WORLD TRADE  
ORGANIZATION  WT/DS212/RW 
17 August 2005 
 (05-3547) 
 Original:   English 
  
 
    
UNITED STATES – COUNT ERVAILING MEASURES 
CONCERNING CERTAIN PRODUCTS FROM THE 
EUROPEAN COMMUNITIES 
 
 
 
Recourse to Article 21 .5 of the DSU by the European Communities  
 
 
 
 
 
Final Report of the Panel 
  WT/DS212/RW 
 Page i 
 
 
 TABLE OF CONTENTS 
Page  
I. INTRODUCTION................................................................................................................... ............1  
II. BACKGROUND ..................................................................................................................... ............2  
A. MEASURES SUBJECT TO THE ORIGINAL PROCEEDINGS ............................................................................2  
B. PANEL AND APPELLATE BODY FINDINGS IN THE ORIGINAL PROCEEDINGS ...............................................2  
C. CURRENT PROCEEDINGS ........................................................................................................................3  
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS...................................4  
A. THE EUROPEAN COMMUNITIES ..............................................................................................................4  
B. THE UNITED STATES ..............................................................................................................................4  
IV. ARGUMENTS OF THE PARTIES...................................................................................................5  
A. FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES ............................................................5  
1. Introduction................................................................................................................... ......................5  
2. Certain corrosion-resistant carbon st eel flat products from France ..............................................5  
(a) The privatization of Usinor as a whol e was at arm's leng th and for FMV ......................................................... 5 
(b) The shares sold through the employee/retiree offering were at arm's length and fo r FMV ...............................6  
(c) The United States is not in compliance with its WTO obligations with respect to the USDOC 
determination in the  French case .................................................................................................................... ...7 
3. Cut-to-length Carbon Steel (CTL) Plat e from the UK and from Spain .........................................8  
(a) The United States breached its WTO obligations by finding a likelihood of continuation or recurrence 
on the basis of insu fficient evidence.......................................................................................... ........................8  
(b) The United States also breached its WTO obligations by failing to examine the privatizations of BS 
plc and Ac eralia............................................................................................................... ................................10  
4. Failure to cons ider injury..................................................................................................... ............11  
B. FIRST WRITTEN SUBMISSION OF THE UNITED STATES .........................................................................11  
1. Claims not properly before the Panel........................................................................................... ...11 
(a) Injury ......................................................................................................................... ......................................11  
(b) Subsidi zation .................................................................................................................. .................................12  
2. The European Communities bears the burden of proving its claims ...........................................13  
3. USDOC's application of its new privatization methodology to the revised French sunset 
review is consistent with the SCM Agreement  and the DSB recommendations and 
rulings ........................................................................................................................ ........................13  
(a) USDOC's analysis of the Usinor privatiz ation is entirely consistent with the SCM Agreement  and the 
DSB recommendations  and rulings ................................................................................................ .................13  
(b) USDOC properly found that the sale of shares to Usinor's employees was not at arm' s leng th.......................14  
(c) USDOC properly found that the sale of shares to Usinor's employees  was not fo r FMV................................15  
4. In the revised UK and Spain sunset review s, USDOC assumed that  all allocable pre-
privatization subsidies had been extinguished  by the privatizations in question and 
thereby implemented the DSB recommenda tions ..........................................................................17  
C. SECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES .....................................................17  
1. The Panel's terms of reference for this Article 21. 5 proceeding ...................................................17  
(a) The Section 129 determinations c oncerning the UK and Spain were new measures based on new 
reasoning ...................................................................................................................... ...................................17  
(b) The factual findings purporting to justify the reasoning in the  UK and Spanish case s are clearly 
different ...................................................................................................................... .....................................18  
(c) The claims raised by the European Communities concerning the UK and Spain are within the scope 
of its pane l request........................................................................................................... ................................20  
2. Certain corrosion-resistant carbon st eel flat products from France ............................................20  
(a) The privatization of Usinor wa s at arm's lengt h and fo r FMV.................................................................... .....20 
(i) The SCM Agreement requires that a privatization be measured as to the company as a whole..................20  
(ii) The USDOC previously found and accepted before th e Appellate Body that the privatization of 
Usinor was at arm's length and for FMV ......................................................................................... ...........22  
Arm's length ................................................................................................................... .................................22  
Fair market value (FMV)........................................................................................................ .........................23  
(b) The United States is not in complianc e with its obligati ons under th e WTO...................................................24  WT/DS212/RW 
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3. CTL plate from the UK and from Spain.........................................................................................24  
4. Injury ......................................................................................................................... ........................25  
D. SECOND WRITTEN SUBMISSION OF THE UNITED STATES .....................................................................25  
1. Introduction................................................................................................................... ....................25  
2. In the revised French sunset review, USDOC properly found that a benefit continued to 
be counterv ailable ............................................................................................................. ................26  
3. In the revised UK sunset review, USDOC pr operly found that countervailable subsidies 
were likely to cont inue or recur ............................................................................................... ........27  
V. ARGUMENTS OF THE THIRD PARTIES...................................................................................28  
A. WRITTEN SUBMISSION OF BRAZIL .......................................................................................................28  
1. The France Section 129 determination........................................................................................... .28 
(a) The USDOC determination that the sale of shares to Usinor employees/former employees was not at 
arm's-length is inconsistent with the SCM Agreement  and the Appellate Body's findings and 
recommenda tions................................................................................................................ .............................28  
(b) The USDOC determination that the Privatization of Usinor was not for FMV is inconsistent with the 
SCM Agreement  and the Appellate Body's findings and r ecommendati ons.....................................................29  
(c) The USDOC failed to limit countervailing duties to the amount and duration of the subsidy in 
existence ...................................................................................................................... ....................................29  
2. The UK and Spain Sectio n 129 determi nations..............................................................................29  
(a) The USDOC assumptions that the UK and Spanish priva tization transactions were at arm's-length and 
for FMV do not constitu te determinations....................................................................................... ................29  
(b) The USDOC failed to limit countervailing duties to the amount and duration of the subsidy in 
existence ...................................................................................................................... ....................................30  
B. WRITTEN SUBMISSION OF CHINA .........................................................................................................30  
1. European Communities' allegation that USDOC shall consider the evidence about 
Glynwed ........................................................................................................................ .....................30  
2. European Communities' allegation that USDOC shall consider the evidence of 
abolishment of certain subsidy prog rams by the Span ish government........................................30  
3. European Communities' allegation th at USITC shall co nsider injury.........................................31  
C. WRITTEN SUBMISSION OF KOREA ........................................................................................................31  
1. The United States failed to satisfy its WTO ob ligations by refusing to consider evidence 
demonstrating the invalidity of its Sectio n 129 likelihood determinations concerning 
Spain and the UK ............................................................................................................... ...............31  
2. The USDOC improperly determined that there is a likelihood of continuation or 
recurrence of subsidization in the Fr ance Section 129 determina tion..........................................33  
3. The United States erred in failing to reco nsider whether there was a likelihood of 
continuation or recurrence of injury........................................................................................... ....34 
VI. INTERIM REVIEW................................................................................................................. ........34  
A. REQUEST OF THE EUROPEAN COMMUNITIES ........................................................................................34  
B. REQUEST OF THE UNITED STATES ........................................................................................................37  
VII. FINDINGS....................................................................................................................... ..................42  
A. GENERAL CONSIDERATIONS FOR THIS DISPUTE ...................................................................................42  
1. The Panel's mandate............................................................................................................ .............42  
(a) The measures taken to comp ly in these proceed ings .............................................................................. .........42  
(i) Arguments of the parties....................................................................................................... ......................42  
(ii) Evaluation by the Panel ........................................................................................................ ......................43  
The USDOC's treatment of evidence in the likelihood-of-subsidizati on determin ation ..................................46  
The likelihood-of-injur y determination ......................................................................................... ..................47  
Other issues ................................................................................................................... ..................................51  
The failure to revoke the countervailing duty or ders as the measure taken to comply................................51  
The implementation status of the Sec tion 129 determinati ons at i ssue.......................................................51  
(b) Scope of the claims in these pr oceedings....................................................................................... ..................53  
(i) Arguments of the parties....................................................................................................... ......................53  
(ii) Evaluation by the Panel ........................................................................................................ ......................54  
New claim not included in  the Panel request.................................................................................... ...............54  
Other disputed  new claims...................................................................................................... .........................56   WT/DS212/RW 
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 New claim on evidence.......................................................................................................... .....................59  
New claim on like lihood-of-i njury.............................................................................................. ................62  
Conclu sion..................................................................................................................... ..................................64  
2. Standard of review ............................................................................................................. ...............64  
3. Burden of proof ................................................................................................................ .................66  
4. Panel's a pproach ............................................................................................................... ................67  
B. CERTAIN CORROSION -RESISTANT CARBON STEEL FLAT PRODUCTS FROM FRANCE ............................67  
1. Background..................................................................................................................... ...................67  
2. The measure take n to comply .................................................................................................... ......70  
3. The cl aims ..................................................................................................................... .....................70  
4. Whether the measure taken to co mply is inconsistent with Ar ticles 10, 14, 19.4, 21.1 and 
21.3 of the SCM Agreement and Article VI:3 of the GATT 1994 .................................................71  
(a) Whether the privatization analysis mu st be done for the whole company .......................................................71  
(i) Arguments of the parties....................................................................................................... ......................71  
(ii) Evaluation by the Panel ........................................................................................................ ......................72  
(b) Whether the sales of shares to employees/forme r employees were at ar m's length and FMV .........................78  
(i) Whether the sales of shares to employees/f ormer employees were at arm's length ....................................78  
Arguments of the parties....................................................................................................... ...........................78  
Evaluation by the Panel ........................................................................................................ ...........................80  
(ii) Whether the sales of shares to employ ees/former employees were for FMV .............................................83  
Arguments of the parties....................................................................................................... ...........................83  
Evaluation by the Panel ........................................................................................................ ...........................84  
(iii) Conclu sion..................................................................................................................... .............................88  
(c) Whether the maintenance of the existing countervailin g duties is inconsistent with Articles 10, 14, 
19.4, 21.1 and 21.3 of the SCM Agreement and Article VI:3 of the GATT 1994 .............................................88  
C. CUT-TO-LENGTH CARBON STEEL PLATE FROM UNITED KINGDOM .....................................................92  
1. Background..................................................................................................................... ...................92  
2. The measure take n to comply .................................................................................................... ......92  
3. The cl aims ..................................................................................................................... .....................92  
4. Whether the USDOC's failure to examine the pr ivatization of BS plc and to determine 
whether the privatization occurred at arm's length and for FMV is inconsistent with 
Articles 10, 14, 19.4, 21.1 and 21.3 of the  SCM Agreement and Article VI:3 of  the GATT 
1994 ............................................................................................................................... .....................93  
(a) Arguments of the parties....................................................................................................... ...........................93  
(b) Evaluation by the Panel ........................................................................................................ ...........................95  
(i) The United States' obligations purs uant to the findings in the original proceedings regarding the 
USDOC's privatization analysis................................................................................................. .................95  
(ii) The Panel's assessment of the USDOC's analys is in the UK Section 129 determin ation............................98  
(iii) Conclu sion..................................................................................................................... ...........................101  
5. Whether the USDOC's treat ment of evidence on the record during the Section 129 
proceedings is inconsistent with Article 21.3 of the SCM Agreement ........................................ 101  
(a) Arguments of the parties....................................................................................................... .........................101  
(b) Evaluation by the Panel ........................................................................................................ .........................104  
(i) The United States' obligations under Article 21.3 of the SCM Agreement regarding the USDOC's 
treatment of  evidence.......................................................................................................... ......................104  
(ii) The Panel's assessment of the USDOC's trea tment of evidence in the UK Section 129 
determin ation.................................................................................................................. ..........................106  
(iii) Conclu sion..................................................................................................................... ...........................109  
D. CUT-TO-LENGTH CARBON STEEL PLATE FROM SPAIN ....................................................................... 109  
1. Background..................................................................................................................... ................. 109  
2. The measure take n to comply .................................................................................................... .... 110  
3. The cl aims ..................................................................................................................... ................... 110  
4. Whether the USDOC's failure to examine the pr ivatization of  Aceralia and to determine 
whether the privatization occurred at arm's length and for FMV is inconsistent with 
Articles 10, 14, 19.4, 21.1 and 21.3 of th e SCM Agreement and Article VI:3 of the  GATT 
1994 ............................................................................................................................... ................... 111  
(a) Arguments of the parties....................................................................................................... .........................111  
(b) Evaluation by the Panel ........................................................................................................ .........................112  
(i) The United States' obligations purs uant to the findings in the original proceedings regarding the 
USDOC's privatization analysis................................................................................................. ...............112  
(ii) The Panel's assessment of the USDOC's analysis  in the Spain Section 129 determination ......................112  WT/DS212/RW 
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 (iii) Conclu sion..................................................................................................................... ...........................114  
5. Whether the USDOC's treat ment of evidence on the record during the Section 129 
proceedings is inconsistent with Ar ticle 21.3 of the SCM Agreement ........................................ 114  
(a) Arguments of the parties....................................................................................................... .........................114  
(b) Evaluation by the Panel ........................................................................................................ .........................115  
(i) The United States' obligations under Article 21.3 of the SCM Agreement regarding the USDOC's 
treatment of  evidence.......................................................................................................... ......................115  
(ii) The Panel's assessment of the USDOC's treatm ent of evidence in the Spain Section 129 
determin ation.................................................................................................................. ..........................116  
(iii) Conclu sion..................................................................................................................... ...........................118  
VIII. CONCLUSIONS AND RE COMMENDATIO NS ........................................................................ 119  
Annex A - Responses of the European Communities to Questions by the Panel   121 
Annex B - Responses of the United States to Questions by the Panel     130   WT/DS212/RW 
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 ABBREVIATIONS USED FOR DISPUTE SETTLEM ENT CASES REFERRED TO IN THE REPORT  
 
Short Title Full Case Title and Citation 
Australia – Automotive 
Leather II (Article 21.5 – US)  Panel Report, Australia – Subsidies Provided to Producers and Exporters of 
Automotive Leather – Recourse to Article 21.5 of the DSU by the United 
States , WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 2000:III, 
1189 
Australia – Salmon  
(Article 21.5 – Canada)  Panel Report, Australia – Measures Affecting Importation of Salmon – 
Recourse to Article 21.5 of the DSU by Canada , WT/DS18/RW, adopted 
20 March 2000, DSR 2000:IV, 2031 
Brazil – Aircraft  (Article 21.5 – Canada)
  Appellate Body Report, Brazil – Export Financing Pr ogramme for Aircraft – 
Recourse by Canada to Article 21.5 of the DSU , WT/DS46/AB/RW, adopted 
4 August 2000, DSR 2000:VIII, 4067 
Brazil – Desiccated Coconut  Appellate Body Report, Brazil – Measures Affe cting Desiccated Coconut , 
WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, 167 
Canada – Aircraft  
(Article 21.5 – Brazil)  Appellate Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft – Recourse by Brazil to Article 21.5 of the DSU , WT/DS70/AB/RW, 
adopted 4 August 2000, DSR 2000:IX, 4299 
EC – Bananas III  Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 
25 September 1997, DSR 1997:II, 591 
EC – Bed Linen  
(Article 21.5 – India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of 
the DSU  by India , WT/DS141/AB/RW, adopted 24 April 2003  
EC – Bed Linen  
(Article 21.5 – India)  Panel Report, European Communities – Anti-Dumping Duties on Imports of 
Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU  by 
India , WT/DS141/RW, adopted 24 April 2003, as modified by the Appellate 
Body Report, WT/DS141/AB/RW 
EC – Hormones  Appellate Body Report, European Communities – Measures Concerning 
Meat and Meat Products (Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, 
adopted 13 February 1998, DSR 1998:I, 135 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998, 
DSR 1998:I, 9 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
Mexico – Corn Syrup  (Article 21.5 – US)
  Appellate Body Report, Mexico – Anti-Dumping Investigation of High 
Fructose Corn Syrup (HFCS) from the United States – Recourse to Article 21.5 of the DSU  by the United States , WT/DS132/AB/RW, adopted 
21 November 2001, DSR 2001:XIII, 6675 
Turkey – Textiles  Panel Report, Turkey – Restrictions on Impor ts of Textile and Clothing 
Products , WT/DS34/R, adopted 19 November 1999, as modified by the 
Appellate Body Report, WT/DS34/AB/R, DSR 1999:VI, 2363 
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002 WT/DS212/RW 
Page vi  
 
 Short Title Full Case Title and Citation 
US – Carbon Steel  Panel Report, United States – Countervailing Duties on Certain Corrosion-
Resistant Carbon Steel Flat Products from Germany , WT/DS213/R and 
Corr.1, adopted 19 December 2002, as modified by the Appellate Body 
Report, WT/DS213/AB/R 
US – Corrosion-Resistant Steel 
Sunset Review  Appellate Body Report, United States – Sunset Review of Anti-Dumping 
Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004 
US – Corrosion-Resistant Steel 
Sunset Review  Panel Report, United States – Sunset Review of Anti-Dumping Duties on 
Corrosion-Resistant Carbon Steel Flat Products from Japan , WT/DS244/R, 
adopted 9 January 2004, as modified by the Appellate Body Report, 
WTDS244/AB/R 
US – Cotton Yarn  Appellate Body Report, United States – Transitional Safeguard Measure on 
Combed Cotton Yarn from Pakistan , WT/DS192/AB/R, adopted 
5 November 2001, DSR 2001:XII, 6027 
US – Countervailing Measures 
on Certain EC Products  Appellate Body Report, United States – Countervailing Measures Concerning 
Certain Products from the European Communities , WT/DS212/AB/R, 
adopted 8 January 2003 
US – Countervailing Measures on Certain EC Products  Panel Report, United States – Countervailing Measures Concerning Certain 
Products from the European Communities , WT/DS212/R, adopted 8 January 
2003, as modified by the Appellate Body Report, WT/DS212/AB/R 
US – FSC  Panel Report, United States – Tax Treatment for "Foreign Sales 
Corporations" , WT/DS108/R, adopted 20 March 2000, as modified by the 
Appellate Body Report, WT/DS108/AB/R, DSR 2000:IV, 1675 
US – FSC  
(Article 21.5 – EC)  Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Articl e 21.5 of the DSU by the European 
Communities , WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, 55 
US – FSC  
(Article 21.5 – EC)  Panel Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Articl e 21.5 of the DSU by the European 
Communities , WT/DS108/RW, adopted 29 January 2002, as modified by the 
Appellate Body Report, WT/DS108/AB/RW, DSR 2002:I, 119 
US – Lead and Bismuth II  Appellate Body Report, United States – Imposition of Countervailing Duties 
on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating 
in the United Kingdom , WT/DS138/AB/R, adopted 7 June 2000, 
DSR 2000:V, 2595 
US – Oil Country Tubular Goods 
Sunset Reviews Appellate Body Report, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country Tubular Goods from Argentina , 
WT/DS268/AB/R, adopted 17 December 2004 
US – Shrimp  (Article 21.5 – Malaysia)  Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia , 
WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6481 
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with 
Respect to Certain Softwood Lumber from Canada , WT/DS257/R and Corr.1, 
adopted 17 February 2004, as modified by the Appellate Body Report, 
WT/DS257/AB/R 
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 
23 May 1997, DSR 1997:I, 323 
  WT/DS212/RW 
 Page 1 
 
 
 I. INTRODUCTION 
1.1 On 17 March 2004, the European Communities requ ested consultations with the United States 
pursuant to Articles 4 and 21.5 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (DSU ) and Article 30 of the Agreement on Subsidies and Countervailing 
Measures (SCM Agreement ) with respect to the United States' new privatization methodology, its 
application to the determinations set out in the request and the findings in the sunset reviews of: 
Certain Corrosion-Resistant Carbon Steel Flat Products from France (C-427-810)  (Case No. 9); Cut-
to-Length Carbon Steel Plate from United Kingdom  (C–412–815) (Case No. 8); and, Cut-to-Length 
Carbon Steel Plate from Spain  (C–469–804) (Case No. 11)1 
1.2 The request was circulated in document WT /DS212/14 of 19 March 2004.  Consultations 
were held on 24 May 2004 and, although they a llowed a better understanding of respective positions, 
they failed to settle the dispute. 
1.3 On 16 September 2004, the European Communitie s requested the Dispute Settlement Body 
(DSB) to establish a panel pursuan t to Articles 6 and 21.5 of the DSU , Article 30 of the SCM 
Agreement , and Article XXIII of the General Agreement on Tariffs and Trade 1994  (GATT 1994 ).  
The request did not include the United States' new privatization methodology.2  
1.4 At its meeting on 27 September 2004, the DSB de cided, in accordance with Article 21.5 of 
the DSU , to refer to the original panel the matter raised by the European Communities in document 
WT/DS212/15. 
1.5 At that meeting, the parties to the dispute agr eed that the Panel should have standard terms of 
reference.  The Panel's terms of reference are, therefore, the following: 
"To examine, in the light of the relevant provisions of the covered agreements cited 
by the European Communities in document WT/DS212/15, the matter referred to the 
DSB by the European Communities in that do cument, and to make such findings as 
will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".
3 
1.6 The Panel was composed of the original members: 
 Chairman: Mr Gilles Gauthier 
  Members: Ms Marie-Gabrielle Ineichen-Fleisch    Mr Michael Mulgrew  
1.7 Brazil, China and Korea reserved their rights to participate in the Panel's proceedings as third 
parties. 
1.8 The Panel met with the parties on 1-2 March 2005.  It met with the third parties on 
2 March 2005.   
                                                     
 
1  WT/DS/212/14, p.2. 
2 WT/DS/212/15, p.2. 
3 WT/DS/212/16, p.1. WT/DS212/RW 
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 II. BACKGROUND 
2.1 This dispute concerns the parties' disagreement as to the existence or consistency with the 
SCM Agreement and the GATT 1994 of measures taken by the United States to comply with the DSB 
recommendations and rulings in the dispute US – Countervailing Measures on Certain EC Products.   
A. 
MEASURES SUBJECT TO THE ORIGINAL PROCEEDINGS  
2.2 The original panel and Appella te Body proceedings concerne d the WTO-consistency of 12 
countervailing duty determinations by the United States, which included original investigations, 
administrative reviews, and sunset reviews.4   The imposition of countervailing duties in these 12 
determinations was based on the application by the USDOC of two different change-in-ownership 
methodologies (the so-called "gamma" and "same person" methodologies).  The current Article 21.5 
proceedings only concern three of the four  sunset reviews in the original panel5: Certain Corrosion-
Resistant Carbon Steel Flat Products from France (C-427-810)  (Case No. 9); Cut-to-Length Carbon 
Steel Plate from United Kingdom  (C–412–815) (Case No. 8); and, Cut-to-Length Carbon Steel Plate 
from Spain  (C–469–804) (Case No. 11).6 
2.3 The European Communities also brought a clai m in the original proceedings concerning 
Section 771(5)(F) of the US Tariff Act of 1930. 
B. PANEL AND APPELLATE BODY FINDINGS IN THE ORIGINAL PROCEEDINGS  
2.4 The original panel found that the 12 counter vailing duty determinations  were inconsistent 
with Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement .  It also found that Section 1677(5)(F) 
was inconsistent with the Unite d States' obligations under the SCM Agreement  and Article XVI:4 of 
the WTO Agreement.7 
2.5 The Appellate Body upheld the Panel's findings that the determinations of 
United States' Department of Commerce (USDOC ) in the 12 countervailing duty cases were 
inconsistent with the SCM Agreement  because the USDOC had failed to ascertain the continued 
existence of a benefit following the privatization of recipients of prior non-recurring financial 
contributions.  However, it reversed the Panel' s finding that an investigating authority must always 
conclude that a benefit no longer exists for a firm th at has been privatized at arm's length and for fair 
market value (FMV).  The Appellate Body also re versed the Panel's finding that the relevant United 
                                                      
4 From the 12 countervailing duty determinations, six are original investigations: Stainless Sheet and 
Strip in Coils from France (C-427-815) (Case No. 1); Certain Cut-to-Length Carbon Quality Steel from France 
(C-427-817) (Case No. 2);  Certain St ainless Steel Wire Rod from Italy (C-475-821) (Case No. 3); Stainless 
Steel Plate in Coils from Italy (C-475-823) (Case No. 4);  Stainless Steel Sheet and Stri p in Coils from Italy (C-
475-825) (Case No. 5);  Certain Cut-to-Length Carbon-Qua lity Steel Plate from Italy (C-475-827) (Case No. 6); 
two are administrative reviews: Cut-to-Length Carbon Steel Plate from Sweden (C -401-804) (Case No. 7);  
Grain-oriented Electrical Steel from It aly (C-475-812) (Case No. 12) and four are sunset reviews: Cut-to-Length 
Carbon Steel Plate from United Kingdom (C-412-815) (Cas e No. 8);  Certain Corrosio n-Resistant Carbon Steel 
Flat Products from France (C-427-8 10) (Case No. 9); Cut-to-Length Carb on Steel Plate from Germany (C-428-
817) (Case No. 10); and Cut-to-Length Carbon Steel Plate from Spain (C-469-804 ) (Case No. 11).  See 
WT/DS212/4. 
5 The European Communities and the United States settled the fourth sunset review, concerning cut-to-
length carbon steel plate from Germany. 
6 WT/DS212/14, p.2. 
7 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.2.  WT/DS212/RW 
 Page 3 
 
 
 States internal legislation was, as such, inconsis tent with the United States' obligations under the 
 SCM Agreement  and Article XVI:4 of the WTO Agreement.8 
C. CURRENT PROCEEDINGS  
2.6 On 8 January 2003, the DSB adopted the Appe llate Body Report and the Panel Report, as 
modified by the Appellate Body.  The resulting DSB rulings included the recommendation that the 
United States brings its administrative practice (the "same person" methodology) and the twelve 
individual determinations found to  be inconsistent with the SCM Agreement  and the GATT 1994  into 
conformity with its WTO obligations. 
2.7 On 27 January 2003, the United States informed  the DSB that it intended to implement the 
recommendations and rulings of the DSB in a manne r consistent with its WTO obligations.  The 
parties agreed under Article 21.3(b) of the DSU  that the United States had until 8 November 2003 to 
implement the recommendations and rulings of the DSB. 
2.8 In June 2003, the United States finalized a new privatization methodology, published in the 
US Federal Register.9  The new methodology was then applie d to the 12 individual determinations 
found to be inconsistent with the SCM Agreement  and the GATT 1994 .  On 17 November 2003, the 
USDOC published in the US Federal Register a Notice of Implementation for these 12 countervailing 
duty determinations.10  According to this Notice, only in  four of these re-determinations, which 
concerned sunset reviews, did the USDOC maintain  the existing countervailing duties.  In the other 
re-determinations, the measures were either reduced or revoked.  At the DSB meeting of 7 November 
2003, the United States stated that it had fully co mplied with the DSB recommendations and rulings 
on this issue.  The European Communities did not agree. 
2.9 On 17 March 2004, the European Communities re quested consultations under Article 21.5 of 
the DSU .  In that request, the European Communiti es claimed that both the new privatization 
methodology and its application to three of the above-mentioned sunset review re-determinations11 
were inconsistent with Article VI:3 of GATT 1994  and Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM 
Agreement . 
2.10 After consultations had failed, the Eur opean Communities submitted a request for 
establishment of a panel under Article 21.5 of the DSU  on 16 September 2004 this time challenging 
only the USDOC's re-determinati on of the sunset reviews on Certain Corrosion-Resistant Carbon 
Steel Flat Products from France; Cut-to-Length Carbon Steel Plate from United Kingdom; and, Cut-
to-Length Carbon Steel Plate from Spain.  This Panel was established pursuant to that request on 
27 September 2004. 
                                                      
8 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 161. 
9 Notice of Final Modification of Agency Practice Under Section 123 of the Uruguay Round 
Agreements Act, 68 Fed. Reg. 37125 (23 June 2003) (Exhibit EC-1) (Modification Notice). 
10 Notice of Implementation Under Section 129 of the Uruguay Round Agreements Act; Countervailing 
Measures Concerning Certain Steel Products from the European Communities, 68 Fed. Reg. 64858 (17 
November 2003) (Notice of Implementation). 
11 Certain Corrosion-Resistant Carbon Steel Flat Products from France (C-427-810)  (Case No. 9); 
Cut-to-Length Carbon Steel Plate from United Kingdom  (C–412–815) (Case No. 8); Cut-to-Length Carbon 
Steel Plate from Spain  (C–469–804) (Case No. 11). WT/DS212/RW 
Page 4  
 
 III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
A. T
HE EUROPEAN COMMUNITIES  
3.1 The European Communities request s the Panel to find that: 
• The United States has failed to implemen t the recommendations and rulings of the 
DSB and acted inconsistently with its oblig ations under Articles 10, 14, 19.4, 21.1, 
and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  because it did not 
determine properly whether the privatized French company Usinor in Certain 
Corrosion-Resistant Carbon Steel Flat Products from France  continued to receive 
any benefit from financial contributions  previously bestowed on state-owned 
producers; 
 
• The United States has acted inconsistently w ith its obligations under Article 21.3 of 
the SCM Agreement  because it failed to consider evidence on the record in Cut-to-
Length Carbon Steel Plate from the United Kingdom  and Cut-to-Length Carbon Steel 
Plate from Spain  demonstrating that the benefits  from programmes found to confer 
countervailable subsidies no longer existed; 
 
• The United States has failed to implemen t the recommendations and rulings adopted 
by the DSB and acted inconsistently with its obligations under Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  by refusing 
to examine whether, and for failing to find that, the privatizations of BS plc in Cut-to-
Length Carbon Steel Plate from the United Kingdom  and Aceralia in Cut-to-Length 
Carbon Steel Plate from Spain  were at arm’s length and for FMV; and, that 
 
• The United States has failed to meet it s obligations under Article 21.3 of the SCM 
Agreement  because it did not examine in Certain Corrosion-Resistant Carbon Steel 
Flat Products from France , Cut-to-Length Carbon Steel Plate from the United 
Kingdom and Cut-to-Length Carbon Steel Plate from Spain  whether expiry of the 
duty would be likely to lead to continuation or recurrence of material injury.
12 
 
B. THE UNITED STATES  
3.2 The United States contends that it has fully im plemented the recommendations and rulings of 
the DSB in this dispute.  With respect to Usinor's  privatization – the only substantive matter that, in 
the view of the United States, is properly before  this Panel – the USDOC’s conclusion that the 
employee sales did not satisfy the arm’s-length/FMV standard comports with the recommendations 
and rulings of the DSB, as does USDOC’s finding that a corresponding amount of the remaining 
benefit from pre-privatization subsidies was not exti nguished by the privatization.  Thus, the United 
States believes that the European Communities' claims against implementation of the DSB recommendations and rulings are not meritorious.  Th e United States therefore requests this Panel to 
find that the United States properly implemented those recommendations and rulings.
13 
                                                      
12 EC First written submission, para. 72. 
13 US First written submission, para. 50, and US Oral statement, para. 34.  WT/DS212/RW 
 Page 5 
 
 
 IV. ARGUMENTS OF THE PARTIES 
A. FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES  
1. Introduction 
4.1 In the view of the European Communities, the me asures taken with respect to the three sunset 
reviews at issue in this case failed to bring the United States into compliance with the DSB 
recommendations and rulings.14  The mandate of the present Panel is to determine the consistency of 
the measures taken to comply with the provisi on or provisions cited in the Panel request.15 
2. Certain corrosion-resistant carbon steel flat products from France 
4.2 In its France Section 129 determination, the USDOC found that "with the exception of the 
employee offering, which constituted 5.16 per cent of th e sale, the privatization of Usinor was at arm's 
length and for fair market value" 16.  It nevertheless concluded that the "revocation of the order on 
[corrosion-resistant carbon steel flat products from Fr ance] would be likely to lead to continuation or 
recurrence of a countervailable subsidy".17  There had been no basis for the USDOC's conclusion.  
The SCM Agreement  obliges a Member to determine whether a privatized producer received a benefit 
from the financial contribution previously bestow ed on state-owned producers.  This cannot be 
deduced by considering a small part of a sale of shares in isolation. 
4.3 It is clear under WTO case law18, that in determining the likelihood of continuation or 
recurrence of a subsidization, a Member must de termine whether the privatized producers received 
any benefit from the financial contributions previous ly granted to state-owned producers and that the 
producers were presumed not to have received any be nefit if the privatization had been at arm's 
length, for FMV, and under conditions that did not seriously distort the market in which the 
privatization occurred.  As discussed below, the pr ivatized producers did not receive any such benefit 
following Usinor's privatization. 
(a) The privatization of Usinor as a whole was at arm's length and for FMV 
4.4 In its Section 129 determination, the USDOC cons idered whether the sale of Usinor had been 
at arm's length and for FMV from the perspective of four separate categories of purchasers.  Such an 
evaluation was not conclusive regarding whether the privatized firm as a whole  received a benefit as 
required under WTO case law.  The investigating auth ority must consider whether the entire firm had 
been sold for FMV, not just whet her the sales to an individual category of purchasers were at FMV.  
The record demonstrates that the privatization of  Usinor as a whole had been for FMV, because the 
average price paid for Usinor's  shares exceeded the average price per share recognized by the 
Privatization Commission as necessary to recoup th e value of the company.  Excluding shares 
retained by or sold to the Govern ment of France (GOF), directly or indirectly, the total price paid for 
[XXX] shares in Usinor's privatization was FF [XXX], for an average price of FF [XXX] per share.19  
This price exceeds the average minimum price recommended by the Privatization Commission for 
Usinor, FF 84.43, based on the total number of sh ares to be offered, 186,544,395, at the minimum 
                                                      
14 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 161(a). 
15 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , paras. 41-42. 
16 French Section 129 determination,  p. 12 (Exhibit EC-4). 
17 French Section 129 determination,  p. 12 (Exhibit EC-4). 
18 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para.126 and 149 
19 Table of Payments Received in Usinor's Privatiza tion, submitted in GOF/Us inor 2 September 2003 
Questionnaire Response, Appendix 7 (Exhibit EC-5).  The num bers in brackets in the attached exhibit and in the 
text above contain business confidential information.  The European Communities requests that this information 
not be used in the final report or made public. WT/DS212/RW 
Page 6  
 
 price of FF 15,750 billion.
20  The average price per share was also  within the range recognised by the 
USDOC as constituting the market clearing price ( i.e., between FF 86 to 89 per share).21  Further, if 
the GOF's sale of 7.7 per cent of Usinor shares in 1997 were included in the calculation, the average 
price per share would increase to FF [XXX].22 
4.5 Thus, when considered in the context of the privatization as a whole, there had been no doubt 
that Usinor shares were sold at FMV.  Such a finding was consistent with the USDOC's own findings 
in two parallel proceedings in which the USDOC fo und that the privatization of Usinor had taken 
place at arm's length and for FMV.23  As there had been no evidence that the GOF distorted the 
broader market conditions in any way, and the USDOC had not so found24, it follows that the 
privatized producers did not receive any benefit from the previous financial contributions to the state-
owned producers.  
(b) The shares sold through the employee/retiree offering were at arm's length and for FMV 
4.6 The European Communities believed that the a bove analysis was sufficient to demonstrate 
that the USDOC wrongly decided to continue the measures.  Even considering, on an alternative basis, the employee/retiree offering independently, th e evidence demonstrated that the shares sold to 
this category of purchasers were at arm's lengt h and for FMV.  WTO case law does not provide 
guidance on what type of transactions are considered to  be at "arm's length".  As an illustration of the 
meaning of an "arm's-length" transaction, ther efore, the European Communities referred to the Black's 
Law Dictionary  which defines "arm's length" as "[o]f or re lating to dealings between two parties who 
are not related or not on close terms and who are presumed to have roughly equal bargaining power; 
not involving a confidential relationship".
25  For the following reasons, the employee/retiree offering 
did not involve related parties,  and, therefore, constituted an arm's-length transaction.   
4.7 At the time of Usinor's privatization, the company had been wholly owned, directly or 
indirectly, by the GOF.26  The buyers in the employee/retiree offering included employees of Usinor - 
not the GOF.27  Although the GOF participated in share holder meetings and oversaw the financial 
management of the company, it did not "intervene in the day-to-day management of the Company, 
and the Company ... conducted its day-to-day operati ons in a manner similar to that of other major 
international non-state controlled steel producers".28  Thus, the employee purchasers, including former  
employees, were at least two steps removed from having any relationship with the GOF.  Even if 
some type of relationship existed between the selle r and the buyers in this case, it would not have 
                                                      
20  "Opinion Rendered by the Privatization Commission in Regard to the Minimum Value of Usinor-
Sacilor," submitted in GOF/Usinor 2 Septembe r 2003 Questionnaire Response, Appendix 4B. 
21  French Section 129 determination , p. 9 (Exhibit EC-4). 
22 The United States Court of International Trade, in its review of the USDOC's remand determination 
in the Allegheny Ludlum  case, found that the USDOC had correctly an alysed the GOF's sale of the shares in 
1997 as part of the privatization process.  See Allegheny Ludlum , 246 F. Supp. 2d, p. 1311. 
23 Appellate Body Report on  US – Countervailing Measures on Certain EC Products , footnote 4 
(stating that "[t]he USDOC analyzed the sales conditions of the privatizations in two of the underlying sunset reviews (Case Nos. 8 and 10) and three of the original investigations (Case Nos. 1, 2, and 4), concluding that 
those five privatizations took place at arm's length and for fair market value," and citing, among others, the 
remand determinations in Allegheny  Ludlum  and GTS). 
24 French Section 129 determination , p. 12 (Exhibit EC-4) (concluding that "petitioners have not 
sufficiently demonstrated that French or European market  conditions at the time of Usinor's privatization were 
distorted such that the relevant transaction price did no t reflect fairly and accurate ly the subsidy benefits"). 
25 Black's Law Dictionary  82 (7th ed. 2000). 
26 International Offering Prospectus, p. 25, submitted in GOF/Usinor 2 September 2003 Questionnaire 
Response, Appendix 4G ("International Offering Prospectus"). 
27 The employee offering also included employees of affiliates in which Usinor held, directly or 
indirectly, a majority interest.  See International Offering Prospectus, p. 21. 
28 International Offering Prospectus, p. 26.  WT/DS212/RW 
 Page 7 
 
 
 affected the price at which the GOF sold Usi nor shares which had been based on independent 
analyses of the valuation of the company.29  In conducting its privatizati on analysis in the Section 129 
determination, the USDOC concluded that "the em ployees of Usinor were related to Usinor" and, 
therefore, "sales of shares to Usinor employees ... did not constitute an arm's-length transaction".30  
The USDOC did not even consider the relationship between the former employees of Usinor (or its 
affiliates) and the seller in its analysis.  Thus, th ere was no basis for the USDOC's conclusion that the 
employee offering had not been at arm's length, and, in fact, evidence on the record indicates 
otherwise. 
4.8 Further, the sale of Usinor shares in the empl oyee/retiree offering had also been at FMV.  As 
discussed in the USDOC's Section 129 determinatio n, the eligible purchasers had two options: (1) 
they could purchase the shares at the French public o ffering price of FF 86 per share; or (2) they could 
pay a discounted price of FF 68.80 per share, with an  extended payment period, if they agreed to hold 
the shares for a minimum of two years.31  The discount offered to employees and former employees of 
Usinor reflects the risk assumed by the buyers for the resale restrictions on the shares purchased.  That 
is, because the shares purchased by employees/former  employees were less liquid, they were less 
valuable on the market since it was unclear whether, after two years, the price for the shares would be 
greater or lower.  Thus, the price offered to employees/former employees had been at FMV, accounting for the risk assumed by the purchasers for the non-liquidity of the shares.
32 
(c) The United States is not in compliance with its WTO obligations with respect to the USDOC 
determination in the  French case 
4.9 As indicated above, the SCM Agreement  requires investigating authorities to examine the 
conditions of a privatization and to determine wh ether the privatized producers received any benefit 
from the prior subsidization to the state-owned prod ucers before deciding to continue to countervail 
pre-privatization, non-recurring subsidies in sunset reviews.  Where a privatization is at arm's length 
and for FMV, there is a presumption that the bene fit provided to the state-owned producer has been 
extinguished.  Here, that presumption was warrante d and had not been rebutted.  Accordingly, by 
                                                      
29 As indicated in the GOF's and Usinor's submi ssion in the Section 129 proceedings, the USDOC 
noted in its Remand Redetermination in the Stainless Steel Sheet and Strip from France  investigation that "in 
setting the share values, the Ministry of Economic Affairs and Finance and th e French Privatization 
Commission were guided by independent analyses of th e value of the shares.  Objective and independent 
valuations of a company will frequently provide a measur e of the privatized company's full value".  GOF/Usinor 
28 July 2003 Questionnaire Response, Vol. I, p. 14 (quotation omitted). 
30  French Section 129 determination , p. 6 (Exhibit EC-4). 
31 French Section 129 determination, p. 6 (Exhibit EC-4); see also  Ministry of Economic Affairs and 
Finance, "Order of June 26, 1995 Whereby Terms for th e Privatization of Usinor-Sacilor Are Defined," Art. 3, 
submitted in GOF/Usinor 2 September 20 03 Questionnaire Response, Appendix 4F. 
32 It is also common among public offerings throughout the world – including in the context of 
privatizations – to offer shares to employees  or former employees at a specific rate.  See Steven L. Jones, 
William L. Megginson, Robert C. Nash, and Jeffry M. Nette r, "Share issue privatizations as financial means to 
political and economic ends," 53 J. Fin. Econ. 217, 238 (1999); accord  Simon Leary, "Privatization Issue 12: 
Key Steps in a Successful Public Offering,", p. 2, available at  
http://www.pwcglobal.com/extweb/manissue.nsf/Do cID/00727EB5FD8A54BE85256A64002FAC91 (last 
visited 10 November 2004).  In a study by the US General Accounting Office ("GAO") on privatization 
practices in major developed countries, the GAO noted that the governments of these countries, in particular the 
UK and France, have routinely offered set specific pri ces for employees in their privatizations, without 
suggesting that such offerings were in any way exceptional.  See US General Accounting Office, "Budget 
Issues: Privatization/Divestiture Practices in Other Nations ,", p. 5-6, 13-14 (1995).  In France, the privatization 
law itself provides for the offering of a specific rate to  employees and former employ ees so long as those shares 
are retained for at least two years.  See French Privatization Law of 1986, as amended, Art. 11, submitted in 
GOF/Usinor 2 September 2003 Questionnaire Response, Appendix 4.  Thus, the offering of shares at specific 
prices to employees and former employees of a compan y in the context of privatization is common practice. WT/DS212/RW 
Page 8  
 
 failing to revoke the countervailing duties imposed  on corrosion-resistant carbon steel flat products 
from France, the United States had acted inconsistently  with its obligations under Article VI:3 of the 
GATT 1994 and Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement,  and had failed to 
implement the recommendations and rulings of the DSB. 
3. Cut-to-length Carbon Steel (CTL) Plate from the UK and from Spain 
4.10 The USDOC's "likelihood" determinations w ith respect to the UK and Spain were 
inconsistent with the SCM Agreement  and the GATT 1994  because the USDOC refused to consider: 
(a) evidence on the record demonstrating that in bot h cases subsidies would not continue or recur; and 
(b) whether, under the new privatization methodology,  BS plc had been privatized in a manner that 
extinguished the benefit conferred by no n-recurring pre-privatization subsidies. 
(a) The United States breached its WTO obligations by finding a likelihood of continuation or 
recurrence on the basis of  insufficient evidence  
4.11 In both the UK and  Spanish case s, the USDOC failed to meet its obligations under Article 
21.3 of the SCM Agreement.   Had the USDOC performed its "lik elihood" determination as required 
under the SCM Agreement  and considered all of the evidence on the record, it would have determined 
that the subsidy programmes on which it relied ha d expired.  In the UK case, Corus and the 
Government of the UK (GUK) submitted evidence showing that Glynwed
33 no longer produced the 
product under review.34. 
4.12 This point was reiterated in the European Co mmunities' submission, which explained that 
"[w]ith regard to any alleged non-recurring subsidies, Glynwed sold its facilities for producing 
'universal wide flats' to the United States' compan y Niagara LaSalle, well before the sunset review.  
This was an arms-length sale between two private companies, and would therefore have removed the 
benefit of any prior subsidies to the buyer".35  Moreover, Corus and the GUK also submitted evidence 
to the USDOC in the Section 129 proceeding dem onstrating that all the subsidy programmes not 
specific to BS plc, on which the USDOC may have relied in calculating the original CVD rate for 
Glynwed, had been abolished or were no longer avai lable to the UK steel industry.  Specifically, they 
reviewed the four UK programmes36 that were not specific to British Steel, and which therefore could 
have been included in the USDOC's calculation of Glynwed's subsidization rate in 1993. 
                                                      
33 Corus/GUK Section 129 determination, p. 5-6. 
34 Glynwed was a UK producer of steel bar products, and apparently the width of one of its bar 
products had fallen within the scope of the CTL Plate petition in 1992.  However, on 21 May 1999, Glynwed 
sold the equipment, inventory, and certain other assets  of its bar-producing businesses to an unaffiliated US 
producer, Niagara LaSalle.   
35 European Communities Letter, p. 4. 
36 The first of these programmes involved U.K. regional development grants under the Industry Act of 
1972 and the Industry Development Act of 1982.  Corus/GUK stated that "no regional grants under the two statutes ... have been provided to Glynwed/Niagara LaSalle since 1988".  Moreover, pursuant to Commission 
Decision 2496/96 of December 18, 1996 , "as a matter of law regional deve lopment grants provided by HMG 
were no longer available to steel producers as of 1997".   "Accordingly, there is no prospect that, if the plate 
order is revoked, any U.K. producer of plate could obtain a regional development grant under the two U.K. 
industrial acts".
36  The second programme involved regional development grants under the European Regional 
Development Fund ("ERDF").  Here again, Corus/GUK pointed  out that "steel companie s are no longer eligible 
to receive ERDF regional development grants from the EC ".  Accordingly, if the order were revoked, no U.K. 
producer of plate could obtain subsidies under this programme.  The third programme involved the European 
Coal and Steel Community ("ECSC") Article 54 loans and interest rebates.  As Corus/GUK explained, as of 23 July 2002, the ECSC no longer exists, so such loans and interest rebates can no longer be provided.  Moreover, 
the last ECSC Article 53 loan had been reimbursed in 1988.  The final programme involved preferential 
transportation rates provided by the government-owned  British Rail.  As Corus/GUK explained, "[t]he  WT/DS212/RW 
 Page 9 
 
 
 4.13 These explanations as to the abolition of all th e subsidy programmes not specific to British 
Steel, on which the original finding of subsidiza tion for Glynwed may have been based, remain 
entirely unrebutted, and they eliminate any support for the assertion that the subsidization of Glynwed 
by either the GUK or the European Communities w ould continue or recur if the CVD order on CTL 
Plate were revoked.37  For these reasons, the USDOC acted in consistently with the United States' 
obligations under Article 21.3 of the SCM Agreement  by refusing to consider  evidence on the record 
indicating that the non-privatized producer (G lynwed) no longer manufactured the product under 
review and that the subsidy programmes found to be  countervailable in the original investigation no 
longer existed or were no longer available to steel producers. 
4.14 The same was true for the Spanish case.  The Government of Spain (GOS) and the European 
Communities both submitted documents during the sunset  review stating that: "most of the schemes 
countervailed no longer exist or have ceased to pr ovide any meaningful benefits to the current 
exporters of the product concerned[,] especially in view of the fact th at in the meantime most of the 
subsidy would have been amortized".38  The European Communities then reviewed the schemes39 that 
had originally been countervailed, and noted that  they no longer existed or would shortly cease to 
exist.  
4.15 As in the UK case, the abolition of the programmes that had been found to confer subsidies on 
Aceralia entirely eliminated any support for the assertion that the s ubsidization of the privatized 
Spanish producer by either the GOS or the Europe an Communities would continue or recur if the 
CVD order on CTL Plate were revoked.  For these r easons, the USDOC acted inconsistently with the 
United States' obligations under Article 21.3 of the SCM Agreement  by refusing to consider evidence 
on the record that demonstrated that the subs idy programmes found to be countervailable in the 
original investigation no longer existed or were no longer available to steel producers. 
4.16 The USDOC justified its failure to consider th is evidence on the ground that in a Section 129 
proceeding, it need only deal with the specific issue in which the WTO found a lack of compliance.40  
But this restrictive interpretation of the USDOC's role  in bringing its practice into conformity with the 
WTO's findings was based on a serious misundersta nding of a Member's obligations following a 
determination that one of its measures was inconsistent with the SCM Agreement .  It is not sufficient 
for a Member merely to eliminate one erroneous aspect  of the measure at issue, if to do so exposes 
additional failures to comply with  the obligations imposed by the SCM Agreement .  Nor may the 
Member refuse to attempt to bring those additiona l failures into compliance on the ground that they 
                                                                                                                                                                     
privatization of British Rail was completed in 1997.  Si nce the Government of the United Kingdom no longer 
owns the rail service, there can no longer be any countervailable subsidies provided by the Government to steel 
companies as a result of preferentia l rail transportation rates". (See Corus/GUK Section 129 Comments 7-10) 
37 Moreover, as Corus/GUK explained in their Section 129 Comments, even if the USDOC were to take 
the position that some of the subsidies allegedly received by  Glynwed prior to 1991 were  non-recurring, so that 
the benefits continued until fully amortised, the level of unamortised benefits that would have remained at the 
time of the sunset review POR (1999) would have been de minimis .  See Corus/GUK Section 129 Comments, p. 
10 n.14.  Accordingly, this reasoning, which was not  adopted by the USDOC in any event, cannot provide a 
basis for asserting that subsidization would continue or recur if the CTL Plate order were revoked. 
38 Response of the European Commission, sunset review: Countervailing Duty Proceeding on Cut-to-
Length Carbon Steel Plate from Spain, p. 3 (30 September 1999) ("EC Sunset -Review Response on Spain").  Accord  Response of the Kingdom of Spain, Sunset Revi ew: Countervailing Duty Proceeding on Cut-to-Length 
Carbon Steel Plate from Spain, p. 3 (30 September 1999). 
39 Royal Decree 878/81 and the 1984 Council of Ministers Meeting, and the 1987 Government 
Delegated Commission on Economic Affairs, no longer a pplied to the steel industry (the Law 60/78), or would 
shortly cease to exist (Article 54 ECSC Loans)  The latter programme in fact had since ceased to exist in light of 
the expiry of the ECSC itself in July 2002.  These points were reiterated to the USDOC by the GOS and the European Communities in the Section 129 proceeding.  
40 Spain Section 129 determination , p. 5 (Exhibit EC-3); UK Section 129 determination , p. 5 (Exhibit 
EC-2). WT/DS212/RW 
Page 10  
 
 were not considered in previous stages of the WT O dispute settlement proceedings.  To the contrary, 
as discussed above, in an Article 21.5 proceeding, th e Panel's mandate is to "examine whether the new 
measure ... [is] in conformity with , adhering to the same principles of[,] or compatible with" the WTO 
Agreement cited by the complaining Member in its Panel Request.
41  Accordingly, a Member's duty 
remains, throughout such proceedings, to ensure  that the challenged measures were brought into 
compliance with the Member's obligations under the WTO. 
(b) The United States also breached its WTO obligati ons by failing to examine the privatizations 
of BS plc and Aceralia 
4.17 The USDOC also failed to act consistently with the SCM Agreement  in these two Section 129 
determinations, because it refused to examine whether the privatizations of BS plc and Aceralia were 
at arm's length and for FMV.  In light of the arguments presented above, the USDOC could not have 
arrived at a conclusion of likelihood or recurrenc e of subsidization wit hout having examined the 
nature of the UK and Spanish privatizations.  Because it found independent  bases for its likelihood 
determinations, the USDOC did not even consider whet her the privatizations of BS plc or of Aceralia 
were at arm's length and for FMV pursuant to the methodology set forth in its Modification Notice.  
The USDOC's reasons for its failure were insu fficient to satisfy its obligations under the SCM 
Agreement . 
4.18 The undisputed evidence before the USDOC in fact demonstrated that the privatizations of BS 
plc and Aceralia were at arm's length and for FMV, and that, therefore, the pre-privatization subsidies 
granted to those companies had been extinguished.  Indeed, in the Section 129 determination in the 
UK case, Corus and the GUK submitted comments expl aining that in a prior proceeding, the USDOC 
had "concluded that the privati zation of British Steel was an arm's length, fair market value 
transaction".42  Based on this conclusion, the Appellate Body noted that "[t]he USDOC analyzed the 
sales conditions of the privatizations in two of the underlying sunset reviews [citing, inter alia , the 
CTL Plate from UK sunset review] and three of the original investigations ... , concluding that those 
five privatizations took place at arm's length and for fair market value".43  Similarly, in the Spanish 
case, the evidence on the record showed  that the privatization of Aceralia occurred at arm's length and 
for FMV.  The GOS stated in the Section 129 proceedings that "[n]one of the purchasers [in the privatization] was related to the seller (the Spanish State) in any manner" and, therefore, "[t]he sale 
was at arm's length".
44  As to FMV, the record indicated that three categories of purchasers of 
Aceralia's shares participated in the privatizati on process: (1) 35 per cent of Aceralia's shares were 
sold to the Arbed Group of Luxembourg; (2) 12.2 per cent of its shares were sold to the Spanish 
industrial groups Corporación J.M.  Aristrain and Corporación Gestamp S.L.; and (3) 52.76 per cent of 
Aceralia's shares were sold to th e general public by public offering.45  The share price paid by the first 
two categories was € 17.75, while the share pr ice of the public offering was ESP 2080 (€ 12.50).46  
When the number of shares that were purchased by  each of the three categories was multiplied by 
                                                      
41 Appellate Body Report on Canada – Aircraft , para. 37 (quotation omitted). 
42 Corus/GUK 22 August 2003 Supplemental Questionnaire Response, Cover Letter, p. 2, citing 
USDOC , Final Results Redetermination Pursuant to Court Or dered Remand on General Issue of Privatization, 
British Steel plc v. United States , Consol. Ct. No. 93-09-00550-CVD, Slip Op. 95-17 and Order (CIT Feb. 9, 
1995) , p. 18 (17 July 1995).  The USDOC had reached this conclusion in a court-ordered remand of the original 
investigation, in which it determined th at "the UKG's sale of BS plc was at arm's length, for fair market value 
and consistent with commercial considerations because the BS plc shares were offered to private investors 
worldwide, the offering price was based on valuations of independent consultants, and private investors purchased nearly the entire share offering". 
43 Appellate Body Report on US – Countervailing Measures on Certain EC Products , footnote.4. 
44 GOS 28 July 2003 Questionnaire Response, p. 5. 
45 GOS 28 July 2003 Questionnaire Response, p. 2 and 10-11; GOS 5 September 2003 Questionnaire 
Response, p. 6-7. 
46 GOS 28 July 2003 Questionnaire Response, p. 11 and 22.  WT/DS212/RW 
 Page 11 
 
 
 their respective share prices, the resulting total value at which the company was privatized was 
approximately € 1,871,488,430.  This amount was at the high end of the range of valuations obtained 
from independent experts at the commencement of the privatization process, at the request of the GOS 
– which ranged from € 1296.08 million to € 1895.69 million.47 
4.19 By refusing to examine the privatizations of  BS plc and Aceralia in its Section 129 
determinations, despite the undisputed evidence that  they had occurred at arm's length and for FMV, 
the USDOC's determinations were not in complia nce with the conclusion of the Appellate Body 
upholding the Panel's finding that the United States acted inconsistently with its obligations under 
Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  by "imposing and maintaining 
countervailing duties without determining whet her a 'benefit' continues to exist ... ".48   
4. Failure to consider injury 
4.20 Finally, the European Communities noted that  the United States had maintained the above 
three measures without examining whether expiry of the duty would be likely to lead to continuation or recurrence of material injury as required by Article 21.3 of the SCM Agreement .  This was a further 
violation of the SCM Agreement  and a further reason why the United States had failed to bring all 
three of the measures into conformity with its obligations under the SCM Agreement .  
B. F
IRST WRITTEN SUBMISSION OF THE UNITED STATES  
1. Claims not properly before the Panel 
4.21 The European Communities had improperly adva nced claims regardi ng both injury and 
subsidization which are aspects of the determinati ons other than the "measure taken to comply" and 
therefore the Panel should reject them.  
(a) Injury 
4.22 The European Communities' injury  argument consists of one paragraph that simply asserts the 
United States erred by not examining whether the expiry of the duty would be likely to lead to continuation or recurrence of injury in  accordance with Article 21.3 of the SCM Agreement .  The ITC 
did conduct this examination as part of the original  sunset review, but the European Communities did 
not, in the original proceedings, challenge this examination, nor, consequently, did the DSB issue 
rulings relating to this determina tion.  Therefore, there was no b asis for the European Communities' 
claim, which had not been properly brought in the context of this Article 21.5 proceeding.  The 
recommendations and rulings made by the DSB in the underlying proceeding do not pertain to the ITC determination.  Thus, there can be no "mea sure taken to comply" with respect to the ITC 
determination.  As the Appellate Body stated in EC – Bed Linen (Article 21.5 – India) : "we do not see 
why that part of a redetermination that merely inco rporates elements of the or iginal determination ... 
would constitute an inseparable element of the meas ure taken to comply with the DSB rulings in the 
original dispute".
49  Further, in that dispute, "India [sought ] to challenge an aspect of the original 
measure which has not changed, and which the Eu ropean Communities did not have to change, in 
order to comply with the DSB recommendations a nd rulings to make that measure consistent".50  
Likewise, in this dispute, the ITC determination had not changed, nor did the United States have to 
change it in order to comply with the DSB recomm endations and rulings.  Therefore, the European 
                                                      
47 GOS 28 July 2003 Questionnaire Response, p. 6-7; GOS 5 September 2003 Questionnaire Response, 
p. 1-2. 
48 Appellate Body Report on US – Countervailing Measures on Certain EC Products, para. 161(a). 
49 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 86 
50 ibid., para. 87 WT/DS212/RW 
Page 12  
 
 Communities' claim regarding injury was not within  the terms of reference of this Article 21.5 
proceeding. 
4.23 The United States notes that the Panel and th e Appellate Body made their findings in EC – 
Bed Linen in response to arguments advanced by the European Communities.  For example, the 
European Communities argued that: "India did not  challenge these aspects of the original 
determination in the original dispute, that the European Communities therefore had no 
implementation obligation with respect to those aspect s of its original determination, and that the 
European Communities therefore did not m odify them in the redetermination".
51  Before the Appellate 
Body, the European Communities argued that  "it was under no obligation to correct ... its findings . . . 
because the original panel had not ruled that these findings were inconsistent with Article 3.5".52  The 
European Communities' logic as expressed in EC – Bed Linen  and adopted by the DSB was equally 
applicable in this dispute. 
(b) Subsidization 
4.24 The European Communities had argued that USDOC 's findings in the revised sunset reviews 
about Glynwed in the UK case and the recurring subsidy programmes in the Spanish case were 
inconsistent with the SCM Agreement .  The findings that subsidies continued to benefit Glynwed and 
that there were recurring subsidy programs in the Spanish case were made in the original sunset 
reviews.  The European Communities did not cha llenge these aspects of the USDOC determinations 
during the proceedings before the original panel, and neither the original panel nor the Appellate 
Body made any findings concerning these programs, which did not involve use of the privatization 
methodology.  As the Appellate Body in EC – Bed Linen  noted – and argued there by the European 
Communities – a "measure taken to comply" does not  include unchanged findings from the original 
determination.  Because the findings concerning Gl ynwed and the recurring subsidy program in Spain 
were unchanged, and because the recommendations and rulings did not require them to be changed, 
the European Communities cannot use the Ar ticle 21.5 process to challenge them now. 
4.25 The European Communities had argued that the mand ate of an Article 21.5 panel is to review 
the revised measure for its consistency with the agre ement in question and that the Panel is not limited 
to reviewing only the matters on which the DSB ad opted recommendations and rulings.  In support of 
this proposition, the European Communities refers to the Appellate Body report in the Article 21.5 
proceedings in Canada – Aircraft  and the Panel report in the Article 21.5 proceedings in EC – 
Bananas (Ecuador).   However, the European Communiti es misunderstands the relevance of Canada – 
Aircraft  and fails to take into account the Appe llate Body's further clarifications in EC – Bed Linen .  
In Canada – Aircraft , for example, the Panel correctly evaluated whether the measure taken to comply  
was consistent with the Member's WTO obligations ; however, as noted above, the measure taken to 
comply does not include unchanged aspects of a measure not covered by the recommendations and rulings of the DSB.  Similarly, in EC – Bananas (Ecuador) , the Panel also evaluated whether the 
measure taken to comply had been consistent.  In  this dispute, USDOC's findings regarding Glynwed 
and the recurring subsidy programs in Spain were unchanged and did not have to be changed in 
response to DSB rulings and recommendations.  Theref ore, they were not "measures taken to comply" 
and were not subject to Article 21.5.   
4.26 The United States also notes that the European  Communities' panel request states its claim 
under Article 21.5 as follows: "The United States faile d to properly determine whether, in these cases, 
there was continuation or recurrence of subsidizati on and injury, because it did not examine the nature 
of the privatizations in question and their impact  on the continuation of the alleged subsidization".
53  
                                                      
51 Panel Report on EC – Bed Linen (Article 21.5 – India) , para. 6.30 
52 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 77 
53 WT/DS212/15  WT/DS212/RW 
 Page 13 
 
 
 Thus, the European Communities explicitly recognized that the privatization analysis had been the 
sole basis for its Article 21.5 challenge to the new sunset determination.  Th e privatizations and their 
impact on the continuation of subsidization were precisely the matters that USDOC examined in the 
revised sunset determinations in response to th e DSB recommendations and rulings.  The European 
Communities' claims in the present proceeding regarding Glynwed and the recurring subsidy 
programs in Spain do not involve USDOC's treatment of the Br itish and Spanish privatizations, or 
their impact and thus were not within the scope  of the European Communities' Article 21.5 panel 
request or this proceeding.  
2. The European Communities bears the burden of proving its claims 
4.27 It has been well established that the complaini ng party in a WTO dispute bears the burden of 
coming forward with argument and evidence that estab lish a prima facie case of a violation.  If the 
balance of evidence and argument is inconclusive w ith respect to a particular claim, the European 
Communities, as the complaining party, must be found  to have failed to establish that claim.  The 
European Communities had not met its burden, for the reasons described as follows.  Article 11 of the 
DSU  sets forth the standard of review for this Panel.  With respect to disputes involving a 
determination made by a domestic authority based upon an administrative record, the Appellate Body, 
in US – Cotton Yarn , summarized the role of a panel under Article 11.54  Thus, it was clear that the 
Panel's task was not to determine whether the priva tization had been at arm's-length or for FMV, but 
rather whether USDOC properly established the f acts and evaluated them in an unbiased and 
objective way.  Put differently, the Panel's task  was to determine whether a reasonable, unbiased 
person, looking at the same evidentiary record as the USDOC, could have – not would have – reached 
the same conclusions. 
3. USDOC's application of its new privatization methodology to the revised French sunset 
review is consistent with the SCM Agreement  and the DSB recommendations and rulings 
4.28 As noted above, both parties accepted the genera l principle that non-recurring subsidies may 
be allocated over time.  The DSB found, however, that  where the subsidy recipient is privatized in an 
arm's-length sale for FMV, the benefit stream is presumed to be extinguished.  The terms "arm's 
length" and "fair market value" were not used in the text of the SCM Agreement  and were not to be 
interpreted as though they were treaty text.  As demonstrated below, USDOC's revised determination 
in the corrosion-resistant steel from France case was entirely consistent with the DSB 
recommendations and rulings, and was supported by th e evidence on the record before USDOC.  This 
Panel should reject the European Comm unities' claims in their entirety. 
(a) USDOC's analysis of the Usinor privati zation is entirely consistent with the SCM Agreement  
and the DSB recommendations and rulings 
4.29 If the investigating authority finds that a priva tization was at arm's length and for FMV, then 
in making its subsidy determination, it must find, absent evidence to the contrary, that the pre-privatization subsidy benefits have been extin guished.  USDOC's new privatization methodology 
implements these principles verbatim.   Because the arm's-length/FMV test was not found in the text 
of the SCM Agreement , that Agreement does not provide a methodology for analyzing whether a 
transaction is at arm's-length or for FMV.  It is therefore within a Member's discretion to develop a 
                                                     
