RESTRICTED  
  
G/SCM/M/ 97 
 
5 August 2016 
(16-4214) Page: 1/37 
Committee on Subsidies and Countervailing Measures    
 
MINUTES OF THE REGUL AR MEETING  
HELD ON 26 APRIL 201 6 
 
CHAIR: MR MITSUHIRO FUKUYAMA  (JAPAN)  
1. The Committee on Subsidies and Countervailing Measures ("Committee") held a regular 
meeting on 26 April 2016, convened in WTO/AIR/SCM/9 dated 15 April 2016.  
2. The Comm ittee adopted the following agenda:  
1   NATIONAL LEGISLATION  - REVIEW OF NOTIFICATI ONS OF NEW OR 
AMENDED LEGISLATION OR REGULATIONS NOT P REVIOUSLY REVIEWED B Y THE 
COMMITTEE (INCLUDING  SUPPLEMENTAL N OTIFICATIONS OF EXIS TING 
PROVISIONS NOT PREVI OUSLY REVIEWED)  ................................ ................................ .... 2 
1.1   Australia (G/ADP/N/1/AUS/2/Suppl.16 -G/SCM/N/1/AUS/2/Suppl.14 and 
G/ADP/N/1/AUS/2/Suppl.15 -G/SCM/N/1/AUS/2/Suppl.13)  ................................ .......................  3 
1.2   Bahrain, Kingdom of (G/ADP/N/1/BHR/3/Suppl.1 -G/SCM/N/1/BHR/2/Suppl.1 -
G/SG/N/1/BHR/3/Suppl.1)  ................................ ................................ ................................ ... 3 
1.3   Oman (G/ADP/N/1/OMN/3 -G/SCM/N/1/OMN/3 -G/SG/N/1/OMN/3 and 
G/ADP/N/1/OMN/3/Suppl.1 -G/SCM/N/1/OMN/3/Suppl.1 -G/SG/N/1/OMN/3/Suppl.1)  ...................  3 
1.4   Saudi Arabia, Kingdom of (G/ADP/N/1/SAU/2/Suppl.1 -G/SCM/N/1/SAU/2/Suppl.1 -
G/SG/N/ 1/SAU/2/Suppl.1)  ................................ ................................ ................................ ... 3 
1.5   United Arab Emirates (G/ADP/N/1/ARE/2 -G/SCM/N/1/ARE/2 -G/SG/N/1/ARE/2)  ..................  3 
1.6   Dominican Republic (G/ADP /N/1/DOM/3/Suppl.2 -G/SCM/N/1/DOM/2/Suppl.2 -
G/SG/N/1/DOM/2/Suppl.2)  ................................ ................................ ................................ .. 3 
1.7   India (G/ADP/N/1/IND/2/Suppl.5 -G/SCM/N/1/IND/2/Suppl.5, 
G/ADP/N/1/IND/2/Suppl.6 -G/SCM/N/1/IND/2/Suppl.6, and G/ADP/N/ 1/IND/2/Suppl.7 -
G/SCM/N/1/IND/2/Suppl.7)  ................................ ................................ ................................ . 4 
1.8   Kyrgyz Republic (G/ADP/N/1/KGZ/2 -G/SCM/N/1/KGZ/2 -G/SG/N/1/KGZ/2)  ........................  4 
1.9   Lesoth o (G/SCM/N/1/LSO/1)  ................................ ................................ .........................  4 
1.10   Pakistan (G/ADP/N/1/PAK/3 -G/SCM/N/1/PAK/3) ................................ ............................  4 
1.11   Seychelles (G/ADP/N/1/SYC/1 -G/SCM/N/1/SYC/1 -G/SG/N/1/SYC/1)  ................................  4 
1.12   Cameroon (G/ADP/N/1/CMR/1/Suppl.1 -G/SCM/N/1/CMR/1/Suppl.1 -
G/SG/N/1/CMR/1/Suppl.1)  ................................ ................................ ................................ ... 5 
2   SEMI -ANNUAL REPORT S OF COUNTERVAILING DUTY ACTIONS 
(ARTICLE  25.11) - G/SCM/N/298 AND G/SCM/N/298/SUPPL.1  ................................ ...... 5 
3   PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: 
NOTIFICATIONS (ARTIC LE 25.11)  ................................ ................................ ...................  9 
4   ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE 
ELIMINATION OF EXPOR T SUBSIDIES  ................................ ................................ ...........  11 
5   IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS AND 
OTHER INFORMATION FL OWS ON TRADE MEASURE S UNDER THE SCM 
AGREEMENT  ................................ ................................ ................................ ...................  12 G/SCM/M/97  
 
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  6   CONSTANT DOLLAR METH ODOLOGY FOR GRADUATI ON FROM SCM 
ANNEX  VII(B)  ................................ ................................ ................................ ................  16 
7   PERMANENT GROUP OF E XPERTS – ELECTION OF AN EXPER T ................................ ... 17 
8   IMPLEMENTATION OF TH E SCM AGREEMENT: CRE ATION OF A WORKING 
GROUP ON THE IMPLMEN TATION OF COUNTERVA ILING MEASURES – ITEM 
REQUESTED BY BRAZIL  ................................ ................................ ................................ .. 17 
9   NON-NOTIFICATION OF CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 
2011, 2014 AND 2015 REQUESTS BY THE UNIT ED STATES UNDER ARTI CLE 25.10 
OF THE SC M AGREEMENT – ITEM REQUESTED BY TH E UNITED STATES  ..........................  21 
10   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 
2016 REQUEST BY THE UNITED STATES UNDER ARTICLE 25.10 OF THE  SCM 
AGREE MENT – ITEM REQUESTED BY TH E UNITED STATES  ................................ ..............  25 
11   ELIMINATION OF EXPOR T SUBSIDIES FOR TEXT ILES AND APPAREL BY 
INDIA PURSUANT TO AR TICLE 27.5 OF THE SC M AGREEMENT – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  28 
12   GOVERNMENT SUPPORT F OR THE CANADIAN AIRC RAFT INDUSTRY – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  29 
13   ENHANCING F ISHERIES SUBSIDIES T RANSPARENCY – ITEM REQUESTED BY 
THE UNITED STATES  ................................ ................................ ................................ ...... 29 
14   OTHER BUSINESS  ................................ ................................ ................................ .... 33 
14.1   CV Measures by the EU on Ductile Cast Iron Tubes and Pipes from India – Item 
requested by India  ................................ ................................ ................................ ............. 33 
14.2   Japanese Government Support for the Development of Regional Aircraft – Item 
requested by Brazil  ................................ ................................ ................................ ............ 34 
14.3   CVD Investigations by the US on Hot -Rolled and Cold -Rolled Steel Products from 
Brazil – Item requested by Brazil  ................................ ................................ ......................... 35 
15   DATE OF NEXT REGULAR MEETING  ................................ ................................ ..........  37 
16   ELECTION OF OFFICERS  ................................ ................................ ..........................  37 
 
1  NATIONAL LEGISLATION  - REVIEW OF NOTIFICATI ONS OF NEW OR AMENDE D 
LEGISLATION OR REGUL ATIONS NOT PREVIOUSL Y REVI EWED BY THE COMMITTE E 
(INCLUDING SUPPLEMEN TAL NOTIFICATIONS OF  EXISTING PROVISIONS NOT 
PREVIOUSLY REVIEWED)  
3. The Chair noted that, in accordance with the Committee's procedures (G/SCM/W/293/Rev.1), 
the new legislative notifications on the agenda were those that had been circulated in all three 
languages not less than six weeks before the meeting. The deadline for written questions on these 
notifications had been 4 April 2016.  
4. Oral questions could be asked at the meeting, and any Member wishing to receive a w ritten 
answer to any such question would have to submit its question in writing to the Member concerned 
and to the Secretariat not later than 16 May 2016. Written answers were due not later than 
6 June 2016.  
5. The primary review of the notifications would be  held in the Committee on Anti -Dumping 
Practices, where all horizontal issues in addition to anti -dumping issues would be addressed. 
Members thus were requested to limit their questions in this Committee to those specifically 
related to countervailing meas ures. G/SCM/M/97  
 
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  1.1  Australia (G/ADP/N/1/AUS/2/Suppl.16 -G/SCM/N/1/AUS/2/Suppl.14 and  
G/ADP/N/1/AUS/2/Suppl.15 -G/SCM/N/1/AUS/2/Suppl.13 ) 
6. Written questions and answers with respect to these notifications can be found in:  
 G/SCM/Q1/AUS/19 - questions from the United States  
 G/SCM/Q1/AUS/20 – replies to the United States  
7. The Committee took note  of the notifications, questions, and answers.   
1.2  Bahrain, Kingdom of  (G/ADP/N/1/BHR/3/Suppl.1 -G/SCM/N/1/BHR/2/Suppl.1 -
G/SG/N/1/BHR/3/Suppl .1) 
1.3  Oman (G/ADP/N/1/OMN/3 -G/SCM/N/1/OMN/3 -G/SG/N /1/OMN/3 and 
G/ADP/N/1/OMN/3/Suppl .1-G/SCM/N/1/OMN/3/ Suppl.1 -G/SG/N/1/OMN/3/Suppl.1)  
1.4  Saudi Arabia, Kingdom of  (G/ADP/N/1/SAU/2/S uppl.1-
G/SCM/N/1/SAU/2/S uppl.1-G/SG/N/1/SAU/2/S uppl.1) 
1.5  United  Arab Emirates (G/ADP/N/1/ARE/2 -G/SCM/N/1/ARE/2 -G/SG/N/1/ARE/2)  
8. Although these notifications submitted by four of the Gulf Cooperation Council (GCC) Member 
States  appeared separately on the agenda, the Committee decided to review them all together as 
they were all about the GCC Common Law on Anti -Dumping, Countervailing and Safeguard 
Measures.  
9. Written questions with respect to these notifications can be found in:  
 G/SCM/Q1/BHR/9 - questions from the United States  
 G/SCM/Q1/OMN/1 - questions from the United States  
 G/SCM/Q1/SAU/3 - questions from the United States  
10. The Kingdom  of Saudi Arabia , as the Chair of the GCC in 2016, took the floor on behalf of four 
of the GCC notifying member States, namely Bahrain, Kingdom of; Oman; Saudi Arabia, Kingdom 
of and the United Arab Emirates and noted that they would provide oral replies in the Committee 
on Anti -dumping Practices.  
11. The Committee took note  of the notifications, questions, and statements made.  
1.6  Dominican Republic (G/ADP/N/1/DOM/3/S uppl.2-G/SCM/N/1/DOM/2/S uppl.2-
G/SG/N/1/DOM/2/S uppl.2) 
12. Written questions and answers with respect to this notification can be found in:  
 G/ADP/Q1/DOM/7 -G/SCM/Q1/DOM/7 -G/SG/Q1/DOM/7 – questions from the United States  
 G/ADP/Q1/DOM/8 -G/SCM/Q1/DOM/8 -G/SG/Q1/DOM/8 – replies to questions from the 
United States1 
13. The United States  noted that it would raise its questions in the Committee on Anti -Dumping 
Practices.  
14. The Committee took note  of the notification, questions, and statements made.  
                                                
1 Circulated on 22 April 2016.  G/SCM/M/97  
 
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  1.7  India (G/ADP/N/1/IND/2/Suppl.5 -G/SCM/N/1/IND/2/Suppl.5, 
G/ADP/N/1/IND/2/Sup pl.6-G/SCM/N/1/IND/2/Suppl.6, and 
G/ADP/N/1/IND/2 /Sup pl.7-G/SCM/N/1/IND/2/Suppl.7 ) 
15. No questions were raised in respect of this notification.  
16. The Committee took note  of the notification.  
1.8  Kyrgyz Republic (G/ADP/N/1/KGZ/2 -G/SCM/N/1/KGZ/2 -G/SG/N/1/KGZ/2)  
17. Written questions and answers with respect to this no tification can be found in:  
 G/SCM/Q1/KGZ/5 - questions from the United States  
 G/SCM/Q1/KGZ/6 – replies to questions from the United States2 
18. The United States  noted that it would raise its questions in the Committee on Anti -Dumping 
Practices.  
19. The Committee  took note of the notification, questions and statement made.  
1.9  Lesotho (G/SCM/N/1/LSO/1)  
20. No questions were raised in respect of this notification.  
21. The Committee took note  of the notification.  
1.10  Pakistan (G/ADP/N/1/PAK/3 -G/SCM/N/1/PAK/3)  
22. Written questions an d answers with respect to this notification can be found in:  
 G/SCM/Q1/PAK/9  - questions from the United States  
 G/SCM/Q1/PAK/10 and G/SCM/Q1/PAK/10/ Corr.1 – replies to questions from the 
United  States3 
23. Pakistan  noted that this notification was about its ne w legislation on anti -dumping and 
countervailing measures passed by the Pakistan Parliament in September 2015. Both the Anti - 
Dumping Act of 2015 and Countervailing Duties Act of 2015 provide an enhanced legal framework 
for investigation and determination of dumping and injury.  
24. Among major reforms in these acts were the adoption of provisions on anti -circumvention 
measures and the opportunity to appeal before the appellate tribunal. The changes and 
amendments had made Pakistan's regulations more rule -based  and in line with international best 
practices. The reform of the National Tariff Commission also was part of the agenda of Pakistan's 
institutional reforms.  
25. The Committee  took note of the notification, questions and statement made.  
1.11  Seychelles (G/ADP/N/1/ SYC/1 -G/SCM/N/1/SYC/1 -G/SG/N/1/SYC/1)  
26. No questions were raised in respect of this notification.  
27. The Committee took note  of the notification.  
                                                
2 Circulated on 11 May 2016, following the meeting.  
3 Circulate d on 26 April 2016 and 23 May 2016, respectively.  G/SCM/M/97  
 
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  1.12  Cameroon (G/ADP/N/1/CMR/1/Suppl.1 -G/SCM/N/1/CMR/1/Suppl.1 -
G/SG/N/1/CMR/1/Suppl.1)  
28. Written questions with respect t o this notification can be found in:  
 G/ADP/Q1/CMR/3 -G/SCM/Q1/CMR/3 -G/SG/Q1/CMR/3 – questions from the United States  
29. To date, no written answers have been submitted.4  
30. The Chair, recalling the Committee's agreed procedures, informed Members that for new 
legislative notifications to be placed on the agenda of the October 2016 meeting, they would have 
to be circulated in all three languages by 12 September 2016.  
31. Kazakhstan, Kuwait, and the United States had submitted new legislative notifications which 
would b e on the agenda for review at the October 2016 meeting. Written questions concerning 
notifications to be reviewed should be submitted to the notifying Member and to the Secretariat by 
3 October 2016.  
32. Any Member wishing to place a previously -reviewed legisl ative notification on the agenda of 
the Committee's October 2016 regular meeting should submit to the Member concerned and to the 
Secretariat written questions concerning that notification not later than 12 September 2016. The 
Member receiving such questio ns should submit its written answers not later than 
10 October  2016.  
33. The Secretariat would circulate the usual triple -symbolled document containing these and the 
other pertinent deadlines shortly after this meeting.5  
34. Some Members had yet to submit any no tification concerning legislations. The Chair 
underlined the importance of these notifications in terms of transparency, and recalled that for 
many Members all that would be required was a single nil notification. For any Members that 
conducted countervail ing duty investigations but had not yet notified their legislation, it was all the 
more important for the Committee to have the opportunity to review and ask questions about that 
legislation. Therefore, the Chair urged all Members that had not yet made a l egislative notification 
to do so as promptly as possible.   
35. The Chair referred to the document G/SCM/N/18/Add.41 which contained the latest revision 
of the list of authorities competent to initiate and conduct investigations within the meaning of 
Article 2 5.12 of the SCM Agreement, and invited all Members with such an authority to submit the 
required notification pursuant to Article 25.12 of the SCM Agreement, or to review and update as 
necessary their previously -submitted notifications.  
36. The Committee took note of the Chair's statement.  
2  SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY AC TIONS (ARTICLE  25.11) - 
G/SCM/N/298 AND G/SCM/N/298/SUPPL.1  
37. The Chair recalled that document G/SCM/N/298 and G/SCM/N/298/Suppl.1 had invited all 
Members to submit, not later than 15 February 2016, their semi -annual reports under 
Article  25.11 of the SCM Agreement of countervailing duty actions taken in the period 1  July – 
31 December  2015. Document G/SCM/N/298/Add.1 provided the current status of Members' 
reporting for that period.  Paragraph  1 of the document listed those Members reporting 
countervailing duty actions during the period. Paragraph 2 listed the Members that had notified 
having taken no countervailing duty action during the period. Paragraph 5 of the document listed 
the 36 Members that had submitted a one -time notification that they had no investigating 
authority, had taken no countervailing actions to date, and did not anticipate taking any such 
actions in the foreseeable future.  
                                                
