UNITED STATES – COUNTERVAILING DUTIES ON CERTAIN CORROSION-RESISTANT CARBON STEEL FLAT PRODUCTS FROM GERMANY AB-2002-4
Document: Report of the Appellate Body
Date: 28 November 2002
Document codes: WT/DS213/AB/R
Complainant: EU
Respondent: U.S.
Third parties: Japan, Norway
Dispute stage: Appellate Body
Agreements cited: Art. 32.5  Subsidies and Countervailing Measures (SCM)Art. XVI:4  Agreement Establishing the World Trade OrganizationArt. 10, 11.9, 21  Subsidies and Countervailing Measures (SCM)

UNITED STATES – COUNTERVAILING DUTIES ON CERTAIN
CORROSION-RESISTANT CARBON STEEL FLAT
PRODUCTS FROM GERMANY
AB-2002-4
Report of the Appellate Body

APPELLATE BODY
United States – Countervailing Duties on
Certain Corrosion-Resistant Carbon Steel
Flat Products from Germany
United States – Appellant/Appellee
European Communities – Appellant/Appellee
Japan – Third Participant
Norway – Third Participant
AB-2002-4
Present:
Taniguchi, Presiding Member
Ganesan, Member
Sacerdoti, Member
I. Introduction
1. The United States and the European Communities each appeal certain issues of law and legal
interpretations in the Panel Report, United States – Countervailing Duties on Certain Corrosion-
Resistant Carbon Steel Flat Products from Germany (the "Panel Report").
1 The Panel was
established to consider a complaint by the European Communities against the United States regarding
the continuation of countervailing duties on certain corrosion-resistant carbon steel flat products from
Germany ("carbon steel") following the conduct of a five-year, or "sunset", review of those duties.
2. On 17 August 1993, the United States imposed definitive countervailing duties on carbon
steel. The imposition of the duties was based on an investigation by the United States Department of
Commerce ("USDOC") in which it determined that certain German producers of carbon steel
benefitted, at a total rate of 0.60 percent ad valorem, from five countervailable subsidy programs.

2
On 1 September 1999, USDOC gave notice of the automatic initiation of a sunset review of these
countervailing duties.
3 In the course of this review, USDOC determined that revocation of the
countervailing duties "would be likely to lead to continuation or recurrence of a countervailable
subsidy" with respect to carbon steel and tran smitted this determination to the United States

1WT/DS213/R, 3 July 2002, WT/DS213/R/Corr.1, 12 August 2002.
2"Final Affirmative Countervailing Duty Determinations: Certain Steel Products From Germany",
United States Federal Register, 9 July 1993 (Volume 58, Number 130), p. 37315; Exhibit EC-2 submitted by
the European Communities to the Panel; and "Countervailing Duty Orders and Amendment to Final
Affirmative Countervailing Duty Determinations: Certain Steel Products From Germany", United States
Federal Register, 17 August 1993 (Volume 58, Number 157), p. 43756; Exhibit EC-4 submitted by the
European Communities to the Panel.
3"Initiation of Five-Year ('Sunset') Reviews of Anti-Dumping and Countervailing Duty Orders or
Investigations of Carbon Steel Plates and Flat Products", United States Federal Register, 1 September 1999
(Volume 64, Number 169), p. 47767; Exhibit EC-5 submitted by the European Communities to the Panel.

International Trade Commission ("USITC").
4 Based on its finding that two of the original five
subsidy programs had been terminated, the likely rate of such continuation or recurrence of a
countervailable subsidy was determined by USDOC to be 0.54 percent ad valorem.

5 Following an
affirmative determination of the likelihood of continuation or recurrence of injury by USITC, USDOC
published a notice of the continuation of the countervailing duties on 15 December 2000.
6
3. The European Communities argued before the Pane l that United States law relating to sunset
reviews, as such, and as applied in the sunset re view of countervailing duties on carbon steel in this
case, was inconsistent with United States' obligations under the Agreement on Subsidies and
Countervailing Measures (the " SCM Agreement "). The European Communities argued that the
United States acted contrary to Article 21.3 of the SCM Agreement by automatically self-initiating
sunset reviews and by failing to apply in sunset reviews the de minimis standard of 1 percent set out
in Article 11.9 of that Agreement.
4. During the course of the Panel proceedings, the Panel was called upon to determine whether
three further matters were within its terms of reference. First, the Panel granted a request by the
United States for a preliminary ruling that the Eu ropean Communities' claim relating to the United
States' expedited sunset review procedure was outside the Panel's terms of reference.
7 The other two
challenges to the terms of reference arose in connection with two questions put by the Panel to the
European Communities following the second meeting of the parties with the Panel. In response to
these questions, the European Communities responded affirmatively to the Panel that it was making
claims with respect to United States law, as such, relating to the determination to be made in a sunset
review

8, and United States law, as such, dealing with the opportunity to present evidence in a sunset
review.
9 On 14 May 2002, the Panel issued its interim report to the parties. In its interim report, the
Panel made findings on, inter alia, the claims asserted by the European Communities in its responses
to the questions from the Panel.
5. On 23 May 2002, the United States submitted a request for interim review, inter alia ,
objecting to the Panel's interim findings with regard to United States law, as such, relating to the

4Panel Report, para. 2.1.
5Ibid.
6"Continuation of Antidumping and Countervailing Duty Orders on Certain Carbon Steel Products
from Australia, Belgium, Brazil, Canada, Finland, France, Germany, Japan, South Korea, Mexico, Poland,
Romania, Spain, Sweden, Taiwan and the United Kingdom", United States Federal Register, 15 December 2000
(Volume 65, Number 242), p. 78469; Exhibit EC-12 submitted by the European Communities to the Panel.
7Panel Report, paras. 8.5-8.12.
8See, European Communities' response to Question 51 posed by the Panel; Panel Report, para. 5.517.
9See, European Communities' response to Question 54 posed by the Panel; Panel Report, para. 5.522.

determination to be made in a sunset review
10, and with regard to the consistency of United States
law, as such, and as applied, with the obligation to provide ample opportunity to submit evidence in a
sunset review

11, as outside the terms of reference. The Panel rejected the first of these objections.
12
The Panel found, however, that the consistency of United States law, as such, and as applied, with the
obligation to provide ample opportunity to submit evidence in a sunset review was outside its terms of
reference.
13 As a consequence, certain reasoning and findings with respect to this claim, that
appeared in the interim report, were not included in the Panel Report.
6. In the Panel Report, circulated to Members of the World Trade Organization ("WTO") on
3 July 2002, the Panel found that:
(a) US CVD law and the accompanying regulations are
consistent with Article 21, paragraphs 1 and 3, and Article 10
of the SCM Agreement in respect of the application of
evidentiary standards to the self-initiation of sunset reviews;
(b) US CVD law and the accompanying regulations are
inconsistent with Article 21.3 of the SCM Agreement in
respect of the application of a 0.5 per cent de minimis
standard to sunset reviews, and therefore violate Article 32.5
of the SCM Agreement and, consequently, also Article
XVI:4 of the WTO Agreement;
(c) the United States, in applying a 0.5 per cent de minimis
standard to the instant sunset review, acted in violation of
Article 21.3 of the SCM Agreement;
(d) US CVD law and the accompanying regulations and
statement of policy practices are consistent with Article 21.3
of the SCM Agreement in respect of the obligation to
determine the likelihood of continuation or recurrence of
subsidisation in sunset reviews; and

10Panel Report, para. 7.20.
11Ibid., para. 7.24.
12Ibid., paras. 7.21-7.23.
13Ibid., paras. 8.137 and 8.145.

(e) the United States, in failing to determine properly the
likelihood of continuation or recurrence of subsidisation in
the sunset review on carbon steel, acted in violation of
Article 21.3 of the SCM Agreement.
14 (original underlining)
7. The Panel accordingly recommended that:
… the Dispute Settlement Body request the United States to bring its
measures … into conformity with its obligations under the
WTO Agreement.
15
8. On 30 August 2002, the United States notified the Dispute Settlement Body ("DSB") of its
intention to appeal certain issues of law covered in the Panel Report and certain legal interpretations
developed by the Panel, pursuant to paragraph 4 of Article 16 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (the "DSU") and filed a Notice of Appeal pursuant
to Rule 20 of the Working Procedures for Appellate Review (the " Working Procedures "). On
9 September 2002, the United States filed its appellant's submission.
16 On 16 September 2002, the
European Communities filed an other appellant's submission.
17 On 24 September 2002, the European
Communities and the United States each filed an appellee's submission.
18 On th e sam e day , Japan
and Norway each filed third participant's submissions.
19
9. The oral hearing was held on 11 October 2002. The participants and third participants each
presented oral arguments and responded to questions put to them by the Members of the Division
hearing the appeal.

14Panel Report, para. 9.1. One member of the Panel dissented from the findings in paragraphs 9.1(b)
and 9.1(c). That member found, at paragraph 10.15 of the Panel Report, that:
(a) US CVD law and the accompanying regulations are consistent with
Article 21.3 of the SCM Agreement in respect of the application of
a 0.5 per cent de minimis standard to sunset reviews; and
(b) The United States, in applying a 0.5 per cent de minimis standard
to the instant sunset review, did not act in violation of Article 21.3
of the SCM Agreement. (original underlining)
15Panel Report, para. 9.2.
16Pursuant to Rule 21 of the Working Procedures.
17Pursuant to Rule 23 of the Working Procedures.
18Pursuant to Rule 22 of the Working Procedures.
19Pursuant to Rule 24 of the Working Procedures.

II. Arguments of the Participants and the Third Participants
A. Claims of Error by the United States – Appellant
1. Article 21.3 of the SCM Agreement – Applicability of a De Minimis
Standard in Sunset Reviews
10. The United States appeals the findings by the Panel that United States law, as such, and, as
applied in the sunset review with respect to carbon steel, is inconsistent with United States' WTO
obligations because it applies a de minimis standard of 0.5 percent. Both these findings flow from
the Panel's erroneous conclusion that the less than 1 percent de minimis standard applicable to
countervailing duty investigations in Article 11.9 of the SCM Agreement is implied in Article 21.3 of
the Agreement as well. The United States submits that, by implying into Article 21.3 words that are
not there, the Panel failed to act in accordance with customary rules of treaty interpretation.
11. The United States emphasizes that the text of Article 21.3 does not contain any de minimis
standard for sunset reviews. The Panel failed to give meaning to the express absence of any textual
reference to a de minimis requirement in Article 21.3, and improperly relied upon the Appellate
Body Report in Canada – Autos as a basis for finding that textual silence in this case was not
dispositive.
12. The United States refers to Article 21 of the SCM Agreement as immediate context to
Article 21.3. Article 21 contains no cross-reference to Article 11.9, yet does contain specific cross-
references to other provisions. In particular, Article 21.4 expressly makes the evidentiary and
procedural provisions of Article 12 applicable to Article 21 reviews, while Article 21.5 expressly
makes the provisions of Article 21 applicable to Article 18 undertakings. These cross-references
demonstrate that where the drafters wanted the obligations set forth in one provision to apply in
another context, they did so expressly. In this respect, the United States notes that the dissenting
panelist found the omission of any express link between Article 21.3 and Article 11.9 to be dispositive
on the issue of whether the Article 11.9 de minimis standard is applicable to sunset review.
13. The United States also disputes the Panel's analysis and understanding of the de minimis
standard set out in Article 11.9 of the SCM Agreement. The United States points to the decision of
the panel in US – DRAMS

20 and argues that the Panel in this dispute should have interpreted
Article 11.9 in the same way as that panel interpreted Article 5.8 of the Agreement on the
Implementation of Article VI of the Ge neral Agreement on Tariffs and Trade 1994 (the " Anti-

20Panel Report, US – DRAMS, para. 6.87.

Dumping Agreement"). That panel found that the de minimis standard expressed in Article 5.8 of the
Anti-Dumping Agreement does not apply beyond the investigative stage of anti-dumping proceedings.
14. The United States objects to the Panel's reliance upon a 1987 Note by the Secretariat in order
to find that the "sole or principal rationale for the de minimis standard set out in Article 11.9 is that a
de minimis subsidy is considered to be non-injurious."
21 The United States further submits that
recourse to the 1987 Note was inconsistent with the rules of treaty interpretation embodied in the
Vienna Convention on the Law of Treaties (the " Vienna Convention ").

22 T h a t N o t e s e t s o u t t w o
rationales for a de minimis concept, but all that the negotiating history demonstrates is that there was
no consensus or single reason why the drafters established a de minimis standard for investigations.
Finally, the United States contends that it is difficult to reconcile the Panel's finding that the
 de minimis standard relates to the question of whether there is injury with the fact that the
 SCM Agreement has not one, but three different, de minimis standards, depending on the level of
economic development of the exporting country. The United States argues that it is difficult to see
how injury from subsidized imports depends upon the level of economic development in the exporting
Member.
2. Article 6.2 of the DSU – Whether the Panel's Terms of Reference Included a
Claim Against United States Law, As Such, Regarding the Determination to
be Made in a Sunset Review
15. The United States appeals the refusal by the Panel to dismiss the European Communities'
claim regarding the consistency of United States la w, as such, with the obligation to determine the
likelihood of continuation or recurrence of subsidization in a sunset review established by Article 21.3
of the SCM Agreement . The United States argues that the European Communities' panel request
failed to comply with the requirements of Article 6.2 of the DSU. The United States' appeal is
conditional upon the Appellate Body first reversing the Panel's finding that United States law, as
such, is not inconsistent with the obligation to determine the likelihood of continuation or recurrence
of subsidization in sunset reviews. However, in response to questioning at the oral hearing, the
United States indicated that this condition need not be fulfilled for the Appellate Body to consider this
issue.
16. According to the United States, its written submissions to the Panel demonstrate its
understanding that the European Communities' challenge to United States laws, as such, was limited
to two issues only, namely, the automatic se lf-initiation of sunset reviews and the de minimis
standard employed in sunset reviews. When, following the second meeting with the Panel, the

21Panel Report, para. 8.61.
22Done at Vienna, 23 May 1969, 1155 U.N.T.S. 331; 8 International Legal Materials 679.

European Communities purported to have included this additional challenge to United States law in
its panel request, the United States promptly objected.
17. The United States insists that it was prejudiced by the European Communities' failure to
comply with Article 6.2. The United States points out that, because it was unaware of any such claim
until after the second meeting, its submissions to the Panel did not contain any arguments regarding
the consistency of United States law, as such, with the obligation to determine the likelihood of
continuation or recurrence of subsidization in sunset reviews. The United States adds that this
prejudice was not mitigated by the fact that the Panel ruled in favour of the United States on the
merits of this particular claim.
B. Arguments of the European Communities – Appellee
1. Article 21.3 of the SCM Agreement – Applicability of a De Minimis
Standard in Sunset Reviews
18. The European Communities requests the Appellate Body to uphold the Panel's findings with
respect to the application of the de minimis standard under Article 21.3. The European Communities
accepts that Article 21.3 does not contain any explicit textual reference to the de minimis standard
established in Article 11.9, and that nothing in the text of Article 11.9 provides for its de minimis
standard to be implied in Article 21.3. However, the European Communities notes that the text of
Article 21.3 requires the domestic authorities to engage in a review to determine that the expiry of the
countervailing duty would be likely to lead to "continuation or recurrence of subsidization and
injury". These concepts are defined elsewhere in the SCM Agreement for the Agreement as a whole
and are not repeated each time for individual articles. In particular, the reference to "continuation or
recurrence" makes Article 11.9 and the original investigation relevant and applicable. Article 11.9
prevents the authorities from making a finding on subsidization and injury when the amount of
subsidy is found in the investigation to be less than 1 percent ad valorem. Article 15.3 of the
SCM Agreement, dealing with the determination of injury, also refers explicitly to Article 11.9 for
the purpose of establishing the de minimis rule. According to the European Communities, these
provisions demonstrate that subsidization of less than 1 percent is irrebuttably presumed not to cause
injury. If a de minimis subsidization cannot cause injury in an original investigation, it must follow
that it also cannot cause injury in a sunset review.
19. The European Communities argues, referring in particular to Article 21.2 of the SCM
Agreement, that the object and purpose of the requirement to demonstrate subsidization and injury in
a sunset review must be the same as when subsid ization and injury were determined in the original
investigation. It follows that, if the de minimis rule is applicable to original investigations, it must

also be equally applicable to reviews generally and all the more so in the context of time-bound sunset
reviews under Article 21.3. This analysis is further supported by one of the principal objectives of the
SCM Agreement identified by the Panel, namely, the establishment of a "framework within which to
offset injurious subsidisation".

23 As a result, the absence of cross-references in both Article 11.9 and
Article 21.3 is explained by the drafters' belief that it is "obvious" that the same threshold of injurious
subsidization should apply to investigations and sunset reviews.

24 The European Communities also
defends, as justified under Article 32 of the Vienna Convention, the Panel's reference to the
negotiating history of the SCM Agreement. In particular, the European Communities underlines that
the interpretation of Article 21.3 proposed by the United States "produces a result which is 'manifestly
absurd and unreasonable' with respect to the basic obligation".

