RESTRICTED  
  
G/SCM/M/103  
 
23 January 2018  
(18-0568) Page: 1/25 
Committee on Subsidies and Countervailing Measures    
 
 
MINUTES OF THE REGUL AR MEETING  
HELD ON 2 4 OCTOBER  2017 
CHAIR: MS IEVA BARŠAUSKAITĖ  (LITHUANIA ) 
1. The Committee on Subsidies and Countervailing Measures ( "Committee ") held a regular 
meeting on 24 October  2017, convened in WTO/AIR/SCM/1 8 and WTO/AIR/SCM/18/C orr.1 dated 
13 October  2017 and 20 October 2017, respectively.  
 
2. China  noted that overcapacity was not a trade related issue which was related to the 
operation of th e Agreement or the furtherance of its objectives as referred in Article 24.1 of the 
Agreement.  Therefore, the issue of overcapacity was not in the terms of reference of the 
Committee and it was not an appropriate forum for the discussion of this issue.  China did not 
oppose to those Members ' briefing on the outcomes of the G -20 summit to the WTO. However, 
China would emphasize that the inclusion of item 13 into the agenda shall not constitute any 
precedent and could not represent any degree of consensus by M embers on including similar 
issues into the agenda of future meetings of the SCM Committee or any subsidiary bodies of 
the WTO. China requested the Committee to take note of its position as stated.  
 
3. Mexico  requested to be included as a co -sponsor for the a genda item 1 3.  
 
4. The Committee took note  of the statements made and adopted  the following agenda:  
 
1   NATIONAL LEGISLATION ................................ ................................ .............................  2 
1.1   Review of notifications of new or amended legislation or regulations not previously 
reviewed by the Committee (including supplemental notifications of e xisting provisions 
not previously reviewed)  ................................ ................................ ................................ ...... 2 
1.1.1    European Union (G/SCM/N/1/EU/2/Suppl.1)  ................................ ................................  3 
1.1.2    India (G/ADP/N/1/IND/2/Suppl.8 –G/SCM/N/1/SCM/2/Suppl.8)  ................................ ...... 3 
1.1.3    New Zealand (G/ADP/N/1/NZL/2/Suppl.6/Rev.1 -
G/SCM/N/1/NZL/2/Suppl.6/Rev.1)  ................................ ................................ ........................  3 
1.2   Review of notifications of new or amended legislation or regulations with 
outstanding written questions  ................................ ................................ ...............................  3 
1.2.1    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)  ................................ ................................ ................................ ... 3 
1.2.2    El Salvador (G/ADP/N/1/SLV/3/Suppl.1 -G/SCM/N/1/SLV/3/Suppl.1 -
G/SG/N/1/SLV/3/Suppl.1)  ................................ ................................ ................................ .... 4 
1.2.3    European Union (G/SCM/N/1/EU/2 and G/ADP/N/1/EU/3)  ................................ ..............  4 
2   SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY ACTIO NS 
(ARTICLE  25.11) – G/SCM/N/321 AND G/SC M/N/321/SUPPL.1  ................................ ..... 4 
3   PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: 
NOTIFICATIONS (ARTIC LE 25.11) – G/SCM/N/319, G/SCM/N /320, 
G/SCM/N/322, G/SCM/N /323, G/SCM/N/324, A ND G/ SCM/N/325  ...............................  6 
4   ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE 
ELIMINATION OF EXPOR T SUBSIDIES - 31 DECEMBER 2015 END  OF FINAL G/SCM/M/103  
 
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  PHASE -OUT PERIOD AND FINAL  NOTIFICATION DUE 30 JUNE 2016 
(G/SCM/N/299/…)  ................................ ................................ ................................ ..........  7 
5   IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS AND 
OTHER INFORMATION FL OWS ON TRADE MEASURE S UNDER THE SCM 
AGREEMENT  ................................ ................................ ................................ .....................  8 
6   PERMANENT GROUP OF E XPERTS  ................................ ................................ ..............  12 
7   TRANSPARENCY AND POS SIBLE STEEL SUBSIDIE S IN CHINA - ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  12 
8   TRANSPARENCY AND POS SIBLE FISHERIES SUBS IDIES IN CHINA – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  15 
9   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES UNDER THE 
INTERNATIONALLY WELL -KNOWN BRAND PROGRAMM E (G/SCM/Q2/CHN/71) – 
ITEM REQUESTED BY TH E UNITED STATES  ................................ ................................ ..... 17 
10   INDIA'S ELIMINATION OF EXPORT SUBSIDIES FOR TEXTILES AND APP AREL 
PURSUANT TO ARTICLE 27.5 OF THE SCM AGRE EMENT – ITEM REQUESTED BY 
THE UNITED STATES  ................................ ................................ ................................ ...... 19 
11   INDIA'S GRADUATION F ROM ANNEX VII OF THE  SCM AGREEMENT – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  20 
12   ENHANCING FISHERIES SUBSIDIES TRANSPAREN CY – ITEM REQUESTED BY 
THE UNITED STATES  ................................ ................................ ................................ ...... 20 
13   SUBSIDIES AND OVERCA PACITY – ITEM REQUESTED BY CA NADA, THE 
EUROPEAN  UNION, JAPAN, MEXICO , AND THE UNITED STA TES ................................ ..... 22 
14   QUESTIONS REGARDING THE 2015 NEW AND FUL L NOTIFICATION OF TH E 
UNITED  STATES (G/SCM/Q2/USA /73) - ITEM REQUESTED BY CH INA ...........................  25 
15   OTHER BUSINESS  ................................ ................................ ................................ .... 25 
15.1   Certain Systemic Concerns Regarding CVD Investigations Initiated by the 
United  States – Item Requested by India  ................................ ................................ .............. 25 
16   DATE OF NEXT REGULAR  MEETING  ................................ ................................ ..........  25 
17   ANNUAL REPORT OF THE  COMMITTEE ON SUBSIDI ES AND 
COUNTERVAILING MEASU RES TO THE COUN CIL FOR TRADE IN GOO DS 
(ARTICLE  32.7)  ................................ ................................ ................................ ..............  25 
 
 
1  NATIONAL LEGISLATION  
1.1  Review of  notifications of new or amended legislation or regulations not previously 
reviewed by the Committee (including supplemental notifications of existing provisions 
not previously reviewed)  
5. 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 2 October  2017.  In accordance with the review procedures, the legislative 
notifications of Cameroon, El Salvador, and the European Union would also be taken up under this 
item due to outstanding written questions about them.  
 
6. Oral questions could be asked at the meeting, an d any Member wishing to receive a written 
answer to any such question would have to submit its question in writing to the Member concerned G/SCM/M/103  
 
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  and to the Secretariat not later than 1 3 November  2017. Written answers were due not later than 
4 December  2017.1  
7. 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 tho se specifically 
related to countervailing measures.  
1.1.1   European Union  (G/SCM/N/1/EU/2/Suppl.1 ) 
8. No Member raised any questions or comments about this notification.  
 
9. The Committee took note  of the notification .  
 
1.1.2    India  (G/ADP/N/1/ IND/2/Suppl.8 –G/SCM/N/1/SCM/2/Suppl.8)  
10. Written questions with respect to this notification can be found in:  
 
 G/ADP/Q1/ IND/26–G/SCM/Q1/ IND/26 – questions from Ukraine  
 G/ADP/Q1/IND/27 -G/SCM/Q1/IND/27 – questions from Mexico  
 
11. Mexico  indicated that it was wait ing for the written answers.  
 
12. Ukraine  noted that it was expecting to review this notification in the Committee on Anti -
Dumping Practices.  
 
13. India indicated that the notification was about the amendm ents made in the regulations 
in 2002 and 2003. As requested  by Ukraine, India would provide its answers at the Committee on 
Anti-Dumping Practices. It was still working on the responses for questions from Mexico.  
 
14. The Committee took note  of the notification, questions, and statements made .  
 
1.1.3    New Zealand  (G/ADP/N/1/ NZL/2/Suppl. 6/Rev.1 -
G/SCM/N/1/ NZL/2/Suppl.6/Rev.1)  
15. Written questions with respect to this notification can be found in:  
 
 G/ADP/Q1/ NZL/3-G/SCM/Q1/ NZL/3 - questions from the United States  
 G/ADP/Q1/ NZL/4 -G/SCM/Q1/NZL/4 - questions from Australia  
 
16. The Committee took note  of the notification and questions.  
 
1.2  Review of notifications of new or amended legislation or regulations with 
outstanding written questions  
1.2.1   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)  
17. Written q uestions with respect to 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  
18. The Committee took note  of the notification and questions . 
 
                                                
1 Relevant deadlines for written follow -up questions and written answers in November and 
December  2017, respectively, can be found in section 1 of document G/ADP/W/ 500-G/SCM/W/57 4-
G/SG/W/24 2. G/SCM/M/103  
 
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  1.2.2   El Salvador (G/ADP/N/1/SLV/3/Suppl.1 -G/SCM/N/1/SLV/3/Suppl.1 -
G/SG/N/1/SLV/3/Suppl.1)  
19. Written questions with respect to this notification can be found in:  
 
 G/ADP/Q1/SLV/8 -G/SCM/Q1/SLV/8 -G/SG/Q1/SLV/7 - questions from the United States  
 G/ADP/Q1/SLV/9 -G/SCM/Q1/SLV/9 -G/SG /Q1/SLV/8 - questions from Mexico  
 
20. The Committee took note  of the notification and questions.  
 
1.2.3   European Union (G/SCM/N/1/EU/2 and G/ADP/N/1/EU/3)  
21. Written questions and answers with respect to this notification can be found in:  
 
 G/ADP/Q1/EU/1 –G/SCM/Q1/EU/1  – questions from the United States  
 G/ADP/Q1/EU/2 –G/SCM/Q1/EU/2 – questions from the Russian Federation  
 G/ADP/Q1/EU/3 –G/SCM/Q1/EU/3 – replies to the Russian Federation  
 G/ADP/Q1/EU/4 –G/SCM/Q1/EU/4 – replies to the United States  
 
22. The Committee took note  of the notification, questions, and answers.  
 
23. The Chair noted that Liberia  had recently submitted its legislative notification. Written 
questions concerning  this and any other  new legislative notifications to be reviewed should be 
submitted to the notifying Member and to the Secretariat by 3 April 2018.  
 
