RESTRICTED  WORLD TRADE  
ORGANIZATION  G/SCM/M/73 
20 September 2010 
 (10-4745) 
Committee on Subsidies  
and Countervailing Measures  
 
 
 
MINUTES OF THE REGULAR MEETING  
HELD ON 27 APRIL 2010 
 
Chairman:  Mr. Raimondas Alisauskas (Lithuania ) 
 
 
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a regular 
meeting on 27 April 2010.   
2. The proposed agenda for this meeting was circulated to Members in document 
WTO/AIR/3540, dated 16 April 2010.  The Chairman  noted that the delegation of Japan had indicated 
its intention to raise the issue contained in  document G/SCM/136 dated 22 April 2010 for discussion 
under "other business".  In addition, the delegation of the United States indicated that it intended to 
raise, under the same agenda item, its request to the Secretariat to perform an export competitiveness 
calculation with respect to textile  and apparel exports from India. 
3. The Committee adopted  the agenda, as amended:  
A. NATIONAL LEGISLATION – REVIEW OF NOTIFICATIO NS OF NEW OR AMENDED 
LEGISLATION OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE COMMITTEE ..................2  
1. Brazil......................................................................................................................... .................2  
2. Cambodia....................................................................................................................... ............3  
3. Costa Rica..................................................................................................................... .............3  
4. Japan.......................................................................................................................... ................3  
5. Norway......................................................................................................................... ..............4  
B. SEMI -ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS ...................................................4  
1. Review of semi-annual reports ................................................................................................4  
(a) Australia...................................................................................................................... ................4  
(b) Canada ......................................................................................................................... ...............5  
(c) China.......................................................................................................................... .................5  
(d) European Union ................................................................................................................. .........8  
(e) New Zealand .................................................................................................................... ...........8  
(f) Peru ........................................................................................................................... ..................8  
(g) South Africa................................................................................................................... .............8  
(h) United States .................................................................................................................. .............8  
2. Communication from Japan ....................................................................................................9  G/SCM/M/73 
Page 2  
 
  C.
 NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS .....................10  
D. CONTINUATION OF DISCUSSIONS "ON WAYS TO IMPROVE THE TIMELINESS AND 
COMPLETENESS OF NOTIFICATIONS AND OTHER INFORMATION FLOWS ON TRADE 
MEASURES " UNDER THE SCM  AGREEMENT .............................................................................10  
E. CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM ANNEX VII(B) .................14  
F. PERMANENT GROUP OF EXPERTS ...............................................................................................15  
G. ANNUAL UPDATING NOTIFICATIONS IN THE CONTEXT OF THE PROCEDURES FOR THE 
CONTINUATION OF EXTENSIONS OF THE TRANSITION PERIOD FOR THE ELIMINATION 
OF EXPORT SUBSIDIES SET OUT UNDER ARTICLE 27.4  OF THE SCM AGREEMENT ......................16  
H. REQUEST BY INDIA FOR CLARIFICATION FROM THE UNITED STATES ON 
DETERMINATIONS MADE IN THE ADMINISTRATIVE REVIEW OF COUNTERVAILING 
DUTY ON IMPORTS OF CERTAIN HOT -ROLLED CARBON STEEL FL AT PRODUCTS FROM 
INDIA – G/SCM/134..................................................................................................................18  
I. OTHER BUSINESS .......................................................................................................................19  
1. Issue raised by Japan, as circulated in document G/SCM/136...........................................19  
2. Intervention by the United States regarding India's export competitiveness....................21  
J. DATE OF NEXT REGULAR MEETING ............................................................................................22  
K. ELECTION OF OFFICERS .............................................................................................................22  
 
A. NATIONAL LEGISLATION – REVIEW OF NOTIFICATIONS OF NEW OR AMENDED LEGISLATION OR 
REGULATIONS NOT PREVIOUS LY REVIEWED BY THE COMMITTEE  
4. The Chairman  noted that Item A of the agenda dealt with the review of notifications of 
countervailing duty legislation and/or  regulations, in accordance with  the procedures adopted by the 
Committee at its special meeting in April 1996 ( document G/SCM/W/293).  The Chairman explained 
that these procedures provided inter alia  that at each regular meeting the Committee would consider 
notifications of new or amended legislations not previously reviewed by the Committee if such 
notifications had been circulated to Members in a ll three working languages at least six weeks prior to 
the scheduled date of the meeting.  The Chair no ted that in accordance with this provision, the 
Committee had before it at this meeting new notif ications of countervailing duty legislation from 
Brazil, Cambodia, Costa Rica, Japan and Norway.  Pa rts of these notifications that related to anti-
dumping investigations would be reviewed at the meeting of the Committee on Anti-Dumping 
Practices to be held the following day; the Chair also reminded delegations that, as indicated in the 
draft annotated agenda for the meeting, the primary re view of these notifications  would be held in the 
Committee on Anti-Dumping Practices and the SCM Committee would only discuss issues that 
related specifically to countervailing measures. 
1. Brazil  
5. The Chairman noted that the notification of  Brazil had been circulated in document 
G/SCM/N/1/BRA/2/Suppl.3 of 10 November 2009.  This supplemental notification contained an 
amendment to Brazil's legislation which extended ma rket economy status to certain countries in the 
context of countervailing duty investigations.  
6. The delegate of Brazil  stated that for the purposes of inv estigations and the imposition of anti-
dumping and countervailing measures, Bulgaria a nd Romania would be considered as market 
economies.  G/SCM/M/73 
 Page 3 
 
 
  7. The Committee took note  of the statements made.  
2. Cambodia 
8. The Chairman  noted that the Committee had befo re it a notification from Cambodia, 
circulated in document G/SCM/N/1/KHM/1 dated 10 March 2010, indicating that Cambodia had no 
laws or regulations on counte rvailing duty investigations.  
9. The delegate of Cambodia  confirmed that, as noted in document G/SCM/N/1/KHM/1, 
Cambodia had no legislation for anti-dumping and countervailing duty investigations and that 
Cambodia adhered to its commitments as stipulated in paragraphs 106, 107 and 108 of the Working 
Party for its accession concerning anti-dumping, countervailing duty and safeguard measures.  
Cambodia had not applied and would continue not to apply countervailing measures until it had 
appropriate legislation and procedures in place wh ich were consistent with the WTO Agreement. 
10. The Committee took note  of the statements made.  
3. Costa Rica 
11. The Chairman  noted that the Committee had rece ived a notification from Costa Rica, 
circulated in document G/SCM/N/1/CRI/4 dated 5 Febr uary 2010.  This piece of legislation contained 
detailed rules regarding subsidy calculations in countervailing duty investigations.  No delegation 
took the floor to comment or ask questions on this notification. 
4. Japan 
12. The Chairman noted that, through document G/SCM/N/1/JPN/2/Suppl.6, dated 
17 August 2009, Japan had notified the amendments made to the guidelines related to countervailing 
duty investigations.  Through document G/SCM/Q1/J PN/14, the United States submitted questions.  
Japan's replies to these questions were ci rculated in document G/SCM/Q1/JPN/15 dated 
22 April 2010. 
13. As a general introduction of its no tification, the delegate of Japan  stated that the Japanese 
government undertook, in 2008, a review of the system of trade remedies in light of recent experiences of its investigating authorities. As  a result, the Japanese government had published 
amendments to relevant articles in the related laws and system of trade remedies which were in effect 
as of 1 April 2009.  Japan had subsequently notif ied the amendments in accordance with the Anti-
Dumping, SCM and Safeguards Agreements.  Th e purpose of the amendments was to achieve, inter 
alia, enhanced efficiency and transparency, within the framework of, and fully consistent with, the 
WTO Agreements.  The delegate noted that this included, among other things, the following points:  
1. clarification of "sufficient evidence" to initia te an investigation where information reasonably 
available would be sufficient to satisfy the require ment;  2. the timeframe for the determination to 
initiate an investigation in response to an app lication (normally two months);  3. enhanced 
participation of consumer groups and industrial users in the procedure;  4. provision of standard 
timeframes for the overall inves tigative process; 5. establishment of procedures for preliminary 
determinations;  and 6. introducti on of standardized questionnaires.  The delegate noted that there 
were a number of overlaps between the amendmen ts made to the anti-dumping and countervailing 
duty regimes.  Thus the delegate suggested that, if the delegation of the United States agreed, he 
would discuss the responses provided by his delegati on to the questions posed by the United States in 
the context of the meeting of the Anti-Dumping Co mmittee that was to be held the following day.  
14. The delegate of the United States
 agreed with the delegate of Japan's proposal to discuss the 
responses provided to the US questions at the meeting of the Anti-Dumping Committee. G/SCM/M/73 
Page 4  
 