4 In accordance with the Committee's procedures in G/SCM/W/293/Rev.1, any legislative notification in 
respect of which written answers to written questions have not been provided by the relevant deadline wi ll be 
placed on the agenda of the Committee's subsequent regular meeting.  
5 G/ADP/W/ 494-G/SCM/W/ 566-G/SG/W/ 235 and G/ADP/W/ 494/Corr.1 -G/SCM/W/ 566/Corr.1 -
G/SG/W/ 235/Corr.1  G/SCM/M/97  
 
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  38. The one -time notifications served a usef ul transparency function, as they assisted non -active 
Members to meet their notification requirements in a streamlined way. Any eligible Member that 
had not already done so thus was urged to submit a one -time notification. The Secretariat was 
ready to assi st any Member in this regard.  
39. Unfortunately, the very large number of Members listed in paragraphs 3 and 4 of the 
document had not submitted a semi -annual report for July - December 2015. They were urged to 
do so as soon as possible.   
40. No comments or quest ions were raised concerning the semi -annual reports of Australia, 
Brazil, Canada, Egypt, European Union, India, Kazakhstan, Mexico, Peru, or Turkey.  
41. With respect to the semi -annual report of China , the United States  raised questions regarding 
the counterva iling duty investigation against dry distillery grains (DDGS) which was a by -product 
of the production of ethanol, regarding two tax programmes that were included in the 
investigation, as well as the upstream subsidy allegation.  
42. The United States noted tha t in the course of consultations prior to the initiation of the 
investigation, it had informed China that the two programmes in question had been terminated, 
and provided China with a translated copy of the statute that had terminated the programmes. 
Nonet heless, these programmes had been included in the investigation. The United States 
requested China to explain why it had not taken into account the termination of these programmes 
as evidenced by the statutory documentation.  
43. Regarding the upstream subsidy  allegation, the petition had alleged that the ethanol 
producers had received certain subsidies that had benefited DDGS as well. The petition also had 
alleged that certain primary agricultural products such as corn were subsidized. The United States, 
howev er, was of the view that no evidence had been submitted that the subsidy had been 
provided to the corn farmers or that the benefit in the primary agricultural product had been 
passed through to the ethanol or DDGS producer. The United States questioned whe ther there had 
been any particular reason that convinced the investigating authority to include the primary 
agricultural programmes in the investigation.  
44. The United States stated that the allegation that a subsidy to corn farmers had passed 
through to DDG S and ethanol producers was essentially based on a simple assertion, and 
requested China to explain whether there was other argumentation or evidence in this regard.  
45. China  stated that prior to the investigation it had conducted consultations with the 
Unite d States on 29 December 2015, and that the investigation had been initiated on 
12 January  2016. As the case was still ongoing China's comments were preliminary. China and the 
United States had already exchanged views, and China would carry out the investig ation strictly in 
line with its trade remedy laws and regulations, as well as the WTO rules, in an objective manner. 
China also would keep a high level of transparency in this case.  
46. China believed that with cooperation of the interested parties, the inves tigating authority 
would make a fair and transparent determination after careful investigation. It would forward any 
written questions to its capital and provide a detailed reply.   
47. The United States  reiterated that these were important and interesting iss ues and asked what 
the responding country could provide at the consultation stage to convince the investigating 
authority that the programme had been terminated or not used. It was difficult to make a decision 
with little evidence, but if there was an argu ment that a programme had been terminated and a 
statute showing the termination, this was good evidence not to include the programme in the 
investigation. With respect to upstream subsidies, the United States noted that these were very 
difficult issues, es pecially in respect of the pass through of subsidy benefits between unrelated 
parties. These issues deserved extremely careful consideration.  
48. China  reiterated that the investigation would be conducted in a fair and transparent way, as 
required by the WTO r ules, and the practices usually adopted by many Members.  G/SCM/M/97  
 
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  49. With respect to the semi -annual report of the Russian Federation , Ukraine  expressed its 
concern over countervailing duty investigation initiated by the Eurasian Economic Commission on 
26 December 201 5 on ferrous silicon manganese originating in Ukraine and exported to the 
territory of the Eurasian Economic Union. The investigation had been initiated on the basis of an 
application which had not been submitted by or on behalf of the domestic industry as  required by 
Article 11.1 of the Agreement on Subsidies and Countervailing Measures. Ukraine requested the 
members of the Eurasian Economic Union - Armenia, Kazakhstan, Kyrgyz Republic and the Russian 
Federation - to terminate the investigation without app lication of any definitive countervailing 
measures pursuant to the provisions of Article 11.9 of the SCM Agreement.  
50. The Russian Federation  indicated that the investigation was ongoing and that all interested 
parties had the right to provide comments in the  course of the investigation. The investigation had 
been initiated completely in accordance with the internal legislation of the Eurasian Economic 
Union and in full conformity with WTO obligations of the Russian Federation. The questions and 
concerns of Uk raine would be fully addressed in the final report of the result of the investigation.  
51. Regarding the semi -annual report of Ukraine , the Russian Federation  expressed its 
disappointment due to the imposition of the final measure against passenger cars origin ating in 
the Russian Federation. The Russian Federation reiterated that the application of Ukrainian 
producers had not included sufficient evidence and the information submitted by the Russian 
exporters regarding the existence of the alleged subsidies and benefits had not been taken into 
consideration. In addition, Ukraine had failed to hold consultations as required by Article 13 of the 
SCM Agreement because it had not provided access to non -confidential evidence used for the 
initiation of the investigatio n. Finally, it had become a bad tradition for the Ukraine in its trade 
defence investigations not to disclose or adequately explain the methods used to calculate the 
duties as well as not to provide any explanations regarding relevant injury factors.  
52. Unfor tunately, the investigation had been conducted in violation of Articles 11.2, 11.3, 12.7, 
13.4, 14 and 15 of the SCM Agreement. The Russian Federation urged Ukraine to reconsider the 
measure and to bring it in conformity with the WTO rules.  
53. Ukraine  indicat ed that the investigating authority had made positive determination on the 
existence of subsidies, material injury and the causal link between the subsidized imports and the 
material injury. The Russian Federation had been invited to consultations before t he initiation of 
the investigation. Ukraine had been provided the opportunity to continue to the consultations 
which had been held on 27 November 2014 and 24 October 2015 in accordance with Article 13 of 
the SCM Agreement.  
54. During the investigation, Ukraine  had provided the opportunity to all interested parties to 
present evidence, participate in public hearings and provide written comments on the 
investigation. The main findings and conclusions of the investigating authority had been sent to all 
interested parties including the competent authorities of the Russian Federation. Thus, Ukraine had 
acted in compliance with the provisions of Article VI of GATT 1994 and the SCM Agreement.  
55. With respect to the semi -annual report of the United States , the Russian Fede ration  stated 
that the United States had imposed a provisional measure against the imports of cold -rolled steel 
products originating in Russia on 22 December 2015. The major part of the duty had been to 
countervail a subsidy in the form of provision of nat ural gas for less than adequate remuneration. 
The Russian Federation indicated that the United States' conclusions were erroneous and raised 
systemic concerns because the United States' approach was based on three essential, but 
frequently flawed determina tions on financial contribution, benefit, and specificity.  
56. Regarding the financial contribution, the Russian Federation indicated that provision of natural 
gas by the public joint stock company, GAZPROM, could not constitute a financial contribution by a 
government or a public body, by its nature. GAZPROM was one of the natural gas producers 
functioning under the respective corporate law and operating as a profit seeking enterprise. As it 
was a natural monopoly of general infrastructure of gas transportatio n, it was subject to additional 
state control in order to ensure that the company did not abuse its market position. According to 
the WTO jurisprudence, however, in order to be a public body, an entity should be vested with 
government authority. The United  States deemed GAZPROM vested with such an authority 
because of the partial state ownership which did not demonstrate that the government was G/SCM/M/97  
 
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  exercising a meaningful control over its business, let alone giving an authority to provide financial 
contribution  on behalf of the government. Thus, the United States had failed to establish the 
existence of financial contribution properly in accordance with Article 1 of the SCM Agreement.  
57. With respect to calculation of an alleged benefit, the Russian Federation stat ed that the United 
States had indicated at the previous meeting that its practice of benefit calculation had been 
brought in consistency with the Appellate Body decisions. In reality, the United States had 
completely ignored the viable Russian market bench marks in determining the adequacy of 
remuneration for natural gas in Russia.  
58. These were prices for natural gas supplied by companies in their unregulated segments and 
prices established on the Russian commodity exchange which were profitable for sellers. H aving 
rejected viable in -country benchmarks, the United States had elaborated its own world market 
price benchmark based on prices from the European and Asian markets. World market prices for 
natural gas did not take into account the differences in natural  gas endowments between states 
and particularities of different supply systems.  In addition, Russia reminded the AB's finding which 
seemed to be forgotten by the United States: "Countervailing measures must not be used to offset 
differences in comparative  advantages between the countries". Due to the use of out of country 
benchmarks, the provisional measures, contrary to the Appellate Body's findings, were offsetting 
differences in competitive advantage between Russia with its large natural gas surplus and  
numerous other markets with sizeable natural gas deficits. Russia believed that United States' 
actions were in breach of Article 14(d) of the SCM Agreement in which the adequacy of 
remuneration was prescribed in relation to prevailing market conditions in  the country of goods 
provided or purchased.  
59. Regarding the specificity, the United States had not considered the Russian gas market as a 
whole. Two major groups of consumers, namely household and power supply and heating, had 
been totally excluded from th e analysis and the shares of gas consumption by metallurgical, agro -
chemical and cement industries had been aggregated and compared with only one category, 
"other consumers". In reality, the share of metallurgical sector in the total volume of gas 
consumpt ion in Russia had been only four % in the period of investigation. Considering this figure 
as pre -dominant was irrational. Russia stated that the use of this methodology had been result -
oriented and inconsistent with Article 2.1(c) of the SCM Agreement.  
60. Russia reiterated that the regulation of prices was a natural and indispensable instrument of 
state economic policy. Normally, it was used in order to manage resources effectively to prevent 
monopolies from abusing market situations, create conditions for st able supply of goods and 
services, etc. Nevertheless, as it had been stated at the previous meeting, the United States' 
practices in countervailing investigations created an unbearable lose -lose situation; where on the 
one hand the absence of price regulat ion did not allow the country to overcome market failures 
effectively, on the other hand the existence of such regulation created presumption that the 
exported goods were subsidized. The Russian Federation thus urged the United States to conclude 
the inves tigation in a WTO -consistent manner.  
61. China  shared the Russian Federation's concerns about the investigation practices of the 
United States. The United States' findings on the provision of inputs for less than adequate 
remuneration were inconsistent with t he WTO rules. The US authority simply defined a company 
with state ownership as a public body or a private company as a public body controlled by the 
government because of the existence of partisan organization in the company, or the personal 
political bac kground of the company executives. China also noted that the US authority often 
applied external benchmarks when calculating the benefit of subsidies, which exaggerated the 
margin of subsidies. Despite the tremendous efforts and the legal arguments made by  China and 
Chinese companies during the investigations, the US authority often used adverse facts available. 
China reiterated that trade remedy investigations had not to be used as instruments of 
protectionism and urged the United States to act strictly in  line with the WTO rules and to refrain 
from the abuse of discretion.  
62. India joined the Russian Federation and stated that it had systemic concern on the matter. It 
noted that price regulation was a very important instrument of economic policy and should no t be 
considered as financial contribution by the government. Such policies should not be considered as 
having any cause and effect link for the purpose of the SCM Agreement and accordingly, the 
product exported should not be countervailed solely on the bas is of existence of price regulation. G/SCM/M/97  
 
- 9 - 
 
  The mere fact that the price was regulated did not mean that there was an element of subsidy 
involved and it was a specific subsidy. While investigating exports of steel products from India, the 
US authority had conside red granting iron ore mine leases by the government as provision of iron 
ore free and incorrectly applied the methodology of less than adequate remuneration. India had 
reiterated that not each and every action of a government could be considered as counter vailable 
subsidy unless the cause and effect on the account of the government was clearly established by 
investigators and such a practice was inconsistent with the SCM Agreement.  
63. The Kingdom of Saudi Arabia  joined the views expressed by China and India.  
64. The United States  stated that it conducted all countervailing duty investigations in an open 
and transparent manner in accordance with US law and its international obligations, and took into 
account the views of all interested parties.  
65. Regarding the concer ns raised on public body determinations, the evidence in those cases had 
strongly supported the findings and was consistent with findings by the WTO for example in DS379 
and DS437. The US also noted that it had modified its practice for determining whether  entities 
were public bodies to specifically take into account the DS379 decision, and this modification had 
been fully reflected in the ongoing proceedings.  
66. Regarding the comments on the United States' selection of market benchmarks to determine 
the provi sion of inputs for less than adequate remuneration, the US noted that this issue was 
currently subject to WTO implementation proceedings and as part of that proceeding the US was 
working diligently to bring its countervailing duty measures concerning impor ts in this case, 
particularly from China, into compliance with its WTO obligations.  
67. With respect to China's comment concerning the use of facts available, the United States 
noted that each instance where it had resorted to facts available had been fully co nsistent with its 
obligation under Article 12.7 of the Agreement. There were wide ranges of circumstances that lead 
to the application of facts available, including the complete non -cooperation by some company 
respondents or failure to provide information specifically requested. Facts available were applied 
only in those instances where a party did not cooperate.  
68. Regarding Russia's comments on investigation of cold -rolled steel flat products, the US noted 
that this investigation was nearing its conclusion a nd a final determination would be issued shortly. 
The United States would give full consideration to the views of all interested parties in reaching its 
final determination. The US also noted that the information request in countervailing duty 
investigatio ns could be extensive and difficult to comply with and the Russian's efforts in this 
regard had been exemplary. With respect to Russia's comment on natural gas pricing, the US 
indicated that its preliminary determination had been fully consistent with its WTO obligations. The 
US authority had properly determined that GAZPROM was a public body relying more on simple 
government ownership and thus provided financial contribution in the form of natural gas. The US 
authority had also found that the domestic mark et had been distorted and that resort to external 
benchmark for the benefit analysis had been appropriate. Gas pricing in Russia was heavily 
regulated by the government and dominated by government owned suppliers.  
69. The US disagreed with India's comments th at the government could control prices and that 
they could not be considered subsidies.  
70. The Committee took note  of all semi -annual reports submitted, and all statements made.  
3  PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: NOTIFICAT IONS 
(ARTICLE 25.11)  
71. The Chair  reported that since the Committee's October 2015 regular meeting, notifications 
under Article 25.11 of preliminary and final countervailing duty actions had been received from 
Australia, Canada, the European Union, India, Peru, Ukraine, and the U nited States. Those 
notifications were listed in documents G/SCM/N/296 -297 and 300 -303. 
72. Regarding Peru's notification, Argentina  stated that it had posed written questions in 
document G/SCM/Q5/PER/1 which highlighted its concerns over the investigation con ducted by the G/SCM/M/97  
 
