WORLD TRADE  
ORGANIZATION  WT/DS379/AB/R 
11 March 2011 
 (11-1239) 
 Original:   English 
 
 
    
 
    
 
     
 
 
UNITED STATES – DEFINITIVE AN TI-DUMPING AND COUNTERVAILING 
DUTIES ON CERTAIN PRODUCTS FROM CHINA 
 
 
 
AB-2010-3 
  
 
    
 
    
Report of the Appellate Body  WT/DS379/AB/R 
 Page i 
 
 
  I. Introduction................................................................................................................ .................1 
II. Arguments of the Participants  and the Third Participants ..........................................................9 
A. Claims of Error by China – Appellant ...........................................................................9 
1. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies..................................9  
(a) The Ordinary Meaning of the Terms of the Treaty............................10  
(i) Dictionary Definitions ..........................................................10  
(ii) Context..................................................................................10  
(iii) Object and Purpose of the SCM Agreement ..........................12  
(iv) Interpretation by the Appellate Body in Canada – 
Dairy .....................................................................................14  
(v) Reference to Municipal Laws...............................................15  
(b) The ILC Articles ................................................................................16  
(i) Status of the ILC Articles .....................................................16  
(ii) Relevance of the ILC Articles ..............................................18  
(c) The USDOC's "Public Body" Determinations...................................19  
2. Article 2 of the SCM Agreement :  Specificity.................................................20  
(a) Article 2.1(a) of the SCM Agreement :  "Subsidy" and 
"Explicitly" ........................................................................................20  
(i) Interpretation.........................................................................21  
(ii) Application ...........................................................................23  
(b) Article 2.1(a) of the SCM Agreement :  "Certain Enterprises" ...........23  
(c) Article 2.2 of the SCM Agreement .....................................................24  
3. Article 14 of the SCM Agreement :  Calculation of the Benefit.......................26  
(a) Article 14(d) of the SCM Agreement :  Input Benchmarks.................26  
(i) Interpretation of Article 14(d) of the SCM Agreement .........26  
(ii) Application of Article 14(d) of the SCM Agreement ............30  
(iii) The USDOC's Rationale for Finding Distortion...................33  
(b) Article 14(b) of the SCM Agreement :  Loan Benchmarks.................33  
(i) Rejection of Interest Rates in China as Benchmarks 
under Article 14(b) of the SCM Agreement ..........................34  
(ii) Consistency with Article 14(b) of the Benchmarks 
Actually Used by the USDOC..............................................39  
"Comparable" .......................................................................39 
"Could Actually Obtain on the Market" ...............................40 Article 11 of the DSU...........................................................41 
4.
 Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and 
Article VI:3 of the GATT 1994:  "Double Remedies"....................................41  
(a) The Purpose of Countervailing Duties...............................................43  
(b) Interpretation of Article 19.4 of the SCM Agreement  and 
Article VI:3 of the GATT 1994 .........................................................44  
(c) Interpretation of Article 19.3 of the  SCM Agreement ........................49  
(d) Consequential Claims under Articles 10 and 32.1 of the 
SCM Agreement .................................................................................50  
(e) Completion of the Analysis ...............................................................50  
B. Arguments of the United States – Appellee ..................................................................51 
1. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies................................51  
(a) The Ordinary Meaning of the Terms of the Treaty............................51  
(i) Dictionary Definitions ..........................................................51  
(ii) Context..................................................................................52  
(iii) Object and Purpose of the SCM Agreement ..........................55  WT/DS379/AB/R 
Page ii  
 
  (iv)
 Reference to Municipal Laws...............................................56  
(b) The ILC Articles ................................................................................56  
(i) Status of the ILC Articles .....................................................57  
(ii) Relevance of the ILC Articles ..............................................57  
(c) Findings by Previous Panels..............................................................59  
(d) The USDOC's "Public Body" Determinations...................................60  
2. Article 2 of the SCM Agreement :  Specificity.................................................60  
(a) Article 2.1(a) of the SCM Agreement :  "Subsidy" and 
"Explicitly" ........................................................................................60  
(i) Interpretation.........................................................................61  
(ii) Application ...........................................................................62  
(b) Article 2.1(a) of the SCM Agreement :  "Certain Enterprises" ...........63  
(c) Article 2.2 of the SCM Agreement .....................................................65  
3. Article 14 of the SCM Agreement :  Calculation of the Benefit.......................66  
(a) Article 14(d) of the SCM Agreement :  Input Benchmarks.................66  
(i) Interpretation of Article 14(d) of the SCM Agreement .........67  
(ii) Application of Article 14(d) of the SCM Agreement ............69  
(iii) The USDOC's Rationale for Finding Distortion...................70  
(b) Article 14(b) of the SCM Agreement :  Loan Benchmarks.................71  
(i) Rejection of Interest Rates in China as the 
Benchmark under Article 14(b) of the 
SCM Agreement ....................................................................72  
(ii) Consistency with Article 14(b) of the Benchmarks 
Actually Used by the USDOC..............................................76  
"Comparable" .......................................................................76 
"Could Actually Obtain on the Market" ...............................76 
Article 11 of the DSU...........................................................77 
4. Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and 
Article VI:3 of the GATT 1994:  "Double Remedies"....................................78  
(a) China's Accession Protocol................................................................78  
(b) Interpretation of Article 19.4 of the SCM Agreement  and 
Article VI:3 of the GATT 1994 .........................................................78  
(c) Interpretation of Article 19.3 of the SCM Agreement ........................80  
(d) Context of the Relevant Terms of the SCM Agreement .....................81  
(e) Consequential Claims under Articles 10 and 32.1 of the 
SCM Agreement .................................................................................84  
(f) Completion of the Analysis ...............................................................84  
C. Arguments of the Third Participants ............................................................................85 
1. Argentina.........................................................................................................85 
2. Australia ..........................................................................................................86 3. Brazil...............................................................................................................89 4. Canada.............................................................................................................90 5. European Union ..............................................................................................91 
6. India ................................................................................................................96 
7. Japan................................................................................................................96 8. Mexico.............................................................................................................99 9. Norway............................................................................................................99 10. Saudi Arabia..................................................................................................100 
11. Turkey ...........................................................................................................102
 
III. Issues Raised in This Appeal ..................................................................................................1 03 
A. Introduction ...............................................................................................................105  WT/DS379/AB/R 
 Page iii 
 
 
  IV. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies........................................................106  
A. Introduction ...............................................................................................................106 
B. Article 1.1(a)(1) of the SCM Agreement ....................................................................108 
1. The Meaning of the Term "Public Body" .....................................................108  
2. Further Allegations of Error..........................................................................125  
3. Application of Article 1.1 of the SCM Agreement  to the USDOC's 
Determinations ..............................................................................................130  
4. China's Consequential Claims under Articles 10 and 32.1 of the SCM Agreement ............................................................................................137
 
C. Conclusion .................................................................................................................137 
V. Article 2 of the SCM Agreement :  Specificity.........................................................................138  
A. Article 2.1(a) of the SCM Agreement .........................................................................138 
1. Interpretation of Article 2.1 of the SCM Agreement .....................................139  
2. Application of Article 2.1(a) of the SCM Agreement ....................................145  
(a) Whether the Panel erred in finding that the USDOC identified 
an explicit limitation on access to the subsidy.................................146 
(b) Whether the Panel erred in finding that the USDOC had a 
sufficient basis on which to determine that the subsidy was limited to "certain enterprises".........................................................149 
B. Article 2.2 of the SCM Agreement .............................................................................157 
1. The Panel's Interpretation of the Term "Subsidy" in Article 2.2...................158 
2. The Panel's Statements Regarding a "Distinct Regime" ...............................160 
VI.
 Article 14 of the SCM Agreement :  Calculation of the Benefit...............................................163  
A. Article 14(d):  Benchmarks for Input Prices ..............................................................163 
1. Introduction...................................................................................................163 
2. Interpretation of Article 14(d) of the SCM Agreement ..................................165 
3. The Panel's Assessment of the US DOC's Determination to Reject In-
Country Private Prices in China as Benchmarks for HRS Inputs .................171 
4. Article 11 of the DSU ...................................................................................174 
B. Article 14(b):  Benchmarks for Loans .......................................................................176 
1. Introduction...................................................................................................176 
2. Interpretation of Article 14(b) of the SCM Agreement ..................................178 
3. The Panel's Assessment of the USDOC's Decision Not to Rely on 
Interest Rates in China as Benchmarks for SOCB Loans Denominated in RMB..........................................................................................................184 
4. The Panel's Assessment of the Proxy Benchmark Actually Used by the 
USDOC to Calculate the Benefit from RMB-Denominated SOCB 
Loans.............................................................................................................190 
(a) China's Claim under Article 11 of the DSU ....................................191 (b) Completion of the Analysis Regarding the Consistency of the 
USDOC's Proxy Benchmark with Article 14(b) of the SCM Agreement ...............................................................................196
 
VII. Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994:  "Double Remedies" ..........................................................................................199  
A. Introduction ...............................................................................................................199 WT/DS379/AB/R 
Page iv  
 
  B. Interpretation of Articles 19.3 and 19.4 of the SCM Agreement and Article VI:3 
of the GATT 1994 .......................................................................................................202 
1. Article 19.3 of the SCM Agreement ..............................................................203 
2. Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994 ....217 
3. Conclusion.....................................................................................................218 
C. Completion of the Analysis ........................................................................................219 
D. Articles 10 and 32.1 of the SCM Agreement ..............................................................224 
VIII.
 Findings and Conclusion........................................................................................................ .225 
 
ANNEX I Notification of an Appeal by China, WT/DS379/6  WT/DS379/AB/R 
 Page v 
 
 
  CASES CITED IN THIS REPORT 
 
Short title Full case title and citation 
Argentina – Footwear (EC) Appellate Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515 
Australia – Apples Appellate Body Report, Australia – Measures Affecting the Importation of 
Apples from New Zealand , WT/DS367/AB/R, adopted 17 December 2010 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
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 Appellate Body Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, 1161 
Brazil – Aircraft 
(Article 22.6 – Brazil) Decision by th e Arbitrators, Brazil – Export Financing Programme for 
Aircraft – Recourse to Arbitration by Brazil under Article 22.6 of the DSU and 
Article 4.11 of the SCM Agreement , WT/DS46/ARB, 28 August 2000, DSR 
2002:I, 19 
Canada – Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377 
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive 
Industry , WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 
2000:VI, 2985 
Canada – Continued 
Suspension Appellate Body Report, Canada – Continued Suspension of Obligations in the 
EC – Hormones Dispute , WT/DS321/AB/R, adopted 14 November 2008 
Canada – Dairy Appellate Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products , WT/DS103/AB/R, WT/DS113/AB/R 
and Corr.1, adopted 27 October 1999, DSR 1999:V, 2057 
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts , 
WT/DS339/R, WT/DS340/R, WT/DS342/R and Add.1 and Add.2, adopted  12 January 2009, as upheld (WT/DS339/R) and as modified (WT/DS340/R, 
WT/DS342/R) by Appellate Body Reports WT/DS339/AB/R, 
WT/DS340/AB/R, WT/DS342/AB/R 
EC and certain member States – Large Civil Aircraft Panel Report, European Communities and Certain Member States – Measures 
Affecting Trade in Large Civil Aircraft , WT/DS316/R, circulated to WTO 
Members 30 June 2010 (not yet adopted) 
EC – Countervailing 
Measures on DRAM Chips Panel Report, European Communities – Countervailing Measures on Dynamic 
Random Access Memory Chips from Korea , WT/DS299/R, adopted 3 August 
2005, DSR 2005:XVIII, 8671 
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed 
Salmon from Norway , WT/DS337/R, adopted 15 January 2008, and Corr.1, 
DSR 2008:I, 3 
EC – Sardines Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
Japan – Alcoholic  
Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 
1996, DSR 1996:I, 97 WT/DS379/AB/R 
Page vi  
 
  Short title Full case title and citation 
Japan – DRAMs (Korea) Appellate Body Report, Japan – Countervailing Duties on Dynamic Random 
Access Memories from Korea , WT/DS336/AB/R and Corr.1, adopted 17 
December 2007, DSR 2007:VII, 2703 
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Dutie s on Dynamic Random Access 
Memories from Korea , WT/DS336/R, adopted 17 D ecember 2007, as modified 
by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, 2805 
Korea – Commercial Vessels Panel Report, Korea – Measures Affecting Trade in Commercial Vessels , 
WT/DS273/R, adopted 11 April 2005, DSR 2005:VII, 2749 
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 
Korea – Various Measures on 
Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 
2001, DSR 2001:I, 5 
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, DSR 2002:IX, 3779 
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations 
in the EC – Hormones Dispute , WT/DS320/AB/R, adopted 14 November 
2008, DSR 2008:X, 3507 
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application 
of Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009 
US – Corrosion-Resistant 
Steel Sunset Review Appellate Body Report, United States – Sunset R eview of Anti-Dumping Duties 
on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3  
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 Duty 
Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, 8131 
US – Countervailing Duty Investigation on DRAMS Panel Report, United States – Countervailing Duty Investigation on Dynamic 
Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/R, adopted 20 July 2005, as modified by Appellate Body Report 
WT/DS296/AB/R, DSR 2005:XVII, 8243 
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, DSR 2003:I, 5 
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as 
Subsidies , WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI, 
5767 
US – FSC 
(Article 22.6 – US) Decision by th e Arbitrator, United States – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Arbitration by the United States under Article 
22.6 of the DSU and Article 4.11 of the SCM Agreement , WT/DS108/ARB, 30 
August 2002, DSR 2002:VI, 2517  WT/DS379/AB/R 
 Page vii 
 
 
  Short title Full case title and citation 
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 20 April 
2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475) 
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of 
Gambling and Betting Services , WT/DS285/R, adopted 20 April 2005, as 
modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, 5797 
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 23 August 
2001, DSR 2001:X, 4697 
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, 
4051 
US – Large Civil Aircraft (2nd complaint) United States – Measures Affecting Tr ade in Large Civ il Aircraft (Second 
Complaint) , WT/DS353 (panel proceedings in progress) 
US – Line Pipe Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Circular Welded Carbon Quality Line Pipe from Korea , 
WT/DS202/AB/R, adopted 8 March 2002, DSR 2002:IV, 1403 
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571 
US – Softwood Lumber VI 
(Article 21.5 – Canada) Appellate Body Report, United States – Investigation of the International 
Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada , WT/DS277/AB/RW, adopted 9 May 2006, 
and Corr.1, DSR 2006:XI, 4865 
US – Stainless Steel (Mexico) Appellate Body Report, United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R, adopted 20 May 2008, DSR 
2008:II, 513 
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R, WT/DS249/AB/R, 
WT/DS251/AB/R, WT/DS252/AB/R, WT /DS253/AB/R, WT/DS254/AB/R, 
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 
2003:VII, 3117  
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton and 
Man-made Fibre Underwear , WT/DS24/AB/R, adopted 25 February 1997, 
DSR 1997:I, 11 
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, 3 
US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton , WT/DS267/R, 
Corr.1, and Add.1 to Add.3, adopted 21 March 2005, as modified by Appellate 
Body Report WT/DS267/AB/R, DSR 2005:II, 299 
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717 
 WT/DS379/AB/R 
Page viii  
 
  ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
Anti-Dumping Agreement  Agreement on Implementation of Article VI of the General Agreement 
on Tariffs and Trade 1994  
CFS Paper Issues and 
Decision Memorandum Issues and Decision Memorandum for the Final Determination in the 
Countervailing Duty Investigation of Coated Free Sheet from the 
People's Republic of China  (Panel Exhibit CHI-93)  
China's Accession Protocol Protocol on the Accession of the People's Republic of China, WT/L/432 
CWP Circular welded carbon quality steel pipe 
CWP Issues and Decision 
Memorandum Issues and Decision Memorandum for the Final Determination in the 
Countervailing Duty Investigation of Circular Welded Carbon Quality 
Steel Pipe from the People's Republic of China  (Panel Exhibit CHI-1) 
DRAMS Dynamic random access memory semiconductors 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes 
GATS General Agreement on Trade in Services 
GATT 1994 General Agreement on Tariffs and Trade 1994  
GNI Gross national income  
GOC Catalogue Guiding Catalogue of the Industrial Restructuring (2005) , promulgated 
by the National Development and Reform Commission (Panel 
Exhibit CHI-70) 
HRS Hot-rolled steel  
ILC International Law Commission 
ILC Articles Responsibility of States for Internationally Wrongful Acts .  Text 
adopted by the ILC at its fifty-third session, in 2001, and submitted to 
the United Nations General Assembly as a part of the ILC's report covering the work of that session.  The General Assembly "[took] note of the articles on responsibility of States for internationally wrongful acts" for the first time in General Assembly Resolution 56/83 of 12 December 2001, corrected by document A/56/49(Vol. I)/Corr.4, and 
subsequently in Resolution 59/35 of 2 December 2004, 
Resolution 62/61 of 6 December 2007, and Resolution 65/19 of 6 December 2010.  The ILC's report, which also contains commentaries on the draft articles, appears in the Yearbook of the International Law 
Commission, 2001 , Vol. II, Part Two 
Implementing Regulation Decision of the State Council on Promulgating the "Interim Provisions 
on Promoting Industrial Structure Adjustment" for Implementation  
(Panel Exhibit US-87) 
Industrial Park New Century Industrial Park 
LWR Light-walled rectangular pipe and tube  WT/DS379/AB/R 
 Page ix 
 
 
  Abbreviation Description 
LWR Issues and Decision 
Memorandum Issues and Decision Memorandum for the Final Determination in the 
Countervailing Duty Investigation of Light-Walled Rectangular Pipe 
and Tube from the People's Republic of China  (Panel Exhibit CHI-2) 
LWS Laminated woven sacks  
LWS Issues and Decision 
Memorandum Issues and Decision Memorandum for the Final Affirmative 
Countervailing Duty Determination:  Laminated Woven Sacks from the 
People's Republic of China  (Panel Exhibit CHI-3)  
NME Non-market economy 
OTR Certain new pneumatic off-the-road tyres 
OTR Issues and Decision 
Memorandum Issues and Decision Memorandum for the Final Affirmative 
Countervailing Duty Determination:  Certain New Pneumatic Off-the-Road Tires (OTR Tires) from the People's Republic of China  
(Panel Exhibit CHI-4) 
Panel Report Panel Report, United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/R 
RMB Chinese renminbi 
SCM Agreement Agreement on Subsidies and Countervailing Measures  
SOCB State-owned commercial bank  
SOE State-owned enterprise 
Tokyo Round Subsidies 
Code Tokyo Round Agreement on Interpretation and Application of 
Articles VI, XVI and XXIII of the General Agreement on Tariffs and 
Trade , BISD 26S/56, entered into force 1 January 1980 
USDOC United States Department of Commerce 
Vienna Convention Vienna Convention on the Law of Treaties , done at Vienna, 23 May 
1969, 1155 UNTS 331;  8 International Legal Materials 679  
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/6, 16 August 
2010 
WTO World Trade Organization 
WTO Agreement  Marrakesh Agreement Es tablishing the World Trade Organization  
  WT/DS379/AB/R 
 Page 1 
 
 
  WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products 
from China  
 
China, Appellant  
United States, Appellee  
 
Argentina, Third Participant 
Australia,  Third Participant 
Bahrain,  Third Participant 
Brazil,  Third Participant 
Canada,  Third Participant  
European Union1, Third Participant  
India, Third Participant  
Japan, Third Participant  
Kuwait, Third Participant 
Mexico,  Third Participant 
Norway,  Third Participant 
Saudi Arabia,  Third Participant  
Separate Customs Terr itory of Taiwan, Penghu,
 Kinmen and Matsu, Third Participant 
Turkey,  Third Participant  AB-2010-3 
 
Present: 
 Ramírez-Hernández, Presiding Member Bautista, Member Van den Bossche, Member 
 
 
I. Introduction 
1. China appeals certain issues of law and legal in terpretations developed in the Panel Report, 
United States – Definitive Anti-Dumping and Count ervailing Duties on Certain Products from China  
(the "Panel Report").2  The Panel was established on 20 January 2009 to consider a complaint by 
China with respect to definitive anti-dumping duties and countervailing duties imposed by the 
United States on each of the following four products from China:  (i) circular welded carbon quality 
                                                      
1This dispute began before the entry into force of the Treaty of Lisbon amending the Treaty on 
European Union and the Treaty establishing the European Community  (done at Lisbon, 13 December 2007) on 
1 December 2009.  On 30 November 2009, the World Trade Organization received a Verbal Note (WT/L/779) 
from the Council of the European Union and the Commission of the European Communities stating that, by 
virtue of the Treaty of Lisbon , as of 1 December 2009, the "Europe an Union" replaces and succeeds the 
"European Community".  On 13 July 2010, the World Trade Organization r eceived a Verbal Note (WT/Let/679) 
from the Council of the European Union confirming that , with effect from 1 D ecember 2009, the European 
Union replaced the European Community and assumed all the rights and obligations of the European Community in respect of all Agreements for which the Di rector-General of the Worl d Trade Organization is the 
depositary and to which the European Community is a si gnatory or a contracting party.  We understand the 
reference in the Verbal Notes to the "European Communi ty" to be a reference to the "European Communities".  
Thus, although the European Communities reserved its right to participate in the Panel proceedings as a third 
party, and the Panel referred to the European Commun ities in its Report, the European Union filed its third 
participant's submission in this appeal  after the entry in to force of the Treaty of Lisbon , and we will thus refer to 
the European Union in this Report. 
2WT/DS379/R, 22 October 2010. WT/DS379/AB/R 
Page 2  
 
  steel pipe ("CWP");  (ii) light-walled rectangular pipe and tube ("LWR");  (iii) laminated woven sacks 
("LWS");  and (iv) certain new pneumatic off-the-road tyres ("OTR").
3 
2. In respect of each of the products, an anti- dumping and a countervailing duty investigation 
were initiated in tandem in July or August 2007.4  In each of the four anti-dumping investigations, the 
United States Department of Commerce (the "USDOC") treated China as a non-market economy 
("NME") country for purposes of determining normal value and calculating the margins of dumping.  
For each product, the USDOC issued its final an ti-dumping and countervailing duty determinations on 
the same day, in either June or July 2008.5  Pursuant to these determinations, the USDOC imposed 
definitive anti-dumping and countervailing duties on  the four investigated products from China.6 
3. Among the determinations made by the USDOC in the four countervailing duty 
determinations were the following.  In the CWP and the LWR investigations, the USDOC determined 
that the government provision of hot-rolled steel ("HRS") to certain producers through State-owned 
enterprises ("SOE"s) constituted countervailable subsid ies, that private prices in China could not be 
used as benchmarks to determine the existence and amount of benefit conferred by such subsidies and 
that, as a result, it was necessary to resort to alternative benchmarks in conducting its benefit 
determination.7  In the CWP, LWS, and OTR investigations, the USDOC found that the provision of 
preferential loans by government policy bank s and State-owned commercial banks ("SOCB"s) 
constituted subsidies that were de jure  specific, that it would not be appropriate to use the interest 
rates on loans issued by Chinese banks as a benchmar k, and that it was necessary, instead, to construct 
a proxy interest rate to determine the existen ce and amount of benefit conferred by the loans.8  In the 
LWS investigation, the USDOC found that the government provision of land-use rights was a subsidy that was regionally specific, and used out-of-count ry benchmarks to determine the existence and 
                                                     
 
3Panel Report, para. 2.1. 
4The CWP investigations were initiated on 5 July 2007;  the LWR investigations on 24 July 2007;  the 
LWS investigations on 25 July 2007;  and the OTR investigations on 7 August 2007. (Panel Report, paras. 2.2, 
2.6, 2.7, 2.10, 2.11, 2.14, 2.15, and 2.18)  For each of the four countervailing duty investigations, the period of investigation was from 1 January to 31 December 2006. ( Ibid., paras. 2.2, 2.7, 2.11, and 2.15)  For each of the 
four anti-dumping investigations, the period of inves tigation was from 1 October 2006 to 31 March 2007. ( Ibid., 
paras. 2.6, 2.10, 2.14, and 2.18) 
5The final determinations were issued on 5 June 2008 for CWP;  on 24 June 2008 for both LWR and 
LWS;  and on 15 July 2008 for OTR. (Panel Report, paras. 2.3, 2.6, 2.8, 2.10, 2.12, 2.14, 2.16, and 2.18) 
6In respect of CWP, the countervailing duty rates ranged from 29.62 per cent to 616.83 per cent and the 
anti-dumping duty rates ranged from 69.20 per cent to 85. 55 per cent;  in respect of LWR, the countervailing 
duty rates ranged from 2.17 per cent to 200.58 per cent and the anti-dumping duty rates ranged from 
249.12 per cent to 264.64 per cent;  in respect of LWS, the countervailing duty rates ranged from 29.54 per cent to 352.82 per cent and the anti-dumping duty rates ranged from 64.28 per cent to 91.73 per cent;  and in respect 
of OTR, the countervailing duty rates ranged from 2.45 per cent to 14 per cent and the anti-dumping duty rates 
ranged from 5.25 per cent to 210.48 per cent. (Panel Report, paras. 2.3, 2.6, 2.8, 2.10, 2.12, 2.14, 2.16, and 2.18) 
7Panel Report, paras. 2.4 and 2.9. 
8Panel Report, paras. 2.5, 2.13, and 2.17.  WT/DS379/AB/R 
 Page 3 
 
 
  amount of the subsidy benefits.9  In all four investigations, the USDOC determined that various SOEs 
that supplied goods to investigated compani es should be characterized as "public bodies"10, and it 
made the same determination in respect of certa in SOCBs that provided loans to investigated 
companies in the OTR investigation.11 
4. Before the Panel, China claimed that the fi nal USDOC determinations that led to the 
imposition of the duties, the orders imposing the du ties themselves, and certain aspects of the conduct 
of the underlying countervailing duty investigatio ns were inconsistent with the United States' 
obligations under the Agreement on Subsidies and Countervailing Measures (the " SCM Agreement ") 
and the General Agreement on Tariffs and Trade 1994  (the "GATT 1994").12  China also made both 
"as applied" and "as such" claims in connection with the alleged imposition by the United States of 
"double remedies" resulting from the application, in each  of the four sets of investigations at issue, of 
anti-dumping duties calculated under the United St ates' NME methodology simultaneously with 
countervailing duties on the same products.13 
5. More particularly, with respect to the USDOC's findings of financial contribution, China 
claimed that the USDOC's determin ations that certain SOEs and SOCBs constituted "public bodies" 
were inconsistent with Artic les 1.1, 10, and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994.14  China also claimed that the USDOC's determination that the preferential lending by 
SOCBs in the OTR investigation was de jure specific was inconsistent with Articles 2.1(a), 10, 
and 32.1 of the SCM Agreement  and Article VI:3 of the GATT 1994.15  With regard to regional 
specificity, China claimed that the USDOC's finding regarding the provision of land-use rights in the 
                                                      
9Panel Report, paras. 2.13 and 9.146. 
10Panel Report, para. 8.99.  The Panel noted that "public  bodies" are referred to as "authorities" in the 
relevant United States statute and thus in the USDOC's determinations as well.  The United States explained 
that, under its domestic law, the definition of the term "authority" includes the term "public entity", and this 
latter term means "public body".  There is no disagreemen t between the parties as to the equivalence of the 
terms "public entity" under United States law and "public body" in Article 1.1(a)(1) of the SCM Agreement . 
(Ibid., para. 8.99 and footnote 199 thereto) 
11Panel Report, para. 8.117. 
12Panel Report, para. 2.1.  In its request for the establishment of a panel, China also made claims under 
Articles 2.4, 9.2, and 9.3 of the Agreement on Implementation of Article VI  of the General Agreement on Tariffs 
and Trade 1994 (the " Anti-Dumping Agreement ").  China did not pursue these claims before the Panel. (Panel 
Report, footnote 880 to para. 14.12) 
13Panel Report, para. 2.1. 
14Panel Report, paras. 8.1 and 8.2.  With regard to the USDOC's analysis of financial contribution, 
China also claimed that the USDOC's failure in the CWP, LWR, and OTR investigations to assess whether 
trading companies were entrusted or directed to ma ke financial contributions was inconsistent with 
Articles 1.1(a)(1)(iv), 10, and 32.1 of the SCM Agreement  and Article VI:3 of the GATT 1994. ( Ibid., 
paras. 12.1 and 12.3) 
15Panel Report, para. 9.1. WT/DS379/AB/R 
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  LWS investigation was inconsistent w ith Articles 2, 10, and 32.1 of the SCM Agreement  and 
Article VI:3 of the GATT 1994.
16 
6. China made multiple claims with resp ect to the USDOC's benefit analyses.17  Among the 
claims relating to the USDOC's selection of benchmarks were claims that:  (i) in the CWP, LWR, and LWS investigations, the USDOC's rejection of Ch inese private prices as benchmarks in respect of 
SOE-produced inputs (HRS in the CWP and LWR inv estigations, and biaxial-oriented polypropylene 
in the LWS investigation) was inconsistent  with Articles 10, 14(d), and 32.1 of the SCM Agreement  
and Article VI:3 of the GATT 1994
18;  and that (ii) in the CWP, LWS, and OTR investigations, the 
USDOC's rejection of Chinese renminbi ("RMB") inte rest rates as benchmarks in respect of SOCB 
loans denominated in RMB and its use, instead, of a constructed proxy as a benchmark, were 
inconsistent with Articles 10, 14(b), and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994.19 
7. With regard to the issue of "double remedies", China claimed that, in each of the four sets of 
investigations, the USDOC's use of its NME met hodology to determine normal value in anti-dumping 
determinations, concurrently w ith the imposition of countervailing duties on the same products, was 
                                                      
16Panel Report, para. 9.108. 
17China claimed that the USDOC's failure in the OTR investigation to offset positive amounts of 
benefit with negative amounts was inconsistent wi th Articles 10, 14, 19.1, 19.4, and 32.1 of the SCM Agreement  
and Article VI:3 of the GATT 1994. (Panel Report, para. 11.1 )  China also claimed, as an alternative to its claim 
in respect of financial contribution set out supra , footnote 14 of this Report, that the USDOC's methodology for 
the calculation of benefit in the CWP, LWR, and OTR inve stigations was inconsistent with Articles 1.1, 10, 14, 
19.1, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the GATT 1994, because the USDOC failed to 
conduct a pass-through analys is to determine whether any subsidy be nefits received by trading companies 
selling inputs were passed through to the investigated producers purchasing those inputs. (Panel Report, paras. 12.2 and 12.4) 
18Panel Report, paras. 10.1, 10.2, and 10.24.  China also claimed that the USDOC's rejection of in-
country benchmarks in respect of the provision of land-use rights in the LWS and OTR investigations and the use of benchmarks based on out-of-country prices were inconsistent with Articles 10, 14(d), and 32.1 of the 
SCM Agreement  and Article VI:3 of the GATT 1994. ( Ibid., paras. 10.1, 10.4, 10.5, 10.67, and 10.164)  
Furthermore, in its request for the establishment of a pa nel, China made certain claims under Section 15 of the 
Protocol on the Accession of the People's Republic of China ("China's Accession Protocol") (WT/L/432), 
which, inter alia , addresses importing Members' methodologies for identifying and measuring the subsidy 
benefit for imports from China.  However, China did not pursue these claims and the Panel did not rule on them. (Ibid., paras. 10.9-10.12) 
19Panel Report, paras. 10.1, 10.6, 10.7, 10.85, and 10.192.  China also claimed that, in the OTR 
investigation, the USDOC acted inconsistently with Article 14(b) of the SCM Agreement  in applying as a 
benchmark an annual average LIBOR-based interest rate, in stead of the applicable daily rates, to United States 
dollar-denominated loans. ( Ibid., paras. 10.1, 10.8, 10.85, and 10.210)  WT/DS379/AB/R 
 Page 5 
 
 
  inconsistent with Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI of the 
GATT 1994.20 
8. In addition, China made claims under Artic les 12.1, 12.1.1, 12.7, and 12.8 of the 
SCM Agreement  alleging that certain procedural asp ects of the USDOC's conduct of the 
countervailing duty investigations we re inconsistent with the Unite d States' obligations under these 
provisions.21 
9. The Panel Report was circulated to Members of the World Trade Organization (the "WTO") 
on 22 October 2010. 
10. In respect of China's claims regarding the USDO C's determinations of financial contributions, 
the Panel found that China had not established that  the USDOC had acted inconsistently with the 
obligations of the United States under Article 1.1(a)(1) of the SCM Agreement  by determining in the 
relevant investigations at issue that SOEs and SOCBs constitu ted "public bodies".22 
11. In respect of China's claims regarding the USDOC's specificity determinations, the Panel 
found that: 
China did not establish that the USDOC acted inconsistently with the 
obligations of the United States under Article 2.1(a) of the SCM Agreement by determining in the OTR investigation that lending by SOCBs to the OTR tire industry was de jure  specific;  [and] 
                                                     
 
20Panel Report, para. 14.8.  China also claimed that:  (i) the USDOC's failure to extend to imports from 
China the same unconditional entitlement to the avoidance of double remedies that the USDOC extends to like 
products originating in other Members was inc onsistent with Article I:1 of the GATT 1994 ( ibid., para. 14.9);  
(ii) the United States acted inconsistently with Articles 12.1 and 12.8 of the SCM Agreement , due to the 
USDOC's failure to provide interested parties notice of th e information that the USDOC required to evaluate the 
existence of double remedies, and failure to inform Ch ina and interested parties of the essential facts under 
consideration that would "form the basis" for the USDOC's  determinations in respect of the issue of "double 
remedies" ( ibid., para. 14.10);  and (iii) the Un ited States' failure to provide sufficient legal authority for the 
USDOC to avoid the imposition of double remedies when it imposes anti-dumping duties determined pursuant 
to its NME methodology simultaneously with the imposition of countervailing duties on the same product was 
inconsistent with Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Articles I:1 and VI of the 
GATT 1994 ( ibid., paras. 14.11 and 14.12). 
21China claimed that the USDOC's failure in the four i nvestigations to afford interested parties a 30-day 
period to reply to the "supplemental" questionnaires and "new allegation" questionnaires was inconsistent with 
Article 12.1.1 of the SCM Agreement (Panel Report, para. 15.1), and that the USDOC's use of facts available in 
the LWR and CWP investigations in respect of provis ion of goods through transactions involving trading 
companies was inconsistent with Articles 12.1 and 12.7 of the SCM Agreement (ibid., para. 16.1). 
22Panel Report, para. 17.1(a)(i);  see also paras. 8.138 and 8.143.  The Panel also found that China had 
not established that the USDOC had acted inconsisten tly with the obligations of the United States under 
Article 1.1 of the SCM Agreement  by failing to determine, in the CWP,  LWR, and OTR investigations, that 
trading companies were "entrusted" or "directed" by the government to make financial contributions. ( Ibid., 
para. 17.1(a)(ii);  see also para. 12.38) WT/DS379/AB/R 
Page 6  
 
  The USDOC acted inconsistently with  the obligations of the United 
States under Article 2 of the SCM Agreement by determining that the government provision of land-use rights, in the LWS investigation, was regionally-specific.
23 
12. In respect of China's claims regarding the US DOC's benefit determina tions, the Panel found, 
in part24, that:  
China did not establish that the USDOC acted inconsistently with the 
obligations of the United States under Article 14(d) of the SCM Agreement by rejecting in-country private prices in China as 
benchmarks for HRS in the CWP a nd LWR investigations ... ;  [and] 
China did not establish that the USDOC acted inconsistently with the 
obligations of the United States under Article 14(b) of the SCM Agreement by rejecting interest rates in China as benchmarks for calculating the benefit from RMB-denominated loans from SOCBs,
                                                     
 
23Panel Report, para. 17.1(b)(i) and (ii);  see also paras. 9.107 and 9.164. 
24In respect of China's claims regarding the USDOC's benefit analyses, the Pane l also found that China 
had not established that the USDOC had acted inconsistent ly with the obligations of the United States under the 
SCM Agreement  or Article VI:3 of the GATT 1994: 
(a) by failing to conduct a pass-through analysis in the OTR investigation 
to determine whether any subsid y benefits received by trading 
companies selling rubber inputs were passed through to the OTR 
producers purchasing those inputs (Panel Report, para. 17.1(c)(i);  see 
also para. 12.45); 
(b) by not "offsetting" positive benef it amounts with "negative" benefit 
amounts, either across different kinds of rubber or across different 
months of the period of investigation, in the OTR investigation ( ibid., 
para. 17.1(c)(iv);  see also para. 11.68); 
(c) by rejecting in-country private prices in China as benchmarks for ... 
[biaxial-oriented polypropylene] in the LWS investigation ( ibid., 
para. 17.1(c)(vi);  see also para. 10.66);  and 
(d) by rejecting land-use prices in China as benchmarks for government-
provided land-use rights in the LWS and OTR investigations, or [by 
virtue of] the benchmarks actually used ( ibid., para. 17.1(c)(ix);  see 
also para. 10.82). 
The Panel further found, in respect of China's clai ms regarding the USDOC's benefit analyses, that: 
(a) the USDOC had acted inconsistently with the obligations of the United 
States under Articles 1.1 and 14 of the SCM Agreement  in failing to 
ensure that its methodology for benefit analysis did not calculate a 
benefit amount in excess of that conferred ( ibid., para. 17.1(c)(ii);  see 
also para. 12.58);  and 
(b) the USDOC had acted inconsistently with the obligations of the United 
States under Article 14(b) of the SCM Agreement  by using average 
annual interest rates as benchmarks for United States dollar-denominated loans from SOCBs in the OTR investigation ( ibid., 
para. 17.1(c)(viii);  see also para. 10.219).  WT/DS379/AB/R 
 Page 7 
 
 
  in the CWP, LWS and OTR investigations, or that the benchmarks 
actually used in respect of the RMB-denominated loans were inconsistent with those obligations.
25 
13. In respect of China's claims of consequen tial violations of Articles 10 and 32.1 of the 
SCM Agreement  and Article VI:3 of the GATT 1994, the Panel applied judicial economy.26 
14. In respect of China's claims with respect to "double remedies", the Panel found, in part27, that: 
China did not establish that the Un ited States acted inconsistently 
with its obligations under Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement or under Article VI:3 of GATT 1994 by reason of the USDOC's use of its NME methodology in the four anti-dumping investigations at issue and the imposition of anti-dumping duties on 
that basis concurrently with the imposition of countervailing duties 
on the same products in the four coun tervailing duty investigations at 
issue.
28 
15. The Panel also found, with respect to one of China's claims regarding procedural aspects of 
the countervailing duty investigations, that the United States had acted inconsistently with 
Article 12.7 of the SCM Agreement  by applying facts available in the CWP and LWR investigations.29 
                                                      
25Panel Report, para. 17.1(c)(vi) and (vii);  see also paras. 10.61 and 10.148.  Before assessing China's 
claims in respect of the benchmarks actually used by the USDOC to calculate the benefit from the provision of loans and land-use rights in the CWP, LWS, and OTR investigations, the Panel made a finding that these claims 
fell within its terms of reference. ( Ibid., para. 17.1(c)(v);  see also para. 10.163) 
26Panel Report, para. 17.1(d);   see also para. 13.1. 
27The Panel also:  (i) ruled that the "omission" challe nged by China, that is, the United States' alleged 
failure to provide sufficient legal authority for the US DOC to avoid the imposition of double remedies when it 
imposes anti-dumping duties determined pursuant to its NME methodology simultaneously with the imposition of countervailing duties on the same product, fell outside its terms of reference and that, therefore, China's "as 
such" claims under Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Articles I:1 and VI of the 
GATT 1994 equally fell outside its terms of reference (Panel Report, para. 17 .1(e)(i);  see also para. 14.42);  
(ii) found that China had not established that the USDO C had acted inconsistently with the obligations of the 
United States under Articles 12.1 and 12.8 of the SCM Agreement  by failing to give "notice" of the information 
it required to evaluate the existence of double remedies or to inform the Government of China and interested 
parties of the essential facts under consideration that would "form the basis" for its determination in respect of 
double remedies in the four countervailing duty investigations at issue ( ibid., para. 17.1(e)(iii);  see also 
para. 14.149);  and (iii) found that China had not establis hed that the United States acted inconsistently with its 
obligations under Article I:1 of the GATT 1994 when, as a result of the investigations at issue, it concurrently 
imposed anti-dumping duties calculated under the United States' NME methodology and countervailing duties (ibid., para. 17.1(e)(iv);  see also para. 14.182). 
28Panel Report, para. 17.1(e)(ii);  see also paras. 14.123, 14.130, 14.138, and 14.139. 
29Panel Report, para. 17.1(f)(ii);  see also para. 16.17.  In the light of this finding, the Panel applied 
judicial economy in respect of Chin a's claims regarding the USDOC's benefit determinations in these two 
investigations on the provision of HRS by trading companies. ( Ibid., para. 17.1(c)(iii);  see also para. 12.40)  In 
contrast, the Panel found that China had not established that the USDOC had acted inconsistently with the obligations of the United States under Article 12.1.1 of the SCM Agreement  by failing to provide the 
Government of China and investigated producers at least 30 days to respond to the "supplemental" 
questionnaires and "new allegation" questionnaires used in the four countervailing duty investigations at issue. 
(Ibid., para. 17.1(f)(i);  see also para. 15.49)  The Panel also found that China's claim under Article 12.1 of the 
SCM Agreement was outside the terms of reference of the Panel. ( Ibid., para. 17.1(f)(iii);  see also para. 16.18) WT/DS379/AB/R 
Page 8  
 
  16. Accordingly, the Panel recommended that the Di spute Settlement Body (the "DSB") request 
the United States to bring those measures found to be inconsistent into conformi ty with its obligations 
under the SCM Agreement  and the GATT 1994. 
17. On 1 December 2010, China notified the DSB of it s intention to appeal certain issues of law 
covered in the Panel Report and cer tain legal interpretations devel oped by the Panel, pursuant to 
Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  (the "DSU"), and filed a Notice of Appeal
30 and an appellant's submission pursuant to 
Rules 20 and 21, respectively, of the Working Procedures for Appellate Review  (the " Working 
Procedures ").31  On 20 December 2010, the United St ates filed an appellee's submission.32  
On 22 December 2010, Argentina33, Australia, Brazil, Canada, the European Union, Japan, Norway, 
and Saudi Arabia each filed a third participant's submission34, and a third participant's submission was 
also received from Turkey.35  Bahrain, India, Mexico, and the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu each notified its intenti on to appear at the oral hearing as a third 
participant. 
18. On 15 December 2010, the Appellate  Body received an unsolicited amicus curiae  brief.  After 
giving the participants and the third participants an opportunity to express their views, the Division 
hearing the appeal did not find it necessary to rely on this amicus curiae  brief in rendering its 
decision. 
19. The oral hearing in this appeal was held on 13 and 14 January 2011.  The participants 
and 11 of the third participants (Argentina, Austra lia, Brazil, Canada, the European Union, India, 
Japan, Mexico, Norway, Saudi Arabia, and Turkey) made  oral statements.  The participants and third 
participants responded to questions posed by th e Members of the Division hearing the appeal. 
                                                      
30WT/DS379/6. 
31WT/AB/WP/6, 16 August 2010.  This is the first appeal filed under this latest version of the Working 
Procedures , the provisions of which apply to appeals initiated on or after 15 September 2010. 
32Pursuant to Rules 22 and 23(4) of the Working Procedures . 
33On 23 December 2010, the Direct or of the Appellate Body Secretariat received the executive 
summary of Argentina's third participant's submission.  By letter dated 5 January 2011, the Division hearing this 
appeal informed Argentina that th e executive summary would not be accepted because it had been submitted 
after 22 December 2010, the deadline for filing a third participant's submission. 
34Pursuant to Rule 24(1) of the Working Procedures . 
35We note that Turkey's third participant's subm ission was not received be fore the 17:00 deadline 
specified in Rule 18(1) of the Working Procedures .  While we are cognizant of the fact that this is the first 
appeal filed following r ecent amendments to the Working Procedures , including to Rule 18(1), we nevertheless 
wish to emphasize strongly the importance of timely filing of documents in appeals.   WT/DS379/AB/R 
 Page 9 
 
 
  II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by China – Appellant 
20. First, China appeals the Panel's interp retation of Article 1.1(a)(1) of the SCM Agreement  and 
its finding that China had not established that the USDOC had acted inconsistently with the 
obligations of the United States by determining th at SOEs and SOCBs constituted "public bodies".  
Second, with respect to the Panel's findings on  specificity, China:  (i) appeals the Panel's 
interpretation of Article 2.1(a) of the SCM Agreement and its finding that China had not established 
that the USDOC had acted inconsistently with the obligations of the United States by determining in 
the OTR investigation that lending by SOCBs to the OTR industry was de jure  specific;  and 
(ii) challenges the Panel's legal in terpretation of Article 2.2 of the SCM Agreement  in its evaluation of 
China's claim that the USDOC had acted inconsistent ly with the obligations of the United States 
under Article 2 of the SCM Agreement  by determining in the LWS investigation that the government 
provision of land-use rights was regionally specific.  Third, China appeals the Panel's interpretation of 
Article 14(d) of the SCM Agreement  and its finding that China had not established that the USDOC 
had acted inconsistently with the obligations of th e United States by rejecting private prices in China 
as benchmarks for HRS in the CWP and LWR inves tigations.  Fourth, China appeals the Panel's 
interpretation of Article 14(b) of the SCM Agreement  and its finding that China had not established 
that the USDOC had acted inconsistently with the obl igations of the United States by rejecting interest 
rates in China as benchmarks for calculating th e benefit from RMB-denominated loans from SOCBs, 
in the CWP, LWS, and OTR investigations, and by instead using a constructed proxy as a benchmark.  
Finally, China appeals the Panel's finding that Chin a had not established that the United States had, by 
imposing anti-dumping duties calculated under an  NME methodology and countervailing duties 
concurrently on the same products, imposed "doubl e remedies" and acted inconsistently with its 
obligations under Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement or Article VI:3 of the 
GATT 1994. 
1. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies  
21. China requests the Appellate Body to find that  the Panel erred in its interpretation and 
application of the term "public body" in Article 1.1(a)(1) of the SCM Agreement , and that the Panel 
acted inconsistently with Articles 3.2 and 11 of  the DSU by relying on municipal law usages in 
interpreting this term.  China requests the Appellate  Body to reverse the Panel's finding that "any 
public body" in Article 1.1 means "any government-controlled entity", and to find that a "public body" is an entity that exercises authority v ested in it by the government for the purpose of 
performing functions of a governmental character.  Ch ina also requests the Appellate Body to reverse WT/DS379/AB/R 
Page 10  
 
  the Panel's finding that China did not establish that the United States had acted inconsistently with its 
obligations under Article 1.1 of the SCM Agreement  and to find, instead, that the United States did act 
inconsistently with these obligations in determin ing that the provision of inputs by SOEs and the 
provision of loans by SOCBs were financial contri butions by "public bodies".  China further requests 
the Appellate Body to complete the analysis in respect of China's con sequential claims and to find that 
the challenged measures are inconsiste nt with Articles 10 and 32.1 of the SCM Agreement . 
22. China alleges that the Panel erred in concludi ng that government control established through 
majority ownership would be sufficien t to conclude that an entity is a "public body".  In China's view, 
the Panel failed to interpret Article 1.1 of the SCM Agreement  in accordance with the ordinary 
meaning of the terms of the treaty in their context and in the light of its object and purpose, and further failed to take account of the Internati onal Law Commission's (the "ILC") Articles on 
Responsibility of States for Internationally Wrongful Acts
36 (the "ILC Articles") in its interpretation.  
China submits that, when the term is properly inte rpreted, the defining characteristic of a "public 
body" is that it exercises author ity vested in it by the government for the purpose of performing 
functions of a governmental character. 
(a) The Ordinary Meaning of the Terms of the Treaty 
(i) Dictionary Definitions 
23. With respect to the term "public body", Chin a asserts that the most relevant dictionary 
definitions of the adjective "public", when used  with the noun "body", denote a body acting on behalf 
of a nation or community as a whole, and under the au thority of, or officially on behalf of, the nation 
or community as a whole. 
(ii) Context 
24. As regards the context relevant to the interpre tation of the term "public body", China argues, 
first, that the most important contextual element is the fact that Article 1.1 of the SCM Agreement  
places "a government" and "any public body" in  the same category for purposes of attributing 
financial contributions to Members.  China di sagrees with the Panel's understanding that this 
                                                      
36Responsibility of States for Internationally Wrongful Acts .  Text adopted by the ILC at its fifty-third 
session, in 2001, and submitted to the United Nations Gene ral Assembly as a part of the ILC's report covering 
the work of that session.  The General Assembly "[took] note of the articles on responsibility of States for internationally wrongful act s" for the first time in General Assemb ly Resolution 56/83 of  12 December 2001, 
corrected by document A/56/49(Vol. I)/Corr.4, and subsequently in Resolution 59/35 of 2 December 2004, 
Resolution 62/61 of 6 December 2007, and Resolution 65/19 of 6 December 2 010.  The ILC's report, which also 
contains commentaries on the dr aft articles, appears in the Yearbook of the International Law Commission, 
2001 , Vol. II, Part Two.   WT/DS379/AB/R 
 Page 11 
 
 
  collective expression is merely a device to simplify  drafting.  China quotes the Appellate Body's 
statement in Canada – Dairy  that "the essence of 'government'" is its functions, powers, and authority, 
and submits that the same should apply to an y entity deemed functionally equivalent to a 
government.37  Furthermore, while the use of the words "a", "or", and "any" may suggest that the 
terms "a government" and "any public  body" have separate meanings, the mere fact that they have 
separate meanings reveals nothing ab out the content of each.  Likewise, according to China, the use of 
the word "any" suggests only that all entities that qualify as a "public body" are captured within the 
scope of Article 1.1, but gives no indication as to their nature or defining characteristics. 
25. Second, with respect to Article 1.1(a)(1)(iv) of the SCM Agreement , China notes that the 
Panel considered the relevant question to be whether wholly or majority government-owned 
enterprises that produce and sell goods and services ar e more appropriately categorized as "public 
bodies" or "private bodies" for the purposes of the SCM Agreement .  For China, the answer to this 
question is clear from the language of Article 1.1( a)(1)(iv) and the Appellate Body's interpretation 
thereof.  Under Article 1.1(a)(1)(iv), the conduct of a "private body" will be attributed to a Member 
only if a government or public body "entrusts or directs [it] to carry out one or more of the ... 
functions ... which would normally be vested in th e government and the practice, in no real sense, 
differs from practices normally follow ed by governments".  This confirms that the focus of Article 1.1 
is on attributing to Members functions that are gove rnmental in nature, and that a "public body" must 
be vested with governmental authority in order to be  capable of entrusting or directing a private body.  
Such a view is reflected in the Appellate Body's interpreta tion of subparagraph (iv) in US – 
Countervailing Duty Investigation on DRAMS  and was shared by investigating authorities in the 
United States, the European Union, and Japan in the various dynamic random access memory 
semiconductors ("DRAMS") proceedings.38  All of these investigating authorities treated government-
owned entities as "private bodies" unless  they were created by a government for the purpose of 
carrying out governmental functions and vested with the authority to do so.  China points out that the 
dictionary definitions of the terms "private enterp rise" and "public sector", which the Panel considered 
as context, do not appear in the text of Article 1.1 and therefore cannot be relevant context for 
interpreting the terms "public body" and "private body". 
                                                      
37China's appellant's submission, paras. 41 (quoting Appellate Body Report, Canada – Dairy , para. 97) 
and 42. 
38China's appellant's submission, paras. 57-59 (quoting Appellate Body Report,  US – Countervailing 
Duty Investigation on DRAMS , paras. 113 and 131;  and referring to Panel Report, EC – Countervailing 
Measures on DRAM Chips , paras. 7.35, 7.90, and 7.119;  Panel Report, US – Countervailing Duty Investigation 
on DRAMS , para. 7.8 and footnote 29 thereto;  and Panel Report, Japan – DRAMs (Korea) , paras. 7.50 
and 7.55). WT/DS379/AB/R 
Page 12  
 
  26. Third, with respect to Article 1.1(a)(1)(i)-(iii) of the SCM Agreement , which the Panel 
considered to be a further contextual element, Ch ina disagrees with the Panel's premise that some of 
the functions listed in these subparagraphs are typi cally the business of firms or corporations rather 
than governments.  Rather, the provision of lo ans, goods, or services is neither inherently 
governmental nor inherently non-governmental.  Mo reover, even accepting that the Panel's premise 
was correct, it does not follow that the term "pub lic body" must mean any "government-controlled 
entity". 
27. Finally, China rejects the Panel's equation of China's arguments on "public body" with those 
of Korea in Korea – Commercial Vessels , as well as the Panel's corresponding observation that such 
an approach would "suffer from the same flaw of mixing considerations of benefit (behaviour in a 
particular instance) with determining the nature of  the entity (without regard for its behaviour in a 
particular instance)".
39  Under China's interpretation of "public body", whether an entity is vested with 
and exercises authority to carry out governmental f unctions would not require any analysis of whether 
the terms of a given transaction are commercial or not. 
(iii) Object and Purpose of the SCM Agreement 
28. China recalls the Appellate Body's view that the  SCM Agreement  reflects a "delicate 
balance"40 between Members that sought to impose more disciplines on the use of subsidies and those 
that sought to impose more disciplines on the app lication of countervailing measures.  The Panel, 
however, ignored this "delicate balance" and fo cused exclusively on the disciplines on the use of 
subsidies, because of its concern that interpreti ng the term "public body" too narrowly would allow 
avoidance of the SCM Agreement 's disciplines.  Yet the Panel's concern is misplaced for two reasons.  
First, the Panel wrongly believed that China's defi nition of "public body" was limited to "formal 
arms" or "organs" of government and could not en compass government-owned or -controlled entities.  
Second, even if a government-owned or -controlled corporation were not deemed a public body, its 
conduct could still be captured by the SCM Agreement  under Article 1.1(a)(1)(iv), which, as the 
Appellate Body has recognized, is essentially an anti-circumvention pr ovision intended to ensure that 
governments do not evade their obligations under the SCM Agreement  by using private bodies to take 
actions that would otherwise fa ll within Article 1.1(a)(1). 
                                                      
39China's appellant's submission, para. 68 (quoting Panel Report, para. 8.72). 
40China's appellant's submission, para. 76 (quoting Appellate Body Report, US – Countervailing Duty 
Investigation on DRAMS , para. 115).  WT/DS379/AB/R 
 Page 13 
 
 
  29. China contests the Panel's view that it would "seriously undermine the entire 
SCM Agreement"41 if subparagraph (iv) were deemed to  encompass government-controlled corporate 
entities.  The investigating authorities of the Unit ed States, the European  Union, and Japan all 
evaluated the conduct of government-owned or -con trolled entities in their investigations on DRAMS 
as that of private bodies subject to the standard of entrustment or direction in Article 1.1(a)(1)(iv).  
Furthermore, in the WTO disputes related to these in vestigations, neither the panels nor the Appellate 
Body suggested that there might be any problem with such an approach.  The findings of these 
investigating authorities are "ample testament"42 to the fact that a government's conduct will not 
escape the disciplines of the SCM Agreement .  Moreover, the Panel's reliance upon a concern that 
"Members 'could easily hide behind  the presumptively "private" nature of such [government-owned 
or -controlled] entities, even while running those entities so as deliberately  to provide trade-distorting 
subsidies'"43, is inconsistent with Article 26 of the Vienna Convention on the Law of Treaties44 (the 
"Vienna Convention ").  This provision has been recognized  as requiring panels and the Appellate 
Body to "assume that Members of the WTO will ab ide by their treaty obligations in good faith, as 
required by the principle of pacta sunt servanda  articulated in Article 26 of the Vienna Convention ".45 
30. Finally, with respect to the Panel's attempt to  justify its "broad" interpretation of the term 
"public body" on the ground that the categorization of a given entity as a government, a public body or a private body under Article 1.1(a)(1) "is simp ly the 'first filter' in a multi-part analysis"
46, China 
observes that this "ignores the fact that the financial contribution requirement was itself  designed to be 
a meaningful 'filter' in the subsidy analysis".47  China contends that the object and purpose of the 
SCM Agreement  would be undermined if entities properly considered "private bodies" subject to the 
standard of entrustment and direction were automatic ally deemed "public bodies".  China insists that 
there is "no conceivable justification" for th e Panel's interpretation, which "amounts to a per se  rule 
that 51 per cent government ownership is sufficient,  by itself, to conclude that an entity is a public 
body"48, and cautions that such an interpretation w ould, if accepted, "have far-reaching and troubling 
implications for the proper application of the SCM Agreement".49 
                                                      
41China's appellant's submission, para. 82 (quoting Panel Report, para. 8.82). 
42China's appellant's submission, para. 84. 
43China's appellant's submission, para. 86 (quoting Panel Report, para. 8.82). (emphasis added by 
China) 
44Done at Vienna, 23 May 1969, 1155 UNTS 331;  8 International Legal Materials 679. 
45China's appellant's submission, para. 85 (quoting Appellate Body Report, EC – Sardines , para. 278). 
46China's appellant's submission, para. 88 (quoting Panel Report, para. 8.76). 
47China's appellant's submission, para. 89. (original emphasis) 
48China's appellant's submission, para. 92. 
49China's appellant's submission, para. 91. WT/DS379/AB/R 
Page 14  
 
  (iv) Interpretation by the Appellate Body in Canada – Dairy 
31. China asserts that its interpretation of the term  "public body" is the only one consistent with 
the Appellate Body's interpretation of Article 9.1(a) of the Agreement on Agriculture  in the Canada – 
Dairy  dispute.  Because the Spanish and the French te xts of that provision and of Article 1.1 of the 
SCM Agreement  use "identical" or "highly similar" term s, the Panel should have treated the terms 
"public body" and "government agency" in th e English texts "as functional equivalents".
50  In support 
of this argument, China points to the "closely re lated" nature of these two provisions, to the notion 
that "a treaty interpreter must read all applicable pr ovisions of a treaty in a way that gives meaning to 
all of them, harmoniously"51, and to Article 33 of the Vienna Convention .52  For China, the Panel 
erred in law in refusing to adopt a single, harm onious interpretation of the terms "public body", 
"organismo público ", and " organisme public ", particularly given its express recognition that the 
dictionary definitions of these terms "could encompass"53 an interpretation of such terms as meaning 
"an entity 'which exercises powers vested in it by a "government" for the purpose of performing 
functions of a "governmental" character'".54 
32. China notes that the Panel's sole reason for rej ecting the significance of the Appellate Body's 
ruling in Canada – Dairy was that the Panel had found other de finitions and usages showing a broader 
possible scope of the term "public body" in variou s municipal laws.  This is erroneous for three 
reasons.  First, the Panel mischaracterized Ch ina's position as categorically excluding that a 
government-owned or -controlled entity  could constitute a "public body"/" organismo 
público "/"organisme public ".  Second, the Panel identified no le gal basis for its recourse to municipal 
law to interpret a multilateral treaty.  Neith er Article 31 nor any other provision of the 
Vienna Convention  would justify such an interpretative appr oach.  China adds that, if recourse to 
municipal law were accepted as a valid tool of tr eaty interpretation, multiple practical problems would 
arise, including:  whose municipal law should be examined;  what means should be used to conduct 
the survey;  and what would be the interpretative significance of complete or partial uniformity in 
municipal law?  China considers that many of thes e problems are evident in the Panel's arbitrary and 
ad hoc recourse to a few apparently randomly selec ted examples of municipal law in this dispute.
                                                      
50China's appellant's submission, paras. 98 and 99. 
51China's appellant's submission, para. 94 (quoting Appellate Body Report, US – Upland Cotton , 
para. 549 (original emphasis)). 
52Article 33(1) of the Vienna Convention  provides in pertinent part that, "[w]hen a treaty has been 
authenticated in two or more languages, the text is equa lly authoritative in each language".  Article 33(3), in 
turn, provides that "[t]he terms of the treaty are presumed to have the sa me meaning in each authentic text." 
53China's appellant's submission, para. 101 (quoting Panel Report, para. 8.61). 
54China's appellant's submission, para. 102 (quoting Appellate Body Report, Canada – Dairy , 
para. 97).  WT/DS379/AB/R 
 Page 15 
 
 
  Such an "uncontrolled" survey of municipal law constitutes, according to China, an impermissible 
method of interpretation that is inconsistent with Ar ticle 3.2 of the DSU, as well as with the Panel's 
obligations under Artic le 11 of the DSU. 
(v) Reference to Municipal Laws 
33. China considers that, because the Panel's recourse to municipal law was erroneous, the 
Appellate Body need not examine the content of th ose laws.  Should the Appellate Body nevertheless 
consider those laws, China submits that the Pane l's interpretation of each of the municipal laws 
referred to in its Report constitutes le gal error.  None of the municipa l laws cited by the Panel define 
an entity as a public body exclusively, or even primarily by reference to government control.   
34. China submits that, according to  the official website of the Scottish Government, "public 
bodies" under Scottish law have been vested with the authority to perform functions of a governmental character, namely, "the delivery of publ ic services" and "'important statutory, regulatory 
and advisory functions' that further the government's 'strategic objectives'".
55  With respect to 
European Union law, the explanation on "pub lic sector body" in the European Communities 
Commission Research Directorate note quoted by the Panel does not suggest that government 
ownership or control per se  is sufficient to establish "public sector body" status under the law 
governing public contracts.  That note states that public sector bodies are "set up under public law", 
which indicates that such entities perform public servi ce missions under authority formally vested in 
them by the State via special purpose legislation.56  As for Québec law, the website to which the Panel 
referred explains that a government agency is define d by "a plurality of ... criteria", including that the 
entity "has a mission of public interest" and "is create d by the legislature or a government authority", 
and official Québec Provincial Government docum ents describe commercial services provided by 
State enterprises as "commercial services ... considered of general interest".57  Finally, with respect to 
Spanish law, China argues that the fact that the definition of " organismo público " under Article 43.1 
of Spain's Law 6/1997 of 14 April 1997 includes so-called " entidades públicas empresariales " 
("public business entities") does not, alone, establish th at Spain considers government ownership or 
control sufficient to establish an entity as an " organismo público ".58  To the contrary, three other 
Articles of the same law, as well as the Spanish Government's official inventory of " entidades 
                                                      
55China's appellant's submission, paras. 119 and 120 (quoting "About Scotland's Public Bodies", 
available at <http://www.scotland.gov.uk/Topics/Government/public-bodies/about>). 
56China's appellant's submission, para. 123. 
57China's appellant's submission, para. 126. 
58China's appellant's submission, para. 128. WT/DS379/AB/R 
Page 16  
 
  públicas empresariales ", confirm that such entities are crea ted under public law for the purpose of 
acting in the general interest and ar e vested with public service missions.
59 
(b) The ILC Articles 
35. China contends that the Panel further erred in  refusing to take into account the ILC Articles.   
Before the Panel, China argued that the rules of attribution codified in the ILC Articles, and in 
particular the three categories of attribution set out in Articles 460, 561, and 862, reflect customary 
international law and closely paralle l the attribution of financial contributions to Members when they 
are provided by:  (i) a "government";  (ii) any "public body";  or (iii) a "private body" that is entrusted 
or directed by a government or public body.  These provisions are, therefore, "relevant rules of 
international law applicable in the re lations between the parties" to the Marrakesh Agreement 
Establishing the World Trade Organization  (the " WTO Agreement ") within the meaning of 
Article 31(3)(c) of the Vienna Convention and the Panel was under an obligation to take them into 
account when interpreting Article 1.1 of the SCM Agreement .  China adds that, had the Panel taken 
the ILC Articles into account, it would have had no choice but to accept that State-owned entities are presumptively private bodies, ordinarily covered by subparagraph (iv), unless they are exercising 
elements of governmental authority, in whic h case they would be considered public bodies. 
(i) Status of the ILC Articles 
36. China asserts that the Panel wrongly identifie d the threshold question as whether the ILC 
Articles are "recognized in the WTO" as rules of inte rnational law applicable in the relations between 
the parties, instead of whether the ILC Articles "constitute"
63 such rules.  China underlines that the 
ILC Articles reflect customary rules of public international law and, as such, are necessarily 
applicable in the relations between WTO Members.  In  any event, the fact that the ILC Articles reflect 
                                                      
59China's appellant's submission, paras. 129 and 130 (referring to Articles 1, 2(3), and 53 of Spain's 
Law 6/1997 of 14 April 1997, Ley de Organización y Funcionamiento de la Administración General del Estado  
(Law on the Organization and Functioning of the General Administration of the State)). 
60According to China, Article 4 establishes the "core principle of attribution" that the State is 
responsible for the conduct of its "organs" acting in that capacity. (China's appellant's submission, footnote 140 to para. 139 (quoting Article 4 of the ILC Articles (Panel Exhibit CHI-102))) 
61China submits that Article 5 addresses the actions of  "a person or entity which is not an organ of the 
State under Article 4", in which case its conduct will be a ttributed to the State only when it "is empowered by 
the law of that State to exercise elements of the governmental authority … provided the person or entity is 
acting in that capacity in the particular instance". (China's appellant's submission, footnote 141 to para. 139 
(quoting Article 5 of the ILC Artic les (Panel Exhibit CHI-102))) 
62China describes Article 8 as addressing the condu ct of private persons, whose conduct will be 
attributable to the State when they are "in fact acting on the instructions of, or under the direction or control of, 
that State in carrying out the conduct". (China's appellant's submission, footnote 142 to para. 139 (quoting Article 8 of the ILC Articles (Panel Exhibit CHI-102))) 
63China's appellant's submission, para. 148.  WT/DS379/AB/R 
 Page 17 
 
 
  customary international law and/or general principles of law has been expressly  recognized on 
multiple occasions in WTO jurisprudence64;  the ILC Articles have been referred to on many more 
occasions without discussion of their status in intern ational law;  and there has been no WTO decision 
finding that the ILC Articles are not customary international law.  
37. Although the Panel reasoned that panels and the Appellate Body  have not identified the ILC 
Articles as "relevant rules of international law" within the meaning of Article 31(3)(c) of the 
Vienna Convention , China observes that the only basis upon which panels or the Appellate Body 
could have cited the ILC Articles when interpreting a covered agreem ent would have been pursuant to 
Article 31(3)(c) of the Vienna Convention , because the ILC Articles do not qualify under any of the 
other means of interpretation author ized in Article 31 or 32 of the Vienna Convention .  China cites the 
Appellate Body's treatment of the ILC Articles in US – Line Pipe  as a "compelling illustration", 
explaining that the only reasonable conclusion that can be drawn from the sequence of the Appellate 
Body's analysis is that it considered the ILC Artic les to be "rules of international law", within the 
meaning of Article 31(3)(c), that were "relevan t" to its interpretation of Article 5.1 of the Agreement 
on Safeguards .65 
38. China considers that the Panel's statement, that  the various citations to the ILC Articles in 
WTO dispute settlement reports have been "as conc eptual guidance only to supplement or confirm, 
but not to replace" an analysis based on ordinary meaning, reflects a fundamental misunderstanding of 
the role of rules of international law in the interpretative exercise.66  As the Appellate Body and the 
panels that have referred to them  have properly recognized, "rules of  international law" are merely 
one aspect of the holistic interpretative process under Article 31 of the Vienna Convention .  With 
respect to the Panel's observation that, in some ca ses, panels and the Appellate Body have made 
explicit that the ILC Articles are not binding, Chin a points out that the two decisions cited by the 
Panel state only that the ILC Articles are not bindin g "as such", meaning that they are not themselves 
equivalent to a treaty establishing binding obligations.  Yet, adds China, this is irrelevant because, as 
long as the ILC Articles reflect rules of customary inte rnational law or general principles of law, such 
rules are binding on States notwithstanding the fact th at they are not codified in a treaty, as the past 
reliance upon them by panels and the Appellate Body confirm. 
                                                      
64China refers, in particular, to the Appellate Body reports in US – Line Pipe  and US – Cotton Yarn , to 
the panel reports in Australia – Salmon (21.5 – Canada)  and US – Gambling , and to the arbitral awards in US – 
FSC (Article 22.6 – US) and Brazil – Aircraft (Article 22.6 – Brazil) . (China's appellant's submission, para. 152 
and footnotes 159-164 thereto) 
65China's appellant's submission, paras. 157 and 158 (referring to Appellate Body Report, US – Line 
Pipe, para. 260). 
66China's appellant's submission, para. 154 (quoting Panel Report, para. 8.87). WT/DS379/AB/R 
Page 18  
 
  (ii) Relevance of the ILC Articles 
39. China characterizes as "clearly erroneous"
67 the Panel's view that the ILC Articles are not 
"relevant" to the interpretation of Article 1.1 of the SCM Agreement .  Both Article 1.1 and the ILC 
Articles address the circumstances under which conduc t by various entities may be attributed to a 
Member or a State.  The Appellate Body's reference in US – Countervailing Duty Investigation on 
DRAMS to the commentary on Article 8 of the ILC Articl es when interpreting the meaning of the term 
"entrusts or directs" in Article 1.1(a)(1)(iv) of the SCM Agreement  reflects this relevance. 
40. China contends that the three categories of attri bution set out in Articles 4, 5, and 8 of the ILC 
Articles closely parallel the concepts  of "a government", "any public body", and "a private body" that 
is entrusted or directed by a government or  public body, in Article 1.1(a)(1) of the SCM Agreement .  
Article 8 of the ILC Articles reflects the principle that State-owned entities are considered "private 
bodies" whose conduct will be attributed to the State only if they are acting on the instructions of, or 
under the direction or control of, the government.  China also suggests that Article 5 of the ILC 
Articles, which addresses the conduct of entities that are empowered by the law of the State to exercise functions of a public character normally ex ercised by State organs, "naturally encompasses 
within its scope"
68 the type of entity that is characterized as  a "public body" in Article 1.1(a)(1) of the 
SCM Agreement . 
41. China also rejects as implausible and erroneous two additional reasons gi ven by the Panel in 
support of its view that the ILC Articles are irrele vant to the interpretation of Article 1.1 of the 
SCM Agreement .  To accept the Panel's statement that th e ILC Articles "are not concerned with the 
substance of the underlying international obligatio ns, but are rather concerned with determining 
whether a State is or is not responsible for a give n action that may constitute a substantive breach of 
such an obligation"69 would imply accepting that the ILC—the same body responsible for both the 
ILC Articles and codifying the obligations in Article 31 of the Vienna Convention —meant to exclude 
categorically from Article 31 any recourse to custom ary international law when questions of State 
responsibility are implicated in treaty interpre tation, which "would make no sense at all".70  Second, 
with respect to the Panel's view that Article 1.1 of the SCM Agreement constitutes lex specialis  within 
the meaning of Article 55 of the ILC Articles, thus displacing the customary rules of attribution in the 
ILC Articles, China argues, relying on the commentary on Article 55, that a treaty interpreter must examine both the potential "special rule" and the "general rule" to evaluate whether the treaty drafters 
                                                     
 
67China's appellant's submission, para. 166 (referring to Panel Report, para. 8.90). 
68China's appellant's submission, para. 144. 
69China's appellant's submission, para. 171 (quoting Panel Report, para. 8.90). 
70China's appellant's submission, para. 177.  WT/DS379/AB/R 
 Page 19 
 
 
  intended to depart from customary international law, and if so, to what extent.  The Panel, however, 
simply assumed that, merely because Article 1.1 of the SCM Agreement  deals with the same subject 
matter as the ILC Articles, it must be lex specialis , with no further interpretative inquiry.  According 
to China, nothing in the text of Article 1.1 of the SCM Agreement  or its negotiating history suggests 
an actual inconsistency between the rules of attribut ion in Article 1.1 and those in the ILC Articles.  
To the contrary, contends China, with their respec tive three categories of attribution, the two sets of 
rules "appear largely congruent".71 
(c) The USDOC's "Public Body" Determinations 
42. China asserts that, because  they were based on an erroneous interpretation of the term "public 
body", all of the Panel's findings upholding the USDOC's "public body" determinations must be 
reversed.  China also requests the Appellate Body to find that the USDOC's determinations that SOEs and SOCBs are "public bodies" are, on their face, inc onsistent with the proper meaning of that term 
under Article 1.1 of the SCM Agreement . 
43. China underlines that the USDOC made no findi ng on whether SOEs or SOCBs are vested 
with the authority to exercise governmental functions  in connection with the provision of the various 
inputs or loans at issue.  With respect to SOEs, in  each of the four investigations the USDOC simply 
applied a rule of majority ownership.  As for th e SOCBs determined to be "public bodies" in the OTR 
investigation, the USDOC did not take account of th e fact that the relevant banks were established 
pursuant to and operate under company and comme rcial banking laws.  Th e USDOC referred to a 
previous case, CFS Paper
72, in which it had identified a number of  features of the commercial banking 
system in China as allowing for continued government control of SOCB lending decisions, but in that 
same case the USDOC itself acknowledged that this  evidence was "mixed".  Although these findings 
might be relevant to an examination of whether SOCBs were "directed" to provide loans within the 
meaning of Article 1.1(a)(1)(iv), they are, China maintains, "inadequate, on their face"73, to support a 
conclusion that SOCBs are public bodies. 
44. In China's view, the USDOC should instead have begun with the presumption that the SOEs 
and SOCBs at issue were private bodies, and th en evaluated whether they were exercising 
governmental authority to perform governmental functions by considering factors such as:  
(i) whether they were created by special decr ees or under company and commercial banking laws;  
                                                      
71China's appellant's submission, para. 188. 
72China's appellant's submission, para. 198 (referring to Issues and Decision Memorandum for the 
Final Determination in the Countervailing Duty Investigation of Coated Free Sheet from the People's Republic of China  (Panel Exhibit CHI-93) (the "CFS Paper Issues and Decision Memorandum")). 
73China's appellant's submission, para. 199. WT/DS379/AB/R 
Page 20  
 
  (ii) the purposes for which they were formed;  (iii) th e nature of the functions they perform;  (iv) the 
nature and scope of governmental authority vested in them;  and (v) the laws and regulations under 
which they operate.  For China,  the USDOC's failure to evaluate any of these factors renders its 
"public body" determinations as to SOEs in all four investigations, and as to SOCBs in the OTR 
investigation, inconsistent w ith Article 1.1(a)(1) of the SCM Agreement . 
2. Article 2 of the SCM Agreement :  Specificity
 
45. China requests the Appellate Body to reverse th e Panel's findings that China did not establish 
that the United States acted inconsistently w ith its obligations under Article 2.1(a) of the 
SCM Agreement  in respect of the SOCB lending in the OT R investigation.  In particular, China 
considers that the Panel erred in interpreting the terms "subsidy" and "explicitly", as well as in 
applying the term "certain enterprises".  China also  maintains that the Panel erred in interpreting the 
term "subsidy" in Article 2.2 of the SCM Agreement  and in suggesting that a subsidy would be 
regionally specific if it is provided as part of a "d istinct regime", even if the identical subsidy is 
available elsewhere. 
(a) Article 2.1(a) of the SCM Agreement :  "Subsidy" and "Explicitly" 
46. China requests the Appellate Body to reverse the Panel's conclusion that China did not 
establish that the United States acted inconsistently with its obligations under Article 2.1(a) of the 
SCM Agreement  in finding the alleged "policy lending" s ubsidy in the OTR investigation to be de jure  
specific to certain enterprises.  Ch ina also requests the Appellate Body  to complete the analysis and 
find that the USDOC's specificity determination was inconsistent with Article 2.1(a) of the 
SCM Agreement  and, as a consequence, also incons istent with Articles 10 and 32.1 of the 
SCM Agreement . 
47. China recalls that the Panel described how the Decision of the State Council on Promulgating 
the "Interim Provisions on Promoting Industr ial Structure Adjustment" for Implementation74 (the 
"Implementing Regulation") of the 11th Five-Year Pl an of the Government of China created four 
categories of industrial activity in China—(i) the "encouraged" category;  (ii) the "restricted" category;  (iii) the "eliminated" category;  and (i v) the "permitted" category—and that the industries 
that fall within the "encouraged", "restricted", and "eliminated" categories are described in the 
Guiding Catalogue of the Industrial Restructuring (2005)
75 (the "GOC Catalogue").  After noting that
                                                      
