Source(s) of the information:

Lawyers, other representatives, expert(s), tribunal’s secretary

Report of the Panel

CASES CITED IN THIS REPORT

Short titleFull case title and citation
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1161
Canada – Dairy Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R, WT/DS113/AB/R and Corr.1, adopted 27 October 1999, DSR 1999:V, p. 2057
Canada – Dairy (Article 21.5 – New Zealand and US) Appellate Body Report, Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products – Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/AB/RW, WT/DS113/AB/RW, adopted 18 December 2001, DSR 2001:XIII, p. 6829
China – GOES Panel Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/R and Add.1, adopted 16 November 2012, upheld by Appellate Body Report WT/DS414/AB/R
EC – Commercial Vessels Panel Report, European Communities – Measures Affecting Trade in Commercial Vessels, WT/DS301/R, adopted 20 June 2005, DSR 2005:XV, p. 7713
EC – Countervailing Measures on DRAM Chips Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005, DSR 2005:XVIII, p. 8671
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135
EC and certain member States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7
EC and certain member States – Large Civil Aircraft Panel Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685
Guatemala – Cement I Appellate Body Report, Guatemala – Anti‑Dumping Investigation Regarding Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998, DSR 1998:IX, p. 3767
Guatemala – Cement II Panel Report, Guatemala – Definitive Anti‑Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted 17 November 2000, DSR 2000:XI, p. 5295
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/R, adopted 17 December 2007, as modified by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, p. 2805
Korea – Commercial Vessels Panel Report, Korea – Measures Affecting Trade in Commercial Vessels, WT/DS273/R, adopted 11 April 2005, DSR 2005:VII, p. 2749
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3
Mexico – Anti‑Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti‑Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p. 10853
Mexico – Steel Pipes and Tubes Panel Report, Mexico – Anti‑Dumping Duties on Steel Pipes and Tubes from Guatemala, WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, p. 1207
US – Anti-Dumping and Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p. 2869
US – Anti-Dumping and Countervailing Duties (China) Panel Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/R, adopted 25 March 2011, as modified by Appellate Body Report WT/DS379/AB/R, DSR 2011:VI, p. 3143
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291
US – Corrosion‑Resistant Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti‑Dumping Duties on Corrosion‑Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3
US – Corrosion‑Resistant Steel Sunset Review Panel Report, United States – Sunset Review of Anti‑Dumping Duties on Corrosion‑Resistant Carbon Steel Flat Products from Japan, WT/DS244/R, adopted 9 January 2004, as modified by Appellate Body Report WT/DS244/AB/R, DSR 2004:I, p. 85
US – Countervailing Duty Investigation on DRAMS Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Countervailing Measures on Certain EC Products Appellate Body Report, United States – Countervailing Measures Concerning Certain Products from the European Communities, WT/DS212/AB/R, adopted 8 January 2003, DSR 2003:I, p. 5
US – Customs Bond Directive Panel Report, United States – Customs Bond Directive for Merchandise Subject to Anti‑Dumping/Countervailing Duties, WT/DS345/R, adopted 1 August 2008, as modified by Appellate Body Report WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VIII, p. 2925
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as Subsidies, WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI, p. 5767
US – Gambling Panel Report, United States – Measures Affecting the Cross‑Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia, WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, p. 4051
US – Large Civil Aircraft (2nd complaint) Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012
US – Large Civil Aircraft (2nd complaint) Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/R, adopted 23 March 2012, as modified by Appellate Body Report WT/DS353/AB/R
US – Oil Country Tubular Goods Sunset Reviews Appellate Body Report, United States – Sunset Reviews of Anti‑Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, p. 3257
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand, WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, p. 2539
US – Softwood Lumber III Panel Report, United States – Preliminary Determinations with Respect to Certain Softwood Lumber from Canada, WT/DS236/R, adopted 1 November 2002, DSR 2002:IX, p. 3597
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, p. 571
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1, adopted 17 February 2004, as modified by Appellate Body Report WT/DS257/AB/R, DSR 2004:II, p. 641
US – Softwood Lumber VI (Article 21.5 – Canada) Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865
US – Steel Plate Panel Report, United States – Anti‑Dumping and Countervailing Measures on Steel Plate from India, WT/DS206/R and Corr.1, adopted 29 July 2002, DSR 2002:VI, p. 2073
US – Upland Cotton Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9 May 2006, and Corr.1, DSR 2006:II, p. 417
US – Zeroing (EC) Panel Report, United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), WT/DS294/R, adopted 9 May 2006, as modified by Appellate Body Report WT/DS294/AB/R, DSR 2006:II, p. 521

ABBREVIATIONS

AbbreviationDescription
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679
WTO World Trade Organization
SCM Agreement Agreement on Subsidies and Countervailing Measures
USDOC United States Department of Commerce
SOEs State-owned enterprises

1 INTRODUCTION

1.1 COMPLAINT BY CHINA

1.1.
On 25 May 2012, China requested consultations with the United States under Article 4 of the DSU, Article XXIII:1 of GATT 1994, and Article 30 of the SCM Agreement with respect to the United States' countervailing duty measures on certain products from China as described in document WT/DS437/1.
1.2.
Consultations were held on 25 June 2012 and 18 July 2012 with a view to reaching a mutually satisfactory solution. These consultations clarified certain issues pertaining to this matter, but failed to resolve the dispute.

1.2 PANEL ESTABLISHMENT AND COMPOSITION

1.3.
On 20 August 2012, China requested the establishment of a panel pursuant to Article 6 of the DSU with standard terms of reference.1 At its meeting on 28 September 2012, the DSB established a panel pursuant to the request of China in document WT/DS437/2, in accordance with Article 6 of the DSU.2
1.4.
The Panel's terms of reference are the following:

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/DS437/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.3

1.5.
On 14 November 2012, China requested the Director-General to determine the composition of the panel, pursuant to Article 8.7 of the DSU. On 26 November 2012, the Director-General accordingly composed the Panel as follows:

Chairperson: Mr Mario Matus

Members: Mr Scott Gallacher

Mr Hugo Perezcano Díaz

1.6.
Australia, Brazil, Canada, the European Union, India, Japan, Korea, Norway, the Russian Federation, the Kingdom of Saudi Arabia (Saudi Arabia), Turkey and Viet Nam notified their interest in participating in the Panel proceedings as third parties.