25
20. The European Communities emphasizes that acceptance of the United States' position would
allow countervailing duties based on a de minimis level of subsidization to remain ad aeternum.
This would violate the text of Articles 21.3 and 21.1 of the SCM Agreement because it would allow
the continuation of countervailing duties in blocks of five more years without there being any real
need to counter subsidization which is likely to cause injury.
2. Article 6.2 of the DSU – Whether the Panel's Terms of Reference Included a
Claim Against United States Law, As Such, Regarding the Determination to
be Made in a Sunset Review
21. The European Communities submits that the matte r of the consistency of United States law,
as such, relating to the determination to be made in a sunset review with its obligations under
Article 21.3 of the SCM Agreement , was within the Panel's terms of reference. The request for
establishment of a panel explained the history and basic framework of the relevant United States laws,
regulations and practices, and mentioned Article 21 of the SCM Agreement. The request identified
the relevant measure, the SCM Agreement provisions claimed to have been violated, and the grounds
on which this claim is based. The European Communities argues that it further developed this claim
and all supporting arguments in each of its written and oral submissions to the Panel, and that the
United States responded to such claims and arguments in its pleadings before the Panel. The
European Communities adds that the late stage of the Panel proceedings at which the objection was
raised indicates that the United States was not prejudiced by any lack of clarity in the panel request.

23Panel Report, para. 8.66. (original underlining)
25Ibid., para. 35.

C. Claims of Error by the European Communities – Appellant
1. Article 21.3 of the SCM Agreement – Self-Initiation of a Sunset Review by
the Authorities
22. The European Communities argues that the Panel erred in its interpretation of Article 21.3
with respect to the evidentiary standards applicable to the self-initiation of sunset reviews and
requests the Appellate Body to find that the standards specified in Article 11.6 of the SCM Agreement
apply equally to the self-initiation by authoritie s of sunset reviews. The European Communities
contends that the Panel conducted only a partial interpretation of the text of Article 21.3, but failed to
analyze the context of Article 21.3 and the object and purpose of the SCM Agreement.
23. In the view of the European Communities, no provision in the SCM Agreement can be read
in isolation, and all provisions are potentially applicable, mutatis mutandis, to Article 21.3, to the
extent that they are relevant to sunset reviews and that their application does not create a situation of
conflict or is not specifically excluded. This is true in particular within Part V of the SCM
Agreement. The European Communities thus disputes the significance of the omission from
Article 21.3 of any explicit reference to the evidentiary standards for the self-initiation of sunset
reviews. No such reference is necessary because it is "obvious from the overall context and
architecture of Part V of the SCM Agreement" that such evidentiary standards apply to the self-
initiation of sunset reviews as well.

26
24. The European Communities explains that, notwithstanding the lack of any explicit cross-
reference to the evidentiary standard set out in Article 11.6 of the SCM Agreement , Article 21.3
requires domestic authorities that engage in a review to "determine" that the expiry of the
countervailing duty would be likely to lead to con tinuation or recurrence of subsidization. The verb
"to determine" means to find out, to ascertain, to establish, or to carry out all those activities necessary
to reach a reasoned decision. Furthermore, Articles 11.2 and 11.6 prescribe the same evidentiary
burden for both the domestic industry and the domestic authorities to initiate an investigation. It is
difficult therefore to understand why, in a sunset review, the same evidentiary standard as set out in
Article 11.2 applies only to initiation by the domestic industry, but not to self-initiation by the
authorities.
25. The European Communities argues that the Panel also failed to consider Articles 22.1
and 22.7 of the SCM Agreement. It is clear from Article 22.7 that the same procedural guarantees
that apply to the initiation of an original investiga tion also apply to the initiation of a sunset review.

26European Communities' other appellant's submission, para. 25.

In particular, when read in conjunction with Article 22.1, Article 22.7 clearly requires domestic
authorities to have "sufficient evidence" before self-initiating sunset reviews.
26. Lastly, the European Communities questions certain reasoning used by the Panel to support
its finding that there is no evidentiary standard appl icable to the self-initiation by the authorities of a
sunset review. In particular, the European Communities questions the Panel's reliance on its own
assessment that initiation is "merely the beginnin g of a process leading to a determination as to
whether or not subsidisation and injury are likely to continue or recur."
27 The European Communities
also takes issue with the Panel's reliance on concepts such as the "chilling effect [of countervailing
duty actions] on trade in the product concerned"

28 and "trade harassment"
29, in order to distinguish
the initiation of investigations from the regime applicable to sunset reviews. Such concepts are not
found in the SCM Agreement and should not have formed a basis for the Panel's interpretation of
Article 21.3.
2. Article 11 of the DSU and Article 21.3 of the SCM Agreement –
United States Law, As Such, Regarding the Determination to be Made in a
Sunset Review
27. The European Communities requests the Appellate Body to reverse the Panel's finding that
United States law, as such, regarding the determination to be made in a sunset review, is consistent
with Article 21.3 because no provision of United States law mandates WTO-inconsistent behaviour.
In addition to its appeal regarding Article 21.3, the European Communities submits that in
considering the relevant United States law, as such, the Panel failed to make an "objective
assessment" of the matter before it, thus also violating its duty under Article 11 of the DSU.
28. The European Communities recalls that the Panel expressed doubts with respect to the
conformity of United States law with United St ates' obligations regarding the determination to be
made in a sunset review and considered that it did not have any information to resolve these doubts.

30
Yet the Panel did nothing to obtain such information. The European Communities argues that, in
"wilfully" failing to analyze United States law
31, the Panel exceeded the bounds of its discretion, as
the trier of facts, in its appreciation of the ev idence. The Panel should have gathered further

27Panel Report, para. 8.42.
28Ibid., para. 8.35.
29Ibid., para. 8.34.
30European Communities' other appellant's submission, paras. 43 and 45, referring to the Panel Report,
para. 8.105.
31European Communities' other appellant's submission, para. 46.

information and should have considered United States practice to resolve its doubts with respect to
United States law.
29. The European Communities argues that a proper analysis of United States law and practice
reveals that, in a sunset review, USDOC never considers any changes or terminations of subsidy
programs, unless such changes or terminations were found by it in a previous review. This refusal to
conduct a new investigation in a sunset review violates the requirements of Article 21.3 of the
SCM Agreement because it contravenes the duty placed on domestic authorities to "determine" the
likelihood of continuation or recurrence of a subsidy, and shifts the burden of proving a change in
circumstances to the foreign exporter.
30. The European Communities also challenges the Panel's analysis of whether the law in
question was mandatory or discretionary. According to the European Communities, the Panel found
that, although the law allows WTO-inconsistent determinations, the law, as such, was not inconsistent
because one interpretation could lead to WTO-consistent behaviour. The European Communities
claims that upholding this Panel finding "would amount to a mockery of justice"

32, since the Panel in
effect confirmed that USDOC's interpretation of United States law is WTO-inconsistent, but found
that the law itself is not. The European Communities urges the Appellate Body to find that United
States law "mandates" outcomes that are inconsistent with Article 21.3 of the SCM Agreement, and
consequently that the law also violates Article 32.5 of the SCM Agreement and Article XVI:4 of the
Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement
 ").
3. Articles 6.2 and 11 of the DSU – The Opportunity to Submit Evidence in a
Sunset Review
31. The European Communities appeals the Panel' s finding that the European Communities'
claims that United States law was inconsistent with the obligation in Article 12.1 of the SCM
Agreement to provide "ample opportunity to present … evidence" were outside the Panel's terms of
reference. The European Communities requests the Appellate Body to reverse the Panel's finding on
this issue and either to reinstate and modify the substantive findings made by the Panel in its interim
report, or to itself find the relevant United States law, as such, and as applied in this case, to be
inconsistent with the obligation to afford ample opportunity to submit evidence in a sunset review.
32. The European Communities argues that the request for the establishment of a panel was
sufficiently precise on this matter to comply w ith the requirements of Article 6.2 of the DSU.
The panel request mentioned Article 21 of the SCM Agreement in its totality, and paragraph 4 of
Article 21 applies Article 12 to sunset reviews. Moreover, the request identified the relevant United

32European Communities' other appellant's submission, para. 55.

States laws and regulations. Before the Panel, the European Communities made arguments with
regard to Articles 21.3, 21.4, as well as Article 12 of the SCM Agreement. The United States did not
object to the claims regarding the opportunity to submit evidence until late in the proceedings, which
suggests that the United States suffered no prejudice on account of any lack of clarity in the panel
request.
33. The European Communities further contends that the Panel acted inconsistently with
Article 11 of the DSU in its interpretation of Article 6.2. The Panel could not, on the basis of the
request for the establishment of the Panel and the first written submission of the European
Communities, objectively have concluded that the European Communities' claims were not
sufficiently clear, nor that the United States was not aware that such claims were being made.
D. Arguments of the United States – Appellee
1. Article 21.3 of the SCM Agreement – Self-Initiation of a Sunset Review by
the Authorities
34. The United States submits that the Panel's finding that no evidentiary standards are applicable
to the self-initiation of sunset reviews under Article 21.3 of the SCM Agreement is correct and
should be affirmed. The United States argues that, under Article 21.3, the right of the authorities to
initiate a sunset review on their own initiative is unqualified. The use of disjunctive language in
Article 21.3 is unambiguous. Under the customary rules of treaty interpretation of public
international law, the provision must be read according to its ordinary meaning, namely that the
authorities may either self-initiate a sunset review, or, initiate a sunset review in response to a duly
substantiated request from the domestic industry. The fact that the text of Article 21.3 contains no
reference to evidentiary requirements for self-initi ation of sunset reviews must have some meaning.
The United States asserts that the ordinary meaning of the absence of such a reference is simply that
there is no requirement to apply the evidentiary requirements in Article 11.6 of the SCM Agreement
(or any other evidentiary requirement) when authorities initiate sunset reviews on their own initiative.
35. The United States argues that analysis of the terms of Article 21.3 in their context and in light
of the object and purpose of the SCM Agreement leads to the same conclusion. Article 21 contains
no reference to Article 11.6, yet it does contain specific references to other provisions of the
Agreement. The SCM Agreement, in general, also contains multiple instances where obligations set
forth in one provision are made applicable in another context by means of an express cross-reference
or by means of an explicit statement on the scope of application of the particular provision. The
omission of any express link between Article 21.3 and Article 11.6 means that the Members chose not
to apply the evidentiary requirements of Article 11.6 to Article 21.3. The United States argues that

reading into Article 21.3 a cross-reference to Article 11.6 that is plainly not there would render these
cross-references redundant.
36. The United States submits that nothing in the text of Article 11.6 supports the European
Communities' assertion that the evidentiary requirements of that provision apply when authorities
self-initiate sunset reviews under Article 21.3. To the contrary, the text of Article 11.6 unequivocally
states that those evidentiary requirements are applicable when authorities decide to self-initiate an
investigation.
37. In the view of the United States, because the functions of original investigations and sunset
reviews are different, it is not unreasonable to find that the initiation requirements for investigations
and sunset reviews are different. The purpose of an investigation is to determine whether the
conditions necessary for the imposition of a countervailing duty currently exist. The purpose of a
sunset review is to determine whether the conditions necessary for continued imposition of a
countervailing duty exist. In contrast to the retros pective focus of an investigation, a sunset review is
required to focus on likely future behaviour.
2. Article 11 of the DSU and Article 21.3 of the SCM Agreement –
United States Law, As Such, Regarding the Determination to be Made in a
Sunset Review
38. The United States argues that the Panel properly found that United States law, as such, is
consistent with United States' obligations relating to the determination to be made in a sunset review.
The United States dismisses the Panel's expression of doubt with respect to the conformity of one
particular regulatory provision with such obligations

33 on the ground that the Panel drew an incorrect
inference as to how that provision operates.
39. The United States submits that the European Communities misstates the standard for
distinguishing between mandatory and discretionary legislation. The fact that a particular application
of a law is found to be WTO-inconsistent does not mean that the law as such is automatically WTO-
inconsistent. The European Communities has failed to identify and articulate how any provisions of
the United States statute or regulations require USDOC to act inconsistently with obligations relating
to the likelihood determination or preclude USDOC from acting consistently with such obligations.
Nor has the European Communities articulated how particular text in the Statement of Administrative
Action (the "SAA") or the Sunset Policy Bulletin

34 requires USDOC to interpret the statute or the

33Panel Report, para. 8.105.
34Policy Bulletin, "Policies Regarding the Conduct of Five-Year ('Sunset') Reviews of Antidumping
and Countervailing Duty Orders", United States Federal Register, 16 April 1998 (Volume 63, Number 73), p.
18871.

regulations in a WTO-inconsistent manner in respect of the determination to be made in a sunset
review.
40. As for the European Communities' argument th at the SAA, in conjunction with the Sunset
Policy Bulletin, establishes a practice which demonstrates that the United States statute violates
Article 21.3, the United States puts forward two arguments. First, the European Communities
misstates United States practice by suggesting that USDOC does not consider any changes or
terminations of subsidy programs, unless such changes or terminations were found in a previous
review of the order. In fact, United States law requires USDOC to consider whether any change to a
subsidy program has occurred that is likely to affect the net countervailable subsidy. Second, noting,
inter alia, the ruling of the Appellate Body in US – Hot-Rolled Steel
 35, the United States argues that
United States practice, even if it were WTO-inconsistent, could not render the United States statute
and regulations, as such, WTO-inconsistent.
3. Articles 6.2 and 11 of the DSU – The Opportunity to Submit Evidence in a
Sunset Review
41. The United States submits that the Panel properly found that the European Communities'
claims regarding the consistency of United States law, as such, and as applied, in respect of the
opportunity to submit evidence in a sunset review, were not within its terms of reference. As the
Panel found, the European Communities' panel request failed to identify the opportunity to submit
evidence in a sunset review as a specific measure at issue. Moreover, the panel request also failed to
identify the provisions of the SCM Agreement allegedly violated and failed to provide a brief
summary of the legal basis of the complaint. Therefore, even if the Appellate Body should reverse the
Panel's finding that the European Communities' panel request failed to identify the specific measure at
issue, the United States urges the Appellate Body to affirm the Panel's finding that these matters were
beyond the Panel's terms of reference on these additional grounds.
42. On the issue of whether the Appellate Body may reinstate or modify the Panel's interim
findings, the United States submits that the interim findings have no legal status and could not,
therefore, be reinstated.

35Appellate Body Report, US – Hot-Rolled Steel, para. 200.

E. Arguments of the Third Participants
1. Japan
(a) Article 21.3 of the SCM Agreement – Applicability of a De Minimis
Standard in Sunset Reviews
43. Japan submits that the de minimis standard under Article 11.9 of the SCM Agreement is
applicable to sunset reviews as well, and supports the Panel's finding in this regard. Although
Article 21.3 does not itself define the terms "subsidization" and "injury", the meaning of these terms
can be determined from Articles 1, 14 and 15 of the SCM Agreement. A proper interpretation of
Article 15 requires that only those subsidies that are more than de minimis be considered injurious
and thus subject to countervailing duties. Article 11.9 supports this view as its second sentence refers
not to "investigations", but rather to the broader concept of "cases" which must be read to include
sunset reviews. Japan finds further support for its view in the language of Articles 21.1, 22 and 27 of
the SCM Agreement.
44. Japan adds that the Panel's interpretation is consistent with the object and purpose of
Article 21.3. In Japan's view, sunset reviews and original investigations both decide whether
countervailing duties should apply. Both determinations should therefore apply the de minimis rule
of Article 11.9 to determine the existence of a coun tervailable subsidy. Las tly, with respect to the
reasoning of the panel in US – DRAMS , Japan argues that duty assessment reviews, which were at
issue in that case, differ fundamentally from sunset reviews. Japan submits that the logic of the
US – DRAMS panel supports the Panel's findings in the present proceedings.
(b) Article 21.3 of the SCM Agreement – Self-Initiation of a Sunset
Review by the Authorities
45. Japan argues that the authorities must be in possession of "sufficient evidence" in order to
self-initiate sunset reviews under Article 21.3 of the SCM Agreement. Japan submits that, in finding
that authorities may automatically self-initiate sunset reviews without any evidentiary basis, the
Panel misread the text of Article 21.3. The absence of even a scintilla of evidence can never be
considered "sufficient". Investigating authorities must have some factual basis in order to initiate a
review. Japan points to Article 22 of the SCM Agreement as explicitly requiring authorities to satisfy
themselves that there is "sufficient evidence" to just ify the initiation of sunset reviews, and faults the
Panel for not examining this provision. Japan emphasizes that Article 22.7 specifically states that
Article 22.1 applies, mutatis mutandis, to sunset reviews under Article 21.3.

