To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by China in document WT/DS449/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.⁴

Chairperson: Mr José Graça Lima

Members: Mr Donald Greenfield

Mr Arie Reich

a. Sections 1 and 2 of United States Public Law 112-99, "An act to apply the countervailing duty provisions of the US Tariff Act of 1930 to nonmarket economy countries, and for other purposes" (P.L. 112-99);

b. any and all determinations or actions by the United States Department of Commerce (USDOC), the United States International Trade Commission (USITC), or United States Customs and Border Protection (USCBP) relating to the imposition or collection of countervailing duties on products imported into the territory of the United States from the People's Republic of China, where such determinations or actions were made or performed in connection with countervailing duty investigations or reviews initiated between 20 November 2006 and 13 March 2012;

c. the anti-dumping measures listed in Appendix B of its panel request, including the definitive anti-dumping duties imposed pursuant to their authority, as well as the combined effect of these anti-dumping measures and the parallel countervailing duty measures identified in Appendix A of its panel request; and

d. the failure of the United States to provide the USDOC with legal authority to identify and avoid the double remedies that are likely to result when the USDOC applies countervailing duties in conjunction with anti-dumping duties determined in accordance with the US non-market economy methodology, in respect of investigations or periodic reviews initiated between 20 November 2006 and 13 March 2012.

a. Section 1 of P.L. 112-99, including the new Section 701(f) of the United States Tariff Act which it establishes, is inconsistent as such with Articles X:1, X:2¹⁰, X:3(a), and X:3(b) of the GATT 1994;

b. Section 2 of P.L. 112-99 amending Section 777A of the United States Tariff Act is inconsistent as such with Article X:3(a) of the GATT 1994;

c. the United States lacks legal authority to identify and avoid double remedies in respect of certain investigations and reviews initiated between 20 November 2006 and 13 March 2012, and is thereby prevented in all such investigations and reviews, from ensuring that the imposition of countervailing duties is consistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994, and from ensuring that the imposition of anti-dumping duties in the associated anti-dumping investigations and reviews is consistent with Articles 9 and 11 of the AD Agreement and Article VI of the GATT 1994;

d. the United States failed to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012; that the resulting countervailing duty measures, including any countervailing duties collected pursuant to their authority, are inconsistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994; and that the associated anti‑dumping measures in each such instance, including any anti-dumping duties collected pursuant to their authority, are inconsistent with Articles 9 and 11 of the AD Agreement and Article VI of the GATT 1994.

a. Section 1 of P.L. 112-99, including the new Section 701(f) of the United States Tariff Act which it establishes, is inconsistent as such with Articles X:1, X:2¹², and X:3(b) of the GATT 1994;

b. the United States failed to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012; and that the resulting countervailing duty measures, including any countervailing duties collected pursuant to their authority, are inconsistent with Articles 10, 19, and 32 of the SCM Agreement.

a. Section 1 of Public Law (PL) 112-99 is inconsistent as such with Articles X:1, X:2²², X:3(a), and X:3(b) of the GATT 1994;

b. Section 2 of PL 112-99, amending Section 777A of the United States Tariff Act, is inconsistent as such with Article X:3(a) of the GATT 1994;

c. the United States lacks legal authority to identify and avoid double remedies in respect of certain investigations and reviews initiated between 20 November 2006 and 13 March 2012, and is thereby prevented in all such investigations and reviews, from ensuring that the imposition of countervailing duties is consistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994, and from ensuring that the imposition of anti-dumping duties in the associated anti-dumping investigations and reviews is consistent with Articles 9 and 11 of the Anti-Dumping Agreement and Article VI of the GATT 1994; and

d. the United States failed to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012; that the resulting countervailing duty measures, including any countervailing duties collected pursuant to their authority, are inconsistent with Articles 10, 15, 19, 21, and 32 of the SCM Agreement and Article VI of the GATT 1994; and that the associated anti‑dumping measures in each such instance, including any anti-dumping duties collected pursuant to their authority, are inconsistent with Articles 9 and 11 of the Anti-Dumping Agreement and Article VI of the GATT 1994.