  15. The Committee took note
 of the statements made. 
5. Norway 
16. Document G/SCM/N/1/NOR/4/Corr.1 dated 1 D ecember 2009 contained a textual correction 
to Norway's legislative notification made earlie r and discussed at the Committee's last regular 
meeting.  No delegation took the floor to co mment or ask questions on this notification. 
B. SEMI -ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS  
1. Review of semi-annual reports 
17. The Chairman  noted that a request to submit semi-annual reports for the period 1 July – 
31 December 2009, to be submitted not later than 12 March 2010, had been circulated in document 
G/SCM/N/203, dated 15 January 2010.  Australia, Cana da, China, the European Union, New Zealand, 
Peru, South Africa, and the United States had subm itted semi-annual reports on countervailing duty 
actions taken during this period.  These semi-annual reports had been circulated in document series 
G/SCM/N/203/....  The Chairman recalled that the Committee, at its regular meeting of 20 October 2009, had adopted a new notification fo rmat for semi-annual reports which Members were 
required to follow in their semi-annual reports for actions taken in the second half of 2009.  The 
Chairman stated that his impression was that the sh ift from the old to the new notification format had 
been smooth and that Members had not experien ced significant problems.  Members which had 
notified that they had not taken any countervaili ng duty action during the period July-December 2009 
were listed in paragraph 2 of document G/SCM/N/203/Add.1, which had been  circulated on 
22 April 2010.  The Chairman noted that as reflecte d in paragraphs 3 and 4 of the same document, 
there remained a large number of Members that had not submitted a semi-annual report and that thus 
failed to comply with this important notification re quirement.  The Chairman further recalled that the 
Committee, at its regular meeting of 20 October 2009, adopted a one-time notification format for 
Members that did not have countervailing duty legi slation, which therefore had not conducted an 
investigation so far and which were unlikely to do so in the foreseeable future.  So far, 13 Members 
had submitted one-time notifications.  The list of such Members was contained in paragraph 5 of 
document G/SCM/N/203/Add.1 as well as in Annex F of the revised compendium 
(G/SCM/W/546/Rev.1).  The Chair also noted that Mozambique also had made a one-time notification recently. 
18. The Chairman indicated that in his view, one-time notifications served an important 
transparency purpose in the sense that they allowe d Members to see a clearer picture of the level of 
compliance with the notification obligation pertai ning to semi-annual repo rts of countervailing 
actions.  Further, they facilitated the bureaucratic  aspect of notifications because once a one-time 
notification was made, the Member making that no tification was no longer expected to submit semi-
annual reports of countervailing acti ons until such time as circumstances changed.  He therefore urged 
Members that qualified for one-time notifications to submit such a notification in due course.  
19. The Chairman then opened the floor for comments on the semi-annual reports submitted by 
those Members that had taken countervailing dut y actions in the period July-December 2009: 
(a) Australia 
20. The semi-annual report of Australia on counterva iling duty actions taken in the second half of 
2009 had been circulated in document G/SCM/N/ 203/AUS, dated 24 March 2010.  No delegation 
took the floor to comment or ask questions on this notification.   G/SCM/M/73 
 Page 5 
 
 
  (b) Canada 
21. The semi-annual report of Canada on countervaili ng duty actions taken in the second half of 
2009 had been circulated in documents G/SC M/N/203/CAN dated 17 March 2010. No delegation 
took the floor to comment or ask questions on this notification. 
(c) China 
22. The semi-annual report of China on countervailing duty actions taken in the second half of 
2009 had been circulated in document G/SCM/N/203/CHN dated 29 March 2010.  
23. The delegate of the United States  indicated that his delegation had a number of ongoing 
concerns with respect to China's conduct in its c ountervailing duty investiga tions against US products. 
The delegate noted that his dele gation had raised these concerns on previous occasions, in bilateral 
and multilateral fora, including in  the Committee, but that China' s recent actions in these cases 
indicated that the United States' concerns had not been addressed. China's three countervailing duty 
investigations affected US exports of electrical st eel, chicken products and autos.  In each of these 
proceedings, it appeared that some of China's actions  might be inconsistent with its obligations under 
the SCM Agreement. 
24.  The first point the delegate of the United Stat es wished to raise pertained to the evidentiary 
standard China had applied when initiating invest igations. In particular, the United States was 
troubled that China had initiated an investigation of subsidy in all three of its countervailing duty 
investigations despite a lack of sufficient eviden ce as required by Article 11.2 of the SCM Agreement. 
China had, for example, initiated an investigation of a programme that had been terminated 18 years 
ago, despite the United States having informed China of this fact during the pre-initiation 
consultations.  But the most problematic exampl e involved alleged subsidies provided not to the 
producer of the product under investigation, but to  upstream input suppliers , downstream consuming 
industries, or even to the final consumer of the product under investigation.  As the United States had 
noted in its consultations with China, the Appe llate Body had made it clear that investigating 
authorities were not allowed to presume that a subsid y to the producer of an input product conferred a 
benefit upon an unrelated producer who purchased the input in an arms' length transaction.  Likewise, 
a subsidy to a downstream consuming industry or fi nal consumer could not be presumed to confer a 
benefit on unrelated producers of th e product under investigation.  Ch ina had initiated investigations 
of these allegations despite the absence of any ev idence as to how subsidy benefits to upstream 
suppliers, downstream consuming industries, or fina l consumers might have benefited the producer of 
the product under investigation.  The delegate theref ore asked China to explain what type of evidence 
China considered sufficient to initiate an inves tigation of alleged subsidies provided to upstream 
suppliers or to downstream consum ing industries or final consumers as opposed to the producer of the 
product under investigation. 
25. The second element the delegation of the Unite d States wished to address involved China's 
recently-completed final determination in the electrical  steel investigation.  In that investigation, 
China had found, on the basis of adverse facts available, that certain government procurement 
practices constituted countervailabl e subsidies.  China had done so, however, even though it had 
conceded that government purchases had been made  under competitive bidding procedures, often with 
substantial participation from comp anies outside the United States.  Despite the competitive nature of 
the market, China had determined that US domestic pr ices were so distorted that they were not usable 
as benchmarks.  Next, China had rejected and refused  to consider customer lists of the US steel 
companies under investigation and instead had assum ed that all the domestic sales of the US steel 
companies were sales to the government and that a 25 per cent premium had been paid on each and every sale.  Even if China had been justified to resort to facts available, the assumptions made under 
the circumstances were excessive and punitive in nature.  China could have made any number of more G/SCM/M/73 
Page 6  
 
  reasonable assumptions that had some basis in fact . The delegate of the United States asked China 
how it justified assuming that all domestic sales of the companies under investigation had been sales 
to the government. 
26.  The delegate of the United States then turn ed to injury determinations of the Chinese 
investigating authorities.  In sev eral instances, the Chinese investigating authorities had reached 
conclusions that were inconsistent with, or not suppo rted by, the facts on the record.  For example, in 
the electrical steel investigation, the data on the record did not support a conclusion that there could 
have been pervasive underselling by the imports under consideration.  In fact, no such price 
comparison had appeared to have been made . Further, while the volume of imports under 
investigation went up, production, sales, revenues,  prices and pre-tax profits of China's domestic 
industry had also gone up during the same time period.  In the chickens case, the Chinese 
investigating authority had failed to  take into account the fact that the price per tonne of the imports 
being investigated would reflect the fact that US  chicken exports to China consisted primarily of 
lower value chicken parts such as chicken feet.  Finall y, in the autos case, the share of US imports had 
been extremely low, approximately 2 per cent, an d had remained stable throughout the relevant 
period.  Therefore, in each of these investigations, it appeared to the delegation of the United States 
that China lacked the evidence to justify an investigation, and, a fortiori , affirmative preliminary or 
final determinations. 
27. Finally, the delegate of the United States wished to raise the issue of the lack of transparency 
with respect to the findings contained in China' s countervailing duty determinations.  To a large 
extent, it was not possible to follow the legal rati onale behind the stated conclusions, nor was it 
possible to infer from the information provided the full nature of the methodology followed in 
calculating the countervailing duty rate.  The delegate c ited as example of this lack of transparency  
the calculation of the "all others" rate in the fi nal electrical steel determination.  There was no 
explanation whatsoever in the final disclosure or  final determination for how China calculated the 
countervailing duty rate applied to the companies not individually investigated.  Even more troubling 
was the fact that there was no explanation why this rate increased from the 12 per cent rate 
determined in the preliminary decision to the 44.6 per cent rate in the final determination.  The 
delegate therefore asked China for an explanation of  its calculation of the "all others" rate and asked 
that, in the future, the Chinese investigating aut horities provide further detail and clear rationales 
regarding their findings.  
28. The delegate of China
 noted that China and the United States had exchanged views on the 
points raised by the United States in several fora.  China had conducted the countervailing duty 
investigations at issue strictly consistently with  the disciplines of the SCM Agreement and was still 
open to comments from the United States.  In respon se to the United States' comment with respect to 
an alleged lack of sufficient evidence in the petition,  the delegate of China noted that under Article 11 
of the SCM Agreement, the degree of evidence that the applicant had to provide was limited to the 
evidence which was reasonably available to the app licant and that the investigating authority would 
examine the prima facie evidence provided by the applicant but would not make a substantive 
examination of the evidence.  After revi ewing the adequacy and accuracy of the prima facie evidence 
submitted in the three applications at issue, the Ch inese investigating authority determined that this 
prima facie evidence was in all three instances sufficient to  justify the initiation of an investigation. 
Before initiation, the Chinese investigating aut hority invited the United States government for 
consultations. 
29. With respect to the second issue ra ised by the US delegate, the de legate of China stated that 
the use of facts available for the Buy America programme, the Chinese investigating authority had 
conducted the investigation at issue very carefu lly and given numerous opportunities to the US 
government and to US respondents to provide info rmation.  The Chinese authority had requested 
information on domestic sales regarding all product s both in the original questionnaires and in  G/SCM/M/73 
 Page 7 
 