1.3 PANEL PROCEEDINGS

1.3.1 General

1.7.
After consultation with the parties, the Panel adopted its Working Procedures4 and timetable on 19 December 2012. Following its adoption, the Panel introduced subsequent modifications to its timetable.
1.8.
The Panel held a first substantive meeting with the parties on 30 April and 1 May 2013. A session with the third parties took place on 30 April 2013. The Panel held a second substantive meeting with the parties on 23-24 July 2013. On 2 August, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 28 February 2014. The Panel issued its Final Report to the parties on 9 May 2014.

1.3.2 Request for enhanced third party rights

1.9.
On 4 December 2012, Canada requested the Panel to grant it enhanced third party rights in the Panel's working procedures. Subsequently, Australia, Brazil and Turkey endorsed this request.
1.10.
In a communication dated 20 December 2012, addressed to Canada, Australia, Brazil and Turkey, and copied to the parties and all other third parties, the Panel declined Canada's request for enhanced third-party rights in these proceedings and indicated that it would provide its reasoning on this matter in its report.
1.11.
The Panel notes, first, that the parties to the dispute have opposed the request of Canada that it be accorded enhanced third party rights. In addition, the Panel has carefully reviewed the reasons advanced by Canada to support its request. In the Panel's view, these reasons are not among those that would justify departing from the third party rights established in paragraphs 2 and 3 of Article 10 of the DSU, paragraph 6 of Appendix 3 of the DSU, and subsequent panel practice regarding enhanced third party rights.
1.12.
In its request, Canada argues that "it has significant legal and systemic interests in the outcome of this dispute, particularly because any clarifications made to the provisions of the [SCM Agreement] raised in this dispute may have potentially wide-ranging implications for the methodology used by authorities in subsidy investigations and the results of such investigations". According to Canada, "[t]he rights traditionally granted to third parties are inadequate to allow the Panel to fully take into account Canada's interests in this dispute".
1.13.
In the Panel's view, what Canada characterizes as its "significant legal and systemic interests in the outcome of this dispute" means that Canada has a "substantial interest" within the meaning of Article 10.2 of the DSU in the matter before this Panel. However, the Panel fails to see how those legal and systemic interests differentiate Canada from any other WTO Member, such as to warrant the granting of enhanced third party rights. Canada does not assert that it is affected by this particular dispute in a manner that differentiates it from any other third party. The Panel observes that in recent practice panels have generally rejected requests for enhanced third party rights based on assertions of interests of a general systemic nature and where the parties requesting enhanced third party rights have failed to identify how they are specifically affected by a particular dispute.5 The Panel is further of the view that Canada has not explained why the existing third party rights are inadequate to allow the Panel to fully take into account Canada's interests.

1.3.3 Preliminary ruling

1.14.
On 14 December 2012, the United States submitted to the Panel a request for a preliminary ruling concerning the consistency of China's request for the establishment of the Panel with Article 6.2 of the DSU.
1.15.
On 8 February 2013, the Panel issued a preliminary ruling to the parties. After consulting the parties to the dispute, the Panel decided to inform the DSB of the content of its preliminary ruling.6
1.16.
The preliminary ruling provides that it "is an integral part of the Panel's Final Report, subject to any changes that may be necessary in the light of comments received from the parties during Interim Review".

2 FACTUAL ASPECTS

2.1 THE MEASURES AT ISSUE

2.1.
China's claims relate to 32 initiations of investigations or preliminary or final determinations in 17 countervailing duty investigations conducted from 2007 through 2012.7

3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS

3.1.
China requests that the Panel find that:

a. In connection with the alleged provision of input goods for less than adequate remuneration:

i. The USDOC's findings of financial contribution are inconsistent with Article 1.1(a)(1) of the SCM Agreement, because the USDOC incorrectly determined, or did not have a sufficient basis to determine, that certain SOEs are "public bodies" within the meaning of that provision in the input subsidy investigations listed in CHI-1;

ii. The "rebuttable presumption" established and applied by the USDOC in respect of whether SOEs can be classified as "public bodies" is, as such, inconsistent with Article 1.1(a)(1) of the SCM Agreement;

iii. The USDOC's initiation of countervailing duty investigations in respect of allegations that SOEs confer countervailable subsidies through their sales of inputs to downstream producers, in the absence of sufficient evidence in the petition to support an allegation that SOEs constitute "public bodies" within the meaning of Article 1.1(a)(1) of the SCM Agreement, and in the absence of a sufficient review of the petition by the USDOC in respect of this allegation, is inconsistent with Articles 11.2 and 11.3 of the SCM Agreement in the Steel Cylinders, Solar Panels, Wind Towers, and Steel Sinks investigations;

iv. The USDOC's findings of benefit are inconsistent with Article 1.1(b) and Article 14(d) of the SCM Agreement, because the USDOC improperly found that the alleged provision of goods for less than adequate remuneration conferred a benefit upon the recipient, and improperly calculated the amount of any benefit allegedly conferred, including, inter alia, its erroneous findings that prevailing market conditions in China were "distorted" as the basis for rejecting actual transaction prices in China as benchmarks in the input subsidy investigations listed in CHI-1;

v. The USDOC's findings of specificity are inconsistent with Articles 2.1 and 2.4 of the SCM Agreement, because the USDOC failed to make a proper determination on the basis of positive evidence that the alleged provision of inputs for less than adequate remuneration was specific to an enterprise or industry or group of enterprises or industries in the input subsidy investigations listed in CHI-1;

vi. The USDOC's initiation of countervailing duty investigations in respect of the alleged provision of inputs for less than adequate remuneration, in the absence of sufficient evidence in the petition to support an allegation that any such subsidy would be specific under Article 2 of the SCM Agreement, and in the absence of a sufficient review of the petition by the USDOC in respect of this allegation, is inconsistent with Articles 11.2 and 11.3 of the SCM Agreement in the input subsidy investigations listed in CHI-1.

b. In connection with all of the identified countervailing duty investigations in which the USDOC has issued a preliminary or final countervailing duty determination:

i. The USDOC's use of so-called "adverse facts available" to support its findings of financial contribution, specificity, and benefit is inconsistent with Article 12.7 of the SCM Agreement in the instances identified in CHI-2 because the USDOC did not rely on facts available on the record.

c. In connection with the alleged provision of land and land-use rights for less than adequate remuneration:

i. The USDOC's findings of specificity are inconsistent with Articles 2.2 and 2.4 of the SCM Agreement, because the USDOC failed to make a proper determination on the basis of positive evidence that the alleged subsidy was specific to an enterprise or industry or to a group of enterprises or industries in the land specificity investigations listed in CHI-1.

d. In connection with export restraints allegedly maintained by China:

i. The USDOC's initiation of countervailing duty investigations in respect of these allegations is inconsistent with Articles 11.2 and 11.3 of the SCM Agreement in the Magnesia Bricks and Seamless Pipe investigations;

ii. The USDOC's determination that export restraints provided a "financial contribution" is inconsistent with Article 1.1(a) of the SCM Agreement in the Magnesia Bricks and Seamless Pipe investigations.