- 10 - 
 
  Peruvian authority. Argentina noted that both the measure imposed and the investigation it relied 
on contained serious shortcomings which made both of these inconsistent with the provisions of 
the Agreement.  
73. Peru stated that it's Minister of  Foreign Trade and Tourism closely followed anti -dumping and 
countervailing duty investigations, in Peru and abroad, respecting the autonomy of the 
investigating authorities in all cases. Peru's written replies to the questions posed by Argentina 
would be submitted on that day.6  
74. In the course of the investigation, the Peruvian investigating authority (INDECOPI) had 
determined the existence of financial contributions by the Government of Argentina that conferred 
a benefit on the production of biodiesel and that were specific, and also had found that the 
increase in imports of subsidized biodiesel had had a negative impact on the prices of the domestic 
product and on the performance of the Peruvian domestic industry . INDECOPI had not found other 
factors that explained or contributed to the injury experienced by the domestic industry .  
75. Regarding the Supply Agreement that benefitted the Argentinian industry, INDECOPI  
determined that it constituted a financial contribution in the form of " purchase of goods " as 
defined in Article 1.1(a)(1)(iii) of the SCM Agreement. The purchase of goods was not carried out 
directly by the government , but instead  indirectly , through private bodies that the Government of 
Argentina had entrusted with such functions , as provided for i n Article 1.1(a)(1)(iv) of the 
Agreement.  
76. The Supply Agreement confer red a benefit to biodiesel producers in Argentina on their  internal 
sales. When determining the internal price of biodiesel  in Argentina and the domestic sales quota 
for each producer , the Supply Agreement allowed the  producers to obtain commercial conditions 
better than th ey would have obtained in the absence of this regulation. When selling in the 
domestic market , the producers gained access to the subsid y which allowed them later to produce 
biodiesel  that could be sold in either the domestic or external market s.  
77.  Therefore, to calculate the amount of the subsidy, the different price conditions had been 
considered , as well as the size of each producer 's internal sale quotas pursuant to  the Supply 
Agreement , and the total volume of biodiesel produced by each producer.  
78. The final report described in detail all of the information  and documentation  presented by the 
Argentine companies that had been used by INDECOPI to determine the amount of  subsidies, and 
which had been duly verified according to Article 12.5 of the SCM Agreement.  
79. Regarding the second measure, the tax on minimum presumed income, the final report had 
noted that the provisions of Law 26.093 constituted  a financial contributio n in the form of a direct 
transfer of funds as defined in Article 1.1(a)(1)(i) of the SCM Agreement.  
80. As indicated in the final report, the provisions of this law granted Argentine biodiesel 
producers greater financial resources which enabled them to enjoy  greater liquidity and as a 
result, improve their financial situation.  
81. The amount of the subsidy had been calculated on the basis of accounting and financial 
information supplied by the Argentine companies that had cooperated in the proceeding , as well as  
information regarding the implementation of Law 26.093 and the existence of beneficiaries which 
had been duly presented by the Government of Argentina. Only four out of six enterprises  that had 
been asked to provide affidavit s of payment of the minimum pr esumed income tax had presented 
them, along with information allowing for detailed verification of the calculation of the tax 
payments, including any additions, deductions and exemptions .  
82. Regarding injury, in accord ance with Article 15 of the SCM Agreemen t, INDECOPI evaluated 
the domestic industry's economic indicators over the entire investigation period  (January 2009 -
June 2014),  considered the intervening trends , and pa id particular attention to what happened in 
the final part of that period. In that reg ard, it had been found that the installed capacity in 
domestic industry, domestic sales, market share, profits, and inventories had show n a notable 
                                                
6 G/SCM/Q5/PER/2 .  G/SCM/M/97  
 
- 11 - 
 
  downward trend during the final, most recent part of the period of investigation. By contrast by 
the end of the period of analysis, Argentina had consolidated itself as almost the only supplier of 
biodiesel in the domestic market.  
83. Finally, INDECOPI  had found the existence of a causal link between the import s of biodiesel 
from Argentina and the deterioration of the domestic industry 's condition. INDECOPI also had 
analysed other factors that might have influence d the trends in the indicators that reflect ed injury , 
as required by Article 15.5 of the SCM Agreement. In this regard, the importing companies  had not 
presented the evidence  necessary to justify their objections regarding the quality of the product.  
84. Argentina  stated that the replies would be analysed in detail by its capital.  
85. India referred to the document G/SCM/N/302 and raised its systemic concerns regar ding the 
investigation that had been initiated by the United States in February 2016 on imports of new 
pneumatic off -the-road tyres from China, India and Sri Lanka. In the course of investigation, the 
USITC had made its preliminary findings in March 2016 i n which it had done cross -cumulation to 
arrive at the injury margin. Although only Sri Lanka had been subject to countervailing 
investigations, imports from Sri Lanka and India had been cumulatively assessed while calculating 
anti-dumping injury on account  of India's exports to the US. India noted that cross -cumulation was 
inconsistent with the WTO provisions in light of the ruling in WTO dispute DS436 US - CVD 
Measures on Certain Hot Rolled Carbon Flat Steel Products originating from India . 
86. In that dispute , the AB had ruled that the US practice of cross -cumulation of imports for injury 
analysis was inconsistent with Article 15 of the Agreement because the imports from countries 
subject to CVD investigations, could not be cumulated with the imports from othe r countries 
subject to AD investigations. India requested the US to explain why the practice of cross -
cumulation had been repeated in the instant case despite the WTO jurisprudence on the matter.  
87. Regarding another systemic issue, India noted that and in t he case of corrosion resistant steel 
products from India, the USITC had initiated an investigation on the same day as the petition had 
been filed, without waiting for the USDOC to examine the accuracy, adequacy and sufficiency of 
evidence in the petition a nd the standing of the domestic industry. India stated that this did not 
comply with the SCM Agreement and called the US to fully align its practices with the Agreement 
and the relevant jurisprudence for uniformity, predictability and stability in its poli cies. 
88. With respect to the issue of cross -cumulation, the United States  requested India to submit 
written questions. Regarding the initiation of the investigation by the USITC, the US indicated that 
there might be a wording issue. The US Department of Comme rce was responsible under US Law 
for the initiation of a countervailing duty case and the ITC would not conduct an investigation, until 
the Department of Commerce had initiated a case. The US noted that the ITC would start its 
information gathering process es as soon as they got the petition because in the US the preliminary 
determination on injury was done on the forty -fifth day which was very quick for preliminary 
determination.  
89. India indicated that it would submit written questions on cross -cumulation.  
90. The Committee took note  of the notifications, questions and answers, and statements made.  
4  ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE ELI MINATION OF 
EXPORT SUBSIDIES  
91. The Chair  recalled that Members that had been granted extensions under Article  27.4 
pursuant to the procedures in WT/L/691 were required, under paragraph 2(c) of the procedures, to 
submit transparency notifications in respect of each year of the final two -year phase -out period, 
i.e. calendar years 2014 and 2015. The deadline for the  notification pertaining to 2014 was 
30 June 2015. A reminder to this effect had been circulated in document G/SCM/N/290/INF.  
92. To date, Belize, Costa Rica, Dominica, El Salvador, Guatemala, Jamaica, Jordan, Mauritius, 
and Saint Vincent and the Grenadines h ad submitted these notifications, which had been circulated 
in the G/SCM/N/290 series. The Chair reminded the other Members with extensions to submit their 
notifications covering calendar year 2014 as soon as possible.  G/SCM/M/97  
 
- 12 - 
 
  93. Furthermore, given that 2015 was the final year of the two -year phase -out period pursuant to 
the previously mentioned procedures, the Members with extensions needed to have completed the 
elimination of their export subsidies by 31 December 2015.  They also had to provide a final 
transparency notification in respect of calendar year 2015 not later than 30 June 2016. A reminder 
concerning that final round of Article 27.4 –related notifications had been circulated in document 
G/SCM/N/299.  
94. The Dominican Republic  explained that it had not submitted a notification for 2014 due to 
confusion and noted that the notification had been sent to the Secretariat on 8 April 2016. It would 
also submit the appropriate notification before 30 June 2016.7 
95. New Zealand  brought attention the 2015 deadline for eliminati ng export subsidies and to 
submit formal notifications in June 2016. It noted that   the elimination of export subsidies was a 
long running issue and thanks to the Ministerial Conference in Nairobi Members were looking 
forward to eventually drawing this is sue to a conclusion across the WTO essentially as this 
prohibition applied to agriculture and non -agriculture goods. Transparency was an important factor 
both in supporting implementation and full monitoring of implementation; therefore New Zealand 
acknowl edged the recent reforms that had been undertaken and notified by Members but also 
noted that there were still a number of notifications outstanding. New Zealand invited the relevant 
Members to submit their final 2016 notifications in a timely manner so th at Members could be 
informed about the situation in the next meeting of the Committee.  
96. The United States  indicated that this had been a long journey, starting back in 2002, but the 
extensions had come to an end. Accordingly, all extension recipients shoul d have terminated their 
programmes by the time. The US asked those members, who had not yet terminated their 
programmes, to do so as soon as possible. It noted that under the last extension decision, each 
extension recipient was expected to notify the Comm ittee that the export subsidy at issue had 
indeed been terminated. In this regard, the US asked those members who had not yet notify that, 
to do so as soon as possible.  
97. The Committee took note  of the statements made.  
5  IMPROVING THE TIMELI NESS AND COMPLETEN ESS OF NOTIFICATIONS  AND OTHER 
INFORMATION FLOWS ON  TRADE MEASURES UNDER  THE SCM AGREEMENT  
98. The Chair recalled that since the request of the Chairman of the Trade Policy Review Body in 
spring 2009, the Committee had been discussing, at formal and informal m eetings, "ways to 
improve the timeliness and completeness of notifications and other information flows on trade 
measures". The substance of those discussions was reflected in the minutes of the previous 
meetings.  
99. The Chair recalled that at Committee's Octo ber meeting a number of Members had indicated 
their willingness to continue discussions on ways to improve timeliness and completeness of 
notification obligations under the SCM Agreement, with the notification of subsidies being the most 
fundamental. In th is regard, there were three topics to cover under this agenda item, the status of 
Members' notifications of subsidies, the Australian suggestion to add a new annex to the document 
on the status of Member's notifications; and the US proposal regarding a wri tten process for 
questions and answers under Articles 25.8 and 25.9 of the SCM Agreement.  
100.  Since 2009, the Secretariat had prepared and updated a background note 
(G/SCM/W/546/Rev.7 and Corrigendum 1) at the request of Members, providing a snapshot of the 
level of compliance with the various notification obligations under the SCM Agreement since 1995.  
101.  Unfortunately, compliance with the obligation to notify subsidies remained low. Ninety -eight 
Members had not made their 2015 new and full subsidy notification f or which the deadline had 
been 30 June  2015. Sixty -seven Members still had not made their 2013 new and full subsidy 
notification, although the deadline had been nearly three years earlier. Further, fifty -seven 
Members still had not made their 2011 notifica tions, which had been due more than four years 
earlier. Many of these Members either had never notified or had done so only in the distant past. 
                                                
7 G/SCM/N/284/DOM and G/SCM/N/290 . G/SCM/M/97  
 
- 13 - 
 
  The chronic low compliance with this fundamental transparency obligation constituted a serious 
problem in the p roper functioning of the Agreement.  
102.  The Members that had not yet made their 2015 notifications were: Angola; Antigua and 
Barbuda; Argentina; Bahrain, Kingdom of ; Bangladesh; Barbados; Belize; Benin; Bolivia, 
Plurinational State of ; Botswana; Brazil; Brunei  Darussalam; Burkina Faso; Burundi; Cabo Verde; 
Cambodia; Cameroon; Central African Republic; Chad; Colombia; Côte d'Ivoire; Cuba; Democratic 
Republic of Congo; Djibouti; Dominican Republic; Egypt; Fiji; Gabon; the Gambia; Georgia; 
Ghana; Grenada; Guatemal a; Guinea; Guinea -Bissau; Guyana; Haiti; Honduras; Iceland; India; 
Indonesia; Israel; Kazakhstan ; Kenya; Kuwait, the State of ; Kyrgyz Republic; Lao People's 
Democratic Re public ; Madagascar; Malawi; Malaysia; Maldives; Mali; Mauritania; Moldova, 
Republic of ; Mongolia; Morocco; Mozambique; Myanmar; Namibia; Nepal; Nicaragua; Niger; 
Nigeria; Oman; Pakistan; Panama; Papua New Guinea; Paraguay; Philippines; Russian Federation; 
Rwanda; Saint Kitts and Nevis; Saint Lucia; Samoa; Saudi Arabia, Kingdom of ; Senegal; 
Seychelles; Sierra Leone; Solomon Islands; South Africa; Sri Lanka; Suriname; Swaziland; 
Tajikistan; Tanzania; The Former Yugoslav Republic of Macedonia; Togo; Tonga; Trinidad and 
Tobago; Tunisia; Uganda; Uruguay; Vanuatu; Venezuela, Bolivarian Republic of ; Viet N am; 
Yemen; Zambia; and Zimbabwe.  
103.  The Chair invited the Members that had not yet submitted their 2015 notifications to provide 
an update to the Committee on their progress in preparing these notifications.   
104.  The Russian Federation  stated that it had  submitted its new and full subsidy notification 
covering the period of 2013 -2014 the day before.8 
105.  The Chair urged Members that had not yet submitted their 2015 notifications to do so, and 
recalled that the Secretariat continued to be available for enquiri es about compliance with 
notification obligations. The Secretariat had assisted many Members in the past and Members 
finding themselves unable to comply with their obligations were encouraged to consult the 
Secretariat. There was a range of resources that delegations could draw upon in working to rectify 
the situation, including the Secretariat Handbook on Notification Requirements for the SCM 
Agreement and the two Geneva -based Internship Programmes coordinated by the Secretariat.  
106.  The European Union  noted t hat although it had submitted notifications covering the period 
up to 2014 for all its Member States, it had been listed as 2011 -2012 for some of the EU Member 
States in Annex B of the compendium document.9 
107.  The Chair recalled that at previous meetings, the  Committee had discussed a proposal by 
Australia to add a new annex to the compendium document which would list all Secretariat 
calculations of export competitiveness pursuant to Article 27.6.  
108.  Australia  recalled its interventions at previous meetings and reiterated that the Secretariat's 
Background Note was a very useful document. What it had previously proposed was to have a 
more complete and balanced document which approached the notifications and obligations 
equitably. The last sentence of paragraph 19 of the Background Note, made a comment that no 
developing Member had made such a notification. Australia was seeking to include an annex 
similar to that for Article 25.8 to reflect whether a Member had requested a computation from the 
Secretariat.  
109.  Austral ia also recalled that it had previously raised the issue of Annex C about the request 
for information under Article 25.8. At the moment, Annex C referred the requesting member, the 
member concerned and the notification provided. In fact, the document refer ences were the 
request for information from Members none of which had actually responded. It was difficult to 
find responses of Members. In this regard, Australia suggested putting the replies in that 
document. At the moment there was a notification provid ed which suggested that it was the reply 
document. However, in fact it was the notification asking for the information. Australia noted that 
it had raised this issue at least three years ago and called Members to share their views on adding 
a further annex  to that document.  
                                                
8 G/SCM/N/284/RUS was circulat ed on 11 May 2016.  
9 Annex B was updated in document G/SCM/W/546/Rev.7/Corr.2 dated 19 May 2016.  G/SCM/M/97  
 
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  110.  The United States  expressed its support for the Australian proposal with respect to both 
export competitiveness requests and the issue of Annex C.  
111.  India reiterated that it attached great importance to transparency and notification obliga tion 
for smooth functioning of the multilateral trading system which was an important component of 
the SCM Agreement. It had recently submitted an additional notification on its fisheries subsidy 
programme and it was also working on its latest new and full  subsidy notification.  
112.  With respect to the Australian proposal India asked Australia to explain the exact nature of 
its suggestion. It specifically asked what would be reflected in the new Annex proposed by 
Australia. According to India, under Article 27.6 , export competitiveness might be determined 
either on the basis of a notification by the developing member at issue, or on the basis of the 
calculation conducted by the Secretariat at the request of any Member. The present report 
prepared by the Secretari at correctly reflected that no developing member had made any such 
notification. While there might have been requests to the Secretariat and the Secretariat might 
have calculated export competitiveness pursuant to Article 27.6, these could not be considere d as 
notification by Members and in India's view, the purpose of the document was to list out the 
notification obligations contained in the SCM Agreement. Regarding its proposal on Annex C, India 
asked Australia to clarify whether it was suggesting to repl ace the last column which listed out the 
questions or the request with the responses by Members.  
113.   Norway  noted its concern over the lack of compliance with notification obligation which was 
a serious challenge for the proper functioning of the Committee an d reiterated its support for the 
Australian proposals.  
114.   Australia  noted that the existing Secretariat document described a notification and it 
believed that a request from any WTO Member for a computation constituted a notification to 
other Members. Austra lia was simply seeking to increase the transparency of how often the 
provision had been utilised  by Members. The document referred to notification numbers and 
Australia stated that it was sometimes difficult to find the relevant documents. Thus, it would b e 
useful to have an annex to show which Member had requested a computation and the notification 
number, similar to the one for Article 25.8. Australia was not seeking to attach actual 
computations to the document. Regarding India's question on Article 25.8 , the third column would 
be the Member's reply, because the heading at the moment was  titled "Notification Provided". In 
Australia's view the heading was ambiguous because it suggested that the  notification reference  
was a reply which was not the case.  
115.  China noted that it would share its comments on that issue when the next agenda item on 
another proposal on Article 25.8 would be discussed.  
116.  India noted that it would take this issue back to its capital and it was not in a position to 
agree to it in this meet ing. 
117.  The Chair recalled that at the Committee's October 2015 regular meeting, a number of 
Members had indicated their willingness to continue discussions on the proposal from the 
United  States (G/SCM/W/557/Rev.1) regarding the treatment of questions and an swers under 
Articles  25.8 and 25.9 of the SCM Agreement.  
118.  The United States  recalled that previously it had introduced its formal proposal according to 
which written answers to initial written questions under Article 25.8 should be provided within 
60 days a nd that follow -up questions should be answered in 30 days. The Committee should try to 
reach consensus on common sense procedures for responding to questions submitted under 
Article  25.8. All Members recognized that there was a problem and the US proposal was neither 
radical nor outside the bounds of what any Member should be expected to do when it received 
written questions regarding its subsidy regime; namely, to respond in writing and within a 
reasonable period of time, regardless of the provision under which the questions were submitted. 
Several Members repeatedly had expressed support for the proposal.  
119.  The proposal was not different from the current practice of responding in writing within a 
reasonable time to written questions pertaining to regular Art icle 25 subsidy notifications. The 
shared commitment to the principal of transparency should unify Members in support of advancing G/SCM/M/97  
 