46. Japan also argues that Article 11.6 of the SCM Agreement requires that authorities have
"sufficient evidence" to initiate sunset reviews under Article 21.3. Japan submits that Article 11
specifically applies to sunset reviews due to Article 22.7, which requires the mutatis mutandis
application of Article 22.1 in such reviews. Japan argues that the Panel improperly focused its
interpretation on Article 11.6 in isolation, without examining its relationship to Articles 22.1 and 22.7.
47. Japan submits that the Panel failed to focus on the purpose of initiation. In Japan's view,
Article 21.3 contemplates that some countervailin g duties may terminate without review. The duty
may be continued beyond five years only when this is necessary to counteract injurious subsidization.
Under Article 11.6, authorities must have sufficient ev idence to self-initiate an original investigation.
It makes no sense, in Japan's view, for the SCM Agreement to limit the discretion to self-initiate in
some instances but allow unfettered discretion in other instances.
48. Japan adds that the de minimis rule under Article 11.9, and the obligation under Article 21.1
to continue the imposition of countervailing duties "only as long as" necessary to counteract injurious
subsidization, also support an interpretation of Article 21.3 that would require authorities to be in
possession of sufficient evidence to initiate sunset reviews under that provision.
2. Norway
(a) Article 21.3 of the SCM Agreement – Applicability of a De Minimis
Standard in Sunset Reviews
49. Norway argues that the Panel correctly found that the de minimis requirement of Article 11.9
also applies to sunset reviews. A proper analysis of the context of Article 21.3 reveals that all
provisions of the SCM Agreement are applicable, mutatis mutandis, to Article 21.3, to the extent
that they are relevant to sunset reviews. The immediate context of Article 21.3 is Article 21.1, which
establishes that, where subsidization does not cause such injury, the Agreement does not authorize the
imposition of countervailing duties. Furthermore, Article 11.9 requires that there shall be immediate
termination in cases where the amount of subsidy is de minimis. There is no reason why the same
de minimis standard should not apply to sunset reviews. Sunset reviews and the original investigation
share the same object and purpose, and all impositions of countervailing duties must fulfil the same
requirements. Finally, Norway attaches no significance to the absence in Article 21 of any mention
of, or cross-reference to, Article 11.9. Norway argues that certain basic concepts such as "subsidy"
and "injury", once defined, need not be repeated, and that Article 21.3 must be interpreted in good
faith.

(b) Article 21.3 of the SCM Agreement – Self-Initiation of a Sunset
Review by the Authorities
50. Norway argues that the Panel erred in finding th at the United States standard of initiation for
sunset reviews of countervailing duties is consistent with Articles 21 and 11 of the SCM Agreement.
Article 11 applies to sunset reviews, as do all the provisions of Part V of the SCM Agreement .
Norway finds support for this view in the refere nce made to Article 12 in Article 21.4 of the
Agreement. Norway points to the context of Article 21.3, in particular paragraphs 1 and 2 of
Article 21; as well as Article 11, which sets out evidentiary requirements for the initiation of
countervailing duty investigations. According to No rway, the requirement of sufficient evidence in
Article 11 is also clearly set forth in Article 22.1, which is explicitly applied to sunset reviews by
virtue of Article 22.7.
(c) Article 11 of the DSU and Article 21.3 of the SCM Agreement –
United States Law, As Such, Regarding the Determination to be
Made in a Sunset Review
51. Norway submits that United States law vi olates Article 21.3 and 21.1 and the purpose of
Part V of the SCM Agreement (and consequently also Article 32.5 of the SCM Agreement and
Article XVI:4 of the WTO Agreement ) by not requiring a new investigation in sunset reviews.
Article 21.3 establishes a positive obligation upon the domestic authorities to "determine" the
likelihood of continuation or recurrence of subsidization. This means that Article 21.3 requires the
authorities to undertake an unbiased review, independent of the results of the original investigation, in
full conformity with all the procedural and substantive requirements for an initial determination.
There is no reason to understand the requirement of "determination" of subsidization and injury
differently in Article 21.3 as compared to, inter alia, Articles 11 and 15. This is also sustained by
Article 21.1 and the purpose of Part V of the SCM Agreement. United States law limits the ability of
the authorities to conduct a proper determination in a sunset review. For this reason, Norway also
supports the European Communities' argument that the Panel mischaracterized the distinction made in
previous WTO rulings between discretionary and mandatory laws.

III. Issues Raised in this Appeal
52. The following issues are raised in this appeal:
(a) as to the de minimis standard in sunset reviews:
whether the Panel erred in finding, in paragraphs 8.80, 8.81, 8.84, 9.1(b) and 9.1(c) of
its Report that, in not applying a less than 1 percent de minimis standard in sunset
reviews, United States law, as such, and as applied in the sunset review of
countervailing duties on carbon steel, is inconsistent with Article 21.3 and, therefore,
with Article 32.5, of the Agreement on Subsidies and Countervailing Measures (the
"SCM Agreement"), and consequently is also inconsistent with Article XVI:4 of the
 Marrakesh Agreement Establishing the World Trade Organization (the " WTO
Agreement");
(b) as to the evidentiary standards for the self-initiation of sunset reviews:
whether the Panel erred in finding, in paragraphs 8.49 and 9.1(a) of its Report, that
United States law, as such, with respect to the automatic self-initiation by authorities
of sunset reviews, is consistent with paragraphs 1 and 3 of Article 21, and with
Article 10, of the SCM Agreement;
(c) as to the determination to be made in sunset reviews:
(i) whether the Panel erred in finding, in paragraph 7.23 of its Report, that the
request for the establishment of the Panel satisfied the requirements of
Article 6.2 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (the "DSU") with respect to a claim regarding the
consistency of United States law, as such, with the obligation to determine
the likelihood of continuation or recurrence of subsidization in sunset
reviews;
(ii) whether the Panel erred in finding, in paragraphs 8.106 and 9.1(d) of its
Report, that United States law, as such, is not inconsistent with the obligation
in Article 21.3 of the SCM Agreement to determine the likelihood of
continuation or recurrence of subsidization in sunset reviews; and whether
the Panel acted inconsistently with its duties under Article 11 of the DSU
in so finding; and

(d) as to the opportunity to present evidence in sunset reviews:
whether the Panel erred in finding, in paragraph 8.145 of its Report, that the request
for the establishment of the Panel failed to satisfy the requirements of Article 6.2 of
the DSU with respect to claims regarding the consistency of United States law, as
such, and as applied in the sunset review of countervailing duties on carbon steel,
with obligations regarding the opportunity to present evidence in sunset reviews; and
whether the Panel acted inconsistently with its duties under Article 11 of the DSU in
so finding.
IV. Background
53. This appeal raises a number of issues relating to Members' obligations under the SCM
Agreement in the conduct of five-year, or "sunset", reviews of countervailing duties. We consider it
useful, at the outset, to set out a brief overview of our understanding of the relevant United States'
legal framework relating to sunset reviews, based on the explanations provided by the participants in
the course of these proceedings.
54. In United States law, sunset reviews are governed primarily by Sections 751(c) and 752 of the
Tariff Act of 1930, as amended (the "Tariff Act"), which correspond, respectively, to Sections 1675(c)
and 1675a of Title 19 of the United States Code.

36 Pursuant to Section 751(c)(1), the United States
Department of Commerce ("USDOC") is directed, in a sunset review, to "determine, in accordance
with Section 752, whether revocation of the countervailing … duty order … would be likely to lead to
continuation or recurrence of … a countervailable subsidy".

37 Section 752 sets forth certain "special
rules" that apply, inter alia , to the determination to be made by USDOC in sunset reviews.
Specifically, Section 752(b)(1) provides that USDOC "shall consider":
(A) the net countervailable subsidy determined in the investigation
and subsequent reviews, and
(B) whether any change in the program which gave rise to the net
countervailable subsidy described in subparagraph (A) has occurred
that is likely to affect that net countervailable subsidy.

36As the participants, and the Panel, have referred primarily to Sections 751(c) and 752 of the Tariff
Act, rather than to Sections 1675(c) and 1675a of Title 19 of the United States Code, we will also refer to the
Tariff Act provisions in this Report. By way of background, Title 19 of the United States Code deals with
matters relating to customs duties. Chapter 4 of Title 19 corresponds to the Tariff Act of 1930, as amended. Its
Subtitle IV sets forth the legislative rules relating to anti-dumping and countervailing duties.
37Under United States law, USDOC is charged with responsibility for determinations relating to
subsidization. A separate agency, the United States International Trade Commission, is responsible for injury
determinations. None of the issues in this appeal relates to an injury determination.

55. Section 752(b)(2) of the Tariff Act provides that, "if good cause is shown", USDOC shall also
consider, in certain circumstances and within specified limits, certain other subsidy programs that are
either determined in other investigations or revi ews to provide net countervailable subsidies, and
certain programs newly alleged to provide countervailable subsidies. Section 752(b)(3) requires
USDOC to provide to the United States International Trade Commission ("USITC") "the net
countervailable subsidy that is likely to prevail if the order is revoked". It further stipulates that
USDOC "shall normally" choose a net countervaila ble subsidy that was determined in the final
determination made in an investigation

38, or in a subsequent review of the countervailing duty.
39
56. These statutory provisions are implemented through additional provisions contained in the
United States Code of Federal Regulations (the "Regulations"). Specifically, Part 351 of Title 19 of
the Regulations sets forth regulations relating to anti-dumping and countervailing duties and related
procedures as they relate to USDOC, and Section 218 of Part 351 deals with sunset reviews.
57. In their discussion of the framework governing the conduct of sunset reviews, the participants
have also referred to the Statement of Administrative Action

40 (the "SAA") and USDOC's "Policies
Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and Countervailing Duty
Orders"
41 (the "Sunset Policy Bulletin"). The SAA, which was submitted to the United States
Congress along with the proposed Uruguay Round Agreements Act
42 (the "URAA"), "represents an
authoritative expression by the Administration concerning its views regarding the interpretation and
application of the Uruguay Round agreements".

43 According to the URAA, the SAA is to be:

38Pursuant to Section 705 of the Tariff Act.
39Pursuant to Section 751(a) or 751(b)(1) of the Ta riff Act. We observe that in addition to sunset
reviews, Section 751 of the Tariff Act provides for two other types of reviews, namely "periodic review of
amount of duty", and "reviews based on changed circumstances". Periodic reviews, dealt with in Section
751(a), are sometimes referred to as "administrative reviews". Pursuant to Section 751(a), USDOC is required,
upon request, to "review and determine the amount of any net countervailable subsidy" once a year, and then
publish "the results of such review, together with notice of any duty to be assessed, estimated duty to be
deposited, or investigation to be resumed." Paragraph (b) of Section 751 deals with "reviews based on changed
circumstances", and applies to both USDOC and USITC. When USDOC or USITC receives information, or a
request from an interested party, which "shows change d circumstances sufficient to warrant a review", then
USDOC or USITC (as the case may be) must conduct a review of the relevant determination or agreement.
40H.R. 5110, H.R. Doc. 316, Vol. 1, 103d Congress, 2nd Session, 656 (1994).
41Policy Bulletin, United States Federal Register, 16 April 1998 (Volume 63, Number 73), p. 18871.
42Public Law 103-465, 108 Stat. 4809, which became law in the United States on 8 December 1994.
43SAA, supra, footnote 40, p. 656.

… regarded as an authoritative expression by the United States
concerning the interpretation and application of the Uruguay Round
Agreements and this Act in any judicial proceeding in which a
question arises concerning such interpretation or application.
44
The Sunset Policy Bulletin, issued by USDOC, is "intended to complement the applicable statutory
and regulatory provisions by providing guidance on methodological or analytical issues not explicitly
addressed by the statute and regulations".
45
V. Article 21.3 of the SCM Agreement – Applicability of a De Minimis Standard in Sunset
Reviews (Appeal by the United States)
58. The Panel was of the view that, for sunset reviews, the "less than 1 percent" de minimis
standard
46 specified, with respect to the amount of the subsidy, in Article 11.9 of the SCM Agreement
is "implied in Article 21.3".
47 Based on this view, the Panel found that:
US CVD law and the accompanying regulations are inconsistent with
Article 21.3 of the SCM Agreement in respect of the application of a
0.5 per cent de minimis standard to sunset reviews, and therefore
violate Article 32.5 of the SCM Agreement and, consequently, also
Article XVI:4 of the WTO Agreement.
48 (original underlining)
[T]he United States, in applying a 0.5 per cent de minimis standard to
the instant sunset review, acted in violation of Article 21.3 of the
SCM Agreement.
49 (original underlining)
59. The United States appeals these findings. The United States argues that the Panel failed
properly to apply the customary rules of treaty interpretation and wrongly "read into" Article 21.3 of
the SCM Agreement words and obligations that simply do not exist under that provision. According
to the United States, if the text of Article 21.3 is properly interpreted, in its context and in the light of
the object and purpose of the SCM Agreement as a whole, it is clear that this provision does not

44URAA, Section 102(d); 19 U.S.C. § 3512(d).
45Sunset Policy Bulletin, supra, footnote 41, p. 18871. In response to questioning at the oral hearing,
the United States indicated that the Sunset Policy Bulle tin represents a statement of existing USDOC practice.
The United States explained that the Sunset Policy Bulletin, as such, is not binding upon USDOC, but that
USDOC may not depart from it in an arbitrary or capricious manner. The European Communities submitted
that the Sunset Policy Bulletin "contains a compendium of the DOC policies with regard to sunset reviews of
AD and CVD orders, i.e. it illustrates the normal best practice of the domestic investigating authority on the
issue under dispute". (European Communities' other appellant's submission, para. 47)
46We observe that Article 11.9 of the SCM Agreement defines as de minimis an amount of subsidy of
less than 1 percent ad valorem. For the sake of simplicity, we will refer to this standard as either the "1 percent
de minimis standard" or as the "de minimis standard in Article 11.9".
47Panel Report, para. 8.80.
48Ibid., para. 9.1(b).
49Ibid., para. 9.1(c).

require the application of any de minimis standard in a sunset review.
50 The United States
underlines that one member of the Panel expressed that view in his separate dissenting opinion.
51
60. This issue requires us to consider whether, as the Panel found, the same 1 percent
de minimis standard that must be applied, pursuant to Article 11.9 of the SCM Agreement, in
countervailing duty investigations, must also be applied in sunset reviews carried out pursuant to
Article 21.3 of that Agreement. The issue arises because United States law does not require
application of a 1 percent de minimis standard in sunset reviews. Rather, United States law
prescribes a de minimis standard of 0.5 percent ad valorem for sunset reviews

52 In its legislation
and regulations implementing the results of the Uruguay Round, the United States provided for a
de minimis standard of 1 percent to be applied in investigations

53, but maintained its pre-existing
de minimis standard of 0.5 percent for reviews.
54 These modifications reflected the view of the
United States Administration, as expressed in the SAA, that the " de minimis requirements of

51One member of the Panel dissented from the findings of the Panel in paragraphs 9.1(b) and 9.1(c).
That member found, at paragraph 10.15 of the Panel Report, that:
(a) US CVD law and the accompanying regulations are consistent with
Article 21.3 of the SCM Agreement in respect of the application of
a 0.5 per cent de minimis standard to sunset reviews; and
(b) The United States, in applying a 0.5 per cent de minimis standard
to the instant sunset review, did not act in violation of Article 21.3
of the SCM Agreement. (original underlining)
52Section 752(b)(4)(B) of the Tariff Act provides that the same de minimis standard that applies in
periodic reviews and changed circumstances reviews shall also apply to sunset reviews. This rate is not
specified in the Tariff Act, but is set at 0.5 percent ad valorem in Section 351.106(c)(1) of Title 19 of the
Regulations.
53Sections 703(b)(4) and 705(a)(3) of the Tariff Act.
54Sunset reviews did not exist under United States law prior to the passage of the URAA. By virtue of
Section 752(b)(4)(B) of the Tariff Act, the same de minimis standard that applies in periodic reviews and
changed circumstances reviews is also applied to sunset reviews. The SAA explains that:
[in reviews of countervailing duty orders], the Administration intends that
Commerce will continue its present practice of waiving the collection of
estimated deposits if the deposit rate is below 0.5 percent ad valorem, the
existing regulatory standard for de minimis.
(SAA, supra, footnote 40, p. 939)

Articles 11.9, 27.10 and 27.11 of the Subsidies Agreement are applicable only to initial CVD
investigations. Thus … these standards are not applicable to reviews of CVD orders."
55
61. At the outset of our analysis, we recall that Article 3.2 of the DSU recognizes that
interpretative issues arising in WTO dispute settle ment are to be resolved through the application
of customary rules of interpretation of public international law. It is well settled in WTO case law
that the principles codified in Articles 31 and 32 of the Vienna Convention on the Law of Treaties
(the "Vienna Convention") are such customary rules. Article 31(1) provides in relevant part that:
A treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose.
62. Thus, the task of interpreting a treaty provision must begin with its specific terms.
Accordingly, we turn, first, to Article 21.3 of the SCM Agreement, which deals with sunset reviews:
Notwithstanding the provisions of paragraphs 1 and 2, any definitive
countervailing duty shall be terminated on a date not later than five
years from its imposition (or from the date of the most recent review
under paragraph 2 if that review has covered both subsidization and
injury, or under this paragraph), unless the authorities determine, in a
review initiated before that date on their own initiative or upon a duly
substantiated request made by or on behalf of the domestic industry
within a reasonable period of time prior to that date, that the expiry of
the duty would be likely to lead to continuation or recurrence of
subsidization and injury.
52 The duty may remain in force pending the
outcome of such a review.

