UNITED STATES – COUNTERVAILING MEASURES ON CERTAIN HOT-ROLLED CARBON STEEL FLAT PRODUCTS FROM INDIA
Document: Request for the Establishment of a Panel by India
Date: 13 July 2012
Document codes: WT/DS436/3
Complainant: India
Respondent: U.S.
Third parties: Australia, Canada, China, EU, Saudi Arabia, Turkey
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 12, 14, 15, 19, 32  Subsidies and Countervailing Measures (SCM)Art. VI  GATT 1994Art. 1, 2, 10, 11, 13, 21, 22  Subsidies and Countervailing Measures (SCM)Art. I  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

UNITED STATES – COUNTERVAILING MEASURES ON CERTAIN
HOT-ROLLED CARBON STEEL FLAT PRODUCTS FROM INDIA

Request for the Establishment of a Panel by India

 The following communication, dated 12 July 2012, from the delegation of India to the
Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

Governing the Settlement of Disputes (the "DSU"), Article XXII: 1 of the General Agreement on
Tariffs and Trade 1994 (the "GATT 1994") and Article 30 of the Agreement on Subsidies and
Countervailing Measures (the "ASCM"), with regard to the imposition of countervailing duties on
Certain Hot Rolled Carbon Steel Flat Products from India ("subject goods") by the United States.
2. Consultations were held on 31 May and 1 June 2012. Unfortunately, the consultations were
unsuccessful in resolving the dispute. Therefore, I ndia respectfully requests, pursuant to Articles 4.7
and 6 of the DSU and Article 30 of the ASCM, that the Dispute Settlement Body ("DSB") establish a
Panel to examine this matter, with the standard term s of reference, as set forth in Article 7.1 of the
DSU.
Measures at Issue:

3. The United States conducted a counterva iling duty (the "CVD") investigation
(No. C-533-821) and levied countervailing duti es on the subject goods. The provisional measures
were imposed with effect from 20 April 2001 and th e final measures were imposed with effect from
3 December 2001. The United States concluded a sunset review in 2007 and continued the duties for a
further period of five years. The United States also conducted several Administrative Reviews (the
"AR") to determine the CVD rate/s to be applied on the imports made during the relevant AR period.
The measures continue to be in force. This request covers the countervailing duties applied on the
subject goods by the United States from time to time . A non-exhaustive list of determinations, orders,
etc. issued by the United States in Case No. C-533-821 is enclosed as Annex 1.
4. The measures covered in this request also include the following provisions of the
United States Tariff Act, 1930 as codified in the Unit ed States Code, Title 19, Chapter 4, Subtitle IV
("19 USC") and the United States Code of Federa l Regulations, Title 19, Volume 3, Chapter III,
Part 351 ("19 CFR 351"):
 (a) 19 CFR § 351.511(a)(2)(i) to (iii);

 (b) 19 CFR § 351.511(a)(2)(iv);

 (c) 19 USC § 1677(7)(G);

 (d) 19 USC § 1675a(a)(7);

 (e) 19 USC § 1675b(e)(2);

 (f) 19 USC § 1677e (b); and

 (g) 19 CFR § 351.308

5. The request also covers all the amendments, replacements, implementing acts or any other
related measure in connection with the measures referred herein.
Legal Basis