74Panel Exhibit US-87.  See Panel Report, para. 9.53. 
75Panel Exhibit CHI-70.  After approval of the State Council, the GOC Catalogue was promulgated by 
the National Development and Reform Commission. (See Panel Report, para. 9.6)  WT/DS379/AB/R 
 Page 21 
 
 
  the alleged subsidy was the provision of lo ans by SOCBs to OTR producers on allegedly 
below-market terms, and that the USDOC's finding of de jure specificity was based on the fact that 
the radial tyre industry is one of 539 different i ndustries classified as an "encouraged" industry, China 
advances three independent grounds for reversal of th e Panel's finding.  First, China asserts that the 
Panel's interpretation of Article 2.1( a) and, in particular, of the te rms "subsidy" and "explicitly", was 
legally in error.  Second, China contends that, ev en accepting the Panel's interpretation of these terms, 
the Panel erred in applying its interpretation to th e facts, because it failed to identify any relevant 
limitation on access to the subsidy.  Third, Chin a contends that the Panel's finding that the 539 
"encouraged" industries constitute "certain enterprise s" within the meaning of Article 2.1(a) amounts 
to legal error, because it involved the improper a pplication of a treaty term to the facts or a 
characterization of municipal law, or, alternativel y, because the Panel's assessment of the facts was 
not "objective" and was thus inconsistent with  its obligations under Article 11 of the DSU. 
(i) Interpretation 
48. China emphasizes that the term "a subsidy" in Article 2.1(a) of the SCM Agreement  is a 
reference to a subsidy as defined in Article 1, that is, a financial contribution that confers a benefit.  
Accordingly, specificity must be  analyzed at the level of the subsidy .  Referring as well to the word 
"explicitly" and its consid eration by the panel in EC and certain member States – Large Civil 
Aircraft76, China contends that the ordinary meaning of Article 2.1(a) requires investigating 
authorities to establish that the actual words of the legislation pursuant to which the granting authority 
operates limit access to the particular financial contribution and to the associated benefit that have 
provisionally been found to constitute the subsidy.  If the legislation provides no indication that the 
recipient of a financial contribution will obtain a benefit in some degree,  the legislation cannot 
"explicitly limit[] access to a subsidy". 
49. China highlights that, instead of properly in terpreting Article 2.1(a) in accordance with 
Article 31 of the Vienna Convention , the Panel adopted a "functional" interpretation in order to find 
that a subsidy can be de jure specific under Article 2.1(a) if the re levant legislation explicitly limits 
access either to a financial contribution or to a benefit.  This "functional" approach ignored the word 
"subsidy", effectively read the term "explicitly" out of  Article 2.1(a), was inconsistent with the object 
                                                      
76China quotes the following statement from that panel:  "[I]t follows from the ordinary meaning of the 
word 'explicit' that it is not any limitation on access to a subsidy to certain enterprise s that will make it specific 
within the meaning of Article 2.1(a), but only a limitation th at '[d]istinctly express[es] all that is meant;  leaving 
nothing merely implied or suggested'; a limitation that is 'unambiguous' and 'clear'." (China's appellant's submission, para. 211 (quoting Panel Report, EC and certain member States – Large Civil Aircraft  (not yet 
adopted), para. 7.919)) WT/DS379/AB/R 
Page 22  
 
  and purpose of Article 2.1(a), and supplanted a proper interpretation based on the text of the 
provision. 
50. China considers that any interpretation of Artic le 2.1(a) that would find a subsidy to be 
"specific" when it is broadly available throughout an economy is inconsistent with the object and 
purpose of the SCM Agreement  as reflected in Article 2, namely , to filter out subsidies that are 
broadly available and widely used throughout an ec onomy.  Yet this is precisely the consequence of 
the Panel's "interpretation".  China points, in th is regard, to evidence on the record that most 
commercial borrowers in China obtained loans at in terest rates that fell within a band between the 
lending rate floor (90 per cent of the benchmark ra te set by the People's Bank of China) and the 
benchmark rate itself, irrespective of whether th e loan was issued by an SOCB or a non-SOCB.  
Because the interest rates of the i nvestigated loans fell within or above this band, they were neither 
"preferential" nor "non-commercial".  Not only wa s the alleged subsidy not explicitly limited to 
certain enterprises, it was not so limited in fact , because every borrower in China that obtained a loan 
from an SOCB at prevailing RMB interest rates recei ved the alleged financia l contribution (a loan 
from an SOCB) and benefit (the interest rates that the USDOC considered to confer a benefit).  This, 
asserts China, further illustrates that  the Panel's erroneous interpretati on deprived Article 2.1(a) of its 
ability to catch only subsidies that are not broadly available throughout an economy. 
51. China also takes issue with the concern e xpressed by the Panel that accepting China's 
interpretation of Article 2.1(a) would narrow the scope of coverage of the SCM Agreement .  On the 
face of Article 2.1, this concern is w ithout basis because subsidies that are not de jure  specific under 
Article 2.1(a) can still be de facto  specific under Article 2.1(c).  Th e Panel, however, seems to have 
favoured a "broad" interpretation of Artic le 2.1(a) because it considered that de facto specificity is 
more difficult for investigating authorities to establish than de jure  specificity.  Yet a proper approach 
to treaty interpretation—including taking prope r account of the "delicate balance" in the 
SCM Agreement between disciplines on subsidies and disciplines on the use of countervailing 
duties—is not consistent with an approach that  favours a particular interpretative outcome on the 
ground that it is more convenient for the investiga ting authorities, or makes it more likely that they 
will reach an affirmative determination of counterv ailability.  Thus, China submits that each of the 
separate bases for a finding of specificity in Article 2.1 must be interpreted ac cording to its own terms 
and be given equal standing in  the interpretative process. 
52. China argues that the Panel's findi ng on the USDOC's determination of de jure specificity 
with respect to the alleged policy lending in the OTR investigation must be reversed because this 
finding was based on the Panel's misinterpretation of Article 2.1(a).  China further requests the  WT/DS379/AB/R 
 Page 23 
 
 
  Appellate Body to complete the analysis and find that the USDOC's de jure specificity determination 
was inconsistent with Article 2.1(a), on the ground that it is undisputed that the economic planning 
documents on which the USDOC relied in reaching its finding did not explicitly limit access to the 
alleged lending by SOCBs at "preferential" interest  rates.  China points, in particular, to the 
concession of the United States before the Panel that the economic planning documents "do not necessarily require banks to lend at preferential interest rates" and do not, by their own terms, 
"reduc[e] the price of credit" for borrowers  in the "encouraged" category of industries.
77 
(ii) Application 
53. Should the Appellate Body uphold the Panel's interpretation of the terms "subsidy" and 
"explicitly" in Article 2.1(a), then China conditi onally appeals the Panel's finding that the economic 
planning documents relied upon by the USDOC e xplicitly limited access to the relevant financial 
contribution (loans by SOCBs), and requests the A ppellate Body to complete the analysis and find 
that there was no such explicit limitati on of access in the measures at issue. 
54. China recalls that the Panel found that "a r easonable and objective investigating authority 
could have determined that pursuant to [the economic planning documents ], SOCBs (among other 
financial institutions) were instructed to pr ovide financing to the 'encouraged' projects."78  Yet, such 
"instruction" does not identify an explicit limitation of  access to the relevant financial contribution.  
The economic planning documents did not require SOCBs to provide loans exclusively to the 
"encouraged" industries.  Rather, the un iverse of companies to which the SOCBs may provide loans 
included the "encouraged" category of industries as well as the " permitted " category of industries.  It 
follows, in China's view, that, because the Panel fa iled to identify an explicit limitation of access to 
loans by SOCBs to the "encouraged" industries, its findings were legally insufficient to sustain the 
USDOC's determination of specificity, even under the Panel's incorrect interpretation of 
Article 2.1(a), and must be reversed. 
(b) Article 2.1(a) of the SCM Agreement :  "Certain Enterprises" 
55. China submits that the Appellate Body must reve rse the Panel's finding that the "encouraged" 
category of industries constituted "certain enterprise s", or the specificity requirement under Article 2 
of the SCM Agreement  "will effectively become a dead letter".79  China characterizes the Panel's 
interpretation and application of the term "certain enterprises" to the relevant facts as "plainly in 
                                                      
77China's appellant's submission, para. 235 (quoting United States' first written submission to the Panel, 
paras. 364 and 365). 
78China's appellant's submission, para. 238 (quoting Panel Report, para. 9.106). 
79China's appellant's submission, para. 256. WT/DS379/AB/R 
Page 24  
 
  error"
80 and emphasizes, in this regard, that th e GOC Catalogue identified 539 "encouraged" 
industries spread across 26 broad economic sectors.   
56. China recalls that the panel in US – Upland Cotton  interpreted "certain enterprises" as 
meaning a "limited group of producers of certain pr oducts" and considered that a subsidy is provided 
to "certain enterprises" if the recipients of the s ubsidy constitute no more than a "discrete segment" of 
the economy of the Member granting the subsidy.81  In addition, the panel in EC and certain member 
States – Large Civil Aircraft  found that subsidies available to a "wide array of economic sectors" are 
not subsidies provided to "certain enterprises".82  With these in mind, China contests the Panel's view 
that the 539 "encouraged" indust ries are "described in very specific and narrowly-circumscribed 
terms" and "singl[e] out ... very particular types of projects".83  Since the 95 categories of 
investments/indicators considered in EC and certain member States – Large Civil Aircraft  were 
described in terms that are directly comparable to  the descriptions of encouraged industries in this 
dispute, and were found in that dispute to be "e xpressly intended to benefit recipients well beyond a 
particular enterprise or industry or group of enterprises or industries"84, the 539 "encouraged" 
industries in this dispute ―more than five times as many as 95 categories ―do not constitute "certain 
enterprises".  In addition, the 539 "encouraged" indu stries cover a much broader range of industries 
than those that the United States clai med were not "certain enterprises" in US – Upland Cotton  and 
US – Large Civil Aircraft (2nd complaint) .  While acknowledging that the concept of "certain 
enterprises" contains "a certain amount of indete rminacy at the edges", China insists that it is 
"impossible to characterize 539 industries spanni ng 26 different economic sectors as a 'discrete 
segment' of the Chinese economy".85 
(c) Article 2.2 of the SCM Agreement  
57. With respect to the USDOC's determination in the LWS investigation that the provision of 
land-use rights in the New Century Industrial Park (the "Industrial Park") for less than adequate 
remuneration was regionally specific, China agrees  with the Panel's conc lusion that the USDOC's 
determination was inconsistent  with Article 2.2 of the SCM Agreement .  China nevertheless appeals 
this finding because it disagrees with the basis on whic h the Panel reached this conclusion.  Citing the 
                                                      
80China's appellant's submission, para. 250. 
81China's appellant's submission, para. 248 (quoting Panel Report, US – Upland Cotton , paras. 7.1142 
and 7.1151). 
82China's appellant's submission, para. 248 (quoting Panel Report, EC and certain member States – 
Large Civil Aircraft  (not yet adopted), para. 7.931). 
83China's appellant's submission, para. 250 (quoting Panel Report, para. 9.68). 
84China's appellant's submission, para. 253 (quoting Panel Report, EC and certain member States – 
Large Civil Aircraft  (not yet adopted), para. 7.931). 
85China's appellant's submission, para. 255.  WT/DS379/AB/R 
 Page 25 
 
 
  "systemic importance to the proper interp retation and functioning of Article 2"86, China requests the 
Appellate Body to:  (i) find that the Pane l erred in interpreting Article 2.2 of the SCM Agreement  to 
permit a finding of specificity based solely on a finding that the financial contribution ―rather than 
the subsidy―was geographically limited;  and (ii) reverse the Panel's finding that the existence of a 
distinct regime is relevant to a determin ation of specificity under Article 2.2 of the SCM Agreement . 
58. With respect to the first poin t, China asserts that the USDOC was required to find that the 
provision of land-use rights for less than adequate remuneration (the subsidy) was regionally specific, 
but it found only that the provision of land-use ri ghts (the financial contribution) was regionally 
specific.  This finding was both legally insufficient, and factually untrue, given that undisputed evidence on the record demonstrated that other comp anies located outside the Industrial Park received 
land-use rights from Huantai County at the same price or at a lower price and, thus, the provision of 
land-use rights at a price that the USDOC consider ed to represent less-than-adequate remuneration 
was not limited to companies that purchased la nd-use rights within the Industrial Park.  China 
contends, as it did in its arguments on Article 2.1(a), th at the reference to a "subsidy" in Article 2.2 is 
a reference to a "subsidy" as defined in Article 1, and not to either a "financial contribution" or a 
"benefit". 
59. With respect to the second point, China expresses co ncerns about the Panel's statements that 
the USDOC failed to identify any evidence "that the provision of land-use rights in the Industrial Park 
constituted a distinct regime  for the provision of that financial contribution, compared with the 
provision of financial contributions in the form of land-use rights outside the Park"
87, and that it 
would have reached a different conclusion if the Un ited States had demonstrated that the provision of 
land-use rights within the Industrial Park "c onstituted a land-use regime that was clearly 
distinguishable from the general provision of land-use rights by the county government".88  C h i n a  
views these statements as the Panel's endorsement of an interpretation of Article 2.2 that would permit 
a subsidy to be found to be regionally specific when  it is part of a "distinct regime", even if the 
identical subsidy is available to all enterprises located throughout the jurisdiction of the granting 
authority.  Such an interpretati on would have important implications for the compliance obligations of 
the United States in this dispute, and for the operatio n of Article 2 generally.  China seeks reversal of 
this finding because such an interpretation of Article 2.2 of the SCM Agreement  would fail to filter out 
subsidies that are provided throughout the jurisdiction of the granting authority. 
                                                      
86China's appellant's submission, para. 264. 
87China's appellant's submission, para. 265 (quoti ng Panel Report, para. 9.159). (emphasis added by 
China) 
88China's appellant's submission, para. 265 (quoting Panel Report, para. 9.163). WT/DS379/AB/R 
Page 26  
 
  3. Article 14 of the SCM Agreement :  Calculation of the Benefit
 
(a) Article 14(d) of the SCM Agreement :  Input Benchmarks 
60. With respect to the USDOC's reje ction, in the CWP and LWR investigations, of private prices 
for HRS in China as the applicable bene fit benchmark under Article 14(d) of the SCM Agreement , 
China requests the Appellate Body to:  (i) find that  the Panel erred in interpreting Article 14(d) to 
permit investigating authorities to reject in-country  private prices as a benchmark based solely on 
evidence that the government is the predominant supp lier of the good in question;  (ii) reverse the 
Panel's finding that China did not establish that the USDOC had acted inconsistently with the 
obligations of the United States under Article 14(d) of the SCM Agreement  by rejecting private prices 
in China as benchmarks for HRS inputs;  and (iii)  find that the Panel acted inconsistently with 
Article 11 of the DSU by appearing to attribute to the USDOC a rationale for its finding of distortion 
other than the rationale that appears in its publis hed determinations.  Upon and as a consequence of 
such findings, China further requests the Appellate Body to complete the analysis in respect of 
China's consequential claims and to find that the challenged measures are inconsistent with 
Articles 10 and 32.1 of the SCM Agreement . 
(i) Interpretation of Article 14(d) of the SCM Agreement 
61. China notes that, as the Panel acknowledged, China's claim under Article 14(d) of the 
SCM Agreement  presented a "straightforward question of legal interpretation", namely, "whether 
record evidence that the government  was the predominant supplier of a good can be sufficient, on its 
own, to establish market distortion"89 and thereby justify the rejection of in-country private prices as a 
benefit benchmark.  China asserts that, by answeri ng this question in the affirmative, the Panel erred 
in its interpretation of Article 14( d), and departed from the standard articulated by the Appellate Body 
in US – Softwood Lumber IV , namely, that an investigating authority may resort to a benchmark other 
than private prices in the country of  provision only "when it has been established  that [] private prices 
are distorted, because of the predominant role of the government in the market as a provider of the 
same or similar goods".90 
62. China first recalls four aspects of the Appellate Body's decision in US – Softwood Lumber IV 
that are central to this issue on appeal.  First, th e "text of Article 14(d) [of the] SCM Agreement does 
not ... explicitly refer to a 'pure' market, to a ma rket 'undistorted by government intervention', or to a 
                                                      
89China's appellant's submission, para. 272 (quoting Panel Report, para. 10.38). 
90China's appellant's submission, para. 281 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 103). (emphasis added by China)  WT/DS379/AB/R 
 Page 27 
 
 
  'fair market value'".91  Second, Article 14(d) "emphasize[s] by  its terms that prices of similar goods 
sold by private suppliers in th e country of provision are the primary benchmark that investigating 
authorities must use  when determining whether goods have been provided by a government for less 
than adequate remuneration."92  Third, in certain situations, the use of private prices as a benchmark 
would fail to capture the full extent of the subsid y and thereby undermine the subsidy disciplines in 
the SCM Agreement .  Finally, "the possibility under Article 14(d) for investigating authorities to 
consider a benchmark other than private prices in the country of provision is very limited ."93  China 
asserts that the Appellate Body's conclusion that  evidence of "significant" or "predominant" 
government market share is insufficient, on its own,  to demonstrate the distortion of private prices 
reflects a proper interpretation of Article 14(d) and is consistent with basic principles of economics.94 
63. China contests the Panel's view that Article 14(d) does not "prohibit, a priori , a finding of 
market distortion ... where the only relevant evid ence was that the government is the predominant 
supplier of the good"95, and asserts that the only reasoning offered by the Panel for this view was that 
paragraph 102 of the Appe llate Body report in US – Softwood Lumber IV  drew a legal distinction 
between the government acting as a "significant" supplier of a good and the government acting as a 
"predominant" supplier of a good.  This reasoning implies that an investigating authority's finding that 
the government is a "predominant", rather than a "s ignificant", supplier, would be legally sufficient, 
on its own, to reject private market prices as a benchmark under Article 14(d).96  China stresses that 
the Appellate Body could not have meant to establish such a per se  rule in US – Softwood Lumber IV .  
Rather, the Appellate Body stated  in that case that the determina tion of whether private prices are 
distorted because of the government's predominant ro le in the market must be made on a case-by-case 
basis according to the particular facts underlying each investigation.  If the government's predominant 
role were sufficient to establish distortion, then  there would be no need to make a "case-by-case" 
determination.  China contends that nothing in th e Appellate Body's interpretation of Article 14(d) 
suggests that there is some quantitative threshold of  "predominance" at which a finding of "distortion" 
can be inferred in the absence of any other evid ence, and that, in fact, there is no threshold of 
"predominance" at which private market prices will  necessarily "align" with a government price that 
is "artificially low". 
                                                      
91China's appellant's submission, para. 277 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 87). 
92China's appellant's submission, para. 278 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 90). (emphasis added by China) 
93China's appellant's submission, para. 280 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 102). (emphasis added by China) 
94China's appellant's submission, para. 282. 
95China's appellant's submission, para. 293 (quoting Panel Report, para. 10.45). 
96China's appellant's submission, para. 297. WT/DS379/AB/R 
Page 28  
 
  64. China considers that the "implausibility"
97 of the Panel's reading of US – Softwood Lumber IV 
is further highlighted by the reasons given by the Appellate Body for not completing the analysis in 
that appeal.  The undisputed  facts included the market shares of the single government suppliers in 
each relevant Canadian province (which ranged from 83 to 99 per cent), the fact that the prices of 
government-supplied harvesting rights in each province were administratively set and the fact that 
there were (and could be) no imports of such rights.   Even though, based on these undisputed facts, 
the Appellate Body was able to characterize the role of the provincial governments in Canadian 
timber markets as "predominant", the Appellate Body found that it could not complete the analysis 
because there were insufficient undisputed facts "rel ating to the alleged distortive effects on prices of 
the provincial governments' participation in the market  for standing timber", and noted, in particular, 
the disputed character of the "evidence relied on by USDOC to conclude that private prices for 
stumpage in Canada were distorted".98  China claims, therefore, that the Appellate Body did not 
complete the analysis in US – Softwood Lumber IV  because it did not consider "predominance", on its 
own, to be a sufficient basis for rejecting private market prices under Article 14(d). 
65. China also points out that the USDOC itsel f did not perceive a distinction between a 
"predominant" supplier and a "significant" supplie r.  Indeed, the USDOC never used the word 
"predominant" in its distortion analysis, but instead  articulated its standard for finding distortion as 
whether the government provides a majority or a substantial portion of the market for a good. 
66. China observes that this appeal also presents an interpretative issue related to Article 14(d) 
that the Appellate Body did not address in its report in US – Softwood Lumber IV , namely, the types 
of evidence that would be relevant to a "distortion" inquiry under that provision.  In contrast to the 
Panel's interpretation, which would en able an investigating authority to reject private market prices as 
a benchmark based only on evidence of market share,  China considers that, consistently with the 
Appellate Body's interpretation of Article 14(d), evidence relating to government market share can 
never be sufficient, as a matter of either law or economics, to reject private market prices as 
"distorted".  Rather, investigating authorities mu st examine and evaluate evidence concerning actual 
market conditions for the good in question.   
67. For China, the Appellate Body's reasoning in US – Softwood Lumber IV suggests that the 
types of evidence that are relevant  are those that enable an inv estigating authority to determine 
whether the government's "predominant role" as a pr ovider of the good has caused private suppliers of
                                                      
97China's appellant's submission, para. 301. 
98China's appellant's submission, para. 303 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 115).  WT/DS379/AB/R 
 Page 29 
 
 
  the good to "align their prices" at a level that is "artif icially low", such that th e use of private prices as 
a benchmark would fail to capture "t he full extent of the subsidy".99  While recognizing that the case-
by-case nature of the distortion inquiry may lead to different types of evidence being relevant in 
different cases, China nevertheless considers that certain general principles can be identified.   
68. As a starting point, China argues that the fact that prices are aligned does not indicate that 
those prices are suppressed or artificially low, because it is an ordinary feature of markets that prices 
tend to align at a market clearing price that equilib rates supply with demand, especially in markets for 
commodity products like HRS.  This remains true even where government suppliers have a significant 
or predominant share of the market, because ma rket power is associated with supracompetitive 
pricing, that is, prices that are "artificially high" rather than "artificially low".   
69. China observes that, in the Panel proceedings , the United States understood the Appellate 
Body's reasoning in US – Softwood Lumber IV  to reflect an economic theory known as the "dominant 
firm" model.  China finds it unclear why the Unite d States believes that the Appellate Body had in 
mind a theory of supracompetitive pricing when its fundamental concern was that benchmark prices 
might be artificially low, not artificially high.  In any event, China stresses that the dominant firm 
model does not conclude that any firm with a signi ficant or predominant share of the market has the 
ability, for that reason alone, to dictate the market  price.  Rather, what makes a dominant firm 
"dominant" is not its market share, but the unique cost advantage that it possesses relative to other 
suppliers. 
70. China suggests that the United States' relianc e upon the dominant firm model in order to 
explain US – Softwood Lumber IV may amount to an argument that a "dominant firm" could cause 
private prices to be "artificially low" if it acted as an "irrational" dominant firm, that is, a firm that does not take full advantage of the market power that  it possesses.  China asserts that, if this is indeed 
the United States' position, it is flawed as a matter of law, logic, and economics.  There is no basis to 
assume, a priori , that a "dominant" government supplier will sell its output at a price that is lower 
than the profit-maximizing price described by the domi nant firm model.  Furthermore, even if it were 
to do so, and this were to have an effect on the prices charged by private suppliers, it does not follow 
that private prices could no longer provide a valid  benchmark for determining the adequacy of 
remuneration.  Article 14(d) does not require  government suppliers to supply goods at a 
supracompetitive price and extract whatever monopoly or  oligopoly rents might be available to them.  
Thus, the fact that a government "dominant firm" se lls its output at a price that is lower than the 
                                                     
 
99China's appellant's submission, para. 308 (quoting Appellate Body Report, US – Softwood Lumber IV , 
para. 100). WT/DS379/AB/R 
Page 30  
 
  maximum  supracompetitive price that it could charge does not mean that private prices will be 
"artificially low" as a benchmark and fail to capture  the full extent of a subsidy benefit.  On the 
contrary, China argues, private prices in these circum stances would continue to be "artificially high" 
in the sense that they reflect the ma rket power of the dominant firm.   
71. Finally, China refers to a situation where a government supplier does not have a unique cost 
advantage.  In such a situation, the only means by which the government supplier could cause private 
prices to be artificially low is to price its own out put below its cost of production.  If the government 
supplier adopts such pricing strate gy and is able to satisfy the entirety of market demand, private 
suppliers would eventually exit the market.  Therefor e, evidence of the existence of private suppliers 
in the market suggests that the government supplier does not sell its output at below-cost price or that 
it is not able to satisfy the entirety of market de mand.  In addition, if the government supplier is 
selling its output below its cost of production, it would soon become unprofitable as an enterprise.  
Therefore, China asserts, evidence that government s uppliers are profitable is a strong indication that 
they are not selling their outputs at a price below their costs of production. 
72. Based on the above arguments, China asserts that it is these types of objective indicators, 
rather than government market share alone, that are relevant in evaluating whether the effect of the 
government's pricing strategy is to cause private prices to be "artificially low" and, therefore, 
inappropriate as a benchmark under Article 14(d).  For China, a proper distortion inquiry under 
Article 14(d) should assess whether private prices ar e "artificially low" by focusing on whether there 
is any evidence in the relevant market that govern ment suppliers are selling the good at a price below 
their costs of production, and whether the effect of this action is to cause private suppliers to price 
their own output below their own costs of production. 
(ii) Application of Article 14(d) of the SCM Agreement 
73. China emphasizes that, in the CWP and LWR investigations, the USDOC's rejection of 
Chinese market prices as a benchmark was predicated  exclusively on evidence relating to the market 
share of SOE suppliers of HRS.  China cites ce rtain passages from the USDOC's Issues and Decision 
Memoranda in these two investigations in order to i llustrate that the determinations reveal, on their 
face, the USDOC's reliance on a quantitative test based  solely on government market share, and that, 
although China had placed evidence on the record relating to factors  other than SOE market share, the 
USDOC considered that such ev idence was not relevant, or did not "mitigate the fact that the  WT/DS379/AB/R 
 Page 31 
 
 
  government accounts for a significant portion of production".100  China further recalls that, before the 
Panel, the United States defended the USDOC's findi ngs in the CWP and LWR investigations based 
on the proposition that the "predominant" role of the government as a supplier of the good is 
sufficient, as a matter of law, to reject private market prices under Article 14(d). 
74. China highlights the evidence that it placed on the record of the USDOC in the CWP and 
LWR investigations concerning the actual nature and structure of the Chinese HRS industry, which, in 
its view, was precisely the type of objective evidence  that is relevant to a proper distortion inquiry 
under Article 14(d).  China asserts, in particular, that  it demonstrated, on the basis of undisputed facts, 
that:  (i) SOE producers of HRS are profitable;  (ii) private investment in the Chinese HRS industry has been growing;  (iii) many SOE producers of HRS are publicly listed corporations that operate 
under the same Chinese company law as companies with no State ownership;  (iv) the Chinese HRS 
market is heavily fragmented, with numerous SO E and non-SOE suppliers competing for sales;  (v) 
there is no uniform or government-set price for HRS;  and (vi) prices for HRS fluctuate by producer, by time, and by region. 
75. Taking each of these elements in turn, China fi rst argues that the evid ence that it introduced 
before the USDOC that both SOE producers and priv ate suppliers were profitable on their HRS sales 
both generally and during the period of inves tigation was highly probative of whether the 
government's role as a supplier had suppressed pr ivate market prices for HRS.  The USDOC, 
however, stated unequivocally that such evidence w as "not relevant".  Second, the evidence that 
private investment in the HRS industry, particul arly in the large publicly listed SOEs, had grown 
significantly in recent years was related to profitabi lity, and also demonstrated that investors view 
these companies as seeking to maximize returns to their shareholders.  Third, the evidence showing 
that many of the largest SOEs producing HRS we re structured as publicly listed corporations 
incorporated under Chinese company law, and that th e four largest SOEs were publicly listed and had 
private ownership ranging from 18 to 49 per cent distinguished the CWP and LWR investigations 
from the circumstances in US – Softwood Lumber IV , where the goods at issue were provided directly 
by government ministries to harvesters.  Wh ile there may have been some basis in US – Softwood
                                                     
 
100China's appellant's submission, paras. 285 and 286 (quoting  Issues and Decision Memorandum for 
the Final Determination in the Countervailing Duty Investigation of Circular Welded Carbon Quality Steel Pipe 
from the People's Republic of China  (Panel Exhibit CHI-1) (the "CWP Issues and Decision Memorandum"), 
pp. 64 and 65;  and Issues and Decision Memorandum for the Fina l Determination in the Countervailing Duty 
Investigation of Light-Walled Rectangular Pipe and Tube from the People's Republic of China  (Panel Exhibit 
CHI-2) (the "LWR Issues and Decision Memorandum"), pp. 35 and 36). WT/DS379/AB/R 
Page 32  
 
  Lumber IV to infer that the government was providing the good on terms and conditions that were 
designed to fulfil government policy objectives rather than to maximize returns, no such inference is 
warranted where the "government" is providing th e good through publicly listed corporations that are 
legally obligated to act in the best interests of th eir shareholders, and that are subject to the same 
requirements of corporate governance and financial disclosure as companies having no State ownership. 
76. Fourth, the evidence submitted by China demons trating the fragmented and "atomized" nature 
of the Chinese HRS industry, including the fact that there are multiple SOE providers, undercut the USDOC's apparent assumption that the government is selling the good at a price that is lower than its 
cost of production, and that its market share forces  private suppliers to "align" their own prices with 
the government's price.  This assumption of a sing le government pricing strategy is even more 
unwarranted when the "government supplier" is not  a single entity, but rather a large number of 
separate companies in which the State has varying degrees of ownership interest.  Fifth, the 
undisputed fact that there is no government agency in China that sets prices for HRS, regulates the 
prices charged by either SOEs or private producers of  HRS, or regulates the steel industry in general 
indicated that there is no obvious means for the govern ment to induce or compel private suppliers to 
align their prices with the SOEs' prices, and unde rmined the USDOC's assumption that SOE suppliers 
acted in concert to sell HRS at below-market pri ces.  Finally, data placed on the record by China 
showed that prices for HRS varied by producer, by month, and by region, with no clear pattern of 
higher or lower prices by producer, which strongly co ntradicted the proposition that SOE suppliers of 
HRS acted as a cartel with control over market prices.   China contends that such evidence of price 
variation, rather, supported the conclusion that HRS prices in China are determined in accordance 
with normal market forces.   
77. China emphasizes that all of  the evidence discussed above was relevant to a proper 
determination of whether private market prices fo r HRS were "distorted".  In the CWP and LWR 
investigations, however, the USDOC eschewed any examination of whether market forces were 
actually at work in favour of a "distortion" t est that merely assumed that market forces were not at 
work, and rejected the need to examine any evidence that would detract from this assumption.  
According to China, this approach was not cons istent with Article 14(d), as interpreted by the 
Appellate Body in US – Softwood Lumber IV , and, in accepting the USDOC's rejection of this 
evidence as not relevant to its distortion inquiry, the Panel erred in its interpre tation and application of 
that provision.   WT/DS379/AB/R 
 Page 33 
 
 
  (iii) The USDOC's Rationale for Finding Distortion 
78. China addresses, as a final matter, the suggesti on made by the Panel in paragraphs 10.55 
and 10.56 of its Report that the USDOC "considered" arguments and evidence relating to factors other 
than government market share in reaching its findings  of "distortion".  China contests, first, the 
Panel's characterization of China's argument as an assertion that the USDOC applied an unlawful 
"per se " test whereby the evidence th at the government was the majority supplier of a good led 
ipso facto  to the determination that the Chinese market prices for HRS were distorted.  What China 
meant by a " per se " test is that, in the CWP and LWR inv estigations, the USDOC relied exclusively 
on evidence relating to the government market share.  China did not make "as such" claims against the 
USDOC's "distortion" test. 
79. China submits that, if the Panel meant to s uggest that, as long as the USDOC received and 
considered arguments and evidence relating to factors other than the government market share, the 
USDOC's exclusive reliance on evidence relating to the government market share in finding 
"distortion" was consistent with Article 14(d) of the SCM Agreement , then such a conclusion suffers 
from two errors.  First, China recalls its argu ment, as well as the Appellate Body's finding in US – 
Softwood Lumber IV , that an investigating authority's excl usive reliance on government market share 
to support a finding that private prices are distorte d is inconsistent with a proper interpretation of 
Article 14(d).  Second, the Panel appears to attri bute to the USDOC a rationale that the USDOC did 
not adopt.  China highlights in this regard that th e "rationale or explanation" provided by the USDOC 
in its determinations was based exclusively on gove rnment market share, and it was solely on this 
basis that the Panel could examine the consiste ncy of these determinations with the covered 
agreements.  Thus, to the extent that the Panel attr ibuted to the USDOC an implicit "consideration" of 
other factors and evidence, this was inconsistent wi th the Panel's obligation under Article 11 of the 
DSU to limit its examination to the USDOC's stated rationale.   
80. China argues that, if the Panel's view was, rather, that the USDOC not only received and 
considered, but expressly relied upon, the arguments and evidence relating to factors other than the 
government market share, then such view is plai nly incorrect.  China emphasizes that there is not a 
single reference in the CWP and LWR investigations  to any factor other than SOE market share. 
(b) Article 14(b) of the SCM Agreement :  Loan Benchmarks  
81. China requests the Appellate Body to reverse th e Panel's finding that China did not establish:  
(i) that the United States acted inconsistently with its obligations under Article 14(b) of the 
SCM Agreement  by rejecting observed interest rates in China as benchmarks to calculate the benefit WT/DS379/AB/R 
Page 34  
 
  conferred by loans denominated in RMB;  and ( ii) that the benefit benchmark that the USDOC 
actually used to compare to the rates of the RMB loans was inconsistent with Article 14(b) of the 
SCM Agreement .  China also requests the Appellate Body to  find that the Panel acted inconsistently 
with Article 11 of the DSU by failing to assess the c onformity of the benchmark used by the USDOC 
with the legal requirements of Article 14(b).  Up on and as a consequence of such findings, China 
further requests the Appellate Body to complete th e analysis in respect of China's consequential 
claims and find that the challenged measures ar e inconsistent with Ar ticles 10 and 32.1 of the 
SCM Agreement . 
82. China explains that, in the CWP, LWS, and OT R investigations, the USDOC rejected the use 
of any RMB interest rates on the ground that they were distorted by government intervention in the banking sector.  Instead, the USDOC used a model b ased on interest rates from over thirty different 
countries, selected from a World Bank grouping based on their per capita gross national income 
("GNI"), which the USDOC regressed based on an  institutional quality ra ting assigned to each of 
these countries.  This model produced a proxy interest  rate that the USDOC compared to the interest 
rates on the SOCB loans to determine whether a benefit was conferred.  China asserts that the Panel's 
evaluation of the USDOC's finding of distortion due to the role of the Chinese Government in the 
banking sector reflects a clear legal error.  China emphasizes that the Panel's "distortion" standard 
turned on whether government interventions "effec tively dictate" the interest rates for loans 
denominated in a particular currency.  Since,  however, all governments "effectively dictate" 
benchmark interest rates in the ordinary course of  implementing monetary policy, all interest rate 
benchmarks would be considered "distorted" under the Panel's standard.  China also contends that the 
Panel erred in finding that the USDOC's multi- currency regression model was consistent with 
Article 14(b) because its finding was based on multiple e rrors of legal interpretation, and on a failure 
to evaluate whether this benchmark was, as this provision requires, a "comparable commercial loan 
which the firm could actually obtain on the market". 
(i) Rejection of Interest Rates in China as Benchmarks under 
Article 14(b) of the SCM Agreement 
83. China requests the Appellate Body to find that  the Panel erred in its interpretation and 
application of Article 14(b) of the SCM Agreement  in concluding that the USDOC had a lawful basis 
to reject observed RMB interest rates as benchm arks in the CWP, LWS, and OTR investigations. 
84. For China, the central question of legal interp retation before the Panel was what constitutes a 
"comparable commercial loan which the firm coul d actually obtain on the market" and not, as the 
Panel stated, "whether, and if so under what ci rcumstances, Article 14(b) of the SCM Agreement  WT/DS379/AB/R 
 Page 35 
 
 
  permits the rejection of in-country interest ra tes as benchmarks for government-provided loans".101  
Article 14(b) does not have an express notion of territo riality, and, therefore, the paradigm of "in the 
country" versus "out of the country" does not arise.  The Panel should, therefore, have asked whether, 
and if so under what circumstances, Article 14(b) permits the use of a loan benchmark that is not 
"comparable" or that is not consistent with so me other aspect of the Article 14(b) standard.   
85. China contests the USDOC's rejection of RMB interest rates as benchmarks in the light of the 
"distortion" of China's banking sector due to th e Chinese Government's predominant role and other 
alleged interventions in the commercial banking sect or.  Before the Panel, China argued that the 
concept of interest rate "distortion" made no sense, because the nature of benchmark interest rates is 
that they are determined by government "interve ntion", whereas the United States contended that 
there is a significant difference between China's in tervention and that of most other governments.  
Thus, the issue that was before the Panel and that is  now before the Appellate Body is whether there is 
a meaningful and relevant difference between th e effect on benchmark interest rates that all 
governments have through their implementation of m onetary policy, on the one hand, and the effect 
that governments have through a separate and independe nt category of intervention, that can properly 
be classified as "distortions", on the other hand.  The Panel, maintains China, erred in finding that 
there was a clear distinction between these two categories of intervention. 
86. China argues that the Panel erred in concluding that loans are not "commercial" if they are 
made in an environment in which the government e ffectively establishes benc hmark interest rates.  
Since, however, all governments with their own cu rrency "effectively establish" benchmark interest 
rates, this alone cannot prevent loans from being "c ommercial".  Commercial banks are providers of a 
service, rather than a good, and what matters to the lender's profitability is the spread between its 
deposit rate and its lending rate, rather than the absolute  level of market interest rates.  China explains 
that there are banks in China that provide "comme rcial" loans, and gives the example of the four 
largest SOCBs, which are among the largest commerc ial banks in the world, are publicly listed, 
highly profitable, and provide loans with the objectiv e of making a profit.  China also contends that 
the Panel erred to the extent it considered that the fact that the Government of China holds ownership 
interests in certain banks renders all of their loans ipso facto  "non-commercial", and points out, in this 
regard, that Article 14(b) requires a comparison be tween "the government loan in question" and a 
"commercial" loan, not a "non-governmental" loan.  Thus, the Pa nel's "distortion" analysis was based 
on an erroneous interpretation of the word "commercial". 
                                                      
101China's appellant's submission, para. 398 (quoting Panel Report, para. 10.105). WT/DS379/AB/R 
Page 36  
 
  87. China also points to two notions central to the Pa nel's analysis of distortion:  (i) that interest 
rates are ordinarily determined by market forces;  and (ii) that government interventions in the market 
that effectively establish interest rates are an abe rration that can be classified as distortion.  Although 
the Panel appeared to view them as such, China contends that "market forces" and "government 
interventions" are not conflicting alternatives.  Rath er, when it comes to money supply and interest 
rates, "market forces" and "government interventions" are the norm.  China points, in this regard, to 
the example of the relationship between the Unite d States Federal Funds rate, maintained by the 
Federal Reserve, and the prime rate, based on obser ved rates, which is consistently about three 
percentage points above the Fede ral Funds rate.  China asserts that, as the standard benchmark for 
commercial borrowing in the United States, the prime ra te is, without question, a reliable indicator of 
the amount that a creditworthy commercial borro wer "would pay" on a "comparable" dollar-
denominated loan that it "could actually obtain on the market".  Yet, if the Panel's distortion standard 
were applied, this benchmark inter est rate would have to be rejected as "distorted" since it is, on the 
Panel's formulation, "effectively established" by th e "interventions" of the Federal Reserve.  This 
example illustrates, in China's view, that, as a ma tter of macroeconomics, the Panel's standard was 
based on a false dichotomy between "market forces" and "government interventions". 
88. China underlines that the necessary consequence of th e Panel's "distortion" standard is that all 
interest rate benchmarks are "distorted", and that there is no such thing as a "commercial" loan.  This 
manifestly absurd interpretation of Article 14(b) would permit investigating authorities to reject 
observed interest rates as a benchmark for loans de nominated in any currency and must, China urges, 
be rejected by the Appellate Body. 
89. China also disagrees with the Panel's perception th at there is a "clear distinction" between the 
implementation of monetary policy, on the one hand, and the government participating as a lender 
and/or otherwise intervening in the lending market , on the other hand.  The Panel never explained 
what this "clear distinction" is and, in China' s view, it is both illusory and meaningless, because the 
implementation of monetary policy frequently involv es actions that could be characterized as "the 
government participating as a lender and/or otherw ise intervening in the lending market as such".
102  
Yet, the means by which central banks "effectively establish" benchmark interest rates are immaterial 
to the result they achieve.  It follows, according to  China, that this "clear distinction", which 
underpins the Panel's entire "distortion" analysis, la cks any legal or economic foundation and that this 
alone is a sufficient basis on which to reve rse the Panel's findings and conclusions under 
Article 14(b). 
                                                      
102China's appellant's submission, para. 427 (quoting Panel Report, para. 10.126).  WT/DS379/AB/R 
 Page 37 
 
 
  90. China asserts that the Panel's review of th e specific factors that the USDOC relied upon to 
support its "distortion" determina tion further reveals the legal and economic errors underlying the 
Panel's concept of interest rate "distortion".  In its assessment of the USDOC's analysis, the Panel 
required none of the elements that, under the Panel' s understanding of Article 14(b), should have been 
demonstrated, and limited its subs tantive assessment of the USDOC's "distortion" finding to a single 
paragraph. 
91. China argues, more specifically, that, in revi ewing the USDOC's finding, the Panel failed to 
evaluate how the government's role as a commerc ial lender could have had any effect on benchmark 
rates.  Instead, the Panel simply accepted the unsubst antiated assertion that the Government of China's 
"predominant role" as a lender had "distorted" inter est rates.  China speculates that the Panel may 
have assumed:  that the provision of loans by the government at below-market interest rates could 
"drag down" benchmark interest rates to an "artific ially low" level in a way that would be "clearly 
distinct" from monetary policy;  that government-o wned banks will provide loans at below-market 
rates when they have a large market share;  and that  this will cause other banks to "align" their rates to 
such below-market interest rates.103  Such a theory would, however, be erroneous because the only 
way that commercial banks can affect observed interest rates is to lend an amount that is smaller than 
what they are allowed to lend under the reserve-de posit ratio established by the central bank, which 
would cause interest rates to rise.  Moreover, if the government were to provide loans to commercial 
borrowers at below-market interest rates, othe r commercial banks could not lower their rates to 
"align" with such rates because they cannot creat e more money to satisfy the increased demand for 
loans at the lower rate.  This, submits China, is  why State ownership of commercial banks has no 
bearing on observed interest rates th at is distinct from the role of government in the implementation of 
monetary policy.  Even assuming that commercial banks could affect observed interest rates by 
providing loans at low interest rates, the central  bank always has the ability to reduce the money 
supply to return benchmark interest rates to the level that it desires.  For these reasons, China 
contends, the Panel erred in accepting that the gove rnment's "predominant ro le as a lender" was a 
valid basis for rejecting observed interest  rates as a benchmark under Article 14(b). 
92. China argues that the Panel's consideration of  three other alleged government interventions 
identified by the USDOC suffered from similar defici encies.  First, China maintains regulatory limits 
on the interest rate that banks can provide on de posits, and imposes a floor on the minimum interest 
rate that banks can charge on loans to borrowers.  As China explained to the Panel, such regulations 
are not "distortions".  Rather, they contribute to  the safety and soundness of commercial banks and are 
                                                      
103China's appellant's submission, para. 440. WT/DS379/AB/R 
Page 38  
 
  ordinary features of bank regulatory systems wo rldwide.  Although neither the Panel nor the 
United States explained how China's lending and deposit rate regulations would aff ect interest rates, it 
is undisputed that they cause interest rates to be higher , which means that using observed RMB 
interest rates as a benchmark would, if anythi ng, tend to overstate the subsidy benefit. 
93. Second, the Panel considered that the USDO C was "not unjustified" in relying upon its 
previous finding in CFS Paper that lending rates in  China were largely undifferentiated, with most 
loans made at rates close to the government-set benchmark rate as evidence that market forces were 
not operating and that banks lacked adequa te risk management and analysis skills.
104  China disagrees 
that the fact that observed interest rates tend to cluster around an interest rate determined by the 
central bank constitutes no such evidence, and recalls , in this regard, that in the United States the 
prime rate moves in lock-step with the Federal F unds rate.  Moreover, even if it were true that 
Chinese banks still lack adequate risk management and analysis skills, neither the United States nor 
the Panel explained how this would affect observed interest rates.  Indeed, China asserts, nothing in 
Article 14(b) suggests that the existence or non-exis tence of adequate risk management and analysis 
skills is relevant to the selection of a benchmark under Article 14(b). 
94. Third, in reviewing the USDOC's determination,  the Panel referred vaguely to various pieces 
of evidence that the USDOC had relied upon to conc lude that the Government of China continued to 
play a role and have influence in the Chinese commercial banking sector, which China considers may 
have been a reference to the USDOC's finding that  the Government of China allegedly influences 
bank lending decisions by SOCBs, and its finding th at the SOCBs allegedly make loan decisions in 
accordance with State industrial policies.  While Ch ina disagrees with these factual findings made by 
the USDOC, in the context of Article 14(b) the importa nt point is that the Panel failed to evaluate how 
the alleged role and influence of the Chinese Gove rnment had any effect on observed RMB interest 
rates and, in particular, how it caused them to be lo wer than they otherwise would have been in a way 
and to an extent that is clearly distinct from the implementation of monetary policy. 
95. China submits that the Panel's analogy to the Appellate Body's decision in US – Softwood 
Lumber IV  was misplaced because there is a fundament al difference between benchmark prices for 
goods under Article 14(d) and benc hmark interest rates for loans under Article 14(b).  Governments 
do not ordinarily establish prices for goods, whereas they do ordinarily establish benchmark interest 
rates.  China explains that:  (i) a comparison of interest rates is different from a comparison of prices because even the observed interest rates are effect ively determined by the government's decisions 
concerning the money supply;  (ii) commercial ba nks, whether government owned or not, have no 
                                                     
 
104China's appellant's submission, para. 456 (quoting Panel Report, para. 10.146).  WT/DS379/AB/R 
 Page 39 
 
 
  effect on benchmark interest rates;  and (iii) benchmark interest rates cannot be "artificially low" since 
such rates reflect a government's policy choices and there is no objectively "correct" set of interest 
rates that would prevail in the absence of government "distortion". 
96. As a final matter, China expresses the view th at the Panel's "distortion" rationale under 
Article 14(b) is "dangerous ly devoid of legal content"105 and "entirely lacking in economic 
substance"106, and cautions that, if it is left uncorrected by the Appellate Body, this will stand as an 
open invitation to investigating authorities to re ject benchmark interest rates in favour of 
manufactured "proxies" that serve no other purpose th an to generate artificial subsidy benefits and 
open the door to the use of countervailing duties as a means of sitting in judgment upon, or seeking to 
counteract, the monetary policies pursued by other WTO Members. 
(ii) Consistency with Article 14(b)  of the Benchmarks Actually 
Used by the USDOC 
97. China requests the Appellate Body to reverse the Panel's conclusion that the USDOC's loan 
benchmark was not inconsistent  with Article 14(b) of the SCM Agreement .  According to China, there 
was no basis for finding that the USDOC's multi-cu rrency regression model based on per capita GNI 
and institutional quality was a "comparable commerci al loan which the firm could actually obtain on 
the market".  Moreover, the Panel's conclusion to the contrary was based on clear errors of legal 
interpretation and a failure to undertake an obj ective assessment of the matter in accordance with 
Article 11 of the DSU. 
98. China considers that there are three essential el ements that a benchmark rate must satisfy in 
order to be consistent with Article  14(b), namely, it must be:  (i) comparable;  (ii) commercial;  and 
(iii) one that the firm receiving the government-p rovided loan could actually obtain on the market.  
For China, the fundamental flaws in the USDOC's lo an benchmark were that it was not comparable 
and was not one that the respondent borrowers could actually obtain on the market. 
"Comparable " 
99. China argues that the meaning of the word "com parable" is informed by the context provided 
by Article 14(b).  That provision requires a compar ison of interest rates for determining whether the 
recipient of the government loan is "better off" than it would have been in the absence of the 
government loan.  China agrees with the Panel that a "comparable" loan is one that was provided at 
approximately the same time, has the same interest  rate structure, has a similar maturity, is for 
                                                      
105China's appellant's submission, para. 472. 
106China's appellant's submission, para. 473. WT/DS379/AB/R 
Page 40  
 
  approximately the same amount, and is denomina ted in the same currency, as the government-
provided loan.  Among these, the currency in which the loan is denominated is of fundamental 
importance because real interest rates differ by the cu rrency in which the loan is denominated and the 
country in which the loan is issued.  China presents th e real interest rates for 30 out of the 33 countries 
used by the USDOC for its 2006 benchmark to illustrate  that, even when countries are similar in many 
respects, their real interest rates differ significantl y, to the extent that loans denominated in their 
different currencies cannot be consid ered "comparable" to each other.  China claims that the Panel 
ignored the importance of the currency in which a loan is denominated, and asserts that the Panel 
should have examined, for example, whether th e USDOC's regression model had any foundation in 
the economic literature, and whether there was any empirical support for the use of per capita GNI 
and "institutional quality" as a means of assessing di fferences in interest rates across different 
currencies. 
100. China considers that the Panel's evaluation of the USDOC's methodology of constructing a 
proxy interest rate was cursory and uncritical.  The Panel found that the USDOC's methodology was 
"permissible" and "not unreasonable" under the circum stances of the investigations without providing 
any explanation for these conclusions.  For instance,  the Panel did not ask whether the 20 percentage 
point disparity in real interest rates among th e countries in the World Bank's grouping of lower-
middle-income countries undermined the US DOC's assertion that the use of per capita  GNI would 
permit loans denominated in different currencies to be  made "comparable" to each other.  China also 
points out that the Panel did not demand any founda tion for the USDOC's assertions that there is a 
broad inverse relationship between real interest ra tes and income levels and that the institutional 
quality of countries relates to the comparability of loans denominated in different currencies. 
"Could Actually Obtain on the Market
" 
101. While agreeing with the Panel that the credit rati ng of the borrower is relevant to identifying 
an appropriate benchmark, China contends that the phrase "could actually obtain on the market" in 
Article 14(b) has a broader meaning than the one the Pa nel attributed to it.  Pointing in particular to 
the words "actually" and "market", China argues th at any benchmark loan must be one that the 
borrower could in fact obtain, given the sources of credit that are actually available to it.  Loans 
denominated in certain currencies (such as the Unite d States dollar) can be borrowed in international 
markets, whereas those denominated in other currenc ies (such as the RMB) can be borrowed only in 
the country issuing the currency.  In addition, a wide variety of commercial and regulatory factors 
may affect the ability of a particular borrower to obtain loans from sources outside its home country or in currencies other than those in which it prin cipally does business.  China highlights that the  WT/DS379/AB/R 
 Page 41 
 
 
  purpose of benefit calculation is to determine whet her the recipient of a financial contribution is 
"better off" than it would have b een in the absence of the financial contribution, and contends that 
hypothetical "loans" from credit markets that do not exist cannot serve this purpose. 
Article 11 of the DSU  
102. China observes that the Panel framed its inquiry as whether the USDOC's proxy benchmark 
"sufficiently approximate[d]" the requirements of  Article 14(b), and whether its methodology was 
"aimed at generating" a proxy RMB interest rate  that was consistent with the requirements of 
Article 14(b).107  Yet, according to China, the Panel was in fact required to evaluate the USDOC's 
benchmark for its "conformity" with Article 14(b), not to ask whether it was a "sufficient 
approximation" of the standard set out in that prov ision.  Moreover, the Panel considered whether the 
USDOC "aimed at generating" a benchmark that w as consistent with Article 14(b), but failed to 
consider whether the USDOC actually succeeded in doing so.  Instead, the Panel saw its task as 
limited only to "evaluat[ing] the internal logic of the methodology employed, and the soundness and 
appropriateness of the data relied upon by the USDOC, in constructing the proxy".108  On this basis, 
the Panel conducted—in a single paragraph—a perf unctory examination of the USDOC's benchmark 
and concluded that it was "not … unreasonable under the circumstances".109  China emphasizes that 
such an approach was inconsistent with the standard  of review established by Article 11 of the DSU.  
The "not unreasonable" standard of review that th e Panel applied is one that the Appellate Body has 
explicitly rejected as inconsistent with the "critical and searching analysis called for by Article 11 of 
the DSU".110 
4. Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of 
the GATT 1994:  "Double Remedies"   
103. In its appeal of the Panel's findings regarding "double remedies", China requests the 
Appellate Body to:  (i) find that the Panel erred in its interpretation and application of Articles 10, 
19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the GATT 1994;  (ii) reverse the 
Panel's finding that China did not establish that the United States had acted inconsistently with its 
obligations under these provisions by imposi ng anti-dumping duties calculated under its NME 
methodology concurrently with the imposition of countervailing duties on the same products, without
                                                      
107China's appellant's submission, para. 374 (quoting Panel Report, paras. 10.204 and 10.206). 
108China's appellant's submission, para. 375 (quoting Panel Report, para. 10.206). 
109China's appellant's submission, para. 375 (quoting Panel Report, para. 10.207). 
110China's appellant's submission, para. 377 (quoting Appellate Body Report, US – Softwood 
Lumber VI (Article 21.5 – Canada) , para. 113). WT/DS379/AB/R 
Page 42  
 
  taking steps to avoid offsetting the same subsidies twi ce;  and (iii) complete the analysis and conclude 
that the USDOC acted inconsistently with the oblig ations of the United States under Articles 10, 19.3, 
19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the GATT 1994,  in all of the investigations 
at issue, by failing to take steps to avoid offsetting the same subsidies twice. 
104. China notes that the Panel found that the simultaneous imposition of anti-dumping duties 
calculated under an NME methodology and of counte rvailing duties likely results in any subsidy 
granted in respect of the good at issue being off set more than once.  This is because the dumping 
margins calculated under an NME methodology are gene rally higher than would otherwise be the case 
because they result from a comparison of export pri ces to market-determined (unsubsidized) costs of 
production, rather than to a producer's actual (subsid ized) costs of production and, therefore, reflect 
not only price discrimination, but also economic distortions affecting the producer's costs of 
production, including domestic subsidies.  The Panel nonetheless also found that the relevant 
provisions of the covered agreements do not preven t an investigating authority from offsetting the 
same subsidy more than once.  This, asserts China,  is "one of the most surprising and anomalous 
conclusions in the history of dispute settlement"
111 and "flies in the face of the remedial purpose of 
countervailing duties and the objective of im posing meaningful disciplines on the use of 
countervailing measures".112 
105. China contends that an importing Member is unde r an affirmative legal obligation to ensure 
that it does not impose countervailing duties to offset  a subsidy that it simultaneously offsets through 
the manner in which it calculates anti-dumping duties in  respect of the same imported product.  This 
obligation arises from:  (i) Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, 
which prohibit Members from levy ing countervailing duties in excess of the amount of the subsidy 
found to exist;  (ii) Article 19.3 of the SCM Agreement , which requires investigating authorities to 
impose countervailing duties in the "appropriate" amounts;  (iii) Article 10 of the SCM Agreement , 
which requires Members to "take all necessary steps to ensure that the imposition of a countervailing 
duty ... is in accordance with the provisions of Artic le VI of [the] GATT 1994 and the terms of [the 
SCM] Agreement";  and (iv) Article 32.1 of the SCM Agreement , which prohibits Members from 
taking "specific action against a subsidy of a nother Member ... except in  accordance with the 
provisions of [the] GATT 1994, as interpreted by [the  SCM] Agreement".  China emphasizes that the 
Panel erred in its interpretation of these provisions and in reasoning that, because the SCM Agreement 
does not contain a provision expressly  prohibiting a Member from offsetting the same domestic 
                                                      
111China's appellant's submission, para. 476. 
112China's appellant's submission, para. 487.  WT/DS379/AB/R 
 Page 43 
 
 
  subsidies through the imposition of two different duti es, it was the intention of the drafters of the 
SCM Agreement to authorize  such actions. 
106. By way of background, China recalls that, in  2006, the USDOC reversed its longstanding 
position that it would not apply countervailing duties to imports from any country designated as an 
NME.113  Since then, the USDOC has initiated over 23  simultaneous anti-dumping and countervailing 
duty investigations in respect of imports from China, and has imposed parallel anti-dumping and 
countervailing duty measures in 21 of these inv estigations.  The USDOC maintains that, under 
United States law, it has no authority or obligati on to avoid the imposition of double remedies.  China 
points out that, in GPX International Tire Corporation v. United States , the United States Court of 
International Trade (the "CIT") recently rejected this position and held that the USDOC is required, 
under United States law, to avoid the imposition of double remedies when it uses its anti-dumping 
NME methodology in conjunction with countervailing duties.114 
(a) The Purpose of Countervailing Duties 
107. China recalls that footnote 36 of the SCM Agreement  defines a countervailing duty as "a 
special duty levied for the purpose of offsetting any subsidy bestowed directly or indirectly upon the manufacture, production or export of any merchandise", and reasons that the concept of "offsetting" a 
subsidy makes clear that countervailing duties serve re medial, rather than punitive purposes.  That the 
purpose of countervailing duties is to offset  actionable subsidies that exist in respect of imported 
products and, thereby, remedy the injury that the subsidized imports are causing  is evident throughout 
the architecture of Article VI:3 of the GATT 1994 and the SCM Agreement , and notably in:  
(i) Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement , which prohibit Members 
from applying countervailing duties "in excess of" the amount of subsidy that "exists" and can be 
"attributed to the imported products under inves tigation";  (ii) Articles 15.5 and 19.1 of the 
SCM Agreement , which require the investigating authorities to determine that subsidized imports are 
causing injury to the domestic industry;  and (iii) Articles 19.2 and 21.1 of the SCM Agreement , which 
reflect the linkage between the imposition of counter vailing duties and the goal of removing the injury 
that subsidized imports are causing to domestic producers.  China also emphasizes that any 
interpretation of the SCM Agreement  must take into account its object and purpose, which is "to 
increase and improve GATT disciplines rela ting to the use of both subsidies and countervailing 
                                                     
 
113China's appellant's submission, para. 483 (referring to Panel Report, para. 14.4). 
114GPX International Tire Corp v. United States , 645 F. Supp. 2d 1231 (Ct. Int'l Trade 2009) (Panel 
Exhibit CHI-169).  This decision, which relates to the same OTR countervailing duty determination at issue in this WTO dispute, has been appealed to the United States Court of Appeals for the Federal Circuit. (United 
States' responses to questioni ng at the oral hearing) WT/DS379/AB/R 
Page 44  
 
  measures".
115  For China, the Panel's findings on "double remedies" are at odds with both the remedial 
purpose of countervailing duties and the object and purpose of the SCM Agreement . 
(b) Interpretation of Article 19.4 of the SCM Agreement  and Article VI:3 
of the GATT 1994 
108. China points out that Article 19.4 of the SCM Agreement  prohibits Members from applying 
countervailing duties in excess of the amount of s ubsidy that "exists", and that the corresponding 
discipline is set forth in Article VI:3 of the GATT 1994.  China argues that a subsidy "exists" within 
the meaning of Article 19.4 only if it can be attrib uted to the imported product as a cause of injury to 
domestic producers.  If, however, a subsidy has been "offset" through the manner in which the 
importing Member calculates anti-dumping duties, the subsidy no longer "exists" because it can no 
longer be attributed to the imported products as a ca use of injury to domestic producers.  Noting that 
the ordinary meaning of "offset" includes "cancel out by", China submits that, if a subsidy in respect 
of an imported product has been "cancelled out", it cannot be "cancelled out" a second time.   
109. China recalls that the Panel accepted that Article 19.4 of the SCM Agreement  would preclude 
the cumulative levying of two countervailing duties in excess of the amount of the subsidy found to 
exist, but that the same provision "is oblivious to  any potential concurrent imposition of anti-dumping 
duties".116  For China, however, these two situations are i ndistinguishable.  Thus, if it is inconsistent 
with Article 19.4 to offset the same subsidy twice through the impos ition of two countervailing duties, 
it is equally inconsistent to offset the same s ubsidy twice through the imposition of a countervailing 
duty simultaneously with an anti-dumping duty that eff ectively offsets subsidies.  China questions the 
Panel's asserted distinction between the purpose a nd the nature of anti-dumping duties as opposed to 
countervailing duties, but stresses that, in any ev ent, the legally relevant question is what effect a duty 
has.  If a duty has the effect of offsetting a subs idy, then, China contends, it must be taken into 
account when determining whether there remains a subsidy to offset through the imposition of 
countervailing duties under Article 19.4. 
110. China argues that the Panel's interpretation of Article 19.4 is inconsis tent with Appellate 
Body jurisprudence regarding the privatization of SOEs and the sale of subsidized inputs in arm's-length transactions, which supports the view that, when an importing Member imposes countervailing 
duties to offset a subsidy that cannot be attribut ed to the imported product, such countervailing duties
                                                     
 
115China's appellant's submission, para. 497 (quoting Appellate Body Report, US – Carbon Steel , 
para. 73). (emphasis added by China) 
116China's appellant's submission, para. 501 (referring to Panel Report, para. 14.112).  WT/DS379/AB/R 
 Page 45 
 
 
  are "in excess" of the amount of the subsidy under Ar ticle VI:3 of the GATT 1994 and, by extension, 
Article 19.4 of the SCM Agreement . 
111. China regards the Appellate Body decisions in US – Countervailing Measures on Certain EC 
Products  and US – Softwood Lumber IV  as establishing that a Member may not impose countervailing 
duties if, as a result of events external to the determ ination of financial contribution and benefit, such 
as privatization or a relevant arm' s-length sale, the subsidy can no longer be attributed to the imported 
product under investigation.  China understands US – Countervailing Meas ures on Certain EC 
Products , where the Appellate Body found that the United States had ac ted inconsistently with its 
obligations under Articles 10 and 19.4 of the SCM Agreement , as establishing that the continued 
"existence" of the subsidy depended  on whether the subsidy could stil l be attributed to the imported 
products under investigation as a source of injury, not  merely on whether it "exist ed" in the sense that it 
was possible to identify a financial contribution and benefit.  Similarly, China views the Appellate 
Body's finding in US – Softwood Lumber IV  that, in the wake of an ar m's-length sale, investigating 
authorities are required to undertake an analysis to ensure that they do not impose countervailing duties 
"in excess  of the amount of the total subsidy accruing to" the imported product, as affirming that a 
subsidy must be attributable to the imported pr oduct for it to be "offset" through the imposition of 
countervailing duties.117 
112. China dismisses, as "empty formalism"118, the Panel's disregard of these two Appellate Body 
reports on the grounds that:  (i) ther e is a distinction between "extingui shing" a subsidy, as discussed in 
these two cases, and "offsetting" it;  and (ii) privat ization is a "real world ev ent", whereas the imposition 
of an anti-dumping duty is merely a "remedy".  Accord ing to China, regardless of whether a subsidy has 
been offset or extinguished, the legal effect is iden tical, that is, there is no l onger a subsidy that can be 
attributed to the imported product for the purpose of im posing countervailing duties,  and it is immaterial 
whether a subsidy is offset as a result of some exte rnal commercial event or as a result of the imposition 
of a duty.  Either way, the subsidy no longer exists in respect of the imported product. 
113. China also takes issue with the Panel's statement that Article 19.4 of the SCM Agreement  is 
"oblivious" to the imposition of anti-dumping duties.  The Panel appears to regard the SCM Agreement  
and the  Agreement on Implementation of Article VI of the General Agreement on Tariffs and 
Trade 1994  (the " Anti-Dumping Agreement ") as entirely unrelated to each other.  The Panel's apparent 
acceptance that there is no obligation to take into account how measures imposed under these two
                                                      
117China's appellant's submission, para. 515 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 141). (original emphasis) 
118China's appellant's submission, para. 518. WT/DS379/AB/R 
Page 46  
 
  Agreements might interact in a particular instance ignores  the fact that, because the 
Anti-Dumping Agreement  and the SCM Agreement  are integral parts of the same treaty, that is, the  
WTO Agreement , a treaty interpreter must read  all applicable provisions of the treaty in a way that gives 
meaning to all of them harmoniously.   
114. China quotes, in this regard, the Appellate Body's statements that the different provisions of the 
WTO Agreement should be read "in a coherent and consis tent manner which gives full and effective 
meaning to all of their terms", and that Members "must be mindful of thei r other WTO obligations" 
when taking action under the differ ent agreements that make up the WTO Agreement .
119  China argues 
that, if a privatization or the sale of a subsidized input is an external event that the importing Member 
must take into account in determining whether a su bsidy continues to exist, the imposition of another 
remedy available under the WTO Agreement  must also be taken into account , particularly given that this 
is an action taken by the importing Member itself. 
115. Lastly, China contends that the Panel' s interpretation of Article 19.4 of the SCM Agreement  is 
antithetical to the object and purpose of the SCM Agreement , and would convert measures meant to be 
remedial into measures that are essentially pun itive in nature.  The object and purpose of the 
SCM Agreement is to strengthen and improve GATT discip lines relating to the use of both subsidies 
and countervailing measures while, at the same time , recognizing the right of Members to impose 
such measures under certain conditions.  The SCM Agreement thus reflects a delicate balance and 
Part V, in particular, "is aimed at striking a ba lance between the right to impose countervailing duties 
to offset subsidization that is causing injury, and th e obligations that Members must respect in order to 
do so".120  China emphasizes that chief among such obligations is Article 19.4. 
116. China adds that, even though an analysis of object and purpose is an integral part of the 
general rule of interpretation pr escribed by Article 31(1) of the Vienna Convention , the Panel did not 
address whether its interpretation of Article 19.4 w as consistent with the ob ject and purpose of the 
SCM Agreement .  Indeed, the Panel only dealt with obj ect and purpose in order to dismiss an 
argument that China never made, namely, that the object and purpose of the SCM Agreement is to 
impose disciplines with respect to not only the use of countervailing duties but also the use of anti-
dumping duties.  China clarifies that its argument w as, and remains, that it is inconsistent with the 
object and purpose of the SCM Agreement  to permit Members to impose countervailing duties without 
                                                      
119China's appellant's submission, paras. 520 and 521 (quoting Appellate Body Report, US – Upland 
Cotton , paras. 549 and 550). 
120China's appellant's submission, para. 523 (quoting Appellate Body Report, US – Carbon Steel , 
para. 74).  WT/DS379/AB/R 
 Page 47 
 
 
  taking into account the fact that they offset th e same subsidies through the manner in which they 
calculate anti-dumping duties. 
117. China addresses three elements of "context"  taken into account by the Panel in its 
interpretation of Article 19.4:  (i) Article VI:5 of the GATT 1994;  (ii) the Tokyo Round Agreement 
on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs 
and Trade121 (the " Tokyo Round Subsidies Code ");  and (iii) the Protocol on the Accession of the 
People's Republic of China to the WTO122 ("China's Accession Protocol").  China submits, however, 
that the Tokyo Round Subsidies Code  is not "context" within the meaning of Article 31 of the 
Vienna Convention  but, at most, a circumstance surrounding the conclusion of the SCM Agreement 
and thus a supplementary means of in terpretation under Article 32 of the Vienna Convention .  China 
further questions how its Accession Protocol, negotia ted subsequent to Artic le 19.4, could provide 
evidence of the intent of the drafters of that provision. 
118. China disagrees with the Panel that its in terpretation of Article 19.4 is supported by 
Article VI:5 of the GATT 1994.  Using a contrario  reasoning, the Panel observed that, because 
Article VI:5 of the GATT 1994 prohibits a Member from offsetting the same subsidy twice in the case 
of export subsidies, this provision permits  offsetting the same subsidy twice in the case of domestic 
subsidies.  The Panel then used this a contrario  interpretation as context to interpret Article 19.4 of 
the SCM Agreement as not prohibiting the imposition of double remedies.  It is not disputed that 
Article VI:5 of the GATT 1994 is premised on the assumption that an export subsidy will reduce a 
producer's export price relative to normal value and therefore create a dumping margin that would not 
otherwise exist.  As such, this provision addr esses a particular instance in which double remedies 
could be imposed in respect of the same unfair trad e practice.  China contends that the Panel engaged 
in an extraordinary interpretativ e leap to conclude, from this relatively narrow provision, that the 
drafters of the SCM Agreement  affirmatively intended to permit double remedies in the case of 
domestic subsidies. 
119. China argues that, in considering Article VI :5 of the GATT 1994, the Panel should have 
sought to interpret all of the provisions before it in a way that gave meaning to all of them, 
harmoniously, and points to the A ppellate Body's approach in US – Upland Cotton  as an example as 
to how this might have been done.  In that case, the Appellate Body noted that Article 6.3 of the 
Agreement on Agriculture  does not specifically refer to impor t substitution subsidies, but reasoned 
that, because Article 3.1(b) of the SCM Agreement  expressly prohibits  import substitution subsidies, 
                                                      
121BISD 26S/56, entered into force 1 January 1980. 
122WT/L/432. WT/DS379/AB/R 
Page 48  
 
  the drafters of the Agreement on Agriculture  "would have included 'an equally explicit and clear 
provision' if they had intended to authorize  import substitution subsidies within the Current Total 
AMS".
123  On a similar approach, according to China, the Panel should have referred to the absence of 
any indication that the drafters of Article VI:5 considered the issue of double remedies beyond the 
narrow circumstances in which an export subsi dy literally creates a "situation of dumping", and 
examined Article 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994 in the light of 
Appellate Body jurisprudence and the object a nd purpose of imposing meaningful disciplines on the 
use of countervailing measures.  The Panel shoul d also have taken account of the paradoxical 
outcome produced by its a contrario interpretation of Article VI:5, namely, that double remedies are 
prohibited in respect of export subsidies but are pe rmitted in respect of domestic subsidies, even 
though export subsidies are prohibited under Article 3 of the SCM Agreement  whereas domestic 
subsidies are merely actionable.  China submits that, if the drafters of the SCM Agreement  had 
intended to permit double remedies in respect of subsid ies that are merely actionable, they would have 
explicitly provided for such a result. 
120. China contends that the Panel erred in considering that the non-inclusion in the 
SCM Agreement of a provision like Article 15 of the Tokyo Round Subsidies Code , which requires 
Members to choose between the use of an NM E anti-dumping methodology or the imposition of 
countervailing duties, suggested that the drafters of the SCM Agreement  intended to permit the 
imposition of double remedies with respect to domes tic subsidies.  China alleges that, whether as 
context or as a supplementary means of interpretati on, the only inference that can be drawn from the 
absence of a similar provision in the SCM Agreement is that Members no longer intended to prohibit 
the concurrent application of these two remedies.  This does not mean that the drafters of the 
SCM Agreement  affirmatively considered and decided that  Members should be allowed to apply these 
two remedies concurrently in a manner that results in  offsetting the same subsidies twice.  China adds 
that there is no evidence that th e avoidance of such double remedi es was the original rationale for 
Article 15 of the Tokyo Round Subsidies Code .  China also distinguishes this dispute from US – 
Underwear , to which the Panel referred, where the Appe llate Body held that the absence, in the 
Agreement on Textiles and Clothing , of a provision expressly authorizing the backdating of import 
restraint measures, such as the one that had exis ted under a predecessor agreement, simply reinforced 
its interpretative conclusion that such retro active application was no longer permissible.   
121. China contests the Panel's understanding that  Section 15 of China's Accession Protocol, 
which does not contain an express prohibition on th e imposition of double remedies, suggests that 
                                                      
123China's appellant's submission, para. 535 (quoting Appellate Body Report, US – Upland Cotton , 
para. 547).  WT/DS379/AB/R 
 Page 49 
 
 
  Article 19.4 of the SCM Agreement  was not intended to address the issue of double remedies.  China 
also argues that the absence of a provision prohibiting the imposition of double remedies in 
Section 15 of China's Accession Protocol is equally c onsistent with the proposition that the drafters of 
the Protocol were aware that Article 19.4 of the SCM Agreement  already addressed this concern. 
(c) Interpretation of Article 19.3 of the  SCM Agreement  
122. China recalls that Article 19.3 of the SCM Agreement requires that countervailing duties be 
levied in the "appropriate" amounts, and considers th at, if an importing Member has offset a subsidy 
through a manner in which it calculates anti-dumping duties, it must take this into account in 
determining the "appropriate" amount of a countervailing duty to levy.  In this regard, the panel in 
EC – Salmon (Norway)  considered, in interpreting the corres ponding provision in Article 9.2 of the 
Anti-Dumping Agreement , that the "appropriate" amount of an anti-dumping duty must be an amount 
that results in offsetting or preventing dumping.  Applying the same reasoning to the interpretation of 
Article 19.3, China argues that, according to Ar ticle VI:3 of the GATT 1994 and footnote 36 to 
Article 10 of the SCM Agreement , the purpose of a countervailing duty is to "offset" the amount of 
any subsidy attributable to the imported product under investigation and that, therefore, the "appropriate" amount of a countervailing duty can be no greater than the amount necessary to offset 
the subsidy. 
123. China disagrees with the Panel's statement that "the imposition of anti-dumping duties 
calculated under an NME methodology has no impact  on whether the amount of the concurrent 
countervailing duty is 'appropriate' or not."
124  Unlike the interpretative approach taken by the panel in 
EC – Salmon (Norway) , the Panel's interpretation of Article 19.3 is divorced from any consideration 
of the purpose of countervailing duties, and tr eats anti-dumping and countervailing duties as 
"hermetically isolated" from each other, notwithstan ding the Panel's recognition that certain methods 
of calculating anti-dumping duties can have the effect  of offsetting subsidies, and notwithstanding the 
fact that anti-dumping and countervailing duties are both remedies in respect of unfairly traded imports whose legal parameters are defined by the same treaty.  China reiterates that any 
determination of the "appropriate" amount of a countervailing duty must  take into account the extent 
to which the investigating authority offsets the same subsidies through the manner in which it 
calculates anti-dumping duties in respect of the same  imported products and that, for this reason, as 
well as for the reasons discussed in connection with  its arguments regarding the interpretation of 
Article 19.4, the Panel's findings u nder Article 19.3 were in error. 
                                                     
 
124China's appellant's submission, para. 553 (quoting Panel Report, para. 14.128). WT/DS379/AB/R 
Page 50  
 