 
54 "[P]anels must examine whether th e competent authority had evaluated all relevant factors; they must 
assess whether the competent authority had examined all the pertinent facts and assess whether an adequate 
explanation had been provided as to how those facts support the determination; and they must also consider whether the competent authority's explanation addresses fully the nature and complexities of the data and 
responds to other plausible interpretations of the data.  However, panels must not conduct a de novo  review of 
the evidence nor substitute their judgement for that of the competent authority". WT/DS212/RW 
Page 14  
 
 reasonable methodology for addressing these issues.  Mo reover, because of the fact-intensive nature 
of the inquiry, the appropriate analytical appro ach may vary from case to case.  Nevertheless, the 
European Communities argued that USDOC wa s obligated to evaluate whether the average  price for 
all of the French privatization transactions was at FMV.  In the European Communities' view, 
therefore, it was impermissible for USDOC, in exam ining the French privatization transactions, to 
take into account the evidence that these transactions  were accomplished by means of four distinct 
groupings of purchasers.  There was simply no basis fo r this view.  To the contrary, USDOC analyzed 
the issue of whether Usinor was sold at arm's le ngth and for FMV in a manner that had been entirely 
consistent with those concepts as used  by the Panel and the Appellate Body.  
4.30 If a privatization at arm's length and for FM V extinguishes the subsidy benefit, it follows 
logically that the benefit from a non-recurring financial contribution continues if a portion of the 
company was not sold at arm's length and for FMV.  This had been precisely the approach USDOC 
took in the Usinor case.  The Usinor privatization had been divided into four separate and distinct parts, each targeting a different group of investors and resulting in a different price.  One of those groups was comprised of company employees.  As  discussed further below, USDOC found that the 
relationship between the company and its employe es was not at arm's length.  Moreover, USDOC 
found that the privatization processes were different for each of the four groups and that the 5.16 per 
cent of Usinor's shares sold to its employees were sold for less than FMV.  Thus, USDOC determined 
that the 5.16 per cent of the allo cated pre-privatization benefit wa s not extinguished.  The remaining 
94.84 per cent of the allocated benefit was found to  be extinguished by the sale of the remaining 
portion of the company in arm's-length transactions for FMV. 
4.31 The analytical approach describ ed above was entirely consistent with the Panel's finding that 
pre-privatization subsidies were extinguished wh ere the privatized producer, an amalgam of the 
company and its new owners, receives "nothing for fr ee".  To the extent that a portion of the company 
was sold for less than FMV, th e privatized producer received something "for free".  USDOC's 
analysis of the Usinor privatization established th at the privatized Usinor did, in fact, receive 
something "for free" to the extent that some of the purchasers – Usinor employees – did not pay FMV 
for the so-called "preferential" shares.  It was therefore entirely reasonable for USDOC to determine 
that a corresponding portion of the pre-privatization benefit continues. 
4.32 The European Communities had failed to provid e any basis for its claim that USDOC was 
obligated to use an "average price" analysis.  Th e European Communities' argument, in fact, ignores 
the fundamental importance of determining that the privatization was at arm's length and for FMV.  
There was simply no basis to conclude that USDOC had been required to disregard, for purposes of 
the privatization analysis, the no n-arm's-length/non-FMV sale of shares to the employees of Usinor.  
As demonstrated below, USDOC properly consider ed those transactions and its conclusions were 
supported by the evidence. 
(b) USDOC properly found that the sale of shares to  Usinor's employees was not at arm's length 
4.33 The evidence on record amply demonstrates that sales to Usinor's employees were not at arm's 
length.  To the contrary, the sales were openly acknowledged to be preferential.  Moreover, the 
evidence that the employees did not pay FMV for the portion of the company they acquired was overwhelming.  The European Communities' argument s to the contrary were premised on assumptions 
about what constitutes an arm's-lengt h sale that have no basis in the SCM Agreement , or in the 
recommendations and rulings of the DSB.  The SCM Agreement  does not refer to "arm's length", and 
neither the Panel nor the Appellate Body provided an y elaboration on this term .  The "arm's-length"  WT/DS212/RW 
 Page 15 
 
 
 definition55 applied by USDOC is, however, entirely cons istent with the ordinary understanding of 
that term. 
4.34 Consistent with this definition, to determine wh ether sales of Usinor's shares were at arm's-
length, USDOC first considered the existence of rela tionships that would indicate the sales were not at 
arm's length.  USDOC found such a relationship with respect to Usinor employees.  USDOC's 
approach recognizes that  the respective interests of employers and employees may not be 
distinguishable and that members of the "corporat e family" often treat each other more favourably 
than they do others outside the family – a point bo rne out by the admittedly preferential nature of the 
employees stock purchases in this case.  USDOC th en proceeded to examine the terms of the 
transaction between Usinor and its employees to de termine whether those terms would have existed 
had the transaction been between unrelated pa rties.  As USDOC explained these purchasers 
[employees] had two options: (1) they could purch ase shares at the French public offering price of 
FF 86 per share, or (2) they could pay a discounted price of FF 68.80, with an extended payment period, if they agreed to hold the shares for two y ears.  Additionally, they were eligible to receive 
bonus shares if they held the shares for specified periods.  Thus, the employee offering was clearly 
distinguishable from the public offerings and was op enly characterized as "preferential" in Usinor's 
Prospectus. 
4.35 Because there had been a preferential option available to employees that had not been 
available to unrelated parties, USDOC concluded th at the terms of the transaction were different as a 
result of the relatedness of the parties and, hence, th at the transactions were not at arm's length.  The 
European Communities maintained that USDOC's arm's-length analysis had been in error because 
USDOC confused the company (Usinor) and its ow ner (the GOF), finding only that Usinor's 
employees were related to Usinor, not to the GOF.  The facts, however, indicate that the GOF offered preferential share prices to the employees of a company that it entirely owned, demonstrating that it did not deal with those employees at arm's length for purposes of the privatization.  Moreover, the 
DSB rationale for finding that a  benefit may be ex tinguished by an arm's length, FMV privatization 
hinges on the assumption that there was little distin ction between the company and its new owners.  
Ironically, the European Communities now appears to  argue that, for purposes of determining whether 
a privatization transaction is at arm's length, ther e is a significant distinction between a company and 
its owners.  
(c) USDOC properly found that the sale of shares to Usinor's employees was not for FMV 
4.36 USDOC's finding that the sale of shares to Usinor's employees had not been for FMV was 
reasonable and overwhelmingly supported by th e evidence on the record .   Once again, the SCM 
Agreement  does not contain this term.  In its determination, USDOC c onsidered what the "full amount 
that the company or its assets (including the value of any subsidy benefits) were actually worth under 
the prevailing market conditions was paid, and paid  through monetary or equivalent compensation".  
One means of performing that analysis might be to fi nd market benchmarks in the form of actual sales 
of comparable companies.  In those circumstances, USDOC found none  and based its examination of 
FMV on various aspects of the transaction process.  Specifically, USDOC examined the "process 
factors" set forth in the Modification Notice:   objective analysis, artificial barriers to entry, acceptance 
of the highest bid, and committed investment.  US DOC's approach to the FMV analysis is supported 
by Article 14 of the SCM Agreement , which defines the benefit from government equity infusions in 
terms of whether the government ac tion is consistent with "the us ual investment practice (including 
                                                     
 
55 "In considering whether the evidence presented dem onstrates that the trans action had been conducted 
at arm's length, the United States would be guided by th e SAA's definition of an arm's-length transaction, noted 
above, as a transaction negotiated between unrelated par ties, each acting in its own interest, or between related 
parties such that the terms of the transaction are those that would exist if the transaction had been negotiated 
between unrelated parties. " Modification Notice  WT/DS212/RW 
Page 16  
 
 for the provision of risk capital) of private investors in the territory of that Member [the Member that 
is bestowing the benefit]".   
4.37 Because the Usinor privatization was not accomplished through a bidding process, USDOC 
did not consider whether the GOF accepted the high est bid.  Rather, USDOC considered the sales 
process and whether the GOF received a price that maximized its return.  Further, regarding the 
committed investment factor, i.e. whether buyers of Usinor's shar es were required to undertake certain 
post-sale investments, or observe certain post-sale restrictions, USDOC found that there was no evidence to indicate that any of the committed invest ments distorted the amount that the buyers were 
willing to pay. 
4.38 USDOC found that the GOF had conducted an objective analysis that it used in structuring the 
Usinor privatization.  That analysis indicated  a minimum value of FF 15,750 billion for Usinor.  
Minimum value and FMV are, however, distinctly different concepts.  FMV is based on the results of a market process, not merely on a pre-sale appraisal.  USDOC therefore never considered the minimum value to be the FMV of the company.  Regarding artificial barriers to entry for the 
employee sales, USDOC found that the employee shar es could be purchased only by current and past 
employees of Usinor.  Hence, by the very te rms defining the employee pool, numerous potential 
purchasers were excluded from purchasing these shar es.  Unlike the terms defining the employee 
pool, the international offering and the French offe ring did not involve meaningful limitations on the 
competition for shares.  
4.39 As to purchase price, USDOC's general appro ach was to look to see whether the GOF charged 
a market-clearing price for its shares of Usinor.  A market-clearing price is one that equates the supply 
of shares to the demand for shares.  If the GOF set the offering price for Usinor's shares too low, the 
offering would have been oversubscr ibed and many people seeking shares would have been unable to 
obtain them.  Conversely, if the GOF set the offeri ng price too high, the offering would have been 
undersubscribed.  Given the oversubscription to the Fren ch offering at the FF 86 price, the fact that 
shares were moved from the international offering to  the French offering, and the number of shares 
sold at each of the two prices, USDOC found that the market-clearing price for Usinor's shares was 
between FF 86 and 89.  Usinor's employees, on the other hand, had the opti on of purchasing shares 
for FF 68 per share – well below the market-clearing price.  Based on these uncontested facts, USDOC concluded that the sale of shares to Usi nor employees had not been for FMV, both because 
of the limitations in the purchaser pool and the failure of Usinor to set the share price for employees at anything close to a market-clearing level. 
4.40 The European Communities main tained that USDOC's FMV an alysis had been in error 
because "[t]he discount offered to employees and former employees of Usinor reflects the risk assumed by the buyers for the resale restrictions  on the shares purchased".  Resale restrictions per se  
provide no explanation for the subs tantial discount afforded Usinor's employees.  To the contrary, 
resale restrictions in the Usinor privatization were  not limited to company employees.  Purchasers in 
the French offering as well as the stable sharehol ders were subject to similar restrictions.  
Nevertheless, the share prices for the latter two grou ps were well above the preferential price for the 
employees.  Moreover, if the European Communities' argument were correct, one would expect the European Communities to be able to provide ev idence that employees were equally (or virtually 
equally) likely to participate in the French public of fering as they were to participate in the employee 
offering.  The European Communities had offere d no such evidence.  Nor had the European 
Communities offered any demonstration of how the discount offered to employees was supposed to 
reflect the risk assumed by the buyers for the re sale restrictions.  In sum, USDOC reasonably 
concluded that the sale of shares to Usinor's employees had not been at arm's length or for FMV.  These conclusions should therefore be affirmed by the Panel.    WT/DS212/RW 
 Page 17 
 
 
 4. In the revised UK and Spain sunset revie ws, USDOC assumed that all allocable pre-
privatization subsidies had been extinguished by the privatizations in question and thereby implemented the DSB recommendations 
4.41 In the revised sunset review determinations in the UK and  Spanish case s, USDOC assumed 
for purposes of its analysis that the pertinent pr ivatizations had extinguished all allocable pre-
privatization subsidies.  USDOC nevertheless concl uded that, in both of those cases, there remained 
an affirmative likelihood of continuation or r ecurrence of a countervailable subsidy.  Those 
determinations were based on evidence wholly unrelated  to pre-privatization subsidies.  For example, 
in the UK case, one company (Glynwed) was never owned by the UK government.  Glynwed therefore continued to benefit from all subsidies that  had been bestowed upon it.  In the Spanish case, 
there were also recurring  (nonallocable) subsidies to the privati zed company (Aceralia) that continued 
after privatization.  Despite the fact that USDOC di d not rely on pre-privatization subsidies to these 
companies in determining that they would continue  to benefit from subsid ies if the countervailing 
duty orders were revoked, the European Communiti es challenged the revised determinations on the 
grounds that USDOC failed to examine whether th e UK and Spanish privatizations were at arm's 
length and for FMV.  The European Communities' argument elevated form over substance.  USDOC 
assumed  that the privatizations in the UK and Spain were at arm's-length and for FMV.  Because 
USDOC did not rely on pre-privatization subsidi es, its revised determination simply cannot be 
inconsistent with the DSB recommendations.  
C. S
ECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES  
1. The Panel's terms of reference for this Article 21.5 proceeding 
4.42 The United States asserted that the European Communities had improperly advanced claims 
regarding both injury and subsid ization, because these claims concern part of the United States' 
original sunset determinations in 2000, and that, ha ving failed to raise those issues before the original 
panel and Appellate Body, the European Commun ities was now foreclosed from doing so in this 
Article 21.5 proceeding.56  For the following reasons, the United States' assertion was incorrect: 
(a) The Section 129 determinations concerning th e UK and Spain were new measures based on 
new reasoning 
4.43 The Section 129 determinations at issue in th is proceeding were measures taken by the United 
States to comply with the recommendations and rulin gs of the DSB.  The United States admitted this 
in its First written submission:  The United States attempted to dissociate certain aspects of these 
determinations – the failure to examine the evidence in respect of the UK and  Spanish case s and the 
failure to re-examine injury – from the "measur es taken to comply".  The legal claim that the 
European Communities made in the original WT O proceedings was that the United States, in 
maintaining countervailing duties without properly analysing the likelihood of continuation or 
recurrence of subsidization, violated, inter alia , Article 21.3 of the SCM Agreement .   This was 
confirmed by the Panel who found that the measures ch allenged in the original proceeding were based 
on insufficient determinations by the USDOC.  Th e United States could continue to maintain the 
challenged measures only if it were to find alterna tive, sufficient grounds on which they could be 
based.  Therefore, the USDOC responded by issui ng what the United States itself acknowledged were 
"new determinations"57, based on a revised analysis of the UK and Spanish programmes, comprising 
"measures taken to comply with the r ecommendations and rulings" of the DSB.  
                                                      
56 US First written submission, paras. 14-21 
57 US First written submission, para. 11 WT/DS212/RW 
Page 18  
 
 4.44 The United States asserted that an aspect of a measure which was before the original panel 
and Appellate Body and wh ich had not changed was not properly be fore an Article 21.5 panel, relying 
for its support on the Appellate Body's decision in EC – Bed Linen .
58  However, in EC – Bed Linen , 
India raised in the Article 21.5 proceeding the same claim as it had in the original proceedings 
regarding a component of the implementing measure that remained unchanged from, and was part of, 
the original measure, and which had been " not found to be inconsistent with WTO obligations ".59  
Whereas, in the present case, the European Communities had raised new claims concerning 
components of the new measures which were not part of the or iginal measure.  Indeed, the situation 
before the present Panel was more akin to the situation which faced the 21.5 panel in Canada – 
Aircraft (Article 21.5 – Brazil) .  Contrary to the assertions in the US First written submission, the 
Section 129 determinations as to the UK and Spain were "new" sunset review determinations based 
on different reasoning.  In both of the original s unset review determinati ons, the USDOC concluded 
that there was a likelihood of continuation or recurrence because none of the producers/exporters 
concerned participated in the review.  Because  of their non-cooperation, the USDOC made the 
adverse assumption that there was a likelihood of con tinuation or recurrence of subsidization, without 
examining any of the facts put on the record by the Governments of Spain and the United Kingdom 
and the European Commission respectively, and w ithout revisiting its analysis of any of the 
programmes at issue,60 rather relying on findings it had made in the original investigations of the 
existence of certain subsidy programmes.61  Thus, the reasoning of th e Section 129 determinations, 
based on the existence of certain subsidies purporting to justify a finding of likelihood of continuation 
of recurrence, was different from the USDOC's reas oning in the original sunset reviews, where the 
finding of likelihood of con tinuation or recurrence was based on assumptions drawn from the 
respondents' failure to cooperate.  Consequently, the Section 129 dete rminations were new measures 
based on new reasoning. 
(b) The factual findings purporting to justify the reasoning in the  UK and  Spanish case s are 
clearly different 
4.45 Even assuming, arguendo , that the two forms of reasoning ( i.e., the likelihood of continuation 
or recurrence arising from the respondents' non- cooperation, and that ar ising from the alleged 
existence of certain subsidy programmes) could be considered unchanged, the underlying bases -- that 
                                                      
58 US First written submission, paras. 15-20 
59 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 89 (emphasis added); see also 
id. at paras. 80-88. 
60  Issues and Decision Memo for th e Expedited Sunset Review of the Countervailing Duty Order on 
Cut-to-Length Carbon Steel Plate from the United Kingdom; Final Results  (29 March 2000), p. 12-14 (" Sunset 
Review of CTL Plate from the UK ") (Exhibit EC-6).  This document was submitted in the original panel 
proceeding as Exhibit EC-18.  See also Issues and Decision Memo for the Expedited Sunset Review of the 
Countervailing Duty Order on Cut-to-Length Carbon Steel Plate from Spain; Final Results (29 March 2000 ) 
("Sunset Review of CTL Plate from Spain"), p. 16-18.   (Exhibit EC-7).  This document was submitted in the 
original panel proceeding as Exhibit EC-22.   
The Appellate Body has recently ruled that the assumption of the likelihood of continuation or 
recurrence of dumping in the event of non-cooperation is inconsistent with Article 11.3 of the Anti-Dumping 
Agreement (the equivalent of Article 21.3 of the SCM Agreement ) because an investigating authority has an 
"obligation" to "arrive at a reasoned conclusion on the basis of positive evidence".  See Appellate Body Report, 
US – Oil Country Tubular Goods Sunset Reviews , para. 234 (citation and quotation omitted). 
61 In the UK case, the USDOC found, that, even assu ming the British Steel privatization to be at arm's 
length and fair market value, "we would still make an affirmative likelihood determination based on the determination in the Final Sunset Results
 that programs previously determined to provide countervailable 
subsidies and/or benefit streams from such products continue to benefit Glynwed, the other producer/exporter of 
the subject merchandise".  UK Section 129 determination , p. 4 (Exhibit EC-2).  In the Spanish case, USDOC 
held, making similar assumptions for Aceralia, that "we would still make an affirmative likelihood 
determination based on the fact that subsidy programs that have provided recurring, non-allocable subsidies at 
above de minimis  rates continue to exist".  Spanish Section 129 determination , p. 3 (Exhibit EC-3).  WT/DS212/RW 
 Page 19 
 
 
 is, the factual findings purporting to justify the reaso ning -- were clearly different in the two cases.  In 
the original sunset review determinations in both the UK and the  Spanish case s, although the 
determination of likelihood was made because of the non-cooperation of the producers/exporters, the 
information the USDOC reported to the United Stat es International Trade Commission regarding the 
"nature of the subsidies" allegedly provided, and wh ich were thus examined for a causal link to injury, 
concerned a different company or a different set of programmes from those relied upon by the 
USDOC in the Section 129 determinations.  In its Section 129 determination in the UK case, for 
example, the USDOC focused exclusively on pr ogrammes that benefited Glynwed, because it 
assumed that all countervailable benefits that had previously been conferre d upon BS plc had been 
extinguished through the company's privatization.62  In contrast, in the sunset review determination 
considered in the original WTO proceedings, th e USDOC identified exclusively programmes that 
benefited BS plc .63  There was no reference in the USDOC's anal ysis of the nature of the subsidies to 
Glynwed at all.64  Thus, assuming, arguendo , that the original sunset determination was not based on 
an assumption triggered by the producer/exporters' non-cooperation, but on a finding purporting to be 
positive evidence, the exclusive b asis upon which the USDOC reached its finding in the Section 129 
determination was distinct from that  upon which it reached its conclusion in the sunset review at issue 
in the original WTO proceedings.   
4.46 Likewise, in the Spanish case, the determinati on at issue in the original WTO proceedings 
was based primarily on thirteen subsidy progr ammes that allegedly conferred non-recurring and 
recurring benefits.65  In contrast, the determination at issu e in this Article 21.5 proceeding was based 
exclusively on programmes that allegedly provided recurring  subsidies, and the USDOC had only 
specified one such programme.66  Thus, the bases upon which the USDOC focused its determinations 
regarding the UK and  Spanish case s in its original sunset review and its Section 129 determination 
were distinct and, therefore, the measures at issue were "different". 
4.47 Because the measures at issue in this Article 21.5 proceeding were "new" and "different" from 
those considered in the original WTO proceedings and because they were taken to comply with the 
recommendations and rulings of the DSB, the fu nction and scope of Article 21.5 proceedings 
discussed by the Appellate Body in Canada – Aircraft (Article 21.5 – Brazil) were applicable to this 
dispute.  Accordingly, the new claims presented by the European Communities concerning the "new" 
and "different" measures at issue in this Article 21.5 proceeding were properl y before this Panel. 
4.48 Likewise, the European Communities' injury argum ent was properly before this Panel.  In the 
Section 129 determinations regard ing the UK and Spain, the USDOC assumed for the first time that 
the privatizations of BS plc and Aceralia were at arm's length and for FMV.  This had the effect of 
significantly lowering the level of the countervailable subsidies that were found by the USDOC to be likely to continue or recur in the event that th e countervailing duty orders were revoked.  In the UK 
case, the USDOC measured the countervailable subsidies provided to Glynwed at 0.73 per cent.
67  As 
to Spain, the USDOC had previously measured the al legedly recurring subsidies provided to Aceralia 
at 1.73 per cent.68  These figures were far lower than the 12.00 per cent for "all others"69 and 36.86 per 
                                                      
62 UK Section 129 determination, p. 3-4 (Exhibit EC-2). 
63 Sunset review of C TL Plate from the UK , p. 17-19  (Exhibit EC-6).  
64 Sunset review of CTL Plate from the UK, p. 17-19  (Exhibit EC-6).  
65 Sunset review of CTL Plate from Spain , p. 16-18  (Exhibit EC-7).  
66 Spanish Section 129 determination , p. 3 (stating that even if the USDOC were to determine that non-
recurring, allocable subsidies received by Aceralia prior to  the 1997 privatization woul d not continue through or 
after the period of review, "we would still make an affi rmative likelihood determinatio n based on the fact that 
subsidy programs that have provided recurring, non-allocable subsidies at above de minimis  rates continue to 
exist") (Exhibit EC-3). 
67 Sunset review of C TL Plate from the UK , p. 19 (Exhibit EC-6). 
68 In the Spanish determinations, the USDOC did not expressly indicate which subsidy programmes 
were considered recurring in its Section 129 determinati on or in the original sunset  review.  In the original WT/DS212/RW 
Page 20  
 
 cent
70 figures, respectively, which the USDOC had issu ed in the original sunset determinations.  
However, because such changes to the subsidy ra tes resulted from the USDOC's revised subsidization 
findings, the European Communities logically could not have argued at an earlier stage of WTO proceedings that the USDOC's redetermination of th e subsidy rates required a reconsideration of the 
injury determination.  Had the USDOC properly an alysed the UK and Spanish programmes at issue in 
its Section 129 determinations, the USDOC would ha ve found that no subsidies would be likely to 
continue or recur and that, therefore, the continua tion of countervailing duties was not warranted.  In 
an analogous situation, the Appellate Body in EC – Bed Linen (Article 21.5 – India)  determined that it 
was appropriate for the complaining party to raise the issue of injury in an Article 21.5 proceeding 
where the investigating authority revised its findi ngs regarding the amount of imports found to be 
dumped.  Likewise here, the reduc tions in subsidy rates which the USDOC found in its revised 
Section 129 determinations would likely have an impact on the United States' finding of injury.  
Therefore, the United States was required to  reconsider its injury determination.  
(c) The claims raised by the European Communitie s concerning the UK and Spain are within the 
scope of its panel request 
4.49 The European Communities noted that in its requ est for the establishment of a panel in this 
Article 21.5 proceeding, it had challenged the propriety  of the United States' determinations in the UK 
and Spanish case s that there was a "likelihood of continua tion or recurrence of subsidization and 
injury".  That is, that the United States had failed to meet its obligations, inter alia , under Article 21.3 
of the SCM Agreement .  This claim was based on a number of arguments, including that the USDOC 
had failed to examine the nature and also the "impact  [of the privatizations] on the continuation of the 
alleged subsidization".
71  The European Communities challenged  the USDOC's finding of a likelihood 
of continuation or recurrence in light of the USDOC 's assumptions in its Section 129 determinations 
that the privatizations of BS plc and Aceralia we re at arm's length and for FMV.  Thus, the United 
States' contention that the European Communities' claims in this proceeding regarding the UK and 
Spain were "not within the scope of the Eu ropean Communities' Article 21.5 panel request"72 was 
incorrect. 
2. Certain corrosion-resistant carbon steel flat products from France 
(a) The privatization of Usinor was at arm's length and for FMV 
4.50 The United States has asserted that the USDOC's revised determination in the French case 
was consistent with the DSB recommendations and rulings and was supported by the evidence before 
the USDOC.73  For the following reasons, the Un ited States' assertions are incorrect.  
(i) The SCM Agreement requires that a privatization be  measured as to the company as a whole 
4.51 Before determining that pre-privatization, no n-recurring subsidies are likely to continue, an 
investigating authority in a sunset review would be obliged under the SCM Agreement  to examine the 
conditions of the privatization to determine whether the privatized producer continued to receive a 
                                                                                                                                                                     
investigation, the USDOC only expressly indicated that one programme provided recurring subsidies – the Fund 
for Employment Promotion and Early Retirement.  The USDOC measured the recurring subsidies provided to 
Aceralia in that programme at 1.73 per cent.  See Final Affirmative Countervailin g Duty Determinations: 
Certain Steel Products From Spain , 58 Fed. Reg. 37374, 37378 (1993). 
69 Sunset review of C TL Plate from the UK , p. 19 (Exhibit EC-6).  
70 Sunset review of CTL Plate from Spain,  p. 18 (Exhibit EC-7). 
71 US – Countervailing Measures on Certain EC Products , Recourse to Article 21.5 of the DSU by the 
European Communities , Request for the Establishment of a Panel, WT/DS212/15 (17 September 2004), p. 2.   
72 US First written submission, para. 21. 
73 US First written submission, paras. 28-47.  WT/DS212/RW 
 Page 21 
 
 
 benefit from prior subsidization to the state-owned producer.  As the Appellate Body stated in this 
case: 
"the obligation under Article 21.2 of the SCM Agreement  ... requires an investigating 
authority in an administrative review, upon receiving information of a privatization resulting in a change in ownership, to de termine whether a "benefit" continues to 
exist.  In our view, the SCM Agreement , by virtue of Articles 10, 19.4, and 21.1, also 
imposes an obligation to conduct such a dete rmination on an investigating authority 
conducting a sunset review.  As we observe d earlier, the interplay of GATT Article 
VI:3 and Articles 10, 19.4 and 21.1 of the SCM Agreement  prescribes an obligation 
applicable to original investigations as well as to reviews covered under Article 21 of 
the SCM Agreement  to limit countervailing duties to  the amount and duration of the 
subsidy found to exist by th e investigating authority."
74 
4.52 A privatization that occurs at arm's length and for FMV creates the presumption that any 
"benefit" from prior subsidization to the state-owne d producer was extinguished and, therefore, that 
continuation of the countervailing duties was not wa rranted.  As the Appellate Body explained: 
"The effect of such a privatization [at ar m's length and for FMV] is to shift to the 
investigating authority the burden of iden tifying evidence which establishes that the 
benefit from the previous financial contribution does indeed continue beyond privatization.  In the absence of such proof, the fact of the arm's length, fair market 
value privatization is sufficient to comp el a conclusion that the "benefit" no longer 
exists for the privatized firm, and, theref ore, that countervailing duties should not be 
levied."
75 
4.53 Although this Panel and the Appellate Body did not specify a methodology for determining 
under what circumstances a privatization has occurred at arm's length and for FMV, these factors were nevertheless discussed in the cont ext of the privatization of the firm as a whole .  The Panel and 
Appellate Body did not discuss whether each component  of a privatization was at arm's length and for 
FMV, contrary to the USDOC's incorrect method in its Section 129 determination and contrary to the 
United States' suggestion in its First written submission.
76 
4.54 For example, the Panel stated: 
"[w]e believe that privatization calls for a (re)determination of the existence of a 
benefit to the privatized producer, and th at fair market value payment by the 
privatized producer (and its owners) extinguishes the benefit resulting from the prior 
financial contribution (subsidization) bestowed upon the state-owned producer, 
because no advantage or benefit accrued to that privatized producer over and above 
what market conditions dictate pursuant to Article 14 of the SCM Agreement ."77 
The Panel also stated that: 
 
"if upon privatization, fair market valu e is paid for all productive assets, goodwill, 
etc. employed by the state-owned producer , the Panel fails to see how the subsidies 
                                                      
74 Appellate Body Report on  US – Countervailing Measures on Certain EC Products , para. 149 
(citations and emphasis omitted). 
75 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 126. 
76 French Section 129 determination , p. 3-12 (Exhibit EC-4); see also  US First written submission, 
paras. 28-33. 
77 Panel Report on  US – Countervailing Measures on Certain EC Products , para. 7.77 (emphasis 
added) WT/DS212/RW 
Page 22  
 
 bestowed to the state-owned producer could s ubsequently be considered to still confer 
a "benefit" on the privatized producer (in the sense of  the company together with its 
owners)  who has paid fair market value for all the shares and assets, reflecting, we 
must assume, the value of past subsidization."
78 
4.55 Likewise, quoting from its Report in US – Lead and Bismuth II , the Appellate Body stated 
that "the Panel made factual findings that UES and BS plc/BSES  paid FMV for the productive assets, 
goodwill, etc. they acquired from BSC and subsequent ly used in the production of leaded bars 
imported into the United States in 1994, 1995 and 1996".79  
4.56 Moreover, considering whether the "p rivatized producer (and its owners)"80 as a whole paid 
FMV, rather than whether each component of th e sale of the company was at FMV, was the only 
correct interpretation of the obligations established by the SCM Agreement .  The contrary 
interpretation would allow countervailing duties to c ontinue to be applied notwithstanding the fact 
that the value received by the producer as a whole  was greater than or equal to the FMV of the 
company.  The USDOC, however, reached this conclu sion without taking into account the fact that a 
significant proportion of the purchasers of Usinor's shares ( i.e., the stable shareholders) actually paid 
prices that were greater  than the prices identified by the USDOC  as market-clearing prices, and that 
most purchasers paid prices that were within the market-clearing range.  Had the USDOC evaluated the privatization as a whole  by, for example, evaluating the average price paid per share overall, the 
unavoidable conclusion would have been that the privatization of Usinor was for FMV. 
(ii) The USDOC previously found and accepted before th e Appellate Body that the privatization 
of Usinor was at arm's length and for FMV  
4.57 The finding by the USDOC in the French case th at the privatization of Usinor was not at 
arm's length and for FMV was particularly troubling in  light of the fact that the USDOC in two other 
cases reached precisely the opposite conclusion.  As  stated by the Appellate Body, "[t]he USDOC 
analyzed the sales conditions of the privatizati on of Usinor, in the remand determinations in Allegheny 
Ludlum  (Case No. 1) and GTS (Case No. 2), concluding that those five privatizations took place at 
arm's length and for FMV."
81  Further, the United States did not contest before the Panel and the 
Appellate Body that "the sales [ i.e., all the privatizations] were at arm's length and for fair market 
value".82  The United States has, in this proceeding, failed to offer any explanation whatsoever for 
these contradictory outcomes. 
Arm's length  
4.58 In considering whether a privatization has occurre d at arm's length, an investigating authority 
must focus on the degree of post-privatization i ndependence from the government of the purchasers of 
the company's shares.  In the current case, it was clea r that after the privatization of Usinor, there was 
no relationship whatsoever between the seller, the GOF, and the buyers, the employees/retirees of 
Usinor.  After the privatization, the GOF held only an  insignificant interest in Usinor, and, therefore, 
the relationship between GOF and the employees/re tirees of Usinor was unque stionably independent 
(the European Communities maintains that the rela tionship was, in any event, independent, even 
before the privatization). 
                                                      
78 Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.72 (emphasis 
added). 
79 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 142 
(emphasis added and omitted). 
80 Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.77. 
81 Appellate Body Report on US – Countervailing Measures on Certain EC Products , footnote.4. 
82 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 84.  WT/DS212/RW 
 Page 23 
 
 
 4.59 Even assuming arguendo  that the concept of "arm's length"  refers to the non-existence of 
some type of special relationship between the government and the purchasers at the time of the sale, it was clear that the USDOC's analysis was inadequa te.  The USDOC appears to have merely assumed 
that the employees/retirees of Usinor and the seller of Usinor's shares (the GOF) were related because 
"the employee offering was clearly distinguish able from the public offerings and was openly 
characterized as 'preferential'."
83  However, the mere fact that Usinor shares were offered at allegedly 
preferential rates to employees/retirees of Usinor per se  does not mean that the seller and the buyers 
of the shares were related.  Purchasers in the Fren ch public offering, for exam ple, were also offered 
preferential treatment (i.e. a certain number of shares for free).84  The USDOC found that the 
purchasers of the French public offering "were not related  to the seller" and that, therefore, those sales 
"constituted arm's-length transactions".85 
4.60 The United States, in its first written submi ssion, alleged that because the GOF offered 
preferential share prices to employees of a company that it owned, it did not deal with those employees at arm's length.
86  However, just because Usinor was owned by the GOF at the time of the 
sale of the shares does not lead to the conclusi on that Usinor's employees were employees of the 
Government.  In fact, according to the Internati onal Offering Prospectus , despite its ownership 
interest, the GOF was not involved in the day-to -day management of Usinor.  Therefore, the 
employee purchasers were at least two steps remo ved from having any direct relationship with the 
GOF, the seller of Usinor shares.87  Further, the employee offering included former , as well as current, 
employees of Usinor.  There was no evidence whatso ever that any relationship existed between the 
former employees of Usinor and the GOF that co uld support a conclusion that the sales to this 
category of purchasers were not at "arm's length".   
4.61 In conducting its privatization analysis in its Section 129 determination, the USDOC failed to 
evaluate how or why the employees of Usinor were allegedly related to the seller.  It just assumed that 
they were.  Additionally, the USDOC did not even consider the former employees.  In light of the 
above, it follows that there was no basis for th e USDOC's conclusion that the employee/retiree 
offering was not at arm's length, and, in f act, evidence on the record suggests otherwise. 
Fair market value (FMV)  
4.62 Further, the sale of Usinor shares in the empl oyee/retiree offering was at FMV.  That this was 
so was evident from the fact that the discount offered to employees and retirees of Usinor reflects the 
risk assumed by the buyers for the resale restric tions on the shares purchased.  The United States' 
argument that resale restrictions per se  "provide no explanation for th e substantial discount afforded 
Usinor's employees"88 is unpersuasive.  The restrictions pl aced upon the French public offering and 
the stable shareholder offering, to the extent they  were applicable, were not as restrictive as those 
required of the employees/retirees of Usinor.  The resale restrictions imposed on purchasers in the French public offering were applicable only where purchasers acquired free shares and were less severe than for the purchasers in the employee/retir ee offering who chose to purchase the shares at a 
discount rate ( i.e., required holding period of 18 months v. 24 months).  Similarly, the resale 
restrictions imposed on the stable shareholders were not as severe as they were in the 
                                                     
 
83 French Section 129 determination , p. 6 (Exhibit EC-4). 
84 International Offering Prospectus for Usinor Privatization, p. 22, submitted in GOF/Usinor 2 
September 2003 Questionnaire Response, Appendix 4G (indicating that "[i]n the French Public Offering, 
individuals will be entitled to receive from the French State a certain number of free Shares based on the number 
of Existing Shares purchased by such individuals and held for a period of at least 18 consecutive months") 
("International Offering Prospectus") (Exhibit EC-8). 
85 French Section 129 determination , p. 5 (emphasis added) (Exhibit EC-4). 
86 US First written submission, para. 38. 
87 EC First written submission, para. 42. 
88 US First written submission, para. 46. WT/DS212/RW 
Page 24  
 
 employee/former employee offering  they were only prohibited from selling all of the shares for the 
first 3 months and were then able to sell a li mited number of shares for the next 15 months.  
Thereafter, they were able to sell their shares to any third party.
89  In light of these facts, there was no 
merit to the United States' argument that resale r estrictions did not provide a basis for offering a 
20 per cent discount to Usinor's employees/retirees, or that the sales of shares to the 
employees/retirees were not FMV. 
(b) The United States is not in compliance with its obligations under the WTO 
4.63 By failing to revoke the countervailing duties imposed on certain corrosion-resistant carbon 
steel flat products from France in light of the fact  that the privatization (whether considered as a 
whole or, alternatively, from the perspective of th e employee/retiree offering) occurred at arm's length 
and for FMV, the United States has acted inconsiste ntly with its obligations  under GATT Article VI:3 
and Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  and has failed to implement the 
recommendations and rulings of the DSB. 
3. CTL plate from the UK and from Spain 
4.64 The United States, in its first written submi ssion, argued that the European Communities' 
claims challenging the USDOC's findings that subs idies continued to benefit the producers of the 
products involved in the sunset reviews in the UK and Spanish case s were not properly before this 
Panel.90  As discussed above, the United States' assertions were unfounded.91   Moreover, the United 
States failed to challenge the merits of the Eur opean Communities' arguments regarding the USDOC's 
subsidy findings.  Nevertheless, it was clear that the United States breached its WTO obligations by 
finding a likelihood of continuation or recurrence on th e basis of insufficient evidence.  In both the  
UK and  Spanish case s, the USDOC failed to consider evidence on the record demonstrating that the 
programmes found to confer counterva ilable benefits no longer existed and/or no longer applied to the 
steel industry.92  No contradictory evidence whatsoever exists on the record; the USDOC simply 
refused to consider the point.  The USDOC also failed to consider evidence on the record that 
Glynwed, the UK producer to which the privatization issue did not apply, had sold off certain of its 
assets and no longer produced the product under review.93  Had the USDOC performed its likelihood 
determinations as required under the SCM Agreement , that is, had it considered all of the evidence on 
the record, it would have found no likelihood of continuation or recurrence of countervailable 
subsidies regarding CTL plate from the UK and Spain. 
4.65 In light of the fact that the United States admitted in its first written submission that the 
USDOC had assumed that the privatizations of BS  plc and Aceralia were at arm's length and for 
FMV,94 the USDOC's sole basis for finding a likelihood of continuation or recurrence of subsidization 
was its reliance on programmes allegedly found to c onfer benefits to Glynwed and apparently one 
programme allegedly found to confer  recurring benefits in Spain.  Ho wever, because the United States 
had failed to consider evidence on the record de monstrating that these programmes no longer existed 
or applied to steel producers and that Glynwe d no longer produced the product under review, the 
United States had acted inconsistently with  its obligations under Article 21.3 of the SCM Agreement . 
                                                      
89 International Offering Prospectus, p. 23-24 (Exhibit EC-8). 
90 US First written submission, paras. 18-20. 
91 See discussion supra  paras. 9-22. 
92 EC First written submission, paras. 53-62. 
93 EC First written submission, paras. 51-52. 
94 See, e.g.,  US First written submission, para. 49.  WT/DS212/RW 
 Page 25 
 
 
 4. Injury 
4.66 In its first written submission, the United States failed to dispute on the merits the European 
Communities' argument that the United States was ob liged to examine whether the revocation of the 
countervailing duty orders in the UK and  Spanish case s would be likely to lead to continuation or 
recurrence of material injury as required by the SCM Agreement .  The European Communities, 
however, maintained that Article 21.3 of the SCM Agreement  obliges investigating authorities in 
sunset reviews to determine that the expiry of th e duty would be likely to lead to continuation or 
recurrence of injury, separately from the determin ation as to the likelihood of continuation or 
recurrence of subsidization.  Further, Article 21.1 of the SCM Agreement  requires that "[a] 
countervailing duty rate shall remain in force only as long as and to the extent necessary to counteract 
subsidization which is causing injury ".95   
4.67 Given the USDOC's findings in these Section 129 de terminations that the applicable subsidy 
rates would be substantially lower than those in the original sunset reviews,96 it was highly likely that 
the USDOC's revised determinations would affect the causal link between those subsidies and a finding of continuation or recurrence of injury to the domestic industry.
97  Accordingly, by failing to 
reconsider its injury determination in the UK and  Spanish case s, the United States violated its 
obligations under Articles 21.1 and 21.3 of the SCM Agreement .  Alternatively, in light of the 
possibility of a finding of zero subsidies ( i.e., if, as discussed above, the USDOC had properly 
considered all of the evidence on the record),98 the need for an inquiry into the likelihood of 
continuation or recurrence of injury would have been obviated. 
D. SECOND WRITTEN SUBMISSION OF THE UNITED STATES  
1. Introduction 
4.68 Since, according to the schedule established by  the Panel, the rebuttal submission of the 
European Communities had been due to be submitted  simultaneously with this submission, and the 
third-party submissions were not due to be submitted until after this submission, the United States 
effectively had nothing to rebut.  Therefore, this  submission would be limited to a few additional 
comments regarding the EC First written submission. 
4.69 At the outset, the United States wished to emph asize the Appellate Body's finding that, where 
the authorities examine "a benefit resulting from a pr ior non-recurring financial contribution bestowed 
on a state-owned enterprise,"99 they must take into account a full privatization at arm's length and for 
FMV without regard to the ordinary legal di stinction between a company and its owners.100  T h e  
USDOC's revised privatization methodology was fully consistent with the Appellate Body's finding.  
In determining whether a full privatization has extinguished the benefit from prior, non-recurring 
financial contributions, USDOC no longer makes a di stinction between a company and its owners.  
Thus, the focus of USDOC's new methodology was on whether the privatization transaction had 
extinguished the benefit from allocable, pre-privati zation subsidies such that the "privatized producer" 
– meaning the company and its new owners101 – had received no benefit.  Consistent with the findings 
                                                      
95 Emphasis added.  The Appellate Body in US – Countervailing Measures on EC Products  found that 
the provisions in Article 21.1 of the SCM Agreement  set out obligations of Members that are applicable not only 
in original investigations but also in administrative and sunset reviews.  See Appellate Body Report, US – 
Countervailing Measures on Certain EC Products , para. 139. 
96 See discussion supra  para. 23. 
97 See discussion supra  at para. 25. 
98 See discussion supra  paras. 51-57. 
99  Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 117 
100  Appellate Body Report on US – Countervailing Measures on Certain EC Products , paras. 118-119. 
101 Panel Report on US – Countervailing Measures on Certain EC Products , paras. 7.54 and 7.72 WT/DS212/RW 
Page 26  
 
 of the Appellate Body, USDOC does not  perform a new benefit calculation.
102  Rather, if the entire 
privatization is at arm's length and for FMV, US DOC presumes that the benefit from allocable, pre-
privatization subsidies has been extinguished.103  If the entire privatization is not arm's-length/FMV, 
then all of the benefit from allocable, pre-privatization subsidies remains countervailable (except to 
the extent that it had already been countervailed).104  Where only a portion of the company is not sold 
in an arm's-length/FMV transaction, it follows that only a corresponding portion of the benefit 
remains countervailable.  The privatized producer in  the latter two situations has received something 
"for free" in that the government did not require FMV for all, or part, of the company.105 
2. In the revised French sunset review, USDO C properly found that a benefit continued to 
be countervailable 
4.70 In implementing the recommendations and rulings of the DSB in the revised French sunset 
review – which involved the Usinor privatization – USDOC found that the privatized Usinor received 
something "for free" in that the so-called "prefere ntial" shares offered to Usinor's employees were 
sold at less than FMV in a non-arm's-length transac tion.  Therefore, USDOC reasonably determined 
that a corresponding portion of the allocated benefit continued to be  countervailable after 
privatization.  As explained in the U.S.' firs t written submission, the European Communities had 
failed to demonstrate that USDOC's finding of a non-arm's-length transaction at less than FMV had been in error.  Moreover, there is nothing in the text of the SCM Agreement  or the DSB 
recommendations and rulings that would require  USDOC to follow the European Communities' 
suggested method for considering FMV; i.e., averaging out the prices paid  for all shares and, then, 
comparing the average price with FMV to make a singular judgment about the privatization.
106 
4.71 The European Communities attempted to buttress its  unwarranted claim that all of the shares 
in Usinor were sold for FMV by asserting that: "S uch a finding is consistent with the USDOC's own 
findings in two parallel proceedings concerning th e privatization of Usinor in which the USDOC 
found that the privatization of Usinor took pl ace at arm's length and for fair market value".107  The 
findings to which the European Communities refe rred were two remand de terminations made by 
USDOC in domestic litigation concerning counter vailing duty orders other than the order on 
corrosion-resistant carbon steel  flat products from France.108  The European Communities also 
asserted that it was a "common" practice for privatiz ing governments to set aside shares for company 
employees.109  Both European Communities assertions were  misplaced.  The methodology applied by 
USDOC in the two prior remand determinations  was not the methodology described in the 
Modification Notice and applied in the revised French  sunset review.  Hence, the results of those 
determinations have no relevance to the present proceeding.  In particular, in the remand 
determinations cited by the European Commun ities, USDOC treated Usinor's employees as "new 
                                                      
102  Appellate Body Report on US – Countervailing Measures on Certain EC Products,  para. 117 
103  That presumption may be rebutted with evidence demonstrating that broader market conditions were 
severely distorted by government action.  See Modification Notice , p. 37,127.  
104  Modification Notice , p. 37,127. 
105  Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.72 
106  EC First written submission, paras. 37-38.  The Eu ropean Communities' argument is akin to arguing 
that if a government provides a comp any with a subsidy in the form of a below-market-rate loan, that subsidy 
can be excused if the governmen t also provides the company w ith a loan at a higher rate. 
107  EC First written submission, para. 39. 
108  Results of Redetermination Pursuant to Court Remand in GTS Indus. S.A. v. United States , No. 00-
03-00118, slip op. 02-02 (Court of International Trade, January 4, 2002) ("Determination on Remand in GTS 
Indus. S.A. v. United States ") (copy attached as Exhibit US-1); Results of Redetermination Pursuant to Court 
Remand in Allegheny Ludlum Corp. v. United States , No. 99-09-00566, slip op. 02-01 (Court of International 
Trade, January 4, 2002) ("Determination on Remand in Allegheny Ludlum Corp. v. United States ") 
109  European Communities first written submission, footnote. 71.  WT/DS212/RW 
 Page 27 
 
 
 owners," distinguishable from the company.110  For this reason, USDOC, while finding that the 
employees paid a subsidized price for their shares, di d not take that into account in analyzing whether 
Usinor had been sold for FMV.111 
4.72 On the other hand, in implementing the recommendations and rulings of the DSB in the 
revised French sunset review, USDOC properly took into account the fact that shares were offered to 
Usinor's employees in a non-arm's-length transaction for less than FMV; since, consistent with the 
findings of the Appellate Body, its new methodology required it to consider the privatized company 
and its new owners together as the privatized producer.112  Furthermore, it was irrelevant whether it 
was a common practice when privatizing enterprises for governments to set aside shares for company 
employees.  The only relevant issue was whether th e privatized producer, Usinor and its new owners, 
received something "for free" by not having to pay FM V in an arm's-length transaction.  In short, the 
European Communities had not demonstrated that USDOC erred in finding that the employee sales 
were not at arm's length and for FMV.  Cons equently, there was no basis for the European 
Communities' claim that USDOC erred in finding that  the subsidy benefit associated with those sales 
had not been extinguished by the Usinor privati zation, and the Panel should reject that claim. 
3. In the revised UK sunset review, USDOC properly found that countervailable subsidies 
were likely to continue or recur  
4.73 With respect to the sunset review in the UK  case, in implementing the recommendations and 
rulings of the DSB, USDOC assumed that the UK privatization extinguished entirely the allocated 
subsidy benefit from pre-privatization subsidies.  By making that assumption, and by revising the 
sunset review in accordance with that assu mption, USDOC fully complied with the DSB 
recommendations and rulings.  USDO C nevertheless found that counter vailable subsidies were likely 
to continue or recur in the event of revocation, for reasons explained in its first written submission.113  
The European Communities cited an earlier remand  determination to suggest that USDOC did not 
perform the proper revised analysis114, but the reliance is misplaced.  What USDOC found previously 
regarding the nature of the privatization of Britis h Steel plc cannot in any way render more complete 
USDOC's assumption in the revised sunset determin ation that the privatization of British Steel plc 
extinguished the benefit from allocable, pre-priv atization subsidies.  Moreover, USDOC's new 
privatization methodology was not applied in th e remand determination cited by the European 
Communities.115  For that reason, even if th ere had been an open issue in  this proceeding as to whether 
the privatization of British Steel plc should have been treated as satisfying the arm's-length/FMV 
standard – and there was not – the remand dete rmination in question would not be germane. 
                                                      
110 Determination on Remand in GTS Indus. S.A. v. United States ; Determination on Remand in 
Allegheny Ludlum Corp. v. United States . 
111  See, e.g., Determination on Remand in Allegheny Ludlum Corp. v. United States ("Accordingly, the 
Department has conducted a thorough analysis of the facts and circumstances of Usinor's privatization to 
determine whether the purchasers (i.e., the new owners) pa id full value for the company. ...  While we find that 
the Usinor employees who purchased the small per centag e of remaining shares paid less than the full fair 
market value of those shares  and, thus, did receive a subsidy from th e French Government, this subsidy is not 
countervailable because these purchase rs are distinct individuals who ar e not, in their individual capacity, 
engaged in production of the subject merchandise".). 
112  Modification Notice, p. 37,137.    
113  USDOC made a similar finding in the revised sunset review on cut-to-length carbon steel plate from 
Spain, another determination that is presently challenged by the EC.   
114 EC First written submission, para. 68.  
115 Final Results of Redetermination Pursuant to Court Ordered Remand on General Issue of 
Privatization in British Steel plc v. United States , Consol. Ct. No. 93-09-00550-CVD, slip op. 95-17 (Court of 
International Trade, February 9, 1995)  (copy attached as Exhibit US-3). WT/DS212/RW 
Page 28  
 
 V. ARGUMENTS OF THE THIRD PARTIES 
A. W
RITTEN SUBMISSION OF BRAZIL  
1. The France Section 129 determination 
5.1 In the French Section 129 sunset review, the USDOC determination that subsidies were likely 
to continue or recur if the order were revoked, w as premised on a finding that little more than 5 per 
cent of the shares in the privatization at issue in the review were not sold at arm's-length and FMV.116  
Brazil found the USDOC Section 129 determin ation to be inconsistent with the SCM Agreement  and 
the rulings and recommendations of the DSB. 
(a) The USDOC determination that the sale of shares to Usinor employees/former employees was 
not at arm's-length is inconsistent with the SCM Agreement  and the Appellate Body's findings 
and recommendations 
5.2 The USDOC found that because 5.16 per cent of Usinor shares were made available at a 
discount to the general offering pr ice, the employee/former employee share offering transactions were 
not at arm's length.117  Brazil took exception to the US argument on a number of grounds.  First, 
USDOC never established that Usinor employees/form er employees were related to the seller, the 
GOF, merely offering a one sentence conclusion that the employees were related to Usinor.118  There 
may be no definition of "arm's-length" contained in the SCM Agreement , but the USDOC had to 
explain its conclusions in order to allow this Panel to  consider its rationale, consistent with the Panel's 
standard of review under Article 11 of the DSU .  The United States offered only post hoc justification.  
Brazil further agreed with the reasons offered by the European Communities as to why Usinor 
employees/former employee were in fact not related to the seller, the GOF.119  The principal United 
States' argument in response is that drawing dis tinctions between the company and the owner of the 
company in this situation is inconsistent with  the DSB assumption that there is little distinction 
between the company and its owners.  Brazil found the argument was simply misplaced.120  The Panel 
and Appellate Body were addressi ng whether benefits may be bestowed on a company through 
indirect subsidies to its owners, not whether there is an affiliation between an owner and prospective 
purchaser.  Moreover, the Panel and Appellate Body  never found that the company and the owner 
were one and the same for all purposes and in all instances.121   
5.3 Second, even if affiliation somehow existe d between the employees/former employees of 
Usinor and the GOF, this is not dispositive with r espect to the continuation of benefit.  The arm's-
length test reflects a general understanding th at transactions between affiliated parties may not always  
be on commercial terms.  Thus, a closer review of the actual terms is warranted where affiliation 
exists to determine if the term s reflect usual commercial practice.122  If they do, then the transaction at 
                                                      
116  Issues and Decision Memorandum for the Section 129 Determination:  Corrosion-Resistant Carbon 
Steel Flat Products from France:  Final Results of Expedited Sunset Review of  Countervailing Duty Order  (23 
October 2003) ("France Section 129 determination"), p. 12.  (Exhibit EC-4). 
117 Id., p. 6. 
118 France Section 129 determination, p. 6. 
119 EC First written submission, paras. 41-42; EC  Second written submission, paras. 40-45. 
120 US First written submission, para. 38, citing US – CVDs on Certain European Communities 
Products (Panel) , paras. 7.54 and 7.72 and US – CVDs on Certain European Communities Products (AB) , 
paras. 113-115. 
121 Panel Report on US – Countervailing Measures on Certain EC Products , paras. 7.54 and 7.72 and 
US – CVDs on Certain European  Communities Products (AB) , paras. 113-115. 
122 See, e.g., US First written submission, para. 40. (USDOC  will consider "the usual private practice" 
as to the sale of companies).  We note that the Panel in  this case already found that the United States in practice 
essentially does not distinguish between the terms "arm's  length" and "fair market value," underscoring the US  WT/DS212/RW 
 Page 29 
 
 
 issue is presumptively consistent with market prin ciples and the terms should not be used to impugn 
the transaction as not representing FMV.  Unfortunat ely, the United States did not follow through on 
its own apparent understanding.  The United States wa nts to colour the employee share discount as an 
anomaly and highly unusual, not reflecting common commercial practice whereas, in reality, such offering discounts are extremely common. 
(b) The USDOC determination that the Privatization of Usinor was not for FMV is inconsistent 
with the SCM Agreement  and the Appellate Body's findings and recommendations 
5.4 The facts of the Usinor privatization are that th e market value of the firm was established, and 
a determination made on what was necessary to recoup the value of the company.  As it turns out, the total price paid for the company and the average share price met or exceeded the recommendations of 
the appraisal, as well as the "market clearing price" calculated by the USDOC.
123  The USDOC 
disregarded this fact and looked at just 5 per cent of the total sale to find that non-recurring subsidy 
benefits were not extinguished in the transaction.   Brazil found that the approach taken by the 
USDOC was inconsistent with the ruling of the Appellate Body in Canada – Aircraft,  as reiterated by 
the Appellate Body in this dispute.  The Appellate Body explicitly noted: "once a fair market price is 
paid ... [the] market value is redeemed".124   
(c) The USDOC failed to limit countervailing duties to  the amount and duration of the subsidy in 
existence 
5.5 Because the USDOC failed to properly consider both the arm's-length nature of the Usinor 
privatization and the market value of the transacti on, its Section 129 sunset review determination in 
this case is also inconsistent with GATT Artic le VI:3 and Articles 10, 19.4 and 21.1 of the SCM 
Agreement .  Specifically, the USDOC did not establish a proper basis for determining the amount and 
duration of the subsidy at issue in the review a nd thus it was impossible to act in accordance with 
these particular provisions, as interpreted by the Pa nel and Appellate Body, to limit the countervailing 
duties under the respective orders by the amount and duration of the subsidy it found to exist. 
2. The UK and Spain Section 129 determinations 
(a) The USDOC assumptions that the UK and Spanish privatization transactions were at arm's-
length and for FMV do not c onstitute determinations 
5.6 In its Section 129 sunset review determinati ons of the UK and Spanish countervailing duty 
orders, the USDOC found "even assuming arguendo " that privatization in the two cases did 
extinguish pre-privatization subsidy benef its, it was not obliged to take any action.125  Brazil recalled 
that the Appellate Body resolved that a "determinati on" must be made with respect to the effects of 
privatization on pre-privatization benefit streams.126  The word "determination" denotes an official 
ruling; a sense of certainty and finality to a particular issue.  This is not what the USDOC offered in 
its Section 129 determinations in the UK and  Spanish case s.  An assumption is not sufficient to 
implement the rulings and recommendations of the DSB in this case.  It does not matter whether other 
types of subsidies or other subsidized producers we re involved in the sunset review.  The explicit 
                                                                                                                                                                     
consideration of the close relationship between the two terms.  At the same time, the Panel noted the terms could 
represent different concepts.  See Panel Report on US – Countervailing Measures on Certain EC Products , para. 
6.39.  Brazil agrees.  "Arm's length" reflects more of a process-oriented concept, as opposed to the valuation concept inherent in the term "fair market value".  Nonetheless, the "arm's length" test ultimately provides the 
context for, and otherwise informs, the decision on "fair market value". 
123 Id., para. 38. 
124 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 102. 
125 Id. 
126 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 149 WT/DS212/RW 
Page 30  
 
 finding of the Appellate Body is that an authority must  render a determination on the effect of a 
privatization.  In this regard, the United States had not brought its measures into compliance with its 
obligations under the SCM Agreement  and Article VI:3 of GATT 1994 , as elaborated by the Panel and 
Appellate Body.   
(b) The USDOC failed to limit countervailing duties to  the amount and duration of the subsidy in 
existence 
5.7 If the United States chose to stand by the USDOC "assumptions" regarding the effect of the 
privatizations at issue in the UK and Spanish sunset  reviews as something more than mere argument, 
then the USDOC Section 129 determinations in th ese cases would be inconsistent with GATT Article 
VI:3 and Articles 10, 19.4 and 21.1 of the SCM Agreement.  Specifically , the USDOC should have, on 
the basis of its assumptions, limited the counter vailing duties applied unde r the reviewed orders, 
taking into account the elimination of be nefits resulting from the privatizations. 
B. W
RITTEN SUBMISSION OF CHINA  
1. European Communities' allegation that USDOC shall consider the evidence about 
Glynwed 
5.8 The "measures taken to comply" should be in terpreted broadly enoug h to accommodate the 
measures that a challenged Member should take to comply with the DSB recommendations and 
rulings.  The USDOC was not obliged to consider  the evidence about Glynwed in a Section 129 
proceeding.  Such a consideration is not a "measure taken to comply".  Otherwise, the certainty of an 
administrative determination would be ruined.  A respondent may not be allowed to cure its 
deficiencies in the original sunset review by having a "second-chance".  The European Communities' 
allegation seemed to suggest that once an aspect of a sunset review was found to be inconsistent with 
the WTO Agreement, the investigating authority is ob liged to render an entirely new review.  We see 
no merits of this argument.  We agree with th e European Communities th at a Member should not 
implement a DSB recommendation in a "formalistic" ma nner.  However, we believe that the scope of 
"measures taken to comply" includes both the me asures the challenged Member has actually taken 
and the measures the challenged Member should have taken.  Because China believes that 
investigating authorities should not take evidence pr esented before them after the closure of record, 
China did not think the consideration of evidence in relation to Glynwed was a "measure taken to 
comply".  More specifically, China did not thi nk it was a measure the USDOC should have taken.  
Therefore, China believed that the European Comm unities' allegation in relation to Glynwed should 
not be considered by this panel. 
2. European Communities' allegation that USDOC shall consider the evidence of 
abolishment of certain subsidy pr ograms by the Spanish government 
5.9 China may shortcut its analysis by relyi ng on the reasoning of the Appellate Body in EC – 
Bed Linen (Article 21.5 – India) .  In that case, India raised the non-attribution issue before the original 
panel but, as found by the Panel, failed to pursue it.  The Appellate Body in that case denied India's 
claim to include such an issue in a 21.5 proceeding by reasoning that that issue does not "constitute an 
inseparable element  of a measure taken to comply".127  China believed that if an issue had no 
connection with the DSB recommendations and rulings, it would not be a "measure taken to comply".  
Again, review of all the evidence in the original sunset review was not a measure that the challenged 
Member should have taken; and, accordingly, it w as not a measure taken to comply.  The European 
Communities' rationale, similarly, seemed to suggest that the investigating authority should render a 
new sunset review if an aspect of the review is found inconsistent with the WTO Agreement.  China 
                                                      
127 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para.86  WT/DS212/RW 
 Page 31 
 
 
 similarly could not agree.  If th e European Communities intended to argue that issue, it may well 
initiate a new, fresh panel.  An Article  21.5 proceeding was not a proper forum. 
3. European Communities' allegation that USITC shall consider injury 
5.10 In accordance with United States law, the US DOC should provide the USITC with a net 
countervailable subsidy which it did in its original  sunset reviews for both the UK and the Spanish 
cases.128  The net countervailable subsidy for the UK case was 0.73 per cent for Glynwed and 12 per 
cent for all other producers/exporters.129  In the Spanish case, it was 36.86 per cent for all producers/ 
exporters.130  In the proceedings before the original  panel and the Appellate Body, non-recurring 
allocable subsidies had been found presumably extinguished by an arm's length privatization transaction for FMV.
131  In the Section 129 determinations for the UK and  Spanish case s, the USDOC 
assumed that the privatization was at arm's length and for FMV.132  In this situation, it was reasonable 
to conclude that the USDOC would have had to  calculate a new countervailable subsidy because 
certain programmes had been found to have exti nguished.  By examination of the Section 129 
determinations for the UK and Spanish case s, China found that the USDOC did not do so.  The 
primary reason for the USDOC not to calculate this  net countervailable subsidy rate was that the 
likelihood determination would be  made on an order-wide basis.133  However, even if it was assumed 
that the calculation of a net countervailable subs idy rate had no impact on the USDOC's likelihood 
determination because it was made on an order-w ide basis, the USDOC failed to consider the 
potential impact of this rate on the USITC's determination. 
5.11 Accepting the rationale of the Appellate Body in  the original appeal for this case, China 
would have deemed the net rate co mmunicated by the USDOC to USITC in the original sunset review 
inaccurate.  In this situation, a portion of the US ITC's original likelihood determination with respect 
to injury could be inferred as inconsistent with the recommendations and rulings of the Panel and the 
Appellate Body.  This portion is where the USITC reli ed for its determination on the rate provided by 
the USDOC.  USDOC's determination in a Section 129 proceeding not to provide the USITC with a 
new net countervailable subsidy ra te rendered its effort to comply with the DSB recommendations 
and rulings incomplete.  USITC's failure to "correct" the relevant portion of its likelihood 
determination was also a failure to bring its me asures into conformity.  The separation of the 
investigating authorities did not immunise the USIT C from taking actions to bring its measures into 
conformity.  Both the USDOC's provision of a new net countervailable subsidy rate to the USITC and 
the USITC's correction of its original likelihood de termination or a portion thereof, were measures 
taken to comply and, therefore, were within the terms of reference of the compliance panel. 
C. WRITTEN SUBMISSION OF KOREA  
1. The United States failed to satisfy its WTO ob ligations by refusing to consider evidence 
demonstrating the invalidity of its Sectio n 129 likelihood determinations concerning 
Spain and the UK 
5.12 The United States has argued that it need not c onsider evidence submitted in the course of the 
Section 129 proceedings demonstrating that the revi sed measures generated new inconsistencies with 
                                                      