24. To place a previously -reviewed legislative notification on the agenda of the Committee 's 
April 2018 regular meeting, written questions had to be submitted to the Member concerned and 
to the Secretariat not later than 12 March 2018. The Member receiving such questions should 
submit its written answers not later than 9  April 2018. The Secretariat would circulate the usual 
triple-symbolled document containing these and the other deadlines shortly after the meeting.2  
 
25. Some Members had yet to submit any notification concerning legislations. The Chair 
underlined the importance of these notifications in terms of transparency, and recal led that for 
many Members all that would be required was a single nil notification. For any Members that 
conducted countervailing duty investigations but had not yet notified their legislation, it was all the 
more important for the Committee to have the op portunity to review and ask questions about that 
legislation. Therefore, the Chair urged all Members that had not yet made a legislative notification 
to do so as promptly as possible.   
 
26. The Chair referred to the document G/SCM/N/18/Add.43 which contained the latest revision 
of the list of authorities competent to initiate and conduct investigations within the meaning of 
Article 25.12 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.  
 
27. New Zealand  invited Members to make their legislative notifications before the next meeting 
if they had not yet done so. For those who did not have any legislation   all that was required was 
a one -time notification. Members should take advantage of the technical assistance available 
through the Secretariat if they had any issues.  
 
28. The Committee took note  of the statement s made.   
 
2  SEMI -ANNUAL REPORTS OF COUNTERVAILING DU TY ACTIONS (ARTICLE 25.11) – 
G/SCM/N/3 21 AND G/SCM/N/3 21/SUPPL.1  
29. The Chair recalled that document G/SCM/N/3 21 and Supplement 1 had invited all Members 
to submit not later than 15 August  2017, their semi -annual reports  under Article 25.1 1 of the 
SCM Agreement of countervailing duty actions taken during the period 1 January  through 
30 June 2017. Document G/SCM/N/3 21/Add.1 provided the current status of Members ' reporting 
for that period. Paragraph 1 of the document listed those Members rep orting countervailing duty 
                                                
2 G/ADP/W/ 500-G/SCM/W/5 74-G/SG/W/2 42, circulated on 27 October 201 7. G/SCM/M/103  
 
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  actions during the period. Paragraph 2 listed Members that had notified having taken no 
countervailing duty action during the period. Paragraph 5 of the document listed the 3 9 Members 
that had submitted a one -time notification th at they had no investigating authority, had taken no 
countervailing actions to date, and did not anticipate taking any such actions in the foreseeable 
future.   
30. One-time notifications served a useful transparency function, as they assisted non -active 
Membe rs 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 assist any Member in this regard.  
 
31. Unfortunately, as listed in paragraphs 3 and 4 of the document , many  Members had not 
submitted a semi -annual report for January – June 2017 . They were urged to do so as soon as 
possible.  
 
32. No comments or questions were raised concerning the semi -annual reports of Australia,  
Brazil, Canada, China, Egypt, India, New Zealand, Pakistan, and Peru.   
33. China  expressed its concerns regarding the European Union 's CVD investigation on hot -
rolled steel products, in which, according to China,  the EU Commission had adopted many 
unreasonable practice s. The Commission had determined that Chinese financial institutions had 
provided loans to the producers. Five of the state -owned financial enterprises had been 
determined to be public bodies on the ground that the Government of China exercised meaningful 
control over those banks. In addition, treating those loans as grants, the Commission had 
considered the full amount of the loan as the benefit while it had failed to provide reasons and 
justification for that decision. Since the treatment of the concerned  loans as grants was neither 
evidenced nor explained and the alleged economic situation of the concerned companies did not 
justify that treatment, China was expecting the EU to end that erroneous practice and to ensure 
the rights of Chinese enterprises.   
 
34. The European Union  noted that there had been a large number of subsidy schemes in the 
investigation which had resulted in a high subsidy margin. A significant part of the subsidy margin 
had been based on the benefit found on the loans received under the p referential conditions. In 
that investigation, the determination of the benefit had been further individualized given the 
particular financial situation of each of the sampled companies. The financial situation of some of 
the sampled companies was such tha t they would not get access to additional financial means 
under normal market circumstances. Therefore, the capital amount of the loans had been taken 
into account for the calculation of the benefit for those companies. The EU noted that the actions 
taken and the justifications provided were fully in compliance with the Agreement.  
 
35. With respect to the semi -annual report of the  United States , Kazakhstan  expressed its 
concern over the investigations on silicon metal originating in Kazakhstan for which the pre liminary 
countervailing duty was determined as 120%. The US had recognized the Government of 
Kazakhstan and the exporting company as non -cooperative . Therefore, the responses provided 
had not been taken into account and the amount of subsidy had been calcu lated on the basis of 
adverse facts available. The US had accepted  Kazakhstan as non -cooperative only because it had 
submitted the questionnaire response 8 minutes and 22 seconds later than the deadline which had 
been due to some technical problems related  to the ACCESS electronic system itself.  
36. Although Kazakhstan had acted in its best ability to submit the response within the deadline, 
including informing the US in advance about such technical problems, its request for extension had 
been rejected. In addition, while other countries had been given an opportunity to submit 
responses after the deadline in that investigation as well as in other investigations, such an 
opportunity had not been provided for Kazakhstan. Kazakhstan al so noted that it had been 
given  14 days less time than other countries to complete the initial questionnaire and that equal 
opportunities should be provided to all Members. In light of those points, Kazakhstan asked the 
US to accept and use all the information provided before makin g the final decision.  
37. Turkey  expressed its concern over the investigations on iron and steel products originating 
in Turkey. In the investigations there had been inconsistencies regarding public body, specificity, 
benefit calculation and cross -cumulation d ecisions. Therefore, Turkey had taken those issues to 
the WTO panel. Turkey invited the US to take into account the Appellate Body and Panel decisions G/SCM/M/103  
 
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  on cross -cumulation methodology in ongoing investigations and not to cumulate the effects of 
subsidized i mports with the effects of non -subsidized, dumped imports. In addition, referring to 
Article 27.10(a) of the Agreement, Turkey indicated that as a developing Member, it was expecting 
the US to terminate the investigation for Turkey if the per unit subsidiz ation rate was not 
exceeding the 2% threshold.  
38. The European Union  expressed its concerns over certain procedural aspects in the ongoing 
investigation on ripe olives originating in the EU. In particular , the request for information by 
the US was extremely burdensome. Questionnaires were requesting information over twelve years 
and not only the olive producers but also their suppliers , over which the olive producers had no 
control, were expected to provide responses to the questionnaires although they were n ot related 
to the producers. Only 21 days had been provided to send replies where, according to Article 12.1 
of the Agreement, the deadline to reply the questionnaire should be at least 30 days. The EU 
asked the US to take a reasonable and proportionate ap proach in the investigation and noted that 
discouraging parties from cooperation due to overly burdensome questionnaires was not in the 
spirit of the Agreement. The EU indicated that it would closely follow that case and make sure that 
its exporters ' rights were duly respected.  
39. Regarding Kazakhstan 's concerns, t he United States  asked Kazakhstan to submit its 
questions in writing.  
40. With respect to Turkey 's concerns, the US recalled that much of the issues were in litigation 
before the Dispute Settlement Body  and the results should be waited. As to the negligibility 
threshold, the US indicated that it was not accepting Turkey as a developing country. It was in 
correspondence with Turkey on that issue and had already explained its position in detail.  
41. Regarding  the concerns raised by the EU, the US recalled that the investigation on olives 
were outside of the reporting period. The US also noted that in the context of countervailing duty 
investigations , it was a well -accepted fact that some subsidies had an exten ded period over which 
they might benefit the company. In this regard, for example when a company received a big sum 
of subsidy in year -1 it was fair to say that this subsidy might be benefiting the company beyond 
year-1. Reaching back twelve years was look ing for any subsidies benefit of which should be 
allocated over time.  
42. 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) – G/SCM/N/31 9, G/ SCM/N/3 20, G/SCM/N/3 22, G/SCM/N/3 23, 
G/SCM/N/3 24, AND G/SCM/N/3 25 
43. The Chair  reported that since the Committee 's April 2017 regular meeting, notifications 
under Article 25.11 of preliminary and final countervailing duty actions had been received from 
Austra lia, Canada, China, Peru, and the United  States. Those notifications were listed in 
documents G/SCM/N/31 9, 320, 322, 323, 324, and 3 25. 
 
44. China  expressed its concerns on the United States ' practice of considering the loans from 
state-owned commercial banks as subsidies while Chinese law stipulated that those banks 
operated independently. China noted that those banks provided loans according to market demand 
and urged the US to stop treating  state-owned commercial banks as public bodies and to use 
China 's market interest rates as the benchmark.  
 
45. China also indicated that the US practice of considering the export credit insurance as a 
subsidy was unreasonable. Although the Chinese enterprises , their importers, and the relevant 
banks had submitted evidence to prove the absence of such subsidies, the US had calculated duty 
rates artificially based on a determination that the Chinese side had not cooperate. China urged 
the US to terminate those u nreasonable practices and make determinations on objective facts.  
 
46. With respect to China 's concerns regarding the publicly -owned banks, the United States  
noted that according to Chinese banking law, Chinese banks had to lend in accordance with 
Chinese indu strial policy, which seemed to be a lack of independence. The US also indicated that it 
had recently re -examined its policy with respect to bank lending in China which Members could G/SCM/M/103  
 
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  refer to. Regarding the export credit programme, the US noted that China h ad not given access to 
the investigating authority to verify the information provided by the export credit agencies.  
 
47. The Committee took note  of the notifications and statements made.  
4  ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE ELI MINATION OF 
EXPORT SUBSIDIES - 31 DECEMBER 2015 END  OF FINAL PHASE -OUT PERIOD AND FINAL  
NOTIFICATION DUE 30 JUNE 2016 (G/SCM/N/2 99/…)  
48. The Chair recalled that Members that had been granted extensions under Article 27.4 
pursuant to the procedures in WT/L/691 were requi red, 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 re minder to this effect had been circulated in document G/SCM/N/290/INF.  
49. To date, Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, Guatemala, 
Jamaica, Jordan, Mauritius, Papua New Guinea, Saint Lucia, and Saint Vincent and the Grenadines 
had s ubmitted these notifications, which had been circulated in the G/SCM/N/290 series.3  
50. 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 hav e 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. For the information of Members , the Chair  had asked Secretariat to prepare a room 
document indicating the current status of notifications and of actions reported by Members with 
extensions under  Article  27.4.4 
51. To date, only nine of the beneficiary Members – Belize, Costa Rica, Dominican Repub lic, 
El Salvador, Grenada, Guatemala, Jamaica, Jordan, Mauritius, and Saint Vincent and 
the Grenadines  – had submitted those final notifications.5 The Chair reminded other Members with 
extensions to submit their final transparency notifications as soon as possible. The deadline for the 
elimination of the export subsidies had been two years earlier while for submitting the final 
notification had been more than  one year earlier. She also underlined the importance of the 
compliance of the beneficiary Members with the corresponding substantive and transparency 
obligations.  
 