3.2.
China requests that in each instance where the Panel makes a finding of inconsistency, the Panel also find that, as a consequence, the United States has acted inconsistently with Articles 10 and 32.1 of the SCM Agreement and Article VI:3 of the GATT. It also requests that the Panel recommend that the United States bring the challenged measures into conformity with its obligations under the relevant covered agreements.
3.3.
The United States requests that the Panel reject China's claims in this dispute. It also requests the Panel to disregard China's claims pertaining to the preliminary determinations in Wind Towers and Steel Sinks. As China did not request consultations on these determinations, such determinations should thus be outside the terms of reference of this panel proceeding.

4 ARGUMENTS OF THE PARTIES

4.1.
The arguments of the parties, other than in their answers to questions, are reflected in their written submissions, oral statements or their executive summaries thereof, provided to the Panel in accordance with paragraph 16 of the Working Procedures adopted by the Panel (see Annexes A, B, D, F and G).

5 ARGUMENTS OF THE THIRD PARTIES

5.1.
The arguments of the third parties, other than in their answers to questions, are reflected in their written submissions, oral statements or their executive summaries thereof, provided in accordance with paragraph 16 of the Working Procedures adopted by the Panel (see Annexes A, C and E). The arguments of Australia, Canada, Norway and Saudi Arabia are reflected in their third-party written submissions and third-party oral statements or their executive summaries thereof. The arguments of Brazil are reflected in its third-party comments on the United States' request for a preliminary ruling, the executive summary of its third-party written submission and in its third-party oral statement. The arguments of the European Union are reflected in the executive summary of its third-party comments on the United States' request for a preliminary ruling and in the executive summary of its third-party written submission. The arguments of India, Japan, Korea and Turkey are reflected in their third-party oral statements. The Russian Federation and Viet Nam did not submit third-party written or oral arguments to the Panel.

6 INTERIM REVIEW

6.1.
On 28 February 2014, the Panel submitted its Interim Report to the parties. On 14 March 2014, China and the United States each submitted written requests for the review of precise aspects of the Interim Report. On 11 April 2014, each party submitted comments on the other's requests for review. Neither party requested an interim review meeting.
6.2.
In accordance with Article 15.3 of the DSU, this section of the Report sets out the Panel's response to the parties' requests made at the interim review stage. The Panel modified aspects of its Report in light of the parties' comments where it considered it appropriate, as explained below. Due to changes made as a result of our review, the numbering of footnotes in the Final Report has changed from the Interim Report. The text below refers to the footnote numbers in the Interim Report, with the corresponding footnote numbers in the Final Report (if different) in parentheses for ease of reference.

6.1 ENHANCED THIRD PARTY RIGHTS

6.3.
Regarding paragraphs 1.11-1.13, the United States requests the deletion of part of the reasons provided by the Panel for the rejection of Canada's request for enhanced third party rights. The United States argues that the opposition of the parties to a request for enhanced third party rights serves as an independent and sufficient basis for such a request to be rejected. As such, the United States requests that the additional reasons provided by the Panel be deleted. The United States is concerned that these additional reasons could be misread to imply that a panel has discretion to grant enhanced third party rights for any number of reasons, potentially even where each party to the dispute has objected to granting enhanced rights.
6.4.
China does not comment on the United States' request.
6.5.
The Panel has decided to reject the United States' request, as it is well established that it is within a panel's discretion whether to grant enhanced third party rights. In particular, the Appellate Body has confirmed that, beyond the minimum rights guaranteed under Article 10 and Appendix 3 to the DSU, "[p]anels enjoy a discretion to grant additional participatory rights to third parties in particular cases, as long as such 'enhanced' rights are consistent with the provisions of the DSU and the principles of due process".8 As such, the Panel has made no modifications to paragraphs 1.11-1.13.

6.2 PRELIMINARY RULING

6.6.
Regarding paragraphs 1.14-1.16, the United States requests that the findings contained in the preliminary ruling be set out as a part of the Final Report, instead of being incorporated by reference. In addition, the United States requests that certain editing and typographical errors be corrected in the preliminary ruling.
6.7.
China does not comment on the United States' request.
6.8.
The Panel notes that it is consistent with previous panels' practice to circulate the preliminary ruling as a separate document. However, for the sake of completeness, the Panel has added a footnote to paragraph 8.1 to reiterate that the Panel's conclusions incorporate those set forth in its preliminary ruling, as contained in the document WT/DS437/4, circulated on 21 February 2013, which has been attached to this Report as Annex A-8.

6.3 TERMS OF REFERENCE

6.9.
Regarding paragraph 7.25, China requests that the first sentence of the paragraph be modified to conform with China's response to Panel question No. 2, cited therein.
6.10.
The United States does not comment on China's request.
6.11.
The Panel has made modifications to the first sentence of paragraph 7.25 to reflect China's request.