  (d) Consequential Claims under Articles 10 and 32.1 of the 
SCM Agreement  
124. China requests the Appellate Body to reverse th e Panel's rejection of China's consequential 
claims under Articles 10 and 32.1 of the SCM Agreement .  These Panel findings were made in the 
light of its findings regarding Articles 19.3 and 19.4 of the SCM Agreement .  Because China considers 
that the Panel's prior findings on Articles 19.3 and 19 .4 were in error, Chin a requests the Appellate 
Body to reverse these findings and to complete  the analysis and find that the USDOC acted 
inconsistently with the obligations of the United States under Articles 10 and 32.1 of the 
SCM Agreement by imposing and maintaining counterva iling duties without determining whether 
those duties simultaneously offset th e same subsidies by virtue of the methodology used to calculate 
anti-dumping duties. 
125. China contests the Panel's finding that the USDOC had no obligation under Article 10 of the 
SCM Agreement  to consider whether the use of an NME methodology in a parallel anti-dumping 
investigation had the "effect" of offsetting the sam e alleged subsidies.  The Panel's finding was 
premised on its prior, erroneous finding that the imposition of anti-dumping duties calculated under an 
NME methodology is not an "event" that investig ating authorities must take into account in 
determining the amount of a counter vailable subsidy that is attribut able to the imported product under 
investigation.  China argues that, having ac knowledged the potential for "double counting", the 
USDOC was required to take all necessary actions to ensure that the imposition of countervailing 
duties did not result in offsetting the same subsidies twice, but that it took no steps whatsoever to 
investigate and avoid the imposition of double remedies. 
(e) Completion of the Analysis 
126. Based on all of the above arguments, China conten ds that the Panel's finding with respect to 
"double remedies" was based on multiple errors of le gal interpretation and that, properly interpreted, 
multiple provisions of the SCM Agreement  establish that Members are obliged to investigate and 
avoid the imposition of double remedies in respect of the same subsidies.  Accordingly, China 
requests the Appellate Body to reverse the Panel's fi nding and to complete the analysis and find that 
the USDOC acted inconsistently with Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and 
Article VI:3 of the GATT 1994, in all of the investiga tions at issue, by failing to take steps to avoid 
offsetting the same subsidies twice. 
127. China argues that it is undisputed that the US DOC took no steps to investigate and avoid the 
imposition of double remedies, notwith standing its recognition of the po ssibility of "double counting".   WT/DS379/AB/R 
 Page 51 
 
 
  The reason for this—that the USDOC considered that  it had neither an obligation nor the authority 
under United States law to do so—is immaterial to the United States' obligations under the covered 
agreements.  China contends that, contrary to an  apparent suggestion by the Panel, it was not for 
China to "conclusively establish"125 that double remedies resulted from the concurrent imposition of 
anti-dumping duties calculated using an NME methodology and countervailing duties in the 
investigations at issue.  Rather, the USDOC had an  affirmative obligation to determine whether, and 
in what amount, double remedies would occur in the facts of these investigations.  Since it 
indisputably did not do so, the Appellate Body may reach a finding of inconsistency upon reversal of 
the Panel's legal interpretation of the relevant pr ovisions.  In any event, China also refers to 
submissions that it made before the Panel that it cons iders shows that China did, in fact, demonstrate, 
based on undisputed evidence in th e record, that double remedies o ccurred in the investigations at 
issue. 
B. Arguments of the United States – Appellee 
1. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies  
128. The United States requests the Appellate Body to uphold the Panel's finding that the 
USDOC's determinations that certa in SOEs and SOCBs are "public bodi es" were not inconsistent with 
Article 1.1(a)(1) of the SCM Agreement , and to find that the Panel di d not act inconsistently with 
Articles 3.2 and 11 of the DSU.  The United States  argues that the Panel examined the ordinary 
meaning of the term "public body" in its context and in the light of the object and purpose of the 
SCM Agreement , and correctly found that the term "public  body" means an entity controlled by a 
government and that such entities are not necessarily,  as China contends, limited to entities vested 
with government authority to perform governmental functions. 
(a) The Ordinary Meaning of the Terms of the Treaty 
(i) Dictionary Definitions 
129. The United States recalls the dictionary defi nitions of the words "public" and "body" 
examined by the Panel, which indicate that the or dinary meaning of the term "public body" includes 
corporations or entities belonging to the community or  nation.  The Panel also considered the relevant 
provisions in the French and Spanish ve rsions of Article 1.1(a)(1) of the SCM Agreement ("organisme 
public " and " organismo público ") and found that the definitions of the words " public " and " público " 
include the notion of belonging to, or being controlled by, the State or government, and not 
                                                      
125China's appellant's submission, para. 561 (quoting Panel Report, para. 14.76). WT/DS379/AB/R 
Page 52  
 
  necessarily the performance of governmental functions .  On this basis, the Panel properly concluded 
that such definitions indicate that the ordinary m eaning of "public body" may encompass, but is not 
limited to, entities authorized by la w to perform functions of a gover nmental or public character and, 
in fact, performing acts in the exercise of such authority.  The United States reiterates that the 
ordinary meaning of this term refers to entities owned or controlled by a government. 
(ii) Context 
130. According to the United States, all of China's c ontextual arguments attempt to make the point 
that a "public body" is no different from a government  agency.  The Panel, however, rightly rejected 
such an interpretation and properly concluded, instea d, that the context supports an interpretation of 
the term "public body" as referring to an entity c ontrolled by a government.  The United States argues 
that the use of the distinct terms "a government" a nd "any public body" as part of a disjunctive phrase 
in Article 1.1(a)(1) of the SCM Agreement  suggests that these terms ha ve distinct and different 
meanings.  The word "government" refers to the form al apparatus of a State (its ministries, agencies, 
and other offices) that has the power and authority to govern.  Because China's interpretation of the 
term "public body" differs in no significant way from the word "government" ―which includes 
government agencies ―accepting such an interpretation would reduce the term "public body" to a 
redundancy.  The United States also points out th at China's proposed standard for determining 
whether an entity is a "public body" is exactly the same as the standard articulated by the 
Appellate Body in Canada – Dairy for determining whether an entity is a "government entity", even 
though Article 1.1(a)(1) of the SCM Agreement  lacks the type of direct textual linkage between the 
two terms that are found in the phrase "government or their agencies " in Article 9.1 of the Agreement 
on Agriculture .  
131. The United States also agrees with the Panel th at the word "any" preceding the term "public 
body" suggests a broader, rather than a narrower, mean ing of this term, that is, "public bodies of any 
kind".  Some such entities might, as China suggests, be  more akin to government agencies, but all are 
entities controlled by the government and, thus, proper ly considered public bodies.  In addition, the 
use of the word "any" suggests that the term " public body" does not relate back to the term 
"government".  The language actually used in Artic le 1.1(a)(1) must be given effect, and this 
provision does not refer to "government or pub lic body", "government or its public bodies", 
"government or another public body", or  "government or similar public bodies". 
132. Like the Panel, the United States considers that  the grouping of the terms "a government" and 
"public body" into a collective reference as "govern ment" is simply a drafting technique to avoid 
repeating the phrase "a government or any public body within the territory of a Member".  This  WT/DS379/AB/R 
 Page 53 
 
 
  drafting technique is similar to that used in Article 2.1 of the SCM Agreement , which refers to "an 
enterprise or industry or group of enterprises or in dustries" as "certain enterprises", notwithstanding 
that the terms "enterprise" and "industry" clearly have different meanings.  Although it considers that 
China "greatly overstates the significance of the use of the shorthand term 'government'"126, the 
United States asserts that, even assuming that th e grouping of the terms "a  government" and "public 
body" under the term "government" has some meani ng besides as a drafting technique, such meaning 
is that, as the panel in Korea – Commercial Vessels  found, if an entity is controlled by the government 
(or other public body), any action by that entity is attributable to the govern ment, and should therefore 
fall within the scope of Article 1.1(a)(1) of the SCM Agreement . 
133. As for the context provided by the term "pri vate body" in Article 1.1(a)(1)(iv) of the 
SCM Agreement , the United States observes that dictionary  definitions and everyday notions suggest 
that the word "public" is "the opposite of private", a nd that "private" refers to something unrelated to 
government.  Although China objects to it, the United St ates considers that the Panel's reference to the 
term "private enterprise" instead of "private bod y" was of no moment because the word "body" is 
defined to include "corporation" or other groups of people working toward some common purpose or, 
in other words, an enterprise.  The important c ontext provided by the term "private body", which 
China ignores, is that enterprises owned or cont rolled by the government cannot be considered 
"private bodies" without eviscerating the meaning of the word "private".  This too supports the view 
that such enterprises must be "public bodies".  The United States argues that the requirement for 
entrustment or direction of functi ons described in Article 1.1(a)(1)(i)-(iii) does not mean that a public 
body must be vested with governmental functions so  that it can entrust or direct a private body to 
carry them out.  The language in subparagraph (iv) simply refers back to the functions described in 
subparagraphs (i)-(iii) that would otherwise normally be carried out by, and vested in, governments or 
any public bodies.  There is nothing inherently  governmental about the functions described in 
subparagraphs (i) and (iii), and the language of subparagraph (iv) simp ly ensures that only the actions 
covered in subparagraphs (i)-(iii) are captured by in stances of entrustment or direction of a private 
body by a government or public body.  The United States contests China's understanding that the interpretation that a public body must be vested w ith governmental authority is confirmed by the 
various determinations in the DRAMS cases.  The DRAMS investigation was something of an 
anomaly, because government ownership of the banks was temporary and due to the Korean financial 
crisis.  Thus, the DRAMS investigation is not fully reflective of the USDOC's analysis of the "public 
body" issue, and in other cases the USDOC has found ownership or control to be indicative of public 
body status. 
                                                     
 
126United States' appellee's submission, para. 75. WT/DS379/AB/R 
Page 54  
 
  134. With respect to Article 1.1(a)(1)(i)-(iii), the United States points out that the Appellate Body 
stated in Canada – Dairy  that the essence of "government" is th at it enjoys the effective power to 
"regulate", "control", or "supervise" individuals.
127  This definition does not include any notion of the 
government being inherently involve d with lending, selling, or any ot her activity in the marketplace.  
The United States argues that, accordingly, the Panel correctly concluded that the activities listed in 
Article 1.1(a)(1)(i)-(iii) are more inherently tho se of businesses or firms.  Thus, limiting the term 
"public body" to entities performing governmental f unctions would deprive much of Article 1.1(a)(1) 
of meaning in many cases.   
135. Finally, the United States asserts that the Panel correctly declined to treat Article 9.1 of the 
Agreement on Agriculture and the Appellate Body's interp retation of that provision in Canada – Dairy 
as "decisive context" for the meaning of the term "public body" in the SCM Agreement .  The terms of 
Article 9.1 of the Agreement on Agriculture  are different from the terms of Article 1.1(a)(1) of the 
SCM Agreement  in all three languages128, and both the English and French versions of Article 9.1 link 
the term "governments" or " pouvoirs publics " and the term "agencies" or " organismes " through the 
word "their" or " leurs ", a link which is noticeably absent from Article 1.1(a)(1) of the 
SCM Agreement .  There is no reason why the Appellate B ody's interpretation of  a different term, 
situated in a different context, in a different agreement that has its own object and purpose, should 
dictate the interpretation of "public body".  Moreove r, the United States alleges that, in its arguments, 
China repeatedly cites to the first part of the following sentence from the Appellate Body report in 
Canada – Dairy , while omitting the last (italicized) part of the sentence:  "[a governmental agency is] 
an entity which exercises powers vested in it by a 'government' for the purpose of performing 
functions of a 'governmental' character, that is, to 'regulate', 'restrain ', 'supervise' or 'control' the 
conduct of private citizens ."129  This description of what constitu tes "government functions" illustrates 
just how restrictive China's proposed interpretation of  the term "any public body" is.  It follows, for 
the United States, that the context of the term "pub lic body" supports an interpretation of that term 
that includes entities controlled by a government, but not necessarily exercising governmental functions, and that the terms in Article 9.1 of the Agreement on Agriculture , as interpreted by the 
Appellate Body in Canada – Dairy , do not provide relevant context that requires a different result. 
                                                     
 
127United States' appellee's submission, para. 91 (quoting Appellate Body Report, Canada – Dairy , 
para. 97). 
128Article 9.1(a) of the Agreement on Agriculture  refers to "governments or their agencies";  " les 
pouvoirs publics ou leurs organismes ";  "los gobiernos o por organismos públicos ".  Article 1.1(a)(1) of the 
SCM Agreement  refers to "a government or any public body within the territory of a Member";  " des pouvoirs 
publics ou de tout organisme public du ressort territorial d'un Membre ";  " un gobierno o de cualquier 
organismo público en el territorio de un Miembro ". (United States' appellee's submission, para. 94) 
129United States' appellee's submission, para. 96 (quoting Appellate Body Report, Canada – Dairy , 
para. 97). (emphasis added by the United States)  WT/DS379/AB/R 
 Page 55 
 
 
  (iii) Object and Purpose of the SCM Agreement 
136. The United States recalls that "the object and purpose of the SCM Agreement  ... includes 
disciplining the use of subsidies and countervailin g measures while, at the same time, enabling WTO 
Members whose domestic industries are harmed by  subsidized imports to use such remedies"130, and 
submits that the SCM Agreement  must not be interpreted rigidly or formalistically in a manner that 
would undermine its disciplines on trade-distorting s ubsidization.  Interpreting the term "public body" 
as referring to entities controlled by the government preserves the strength and effectiveness of the 
subsidy disciplines, and inhibits circumvention by ensuring that governments cannot escape those 
disciplines by using entities under their control to accomplish tasks that would potentially be subject 
to those disciplines if the governments themselves unde rtake them.  In contrast, China's restrictive 
interpretation would render some s ubsidization unreachable, which would be at odds with the object 
and purpose of the SCM Agreement . 
137. The United States suggests that China's argument that Article 1.1(a)(1)(iv) operates as the 
exclusive anti-circumvention provision in the SCM Agreement  has no support in the Agreement.  
Requiring proof of government entrustm ent or direction of an entity it owns or controls would be akin 
to inquiring whether the government entrusted or directed itself, and proving entrustment or direction in such circumstances would be difficult or impossi ble.  With respect to the DRAMS cases, to which 
China refers as proof that the entrustment or dir ection provision works even when the entrusted or 
directed entities are government owned, the Unite d States points out that, in those cases, the 
government ownership was temporary and in place due to  the Korean financial crisis, and that the fact 
that the investigating authority could make a dete rmination of entrustment or direction in one case 
does not demonstrate that it would not be possible for a government to hide evidence of entrustment 
or direction in other situations.  The United States disagrees, in this regard, with China's assertion that 
the Panel's finding that majority government ownershi p is sufficient to establish that an entity is a 
"public body" is not logical, given that government  ownership alone cannot establish entrustment or 
direction.  This is because an entrustment or  direction analysis is an analysis of the actions  of the 
government or public body, whereas ownership is not an action but a state , and an analysis of whether 
an entity is a public body is an analysis of  the state, or the nature, of that entity. 
138. Finally, the United States agrees with the Pane l that an interpretation of the term "public 
body" as meaning an entity controlled by a government is not so broad that it undermines the object
                                                     
 
130United States' appellee's submission, para. 102 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 95). WT/DS379/AB/R 
Page 56  
 
  and purpose of the SCM Agreement .  To the contrary, it simply ensures that such entities are subject to 
the potential  disciplines of the Agreement subject to the othe r elements of a subsidy that must also be 
examined. 
(iv) Reference to Municipal Laws 
139. The United States asserts that China is incorrect  in characterizing the Panel's reference to 
municipal laws as the "sole reason" why the Panel did not agree with China's proposed interpretation 
of the term "public body" and in asserting that such reference "infected"
131 key elements of the Panel's 
decision.  Rather, the Panel examined the dictiona ry definitions of the term "public body" and its 
French and Spanish counterparts, and found that th ese were not limited to the meaning suggested by 
China.  Since the Appellate Body has cautioned th at dictionary definitions alone are not always 
capable of resolving the question of interpretation, the Panel's further reference to the definitions and 
practices in different jurisdictions as to what t ypes of entity are considered "public bodies" was 
appropriate.  This examination of the use of the te rm "public body" in the "municipal law" of various 
jurisdictions was merely part of the Panel's cons ideration of the ordinary meaning of that term, 
consistently with the requirements of the Vienna Convention .  In response to China's suggestion that 
the Panel erred in its analysis because public bodies are not defined exclusively or even primarily by 
reference to government control in the jurisdictions  referred to by the Panel, the United States points 
out that the Panel's task was to determine whether the term "public body" is limited to entities vested 
with authority from the government to perform gove rnmental functions and in fact performing such 
functions.  The United States submits that the Panel properly found that usage of the term in various 
jurisdictions confirmed that its ordinary meaning is not so limited, and can cover a wide array of 
entities. 
(b) The ILC Articles 
140. The United States considers that the Panel co rrectly found that the ILC Articles are not 
relevant rules of international law that must be taken into account in the interpretation of the term 
"public body" in Article 1.1(a)(1) of the SCM Agreement .  The United States points out that China 
devotes more than 25 per cent of its arguments on th e "public body" issue to the ILC Articles, and 
contends that this heavy reliance is misplace d and simply reinforces how disconnected China's 
proposed interpretation is from the actual text of the SCM Agreement .  In the view of the 
United States, the Panel properly asked whether th e ILC Articles "would override [its] analysis and 
                                                      
131United States' appellee's submission, para. 59 (referring to China's appellant's submission, 
paras. 103-132).  WT/DS379/AB/R 
 Page 57 
 
 
  conclusions based on the text of the SCM Agreement itself"132, and correctly answered this question 
in the negative. 
(i) Status of the ILC Articles 
141. The United States asserts that the ILC Articles are not a subsequent agreement between the 
parties regarding the interpretation of the treaty or the application of its provisions because they make 
no reference to the SCM Agreement or its provisions, and also because they are not an "agreement" 
between any parties, as the United Nations General A ssembly has merely "take[n] note of" them.  The 
United States adds that the ILC Articles are not sub sequent practice in the application of the treaty, 
which establishes the agreement of the parties rega rding its interpretation, and notes that China has 
not suggested that they are. 
142. With respect to the status of the ILC Ar ticles, the United States recalls that in US – Line Pipe  
the Appellate Body explained that "the Intern ational Law Commission's Draft Articles ... do not 
constitute a binding legal instrument as such".133  While the Appellate Body has recognized that 
certain parts of the ILC Articles may be understood as setting out recognized principles of customary international law, the United States notes that, give n the level of detail and fine line distinctions 
constructed in Articles 5 and 8 of the ILC Articles,  it remains an open and contested question whether 
all of these details and distinctions have risen to th e status of customary international law.  Only if 
these Articles were customary international law could they be said to be "applicable in the relations 
between the parties" and, as a result, potentially rele vant in this dispute under Article 31(3)(c) of the 
Vienna Convention . 
(ii) Relevance of the ILC Articles 
143. The United States asserts that, even assuming th at the ILC Articles could be considered as 
"rules of international law applicable in the relati ons between the parties", the Panel correctly found 
that they are not "relevant" to the interpretation of the term "public body" because their purpose is not 
to define the primary rules establishing obligations u nder international law, but rather to define when 
a State is responsible for a breach of primary rules.  The primary rule in the context of countervailing 
duties is contained in Article 10 of the SCM Agreement , which requires compliance with the 
provisions of Article VI of the GATT 1994 and of the SCM Agreement  including Article 1.1(a)(1).  
The question in this dispute is whether the United States breached this primary obligation.  The ILC
                                                     
 
132United States' appellee's submission, para. 109 (quoting Panel Report, para. 8.84). 
133United States' appellee's submission, para. 114 (quoting Appellate Body Report, US – Line Pipe , 
para. 259). WT/DS379/AB/R 
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  Articles are not helpful in determining whether such a breach occurred.  Rather, they would be 
relevant only if there was some question as to whethe r the actions of the USDOC were attributable to 
the United States.  Furthermore, the question as to whether a "public body" provided goods or loans in 
China is not a question of attribution of "wrong ful" acts to China, because Article 1.1 of the 
SCM Agreement , which defines a "subsidy", does not itself impose any obligation on Members.  The 
United States agrees with the Pa nel's recognition that a determina tion that a government-controlled 
entity is a "public body" under the SCM Agreement , or that such public body has provided a financial 
contribution, is not a determination that the Member has engaged in "wrongful conduct".   
144. Even assuming that providing a financial contribut ion is a wrongful act within the meaning of 
the ILC Articles and that the ILC Articles are not ot herwise inapplicable, the United States asserts that 
the SCM Agreement contains special rules of international law that govern when a financial 
contribution occurs and is attribut able to a State, and is, thus, lex specialis within the meaning of 
Article 55 of the ILC Articles.  In response to Chin a's argument that, in orde r for a provision to be lex 
specialis , there must be some "actual inconsistency" w ith or "discernible intention" to exclude the 
other provision, the United States submits that  there is such inconsistency between China's 
interpretation of the ILC Articles and the proper interpretation of the term "public body" in 
Article 1.1(a)(1) of the SCM Agreement , because the interpretation of the ILC Articles advocated by 
China is inconsistent with the ordina ry meaning of the term "public body". 
145. The United States recalls that, although  Korea made similar arguments in Korea – 
Commercial Vessels  to those made by China in this dispute,  that panel rejected the same test drawn 
from Article 5 of the ILC Articles that China propos es here, and did not find that the ILC Articles are 
relevant rules of international law, applicable in th e relations between the parties, that must be taken 
into account when interpreting the term "public body". 
146. The United States maintains that China mi sreads the Appellate Body report in US – 
Countervailing Duty Investigation on DRAMS .  The issue in that case was, unlike this dispute, 
whether certain private bodies were entrusted or di rected by the government within the meaning of 
Article 1.1(a)(1)(iv) of the SCM Agreement .  Although the Appellate Body referred to the ILC 
Articles in passing in a footnote, it did not state that  they were relevant rules of international law or 
that Articles 5 and 8 of the ILC Articles must be ta ken into account in interpreting Article 1.1 of the 
SCM Agreement .  The United States also argues that the co rporate law principle of the separateness of 
owners from corporations or firms, upon which the commentary on Article 8 of the ILC Articles 
relies, is not always appli cable in the context of the SCM Agreement , and that a reference to that 
commentary in a footnote in an Appellate Body report  does not confirm that an entity cannot be a  WT/DS379/AB/R 
 Page 59 
 
 
  "public body" unless exercising elements of governme ntal authority.  The United States also points 
out that, in US – Countervailing Duty Investigation on DRAMS , the Appellate Body acknowledged 
the panel's statement that the relevant investiga ting authority might have been entitled to treat a 
100-per cent government-owned entity as a public body, and that the panel in EC – Countervailing 
Measures on DRAM Chips  made a similar statement. 
(c) Findings by Previous Panels 
147. The United States takes the view that the Pane l provided a thorough, objective, reasoned legal 
analysis of the meaning of Article 1.1(a)(1) of the SCM Agreement , in accordance with the customary 
rules of interpretation of international law, and correctly interpreted the term "public body" as not 
limited to an entity vested with authority to pe rform governmental functions, but rather as including 
any entity that is controlled by a government.  The United States further observes that previous panels 
have interpreted "public body" in the same way an d that, while the Appellate Body is not bound by 
the findings of these panels, their consistent appr oach indicates that a consensus has emerged among 
panels, and that WTO Members have "legitimate expect ations" as to the meaning of the term "public 
body". 
148. The United States points out that the panel in EC and certain member States – Large Civil 
Aircraft  found a government-owned financial institution to be a "public body"134, and that the panel in 
Korea – Commercial Vessels  concluded that "an entity will constitut e a 'public body' if it is controlled 
by the government (or other public bodies)".135  The latter panel rejected Korea's argument that an 
organization is a public body only when it acts in an official capacity or is engaged in governmental 
functions, which the United States considers is es sentially identical to China's argument in this 
dispute, although China asserts otherwise.  Both Korea's position in Korea – Commercial Vessels  and 
China's position in this dispute imply that an entity could change from a public to a private body on a 
daily or even a transactional basis, depending on  the function it performs, which only underscores 
that, as the United States contends and the Panel fou nd, the "public body" question must relate to the 
nature of an entity and not to its acti ons or behaviour in any given in stance.  The United States further 
points out that both of these arguments confuse the se parate legal elements of "financial contribution" 
and "benefit" and that, partly for this reason, the Korea – Commercial Vessels  panel also declined 
Korea's invitation to import concepts from the ILC Articles.  
                                                      
134United States' appellee's submission, para. 135 (referring to Panel Report, EC and certain member 
States – Large Civil Aircraft  (not yet adopted), para. 7.1359). 
135United States' appellee's submission, para. 136 (quoting Panel Report, Korea – Commercial Vessels , 
para. 7.50). WT/DS379/AB/R 
Page 60  
 
  (d) The USDOC's "Public Body" Determinations 
149. The United States submits that the Panel, based on its correct legal interpretation of the term 
"public body", properly found that the USDOC's de terminations in the CWP, LWR, LWS, and OTR 
investigations that certain SOEs are "public bodies"  and in the OTR investigation that certain SOCBs 
are "public bodies" were not inconsiste nt with Article 1.1(a)(1) of the SCM Agreement , and that the 
Appellate Body should affirm this finding.  
150. The United States notes, in this regard, that the Panel found that there was "no legal error, in 
analyzing whether an entity is a public body, in giving primacy to evidence of majority government-
ownership"
136, and noted that, in the USDOC proceedings, the respondents and the Government of 
China did not provide evidence, and for the most pa rt there was none on the record, beyond evidence 
of government ownership.  The United States unde rlines that China does not challenge these aspects 
of the Panel's findings, and does not argue that g overnment ownership did not equate to government 
control, that the records in the investigations did not support the USDOC's findings of ownership or 
control, or that the Panel erred in concluding that the USDOC pr operly found the relevant entities to 
be owned or controlled by the government. 
2. Article 2 of the SCM Agreement :  Specificity  
(a) Article 2.1(a) of the SCM Agreement :  "Subsidy" and "Explicitly" 
151. The United States requests the Appellate Body to uphold the Panel's finding that the 
USDOC's determination in the OTR investiga tion, that the policy lending subsidy was de jure  
specific, was not inconsistent with Article 2.1(a) of the SCM Agreement .  Chinese policy documents 
at the national, provincial, and municipal levels establish "encouraged" proj ects to which lending is 
provided and "restricted" and "eliminated" projects to which lending is prohi bited, and demonstrate 
that access to the policy lending subsidy was exp licitly limited to certain enterprises, including the 
OTR industry.  After examining the totality of th e evidence that the USDOC  considered, the Panel 
correctly concluded that the evidence on the record  supported the USDOC's specificity determination.  
The United States submits that the Panel's interpretati on of Article 2.1(a) was correct and its analysis 
of the evidence was thorough. 
                                                      
136United States' appellee's submission, para. 147 (quoting Panel Report, para. 8.136).  WT/DS379/AB/R 
 Page 61 
 
 
  (i) Interpretation 
152. The United States asserts that, contrary to the allegations made by China, the Panel properly 
interpreted the text of Article 2. 1(a) consistently with the customary rules of interpretation.  The 
United States observes that, in criticizing the Pane l's "functional" interpretation of Article 2.1(a), 
China mischaracterizes the Panel as having departed from the text.  In fact, the Panel's functional approach was a method for analyzing the text and, in particular, the phrase "explicitly limits access to a subsidy".  The Panel considered China's proposed "textual" analysis and th e definition of the word 
"subsidy", but having looked at the text "from a functional standpoint"
137, disagreed with China's view 
of the significance of the word "subsidy" for the purpose of interpreting Article 2.1(a). 
153. With respect to the requirement in Article 2.1(a) that a limitation be "explicit", the 
United States contends that the Panel did not find an "implied or suggested" limitation to be sufficient 
for the purposes of de jure  specificity, as China argues.  The Pa nel recognized that there are many 
ways in which access to a subsidy could be expl icitly limited, including an explicit limitation on 
access to a financial contribution, which would neces sarily also explicitly limit access to the subsidy.  
As for the Panel's alleged failure to examine the or dinary meaning of the term "explicitly", the mere 
fact that the Panel did not refer to any dicti onary definition of the word "explicitly" does not 
demonstrate any such failure.  The United States points out that Article 31 of the Vienna Convention  
does not oblige a treaty interpreter to consult a dictionary in all cases, and the absence of any 
indication in the Panel Report that the Panel did so does not, in itself, constitute legal error. 
154. The United States also recalls that, before th e Panel, China acknowledged that there was no 
disagreement among the parties that an "explicit" lim itation is one based on the "actual words of the 
law"138, and that there is also no disagreement as to whether the USDOC correctly reported the "actual 
words" used in the various policy planning documen ts.  Thus, there was no need for the Panel to 
consider the meaning of the term "explicitly" in isolation. 
155. The United States considers that the Panel properl y examined the context in which the text of 
Article 2.1(a) of the SCM Agreement  should be interpreted.  The Panel properly noted that nothing in 
Article 2 would narrow down the possible forms of subsidization that fall within the definition in 
Article 1 and that Article 1.2 treats the concepts of subsidy and specificity as separate, and recalled 
that the Appellate Body in Brazil – Aircraft  found that "financial contribution" and "benefit" are 
independent concepts.  The United States highlights th at the Panel also signalled its agreement with 
                                                      
137United States' appellee's submission, para. 165 (quoting Panel Report, para. 9.25). 
138United States' appellee's submission, para. 170 (quoting China's response to Panel Question 64 after 
the first Panel meeting, para. 201). WT/DS379/AB/R 
Page 62  
 
  previous panels that analyzed the question of sp ecificity separately from financial contribution and 
benefit. 
156. According to the United States, the Panel's interpretation of Article 2.1(a) of the 
SCM Agreement  is also consistent with the object and purpose of the SCM Agreement , that is, to 
strengthen and improve GATT disciplines relating to  the use of both subsidies and countervailing 
measures, while recognizing the right of Members to impose such measures under certain conditions.  
The Panel concluded that China's proposed interpre tation, which would require  explicit limitation of 
both the financial contribution and the benefit, w ould open considerable scope for circumvention of 
the SCM Agreement  and is inconsistent with the object and purpose of the SCM Agreement .  The 
United States notes, in this respect, that the rele vant object and purpose under Article 31 of the Vienna 
Convention  is that of the treaty itself, and asserts th at China's arguments, which focus on the object 
and purpose of Article 2 of the SCM Agreement , are not germane to the proper interpretative analysis.  
Finally, the United States emphasizes that, while  China dismisses the Panel's concerns about 
circumvention with the assertion that "[s]ubsidies that are not de jure  specific under Article 2.1(a) can 
still be de facto  specific under Article 2.1(c)"
139, China never seriously addresses those concerns, 
namely, that accepting China's proposed interpretation of Article 2.1(a) "would have the effect of 
treating as non- de jure  specific a wide variety of subsidies  to which access was explicitly limited" and 
that, "where the details as to the actual distributio n of the subsidy could not be obtained, the subsidy 
would be left outside the scope of the SCM Agre ement in spite of its undeniably being explicitly 
limited to particular beneficiaries."140 
(ii) Application 
157. The United States requests the Appellate Body to reject China's conditional appeal of the 
Panel's finding that the economic planning documen ts relied upon by the USDOC established that its 
specificity determination was consis tent with Article 2.1(a) of the SCM Agreement . 
158. The United States characterizes as "misleading and incorrect"141 China's argument, on appeal, 
that policy lending by the SOCBs to the tyre indu stry could not be found to be specific because 
SOCBs, in addition to providing loans to the "e ncouraged" category, also provided loans to the 
"permitted" category.  There is no  evidence in the record before th e Panel or before the USDOC to 
support China's contention that SOCBs provided lo ans to the permitted category, and China does not
                                                      
139United States' appellee's submission, para. 179 (quoting China's appellant's submission, para. 227). 
140United States' appellee's submission, para. 180 (quoting Panel Report, para. 9.30). (emphasis added 
by the United States) 
141United States' appellee's submission, para. 185.  WT/DS379/AB/R 
 Page 63 
 
 
  identify any such evidence.  More over, according to the United States, reading Articles 12 and 13 of 
the Implementing Regulation together makes clear that the "'permitted' projects, due to their exclusion 
from the GOC Catalogue, are also excluded from government lending pursuant to the policy lending 
subsidy".142  As the Panel recognized, the existence of the "permitted" category further demonstrates 
that the policy lending subsidy was not generally  available within the Chinese economy.  The 
United States adds that, even assuming arguendo  that the "permitted" category is relevant to the 
specificity analysis, China is incorrect in asserting that the "permitted" and "encouraged" categories, 
taken together, are too broad to constitute "certain enterprises" , because the entries in the GOC 
Catalogue's list of projects to which lending is prohib ited are much more numerous than the entries in 
the list of projects in the encouraged category, wh ich suggests that the policy lending subsidy is not 
generally available within the Chinese economy. 
159. The United States asserts that China's conditi onal appeal of the Panel's finding that the 
economic planning documents relied upon by the USDOC limited access to the policy lending 
subsidy is based entirely on Article 13 of the Im plementing Regulation.  China thus ignores the 
totality of the evidence before the USDOC, which included a number of central, provincial, and 
municipal planning documents.  In this regard, the United States recalls the Appellate Body's ruling in 
Japan – DRAMs (Korea) that a panel reviewing a determinati on on a particular issue based on the 
totality of the evidence relevant to that issue must  conduct its review on the same basis, and observes 
that, in this case, the Panel properly examined the totality of the eviden ce before the USDOC and 
found that it supported the USDOC's determination of de jure  specificity. 
(b) Article 2.1(a) of the SCM Agreement :  "Certain Enterprises" 
160. The United States requests the Appellate Body to reject China's contention that the Panel 
erred in its interpretation of the term "certain enterp rises" and its application to the relevant facts.  The 
United States considers that China's argument ignor es virtually all of the evidence on the record and 
depends entirely on a factual premise that was expressly rejected by the Panel, namely, that the policy lending subsidy is available to an entire sector of the Chinese economy.  
161. The United States sets out an extensive summary  of the Panel's detailed analysis of the 
totality of evidence before the US DOC, at the central, provincial, and municipal levels, for the 
purpose of illustrating the comprehensiveness of th e Panel's analysis and contrasting it to the 
narrowness of China's appeal.  The United States cons iders that the Panel's reasoning shows that it 
properly determined, on the facts of this dispute,  that a reasonable and objective investigating 
                                                     
 
142United States' appellee's submission, para. 187. WT/DS379/AB/R 
Page 64  
 
  authority could, on the basis of  the evidence on the record, have reached the conclusions that the 
USDOC reached in the OTR investigation and, ther efore, that China failed to establish that the 
USDOC's de jure  specificity finding was inconsistent with Article 2.1(a) of the SCM Agreement . 
162. The United States also observes that, while it is clear that the Panel considered the provincial 
and municipal policy documents, it is unclear how much weight the Panel accorded to these documents.  Although some of the Panel's statemen ts may suggest that the provincial and municipal 
policy documents are less probativ e than the central government policy documents, the Panel 
recognized that the USDOC based its specificity dete rmination on the totality of the evidence.  The 
United States hypothesizes, in this connection, a situation in which central government policy 
documents might suggest, without clearly establishing, that access to the subsidy is limited, and considers that, in such circumstances, provincial and municipal policy documents could flesh out the 
subsidy programme and provide the evidence necessar y to substantiate clearly that access to the 
subsidy programme is explicitly limited to certain ente rprises within the meaning of Article 2.1(a) of 
the SCM Agreement . 
163. The United States points out that the Panel agreed with the US – Upland Cotton panel that a 
subsidy is provided to "certain enterprises" if the recipients of the subsidy constitute no more than a 
"discrete segment" of the economy of the Me mber granting the subsidy, which can only be 
determined on a case-by-case basis.
143  The United States contests Ch ina's assertion that the Panel 
erred in finding that the policy lending subsidy was limited to "certain enterprises" on the ground that 
it is impossible to characterize 539 industries sp anning 26 different economic sectors as a discrete 
segment of the Chinese economy, for the following reasons. 
164. First, the United States characterizes as "s imply inaccurate" China's assertion that the GOC 
Catalogue identifies 539 encouraged "industries", and highlights that the Panel found that the 
Catalogue lists "individual project types, described  in very specific and narrowly-circumscribed 
terms", and that the overall impression that it gave "is not one of broad availability but rather of 
singling out of very particular types of projects".144  In the view of the United States, China appears to 
be challenging the Panel's factual finding in respect  of the contents of the items listed in the 
encouraged category.  This, however, is not an issue of law, and thus, is not an appropriate matter for 
appellate review under Article 17.6 of the DSU.  Moreover, in response to China's criticism of the 
Panel's reference to the restricted and eliminated categories, the United States argues that the Panel's 
                                                      
143United States' appellee's submission, para. 213 (referring to Panel Report, para. 9.41). 
144United States' appellee's submission, para. 215 (quoting Panel Report, para. 9.68).  WT/DS379/AB/R 
 Page 65 
 
 
  reference to these other categories, and the large number  (539) of listings that th ey contained, was part 
of its examination of the totality of the evidence and that its conclusion was correct. 
165. Second, with respect to China's argument that interpreting the term "certain enterprises" to 
cover the range of economic sectors included in the encouraged category would be inconsistent with 
the finding of the panel in EC and certain member States – Large Civil Aircraft that access to 
European Investment Bank loans was not limited to certain enterprises, the Un ited States argues that 
the facts in that case are different fro m those in this dispute, and points out that the panel report in that 
case has not yet been adopted by the DSB. 
166. Third, the United States claims that China' s reference to the purported position of the 
United States on the issue of what constitutes " certain enterprises" in previous cases is "a 
distraction".145  China mischaracterizes the United States' position in US – Large Civil Aircraft (2nd 
complaint)  and US – Upland Cotton , and ignores key distinctions between the facts in those disputes 
and the facts in this dispute.  The issue in this dispute is whether the Panel properly determined that 
the USDOC's determination of specificity w as consistent with Article 2.1(a) of the SCM Agreement , 
and the United States submits that it did. 
(c) Article 2.2 of the SCM Agreement  
167. With respect to China's appeal regarding the Panel's assessment of the regional specificity 
determination made by the USDOC in the LWS investigation, the United States requests the 
Appellate Body to uphold the Panel's findings a nd legal interpretations of Article 2.2 of the 
SCM Agreement . 
168. With respect to the first point raised by Ch ina, based on its interpretation of the word 
"subsidy", the United States refers to its argument a bout the definition of this word presented in the 
context of Article 2.1(a), which re inforces that the mere use of th e term "subsidy" does not signify 
that an investigating authority must determine that  both the financial contribution and the benefit are 
regionally specific in order for a subsidy to be regionally specific within the meaning of Article 2.2. 
169. With respect to the second point raised by China, concerning the Panel's reference to a 
"distinct regime", the United States submits that it does not appear that the Panel made any "finding" 
that the existence of a distinct or unique regime fo r the provision of a subsidy is legally relevant to a 
determination of specificity under Article 2.2 of the SCM Agreement .  The statement to which China 
refers is simply a passing statement by the Panel about an analytical approach that the USDOC did not 
                                                      
145United States' appellee's submission, para. 224. WT/DS379/AB/R 
Page 66  
 
  adopt and evidence to which the United States did not point.  In this regard, China's arguments 
suggest that China itself appears to be aware that the Panel did not make a "finding".  Furthermore, 
the Panel expressly stated that it was not making a factual finding, and there is no indication that it 
was making a legal finding of the sort alleged by Chin a.  The United States recalls that the subject of 
an appeal must be an issue of law or legal interp retation and, thus, asserts that China's appeal on this 
point does not appear to be prope rly before the Appellate Body. 
170. The United States also deems "unfounded"
146 China's concerns about the implications of the 
Panel's statement for the United States' implementa tion obligations and for the operation of Article 2 
generally.  The Panel did not, at the conclusion of it s Report, suggest ways in which the United States 
might implement the recommendations, as is contempl ated under Article 19.1 of the DSU, and there 
is no indication in the Panel's statements that they  are intended to be, or actually constitute, such a 
suggestion.  Thus, the statements have no implica tions, either for the compliance obligations of the 
United States, or for the operation of Article 2 generally. 
171. Finally, the United States asserts that the crux of  China's appeal with respect to this point 
appears to be China's contention that the Panel w ould have found regional sp ecificity if the land-use 
rights had been provided as part of a distinct regi me, even when the identi cal subsidy was available 
elsewhere in Huantai County, and notes that the Panel never discussed what it would have found in 
the event that the identical subsidy were  available elsewhere in Huantai County. 
3. Article 14 of the SCM Agreement :  Calculation of the Benefit  
(a) Article 14(d) of the SCM Agreement :  Input Benchmarks 
172. The United States submits that China's argume nts in support of its appeal related to 
Article 14(d) of the SCM Agreement  are without merit.  The United States requests the Appellate 
Body to find that the Panel did not err in determin ing that the USDOC did not act inconsistently with 
the SCM Agreement in rejecting private prices in China as benchmarks in determining the benefit 
from the government provision of HRS to res pondents in the CWP and LWR investigations. 
173. At the outset, the United States notes its agreement with China that China' s claim, before the 
Panel and on appeal, presents a "straightforward qu estion of legal interpretation", namely, "whether 
record evidence that the government  was the predominant supplier of a good can be sufficient, on its 
own, to establish market distortion".147  Unlike China, however, the United States considers that the 
                                                      
146United States' appellee's submission, para. 243. 
147United States' appellee's submission, paras. 248 (quoting China's appellant's submission, para. 272) 
and 250 (quoting Panel Report, para. 10.38)).  WT/DS379/AB/R 
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  Panel correctly answered this question in the affi rmative, and that the Panel's interpretation of 
Article 14(d) was consistent with the customary rul es of interpretation and in line with the Appellate 
Body's interpretation of this provision in US – Softwood Lumber IV . 
174. The United States points to what it characteriz es as a "fundamental flaw" in the arguments 
raised by China.  In its view, China misunderstands  the problem identified by the Panel, and by the 
Appellate Body in US – Softwood Lumber IV , when it characterizes the question as whether 
government predominance in the market will cause pr ivate market prices to be "artificially low".  
However, the problem with government predominance in  the market is, rather, that private prices will 
align with the government price such that a compar ison of the government price to a benchmark price 
from the private market in the country of provision w ould be circular, that is , would be tantamount to 
comparing the government price to itself.  Such circul arity in turn results in a benefit calculation that 
is "artificially low".  The question of whether the government price is "artificially low" is the very 
question addressed by the benefit analysis and, in order to answer that question, the investigating 
authority must first identify a commercial benchm ark, free from the influence of the government's 
own pricing strategy, with which to compare the govern ment price.  In the view of the United States, 
China's basic misunderstanding of this issue permeates and undermines its appeal. 
(i) Interpretation of Article 14(d) of the SCM Agreement 
175. In the view of the United States, the Panel prope rly interpreted Article 14(d) and, consistent 
with a correct understanding of the Appellate Body's interpretation of that provision in US – Softwood 
Lumber IV , properly concluded that evidence that the government is the predominant supplier of a 
good in a country is sufficient to justify the rejection of in-country private prices a benchmark for 
determining the benefit from the government pr ovision of that good.  In other words, the 
United States elaborates, there is no requirement in Article 14(d) to establish price distortion, in addition to the predominance of the government in the market, before resorting to an out-of-country benchmark. 
176. The United States recalls that the chapeau of Ar ticle 14 refers to "any method" used by an 
investigating authority and describes the subparagr aphs that follow as "guidelines".  The Appellate 
Body stated, in US – Softwood Lumber IV , that "the use of the term ' guidelines' in Article 14 suggests 
that paragraphs (a) through (d) shoul d not be interpreted as 'rigid rules that purport to contemplate 
every conceivable factual circumstance'."
148  The Appellate Body also recognized that investigating
                                                      
148United States' appellee's submission, para. 261 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 92). WT/DS379/AB/R 
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  authorities may use a benchmark other than priv ate prices in the country of provision under 
Article 14(d) in certain circumstances, because it ma y not always be the case that private prices in the 
market of provision will represent an appropriate measure of the "adequacy of remuneration" for the 
provision of goods.  China reads the Appellate Body report in US – Softwood Lumber IV as 
establishing a rule that, in order to reject in-c ountry private prices a benchmark, investigating 
authorities must not only find that the government plays a predominant role in the market, but also 
make an entirely separate finding that private prices are distorted (artificially low) by virtue of the 
government's predominant role.  However, the Panel did not read this report in such a way, and the 
United States agrees with the Panel's approach. 
177. The United States recalls that, in US – Softwood Lumber IV , the Appellate Body reasoned that 
requiring the use of in-country private prices as a benchmark in all circumstances would frustrate the 
purpose of Article 14 and make  it impossible to calculate benefit, notably in circumstances where "the 
government's role in providing the financial cont ribution is so predominant that it effectively 
determines the price at which private suppliers sell the same or similar goods, so that the comparison 
contemplated by Article 14 would become circular".
149  The United States views this statement as 
evincing the Appellate Body's acceptance that it is  the government predominance itself that is the 
cause of the price distortion.  Thus, the Appellate  Body did not interpret Article 14(d) of the 
SCM Agreement  as requiring investigating authorities to make a separate finding that private prices 
are distorted.   
178. The United States also highlights that, in US – Softwood Lumber IV , the Appellate Body 
found little distinction between the situation where the government is the sole supplier of the good 
and the situation where the government is a pred ominant supplier because, whenever the government 
is a predominant supplier, it can affect, through its own pricing strategy, the private prices to the point 
where there may be little difference between the g overnment price and the private prices.  The 
United States notes that the Panel took the same position. 
179. The United States contests China's argument that the only reasoning provided by the Panel to 
support its interpretation of Article 14(d) was that there is a legally significant difference between the 
government acting as a significant supplier of a good and the government acting as a predominant 
supplier of a good.  Like the Appellate Body in US – Softwood Lumber IV , the Panel emphasized the 
identity between the government acting as the sole and a predominant supplier, rather than the 
difference between the government acting as a signi ficant versus a predominant supplier.  The 
                                                      
149United States' appellee's submission, para. 267 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 93).  WT/DS379/AB/R 
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  United States adds that the Panel also addressed, a nd properly dismissed, China's contention that the 
Appellate Body used the terms "predominant" an d "significant" interchangeably.  As the Panel 
understood, the Appellate Body used two distinct  terms to express two distinct concepts.  
180. The United States disputes China' s assertion that the Appellate Body's inability to complete 
the analysis in US – Softwood Lumber IV  demonstrates that the Appellate Body considered that 
"predominance" alone is not a sufficient basis to re ject in-country private prices as a benchmark.  The 
Appellate Body did not complete the analysis, not because the undisputed facts relating to government 
predominance were insufficient to find that pr ivate prices could be rejected as a benchmark, but 
because the panel had not made findings concerning th e weight to be ascribed to disputed facts and 
evidence on the panel record in addition to the evidence of government predominance.  The 
United States also points out that, even if the Appe llate Body had completed the analysis of whether 
the USDOC was allowed to reject in-country privat e prices as the benchmark, the Appellate Body 
would not have been able to examine whether the benchmark actually used by the USDOC related or 
referred to, or was connected with, prevailing market conditions in Canada, as required by 
Article 14(d). 
181. The United States argues that, unlike China's asse rtion, in the relevant investigations, the 
USDOC used "predominance" as a sta ndard.  The United States recalls that the USDOC described the 
Chinese Government's involvement in the HRS mark et as "overwhelming" and explained that the 
market is "so dominated" by governmental presen ce, which is synonymous with "predominant". 
(ii) Application of Article 14(d) of the SCM Agreement 
182. The United States submits that the economic anal ysis and discussion of various evidentiary 
items that China presents in its appellant's submi ssion are irrelevant, because China's position is based 
on the flawed assumption that the foundation of the USDOC's determinations, the Panel's finding, and 
the Appellate Body's interpretation of Article 14(d) in US – Softwood Lumber IV  is that a 
government's predominant role as a supplier of a g ood will result in "artificially low" prices for the 
good in that country.  In fact, the United States c ontends, the reason why investigating authorities may 
utilize a benchmark other than in-country prices is  that comparing the government price to an 
in-country price aligned with it would be circular a nd would result in an artificially low benefit.   
183. The United States asserts that China fails to unde rstand that there is no way for investigating 
authorities to determine whether prices are artificia lly low or not without comparing the prices to 
some benchmark.  It is first necessary, before getting to the question of whether the government prices 
are artificially low, to find something with whic h to compare the financial contribution.  Thus, WT/DS379/AB/R 
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  contrary to China's assumption, the reason an inv estigating authority may disregard in-country prices 
as a benchmark under the interpretation of Article 14(d) elaborated by the Appellate Body in US – 
Softwood Lumber IV  is that there is no way of knowing whet her those prices are too low in the first 
place.  It follows, submits the United States, that China's efforts to establish that the fact that the 
government is the predominant supplier of a good does not prove that prices in the country are artificially low are fundamentally flawed.  Like wise, China's arguments that there was evidence 
before the USDOC relevant to a "proper distortio n inquiry" are mistaken.  The evidence to which 
China points as showing that private HRS suppliers  could not have been selling at "suppressed", 
"below-market", or "below-cost" prices is irrele vant because it is not necessary to show separate 
evidence of market distortion—much  less evidence that in-country pr ivate prices are below market or 
below cost—when the government is a predominan t supplier and therefore prices are inherently 
aligned or distorted.  Thus, reasons the United Stat es, the Panel did not err in concluding that nothing 
in Article 14(d), or in the Appellate Body's report in US – Softwood Lumber IV , "would prohibit, 
a priori , a finding of market distortion, and a decision to depart from in-country private prices, where 
the only relevant evidence was that the governme nt is the predominant supplier of the good."
150   
(iii) The USDOC's Rationale for Finding Distortion 
184. The United States maintains that, because the Pane l did not err in its analysis of the legal 
issue, it also properly found that the USDOC's de terminations in the CWP and LWR investigations 
were not inconsistent with the SCM Agreement . 
185. The United States observes that, although Chin a argues that the USDOC itself did not 
distinguish between the government as a "predominant" supplier and the government as a 
"significant" supplier, it is undisputed that the Chinese Government was the predominant supplier of 
HRS during the relevant periods of investigation in the CWP and LWR investigations, because of the 
fact that SOEs accounted for 96.1 per cent of HRS production in China.  Even if it did not use the word "predominant", the USDOC explained that the government's involvement in the HRS market 
was "overwhelming" and cited to its Softwood Lumb er determination in explaining its practice when 
the market is "so dominated by the presence of the government".
151  For the United States, it follows 
that the USDOC's determinations were  based on a finding of predominance. 
186. As for China's allegation that the Panel failed to  discharge its duties pursuant to Article 11 of 
the DSU, the United States recalls that China's pr incipal argument before the Panel was that the 
                                                      
150United States' appellee's submission, para. 295 (quoting Panel Report, para. 10.45). 
151United States' appellee's submission, para. 285 (quoting  CWP Issues and Decision Memorandum 
(Panel Exhibit CHI-1), p. 64;  and LWR Issues and D ecision Memorandum (Panel Exhibit CHI-2), p. 36).  WT/DS379/AB/R 
 Page 71 
 
 
  USDOC impermissibly relied upon a per se  rule of government predominance to justify its use of out-
of-country benchmarks, and that this argument assu med, incorrectly, that government predominance 
alone was insufficient to justify a finding of market  distortion and the use of prices other than in-
country prices as benchmarks.  The United States also points out that the Panel appropriately 
considered whether the USDOC examined all the evidence and arguments on the record, in keeping 
with the Appellate Body's instruction that a deci sion to disregard in-country prices as the benchmark 
must be made on a case-by-case basis.   
187. The United States also rejects China's intimati on that the Panel attributed to the USDOC's 
determinations a rationale or e xplanation other than that provided by the USDOC.  As its Report 
reflects, the Panel summarized th e evidence that the USDOC had indicated was before it, and 
explained that the USDOC properly found that much  of that evidence was irrelevant, because it did 
not negate the fact that any comparison to in-country  prices would be circular due to the government's 
predominant position.  Thus, the Panel examined th e USDOC's own rationale for its determination.  
The United States also finds it significant that the Pa nel discussed the USDOC's analysis of the role of 
imports into the Chinese market in all four counter vailing duty investigations, something which China 
ignores.  In both the CWP and LWR investigations, the USDOC noted that the volume of imports of 
HRS amounted to only three per cent of total Chinese HRS production and c oncluded that imports 
were insufficient to serve as a reliable benchmark.  Th e Panel contrasted this with the situation in the 
OTR investigation where, despite the government's  share of domestic production of rubber, the 
USDOC relied upon import prices and other in-c ountry prices as benchmarks due to the large 
penetration of rubber imports in China's rubber mark et and the lack of other evidence demonstrating 
that SOEs or government agencies had distorted this market. 
188. Accordingly, the United States submits that the A ppellate Body should fi nd that the Panel did 
not err in determining that the USDOC did not act inconsistently with the SCM Agreement  in deciding 
not to use in-country prices as benchmarks in the CWP and LWR investigations. 
(b) Article 14(b) of the SCM Agreement :  Loan Benchmarks 
189. The United States requests the Appellate Body to re ject China's claims related to Article 14(b) 
of the SCM Agreement .  The United States considers that the Panel correctly found that the USDOC's 
rejection of Chinese interest rates as benchmarks in the CWP, LWS, and OTR investigations and the 
benchmarks actually used by the USDOC we re consistent with Article 14(b) of the SCM Agreement .  
The United States also contends that the Panel did no t act inconsistently with Article 11 of the DSU. WT/DS379/AB/R 
Page 72  
 
  190. Like the Panel, the United States considers th at China proposes an "excessively formalistic 
interpretation" of Article 14(b), which "would eff ectively limit an investigating authority's ability to 
identify an appropriate benchmark, forcing it instead to fall back on a choice from among 
inappropriate benchmarks".
152  The United States also argues that China's arguments are premised on 
an erroneous conflation of "benchmark interest ra tes" and "commercial" interest rates used as 
benchmarks to measure benefit under Article 14(b), and that th is undermines China's legal and 
economic arguments.  As for Chin a's allegations under Article 11 of the DSU, the United States 
regards them as based on misrepresentations and mischaracterizations of the Panel Report and, as 
such, without merit. 
(i) Rejection of Interest Rates in China as the Benchmark under 
Article 14(b) of the SCM Agreement 
191. The United States considers that the Panel properly interpreted Article 14(b) of the 
SCM Agreement  as permitting the use of a proxy loan, incl uding a loan denominated in a different 
currency, and requests the Appellate Body to uphold th e Panel's interpretation of this provision.  The 
United States further submits that the Panel corre ctly found that China failed to establish that the 
USDOC's decision, in the CWP, LWS, and OTR inves tigations, not to rely on Chinese interest rates 
as benchmarks for SOCB loans denominated in RMB was inconsistent with the obligations of the 
United States under Article 14(b) of the SCM Agreement . 
192. The United States first acknowledges China's criti cism of the Panel's formulation of the 
central question of legal interpretation and accepts that China correctly po ints out that, because 
Article 14(b), unlike Article 14(d), does not have an express notion of territoriality, the paradigm of 
"in the country" versus "out of the country" does not arise.153  Yet, according to the United States, 
such a geographical limitation on the benchmark th at may be selected is nevertheless implicit in 
China's arguments that the currency of the benchmar k loan must be the same as the currency of the 
financial contribution, and that RMB loans may only be obtained in China. 
193. The United States recalls that the Appellate Body has stated that paragraphs (a) through (d) of 
Article 14 of the SCM Agreement should not be interpreted as rigid rules covering all possible 
circumstances, that WTO Members have some latitude  in the methods used to  calculate benefit, and 
that the marketplace provides an appropriate basis for comparison in determining whether a benefit 
has been conferred.  The Appellate Body also recognized, in US – Softwood Lumber IV , that 
investigating authorities may use a benchmark other than private prices in the country of provision 
                                                      
152United States' appellee's submission, para. 305 (quoting Panel Report, para. 10.121). 
153United States' appellee's submission, para. 307 (quoting China's appellant's submission, para. 398).  WT/DS379/AB/R 
 Page 73 
 
 
  under Article 14(d) in certain circumstances, because it may not always be the case that private prices 
in the country of provision will represent an appr opriate measure of the "adequacy of remuneration" 
for the provision of goods. 
194. The United States sets out, and agrees with, the ma in elements of the Panel's interpretation of 
Article 14(b), including:  (i)  the comparator to be  used must be, first and foremost, "commercial";  
(ii) the "ideal" benchmark would be an actual lo an from a commercial lender of the same size, 
maturity, structure, and currency, to the inv estigated entity, taken out on the same day as the 
investigated government loan, although, in practice,  the existence of such an ideal benchmark loan 
will be extremely rare;  and (iii) Article 14(b), by  its own terms, makes allowance for the use of 
proxies when an identical or nearly identical  loan is not available as a benchmark.   
195. In the view of the United States, Ch ina's argument that the Panel erred  in its interpretation of 
the term "comparable" amounts to a denial of the po ssibility that an investigating authority could ever 
make adjustments sufficient to render a benchmark loan denominated in another currency comparable, 
or, in other words, to a requirement to use loans within China as the benchmark.  The Panel rejected 
the same argument because it considered the logic of the Appellate Body's finding in US – Softwood 
Lumber IV to be equally applicable under Article 14(b).  The Appellate Body held that Article 14(d) 
allows investigating authorities to reject in-country prices as a benchmark under certain 
circumstances, notably where a comparison with in-country private prices would be inherently 
circular.  The United States considers that the Pa nel's reference to the Appellate Body report in US – 
Softwood Lumber IV was appropriate because the potential for a circular comparison is as great under 
Article 14(b) as it is under Article 14(d), and di smisses China's arguments  to the contrary.  
196. The United States asserts, in this regard, that  China misunderstands the significance of the 
Appellate Body report in US – Softwood Lumber IV and its focus on the problem of avoiding a 
comparison that is circular.  China's argument that there is no evidence of "distortion" in the Chinese 
lending market misses the point, because the concern is  not that Chinese interest rates are "artificially 
low", but that they are effectively established by  the government.  The United States adds that the 
Panel's interpretation of Article 14(b) is c onsistent with the object and purpose of the 
SCM Agreement , which includes disciplining the use of s ubsidies and countervailing measures while 
enabling Members whose domestic industries are harmed  by subsidized imports to use such remedies, 
and that China's interpretation would effectively limit  investigating authorities' ability to identify an 
appropriate benchmark.   
197. Turning to the question of whether the Panel correctly found that the USDOC could, 
consistently with Article 14(b), decide not to use Chinese interest rates as benchmarks for SOCB WT/DS379/AB/R 
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  loans denominated in RMB in the CWP, LWS, and OTR investigations, the United States recalls that 
the Panel observed that the USDOC had determined that none of the sources of Chinese interest rates 
could be used as benchmarks because it considered , based on its determination in the CFS Paper  case, 
that there was no functioning market for loans in Ch ina.  The United States points out, in particular, 
that the Panel noted that the USDOC had determined, inter alia , that:  China's banking system was 
still under State-control;  China's banking system  still operated in accordance with governmental 
planning policies;  interest rate s were regulated by the governmen t;  foreign-owned banks in China 
were subject to the same restrictions as SOCBs;  and foreign currency lending rates in China were 
unsuitable for measuring the benefit of loans denominated in RMB. 
198. As an initial matter, the United States identifies what it considers to be the fundamental flaw 
in China's arguments on appeal, namely, that China appears to confuse "benchmark interest rates", 
which are set or influenced by the government's mone tary policy, with "commercial" interest rates, 
which are, under normal circumstances, set by commercial banks operating in the market.  
Article 14(b) is concerned with "commercial" interest  rates, that is, interest rates determined by the 
"market".  As China recognizes, "benchmark inte rest rates" may be "effectively dictated" by 
government monetary policy.  Commercial banks, how ever, as China also recognizes, charge different 
interest rates to different borrowers, based on th eir assessment of the borrower's credit, and this 
interest rate differentiation is a way of managing a bank's risk.  The United States submits that the 
kind of "commercial" loan interest rate that is  suitable for use as a benchmark for measuring benefit 
under Article 14(b) is, in virtually all cases, going to be different from the "benchmark interest rate" 
for a particular currency and that, for these reasons, all of China's legal and economic arguments that 
relate to "benchmark interest rates" are beside the point. 
199. China's example of the relationship between the United States' federal f unds rate and its prime 
rate is, the United States asserts, based on this conf usion.  Although China makes much of the fact 
that the prime rate closely tracks the federal funds  rate, China wrongly equates the two concepts and 
also overlooks that the interest rate forma tion "processes" in China and the United States are 
fundamentally different.  In the United States, th e Federal Reserve influen ces wholesale (inter-bank) 
rates, whereas in China the People's Bank of China ef fectively dictates retail (bank-to-customer) rates.  
In the United States, retail rat es are market based, because banks construct their retail rates upon the 
base of the federal funds rate.  To the extent that th e prime rate tracks the federal funds rate, that is a 
function of the market.  In China, there is no ma rket-based building process underlying retail rates.  
Instead, the People's Bank of China itself changes re tail lending rates by administratively determining 
the floors that constrain them.  WT/DS379/AB/R 
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  200. The United States regards as "without basis in fact"154 China's challenge to the consideration 
by the USDOC and by the Panel of specific factor s relevant to "distortion", and China's related 
suggestion that the Chinese Government's particip ation in and regulatory control of the Chinese 
lending market is equivalent to the implementa tion of monetary policy by the United States 
Government and governments of other countries.  The United States highlights that the USDOC found, based on record evidence, that China controls  banks' lending through the regulation of interest 
rates, and that these regulatory controls were c onsidered necessary because the SOCBs were not at a 
point where they could lend without such controls .  By maintaining both a deposit rate cap and a 
lending rate floor, China ensures that banks can reta in profits while lending at the floor rate.  The 
United States stresses that the use of the floor on lending rates together with the cap on deposit rates is 
fundamentally different from what are considered traditional regulatory controls.  In response to 
questioning at the oral hearing, the United States explained that this is because the floor on lending 
rates is set at a level that is higher than the cap on deposit rates. 
201. With respect to the lack of differentiation in interest rates on loans in China, and China's 
allegation that the Panel and the USDOC failed to  explain why the Chinese Government's role or 
intervention in the market caused inte rest rates to be "artificially low" , the United States reiterates that 
China misunderstands the problem.  The problem is not  that the Government's predominant role in the 
Chinese commercial lending market necessarily causes inter est rates to be "artificially low", but that 
the Government's predominant role  in the Chinese commercial lending market, both as a lender and in 
terms of controlling the operation of this market, r esults in the problem of an inherently circular 
comparison.  Therefore, in order to determine wh ether Chinese interest rates are low, a comparison 
must be made to something other than a Chinese interest rate. 
202. Finally, the United States dismisses as "unfounded"
155 the caution expressed by China that 
accepting the Panel's interpretation of Article 14(b)  would open the door to the use of countervailing 
duties as a means of sitting in judgement upon, or seeking to counteract, the monetary policies 
pursued by other WTO Members.  The United Stat es emphasizes that it was not China's monetary 
policies that led the USDOC and the Panel to conclu de that the Chinese lending market was distorted.  
Rather, it was the Government's predominant role in the Chinese lending market both as a lender and 
in terms of controlling the operation of the market, wh ich distorted interest rates, that led the USDOC 
and the Panel to conclude that observed rat es in China were not suitable as benchmarks. 
                                                      
154United States' appellee's submission, para. 344. 
155United States' appellee's submission, para. 349. WT/DS379/AB/R 
Page 76  
 
  (ii) Consistency with Article 14(b)  of the Benchmarks Actually 
Used by the USDOC 
203. The United States contends that, having adopted  a proper approach in its assessment of the 
loan benchmark actually used by the USDOC to calculate the benefit from RMB-denominated SOCB loans, the Panel correctly found that such benchmar k was not inconsistent with Article 14(b) of the 
SCM Agreement .  The United States requests the Appellate Body to uphold this finding and to dismiss 
China's appeal. 
"Comparable
" 
204. The United States notes that, although Chin a accepts all of the comparability factors 
identified by the Panel, China argues that the curr ency in which the loan is denominated is of 
"fundamental importance" because real interest rates differ by currency and the country in which the 
loan is issued.  Indeed, to the United States, it a ppears that China considers the currency to be the only 
relevant factor in determining whether a loan is comparable.  Although Chin a argues that a loan in 
one currency cannot be compared to a loan in a nother currency because differences in interest rates 
are idiosyncratic to each currency, the United States  observes that this argument is no criticism of the 
loan benchmark used by the USDOC .  The United States explains that the USDOC used a group of 
interest rates, rather than a single out-of-country in terest rate, as it considered that various factors can 
impact national averages for interest rates.  To ensure that the constructe d benchmark approximated a 
"comparable commercial loan", th e USDOC selected countries that ha d similar GNIs to China on the 
basis that there is a broad inverse relationshi p between income levels and lending rates, and 
performed a regression analysis of those rates, GNI data, and World Bank governance indicators to 
determine a yearly comparison interest rate.  The US DOC also adjusted for inflation as a proxy for an 
adjustment for exchange rate expectations.  At th e oral hearing, the United States explained that the 
USDOC had determined in consultation with ot her government agencies which were the most 
relevant factors to use in order to make adju stments to the regression model.  Although China 
complains of the 20 percentage point spread in r eal interest rates among the countries considered by 
the USDOC, the United States considers that this va riation supports the appropriateness of performing 
a multi-currency analysis, rather than relying on data from one country alone. 
"Could Actually Obtain on the Market " 
205. Although China asserts that its interpretati on of the phrase "could actually obtain on the 
market" is broader than that of the Panel, the Unite d States considers that it is, in fact, a far narrower 
interpretation.  Accepting China's formalistic in terpretation, namely, that any benchmark must  WT/DS379/AB/R 
 Page 77 
 
 
  represent a loan from a "market" in which a firm  "could actually obtain" a "comparable commercial 
loan" given the sources of credit that are actually av ailable to it, would, as the Panel found, limit an 
investigating authority's ability to identify an appropr iate benchmark and force it to resort instead to 
inappropriate benchmarks.  The United States also  highlights that China's proposed interpretation 
appears to be inconsistent with the proposal  made by Chinese respondents in the relevant 
investigations, that the USDOC should use a weighted  average of interest rates charged by Chinese 
banks, both State-owned and non-Stat e-owned, during the period of investigation.  Since a weighted 
average of interest rates is necessarily not a loan  that the borrower could, in fact, obtain, the 
United States views this as a concession by China that  something other than an "actual" loan may be 
used as a benchmark, consistently with Article 14(b).  The United States observes that the USDOC's 
multi-currency regression model was, itself, a weighted average of interest rates, albeit one that also 
took account of additional factors in order to improve its reliability as a benchmark. 
Article 11 of the DSU  
206. The United States contests China's assertion that  the Panel failed to undertake an objective 
assessment of the matter before it, in accordance w ith Article 11 of the DSU.  The United States 
alleges that China has not discharged the burden, which the Appellate Body has described as a heavy 
one, of establishing the Panel's failure to comply with Article 11. 
207. The United States observes that Ch ina repeatedly criticizes the brevity of the Panel's analysis, 
noting, for example, that the Panel analyzed an issue in a single paragr aph or in a single sentence.  For 
the United States, these arguments appear to be ma de under Article 12.7 of the DSU, although China 
has raised no claim of error on appeal under that pr ovision.  In any event, the Appellate Body has 
explained that a panel has discretion to address onl y those arguments it deems necessary to resolve a 
particular claim.  The United States further consid ers that China misrepresents the Panel's analysis.  
The Panel engaged in a thorough and objective ex amination of the evidence on the record and 
provided well-reasoned and complete e xplanations for all of its findings .  That the Panel may not have 
addressed certain economic arguments that were not relevant to its analysis cannot constitute grounds 
to find that it acted inconsistently with Article 11 of the DSU. 
208. Finally, in response to China' s argument that the Panel applied a standard of "sufficient 
approximation" to, rather than "actual conformity" with, Article 14(b) of the SCM Agreement , the 
United States contends that it is clear, from a full reading of the Panel Report, that the Panel did not 
apply a standard of "sufficient approximation" of conformity with the relevant covered agreements. WT/DS379/AB/R 
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  4. Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of 
the GATT 1994:  "Double Remedies"  
209. The United States requests the Appellate Body to dismiss China's appeal with respect to the 
concurrent application of countervailing duti es and anti-dumping duties and alleged "double 
remedies", and to reject China's request to complete  the analysis.  The United States considers that the 
Panel properly interpreted the rele vant provisions of the covered ag reements, and correctly concluded 
that China failed to establish th at the USDOC's use of its NME methodology in the anti-dumping 
determinations at issue in this dispute, concurre ntly with its imposition of countervailing duties on the 
same products, was inconsistent with Ar ticles 10, 19.3, 19.4, or 32.1 of the SCM Agreement  or with 
Article VI:3 of the GATT 1994. 
(a) China's Accession Protocol 
210. The United States contends that China's Acces sion Protocol provides supportive context for 
the Panel's interpretation of Articles 19.3 and 19.4 of the SCM Agreement .  The United States points 
out that China's Accession Protocol is an integral part of the WTO Agreement and, as such, must be 
interpreted in accordance with the cu stomary rules of interpretation of public international law.  In 
addition to agreeing to be bound by the text of the SCM Agreement , China agreed to the requirements 
of the Protocol including, notably, Paragraph 15, which expressly authorizes the application of anti-
dumping duties and countervailing duties to imports from China, including specifically anti-dumping duties calculated using an NME methodology and countervailing duties based upon benefit calculations using benchmarks outside of China.   Significantly, Paragraph 15 imposes no limit on the 
concurrent application of both remedies.  The United States recalls that the Panel interpreted 
Articles 19.3 and 19.4 of the SCM Agreement  as not conditioning the application of countervailing 
duties on the existence, or a lack thereof,  of anti-dumping duties calculated under an NME 
methodology, and submits that China's Accession Prot ocol is consistent with this interpretation. 
(b) Interpretation of Article 19.4 of the SCM Agreement  and Article VI:3 
of the GATT 1994 
211. In the view of the United States, the Panel properly inte rpreted Article 19.4 of the 
SCM Agreement in accordance with Article 31 of the Vienna Convention , correctly found that 
Article 19.4 does not provide a legal basis for Chin a's claims, and rightly rejected China's argument 
that, where an NME anti-dumping duty may theoretically have offset part of a subsidy, such subsidy 
no longer "exists" for purposes of Article 19.4.  The Panel correctly recognized that Article 19.4 is not concerned with the existence of subsidies, but with ensuring that any countervailing duties imposed 
do not exceed the subsidies attributable to the impor ted goods, in terms of subsidization per unit.    WT/DS379/AB/R 
 Page 79 
 
 
  212. The United States emphasizes that the text of Article 19.4 limits the amount of countervailing 
duties that may be levied to "the amount of the subsidy found to exist" .  The existence of subsidies for 
purposes of the SCM Agreement  is governed by Articles 1 and 14 of the SCM Agreement , and has 
nothing to do with the imposition of anti-dumping duties based on an NME methodology.  Moreover, as the Panel explained, by its own terms, Artic le 19.4 only imposes disciplines with respect to 
countervailing duties (not anti-dumping duties) and is , thus, "oblivious to any potential concurrent 
imposition of anti-dumping duties".
156   
213. The United States asserts that the imposition of  anti-dumping duties calculated under an NME 
methodology has no bearing on the "existence" of a subsidy under the SCM Agreement .  Such 
imposition of NME anti-dumping duties on some fraction of the goods produced by a subsidy recipient neither extracts the subsidy from the recipient and returns it to the government nor 
extinguishes the benefit.  The United States also  points out that Article 19 as a whole lists 
circumstances in which subsidies may not be co untervailed, including when they have been 
withdrawn (Article 19.1), and on imports from sour ces that have renounced the relevant subsidies 
(Article 19.3).  Similarly, Article 7.8 of the SCM Agreement offers two alternative options as remedies 
for an actionable subsidy:  to remove the adverse eff ect of the subsidy;  or to  withdraw the subsidy.  
The United States argues that these provisions show that the SCM Agreement  distinguishes between 
the existence and withdrawal of a subsidy, on the one  hand, and the effects and the removal of effects 
of a subsidy found to exist, on the other hand. 
214. The United States contends that the limitati on in Article 19.4 of countervailing duties to 
"subsidization per unit of the subsidized and exported product" means that the amount of 
countervailing duties cannot exceed the portion of the total subsidy attributable to the imports in 
question.  The United States cautions that accepting China's interpretation would replace this logical 
rule with a host of difficulties and unforeseen conseque nces.  For example, a variety of problems with 
timing and sequences could arise.  For instance, in the United States, countervailing duty rates are 
usually determined before anti-dumping duty rates.  Therefore, the USDOC would not know at the 
time of the countervailing duty determination wh ether the NME anti-dumping duty rate would be 
positive and, thus, could not know whether the su bsidy had, under China's reasoning, ceased to 
"exist".  Another example is the question of whether other Members could impose countervailing 
duties on products after the same products had been  subject to the United States' anti-dumping duties 
calculated under an NME methodology, given that, under China's reasoning, the relevant subsidies 
must be deemed no longer to "exist".  The United St ates also points out that, in a retrospective duty 
assessment system, the duties collected may be lo wer than the dumping margin calculated for the 
                                                     