a. China indicated that it was not pursuing the claim, contained in Part A of its panel request, that Section 1 of PL 112-99 is inconsistent with Article X:3(a) of the GATT 1994²³;

b. China indicated that it was not pursuing the claim, contained in Part B of its panel request, that Section 2 of PL 112-99, amending Section 777A of the United States Tariff Act, is inconsistent as such with Article X:3(a) of the GATT 1994²⁴;

c. China indicated that it was not pursuing the claims, contained in Part C of its panel request, that the United States lacks authority to identify and avoid double remedies in respect of certain investigations and reviews initiated between 20 November 2006 and 13 March 2012²⁵; and

d. China indicated that with respect to the claims in Part D of its panel request, regarding the USDOC's alleged failure to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012, China would only pursue its claims under Articles 10, 19, and 32 of the SCM Agreement. Furthermore, the Panel, in its preliminary ruling, ruled that the general references to Articles 10, 19, and 32 contained in Part D of the panel request warrant the inference that the obligations at issue are those contained in Articles 10, 19.3, and 32.1 of the SCM Agreement.²⁶

a. Section 1 of PL 112-99 is inconsistent as such with Articles X:1, X:2²⁷, and X:3(b) of the GATT 1994; and

b. the United States failed to investigate and avoid double remedies in certain investigations and reviews initiated between 20 November 2006 and 13 March 2012, and the resulting countervailing duty measures are therefore inconsistent with Articles 10, 19.3, and 32.1 of the SCM Agreement.

Public Law 112-99—March 13, 2012

Public Law 112-99

112th Congress

An Act

To apply the countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. APPLICATION OF COUNTERVAILING DUTY PROVISIONS TO NONMARKET ECONOMY COUNTRIES.

(a) In General.—Section 701 of the Tariff Act of 1930 (19 U.S.C. 1671) is amended by adding at the end the following:

"(f) Applicability to Proceedings Involving Nonmarket Economy Countries.—

"(1) In general.--Except as provided in paragraph (2), the merchandise on which countervailing duties shall be imposed under subsection (a) includes a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States from a nonmarket economy country.

"(2) Exception.—A countervailing duty is not required to be imposed under subsection (a) on a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States from a nonmarket economy country if the administering authority is unable to identify and measure subsidies provided by the government of the nonmarket economy country or a public entity within the territory of the nonmarket economy country because the economy of that country is essentially comprised of a single entity.''.

(b) Effective Date.—Subsection (f) of section 701 of the Tariff Act of 1930, as added by subsection (a) of this section, applies to—

(1) all proceedings initiated under subtitle A of title VII of that Act (19 U.S.C. 1671 et seq.) on or after November 20, 2006;

(2) all resulting actions by U.S. Customs and Border Protection; and

(3) all civil actions, criminal proceedings, and other proceedings before a Federal court relating to proceedings referred to in paragraph (1) or actions referred to in paragraph (2).

SEC. 2. ADJUSTMENT OF ANTIDUMPING DUTY IN CERTAIN PROCEEDINGS RELATING TO IMPORTS FROM NONMARKET ECONOMY COUNTRIES.

(a) In General.—Section 777A of the Tariff Act of 1930 (19 U.S.C. 1677f-1) is amended by adding at the end the following:

"(f) Adjustment of Antidumping Duty in Certain Proceedings Relating to Imports From Nonmarket Economy Countries.—

"(1) In general.—If the administering authority determines, with respect to a class or kind of merchandise from a nonmarket economy country for which an antidumping duty is determined using normal value pursuant to section 773(c), that—

"(A) pursuant to section 701(a)(1), a countervailable subsidy (other than an export subsidy referred to in section 772(c)(1)(C)) has been provided with respect to the class or kind of merchandise,

"(B) such countervailable subsidy has been demonstrated to have reduced the average price of imports of the class or kind of merchandise during the relevant period, and

"(C) the administering authority can reasonably estimate the extent to which the countervailable subsidy referred to in subparagraph (B), in combination with the use of normal value determined pursuant to section 773(c), has increased the weighted average dumping margin for the class or kind of merchandise,

the administering authority shall, except as provided in paragraph (2), reduce the antidumping duty by the amount of the increase in the weighted average dumping margin estimated by the administering authority under subparagraph (C).