52. New Zealand  thanked Costa Rica for its notification and noted that no other final 
transpar ency notifications had been received since the last meeting of the Committee.  It recalled 
that all those export subsidies should have been removed by 31  December 2015 and an 
assessment was not possible in a number of cases as beneficiary Members had not co nfirmed the 
extent of their reforms. The notification should be a fairly simple administrative matter since 
almost all of the Members concerned had previously reported the time limited nature of the 
planned termination of their export subsidy programmes. N ew Zealand was keen to meet those 
Members to get a better understanding of the barriers they might have. Finally, it requested to 
keep that item on the agenda for the next meeting.  
53. Costa Rica  noted that it stood ready for the possible questions regarding i ts notification.  
54. Jordan  recalled that its subsidy programme  had been discussed at the Council for Trade in 
Goods and  it was committed to phase out its subsidy programme by the end of 2018 in accordance 
with the action plan that was submitted to the CTG. Jordan was working on a WTO -compliant 
replacement programme to be implemented as of January 2019.  
55. Barbados  informed the Committee that the process was still ongoing and it was not 
completed yet.  
                                                
3 Please note that Papua New Guinea submitted its notification in document G/SCM/N/290 /PNG, dated 
21 November 2017.  
4 RD/SCM/32 . 
5 Please note that Papua New Guinea submitted its notification in document G/SCM/N/29 9/PNG, dated 
21 November 2017.  G/SCM/M/103  
 
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  56. Japan  expressed its support for New Zealand 's suggestion to kee p this item , for the 
perspectives of transparency,  on the agenda for the next meeting of the Committee.  
57. The United States  congratulated those Members who had already phased out their subsidy 
programmes. It was pleased to hear that Jordan was in accordance with its action plan to end the 
subsidy programme by the end of 2018. The US also echoed New Zealand 's suggestion to keep 
this item on the agenda of the next meeting.  
58. The Chair  noted that the Committee would revert to that issue at the next meeting.  
 
59. The Committee took note  of the statements made.  
 
5  IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS A ND OTHER 
INFORMATION FLOWS ON  TRADE MEASURES UNDER  THE SCM AGREEMENT  
60. The Chair recalled that since the request of the Chairman of the Trade Policy Rev iew Body in 
spring 2009, the Committee had been discussing, at formal and informal meetings, "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.  
61. The Chair recalled that at Committee 's April 2017 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 this 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 writte n process 
for questions and answers under Articles 25.8 and 25.9 of the SCM Agreement.  The Chair 
suggested to take these topics up one by one and invited Members to make comments separately 
on each.  
62. Regarding the status of subsidy notifications, the Chair recalled that the Secretariat had 
prepared and updated a background note (G/SCM/W/546/Rev. 8) at the request of Members 
since 2009, providing a snapshot of the level of compliance with the various not ification obligations 
under the SCM Agreement since 1995.  
63. Unfortunately, compliance with the obligation to notify subsidies remained low. 
105 Members had not made their 201 7 new and full subsidy notification for which the deadline had 
been 30 June  2017. Seventy -five Members still had not made their 201 5 new and full subsidy 
notification, although the deadline had been more than two  years earlier. Further, sixty Members 
still had not made their 201 3 notifications, which had been due almost four years earlier . Many of 
these Members either had never notified or had done so only in the distant past. The chronic low 
compliance with this fundamental transparency obligation constituted a serious problem in the 
proper functioning of the Agreement.  
64. The Members that h ad not yet made their 201 7 notifications were: Afghanistan ; Albania ; 
Angola; Antigua and Barbuda; Argentina; Armenia ; Australia ; Bahrain, Kingdom of; Bangladesh; 
Barbados; Belize; Benin; Bolivia, Plurinational State of; Botswana; Brazil; Brunei Darussalam;  
Burkina Faso; Cabo Verde; Cambodia; Cameroon; Central African Republic; Chad; China, 
Colombia; Congo; Côte d 'Ivoire; Democratic Republic of Congo; Djibouti; Dominica; 
Dominican  Republic; Ecuador; Egypt;  El Salvador;  Fiji; the Gambia; Georgia; Ghana; Guinea; 
Guinea -Bissau;  Guyana;  Haiti; India; Indonesia; Israel;  Jamaica;  Kenya; Kuwait, the State of; 
Kyrgyz Republic; Lao People 's Democratic Republic; Lesotho; Liberia;  Lichtenstein;  Madagascar;  
Maldives; Mauritania;  Mauritius; Mexico;  Mongolia; Monteneg ro; Morocco; Mozambique; Myanmar; 
Namibia; Nepal; Nicaragua; Niger; Nigeria; Norway; Pakistan; Panama; Papua New Guinea; 
Philippines;  Qatar; Russian Federation;  Rwanda; Saint Kitts and Nevis; Saint Lucia; Saint Vincent 
and the Grenadines; Samoa; Saudi Arab ia, Kingdom of; Senegal;  Seychelles;  Sierra Leone; 
Solomon Islands; South Africa; Sri Lanka; Suriname; Swaziland; Switzerland; Tajikistan; 
Tanzania; Thailand; The former Yugoslav Republic of Macedonia; Tonga; Trinidad and Tobago; 
Tunisia; Uganda; United Ar ab Emirates; United States; Uruguay;  Vanuatu; Venezuela, 
Bolivarian  Republic of; Viet  Nam; Yemen; and Zimbabwe.  G/SCM/M/103  
 
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  65. The Chair invited the Members that had not yet submitted their 201 7 notifications to provide 
an update to the Committee on their progress in pre paring these notifications.  
 
66. The United States  indicated that it had completed 80% of the process of compiling the 
required information and getting clearance from sub -central and central agencies. For the 
upcoming notification , the US spent more time on it s state -level programmes which was always 
the most difficult aspect of its notification. In particular, the US was checking whether  any new 
programmes had been included . It also made an effort in establishing budget amounts of certain 
programmes and looked  at the fisheries subsidy programmes provided by the states. Those efforts 
caused a delay but the US  was expecting to submit its notification  by the end of the year.  
 
67. Australia  was aware that it had not yet submitted its notification and assured Members th at 
it was working on its central and sub -central level programmes. Australia was hoping to submit its 
notification by the end of 2017.  
 
68. Brazil  indicated that it was finalizing its notification and expe cted to submit it by the end 
of 2017.  
 
69. The Russian Fede ration  thanked the Secretariat for its efforts to monitor the compliance of 
Members with their transparency obligations which should be fulfilled by all Members in good faith. 
As a country that had a complex state structure, the Russian Federation understo od the challenges 
Members might face in preparing  their notifications. Collecting information from the regions, 
bringing it to the generally accepted format was time -consuming. Nevertheless, all Members 
should do their best to fulfil their obligations on t ransparency in a timely manner. The 
Russian  Federation was preparing its notification and would submit it in due course.  
 
70. Colombia  noted that it was working on its notification and it would update the relevant 
information for the period between 2012 and 20 17.  
 
71. Uruguay  informed the Committee that the elimination process of the Automotive Industry 
Program initiated during the 2013 -2015 transition period was still ongoing and it was 
implementing necessary measures to eliminate it promptly. Uruguay also indicated that it would 
inform the Committee as soon as it had news on that matter.  
 
72. China  noted that as a developing Member with a vast territory and a complex administrative 
structure it was not easy to collect the subsidy information overnight. China ha d made unremitting 
efforts to collect the information both at the central and sub -central levels and it would do its best 
to submit its notification as soon as possible.  
 
73. The Chair urged Members that had not yet submitted their notifications to do so, and  
recalled that the Secretariat continued to be available for enquiries 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 encoura ged 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 Notifi cation Requirements for the 
SCM Agreement and the two Geneva -based Internship P rogrammes coordinated by the 
Secretariat.  
 
74. The European Union  expressed its concern regarding the dismal state of compliance of 
Members with the notification obligations under the SCM Agreement. Two-thirds of the 
Membership had not submitted their 2017 not ifications. The EU urged Members to take their 
notification obligations seriously. Not having that information undermined the work of the 
Committee. Members needed to understand how the subsidies had affected  international trade . 
The EU asked the remaining  Members, which had not  already submitted their 2017 notifications to 
do so , as quickly as possible.  
75. New Zealand  supported the comments made by the EU and noted that it was disappointing 
to see such a low level of compliance with regular notification oblig ations, particularly for 
notifications prior to 2017. It also acknowledged that Members with sub -central programmes had 
additional challenges. To understand whether trade distorting subsidies were in place, which might 
be affecting other Members ' interest,  was difficult without up to date and complete notifications.  
Existence of Members who had not indicated that they had no programmes in place was G/SCM/M/103  
 
- 10 - 
 
  contributing to uncertainty and low level of compliance. Commending those Members who had met 
their obligation s, New Zealand encouraged those Members who had not yet submitted their 
notifications, particularly for 2015 and previous years, to do so prior to the April meeting of the 
Committee.  
76. Canada  viewed transparency obligations as a fundamental aspect of the Agr eement and a 
basic obligation for Members. It had strong concerns with the general trend towards lower rates of 
compliance with transparency obligations and the difficulties in moving towards greater 
transparency in the Committee. All Members should fulfil  their obligations in a timely and complete 
manner.  
77. The United States  echoed the views of the European Union, New Zealand, and Canada. The 
US encouraged all Members who had not yet submitted their notifications to do so as soon as 
possible.  In particular, the US encouraged larger Members who were significant exporters but had 
not yet provided their notifications to get up to date their notifications.  
78. The Chair noted that many Members were aware of the scope and importance of the 
problem. She hoped that the  Membership would further seek ways to improve the level of 
compliance with that fundamental transparency obligation. She would remain at Members ' disposal 
and were ready to engage with those delegations wh ich might have any ideas or suggestions for 
improvement.  
79. With respect to the second topic under this agenda item, the Chair recalled that at previous 
meetings, the Committee had discussed a proposal by Australia to add a new annex to the 
compendium document w hich would list all Secretariat calculations of export competitiveness 
pursuant to Article 27.6.  
80. Australia  noted that it had two proposals which were aimed at improving internal 
consistency within the compendium document. In reference to Article 27.6, Aus tralia was 
suggesting to include the requests made by Members  and was not looking for an interpretation of 
Article 27.6.  The second proposal was in relation to the request for information under Article 25.8 
and the Annex C of the document, in particular. A lthough the heading read as "notification 
provided ", it was the notification of the requesting Member, not the replies. Australia was seeking 
further clarification to complete the document.  
81. Canada , the European Union , New Zealand , and the United States , expressed their support 
for Australian proposals.  
82. China  noted that the title of Annex C to the Secretariat 's background note, "request for 
information under Article 25.8 of the SCM Agreement ", was quite clear. In the third column of the 
annex, the document numbers of those requests were shown for information which reflected the 
heading i.e., the notification provided as well as the relevant rules of the Agreement. Therefore to 
change that heading into replies by the Members receiving request for information was not legally 
grounded.  
83. The Chair  suggested reverting to that issue at the next meeting of the Committee.  
84. The Chair recalled that at the Committee 's April 2017 regular meeting, a number of 
Members had indicated their willingness to continue discussions on the proposal from the US 
regarding procedures for questions and answers under Ar ticles 25.8 and 25.9 of the 
SCM Agreement.  The previous week , the US had submit ted a revised document which had also 
been submitted as a room document at the previous meeting (G/SCM/W/557/Rev. 2). 
 