 
  supplemental questionnaires, yet res pondents had not provided this very important information.  In 
these circumstances, the investigating authority made  its determination based on facts available, in 
accordance with Article 21 of Chin a's countervailing duty regulations.  The delegate also noted that 
the US Department of Commerce had frequently used facts available or adverse facts available in countervailing duty investigations against China when  not satisfied with the information submitted by 
Chinese parties, irrespective of the importance of the information to the USDOC's determination.  
China would like to discuss the use of facts available in the future  Rules negotiations in order to 
enhance the fair and open process of countervailing duty investigations.  
30. With respect to the injury determinations, the de legate of China stated that in examining the 
impact of the US subsidized imports on the domestic  industry, the Chinese investigating authority had 
examined all relevant facts in accordance w ith Chinese law and WTO rules.  The Chinese 
investigating authority's determination on the existe nce of injury to the Chinese domestic industry was 
based on positive evidence.  
31. With respect to the last issue, the alleged lack  of transparency in calculating the "all others" 
rate in the GOES investigation, the delegate of China noted that according to Article 21 of China's 
CVD Regulation, in a case in which interested par ties did not provide inform ation or did not provide 
necessary information within reasonable time limits , the authority could make a determination on the 
basis of facts available. The Chinese investigating au thority had determined th e "all others" rate on the 
basis of facts available, in accord ance with applicable WTO rules.  Th e delegate stated that this was 
not different from the practice of the USDOC. 
32. The delegate of the United States
 noted, with respect to the l ack of evidence in the petition 
and what the initiation threshold was, that Ch ina had indeed invited the United States for 
consultations with respect to all three cases.  As  he had noted earlier, with respect to the one 
programme, during consultations, the United States had informed China that that programme had been 
terminated 18 years ago.  Therefore, his delegati on felt that the inclusion of that programme was not 
justified under the Subsidies Agreement.  Secondly, his delegation's particular question with respect 
to the initiation threshold had to do with the ge neral issue of what evid ence was needed at the 
initiation stage when the allegation w as with respect to subsidies provided to upstream input suppliers 
or downstream consuming industries.  His delegation w as of the view that - and this was pretty clear 
from past Appellate Body reports - when a subsid y was not provided directly to the producer under 
investigation, there were additional evidentiary thresholds that had to be crossed before an 
investigation could be initiated and before the subsidy programme could be found to benefit the 
producer under investigation.  As a specific exampl e, in the chickens case, many of the allegations 
were with respect to alleged subsidy programmes provided to US farmers growing corn, and it was 
alleged that the subsidy to the corn farmer so mehow benefited the chicken producer.  In his 
delegation's view, China had accepted that allega tion without sufficient evidence as to how the 
subsidy to the farmer could have passed throug h to the chicken producer. And there were similar 
allegations in the other cases where the subsidy al legation was with respect to the upstream input 
supplier or even to the downstream producer.  It was the view of the United States that in those cases, 
there had to be some explanation and some ev idence provided as to how the subsidy passed through 
or passed back to the producer under investigation. 
33. Secondly, with respect to the decision of the Ch inese authority on facts available with respect 
to the US procurement programmes, the delegate of  the United States noted that the United States had 
provided evidence that the product under investiga tion, electrical steel, was not sold to the US 
government or any other governmental body.  Evidentl y, this had not been sufficient for China and as 
a result, China had asked for all sales of all products .  In his delegation's view, this was an excessive 
request for information that was unr elated to the product under inves tigation (electrical steel), which 
the United States had demonstrated was not sold to  the government, and therefore the subsidy alleged 
could not have benefited the producers under investigation. G/SCM/M/73 
Page 8  
 
  34. Finally, he noted that his delegation had rai sed very specific issues with respect to the 
Chinese authority's determination of injury, and th at those specific issues had not been addressed by 
the delegate from China.  The delegate of the United States noted however that these were very 
technical and intricate issues and that the people that  could answer them might not be in attendance at 
the meeting.  Finally, with respect to the transp arency issue, if he had understood China's answer 
correctly, the reason why the "all others" rate had been raised between the preliminary and final 
determinations was that the othe r producers had not responded to Chin a's questionnaires. Yet he noted 
that for this particular product, there were only two producers in the United States, so there were no 
other producers that could have provided the information requested. 
35. The delegate of China
 noted the concerns and comments of the delegation of the 
United States.  She reiterated that that these issues were quite detailed and t echnical;  in order to 
ensure a full exchange of views, her delegation l ooked forward to receiving written questions from the 
United States and would then provi de a written reply in due course. 
36. The Committee took note  of the statements made. 
(d) European Union 
37. The semi-annual report of  the European Uni on on countervailing duty actions taken in the 
second half of 2009 had been circulated in document G/SCM/N/203/EEC dated 26 April 2010. 
38. No delegation took the floor to comment or ask questions on this notification.  
(e) New Zealand 
39. The semi-annual report of New Zealand on co untervailing duty actions taken in the second 
half of 2009 had been circulated in doc ument G/SCM/N/203/NZL dated 17 March 2010.  
40. No delegation took the floor to comment or ask questions on this notification.  
(f) Peru 
41. Peru's semi-annual report on countervailing duty actions taken in the second half of 2009 had 
been circulated in document G/SCM/N/203/PER dated 7 April 2010.  
42. No delegation took the floor to comment or ask questions on this notification.  
(g) South Africa 
43. South Africa's semi-annual report on countervailin g duty actions taken in the second half of 
2009 had been circulated in document G/ SCM/N/203/ZAF dated 9 February 2010.  
44. No delegation took the floor to comment or ask questions on this notification.  
(h) United States  
45. The semi-annual report of the United States on countervailing duty actions taken in the 
second half of 2009 had been circulated in  document G/SCM/N/203/United States, dated 
18 March 2010.  
46. The delegate of China  wished to briefly comment on the semi-annual report of the 
United States.  China had found a number of common problems with respect to twelve preliminary or  G/SCM/M/73 
 Page 9 
 
 
  final countervailing duty actions taken by the US  Department of Commerce.  Among these problems 
were the failure to demonstrate the specificity of certain programs, mistakes in calculating the amount 
of subsidies by using a benchmark out of China, and the failure to make adjustments to avoid the 
double counting of the countervailing duty.  Since th ese issues were currently under consideration by 
the DS379 panel, the delegate indicated that she w ould not discuss these points further at the meeting. 
47. Instead, the delegate of China expressed the con cerns of her delegation with respect to the US 
International Trade Commission's improper findings of  threat of injury and causation in the final 
determination in the investigation on oil count ry tubular goods from China.  Her delegation 
considered that the USITC's treatment of capacity in  China and of the extent to which this capacity 
would come to the United States was rather speculativ e and did not meet the strict standards set out 
under the SCM Agreement. In particular, even after finding no current adverse price effects and no 
current adverse impact, the USITC nevertheless had found that circumstances would change without really explaining why.  These findings were not c onsistent with the high standard under Article 15.7 
of the SCM Agreement and also failed to rest on positive evidence and objective examination as 
required by Article 15.1 of the Agreement.  In a ddition, the USITC had also failed to establish a 
causal link and failed not to attribute other factors, particularly declining demand, to subject imports. 
The delegate stated that the causation requirements of Article 15.5 of the Agreement also applied to 
"threat" determinations.  Several WTO panels had found authorities to have acted inconsistently with 
these requirements of causal link and non-attribution.   The USITC never convincingly explained why, 
if imports from China did not cause current injury , these same imports would cause injury in the 
future.  Instead, the USITC speculated that im ports from China would increase even though the 
evidence showed that imports only increased when  US demand pulled them into the market.  
48. The delegate of the United States
 noted that his delegation and China had had many 
exchanges over the years and that these exchanges were becoming more technical and more productive in nature and he thought that both delegati ons looked forward to their continuation so that 
the two sides could perhaps develop a common understa nding with respect to some of these issues.  
With respect to the threat and causation issues raised  by China, he noted that his ITC colleague was 
not with him to provide specific detailed answer s to China's questions, but if China provided 
questions in writing, his delegation would provide answers in writing. 
49. The delegate of China
 indicated that her delegation woul d provide their questions in writing 
in due course.  Further, her delegation considered that the text of the SCM Agreement required a high 
standard for the authorities to find threat of injury  – the finding had to be based on facts, and not on 
mere conjecture and the change in circumstances mu st be clearly foreseen and imminent and there had 
to be likelihood of substantially increased imports .  Her delegation hoped that the United States, as 
one of the most experienced Members in the conduct of trade remedies investigations, could be more 
prudent and strictly follow these requi rements in future investigations. 
50. The delegate of the United States  indicated that the United States took their WTO obligations, 
and in particular their obligations with respect to trade remedies, very seriously and that it was the 
view of his delegation that all th eir actions were consis tent with the relevant agreements.  The 
delegate also noted that the issue of thr eat was by its very nature a difficult one.  
51. The Committee took note  of the statements made.  
2. Communication from Japan 
52. With regard to semi-annual reports of counter vailing duty actions, the Chair also noted the 
notification made by Japan, circulated in doc ument G/SCM/N/207 dated 17 March 2010.  Japan had 
no countervailing action to report for the period 1 July-31 December 2009 and therefore had not 
submitted a semi-annual report.  On a voluntary basi s and using the new notification format, however, G/SCM/M/73 
Page 10  
 