 
156United States' appellee's submission, para. 396 (quoting Panel Report, para. 14.112). WT/DS379/AB/R 
Page 80  
 
  period of investigation, or even none at all.  Thus, reasons the United States, China's argument that the 
application of anti-dumping duties calculated under an NME methodology automatically causes 
subsidies to cease to exist also conflicts  with such retrospective systems. 
215. For the United States, these difficulties underlin e why a prohibition on "double remedies" 
should not be read into the SCM Agreement .  If the drafters had intended to create such a prohibition, 
then they would logically have included an oblig ation for investigating authorities to go back and 
amend a countervailing duty rate when anti-dumping du ties are subsequently imposed or adjusted, but 
they did not. 
216. The United States contends that China is incorr ect in asserting that the Panel's interpretation 
of Article 19.4 is inconsistent with  the Appellate Body's findings in US – Countervailing Measures on 
Certain EC Products and US – Softwood Lumber IV .  The United States rejects the analogy that China 
draws between the effect of an arm's-length sale of a subsidy recipient and the imposition of NME 
anti-dumping duties on goods manufactured by a produ cer whose ownership has not changed.  Unlike 
in US – Countervailing Measures on Certain EC Products , where the Appellate Body found that an 
arm's-length, fair-market-value privatization terminated  the benefit and, therefore, the existence of the 
subsidy, the imposition of NME anti-dumping duties does not terminate the benefit to the subsidy 
recipient and, thus, does not affect the existence of a subsidy.  US – Softwood Lumber IV also does not 
support China's arguments.  The Appellate Body f ound, in that dispute, that the producer of the 
product had not received a subsidy, because the subsid y to the manufacturer of an input did not pass 
through to that producer.  For the United States, such a situation is clearly distinct from a situation in 
which a subsidy recipient is subject to NME anti-dumping duties. 
(c) Interpretation of Article 19.3 of the SCM Agreement  
217. The United States alleges that, contrary to th e arguments advanced by China, the Panel 
engaged in extensive consideration of the SCM Agreement , including reference to the definition of the 
phrase "appropriate amounts" in Article 19.3.  The United States agrees with the Panel that the 
imposition of anti-dumping duties calculated under an NME methodology has no impact on whether 
or not the amount of the concurrent countervailin g duty collected is "appropriate", and that the 
concurrent application of countervailing duties and anti-dumping duties calculated using an NME 
methodology is not inconsistent  with Article 19.3 of the SCM Agreement .  Thus, the Panel's findings 
with respect to Article 19.3 of the SCM Agreement  should be upheld.  WT/DS379/AB/R 
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  218. The United States contends that the panel report in EC – Salmon (Norway)  lends no support 
to China's interpretation of Article 19.3 of the SCM Agreement .  Article 19.3 can and should be 
interpreted in a similar fashion to the way in which Article 9.2 of the Anti-Dumping Agreement  was 
interpreted in that case, namely, that the "appropr iate" amount of countervailing duties must be an 
amount no greater than the subsidies attributab le to the subject merchandise when all other 
requirements for the imposition of countervailing duti es have been fulfilled.  The United States points 
out that it is not disputed that the amount of the s ubsidies calculated, or found to exist, by the USDOC 
corresponded to the countervailing duties imposed by the USDOC. 
219. The United States adds that, as the Panel noted, the manner in which the dumping margin is 
calculated ―through an NME methodology or otherwise ―has no impact on the existence of 
subsidies, which may be found to exist in a parallel countervailing duty investigation, and the 
potential "double remedies" that may result from the imposition of anti-dumping duties based on an 
NME methodology do not transform such anti- dumping duties into countervailing duties. 
(d) Context of the Relevant Terms of the SCM Agreement  
220. The United States contends that the Panel correctly observed that Article VI:5 of the 
GATT 1994 sets forth the sole limitation on a Member's ability to apply anti-dumping and countervailing duties concurrently.  Two things are clear from Article VI:5:  (i) Members understood 
that, as a general matter, anti-dumping duties and count ervailing duties can be applied concurrently to 
the same product;  and (ii) Article VI:5 appli es only to concurrent anti-dumping and countervailing 
duty proceedings on the same product that invol ve "the same situation of dumping or export 
subsidization".  The United States argues that, if  Members had intended to constrain concurrent 
application in other situations, th ey would have provided so explic itly, as they did in Article VI:5. 
221. The United States also considers that the second Ad Note to Article VI:1 of the GATT 1994, 
which recognizes that, in the case of NME countries,  an investigating authority conducting an anti-
dumping duty proceeding may need to look beyond th e exporting country to find appropriate prices 
for comparison with prices in the importing countr y, provides further contextual support for the 
Panel's findings under Articles 19.3 and 19.4 of the SCM Agreement .  The second Ad Note to 
Article VI:1 was added to the GATT in 1955, but w as not, at the time, accompanied by a modification 
to Article VI:5, or to any other provision, requiri ng the offsetting of countervailing duties against anti-
dumping duties, or vice versa, in case s of concurrent investigations. 
222. The United States further asserts that, since onl y imported goods are subject to anti-dumping 
duties or countervailing duties, reading Article VI :5 as encompassing situations in which domestic WT/DS379/AB/R 
Page 82  
 
  subsidies granted to exported goods are countervailed would effectively read the term "export" out of 
the relevant sentence of that provision, whic h is inconsistent with the principle of effet utile . 
223. The United States regards China's arguments regarding the Panel's allegedly improper, 
a contrario  approach to Article VI:5 as unpersuasive, a nd its attempt to draw an analogy with the 
interpretative approach of the Appellate Body in US – Upland Cotton as mistaken.  The Panel did not 
find, and the United States did not argue, that the dr afters of Article VI:5 affirmatively intended to 
permit  double remedies in the case of domestic subsidies.   To the contrary, what the Panel and the 
United States considered to be relevant is that  the prohibition in Article VI:5 does not address 
domestic subsidies, but only "export subsidization" .  As for the Appellate Body's approach in US – 
Upland Cotton , that case involved reconciling an express allowance in one of the covered agreements 
with an express prohibition in another, which is not the issue in this dispute.   In any event, according 
to the United States, US – Upland Cotton  stands for nothing more than  the proposition that express 
language represents the essential st arting point in interpreting the WTO Agreement . 
224. The United States is of the view that the Panel properly interpreted the significance of 
Article 15 of the Tokyo Round Subsidies Code  and of the absence of a similar provision in the 
SCM Agreement .  Article 15 directly confronts the fundamental issue in this dispute:  whether a 
Member must choose between anti-dumping duties and countervailing duties when the methodology 
used to calculate the dumping margin does not rely on domestic prices or costs of the exporting party.  
The inclusion of Article 15 in the Tokyo Round Subsidies Code  provides meaningful evidence that 
parties to that Code considered that no other provision in the GATT 1947 contained such an 
"either/or" requirement, because otherwise the inclus ion of Article 15 in the Code would have been 
superfluous.  Furthermore, argues the United St ates, the existence of a provision in the Tokyo Round 
Subsidies Code  specifically prohibiting the concurrent a pplication of anti-dumping and countervailing 
duties to certain countries, followed by the di sappearance of that provision in the successor 
SCM Agreement , demonstrates that such a prohibiti on no longer exists and reinforces the 
presumption, created by the express limitation in Article VI:5 itself, that WTO Members never agreed on such a prohibition.  The United States adds, in this  connection, that this is an issue that was not 
addressed by China in its accession. 
225. The United States argues that the Appellate Body's finding in US – Underwear supports the 
Panel's interpretative approach.  The Appellate Bo dy attributed significance to the meaning of a 
provision in the Multifibre Arrangement, and to the absence of such a provision in its successor 
agreement, the Agreement on Textiles and Clothing , which is the same as the Panel's approach in this 
case.  WT/DS379/AB/R 
 Page 83 
 
 
  226. Turning to object and purpose,  the United States expresses the vi ew that the Panel correctly 
construed the object and purpose of the SCM Agreement and found that it does not speak to the 
remedies available under the Anti-Dumping Agreement  or to the level of remedies to be imposed in 
situations where there are parallel anti-dum ping and countervailing duty investigations.   The 
United States points out that Article 31 of the Vienna Convention is clear that it is the object and 
purpose of the Agreement as a whole that is releva nt, and characterizes China's attempt to assign an 
object and purpose to only Part V of the SCM Agreement  as erroneous.  The United States also 
observes that, in any event, the object and purpose of an agreement cannot supersede the ordinary 
meaning of Article 19.4 or any of the other relevant provisions. 
227. The United States considers that, under the WTO agreements, Members created two distinct 
remedies for two separate unfair trade practices:  dumping and subsidies.  Anti-dumping duty rules 
compare prices at which a company sells product s in its home and export markets, whereas 
countervailing duty rules focus on subsidies b estowed on products by governments.  The 
United States notes that, under th e GATT 1994, as well as under the Anti-Dumping Agreement  and the 
SCM Agreement , neither the provisions permitting the imposition of anti-dumping duties nor those 
permitting the imposition of c ountervailing duties include any reference to the other remedy.  Instead, 
footnote 24 of the Anti-Dumping Agreement  and footnote 56 of the SCM Agreement  each makes clear 
that trade remedy action under the other Agreement would not be precluded.  Accordingly, contends 
the United States, the WTO agreements recognize that anti-dumping and countervailing duties are 
separate remedies that address distinct unfair trade practices, and that those remedies may be applied 
to the fullest extent of the dumping margin or subs idy found to exist, regardless of the existence of 
parallel anti-dumping or counter vailing duty investigations. 
228. The United States adds that the GATT Contracti ng Parties reinforced the distinctness of the 
remedies available in anti-dumping and counterva iling duty proceedings by providing for only one 
instance—set out in Article VI:5—w here both remedies may not be app lied to the full amount.  This 
provision clearly reflects the understanding of Memb ers that, as a general matter, anti-dumping duties 
and countervailing duties could be a pplied concurrently to the same product, and also reinforces the 
conclusion that they did not intend to prohibit the concurrent application of remedies in any other 
circumstances. WT/DS379/AB/R 
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  (e) Consequential Claims under Articles 10 and 32.1 of the 
SCM Agreement  
229. The United States requests the Appellate Body to  uphold the Panel's finding that the condition 
for China's consequential claims under Articles 10 and 32.1 of the SCM Agreement  has not been 
fulfilled.  As they were before the Panel, China's claims under Articles 10 and 32.1 of the 
SCM Agreement  depend upon the success of its claims that th e United States acted inconsistently with 
Articles 19.3 and 19.4 of the SCM Agreement .  As discussed above, the United States considers that 
the Panel properly interpreted Articles 19.3 and 19.4 and that its findings in this regard should be 
upheld.  Accordingly, the Panel's findings with resp ect to China's claims under Articles 10 and 32.1 of 
the SCM Agreement  should also be upheld.  
(f) Completion of the Analysis 
230. The United States requests the Appellate Body to decline China's request to complete the 
analysis.  The United States contends that the bur den of establishing the existence of double remedies 
would be on China, and that the Panel made no finding regarding whether China had conclusively 
established that double remedies resulted from the c oncurrent imposition of countervailing duties and 
anti-dumping duties in this dispute. 
231. The United States notes that China argues that an  importing Member must establish, in the 
course of countervailing duty and anti-dumping inves tigations, whether and in what amount a subsidy 
remains attributable to the impor ted product, and observes that Chin a appears to believe that this 
means that the burden of proof would be on the importing Member in a WTO dispute as well.  The 
United States argues that no such requirement exis ts, and that China's approach would confuse the 
obligations of Members conducting an investigatio n with the burden of proof in a WTO dispute 
settlement proceeding.  The United States emphasizes that China, as the complaining party in this 
dispute, bears the burden of making out a prima facie case of violation of a relevant WTO obligation. 
232. Second, the United States highlights that, while it  accepted that the concurrent application of 
countervailing duties and anti-dumping duties calculate d using an NME methodology was "likely" to 
produce remedies that overlapped to "some" extent
157, the Panel made no findings as to whether 
double remedies resulted from the concurrent appli cation of anti-dumping duties calculated under an 
NME methodology and countervailing duties, in the de terminations for any of the four products at 
issue.  In the absence of any such finding, there is no basis for the Appellate Body to conclude that 
double remedies occurred as a factual matter. 
                                                      
157United States' appellee's submission, para. 454 (quoting Panel Report, para. 14.75).  WT/DS379/AB/R 
 Page 85 
 
 
  233. The United States contests China's assertions th at there are no disputed facts that the 
Appellate Body need examine to rule on this issu e, that a finding of inconsistency would follow 
directly from the reversal of the Panel's legal inte rpretations, and that China's submissions before the 
Panel amounted to a demonstration, based on undisp uted evidence, that double remedies occurred in 
the investigations at issue.  China made no attemp t, in any of the proceedings before the USDOC, to 
present evidence that double remedies had occurred,  and also failed to place undisputed facts on the 
Panel record.  Before the Panel, China simply ar gued that subsidies in market economies would lower 
dumping margins on a pro rata basis (thus avoiding any "double remedies"), but that subsidies have 
no effect whatsoever on dumping margins in NM E countries.  The United States emphasizes that 
China provided no evidence to support e ither of these theoretical assumptions. 
C. Arguments of the Third Participants 
1. Argentina  
234. With respect to the definition of "public body" under Article 1.1(a)(1)(i) of the 
SCM Agreement , Argentina agrees with the Panel's interp retation of "public body" as meaning "any 
government-controlled entity".158  The question of whether an entity is a "public body" relates to the 
nature, not the behaviour, of that entity.  The br oad interpretation given by the Panel to the term 
"public body" is correct, and consistent with the object and purpose of the SCM Agreement .  In 
contrast, the narrow interpretation put forward by China, which equates "public body" with 
"government", is contrary to the ordinary meani ng of the term, and would potentially provide WTO 
Members with a means to evade the obligations that  they have assumed under that Agreement.  This 
is because, under the narrow definition of "public bo dy" put forward by China, wholly or majority 
government-owned enterprises would not necessarily be covered by the SCM Agreement , yet such 
entities cannot, by their very nature, be consider ed to be "private entities" without rendering the 
differentiation between "public" and "private" mean ingless.  Therefore, accepting China's position 
would mean that a category of entities controlled by  the State but that do not have government powers 
and that are engaged in activities involving the suppl y of goods and services would remain outside the 
framework of the SCM Agreement .  Argentina adds that, even if, under China's narrow interpretation, 
a State-owned entity could qualify as a "private body", then the analysis of whether that "private 
body" has granted a financial contribution would n eed to be conducted under Article 1.1(a)(1)(iv), 
which would, as the Panel explained, amount to  enquiring whether the government entrusted or 
directed itself to provide a financial contribution. 
                                                      
158Argentina's third participant's submission, para. 16 (quoting Panel Report, para. 8.83;  and referring 
to para. 8.84). WT/DS379/AB/R 
Page 86  
 
  235. With respect to the simultaneous imposition of  anti-dumping duties and countervailing duties, 
Argentina considers that such simultaneous impositi on is in accordance with WT O rules provided that 
the countervailing duties aim to offset domestic subs idies and not export subsidies.  The principle 
expressio unius est exclusio alterius suggests that, as the WTO rules contain a specific prohibition on 
the simultaneous application of certain measures,  but no specific prohibition on the simultaneous 
application of anti-dumping duties determined using the surrogate country methodology and 
countervailing duties, then the concurrent applicati on of duties in the latter case is consistent with 
WTO rules.  Argentina also contests China' s presumption that the application of an NME 
methodology in an anti-dumping investigation necess arily addresses subsidization, and notes that the 
purpose of an NME methodology is to mirror market economy conditions by using undistorted analogue country prices and costs, rather than  trying to offset the use of subsidies. 
2. Australia
 
236. Australia agrees with the Panel's interpretation of the term "public body"  in Article 1.1(a)(1) 
of the SCM Agreement  as "an entity controlled by a government"159, and that such control may be 
determined principally, but not solely, on majority ownership.  However, the Panel's findings in 
rejecting China's arguments based on the ILC Articl es went beyond those of previous panels and the 
Appellate Body.  Although the ILC Articles are not  themselves binding, many of the principles they 
embody reflect customary international law, as pa nels and the Appellate Body have regularly 
recognized.  The Panel Report reflected such prin ciples of customary international law when it 
attributed the conduct of all levels  of government in China to the State.  Principles of customary 
international law are "rules of inte rnational law applicable in the rela tions between the parties" within 
the meaning of Article 31(3)(c) of the Vienna Convention  and, as such, are to be taken into account 
when interpreting WTO provisions.  Nonetheless, the ILC Articles cannot assist with the question of the meaning of the term "public body", because Article 1.1 of the SCM Agreement is not an attribution 
rule, and because the ILC Articles do not purport to de fine the content of the term "public body".  
Rather, Article 1.1 simply determ ines which subsidies granted by which bodies will be included in the 
coverage of the SCM Agreement , and the ILC Articles are concerned only with whether behaviour by 
any body, regardless of its characterization, will be attr ibuted to the State.  Even if the Panel were 
correct that Article 1.1 of the SCM Agreement is an attribution rule and th at there is, therefore, some 
overlap between the provision and the ILC Articles,  this alone is not sufficient for a finding of 
lex specialis .  For the lex specialis  principle to apply, there must be some actual inconsistency 
between the two overlapping provisions or a discernible intention th at one provision is to exclude the
                                                     
 
159Australia's third participant's submission, para. 4 (quoting Panel Report, paras. 8.74-8.80).  WT/DS379/AB/R 
 Page 87 
 
 
  other, yet the SCM Agreement  does not evince any intention to diff er from the principles of customary 
international law relating to the attr ibution of responsibility to the State.  Australia considers, in this 
regard, that China erred and "misalign[ed]"160 the relevant categories in suggesting that there is a 
direct correlation between Article 5 of the ILC Articles and "public bodies", and between Article 8 
and "private bodies" that have been "entrusted or di rected" by government.  In Australia's view, it is, 
rather, Article 8 of the ILC Articles that more cl osely resembles the definition of "public body" and 
Article 5 that more closely resembles the principle of  "private bodies" that have been "entrusted or 
directed" by a government.  When the relevant provisions are appropriately aligned, submits 
Australia, it follows that the Panel was correct in fi nding that Articles 4, 5, and 8 of the ILC Articles 
were not of assistance in this dispute. 
237. With respect to the interpretation of Article 2.2 of the SCM Agreement , Australia agrees with 
the Panel's interpretation of the terms "certain enterprises" and "designated geographical region" and 
its articulation of the relationship between paragraphs 1 and 2 of Artic le 2.  The Panel correctly found 
that regional specificity can be determined on th e basis of a geographical limitation alone, and does 
not require an additional limitation to certain enterp rises.  Otherwise, it would be difficult to envisage 
a situation covered by Article 2.2 that would not be already covered by Article 2.1(a) through (c), 
which would render Article 2.2 meaningless and of no effect.  Australia also agrees with the Panel's 
finding that the term "designated geographical re gion" can encompass any identifiable tract of land 
within the jurisdiction of a granting authority, and with its criticism that the USDOC's reasoning—
that the provision of the land-use rights was re gionally specific because the land was physically 
located in the designated area within the juri sdiction of the granting authority—was essentially 
circular, given that land is itself a location.  As for the Panel's statement regarding a possible "distinct regime", Australia regards the Pane l as having left open the question of whether, for an area to be 
treated as geographically distinct, the region needs to have some character aside from the simple 
provision of land-use rights, or whether the land-use rights themselves can provide that distinct 
character as long as the particular provision of land-u se rights is different for that particular area.  
Nonetheless, certain statements by the Panel suggest  that it considered that the latter would suffice, 
and Australia agrees with this view. 
238. With respect to the issue of the appropria te market benchmark to be applied under 
Article 14(b) of the SCM Agreement , Australia, first, expresses the view that, in a situation where 
there is no loan that the investigated borrower "could actually obtain on the market", for example 
because the borrower is not creditworthy, this does not mean that there is no benchmark and that, 
therefore, the benefit amount is zero.  Rather, in such circumstances, as well as in circumstances 
                                                     
 
160Australia's third participant's submission, para. 22. WT/DS379/AB/R 
Page 88  
 
  where there is no market at all for a particular ty pe of loan, the entire amount of the government loan 
would constitute the benefit.  In a case where the market is distorted, however, it is, as the Panel 
found, reasonable to construct a benchmark based on market principles.  The only other alternatives 
would have been for the Panel to have found that no analysis could be conducted due to the inability 
to find a comparable loan and thus that no benefit was conferred, or to have found that no such loan 
existed on the market and therefore that the entire amount of the loan constituted the benefit.  The 
former approach would exempt Members with dist orted markets from the market-based obligations 
under the SCM Agreement , while the latter approach would have involved treating loans on China's 
distorted loan market in the same way as loans that  no commercial lender would ever grant.  Australia 
also agrees with the Panel's view that the currency in  which a loan is denominated is one of its most 
important characteristics, but that currency di fferences do not necessarily pose an insurmountable 
hurdle, as there are means to determine the equiva lence of loans expressed in different currencies. 
239. With respect to the simultaneous imposition of  anti-dumping duties calculated under an NME 
methodology and countervailing duties, Australia ag rees with the Panel's strict reading of 
Articles 19.3 and 19.4 of the SCM Agreement , and cautions that a broader reading of these provisions 
would compromise the integrity of individual invest igations in the pursuit of preventing an outcome 
(double remedies) that it is by no means clear Members intended to prevent.  Anti-dumping and countervailing measures are trade remedies that addr ess two distinct trade practices and have different 
purposes and effects.  Neither the Anti-Dumping Agreement nor the SCM Agreement address 
concurrent or parallel anti-dumping and countervailing duty investiga tions.  The covered agreements 
contain no prohibition on such investigations and, indeed, Article VI:5 of the GATT 1994 reinforces 
the right of Members to conduct both.  The Pa nel correctly found that the "appropriate amount" 
referred to in Article 19.3 is the appropriate amount to offset the subsidy, and that Article 19.4 is 
oblivious to any potential conc urrent imposition of anti-dumping duties.  In cases where double 
remedies do not arise, it will be important that these provisions only permit countermeasures for the 
specific subsidy that has been investigated and not take into account factors outside of the 
investigation.  Australia suggests, nevertheless, th at the Appellate Body might consider the question 
of whether Article 11.2 of the Anti-Dumping Agreement or Article 21.2 of the SCM Agreement  could 
address the situation of double remedies, because it seems possible that investigating authorities might 
find, in a review subsequent to the imposition of  anti-dumping and countervailing duties, that the 
relevant duty would no longer meet the test that the continued imposition is necessary to offset dumping or subsidization nor that the injury would be  likely to continue or recur if the duty were 
removed or varied.  WT/DS379/AB/R 
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  3. Brazil  
240. With respect to Article 1.1(a)(1) of the SCM Agreement , Brazil takes no position on whether 
the Chinese companies involved in the investigations at issue constitute public bodies in the sense of 
that provision or whether they are private bodies entrusted or directed by the Government of China.  
However, Brazil contends that the Panel's swee ping interpretation of the term "public body" 
impermissibly expands the scope of subsidy disciplines beyond what WTO Members agreed to in the SCM Agreement .  Contrary to what the Panel found, a "public body" "is an entity vested with the 
authority to, in the regular course of its activities, pe rform functions and exercise  attributions that are 
typical of a government".
161 
241. Brazil contends that the criterion of governme nt control of an entity, which the Panel 
considered determinative for finding that the entities at issue were "public bodies", is just one of 
numerous factors that should be considered when ev aluating the nature of the company.  Government 
ownership and control do not, in and of themselve s, establish a presumption that a company is a 
"public body".  The determination of whether an entity constitutes a public body is a case-by-case 
assessment based on an overall analysis of all rele vant attributes of the entity, including the stated 
objectives and the legal regime under which the entity operates, its day-to-day activities, as well as 
ownership and control.  In any event, Brazil is of the view that the notion of "control" must in all 
cases exceed the boundaries of shareholding and invo lve an assessment of other factors, such as the 
company's internal structure and composition of management boards, its decision-making processes, 
and the legal regime under which it operates. 
242. Brazil explains that, according to the Panel' s interpretation, any company whose shares are 
majority owned by a government will automatically be  deemed to be a "public body", and, thus, its 
everyday commercial transactions could be deemed to be financial contributions in the sense of 
Article 1 of the SCM Agreement .  Furthermore, ownership is an  inherently unstable criterion, 
especially for a publicly traded company and should t hus not be the sole criterion for distinguishing a 
public body from a private body.  Brazil recalls that the panel in Korea – Commercial Vessels rejected 
a test that would result in classifying an entity as a "public body" on one day and a "private body" the 
next, solely on the basis of its behaviour on tho se days.  A similar dilemma would arise from relying 
exclusively on ownership of a company as a crite rion to distinguish between public and private 
bodies, because the ownership of a publicly traded company constantly fluctuates through the normal 
sale and trading of shares in the stock market.  De pending on the magnitude of the trading, a company 
could be majority owned by a government  at one moment, but not at the next. 
                                                      
161Brazil's third participant' s submission, para. 3. WT/DS379/AB/R 
Page 90  
 
  4. Canada
 
243. Canada requests the Appellate Body to uphold the Panel's findings that SOEs and SOCBs are 
public bodies within the meaning of Article 1.1(a)(1) of the SCM Agreement .  Canada submits that the 
Panel was correct in finding that an entity controlled by a government is a "public body", and that a 
government may exercise such control through whole or majority ownership.  The Panel's 
interpretation is consistent with  the context of Article 1.1(a)(1) and the object and purpose of the 
SCM Agreement , as it ensures that the disciplines of the SCM Agreement are given a sufficiently 
broad scope in terms of the entities to which they apply.  By contrast, China's interpretation would 
reduce the term "public body" to inutility and u nduly limit the scope of the subsidy disciplines by 
excluding entities that are controlled by government and that make financial contributions that are 
listed in Article 1.1(a)(1).  Canada further asserts that China's interpretation would allow 
circumvention of the SCM Agreement , because a government could simply have entities that it 
controls perform the functions lis ted under Article 1.1(a)(1) instead of performing them itself. 
244. With respect to Article 14(d) of the SCM Agreement , Canada requests the Appellate Body to 
reverse the Panel's finding that the government's pr edominance as a supplier of goods, in and of itself, 
justifies an investigating authority's use of out-of-c ountry benchmarks.  Canada  submits that the Panel 
erred in so finding, and erred in its r eading of the Appellate Body report in US – Softwood Lumber IV .  
The Appellate Body made clear that the circumstan ces in which investigating authorities could resort 
to out-of-country benchmarks are "very limited"162, and specifically stated that the role of the 
government as a provider of goods in the market is not sufficient, in and of itself, to establish that in-country private prices are distorted and therefore cannot be used as benchmarks.  Under the 
Appellate Body's interpretation of Article 14(d) of the SCM Agreement , positive evidence of the 
distortion of private prices found on a case-by-case basi s is always necessary, yet the false distinction 
that the Panel created between the government as a "significant" supplier and the government as a 
"predominant" supplier would effectively negate th is requirement.  Canada also observes that the 
USDOC could have justified its use of out-of-count ry benchmarks by relying on Section 15(b) of 
China's Accession Protocol, which permits investiga ting authorities to calculate a Chinese subsidy 
benefit on the basis of costs or prices out side China if there are "special difficulties"
163 in the 
application of Article 14 of the SCM Agreement .   
                                                      
162Canada's third participant's submission, para. 26 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 102). 
163Canada's third participant's submission, para. 44 (quoting China's Accession Protocol, para. 15(b), 
and China's Accession Working Party Report, para. 150).  WT/DS379/AB/R 
 Page 91 
 
 
  245. Canada requests the Appellate Body to uphold the Panel's finding that China did not establish 
that the United States had acted inconsiste ntly with its WTO obligations under the SCM Agreement or 
the GATT 1994 by applying countervailing duties and anti-dumping duties concurrently where 
normal values were calculated using cost s and prices from outside China.  The WTO Agreement treats 
dumping and subsidization as two different causes of injury to domestic industries and provides 
distinct sets of rules for each.  When an importe d product happens to be bot h dumped and subsidized, 
and causes injury, an importing Member may impose both an anti-dumping duty equal to the margin 
of dumping and a countervailing duty equal to the amount of the subsidy.  That Member's right to do 
so is both confirmed and circumscribed by Article VI:5 of the GATT 1994.164  Nothing in the 
GATT 1994, the Anti-Dumping Agreement , or the SCM Agreement prevents the concurrent 
application of duties determined on the basis of prices or costs found outside the market of the 
exporting Member whose products are under investigation, but the second Ad Note to  Article VI:1 of 
the GATT 1994 expressly authorizes an importing Memb er to calculate the normal value of products 
from centrally planned economies using costs or prices in a surrogate country instead of domestic prices.  China's Accession Protocol also confir ms the possibility of concurrent anti-dumping and 
countervailing duties even when they are not based on prices or costs found in China.  In Canada's 
view, if WTO Members had intended to prohibit su ch concurrent application when anti-dumping 
duties on Chinese products are calculated on the basi s of subparagraph 15(a)(ii) of China's Accession 
Protocol, then they would have included such a pr ohibition in China's Accession Protocol, as they had 
done earlier in the Tokyo Round Subsidies Code .  Under Article 19.4 of the SCM Agreement , a 
countervailing duty on a Chinese product will be in "the  amount of the subsidy found to exist" if it is 
calculated in accordance with Article 14 of the SCM Agreement  or paragraph 15(b) of China's 
Accession Protocol.  No other method for calcula ting the amount of the subsidy is prescribed.  
Nothing in the Anti-Dumping Agreement  has any legal relation to such calculation, and the imposition 
of anti-dumping duties does not extinguish the benefit of a subsidy.  Therefore, as long as the 
importing Member calculates the amount of subsidy in accordance with either of these provisions, the countervailing duty will be in the "appropriate  amount" as required by Article 19.3 of the 
SCM Agreement . 
5. European Union
 
246. The European Union submits that the Panel's interpretation and application of the term 
"public body" in Article 1.1(a)(1) of the SCM Agreement  as including, in this particular case, entities 
controlled by the government does not amount to a legal error, even though the European Union considers that the Panel made statements that were unnecessary for the purpose of resolving this 
                                                     
 
164Canada's third participant's submission, para. 40.  WT/DS379/AB/R 
Page 92  
 
  dispute.  The European Union suggests that the Appellate Body uphold the Panel's findings, but make 
it clearer that ownership or control is not necess arily dispositive of this matter in all cases.   
247. The European Union views the actual disput e between the participants as relating to 
presumptions, burden of proof, and evidence before an  investigating authority, with China appearing 
to argue that a publicly owned or controlle d enterprise should be considered to be presumptively  
private and the United States appearing to argu e that such enterprises should be considered 
presumptively public bodies.  Therefore, the question is wh ether the Panel erred in finding that the 
evidence before the USDOC reasonably supported the determination of "public body" in the 
investigations at issue, and the answer to this ques tion appears to be affirmative.  The European Union 
notes that China could have submitted to the USDOC evidence indicating the role of the market and 
the absence of government interference.  A fundament al element in the determination of financial 
contribution is that the action of the entity must  be somehow attributed to the government.  The 
distinction between public body and private body is relevant to this question of attribution, and 
control of the entity is a relevant element to estab lish whether an entity is a public or private body. 
The European Union considers that a high level of government ownership is a very relevant, 
potentially determinant, factor, depending on the level of cooperation from the responding parties and 
the evidence on the record.  The degree or nature of control that government ownership entails is also 
relevant.  As the Panel found, there could be cas es where government ownership would not lead to 
government control, since, in a determination of whether an entity is a public body, all relevant facts 
and evidence should be taken into account.   
248. The European Union characterizes China's in terpretation of the term "public body" as 
incorrect and overly rigid, because it equates " public body" with "government agency", would 
preclude investigating authorities from taking into cons ideration the totality of facts and evidence, and 
places a whole category of government-controlled en tities outside the scope of the definition of 
"public body".  The European Union agrees with the Panel that Article 1.1(a)(1) joins the terms 
"government" and "public body" as a shorthand in or der to avoid repetition, not because the concepts 
should be equated.  In this regard, the European Union notes that items (j) and (k) of the Illustrative 
List of Export Subsidies in Annex I to the SCM Agreement  refer to government control as a separate 
and distinct criterion.  As for China's assertion th at "public body" must be interpreted harmoniously 
with the term "government agency" in Article 9.1 of the Agreement on Agriculture , the European 
Union considers that neither the Appellate Body report in Canada – Dairy  nor Article 33 of the 
Vienna Convention supports China's view, and that the Panel did not provide different meanings to 
similar terms.  In referring to municipal laws, the Panel was not using Article 31(3)(b) of the 
Vienna Convention , but interpreting the ordinary meani ng of the term "public body" under  WT/DS379/AB/R 
 Page 93 
 
 
  Article 31(1), starting with dictionary meanings  and then examining other "common" meanings 
found, inter alia , in the municipal laws of WTO Members.  Finally, the European Union notes that 
although China refers to the ILC Articles in support of its narrow interpretation of "public body", the 
Commentaries to those Articles themselves make  reference to the question of a State's control  of the 
conduct of an entity. 
249. With respect to the interpretation of Article 2.1(a) of the SCM Agreement , the European 
Union submits that financial contri bution, benefit, and specificity are three separate, cumulative, and 
sequential elements, and that the specificity analysis takes place after  it has been established that a 
subsidy exists.  Article 2.1(a) focuses on whether ac cess to the subsidy that has been found to exist is 
explicitly limited in law, and does not require the ex plicit identification of both financial contribution 
and benefit.  As the Panel observed, if the text of  the law contains a financial contribution that is 
limited to "certain enterprises", it follows that only those enterprises will have access to it.  With 
respect to China's challenge to the Panel's inte rpretation and application of the term "certain 
enterprises", the European Union notes that the factua l situation appears to be more complicated than 
that presented by China, and considers that the fo llowing factors strongly suggest that the subsidies 
were granted to a "sufficiently discrete segment" of the Chinese economy as to be limited to "certain 
enterprises" within the meaning of Article 2.1(a):  (i) the USDOC found that SOCBs were instructed 
by means of central and provincial planning docu ments to provide financing to an identified subset  of 
"encouraged" projects;  (ii) the "encouraged" projects were described in very specific and narrowly 
circumscribed terms and accounted for only a part of the activities covered by the 26 sectors 
concerned;  and (iii) only part of the tyre indust ry is included in the "encouraged" category.  The 
European Union further argues that, in general, Ar ticle 2.1(a) requires a comprehensive and flexible 
determination of specificity based on a range of  principles as dictated by the circumstances of a 
particular case.  The European Union points to the wording of the chapeau of Article 2.1 and 
Article 2.1(c), the overlap between the principles un der subparagraphs (b) and (c), and the immediate 
context in which all three subparagr aphs are placed and observes, in this respect, that the criteria in 
Article 2.1(b) and (c) may become relevant for the analysis of de jure specificity. 
250. With respect to the interpretation of Article 2.2 of the SCM Agreement , the European Union 
understands China to argue that, if there is a br oader "programme" whereby the granting authority 
provides land at below-market prices to all compani es within its jurisdiction, the examination of an 
ad hoc subsidy would be too narrow.  The European  Union considers that, if there is evidence of a 
subsidy programme whereby the granting authority sells land at a below-market price to all companies within its territory, then it would be artif icial to conclude that an ad hoc subsidy to one 
company within the same region is specific under Ar ticle 2.2.  However, the existence of a broader WT/DS379/AB/R 
Page 94  
 
  programme is a factual question that requires evid ential support in accordance with Article 2.4 of the 
SCM Agreement .  The fact that Article 2.2 refers to a "s ubsidy" rather than a "subsidy programme" is 
irrelevant, because the SCM Agreement does not always systematically distinguish between these two.  
Rather, submits the European Union, like the rest  of Article 2, a subsidy in Article 2.2 includes 
ad hoc/individual instances of subs idization as well as subsidy programmes, the existence of which 
has to be proven in accordance with Article 2.4. 
251. With respect to the rejection of in-count ry benchmarks under Article 14(d) of the 
SCM Agreement , the European Union considers, based on its understanding of th e Appellate Body's 
findings in US – Softwood Lumber IV , that the fact that the governme nt is the predominant supplier of 
certain goods in the market may be a determining fa ctor when examining all the relevant facts and 
evidence in order to ascertain whethe r market prices established by pr ivate parties can be used as the 
benchmark for the benefit determina tion, or whether, in a particul ar case, another benchmark should 
be used.  In US – Softwood Lumber IV , the Appellate Body focused  on the impact that the 
government's role as a supplier of the product co ncerned has on prices in the market and not on 
whether the prices charged by the government are below-market prices.  If the government's role 
implies that prices set by private operators follo w those of the government, then examining prices of 
private operators would not be useful as a market benchmark.  Thus, reasons the European Union, the Appellate Body's view was that, when the government  is the predominant supplier of certain goods, it 
is likely  (as a logical presumption) that private prices cannot be used since private operators would 
align their prices to those of the predominant s upplier.  The Appellate Body also accepted that a 
government's role as a "significant" supplier of the good in question is distinct from that of a 
"predominant" supplier of the good in question, and reflects a different degree of how such a role may 
distort private prices in the market. The European  Union notes that "predominant" refers to both 
quantitative and qualitative elements, whilst "significan t" deals more with the quantitative aspect, and 
that, in terms of quantity, "predominant" indicates a higher amount than "significant".  In this dispute, 
the European Union understands that the USDOC's ra tionale for using an a lternative benchmark was 
primarily  (not exclusively) based on the preponderant market share of SOEs in China.  Although 
China seems to consider that reliance on the govern ment as a predominant supplier coupled with the 
use of facts available to examine the role of th e government in the Chinese market of the product 
concerned was not a proper examination of the f acts, China did not challenge the use of facts 
available before the Panel.  Therefore, absent mo re information about the market situation, the 
European Union considers that the Panel properly concluded that the USDOC's determinations were 
not based on a per se  rule—that, if the government were th e predominant supplier of a particular 
good, this would be a sufficient reason to reject private in-country prices as the benchmark—but on 
the specific facts of the case.  WT/DS379/AB/R 
 Page 95 
 
 
  252. With respect to the issue of loan benchmarks under Article 14(b) of the SCM Agreement , the 
European Union believes that the interpretati on of Article 14(d) by the Appellate Body in US – 
Softwood Lumber IV is also relevant for clarifying the mean ing of Article 14(b).  The Appellate Body 
reasoned that, if the relevant market conditions were distorted, the comparison contemplated by 
Article 14 would become useless.  This suggests, in the case of loans, that, if it can be shown that the 
"comparable commercial loan which the firm  could actually obtain on the market" is also distorted 
because of the government's intervention, then  it would follow that having recourse to other 
benchmarks could be possible on a reasonable basis.  Here, too, the key question is not whether the 
government loans are provided on more favourable te rms than the market, but to what extent a 
"comparable commercial loan" can be found on the ma rket despite the governme nt's predominant role 
as a lender on the same market.  The European Un ion emphasizes that this "same market" is not 
another government loan, as China posits, but loans o ffered by private companies.  As for China's 
arguments with respect to the gove rnment's intervention in the mark et, the European Union considers 
that setting inter-bank interest rates is different from a situation where a central bank effectively 
dictates the actual lending rates of public or priv ate banks to companies.  The European Union 
expresses the view that recourse to a proxy was appr opriate in the circumstances of this case, namely 
where, in view of the government's "predominant role as a lender" together with "other factors 
showing government intervention in the lending ma rket", there was no "comparable commercial loan 
which the firm could actually obtain on the ma rket".  The European Union highlights that 
Article 14(b) contains no mention of any geographi cal considerations, and that the benchmark chosen 
must, nevertheless, relate or refer to, or be connected with, market conditions. 
253. With respect to the simultaneous imposition of  anti-dumping duties calculated under an NME 
methodology and countervailing duties, the European Union does not disagree with the Panel's line of 
reasoning and notes that, while the potential for a doubl e remedy exists, this must be determined on a 
case-by-case basis.  It cannot be presumed that the imposition of anti-dumping duties based on an 
NME methodology and countervailing duties will alwa ys lead to a double remedy, because subsidies 
do not always affect prices and may have other e ffects that have no impact on the dumping margin.  
Moreover, it is well established that subsidies can be countervailed without a demonstration of the 
effects on prices of the subsidized imports.  China's interpretation of  Article 19.4 of the 
SCM Agreement —that, if the subsidy has been offset by virtue of the manner in which the importing 
Member calculates anti-dumping duties, the subsi dy no longer exists within the meaning of 
Article 19.4—is incorrect, because the subsidy continu es to exist until it is withdrawn, as stated in 
Article 19.1.  The European Union also submits th at a subsidy may continue benefiting its recipient 
regardless of the imposition of a remedy to offset it, and that such situation is unlike that of a 
privatization, which directly speak s to the existence of benefit. WT/DS379/AB/R 
Page 96  
 
  6. India
 
254. With respect to the definition of "public body" under Article 1.1(a)(1) of the SCM Agreement , 
India asserts that the degree of government ownership is not, in itself, suffici ent to consider an entity 
to be a public body, but that the exercise of govern mental authority and power is also necessary.  
India recalls that the panel in EC – Countervailing Measures on DRAM Chips  found that, even in the 
case of 100-per cent government ownership of a ba nk, a demonstration that the government actually 
exercised its power and was able to direct the bank to take certain actions was necessary for an entity 
to be considered a "public body". 
255. With respect to the rejection of in-count ry benchmarks under Article 14(d) of the 
SCM Agreement , India suggests that the Appellate Body s hould reverse the Panel's finding, because it 
is inconsistent with the Appellate Body 's interpretation of that provision in US – Softwood Lumber IV .  
India recalls that the Appellate Body found in that  case that, in order for investigating authorities to 
use an out-of-country benchmark, it must be established that in-country private prices are distorted 
because of the predominant role of the government in the market as a provider of the same or similar goods.  Therefore, investigating authorities are require d to conduct an analysis of the relevant market 
and to establish the conditions under which the prices were established in that market, that is, that 
private suppliers have aligned their prices and th at this alignment is due to the government's 
participation and dominance.  India also asserts that  the Panel was required to, but did not, make a 
finding as to whether the USDOC's determination that  there was market distortion of prices was based 
on positive evidence. 
7. Japan
 
256. Japan agrees with the Panel's finding that the te rm "public body" in Article 1.1(a)(1) of the 
SCM Agreement refers to any entity controlled by the govern ment.  Japan contends that the question 
of whether an entity constitutes a "public body" relates to the nature of the entity, not the actions taken 
by the entity.  Whether an action is public or priv ate in nature is not determinative of whether an 
entity is a public body or a private body in the sense of Article 1.1(a)(1).  Rather, according to Japan, 
an entity is a "public body" regardless of the acts it performs if the entity is, by its nature, controlled 
by the government. 
257. Japan further submits that the ILC Articles, and in  particular Article 5, are not "relevant" rules 
in the sense of Article 31(3)(c) of the Vienna Convention  for interpreting the term "public body" in 
Article 1.1(a)(1) of the SCM Agreement , since Article 5 neither defines nor uses the term "public WT/DS379/AB/R 
 Page 97 
 
 
  body".  Article 5 stipulates a rule of attribution of  conduct to a State, but it does not define the term 
"public body" as that term is used in the SCM Agreement .  Japan disagrees with China's 
characterization of how Japan's investigating au thority treated government-owned or -controlled 
entities in the countervailing duty investigations on DRAMS from Korea, and maintains that the 
approach taken by Japan's investigating authority was consistent with the interpretation of "public 
body" by the panel in Korea – Commercial Vessels .  Japan submits that its investigating authorities 
relied on the fact that the Government of Korea had strong controlling power over the activities of the 
entity. 
258. With respect to the rejection of in-count ry benchmarks under Article 14(d) of the 
SCM Agreement , Japan considers that the Panel correc tly relied upon the analytical framework 
provided by the Appellate Body in US – Softwood Lumber IV  in analyzing the USDOC's approach to 
the effect of government predominance in the market  for the goods in question, but does not take any 
position as to whether the Panel conducted an appropria te analysis on the facts of this case.  The 
Appellate Body recognized the possibility that the g overnment's predominant role in the market may 
be such that it disqualifies transactions in the ma rket as benchmarks for the good in question, but it 
did not conclude that such a governmental role coul d be found solely by reason of the fact that the 
government was a significant supplier.  Rather, the Appellate Body explained the necessity for a case-
by-case analysis.  In this regard, China's alle gation, that evidence that the government has a 
"significant" or "predominant" shar e of the market for the good in ques tion is insufficient, on its own, 
to reject private market prices as "distorted", app ears to be based on a misunderstanding of the Panel's 
decision.  The Panel found that evidence of govern ment predominance as a supplier is not conclusive, 
but is "the principal evidence relevant to this question".165  Japan observes that the Panel also found 
that the USDOC did not apply a mechanical rule that in-country private prices are unusable as 
benchmarks when the government is found to be a si gnificant supplier, but that its test was, rather, 
based on a case-by-case analysis of the particular facts of the investigation. 
259. Japan agrees with the Panel's framework for c onsidering the issue of loan benchmarks under 
Article 14(b) of the SCM Agreement  in circumstances where the in-country market of loans is 
distorted, but does not take any position as to whether the loan market in China is distorted or whether 
the USDOC applied appropriate adjustments to th e third-country data.  The Appellate Body's 
reasoning in US – Softwood Lumber IV  for approving out-of-c ountry benchmarks under 
Article 14(d) ―that the comparison contemplated by Article 14 would become circular when the 
government's role in the market is so predomin ant that it effectively determines private prices ―is also
                                                      
165Japan's third participant's submission, para. 18 (quoting Panel Report, para. 10.41). WT/DS379/AB/R 
Page 98  
 
  valid in this dispute.  The text of Article 14 and the panel and Appe llate Body reports in Japan – 
DRAMs (Korea) confirm that this Article provides Members with some latitude in choosing a method 
for calculating the amount of benefit, provided that  such method is consistent with the guidelines 
contained in Article 14.  Thus, the investigating au thorities' discretion to rely on third-country or 
hypothetical loans as a proxy benchmark would not be  unfettered, and due care to apply appropriate 
adjustments to third-country data may be necessary, as the Appellate Body noted in US – Softwood 
Lumber IV  in the case of Article 14(d).
166  Japan also agrees with the Pa nel that, contrary to China's 
assertion, monetary policy is a separate matter from the actual determination of commercial interest 
rates in the market, and argues that the lending rat es of commercial banks may be considered to be 
distorted if the government were to intervene in th eir considerations of economic and business factors. 
260. With respect to the simultaneous imposition of  anti-dumping duties calculated under an NME 
methodology and countervailing duties, Japan agr ees with the Panel that such simultaneous 
imposition creates the potential for a "double remedy".  Japan explains that, when authorities impose a 
countervailing duty against an export subsidy that lowers an export price (but not normal value), a 
double remedy always occurs if the authorities also impose an anti-dumping duty, which is why 
Article VI:5 explicitly prohibits the simultane ous imposition of anti-dum ping and countervailing 
duties in such circumstances.  In contrast, a double remedy rarely occurs in the case of simultaneous 
imposition of an anti-dumping duty and a counterva iling duty against a domestic subsidy.  Although 
this may occur when the anti-dumping duty is cal culated under an NME methodology, Japan agrees 
with the Panel that the precise extent to which the NME calculation captures any subsidization is a 
factual issue that could be difficult to ascertain.  As the existence of a double remedy depends on the 
facts of a particular case, it is not sufficient fo r a complaining Member, for the purpose of establishing 
a claim that there is a double remedy, to simply po int to the simultaneous application of anti-dumping 
duties calculated under an NME methodology and count ervailing duties.  Rather, that complaining 
Member must demonstrate that there is a double remedy based on the facts and calculations of the 
particular case.  Japan also ch aracterizes as without merit China's reference to the Appellate Body 
report in US – Upland Cotton and its criticism of the Panel's alleged a contrario analysis of 
Article VI:5 of the GATT 1994.  The Panel did not conclude that this provision permits  the 
simultaneous imposition of anti-dumpi ng and countervailing duties in th e case of domestic subsidies, 
it simply found that Article VI:5 does not  prohibit  such simultaneous imposition. 
                                                      
166Japan's third participant's submission, para. 30 (quoting Appellate Body Report, US – Softwood 
Lumber IV , para. 109).  WT/DS379/AB/R 
 Page 99 
 
 
  8. Mexico  
261. Mexico disagrees with China that the defining characteristic of a public body is that "it 
exercises authority vested in it by the governme nt for the purpose of performing functions of a 
governmental character".167  This approach is incorrect because Article 1.1(a)(1) of the 
SCM Agreement does not address the authority, functions, or  attributes of governments, but defines 
the term "subsidy".  Subparagraph (a)(1), in partic ular, spells out all the possible forms in which a 
financial contribution may be effect uated.  Mexico maintains that the term "public body" must be 
interpreted broadly and that a subs idy is deemed to exist where a body controlled by the government 
provides a financial contribution that confers a benefit. 
9. Norway  
262. Norway disagrees with the Panel's interpretation of the term "public body".  For Norway, the 
dividing line between "public bodies" and "private b odies" is not based on control or ownership, but 
on a functional delimitation based on whether the body in question performs governmental functions 
or not.  If the body in question performs governmental f unctions, then its conduct is to be attributed to 
the State according to Article 1.1(a)(1).  On the contrary, if the body in question does not perform 
governmental functions, any financial contribution it provides is attributable to the State only if the 
government has entrusted or directed the body to provide such contribution.  Norway bases this 
argument on the language of Article 1.1(a)(1)(iv), in particular the reference to functions that "would 
normally be vested in the government", which it cons iders relevant context for the interpretation of 
the term "public body". 
263. Norway maintains that both the panel report in EC – Countervailing Measures on DRAM 
Chips and the panel report in Korea – Commercial Vessels stand for the proposition that government 
ownership is not sufficient, in and of itself, to determine that a company is a "public body".  Other 
elements must be present, a key element of which is the exercise of governmental functions.  Norway 
also contends that the definition of the te rm "public entity" in paragraph 5(c) of the Annex on 
Financial Services  to the General Agreement on Trade in Services  (the "GATS"), albeit not directly 
applicable, sheds light on the definition of the term "public body" in Article 1.1(a)(1) of the SCM Agreement .  It supports Norway's position because it cl arifies that an essential criterion is that 
                                                     
 
167Mexico's opening statement at th e oral hearing (quoting China's appellant's submission, para. 16). WT/DS379/AB/R 
Page 100  
 
  the entity in question must be "engaged in carry ing out governmental functions or activities for 
governmental purposes".
168 
264. With respect to the simultaneous imposition of  anti-dumping duties calculated under an NME 
methodology and countervailing duties, Norway subm its that the Appellate Body should find that, 
where a subsidy has already been offset through an anti-dumping duty that extinguishes the effects of 
subsidization, the imposition of a concurrent countervailing duty to o ffset the same subsidy already 
offset by the anti-dumping duty is not appropriate under Article 19.3 of the SCM Agreement .  The 
rationale of Article VI:5 of the GATT 1994, that the application of a "double remedy" is inappropriate 
in cases of the concurrent imposition of anti-dumpi ng duties and countervailing duties to counter the 
same export subsidization, applies equally in si tuations where a countervailing duty is imposed to 
counter a domestic subsidy.  Furthermore, Norway contends that Article 32.1 of the SCM Agreement  
stipulates that any specific action agains t subsidies must be undertaken under the SCM Agreement , 
and that, therefore, the imposition of an anti-dumpi ng duty to offset subsidiz ation is inappropriate 
under Article 32.1 of the SCM Agreement . 
10. Saudi Arabia  
265. Saudi Arabia disagrees with the Panel's interpre tation of the term "public body" and submits 
that a public body is an entity acting under governme nt authority that also performs functions of a 
governmental character.  Saudi Arabia argues that , because the two terms "government" and "public 
body" are functionally equiva lent for all purposes in the SCM Agreement , the actions of a "public 
body" must involve the essential attributes of a gove rnment, that is, the exercise of governmental 
authority in carrying out governmental functions.  Furthermore, an entity can only "entrust" or 
"direct" a private body when it possesses the authority to do so.  The fact that an entity is controlled or 
owned by a government would not, in itself, vest it with  the requisite authority.  Saudi Arabia refers to 
the context provided by Article 1.1(a)(1)(iv) to submit that the SCM Agreement  sets out a bright line 
test to determine whether an entity is a "public  body", namely that, where an entity engages in 
government functions and practices, it s hould be considered a "public body". 
266. Saudi Arabia contests the Panel's inte rpretation of Article 2.1(a) of the SCM Agreement   
because it effectively eliminates the requirement that countervailing duties be imposed only on a 
specific subsidy as defined under the SCM Agreement .  The Panel's interpretati on is inconsistent with 
the text of Articles 1 and 2, because every paragr aph and subparagraph of Article 2 refers to the
                                                      
168Norway's third participant's submission, para. 23 (quoting paragraph 5(c) of the Annex on Financial 
Services  to the GATS).  WT/DS379/AB/R 
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  specificity of a subsidy , and a subsidy, as defined in Article 1.1, encompasses both financial 
contribution and benefit.  An authority therefore may not find de jure specificity under Article 2.1(a) 
based merely on the fact that a financial contri bution is expressly limited to a certain group of 
enterprises or industries.  The authority must also  find that the financial contribution conferred a 
benefit that is expressly limited to those recipients.  Furthermore, Saudi Arabia asserts that the Panel's 
interpretation impermissibly severs the requisite causal connection that the words "a benefit is thereby 
conferred" in Article 1.1 establish, and that must  exist between a "financial contribution" and a 
"benefit".  Saudi Arabia illustrates this error by pointing to a "logical impossibility"169 that flowed 
from the Panel's approach:  the Panel found that a financial contribution in the form of government 
allocation of credit to a specific industry conferred a specific benefit on that industry even though:  (i) there was no evidence that any of the enterprises in that industry received an over-allocation of 
credit;  and (ii) the loans received by the enterprises in that industry carried the same interest rates that 
prevailed for all other enterprises in all other industries in the country of export. 
267. With respect to the rejection of in-count ry benchmarks under Article 14(d) of the 
SCM Agreement , Saudi Arabia submits that the Panel's fi nding that investigating authorities may find 
market distortion based solely on evidence of govern ment predominance is err oneous and inconsistent 
with the Appellate Body's ruling in US – Softwood Lumber IV .  Although the Appellate Body 
emphasized that the possibility for investigating au thorities to consider an out-of-country benchmark 
under Article 14(d) is very limited, the Panel set up a presumption whereby evidence of government 
predominance in the domestic market alone jus tifies a finding of market distortion.  This is 
inconsistent with the Appellate Body 's statements that "[t]he fact that the government is a significant 
supplier of goods does not, in itself, establish that all prices for the goods are distorted " and that 
"[t]he determination of whether private prices are distorted because of the government's predominant 
role in the market, as a provider of certain goods, must be made on a case-by-case basis , according to 
the particular facts underlying each countervailing duty investigation."
170  Furthermore, as the 
Appellate Body stated, any benchmark used must reflect the prevailing market conditions in the 
country of provision, and countervailing duties must not  be used to offset differences in comparative 
advantages between countries.  Saudi Arabia cautions, in this regard, that an external benchmark is a 
blunt instrument that could readily negate the natural comparative advantages of the country under 
investigation, particularly given the inevitably subjective nature of the adjustment process.  Lastly, 
Saudi Arabia points to the requirement, in Article 11.9 of the SCM Agreement , to determine the 
existence of each of the elements of a subsidy based on substantial evidence, which it considers 
                                                      
169Saudi Arabia's third participant's submission, para. 48.  
170Saudi Arabia's third participant's submission , para. 52 (quoting Appellate Body Report, US – 
Softwood Lumber IV , para. 102). (emphasis added by Saudi Arabia) WT/DS379/AB/R 
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  provides textual guidance in assessing the Panel's appro ach.  Saudi Arabia contends that Article 14(d) 
may not be interpreted in a manner that alleviates an investigating authority's burden to demonstrate 
"market distortion" based on sufficient evidence, a nd instead allows the authority to presume the 
existence of "market distortion" based on government predominance in the market. 
11. Turkey
 
268. Turkey agrees with the Panel that government control should be the criterion for determining 
whether an entity is a "public body" within  the meaning of Article 1.1(a)(1) of the SCM Agreement , 
and that ownership is the main, but not necessarily the exclusive, indicator of control.  China 
erroneously suggests that "government" and "public bodies" are equivalent expressions.  However, the 
drafters of the SCM Agreement did not use only one term, but instead made a clear distinction 
between "government" and "public body", and this di stinction must be given effect.  Turkey observes 
that China's proposed interpretation is ambiguous, be cause what is inherently a governmental function 
varies from one political culture to another.  Turkey  disputes China's contention that the meaning of 
terms in other WTO agreements, such as the Agreement on Agriculture , are relevant to the meaning of 
"public body" in the SCM Agreement , noting that each agreement has its own scope, definitions, and 
object and purpose.  Turkey also considers that Ar ticles 5 and 8 of the ILC Articles are irrelevant to 
the meaning of "public body" because the ILC Articles and the SCM Agreement cover totally different 
issues, the ILC Articles are not context for the term  "public body", and, in any event, as the Panel 
found, the SCM Agreement  is a lex specialis  that would override the lex generalis  of the ILC Articles.  
While refraining from commenting on the facts of this case, Turkey reiterates that majority 
government ownership is strong evidence of contro l, and observes that separate legal personality, 
listing on domestic or foreign stock exchanges, a nd foreign ownership do not constitute evidence that 
an entity is an independent entity in the market.  Turkey further submits that there is no obligation, 
under WTO law, for the United States to apply the "five-factor test", and asserts that it is the 
obligation of China to prove that the entities in question are not controlled by the government.   
269. With respect to the rejection of in-country private prices as a benchmark under Article 14(d) 
of the SCM Agreement , Turkey shares the view of the Pane l that the predominant role of the 
government in the domestic market itself constitut es sufficient evidence of the existence of price 
distortion in the market to allow recourse to an out-of-country benchmark.  In addition, it is accepted 
by WTO Members, and was acknowledged by China during its accession to the WTO, that the 
Chinese economy has some specific features that, for th e time being, make it inappropriate to define it 
as a market economy for purposes of trade remedies .  Turkey considers that, by accepting the terms 
and conditions cited in the Accession Protocol , China confirmed the predominance of the  WT/DS379/AB/R 
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  "government" in the Chinese economy.  It would be meaningless for investigating authorities to use 
in-country private prices as benchmarks in situati ons where the government predominance is a fact 
because the benefit would be found to be artificially  low or even zero, the full extent of a subsidy 
would not be captured, and the rights of Members to  "fully offset, by appl ying countervailing duties, 
the effect of the subsidy as permitted by the SCM Agreement "171 would be undermined.  Thus, reasons 
Turkey, it cannot be assumed that such prices as the be nchmark in the relevant investigations provide 
an appropriate basis for the analysis of benefit, and the rejection of Chinese in-country prices was not 
inconsistent with Article 14 of the SCM Agreement . 
III. Issues Raised in This Appeal 
270. The following issues are ra ised in this appeal: 
(a) Whether the Panel erred in interpreting the te rm "public body" in Article 1.1(a)(1) of 
the SCM Agreement  to mean "any entity controlled by a government", and in failing 
to find that the USDOC acted inconsistently with that provision, by determining, in 
the four countervailing duty investigations  at issue, that SOE input suppliers 
constituted "public bodies", a nd by determining, in the OTR investigation, that 
SOCBs constituted "public bodies";  
(b) Whether, with respect to specificity, th e Panel erred in its interpretation and 
application of Article 2 of the SCM Agreement , and in particular: 
(i) whether the Panel erred in its interpretation of Article 2.1(a) of the 
SCM Agreement , and in failing to find that the USDOC acted inconsistently 
with that provision, by determining in the OTR investigation that lending by 
SOCBs to the OTR industry was de jure  specific;  and 
(ii) whether, in its assessment of China' s claim in respect of the USDOC's 
determination of regional specificity in the LWS investigation, the Panel 
erred in its interpretation of Article 2.2 of the SCM Agreement ; 
(c) Whether, with respect to the benchmarks used  to calculate benefit, the Panel erred in 
its interpretation and appli cation of Article 14 of the SCM Agreement , and in 
particular: 
                                                      
171Turkey's third participant's submission, para. 37 (quoting Appellate Body Report,  US – Softwood 
Lumber IV , para. 95). WT/DS379/AB/R 
Page 104  
 
  (i) whether the Panel erred in its inte rpretation of Article 14(d) of the 
SCM  Agreement , and in failing to find that the USDOC acted inconsistently 
with the obligations of the United States under that provision, by rejecting in-
country private prices in China as benchmarks for HRS in the CWP and LWR investigations;   
(ii) whether the Panel erred in its inte rpretation of Article 14(b) of the 
SCM Agreement , and in failing to find the USDOC  acted inconsistently with 
the obligations of the United States under that provision: 
A. by rejecting interest rates in China as benchmarks for calculating the 
benefit from RMB-denominated loans from SOCBs in the CWP, LWS, and OTR investigations;  and 
B. by using a constructed proxy benchmark in respect of the RMB-
denominated loans from SOCBs in the CWP, LWS, and OTR investigations; 
(d) Whether, with respect to "double remedies" , the Panel erred in its interpretation of 
Articles 19.3 and 19.4 of the SCM Agreement , and Article VI:3 of the GATT 1994, 
and in failing to find that the USDOC acted in consistently with the obligations of the 
United States under those provisions, by concurrently imposing anti-dumping duties 
calculated on the basis of its NME methodology and countervailing duties in the 
investigations at issue;   
(e) Whether, in reaching its findings and conclusions on the issues identified in 
paragraphs (a), (b)(i), (c)(i) and (ii)B. above, the Panel failed to make an objective 
assessment of the matter before it and act ed inconsistently with its duties under 
Article 11 of the DSU;  and 
(f) If the Appellate Body finds that the Panel erred with regard to the issues identified in 
paragraphs (a), (b)(i), (c), (d) and/or (e ) above and completes the analysis and finds 
that the United States acted inconsistently  with Article 1.1(a)(1), Article 2.1(a), 
Article 14(b) and/or (d), Article 19.3 and/or 19.4 of the SCM Agreement , and/or 
Article VI:3 of the GATT 1994, then whether the United States, in consequence, also 
acted inconsistently with its obligati ons under Articles 10 and 32.1 of the 
SCM Agreement .  WT/DS379/AB/R 
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  A. Introduction 
271. Before commencing our analysis of the issues of law and legal interpretations raised in this 
appeal, we briefly outline certain pertinent facts a nd background information.  This dispute concerns 
four sets of anti-dumping and countervailing duty i nvestigations conducted by the United States 
Department of Commerce (the "USDOC"), and the resulting definitive anti-dumping and 
countervailing duties imposed by the United States  on each of the following four products from 
China:  (i) circular welded carbon quality steel pipe ("CWP");  (ii) light-walled rectangular pipe and tube ("LWR");  (iii) laminated woven sacks (" LWS");  and (iv) certain new pneumatic off-the-
road tyres ("OTR").
172   
272. In respect of each product under investigation,  the relevant anti-dumping and countervailing 
duty investigations were  initiated in tandem in  July or August 2007.173  The periods of investigation in 
respect of the four countervailing duty investigations  at issue were identical  in range, as were the 
periods of investigation in respect of the f our companion anti-dumping duty investigations.174  In each 
of the four anti-dumping duty investigations, the USDOC treated China as a non-market economy 
("NME") for the purpose of calculating the margin of dumping.175  For each product, the USDOC 
issued its final anti-dumping and counterva iling duty determinations on the same day.176   
273. Only a sub-set of the issues raised before the Pa nel with regard to the determinations of the 
USDOC are before us.  More specifically, China appeal s:  (i) the Panel's interpretation and application 
of the term "public body" in Article 1.1(a)(1) of the SCM Agreement ;  (ii) the Panel's interpretation 
and application of Articles 2.1(a) and 2.2 regardi ng specificity;  (iii) the Panel's interpretation and 
application of Articles 14(d) and 14(b) regarding the USDOC's use of benchmarks for the calculation 
                                                      
172Panel Report, para. 2.1.  As a result of the dete rminations that it made in the investigations 
concerning these products , the USDOC imposed definitive anti-dumpi ng and countervailing duties on each of 
the four investigated products, in th e following amounts:  for CWP, a counte rvailing duty rate of 29.62 per cent 
to 616.83 per cent and an anti-dumping duty rate of 69.20 per cent to 85.55 per cent;  for LWR, a countervailing 
duty rate of 2.17 per cent to 200.58 per cent and an anti-dumping duty rate of 249.12 per cent to 264.64 per cent;  for LWS, a countervailing duty rate of 29.54 per cent to 352.82 per cent and an anti-dumping duty rate of 
64.28 per cent to 91.73 per cent;  and, for OTR, a countervailing duty rate of 2.45 per cent to 14 per cent and an 
anti-dumping duty rate of 5.25 per cent to 210.48 per cent. (Panel Report, paras. 2.3, 2.6, 2.8, 2.10, 2.12, 2.14, 2.16, and 2.18) 
173The CWP investigations were initiated on 5 July 2007;  the LWR investigations on 24 July 2007;  
the LWS investigations on 25 July 2007;  and the OTR investigations on 7 August 2007. (Panel Report, paras. 2.2, 2.6, 2.7, 2.10, 2.11, 2.14, 2.15, and 2.18) 
174Panel Report, paras. 2.2, 2.6, 2.7, 2.10, 2.11, 2.14, 2.15, and 2.18. 
175Under Section 773(c) of the United States Tariff Act of 1930 (19 U.S.C. 1677b(c)), normal value in 
anti-dumping investigations involving products from NME countries is determined on the basis of values of 
factors of production in countries that the USDOC has designated as market economies. (Panel Report, 
footnote 6 to para. 2.1) 
176Additional information regarding the factual aspects of these investigations and of the determinations 
made by the USDOC is set out in the Panel Report. (See, in particular, Panel Report, paras. 2.1-2.18) WT/DS379/AB/R 
Page 106  
 
  of benefit;  and (iv) the Panel's findings u nder Articles 10, 19.3, 19.4, and 32.1 of the 
SCM Agreement , and Article VI:3 of the GATT 1994 with re gard to the alleged imposition of "double 
remedies" in the four investigations at issue. 
274. China's appeal regarding the Panel's interpreta tion and application of the term "public body" 
in Article 1.1(a)(1) of the SCM Agreement , relates, with respect to the State-owned enterprise ("SOE") 
"public body" determinations, to all four of the countervailing duty inv estigations, and, with respect to 
the State-owned commercial bank ("SOCB") "public body" determinations, to  the OTR countervailing 
duty investigation only.  China's claims of error re lating to Article 2.1(a) and Article 2.2 concern the 
OTR and LWS countervailing duty investigations, resp ectively.  China's appeal under Article 14(d) 
regarding the USDOC's use of benefit benchmarks  for SOE-provided inputs relates to the CWP and 
LWR countervailing duty investigations, while Ch ina's appeal under Article 14(b) regarding the 
USDOC's use of benefit benchmarks for SOCB-provi ded loans relates to the CWP, LWS, and OTR 
investigations.  China's appeal of the Panel's fi ndings on double remedies relates to all of the USDOC 
investigations at issue.   
275. In this Report, we adopt the order of analysis u sed by the Panel in respect of the issues raised 
by China on appeal.  Accordingly, we first cons ider China's claim that the Panel erred in its 
interpretation and application of Article 1.1(a)(1) of the SCM Agreement .  Second, we consider 
China's claims that the Panel erred in its interp retation and application of Article 2.1(a) of the 
SCM Agreement , and in its interpretation of Article 2.2 of the SCM Agreement .  Third, we consider 
China's claims that the Panel erred in its interpre tation and application of Articles 14(d) and 14(b) of 
the SCM Agreement .  Lastly, with regard to the alleged imposition of double remedies, we consider 
China's claims that the Panel erred in its interp retation and application of Articles 10, 19.3, 19.4, 
and 32.1 of the SCM Agreement , and Article VI:3 of the GATT 1994. 
IV. Article 1.1(a)(1) of the SCM Agreement :  Public Bodies 
A. Introduction 
276. China appeals the Panel's finding that China failed to establish that the USDOC had acted 
inconsistently with the United States' ob ligations under Article 1.1(a)(1) of the SCM Agreement  in 
determining in the CWP, LWR, LWS, and OTR c ountervailing duty investigations that SOE input 
producers were public bodies
177, and, in the OTR investigation, that SOCBs were public bodies.178 
                                                      
177Panel Report, paras. 8.138 and 17.1(a)(i). 
178Panel Report, paras. 8.143 and 17.1(a)(i).  WT/DS379/AB/R 
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  277. The USDOC determined in all four investigations  at issue that the relevant SOEs were public 
bodies.  In making these findings, the USDOC based itself on a rule of majority ownership, that is, the 
USDOC's findings that these entities constitute public bodies were "principally" based on the fact that 
the SOEs are majority government owned.179  In the OTR investigation, the USDOC also determined 
that SOCBs were public bodies.180  This finding was based on the USDOC's analysis of the same issue 
in its earlier CFS Paper determination.181 
278. The Panel interpreted the term "public  body" in Article 1.1(a)(1) of the SCM Agreement to 
mean "any entity controlled by a government".182  The Panel considered gove rnment ownership to be 
highly relevant and potentially disposi tive evidence of government control183 and, on that basis, 
upheld the USDOC's determinations in the inves tigations at issue that the SOEs and SOCBs 
constituted public bodies. 
279. China alleges that the Panel erred in interpreting the term "public body" in Article 1.1(a)(1) of 
the SCM Agreement  to mean any government-controlled entity an d that this mistaken interpretation of 
the term "public body" rende red erroneous the Panel's findings upholding the USDOC's 
determinations.  China submits that government owne rship or control is insufficient to establish that 
an entity is a public body.  For China, the defining characteristic of a public body is that it exercises 
authority vested in it by the government for the purpose of performing functions of a governmental 
character.184  China therefore requests us to reverse the Panel's finding that a "public body" in 
Article 1.1(a)(1) means "any government-controlled entit y" and to find instead that a public body is an 
entity that exercises authority vested in it by the government for the purpose of performing functions 
of a governmental character.185  China also requests us to rever se the Panel's finding that China did 
not establish that the United States acted inconsistent ly with its obligations under Article 1.1(a)(1), 
and to find instead that the United States did act in consistently with these obligations in determining 
that the provision of inputs by SOEs, and the provision of loans by SOCBs, were financial 
contributions by public bodies.  China further requests us to complete the analysis and find, 
consequentially, that the challenged measures are inconsistent with Artic les 10 and 32.1 of the 
SCM Agreement . 
                                                      
179Panel Report, para. 8.127. 
180Panel Report, para. 8.139. 
181Panel Report, para. 8.140. 
182Panel Report, para. 8.94. 
183Panel Report, para. 8.134. 
184China's appellant's submission, para. 16. 
185China's appellant's submission, para. 30. WT/DS379/AB/R 
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  280. The United States responds that the Panel appropr iately rejected China's argument that the 
term "public body" must be unde rstood as referring only to entities vested with government authority 
and performing governmental functions.
186  The United States requests the Appellate Body to uphold 
the Panel's finding that the term "public body" in the sense of Article 1.1(a)(1) means any entity controlled by a government
187 as well as its finding that China di d not establish that the USDOC had 
acted inconsistently with the United States' oblig ations under Article 1.1(a )(1) in making its public 
body determination in the relevant investigations. 
281. Before turning to our analysis, we note th at, while China and the United States advocate 
different definitions of the term  "public body", their respective co nceptions of the entities that may 
properly be considered "public bodies" are not mutually  exclusive, and, in fact overlap significantly.  
China, while requesting us to find that a public body is  an entity that exercises authority vested in it 
by the government for the purpose of performing functions of a governmental character, does accept 
that such public bodies may also be entities that ar e controlled by the government.  The United States, 
in turn, while requesting us to uphold the Panel's finding that "any public body" in Article 1.1(a)(1) 
necessarily means "any government-controlled entit y", accepts that an entity vested with 
governmental authority may constitute a "public body " provided that it is also "controlled" by the 
government. 
B. Article 1.1(a)(1) of the SCM Agreement 
1. The Meaning of the Term "Public Body"  
282. Article 1.1 of the SCM Agreement stipulates that a "subsidy" shall be deemed to exist for the 
purpose of the SCM Agreement  if there is a "financial contri bution by a government or any public 
body" and "a benefit is thereby conferred".188  China's claims relate to the first of the two elements, in 
particular, to the question of how to define the term  "public body" in Article 1.1(a)(1).  In addressing 
China's claims relating to Article  1.1(a)(1), we first set out our understanding of the term "public 
body" in the phrase "a government or any public  body".  Thereafter, we address a number of 
additional allegations raised by China with regard to the Panel's analysis of this interpretative issue.  
We subsequently address China's requests that we reve rse all of the Panel's findings with respect to 
                                                      
186United States' appellee's submission, para. 45. 
187United States' appellee's submission, para. 145. 
188Articles 1.1(a)(2) and 1.1(b) of the SCM Agreement  stipulate that a subsidy shall also be deemed to 
exist if there is any form of income or price support in  the sense of Article XVI of the GATT 1994 and a benefit 
is thereby conferred.  This dispute does not raise the i ssue of subsidies granted in the form of income or price 
support.  WT/DS379/AB/R 
 Page 109 
 
 
  the USDOC's public body determinations, and that we  find those determinations  to be inconsistent 
with Article 1.1(a)(1) and, as a conseque nce, with Articles 10 and 32.1 of the SCM Agreement .189 
283. Article 1.1 of the SCM Agreement  states as follows:  
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if: 
(a)(1) there is a financial contribution by a government or any 
public body within the territory of a Member (referred to in 
this Agreement as "government"), i.e. where: 
(i) a government practice involves a direct transfer of funds 
(e.g. grants, loans,  and equity  infusion), potential direct 
transfers of funds or liabilities (e.g. loan guarantees); 
(ii) government revenue that is otherwise due is foregone or 
not collected (e.g. fiscal incentives such as tax credits); 
(iii) a government provides goods or services other than general 
infrastructure, or purchases goods; 
(iv) a government makes payments to a funding mechanism, or 
entrusts or directs a private body to carry out one or more 
of the type of functions illustrated in (i) to (iii) above 
which would normally be vested in the government and the 
practice, in no real sense, differs from practices normally followed by governments. 
 or 
 
(a)(2) there is any form of income or price support in the sense of 
Article XVI of GATT 1994; 
 and 
 
(b) a benefit is thereby conferred. 
284. With respect to the architecture of Article 1.1 of the SCM Agreement , we note that the 
provision sets out two main elements of a subsidy, namely, a financial contribution and a benefit.  
Regarding the first element, Artic le 1.1(a)(1) defines and identifies the governmental conduct that 
constitutes a financial contribution.  It does so both by listing the relevant conduct, and by identifying 
certain entities and the circumstance s in which the conduct of those entities will be considered to be 
conduct of, and therefore be attributed to, the re levant WTO Member.  Two principal categories of
                                                     
 
189China's appellant's submission, paras. 31, 193, 195, 202, and 563(1) and (6). WT/DS379/AB/R 
Page 110  
 
  entities are distinguished, those that are "governme ntal" in the sense of Article 1.1(a)(1):  "a 
government or any public body ... (referred to in this  Agreement as 'government')";  and those in the 
second clause of subparagraph (iv):  "private body".  If the entity is governmental (in the sense 
referred to in Article 1.1(a)(1)), and its conduct falls within the scope  of subparagraphs (i)-(iii) or the 
first clause of subparagraph (iv), there is a fina ncial contribution.  When, however, the entity is a 
private body, and its conduct falls within the scope  of subparagraphs (i)-(iii), then there is only a 
financial contribution if, in addition , the requisite link between the government and that conduct  is 
established by a showing of entrustment or directio n.  Thus, the second clause of subparagraph (iv) 
requires an affirmative demonstration of the link between the government and the specific conduct , 
whereas all conduct of a governmental entity constitut es a financial contribution to the extent that it 
falls within subparagraphs (i)-(iii) and the first clause of subparagraph (iv).
190 
285. This appeal raises the question of the correct interpretation of the term "public body".  In 
keeping with the customary rules of interpretati on of public international law, we consider the 
ordinary meaning of the term "public body" in Article 1.1(a)(1) of the SCM Agreement .  We note that, 
while it is not defined as a composite term, the i ndividual words are defined in the dictionary.  The 
word "public" is defined, inter alia , as "of or pertaining to the people as a whole;  belonging to, 
affecting or concerning the community or nation", as "carried out or made by or on behalf of the 
community as a whole", or as "authorized by or representing the community".191  The word "body" in 
the sense of an aggregate of individuals is defined as "an artificial person created by legal authority;  a 
corporation;  an officially constituted organiza tion, an assembly, an in stitution, a society."192  T h e  
composite term "public body" could thus refer to  a number of different c oncepts, depending on the 
combination of the different definitional elements.  As such, dictionary definitions suggest a rather 
broad range of potential meanings of the term "public body", which encompasses a variety of entities, including both entities that are vest ed with or exercise governmental authority and entities belonging 
to the community or nation.
193  We note that dictionary definitions of these words in Spanish and 
                                                      
190See Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 112;  and 
Panel Report, US – Export Restraints , para. 8.53. 
191Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2394. 
192Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 261. 
193We note a similar finding by the Panel at paragraph 8.59 of the Panel Report.  WT/DS379/AB/R 
 Page 111 
 
 
  French would accommodate a similarly broad range of potential meanings of the term "public 
body".194 
286. The term "government" is used twice in Article 1. 1(a)(1).  It appears, first, within the phrase 
"a government or any public body".  Second, " government" appears within a parenthetical phrase 
specifying that, for purposes of the SCM Agreement , this word refers collectively to "a government or 
any public body".  Where it is necessary to distinguish betw een these two uses of the term 
"government" for purposes of our analysis, we refer to the first use of the word as "government" in the 
narrow sense, and to the second use of the word as "government" in the collective sense, or the 
collective term "government". 
287. We recall that the Panel regarded the collec tive term "government" as "merely a device to 
simplify the drafting".195  China disagrees with the Panel's reas oning.  China refers to the Appellate 
Body Report in Canada – Dairy  in support of its view that a public  body is functionally equivalent to 
a government in the narrow sense.196  The United States agrees with the Panel's reasoning that the 
collective term "government" is merely a drafting de vice.  The United States further contends that, 
because China's interpretation of the term "public body" differs in no significant way from the word 
"government" in the narrow sense ―which includes government agencies ―accepting such an 
interpretation would reduce the te rm "public body" to redundancy. 
288. We note that Article 1.1(a)(1) of the SCM Agreement joins "government" in the narrow sense 
and "public body" under the collective term "governme nt".  In contrast, Article 1 clearly juxtaposes 
the concepts of "government" (including "public body") and "private body".  As we see it, the 
juxtaposition of the collective term "government" on the one side and "private body" on the other 
side, as well as the joining under the collective term "government" of both a "government" in the 
narrow sense and "any public body" in Article 1.1(a)(1) of the SCM Agreement , suggests certain 
commonalities in the meaning of the term "governme nt" in the narrow sense and the term "public 
body" and a nexus between these two concepts.  When  Article 1.1(a)(1) stipulates that "a government" 
and "any public body" are referred to in the SCM Agreement  as "government", the collective term 
                                                      