85. The United States  recalled that previously it had introduced its formal proposal that written 
answers to initial questions under Article 2 5.8 be provided within sixty days and that follow -up 
questions be answered in thirty days. The Committee should try to reach consensus on common 
sense procedures to respond questions submitted under Article 25.8 of the Agreement. The US 
proposal was no dif ferent from the current accepted practice of responding to written questions 
submitted in regard to regular Article 25 subsidy notifications.  G/SCM/M/103  
 
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  86. The US noted that provisions for written questions and written answers in the normal 
context of the Committee wer e not provided for in the Agreement; rather those were based on a 
common sense. Since the establishment of the WTO, Members had been judicious in invoking the 
provisions of Article 25.8 with only 17 submissions which was not as if Members had been abusing 
the mechanism. The US  also recognized the potential burden that proposal might present, in 
particular for lesser developed countries with significant capacity constraints . 
87. The US referred to a proposal regarding the possibility of responding to Article 25. 8 
questions in a Member 's new and full notification and in responding to questions related to such a 
notification. That suggestion might have merit if the support measures identified in Article 25.8 
submissions were explicitly addressed in either a new and  full notification or in responses to 
questions submitted pursuant to such a notification. The US would welcome to hear from other 
Members regarding that proposal.  
88. The US also referred to the room document distributed at the previous meeting and 
explained that according to the proposal, the answers to Article 25.8 questions would be submitted 
within 60 days unless otherwise agreed by the relevant Members. The previous week, the US had 
formally submitted the new text which was identical to the referred room document. If such a text 
had been adopted by the Committee, the US  would have looked favourably upon any request by a 
developing Member for additional time.  
89. The US welcomed specific proposals from Members on how the proposal could be modified in 
order to r educe the burden on those Members who had the most s ignificant capacity constraints 
and invited Members to make a counter -proposal if they had an issue with the  proposal.  The US 
remained flexible in finding a pragmatic solution that would satisfy the underlying objective of 
enhancing the exchange of information.  
90. Noting the importance of notification requirement under Article 25.8, Japan  supported the 
US proposal to establish certain procedures to facilitate the responses in a timely and 
comprehensive m anner.  
91. New Zealand  supported the US proposal indicating that it would allow a better 
understanding of Members ' programmes. The proposal was practical and not overly burdensome. 
New Zealand expected to hear other Members ' comments.  
92. The European Union  expres sed its support for the US proposal noting that it complemented 
the existing notification requirements of the Agreement. The latest amendment to the proposal 
was good as it took into account resource problems or burdens for some Members in meeting the 
deadlines. The EU also asked other Members to support the proposal.  
93. Canada  supported the US proposal noting that it was open to explore a mechanism to 
address Article 25.8 requests and could be flexible. It also encouraged constructive discussions 
between Memb ers in particular from those Members who had expressed concerns.  
94. Australia  remained interested and supportive of the US proposal. The US had usefully 
identified a gap in the Committee 's procedures and the suggested approach had been flexible to 
accommodate  the concerns raised by Members. Greater clarity in that procedure would encourage 
compliance with the notification obligations and improve the completeness and timeliness of the 
notifications.  
95. The Russian Federation  noted that there was a room for improvement in terms of 
completeness of notifications, meeting submission deadlines and timely responses by Members. 
The Russian Federation welcomed both proposals from the US and Australia. In general, Russia did 
not oppos e the US proposal; however, Members should take due account of the difficulties faced 
by Members with large economies, complex state structures and allocation of budget funding. An 
opportunity to agree on other deadlines would also be helpful. Nevertheless , it should be thought 
over how Members could organize that option, considering available administrative resources and 
timing. The Russian Federation remained ready for further discussions.  
96. China  recalled its position at the previous Committee meetings not ing that Article 25.9 
neither provided for the submission of written replies nor any specific time frames for the G/SCM/M/103  
 
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  submission of answers. The requirements for making such written answers or setting compulsory 
deadlines would impose newly added substantive o bligations on Members for which there was no 
legal basis. As expressed by many Members during previous meetings of the Committee, this 
might disturb the balance of rights and obligations reflected in the results of negotiations on 
relevant articles. The pr oposal would cause difficulties and challenges for both LDC Members as 
well as many developing Members with capacity constraints. It would increase the workload and 
distract Members ' focus on preparing the notifications under Article 25.1. The proposal, contrary to 
the original intention, might further delay submissions of notifications.  
97. According to Thailand , setting certain deadlines would impose additional obligations on 
Members. I f the requesting and responding Member did not agree on a time -frame, the responding 
Member would be constraint with the proposed time limits which would cause difficulties and affect 
the completeness of responses especially when a Member received several questions related to a 
number of agencies. Thailand was open for further discussions.  
98. Korea  welcomed the revised proposal by the US and would make a thorough review with its 
capital experts. It encouraged Members to enhance transparency through the impleme ntation of 
the notification obligations under the WTO.  
99. The Chair  stated that it appeared that Members wished to continue discussions on those 
issues at the next regular meeting of the Committee.  
 
100.  The Committee took note  of the statements made.  
 
6  PERMANENT GROUP OF EXPERTS  
101.  The Chair  recalled that the term of office of Mr Welber Barral as a member of the Permanent 
Group of Experts  had ended previous spring  and his position needed to be filled . 
102.  Following the then Vice Chairperson 's call for consultations, some  issues had been arisen 
regarding one of the CVs received, and since it had not been possible to resolve the matter, the 
Vice Chair had suspended the consultations. Unfortunately, the Chair could not report a progress 
since she had took over the chairperso nship. She would inform the Committee if and when the 
matter was resolved.  
103.  Korea  expressed its concerns over the postponement of consultations and hoped that the 
process would resume as soon as possible.  
104.  The Committee took note  of the statements made.  
7  TRANSPARENCY AND POSSIB LE STEEL SUBSIDIES I N CHINA - ITEM REQUESTED BY 
THE UNITED STATES  
105.  The United States  noted that the global steel in dustry was in a state of crisis. P roductive 
capacity had outst ripped demand  and the recent seminar on subsidies and overcapacity had 
touched on some of those issues. Partly that was due to the economics of making steel. Since a 
big part of steel mill costs were fixed, producers had a strong incentive to maintain or increase 
capac ity utilization to capture economies of scale. That put pressure on companies to keep mills 
running even when market signals might indicate the need for production cutbacks or the 
elimination of capacity.  
106.  Government subsidies and other support policies co uld distort the market signals and thus 
companies ' production and capacity decisions . As it had been touched on the recent seminar, such 
subsidies kept mills running longer than market forces might justify and delayed further the 
elimination of excess capa city. Since steel was a vital sector for its economy, the US had raised 
questions about the transparency of China 's industrial development and support policies.  
107.  With an increase of approximately 580% , the growth of the steel industry in China had been 
remarkable since it had becom e a WTO Member . China accounted for one -half of the world 's steel 
production. The growth of capacity in China  had outpaced the growth of demand in China, by over 
400 million tons.  G/SCM/M/103  
 
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  108.  In a market economy, when capacity outpaced dem and, the owners of that capacity were 
threatened by financial losses which caused capacity reductions or exit from the market. When an 
excess capacity existed in a market economy, it would be difficult, if not impossible, to obtain 
commercial financing to invest in more capacity or the maintenance of existing capacity. Those 
basic economic realities did not apply in China.  
109.  While the global financial crisis in 2008 had led to a severe drop in worldwide steel demand, 
the capacity had continued to grow in Chin a, by over 440 million tons, or 160 %, since 2009 . That 
increase  in capacity was more than the total capacity of the US, Japan, India, and Brazil combined.   
110.  According to China 's Ministry of Industry and Information Technology, as well as many 
market analyst s, China 's steel demand had peaked, and the demand had been declining 
since 2013.  Due to insufficient domestic demand, China 's excess production had spilled over to 
export markets. Since 2001, China 's exports of steel had grown from less than five million tonnes 
to over 100 million tonnes in 2016 which had led to a significant rise in trade remedy cases against 
Chinese products in both developed and developing countries. China maintained that the 
tremendous growth in capacity and exports had been accomplish ed without any specific 
government subsidy while an examination of the annual reports of several of the largest steel 
companies in China indic ated otherwise.   
111.  The US noted that in each of the six annual reports reviewed, there was a section titled 
"govern ment subsidies " or "government grants " which were dozens of government -funded projects 
through the provision of grants. The total number of subsidies or grants listed was 
approximately  160 all of which might not be subject to notification requirements of A rticle 25. 
According to the US, however, there were certainly more than three non -specific programmes 
which China had claimed to be the exclusive instances of government intervention in the Chinese 
steel industry.  
112.  Those annual reports  also indicated  that several of China 's steel companies had recei ved 
government equity infusions . While it was possible that none of the government equity infusions 
had provided a benefit to the recipient companies, in light of the rapid expansion of the industry 
contrary to m arket demand, it was reasonable to ask if those government investments had been 
consistent with market principles.  
113.  Referring to the worldwide overcapacity in the steel industry and the particular economics of 
the steel industry, The US noted that it was c ritical for all steel -producing countries to come 
forward and meet their obligations under the Agreement.  
114.  China  thanked the US for its consistent concern over China 's policies involving the steel and 
iron sectors, and indicated its willingness to clarify them to the best of its ability. Referring to its 
statement made  at the beginning of the meeting , China noted that the regular meeting of the 
Committee was not an appropriate forum for the discussion of overcapacity issues which were not 
in the terms of reference of this Committee.  
115.  China had introduced its relevant measures involving steel and iron in dustry at previous 
regular meetings. In its subsidy notification in documents G/SCM/N/220 /CHN , G/SCM/N/253 /CHN , 
and G/SCM/N/284/CHN, China had incorporated some of the subsidy policies related to the steel 
industry in line with the transparency principle, such as Program me 72, entitled the "Incentive 
Fund for Energy -Conserving Technology Upgrading and the Special Fund for Clean Energy " which 
had been notified as a sub -program me of Program me 79, entitled the "Special Fund for the 
Development of Circular Econ omy", although that did not mean that those policies were specific. 
Other policies which were considered as generally applied government inputs without specificity 
had not been included in China 's subsidy notifications. Therefore, the doubts of the US that China 
had never notified a single steel subsidy were groundless.  
116.  China ha d carefully verified the measures requested by the US and the European Union 
pursuant t o Article 25.8 of the Agreement and it would provide  clarification in two categories. First, 
in its central government level subsidy notification , for example,  (i) the "Incentive Fund of Hebei 
Province for Energy -Saving Transformation " had come from program me 72 entitled  "Incentive 
Fund for Transformation of Energy -Saving "; (ii) "Wuhan Iron and Stee l Group 's Special Fund for 
Environmental Projects, Energy -Saving and Emission Reduction " had come from the "Special Fund G/SCM/M/103  
 