A. "As such" claims

6. In terms of the provisions contained in 19 CFR § 351.511(a)(2)(i) to (iii), the United States
follows a three-tiered benchmark approach in de termining the adequacy of remuneration for the
provision of goods or services by the Government. Under Tier-I, the United States considers market
determined price resulting from actual transactions in the country in question referred to as
'in-country' prices. If the Tier-I price is not availa ble, the United States considers the world market
price (Tier-II), provided it is reas onable to conclude that such pri ce would be available to purchasers
in the country in question. If the Tier-II price is also not available, the United States will measure the
adequacy of remuneration by assessing whether the government price is consistent with market
principles. Under these provisions, the United Stat es examines whether the Government price in
question is in accordance with market principles only when no benchmark is available under either
Tier I or Tier II. The above mentioned provisions of the United States law relegates the prices, which
are consistent with market principles as per Ti er III, below the benchmark prices determined under
either Tier I or Tier II, while measuring the adequacy of remuneration.
7. Further, the benchmark prices under either Tier-I or Tier-II are mandatorily adjusted to reflect
the price that a firm actually paid or would pay if it had imported the product. This adjustment will
include delivery charges and import duties. The relevant provision is contained in
19 CFR § 351.511(a)(2)(iv). Even if the government price is at ex-factory level, ocean freight,
delivery charges and import duties are included in the benchmark price to arrive at delivered prices. In
measuring the adequacy of remuneration for the provis ion of goods, it is inappropriate to mandatorily
include delivery charges and import duties. This prac tice also results in a higher subsidy margin and
as a consequence, an excessive rate of countervailing duty.
8. The United States laws contained in 19 USC § 1677(7)(G), 19 USC § 1675a(a)(7), and
19 USC § 1675b(e)(2) provide that the US Intern ational Trade Commission shall cumulatively assess
the volume and effect of the subject merchandi se from all countries with respect to which:
(a) petitions seeking imposition of either an antidum ping or a countervailing duty were filed on the
same day, (b) antidumping or countervailing duty inv estigations were initiated on the same day; or
(c) when both (a) and (b) are satisfied. These provisions permit cumulation of imports from countries
that are not subject to simultaneous countervailing duty investigations.
9. The United States laws contained in 19 USC § 1677e (b) and the implementing regulations
contained in 19 CFR § 351.308 provide for the use of 'adverse facts available' standards in making
determinations in both antidumpi ng and countervailing duty investig ations. Under the 'adverse facts
available' standard, an adverse inference may be drawn by selecting from among the facts otherwise

available. In other words, the inves tigating authority need not consider all the facts available and it is
sufficient for the authority to consider one or more facts from among all the facts available to draw an
adverse inference. The ASCM does not provide for the use of 'adverse facts available' standard.
10. India considers that the aforesaid provisions of the US laws are inconsistent with the
United States' obligations under the Articles 12, 14, 15, 19 and 32 of the ASCM and Article XVI:4 of
the Marrakesh Agreement Establishing the World Trade Organization as described below:
 (a) The provisions contained in 19 CFR § 351.511(a)(2)(i) to (iii) are 'as such'
inconsistent with Article 14(d) of the AS CM because they mandate a hierarchical
approach in which an evaluation of whethe r the government price in question is in
accordance with market principles is not made in every case but only in a case where
both Tier I and Tier II benchmarks are not available.

 (b) The provision contained in 19 CFR § 351.511( a)(2)(iv) is inconsistent 'as such' with
Article 14(d) of the ASCM because it mandat es the use of 'deliver ed prices' in every
case, disregarding the prevailing market conditions for the goods in question in the
country of provision.

 (c) The provision contained in 19 CFR § 351.511( a)(2)(iv) is inconsistent 'as such' with
Articles 19.3 and 19.4 of the ASCM because th e use of 'delivered prices' in every
case leads to an excessive subsidy margin and consequently, an inappropriate amount
of duty, in excess of the amount of actual subsidy, if any.

 (d) The provisions contained in 19 USC § 1677(7)(G), 19 USC § 1675a(a)(7), and
19 USC § 1675b(e)(2) are "as such" inconsistent with Article 15.3 of the ASCM
because they mandate cumulation of imports from countries not subject to
simultaneous countervailing duty investigations and consequently, are also "as such"
inconsistent with Articles 15.1, 15.2, 15.4 and 15.5 of the ASCM.

 (e) The provisions contained in 19 USC § 1677e (b) and the implementing regulations
contained in 19 CFR § 351.308 are "as such " inconsistent with Article 12.7 of the
ASCM because they provide for the use of "adverse facts available" in countervailing
duty investigations.

11. To the extent the United States Code and the Code of Federal Regula tions mentioned above
are inconsistent with the provisions of the ASCM, the United States is violating Article 32.5 of the
ASCM as well as Article XVI:4 of the Marrak esh Agreement Establishing the World Trade
Organization.
B. "As applied" claims

12. India considers that the determinations ma de, and the countervailing measures imposed, by
the United States are inconsistent with Articles 1, 2, 10, 11, 12, 13, 14, 15, 19, 21 and 22 of the
ASCM and, at a minimum, with the following obligations under the covered agreements:
(a) In connection with the alleged provision of High Grade Iron Ore for Less Than Adequate
Remuneration –

 (i) Articles 1.1(a)(1) of the ASCM –

 1. Because the National Mineral Deve lopment Corporation Limited (NMDC) is
not "government" or a "public body".

 2. Because the sale of iron ore by the NMDC did not amount to financial
contribution by the Government of India.

 (ii) Articles 1.1(a)(1) of the ASCM, in view of the absence of a valid determination that
the NMDC is "government" or a "public body" and the failure to make a
determination that the Government "entrusts or directs" NMDC to provide high grade
iron ore to producers of the subject goods.