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  that principal in practice, by adopting pragmatic procedures for the exchange of information as 
called for under Articles 25. 8 and 25.9 of the SCM Agreement. The US remained willing to work 
with Members to find a pragmatic solution and believed the underlying rationale of its proposal – 
to enhance information flows among Members – was fundamentally sound. The US noted that it 
was suggesting another idea –an informal consultation process - that could be implemented in the 
context of Article 25.8 questions according to which the requesting Member could request to meet 
with the responding Member to discuss how long it might take to a nswer the questions raised.  
120.  The US indicated that it might take more than one meeting to determine the appropriate 
length of time. However, while some requests might legitimately take longer than 60 days to 
answer, others might take less. The idea would be  that the relevant Members would decide 
between themselves as to a reasonable time -frame to provide answers.  
121.  The US invited Members, in particular those who had raised the issue of capacity constraints 
during the previous meetings, to provide constructive ideas on how the proposal could be 
improved. The US remained flexible in finding a pragmatic solution that satisfied the underlying 
objective – which the United States assumed to be shared by all Members – of enhancing the 
exchange of information.  
122.  Japan  was supportive of enhancing transparency and  welcomed the flexible and practical 
approach which the United States had suggested . It was looking forward to hearing other 
Members' ideas and remained constructively engaged in further discussion.  
123.  Australia  remai ned supportive of clarifying procedures within the Committee in terms of the 
review of notifications. The US was looking at flexible and alternative pathways to improve 
transparency and had proposed an alternative approach of having informal consultations between 
parties. Australia remained very supportive and was of the view that transparency could be 
achieved in a collaborative environment.  
124.  Canada  thanked the US for developing another pragmatic approach to enhancing 
transparency with respect to questions and answers and the notification process in general. It was 
looking forward to further discussions and hearing from other members that might have concerns.  
125.  The European Union  remained supportive and was looking forward to further discussions.  
126.  The Russian F ederation  reiterated that the US proposal could increase administrative burden 
on members with complex state structures and large economies as well as least developed 
Members. At the same time, it noted that compliance with transparency obligations under t he SCM 
Agreement was a crucial element for the effective functioning of the WTO and it was looking 
forward to discussing new alternative approach suggested by the US.  
127.  Chinese Taipei  welcomed this practical and feasible way to enhance transparency and was 
looking forward to discussing this idea further.  
128.  Norway  reiterated its support for the US proposal which seemed directly relevant to 
improving timeliness and completeness of notifications. Norway remained open and flexible to 
explore the possibility of suc h a mechanism, including the new idea presented by the US.  
129.  New Zealand  expressed its support for the US proposal and noting the flexible approach of 
the US, invited members with concerns to share their suggestions to resolve them.  
130.  China  recalled its posit ion on this issue at the previous meetings and noted that in addition 
to capability it was also about the legal balance established during the negotiations on the relevant 
articles of the SCM Agreement. China's view was that the requirements in the US prop osal for 
written answers and setting compulsory deadlines were inconsistent with the requirements of the 
SCM Agreement. With respect to the Australian proposal, China noted that the title of Annex C was 
clear that it was about the requests from Members. It  asked how the annex could be changed as 
proposed by Australia while there had no written Q&A procedures agreed by all members.  
131.   India appreciated the US for its flexibility and noted that its view on this proposal had 
remained unchanged because of three p oints one of which had been expressed by China by saying G/SCM/M/97  
 
- 16 - 
 
  that Members could not upset the negotiated balance between Article 25.8 and Article 25.9 by 
including the word "written". The requirement of a written answer with a negotiated deadline 
would definit ely upset the balance of the text. Secondly, any kind of time limit had to be examined 
from the point of view of practicability. It would be adding burden to countries, developing and 
least developed countries in particular, whose authorities were already stretched. Such timelines 
might not actually yield the results which the proposal was seeking. Thirdly, India noted that the 
proposal stated that all pending questions would automatically remain on the agenda until a 
written reply was provided. This was wo rrisome because who would determine whether or not a 
question had been appropriately answered? A situation might arise that those questions remain on 
the agenda forever. Finally, India indicated that it was going to take this proposal to its capital to 
see how it could sort it out.  
132.   Brazil  noted that it attached great importance to transparency.  It understood from the US 
proposal that the informal consultations between the parties would be to agree on some kind of a 
deadline for the answers to be circulate d in written format. According to Brazil, that did not 
address the fact that had been mentioned by China and India. The authorities in developing 
countries faced overloaded work. Therefore if Members continued to seek a deadline, finding a 
common ground mi ght not be possible. Brazil also recalled India's comment and asked who would 
judge whether the issue had been properly addressed or not.  
133.   The United States  noted that although there were a lot of comments about the deadlines 
that were being imposed, and u nfairness of the deadlines, these were the exact same deadlines 
that Members had when writing questions and providing answers under the normal subsidy 
notification review procedures. With respect to China's comments, the US was trying to be as 
flexible as it could and showed some deference to developing country members who might need 
more time. Regarding the comments on keeping the unanswered Article 25.8 questions on the 
agenda and the comments on deciding whether the questions had been answered, the US ha d 
pointed out that this was done every year and every meeting by the Secretariat. If a member did 
not answer the questions posed with respect to its subsidy notification, those questions remained 
on the agenda. The US noted that it was asking for the same treatment for Article 25.8 questions 
and recalled that Article 25.8 was the text in the Agreement, it was not informal rules that 
governed the Committee or the Secretariat.  
134.  With respect to the deadlines, the US indicated that it was trying to be as flexibl e as possible 
to have a negotiated deadline. Answers should be provided in less than 60 days while some 
questions might need more than 60 days.  
135.  The Chair stated that it appeared that Members wished to continue discussions on these 
issues at the next regula r meeting of the Committee.  
136.  The Committee took note  of all of the statements made.  
6  CONSTANT DOLLAR METH ODOLOGY FOR GRADUATI ON FROM SCM ANNEX  VII(B)  
137.  The Chair  recalled that, pursuant to the Doha Ministerial Decision on Implementation -
Related Issues and Con cerns (document WT/MIN(01)/17, paragraph 10.1), Annex VII(b) to the 
SCM Agreement listed Members until their GNP per capita reached US$1,000 in constant 1990 
dollars for three consecutive years. As of 1 January 2003, the methodology set forth in G/SCM/38, 
Appendix 2 had applied for making those calculations. In accordance with that Decision, since then 
the Secretariat had circulated annual notes in document series G/SCM/110 updating the GNP per 
capita figures for the Members listed in Annex VII(b) based on that methodology. The most recent 
version, Addendum 11, had been circulated in 2014. The Secretariat would circulate updated 
calculations during the summer, when the necessary World Bank data became available.10 
138.  The Committee took note  of the Chair's statem ent. 
                                                
10 G/SCM/110/Add.13  was circulated on 19 May 2016 . G/SCM/M/97  
 
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  7  PERMANENT GROUP OF E XPERTS – ELECTION OF AN EXPER T 
139.  The Chair recalled that the term of office of Mr Zhang Yuqing as a member of the Permanent 
Group of Experts was expiring and that at the present meeting the Committee should elect a new 
member to repl ace him.  
140.  The Secretariat had received five nominations to fill this vacancy, all by the announced 
deadline: Mr Jaemin LEE from Korea, Ms Tsai -yu LIN from Chinese Taipei, Ms Luz Elena REYES DE 
LA TORRE from Mexic o, Mr  Pascuale SAROLI from Canada, and Ms Lan ye ZHU from China. The 
Chair had conducted a process of consultations to hear the views and preferences of Members and 
had also received a number of written expressions of view. A very large number of Members, 
spanning the entire Membership in terms of geo graphy and level of development, had expressed 
views in this matter.  
141.  The Chair indicated that Members' expressions of preference had been clear. Of the five 
candidates, one – Ms Luz Elena Reyes de la Torre – had received the most support by a 
considerable margin. He recalled that he had explained the procedures he had followed and shared 
the results of the consultations with the Membership in a transparency session held on 
4 April 2016. On that date, he had circulated a fax to Members summarizing the proces s and the 
outcome of his consultations. In that fax, he had asked any Member that had not been able to join 
a consensus around the candidate who had received the most expressions of support, 
Ms Luz Elena Reyes de la Torre, to so inform him in writing via t he Secretariat by 11 April 2016. 
He also had noted that Members not expressing any view would be considered to agree to join the 
proposed consensus.  
142.  He recalled his fax dated 13 April 2016 through which he had shared with the Membership 
that no delegation had contacted him. Accordingly, it appeared that there was a consensus to elect 
Ms Reyes de la Torre to the PGE. The Chair thus proposed that the Committee elect 
Ms Reyes  de la Torre to the Permanent Group of Experts, for a term of office to expire in spri ng 
2021.  
143.  The Committee elected  Ms Reyes de la Torre to the Permanent Group of Experts.  
144.  The Republic of Korea  expressed its appreciation for the support extended to Mr Jaemin Lee 
and thanked the Chair and the Secretariat for their efforts during the consult ation process.  
145.  Mexico  thanked the Chair as he had carried a very difficult process in a very transparent 
way. 
146.  The United States  expressed its appreciation to the Chair for his work in seeking and 
developing a consensus. It was very pleased that Members had  been able to avoid the stalemates 
of the past which spoke well of the membership and of the institution as a whole.  
8  IMPLEMENTATION OF TH E SCM AGREEMENT: CRE ATION OF A WORKING G ROUP ON 
THE IMPLMENTATION OF  COUNTERVAILING MEASU RES – ITEM REQUESTED BY BR AZIL  
147.  Brazil  stated that it was t rying to address one straightforward question – what could be done 
to improve the work of the Committee and contribute to the better implementation of the 
SCM Agreement. Brazil invited all Members to reflect their views on the c reation of a Group on 
Implementation under the Committee which could contribute to the substantive work of the 
Committee and in the end to the better functioning of the multilateral trade system. The existing 
activities of the Committee were very useful fo r all Members in order to increase their knowledge 
about national legislations and about specific investigations and certain CVD measures that 
affected Members. All Members had the opportunity to review specific notifications filed to the 
Committee, presen t questions and listen to the justifications supporting the decisions of Members 
in pursuing a certain measure. When Members were not able to agree, they had the possibility to 
take the discussion to dispute settlement system which should be the last resor t to deal with 
differences in the interpretation of the Agreement. However, the scenarios were different at the 
time being; almost half of the 507 disputes in the WTO were related to the trade remedies 
agreements, including AD, SCM and Safeguards, which on ly revealed the difficulty of investigating 
authorities all over the world faced to interpret the multilateral disciplines.  G/SCM/M/97  
 
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  148.  The work in the Committee could definitely contribute to avoid the spate of litigation and 
there might be room for some improvement . Trade defence investigations were complex and 
demanded a high degree of commitment and dedication. It was a fact that technical discussions 
among the experts facilitated mutual understanding. Many Members had already met with 
members of Brazilian authori ty in different occasions in previous years to exchange views on a 
variety of technical topics related to investigations. While these technical exchanges allowed Brazil 
to make other Members understand how it proceeded in the investigations, they also had given 
Brazil an opportunity to better understand how it implemented many of the disciplines of 
Safeguards, Anti -Dumping and the SCM Agreements. Those activities had decisively contributed to 
the quality of work by firstly allowing Brazil to explore new app roaches to technical problems that 
it had to face, and secondly by providing an understanding on how each member proceeded in its 
own investigations. This put Brazil in a better position to defend the interest of its exporters 
involved in investigations ab road. 
149.  Creating such a forum of technical exchange was not related to one specific investigation but 
it was based on a horizontal topic selected in advance by consensus which would provide a chance 
to learn from each other and in the end might allow Members  to find a common approach for their 
problems. The Membership had already accumulated some experience with this kind of activity 
within the Group on Implementation in Anti -Dumping in which Brazil had been a strong advocate 
for substantive discussion and te chnical exchange. It could help members to better implement the 
Agreement.  
150.  Brazil had presented this issue to the appreciation of the Committee. Creating a Group on 
Implementation on subsidies and countervailing measures would benefit all of the Membership . 
Members could work on the same mandate and rules of procedure they had for the Group on 
Implementation in Anti -Dumping and establish that group.  
151.  Costa Rica  was supportive and indicated that Brazil's proposal was interesting given the 
positive experiences  Members had had with respect to the Implementation of the Working Group 
in Anti -Dumping. That could be useful to reproduce a group under the SCM Agreement in order to 
give members a better understanding of it.  
152.  Referring to the similar mechanism in the An ti-Dumping Committee Paraguay  supported the 
proposal which would be an opportunity to solve issues related to procedures and notifications. It 
would also serve to overcome some difficulties faced by Members, particularly developing 
countries. Paraguay also  indicated that it would look at the issue in more depth.  
153.  Colombia  echoed its support for Brazil's proposal indicating that there were good reasons to 
support it.  
154.  Egypt  expressed its support for the proposal and stated that as it had not got experience in  
this area and setting up this working group could be useful for all Members.  
155.  Mexico  supported the proposal which would serve to increase transparency and provide 
opportunity for discussion between Members, allowing discussions on different circumstances and 
complex situations which arose out of the proceedings. That kind of initiative was always going to 
be welcomed in order to help Members to resolve differences. Mexico reiterated its support for the 
proposal and wished to know more about the scope of th e proposed group.  
156.  The Russian Federation  expressed its support for the proposal. According to Russia, 
following the efforts of the Negotiating Group on Rules and at the tenth Ministerial Conference in 
Nairobi the work on all transparency related issues per taining to the Anti -Dumping and SCM 
Agreement should be continued by the relevant Committees.  From this perspective, it was high -
time for the establishment of a Working Group on Implementation of the SCM Agreement, similar 
to that existing for the Anti -Dumping issues. The Working Group's core objective should be 
clarification and specification of the provisions of the SCM Agreement, pertaining to countervailing 
measures in particular. It should create neither additional obligations nor opportunities to dev iate 
from the existing ones. As in the case of the initiative to create a similar mechanism for 
implementation of the Agreement on Safeguards, preparation of recommendations for subsequent 
consideration and adoption by the Committee on Subsides and Counter vailing Measures should be 
the main task of this Working Group. Its work should be concentrated to the issues of common G/SCM/M/97  
 