55SAA, supra, footnote 40, p. 939. (emphasis added) These expressed views of the United States
contrast with the practice of the European Communitie s. The European Communities' legislation does not deal
explicitly with the de minimis standard to be applied in a sunset review (or, in European Communities'
terminology, "Expiry Review"). (See Article 17 of Council Regulation (EC) 2026/97 of 6 October 1997 on the
protection against subsidised imports of countries not members of the European Community, Official Journal
L288/1 of 21 October 1997; Exhibit EC-26 submitted by the European Communities to the Panel) However, in
a specific case where a subsidy granted by a developing country was found to be less than 2 percent, the
European Commission terminated the duty at the expiry review stage as a consequence of its finding that the
subsidy was de minimis . (EC Commission Decision of 12 June 1998, terminating the countervailing duty
proceeding concerning imports of polyester fibres and polyester yarns originating in Turkey, Official Journal
L168/46 of 13 June 1998; Exhibit EC-27 submitted by the European Communities to the Panel)

63. Article 21.3 imposes an explicit temporal limit on the maintenance of countervailing duties.
For countervailing duties that have been in place for five years, the terms of Article 21.3 require their
termination unless certain specified conditions are met. Specifically, a Member is permitted not
to terminate such duties only if it conducts a review and, in that review, determines that the prescribed
conditions for the continued application of the duty are satisfied. The prescribed conditions are "that
the expiry of the duty would be likely to lead to continuation or recurrence of subsidization and
injury". If, in a sunset review, a Member makes an affirmative determination that these conditions are
satisfied, it may continue to apply countervailing duties beyond the five-year period set forth in
Article 21.3. If it does not conduct a sunset revi ew, or, having conducted such a review, it does not
make such a positive determination, the duties must be terminated.
64. As the Panel observed, and as all of the participants in this appeal agree, the text of
Article 21.3 does not mention any de minimis standard to be applied in sunset reviews. Nor does it
make any express reference to the de minimis standard set forth in Article 11.9 of the
SCM Agreement.
65. We have previously observed that the fact that a particular treaty provision is "silent" on a
specific issue "must have some meaning".

56 In this case, the lack of any indication, in the text of
Article 21.3, that a de minimis standard must be applied in sunset reviews serves, at least at first
blush, as an indication that no such requirement exists. However, as the Panel itself observed, the task
of ascertaining the meaning of a treaty provision wi th respect to a specific requirement does not end
once it has been determined that the text is silent on that requirement.
57 Such silence does not exclude
the possibility that the requirement was intended to be included by implication.
66. With this in mind, we next consider Article 11.9 of the SCM Agreement, which sets forth,
for original investigations, the de minimis standard that the Panel found to be "implied" in sunset
reviews carried out pursuant to Article 21.3. Article 11.9 provides:
An application under paragraph 1 shall be rejected and an
investigation shall be terminated pr omptly as soon as the authorities
concerned are satisfied that there is not sufficient evidence of either
subsidization or of injury to justify proceeding with the case. There
shall be immediate termination in cases where the amount of a
subsidy is
 de minimis, or where the volume of subsidized imports,
actual or potential, or the injury, is negligible. For the purpose of this
paragraph, the amount of the subsidy shall be considered to be
de minimis if the subsidy is less than 1 per cent ad valorem.

56Appellate Body Report, Japan – Alcoholic Beverages II , at 111. See also, Appellate Body Report,
Canada – Patent Term, para. 78.
57Panel Report, paras. 8.27-8.30.

67. This provision is one of the eleven paragraphs of Article 11. The various paragraphs set forth
rules of a mainly procedural and evidentiary nature. All of them relate to the authorities' initiation and
conduct of a countervailing duty investigation, as would be expected given the overall title of
Article 11 – "Initiation and Subsequent Investigation". Paragraph 9 of Article 11 requires authorities
to terminate immediately investigative action in three situations. One of these is when the authorities
are satisfied that the amount of the subsidy is less than 1 percent ad valorem.
68. Although the terms of Article 11.9 are detailed as regards the obligations imposed on
authorities thereunder, none of the words in Article 11.9 suggests that the de minimis standard that it
contains is applicable beyond the investigation phase of a countervailing duty proceeding.
58 I n
particular, Article 11.9 does not refer to Article 21.3, nor to reviews that may follow the imposition
of a countervailing duty.
69. We observe, in this regard, that the technique of cross-referencing is frequently used in the
SCM Agreement . Article 21.4 refers to the obligations set forth in Article 12, and Article 21.5
subjects undertakings given in accordance with Article 18 to the review mechanisms contemplated in
Article 21. Similarly, Article 22.7 of the SCM Agreement explicitly applies the provisions of
Article 22, entitled "Public Notice and Explanation of Determinations ", to reviews carried out under
Article 21. Furthermore, Article 11.9 is specifically referred to in Article 15.3 of the SCM
Agreement, and the provisions of Article 11, more generally, are referred to in a number of other
provisions of the SCM Agreement.
59 These cross-references suggest to us that, when the negotiators
of the SCM Agreement intended that the disciplines set forth in one provision be applied in

58We do not subscribe to the view, expressed by Japan, that the use of the word "cases" (rather than the
word "investigation") in the second sentence of Article 11.9 means that the application of the de minimis
standard set forth in that provision must be applied in all phases of countervailing duty proceedings—not only
in investigations. The use of the word "cases" does not alter the fact that the terms of Article 11.9 apply the
de minimis standard only to the investigation phase. We note further that the panel in US – DRAMS rejected a
similar argument with respect to the meaning of the word "cases" in Article 5.8 of the Anti-Dumping
Agreement, a provision almost identical to Article 11.9 of the SCM Agreement. (Panel Report, US – DRAMS,
para. 6.87)
59See, for example, Articles 12.13, 13.1, 17.1 and 22.1 of the SCM Agreement. Moreover, as the Panel
noted that:
[a] number of provisions in the SCM Agreement also apply independently
of cross-references in that they contain explicit statements of their scope of
application: definition of "subsidy" in Article 1 ("For the purpose of this
Agreement"); definition of "interested parties" in Article 12.9 ("for the
purposes of this Agreement"); calculation of the amount of a subsidy under
Article 14 ("For the purpose of Part V"); definition of "initiated" in footnote
37 ("as used hereinafter"); definition of "injury" under Article 15 and in
footnote 45 ("Under this Agreement"); definition of "like product" in
footnote 46 ("Throughout this Agreement"); definition of domestic industry
in Article 16 ("For the purposes of this Agreement"); and definition of
"levy" in footnote 51 ("As used in this Agreement").

another context, they did so expressly. In the light of the many express cross-references made in the
SCM Agreement, we attach significance to the absence of any textual link between Article 21.3
reviews and the de minimis standard set forth in Article 11.9. We consider this to be noteworthy,
having regard to the fact that both the adoption of a de minimis standard for investigations, and the
introduction of a "sunset" provision, were regarded as important additions to the Tokyo Round
Subsidies Code for improving GATT disciplines on subsidies and countervailing duties.
60
70. Turning to the immediate context of Article 21.3, we observe the title to Article 21 of the
 SCM Agreement reads "Duration and Review of Countervailing Duties and Undertakings". The first
paragraph of Article 21 stipulates that a countervailing duty "shall remain in force only as long as and
to the extent necessary to counteract subsidization which is causing injury". We see this as a general
rule that, after the imposition of a countervailing duty, the continued application of that duty is subject
to certain disciplines. These disciplines relate to the duration of the countervailing duty ("only as
long as … necessary"), its magnitude ("only … to the extent necessary"), and its purpose ("to
counteract subsidization which is causing injury"). Thus, the general rule of Article 21.1 underlines
the requirement for periodic review of countervailing duties and highlights the factors that must
inform such reviews. This does not, however, assist us in determining whether a specific de minimis
standard is intended to be applied in an Article 21.3 review.
71. Continuing our examination of Article 21 with its second paragraph, we recall that, as we
explained in US – Lead and Bismuth II
 , "Article 21.2 provides a review mechanism to ensure that
Members comply with the rule set out in Article 21.1 of the SCM Agreement."
61 Moreover, the last
sentence of Article 21.2 emphasizes the principle that the countervailing duty must be terminated
"immediately" when "the authorities determine that the countervailing duty is no longer warranted".
As we explained in our Report in US – Lead and Bismuth II , the determination made in a review
under Article 21.2 must be a meaningful one:

60See infra., para. 90.
61Appellate Body Report, US – Lead and Bismuth II , para. 53. Article 21.2 of the SCM Agreement
provides that:
The authorities shall review the need for the continued imposition of the
duty, where warranted, on their own initiative or, provided that a reasonable
period of time has elapsed since the imposition of the definitive
countervailing duty, upon request by any interested party which submits
positive information substantiating the need for a review. Interested parties
shall have the right to request the authorities to examine whether the
continued imposition of the duty is necessary to offset subsidization,
whether the injury would be likely to continue or recur if the duty were
removed or varied, or both. If, as a result of the review under this
paragraph, the authorities determine that the countervailing duty is no longer
warranted, it shall be terminated immediately.

[o]n the basis of its assessment of the information presented to it by
interested parties, as well as of other evidence before it relating to the
period of review, the investigating authority must determine whether
there is a continuing need for the application of countervailing duties.
The investigating authority is not fr ee to ignore such information. If
it were free to ignore this information, the review mechanism under
Article 21.2 would have no purpose.
62
While the requirement of a rigorous review cannot be denied, Article 21.2 does not expressly establish
a de minimis standard. Accordingly, its terms do not, in our view, shed light on whether such a
standard must be "implied" either for reviews carried out pursuant to that provision or pursuant to
Article 21.3.
72. The immediate context of Article 21.3 also includes paragraph 4 of Article 21, the first
sentence of which provides that "[t]he provisions of Article 12 regarding evidence and procedure shall
apply to any review carried out under this Article." Article 12 sets out obligations, primarily of an
evidentiary and procedural nature, that apply to the conduct of an investigation. It comes
immediately after Article 11, which sets forth a number of procedural, evidentiary as well as
substantive rules related to the initiation and conduct of an investigation. Given that the requirements
of Articles 11 and 12 are placed consecutively in the Agreement, and the fact that both Articles
expressly set out obligations in relation to investigations, we read the express reference in
Article 21.4 to Article 12, but not to Article 11, as an indication that the drafters intended that the
obligations in Article 12, but not those in Article 11, would apply to reviews carried out under
Article 21.3.
73. Looking beyond the immediate context of Article 21.3, we turn to the object and purpose of
the SCM Agreement. We note, first, that the Agreement contains no preamble to guide us in the task
of ascertaining its object and purpose. In Brazil – Desiccated Coconut , we observed that the
"SCM Agreement contains a set of rights and obligations that go well beyond merely applying and
interpreting Articles VI, XVI and XXIII of the GATT 1947."

63 T h e SCM Agreement defines the
concept of "subsidy", as well as the conditions under which Members may not employ subsidies. It
establishes remedies when Members employ prohib ited subsidies, and sets out additional remedies
available to Members whose trading interests are harmed by another Member's subsidization practices.
Part V of the SCM Agreement deals with one such remedy, permitting Members to levy countervailing
duties on imported products to offset the benefits of specific subsidies bestowed on the manufacture,
production or export of those goods. However, Part V also conditions the right to apply such duties on
the demonstrated existence of three substantive conditions (subsidization, injury, and a causal link

62Appellate Body Report, US – Lead and Bismuth II, para. 61.
63Appellate Body Report, Brazil – Desiccated Coconut, at 181.

between the two) and on compliance with its procedural and substantive rules, notably the requirement
that the countervailing duty cannot exceed the amount of the subsidy.
64 Taken as a whole, the main
object and purpose of the SCM Agreement is to increase and improve GATT disciplines relating to the
use of both subsidies and countervailing measures.
65
74. We thus believe that the Panel properly identified, as among the objectives of the
SCM Agreement, the establishment of a framework of rights and obligations relating to countervailing
duties66, and the creation of a set of rules which WTO Members must respect in the use of such
duties.
67 Part V of the Agreement is aimed at striking a balance between the right to impose
countervailing duties to offset subsidization that is causing injury, and the obligations that Members
must respect in order to do so. While we agree that Part V strikes such a balance, this alone does not
assist us in the task of determining whether the 1 percent de minimis standard in Article 11.9 is
intended to be applied in reviews carried out pursuant to Article 21.3.
75. This brings us to an examination of the re asoning used by the Panel to find that the
de minimis standard of Article 11.9 "must be applicable to sunset reviews as it is to investigations".
68
The Panel was of the view that "the sole or princi pal rationale for the de minimis standard set out in
Article 11.9 is that a de minimis subsidy is considered to be non-injurious."
69
76. Using this rationale, the Panel reasoned that it would be "difficult to see how de minimis rate
of likely subsidisation could be considered injurious at the stage of sunset review and continuation of
a CVD, when the same rate is considered non-injurious at the stage of investigation and imposition of
a CVD."

70 The Panel summarized its reasoning as follows:

64See Article 19.4 of the SCM Agreement. We also note that Article 19.2 expressly states that "[i]t is
desirable … that the duty should be less than the total amount of the subsidy if such lesser duty would be
adequate to remove the injury to the domestic industry".
65We recall that the 1986 Punta del Este Ministerial Declaration, which initiated the Uruguay Round,
and charted the course of the negotiations, provided that:
[n]egotiations on subsidies and countervailing measures shall be based on a
review of Articles VI and XVI and the MTN agreement on subsidies and
countervailing measures with the objective of improving GATT disciplines
relating to all subsidies and countervailing measures that affect
international trade. (emphasis added)
(Ministerial Declaration on the Uruguay Round, GATT Doc. No. MIN.DEC (20 September 1986), p. 7)
66Panel Report, para. 8.32.
67Ibid., para. 8.68.
68Ibid., para. 8.79.
69Ibid., para. 8.61.
70Ibid., para. 8.65.

… the rationale for the de minimis standard set out in Article 11.9 is
clearly that CVDs are to be used to counter injurious subsidisation,
and the threshold set out in this provision demarcates the level below
which subsidisation is deemed to be so small as to be non-injurious
for purposes of the imposition of CVDs. Having found this to be the
case, and having established that one of the objects and purposes of
the SCM Agreement is to regulate the imposition of CVDs and to
create a disciplinary framework therefor, we are of the view that the
de minimis standard must be applicable to sunset reviews as it is to
investigations. Finding otherwise would compromise the very object
and purpose of the SCM Agreement and the disciplinary framework
that the drafters sought to create through the Agreement.

71
77. The Panel's approach was centered on the premise that the de minimis standard set forth in
Article 11.9 represents a threshold below which subsidization is always non-injurious. The Panel
formed this opinion after examining a 1987 Note prepared by the Secretariat for the Uruguay Round
Negotiating Group on Subsidies and Countervailing Measures

72, which was brought to the Panel's
attention by the European Communities.
73 The Panel cited part of the Note which recognized that
there are two alternative (but not mutually exclusive) theoretical justifications for a de minimis
rule.
74 The Panel continued:
[w]hile it is not known which of the two rationales, if not both ("not
mutually exclusive"), served as a basis for Article 11.9, the language
of that provision suggests to us that it was the first rationale that was
the basis for, or was at least paramount in, the drafting of that
provision.

75
78. We observe, first, that in taking this approach, the Panel did not explain why it thought that it
was appropriate to rely on the 1987 Note, but simply stated that "it is useful to consider the rationale
for the application of a de minimis standard to investigations, as reflected in a Note by the Secretariat
prepared in April 1987".