"(2) Maximum reduction in antidumping duty.—The administering authority may not reduce the antidumping duty applicable to a class or kind of merchandise from a nonmarket economy country under this subsection by more than the portion of the countervailing duty rate attributable to a countervailable subsidy that is provided with respect to the class or kind of merchandise and that meets the conditions described in subparagraphs (A), (B), and (C) of paragraph (1).''.

(b) Effective Date.—Subsection (f) of section 777A of the Tariff Act of 1930, as added by subsection (a) of this section, applies to—

(1) all investigations and reviews initiated pursuant to title VII of that Act (19 U.S.C. 1671 et seq.) on or after the date of the enactment of this Act; and

(2) subject to subsection (c) of section 129 of the Uruguay Round Agreements Act (19 U.S.C. 3538), all determinations issued under subsection (b)(2) of that section on or after the date of the enactment of this Act.

Approved March 13, 2012.

Table 1: List of Investigations and Reviews Cited by China³⁰

Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any [Member³¹], pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to enable governments and traders to become acquainted with them. Agreements affecting international trade policy which are in force between the government or a governmental agency of any contracting party and the government or governmental agency of any other contracting party shall also be published. The provisions of this paragraph shall not require any contracting party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

a. is a "[l]aw[], regulation[], judicial decision[] [or] administrative ruling[] of general application … pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use";

b. was "made effective" by the United States; and

c. was not "published promptly in such a manner as to enable governments and traders to become acquainted" with it.

Nor does the fact that it was a country-specific measure exclude the possibility of it being a measure of general application. If, for instance, the restraint was addressed to a specific company or applied to a specific shipment, it would not have qualified as a measure of general application. However, to the extent that the restraint affects an unidentified number of economic operators, including domestic and foreign producers, we find it to be a measure of general application.⁵¹

While the restraint measure was addressed to particular, i.e. named, exporting Members, including Appellant Costa Rica …, we note that the measure did not try to become specific as to the individual persons or entities engaged in exporting the specified textile or clothing items to the importing Member and hence affected by the proposed restraint.⁵²

a. Section 1 is part of a "law" and contains a provision that is of "general application" and "pertains" to "rates of duty";

b. Section 1 as a whole was "made effective" by the United States on 13 March 2012; and

c. Section 1 was published "promptly", once it had been made effective.

No measure of general application taken by any contracting party effecting an advance in a rate of duty or other charge on imports under an established and uniform practice, or imposing a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor, shall be enforced before such measure has been officially published.

a. is a "measure of general application taken by [a Member] effecting an advance in a rate of duty or other charge on imports under an established and uniform practice, or imposing a new or more burdensome requirement, restriction or prohibition on imports, or on the transfer of payments therefor"; and

b. has been "enforced before [it] has been officially published".

At the same time, we are bound to observe that Article X:2 of the General Agreement, does not speak to, and hence does not resolve, the issue of permissibility of giving retroactive effect to a safeguard restraint measure. The presumption of prospective effect only does, of course, relate to the basic principles of transparency and due process, being grounded on, among other things, these principles. But prior publication is required for all measures falling within the scope of Article X:2, not just ATC safeguard restraint measures sought to be applied retrospectively. Prior publication may be an autonomous condition for giving effect at all to a restraint measure. Where no authority exists to give retroactive effect to a restrictive governmental measure, that deficiency is not cured by publishing the measure sometime before its actual application. The necessary authorization is not supplied by Article X:2 of the General Agreement.¹⁷⁵