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  for Clean Energy ", which had been notified as a sub -program me of Program me 79, entitled t he 
"Special Fund for the Development of Circular Economy; and (iii) "Shougang Group 's Import 
Discount Fund" had come from program me 39 entitled  "Special Fund for the Development of 
International Economy and Trade". 
117.  As the s econd  category , China referred to  the policies which shall not be included  in its 
notification due to non -specificity, such as "Polluted Water Treatment Special Fund of Hebei Iron 
and Steel Company "; "Environmental Protection  Special Fund "; "National Technology Support Plan 
Special Fund "; "Hebei Finance Department Allocation of  First Batch of Talent Selection Fund "; 
"Receipt of PRC MIIT Deepen Harmonization Special Fund "; "Stable Employment Subsidy for 
Losses from Demolition " and "Stopping Production and Stopping Business of Shougang Company ".  
118.  Those were the verification result s that China ha d collected from the relevant department s 
and local governments. China w ould update  the Committee and the US on any further comments 
and responses if there  was any progress.  
119.  Regarding the issue of specificity, China indicated that it would carry out in -depth studies on 
policies related to the iron and steel industry as well as the concerns of Members, and try to 
incorporate the results of the study and respond to concerns of Members including the US in its 
future notification.  
120.  Japan  shared th e US' concerns and  supported the discussion raised . From the perspective of 
transparency, it was beneficial to strengthen the notification obligation in line with the existing 
WTO rules.  
121.  Australia  agreed that it was critical for all steel producing Member s to meet their notification 
obligations under the Agreement. It saw transparency as the core of the Agreement and urged all 
Members to complete their notifications as soon as possible. There were different mechanisms to 
meet notification obligations under  Article 25 and Australia encouraged Members to explore them 
to ensure complete and timely notifications.  
122.  Canada  recalled its previous interventions on the importance of transparency obligations as 
a fundamental aspect of the Agreement. All Members should  strive to fulfil those obligations in a 
timely and complete manner and promptly provide responses to questions raised by other 
Members. In particular, Canada noted that transparency in steel subsidies was fundamental in 
addressing the overcapacity issue i n that sector. Canada expected China 's ongoing engagement in 
that issue.  
123.  The European Union  noted that the notification obligations existed to ensure that Members 
had knowledge of each other 's domestic subsidy regimes and their effects. The EU reiterated  that 
the compliance with the notification obligations under Article 25 was crucial for the effective work 
of the Committee. The submission of a subsidy notification was a key step in meeting the 
obligations under the Agreement but not sufficient without c omplete information. I t had to include 
information on all specific subsidies both at central and sub -central levels regarding all sectors. 
One of the means to understand the global problems arising from serious overcapacity in the steel 
industry was having  knowledge of the type of the subsidies in place. Given the economic 
importance of the steel industry worldwide, the EU urged all steel producing Members to come 
forward and meet their notification obligations.  
124.  China  clarified that its written answers to t he questions posed by the US in document 
G/SCM/Q2/CHN/69 regarding its subsidy programmes at sub -central level had been submitted 
prior to the meeting and invited Members to check those responses.6  
125.  The Committee took note  of the statements made.  
                                                
6 G/SCM/ Q2/CHN/73 circulated on 30 October 2017.  G/SCM/M/103  
 
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  8  TRANSPARENCY AND POS SIBLE FISHERIES SUBS IDIES IN CHINA – ITEM REQUESTED 
BY THE UNITED STATES  
126.  The United States  recalled that in China 's 2014 Trade Policy Review, the Secretariat had 
uncovered 30 support programmes for China 's fisheries sector. The Secretar iat's Report had noted 
that China had not notified any of these programmes to the Committee and further that China 
could not confirm any of the programmes had been in place. China had not provide any 
substantive responses to the questions asked in the cour se of the TPR process stating that it 
needed more time to identify and verify information regarding those support programmes. In its 
third subsidy notification covering the period between 2009 and 2014, which had been submitted 
in October 2015, China had n ot included any of the programmes id entified by the Secretariat. 
In 2016, the US had counter -notified over forty possible fisheries subsidies, mostly those 
previously identified by the Secretariat.  
 
127.  During China 's TPR in October 2016, Members had asked Chi na to explain when it would 
notify its fisheries subsidies. Noting that three programmes had been already notified, China had 
stated that it had been continuing to review its fisheries subsidies and that it would deliberate on 
the notification issue. Accep ting that three programmes had already been notified, over forty 
programmes remained unnotified.  
 
128.  Although the substantial number of measures that had been uncovered and translated 
indicated that the provinces in China had programmes to support a signific ant expansion of China 's 
distant water fishing fleet, no fisheries subsidies had been included in China 's sub -central subsidy 
notification submitted in July 2016.  
 
129.  The number, variety and substantial nature of the subsidies measures in China was quite 
noteworthy. It included a multitude of measures for fishing vessel acquisition and renovation; 
subsidies for insurance; subsidized loans for processing facilities; fuel subsidies; preferential 
provision of water, electricity and land; grants to explore new off shore fishing grounds; grants for 
establishing famous brands; and special funds for strategic emerging industries in the marine 
economy. It appeared that China had been aggressively expanding its distant water fishing fleet 
despite the fragile state of the  global fisheries. The US urged Members to read the measures that 
had been uncovered and translated.  
 
130.  The dire state of the world 's fisheries had led to calls both at the WTO and other 
international fora for greater transparency for fisheries subsidies tha t contributed to overfishing 
and overcapacity, beyond the obligations of 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 subsidie s that contribute to overcapacity 
and over -fishing, and to refrain from introducing new such subsidie s, without prejudice to the 
WTO Doha negotiations ".  
 
131.  More recently, the Sustainable Development Goal 14.6 targeted, by 2020, the prohibition of 
certain forms of fisheries subsidies which contributed to overcapacity and overfishing as well as  
the elimination of subsidies that contributed to illegal, unreporte d and unregulated fishing . I also  
asked countries to refrain from introducing new such subsidies, recognizing the need for 
appropriate and effective special and differential treatment. According to the US, the subsidy 
notification obligation of Members cou ld serve as an effective monitoring mechanism to ensure 
implementation of the commitments made under the SDG 14.6.  
 
132.  Members could provide subsidies  to their fishing industries; however, they all had an 
obligation to notify their programmes. In light of the  Xiamen Declaration, SDG 14.6, and other 
international initiatives, most countries were seeking to increase the level of transparency of their 
fisheries subsidies programmes, reform those programmes, and to refrain from introducing new 
subsidies or from ex tending or enhancing the existing ones.  
 G/SCM/M/103  
 
- 16 - 
 
  133.  Noting that Members were negotiating disciplines on fisheries subsidies in the WTO, the US 
asked how Members could negotiate effective and meaningful disciplines if they lacked basic 
information on Members ' existing  programmes, including information on the programmes of the 
world 's largest fish producer.  
 
134.  Given the even increasing pressure facing the world 's fisheries and the global consensus to 
take action to save the oceans, the US again requested China to join tho se seeking a solution, 
which could start with Members putting all of their programmes on the table for all Members to 
see. 
 
135.  China  reiterated that it had  verified relevant programmes referred in the US counter -
notification in document G/SCM/Q2/CHN/59. The majority of the programmes were overlapping 
with the document G/ SCM/Q2/CHN/52 submitted by the United States in April 2015 and a t the 
previous meetings, China had already clarified some of the fishery subsidy programmes and 
provided a detailed explanation  on the programmes covered by China 's notifications. China would 
provide more  clarification at the meeting.  
 
136.  First, regarding  Programme No. 47 of China 's notification and Program me No. 42 of the 
counter -notification, entitled "Subsidy for Purchasing Agricu ltural Machinery and Tools ", China had 
indicated in its notification that the subsidy was provided to individual farmers purchasing 
agricultural machinery and tools  or service providers  and was not targeted at specific industries.  
 
137.  Second, with respect to  Programme No. 55 of China 's notification and Programmes No. 30 
and No. 31 of the counter -notification, entitled the "Subsidy to the Change of Fishermen 's 
Production ", China noted  that the submission by the US was one of the supporting directions of the 
funds of Programme No. 55.  China referred to Item No.3, "Subsidies on Reduction in the Number 
of Fishing Vessels and Change of Fishermen 's Production ", regarding how the subsidy was 
provided.  
 
138.  Third, in respect of Programme No. 84 of China 's notification and Program mes No. 36 and 
No. 37 of the counter -notification, there might be some misunderstanding. The support policies 
mentioned in the submission of the US included two aspects. Firstly, import tariffs were exempted 
for leading enterprises engaged in agricu ltural product processing programme s encouraged by the 
state which imported internationally advanced equipment for self -use. For that subsidy , China 
referred to  Program me No. 61, "Preferential Tax Treatment for Import of Equipment ", in its third 
subsidy no tification. Secondly, leading enterprises enjoyed preferential tax treatments when 
purchasing environmental protection, water and energy con servation  equipment. For that subsidy , 
China referred to Program me No. 14, "Preferential Tax Treatment for Projects for Environmental 
Protection, Water and Energy Conservation ", in its third subsidy notification.  
 
139.  China noted that it would try to take into consideration the concerns of Members regard ing 
fishery policies  in its future subsidy notification. With respect t o the completeness of the subsidy 
notifications, China indicated that  its officials were in pursuit of submitting notifications in a 
complete manner. What China could do was to collect as much subsidy policy information as 
possible while striving to reduce  omissions. Taking into account that China was a developing 
country with vast territory and complex administrative structures, all subsidy policies could not be 
covered overnight. Moreover, China did not think that the US notifications were totally perfect  in 
terms of the completeness. As shown in the Article 25.8 request raised by China at the April 
meeting and the questions on the US ' 2015 new and full notification, there were also problems 
regarding the completeness of the US notifications.  
 
140.  As a respons ible Member, China had always committed to perform its transparency 
obligations earnestly and done its utmost to address Members ' concerns related to China 's subsidy 
policies. In the process of preparing new subsidy notifications at central and sub -central  
government levels, China would take Members  concerns into full consideration, collect as much 
subsidy policy information as possible, and constantly improve the transparency of China 's trade 
policies.  
 