194We note that, in Spanish, the definition of " organismo " is " conjunto de oficinas, dependencias o 
empleos que forman un cuerpo o institución " and " público " is defined as " se dice de la potestad, jurisdicción y 
autoridad para hacer algo, como contrapuesto a privado ". (Diccionario de la Lengua Española , 22nd edn (Real 
Academia Española, 2001), pp. 1107 and 1259)  
In French, " organisme " is defined as " ensemble des services, des bureaux affectés à une tache " and 
"public " is defined as " relatif aux collectivités sociales juridiquement définies;  dressé par une authorité selon 
les formes légales ". (Le Nouveau Petit Robert , J. Rey-Debove and A. Rey (eds) (Dictionnaires Le Robert, Paris, 
2003), pp. 1798 and 2114) 
195Panel Report, para. 8.66. 
196China's appellant's submission, paras. 41 (quoting Appellate Body Report, Canada – Dairy , para. 97) 
and 42. WT/DS379/AB/R 
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  "government" is used as a superordinate, including, inter alia , "any public body" as one hyponym.  
Joining together the two terms under the collective te rm "government" thus implies a sufficient degree 
of commonality or overlap in their essential charac teristics that the entity in question is properly 
understood as one that is governmental in nature and whose conduct will, when it falls within the 
categories listed in subparagraphs (i)-(iii) and th e first clause of subparagraph (iv), constitute a 
"financial contribution" for purposes of the SCM Agreement . 
289. We therefore disagree with the Panel's reas oning that the use of the collective term 
"government" has no meaning besides facilitating the drafting of the Agreement.  We also disagree 
with the Panel's view that the words "a", "or", and "any" within the phrase "a government or any 
public body" indicate that "government" and "pub lic body" are separate concepts with distinct 
meanings.
197  The term "government" as a shorthand for "a government or any public body" may well 
have been employed as a drafting device.  Howe ver, speculation that the use of the collective 
expression was "merely a device to simplify the drafti ng" and that, therefore, the collective expression 
has no interpretative significance, is not consonant with  the principle of effective treaty interpretation.  
It ignores that the structure and the wording of the treaty is significant in determining the common 
intention of the parties. 
290. Turning then to the question of what essential characteristics an entity must share with 
government in the narrow sense in order to be a public body and, thus, part of government in the collective sense, we note, that the term "govern ment" is defined as the "continuous exercise of 
authority over subjects;  authoritative direction or regulation and control".
198  In this vein, the 
Appellate Body found, in Canada – Dairy , that the essence of governme nt is that it enjoys the 
effective power to regulate, control, or supervi se individuals, or otherwise restrain their conduct, 
through the exercise of lawful authority.  The Ap pellate Body further found that this meaning is 
derived, in part, from the functions  performed by a government and, in part, from the government 
having the powers  and authority  to perform those functions.199  As we see it, these defining elements 
of the word "government" inform the meaning of th e term "public body".  This suggests that the 
performance of governmental functions, or the fact of  being vested with, and exercising, the authority 
to perform such functions are core comm onalities between governme nt and public body. 
                                                      
197Panel Report, para. 8.65.  We do, however, agree w ith the Panel that the word "any" before "public 
body" suggests that there may be different kinds of public bodies, and that all such entities fall within the scope 
of the collective term "government". 
198Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 1139. 
199Appellate Body Report, Canada – Dairy , para. 97.  WT/DS379/AB/R 
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  291. In seeking to refine our understanding of the con cept of "public body" in Article 1.1(a)(1) of 
the SCM Agreement , and, in particular, of the core characteris tics that such an entity must share with 
government in the narrow sense, we consider next th e context provided by Article 1.1(a)(1)(iv).  As 
noted above, this provision introduces the concept of "private body".  The meaning of the term 
"private body" may be helpful in illuminating th e essential characteristics of public bodies, because 
the term "private body" describes something that is not "a government or any public body".  The panel 
in US – Export Restraints  made a similar point when it observed th at the term "private body" is used 
in Article 1.1(a)(1)(iv) as a counterpoint to government  or any public body, that is, any entity that is 
neither a government in the narrow sense nor a public body would be a private body.200 
292. The definition of the word "private" includes "of a service, business, etc:  provided or owned 
by an individual rather than the state or a public  body" and "of a person:  not holding public office or 
an official position".201  We note that both the definition of "public" and of "private" encompass 
notions of authority as well as of control.  The defi nitions differ, most notably, with regard to the 
subject exercising authority or control. 
293. We also consider that, because th e word "government" in Article 1.1(a)(1)(iv) is used in the 
sense of the collective term "government", that provi sion covers financial contributions provided by a 
government or any public body where "a government or  any public body" entrusts or directs a private 
body to carry out one or more of the type of functio ns or conduct illustrated in subparagraphs (i)-(iii).  
Accordingly, subparagraph (iv) envisages that a pub lic body may "entrust" or "direct" a private body 
to carry out the type of functions or co nduct illustrated in subparagraphs (i)-(iii). 
294. The verb "direct" is defined as to give authorita tive instructions to, to order the performance 
of something, to command, to control, or to govern an action.202  The verb "entrust" means giving a 
person responsibility for a task.203  The Appellate Body has interpreted "direction" as referring to 
situations where a government ex ercises its authority, including some degree of compulsion, over a 
private body, and "entrustment" as referring to situat ions in which a government gives responsibility 
to a private body.204  Thus, pursuant to subparagraph (iv), a public body may exercise its authority in 
order to compel or command a private body, or govern a private body's actions (direction), and may
                                                      
200Panel Report, US – Export Restraints , para. 8.49. 
201Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2351. 
202Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 692. 
203Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 844. 
204Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , paras. 111 and 116. WT/DS379/AB/R 
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  give responsibility for certain tasks to a private body (entrustment).  As we see it, for a public body to 
be able to exercise its authority over a private bod y (direction), a public body must itself possess such 
authority, or ability to compel or command.  Similarl y, in order to be able to give responsibility to a 
private body (entrustment), it must itself be vested with such responsibility.  If a public body did not 
itself dispose of the relevant authority or respons ibility, it could not effectively control or govern the 
actions of a private body or delegate such responsibili ty to a private body. This, in turn, suggests that 
the requisite attributes to be able to entrust or di rect a private body, namely, authority in the case of 
direction and responsibility in the case of entrustment, are common characteristics of both government in the narrow sense and a public body. 
295. This raises the question as to what kind of au thority or responsibility an entity must exercise 
or be vested with to constitute a public body in the sense of the SCM Agreement .  We note that 
subparagraph (iv) refers to entrus tment or direction to carry out th e type of functions illustrated in 
subparagraphs (i)-(iii) "which would normally be vest ed in the government".  We recall the Panel's 
statement that the provision of loans and loan guar antees referred to in subparagraph (i), and the 
provision of goods and services referred to in subpar agraph (iii), are "functions that are typically 
carried out by, indeed in the firs t instance are the core business of, firms or corporations rather than 
governments."
205  China disagrees with this statement and contends that the provision of loans and 
goods or services is not inherently governmental or  inherently non-governmental.  The United States 
maintains that the provision of loans and loan guarantees, and the provision of goods and services, are 
not inherently the functions of g overnments or entities vested with authority to perform governmental 
functions, but rather of firms or businesses, including sometimes those owned or controlled by the government. 
296. We observe that the Panel identifies no basis for its statement that certain acts listed in 
subparagraphs (i) and (iii) are "in the first instance [] the core business of [] firms or corporations 
rather than governments".
206  In any event, we consider that whether a particular means of making a 
financial contribution is more commonly  used by public or private entities has no direct bearing on, 
nor allows any inference regarding, the constituen t elements of a public body in the context of 
Article 1.1(a)(1) of the SCM Agreement .  On the contrary, we consider  relevant that, while the types 
of conduct listed in Article 1.1(a )(1)(i) and (iii) can be carried out by a government as well as by 
private bodies, a decision to forego or not collect government revenue that is otherwise due, which is
                                                      
205China's appellant's submission, para. 64 (quoting Panel Report, para. 8.70). 
206Panel Report, para. 8.70.  WT/DS379/AB/R 
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  set out in subparagraph (ii), appears to constitu te conduct inherently involving the exercise of 
governmental authority.  Taxation, for instance, is an integral part of the sovereign function.  Thus, if 
anything, the context of Article 1.1(a)(1)(i)-(iii) a nd in particular subparagr aph (ii) lends support to 
the proposition that a "public body" in the sense of Article 1.1(a)(1) connotes an entity vested with 
certain governmental responsibilities, or exercising certain governmental authority. 
297. This brings us to the next contextual element, namely, the phrase "which would normally be 
vested in the government" in subparagraph (iv).  As  we see it, the reference to "normally" in this 
phrase incorporates the notion of what would ordinarily  be considered part of governmental practice 
in the legal order of the relevant Member.  This su ggests that whether the functions or conduct are of 
a kind that are ordinarily classified as governmental in the legal order of the relevant Member may be a relevant consideration for determ ining whether or not a specific entity is a public body.  The next 
part of that provision, which refers to a practice that, "in no real sense, differs from practices normally 
followed by governments", further suggests that th e classification and functions of entities within 
WTO Members generally may also bear on the questi on of what features are normally exhibited by 
public bodies. 
298. We next consider the term "public body" in the light of the object and purpose of the 
SCM Agreement .  The Panel was of the view that: 
[t]o read "any public body" in Article 1.1(a)(1) as excusing from a 
Member government's direct responsibility a wide swathe of government-controlled entities engaging in exactly the sorts of transactions listed in Article 1.1( a)(1)(i)-(iii) of the SCM Agreement 
would fundamentally undermine the Agreement's logic, coherence 
and effectiveness, and thus would be at odds with its object and purpose.
207 
299. Furthermore, the Panel considered that its reading of the term "public body": 
[E]nsures that whatever form a pub lic entity takes (whether agency, 
Ministry, board, corporation, etc.) the government that controls it is directly responsible for those of its actions that are relevant under the 
Agreement.
208 
                                                      
207Panel Report, para. 8.79. 
208Panel Report, para. 8.79. WT/DS379/AB/R 
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  300. China takes issue with this reasoning and conte nds, first, that the Panel wrongly believed that 
China's definition of "public body" was limited to fo rmal arms or organs of government and could not 
encompass government-owned or -controlled ent ities.  Second, even if a government-owned 
or -controlled corporation were not regarded as a public body, its conduct could still be captured by 
the SCM Agreement  under Article 1.1(a)(1)(iv).  The United St ates submits that interpreting the term 
"public body" as referring to entities controlle d by the government preserves the strength and 
effectiveness of the SCM Agreement 's subsidy disciplines.  For the United States, such an 
interpretation also inhibits circumvention, by ensuring that governments cannot escape those 
disciplines by using entities under their control to accomplish tasks that would potentially be subject to those disciplines were the governme nts themselves to undertake them.   
301. We note, first, that the SCM Agreement  does not contain a preamble or an explicit indication 
of its object and purpose.  However, the Appellate  Body has stated that the object and purpose of the 
SCM Agreement  is "to increase and improve GATT disciplines  relating to the use of both subsidies and 
countervailing measures".
209  Furthermore, in US – Softwood Lumber IV , the Appellate Body noted 
that the object and purpose of the SCM Agreement  is to "strengthen and improve GATT disciplines 
relating to the use of both subsidies and counterva iling measures, while, recognizing at the same time, 
the right of Members to impose such measures under certain conditions".210  Finally, we note that, 
with respect to the object and purpose of the SCM Agreement , the Appellate Body stated in US – 
Countervailing Duty Investigation on DRAMS  that the SCM Agreement  "reflects a delicate balance 
between the Members that sought to impose more di sciplines on the use of subsidies and those that 
sought to impose more disciplines on the application of countervailing measures".211 
302. As we see it, considerations of object and purpo se are of limited use in delimiting the scope of 
the term "public body" in Article 1.1(a)(1).  This  is so because the ques tion of whether an entity 
constitutes a public body is not tantamount to the question of whether measures taken by that entity 
fall within the ambit of the SCM Agreement .  A finding that a particular entity does not constitute a 
public body does not, without more, exclude that entity's conduct from the scope of the
                                                      
209In making this observation, the Appellate Body based itself on the 1986 Punta del Este Ministerial 
Declaration, which initiated the Uruguay Round, and char ted the course of the negotiations. (See Appellate 
Body Report, US – Carbon Steel , footnote 65 to para. 73 (quoting Ministerial Declaration on the Uruguay 
Round, GATT Doc. No. MIN.DEC (20 September 1986), p. 7)) 
210Appellate Body Report, US – Softwood Lumber IV , para. 64. (footnote omitted) 
211Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 115.   WT/DS379/AB/R 
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  SCM Agreement .  Such measures may still be attributed to a government and thus fall within the 
ambit of the SCM Agreement  pursuant to Article 1.1(a)(1)(iv) if the entity is a private entity entrusted 
or directed by a government or by a public body.212 
303. We consider that the Panel's object and purpo se analysis did not take full account of the 
SCM Agreement 's disciplines.  It is important to keep in  mind that entities that are considered not to 
be public bodies are not, thereby, immediately excluded from the SCM Agreement 's disciplines or 
from the reach of investigating authorities in a countervailing duty investig ation.  The Panel was 
concerned with what it saw as the implications of to o narrow an interpretation.  As we see it, however, 
too broad an interpretation of the term "public bo dy" could equally risk upsetting the delicate balance 
embodied in the SCM Agreement  because it could serve as a license for investigating authorities to 
dispense with an analysis of entrustment and dir ection and instead find entities with any connection to 
government to be public bodies.  Thus, in our view , considerations of the object and purpose of the 
SCM Agreement  do not favour either a broad or a narrow in terpretation of the term "public body".  
We therefore disagree with the Panel's finding that interpreting "any public body" to mean any entity 
that is controlled by the government best serves the object and purpose of the SCM Agreement . 
304. In interpreting the term "public body", we next turn to consider—in accordance with 
Article 31(3)(c) of the Vienna Convention —any relevant rules of international law applicable in the 
relations between the parties.  Article 31(3)(c) provides: 
3. There shall be taken into account, together with the context: 
 ...  (c) any relevant rules of international law applicable in the 
  relations between the parties. 
305. China submits that the rules of attribution re flected in the International Law Commission's 
(the "ILC") Articles on Responsibility of States for Internationally Wrongful Acts
213 (the "ILC 
                                                      
212Moreover, a finding that an entity is a public body does not, in itself,  result in the application of the 
"disciplines" of the SCM Agreement , as the financial contribution by the public body must confer a benefit and 
the subsidy granted must be specific for such disciplines to apply. 
213Responsibility of States for Internationally Wrongful Acts .  Text adopted by the ILC at its fifty-third 
session, in 2001, and submitted to the United Nations Gene ral Assembly as a part of the ILC's report covering 
the work of that session.  The General Assembly "[took] note of the articles on responsibility of States for internationally wrongful act s" for the first time in General Assemb ly Resolution 56/83 of  12 December 2001, 
corrected by document A/56/49(Vol. I)/Corr.4, and subsequently in Resolution 59/35 of 2 December 2004, 
Resolution 62/61 of 6 December 2007, and Resolution 65/19 of 6 December 2 010.  The ILC's report, which also 
contains commentaries on the dr aft articles, appears in the Yearbook of the International Law Commission, 
2001 , Vol. II, Part Two. WT/DS379/AB/R 
Page 118  
 
  Articles"), in particular, Articles 4
214, 5215, and 8216, reflect customary rules of international law or 
general principles of law.  As such, they are "rul es of international law applicable in the relations 
between the parties" in the sense of Article 31(3)(c) of the Vienna Convention  and relevant to the 
interpretation of Article 1.1(a)(1) of the SCM Agreement .  China contends that the three categories of 
attribution set forth in Articles 4, 5, and 8, r espectively, of the ILC Articles closely parallel the 
attribution of financial contributions to WTO Members under the SCM Agreement  when they are 
provided by:  (i) a government;  (ii) a public body;  or (iii) a private body entrusted or directed by a 
government or a public body.  According to China, Article 5 of the ILC Articles encompasses the type 
of entity characterized as a "public body" in Article 1.1(a)(1) of the SCM Agreement .  Further, 
because Article 5 stipulates that conduct of non-State organs may be attributable to the State only where such organs exercise elements of governme ntal authority, the term "public body" in 
Article 1.1(a)(1) must, according to China, be inte rpreted to mean an entity that exercises authority 
vested in it by a government for the purpose of performing functions of a governmental character. 
306. The United States contends that the Panel pr operly asked whether the ILC Articles "would 
override [its] analysis and conclusions based on the text of the SCM Agreement itself", and correctly 
answered this question in the negative.
217  The United States asserts that the ILC Articles are not a 
subsequent agreement between the pa rties regarding the interpretation of the treaty or the application 
of its provisions because they make no reference to the SCM Agreement , and also because they are in 
any event not an "agreement", as the United Nations General Assembly has merely "taken note of" 
                                                      
214Article 4 of the ILC Articles reads: 
Article 4. Conduct of organs of a State 
1. The conduct of any State organ shall be considered an act of that State 
under international law, whether the or gan exercises legislative, executive, 
judicial or any other functions, whatever position it holds in the organization 
of the State, and whatever its char acter as an organ of the central 
Government or of a territorial unit of the State. 2. An organ includes any person or entity which has that status in 
accordance with the intern al law of the State. 
215Article 5 of the ILC Articles reads: 
Article 5. Conduct of persons or entities 
exercising elements of governmental authority 
The conduct of a person or entity which is not an organ of the State under article 4 but which is empowered by the law of that State to exercise 
elements of the governmental authority  shall be considered an act of the 
State under international law, provided the person or entity is acting in that capacity in the particular instance. 
216Article 8 of the ILC Articles reads: 
Article 8. Conduct directed or controlled by a State 
The conduct of a person or group of persons shall be considered an act of a 
State under international law if the person or group of persons is in fact 
acting on the instructions of, or under the direction or control of, that State in carrying out the conduct. 
217United States' appellee's submission, para. 109 (quoting Panel Report, para. 8.84).  WT/DS379/AB/R 
 Page 119 
 
 
  them.  That some parts of the ILC Articles might reflect customary international law does not mean 
that all of the details of the ILC Articles, including the ILC Commentaries, have attained this status.  
The United States contends that, given the level of detail and fine-line distin ctions constructed in 
Articles 5 to 8 of the ILC Articles, it remains an open, and contested, question whether all of these 
details and distinctions have risen to th e status of customary international law. 
307. We note that Article 31(3)(c) of the Vienna Convention , quoted above, contains three 
elements.  First, it refers to "rules of internationa l law";  second, the rules must be "relevant";  and 
third, such rules must be "applicable in the relati ons between the parties".  We will address these three 
elements in turn. 
308. First, the reference to "rules of international law" corresponds to the sources of international 
law in Article 38(1) of the Statute of the Interna tional Court of Justice and thus includes customary 
rules of international law as well as general principles of law.218  Second, in order to be relevant, such 
rules must concern the same subject matter as the tr eaty terms being interpreted.  To the extent that 
Articles 4, 5, and 8 of the ILC Articles concern th e same subject matter as Article 1.1(a)(1) of the 
SCM Agreement , they would be "relevant" in the sense of Article 31(3)(c) of the Vienna Convention .  
With respect to the third requirement, the question is whether the ILC Articles are "applicable in the 
relations between the parties".  We observe that Articles 4, 5, and 8 of the ILC Articles are not 
binding by virtue of  being part of an international treaty.  However, insofar as they reflect customary 
international law or general principles of law, these  Articles are applicable in the relations between 
the parties.219 
309. Before addressing whether the attribution rules re flected in the ILC Articles, in particular 
Article 5, constitute customary international law or general principles of law, we consider to what 
extent these rules provide guidance for the interpretati on of the term "public body" in Article 1.1(a)(1) 
of the SCM Agreement .  Both Article 1.1(a)(1), on the one hand, and Articles 4, 5, and 8 of the ILC 
Articles, on the other hand, set out rules relating to the question of attribution of conduct to a State.  
At the same time, we note certain differences in the approach reflected in these two sets of rules.  The 
connecting factor for attribution pursuant to the ILC Articles is the particular conduct , whereas, the 
connecting factors in Article 1.1(a)(1) of the SCM Agreement are both the particular conduct and the 
type of entity .  Under the SCM Agreement , if an entity is a public body, then its conduct is attributed 
directly to the State, provided that such conduct falls  within the scope of subparagraphs (i)-(iii), or the 
                                                      
218See M.E. Villiger, "Commentary on the 1969 Vienna Convention on the Law of Treaties " (Martinus 
Nijhoff, 2009), p. 433. 
219Appellate Body Reports, US/Canada – Continued Suspension , para. 382.  See also Panel Report, 
US – Gambling , para. 6.128. WT/DS379/AB/R 
Page 120  
 
  first clause of subparagraph (iv).  Conversely, if an entity is a private body in the sense of 
Article 1.1(a)(1)(iv), its conduct can be attributed to the State only indirectly  through a demonstration 
of entrustment or direction of that body by the gov ernment or a public body.  By contrast, the sole 
basis for attribution pursuant to the ILC Articles is th e particular conduct at issue.  Articles 4, 5, and 8 
each stipulates the conditions in which conduct  shall be attributed to a State. 
310. More specifically, however, with regard to Artic le 5 of the ILC Articles, we note that despite 
certain differences between the attribution rules of the ILC Articles and those of the SCM Agreement , 
our above interpretation of the term "public body" coincides with the essence of Article 5.  We have 
indicated that being vested with, and exercising, au thority to perform government al functions is a core 
feature of a "public body" in the sense of Article 1.1(a)(1).  Here, we note that the commentary on 
Article 5 explains that Article 5 refers to the tr ue common feature of the entities covered by that 
provision, namely that they are empowered, if only to  a limited extent or in a specific context, to 
exercise specified elements of governmental authority .  The commentary also states that the existence 
of a greater or lesser State participation in its capital, or ownership of its assets are not decisive 
criteria for the purpose of attribution of the entity's conduct to the State.
220  This corresponds to our 
above interpretation of the term " public body" in Article 1.1(a)(1).   As we have said above, being 
vested with governmental authority is the key feat ure of a public body.  State ownership, while not 
being a decisive criterion, may serve as evidence in dicating, in conjunction with other elements, the 
delegation of governmental authority. 
311. In this context, we observe that the Unite d States acknowledges that the ILC Articles might 
reflect customary international law to some extent .  Yet, the United States contends that given the 
"fine line distinctions"221 constructed in Articles 5 to 8 of the ILC Articles, it remains an open and 
contested question whether all of these details and dis tinctions have risen to the status of customary 
international law.  Our analysis, however, does not dr aw on any details or "fine line distinctions" that 
might exist under Article 5 of the ILC Articles.  Ra ther, we see similarities in the core principles and 
functions of the respective provisions.  Our consid eration of Article 5 of the ILC Articles does not 
contradict our analysis of Article 1.1(a)(1) above.  Rather, it lends further support to that analysis.  
Yet, because the outcome of our analysis does not turn on Article 5, it is not necessary for us to 
                                                      
220Commentary on Article 5 of the ILC Draft Articles, para. 3. 
221United States' appellee's submission, para. 115.  The United States argues that only if the ILC 
Articles were customary international law could they be said to be "applicable in the relations between the 
parties" and, as a result, possibly relevant in  this dispute under Article 31(3)(c) of the Vienna Convention .  WT/DS379/AB/R 
 Page 121 
 
 
  resolve definitively the question of to what extent  Article 5 of the ILC Articles reflects customary 
international law.222   
312. China takes issue with the Pane l's finding that the ILC Articles need not be taken into account 
because, inter alia , they are not "relevant" to the interpretation of Article 1.1 of the 
SCM Agreement .223  In our view, the Panel misconstrued the ro le of the ILC Articles when it set out to 
analyze "whether [the ILC Articles] would override [the Panel's] analysis and conclusions based on 
the text of the SCM Agreement  itself".224  The question is not whether intermediate results of one 
element of the interpretative exercise "override" the results of another.  Rules of international law 
within the meaning of Article 31(3)(c) are one of several means to ascertain the common intention of 
the parties to a particular agreement reflected in Article 31 of the Vienna Convention . 
313. We are puzzled by the Panel's statement that th e ILC Articles have been cited by panels and 
the Appellate Body "as conceptual guidance only to  supplement or confirm, but not to replace, the 
analyses based on the ordinary meaning, context and object and purpose of the relevant covered 
Agreements".225  The Panel elaborated that, while in so me WTO disputes the ILC Articles "have been 
cited as containing similar provisions to those in cer tain areas of the WTO Agreement, in others they 
have been cited by way of contrast with the pr ovisions of the WTO Agreement, as a way to better 
understand the possible meaning of the provisions of the WTO Agreement".226  The Panel considered 
this to indicate that panels and the Appellate Body  have not considered the ILC Articles to constitute 
rules of international law in the sense of Article 31(3)(c).227  To us, this demonstrates the opposite.  If, 
as the Panel states, certain ILC Articles have been "cited as containing similar provisions to those in 
certain areas of the WTO Agreement" or "cited by way of contrast with the provisions of the WTO 
Agreement", this evinces that these ILC Articles ha ve been "taken into account" in the sense of 
Article 31(3)(c) by panels and the Appellate Body in these cases. 
314. We briefly address the participants' arguments rela ting to the Panel's statement that Articles 4, 
5, and 8 of the ILC Articles would, in any even t, be superseded by Article 1.1(a)(1) of the 
SCM Agreement  as lex specialis  regarding attribution pursuant to Article 55 of the ILC Articles.  
Article 55 provides: 
                                                      
222We recall that, with respect to Article  4 of the ILC Articles, the panel in US – Gambling  stated that 
the principle set out in Article 4 of the ILC Articles refl ects customary international law concerning attribution. 
(Panel Report, US – Gambling , para. 6.128) 
223China's appellant's submission, para. 147. 
224Panel Report, para. 8.84. 
225Panel Report, para. 8.87. (footnote omitted) 
226Panel Report, para. 8.87. 
227Panel Report, para. 8.87. WT/DS379/AB/R 
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  Lex specialis 
These articles do not apply where and to the extent that the 
conditions for the existence of an internationally wrongful act or the content or implementation of the international responsibility of a 
State are governed by special rules of international law. 
315. China submits that for the lex specialis  principle to apply it is not enough that the same 
subject matter is dealt with by two provisions; ther e must be some actual inconsistency between them, 
or else a discernible intention that one provision is to exclude the other.
228  The United States responds 
that there is "plainly" an inconsistency between China's interpretation of the ILC Articles and the 
interpretation of the term "public body" in Article 1.1(a)(1) of the SCM Agreement , and that the Panel 
so found.229 
316. As we see it, Article 55 of the ILC Articles does not speak to the question of whether, for the 
purpose of interpreting Article 1.1(a)(1) of the SCM Agreement , a panel or the Appellate Body can 
take into account provisions of the ILC Articles.  Article 55 stipulates that "[t]hese articles do not 
apply where ...".  Article 55 addresses the question of which rule to apply  where there are multiple 
rules addressing the same subject matter.  The ques tion in the present case, however, is not whether 
certain of the ILC Articles are to be applied , that is, whether attribution of conduct of the SOEs and 
SOCBs at issue to the Government of China is to  be assessed pursuant to the ILC Articles instead of 
Article 1.1(a)(1) of the SCM Agreement .  There is no doubt that the provision being applied in the 
present case is Article 1.1(a)(1).  Rather, the quest ion is, whether, when interpreting the terms of 
Article 1.1(a)(1), the relevant provisions of the ILC Articles may be taken into account as one among 
several interpretative elements.  Thus, the treaty being applied  is the SCM Agreement , and the 
attribution rules of the ILC Articles are to be taken into account  in interpreting the meaning of the 
terms of that treaty.  Article 55 of the ILC Articles does not speak to the issue of how the latter should 
be done. 
317. Having completed our analysis of the interpreta tive elements prescribed by Article 31 of the 
Vienna Convention , we reach the following conclusions.  We  see the concept of "public body" as 
sharing certain attributes with the concept of " government".  A public body within the meaning of 
Article 1.1.(a)(1) of the SCM Agreement must be an entity that possesses,  exercises or is vested with 
governmental authority.  Yet, just as no two gove rnments are exactly alike, the precise contours and 
characteristics of a public body are bound to differ fro m entity to entity, State to State, and case to 
                                                      
228China's appellant's submission, para. 184 (quoting the commentary on Article 55 of the ILC Draft 
Articles, para. 4).  China also refers to a statement along the same lines made by the panel in Korea – 
Procurement , at paragraph 7.96 of its report. 
229United States' appellee's submission, para. 125.  WT/DS379/AB/R 
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  case.  Panels or investigating authorities confr onted with the question of whether conduct falling 
within the scope of Article 1.1.(a)(1) is that of  a public body will be in a position to answer that 
question only by conducting a proper evaluation of th e core features of the entity concerned, and its 
relationship with government in the narrow sense.   
318. In some cases, such as when a statute or other legal instrument expressly vests authority in the 
entity concerned, determining that such entity is a public body may be a straightforward exercise.  In 
others, the picture may be more mixed, and the challenge more complex.  The same entity may 
possess certain features suggesting it is a public body , and others that suggest that it is a private 
body.230  We do not, for example, consider that th e absence of an express statutory delegation of 
authority necessarily precludes a determination that a pa rticular entity is a public body.  What matters 
is whether  an entity is vested with authority to exercise governmental functions, rather than how that 
is achieved.  There are many different ways in which government in the narrow sense could provide 
entities with authority.  Accordingly, different types of evidence may be relevant to showing that such 
authority has been bestowed on a particular entity.  Evidence that an entity is, in fact, exercising 
governmental functions may serve as evidence that it possesses or has been vested with governmental 
authority, particularly where such  evidence points to a sustained and systematic practice.  It follows, 
in our view, that evidence that  a government exercises meaningful control over an entity and its 
conduct may serve, in certain circumstances, as evidence that the relevant entity possesses 
governmental authority and exercises such authorit y in the performance of governmental functions.  
We stress, however, that, apart from an express de legation of authority in a legal instrument, the 
existence of mere formal links between an entity and government in the narrow sense is unlikely to 
suffice to establish the necessary possession of government al authority.  Thus, for example, the mere 
fact that a government is the majority sharehol der of an entity does not demonstrate that the 
government exercises meaningful control over th e conduct of that entity, much less that the 
government has bestowed it with governmental aut hority.  In some instan ces, however, where the 
evidence shows that the formal indicia of government  control are manifold, and there is also evidence 
that such control has been exerci sed in a meaningful way, then su ch evidence may permit an inference 
that the entity concerned is exercising governmental authority. 
                                                      
230In this context, we note that the panel in US – Countervailing Duty Investigation on DRAMS  
commented, with respect to certain entities, that the USDOC had treated as "private bodies", that, "[d]epending 
on the circumstances", the evidence "might well have justified treatment of such creditors as public bodies." (Panel Report, US – Countervailing Duty Investigation on DRAMS , footnote 29 to para. 7.8)  While we do not 
agree with that panel's implication that the particular evidence to which it referred—evidence of government 
ownership—could be decisive, we do consider that the statement illustrates that th e analysis of whether the 
conduct of a particular entity is conduct of the governmen t or a public body or conduct of a private body is 
indeed multi-faceted and that an entity may display ch aracteristics pointing into different directions.   WT/DS379/AB/R 
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  319. In all instances, panels and investigating aut horities are called upon to engage in a careful 
evaluation of the entity in question and to identify its common features and relationship with 
government in the narrow sense, having regard, in par ticular, to whether the entity exercises authority 
on behalf of government.  An investigating authorit y must, in making its determination, evaluate and 
give due consideration to all  relevant characteristics of the en tity and, in reaching its ultimate 
determination as to how that entity should be char acterized, avoid focusing exclusively or unduly on 
any single characteristic without affording due c onsideration to others that may be relevant.
231 
320. We recall that the Panel interpreted the term  "public body" in Article 1.1(a)(1) of the 
SCM Agreement to mean "any entity controlled by a government".232  We note that the Panel did not 
further clarify its notion of control, although it considered government ownership to be "highly 
relevant (indeed potentially dispositive)".233  In that context, the Panel relied on the "everyday 
financial concept of a 'controlling interest' in a company".234  The above analysis, however, indicates 
that control of an entity by a government, in itself,  is not sufficient to establish that an entity is a 
public body.  We, therefore, disagree with the Panel's interpretation. 
321. The Panel may have been led to its interpretati on as a consequence of the particular approach 
to the interpretative exercise it undertook.  To us, it appears that, at each step of the interpretative 
exercise, the Panel tested the interpretation advocated  by China, which it characterized as that "any 
public body" is limited to government agencies or other entities vested with and exercising 
governmental authority.  At each step, the Panel rejected China's proposition.  At the end of its 
interpretative exercise, having consistently reject ed China's proposition, the Panel agreed with the 
United States that the term public body "refers to  entities owned or controlled by the government".235  
The Panel did not, however, consider whether any cr iteria other than those relied upon by the parties 
could potentially be relevant to the enquiry, or whether any indicia other than State ownership are 
relevant to government control.  Nor did the Panel su fficiently analyze the inte rpretative elements that 
served as the basis for its finding that State ownership or control is in itself sufficient to establish that 
an entity constitutes a public body. 
322. For all of the above reasons, we consider that the Panel's interpretation of "public body" lacks 
a proper legal basis.  We therefore reverse the Panel's finding, in paragra ph 8.94 of the Panel Report, 
                                                      
231We note that similar obligations apply to panels in  the context of claims relating to provisions in 
Parts II and III of the SCM Agreement . 
232Panel Report, para. 8.94. 
233Panel Report, para. 8.134. 
234Panel Report, para. 8.134. 
235United States' first written submission to the Pa nel (as corrected, 2 July 2009), para. 101.  WT/DS379/AB/R 
 Page 125 
 
 
  that the term "public body" in Article 1.1(a)(1) of the SCM Agreement  means "any entity controlled 
by a government". 
2. Further Allegations of Error  
323. In this section, we address a number of additi onal allegations of error made by China relating 
to the Panel's analysis of Article 1.1(a)(1) of the SCM Agreement . 
324. China maintains that the Panel improperly cons idered as "context" definitions of terms not 
found in Article 1.1, namely, "private enterprise" and "public sector".236  China alleges that the Panel's 
reasoning amounts to an ersatz and erroneous "ord inary meaning" analysis, in which the Panel 
effectively replaced the actual terms in Article 1. 1 with terms that do not appear in the text and 
therefore cannot constitute context.  We observe that neither the term "private enterprise" nor the term 
"public sector" are used in Article 1.1 of the SCM Agreement .  Dictionary definitions of these terms 
are thus of limited relevance, if any, for determ ining the meaning of the term "public body" in 
Article 1.1(a)(1). 
325. Second, China contends that the Panel considered, as part of its contextual  analysis of 
Article 1.1(a)(1) of the SCM Agreement a concern explained by the panel in Korea – Commercial 
Vessels  regarding what the Panel considered to be a similar issue to the one of the present case.237  We 
note that the definition of "context" in Article 31(2) of the Vienna Convention  makes no mention of 
jurisprudence.  Panel reports in previous disputes do not form part of the context of a term or 
provision in the sense of Article 31(2) of the Vienna Convention .238  Rather, the legal interpretation 
embodied in adopted panel and Appellate Body reports become part and parcel of the WTO acquis  
and have to be taken into account as such.239   
326. Third, China takes issue with the Panel's statement that if the term "public body" is 
understood as being limited to entities vested with go vernmental authority, governments could easily 
hide behind the presumptively "private" nature of  an entity, even while running such entity "so as 
deliberately to provide trade-distorting subsidies".240  In this respect, we recall, first, that according to 
Article 31 of the Vienna Convention , a treaty is to be interpreted in good faith.  That means, inter alia , 
                                                      
236China's appellant's submission, para. 61 (referring to Panel Report, para. 8.69). 
237China's appellant's submission, para. 68 (referring to Panel Report, para. 8.72). 
238We note that, similarly, the Appellate Body has found that "panel reports adopted by the GATT 
[Members] and the WTO Dispute Settlement Body [do not] constitute subsequent practice in a specific case" in 
the sense of Article 31 of the Vienna Convention . (Appellate Body Report, Japan – Alcoholic Beverages II , 
p. 14, DSR 1996:I, 97, at 108) 
239Appellate Body Report, US – Stainless Steel (Mexico) , para. 160;  Appellate Body Report, Japan – 
Alcoholic Beverages II , p. 14, DSR 1996:I, 97, at 108. 
240Panel Report, para. 8.82. WT/DS379/AB/R 
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  that terms of a treaty are not to be interpreted based on the assumption that one party is seeking to 
evade its obligations and will exercise its rights so as to cause injury to the other party.  Yet, the 
United States' argument that "a government would be able to hide behind its ownership interest in an 
entity and engage in entrustment or direction behind closed doors"
241 pleads for an interpretation 
founded on this very assumption, and the above stat ement by the Panel reveals an interpretation on 
this basis.  A proper interpretation in accordance with Article 31 of the Vienna Convention , however, 
cannot proceed based on such an assumption.  Furthe rmore, as our analysis above reveals, we do not 
consider that Article 1.1(a)(1) establishes that  entities are either presumptively private or 
presumptively public bodies.  Rather, in order to determine properly that a financial contribution has 
been made by an entity that is not formally part of  government in the narrow sense, an investigating 
authority must point to positive evidence either establishing that the entity is a public body or 
demonstrating entrustment or direction. 
327. We consider the Panel's approach to be all the more inappropriate under Article 1.1 of the 
SCM Agreement , because the treaty itself contains a sp ecific provision seeking to ensure that 
governments do not evade their obligations under the SCM Agreement  by using private bodies to take 
actions that would otherwise fall within the scope of Article 1.1(a)(1), were they to be taken by the 
government itself.  This provision is, as the Appellate Body has expressly recognized, Article 1.1(a)(1)(iv).
242  This, too, precludes reliance on cons iderations of circumvention in the 
interpretation of the very provision whose circum vention Article 1.1(a)(1)(iv) seeks to prevent. 
328. Fourth, China argues that "public b ody" in Article 1.1(a)(1) of the SCM Agreement should be 
interpreted harmoniously with "governm ent agencies" in Article 9.1 of the Agreement on Agriculture , 
because the Spanish text of the covered agreemen ts uses the term "organismo público" both in 
Article 1.1(a)(1) of the SCM Agreement  and, in the plural, in Article 9.1 of the Agreement on 
Agriculture .  China submits that, in Canada – Dairy , the Appellate Body interpreted the term 
"governments and their agencies" in Article 9.1 of the Agreement on Agriculture as entities that 
exercise powers vested in them by a government for the purpose of performing functions of a governmental character.  China argues that panels and the Appellate Body have sought the meaning 
that gives effect simultaneously to  the text as it appears in all th ree official languages of the WTO.
243  
China argues that, therefore, the Panel should ha ve treated the English terms "public body" and 
                                                      
241United States' appellee's submission, para. 104. 
242Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 113;  Appellate 
Body Report, US – Softwood Lumber IV , para. 52. 
243China's appellant's submission, para. 94 (referring to Appellate Body Report, US – Countervailing 
Duty Investigation on DRAMS , para. 111 and footnote 176 thereto;  and Panel Report, China – Auto Parts , 
para. 7.165).   WT/DS379/AB/R 
 Page 127 
 
 
  "government agency" as functional equivalents and read the term "public body" as a synonym of 
"government agency".244 
329. The United States responds that the Panel was co rrect in rejecting China's arguments based on 
Article 9.1 of the Agreement on Agriculture and the interpretation of the terms of that provision by the 
Appellate Body in Canada – Dairy .  The United States contends that, because the language of 
Article 9.1 of the Agreement on Agriculture  is different from that of Article 1.1(a)(1) of the 
SCM Agreement , and because it is situated in a different c ontext and in a different agreement that has 
its own object and purpose, the term "public body" must mean something different than the term 
"government agency".245 
330. As a preliminary matter, we do not consider it de terminative that the term used in Article 9.1 
of the Agreement on Agriculture  and Article 1.1(a)(1) of the SCM Agreement , "organismo público ", is 
the same only in the Spanish version.  The covered agreements are authentic in all three languages.  
Therefore, pursuant to Article 33(3) of the Vienna Convention , the terms of the treaty are presumed to 
have the same meaning in each authentic text.  Nonetheless, specific terms may not have identical 
meanings in every covered agreement.  Where the ordinary meaning of the term is broad enough to 
allow for different interpretations, and the context as well as the object and purpose of the relevant 
agreements point in different directions, the meani ng of a term used in different places of the covered 
agreements may differ. 
331. We note that the Panel rejected China's argumen t relating to the harmonious interpretation of 
"government or any public body" in Article 1.1(a)(1) of the SCM Agreement  and "governments or 
their agencies" in Article 9.1 of the Agreement on Agriculture , because it had found definitions and 
usages showing a broader possible sc ope of the term "public body".246  However, we do not see that 
China argued simply that the term "public body" or " organismo público " in itself has a narrow scope.  
Rather, we understand China's argumen t to be that the same term " organismo público " is used in 
Article 1.1(a)(1) of the SCM Agreement  and Article 9.1 of the Agreement on Agriculture , and that, 
since the Appellate Body has interpreted the te rm "organismo público" in Article 9.1 of the Agreement 
on Agriculture  to mean an entity which exercises powers v ested in it by a government for the purpose 
of performing functions of a governmental character247, the same term, albeit identical only in the 
Spanish version of the covered ag reements, should be interpreted in the same way in the context of 
Article 1.1(a)(1) of the SCM Agreement . 
                                                      
244China's appellant's submission, para. 99 (quoting Appellate Body Report, Canada – Dairy , para. 97). 
245United States' appellee's submission, paras. 94-99. 
246Panel Report, para. 8.63. 
247Appellate Body Report, Canada – Dairy , para. 97. WT/DS379/AB/R 
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  332. In any event, for the purpose of the present appeal, it suffices to note that the Panel's 
statement that it had "found other definitions  and usages showing a broader possible scope"
248 of the 
term "public body" than the definitions suggested by China, provides no support to the conclusion of 
the Panel's analysis under Article 1.1(a)(1) of the SCM Agreement .  In our view, the Panel failed to 
address properly the substance of China's argument  about a harmonious interpretation of the term 
"organismo público " in the SCM Agreement  and in the Agreement on Agriculture . 
333. Fifth, and finally, we address China's allegati on that the Panel dismissed the interpretation 
that would give effect simultaneously to the text as it appears in all three official languages of the 
WTO solely on the basis that other definitions and usages showed a broader possible scope.249  China 
asserts that all of the usages to which the Panel referred, and on which it relied as showing a broader 
possible scope of the meaning of the term "pub lic body", came from the Panel's recourse to, and 
interpretation of, various municipal laws.  China ar gues that the Panel erred, first, in relying on 
municipal law usages to interpret the SCM Agreement , and, second, in concluding that these usages 
supported its finding that government control, wit hout more, is the single criterion that defines a 
"public body", " organismo público ", or " organisme public ".250 
334. The United States asserts that the Panel's reference to municipal laws was not the "sole 
reason" why the Panel did not agree with China's proposed interpretation of the term "public body".251  
Rather, the Panel examined the dictionary definiti ons of the term "public body" and found that these 
were not limited to the meaning suggested by China.  Since the Appellate Body has cautioned that 
dictionary definitions alone are not always capable  of resolving the question of interpretation, the 
Panel's further reference to the definitions and pr actices in different jurisdictions as to what entities 
are considered public bodies was appropriate.  In th e view of the United States, this examination of 
the use of the term "public body" in the "municipal law" of various jurisdictio ns was merely part of 
the Panel's consideration of the ordinary meaning of that term. 
335. Turning to our analysis, we recall that dictionaries are not, as the Appellate Body has 
previously recognized, the sole source of informa tion for determining the meaning of a treaty term.252  
Nonetheless, we have some reservations relating to the way in which the Panel had recourse to usages 
of the term "public body" or similar terms in the municipal law of a number of jurisdictions in this
                                                      
248Panel Report, para. 8.63. 
249China's appellant's submission, para. 103 (referring to Panel Report, para. 8.63). 
250China's appellant's submission, para. 106. 
251United States' appellee's submission, para. 59 (referring to China's appellant's submission, 
paras. 103-132). 
252Appellate Body Report, US – Gambling , para. 164.  WT/DS379/AB/R 
 Page 129 
 
 
  dispute.  First, the Panel did not clearly explain why it considered that an examination of the 
understanding of the concept of a public body in  municipal law would assist in answering the 
particular interpretative question with which it was c onfronted.  Second, while the Panel refers to the 
definition of "public body" or simi lar terms in four different jurisd ictions, it is not clear whether the 
Panel assessed the usage of the relevant terms only in these four jurisdictions or whether the Panel 
surveyed other jurisdictions as well.  If the form er, it is not evident why the Panel picked those 
particular jurisdictions;  if the latter, the Panel di d not disclose or discuss the results of its survey in 
their entirety.  Nor did the Panel, as it might usefully have done, seek input from the parties and third parties as to which municipal law usages of the te rm "public body" were of assistance, if any, and 
why. 
336. In any event, as we see it, th e Panel's excursion into Scottis h, European Union, Québécois, 
and Spanish law was not vital to its finding that th e ordinary meaning of the term "public body" could 
be broader than the meaning suggested by China.  Th at part of the Panel's analysis would stand even 
without this element of the reasoning.  Therefor e, we do not address this argument further and, 
consequently, also refrain from addressing further argum ents by China to the effect that the Panel also 
erred in its understanding of Scottish, European Union, Québécois, and Spanish law. 
337. China also alleges that the Panel's relian ce on municipal law was inconsistent with 
Articles 3.2 and 11 of the DSU.
253  China does not present any arguments in support of this allegation.  
We recall that the Appellate Body has held that a challenge under Article 11 of the DSU must stand 
by itself and be substantiated with specific arguments, rather than merely being put forth as a 
subsidiary argument or claim in support of a claim of  a panel's failure to construe or apply correctly a 
particular provision of a covered agreement.254  This is not the case with the present Article 11 
challenge and we therefore reject it. 
                                                      
253China's appellant's submission, para. 114. 
254Appellate Body Report, US – Steel Safeguards , para. 498;  Appellate Body Report, Australia – 
Apples , para. 406. WT/DS379/AB/R 
Page 130  
 
  3. Application of Article 1.1 of the SCM Agreement  to the USDOC's 
Determinations  
338. We now turn to China's further claims relati ng to the application of Article 1.1 of the 
SCM Agreement  to the USDOC's determinations.  Chin a claims that the Panel's erroneous 
interpretation of the term "public body" requires reversal of its finding upholding the USDOC's 
determinations that the SOEs and SOCBs at issue we re public bodies in the sense of Article 1.1(a)(1). 
339. China submits that, because they are based on an  erroneous finding that majority ownership 
by the government is sufficient on its own to establish that an entity is a public body255, the Panel's 
conclusions on the USDOC's public body findings ar e equally erroneous.  The United States submits 
that the Panel, based on its correct legal interpre tation of the term "public body", properly found that 
the USDOC's determinations in the CWP, LWR, LWS,  and OTR investigations that certain SOEs are 
public bodies, and in the OTR investigation th at certain SOCBs are public bodies were not 
inconsistent with Article 1.1(a)(1) of the SCM Agreement , and that the Appellate Body should affirm 
this finding. 
340. We have found above that the Panel erred in  interpreting the term "public body" in 
Article 1.1(a)(1) of the SCM Agreement  to mean "any entity controlled by a government".256  T h e  
Panel's further finding that China did not establish that the USDOC had acted inconsistently with the 
obligations of the United States under the SCM Agreement was dependent on, and was made as a 
consequence of, that erroneous interpretation.  Ther efore, we must also reverse the Panel's ultimate 
finding, in paragraph 17.1(a)(i) of its Report, th at China did not establish that the USDOC acted 
inconsistently with the obligations of the United States under Article 1.1(a)(1) of the SCM Agreement  
in determining in the investigations at issue th at the relevant SOEs a nd SOCBs constituted public 
bodies.257 
341. China further requests us to find that the USDO C's determinations that the provision of inputs 
by SOEs and the provision of loans by SOCBs were  financial contributions by public bodies were 
inconsistent with the proper interp retation of the term "public body".   The United States observes that 
the Panel found that there was "no legal error, in analyzing whether an entity is a public body, in 
giving primacy to evidence of majority government-ownership"258, and noted that, in the USDOC
                                                      
255China's appellant's submission, para. 192 (referring to Panel Report, para. 8.135). 
256Panel Report, para. 8.94. 
257See also Panel Report, paras. 8.138 and 8.143. 
258United States' appellee's submission, para. 147 (quoting Panel Report, para. 8.136).  WT/DS379/AB/R 
 Page 131 
 
 
  proceedings, the respondents and the Government of China did not provide evidence, and for the most 
part there was none on the record, beyond evidence of  government ownership.  The United States 
maintains that China does not challenge  these aspects of the Panel's findings. 
342. In order to determine whether a finding that  the United States acted inconsistently with 
Article 1.1(a)(1) of the SCM Agreement  is warranted, we must ourselves examine the USDOC's 
public body determinations and ascertain whether these determinations are consistent with the 
requirements of Article 1.1(a)(1), properly interpre ted.  We are mindful that we may only complete 
the analysis to the extent that there are sufficien t factual findings by the Panel or undisputed facts on 
the Panel record.  We first address the question of  whether a reasonable and objective investigating 
authority could, based on the evid ence before the USDOC, have determin ed that the SOEs at issue are 
public bodies.  Thereafter, we turn to the question of whether a reasonable and objective investigating 
authority could have made the same determin ation in respect of the SOCBs at issue. 
343. With respect to the SOEs, we recall the Panel's fi ndings that in all of the investigations at 
issue, the USDOC determined that the relevant SOEs were public bodies259 based on the fact that the 
Government of China held the majority owners hip of the shares in the respective companies.260  These 
companies were producers of steel, rubber and pe trochemical inputs sold to the investigated 
companies or to trading companies.  We further recall that China had argued before the USDOC that 
in order to determine whether the relevant entiti es were public bodies, the USDOC should conduct the 
five-factor test that it had applied in prior investigations.261  The five factors that the USDOC had 
examined in the past are:  (i) government ow nership;  (ii) government presence on the board of 
directors;  (iii) government control over activities;  (iv) pursuit of governmental policies or interests;  
and (v) whether the entity was created by statute.262  In the CWP, LWR, and LWS investigations, the 
USDOC stated that there was insu fficient evidence on the record of these investigations to apply the 
five-factor test.263  In the OTR investigation, the USDOC st ated that conducting the five-factor test in
                                                      
259The Panel noted that "public bodies" are referred to as "authorities" in the relevant United States 
statute and, thus, in the USDOC's determinations as we ll.  The United States explained that, under its domestic 
law, the definition of the term "authority" includes the term "public entity", and this latter term means "public 
body".  There is no disagreement between the parties as to the equivalence of the terms "public entity" under United States law and "public body " in Article 1.1(a)(1) of the SCM Agreement . (Panel Report, para. 8.99 and 
footnote 199 thereto) 
260Panel Report, paras. 8.100, 8.104, 8.110, and 8.114. 
261Panel Report, paras. 8.101, 8.105, 8.111, and 8.114. 
262Panel Report, para. 8.101. 
263Panel Report, paras. 8.102, 8.106, and 8.112.  At the oral hearing in this appeal, the United States 
explained that there is no consistent USDOC practice of  applying a five-factor test.  While the USDOC does 
apply such a test in some cases, in others it does not. WT/DS379/AB/R 
Page 132  
 
  respect of an SOE that supplied rubber to investigated compani es was not necessary absent 
information calling into question whether gove rnment ownership does not mean government 
control.
264  In the CWP, LWR, and OTR investigations, the USDOC added that it would reconsider 
the feasibility of applying the five-factor test during an administrative review.265  Finally, we recall 
that in all of the investigations at issue, the USDOC expressly declined to undertake an entrustment 
and direction analysis pursuant to Article 1.1(a)(1)(iv).266 
344. We note that investigating authorities have a duty to seek out relevant information and to 
evaluate it in an objective manner.267  The reasoning of the authority must be coherent and internally 
consistent, and the conclusions reached and the infe rences drawn by the authority must be based on 
positive evidence.268  Accordingly, in the present case, the USDOC was under an obligation to 
actively seek out information relevant to the analys is of whether a financial contribution had been 
made.  This included information relevant to th e potential characterization of SOEs as public bodies. 
345. It is undisputed that the SOEs at issue are not  part of government in the narrow sense.  The 
question is whether they are public bodies or private bodies.  We have found above that the determination of whether a particular  conduct is that of a public body must be made by evaluating the 
core features of the entity and its relationship to government in the narrow sense.  That assessment 
must focus on evidence relevant to the question of whether the entity is vested with or exercises 
governmental authority.  As we have pointed out ab ove, determining whether an entity is a public or 
private body may be a complex exercise, partic ularly where the same entity exhibits some 
characteristics that suggest it is a public body, and othe r characteristics that suggest that it is a private 
body. 
                                                     
 
264Panel Report, para. 8.114. 
265Panel Report, paras. 8.102, 8.106, and 8.114. 
266Issues and Decision Memorandum for the Fina l Determination in the Countervailing Duty 
Investigation of Circular Welded Carbon Quality Steel Pipe from the People's Republic of China  (Panel Exhibit 
CHI-1) (the "CWP Issues and Decision Memorandum"), p. 63;  Issues and Decision Memorandum for the Final 
Determination in the Countervailing Du ty Investigation of Light-Walled Rect angular Pipe and Tube from the 
People's Republic of China  (Panel Exhibit CHI-2) (the "LWR Issues and Decision Memorandum"), p. 30;  
Issues and Decision Memorandum for the Final Affirma tive Countervailing Duty Determination:  Laminated 
Woven Sacks from the People's Republic of China  (Panel Exhibit CHI-3) (the "LWS Issues and Decision 
Memorandum"), p. 67;  and Issues and Decision Memorandum for the Final Affirmative Countervailing Duty 
Determination:  Certain New Pneumatic Off-the-Road Ti res (OTR Tires) from the People's Republic of China  
(Panel Exhibit CHI-4) (the "OTR Issues and Decision Memorandum"), p. 77. 
267Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 199.  See also 
Appellate Body Report, US – Wheat Gluten , para. 53. 
268Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93.  WT/DS379/AB/R 
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  346. We recall the Panel's finding that the USDOC ha d determined that the SOEs at issue were 
public bodies "by applying a rule of majority government-ownership".269  The Panel also stated that 
the USDOC did not apply a "simple per se  majority ownership test", because the USDOC "examined 
all of the evidence and arguments that were before it in reaching its conclusions that the SOEs were 
public bodies".270  In making this statement, however, th e Panel did not identify or refer to any 
particular passages from the USDOC's determinations.271  The Panel further observed that the 
determinations concerning SOEs in the CWP, LWR,  LWS, and OTR investigations "were principally 
based on the uncontested fact that these entities were majority government-owned".272  In response to 
questioning at the oral hearing in this appeal, th e United States explained that the USDOC asked for 
ownership information but did not ask for other inform ation relating to the elements of the five-factor 
test.  To us, this indicates that the USDOC did not comply with its duty to seek out relevant 
information and to evaluate it in an objective manner in order to ensure that its determinations were 
based on a sufficient factual basis.273  The USDOC relied "principally" on information about 
ownership.  In our view, this is not sufficient becau se evidence of government ownership, in itself, is 
not evidence of meaningful control of an entity by government and cannot, without more, serve as a 
basis for establishing that the entity is vested with  authority to perform a governmental function.  
Accordingly, such evidence, alone, cannot support a finding that an entity is a public body.   
347. The USDOC's approach was thus inconsistent with a proper understanding of the term "public 
body" in Article 1.1(a)(1) of the SCM Agreement .  Accordingly, we find that the USDOC's public 
body determinations in respect of SOEs in th e CWP, LWR, LWS, and OTR investigations are 
inconsistent with Article 1.1(a)(1). 
                                                      
269Panel Report, para. 8.99. 
270Panel Report, para. 8.127. 
271Similar statements by the Panel are made in paragraphs 8.132, 8.137, and 8.143, in all instances 
without reference to any particular part of the USDOC's reasoning in the determinations. 
272Panel Report, para. 8.127. 
273See also Appellate Body Report, US – Wheat Gluten , para. 53. WT/DS379/AB/R 
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  348. Next, we turn to the USDOC's determination in the OTR investigation that the relevant 
SOCBs were public bodies.  The USDOC explained that: 
[a] complete analysis of the fact s and circumstances of the Chinese 
banking system that have led us to  find that Chinese policy banks and 
SOCBs constitute a government author ity is included in [CFS Paper] 
and [the Issues and Decision Memorandum in that investigation] at Comment 8.  Parties in the instant case have not demonstrated that conditions within the Chinese banking sector have changed 
significantly since that previous d ecision such that a reconsideration 
of that decision is warranted. See e.g
., the discussion in Tianjin 
Government Verification Report  at 5 (a Tianjin municipal 
government official confirmed that  SOCBs are under [Tianjin State-
owned Assets Supervision and Administration Commission] supervision). In addition, there are scholarly publications on the 
record which report that SOCBs are required to support the 
[Government of China]'s industrial policies.[*]
274 (original 
underlining) 
[* original footnote 45] See, e.g. IMF Working Paper – China's Banking 
Sector Reform  at 18-19, which states that "it is difficult to find clear 
evidence that SOCBs have changed their behaviour and became 
commercially oriented" and that governments should avoid "interference for policy purposes." 
349. In CFS Paper, the USDOC's determination that  the SOCBs in that investigation constituted 
public bodies was based on the foll owing considerations:  (i) "near complete state-ownership of the 
banking sector in China";  (ii) Article 34 of the Commercial Banking Law, which states that banks are 
required to "carry out their loan business upon the needs of [the] national economy and the social 
development and under the guidance of State industria l policies";  (iii) record evidence indicating that 
SOCBs still lack adequate risk management and analyti cal skills;  and (iv) the fact that "during [that] 
investigation the [USDOC] did not receive the ev idence necessary to document in a comprehensive 
manner the process by which loans were requested, granted and evaluated to the paper industry".275 
350. We note that the USDOC's analysis regarding th e public body character of the SOCBs in the 
OTR investigation—albeit elaborated principally in the earlier investigation in CFS Paper—is broader 
than its analysis regarding the SOEs in the four inv estigations at issue.  In the former analysis, the 
USDOC relied on information regardin g ownership and control.  In a ddition, however, it considered 
other factors, such as a provision in China's Commercial Banking Law stipulating that banks are
                                                      
274OTR Issues and Decision Memorandum (Panel Exhibit CHI-4), p. 101. 
275Issues and Decision Memorandum for the Fina l Determination in the Countervailing Duty 
Investigation of Coated Free Sheet fr om the People's Republic of China  (Panel Exhibit CHI-93) (the "CFS Paper 
Issues and Decision Memorandum"), pp. 58-60.  WT/DS379/AB/R 
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  required to "carry out their loan business upon the needs of [the] national economy and the social 
development and under the guidance of State industrial policies".276  The USDOC also took into 
consideration an excerpt from the Bank of China's Global Offering, which states that the "Chinese 
Commercial Banking Law requires commercial banks to take in to consideration government 
macroeconomic policies in making lending decisions ", and that accordingly "commercial banks are 
encouraged to restrict their lending to borrowers in certain industries in accordance with relevant 
government policies".277  The USDOC also considered a 2005 OECD report, stating that "[t]he chief 
executives of the head offices of the SOCBs ar e government appointed and the party retains 
significant influence in their choice".278  In addition, the USDOC cons idered evidence indicating that 
SOCBs still lack adequate risk management and analytical skills. 
351. We also note that the present OTR determination itself contains some analysis with respect to 
SOCBs.  It refers to the USDOC 's determination in CFS Paper  and states that the parties in the OTR 
investigation had not demonstrated that there ha d been significant changes in conditions in the 
Chinese banking sector since that determination.  In addition, it refers to a statement by a Tianjin 
municipal government official reproduced in the Ti anjin Government Verification Report, and to an 
International Monetary Fund workin g paper in support of the propos ition that SOCBs are required to 
support China's industrial policies.279 
352. As a preliminary matter we wish to clarify that  it was for the USDOC to establish, based on 
positive evidence, that SOCBs in China constitute public bodies.  To the extent that the above 
statement that the parties in the OTR investiga tion had not demonstrated that the Chinese banking 
sector had significantly changed since the CFS Paper  determination suggests that the initial burden 
was on China and the investigated OTR produ cers to adduce evidence that the SOCBs are not public 
bodies, that statement would reflect a misconception of the investigating authority's task. 
353. We now turn to the question of whether the USDOC provided a reasoned and adequate 
explanation of the basis for its determinati on that the SOCBs were public bodies in the OTR 
investigation.  The Panel considered the "lengthy discussion" in the CFS Paper determination of the 
evidence that the SOCBs were either wholly or  majority government owned during the period of
                                                      
276CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 58. 
277CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 58. 
278CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 55 (quoting Economic 
Survey of China, Organization for Economic Cooperation and Development (2005), pp. 140 and 141). 
279OTR Issues and Decision Memorandum (Panel Exhibit CHI-4), p. 101. WT/DS379/AB/R 
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  investigation in that case, and of evidence that there was extensive government involvement in and 
control over their operations, and found that this constituted a sufficient basis for the USDOC's public 
body determination in respect of th e SOCBs in the OTR investigation.
280 
354. In our view, merely incorporating by referenc e findings from one determination into another 
determination will normally not suffice as a reasoned a nd adequate explanation.  Nonetheless, where 
there is close temporal and substantive overlap be tween the two investigations, such cross reference 
may, exceptionally, suffice.  We do see substan tive overlap between the CFS Paper and the OTR 
determinations, as both investigati ons were concerned with the natu re of SOCBs in China.  With 
respect to the temporal element, we note that th ere was only one year's difference between the period 
of investigation in CFS Paper  (calendar year 2005) and the period of investigation in OTR (calendar 
year 2006).  We also note that, notwithstanding the USDOC's express acknowledgement in CFS Paper  
that the "scope and extent of govern ment control over SOCBs is changing"281, China has not 
challenged, either before the Pane l or before us, the USDOC's reliance in the OTR investigation on its 
findings in CFS Paper.  In the light of these cons iderations, we do not see that the USDOC's reliance 
on its finding, in CFS Paper, was inconsistent w ith the USDOC's obligations to base its public body 
determination on positive evidence and to provide a reasoned and adequate explanation of how the 
evidence on the record supported that determination. 
355. As we have explained above, the USDOC, in  CFS Paper, discussed  extensive evidence 
relating to the relationship between the SOCBs a nd the Chinese Government, including evidence that 
the SOCBs are meaningfully controlled by the governme nt in the exercise of their functions.  Whether 
or not we would have reached the sa me conclusion, it seems to us that  in its CFS Paper determination, 
the USDOC did consider and discuss evidence indica ting that SOCBs in China are controlled by the 
government and that they effectively exercise  certain governmental functions.  In the OTR 
investigation, this analysis was incorporated by refe rence.  In addition, in the OTR investigation, the 
USDOC also referred to certain other evidence on the record of that investigation demonstrating that 
SOCBs are required to support China's industrial polic ies.  In our opinion, these considerations, taken 
together, demonstrate that the USDOC's public body determination in respect of SOCBs was 
supported by evidence on the record that these SOCB s exercise governmental functions on behalf of 
the Chinese Government. 
                                                      
280Panel Report, para. 8.143. 
281CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 56.  WT/DS379/AB/R 
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  356. We therefore find that China has not established that the USDOC's public body determination 
in respect of SOCBs in the OTR investigation is  inconsistent with Article 1.1(a)(1) of the 
SCM Agreement . 
4. China's Consequential Claims under Articles 10 and 32.1 of the 
SCM Agreement  
357. China also requests the Appellate Body to find  that, as a consequence of the fact that the 
USDOC's determinations are inconsiste nt with Article 1.1(a)(1) of the SCM Agreement , the 
United States is also in violation of its obligations under Articles 10 and 32.1 of the SCM Agreement .  
We note that the Panel stated that it would exerci se "judicial economy" with respect to these claims, 
because China had presented no argumentation in suppor t of these consequential claims, but simply 
requested findings.282 
358. We have found the USDOC's public body determin ations in respect of SOEs in the CWP, 
LWR, LWS, and OTR investigations to be inconsiste nt with Article 1.1(a)(1).  We recall that the 
Appellate Body has treated claims under Articles 10 and 32.1 of the SCM Agreement  as consequential 
claims in the sense that, where it has not been established that the essential elements of the subsidy 
definition in Article 1 are present, the right to impose a countervailing duty has not been established 
and this, as a consequence, means that the count ervailing duties imposed are inconsistent with 
Articles 10 and 32.1 of the SCM Agreement .283  Accordingly, we are of the view that China was not 
required to advance further arguments to establish a consequential violation of  Articles 10 and 32.1.  
We therefore find that the USDOC's public body determina tions with respect to SOEs in the four 
investigations at issue are also inconsistent w ith the United States' obligations under Articles 10 
and 32.1 of the SCM Agreement . 
C. Conclusion 
359. In the light of the above considerations, we reverse the Panel's finding in paragraph 8.94 that 
the term "public body" in Article 1.1(a)(1) of the SCM Agreement means "any entity controlled by a 
government".  We also reverse  the Panel's finding in paragraph 17.1( a)(i) that "China did not establish 
that the USDOC acted inconsistently with the oblig ations of the United States under Article 1.1(a)(1) 
of the SCM Agreement in determining in the rele vant investigations that the SOEs and SOCBs 
constituted 'public bodies'".284  In completing the analysis, first, we find that the USDOC acted 
inconsistently with Article 1.1(a )(1) and with the United States' obligations under Articles 10 and 32.1 
                                                      
282Panel Report, para. 13.1. 
283Appellate Body Report, US – Softwood Lumber IV , para. 143. 
284See also Panel Report, paras. 8.138 and 8.143. WT/DS379/AB/R 
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  of the SCM Agreement  by determining, in the CWP, LWR, LWS, and OTR investigations, that SOE 
input suppliers constituted pub lic bodies;  and, second, we find that China did not establish that the 
USDOC acted inconsistently with Article 1.1(a)(1) of the SCM Agreement  by determining in the OTR 
investigation that SOCBs constituted public bodies. 
V. Article 2 of the SCM Agreement :  Specificity 
360. China appeals the Panel's interpretation a nd application of Article 2.1(a) of the 
SCM Agreement in respect of the USDOC's determination that the provision of SOCB lending in the 
OTR investigation was specific to the tyre industry.   Moreover, China claims that the Panel erred in 
its interpretation of the term "s ubsidy" in Article 2.2 of the SCM Agreement  when reviewing the 
USDOC's regional specificity determination in the LW S investigation, and in stating that a subsidy 
would be regionally specific if it is provided as part of a "distinct regime", even if an identical subsidy 
is available elsewhere.  We address these issues in turn. 
A. Article 2.1(a) of the SCM Agreement 
361. China appeals the Panel's finding that:  
China did not establish that the USDOC acted inconsistently with the 
obligations of the United States under Article 2.1(a) of the SCM 
Agreement by determining in the OTR investigation that lending by SOCBs to the OTR tire industry was de jure specific.
285 
362. China takes issue with the Panel's inte rpretation of Article 2.1(a) of the SCM Agreement  as it 
relates to the terms "subsidy" a nd "explicitly".  China further make s two allegations of error in 
relation to the Panel's application of Article 2.1(a) of the SCM Agreement  to the USDOC's 
determination of de jure  specificity in respect of SOCB lending in the OTR investigation.  First, 
China argues that the Panel failed to apply its own interpretation of the terms "subsidy" and 
"explicitly" to the facts of this dispute.  Second, Ch ina contends that the Panel erred in finding that the 
policy lending subsidy was limited to "certain enterp rises" within the meaning of Article 2.1(a) of the 
SCM Agreement .  China requests the Appellate Body to co mplete the analysis and find that the 
USDOC's specificity determination in respect of SOCB lending in the OTR investigation was 
inconsistent with Article 2.1(a) and, as a conseque nce, also inconsistent with Articles 10 and 32.1 of 
the SCM Agreement . 
                                                      
285Panel Report, para. 17.1(b)(i).  WT/DS379/AB/R 
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  1. Interpretation of Article 2.1 of the SCM Agreement  
363. China's appeal requires us to consider, for the first time, certain issues of interpretation under 
Article 2 of the SCM Agreement .  We begin by noting that the first mention of the concept of 
specificity is found in Article 1.2  of the SCM Agreement , which provides: 
A subsidy as defined in paragraph 1 shall be subject to the provisions 
of Part II or shall be subject to th e provisions of Part III or V only if 
such a subsidy is specific in accordance with the provisions of 
Article 2. 
364. Thus, only subsidies that are "specific" are countervailable in accordance with the provisions 
of Part V of the SCM Agreement .  Article 2 elaborates the concept of "specificity".  Its first paragraph 
sets out a number of principles for determining whethe r a subsidy is specific by virtue of its limitation 
to an enterprise or industry or group of enterprises or  industries ("certain enterprises").  Article 2.2 of 
the SCM Agreement identifies limitations related to the geographical location of beneficiaries that 
render a subsidy "regionally" specific.  Article 2. 3 deems all prohibited subsidies within the meaning 
of Article 3 (export subsidies and im port substitution subsidies) to be specific.  Lastly, Article 2.4 
requires that any determination of specificity be  "clearly substantiated on the basis of positive 
evidence". 
365. This appeal raises the issue of the interpretation of Article 2.1 of the SCM Agreement , which 
provides: 
Article 2 
Specificity 
2.1 In order to determine whether a subsidy, as defined in 
paragraph 1 of Article 1, is specific to an enterprise or industry or group of enterprises or industries (referred to in this Agreement as "certain enterprises") within the ju risdiction of the granting authority, 
the following principles shall apply: 
(a) Where the granting authority, or the legislation pursuant to 
which the granting authority operates, explicitly limits access to a subsidy to certain en terprises, such subsidy shall 
be specific. 
(b) Where the granting authority, or the legislation pursuant to 
which the granting authority operates, establishes objective criteria or conditions[*] governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that suchWT/DS379/AB/R 
Page 140  
 
  criteria and conditions are stric tly adhered to.  The criteria 
or conditions must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification. 
(c) If, notwithstanding any appearance of non-specificity 
resulting from the application of the principles laid down in 
paragraphs (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered.  Such factors are:  use of a subsidy programme by a limited number of certain enterprises, predominant use 
by certain enterprises, the gr anting of disproportionately 
large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy.[**]  In applying this subparagraph, acc ount shall be taken of the 
extent of diversification of economic activities within the 
jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation. 
[*original footnote 2] Objective criteria or conditions, as used herein, mean 
criteria or conditions which are neut ral, which do not favour certain 
enterprises over others, and which are economic in nature and horizontal in application, such as number of employees or size of enterprise. 
[**original footnote 3] In this regard, in particular, information on the 
frequency with which applications for a subsidy are refused or approved and the reasons for such decisions shall  be considered. 
366. The chapeau of Article 2.1 offers interpreta tive guidance with regard to the scope and 
meaning of the subparagraphs that follow.  The ch apeau frames the central inquiry as a determination 
as to whether a subsidy is specific to "certain en terprises" within the jurisdiction of the granting 
authority and provides that, in an examination of whether this is so, the "principles" set out in 
subparagraphs (a) through (c) "sha ll apply".  We consider that the use of the term "principles"—
instead of, for instance, "rules"—suggests that subpa ragraphs (a) through (c) are to be considered 
within an analytical framework that recognizes an d accords appropriate weight to each principle.  
Consequently, the application of one of the subpa ragraphs of Article 2.1 may not by itself be 
determinative in arriving at a conclusion that a particular subsidy is or is not specific. 
367. Article 2.1(a) establishes that a subsidy is specifi c if the granting authority, or the legislation 
pursuant to which the gran ting authority operates, explicitly limits access to that subsidy to eligible 
enterprises or industries.  Article 2.1(b) in turn sets out that specificity "shall not exist" if the granting 
authority, or the legislation pursuant to which the granting authority operates, establishes objective 
criteria or conditions governing the eligibility for, and the amount of, the subsidy, provided that 
eligibility is automatic, that such cr iteria or conditions are strictly adhered to, and that they are clearly  WT/DS379/AB/R 
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  spelled out in an official document so as to be capable of verification.286  These provisions thus set out 
indicators as to whether the conduct or instruments of the granting authority discriminate or not:  
Article 2.1(a) describes limitations on eligibility that  favour certain enterprises, whereas Article 2.1(b) 
describes criteria or conditions that guard against sel ective eligibility.  Finally, Article 2.1(c) sets out 
that, notwithstanding any appearance of non-specifi city resulting from the principles laid down in 
subparagraphs (a) and (b), other factors may be c onsidered if there are reasons to believe that a 
subsidy may, in fact, be specific in a particular case.287 
368. We observe that Article 2.1(a) and (b) identify certain common elem ents in the analysis of the 
specificity of a subsidy.  For instance, these princi ples direct scrutiny to the eligibility requirements 
imposed by "the granting authority, or the legi slation pursuant to which the granting authority 
operates".  This is a critical feature of both pr ovisions as it situates the an alysis for assessing any 
limitations on eligibility  in the particular legal instrument  or government conduct effecting such 
limitations.  We also note that both provisions turn on indicators of eligibility  for a subsidy.  
Article 2.1(a) thus focuses not on whether a subsidy has been granted to certain enterprises, but on 
whether access  to that subsidy has been explicitly limited.  This suggests that the focus of the inquiry 
is on whether certain enterprises are el igible for the subsidy, not on wh ether they in fact receive it.  
Similarly, Article 2.1(b) points the inquiry towa rds "objective criteria or conditions governing the 
eligibility for, and the amount of, a subsidy".  Arti cle 2.1(b) also indicates other legal and practical 
considerations relevant to the analysis, all of which centre on the manner in which the criteria or 
conditions of eligibility are pr escribed and adhered to.   
369. Notwithstanding the fact that the principles under subparagraphs (a) and (b) may point to 
opposite results, there may be situations in which as sessing the eligibility for a subsidy will give rise 
to indications of specificity and non-specificity as a result of the application of Article 2.1(a) and (b).  
This is because Article 2.1(a) identifies circum stances in which a subsidy is specific, whereas 
Article 2.1(b) establishes circumstances in which a subsidy shall be regarded as non-specific.  We can 
conceive, for example, of situations in which an initial indication of specificity under Article 2.1(a)
                                                      