It would have been an exercise in speculation on the part of the Panel to predict either when or how that case may be concluded, or to assume that injunctive relief ultimately would be granted and that the United States Court of Appeals or the Supreme Court of the United States eventually would compel the Department of State to modify the Revised Guidelines. The Panel was correct not to indulge in such speculation, which would have been contrary to the duty of the Panel, under Article 11 of the DSU, to make "an objective assessment of the matter … including an objective assessment of the facts of the case".³⁰⁴

a. Section 1 has been "enforced" before its official publication through Section 1(b) and relevant determinations or actions made or taken by the United States between 20 November 2006 and 13 March 2012 in respect of imports from China;

b. Section 1 is part of a United States law, and hence a "measure" taken by the United States, and contains a provision that is of "general application"; but

c. Section 1 does not effect an "advance" in a rate of duty or other charge on imports under an established and uniform practice, nor does it impose a requirement, restriction, or prohibition, on imports that is "new or more burdensome".

In this regard, it is important to note here our practice of not applying the CVD law to non-market economies. The CAFC upheld this practice in Georgetown Steel Corp. v. United States, 801 F.2d 1308 (Fed. Cir. 1986). See also GIA at 37261. We intend to continue to follow this practice. Where the Department determines that a change in status from non-market to market is warranted, subsidies bestowed by that country after the change in status would become subject to the CVD law.³⁴³

If Section 1 of PL 112-99 was merely a clarification of existing law, which did not change United States law or make it stricter towards imports from NMEs, this would mean that USDOC was always under an obligation to impose CVDs on subsidized goods from NMEs. That this was not the case can be seen clearly from the above pronouncement by USDOC. Clearly, if USDOC was under such a legal obligation it could not have followed a "practice of not applying the CVD law to non-market economies."

The substantive issue in this case, here on appeal from the Court of International Trade, is whether the countervailing duty provisions in section 303 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1303 (1982), apply to alleged subsidies granted by countries with so-called nonmarket economies for goods exported to the United States. The International Trade Administration of the Department of Commerce (Administration) held that section 303 does not apply to nonmarket economies.³⁴⁵

It is hence clear that USDOC itself did not consider itself at the time authorized to apply CVDs on NMEs. This is so, because if the countervailing duty provisions of United States law, as it then was, did not apply to NMEs, that means that USDOC had no legal authority to impose such duties on NMEs. The court then went on to define the legal question that it had to rule on:

In other words, we must determine, as best we can, whether when Congress enacted the countervailing duty law in 1897 it would have applied the statute to nonmarket economies, if they then had existed.³⁴⁶

The court reached the conclusion that Congress would not have done so, and in the many years that passed since 1897 never wanted to do so (i.e., apply CVD law to NMEs):

Further support for our conclusion is furnished by the more recent actions of Congress in dealing with the problem of exports by nonmarket economies through other statutory provisions. Those statutes indicate that Congress intended that any selling by nonmarket economies at unreasonably low prices should be dealt with under the antidumping law. There is no indication in any of those statutes, or their legislative history, that Congress intended or understood that the countervailing duty law also would apply.³⁴⁷

The court then discussed the 1974 amendments to the CVD laws and noted:

There is no indication, however, that in doing so Congress intended to change the scope of that law or believed that it covered nonmarket economies. If Congress had so intended or believed, it is curious that the legislature gave no such indication, particularly in view of the specific changes it made in the antidumping law to deal with the problem.³⁴⁸

The court concluded its analysis with the following statement:

Congress … has decided that the proper method for protecting the American market against selling by nonmarket economies at unreasonably low prices is through the antidumping law. This law is designed to protect domestic industry from injury resulting from the sale in the United States of foreign merchandise that is priced below its fair value, and provides a remedy therefor in 19 U.S.C. § 1677b(c). If that remedy is inadequate to protect American industry from such foreign competition — a question we could not possibly answer — it is up to Congress to provide any additional remedies it deems appropriate.³⁴⁹

This judgment is a final and binding decision, and as can be seen by the pronouncement of USDOC published in the Federal Register,³⁵⁰ USDOC itself saw it as such and based its practice of not applying CVDs on imports from NMEs on this judgment. Indeed, the parties agree that this decision was a final, unappealed decision, and was governing and controlling under United States law.³⁵¹