 (iii) Article 1.1(b) of the ASCM, in view of the failure to establish that the sale of iron ore
by the NMDC to producers of subject goods conferred a benefit.

 (iv) Article 2.1(c) of the ASCM, because the sale of iron ore by the NMDC is not de facto
specific and the determination has been ma de without considering all the mandatory
factors listed therein, in particular, the exte nt of diversification of economic activities
within the jurisdiction of the granting authority, as well as the length of time during
which the subsidy program has been in operation.

 (v) Article 2.4 of the ASCM, in view of the failure to substantiate the determination of
specificity on the basis of positive evidence.

 (vi) Article 14(d) of the ASCM –

 1. Because the adequacy of remunera tion for the provision of iron ore was
determined by reference to a benchm ark price, without first examining
whether the NMDC price itself was adequate.

 2. Because the adoption of the deliver ed price as benchmark disregarded the
prevailing market conditions for sale of iron ore in India.

 3. Because the adequacy of remunerati on was not determined in relation to the
prevailing market conditions for sale of iron ore in India.

 4. Because the export prices of the NM DC were rejected in determining the
adequacy of remuneration.

 5. Because of the use of an 'out of c ountry' benchmark even when an 'in country'
benchmark was available, while determining the adequacy of remuneration.

 (vii) Articles 19.3 and 19.4 of the ASCM, b ecause the determination leads to an excess
amount of subsidy, if any, and an inappropriate amount of duty.

(b) In connection with the Captive Mining of Iron Ore

 (i) Article 12.5 of the ASCM, because the United States, based on the evidence on
record, could not have satisfied itself as to the existence of a "captive" mining rights
program and a separate set of regulations therefor.

 (ii) Article 1.1(a)(1)(iii) of the ASCM, because the grant of 'mining rights' does not
amount to financial contribution by way of provision of goods.

 (iii) Article 1.1(b) of the ASCM, in view of the failure to establish that grant of mining
rights conferred a 'benefit'.

 (iv) Article 2.1(c) of the ASCM, because the grant of mining rights of iron ore is not
de facto specific to just steel producers and th e determination has been made without
considering all the mandatory factors listed therein, in particular, the extent of
diversification of economic activities within the jurisdiction of the granting authority,
as well as the length of time during which the subsidy program has been in operation.

 (v) Article 2.4 of the ASCM, in view of the failure to substantiate the determination of
specificity on the basis of positive evidence.

 (vi) Article 14(d) of the ASCM –

 1. In view of the failure to determine whether the remuneration for the grant of
mining rights was adequate.

 2. Because the adequacy of remuneration was not determined in relation to
prevailing market conditions for the iron ore in question, in India.

 3. Because the prices of the NMDC were rejected in determining the adequacy
of remuneration.

 4. Because of the use of an 'out of c ountry' benchmark even when an 'in country'
benchmark was available while determining the adequacy of remuneration.

(vii) Articles 19.3 and 19.4 of the ASCM, becau se the determination leads to an excess
amount of subsidy, if any, and an inappropriate amount of duty.

(c) In connection with the Captive Mining of Coal

 (i) Article 1.1(a)(1)(iii) of the ASCM, because the grant of 'mining rights' does not
amount to financial contribution by way of provision of goods.

(ii) Article 1.1 (b) of the ASCM, because of th e failure to establish that grant of mining
rights conferred a benefit.

 (iii) Articles 2.1(a) and (b) of the ASCM, because the grant of captive mining rights for
coal was based on objective criteria and conditions.

 (iv) Article 14(d) of the ASCM –

 1. In view of the failure to determine whether the remuneration for the grant of
mining rights was adequate.

 2. Because the adequacy of remuneration was not determined in relation to
prevailing market conditions for the coal in question, in India.

 (v) Articles 19.3 and 19.4 of the ASCM, becau se the determination leads to an excess
amount of subsidy, if any, and an inappropriate amount of duty.

(d) In connection with the operations of the Steel Development Fund (SDF)

 (i) Article 1.1(a)(1) of the ASCM –

 1. Because the Joint Plant Committee (JPC) is not 'government' or a 'public
body'.

 2. Because the grant of loans from the SDF is not a government practice that
involves the direct transfer of funds, or potential direct transfer of funds, to
steel producers.