141.  Japan  noted that it was expecting China to notify the  relevant subsidies in consistent with 
the WTO rules.  
 G/SCM/M/103  
 
- 17 - 
 
  142.  Recalling its previous interventions with respect to transparency obligations, Canada  
indicated that it specifically supported greater transparency regarding fisheries subsidies. It hoped 
that China wa s in a position to provide all relevant information in its forthcoming notifications.  
 
143.  The European Union  remained concerned with the poor state of subsidy notifications in 
fisheries sector by important WTO Members. There was a wide agreement that fisheri es subsidies 
were one of the major contributions to the poor state of world 's fisheries. A failure to notify 
fisheries subsidies prevented Members from effectively scrutinizing the impacts of those subsidies. 
The EU called on all Members to respect those o bligations under Article 25 of the Agreement and 
properly notify all subsidies granted in the fisheries sector both at the central and local levels.  
 
144.  Australia  echoed the concerns over the lack of transparency regarding fisheries subsidies. 
Assessing the i mpact of subsidy programmes would be very hard without the most rudimentary 
transparency through notifications. Australia urged all Members to be mindful that there was an 
obligation to notify fisheries subsidies as well.  
 
145.  New Zealand  encouraged all Member s to ensure that they notified any relevant fisheries 
subsidies given their impact on overcapacity and overfishing.  
 
146.  China  reiterated that the concerns raised by Members would be taken into consideration in 
its new subsidy notification.  
 
147.  The Committee took note  of the statements made.  
9  NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES UNDER THE 
INTERNATIONALLY WELL -KNOWN BRAND PROGRAMM E (G/SCM/Q2/CHN/71) – ITEM 
REQUESTED BY THE UNI TED STATES  
148.  The United States  indicated that the focus of its fifth counter -notification was China 's 
Internationally Well -known Brand Programme. That issue went back to 2008, when the US had 
asked for dispute settlement consultations regarding the Famous Export Brand Programme (FEBP) 
which had been alleged to be a prohibited export  subsidy under the Agreement.  
149.  The US ' statement of evidence had included more than 90 legal measures that had 
established and implemented the FEBP at the central and sub -central levels of government. The 
central level measures had laid out the parameters o f the programme which had been 
implemented at the sub -central levels in a variety of ways.  
150.  Following the consultations, the US and China had conducted settlement discussions for 
several months. Towards the end of 2009, China had terminated or amended many of the 
measures at issue and demonstrated that the remaining programmes had expired or been no 
longer in effect. A mutually agreed solution had been signed in December 2009 in which China had 
confirmed "that no export -contingent benefit [would] be provided  to entities in China under any 
measures contained in the consultation request or any subsequent related measure ". 
151.  Subsequent to that agreement, the US had begun to see legal measures at the central and 
sub-central levels establishing the Internationally W ell-Known Brand Programme. The relevant 
central government legal measure had stated that the FEBP had been "adjusted and perfected " 
and that the title Famous Export Brand would be changed to Internationally Well -Known Brand.  
152.  While the export -related eligib ility criteria had been removed from the central level measure, 
very similar export -related eligibility criteria had been included in the sub -central measures.  
153.  In China 's most recent subsidy notification regarding sub -central level programmes, the 
FEBP was  notified by many sub -central governments although it had  been effectively terminated 
in 2009. Notifying a programme after seven years from its expiration was not particularly helpful 
in furthering the transparency objectives of the Agreement.  
154.  While many o f the Famous Export Brand measures had been notified after the termination of 
the programme, neither the central nor sub -central notifications of China had included the 
measures implementing the Internationally Well -known Brand Programme which had become G/SCM/M/103  
 
- 18 - 
 
  effective more recently. Those actions did not provide Members with the level of transparency 
envisioned by the Agreement and indeed raised questions as to the brand programmes currently in 
place and whether they were consistent with the rules of the Agreem ent regarding export 
subsidies. It was disturbing that those serious questions regarding China 's subsidy regime 
continued sixteen years after China had become a WTO Member.  
155.  Japan  noted that if there were any subsidies which triggered the notification requi rement , 
yet had not been notified with the latest information, they should be adequately notified.  
156.  China  indicated that the programmes referred by  the US were e ither cancelled or abolished. 
Upon receiving the document G/SCM/Q2/CHN/71 submitted by the US, C hina had carefully sorted 
out and verified the relevant programmes which could be divided into four categories.  
157.  First, policies which granted honorary titles of "international well -known brands " rather than 
provided subsidies , such as ; 
 
 Item No. 2: Notice on Organizing and Carrying Out the 2013 -2015 "Anhui Famous Export 
Brands " Selection Work;  
 Item No. 7: Notice on Doing Well the 2014 -2016 Fujian Province Key Cultivation and 
Development International Well -Known Brands Application Work;  
 Item No. 9:  Notice on Recommending the 2013 -2014 "Fujian Province Key Cultivation 
and Development International Well -Known Brands " Enterprises;  
 Item No. 15:  Dehua County Three -Year Action Plan for Further Promoting Enterprises ' 
Indigenous Innovation;  
 Item No . 18: Notice on Carrying Out Guangzhou City 2012 -2013 Key Cultivation and 
Development Indigenous International Well -Known Brands Enterprise Designation Work;  
 Item No. 19:  Work Plan for the 2011 -2013 Guangdong Province Foreign Trade and 
Economic Bureau Key Cultivation and Development International Well -Known Brands 
Designation;  
 Item No.  23: Implementing Opinion to Further Promote Henan Province International 
Well-Known Brands Cultivation and Construction Work;  
 Item No. 25: Notice on Organizing the Recommenda tion and Selection of the 2013 -2015 
"Henan Province International Well -Known Brands " Activities;  
 Item No. 26:  Henan Province Selection Measure on International Well -Known Products;  
 Item No. 72:  Notice on Organizing the Application for the 2014 -2016 "Shando ng Province 
Key Cultivation and Development International Well -Known Brands "; 
 Item No. 78:  Rule on the Tianjin Municipality Exit -Entry Inspection and Quarantine 
Bureau Promoting International Well -Known Brands Cultivation Work;  
 Item No. 79: Notice on Carry ing Out the 2011 "Tianjin Municipality International Well -
Known Brands " Designation Work;  
 Item No. 80:  Notice on Carrying Out the 2014 "Zhejiang Export Brands " Designation 
Work.  
 
158.  Second, planning or catalogues were documents of guiding nature, which did no t involve 
specific subsidies , such as;  
 
 Item No. 1: Guiding Opinion on Promoting International Well -Known Brands Cultivation 
Work;  
 Item No. 6:  Fujian Province Foreign Trade and Economic Cooperation Bureau Passing on 
the Ministry of Commerce and Eight Agency [Issued] Guiding Opinion on Promoting 
International Well -Known Brands Cultivation Work, Min Wai Jing Mao Fa [2009] No. 16 
(27 April 2009);  
 Item No. 11: Implementing Opinion on Accelerating Industrial Leapfrog Development;  
 Item No. 13:  Opinions on Promoting the Upgrade and Development of the Manufacturing 
Sector;  
 Item No. 17:  Guiding Opinion on Promoting Foreign Economic and Trade Enterprises ' 
Indigenous Innovation and Indigenous International Well -Known Brand Construction;  G/SCM/M/103  
 
- 19 - 
 
   Item No. 24:  Opinion on P romoting International Well -Known Brands Cultivation Work;  
 Item No. 37: Opinion on Accelerating Foreign Trade Development.  
 
159.  Third, relevant policies had existed but no subsidy had ever been granted in accordance with 
such policies including;  
 Item No. 20: H aojiang District Measures on Promoting Foreign Trade Import and Export 
Development;  
 Item No. 38: Implementing Opinion on Accelerating Industrial Development;  
 Item No. 48: Inner Mongolia Implementing Plan on Promoting International Well -Known 
Brands Cultiva tion Work "Ten Thousand Talent Program me"; 
 Item No. 44: Notice on Carrying out 2015 "Inner Mongolia Key Cultivation and 
Development International Well -Known Brands " Selection and Designation Work.  
 
160.  Fourth, subsidy policies claimed by the US did not exist , such as;  
 
 Item No. 22: Preferential Policies to Support Foreign -invested Enterprise Trademark 
Registration and International Well -Known Brands;  
 Item No. 39: Measure on Industrial Enterprise Development Preferential Policies and 
Rewards;  
 Item No. 40: Changde City Interim Measure on Continuation of Industrial Shifting 
Development and Processing Trade Guiding Fund Administration.  
 
161.  The United States  indicated that it had to go back and compare China 's responses with the 
counter -notified measures. It was c urious that there were so many measures but no subsidies. In 
terms of measures that did not exist, the US reiterated that those measures existed and had been 
translated from Chinese.  
162.  The Committee took note  of the statements made.  
10  INDIA 'S ELIMINATION OF EXPORT SUBSIDIES FOR  TEXTILES AND APPAREL  
PURSUANT TO ARTICLE 27.5 OF THE SCM AGRE EMENT – ITEM REQUESTED BY TH E 
UNITED STATES  
163.  The United States  recalled its view, based on the Secretariat 's calculations, that the Indian 
textile and apparel sector had reach ed export competitiveness no later than 2007. Therefore, India 
had had an obligation – at least since 2007 – to gradually phase out export subsidies provided to 
numerous products in the textile and apparel sector, meaning that the eight year phase -out peri od 
had ended and all export subsidies to India 's textile sector should have been terminated. While 
India's recently released Foreign Trade Policy for 2015 -2020 recognized the need to terminate 
certain programmes, unfortunately it did not establish any proc edural framework for doing so and 
appeared to target 2018 as the operative date for termination. The US had made clear to India 
that it would welcome further dialogue as to how India could meet its WTO obligations.  
164.  India recalled its previous intervention s noting that 2018 would be its timeline for phasing 
out the export subsidies to textiles and apparel products. Most of the existing programmes were in 
the form of remission or exemption of duties and therefore not export subsidies. For the remaining 
progr ammes, which were alleged to be export subsidies, India was committed to meet its 
obligations and ready to engage in discussions on the issues such as when export competitiveness 
was reached. India recalled its previous interventions that export competitiv eness had been 
reached in 2010 therefore it had time until 2018 to remove the programmes in question. Despite 
the fact that there were certain issues regarding the legal interpretations  on the definition of 
product, India reiterated that it had time till December 2018.  
165.  The Committee took note  of the statements made.  G/SCM/M/103  
 