[W]e find that when amending and reenacting countervailing duty law in 1988 and 1994, Congress legislatively ratified earlier consistent administrative and judicial interpretations that government payments cannot be characterized as "subsidies" in a non-market economy context, and thus that countervailing duty law does not apply to NME countries.³⁵³

It went on to hold:

We thus find that in amending and re-enacting the trade laws in 1988 and 1994, Congress adopted the position that countervailing duty law does not apply to NME countries. Although Commerce has wide discretion in administering countervailing duty and antidumping law, it cannot exercise this discretion contrary to congressional intent. We confirm the holding of the Trade Court that countervailing duties cannot be applied to goods from NME countries.

Hence, the CAFC rejected the argument by the United States administration that the United States Tariff Act permitted USDOC to impose countervailing duties on imports from nonmarket economy countries if it was "possible to identify a subsidy" in such countries. The court concluded by stating that if USDOC wished to impose countervailing duties on imports from NME countries, "the appropriate approach is to seek legislative change".³⁵⁴ It was on this background that the United States authorities did in fact turn to Congress and requested it to adopt PL 112-99, which as noted above is entitled "an act to applythe countervailing duty provisions of the Tariff Act of 1930 to nonmarket economy countries".

[a]bsent legislation, should the decision of the court [in GPX V] become final, Commerce will be required to revoke all CVD orders and terminate all CVD proceedings involving non-market economy countries, including 24 existing CVD orders on imports from China and Vietnam, as well as five pending investigations and two recently filed petitions.³⁶⁴

Article X:2, General Agreement, may be seen to embody a principle of fundamental importance - that of promoting full disclosure of governmental acts affecting Members and private persons and enterprises, whether of domestic or foreign nationality. The relevant policy principle is widely known as the principle of transparency and has obviously due process dimensions. The essential implication is that Members and other persons affected, or likely to be affected, by governmental measures imposing restraints, requirements and other burdens, should have a reasonable opportunity to acquire authentic information about such measures and accordingly to protect and adjust their activities or alternatively to seek modification of such measures.

Assume that Country A's unbound tariff rate on a certain product is x%, and that it has been published properly in its official gazette. On January 1, 2013, Country A's customs authorities start collecting customs duties on this product at the rate of 2x%, although the published tariff rate is x%, and in spite of protests by importers of the product in question. On June 1, 2013, Country A's Minister of Finance signs an order to raise the duty on this product to 2x% with an effective date of January 1, 2013. The order, which is within his authority under the laws of Country A, is published promptly on the same day that it was signed. Would Country A's actions be consistent with GATT Articles X:1 and X:2?³⁷⁸

The United States responded inter alia that if Country A's customs authorities were acting pursuant to a measure of general application, which was not published, then Country A's actions could be inconsistent with Article X:2 as from January 1, as the measure was enforced before publication. However, "the collection of a duty at the rate of 2x% by only certain customs authorities (perhaps at certain ports or at certain times) would not appear to be a measure of general application"³⁷⁹ and thus not prohibited by Article X:2. The United States further responded that "the Minister of Finance's order on June 1 … would not fall under one of the listed changes under Article X:2 in the scenario in which there was a measure of general application pursuant to which the customs authorities applied a rate of 2x%. That is, the order was not an 'advance' on a rate of duty or other charge on imports under an established and uniform practice, nor was it a 'new' or 'more burdensome' requirement, restriction or prohibition on imports".³⁸⁰

Each [Member] shall maintain, or institute as soon as practicable, judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review and correction of administrative action relating to customs matters. Such tribunals or procedures shall be independent of the agencies entrusted with administrative enforcement and their decisions shall be implemented by, and shall govern the practice of, such agencies unless an appeal is lodged with a court or tribunal of superior jurisdiction within the time prescribed for appeals to be lodged by importers; Provided that the central administration of such agency may take steps to obtain a review of the matter in another proceeding if there is good cause to believe that the decision is inconsistent with established principles of law or the actual facts. (Emphasis added)