6.4 CLAIMS UNDER ARTICLE 1.1(A)(1) OF THE SCM AGREEMENT

6.12.
Regarding paragraph 7.92, China requests that the description, in the first sentence of the paragraph, of Kitchen Shelving as "the only available written evidence" of the USDOC's policy be modified to reflect the fact that the application of the same policy by the USDOC in subsequent CVD cases also constitutes evidence of the policy. As such, China requests that the Panel either replace the word "only" with the word "first" or, alternatively, that the first sentence of the paragraph be rephrased as follows: "We begin our assessment of this claim by looking at the relevant excerpt of Kitchen Shelving, where according to China the USDOC first articulated its policy."
6.13.
The United States submits that it does not support China's reformulation of paragraph 7.92. Nonetheless, the United States does not oppose China's alternative proposed modification, subject to the addition of commas after the terms "where" and "China".
6.14.
The Panel has modified the first sentence of paragraph 7.92 in line with the alternative wording put forth by China, while also accepting the modification to this wording proposed by the United States.
6.15.
Regarding paragraph 7,116, the United States requests that the wording of the second sentence of the paragraph be modified to accurately reflect the statement made by the USDOC in the Solar Panels Issues and Decision Memorandum, and quoted in that paragraph. Accordingly, the United States provides a modified wording for the sentence.
6.16.
China submits that the Panel should reject the United States' request on the grounds that the wording of paragraph 7,116 is appropriate, especially when taking into account the context of the USDOC's statement. In China's view, the context is important as it shows that the USDOC's statement was meant to convey a lack of intent to modify the USDOC's approach to the public body issue, despite the Appellate Body Report in US – Anti-Dumping and Countervailing Duties (China).
6.17.
The Panel has modified the second sentence of paragraph 7,116 according to the wording provided by the United States, as well as made certain editorial changes, to improve the clarity of the Report.
6.18.
Regarding paragraph 7,127, the United States requests that the last two sentences of the paragraph be deleted, and that the first sentence of paragraph 7,127 be moved to the end of paragraph 7,126. The United States makes its request on the grounds that neither the text of the Kitchen Shelving Issues and Decision Memorandum nor US domestic law supports the Panel's conclusion that the USDOC is restricted from considering other evidence beyond ownership.
6.19.
China submits that the Panel should reject the United States' request, as it merely restates the arguments presented by the United States in support of the proposition that the policy articulated in the Kitchen Shelving Issues and Decision Memorandum could not be challenged "as such". Nonetheless, China suggests modified wording for the second sentence of paragraph 7,127.
6.20.
The Panel has amended paragraph 7,127 in accordance with the wording suggested by China, as it considers that this modification most appropriately addresses the issue raised by the United States.

6.5 CLAIMS UNDER ARTICLE 11 OF THE SCM AGREEMENT – EVIDENCE OF A FINANCIAL CONTRIBUTION

6.21.
Regarding paragraph 7,138, which summarises the United States' arguments, the United States requests that the first sentence of that paragraph be modified to properly characterise the United States' arguments on the initiation issue. As a related matter, with respect to paragraph 7,139, the United States requests that a sentence be added to the end of that paragraph to fully reflect the United States' arguments.
6.22.
China submits that the Panel should reject the United States' request to modify paragraph 7,138, as that paragraph accurately reflects the United States' argument.
6.23.
The Panel notes that the first sentence of paragraph 7,138 accurately reflects the United States' rejection, in paragraph 115 of its second written submission, of the argument made by China in paragraph 32 of its opening statement at the first meeting of the Panel. Nonetheless, the Panel accepts the United States' requests to modify the first sentence of paragraph 7,138 and to add a sentence to paragraph 7,139, with some editorial changes, to clarify and fully reflect the United States' core arguments on the initiation issue.

6.6 CLAIMS UNDER ARTICLES 1.1(B) AND 14(D) OF THE SCM AGREEMENT

6.24.
Regarding paragraph 7,166, which summarises the United States' arguments, the United States requests the deletion of the adjective "right" in the fourth sentence of the paragraph from the characterization of the test for determining a benefit.
6.25.
China does not comment on the United States' request.
6.26.
The Panel has modified paragraph 7,166 as requested by the United States.
6.27.
Regarding paragraph 7,167, which summarises the United States' arguments, the United States requests that certain modifications be made to the first and second sentences of the paragraph, and that two sentences be added after the second sentence of the paragraph, in order to more accurately reflect the United States' arguments made in its submissions.
6.28.
China submits that the Panel should reject the United States' request to make certain modifications to the first sentence of paragraph 7,167, as China considers that the paragraph of the submission cited by the United States in support of its request does not speak in favour of the modification.
6.29.
The Panel has modified paragraph 7,167 as requested by the United States, with certain editorial changes.
6.30.
Regarding paragraph 7,167, which summarises the United States' arguments, and footnotes 212 (223) and 213 (224), the United States requests that certain modifications be made to the footnotes to better reflect the United States' arguments.
6.31.
China does not comment on the United States' request.
6.32.
The Panel has modified footnotes 212 (223) and 213 (224) as requested by the United States.
6.33.
Regarding paragraph 7,186, and footnotes 235 (246) and 238 (249), the United States requests that the footnotes be modified to more accurately reflect the determinations cited in support of the Panel's factual findings. With respect to footnote 235 (246), the United States requests that the reference to Aluminum Extrusions be deleted, since it does not lend support to the statement that "some determinations are based on the market share of government-owned/controlled firms in domestic production alone". With respect to footnote 238 (249), the United States requests that the reference to Steel Cylinders be deleted, since it does not lend support to the statement that "some determinations are based on the market share of the government plus the existence of … export restraints".
6.34.
China submits that if the Panel accepts the United States' requested deletion of Aluminum Extrusions from footnote 235 (246), a reference to Aluminum Extrusions should be added to footnote 238 (249). Similarly, if the Panel accepts the United States' requested deletion of Steel Cylinders from footnote 238 (249), China requests that a reference to Steel Cylinders be added to footnote 236 (247), since it involves recourse to adverse facts available.
6.35.
The Panel has modified footnotes 235 (246) and 238 (249) in accordance with the requests made by the United States and China, as they enhance the factual accuracy of the Report. However, the Panel has decided to reject China's related request to add a reference to Steel Cylinders to footnote 236 (247), as the Panel does not consider the reason given by China for this addition to be factually accurate.
6.36.
Regarding paragraph 7,187, the United States requests that certain modifications be made to the paragraph to better reflect the factual evidence underlying the Panel's evaluation.
6.37.
China does not comment on the United States' request.
6.38.
The Panel has modified paragraph 7,187 as requested by the United States.
6.39.
Regarding paragraph 7,197, the United States requests that the Panel add findings with respect to Article 1.1(b) of the SCM Agreement.
6.40.
China does not comment on the United States' request.
6.41.
The Panel has modified paragraph 7,197 as requested by the United States, as well as paragraph 8.1 for the sake of completeness.