286Footnote 2 further states that these criteria or cond itions have to be neutral, do not favour certain 
enterprises over others, and are economic in nature and horizontal in application, such as the number of 
employees or size of enterprise. 
287According to Article 2.1(c) of the SCM Agreement , these factors are:  (i) use of a subsidy programme 
by a limited number of certain enterprises;  (ii) predom inant use by certain enterprises;  (iii) the granting of 
disproportionately large amounts of subsidy to certain enterprises;  and (iv) the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy.  Footnote 3 to Article 2.1(c) specifies 
that "in particular, information on the frequency with which applications for a subsidy are refused or approved 
and the reasons for such decisions sha ll be considered".  The final senten ce of Article 2.1(c) adds that, in 
applying these four factors,  account shall be taken of two general parameters, namely, the diversification of 
economic activities in the subsidizing country, and the length of time the programme has been in operation. WT/DS379/AB/R 
Page 142  
 
  may need to be considered further if additional ev idence demonstrates that the subsidy in question is 
available on the basis of objective criteria or conditi ons within the meaning of Article 2.1(b).  This 
therefore suggests that, where the eligibility requi rements of a measure present some indications 
pointing to subparagraph (a) and cert ain others pointing to subparagra ph (b), the specificity analysis 
must accord appropriate consid eration to both principles. 
370. Furthermore, the introductory sentence of Article  2.1(c) establishes that "notwithstanding any 
appearance of non-specificity" resulting from the appli cation of Article 2.1(a) and (b), a subsidy may 
nevertheless be found to be "in fact" specific.  The reference in Article 2.1(c) to "any appearance of non-specificity" resulting from the application of Artic le 2.1(a) and (b) supports the view that the 
conduct or instruments of a granting authority may not clearly satisfy the eligibility requirements of Article 2.1(a) or (b), but may nevertheless give rise  to specificity in fact.  In such circumstances, 
application of the factors under Article 2.1(c) to f actual features of a challenged subsidy is warranted.  
Since an "appearance of non-specificity" under Article 2.1(a) and (b) may still result in specificity in 
fact under Article 2.1(c) of the SCM Agreement , this reinforces our view that the principles in 
Article 2.1 are to be interpreted together. 
371. Accordingly, we consider that a proper unders tanding of specificity under Article 2.1 must 
allow for the concurrent application of these princi ples to the various legal and factual aspects of a 
subsidy in any given case.  Yet, we recognize that  there may be instances in which the evidence under 
consideration unequivocally indicates specificity or n on-specificity by reason of law, or by reason of 
fact, under one of the subparagraphs, and that in such circumstances further consideration under the 
other subparagraphs of Article 2. 1 may be unnecessary.  For instance, Article 2.1(c) applies only 
when there is an "appearance" of non-specificity .  Likewise, a granting authority or authorizing 
legislation may explicitly limit acc ess to a subsidy to certain enterprises within the meaning of 
Article 2.1(a), but not provide objective criteria or conditions that could be scrutinized under 
Article 2.1(b).  We do, however, caution against ex amining specificity on the basis of the application 
of a particular subparagraph of Article 2.1, when the potential for application of other subparagraphs 
is warranted in the light of the nature and cont ent of measures challenged in a particular case. 
372. China's appeal focuses, in particular, on the proper interpretation of subparagraph (a) of 
Article 2.1 which provides that a subsidy is specific "[w]here the granting authority, or the legislation 
pursuant to which the granting au thority operates, explicitly limits  access to a subsidy to certain 
enterprises".  The word "explicitly" qualifies th e phrase "limits access to a subsidy to certain 
enterprises".  In its adverbial form, the term "explicitly" signifies "[d]istinctly expressing all that is  WT/DS379/AB/R 
 Page 143 
 
 
  meant;  leaving nothing merely implied or suggested;  unambiguous;  clear".288  Moreover, "express" 
is a synonym for "explicit".289  We therefore consider that a subsidy is specific under Article 2.1(a) if 
the limitation on access to the subsidy to certain enterprises is express, unambiguous, or clear from 
the content of the relevant instrument, and not merely "implied" or "suggested". 
373. Furthermore, a subsidy is specific under Article 2.1(a) of the SCM Agreement  when the 
explicit limitation reserves access to that subsidy to "certain enterprises".  Th e chapeau of Article 2.1 
establishes that the term "certain enterprises" refers to "an enterprise or industry or group of 
enterprises or industries".  We first note that the word "certain" is defined as "[k]nown and 
particularized but not explicitly identified: (with  sing. noun) a particular, (with pl. noun) some 
particular, some definite".290  The word "group", in turn, is commonly defined as "[a] number of 
people or things regarded as forming a unity or  whole on the grounds of some mutual or common 
relation or purpose, or classed together because of a degree of similarity".291  Turning to the nouns 
qualified by "certain" and "group", we see that "ent erprise" may be defined as "[a] business firm, a 
company"292, whereas "industry" signifies "[a] particular fo rm or branch of productive labour; a trade, 
a manufacture".293  We note that the panel in US – Upland Cotton  considered that "an industry, or 
group of 'industries', may be genera lly referred to by the type of products they produce";  that "the 
concept of an 'industry' relates to producers of certain products";  and that the "breadth of this concept 
of 'industry' may depend on several factors in a given case".294  The above suggests that the term 
"certain enterprises" refers to a single enterprise or  industry or a class of enterprises or industries that 
are known and particularized.  We nonetheless agree w ith China that this con cept involves "a certain 
amount of indeterminacy at the edges"295, and with the panel in US – Upland Cotton that any 
determination of whether a number of enterprises or  industries constitute "certain enterprises" can 
only be made on a case-by-case basis.296 
                                                      
288Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 901. 
289Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 903. 
290Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 375. 
291Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 1167. 
292Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 841. 
293Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 1371. 
294Panel Report, US – Upland Cotton , para. 7.1142.  We note that understanding "industry" by 
reference to the producers of a particular product is also consistent with Article 16.1 of the SCM Agreement , 
which defines "domestic industry" as "the domestic producers as a whole of the like products ... ".   
295China's appellant's submission, para. 255. 
296Panel Report, US – Upland Cotton , para. 7.1142. WT/DS379/AB/R 
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  374. China's appeal relates to the Panel's in terpretation of Article 2.1(a) of the SCM Agreement  and 
to its finding that there is no requirement that the limitation on access necessarily be set forth 
explicitly with respect to both the financial contribu tion and the benefit in order for a subsidy to be 
specific under that provision.
297  China maintains that the relevant inquiry under Article 2.1(a)  is 
"whether the actual words of the legislation limit access to the particular financial contribution and its 
associated benefit that the inves tigating authority has found to satisfy the two-part definition of a 
'subsidy' under Article 1 of the SCM Agreement".298 
375. The United States responds that China's suggested interpretation "is not supported by the text 
of that provision".299  The United States adds that the Panel correctly determined, based on the text 
and context of Article 2.1(a), that there are "many ways in which access to a subsidy could be explicitly limited", and that it did not "see that  both the financial contribution and the benefit 
necessarily would have to be set forth explicitly to effect such a limitation".
300 
376. Thus, the interpretative question before us is whether a subsidy is specific in the sense of 
Article 2.1(a) only if the granting authority, or the legislation pursuant to which the granting authority 
operates, explicitly limits access both to the financial contribution and to its corresponding benefit, as 
China suggests, or whether, as the Panel found, an explicit limitation on access either to the financial 
contribution or to the benefit may prove sufficient for a subs idy to be specific under Article 2.1(a) of 
the SCM Agreement .  As an initial matter, we observe that this aspect of China's appeal relies upon the 
reference in the chapeau of Article 2.1 to "a subsi dy, as defined in paragraph 1 of Article 1" of the 
SCM Agreement .  Article 1.1, in turn, sets forth that "a s ubsidy shall be deemed to exist" if there is a 
financial contribution, or any form of income or price support, and a benefit is thereby conferred. 
377. We do not share China's view that the use of the word "subsidy" in the chapeau of  Article 2.1 
of the SCM Agreement  means that each of the definitional elements of a subsidy bears upon the 
question of whether a subsidy is specific under Article  2.1(a).  Rather, what must be made explicit 
under Article 2.1(a) is the limitation on access  to the subsidy to certain enterprises, regardless of how 
this explicit limitation is established.  In this resp ect, we consider that, generally, a legal instrument 
explicitly limiting access to a financial contribution to  certain enterprises, but remaining silent on 
access to the benefit, would nevertheless constitute an explicit limitation on access to that subsidy.  
This is because, in our view, an explicit li mitation on access to a financial contribution would 
necessarily entail a limitation on access to the bene fit conferred, since only the enterprises or 
                                                      
297China's appellant's submission, para. 213 (referring to Panel Report, para. 9.28). 
298China's appellant's submission, para. 212. (emphasis added) 
299United States' appellee's submission, para. 166 (quoting Panel Report, para. 9.28). 
300United States' appellee's submission, para. 163 (quoting Panel Report, para. 9.26).  WT/DS379/AB/R 
 Page 145 
 
 
  industries eligible for that financial contribution would be eligible to enjoy the benefit resulting 
therefrom.  We therefore agree with the Panel that  "there are many ways in which access to a subsidy 
could be explicitly limited", and that it is not th e case "that both the financial contribution and the 
benefit necessarily would have to be set fort h explicitly to effect such a limitation".301   
378. For these reasons, we disagree with China that th e relevant inquiry under Article 2.1(a) is 
whether the actual words of the legislation limit acc ess to both the particular financial contribution 
and its associated benefit.302  The necessary limitation on access to the subsidy can be effected 
through an explicit limitation on access to the financia l contribution, on access to the benefit, or on 
access to both. 
2. Application of Article 2.1(a) of the SCM Agreement  
379. China also appeals two aspects of the Panel' s application of Article 2.1(a) of the 
SCM Agreement to the USDOC's specificity determination in respect of SOCB lending in the OTR 
investigation.  First, China raises a conditional appe al in the event that the Appellate Body disagrees 
with China's proposed interpretation of Article 2.1(a).  Second,  China appeals the Panel's application 
of the term "certain enterprises" in Article 2.1(a) to the relevant facts in the OTR investigation.  
Before addressing these specific points on appeal, we reca ll that the standard of review applicable to a 
panel reviewing a countervaili ng duty determination precludes a panel from engaging in a de novo  
review of the facts of the case "or substitut[ing] its  judgement for that of the competent authorities".303  
At the same time, a panel is required to "unde rtake an in-depth examination of whether the 
explanations given disclose how the investigating authority treated the facts and evidence in the 
record and whether there was positive evidence before it to support the inferences made and 
conclusions reached by it"304, and such examination "must be cr itical and searching, and be based on 
the information contained in the record and the e xplanations given by the authority in its published 
                                                      
301Panel Report, para. 9.26.  We therefore agree with the two illustrative examples set out by the Panel 
in paragraph 9.27 of its Report.  First, a subsidy would be specific under Article 2.1(a) if the relevant instrument 
explicitly limits access to the financial contribution alone , since this will necessarily  lead to a limitation on 
access to the benefit.  Second, and as China itself recognizes in paragraph 2 20 of its appellant's submission, an 
explicit limitation on access to the benefit would also suffice to find that a subsidy is specific under 
Article 2.1(a) of the SCM Agreement , even in the absence of an explic it limitation on access to the financial 
contribution. 
302China's appellant's submission, para. 212. 
303Appellate Body Report, US – Steel Safeguards , para. 299 (referring to Appellate Body Report, 
Argentina – Footwear (EC) , para. 121). 
304Appellate Body Report, US – Softwood Lumber VI (Article 21 .5 – Canada) , para. 93.  WT/DS379/AB/R 
Page 146  
 
  report".
305  Furthermore, we recall the pr escription in Article 2.4 of the SCM Agreement  that "[a]ny 
determination of specificity ... shall be clearly  substantiated on the basis of positive evidence". 
(a) Whether the Panel erred in finding that the USDOC identified an 
explicit limitation on access to the subsidy 
380. China's conditional appeal assumes, arguendo , that it is sufficient, under Article 2.1(a), for 
the explicit limitation to restrict access to the fina ncial contribution alone.  China argues that, even on 
such an interpretation, the measures relied upon by  the USDOC did not contain any such limitation, 
and the Panel erred in finding otherwise.  Before pr oceeding to the substantive analysis of this claim 
of error on appeal, it is necessary, briefly, to set out the relevant facts and, in particular, to recall the 
basis for the USDOC's finding that  access to the policy lending subsidy was explicitly limited. 
381. The Panel found that, in the OTR investigation, the USDOC determined that China had, 
through SOCBs, provided preferential lending to the tyre industry, in particular to two Chinese 
producers, GTC and Starbright.306  The Panel understood that th ese subsidies were found to be de jure 
specific because a number of central, provincial, and municipal laws, plans and policies explicitly 
limited access to these subs idies to the OTR industry.307  In particular, the Government of China's 
11th Five-Year Plan (2006-2010) called for "increasi ng the development of important spare parts for 
the automobile industry".308  Moreover, the Decision of the State Council on Promulgating the 
"Interim Provisions on Promoting Industrial Structure Adjustment" for Implementation309 (the 
"Implementing Regulation") of the 11th Five-Year Plan established four categories of 
projects/industries310, namely, "encouraged", "restricted", "eliminated" and "permitted".311  The 
projects/industries falling within the "encouraged",  "restricted", and "eliminated" categories were 
                                                      
305Appellate Body Report, US – Softwood Lumber VI (Article 21 .5 – Canada) , para. 93. 
306Panel Report, para. 9.45. 
307Panel Report, para. 9.46. 
308Panel Report, para. 9.53. 
309Panel Exhibit US-87.  See Panel Report, para. 9.53. 
310We note that the participants disagree as to the pr oper characterization of the items listed in the 
GOC Catalogue.  China consistently refers to the items listed in the GOC Catalogue as "industries".  The United 
States, on the contrary, argues that the Panel found that the items listed in the "encouraged" categories were not 
"industries" but "individual project types, described in very specific and narrowly-circumscribed terms".  (United States' appellee's submission, paras. 28 and 215)  The Panel seems to have rejected China's proposition 
that the items falling within the "encouraged" category constitute "industries" noting that "the Catalogue lists 
types of projects, and not, for example,  either whole industries or single ente rprises". (Panel Report, para. 9.62)  
It is not evident to us that all of the entries in the GOC Catalogue necessarily have the same character, whether 
that be "industries" or "projects".  In any event, for th e purpose of this appeal, we do not consider it necessary to 
determine the nature of the items contained in the "encouraged" category or in the GOC Catalogue as a whole.  Accordingly, we will refer to the items listed therein as "projects/industries". 
311Panel Report, para. 9.59.  WT/DS379/AB/R 
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  described in the Guiding Catalogue of the Industrial Restructuring (2005)312 (the "GOC Catalogue"), 
whereas those projects/industries not listed under eith er of these categories were deemed to belong to 
the "permitted" category, provided that they conforme d to "the relevant laws , regulations and policies 
of the state".313  The Panel found, in this regard, that th e USDOC had determined that the Chemical 
Industry Sector within the "encouraged" category of the GOC Catalogue included the following entry:  
"[p]roduction of advanced belt tyre radial, its  supporting materials and equipment production".314 
382. China argues that, even under the Panel's inte rpretation of "subsidy" and "explicit", for a 
subsidy to be specific under Article 2.1(a), it "would need to contain an explicit limitation of access to 
the relevant financial contribution "315, and that "the finding that SOCBs  were 'instructed to provide 
financing to the "encouraged" projects' does not, by its own terms, identify an explicit limitation of 
access  to the relevant financial contribution".316  China further alleges that it is undisputed that 
SOCBs also provided loans to the industries under the "permitted" category which encompasses "the 
entire range of economic activity in China that doe s not fall within the [encouraged, restricted and 
eliminated] categories".317  Therefore, China contends that acce ss to the financial contribution was not 
limited (explicitly or otherwise) to the "encourag ed" industries and that, consequently, the alleged 
subsidy was not specific under Article 2.1(a) of the SCM Agreement . 
383. In response, the United States argues that China fails to identify any evidence on the record to 
support its assertion that SOCB lending is also availa ble to the "permitted" category, and that the 
Panel made no findings on this issue.318  The United States further alleges that China's arguments are 
"flawed" because they are premised on a single piece of evidence—Article 13 of the Implementing
                                                      
312Panel Exhibit CHI-70.  After approval of the Stat e Council, the GOC Catalogue was promulgated by 
the National Development and Reform Commission. (See Panel Report, para. 9.6) 
313Panel Report, para. 9.59.  According to the Panel and the USDOC, the Implementing Regulation 
identified the GOC Catalogue as the "important basis for funding investments directions, etc." ( Ibid., para. 9.56 
(quoting OTR Issues and Decision Memorandum (Panel Exhibit CHI-4), p. 13)) 
314Panel Report, para. 9.63.  The Panel noted that off-the-road tyres can be bias ply tyres, meridian 
tyres, and radial tyres. ( Ibid., footnote 351 to para. 9.74 (referring to OTR Issues and Decision Memorandum 
(Panel Exhibit CHI-4), pp. 14 and 99)) 
315China's appellant's submission, para. 237. (original emphasis) 
316China's appellant's submission, para. 238. (original emphasis) 
317China's appellant's submission, para. 241. 
318United States' appellee's submission, paras. 185-189. WT/DS379/AB/R 
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  Regulation
319—whereas the Panel's analysis was based on the totality of the evidence before the 
USDOC, and that this approach enabled the Panel to  find that the USDOC's specificity determination 
was in accordance with Article 2.1(a) of the SCM Agreement .320 
384. China's arguments on this issue focus on whethe r access to SOCB loans was limited to the 
industries in the "encouraged" category or whether,  on the contrary, the "permitted" industries were 
also beneficiaries of such loans.  The Panel found that, in terms of financing from financial 
institutions, the projects/industries under the "encourag ed" category were designated as those to which 
"all financial institutions are required  to provide credit supports in compliance with economic 
principles".321  The Panel also considered that for proj ects/industries under the "restricted" category, 
investments were prohibited but "nevertheless, under certain circumstances, en terprises with existing 
production capacities in a restricted industry can be allowed to transform or upgrade themselves, and 
that in those circumstances, the financial institutions shall, in compliance with the credit principles, 
continue providing supports".322  As regards the projects/industr ies under the "eliminated" category, 
the Panel considered that the Implementi ng Regulation mandated the abolition of such 
projects/industries and withdrawal of any type of financing.323  Finally, with regard to the permitted 
category, the Panel simply observed that the Impl ementing Regulation states that projects/industries 
not falling within either of the three categories we re to be regarded as "permitted", and that such 
projects/industries are not listed in the GOC Catalogue.324 
385. In our view, in arguing that "[i]t is undisputed that SOCBs also provided loans to the 
permitted  category of industries"325, China seeks to attribute to the Panel a "finding" regarding the 
"permitted" category that the Panel did not make.  The Panel did not find that the projects/industries 
under the "permitted" category were eligible to  receive the same loans as the "encouraged" 
projects/industries and China does not claim that the Panel erred in not making such a finding.  What
                                                      
319Article 13 of the Implementing Regulation provides that: 
The "Catalogue for the Guidance of Industrial Structure Adjustment" is composed of three categories, name ly, the encouraged  category, the 
restricted category and the eliminat ed category.  The industries not 
belonging to the encouraged category,  the restricted category or the 
eliminated category, but conforming to the relevant laws, regulations and 
policies of the state, shall belong to the permitted category.  The industries 
of the permitted category are not listed in  the "Catalogue for the Guidance of 
Industrial Structure Adjustment. 
(Implementing Regulation (Panel Exhibit US-87), p. 10) 
320United States' appellee's submission, paras. 190-195. 
321Panel Report, para. 9.59. (emphasis added) 
322Panel Report, para. 9.59. 
323Panel Report, para. 9.59. 
324Panel Report, para. 9.59. 
325China's appellant's submission, para. 241. (original emphasis)  WT/DS379/AB/R 
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  the Panel found is only that those projects/industries not listed in either of the three categories were 
deemed to be "permitted" under the Implementing Regulation.  Both the Implementing Regulation 
and the Panel Report are silent on the issue of how  financial institutions ar e to conduct themselves 
with regard to projects/indust ries in the "permitted" category.326  Therefore, we consider that the Panel 
did not err in considering that the policy lending provided for in China's central level planning 
documents was explicitly limited to the "encouraged" projects/industries, and consequently, we reject 
China's "conditional" ground of appeal.  We also high light that, as explained in the next subsection of 
this Report, neither the Panel nor the USDOC limite d its consideration of specificity to these central 
level documents. 
(b) Whether the Panel erred in finding that the USDOC had a sufficient 
basis on which to determine that the subsidy was limited to "certain enterprises" 
386. As an initial matter, we observe that Chin a's appeal does not appear to concern the 
interpretation by the Panel of the term "certain en terprises".  In fact, China seems to agree with the 
Panel, which essentially adopted the same analysis as the panel in US – Upland Cotton , that the term 
refers to a "limited group of producers of certain products"
327, and that "a subsidy is provided to 
'certain enterprises' if the recipients of the subsid y constitute no more than a 'discrete segment' of the 
economy of the Member granting the subsidy".328  Rather, we understand China to appeal the Panel's 
application of the term "certain enterprises" to the pa rticular facts in this dispute.  China alleges that 
the Panel erred in finding that the 539 "encouraged " industries are "described in very specific and 
narrowly-circumscribed terms", since, in China's view, many of these industries, individually, 
"represent[] a broad segment of economic activity".329  China also contends that the Panel erroneously 
relied on the "restricted" and "eliminated" categories in reaching its conclusion that the "encouraged" 
industries, taken as a whole, collectively constitute d "certain enterprises" within the meaning of 
Article 2.1(a) of the SCM Agreement . 
387. The United States responds that the Panel's finding that the 539 "encouraged" 
projects/industries are "described in very specific and narrowly-circumscribed terms" is a factual finding and, thereby, not subject to appellate review under Article 17.6 of the DSU.
330  Furthermore, 
                                                      
326Furthermore, the United States has expressed disa greement with China's assertion that it is an 
"undisputed fact" that the industries falling under the "permitted" cat egory receive loans from SOCBs, arguing 
that, according to Article 13 of th e Implementing Regulation of the 11th  Five-Year Plan (2006-2010), the 
"permitted" category was expr essly excluded from the GOC Catalogue an d, therefore, from the Government of 
China's policy priorities for lending. (United States' responses to questioning at the oral hearing) 
327China's appellant's submission, para. 248 (quoting Panel Report, US – Upland Cotton , para. 7.1142). 
328China's appellant's submission, para. 248 (quoting Panel Report, US – Upland Cotton , para. 7.1151). 
329China's appellant's submission, para. 250. 
330United States' appellee's submission, paras. 215 (quoting Panel Report, para. 9.68) and 217. WT/DS379/AB/R 
Page 150  
 
  the United States contends that Chin a's allegations that the Panel "app ears to have been influenced in 
its conclusion by the existence of the 'restricted' and 'eliminated' categories of industries described in 
the GOC Catalogue", do not take proper account of  the approach that the Panel actually adopted.
331  
According to the United States, the Panel engaged in a comprehensive analysis of all the evidence 
before the USDOC, including evidence of the "restricted" and "eliminated" categories, and it was on the basis of all the evidence that the Panel found that the USDOC's specificity determination in 
respect of SOCB lending in the OTR investigation wa s not inconsistent with Article 2.1(a) of the 
SCM Agreement . 
388. Before addressing the specific arguments that China raises, which target one part of the 
Panel's analysis of the facts, we consider it usef ul to set out, more generally, how the Panel conducted 
its analysis.  At the outset of its analysis, th e Panel expressed its understanding that the USDOC had 
based its specificity determination "on a finding th at a number of central, provincial and municipal 
government planning documents provided for th e development of the OTR tire industry, inter alia , 
through the provision of loan financing by SOCBs (i .e., government financial contributions) to the tire 
producers, in some instances identified by name".
332  The Panel then set out to assess "whether that 
determination is reasonably supported by  the documents on which it was based".333  The Panel took 
note of the USDOC's finding that "central level plans should be considered a central government 
policy or programme that local governments a dopt and implement through their own five-year 
plans".334  The Panel considered that this amounted to  "a finding that the 'policy lending programme' 
was a central-government programme ... implemen ted at the provincial and municipal levels".335  On 
this basis, the Panel identified its "first and pr incipal task [as analyzing] whether the central 
government-level planning documents could support the USDOC's finding of de jure  specificity".336  
The Panel further explained that, "b y its own terms, the USDOC's specificity determination in respect 
of SOCB lending to the OTR tire industry was based  on the 'totality' of the evidence" and that, 
therefore, it would follow the same approach  in its review of that determination.337  The Panel then 
                                                      
331United States' appellee's submission, para. 218 (quoting China's appellant's submission, para. 251). 
332Panel Report, para. 9.46. 
333Panel Report, para. 9.47. 
334Panel Report, para. 9.48. 
335Panel Report, para. 9.49. 
336Panel Report, para. 9.49.  
337Panel Report, para. 9.52.  WT/DS379/AB/R 
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  went on to conduct a detailed and lengthy examinati on of policy planning documents at the central, 
provincial and municipal levels that  had been relied upon by the USDOC.338 
389. The Panel considered the USDOC's findings that  at the central-government level:  (i) the  
Government of China's 11th Five-Year Plan (2006- 2010) provided for the development of important 
spare parts for the automotive industry339;  (ii) the Implementing Regulation of the 11th Five-Year 
Plan served as the basis for, inter alia , funding investment directions, and established in Article 13 
four categories under which different projects were to  be "encouraged", "restricted", "eliminated" or 
"permitted"340;  and (iii) the GOC Catalogue established the specific projects falling under the 
"encouraged", "restricted" and "eliminated" categor ies—including the "[p]roduction of advanced belt 
tyre radial, its supporting materials and equipment production" as an "encouraged" project within the 
Chemical Industry Sector.341  The Panel further found that the GOC Catalogue and the categories 
thereof are mandatory and that "a principal functi on of the GOC Catalogue is the allocation of loan 
financing by financial institutions".342  The Panel found that the items listed in the GOC Catalogue 
"are individual project types, described in very specific and narrowly-circumscribed terms"343, and 
that the "encouraged", "restricted", and "eliminated" projects do not describe all economic activity in 
China since the Implementing Regulation establishes a default "permitted" cate gory, which covers all 
activities not expressly listed under either of the three categories foreseen in the GOC Catalogue.344  
Therefore, the Panel was of the view that a re asonable and objective investigating authority could 
                                                      
338In the circumstances of this dispute, while th e Panel did not expressly examine the potential 
application of Article 2.1(b) and (c), it nevertheless stressed "the balance struck in Article 2 of the 
SCM Agreement – a subsidy to which access is automatic based on neutral,  horizontally-applicable economic 
criteria is not specific, and thus falls outside the sc ope of the SCM Agreement, but the appearance of non-
specificity can be overridden by the f acts of how the subsidy is allocated in practice." (Panel Re port, para. 9.22)  
We also observe that the Panel found that the provision at issue in this dispute was Article 2.1(a) of the 
SCM Agreement . (Panel Report, para. 9.23)  Moreover, in response to questioning at the oral hearing in this 
appeal, neither participant asserted that  the principle in Article 2.1(b) was relevant in the OTR investigation.  
China considered that Article 2.1 consists of three inte rrelated provisions, and that, if anything, Article 2.1(c) 
was the one that had the most relevance for the USDOC's analysis.  The United States expressed the view that 
there was no indication that there were objective criteria or conditions governing the eligibility for the subsidy 
and that recourse to Article 2.1(c) was unwarranted , given that the evidence on  the record established de jure  
specificity. 
339Panel Report, paras. 9.54 and 9.55. 
340Panel Report, paras. 9.56-9.60. 
341Panel Report, paras. 9.61-9.63. 
342Panel Report, para. 9.60. 
343Panel Report, para. 9.68.  The Panel also found that in a number of cases, "closely related projects 
appear in two or three of the categorie s, with one variant to be encouraged, a second to be restricted, and a third 
to be abolished". (Panel Report, para. 9.69) 
344Panel Report, para. 9.70 WT/DS379/AB/R 
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  conclude that any subsidies granted on the basis of  "the 'encouraged' category were to a sufficiently 
discrete segment of the economy as to be  limited to 'certain enterprises'".
345 
390. The Panel then observed that at provincial a nd municipal levels, the USDOC had found that 
policy lending was specific to the tyre industry or to  named tyre producers.  In particular, the Panel 
found that, through their respective Five-Year Plans, Guizhou province and Guiyang municipality 
singled out GTC (a tyre producer) for technology renova tion of two meridian line tyres with respect to 
its 5-million-unit semi-steel radial tyre project, a nd called for policy bank loans and loans from abroad 
to be allocated according to the plans a nd in conformity with economic policies.346  The Panel also 
noted that the USDOC had found that, while the Fi ve-Year Plan of Hebei province did not identify 
any particular producer, it generally identified automobile parts and the rubber industry as key 
projects and that a tyre producer, Starbright, was lo cated in one of the cities designated as the basis for 
automobile development.347  The Panel concluded that it was reasonable for the USDOC to have 
found that these documents implemented the central-l evel plans for the development of the tyre 
industry, which included the provision of financing to that industry.348 
391. China focuses on the alleged finding by th e Panel that the GOC Catalogue explicitly 
identified "certain enterprises" in th e sense of Article 2.1(a) of the SCM Agreement  for encouragement 
and development, including the tyre industry.  In ev aluating this ground of appeal, we first consider 
whether the Panel in fact made such a finding, an d then address the substance of China's arguments. 
392. On the one hand, the Panel seems to have ascr ibed great significance to the GOC Catalogue, 
which the Panel described as "the central documen t in the USDOC's specificity determination".349  
The Panel expressed the view that its conclusions on the USDOC's de jure  specificity finding "must 
necessarily hinge on whether the encouraged project s, taken as a whole, could reasonably be viewed
                                                      
345Panel Report, para. 9.71.  The Panel also reviewed the USDOC's finding that, under the Government 
of China's 10th Five-Year Plan (2001-2005), the SETC Circular 716 identified the production of "meridian 
tires" (radial tyres) as a national priority and stated that the contribution of public funds should be reasonably directed "so as to ... guarantee th e realization of the target". ( Ibid., para. 9.74)  The Panel considered that the 
wording of the Circular supported the USDOC's finding that this document conveyed policy directions 
concerning investment in the OTR industry to other levels of governments. ( Ibid., paras. 9.73-9.79) 
346Panel Report, para. 9.87.  The Panel also noted the USDOC's finding that the Guizhou 10th Five-
Year Plan referred to "the technology  renovation project of meridian line tires of GTC" as a project to "be 
supported". ( Ibid., para. 9.86)  
347Panel Report, para. 9.91.  The Guidelines for the Implementation of Hebei Province Science & 
Technology 11th Five-Year Plan stated that "policy financial institutions 'shall support' national and provincial 
key technology projects and key technology industrialization projects". ( Ibid., para. 9.92) 
348Panel Report, paras. 9.89 and 9.94. 
349Panel Report, para. 9.61.  WT/DS379/AB/R 
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  as a sufficiently discrete segment of the economy as to  constitute, collectively, 'certain enterprises'"350;  
and described its task as an inquiry into "wheth er the USDOC could reasona bly have concluded on 
the basis of positive evidence before it that the list of encouraged proj ects taken as a whole, in spite of 
being lengthy and diverse, constituted a 'sufficiently  discrete segment of the economy' as to constitute 
'certain enterprises'".351   
393. On the other hand, however, the Panel expr essly stated that the USDOC's specificity 
determination was premised on the totality of the ev idence, that is, on evidence pertaining to all levels 
of government.352  The Panel pointed out that it would undertake its review on the same basis, and 
proceeded to scrutinize, not only the GOC Catalo gue, but various other documents at the central 
government level, as well as numerous policy pla nning documents at the provincial and municipal 
levels.  At the conclusion of its analysis, the Pane l found that the USDOC's specificity determination 
in the OTR investigation was "that lending by SOCBs to the OTR tire industry (in particular to GTC 
and Starbright) was de jure specific".353  The wording of this finding is, in our view, significant, 
because it reveals that the relevant explicit limitation was not, or not only, the one set out in the 
GOC Catalogue.354  Instead, the finding represents an acknowle dgement by the Panel that the alleged 
subsidy was explicitly limited, as well, by docume nts at the provincial and municipal government 
levels.  This seems to us to have been both a pr oper and a sufficient basis for the Panel to conclude 
that the USDOC had not acted inconsistently with Article 2.1(a) of the SCM Agreement  in 
determining in the OTR investigation that SOCB lending to the tyre industry was de jure  specific. 
394. For these reasons, we see tension between certa in statements made by the Panel, which 
emphasize that the GOC Catalogue is key to, and dispositive of, a finding of specificity, and which 
are the focus of China's appeal, and other statements made by the Panel, along with its overall approach, which suggest that the GOC Catalogue played a lesser, non-determinative role in the 
specificity analysis.  We observe, in this regard, th at the Panel does not appear to have pointed to any 
language in the USDOC's specificity determinati on in the OTR investigation suggesting that the 
USDOC itself considered that its specificity analysis  had to be undertaken principally or solely based
                                                     
 
350Panel Report, para. 9.61. 
351Panel Report, para. 9.67. 
352Panel Report, para. 9.52. 
353Panel Report, para. 9.107.  The USDOC's determina tion in the OTR investigation on which the Panel 
relied (Panel Exhibit CHI-4) also reveals that it was on the basis of the totality of the information that the 
USDOC found that the Government of China directed policy lending to the tyre industry or to specific 
enterprises in the tyre industry. 
354We recall that the relevant entry in the "encouraged" category of the GOC Catalogue referred to 
"production of advanced belt tyre radial, its supporting materials and equipment production". WT/DS379/AB/R 
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  on the GOC Catalogue, or that the USDOC found that all of the entries in the "encouraged" category 
constituted "certain enterprises".  Nor do we see any su ch indication in the determination.  Rather, the 
USDOC conducted its specificity analysis taking into  account all relevant legal instruments at the 
central, provincial and municipal levels, and on the b asis of all this evidence, together, reached its 
ultimate conclusion that SOCB lending is explicitly sp ecific to the tyre industry, notably to GTC and 
Starbright. 
395. We do not understand China to contest that th e relevant item in the GOC Catalogue on which 
the USDOC relied—"[p]roduction of advanced be lt tyre radial, its supporting materials and 
equipment production"
355—is "described in very specific a nd narrowly-circumscribed terms".356  
Rather, China argues that certain other entries in  the GOC Catalogue, and the "encouraged" category 
taken as a whole, "represent[] a broad segment of economic activity".357  However, for the reasons just 
given, we are uncertain whether the Panel made th e finding, challenged by China on appeal, that the 
entirety of the "encouraged" category constitutes "certain enterprises" within the meaning of 
Article 2.1(a).  Since the Panel found that th e USDOC had established that several planning 
documents, at central, provincial and municipal levels  of government singled out the tyre industry, or 
specific companies, we do not see that the Panel ne eded to make a finding as to whether the entirety 
of the "encouraged" category constituted "certain ente rprises" in the sense of Article 2.1(a).  Nor are 
we called upon to undertake such an analysis.  Ac cordingly, we consider it unnecessary to examine 
whether that category as a whole, or entries in that  category other than "[p]r oduction of advanced belt 
tyre radial, its supporting materials and equipment production", are not described in "very specific, 
narrowly-circumscribed" terms. 
396. China also challenges the Panel's reliance on the "restricted" and "eliminated" categories, as 
well as the Panel's alleged failure to take pr oper account of the significance of the "permitted" 
category in its analysis.358  However, we recall, again, that certain aspects of the Panel's approach 
departed from that of the USDOC to the extent that th ey implied that the specificity analysis in respect 
of SOCB lending in the OTR investigation had to be  ascertained at the central-government level, and
                                                      
355Panel Report, para. 9.63 (quoting Panel Exhibit US-86).  The Panel decided to rely principally on the 
United States' version of the GOC Catalogue in the light of the discrepancy between the United States' and 
China's translations of this item.  In this respect, China' s translation reads:  "high-pe rformance meridian tires and 
the special materials and equipment". (Panel Report, footnote 338 to paragraph 9.63 (quoting GOC Catalogue 
(Panel Exhibit CHI-70), p. 7)) 
356Panel Report, para. 9.68. 
357China's appellant's submission, para. 250.  In partic ular, China states that "[d]escriptions such as 
'reform and construction of power networks', 'petrole um and natural gas exploration', 'development and 
production of vaccines and me dicines', 'manufacture of agricultural e quipment', and 'software development and 
production' – to name just a handful – are not 'specific and narr owly-circumscribed'." 
358China's appellant's submission, para. 251.  WT/DS379/AB/R 
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  that the GOC Catalogue was the crucial document in the USDOC's specificity determination.  We also 
observe that the USDOC itself did not refer to the content or significance of the "restricted", 
"eliminated", and "permitted" categories. 
397. As we have already explained, the "encouraged " category in the GOC Catalogue did not form 
the basis of the USDOC's specificity determin ation in respect of SOCB lending in the OTR 
investigation.  Rather, the USDOC determined that the policy lending subsidy was specific based 
upon its examination of multiple policy planning doc uments at all relevant levels of government, 
which, taken together, identified the OTR industry or  tyre producers.  It follows that the Panel's 
discussion of this category, including its reliance on  the "restricted", "eliminated" and "permitted" 
categories, was not reflective of the analysis conduc ted by the USDOC in the OTR investigation.  By 
implication, therefore, China's appeal does not take  issue with the USDOC's specificity determination 
as such.  Rather, China challenges t hose elements of the Panel's analysis that superimposed additional 
considerations upon the USDOC's approach.  Because we have found above that the Panel's review of 
the USDOC's specificity determinations was properl y based on documents at all levels of government, 
we consider it unnecessary to examine further the Panel's evaluation of the significance of the 
"restricted", "eliminated" and "permitted" categories in the GOC Catalogue. 
398. Since we consider that certain elements of the Panel's reasoning do not parallel the rationale 
employed by the USDOC in its specificity determ ination, the question becomes whether this means 
that we must reverse the Panel's ultimate findi ng that China has not established that the USDOC's 
specificity determination in respect of SOCB lending in the OTR investigation was inconsistent with 
Article 2.1(a) of the SCM Agreement .  For the reasons set out below, we  do not believe that this is the 
case. 
399. We observe that the Panel made at least four  intermediate findings concerning the USDOC's 
specificity determination in the OTR investigation.   First, the Panel found that it was reasonable for 
the USDOC to rely on central documents implemen ting the Government of China's 11th Five-Year 
Plan (2006-2010), and in particular on the GOC  Catalogue, in finding that SOCB lending was 
explicitly limited to the OTR industry in the light of  the explicit reference in the GOC Catalogue to 
"'advanced belt tires …' as an 'encouraged' project".359  Second, the Panel found that the SETC 
Circular 716, which relates to the Government of China's 10th Five-Year Plan (2001-2005), also 
supported the USDOC's finding that the central government planning docum ents conveyed policy
                                                      
359Panel Report, para. 9.72. WT/DS379/AB/R 
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  directions to other levels of government concerning investment in the OTR industry.
360  Third, the 
Panel found that the USDOC reas onably concluded that Guizhou pr ovince and Guiyang municipality 
had, through central-government documents, been directed to implement central-government plans 
"for development of the OTR tires industry, including in respect of the provision of credit financing".
361  Fourth, the Panel found that the USDOC re asonably concluded that a number of Five-
Year Plans in Hebei province had identified the deve lopment of auto parts as "key" or "mainstay" 
industries and that other documents had, in furt herance of these provincial plans, mandated that 
financial institutions support these projects/industries.362 
400. The Panel's analysis, viewed in its entirety,  reveals that the USDOC found that the OTR 
industry was explicitly identified in the planning do cuments at all government levels as a target for 
development and that all financial in stitutions were instructed to provide financing to that industry.  
Thus, despite the Panel's apparent  understanding that central-government  documents were the relevant 
basis for the USDOC's specificity determination,  we note that, ultimately, the Panel conducted a 
proper factual analysis based on the totality of ev idence, at all levels of government, on which the 
USDOC supported its specificity determination.  The Panel appears to ha ve accepted that such 
documents, taken together, demonstrate a clear lending policy directed to favour the tyre industry.  
We, therefore, conclude that the Panel's ultimate finding, that "China has failed to establish that the 
USDOC's finding in the OTR investigation, that lending by SOCBs to the OTR tire industry (in particular to GTC and Starbright) was de jure specific, was inconsistent w ith the obligations of the 
United States under Article 2.1(a) of the SCM Agreement"
363, does not amount to legal error. 
401. Accordingly, we uphold  the Panel's finding, in paragraph 17.1(b)(i) of the Panel Report364, 
that China did not establish that the USDOC acted  inconsistently with the obligations of the 
United States under Article 2.1(a) of the SCM Agreement  by determining in the OTR investigation 
that SOCB lending was specific to the tyre industry. 
                                                      
360Panel Report, para. 9.79. 
361Panel Report, para. 9.89. 
362Panel Report, para. 9.94. 
363Panel Report, para. 9.107. 
364See also Panel Report, para. 9.107.  WT/DS379/AB/R 
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  B. Article 2.2 of the SCM Agreement 
402. In this section, we address China's appeal regarding Article 2.2 of the SCM Agreement .  The 
Panel ruled in favour of China on its cl aim under Article 2.2, and found that: 
The USDOC acted inconsistently with the obligations of the 
United States under Article 2 of the SCM Agreement by determining 
that the government provision of land-use rights, in the LWS investigation, was regionally-specific.
365 
403. Although China does not disagree with the Panel's conclusion that the USDOC's 
determination was inconsistent w ith Article 2.2, China nevertheless appeals this finding because it 
disagrees with the basis on which the Panel reached  it, and is concerned about certain systemic 
implications that may flow from the Panel's reasoning. 
404. We recall that Article 2.2 of the SCM Agreement provides: 
A subsidy which is limited to certain enterprises located within a 
designated geographical region within the jurisdiction of the granting authority shall be specific.  It is understood that the setting or change 
of generally applicable tax rates by  all levels of government entitled 
to do so shall not be deemed to be  a specific subsidy for the purposes 
of this Agreement.   
405. As an initial matter, we observe that, in its an alysis, the Panel considered that the claims 
raised by China posed two specific interpretative qu estions with respect to the scope and meaning of 
Article 2.2 of the SCM Agreement , namely:  (i) whether the reference to "certain enterprises" means 
that, in order for a subsidy to be regionall y specific, there must be a limitation to a subset  of 
enterprises located within the designated geographica l region, or whether, instead, a limitation on a 
purely geographical basis is sufficient
366;  and (ii) whether a "designated geographical region" must 
necessarily have some sort of formal administrativ e or economic identity, or whether any identified
                                                      
365Panel Report, para. 17.1(b)(ii);  see also para. 9.161.  The Panel found that the USDOC had 
determined that the provision of land-use rights to a Chinese producer of LWS, Aifudi, was regionally specific 
because the land was physically located  in a designated area within the ju risdiction of the granting authority—
the New Century Industrial Park (the "Industrial Park").  The Panel concluded that the USDOC's determination was inconsistent with Article 2.2 of the SCM Agreement  because the USDOC failed to establish that the 
provision of land-use rights in the designated area constituted a "distinct regime"—for instance, by virtue of 
price differences—compared with the provision of land-use rights outside of the Industrial Park. ( Ibid., 
paras. 9.159 and 9.160) 
366Panel Report, paras. 9.125 and 9.128. WT/DS379/AB/R 
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  tract of land within the territory of a granting au thority can be a "designated geographical region" for 
the purposes of a finding of regional specificity.
367  The Panel resolved these questions as follows: 
... the term "certain enterprises" in  Article 2.2 of the SCM Agreement 
refers to those enterprises located  within, as opposed to outside, the 
designated geographical region in quest ion, with no further limitation 
within the region being required.368 
... a "designated geographic region" in the sense of Article 2.2 of the 
SCM Agreement can encompass any identified tract of land within 
the jurisdiction of a granting authority.369 
406. China has not appealed either of these interpretati ons by the Panel.  Accordingly, they are not 
before us in this appeal and we neither endorse, nor reject, the Panel's view as to the meaning of these 
two terms.  
407. China's appeal is of a much narrower scope.  Ch ina requests that we:  (i) find that the Panel 
erred in interpreting Article 2.2 of the SCM Agreement  to permit a finding of specificity based solely 
on a finding that the financial contribution—rather than the subsidy —was geographically limited;  and 
(ii) reverse the Panel's finding that the existence of a "distinct regime" is releva nt to a determination of 
specificity under Article 2.2.  We c onsider each of these issues in turn. 
1. The Panel's Interpretation of the Term "Subsidy" in Article 2.2  
408. The first part of China's appeal under Article 2.2 of the SCM Agreement  concerns the Panel's 
finding that: 
... it is not necessary for a granting authority or the relevant 
legislation to identify all elements of a specific subsidy for a valid finding of de jure specificity. We thus find no legal error in the 
USDOC having based its determinati on of regional specificity on the 
element of the financial contribution, i.e., on the provision of land-use rights by Huantai County.
370 
409. China appeals the Panel's interpretation of the term "subsidy" in Article 2.2 of the 
SCM Agreement .  In particular, China claims that the Pa nel erred in its interpretation of the term 
"subsidy" in Article 2.2 by finding "no legal erro r" in the LWS investigation when the USDOC based 
its regional specificity determination on the elemen t of the financial contribution, thus failing to 
                                                      
367Panel Report, paras. 9.126 and 9.140. 
368Panel Report, para. 9.135. 
369Panel Report, para. 9.144. 
370Panel Report, para. 9.155.  WT/DS379/AB/R 
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  identify all elements of a specific subsidy.371  China adds that undisputed record evidence 
demonstrates that the provision of land-use rights that the USDOC considered to be at less than 
adequate remuneration was not limited to enterprises  located within the New Century Industrial Park 
(the "Industrial Park"), and that enterprises located outside the Industrial Park received land-use rights 
at the same or at a lower price. 
410. In response, the United States considers that Ch ina's claim regarding the Panel's interpretation 
of "subsidy" in Article 2.2 of the SCM Agreement  is unfounded, and that China puts forth the same 
arguments as it did in the context of its claims of error relating to Article 2.1(a).  The United States, 
therefore, refers to, and relies on, its arguments advanced in relation to the Panel's analysis of 
Article 2.1(a).   
411. We understand that China's appeal on this point consists essentially of the same arguments as 
those advanced in respect of its claim under Article 2.1(a) of the SCM Agreement .  Specifically, China 
argues that "[a]s with its erroneous interpretation of Article 2.1(a)", the Panel's interpretation of 
Article 2.2 failed to require that there be a limitation on the access both to a financial contribution and 
to a benefit, and thus ignored "the express definition of the term 'subsidy'".372 
412. We note that China made the same arguments befo re the Panel and that, in rejecting them, the 
Panel simply referred to the reasons that it gave fo r rejecting China's interpretation of the significance 
of the word "subsidy" in Article 2.1(a).373 
413. Like the Panel, we are not persuaded by China' s arguments with respect to the term "subsidy" 
in Article 2.1(a).  In the same way as the Pa nel did, we consider that our reasoning under 
Article 2.1(a) is sufficient to dispose of this  claim of error by China under Article 2.2 of the 
SCM Agreement .  We recall that the purpose of Article 2 of the SCM Agreement  is not to identify the 
elements of the subsidy as set out in Article 1. 1, but to establish whether the availability of the 
subsidy is limited inter alia  by reason of the eligible recipients (Article 2.1(a)) or by reason of the 
geographical location of beneficiaries (Article 2.2).  We also consider that a limitation on access to a 
subsidy may be established in many different ways  and that, whatever the approach investigating 
authorities or panels adopt, they must ensure  that the requisite limitation on access is clearly
                                                      
371China's appellant's submission, para. 263. 
372China's appellant's submission, para. 264. 
373Panel Report, para. 9.155.  In disposing of this issue in its Article 2.2 analysis, the Panel referred to 
"our finding, supra , that it is not necessary for a granting authority or the relevant legislation to identify all 
elements of a specific subsidy for a valid finding of de jure  specificity".  We understand the Panel to have been 
referring to the finding and reasoning set out in paragraphs 9.28-9.32 of its Report, where it addressed the same 
arguments made by China in the context of its Article 2.1(a) claim. WT/DS379/AB/R 
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  substantiated on the basis of positive evidence.  We consider that, under Article 2.2, as under 
Article 2.1(a), a limitation on access to a financial contribution will also limit access to any resulting 
benefit, since only those obtaining the financial c ontribution can be beneficiaries of that subsidy.
374 
414. Accordingly, we find the Panel did not err in its interp retation of the term "subsidy" in 
Article 2.2 of the SCM Agreement , or in finding that the USDOC committed no legal error in basing 
"its determination of regional specificity on the el ement of the financial contribution, i.e., on the 
provision of land-use rights by Huantai County".375 
2. The Panel's Statements Regarding a "Distinct Regime"  
415. The second part of China's appeal under Article 2.2 of the SCM Agreement concerns certain 
statements by the Panel that, according to China, sugg est that a subsidy would be regionally specific if 
it were provided as part of a "distinct regime" even  if the identical subsidy were also available 
elsewhere.376 
416. The Panel scrutinized the USDOC's determina tion, in the LWS investigation, that the 
provision of land-use rights to an investigated company (Aifudi) was regionally specific because the 
land was physically located in a designated area (t he Industrial Park) within the jurisdiction of the 
granting authority (Huantai County).  The Panel found that the USDOC had failed to assess whether 
the provision of land-use rights in the Industrial Pa rk constituted a "distinct regime"—for instance, by 
virtue of price differences—compared with the land -use rights outside the Industrial Park.  The Panel 
further found that record evid ence indicated that "there was no separate land policy for land in 
industrial zones, and that as long as land was for industrial use, it had to be in accordance with 
industrial land policy, which applied whether the land was inside or outside an industrial zone".377  
The Panel concluded that the USDOC had not estab lished that the provision of land-use rights (the 
financial contribution) was limited, within the meaning of Article 2.2, to Aifudi. 
417. We observe that, after reaching its finding that the USDOC's regional specificity 
determination in the LWS investigation w as inconsistent with Article 2.2 of the SCM Agreement , the 
Panel expressed some qualifying statements regarding its  regional specificity finding.  First, the Panel 
pointed out that it was not making a finding as to whet her "the intrinsic geographic nature of land-use
                                                      
374Supra , paras. 377 and 378 of this Report. 
375Panel Report, para. 9.155. 
376China's appellant's submission, paras. 265-270. 
377Panel Report, para. 9.160 (referring to Panel Exhibit US-79, p. 8).  WT/DS379/AB/R 
 Page 161 
 
 
  rights would always preclude a regional specificity  finding in respect of the provision of land-use 
rights".378  Second, the Panel stressed that it was not making a "factual finding" as to whether the 
provision of land-use rights in the Industrial Park did, or did not, constitute a "unique land-use 
regime".  Rather, the Panel explained, it was simp ly observing that the USDOC had not inquired into 
whether such a "unique regime" existed in the Industr ial Park and that, had evidence relevant to these 
points been placed on the USDOC record, "it might ha ve resulted in a finding of regional specificity 
consistent with Article 2. 2 of the SCM Agreement".379 
418. China takes issue with the latter statement of th e Panel.  China views this statement as an 
endorsement of an interpretation of Article 2.2 that  would lead to a subsidy being regionally specific 
if it is provided as part of a "distinct regime" even  if the identical subsidy is available elsewhere.  
Alluding to the implications of such an interpre tation for the United States' compliance obligations, 
China contends that the same subsidy does not be come "a different subsidy merely because it is 
provided under a distinct 'program' or 'regime'".380  China adds that such an interpretation would 
defeat the clear purpose of Article 2.2 of the SCM Agreement .381 
419. The United States responds that the Panel did not make any "finding" or "legal interpretation" 
that the existence of a "distinct regime" is lega lly relevant for a specificity determination under 
Article 2.2 of the SCM Agreement , and that the Panel expressly stated that it was not making a 
"factual finding".  The United States submits that the scope of appellate review is limited to issues of 
law and legal interpretation and that , accordingly, China's appeal is not properly before the Appellate 
Body.  In any event, argues the United States, Ch ina's concern that the statements could have a 
bearing on implementation is unfounded because the Panel did not suggest ways in which the 
United States could implement under Article 2.2.  The United States adds that the Panel never 
discussed what it would have found if an identical  subsidy were available elsewhere in Huantai 
County.382 
                                                      
378Panel Report, para. 9.162. 
379Panel Report, para. 9.162.  The Panel found that the USDOC had not made inquiries with respect to 
these issues during the LWS investiga tion.  Therefore, the Panel clarified that depending on the outcome of 
those inquiries, "our conclusions as to the WTO-cons istency of the USDOC's regional specificity finding in 
respect of the provision of land-use rights to Aifudi might have been different". ( Ibid., para. 9.163) 
380China's appellant's submission, para. 267. 
381China's appellant's submission, para. 269. 
382United States' appellee's submission, para. 245. WT/DS379/AB/R 
Page 162  
 
  420. At the outset, we note that China's appeal concerns statements  made by the Panel in order to 
clarify the narrow and fact-specific nature of its finding of violation of Article 2.2 of the 
SCM Agreement .  These statements identify certain  unanswered questions and posit that, if evidence 
relevant to those questions existed, and if it had been placed on the record before the USDOC, this 
"might have" resulted in a finding of regiona l specificity consistent with Article 2.2.
383 
421. Whether or not these statements by the Panel can be characterized as "findings" on issues of 
law or legal interpretations384, they were very much focused on the particular facts of the LWS 
investigation, and it is clear to us that they were obiter  in nature.  What is not at all clear to us, 
however, is that these statements somehow imply, as  China suggests, that the Panel considered that 
the mere existence of a "distinct" regime would en able a subsidy to be found to be specific to a 
designated geographical region, even if the identical subsidy were also available to enterprises outside 
that designated geographical region.  Nor do we thi nk that the statements suggest that "the Panel 
would have found the alleged land-u se rights subsidy to be regionally specific if it had been provided 
as part of a 'distinct regime', even if the iden tical subsidy was available elsewhere in Huantai 
County".385 
422. If anything, several elements of the Panel's r easoning appear to us to suggest the opposite.  
The Panel stated, for example, th at evidence "of differences in land- use prices within and outside the 
Industrial Park, [could constitute] possible factual evidence of the existence of a separate land-use 
regime for the Industrial Park".386  The Panel criticized the USDOC for failing to make "findings as to 
any clear basis on which the provision of a financial contribution in the form of land-use rights 
differed as between land inside and outside the Park".387  Finally, the Panel observed that: 
... had the USDOC made further inquiries into these or similar issues, 
and depending on the outcome of those inquiries , our conclusions as 
to the WTO-consistency of the USDOC's regional specificity finding 
in respect of the provision of land-use rights to Aifudi might have 
been  different.388 
                                                      
383Panel Report, para. 9.162. 
384We note that, although China's Notice of Appeal and appellant's submission challenge the Panel's 
"interpretation" of Article 2.2 of the SCM Agreement  in this regard, the relevant paragraph of the Panel Report 
cited by China (paragraph 9.155) is contained in the section of the Panel Report dealing with the application of 
Article 2.2 to the USDOC's specificity determination in  the LWS investigation.  Neither China's Notice of 
Appeal nor its appellant's submission alleges any error in the section of the Panel Report dealing with the interpretation of Article 2.2 (paragraphs 9.124-9.144). 
385China's appellant's submission, para. 266. 
386Panel Report, para. 9.160. 
387Panel Report, para. 9.163. 
388Panel Report, para. 9.163. (emphasis added)  WT/DS379/AB/R 
 Page 163 
 
 
  423. Accordingly, we do not accept the premise upon which the second part of China's appeal 
under Article 2.2 of the SCM Agreement is founded, and it is not necessary for us to consider it 
further. 
424. In the light of all of the above, we find that China has not established any relevant error in the 
Panel's interpretation of the term "subsidy" in Article 2.2, and we reject  China's allegations of error in 
respect of the Panel's statement concerning a "distinct regime" in the context of the LWS 
investigation.389  We refrain from reviewing other aspects of the Panel's interpretation of Article 2.2, 
which have not been appealed by the pa rticipants, and on whic h we express no view. 
VI. Article 14 of the SCM Agreement :  Calculation of the Benefit 
A. Article 14(d):  Benchmarks for Input Prices 
1. Introduction  
425. We now turn to China's appeal of the Panel' s findings concerning the USDOC's rejection, in 
the CWP and LWR investigations, of in-country privat e prices in China as benchmarks for calculating 
the benefit conferred by the provision, by SOEs, of hot-rolled steel ("HRS") inputs to investigated companies. 
426. The Panel interpreted Article 14(d) of the SCM Agreement , relying on the Appellate Body 
Report in US – Softwood Lumber IV , and found that "nothing in that report ... would prohibit, a priori , 
a finding of market distortion, and a decision to depart from in-country private prices, where the only relevant evidence was that the government is the predominant supplier of the good."
390  The Panel 
understood the Appellate Body to have stated, in US – Softwood Lumber IV , that "the decision to 
reject in-country prices as the benchmark due to the ro le of the government in the market for the good 
in question can only be made on a case-by-case basis,  in accordance with the re levant evidence in the 
particular investigation, rather than in the abstract."391  The Panel then applied this interpretation of 
                                                      
389We recall that the Panel ultimately concluded, in paragraph 17.1(b)(ii) of its Report, that the USDOC 
had acted inconsistently with the obligations of the United States under Article 2.2 of the SCM Agreement  by 
determining that the government provision of land-use rights, in the LWS investigation, was regionally-specific.  
This Panel finding is not affected by China's appeal.  China does, however, in its appeal, make a general request 
that we find consequential violations of Articles 10 and 32.1 of the SCM Agreement  wherever we find a 
violation of a substantive obligation under the SCM Agreement .  Since, however, the finding of inconsistency 
with Article 2.2 is a finding made by the Panel, rather than by us, and since China has not appealed the Panel's application of judicial economy, in respect of China's claims of consequential violations of Articles 10 and 32.1 
of the SCM Agreement  (Panel Report, para. 17.1(d)), we need not address those claims of consequential 
violation. 
390Panel Report, para. 10.45. 
391Panel Report, para. 10.47. WT/DS379/AB/R 
Page 164  
 
  Article 14(d) of the SCM Agreement  to the USDOC's determination in the two investigations at issue 
and found that: 
China has not established that the USDOC acted inconsistently with 
the obligations of the United States under Article 14(d) of the SCM 
Agreement by rejecting in-country  private prices in China as 
benchmarks for HRS in either the CWP or the LWR investigations.
392 
427. China appeals these findings by the Panel and requ ests us to:  (i) find that the Panel erred in 
interpreting Article 14(d) of the SCM Agreement  to permit investigating authorities to reject in-
country private prices as a benchmark based solely on evidence that the government is the 
predominant supplier of the good in question;  (ii)  reverse the Panel's finding that China did not 
establish that the USDOC acted inconsistently with the obligations of the United States under 
Article 14(d) by rejecting private prices in China as benchmarks for HRS input s;  and (iii) find that 
the Panel acted inconsistently with  Article 11 of the DSU by attributing to the USDOC a rationale for 
its finding of distortion other than the rationale that  appears in its published determinations.  Upon and 
as a consequence of such findings, Ch ina further requests that we comple te the analysis in respect of 
China's consequential claims and find that the cha llenged measures are inconsistent with Articles 10 
and 32.1 of the SCM Agreement . 
428. The United States responds that the Panel properl y concluded that, under Article 14(d) of the 
SCM Agreement , evidence that the government is the pred ominant supplier of a good in a country is 
sufficient to justify rejection of in-country privat e prices as benchmarks for determining benefit.  
Regarding China's Article 11 of the DSU claim, the United States argues that the Panel did not attribute to the USDOC a rationale or explanation other than that provided by the USDOC in its 
determinations. 
429. In the CWP and LWR investigations, the USDOC rejected private prices of HRS in China as 
benchmarks for measuring the exis tence and amount of be nefit conferred by SOE-provided inputs of 
HRS.  The USDOC determined that, because Chin a's SOEs accounted for the "overwhelming" 
majority of the production and sale of HRS (96.1 per cent), private prices of HRS in China were not 
suitable as subsidy benchmarks.
393  The USDOC also found that China's assertions concerning factors 
other than government market shares were either not  relevant or "did not mitigate the fact that the 
                                                      
392Panel Report, para. 10.61. 
393The USDOC arrived at the 96.1 per cent figure using facts available. (Panel Report, paras. 10.49 and 
10.54;  CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), p. 11;  and LWR Issues and Decision 
Memorandum (Panel Exhibit CHI-2), p. 4)  WT/DS379/AB/R 
 Page 165 
 
 
  government accounted for" a significant portion of production.394  Having rejected private prices of 
HRS in China, the USDOC selected external pri ces as subsidy benchmarks, based on world market 
prices for HRS as reported in "Steel Benchmarker" , an international steel industry publication.395 
430. In addressing China's claims under Article 14(d) of the SCM Agreement , we focus first on the 
Panel's interpretation of Article 14(d).  We then  consider the Panel's findings concerning the 
USDOC's rejection, in the CWP and LWR investiga tions, of in-country private prices in China as 
benchmarks for HRS inputs.  Finally, we address Ch ina's claim that the Panel acted inconsistently 
with Article 11 of the DSU, by attributing to the USDOC a rationale for its determinations that the 
USDOC did not, in fact, adopt. 
2. Interpretation of Article 14(d) of the SCM Agreement  
431. At the outset of its analysis of Article 14(d) of the SCM Agreement , the Panel framed the 
"central legal question" before it as whether, given the findings of the Appellate Body in US – 
Softwood Lumber IV , evidence that the government was the predominant supplier of a good can be 
sufficient, on its own, to establish market distortion such that rejection of in-country private prices as 
benchmarks would be permissi ble under Article 14(d) of the SCM Agreement , or whether, 
alternatively, some evidence in addition to the go vernment's share of the market for the good in 
question would always be required before in -country private prices could be rejected.396 
432. The Panel read the Appellate Body report in US − Softwood Lumber IV  as suggesting that "the 
evidence of the government's predominance as supplier of the good is the central fact that must be 
established for a decision to depart fro m in-country private prices to be valid".397  The Panel stated 
that it did not consider that the Appellate Body report in US − Softwood Lumber IV  countenanced the 
application of a " per se " rule, whereby in every case and regardless of any other evidence, the fact that 
a government was the predominant supplier of a particular good would be a sufficient basis for 
rejecting in-country private prices as a benchmark.398  The Panel, however, stated that it saw "nothing
                                                      
394Panel Report, para. 10.53;  CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), p. 65;  
and LWR Issues and Decision Memorand um (Panel Exhibit CHI-2), p. 36. 
395Panel Report, para. 10.50;  CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), pp. 11, 
12, and 66;  and LWR Issues and Decision Memorandum (Panel Exhibit CHI-2), p. 37. 
396Panel Report, para. 10.38. 
397Panel Report, para. 10.45. 
398Panel Report, para. 10.40. WT/DS379/AB/R 
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  in that report that would prohibit, a priori , a finding of market distortion, and a decision to depart 
from in-country private prices, where the only rele vant evidence was that the government is the 
predominant supplier of the good".
399 
433. China contests the Panel's understanding of Article  14(d) and of the Appellate Body report in 
US – Softwood Lumber IV .  China asserts that, in US – Softwood Lumber IV , the Appellate Body 
concluded that evidence of "significant" or "predom inant" government market share is insufficient, on 
its own, to demonstrate the distortion of private pri ces.  The Panel's reasoning, in contrast, implies that 
an investigating authority's finding that the government  is a "predominant", rather than a "significant", 
supplier would be lega lly sufficient, on its own, to reject pr ivate market prices as a benchmark under 
Article 14(d).400  China stresses that the Appellate Body could not have meant to establish such a 
per se rule.  According to China, th e Appellate Body stated, in US – Softwood Lumber IV , that the 
determination of whether private prices are distorte d because of the government's predominant role in 
the market must be made on a case-by-case basi s according to the particular facts underlying each 
investigation.  China contends that such a "cas e-by-case" determination would be unnecessary if the 
government's predominant role were sufficient to estab lish distortion.  China adds that nothing in the 
Appellate Body's interpretation of Article 14(d) su ggests that there is some quantitative threshold of 
"predominance" at which a finding of "distortion" can be inferred in the absence of any other evidence. 
434. In the view of the United States, the Panel prope rly interpreted Article 14(d) and, consistent 
with a correct understanding of the Appellate Body's interpretation of that provision in US – Softwood 
Lumber IV , properly concluded that evidence that the government is the predominant supplier of a 
good in a country is sufficient to justify the re jection of in-country private prices as benefit 
benchmarks.  According to the United States, ther e is no requirement in Article 14(d) to establish 
price distortion, in addition to the predominance of  the government in the market, before resorting to 
out-of-country benchmarks. 
                                                     
 
399Panel Report, para. 10.45. 
400China's appellant's submission, para. 297.  WT/DS379/AB/R 
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  435. Article 14 of the SCM Agreement  states in relevant part: 
For the purpose of Part V, any method used by the investigating 
authority to calculate the benefit to the recipient conferred pursuant to paragraph 1 of Article 1 sha ll be provided for in the national 
legislation or implementing regula tions of the Member concerned 
and its application to each partic ular case shall be transparent and 
adequately explained.  Furthermore, any such method shall be 
consistent with the following guidelines: 
 ... (d) the provision of goods or services or purchase of goods by a 
government shall not be consid ered as conferring a benefit 
unless the provision is made for less than adequate 
remuneration, or the purchase is made for more than 
adequate remuneration.  The ad equacy of remuneration shall 
be determined in relation to prevailing market conditions for 
the good or service in question in the country of provision or purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).  
436. Article 14 deals with the "Calculation of the Am ount of a Subsidy in Terms of the Benefit to 
the Recipient".
401  The Appellate Body found, in  Canada – Aircraft , that a government financial 
contribution confers a benefit if the "'financial cont ribution' makes the recipi ent 'better off' than it 
would otherwise have been, absent that contribution", and that "the marketplace provides an appropriate basis for comparison".
402  According to Article 14(d), this benefit is to be found when a 
recipient obtains goods from the government for "less than adequate remuneration", and such 
adequacy is to be evaluated in relation to prevaili ng market conditions in the country of provision.   
437. In US – Softwood Lumber IV , the Appellate Body found that, taken together, the terms of 
Article 14 "establish mandatory parameters within wh ich the benefit must be calculated, but they do 
                                                      
401We observe that China's Accession Protocol also addresses the issue of benchmarks under Article 14 
of the SCM Agreement .  Specifically, Section 15(b ) affords importing WTO Members investigating Chinese 
imports additional flexibility in the methodology used to  identify and measure subsid y benefits, if there are 
"special difficulties" in the usual application of, inter alia , Articles 14(b) and 14(d) of the SCM Agreement , and 
recognizes "the possibility that prevailing terms and conditions in China may not always be available as 
appropriate benchmarks."  Yet, the same provision also specifies that, in applying such methodologies, the 
importing Member should, "where practicable, ... adjust such prevailing terms and conditions before considering 
the use of terms and conditions prevailing outside China."  We note that, in its request for the establishment of the Panel, China raised claims under Section 15(b) and (c ) of its Accession Protocol in connection with all the 
instances in which the USDOC resorted to a benchmark outside of China for the purpose of determining the 
existence and amount of any alleged subsidy benefit.  China did not, however, pursue these claims before the Panel, "reserv[ing] its right to present arguments under S ection[] 15(b) and (c) of its Protocol in the event that 
the United States invoked the disciplines  contained therein".  After both parties confirmed to the Panel that they 
were not seeking a ruling by the Panel under Section 15 of China's Accession Protocol, the Panel decided not to address this provision. (Panel Report, paras. 10.9-10.12) 
402Appellate Body Report, Canada – Aircraft , para. 157.  WT/DS379/AB/R 
Page 168  
 
  not require using only one methodology for determ ining the adequacy of remuneration for the 
provision of goods by a government".  Moreover, "t he use of the term 'guidelines' in Article 14 
suggests that paragraphs (a) through (d) should no t be interpreted as 'rigid rules that purport to 
contemplate every conceivable factual circumstance'."
403 
438. Returning to the issue raised by Chin a in this appeal, we recall that, in US – Softwood 
Lumber IV , the Appellate Body posed and answered several questions with respect to the 
interpretation of Article 14(d), including two that are of  particular relevance here.  First, the Appellate 
Body asked whether that provision permits investig ating authorities to use a benchmark other than 
private prices in the country of provision for determining if goods have been provided by a 
government for less than adequate remuneration.  Th e Appellate Body answered that question in the 
affirmative, albeit subject to a number of qualifi cations.  The Appellate Body considered that an 
interpretation of Article 14(d) that required the use of private prices in  the country of provision as the  
exclusive benchmark in all situations would frust rate the purpose of Article 14, as well as the object 
and purpose of the SCM Agreement .404  The Appellate Body found, inst ead, that "prices in the market 
of the country of provision are the primary, but  not the exclusive, benchmark for calculating 
benefit".405 
439. Second, the Appellate Body addressed the question of when  investigating authorities may use 
a benchmark other than private prices in the countr y of provision.  The Appellate Body emphasized 
that such circumstances are "very limited"406 and found that: 
... an investigating authority may use a benchmark other than private 
prices of the goods in question in the country of provision, when it 
has been established that those privat e prices are distorted, because of 
the predominant role of the government in the market as a provider of the same or similar goods.
407 
440. China considers that these findings stand for the proposition that an investigating authority is 
always  required to analyze factors other than the gove rnment's market share as evidence that private 
prices are distorted in the market.  China's argument , in this regard, relies upon the Appellate Body's 
statements, in US – Softwood Lumber IV , that "an allegation that a government is a significant
                                                      
403Appellate Body Report, US – Softwood Lumber IV , para. 92. 
404Appellate Body Report, US – Softwood Lumber IV , para. 95.  The Appellate Body referred to the 
situation in which the government's role in providing the financial contribution is so predominant that it effectively determines the price at which private suppliers sell the same or similar products, so that the 
comparison contemplated by Article  14(d) would become circular. ( Ibid., para. 93) 
405Appellate Body Report, US – Softwood Lumber IV , para. 97.  See also para. 96. 
406Appellate Body Report, US – Softwood Lumber IV , para. 102. 
407Appellate Body Report, US – Softwood Lumber IV , para. 103.  WT/DS379/AB/R 
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  supplier would not, on its own, prove distortion an d allow an investigating authority to choose a 
benchmark other than private prices in the country of provision" and that "[t]he determination of 
whether private prices are distorted because of the g overnment's predominant role in the market, as a 
provider of certain goods, must be made on a case-by -case basis, according to  the particular facts 
underlying each countervailing duty investigation."408 
441. According to China, in these two statements, th e Appellate Body used the concepts of the 
government as a "significant supplier" and of "the government's predominant role in the market, as a 
provider" interchangeably.  China, therefore, fa ults the Panel for understanding otherwise.  We, 
however, like the Panel, view the Appellate Body in US – Softwood Lumber IV  as having intended to 
use the terms "predominant" and "significant" to refe r to two different sets of circumstances, and not 
as interchangeable concepts.  We r ead that Appellate Body report as indicating that, if the government 
is a significant supplier, this fact alone cannot justify a finding that prices are distorted.  Instead, 
where the government is the predominant supplier, it is likely  that private prices will be distorted, but 
a case-by-case analysis is still required. 
442. Several elements of the Appellate Body's reasoni ng in that appeal support this view.  Notably, 
the Appellate Body considered that, as far as ma rket distortion and effect on prices are concerned, 
"there may be little difference betwee n situations where the government is the sole provider of certain 
goods and situations where the government has a predominant role in the market as a provider of those goods".  The Appellate Body reasoned that  "[w]henever the government is the predominant 
provider of certain goods, even if not the sole provider, it is likely  that it can affect through its own 
pricing strategy the prices of private providers for those goods."
409 
443. This reasoning, in our view, excludes the application of a per se  rule, according to which an 
investigating authority could prope rly conclude in every case, and regardless of any other evidence, 
that the fact that the government is the predominan t supplier means that private prices are distorted.  
At the same time, we do not consider that, in cases in which the government is the "predominant" 
supplier, an investigating authorit y would be required to conduct the same type of analysis as in cases 
where the government is only a "significant" supplie r.  In both cases, the investigating authority 
would have to reach its conclusions based on all th e evidence that is put on  the record, including 
evidence regarding factors other than government mark et share.  However, when the government is a 
"significant" supplier, evidence pertaining to factors other than government market share will be 
                                                      
408Appellate Body Report, US – Softwood Lumber IV , para. 102. 
409Appellate Body Report, US – Softwood Lumber IV , para. 100. (emphasis added) WT/DS379/AB/R 
Page 170  
 
  needed, as the government's role as a significant supplier cannot, on its own, prove distortion of 
private prices. 
444. With this, we are not suggesting that there is  a threshold above which the fact that the 
government is the predominant supplier in the ma rket alone becomes sufficient to establish price 
distortion, but clearly, the more predominant a government's role in the market is, the more likely  this 
role will result in the distortion of private pr ices.  Moreover, we note that the concept of 
predominance does not refer exclusively to market shares, but may also refer to market power.  We 
consider this conclusion to be  consistent with the statement of the Appellate Body in US – Softwood 
Lumber IV  that, when the "government's role in providing the financial contribution is so predominant  
that it effectively determines the price at which priv ate suppliers sell the same or similar goods, ... the 
comparison contemplated by Article 14 would become circular".
410  Such influence on prices 
presupposes that sufficient market power exists. 
445.   The Panel stated that "nothing in [the US – Softwood Lumber IV ] report ... would prohibit, 
a priori , a finding of market distortion, and a decision to depart from in-country private prices, where 
the only relevant evidence was that the governme nt is the predominant supplier of the good."411  We 
do not read this statement by the Panel as endorsing a per se  rule based on the government's role as 
the predominant supplier of the good.  To the cont rary, we understand the Pa nel's reasoning to mean 
that evidence that the government  is the predominant supplier may ultimately lead to a finding of 
market distortion, depending on the circumstance s of the case, including how predominant the 
government's role is and the evidence pertaining to fa ctors other than government market share that is 
on the record and that must be considered.  In this  respect, we note that the Panel stated, relying on the 
Appellate Body report in US – Softwood Lumber IV , that "the decision to reject in-country prices as 
the benchmark due to the role of the government in  the market for the good in question can only be 
made on a case-by-case basis, in accordance with the re levant evidence in the particular investigation, 
rather than in the abstract."412  We disagree, therefore, with China that the Panel understood the 
Appellate Body report in US – Softwood Lumber IV  as establishing a per se  rule, according to which 
an investigating authority can reject private prices based only on a finding that the government is the 
predominant supplier in the market.413 
                                                      
410Appellate Body Report, US – Softwood Lumber IV , para. 93. (emphasis added) 
411Panel Report, para. 10.45. 
412Panel Report, para. 10.47 (referring to Appellate Body Report, US – Softwood Lumber IV , 
para. 102). 
413The Panel expressly agreed with China that the Appellate Body report in US – Softwood Lumber IV  
does not establish a per se  rule of predominance. (Panel Report, para. 10.40)  WT/DS379/AB/R 
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  446. In sum, we are of the view that  an investigating authority may reject in-country private prices 
if it reaches the conclusion that these are too dist orted due to the predominant participation of the 
government as a supplier in the market, thus rende ring the comparison required under Article 14(d) of 
the SCM Agreement  circular.  It is, therefore, price distortion that would allow an investigating 
authority to reject in-country private prices, not the fact that the government is the predominant supplier per se .  There may be cases, however, where the government's role as a provider of goods is 
so predominant that price distortion is likely a nd other evidence carries only limited weight.  We 
emphasize, however, that price distortion must be established on a case-by-case basis and that an investigating authority cannot, based simply on a finding that the government is the predominant 
supplier of the relevant goods, refuse to consider evidence relating to factors other than government 
market share. 
447. In the light of the above, we do not consider th at the Panel interprete d Article 14(d) of the 
SCM Agreement  as permitting the rejection of in-country  private prices as benchmarks through the 
application of a per se  rule based on the role of the government as the predominant supplier of the 
goods.  Rather, the Panel correctly interpreted Article 14(d) of the SCM Agreement  as requiring that 
the issue of whether in-country private prices are dist orted such that they cannot meaningfully be used 
as benchmarks is one that must be determined on a case-by-case basis, having considered evidence 
relating to other factors, even in situations wher e the government is the predominant supplier in the 
market. 
3. The Panel's Assessment of the USDOC's  Determination to Reject In-Country 
Private Prices in China as Benchmarks for HRS Inputs  
448. Having concluded that the Panel correc tly interpreted Article 14(d) of the SCM Agreement  as 
permitting the rejection of in-country private prices if these are too distorted, we now turn to the 
Panel's assessment of the USDOC's decision to reject Chinese in-country private prices for HRS 
inputs in the CWP and LWR investigations. 
449. The Panel disagreed with China that, in the in vestigations at issue, the USDOC applied a 
"per se " rule based on the government's predominant role as a supplier of the goods.  The Panel 
considered that, "given the exte nsive summaries and discussion contai ned in the determinations, it is 
clear that the USDOC received from parties on both  sides of the investigation, and considered, 
arguments and evidence relevant to the role of the government in the Chinese HRS market."414  The 
Panel noted that "[t]he fact that the USDOC ultimate ly did not find that ... other information led to the
                                                      