  Japan had made a submission on the measures imposed by Japan prior to this reporting period.  As 
stated in the cited document, Japan had done this for transparency purposes.   The Chairman expressed 
his appreciation for this initiative of Japan. 
53. The delegate of Japan
 wished to explain the objective of his country's submission.  He noted 
that Japan had no countervailing duty action or exis ting measures in force as of 31 December 2009 to 
include in its semi-annual report for the period of 1 July 2009 to 31 December 2009.  However, Japan 
had voluntarily submitted detailed in formation with respect to defin itive countervailing duties to date 
for the purpose of improving transparency and cont ributing to the collection of necessary data for 
Members and the Secretariat.  Japan took the vi ew that Members were under no obligation to submit 
such information under the new format;  howev er, Japan strongly encouraged the SCM Committee 
and other Members to consider possible inclusion of  this sort of detailed voluntary information under 
the new format for the sake of enhancing transp arency and improving the accessibility of necessary 
data, for Members and the Secretariat.  He further noted that Japan had also submitted voluntary information in the context of anti-dumping, as had been explained at the October 2009 meeting of the 
Anti-Dumping Committee.  On that occasion, hi s delegation had provide d additional voluntary 
information regarding definitive an ti-dumping measures in force as reported in Annex of the new AD 
format.  This time, in the countervailing duty cont ext, Japan had gone even further by providing 
information on measures already terminated.  His delegation believed that the compilation submitted 
would assist the establishment of a proper database by the Secretariat, which would provide a good 
tool for Members in the context of surveillance.  
54. The Committee took note
 of the statement made by the delegate of Japan. 
C. NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS  
55. The Chairman  stated that Article 25.11 of the SCM Agreement required Members to submit 
reports of any preliminary and/or  final countervailing duty actions ta ken.  As with the notification 
format for semi-annual reports, the Committee, at  its regular meeting of 20 October 2009, had 
adopted a new notification format regarding minimu m information to be provided in connection with 
ad hoc notifications of countervailing actions, whic h format had also became applicable as from the 
beginning of 2010.  The Chairman also observed that Members had not experienced significant problems in using the new notification format. 
56. Since the last regular meeting of the Committee, Canada, China, New Zealand, the 
European Union, Peru, South Africa and the Unite d States had submitted notifications of preliminary 
and/or final actions taken under Artic le 25.11 of the SCM Agreement.  Lists of the notifications of 
preliminary and final countervailing duty actions received by the Committee had been circulated in 
documents G/SCM/N/200, 201, 204-206 and 208. 
57. The Chairman then opened the floor for dele gations to make comments on these reports.  No 
delegation commented on the reports. 
D. C
ONTINUATION OF DISCUSSIONS "ON WAYS TO IMPROVE THE TIMELINESS AND 
COMPLETENESS OF NOTIFICATIONS AND OTHE R INFORMATION FLOWS ON TRADE MEASURES " 
UNDER THE SCM  AGREEMENT  
58. The Chairman  recalled that following the request of 23 March 2009 from the Chairman of the 
Trade Policy Review Body to discuss "ways to  improve the timeliness and completeness of 
notifications and other information flows on trade measures" in the context of the SCM Agreement, 
the Committee had discussed this issue in various informal meetings as well as at its two regular 
meetings held in the course of 2009.    G/SCM/M/73 
 Page 11 
 
 
  59. As a result of these discussions, several step s had been taken which contributed to the 
objective identified in the request from the Chairman of the Trade Policy Review Body.  First, the previous Chairman had sent reminder letters to t hose Members that had not made their 2007 new and 
full subsidy notifications as of the end of March 2009.  Second, at the request of Members, the Secretariat had prepared a background note which had been circulated in document G/SCM/W/546 
dated 28 April 2009 and which offered a snapshot of the level of compliance with various notification 
obligations under the SCM Agreement since 1995.  Third, at the October 2009 regular meeting, the 
Committee had adopted new standard formats for th e semi-annual reports of countervailing actions as 
well as the minimum information to be provided in connection with ad hoc notifications of 
countervailing actions.  At the same meeting, the Co mmittee had also decided to add a new table to its 
annual report which showed the time periods covered by the most recent subsidy notification made by 
each Member. 
60. In preparation for this meeting, the Chairman had taken two further steps with regard to the 
improvement of timeliness and completeness of no tification obligations under the SCM Agreement.  
First, on 12 April 2010, the Chairman had sent remind er letters to 89 Members that had not made their 
2009 new and full subsidy notifications by then.  S econd, the Chairman had asked the Secretariat to 
update the compendium of notification obligatio ns, which was then circulated in document 
G/SCM/W/546/Rev.1, dated 16 April 2010. 
61. The Chairman regarded the notification of subs idies as by far the most important notification 
obligation found in the SCM Agreement.  Unfortunately, 89 Members had not yet observed this important obligation by the time he had sent the reminder letters although the deadline had passed by 
almost a year.  Further, he underlined that a good chunk of these Members had not observed their 
previous subsidy notification obligations either.  The Chairman noted that Qatar, the United States 
and Namibia had submitted their 2009 new and full s ubsidy notifications after receiving the reminder 
letters.  These notifications would be re viewed by the Committee in due course. 
62. Before giving the floor to Members wishing to present their views about the further steps that 
the Committee could take to improve timeliness a nd completeness of notif ication obligations under 
the SCM Agreement, as foreshadowed in the reminde r letters he had sent, the Chairman invited the 
Members that had received such letters and whic h still had not submitted their 2009 new and full 
subsidy notifications to take the floor and e xplain to the Committee what precluded them from 
fulfilling this important notification obligation on time.   
63. The delegate of Korea
 informed the Committee that his delegation had made its 2009 
notification in the morning of the day of the Commit tee meeting.  Korea attached a special importance 
to the Committee's work on improving timeliness and completeness of notifications and was pleased 
to be able to submit its 2009 notification on time.  The delegate also thanked the Chairman for taking 
a special interest in this matter and indicated that in Korea's case, the reminder letter sent out by the 
Chairman had been very useful in reminding releva nt ministries of the importance of notifications.  
64. The delegate of Sri Lanka  noted that his delegation had received the Chairman's reminder 
letter and that officials in the capital were in the pr ocess of preparing his country's notification.  He 
further noted that with the settlement of the admini stration after the election which had been held very 
recently, and since they needed the cooperation of a number of organizations that were involved in 
these matters, with the cooperation of these agencies, he expected that the notification could be made 
soon. 
65. The delegate of Brazil  stated that Brazil attributed a great value to the notification exercise 
and regretted that Brazil had been th is late in its notification.  She also indicated that the Chairman's 
letter had been useful in providing her delegation with some power to exercise pressure on capital. 
Officials in capital regretted the delay in submitting Brazil's notification but noted that they had been G/SCM/M/73 
Page 12  
 