The Panel, however, noted that Article X:3(b) of the GATT 1994 does not contain an express textual link to the obligation of uniform administration of customs laws in Article X:3(a). The Panel contrasted this with Article X:3(c) of the GATT 1994, which explicitly cross-references Article X:3(b).⁴³⁰ Against this background, the Panel considered that it was not possible to infer that the drafters of the GATT 1994 intended the obligation of Article X:3(b) to be read as simultaneously requiring uniform administration in accordance with Article X:3(a). In the Panel's view, this would amount to 'merging different requirements that are currently contained in separate sub-paragraphs of Article X'.⁴³¹ We see no reason to disagree with the Panel's interpretation. We are also of the view that the requirement of "uniformity" contained in Article X:3(a) does not imply that under Article X:3(b) decisions of review tribunals must govern the practice of all agencies entrusted with customs enforcement throughout the territory of a WTO Member. Article X:3(a) requires, inter alia, uniformity of administration. In contrast, Article X:3(b) relates to the review and correction of administrative action by independent mechanisms.⁴³²

A basic object and purpose of the GATT 1994, as reflected in Article X:3(b), is to ensure due process in relation to customs matters. The Appellate Body referred to this due process objective in EC – Selected Customs Matters.⁴³⁵ In that vein, the panel in EC – Selected Customs Matters stated that Article X:3(b) seeks to 'ensure that a trader who has been adversely affected by a decision of an administrative agency has the ability to have that adverse decision reviewed.'⁴³⁶ In addition, relating more broadly to Article X:3 of the GATT 1994, the Appellate Body has found that this provision establishes certain minimum standards for transparency and procedural fairness in Members' administration of their trade regulations.⁴³⁷ While recognizing WTO Members' discretion to design and administer their own laws and regulations, Article X:3 also serves to ensure that Members afford the protection of due process to individual traders. As we see it, the obligation under Article X:3(b) to maintain tribunals or procedures for the prompt review and correction of administrative action relating to customs matters is an expression of this due process objective of Article X:3.⁴³⁸

Although the scope of the new legislation is clear, appellees nonetheless contend that the new legislation is unconstitutional because (1) it attempts to prescribe a rule of decision for this case after our decision in GPX was rendered …

We think the first of these arguments is without merit. The Supreme Court has counselled that "[w]hen a new law makes clear that it is retroactive, an appellate court must apply that law in reviewing judgments still on appeal that were rendered before the law was enacted, and must alter the outcome accordingly." Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 226, 115 S.Ct. 1447, 131 L.Ed.2d 328 (1995). Unlike Plaut, where Congress attempted to undo a final judgment, see id. at 227, 115 S.Ct. 1447, this case was still pending on appeal when Congress enacted the new legislation, as our mandate had not yet issued, see Fed. R.App. P. 41(b)-(c); see also Beardslee v. Brown, 393 F.3d 899, 901 (9th Cir.2004) ("An appellate court's decision is not final until its mandate issues."). It makes no difference that Congress, in the legislative history, addressed the decision in this case by name. See, e.g., Ileto v. Glock, Inc., 565 F.3d 1126, 1139 (9th Cir.2009) ("[A] statute affecting pending cases, indeed designating them by name and number, [does] not offend separation of powers because Congress was changing the law applicable to those cases rather than impermissibly interfering with the judicial process." (citing Robertson v. Seattle Audubon Soc'y, 503 U.S. 429, 440, 112 S.Ct. 1407, 118 L.Ed.2d 73 (1992))). Thus, no issue is raised by the fact that our decision in GPX had issued prior to enactment of the new legislation because this case remained pending on appeal.⁴⁴⁹

When a countervailing duty is imposed in respect of any product, such countervailing duty shall be levied, in the appropriate amounts in each case, on a non-discriminatory basis on imports from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced any subsidies in question or from which undertakings under the terms of this Agreement have been accepted. Any exporter whose exports are subject to a definitive countervailing duty but who was not actually investigated for reasons other than a refusal to cooperate, shall be entitled to an expedited review in order that the investigating authorities promptly establish an individual countervailing duty rate for that exporter.