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  11  INDIA 'S GRADUATION FROM AN NEX VII OF THE SCM A GREEMENT – ITEM 
REQUESTED BY THE UNI TED STATES  
166.  The United States  recalled that Members included in Annex VII of the Agreement were not 
subject to the prohibition on export subsidies in Article 3 of the Agreement and originally those 
Members would have graduated from the annex if their GNP per capita had risen above $100 0 in a 
given single year. At the Doha Ministerial, the threshold for graduation had been raised 
substantially according to which those Members would graduate from Annex VII if their GNP per 
capita was above $1000 in constant 1990 dollars for three consecut ive years.  
167.  According to Secretariat 's latest calculation released in July 2017, India had been above the 
threshold for three consecutive years. Therefore, India was no longer included in Annex VII and 
would have to end all of its export subsidies in all se ctors of its economy. The US was interested in 
hearing India 's intentions for its existing export subsidy programmes.  
168.  Japan  referred to the Secretariat 's latest calculation and noted that India was expected to 
become subject to the prohibition on export su bsidies. India should withdraw all the export 
subsidies or remove their contingency on export performance.  
169.  India noted that it was aware of its commitments under the WTO, however subsidies could 
not be withdrawn overnight. Along with other co -sponsors, it had submitted a paper in document 
TN/RL/GEN/177/Rev.1 in which they had explained their understanding of the present text of the 
Agreement  and sought for amendments to the Agreement to clarify the existing provisions, 
Articles  27.2(b) and 27.4, in particul ar. The particular reference therein had been referred in 2011 
Chair's text but had not been delivered further despite the efforts. India referred to its last review 
in Foreign Trade Policy 2015 which was available in the public domain and noted that it had 
streamlined export subsidy schemes substantially. There were one or  two schemes which were 
alleged to be export subsidies. India was ready to work with Members to clarify  and resolve any 
issue regarding graduation  from Annex VII.    
170.  The Committee took note  of the statements made.  
12  ENHANCING FISHERIES SUBSIDIES TRANSPAREN CY – ITEM REQUESTED BY TH E 
UNITED STATES  
171.  The United States  recalled the informal room document circulated at the last meeting of the 
Committee consisting of seven questions to guide the discussion. As some Members had needed 
more time, the US would continue i ts focus on those questions. The US clarified that those 
questions were submitted in the context of the work of the Committee and it did not intend to 
submit them to the Negotiating Group on Rules (NGR).  
172.  As a general matter, the US asked what other informa tion might be needed to assess the 
trade and resource impacts of a fishery subsidy. The US recalled that it had suggested: (i) catch 
data by species in the relevant fishery; (ii) status of the fish stocks in the relevant fishery; (iii) 
fleet harvesting cap acity in the relevant fishery; (iv) conservation and management measures in 
place for the relevant fish stock; and (v) total imports/exports per species.  
173.  Catch data and the status of the targeted fishery was important for the US to monitor the 
status of th e relevant  fishery and generally not to subsidize the harvesting of depleted stocks 
which would likely lead to even more fish to be harvested.  The US recognized the point made 
about the difficulty of linking a subsidy to any one fishery in certain circumst ances and welcomed 
ideas on addressing that issue. It understood that defining "harvesting capacity " was difficult and 
asked whether there was a practical approach to that issue which might provide valuable 
information.  The US also asked whether any of the  relevant international fishing organizations 
could help Members to fill in some of the information gaps regarding the catch data and status of 
stocks and fleet capacity.  
174.  The WTO was not a fishery management organization and might not have the expertise t o 
evaluate management plans. However, if harvesting a particular fish stock was going to be 
subsidized , it would be critical to have a management regime to prevent overfishing.  G/SCM/M/103  
 
- 21 - 
 
  175.  Under the regular notification obligations of the Agreement, information on the  trade effects 
of a subsidy was requested. While the reasoning behind that requirement was understandable, 
Members found it difficult to answer. Therefore the US asked whether there was concrete 
information that could be provided such as imports and export s, which might shed light on 
possible trade effects.  
176.  The US finally noted that its ultimate goal was to ensure that the notifications provided 
greater transparency on fisheries subsidies programmes and allowed a better understanding of the 
operation of not ified programmes.  
177.  Panama  noted that fisheries subsidies would not only distort trade but also restrict the 
competition as they had a great impact on export and production capacity. Fisheries were common 
resources, in particular the ones in the high seas. I t was very important to understand the effects 
of fisheries subsidies on the environment and the possibility of exhausting resources due to 
overfishing. In this regard, transparency was very important and a key component to evaluate the 
impact of subsidies  on trade . Panama was concerned with the quality of notifications and called 
upon all Members to cooperate on that matter.  
178.  New Zealand  noted that it had provided answers to th e questions  raised by the US  at the 
April meeting and encouraged all Members to take a look at the questions and provide answers.  
179.  The European Union  was very concerned about the poor state of subsidy notifications in 
general, not only with regard to fisheries subsidies. It referred t o its paper in document 
TN/RL/GEN/188 dated 30 May 2017 and recalled that it had offered three alternatives to improve 
transparency at the two subsequent NGR meetings: (i) streamlined monitoring of compliance with 
notification obligations; (ii) a general r ebuttable presumption according to which all non -notified 
subsidies would be presumed to be actionable; and (iii) a rebuttable presumption of actionability 
applicable to counter -notified subsidies.  
180.  According to the EU, in the area of fisheries subsidies, m ore information than prescribed in 
Article 25.3 of the Agreement was needed in order to effectively know what other Members were 
doing. Hence, in the context of fisheries subsidies negotiations, the EU had proposed a two -tier 
approach in document TN/RL/GEN /181/Rev.1. In addition to information requested by Article 25.3, 
the EU had prescribed certain information to be provided on a mandatory basis while certain other 
types of information would be provided on the best endeavour basis only.  
181.  Japan  noted that n otifications of subsidies under the SCM Agreement were important. The 
NGR had been discussing the disciplines of fisheries subsidies and comprehensive negotiations on 
prohibited subsidies  and notification requirements were ongoing. The NGR should be the re levant 
platform to discuss any additional notification requirements.  
182.  According to Canada , improved transparency in fisheries subsidies was an important step in 
taking action to address the state of world 's fisheries. It supported the discussion on that item 
including exploring ways to enhance transparency in the context of fisheries subsidies 
negotiations. It continued to consider the  questions posed by the US with the intention to respond.   
183.  Australia  noted that transparency of subsidy notifications was core work of the Committee. 
There were ongoing discussions in the NGR but Members did not yet know the outcomes. Recalling 
the EU 's proposals to improve transparency, Australia noted that it was open to discuss all those 
proposals. The Committee had a role  to find ways to improve fisheries subsidies transparency. 
Australia was still working on the questions raised by the US and would provide some general 
responses at the next meeting. As it stated  at the April 2017 meeting, Australia considered 
improved tra nsparency should be implementable and not duplicate information requirements in 
other organizations. With respect to the second question posed by the US, it noted that the 
Committee could identify the information gaps. Australia was ready to work with othe r Members to 
improve transparency in fisheries subsidies.  
184.  Recalling the ongoing discussions in the NGR, China  noted that the NGR was the appropriate 
forum to discuss fisheries subsidies transparency.  
185.  The Committee took note  of the statements made.  G/SCM/M/103  
 
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  13  SUBSIDIE S AND OVERCAPACITY – ITEM RE QUESTED BY CANADA, T HE 
EUROPEAN  UNION, JAPAN, MEXICO , AND THE UNITED STA TES 
186.  The European Union  indicated that it would deliver a statement on behalf of the co -sponsors 
of that agenda item and referred to a seminar on the role of subsidies as a contributor to 
overcapacity that had been organized by the EU, Canada, Japan, Mexico and the United States  on 
2 October 2017.  
187.  The EU noted that i ndustrial overcapacity was a major and growing cause of distortions to 
international trade as it negatively affected the economic situation of those countries in which 
overcapacity occurred as well as of third countri es whose industries were adversely affected by the 
resulting oversupply.  
 
188.  Subsidies were one of the main contributors to overcapacity which had also been recognized 
by global leaders. During the Chinese G20 presidency in 2016 , both G20 Trade Ministers and 
Leaders had recognized that "subsidies and other types of support from governments or 
government -sponsored institutions can cause market distortions and contribute to global excess 
capacity and therefore require attention. " 
 
189.  The EU and co -sponsors fully re cognised that not only the WTO, but also other international 
settings had a relevant role to play in addressing the issue of overcapacity. Given its broader trade 
mandate and wide membership , and more specifically the SCM Agreement, t he WTO had a central 
role to play . Therefore, the EU, along with other co -sponsors, had drawn the Committee 's 
attention to the issue by submitting two papers (G/SCM/W/569 and G/SCM/W/572 ) about  the role 
of subsidies on overcapacity.  
 
190.  The first paper discussed in October 2016 me eting had been a more general introduction of 
the topic while the second paper discussed in April 2017 had offered some specific answers to how 
the issue could be addressed.  
 
191.  The purpose of the referred seminar had been to have experts address the relatio nship 
between subsidies and overcapacity from different angles, thereby deepening the debate about the 
issue. The EU informed Members that the  seminar was available online and interested Members 
could approach the co -sponsors directly if they had difficult ies to access.  
 
192.  At the outset of the seminar, Marc Vanheukelen, the EU Ambassador to the WTO, had 
highlighted why the co -sponsors perceived the industrial subsidies and overcapacity as a grave 
problem. He had made reference to the papers  submitted to the Committee by the EU and other 
co-sponsors and noted that the seminar would be useful when taking further steps aiming at 
subjecting subsidies that contributed to overcapacity to more stringent disciplines.  
 
193.  In the first and practical bloc of the seminar, t he concrete situation in steel and aluminium 
industries affected by overcapacity and how subsidies had contributed to it had been described. 
The first speaker in that block, Mr Karl Tachelet, had described the situation in the steel industry 
and the crisis  that had arisen in 2015. He had also addressed the issue of overcapacity indicating 
that ther e had been no one -size-fits-all definition of excess capacity.  
 
194.  The second speaker, Mr Markus Taube , had described the situation of the global aluminium 
industry and a particular situation in China including the Chinese impact on the global aluminium 
markets as well as subsidies and functional equivalents to subsidies. He had also pointed out the 
difference between the notions of overshooting capacity and overcapac ity as the latter existed in 
the aluminium industry.  
 
195.  In the second and theoretical bloc, presentations had been on the most typical forms of 
subsidies that contribute to overcapacity and the role of state -owned enterprises,  particularly 
state-owned banks . Presenters had also identified stre ngths and weaknesses of the 
SCM Agreement to tackle the issue as well as ways to improve it.  
 