76 In any event, it seems to us that the 1987 Note does not support the Panel's

71Panel Report, para. 8.79.
72Ibid., para. 8.60, referring in footnote 296 to MTN.GNG/NG10/W/4, 28 April 1987.
73The 1987 Note was first referred to by the European Communities in its comments on the responses
of the United States to questions from the Panel following the first meeting of the Panel with the parties.
(Panel Report, para. 5.320.) For further discussion of the Note by the parties, see also, Panel Report,
paras. 5.464-5.466, 5.501-5.504 and 5.530-5.536. The 1987 Note was submitted by the United States to the
Panel as Exhibit US-7.
74The first view that "no action should be taken … 'where the effect of the subsidy on the industry in
the importing country is not such as to cause material injury'". The second was that "'de minimis non curat lex':
the law does not take notice of minimal matters". (original underlining) (Panel Report, para. 8.60, quoting from
the 1987 Note, MTN.GNG/NG10/W/4, p. 2)
75Panel Report, para. 8.60.
76Ibid., para. 8.60. It is, for example, unclear to us whether the Panel considered the Note to form part
of the preparatory work of the treaty and intended to use it as a supplementary means of treaty interpretation
within the meaning of Article 32 of the Vienna Convention.

conclusion that the "rationale" for the de minimis standard in Article 11.9 is that a de minimis
subsidy is considered to be non-injurious. As the Panel itself recognized, the 1987 Note sets forth
two rationales for de minimis standards, but does not suggest which of them is more compelling or
preferable. Nor was any evidence adduced before the Panel suggesting that the negotiators of the
SCM Agreement considered these or other rationales and expressed a preference for any of them.
The Panel chose to base its interpretation of Article 11.9 on only one of these rationales. Even if it
were appropriate to rely on the 1987 Note in interpreting the SCM Agreement in accordance with the
rules of interpretation set forth in the Vienna Convention, selective reliance on such a document does
not provide a proper basis for the conclusion reached by the Panel in this regard.
79. More importantly, leaving aside the 1987 Note, the SCM Agreement does not, in our view,
support the "rationale" attributed by the Panel to the de minimis standard in Article 11.9. Article 15
of the SCM Agreement, which deals with injury and how it is to be determined, refers, in its
paragraph 3, to the de minimis standard in Article 11.9 only for the purpose of cumulation of
imports. Moreover, footnote 45 to Article 15 indicates that, in the SCM Agreement, the term "injury"
is, "unless otherwise specified", to:
… be taken to mean material injury to a domestic industry, threat of
material injury to a domestic industry or material retardation of the
establishment of such an industry and shall be interpreted in
accordance with the provisions of [Article 15].
In defining the concept of injury, footnote 45 does not make any reference to the amount of subsidy
involved.
80. Similarly, Article 1 of the SCM Agreement sets out a definition of "subsidy" that applies to
the whole of that Agreement. This definition includes all such subsidies, regardless of their amount.
None of the provisions in the SCM Agreement that uses the term "subsidization" confines the
meaning of "subsidization" to subsidization at a rate equal to or in excess of 1 percent ad valorem, or
to any other de minimis threshold.

77 It is also worth noting that, under Part II of the SCM
Agreement, prohibited subsidies are prohibited regardless of the amount of the subsidy.
81. Thus, in our view, the terms "subsidization" and "injury" each have an independent meaning
in the SCM Agreement which is not derived by reference to the other. It is unlikely that very low
levels of subsidization could be demonstrated to cause "material" injury. Yet such a possibility is

77The term "subsidization" is used in the following Articles of the SCM Agreement: 6.1(a); 8.3; 11.9;
12.10; 15.3; 17.2; 18.2; 18.4; 19.4; 21.1; 21.2; 21.3; as well as in Annex IV.

not, per se, precluded by the Agreement itself, as injury is not defined in the SCM Agreement in
relation to any specific level of subsidization.
82. We note, too, that Articles 27.10 and 27.11 of the SCM Agreement require termination of a
countervailing duty investigation with respect to a developing country Member whenever "the
overall level of subsidies granted does not exceed" 2 or 3 percent, depending on the circumstances.
These provisions require authorities, in a countervailing duty investigation, to apply a higher
de minimis subsidization threshold to imports from developing country Members. To accept the
Panel's reasoning—that de minimis subsidization is non-injurious subsidization—would imply that,
for the same product, imported into the same country, and affecting the same domestic industry, the
SCM Agreement establishes different thresholds at which the same industry can be said to suffer
injury, depending on the origin of the product. This unreasonable implication casts further doubt on
the "rationale" attributed by the Panel to Article 11.9
 's de minimis standard.
83. To us, there is nothing in Article 11.9 to suggest that its de minimis standard was intended to
create a special category of " non-injurious" subsidization, or that it reflects a concept that
subsidization at less than a de minimis threshold can never cause injury. For us, the de minimis
standard in Article 11.9 does no more than lay down an agreed rule that if de minimis subsidization
is found to exist in an original investigation, auth orities are obliged to terminate their investigation,
with the result that no countervailing duty can be imposed in such cases.
84. Accordingly, we do not believe that there is a clear "rationale" behind the 1 percent
de minimis rule of Article 11.9 that must also apply in the context of reviews carried out under
Article 21.3. However, the Panel reasoned that it would be "difficult to see how de minimis rate of
likely subsidisation could be considered injurious at the stage of sunset review and continuation of a
CVD, when the same rate is considered non-injurious at the stage of investigation and imposition of a
CVD."

78 The Panel added that "[s]uch an interpretation would also yield irrational results".
79 For the
reasons that follow, we are not persuaded that this is so.
85. Under the SCM Agreement, it is the countervailing duty that comes up for a review under
Article 21.3. Once the Agreement has been in operation for a sufficient number of years, a
countervailing duty subject to such a review will typically be a duty that was imposed after the entry

78Panel Report, para. 8.65.
79Ibid., para. 8.69.

into force of the SCM Agreement. 80 For this reason the underlying subsidy will have been found, in
a proper investigation conducted in accordance with the requirements of the SCM Agreement, to be a
subsidy that was in excess of the de minimis standard of Article 11.9 (or Article 27.10 or
Article 27.11 as the case may be) at the time of imposition of the countervailing duty. There would be
no countervailing duty to be reviewed where, in the original investigation, the amount of subsidy was
found to be less than the de minimis standard. In that case, the investigation itself would have been
terminated and no duty could have been imposed.
81
86. We believe that the relevant question to be addressed is, therefore, what obligations the
negotiators intended to apply in the case of a review of a countervailing duty where the underlying
subsidy has fallen below the de minimis standard of Article 11.9 subsequent to the original
investigation. It is not inconceivable that the negotiators of the SCM Agreement took the view that
when a subsidy, originally found to be in excess of the de minimis level and to be causing injury, has
fallen below the de minimis level subsequent to the investigation stage, authorities conducting a
sunset review should nevertheless determine whether revocation of the duty is still likely to lead to
continuation or recurrence of the injury to the domestic industry. The automatic termination of the
countervailing duty may not have been considered desirable in such a situation.
87. We further observe that original investigations and sunset reviews are distinct processes with
different purposes. The nature of the determination to be made in a sunset review differs in certain
essential respects from the nature of the determinati on to be made in an original investigation. For
example, in a sunset review, the authorities are called upon to focus their inquiry on what would
happen if an existing countervailing duty were to be removed. In contrast, in an original

80Articles 32.3 and 32.4 of the SCM Agreement provide:
Subject to paragraph 4, the provisions of this Agreement shall apply to
investigations, and reviews of existing measures, initiated pursuant to
applications which have been made on or after the date of entry into force
for a Member of the WTO Agreement.
For the purposes of paragraph 3 of Article 21, existing countervailing
measures shall be deemed to be imposed on a date not later than the date of
entry into force for a Member of the WTO Agreement, except in cases in
which the domestic legislation of a Member in force at that date already
included a clause of the type provided for in that paragraph.
By virtue these provisions, even countervailing duties imposed as a result of investigations initiated
prior to the date of entry into force of the WTO Agreement are subjected to sunset review in accordance with
the requirements of Article 21.3. With the passage of time, however, countervailing duties reviewed under
Article 21.3 will increasingly be countervailing duties that were imposed as a result of an investigation initiated
 after the date of entry into force of the WTO Agreement.
81We note that in the instant case of carbon steel, the original countervailing duty was imposed in 1993,
before the SCM Agreement came into force. Had this been a case where the original subsidy was the subject of
an investigation under the SCM Agreement, the investigation would have been terminated under Article 11.9 as
the original subsidy was below the 1 percent de minimis standard.

investigation, the authorities must investigate the existence, degree and effect of any alleged subsidy
in order to determine whether a subsidy exists a nd whether such subsidy is causing injury to the
domestic industry so as to warrant the imposition of a countervailing duty. These qualitative
differences may also explain the absence of a requirement to apply a specific de minimis standard in
a sunset review.
88. At the same time, we wish to underline the thrust of Article 21.3 of the SCM Agreement. An
automatic time-bound termination of countervailing duties that have been in place for five years from
the original investigation or a subsequent comprehe nsive review is at the heart of this provision.
Termination of a countervailing duty is the rule and its continuation is the exception. The
continuation of a countervailing duty must therefore be based on a properly conducted review and a
positive determination that the revocation of the countervailing duty would "be likely to lead to
continuation or recurrence of subsidization and injury." Where the level of subsidization at the time
of the review is very low, there must be pers uasive evidence that revocation of the duty would
nevertheless lead to injury to the domestic industry . Mere reliance by the authorities on the injury
determination made in the original investigation will not be sufficient.

82 Rather, a fresh
determination, based on credible evidence, will be necessary to establish that the continuation of the
countervailing duty is warranted to remove the injury to the domestic industry.
89. For these reasons, we consider that the non-application of an express de minimis standard at
the review stage, and limiting the application of such a standard to the investigation phase alone, does
not lead to irrational or absurd results. Accordingly, we do not consider it strictly necessary to have
recourse to the supplementary means of interpretation identified in Article 32 of the Vienna
Convention.
90. In any event, we consider that recourse to the negotiating history of the SCM Agreement
tends to confirm our view as to the meaning of Artic le 21.3. We note that the two issues, namely the
application of a specific de minimis standard in investigations, and the introduction of a time-bound
limitation on the maintenance of countervailing duties, were considered to be highly important and
were the subject of protracted negotiations. Specific provisions dealing with each of these two issues
were viewed as necessary to improve the existing disciplines of the GATT and of the Tokyo Round
Subsidies Code. The final texts of Article 11.9 and of Article 21.3 were the result of a carefully
negotiated compromise that drew from a number of different proposals, reflecting divergent interests
and views. We further note in this respect that none of the participants in this appeal pointed to any

82As we noted earlier, no issues relating to the injury determination are raised in this case.

document indicating that the inclusion of a de minimis threshold was ever considered in the
negotiations on sunset review provisions leading to the text of Article 21.3. 83
91. We are of the view that a finding on our part that the de minimis standard of Article 11.9 is
implied in sunset reviews under Article 21.3 would upset the delicate balance of rights and obligations
attained by the parties to the negotiations, as embodied in the final text of Article 21.3. Such a finding
would be contrary to the requirement of Article 3.2, repeated in Article 19.2 of the DSU, that our
findings and recommendations "cannot add to or diminish the rights and obligations provided in the
covered agreements".
92. For the reasons set forth above, we are unable to conclude that the de minimis standard set
forth in Article 11.9 of the SCM Agreement is implied in Article 21.3 of the Agreement. We,
therefore, reverse the finding of the Panel that "the de minimis standard of Article 11.9 is implied in
Article 21.3."

84
93. Having found that there is no de minimis standard implied in Article 21.3 of the
SCM Agreement, it follows that United States law as such is not inconsistent with Article 21.3 of the
SCM Agreement on the ground that it does not require application of a 1 percent de minimis
standard in sunset reviews. Accordingly, we also reverse the Panel's finding, in paragraph 9.1(b) of
the Panel Report, that:
US CVD law and the accompanying regulations are inconsistent with
Article 21.3 of the SCM Agreement in respect of the application of a
0.5 per cent de minimis standard to sunset reviews, and therefore
violate Article 32.5 of the SCM Agreement and, consequently, also
Article XVI:4 of the WTO Agreement. (original underlining)
94. The Panel also found, at paragraph 9.1(c) of the Panel Report, that the United States acted
inconsistently with Article 21.3 of the SCM Agreement in not applying a 1 percent de minimis
standard in the sunset review of countervailing duties on carbon steel at issue in this case. The United
States requests us to reverse this finding, for the same reasons that it requests reversal of the Panel's

83Having examined a number of proposals made by delegations, Notes by the Secretariat summarizing
the discussions, and a succession of drafts of the Agreement, we are also unable to find any sign that this issue
was addressed during the negotiations. (See, notably, the so-called "Cartland drafts" of 1990,
MTN/GNG/NG10/W/38 and Rev. 1, 2 and 3; and the "Dunkel Draft" of 1991, Draft Final Act Embodying the
Results of the Uruguay Round of Multilateral Trade Negotiations, MTN.TNC/W/FA, 20 December 1991). Our
review of certain commentaries on and summaries of the negotiation of the Anti-Dumping Agreement and the
SCM Agreement – the negotiations of which were in part closely linked – also gives no indication that the issue
arose during the negotiations.
84Panel Report, para. 8.80.

finding that the United States law, as such, relating to the de minimis standard to sunset reviews, is
inconsistent with Article 21.3 of the SCM Agreement.
95. The Panel's reasoning on this issue consisted almost entirely of the following sentence:
… [h]aving found that the de minimis standard set out in Article 11.9
is applicable to sunset reviews and that US CVD law is inconsistent
with the SCM Agreement in this respect, we find that the United
States violated the SCM Agreement by failing to apply such a de
minimis standard to the instant sunset review.

85
96. In other words, the Panel's finding that the United States acted inconsistently with its
obligations under Article 21.3 of the SCM Agreement in its sunset review of carbon steel depended
on, and was the inevitable consequence of its finding that United States law, as such, is inconsistent
with those obligations. Logic compels us to take the same approach. Indeed, none of the participants
suggests that we should reach a different conclusion regarding the consistency with Article 21.3 of
USDOC's application of its de minimis standard in this case from the one we reach with respect to
the consistency of United States law as such in this regard.
97. We therefore reverse also the Panel's finding, in paragraph 9.1(c) of the Panel Report, that:
… the United States, in applying a 0.5 per cent de minimis standard
to the instant sunset review, acted in violation of Article 21.3 of the
SCM Agreement.
86 (original underlining)
VI. Article 21.3 of the SCM Agreement – Self-Initiation of a Sunset Review by the
Authorities (Appeal by the European Communities)
98. The Panel found that:
… no evidentiary standards are applicable to the self-initiation of
sunset reviews under Article 21.3. We thus conclude that US CVD
law and the accompanying regulations are consistent with the SCM
Agreement in respect of the automatic self-initiation of sunset
reviews, and accordingly reject the European Communities' claim in
this regard.
87
99. The European Communities asks us to reverse this finding on the ground that the Panel erred
in its interpretation of Article 21.3. Accordin g to the European Communities, the evidentiary
standards specified in Article 11.6 of the SCM Agreement for authorities to initiate an investigation

85Panel Report, para. 8.84.
86Ibid., para. 9.1(c).
87Ibid., para. 8.49. (footnote omitted)

on their own initiative also apply to the initiation by such authorities of a sunset review on their own
initiative. Specifically, the European Communities considers that Article 21.3 requires investigating
authorities, if they wish to self-initiate a sunset review, to be in possession of the same level of
evidence as would be required in a "duly substantiated request" from the domestic industry.

88
Because United States law provides for the automatic self-initiation of sunset reviews by USDOC, in
every case, regardless of whether USDOC is in possession of any evidence, the European
Communities asks us to find that such law is inconsistent with Article 21.3 of the SCM Agreement, as
well as with Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.
100. Japan supports the assertion of the European Communities that the Panel misinterpreted
Article 21.3 of the SCM Agreement in finding that no evidentiary standard applies to the self-
initiation of sunset reviews by the authorities. For Japan, however, the evidentiary standard that
applies is not necessarily the same as would be required under Article 11.6 or as would be required in
a request by the domestic industry under Article 21.3. Rather, Japan submits that the authorities
must be in possession of "sufficient evidence". Although what constitutes "sufficient evidence" will
vary from case to case, Japan insists that the automatic initiation of sunset reviews, "without even a
scintilla of evidence" can never be considered "sufficient".

89
101. Before commencing our analysis, we note that United States law provides for the automatic
self-initiation of sunset reviews by the authorities in each and every case. Section 751(c)(2) of the
Tariff Act directs USDOC to publish a notice of in itiation of a sunset review no later than 30 days
before, inter alia, the fifth anniversary of the date of publication of a countervailing duty order.
Section 351.218(b) of Title 19 of the Regulations c onfirms that USDOC will conduct a sunset review
of each countervailing duty order. Both the Sunset Policy Bulletin and the SAA describe the
initiation of sunset reviews by USDOC as "automatic".

90
102. We begin our consideration of this issue with the text of Article 21.3 of the SCM Agreement,
the relevant part of which provides that:

88In footnote 9 to paragraph 13 of its other appellant's submission, the European Communities refers to
paragraphs 8.15 and 8.16 of the Panel Report for details as to the type of evidence that it considers must be
included in such a "duly substantiated request".
89Japan's third participant's submission, para. 32.
90Sunset Policy Bulletin, supra, footnote 41, p. 18872; SAA, supra, footnote 40, p. 889.

… any definitive countervailing duty shall be terminated on a date
not later than five years from its imposition … unless the authorities
determine, in a review initiated before that date on their own
initiative or upon a duly substantiated request made by or on behalf
of the domestic industry within a reasonable period of time prior to
that date, that the expiry of the duty would be likely to lead to
continuation or recurrence of subsidization and injury. (emphasis
added)
103. As we have seen, Article 21.3 requires the termination of countervailing duties within five
years unless the prescribed determination is made in a review. Article 21.3 contemplates initiation of
this review in one of two alternative ways, as is made clear through the use of the word "or". Either
the authorities may make their determination "in a review initiated … on their own initiative"; or,
alternatively, the authorities may make the determination "in a review initiated … upon a duly
substantiated request made by or on behalf of the domestic industry …". The words "duly
substantiated" qualify only the authorization to initiate a review upon request made by or on behalf of
the domestic industry. No such language qualifies the first method for initiating a sunset review,
namely self-initiation of a review by the authorities.
104. In principle, when a provision refers, without qualification, to an action that a Member may
take, this serves as an indication that no limitation is intended to be imposed on the manner or
circumstances in which such action may be taken. However, because the task of interpreting a treaty
provision does not end with a bare examination of its text, the absence of an express limitation on
Members' ability to take a certain action is not dispositive of whether any such limitation exists.