128 65 F.R. 18,307, 18,308, and 65 F.R. 18,309, 18,310. 
129 65 F.R. 18,309, 18,310. 
130 65 F.R. 18,307, 18,308. 
131 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para.127. 
132 Decision Memorandum on §129 Determination: Final Results of Expedited Sunset Review of Cut-
to-Length Carbon Steel Plate from the United Kingdom; and Decision Memorandum on §129 Determination: 
Final Results of Expedited Sunset Review of Cut-to-Length Carbon Steel Plate from Spain. 
133 Id. WT/DS212/RW 
Page 32  
 
 the WTO Agreements.  Korea submits that the Un ited States' argument is incorrect, because it is 
derived from an erroneous interpretation of a Member's obligations under Article 21.5 of the DSU .  
5.13 When undertaking measures intended to comply with the recommendations and rulings of the 
DSB, a Member may not merely correct the errors identified by the DSB but rely on other grounds to 
reaffirm its determination. While refusing to consider arguments that  have been raised before it, it 
could focus on other grounds which may create new in consistencies with the co vered Agreements.  In 
its Section 129 determinations on Spain and the UK, the USDOC relied on grounds that had not been 
the basis of its original sunset determinations in d eciding that, despite the privatizations of BS plc and 
Aceralia, there was a likelihood of conti nuation or recurrence of subsidization.
134  In the Spanish case, 
the USDOC based its determination on the assertion that, independent of the non-recurring subsidies 
whose benefits were assumed to be extinguished by the privatization of Aceralia, "there are 
countervailable recurring, non-allocable subsidies provi ded pursuant to programs that to the best of 
our knowledge continue to exist".135  And as to the UK case, the USDOC based its determination on 
the assertion that in the original investigation, it had found a countervailable subsidy rate for Glynwed 
Steels Ltd. ("Glynwed").136  In both of the Section 129 determinations, while relying on these 
alternative bases for its conclusion that there wa s a likelihood of continuation or recurrence of 
subsidization, the USDOC refused to consider evidence submitted by the European Communities and 
the Governments of Spain and the UK demonstrating that the alternative bases no longer existed and, 
therefore, could not support its determinations.  The USDOC did so on the basis of an understanding 
of its duty to implement that is incorrect.  Moreov er, the United States failed to satisfy its obligations 
under Article 21.3 of the SCM Agreement  to exercise an active role137 when the USDOC refused to 
consider the evidence submitted by  the European Communities, Spai n and the UK that the bases for 
its Section 129 determinations were flawed. 
5.14 In the current case, Korea was not familiar w ith the subsidy programs that the USDOC relied 
on in its Section 129 determinations, and, ther efore, took no position as to the accuracy of the 
arguments that those programs had been abolished or no longer applie d to steel production.  However, 
Korea submitted that the United Stat es acted inconsistently with its  obligations under Article 21.3 of 
the SCM Agreement  when the USDOC, in the Section 129 dete rminations, "remain[ed] passive in the 
face of possible shortcomings in the evidence submitted",138 and disregarded evidence on the record 
demonstrating that the alternative bases on whic h the USDOC made its likelihood determinations no 
longer existed.  
                                                      
134 Korea notes that the United States asserts that the grounds providing the basis for its Spain and UK 
Section 129 Determinations are "unchanged and did not have to be changed in response to DSB rulings and recommendations.  Therefore, they are not 'measures taken to comply' and are not subject to Article 21.5".  US 
First written submission, para. 20 (8 December 2004).  Ho wever, Korea agrees with the reasoning presented by 
the European Communities as to why this assertion is in correct.  EC Second written submission, paras. 9-26 (7 
January 2005)  
135 Spain Section 129 determination, p. 3. 
136 UK Section 129 determination, p. 4. 
137 Panel Report on US – Carbon Steel , para. 8.117 ( quoting  Appellate Body Report on US – Cotton 
Yarn , para. 73 (in turn quoting Appellate Body Report on US – Wheat Gluten , para. 55)).  Similarly, the 
Appellate Body has explained that Article 11.3 of the Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade 1994 , which contains nearly identical language to that of Article 21.3 of the 
SCM Agreement , "makes clear that it envisages a process combining both investigatory and adjudicatory 
aspects.  In other words, Article 11 .3 assigns an active rather than a passive decision-making role to the 
authorities".  Appellate Body Report on US – Corrosion-Resistant  Steel Sunset Review , para. 111 (emphasis in 
orgiinal). 
138 Panel Report on US – Carbon Steel , para. 8.117.  WT/DS212/RW 
 Page 33 
 
 
 2. The USDOC improperly determined that th ere is a likelihood of continuation or 
recurrence of subsidization in the France Section 129 determination  
5.15 Korea recognized that, in these proceedings, th e European Communities and the United States 
disputed whether the USDOC was correct in finding that the sales of shares in the employee offering 
were not at arm's length and for FMV.  Even assu ming for the purpose of this submission that the 
USDOC's factual finding was correct, Korea submitte d that the USDOC erred in its legal conclusion 
that the privatization of the company did not extinguish the benefit conferred by the non-recurring pre-privatization subsidies and that, therefore, th ere was a likelihood of continuation or recurrence of 
subsidization.  One of the flaws in the USDOC's reasoning is the lack of any connection between its 
factual finding regarding the non-arm's length/FMV sale of a very small proportion of the company's 
shares and its legal conclusion that the benefit conf erred by the pre-privatization subsidies was not 
extinguished.  The France Section 129 determination c ontains nothing but the bare assertion that such 
a connection existed which is insufficient to satis fy a Member's obligation "to make a finding on 
subsidization , i.e., whether or not the subsidy continues to exist",
139 as required by the Appellate 
Body. 
5.16 Furthermore, the lack of an explanation as to  a connection between the factual finding and the 
legal conclusion is particularly troublesome because of the insignificant proportion of the company's 
shares that were found by the USDOC to be sold at non-arm's length/FMV conditions.  Korea did not 
understand that the Appellate Body intended that th e "rebuttable presumption" that a privatization 
extinguishes the benefits from pre-privatization s ubsidies would arise only in cases in which 100 per 
cent of the privatized company's sh ares are sold at arm's length and FMV.  To the contrary, Korea 
submitted that in a case such as this, in which the overwhelming majority of the shares (almost 95 per 
cent) were concededly sold at arm's length and for FMV, the burden remained upon the Member to 
"identify[ ] evidence which establishes that the be nefit from the previous fi nancial contribution does 
indeed continue beyond privatization".140  The USDOC failed to satisfy this burden in its France 
Section 129 determination. 
5.17 In addition, Korea agreed with the Europ ean Communities that a proper evaluation of a 
privatization must be performed for the company as a whole.141  Small individual elements of a 
privatization cannot be evaluated in  isolation to determine whether the privatization had the effect of 
extinguishing the benefit conferred by pre-privatiza tion subsidies.  The contrary method of analysis 
adopted by the USDOC in this proceeding would perm it an investigating authority to conclude that a 
privatization failed to extinguish such benefits on the basis of non-arm's length/FMV sales of a de 
minimis  proportion of the company's shares, regardless of the conditions surrounding the sales of the 
vast majority of the company's shares – a situati on closely approached in the current case.  Korea 
agreed with the European Communities that, if the privatization of the company, when viewed as a 
whole, occurred at FMV, then the United States had failed to satisfy its burden "of identifying 
evidence which establishes that the benefit from th e previous financial contribution [did] indeed 
continue beyond privatization".142  
5.18 Finally, in a cryptic comment to this Pane l, the United States asserted that the USDOC 
"determined that the [sic] 5.16 per cent of the allocated pre-privatization benefit" – i.e., the same per 
centage as the proportion of the company's shares fo und not to be sold at arm's length and for FMV – 
"was not extinguished.  The remaining 94.84 per cent of the allocated benefit was found to be 
extinguished by the sale of the remaining portion of the company in arm's-length transactions for fair 
                                                      
139 Appellate Body Report on US – Lead and Bismuth II , para. 54 (emphasis in orgiinal). 
140 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 126. 
141 EC Second written submission, paras. 30-34. 
142 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 126. WT/DS212/RW 
Page 34  
 
 market value".
143  Such a determination regarding the proportional extinguishment of the pre-
privatization benefit, however, cannot be found in  the USDOC's France Section 129 determination.  
Moreover, if a determination that the vast majo rity of the pre-privatization benefit had been 
extinguished were in fact included in the USDOC's  Section 129 determination, it becomes even less 
clear how the USDOC could nonetheless reach the conclusion that there was a likelihood of 
continuation or recurrence of subsidization suffici ent to warrant continuation of the CVD order. 
3. The United States erred in failing to reco nsider whether there was a likelihood of 
continuation or recurrence of injury 
5.19 Even assuming, for the sake of argument, that some countervailable subsidies or benefits 
remained unaffected by the privatizations of Aceralia and BS plc, the effect of the United States' 
concessions before this Panel is that the remain ing countervailable subsidy rates reported to the 
USITC must be revised significantly.  The UK case provided a particularly stark example – with the elimination of the 12.00 per cent rate for "all othe r" producers, the only remaining subsidy rate was 
Glynwed's 0.73 per cent – a rate so low that it was considered de minimis  for investigations under 
Article 11.9 of the SCM Agreement . 
5.20 Korea agreed with the European  Communities that in failing to reconsider the likelihood of 
the continuation or recurrence of injury in light of the USDOC's revised subsidy determinations for 
the UK and Spain, the United States had failed to satisfy its obligations under the SCM Agreement
.144  
As the Appellate Body stated in the para llel situation involving anti-dumping duties in EC – Bed 
Linen (Article 21.5 – India) : "[t]he amount of dumped imports will,  of course, have an impact on the 
assessment of the effects of the 'dumped imports' for the purposes of determining injury.  It is clear, 
therefore, that the revised findings on dumping a nd injury could have a bearing on whether a causal 
link exists between dumping and injury".145  Thus, when a Member's investigating authority revised 
its conclusions regarding the factual predicates underl ying its injury determination, its obligation to 
ensure that it maintained countervailing duties only to  the extent necessary to counteract subsidization 
that was causing injury required th at the injury determination be reconsidered in light of those 
changed factual conclusions.  Only by doing so could the Member ensure that it was properly 
discharging its obligations under Articles 21.1 and 21.3 of the SCM Agreement . 
VI. INTERIM REVIEW 
6.1 On 29 April 2005, the Panel issued its Interim Re port to the parties.  On 13 May 2005, both 
the European Communities and the United States subm itted written requests for the Panel to review 
several aspects of the Interim Report.  On 20 May 2005, both parties submitted written comments on 
the other party's request for interim review.  Neither  party requested an interim review meeting with 
the Panel.  
6.2 The Panel has carefully reviewed the arguments and proposed amendments to the text of the 
Interim Report and addresses them below.  Where necessary, the Panel has also made certain 
revisions to the Report. 
A. REQUEST OF THE EUROPEAN COMMUNITIES  
6.3 The European Communities has asked the Panel to  address three points.  First, the European 
Communities questions the accuracy of the comparison of the restrictions and incentives applicable to 
the French public offering and the employee shar e offering.  The European Communities then 
                                                      
143 US First written submission, para. 31 (footnote omitted). 
144 See EC First written submission, para. 71; EC Second written submission, paras. 58-60. 
145 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 86 (emphasis omitted).  WT/DS212/RW 
 Page 35 
 
 
 proposes to amend paragraph 7.153 of the Interi m Report (paragraph 7.153 of this Report).146  The 
United States also proposes to amend the paragra ph and states that its version follows the Panel's 
original draft more closely.147   
6.4 The Panel considers that the description of the various restrictions and incentives applicable 
to both share offerings in paragr aph 7.153 of its Interim Report w as not inaccurate although brief.  
The Panel does not object to expanding its descripti on as requested by the parties and has therefore 
amended paragraph 7.153 of the Interim Report (paragraph 7.153 of this Report) accordingly. 
6.5 Second, as regards paragraphs 7.175 and 7.176 of the Interim Report (paragraphs 7.175 and 
7.176 of this Report), the European Communites ar gues that the Panel's reasoning that the US action 
is further justified by the fact that it has a retr ospective system of duty collection and exporters can 
request annual or changed circumstances reviews is errone ous and dangerous.148  The European 
Communities argues that an investigating author ity's obligation to conduct periodic reviews is 
independent of the obligation to properly conduct a sunset review under the SCM Agreement .  The 
European Communities contends that distinguishing between systems of duty collection suggests that 
an investigating authority in a retrospective system  can take certain actions that an investigating 
authority in a prospective system cannot.  In addition, the European Co mmunities asserts that the 
United States never argued the points at issue in pa ragraphs 7.175 and 7.176 and thus request that the 
Panel delete paragraph 7.175 and a portion of paragraph 7.176.149  The United States disagrees and 
believes the European Communities' proposed deletion is inappropriate.  The United States maintains 
that the Panel is not implying that a retrospective system permits a Member to derogate from its 
                                                      
146 The European Communities proposes the following paragraph: 
 "Based on the evidence from th e record, employees and retirees can either participate in the 
public offering or buy shares with a discount of  20per cent, but then with the obligation to 
hold them for 24 months. They can then obtain a free share for the first 71 shares purchased 
and 1 free share per subsequent 5 shares purchased. Persons taking part in the public offering 
are not subject to an obligation to hold their shares for any amount of time unless they want to 
obtain one free extra share for each 10 shares purchased (up to a ceiling of 30 000 francs for 
the purchased shares). The required duration for holding shares is then 18 months. As a result, 
for the first 100 shares, shareholders under th e discounted employee offering receive 6 free 
shares, while shareholders under  the French public offering receive 10 free shares provided 
that the shareholders in both cases agree to the holding restrictions." 
 
EC Request for interim review, pp. 1-2.  
147 The United States proposes the following paragraph: 
 "Based on the evidence on the record, under both the employee offering and the French public 
offering, purchasers may receive free shares.  The condition is that purchasers under the 
employee offering must hold their shares for 24 months.  Purchasers under the French public offering must only hold their shares for 18 months.  While purchasers under the discounted 
employee offering get 1 free share for the fi rst 71 shares purchased and 1 free share per 
subsequent 5 share purchased, the purchasers under the French public offering get 1 free share per 10 shares purchased (up to a ceiling of 30 000 francs for the purchased shares).  For the 
first 100 shares, a shareholder under the discou nted employee offering receives 6 free shares 
while a shareholder under the French pub lic offering receives 10 free shares." 
 
US Comments on EC request for interim review, para. 2. 
148 EC Request for interim review, p. 2. 
149 The European Communities requests that the Panel delete the text "and given the fact that the 
United States is not relying on the sunset review as a ba sis for collecting duties at a particular rate" in paragraph 
7.176.  EC Request for interim review, p. 2. WT/DS212/RW 
Page 36  
 
 obligations relating to sunset reviews.
150.  The United States emphasizes that the Panel does not mean 
that Members with prospective systems incur great er obligations than those with retrospective 
systems.  Instead, the United States understands the Pa nel to mean that the margin established in the 
original investigation is not necessarily the rate at  which duties are collected because the exporter has 
the option to seek review to establish that rate.151  In addition, the United States disagrees with the 
European Communities' statement that paragraph 7.1 75 of the Interim Report (paragraph 7.175 of this 
Report) is unnecessary to the Panel's reasoning.  The United States insists that it did argue throughout 
the proceedings that assessment re views, as opposed to sunset review s, are the means by which an 
individual company can obtain a modified assessment rate.152  Finally, the United States disagrees 
with the European Communities' proposal to delete  a phrase in paragraph 7.176 and explains that the 
reasoning in paragraph 7.176 is rela ted to sunset reviews and does not  have to be deleted even upon 
the deletion of paragraph 7.175, which the United States considers as related to the original 
investigation.153 
6.6 Contrary to the European Communities' charact erization of the Panel's reasoning, the Panel 
does not consider that the United States' retrospective assessment system somehow further justifies 
the USDOC's continuation of the measure.  In pa ragraphs 7.175 and 7.176, the Panel is simply 
addressing the issue of whether the continuation of th e measure is inconsistent with Article VI:3 of 
GATT 1994  and Articles 10, 19.4 and 21.1 of the SCM Agreement as regards the obligation to ensure 
that the duties collected are limited to the amount and duration of the subsidy found to exist by the 
investigating authority.  We note that the Pane l had already concluded in  paragraph 7.172 of the 
Interim Report (paragraph 7.172 of this Report)  that the USDOC's consideration of Usinor's 
privatization when making its likelihood-of-subsidiza tion analysis is not inconsistent with Articles 14 
and 21.3 of the SCM Agreement .  If the Panel would have found that, on the contrary, the USDOC's 
consideration of Usinor's privatization was inconsistent with Articles 14 and 21.3 of the SCM 
Agreement , then the measure at issue would automatic ally be inconsistent with the provisions 
requiring the United States to limit the duties collected  to the amount of subsidization; at that point, 
any duty would be unjustified.  However, having found that the USDOC's consideration of Usinor's 
privatization is not in consistent with Articles 14 and 21.3 of the SCM Agreement , the Panel went on to 
analyse the European Communities' claim that th e United States acted inconsistently with its 
obligations under Article VI:3 of the GATT 1994 and Articles 10, 19.4 and 21.1 of the SCM 
Agreement .  In doing so, the Panel does not find that a retrospective system somehow renders the 
USDOC's affirmative likelihood-of-subsidization re-det ermination not inconsiste nt with the relevant 
provisions of the GATT 1994 and the SCM Agreement .  Rather, the Panel notes that the United States' 
retrospective system functions in a way that ensu res that excess duties are not collected pursuant to a 
sunset review.  Moreover, the Panel never states th at an investigating authority in a retrospective 
system can take certain actions that an investigati ng authority in a prospective system cannot.  On the 
contrary, an investigation authority in a prospectiv e system can always adopt  a mechanism to ensure 
that excess duties are not collected pursuant to a su nset review.  Given the nature of a prospective 
system, that mechanism would probably be different  from that of the United States, for example, a 
                                                      
150 (footnote original) The United States would furt her note that the Panel found that the United States 
had respected the obligations relating to sunset reviews, based in large part on the persuasive reasoning of 
Appellate Body reports.  Therefore, paragraph 7.175 is not a justification for a derogation from obligations but 
rather confirmation that the European Communities has sough t to attach obligations to Article 21.3 that simply 
do not exist. 
151 US Comments on EC request for interim review, para. 3. 
The United States also notes that the reference in footnote 281 of the Interim Report (footnote 328 of 
this Report) should refer to paragraph 33 of the Eu ropean Communities' first written submission instead of 
paragraph 32.  US Comments on EC request for interim review, para. 3, footnote 2.  The Panel disagrees, 
considers that paragraph 32 reflects the arguments made in the paragraph cited, and therefore will not amend the 
footnote.   
152 US Comments on EC request for interim review, para. 4. 
153 US Comments on EC request for interim review, para. 5.  WT/DS212/RW 
 Page 37 
 
 
 refund mechanism.  The Panel, therefore, has not deleted the contested portions of paragraphs 7.175 
and 7.176 as requested by the European Communities.  However, to further clarify this Panel's ruling, 
we have amended the text of the relevant paragraphs accordingly. 
6.7 Finally, the European Communities identifies the erroneous numbering of an exhibit as "EC 
Exhibit-11" instead of "EC Exhibit-10" in footnotes 375, 377, 378, 379, and 380, and a line of typing 
error in footnote 390 of the Interim Report (footnotes 422, 424, 425, 426, 427, and 437 of this 
report).154   
6.8 The Panel has amended the text of the relevant footnotes to correct these typographical errors. 
B. REQUEST OF THE UNITED STATES  
6.9 In its request for interim review, the Unite d States comments on several portions of the 
Interim Report.  The United States does not, howeve r, suggest any specific amendments to it.   
6.10 Regarding paragraphs 7.16-7.17 of the Interim Report (paragraphs 7.16-7.17 of this Report), 
the United States submits that the Interim Report provides no explanation as to how the USDOC had "changed the basis" of its affirmative likelihood- of-subsidization finding in the Spain Section 129 
determination.
155  Regarding paragraph 7.293 of the Interi m Report (paragraph 7.293 of this Report), 
the United States again submits that paragraph 7.293 and paragraphs 7.16-7.18,  which are referenced 
therein, contain no analysis of how the basis of th e affirmative finding changed in the Spain Section 
129 determination.156 
6.11 The Panel notes that paragraphs 7.289 and 7.2 90 of the Interim Report specifically indicate 
that, in the Spain Section 129 determination, th e USDOC based its likelihood-of-subsidization re-
determination on the existence of recurring subsidies  to Aceralia, whereas in the original sunset 
determination, the USDOC based its like lihood-of-subsidization determination on the insufficiency of 
evidence  due to lack of cooperation from foreign producers.  The Panel however notes the comment 
of the United States and has amended paragraph 7.17 of this Report to further clarify the changed 
bases of the affirmative likelihood-of-subsidisation re -determinations as set out in the UK Section 129 
determination and the Spain Section 129 determin ation.  Having done this, the Panel does not 
consider that paragraph 7.293, which cossreferences paragraph 7.17, needs further clarification.  
6.12 Regarding paragraph 7.69 of the Interim Repor t (paragraph 7.69 of this Report), the United 
States submits that the European Communities ne ver identified any new evidence placed on the 
record during the Spain Section 129 proceedings157 and that, regarding the UK Section 129 
determination, it is "inaccurate to state that the evidence regarding Glynwed’s cessation of production 
is 'new evidence, which could no t have been presented before.'".158  The United States also argues that 
the Panel inaccurately character ized the UK Section 129 determination and the Spain Section 129 
determination when the Panel stated that the dete rminations are based on different reasoning than the 
original sunset reviews.  The United States challe nges the Panel's statement that the different or 
relative "weight" given to the evidence in the re-d etermination regarding Glynwed's subsidisation is 
an aspect of the measure taken to comply.  Th e United States emphasizes that the Report does not 
provide any reasoning as to how the Spain Sec tion 129 determination was based on different 
reasoning.159  The European Communities disagrees an d proposes inserting the phrase "or evidence 
                                                      
154 EC Request for interim review, pp. 1-2. 
155 US Request for interim review, paras. 2, 19. 
156 US Request for interim review, para. 23. 
157 US Request for interim review, para. 4. 
158 US Request for interim review, para. 5. 
159 US Request for interim review, paras. 6-8. WT/DS212/RW 
Page 38  
 
 which was not considered in the original sunset reviews was re-submitted" after "was submitted" in 
the sixth sentence of paragraph 7.69.
160   
6.13 The Panel agrees with the United States that the European Communiti es has not identified 
any new evidence that was submitted during the Sp ain Section 129 proceedings.  As regards the 
evidence on Glynwed's sale of its production facilities, the Panel considers it as new evidence since, 
as submitted by the European Communities161 and not contested by the United States, it was presented 
for the first time during the Section 129 proceedi ngs.  Whether the evidence could have been 
submitted before has no bearing on whether it is new evidence submitted for the first time during the 
Section 129 proceedings.  The Panel has nevert heless amended paragraph 7.69 to remove its 
statement that the relevant evidence "which could not have been submitted before".  As regards the 
United States' comments on the Panel's findings on the relevance of the weight given to the evidence 
during the Section 129 determinations, the Panel c onsiders that it has sufficiently explained its 
reasoning in the Report. 
6.14 Regarding the analysis of the Panel's manda te in paragraph 7.71 of the Interim Report 
(paragraph 7.71 of this Report), where the Panel st ates that the United States introduced the issue of 
the treatment of evidence by revising the dete rmination and by changing the legal basis of the 
determination, the United States insists that th e USDOC did not change the legal basis of the 
affirmative determination.162   
6.15 The Panel considers that it has sufficiently addr essed this issue in paragraph 6.11 above.   
6.16 Regarding paragraphs 7.214-7.215 of the Interi m Report (paragraphs 7.214-7.215 of this 
Report), the United States argues that Article 21.3 of the SCM Agreement  requires a sunset review 
determination, not a privatizati on determination, and the Interim Report does not explain how an 
analysis of privatization is equivalent  to an analysis of a sunset review.163 
6.17 The Panel recalls that, as explained in paragr aphs 7.199 and 7.209 belo w, the Appellate Body 
upheld this Panel's findings in the original proceedi ngs that, before deciding to continue to countervail 
pre-privatization, non-recurring subsidies, the USDOC  is required to examine the conditions of the 
privatization and to determine whether the priva tised producer continues to benefit from pre-
privatization, non-recurring subsidies.164  In paragraphs 7.214-7.215 of its Report, the Panel has 
referred to this finding from the original proceedi ngs.  Given the existence of the privatizations 
concerned, the USDOC is obliged to examine the conditions of these privatizations and to determine  
whether the privatised producer received any bene fit from the financial contributions bestowed on the 
state-owned producers.  In other words, the latter "determination" is one specific determination as 
required by Article 21.3 in cases of sunset reviews involving privatizations.   
6.18 Regarding paragraph 7.216 of the Interim Repor t (paragraph 7.216 of this Report), the United 
States notes that there is no textual analysis to support a statement of the Panel, which the United 
States interprets as requiring "that a determination mu st be made in a sunset review for purposes of 
assisting respondent interested parties in an assessment proceeding".165   
                                                      
160 EC Comments on US request for interim review, p. 1. 
161 See EC Response to Panel question No. 43. 
162 US Request for interim review, para. 9. 
163 The United States takes issue with the Panel' s statement: "'Nor was there a 'determination' on 
whether the privatized pr oducers received any benefit ... .  The Panel considers that there is a difference between 
'assumption' and 'determination' ... .  In this regard, what Article 21.3 explicitly requires is a 'determination'. ...'"  
US Request for interim review, paras. 10-11. 
164 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 149. 
165 US Request for interim review, para. 12.  WT/DS212/RW 
 Page 39 
 
 
 6.19 The Panel disagrees with the United States' interpretation of the Panel's reasoning in 
paragraph 7.216 of this Report.  Requiring the USDOC  to examine the conditions of the privatisation 
and determine whether the benefit continues is not for purposes of assisting respondent interested 
parties in an assessment proceeding.  The reference to the situation where an assessment is requested 
is used simply to illustrate the legal uncerta inty that would arise from an assumption. .  
6.20 Regarding paragraphs 7.234-7.238 of the Interi m Report (paragraphs 7.234-7.238 of this 
Report), the United States asserts that the Panel is "imputing the requirements necessary to make a determination of likelihood to a finding  regarding the effects of privatization".
166  The United States 
argues that neither Article 11.3 of the Anti-Dumping Agreement  nor the Appellate Body addressed 
"the issue of whether an administering authority may make an assumption where there are sufficient 
other bases for making the likelihood determination in question".167  The United States insists that the 
assumption about privatization does not compromise or affect the overall likelihood-of-subsidization 
determination; therefore, the assumption about pr ivatization did not prevent the USDOC from making 
its likelihood-of-subsidization dete rmination on the basis of positiv e evidence.  Consequently, the 
United States maintains "that it is inaccurate to conclude that Commerce erred in assuming, rather 
than determining, that privatization extinguished the benefit".168 
6.21 The Panel notes that paragraphs 7.234-7.238 si mply review a number of Appellate Body and 
panel reports regarding the lega l requirements on the treatment of evidence during sunset reviews 
conducted under Articles 21.3 of the SCM Agreement and Article 11.3 of the Anti-Dumping 
Agreement .  The issue of why an assumption is not sufficient to meet the requirement of making a 
determination is a different issue and has been an alysed in paragraphs 7.198 to 7.217 below.   
6.22 Regarding paragraph 7.245 of the Interim Repor t (paragraph 7.245 of this Report), the United 
States raises two issues.  First, the United States ch aracterizes as inaccurate the Panel’s statement that 
the USDOC based its affirmative likelihood-of-subsidization re-determination in the UK Section 129 
determination on a finding from the original inves tigation that there was a subsidy benefit to 
Glynwed.169  The United States argues that the findings  in the UK Section 129 determination were 
based on the evidence and findings from the original  sunset review proceedings, not the original 
investigation.  In the United States' view, the finding  in the original sunset review determination that 
there was insufficient evidence to conclude that th e benefit had been extinguished is the same as the 
finding in the UK Section 129 determinati on that a subsidy continued for Glynwed.170  Second, the 
United States also characterizes as inaccurate th e Panel's statement that the insufficiency of 
information on the termination of subsidy progra mmes due to the non-cooperation of respondents was 
the basis of the original sunset review determination and that this basis is different than the basis of 
the UK Section 129 determination.  The United Stat es emphasizes that the affirmative finding in the 
original sunset review was based on the fact that  there was no evidence that the benefit had been 
extinguished; respondents' non-cooperation is only one  of the reasons for th e absence of evidence 
since any other interested party could have put forth evidence.171  The European Communities 
disagrees and asserts that the USDOC did not a ssess the evidence provided by the European 
Commission and the GOUK.  The European Communiti es insists that the only explanation for the 
USDOC's refusal to asses the information provided  by the European Communities and the GOUK is 
that the relevant exporters/producers had not participated.172 
                                                      
166 US Request for interim review, para. 13  
167 US Request for interim review, para. 13. 
168 US Request for interim review, para. 13. 
169 US Request for interim review, para. 14. 
170 US Request for interim review, paras. 14-16. 
171 US Request for interim review, paras. 17-18. 
172 EC Comments on US request for interim review, p. 2. WT/DS212/RW 
Page 40  
 
 6.23 As regards the first comment, the Panel notes th at the original sunset review determination 
focused almost exclusively on the benefit to BS plc.  The text of the original sunset review 
determination only mentioned Glynwed in a descrip tion of findings from the original countervailing 
duty order and as part of the description of the domestic interested parties' arguments , never in the 
USDOCs analysis.  While the USDOC also restat ed the rate for Glynwed at the end of the 
determination, the USDOC explained that it normally selects the rate from the original 
investigation.
173  Moreoever, the programme descriptions  provided by the USDOC only mention the 
subsidization of BS plc, not Glynwed.174  In addition, the reasoning of the original sunset review 
determination as set out in "The Department's Position" focused only on the "subsidy programmes" 
and the insufficiency of evidence demonstrating that some programmes had been fully amortized.175  
Therefore, the Panel considers that the "basis" or the "reasoning" of the original sunset determination 
as set out in "The Department's Position" was not specifically that a benefit continued to exist for 
Glynwed.176  In the UK Section 129 determination, however, the USDOC focused solely on the 
benefit to Glynwed.177  The Panel therefore disagrees with the United States' assertions.  As regards 
the Unites States' second comment, the Panel notes that the respondent s' non-cooperation is one of the 
reasons for the insufficiency of evid ence in the original sunset review .  Since nevertheless the focus of 
the Panel's statement was the insufficiency of ev idence, we agree to delete the reference to non-
cooperation in paragra ph 7.245 of this Report.178   
6.24 Regarding the United States' comments on paragraphs 7.248179 and 7.281180 of the Interim 
Report (paragraphs 7.248 and 7.281 of this Repor t), the Panel has addressed these concerns in 
paragraph 6.11 above.  
6.25 As regards the United States' comments on para graph 7.252 of the Interim Report (paragraph 
7.252 of this Report)181, the Panel refers to its comme nts in paragraph 6.13 above.  
6.26 Regarding paragraph 7.291 of the Interim Repor t (paragraph 7.291 of this Report), the United 
States characterizes as inaccurate the Panel's statement that "the 1987 Government Delegated Commission on Economic Affairs: Fund For Employ ment Promotion and Early Retirement was the 
programme that the USDOC found to be 'recurring' and that the USDOC used as the basis for its 
affirmative likelihood-of-subsidi zation determination in the Spai n Section 129 determination".  
Quoting page three of the UK Sunset Review Issues and Decision Memo, the United States insists that the programme is an example of a recurring subsidy programme.
182  The European Communities 
comments that the United States identified no other programme as recurring and therefore proposes amending paragraph 7.291 as follows: "was the only programme that the USDOC found
 identified to 
be as 'recurring'".183 
                                                      
173 Issues and Decision Memo for the Expedited Suns et Review of the Countervailing Duty Order on 
Cut-to-Length Carbon Steel Plate from the United Kingdom; Final Results, p. 14-15, 19 (7 April 2000) (Exhibit 
EC-6) ("UK Sunset Review I ssues and Decision Memo"). 
174 UK Sunset Review Issues and Decision Memo, footnote 173 above, pp. 17-19. 
175 UK Sunset Review Issues and Decision Memo, footnote 173 above, pp. 2, 12-14. 
176 US Request for interim review, para.18. 
177 Issues and Decision Memorandum: Section 129 Determination: Final Results of Expedited Sunset 
Review of Cut-to-Length Carbon Steel Plate from the United Kingdom, p. 4 (24 October 2003) (Exhibit EC-2). 
178 US Request for interim review, paras. 17-18. 
179 The United States reiterates that similar conclusion s in paragraphs 7.16 and 7.17 are also incorrect.  
US Request for interim review, para. 19. 
180 US Request for interim review, para. 21. 
181 US Request for interim review, para. 20. 
182 US Request for interim review, para. 22. 
183 EC Comments on US request for interim review, p. 2.  WT/DS212/RW 
 Page 41 
 
 
 6.27 The Panel notes the United States' clarification that the recurring subsidy programmes 
collectively form the basis of the Spain Section 129 determination, even though the USDOC has not identified any other recurring programmes in the determ ination.  The Panel has therefore clarified this 
point in paragraph 7.291of this Report. 
6.28 Regarding paragraph 7.291, footnote 492 of the Interim Report (paragraph 7.291, footnote 
539 of this Report), the United States notes that page 17 of the Issues and Decision Memorandum 
cited does not exist.
184  The European Communiti es states that it does exist.185  The Panel has verified 
that the page exists and therefore does not need to amend footnote 539 of this Report. 
6.29 Regarding paragraph 7.296 of the Interim Repor t (paragraph 7.296 of this Report), the United 
States characterizes as inaccurate the Panel's stat ement that the USDOC rejected evidence on the 
termination of subsidy programmes as insufficient due to the non-cooperation of respondents.  Citing 
page thirteen of the Spain Sunset Review Issu es and Decision Memo, the United States emphasizes 
that the determination states that no evidence of termination was provided and therefore the respondents' arguments were unsubstantiated.
186  The European Communities disagrees and asserts 
that the USDOC did not assess the evidence pr ovided by the European Commission and the 
Government of Spain.  The European Communitie s insists that the non-cooperation of respondents 
was the only reason that the USDOC provide d for not assessing the evidence at issue.187 
6.30 The Panel notes that in the original sunset review determination, the USDOC summarized the 
European Communities and the GOS ' arguments that a number of subsidy schemes no longer existed 
and that the subsidization of the steel sector was prohibited since 1997 following the adoption of a 
series of European Commission Decisions.  In th e section entitled "The Department's Position", the 
USDOC did mention that "the Department did not receive a response from the foreign 
producer/exporter and, pursuant to section 351.2 18(d)(2)(iii) of the Sunset Regulations, this 
constitutes a waiver of participation".188  Immediately following this statement, the USDOC stated 
"[b]ecause there have been no administrative re views of this order and no evidence has been 
submitted to the Department demonstrating the te rmination of the countervailable programs, the 
Department assumes that these programs continue to exist and are utilized."189  The USDOC further 
based its affirmative determination on the fo llowing grounds: "[ absence of] evidence that the 
programs have been terminated, [absence of evid ence] that the benefits from programs for which 
benefits are allocated over time will not continue be yond this sunset review, or  [lack of] participation 
in this review of a foreign producer/exporter...".190  It remains unclear which of those grounds are the 
ones on which the USDOC relied in this  case.  In any event, the Panel will delete the reference to non-
cooperation in paragraph 7.296 of th is Report and will add a footnote referring to those grounds.   
                                                      
184 US Request for interim review, para. 22. 
185 EC Comments on US request for interim review, p. 2. 
186 US Request for interim review, para. 24. 
187 EC Comments on US request for interim review, p. 2. 
188 Issues and Decision Memo for the Expedited Suns et Review of the Countervailing Duty Order on 
Cut-to-Length Carbon Steel Pl ate from Spain; Final Results, p. 13 (7 April 2000) (Exhibit EC-7) ("Spain Sunset 
Review Issues and Decision Memo"). 
189 Spain Sunset Review Issues and Deci sion Memo, footnote 188 above, p. 13. 
190 Spain Sunset Review Issues and Decisi on Memo, footnote 188 above, pp. 13-14. WT/DS212/RW 
Page 42  
 
 VII. FINDINGS 
A. G
ENERAL CONSIDERATIONS FOR THIS DISPUTE  
1. The Panel's mandate 
7.1 Article 21.5 of the DSU provides that "[w]here there is di sagreement as to the existence or 
consistency with a covere d agreement of measures taken to co mply with the recommendations and 
rulings", an Article 21.5 panel shall decide the dispute.  We note that the Appellate Body in EC – Bed 
Linen (Article 21.5 – India)  emphasized that an Article 21.5 proceeding is similar to the original 
proceedings and thus, the "matter" at issue consists  of the same elements: the specific "measures" at 
issue and the legal basis of the complaint, i.e. the claims .191  The mandate of an Article 21.5 panel is 
therefore to determine (i) whether measures have been  taken to comply and, if so,  (ii) whether such 
measures are fully consistent with the covered agreements, as disputed by the legal claims  included in 
the Panel request.192 
7.2 Both the identity and scope of the measures take n to comply as well as the claims that can be 
considered by this Panel have been the object of co ntroversy between the parties to this dispute.  We 
will therefore consider both elements  of the matter before us in orde r to identify the measures taken to 
comply and the legal claims properly before this Panel. 
(a) The measures taken to comply in these proceedings 
(i) Arguments of the parties 
7.3 At first, the parties seemed to agree that th e measures taken to comply by the United States 
were the three Section 129 determinations  (France, UK and Spain), each including a revision of the 
likelihood-of-subsidization determination from the original sunset review.  However, during the 
proceedings it became patent that the parties do not  agree on either the identity or the scope of the 
measures taken to comply.   
7.4 After having said that it was "treating the USDO C's failure to revoke [the three countervailing 
duty] orders as the purported 'implementation' of the USDOC's findings"193, the European 
Communities asserted in its Second wr itten submission that the "Sec tion 129 determinations at issue 
in this proceeding are measures taken by the Unite d States to comply with the recommendations and 
rulings of the DSB".194  Yet in response to a question by this Panel, the European Communities 
clarified its position and insisted that the measures taken to comply are "the maintenance of (or in 
other words the failure to revoke or amend) th e countervailing duties" and that the Section 129 
determinations constitute the statement of reasons for the maintenance of the duties.195  
7.5 The United States' position is very different.  It  argues that the "measure" taken by USDOC to 
comply with the recommendations and rulings of th e DSB relates only to the treatment of allocable, 
pre-privatization subsidies.196  All other aspects of the Section 129 determinations such as USDOC's 
findings regarding subsidies to Glynwed in the UK case and the recurring subsidy programmes in the 
Spain case are unchanged aspects of the measure that were not addressed by the DSB recommendations and rulings and therefore are not with in the scope of the "measure taken to comply" 
                                                     
 
191 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 78. 
192 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 79. 
193 EC First written submission, para. 8. 
194 EC Second written submission, para. 12. 
195 EC Response to Panel questions Nos. 17, 21. 
196 US First written submission, para. 2.  WT/DS212/RW 
 Page 43 
 
 
 in the Article 21.5 proceedings.197  Further to a question by the Pane l, the United States clarified that 
the measures taken to comply are those aspects of the Section 129 determinations that represent revisions to the original determinations in or der to comply with the DSB recommendations and 
rulings.  With respect to these revised determinations, the revised privatization analysis of Usinor is a 
measure taken to comply.  By contrast, the United States argues, any findings regarding Glynwed and 
the Spanish subsidy programmes in the revised s unset review are not measures taken to comply 
because they are unchanged aspects of the original determination that have nothing to do with 
privatization and therefore did not need to be ch anged to comply with the DSB recommendations and 
rulings.
198 
(ii) Evaluation by the Panel 
7.6 The concept of "measures taken to comply" has been interpreted by the Appellate Body in 
Canada – Aircraft (Article 21.5 – Brazil)  as referring to those "measures which have been , or which 
should be , adopted by a Member to bring about complia nce with the recommendations and rulings of 
the DSB".199  In other words, a complaining Member can  challenge either a Member's implementing 
actions, i.e. "measures which have been … adopted," or their omissions, i.e. "measures which should 
be[]… adopted". 
7.7 Establishing which are the measures taken to comp ly is a necessary step in these proceedings 
since, as expressed by the Appellate Body in EC – Bed Linen (Article 21.5 – India),  an Article 21.5 
panel can only consider measures  that are taken to comply :  "If a  claim  challenges a measure  which is 
not a 'measure taken to comply', that  claim   cannot properly be raised in Article 21.5  proceedings."200  
As it provides the basis for including or excluding legal claims, identifying the "measures taken to 
comply" is therefore of primary importance.   
7.8 Deciding what constitutes a "measure taken to comply" in an Article 21.5 proceeding is a 
matter subject to decision by the panel, not by the parties.201  As affirmed by the Appellate Body202, 
the panel in EC – Bed Linen (Article 21.5 – India)  concluded that it is for an Article 21.5 panel to 
decide whether certain measures have been "tak en to comply" with a DSB recommendation or 
ruling.203  The Panel request, while providing a point de départ , does not require an Article 21.5 panel 
to consider all the measures contained therein as measures taken to comply.  Therefore, while the 
                                                      
197 US First written submission, paras. 19-20. 
198 US Response to Panel question 21. 
199 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 36 (emphasis added).;  
200 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 78 (emphasis in orgiinal). 
201 The Panel in Australia – Salmon (Article 21.5 – Canada)  ruled: 
 
"We note that an Article 21.5 panel cannot leave it to the full discretion of the implementing Member to decide whether a measure is one 'taken  to comply'.  If one were to allow that, an 
implementing Member could simply avoid any sc rutiny of certain measures by a compliance 
panel, even where such measures would be so clearly connected to the panel and Appellate Body reports concerned, both in time and in resp ect of the subject-matter, that any impartial 
observer would consider them to be  measures 'taken to comply'".  
 Panel Report on Australia – Salmon (Article 21.5 – Canada),  para. 7.10, subparagraph 22.  See also  
Panel Report on Australia – Automotive Leather II (Article 21.5 – US), paras. 6.4-6.5. 
202 "We agree with the Panel  that it is, ultimately, for an Article 21.5 panel – and not for the 
complainant or the respondent – to determine which of the measures listed in the request for its establishment 
are 'measures taken to comply'."  Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 78.   
203 Panel Report on EC – Bed Linen (Article 21.5 – India) , para. 6.15.  WT/DS212/RW 
Page 44  
 
 parties dispute the scope of the measures taken to co mply, it is ultimately up to this Panel, not the 
parties, to identify which measures in the Pa nel request are the measures taken to comply.
204 
7.9 As the first step in determining which measur es are the "measures taken to comply" by the 
United States in these proceedings, we shall look at the measures identified by the European 
Communities in the Panel request since it defines the outer limits of our mandate.205  
7.10 In the Panel request, the European Commun ities identifies three out of the twelve 
countervailing duty determinations that  were the subject of the original panel proceedings.  All three 
are sunset reviews :  
(a) Certain Corrosion-Resistant Carbon Steel Flat Products from France (C-427-810) 
(Case No. 9);.   
(b) Cut-to-Length Carbon Steel Plate from United Kingdom (C–412–815) (Case No. 8); 
(c) Cut-to-Length Carbon Steel Plate from Spain (C–469–804) (Case No. 11).206  
7.11 In footnotes 1 through 3 of its Panel request, whic h cite each of the three sunset reviews, the 
European Communities further refers to three un published memoranda that the USDOC had issued 
and posted on its website.207  It is these memoranda that contain the revised likelihood-of-
subsidization determinations for the sunset revi ews conducted by the USDOC pursuant to Section 129 
of the Uruguay Round Agreements Act ("Section 129").208   
7.12 Section 129 is the US procedure aimed at renderi ng an administering authority's action, which 
was previously found WTO-inconsistent by the DSB, " not inconsistent with the findings  of the panel 
or the Appellate Body".209  We shall therefore examine the thre e Section 129 determinations issued by 
                                                      
204 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 78. 
205 In US – Carbon Steel , the Appellate Body stated that the request for establishment governs a panel's 
terms of references and must cont ain the specific measures at issu e.  Appellate Body Report on US – Carbon 
Steel , paras. 124-125. 
206 Request for establishment, p. 2.  In the back ground information provided earlier in the Request 
itself, the European Communities stated that the Unite d States had finalized a new "change-in-ownership" 
methodology and subsequently issued new determinations in which the United States had applied this 
methodology to the twelve determina tions challenged by the European Comm unities in the origin al proceedings.  
Request for establishment, p. 1; see Notice of Final Modification of Agen cy Practice Under Section 123 of the 
Uruguay Round Agreements Act, 68 Fed. Reg. 37125 (23 June 2003) (Exhibit EC-1) (Modification Notice).  
The Panel notes that the United States' ne w privatization methodology as such is not part of the current 
proceedings.  Request for establishment, p.2; EC First written submission, para. 2. 
207 Request for establishment, p.2, footnotes 1-3.   
208 See Issues and Decision Memorandum for the Section 129 Determination: Corrosion-Resistant 
Carbon Steel Flat Products from France; Final Results of Expedited Sunset Review of Countervailing Duty 
Order (23 October 2003) ("France Section 129 determination") (Exhibit EC-4); Issues and Decision 
Memorandum: Section 129 Determination: Final Results of Expedited Sunset Review of Cut-to-Length Carbon Steel Plate from the United Kingdom (24 October 2003) ("UK Section 129 determination") (Exhibit EC-2); 
Issues and Decision Memorandum: Section 129 Determination: Final Results of Expedited Sunset Review of 
Cut-to-Length Carbon Steel Plate from Spain (24 October 2003) ("Spain Section 129 determination") (Exhibit EC-3).  
209 The relevant excerpt of Section 129 reads as follows: 
 "Notwithstanding any provision of the Tariff Act of 1930 (19 U.S.C. 1202 et seq.), the 
administering authority shall, w ithin 180 days after receipt of a written request from the Trade 
Representative, issue a determination in connectio n with the particular proceeding that would  WT/DS212/RW 
 Page 45 
 
 
 the USDOC to determine what the United States  has done to implement the DSB rulings and 
recommendations. 
7.13 The wording of two of the three Section 129 dete rminations at issue (UK, Spain) specifically 
refers to the USDOC's task of impl ementing the Appellate Body findings:210   
"This memorandum constitutes our Secti on 129 Determination regarding the 
affirmative likelihood determina tion in the final results of the expedited sunset review 
of the order on cut-to-length carbon steel plate (“CTL Plate”) from [the United Kingdom or Spain]... 
… Section 129 of the URAA is the applicable provision governing the nature and effect 
of determinations issued by the [USDOC] to implement findings by WTO panels and 
the Appellate Body. Specifically, section 129(b)(2) provides that '{n}otwithstanding any provision of the Tariff Act of 1930 . . .,'  within 180 days of a written request from 
the US Trade Representative (“USTR”), th e [USDOC] shall issue a determination 
that would render its actions not inconsiste nt with an adverse finding of a WTO panel 
or the Appellate Body.
211 
… The [USDOC's] duty, in rendering a de termination in this case under Section 
129(b)(2) of the URAA, is not to reconduct the original sunset review in its totality, but to render it not inconsistent with the findings of the Appellate Body…"
212 
7.14 The above wording is not present in the France Section 129 determination.  However, this 
determination does refer to the change in the priv atization methodology further to the adoption of the 
Appellate Body report in the original proceedings and to the application of that new methodology to 
Usinor's privatization pursuant to Section 129.213  
7.15 Both the legal basis of the three Section 129 determinations at issue and the above wording 
indicate that these determinations were intended as the means of rendering the original sunset reviews 
“not inconsistent” with the DSB recommendations and rulings in the original proceedings.  The 
United States argues that the measures taken to co mply have a narrow scope and only include those 
aspects of the Section 129 determinations  that revise portions of the original sunset reviews in order to 
                                                                                                                                                                     
render the administering authority's action described in paragraph (1) not inconsistent with the 
findings of the panel or the Appellate Body."  
Section 129(b)(2) of the Uruguay Round Agreements Act; 19 U.S.C. Section 3538(b)(2) (2003) 
(emphasis added). 
210 In response to a question by the Panel, the Unite d States confirmed that the USDOC's intention was 
to render the original sunset reviews not inconsistent  with the DSB recommendations and rulings, meaning both 
the Appellate Body findings and this Panel's findings as modified by the Appellate Body.  US Response to Panel question 16. 
211 UK Section 129 determination, footnote 208 above, pp. 1-2; Spain Section 129 determination, 
footnote 208 above, pp. 1-2. 
212 UK Section 129 determination, footnote 208 above, p. 9.  The language in the Spain Section 129 
determination is virtually identical.  Spain Section 129 determination, footnote 208 above, p. 6. 
213 France Section 129 determination, footnote 208 above, pp. 1-2. WT/DS212/RW 
Page 46  
 
 comply with the DSB recommendations and rulings.
214  Specifically, the United States insists that the 
revisions only concern the privatization analysis.   
7.16 The Panel agrees with the United States that th ose aspects of the Section 129 determinations 
that represent revisions to the original dete rminations in order to comply with the DSB 
recommendations and rulings are measures taken to comply.  The Panel does not however agree with 
the United States that the revisions only concern the privatization analysis.   
7.17 The Panel notes that the United States often refe rs in its submissions to these determinations 
as "revised" sunset reviews.215  However, the "revision" undertaken by the United States consists of an 
affirmative re-determination of the likelihood of con tinuation or recurrence of subsidization, as set out 
in each of the three Section 129 determinations.216  In the France Section 129 determination, the 
USDOC does examine Usinor’s privatization a nd makes a re-determination of likelihood of 
continuation or recurrence of subsidization on the basis of that examination.217  In the UK and Spain 
Section 129 determinations though, the USDOC does not analyse the privatizations at issue and instead revises its likelihood-o f-subsidization determination by changing the basis f or its affirmative 
conclusion,i.e. the subsidies benefiting Glynwed inst ead of the non-recurring subsidies to BS plc, in 
the UK case, and the recurring subsidies benefiting Aceralia instead of the non-recurring subsidies 
benefiting that same producer.
218  In the latter two Section 129 de terminations, USDOC's "revisions" 
thus are not restricted to the privatization aspects of the likelihood-of-subsidization determination in 
the Section 129 determinations.   
7.18 The Panel therefore considers that the measures taken to comply in these proceedings are not 
limited to the privatization aspects of the Sectio n 129 determinations.  The Panel finds that the 
affirmative likelihood-of-subsidizati on analysis as set out in the Section 129 determinations in the UK 
and Spain cases, is a measure taken to comply in each case.   
7.19 The parties dispute two main issues regarding the scope of the measures taken to comply.  
Both issues are intrinsically relate d to whether this Panel can consider certain legal claims.  These 
issues concern the USDOC's treatment  of evidence in the likelihood-o f-subsidization determination in 
the UK and Spain Section 129 determinations and the likelihood-of-injury determination in the three 
sunset reviews at issue.219   
The USDOC's treatment of evidence in the likelihood-of-subsidization determination  
7.20 Regarding the treatment of evidence, we not e that, as already indicated, the affirmative 
likelihood-of-subsidization re-determinations set out  in the Section 129 determinations, are measures 
taken to comply.  The Panel understands that the ev idence at issue concerns aspects of the likelihood-
of-subsidization analysis pertaining to the re-deter minations since it refers to matters regarding the 
changed basis for the affirmative conclusions.  Spec ifically the evidence in question relates to the 
termination and/or non-application of various s ubsidy programmes other than the pre-privatization 
non-recurring programmes, and to whether one of  the UK producers, Glynwed, stopped producing the 
product concerned.  The Panel al so understands that the respondents invoked this evidence during the 
                                                      
214 US Response to Panel question 21. 
215 US First written submission, paras. 2, 11, 13, 18, 21 , 48; US Second written submission, paras. 2, 5, 
7-8, 13-14; US Oral statement, paras. 23, 28-29; US Response to Panel questions 3, 21, 28, 33, 36, 39, 41, 51. 
216 France Section 129 determination, footnote 208 a bove; UK Section 129 determination, footnote 208 
above; Spain Section 129 determination, footnote 208 above. 
217 France Section 129 determination, footnote 208 above, pp. 3-12. 
218 UK Section 129 determination, footnote 208 above, pp. 3-4; Spain Section 129 determination, 
footnote 208 above, p. 3. 
219 The Panel notes that while the USDOC conducts the likelihood-of-subsidization analysis, it is a 
different agency, the USITC, that conduc ts the likelihood-of-injury analysis.    WT/DS212/RW 
 Page 47 
 
 
 Section 129 proceedings for both the UK and Spain Section 129 determinations220 and submitted new 
evidence in the UK Section 129 proceedings.221 
7.21 Since the whole of the affirmative likelihood-o f-subsidization re-determinations, as set out in 
the Section 129 determinations at issue, are measu res taken to comply in these proceedings, the Panel 
considers that the treatment of the evidence re lating to the subsidy programmes upon which that 
affirmative re-determination is based, is also  part of the measures taken to comply.   
The likelihood-of-injury determination   
7.22 As regards the likelihood-of-injury determination,  none of the Section 129 determinations at 
issue includes a revision of the likelihood of continuation or recurrence of injury.222  The European 
Communities claims that the United States should ha ve re-determined the likelihood of continuation 
or recurrence of injury further to revising its lik elihood-of-subsidization determination.  The United 
States, on the contrary, argues that the measures take n to comply in these proceedings are only those 
aspects of the Section 129 determinations  that revise portions of the original sunset reviews in order to 
comply with the DSB recommendations and rulings.223     
7.23 The question is therefore whether the failure to re-determine the likelihood of continuation or 
recurrence of injury is also a measure taken to co mply or represents the failure of taking a measure 
necessary to comply.  In principle, an omission a ttributable to a WTO Member can be a measure of 
that Member for purposes of dispute settlement proceedings.224  Specifically in the context of an 
Article 21.5 review, as stated above, the concept "measures taken to comply" refers to those 
"measures which have been, or which should be , adopted by a Member to bring about compliance 
with the recommendations and rulings of the DSB".225  Hence, the Panel arguably has the authority to 
identify omissions that could render the United Stat es' implementation inconsistent with the covered 
agreements. 
7.24 The United States invokes the Appellate Body's reasoning in EC – Bed Linen (Article 21.5 – 
India)  to argue that the measures taken to comply  exclude any unchanged aspects of the original 
sunset determinations, such as, in this case, the injury analysis.   
7.25 In EC – Bed Linen (Article 21.5 – India) , to comply with the DSB recommendations and 
rulings in the original proceedings, the Europ ean Communities issued a complete anti-dumping 
regulation that encompassed not only the revisions of certain aspects of the dumping, injury and 
                                                      
220 UK Section 129 determination, footnote 208 above, pp. 6-7; Spain Section 129 determination, 
footnote 208 above, p. 6. 
221 UK Section 129 determination, footnote 208 above, pp. 8-9. 
222 See France Section 129 determination, footnote 208 above, p. 12: UK Section 129 determination, 
footnote 208 above, p. 9; Spain Section 129 determination, footnote 208 above, p. 9. 
223 US Response to Panel question 21. 
224 In particular, the Appellate Body stated that:  
 
"any act or omission attributable to a WTO Me mber can be a measure of that Member for 
purposes of dispute settle ment proceedings.  The act s or omissions that are so attributable are, 
in the usual case, the acts or omissions of the organs of the state, including those of the 
executive branch."  Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , 
para. 81.  In a footnote, the Appellate Body specified that "[b]oth specific determinations 
made by a Member's executive agencies and re gulations issued by its executive branch can 
constitute acts attributable to that Member. ..."    
Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , footnote 79. 
225 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 36 (emphasis added).   WT/DS212/RW 
Page 48  
 
 causality analysis, but also the remaining aspects of  those analyses from the original regulation that 
the European Communities had not been asked to br ing into conformity with WTO law and thus had 
not revised.  India challenged the re-determinati on on the grounds that the European Communities did 
not also re-examine the impact of the reduced amount of dumped imports on the effects of "other 
factors", for the purpose of the injury analysis.
226   
7.26 The Article 21.5 panel, however, declined to consider India's claim on the "other factors" 
analysis after finding that the original panel dismissed the claim and India did not appeal.227  T h e  
Appellate Body affirmed, explaining that there is no reason to conclude that a "part of the 
redetermination that merely incorporates elements of  the original determination ... would constitute an 
inseparable element of a measure taken to comply w ith the DSB rulings in the original dispute".  The 
"other factors" analysis was such an element – an unrevised aspect of the original measure – that "the 
investigating authorities of the European Commun ities were able to trea t ... separately" when 
conducting the re-determination.228  Therefore, it fell outside the scope of the measures taken to 
comply. 
7.27 While the findings and reasoning in EC – Bed Linen (Article 21.5 – India)  may seem tailored 
to this dispute, the facts and circumstances are not entirely similar.  Like EC – Bed Linen (Article 21.5 
– India) , the likelihood-of-injury analysis  is an unrevised aspect of the original sunset review.  Unlike 
EC – Bed Linen (Article 21.5 – India) , however, the likelihood-of-injury analysis was never 
incorporated in the Section 129 determ inations.  Moreover, unlike India in EC – Bed Linen (Article 
21.5 – India) , the European Communities never raised any clai ms on the issue of injury in the original 
proceedings. 
7.28 Distinct from the issue of whethe r an unrevised aspect is part of  the measure taken to comply, 
EC – Bed Linen (Article 21.5 – India)  also stands for the proposition that the effects  of the 
investigating authorities' actions are relevant to iden tifying the scope of the measures taken to comply.  
To comply with the DSB recommendations and ruli ngs in the original proceedings, the European 
Communities' investigating authorities recalculated the dumping margins without relying on zeroing, 
found that two producers were no longer dumping, thereby reducing the amount of dumped imports, 
and evaluated whether this reduction had an impact  on the effect of dumped imports for the purpose 
of determining injury.  Since the revised dumping an d injury findings may have had an impact on the 
causal link, the investigating authorities also exam ined whether the causal link between two revised 
elements – dumping and injury – still existed.  The investigating authorities, however, did not reconduct the "other factors" analysis since it was unaffected by the revisions.  India challenged the 
European Communities' failure to r econduct this analysis.  The Article  21.5 panel refused to consider 
the issue, concluding that the issue was not properly before it.  India appealed.  The Appellate Body 
affirmed the panel and explained that the reductio n in the amount of dumped imports would have an 
impact on the effect of dumped imports for the purposes of determining injury, which would then 
have a bearing on whether a causal link exists.  The Appellate Body, however, could not find any 
reason to conclude that a reduction in the amount of dumped imports would also have an impact on 
the effect of "other factors" for the purposes of determining injury.  The Appellate Body therefore 
concluded that the European Communities did not have  to reconduct the "other factors" analysis as it 
was unaffected by the reduction in dumping.  Hence,  the Appellate Body concluded that the issue was 
not properly before the panel.
229 
                                                      
226 Panel Report on EC – Bed Linen (Article 21.5 – India) , paras. 2.6-2.11. 
227 Panel Report on EC – Bed Linen (Article 21.5 – India) , para. 6.53; see Appellate Body Report on 
EC – Bed Linen (Article 21.5 – India) , para. 75. 
228 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 86. 
229 The Appellate Body used the terminology "impact on" and "bearing upon" to refer to the effects of 
one aspect on another:  WT/DS212/RW 
 Page 49 
 
 
 7.29 Following that line of reasoning, it therefore a ppears that whether the failure to revise the 
likelihood-of-injury analysis is necessarily part of a measure taken to comply depends on the potential 
effect of the re-determination of the likelihood-of-subs idization on the likelihood-of-injury analysis.   
7.30 Whether a change in the likelihood-of-subsidi zation determination can affect the likelihood-
of-injury analysis is not an easy issue to decide in the abstract.  If we look at the circumstances of this 
dispute, we note that the USDOC conducted an expe dited sunset review on an order-wide basis.  The 
USDOC did not recalculate the rate of subsidization in either the original sunsets or in Section 129 
determinations and did not make any sep arate calculation for each producer/exporter.230  Both the 
practice of conducting sunset reviews on an order-wide basis231 and the absence of the requirement to 
recalculate subsidization margins in sunset reviews232 have been condoned by the Appellate Body in 
                                                                                                                                                                     
 
"We agree with India that the investigating authorities of the European Communities were required to revise the original determination of dumping and injury in order to comply with 
the DSB recommendations and rulings.  Towards this end, the European Communities 
recalculated the dumping margins without  applying the practice of 'zeroing' that had been 
found to be inconsistent with WTO obligations in the original dispute.  According to the 
recalculation, two of the  individually   examined Indian producers were  not  dumping.
   The 
investigating authorities deducted the imports attributable to those two producers from the 
 volume   of dumped imports, and, accordingly, the volume of dumped imports in the 
redetermination was  lower  than in the original determination.  According to EC Regulation 
1644/2001, the investigating authorities of the European Communities also 're-examined' 
whether a causal link between the two  revised   elements – dumped imports and the injury to 
the domestic industry – still existed, and the Panel reviewed that re-examination. 
 