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  interest in particular where consensus could be achievable and where discussion would be deemed 
helpful. Russia believed that the group would easily identify the areas where Members could agree 
on and hoped for the early start of the Group's work.  
157.  China  recalled its intervention on Brazil's proposal for establishing a Working Group on 
Implementation under the Safeguards Committee. Bearing in mind the importance of the mandate 
on Rules Negotiations it would be beneficial for all Members to enhance their regular work in the 
Rules Committees. China thus supported the proposal for establishing a Working Group on 
Implementation under this Commit tee, which would provide more opportunities for exchange of 
experience on laws and practice of CVD investigations. It would be helpful in establishing 
consensus among Members on how to clarify and improve the rules of trade remedies as required 
by their ma ndate.  
158.  Chile supported the proposal and looked forward to discussing the details of it.  
159.  The Republic of Korea  thanked Brazil for its proposal and efforts to enhance transparency 
and looked forward to further discussions on it.  
160.  Canada  supported further cons ideration of the proposal, as those types of information 
exchanges were useful for promoting greater transparency and understanding of others' respective 
systems. Given the complexity of those proceedings it was helpful to share respective 
interpretation o f the Agreement and best practices. The recently reinvigorated Working Group on 
Implementation in the Anti -Dumping context would inform Members' discussion of how and in 
what way the Membership should expand the Working Group on Implementation to the other  
Committees. At the meeting of the Safeguards Committee there had been a suggestion that a 
formal proposal would be helpful to further discussions on the issue which Canada would 
encourage.  
161.  Chinese Taipei  welcomed efforts to reinvigorate the Committee's re gular work in line with 
Paragraph 29 of Nairobi Ministerial Declaration to enhance transparency and looked forward to 
further discussions.  
162.  Norway  indicated that in principle it supported reinvigorating and strengthening the regular 
work of the Committee, in line with the agreement of the Ministers in the 10th Ministerial 
Conference. It welcomed any proposals to this end. Of course a working group should be 
established only if its existence was justified and it could contribute positively and indeed activel y 
to the Committee work. With regard to countervailing duties, this might be the case. Norway also 
noted that countervailing measures were not the most frequently used trade remedy. For this 
reason, Norway was still considering whether a working group with  the suggested mandate might 
play such an active role. Norway indicated that it would reflect a bit further on the proposal, in 
light of Brazil's presentation and other Members' reaction. It was open and flexible and looking 
forward to continuing the discu ssions.  
163.  Peru looked favourably upon the idea of setting up this kind of working group because more 
could be done by looking at the practices undertaken by national authorities. It looked forward to 
further details in order to make progress on this issue.  
164.  According to Japan,  exchange of knowledge on CVD implementation was important for all 
Members. Japan suggested that Members could discuss other issues raised in the Committee such 
as transparency within the proposed group. It was looking forward to further discussions on the 
scope of this group.  
165.  Australia  noted that it attached great importance to transparency. It was prepared to discuss 
this proposal further, but there were a couple of points which were also raised by some of the 
other Members. Australia dr ew attention that this was a trade -remedy instrument that fewer 
Members utilized; therefore a better clarity on the scope of the working group was needed. There 
were similar procedures between countervailing duty investigations and anti -dumping 
investigati ons. Although they were two different agreements, there were some similarities. Thus a 
working group on implementation on countervailing duty practices might be somewhat duplicative 
in terms of what was going on in the Anti -Dumping Committee. For that reas on Australia asked 
Brazil to provide further clarification on that issue. Australia said that Members’ experience of the G/SCM/M/97  
 
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  re-focused Working Group on Implementation in the Anti -Dumping Committee, which was going 
very well , could inform Members in the contex t of similar mechanism in the SCM Committee . 
Australia was pleased to continue to consider Brazil's proposal but needed to think clearly on 
whether this was a burden that would fall on a few Members, given the recourse to the CVD 
mechanism and how it would  operate vis -à-vis the work in the Anti -Dumping Committee. Australia 
looked forward to discussing with Brazil and other Members the precise details of the proposal.  
166.  The European Union  indicated that it was ready to discuss issues that would contribute to 
the better functioning of the SCM Agreement and the work of the Committee. However the EU also 
bore in mind that the main and more urgent problem that this group was facing was not the CVD 
practices of Members but the more disturbing problem on the lack of  transparency through full 
notification of schemes by Members and therefore it would be ready to discuss on that basis.  
167.  Morocco  found the proposal useful as it would provide more information for Members, 
developing ones in particular, given the complexity of such procedures.  
168.  Turkey  expressed its support to the proposal and hoped that establishing a working group 
on implementation would enhance the opportunity to exchange of experiences between 
experienced and less experienced countries in CVD investigations . It also noted that it was looking 
forward for further details.  
169.  Indonesia  supported the proposal and stated that the creation of the working group would 
be for the benefit of all Members and increase transparency. It noted that it was waiting for the 
detailed proposal.  
170.  The Dominican Republic  joined others who had supported the proposal. It indicated that it 
would be beneficial to exchange experiences on countervailing measures and was waiting for more 
details.  
171.  The United States  noted that the key question was "what could members do to contribute to 
the work of the Committee" as asked by Brazil and it would support anything along those lines. 
However, it was not what the agenda item said. The US associated itself with the comments of 
Australia who had noted that the burden of this group, as proposed, might fall on the few of 
Members that were doing countervailing duty investigations much more than others. It also 
associated itself with the comments of the EU, who had stated that the bigger problem with 
respec t to the SCM Agreement was not the countervailing duty investigations but the poor subsidy 
notification record.  
172.  Referring to reactions of other members, New Zealand  noted that there was clearly an 
appetite in this proposal which warranted further considera tion. Because there had certainly been 
some valid questions raised, for example on scope, it would encourage Brazil to provide some 
more details around its proposal and respond to some of those questions.  
173.  India had carefully noted the points made by the Br azilian delegation regarding this proposal 
and it would convey it to its capital. India understood that the idea was to set up a working group 
on the lines of what Members already had in the area. Details in written form explaining the 
proposal would be he lpful and facilitate the consideration by its capital. As a preliminary comment, 
India indicated that it was open to considering the idea of setting up a similar kind of institutional 
mechanism as in the Anti -Dumping Committee to discuss implementation -related issues regarding 
the SCM Committee. All Members would agree that there were many similarities between these 
two trade remedy instruments and sharing of experiences between the more experienced and the 
less experienced members could be useful for all m embers. India looked forward to hearing the 
views of other Members and participating in further discussion.  
174.  Brazil  noted that this was not a formal proposal. It had wanted to test the idea with 
Members to see whether the Membership would at least agree tha t there were ways to improve 
the substantive work of the Committee. Some Members had identified other problems that were 
not the aim of Brazil's proposal. The idea was to gather investigating authorities to exchange views 
on some specific technical problem s. It was about a better implementation of the Agreement, 
trying at least to avoid questions that might be raised with respect to specific investigations which 
was exactly what Members did in the Committee, but also trying to avoid the path of litigation. G/SCM/M/97  
 
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  Brazil recognized that there were other issues that deserved attention but its proposal was not an 
answer for all the problems that Members were facing in the Committee. Brazil noted the high 
level of support for its proposal, and requested to convene an i nformal session under the 
Committee to discuss the issue further so that it would be easier to come back to that issue in 
October's meeting with some conclusions. Brazil expressed its willingness to draft some sort of 
mandate for the group, which would be the same with the one in Safeguard Committee, to 
replicate the mandate for the Group of Implementation in the Anti -Dumping Committee.  
175.  The United States  stated that it would only agree to move forward informally if the scope 
issues could also be addressed a s discussed.  
176.  Brazil  requested the United States to elaborate what it meant by "scope issues" and what 
points the US expected to be included in that informal session.  
177.  The United States  stated that the European Union had been straightforward on that topic. 
The European Union  reiterated that it was committed to work on improving the working of both 
the SCM Agreement and the work of the Committee, but noted that the more immediate problem 
would be the lack of transparency on subsidy schemes of Members. It refer red to the document 
that the Secretariat had updated under the item "Improving the Timelines and the Completeness 
of Notifications" and drew attention to a dramatic increase in the number of Members who were 
not notifying between 2013 and 2015. According t o the EU this was a more urgent matter at hand 
to help the work of the Committee and the functioning of the Agreement.  
178.  Brazil  confirmed that the point raised by the European Union was an important issue which 
Members had been discussing for a long time in the Committee. Brazil was open to discuss the 
issue of timeliness and completeness of notifications; therefore it had no problems to see whether 
it could be addressed in that informal session. Brazil reiterated that its proposal was mainly 
directed for tho se Members that had investigating authorities. It noted that some Members had 
raised the issue of burden for them, but similar to the Anti -Dumping Committee it would not be 
mandatory to share experience in this group. Brazil indicated that it was open to a ddress or 
discuss further the proposal on timeliness and completeness in informal sessions and asked the 
Chair to convene one in the future.  
179.  The Chair  noted that it appeared that a number of Members were ready to explore Brazil's 
proposal to create a CVD I mplementation Group, and also, there were Members which had 
questions and suggestions including scope of the working group. In the light of this reaction, the 
Chair suggested to leave this issue to the next Chair to determine any next steps, including the 
option of organizing an informal consultation.  
180.  The Committee took note  of the statements made.  
9  NON-NOTIFICATION OF CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 2011, 
2014 AND 2015 REQUES TS BY THE UNITED STA TES UNDER ARTICLE 25 .10 OF THE SCM 
AGREEMENT – ITEM  REQUESTED BY THE UNI TED STATES  
181.  The United States  recalled that China had submitted only three subsidy notifications in its 
15 years of WTO Membership all of which had been submitted well beyond the deadlines for the 
periods covered, and had been grossly i ncomplete. Despite previous assurances to include sub -
central measures China had yet to notify a single subsidy administered by a local or provincial 
government. China's subsidy notifications suffered not only from significant under -reporting, but 
also fro m substantial over -reporting of programmes that could hardly be considered "subsidies" 
under the SCM Agreement, such as social -welfare programmes designed to alleviate poverty or 
promote employment and subsidies for HIV medications. This inflated the alrea dy limited number 
of programmes reported. Following years of frustration during which the US and other Members 
had raised concerns and after fair warning, in October 2011 the US had pursued the "counter -
notification" procedure of Article 25.10, listing app roximately 200 central and sub -central 
government subsidy measures and requesting China promptly to notify those programmes or to 
explain why they should not be notified. For transparency purposes, the US had included 
translated copies of every underlying legal measure although it was not required under 
Article  25.10.  G/SCM/M/97  
 
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  182.  Although the US had made many of these points before, it was important to repeat a 
number of key observations regarding the subsidy measures included in its 2011 Article 25.10 
request.  
183.  First, over half of the programmes mentioned therein were at sub -central level, supporting 
the long -standing US position that sub -central programmes were critically important in China, as 
actual implementation of central government industrial subsidy policies wa s often, if not normally, 
the responsibility of the sub -central governments. It also appeared that sub -central governments 
had a degree of freedom to implement some programmes according to local conditions. This could 
complicate the nature of any central g overnment "programme", as sub -central governments might 
provide slightly different subsidies while implementing the central government "programme". The 
ongoing research by and actions of the US continued to demonstrate unequivocally the critical role 
playe d by sub -central governments in the implementation of subsidy policies in China. A subsidy 
notification from China that did not include sub -central programmes was simply not a full 
notification.  
184.  Second, the Committee previously had discussed the importance  of China's five -year plans. 
China had responded that five -year plans and other industry plans did not establish subsidy 
programmes. Whether or not this was true in a narrow, technical sense, it was nevertheless clear 
that China's industrial plans were the  blueprints pursuant to which actual subsidy programmes 
were designed and implemented. This was relatively clear, in particular, when examining the 
fishery measures that the US had recently counter -notified.  
185.  Third, certain Chinese subsidy programmes were i n place for a short period, such as two 
years, and then were replaced by other measures. This underscored the importance of China 
notifying its subsidy programmes on a regular and timely basis. If this did not occur, many 
programmes would have come and gon e without any notification provided during the time that the 
programme had actually been in effect.  The result was little, if any, meaningful transparency, 
contrary to the intention of Article 25.  This could be seen with respect to the notification that 
China provided in the fall of last year, where it covered programmes in the twelfth five -year plan, 
but not the twelfth five -year was over and new programmes would likely be implemented under 
the new thirteenth five -year plan.  
186.  Fourth, insisting on a compl ete and timely notification of China's specific subsidy 
programmes had meaningful implications beyond the necessary transparency obligations. The 
subsidy measures identified in the submission appeared to include some prohibited export and 
import -substituti on subsidies.  
187.  Fifth, the fact that the US compiled and analysed all of the information included in its 2011, 
2014, 2015 and 2016 Article 25.10 submissions – all from publicly available Chinese government 
sources – cast doubt on China's repeated claims tha t it lacked the ability to collect and report the 
same information, especially after more than 15 years of WTO Membership. China was the world's 
largest exporter and it was verging on becoming the world's largest economy; claims of capacity 
constraints wer e difficult to take seriously. In previous meetings, China had provided some 
information orally and had stated that numerous programmes from the US first counter -
notification had already been notified. Although the information China had provided was a help ful, 
initial response to the US counter -notification, it fell far short of what was required. Even if the US 
had accepted all of China's arguments that a certain programme had been previously notified, 
which it did not, there remained many uncontested meas ures that China had failed to address in 
any manner and another 44 measures had been added. Such technical issues were better solved 
bilaterally. Unfortunately, while China's past interventions had portrayed a sense of outrage and 
indignation, China seemed  to be quite reluctant to defend its arguments in a bilateral meeting.  
188.  All of the US counter -notifications after 2011, in 2014, 2015 and 2016 had followed the 
same pattern. The US had first submitted questions under Article 25.8, often identifying 
specific ally the underlying legal measure at issue. It waited for months and sometimes years for 
answers that never came although under Article 25.9, a Member had to respond "as quickly as 
possible and in a comprehensive manner". The US had resorted to the Article  25.10 counter -
notification mechanism only after waiting for a response to its Article 25.8 questions for more than 
two years.  G/SCM/M/97  
 
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  189.  The US' previous counter -notifications had covered important sectors for Members; 
particularly noteworthy in the existing environ ment was steel. China was the largest steel producer 
and exporter in the world. It had recognized that over -capacity was a severe problem in the steel 
sector and that all too often, zombie companies, could not go out of business, because they were 
too impo rtant to the local economy and were consequently kept alive by local government support. 
China's own steel association had made this very point and still, China had yet to notify a single 
steel subsidy measure. And yet, it was clear, not only from China's steel trade association, but also 
from previous steel -related legal measures, that the government of China was very much involved 
in China's steel industry. For example, the central government's steel industry adjustment and 
revitalization plan of 2009 sta ted that "special funds were available for the investment in capital 
construction within the central budget, and known for supporting the technical reconstruction of 
steel enterprises (…) technological R&D and technology introduction to push forward the 
technological process of the steel industry."  
190.  Despite the specificity of the above -referenced measures, China often indicated that such 
planning documents did not establish support programmes. But even the steel companies 
themselves divulged that they had re ceived significant subsidies from the government. The US had 
provided a room document in the back that was a simple listing of subsidies found in the public 
documents of one of the largest steel companies in China.  
191.  The US would admit that each and every on e of these support measures may not meet the 
technical definition of a specific subsidy under the Agreement, but surely, many of them did, 
although none had been notified. It appeared from the lack of a single steel -specific subsidy 
programme that China's position was that it did not subsidize its steel industry. Finally, as it was 
seen in the news in previous week, China's bank regulators, had recently instructed banks in 
China, to relax financing constraints and increase direct funding to the steel indust ry. While the 
technical nature of any ultimate benefit to the steel industry might be unclear at this point, it 
appeared as if the steel industry would benefit, if not from the better terms on its borrowings, 
from better access to bank financing.  
192.  The US no ted that China as the world's largest exporter and as a leader in this institution 
had a responsibility to abide by its obligations. The US recognized that it was every WTO Member's 
right to decide the degree of government intervention in its economy. Ever y Member also had 
agreed that its subsidies were subject to the WTO rules and to the transparency obligations that 
were central to the proper functioning of the Committee. It had been unfortunate that the US had 
repeatedly had to resort to the counter -notification mechanism which it did so reluctantly. But 
China's latest subsidy notification demonstrated that hundreds of measures were not being 
notified. The US reiterated its willingness to meet bilaterally to discuss the specifics of the 
measures in its 20 11, 2014, 2015 and 2016 Article 25.10 submissions.   
193.  The US urged China to abide fully by its subsidy notification obligations under the SCM 
Agreement, and stood ready to work with China to take concrete steps to move rapidly toward a 
subsidy notification that would present the full picture of its subsidy regime in a clear and 
transparent manner.  
194.  China  believed that the purpose of counter -notification under Article 25.10 of the SCM 
Agreement should be to promote timely performance of the Members' obligation  to submit their 
subsidy notifications. Though the US submissions had often ignored what China had already 
notified. As China had clarified at the previous meetings, it had tried its best to make clarifications 
in response at the regular meetings in recent  years, while preparing its latest notification.  
195.  More importantly, China had submitted its subsidy notification at the Central Government 
level up to 2014 in October 2015. These efforts should have been able to address most of the US 
concerns in its submi ssions. As for the items at sub -central government level mentioned in the 
submission, some of them had already been clarified by China's intervention at the Committee's 
previous regular meetings and the rest could be addressed, by and large, by China's not ification on 
subsidies at the sub -central government level which was going to be submitted soon. US could 
have its own opinion on the measures notified by other Members, be it over -reporting, or under -
reporting; however as it had already been reiterated an d repeated several times by China, it was 
up to notifying Member, to decide which policies to include in its own notification based on its 
understanding of the SCM Agreement. The notification obligation was transparency oriented and 
had no legal weight as to actual identification or measurement of a subsidy, or its status. This G/SCM/M/97  
 