6.7 CLAIMS UNDER ARTICLES 2.1 AND 2.4 OF THE SCM AGREEMENT

6.42.
Regarding paragraph 7,215, which summarises the United States' arguments, the United States requests that a sentence be added to the end of that paragraph for the sake of completeness.
6.43.
China does not comment on the United States' request.
6.44.
The Panel has added the sentence suggested by the United States, with some editorial changes, to the end of paragraph 7,215.
6.45.
Regarding paragraph 7,229 and footnote 293 (305), as well as paragraph 7,239 and footnote 307 (319), the United States requests that the references to the Oxford English Dictionary be made more specific.
6.46.
China does not comment on the United States' request.
6.47.
The Panel has made certain modifications to footnotes 293 (305) and 307 (319) to reflect the United States' requests.

6.8 CLAIMS UNDER ARTICLE 11 OF THE SCM AGREEMENT – EVIDENCE OF SPECIFICITY

6.48.
With respect to paragraph 7,282, the United States suggests adding the term "for purposes of initiation" in order to elucidate the meaning of the sentence.
6.49.
China does not comment on the United States' request.
6.50.
The Panel has modified paragraph 7,282 as suggested by the United States.

6.9 CLAIMS UNDER ARTICLE 12.7 OF THE SCM AGREEMENT

6.51.
Regarding paragraphs 7,284 and 7,307, and footnotes 345 (357) and 378 (deleted), the United States requests that the introduction to section 7.10 be brought in line with the introduction to section 7.8 with respect to the exclusion of the preliminary determinations in Wind Towers and Steel Sinks, and that footnote 345 (357), rather than footnote 378 (deleted), reflect this.
6.52.
China does not comment on the United States' request.
6.53.
The Panel has made the modifications requested by the United States to paragraph 7,284 and footnote 345 (357), and has deleted footnote 378 (deleted), to consistently reflect the finding that the preliminary determinations in Wind Towers and Steel Sinks are not within the Panel's terms of reference.
6.54.
Regarding paragraph 7,318 and footnote 390 (401), the United States requests that the references to the preliminary determination in Wind Towers be removed, in light of the finding that it is not within the Panel's terms of reference.
6.55.
China does not comment on the United States' request.
6.56.
The Panel has made the modifications requested by the United States to paragraph 7,318 and footnote 390 (401), to properly reflect the finding that the preliminary determination in Wind Towers is not within the Panel's terms of reference.
6.57.
Regarding paragraph 7,324, the United States requests the deletion of that paragraph on the grounds that the USDOC's statements referred to therein are not part of China's affirmative case in support of its claim, and that the paragraph is therefore extraneous to the Panel's analysis.
6.58.
China submits that the Panel should reject the United States' request. According to China, it has provided the specific language in each investigation that demonstrates the lack of factual foundation in the adverse facts available determinations referenced by the Panel. As such, the Panel is acting within its mandate.
6.59.
The Panel has decided to reject the United States' request to delete paragraph 7,324. We do not agree with the United States that paragraph 7,324 is extraneous to the Panel's analysis. While China does fail to discuss, or even acknowledge, the meaning of these statements, the statements themselves form part of the evidence provided by China to the Panel in its Exhibits in support of its case. As such, the Panel is within its rights to express concern over these statements.

6.10 CLAIMS UNDER ARTICLES 2.2 AND 2.4 OF THE SCM AGREEMENT

6.60.
Regarding paragraph 7,326 and footnote 405 (416), the United States requests that a reference to exhibits CHI-1 and CHI-121, identifying the regional specificity determinations challenged by China, be added to footnote 405 (416) for purposes of greater clarity.
6.61.
China does not comment on the United States' request.
6.62.
The Panel has modified footnote 405 (416) in accordance with the United States' request.
6.63.
Regarding paragraph 7,328, the United States suggests that the first sentence of the paragraph be clarified by using the terminology of the SCM Agreement.
6.64.
China does not comment on the United States' request.
6.65.
The Panel has modified paragraph 7,328 in accordance with the United States' suggestion.
6.66.
Regarding paragraph 7,349, China requests that the paragraph be modified to correctly reflect China's argument, namely that the relevant inquiry under Article 2.2 is whether the financial contribution (i.e. the provision of land-use rights, in this case) or the benefit is limited to the identified industrial park or economic development zone. China has however provided no alternate wording for paragraph 7,349.
6.67.
The United States submits that the Panel should reject China's request, since, despite the use of slightly different language by the Panel, paragraph 7,349 accurately reflects China's arguments.
6.68.
The Panel has made certain modifications to paragraph 7,349 to reflect China's request and more clearly align the language used therein with the language used in China's submissions.

6.11 CLAIMS CONCERNING EXPORT RESTRAINTS

6.69.
Regarding paragraph 7,374, which summarises the United States' arguments, the United States requests that wording be added to the paragraph to more accurately reflect the argument that the applications contained evidence which supports the USDOC's initiations of investigations.
6.70.
China does not comment on the United States' request.
6.71.
The Panel has modified paragraph 7,374 as requested by the United States.
6.72.
Regarding paragraph 7,375 and footnote 454 (465), the United States requests that a further reference to the United States' first written submission be added to footnote 454 (465).
6.73.
China does not comment on the United States' request.
6.74.
The Panel has modified footnote 454 (465) as requested by the United States.

6.12 EDITING AND TYPOGRAPHICAL CHANGES

6.75.
In addition to the specific requests discussed above, the parties have asked the Panel to make changes of an editorial nature to improve clarity and accuracy or better reflect the language used in their submissions. The Panel has considered these requests and made the changes that it considered appropriate. In addition, the Panel also corrected typographical errors and made changes to other paragraphs to improve the clarity of the text and better express its reasoning.