The  amount  of dumped imports will, of course, have  an impact on the assessment of the  
effects  of the 'dumped imports' for the purposes of determining  injury .  It is clear, therefore, 
that the revised findings on dumping and injury could have a bearing on whether a causal link 
exists between dumping and injury.  But whilst a revised finding of  dumping  will, in all 
likelihood, have an impact on the 'effect of  dumped  imports', we see no reason to conclude as 
well that this revised finding would have any impact on the 'effects … of known factors  other 
than  the dumped imports' in this dispute.   Accordingly, we are of the view that the 
investigating authorities of the European Communities were not required to change the determination as it related to the 'effects of other factors' in this particular dispute.  Moreover, 
we do not see why that part of the redetermina tion that merely incorporates elements of the 
original determination on 'other factors' woul d constitute an inseparable element of a measure 
taken to comply with the DSB rulings in the original dispute.  Indeed, the investigating 
authorities of the European Communities were able to treat this element separately.  
Therefore, we do not agree with India that the redetermination can only be considered 'as a 
whole new measure'". 
 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , paras. 85-86 (original footnotes 
omitted). 
230 The Panel recalls, as stated in footnote 219 above, that while the USDOC conducts the likelihood-
of-subsidization analysis, it is a different agency, the USITC, that conducts the likelihood-of-injury analysis. 
231 We note that the requirement to calculate company-specific rates in original investigations of the 
Anti-dumping Agreement  does not exist in the SCM Agreement.  Nevertheless, in the context of anti-dumping 
sunset reviews, the Appellate Body has ruled that the sunset review provision does not oblige investigating 
authorities in a sunset review to make "company-specific" likelihood determinations.  Appellate Body Report on 
US – Corrosion-Resistant Steel Sunset Review , paras. 149-150; see also  Appellate Body Report on US – Oil 
Country Tubular Goods Sunset Reviews , para. 231. 
232 The Appellate Body in US – Corrosion-Resistant Steel Sunset Review  analysed the extent of an 
investigating authority's obligation under Article 11.3 of the Anti-Dumping Agreement  and concluded that:  
 
"Article 11.3 does not expressly prescribe any specific methodology for investigating 
authorities to use in making a likelihood determination in a sunset review. ...  Thus, WT/DS212/RW 
Page 50  
 
 previous disputes.  Furthermore, the Appellate B ody has ruled that since the United States has chosen 
to conduct its sunset reviews on an order-wide basi s, the consistency of th e likelihood determination 
must be evaluated in the context of an order-wide determination.  Indeed, in US – Oil Country 
Tubular Goods Sunset Reviews , the Appellate Body ruled that "because the United States has chosen 
to make order-wide determinations in sunset review s, an allegation that a measure prevents the United 
States from making a likelihood determination consistent with Article 11.3 [of the Anti-Dumping 
Agreement ] must be evaluated by reference to the relevance of that measure for the order-
wide  determination."
233  We will therefore analyse the potentia l effect of a likelihood-of-subsidization 
determination on the likelihood-of-injury determinati on in the context of a sunset review conducted 
on an order-wide basis and without recalc ulating the rate of subsidization. 
7.31 The result of a likelihood-of-subsidization dete rmination conducted on an order-wide basis, 
without calculating the subsidization rate per producer /exporter, can only be a "yes" or "no" decision.  
If the decision is "no", there would be no need to  proceed any further because there would be no 
subsidized imports to cause injury.  If the decision is "yes", the Panel finds it difficult to see how the 
likelihood-of-injury analysis would necessarily be af fected.  Where no new rate of subsidization is 
calculated and no exporter-specific decision on li kelihood-of-subsidization is made, as here, we can 
see no basis for concluding that the re-determination of  the likelihood of recurrence or continuation of 
subsidization affects the likelihood-of-injury analysis.234  The Panel therefore considers that 
                                                                                                                                                                     
Article 11.3 neither explicitly requires author ities in a sunset review to calculate fresh 
dumping margins, nor explicitly prohibits them from relying on dumping margins calculated 
in the past.  This silence in the text of Article 11.3 suggests that no obligation is imposed on 
investigating authorities to calculate or rely  on dumping margins in a sunset review." 
 
Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , paras. 123-24; see also 
Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews , para. 178.  Although the Appellate 
Body examined an investigating authorities' obligations under the Anti-Dumping Agreement , the jurisprudence 
regarding an investigating authorities' obligations applies equally to identical or almost identical provisions on 
sunset reviews under the SCM Agreement .  In US – Corrosion-Resistant Steel Sunset Review , the Appellate 
Body stated that: 
 
"Article 11.3 is textually iden tical to Article 21.3 of the SCM Agreement , except that, in 
Article 21.3, the word "countervailing" is used  in place of the word "anti-dumping" and the 
word "subsidization" is used in place of the word "dumping".  Given the parallel wording of 
these two articles, we believe that the explanation, in our Report in  US – Carbon Steel,  of the 
nature of the sunset review provision in the  SCM Agreement  also serves, mutatis mutandis , 
as an apt description of Article 11.3 of the  Anti-Dumping Agreement .  (Appellate Body 
Report on  US – Carbon Steel , paras. 63 and 88)." 
 
Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 104, footnote 114.   
233 Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews , para. 231. 
234 We note that in the Anti-Dumping Agreement , the "the magnitude of the margin of dumping" is 
listed as an injury factor in Article 3.4.  There is, however, no correspondi ng provision on the amount or rate or 
margin of subsidization in Article 15.4 of the SCM Agreement .  Thus, while the amount of subsidization could  
be considered in both an original injury determination and in a likelihood-of-injury determination, this Panel 
understands that the failure to do so does  not violate any specific provision of the SCM Agreement .  Even 
assuming that the rate of subsidization is relevant to the likelihood-of-injury analysis, the USDOC conducted its 
affirmative re-determination on an order-wide basis and without recalculating the rate of subsidization.  
Therefore, the rate of subsidization is unchanged and has no effect on the volume aspects of the likelihood-of-injury determination.   
 
As to the potential implication of a reduced amount of subsidized imports, this Panel considers that it is 
only relevant if it is clear that a change in the subsidy benefit to BS plc and Acera lia necessarily affected the 
volume of likely subsidized imports and only where it is  necessary as a legal matte r to make company-specific 
determinations of the likelihood of subsidization.  By analogy to Article 11.3  of the  Anti-Dumping Agreement ,  WT/DS212/RW 
 Page 51 
 
 
 reconducting a likelihood-of-injury determination, give n the particular circumstances in this dispute, 
is not a measure that should be  adopted by the United States to bring about compliance with the 
recommendations and rulings of the DSB and thus the failure to reconduct the likelihood-of-injury 
determination is not an aspect of the measures taken to comply . 
Other issues  
The failure to revoke the countervailing duty orders as the measure taken to comply 
7.32 As indicated above, the European Communities al so argues that it is treating the USDOC’s 
failure  to revoke the countervailing duty orders in all three sunset reviews as the purported 
implementation taken by the United States to comply with the DSB recommendations and rulings.235  
In response to questions by the Panel, the European  Communities clarified that the measures taken to 
comply are "the maintenance of (or in other word s the failure to revoke or amend) the countervailing 
duties" and that the Section 129 determinations  constitute the statement of reasons for the 
maintenance of the duties.236  
7.33 The Panel disagrees with the European Communitie s' characterization of the measure taken to 
comply as the USDOC’s failure to revoke the count ervailing duty orders.  As explained above, the 
measures taken to comply are the affirmative likel ihood-of-subsidization re-d eterminations as set out 
in the three Section 129 determinations at issue.  The maintenance of the duties is a consequence of 
the affirmative re-determination of the likelihood of  continuation or recurrence of subsidization.  
Whether the United States should have reached a different conclusion on likelihood and revoked or 
amended the countervailing duties as part of the impl ementation process relates to the adequacy of the 
measures taken to comply rather than their scope.  
The implementation status of the Section 129 determinations at issue 
7.34 While the Panel considers the affirmative like lihood-of-subsidization re-determinations as set 
out in the three Section 129 determinations as the measures taken to comply, the Panel must address 
the possibility that these determinations may not have been implemented and consequently not 
"taken"237 by the United States.  The European Communiti es drew our attention to the possible lack of 
implementation in its First written submission, where it indicated that "[i]f the USDOC in fact refused 
to implement its findings in its Section 129 issu es and decision memoranda for the three sunset 
reviews at issue here, there is all the more reason fo r this Panel to find that the United States has failed 
to comply with the recommendations and rulings of the Dispute Settlement Body."238  While none of 
the parties pursued the issue, the apparent lack of implementation concerns this Panel as it might 
mean that the Section 129 determina tions are not and will never be in force and that the United States 
has not actually "taken" any measures to comply.   
7.35 In an Article 21.5 proceeding, the measure or measures taken to comply go to the heart of 
panel's mandate.  The Appellate Body has ruled th at panels have a duty to examine issues of a 
"fundamental nature", issues that go to the root of their jurisdiction, on their own motion if the parties 
                                                                                                                                                                     
however, there is no such oblig ation in Article 21.3 of the SCM Agreement .  In the absence of company-specific 
determinations of the likelihood of subsidization, the USDOC's order-wide-based conclusion that subsidization 
is likely to continue or recur seems to apply to the entire volume of likely imports, as no imports were explicitly excluded. 
235 EC First written submission, para. 8; see paragraph 7.4 above. 
236 EC Response to Panel questions 17, 21 (emphasis added). 
237 We recall that the Appellate Body in Canada – Aircraft (Article 21.5 – Brazil)  considered that 
measures taken to comply are measures which have been or should be adopted .  See paragraph 7.6 above. 
238 EC First written submission, para. 8, footnote 10. WT/DS212/RW 
Page 52  
 
 to the dispute remain silent on those issues.
239  Therefore, even though the parties have not argued this 
issue, we must determine whether the three S ection 129 determinations, despite the absence of 
direction by the USTR to implement, still constitute measures "taken" to comply.   
7.36 The Notice of Implementation to which the Eur opean Communities refers in its First written 
submission indicates that "[b]ecause the US Trade re presentative declined to direct the [USDOC] to 
implement the revised determinati ons with regard to the four sunset reviews involved in the WTO 
dispute, we are not implementing  these Section  129 Determinations. See sections 129(b)(4) and 
129(c)(1)(B) of the URAA".240  This wording appears to indi cate that the three Section 129 
determinations at issue were not implemented in the sense that they  did not enter into force.   
7.37 The fact that a measure may not be in for ce does not impede it from being challenged in 
dispute settlement proceedings.  As indicated by the panel in Turkey – Textiles , "[i]t is customary 
practice of GATT/WTO dispute settlement procedures to address applied measures".  However, the 
panel also stated that "previous adopted GATT pa nels have always considered that mandatory 
legislation of a Member, even if not yet in force or not applied241, can be challenged by another WTO 
Member."242  The wording of the Notice of Implementa tion does not however indicate that the three 
Section 129 determinations are binding.   
7.38 In response to a question by the Panel, the Unite d States clarified that the absence of direction 
from the USTR to implement is due to the fact th at no specific implementation was needed.  In US 
administrative law terms, this means that the USDOC did not have to order US Customs to change the 
deposit rates as these were maintained at the same levels as before.243  The United States thus 
confirmed that the three Section 129 determinations are in force. 
7.39 Since the United States confirmed that the three Section 129 determinations are in force and 
the European Communities did not contest this fact , the Panel considers the affirmative likelihood-of-
subsidization re-determinations as set out in the three Section 129 determinations as the measures 
“taken” by the United States to comply w ith the DSB rulings and recommendations.   
                                                      
239 Appellate Body Report on Mexico – Corn Syrup (Article 21.5) , para. 36; see also Appellate Body 
Report on US – Carbon Steel , para 123. 
240 See Notice of Implementation Under Section 129 of the Uruguay Round Agreements Act; 
Countervailing Measures Concerning Certain Steel Products from the European Communities, 68 Fed. Reg. 
64858, 64859 (17 November 2003) (emphasis added) (Notice of Implementation).  
241 (footnote original ) See for instance the Panel Report on United States – Taxes on Petroleum and 
Certain Imported Substances , adopted on 17 June 1987, BISD 34S/136 (" US – Superfund "), paras. 5.2.1-5.2.2; 
Panel Report on EEC – Regulation on Imports of Parts and Components , adopted on 16 May 1990, 
BISD 37S/132, paras. 5.25-5.26; Panel Report on United States – Measures Affecting Alcoholic and Malt 
Beverages , adopted 19 June 1992, BISD 39S/206, para. 5.39. 
242 Panel Report on Turkey – Textiles , para. 9.37. 
243 The United States refers to an excerpt from the Statement of Administrative Action which reads as 
follows:   
 "The Trade Representative may decline to request implementation of the [revised] 
determination.  This might be the case, for example, if [the USDOC] issued a final affirmative 
subsidy determination and a WTO panel subsequently finds that [the USDOC's] analysis was not consistent with the Subsidies Agreement.  On making a new determination at the Trade 
Representative's direction, [the USDOC] could co rrect the analytical fl aw found by the panel 
without changing the original outcome.  In such a case, there would be no need to implement 
the new determination as a matter of domestic law."   
 
Statement of Administrative Action, p. 356 (Exhibit US-7) ("SAA").    WT/DS212/RW 
 Page 53 
 
 
 7.40 The Panel therefore finds that the measures ta ken to comply in these proceedings are the 
affirmative re-determinations of the likelihood of continuation or recurrence of subsidization, as set 
out in the three Section 129 determinations at issue.   
(b) Scope of the claims in these proceedings 
(i) Arguments of the parties 
7.41 The United States argues that the European Communities has improperly advanced claims 
regarding both the non-pre-privatization subsidy and injury aspects of the original sunset review determinations.  According to the United States, th ese aspects were not challenged during the original 
panel proceedings and remained unchanged in the Section 129 process and re-determinations.
244  For 
the United States, the measures taken by the USDO C to comply with the DSB recommendations and 
rulings relate only to the treatment of allocable, pre-privatization subsidies.245  All other aspects of the 
Section 129 determinations, which rela te to aspects of the original sunset review determinations that 
were not addressed by the DSB, fall outside the scope of the "measure taken to comply" in the Article 
21.5 proceedings.246  In its Oral statement, the United States insisted that "[a] 'measure taken to 
comply' consists of those aspects  of a determination that implement the findings and 
recommendations of the DSB".247  For the United States, the cl aims on the evidence regarding non-
pre-privatization subsidies and injury raised by the European Communities are outside this Panel's 
mandate.248 
7.42 The United States cites the Appellate Body in EC – Bed Linen (Article 21.5 – India)  as 
support for its position that claims other than those re garding the privatization analysis fall outside the 
Panel's mandate.249  The United States asserts that according to Appellate Body jurisprudence, an 
investigating authority's findings that are "uncha nged" during the original proceedings cannot be 
challenged in Article 21.5 proceedings.250 
7.43 The European Communities considers that the factual circumstances in EC – Bed Linen 
(Article 21.5 – India) are different from those in the current proceedings.  The European Communities 
maintains that it raised new claims concerning components of the new measures which were not part 
of the original measure and therefore were not and could not have been  before the Panel and 
Appellate Body in the original proceedings.251 
7.44 The European Communities argues that the panel' s mandate in an Article 21.5 proceeding is 
to examine whether the new measure is consistent wi th the provisions of the covered agreements cited 
by the complaining Member in its panel request.  In  its view, it is not sufficient to eliminate only one 
erroneous aspect of the measure if doing so exposes additional inconsistencies with the obligations of 
                                                      
244 US First written submission, para. 14. 
245 US First written submission, para. 2. 
246 See US First written submission, paras. 2, 5, 15-16, 18-20; US Oral statement, paras. 3, 8-9, 15. 
247 US Oral statement, para. 3 (emphasis added).  
248 US Response to Panel question No. 21. 
249 US First written submission, para . 16.  The United States refers inter alia  to two excerpts from the 
Appellate Body Report: "we do not see why that part of a redetermination that merely incorporates elements of 
the original determination... would constitute an inseparable element of the measure taken to comply with the DSB rulings in the original dispute"; and "India [sought]  to challenge an aspect of  the original measure which 
has not changed, and which the European Communities did not have to change, in order to comply with the 
DSB recommendations and rulings to make that measure consistent...."  Appellate Body Report on EC – Bed 
Linen (Article 21.5) , paras. 86 and 87, respectively. 
250 US First written submission, paras. 16, 18-20; see US Oral statement, paras. 3-5. 
251 EC Second written submission, para. 15. WT/DS212/RW 
Page 54  
 
 the SCM Agreement .
252  In the European Communities' view , the Section 129 determinations are 
measures taken by the United States to comp ly with the DSB recommendations and rulings.253  Hence, 
these determinations are new measures based on new reasoning254 and on new factual findings.255  The 
European Communities thus has raised new clai ms concerning components of these new measures 
which were not before the panel and the AB in the original proceedings.256   
7.45 The European Communities argues that its cl aims challenging the lack of injury re-
determinations in the UK and Spain cases are properly before this Panel.  It is in these two Section 
129 determinations that the USDOC assumed for the firs t time that the privatizations of British Steel 
plc (BS plc) and Aceralia were at arm's length and for fair market value (FMV).  In its view, these assumptions would significantly lower the levels of subsidization from those in the original sunset 
reviews, which in turn may require a reconsiderat ion of likelihood of injury in the two Section 129 
determinations.
257   
(ii) Evaluation by the Panel 
7.46 The parties dispute the scope of the legal claims  that this Panel can consider.  Specifically, 
regarding the French case, the parties disagree wh ether the United States should have revised the 
likelihood-of-injury determination made by the USITC in the original sunset reviews, in addition to 
revising its likelihood-of subsidization analysis of  the USDOC.  As regards the UK and Spain cases, 
the parties dispute whether the Panel should consid er the European Communities' claims challenging 
the USDOC's alleged failure to adequately consid er evidence in the likeli hood-of-subsidization re-
determinations and the United Stat es’ alleged failure to revise the lik elihood-of-injury determination.  
New claim not included in the Panel request  
7.47 The United States argues in a footnote to its First written submission that the European 
Communities' claim that the United States shoul d have reconsidered the likelihood-of-injury 
determination in the French case is outside this Pane l's terms of reference because it is not included in 
the Panel request.258  The European Communities, which only a ddressed this point in its First written 
submission, disagrees.  In response to a question by  the Panel, the European Communities asserts that 
"[t]he claim is made in paragraph 1 of th e second paragraph on page 2 of the Request for 
Establishment.  It is there that the EC claims th at the US is maintaining duties inconsistently, with, 
inter alia , Articles 21.1 and 21.3.  Those provisions requi re that subsidies be maintained only where 
subsidization is causing injury."  In a footnote  to the second sentence, th e European Communities 
insists that "[a] claim is an allegation that partic ular measures are inconsistent with specific provisions 
of the covered agreements."259   
7.48 As indicated above, the Appellate Body has ruled that panels have a duty to examine issues of 
a "fundamental nature", issues that go to the root of their jurisdiction, on their own motion if the 
parties to the dispute remain silent on those issues.260  Whether a claim falls within our terms of 
reference is clearly an issue that goes to the root  of our jurisdiction.  Therefore, even though the 
                                                      
252 EC First written submission, para. 62; EC Second written submission, para. 11. 
253 EC Second written submission, para. 15. 
254 EC Second written submission, paras. 14, 17.  
255 EC Second written submission, para. 18. 
256 EC Second written submission, para. 15. 
257 EC Second written submission, paras. 23, 25. 
258 US First written submission, para. 15, footnote 19. 
259 EC Response to Panel question 25; see Request for establishment, p. 2. 
260 Appellate Body Report on Mexico – Corn Syrup (Article 21.5) , para. 36; see also Appellate Body 
Report on US – Carbon Steel , para 123.  WT/DS212/RW 
 Page 55 
 
 
 parties have barely argued this issue, we must de termine whether this claim is within our terms of 
reference.   
7.49 The Panel notes that the Panel request includes th e following text describing the claims on the 
French case: 
"That in the sunset review Certain Corrosion-Resistant Carbon Steel Flat Products 
from France (C-427-810) (Case No. 9), the United States failed to properly examine 
the existence, continuation or likelihood of r ecurrence of subsidization. In particular, 
with regard to the privatization concerne d, it improperly analysed whether the price 
for employees and retirees' shares cons tituted a subsidy or that it led to any 
continuation of a countervailable subsidy. Th is is inconsistent with Articles 10, 14, 
19.4, 21.1 and 21.3 of the SCM Agreement  and Article VI: 3 of GATT 1994."261 
7.50 Unlike the UK and Spain cases, where the word "i njury" is explicitly me ntioned when making 
the claims pursuant to Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  and Article VI:3 of 
GATT 1994262, the claims for the French case do not cont ain the word "injury".  The text does, 
however, explicitly refer to the likelihood-of-s ubsidization determination.  The European 
Communities' argument that the mere listing of one provision covering both likelihood-of- 
subsidization and likelihood-of-injur y determinations is sufficient to  imply the particular violation 
claimed cannot stand in this case.  In Korea – Dairy , the Appellate Body explained that the mere 
listing of the articles of an agreement alleged to have been breached may not necessarily be sufficient 
for the purposes of Article 6.2 of the DSU .   The Appellate Body opined that such a case may arise 
"where the articles listed establish not one single, di stinct obligation, but rather multiple obligations.  
In such a situation, the listing of articles of an agreement, in and of itself, may fall short of the 
standard of Article 6.2".263  Article 21.3 of the SCM Agreement contains at least two obligations, one 
referring to the likelihood of subsidization, the ot her to the likelihood of injury.  The claim on the 
likelihood of subsidization is identified in the Pa nel request but there is no mention of the likelihood-
of-injury aspect.264  The Panel considers that this is one of the cases where the mere listing of an 
article, coupled with the reference to only one of the obligations provided for in that article, falls short 
of meeting the requirements in Article 6.2 of the DSU .  Thus, in our view, the European Communities 
failed to state a claim regarding the likelihood of injury in the Panel request. 
7.51 The fact that the European Communities argue d this claim in its First written submission 
cannot cure the absence of a suffici ently specified claim in the Pane l request.  We recall that the 
Appellate Body in EC – Bananas III ruled that:  
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be 
specified sufficiently in the request for th e establishment of a panel in order to allow 
                                                      
261 Request for establishment, p. 2. 
262 In this regard, the Request for establishment reads as follows: "[t]he United States failed to properly 
determine whether, in these cases, there was continuation or recurrence of subsidization and injury ".  Request 
for establishment, p. 2 (emphasis added).  
263 Appellate Body Report on Korea – Dairy , para. 124.  
264 The Appellate Body in India – Patents (US)  stated that:  
 
"[t]he jurisdiction of a panel is established by  that panel's terms of reference, which are 
governed by Article 7 of the DSU.  A panel may consider only those claims that it has the 
authority to consider under its terms of reference.  A panel cannot assume jurisdiction that it 
does not have."  
Appellate Body Report on  India – Patents (US) , para. 92; see also Appellate Body Report on US – 
Shrimp (Article 21.5 – Malaysia) , paras. 87-88. WT/DS212/RW 
Page 56  
 
 the defending party and any third parties to know  the legal basis of the complaint.   If 
a claim  is not specified in the request for the establishment of a panel, then a faulty 
request cannot be subsequently 'cured' by a complaining party's argumentation in its first written submission to the panel or in  any other submission or statement made 
later in the panel proceeding."
265   
7.52 Therefore, since we have concluded that it is not properly specified in the Panel request, the 
Panel finds that the claim on the failure to revise the likelihood-of-injury de termination regarding the 
France Section 129 determination falls outside this Pa nel's terms of reference and thus we cannot rule 
on it.  
Other disputed new claims  
7.53 As regards the UK and Spain cases, the parties dispute whether the Panel should consider the 
European Communities' legal claims that challe nge the USDOC's alleged failure to adequately 
consider evidence in the likelihood-of-subsidizati on re-determination and the United States' alleged 
failure to reconsider the likeli hood-of-injury determination.   
7.54 We have already concluded in paragraph 7.18 above that the measures taken to comply in 
these proceedings are the affirmative likelihood-of-s ubsidization re-determinations.  We have also 
concluded in paragraphs 7.21 and 7.31 above that the measures ta ken to comply include the treatment 
of evidence by the USDOC and that the alleged failur e to re-determine the likelihood of injury is not 
an aspect of the measures taken to comply. 
7.55 A legal claim is properly before an Article 21. 5 panel if it challenges the measures taken to 
comply on the basis of inconsiste ncy with the covered agreements.266  A panel is thus not limited to 
the claims raised in the original proceedings.  In stead, as the Appellate Body has confirmed, Article 
21.5 panels can consider " new claims, arguments, and factual circumstances different from those 
raised in the original proceedings, beca use a 'measure taken to comply' may be inconsistent  with 
WTO obligations in ways different  from the original measure".  The Appellate Body explained that 
"an Article 21.5 panel could not pr operly carry out its mandate to asse ss whether a 'measure taken to 
comply' is  fully consistent   with WTO obligations if it were precluded from examining claims 
additional to, and different from, the clai ms raised in the original proceedings".267  Article 21.5 panels 
appear to have a broad mandate, a mandate almost ak in to the original panel, and thus can consider 
any properly-raised new claims regarding the measures taken to comply.   
7.56 A closer look at the Appellate Body’s reasoning, however, indicates that an Article 21.5 
panel's mandate is not as broad as it seems.  The Appe llate Body reasons that new claims should fall 
within the scope of an Article 21.5 panel's manda te because the measure taken to comply may be 
inconsistent with WTO obligations in ways different from the original measure.  The question before 
us here is whether this reasoning should also apply to new claims that allege that the measures taken 
to comply are inconsistent in ways identical  to the original measure and were not raised or resolved in 
the original proceedings.  The Appellate Body has stressed that the utility of Article 21.5 proceedings 
as an expedited verification of im plementation would be seriously unde rmined if a panel was limited 
to examining the measure taken to comply from the perspective of the claims, arguments, and facts in 
the original proceedings because an Article 21.5 pa nel would not be capable of examining fully the 
                                                      
265 Appellate Body Report on EC – Bananas III , para. 143 
266 EC – Bed Linen (Article 21.5 – India) , paras. 78-79. 
267 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 79 (emphasis in orgiinal); see also  
Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41; Appellate Body Report on  US – 
Shrimp (Article 21.5 – Malaysia), paras. 86-87.  WT/DS212/RW 
 Page 57 
 
 
 consistency of the measure taken to comply with the covered agreements.268  The question is whether 
this utility principle requires that all new claims must be considered by Article 21.5 panels, even if the 
claims regard unchanged aspects of the original meas ure and thus could have been raised, but were 
not, in the original proceedings. 
7.57 To determine which claims an Article 21.5 pa nel can consider, the Panel has followed the 
same analytical process as the Appellate Body in EC – Bed Linen (Article 21.5 – India)  by examining 
the facts and circumstances in previous Article 21.5 proceedings and by reviewing the Appellate 
Body's conclusions in those cases.   
7.58 In Canada – Aircraft (Article 21.5 – Brazil) , the Appellate Body examined whether an 
Article  21.5 panel could consider a new claim269 that challenges an aspect of the measure taken to 
comply which was not part  of the original measure and had not been, and could not have been, 
previously raised before the pa nel in the original proceedings.270  The Appellate Body explained that 
an Article 21.5 panel is not limited solely to ex amining whether the Member complied with the DSB 
recommendations and rulings, but rather must examin e the consistency of the new measure with the 
relevant provisions of the SCM Agreement .271  The Appellate Body, invoking the utility of Article 
21.5 proceedings, concluded that the panel theref ore should have considered Brazil's new claim.272   
7.59 In US – FSC (Article 21.5 – EC) , the Appellate Body upheld a ruling on a new claim 
challenging an aspect of the measure taken to comp ly that was a revision of the original measure.273  
Although neither the panel nor the Appellate Body explicitly considered the issue of whether an 
Article 21.5 panel can consider a new claim, both analysed the substance of the claim and made findings, which indicates that they believed the claim was properly before them.
274  As in Canada – 
Aircraft (Article 21.5 – Brazil) , the new claim in US – FSC (Article 21.5 – EC)  could not have been 
raised in the original panel pro ceedings because the allegedly inconsis tent aspect first appeared during 
the implementation process.  The same argument regarding the utility of Article 21.5 proceedings 
would therefore seem to apply.275   
                                                      
268 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41. 
269 In Canada – Aircraft (Article 21.5 – Brazil) , the Appellate Body refers to Brazil's claim as an 
"argument" when it is in fact a new claim.  Although Br azil challenged the same provision, Article 3.1(a) of the 
SCM Agreement , it alleged new grounds for the violation that render it a new claim.  See Appellate Body Report 
on Canada – Aircraft (Article 21.5 – Brazil) , paras. 27-31. 
270 In the original proceedings of Canada – Aircraft , the DSB adopted findings that a Canadian 
programme is inconsistent with Article 3.1(a) SCM on the grounds that the qualification for a subsidy 
programme is based on export performance and therefor e constitutes a prohibited export subsidy.  The DSB 
recommendations and rulings required Canada to withdr aw the inconsistent aspects of the programme, which 
Canada did.  Canada then revised the programme.   In the Article 21.5 proceedings, Brazil challenged the 
consistency of the revised programme with Article 3.1(a) SCM, arguing, inter alia,  that the revised programme 
was inconsistent with Article 3.1(a) SC M because it targeted the aircraft indu stry only because of the industry's 
export-orientation.  The Article 21.5 panel refused to consider the new claim, explaining that it was unrelated to 
the panel's reasoning in th e original proceedings and unrelated to the DSB recommendations and rulings.  The 
Appellate Body reversed.  Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , paras. 25, 27-28, 
33-34 and 42. 
271 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 40. 
272 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41. 
273 Appellate Body Report on US – FSC (Article 21.5 – EC) , para. 222.   
274 Panel Report on US – FSC (Article 21.5 – EC) , paras. 8.123-8.159; Appellate Body Report on US – 
FSC (Article 21.5 – EC) , paras. 197-222.  Compare Panel Report on US – FSC , para. 3.2 (including no claim on 
Article III:4 of GATT 1994 ) with Panel Report on US – FSC (Article 21.5 – EC) , para. 3.1 (including a claim on 
Article III:4 of GATT 1994 ). 
275 See Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41. WT/DS212/RW 
Page 58  
 
 7.60 In EC – Bed Linen (Article 21.5 – India) , which both parties cited repeatedly, the Appellate 
Body examined whether an Article  21.5 panel could consider the same  claim raised in the original 
proceeding challenging an aspect of the measure taken to comply that was unchanged from the 
original measure and had been previously dismisse d by the panel in the original proceedings.  The 
parties have discussed extensivel y whether the circumstances in EC – Bed Linen (Ar ticle 21.5 – India)  
are similar to this dispute.   
7.61 In EC – Bed Linen (Article 21.5 – India) , India raised a claim regarding an aspect of the 
measure taken to comply that was unchanged from the original measure: the European Communities' 
evaluation of the relevance of "other factors" in its  injury analysis.  The original panel had already 
considered the claim, found that India failed to estab lish a prima facie case, and dismissed the claim.  
India never appealed the finding.  By adopting the panel and Appellate Body reports, the DSB 
effectively resolved this issue.  The Article 21. 5 panel therefore concluded that India was precluded 
from raising an issue that had already been decided.
276 
7.62 India appealed, asserting that the new measure  before the Article 21.5 panel should be 
considered as a whole and not separated into elemen ts.  India argued that given the revised dumping 
and injury findings, the European  Communities also had to re-examine the “other factors” analysis.277  
After analyzing the re-determination, the Appellate Body found that the investigating authorities were 
required to change some aspects of the original determination, but not others.  Thus, while the 
causation analysis was a new aspect of the measure  taken to comply with the DSB recommendations 
and rulings, the “other factors” analysis remained  unchanged from the original determination.  The 
Appellate Body affirmed the panel's finding, explaining that the unchanged aspects were not 
inseparable elements of the measure taken to comply.278 
7.63 The Appellate Body upheld the Article 21.5 pa nel's finding that a claim which was "disposed 
of" by the original panel and not appealed was out side its terms of reference.  The Appellate Body 
explained that based on other provisions of the DSU, namely Articles 16.4, 19.1, 21.1, 21.3 and 22.1, 
"an unappealed finding included in a panel report that is adopted by the DSB must be treated as a 
final resolution to a dispute between the pa rties in respect of the particular claim and the specific 
component of a measure that is the subject of that claim."  This occurs, it sai d, "in the same way and 
with the same finality as a finding included in an Appellate Body Report adopted by the DSB".279   
                                                      
276 Panel Report on EC – Bed Linen (Article 21.5 – India) , para. 6.53; see Appellate Body Report on 
EC – Bed Linen (Article 21.5 – India) , para. 75. 
277 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , paras. 75, 82. 
278 Appellate Body Report on EC – Bed Linen (Article 21.5 – India) , para. 86. 
279 In particular, the Appellate Body reasoned as follows: 
 "... an  unappealed  finding included in a panel report that is  adopted  by the DSB must be 
treated as a  final resolution  to a dispute between the parties in respect of the  particular   
claim and the  specific  component of a measure that is the subject of that claim.  This 
conclusion is supported by Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and 
Article 22.1 of the DSU.  Where a panel conc ludes that a measure is inconsistent with a 
covered agreement, that panel shall  recommend , according to Article 19.1, that the Member 
concerned bring that measure into conformity with that agreement.  A panel report, including 
the  recommendations  contained therein, shall be  adopted   by the DSB within the time period 
specified in Article 16.4 – unle ss appealed.  Members are to  comply  with recommendations 
and rulings  adopted  by the DSB promptly, or within a reasonable period of time, in 
accordance with paragraphs 1 and 3 of Article  21 of the DSU.  A Member that does not 
comply with the recommendations and rulings adopted by the DSB within these time periods must face the consequences set out in Article 22.1, relating to compensation and suspension of 
concessions.  Thus, a reading of Articles 16.4 and 19.1, paragraphs 1 and 3 of Article 21, and 
Article 22.1, taken together, makes it abundantly clear that a panel finding which is not  WT/DS212/RW 
 Page 59 
 
 
 7.64 This analysis of the Appellate Body decisions l eads us to conclude that an Article 21.5 panel 
can consider a new claim on an aspect of the meas ure taken to comply that constitutes a new or 
revised element of the original measure, which clai m could not have been raised in the original 
proceedings.  This was the case in both Canada – Aircraft (Article 21.5 – Brazil)  and US – FSC 
(Article 21.5 – EC) .  On the other hand, an Article 21.5 pa nel cannot consider the same claim on an 
aspect of the measure taken to comply that is an  unchanged element of the original measure and was 
already challenged in the original proceedings and di smissed in an adopted report.  This was the case 
in both EC – Bed Linen (Article 21.5 – India)  and US – Shrimp (Article 21.5 – Malaysia) .280   
7.65 None of these Appellate Body reports explicitly  addresses the situation in this dispute:  
Contrary to EC – Bed Linen (Article 21.5 – India) , where the same claim was raised, the claims on 
treatment of evidence and likelihood of injury ra ised by the European Co mmunities are new claims, 
meaning claims that were not raised in the original proceedings.  Contrary to Canada – Aircraft 
(Article 21.5 – Brazil)  and US – FSC (Article 21.5 – EC) , although we are dealing with new claims, 
the new claims in this dispute refer to aspects of the original measure that were not changed by the 
United States during the implementation, although,  allegedly, they should have been changed. 
7.66 We will therefore examine whether these new claims fall within this Panel’s mandate. 
New claim on evidence 
7.67 As regards the claim on evidence, the parties differ on whether the claim concerns a changed 
or unchanged aspect of the original measure and whether it should have been raised during the 
original proceedings.  The United States argues that  the consideration of the evidence by the USDOC 
in the sunset review was not re vised in the UK and Spain Section 129 determinations and thus the 
claim on evidence regards an unchanged aspect of the or iginal measure.  The United States insists that 
the European Communities could have and should have raised this claim during the original 
proceedings.281  The European Communities counters that the measures taken to comply are based on 
new reasoning282 and on new factual findings283, and therefore the new claims refer to aspects of the 
original measures that were revised in the im plementation process.  The European Communities 
insists that it has raised " new claims concerning components of the new measures which were not part 
of the original measure and therefore were not and could not have been  before the Panel and 
Appellate Body in the proceedings arising from the original sunset determinations".284  The European 
Communities argues that it could not have raised the claim on the treatment of evidence in the original 
                                                                                                                                                                     
appealed, and which is included in a panel report  adopted   by the DSB, must be accepted by 
the parties as a  final  resolution to the dispute between them, in the same way and with the 
same finality as a finding included in an Appellate Body Report adopted by the DSB – with 
respect to the particular claim and the specific component of the measure that is the subject of the claim." 
 
Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 93. 
280 The United States seems to suggest that an Article 21.5 panel cannot consider a claim that the 
domestic  investigating authority considered and dismissed.  US First written submission, paras. 18-20.  The 
scope of an Article 21.5 panel's mandate, however, is only limited by a prior panel or Appellate Body decision, not by a decision of a Member's investigating authority.  
281 See US First written submission, paras. 16, 18-20; US Oral statement, paras. 5-6, 17-22; US 
Response to Panel question No. 1. 
282 EC Second written submission, paras. 14, 17. 
283 EC Second written submission, para. 18. 
284 EC Second written submission, para. 15. WT/DS212/RW 
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 proceedings because the legal and factual basis for the original affirmative sunset review 
determination are different from tho se of the Section 129 determination.
285   
7.68 The Panel considers the claim on evidence to be a new claim since it was not raised during the 
original proceedings.  Whether this new claim regards changed  or unchanged  aspects of the measures 
taken to comply is more complex.  At first si ght, the USDOC's treatment of the evidence in the 
measures taken to comply might appear to be unchange d if compared to the original sunset reviews.  
In the original sunset reviews, the USDOC found that respondents i.e. the European Communities and 
the national governments at issue, failed to pr ovide substantive eviden ce because there were no 
cooperating exporters/producers and thus the USDOC could not verify whether the benefit from some 
of the programmes at issue had been fully amortized.286  During the Section 129 proceedings, further 
                                                      
285 EC Second written submission, para. 4; EC Oral statement, para. 14. 
286 The USDOC concluded as follows:  
 
"The Department notes that, although the EC and GOUK assert that these programs have been 
terminated, as they involved sp ecific governmental action, and th at subsidization of the steel 
sector in the EU is strictly prohibited following the adoption of the EC Decision, the 
Department normally will determine that a countervailable subsidy will continue to exist 
where the benefit stream will continue beyond th e end of the sunset review.  Without evidence 
that some programs have been fully amortized, or participation in this review of a foreign 
producer/exporter, we determine that counterv ailable subsidy programs continue to confer 
benefits above de minimis , and that revocation of the countervailing duty order is likely to lead 
to continuation or recurrence of a countervailable subsidy."   
 Issues and Decision Memo for the Expedited Sunset Review of the Countervailing Duty Order on Cut-
to-Length Carbon Steel Plate from the United Kingdom; Final Results, p. 13 (7 April 2000) (Exhibit EC-6) 
("UK Sunset Review Issues and Decision Memo"); see also  Cut-to-Length Carbon St eel Plate From the United 
Kingdom; Final Results of Expedited Sunset Review of Countervailing Duty Order, 65 Fed. Reg. 18309 (7 April 
2000) (Exhibit US-4) ("UK Sunset  Review Final Results").   
 "Although the EC and GOUK  claim that some programs noted  above, in accordance with the 
EC Commission Decision, can no longer provide countervailable benefits to 
producers/exporters of subject merchandise, they did not provide substantive evidence to the Department with respect to the termination of these programs."   
UK Sunset Review Issues and Decision Memo, p. 16.   
 In the original Spain sunset review, the USDOC concluded in the same vain:  
 
"The Department notes that, although the EC and GOS assert that these programs have been 
terminated as they involved sp ecific governmental action and subs idization of the steel sector 
in the EU that it is strictly prohibited following the adoption of the EC Commission Decision, the Department normally will determine that a countervailable subsidy will continue to exist 
until it is fully amortized. Without evidence that the programs have been terminated, that the 
benefits from programs for which benefits are allocated over time will not continue beyond this sunset review, or participation in this revi ew of a foreign producer/exporter, we determine 
that revocation of the countervailing duty order is likely to lead to continuation or recurrence 
of a countervailable subsidy."    
Issues and Decision Memo for the Expedited Sunset Review of the Countervailing Duty Order on Cut-
to-Length Carbon Steel Plate from Spain; Final Results, pp. 13-14 (7 April 2000) (Exhibit EC-7) ("Spain Sunset Review Issues and Decision Memo"); see also  Cut-to-Length Carbon Steel Plat e From Spain; Final Results of 
Expedited Sunset Review of Countervailing Duty Order,  65 Fed. Reg. 18307, 18308 (7 April 2000) (Exhibit 
US-5) ("Spain Sunset Review Final Results"). 
 
"Although the EC and GOS claim that some programs, including Law 60/78 , the Royal 
Decree 878/8  and the 1984 Counsel of Minister's Meeting , no longer exist to provide  WT/DS212/RW 
 Page 61 
 
 
 to the USDOC's issuance of the draft determinati ons where the basis for th e affirmative likelihood-of-
subsidization had changed and was now subsidy programmes othe r than pre-privatization non-
recurring programmes, the respondents invoked the ev idence submitted during the sunset review plus, 
in the UK case, additional evidence regarding Glynwe d's sale of relevant production facilities.  The 
USDOC refused to consider the evidence in the Section 129 proceedings, stating that it was not 
reopening issues that were resolved in the sunset re view and were not found by the Appellate Body to 
be inconsistent with the SCM Agreement.287   
7.69 In this Panel's view, the relative importance of  the evidence concerning non-pre-privatization 
subsidies and Glynwed's sale of  relevant production facilities has changed  as a consequence of the 
new basis for the affirmative likelihood- of-subsidization re-determinations.  In Canada – Aircraft 
(Article 21.5 – Brazil) , the Appellate Body explained that an Article 21.5 panel should be able to 
consider new claims where "the relevant facts be aring upon the 'measure taken to comply' may be 
different from the relevant facts relating to the measure at issue in the original proceedings".288  In this 
dispute, the affirmative likeli hood-of-subsidization re-determinati ons are now based on different 
reasoning and different factual circumstances than tho se in the original sunset review.  As discussed 
in Sections VII.C and VII.D below, the affirmativ e likelihood-of-subsidizati on determination in the 
original sunset reviews rested only upon the con tinuation of the benefit from pre-privatization, non-
recurring subsidies, while the affirmative likelih ood-of-subsidization determination in the UK and 
Spain Section 129 determinations rested only upon subsidy programmes other than pre-privatization 
non-recurring programmes.  Thus, the weight given in the re-determination to the subsidy programmes to which the evidence relates is necessarily  different than in the original sunset review.  
In addition, the fact that new evidence w as submitted during the UK Section 129 proceedings
289 also 
indicates that this aspect of the measure taken to comply has changed  vis-à-vis  the original measure.  
We also note that in the UK Section 129 proceedings, Corus, one of the exporters/producers, cooperated during the Section 129 proceedings.  Th erefore, under these circumstances, we consider 
that the new claims on evidence refer to aspects of the measure taken to comply which have changed 
in respect of the original measure.   
7.70 In addition, the European Communities could not have meaningfully raised the treatment of 
evidence in the original proceedi ngs because the basis for the affi rmative likelihood-of-subsidization 
determination in the original sunset review was di fferent than that in the affirmative likelihood-of-
subsidization re-determination set out in the Sectio n 129 determinations.  Nevertheless, even if the 
                                                                                                                                                                    
 
countervailable benefits to producers/exporters of subject merchandise, they did not provide 
substantive evidence to the Department with resp ect to the termination of these programs."   
Spain Sunset Review Issues and Decision  Memo, p. 15 (emphasis in orgiinal). 
287 The USDOC concluded:  
 "The Department's duty, in rendering a determination in this case under section 129(b)(2) of 
the URAA, is not to reconduct the original sunset review in its totality, but to render it not 
inconsistent with the findings of the Appellate Body.  The Department has done this by determining that, based on the conclusions in the sunset review regarding Glynwed, an 
affirmative likelihood determination continues to be appropriate.  
The Department is not reopening issues in this determination that were resolved in the sunset review and were not found by the Appellate  Body to be inconsistent with the SCM 
Agreement.  The result, as explained above, is that we continue to find on an order-wide basis 
that revocation of the order would likely lead to the continuation or recurrence of a countervailable subsidy."   
 
UK Section 129 determination, footnote 208 above, p. 9.  The text of the Spain Section 129 
determination is similar.  Spain Section 129 determination, footnote 208 above, p. 6.   
288 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41. 
289 See EC Response to Panel question No. 43. WT/DS212/RW 
Page 62  
 
 European Communities could have raised a claim on  the USDOC's treatment of the evidence in the 
original proceedings, this would not affect the Pa nel's conclusion since the new claim challenges the 
treatment of the evidence in the Section 129 determin ations, which concerns an aspect of the measure 
taken to comply that has changed relative to the orig inal measure.  An Article 21.5 proceeding aims to 
ensure the effective resolution of disputes by prov iding the complaining Member with an expeditious 
procedure to challenge the implementation of th e DSB recommendations and rulings.  This Article 
21.5 Panel can therefore consider new claims arising from the implementation.
290   
7.71 When determining whether to consider a new claim, however, an Article 21.5 panel should 
also consider the impact on the parties' due process rights.  In this dispute, permitting the claims on 
the treatment of evidence does not unduly deprive the United States of its due process rights.  The 
United States itself introduced the issue of treatment of evidence by revising the entire likelihood-of-
subsidization determination and by changing the legal basis of the affirmative conclusion of 
likelihood of continuation or recurrence of subsid ization.  The United States therefore could have 
anticipated a claim on the USDOC's treatment of evid ence.  Accordingly, the Panel concludes that the 
European Communities' claim on evidence falls within this Panel's mandate. 
New claim on likelihood-of-injury 
7.72 The parties also dispute whether the Panel can  consider the claim on the failure to re-
determine the likelihood of continuation or r ecurrence of injury.  This claim is also a new claim.  
However, as found in paragraph 7.31 above, the likeli hood-of-injury determination is not an aspect of 
the measures taken to comply, but an aspect of th e original measures in the UK and Spain cases.  As 
explained above, the Appellate Body has ruled that  an Article 21.5 panel can only consider those 
claims relating to a measure taken to comply.291  Since this Panel has c oncluded in paragraph 7.31 
above that the failure to reconduct the likelihood-o f-injury determination is not an aspect of the 
measure taken to comply in the UK and Spain cases,  we cannot therefore consider the European 
Communities' claim on failure to reconsider likelihood of injury.   
7.73 Even if we were to consider that the likeli hood-of-injury analysis were an aspect of the 
measures taken to comply , we would nevertheless still concl ude that the European Communities' 
claim  on failure to reconsider likelihood of injury is not within our mandate.  The Appellate Body 
jurisprudence summarized in EC – Bed Linen (Article 21.5 – India)  seems to indicate that the 
European Communities is not precluded from raising claims that it did not raise in the original 
proceedings, provided that these claims concern the measures taken to comply and are included in the 
Panel request.  We recall that the Appellate Body’s reasoning for the inclusion of new claims in the 
scope of Article 21.5 proceedings was that "the 'measure taken to comply' may be  inconsistent   with 
WTO obligations in ways different from the original measure".292   The question here is whether this 
conclusion should also apply to new claims where the measure taken to  comply is unchanged from the 
original measure and thus allegedly inc onsistent with WTO obligations in ways identical to  (not 
different from ) the original measure.   
                                                      
290 Article 21.5 panels can consider " new claims, arguments, and factual circumstances different from 
those raised in the original proceedings, because a 'measure taken to comply' may be inconsistent  with WTO 
obligations in ways different from the original measure".  The Appellate Body explained that "an Article 21.5 
panel could not properly carry out its mandate to assess whether a 'measure taken to comply' is  fully consistent   
with WTO obligations if it were precluded from examining claims additional to, and different from, the claims raised in the original proceedings".  Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 79 
(emphasis in orgiinal).   
291 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 78. 
292 Appellate Body Report on EC – Bed Linen (Article 21.5) , para. 79. (emphasis added); see also  
Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 41; Appellate Body Report on  US – 
Shrimp (Article 21.5 – Malaysia), paras. 86-87.  WT/DS212/RW 
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 7.74 In this dispute, this Panel confronts the issue of whether to consider new claims on aspects of 
the original measure that are unchanged and were not challenged in the original proceedings.  The 
purpose of Article 21.5 is to provide an expeditio us procedure to establish whether a Member has 
properly implemented the DSB recommendations a nd rulings.  Admitting such a new claim would 
mean providing the European Communities with a sec ond chance to raise a claim that it failed to raise 
in the original proceedings.  The Appellate Body , however, has found that a party cannot cure the 
failure to include a claim in the panel request by  raising the claim in subsequent submissions or 
statements.293   
7.75 Moreover, the Panel is concerned that allowi ng a new claim on the likelihood-of-injury in the 
current proceedings may jeopardize the principles of  fundamental fairness and due process.  In our 
view, it would be unfair to expose the United States to  the possibility of a finding of violation on an 
aspect of the original measure that the United Stat es was entitled to assume w as consistent with its 
obligations under the relevant agreement given the ab sence of a finding of violation in the original 
report.294 
                                                      
293 In EC – Bananas III , the Appellate Body explained that:  
 
"Article 6.2 of the DSU requires that the claims , but not the arguments , must all be specified 
sufficiently in the request for the establishment of a panel in order to allow the defending party 
and any third parties to know the legal basis of the complaint.  If a claim  is not specified in the 
request for the establishment of a panel, then a faulty request cannot be subsequently 'cured' by a complaining party's argumentation in its first written submission to the panel or in any 
other submission or statement made later in the panel proceeding." 
 Appellate Body Report on EC – Bananas III , para. 143; see also  Appellate Body Report on Brazil – 
Desiccated Coconut , p. 22, DSR 1997:I, p. 167, at p. 186 (stating that a claim falls outside a panel's terms of 
reference unless it is identified in the document specifying the panel's terms of reference); Appellate Body Report on India – Patents (US) , para. 88 (emphasizing the difference between the claims, which must be 
included in the request for establishment as they estab lish the panel's terms of reference, and the arguments, 
which are set out and clarified in th e written submissions and oral statements throughout the panel proceedings). 
294 The Panel notes that in EC – Bed Linen (Article 21.5 – India) , the panel  explained that, in such a 
situation, a defending Member would not have the opportunity to bring the measure into conformity.  Panel 
Report on EC – Bed Linen (Article 21.5 – India) , para. 6.40.  Indeed, there is no provision for a "reasonable 
period" to implement the ruling in an Article 21.5 dispute.  Thus, an Article 21.5 panel ruling on such a new 
claim may immediately give rise to rights for compensa tion or suspension of concessions under Article 22 DSU.  
Moreover, the parties do not have the same opportunity to present evidence and arguments in Article 21.5 
proceedings.   
 The circumstances of the present case illustrate the potential procedural unfairness.  The European 
Communities did not agree that the United States could submit consecutive rebuttals and required that the 
rebuttals be simultaneous.  Therefore, the United Stat es could only rebut the arguments in the European 
Communities' Second written submission during the sole m eeting with the parties.  Consequently, important 
facts and issues continued to surface quite late into the Article 21.5 proc eedings, proceedings that are already 
abbreviated.  In addition, we note that the record of the original proceedings does not even include evidence regarding the likelihood-of-injury determinations which, as noted above, were made by a different agency than 
the likelihood-of-subsidization determinations at issue in the original dispute.  Thus, were we to consider the 
injury claim as within our mandate, we would have an extremely limited evidentiary basis on which to rule.  Finally, the shorter timeline significantly limits both the pa nel's opportunity to interact with the parties and the 
panel's time to deliberate.  The panel typically has only one opportunity to meet with the parties, unlike the 
normal proceedings where two subs tantive meetings take place.   WT/DS212/RW 
Page 64  
 
 7.76 In sum, permitting the European Communities to  introduce a new claim on an aspect of the 
original measure that was never challenged and re mained unchanged raises serious issues regarding 
the United States' due process rights.  On balance, the utility of an Article 21.5 proceeding should not 
override the basic due process rights of the parties to a dispute.
295 
Conclusion  
7.77 The Panel therefore concludes that the Europ ean Communities' claims on the failure to re-
determine the likelihood of continuation or r ecurrence of injury in the three Section 129 
determinations are not properly be fore this Panel.  The Panel al so concludes that the European 
Communities' claims on evidence are properly before this Panel. 
2. Standard of review 
7.78 The standard of review applicable to SCM Agreement -related disputes is the general 
"objective assessment" standard of Article 11 of the DSU .  In EC – Hormones , the Appellate Body 
clarified that "the applicable standard [pur suant to Article 11 of the DSU] is neither de novo review as 
such, nor 'total deference', but rather the 'objective assessment of the facts'".296   
7.79 In US – Cotton Yarn , the Appellate Body indicated that its Reports in Argentina – Footwear 
(EC) , US – Lamb and US – Wheat Gluten , all concerning disputes under the  Agreement on 
Safeguards , "spell out key elements of a panel's st andard of review under Article 11 of the DSU  in 
assessing whether the competent authorities complie d with their obligations in making their 
determinations".  The Appellate Body stated: 
"This standard may be summarized as follo ws:  panels must examine whether the 
competent authority has evaluated all relevant factors;  they must assess whether the 
competent authority has examined all th e pertinent facts and assessed whether an 
adequate explanation has been provided as to how those facts support the determination;  and they must also c onsider whether the competent authority's 
explanation addresses fully the nature and co mplexities of the data and responds to 
other plausible interpretations of the data .  However, panels must not conduct a  de 
novo  review of the evidence nor substitute thei r judgement for that of the competent 
authority."
297 
7.80 Precisely, in the context of the analysis of Us inor's privatization, we note that the United 
States, with reference to the Appellate Body Report in US – Cotton Yarn , argues that the Panel’s task 
under Article 11 of the DSU  is not to determine whether the privatization was at arm’s-length or for 
FMV, but rather whether the USDOC properly esta blished the facts and evaluated them in an 
unbiased and objective way.  "Put differently, the Pane l’s task is to determine whether a reasonable, 
                                                      
295 As indicated by the Panel in  EC – Bed Linen (Article 21.5 – India) :  
 
"[s]uch an outcome would not seem to be consistent with the overall object and purpose of the 
DSU to achieve satisfactory resolution of disp utes, effective functioning of the WTO, to 
maintain a proper balance between  the rights and obligations of Members, and to ensure that 
benefits accruing to any Member under covered ag reements are not to nu llified or impaired."  
 Panel Report on EC – Bed Linen (Article 21.5 – India) , para. 6.40. 
296 Appellate Body Report on EC – Hormones , para 117. 
297 Appellate Body Report on US – Cotton Yarn , para. 74.  WT/DS212/RW 
 Page 65 
 
 
 unbiased person, looking at the same evidentiary record as [the USDOC], could have – not would 
have – reached the same conclusions."298 
7.81 The Panel notes that several panels and the A ppellate Body have addressed the scope of a 
panels' task in the specific context of sunset re views.  Most of these disputes concerned the anti-
dumping sunset review provision under Article 11.3 of the  Anti-Dumping Agreement .  We note that 
the Appellate Body has considered that its interpretation of Article 21.3 of the SCM Agreement  
applies mutatis mutandis to Article 11.3 of the Anti-Dumping Agreement  due to the provisions’ 
(almost) identical wording.299  We also note that the Declaration on Dispute Settlement Pursuant to 
the Agreement on Implementation of Article VI of  the General Agreement on Tariffs and Trade 1994 
or Part V of the Agreement on Subsidies and Countervailing Measures recognizes "the need for the 
consistent resolution of disputes from an ti-dumping and countervailing duty measures".300  O n  t h i s  
basis, the Panel considers that the following d escription of a panel’s task in considering the 
investigating authorities' behaviour, even if refe rring to anti-dumping sunset reviews, should also 
apply to sunset reviews under the SCM Agreement .  
7.82 In this respect, the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews cited 
with approval the panel's description of the investig ating authority's duties in an anti-dumping sunset 
review in US – Corrosion-Resistant Steel Sunset Review . 301  According to this description, Article 
11.3 of the  Anti-Dumping Agreement  imposes an obligation on the investigating authority to make a 
determination on the basis of positive evidence and w ith sufficient factual basis to allow it to draw 
reasoned and adequate conclusions concerning the likelihood of such continuation or recurrence.302  
The Appellate Body concluded that a panel must eval uate the investigating authority's sunset review 
determination in light of that obligation and asses whether the investigating authorities properly 
established the facts and evaluated them in an unbiased and objective manner:  
"These obligations of investigating authoriti es inform the task of a panel called upon 
to evaluate the consistency of an inv estigating authority's determination with 
                                                      
298 US First written submission, para. 25. 
299 In US – Corrosion-Resistant Steel Sunset Review , the Appellate Body stated:  
 "Article  11.3 is textually identical to Article 21.3 of the SCM Agreement , except that, in 
Article 21.3, the word 'countervailing' is used in  place of the word 'anti- dumping' a nd the word 
'subsidization' is used in place of the word ' dumping'.  Given the parallel wording of these two 
articles, we believe that the explanation, in our Report in  US – Carbon Steel,  of the nature of 
the sunset review provision in the  SCM Agreement  also serves, mutatis mutandis , as an apt 
description of Article 11.3 of the  Anti-Dumping Agreement .  (Appellate Body Report on  US 
– Carbon Steel , paras. 63 and 88)."  
 
Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 104, footnote 114. 
300 We note that, in US – Softwood Lumber VI , the panel was called on to consider a case involving a 
single injury determination with respect to both subsidized and dumped imports.  The claims therefore involved identical or almost identical provisions of the SCM Agreement  and the Anti-Dumping Agreement .  The panel 
concluded that given its understanding of the applicable standards of review under Article 11 of the DSU and 
Article 17.6 of the Anti-Dumping Agreement , it nonetheless did not consider that it was either necessary or 
appropriate to conduct separate analys es of the injury determination under the two agreements.  In arriving to 
this conclusion, the panel relied on the Declaration on Dispute Settlement Pursuant to the Agreement on 
Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement 
on Subsidies and Countervailing Measures .  Panel Report on US – Softwood Lumber VI , para. 7.18. 
301 Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews , paras. 179, 321.  In US 
– Corrosion-Resistant Steel Sunset Review , the Appellate Body considered that the "Panel's description of the 
obligations of investigating authorities in conducting a su nset review closely resembles our own, and we agree 
with it".  Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 115. 
302 Panel Report on US – Corrosion-Resistant Steel Sunset Review , para. 7.271.   WT/DS212/RW 
Page 66  
 
 Article 11.3 of the  Anti-Dumping Agreement .  The task of the panel is to assess 
whether the investigating authorities prope rly established the facts and evaluated 
them in an unbiased and objective manner.
303  We agree with the Panel that '[its] task 
[was] not to perform a  de novo  review of the informati on and evidence on the record 
of the underlying sunset review, nor to subs titute [its] judgment for that of the US 
authorities'.304  If the panel is satisfied that an investigating authority's determination 
on continuation or recurrence of dumping or injury rests upon a sufficient factual basis to allow it to draw reasoned and ade quate conclusions, it should conclude that 
the determination at issue is not inc onsistent with Article 11.3 of the  Anti-Dumping 
Agreement .
305"306 
7.83 We shall therefore apply the above standard of review when evaluating the affirmative 
likelihood-of-subsidization re-determinations at issue in these proceedings. 
3. Burden of proof 
7.84 The Appellate Body summarised its prio r findings on the burden of proof in US – Wool Shirts 
and Blouses , indicating that the burden of proof rests upon the party, whether complaining or 
defending, who asserts the affirmative of a particular  claim or defence.  If that party adduces evidence 
sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, 
who will fail unless it adduces sufficient evidence to rebut the presumption.307 
7.85 The Appellate Body also specifically considered the application of the burden of proof in the 
context of an Article 21.5 proceeding.  In Canada – Aircraft (Article 21.5 – Brazil) , it ruled that the 
examination of "measures taken to comply" must be based on the relevant facts proved by the 
complainant to the Article 21.5 panel during the panel proceedings.308  In its sister case, Brazil – 
Aircraft (Article 21.5 – Canada) , the Appellate Body confirmed that the fact that the measure at issue 
was 'taken to comply' with the 'recommendations an d rulings' of the DSB does not alter the allocation 
of the burden of proving a defence.309  
7.86 In determinations on subsidization, we r ecall that in the original proceedings in US – 
Countervailing Measures on Certain EC Products , the Appellate Body found that, when the 
investigating authority determines that a privati zation has taken place at arm's length and for FMV, 
the investigating authority has the burden to prove that the benefit still passed through to the 
privatized producer: 
"We understand the Panel to be stating that privatization at arm's length and for fair 
market value privatization  presumptively  extinguishes any benefit received from the 
non-recurring financial contribution bestowed upon a state-owned firm.  The effect of 
                                                      
303 (footnote original ) Anti-Dumping Agreement , Article 17.6(i). 
304 (footnote original ) Panel Report, para. 7.5. 
305 (footnote original ) There are analogies between this description of the panel's task and what the 
Appellate Body stated in  US – Lamb   in the context of the application of safeguard measures.  In that case, the 
Appellate Body recalled that the applicable standard is neither  de novo  review, nor total deference, but rather 
the objective assessment of the fact s. (Appellate Body Report on US – Lamb , para. 101)  The Appellate Body 
went on to state that "[f]irst, a panel must review whether competent authorities have evaluated  all relevant 
factors ,  and, second, a panel must review whether the authorities have provided a   reasoned and adequate 
explanation  of how the facts support their determination." ( Ibid., para. 103) (original emphasis; footnote 
omitted) 
306 Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews , para. 322. 
307 Appellate Body Report on US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p. 323, at p. 335. 
308 Appellate Body Report on Canada – Aircraft (Article 21.5 – Brazil) , para. 38.  
309 Appellate Body Report on Brazil – Aircraft (Article 21.5 – Canada) , para. 66.  WT/DS212/RW 
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 such a privatization is to shift to the inv estigating authority the burden of identifying 
evidence which establishes that the benefit from the previous financial contribution 
does indeed continue beyond privatization.  In the absence of such proof, the fact of 
the arm's-length, fair market value privati zation is sufficient to compel a conclusion 
that the 'benefit' no longer exists for th e privatized firm, and, therefore, that 
countervailing duties should not be levied.  Th is is an accurate characterization of a 
Member's obligations under the  SCM Agreement . 
... Privatization at arm's length and for fair market value may  result in extinguishing 
the benefit.  Indeed, we find that there is a rebuttable presumption that a benefit ceases to exist after such a privatization.  Nevertheless, it does not  necessarily  do so.  
There is no inflexible rule  requiring  that investigating authorities, in future cases, 
 automatically  determine that a 'benefit' derive d from pre-privatization financial 
contributions expires following privatization at  arm's length and for fair market value.  
It depends on the facts of each case." 
310 
4. Panel's approach 
7.87 Having concluded that the measures taken to comply in these proceedings are the affirmative 
likelihood-of-subsidization re-determinations set out in  the three Section 129 determinations at issue, 
we will address the claims raised by the Europ ean Communities concerning each of these three re-
determinations. 
B. CERTAIN CORROSION -RESISTANT CARBON STEEL FLAT PRODUCTS FROM FRANCE  
1. Background 
7.88 On 8 January 2003, the DSB adopted the origin al panel and Appellate Body Reports.  The 
Panel found that the sunset  review determination on Certain Corrosion-Resistant Carbon Steel Flat 
Products from France  (C-427-810) (Case No. 9), which was based on the so-called gamma 
methodology, was inconsistent with the SCM Agreement , since the USDOC did not examine whether 
the privatization, that occurred after the origin al imposition of countervailing duties, was at arm's 
length and for FMV and had failed to  determine whether the privatized producer received any benefit 
from the financial contributions previously b estowed on the state-owned producer.  The Panel 
considered that by failing to determine the likelihood of continuation or recurrence of a subsidization, 
prior to its decision to maintain countervailing duti es, the United States had violated Articles 14, 19.4, 
21.1 and 21.3 of the SCM Agreement , which prohibit a Member, pursuant to a sunset review, from 
maintaining countervailing duties where there has not been any determination of likelihood of 
continuation or recurrence of subsid ization and thus of a continued need for countervailing duties.  It 
also concluded that, since the United States had maintained countervailing duties that were 
inconsistent with Articles 14, 19.4, 21.1 and 21.3 of the SCM Agreement , it had also violated Article 
10 of the SCM Agreement  which requires that countervailing duties be imposed or maintained 
consistently with the SCM Agreement .311  The Appellate Body upheld these Panel findings.312 
7.89 Following the adoption of the Panel and Appe llate Body Reports by the DSB, the USDOC 
published a new privatization methodology ("Modifica tion Notice"), which is not being challenged by 
the European Communities in these proceedings.313  The USDOC also reviewed its determination of 
                                                      
310 Appellate Body Report on US – Countervailing Measures on Certain EC Products , paras. 126-127. 
311 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.1(c). 
312 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 161(a). 
313 The new privatization methodology includes a "baseline presumption" that non-recurring subsidies 
benefit the recipient over a period of time, usually th e average useful life of the recipient's assets, and are WT/DS212/RW 
Page 68  
 
 the likelihood of continuation or recurrence of subsid ization contained in the original sunset review, 
which had been found to be inconsistent with the SCM Agreement  and the GATT 1994 .  Accordingly, 
the USDOC issued its Issues and Decision Memorandum for the Section 129 Determination: 
Corrosion-Resistant Carbon Steel Flat Products fr om France; Final Results of Expedited Sunset 
Review of Countervailing Duty Order  of 23 October 2003 ("France Section 129 determination").
314   
7.90 In the France Section 129 determination, the USDOC applied its new privatization 
methodology to Usinor's privatization.  Accord ing to the France Section 129 determination, the 
Government of France ("GOF") incrementally priva tized Usinor over a three-year period (July 1995-
August 1998).  Prior to the privatization, the GOF wholly owned Usinor, holding 80 per cent directly 
and 20 per cent through the government-controlled Créd it Lyonnais (or later, its division, Clindus).315  
In effectuating the privatization, the GOF issued four  types of share offerings to four different classes 
of purchasers: 1) French resident nationals a nd European Communities or European Economic Area 
nationals in France ("French public offering"); 2) current and qualifying former employees of Usinor 
throughout the world ("employee/former employee offering"); 3) stable shareholders comprising 
various institutional investors, both public and priv ate ("stable shareholder offering"); and 4) the 
general public in the French and international fina ncial markets ("internati onal offering").  The GOF 
subjected the four types of share offerings to different restrictions.316 
                                                                                                                                                                     
therefore allocable over that period of  time, i.e. the allocation period.  With an adequate showing, however, the 
recipient of the subsidy can rebut this baseline presumption and demonstrate that a privatization extinguished all 
pre-sale benefits.  To do so, the recipient must prove th at the government sold "all or substantially all" of its 
assets during the allocation period; that the government retains no control over the privatized company or its assets; and that the sale was at arm's length and for FMV.  In determining whether the sale was at arm's length, 
USDOC follows the definition of "arm's length" provided in the Statement of Administrative Action.  
Specifically, USDOC examines whether the "transaction [w as] negotiated between unrelated parties, each acting 
in its own interest, or between related parties such that the terms of the transaction are those that would exist if 
the transaction had been negotiated between unrelated parties."  Modification Notice, footnote 206 above, 
p. 37127 ( quoting  SAA, footnote 243 above, p. 258). 
 