  pushing for the 27 states to provide information, wh ich was a difficult process.  These officials were 
working on a draft of the notification, which would be submitted within days.  
66. The delegate of Canada
 clarified that Canada was not one of the 89 countries not having 
completed their 2009 notification.  The delegate wished to commend the concrete steps that the 
Chairman had been taking to impr ove delegations' compliance record with respect to notifications. 
Her delegation considered the objective of impr oving both timeliness and completeness to be 
important. Meeting these goals was not necessarily a simp le feat but that if all delegations tried to 
make a concerted effort towards these objectives, Members could make some progress and see some improvement in the situation. 
67. The Chairman
 then opened the floor to any delegation wishing to offer views on further 
"ways to improve the timeliness and completeness of notifications and other information flows on 
trade measures" in the cont ext of the SCM Agreement. 
68. The delegate of the European Union  stated that while the Eur opean Union appreciated the 
explanations made by some Members, there were a lot of Members that had neither submitted their 
notifications nor provided any explanation in this r espect.  For this reason, he wished to deliver a 
statement on the issue of timeliness and completen ess of notifications.  The delegate recalled that 
Article 25.1 of the SCM Agreement provided that no tifications of subsidies had to be submitted not 
later than 30 June of each year and had to conf orm to the provisions of paragraphs 2 through 6 of 
Article 25 of the SCM Agreement.  This notification requirement applied to any subsidy, as defined in 
Article 1.1 of the SCM Agreement which was specifi c within the meaning of Article 2 of the SCM 
Agreement. Such subsidy notifications had to pr ovide a necessary degree of detailed and specific 
information so as to allow other WTO Members to assess the WTO compatibility of notified measures 
and to consider possible further steps, including quest ions regarding the notification.  In this regard, 
the European Union thanked the WTO Secretar iat for providing Members with the document 
G/SCM/W/546/Rev.1 along with the new Annex B a nd the chart which illustrated the trend of 
notifications submitted between the years 1995-2 009.  A reading of document G/SCM/W/546/Rev.1 
revealed a very poor record of notifications s ubmitted along with a dismal outlook.  Moreover, even 
where Members had submitted their notifications, th ey might have done so long after the deadline. 
This practice did not serve the fundamental WTO prin ciple of transparency and raised the question as 
to what Members could reasonably ask and expect  from their trading partners notwithstanding the 
example Members set for recently-acceded Memb ers and those in the process of accession 
negotiations. 
69. Already on previous occasions the European  Union had expressed its concern over the 
apparent unwillingness of Members to abide by thei r WTO obligation to submit a complete subsidy 
notification on time.  While many of the countries that had not notified were  least-developed countries 
with a relatively small share of world trade, a nu mber of large exporters had not submitted a single 
notification in over a decade, or even longer.  Th is situation had to be improved swiftly;  Members 
could not continue benefiting from the rules-based trading system while on the other hand not 
recognizing their obligations.  Members had to acknow ledge that along with rights came obligations.  
The European Union also appreciated some Me mbers acknowledging their obligation and submitting 
their outstanding subsidy notification for the last peri od that they were required to notify.  However, 
the European Union viewed this as being only the starting point and expected those Members to work 
back from that point and submit the missing subsidy notification for previous periods as soon as 
possible. 
70. The European Union did not believe that the approach of not submitti ng subsidy notification 
and the disregard of WTO obligations that came along with Membership would serve Members in the 
long run and therefore encouraged Members to re-cons ider this approach.  The European Union also 
encouraged Members to seek the assistance of the WT O secretariat for the preparation of their subsidy  G/SCM/M/73 
 Page 13 
 
 
  notification.  Finally, the European Union suggest ed that the Chair hold informal discussions on how 
to improve the record of notifications and see whether WTO Members and/or the WTO secretariat could contribute to that objective.  His delegation also requested to keep this item on the agenda until 
improvement could be seen and a good r ecord of notifications was achieved. 
71. The delegate of Japan
 stated that his delegation had been supportive of the initiative by the 
General Council Chair and the TPRB Chair to improve the timeliness and completeness of 
notifications and other information flows on trad e measures given the surveillance and monitoring 
role played by the WTO during the recent economic crisis.  His delegation therefore appreciated the 
Chair's strong leadership in sending reminder lette rs to the 89 Members that had not yet submitted 
their notifications.  His delegation was encouraged by  the notifications that had been made following 
the Chairman's reminder letters.  His delegation c onsidered the updated document prepared by the 
Secretariat to be an extremely useful tool for Members to see where things stood and he hoped that 
the document would continue to be updated.  Japan was concerned about what it considered to be the 
unfair situation at the special session of the SCM Committee held in the morning.  At the special 
session, only notifying Members had been subject to reviews, whereas non-notifying Members were 
neither subjected to reviews, nor listed on the agenda.  This was a systematic deficiency and his 
delegation hoped for an improvement of this aspect of the Subsidies Co mmittee.  In light of the recent 
economic crisis, the Director-General had provi ded monitoring reports, not only for all WTO 
Members, but also together with UNCTAD and the OECD for so-called G-20 Members.  These G-20 players probably had due responsibility to show leader ship to abide by the notification obligations.  
His delegation hoped that all 89 Members (less thos e that had already submitted notifications) would 
comply with the notification obligation.  Regard ing the European Union's suggestion on technical 
assistance, his delegation believed that more targeted technical assistance for the drafters of smaller Members could help as witnessed in connection with  the Article 27.4 process discussed the previous 
October.  Raising awareness of the importance of complying with the notification obligations throughout the Councils and Committees – as done by the General Council and TPRB Chairs and 
other Committees was very important.  Finally, his delegation supported the European Union's 
suggestion of maintaining this issue as an agenda  item until there were improvements in meeting the 
notification obligations.  
72. The delegate of the United States
 stated that his delegation attached importance to the 
notification obligation in Article 25 of the SCM Agreement and wholeheartedly agreed with the 
interventions of the European Union, Japan and Canada with one small ex ception which he would 
touch upon later.  The one point he wished to em phasize and that the European Union also made was 
that there were several large developing countries th at had not provided a notification for a long time 
and that these countries were real beneficiaries of th e rules-based trading syst em.  With rights came 
obligations, so he encouraged these Members to redouble their efforts in submitting subsidy 
notifications.  This was somewhat in parallel with the other effort that the Committee had undertaken 
in the previous year to help those lesser develope d countries that might not have programs to submit a 
notification to that effect.  He thought that the Committee needed to prioritize who should be the focus of the Committee's attention in the coming m onths and years with respect to meeting their 
notification obligations.  His delegation wished to express its appreciation to the Chair for his 
attention to this matter and for his letters to th e 89 members, including the United States.  He hoped 
that the new Chair would continue the focus on this impor tant issue.  An issue of particular interest to 
his delegation concerned the notification by sub-cen tral governments.  This was an area that would 
benefit from future work and attention.  A second area worthy of attention was, as his delegation had 
noted the previous year, related to Article 25.8 of the SCM Agreement.  In the background note by the 
Secretariat, which in general his delegation consid ered to be a very good and helpful document, the 
format for Article 25.8 requests in Annex C was stil l somewhat lacking.  In particular, the problem 
that his delegation had described previously was that many Members had received Article 25.8 
requests for information and had either not res ponded or only responded orally after a significant 
delay.  His delegation believed that this Anne x C (or a document of a similar type) should list G/SCM/M/73 
Page 14  
 
  information such as the date at which the Article 25.8 request had been made, the Member to whom 
the request had been directed, and whether the requ est was still outstanding.  As a general matter, his 
delegation attached great importance to the notif ication obligation and believed that the Committee 
should continue to focus on this very serious sy stemic problem.  The one caveat that his delegation 
had with the suggestions made by previous speaker s concerned the European Union's request to make 
this issue a permanent agenda item.  The issue of making a topic a permanent agenda item was a 
systemic issue for his delegation and one that hi s delegation was trying to address across the various 
bodies of the WTO.  His delegation therefore would appreciate that the item be placed on the agenda 
for the next Committee meeting only and that it be  identified as being put there pursuant to the 
European Union's request. 
73. The delegate of New Zealand
 stated that New Zealand attached great importance to the 
subsidy notification obligations outlined under Article  25 of the SCM Agreement and agreed with the 
interventions of the European Union, Canada and Japan.  His delegation supported the European 
Union's suggestion to continue the issue as an item of agenda until improvements were made and 
noticed. 
74. The delegate of Australia  stated that his delegation had participated very actively in these 
discussions, which had been going on for over a year, Chaired by the Chairman and the previous Chair of this Committee.  His delegation considered  that the notification obligations under the SCM 
Agreement were very important a nd agreed with the previous speak ers that had intervened on this 
issue.  Many in the room had particularly highlig hted the new and full subsidies notifications, which 
was a very important obligation.  His delegation was disappointed that 89 Members had not fulfilled 
it.  Finally, he thanked the Chair for the steps taken to improve the record on notifications and 
indicated that his delegation was open to suggestions  on ways to improve this record going forward. 
75. The delegate of Turkey
 stated that his delegation attached the utmost importance to the 
completeness and timeliness of notifications for the sake of transparency.  In  this respect, Turkey 
appreciated the Chairman's efforts and the Chairman sending reminders to 89 Members and raising 
this important issue before the Committee again.  Turkey had done its homework in this respect, and 
encouraged other Members to make the required notif ications in due course.  His delegation supported 
the points made by previous speakers, especially the interventions made by the European Union, 
Japan and the United States. 
76. The Chairman  thanked the delegations that had take n the floor and offered their views on 
further "ways to improve the timeliness and complete ness of notifications and other information flows 
on trade measures" in the context of the SCM Agreement.  His impression from the Committee's 
discussions on this issue was that there was a need to  take such discussions further in the Committee.  
It seemed to him that these discussions could focus on  two issues:  1- the difficulties, if any, Members 
faced in connection with the preparation of th eir notifications under the SCM Agreement and  
2- further improvements that could be made with  regard to the timeliness and completeness of 
notification obligations under the SCM Agreement.  
77.  The Committee took note  of the statements made. 
E. CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM ANNEX VII(B)   
78. The Chairman  stated that under this agenda item,  he wished to remind Members that, 
pursuant to the Doha Ministerial Decision on Impl ementation-Related Issues and Concerns (document 
WT/MIN(01)/17, para. 10.1) -- in which Ministers ha d agreed that Annex VII(b) to the Agreement on 
Subsidies and Countervailing Measures included the Me mbers that were listed therein until their GNP 
per capita reached US$1,000 in constant 19 90 dollars for three consecutive years -- as of 
1 January 2003, the methodology set forth in G/SCM/38, Appendix 2 applied.  In 2003, 2004, 2005,  G/SCM/M/73 
 Page 15 
 