In essence, "double remedies" may arise when both countervailing duties and anti-dumping duties are imposed on the same imported products. The term "double remedies" does not, however, refer simply to the fact that both an anti-dumping and a countervailing duty are imposed on the same product. Rather, as explained below, "double remedies", also referred to as "double counting", refers to circumstances in which the simultaneous application of anti-dumping and countervailing duties on the same imported products results, at least to some extent, in the offsetting of the same subsidization twice. [...]

[...] When investigating authorities calculate a dumping margin in an anti-dumping investigation involving a product from an NME, they compare the export price to a normal value that is calculated based on surrogate costs or prices from a third country.⁴⁷⁵ Because prices and costs in the NME are considered unreliable, prices, or, more commonly, costs of production, in a market economy are used as the basis for calculating normal value.⁴⁷⁶ In the dumping margin calculation, investigating authorities compare the product's constructed normal value (not reflecting the amount of any subsidy received by the producer) with the product's actual export price (which, when subsidies have been received by the producer, is presumably lower than it would otherwise have been). The resulting dumping margin is thus based on an asymmetric comparison and is generally higher than would otherwise be the case.⁴⁷⁷

As the Panel explained, the dumping margin calculated under an NME methodology "reflects not only price discrimination by the investigated producer between the domestic and export markets ('dumping')", but also "economic distortions that affect the producer's costs of production", including specific subsidies to the investigated producer of the relevant product in respect of that product.⁴⁷⁸ An anti-dumping duty calculated based on an NME methodology may, therefore, "remedy" or "offset" a domestic subsidy, to the extent that such subsidy has contributed to a lowering of the export price.⁴⁷⁹ Put differently, the subsidization is "counted" within the overall dumping margin. When a countervailing duty is levied against the same imports, the same domestic subsidy is also "counted" in the calculation of the rate of subsidization and, therefore, the resulting countervailing duty offsets the same subsidy a second time. Accordingly, the concurrent imposition of an anti-dumping duty calculated based on an NME methodology, and a countervailing duty may result in a subsidy being offset more than once, that is, in a double remedy. Double remedies may also arise in the context of domestic subsidies granted within market economies when anti-dumping and countervailing duties are concurrently imposed on the same products and an unsubsidized, constructed, or third country normal value is used in the anti-dumping investigation.⁴⁸⁰

The Panel understood the United States to have accepted the principle that double remedies may result from the concurrent imposition, on the same product, of countervailing duties and anti-dumping duties calculated using an NME methodology.⁴⁸¹ The United States nevertheless argued that the existence of a double remedy depends on whether the subsidy leads to a reduction in the export price in any given instance, and contended that it cannot be presumed that domestic subsidies lower export prices pro rata,or one-for-one.⁴⁸²⁴⁸³

The Panel reviewed what it considered to be relevant contextual elements for its interpretation of Article 19.4 of the SCM Agreement. However, the Panel also recalled these contextual elements in its interpretation of Article 19.3 and noted that "[t]he same considerations likewise suggest that it was not the intention of the drafters [of] the SCM Agreement to address the question of double remedies in Article 19.3 of the SCM Agreement". (Panel Report, para. 14,129)⁵²⁵

We consider that the two requirements in the first sentence of Article 19.3 inform each other. Thus, it would not be appropriate for an importing Member to levy countervailing duties on imports from sources that have renounced relevant subsidies, or on imports from sources whose price undertakings have been accepted. Similarly, because the requirement that the duty be levied in "appropriate amounts" implies a certain tailoring of the amounts according to circumstances, this suggests that the requirement that the duty be imposed on a non-discriminatory basis on imports from all subsidized sources should not be read in an overly formalistic or rigid manner. The second sentence of Article 19.3 provides a specific example of circumstances in which it is permissible not to differentiate amongst individual exporters, as well as of when and how differentiated treatment in the establishment of a countervailing duty rate is required.⁵²⁸

On appeal, China claims that it is "the obligation of the investigating authority to investigate and make a determination as to whether it is offsetting the same subsidies twice", whereas the United States argues that "the burden to establish the existence of such an alleged double remedy would be on China".