In determining whether the sale was for FMV, the USDOC asks whether the purchaser(s) paid "the full 
amount that the company or its assets (including the value of any subsidy benefits) were actually worth under the prevailing market conditions."  Payment can be through either monetary or equivalent compensation.  As 
part of this analysis, the USDOC examines "whether the government, in its capacity as  seller, acted in a manner 
consistent with the normal sales practices of private, co mmercial sellers in that country."  A primary indicator of 
"acting in a manner consistent with the normal sales practice" is whether the government maximized its return 
on the sale.  To ascertain whether a government maximized its return, the USDOC considers information on the 
sale process and any comparable benchmark prices.  Th e USDOC also analyzes a non -exhaustive list of factors: 
whether the government conducted an objective analysis of  appropriate sale price; wh ether artificial barriers to 
entry exist, i.e. placing unreasonably burdensome requi rements in bidding; whether the government accepted the 
highest bid; and whether the government required a comm itted investment, i.e. offered inducement in exchange 
for promise of future investment.  
 Finally, if the recipient establishes that the priv atization occurred at arm's length and for FMV, the 
injured party can still prove the benefit was not extinguished by showing that broader market conditions were 
not present or were distorted by the government.  To do so, the injured party must either demonstrate the absence of basic conditions for a properly functioning ma rket or the existence of legal/fiscal incentives that 
distort terms of sale.  Modification Notice, footnote 206 above, pp. 37127-37128. 
314 France Section 129 determination, footnote 208 above. 
315 France Section 129 determination, footnote 208 above, p. 3. 
316 International Offering Prospectus for Usinor Privatisation, pp. 21-24, 84-86 (Exhibit EC-8) ("Usinor 
Prospectus"); Order of the French Minister of Economic Affairs and Finance: Order of June 26, 1995 Whereby Terms for the Privatization of Usinor-Sacilor Are Defi ned (26 June 1995) (Exhibit EC-10) ("Order Defining 
Terms for the Usinor Privatization").  A table describing the different conditions and restrictions attached to 
each of the four share offerings is included in paragr aph 7.150 below.  WT/DS212/RW 
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 7.91 According to the France Section 129 determinati on, by the end of 1995, private shareholders 
held the majority of shares with over 75 per cent.  The GOF and Clindus had reduced their holdings to 
9.8 per cent and 2.5 per cent, respectively.  Stable shareholders held 15.8 per cent.  Of those stable 
shareholders, three were directly or indirectly go vernment-controlled ("public stable shareholders").  
Usinor employees held only 3.55 per cent.317 
7.92 Also according to the France Section 129 determ ination, the USDOC stated that in January 
1997, the GOF delivered approximately 1.2 per cent of total Usinor shares to French individual shareholders and employees who ha d complied with the share restrictions.  In October 1997, the GOF 
sold another approximately 7.7 per cent of tota l Usinor shares.  By year-end 1997, private 
shareholders held over 85 per cent  of total Usinor shares.  The GOF held 0.93 per cent directly.  
"Clindus and the public stable shareholders rema ined unchanged at 2.5 per cent and 10.1 per cent, 
respectively".
318  Usinor employees held 5.16 per cent.319  In August 1998, the GOF completed the 
privatization by delivering the remaining 0.93 per cent to shareholders as free shares.  The GOF no 
longer held any direct ownership in Usinor.320 
7.93 After analysing Usinor's privatization in the France Section 129 determination, the USDOC 
found that the privatization of Usinor was at ar m’s length and for FMV with the exception of the 
employee/former employee offering, which constituted 5.16 per cent of the sale.  The USDOC therefore reaffirmed the affi rmative likelihood determination  in its original sunset review, indicating 
that "[t]he sale of shares to Usinor employees at  prices below fair market value did not extinguish 
certain allocable, nonrecurring, pre-privatization subsidies that continue at an above de minimis rate 
beyond the original sunset review".
321  The USDOC affirmed its orig inal likelihood-of-subsidization 
determination, which reported the net countervailable subsidy rate lik ely to prevail upon revocation of 
the order as an ad valorem  country-wide countervailing dut y rate of 15.13 per cent.322  
                                                      
317 France Section 129 determination, footnote 208 above, p. 3.  The Panel notes that the USDOC 
provided these values in its Section 129 determination and these values appear to add up to 106.65 per cent.  
The parties, however, do not dispute the precise per centa ges.  Therefore, the Panel considers it unnecessary to 
address this particular discrepancy.  
318 The Panel notes that it is unclear whether the public stable shareholders held 10.1 per cent of total 
shares or 10.1 per cent of the 15.8 per cent stable shareholder portion, which would be 1.6 per cent of total 
shares.  See France Section 129 determination, footnote 208 above, p. 3.  Again, as the parties do not dispute the 
precise per centages, the Panel considers it unnece ssary to address this particular discrepancy. 
319 France Section 129 determination, footnote 208 above, p. 3. 
320 France Section 129 determination, footnote 208 above, p. 3. 
321 France Section 129 determination, footnote 208 above, p. 12. 
322 France Section 129 determination, footnote 208 above, p. 16.  The Panel understands that the 
USDOC first issued a final determination in July 19 93, where the USDOC found countervailable subsidies to 
exist and determined the country-wide ad valorem  cash deposit rate to be 15.49 per cent.  Final Affirmative 
Countervailing Duty Determinations: Certain Steel Products From France, 58 Fed. Reg. 37304, 37314 (9 July 
1993).  We also note that the USDOC subsequently recalculated this cash deposit rate to correct ministerial 
errors before issuing the order in August 1993 to  countervail subsidies at the revised country-wide ad valorem  
cash deposit rate of 15.12 per cent.  Countervailing Duty Order and Amendment to Final Affirmative 
Countervailing Duty Determination: Certain Steel Pro ducts from France, 58 Fed. Reg. 43759, 43760-61 (17 
August 1993).  In April 2000, the USDOC published the final results of its sunset review and maintained the 
order based on its finding that the "revocation of the countervailing duty order would be likely to lead to 
continuation or recurrence of the subsidy".  Corrosion- Resistant Carbon Steel Flat Products from France; Final 
Results of Expedited Sunset Review of Countervailing Duty  Order, 65 Fed. Reg. 18063, 18064 (6 April 2000).  
In the Issues and Decision Memo, the USDOC explaine d that it was taking the cash deposit rate from the 
original investigation because that was the "only calcula ted rate that reflects the behaviour of exporters and 
foreign governments wit hout the discipline of an order or suspension  agreement in place".  Issues and Decision 
Memo for the Sunset Review of the Countervailing Du ty Order on Certain Corrosion-Resistant Carbon Steel 
Flat Products from France; Final Results, pp. 7-8 (6 April 2000).  We note that the countervailing duty rate WT/DS212/RW 
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 2. The measure taken to comply 
7.94 As concluded in paragraph 7.18 above, the measure taken to comply as regards Certain 
Corrosion-Resistant Carbon Steel Flat Products from France  is the affirmative likelihood-of-
subsidization re-determination set out in  the France Section 129 determination. 
3. The claims 
7.95 The European Communities clai ms that, by failing to revoke the countervailing duties on 
Certain Corrosion-Resistant Carbon Steel Flat Products from France , the United States failed to 
implement the DSB recommendations and acted inconsistently with its WTO obligations.
323  I n  
particular, the European Communities claims that the USDOC failed to properly determine whether 
the privatized French company Usinor continued to  receive any benefit from financial contributions 
previously bestowed on the state-owned producer.324  The European Communities, referring to the 
findings of this Panel and the Appellate Body in th e original proceedings, argues that, in determining 
the likelihood of continuation or recurrence of subs idization, a Member must determine whether the 
privatized producers received any benefit from the fina ncial contributions previously granted to state-
owned producers.  Where a privatization is at arm’ s length, for FMV and under conditions that did not 
seriously distort the market in which the privatiza tion occurred, it argues, there is a presumption that 
the benefit provided to the state-owned producer has been extinguished.  In its view, the privatized 
producers did not receive any such benefit following Us inor’s privatization, so that presumption is 
warranted and has not been rebutted.  In the alte rnative, the European Co mmunities also challenges 
the USDOC's maintenance of countervailing duties based on the France Section 129 determination on 
the grounds that the USDOC's finding that 5.16 per cent of the benefit passes through does not justify 
such a maintenance.325 
7.96 Accordingly, the European Comm unities requests that this Panel finds that the United States 
has failed to implement the recommendations and rulings  of the DSB and acted inconsistently with its 
obligations under Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  and Article VI:3 of the 
GATT 1994 .326 
7.97 The United States contests these allegations and re quests the Panel to affirm that the USDOC 
reasonably concluded that the sale of shares to Usinor’s employees was not at arm’s length or for FMV.  It argues that the Eur opean Communities has not demonstr ated that the USDOC erred in 
making that finding and in maintaining the duties on  those bases, and that therefore the Panel should 
reject the European Communities' claims.
327 
7.98 We recall that we have found in paragraph 7. 52 above that the European Communities' claim 
on the USDOC's alleged failure to revise the likelih ood-of-injury determina tion in this case does not 
fall within this Panel's terms of reference.  
                                                                                                                                                                     
likely to prevail in the sunset review is 15.13 per cent, which is 0.01 per cent higher than the rate provided in the 
amended final determination.  The USDOC explained that it revised the rate from the original investigation as a 
result of domestic court rulings.  Corrosion-Resistant Ca rbon Steel Flat Products from  France; Final Results of 
Expedited Sunset Review of Countervailing Duty Orde r, 65 Fed. Reg. 18063, 18064 (6 April 2000).   
323 EC First written submission, paras. 30, 46 and , 72; Second written submission, para. 50. 
324 EC Request for establishment, p. 2. 
325 EC First written submission, paras. 36. 
326 EC Request for establishment, p. 2;  EC Firs t Written submission, paras. 30, 46 and 72; Second 
written submission, para. 50. 
327 US Second written submission, para. 10.  WT/DS212/RW 
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 4. Whether the measure taken to comply is incons istent with Articles 10, 14, 19.4, 21.1 and 
21.3 of the SCM Agreement and Article VI:3 of the GATT 1994   
7.99 The European Communities claims that the USDOC failed to examine the conditions of 
Usinor's privatization and to determine whether Usinor continued to benefit from non-recurring, pre-
privatization subsidies.  This claim rests upon two main grounds:  First, the European Communities 
alleges that the USDOC wrongly app lied its new methodology to Usinor's  privatization by performing 
a segmented analysis instead of analysing the pr ivatization as a whole.  Second, the European 
Communities asserts that the USDOC did not prope rly evaluate whether the sales of shares to 
employees/former employees were at arm's length and for FMV.  In the alternative, the European 
Communities also challenges the maintenance of c ountervailing duties on the basis of a finding that 
5.16 per cent of the benefit passed through.328 
7.100  We shall examine these grounds one at the time.  We recall that, as explained in 
paragraph 7.79 above, the task of this Panel is to assess whether the USDOC properly established the 
facts and evaluated them in an unbiased and objectiv e manner.  In doing so, we are not to perform a 
de novo  review of the information and evidence on the r ecord of the determination, nor to substitute 
our judgement for that of the USDOC.   
(a) Whether the privatization analysis must be done for the whole company 
(i) Arguments of the parties 
7.101  The European Communities argues that when vi ewed in the context of the company as a 
whole, the privatization of Usinor occurred at arm's length and for FMV.329  The European 
Communities contends that the privatization of Usinor as a whole occurred at FMV because the 
average price paid for Usinor’s  shares exceeded the average price per share recognised by the 
Privatization Commission as necessary to recoup the value of the company and fell within the market-
clearing price range that the USDOC identified.330  The European Communities maintains that the 
United States should have therefore conclude d that because the privatization overall  was at FMV, no 
benefit from pre-existing non-recurring subsidies could be attributed to the newly privatized 
producer.331  In its First written submission, the Europ ean Communities emphasizes that regardless of 
the minimum value or the price paid within an in dividual share offering, "the total price paid for 
[XXX] shares in Usinor’s privatization was FF [XXX], for an average price of FF [XXX] per 
share".332  The European Communities argues that th e United States should have compared the 
market-clearing price range, FF 86 to FF 89, whic h the USDOC identified in the France Section 129 
determination333, with this actual average price per share obtained, instead of with the price per 
category of share offering as set out in the Usinor  prospectus.  The European Communities maintains 
that as a result of the comparison of the market-cl earing price range with this actual average price per 
share obtained, the USDOC would have been obliged to conclude that the entire privatization was for 
FMV. 
7.102  The European Communities asserts  that the USDOC's analysis constitutes a kind of “zeroing” 
because the USDOC considers that if one portion is so ld at less than FMV, a benefit for the company 
as a whole survives the transaction even if other portions  are sold at prices that ensure that the whole 
                                                      
328 EC First written submission, para. 32. 
329 EC First written submission, paras. 37-39;  EC Se cond written submission, paras. 30-36;  EC Oral 
statement, para. 5. 
330 EC First written submission, paras. 37-38;  EC Second written submission, para. 36. 
331 EC Oral Statement, para. 5. 
332 EC First written submission, para. 38.  The European Communities has asked the Panel to treat 
these figures as confidential information. 
333 France Section 129 determination, footnote 208 above, pp. 8-9. WT/DS212/RW 
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 transaction is for FMV.
334  In the European Communities’ view, although this Panel and the Appellate 
Body did not specify a methodology for determin ing under which circumstances a privatization has 
occurred at arm’s length and for FMV, these factors we re nevertheless discussed in the context of the 
privatization of the firm as a whole .335  The European Communities argues that the consistent finding 
made by this Panel was that what mattered w as whether the privatized producer, comprising the 
company and its owners, had received something for free.  It emphasizes that privatizations frequently 
involve the sale of shares to different groups of  persons at different prices.  Nonetheless, no 
suggestion was made that if one of the new owners  paid less than FMV, the whole transaction would 
be regarded as not occurring under FMV conditions.336     
7.103  The United States disagrees with the European  Communities and contends that nothing 
prevents the United States from conducting an analys is of four distinct categories of purchasers to 
determine whether Usinor was sold for FMV.  In  its view, the European Communities cannot oblige 
the USDOC to use an "average price" analysis.337  In fact, the United States emphasises that neither 
the DSB recommendations and rulings nor the SCM Agreement  prescribe a particular methodology for 
analysing a privatization.338  The United States therefore contends that it is within a Member’s 
discretion to develop a "reasonable" methodology.339   
7.104  The United States also argues that the Eu ropean Communities’ averaging methodology 
insufficiently incorporates the arm’s length and FM V analyses.  Specifically, the United States argues 
that the averaging of share values ignores the arm’s length issue and treats FMV as a purely 
quantitative analysis.  The United States insists that the USDOC’s FMV analysis is not purely 
quantitative, but instead encompass es several “process-oriented” factors, e.g. limitations on the 
purchaser pool and the nature of the bidding process.340  In the United States' view, if a portion of the 
company was not sold at arm's length and for FMV, logically, the benefit from a non-recurring 
subsidy remains countervailable.341  The United States asserts that the rationale of the panel's finding 
is that pre-privatization subsidies are extinguished  where the privatized producer receives nothing "for 
free".  Therefore, it argues, to the extent that a portion of the company was sold for less than FMV, 
the privatized producer received something "for free".  If the entire privatization is not arm’s-
length/FMV, then all  of the benefit from allocable, pre-priva tization subsidies remains countervailable 
(except to the extent that it has already been countervailed).342  Where only a portion of the company 
is not sold in an arm’s-length/FMV transaction, it follows that only a corresponding portion of the 
benefit remains countervailable.343  In this case, the Usinor employees did not pay FMV for the 
preferential shares and therefore, Usinor received something “for free” and that corresponding portion 
of the pre-privatization benefit continues.344     
(ii) Evaluation by the Panel 
7.105  The European Communities challenges the United States' "segmented" analysis of Usinor's 
privatization.  It argues that the USDOC should ha ve examined Usinor's privatization as a whole 
because the segmented analysis does not take into account the fact that FMV was paid for the whole 
                                                      
334 EC Oral Statement, para. 5. 
335 EC Second written submission, paras. 30-33. 
336 EC Oral Statement, para. 6. 
337 US First written submission, paras. 29, 33; US  Second written submission, para. 5; US Oral 
statement, para. 27. 
338 US Oral statement, para. 27. 
339 US First written submission, paras. 28-29. 
340 US Oral statement, para. 28. 
341 US First written submission, para. 3; US Oral statement, paras. 25-26. 
342 US Oral Statement, para. 25. 
343 US Oral Statement, para. 26. 
344 US First written submission, para. 32 ; US Oral statement, paras. 26.   WT/DS212/RW 
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 of the company.345  For the European Commun ities, because the average price per share obtained falls 
within the range of market-clearing prices, th e USDOC should have concluded that the entire 
privatization occurred for FMV.346  The United States disagrees a nd justifies its "segmented" 
methodology on the grounds that both the selling methods and the price of the shares were different for each category of share offering.
347  It also argues that the Eu ropean Communiti es’ averaging 
methodology ignores the arm’s-length issue and trea ts FMV as a purely quantitative analysis.  The 
                                                      
345 EC First written submission, para. 37; EC Second written submission, paras. 35-36.  Regarding the 
privatization as a whole, the European Communities also argued that the USDOC had already found in two prior 
domestic remand determinations that the very same privatization of Usinor was at arm's length and for FMV and 
that, therefore, the benefits conferred by the pre-priva tization subsidies had been extinguished.  EC First written 
submission, para. 12, footnote 19; EC Second written submission, para. 37; see Results of Redetermination 
Pursuant to Court Remand, GTS Industries S.A. v. United States , No. 00-03-00118, Remand Order (Ct. Int'l. 
Trade, 4 January 2002) (Exhibit US-1); Results of Redetermination Pursuant to Court Remand, Alleghany 
Ludlum Corp., et al v. United States , No. 99-09-00566, Remand Order (Ct. Int'l. Trade, 4 January 2002) (Exhibit 
US-2).  The European Communities also referred to th e Panel and Appellate Body's findings not contested by 
the United States whereby "the sales [i.e., all the priva tizations] were at arm's lengt h and for FMV." EC Second 
written submission, para. 37; see Appellate Body Report on US – Countervailing Measures on Certain EC 
Products , para. 84. 
 
The United States countered that the prior remand determinations are inapposite since they apply a 
methodology that was found to be inconsistent with the covered agreements.  US  Second written submission, 
paras. 6-7.  The United States also insists that it made no admissions as to the conditions of sale surrounding 
these privatizations in the underlying procee dings.  US Oral statement, para. 29.   
 In the Comments to the France Section 129 determin ation, the USDOC actually  addresses the issue of 
the two remand determinations and disagrees with the respondent's contentions regarding the relevance of these 
precedents.  The USDOC explains that it did not consider in those determinations whether the sale was at arm's length or whether the broader market conditions were distorted.  Moreover, the USDOC never found that all 
four share offerings were at arm's length and for FMV.   In fact, the USDOC foun d that the employee share 
offering was restricted  and served to limit potential purchasers, and that Usinor employees paid less than full 
FMV.  In addition, the USDOC also states that both Stainless Remand and CTL Remand were under review by 
the Court of Appeals for the Federal Circuit at the time and therefore do not constitute a final and conclusive 
decision regarding the legality of the change-in-ownership methodology used by the USDOC in those cases.  France Section 129 determination, footnote 208 above, p. 14.   
 
The Panel notes that, in those remand investigations, the USDOC was applying the same person 
methodology, which this Panel found inconsistent with the SCM Agreement  in the original proceedings.  As the 
Panel explained at the time, the same person methodology presented a different legal issue, i.e. whether the pre-privatized and the privatized companies were the same person.  By applying this methodology, the USDOC did 
not consider whether the privatization of Usinor was at arm's length and for FMV, it just found that, because the 
state-owned Usinor and the privatized Usinor were not the same person, the benefit received by the state-owned Usinor did not pass through to the employees.   
346 EC First written submission, para. 38; EC Comment on US response to Panel question No. 32. 
 A third-party to these proceedings suggests that the approach taken by the USDOC may be inconsistent 
with the ruling of the Appellate Body in US – Countervailing Measures on Certain EC Products , where the 
Appellate Body explicitly noted, "once a fair market price is paid ... [the] market value  is redeemed."  Appellate 
Body in US – Countervailing Measures on Certain EC Products,  para. 102 (emphasis in orgiinal).  The third-
party feels that the Appellate Body did not say that an investigating authority could dissect a broader transaction 
where the market value is recouped in order to rend er a contradictory determination.  Brazil Third-party 
submission, para. 22.  This Panel, however, does not believe that this excerpt either prescribes or precludes any 
particular methodology for analysing a privatization. 
347 France Section 129 determination, footnote 208 above, p. 5. WT/DS212/RW 
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 United States insists that the USDOC’s FMV analys is is not purely quantitative, pointing to the 
“process-oriented” factors in its methodology.
348  
7.106  We are therefore called upon to decide whether the USDOC was obliged to examine Usinor's 
privatization as a whole, as claimed by the European Communities. 
7.107  We shall first examine how the USDOC conducted its  analysis of Usinor's privatization as set 
out in the France Section 129 determination.  We  note that the USDOC separately considered the 
sales transactions pertaining to the four different categories of share offerings (international offering, 
French public offering, employee/former employ ee offering and stable shareholder offering).349  The 
USDOC then applied its new privatization methodolog y to the four categories of share offerings to 
evaluate whether the sales transactions in each sh are offering occurred at arm’s length and for FMV 
and to thus determine whether the privatizati on had extinguished the benefit from non-recurring pre-
privatization subsidies. 
7.108  To determine whether the privatization of Us inor was conducted at arm’s length, the USDOC 
applied the definition of arm's length provided in the Modification Notice.350  The United States 
analysed the four categories of transactions individually , explaining that it was necessary to analyse 
them individually because both the selling methods and the share price differ among categories.351  
The USDOC found that all categories except the empl oyee/former employee share offering were at 
arm's length.352 
7.109  The USDOC explained that in examining whet her Usinor was privatized for FMV, the 
USDOC first considered whether there was a cont emporaneous, benchmark pr ice.  Concluding there 
was no such price, the USDOC stated that it would then analyse the sales pr ocess according to several 
factors on the non-exhaustive list in the Modifica tion Notice: objective analysis, purchase price, 
artificial barriers to entry, committed investment and concurrent subsidies.353 
7.110  When examining the valuation of Usinor, the USDOC concluded that "the GOF 
commissioned and followed the recommendations of objective analyses of the value of Usinor".354  
The Privatization Commission determined the averag e minimum share price to be FF 84.43, based on 
the total number of shares to be offered, 186, 544,395, at the minimum price of FF 15,750 billion.355  
Looking at the USDOC's analysis, the Panel understa nds that the USDOC found that the Privatization 
Commission based this minimum value on independen t evaluations of Usinor's value and therefore 
found that the formulation of Usinor's value was based on objective analysis.356   
                                                      
348 US Oral statement, para. 28. 
349 Usinor Prospectus, footnote 316 above, pp. 21-24, 84-86. 
350 The USDOC cites the definition of "arm's length" in the Statement of Administrative Action, which 
provides that an arm's length transac tion is "a transaction [that was] nego tiated between unrelated parties, each 
acting in its own interest, or between related parties such  that the terms of the transaction are those that would 
exist if the transaction had been negotiated between unrelated parties."  Modification Notice, footnote 206 
above, p. 37127 ( quoting  SAA, footnote 243 above, p. 258). 
351 French Section 129 determination, footnote 208 above, p. 5. 
352 French Section 129 determination, footnote 208 above, pp. 5-6. 
353 France Section 129 determination, footnote 208 above, pp. 6-11. 
354 France Section 129 determination, footnote 208 above, p. 10. 
355 EC First written submission, para. 38. 
356 In evaluating whether there was an objective analysis of FMV, the USDOC explained that: 
 
"[t]he decision to privatize Usinor and the terms of privatization were executed through an 
order of the Ministry of Economic Affairs and Finance, based on an opinion by the 
Privatization Commission, both issued in June 1995. Share prices were set by the Ministry,  WT/DS212/RW 
 Page 75 
 
 
 7.111  When analysing the purchase price, however, th e USDOC explained that the analysis focuses 
on whether the GOF obtained a market-clearing pri ce, not whether it obtained the minimum value.  
The USDOC emphasized that the market-clearing price, not the minimum value, reflects FMV, i.e. the price at which the GOF maximised its return.
357  The USDOC defined the market-clearing price as 
"one that equates the supply of shares with the demand for shares".358  The USDOC explained that if 
the Government of France had set the price too low or too high for a particular share offering, that 
share offering would be over-subscribed or unde r-subscribed, respectively.  The USDOC then 
determined that the market clearing price fell betw een FF 86 and FF 89 because that is the price range 
at which supply balanced demand for the French pub lic offering and the international offering.  The 
USDOC found that the shares for the international o ffering and French public offering were within the 
market-clearing price, the stable shareholder offering was above the market-clearing price, and only 
the employee share price was below the market-clearing price.359   
7.112  Further to its "segmented" analysis, the USDOC found that:  
"[t]he evidence presented on the record of [the Section 129] determination 
demonstrates that, with the exception of  the employee offering, which constituted 
5.16 per cent of the sale, the privatization of Usinor was at arm’s length and for fair 
market value.  While certain aspects of th e sales process for stable shareholders made 
the process less open, the price paid by the stable shareholders was an arm’s-length 
price and it exceeded [the USDOC’s] measure of fair market value, FF 86 - 89. Regarding the shares sold to Usinor’s em ployees, [the USDOC] determine[s] that 
these sales were not at arm’s length. Nor can the sales at FF 68 be considered 
transactions at fair market value."
360   
7.113  The USDOC therefore determined that ever y share offering except the employee/former 
employee share offering was at FMV.361  The USDOC thus reaffirmed the affirmative likelihood 
determination in its original sunset review, indicating that "[t]he sale of shares to Usinor employees at 
prices below fair market value did not extinguish certain allocable, nonrecurring, pre-privatization 
subsidies that continue at an above de minimis rate beyond the original sunset review".362 
                                                                                                                                                                     
based on the opinion of the Privatization Commission, in consultation with Banque S.G. 
Warburg ("Warburg") and the other Global Coordinators of the share offerings, and in 
accordance with the privatization law. The Privatization Commissi on stated that it relied upon 
various valuation methodologies for Usinor including, inter alia , stock-exchange-based 
comparisons and net liquidity flows. Based on its analysis, the Commission recommended a 
minimum value for Usinor of FF 15,750 billion. ...  The minimum value set by the 
Privatization Commission was consistent with the range of values established in the Warburg 
valuation. ...  Given the number of shares the GOF expected to sell and the prices for those shares, the expected revenue was consistent with the various valuations." 
 
France Section 129 determination, footnote 208 above, pp. 6-7. 
357 France Section 129 determination, footnote 208 above, pp. 8-9.  In its response to a Panel question, 
the United States emphasized that the appraised value pr ovided by the Privatization Commission is a minimum 
value, not a fair market value.  US  Response to Panel question No. 32. 
358 France Section 129 determination, footnote 208 above, p. 8; US First written submission, para. 44. 
359 France Section 129 determination, footnote 208 above, pp. 8-9; see also  US Oral statement, 
para. 33. 
360 France Section 129 determination, footnote 208 above, p. 12. 
361 France Section 129 determination, footnote 208 above, pp. 8-9; see also  US Oral statement, 
para. 33. 
362 France Section 129 determination, footnote 208 above, p. 12.  The USDOC also referred to new 
subsidy allegations "timely submitted" by the petitioners but decided not to pursue th em because, in its view, it 
would have no impact on the outcome of the determination.  France Section 129 determination, footnote 208 WT/DS212/RW 
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 7.114  When considering whether the USDOC was require d to consider Usinor's privatization as a 
whole, we note that the SCM Agreement does not provide a particular methodology for analysing 
whether a privatization is conducted at arm' s length and for FMV.  Article 14 of the SCM Agreement  
only provides that " any" method used by investigating authori ties to calculate th e benefit to the 
recipient shall be provided for in a WTO Member's legislation or regulations, and it requires that its 
application be transparent and adequately explained.  As f ound by the Appellate Body in US – 
Softwood Lumber IV , "[t]he reference to ' any' method... clearly implies that more than one method 
consistent with Article 14 is av ailable to investigating authorities for purposes of calculating the 
benefit to the recipient".
363 
7.115  Moreover, neither this Panel nor the Appellate  Body addressed this issue in the original 
proceedings.  Instead, the Appellate Body, paraphrasing the Panel, ruled that, "in sunset reviews, the 
investigating authority, before deciding to conti nue to countervail pre-privatization, non-recurring 
subsidies is obliged to 'examine the conditions of such privatizations and to determine whether the 
privatized producers received any benefit from the prior subsidization to the state-owned 
producers'.364"365  Neither the panel nor the Appellate Body established a precise methodology for an 
investigating authority to follow when examining the conditions of the privatization at issue. 
7.116  The European Communities, although conceding that  the Panel and the Appellate Body in the 
original proceedings did not require a particular methodology, argues that the factors – arm's length and FMV – were nevertheless discussed in th e context of the privatization of the firm as a whole .  The 
European Communities refers to the Panel Report where the Panel explained that the payment of 
FMV by the privatized producer and its owners  extinguishes the benefit of non-recurring, pre-
privatization benefits that were bestowed upon the state-owned company because no benefit can 
accrue to the privatized producer beyond what market conditions dictate.
366  The European 
                                                                                                                                                                     
above, p. 13.  We note that the US DOC also found that there were no concurrent subsidies at the time of the 
privatization.  France Section 129 determination, footnote 208 above, p. 10. 
363 Appellate Body Report on US – Softwood Lumber IV , para. 91. 
364 (footnote original ) Panel Report [on US – Countervailing Measures on Certain EC products ,] para. 
7.116.  
365 Appellate Body Report on US – Countervailing Measures on Certain EC products , para. 149.  
366 EC Second written submission, paras. 30-33.   
 
The Panel stated:  
"that privatization calls for a (re)determination of  the existence of a bene fit to the privatized 
producer, and that fair market value payment by the privatized producer (and its owners)  
extinguishes the benefit resulting from the prior financial contribution (subsidization) 
bestowed upon the state-owned producer, because no advantage or benefit accrued to that 
privatized producer over and above what mark et conditions dictate pursuant to Article 14 of 
the SCM Agreement ." 
 Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.77 (emphasis added). 
 
The Panel explained that:  
"if upon privatization, fair market value is paid for all productive assets, goodwill, etc. 
employed by the state-owned producer, the Panel fails to see how the subsidies bestowed to the state-owned producer could subsequently be considered to still confer a 'benefit' on the 
privatized producer (in the sense of the company together with its owners)  who has paid fair 
market value for all the shares and assets, re flecting, we must assume, the value of past 
subsidization." 
 
Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.72 (emphasis added).  WT/DS212/RW 
 Page 77 
 
 
 Communities emphasized that the Panel’s most important finding was that the primary factor for 
consideration is whether the privatized produ cer, comprising the company and its owners, had 
received something for free.367   
7.117  The Panel, however, fails to see how this refere nce, which emphasises the fact that FMV was 
paid by the privatized producer meaning the comp any and its owners, enge nders an obligation to 
exclusively  examine the conditions of the privatization by looking at the company as a whole .  In the 
Panel’s view, these excerpts neither require an anal ysis of the conditions of the privatization as a 
whole nor preclude segmenting such an analysis.   
7.118  In the absence of a legally prescribed methodol ogy, the Panel agrees with the United States 
that it is within a Member's discretion to develop a reasonable  methodology which, as required by 
Article 14 of the SCM Agreement , must be applied in a transparent manner and be adequately 
explained.  Again, we recall that the task of th is Panel is to asses whether the USDOC examined all 
the pertinent facts and adequately explained its conclusion.   The Panel's task is neither to perform a de 
novo  review of the information and evidence on the reco rd of the determination, nor to substitute our 
judgement for that of the USDOC.368  Accordingly, the issue before  this Panel is not whether the 
Panel would have preferred that the USDOC analy se Usinor’s privatization as a whole but whether 
the USDOC’s segmented analysis of Usinor’s pr ivatization is reasonable and was transparently 
applied and adequately explained. 
7.119  The Panel does not find that the USDOC’s indi vidual analysis of each category of share 
offering is unreasonable.  On the contrary, the US DOC’s segmented analysis appears rather logical 
and systematic given the conditions of the privatiza tion.  As described in paragraphs 7.90-7.92 above, 
instead of a single transaction, the GOF incrementall y privatized Usinor over a period of three years 
through a multitude of sales transactions grouped in f our share offerings that were each subject to 
distinct conditions and restrictions.369  The organization of the USDOC’s analysis of the conditions of 
Usinor's privatization actually mirrored that of the share offerings.  We also consider that the USDOC 
applied its methodology in a transparent manner: the USDOC published a description of its new 
methodology in the Federal Register  and then applied it accordingly.370  The adequacy of the 
USDOC's explanation of its conclusions, however, is not entirely satisfactory, as we will see when 
examining the USDOC's arm's-length analysis on the employee/former employee share offering.  
7.120  We note that the United States argues th at the European Communities’ averaging 
methodology ignores the arm’s-length issue.  We ag ree with the United States.  Indeed, given the 
diversity of the purchasers and sales conditions, the Panel has difficulty formulating an arm’s length 
analysis for Usinor's privatization as a whole.   
7.121  The United States also argues that the Europ ean Communities’ averaging methodology treats 
FMV as a purely quantitative analysis and ignores its “process-oriented” factors.  We note that, in 
conducting its FMV analysis, the USDOC states that it is "weighing these various factors" – including objective analysis, artificial barriers to entry, pur chase price, committed investment and concurrent 
subsidies.  However, it later appears to neverthel ess take the finding of the non market-clearing price 
for the employee/former employee share offering as definitive.
371  Although the USDOC insists that 
                                                      
367 EC Oral statement, para. 6. 
368 See discussion in paragraphs 7.78-7.83 above.   
369 France Section 129 determination, footnote 208 above, pp. 3-4.  See the table describing the 
conditions applicable to each share o ffering in paragraph 7.150 below. 
370 See Modification Notice, footnote 206; France Section 129 determination, footnote 208 above, 
pp. 3-12. 
371 The USDOC concluded:  
 WT/DS212/RW 
Page 78  
 
 it conducted a qualitative FMV analysis, its relia nce on the non market-clearing price for the 
employee share offering indicates that the conclusion is actually heavily quantitative.  The Panel thus 
considers that unlike the case of the arm's length an alysis, the FMV analysis could have been done 
either in a segmented manner or as a whole, as suggested by the Europ ean Communities.  The 
USDOC could have just as easily compared the aver age price obtained to the market-clearing price in 
its analysis of the privatization as a whole, as it co mpared the individual price of each share offering 
to the market-clearing price in its segmented an alysis.  The Panel, however, cannot find any legal 
basis to require the USDOC to conduct its analysis in a particular manner. 
7.122  Consequently, given the complexity of the priv atization process, we find that the USDOC’s  
segmented analysis of the conditions of Usinor's pr ivatization is not unreasonable and was applied in a 
transparent manner. 
(b) Whether the sales of shares to employees/former employees were at arm's length and FMV 
7.123  The European Communities has argued that , even considering the employees/former 
employees share offering independently, the evidence dem onstrates that the sales of Usinor's shares to 
this category of purchasers were nevertheless at arm's length and for FMV.
372  The United States 
disagrees.  We shall therefore examine the USDOC' s analysis of the sales transactions pertaining to 
the employees/former employees share offering.  We shall commence by explaining the USDOC's arm's length analysis, followed by the FMV analysis. 
(i) Whether the sales of shares to emplo yees/former employees were at arm's length 
Arguments of the parties
 
7.124  The European Communities argues that the shares sold through the employees/former 
employees offering were at arm's length.  The European Commun ities refers to the Black’s Law 
Dictionary  definition of arm's length as a term "[o]f or relating to dealings between two parties who 
are not related or not on close terms and who are presumed to have roughly equal bargaining power; 
not involving a confidential relationship"373 to support its view that the employees/former employee 
offering did not involve related parties, and, th erefore, did constitute an  arm’s-length transaction.374   
7.125  The European Communities also  argues that the United States wrongly examined whether a 
pre-privatization relationship existed rath er than a post-privatization relationship.375  In addition, the 
                                                                                                                                                                     
"Based on our review of the factors relevant to FMV, the privatization of Usinor presents a 
somewhat mixed picture. On the one hand, there were some barriers in the bidding process 
that might have limited the number of potential purchasers. On the other hand, there is 
substantial record evidence that the privatiza tion of Usinor was accomplished through a fair-
market-value transaction, wi th the exception of the empl oyee offering. First, the GOF 
commissioned and followed the recommendations of objective analyses of the value of 
Usinor.  Second, the value/cost of any committed investment was known to bidders and reflected in the prices offere d. Third, the GOF set and recei ved a market-clearing price for 
Usinor's shares, except in the employee offering which constituted only 5.16 per cent of the 
sale; in the stable shareholder offering, the GOF set and received an above market-clearing 
price. After weighing these various factors, we determine that, with the exception of the 
employee offering, FMV was paid for Usinor." 
 France Section 129 determination, footnote 208 above, pp. 10-11. 
372 EC Second written submission, para. 38. 
373 EC First written submission, para. 41 ( citing  Black's Law Dictionary  (West Group, 1999), 7th ed., 
p. 82). 
374 EC First written submission, para. 41. 
375 EC Second written submission, para. 39; EC Oral statement, para. 8.  WT/DS212/RW 
 Page 79 
 
 
 European Communities argues, altho ugh Usinor was wholly-owned, directly or indirectly, by the 
GOF, the buyers in the employee/retiree offering included employees of Usinor, not employees of the GOF.  In its view, although the GOF participated in  shareholder meetings a nd oversaw the financial 
management of the company, it did not “intervene in the day-to-day management of the Company, and the Company ... conducted its day-to-day operati ons in a manner similar to that of other major 
international non-state controlled steel producers.”
376  Thus, it argues, the employee purchasers were 
at least two steps removed from having any relationship to the GOF.377  Furthermore, it contends, the 
employee/former employee offering also included former  employees of Usinor.378  There is no 
evidence whatsoever th at there was any relationship between the former  employees of Usinor and the 
GOF.  Even if some type of relationship existed be tween the seller and the buyers in this case, it was 
not the type of relationship that would affect the price at which the GOF sold Usinor shares.379  The 
European Communities points out that the France Section 129 determination contains no explanation/reasoning as to how and why employees/fo rmer employees are related to the GOF, just a 
conclusion that they are related to Usinor.
380   
7.126  The United States disagrees, arguing that the SCM Agreement  does not refer to “arm’s 
length,” and neither the Panel nor the Appellate  Body provided any elaboration on this term.381  It 
contends that the “arm’s-length” analysis applied by the USDOC is, however, entirely consistent with 
the ordinary understanding of that term.  The Un ited States quotes the New Shorter Oxford Dictionary 
and Black's Law Dictionary in support.382   
7.127  The United States also argues that the Europ ean Communities misconstrued the logic of the 
USDOC’s arm’s-length finding.  Contrary to the European Communities’ assertion, the United States 
insists that the “preferential” rate offered to th e employees was not the sole basis of the USDOC’s non 
arm’s-length finding.383  The United States explains that the USDOC’s arm’s length test consists of 
two steps.384  The first step is to evaluate the relations hip between the parties, i.e. the relationship 
between the company, Usinor, and its employees.  Th e United States concludes that in this case, the 
employees are inarguably affiliated to Usinor.385  The United States argues that the USDOC's 
approach recognizes that the respective inter ests of employers and employees may not be 
distinguishable and that members of the “corporate family” often treat each other more favourably than they do others outside the family; and that  this point is demonstrated by the admittedly 
preferential nature of the employee stock offering.
386  The United States further explains that after 
evaluating the relationship, the USDOC proceeds to  the second step to examine the terms of the 
                                                      
376 EC First written submission, para. 42 ( quoting  Usinor Prospectus, footnote 316 above, p. 26); see 
also EC Oral statement, para. 8. 
377 EC Oral statement, para. 8. 
378 In addition to including former employees of Usinor, the employee offering included former 
employees of affiliates in which Usinor held, directly or indirectly, a majority interest.  See Usinor Prospectus, 
footnote 316 above, p. 21. 
379 EC First written submission, paras. 40-44. 
380 EC First written submission, para. 44. 
381 US First written submission, para. 35; US Oral statement, para. 27. 
382 US First written submission, para. 35 ( citing  The New Shorter Oxford English Dictionary  (Oxford 
University Press, 1993), Thumb Index Edition, Vol. I, p. 114 (at arm's length: "without undue familiarity; (of dealings) with neither party controlled by the other.") and Black's Law Dictionary  (West Group, 1999), 7
th ed., 
p. 103 ("Of or relating to dealings between two parties who are not related or not on close terms and who are 
presumed to have roughly equal bargaining power; not involving a confidential relationship. ...")). 
383 US Oral statement, para. 31. 
384 US Oral statement, para. 31; see US First written submission, paras. 36-37. 
385 US Oral statement, para. 31; see US First written submission, para. 36 (where the US characterises 
this step in the analysis somewhat differently as "consid er[ing] the existence of relationships that would indicate 
the sales were not at arm's length"). 
386 US First written submission, para. 36. WT/DS212/RW 
Page 80  
 
 transaction between Usinor and its employees to de termine whether those terms would have existed 
had the transaction been between unrelated parties.
387  In other words, to determine "whether the price 
charged the affiliated party was different from wh at it would have been absent the affiliation".388  The 
United States argues that it was at this step of the analysis that the USDOC relied on the "preferential" 
nature of the employee share offering to explain the lower share price.389  Because there was a 
preferential option available to employees that was not available to unrelated parties, the USDOC 
concluded that the terms of the transaction were di fferent as a result of the relatedness of the parties 
and, hence, that the transactions were not at arm’s length.390  The United States emphasises that the 
evidence on the record amply supports the conclusion that the sales were not at arm’s length; specifically, "the sales were openly acknowledged to be preferential".
391  The United States also 
insists that the European Communities provided no factual basis to contradict the USDOC’s 
conclusion that the "preferential" nature of the relationship resulted in a lower share price.392   
7.128  The United States disagrees with the European  Communities’ argument that the USDOC’s 
arm’s-length analysis was in error because it confu sed the company (Usinor) and its owner (the GOF), 
finding only that Usinor’s employees were  related to Usinor, not to the GOF.393  The United States 
contends that the facts indicate that the GOF offe red preferential share prices to the employees of a 
company that it entirely owned, demonstrating that  it did not deal with those employees at arm’s 
length for purposes of the privatization.394  Moreover, it argues, the DSB rationale for finding that a 
benefit may be extinguished by an arm’s length,  FMV privatization hinges on the assumption that 
there is little distinction between the company and its new owners.395  In its view, that fact that the 
new methodology requires the USDOC to consider the privatized company and its owners as a single 
privatized producer is consistent w ith the findings of the Appellate Body.396 
7.129  The United States disputes the European Co mmunities’ argument that the USDOC should 
have considered the relationship after the privati zation.  The United States explains that the DSB 
recommendations and rulings focused on whether the transaction  extinguished the benefit.  What 
occurs after the privatization is therefore irrelevant.397 
Evaluation by the Panel  
7.130  The European Communities is challenging the USDOC's finding that Usinor’s employees and 
former employees are related to Usinor and that, in  view of the preferential nature of the share 
offering, the sales transactions pertaining to the employee/former employee share offering were not at 
arm's length.   
7.131  We are therefore called upon to examine whet her the USDOC properly determined that the 
sales transactions pertaining to the employee/former employee share offering were not at arm's length.  
                                                      
387 US First written submission, para. 37. 
388 US Oral statement, para. 31. 
389 US Oral statement, para. 31. 
390 US First written submission, para. 37. 
391 US First written submission, para. 34. 
392 US Oral statement, para. 31. 
393 US First written submission, para. 38; US Oral statement, para. 32; see also  EC First written 
submission, para. 42. 
394 US First written submission, para. 38; see also  EC First written submission, para. 42 (where the 
European Communities states that Usinor was wholly  owned, directly or indirectly, by the GOF). 
395 US First written submission, para. 38.  The United States refers to the Panel Report on US – 
Countervailing Measures on  Certain EC Products,  paras. 7.54 and 7.72 and the Appellate Body Report on US – 
Countervailing Measures on Certain EC Products,  paras. 113-115. 
396 US Second written submission, para. 8; US Oral statement, para. 32. 
397 US Oral statement, para. 30.  WT/DS212/RW 
 Page 81 
 
 
 We shall commence by looking at the USDOC's analysis and conclusions as set out in the France 
Section 129 determination. 
7.132  In the France Section 129 determination, as al ready explained, the USDOC applied its new 
privatization methodology and found that the sales  transactions in all share offerings except the 
employee/former employee share offering were at arm's length.398  In the case of Usinor's 
employees/former employees, the USDOC found:  
"Finally, an even smaller number of sh ares (eventually comprising 5.16 per cent) 
were sold exclusively to current and qualifying former Usinor employees. These purchasers had two options: (1) they could purchase shares at the French public 
offering price of FF 86 per share, or (2) they could pay a discounted price of FF 
68.80, with an extended payment period, if they agreed to hold  the shares for two 
years. Additionally, they were eligible to receive bonus shares if they held the shares 
for specified periods. Thus, the employee offering was clearly distinguishable from 
the public offerings and was openly charact erized as 'preferential' in Usinor’s 
International Offering Prospectus (“Prospectus ”). 
We determine that the employees of Usinor were related to Usinor and that the sales 
of shares to Usinor employees at the discounted price did not constitute an arm’s-length transaction."
399 
7.133  We note that neither the SCM Agreement  nor prior reports have defi ned the concept of "arm's 
length".  The parties have referred to  various dictionary definitions of "arm's length" to support their 
positions.  For instance, the Black’s Law Dictionary  defines arm's length as “[o]f or relating to 
dealings between two parties who are not related or  not on close terms and who are presumed to have 
roughly equal bargaining power; not involvi ng a confidential relationship”.  The New Shorter Oxford 
Dictionary  defines arm’s length as "without undue fam iliarity; (of dealings) with neither party 
controlled by the other".400  
7.134  The United States contends that the definition contained in its new privatization methodology 
corresponds to the ordinary meaning of arm's length.401  The definition provides that an arm's-length 
transaction is "a transaction negotiated between unrelat ed parties, each acting in its own interest, or 
between related parties such that the terms of th e transaction are those that would exist if the 
transaction had been negotiated between unrelated parties".402  This definition appears to coincide 
with the above dictionary definitions in that all hi ghlight the independence of the parties in an arm's 
length transaction: either the parties have equal barg aining power, neither party controls the other, or 
each party is acting in its own interest.   
7.135  In any case, the European Communities has not challenged the definition of arm's length in 
the USDOC's new privatization methodology, but its application to the sales transactions pertaining to 
Usinor's employee/former employee share offering.  Therefore, determining whether the definition on 
the new privatization methodology corresponds to the ordinary meaning of the concept, as described 
in the above dictionaries, is not our task.  We  are asked to examine the appropriateness of the 
USDOC's analysis and conclusion on arm's length that results from the application of that definition 
to the sales transactions involving the empl oyee/former employee share offering.   
                                                      
398 France Section 129 determination, footnote 208 above, pp. 4-6. 
399 France Section 129 determination, footnote 208 above, p. 6. 
400 US First written submission, para. 35, footnote 44. 
401 US First written submission, para. 35. 
402 Modification Notice, footnote 206, p. 37127 ( quoting  SAA, footnote 243 above, p. 258). WT/DS212/RW 
Page 82  
 
 7.136  As shown in paragraph 7.132 above, the USDO C analysis as regards the employees/former 
employees share offering consists of a description of  the conditions of that offering, followed by a 
conclusion that "the employees of Usinor were related to Usinor and that the sales of shares to Usinor 
employees at the discounted price did not constitute an arm’s-length transaction".
403   
7.137  The Panel considers that the USDOC's arm's-le ngth analysis in the France Section 129 
determination fails to ask and respond to the basic question in an arm's-length test, i.e. whether the 
purchaser is related to the seller .  The France Section 129 determination contains no reasoned 
conclusion that the purchasers of the shares pert aining to the employees/former employees share 
offering are related to the seller of those shares, i.e the GOF.  It only contains a conclusion that 
Usinor's employees are related to Usinor.404  One could be entitled to assume that an employee is 
related to his/her employer; the same goes for a former employee (for example, a retiree's pension 
may depend on the employer's performance).  But from there, a conclusion that the employees/former 
employees are related to another entity that owns the employer company requires at least some explanation.  We recall that Article 14 of the SCM Agreement  requires that the method to determine 
the existence of a benefit be adequately explained.
405  The USDOC should have therefore explained 
why by being related to their employer, the empl oyees/former employees are somehow related to the 
GOF.   
7.138  The Panel therefore concludes that the USDOC did not properly establish that the sales 
transactions pertaining to Usinor's employee/former  employee share offering were not at arm's length 
because the USDOC failed to provide an ade quate and reasoned conclusion on why Usinor's 
employees and former employees were related to the GOF. 
7.139  The European Communities also  argues that the United States wrongly examined whether a 
pre-privatization relationship existed rath er than a post-privatization relationship.406  The United 
States disagrees and contends that the DSB reco mmendations and rulings focused on whether the 
transaction  extinguished the benefit.  In its view, what  occurs after the privatization is therefore 
irrelevant.407  The Panel agrees that the arm's length anal ysis should focus on the relationship between 
the seller and the purchaser at the time of the tran saction, since the purpose of the analysis is to 
determine whether the terns of that transaction are affected by the relation between those parties. 
7.140  Notwithstanding the absence of an adequate a nd reasoned conclusion, the Panel notes that 
whether Usinor's employees are related to the GOF is  not dispositive with respect to the continuation 
of a benefit.  The Panel agrees that the arm’s-length test is an ancillary exam ination that provides the 
context for, and otherwise informs, the decision on FMV.  The arm’s-length test by itself is not a 
bright-line test for determining whether a benefit is eliminated.  Rather, the arm’s length test reflects a 
general understanding that transac tions between related parties may not always  be on commercial 
terms.408  Therefore, the arm's-length test merely aff ects the level of scrutiny for the FMV analysis.  
Where a relationship exists, a closer analysis of the actual terms is warranted to determine if the 
transaction at issue is consistent with market prin ciples.  Thus, regardless of whether the transaction 
occurred at arm's length, an investigating authorit y must analyse whether the privatization was for 
FMV to ultimately determine whether a benefit pas sed through.  We shall therefore examine whether 
the USDOC appropriately found that the employee/former employee shares were not sold for FMV. 
                                                      
403 France Section 129 determination, footnote 208 above, p. 6.   
404 The Panel notes that the conclusion does not mention Usinor's former employees. 
405 Appellate Body Report on US – Softwood Lumber IV , para. 91. 
406 EC Second written submission, para. 39; EC Oral statement, para. 8. 
407 US Oral statement, para. 30. 
408 See Brazil Third-party submission, para. 19.  WT/DS212/RW 
 Page 83 
 
 
 (ii) Whether the sales of shares to employees/former employees were for FMV  
Arguments of the parties  
7.141  The European Communities challenges the US DOC's conclusion that the employee share 
offering was not at FMV.  The European Commun ities argues that the discount offered to Usinor 
employees and former employees reflects the risk assumed  by the buyers for the resale restrictions on 
the shares purchased.  Because the shares purch ased by some Usinor employees and former 
employees were less liquid, they were less valuable on the market since it was unclear whether, after 
two years, the price for the shares would be higher or lower.409  The European Communities argues 
that the restrictions placed upon the French public offering and the stable shar eholders, to the extent 
they were applicable, were not as restrictive as t hose on the employee/former employee offering.  The 
French public offering restricted sales only wh ere purchasers acquired free shares.  The stable 
shareholders were precluded from selling shares for th ree months, allowed to sell a limited number of 
shares for the following 15 months, and no longe r precluded from selling shares after 15 months.410 
7.142  The European Communities argu es that it is also common among public offerings throughout 
the world, including in the context of privatizations , to offer shares to employees or former employees 
at a specific rate.411   
7.143  The United States contests the European Co mmunities' arguments by asserting that resale 
restrictions per se  provide no explanation for the substantia l discount afforded Usinor’s employees.  
To the contrary, it argues, resale restrictions in th e Usinor privatization were not limited to company 
employees.  Purchasers in the French offering as we ll as the stable shareholders were subject to 
similar restrictions.  Nevertheless, it argues, the sh are prices for the latter two groups were well above 
the preferential price for the employees.  In its  view, were the European Communities’ argument 
correct, one would expect the European Communities to be able to provide evidence that employees 
were equally (or virtually equally) likely to particip ate in the French public offering as they were to 
participate in the employee/former employee offering.412  The European Communities, it argues, has 
offered no such evidence nor has the European  Communities offered any demonstration of how the 
discount offered to employees was supposed to reflect  the risk assumed by the buyers for the resale 
restrictions.413  Moreover, the United States alleges, th e European Communities avoids explaining 
how it calculated the employee share price, there by failing to contextualize the seller’s basis for 
characterizing the employee share offering as "preferential".414  It also contends that it is irrelevant 
                                                      
409 EC First written submission, para. 45. 
410 EC Second written submission, para. 47; EC Oral statement, para. 7. 
411 The Panel notes that the European Communities explicitly refers to the term "specific" and not to 
the term "preferential".  The European Communities cite s Steven L. Jones, William L. Megginson, Robert C. 
Nash, and Jeffry M. Netter, "Share issue privatizations as financial means to political and economic ends," 53 J. Fin. Econ. 217, 238 (1999); accord  Simon Leary, "Privatization Issue 12:  Key Steps in a Successful Public 
Offering," at 2, available at  http://www.pwcglobal.com/extweb/manissue.nsf/DocID/.  The EC also indicates 
that, in a study by the US General Accounting Office ("GAO") on privatization practices in major developed countries, the GAO noted that the governments of these countries, in particular the UK and France, have 
routinely offered set specific prices for employees in their privatizations, without suggesting that such offerings 
were in any way exceptional.  See US General Accounting Office, "Budget Issues: Privatization/Divestiture 
Practices in Other Nations," at 5-6, 13-14 (1995).  In Fr ance, the privatization law itself provides for the offering 
of a specific rate to employees and former employees so lo ng as those shares are retained for at least two years.  
See French Privatization Law of 1986, as amended, Art. 11, submitted in GOF/Usinor 2 September 2003 
Questionnaire Response, Appendix 4.  Thus, the offering of shares at specific prices  to employees and former 
employees of a company in the context of privatiza tion is common practice.  EC First written submission, 
footnote 71; see EC Oral statement, paras. 6-7. 
412 US First written submission, para. 46. 
413 US First written submission, para. 46; US Oral statement, para. 33. 
414 US Oral statement, para. 33. WT/DS212/RW 
Page 84  
 
 whether it is common practice for a government to set aside shares for government employees when 
privatizing an enterprise.
415 
Evaluation by the Panel  
7.144  The European Communities claims that the sales of shares to Usinor's employees and former 
employees were for FMV and argues that the discount offered to this category of buyers reflects the 
risk they assumed for the resale restrictions on the shares purchased.  Specifically, the European 
Communities maintains that the share price reflects the 24-month resale restriction and its accompanying risk.  In its view, this restriction is stricter than those on the French public offering and 
the stable shareholders offering so the risk is accordingly higher and the share price lower.  The 
United States disagrees. 
7.145  We shall therefore examine whether the USDOC reasonably concluded that the sales 
transactions pertaining to the employee/former employee share offering were not for FMV.  To this end, we shall commence by examining the USDOC 's FMV analysis in the France Section 129 
determination.  
7.146  In the France Section 129 determination, th e USDOC explained that in examining whether 
Usinor was privatized for FMV, the USDOC first considered whether there was a contemporaneous, 
benchmark price.  Concluding there was no such price, the USDOC stated that it would then analyse the sales process according to several factors on the non-exhaustive list in the Modification Notice: 
objective analysis, artificial barriers to entry, pu rchase price, committed investment, and concurrent 
subsidies.
416  The USDOC then proceeded to analyse each category of share offering separately within 
each factor to determine whether the sales in each category were at FMV. 
7.147  We note that during the FMV analysis, the US DOC examined the employee/former employee 
share offering within the context of several of th e factors listed above.  Specifically, when examining 
artificial barriers to entry, the USDOC found that th e sales process was restricted with respect to the 
employee pool because it excluded numerous potential purchasers who were not employees/former employees.
417  When analysing purchase price, the USDOC  focused on the conditions of the French 
public offering and the international offering and determined that the prices for those two share 
offerings, FF 86 and FF 89, respectively, set the range  for the market-clearing price, i.e. "[the price] 
that equates the supply of shares with the demand for shares".418  The USDOC, however, performed 
                                                      
415 US Second written submission, para. 9. 
416 France Section 129 determination, footnote 208 above, pp. 6-11. 
417 France Section 129 determination, footnote 208 above, p. 7. 
418 The USDOC explained that  
 "[i]n regard to the price, we have sought to  determine whether the GOF charged a market-
clearing price for it shares of Usinor. A market-c learing price is one that equates the supply of 
shares with the demand for shares . If the GOF had set the prices for Usinor's shares too low, 
the offering would have been over-subscribed and many people seeking shares would not have 
been able to purchase them in the initial offeri ng. Conversely, if the prices were set too high, 
the offering would have been under-subscribed and the GOF would not have been able to sell as many shares as it had planned. 
 