 (ii) Articles 1.1(a)(1) of the ASCM, in view of the absence of a valid determination that
JPC is "government" or a "public body" and the failure to make a determination that –

 1. The SDF involves the Government making payments to a funding
mechanism.

 2. The Government "entrusts or direct s" the JPC to establish and operate the
SDF.

 (iii) Article 1.1(b) of the ASCM, because th e SDF program did not confer a benefit on the
participating steel producers.

 (iv) Article 14 of the ASCM –

 1. In view of the failure to determine th e net benefit, if any, i.e., after adjusting
the costs incurred by the exporters in order to participate in the SDF program.

 2. Because the benchmark adopted di d not represent the rate applicable for
comparable commercial loans.

 3. Because the application of the releva nt United States' laws and regulations is
not transparent and adequately explained.

 (v) Articles 19.3 and 19.4 of the ASCM, becau se the determination leads to an excess
amount of subsidy, if any, and an inappropriate amount of duty.

 (vi) Article I of the GATT, in view of the inconsistent and discriminatory determinations
in respect of similar programs, i.e., funds from producer levies.

(e) In connection with the injury determination –

 (i) Article 15.3 of the ASCM, because imports from 11 countries have been cumulated,
of which six countries are not subject to simultaneous CVD investigation.

 (ii) Articles 15.1 and 15.2 of the AS CM, because both subsidized imports and non-
subsidized imports have been considered together in determining injury.

 (iii) Articles 15.1 and 15.4 of the ASCM –

 1. Because both subsidized imports and non-subsidized imports have been
considered together while examining th e impact of subsidized imports on the
domestic industry.

 2. In view of the failure to consider all the mandatory economic factors, in
particular, growth, return on investme nt and ability to raise capital or
investment.

 (iv) Article 15.5 of the ASCM, because both subsidized imports and non-subsidized
imports have been considered together while demonstrating the causal relationship
between subsidized imports and injury to the domestic industry.

(f) In connection with other issues

 (i) Article 11 of the ASCM because no inv estigation was initiated or conducted to
determine the effects of new subsidies included in the administrative reviews.

 (ii) Articles 13.1 and 13.2 of the ASCM, in view of the failure to invite India for
consultations before including New Subs idy Allegations within the scope of
Administrative Reviews.

 (iii) Article 21 of the ASCM, because le vying countervailing duties in respect of new
subsidies does not amount to reviewing the need for continuation of the existing
countervailing duties.

 (iv) Article 22.1 and 22.2 of the ASCM, in view of the failure to issue a public notice
regarding initiation of investigation into the alleged new subsidy programs.

 (v) Article 12.7 of the ASCM, in view of the punitive application of the 'adverse facts
available' standard while determining the subsidy margins.

13. India considers that the measures, 'as applied', are inconsistent with Articles 22.3 and 22.5 of
the ASCM because the determinations of the United States do not set forth, in sufficient detail, the
findings and conclusions on the material issues of facts and law, all releva nt information on the
matters of fact and law, reasons for the various findings, as well as reasons for acceptance or rejection
of relevant arguments or claims raised by the interested parties.
14. As a consequence of the inconsistencies mentioned above, the countervailing duties applied in
this case are inconsistent with Articles 10 and 32.1 of the ASCM and Article VI of the GATT 1994.
15. India further considers that the measures at issu e have a serious adverse impact on the export
of subject goods from India to the United States. Furt her, India considers that the measures at issue
cause nullification or impairment of benefits accruing to India under all the aforesaid cited
agreements.
16. India hereby requests that this request for the establishment of a Panel be placed on the
agenda of the DSB meeting to be held on 23 July 2012.

Annex 1

Original Investigation

 1. Preliminary Affirmative Countervailing Du ty Determination and Alignment of Final
Countervailing Determination With Final Antidumping Duty Determinations: Certain
Hot-Rolled Carbon Steel Flat Products From India :, 66 FR 20240-01,
April 20, 2001.

 2. Issues and Decision Memorandum – Final Results of the Countervailing Duty
Investigations: Certain Hot-Rolled Carbon Steel Flat Products From India ,
66 ITADOC 49635, September 21, 2001.

 3. Final Affirmative Counter vailing Duty Determination: Certain Hot-Rolled Carbon
Steel Flat Products From India, 66 FR 49635-01, September 28, 2001.

 4. Injury Determination: Hot Rolled Steel Products from China, India, Indonesia,
Kazakhstan, Netherlands, Romania, South Africa, Taiwan, Thailand, and Ukraine ,
701-TA-405-408 and 731-TA-899-904 and 906-908, Pub. 3468, United States
International Trade Commission, November 2001.