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  exact sentence could be found on the cover of the US notification of subsidies submitted to the 
WTO as well. Since Chinese authorities had no further feedback on the US submissions u nder this 
agenda item, at this moment China did not have any further update to share with the US.  
196.  Regarding the lack of notification for the sub -central government level notifications, China 
referred to its statement made at the special meeting of the Com mittee and reiterated that it was 
in the final stage of the domestic procedure in completing and submitting this notification to the 
WTO. On the second point raised by the US about the relationship between the policies at central 
and local level, China dis agreed with the argument that the local authorities implemented or 
formulated specific policies at the direction of the Central Government. China stated that it would 
welcome any evidence the US had and it might be more appropriate to discuss this issue at  
another forum.  
197.  China referred to the statement made by the US in which it stated: "although China claimed 
that some or several of the items included in the US submissions were already notified by China 
(…)" and noted that it was not what China "had claime d", it was what China had submitted either 
in its latest or previous notifications. It was true that China had submitted only three notifications 
but this did not impair the fact that it had submitted full notification for all 15 years. In addition 
China w ould submit the sub -central government notification soon and invited all Members to pay 
close attention to this notification.  
198.  China reiterated its call for the US to carefully study its notification and check whether it was 
true that the identified item ha d been already notified. This could save the US from counter -
notifying the already notified items and prevent China to conduct unnecessary repeated 
verifications and clarifications which had been preventing China's efforts to submit its notification 
in a q uicker fashion.  
199.  With respect to the point raised by the US on steel, China stated that it was not a common 
practice for the Committee to have a room document - if it could be called as such - like the one 
submitted by the US, because the source of informati on provided was not clear. Neither a web link 
nor any other source had been cited. It was strange for any Member to anonymously circulate 
ungrounded materials irrelevant to the meeting agenda. China suggested that the best approach 
was to focus on the noti fications under the review of the Committee and have meaningful 
communications among Members. Regarding the over -capacity in steel industry, China noted that 
it was not a problem unique to China; it was a global problem and that was the reason for 
convenin g a high -level meeting in Brussels previously. This Committee was not the correct forum 
to talk about this specific problem.  
200.  China invited once again the US to focus on the latest version of its notification and 
earnestly study it and ask the relevant ques tions. China had already handed its written response 
to the US although the questions raised had been received after the deadline. China indicated that 
this demonstrated how sincere and how truthful China had been in honouring its transparency 
obligations under the SCM Agreement. China welcomed any further questions from the US on its 
notified programmes which showed its willingness to provide as much information as possible so 
as to facilitate better understanding of its notification.  
201.  The United States  noted that China was urging the US to carefully study its previous subsidy 
notifications which the US had done. The US had done that very carefully and methodically and 
was ready to sit down with China to review its process. China was not ready to sit down w ith the 
US and this indicated something. The one could add up all of the programmes that China had 
referred to in its interventions over the last couple of years, but there would still be dozens of 
programmes that it had not said anything about. According to the US, it was uncontested that 
those measures should have been notified.  
202.  With respect to whether or not there was direction from the central government to the sub -
central governments, the US would point China to any number of its consultation requests that the 
US had filed in the previous three or four years. It was relatively clear that central government 
programmes were developed in conjunction with sub -central governments and sub -central 
governments were directed to implement or provide their own sou rce of funding.  G/SCM/M/97  
 
- 25 - 
 
  203.  Regarding China's comments on the room document, the US stated that although it was not 
sure whether there were procedures or not, it had identified the document as its own, not 
anonymous. The document very clearly indicated that the infor mation was from publicly available 
documents of the steel company that was referred. The US noted that it would keep on asking 
China where the steel programmes were, and the silence was deafening at this point. In addition, 
it was hard to believe that Chin a had not provided a single subsidy to its steel industry. The US 
confirmed that it was up to the notifying member to decide the programmes to notify but it 
recalled that there were rules under the Agreement in that regard.  
204.  China  reiterated that within th e Committee practice, it had provided clarifications or 
explanations to the US regarding its submissions about the relationship between the central and 
the so -called local policy. It was the US' choice not to listen and to insist on the sort of relationshi p 
of direction between these two. China did not know what else it could do to help the US to 
understand that point.  
205.  Regarding the US' claim on China's silence with respect to the steel programmes, China had 
clarified that it had not had a preferential tax  treatment directly granted to iron and steel 
enterprises nor it had had a preferential tax treatment specifically for the purchase of domestically 
produced equipment by iron and steel enterprises. China had also pointed out that many of the 
items in the U S submission had been plans, opinions and catalogues which had been documents of 
guiding nature only and did not involve specific subsidy policies. It was not true that no 
clarification or responses had been provided. China highly honoured and respected th e rules of the 
SCM Agreement. It was for that reason that, after so many years' tremendous effort it had 
managed to submit its latest version of the central -government level  policy notification in 
October  2015, even earlier than the United States.  
206.  The United States  noted that there was nothing nefarious about having coordination 
between central and local governments. The United States Federal Government and local 
governments cooperated often in delivering assistance programmes. It stated that it would brin g 
documents on Chinese legal measures for the next meeting to review.  
207.  Regarding the steel question, the US reiterated that it seemed like China had not provided a 
single subsidy to its steel industry and asked Members to think about that and look at the ro om 
document.  
208.  China  clarified that there was cooperation between the central government and the local 
governments; but the central government did not give directions to the local governments.  
209.  The Committee took note  of the statements made.  
10  NON-NOTIFICATION  BY CHINA OF ALLEGED SUBSIDIES CONTAINED IN THE 2016 
REQUEST BY THE UNITE D STATES UNDER ARTIC LE 25.10 OF THE SCM AGREEMENT – 
ITEM REQUESTED BY TH E UNITED STATES  
210.  The United States  noted that in China's most recent TPR, in May 2014, the Secretariat had 
repor ted that it had uncovered information on 30 support programmes for China's fisheries sector. 
The Secretariat's Report had noted that China had not notified any of these programmes to this 
Committee and further that China could not confirm that any of the p rogrammes were even in 
effect. In the course of the trade policy review process, many Members had asked questions about 
these programmes. China had not provided any substantive response to these questions stating 
that it needed more time to identify and ve rify information regarding these support programmes.  
211.  Beginning with the support programmes uncovered by the Secretariat in China's TPR report, 
the US had performed further research and uncovered information on additional support 
programmes appearing to ben efit China's fisheries sector. In 2015, it had submitted questions to 
China under Article 25.8 with respect to the support measures found by the Secretariat in addition 
to programmes that the US had uncovered independently.  
212.  The US still had not heard from China with respect to its Article 25.8 questions on fisheries 
subsidy programmes. The dire state of the world's fisheries had led to calls for greater disciplines 
on fisheries subsidies that contributed to overfishing and overcapacity, beyond the obligatio ns of G/SCM/M/97  
 
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  all Members to notify their subsidy programmes under Article 25 of the SCM Agreement. While 
reaching an agreement on such disciplines had been difficult, countries had recognised that an 
initial step should be greater transparency with respect to the  existing fisheries subsidy 
programmes. For example, in August 2014, at the 4th APEC Ocean Related Ministerial Meeting, 
APEC Ministers had agreed to the Xiamen Declaration. Paragraph 21 of this Declaration stated: "In 
light of the Rio+20 outcome document, particularly paragraph 173, we encourage APEC members 
to further improve the transparency and reporting of existing fisheries subsidies programmes 
through the WTO, and to eliminate subsidies that contribute to overcapacity and over -fishing, and 
to refrain from introducing new such subsidies, without prejudice to the WTO Doha negotiations." 
China had never yet notified a single wild capture fishery programme in its 15 years of WTO 
membership.  
213.  Given the lack of any meaningful response from China to its Articl e 25.8 questions, in 
April 2015 the US had filed its fourth Article 25.10 submission counter -notifying over 40 fisheries 
subsidy measures in China. Overall, the US had counter -notified nearly 400 subsidy measures in 
China. The US noted that this Article 25 .10 submission was based entirely on the programmes 
previously identified in its Article 25.8 request to China which had been submitted in 2015 and 
never answered by China. Although it was not required by the Agreement, the US had translated 
nearly 300 pag es of all relevant measures that China was obligated to notify pursuant to its 
protocol of accession commitments. The US had resorted to the Article 25.10 counter -notification 
mechanism only after a year had passed without any meaningful response from Chin a, or any 
timeframe as to when a response might be forthcoming.  
214.  The number, variety and substantial nature of programmes in the US submission on China's 
fishery support programmes was quite noteworthy. The list included a multitude of programmes 
for fishin g vessel acquisition and renovation; a 100 % corporate income tax exemption for pelagic 
fishing enterprises; grants for new fishing equipment; subsidies for insurance; subsidized loans for 
processing facilities; fuel subsidies; preferential provision of wat er, electricity and land; grants to 
explore new offshore fishing grounds; grants for establishing famous brands; and special funds for 
strategic emerging industries in the marine economy.  
215.  Perhaps most important were the support programmes China had in plac e for its distant 
water fleets. The particulars of these programmes appeared to be implemented mostly by the 
provinces. Members should read these measures for themselves and reach their own conclusions, 
but the US was of the view that it would be instructi ve to highlight three measures in particular. 
The first legal measure was Annex VIII on page 60 of the US submission in which the province 
stated that, it would, "implement the hundreds of thousands of fishing vessels upgrading and 
reconstruction project, by 2020, it would complete the upgrading and reconstruction of 100 distant 
water fishing vessels, reconstructing 1000 domestic fishing vessels for equipment modernization 
and reconstructing 10,000 wooden fishing vessels with fibre glass material."  
216.  The sec ond legal measure could be found in Annex V on page 39 of the US submission, in 
which the relevant province stated, "by the end of the Twelfth Five -Year period, the province was 
planning to have 400 distant water fishing vessels with the fishing output at 280,000 tonnes, the 
output value of 2.5 billion yuan and to accelerate the expansion of the distant water fishery."  
217.  The third legal measure was in Annex XIII on pages 90 -92 in which the relevant province 
stated that it would "strive to increase the scale o f distant water fishing vessels in the entire 
province to 700 vessels, by 2017, with distant water capture production of 600,000 tonnes and 
output value of 8 billion yuan, as well as cultivating 10 leading enterprises in the distant water 
fishing industry with output value of more than 100 million yuan and establishing 15 domestic and 
international distant water fishing industrial bases." Although perhaps not involving subsidy 
measures but perhaps indicative of its intention to scale -up significantly, later  in the same 
measure, the province stated it would "strengthen the basic skills and officer training for crew 
members in the distant water fishing industry: with the support of the Xiamen Ocean Vocational 
College, provincial marine technology schools and o ther top -level training institutions for crew -
members in the fishing industry, 1000 officers in the distant water fishing industry and 3000 crew 
members in the distant water fishery would be trained annually."  
218.  According to the US, it appeared China was, or  rather had been, aggressively expanding its 
distant water fishing fleet despite the fragile state of the global fisheries. The most subsidy types 
could be provided to a Member's fishing industry, but all Members had an obligation to notify their G/SCM/M/97  
 
- 27 - 
 
  programme s and pursuant to the Xiamen Declaration and other international initiatives, countries 
were seeking to increase the level of transparency of their fisheries subsidies programmes and to 
refrain from introducing new subsides or from extending or enhancing t he existing subsidies.  
219.  The US noted that all of the big producers such as the US, the EU, Japan, Korea, Australia, 
Brazil, and India had fishery subsidies, and that they all notified them. The SCM Agreement 
allowed Members to provide nearly every type of s ubsidy and for whatever reason, fish products 
had not been a common source of trade friction. The US did not understand the reason for China's 
failure in notifying a single wild capture programme in 2001, following its accession to the WTO, or 
in its first  two notifications, or following the US' second counter -notification which had included 
several fishery support measures, or following its TPR report, or following the Xiamen Declaration, 
or following receiving Article 25.8 questions, or in its most recent  subsidy notification. Given the 
rapid depletion of the world's fisheries, the US again requested China to join those seeking a 
solution, which could start with Members putting all of their programmes on the table for all 
Members to see.  
220.  China  indicated th at it had received the US submission shortly before the meeting and was 
still verifying its contents. Following a rough look, however, it had found that some programmes 
that China had already notified had been once again listed in that document. For exampl e, Item 
No. 35 in the submission, Announcement on Issues Concerning Preferential Enterprise Income Tax 
for Agriculture, Forestry, Animal Husbandry and Fishery Projects (SAT Circular No. 48 of 2010) had 
been listed as Programme No. 42 in China's latest noti fication of subsidy at central government 
level.  
221.  Item No. 42, 2014 – Guidance of the Ministry of Agriculture on the Implementation of 
Subsidies for Purchasing Agricultural Equipment (Nong Ban Cai No.6 of 2014, dated 
12 February  2014) had been included in C hina's latest subsidy notification as Programme No. 47.  
222.  China noted that the importance of studying carefully a Member's notifications and raise 
relevant questions could not be overemphasized. China recalled that in October 2015 meeting, the 
US had said t hat there had been only three programmes related to fisheries. But it had just said 
that China had not notified a single programme of fisheries over the previous 15 years. In order to 
avoid this kind of voluntary judgment, China invited the US to study car efully the notifications 
submitted by a Member seriously, thus avoiding itself the trouble of counter -notifying what had 
been already notified by others and alleviate the burden of unnecessary repeated verifications by 
others. China believed that the energ y and time of all Members should and could be spent better 
on the notifications under the review of the Committee. China noted that it would still provide 
feedback, to the specific US submission in due course according to its verification results.  
223.  Regardin g Programme No. 35, the United States  asked China whether it knew that in its 
previous notification it specifically had said that the benefit at issue had been a 100 % tax 
exemption for fishermen.  
224.  China  indicated that during the course of the last session o f China's TPR in July 2014, it had 
provided a detailed answer to the question asked by the US and asked the US to refer to that 
response.  
225.  The United States  noted that the reason for bringing up the tax exemption programme was 
that notification of China had  not explained the fact that it also provided a 100 % tax exemption for 
certain fishermen. Hence, the important thing was the level of details. According to Article 25.3, 
the content of the notifications should be specifically specific to enable other Membe rs to evaluate 
the trade effects and to understand the operation of notified subsidy programmes. More details 
were needed in China's notification to know the full range of potential benefits which were being 
provided under a particular programme.  
226.  The seco nd example was the strategic emerging industries programme that China had 
notified. The US had counter -notified many measures under this programme last year. It had been 
a very wide ranging programme in which provincial measures and measures covering vario us 
sectors had been cited. China had notified the strategic industry programme but it had been a very 
bare-bones notification. If it had not been known that there had been provincial and sectoral 
variance on this particular programme, the full nature and o peration of the programme would not G/SCM/M/97  
 
