UNITED STATES – COUNTERVAILING MEASURES CONCERNING CERTAIN PRODUCTS FROM THE EUROPEAN COMMUNITIES
Document: Status Report by the United States
Date: 28 October 2003
Document codes: WT/DS212/13
Complainant: EU
Respondent: U.S.
Third parties: Brazil, China, India, South Korea, Mexico
Dispute stage: Implementation & Compliance
Agreements cited: Art. 1, 10, 14, 21.1, 32.5  Subsidies and Countervailing Measures (SCM)Art. XVI:4  Agreement Establishing the World Trade OrganizationArt. 19.1, 19.3, 19.4, 21.2, 21.3  Subsidies and Countervailing Measures (SCM)Art. VI:3  GATT 1994

UNITED STATES – COUNTERVAILING MEASURES CONCERNING
CERTAIN PRODUCTS FROM THE EUROPEAN COMMUNITIES
Status Report by the United States
The following communication, dated 27 October 2003, from the Permanent Mission of the
United States to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.6
of the DSU.
Status Report Regarding Implementation of the
Recommendations and Rulings of the DSB in
 (WT/DS212)
1. The United States submits this report in accordance with Article 21.6 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes ("DSU").
2. United States - Countervailing Measures Concerning Certain Products from the European
Communities (" Certain Products ") involved a challenge by the European Communities ("EC") to
twelve different countervailing duty determinations by the US Department of Commerce
("Commerce") involving different products from the EC . Each of these determinations involved the
question of whether a subsidized, government-owned company remains subsidized after it is
"privatized". The EC claimed that the method used in these determinations – known as the
"same-person" method – was inconsistent with various provisions of the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement"). (The twelve de terminations are listed in Annex A to
the Panel's report.)
3. The Dispute Settlement Body ("DSB") adopted its recommendations and rulings on
8 January 2003. On 10 April 2003, the United States and the EC reached an agreement that the
reasonable period of time for implementing the DSB's recommendations and rulings would be
ten months, a period ending on 8 November 2003.
4. The United States is implementing the DSB's recommendations and rulings in two stages.
First, Commerce modified its method for dealing with the privatization of subsidized companies. In
accordance with the transparency requirements of US law, on 21 March 2003, Commerce published a
Notice of Proposed Modification of Agency Practice Under Section 123 of the Uruguay Round
Agreements Act and Request for Public Comment , 68 Fed. Reg. 13,897. After analyzing the
comments it received – which included comments from representatives of both domestic and foreign
firms – Commerce published a Notice of Final Modification of Agency Practice Under Section 123 of
the Uruguay Round Agreements Act, 68 Fed. Reg. 37,125 (23 June 2003) ("Final Modification").

5. In the Final Modification , Commerce announced a new methodology based on certain
rebuttable presumptions that reflected the DSB findings in Certain Products. Commerce's "baseline
presumption" is that allocable, non-recurring subsidies can benefit the recipient over a period of time
("allocation period") normally corresponding to the average useful life of the recipient's assets. This
presumption can be rebutted by a demonstration that during the allocation period, a privatization
occurred in which the government sold its ownership of all, or substantially all, of a company or its
assets, retaining no control of the company or its assets, and that the sale was an arm's-length
transaction for fair market value. The Final Modification describes the criteria Commerce will
consider in determining whether a privatization transaction is at "arm's length" and for "fair market
value."
6. The Final Modification goes on to provide that, consistent with the DSB's findings, the
presumption of subsidy extinguishment arising from a privatization at arm's length and for fair market
value can be rebutted. Accordingly, the Final Modification sets forth a non-exhaustive list of factors
that Commerce will examine for purposes of determining whether a company continues to benefit
from prior subsidies, notwithstanding its privatization in an arm's-length, fair market value
transaction.
7. Once Commerce had modified its privatization methodology, it then began the second step of
the implementation process, which was to issue revised, and WTO-consistent, redeterminations with
respect to the twelve determinations at issue in Certain Products.
8. On 10 August 2003, the US Trade Representative made a written request to the Secretary of
Commerce to issue determinations under section 129(b) of the Uruguay Round Agreements Act that
would render Commerce's twelve determinations not inconsistent with the findings in the Certain
Products dispute. Commerce issued questionnaires and supplemental questionnaires to the
respondent parties involved in each of the twelve determinations. Between 15 September and
1 October, Commerce released to the participating parties a draft redetermination with respect to each
of the twelve determinations.
9. In all but three of these draft redeterminations, Commerce performed a new analysis of the
privatization issue based on the application of its new methodology to the evidence in the record of
the particular section 129 case. In the other three redeterminations, all of which were five-year (or
"sunset") reviews, Commerce assumed arguendo that the allocable pre-privatization subsidies were
extinguished by the privatization transaction, and found that its determination of likelihood of
continuation or recurrence of a countervailable subsidy would be the same regardless of whether the
allocable, pre-privatization subsidies had been extinguished. With respect to the sunset reviews
involving merchandise from the United Kingdom and Germany, there were other subsidized
companies subject to the countervailing duty orders that were not affected by the privatization
transactions. With respect to the sunset review involving merchandise from Spain, the privatized
company continued to receive recurring subsidies after the privatization.
10. With respect to each of the draft redeterminations, Commerce received comments from the
parties involved. After considering and analyzing the comments from the parties, on
24 October 2003, Commerce issued final redeterminations in each of the twelve cases. In all twelve,
Commerce considered whether and how the application of its new, WTO-consistent privatization
methodology would change Commerce's original de termination. In all but three of the cases,
Commerce found – or assumed arguendo – that the privatization transaction was at arm's length and
for fair market value. In no case did Commerce find that the resulting presumption of subsidy
extinguishment had been overcome.

11. In the three cases involving steel products from France, Commerce determined that a portion
of the privatization was not at arm's length and for fair market value, because, among other reasons,
the buyers and sellers were related and the shares were sold at a discount. This portion of the
privatization involved the sale of certain shares of the subsidized company to the company's
employees.
12. These determinations will be available to WTO Members and the general public on
Commerce's Internet website at http://ia.ita.doc.gov.