7 FINDINGS

7.1 INTRODUCTION

7.1.1 Measures at issue

7.1.
In this dispute China advances "as applied" claims with respect to 17 countervailing duty investigations9 initiated by the USDOC in the period 2007-2012:

Short TitleFull Title
Thermal Paper Lightweight Thermal Paper From the People's Republic of ChinaInvestigation C-570-921
Pressure Pipe Circular Welded Austenitic Stainless Pressure Pipe from the People's Republic of China Investigation C-570-931
Line Pipe Certain Circular Welded Carbon Quality Steel Line Pipe from the People's Republic of ChinaInvestigation C-570-936
Citric Acid Citric Acid and Certain Citrate Salts From the People's Republic of ChinaInvestigation C-570-938
Lawn Groomers Certain Tow Behind Lawn Groomers and Certain Parts Thereof from the People's Republic of ChinaInvestigation C-570-940
Kitchen Shelving Certain Kitchen Appliance Shelving and Racks from the People's Republic of ChinaInvestigation C-570-942
OCTG Certain Oil Country Tubular Goods from the People's Republic of ChinaInvestigation C-570-944
Wire Strand Pre-Stressed Concrete Steel Wire Strand from the People's Republic of ChinaInvestigation C-570-946
Magnesia Bricks Certain Magnesia Carbon Bricks From the People's Republic of China Investigation C-570-955
Seamless Pipe Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from the People's Republic of ChinaInvestigation C-570-957
Print Graphics Certain Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses From the People's Republic of ChinaInvestigation C-570-959
Drill Pipe Drill Pipe From the People's Republic of ChinaInvestigation C-570-966
Aluminum Extrusions Aluminum Extrusions From the People's Republic of ChinaInvestigation C-570-968
Steel Cylinders High Pressure Steel Cylinders From the People's Republic of ChinaInvestigation C-570-978
Solar Panels Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People's Republic of ChinaInvestigation C-570-980
Wind Towers Utility Scale Wind Towers From the People's Republic of ChinaInvestigation C-570-982
Steel Sinks Drawn Stainless Steel Sinks From the People's Republic of ChinaInvestigation C-570-984

7.2.
In respect of 14 of these investigations10, China's claims relate to: (i) findings of the USDOC that Chinese SOEs were public bodies; (ii) findings of the USDOC that the provision of certain inputs by the Chinese SOEs conferred a benefit; (iii) findings of the USDOC that alleged subsidies arising from the provision of inputs at less than adequate remuneration were specific; and (iv) the decisions of the USDOC that there was sufficient evidence with respect to specificity of the alleged subsidies to justify the initiation of a countervailing duty investigation. With respect to four of these 14 investigations11, China's claims relate to the USDOC's treatment of Chinese SOEs as public bodies for purposes of the initiation of the countervailing duty investigation.
7.3.
With regard to 15 of the 17 countervailing duty investigations at issue in this dispute12, China's claims concern the USDOC's resort to the use of adverse facts available.
7.4.
With regard to seven countervailing duty investigations13, China's claims relate to findings of the USDOC that subsidies in the form of the provision of land use rights are specific.
7.5.
Finally, with regard to two countervailing duty investigations14, China's claims concern the USDOC's initiation of countervailing duty instigations into export restraints and its findings that these export restraints are financial contributions.
7.6.
In addition to these "as applied" claims, China presents an "as such" claim with respect to the USDOC's "rebuttable presumption" that SOEs are public bodies.

7.2 GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION, STANDARD OF REVIEW AND BURDEN OF PROOF

7.2.1 Treaty interpretation

7.7.
Article 3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention on the Law of Treaties are such customary rules.

7.2.2 Standard of review

7.8.
Panels generally are bound by the standard of review set forth in Article 11 of the DSU, which provides, in relevant part, that:

[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.

7.9.
The Appellate Body has explained that where a Panel is reviewing an investigating authority's determination, the "objective assessment" standard in Article 11 of the DSU requires a panel to review whether the authorities have provided a reasoned and adequate explanation as to (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings support the overall determination.15
7.10.
The Appellate Body has clarified that a panel should not conduct a de novo review of the evidence, nor should it substitute its judgment for that of the authority. A panel must limit its examination to the evidence that was before the agency during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.16 At the same time, a panel must not simply defer to the conclusions of the investigating authority; a panel's examination of those conclusions must be "in-depth" and "critical and searching".17

7.2.3 Burden of proof

7.11.
The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.18 Therefore, China bears the burden of demonstrating that the challenged measures are inconsistent with the SCM Agreement. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.19 Finally, it is generally for each party asserting a fact to provide proof thereof.20
7.12.
The United States argues that in respect of most of its claims China has failed to make a prima facie case. The United States submits that China's first written submission relies on broad and inaccurate generalisations regarding the facts of the USDOC's preliminary and final determinations and fails to discuss how the provisions of the SCM Agreement apply to any of the determinations made by the USDOC.21 By contrast, China considers that with respect to all of its claims it has met each of the elements that the Appellate Body has deemed necessary to establish a prima facie case.22 The Panel will address the issue of China's alleged failure to make a prima facie case to the extent that this is necessary to make a finding on the merits of each of China's claims.23

7.3 WHETHER THE PRELIMINARY DETERMINATIONS IN WIND TOWERS AND STEEL SINKS ARE WITHIN THE PANEL'S TERMS OF REFERENCE

7.3.1 Introduction

7.13.
The United States requests the Panel to rule that the preliminary determinations in Wind Towers and Steel Sinksare notwithin the Panel's terms of reference because they were notsubject to the consultations requested by China in this dispute.24

7.3.2 Relevant Provisions

7.14.
Article 4 of the DSU provides, relevantly:

4. … Any request for consultations shall be submitted in writing and shall give the reasons for the request, including identification of the measures at issue and an indication of the legal basis for the complaint.

7. If the consultations fail to settle a dispute within 60 days after the date of receipt of the request for consultations, the complaining party may request the establishment of a panel. The complaining party may request a panel during the 60-day period if the consulting parties jointly consider that consultations have failed to settle the dispute.

7.15.
Article 6 of the DSU provides, relevantly:

2. The request for the establishment of a panel shall be made in writing. It shall indicate whether consultations were held, identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.