 
  2006, 2007, 2008 and 2009 the Secretariat had circ ulated Notes updating GNP per capita for Members 
listed in Annex VII(b).  Those notes were contai ned in documents G/SCM/110 & /Add.1, 2 and 3 and 
Corr.1, Add.4, Add.5 and Add.6.  The Chairman  informed Members that the Secretariat would 
circulate new updated calculations when the necessa ry World Bank data became available.  
79. The Committee took note  of the Chairman's statement. 
F. PERMANENT GROUP OF EXPERTS  
80. The Chairman  recalled that the term of Mr. Chang-fa Lo as member of the Permanent Group 
of Experts ended in the Spring of 2010 and that his position needed to be filled.  The Chairman drew 
Members' attention to document G/SCM/135, ci rculated on 22 April 2010, which explained the 
process he had followed on this matter.  As indica ted in that document, the Chairman had held 
informal consultations with Members on the three names proposed by Australia, Japan and Chinese 
Taipei to replace Mr. Chang-fa Lo, with a view to  deciding on the one name to be proposed to the 
Committee. 
81. As indicated in document G/SCM/135, as a result of his informal consultations, the Chairman 
decided to propose Mr. Akio Shimizu to fill Mr . Chang-fa Lo's position. The Chairman noted, 
however, that this had not been an easy decision to reach. Most of the Members the Chairman had 
contacted on this issue expressed the view that all three candidates were perfectly qualified for the 
job.  Since the outgoing member of the PGE was also a national of Chinese Taipei, however, Members generally focussed on the candidates propo sed by the delegations of Australia and Japan. 
Both of these candidates had excellent credentials  which made it difficult for Members to make a 
choice and for the Chair to come to a conclusion on this matter.  
82. Specifically, the Chairman noted that Mr. Arnott,  the candidate proposed by Australia, had an 
impressive career path on trade issues, and particular ly on subsidy matters.  His experience on subsidy 
issues included the work he had done as a WTO panelist and as a negotiator of the Subsidies 
Agreement in the Uruguay Round.  It was not a surpri se that an important number of delegations had 
expressed strong support for him. 
83. Even though the levels of support for both Mr. Sh imizu and Mr. Arnott were very close, at the 
end of the day the Chairman could only propose one name.  Since Mr. Shimizu had received slightly 
more support from Members expressing their views on this issue, the Chairman had decided to propose his name for the PGE.  The Chairman tha nked the three delegations that had put forward 
candidates, and all the delegations with which he ha d conducted informal consu ltations on this matter, 
for their constructive cooperation. 
84. Based on the informal consultations he had he ld, the Chairman proposed that the Committee 
select Mr. Akio Shimizu to replace Mr. Chang-fa Lo  as a member of the Permanent Group of Experts. 
85. The Committee elected
 Mr. Shimizu as a member of the Permanent Group of Experts.  
86. The delegate of Chinese Taipei  expressed the appreciation of her delegation for the time and 
efforts devoted by the Chairman on conducting info rmal consultations on th e PGE elections.  The 
delegate congratulated Japan and professor Shimiz u and wished him every success, and thanked those 
delegations that had given their support to the candidate from Chinese Taipei during consultations.  
Chinese Taipei hoped to have anothe r opportunity to contribute to the PGE some time in the future. 
87. The delegate of the United States  congratulated Mr. Akio Shimizu on his appointment to the 
Permanent Group of Experts and thanked all the de legations for their cooperation and constructive 
engagement in the nomination and consultations process.  The dele gate recalled that the Committee G/SCM/M/73 
Page 16  
 
  had gone through a number of years where there were a number of empty slots and noted that the 
Committee now seemed to have a process in place  whereby the Committee filled those slots on a 
regular basis as foreseen by the SCM Agreemen t.  He did not know personally the nominee from 
Chinese Taipei, but he knew Mr. Arnott personally as they worked in the informal group of experts 
together and could personally attest to his intell ect and his experience in the subsidies area and would 
encourage Australia to re-nominat e him for the next empty position. 
88. The delegate of Australia
 congratulated Mr. Akio Shimizu on his election to the PGE.  His 
delegation believed that Mr. Shimizu's extensive academic career and experience as a WTO dispute 
settlement panelist would ensure that he made a va luable contribution during his time as a member of 
the PGE.  The delegate also noted the Chairman 's comment about the strong support received by 
Mr. Arnott and noted that it had been a difficult deci sion for the Chair and tha nked all delegations that 
expressed strong support for Mr. Arnott and thanke d the delegate of the United States for his 
comments.  
89. The delegate of Japan  thanked the Chairman for the consultations conducted and other 
Members for their participation in these consulta tions.  He wished to convey to the SCM Committee 
and to the Members who had supported Prof. Shimizu of his readiness to serve as a member of this 
Group.  From then on he was in the hands of th e Secretariat, the Committee and Members as a whole. 
90. The delegate of the European Union  congratulated the elected candidate from Japan and 
thanked the Secretariat and the Chairman for thei r conduct of informal meetings with a view to 
reaching a good proposal on this issue. 
91. On behalf of all Members, the Chairman  congratulated Mr. Akio Shimizu and wished him the 
best success as member of the Permanent Group of Experts. 
92. The Committee took note  of the statements made. 
G. ANNUAL UPDATING NOTIFICATIONS IN THE CONTEXT OF THE PROCEDURES FOR THE 
CONTINUATION OF EXTENSIONS OF THE TRANS ITION PERIOD FOR THE ELIMINATION OF 
EXPORT SUBSIDIES SET OUT UNDER ARTICLE 27.4  OF THE SCM AGREEMENT  
93. The Chairman  recalled that the procedures set forth in the General Council decision 
WT/L/691 required the identification by Members benefiting from the extension of the transition 
period for the elimination of export subsidies pr ovided for under Article 27.4 of the SCM Agreement 
of three elements in the annual updating notifications that were due on 30 June 2010:  1- Internal steps 
taken, as from 1 January 2008, with a view to elimin ating exports subsidies for which extensions had 
been granted, 2 - Ways in which beneficiari es of the export subsidy programmes benefiting from 
extensions had been notified, between 1 January 2008 and 31 December 2009, that such extensions 
would not go beyond the end of calendar year 2015,  and 3 - The action plan for eliminating export 
subsidies benefiting from extensions. 
94. The Chairman noted that the first two elements  were also required as part of the 2009 annual 
updating notifications.  The third element, i.e. the submission of an action plan, however, was new 
and would, in his view, play an important role in  connection with the review  that would be conducted 
at the Committee's upcoming fall meeting.  In order to discuss the particularities of this year's annual 
updating notifications, the Chairman had had inform al consultations with the Members at issue on 
19 April 2010.  His impression was that these consulta tions had helped clarify certain issues about this 
year's notifications. 
95. The Chairman then turned to the questions posed by the United States to some of the 
Members benefiting from extensions under the Ge neral Council decision in connection with their  G/SCM/M/73 
 Page 17 
 
 
  updating notifications made in 2009.  These ques tions had been circulated in the following 
documents: 
- G/SCM/Q2/BRB/3 (Barbados) - G/SCM/Q2/BLZ/3 (Belize) - G/SCM/Q2/CRI/10 (Costa Rica) 
- G/SCM/Q2/DMA/2 (Dominica) 
- G/SCM/Q2/FJI/14 (Fiji) - G/SCM/Q2/GRD/3 (Grenada) - G/SCM/Q2/JAM/7 (Jamaica) - G/SCM/Q2/JOR/5 (Jordan) 
- G/SCM/Q2/MUS/8 (Mauritius) 
- G/SCM/Q2/PAN/11 (Panama) - G/SCM/Q2/PNG/3 (Papua New Guinea) - G/SCM/Q2/KNA/3 (Saint Kitts and Nevis) - G/SCM/Q2/LCA/3 and Corr.1 (Saint Lucia) 
- G/SCM/Q2/URY/8 (Uruguay) 
96. Belize, Jordan, Costa Rica, Grenada, Jamaica, Barbados and Panama had responded to these 
questions through documents G/SCM/Q2/BLZ/ 4, G/SCM/Q2/JOR/6, G/SCM/Q2/CRI/11, 
G/SCM/Q2/GRD/4, G/SCM/Q2/JAM/8, G/SCM/Q2/ BRB/4 and G/SCM/Q2/PAN/12, respectively.  
The Chairman asked other delegations whether they wished to respond to the questions raised by the 
United States. 
97. The delegation of Mauritius
 thanked the United States for the questions posed.  Regarding the 
United States' question concerning the Freeport Sc heme Corporate Tax Exemption, provision had 
been made under Section 8(b)(i) of the Additional Stimulus Package Act  2009 to remove corporate 
tax exemption for the Freeport as from 30 June 2011.  The beneficiaries of the programme were already aware that it would end in 2011 as per th e Additional Stimulus Package Act, which was 
published in the gazette on 16 April 2009.  As regards the Free Port Scheme Customs and Excise 
Duty exemption on machinery and equipment, the delegate wished to point out that although notification had been made regarding excise duty concessions on machinery and equipment, there was 
no excise duty thereon.  As regards Customs duty,  Mauritius had undertaken major reforms in the 
2006 and 2008 Budgets with the result that 86 per cent  of tariff lines were now duty-free.  Virtually 
all imported industrial machinery and equipment did not  attract any customs duty.  The delegate noted 
that a copy of Mauritius' updated Customs Tariff  Schedule was available in the website of the 
Mauritius Revenue Authority (www://mra.gov.mu).  This  answer would be provided in writing to the 
Secretariat as soon as possible.  G/SCM/M/73 
Page 18  
 