- 28 - 
 
  have been known. The US might have counter -notified a programme or a measure due to such 
kind of lack of detail in China's notification. The question of how much detail should go into a 
notification was a fair question; however, when a member had many measures that were 
providing different types of benefits to different sectors, all of that should be clear. Simply pointing 
to a single measure that set out the overarching policy did not give other members a clear sense 
on the operation of the programme.  
227.  China  noted that it had not submitted its notification for the US. China had done that in 
order to observe its WTO obligations; this was required by the SCM Agreement. If the US had 
expected that all or most of the items, th at it deemed to be notified were included, it had to be 
disappointed. Regarding the details of the notification, China indicated that it had been strictly 
live-up to the format of the notification improvising all the items required. China agreed that the 
level of details could be discussed because not always much detail could be found at the other 
Members' notification including that submitted by the US. These technical issues could be well -
discussed surrounding the notifications submitted by Members. China  had reiterated its readiness 
to discuss and interact around its notified programmes, and to provide as much information as 
possible, as requested by Members. To this end, the obligations under Article 25.1 and Article  25.8 
should be differentiated.  
228.  The United States  noted that it looked forward to further discussion of the fishery measures 
that were included in its Article 25.10 submission.  
229.  The Committee took note  of the statements made.  
11  ELIMINATION OF EXPOR T SUBSIDIES FOR TEXT ILES AND APPAREL BY INDIA 
PURSUANT TO ARTICLE 27. 5 OF THE SCM AGREEME NT – ITEM REQUESTED BY TH E 
UNITED STATES  
230.  The United States  recalled the Secretariat's calculations on export competitiveness of Indian 
textile and apparel products according to which India had reached export competit iveness no later 
than 2007. Therefore, India had an obligation – at least since 2007 – to gradually phase out export 
subsidies provided to numerous products in the textile and apparel sector. The eight year phase -
out period had ended, meaning that all expo rt subsidies to India's textile sector should have 
already been terminated. India had recently released Foreign Trade Policy for 2015 -2020 
recognized the need to terminate certain programmes. Unfortunately, it did not establish any 
procedural framework as to how this would be done and it appeared to target 2018 as the 
operative date for termination. More disturbingly, recent press releases indicated that the 
government had extended another programme which provided preferential interest rates – the 
interest subsidy scheme for exporters. In addition, under the new foreign trade policy, the 
Merchandise Exports from India Scheme (MEIS) export incentives had been extended to units 
located in Special Economic Zones (SEZ) as additional benefits. The MEIS provided e xporters an 
import duty credit based on the value of their exports and possibly had a domestic content angle 
by providing a "higher reward" for exports with "high domestic content and value addition". Textile 
and apparel was among the sectors covered by th e programme and the United States was one of 
the targeted export markets. According to recent press releases from the Government of India 
there were also some very substantial benefits going to India's textiles and garment sector under 
the SEZ programme. I ndia seemed to have taken a step backward in meeting its obligations under 
the SCM Agreement.  
231.  In light of the recent Annex VII calculation updates issued by the Secretariat, which 
suggested that India was expected to reach the per capita GNP threshold in 2 017, the US urged 
India as a first step to eliminate those export subsidies which benefited the textiles and apparel 
industries.  
232.  The US had made clear to India that it would welcome further dialogue on these issues in 
the context of their continued bilater al engagement. Unfortunately, while this issue had been on 
various bilateral agendas, the absence of Indian Government officials with direct knowledge of the 
programmes had prevented meaningful discussion. The US noted that it remained open to 
substantive bilateral discussion of this issue while its patience wore thin.  G/SCM/M/97  
 
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  233.  India recalled its previous interventions on this issue, and was committed to meeting its 
obligations under the SCM Agreement in time. India expressed its commitment to engage 
constructively in the clarification of the obligations under Articles 27.5 and 27.6, in particular the 
definition of "product", the coverage of tariff lines, where and when export competitiveness was 
reached and when the eight year phase -out period would begin. According ly, India considered that 
since the information on the export competitiveness was provided in 2010, the eight year phase -
out period would begin from 2018. As mentioned by the US on the MEIS, many of the schemes 
were in the nature of remission or refund of duties on inputs used in exported goods, which were 
not export subsidies schemes and some of which had been discontinued. A number of them had 
been removed from or rationalised in the Foreign Trade Policy of 2015 -2020. Further, while the 
government had not  set out any procedures regarding domestic content requirement, domestically 
manufactured goods were entitled to apply for subsidies, as per the SCM Agreement. India 
renewed its commitment to meet bilaterally with the US and requested the US to keep India in the 
loop.  
234.  The Committee took note  of the statements made.  
12  GOVERNMENT SUPPORT F OR THE CANADIAN AIRC RAFT INDUSTRY – ITEM 
REQUESTED BY THE UNI TED STATES  
235.  The United States  noted that it had long had concerns about Canadian federal and provincial 
support to  the development of the C Series aircraft. These concerns dated back to 2008 and many 
of the US questions about this financing had gone unanswered by Canada. The US had new 
concerns about recent reports of possible Canadian Federal and Quebec Provincial Go vernment 
funding to support the bombardier C series jetliner.  
236.  In October 2015, Bombardier had announced a memorandum of understating under which 
the Government of Quebec was to provide 1 billion dollars to establish a joint venture with 
Bombardier to deve lop the C Series aircraft. In addition, according to various press reports, 
Bombardier was also seeking 1 billion dollars from the Government of Canada to support the 
development of the C Series. The US urged Canada to agree to discussions between two 
governments for the purpose of exchanging views on that funding and the extent to which there 
could be assurances, that it would not distort the market for commercial jetliners or contravene 
the WTO rules.  
237.  Canada  stated that as a strong supporter of rules -based trade it was committed to upholding 
its WTO obligations including with respect to the SCM Agreement. The Government of Canada took 
its WTO obligations into account when considering any potential support. Keeping these obligations 
in mind Canada had also endeavoured to support economic growth in a variety of sectors such as 
through support for innovation, research and development. Aerospace was a sector of strong 
importance to Canada as it was to other aircraft producing countries. In this regard Canada no ted 
that the governments of all major aircraft producing countries provided support to their respective 
sectors.  
238.  Canada provided some updates with respect to the media reports that had been mentioned 
regarding recent announcements. With respect to Quebec, it had been reported in media that 
Bombardier and Quebec had entered into a Memorandum of Understanding. However, Canada 
pointed out that nothing else had been announced and Bombardier had not received any payments 
from Quebec. At the federal level, Canada  had not made any commitments to Bombardier and 
assured that if any support had been offered, it would have complied with its international 
obligations. Canada took note of the US concerns and remained prepared to engage further 
discussions, in particular,  as requested in a bilateral meeting.  
239.  The Committee took note  of the statements made.  
13  ENHANCING FISHERIES SUBSIDIES TRANSPAREN CY – ITEM REQUESTED BY TH E 
UNITED STATES  
240.  The United States  explained that it had requested this agenda item to discuss and explor e 
ways of improving and enhancing the transparency of fisheries subsides. It pointed out that 
fisheries subsidies could have significant environmental, economic and social impacts and G/SCM/M/97  
 
- 30 - 
 
  consequently merit special attention. The world's fisheries resources co ntinued to decline and were 
at risk of collapse, with nearly 30 % of all global stocks classified as being overfished by the FAO in 
2014. There was diminishing room for growth in catches through increased fishing effort, with 
61% of global stocks classified  as being fully fished. Despite the state of global stocks, 
governments were continuing to spend billions of dollars on harmful fisheries subsidies which was 
a major contributing factor to the worsening situation. Members needed to develop ambitious and 
effective disciplines on fisheries subsidies which appeared to be no small task. Most immediately, 
Members needed to focus on what they could move forward at the moment and what steps they 
could realistically and practically take in that direction. As global  fisheries were rapidly being 
depleted, action was needed.  
241.  In APEC, the United States and New Zealand had proposed an initiative to increase 
transparency around APEC economy fisheries assistance programmes using strong reporting and 
notification requiremen ts. In 2015, these economies, along with Australia and Peru, had circulated 
a compendium of fisheries assistance programmes in APEC economies. The compendium included 
information on nearly 400 fisheries assistance programmes and was based on surveys of 
government ministries and publically available information. To further enhance the work, the US 
and New Zealand had proposed a reporting mechanism whereby APEC economies would report 
information required under Article 25.3 of the SCM Agreement and to the exte nt possible, 
additional information including the legal authority for the programme, catch -data by species in 
the relevant fishery, status of the fish stocks in the relevant fishery, fleet harvesting capacity in 
the relevant fishery, conservation and manag ement measures in place for the relevant fish stock 
and total imports and exports per species.  
242.  The US was hoping that all other APEC Members would join in this important effort. The US 
had brought this work to the attention of the Committee, given its rel evance to the Committee's 
responsibilities. Many of the concepts that were being discussed in APEC carried forward ideas that 
had been raised before and during the Nairobi Ministerial Conference. Additionally the US believed 
that the Committee could play a n important role in enhancing the transparency of fisheries 
subsidies and it was seeking to discuss and explore actions the Committee could undertake to help 
achieve that objective.  
243.  The US recalled that Article 25 of the SCM Agreement required Members to notify their 
specific subsidies. Unfortunately, all too often Members, including Members with substantial fishing 
fleets and subsidy programmes did not notify their programmes. That issue needed to be 
addressed generally, but also specifically with respect  to fisheries subsidies programmes. The US 
invited Members to initiate a dialogue on steps the Committee could take to enhance the 
information they provided in their fisheries subsidies notification, for example by including 
supplemental information in the  notifications of the sort that had been included in the APEC 
proposal. Such information would build on and complement the existing notification requirements 
of Article 25 of the SCM Agreement.  
244.  The US indicated that the goal of Members should be to ensure  that their notifications 
provided greater transparency that was unique to fishery subsidies programmes and allowed 
better understanding of the operation of the notified programmes. The US was open to other ideas 
and believed that it was time to get starte d on a dialogue that would put Members in the best 
possible position to develop and implement a more substantive and effective set of disciplines, 
with the goal of positively affecting the state of global fisheries.  
245.  The European Union  emphasized the need f or Members to comply with transparency 
obligations of the SCM Agreement and expressed its support for initiatives for improved 
transparency. It thanked the US for the work done in the context of its counter -notification which 
had already been addressed und er Item 10 regarding subsidies provided by China in the fisheries 
sector. Indicating that fish was a good starting point, it suggested that enhanced transparency was 
needed across the board for all sectors and all subsides granted.  
246.  New Zealand  noted that i t shared the concerns raised by the US and others on fisheries 
subsidies. The Sustainable Development Goals and specifically the Target 14.6 adopted in 
September 2015 was a reminder of the urgency of action around that issue and certainly the SCM 
Committee  could play a role in responding to that call to action. While the greatest gain would 
come from ambitious and effective disciplines on fisheries subsidies, enhancing transparency would 
in itself bring benefits. Therefore, transparency was such a central p rinciple to the work of the G/SCM/M/97  
 
- 31 - 
 
  WTO. The issue of compliance with the existing notification obligations was a systemic issue in 
which Members had a shared interest. In this sense, New Zealand welcomed further consideration 
on what could be done to improve Memb ers' notification performance in that area. It also 
welcomed a dialogue on how a notification of fisheries programmes specifically could be enhanced.  
247.  New Zealand indicated that the Committee work could usefully complement Members' 
negotiation efforts on d isciplines more broadly. It suggested first a discussion around the types 
and extent of relevant information that would help Members better understanding the impact of 
fishery subsides and the operations of those programmes. Following that, Members could c onsider 
some of the practical implications around reporting such as feasibility and burden which were 
important issues for many members. It noted that the APEC idea referred by the US with respect 
to fisheries assistance supporting mechanism was one exampl e that Members could take into 
consideration in those discussions. However, the proposals in the lead -up to and during the MC10 
were also other potential sources of ideas.  
248.  Peru agreed with the final objective of the US proposal regarding the development o f 
ambitious disciplines in the area of fisheries subsidies as laid out in the WTO mandate and in the 
Sustainable Development Objective 14.6. The work and the good practices in the area of 
notifications strengthened transparency. In the particular case of f isheries subsidies, these 
constituted a basis for developing disciplines that allowed for the elimination of fisheries subsidies. 
In this context, within the APEC Forum, Peru encouraged the Member economies to support the 
multilateral trade system in order  to achieve this goal .  
249.  Peru estimated that the Tenth Ministerial Conference had revealed once again that an 
agreement to eliminate fisheries subsidies  was not only important but necessary. This was due to 
the trade effect that reduced competitiveness on t he international market, the future availability of 
marine resources, and the sustainability of vulnerable sectors that depended on the fishing sector, 
such as artisanal fishing.  
250.  For that reason, Peru encouraged Members to provide more detailed and more p recise 
information on the programmes they maintained to assist their domestic fishing sector , and 
considered that in a future Committee meeting  Members could discuss categories of information 
suggested by the US , such as the name of the programme, the lega l authority for the programme , 
relevant information on catch by species , and total exports and imports by species, amongst 
others.  
251.  Peru recalled that its proposal in document TN/RL/W /264 dated 21  October 2015  had 
suggested  some of those categories.  
252.  Colom bia noted that it had always supported transparency which helped both monitoring the 
commitments and negotiations. For that reason, the discussion on that issue had to be held within 
both the Committee and the Rules Negotiating Group to see the ways to imp rove transparency 
procedures. Colombia also noted that it would consult the issue with its capital.  
253.  China  recalled Members that they had taken in -depth negotiations on transparency on 
fisheries subsidies at Nairobi and it had engaged in the discussion in a  very constructive way. 
Unfortunately, Members had not reached consensus on that issue which showed that there were 
some difficulties in fisheries subsidies transparency negotiations. The key to resolve those 
difficulties was outside the fisheries negotiat ions. Members could re -start the Rules negotiations to 
resolve all the remaining issues of rules negotiations and enhance the transparency in fisheries 
subsidies as well as other important issues remained at the Rules Negotiations.  
254.  Norway  expressed its co ncern over the dire state of the world's fisheries resources and 
stated that it would continue to seek effective multilateral disciplines on fisheries subsidies in the 
WTO as well as increased transparency. In Nairobi, Norway had joined 27 other Members in  a 
Ministerial Declaration on fisheries subsidies who had announced that they would continue to seek 
appropriate enhanced WTO transparency and reporting to enable the evaluation of trade and 
resource effects of fisheries subsidy programmes. In Norway's vie w, notifications under the SCM 
Agreement were grossly limited and there was a clear need and scope for improvement. The 
Committee could play an important role in enhancing transparency of fisheries subsidies; therefore 
Norway was pleased to discuss actions  that the Committee could undertake to help achieve this G/SCM/M/97  
 
- 32 - 
 
  objective. It was open to explore ways to bring about better compliance and enhance the 
information that Members provided in their fisheries subsidies notifications, without prejudice to 
any position s might be taken in negotiations on this issue.  
255.  Uruguay  noted that it would be able to support any transparency measures to improve the 
situation in this sector. It would pass the information on to its capital and hoped that it would to 
get more specific c omments on the issue for future discussions of the Committee.  
256.  Australia  reiterated that it was a strong supporter of transparency and compliance with 
notification obligations and  had listened carefully  to Members' discussion on the difficulties with 
compl iance with the transparency obligations. Members woul d be aware that what the 
United  States had put on the table was similar to what Australia and the EU had been seeking last 
year in terms of improving and enhancing transparency of fisheries subsidies wit hin the 
Committee. For that reason, Australia was very pleased to have a proposal to consider. Within the 
Committee, Members were discussing subsidies within the meaning of the definition of the 
Agreement. Within APEC, however, countries were looking at pr ogrammes; so notionally it had 
been a broader universe. Australia agreed with the US that this had been a very valuable exercise 
within APEC and indicated that it was pleased to discuss improving transparency referring to the 
point raised by the EU that tr ansparency across the board was very important.  
257.  Mexico  noted its willingness and interest in discussing this issue.  
258.  India stated that this had been a part of the negotiations under the Rules Negotiating Group 
before Nairobi and a similar proposal had been tabled by Australia and the EU which had been 
discussed in detail in both Geneva and Nairobi. India was looking at transparency -plus outcomes in 
fisheries subsidies and not just in fisheries subsidies of the Rules Negotiating Group but also in 
other areas discussed in the Group.  
259.  With respect to notification requirement, the problem was not the detail of notification but 
the political will to notify the programme. Therefore, according to India, adding on to the details of 
notification would not improve trans parency.  
260.  India also pointed out that it had been notifying its fisheries subsidies and encouraged other 
Members to notify their fishery subsidies in terms of the requirements which were presently 
available under the SCM Agreement. India invited Members to  meet the existing requirements 
before thinking of enhancing them further. India also drew attention of Members that the 
additional information requested in that proposal which was similar to what US had just mentioned 
in terms of fisheries affected by the  programme, by the domestic and international fisheries, 
whether fisheries were export fisheries, the status of fish stocks in the fishery for which the 
subsidy was provided, whether it was overexploited, depleted, fully -exploited and conservation 
and mana gement measures associated with subsidies in place could be very resource intensive 
and onerous for developing countries.  
261.  Argentina  noted that its comments were systemic with regard to this item as well as with 
regard to agenda Item 10. It also indicated t hat transparency in fisheries subsides was important 
and it would follow closely any discussions on this subject.  
262.  Chinese Taipei  welcomed the US proposal and indicated its willingness to join discussions. It 
also reiterated the EU's comments and expressed its concern over improving transparency for 
subsidies given to all sectors.  
263.  Brazil  remained open for further discussions but also noted that some Members were still 
unwilling to discuss this issue in the Committee and preferred to take that issue at the NG R. 
264.  Japan  noted that enhancing transparency in fishery subsides would contribute to tackling 
subsides for fishing that negatively affected fish stocks and expressed its willingness  to play a role 
in an open and constructive manner.  
265.  Canada  agreed that trans parency with respect to the fish subsides was an important 
component of the contribution that WTO could make and it was strong proponent of transparency 
in general. It echoed the comments of Australia by saying that this discussion should be linked G/SCM/M/97  
 