As noted above, the prices in the French and international public offerings were FF 86 and FF 89, respectively. The evidence on the record shows that because of the high level of demand, 
the number of shares made availa ble in the French offering had to be increased.  First, shares 
were moved from the international offering to the French offering.  Additional shares 
subsequently were made available...  Regarding the international offering, shares were 
originally moved from there to the French offering but, subsequently, the number of shares 
sold under the international offering was increased. ...    WT/DS212/RW 
 Page 85 
 
 
 no qualitative analysis of the conditions of the employee/former employee offering and simply 
concluded that the FF 68 price for the employee/former employee share offering fell outside this range of market-clearing prices.
419  The USDOC also analysed whet her the conditions/restrictions of 
the employee/former employee share offering c onstituted a committed investment.  The USDOC 
concluded that since the restrictions were known pr ior to purchase, they were fully reflected in the 
share price. 420 
7.148  The USDOC concluded that the employee/former employee share offering was not at FMV 
because the employee/former employee share offeri ng was subject to "some barriers in the bidding 
process that might have limited the number of pot ential purchasers" and because the Government of 
France did not set or receive a market-clearing price for the employee/former employee share 
offering.421 
7.149  The parties dispute whether the "preferential"  terms, including the 20 per cent discount that 
the GOF offered Usinor's employees and form er employees, justify a finding that the 
employee/former employee share offering was not at FMV.  As indicated above, the European Communities argues that the 20 per cent discount  reflects the actual risk assumed by the 
employees/former employees for the resale restrictions on the shares purchased.
422  The United States 
contests this argument and contends that if this were the case, the European Communities should have 
provided the USDOC with sufficient evidence during the Section 129 proceedings to demonstrate that 
the additional restrictions on the employee/former  employee share offering account for the 20 per cent 
discount.423    
7.150  To assess this issue, it may be worth clarifying  the different conditions applicable to each of 
the share offerings.  The following table displays these conditions and the price per share of each 
offering: 
                                                                                                                                                                     
 
Given the over-subscription at the FF 86 price, the fact that shares were moved from the 
international offering to the French offering, an d the number of shares sold at each of the two 
prices, it appears that the market clearing price for Usinor's shares was between FF 86 and 89.  
Therefore, we determine that the GOF maximized its return on the shares sold in the French 
and international public offerings."  
France Section 129 determination, footnote 208 above, pp. 8-9. 
419 France Section 129 determination, footnote 208 above, p. 9. 
420 France Section 129 determination, footnote 208 above, pp. 9-10. 
421 France Section 129 determination, footnote 208 above, pp. 10-11. 
422 See EC Response to Panel questions Nos. 30, 34 and 36; see generally  Usinor Prospectus, footnote 
316 above, pp. 21, 23 (providing the general conditions of the employee share offering); Order Defining Terms 
for the Usinor Privatization, footnote 316 above, art. 3 (specifying the terms of the employee share offering). 
423 See US Response to Panel question No. 30.  WT/DS212/RW 
Page 86  
 
  
Combined 
Offering Factors Affecting Share Price: Restrictions/Incentives/Sale Mechanism Price Per Share (FRF) 
International  
Offering424 Sale mechanism: Underwritten  by three regional groups (France, US, Rest of the 
World), collectively referred to as th e International Underwriters, under the 
following conditions:  
 Payment by GOF, Clindus, and Usinor  of a management  commission and 
underwriting commission of .60 per cent of the aggregate international offering 
price;  Payment by GOF, Clindus, and Usinor of  a selling concession of 1.80 per cent 
of the aggregate international offering price; 
 Payment by GOF, Clindus, and Usinor of FRF 2,000,000 for certain expenses; 
and  
 Indemnification by GOF, Clindus, and Usinor against certain liabilities 89 
 
French Public 
Offering425 Restrictions/Incentives:  
 Holding period: A minimum holding pe riod of 18 months applies;  
 Free shares: Shareholders receive 1 free share for each 10 shares purchased after 
the minimum holding period 
 
Sale mechanism: Terms pursuant to th e French OPV Underwriting Agreement 86 
Employee  
Offering426 Restrictions/Incentives:   
 Purchase price:  
o At the French public share offering price of FF 86, or  
o At a 20 per cent discount on the price of the French public share offering, 
which is FF 68.8; 
 Holding period: Only the shares purchased at the discount price are subject to a 
24-month holding period;   Free shares:  
o At the French public share offering price, 1 free share for each 3 shares 
purchased, or  
o At a 20 per cent discount on the price of the French public share offering, 1 
free share for the first 71 shares purchased and 1 free share per five 
purchased from the 72nd share onwards; 
 Delayed payment terms:  
o At the French public share offering pr ice, immediate payment in cash, or 
o At a 20 per cent discount on the price of the French public share offering, 
either immediate payment in cash or 30 per cent at purchase, 30 per cent 
after 1 year, and remaining 40 per cent after 2 years.   
 Sale mechanism: No underwriter 86 or 68.8 (20 per cent 
discount on the 
French public 
offering price) 
Stable  
Shareholders427 Restrictions: Stable sharehol ders signed an agreement (" Protocole") agreeing to  
 Hold all existing shares for three months from the date of publication of the 
French Public Offering results; 
 After those three months, sell a maximum of 20 per cent;   
 Hold the remaining 80 per cent for anot her 15 months or sell only to another 
Stable Shareholder; and  After the 15 months (a tota l 18 months), respect the other Stable Shareholders' 
pre-emption rights when selling to third parties. 
 Sale mechanism: No underwriter 90.78 
(102 per cent of the 
International 
Offering Price) 
 
7.151  The above table shows that different degrees and/or  types of restrictions apply to each of the 
four share offerings.  We recall that our task is to evaluate whether the USDOC has examined all the 
                                                      
424 Usinor Prospectus, pp. 21-24, 84-86; see Order Defining Terms for the Usinor Privatization, 
footnote 316 above.  
425 Usinor Prospectus, pp. 21-24, 84-86; see Order Defining Terms for the Usinor Privatization, 
footnote 316 above. 
426 Order Defining Terms for the Usinor Privatization, footnote 316 above, art. 3. 
427 Usinor Prospectus, pp. 21-24, 84-86; see Order Defining Terms for the Usinor Privatization, 
footnote 316 above.  WT/DS212/RW 
 Page 87 
 
 
 pertinent facts and to assess whether the USDOC prov ided an adequate and reasoned explanation as to 
how those facts support its determination.    
7.152  In contesting the European Co mmunities' argument that the 20 per cent discount on the 
employee/former employee share price is a risk prem ium for the resale restrictions, the United States 
asserts that purchasers in other categories, namely the French public offering and the stable 
shareholders, were subject to similar restrictions as the employee/former employee share offering.428  
7.153  Based on the evidence on the record, under bot h the employee/former employee offering and 
the French public offering, purchasers may receive free shares and be subject to holding restrictions.  
Employees and retirees can either participate in the French public offering or buy shares with a 
discount of 20 per cent, but then with the obliga tion to hold them for 24 months.  They can then 
obtain a free share for the first 71 shares purchased and one free share per subsequent five shares 
purchased.  Purchasers taking part in the French pub lic offering are not subject to an obligation to 
hold their shares for any amount of time unless they  want to obtain one free extra share for each 
ten shares purchased (up to a ceiling of 30 000 fra ncs for the purchased shares).   The required 
duration for holding shares is then 18 months.  As a result, for the first 100 shares, shareholders under 
the discounted employee/former employee offering receive six free shares, while shareholders under 
the French public offering receive ten free shares pr ovided that the shareholders in both cases agree to 
the holding restrictions. 
7.154  The Panel notes that the USDOC never actually  analysed the effect of the different 
restrictions and instead merely asserted that the "[r]esale restrictions per se provide no explanation for 
the substantial discount afforded Usinor's employees."429  We recall that the Appellate Body has 
assigned an active  rather than a passive decision-making role to an investigating authority performing 
a sunset review.430  The question is whether this active role  obliges the USDOC, in this case, to search 
for evidence that provides the basis for the 20 pe r cent discount beyond the evidence on the record, or 
                                                      
428 US First written submission, para. 46; US Response to Panel question No. 30. 
429 US First written submission, para. 46; see US Oral statement, para. 33.   
 
In addition, we note that the Usinor Prospectus desc ribes the terms of an international underwriting and 
selling agreement for the International Share Offering.  This agreement required the GOF, Clindus and Usinor to 
pay the International Underwriters a management commission, an underwriting commission, a selling 
concession, and FRF 2,000,000 to cover certain expenses.  The GOF, Clindus and Usinor also agreed to indemnify the International Underwriters against certain  liabilities.  Usinor Prospectus, footnote 316 above, 
pp. 84-86.   
 
We also note that the French Share Offering was underwritten with terms provided in a French 
Underwriting Agreement, which is not detailed in the Usinor Prospectus.  The Em ployee Share Offering and 
Stable Shareholders were not underwritten.  Usinor Prospectus, footnote 316 above, pp. 23-24, 84. 
430 The Appellate Body indicated: 
 "This language in Article 11.3 makes clear that it envisages a process combining both 
investigatory and adjudicatory aspects.  In other words, Article 11.3 assigns an active rather 
than a passive decision-making role to the authorities.  The words 'review' and 'determine' in Article 11.3 suggest that authorities conducting a sunset review must act with an appropriate 
degree of diligence and arrive at a reasoned conclusion on the basis of information gathered as 
part of a process of reconsideration and examination.  In view of the use of the word 'likely' in Article 11.3, an affirmative likelihood determination may be made only if the evidence 
demonstrates that dumping would be probable if the duty were terminated – and not simply if 
the evidence suggests that such a result might be possible or plausible."   
Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 111 (footnotes 
omitted). WT/DS212/RW 
Page 88  
 
 whether it was for the respondents to justify that discount.  In a subsidy case such as this one, the 
government that is privatising its own company is best placed to provide specific information 
regarding the conditions of that privatization.  It  is therefore reasonable to conclude that it is 
incumbent on the GOF to provide the justification for the 20 per cent discount on the employee share offering.  The Panel has closely examined the Fran ce Section 129 determination and failed to find that 
the respondents provided such evidence.  We have also asked the European  Communities to specify 
which evidence it provided.  Even after a specific question by the Panel, however, the European 
Communities declined to submit any additional evid ence or explanation and merely reiterated its 
argumentation that the 20 per cent discount reflects a risk premium.
431 
7.155  The European Communities also  argues that the USDOC should have considered normal 
commercial practices in this context.  The Eu ropean Communities asserts that it is common among 
public offerings throughout the world, including in the context of privatizations, to offer shares to 
employees or former employees at a specific rate.432  The Panel does not consider this to be a valid 
argument.  Whether it may be common practice to make shares available to one's employees/former 
employees at non-FMV prices is irrelevant.  The issue is whether the transactions at issue occurred at 
FMV or not. 
7.156  The Panel therefore concludes that, given the evid ence in the record of the France Section 129 
determination, the USDOC's analysis and subseque nt conclusion that the employee/former employee 
share offering was not for FMV was not unreasonable. 
(iii) Conclusion 
7.157  We have found that the USDOC did not properly establish that the sales transactions 
pertaining to Usinor's employee/former employee share offering were not at arm's length because the 
USDOC did not provide an adequate and reasone d explanation as to why Usinor's employees and 
former employees were related to Usinor and, more importantly, to the GOF.  However, we have also explained that the USDOC's conclusion on arm's length is not dispositive with respect to the 
continuation of benefit since the arm’s-length test is  an ancillary examination linked to the concept of 
FMV, which ultimately provides the context for, and otherwise informs, the decision on FMV.   
7.158  We have also found that, given the evidence on the record of the France Section 129 
determination, the USDOC's analysis  and subsequent conclusion that the sale transactions pertaining 
to the employee/former employee share offering were  not for FMV was not unreasonable.  Therefore, 
we conclude that, although the USDOC failed to pr ovide an adequate and reasoned explanation as to 
why Usinor's employees and former employees were re lated to Usinor and, more importantly, to the 
GOF, the USDOC's analysis of the conditions of Us inor's privatization, specifically whether the 
employee/former employee share offering occurre d at arm's length and for FMV, was neither 
inadequate nor unreasonable.  
(c) Whether the maintenance of the existing counterva iling duties is inconsistent with Articles 10, 
14, 19.4, 21.1 and 21.3 of the SCM Agreement and Article VI:3 of the GATT 1994  
7.159  Having found that the USDOC's conclusion that the employee/former employee share 
offering was not at arm's length and for FMV was not  inadequate or unreasonable, we shall examine 
whether the United States, by maintaining the count ervailing duties on the basis of that finding, acted 
inconsistently with its obliga tions under Article VI:3 of the GATT 1994 and Articles 10, 14, 19.4, 
21.1, and 21.3 of the SCM Agreement,  and has therefore failed to implement the recommendations 
and rulings of the DSB.   
                                                     
 
431 EC Response to Panel question No. 30. 
432 EC First written submission, footnote 71; EC Oral statement, para. 6.  WT/DS212/RW 
 Page 89 
 
 
 7.160  We shall commence by examining the USDOC’ s affirmative conclusion to maintain the 
countervailing duties on the grounds that there is a likelihood of continuation or recurrence of 
subsidization if these duties were to be revoked.   The USDOC states the following in the France 
Section 129 determination: 
“The evidence presented on the record of th is determination demonstrates that, with 
the exception of the employee offering, whic h constituted 5.16 per cent of the sale, 
the privatization of Usinor was at arm’s length and for fair market value.  While 
certain aspects of the sales process for st able shareholders made the process less 
open, the price paid by the stable shar eholders was an arm’s-length price and it 
exceeded our measure of fair market value, FF 86 - 89. Regarding the shares sold to 
Usinor’s employees, we determine that these sales were not at arm’s length. Nor can 
the sales at FF 68 be considered transactions at fair market value."433 
7.161  The USDOC further concluded that "[t]he sale of shares to Usinor employees at prices below 
fair market value did not extinguish certain allo cable, nonrecurring, pre-privatization subsidies that 
continue at an above de minimis rate beyond the original sunset review.  Under these circumstances, 
the [USDOC] finds that countervailable subsidies ar e likely to continue or recur in the event of 
revocation".434  The Panel finds the scope of this conclusion unclear.   
7.162  We note that, in response to respondent's comments, the USDOC explains:  
“In this determination, we have applied the approach laid out in our Modification 
Notice, which states that, where we find th at the baseline presumption is not rebutted 
because a transaction was not made at arm’s length and for fair market value, or 
because of severe market distortions, 'we will find that the company continues to 
benefit from the prior subsidies in the full amount of the remaining unallocated balance of the subsidy benefit'."
435 
7.163  Although the USDOC never explicitly identified the remaining unallocated balance, it did 
find that only 5.16 per cent of the shar es was not sold at arm's length/FMV.436  Therefore, it seems 
reasonable to conclude that the remaining unallocated  balance of the subsidy benefit consisted of the 
5.16 per cent.437  The United States confirmed this underst anding through its written submissions and 
later in response to a question by the Panel.438   
                                                      
433 France Section 129 determination, footnote 208 above, p. 12. 
434 France Section 129 determination, footnote 208 above, p. 12. 
435 France Section 129 determination, footnote 208 above, p. 15. 
436 France Section 129 determination, footnote 208 above, p. 12. 
437 The Panel notes that the USDOC issued two Section 129 determinations concerning the Usinor 
privatization on two original investiga tions subject to this Panel during the original proceedings .  In both cases, 
the USDOC revised its analysis of Usinor's privatizati on further to its new privatization methodology and found 
that the privatization was at arm's length/FMV except for 5.16 per cent of the sales transactions that pertained to the employee share offering.  The USDOC concluded that only 5.16 per cent of the benefit passed through to the 
privatized company and recalculated th e rates of subsidization to exclude the pre-privatization subsidies found 
to be non-countervailable.  Sin ce the recalculated rates were de minimis , the USDOC decided to revoke the 
countervailing duties.  Issues and Decision Memorandum for the Section 129 Determination: Final Affirmative 
Countervailing Duty Determination: Stainless Steel Sheet  and Strip in Coils from France, pp. 11-12 (24 October 
2003); Issues and Decision Memora ndum for the Section 129 Determinati on: Final Affirmative Countervailing 
Duty Determination: Certain Cut-to-Length Carbon Qua lity Steel Plate from France, p. 12 (23 October 2003). 
438 US First written submission, paras. 31, 32; US Oral  statement, paras. 24-26; US Response to Panel 
question No. 33.   WT/DS212/RW 
Page 90  
 
 7.164  Having found that only 5.16 per cent of the benefit continues, the question is why the United 
States maintained the duties at the original level.   We recall that the USDOC conducted an order-wide 
review where no company-specific calculations took place.  As explained in paragraphs 7.30-7.31 
above, in the absence of recalculation, the finding that any subsidization remains serves as the basis of 
an affirmative conclusion of likelihood of con tinuation or recurrence of subsidization.   
7.165  We shall now examine whether the maintenan ce of the existing countervailing duties on the 
basis of a finding that only 5.16 per cent of the be nefit passes through is incons istent with Articles 10, 
14, 19.4, 21.1 and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994 , as claimed by the 
European Communities.  It is useful  to recall briefly these provisions:  
7.166  Article 10 of the  SCM Agreement  provides that "Members shall take all necessary steps to 
ensure that the imposition of a countervailing duty on any product of the territory of any Member 
imported into the territory of another Member is in accordance with the provisions of Article VI of 
GATT 1994 and the terms of this Agreement."
439 (footnote omitted)  Article VI:3 of GATT 1994 
precisely permits Members of the WTO to impose a "countervailing duty" on products imported from other Members of the WTO "for the purpose of offs etting any bounty or subsidy bestowed, directly, 
or indirectly, upon the manufacture, production or export of any merchandise."
440   
7.167  Article 14 of the  SCM Agreement  requires that "any method used by the investigating 
authority" of a WTO Member "to calculate the benef it to the recipient … shall be provided for in the 
national legislation or implementing regulations of the Member concerned and its application to each 
particular case shall be transparent and adequately explained."441   
7.168  Article 19.4 of the SCM Agreement  further provides that "[n]o countervailing duty shall be 
levied on any imported product in excess of the amount of the subsidy found to exist, calculated in 
terms of subsidization per unit of the subsidized and exported product".   
7.169  Article 21.1 of the SCM Agreement  reads: “[a] countervailing duty shall remain in force only 
as long as and to the extent necessary to counteract  subsidization which is causing injury”.   
7.170  Article 21.3 of the SCM Agreement  further emphasizes the exceptional character of 
countervailing measures by providing for the general ru le of termination of the CVDs no later than 
five years from imposition, with one exception i.e., the likelihood of continuation or recurrence of 
subsidization and injury to be establishe d by means of a review investigation: 
"[n]otwithstanding the provisions of paragr aphs 1 and 2, any definitive countervailing 
duty shall be terminated on a date not later than five years from its imposition ... , unless the authorities determine, in a review initiated before that date ... that the 
expiry of the duty would be likely to lead to continuation or recurrence of 
subsidization and injury." (Footnote omitted.) 
7.171  In this regard, the Appellate Body in the orig inal proceedings agreed with this Panel that, 
under Article 21.3  of the SCM Agreement , regardless of whether administrative reviews under Article 
21.2 of the SCM Agreement  had been requested since the original investigation, the importing 
Member is obliged to consider ev idence before it relating to subsidi zation and obliged to  determine  
whether a "benefit" continues to exist following the privatization of the investigated firm before 
concluding "whether subsidization exis ts and is likely to continue or recur".  The Appellate Body also 
agreed with this Panel in that, in sunset review s, the investigating authority, before deciding to 
                                                     
 
439 Article 10 of the  SCM Agreement.  
440 Article VI:3 of the GATT 1994 . 
441 Article 14 of the  SCM Agreement.   WT/DS212/RW 
 Page 91 
 
 
 continue to countervail pre-privatization, non-recurring  subsidies, is obliged to examine the conditions 
of such privatizations and to de termine whether the privatized producers received any benefit from the 
prior subsidization to the state-owned producers.442   
7.172  We have found in paragraph 7.122 above that the USDOC's segmented analysis of Usinor's 
privatization was not unreasonable.  We have furt her concluded in paragra phs 7.138 and 7.140 above 
that, although the USDOC did not provide an ade quate and reasoned explanation on arm's length, the 
arm's length test is merely an ancillary examina tion that provides the context for, and otherwise 
informs, the decision on FMV.  In addition, in pa ragraph 7.156 above, we c oncluded that the USDOC 
provided a reasoned and adequate conclusion on whether the employee/former employee share 
offering occurred for FMV.  Therefore, the USDO C has not failed to examine the conditions of 
Usinor's privatization and to determine that the pr ivatized Usinor continued to receive some benefit 
from pre-privatization subsidization to the state- owned Usinor.  We therefore find that the United 
States did not act inconsistently with Articles 14 and 21.3 of the SCM Agreement  as regards the 
consideration of Usinor's privatization when  making its likelihood-of-subsidization analysis. 
7.173  We shall now examine whether the continuation of  the measure is inconsistent with Article 
VI:3 of the GATT 1994  and Articles 10, 19.4 and 21.1 of the SCM Agreement , as claimed by the 
European Communities.  In this regard, the Appellate  Body found in the original proceedings that the 
interplay of Article VI:3 of the GATT 1994  and Articles 10, 19.4 and 21.1 of the SCM Agreement 
prescribes an obligation to limit countervailing duties to the amount and duration of the subsidy found 
to exist by the investigating authority.  It also conc luded that this obligation applies to both original 
investigations as well as revi ews covered by Article 21 of the SCM Agreement , thus including sunset 
reviews under Article 21.3 of the SCM Agreement , such as the re-determinations at issue in this 
dispute.443   
7.174  The Panel is conscious that the Appellate Body has condoned the practice of order-wide 
sunset reviews and that it has actually ruled that  since the United States has chosen to conduct its 
sunset reviews on an order-wide basis, the cons istency of the likelihood determination must be 
evaluated in the context of an order-wide determination.444  In that context, the Panel understands that 
where no recalculation of the rate of subsidization as found in the original investigation is made, the 
finding that a small part of the benefit passes thr ough to the privatized producer can serve as the basis 
of the affirmative likelihood-of-subsidization conclu sion and thus the maintenance of the duties.   
7.175  However, this does not mean that the Un ited States will necessarily be collecting 
countervailing duties at the level set by the original  order.  We recall that the United States has a 
retrospective system for the assessment and collection of duties.445  In the context of this system, the 
Panel understands that an exporter can request an annual or changed circumstances review.  
Accordingly, the Panel has no reason to believe that the USDOC finding that 5.16 per cent of the 
benefit from pre-privatization, non-recurring subsidie s passed through to the privatized producer, will 
not be reflected in the level of any countervailing duty actually imposed on Usinor.446   
                                                      
442 Appellate Body Report on US – Countervailing Measures on Certain EC Products , paras. 148-149; 
Panel Report on US – Countervailing Measures on Certain EC Products , paras. 7.114–7.116.  
443 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 149; see 
Panel Report on US – Countervailing Measures on Certain EC Products , paras. 7.114–7.116. 
444 See paragraphs 7.30-7.31 above. 
445 See 19 U.S.C. § 1671 (2003) (concerning the imposition of countervailing duties); 19 U.S.C. § 
1675(a) (2003) (concerning administrative reviews); 19 U.S.C. § 1675(b) (2003) (concerning changed 
circumstances reviews); 19 U.S.C. § 1505 (2003) (concerning the deposit of estimated duties); 19 U.S.C. § 1520 (2003) (concerning the refund of excess deposits).  
446 The Panel notes that it is not finding that a retrospective system somehow renders the USDOC's 
affirmative likelihood-of-subsidization re-determination no t inconsistent with the relevant provisions of the WT/DS212/RW 
Page 92  
 
 7.176  Therefore, in the absence of an obligation to recal culate a rate of subsidization in the context 
of a sunset review and given the fact that the Unite d States is not relying on the sunset review as a 
basis for collecting duties at a particular rate , the Panel finds that the USDOC’s affirmative 
likelihood-of-subsidization re-determination as set out  in the France Section 129 determination is not 
inconsistent with Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  and Article VI:3 of the 
GATT 1994  in regard to the obligation to limit counterva iling duties to the amount and duration of the 
subsidy.  Therefore, the United States has not faile d to implement the recomme ndations and rulings of 
the DSB. 
C. C
UT-TO-LENGTH CARBON STEEL PLATE FROM UNITED KINGDOM  
1. Background  
7.177  On 8 January 2003, the DSB adopted the reports of  the original panel and the Appellate Body. 
The Panel found that the sunset review determination on Cut-to-Length Carbon Steel Plate From the 
United Kindom  was inconsistent with Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement .447  
The Appellate Body subsequently affirmed the Panel's conclusion.448 
7.178  As indicated in paragraph 7.89 above, following the adoption of the original panel and 
Appellate Body reports by the DSB on 8 January 20 03, the USDOC issued the Modification Notice, 
which the European Communities did not challenge in th is dispute.  It also reviewed its determination 
on the likelihood of continuation or recurrence of s ubsidization contained in the original sunset 
review, which had been found inconsistent with the SCM Agreement .  Accordingly, the USDOC 
issued its Issues and Decision Memorandum: Section 129 Det ermination: Final Results of Expedited 
Sunset Review of Cut-to-Length Carbon Steel Plate From the United Kingdom  ("UK Section 129 
determination") on 24 October 2003.  
7.179  The original countervailing duty on these produc ts from the UK was imposed on 17 August 
1993 with a countrywide ad valorem  rate of 12 per cent and a company-specific ad valorem  rate for 
Glynwed of 0.73 per cent.449  The sunset review determination, published on 7 April 2000, found that 
"revocation of the countervailing dut y order would be likely to lead to continuation or recurrence of a 
subsidy".  The USDOC reported to the USITC that the net countervailable subsidy rate likely to 
prevail was 0.73 per cent for Glynwed and 12 per cent for all other British producers and exporters.450 
2. The measure taken to comply 
7.180  As concluded in paragra ph 7.18 above, the measure taken to comply as regards Cut-to-Length 
Carbon Steel Plate From the United Kingdom  is the affirmative likelihood-of-subsidization re-
determination set out in the UK Section 129 determination. 
3. The claims 
7.181  With respect to the UK Section 129 determin ation, the European Communities requests the 
Panel to make the following findings: 
                                                                                                                                                                     
GATT 1994 and the SCM Agreement.  Rather, the Panel notes that the United States' retrospective system 
functions in a way that ensures that excess duties are not collected pursuant to a sunset review. 
447 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.1(c).  
448 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 161(a). 
449 Countervailing Duty Order: Certai n Steel Products from the United Kingdom, 58 Fed. Reg. 43748, 
43749 (17 August 1993); see Final Affirmative Countervailing Duty Determination: Certain Steel Products from the United Kingdom, 58 Fed. Reg. 37393, 37399 (9 July 1993). 
450 Cut-to-Length Carbon Steel Plate From the United Kingdom; Final Results of Expedited Sunset 
Review of Countervailing Duty Order, 65 Fed. Reg. 18309, 18310 (7 April 2000) (Exhibit US-4).  WT/DS212/RW 
 Page 93 
 
 
 (i) that the United States has failed to implement the recommendations and 
rulings adopted by the DSB and acted inc onsistently with its obligations under 
Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  and Article VI:3 of the 
GATT 1994  by refusing to examine whether, and for failing to find that, the 
privatization of BS plc in Cut-to-Lengt h Carbon Steel Plate from the United Kingdom 
was at arm's length and for FMV. 
(ii) that the United States has acted in consistently with its obligation under 
Article 21.3 of the SCM Agreement  because it failed to consider evidence  on the 
record in Cut-to-Length Carbon Steel Plate from the United Kingdom demonstrating that the benefits from programmes found to  confer countervailable subsidies no 
longer existed. 
(iii) that the United States failed to meet its obligations under Articles 21.3 of the 
SCM Agreement  because it did not examine in, inter alia , Cut-to-Length Carbon Steel 
Plate from the United Kingdom , whether expiry of the duty would be likely to lead to continuation or recurrence of material injury.
451 
7.182  The United States rejects all the claims that th e European Communities raised arguing that the 
USDOC assumed that the privatization of BS plc wa s at arm's length and for fair market value and 
that it was not required to consider the evidence submitted during the Section 129 proceedings for the 
purpose of rendering the sunset review determinatio n "not inconsistent" with the recommendations 
and rulings of the DSB.  It was also not obliged to make a new likelihood-of-injury determination.  
7.183  The Panel recalls its findings in paragraphs 7. 31 and 7.72-7.76 above that the likelihood-of-
injury determination is not part of the measure ta ken to comply and that therefore the claim on the 
failure to re-determine the likelihood of continuation or  recurrence of injury is not part of this Panel's 
mandate.  Thus, the Panel will not address the Eur opean Communities' injury claim in these Article 
21.5 proceedings.   
7.184  In light of the European Communities' claims and parties' debates on these claims during the 
Panel proceeding, the Panel will proceed to examin e each one of the two claims in the following 
sections for the purpose of reaching conclusion s on the consistency of the UK Section 129 
determination with the recommendati ons and rulings of the DSB and the relevant provisions of the 
covered agreements as invoked by the Europ ean Communities in its Panel request.   
4. Whether the USDOC's failure to examine the pr ivatization of BS plc and to determine 
whether the privatization occurred at arm's length and for FMV is inconsistent with 
Articles 10, 14, 19.4, 21.1 and 21.3 of the  SCM Agreement and Article VI:3 of  the GATT 
1994  
(a) Arguments of the parties 
7.185  The European Communities argues that the USDO C refused to consider in the UK Section 
129 determination whether, under the modified privati zation methodology, BS plc had been privatized 
in a manner that extinguished the benefits confe rred by the non-recurring subsidies bestowed to the 
state-owned producer prior to its privatization.452 
7.186  The European Communities submits that there was evidence in the record demonstrating that 
the privatization of the BS plc was conducted at arm's length and for FMV.  Article 21.3 of the SCM  
                                                      
451 EC First written submission, para. 72. 
452 EC First written submission, para. 14. WT/DS212/RW 
Page 94  
 
 Agreement  obliges authorities to evaluate all evidence on the record in determining whether subsidies 
are likely to continue or recur, not merely to assume that the likelihood of continuation or recurrence exists.  By refusing to consider evidence of priv atization which demonstrated that the benefit no 
longer existed, the United States acted in consistently with Article 21.3 of the SCM Agreement .
453  
7.187   The European Communities also  argues that Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM 
Agreement  as well as Article VI:3 of the GATT 1994  require that an investigating authority examine, 
in a sunset review, whether a benefit  continues to exist after privatiza tion before imposing or 
maintaining a duty.  By refusing to examine the priv atization, the United States acted inconsistently 
with its obligations under these provisions.454   
7.188  In this regard, the European Communities cit es the original panel report conclusion, in 
paragraph 8.1(c), which was upheld by the Appella te Body Report in paragraph 153, that in the 
original sunset review determinations, the USDOC "did not examine whether the privatizations, that 
occurred after the original imposition of countervailing duties, were at ar m's length and for fair market 
value.  Thus the United States failed to determin e whether the privatized producers received any 
benefit from the financial contributions previously bestowed to the state-owned producers.  By failing 
to determine the likelihood of continuation or recurre nce of a subsidization, prior to its decision to 
maintain countervailing duties, the United States has violated Articles 14, 19.4, 21.1 and 21.3 of the SCM Agreement".
455  The European Communities also points out the original Panel's finding, 
confirmed by the Appellate Body, that because the United States had maintained countervailing duties 
that were inconsistent with these provisions, th e United States also violated Article 10 of the SCM 
Agreement  which requires that countervailing duties must be  imposed or maintained consistently with 
the SCM Agreement.456   
7.189  The European Communities also argues that by refusing to examine the privatization, the 
Section 129 determination is not in compliance w ith the conclusion of the Appellate Body in 
paragraph 161 (a) that the United States acted incons istently with its obligations under Articles 10, 14, 
19.4, 21.1 and 21.3 of the SCM Agreement  by "imposing and mainta ining countervailing duties 
without determining whether a 'benefit' continue to exist".457   
7.190  The United States argues that the USDOC assumed for purpose of its likelihood 
determination that the privatization of BS plc w as conducted at arm's length and for FMV and entirely 
extinguished all benefits from pre-privatization, non-recurring subsidies in question.  Therefore, the 
USDOC did not rely on any benefit from allocable, pr e-privatization subsidies in determining whether 
subsidization was likely to continue or recur if the order were revoked.458   
7.191  Rather, the United States argues that the UK Section 129 determination was based on 
evidence wholly unrelated to the (allocable, non-recu rring) pre-privatization subsidies.  One private 
company Glynwed continued to benefit from a ll subsidies that had been bestowed upon it.459 
7.192  The United States points out that despite the f act that the USDOC did not rely on the non-
recurring pre-privatization subsidies to the stat e-owned companies in determining whether the 
privatized company would continue to benefit fro m subsidies if the countervailing duty order were 
                                                      
453 EC First written submission, paras. 47-50; EC  Second written submission, paras. 7, 53, 57, 61. 
454 EC First written submission, para. 30. 
455 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.1(c); Appellate 
Body Report on US – Countervailing Measures on Certain EC Products , para. 153. 
456 EC First written submission, paras. 66-67. 
457 EC First written submission, para. 70 ( quoting  Appellate Body Report on US – Countervailing 
Measures on Certain EC Products , para. 161(a)). 
458 US First written submission, paras. 4, 48; US Second written submission, para. 11. 
459 US First written submission para. 48.  WT/DS212/RW 
 Page 95 
 
 
 revoked, the European Communities nevertheless ch allenges the UK Section 129 determination on the 
ground that the USDOC failed to examine whether the privatization was at arm's length and for FMV.  In the view of the United States, the Eur opean Communities' argument elevates form over 
substance.
460  
7.193  The US argues that because the USDOC assumed that  the privatization of the BS plc was at 
arm's length and for FMV, and that thus it did not rely on pre-privatization subsidies in making the 
determination, the revised determination can not be inconsistent with th e DSB recommendations and 
rulings.461  
7.194  The United States argues that the original sunset  review in the UK case expressly stated that 
Glynwed continued to be subsidized, and that the European Communities did not challenge that 
aspect of the original sunset review determination in  the original proceedings.  Therefore, neither the 
original panel nor the Appellate Body considered  the issue in the underlying proceedings.  Because 
the European Communities did not challenge that co nclusion in the original proceedings, the United 
States maintains that it cannot ask this Panel to exam ine this aspect of the orig inal sunset review for 
the first time in these Article 21.5 proceedings.462 
7.195  The USDOC explained in its UK Section 129 determination that as the sunset review 
determination was made on an order-wide rath er than company-speci fic basis, examining 
privatization was not necessary for the USDOC to arrive at an affirmative sunset likelihood 
determination with respect to the order as a whole.463 
(b) Evaluation by the Panel 
7.196  The European Communities argues that the USDOC refused to ex amine the privatization of  
BS plc and to determine whether the privatization was at arm's length and for FMV and consequently 
extinguished the benefit of pre-privatization subsidies.   It claims that the failure to examine and to 
determine these issues is inconsistent with  Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  
and Article VI:3 of the GATT 1994 .  In response, the United St ates contends that the USDOC 
assumed that the privatization of BS plc was at arm's length and for FMV.  However, the United 
States argues, the affirmative likelihood-of-subs idization determination in the UK Section 129 
determination was made on anothe r basis, namely, that another private firm, Glynwed, was still 
benefiting from non-recurring subsidy programmes.  Th erefore, in its view, the determination cannot 
be inconsistent with the recommenda tions and rulings of the DSB.   
7.197  With these arguments in mind, the Panel considers that it is appropriate to first have recourse 
to the relevant findings of the original panel and the Appellate Body to identify the specific 
requirements imposed by the SCM Agreement  on the investigating authorities regarding the 
privatization analysis during a sunset review.  Based on these requirements, the Panel will then 
determine whether these requirements were actually  met in the UK Section 129 determination. 
(i) The United States' obligations pursuant to the fi ndings in the original proceedings regarding 
the USDOC's privatization  analysis 
7.198  The Appellate Body found in the original pro ceedings that where an investigating authority 
receives information regarding a privatization in the process of an administrative or sunset review,  
                                                      
460 US First written submission para. 49. 
461 US First written submission, para. 49; US Second written submission, para. 11. 
462 US Oral statement, paras. 18, 22. 
463 UK Section 129 Determination, footnote 208 above, p. 5.  WT/DS212/RW 
Page 96  
 
 the investigating authority is under an obligation to make a finding on whether a subsidy benefit 
continues to exist :   
"We have already determined, in  US – Lead and Bismuth II , that the gamma  method 
is inconsistent with the oblig ation under Article 21.2 of the SCM Agreement .  That 
obligation requires an investigating authority in an  administrative  review, upon 
receiving information of a privatization  resulting in a change in ownership, to 
determine whether a 'benefit' continues to exist.   In our view, the  SCM Agreement , by 
virtue of Articles 10, 19.4, and 21.1, al so imposes an obligation to conduct such a 
determination on an investiga ting authority conducting a  sunset  review."
464 
It is clear from this finding that such an obligation is imposed by Articles 10, 19.4 and 21.1 of  the 
SCM Agreement  in the case of a sunset review.  
 7.199  More specifically, the Appellate Body also upheld  the Panel's finding that, when informed of 
a privatization, the authority is required, by Articles 10,19.4, and 21.1 of the SCM Agreement  as well 
as Article VI:3 of the GATT 1994 , to examine the conditions of privatization and to determine whether 
the privatised producer continues to benefit from non-recurring pre-privatization subsidies before 
deciding to countervail those subsidies: 
"As we observed earlier, the interplay of GATT Article VI:3 and Articles 10, 19.4, 
and 21.1 of the SCM Agreement  prescribes an obligation applicable to original 
investigations as well as to reviews covered under Article 21  of the SCM Agreement  
to limit countervailing duties to the amount and duration of the s ubsidy found to exist 
by the investigating au thority.  Consequently, we see no error in the Panel's finding 
that, in sunset reviews, the investigating authority,  before deciding to continue to 
countervail pre-privatization, non-recurring s ubsidies, is obliged to 'examine the 
conditions of such privatiza tions and to determine wheth er the privatized producers 
received any benefit from the prior subsidiz ation to the state-owned producers'.  
Therefore, we agree with the Panel that th e 'four determinations made in the context 
of sunset reviews and based on the gamma  methodology are inconsistent with the 
SCM Agreement [because] the United St ates failed to determine whether the 
privatized producers received any benefit fro m the financial contributions previously 
bestowed to the state-owned producers."
465  
In fact, here the Appellate Body upheld the original panel's conclu sion that the inconsistency of the 
four sunset review determinations, wh ich were based on the gamma methodology466, with relevant 
                                                      
464 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 149 
(emphasis added). 
465 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 149 
(emphasis added). 
466 As indicated in paragraph 7.198 above, the Appellate Body already upheld a panel finding that the 
gamma methodology was inconsistent with the SCM Agreement  in US – Lead and Bismuth II .  Appellate Body 
Report on US – Lead and Bismuth II , paras. 62, 75(b).  The gamma methodology was also one of the measures 
at issue during the original pro ceedings.  In the original proceedin gs, the Appellate Body explained:  
 
"The  gamma  method was formerly used by the USDOC to determine the extent to which a 
non-recurring financial contribution provided to a state-owned enterprise should be amortized 
over time to arrive at a countervailable subsidy rate, particularly after sale of the subsidized 
entity to a private firm.  In applying this method, the USDOC employed an 'irrebuttable presumption' that the benefits of the financial contribution would remain with the recipient 
over a standard period of time, such that 'USDOC does not undertake an inquiry into whether 
and, if so, to what extent the subsidy continues to benefit production at any subsequent point  WT/DS212/RW 
 Page 97 
 
 
 provisions of the SCM Agreement  was exactly because of the absence of a determination on whether 
the privatized producer received any benefit from th e pre-privatization subsidies given to the state-
owned enterprises.  7.200  On the issue of how the examination of conditio ns of privatization bears on the determination 
of whether a "benefit" continues to exist for the privatized producer, the Appellate Body found that an 
arm's-length and FMV  privatization  establishes a rebuttable presumption that benefits  from pre-
privatization subsidies bestowed to the state-owned company cease to exist  for the privatized 
producer: 
"The effect of such a privatization is to sh ift to the investigating authority the burden 
of identifying evidence which establishes that the benefit from the previous financial 
contribution does indeed continue beyond privatization.  In the absence of such proof, 
the fact of the arm's-length, fair market valu e privatization is sufficient to compel a 
conclusion that the 'benefit' no longer exists for the privatized firm, and, therefore, 
that countervailing duties should not be levied.  This is an accurate characterization 
of a Member's obligations under the SCM Agreement ."
467  
7.201  The original panel made the following conclusi on with regard to the four sunset review 
measures (including the sunset reviews regarding UK, Spain and France): 
"The four determinations made in the c ontext of sunset reviews and based on the 
gamma methodology are inconsistent with  the SCM Agreement, since the US 
Department of Commerce did not examine whether the privatizations , that occurred 
after the original imposition of countervailing duties, were at arm's-length and for 
fair market value .  Thus the United States failed to determine whether the privatized 
producers received any benefit  from the financial contribut ions previously bestowed 
to the state-owned producers.  By failing to determine the likelihood of continuation 
or recurrence of a subsidization, prior to  its decision to maintain countervailing 
duties, the United States has violated Articles 14, 19.4, 21.1 and 21.3 of the SCM 
Agreement , which prohibit a Member, pursuant to  a sunset review, from maintaining 
countervailing duties where there has not b een any determination of likelihood of 
continuation or recurrence of subsidiza tion and thus of a continued need for 
countervailing duties.  Since the United St ates has maintained countervailing duties 
that are inconsistent with Articles 14, 19. 4, 21.1 and 21.3 the United States has also 
violated Article 10  which requires that countervailing duties be imposed or 
maintained consistently with the SCM Agreement. 
Therefore, the countervailing duty orders in – Cut-to-Length Carbon Steel Plate from United Kingdom  (C-412-815)   
(Case No. 8); 
– Certain Corrosion-Resistant Carbon Steel Flat Products from France  
(C-427-810) (Case No. 9);  
                                                                                                                                                                    
 
of time.  Rather the USDOC simply will countervail the amount of the subsidy originally 
allocated to the year' under review."   
 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 12. 
467  Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 126 
(emphasis added). WT/DS212/RW 
Page 98  
 
 – Cut-to-Length Carbon Steel Plate from Germany  (C-428-817) (Case No. 10); 
and  
– Cut-to-Length Carbon Steel Plate from Spain  (C-469-804) (Case No. 11). 
are inconsistent with Articles 10, 14, 19.4,  21.1 and 21.3 of the SCM Agreement."
468 
7.202  This conclusion of the original panel on the four sunset review measures was upheld by the 
Appellate Body in its conclusion stating that it: 
"upholds  the Panel's findings, in paragraphs 8. 1 (a), (b) and (c) of the Panel Report, 
that the United States has acted inconsiste ntly with Articles 10, 14, 19.1, 19.4, 21.1, 
21.2 and 21.3 of the  SCM Agreement , by imposing and maintaining countervailing 
duties without determining whether a 'benefit' continues to exist in the following 
countervailing duty determinations..."469 
7.203  From these findings of the Appellate Body and the original panel, it is clear that in a sunset 
review process involving privatization informatio n, the investigating authority is obliged under 
Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  to examine whether the privatization was 
at arm's length and for FMV in order to dete rmine whether the benefit from the non-recurring 
subsidies bestowed upon a  pre-privatized company c ontinues to exist for the privatized producer and 
to maintain the countervailing duties after making  an affirmative likelihood of continuation or 
recurrence of subsidization determination.    
(ii) The Panel's assessment of the USDOC's analysi s in the UK Section 129 determination  
7.204  With these findings of the original panel and th e Appellate Body in mind, the Panel will now 
examine the UK Section 129 determination to determ ine whether these obligations were met in the 
USDOC's privatization analysis.  Under the head ing "Privatization of British Steel plc", the UK 
Section 129 determination begins with a gene ral description of the privatization process: 
"In December 1987,470 the UK Secretary of State for Trade and Industry announced 
that the GOUK471 intended to privatize the British Steel Corporation (“BSC”).  In 
order to comply with corporate laws in  the United Kingdom, BSC was reorganized as 
British Steel plc (“BS plc”).  In Novemb er 1988, the GOUK sold two billion shares, 
at 125p per share, of BS plc to UK citizens and UK institutions.  The GOUK also sold shares on equity markets in th e United States, Canada, Japan , and Europe at the same 
price.  The GOUK retained one special shar e which gave it the authority to prohibit 
any person or persons acting in concert fro m acquiring more than 15 per cent of the 
shares. Employees of BS plc received a nominal amount of free shares and 
                                                     
 
468 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.1(c) (emphasis 
added). 
469 Appellate Body Report on  US – Countervailing Measures on Certain EC Products , para. 161 
(emphasis added).  
470 (footnote original ) All factual statements contained in this  section regarding the privatization of 
British Steel plc ("BS plc") were derived from National Audit Report, Report by the Comptroller and Auditor 
General entitled "Department of Trade and Industry: Sale  of Government Shareholding in British Steel plc," 
February 8, 1990 (submitted July 28, 2003 as Exhibit 12 of the Response of the United Kingdom and Corus Group plc to the Department's Questionnaire of July 2, 2003 in Cut-to-Length Carbon Steel Plate from the 
United Kingdom). 
471 GOUK stands for Government of the United Kingdom.  WT/DS212/RW 
 Page 99 
 
 
 preferential treatment in obtaining shares.  Pensioners of the company also received 
preferential treatment in obtaining shares."472 
7.205  Then, the UK Section 129 determination goes on to explain the main elements of the new 
privatization methodology in the Modification Notice.  Following this, the UK Section 129 determination does not apply the new methodology to the privatization of the BS plc.  Rather, the 
following statement is made: 
"However, even assuming arguendo , that, pursuant to an analysis under section 
129(b)(2) of the URAA, the [USDOC] were to find that the privatization of BS plc met all the criteria for rebutting the baselin e presumption set forth in the [USDOC's] 
Modification Notice
, such a finding would not affect the results in the instant 
determination that there would be a like lihood of continuation or recurrence of a 
countervailable subsidy if the order were revoked."473 
7.206  The UK Section 129 determination then refers to  the legislative history of the URAA and the 
USDOC's Sunset Policy Bulletin of 1998 to clarify that pursuant to Section III.A.2 of the Sunset 
Policy Bulletin, the determination of  likelihood would be made on an "order-wide" basis.  It then 
addresses the subsidies to Glynwed and concludes: 
"During the underlying CVD investigation,  the [USDOC] investigated another UK 
producer of subject merchandise, Glynwed , and determined a subsidy rate for 
Glynwed that was above de minimis .  In the Final Sunset Results , the [USDOC] 
determined that countervailable subsidies w ould likely continue or recur in the event 
of revocation. ... Even if we were to determine, pursuant to an analysis under the 
privatization  methodology  set forth in the Modification Notice , that subsidies  
received by BS plc prior to the sale of shares would not continue through or after the 
POR of the sunset review , we would still make an affirmative likelihood 
determination based on the determination in the Final Sunset Results  that programs 
previously determined to provide countervailable subsidies and/or benefit streams 
from such programs continue to benefit Glynwed , the other producer/exporter of the 
subject merchandise, for whom privatization is not an issue."474  
7.207  In sum, the USDOC made an affirmative likelihood of continuation or recurrence of 
subsidization determination based on the reason th at the subsidy programmes continued to benefit 
another company, Glynwed.  The US argues that  the revised sunset review was based on an 
"assumption" that the BS plc privatization was conducted at arm's length and for FMV and that the 
benefit from the pre-privatization subsidies were entir ely extinguished for the privatized firm BS plc.  
The phrases used in the UK Section 129 determination include "even assuming arguendo ...", and 
"even if we were to determine...".  
7.208  In fact, the last paragraph of the UK Sec tion 129 determination states that the arm's 
length/FMV issue on the privatization of British Steel  plc was not addressed in this determination: 
"The [USDOC] has received allegations that the privatization here was affected by 
'market distortions' such that any arm's length/fair market value findings would not warrant a determination that countervaila ble subsidies were extinguished by the 
privatization.  We do not need to a ddress the market distortion allegations, because 
                                                     
 
472 UK Section 129 determination, footnote 208 above, p. 3. 
473 UK Section 129 determination, footnote 208 above, p. 3. 
474 UK Section 129 determination, footnote 208 above, pp. 3-4 (emphasis added). WT/DS212/RW 
Page 100  
 
 we have not–for the reasons explained abo ve–addressed the arm's length/fair market 
value issue. "
475 
7.209  In this regard, the Panel recalls the findings of the original panel which were upheld by the 
Appellate Body stating that the original sunset review regarding UK was in consistent with Articles 
10, 14, 19,4, 21.1 and 21.3 of the SCM Agreement  because the USDOC " did not examine  whether the 
privatizations , that occurred after the original imposition of countervailing duties, were at arm's-
length and for fair market value  therefore the United States " failed to determine whether the 
privatized producers received any benefit  from the financial contributions previously bestowed to the 
state-owned producers and which resulted in the failure to make an affirmative likelihood of 
subsidization determination pr ior to the decision to mainta in the countervailing duties."476  
7.210  The Panel considers that the issue here is whether an assumption, if indeed such an 
assumption was made, meets the obligation set out by the original panel and the Appellate Body for a 
sunset review determination involvi ng privatization, which is, "to ex amine the privatization" and to 
"determine whether the privatized producer, the BS plc, received any benefit" from the non-recurring 
subsidies bestowed to the state-owned producer.   
7.211  The Panel notes in this regard, that the Appe llate Body interpreted the words "review" and 
"determine" in the context of an anti-dumping sunset  review as requiring that the authority must act 
with an appropriate degree of diligence and ar rive at a reasoned conclusion on the basis of 
information gathered as part of the pro cess of reconsideration and examination: 
"This language in Article 11.3 makes cl ear that it envisages a process combining both 
investigatory and adjudicatory aspects. ...  Article 11.3 assigns an active rather than a 
passive decision-making role to the authorities.   The words 'review' and 'determine' in 
Article 11.3 suggest that authorities conductin g a sunset review must act with an 
appropriate degree of diligence and arrive at a reasoned conclusion on the basis of 
information gathered as part of the pro cess of reconsideration and examination."477 
7.212  The Appellate Body also stated that the ordi nary meaning of the word "determine" includes 
"[c]onclude from reasoning or i nvestigation, deduce" as well as "[s]ettle or decide (a dispute, 
controversy, etc., or a sentence, conclusion, issue, etc.) as a judge or arbiter".478 
7.213  Considering the similarity of the text of Article 11.3, the anti-dumping sunset review 
provision, and that of Article 21.3, the counterva iling duty sunset review provision, as well as the 
similarity in their functions in the Anti-Dumping Agreement  and the SCM Agreement , respectively, the 
Panel considers that the same meaning of the word  "determine" in Article 11.3 of the Anti-dumping 
Agreement also applies to the wo rd "determine" under Article 21.3 in the context of countervailing 
duty sunset review.  Therefore, the authorities cond ucting a countervailing duty sunset review must 
act with an appropriate degree of diligence and arrive at a reasoned conclusion. 
7.214  Turning back to the UK Section 129 determinati on, the USDOC stated that "we have not – for 
the reasons explained above – addressed the arm's le ngth/fair market value issue".  Therefore, it is 
clear that there was no "examination" on " whether the privatization  was at arm's length and for fair 
market value ".  Nor was there a "determination" on whether the privatized producers received any 
benefit  from the financial contributions previously  bestowed to the state-owned producers " because 
there was no analysis in the UK Section 129 determination to that effect.  
                                                      
475 UK Section 129 determination, footnote 208 above, p. 4 (emphasis added). 
476 See pararaph 7.27 above. 
477 Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 111. 
478 Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 110.  WT/DS212/RW 
 Page 101 
 
 
 7.215  The Panel considers that there is a difference between "assumption" and "determination" in 
that a determination is required to be based  on sufficient evidence and adequate reasoning479 whereas 
an "assumption" needs not to be supported by evidence or reasoning.480  In this regard, what Article 
21.3 explicitly requires is a "determination", an obligation more burdensome for the investigating 
authority than that of an "assumption".   
7.216   In practice, the legal certainty of an assumption would also be different from that of a 
determination to the interested parties.  The Un ited States argues that the USDOC "assumed" that the 
privatization was at arm's length and for FMV and that the privatization therefore extinguished the 
benefit from the non-recurring subsidies bestowed on the state-owned enterprise.  However, for 
example, if BS plc were to request an assessment re view in the future, it is not clear whether such an 
assumption would be treated as a determination  that the privatization was conducted at arm's length 
and for FMV and that the subsidy benefit was extinguished for BS plc.481   
(iii) Conclusion 
7.217  For the reasons set out above, the Panel finds th at the United States failed to examine and to 
determine whether the privatization was at arm's le ngth and for FMV and whether the benefit from the 
non-recurring subsidies bestowed to the state-owned producer extinguished for the privatized BS plc.  
By failing to properly determine the likelihood of con tinuation or recurrence of subsidization prior to 
its decision to maintain countervailing duties, the Un ited States acted inconsistently with obligations 
under Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  
and therefore failed to implement the reco mmendations and rulings of the DSB.    
5. Whether the USDOC's treatm ent of evidence on the record during the Section 129 
proceedings is inconsistent with Article 21.3 of the SCM Agreement   
(a) Arguments of the parties 
7.218   The European Communities argues that duri ng the UK Section 129 proceedings, the USDOC 
refused to consider evidence in  the Corus/GOUK Section 129 Comment s which demonstrated that the 
subsidies would not continue or recur with respect  to Glynwed.  Those Comments showed that (i) 
Glynwed no longer produced the product subject to review because that component of its business had 
been sold to another private company, Niagara La Salle Corp., in 1999; (ii) there is no evidence that 
Glynwed had been benefiting from subsidies even at the time of the original countervailing duty 
investigation in 1993; and (iii) most importantly, all of the subsidy programmes that were not specific 
to BS plc (i.e., that could have been applied to Glynwed) either no longer existed or were no longer 
available to the UK steel industry.482   
7.219  In particular, the European Communities argues that Corus and GOUK submitted evidence in 
the Section 129 proceeding indicating that all of the subsidy programmes not specific to BS plc, on 
which the USDOC might have relied in calculating th e original countervailing duty for Glynwed, had 
been abolished or were no longer available to the UK steel industry.  Specifically, they explained in 
                                                      
479 See paragraphs 7.211 -7.213 above. 
480 The ordinary meaning of "assumption" is, inter alia , "[t]he action or an act of taking of something 
for granted; the taking of something as being true, for the sake of argument or action; something so assumed; a 
supposition".  The New Shorter Oxford English Dictionary , The New Shorter Oxford English Dictionary  
(Oxford University Press, 1993), 4th ed.,, Vol. I, p 134. 
481 In this regard, the US clarified in its replies to Panel questions that imports from BS plc were still 
treated as subsidized imports and countervailing duties we re levied against BS plc even after the UK Section 
129 determination.  To change that, the privatized firm, BS plc, would have to request an assessment review.  
See US Replies to Panel questions Nos. 41-42.   
482 EC First written submission, paras. 17, 51-53. WT/DS212/RW 
Page 102  
 
 their Comments the non-availability of four subsid ies programs to Glynwed, namely, the UK regional 
development grant under the Industry Act of 1972 a nd the Industry Development Act of 1982, the 
European Regional Development Fund, the ECSC Ar ticle 54 loans and interest rebates, and the 
preferential transportation rates provided by the government-owned British Rail.
483 
7.220  The European Communities also indicates in its  reply to a Panel question that it also 
submitted evidence during the Section 129 proceedings on the privatization of BS plc to support its 
claim that the privatization extinguished th e prior non-recurring privatization benefit.484 
7.221  The European Communities cites the panel in US –  Carbon Steel , where the panel stated that 
the authority's determination under Article 21.3 "shoul d rest on the evaluation of the evidence that it 
has gathered during the original investigation, the intervening reviews and finally the sunset 
review"485 and that "[t]heir 'duties of investigati on and evaluation preclude them from remaining 
passive in the face of possible shortcomings in  the evidence submitted.'  They 'must undertake 
additional steps, when the circumstances so require, in order to fulfil their obligation to evaluate all 
relevant factors.'"486  Therefore, in the European Communiti es' view, Article 21.3 requires more than 
merely assuming that the likelihood of  subsidization exists; rather, the conclusion to that effect must 
be based on the information gathered in the process.487  The European Communities also cited the 
Appellate Body's statements on standard of review  for anti-dumping sunset re view determinations in 
US –  Corrosion- Resistant Steel  Sunset Review  and US –  Oil Country Tubular Goods Sunset Reviews 
to argue that an investigating authority conduc ting a sunset review must "arrive at a reasoned 
conclusion" on the basis of "positive evidence".488  
7.222  The European Communities argues that the USDOC  did not consider all of the evidence on 
the record, and that by refusing to  consider evidence indicating that privatization of BS plc was at 
arm's length and for FMV and evidence demonstrati ng that subsidies no longer exist or were no 
longer available, it failed to meet the obligation un der Article 21.3 that authorities evaluate all the 
evidence on the record in making a li kelihood-of-subsidiza tion determination.489  In particular, the 
European Communities argues th at the USDOC failed to consider evidence on the record 
demonstrating that subsidy programs found to confer  benefits no longer exis ted or no longer applied 
to the UK steel industry and that Glynwed had sold  off the relevant assets and no longer produced the 
subject merchandise.490 
7.223  The United States argues that as the USDOC assu med that the pertinent privatization had 
extinguished all allocable pre-privatization subs idies, the affirmative likelihood-of-subsidization 
determination in the UK Section 129  determination was based on ev idence wholly unrelated to pre-
privatization subsidies.  It points out that the company Glynwed continued to benefit from all 
subsidies that had been bestowed on it.491 
7.224  The United States argues that neither the Appella te Body nor the original panel made any 
findings concerning these subsidy programs, which di d not involve the privatization methodology.  
                                                      
483 EC First written submission, paras. 53-57. 
484 EC Response to Panel question No. 42. 
485 EC First written submission, para. 47 (quoting Panel Report on US – Carbon Steel , para 8.95). 
486 EC First written submission, para. 48 (quoting Panel Report on US – Carbon Steel , para 8.117) 
(footnotes omitted); see also  Appellate Body Report on  US – Cotton Yarn , para. 73. 
487 EC First written submission, para. 49. 
488 EC Second written submission, para. 55 ( citing  Appellate Body Report on US – Corrosion-Resistant 
Steel Sunset Review , para. 114 ( quoting  Panel Report on US – Corrosion-Resistant Steel Sunset Review , para. 
7.271) and Appellate Body Report on US – Oil Country Tubular Goods Sunset Reviews , para. 234). 
489 EC First written submission, paras. 47, 50, 58; EC Second written submission, paras. 53, 56-57. 
490 EC First written submission, para. 51-57. 
491 US First written submission, para. 48.  WT/DS212/RW 
 Page 103 
 
 
 The USDOC findings concerning Glynwed in the UK case were unchanged  in the UK Section 129 
determination from the original sunset determination .  Because the recommendations and rulings of 
the DSB did not require them to be changed, th e European Communities ca nnot use the Article 21.5 
process to challenge them.492 
7.225   In the UK Section 129 determination, the USDOC  explained the refusal to consider the issue 
regarding Glynwed with its understanding that the duty of the authority in a Section 129 
determination is not to re-conduct the original su nset review in its totality, but to render it not 
inconsistent with the findings of the Appellate  Body.  The USDOC has done this and based on the 
conclusion regarding Glynwed in the original sunset review, the likelihood-of-subsidization 
determination in the UK Section 129 determination was proper.  In the view of the USDOC, it did not 
need to reopen issues that were resolved in the original sunset review and were not found to be 
inconsistent with the SCM Agreement.493  
7.226  In particular, the United States argues that the European Communities' arguments regarding 
Glynwed are not properly before th is Article 21.5 Panel because these arguments have nothing to do 
with privatization.  The United States submits th at the USDOC had decided in the original sunset 
review that Glynwed continued to receive count ervailable subsidies and the USDOC relied on that 
conclusion in its revised determination.  The fact  that the European Communities did not challenge 
the conclusion regarding Glynwed in the original  panel proceedings prevents this Panel from 
examining the Glynwed issue for the first time  as a part of these Article 21.5 proceedings.494 
7.227  The European Communities argues that as the Appellate Body stated in Canada – Aircraft 
(Article 21.5 – Brazil) that an Article 21.5 panel's mandate is to examine whether the new measure is 
in conformity with the WTO agreement cited by the complaining Member in its panel request.  It is 
therefore not sufficient for a Member merely to eliminate one erroneous aspect of the measure, if 
doing so exposes additional failures to comply with the SCM Agreement , nor may the Member refuse 
to bring those additional failures into compliance on the ground that they were not considered in 
previous stages of the WTO proceedings.495 
7.228  The European Communities also argues that it was impossible for the European Communities 
to raise issues regarding the expiry of the subsidy programs in the original panel proceedings as this 
issue only arose in the UK Section 129 determinat ion when the USDOC relie d on the application of 
these subsidy programmes to a specific firm as  the basis of its likelihood-of-subsidization 
determination.  Whereas the legal basis for the orig inal affirmative sunset review determination was 
the assumption that there would be a likelihood of co ntinuation or recurrence of subsidisation because 
of the non-cooperation of the producers concerned.496  
7.229    The European Communities contends that its  arguments regarding the non-existence of 
certain subsidies and those regarding the necessity  of fresh likelihood-of-injury findings made during 
the current proceedings are warranted since th ey are different from the situation in the EC – Bed Linen 
(Article 21.5 – India) case, where the complaining party raised, in the Article 21.5 proceedings, a 
claim that had already been dismissed by the original panel in that dispute.497 
                                                      
492 US First written submission, para. 18. 
493 UK Section 129 determination,  footnote 208 above, p. 7. 
494 US Oral Statement, paras. 15, 18-20. 
495 EC First written submission, para. 62 ( citing  Appellate Body Report on Canada – Aircraft 
(Article 21.5 – Brazil) , para. 37). 
496 EC Second written submission, para. 4; EC Oral statement, para. 14. 
497 EC Oral statement, paras. 12-13. WT/DS212/RW 
Page 104  
 
 (b) Evaluation by the Panel 
7.230  The Panel recalls that we found in paragraphs 7.18 and 7.71 above, that the measure taken to 
comply with the recommendations and rulings of the DSB is the affirmative likelihood-of-
subsidization re-determination set out in the UK Section 129 determination and that the European 
Communities 's new claim regarding the treatment of evidence by the USDOC during the Section 129 
proceeding is within the mandate of this Panel.  
7.231  Given that the European Communities' eviden ce claim is made under Article 21.3 of the SCM 
Agreement , the Panel considers it suitable to first iden tify the obligations under Article 21.3 of the 
SCM Agreement  regarding the treatment of evidence by the investigating authority during the sunset 
review process.  After that, the Panel will assess whether the treatment of evidence by the USDOC in 
the UK Section 129 determination is cons istent with such an obligation.  
(i) The United States' obligations under Artic le 21.3 of the SCM Agreement regarding the 
USDOC's treatment of evidence 
7.232  The Panel notes that in US – Corrosion-Resistant Steel Sunset Review,  the Appellate Body 
elaborated on the specific requirements of Article 11.3 of the Anti-Dumping Agreement , a provision 
that is almost identical to Article 21.3 of the SCM Agreement .  The requirements imposed on the 
investigating authority in the process of conducting a sunset review are as follows:  
"This language in Article 11.3 makes clear that it envisages a process combining 
 both investigatory and adjudicatory aspects.   In other words, Article 11.3 assigns an 
active rather than a passive decision-ma king role to the authorities. The words 
"review" and "determine" in Article 11.3 suggest that authorities conducting a sunset 
review must act with an appropriate degree of diligence and arrive at a reasoned 
conclusion on the basis of information gathered as part of a process  of 
reconsideration and examination.  In view of the use of the word "likely" in Article 11.3, an affirmative likelihood determination may be made only if the 
evidence demonstrates  that dumping would be probable if the duty were terminated – 
and not simply if the evidence suggests th at such a result might be possible or 
plausible."
498 
7.233  The Appellate Body in US – Corrosion-Resistant Steel Sunset Review  also upheld the panel's 
findings on the duty of an investigating authority: 
"The text of Article 11.3 contains an  obligation "to determine" likelihood of 
continuation or recurrence of dumping and in jury.  The text of Article 11.3 does not, 
however, provide explicit guidance regarding the meaning of the term "determine".  
The ordinary meaning of the word "determine" is to "find out or establish precisely" or to "decide or settle".  The requirement to make a "determination" concerning 
likelihood  therefore precludes an investigating aut hority from simply assuming that 
likelihood exists.   In order to continue the imposition of the measure after the expiry 
of the five-year application period, it is clear that the investigating authority has to 
determine, on the basis of positive evidence , that termination of the duty is likely to 
lead to continuation or recurrence of dumping and injury.  An investigating authority 
must have a sufficient factual basis to allow it to draw reasoned and adequate 
                                                     
