WT/DS486/2  
 
13 February 2015  
(15-0910)  Page: 1/3  
  Original: English  
 
 EUROPEAN UNION – COUNTERVAILING MEASURES ON CERTAIN  
POLYETHYLENE TEREPHTHALATE FROM PAKISTAN 
REQUEST FOR THE ESTABLISHMEN T OF A PANEL BY PAKISTAN 
The following communication, dated 12 February 2015, from the delegation of Pakistan to the 
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.  
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  On 17 October 2014, Pakistan requested consultations with the European Union (EU) pursuant to 
Article 4 of the Understanding on Rules and Pr ocedures Governing the Settlement of Disputes 
(DSU), Article 30 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and Article XXIII:1 of the General Agreement on  Tariffs and Trade 1994 (GATT 1994). These 
consultations related to the imposition of provis ional and definitive countervailing duties imposed 
by the EU on imports of certain polyethylene terephthalate from Pakistan, as well as to certain aspects of the investigation underlying those measures.
  
Consultations were held on 17 December 2014 with a view to reaching a mutually satisfactory 
solution. However, these consultations failed to resolve the dispute.   
In accordance with Article 4.7 of the DSU, th erefore, Pakistan requests that the Dispute 
Settlement Body (DSB) establish a panel to examin e this matter. Pursuant to Article 6.2 of the 
DSU, Pakistan proceeds infra to identify the specific measures at issue and to provide a brief 
summary of the legal basis of the complaint. 
A. THE MEASURES AT ISSUE    
The measures at issue are the provisional and defi nitive countervailing duties imposed by the EU 
on imports of certain polyethylene terephthalate from Pakistan, as well as certain aspects of the underlying investigation and determinations related thereto, as set forth in the following 
instruments: 
 Commission Regulation (EU) No 473/2010 of 31 May 2010, Imposing a provisional 
countervailing duty on imports of certain polyethylene terephthalate originating in Iran, Pakistan and the United Arab Emirates, OJ L134/25.   
 Council Implementing Regulation (EU) 857/ 2010 of 27 September 2010, Imposing a 
definitive countervailing duty and collecting de finitively the provisional duty imposed on 
imports of certain polyethylene terephthalate originating in Iran, Pakistan and the United 
Arab Emirates, OJ L254/10. 
In addition to these legal instruments, this request also covers any amendments, extensions, 
related instruments or practices, including method ologies, the results of any review proceedings, 
whether initiated prior to or following this panel request or the establishment of the panel, as well 
as modifications of the original measures trigge red by any proceedings under EU law, including 
proceedings before the European Court of Justice.   WT/DS486/2 
 
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  B. LEGAL BASIS OF THE COMPLAINT  
In Pakistan's view, the measures at issue are inconsistent with the EU's obligations under the SCM 
Agreement and the GATT 1994 for the following reasons:  
 The EU determined that the "Manufacturing Bond Scheme" (MBS) is a countervailable 
subsidy that is contingent upon export performance. This determination appears to be 
inconsistent with Articles 1 and 3, and Annexes I, II, and III of the SCM Agreement , as well 
as Article VI of the GATT 1994.  In particular: 
o the EU appears to have acted inconsistently with Articles 1.1(a)(1)(i), 1.1(a)(1)(ii), and 
3.1(a) and Annexes I(h), I(i), II(I)(1)-(2), II(II)(1)-(2), III(I), and III(II)(1)-(3) of the SCM Agreement, as well as Article VI of the GATT 1994, by determining that the MBS constituted a remission or drawback of import charges in excess of those levied on 
imported inputs that are consumed in the production of the exported product; and, 
o the EU appears to have acted inconsistently with Articles 1.1(a)(1)(i), 1.1(a)(1)(ii), and 
3.1(a) and Annexes I(h), I(i), II(I)(1)-(2), II(II)(1)-(2), III(I), and III(II)(1)-(3) of the 
SCM Agreement, as well as Article VI of the GATT 1994, by determining that the entirety 
of the duty refunds under the MBS scheme – ra ther than just the excess portion of these 
refunds – constituted an export subsidy. 
 The EU determined that the "Long-Term Financing of Export-Orientated Projects" (LTF-EOP) 
programme constituted a countervailable subsidy that is contingent upon export performance and included this subsidy in its calculation of the subsidization margin.  This determination appears to be inconsistent with Articles 1, 3, 14, and 19 of the SCM 
Agreement as well as Article VI of the GATT 1994.  In particular: 
o the EU appears to have acted inconsistently with Articles 1.1(a)(1)(i), 1.1(a)(1)(iv), 
1.1(b), 3.1(a), the chapeau of Article 14, Arti cles 14(b) and 19.3 of the SCM Agreement, 
as well as Article VI of the GATT 1994, by fa iling to explain adequately the application of 
its method to calculate the benefit in the case at hand and by choosing an inappropriate interest benchmark for calculating the amount of subsidy during the investigation period; 
and, 
o the EU appears to have acted inconsistently with Articles 1.1(b), 3.1(a),  14(b), and 19.3 
of the SCM Agreement, as well as Article VI of the GATT 1994, in its allocation of the amount of the subsidy. 
 The EU determined that a causal link existe d between the allegedly subsidized imports and 
the material injury suffered by the domestic industry.  In doing so, the EU appears to have acted inconsistently with Article 15.5 of the SCM Agreement by failing to ensure that 
injurious effects of known factors, including inter alia  imports from other sources, 
competition from domestic producers not included in the domestic industry, economic downturn, and low oil prices, were not improperly attributed to the allegedly subsidized 
imports. 
 The EU appears to have acted inconsistently  with Articles 12.6 and 12.8 of the SCM 
Agreement by failing to provide the Pakistan i exporter with the results of the EU's 
verification visits to that exporter and by fa iling to inform all interested parties of the 
essential facts under consideration.  Moreover, during the verification visits, the EU appears 
to have acted inconsistently with Article 12.6 and Annex VI(1)-(8) of the SCM Agreement by failing to make a thorough and objective assessment of the matter, including a proper 
establishment of the facts. 
 The EU appears to have acted inconsistently  with Articles 22.3 and 22.4 of the SCM 
Agreement by failing to provide in sufficient detail the findings, explanations, and 
conclusions reached with respect to the existence of the subsidies allegedly arising under the 
MBS and LTF-EOP programmes and the amount of subsidization, as well as with respect to the causation and non-attribution analysis, as described above. WT/DS486/2 
 
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  It appears to Pakistan that the foregoing aspect s of the EU's determinations cannot be reconciled 
with Articles 10, 19.1, and 32 of the SCM Agreemen t, and the specific provisions cited above.   
Pakistan considers that the measures described above nullify and impair benefits accruing to 
Pakistan under the SCM Agreement and the GATT 1994. 
C. REQUEST FOR THE ESTA BLISHMENT OF A PANEL  
In the light of the above, Pakistan requests, purs uant to Articles 4.7 and 6 of the DSU, Article 30 
of the SCM Agreement and Article XXIII:2 of the GATT 1994, that the DSB establish a panel to 
examine this matter. Pakistan further requests that the panel have the standard terms of 
reference, as set forth in Article 7.1 of the DSU.  
Pakistan requests that this request be placed on the agenda of the DSB meeting to be held on 
23 February 2015.   
 
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