 5. Amended Final Results of Countervailing Duty Orders : Certain Hot-Rolled Carbon
Steel Flat Products From India and Indonesia, 66 FR 60198-01, December 3, 2001.

 6. Countervailing Duty Order in the Investigation: Certain Hot Rolled Carbon Steel Flat
Products from India, January 8, 2002.

Administrative Review: POR April 20, 2001 through December 31, 2002

 7. Preliminary Results of Countervailin g Duty Administrative Review: Certain
Hot-Rolled Carbon Steel Flat Products from India, 69 FR 907-01, January 7, 2004.

 8. Issues and Decision Memorandum – Final Results of the Countervailing Duty
Investigation: Certain Hot-Rolled Car bon Steel Flat Products From India,
69 ITADOC 26549, May 6, 2004.

9. Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled
Carbon Steel Flat Products from India, 69 FR 26549-01, May 13, 2004.

Administrative Review: POR January 1, 2004 through December 31, 2004

 10. Preliminary Results of Countervailin g Duty Administrative Review: Certain
Hot-Rolled Carbon Steel Flat Products from India, 71 FR 1512-01, January 10, 2006.

 11. Issues and Decision Memorandum – Final Results of Administrative Review of the
Countervailing Duty Order : Certain Hot- Rolled Carbon Steel Flat Products from
India, 71 ITADOC 28665, May 10, 2006.

 12. Final Results of Countervailing Duty Administrative Review: Certain Hot-rolled
Carbon Steel Flat Products from India, 71 FR 28665-01, May 17, 2006.

Sunset Review

 13. Issues and Decision Memorandum – Final Results of Expedited Sunset Reviews of
the Countervailing Duty Orders: Certain Hot-Rolled Carbon Steel Flat Products from
Argentina, India, Indonesia, South Africa, and Thailand, 71 ITADOC 70960,
December 7, 2006.

 14. Final Results of the Expedited Five -Year (Sunset) Reviews of the Countervailing
Duty Orders: Certain Hot-Rolled Carbon Steel Flat Products from Argentina, India,
Indonesia, South Africa, and Thailand, 71 FR 70960-03, December 7, 2006.

 15. Injury Determination – Hot Rolled Steel Products from China, India, Indonesia,
Kazakhstan, Argentina, Romania, South Africa, Taiwan, Thailand, and Ukraine,
701-TA-404-408 and 731-TA-898-902 and 904-908(Review), Pub. 3956,
United States International Trade Commission, October 2007.

 16. Continuation of Antidumping Duty a nd Countervailing Duty Orders – Certain
Hot-Rolled Carbon Steel Flat Products from India, Indonesia, the People's Republic
of China, Taiwan, Thailand, and Ukraine, 72 FR 73316-03, December 27, 2007.

Administrative Review: POR January 1, 2006 through December 31, 2006

 17. Preliminary Results of Countervailin g Duty Administrative Review: Certain
Hot-Rolled Carbon Steel Flat Products from India, 73 FR 1578-02, January 9, 2008.

 18. Issues and Decision Memorandum – Final Results of Countervailing Duty
Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products From India,
73 ITADOC 40295, July 7, 2008.

 19. Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled
Carbon Steel Flat Products From India, 73 FR 40295-02, July 14, 2008.

Administrative Review: POR January 1, 2007 through December 31, 2007

 20. Preliminary Results of Countervailin g Duty Administrative Review: Certain
Hot-Rolled Carbon Steel Flat Products from India, 73 FR 79791-01,
December 30, 2008.

 21. Issues and Decision Memorandum – Final Results of Countervailing Duty
Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India,
74 ITADOC 20923, April 29, 2009.

 22. Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled
Carbon Steel Flat Products from India, 74 FR 20923-01 May 6, 2009.

Administrative Review: POR January 1, 2008 through December 31, 2008

 23. Preliminary Results of Countervailin g Duty Administrative Review: Certain
Hot-Rolled Carbon Steel Flat Products from India, 75 FR 1496-01, January 11, 2010.

 24. Issues and Decision Memorandum – Final Results of Countervailing Duty
Administrative Review: Certain Hot Rolled Carbon Steel Flat Products from India,
75 ITADOC 43488, July 19, 2010.

 25. Final Results of Countervailing Duty Administrative Review – Certain Hot Rolled
Carbon Steel Flat Products from India, 75 FR 43488-01, July 26, 2010.

The request also covers all the amendments, repl acements, implementing acts or any other related
measure in connection with the measures referred above.