. /.  WORLD TRADE  
ORGANIZATION  TN/RL/GEN/34 
23 March 2005 
 (05-1222) 
Negotiating Group on Rules Original:   English 
  
 
PROHIBITED EXPORT SUBSIDIES 
 
Communication from Australia
 
  
 The following communication, dated 22 March 2005, is being circulated at the request of the 
Delegation of Australia.   The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiating Group as an informal document (JOB(05)/40), also be circulated as a formal document. 
 
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 Australia welcomes the broad discussion at the Negotiating Group on Rules meeting in 
November 2004 on the Australian proposal to clarify th e standard of "in fact" export contingency, as 
contained in Article 3.1(a) of the WTO Ag reement on Subsidies a nd Countervailing Measures 
(SCM).
1   
 We recall that Australia’s proposal of 19 Oc tober 2004 sought to clarify the following: 
 
• what facts or factors must be considered in determining “in fact” export contingency;  
• the fact of export propensity should not be ta ken in isolation and this fact should not 
necessarily have greater weight in any case-specific examination;  and  
• the need for parallel consideration of the appli cation of the subsidy analysis in countervailing 
duty investigations.   
 Australia’s concerns relate to not only whether or not any particular fact is in itself relevant, but also 
whether in considering several facts, no one fact on its own is sufficient a basis to determine "in fact" 
export contingency.  Australia cons iders that export orientation is a relevant fact which may be taken 
into account but it is one of several facts which are considered.
2  Under the existing textual 
formulation of SCM Article 3.1(a), it remains open for undue and unfair emphasis to be placed on the 
issue of export propensity or export orientation.  Australia considers that SCM Article 3.1(a) can, and should, be clarified without disturbing the 
important presumption that prohibited subs idies cause serious trade effects.   
 
PROPOSED TEXTUAL AMENDMENTS 
 
The following is intended to outline broadly ho w Australia sees SCM Article 3.1(a) as being 
meaningfully clarified.  The proposed preliminary text focuses on that aspect of Australia’s proposal 
                                                     
 
1 Document JOB(04)/151; TN/RL/GEN/22 
2 Canada – Measures Affecting the Export of Civilian Aircraft , (hereafter Canada – Aircraft ), 
Appellate Body Report, WT/DS70/AB/R, adopted 8 August 1999, para 173. TN/RL/GEN/34 
Page 2  
 
relating to ensuring that the fact of export orie ntation is not given undue emphasis.  It also 
conceptually outlines how an illustrative, non-exha ustive range of factors could be listed.   
 Australia proposes the following amendment to SCM Ar ticle 3.1(a) so that the relevant part of 
footnote 4 reads: 
 
3.1 Except as provided in the Agre ement on Agriculture, the following 
subsidies, within the meaning of Article 1, shall be prohibited:  
(a) subsidies contingent, in law or in fact
4, whether solely or as one 
of several other conditions, upo n export performance, including 
those illustrated in Annex I … 
______________________________________________________ 
4 This standard is met when the facts de monstrate that the gr anting of a subsidy, 
without having been made legally contingent upon export performance, is in fact tied 
to actual or anticipated exportation or export  earnings. The mere fact that a subsidy is 
granted to enterprises which export , or which have a high degree of export 
orientation,  shall not for th ose reason s alone be considered to be an export subsidy 
within the meaning of this provision. 
 
Alternatively, the footnote could read as follows: 
 
Factors that should be considered in determini ng ‘in fact’ contingency include the size of 
the domestic market, … 
Australia reserves the right to submit further proposals on this issue. 
 
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