We observe that, in US – Countervailing Measures on Certain EC Products, the Appellate Body stated that, "under Article VI:3 of the GATT 1994, investigating authorities, before imposing countervailing duties, must ascertain the precise amount of a subsidy attributed to the imported products under investigation."⁵³⁸ We consider that a parallel can be drawn between the obligation of an investigating authority under Article VI:3 of the GATT 1994 to determine the precise amount of the subsidy, on the one hand, and the analogous obligations that an investigating authority has under Articles 19.3 and 19.4 of the SCM Agreement, on the other hand, to determine and levy countervailing duties in amounts that are appropriate in each case and that do not exceed the amount of the subsidy found to exist.

In the same way, therefore, as an investigating authority is subject to an affirmative obligation to ascertain the precise amount of the subsidy, so too is it subject to an affirmative obligation to establish the appropriate amount of the duty under Article 19.3. This obligation encompasses a requirement to conduct a sufficiently diligent "investigation" into, and solicitation of, relevant facts, and to base its determination on positive evidence in the record. We recall our finding above that, among the factors to be taken into account by an investigating authority, in establishing the "appropriate" amount of countervailing duty to be imposed, is evidence of whether and to what degree the same subsidies are being offset twice when anti-dumping and countervailing duties are simultaneously imposed on the same imported products. We also recall that such double remedies are "likely" when the concurrent anti-dumping duties are calculated on the basis of an NME methodology.⁵³⁹⁵⁴⁰

We do not accept China's contention that a finding of inconsistency of the measures at issue must directly follow from our reversal of the Panel's interpretation of Article 19.3 of the SCM Agreement. We have expressed the view that, as a legal matter, this provision prohibits double remedies. But, we have not yet considered the question of when, as a factual matter, double remedies arise. In principle, we agree with the statement by the Panel that double remedies would likely result from the concurrent application of anti-dumping duties calculated on the basis of an NME methodology and countervailing duties⁵⁵⁰, but we are not convinced that double remedies necessarily result in every instance of such concurrent application of duties. This depends, rather, on whether and to what extent domestic subsidies have lowered the export price of a product, and on whether the investigating authority has taken the necessary corrective steps to adjust its methodology to take account of this factual situation.⁵⁵¹

The United States puts forward a number of scenarios under which it is plausible that the subsidy would not have a one-for-one impact on the producer's costs of production or on export prices. The United States also points out that the imposition of countervailing duties is not conditioned upon a demonstration of the price effects of the subsidy; in other words, that a Member is allowed to countervail subsidies that have no effects on the price of subsidized imports.

All else being equal, one would expect a domestic subsidy to lower the recipient's production costs, allowing that producer to lower its prices in both the domestic and export markets.⁵⁵⁴ It would, in our view, be a rare case in which a subsidy bestowed upon the producer of an exported good has no effect at all on either the producer's costs of production or – assuming they are relevant – export prices, such that no portion of that subsidy would be subject to a double remedy where both anti-dumping duties based on an NME methodology, and countervailing duties, were imposed on imports of a given product.

In sum, the United States' arguments raise the question of the extent of a double remedy in specific factual circumstances – whether a complete double remedy necessarily results from all instances of concurrent imposition of anti-dumping duties calculated under an NME methodology and of countervailing duties. They do not, however, invalidate the general proposition that at least some double remedy will likely arise from the concurrent imposition of countervailing duties and anti-dumping duties calculated under an NME methodology. If anything, the arguments put forward by the United States reinforce the idea that ascertaining the precise extent of double remedy in specific investigations would be a complex task, a fact which is highlighted by both the GAO, in its 2005 Report, and by the CIT in GPX.⁵⁵⁵⁵⁵⁶