7.3.3 Main arguments of parties

7.3.3.1 United States

7.16.
The United States argues that the preliminary determinations in the Wind Towers and Steel Sinks investigations are outside the terms of reference of the panel proceeding.25 The United States notes that these preliminary determinations have never been the subject of consultations between the two parties because they were not included in China's request for consultations. Their inclusion would have been in any event impossible because both determinations were issued after China's request for consultations. The latter included only the initiations of the corresponding investigations.26 The United States argues that based on Articles 4.4 and 4.7 as well as 6 of the DSU, a complaining party must request consultations regarding a matter before the latter may be referred to the DSB for the establishment of a panel, which in turn establishes the terms of reference for the panel proceeding in accordance with Article 7.1 of the DSU. The United States further contends that China tries to circumvent the requirements of DSU by not having filed an additional or supplemental consultations request.27 In addition, the United States argues that in the panel request, China made additional legal claims relating to the public body, facts available, benchmark and specificity findings of the preliminary determinations of Wind TowersandSteel Sinks which expands the scope of the dispute.28
7.17.
The United States argues that there is an inherent contradiction between, on the one hand, China's argument that the addition of the preliminary determinations in Wind Towers and Steel Sinks does not expand the scope of the dispute because these determinations are the "next phase" of the investigations initiated, and, on the other, China's argument that the addition of the legal claims associated with these preliminary determinations does not expand the scope of the dispute because the same legal claims have been raised for other final determinations. The United States also submits that China's argument reading preliminary determinations as "next phases" could arguably open the door for complainants to add "next phases" of an investigation after the consultation request while they included in the latter only the initiation of the investigation in question. The United States further contends that China fails to recognize that preliminary determinations are distinct from the initiations of investigations.29
7.18.
Moreover, the United States argues that the legal claims of China regarding the preliminary determinations are not a natural evolution from the legal claims associated with the measures consulted upon – the initiation of the investigations. The United States considers that each legal claim for each measure stands independently of each other. According to the United States, the only similarity in the scope of the dispute between the consultation and panel request is that China challenges separate, different measures using the same claims it has used for other measures.30
7.19.
The United States also contends that China has failed to establish a proper legal foundation for challenging preliminary determinations as compared to final determinations31, and in particular has failed to explain why, in light of the language of a particular provision and the preliminary nature of the determinations, it would be appropriate to make a finding under that provision with respect to a preliminary determination that is subject to change.32

7.3.3.2 China

7.20.
China submits that the Wind Towers and Steel Sinks investigationsarethe "measures at issue" in the sense of Article 4.4 of the DSU and both the initiation and preliminary determinations are the "specific measures at issue" in the context of Article 6.2 of the DSU.33 Both the initiation and preliminary determinations concern the same investigation of the same products from the same country by the same agency. China further argues that the Appellate Body has held that Articles 4 and 6 do not require a "precise and exact identity" between the specific measures that were the subject of consultations and those identified in the panel request as long as the complainant does not "expand the scope of the dispute" or change the "essence of the challenged measures".34 The preliminary determinations are merely the next phase of the investigations, the initiation of which was identified in the consultation request, and together with which they represent a "continuum of events". There is therefore a "sufficient degree of identity" to warrant a conclusion that the inclusion of the preliminary determinations in the panel request does not expand the scope of the dispute.35
7.21.
In addition, China argues that the inclusion of these two preliminary determinations in the panel request has no effect on the scope of China's legal claims in this dispute. The two preliminary determinations represent two additional instances of the same claims that China has already raised in respect of other measures at issue in this dispute. China thus requests the Panel to reject the US assertion that these determinations are not within the Panel's terms of reference.36 Moreover, China contends that its two arguments are not contradictory; rather the second one, with respect to the legal claims, reinforces the fact that including the next phase of an investigation, the initiation of which was identified in the consultations request, does not expand the scope of the dispute.37
7.22.
In relation to the inclusion of preliminary determinations in its complaint, China argues that the SCM Agreement does not contain a provision equivalent to Article 17.4 of the Anti-Dumping Agreement which China interprets as an expression of an unconditional right to challenge preliminary countervailing duty determinations. China cites in support of its position the US – Softwood Lumber III dispute, where the challenged measures on which the panel reached findings and made recommendations were preliminary countervailing duty determinations of the USDOC.38

7.3.4 Evaluation by the Panel

7.23.
In order to decide whether the preliminary affirmative countervailing duty determinations in Wind Towers and Steel Sinks, which were not subject to the consultations held in this dispute, are within our terms of reference, we must determine whether the inclusion of these determinations in China's panel request has expanded the scope of this dispute.39 We may examine the scope of the dispute in terms of both the measures at issue and the claims advanced by China.40 We are guided in our assessment by the Appellate Body's statement that a "precise and exact identity" of measures between the two requests is not necessary, "provided that the 'essence' of the challenged measures had not changed".41
7.24.
In both its request for consultations and its panel request, China identifies the specific measures at issue as those preliminary and final determinations listed in Appendix 1 of each request. China explains:

The measures include the determination by the USDOC to initiate the identified countervailing duty investigations, the conduct of those investigations, any preliminary or final countervailing duty determinations issued in those investigations, any definitive countervailing duties imposed as a result of those investigations, as well as any notices, annexes, decision memoranda, orders, amendments, or other instruments issued by the United States in connection with the countervailing duty measures identified in Appendix 1.42