  98. The delegation of Barbados
 thanked the delegation of the United States for their questions 
regarding Barbados' new and full subsidies notificati on.  As reflected in the response that had been 
circulated, she assured the United States and ev ery other delegation of Barbados' continued 
commitment to be open and transparent in the process of eliminating export subsidies by 31 December 2015.  To this end, Barbados activ ely continued consultati ons with the relevant 
stakeholders, seeking to ensure a smooth transition du ring and subsequent to th e removal of benefits, 
particularly given the expected long term effect s of the global economic crisis on developing 
countries and the smallest and most vulnerable among them.  The delegate indicated that they were 
cognizant of the provisions under General Council decision WT/L/691 in relation to the updating 
notification requirements for 2010 and the related mid-period assessment.  Barbados was currently 
undertaking the necessary steps to fulfil the components of this requirement. 
99. The delegate of the United States
 wished to briefly explain the background with respect to 
questions asked by his delegation. The delegate recalled that, as mentioned by the Chairman, there 
were a number of intermediary steps that the Gene ral Council decision laid out that his delegation was 
interested in making sure took place.  The internal st eps, internal consultations  that needed to take 
place before the programmes were terminated and th e notification of beneficiaries were the two key 
items for this year.  His delegation was looking fo rward to the submission of the action plans this 
coming June with respect to the termination of the relevant programmes.  He also thanked all 
countries that answered the questions asked by hi s delegation and looked forward to the answers from 
others and appreciate the continuing co mmitment to end these programmes by 2015. 
100. The delegate of Japan  wished to echo what the United States had said about the importance of 
this process under Article 27.4 of the SCM Agreement.  Japan had a systemic interest in this issue.  
As the United States delegate had indicated, there had been intensive negotiations between April 2006 
and July 2007 to reach consen sus on the General Council decision.  The text had been heavily 
negotiated, with important commitments, including the action plan in 2010 towards the elimination of 
export subsidies in 2013 and 2015.  This year's im portant commitment was the notification of this 
action plan.  His delegation looked forward to th e notifications which would be due on 30 June. 
101. The Committee took note  of the statements made.   
H. REQUEST BY INDIA FOR CLARIFICATION FROM THE UNITED STATES ON DETERMINATIONS 
MADE IN THE ADMINISTRATIVE REVIEW OF COUNTERVAILING DUTY ON IMPORTS OF CERTAIN 
HOT-ROLLED CARBON STEEL FLAT PRODUCTS FROM INDIA – G/SCM/134 
102. The Chairman  noted that India had requested clarification from the United States on 
determinations made in the administrative review  of countervailing duty on imports of certain hot-
rolled carbon steel flat products from India, as circulated in document G/SCM/134 dated 
13 April 2010.  
103. The delegate of India  indicated that his delegation requ ested the United States to clarify 
certain points made in the administrative review of countervailing duty on imports of certain hot 
rolled carbon steel flat products from India.  The poi nts on which clarifications had been sought were:  
the basis for treatment of NMDC as a public body;  arriving at a finding that a benefit was conferred in terms of Article 1.1;  the use of out-of-country benchmarks. 
104. The delegate of the United States
 indicated that for the investigation in question, as in all 
United States' anti-dumping and countervailing duty determinations, the Department of Commerce 
distributed a final Issues and Decision memora ndum that contained a complete and detailed 
explanation of the findings in the proceeding.  This memorandum detailed all the relevant facts, 
analyses, views of the interested parties and final conclusions by the Department.  The delegate also 
noted that all such memoranda were available to the public on the Department of Commerce's  G/SCM/M/73 
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  website.  With respect to India's first question,  as detailed in the Issues and Decision Memorandum, 
starting on p. 14 and further in comment 10, the Commerce Department had found that NMDC was a 
mining company that supplied high grade ore to the producer of the product under investigation.  The Commerce Department had further found that NMDC  was governed by the Government of India's 
Ministry of Steel and that the Government of India directly held 98 per cent of its shares.  Therefore, 
consistent with the SCM Agreement, the Depart ment of Commerce had found NMDC to be a public 
body.  With respect to India's second question,  as detailed in the Issues and Decision Memorandum, 
starting on p. 14, the Commerce Department had found that NMDC, as a public body, had provided 
high grade iron ore to the producer of the pro duct under investigation for less than adequate 
remuneration as determined by comparison to a market  benchmark price. Therefore, consistent with 
the SCM Agreement, the Commerce Department had dete rmined that a benefit existed.  With respect 
to India's third question, the Department had de termined the existence and the amount of benefit 
based on the information available on the record rega rding market prices for comparable ore.  It was 
well established under the SCM Agreement that under certain circumstances, including those found in 
the review at issue, adequate remuneration c ould be assessed using appropriate out of country 
benchmarks.  His delegati on would be interested to hear India' s views regarding the Department of 
Commerce's findings in the referenced proceeding, specifically whether India could explain whether it 
considered that the Department of Commerce's findi ngs were inconsistent with the SCM Agreement, 
and if so, precisely why. 
105. The delegate of India
 thanked the delegate of the Unite d States for the explanations and 
clarifications provided.  His delegation w ould go through the document mentioned by the 
United States and would come back with speci fic comments as the United States had requested. 
106. The delegate of the European Union  indicated that the European Union took no position on 
the facts of this case, but reminded the Committee that  the use of external benchmarks for determining 
the existence and amount of a subsidy was a legi timate practice for invest igating authorities in 
countervailing duty cases and fully in line with WTO rules.  It was now well established in WTO case 
law that in certain situations especially where the government, including public bodies, was the sole 
or predominant supplier of the goods and services in question, there would be no functioning market 
in the exporting country for these goods and services because any private price would be distorted by the government's participation.  In these circumstan ces, investigating authorities were entitled to make 
use of benchmarks from outside the exporting country  which reflected prices prevailing in a market 
situation, including intern ational prices for the goods and services in question.   
107. The Committee took note
 of the statements made. 
I. OTHER BUSINESS  
1. Issue raised by Japan, as circulated in document G/SCM/136 
108. Before explaining Japan's questions to Canada, the delegate of Japan  briefly touched upon the 
background for the inclusion of this issue in the agenda under "other business".  Japan had had a few 
questions at the special session to Canada with  respect to Canada's 2009 new and full subsidy 
notification, covering programmes for the period 2007-2008 from the province of Ontario.  Japan had asked two questions at the special Committee meeting in light of the structural aspect of the Ontario 
province programmes.  This was a matter for the sp ecial session, based on the notifications.  His 
present intervention, however, was not based on the no tification of Canada.  Rather, it was a new item 
for the regular meeting of the Committee.  The dele gate noted that the new Ontario legislation had 
just been enacted, in 2009, and therefore had not be en notified as of yet.  However the legislation had 
been implemented, or parts would soon be impl emented in the Budget for 2011.  Therefore, his 
delegation saw this as an urgent issue to be discu ssed at the regular meeting of the SCM Committee.  G/SCM/M/73 
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  109. Turning to his delegation's questions to Cana da, the delegate of Japan referred to the 
communication by his delegation in document G/SCM/136.  He wished to register his delegation's concern with the Feed-In Tariff (FIT) Programme of the province of Ontario, Canada.  The FIT Programme had been established by the Green En ergy and Green Economy Act, 2009, enacted on 
14 May 2009.  The Act stated that "the Minister may direct the Ontario Power Authority (OPA) to 
develop a feed-in tariff program";  and that the Mini ster "shall issue directions that set out the goals 
relating to domestic content to be  achieved during the period to be covered by the program."  On 
24 September 2009, the Deputy Premier George Smith erman had issued a directive requiring that 
"each wind power and solar PV project and solar mi cro FIT project contain a defined percentage of 
domestic content."  It also required that "the FI T Contract should include a standardized method for 
calculating the level of domestic content in a proj ect" and that "domestic provisions will be enforced 
through the FIT Contract."  The delegate of Japa n indicated that his delegation had strong concerns 
about this Ontario FIT Programme with respect to  its inconsistency with GATT and TRIMs.  His 
delegation also questioned whether the programme wa s consistent with the SCM Agreement, namely 
with Article 3.1(b) thereof.  It is in this regard  that his delegation had asked the following questions to 
Canada: 
(i) Is it a correct understanding that the OPA ensures the payment of the "contract price" 
if the suppliers of renewable energy run th e Contract Facilities which are developed and 
constructed such that the Domestic Content Level is equal to or greater than the Minimum Required Domestic Content Level"? 
(ii) Is it a correct understanding that the "cont ract price" is set to support the income of 
the suppliers or the price of renewable energy, wh ich is traded at the market price without the 
FIT Programme? 
(iii) Is the "contract price" higher than the market price?  (iv) Is the OPA, established by the Electricity Restructuring Act, 2004, a public body 
owned by the Government of Ontario? 
(v) Is it a correct understanding that the "contr act price" is not applicable to suppliers 
who run the Contract Facilities which do not meet the Minimum Required Domestic Content Level? 
(vi) Is there any supplier who has met th e Minimum Required Domestic Content Level 
since last October when the FIT programme was initiated?  If any, what percentage of FIT 
contractors has met it? 
110. Although his delegation could appreciate the obj ective of the FIT programme, which was to 
encourage the use of renewable energy, as previo usly mentioned, it was concerned that the FIT 
programme might have been designed and implemen ted in a manner which was not consistent with 
the WTO agreements. 
111. The delegate of Canada
 indicated that although she did not have answers with her given the 
late arrival of the questions, but reassured the Comm ittee that they were in close consultations with 
the province of Ontario and would endeavour res ponses as soon as possible.  She could, however, 
provide a brief general overview at this time.  The FIT Programme was a comprehensive guaranteed 
pricing programme for the production of renewable energy in the province of Ontario, not unlike 
other feed-in tariff programmes in operation in ot her countries.  The programme was intended to  
increase the development of renewable energy in Ontario and was open to a variety of generators, 
project size and renewable fuel types.  Her delegati on would take a close look at Japan's questions and 
would answer them in due course.  The delegate of Japan had mentioned that his government was in  G/SCM/M/73 
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  consultations with the government of the province of Ontario;  her delegation encouraged these 
discussions to continue. 
112. The delegate of Japan  reiterated that Japan did not contest the policy objective of the FIT 
programme in general, but that it was contesting the consistency of the programme with the WTO 
Agreements, including the GATT, TRIMs and SCM Ag reements.  As the dele gate from Canada had 
mentioned, many countries had introduced this sort  of programme yet to his delegation's knowledge, 
the Ontario programme was the only one which included an explicit local content requirement.  His delegation would continue to assess the consistency of the programme with the WTO Agreements and 
would continue to consult with the government of Ontario.  Yet this was a matter for Canada as a 
WTO Member so his delegation would be pleased to  continue consultations with Canada.  His 
delegation looked forward to Canada's written response. 
113. The delegate of the United States
 noted that his delegation shared many of Japan's concerns 
with the FIT programme, and in particular the domestic content requirement.  The US domestic 
industry had approached the US government and voiced  their concerns with this programme as well, 
so his delegation would be interested to see whet her or how changes were made to the programme. 
114. The Committee took note  of the statements made. 
2. Intervention by the United States re garding India's export competitiveness 
115. The delegate of the United States  noted that in February of this year, the United States had 
requested the Secretariat to calculate the export competitiveness of textile and apparel products from 
India pursuant to Article 27.6 of the SCM Agreemen t.  As Members were aware, developing country 
Members listed in Annex VII to the SCM Agreemen t were allowed to provide export subsidies, 
despite the general prohibition contained in Article  3.1(a) of the Agreement.  However, once a 
product of an Annex VII country reached export co mpetitiveness, Article 27.5 required that export 
subsidies on that product be gradually phased out over a period of eight years.  Under Article 27.6, a 
product was export competitive if it reached a shar e of 3.25 per cent in world trade for two 
consecutive years.  Prior to making its request to the Secretariat, the United States had performed its 
own export competitiveness calculations, which indicat ed that textile and a pparel products from India 
had become export competitive.  Having conducted several countervailing duty investigations with 
respect to Indian exports, the United States was also aw are of certain programmes in  India.  All this to 
say that the United States had a solid basis fo r making its request to the Secretariat.  
116. Following the United States' request, in Ma rch 2010, the Secretariat had released its 
calculations and more recently issued a revision.  The United States now wished to hear from India 
how it intended to respond to the findings fro m the Secretariat that it had reached export 
competitiveness with respect to textile and apparel pr oducts.  He also noted that no export subsidy or 
other subsidy programmes had been notified by In dia to the Committee under Article 25 of the 
Subsidies Agreement since 2000.  His delegation w ould be interested to know whether India had 
identified any existing export subsidy programmes pr ovided to its textiles and apparel producers for 
which it could be entitled to an eight-year phase-out period under Article 27.5 of the SCM 
Agreement.  If so, his delegation encouraged Indi a to notify any such export subsidy programmes as 
soon as possible in order to allow for a constructive e ngagement as to the development of a structured 
phase-out of notified programmes.  Furthermore, it  was his delegation's view that India had an 
immediate obligation not to implement new export s ubsidy programmes for its exports of textiles and 
apparel products.  In this contex t, his delegation was deeply concerned about recent press reports 
which indicated that India had implemented a ne w incentive package for the export sector under the 
Market Linked Focus Product scheme.  According to  press reports, this programme targeted, in part, 
Indian textile and apparel produc ts, including export of such produc ts to the United States.  In G/SCM/M/73 
Page 22  
 