91
105. Before leaving our analysis of the text of Article 21.3 of the SCM Agreement, we, lastly,
note that the provision contains no explicit cross- reference to evidentiary rules relating to initiation,
such as those contained in Article 11.6. We believe the absence of any such cross-reference to be of
some consequence given that, as we have seen

92, the drafters of the SCM Agreement have made
active use of cross-references, inter alia, to apply obligations relating to investigations to review
proceedings. In our view, the omission of any express cross-reference thus serves as a further
indication that the negotiators of the SCM Agreement did not intend the evidentiary standards
applicable to the self-initiation of investigations under Article 11 to apply to the self-initiation of
reviews under Article 21.3.

91"[O]missions in different contexts may have different meanings, and omission, in and of itself, is not
necessarily dispositive." (Appellate Body Report, Canada – Autos, para. 138)
92Supra, paras. 69 and 72.

106. We now turn to the immediate context of Article 21.3 of the SCM Agreement, namely the
other paragraphs of Article 21.
107. Article 21.2 provides, in relevant part:
The authorities shall review the need for the continued imposition of
the duty, where warranted, on their own initiative or, provided that a
reasonable period of time has elapsed since the imposition of the
definitive countervailing duty, upon request by any interested party
which submits positive information substantiating the need for a
review. (emphasis added)
108. Article 21.2 differs from Article 21.3 in that the former identifies certain circumstances in
which the authorities are under an obligation to review ("shall review") whether the continued
imposition of the countervailing duty is necessary. In contrast, the principal obligation in Article 21.3
is not, per se, to conduct a review, but rather to terminate a countervailing duty unless a specific
determination is made in a review. We note that Article 21.2 sets down an explicit evidentiary
standard for requests by interested parties for a re view under that provision. In order to trigger the
authorities' obligation to conduct a review, such requests must, inter alia , include "positive
information substantiating the need for review". Article 21.2 does not, on its face, apply this same
standard to the initiation by authorities "on thei r own initiative" of a review carried out under that
provision. Thus, Article 21.2 contemplates that, for reviews carried out pursuant to that provision, the
self-initiation by the authorities of a review is not governed by the same standards that apply to
initiation upon request by other parties.
109. As we have noted earlier, the fourth paragraph of Article 21 explicitly applies to Article 21.3
reviews the detailed rules set out in Article 12 of the SCM Agreement regarding evidence and
procedure in the conduct of investigations.

93 However, the rules on evidence and procedure
contained in Article 12 do not relate to the initiation of such investigations.
94 Rather, the rules
relating to evidence needed to initiate an investigation are set out in Article 11, which is not referred
to in Article 21.4. The fact that the rules in Article 11 governing such matters are not incorporated by
reference into Article 21.3 suggests that they are not, ipso facto, applicable to sunset reviews.

93Supra, para. 72.
94One provision in Article 12 of the SCM Agreement deals indirectly with the initiation of an
investigation. Paragraph 12 reads, in relevant part:
The procedures set out above are not intended to prevent the authorities of a
Member from proceeding expeditiously with regard to initiating an
investigation … in accordance with relevant provisions of this Agreement.

110. Looking further into the context of Article 21.3, we turn to Article 22 of the SCM Agreement,
which is entitled " Public Notice and Explanation of Determinations ". Paragraph 1 of Article 22
provides:
When the authorities are satisfied th at there is sufficient evidence to
justify the initiation of an investigation pursuant to Article 11, the
Member or Members the products of which are subject to such
investigation and other interested parties known to the investigating
authorities to have an interest therein shall be notified and a public
notice shall be given. (emphasis added)
111. Article 22.1 imposes notification and public notice obligations upon Members that have
decided, in accordance with all the requirements of Article 11, that the initiation of a countervailing
duty investigation is justified. Article 22.1 does not itself establish any evidentiary rule, but only
refers to a standard established in Article 11.9.
112. Article 22.7 applies the provisions of Article 22 " mutatis mutandis to the initiation and
completion of reviews pursuant to Article 21". To us, in the same way that Article 22.1 imposes
notification and public notice requirements on investigating authorities that have decided, in
accordance with the standards set out in Article 11, to initiate an investigation, Article 22.1 (by
virtue of Article 22.7) also operates to impose notification and public notice requirements on
investigating authorities that have decided, in accordance with Article 21, to initiate a review.
Similarly, in the same way that Article 22.1 does not itself establish evidentiary standards applicable
to the initiation of an investigation, it does not itself establish evidentiary standards applicable to
the initiation of sunset reviews. Such standards, if they exist, must be found elsewhere.
113. We, therefore, turn next to Article 11 of the SCM Agreement as possible relevant context in
our interpretation of Article 21.3. It is, in fact, Article 11 that sets forth the evidentiary standards that
apply to the initiation by authorities of a countervailing duty investigation.
114. We recall that Article 11 is entitled "Initiation and Subsequent Investigation". Paragraph 2 of
Article 11 sets forth guidance as to what may constitute "sufficient evidence" for purposes of an
application by or on behalf of domestic industry seeking initiation of an investigation. It provides, in
part, that:
An application under paragraph 1 shall include sufficient evidence of
the existence of (a) a subsidy and, if possible, its amount, (b) injury
within the meaning of Article VI of GATT 1994 as interpreted by
this Agreement, and (c) a causal link between the subsidized imports
and the alleged injury. Simple assertion, unsubstantiated by relevant
evidence, cannot be considered sufficient to meet the requirements of
this paragraph.

115. The remainder of Article 11.2 sets forth the type of evidence that should be included in the
application. Article 11.3 directs the authorities to "review the accuracy and adequacy of the evidence
provided in the application to determine whether the evidence is sufficient to justify the initiation of
an investigation." Article 11.6 applies the "sufficient evidence" standard in Article 11.2 to the self-
initiation of investigations by investigating authorities, and Article 11.9 requires the authorities to
reject an application that does not contain "sufficient evidence of subsidization and injury".

95 Thus,
Article 11 sets out a number of evidentiary requirements that must be satisfied in order to initiate a
countervailing duty investigation.
116. In sum, our review of the context of Article 21.3 of the SCM Agreement reveals no
indication that the ability of authorities to self-initiate a sunset review under that provision is
conditioned on compliance with the evidentiary standards set forth in Article 11 of the
SCM Agreement relating to initiation of investigations. Nor do we consider that any other evidentiary
standard is prescribed for the self-initiation of a sunset review under Article 21.3.
117. This is not to say that authorities may continue the countervailing duties after five years in the
absence of evidence that the expiry of the duty would be likely to lead to continuation or recurrence of
subsidization and injury. Article 21.3 prohibits the continuation of countervailing duties unless a
review is undertaken and the prescribed determination, based on adequate evidence, is made.

96
118. For all of these reasons, we agree with the Panel that Article 21.3 of the SCM Agreement
does not prohibit the automatic self-initiation of sunset reviews by investigating authorities.
97
Accordingly, we uphold the Panel's finding in paragraph 9.1(a) of the Panel Report that:
US CVD law and the accompanying regulations are consistent with
Article 21, paragraphs 1 and 3, and Article 10 of the
SCM Agreement in respect of the application of evidentiary
standards to the self-initiation of sunset reviews.

95Article 11.6 of the SCM Agreement provides:
If, in special circumstances, the authorities concerned decide to initiate an
investigation without having received a written application by or on behalf
of a domestic industry for the initiation of such investigation, they shall
proceed only if they have sufficient evidence of the existence of a subsidy,
injury and causal link, as described in paragraph 2, to justify the initiation of
an investigation.
96We note that, by virtue of the last sentence of Article 21.3, a countervailing duty "may remain in
force pending the outcome of" an ongoing sunset review that was initiated before the five-year anniversary of
the imposition of the countervailing duty. Moreover, Article 21.4 provides that such a review "shall be carried
out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review."
97Panel Report, para. 8.49.

VII. The Determination to be Made in a Sunset Review
A. Article 6.2 of the DSU – Whether the Matter was Within the Panel's Terms of
Reference (Appeal by the United States)
119. The United States appeals the Panel's refusal to dismiss, as outside its terms of reference, the
European Communities' claim under Article 21.3 of the SCM Agreement against United States law,
as such, regarding the determination to be made in a sunset review.
98
120. Before the Panel, this issue arose in the following manner. Following the second meeting of
the Panel with the parties, the Panel posed a question to the European Communities asking whether it
was to understand that the European Communities was "making a claim that US law as such violates
the SCM Agreement in respect of the obligation to '"determine" the likelihood of continuation or
recurrence of subsidization' contained in Article 21.3".

99 The European Communities responded in
the affirmative.
100 In its comments on the responses of the European Communities to questions from
the Panel, the United States asserted that any such claim was outside the Panel's terms of reference.
101
This assertion was reiterated in the United States' request for interim review, after the Panel had
issued its interim report, which included findings on this matter.
102
121. In addressing this issue, the Panel, first, stated that it would not address the objection because
the United States could have, and should have, raised it at an earlier stage in the proceedings.
103
Nevertheless, the Panel went on to examine the request for establishment of the Panel, and stated that
it did "not consider that the European Communitie s' claims regarding the obligation to determine
likelihood of continuation or recurrence of subsidisation are outside the Panel's terms of reference."

104
122. The United States disputes the Panel's rejection of the United States' objection as untimely,
and submits that the panel request did not satisfy the requirements of Article 6.2 of the DSU with

98Panel Report, paras. 7.21 and 7.23. In its Notice of Appeal and appellant's submission, the United
States has stated that its appeal on this issue is conditional upon our reversing the Panel's findings with regard to
the consistency of United States law, as such, with the obligation to determine the likelihood of continuation or
recurrence of subsidization in a sunset review. However, in response to questioning at the oral hearing, the
United States withdrew this condition and suggested that we should consider this issue before turning to the
substance of the European Communities' appeal. The European Communities objected to the withdrawal by the
United States of this condition to its appeal, arguing that it was too late to do so.
99Question 51 posed by the Panel; Panel Report, para. 5.517.
100Panel Report, para. 5.517.
101Ibid., para. 5.581.
102Ibid., para. 7.20.
103Ibid., para. 7.21.
104Ibid., para. 7.23.

respect to the claim regarding the consistency of United States law, as such, with its obligations
relating to the determination to be made in a sunset review.
123. In considering this issue, we recall that we have consistently held that, in the interests of due
process, parties should bring alleged procedural deficiencies to the attention of a panel at the earliest
possible opportunity.
105 In this case, we see no reason to disagree with the Panel's view that the
United States' objection was not raised in a timely manner. At the same time, however, as we have
observed previously, certain issues going to the jurisdiction of a panel are so fundamental that they
may be considered at any stage in a proceeding.

106 In our view, the Panel was correct, therefore, in
turning to consider its terms of reference and in sati sfying itself as to its jurisdiction with respect to
this matter.
124. We thus turn to consider the United States' assertion that the Panel erred in its finding that this
matter was within its terms of reference.
107 We recall that, pursuant to Article 7 of the DSU, a panel's
terms of reference are governed by the request for establishment of a panel. Article 6.2 of the DSU
sets forth the requirements applicable to such requests. It provides, in relevant part:
The request for the establishment of a panel shall … identify the
specific measures at issue and provide a brief summary of the legal
basis of the complaint sufficient to present the problem clearly.
125. There are, therefore, two distinct requirements, namely identification of the specific measures
at issue, and the provision of a brief summary of the legal basis of the complaint (or the claims).
Together, they comprise the "matter referred to the DSB", which forms the basis for a panel's terms of
reference under Article 7.1 of the DSU. 108
126. The requirements of precision in the request for the establishment of a panel flow from the
two essential purposes of the terms of reference. First, the terms of reference define the scope of the
dispute. Secondly, the terms of reference, and the request for the establishment of a panel on which
they are based, serve the due process objective of notifying the parties and third parties of the nature

105Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 50; Appellate Body Report,
US – FSC, para. 166; and Appellate Body Report, US – 1916 Act, WT/DS136/AB/R, para. 54.
106Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US) , para. 36; and Appellate Body
Report, US – 1916 Act, para. 54.
107As we have just stated, this jurisdictional issue is one that may properly be considered at any stage in
the proceedings. In our view, irrespective of the condition initially placed by the United States upon its appeal,
it is appropriate in this case to ascertain the scope of the Panel's terms of reference before turning to the merits
of the European Communities' appeal with regard to the consistency of United States law, as such, with the
obligation to determine the likelihood of continuation or recurrence of subsidization in a sunset review.
108Appellate Body Report, Guatemala – Cement I, paras. 69-76.

of a complainant's case.
109 When faced with an issue relating to the scope of its terms of reference, a
panel must scrutinize carefully the request for establishment of a panel "to ensure its compliance with
both the letter and the spirit of Article 6.2 of the DSU."

110
127. As we have said previously, compliance with the requirements of Article 6.2 must be
demonstrated on the face of the request for the establishment of a panel. Defects in the request for the
establishment of a panel cannot be "cured" in the subsequent submissions of the parties during the
panel proceedings.

111 Nevertheless, in considering the sufficiency of a panel request, submissions and
statements made during the course of the panel proceedings, in particular the first written submission
of the complaining party, may be consulted in orde r to confirm the meaning of the words used in the
panel request and as part of the assessment of whether the ability of the respondent to defend itself
was prejudiced.

112 Moreover, compliance with the requirements of Article 6.2 must be determined on
the merits of each case, having considered the panel request as a whole, and in the light of attendant
circumstances.

113
128. With these considerations in mind, we turn to the request for the establishment of the Panel to
ascertain whether it satisfies the requirements of Article 6.2 of the DSU with respect to the claim that
United States law, as such, regarding the determination to be made in a sunset review, is inconsistent
with Article 21.3 of the SCM Agreement. The panel request states, in relevant part:
Under Article 21.3 of the SCM Agreement, countervailing duties
have to be terminated after five years, unless the investigating
authorities determine that their expiry would be likely to lead to
(i.e. cause), inter alia , the continuation or recurrence of
subsidisation. It is therefore for the DOC to make a positive
demonstration to this effect. In fact, the DOC has not made such a
demonstration; it has merely found that subsidies of less than the
de minimis level provided for in Article 11.9 will continue. …

109Appellate Body Report, Brazil – Dessicated Coconut , at 186. See also, Appellate Body Report,
EC – Bananas III, para. 142.
110Appellate Body Report, EC – Bananas III, para. 142.
111Ibid., para. 143.
112See, for example, Appellate Body Report, Korea – Dairy , para. 127; Appellate Body Report,
Thailand – H-Beams, para.95.
113Appellate Body Report, Korea – Dairy, paras. 124-127.

The EC consider that the US decision of 2 August 2000 not to revoke
the countervailing duties imposed on imports of corrosion resistant
steel (Issue No. 65 FR 47407), as well as certain aspects of the sunset
review procedure which led to it (regulated by Section 751 c) of the
Tariff Act of 1930 and the implementing regulations and interim
final rules issued by the DOC –see footnote 2) are inconsistent with
the obligations of the United States under the SCM Agreement and,
in particular, Articles 10, 11.9, 21 (notably paragraphs 1 and 3), and
32.5 thereof, and under Article XVI:4 of the Agreement establishing
the World Trade Organization.
114 (underlining added)
129. As observed by the Panel
115, the panel request expressly refers to the obligation to determine
the likelihood of continuation or recurrence of subsidization in sunset reviews and to the need to make
a "positive demonstration to this effect." In addition, the request mentions "certain aspects of the
sunset review procedure which led to [the decision not to revoke countervailing duties on carbon
steel]", and specifically refers to the United States statutory provision governing sunset reviews, to
related regulatory provisions, and to the Sunset Policy Bulletin. Together, these provisions govern
USDOC's conduct of a sunset review, including the determination that must be made in such a review.
130. Further, the panel request identifies obligations under, and alleges violation of, Article 21.3 of
the SCM Agreement . This statement of the legal basis for the European Communities' claim is,
indeed, very brief. But this alone does not mean that it falls short of the standard required by
Article 6.2 of the DSU. As we have observed, although the listing of the treaty provisions allegedly
violated is always a necessary "minimum prerequisite" for compliance with Article 6.2, whether
such a listing is sufficient to constitute a "brief summary of the legal basis of the complaint sufficient
to present the problem clearly" within the meaning of Article 6.2 will depend on the circumstances of
each case, and in particular on the extent to which mere reference to a treaty provision sheds light on
the nature of the obligation at issue.

116 In examining the provision at issue in this case, we note that
Article 21.3 of the SCM Agreement is a relatively short provision, and the determination to be made
in a sunset review is one of its central features. In addition, we read the words in the panel request
that it is "for the DOC to make a positive demonstration to this effect" as further elaboration of the
relevant obligation imposed on domestic authorities by Article 21.3.