 
498 Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review , para. 111 (emphasis 
added).  WT/DS212/RW 
 Page 105 
 
 
 conclusions  concerning the likelihood of such continuation or recurrence. (footnotes 
omitted)."499 
7.234  The Panel considers that the same requirement s given to the term "determine" under Article 
11.3 of the Anti-Dumping Agreement  are also applicable to the same term in a countervailing duty 
sunset review process by virtue of Article 21.3 of the SCM Agreement , given the fact that the texts of 
these two provisions are almost identical and so are the functions of these two provisions.  The 
obligation of an investigating authority in conducti ng a countervailing duty sunset  review is therefore 
to make a likelihood-of-subsidization determina tion based on positive evidence, not on assumption, 
and to arrive at a reasoned and adequate conclusion with the support of sufficient factual basis. 
7.235  The Panel also notes that the panel in US – Carbon Steel  reached the same conclusion 
regarding the evidentiary requirements under Article 21.3 of the SCM Agreement , that:  
"[A] determination of likeli hood under Article 21.3 must rest on a sufficient factual 
basis. 
An investigating authority's determinati on of the likelihood of continuation or 
recurrence of subsidization should rest on the evaluation of the evidence that it has 
gathered during the original investigation, the intervening reviews and finally the 
sunset review."500  
7.236  The original panel in this dispute also stated that the investigating authority is obliged to 
consider all evidence provided by any in terested party in a sunset review: 
"[I]n a sunset review investigation the im porting Member is obliged to examine at 
least all the evidence provided by any inte rested party, not just the importing 
producer, and relating to the existence or removal of the subsidization forming the 
basis for the countervailing measures; only th en can the investigating Member be able 
to conclude whether subsidization exists  and is likely to continue or recur."501 
7.237  From the review of the findings of the Appellate  Body and the panels in relevant previous 
cases, it is clear that under Article 21.3 of the SCM Agreement , the investigating authority has an 
obligation in sunset review proceedings to cons ider all evidence placed on its record to make a 
likelihood of subsidization and likelihood of injury determination.  The Panel considers that the same 
obligation also applies to the Section 129 proceedings  regarding the UK in the present dispute since it 
was designed to make revised sun set review determinations.   
7.238  The Panel therefore concludes that an investiga ting authority has the obligation to consider all 
evidence placed on the record in making a likelihoo d of continuation or recurrence of subsidization 
re-determination.  Without so do ing, the investigating authority could not ensure that the new 
measure, that is, the likelihood-of-subsidizati on re-determination set out in the Section 129 
determination, is based on a sufficient factual re cord and therefore satisfies the requirements of 
Article 21.3 of the SCM Agreement . 
                                                      
499 Appellate Body Report on US – Corrosion-Resistant Steel Sunset Review,  para. 114 ( citing Panel 
Report on  US – Corrosion-Resist ant Steel Sunset Review , para. 7.271) (emphasis added). 
500 Panel Report on US – Carbon Steel , paras. 8.94-8.95.  
501 Panel Report on US – Countervailing Measures on Certain EC Products , para. 7.114. WT/DS212/RW 
Page 106  
 
 (ii) The Panel's assessment of the USDOC's trea tment of evidence in the UK Section 129 
determination 
7.239  The Panel notes that the affirmative likelihood of subsidization re-determination in the UK 
Section 129 determination was solely b ased on subsidies provided to Glynwed: 
"Even if we were to determine, pursuant to an analysis under the privatization 
methodology set forth in the Modification Notice
, that subsidies received by BS plc 
prior to the sale of shares would not conti nue through or after the POR of the sunset 
review, we would still make an affirma tive likelihood determination based on the 
determination in the Final Sunset Results  that programs previously determined to 
provide countervailable subsidies and/or benefit streams from such programs  
continue to benefit Glynwed , the other producer/exporter of the subject merchandise, 
for whom privatization is not an issue."502 
7.240  With regard to Glynwed, the Corus group and the GOUK presented comments and evidence 
to the USDOC during the Section 129 proceedings to  support their argument that Glynwed no longer 
benefited from any subsidy programmes because the se programmes either no longer existed or were 
no longer available to the UK steel industry.  In pa rticular, they alleged the non-availability of four 
subsidy programmes to Glynwed, namely, the UK regi onal development grants under the Industry Act 
of 1972 and the Industry Development Act of 1982,  the European Regional Development Fund, the 
ECSC Article 54 loans and interest rebates, as well as the preferential transportation rates provided by the government-owned British Rail.
503   
7.241  The USDOC did not consider the evidence produced by Corus and the GOUK during the 
Section 129 proceedings.  The Section 129 determ ination explained the reason for this refusal: 
"The [USDOC's] duty, ... is not to re-conduct th e original sunset review in its totality, 
but to render it not inconsistent with th e findings of the Appellate Body.  The 
[USDOC] has done this by determining that , based on the conclusions in the sunset 
review regarding Glynwed, the [USDOC 's] sunset likelihood determination was 
proper. 
The [USDOC] is not reopening issues in this determination that were resolved in the 
sunset review and were not found by the A ppellate Body to be inconsistent with the 
SCM Agreement."504 
7.242  The United States also argued during these proceedings that the USDOC had decided in the 
original sunset review that Glynwed continued to receive countervailable subsidies and that the 
USDOC had merely relied on that conclusion in the UK Section 129 determination.  Since the 
European Communities did not challenge the conclu sions regarding Glynwed in the original panel 
proceedings, the United States contended that the European Communities' claim does not constitute a 
part of the mandate of this Article 21.5 Panel.505 
7.243  The European Communities argues that it coul d not have raised a claim regarding the 
evidence pertaining to Glynwed because the determina tion in the original sunset review was based not 
                                                      
502 UK Section 129 determination, footnote 208 above, p. 4 (emphasis original). 
503 EC First written submission, paras. 53-57. 
504 UK Section 129 determination, footnote 208 above, p. 7. 
505 US Oral statement paras. 15, 18-20.  WT/DS212/RW 
 Page 107 
 
 
 on subsidies to Glynwed, but on the assumption of  likelihood of continuation or recurrence of 
subsidization because of the non-cooperation of the producers/exporters.506   
7.244  The Panel notes that in the original sunset re view determination, the USDOC stated that it 
received responses from the GOUK and the Europ ean Communities, but not from any foreign 
producers/exporters because they did not par ticipate in the original sunset review.507  The domestic 
interested parties argued, inter alia , that the subsidy program, "Regional Development Grants", had 
benefit streams for Glynwed that continued up to the year 2004 and that Glynwed could benefit from 
the "Interest Rebates Article 54 Loans" in the fu ture.  The European Communities and the GOUK, on 
the other hand, argued that most of the schemes  countervailed no longer existed or had ceased to 
provide meaningful benefits to the cu rrent exporter of the subject merchandise.508   However, the 
USDOC's reasoning for its likelihood de termination in the original sunset review did not mention the 
name of any specific firm: 
"[A]lthough the EC and GOUK assert that th ese programmes have been terminated, 
as they involved specific governmental action,  and that subsidization of the steel 
sector in the EU is strictly prohibited fo llowing the adoption of the EC Decision, the 
[USDOC] normally will determine that a c ountervailable subsidy will continue to 
exist where the benefit stream  will continue beyond the end of the sunset review.  
Without evidence  that some programs have been fully amortized,  or participation  in 
this review of a foreign producer/exporter, we determine that countervailable subsidy 
programs continue to confer benefits above de minimis , and that revocation of the 
countervailing duty order is likely to lead  to continuation or recurrence of a 
countervailable subsidy."509   
7.245  The Panel observes that no specific name of the subsidy recipient was mentioned in the 
findings of the original sunset determination.  Give n the fact that Glynwed had been determined to be 
one of the subsidy recipients during the origin al countervailing duty determination, the Panel 
therefore understands that the USDOC actually used  its findings regarding a subsidy benefit to 
Glynwed, which the USDOC made in the original countervailing duty determination, as the basis for 
its affirmative likelihood-of-subsidization re -determination set out in the UK Section 129 
determination.  Therefore the basis of the UK S ection 129 determination, that a subsidy benefit 
continued for Glynwed, is different from the basis of  the original sunset review determination, that 
there was insufficient evidence to conclude that the benefit stream from subsidy programmes had 
ceased to exist.  In other words, the factual circ umstance relating to the new measure, that is, the 
continuation of a subsidy benefit to Glynwed as th e basis of the new measure, is different from the 
factual circumstance in the original sunset review  measure, where the insufficiency of information on 
the termination of subsidy programmes from foreign producers/exporters was the basis of the sunset 
determination. 
7.246  As for the US argument that the new evidence was not considered because whether there was 
a subsidy benefit to Glynwed was not a part of th e DSB recommendations and rulings in the original 
dispute, the European Communities responds that th e Panel's mandate is to determine whether the 
new measure is in conformity with the covered agre ements as cited in the Panel request, therefore, it 
is not sufficient for the new measure to merely elim inate one erroneous aspect of the measure, if to do 
so would expose additional failures to comply with the obligations of the SCM Agreement .510 
                                                      
506 EC Second written submission, para. 4; EC Oral statement, para. 14. 
507 UK Sunset Review Issues and Decision Memo, p. 4. 
508 UK Sunset Review Issues and Decision Memo, pp. 7-8. 
509 UK Sunset Review Issues and Decision Memo, p. 13. 
510 EC First written submission, para. 62. WT/DS212/RW 
Page 108  
 
 7.247  In this regard, the Panel notes that there is a difference in the "factual circumstances" in the 
the UK Section 129 determination as compared with th e original sunset review determination.  This 
difference, which concerns the subsidies other than pr e-privatization subsidies to BS plc., includes: (i) 
the participation of the private firm Corus in th e Section 129 proceedings as compared with the non-
participation of the foreign producers/exporters in  the original sunset proceedings; and (ii) the 
provision by the interested parties of new eviden ce during the Section 129 pr oceedings demonstrating 
that Glynwed no longer produced the product concerned.    
7.248  The Panel recalls its previous findings in para graphs 7.16-7.18 above that in the UK Section 
129 determinations, the USDOC revised its lik elihood-of-subsidizati on determination by changing the 
basis  for its affirmative conclusion.  Since the revisi on was not limited to the privatization analysis, 
the "measure taken to comply" by the Unite d States in the UK case encompasses the whole 
affirmative likelihood-of-subsidization analysis as set  out in the UK Section 129 determination.  The 
Panel also found in previous para graphs 7.69-7.71 above that the European Communities' new claim 
on the treatment of evidence concerns the change d aspect of the measure taken to comply and 
therefore it is within  the mandate  of this Article 21.5 Panel.   
7.249  On the obligation of Members in implementing the recommendations and rulings of the DSB, 
the Panel recalls that Article 21.5 of the DSU obl iges the implementing Member to ensure that the 
"new measures taken to comply" with such recommenda tions and rulings are not inconsistent with the 
relevant covered agreement.  Con sequently, the investigating authorit y is obliged to ensure that the 
UK Section 129 determination meets the requirement of Article 21.3 of the SCM Agreement  in respect 
of the treatment of evidence.  
7.250  In examining the treatment of evidence by the USDOC during the Section 129 proceedings, 
the Panel considers it necessary to distinguish two ca tegories of evidence, na mely, the evidence that 
the European Communities and the GOUK already submitted during the original sunset proceedings 
and the USDOC rejected as insufficient, and the ne w evidence that the interested parties submitted 
during the Section 129 proceedings.  
7.251  Regarding the evidence that the Europ ean Communities and the GOUK had already 
submitted during the original sunset review and whic h was rejected by the USDOC as insufficient, the 
Panel is of the view that, given that this evidence has not changed and that the treatment of this 
evidence by the USDOC was neither contested by  the European Communities nor addressed during 
the original proceedings, the US DOC was not obligated to re-examine this evidence during the 
Section 129 proceedings.  Therefore, the Panel finds that the USDOC’s refusal to re-consider 
evidence in the UK Section 129 determination that it  had already considered and rejected during the 
original sunset review is not inc onsistent with Article 21.3 of the SCM Agreement . 
7.252  Regarding the second category of evidence, name ly, evidence provided for the first time by 
the interested parties during the Section 129 pro ceedings, the Panel notes that Corus and the GOUK 
provided new evidence during the Section 129 proceedings  to demonstrate that Glynwed sold the 
business of the production of the product concerned to  another company, Niagara, LaSalle Corp.; 
therefore, it no longer pr oduced the product concerned.511  The Panel notes that there might be other 
new evidence that the interested parties may ha ve presented during the Section 129 proceedings.512 
                                                      
511 EC First written submission, para. 17. 
512 The Panel understands that the European Communities and the GOUK provided some evidence 
during the original sunset review proceedings relating to the non-availability of a benefit from certain subsidy 
programmes.  They also provided evidence during the Section 129 proceedings to demonstrate the non-existence 
of a number of subsidy programmes.  However, from the text of the sunset determination and the text of the 
Section 129 determination as well as the information availa ble to this Panel, it is not possible to clearly identify  WT/DS212/RW 
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 7.253  The Panel recalls its previous findings in pa ragraph 7.238 above that Article 21.3 of the SCM 
Agreement  imposes an obligation on the investigating author ity during sunset review or revised sunset 
review proceedings to take into account all th e evidence placed on its record in making its 
determination of likelihood of continuation or recurrence of subsidization.   
7.254  The Panel considers that by refusing to take into account the evidence that the respondents 
provided for the first time in the Section 129 proceedings513, which was not evidence already 
considered and rejected with reason during the original sunset review, the USDOC may have 
precluded the consideration of evidence that could have been essential to the determination of the 
existence of a subsidy benefit.  The Panel consider s that by refusing to consider such evidence, the 
USDOC findings on the continuation of a subsidy bene fit to Glynwed and therefore its conclusion on 
the likelihood of continuation or recurrence of s ubsidisation in the UK Section 129 determination may 
be based on an insufficient, or ev en an incorrect factual basis. 
(iii) Conclusion 
7.255  Therefore, the Panel finds that the refusal to consider new evidence presented during the 
Section 129 proceedings as well as the findings regard ing the continuation of the subsidy benefit to 
Glynwed in the UK Section 129 determination are incons istent with the requireme nt of Article 21.3 of 
the SCM Agreement . 
D. CUT-TO-LENGTH CARBON STEEL PLATE FROM SPAIN  
1. Background 
7.256  On 8 January 2003, the DSB adopted the reports of  the original panel and the Appellate Body. 
The panel found that the sun set review determination on Cut-to-Length Carbon Steel Plate From 
Spain  was inconsistent with Articles 10,  14, 19.4, 21.1 and 21.3 of the SCM Agreement .514  T h i s  
conclusion of the Panel was upheld by  the Appellate Body in its report.515 
7.257  As indicated in paragraph 7.89 above, following the adoption of the original panel and 
Appellate Body Reports by the DSB on 8 January 2003, the USDOC issued the Modification Notice, 
which the European Communities did not challenge in th is dispute.  It also reviewed its determination 
on the likelihood of continuation or recurrence of subsid ization contained in the original sunset review 
results, which had been found to  be inconsistent with the SCM Agreement .  Accordingly, the USDOC 
issued its Issues and Decision Memorandum: Section 129 Det ermination: Final Results of Expedited 
Sunset Review of Cut-to-Length Carbon Steel Plate from Spain  ("Spain Section 129 determination") 
on 24 October 2003.516   
                                                                                                                                                                     
whether the European Communities, the GOUK or Corus have provided any new evidence during the Section 
129 proceedings relating to the expiry of any specific subsidy programmes. 
513  In paragraph 7.252 and footnote 512, the Panel mentioned the possibility of the existence of new 
evidence provided during the Section 129 proceedings relating to the expiry of specific subsidy programmes, in 
addition to the evidence demonstrating the sale of the business concerned by Glynwed.  Were it the case, the Panel considers that it should also be treated as new evid ence provided for the first time by the interested parties 
during the Section 129 proceedings. 
514 Panel Report on US – Countervailing Measures on Certain EC Products , para. 8.1(c).  
515 Appellate Body Report on US – Countervailing Measures on Certain EC Products , para. 161(a). 
516 The USDOC then published a Noti ce of Implementation in the Federal Register on 17 November 
2004 indicating that the USTR dec lined to direct the USDOC to impl ement this revised sunset review 
determination.  Notice of Implementation, footnote 240, p. 64859.  The US considers that the issuance of the 
Section 129 determination itself satisfies the obligation of bringing the measure into conformity with the 
recommendations and rulings of the DSB.  The US in its reply to Panel questions explained that the USTR WT/DS212/RW 
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 7.258  The original countervailing duty on these produc ts from Spain was imposed on 17 August 
1993 with a countrywide ad valorem  rate of 36.82 per cent.
517  The sunset review determination, 
published on 7 April 2000, found that "revocation of the count ervailing duty order would be likely to 
lead to continuation or recurrence of the subsidy" .  The USDOC reported to the USITC that that the 
net countervailable subsidy rate likely to prevail was 36.86 per cent for all producers and exporters 
from Spain.518  
2. The measure taken to comply 
7.259  As concluded in paragra ph 7.18 above, the measure taken to comply as regards Cut-to-length 
Carbon Steel Plate From Spain  is the affirmative likelihood-of-s ubsidization re-determination as set 
out in the Spain Section 129 determination. 
3. The claims 
7.260  With respect to the Spain Section 129 determination regarding Final Results of Expedited 
Sunset Review of Cut-to-Length Carbon Steel Plate from Spain , the European Communities requests 
the Panel to make the following findings: 
(a) that the United States has failed to im plement the recommendations and rulings 
adopted by the DSB and acted inconsisten tly with its obligations under Articles 10, 
14, 19.4, 21.1, and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  by 
refusing to examine whether, and for failing to  find that, the privatization of  Aceralia 
in Cut-to-Length Carbon Steel Plate from Spain was at arm's length and for fair market value; 
(b) that the United States has acted inconsiste ntly with its obligation under Article 21.3 
of the SCM Agreement  because it failed to consider ev idence  on the record in Cut-to-
Length Carbon Steel Plate from Spain demonstrating that the benefits from programmes found to confer counterva ilable subsidies no longer existed; 
(c) that the United States failed to meet its obligations under Articles 21.3 of the SCM 
Agreement  because it did not examine in, inter alia , Cut-to-Length Carbon Steel Plate 
from Spain, whether expiry of the duty would likely to lead to continuation or 
recurrence of material injury.
519 
7.261  The Panel recalls its findings in paragraphs  7.27-7.31 that the likelihood of injury 
determination is an unrevised aspect of the origin al sunset review, which was not challenged during 
the original panel proceedings and that there is no basis  for concluding that the re-determination of 
the likelihood of continuation or recurrence of  subsidization affects the likelihood-of-injury 
determination, therefore, the failure to re-conduc t a likelihood-of-injury determination is not a 
measure that the United States should have taken to comply with the DSB rulings and recommendations.  Moreover, as the Panel found in pa ragraphs 7.73-7.77, even if the likelihood-of-
injury analysis were an aspect of  the measure taken to comply, the European Communities' claim on 
the failure to re-determine the likelihood of conti nuation or recurrence of injury in the Spain Section 
                                                                                                                                                                    
 
exercised discretion not to direct the im plementation as there was no need for a change as a matter of US law in 
the implementation of the determinations.  See US Response to Panel questions Nos. 18-20.  
517 Countervailing Duty Order: Certain Steel Products From Spain, 58 Fed. Reg. 43761, 43762 (17 
August 1993) (finding a countrywide ad valorem rate of 36.82 per cent); see Final Affirmative Countervailing 
Duty Determinations: Certain Steel Products From Spain, 58 Fed. Reg. 37374, 37385 (9 July 1993) (finding a countrywide ad valorem rate of 36.86 per cent). 
518 Spain Sunset Review Final Results, footnote 286 above, p. 18308. 
519 EC First written submission, para. 72.  WT/DS212/RW 
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 129 determination is not properly before this Panel.  Therefore, the Panel will not address the 
European Communities' injury claim in this Article  21.5 proceedings.  With this in mind, the Panel 
will proceed to examine each one of the othe r two claims in the following paragraphs.   
4. Whether the USDOC's failure to examine the privatization of Aceralia and to determine 
whether the privatization occurred at arm's length and for FMV is inconsistent with 
Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement and Article VI:3 of the  GATT 
1994   
(a) Arguments of the parties 
7.262  The European Communities makes similar arguments on this issue as those made with respect 
to the UK Section 129 determination as reflected in  paragraphs 7.185-7.189 above.  It mainly argues 
that the USDOC refused to consider in the Sp ain Section 129 determination whether under the 
modified privatization methodology, Aceralia had be en privatized in a manner that extinguished the 
benefits conferred by the non-recurring subsidies b estowed to the state-owned producer prior to its 
privatization.520 
7.263  The European Communities also argues that Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM 
Agreement  as well as Article VI:3 of the GATT 1994  require that an investigating authority examine 
in a sunset review, whether a benefit continues to exist after privatization before imposing or 
maintaining a duty.  By refusing to examine the priv atization, the US acted inconsistently with its 
obligations under these provisions.521   
7.264  The European Communities also argues that by refusing to examine the privatization, the 
USDOC's Spain Section 129 determination is not in compliance with the conclusion of the Appellate 
Body in paragraph 161(a) of its report that the Un ited States acted inconsistently with its obligations 
under Articles 10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement  by "imposing and maintaining 
countervailing duties without determining whet her a 'benefit' continues to exist...".522 
7.265  The United States argues that the USDOC assumed for purpose of its likelihood-of-
subsidization determination that the privatization of Aceralia wa s conducted at arm's length and for 
FMV and entirely extinguished all benefits from th e pre-privatization, non-recurring subsidies in 
question.  Therefore, the USDOC did not rely on  any benefit from allocable, pre-privatization 
subsidies in determining whether subsidization was likely to conti nue or recur if the order were 
revoked.523   
7.266  Rather, the United States argues that the Spain Section 129 determination was based on 
evidence wholly unrelated to the (allocable, non-recurring) pre-privati zation subsidies.  In the Spain 
Section 129 determination, the basis of its likelihoo d of subsidization determination was that there 
were recurring (non-allocable) subsidies to the priv atized company Aceralia that continued after 
privatization.524 
7.267  The United States argues that because the USDOC a ssumed that the privatization of Aceralia 
was at arm's length and for FMV, and that the USDO C did not rely on pre-privatization subsidies in 
                                                      
520 EC First written submission, para. 21. 
521 EC First written submission, paras. 63-65. 
522 EC First written submission, paras. 70. 
523 US First written submission, paras 4, 48; US Second written submission, para. 11. 
524 US First written submission, para. 48.  WT/DS212/RW 
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 making the determination, the revised determin ations cannot be inconsistent with the DSB 
recommendations and rulings.
525  
(b) Evaluation by the Panel 
(i) The United States' obligations pursuant to the fi ndings in the original proceedings regarding 
the USDOC's privatization  analysis 
7.268  The Panel summarized the findings of the orig inal panel and of the Appellate Body in 
paragraphs 7.198-7. 203 above.  These findings make clear that an investigating authority is obliged 
under Articles 10, 14, 19.4, 21.1, and 21.3 of the SCM Agreement  to examine whether the 
privatization was at arm's length and for FMV in order to determine whether the benefit from the non-
recurring subsidies bestowed upon a pre-privatized company continues to exist for the privatized 
producer.  These findings also make it clear that, in a sunset review, countervailing duties can only be 
maintained after making an affirmative likelihood of continuation or recurrence of subsidization 
determination. 
(ii) The Panel's assessment of the USDOC's analysi s in the Spain Section 129 determination  
7.269  The privatization analysis that the USDOC adopted  in this case was the sa me as it used in the 
UK case.  Under the heading "Priva tization of Aceralia", the Spain Section 129 determination begins 
with a general description of the privatization process in 1997.  Then the determination states that the 
USDOC's privatization analysis, as provided for in the Modification Notice, is predicated on a baseline presumption that "allocable, non-recurring subs idies can benefit the recipient over a period of 
time normally corresponding to the average useful lif e of the recipient's assets".  To rebut this 
presumption, a party is required to demonstrate that  the privatization was conducted through an arm's-
length transaction for FMV. 
7.270  After that, without addressing the details of the privatization of Acera lia, the determination 
states: 
"However, even assuming arguendo , that, pursuant to an analysis under Section 
129(b)(2) of the URAA, the [USDOC] were to find that the privatization of 
ACERALIA met all the criteria for rebutting the baseline presumption set forth in the 
[USDOC's] Modification Notice
, such a finding would not affect the results in the 
instant determination that there would be a likelihood of continuation or recurrence of 
a countervailable subsidy if the order were revoked."526 
7.271  The determination then refers to the legisla tive history of the URAA and the USDOC's Sunset 
Policy Bulletin of 1998 to clarify that pursuant to Section III.A.2 of the Sunset Policy Bulletin, the 
determination of likelihood woul d be made on an "order-wide" basis.  It then concludes: 
"In the Final Sunset Results , our affirmative likelihood de termination was based, in 
part, on our determination that there are countervailable recurring, non-allocable 
subsidies provided pursuant to programs that to the best of our knowledge continue to 
exist, including, for example, the 1 987 Government Delegated Commission on 
Economic Affairs: Fund for Employme nt Promotion and Early Retirement .  Even if 
we were to determine, pursuant to an analysis under the privatization  methodology 
set forth in the Modification Notice , that non-recurring, allocable subsidies received 
by ACERALIA prior to the 1997 privatization  would not continue through of after the 
                                                      
525 US First written submission, para. 49; US Second written submission, para. 11. 
526 Spain Section 129 determination, footnote 208 above, p. 3.  WT/DS212/RW 
 Page 113 
 
 
 period of review ("POR") of the sunset review , we would still make an affirmative 
likelihood determination based on the fact th at subsidy programs that have provided 
recurring, non-allocable subsidies at above de minimis  rates continue to exist."527 
7.272  In sum, the USDOC made an affirmative lik elihood-of-subsidization determination based on 
the reason that recurring subsidy programs, such  as the 1987 Government Delegated Commission on 
Economic Affairs: Fund for Employment Promotion and Early Retirement continued to exist and to 
benefit Aceralia.  The United States argues that the Spain Section 129 determination was based on an 
assumption that the privatization of Aceralia w as conducted at arm's length for FMV and that the 
benefit from the non-recurring pre-privatization subs idies was entirely extinguished for the privatized 
firm, Aceralia.  The phrases used in the determination include "even assuming arguendo ..." and  
"even if we were to  determine...".   
7.273  The Panel recalls its previous analysis of the original panel and the Appellate Body's findings 
in this regard in paragraphs 7.198- 7.203, and its conclusion that  the investigating authority is obliged 
by Articles 10, 14, 19.4, 21.2 and 21.3 of the SCM Agreement  to "examine" whether the privatization 
was conducted at arm's length and for FMV in order to "determine" whether the privatized producer 
received any benefit from the financial contributi ons previously bestowed to the state-owned 
producers and to maintain the countervailing duti es only after making an affirmative likelihood of 
continuation or recurrence of s ubsidization determination.  
7.274  The Panel is of the view that in order to meet the obligation set out for a sunset review 
determination involving privatizati on, which is "to examine" the pr ivatization and "to determine" 
whether the privatized producer Aceralia continue d to receive subsidy benefit, the investigating 
authority is required to make defin ite findings, rather than assumptions. 
7.275  As the Panel has discussed above, in paragraphs 7.213, 7.214 and 7.215, the obligations to 
"examine" and to "determine" in the context of c ountervailing duty sunset review require that the 
investigating authority act with an appropriate de gree of diligence and arrive at a reasoned conclusion 
on the basis of information in the record of the pr oceedings, rather than simply make an assumption. 
7.276  In the Spain Section 129 determination however , the last paragraph of the privatization 
analysis states the following:  
"[T]he [USDOC] has received allegations that  the privatization here was effected by 
'market distortion' such that any arm's length/fair market value findings would not warrant a determination that countervaila ble subsidies were extinguished by the 
privatization.  We do not need to a ddress the market distortion allegations, because 
we have not–for the reasons explained abo ve–addressed the arm's length/fair market 
value issue ."
528 
7.277  It is clear to the Panel that the USDOC did not  examine whether the privatization of Aceralia 
was at arm's length and for FMV because it did not address this issue.  Nor did the USDOC make a "determination" that non-recurring pre-privatization subsidies ceased to benefit Aceralia as there was 
no language to that effect in the Spain Section 129 determination.   
7.278  The Panel considers that there is a difference between "assumption" and "determination" in 
that a determination is required to be based on sufficient evidence and adequate reasoning whereas an 
assumption need not be supported by evidence or reasoni ng.  In this regard, what Article 21.3 of the 
                                                     
 
527 Spain Section 129 determination, footnote 208 above, p. 3 (emphasis added). 
528 Spain Section 129 determination, footnote 208 above, p. 4 (emphasis added). WT/DS212/RW 
Page 114  
 
 SCM Agreement  explicitly requires is a "determination" , an obligation more burdensome for the 
investigating authority than that of an assumption. 
7.279  In practice, the legal certainty of an assumption would also be different from that of a 
determination to the interested parties involved.   The United States argues that the USDOC assumed 
that the privatization extinguished non-recurring pre-pr ivatization subsidies to Aceralia.  However, for 
example, if Aceralia were to request an assessment review in future, it is not clear whether such an 
assumption would be treated as a determination  that the privatization was conducted at arm's length 
and for FMV and that the non-recurring subsid y benefit was extinguished for Aceralia.  
(iii) Conclusion 
7.280  For these reasons, the Panel finds that the United States
 failed to examine whether the 
privatization of Aceralia was at arm's length and for FMV and to determine whether the benefit from 
non-recurring subsides bestowed to the state-owned pr oducer extinguished for the privatized Aceralia.  
By failing to properly determine the likelihood of  continuation or recurrence of subsidization 
determination prior to its decision to mainta in countervailing duties in its Spain Section 129 
determination, the United States acted inconsistently  with the obligations under Articles 10, 14, 19.4, 
21.1 and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  and therefore failed to 
implement the recommendations and rulings of the DSB. 
5. Whether the USDOC's treatm ent of evidence on the record during the Section 129 
proceedings is inconsistent with Article 21.3 of the SCM Agreement 
7.281  We recall that in paragraph 7. 18 above, we found that the measure taken to comply as regards 
Cut-to-length Carbon Steel Plate from Spain  is the affirmative likelihood-of-subsidization re-
determination set out in the Spain Section 129 determ ination.  In paragraph 7. 71 above, we also found 
that the European Communities' new claim regard ing the treatment of  evidence by the USDOC 
during the Section 129 proceeding is within the manda te of this Panel.  The Panel will therefore 
proceed to examine the European  Communities 's claim on the USDOC's treatment of evidence.  
(a) Arguments of the parties 
7.282  The European Communities argues that in the Spain Section 129 determination, the USDOC 
made its affirmative findings of likelihood of c ontinuation or recurrence of subsides based on the 
"recurring" subsidies provided to Aceralia desp ite evidence on the record in the Section 129 
proceedings, which consisted of statements  by the Government of Spain (GOS) and the European 
Communities that the specific programme cite d by the USDOC, namely, the 1987 Government 
Delegated Commission on Economic A ffairs measures, no longer existed.529  The European 
Communities indicates that both the European Communities and the GOS had explained in 
submissions during the original sunset review   that other recurring , non-allocable subsidies found to 
exist at the time of original investigation in  1993 were no longer granted.  They explained  that these 
programs included, the 1987 Government Delega ted Commission on Economic Affairs measures (no 
longer in existence), Law 60/78 (no longer applied to the steel sector); Royal Decree 878/8 and the 
1984 Council of Ministers Meeting programme (no longer in existence); and Article 54 ECSC loans 
(would shortly cease to exist530).531  In sum, the European Comm unities argues that it had already 
                                                      
529 EC First written submission, para. 24. 
530 The Panel notes that the USDOC issued the Spai n Sunset Review Final Results on 29 March 2000, 
before the expiry of this subsidy.  Spain Sunset Review Final Results, footnote 286 above. 
531 EC First written submission, para. 24, footnote 44.  WT/DS212/RW 
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 explained during the original sunset review  that most of the schemes no longer existed or had ceased 
to provide a meaningful benefit.532   
7.283  The European Communities and the GOS reite rated these arguments to the USDOC during 
the Section 129 proceedings and confirmed the fact that the ECSC Article 54 loan programme expired 
in July 2002.  The European Co mmunities argues that the USDOC nevertheless based its Section 129 
determination on a finding that was demonstrated by the evidence on the r ecord to be palpably 
incorrect .533 
7.284  The European Communities' arguments that Article 21.3 of the SCM Agreement  requires an 
investigating authority to consider all evidence in  its record also apply to the Spain Section 129 
determination, as do the US arguments to the effect th at it is not under an obligation to reopen issues 
already resolved in the original sunset review.  These arguments are reflected in paragraphs 7.221-
7.229 above. 
7.285  The United States argues that as the USDOC assume d that the privatization of Aceralia had 
extinguished all allocable, pre-privatization subs idies, the affirmative likelihood-of-subsidization 
determination in the Spain Secti on 129 determination was based on evidence wholly unrelated to pre-
privatization subsidies.  It cited the recurri ng subsidies benefiting Aceralia in the Spain case.534 
7.286  The United States also argues that neither the A ppellate Body nor the or iginal panel made any 
findings concerning these subsidy programmes, which di d not involve the priva tization methodology.  
The USDOC's findings concerning the recurring subs idy programme for Aceralia in the Spain case 
are unchanged.   Because the recommendations and rulings of the DSB did not require them to be 
changed, the European Communities cannot use the Article 21.5 process to challenge them.535 
7.287   In the Spain Section 129 determination, the USDOC explained its refusal to consider the 
issue of recurring subsidy on its understanding that the duty of the authority in Section 129 determination is not to re-conduct the original su nset review in its totality, but to render it not 
inconsistent with the findings of the Appellate Body.  The USDOC stated that it was not reopening 
issues that had been resolv ed in the original sunset review and had not been found by the Appellate 
Body to be inconsistent with the SCM Agreement .
536   
(b) Evaluation by the Panel 
(i) The United States' obligations under Artic le 21.3 of the SCM Agreement regarding the 
USDOC's treatment of evidence 
7.288  As the Panel concluded in pa ragraph 7.238 above, an investigating authority has the 
obligation to consider all evidence placed on the r ecord in making a likelih ood of continuation or 
recurrence of subsidization re-determination.  Otherwi se, in the view of this Panel, the investigating 
authority could not ensure that the new measu re, that is, the likelihood-of-subsidization re-
determination set out in the Section 129 determinat ion, is based on a sufficient factual record and 
therefore satisfies the requirement of Article 21.3 of the SCM Agreement . 
                                                      
532 EC First written submission, para. 59. 
533 EC First written submission, paras. 24, 59. 
534 US First written submission, para. 48. 
535 US First written submission, para. 18. 
536 Spain Section 129 determination, footnote 208 above, p. 6. WT/DS212/RW 
Page 116  
 
 (ii) The Panel's assessment of th e USDOC's treatment of evidence in the Spain Section 129 
determination 
7.289  The Panel notes that in the revised sunset review determination, i.e., the Spain Section 129 
Determination, the USDOC based its likelihood  determination on the existence of "recurring 
subsidies" to Aceralia found to exist in the orig inal sunset review but only specified one subsidy 
program that was found to be "recurring": 
"In the Final Sunset Results
, our affirmative likelihood de termination was based, in 
part, on our determination th at there are countervailable recurring, non-allocable 
subsidies  provided pursuant to programs that to the best of out knowledge continue to 
exist, including, for example, the 1987 Government Delegated Commission on 
Economic Affairs: Fund For Employment Promotion and Early Retirement .  Even if 
we were to determine, pursuant to an an alysis under the privatization methodology set 
forth in the Modification Notice , that non-recurring, allocable subsidies received by 
ACERALIA prior to the 1997 privatization w ould not continue through or after the 
period of review ("POR") of the sunset re view, we would still make an affirmative 
likelihood determination based on the fact th at subsidy programs that have provided 
recurring, non-allocable subsidies at above de minimis  rates continue to exist."537  
7.290  The Panel also notes that during the original sunset review, the European Communities and 
the GOS argued and provided evidence to the US DOC to demonstrate that subsidy programmes no 
longer existed or were no longer available to the  steel sector.  The USDOC made an affirmative 
likelihood of continuation or recurrence of subsidiza tion determination in its original sunset review 
determination and listed si x subsidy programs as the basis of the affirmative sunset determination.  
The main reason for this affirmative determination w as that the subsidies had not been fully amortized 
and the evidence of termination of the subsidy progr ams or subsidy benefit was not sufficient due to 
the non-participation of the producers/exporters:  
"The [USDOC] notes that, although the EC and the GOS assert that these programs 
have been terminated as they involved sp ecific governmental action and subsidization 
of the steel sector in the EU that is strictly prohibited following the adoption of the EU Commission Decision, the [USDOC] normally will determine that a countervailable subsidy will continue to  exist until it is fully amortized.  Without 
evidence that the programs have been termi nated, that the benefits from programs for 
which benefits are allocated over time will not  continue beyond this sunset review, or 
participation in this review of a foreign producer/exporter , we determine that 
revocation of the countervailing duty order is likely to lead to continuation or 
recurrence of a countervailable subsidy."
538 
                                                      
537  Spain Section 129 determination, footnote 208 above, p. 3 (emphasis added). 
538 Spain Sunset Review Issues and Decision Memo, footnote 286 above, pp. 13-14 (emphasis added).  
This original sunset determination also stated in another paragraph:  
 
"In addition to considering the guidance on likelihood cited above, section 751(c)(4)(B) of the 
Act provides that the Department shall determine that revocation of an order is likely to lead to continuation or recurrence of a countervailable subsidy where a respondent interested party 
waives its  participation in the sunset review.  In the instant review, the Department did not 
receive a response from the foreign producer/exporter and, pursuant to section 
351.218(d)(2)(iii) of the Sunset Regulations
, this constitutes a waiver of participation." 
 
Spain Sunset Review Issues and Decision Memo, footnote 286 above, p. 13.  WT/DS212/RW 
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 7.291  It is noteworthy that, among the six listed s ubsidy programmes found to still exist in the 
original sunset determination, the 1987 Gove rnment Delegated Commissi on on Economic Affairs: 
Fund For Employment Promotion and Early Retirem ent was the programme that the USDOC later 
found to be "recurring" and that the USDOC used  as the basis for its affirmative likelihood-of-
subsidization determination in the Spain Section 129 determination.  We note that the Section 129 
determination does not identify other recurring subsidy programmes although it implies their 
existence.539 
7.292   The United States argues that it is not required to reopen issues that were resolved in the 
original sunset review and that the aspect of the recurring subsidies to Aceralia, which was not raised 
by the European Communities in the original panel proceedings, is not  properly within the mandate of 
this Panel.540  The European Communities responds that the mandate of this Panel, pursuant to Article 
21.5, is to determine whether the measure is in conf ormity with the covered agreements as cited in the 
Panel request.  The European Communities further argu es that it is not sufficient to merely eliminate 
one erroneous aspect of the measure, if to do so wo uld expose additional failures to comply with the 
obligations of the SCM Agreement .541 
7.293  In this regard, the Panel recalls its previous fi ndings in paragraphs 7.16-7.18 above that in the 
Spain Section 129 determinations, the USDOC revi sed its likelihood-of-subsidization determination 
by changing the basis  for its affirmative conclusion.  Since the revision was not limited to the 
privatization analysis, the "measure taken to co mply" by the United States in the Spanish case 
encompasses the whole affirmative lik elihood-of-subsidization analysis as set out in the Spain Section 
129 determination.  The Panel also found in para graphs 7.69-7.71 above, that the European 
Communities' new claim on the treatment of evidence  concerns the changed aspect of the measure and 
therefore it is within the mandate of this Article 21.5 Panel.   
7.294  Turning back to the European Communities' claim that the refusal to consider evidence in the 
record of the Spain Section 129 determinati on is inconsistent with Article 21.3 of the SCM 
Agreement , the Panel recalls its findings in paragraph 7. 238 above, that the obligation in the Section 
129 proceeding is for the investigating authorities to consider all evidence plac ed on  the record of 
that proceeding in making a likelihood of continuation or recurrence of subsidization determination.  
Under Article 21.3 of the SCM Agreement , if the investigating authority fails to do so, it cannot ensure 
that the new measure, that is, the Section 129 determ ination is based on a suffi cient factual record and 
therefore satisfies the requirement of Article 21.3 of the SCM Agreement . 
7.295  On the issue of the submissi on of evidence, the European  Communities argues that the 
European Communities and GOS presented evidence th at they had already provided in the original 
sunset  review regarding the non-existence of s ubsidy programmes or the non-availability of these 
programmes to the Spanish steel industry during the Section 129 proceedings.  The European Communities argues that it  also confirmed the actua l expiry of the ECSC Article 54 loan programme 
in 2002 during the Spain Section 129 proceeding.   
7.296  In particular, the Panel understands that th e European Communities provided statements and 
documents to the USDOC during the original sunset  review demonstrating that the programme "1987 
Government Delegated Commission on Economic Affairs" no longer existed.  This evidence was 
rejected by the USDOC in the original  sunset determination as insufficient.
542  The European 
                                                      
539 See Spain Sunset Review Issues and Decision Memo, footnote 286 above, p. 17. 
540 See parties arguments in paras. 7.285-7.287; US First written submission, para. 18. 
541 EC First written submission, para. 62. 
542 The Panel notes that the USDOC based its affirm ative likelihood-of-subsidisation determination on 
the following grounds: "[absence of] ev idence that the programs have been  terminated, [absence of evidence] 
that the benefits from programs for which benefits ar e allocated over time will not continue beyond this sunset WT/DS212/RW 
Page 118  
 
 Communities and the GOS reiterated these argumen ts to the USDOC during the Section 129 
proceedings.  The USDOC refused to reconsider  this evidence and relied on the abovementioned 
recurring subsidy programme as the basis for th e affirmative likelihoo d-of-subsidization re-
determination set out in the Spai n Section 129 determination.  
7.297  In examining the treatment of evidence by  the USDOC during the Spain Section 129 
proceedings, the Panel, as in the UK case, disti nguishes between two categories of evidence: the 
evidence that the European Co mmunities and the GOS had already submitted during the original 
sunset review and which the USDOC had rejected  as insufficient; and any new evidence that the 
interested parties may have submitted for the fi rst time during the Spain Section 129 proceedings.  
7.298  Regarding the evidence that the European Communities and the GOS had already submitted 
during the original sunset review and which was re jected by the USDOC as insufficient, the Panel is 
of the view that, given that this evidence has not changed and that the treatment of this evidence by 
the USDOC was neither contested by the Europ ean Communities nor addressed during the original 
proceedings, the USDOC was not obligated to re -examine this evidence during the Section 129 
proceedings.  Therefore, the Panel finds that th e USDOC’s refusal to re-consider evidence in the 
Spain Section 129 determination that it had already c onsidered and rejected during the original sunset 
review is not inconsistent  with Article 21.3 of the SCM Agreement . 
7.299  Regarding the second category of evidence, i.e. evidence that may have been provided for the 
first time by the interested parties during the Sec tion 129 proceedings, the Panel considers that, in line 
with its previous findings in paragraph 7.238 above , Article 21.3 of the SCM Agreement  imposes an 
obligation on the investigating authority during th e sunset review to account for all the evidence 
placed on its record in making its likelihood of  continuation or recurrence of subsidization 
determination.  Therefore, the USDO C was obliged under Article 21.3 of the SCM Agreement  to 
consider such new evidence, if any, during the Spai n Section 129 proceedings.  However, the Panel is 
not aware, from the information available to this Panel, of any new evidence presented by the 
European Communities or the GOS during the Spain Section 129 proceedings.  
(iii) Conclusion 
7.300  The Panel therefore concludes that the Europ ean Communities failed to demonstrate that the 
USDOC's treatment of evidence in the Spain Secti on 129 determination is inconsistent with the 
obligation under Article 21.3 of the SCM Agreement . 
                                                                                                                                                                    
 
review, or [lack of] participation in this review of a foreign producer/exporter".  Spain Sunset Review Issues and 
Decision Memo, footnote 286 above, p. 13-14.  WT/DS212/RW 
 Page 119 
 
 
 VIII.  CONCLUSIONS AND RECOMMENDATIONS 
8.1 In light of the findings contained in Sec tion VII above, we therefore conclude that: 
(a) the affirmative likelihood-of-subsidization re -determinations set out in each of the 
Section 129 determinations at issue are th e measures taken to comply by the United 
States with the DSB recommendations and rulings in the original proceedings; 
(b) regarding the UK and Spain Section 129 de terminations, the European Communities' 
claims on the treatment of evidence in the likelihood-of-subsidization analyses are 
properly before this Panel;   
(c) regarding all three Section 129 determinati ons, the European Communities' claims on 
the failure to re-determine the likelihood of  continuation or recurrence of injury are 
not properly before this Panel;   
(d) regarding the France Section 129 determin ation, since the USDOC did not fail to 
examine the conditions of Usinor's privatiza tion and did not fail to determine that the 
privatized Usinor continued to receive  some benefit from pre-privatization 
subsidization of the state-owned Usinor, th e United States did not act inconsistently 
with Articles 14 and 21.3 of the SCM Agreement  as regards the USDOC's 
consideration of Usinor's privatization in its likelihood-of-subsidization analysis.   
In the absence of an obligation to recalculate a rate of subsidization in the context of a 
sunset review and given the fact that the United States is not relying on the sunset review as a basis for collecting duties at a particular rate, the Panel finds that the USDOC’s affirmative likelihood-of-subsidiza tion re-determination as set out in the 
France Section 129 determination is not inc onsistent with Articles 10, 14, 19.4, 21.1 
and 21.3 of the SCM Agreement  and Article VI:3 of the GATT 1994  in regard to the 
obligation to limit countervailing duties to th e amount and duration of the subsidy and 
therefore, the United States has not failed to implement the recommendations and rulings of the DSB;  
(e) regarding the UK Section 129 determination,  the USDOC failed to examine whether 
the privatization of BS plc was at arm's length and for FMV and failed to determine 
whether the privatized producer received any benefit from the prior non-recurring 
subsidization of the state-owned BS plc.   By failing to properly determine the 
likelihood of continuation or recurrence of subsidization, prior to its decision to 
maintain countervailing duties, the United St ates acted inconsistently with Articles 
10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement and Article VI:3 of the GATT 1994  
and therefore failed to implement the reco mmendations and rulings of the DSB;   
(f) regarding the Spain Section 129 determin ation, the USDOC failed to examine 
whether the privatization of Aceralia was at arm's length and for FMV and failed to 
determine whether the privatized producer  received any benefit from the prior non-
recurring subsidization of the state-owned A ceralia.  By failing to properly determine 
the likelihood of continuation or recurrence of subsidization, prior to its decision to maintain countervailing duties, the United St ates acted inconsistently with Articles 
10, 14, 19.4, 21.1 and 21.3 of the SCM Agreement and Article VI:3 of the GATT 1994
 
and therefore failed to implement the re commendations and rulings of the DSB; WT/DS212/RW 
Page 120  
 
 (g) regarding the UK Section 129 determination,  the USDOC’s refusal to re-consider 
evidence that it had already considered and re jected during the original sunset review 
is not inconsistent with Article 21.3 of the SCM Agreement ;   
(h) regarding the UK Section 129 determination,  the USDOC’s refusal to consider new 
evidence submitted during the UK Section 129 proceedings is inconsistent with the 
obligations under Article 21.3 of the SCM Agreement ; 
(i) regarding the Spain Section 129 determina tion, the European Communities failed to 
demonstrate that the USDOC's treatment of evidence in the Spain Section 129 
determination is in consistent with Article 21.3 of the SCM Agreement .   
8.2 Since Article 3.8 of the DSU  provides that "[i]n cases where there is an infringement of the 
obligations assumed under a covered agre ement, the action is considered prima facie to constitute a 
case of nullification or impairment", we conclude that to the extent the United States has acted 
inconsistently with the SCM Agreement  and the GATT 1994  it has nullified or impaired the benefits 
accruing to the European Communities under those agreements.  
8.3 The Panel recommends that the Dispute Settlement Body requests the United States to bring 
its measures into conformity w ith its obligations under the SCM Agreement  and the GATT 1994 . 
* * * * *  WT/DS212/RW 
 Page 121 
 
 
 ANNEX A 
 
RESPONSES OF THE EUROPEAN COMMUNITIES 
TO QUESTIONS BY THE PANEL 
  
SCOPE OF THE PANEL'S MANDATE  
Question 2:  In reference to the European Communities' argument on judicial economy, is the 
European Communities stating that it did not argue the injury claim in the original proceedings 
because it was already attacking the change-in-own ership methodology and that doing so obviates the 
need to make any claims on injury?  (European Communities)   
Answer:  Yes.  The European Communities does not consid er that complaining parties are required to 
attack all inconsistencies in a proceeding and s till less inconsistencies that may only arise once 
another inconsistency has been established (suc h as is the case with the injury findings).  
 
 Just as the objective of prompt settlement of disputes expressed in Article 3.2 DSU  justifies 
judicial economy by Panels, so also does it justify a similar restraint by complaining parties.  
Question 5:  If by implementing the DSB recommendations and rulings, another in consistency arises, 
do the parties believe that an investigating authority is  obligated to address this  further inconsistency 
in the context of the DSB recommendations and rulings ?  Please comment in light of the following 
excerpt from paragraph 79 of the Appellate  Body Report in EC – Bed Linen: 
 
"... It is to be expected, therefore, that the claims, arguments, and factual 
circumstances relating to the "measure taken  to comply" will not, necessarily, be the 
same as those relating to the measure in the original dispute.
 543  Indeed, a 
complainant in Article 21.5 proceedings may well raise new claims, arguments, and 
factual circumstances different from those rai sed in the original proceedings, because 
a "measure taken to comply" may be  incons istent  with WTO obligations in ways 
different from the original measure.  In  our view, therefore, an Article 21.5 panel 
could not properly carry out its mandat e to assess whether a "measure taken to 
comply" is  fully consistent  with WTO obligations if it were precluded from 
examining claims additional to, and different fr om, the claims raised in the original 
proceedings. 544" (European Communities/United States) 
Answer:  Yes.  The European Communities believes that this excerpt speaks for itself. 
 
                                                      
543 (footnote original ) Ibid. 
544 (footnote original ) As we put it in  Canada – Aircraft (Article 21.5 – Brazil) :  
 
Indeed, the utility of the review envisaged under Article 21.5 of the DSU  would be seriously 
undermined if a panel were restricted to exam ining the new measure from the perspective of 
the claims, arguments and factual circumstances th at related to the original measure, because 
an Article 21.5 panel would then be unable to examine fully the "consistency with a covered 
agreement of the measures taken to comply ", as required by Article 21.5 of the DSU .  
 
(Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil) , para. 41)  We defined the function 
of Article 21.5 proceedings in the same vein in our Report in  US – Shrimp (Article 21.5 – Malaysia)  (para. 87). WT/DS212/RW 
Page 122  
 
 SECTION 129 PROCEEDINGS 
  [No questions for the European Communities]  US SUNSET REVIEWS 
 
Question 17 :  In its Request for establishment, the Eu ropean Communities seems to focus on three 
sunset reviews as the relevant  measures taken to comply.
545  In the background information provided 
earlier in the Request itself, however, the European  Communities also states that the United States 
finalized a new "change-in-ownership" methodology and subsequently issued new determinations in 
which the United States applied this methodology to the twelve determinations challenged by the 
European Communities before the original Panel.546  Moreover, in footno tes 1 through 3, the 
European Communities refers to three unpublished me moranda that the USDOC issued and posted on 
its website.547  Then, in its First written submission, th e European Communities clarifies that it "is 
requesting the Panel to review the measures ta ken by the United States concerning the sunset 
reviews."548  Later in the same submission, the Euro pean Communities states that it "is treating the 
USDOC's failure to revoke [the th ree countervailing duty] orders as the purported 'implementation' 
of the USDOC's findings".549  Yet in its Second written submissi on, the European Communities clearly 
states that the "Section 129 determinations at issu e in this proceeding are measures taken by the 
United States to comply with the recomm endations and rulings of the DSB".550  In its Oral Statement, 
however, the European Communities argued that the me asures taken to comply by the US are the 
failure to revoke the CVD orders.  Can the Euro pean Communities please clarify which are the 
measures taken to comply in these proceedings and where in the Request for establishment these 
measures are identified? (European Communities)  
Answer:  The "measures taken to comply" are the mainte nance of (or in other words the failure to 
revoke or amend) the countervailing duties in the three proceedings.   
 
 The "measures taken to comply" must relate to the duties (rather than the determinations) 
since the findings of the Panel that were adopted by the DSB and were required to be implemented 
concerned the countervailing duties imposed on exports  from the three EC Member States concerned.  
 
 It is therefore these duties that were declared WTO-inconsistent and were required to be 
brought into conformity with the SCM Agreement . 
  The Section 129 determinations constitute the st atement of reasons for this maintenance of 
these duties.  The EC identified these measures (that is  the sunset reviews in the three proceedings) in 
the second paragraph on page 2 of its  Request for Establishment.  
  Where a "measure taken to comply" is necessary (and in this case the US admits that it was and indeed has claimed to have taken such a me asure), maintenance or confirmation of the pre-
existing measures may in certain cases constitute a sufficient implementation, where there are new 
findings, determinations  or explanations as to why this is so .  The maintenance or confirmation cannot 
be judged in isolation from the reasons on which it is based (especially where a reasoned explanation 
is a WTO obligation as is the case of countervailing duty measures).  The "measure taken to comply" 
can also be considered to be the maintenance or confirmation combined with the statement of reasons. 
                                                     
 
545 Request for establishment, p.2. 
546 Request for establishment, p.1. 
547 Request for establishment, p.2,  footnotes 1-3.  
548 EC First written submission, para. 3.  The EC lists the three cases by case number.  Id.   
549 EC First written submission, para. 5. 
550 EC Second written submission, para 12.  WT/DS212/RW 
 Page 123 
 
 
  
IMPLEMENTATION  
Question 18:  How did the United States implement th e DSB recommendations and rulings in the 
three sunset reviews at issue?  In the Notice of Im plementation, the USDOC indicates that "[b]ecause 
the US Trade Representative declined to di rect the Department to implement the revised 
determinations with regard to the four sunset revi ews involved in the WTO dispute, [the USDOC is] 
not implementing these Section 129 Determinations".  What constitutes "implementation" in these 
cases? (European Communities/United States)   
Answer:  The European Communities, like the Panel, would appreciate clarification from the United 
States on how the United States considers that it implemented the DSB recommendations and rulings 
in the three sunset reviews at issue. 
 
 The European Communities set out in respon se to Question 17 above what it considers the 
measures taken to comply are in the sunset reviews. 
 
Question 21:  Do the parties agree that the three Secti on 129 determinations at issue are the 
measures taken to comply in these Article 21.5 proceedings? (European Communities/United States) 
 
Answer:  See answer to Questions 17 and 18. 
 
Question 24 :  Does the European Communities suggest that because of the significant impact of the 
new privatization methodology, the United States sh ould not make its likelihood determination on an 
order-wide basis in the sunset review s at issue? (European Communities)  
 
Answer:  The European Communities does not  consider that the "order-w ide" approach of the United 
States is sufficient to ensure proper compliance in th is case.  At the same time, even if the "order-
wide" approach is taken, the European Commun ities does not consider that the United States has 
acted consistently with the SCM Agreement . 
  The findings of the Panel that were adopted by  the DSB and were requi red to be implemented 
concerned the failure of the United States to ensure  that any countervailing duties which were applied 
were limited to an amount corresponding to injurious subsidization (Article 21.1 of the SCM 
Agreement  makes it clear that duties must "remain in  force only as long and to the extent necessary
 to 
counteract subsidization which is causing injury").  In particular, the Panel focussed on the issue of 
privatization, finding that an investigating authority must examine the effect of a privatization in order 
to ensure that any duties applied corresponded to th e amount of injurious subsidization.  The United 
States has failed to respect this obligation in its  "arguendo findings", in respect of the British and 
Spanish cases.    FRENCH CASE  Question 25:  The United States alleges that the claim on likelihood of injury as regards the French 
Section 129 determination is outside this Panel's man date because it is not included in the Request for 
establishment.  Can the European Communities confir m that this is the case?  If not, could the 
European Communities indicate where in the Requ est for establishment this claim is included? 
(European Communities) 
 Answer:  The claim is made in paragraph 1 of the second paragraph on page 2 of the Request for 
Establishment.  It is there that the EC claims th at the US is maintaining duties inconsistently, with, WT/DS212/RW 
Page 124  
 
 inter alia , Articles 21.1 and 21.3.
551  Those provisions require that s ubsidies be maintained only where 
subsidization is causing injury.   
 
Question 26:  Did the four classes of share offering result in different classes of shares, one common 
stock, or some combination? (European Communities)   
 Answer:  Usinor has only one class of shares.  According to the International Offering Prospectus, all 
shareholders have the right to participate in gene ral meetings and to vote according to the number of 
shares they hold.  Each share confers on the holder the right to one vote.  There is no distinction on 
the basis of the share offering in wh ich the specific shares were purchased.
552 
 
Question 30:  Did the European Communities provide informa tion related to the effect of different 
incentives and restrictions on the respecti ve risk premiums of the four cl asses of share offering?  If so, 
did the USDOC take this informatio n into account?  Plea se see the Usinor Prospectus, inter alia, at 
pages 21-24. (European Communities/United States) 
 Answer:  In the French Section 129 proceeding, the G overnment of France (GOF) and Usinor put on 
the record information regarding the effect of  the different incentives and restrictions on the 
respective prices of the shares.  For example,  in its comments on the USDOC's preliminary 
determination in the Section 129 proceeding, Usinor  indicated that "the sale of Usinor shares to 
employees included restrictions on resale that entailed the purchasers to bear increased risks of loss in 
the market."  According to Usinor, "the fair mark et value of these shares was naturally lower than the 
Usinor shares sold without similar resale restrictions."
553   
 
 The EC finds no reference to such ev idence in the USDOC determination.  
 
Question 31:  Where can the Panel find more specific informa tion than that provided in the Usinor 
Prospectus on the terms of the employee  share offering?  (European Communities) 
 
Answer:  The European Communities has provided the Pane l the Order of the French Minister of 
Economic Affairs and Finance of 26 June 1995 Wher eby the Terms for the Privatization of Usinor-
Sacilor Are Defined.554  This order provides in its Article 3: 
 
"9 352 175 actions cédées par l'Etat sont réservées à la souscription des salariés et 
anciens salariés d'Usinor-Sacilor et de ses f iliales visés à l'article 11 de la loi du 6 
août 1986 modifiée susvisée.  
Les actions ainsi réservées seront cédées au  prix de l'offre publique de vente ou avec 
un rabais de 20 p. 100 sur ce prix, soit au  prix de 68,80 F par action. Les actions 
acquises avec un rabais de 20 p. 100 ne pourront être cédées pendant deux ans." 
                                                      
551 A claim is an allegation that particular measures  are inconsistent with specific provisions of the 
covered agreements. 
552 "International Offering Prospectus", p. 78, submitted in GOF/Usinor 2 September 2003 
Questionnaire Response, Appendix 4G. 
553"Comments of Usinor, S.A.," 1 October 2003, p. 3, n.6.  Note that the GOF and/or Usinor had 
submitted similar information in other proceedings before the DOC. 
554 Exhibit EC- 10.  This document was provided to USDOC as Appendix 4F to the response of the 
French Government in the s129 Determination.  The original of the document provided, and its English 
translation, are provided fo r the facility of the Panel.  WT/DS212/RW 
 Page 125 
 
 
  Article 2 concerns the gene ral public offer and states: 
 
"Les personnes mentionnées au deuxième alinéa du présent article bénéficieront d'une action 
gratuite pour dix actions acquises directement de l' Etat à l'occasion de la présente offre, dans 
la limite, pour ces dernières, d'une contre -valeur ne dépassant pas 30 000 F, à condition 
qu'elles aient été conservées au moins dix-huit mois." 
Question 32:  At page 6 of the French Section 129 determination, the USDOC states: 
 
"The decision to privatize Usinor and th e terms of privatization were executed 
through an order of the Ministry of Economic Affairs and Finance, based on an 
opinion by the Privatization Commission, both issued in June 1995.  Share prices 
were set by the Ministry, based on the opini on of the Privatization Commission, in 
consultation with Banque S.G. Warburg ("Warburg") and the other Global Coordinators of the share offerings, and in accordance with the privatization law.  
The Privatization Commission stated that it relied upon various valuation 
methodologies for Usinor including, inter alia, stock-exchange-based comparisons 
and net liquidity flows.  Based on its analysis, the Commission recommended a minimum value for Usinor  of FF 15,750 billion." 
 Do the parties consider that this price of  FF 15,750 billion is the fair market value ( FMV ) for 
Usinor?  For what price did the Govern ment of France actually sell Usinor?  (European 
Communities/United States) 
Answer:  Based on various objective criteria, including th ose identified by the USDOC in its Section 
129 determination discussed above, the Privatization Co mmission determined that the value of Usinor 
was not less than FF 15,750 billion.  This price, therefore, represents the minimum value of the company on the market.  The price for Usinor iden tified by the Privatization Commission was for the 
sale of 186,544,395 shares, for an average minimum price of FF 84.43. 
 By 1997, [XXX] shares had been transferred by the GOF, directly or indirectly, to the 
public.
555  The total price paid for the shares transfe rred, directly or indirectly, by the GOF was 
FF [XXX].  Thus, the average price paid for Usi nor shares FF [XXX] exceeded the average minimum 
price recommended by the Privatization Commission, noted above, of FF 84.43.556 
 
Question 34:  The Panel understands that the employee/retiree offering was characterised as 
"preferential" by the Government of France itself.   Was this term "preferential" only used to 
characterize the employee/retiree share offering?  (European Communities) 
 
Answer:  The term "preferential" was used in the Intern ational Offering Prospectus  in reference to the 
employee/retiree share offering.  The European Comm unities does not believe that the Government of 
France referred to other share offerings as "preferen tial."  However, it clearly considered other share 
offerings provided advantages (see, e.g. the referenc e to certain shareholders who had retained their 
shares, benefiting from free shares - cited in  para. 19 above, response to Question 31) 
 
                                                      
555 This figure includes shares sold in 1997 which we re considered to be part of the privatization of 
Usinor.  The US Court of International Trade, in its  review of the USDOC's remand determination in the 
Allegheny Ludlum  case, found that the USDOC had correctly analysed the GOF's sale  of the shares in 1997 as 
part of the privatization process.  See Allegheny Ludlum Corp. v. United States , 246 F. Supp. 2d. 1304, 1311 
(CIT 2002). 
556 The numbers in brackets in  the text above contain business confidential information.  The European 
Communities requests that this information not be used in the final report or made public. WT/DS212/RW 
Page 126  
 
 Question 35:  Did most Usinor employees participate in the employee share offering?  (European 
Communities)  
Answer:  Yes.  Around 35,000 out of Usinor's workforce of 61,000 participated in the 
employee/retiree offering.  Around 30per cent of th e company's retirees purchased shares under this 
offering. 
Question 36:  In the French Section 129 determination, the USDOC concludes that the employee 
share price was "preferential", i.e.  lower than the market-clearing price.  Yet it also concludes that 
the employee share resale restriction, together with restrictions on the French offering and the stable 
shareholders offering, constituted a "committed inves tment" because these restrictions "were aimed at 
encouraging the purchasers to hold onto their shares for a period of time".
557  The USDOC stated that 
"there is no evidence indicating that these commitmen ts distorted the amount that share purchasers 
were willing to pay"; therefore it concluded that "a ny committed investments were fully reflected in 
the share price".  Do these findings indicate that  the employee share price accurately and fully 
reflects the employees' willingness to hold onto the shares for a minimum period?  Please explain how 
these findings relate.  (European Communities/United States) 
 
Answer:  The European Communities would be grateful for an explanation from the United States as 
to how these two findings relate, after which it will be in a position to offer more specific comments. 
 UK CASE 
 
Question 41:  Which subsidy programmes is the United States currently countervailing?  Which 
recurring programmes form the basis of the USDOC' s affirmative determination of likelihood of 
continuation or recurrence of subsidisation in  the UK Section 129 determination? (European 
Communities/United States) 
 
Answer:  The European Communities would, like the Panel, welcome clarification from the United 
States on these issues.   
 