196.  The first speaker in that bloc, Mr Bernard O 'Connor, had explained the structure of the 
Chinese economy with Sasac, Central H uijin, NDRC and Cisa being the major pillars and 
highlighted that success in China was measured by achieving the plan not by the profitability. He 
had also described what the OECD had been doing in the steel sector and compared the current G/SCM/M/103  
 
- 23 - 
 
  situation to the  one in agriculture in the 80 's where OECD work had been central to resolving 
excess agricultural capacity in the lead up to the Uruguay Round. Subsequently, he had addressed 
the issue of SOEs and concluded that they benefited from, and delivered, subsidie s contributing to 
overcapacity. As for possible solutions, he had suggested , for example , to focus on specificity 
asking whether such a concept was appropriate when, by virtue of government action, a particular 
raw material or energy source was provided at  less than adequate remuneration even if it was 
provided to all players in a market. On the issue of overcapacity, he had suggested that where 
government policy created overcapacity and where the extra capacity was exported this should be 
seen as a prohibi ted subsidy within the terms of Article 3 of the Agreement.  
 
197.  The second speaker, Mr Robert DeFrancesco, had focused on the ways to improve the 
Agreement. He had criticised the Appellate Body for eroding the trade defence instruments in its 
jurisprudence, f or example as regards the public body definition. With respect to the Agreement, 
he had suggested a number of amendments to address the issue.  
 
198.  The first such solution would be to add a new paragraph to Article 5 that would establish a 
finding that a subs idy causes serious prejudice where the subsidy was specific and a Member 's 
capacity levels of a particular like product over a period of time had suppressed and/or depressed 
prices of another Member 's like product.  
 
199.  The second solution would be to revive Article 6.1 of the SCM Agreement which had lapsed 
in 1999 and which had provided for a presumption of serious prejudice for some of the most 
harmful types of subsidies that would be relevant also in the context of addressing the relationship 
between subsid ies and overcapacity.  
 
200.  The third suggestion would be to amend Article 3 of the Agreement to include below -market 
financing schemes as prohibited subsidies. These schemes were: (i) direct transfer of funds to 
cover operating losses; (ii) forgiveness of deb t (taking into account bankruptcy laws or other 
insolvency proceedings); (iii) loans to enterprises that are uncreditworthy; and (iv) debt -for-equity 
swaps that are not on commercial terms.  
 
201.  The fourth solution had focused on adding two harmful subsidies to the list of prohibited 
subsidies: (i) subsides granted under any legal agreement to cover debts or liabilities; and (ii) 
subsidies (such as loans and guarantees, cash grants, capital injections, provision of assets below 
market prices or tax exemptions)  to insolvent or ailing enterprises, without a credible restructuring 
plan based on realistic assumptions with a view to ensuring the return of the insolvent or ailing 
enterprise within a reasonable period of time to long -term viability and without the ent erprise 
significantly contributing itself to the cost of the restructuring.  
 
202.  The fifth idea would be to prohibit subsidies inputs for less than adequate remuneration.  
 
203.  The sixth suggestion would be to focus on increased transparency, for example by 
preve nting a Member that was withholding information about its subsidized programmes from 
challenging affirmative subsidy findings by other Members or by creating a presumption of 
actionability for non -notified subsidies. The final suggestion had been to streng then Annex V to the 
SCM Agreement.  
 
204.  The third and last speaker, Mr Mark Wu, had referred to the issue of negative externalities 
stemming from excess capacities and highlighted legal methods that existed to circumvent the 
WTO law that would otherwise combat  subsidies that promoted overcapacity. These methods 
included: (i) rendering a subsidy non -specific e.g. by providing cheap inputs at the level of the 
whole region; (ii) making sure that no government or public body in stricto sensu  was involved in 
the sub sidy; (iii) merges and acquisitions, debt -equity swaps and balance sheet transfers done by 
private or quasi -state entities without any direct evidence of direction or entrustment by the state; 
and (iv) implicit understanding arrangements that were premised  on networks outside of 
government.  
 
205.  Australia  shared the concerns over global overcapacity. It was a real problem and its 
impacts were felt in the Australian market. There were linkages between that issue and the work 
of the Committee and Australia was supportive of the Committee looking at the issue more fully as 
well as in other global fora. It was interested in how the Committee could further supp ort 
discussion by Members and reiterated that transparency was vital to understand what was G/SCM/M/103  
 
- 24 - 
 
  happening in global markets. Therefore, it was important that Members continued to submit timely 
and complete notifications.  
 
206.  Japan  noted that there were many governmental activities which might trigger overcapacity. 
For example, when strategically important companies began to fail, governments might seek to 
maintain employment, production, and capacity, in particular in the absence of  an exit mechanism. 
Governments might forgive debt, roll over loans from state -owned or controlled financial 
institutions, convert debt -to-equity or provide new equity without restructuring the failing 
companies such that they could operate profitably with  capacities in line with market demand. 
According to Japan, some of the categories of subsidies as contributor to overcapacity and possible 
disciplines could be explored in the Committee.  
 
207.  The typical subsidies related to overcapacity were (i) subsidies t o cover debts or liabilities of 
certain enterprises without any limitation as to the amount of those debts and liabilities and the 
duration; and (ii) subsidies given to an insolvent enterprise without a credible restructuring plan.  
 
208.  Regarding the disciplin e of subsidies, Japan indicated that some new rules, w hich could be 
recognized as WTO -plus provisions, had been established through the FTA negotiations around the 
world. Exploring those disciplines could be beneficial in addressing and discussing the issu e of 
overcapacity.  
 
209.  China  recalled its statement made at the beginning of the meeting and reiterated that the 
Committee was not the proper forum to discuss overcapacity and subsidies were not the major 
cause of it. Overcapacity was a global, periodic and s tructural problem and the root cause was the 
slow recovery of the global economy as well as the sluggish demand conditions since the 
international financial crisis in 2008, which was also confirmed by the G20 Leaders.  
210.  China recalled that G20 Leaders ' Hamb urg Declaration had called for the removal of market -
distorting subsidies and other types of support by governments and related entities. The Global 
Forum on Steel Excess Capacity, facilitated by the OECD, had also required Members to share 
information inc luding supportive policies or measures in the steel sector. Therefore, the 
unremitting efforts and great contribution made by the Global Forum to analyse the links between 
subsidies and creation of excess capacity shall not be neglected or depreciated.  
211.  With respect to the EU 's comments on the relationship between China 's subsidy policies and 
industrial overcapacity, China expected Members to look squarely at its unremitting  efforts in 
addressing overcapacity issues at both central and sub -central levels.  
212.  The Russian Federation  reiterated its view that industrial overcapacity was one of the major 
challenges for global economy and joint effort was vital to tackle it. In July 2017 , the G20 Leaders 
had confirmed their commitment to take the necessary actions to  deliver the collective solutions 
that foster truly level playing field. All possible effort s should be made to that end. There were 
numerous factors contributing to overcapacity all of which should be approach in complex in order 
to overcome the challenge . In this vein, the Russian Federation welcomed the efforts of the 
leading steel producing countries within the Global Forum on Steel Excess Capacity.  
213.  At that stage, it might be more fruitful to leave the discussion on the other factors 
contributing to ov ercapacity in the Global Forum. First of all, following the declaration of the G20 
Leaders, the Global Forum was authorized and expected to look into the issue of subsidies and 
other types of support. Secondly, it was anticipated that the Global Forum woul d elaborate 
concrete policy solutions which should take into account all the factors causing excess capacity.  
214.  The Russian Federation reiterated that due consideration should be accorded to other factors 
contributing to overcapacity, such as trade protecti onism, including large number of trade remedy 
measures in order to address the challenge effectively. For that purpose, the solutions elaborated 
by the Global Forum could be useful to effectively organize the work at other venues, including the 
relevant WT O Committees.  
215.  The Committee took note  of the statements made.  G/SCM/M/103  
 
- 25 - 
 
  14  QUESTIONS REGARDING THE 2015 NEW AND FULL NOTIFICATION OF  THE 
UNITED  STATES (G/SCM/Q2/USA /73) - ITEM REQUESTED BY CH INA 
216.  China  indicated that the 2015 new and full subsidy notification of the US had covered neither 
its new energy vehicle subsidies nor industrial energy efficiency subsidies. In addition, China had 
some questions regarding some federal and state -level subsidy programmes, which had  already  
been incorporated in the notification of the  US, such as specificity of a certain programme, 
conditions for granting the subsidy and the amounts of the subsidy.  China had submitted written 
questions and was expecting to receive written replies from the US as soon as possible.  
217.  The United States  indicated that it would work on the questions and provide answers by the 
next Committee meeting. The US also pointed out  that China had asked about programmes that 
had not been notified . Although China  suggested the opposite in principle regarding the non -
notified programmes, the US would follow the normal processes within the Committee and submit 
written answers.  
218.  The Committee took note  of the questions and statements made.  
15  OTHER BUSINESS  
15.1  Certain Systemic Concerns Regarding CVD Investigations Initiated by the  
United  States – Item Requested by India  
219.  India noted that it had systemic concerns regarding the CVD investigations conducted by the 
United States and it would also submit written questions in due course. The first concern was 
regarding the timing of the p rocesses initiated by the USITC and USDOC. India had indicated that 
although the USDOC was the relevant authority to initiate a CVD investigation under the 
SCM Agreement, the USITC frequently issued notices before the USDOC initiated the 
investigations. In dia requested the US to provide a clarification in that regard. India 's second 
concern was regarding to new subsidy allegations and timelines given for questionnaire responses. 
Finally, the third concern of India was related to the practice of cross cumula tion. India had found 
out that in a number of investigations such as certain new pneumatic off -the-road tires, sulfanilic 
acid, polyethylene terephthalate (PET) film, prestressed concrete steel wire strand, carbazole violet 
pigment 23, lined paper products , and certain oil country tubular goods, the cross cumulation of 
imports had been alleged to be subsidized. Import  data alleged to be dumped but not subsidized 
had been used for the determination of the material injury by the US authorities. India indicate d 
that its paper would provide the details of the issues raised.  
220.  The United States  noted that it would look at those questions and get back to India.  
221.  The Committee took note  of the statements made.  
16  DATE OF NEXT REGULAR  MEETING  
222.  The Committee decided  to hol d its next regular meeting during the week of 23 April 2018, 
with the exact date to be confirmed in due course. As usual, that meeting would be immediately 
preceded by a special meeting for review of subsidy notifications.  
 
17  ANNUAL REPORT OF THE  COMMITTEE O N SUBSIDIES AND COUN TERVAILING 
MEASURES TO THE COUN CIL FOR TRADE IN GOO DS (ARTICLE 32.7)  
223.  The Committee adopted  its Annual Report (2017) to the Council for Trade in Goods.7 
 
224.  The meeting was closed .  
 
__________  
                                                
7 G/L/1195 -G/SCM/ 150.