114WT/DS213/3, pp. 2 and 3. Footnote 2 to the request for the establishment of the Panel refers to:
Section 751 c) of the Tariff Act of 1930, in the Implementing Regulations
on anti-dumping and countervailing duties issued by USDOC (F.R. Vol. 62
No. 96 Monday, May 19, 1997 p 27296 - 19 CFR Parts 351, 353, and 355
Antidumping Duties; Countervailing Duties Final rule) and in the USDOC's
Interim final rules on procedures for conducting five-year ("Sunset'')
Reviews of Antidumping and Countervailing Duty Orders (19 CFR
Section 351- FR Doc. 98-7165 Filed 3-19-98).
115Panel Report, paras. 7.22-7.23.

131. Thus, although we agree with the Panel that "the European Communities could certainly have
been more forthcoming in its request for establishment"
117, we find that the Panel did not err in
concluding that the request for establishment of the panel satisfied the requirements of Article 6.2 of
the DSU with respect to the European Communities' claim regarding the consistency of United States
law, as such, with the obligation to determine the likelihood of continuation or recurrence of
subsidization in a sunset review.
132. We are confirmed in this view by our reading of the European Communities' first written
submission to the Panel. This submission clearly addresses United States law, as such, governing the
likelihood determination. Section 6 of the submission, entitled "Claims", is divided into four
subsections. Subsection 6.2 deals with the determination to be made in a sunset review, and in
part 6.2.2 of that subsection, headed "US laws and practice", the European Communities alleges,
inter alia , that United States law is inconsistent with the United States' obligations under
Article 21.3 of the SCM Agreement.

118
133. In the light of the references to the requirement to make a likelihood determination in the
panel request, and the arguments elaborated in the European Communities' first written submission to
the Panel, we believe that the United States was given adequate notice of the European Communities'
claim. The absence of prejudice to the United States is also reflected in the fact that the Panel did not
sustain the claim of the European Communities in relation to United States law, as such, regarding the
likelihood determination, but rather found United States law in this regard to be consistent with the
obligations in Article 21.3 of the SCM Agreement.
134. We therefore uphold the Panel's finding that:
[w]e therefore do not consider that the European Communities'
claims regarding the obligation to determine likelihood of
continuation or recurrence of subsidisation are outside the Panel's
terms of reference.

119

117Panel Report, para. 7.23.
118European Communities' first submission to the Panel, para. 76.
119Panel Report, para. 7.23.

B. Article 11 of the DSU and Article 21.3 of the SCM Agreement – Whether the Panel
Erred in its Assessment of United States Law (Appeal by the European Communities)
135. The Panel found that:
… US law is not inconsistent with Article 21.3 of the
SCM Agreement with respect to the obligation that the investigating
authorities determine the likelihood of continuation or recurrence of
subsidisation in a sunset review.
… Having found that US CVD law and the accompanying
regulations are consistent with Article 21.3 of the SCM Agreement in
respect of the obligation that the investigating authorities determine
the likelihood of continuation or recurrence of subsidisation in a
sunset review, we need not, and do not, consider whether US CVD
law and the accompanying regulations are inconsistent with
Article 32.5 of the SCM Agreement and Article XVI:4 of the
WTO Agreement.

120
136. The European Communities requests us to reverse these findings and to find that United
States law, as such, is inconsistent with Article 21.3 of the SCM Agreement in respect of the
investigating authorities' obligation to determine the likelihood of continuation or recurrence of
subsidization in a sunset review. The European Communities also asks us to make consequential
findings that United States law, as such, is inconsistent with United States' obligations under
Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.

121
137. The Panel's analysis of this issue consists of tw o distinct parts. First, the Panel interpreted
Article 21.3 to ascertain what that provision requires of investigating authorities making a
"determination" in a sunset review.

122 In this part of its analysis, the Panel opined that "a
determination of likelihood under Article 21.3 must rest on a sufficient factual basis"
123, namely "on
the evaluation of the evidence that it has gathered during the original investigation, the intervening
reviews and finally the sunset review."
124 Furthermore, according to the Panel:

120Panel Report, paras. 8.106 and 8.107. See also, Panel Report, para. 9.1(d).
121We note that neither party has appealed the additional Panel finding, set out in para. 9.1(e) of the
Panel Report, that the specific determination made in the sunset review of countervailing duties on carbon steel
was inconsistent with the requirements of Article 21.3 of the SCM Agreement.
122See Section VIII.D(1)(b)(i) of the Panel Report, paras. 8.89-8.96.
123Panel Report, para. 8.94.
124Ibid., para. 8.95.

[w]hat the investigating authority must do under Article 21.3 is to
assess whether subsidisation is likely to continue or recur should the
CVD be revoked. This is, obviously, an inherently prospective
analysis. Nonetheless, it must itself have an adequate basis in fact.
The facts necessary to assess the likelihood of subsidisation in the
event of revocation may well be different from those which must be
taken into account in an original investigation. Thus, in assessing the
likelihood of subsidisation in the event of revocation of the CVD, an
investigating authority in a sunset review may well consider, inter alia,
the original level of subsidisation, any changes in the original subsidy
programmes, any new subsidy programmes introduced after the
imposition of the original CVD, any changes in government policy,
and any changes in relevant socio-economic and political
circumstances.

125
138. These Panel findings are not appealed by the European Communities. Accordingly, we are
not called upon, in this particular appeal, to review the Panel's the interpretation of Article 21.3 and
the obligations it sets forth with respect to the determination to be made in a sunset review.
139. It is, rather, the second part of the Panel's analysis of this matter that forms the subject of this
appeal. The European Communities' appeal is limited to the findings made by the Panel in its
assessment of whether the relevant United States law, as such, conforms to the requirements of
Article 21.3 of the SCM Agreement.

126
140. In appealing this part of the Panel Report and the resulting finding that United States law "is
not inconsistent with Article 21.3" of the SCM Agreement with respect to the likelihood
determination, the European Communities argues that the Panel did not ascertain the meaning of
United States law in accordance with its duty, under Article 11 of the DSU, to make an "objective
assessment of the matter". The European Communities further contends that the Panel erred in its
interpretation and application of the distinction between mandatory and discretionary laws. The
European Communities' appeal rests upon both Article 11 of the DSU and Article 21.3 of the
SCM Agreement.

125Panel Report, para. 8.96.
126In response to questioning at the oral hearing, the European Communities confirmed that its appeal is
limited to the reasoning and findings contained in Section VIII.D(1)(b)(ii) of the Panel Report,
paras. 8.97-8.107.

1. Article 11 of the DSU – Limitations Imposed by United States Law
141. Article 11 of the DSU provides, in relevant part:
… a panel should make an objective assessment of the matter before
it, including an objective assessment of the facts of the case and the
applicability of and conformity with the relevant covered agreements,
and make such other findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in the covered
agreements.
142. We recall that "the standard of review set forth in Article 11 of the DSU [applies to disputes]
arising under Part V of the SCM Agreement".
127 As we have observed previously, Article 11 requires
panels to take account of the evidence put before them and forbids them to wilfully disregard or
distort such evidence.
 128 Nor may panels make affirmative findings that lack a basis in the evidence
contained in the panel record.
129 Provided that panels' actions remain within these parameters,
however, we have said that "it is generally within the discretion of the Panel to decide which evidence it
chooses to utilize in making findings"

130, and, on appeal, we "w ill not interfere lightly with a panel's
exercise of its discretion".
131
143. In arguing that the Panel acted inconsistently with Article 11 of the DSU and "ignored the
legal limitations imposed by United States law on investigating authorities [in making their
determination in a sunset review]", the European Communities challenges: (i) the Panel's failure to
accord sufficient weight to the Sunset Policy Bu lletin and the SAA in determining the meaning of
Sections 751(c) and 752 of the Tariff Act; (ii) the Panel's failure to draw the appropriate inferences
from USDOC's "consistent practice" as to the meanin g of United States law; and (iii) the Panel's
failure to engage in the additional fact-finding necessary properly to appreciate the meaning of
Section 351.218(e)(2)(i) of the Regulations.

132 We will examine the Panel's treatment of each of
these issues in turn.
144. With respect to the first point, we note that, before the Panel, the European Communities
introduced the Sunset Policy Bulletin and the SAA into evidence.
133 In its arguments before the
Panel, the European Communities cited certain provisions from the Sunset Policy Bulletin and the

127Appellate Body Report, US – Lead and Bismuth II, para. 51.
129Appellate Body Report, US – Wheat Gluten, paras. 161-162.
131Appellate Body Report, US – Wheat Gluten, para. 151.
132European Communities' other appellant's submission, paras. 44-54.
133Exhibits EC-15 and EC-16 submitted by the European Communities to the Panel.

SAA, but did not make arguments as to the precise nature of the relationship between these
instruments, on the one hand, and the relevant statutory and regulatory provisions, on the other hand.
145. In its analysis, the Panel reproduced the relevant portions of Sections 751(c) and 752 of the
Tariff Act, referred to Section 315.218(a) of the Regulations, and observed that:
[t]he Sunset Policy Bulletin and the Statement of Administrative
Action ("SAA") basically elaborate further on the provisions of the
Statute and the Sunset Regulations within the limits set out in the
Statute.
134 (footnote omitted)
146. Thus, the Panel specifically referred to the Sunset Policy Bulletin and the SAA, and took the
view that they operated "within the limits set out" in the legislation—namely Sections 751(c) and 752
of the Tariff Act. 135 The Panel also stated that these instruments did not "change" United States law
as set forth in those statutory provisions.
136 It is clear, from these statements, that the Panel took
account of, and did not disregard, the evidence placed before it by the European Communities.
Accordingly, bearing in mind that Article 11 does not oblige panels to attach to a particular piece of
evidence the same weight as the party submitting that evidence

137, we see no reason to disturb the
Panel's treatment of the Sunset Policy Bulletin and the SAA in its assessment of the meaning of
United States law.
147. The European Communities' second point alleges that, in considering United States law as
such, the Panel did not draw the correct infere nces from the "consistent practice" of USDOC.
Specifically, the European Communities argues that such practice demonstrates that, under United
States law, USDOC does not consider any changes or terminations of subsidy programs, unless such
changes or termination were found in a previous review of the duty, and that this is tantamount to a
"refusal to conduct any investigation in a sunset review".

138 Before the Panel, and on appeal, the
European Communities referred to the sunset review of carbon steel at issue in this case as evidence
of the "consistent practice" of USDOC.
148. We are not persuaded that the conduct of a single sunset review can serve as conclusive
evidence of USDOC practice, and, thereby, of the meaning of United States law. This is particularly
so in the absence of information as to the number of sunset reviews that have been conducted, the

134Panel Report, para. 8.101.
135Ibid., para. 8.101.
136Ibid., para. 8.106.
138European Communities' other appellant's submission, para. 50.

methodology employed by USDOC in other review s, and the overall results of such reviews. 139 We
also point out that, as the Panel noted, even in th e sunset review at issue in this case, USDOC did
make certain adjustments to the rate of subsidiz ation determined in the original investigation,
notwithstanding the absence of any intervening review of the duty.
140 Furthermore, the European
Communities itself put evidence before the Panel, in the form of a decision by a United States
domestic court, suggesting that USDOC's sunset re view of countervailing duties on carbon steel in
this case was not conducted in accordance with United States law.
141 Accordingly, the evidentiary
foundation upon which the European Communities sought to have the Panel draw an inference from
USDOC practice seem to us to have been a weak one. For all of these reasons, we believe that the
Panel acted well within the scope of its discretion in its appreciation of the evidence relating to
USDOC practice in its analysis of United States law relating to the likelihood determination.

139We note that, although the European Communities does not seem to have submitted such evidence to
the Panel, the United States provided, in response to a question from the Panel, a broader picture of the results of
sunset reviews. (Panel Report, para. 5.274) The European Communities did refer, briefly, to three other sunset
reviews conducted by USDOC, but did not introduce the text of the determinations made in those cases into the
140Panel Report, para. 8.116.
141On 4 March 2002, after the parties had made their second written submissions to the Panel but before
their second meeting with the Panel, the European Communities transmitted to the Panel a decision of the
United States Court of International Trade dated 28 February 2002 ( AG der Dillinger Hüttenwerke v. United
States ("Dillinger I"), 193 F. Supp. 2d 1339 (Ct. Int'l Trade 2002); Exhibit EC-24 submitted by the European
Communities to the Panel). By letter dated 5 March 2002, the Panel invited the United States to submit any
comments on the European Communities' submission of that decision by 12 March 2002. The United States did
not submit any comments. In its decision, the Court found that USDOC had not complied with its duties under
United States statutory law in making its determination in the sunset review of carbon steel. The Court opined,
inter alia , that United States law imposes a "fact-gathering" obligation on USDOC in a full sunset review.
(Dillinger I, p. 1348) The Court also rejected USDOC's argument that, when no administrative review has been
conducted, the SAA and the Sunset Policy Bulletin preclude USDOC, in a sunset review, from making
adjustments to the countervailable subsidy rate determined in the original investigation. The Court stated that:
… the SAA indicates that Congress contemplated that Commerce is to
engage in some fact gathering when conducting a full sunset review. …
Such fact gathering would be pointless if Commerce were prohibited from
considering those facts in order to determine whether adjustments to the
original CVD rate are warranted.
… the court finds no support for such a restriction in the statute, the
regulations or the SAA. In fact, the court finds that such an interpretation
… would directly conflict with the SAA and the statutory scheme, and is
therefore impermissible.
(Dillinger I, pp. 1353-1354). In this appeal, the European Communities also submitted, as exhibits to its
appellee's submission, USDOC's redetermination pursuant to the Court's remand, together with a 5 September
2002 decision by the Court of International Trade with respect to this remand determination ( AG der Dillinger
Hüttenwerke v. United States , Slip Op. 02-107, Ct. No. 00-09-00437 (Ct. Int'l Trade, 5 September 2002)). At
the oral hearing in this appeal, the United States stated that these decisions of the Court of International Trade
are interlocutory in nature and may yet be appealed.

149. The third point raised by the European Commun ities relates to the Panel's treatment of the
phrase "extraordinary circumstances" in Section 351.218(e)(2)(i) of Title 19 of the Regulations, which
provides, in relevant part, that:
… only under the most extraordinary circumstances will the
Secretary rely on a countervailing duty rate or a dumping margin
other than those it calculated and published in its prior
determinations.
150. In considering whether United States law restri cted the determination that authorities are to
make in a sunset review, the Panel noted the simila rity between the language of Section 751(c) of the
Tariff Act and Article 21.3 of the SCM Agreement, and then summarized the provisions of
Article 752 of the Tariff Act, which govern USDOC's assessment of the likely rate of subsidization in
a sunset review. The Panel went on to express "some concern" about the possible limiting effects of
the phrase "extraordinary circumstances" in Section 351.218(e)(2)(i) of Title 19 of the Regulations.

142
151. In its challenge to the Panel's approach, the European Communities does not claim that the
Panel failed to take account of relevant evidence submitted by the European Communities. Instead,
the European Communities alleges that the Panel "failed" to engage in the fact-finding the European
Communities thinks necessary to appreciate properly the meaning of the phrase "extraordinary
circumstances".
152. We observe, in this regard, that although Section 351.218(e)(2)(i) of the Regulations was one
of the many provisions submitted by the European Communities in Exhibit EC-14 to the Panel, the
submissions made by the European Communities to the Panel do not specifically refer to
Section 351.218(e)(2)(i) of the Regulations, much less elaborate its meaning. Nor did the
European Communities explain how this provision operates to preclude USDOC from making a
determination consistent with Article 21.3 of the SCM Agreement . In these circumstances, the
European Communities has failed to make its case and we cannot fault the Panel for its treatment of
Section 351.218(e)(2)(i).
153. We also wish to underline that although panels enjoy a discretion, pursuant to Article 13 of
the DSU

143, to seek information "from any relevant source", Article 11 of the DSU imposes no
obligation on panels to conduct their own fact-finding exercise, or to fill in gaps in the arguments
made by parties. In consequence, given that the European Communities itself had submitted no

142Panel Report, para. 8.105.
143As we have stated, "[t]his is a grant of discretionary authority: a panel is not duty-bound to seek
information in each and every case or to consult partic ular experts under this provision." (Appellate Body
Report, Argentina – Textiles and Apparel, para. 84)

evidence—other than the text of the provision—on this point, the Panel did not act inconsistently with
Article 11 in refraining from seeking additional information on its own initiative.
2. The Panel's Treatment of the Distinction Between Mandatory and
Discretionary Legislation
154. Turning to the part of the European Communities' appeal relating to the Panel's treatment of
the distinction between mandatory and discretionary legislation, we recall that the Panel found that:
[h]aving considered the provisions challenged by the European
Communities, we find no provision in US law that mandates WTO-
inconsistent behaviour. We also note that the Regulations, the Sunset
Policy Bulletin and the SAA do not contain any provision that
changes US law in this respect.

144 (original underlining)
155. The European Communities challenges this finding, arguing that the Panel could not properly
have found that the United States law at issue in this case was a "discretionary" law. The European
Communities draws a distinction between a "genuinely discretionary law", where the authorities are
afforded discretion of sufficient breadth and nature to allow for the law to be applied in a WTO-
consistent manner, and a deliberately "complex and ambiguous web of provisions, such as the one at
issue", which creates "a smoke screen of procedures in order to show a ( de facto inexistent)
discretion".