414Panel Report, para. 10.55. WT/DS379/AB/R 
Page 172  
 
  conclusion that government predominance did not distort the market provides no indication ... that a 
'per se ' rule was applied in these investigations."
415  The Panel concluded that China had not 
established that the USDOC had acted inconsistently  with the obligations of the United States under 
Article 14(d) of the SCM Agreement  by rejecting in-country private prices in China as benchmarks for 
HRS in either the CWP or the LWR investigations.416 
450. China claims that, in the CWP and LWR inv estigations, the USDOC's rejection of Chinese 
market prices as benchmarks was predicated exclus ively on evidence relating to the market share of 
SOE suppliers of HRS.  China submits that it placed evidence on the record of the CWP and LWR 
investigations concerning the actual nature and st ructure of the Chinese HRS industry which, in its 
view, demonstrated that, in spite of government ma rket share, the market was functioning and prices 
were not distorted.  China asserts, in particular, th at it demonstrated, on the basis of undisputed facts, 
that:  (i) SOE producers of HRS are profitable;  (ii) private investment in the Chinese HRS industry 
has been growing;  (iii) many SOE producers of HRS are publicly listed corporations that operate 
under the same Chinese company law as companies with no State ownership;  (iv) the Chinese HRS 
market is heavily fragmented, with numerous SOE and non-SOE suppliers competing for sales;  
(v) there is no uniform or government-set price for HRS;  and (vi) prices for HRS fluctuate by 
producer, by time, and by region. 
451. In both the CWP and LWR determinations, the USDOC found, relying at least to some extent 
on facts available, that SOEs produced 96.1 per cen t of all HRS produced in China and that all the 
SOE suppliers are majority owned by the government.417  China did not contest these determinations 
by the USDOC before the Panel.418  We also note that, according to the USDOC's determinations, the 
remaining market shares are taken up mainly by im ports (3 per cent) and that the USDOC considered 
using prices of imported HRS as a possibl e benchmark under Article 14(d) of the SCM Agreement , 
but concluded that "import quantities of HRS were small relative to the Chinese domestic production" 
and that, therefore, "unit values of imports into  China were not sufficient to serve as reliable 
benchmarks".419   
452. The USDOC also reproduced the arguments made  by China and by the respondents based on 
factors other than government market share.  The USDOC concluded, however, that, "because of the 
government's overwhelming involvement  in [China's] HRS market, the use of private producer prices 
                                                      
415Panel Report, para. 10.56. 
416Panel Report, para. 10.61. 
417Panel Report, paras. 8.128, 8.129, 10.54, and 10.55. 
418Panel Report, para. 10.55. 
419Panel Report, para. 10.54.  WT/DS379/AB/R 
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  in China would be akin to comparing the benchmark to itself" and that, therefore, private prices in 
China could not be used to determine the adequacy of remuneration.420 
453. We recall that, while a government's predomin ant role as a supplier in the market makes it 
"likely" that private prices will be distorted, whet her this is the case must be established "on a case-
by-case basis, according to the particular fact s underlying each countervailing duty investigation".421  
As explained above, we read this st atement by the Appellate Body in US – Softwood Lumber IV  to 
suggest that, even in cases in which the government  is the predominant supplier, an investigating 
authority may not establish distortion of prices without considering evidence of other factors that have been presented to the authority as evidence.  In stead, an investigating authority should always 
consider all evidence regarding other factors on the record, but the extent to which such evidence 
carries weight depends on how predominant the gov ernment's role is and on the relevance of other 
factors. 
454. Although the Panel refers to "extensive summaries and discussion contained in the 
determinations"
422, the USDOC's consideration of any eviden ce other than government market share 
appears to have been somewhat cursory and largel y limited to the conclusion that such evidence was 
either irrelevant or insufficient to override the distortion caused by the government's overwhelming 
involvement in the market.  In US – Softwood Lumber IV , the Appellate Body considered that a 
government may be so predominant as to effectively determine private prices.  In this case, therefore, 
the key issue is whether the Panel erred in findi ng that a reasonable and objective investigating 
authority could reach the conclusion that in-country  private prices were unreliable benchmarks, based 
on evidence that the government accounted for 96.1  per cent of HRS production in China and a 
somewhat cursory examination of evidence rela ting to other characteristics of the market. 
455. We observe that, with 96.1 per cent market share, the position of the government in the 
market is much closer to a situation where the govern ment is the sole supplier of the goods than to the 
situation where it is merely a significant supplie r of the goods.  This, in our view, makes it likely  that 
the government as the predominant supplier has the ma rket power to affect through its own pricing 
strategy the pricing by private providers for the same goods, and induce them to align with 
government prices.  In such a situation, evidence of  factors other than government market share will 
have less weight in the determination of price dist ortion than in a situation where the government has 
only a "significant" presence in the market.  Thus, wh ile it is true that the USDOC's consideration of 
                                                      
420CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), pp. 64 and 65;  and LWR Issues and 
Decision Memorandum (Panel Exhibit CHI-2), p. 36. 
421Appellate Body Report, US – Softwood Lumber IV , para. 102. 
422Panel Report, para. 10.55. WT/DS379/AB/R 
Page 174  
 
  factors other than government market share in  the CWP and LWR investigations was somewhat 
cursory, this must be contrasted with the USDOC' s finding that, with 96.1 per cent market share, the 
government had an "overwhelming" involvement in the HRS market.
423  We further observe that the 
Panel also discussed the USDOC's analysis of the role of imports in the market, noting that the 
USDOC had concluded that import quantities (3 per cen t of the market) were small relative to State-
owned production of HRS.424 
456.   In the present dispute, it seems to us th at, given the evidence regarding the government's 
predominant role as the supplier of the goods, that is, the 96.1 per cent market share, and having 
considered evidence of other factors, the Pa nel properly concluded that the USDOC could, 
consistently with Article 14(d) of the SCM Agreement , determine that private prices were distorted 
and could not be used as be nchmarks for assessing the adequacy of remuneration. 
457. China asserts that the USDOC disregarded evid ence submitted by the respondents regarding 
factors other than government market share.  Ho wever, the Panel found that "the USDOC received 
from parties on both sides of the investigation, and considered, arguments and evidence relevant to the 
role of the government in the Chinese HRS market"425 and that, in both determinations, "the USDOC 
considered and rejected as unpersuasive"426 arguments regarding factors other than government 
market share submitted by the respondents. 
458. In the light of the above, we do not consider that the Panel committed legal error in applying 
its interpretation of Article 14(d) to the USDOC's determinations in the CWP and LWR 
investigations.  We, therefore, uphold  the Panel's finding, in paragraph 17.1(c)(vi) of the Panel 
Report427, that China did not establish that the USDOC acted  inconsistently with the obligations of the 
United States under Article 14(d) of the SCM Agreement  by rejecting in-country private prices in 
China as benchmarks for HRS in the CWP and LWR i nvestigations.  Having upheld this finding, it is 
unnecessary to address China's consequential claims under Articles 10 and 32.1 of the 
SCM Agreement . 
4. Article 11 of the DSU  
459. China claims that the Panel appears to have attributed to the USDOC a rationale that the 
USDOC did not adopt.  China contends that the "ra tionale or explanation" provided by the USDOC in 
                                                      
423Panel Report, paras. 10.49, 10.54, and 10.64. 
424Panel Report, para. 10.27. 
425Panel Report, para. 10.55. 
426Panel Report, para. 10.53. 
427See also Panel Report, para. 10.61.  WT/DS379/AB/R 
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  its determinations was base d exclusively on government market shar e, and it was solely on this basis 
that the Panel could examine the consistency of th ese determinations with the covered agreements.  
Thus, in China's view, to the extent that th e Panel attributed to the USDOC an implicit 
"consideration" of other factors and evidence, this  was inconsistent with the Panel's obligation under 
Article 11 of the DSU to limit its examination to th e USDOC's stated rationale.  China argues that, if 
the Panel's view was that the USDOC not merely received and considered , but expressly relied upon, 
the arguments and evidence relating to factors other th an the government's market share, such view is 
incorrect. 
460. As explained above, the Panel found that the USDOC did not apply a per se rule based on the 
government's predominant role as the supplier of th e goods in rejecting Chinese HRS private prices as 
benchmarks.  The Panel first found that the USDO C determined the figure of 96.1 per cent SOEs 
market share, based on facts ava ilable, because China had failed to provide information regarding the 
total amount of domestically produced HRS.  Then , the Panel noted that the USDOC "received" and 
"considered" evidence relating to China's arguments, including the factors set out above, to determine 
"the role of the government in the Chinese HRS market".428 
461. The question before us is, therefore, whether the Panel attributed to the USDOC a rationale 
that was not set out in the CWP and LWR determinati ons, rather than analyzing the rationale that the 
USDOC set out in those determinations.  In this re spect, we recall that, as clarified by the Appellate 
Body in previous disputes, under Article 11 of the DS U, "[a] panel's examination of those conclusions 
must be critical and searching, and be based on th e information contained in the record and the 
explanations given by the authority in its published report ."429  The Appellate Body has also clarified 
that during panel proceedings a Member is precluded from providing an ex post  rationale to justify the 
investigating authority's determination.430 
462. We recall that the USDOC reproduced the argu ments made by China and by the respondents 
based on factors other than government market share, but it disagreed that it must "'look beyond the 
degree of state-ownership' [of the HRS industry in Ch ina] and consider the actual nature and structure 
of the HRS industry".431  The USDOC concluded that China's assertions that there is no single 
government set price, that the HRS industry is hi ghly fragmented, that SOEs operate as private 
companies, that private investment is growing, and that prices fluctuate from day-to-day across 
                                                      
428Panel Report, para. 10.55. 
429Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. (emphasis 
added) 
430Appellate Body Report, Japan – DRAMS (Korea) , para. 159. 
431Panel Report, footnote 480 to para. 10.25 and para. 10.53;  CWP Issues and Decision Memorandum 
(Panel Exhibit CHI-1), p. 65;  and LWR Issues and Decision Memorandum (Panel Exhibit CHI-2), p. 36. WT/DS379/AB/R 
Page 176  
 
  regions, "did not mitigate the fact that the gove rnment accounted for" a significant portion of 
production.
432  Moreover, the USDOC stated that "the profitability of state-owned HRS producers was 
irrelevant for determining whether HRS was pr ovided for less than adequate remuneration".433 
463. This review of the reasons reflected in the USDOC determinations demonstrates that there 
was an express basis in those determinations th at supports the Panel's statement that the USDOC 
"received and considered" evidence pertaining to fact ors other than government market share.  The 
USDOC reproduced the respondents' arguments relating to these factors, considered them, albeit in a 
cursory fashion, and then found that they either were  not relevant to the question of price distortion or 
did not mitigate the fact that the government was the predominant supplier, accounting for 96.1 per 
cent of HRS production.  This, in our view, is suffi cient to conclude that the USDOC "received and 
considered" evidence, and ultimately reached the conc lusion that this evidence was not relevant.  In 
these circumstances, we do not consider that the Pane l attributed to the USDOC a rationale that was 
not contained in the USDOC's determinations. 
464. In the light of the above, we are of the view that the Panel did not attribute to the USDOC a 
rationale that was not in the CWP and LWR determina tions, and, therefore, did not act inconsistently 
with Article 11 of the DSU. 
B. Article 14(b):  Benchmarks for Loans 
1. Introduction  
465. We now turn to China's appeal of the Panel' s findings concerning the USDOC's rejection, in 
the CWP, LWS, and OTR investigations, of interest  rates in China as benchmarks, and the use of an 
external proxy benchmark, to determine whether Chinese renminbi ("RMB")-denominated loans provided by SOCBs conferred a benefit in  accordance with Article 14(b) of the SCM Agreement .
434 
466. The Panel interpreted Article 14(b) of the SCM Agreement  and considered that "inherent in 
Article 14(b), as in Article 14(d), is sufficient fl exibility to permit the use of a proxy in place of 
                                                      
432Panel Report, paras. 10.53 and 10.54;  CWP Issues and Decision Memorandum (Panel Exhibit 
CHI-1), p. 65;  and LWR Issues and Decision  Memorandum (Panel Exhibit CHI-2), p. 36. 
433Panel Report, para. 10.53;  CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), p. 65;  
and LWR Issues and Decision Memorand um (Panel Exhibit CHI-2), p. 36. 
434Before the Panel, China also raised a claim in respect of the benefit benchmark used by the USDOC 
for loans denominated in United States dollars. (Panel Report, paras. 10.1, 10.8, 10.85, and 10.210)  The Panel 
found that the USDOC had acted inconsistently with the obligations of the United States under Article 14(b) of 
the SCM Agreement  by using average annual interest rates as benchmarks for United States dollar-denominated 
loans from SOCBs in the OTR investigation ( ibid., para. 17.1(c)(viii);  see also para. 10.219).  This finding has 
not been appealed.  WT/DS379/AB/R 
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  observed rates in the country in question wh ere no 'commercial' be nchmark can be found".435  The 
Panel then applied its interpre tation of Article 14(b) of the SCM Agreement  to the USDOC's 
determinations in the three investigations at issue.  With respect to the USDOC 's rejection of interest 
rates in China, the Panel found that: 
... China has not established that the USDOC's decision not to rely on 
Chinese interest rates as benchmar ks for SOCB loans denominated in 
RMB was inconsistent with the obligations of the United States under Article 14(b) of the SCM Agreement.
436 
467. With respect to the use by the USDOC of a proxy benchmark to calculate benefit under 
Article 14(b) of the SCM Agreement , the Panel found that: 
... China has not established that th e benchmark actually used by the 
USDOC to calculate the benefit from RMB-denominated SOCB 
loans was inconsistent with the obligations of the United States under 
Article 14(b) of the SCM Agreement.437 
468. China appeals these findings by the Panel and requ ests us to:  (i) reverse the Panel's finding 
that China did not establish that the United States acted inconsistently with its obligations under 
Article 14(b) of the SCM Agreement  by rejecting interest rates in China as benchmarks to calculate 
the benefit conferred by RMB-denominated loans;  (ii) reverse the Panel's finding that China did not establish that the benefit benchmark that the USDOC actually used was inconsistent with 
Article 14(b) of the SCM Agreement ;  and (iii) find that the Panel acte d inconsistently with Article 11 
of the DSU by failing to assess the conformity of the benchmark used by the USDOC with the legal 
requirements of Article 14(b).  Upon and as a con sequence of such findings, China requests that we 
complete the analysis in respect of China's con sequential claims under Articles 10 and 32.1 of the 
SCM Agreement  and find that the challenged measures are inconsistent with these provisions. 
469. The United States considers that the Panel properly interpreted Article 14(b) of the 
SCM Agreement  as permitting the use of proxies, including lo ans denominated in a different currency, 
and requests us to uphold the Panel's interpretation of this provision.  The United States considers that 
the Panel correctly found that the USDOC's rejection of interest rates in China as benchmarks in the 
CWP, LWS, and OTR investigations as well as the benchmark used by the USDOC were consistent 
with Article 14(b) of the SCM Agreement .  The United States also contends that the Panel did not act 
inconsistently with Article 11 of the DSU. 
                                                     
 
435Panel Report, para. 10.130. 
436Panel Report, para. 10.148. 
437Panel Report, para. 10.209. WT/DS379/AB/R 
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  470. In the CWP, LWS, and OTR countervailing duty investigations, the USDOC rejected interest 
rates from all sources of loans in China as benchm arks for measuring the existence and amount of 
benefit conferred by SOCB-provided loans, because  of pervasive government intervention in the 
banking sector, which created significant distortions, restricting and influencing even foreign banks 
within China.  Having rejected interest rates in  China as benchmarks, the USDOC resorted to an 
external benchmark.  Specifically, the USDOC cons tructed, using a regression-based methodology, an 
interest rate benchmark based on inflation-adjusted interest rates of a group of countries with a gross 
national income ("GNI") similar to that of  China (the "USDOC's proxy benchmark").
438  Relying on 
its previous findings in CFS Paper, the USDOC ju stified this approach on the basis of a "broad 
inverse relationship" between income  levels and real interest rates.439 
2. Interpretation of Article 14(b) of the SCM Agreement  
471. We begin our review with the Panel's interpreta tion of Article 14(b).  According to the Panel, 
the "central question of legal interpretation ... is whether, and if so under what circumstances, 
Article 14(b) of the SCM Agreemen t permits the rejection of in-count ry interest rates as benchmarks 
for government-provided loans."440  The Panel viewed the situation under Article 14(b) "as analogous 
to that analyzed by the Appellate Body in US – Softwood Lumber IV  (government predominance as a 
supplier of a good)", and concluded that "in Article  14(b), as in Article 14(d), [there] is sufficient 
flexibility to permit the use of a proxy in place of observed rates in the country in question where no 
'commercial' benchmark can be found".441 
472. China requests us to find that the Panel erred in its interpretation of Article 14(b) of the 
SCM Agreement .  For China, the central question of lega l interpretation before the Panel was what 
constitutes a "comparable commercial loan which the firm could actually obtain on the market", rather 
than the question identified by the Panel, namely , "whether, and if so under what circumstances, 
Article 14(b) of the SCM Agreement permits the rej ection of in-country interest rates as benchmarks 
                                                      
438Panel Report, para. 10.193.  In each investigati on, the USDOC noted that  the regression-based 
methodology used was the same as the methodology used in its CFS Paper  determination.  In CFS Paper, the 
USDOC used interest rate, inflation, and governance quality data for 33 lower-middle-income market economy 
countries.  By running regressions of these countries' real (inflation-adjusted) interest rates on their respective 
composite governance indicators, the USDOC derived models to estimate a country's real interest rate based on its governance indicators.  The US DOC then factored Chin a's composite governance indicators into these 
equations to calculate a benchmark real interest rate. (See CFS Paper Issues and Decision Memorandum  (Panel 
Exhibit CHI-93), pp. 6-8) 
439Panel Report, para. 10.193;  CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), pp. 7 
and 8;  LWS Issues and Decision Memorandum (Panel Exhibit CHI-3), pp. 12 and 13;  and OTR Issues and 
Decision Memorandum (Panel Exhibit CHI-4), pp. 7 and 8. 
440Panel Report, para. 10.105. 
441Panel Report, para. 10.130.  WT/DS379/AB/R 
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  for government-provided loans".442  Article 14(b) does not have an express notion of territoriality, 
and, therefore, the paradigm of "in the country" ve rsus "out of the country" does not arise.  China 
considers that the Panel should, therefore, have ask ed whether the use of an external benchmark is 
consistent with the three essential elements that a benchmark loan must satisfy in order to be 
consistent with Article 14(b), name ly, being a loan that is:  (i) comparable;  (ii) commercial;  and 
(iii) one that the firm receiving the government-provided loan could actually obtain on the market. 
473. We recall that Article 14 of the SCM Agreement  reads, in relevant part: 
For the purpose of Part V, any me thod used by the investigating 
authority to calculate the benefit to the recipient conferred pursuant 
to paragraph 1 of Article 1 sha ll be provided for in the national 
legislation or implementing regula tions of the Member concerned 
and its application to each particular case shall be transparent and adequately explained.  Furthermore, any such method shall be consistent with the following guidelines: 
 ... 
(b) a loan by a government shall not be considered as conferring a 
benefit, unless there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount the firm would pay on a comparable commercial loan which the firm could actually obtain on the market.  In 
this case the benefit shall be the difference between these two 
amounts. 
474. Article 14(b) provides that, in calculating the amount of the benefit resulting from a financial 
contribution in the form of a loan, the benchmark to  be used is "a comparable commercial loan which 
the firm could actually obtain on the market".  Th e Appellate Body has not previously interpreted 
Article 14(b) of the SCM Agreement .  Nonetheless, as discussed above in section VI.A. of this Report, 
the Appellate Body addressed the issue of benefit benchmarks with regard to Article 14(d) of the 
SCM Agreement  in US – Softwood Lumber IV . 
475. We start by considering the constituent elemen ts of a benchmark loan under Article 14(b), 
that is "comparable", "commercial", and a "loan wh ich the firm could actually obtain on the market". 
476. A benchmark loan under Article 14(b) must be a lo an that is "comparable" to the investigated 
government loan.  Comparable is defined as "able to  be compared", "worthy of comparison", and "fit 
to be compared (to)".
443  This, in our view, suggests that something can be considered "comparable", 
                                                      
442China's appellant's submission, para. 398 (quoting Panel Report, para. 10.105). 
443Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 468. WT/DS379/AB/R 
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  when there are sufficient similariti es between the things that are comp ared as to make that comparison 
worthy or meaningful.  Thus, a benchmark loan unde r Article 14(b) should have as many elements as 
possible in common with the investigated loan to be comparable.  The Panel noted that, ideally, an 
investigating authority should use as a benchmark a loan to the same bo rrower that has been 
established around the same time, has the same structure as, and sim ilar maturity to, the government 
loan, is about the same size, and is denominated in the same currency.  The Panel, however, also 
considered that, in practice, the existence of such  an ideal benchmark loan would be extremely rare, 
and that a comparison should also be possible w ith other loans that present a lesser degree of 
similarity.
444  We agree with both of these observations by the Panel. 
477. China claims that the Panel's "distortion" anal ysis was based on an erroneous interpretation of 
the word "commercial".  According to  China, the Panel erred to the extent it considered that the fact 
that the Government of China holds ownership inte rests in certain banks renders all of their loans 
ipso facto  "non-commercial", and points out, in this rega rd, that Article 14(b) requires a comparison 
between "the government loan in question" and a "commercial" loan, not a "non-governmental" loan. 
478. A loan only confers a benefit when and to the ex tent that it has been granted on terms that are 
not otherwise available in the marketplace.445  A key element in ensuring a meaningful comparison 
under Article 14(b) is that a benchmark loan be "commercial".  The comparison between an 
investigated loan and a commercial loan, therefore, reveals whether a benefit has been conferred, and 
its amount.  We observe that the term "commercial" is  defined as "interested in financial return rather 
than artistry; likely to make a profit; regarded as a mere matter of business".446  Thus the term 
"commercial" does not speak of the id entity of the provider of the loan. 
479. Although the Panel did not explicitly rule on the issue, it stated that one possible 
interpretation of "commercial" could be th at any loan made by the government would ipso facto  not 
be "commercial".  In our view, it would not be co rrect to conclude that any loan made by the 
government (or by private lenders in a ma rket dominated by the government) would ipso facto  not be 
"commercial".  We see nothing to suggest that the notion of "commercial" is per se  incompatible with 
the supply of financial services by a government.  Therefore, the mere fact that loans are supplied by a government is not in itself sufficient to establish that such loans are not "commercial" and thus 
incapable of being used as benchm arks under Article 14(b) of the SCM Agreement .  An investigating 
                                                     
 
444Panel Report, para. 10.115. 
445Appellate Body Report, Canada – Aircraft , paras. 155-158. 
446Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 462.  WT/DS379/AB/R 
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  authority would have to establish that the governme nt presence or influence in the market causes 
distortions that render interest rates unusable as benchmarks. 
480. Finally, a benchmark loan under Article 14(b) mu st be a "loan which the firm could actually 
obtain on the market".  The use of the conditional tense, "could", suggests that a benchmark loan under Article 14(b) need not in every case be a loan that exists or that can in fact  be obtained in the 
market.  In this respect, we agree with the Panel th at this refers "first and foremost" to the borrower's 
risk profile, that is, whether the benchmark loan  is one that could be obtained by the borrower 
receiving the investigated government loan.
447  Thus, we consider that Article 14(b) does not preclude 
the possibility of using as benchmarks interest rates on commercial loans that are not actually 
available in the market where the firm is located, such as, for instance, loans in other markets or 
constructed proxies. 
481. In interpreting Article 14(b), the Panel considered that the Appe llate Body's interpretation of 
benchmarks under Article 14(d) in US – Softwood Lumber IV , as permitting the rejection of in-
country private prices as benchmarks, would al so apply under Article 14(b), which, unlike 
Article 14(a) and (d), does not set forth any " a priori  restriction to any geographical market ... or any 
prohibition of any particular appr oach to constructing a proxy".448 
482. We observe that, under Article 14(b), the benchm ark to measure benefit is "the amount the 
firm would pay on a comparable commercial lo an which the firm could actually obtain on the 
market", while, under Article 14(d), it is the "pre vailing market conditions for the good or service in 
question in the country of provision or purchase".  In  contrast to Article 14(d), which clearly connects 
the relevant "market" to "the country of prov ision or purchase", Article 14(b) does not specify 
expressly any geographical or national scope for wh at is the relevant "market" within which a 
comparable commercial loan should be identified.449  We, therefore, agree with China that the relevant 
question under Article 14(b) is not whether an investigating authority may resort to an "out-of-
country" benchmark as opposed to an "in-country" benchmark.  It is, rather, to what extent 
Article 14(b) requires strict and formalistic compliance with all of the conditions specified therein, 
even when doing so would frustrate the purpose of that provision and prevent any calculation of the 
                                                      
447Panel Report, para. 10.113. 
448Panel Report, para. 10.119. 
449We consider that Article 14(b) may well accomm odate, in any given case, a conception of the 
relevant market as one defined on the basis of the particular product or service (a loan), as well as one defined on a geographic basis.  In some cases, the product market may be a national market, such as when loans in a 
particular currency are available only within a particular country.  It seems to us that the word "comparable", 
and some of the factors that the Panel identified as indi cations of comparability—the ti ming, structure, maturity, 
and currency of loans—may equally well be factors relevant  to the identification of the product market as well 
as the geographic market for the loan. WT/DS379/AB/R 
Page 182  
 
  benefit.  Thus, the relevant question is whethe r there is enough flexibility in Article 14(b), as the 
Appellate Body found that there is in Article 14(d), to allow for the use of a benchmark other than one 
that is always, and in every respect, "a comparab le commercial loan which the firm could actually 
obtain on the market". 
483. We have recalled above, in addressing China' s appeal of the Panel's finding under 
Article 14(d), that in US – Softwood Lumber IV  the Appellate Body found that, taken together, the 
terms of Article 14 "establish mandato ry parameters within which the benefit must be calculated, but 
they do not require using only one methodology for determining the adequacy of remuneration for the provision of goods by a government" and that "the u se of the term 'guidelines' in Article 14 suggests 
that paragraphs (a) through (d) shoul d not be interpreted as 'rigid rules that purport to contemplate 
every conceivable factual circumstance'."
450  The Appellate Body further clarified that the guideline in 
Article 14(d) "does not require the use of private pr ices in the market of the country of provision in 
every situation", but rather, "that the method selected for calculating the benefit must relate or refer to, 
or be connected with, the prevailing market conditi ons in the country of provision, and must reflect 
price, quality, availability, marketability, transporta tion and other conditions of purchase or sale, as 
required by Article 14(d)."451  Thus, while the use of an out-o f-country benchmark may be permissible 
in a given case, it would nevertheless have to appr oximate the conditions specified in Article 14(d). 
484. It seems to us that, notwithstanding the diffe rences between Article 14(b) and (d), there may 
also be under Article 14(b) limited circumstances wh ere an excessively formalistic interpretation of 
this provision could frustrate its purpose and pr event the calculation of the benefit.  Reading 
Article 14(b) as always requiring a comparison with  loans denominated in the same currency as the 
investigated loans, even in ci rcumstances where all loans in the same currency are distorted by 
government intervention, would lead to a comp arison with government distorted loans, thus 
frustrating the purpose of Article 14(b).  If loans in a given market and in a given currency are 
distorted by government intervention, an investig ating authority should be permitted, in certain 
circumstances also under Article 14(b), to use a benc hmark other than "a comparable commercial loan 
which the firm could actually obtain on the market ".  However, such a benchmark would have to 
approximate "a comparable commercial loan which the firm could actually obtain on the market". 
485. We observe that the Panel reasoned that the id entification of an appropriate benchmark under 
Article 14(b) can be seen as a "series of concentric circles"452, where the investigating authorities
                                                      
450Appellate Body Report, US – Softwood Lumber IV , para. 92. 
451Appellate Body Report, US – Softwood Lumber IV , para. 96.  
452Panel Report, para. 10.118.  WT/DS379/AB/R 
 Page 183 
 
 
  should first seek commercial loans to  the same borrower that are identi cal or nearly identical to the 
investigated loan.  As the Panel stated, it is not reasonable to assume  that, when there is no actually 
obtainable commercial loan that is comparable in  every respect, an investigating authority must 
conclude that there is no benchmark, and that, therefore, no benefit amount can be determined.453  In 
the absence of an identical or nearly identical lo an, an investigating authority should seek, in turn, 
other similar commercial loans held by the same bo rrower, then similar comme rcial loans granted to 
another borrower with a similar credit risk profile to  the investigated borrower.  In this process, an 
investigating authority will need to make adjustme nts to reflect differences from investigated loans, 
such as date of origination, size, maturity, currency, structure, or borrower's credit risk.454  Yet, there 
may be situations where the actual differences betw een any of the existing commercial loans and the 
investigated government loan are so significant that  it is not realistically possible to address them 
through adjustments.  In such situations, the Panel considered that an investigating authority should be 
allowed to use proxies as benchmarks.455 
486. We agree that selecting a benchmark under Artic le 14(b) involves a progressive search for a 
comparable commercial loan, starting with the commercia l loan that is closest to  the investigated loan 
(a loan to the same borrower that is nearly identical to the investigated loan in terms of timing, 
structure, maturity, size and currency) and moving to less similar commercial loans while adjusting 
them to ensure comparability with the investigated loan. 
487. We see no inherent limitations in Article 14(b) that would prevent an investigating authority 
from using as benchmarks interest rates on loans de nominated in currencies other than the currency of 
the investigated loan, or from using proxies instead of observed interest rates, in situations where the 
interest rates on loans in the currency of the investig ated loan are distorted and thus cannot be used as 
benchmarks.  In fact, to read Article 14(b) as imposing such limitations on the selection of a 
benchmark would potentially frustrate the purpose of  that provision, as no suitable benchmarks could 
be identified in situations where the interest ra tes on loans in a given currency were distorted by 
government presence or influence in the market and no lo an in that currency exists in other markets.  
We further note that, as already discussed above, the possibility of resorting to a proxy under 
Article 14(b) is consistent with th e use of the conditional tense:  " would  pay" and " could  actually 
obtain on the market".  In the absence of an actual comparable commercial loan that is available on 
the market, an investigating authority should be allowed to use a proxy for what "would" have been paid on a comparable commercial loan that "could" have been obtained on the market. 
                                                     
 
453Panel Report, para. 10.116.   
454Panel Report, para. 10.118.  
455Panel Report, para. 10.119. WT/DS379/AB/R 
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  488. We also consider that the further away an investigating authority moves from the ideal 
benchmark of the identical or nearly identical loan , the more adjustments w ill be necessary to ensure 
that the benchmark loan approximates the "compa rable commercial loan which the firm could 
actually obtain on the market" specified in Article 14 (b).  As discussed above, we consider this to be 
consistent with, and parallel to, the requir ement affirmed by the Appellate Body in US – Softwood 
Lumber IV  under Article 14(d), that, in situations where an investigating authority does not use the 
private prices in the market of the country of provision, it should nevertheless select a method for 
calculating the benefit that relates or refers to, or  is connected with, the pr evailing market conditions 
in the country of provision.
456 
489. In sum, we consider that, in spite of the differe nt formulations used in Article 14(b) and (d), 
some of the reasoning of the Appellate Body in US – Softwood Lumber IV  concerning the use of out-
of-country benchmarks and proxies under Article 14(d) is equally applicable under Article 14(b).  In 
particular, we are of the view that a certain degree of flexibility also applies under Article 14(b) in the 
selection of benchmarks, so that such selecti on can ensure a meaningful comparison for the 
determination of benefit.  At the same time, when  an investigating authority resorts to a benchmark 
loan in another currency or to a proxy, it must en sure that such benchmark is adjusted so that it 
approximates the "comparable commercial loan".  Moreover, in accordance with the chapeau of 
Article 14, any such method, as well as how it approx imates the loan in another currency or the proxy 
to a "comparable commercial loan which the firm could actually obtain on the market", must be 
transparent and adequately explained. 
490. In the light of the above, we consider that the Panel did not commit an error in the 
interpretation of Article 14(b) of the SCM Agreement , in finding that "inherent in Article 14(b), as in 
Article 14(d), is sufficient flexibility to permit the use of a proxy in place of observed rates in the 
country in question where no 'comme rcial' benchmark can be found".457 
3. The Panel's Assessment of the USDOC's Decision Not to Rely on Interest 
Rates in China as Benchmarks fo r SOCB Loans Denominated in RMB  
491. Having concluded that the Panel correc tly interpreted Article 14(b) of the SCM Agreement  as 
permitting the use of proxy benchmarks when interest  rates in a given market are distorted, we now 
turn to China's claim that the Panel erred in the application of Article 14(b) of the SCM Agreement  to 
the facts of this dispute.  We address, in particular , China's claim that the Panel erred in finding that 
China had not established that the USDOC's de terminations in the CWP, LWS, and OTR 
                                                      
456Appellate Body Report, US – Softwood Lumber IV , para. 96. 
457Panel Report, para. 10.130.  WT/DS379/AB/R 
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  investigations not to rely on interest rates in China as benchmarks for SOCB loans denominated in 
RMB were inconsistent with Article 14(b). 
492. In the three investigations at issue, the US DOC relied on its previous finding in the CFS 
Paper investigation that the Chinese Government's in tervention in the lending market distorted that 
market.  According to the Panel, that determ ination "formed the principal substantive basis"458 for the 
USDOC's determinations in the three investigations  at issue.  The Panel added that, in these three 
investigations, little new evidence relating to the Ch inese Government's role in the banking sector was 
adduced and that such evidence did not lead the USDOC to change the assessment of the 
Government's role in the banking sector that it had made in CFS Paper.  Furthermore, China did not 
argue before the Panel that "there had been a ma jor change in the government's role in the banking 
sector between the determination in the CFS Paper  investigation and those in the CWP, LWS and 
OTR investigations."459  On this basis, the Panel proceede d to examine the USDOC's determination 
concerning the Chinese banking sector in the CFS Paper investigation.  
493. In respect of the USDOC's determination in CFS Paper, the Panel found that "a reasonable 
and objective investigating authority could have co ncluded that the government played a predominant 
role in the Chinese commercial lending market as  both a lender and in terms of controlling the 
operation of this market, and thus distorted interest rates, such that the observed rates were not 
suitable as benchmarks."460  The Panel reached this conclusion ha ving recalled the extensive evidence 
submitted, verification conducted, and analysis undert aken in the CFS Paper investigation, all of 
which led to and supported the USDOC's "basic finding that the Chinese government played a 
predominant role in the Chinese banking sector and distorted interest rates".461 
494. In establishing whether a lending market is dist orted, and thus cannot provide a benchmark 
for the purpose of Article 14(b), the Panel consid ered that a clear distinction should be drawn 
"between, on the one hand, the government as the setter and implementer of  the general monetary 
policy of a country;  and, on the other hand, the government participating as a lender and/or otherwise 
intervening in the lending market as such, in a wa y and to an extent that effectively it is the 
government, and not the market, that establishes the lending rates."462  In the Panel's view, it is the 
second type of government intervention that may justif y a decision to reject interest rates in a given 
market as benchmarks under Article 14(b). 
                                                      
458Panel Report, para. 10.145. 
459Panel Report, para. 10.145. 
460Panel Report, para. 10.147. 
461Panel Report, para. 10.146. 
462Panel Report, para. 10.126. WT/DS379/AB/R 
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  495. The Panel's analysis was based on the premise that the government's role in setting 
benchmark interest rates is not inconsistent with  the existence of a competitive commercial lending 
market.  The Panel noted, however, that this is di fferent from situations in which the government is 
the only lender in the country or simply dictates the lending rates to be charged by commercial banks.  
The Panel further noted that there may also be c ases where some combination of a large government 
role in the market, and direct governmental contro l over lending rates to borrowers, may result in a 
situation where interest rates charged to commercia l borrowers do not reflect the operation of market 
forces, but are distorted.
463 
496. China argues that "the Panel failed to evaluate  how the government's 'predominant role' as a 
commercial lender could have any effect on benchmark interest rates, le t alone an effect that is 'clearly 
distinct' from the implementation of monetary policy and that would cause benchmark interest rates to 
be lower than they otherwise would be."464  In particular, China claims that the Panel erred in finding 
that there was a clear distinction between, on th e one hand, the government's implementation of 
monetary policy and, on the other hand, the gove rnment participating as a lender and otherwise 
intervening in the lending market.  According to Chin a, the necessary legal consequence of the Panel's 
"distortion" standard is that all interest rate benchm arks are "distorted", and that there is no such thing 
as a "commercial" loan. 
497. China submits that the Panel's analogy to the Appellate Body's decision in US – Softwood 
Lumber IV  was misplaced because governments do not or dinarily establish prices for goods, whereas 
they do ordinarily establish  "benchmark" interest rates.465  China further contends that neither the 
USDOC nor the Panel demonstrated how certain factor s, such as China's regulatory limits on interest 
rates, the fact that observed interest rates are undifferentiated and te nd to cluster around the 
benchmark rate determined by the central bank, and the alleged government influence over SOCBs' 
lending decisions had any effect on observed RMB inter est rates and, in particular, how such factors 
caused interest rates to be lower than they otherwise would be. 
498. We do not consider that the Panel was wrong in drawing a distinction between a government's 
role in implementing monetary policy, on the one hand, and market distortions that may result from 
governmental participation and intervention in th e commercial lending market, on the other hand.  
While the first is a necessary element of all co mmercial lending markets, the second may turn a
                                                      
463Panel Report, para. 10.130. 
464China's appellant's submission, para. 437. (original emphasis) 
465China's appellant's submission, para. 464.  WT/DS379/AB/R 
 Page 187 
 
 
  competitive commercial loan market into a distorte d one, whose interest rates cannot be used as 
benchmarks under Article 14(b) of the SCM Agreement .   
499. We also do not share China's view that the Panel's analogy to the Appellate Body's decision in 
US – Softwood Lumber IV  was misplaced because governments do not ordinarily establish prices for 
goods, whereas they do ordinarily establish benchmark in terest rates.  As we have already explained, 
in our view, the government's role in implemen ting monetary policy does not, in and of itself, 
eliminate the scope for a competitive lending market. 
500. For example, governments may establish or act to influence the  "discount rate", that is, the 
interest rate on the loans that the central bank ma kes to banks.  There is,  however, a fundamental 
difference between the discount rate and the interest rates that banks charge to individual borrowers.  
The latter interest rates are based on the discount rate, but are determined by market forces.  The rate a 
borrower is able to obtain in the market will depend on many factors including its risk profile, the size 
of the loan, its structure, its maturity, as well as what  the borrower is able to negotiate with the lender.  
For instance, if the discount rate is set at 1 per cent, a borrower may negotiate a loan for 
1,000,000 currency units over 10 years at the fixed interest rate of 4 per cent with one bank, while 
another bank may offer the same loan to the same borrower at 3.5 per cent.  The mere fact that central 
banks establish discount rates does not in itself el iminate competition among lenders and thus make 
commercial rates distorted.  Therefore, while it is true that governments, through their central banks, 
may effectively establish discount rates, by this fact alone governments do not establish the interest 
rates available to individual borrowers, which are, rather, determined by market forces. 
501. We further note that China accepts the propositio n that, notwithstanding governments' role in 
setting and implementing monetary policy, a co mpetitive commercial lending market may exist.466  
Indeed, China argues that despite the role of the Chinese Government in setting interest rates, the 
Chinese market for commercial lending is competitive.467  In our view, therefore, the central issue in 
applying Article 14(b) is not whether a "clear distinct ion" exists in the roles of government, but rather, 
whether there is evidence and reasoning demonstrati ng that the Chinese Government, by participating 
in the RMB-lending market and by intervening in th at market (beyond its monetary policy role), is 
able to and does in fact distort interest rates. 
502. We observe that the USDOC's analysis of  the Chinese lending market in the three 
investigations at issue is very brief, but that th e USDOC incorporates by reference its determination in
                                                      
466China's appellant's submission, para. 409. 
467China's appellant's submission, para. 410. WT/DS379/AB/R 
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  an earlier investigation, CFS Paper, where it had already analyzed the Chinese lending market.  The 
Panel noted that China did not argue that there had been a major change in the government's role in 
the banking sector between the determination in th e CFS Paper investigation and those in the CWP, 
LWS, and OTR investigations.
468  We note that there was only one year's difference between the 
period of investigation in CWP, LWS, and OTR and the period of investigation in CFS Paper,  and 
that, in CFS Paper, the USDOC expressly acknowle dged that "banking reforms in China may be 
starting to take effect" and that "the scope and extent of government  control over SOCBs was 
changing".469  Had a longer period of time elapsed between CFS Paper and the investigations at issue, 
we question whether it would have been appropriate or sufficient for the USDOC to simply incorporate by reference its earlier determination in  CFS Paper, without explaining why, despite the 
passage of time, such determination remained valid.  As indicated above
470, we are of the view that 
merely incorporating by reference findings from one determination into another will normally not 
suffice as a reasoned and adequate explanation. 
503. In CFS Paper, the USDOC appears to have based its decision to reject interest rates in China 
as benchmarks under Article 14(b) of the SCM Agreement  on several characteristics of the Chinese 
banking sector, including:  (i) the Chinese Government's  role in the banking sector and influence on 
interest rates, as shown by publications by ou tside institutions (the Organisation for Economic 
Co-operation and Development and the International Monetary Fund ), laws, internal documents, 
including, inter alia , published reports of Chinese banks and by statements made by various officials 
during verification;  (ii) the fact that lending rates were largely undifferentiated,  with most loans being 
made at rates close to the government-set benc hmark rate, which the USDOC considered to be 
evidence that market forces were not operating and that banks still lacked adequate risk management 
and analysis skills;  (iii) that foreign banks in Ch ina were subject to the same government controls as 
domestic banks;  and (iv) that privately owned Chinese banks accounted for a very small percentage 
of total lending.471 
504. We have explained above472, that the Panel did not find that any loan made by the government 
would ipso facto  not be commercial.  Rather, the Panel noted that the USDOC's decision to reject 
interest rates was not based exclusively on the Chin ese Government's predominant role in the market, 
but also on other factors showing its influence on and distortion of interest rates.473 
                                                      
468Panel Report, para. 10.145.  
469Panel Report, para. 10.134. 
470See supra , para. 354 of this Report. 
471Panel Report, para. 10.146. 
472See supra , para. 479. 
473Panel Report, para. 10.111.  WT/DS379/AB/R 
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  505. We note China's claim that, regardless of the merits of each individual factor, the Panel and 
the USDOC failed to explain how each of these factors had any effect on observed interest rates and, 
in particular, how each caused RMB interest rates to  be lower than they would otherwise be.  Based 
on US – Softwood Lumber IV , China argues that, for a benchmark in terest rate to be rejected under 
Article 14(b), an investigating authority must have explained, on the basis of positive evidence, how 
government intervention causes interest rates to be artificially low. 
506. We do not consider China's understanding of US – Softwood Lumber IV  on this issue to be 
correct.  In US – Softwood Lumber IV , the Appellate Body found that, if private prices are aligned 
with government prices because of the government's influence, "[t]he resulting comparison of prices 
... would indicate a 'benefit' that is artificially low, or even zero, such that the full extent of the subsidy 
would not be captured".474  Therefore, in US – Softwood Lumber IV , the Appellate Body took account 
of the consequences for the calculation of the benefit  that would flow from an interpretation of 
Article 14(d) of the SCM Agreement  that would require a comparison of government prices with 
private prices aligned to government prices.  Th e Appellate Body did no t, however, establish a 
specific requirement that, to reject in-country prices, investigating authorities must show that 
government prices are artificially low. 
507. Similarly, under Article 14(b) of the SCM Agreement , a comparison would not be meaningful 
if the investigated loans are comp ared to other loans, whether priv ate or from the government, that are 
distorted due to government intervention in the ma rket.  Under Article 14(b), investigating authorities 
must show that government intervention as a whole di storts the market, not that each factor taken in 
isolation has that effect.  When such distorti on is demonstrated, however, it would frustrate the 
purpose of Article 14 to require nevertheless that  observed market rates serve as the basis for 
comparison and, thereby, for the calculation of the benefit. 
508. We do not consider, therefore, that the US DOC or the Panel was required to determine 
whether factors such as the government's predom inant role as a lender, government regulation of 
interest rates, evidence of undifferentiated inte rest rates, and government influence over SOCB-
lending decisions, each resulted in interest rates that were lower than they otherwise would have been.  
In our view, it was, as the Panel found, sufficient fo r the USDOC to establish th at all of these factors 
taken together distorted the commerc ial lending market such that comparing the interest rates of the 
investigated loans with observed in terest rates in the same market would not be meaningful for the 
purpose of Article 14(b). 
                                                      
474Appellate Body Report, US – Softwood Lumber IV , para. 100. WT/DS379/AB/R 
Page 190  
 
  509. For the reasons expressed above, we consider that  the Panel did not err in finding that the 
USDOC's decision not to rely on interest rates in  China as benchmarks wa s reasoned and adequate, 
and one that a reasonable and objective investigating authority could reach based on the record before 
it.  We, therefore, uphold  the Panel's finding, in para graph 10.148 of the Panel Report
475, that China 
did not establish that the USDOC's decision not to re ly on interest rates in China as benchmarks for 
SOCB loans denominated in RMB in the CWP, LWS, and OTR investigations was inconsistent with 
the obligations of the United States under Article 14(b) of the SCM Agreement . 
4. The Panel's Assessment of the Proxy Benchmark Actually Used by the 
USDOC to Calculate the Benefit from RMB-Denominated SOCB Loans  
510. In the CWP, LWS, and OTR investigations, the USDOC also incorporated by reference some 
of its findings in the CFS Paper investigation in constructing a proxy to serve as the benchmark for 
calculating the benefit associated with the RMB- denominated loans from SOCBs.  This proxy was 
based on a regression analysis of inflation-adjust ed interest rates in 33 lower-middle-income 
countries, on the basis of a "broad inverse relations hip" that the USDOC found between income levels 
and lending rates.476  The USDOC found, based on its findings in CFS Paper, that countries with 
lower per capita GNI tend to have higher interest  rates than countries with higher per capita GNI.477  
In addition, and as it did in CFS Paper, the USDOC made certain adjustments to ensure the 
"comparability" of the proxy benchmark, rela ting to institutional qualities (political stability, 
government effectiveness, and rule of law) and inflation.478  The USDOC also eliminated the interest 
rates of non-market economies as well as those of  countries whose interest rates it found to be 
anomalous.479 
511. China claims that the Panel erred in finding that the proxy benchmark actually used by the 
USDOC in the CWP, LWS, and OTR investigations was a "comparable commercial loan which the 
firm could actually obtain on the market" w ithin the meaning of Article 14(b) of the SCM Agreement .  
China also claims that, in assessing the confor mity of the USDOC's proxy benchmark with 
                                                      
475See also Panel Report, para. 17.1(c)(vii). 
476Panel Report, para. 10.193 and footnote 716 thereto. 
477Panel Report, para. 10.193 and footnote 716 thereto;  CWP Issues and Decision Memorandum 
(Panel Exhibit CHI-1), pp. 7 and 8;  LWS Issues and Decision Memorandum (Panel Exhibit CHI-3), p. 12;  
OTR Issues and Decision Memorandum (Panel Exhibit CHI-4), p. 8;  and CFS Paper Issues and Decision 
Memorandum (Panel Exhibit CHI-93), p. 71. 
478Following comments made by China and by the respondents, the USDOC adjusted the benchmark 
countries' interest rates for inflation, so as to allow a comparison between the real cost of money in China and in 
the group of benchmarked countries. (Panel Report, para. 10.193;  see also CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 72) 
479Panel Report, para. 10.207.  WT/DS379/AB/R 
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  Article 14(b) of the SCM Agreement , the Panel failed to make an objective assessment of the matter, 
and thus acted inconsistently with Article 11 of the DSU. 
512. According to China, there was no basis on whic h the Panel could prope rly have considered 
that the proxy used by the USDOC—namely, a multi-currency regression model based on per capita 
GNI and institutional quality—was a "comparable co mmercial loan which the firm could actually 
obtain on the market".  China considers that there are three essential elements that a benchmark loan 
must satisfy in order to be consistent with Ar ticle 14(b), namely, it must be a loan that is:  
(i) comparable;  (ii) commercial;  and (iii) one th at the firm receiving the government-provided loan 
could actually obtain on the market.  For China,  the fundamental flaws in the USDOC's loan 
benchmark were that it was not comparable and was not one that the respondent borrowers could 
actually obtain on the market. 
513. We begin by addressing China's claim that the Pa nel acted inconsistently with Article 11 of 
the DSU.  Thereafter, we shall address China's claims under Article 14(b) of the SCM Agreement . 
(a) China's Claim under Ar ticle 11 of the DSU 
514. China claims that the Panel failed to fulfil its  duties under Article 11 of the DSU because, in 
finding that the USDOC's benchmark was not unreasonable , it simply accepted the USDOC's 
conclusions without demanding any meaningful explan ation, rather than undertaking an in-depth 
examination of whether the USDOC's be nchmark was supported by positive evidence.480  China 
observes that the Panel saw its task as limited to "evaluat[ing] the internal logic of the methodology 
employed, and the soundness and appropriateness of the data relied upon by the USDOC, in 
constructing the proxy".481  China also observes that the Panel conducted—in a single paragraph—a 
perfunctory examination of the USDOC's benchmar k and concluded that it was "not … unreasonable 
under the circumstances".482 
515. Article 11 of the DSU states in relevant part: 
... a panel should make an objective assessment of the matter before 
it, including an objective assessment of the facts of the case and the applicability of and conformity with  the relevant covered agreements, 
and make such other findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for in the covered 
agreements. 
                                                     
 
480China's appellant's submission, para. 377.  
481China's appellant's submission, para. 375 (quoting Panel Report, para. 10.206). 
482China's appellant's submission, para. 375 (quoting Panel Report, para. 10.207). WT/DS379/AB/R 
Page 192  
 
  516. Article 11 of the DSU sets out the standard of  review applicable in WTO proceedings in 
general, including a panel's review of the determ inations of an investigating authority under the 
SCM Agreement .  On several occasions, the Appellate Body  has explained that, when reviewing the 
determinations of national investigating authorities, a panel must neither conduct a de novo review nor 
simply defer to the conclusions of those author ities.  Rather, a panel should test whether the 
conclusions reached by the investigating authorit y are reasoned and adequate, in the light of the 
evidence on the record and other pl ausible alternative explanations.
483  We recall the detailed guidance 
regarding the appropriate standard of re view provided by the Appellate Body in US – Softwood 
Lumber VI (Article 21.5 – Canada)  and, in particular, its explanation that a panel's examination of an 
investigating authority's conclusi ons "must be critical and searching,  and be based on the information 
contained in the record and the explanations given by the authority in its published report".484  The 
Appellate Body indicated that a panel should not limit its analysis to the determinations of the 
investigating authority, and that only by verifying these determinati ons in the light of alternative 
explanations can a panel come to the positive conclusion that these are "reasoned and adequate".485 
517. In US – Softwood Lumber VI (Article 21.5 – Canada) , the Appellate Body also stated that a 
panel that simply tested whether the conclusi ons of the investigating authority were "not 
unreasonable" would be applying a standard of review that is too deferential a nd, thus, fail to engage 
in the type of "critical and searching analysis" ca lled for by Article 11 of the DSU.  The Appellate 
Body explained that inquiring into whether an authority's finding is "not unreasonable" does not 
necessarily answer the question of "whether that finding is based on positive evidence rather than 
conjecture or remote possibility".486   
518. In this dispute, the Panel observed that in ev aluating the proxy benchmark actually used by 
the USDOC, "the appropriate approach is to c onsider whether the methodology applied by the 
USDOC is one that a reasonable and objective inves tigating authority could use, in the particular 
situation found to exist in the CWP, LWS and OTR investigations".487  The Panel, however, 
subsequently considered that its task in revi ewing the USDOC's proxy benchmark was limited to
                                                      
483See Appellate Body Report, Argentina – Footwear (EC) , paras. 119-121;  Appellate Body Report, 
US – Cotton Yarn , paras. 74-78;  Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , 
paras. 183, and 186-188;  Appellate Body Report, US – Hot-Rolled Steel , para. 55;  Appellate Body Report, 
US – Lamb , paras. 101, and 105-108;  Appellate Body Report, US – Steel Safeguards , para. 299;  Appellate 
Body Report, US – Wheat Gluten , paras. 160 and 161;  and Appellate Body Report, US – Softwood Lumber VI 
(Article 21.5 – Canada) , para. 93. 
484Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93.  See also 
Appellate Body Report, US – Lamb , para. 106. 
485Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 117. 
486Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 113. 
487Panel Report, para. 10.205.  WT/DS379/AB/R 
 Page 193 
 
 
  "evaluat[ing] the internal logic of the methodol ogy employed, and the soundness and appropriateness 
of the data relied upon by the USDOC, in constructing the proxy".488  In explaining its approach, the 
Panel also noted that:  (i) in the absence of undistor ted RMB interest rates in China that could be used 
as benchmarks, there was no point of reference in the record evidence on the basis of which it could 
judge the absolute value of the benchmark used489;  and (ii) China made no arguments as to specific 
flaws in the USDOC's methodology that could and should have been corrected, because its argument 
was that no such proxy methodology based on other countries' interest rates was permissible as a 
matter of law.490 
519. We start by noting that we do not see how the Panel could have fulfilled its duties under 
Article 11 of the DSU through an approach that involved only an evaluation of "the internal logic of the methodology employed, and the soundness and a ppropriateness of the data relied upon by the 
USDOC, in constructing the proxy".
491  Instead, to make an objectiv e assessment of the matter, the 
Panel was also required to test the reasonableness of the methodology employed, including in the light 
of alternative plausible explanations.  The Panel should have verified whether the USDOC provided a 
reasonable explanation as to how the proxy benchm ark approximated a "comparable commercial loan 
which the firm could actually obtain on the market " within the meaning of Article 14(b) of the 
SCM Agreement . 
520. Virtually the entirety of the Panel's reasoni ng regarding the consistency of the USDOC's 
proxy benchmark with Article 14(b) of the SCM Agreement  is contained in paragraph 10.207 of its 
Report.  In this paragraph, th e Panel conducted a cursory review  of the USDOC's proxy benchmark 
and the adjustments made by the USDOC to conclu de that the methodology used by the USDOC was 
"not unreasonable" under the circumstances of the three investigations at issue.  In particular, the 
Panel found that the USDOC's appr oach of selecting a basket of currencies was "permissible" under 
the circumstances of the investigation, that th e USDOC's reliance on the World Bank grouping of 
countries in the same income category as China based on GNI per capita (lower-middle-income 
countries) seemed "not unreasonable", and that the adjustments made to ensure comparability were 
"appropriate" and "not unreasonable". 
521. In drawing its conclusions on the USDOC's de terminations on the pr oxy benchmark, the 
Panel used the very language that th e Appellate Body had pointed to in US – Softwood Lumber VI 
(Article 21.5 – Canada)  as revealing that the panel in that dispute had not applied a sufficient degree 
                                                      
488Panel Report, para. 10.206. 
489Panel Report, para. 10.205. 
490Panel Report, para. 10.205. 
491Panel Report, para. 10.206. WT/DS379/AB/R 
Page 194  
 
  of scrutiny to the determinations of the investiga ting authority.  As the Appellate Body explained, 
inquiring into whether an authority's finding is  "not unreasonable" does not necessarily answer the 
question of "whether that finding is based on posi tive evidence rather than conjecture or remote 
possibility".
492 
522. The Panel appears to have suggested that it did not need to scrutinize carefully the propriety 
of the benchmark selected, or consider whether th ere were other benchmarks available that better 
satisfied the requisite criteria because, according to the Panel, there was no point of reference in the 
record evidence on the basis of whic h it could judge the absolute valu e of the benchmark used.  China 
made no arguments as to specific flaws in the US DOC's methodology that could, and should, have 
been corrected.  Instead, the Panel observed, Chin a's "argument is that no such proxy methodology 
based on other countries' interest rates is permissible as a matter of law".493 
523. We disagree with this statement by the Panel on two levels.  First, the Panel was obliged to 
engage in a critical and searching review of whethe r the reasons put forth by the USDOC justified the 
proxy that it constructed, including in the light of ot her plausible alternatives.  This was so even if, as 
the Panel observed, in the absence of undistorted RMB interest rates in China that could be used as 
benchmarks, there was no point of reference in th e record evidence on the basis of which it could 
judge the absolute value of the benchmark used.  The Panel could, for instance, have looked at the 
USDOC proxy benchmark in the light of alternativ e proxies based, as proposed by China before the 
USDOC, on countries selected based on national saving rat es, rather than GNI, or in the light of a 
benchmark based on interest rates from a third, surrogate country. 
524. Second, it is not clear to us, on the face of th e Panel Report, that China made "no arguments 
as to specific flaws in the USDOC's methodology that could and should have been corrected".494  The 
Panel itself noted that "China rejects the Unite d States' assertion that its benchmark loan was 
'comparable' because it was 'based upon lending rates from countries with similar [ per capita  gross 
national incomes] and institutional quality as me asured by World Bank governance indicators'."495  
The Panel also reproduced China's argument that  "neither the USDOC nor the United States has 
provided any coherent explanation as to why these factors (i.e., per capita  GNI and institutional 
quality) somehow relate to whether loans are 'com parable' within the meaning of Article 14(b)."496  
Finally, the Panel indicated that, according to Ch ina, "the USDOC provide d no explanation of how
                                                      
492Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 113. 
493Panel Report, para. 10.205. 
494Panel Report, para. 10.205.   
495Panel Report, para. 10.195. 
496Panel Report, para. 10.195.  WT/DS379/AB/R 
 Page 195 
 
 
  'governance indicators' such as government effectiveness, regulatory quality and political stability had 
any bearing upon the process of interest formation or the policy choices of monetary authorities as 
regards the direction of monetary conditions and interest rates."497  In our view, these arguments that 
China made before the Panel were sufficient to require that the Panel engage in a robust and 
meaningful review of the USDOC's regression mode l in assessing its consistency with Article 14(b) 
of the SCM Agreement . 
525. The Panel appears to have simply accepted the USDOC's determinations and relevant 
supporting evidence without engaging in a critical a nd searching analysis, or testing the adequacy and 
reasonableness of the USDOC's determinations in the light of other plausible alternative explanations.  
For instance, the Panel characterized the USDOC's  basic position that there is a "broad inverse 
relationship" between income leve ls and lending rates as "not unreasonable".  The Panel, however, did 
not identify any support in the record before the USDOC , or in the Panel record, for this relationship.  
Nor did the Panel itself test the economic underpinni ngs supporting the USDOC's position.  Similarly, 
the Panel found the USDOC's reliance on the Worl d Bank grouping of lower-middle-income 
countries "not unreasonable", but did not engage in a critical discussion of why this is so, apart from 
stating that "this is a pre-existing groupi ng, not one created for the investigations".498  In assessing the 
adjustments made by the USDOC to the regression model, the Panel found them  to be "appropriate" 
and "not unreasonable" but did not engage in a critical examination of these adjustments or of other 
alternative or additional adjustments the USDOC di d not make, such as the adjustment for national 
saving rates suggested by China in the proceedings before the USDOC. 
526. We thus consider that the Panel did not co nduct a sufficiently rigorous review of the 
USDOC's construction of its proxy benchmark.  Inst ead, it seems to us that in its analysis of the 
consistency of the USDOC's proxy be nchmark with Article 14(b) of the SCM Agreement , the Panel 
adopted a standard of review that does not comport with the standard of review to be applied in 
countervailing duty cases.  The Panel rather passive ly accepted the reasons provided by the USDOC 
for its determinations, without engaging in a critic al and searching analysis and without considering 
the USDOC's determinations in the light of plausible alternative explanations. 
527. In the light of the above, we find that the Panel failed to make an objective assessment of the 
matter before it as required by Article 11 of the DSU.  We, therefore, reverse  the Panel's finding, in 
paragraph 10.209 of the Panel Report499, that China did not establish that the benchmark actually used 
                                                      
497Panel Report, footnote 719 to para. 10.195 (quo ting China's first written submission to the Panel, 
para. 266). 
498Panel Report, para. 10.207. 
499See also Panel Report, para. 17.1(c)(vii). WT/DS379/AB/R 
Page 196  
 
  by the USDOC to calculate the benefit from RMB- denominated SOCB loans in the CWP, LWS, and 
OTR investigations was inconsistent with the oblig ations of the United States under Article 14(b) of 
the SCM Agreement . 
(b) Completion of the Analysis Regarding the Consistency of the 
USDOC's Proxy Benchmark with Article 14(b) of the 
SCM Agreement  
528. Having reversed the Panel's finding rega rding the USDOC's proxy benchmark under 
Article 11 of the DSU, we must now consider whethe r we can complete the legal analysis and rule on 
China's claim that such benchmark is inconsistent with Article 14(b) of the SCM Agreement .  When 
the factual findings of the panel and the undisputed facts in the panel record provide the Appellate 
Body with a sufficient basis for its own analysis, th e Appellate Body may complete the analysis with 
a view to facilitating the prompt settlement of the dispute.
500 
529. In keeping with this approach, we must ascer tain whether the factual findings made by the 
Panel and undisputed facts in the record provide a suff icient basis for us to ru le on the consistency of 
the USDOC's proxy benchmark with Article 14(b) of the SCM Agreement .  We start by observing that 
there are no factual findings by the Panel that could assist us in completing the analysis of this issue.  
As explained above, the Panel simply restated the USDOC's reasoning and determinations without 
engaging in a critical and searching review.  The Pa nel made no findings regarding the basis for or the 
soundness of the elements used to construct the be nchmark, nor as to how these elements reasonably 
approximated a comparable commercial loan that a firm could actually obtain on the market.  Thus, 
the Panel made no relevant findings that w ould assist us in completing the analysis. 
530. In the absence of any factual findings by the Pane l, we turn to the Panel record to consider 
whether it contains any undisputed facts that would a llow us to complete the analysis.  As it did in 
respect of its rejection of interest rates in China, in the three investigations at issue (CWP, LWS, and 
OTR), the USDOC relied on its previous findings in  the CFS Paper investigation in constructing a 
proxy benchmark to establish the existen ce of a benefit under Article 14(b) of the SCM Agreement .501  
In CFS Paper and in the three investigations at i ssue, China argued that an external benchmark could 
not be used and that the USDOC should measure the extent of the subsidy based on a benchmark 
comprised of lending rates within China. 
                                                      
500See, for example, Appellate Body Report, Australia – Apples , paras. 367 and 368;  Appellate Body 
Report, Australia – Salmon , paras. 117, 118, and 193;  Appellate Body Report, Canada – Autos , paras. 133 
and 144;  Appellate Body Report, Korea – Various Measures on Beef , para. 128;  and Appellate Body Report, 
US – Continued Zeroing , paras. 189, and 195-197. 
501Panel Report, para. 10.193 and footnote 716 thereto.  WT/DS379/AB/R 
 Page 197 
 
 
  531. In CFS Paper, China also argued that if the USDOC  continued to reject interest rates in China 
as appropriate benchmarks, then the USDOC should make several changes to its methodology when 
constructing a proxy benchmark.  First, China ar gued that the USDOC should not rely on GNI to 
determine the appropriate basket of comparison countries, because this category developed by the 
World Bank—and used by the USDOC in its prelim inary determination—was "outdated and, given 
the recent dramatic changes in China's economy, inappropriate".502  China contended that the 
USDOC's benchmark methodology was contrary to its practice in anti-dumping cases involving 
China, in which the USDOC had designated fi ve countries as being at a level of economic 
development comparable to China in terms of GNI.  According to China, only one of those countries 
was included in the basket of countries used to calculate the proxy benchmark.503  I n  t h e  O T R  
investigation, one of the respondents argued that many of the countries whose interest rates the 
USDOC used to construct its proxy benchmark were dissimilar to China in important ways.504 
532. China further argued in CFS Paper that, instead of relying on GNI, the USDOC should look at 
the national savings rate as the key variable fo r selecting comparable countries to construct an 
appropriate proxy benchmark.  Specifically, China argued—citing to a report that it had submitted to 
the USDOC505—that the national savings rate was the best proxy for the funds available to make loans 
in a country.  China also claimed that another key fact or to consider was the inflation rate in order to 
determine the real cost of a loan.  China claimed th at if national savings rates and inflation rates were 
not taken into account, the USDOC would c ontinue to "overstate the benchmark".506 
533. In response to the arguments by China and by the respondents regarding the changes that it 
should make to its methodology for constructing an external benchmark, the USDOC maintained in 
CFS Paper that GNI, rather than the national savings  rate, was the variable that should be used to 
determine the appropriate basket of  comparison countries.  With respect  to the adjustment of interest 
rates in the basket, in CFS Paper, the USDOC agreed with China that it should adjust for inflation.  
The USDOC explained that adjusting for inflation was a proxy for currency conversion, which would 
allow it to base its loan benefit calculation on comp arable interest rates.  The USDOC, however, 
declined to adjust its proxy benchmark for levels  of savings, as advocated by China.  The USDOC 
explained that controlling for savings would be an  attempt to explain what factors might drive 
differences in the real cost of money across countri es.  According to the USDOC, this would not be a 
                                                      
502See CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 64. 
503See CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 64. 
504See OTR Issues and Decision Memoran dum (Panel Exhibit CHI-4), p. 102. 
505See the Drazen Report (P anel Exhibit CHI-81). 
506See CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 64. WT/DS379/AB/R 
Page 198  
 
  useful exercise because the factors that drove lendi ng rate formation in China were tainted by the 
government's domination of the financial system.
507 
534. We observe that the record of the investigati ons at issue, as well as that of the CFS Paper 
investigation, which the USDOC relied on in the inves tigations at issue, reveal that China not only 
questioned the USDOC's entitlement to resort to an ex ternal benchmark, but that it also challenged the 
methodology adopted by the USDOC in constructi ng the proxy benchmark and suggested several 
changes to improve the comparability of the prox y benchmark.  As explained above, the USDOC 
accepted one of these suggested changes (adjustm ent for inflation) but rejected others.508 
535. Therefore, contrary to the Panel's observation at paragraph 10.205 of its Report, China not 
only rejected the use of a proxy methodology based on other countries' interest rates "as a matter of 
law", but also specifically challenged the methodology used by the USDOC in constructing the proxy 
benchmark by pointing to what it considered to be flaws and by suggesting changes to improve 
comparability.  We have already concluded that th e Panel did not err in finding that the USDOC was 
entitled under Article 14(b) of the SCM Agreement  to reject interest rates in China as benchmarks, if 
interest rates in the relevant market are distorte d, and that Article 14(b) allows an investigating 
authority to resort to an external benchmark, incl uding a proxy based on other countries' interest rates, 
provided that the proxy appropriately approxima tes the conditions specified in Article 14(b).  
536. We observe that, on the one hand, China cha llenges altogether the USDOC's entitlement to 
resort to an external proxy, questions the selec tion of countries based on GNI as not comparable, and 
suggests that the selection of countries, or at least  adjustments to the GNI-based basket, should have 
been made based on national savings rates.  On th e other hand, assuming that an external proxy may 
be used, China does not question the method of cons tructing a proxy based on a basket of currencies 
in itself and does not suggest, for instance, that th e USDOC should have relied on interest rates from a 
single surrogate country.  China also argued that  adjusting for inflation makes the proxy more 
comparable, and the USDOC accepted and incorporat ed this suggestion in its proxy benchmark.  
Based on the above, we consider that there are im portant facts on the record regarding the USDOC's 
proxy benchmark, which the Panel did not address a nd which remain disputed between the parties. 
                                                      
507See CFS Paper Issues and Decision Memorandum (Panel Exhibit CHI-93), p. 72. 
508Panel Report, paras. 10.193 and 10.195.  See also CFS Paper Issues and Decision Memorandum 
(Panel Exhibit CHI-93), pp. 64 and 72.  WT/DS379/AB/R 
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  537. In sum, the Panel made no relevant factua l findings on the USDOC's proxy benchmark that 
would assist us in the completion of the legal analys is.  Moreover, an analysis of the Panel's record 
reveals that China not only questioned altogether the legality of resorting to external benchmarks, but 
that it also challenged specific elements of th e proxy benchmark constructed by the USDOC.  
Therefore, we find that there are insufficient undisputed f acts on the Panel record regarding the 
USDOC's proxy benchmark to enable us to complete  the legal analysis and ascertain the consistency 
of the USDOC's proxy benchmark with the United States' obligations under Article 14(b) of the 
SCM Agreement . 
VII. Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994:  "Double Remedies" 
A. Introduction 
538. Before the Panel, China made both "as such"509 and "as applied"510 claims in connection with 
the alleged imposition by the United States of "doubl e remedies" resulting from the application, in 
each of the four sets of investigations at issue, of anti-dumping duties calculated under the 
United States' NME methodology simultaneously with countervailing duties on the same products.   
                                                      
509China claimed that the United States' failure to provide sufficient legal authority for the USDOC to 
avoid the imposition of double remedies when it impos es anti-dumping duties determined pursuant to its NME 
methodology simultaneously with the imposition of countervailing duties on the same products was inconsistent 
with Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Articles I:1 and VI of the GATT 1994 (Panel 
Report, paras. 14.11 and 14.12).  The Panel found that the measure to which these claims related and, thus, the 
claims fell outside its terms of reference. ( Ibid., paras. 14.11, 14.12, 14.42, and 17.1(e)(i)) 
510Panel Report, para. 14.44.  China claimed that in each of the four sets of anti-dumping and 
countervailing determinations at i ssue:  (i) the USDOC's use of its NME methodology to determine normal 
value in anti-dumping determinations, concurrently w ith the imposition of countervailing duties on the same 
products, was inconsistent with Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994 ( ibid., para. 14.8);  (ii) the USDOC's failure to  extend to imports from China the same 
unconditional entitlement to the avoidance of double remedies that the USDOC extends to like products 
originating in other Members was inconsistent with Article I:1 of the GATT 1994 ( ibid., para. 14.9);  and 
(iii) the United States had acted inconsiste ntly with Articles 12.1 and 12.8 of the SCM Agreement , due to the 
USDOC's failure to provide interested parties notice of th e information that the USDOC required to evaluate the 
existence of double remedies, and failure to inform Ch ina and interested parties of the essential facts under 
consideration that would "form the basis" for the USDOC's  determinations in respect of the issue of "double 
remedy" ( ibid, para. 14.10). WT/DS379/AB/R 
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  539. With respect to one of China's "as applied" claims
511, the Panel found that: 
China did not establish that the Un ited States acted inconsistently 
with its obligations under Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement or under Article VI:3 of GATT 1994 by reason of the USDOC's use of its NME methodology in the four anti-dumping investigations at issue and the imposition of anti-dumping duties on that basis concurrently with the imposition of countervailing duties 
on the same products in the four coun tervailing duty investigations at 
issue.
512 
540. China appeals this finding and requests us to:  (i ) find that the Panel erred in its interpretation 
and application of Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of the 
GATT 1994;  (ii) reverse the Panel's finding that China did not establish that the United States had 
acted inconsistently with its obligations unde r these provisions by imposing anti-dumping duties 
calculated under its NME methodology concurrently with the imposition of countervailing duties on 
the same products, without taking steps to avoi d offsetting the same subsidies twice;  and 
(iii) complete the analysis and conclude that the USDOC acted inconsistently with the obligations of 
the United States under Articles 10, 19.3, 19.4, and 32.1 of the SCM Agreement  and Article VI:3 of 
the GATT 1994, in all of the investigations at issue,  by failing to take steps to avoid offsetting the 
same subsidies twice. 
541. Before turning to the specific i ssues on appeal, we consider it usef ul to outline the concept of 
"double remedies" at issue in this dispute.  In essence, "double remedies" may arise when both 
countervailing duties and anti-dumping duties are impo sed on the same imported products.  The term 
"double remedies" does not, however, refer simply  to the fact that both an anti-dumping and a 
countervailing duty are impo sed on the same product.  Rather, as explained below, "double remedies", 
also referred to as "double counting", refers to circ umstances in which the simultaneous application of 
anti-dumping and countervailing duties on the same impor ted products results, at least to some extent, 
in the offsetting of the same subsidization twice.  "Double remedies" are "lik ely" to occur in cases 
where an NME methodology is used to  calculate the margin of dumping.513 
                                                      
511With respect to the other "as applied" claims rais ed by China, the Panel found that China had not 
established that the United States had acted inconsisten tly with its obligations under Articles 12.1 and 12.8 of 
the SCM Agreement or under Article I:1 of the GATT 1994 (Panel Report, para. 17.1(e)(iii) and (iv)).  
512Panel Report, para. 17.1(e)(ii). 
513The Panel had "no difficulty" accepting: 
... the general proposition that the use of an NME methodology likely 
provides some form of remedy against subsidisation, and therefore, that the 
simultaneous imposition of anti-dumping duties calculated under an NME 
methodology and of countervailing duties likely results in any subsidy granted in respect of the good at issue being offset more than once. 
(Panel Report, para. 14.67)  WT/DS379/AB/R 
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  542. A more detailed explanation of how and why double remedies may occur is set out in 
paragraphs 14.67 through 14.75 of the Panel Repo rt.  We recap the main points here.  When 
investigating authorities calculate a dumping margin  in an anti-dumping investigation involving a 
product from an NME, they compare the export price to a normal value that is calculated based on 
surrogate costs or prices from a third country.514  Because prices and costs in the NME are considered 
unreliable, prices, or, more commonly, costs of pr oduction, in a market economy are used as the basis 
for calculating normal value.515  In the dumping margin calculation,  investigating authorities compare 
the product's constructed normal va lue (not reflecting the amount of any subsidy received by the 
producer) with the product's actual export price (whi ch, when subsidies have been received by the 
producer, is presumably lower than it would otherwi se have been).  The resulting dumping margin is 
thus based on an asymmetric comparison and is generally higher than would otherwise be the case.516   
543. As the Panel explained, the dumping margin calculated under an NME methodology "reflects 
not only price discrimination by the investigated  producer between the domestic and export markets 
('dumping')", but also "economic distortions that affect the producer's costs of production", including 
specific subsidies to the investigated producer of the relevant product in respect of that product.517  An 
anti-dumping duty calculated based on an NME methodology may, therefore, "remedy" or "offset" a 
domestic subsidy, to the extent that such subsid y has contributed to a lowering of the export price.518  
Put differently, the subsidization is "counted" within the overall dumping margin.  When a countervailing duty is levied against the same imports , the same domestic subsidy is also "counted" in 
the calculation of the rate of subsidization and, th erefore, the resulting counte rvailing duty offsets the 
same subsidy a second time.  Accordingly, the concurrent imposition of an anti-dumping duty 
calculated based on an NME methodology, and a c ountervailing duty may result in a subsidy being 
offset more than once, that is, in a double remedy .  Double remedies may also arise in the context of 
domestic subsidies granted within market economi es when anti-dumping and countervailing duties are 
                                                     