Question 42:  What evidence did the European Communities/UK Government/Corus provide 
regarding recurring subsidisation?  When did they prov ide it?  In the Section 129 determination?  In 
the sunset review?  Please distinguish between evidence on general programmes and those specific to 
either British Steel or Glynwed, if applicable.  In the Section 129 determination, did they provide any 
evidence on the same programmes additional to that evi dence already provided in the sunset review?  
Did the evidence regarding non applicable/non lo nger available subsidy programmes submitted 
during the sunset review concern the count ervailed subsidy programmes benefiting Glynwed?  
(European Communities/United States) 
 
Answer:  The European Communities, the UK Gove rnment and Corus provided evidence 
demonstrating that: (i) Glynwed no longer produ ced the subject merchandise; (ii) the benefits 
conferred by certain of the subsidy programmes that were not specific to BS plc were entirely amortised, and (iii) the subsidy programmes that were  not specific to BS plc had been abolished or 
were no longer available to the UK steel industry.
558  This evidence was submitted in the Section 129 
proceeding, after the USDOC issued its draft S ection 129 determination on 24 September 2003. Prior 
to the USDOC's issuance of its draf t Section 129 determination (i.e., in  the sunset review and in the 
early stages of the Section 129 proceedings), the enti re focus by both the USDOC and the parties had 
                                                      
557 France Section 129 determination, p. 9. 
558 See EC FWS, paras. 51-58.  WT/DS212/RW 
 Page 127 
 
 
 been on the privatization of BS plc and its impact on the subsidies that had previously been found to 
confer a benefit on the government-owned entity.   
 The Panel's question also asks whether eviden ce was also submitted regarding the subsidies 
bestowed upon BS plc.  However, the evidence rega rding that entity submitted in the sunset review 
and the Section 129 proceeding focused on its pr ivatization, and whether the privatization 
extinguished the prior non-recurring subsidies that it had received when it was a government-owned 
entity.   
Question 43:  When did Glynwed stop production of the product at issue?  When did respondents first 
submit this evidence?  Why didn't the respondents provide this evidence during the sunset review 
investigation?  (European Communities) 
 
Answer:  At the time of the investigation in 1993, Glynwed was primarily a producer of steel bar 
products, which are outside the scope of the in vestigation and the count ervailing duty order.  
However, the width of one of its bar products appe ared to fall within the scope of the CTL Plate 
petition filed in 1992.  On 21 May 1999, Glynwed so ld the equipment, inventory, and certain other 
assets of its bar-producing businesses to an unaffiliated US producer, Niagara LaSalle.
559  After that 
date, Glynwed no longer produced merchandise that could have fallen within the scope of the 
countervailing duty order.   
 
 This evidence was submitted in the Section 1 29 proceeding, after the USDOC issued its draft 
Section 129 determination on 24 September 2003. Prior to the USDOC's issuance of its draft Section 
129 determination (i.e., in the sunset review and in the early stages of the Section 129 proceedings), the entire focus by both the USDOC and the parties had been on the privatization of BS plc and its impact on the subsidies that had previously been found to confer a benefit on the government-owned 
entity.   
 
 The USDOC was certainly aware that Niagara- LaSalle had purchased equipment, inventory 
and other assets from Glynwed. In fact, as early as November 1999, the USDOC determined that Niagara-LaSalle was the successor-i n-interest to Glynwed in an antidumping and countervailing duty 
review concerning hot-rolled lead and bismuth carbon steel products from the UK.
560  
 Question 45 :  What is the cash deposit rate(s) for the relev ant products in this case?  Is the legal 
basis for this cash deposit rate(s) the original inves tigation, the original sunset review, or the revised 
sunset review provided in the Section 129 det ermination? (European Communities/United States)  
 
Answer:  The cash deposit rates for imports of the subject merchandise remain 0.79per cent for 
Glynwed and 12.00 per cent for "all other" manufacturers/exporters.   
 
Question 49:  Given the text of Article 21.1 SCM, which provides that "a countervailing duty shall 
remain in force only as long as and to the extent necessary to counteract subsidisation which is 
causing injury", could one assume that a change in  circumstances, especially one affecting the level 
of subsidised imports, would require an authority to  revaluate injury?  What is the relationship 
between the obligations in Article 21.1 SCM and Article 21.3 SCM? (European Communities/United 
States)  
 
                                                     
 
559 See EC FWS, paras. 51-52. 
560 See: (Case C-412-810) Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the 
United Kingdom: Final Results of Changed- Circumstances Antidumping and Countervailing Duty 
Administrative Review; Decision of 30 November 1999 (64 FR 66880) (Exhibit EC-11). WT/DS212/RW 
Page 128  
 
 Answer:   The European Communities believes that Article  21.1 is a general rule which finds specific 
expression in Article 21.3.
561  There is, therefore, in the circumst ances before the Panel, an obligation 
to revaluate injury.  SPANISH CASE 
 
Question 50:  In its First written submission, the United States argues that "USDOC assumed that the 
privatization [] in ... Spain [was] at arm's-length and for fair market value"
562  Can the United States 
identify in the text of the Spain Section 129 determ ination the facts and circumstances on the basis of 
which the USDOC "assumed" that the privatization  of Aceralia was at arm's length and for 
FMV ? (United States) 
 
Question 51:  Which subsidy programmes is the United States currently countervailing?  Which 
recurring programmes form the basis of the USDOC' s affirmative determination of likelihood of 
continuation or recurrence of subsidisa tion in the Spain Section 129 determination?  (European 
Communities/United States)  
Answer:  The European Communities would, like the Panel, welcome clarification from the United 
States on these issues.  
Question 52:  What evidence did the European Communiti es/Government of Spain provide regarding 
recurring subsidisation?  When did they provide it?  In the Section 129 determinations?  In the sunset 
reviews?  Please distinguish between evidence on ge neral programmes and those specific to Aceralia.  
In the Section 129 determination, did they provid e any evidence on the same programmes additional 
to that evidence already provided in the sunset review?  (European Communities/United States) 
 
Answer:  The European Communities and the Government  of Spain provided evidence as to the 
"recurring subsidies", which demonstrated that  the programmes that had been found to be 
countervailable by the USDOC in the investigation had been abolished or had ceased to provide any 
meaningful benefits to the exporters of the s ubject merchandise.  Specifically, the European 
Communities reviewed the programmes that had origin ally been countervailed in the investigation, 
and noted that they either no longer existed (the Royal Decree 878/81 and the 1984 Council of 
Ministers Meeting, and the 1987 Government Delegated Commission on Economic Affairs), no 
longer applied to the steel industry (the Law 60/78) , or would shortly cease to exist (Article 54 ECSC 
Loans).
563  The latter programme in fact has since ceased to exist in light of the expiry of the ECSC 
itself in July 2002.   
 
 The European Communities and the Government  of Spain submitted this evidence to the 
USDOC in the sunset review, and reiterated these points in the Section 129 proceeding, after the 
USDOC issued its draft Section 129 determination.564    
  Although the Panel's question also asks to  distinguish between evidence on general 
programmes and those specific to Aceralia, the info rmation submitted specifically regarding Aceralia 
focused on the privatization of the former govern ment-owned entity and whether the privatization 
extinguished the prior non-recurring subsidies bestowed upon that entity.  In addition, as noted above, 
the Government of Spain and the European Communities  had provided information to the USDOC 
demonstrating generally that the programs that ha d previously been identified as providing recurring 
                                                     
 
561 See paras. 7.107 and 7.108 of the Panel's original report. 
562 US First written submission, para. 49. 
563 EC Sunset Review Response on Spain, p. 3. 
564 See EC FWS, paras. 24, 59.  WT/DS212/RW 
 Page 129 
 
 
 subsidies to the government-owned entity, had be en abolished or ceased to provide meaningful 
benefits to the exporters of th e subject merchandise.  This info rmation had been provided to the 
USDOC in both the sunset review and the Section 129 proceeding. 
 
Question 53:  What is the cash deposit rate(s) for the relev ant products in this case?  Is the legal 
basis for this cash deposit rate(s) the original inves tigation, the original sunset review, or the revised 
sunset review provided in the Section 129 determination?  (European Communities/United States) 
 
Answer:  The cash deposit rate for imports of the su bject merchandise remains 36.86per cent for both 
Aceralia and "all other" manufacturers/exporters.  WT/DS212/RW 
Page 130  
 
 ANNEX B 
 
RESPONSES OF THE UNITED STATES  
TO QUESTIONS BY THE PANEL 
 
SCOPE OF THE PANEL'S MANDATE 
 
Question 1:  In its written submissions, the United States refers inter alia to two excerpts from the 
Appellate Body Report in EC- Be d Linen: "we do not see why that part of a redetermination that 
merely incorporates elements of the original determination ... would constitute an inseparable 
element of the measure ta ken to comply with the DSB  rulings in the original dispute"; and  "India 
[sought] to challenge an aspect of the original  measure which has not changed, and which the 
European Communities did not have to change, in order to comply with the DSB  recommendations 
and rulings to make that measure consistent ... . "  Given the specific facts and circumstances in EC – 
Bed Linen, please explain how the Appellate Body ruli ng applies to this dispute.  In other words, how 
do the relevant facts and circumstances in EC – Bed Li nen apply to the facts and circumstances of the 
three Section 129 determinations at issue?  (United States)    
Answer:  In EC – Bed Linen , India sought to use the Article 21.5 proceeding to have the Panel 
address issues that were not related to compliance with the Dispute Settlement Body's ("DSB") recommendations and rulings in the underlying dis pute.  The European Communities ("EC") opposed 
India's efforts and explained why permitting India to advance such claims in an Article 21.5 
proceeding would be "manifestly unfair":  
"Article 21.5 advances the purpose of achievi ng a 'prompt' settlement of the disputes 
by providing an expeditious procedure to establish whether a Member has properly 
implemented the DSB recommendations and rulings ... .  The accelerated process 
provided for in Article 21.5 is not necessary, however, with respect to claims that could have already been pursued before th e original panel.  Article 21.5 is not 
intended to provide a 'second service' to complaining parties which, by negligence or calculation, have omitted to raise (or argue) certain claims during the original proceeding. 
India's reading of Article 21.5 would diminish  the procedural rights of defendants for 
no good reason, thereby altering the balan ce of rights and obligations of Members 
which the DSU purports to maintain.  In th e first place, the deadlines are shorter in 
Article 21.5 proceedings, thus rendering mo re difficult the defence.  Second, and 
more importantly, the defending party woul d not be entitled to a "reasonable period 
of time", with the consequence that ... 'A Member ... might, depending on the nature 
of the violation, be subjected to suspension of concessions'.   
In so far as India did not pursue a claim with respect to a finding set out in the 
original measure before the original pane l, the EC could assume legitimately that 
such finding was WTO consistent and did not need to be corrected.  It would be manifestly unfair to expose the EC to th e possibility of an immediate suspension of 
concessions under Article 22 of the DSU in response to a violation which the EC 
could not have anticipated when the impl ementing measures were taken and which it 
will be given no opportunity to correct."565 
                                                     
 
565 Appellee Submission of the European Communitie s, paras. 139-142 (citations omitted) (Exhibit 
US-6).  WT/DS212/RW 
 Page 131 
 
 
  The EC argued that "the right to make a claim must be exercised promptly, with the 
consequence that Article 21.5 of the DSU  must be interpreted as excluding the possibility to raise or 
argue for the first time a claim before an Article 21.5 Panel when the same claim could have been 
pursued before the original panel."566  In short, the EC did not appear to believe, when it was a 
respondent, that the limitations inherent in an Ar ticle 21.5 proceeding were a "technicality," a position 
the EC is now adopting as a complainant. 
  The Appellate Body agreed with the position th e EC adopted at that time, and which the EC 
appears to disagree with now, i.e., that unchanged parts of an original  measure, which did not have to 
be changed in order to comply with the DSB reco mmendations and rulings, are not subject to Article 
21.5 proceedings.  The quotation in the Panel's question confirms that point. 
  The facts of this dispute conform precisely to the scenario in EC – Bed Linen.  Just as the EC 
argued that India should not be permitted to use Article 21.5 to advance claims that "could have 
already been pursued before the original panel" because the EC "could assume legitimately that such 
finding was WTO consistent and did not need to be corrected," so the EC should not be permitted to 
do so here.     In this dispute, the DSB recommendations and rulings concerned privatization and privatization alone.  With respect to the Britis h sunset review, the EC's arguments concerning 
Glynwed are unchanged findings from the original pro ceeding.  In the original sunset review, USDOC 
determined that subsidization was likely to cont inue or recur not only because of British Steel, but 
also because of Glynwed.  USDOC's conclusion regarding Glynwed was not predicated on a 
privatization analysis.
567  Therefore, USDOC's finding regarding Glynwed is an aspect of the original 
determination that did not change and did no t have to change to comply with the DSB 
recommendations and rulings.  As the EC noted in EC – Bed Linen,  "the re-determination confirmed, 
without making any changes, the findings made in th e original determination ... .  That confirmation 
was made for reasons of transparency and legal certainty and was not, from a legal point of view, 
strictly necessary ... ."568  The same is true for the finding rega rding Glynwed. As a result, consistent 
with EC – Bed Linen , an Article 21.5 proceeding is not the appropriate forum to address any 
grievances the EC might have regard ing USDOC's Glynwed findings.   
 
 The posture of the Spanish sunset review is th e same.  In the original sunset review, USDOC 
determined that subsidization was likely to conti nue or recur not only because USDOC concluded that 
the privatization of Aceralia did not extinguish the benefit from non-recurri ng (and hence allocable), 
pre-privatization subsidies, but because of the exis tence of other subsidy pr ograms that do not confer 
allocable subsidies (because they  provide recurring subsidies).569  Therefore, USDOC's finding 
regarding the other subsidy programs is an aspect of  the original determination that did not change 
and did not have to change to comply with the DSB recommendations and rulings and, as the EC 
argued in EC – Bed Linen , is not subject to Article 21.5 proceedings. 
 
                                                      
566 Appellee Submission of the European Communities, para. 147 (Exhibit US-6).  Indeed, the EC even 
went so far as to suggest that permitting a compla ining Member to advance a claim in an Article 21.5 
proceeding when that claim could have been brought in the original proceeding implicated the "requirement to 
engage in dispute settlement procedures in good faith."  Id., para. 143. 
567 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from the United Kingdom:  
Final Results of Expedited Revi ew of Countervailing Duty Order , 65 Fed. Reg. 18309 (April 7, 2000) (Exhibit 
EC-6). 
568 Appellee Submission of the European Communities, para. 131 (Exhibit US-6). 
569 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from Spain , p. 13-14 
(Exhibit EC-7). WT/DS212/RW 
Page 132  
 
  With respect to arguments about the Interna tional Trade Commission's ("ITC") likelihood of 
injury determination, the EC in EC – Bed Linen  again provides an apt assessment of the situation.  
"Those elements of the original determination that  were not addressed in the re-determination ... are 
not part of the measure 'taken to comply'.  Instead, they are part of the original measure and, as such, 
cannot be challenged before an Ar ticle 21.5 Panel but only before an  ordinary Panel established in 
accordance with Article 4.7 of the DSU. "
570  The United States agrees, as did the Appellate Body 
when it confirmed that unchanged parts of a measure that did not have to be changed to comply with 
the DSB recommendations and rulings are not prop erly part of an Article 21.5 proceeding.  
  The United States is not arguing that all of the EC 's claims are beyond the scope of this Panel.  
For the sunset review from France, the United States ag rees that it is proper for this Panel, as part of 
its Article 21.5 jurisdiction, to review USDOC's re vised privatization analysis of Usinor.  USDOC's 
revised privatization analysis was not part of the original determination and was a change necessary to 
comply with the DSB recommendations and rulings.  
 In the words of the EC, to permit consider ation of the claims regarding Glynwed, the 
recurring Spanish subsidy programs, and injury in this forum would provide a "second service" to a 
complaining party that, "by negligence or calculation"  omitted to raise the claims during the original 
proceeding; it would "diminish the procedural rights" of the United States "for no good reason;" and would deprive the United States of a "reasonable period time" to come into compliance.  The United States "could assume legitimately" that these findings were "WTO consistent and did not need to be 
corrected."  It would be "manifestly unfair to e xpose" the United States to the "possibility of an 
immediate suspension of concessions ... in response to  a violation which the" United States "could not 
have anticipated when the implementing measu res were taken and which it will be given no 
opportunity to correct." Thus, the ma terial facts and circumstances of EC – Bed Linen  are perfectly 
analogous to the facts and circ umstances in this dispute. 
 
 The EC has argued that EC – Bed Linen  is factually distinct from the present dispute because 
in the former India advanced the same claim in both the original proceeding as well as the Article 21.5 
proceeding.  However, as the excer pts from the EC's appellee submission in that dispute confirm, the 
argument the EC advanced, and which the Panel a nd the Appellate Body accepted, was not limited to 
situations in which the "same claim" was being a dvanced; the EC logically argued that a claim that 
could have been brought in the original proceeding c ould not for the first time be brought in an Article 
21.5 proceeding.  Indeed, the fact that India was a ttempting to raise the same claim merely provided, 
in the EC's view, " additional grounds"
571 – not the only grounds – for considering India's claim 
beyond the scope of an Article 21.5 proceeding.  Th e Appellate Body's conclusions, as quoted by the 
Panel in this question, demonstrate that its c onclusions regarding the scope of an Article 21.5 
proceeding are not limited to situations in which th e same claim is advanced .  Instead, they apply 
more broadly to situations in which a Member raises a claim that does not pertain to the measure taken to comply. 
 
Question 3 :  Is the USDOC asserting that the change-o f-ownership methodology had no material 
effect on the other elements of the sunset review determination?  Is the USDOC arguing that even if 
the new change-of-ownership method ology resulted in a changed amount of  subsidisation, this finding 
would not require the USDOC to revise the entire determination? (United States)  
 
Answer:  The United States does assert that application of its new privatization methodology did not 
change the challenged subsidy likelihood determinati ons – those determinations remained affirmative 
despite the reexaminations performed  in the revised sunset reviews.  In addition, the United States 
                                                     
 
570 Appellee Submission of the European Communities, para. 134 (Exhibit US-6). 
571 Appellee Submission of the European Communities,  para. 149 (Exhibit US-6) (Emphasis added).   WT/DS212/RW 
 Page 133 
 
 
 disputes, for the reasons explained below, that th e revised sunset reviews could have resulted in a 
changed amount of subsidization.   Article 21.3 of the SCM Agreement  provides that a definitive countervailing duty must be 
terminated after five years unless the authorities dete rmine that the "expiry of the duty would be likely 
to lead to continuation or recurrence of subsidizati on and injury."  The focus of a sunset review under 
Article 21.3 is thus on future behavior, i.e., whether subsidies and injury are likely to continue or 
recur in the event of expiry of the duty.    USDOC's subsidy likelihood determination is not dependent on the magnitude  of the subsidy 
rate in any prior segment of the countervailing duty proceeding, and USDOC does not calculate a 
subsidy rate for purposes of the subs idy likelihood determination itself.
572  Further, USDOC conducts 
its subsidy likelihood determinati on on an order-wide, not company-specific, basis, unlike certain 
determinations in investig ations and assessment reviews.573  
 
 In sum, application of USDOC's new privati zation methodology to the revised sunset review 
determinations cannot ha ve had any impact on subsidy calcu lations.  Application of the new 
privatization methodology did not result in the elimina tion of subsidization on an order-wide basis.  In 
the British review, the analysis of Glynwed's subsidies was not based on the privatization 
methodology; similarly, in the Spanish review, the analysis of the recurring Spanish subsidy programs 
was not based on any privatization methodology.  Question 4:  Does the United States consider that the amount of subsidisation is relevant for the 
purpose of determining injury?  Is the same cons ideration also relevant in the context of a Sunset 
review ?  (United States) 
 
Answer:  Nothing in Article 15 of the SCM Agreement  requires investigating authorities to consider 
the level of subsidization in an injury analysis .  Nor does Article 21.3 require that the authorities 
consider the level of likely subsidization in determini ng whether injury is likely to continue or recur.  
If the Panel is asking about the relationship between  Article 15 and Article 21.3, the United States 
notes that Article 3 of the Antidumping Agreement does not apply to sunset reviews under Article 
11.3 of that Agreement;
574 by direct analogy, Article 15 of the SCM Agreement  does not apply to 
Article 21.3 sunset reviews of  countervailing duty orders. 
 
Question 5:  If by implementing the DSB  recommendations and rulings, another inconsistency arises, 
do the parties believe that an investigating authority is  obligated to address this  further inconsistency 
in the context of the DSB  recommendations and rulings?  Please comment in light of the following 
excerpt from paragraph 79 of the Appellate  Body Report in EC – Bed Linen: 
 
"... It is to be expected, therefore, that the claims, arguments, and factual circumstances relating to the "measure taken  to comply" will not, necessarily, be the 
same as those relating to the measure in the original dispute.
575  Indeed, a 
complainant in Article 21.5 proceedings may well raise new  claims, arguments, and 
factual circumstances different from those rai sed in the original proceedings, because 
a "measure taken to comply" may be  incons istent  with WTO obligations in ways 
                                                      
572 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, para. 127 (the 
authorities in an antidumping sunset review need not "calculate or rely" on dumping margins).   
573 Id. at paras. 155-158 (Sunset likelihood determination may be made on an order-wide basis).      
574 See, Appellate Body Report, United States – Sunset Reviews of Antidumping Measures on Oil 
Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted December 17, 2004, para. 280. 
575 (footnote original ) Ibid. WT/DS212/RW 
Page 134  
 
 different from the original measure.  In  our view, therefore, an Article 21.5 panel 
could not properly carry out its mandat e to assess whether a "measure taken to 
comply" is  fully consistent  with WTO obligations if it were precluded from 
examining claims additional to, and different fr om, the claims raised in the original 
proceedings.
 576 (European Communities/United States) 
Answer:  At the outset, the United States notes that the f actual situation put forth in the question is 
not the factual situation before the Panel.  The newly alleged inconsistenc ies did not arise in the 
implementation of the DSB recommendations and rulings.  USDOC's findings regarding Glynwed, 
the Spanish subsidy programs, and the ITC's likelih ood of injury determina tion were unchanged parts 
of the original measure.  Therefore, the EC's claims  in that regard are not alleged "incons istencies" 
"arising" out of implementation of the recommenda tions and rulings but rather are aspects of the 
original determination that are simply, in the words of the EC, "confirmed, without making any changes ... for reasons of transparency"  in the revised determination.
577 
  In the Bed Linen  quotation that the Panel cites a bove, the Appellate Body cited to Canada – 
Aircraft .  The quotation from Canada – Aircraft  makes clear that if the measure taken to comply is 
itself WTO-inconsistent, then an Article 21.5 pane l may review the measure taken to comply for 
WTO-inconsistencies.  Article 21.5 provides two b ases for review of a "measure taken to comply" – 
either there is a claim that no such measure exists, or  there is a claim that the measure is inconsistent 
with a covered agreement.  In either  case, though, the Panel is reviewing only
 a "measure taken to 
comply."  There is no reference in Article 21.5 to any other type of measure, and therefore there is no  
jurisdiction under Article 21.5 to review any othe r measure.  Accordingly,  a panel's review under 
Article 21.5 of a measure taken to comply is not  limited to the DSB recommendations and rulings; if 
inconsistencies with WTO obligations other than  those addressed in the DSB recommendations and 
rulings arise with respect to those aspects of the determination that changed to comply with the 
recommendations and rulings, then an Article 21.5 panel would have jurisd iction to review those 
changed aspects for WTO consistency.  
 
Question 6:  Which laws and regulations govern a Sec tion 129 proceeding? How does the Section 
129 procedure work in practice?  Please explain  the respective responsibilities of the USTR and the 
USDOC in Section 129 proceedings and how th ese agencies interrelate. (United States) 
 
Answer:  Section 129(b) of the Uruguay Round Agreemen ts Act, codified at 19 U.S.C. 3538(b), 
addresses instances in which the DSB has found that an action taken by USDOC in an antidumping or 
countervailing duty proceeding is  inconsistent with US obligations under the AD or SCM 
Agreement .578  In such an instance, USTR may ask USDOC to issue a determination that would render 
that agency's action not inconsistent with the r ecommendations and rulings of the DSB.  USTR plays 
no role in that determination.  USDOC will then is sue the revised determination within 180 days of 
receiving the request from USTR.  
                                                     
 
576 (footnote original ) As we put it in  Canada – Aircraft (Article 21.5 – Brazil) :  
Indeed, the utility of the review envisaged under Article 21.5 of the DSU  would be seriously 
undermined if a panel were restricted to examini ng the new measure from the perspective of the claims, 
arguments and factual circumstances that  related to the original measure, because an Article 21.5 panel would 
then be unable to examine fully the "consistency with a covered agreement of the measures taken to comply", as 
required by Article 21.5 of the DSU .  
(Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil) , para. 41)  We defined the function 
of Article 21.5 proceedings in the same vein in our Report in  US – Shrimp (Article 21.5 – Malaysia)  (para. 87). 
577  Appellee Submission of the European Communities, para. 131 (Exhibit US-6). 
578 See United States – Section 129(c)(1) of the Uruguay Round Agreements Act,  WT/DS221/R, 
adopted August 30, 2002.  WT/DS212/RW 
 Page 135 
 
 
  Section 129(b) also provides that USTR ma y direct USDOC to "implement" its revised 
determination for purposes of US law.  The Statement of Administrative Action provides an 
explanation of what this language means in the context of the statute:  
"The Trade Representative may decline to request implementation of the [revised] 
determination.  This might be the case, for example, if USDOC issued a final 
affirmative subsidy determ ination and a WTO panel subsequently finds that 
USDOC's analysis was not consistent with  the Subsidies Agreement.  On making a 
new determination at the Trade Representa tive's direction, USDOC could correct the 
analytical flaw found by the Panel without changing the original outcome.  In such a 
case, there would be no need to implement the new determination as a matter of 
domestic law."
579 
 The circumstances discussed in this passage de scribe precisely the situation in the Article 
21.5 matter before the Panel.  
 The present dispute involves three sunset review s.  Under the US system, a sunset review 
only determines whether an order is continued or  revoked.  It does not affect companies on an 
individual basis except if the order is revoked.  W ith respect to these three reviews, USDOC's revised 
determinations were affirm ative and the orders were therefore con tinued.  For that reason, companies' 
entries were not affected by the revised determination, and there was no need to "implement" for purposes of US law.    
Question 7 :  What are the implications if the USTR do es or does not direct implementation? (United 
States) 
 
Answer:  In the case of the three reviews at hand, th e absence of a direction to implement has no 
implications.  Under US law, there was no need to  implement because the revised determinations did 
not affect the outcome; for example, the revised de terminations did not result in revocation of the 
order.  Therefore, USTR exercised its discretion not to direct implementation. 
 
Question 8:  Does the USDOC have the discretion to implement DSB  recommendations and rulings 
on its own initiative?  Has the USDOC done so on any occasion?  If so, under which circumstances?  
(United States)   
Answer:  USDOC has no independent authority to implement DSB recommendations and rulings on 
its own initiative.  The Section 129 process is th e standard procedure through which USDOC revises 
determinations to come into compliance.  Question 9:  Does the USDOC have the discretion to recalcul ate the margin of subsidisation in a 
Section 129 proceeding?  If so, under which c onditions could a revised margin lead to a new 
likelihood-of-injury determination?  (United States)   
Answer:  As stated above, USDOC does not, and is not required to, recalculate margins of 
subsidization in sunset reviews.  Consequently, an y revisions to USDOC's sunset determinations that 
might be occasioned by a proceeding under Section 129 cannot result in any recalculations to margins 
of subsidization.  
                                                     
 
579  Statement of Administrative Action, p. 356 (Exhibit US-7). WT/DS212/RW 
Page 136  
 
 Question 10:  Does the USDOC have the discretion to open the record and consider new evidence in 
a Section 129 proceeding?  Has the USDOC done so on any occasion?  If so, under which circumstances? (United States) 
 
Answer:  USDOC may consider new evidence where it is relevant to the measure taken to comply, 
which in this case involved the application of US DOC's new privatization methodology.  Under the 
Modification Notice,  a number of factual issues must be resolved when USDOC applies its new 
privatization methodology.  Consequently, wher e it was necessary for USDOC to apply the new 
methodology for purposes of resolving those factual issues, USDOC gave the interested parties an 
opportunity to submit new evidence, and USDOC considered that evidence. 
 
Question 11:  In a Section 129 proceeding, does the USDOC have the discretion to reconsider 
evidence already on the record in the underlying determination?  Has the USDOC done so on any 
occasion?  If so, under which circumstances? (United States)  
Answer:  In a proceeding under Section 129, USDOC may consider relevant evidence from the 
underlying determination.  USDOC may, however, either take action on its own to move such 
evidence onto the record of the Section 129 proceedi ng or offer interested parties the opportunity to 
place such evidence on the record.  Evidence from the underlying determinations was placed on the 
record of several of the Section 129 proceedings occasioned by the DSB recommendations and rulings in this case – including all of the revised Fr ench and Italian reviews – and USDOC considered 
that evidence.
580 
 
Question 12:  What are the main features of an "expedite d" sunset review?  How does this compare 
to other types of sunset reviews? (United States)    
Answer:  In an "expedited" sunset review under sec tion 751(c)(3)(B) of the Tariff Act of 1930, as 
amended ("Act"), USDOC normally will issue a fina l determination within 120 days of the initiation 
of the sunset review; in a "full" sunset review, USDOC's deadline is 240 days under section 751(c)(5)(A) of the Act.       The additional difference between "expedited" and "full" sunset reviews at USDOC is that, in 
the case of the latter, USDOC will issue preliminary resu lts before issuing final results  in the review.  
Question 13:  In a sunset review, as a matter of practice, does the USDOC make a finding on the rate 
of subsidisation? (United States)  
 
Answer:  No.  See  Response to Question 3. 
 
Question 14:  Does US law require the USDOC to determ ine a rate likely to prevail and report this 
rate to the ITC in the sunset review?  For what purpose? (United States) 
 
                                                     
 
580 See, for example, Issues and Decision Memorandum for the Determination Under Section 129 of the 
Uruguay Round Agreements Act: Countervailing Duty Administrative Review: Grain-Oriented Electrical Steel 
from Italy  (24 October 2003), p. 4 (Exhibit US-8) (USDOC looked at new evidence in concluding that 
privatization extinguished the benefit).   WT/DS212/RW 
 Page 137 
 
 
 Answer:  In a sunset review, US law requires that USDOC report to the ITC a rate likely to prevail in 
the event of revocation.  That rate is not calculate d in the sunset review, and it is not used for the 
imposition, collection, or assessment of duties.  Nor does USDOC use it to determine whether countervailable subsidization is likely to continue or recur in the event of revocation.  The ITC may 
consider the rate in making its likelihood of injury  determination.  In these reviews, the ITC did not 
rely on the rates. 
 
Question 15:  Does the USDOC have the discretion to open the record and consider new evidence in 
an expedited sunset review?  Does the USDOC have the discretion to open the record and consider 
new evidence in other types of sunset reviews? (United States) 
 Answer:  During the course of a sunset review, exped ited or otherwise, USDOC solicits and accepts 
information from parties, all of which is then considered in making a final determination.  For 
expedited sunset reviews, see 19 C.F.R. §351.308(f); 19 C.F.R. §351.218(d)(3).  For sunset reviews in 
general, see 19 C.F.R. §351.218(e)(2); 19 C.F.R. §351.218(d)(3). 
 Question 16:  At page 7 of the UK Section 129 determi nation the USDOC states: "The Department's 
duty, in reaching a determination under Section 129(b)(2) of the URAA for this case, is not to 
reconduct the original sunset review in its totality, but to render it not inconsistent with the findings of 
the Appellate Body."  Does the UK Section 129 de termination also intend to render the original 
sunset review not inconsistent with the adopt ed findings of the Panel?  (United States) 
 Answer:  USDOC's Section 129 determination was intended to render the original sunset review not 
inconsistent with the recommendations and rulings of the DSB.  The DSB adopted both the Appellate 
Body report and the Panel report as modified by the Appellate Body.  
Question 18:  How did the United States implement the DSB 's recommendations and rulings in the 
three sunset reviews at issue?  In the Notice of Im plementation, the USDOC indicates that "[b]ecause 
the US Trade Representative declined to di rect the Department to implement the revised 
determinations with regard to the four sunset revi ews involved in the WTO dispute, [the USDOC is] 
not implementing these Section 129 Determinations".  What constitutes "implementation" in these 
cases? (European Communities/United States) 
 Answer:  As a previous panel has noted, terms used in a Member's municipal law and those used in 
WTO provisions "do not necessarily have the same meaning."
581  In this dispute, the United States 
implemented the recommendations and rulings of th e DSB by revising the determinations to render 
them not inconsistent with those recommendations and rulings.  However, for purposes of US law, 
USTR determined that it was unnecessary to "imple ment" the revised determinations because, as 
discussed in greater detail above, the revisions coul d not have resulted in re vocation of any of the 
orders.  
Question 19:  If the Section 129 determinations constitute "i mplementation" in the four sunset cases, 
what is the relevance of the fact that the USTR declined to direct implementation?  Does the absence 
of the USTR's direction to implement affect the legal status of the three Section 129 determinations at 
issue?  If so, to what extent? (United States)  
                                                     
 
581 United States – Sections 301-310 of the Trade Act of 1974 , WT/DS152/R, adopted January 27, 2000, 
para. 7.20. WT/DS212/RW 
Page 138  
 
 Answer:  As noted above, the United States implemen ted for purposes of the WTO by revising the 
determinations in question.  However, because co mplying with the DSB recommendations and rulings 
did not require the United States to change the out come of the determinations, there was no need, 
under US law, for USDOC to "imp lement."  Accordingly, the ab sence of USTR direction to 
implement means that the three determinati ons remain unimplemented under US law, but 
implementation would not have resulted in  the revocation of any of the orders. 
 Question 20 :  Why did the USTR direct the USDOC to implement eight of the twelve Section 129 
determinations and then decline to direct the US DOC to implement the other four Section 129 
determinations? (United States) 
 Answer:  Bringing eight of the twelve determin ations into compliance with the DSB 
recommendations and rulings resulted in either a cha nge to the cash deposit rate  or revocation of the 
order.  Therefore, USTR "directed" USDOC to implem ent in order to modify the cash deposit rate or 
revoke the order.  Bringing the remaining four determinations into compliance only required USDOC 
to correct – as the SAA describes it – an "analytical  flaw" (the privatization methodology) and did not 
affect the outcome of the review.  As a result, ther e was no need to implement as a matter of US law. 
 
Question 21:  Do the parties agree that the three Secti on 129 determinations at issue are the 
measures taken to comply in these Article 21.5 proceedings? (European Communities/United States) 
 
Answer:  Those aspects of the Section 129 determinations  that represent revisions to the original 
determinations in order to comply with the DS B recommendations and rulings are the measures taken 
to comply in these proceedings.  With respect  to these revised determinations, the revised 
privatization analysis of Usinor is a measure take n to comply.  By contrast, any findings regarding 
Glynwed and the Spanish subsidy programs in the revised sunset review are not measures taken to 
comply because they are unchanged aspects of the or iginal determination ha ving nothing to do with 
privatization, and they therefore did not need to be  changed in order to come into compliance with the 
DSB recommendations and rulings.  
Question 22:  During the meeting, the United States said it understood its obligation to implement the 
DSB  recommendations and rulings in respect of privatization  as requiring it to "remove the taint".  
What did the United States mean by the term "remove the taint"?  What impact does it have on the revised sunset determinations? (United States)  
 
Answer:  The DSB recommendations and rulings addr essed the WTO-consistency of USDOC's 
privatization methodology.  The Panel and the Appe llate Body concluded that USDOC's analysis of 
the continuing benefit inuring to British Steel after its privatization was not consistent with US WTO 
obligations.    As the Panel stated, the sunset reviews "b ased on the gamma methodology" are inconsistent 
with the SCM Agreement .
582  Thus, USDOC eliminated its reliance on a flawed privatization 
methodology by assuming that the privatization of Br itish Steel extinguished any continuing benefit.  
As the United States has noted, USDOC's original dete rmination to continue the sunset order was not 
based solely on findings resulting from use of the flawed methodology; the Issues and Decision 
Memorandum in the original sunset determination noted that Glynwed also benefited from a subsidy 
program, and Glynwed's subsidization was not  subject to a privatization analysis.583  Therefore, the 
                                                      
582 Panel, para. 8(1)(c). 
583 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from the United Kingdom:  
Final Results of Expedited Revi ew of Countervailing Duty Order , 65 Fed. Reg. 18309 (April 7, 2000) (Exhibit 
EC-6), p. 6, 13.  WT/DS212/RW 
 Page 139 
 
 
 revised determination is no longer based on the flawed methodology, and the United States has 
thereby complied with the recommendations and rulings of the DSB.   The same is true of the Spanish review, where the original sunset determination was based not 
only on the existence of non-recurring subsidies, but al so on the existence of recurring subsidies.  The 
latter are not affected by privatization and theref ore were not subject to the DSB recommendations 
and rulings. 
 
Question 23:  Does the United States argue that it has complied with the DSB  recommendations and 
rulings by referring a respondent company to an alter nate procedure, i.e. an administrative review, to 
obtain a company-specific rate based on the new privatization  methodology? (United States)  
 
Answer:  No.  The DSB recommendations and rulings a ddressed the following issue: Whether the 
privatization methodology then used by the United States was consistent with US WTO obligations 
and whether the US decision, in the context of a sunset review, to continue the order was WTO-
consistent in light of the fact that it was based on a flawed analysis of whether the benefit survived the 
privatization.  The Appellate Body confirmed in Japan Sunset that order-wide Sunset reviews are 
permissible and that the United States is not obligated to make company-specific determinations in those reviews.
584  If British Steel wishes to obtain a re vised company-specific rate, then the 
appropriate venue, under US law, is for British Steel to seek an administrative review.  However, that 
would be unrelated to the question of complying with the DSB recommendations and rulings. 
 
Question 27:  Can the United States clarify to whom Usinor's employees/retirees are related?  Are 
they related to Usinor, as indicated in the Fr ench Section 129 determination, and/or to the 
Government of France, as argued in th e written submissions? (United States) 
 
Answer:  For purposes of the application of the new privatization methodology, USDOC does not 
distinguish between the company and its owner.  As employees of Usinor, the employees are related to (or affiliated with) Usinor and, therefore, rela ted to (or affiliated with) the seller, the combined 
Usinor/Government of France entity.    
Question 28:  In its Oral Statement, the United States refe rred for the first time to the concept of 
"affiliation" to describe the alleged relation between  Usinor and its employees/retirees.  Could the 
United States explain what this concept means from a legal point of view?  Could the United States 
provide a citation to US law? Where does the concep t of affiliation appear in the French Section 129 
determination? (United States) 
 Answer:  "Affiliation" appears in section 771(33) of the Act.  It informs USDOC's interpretation of 
the term "related" as that term was applied in the revised French sunset review under Section 129 in 
that section 771(33) of the Act makes it clear that the relationship between employers and employees 
is one of "affiliation."  In fact, Question 8 in the questionnaire sent to French respondents in the 
Section 129 proceeding referred both to relatedness and affiliation in setting forth possible criteria for 
determining whether the privatization transaction was at arm's length. 
 
 Regardless of whether one uses the term "rel ated" or "affiliated," the issue before USDOC 
was whether there was a relationship between buyer  and seller such that it would be prudent to 
investigate whether that relationship had an impact on the result of the sales process.  USDOC concluded that the relationship betw een Usinor and its employees did necessitate further inquiry.   In 
this regard, the United States notes that Article 15.4 of the Customs Valuation Agreement provides 
that employers and employees are considered to be related parties.  USDOC's view that the 
                                                     
 
584 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, para. 150. WT/DS212/RW 
Page 140  
 
 relationship between employer and employee might influence the price is not without precedent. 
Thus, for purposes of customs valuation, Members have  already agreed that a relationship between an 
employee and its employer can be grounds for further examination as to whether the price actually paid whether the price actually paid was influen ced by the relationship between the buyer and the 
seller.  Similarly, in the French privatization, the fact that USDOC considered the employer and 
employee – the buyer and the seller – related (or a ffiliated) simply led to further examination of 
whether the price the employees paid  for the shares, which the seller described as "preferential," was 
in fact at arm's length and for fair market value. 
 
Question 29:  In the French Section 129 determination the USDOC states: "We determine that the 
employees of Usinor were related to Usinor...".
585  Can the United States indicate the excerpt(s) in 
this French Section 129 determination where the reasoning for such a conclusion lies?  (United 
States)  
Answer:  US law provides that employers and employees ar e to be considered affiliated (related).  
The fact that USDOC finds parties to be affilia ted (related) does not result in a conclusion about 
whether the transaction was for fair market value;  instead, that finding suggests that the transaction 
merits further scrutiny.  USDOC made this precise  finding in the draft determination, and no one, 
including the interested parties, challenged the conclusion. 
 
Question 30:  Did the European Communities provide informa tion related to the effect of different 
qincentives and restrictions on the respective risk premiu ms of the four classes of share offering?  If 
so, did the USDOC take this inform ation into account?  Please see th e Usinor Prospectus, inter alia, 
at pages 21-24. (European Communities/United States)  
Answer:  The EC never provided USDOC with evidence demonstrating that the "costs" of any 
restrictions on the different share classes fully accoun t for the differences in the prices offered to the 
buyers.  Most especially, the EC never provi ded USDOC with evidence demonstrating how 
restrictions on the employee shares might have fu lly accounted for the special ("preferential") price 
offered to the employees.  Rather, as here, the EC provided USDOC with nothing more than 
conclusory allegations.   Question 32:  At page 6 of the French Section 129 Determination, the USDOC states: 
 
"The decision to privatize Usinor and th e terms of privatization were executed 
through an order of the Ministry of Economic Affairs and Finance, based on an opinion by the Privatization Commission,  both issued in June 1995. Share prices 
were set by the Ministry, based on the opini on of the Privatization Commission, in 
consultation with Banque S.G. Warburg ("Warburg") and the other Global Coordinators of the share offerings, and in  accordance with the privatization law. 
The Privatization Commission stated that it relied upon various valuation methodologies for Usinor including, inter alia, stock-exchange-based comparisons 
and net liquidity flows. Based on its analysis, the Commission recommended a 
minimum value for Usinor  of FF 15,750 billion." 
 Do the parties consider that this price of  FF 15,750 billion is the fair market value ( FMV ) for 
Usinor?  For what price did the Government  of France actually sell Usinor? (European 
Communities/United States)   
Answer:  No.  That was an appraised value, not a fair market value.  An appraised value is – by 
definition – only an pre-sale estimate.  It is not the result of a market process.  See Modification 
                                                     
 
585 French Section 129 Decision Determination, p. 6.  WT/DS212/RW 
 Page 141 
 
 
 Notice, 68 FR at 37131.  Moreover, as pointed out in the Issues and Decision Memorandum for the 
Section 129 Determination: Corrosion-Resistant Car bon Steel Flat Products from France at 7, this 
particular appraised value was treated by the seller as  a "minimum value," not even an estimated sales 
price.  Question 33:  In its First written submission, the United States argues that "although approximately 
95  percent of the benefit from previously a llocated subsidies was extinguished by the privatization  of 
Usinor, the remaining 5 percent of the allocated s ubsidy continued to benefit the privatized entity".
586  
In its Second written submission, it further st ates that "USDOC reasonably determined that a 
corresponding portion of the allocated benefit continued to be countervailable after privatization ".587  
During the meeting with the Panel, the United States argued that the privatization  extinguished 
approximately 95 percent of the pre- privatization , non-recurring subsidies.  Can the United States 
please indicate to the Panel the excerpt of the S ection 129 determination wh ere that finding can be 
found?  How does the United States reconcile this  with the USDOC's position in the Section 129 
determination?  Specifically, please see the USDOC's st atement at page 15 of the French Section 129 
determination where the USDOC explains: 
 
"In this determination, we have applied the approach laid out in our Modification Notice, which states that, where we find that  the baseline presumption is not rebutted 
because a transaction was not made at arm' s length and for fair market value, or 
because of severe market distortions, "we will find that the company continues to 
benefit from the prior subsidies in th e full amount of the remaining unallocated 
balance of the subsidy benefit." See Modific ation Notice, 68 FR at 37138." (United 
States) 
Answer:  USDOC found that the benefit associated solely  with the employee shares was a sufficient 
basis for an affirmative subsidy likelihood finding in  the revised French sunset review – USDOC took 
the 95 per cent of the shares that were not sold to  Usinor employees out of the analysis because the 
benefit associated with those shares had been exti nguished by an arm's-length/fair market value 
privatization.  See Issues and Decision Memorandum  for the Section 129 Determination: Corrosion-
Resistant Carbon Steel Flat Products from France; Final Results of Expedited Sunset Review of 
Countervailing Duty Order, at 10 ("Third, the GOF  set and received a market-clearing price for 
Usinor's shares, except in the employee offering whic h constituted only 5.16 per cent of the sale. ..."); 
and at 16 ("As described in the 'Conclusion' section a bove [p.12], we have determined that the sale of 
shares to Usinor employees permitted the contin uation of certain allocable, non-recurring, pre-
privatization subsidies at an above de minimis rate beyond the original sunset review.  On this basis, 
we reaffirm our original like lihood determination. ...").    
 
 These findings are entirely consistent with USDOC's statement from page 15 of the France 
Section 129 determination.  The statement quoted  by the Panel was USDOC's response to the 
respondent's argument that, where something less than fa ir market value (but greater than zero) is paid 
for a share, the continuing benefit amount should only be the difference between the price actually 
paid and the fair market value.  USDOC had alread y rejected that approach when formulating its new 
privatization methodology.  Modification Notice, 68 FR at 37138.  Rather, under USDOC's new 
methodology, where less than fair market value is paid for a share, the en tire remaining allocable 
subsidy benefit attributable to that share continues to be countervailable. 
 
Question 36:  In the French Section 129 determination, the USDOC concludes that the employee 
share price was "preferential", i.e.  lower than the market-clearing price.  Yet it also concludes that 
the employee share resale restriction, together with restrictions on the French offering and the stable 
                                                     
 
586 US First written submission, para. 12. 
587 US Second written submission, para. 5. WT/DS212/RW 
Page 142  
 
 shareholders offering, constituted a "committed inves tment" because these restrictions "were aimed at 
encouraging the purchasers to hold onto their shares for a period of time".
588  The USDOC stated that 
"there is no evidence indicating that these commitmen ts distorted the amount that share purchasers 
were willing to pay"; therefore it concluded that "a ny committed investments were fully reflected in 
the share price".  Do these findings indicate that  the employee share price accurately and fully 
reflects the employees' willingness to hold onto the shares for a minimum period?  Please explain how 
these findings relate.  (European Communities/United States) 
Answer:   In responding to this question, it is necessar y first to clarify the general purpose and scope 
of USDOC's examination of potential "committed invest ments."  We direct the Panel's attention to the 
thorough explanation of this issue in the Modification Notice, 68 FR at 37133.  A fundamental 
concern underlying USDOC's examination of committed investments is transparency, that is, whether 
the parties to the privatization were aware of the committed investment requirements. If the facts of a 
particular privatization demonstr ate the requisite level of transparency, USDOC will generally find 
that the presence of committed inv estment requirements is not a basis for finding that the sale was for 
less than fair market value.    
 In the revised French sunset review, by finding that the committed investment met the 
enumerated criteria, USDOC found that any restric tions and requirements were fully known to the 
potential buyers and, thus were fully reflected in  the "amount that share purchasers were willing to 
pay."  This finding was only intended to indicate th at the existence of committed investments did not 
provide an additional reason for concluding that th e transaction was not for fair market value, over 
and above USDOC's other findings with respect to fair market value.    
 In sum, USDOC's determination that any restri ctions or requirements were reflected in the 
employee sales price does not mean, and was not intended to mean, that the entire discount or extent of the "preference" in the employee share price is fully accounted for by such restrictions or 
requirements.   
Question 37:  In its First written submission, the United States argues that "USDOC assumed that the 
privatization [] in the UK ... [was] at arm's-length and for fair market value".
589  Can the United 
States identify in the text of the UK Section 129 determination the facts and circumstances on the 
basis of which the USDOC "assumed" that the privatization  of British Steel was at arm's length and 
for FMV ?  (United States) 
 
Answer:  The United States assumed that the privatization of British Steel was at arm's length and at 
fair market value based on the recognition that this issue could not affect the outcome of the sunset 
review, given that the continuation of the order i ndependently relied on the s ubsidization of Glynwed. 
As the United States has noted, its task was to bring its measure into compliance with the DSB 
recommendations and rulings. In doing so, USDOC revi ewed the bases for continuation of the order. 
Because one of the bases for continuing the order w as the subsidization of Glynwed, which did not 
involve privatization and therefore was not affect ed by the DSB recommendations and rulings, an in-
depth privatization analysis of British Steel coul d not have changed the outcome. Therefore, USDOC 
simply assumed that the privatization was at arm's length and for fair market value.7 Because USDOC 
conducts its sunset reviews on an order-wide basis, the outcome of the sunset review would not have 
been affected had USDOC instead  made a "determination" regarding British Steel, as opposed to 
simply assuming the privatization was at arm's length and for fair market value.  
 
                                                      
588 France Section 129 determination, p. 9. 
589 US First written submission, para. 49.   WT/DS212/RW 
 Page 143 
 
 
 Question 38:  On the issue of privatization , Brazil cited the following Appellate Body finding:  
 
"We have already determined, in US – Lead and Bismuth II, that the gamma method is inconsistent with the obligation under Article 21.2 of the SCM Agreement. That 
obligation requires an investigating author ity in an administrative review, upon 
receiving information of a privatization  resulting in a change in ownership, to 
determine whether a "benefit" continues to exist. In our view, the SCM Agreement, by 
virtue of Articles 10, 19.4, and 21.1, al so imposes an obligation to conduct such a 
determination on an investigating authority  conducting a sunset review. As we 
observed earlier, the interplay of GATT Article  VI:3 and Articles 10, 19.4 and 21.1 of 
the SCM Agreement prescribes an obligation ap plicable to original investigations as 
well as to reviews covered under Article  21 of the SCM Agreement to limit 
countervailing duties to the amount and duration of the subsidy found to exist by the investigating authority. Consequently, we see no error in the Panel's finding that, in 
sunset reviews, the investigating authority, before deciding to continue to countervail 
pre-privatization , non-recurring subsidies, is obliged  to 'examine the conditions of 
such privatization s and to determine whether the privatized producers received any 
benefit from the prior subsidisa tion to the state-owned producers'."
590 
 In the UK Section 129 determination, the USDOC assumes arguendo that the privatization  
was at arm's length and for FMV .  Then, however, the USDOC states that it received allegations that 
the privatization  was affected by "market distortions"; concludes that such a privatization  would not 
warrant a finding that the privatization  extinguished pre- privatization , non-recurring subsidies; and 
dismisses the issue, explaining that it would not address this issue because it did not address the arm's 
length/ FMV  issue.  Given all of this, what is the determination on the privatization ? (United States) 
 
Answer:  USDOC did not make any company-specific determinations on privatizations in the UK 
Section 129 determination.  Rather, USDOC determined that, assuming arguendo that the 
privatization of British Steel plc was at arm's-leng th and for fair market value (so that all pre-
privatization subsidies were eliminated) , there rema ined a sufficient basis for an affirmative subsidy 
likelihood determination, i.e., the finding in the or iginal sunset review that other subsidies, not 
affected by privatization, continued during the life of the order.  Question 39:  Given the Appellate Body's recommendations  and rulings, how did the USDOC remove 
the so-called "taint" in this case?  Does the Unite d States consider that its removal of the "taint" 
consists of "assuming arguendo"? (United States)  
Answer:  USDOC assumed that the privatization of British Steel plc was at arm's length and for fair 
market value and thereby rendered the revised UK sunset review consistent with the DSB 
recommendations and rulings.  As noted above, USDOC  found that there remained a sufficient basis 
for an affirmative subsidy likelih ood determination absent the benef it associated with allocable, pre-
privatization subsidies conferred upon British Steel plc.  Because the revised determination was not 
based on a privatization analysis of any kind, th e revised determination was no longer "tainted".  
 Question 40:  The United States argues in its submissions that the USDOC assumed in its Section 129 
determination that British Steel plc was privatized at arm's length and for FMV .  The Panel 
understands that the only subsidy programme s benefiting British Steel prior to its privatization  were 
non-recurring.  Is that correct?  If this is the case, if the privatization  did in fact extinguish the benefit 
of those non-recurring subsidies, what is the basis  for maintaining the CVD order vis-à-vis British 
Steel plc?  (United States) 
 
                                                     
 
590 Appellate Body Report, para. 149 (emphasis added). WT/DS212/RW 
Page 144  
 
 Answer:  As explained above, consistent  with Article 21.3 of the SCM Agreement , USDOC's subsidy 
likelihood determination is made on an order-wide basis.  Thus, a sunset review does not result in 
maintenance of an order vis-a-vis one company or anot her.  Rather, the order is simply continued, and 
those companies subject to the order remain subject to the order.  As the United States has noted, if 
British Steel wishes to have the order revoked vis-a-vis itself, rather than on an order-wide basis, then 
British Steel may request an assessment review to begin that process.   
 
Question 41:  Which subsidy programmes is the United States currently countervailing?   Which 
recurring programmes form the basis of the USDOC' s affirmative determination of likelihood of 
continuation or recurrence of subsidisation in  the UK Section 129 determination? (European 
Communities/United States) 
 
Answer:  The current deposit rate for Glynwed is .73 per cent ad valorem .  For all other exporters, the 
deposit rate is 12 per cent ad valorem.  These depos it rates are based on the results of the original 
investigation, not on the results of the sunset re view or the revised sunset review.  The original 
investigation resulted in affirmative findings with r espect to the following programs:  Equity Infusions 
into British Steel, Cancelled NLF Debt, Regiona l Development Grants, the European Regional 
Development Fund, ECSC Article 54 Loans/Inte rest Rebates, and Transportation Assistance.
591  There 
have been no assessment reviews c onducted with respect to the UK countervailing duty order, and, 
thus, there has been no opportunity  to revise the deposit rates.  
 
 Regarding USDOC's revised likelihood dete rmination in the UK case, USDOC based the 
affirmative result on its finding in the underlying sun set review that Glynwed is likely to continue to 
benefit from countervailable subsidies.592  
 
Question 42:  What evidence did the European Communities/UK Government/Corus provide 
regarding recurring subsidisation?  When did they prov ide it?  In the Section 129 determination?  In 
the sunset review?  Please distinguish between evidence on general programmes and those specific to 
either British Steel or Glynwed, if applicable.  In the Section 129 determination, did they provide any 
evidence on the same programmes additional to that evi dence already provided in the sunset review?  
Did the evidence regarding non applicable/no longer available subsidy programs submitted during 
the sunset review concern the countervailed subsidy programs benefitin g Glynwed? (European 
Communities/United States) 
 
Answer:  The European Communities/the Government  of the UK/Corus offered arguments 
concerning a number of programs in the original suns et review, including programs that benefit or are 
likely to benefit Glynwed.  USDOC rejected those arguments.  In the Section 129 proceeding, the EC 
sought to re-introduce arguments re garding programs that benefit or  are likely to benefit Glynwed.  
However, because the purpose of the Section 129 pr oceeding was to bring the United States into 
compliance with the DSB recommendations and rulings , which were limited to privatization, those 
arguments (and the underlying in formation) were inapposite.  
 
Question 44:  At page 19 of the original sunset review Issues and Decision Memorandum (Exhibit 
EC-6), the USDOC provides a company-specific ra te for Glynwed (0.73 percent) and an all others 
rate (12.00 percent).  Does this mean that the US DOC would have a sufficient basis to recalculate the 
countervailing duty in a sunset review?  If not, what is the source for this rate?  (United States) 
                                                      
591 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from the United Kingdom:  
Final Results of Expedited Revi ew of Countervailing Duty Order , 65 Fed. Reg. 18309 (April 7, 2000) (Exhibit 
EC-6). 
592 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from the United Kingdom:  
Final Results of Expedited Revi ew of Countervailing Duty Order , 65 Fed. Reg. 18309 (April 7, 2000) (Exhibit 
EC-6), p. 13-14.  WT/DS212/RW 
 Page 145 
 
 
  
Answer:  Those are the rates from the original inves tigation.  They were not calculated, or 
recalculated, in the sunset review.   
Question 45:  What is the cash deposit rate(s) for the relev ant products in this case?  Is the legal 
basis for this cash deposit rate(s) the original inves tigation, the original sunset review, or the revised 
sunset review provided in the Section 129 det ermination?  (European Communities/United States)  
 
Answer:  In addition to the deposit rates for the UK case (see answer to Question # 41), the deposit 
rate in the Spanish case is 36.86 per cent country-wid e, and the deposit rate in the French case is 
15.13 per cent (Usinor and country-wide).  In both cases, these deposit rates were determined in the 
investigation (which, in the French case, included recalculation as a result of domestic litigation); no 
party has requested an assessment re view in either of these cases.   
 
Question 46:  The Panel notes that sunset reviews in th e United States are conducted on an order-
wide basis.  Please explain why the UK Section 129  determination provides a company-specific rate 
for Glynwed. (United States)  
Answer:  USDOC did not assign Glynwed a new company-specific rate in the UK Section 129 
determination.  The reference to the rate relates ba ck to the rate that USDOC assigned to Glynwed in 
the original investigation (there were no admini strative reviews) and reported to the Commission in 
the initial sunset determination.  As discussed a bove, in the initial sunset determination, USDOC 
reported company-specific rates only because the US  statute requires USDOC to report likely-to-
prevail rates to the ITC. 
 
Question 47:  Would a decrease in the volume of subsid ized imports pursuant to a likelihood-of-
subsidisation determination have an impact on th e likelihood-of-injury analysis? (United States) 
 
Answer:  The volume of subsidized imports would not be affected by a Section 129 determination 
finding likelihood-of-subsidization on an order-wide basis.  The Appellate Body has clarified that 
Members are not obligated to make company-specific determinations in sunset reviews of antidumping orders; by analogy, Members are not oblig ated to make such determinations in sunset 
reviews of countervailing duty orders.
593  Thus, where, as in the case of the UK Section 129 
determination, there is a finding that order-wide s ubsidization is likely to continue or recur, there 
would be no change in the volume of  imports covered by the order.  If, on the other hand, a Section 
129 determination by USDOC resulted in an order-wid e finding of no likely subsidization, the USTR 
could direct USDOC to "implement" by revoking the order altogether. 
 
Question 48:  Can the United States confirm that the USDOC did not need to revisit the privatization 
analysis in the UK (and Spain) case(s) because it relied on other grounds for its likelihood-of-subsidization determinati on?  (United States)  
 Answer:  Yes. 
 Question 49:  Given the text of Article 21.1 SCM, which provides that "a countervailing duty shall 
remain in force only as long as and to the extent necessary to counteract subsidisation which is 
causing injury", could one assume that a change in  circumstances, especially one affecting the level 
of subsidised imports, would require an authority to  revaluate injury?  What is the relationship 
between the obligations in Article 21.1 SCM and Article 21.3 SCM? (European Communities/United 
States)  
                                                     
 
593 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, para. 150. WT/DS212/RW 
Page 146  
 
  
Answer:  As this Panel has noted, Article 21.1 establishes a "general rule," and Article 21.3 "seems to 
provide a specific application" of that general rule.
594  The United States provides for change-in-
circumstance reviews pursuant to Article 21.2.  Question 50:  In its First written submission, the United States argues that "USDOC assumed that the 
privatization [] in ... Spain [was] at arm's-length and for fair market value"
595  Can the United States 
identify in the text of the Spain Section 129 determ ination the facts and circumstances on the basis of 
which the USDOC "assumed" that the privatization  of Aceralia was at arm's length and for 
FMV ? (United States) 
 
Answer:  As was the case with the UK review, it was unnecessary for USDOC to conduct a 
privatization analysis because there were other, non-privatization grounds for continuing the order.  
See the US answer to Question 39.  Question 51:  Which subsidy programmes is the United States currently countervailing?   Which 
recurring programmes form the basis of the USDOC' s affirmative determination of likelihood of 
continuation or recurrence of subsidisation in the Spain Section 129 determination? (European 
Communities/United States)   
Answer:  In the original affirmative countervailing dut y determination, the following programs were 
found to confer countervailable subsidies: (1) Law 60/70 – Long-term Loans from the Bank of 
Industrial Credit and Equity Infusion; (2) Roya l Decree 878/81 – BCI Exceptional Credits, Grants, 
and Equity Infusion; (3) 1984 Council of Minister s Meeting – Equity Infusions, Loan Guarantees, 
Share "Issue Premium," and Grant; (4) 1987 Government Delegated Commission on Economic 
Affairs – Deferral of Social Security and Other Tax Obligations, Grants, and Fund for Employment 
Promotion and Early Retirement; (5) Contributions Made to INI Special Finance Accounts; and (6) 
ECSC Article 54 Loans and Loan Guarantees.  Ther e have been no assessment reviews to take into 
account changes to these programs and/or changes to the subsidy rates as sociated with these 
programs.   In the Spanish sunset review (and in the revi sed Spanish sunset review), USDOC's affirmative 
likelihood determination was based in part on a dete rmination that there are countervailable recurring, 
non-allocable subsidies provided by programs that continue to exist such as the 1987 Government 
Delegated Commission on Economic Affairs: F und For Employment Promotion and Early 
Retirement.       Question 52:  What evidence did the European Communiti es/Government of Spain provide regarding 
recurring subsidisation?  When did they provide it?  In the Section 129 determinations?  In the sunset 
reviews?  Please distinguish between evidence on ge neral programmes and those specific to Aceralia.  
In the Section 129 determination, did they provid e any evidence on the same programmes additional 
to that evidence already provided in the sunset  review?   (European Communities/United States)   
 
Answer:  The European Communities and the Government  of Spain offered arguments concerning a 
number of programs in the original sunset review.  USDOC rejected these arguments in the original 
review.
596  In the Section 129 proceeding, the EC and th e Government of Spain sought to re-introduce 
their earlier arguments regarding recurring subsidies.   However, because the purpose of the Section 
129 proceeding was to bring the United States into  compliance with the DSB recommendations and 
                                                      
594 Panel Report, paras. 7.107-7.108. 
595 US First written submission, para. 49. 
596 Issues and Decision Memorandum in Cut-to-Length Carbon Steel Plate from Spain  (Exhibit EC-7).  WT/DS212/RW 
 Page 147 
 
 
 rulings, which were limited to privatization, th e arguments (and underlying information) on recurring 
subsidy programs were inapposite.   
Question 53:  What is the cash deposit rate(s) for the relev ant products in this case?  Is the legal 
basis for this cash deposit rate(s) the original inves tigation, the original sunset review, or the revised 
sunset review provided in the Section 129 det ermination?  (European Communities/United States)  
 
Answer:  See response to Question 45. 
 
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