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  with th e issue of compliance with existing notification obligations. Canada also recognized that 
there were questions of scope regarding programmes versus subsidies which would need to be 
addressed.  
266.  The Committee took note  of the statements made.  
14  OTHER BUSINESS  
14.1  CV Measures by the EU on Ductile Cast Iron Tubes and Pipes from India – Item 
requested by India  
267.  India indicated that the EU had imposed a countervailing duty on ductile iron pipe originating 
from India on 17 March 2016, which caused systemic concerns. Indi a noted that the EU authorities 
had gone much beyond the provisions of the SCM Agreement in the course of this investigation. 
The first issue was the EU's treatment of iron ore export duty as a countervailable subsidy, which, 
according to India, did not se em to be in accordance with the provisions of the Agreement as well 
as the EU's own regulations. The EU had held that iron ore prices in India were distorted due to 
the imposition of export tax. According to the EU, all state owned and privately owned iron  ore 
mining companies in India were entrusted or directed by the government to carry out tasks of 
providing iron ore for less than adequate remuneration resulting in the ensuing benefit to be 
treated as a countervailable subsidy. The Commission had selecti vely relied upon excerpts from 
certain reports in support of its finding that there was entrustment. These reports could not be 
given the status of a policy document that could be construed as a positive or affirmative policy 
objective or statement of the Government of India to provide resources at less than adequate 
remuneration.  
268.  The Commission had also failed to establish the existence of a financial contribution and 
benefit as well as specificity with regard to the alleged provision of iron ore at less t han adequate 
remuneration. Further, from the manner in which the Commission had explained its analysis, it 
was evident that the Commission had attempted to countervail the effects of an export tax applied 
by India on iron ore despite the fact that there wa s a WTO jurisprudence which specifically 
rejected the effects -based approach for the determination of final contribution. The absence of any 
affirmative act entrusting or directing private bodies could not imply that any macro -economic 
policy could be deem ed to be entrustment or direction and the result of any government policy 
resulting in a benefit which could be equated to a financial contribution.  
269.  The WTO jurisprudence had shown that in absence of affirmative action, the requisite link 
between the gove rnment and the conduct of a private body could not be established. The EU had 
also ignored the fact that even the reports relied upon by the Commission stated that the sole 
purpose of the measures had been to only preserve natural resources for future use which was a 
permissible right of any Member of the WTO. Considering such a measure as a countervailable 
subsidy had far -reaching implications as it seriously jeopardized the general regulatory power of 
Members.  
270.  The European Union  disagreed with India and i ndicated that their findings on targeted 
export restraints were in line with the disciplines of the SCM Agreement, its Basic Regulation and 
Panel and Appellate Body reports, in particular DS194, DS196 and DS436. The targeted export 
restraint had consisted of an export tax on iron ore of 30 % and a dual freight policy whereby 
higher rates for transport had been applied when iron ore was exported in comparison with when it 
was consumed domestically in India. The effect of the targeted export restraints had bee n the 
drastic reduction of exports and in addition, throughout the entire period of the existence of export 
restraint, the Indian domestic price of iron ore had remained lower than international prices and 
had decoupled from the increase of latter since 20 08. The Commission had established precisely 
that this effect had been actively sought by the Indian Government. As a result, it had concluded 
that the targeted export restraint was a countervailable subsidy.  
271.  The Committee took note  of the statements made.  G/SCM/M/97  
 
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  14.2  Japanese Government Support for the Development of Regional Aircraft – Item 
requested by Brazil  
272.  Brazil  recalled that it had raised this issue at the April and October 2015 meetings of the 
Committee. With considerable difficulty, Brazil had gathered some in formation on the Japanese 
subsidies programmes and asked for clarifications from the Japanese Government. Considering the 
replies so far received all programmes mentioned in previous questions allegedly complied with the 
disciplines of the Agreement. Brazi l had no grounds to reach that conclusion as Japan had 
repeatedly refused to share any information related to the questions presented by Brazil.  
273.  Brazil reminded that it had requested clarification on the official support provided for the 
Mitsubishi Regiona l Jet by any level of the government and any public body in Japan. Brazil had 
tried to obtain clarification, on many programmes that were apparently related to the MRJ Project, 
such as the subsidy of expense to investigate the development of next generatio n airplanes, the 
industrial technology R&D, the R&D for advanced technology development with regard to the 
rationalizing energy used and even the participation of the Development Bank of Japan in this 
project. Brazil had asked for detailed information like  details of the Bank's operation, schedules of 
imbursements of the subsidies programmes, interest rates applied and repayment terms yet had 
received no responses.  
274.  With respect to the industrial technology R&D, Japan had responded that, "the project 
covere d R&D for developing certain kinds of technology that would be applied across 
manufacturing industry, such as railroad, automobiles and aircraft", and concluded that this 
project did not have to be notified. Brazil asked Japan to inform the Committee about  de facto  
beneficiaries of that programme. It also asked Japan to explain the beneficiaries of the so -called 
"subsidy of expense to investigate the development of next generation airplanes". Brazil pointed 
out that despite the allegations presented by Japa n, the programme was not specifically directed 
to one sector.  
275.  Brazil also recalled that Japan had informed in document G/SCM/Q2/JPN/73 that the 
programme had been terminated in 2011, and asked Japan to provide information on the 
beneficiaries which had de facto benefited from it.  
276.  With regard to the second point related to the Development Bank of Japan, Japan had 
informed the Committee that all investment decisions of the bank had been taken in accordance 
with "commercial terms". Based on publicly available  information, an amount of 800 million dollars 
had been provided to the MRJ project through financial support of the Bank. Brazil reiterated its 
call to Japan to provide an explanation about the meaning of commercial terms.  
277.  Japan  noted that it had already  answered Brazil's questions at the previous meetings and 
reiterated that it attached great importance to the rules based multilateral trading system at the 
WTO and it was taking compliance with international trade rules and obligations of the SCM 
Agreemen t very seriously. Japan had never failed to comply with its obligations of subsidy 
notifications since the establishment of the WTO. Japan fully complied with the SCM Agreement 
and notified every specific subsidy in its latest 2015 notification.  
278.  Brazil  invited Japan to refer to the minutes of the previous meeting and recalled its question 
on the "commercial terms". With the few answers received so far, neither Brazil nor any other 
Member could assess the compliance of Japan's programmes in question. Brazil stated that if all 
subsidy programmes had to pass the scrutiny of their own governments, there would have been 
no discussions in the Committee. Brazil reiterated its call to Japan to provide detailed information 
on the amount, beneficiaries, interest rates  and repayment terms of the programmes mentioned 
and on the role of the Japanese Development Bank in the MRJ Project.  
279.  Japan  stated that it took note of Brazil's comments and would convey them to its capital.  
280.  The Committee took note  of the statements made.  G/SCM/M/97  
 
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  14.3  CVD Investigations by the US on Hot -Rolled and Cold -Rolled Steel Products from 
Brazil – Item requested by Brazil  
281.  Brazil  noted that the issues that would be raised under this item were systemic in nature 
and were not about the particularities of the cases r eferred.  In July 2015,  producers of the 
United  States had requested the initiation of two subsidy investigations regarding Brazilian 
programmes allegedly used by Brazilian exporters of cold and hot rolled steel. The petitions had 
not contained publically available information from Brazilian official websites which demonstrated 
that the programmes were neither subsidies nor specific to the product concerned or to the 
exporters involved; rather they had quoted from gossipy websites. The claims in petition co uld be 
easily cross -checked through the official website of Brazilian Department of Commerce or through 
the work of the WTO Trade Policy Review Mechanism, or even through the document presented by 
the Brazilian Government during the consultation phase. Unf ortunately the Department of 
Commerce failed to attend the obligation under Article 11.3 of reviewing the accuracy and 
adequacy of the evidence provided in the application.  
282.  Although the investigation had been initiated for 32 programmes, preliminary 
determ inations had been made for only six programmes which showed that the US system had 
inverted the burden of proof contained in the SCM Agreement.  
283.  For instance, the mere indication by the petitioner on the existence of a drawback system in 
Brazil had been eno ugh for the US Department of Commerce to consider Brazil's drawback system 
as an export subsidy without pointing out which part of Annex II or Annex III of the Agreement 
had been violated.  
284.   The Government of Brazil had cooperated with the US investigating authority from the 
beginning of the investigation and an abnormal amount of legislation and translation had been 
demanded from the Brazilian Government, rather than from the petitioners, regarding those 32 
programmes. Direct reference to our official websi te with Brazilian legislation had not been 
accepted as evidence on record, making useless all the Brazilian Government's efforts to promote 
transparency and accountability to its population and to the international community.  
285.  One of the Brazilian programm es under scrutiny of the Department of Commerce was IPI 
which operated under a value added tax system according to which a tax exemption on final 
consumption of the goods were provided in accordance with the OECD International VAT 
Guidelines. Although it w as known that United States did not have a VAT system, other countries 
could not be harmed by the apparent lack of understanding by the US of such system. 
Furthermore, a simple search on the website of the States where the American petitioner situated 
demo nstrated that several of them either did not charge or charged reduced rates of sales tax on 
consumption of capital goods.  
286.  Therefore, if the exemption of the collection of sales tax on the capital goods was a subsidy 
as the Department of Commerce prelimin ary determined then the US' new and full notification 
under Article 25.2 of the Agreement was inaccurate.  
287.  Another preliminary determination was on "extariffario" which was similar to the 
programmes maintained by the US from 1982 to 2008 throughout a series  of miscellaneous trade 
acts. This programme contained preliminary duty suspensions, reduction and expansion for 
products that were not produced domestically. Similarly to what happened to any General System 
of Preferences, MERCOSUR extariffario mechanism allowed for a unilateral duty reduction. 
Nonetheless, extariffario was a horizontal duty reduction, which not only contributed to the 
objective of trade liberalization of this organization, abide by MFN treatment, but also liberalized 
mainly the trade of i ndustrial goods.  According to the preliminary determinations, however, the 
duty reduction was a countervailable subsidy under the GATT Article XVI.  
288.  Brazil reiterated its concern and noted that such an interpretation might jeopardize the 
international tra de liberalization.      
289.  The United States  indicated that Brazil's statement on the burden of proof was inaccurate 
and contrary to its understating of the initiation standard under Article 11 of the Agreement. The 
US also disagreed with the claim that the p etitions had relied on gossipy websites and that G/SCM/M/97  
 
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  information had been available from public sources indicating that many of the alleged 
programmes had not been subsidies or not available to steel producers. The US noted that the 
investigating authorities w ere not required to conduct the type of investigation at the initiation 
stage that was required to determine if a countervailable subsidy existed. A number of WTO Panels 
had made that point clear. Moreover, investigating authorities had no way of knowing w hether a 
properly alleged subsidy programme was not actually used at the time of initiation, nor could that 
information be considered reasonably available to the petitioners.  
290.  The US Department of Commerce had conducted a thorough examination of the informa tion 
in the petition to confirm that there had been sufficient evidence in the form of laws, regulations, 
news articles, company financial statements or other evidence to support initiation for each 
programme. Therefore the initiation had been fully consis tent with Article 11 of the SCM 
Agreement.  
291.  The US also noted that in the preliminary determination the Commerce had found only one 
alleged subsidy programme not to exist and one to be not countervailable. All the other 
programmes that had been found to co nfer countervailable subsidies or benefits had been found to 
either be not used or to confer very small or non -measurable benefits.  
292.  With respect to the drawback regime, there had not been a mere mention of such a scheme 
in the petition as Brazil claimed. Rather there had been citations to specific laws and regulations 
which had been reflected in Brazil's 2013 TPR report. Contrary to Brazil's claim, the Commerce's 
finding on the countervailability of the duty drawback scheme had cited specific provisions in  the 
Commerce's regulations and the US law which reflected the provisions of the SCM Agreement 
including Annexes I, II and III.  
293.  The US also disagreed with Brazil's contention that citation to official government websites 
was sufficient when responding to requests for pertinent legal instruments governing subsidy 
programmes. It was normal practice for investigating authorities to request original and translated 
versions of the information which was certainly the case in every investigation on US exports in 
which the United States Government was respondent.  
294.  With respect to the IPI tax programme, Brazil's comments regarding the absence of a 
reduction in sales tax in US States in which the US petitioners were located, were irrelevant and 
the evidence submitted by the petitioner regarding the IPI tax programme had been sufficient for 
initiation. Besides, Brazil had not responded to the Commerce's request for information concerning 
this programme. Instead, in its initial questionnaire response, Brazil had stated t hat the 
information had not been yet available and it would be provided later. In a subsequent 
supplemental questionnaire response, Brazil had stated that in its opinion this was not an actual 
programme and there was no need to respond to any questions. Br azil had not provided any 
information to support this assertion such as how the IPI was administered or how rates were 
established and changed. As such, Brazil's opinion had been inadequate evidence on which the 
Commerce could reach a preliminary determina tion. Because the respondent companies had also 
been unresponsive, stating the reduction in IPI rates was not a programme and failing to provide 
information necessary to calculate a benefit, the Commerce had relied on the facts available.  
295.  Regarding Brazil' s comments concerning the extariffario, the US noted that the fact that the 
US maintained a similar programme was not relevant to the evaluation of an alleged subsidy. In 
addition, notwithstanding Brazil's comments that the programme was a horizontal duty reduction, 
Brazil had provided information demonstrating that three sectors, steel making and metal 
industries and the information technology sector, were predominant users of the programme by 
value of goods imported. This supported the finding that scheme  was specific to those sectors.  
296.  Brazil  noted that it disagreed with some comments of the US and indicated that it would 
continue bilateral discussions. Brazil also stated that those systemic procedures applied by the US 
in investigations were burdensome f or developing countries.  
297.  The Committee took note  of the statements made.  G/SCM/M/97  
 
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  15  DATE OF NEXT REGULAR  MEETING  
298.  The Committee decided  to hold its next regular meeting during the week of 
24 October  2016, with the exact date to be confirmed in due course. As usual, th at meeting would 
be immediately preceded by a special meeting for review of subsidy notifications.  
16  ELECTION OF OFFICERS  
299.  On the election of the Chairperson and the Vice -Chairperson of the Committee pursuant to 
Rule 12 of the Rules of Procedures for the Comm ittee meetings, the Chair explained that as the 
consultation at the Council for Trade in Goods ("CTG") level regarding the selection of the new 
Chairperson of this Committee as well as of other Committees under the CTG was still under way, 
the Committee wo uld not be in a position to elect a new Chair at the end of its April meeting.  He 
suggested that the Secretariat send a fax once the CTG had completed its work, indicating the 
Chair identified by the CTG.   The new Chair would be deemed to be elected by the  Committee 
absent any objection.  This approach, which had been followed by the Participants on the Expansion 
of Trade in Information Technology Products and the Market Access Committees, would obviate 
the need for an additional meeting of the Committee.11 On the Vice -Chairperson, he proposed to 
postpone the election of the new Vice -Chairperson until the new Chair was appointed.12 
300.  The meeting was closed .  
 
__________  
                                                
11 On 11 May 2016 a fax was sent conveying to the membership the designation of Mr Jin-dong KIM  
(Korea) by the  CTG as the Chair of the Committee. No objection was received and the Chair was deemed to be 
elected by the Committee.   
12 On 1 July 2016, Mr Jin -dong Kim, the Chair of the Committee, sent a fax to the membership 
conveying the nomination of Mr Bruno Raphaë l HÄSSIG (Switzerland) as the new Vice -Chair of the Committee. 
No objection was received and the Vice -Chair was deemed to be elected by the Committee.