 
514Panel Report, para. 14.68. 
515Panel Report, para. 14.68.  The use of surrogate, market economy values presumptively puts the 
producer in the position of having unsubsidized costs of production. ( Ibid., footnote 965 to para. 14.69) 
516The asymmetry is due to the comparison of an actual , subsidized  export price to a constructed , 
unsubsidized  normal value, rather than to an actual, subsid ized normal value. (Pan el Report, paras. 14.69 
and 14.72) 
517Panel Report, para. 14.69. 
518Panel Report, para. 14.70.  The potential for double re medies is even greater in  the context of export 
subsidies, which benefit only exported goods and therefore presumably lower the export price. ( Ibid., 
footnote 972 to para. 14.72) WT/DS379/AB/R 
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  concurrently imposed on the same products and an un subsidized, constructed, or third country normal 
value is used in the anti-dumping investigation.
519 
544. The Panel understood the United States to have accepted the principle that double remedies 
may result from the concurrent imposition, on th e same product, of countervailing duties and anti-
dumping duties calculated using an NME methodology.520  The United States nevertheless argued that 
the existence of a double remedy depends on whet her the subsidy leads to a reduction in the export 
price in any given instance, and contended that it cannot be presumed that domestic subsidies lower 
export prices pro rata,  or one-for-one.521  The Panel was of the view that it would "be a rare case in 
which a subsidy ... has no effect at all on either the producer's costs of production or ... export 
prices."522  In any event, the Panel considered that  the answer to the question of "whether a complete  
double remedy necessarily  results from all instances  of concurrent impositi on of anti-dumping duties 
calculated under an NME methodology and of c ountervailing duties" would not "invalidate the 
general proposition that at least some  double remedy will likely  arise from the concurrent imposition 
of countervailing duties and anti-dumping du ties calculated under an NME methodology." 523   
B. Interpretation of Articles 19.3 and 19.4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 
545. On appeal, China contends that the Panel erred in  its interpretation of the relevant provisions 
of the SCM Agreement and the GATT 1994, and in reasoning th at, because these provisions do not 
expressly  prohibit a Member from offsetting the same domestic subsidies through the imposition of 
two different duties, it was the intention of the drafters to authorize  such actions.  China emphasizes 
that an importing Member is under an affirmative legal obligation to ensure that it does not impose 
countervailing duties to offset a subsidy that is si multaneously offset through the manner in which it 
calculates anti-dumping duties in respect of the sam e imported product.  In China's view, such 
obligation arises from:  (i) Article 19.3 of the SCM Agreement , which requires investigating 
authorities to impose countervailing duties in the "a ppropriate" amounts;  (ii) Article 19.4 of the 
                                                      
519However, double remedies are unlikely to result in  the context of domestic subsidies granted within 
market economies if normal value is based on domestic sales.  In such cases, both the normal value and the export price will be lowered as a result of the domestic subsidy, so that the dumping margin should not be 
affected. (See Panel Report, footnote 972 to paragraph 14.72) 
520Panel Report, para. 14.71. 
521Panel Report, footnote 968 to para. 14.71, and para. 14.73.  The United States observed that, while 
certain domestic production subsidies will result in increased production and a reduction in export prices, other 
more general subsidies may be used for other purposes (payments of dividends, severance payments, research and development), thus not resulting in any increase in production. (Panel Report, para. 14.71 and footnote 968 
thereto;  United States' responses to Panel Questions 72 an d 73 after the first Panel meeting)  A similar point is 
made by the European Union in its third participant's submission, at paragraph 56. 
522Panel Report, para. 14.74. (original emphasis) 
523Panel Report, para. 14.75. (original emphasis)  See also para. 14.67.  WT/DS379/AB/R 
 Page 203 
 
 
  SCM Agreement and Article VI:3 of the GATT 1994, which prohibit Members from levying 
countervailing duties in excess of the amount of the s ubsidy found to exist;  (iii) Article 10 of the 
SCM Agreement , which requires Members to "take all necessar y steps to ensure that the imposition of 
a countervailing duty ... is in accordance with the provisions of Article VI of [the] GATT 1994 and 
the terms of [the SCM] Agreement";  and (iv) Article 32.1 of the SCM Agreement , which prohibits 
Members from taking "specific action against a subs idy of another Member ... except in accordance 
with the provisions of [the] GATT 1994, as in terpreted by [the SCM] Agreement".   
546. In addressing China's appeal of the Panel's "as a pplied" finding on double remedies in the four 
investigations at issue, we turn to the provisions of the SCM Agreement relied upon by China, 
beginning with Article 19.3. 
1. Article 19.3 of the SCM Agreement  
547. In its analysis of Article 19.3 of the SCM Agreement , the Panel found that:  (i) countervailing 
duties are collected "in the appropriate amounts" insofar as the amount collected does not exceed the 
amount of subsidy "found to exist"524;  (ii) "the imposition of anti-dumping duties calculated under an 
NME methodology has no impact on whether the amount of the concurrent countervailing duty collected is 'appropriate' or not"
525;  and (iii) "it was not the intention of the drafters [of] the 
SCM Agreement to address the question of  double remedies in Article 19.3".526  Accordingly, the 
Panel found that: 
... China has failed to establish that the USDOC's use of its NME 
methodology in the anti-dumping determinations at issue in this dispute, concurrently with its dete rmination of subsidization and the 
imposition of countervailing duties on the same products in the four 
countervailing duty determinations at  issue, was inconsistent with 
Article 19.3 of the SCM Agreement.
527 
548. China claims that these findings, and the Pane l's interpretation of Article 19.3 of the 
SCM Agreement , were in error.  China relies on the reasoning of the panel in EC – Salmon (Norway) , 
which interpreted the corresponding provis ion set forth in Article 9.2 of the Anti-Dumping Agreement , 
and found that the "appropriate" amount of an anti-dumping duty "is the amount of duty that is 
'proper' or 'fitting' in the context of an anti-dumping investigation".528  China submits that under
                                                      
524Panel Report, para. 14.128. 
525Panel Report, para. 14.128. 
526Panel Report, para. 14.129. 
527Panel Report, para. 14.130. 
528China's appellant's submission, para. 550 (quoting Panel Report, EC – Salmon (Norway) , 
para. 7.704). WT/DS379/AB/R 
Page 204  
 
  Article 19.3 of the SCM Agreement  "any determination of the 'appropr iate amount' of a countervailing 
duty must take into account the extent to which the investigating authority offsets the same subsidies 
through the manner in which it calculates anti-dumping duties in respect of the same imported 
products."
529 
549. The United States considers that the Panel correctly found under Article 19.3 of the 
SCM Agreement  that countervailing duties are collected in the "appropriate" amounts where the 
amount of countervailing duties collected does not exceed the amount of su bsidy found to exist.530   
550. Thus, the main interpretative question before us  concerns the meaning of the phrase "in the 
appropriate amounts in each case" in Article 19.3 of the SCM Agreement  and whether, as China 
contends, it would not be appropriate, within the meaning of  that provision, to levy countervailing 
duties that result in, or are likely to r esult in, the imposition of double remedies. 
551. Article 19.3 of the SCM Agreement  reads: 
When a countervailing duty is impos ed in respect of any product, 
such countervailing duty shall be levied, in the appropriate amounts 
in each case , on a non-discriminatory basis on imports of such 
product from all sources found to be  subsidized and causing injury, 
except as to imports from those sources which have renounced any 
subsidies in question or from which undertakings under the terms of this Agreement have been accepted.  Any exporter whose exports are 
subject to a definitive countervailing duty but who was not actually 
investigated for reasons other than  a refusal to cooperate, shall be 
entitled to an expedited review in order that the investigating authorities promptly establish an individual countervailing duty rate for that exporter. (emphasis added) 
552. The first sentence of Article 19.3 of the SCM Agreement  contains two elements:  first, a 
requirement that countervailing duties be levied in  the appropriate amounts in each case, and, second, 
a requirement that these duties be levied on a no n-discriminatory basis on imports of such product 
from all sources found to be subsidized and causing in jury, except for imports from sources that have 
renounced the relevant subsidies or from which undert akings have been accepted.  Beginning with the 
term "appropriate amounts", we note that relevant dictionary defin itions of the term "appropriate" 
include "proper", "fitting" and "specially suitable ( for, to )".
531  These definitions suggest that what is 
"appropriate" is not an autonomous or absolute sta ndard, but rather something that must be assessed 
by reference or in relation to something else.  They suggest some core norm—"proper", "fitting", 
                                                      
529China's appellant's submission, para. 554.  
530United States' appellee's submission, para. 382.  
531Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 106.  WT/DS379/AB/R 
 Page 205 
 
 
  "suitable"—and at the same time adaptation to par ticular circumstances.  Within Article 19.3, the 
circumstance-specific quality of "the appropriate amounts" is further reinforced by the immediate 
context provided by the words "in each case".  We also note that the term "amount" is defined as 
something quantitative, a number, "a quan tity or sum viewed as the total reached".532 
553. We consider that the two requirements in the fi rst sentence of Article 19.3 inform each other.  
Thus, it would not be appropriate for an importing Member to levy countervailing duties on imports 
from sources that have renounced relevant subs idies, or on imports from sources whose price 
undertakings have been accepted.  Similarly, becau se the requirement that the duty be levied in 
"appropriate amounts" implies a certain tailoring of the amounts according to circumstances, this suggests that the requirement that the duty be imposed on a non-discriminatory basis on imports from all subsidized sources should not be read in an ov erly formalistic or rigid manner.  The second 
sentence of Article 19.3 provides a specific example of  circumstances in which it is permissible not to 
differentiate amongst individual exporters, as well as of when and how differentiated treatment in the 
establishment of a countervailing duty rate is required. 
554. We continue our consideration of the meani ng of the term "appropriate amounts" in its 
context, by turning to other paragraphs of Article 19 of the SCM Agreement .
533  We observe, in this 
regard, that in interpreting "appropriate amounts" in  Article 19.3, the Panel appears to have ascribed 
great significance to Article 19.4 of the SCM Agreement , which provides that "[n]o countervailing 
duty shall be levied on any impor ted product in excess of the amount of  the subsidy found to exist, 
calculated in terms of subsidization per unit of the subsidized and exporte d product."  Article 19.4 
thus places a quantitative ceiling on the amount of a countervailing duty, which may not exceed the 
amount of the subsidization. 
555. The Panel's finding that countervailing duti es are collected "in the appropriate amounts 
insofar as the amount collected does not exceed  the amount of subsidy found to exist"534 points to 
Article 19.4 as the key determinant of what is an "appropriate" amount, for purposes of Article 19.3.  
We share the Panel's view that Article 19.4 provi des context relevant to the interpretation of 
Article 19.3.  Yet, we are not persuaded, as the Pa nel seems to have been, that Article 19.4, alone,
                                                      
532Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 71. 
533The Panel reviewed what it consider ed to be relevant contextual elements for its interpretation of 
Article 19.4 of the SCM Agreement .  However, the Panel also recalled these contextual elements in its 
interpretation of Article 19.3 and noted that "[t]he sa me considerations likewise suggest that it was not the 
intention of the drafters [of] the SCM Agreement to addr ess the question of double remedies in Article 19.3 of 
the SCM Agreement". (Panel Report, para. 14.129) 
534Panel Report, para. 14.128. WT/DS379/AB/R 
Page 206  
 
  defines when the amount of duty is "appropriate".  Indeed, if any amount of countervailing duty that 
does not exceed the amount of the subsidy is an "appropriate" amount within the meaning of 
Article 19.3, then the requirement in Article 19.3 would be rendered re dundant, as Article 19.4 
already prescribes that duties not be levied in excess of the amount of the subsidy found to exist.   
556. Thus, while we agree that Article 19.4 informs Article 19.3, we do not see any indication that 
Article 19.4 exhausts the universe according to which "appropriateness" is to be gauged.  Article 19.4 
makes clear that the amount that could be "appropriate" cannot be more than  the amount of the 
subsidy.  However, Article 19.4 neither requires that the amount of countervailing duties equal  the 
full amount of the subsidy found to exist, nor bears upon the question of whether there may be circumstances in which the "appropriate amount " of a countervailing duty will be an amount less than  
the full amount of the subsidy found to exist.
535 
557. It is, rather, Article 19.2 of the SCM Agreement  that appears more relevant to this question.  
While expressly leaving to the importing Member's investigating authorities the decision as to whether the amount of the countervailing duty to be imposed shall be the full amount of the subsidy 
or less, Article 19.2 nevertheless states that it is "desi rable" that "the duty should be less than the total 
amount of the subsidy if such lesser duty w ould be adequate to remove the injury".
536  Article 19.2 
thus encourages such authorities to link the actual amount of the countervailing duty to the injury to 
be removed.   
558. Moreover, once a causal link between the su bsidized imports and injury has been 
demonstrated, the imposition and levying of counterv ailing duties are not hermetically isolated from 
any consideration related to injury.  In addition to Article 19.2, a link between the amount of the 
countervailing duty and the injury that the subsidized  imports are found to be causing is reflected in 
                                                      
535We would like to emphasize that, in this context, we  are considering Article 19.4 as context relevant 
to our interpretation of Article 19.3.  In doing so, we are not addressing China's clai m that the Panel erred in 
finding that a double remedy does not result in an amount of countervailing duty in excess of the subsidy found to exist, within the meaning of Article 19.4. 
536Article 19.2 of the SCM Agreement  reads: 
The decision whether or not to impose a countervailing duty in cases where all requirements for the imposition have been fulfilled, and the decision 
whether the amount of the countervailing duty  to be imposed shall be the 
full amount of the subsidy or less, are decisions to be made by the authorities of the importing Member.  It is desirable that the imposition 
should be permissive in the territory of all Members, that the duty should be 
less than the total amount of the subsidy if such lesser duty would be adequate to remove the injury to the domestic industry, and that procedures 
should be established which would allow the authorities concerned to take 
due account of representations made by domestic interested parties whose interests might be adversely affected by the imposition of a countervailing 
duty. (footnote omitted)  WT/DS379/AB/R 
 Page 207 
 
 
  Article 19.3 itself, which provides that a "counterva iling duty shall be levied, in the appropriate 
amounts in each case ... on imports of such product ... found to be subsidized and causing injury " 
(emphasis added).  Other provisions of the SCM Agreement  also link the countervailing duty to the 
injury that the subsidized imports are found to be  causing.  Article 19.1 allows for the imposition of 
countervailing duties when subsidized  imports "are causing injury".537  The use of the present tense in 
this provision suggests that injury is a continui ng prerequisite for the imposition and levying of 
countervailing duties.  This is confirmed by Article  21.1 that states that "[a] countervailing duty shall 
remain in force only as long as and to the extent  necessary to counteract subsidization which is 
causing injury."   
559. Continuing with our examination of the cont ext provided by other provisions of the 
SCM Agreement , we turn to Article 10, the first provision in Part V of the SCM Agreement , which 
provides:  
Application of Article VI of GATT 1994 [*] 
Members shall take all necessary step s 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.  Count ervailing duties may only be imposed 
pursuant to investigations initiate d[***] and conducted in accordance 
with the provisions of this Agreement and the Agreement on 
Agriculture.
  
[* original footnote 35] The provisions of Part II or III may be invoked in 
parallel with the provisions of Part V;  however, with regard to the effects of 
a particular subsidy in the domestic market of the importing Member, only 
one form of relief (either a countervailing duty, if the requirements of Part V 
are met, or a countermeasure under Articles 4 or 7) shall be available. ... 
[** original footnote 36] The term "countervailing duty" shall be understood 
to mean a special duty levied for th e purpose of offsetting any subsidy 
bestowed directly or indirectly upon the manufacture, production or export 
of any merchandise, as provided for in paragraph 3 of Article VI of 
GATT 1994. 
[*** original footnote 37] The term "initiated" as used hereinafter means 
procedural action by which a Member formally commences an investigation 
as provided in Article 11. 
 
                                                      
537Article 19.1 of the SCM Agreement  reads: 
If, after reasonable efforts have been  made to complete consultations, a 
Member makes a final determination of the existence and amount of the 
subsidy and that, through the effects of the subsidy, the subsidized imports are causing injury, it may impose a co untervailing duty in accordance with 
the provisions of this Article unless th e subsidy or subsidies are withdrawn. WT/DS379/AB/R 
Page 208  
 
  560. We believe that there are three main features of Article 10 of the SCM Agreement that are 
relevant to the interpretative task before us.  First, Article 10 establishes that Part V of the 
SCM Agreement relates to the application of Article VI  of the GATT 1994, and that countervailing 
duties must conform to the dictates of that provision as well as to the SCM Agreement .  Second, by 
providing that "only one form of relief shall be av ailable" for the effects of a subsidy, footnote 35 
makes clear that, at least with in the four corners of the SCM Agreement , there can be no "double 
remedies" against the same subsidization.  Thir d, footnote 36 to Article 10 defines a "countervailing 
duty" as a special duty levied for the purpose of "offsetting" a subsidy.  
561. The link between the GATT 1994 and the SCM Agreement also figures prominently in 
Article 32.1 of the SCM Agreement , which states: 
No specific action against a subsidy of another Member can be taken 
except in accordance w ith the provisions of GATT 1994, as 
interpreted by this Agreement.[*] 
[* original footnote 56] This paragraph is not intended to preclude action 
under other relevant provisions of GATT 1994, where appropriate. 
562. Footnote 56 to Article 32.1 reaffirms the right of  Members to take action under other relevant 
provisions of the GATT 1994, and at the same time recognizes that not all such action will be 
"appropriate". 
563. In our view, therefore, Articles 10, 19.1, 19.2, 19.4, 21.1, and 32.1 all provide context 
relevant to the interpretation of Article 19.3.  These provisions iden tify two situations in which the 
importing Member is prohibited from imposing two remedial measures as a response to the same 
subsidization.  Importing Memb ers are required to choose betw een accepting price undertakings or 
imposing countervailing duties, a nd between taking countermeasures under Parts II and III of the 
SCM Agreement or  imposing countervailing measures under Part V of that Agreement.  These 
provisions also confirm the close link between the GA TT 1994, in particular its Article VI, and Part V 
of the SCM Agreement , and suggest that, among the purposes of countervailing duties are:  to offset or 
counteract injurious subsidization, and to remove th e injury to the domestic industry.  Moreover, they 
indicate that the appropriateness of the amount of countervailing duties is not unrelated to the injury that is being caused.  We note, in this connection, that the Anti-Dumping Agreement contains 
provisions that parallel Articles 10, 19.2, 19.3, 19 .4, 21.1 and 32.1 in the context of anti-dumping 
duties, a subject to which we return below.
538   
                                                      
538The equivalent provisions in the Anti-Dumping Agreement  to Articles 10, 19.2, 19.3, 19.4, 21.1, 
and 32.1 of the SCM Agreement are, respectively, Articles 1, 9.1, 9.2, 9.3, 11.1, and 18.1.  WT/DS379/AB/R 
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  564. Before doing so, we turn to Article VI of  the GATT 1994, which also provides context 
relevant to Article 19.3 of the SCM Agreement .  Article VI, entitled " Anti-dumping and 
Countervailing Duties ", is the genesis of both the SCM Agreement and the Anti-Dumping Agreement .  
Paragraphs 1 and 2 deal exclusively with anti-du mping duties, paragraph 3 deals exclusively with 
countervailing duties, and the remaining four pa ragraphs each deals with both anti-dumping and 
countervailing duties.  Article VI:2 authorizes Me mbers to levy anti-dumping duties "[i]n order to 
offset or prevent dumping", and Article VI:3 specif ies that a countervailing duty is levied "for the 
purpose of offsetting any bounty or subsidy". 
565. Article VI:5 is the provision most pertinent to our inquiry.  It provides: 
No product of the territory of any contracting party imported into the 
territory of any other contracting party shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidization. 
566. The Panel relied on this provision as contextual  support for its findings that Articles 19.3 
and 19.4 of the SCM Agreement  do not address the issue of double remedies.  The Panel considered 
that "these terms are self-explanatory in their in tention to limit the scope of the prohibition in 
Article VI:5 to situations involving export subsidies ".
539  The Panel considered that, because the 
explicit prohibition in Article VI:5 is limited to potential double remedies in respect of export  
subsidies, Members could not have intended to pr ohibit the imposition of double remedies in respect 
of domestic  subsidies in Articles 19.3 or 19.4 of the SCM Agreement , which are, on their face, silent 
on the issue of double remedies.540 
567. We have concerns about the Panel's rather mechanistic,  a contrario reasoning in this 
connection.  While it is true that omissions have meaning541, "omissions in different contexts may 
have different meanings, and omission, in a nd of itself, is not necessarily dispositive".542  In this 
instance, we do not agree with the Panel that the "explicit terms in which the drafters addressed the 
issue" of double remedies in Article VI:5 make it "all the more unlikely that they sought to prohibit 
the imposition of double remedies in respect of other types of subsidies".543  W e  n o t e ,  r a t h e r ,  t h a t  
Article VI:5 prohibits the concurrent applica tion of anti-dumping and countervailing duties to 
compensate for the same situation of dumping or export subsidization.   In our view, the term "same 
situation" is central to an understanding of th e rationale underpinning the prohibition contained in 
                                                      
539Panel Report, para. 14.117. (original emphasis) 
540Panel Report, para. 14.118.  See also para. 14.129. 
541Appellate Body Report, Japan – Alcoholic Beverages II , p. 18, DSR 1996:I, 97, at 111. 
542Appellate Body Report, Canada – Autos , para. 138. 
543Panel Report, para. 14.118. WT/DS379/AB/R 
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  Article VI:5, which in turn sheds light on the reas on why, in the case of domestic subsidies, an 
express prohibition is absent. 
568. We recall that, in principle, an export subsidy will result in a pro rata reduction in the export 
price of a product, but will not affect the price of domestic sales of that product.
544  T h a t  i s ,  t h e  
subsidy will lead to increased price discriminati on and a higher margin of dumping.  In such 
circumstances, the situation of subsidization and the situation of dumping are the "same situation", 
and the application of concurrent duties would amount to the application of "double remedies" to 
compensate for, or offset, that situation.  By comparison, domestic subsidies will, in principle, affect the prices at which a producer sells its goods in the domestic market and in export markets in the same 
way and to the same extent.  Since any lowering of prices attributable to the subsidy will be reflected 
on both sides of the dumping margin calculation, the overall dumping margin will not be affected by 
the subsidization.  In such circumstances, the c oncurrent application of duties would not compensate 
for the same situation, because no part of the dumping margin would be attributable to the 
subsidization.  Only the countervailing duty would offset such subsidization. 
569. To the extent that these assumptions hold true, then the presence, in Article VI, of an express 
prohibition on the concurrent application of duties to counteract the "same situation" of dumping or 
export subsidization, along with the absence of an expr ess prohibition in connection with situations of 
domestic  subsidization appears logical—at least when normal value is calculated on the basis of 
domestic sales prices.  We note, in this regard, th at Article VI:1(a) of the GATT 1994, like Article 2.1 
of the Anti-Dumping Agreement , provides that the usual method for calculating normal value will be 
based on the comparable price for the like product in the exporter's domestic market.  Thus, in anti-
dumping investigations, normal value will typical ly be based on domestic sales prices and any 
domestic subsidy will have no im pact on the calculation of the dumping margin.  Nonetheless, 
Article VI:1(b), like Article 2.2 of the Anti-Dumping Agreement , sets out exceptional methods for the 
calculation of normal value, which are not based on actual prices in the exporter's domestic market.  
The second Ad Note to Article VI:1, which provides the lega l basis for the use of surrogate values for 
NMEs in anti-dumping investigations
545, also authorizes recourse to exceptional methods for the 
                                                      
544See supra , footnote 518 of this Report;  and Panel Report, paras. 14.70, 14.72 and footnote 972 
thereto, and 14.74. 
545Ad Note to Article VI:1 of the GATT 1994 reads: 
It is recognized that, in the case of imports from a country which has a 
complete or substantially complete monopoly of its trade and where all domestic prices are fixed by the State, special difficulties may exist in 
determining price comparability for the pu rposes of paragraph 1, and in such 
cases importing Members may find it necessary to take into account the possibility that a strict comparison with domestic prices in such a country 
may not always be appropriate.  WT/DS379/AB/R 
 Page 211 
 
 
  calculation of normal value in investigations of imports from NMEs.546  In case of domestic 
subsidization, it is only in these exceptional situations  that there is any possib ility that the concurrent 
application of anti-dumping and countervailing duties on the same product could lead to "double 
remedies".   
570. In our view, the references to Article VI of  the GATT 1994 in Articles 10 and 32.1 of the 
SCM Agreement , Article VI itself, and the many parallels  between the obligations that apply to 
Members imposing anti-dumping duties and those im posing countervailing duties, suggest that any 
interpretation of "the appropr iate amounts" of countervailing duties within the meaning of 
Article 19.3 of the SCM Agreement  must not be based on a refusal to take account of the context 
offered both by Article VI of the GA TT 1994 and by the provisions of the Anti-Dumping Agreement .  
While we agree with the Panel th at Articles 19.3 and 19.4 of the SCM Agreement  are concerned with 
countervailing duties and not with anti-dumping duti es, we are not persuaded that it necessarily 
follows that these provisions are, as the Panel noted , "oblivious to any pote ntial concurrent imposition 
of anti-dumping duties".547  Such an interpretative approach is  difficult to reconcile with the notion 
that the provisions in the WTO covered agreements s hould be interpreted in a coherent and consistent 
manner, giving meaning to all a pplicable provisions harmoniously.548  Members have entered into 
cumulative obligations under the c overed agreements and should thus  be mindful of their actions 
under one agreement when taking action under another.  We are reinforced in this view by the fact 
that, although the disciplines that apply to a Me mber's use of anti-dumping duties and its use of 
countervailing duties are legally distinct, the reme dies that result are, from the perspective of 
                                                      
546We observe that, while Article VI:5 was included in  the original text of the GATT in 1947, the 
second Ad Note to paragraph 1 of Article VI was added subsequently, following the 1954-1955 Review Session.  
L/334, adopted 3 March 1955, p. 2, para. 6, and Annex I, Section I.B, p. 10;  3S/222, 223, para. 6. 
547Panel Report, paras. 14.112 and 14.129. 
548Appellate Body Report, US – Upland Cotton , paras. 549 and 550.  We recall that in Argentina – 
Footwear (EC) and US – Upland Cotton , the Appellate Body affirmed that the Multilateral Agreements on 
Trade in Goods, contained in Annex 1A of the WTO Agreement , are "integral parts" of the same treaty, the 
WTO Agreement , and that their provisions, which are binding on all Members, are all prov isions of one treaty, 
the WTO Agreement .  The Appellate Body thus considered that a treaty interpreter must read all applicable 
provisions of a treaty in a way that gives meaning to  all of them, harmoniously. (Appellate Body Report, US – 
Upland Cotton , para. 549 (quoting Appellate Body Report, Argentina – Footwear (EC) , para. 81 and footnote 72 
thereto (referring, in turn, to Appellate Body Report, Korea  – Dairy , para. 81;  Appellate Body Report, US – 
Gasoline , p. 23, DSR 1996:I, 3, at 21;  Appellate Body Report, Japan – Alcoholic Beverages II , p. 12, 
DSR 1996:I, 97, at 106;  and Appellate Body Report, India – Patents (US) , para. 45)))  In US – Upland Cotton , 
the Appellate Body agreed with the panel that "Article 3.1(b) of the SCM Agreement  can be read together with 
the Agreement on Agriculture  provisions relating to domestic support in a coherent and consistent manner which 
gives full and effective meaning to all of their terms". (Appellate Body Report, US – Upland Cotton , para. 549 
(quoting Panel Report, US – Upland Cotton , para. 7.1071)) WT/DS379/AB/R 
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  producers and exporters, indistinguishable.
549  Both remedial actions increase the amount of duty that 
must be paid at the border. 
571. It follows that a proper understanding of the "appropriate amounts" of countervailing duties in 
Article 19.3 of the SCM Agreement cannot be achieved without due rega rd to relevant provisions of 
the Anti-Dumping Agreement  and recognition of the way in whic h the two legal regimes that these 
agreements set out, and the remedies which they au thorize Members to impose, operate.  To us, the 
requirement that any amounts be "appropriate" mean s, at a minimum, that investigating authorities 
may not, in fixing the appropriate amount of count ervailing duties, simply ignore that anti-dumping 
duties have been imposed to offset the same subsid ization.  Each agreement sets out strict conditions 
that must be satisfied before the authorized reme dy may be applied.  The purpose of each authorized 
remedy may be distinct, but the form and effe ct of both remedies are the same.  Both the 
Anti-Dumping Agreement  and the SCM Agreement  contain provisions requiring that the amounts of 
anti-dumping and countervailing duties be "appropriate in each case" , as reflected in Articles 9.2 
and 19.3 respectively.  Both agreements also set ceilings on the maximum amount of duties that can 
be imposed to remedy dumping and subsidi zation, respectively.  Article 19.4 of the SCM Agreement  
establishes that countervailing duties shall not excee d the amount of the subsidy found to exist and 
Article 9.3 of the Anti-Dumping Agreement  establishes that anti-dumping duties shall not exceed the 
margin of dumping. 
572. Only if these provisions are read in wilful isol ation from each other can it be maintained that 
the respective rules on the imposition and levying of duties are complied with when double remedies 
are imposed.  In contrast, reading the two agreem ents together suggests that the imposition of double 
remedies would circumvent the standard of appr opriateness that the two agreements separately 
establish for their respective remedies.  In other wo rds, considering that each agreement sets forth a 
standard of appropriateness of the amount and estab lishes a ceiling for the respective duties, it should 
not be possible to circumvent the rules in each agreement by taking measures under both agreements 
to counteract the same subsidization.  It is count erintuitive to suggest that, while each ag reement sets 
forth rules on the amounts of anti-dumping duties and countervailing duties that can be levied, there is 
no obstacle to the levying of a total amount of an ti-dumping and countervailing duties which, if added 
together, would not be appropr iate and would exceed the combined amounts of dumping and 
subsidization found. 
                                                      
549Moreover, it may well be the case that the injury that the duties seek to counteract is the same injury 
to the same industry.  In this respect, we observe that, for each parallel anti-dum ping and countervailing duty 
investigation at issue in this dispute, the USITC conducte d a single injury determination in respect of imports of 
the relevant products. (United States' responses to questioning at the oral hearing)  WT/DS379/AB/R 
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  573. We consider, next, the object and purpose of the SCM Agreement , and whether this sheds 
light on the meaning of Article 19.3.550  We recall that, in US – Carbon Steel , the Appellate Body 
explained that "Part V of the Agreement is aimed at striking a balance between the right to impose 
countervailing duties to offset subsidization that is  causing injury, and the obligations that Members 
must respect in order to do so."551  Similarly, in US – Softwood Lumber IV , the Appellate Body stated 
that "the object and purpose of the SCM Agreement , ... is to strengthen a nd improve GATT disciplines 
relating to the use of both subsidies and counterva iling measures, while, recognizing at the same time, 
the right of Members to impose such measures under certain conditions".552  The object and purpose 
of the SCM Agreement , as identified by the Appellate Body in these disputes, sets important 
limitations to Members' right to impose count ervailing duties.  Members' right to impose 
countervailing duties to offset subsidies is not unfettered, but subject to compliance with the 
obligations set forth in the SCM Agreement .  Such duties must be for the purpose of offsetting an 
injurious subsidy.  The object and purpose of the SCM Agreement  thus reveals that Members intended 
to allow for the use of countervailing duties to  offset injurious subsidization under certain 
circumstances and subject to specific limitations. 
574. We do not see that the object and purpose of the SCM Agreement  provides clear indications as 
to the intentions of the drafters of the SCM Agreement  in respect of double remedies in case of 
domestic subsidization.  To the extent that the object and purpose of the SCM Agreement  links the 
application of countervailing duties to their purpose— to offset injurious subsidization—this supports 
an interpretation of Article 19.3 that would rend er "inappropriate" the application of countervailing 
duties that, together with anti-dumping duties, excee d the full amount of the subsidy.  We emphasize 
that we are not suggesting that the object and purpose of the SCM Agreement encompasses the 
imposition of disciplines on the use of anti-dumping duties.553  Rather, we simply consider that the 
object and purpose of the SCM Agreement is not inconsistent with an approach that would accept that, 
in fixing the amount of countervailing duties that will be imposed, it is appropria te to take account of 
anti-dumping duties that are being levied on the same products and that offset the same subsidization. 
                                                      
550See also supra , para. 301 of this Report. 
551Appellate Body Report, US – Carbon Steel , para. 74. 
552Appellate Body Report, US – Softwood Lumber IV , para. 64. 
553The Panel observed that China's arguments with respect to object and purpose implied that "it is the 
object and purpose of the SCM Agr eement to impose disciplines not only with respect to the use of 
countervailing duties, but also of anti-dumping duties".  The Panel expressed its view that "the object and 
purpose of Part V of the SCM Agreement is limited to imposition of disciplines with respect to the former". 
(Panel Report, para. 14.122) WT/DS379/AB/R 
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  575. The Panel rejected an argument by China based  on the interpretation of Article 9.2 of the 
Anti-Dumping Agreement  provided by the panel in EC – Salmon (Norway) .
554  Article 9.2 establishes 
that an anti-dumping duty "shall be collected in the appropriate amounts in each case", and is thus the 
provision in the Anti-Dumping Agreement  that corresponds to Article 19.3 of the SCM Agreement .  In 
EC – Salmon (Norway) , the panel found that the appropriate amount of an anti-dumping duty "must 
be an amount that results in offsetting or prev enting dumping, when all other requirements for the 
imposition of anti-dumping duties have been fulfilled".555  We consider that the panel's interpretation 
of Article 9.2 of the Anti-Dumping Agreement  in EC – Salmon (Norway)  is consistent with our 
interpretation of the phrase "in the appropriate amounts" in Article 19.3 of the SCM Agreement , as 
prohibiting the imposition of double remedies, and with  the notion that the two agreements should be 
read together in a consistent a nd coherent manner.  In fact, applying the reasoning of the panel in 
EC – Salmon (Norway) , an appropriate amount of countervailin g duty should be an amount that 
results in offsetting subsidization,  with due regard being had to th e concurrent application of anti-
dumping duties on the same product that offset the same subsidization. 
576. The Panel also considered as an "element of context" Article 15 of the Tokyo Round 
Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement 
on Tariffs and Trade556 (the " Tokyo Round Subsidies Code ").  According to the Panel, the fact that 
Article 15, which explicitly addressed the issue of the concurrent imposition of anti-dumping and 
countervailing duties on NME imports, was not carried forward in the SCM Agreement  lent support to 
an interpretation of Articles 19.3 and 19.4 of the SCM Agreement  as not addressing or encompassing 
the question of the permissibility of double remedies.557 
577. Article 15 of the Tokyo Round Subsidies Code , entitled "Special situations", reads in relevant 
part: 
1. In cases of alleged injury caused by imports from a country 
described in NOTES AND SUPPLEMENTARY PROVISIONS to the General Agreement (Annex I, Ar ticle VI, paragraph 1, point 2) 
the importing signatory may base its procedures and measures either 
 (a)  on this Agreement, or, alternatively 
 (b)  on the Agreement on Implementation of Article VI 
  of the General Agreement on Tariffs and Trade. 
                                                     
 
554Panel Report, para. 14.128. 
555Panel Report, EC – Salmon (Norway) , para. 7.705. 
556BISD 26S/56, entered into force 1 January 1980. 
557Panel Report, para. 14.119.  WT/DS379/AB/R 
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  578. Article 15 of the Tokyo Round Subsidies Code  imposed upon an importing signatory a choice 
between the use of anti-dumping duties and the use of countervailing duties against imports from 
NMEs.  This provision thus prohibited the concurrent application of the two types of duties, 
regardless of whether this in fact r esulted in the imposition of double remedies.558 
579. In our view, Article 15 of the Tokyo Round Subsidies Code  cannot be considered as context 
within the meaning of Article 31 of the Vienna Convention .  Article 31 does not refer to a predecessor 
agreement—that is, an agreement on the same matter th at has ceased to exist and has been replaced by 
the agreement being interpreted—as context or as one of the elements to be taken into account 
together with the context.  Rather, a provision in a predecessor agreement may, at most, form part of 
the circumstances of the conclusion of a treaty under Article 32 of the Vienna Convention  and thus be 
considered as supplementary means of interpretation. 
580. In the present dispute, having reviewed Article 19.3 of the SCM Agreement  and its relevant 
context559, we do not consider it necessary to confir m the interpretation of Article 19.3 of the 
SCM Agreement  by relying on supplementary means of in terpretation, such as the circumstances of 
conclusion of the treaty.  In any event, we are not  persuaded that a provision that explicitly addressed 
the issue of the concurrent imposition of anti-dumpi ng and countervailing duties in respect of imports 
from NMEs, clearly supports an interpretation of Articles 19.3 and 19.4 of the SCM Agreement  "as 
not addressing or encompassing the question of the permissibility of double remedies".560 
581. In particular, we are not persuaded that th e existence in a predecessor agreement of a 
provision prohibiting the concurrent imposition of anti-dumping and countervailing duties to imports 
from NMEs allows an interpreter to conclude, a contrario , that, in the SCM Agreement , Members 
intended to allow double remedies.  We have alread y cautioned, in respect of Article VI:5 of the 
                                                      
558As explained supra , paras. 541-544, "double remedies" does not refer simply to the fact that both 
anti-dumping and countervailing duties are imposed on the same product, but to circumstances in which the 
simultaneous application of anti-dumping and counterva iling duties on the same imported products results, at 
least to some extent, in the offsetting of the same subsidization twice. 
559The Panel also considered Chin a's Accession Pr otocol, which "contains no provision explicitly 
addressing the issue of double remedies even though it appears to allow for the use of countervailing duties while China remains an NME".  For the Panel, the absence of any such provision also suggested that the drafters 
of Articles 19.3 and 19.4 of the SCM Agreement  did not intend these provisions to address the issue of double 
remedies. (Panel Report, para. 14.121;  see also para. 14. 129)  We do not agree with th e Panel that the fact that 
China's Accession Protocol does not ex plicitly address the issue of double re medies suggests that Articles 19.3 
and 19.4 of the SCM Agreement  do not address double remedies.  In ou r view, the fact that China's Accession 
Protocol does not exclude the application of countervailing duties to China while it remained an NME may equally be read as suggesting a shared understanding that China would be protected against the imposition of 
double remedies by the provisions of the SCM Agreement .  On balance, however, we are not persuaded that the 
absence of a provision addressing double remedies in China's Accession Protocol suggests anything regarding the interpretation of Articles 19.3 and 19.4 of the SCM Agreement . 
560Panel Report, para. 14.119.  See also para. 14.129. WT/DS379/AB/R 
Page 216  
 
  GATT 1994, against mechanistic a contrario  reasoning, and recalled that "omissions in different 
contexts may have different meani ngs, and omission, in and of itself,  is not necessarily dispositive".
561  
Article 15 of the Tokyo Round Subsidies Code  does more than merely prohibit double remedies, in 
that it prohibits the concurrent application of anti-dumping and countervailing duties, regardless of 
whether they offset the same situation of subsidizati on.  In the light of this, the absence of a provision 
like Article 15 of the Tokyo Round Subsidies Code  in the SCM Agreement  cannot be interpreted as 
indicating that Members intended to exclude from the scope of the SCM Agreement  a different and 
narrower obligation, such as a prohibition on double remedies. 
582. In sum, based on all of the above, we consider  that the Panel erred in its interpretation of 
Article 19.3 of the SCM Agreement  and failed to give meaning and e ffect to all the terms of that 
provision.  Under Article 19.3 of the SCM Agreement , the appropriateness of the amount of 
countervailing duties cannot be dete rmined without having regard to anti-dumping duties imposed on 
the same product to offset the same subsidizati on.  The amount of a countervailing duty cannot be 
"appropriate" in situations where that duty repr esents the full amount of the subsidy and where anti-
dumping duties, calculated at least to some extent on the basis of the same subsidization, are imposed 
concurrently to remove the same injury to the domestic industry.  Dumping margins calculated based 
on an NME methodology are, for the reasons explaine d above, likely to include some component that 
is attributable to subsidization. 
583. We, therefore, reverse  the Panel's interpretation of Article 19.3 and, in particular, its findings 
that "the imposition of anti-dumping duties calculated under an NME methodology has no impact on 
whether the amount of the concurrent counter vailing duty collected is 'appropriate' or not"562, and that 
Article 19.3 of the SCM Agreement does not address the issue of double remedies.563  We find instead 
that the imposition of double remedies, that is, the offsetting of the same subsidization twice by the 
concurrent imposition of anti-dumping duties calculated on the basis of an NME methodology and 
countervailing duties, is inconsis tent with Article 19.3 of the SCM Agreement . 
                                                      
561Appellate Body Report, Canada – Autos , para. 138. 
562Panel Report, para. 14.128. 
563Panel Report, para. 14.129.  WT/DS379/AB/R 
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  2. Article 19.4 of the SCM Agreement  and Article VI:3 of the GATT 1994564 
584. The Panel found that Article 19.4 of the SCM Agreement  imposes a maximum limit on the 
amount of duties that may be levied, corresponding to the amount of subsidy that is found to exist565, 
and that the use of an NME methodology in anti-dumping investigations does not have the effect of 
extinguishing the subsidy.566  In the Panel's view, Article 19.4 is "oblivious to any potential 
concurrent imposition of anti-dumping duties", and,  therefore, "the narrowly-crafted discipline 
contained in Article 19.4 of the SCM Agreement  does not address situations of 'double remedies'."567 
585. Accordingly, the Panel found that: 
... China has failed to establish that the USDOC's use of its NME 
methodology in the anti-dumping determinations at issue, 
concurrently with its determin ation of subsidization and the 
imposition of countervailing duties on the same products in the four 
countervailing duty determinations at  issue, was inconsistent with 
Article 19.4 of the SCM Agreement.568 
586. For the same reasons, the Panel also found that: 
... China has not established that th e United States imposed duties in 
excess of the subsidy "determined to have been granted" in the 
investigations at issue inconsistently with Article VI:3 of the 
GATT 1994.569 
587. China argues that the Panel erred in finding that Article 19.4 of the SCM Agreement  does not 
address situations of double remedies and argues that, if a subsidy has been offset through the manner 
in which the importing Member calculates anti-dumping duties, the subsidy no longer "exists" within 
the meaning of Article 19.4, because it can no longer be attributed to the imported products as a cause
                                                      
564Article 19.4 of the SCM Agreement  states: 
No 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. (footnote 
omitted) 
Article VI:3 of the GATT 1994 reads in relevant part: 
No countervailing duty shall be levied on any product of the territory of any 
Member imported into the territory of another Member in excess of an 
amount equal to the estimated bounty or subsidy determined to have been granted, directly or indirectly, on the manufacture, production or export of 
such product in the country of origin or exportation, including any special 
subsidy to the transportation of a particular product. 
565Panel Report, para. 14.108.  
566Panel Report, para. 14.113.  
567Panel Report, para. 14.112.  
568Panel Report, para. 14.123. 
569Panel Report, para. 14.136. WT/DS379/AB/R 
Page 218  
 
  of injury to domestic producers.  China thus claims that the imposition of double remedies is 
inconsistent with Article 19.4 of the SCM Agreement , because it results in the imposition and levying 
of countervailing duties in excess of  the subsidy "found to exist".
570  China makes similar arguments 
in respect of Article VI:3 of the GATT 1994. 
588. The United States considers that Article 19.4 of the SCM Agreement  is not concerned with the 
existence of subsidies, but with ensuring that  any countervailing duties imposed do not exceed the 
subsidies attributable to the imported goods, in te rms of subsidization per unit.  The United States 
agrees with the Panel that, by its own terms, Ar ticle 19.4 only imposes disciplines with respect to 
countervailing duties (not anti-dumping duties), and is, thus, "o blivious to any potential concurrent 
imposition of anti-dumping duties".571  We understand the United States to make the same arguments 
in respect of Article VI:3 of the GATT 1994. 
589. In addressing China's claims under Article 19.3, we have explained that the provisions of the 
Anti-Dumping Agreement  and the SCM Agreement  should be interpreted together in a coherent and 
consistent manner, so as to avoid any possible ci rcumvention of the rules governing, and ceilings on, 
anti-dumping and countervailing duties that are set forth in the respective provisions in the two 
agreements.  We, therefore, disagree with the Pa nel's statement that "Article 19.4 of the SCM 
Agreement is oblivious to any potential c oncurrent imposition of anti-dumping duties."572 
590. However, since we have already found that th e imposition of double remedies is inconsistent 
with Article 19.3 of the SCM Agreement , we need not continue our analysis and address China's 
appeal with respect to the interpretati on and application of Article 19.4 of the SCM Agreement  and 
Article VI:3 of the GATT 1994.  We consider, rather , that a ruling on the interpretation of Article 19.4 
of the SCM Agreement  or Article VI:3 of the GATT 1994 is unnecessary for purposes of resolving 
this dispute.  The Panel's interpretation of these pr ovisions is, in our estimation, moot and of no legal 
effect. 
3. Conclusion  
591. We have reversed the Panel's inte rpretation of Article 19.3 of the SCM Agreement .  Because it 
was based on an erroneous interpretation of Article 19.3, we must also reverse  the Panel's ultimate 
finding in paragraph 17.1(e)(ii) of the Panel Report that China did not establish that the United States 
                                                      
570China's appellant's submission, paras. 499-509. 
571United States' appellee's submission, para. 396 (quoting Panel Report, para. 14.112). 
572Panel Report, para. 14.112.  WT/DS379/AB/R 
 Page 219 
 
 
  acted inconsistently with its obligations under Articles 19.3573, 10574, or 32.1575 of the 
SCM Agreement . 
C. Completion of the Analysis 
592. Having reversed these findings, we must consid er China's request that we complete the 
analysis and find the USDOC's concurrent impositi on of anti-dumping duties calculated on the basis 
of its NME methodology, and countervailing duties on the same products in the four countervailing 
duty determinations at issue to be in consistent with Article 19.3 of the SCM Agreement . 
593. China contends that it necessarily follows from a ny reversal of the Panel's legal interpretation 
of a relevant provision that the United States has ac ted inconsistently with its  obligations under that 
provision.576  China argues that it is undisputed that th e USDOC took no steps to investigate and avoid 
the imposition of double remedies, notwithstanding  its recognition of the possibility of "double 
counting".  China emphasizes that, contrary to the suggestion of the Panel, it was not for China to 
"conclusively establish"577 that double remedies resulted from the concurrent imposition of 
countervailing duties and anti-dumping duties calcul ated under an NME methodology.  Rather, the 
USDOC had an affirmative obligation to determine whether, and in what amount, double remedies 
would occur in these investigations , and it indisputably did not do so.  China also refers to 
submissions that it made before the Panel that it considers show that China did, in fact, demonstrate, 
based on undisputed evidence in th e record, that double remedies o ccurred in the investigations at 
issue. 
594. The United States contests China's assertions th at a finding of inconsistency would follow 
directly from the reversal of the Panel's legal interp retations, that there are no disputed facts that the 
Appellate Body need examine to rule on this issu e, and that China's submissions before the Panel 
amount to a demonstration, based on undisputed  evidence, that double remedies occurred in the 
investigations at issue.  The United States emphasize s that China bore the burden of proof in front of 
the Panel, yet made no attempt to present hard ev idence that double remedies ha d occurred, just as it 
made no such attempt before the USDOC. 
                                                      
573See also Panel Report, para. 14.130. 
574See also Panel Report, para. 14.138. 
575See also Panel Report, para. 14.139. 
576China's appellant's submission, para. 562.  
577China's appellant's submission, para. 561 (quoting Panel Report, para. 14.76). WT/DS379/AB/R 
Page 220  
 
  595. The United States points out that the Panel made no findings as to whether double remedies 
resulted from the concurrent application of  anti-dumping duties calculated under an NME 
methodology and countervailing duties, in the determination for any of the four products at issue, and 
the facts are not "undisputed".  Moreover, before th e Panel, the United States argued that the existence 
of double remedies in any given instances depends on whether the subsidy leads to a reduction in the 
export price, and that it cannot be presumed that domestic subsidies lower export prices pro rata.  The 
United States observed that, while certain domestic production subsidies will result in increased 
production and a reduction in export prices, other more general subsidies may be used for other 
purposes (payments of dividends, severance payments, research and development), and may not affect production or export price.
578  For all of these reasons, the United States asserts that there is no basis 
for the Appellate Body to complete the analysis  and determine whether, as a factual matter, double 
remedies occurred. 
596. We begin by recalling that the Panel had "no difficulty" accepting the general proposition that 
double remedies would "likely" arise from the concurrent application of anti-dumping duties calculated based on an NME methodo logy, and of countervailing duties.
579  Because, however, the 
Panel found that China had failed to establish that the imposition of double remedies is inconsistent 
with any of the provisions upon which it based its cl aims, the Panel considered that it did not need to 
examine "the extent to which the concurrent im position of anti-dumping duties determined under the 
USDOC's NME methodology and of countervailin g duties resulted in the imposition of 'double 
remedies' in the four investigations at issue".580  Thus, the Panel did not decide on whether China had 
"conclusively established that, in the investigati ons at issue, double remedies resulted from the 
concurrent imposition of anti-dumping duties calcula ted under the [United States'] NME methodology 
and of countervailing duties".581  For the same reasons, the Panel declined to "consider the specific 
examples submitted by China from these investigations".582 
                                                      
578Panel Report, para. 14.71 and footnote 968 ther eto;  and United States' responses to Panel 
Questions 72 and 73 after the first Panel meeting.  A similar point was made by the European Union in its third participant's submission, at paragraph 56. 
579Panel Report, para. 14.67. 
580Panel Report, para. 14.76. 
581Panel Report, para. 14.76. 
582Panel Report, para. 14.76.  WT/DS379/AB/R 
 Page 221 
 
 
  597. At the same time, the Panel observed that th e "USDOC's treatment of the issue of double 
remedies in the investigations at issu e is not in debate", and explained:  
The parties agree that where in terested parties raised "double 
remedy" arguments in the investigations at issue, the USDOC 
rejected them and that the USDOC did not take into consideration the 
anti-dumping duties imposed on the same products when it imposed countervailing duties in the four c ountervailing duty investigations at 
issue:  it imposed countervailing duties corresponding to the full amount of subsidies found to have been conferred on each 
investigated producer.
583 
598. The Appellate Body has stated in previous dis putes that, if the factual findings of the panel 
and the undisputed facts in the panel record provide the Appellate Body with a sufficient basis for its 
own analysis, the Appellate Body may complete the analysis with a view to facilitating the prompt 
settlement of the dispute.584 
599. We do not accept China's contention that a finding of inconsistency of the measures at issue 
must directly follow from our reversal of the Panel's interpretation of Article 19.3 of the 
SCM Agreement .  We have expressed the view that, as a legal matter, this provision prohibits double 
remedies.  But, we have not yet considered the question of when, as a factual matter, double remedies 
arise.  In principle, we agree with the st atement by the Panel that double remedies would likely  result 
from the concurrent application of anti-dumpi ng duties calculated on the basis of an NME 
methodology and countervailing duties585, but we are not convinced that double remedies necessarily  
result in every instance of such concurrent applica tion of duties.  This depe nds, rather, on whether and 
to what extent domestic subsidies have lowered the export price of a pr oduct, and on whether the 
investigating authority has taken the necessary corr ective steps to adjust its methodology to take 
account of this factual situation. 
600. On appeal, China claims that it is "the ob ligation of the investigating authority to investigate  
and make a determination as to whether it is offsetting the same subsidies twice"586, whereas the 
United States argues that "the burden to establis h the existence of such an alleged double remedy 
would be on China".587 
                                                      
583Panel Report, para. 14.105. (footnote omitted) 
584See, for example, Appellate Body Report, Australia – Salmon , paras. 117, 118, and 193;  Appellate 
Body Report, Canada – Autos , paras. 133 and 144;  Appellate Body Report, Korea – Various Measures on Beef , 
para. 128;  and Appellate Body Report, US – Continued Zeroing , paras. 189, and 195-197. 
585Panel Report, paras. 14.67 and 14.75. 
586China's appellant's submission, para. 561. (original emphasis) 
587United States' appellee's submission, para. 386. WT/DS379/AB/R 
Page 222  
 
  601. We observe that, in US – Countervailing Measures  on Certain EC Products , the Appellate 
Body stated that, "under Article VI:3 of the GAT T 1994, investigating authorities, before imposing 
countervailing duties, must ascertain the precise am ount of a subsidy attributed to the imported 
products under investigation."
588  We consider that a parallel can be drawn between the obligation of 
an investigating authority under Article VI:3 of the GATT 1994 to determine the precise amount of the subsidy, on the one hand, and the analogous obligations that an investigating authority has under 
Articles 19.3 and 19.4 of the SCM Agreement , on the other hand, to determine and levy countervailing 
duties in amounts that are appropriate in each cas e and that do not exceed the amount of the subsidy 
found to exist. 
602. In the same way, therefore, as an investigating authority is subject to an affirmative obligation 
to ascertain the precise amount of the subsidy, so t oo is it subject to an affirmative obligation to 
establish the appropriate amount of the duty unde r Article 19.3.  This obligation encompasses a 
requirement to conduct a sufficiently diligent "inves tigation" into, and solicitation of, relevant facts, 
and to base its determination on positive evidence in  the record.  We recall our finding above that, 
among the factors to be taken into account by an investigating authority, in establishing the 
"appropriate" amount of countervailing duty to be imposed, is evidence of whether and to what degree 
the same subsidies are being offset twice when anti-dumping and countervailing duties are 
simultaneously imposed on the same imported products.   We also recall that such double remedies are 
"likely" when the concurrent anti-dumping du ties are calculated on the basis of an NME 
methodology.
589 
603. We now turn, more specifically, to the questi on of whether the USDOC, in the four sets of 
investigations at issue, acted inconsistently  with the obligations of the United States under 
Article 19.3 of the SCM Agreement .  As mentioned above, the Panel observed that the parties agreed 
"that where interested parties raised 'double remedy ' arguments in the investigations at issue, the 
USDOC rejected them and that the USDOC did not take into considerati on the anti-dumping duties 
imposed on the same products when it imposed c ountervailing duties corresponding to the full amount 
of subsidies found to have been c onferred on each investigated producer."590 
                                                      
588Appellate Body Report, US – Countervailing Measures on Certain EC Products , para. 139. (footnote 
omitted) 
589Panel Report, paras. 14.67 and 14.75.  We also note that the Panel expressed the view that the 
USDOC had itself recognized the potential for double remedies in such circumstances. (See ibid., para. 14.71, 
and the statements quoted in footnote 966 thereto) 
590Panel Report, para. 14.105.  WT/DS379/AB/R 
 Page 223 
 
 
  604. Thus, the USDOC made no attempt to establish whether or to what degree it would offset the 
same subsidies twice by imposing anti-dum ping duties calculated under its NME methodology, 
concurrently with countervailing dutie s.  We recall that, in the investigations at issue, the USDOC 
dismissed China's claim of double remedies on the ground that inter alia  it had no statutory authority 
to make adjustments in the context of countervailing duty investigations.591  Therefore, the USDOC 
did not initiate any examination of whether double reme dies would arise in the four investigations at 
issue and refused outright to afford  any consideration to the issue or  to the submissions pertaining to 
the issue that were presented to it.592 
605. In our view, by declining to address China's claims concerning double remedies in the four 
countervailing duty investigations at issue, the USDO C failed to fulfil its obligation to determine the 
"appropriate" amount of countervailing duties w ithin the meaning of Article 19.3 of the 
SCM Agreement . 
606. Consequently, we find that, in the circumstances of the four sets of anti-dumping and 
countervailing duty investigations at issue, by virtue of the USDOC's imposition of anti-dumping 
duties calculated on the basis of an NME methodology, concurrently with the imposition of 
countervailing duties on the same products, wit hout having assessed whether double remedies arose 
from such concurrent duties, the United States acted inconsistently w ith its obligations under 
Article 19.3 of the SCM Agreement . 
                                                      
591LWR Issues and Decision Memorandum (Panel Exhibit CHI-2), p. 19;  LWS Issues and Decision 
Memorandum (Panel Exhibit CHI-3), p. 40;  and OTR Issues and Decision Memorandum (Panel Exhibit CHI-4), p. 53.  See also CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), p. 101, incorporating 
by reference the Issues and Decision Memorandum in the CWP anti-dumping investigation (Panel Exhibit 
CHI-9), pp. 21 and 22. 
592In the four countervailing duty investigations at issue, China and the respondent producers raised the 
issue of double remedies before the USDOC.  Moreov er, in the parallel anti-dumping investigations, China 
raised the issue of double remedies in the CWP and OTR investigations, but not in the LWR and LWS investigations.  China argued that double remedies arise from concurrent anti-dumping and countervailing duty 
investigations against NMEs because no rmal value is not based on home mark et prices or costs, but rather on 
surrogate values unaffected by subsidies in China.  Moreover, China argued that, in order to avoid the imposition of double remedies, the USDOC could adopt one of the following options:  (i) terminate its 
countervailing duty investigations;  (ii) adjust its anti-dumping calculati ons for the amount of any alleged 
domestic subsidies received by investigat ed producers;  or (iii) apply its standard market economy methodology 
in the parallel anti-dumping investigations. (CWP Issues and Decision Memorandum (Panel Exhibit CHI-1), 
p. 101, incorporating by reference the Issues and Decision Memorandum in the CWP anti-dumping 
investigation (Panel Exhibit CHI-9), pp. 19-21;  LWR Issues and Decision Memorandum (Panel Exhibit CHI-2), p. 19;  LWS Issues and Decision Memorandum (Panel Exhibit CHI-3), p. 31;  and OTR Issues and 
Decision Memorandum (Panel Exhibit CHI-4), pp. 51 and 52) WT/DS379/AB/R 
Page 224  
 
  D. Articles 10 and 32.1 of the SCM Agreement 
607. We have already reversed the Panel's ultim ate finding regarding double remedies, including 
its finding that, because China had not established any violation of Articles 19.3 of the 
SCM Agreement , it also had not established any viol ation of Articles 10 or 32.1 of the 
SCM Agreement . 
608. China asks us to find that, by applying anti-dumping duties based on an NME methodology, 
and countervailing duties to the same imports in the four investigations at issue, the United States 
acted inconsistently with Articles 10 and 32.1 of the SCM Agreement . 
609. The Panel found "that a claim of violation of Article 10 of the SCM Agreement must 
necessarily be consequential to a claim of violatio n of other provisions of the covered agreements".
593  
Since the Panel found that China had not establishe d any violation of Articles 19.3 and 19.4 of the 
SCM Agreement , it concluded that "China [had] not demonstrated that the United States acted 
inconsistently with Article[] ... 10 of the SCM Agre ement as a result of the concurrent imposition of 
anti-dumping duties calculated under the [United St ates'] NME methodology and of countervailing 
duties in the investigations at issue".594  The Panel also found that China's claim under Article 32.1 of 
the SCM Agreement  was "purely consequential to its claims under Articles 10, 19.3 and 19.4 of the 
SCM Agreement  and Article VI:3 of the GATT [] 1994" a nd, having found that China had failed to 
establish a violation of these provisions, also fo und that China had failed to establish that the 
United States had acted inconsiste ntly with Article 32.1 of the SCM Agreement .595 
610. We have already explained that when a Member's measures do not satisfy the express 
conditions for the imposition of a countervailing duty set out in relevant provisions of the 
SCM Agreement , this means that the right to impose a countervailing duty has not been established 
and, as a consequence, such measures are also inconsistent with Articles 10 and 32.1 of the 
SCM Agreement .596  Accordingly, we are of the view that  China was not required to advance further 
arguments to establish a consequential violation of Articles 10 and 32.1.  Having found that the 
USDOC's concurrent imposition of anti-dumping duties calculated on the basis of its NME 
methodology, and countervailing duties on the sa me products in the four countervailing duty 
determinations at issue is incons istent with Article 19.3 of the SCM Agreement , we find that this is 
also inconsistent with Articles 10 and 32.1 of the SCM Agreement . 
                                                      
593Panel Report, para. 14.137. 
594Panel Report, para. 14.138. 
595Panel Report, para. 14.139. 
596See supra , para. 358.  See also Appellate Body Report, US – Softwood Lumber IV , para. 143.  WT/DS379/AB/R 
 Page 225 
 
 
  VIII.  Findings and Conclusion 
611. For the reasons set out in this Report, the Appellate Body: 
(a) with respect to "public bodies": 
(i) reverses  the Panel's finding in paragraph 8.94 of the Panel Report that the 
term "public body" in Article 1.1(a)(1) of the SCM Agreement  means "any 
entity controlled by a governmen t";  and, accordingly, reverses  the Panel's 
finding in paragraph 17.1(a)(i) of the Panel Report597 that China did not 
establish that the USDOC acted inconsis tently with the obligations of the 
United States under Article 1.1(a)(1) of the SCM Agreement  by determining 
in the relevant investigations at issue that SOEs and SOCBs constituted 
"public bodies"; 
(ii) in completing the analysis of China's claims under Article 1.1(a)(1) of the 
SCM Agreement : 
- finds  that the USDOC's determinati ons, in the four countervailing 
duty investigations at issue, that the SOE input suppliers constituted 
"public bodies", are inconsistent  with Article 1.1(a)(1) and, 
consequently, with the United States' obligations under Articles 10 
and 32.1 of the SCM Agreement ;   
- finds  that China did not establish that the USDOC's determination 
that the SOCBs in the OTR inves tigation constituted "public bodies" 
is inconsistent with Article 1.1(a)(1) of the SCM Agreement ;  and 
(iii) finds  that China has failed to substan tiate its claim that the Panel acted 
inconsistently with Article 11 of the DSU by improperly relying on municipal 
law; 
                                                      
597See also Panel Report, paras. 8.138 and 8.143. WT/DS379/AB/R 
Page 226  
 
  (b) with respect to specificity: 
(i) upholds
 the Panel's finding in paragraph 17.1(b)(i) of the Panel Report598 that 
China did not establish that the USDOC acted inconsistently with the 
obligations of the United States under Article 2.1(a) of the SCM Agreement  
by determining in the OTR investigation that SOCB lending was specific to the tyre industry;  and 
(ii) finds
 that the Panel did not err in its in terpretation of the term "subsidy" in 
Article 2.2 of the SCM Agreement  and rejects  China's allegations of error in 
respect of a Panel statement concerning a "distinct regime" in the context of 
the LWS investigation; 
(c) with respect to the benchmarks used to calculate benefit: 
(i) upholds  the Panel's finding in paragraph 17.1(c)(vi) of the Panel Report599 
that China did not establish that the USDOC acted inconsistently with the obligations of the United States under Article 14(d) of the SCM Agreement  
by rejecting in-country private prices in China as benchmarks for HRS in the 
CWP and LWR investigations;  and rejects
 China's claim that the Panel acted 
inconsistently with Article 11 of th e DSU by attributing to the USDOC a 
rationale that was not found in the CWP and LWR determinations; 
(ii) upholds  the Panel's finding in paragr aph 10.148 of the Panel Report600 that 
China did not establish that the USDOC's decision not to rely on interest rates 
in China as benchmarks for SOCB loan s denominated in RMB in the CWP, 
LWS, and OTR investigations was incons istent with the obligations of the 
United States under Article 14(b) of the SCM Agreement ;  and  
(iii) finds  that, in assessing the consistency of  the proxy benchmark used by the 
USDOC with Article 14(b) of the SCM Agreement , the Panel failed to make 
an objective assessment of the matter before it as required by Article 11 of the DSU and, therefore, reverses
 the Panel's finding in paragraph 10.209 of 
the Panel Report601 that China did not establish that the benchmark actually 
                                                      
598See also Panel Report, para. 9.107. 
599See also Panel Report, para. 10.61. 
600See also Panel Report, para. 17.1(c)(vii). 
601See also Panel Report, para. 17.1(c)(vii).  WT/DS379/AB/R 
 Page 227 
 
 
  used by the USDOC to calculate the benefit from RMB-denominated SOCB 
loans in the CWP, LWS, and OTR inves tigations was inconsistent with the 
obligations of the United States under Article 14(b) of the SCM Agreement ;  
but finds  that it is unable to complete the legal analysis of China's claim 
under that provision; 
(d) with respect to "double remedies":  
(i) finds  that the imposition of double remedies, that is, the offsetting of the 
same subsidization twice by the conc urrent imposition of anti-dumping duties 
calculated on the basis of an NME methodology and countervailing duties, is 
inconsistent with Article 19.3 of the SCM Agreement ;  and, therefore 
(ii) reverses  the Panel's findings in paragra phs 14.129 and 14.130 of the Panel 
Report that Article 19.3 of the SCM Agreement does not address the issue of 
double remedies and that China did not establish that offsetting of the same subsidization twice through the conc urrent imposition of anti-dumping duties 
calculated on the basis of an NME methodology and countervailing duties is 
inconsistent with Article 19.3 of the SCM Agreement
602;  and 
(iii) finds  that, in the four sets of anti-dumping and countervailing duty 
investigations at issue, by virtue of the USDOC's imposition of anti-dumping 
duties calculated on the basis of an NM E methodology, concurrently with the 
imposition of countervailing duties on the same products, without having 
assessed whether double remedies arose from such concurrent duties, the 
United States acted inconsistently with its obligations under Article 19.3, and, 
consequently, under Articles 10 and 32.1 of the SCM Agreement . 
612. The Appellate Body recommends that the DS B request the United States to bring its 
measures, found in this Report, and in the Panel Repor t as modified by this Report, to be inconsistent 
with the SCM Agreement603, into conformity with its oblig ations under that Agreement. 
                                                      
602See also Panel Report, para. 17.1(e)(ii). 
603The Panel also recommended that the United States bring its measures found to be inconsistent with 
the GATT 1994 into conformity with its  obligations under that Agreement. (P anel Report, para. 17.3)  However, 
we do not see that the Panel made any such finding of inconsistency.  Nor have we.  WT/DS379/AB/R 
 Page 229 
 
 
  ANNEX I  
 
 WORLD TRADE  
ORGANIZATION  WT/DS379/6 
6 December 2010 
 (10-6557) 
 Original:   English 
  
 
UNITED STATES – DEFINITIVE ANTI-DUMPING AND 
COUNTERVAILING DUTIES ON CERTAIN PRODUCTS FROM CHINA 
 
Notification of an Appeal by China
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
   The following notification, dated 1 December 2010, from the Delegation of China, is being 
circulated to Members. 
 
_______________ 
 
 
1. Pursuant to Article 16.4 and Article 17 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate 
Review, China hereby notifies the Dispute Settlement Body of its decision to appeal to the Appellate 
Body certain issues of law and legal interp retation covered in the Panel Report in United States – 
Definitive Anti-Dumping and Countervailing Duties on Certain Products from China  (WT/DS379/R) 
(Panel Report).  Pursuant to Rule 20(1) of the Working Procedures for Appellate Review , China is 
simultaneously filing this Notice of Appeal with the Appellate Body Secretariat. 
2. The measures at issue are certain anti-dumpi ng and countervailing duty de terminations by the 
U.S. Department of Commerce ("USDOC"), and the definitive anti-dumping and countervailing 
duties imposed by the United States pursuant to thei r authority.  As further specified in China's 
Request for Establishment of a Panel (WT/DS379 /2), these determinations were made in the 
investigations of Circular Welded Carbon Quality Steel Pipe  from the People's Republic of China 
("CWP"), Certain New Pneumatic Off-the-Road Tires from the People's Republic of China  ("OTR"), 
Light-Walled Rectangular Pipe and Tube from the People's Republic of China  ("LWR"), and 
Laminated Woven Sacks from th e People's Republic of China  ("LWS"). 
3. The issues that China raises in this appeal rela te to the Panel's findi ngs and conclusions in 
respect of the consistency of the challenged measures with the General Agreement on Tariffs and 
Trade 1994 ("GATT 1994") and the Agreement on Subsidies and Countervailing Measures  ("SCM 
Agreement"). 
4. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 1.1 of the SCM Agreement as it relat es to Commerce's determinations in all four WT/DS379/AB/R 
Page 230  
 
  countervailing duty investigations that certain stat e-owned enterprises and/or state-owned commercial 
banks are "public bodies" within the meaning of that  provision.  The Panel's errors of law and legal 
interpretation include: 
(a) The Panel erred in its interpretation and a pplication of the term "public body" in 
Article 1.1(a)(1) of the SCM Agreement.
1 
(b) The Panel acted inconsistently with Articles 3.2 and 11 of the DSU by relying on 
municipal law usages of certain terms to  interpret the term "public body" in 
Article 1.1(a)(1) of the SCM Agreement.2 
5. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 2.1(a) of the SCM Agreement as it rela tes to the finding by the USDOC in the OTR 
investigation that certain alleged loan subsidies were de jure specific.  The Panel's errors of law and 
legal interpretation include: 
(a) The Panel erred in interpreting the term "subsidy" in Article 2.1(a) of the SCM 
Agreement to refer to either a financial c ontribution or a benefit, and by failing to 
give effect to the requirement of an explicit limitation of access to a subsidy.3 
(b) The Panel erred in its interpretation of the term "certain enterprises" in Article 2 of 
the SCM Agreement and in its application of  that term to the measures that formed 
the basis for the USDOC's specificity determination.4  To the extent that the Panel's 
findings in respect of "certain enterprises" were based on its assessment of the facts, 
that assessment was not objective as required by Article 11 of the DSU.5 
(c) Conditionally, in the event that the Appellate  Body sustains the Panel's interpretation 
of Article 2.1(a), China appeals the Panel's finding that the USDOC's specificity 
determination was not inconsis tent with that interpretation of Article 2.1(a).  The 
Panel's findings were legally insufficient to sustain Commerce's determination of 
de jure specificity, even under the Panel's interpretation of Article 2.1(a).6 
6. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 2.2 of the SCM Agreement as it relates to the finding by the USDOC in the LWS investigation 
that the provision of allegedly subsidized land-use rights was "limited to certain enterprises located 
within a designated geographical region within the ju risdiction of the granting authority".  The Panel's 
errors of law and lega l interpretation include: 
(a) The Panel erred in interpreting the term  "subsidy" in Article 2.2 of the SCM 
Agreement to refer to either a financial cont ribution or a benefit, and in finding that 
Article 2.2 permits an investigating authorit y to make a finding of regional specificity 
based solely "on the element of  the financial contribution".7 
                                                      
1Panel Report, paras. 8.55-8.94, 8.127-8.143.  The referenced paragraph numbers indicate the primary 
instances of the identified errors.  Ch ina appeals all findings and conclusions  of the Panel that are derived from 
or related to the identified errors, as well as the relevant findings and conclusions of the Panel set forth in 
Section XVII of the Panel Report. 
2Panel Report, paras. 8.60-8.63, para. 8.69. 
3Panel Report, paras. 9.25-9.32, para. 9.95, paras. 9.106-9.107. 
4Panel Report, paras. 9.66-9.72, para. 9.95, paras. 9.106-9.107. 
5Panel Report, paras. 9.66-9.72, para. 9.95, paras. 9.106-9.107. 
6Panel Report, paras. 9.66-9.72, para. 9.95, paras. 9.106-9.107. 
7Panel Report, para. 9.155.  WT/DS379/AB/R 
 Page 231 
 
 
  (b) The Panel erred in its interpretation of Ar ticle 2.2 of the SCM Agreement in finding 
that the existence of a "distinct" or "unique"  "regime" for the provision of a subsidy is 
legally relevant to a determination of specificity under this provision.8 
7. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 14(d) of the SCM Agreement as it relates to the USDOC's rejection of in-country private 
prices for hot-rolled steel as a benchmark in the CWP and LWR investigations.  The Panel's errors of 
law and legal interpretation include: 
(a) The Panel erred in interpreting Article 14(d)  to permit the rejection of in-country 
private prices as a benchmark where th e only evidence relied upon by the 
investigating authority is that the government  is a predominant supplier of the good in 
question.9 
(b) The Panel erred in interpreting Article 14( d) to permit investigating authorities to 
reject private prices as a benchmark based  exclusively on evidence relating to 
government market share, so long as the investigating authority "consider[s] … arguments and evidence" relating to fact ors other than government market share.
10 
(c) The Panel acted inconsistently with Article 11 of the DSU by appearing to attribute to 
the USDOC a rationale for its rejection of pr ivate prices that differs from the rationale 
that appears in the USDOC's published determinations.11 
8. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 14(b) of the SCM Agreement as it relates to  the USDOC's selection of loan benchmarks in the 
OTR, LWS, and CWP investigations.  The Panel's errors of law and legal interpretation include: 
(a) The Panel erred in finding that the be nchmark used by the USDOC was "a 
comparable commercial loan which the firm could actually obtain on the market" within the meaning of Article 14(b).
12 
(b) The Panel acted inconsistently with Article 11 of the DSU by failing to assess the 
conformity of the benchmark used by th e USDOC with the legal requirements of 
Article 14(b).13  To the extent that the Panel's fi ndings and conclusions in respect of 
the USDOC loan benchmark were based on its assessment of the facts, that assessment was not objective as required by Article 11 of the DSU.
14 
(c) The Panel erred in its interpretation and a pplication of Article 14(b) in finding that 
observed interest rates for loans denominated in a particular currency can be rejected 
as a "distorted" benchmark, and in finding th at the USDOC had a legal basis to reject 
observed RMB interest rates as a loan benchmark.15 
9. China seeks review by the Appellate Body of th e Panel's conclusion that, in respect of the 
imposition of countervailing duties, th e covered agreements do not requi re the United States to take 
into account the extent to which it simultaneously offsets the same subsidies through the manner in 
                                                      
8Panel Report, paras. 9.159-9.164. 
9Panel Report, paras. 10.38-10.47, para. 10.61. 
10Panel Report, paras. 10.55-10.56. 
11Panel Report, paras. 10.55-10.56. 
12Panel Report, paras. 10.203-10.209. 
13Panel Report, paras. 10.203-10.209. 
14Panel Report, paras. 10.203-10.209. 
15Panel Report, paras. 10.108-10.130; paras. 10.144-10.148. WT/DS379/AB/R 
Page 232  
 
  which it calculates anti-dumping duties under its non-market economy (NME) methodology.  The 
Panel's errors of law and legal interpretation include: 
(a) The Panel erred in finding that Article VI :3 of the GATT 1994 and Article 19.4 of the 
SCM Agreement do not require the United States to take into account the extent to which the use of its NME methodology in a parallel anti-dumping investigation 
affects the existence and amount of the s ubsidy that remains attributable to the 
imported product under investigation.
16 
(b) The Panel erred in finding that Article 19.3 of the SCM Agreement does not require 
the United States to take into account th e extent to which the use of its NME 
methodology in a parallel anti-dumping inves tigation affects the appropriate amount 
of the countervailing duty to be levied.17 
(c) The Panel erred in finding that Article 10  of the SCM Agreement does not require the 
United States to take all necessary steps to ensure that it does no t offset the same 
subsidies twice through the imposition of two different duties, and in finding that the 
United States did not act inconsistently w ith Article 10 in imposing the challenged 
countervailing duty measures.18 
(d) The Panel erred in finding that the United States did not act inconsistently with 
Article 32.1 of the SCM Agreement in imposing the challenge d countervailing duty 
measures.19 
(e) The Panel erred in finding that it was China' s obligation to "conclusively establish[]" 
that the USDOC offset the same subsidi es twice in the investigations at issue.20 
10. China respectfully requests that the Appellate Body reverse the findings  and conclusions of 
the Panel that are based on the errors of law and le gal interpretation identified above.  With respect to 
the claims of error iden tified in paragraphs 5 and 9 above, China respectfully requests that the 
Appellate Body complete the analysis to conclude  that the challenged measures were inconsistent 
with the obligations of the United States under the covered agreements.  China further requests that 
the Appellate Body complete the an alysis with respect to China's claims of consequential violations 
under Articles 10 and 32.1 of the SCM Agreement as th ey pertain to all of the foregoing claims of 
error, in respect of which the Panel exercised judicial economy.21 
__________ 
 
 
                                                      
16Panel Report, paras. 14.112-14.123, para. 14.136. 
17Panel Report, paras. 14.128-14.130. 
18Panel Report, paras. 14.137-14.138. 
19Panel Report, para. 14.139. 
20Panel Report, para. 14.76. 
21Panel Report, para. 13.1.