  conclusion, his delegation respectfully requested that  India describe the steps it intended to take in 
light of the Secretariat's export competitiveness calculations. 
117. The delegate of India
 indicated that since this item ha d not been included on the agenda 
circulated in advance of the Committee meeting, he did not have prepared comments on the issue 
raised by the United States.  He could, how ever, offer the following preliminary comments: 
Regarding the request made by the United States and the Secretariat Report, India was carefully 
studying the calculations undertaken by the Secretaria t.  India had also requested the Secretariat for  
details of the calculations i.e. the excel sheets of  export data of individual Member countries (with 
names) used for the compilation of world trade da ta for each year from 1996 to 2008.  Further, 
without prejudice to the outcome of India's verification of the calculations, it was India’s 
understanding that the obligation under Article 27.5 for phasing out subsidies could start from the date 
when the Secretariat had made available the com putations and these computations were found to be 
correct by the Members concerned.  Another important related issue was the need for clarity in Article 27.6 on the definition of "p roduct".  Article 27.6 provided th e definition as a "section heading" 
of the Harmonized System Nomenclature.  There was, to India's understanding, no compound term 
like section heading used in the HSN.  It was either  "section", which referred to a group of chapters, 
or "heading", which referred to commodities defined at the four-digit level.  As could be seen from a 
preliminary analysis of the WTO computations, the results would be different if the share in world 
trade was to be computed in respect of "section" or  "heading" level.  Thus, his delegation was of the 
view that a common understanding and clarity on the rele vant provisions needed to be evolved first in 
the Committee before proceeding further in the matter.  India would have detailed comments after 
studying the calculations made by the Secretariat. 
118. The delegate of the United States
 indicated that with respect to  the start date for the phase out 
of export subsidies, it was the view of his delegati on that the start date was the date at which the 
country in question became export competitive in a particular product area.  With respect to the 
section vs. heading issue raised by India, the de legate noted that this issue had been discussed 
previously.  No matter how one looked at the calculation, India was now export competitive. 
119. The Committee took note  of the statements made. 
J. DATE OF NEXT REGULAR MEETING  
120. The Chairman  recalled that the Committee agreed in 1995 that regular meetings normally 
would be held in the last week of April and the last  week of October.  It was proposed that the next 
regular meeting of the Committee take place in th e week of 25 October 2010.  The exact scheduling 
of these meetings would be communicated to Members in due course. 
K. ELECTION OF OFFICERS  
121. The Chairman  stated that, as Members were aware, th e Chairman of the Council for Trade in 
Goods had completed informal c onsultations on the nomination of Chairpersons for the different 
bodies operating under the auspices of the Council for Tr ade in Goods.  As concerned this Committee, 
the Chairman of the Goods Council had proposed the nomination of Mr. Robert Jui-song Fang of 
Chinese Taipei. 
122. The Committee elected  Mr. Fang as Chair, by acclamation. 
123. The Chairman also indicated that he had ha d informal consultations with Members on the 
election of a Vice Chairperson.  As a result of these consultations, he wished to propose Ms Sylvie Larose of Canada as Vice Chair.   G/SCM/M/73 
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  124. The Committee elected  Ms Larose as Vice Chair, by acclamation. 
125. The Chairman  adjourned the meeting. 
_________