145 In short, the European Communities alleges that any discretion afforded to USDOC
under United States law is illusory.
156. We note, first, that, in dispute settlement proceedings, Members may challenge the
consistency with the covered agreements of another Member's laws, as such, as distinguished from
any specific application of those laws. In both cases, the complaining Member bears the burden of
proving its claim. In this regard, we recall our observation in US – Wool Shirts and Blouses that:
… it is a generally-accepted canon of evidence in civil law, common
law and, in fact, most jurisdictions, that the burden of proof rests
upon the party, whether complaining or defending, who asserts the
affirmative of a particular claim or defence.

146 (emphasis added)
157. Thus, a responding Member's law will be treated as WTO- consistent until proven otherwise.
The party asserting that another party's municipal law, as such, is inconsistent with relevant treaty
obligations bears the burden of introducing evidence as to the scope and meaning of such law to

144Panel Report, para. 8.106.
145European Communities' other appellant's submission, para. 61.
146Appellate Body Report, US – Wool Shirts and Blouses , at 335. See also, Appellate Body Report,

substantiate that assertion.
147 Such evidence will typically be produced in the form of the text of the
relevant legislation or legal instruments, which may be supported, as appropriate, by evidence of the
consistent application of such laws, the pronouncements of domestic courts on the meaning of such
laws, the opinions of legal experts and the writings of recognized scholars. The nature and extent of
the evidence required to satisfy the burden of proof will vary from case to case.
158. In this case, the European Communities asserts that United States law has three main
characteristics which effectively remove USDOC's discretion to make a determination consistent
with the requirements of Article 21.3 of the SCM Agreement : first, "no change or termination of
subsidy program can be considered unless such change or termination were found in a previous
review of the order"; second, United States law establishes "a mechanism that results in a reversal of
the presumption of termination of CVD orders"; and, third, the law generates "a consistent and
persistent practice of WTO-inconsistent continuation of CVD orders".

148 We will consider each of
the points raised by the European Communities.
159. First, we address the allegation that USDOC is precluded from considering any changes to or
termination of subsidy programs when there has been no review of the duty between the time of the
final determination in the original investigation and the sunset review. On this point, we recall that
the Panel relied on the specific language in Section 752 (b)(1) of the Tariff Act in order to dismiss the
claim of the European Communities.

149 This provision, inter alia, mandates USDOC to consider
"whether any change in the program that gave rise to such net countervailable subsidy … has
occurred that is likely to affect that net counte rvailable subsidy." The Panel also noted that "the
words of Section 751(c) of the Tariff Act reflect closely the language of Article 21.3 of the
SCM Agreement."

150 We believe that it was appropriate for the Panel to rely on the express
provisions of the statute. Furthermore, we have already noted that, in this case: (i) USDOC did make
certain adjustments to the rate of subsidization determined in the original investigation,
notwithstanding the absence of any intervening review of the duty

151; and (ii) the European
Communities itself introduced a decision by the United States Court of International Trade finding not
only that United States law does not preclude USDOC from taking account of changes in subsidy

147See, for example, Appellate Body Report, US – Wool Shirts and Blouses, at 335.
148European Communities' other appellant's submission, para. 60.
149Panel Report, para. 8.104.
150Ibid., para. 8.103.
151Ibid., para. 8.116.

programs when no review has been conducted, but that any interpretation of the law that would
include such a restriction is "impermissible".
152
160. Second, with respect to the alleged "reversal of the presumption of termination" of
countervailing duties will be terminated after five years, this argument also seems to depend on the
premise that USDOC will not consider changes in subsidy programs. The European Communities
seems to argue that when a subsidy program was found, in an original investigation, to provide
countervailable subsidies, then United States law requires USDOC automatically to make the same
finding in a sunset review. However, as we have just stated, the Panel properly held that United
States law requires changes in a subsidy program to be taken into account in a sunset review.
161. Third, as to the argument that United States law generates a consistent practice of WTO-
inconsistent continuation of countervailing duty orders, we recall that, in support of this assertion, the
European Communities relied primarily on the conduct of the sunset review in this case. This was not
sufficient to require the Panel to make any finding as to USDOC's "consistent practice".

153
162. It follows that, in this case, the European Communities did not satisfy its burden of proving
either that United States law mandates USDOC to act inconsistently with Article 21.3 of the
SCM Agreement, or that such law restricts in a material way USDOC's discretion to make a
determination consistent with Article 21.3 in a sunset review. Thus, we conclude that the Panel did
not err in finding that United States law had not been shown to be inconsistent with Article 21.3 of the
SCM Agreement . Given the evidence before it, the Panel was entitled to rely on the language of
Sections 751(c) and 752 of the Tariff Act in finding that United States law, as such, is not inconsistent
with the obligations that the Panel found to be contained in Article 21.3 of the SCM Agreement.

154
163. Accordingly, we uphold the Panel's findings, at paragraph 8.106, that:
US law is not inconsistent with Article 21.3 of the SCM Agreement
with respect to the obligation th at the investigating authorities
determine the likelihood of continuation or recurrence of
subsidisation in a sunset review.
155

152Dillinger I, supra, footnote 141, p. 1354.
153In this regard, we recall our reasoning supra in paragraph 148 and the footnotes thereto.
154We also recall that the Panel's legal interpretation of the requirements imposed under
Article 21.3— inter alia, that "a determination of likelihood under Article 21.3 must rest on a sufficient factual
basis", and specifically "on the evaluation of the evidence that it has gathered during the original investigation,
the intervening reviews and finally the sunset review"—has not been appealed. (Panel Report, paras. 8.94-8.96)

VIII. Articles 6.2 and 11 of the DSU – The Opportunity to Submit Evidence in a Sunset
Review (Appeal by the European Communities)
164. The European Communities requests that we re verse the Panel's finding that the European
Communities' claims with respect to the consistency of United States law, as such, and as applied in
the case, with the obligation to provide "ample opportunity" to present evidence in a sunset review,
were outside the Panel's terms of reference.

156
165. Before the Panel, this issue arose in the following manner. Following the second meeting of
the Panel, the Panel posed a question inquiring whether it was to understand that the European
Communities was making claims, pursuant to Article 12.1 of the SCM Agreement , regarding the
consistency of United States law with obligations with respect to the opportunity to present evidence
in sunset reviews.

157 The European Communities responded in the affirmative.
158 The United States
asserted, in its comments on the European Communities' response to this question, that such claims
were outside the Panel's terms of reference.

159 This objection was reiterated in the United States'
request for interim review, after the Panel had issued its interim report, which included findings on
these matters.

160
166. In its Report, the Panel found:
… that the European Communities has failed to set out a claim in its
request for establishment with respect to the United States' CVD law
in respect of the investigating authority's obligation to provide ample
opportunity to interested members and parties to submit relevant
evidence in a sunset review. This "measure" is therefore outside our
terms of reference. Accordingly, we do not address the European
Communities' claims under Article 12 of the SCM Agreement.

161

156Panel Report, para. 8.145.
157Question 54 posed by the Panel; Panel Report, para. 5.522.
158Panel Report, para. 5.522.
159Ibid., para. 5.589.
160Ibid., paras. 7.24 and 8.133.

167. As a consequence, the Panel omitted from its Report certain substantive findings and
reasoning, which had appeared in the interim report.
162 On appeal, in addition to asking us to reverse
the Panel's finding on its terms of reference, the European Communities requests that we "reinstate
and modify" these findings from the interim report, or issue our own substantive findings on the basis
of material on the record.
168. The European Communities further asserts that , in considering whether these matters were
within its terms of reference, the Panel committed "serious legal errors in its appreciation of the
facts"

163 and thereby failed to make an objective assessment of the matter before it, as required by
Article 11 of the DSU. In the view of the European Communities, the Panel could not reasonably
have concluded that it was not clear that the European Communities was making claims regarding the
opportunity to present evidence in sunset reviews.
169. In considering the European Communities' appeal, we first set out the portions of the request
for establishment of the Panel that the European Communities asserts demonstrate its compliance with
the requirements of Article 6.2 of the DSU to "identify the specific measures at issue and provide a
brief summary of the legal basis of the complaint sufficient to present the problem clearly." The
penultimate paragraph of the panel request sets forth the following summary of the preceding parts of
the request:

162In its interim report, the Panel made the following findings in relation to these matters:
12.1 In conclusion, we: …
(f) reject the claim of the European Communities that US
CVD law and the accompanying regulations and statement
of policy practices are inconsistent with Article 12.1 of the
SCM Agreement in respect of the obligation to provide
ample opportunity to interested Members and all
interested parties to present in writing all relevant
evidence, and therefore violate Article 32.5 of the SCM
Agreement and, consequently, also Article XVI:4 of the
WTO Agreement; and
(g) uphold the claim of the European Communities that the
United States, in failing to provide ample opportunity to
interested Members and all interested parties to present in
writing all relevant evidence in the instant sunset review,
acted in violation of Article 12.1 of the SCM Agreement.
163European Communities' other appellant's submission, para. 77.

The EC consider that the US decision of 2 August 2000 not to revoke
the countervailing duties imposed on imports of corrosion resistant
steel (Issue No. 65 FR 47407), as well as certain aspects of the sunset
review procedure which led to it (regulated by Section 751 c) of the
Tariff Act of 1930 and the implementing regulations and interim
final rules issued by the DOC –see footnote 2) are inconsistent with
the obligations of the United States under the SCM Agreement and,
in particular, Articles 10, 11.9, 21 (notably paragraphs 1 and 3), and
32.5 thereof, and under Article XVI:4 of the Agreement establishing
the World Trade Organization.
164 (underlining added)
170. As the Panel noted, the panel request contains no explicit reference to the opportunity to
present evidence in a sunset review. 165 Indeed, it does not contain the word "evidence" at all. Nor
does the request give any indication as to why or how USDOC allegedly failed to afford sufficient
opportunity to present evidence in the sunset review of carbon steel. Furthermore, the panel request
does not cite any particular provisions of United States law, or other examples of United States
practice, that relate specifically to the submission of evidence.
171. In our view, the references in the panel request to "certain aspects of the sunset review
procedure", to the United States statutory provisions governing sunset reviews, to related regulatory
provisions, and to the Sunset Policy Bulletin, can be read to refer, generally, to United States law
regarding the determination to be made in a sunset review.

166 However, we do not believe they can
be read to refer to distinct measures, consisting of United States law, as such, and as applied, relating
to the submission of evidence. Accordingly, we agree with the Panel that the matters relating to the
submission of evidence in a sunset review were not within its terms of reference because the specific
measures at issue were not adequately identified in the request for the establishment of the panel
167,
as required by Article 6.2 of the DSU.
172. We would add that, in our view, the panel request also fails to comply with the second
requirement of Article 6.2—to set out the legal ba sis of the European Communities' complaints with
regard to these matters. The panel request does not refer to Article 12.1 of the SCM Agreement,

164WT/DS213/3. Footnote 2 to the request for the establishment of the Panel refers to:
Section 751 c) of the Tariff Act of 1930, … the Implementing Regulations
on anti-dumping and countervailing duties issued by USDOC (F.R. Vol. 62
No. 96 Monday, May 19, 1997 p 27296 - 19 CFR Parts 351, 353, and 355
Antidumping Duties; Countervailing Duties Final rule) and … the
USDOC's Interim final rules on procedures for conducting five-year
("Sunset'') Reviews of Antidumping and Countervailing Duty Orders
(19 CFR Section 351- FR Doc. 98-7165 Filed 3-19-98).
165Panel Report, para. 8.141.
166Supra, paras. 129 to 134.
167Panel Report, para. 8.145.

which deals with the treatment of evidence in a sunset review. The panel request neither identifies
the first paragraph of Article 12 of the SCM Agreement as relevant. Nor does it contain any
language—such as the phrase "ample opportunity to present evidence"—that would at least suggest
the legal basis of the claims. Nor does the request specifically identify Article 21.4, which applies the
requirements of Article 12 to sunset reviews. We recall that the identification of the treaty provisions
claimed to have been violated is a "minimum prerequisite" for stating of the legal basis of a
complaint.

168 In this appeal, the panel request falls short of this minimum prerequisite with respect to
the issue of submission of evidence.
173. Our view is confirmed by a review of the European Communities' submissions to the Panel.
The arguments of the European Communities relating to the opportunity to present evidence were
made exclusively in the context of its claims regarding the obligation to determine the likelihood of
continuation or recurrence of subsidization.
169 However, as we have previously observed, it is
important to distinguish between claims, which must be sufficiently identified in the panel request,
and the arguments in support of those claims, which are set out in the written submissions and
statements made by the parties during panel proceedings.
170 Here, the European Communities made
 arguments on the rules relating to the submission of evidence in support of claims concerning the
determination to be made in a sunset review.
174. Accordingly, we uphold the Panel's finding that its terms of reference did not include claims
against United States law, as such, and as applied in the sunset review of countervailing duties on
carbon steel, relating to the obligation to provide "ample opportunity" to present evidence in a sunset
review.
 171
175. Lastly, we consider the European Communities' assertion, invoking Article 11 of the DSU,
that the Panel did not comply with its duty to make an objective assessment of the matter before it, by
failing to find that the European Communities was making claims with respect to the opportunity to
present evidence in a sunset review.

172
176. In this case, we have upheld the Panel's finding that the request for the establishment of the
Panel failed to comply with the requirements of Article 6.2 of the DSU in relation to matters

169See, European Communities' first submission to the Panel, paras. 99 and 101; European
Communities' second submission to the Panel, paras. 40-44; European Communities' second oral statement to
the Panel, para. 20. See also Panel Report, paras. 5.35, 5.412-5.415, and 5.454.
170Appellate Body Report, EC – Bananas III, paras. 141 and 143.
172European Communities' other appellant's submission, para. 77.

regarding the opportunity to submit evidence in sunset reviews. We did so on the basis of our review
of the reasoning upon which this finding of the Panel was based—with which we agree—as well as on
the basis of our own examination of the panel request. In sum, we are satisfied that the Panel
complied with its duties under Article 11 of the DSU in finding that its terms of reference did not
include the European Communities' claims relating to the opportunity to submit evidence in a sunset
review.
 173
IX. Findings and Conclusions
177. For the reasons set out in this Report:
(a) as to the de minimis standard in sunset reviews, the Appellate Body:
reverses the Panel's findings, in paragraphs 8.80, 8.81, 8.84, 9.1(b) and 9.1 (c) of its
Report, that, in not applying a less than 1 percent de minimis standard in sunset
reviews, United States law, as such, and as applied in the sunset review of
countervailing duties on carbon steel, is inconsistent with Article 21.3 and, therefore,
with Article 32.5, of the SCM Agreement, and consequently is also inconsistent with
Article XVI:4 of the WTO Agreement;
(b) as to the evidentiary standards for the self-initiation of sunset reviews, the Appellate
Body:
upholds the Panel's finding, in paragraphs 8.49 and 9.1(a) of its Report, that United
States law, as such, with respect to the automatic self-initiation by authorities of
sunset reviews, is consistent with paragraphs 1 and 3 of Article 21, and with
Article 10, of the SCM Agreement;
(c) as to the determination to be made in sunset reviews, the Appellate Body:
(i) upholds the Panel's finding, in paragraph 7.23 of its Report, that the request
for the establishment of the Panel satisfied the requirements of Article 6.2 of
the DSU with respect to a claim regarding the consistency of United States
law, as such, with the obligation to determine the likelihood of continuation
or recurrence of subsidization in sunset reviews;

173As a result of our findings in this section, we are not required to, and do not, consider the European
Communities' request that we "reinstate and modify" findings included in the interim report, but omitted from
the Panel Report.

(ii) upholds the Panel's finding, in paragraphs 8.106 and 9.1(d) of its Report, that
United States law, as such, is not inconsistent with the obligation in
Article 21.3 of the SCM Agreement to determine the likelihood of
continuation or recurrence of subsidization in sunset reviews; and finds that
the Panel acted consistently with its duties under Article 11 of the DSU in so
finding;
(d) as to the opportunity to present evidence in sunset reviews, the Appellate Body:
upholds the Panel's finding, in paragraph 8.145 of its Report, that the request for the
establishment of the Panel failed to satisfy the requirements of Article 6.2 of the DSU
with respect to claims regarding the consistency of United States law, as such, and as
applied in the sunset review of countervailing duties on carbon steel, with obligations
regarding the opportunity to present evidence in sunset reviews; and finds that the
Panel acted consistently with its duties under Article 11 of the DSU in so finding.
178. The Appellate Body recommends that the DSB request that the United States bring its
measure found in the Panel Report, as modified by this Report, to be inconsistent with the
SCM Agreement into conformity with its obligations under that Agreement.
Signed in the original at Geneva this 12th day of November 2002 by:
Yasuhei Taniguchi
Presiding Member
_________________________ _________________________
A.V. Ganesan Giorgio Sacerdoti
Member Member