7.25.
Indeed, as noted above, in response to a question from the Panel, China asserted that "[t]he Wind Towers and Steel Sinks investigations are, broadly speaking, "measures at issue" in the sense of article 4.4 of the DSU...".43 However, the investigations are not measures themselves, but rather proceedings, i.e. a series of activities involving a formal or set procedure.44 Certainly, they lead to the adoption of measures, and specifically the initiations and preliminary and final determinations (although they may involve other measures, e.g. the decision to accept an undertaking pursuant to Article 18 of the SCM Agreement). The nature and purpose of each of these measures is different and there are significant distinctions especially between the decision to initiate an investigation and the preliminary and final determinations. For instance, as we have noted elsewhere in this Report45, the SCM Agreement does not require an investigating authority to make any findings or explain its understanding of key issues (such as the financial contribution, the benefit or specificity) when initiating an investigation, which contrasts with the requirements of preliminary or final determinations. Indeed, Article 22.2 requires that the public notice of the initiation of an investigation contain or make available adequate information on inter alia "a description of the subsidy practice or practices to be investigated". In contrast, Article 22.3 requires that the public notice of any preliminary or final determination set forth in sufficient detail "the findings and conclusions reached on all issues of fact and law considered material by the investigating authority".46
7.26.
Their effects are also quite different. As already noted, the notice of initiation describes the subsidy practice or practices to be investigated. The preliminary and final determinations may be affirmative or negative, and they may or may not impose provisional or final countervailing duties, respectively. In fact, an affirmative preliminary determination does not necessarily lead to an affirmative final determination.
7.27.
In its request for consultations China challenges, among other things, the USDOC's treatment of the alleged provision of input goods for less than adequate remuneration. In this regard, China's request for consultations claims that the USDOC acted inconsistently with the SCM Agreement in 14 final affirmative countervailing duty determinations and two preliminary countervailing duty determinations47 by finding that certain SOEs were public bodies, by finding that the alleged provision of input goods for less than adequate remuneration was specific, and by finding that the alleged provision of input goods for less than adequate remuneration conferred a benefit upon the recipient. In its panel request China advances exactly the same claims with respect to 15 final affirmative countervailing duty determinations and three preliminary countervailing duty determinations. While China's claims in this dispute in respect of the alleged provision of input goods at less than adequate remuneration appear to be of a horizontal nature, its specific claim regarding the initiation of four investigations (including Wind Towers and Steel Sinks) is different to those concerning the USDOC's findings in its preliminary and final determinations. As explained in detail in section 7.6 of this Report, China contended that the initiations are inconsistent with Article 11.3 because they were based on the application of an incorrect legal standard — as opposed to findings that SOEs were public bodies. This Panel has rejected this claim by China, for the reasons set forth in section 7.6.
7.28.
The fact that the USDOC later made findings similar to those of the other investigations does not change the different nature, purpose and effects of a decision to initiate an investigation and a preliminary (or final) determination. It may well be that such an outcome is the result, at least in part, of the application of a deliberate policy of general and prospective application, as China has also contended in this case. China has properly challenged such a policy as an "as such" measure and we deal with that claim in the appropriate section of this Report.
7.29.
In light of the foregoing considerations, the Panel finds that the preliminary countervailing duty determinations in Wind Towers and Steel Sinks are not within the Panel's terms of reference.

7.4 WHETHER THE USDOC'S FINDINGS THAT CERTAIN SOES WERE PUBLIC BODIES ARE INCONSISTENT WITH ARTICLE 1.1 (A)(1) OF THE SCM AGREEMENT

7.4.1 Introduction

7.30.
In this section of the Report, the Panel turns to China's claims regarding the USDOC's findings that certain Chinese SOEs were "public bodies" within the meaning of Article 1.1(a)(1) of the SCM Agreement in 12 of the 17 countervailing duty investigations at issue in this dispute, namely Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions, Steel Cylinders and Solar Panels.48
7.31.
In each of these 12 investigations, the USDOC found that financial contributions existed in the form of provisions of certain inputs to the respondents. In this context, the USDOC determined that SOEs which provided the inputs to the respondents were "authorities" within the meaning of section 771(5)(B) of the US Tariff Act of 1930.49
7.32.
China claims that the United States acted inconsistently with Article 1.1(a)(1) of the SCM Agreement because the USDOC determinations that certain SOEs in China were public bodies are inconsistent with the interpretation of the term "public body" set out by the Appellate Body in its report in US – Anti-Dumping and Countervailing Duties (China). Furthermore, as a consequence of these inconsistencies with Article 1.1(a)(1), China claims that the United States acted inconsistently with Articles 10 and 32.1 of the SCM Agreement, as well as Article VI:3 of the GATT 1994.

7.4.2 Relevant provisions

7.33.
The present claim mainly concerns Article 1.1(a)(1) of the SCM Agreement, which relevantly provides the following:

1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government")

7.4.3 Main arguments of China

7.34.
China claims that the United States acted inconsistently with Article 1.1(a)(1) of the SCM Agreement because the USDOC determinations that certain SOEs in China were public bodies are inconsistent with the interpretation of the term "public body" set out by the Appellate Body in its report in US – Anti-Dumping and Countervailing Duties (China).
7.35.
China points out that in US – Anti-Dumping and Countervailing Duties (China),the Appellate Body determined that "'being vested with, and exercising, authority to perform governmental functions' is the 'core feature' that defines a public body" within the meaning of Article 1.1(a)(1). China highlights the significance attached by the Appellate Body to the use of the collective term "government" in Article 1.1(a)(1) and the Appellate Body's reliance upon its finding in Canada – Dairy that the "essence of government is that it enjoys the effective power to regulate, control, or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority". China argues, in this connection, that a public body, like government in the narrow sense, thus must itself possess the authority to "regulate, control, supervise or restrain" the conduct of others. China recalls that the Appellate Body found further support for its interpretation of the term "public body" in sub-paragraph (iv) of Article 1.1 and in the object and purpose of the SCM Agreement.50
7.36.
China recalls that the Appellate Body found in US – Anti-Dumping and Countervailing Duties (China) that in the cases before it the USDOC had not complied with its obligation "to ensure that its determinations were based on a sufficient factual basis" because evidence of government ownership "cannot, without more, serve as a basis for establishing that the entity is vested with authority to perform a governmental function".51 China submits that the input subsidy investigations at issue in the present dispute suffer from the same inconsistency identified by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) because the USDOC found that the SOEs selling inputs to downstream producers of the products under investigation were public bodies based on the same control-based test that the Appellate Body rejected in that dispute. China argues that the USDOC's financial contribution determinations are inconsistent with the SCM Agreement both in those investigations where the USDOC's "government authority" findings were based on evidence submitted by China and in those cases where the USDOC relied on "adverse facts available". This is because the USDOC applied the same flawed control-based standard in all of the input subsidy investigations at issue in this dispute.52
7.37.
China argues53 that, in its consideration of China's claims under Article 1.1(a)(1), the Panel should be guided by the principles that the Appellate Body has established regarding the relevance of its legal interpretations of the covered agreements. While the Appellate Body has never had occasion to elaborate upon what sort of "cogent reasons" might justify departing from a legal interpretation embodied in a previously adopted Appellate Body report, simply advancing minor elaborations on arguments already considered and rejected by the Appellate Body cannot constitute "cogent reasons".54 In China's view, the arguments advanced by the United States before this Panel regarding the interpretation of the term "public body" are not significantly different from the arguments advanced by the United States, and rejected by the Appellate Body, in US – Anti-Dumping and Countervailing Duties (China).55 China considers that the allegedly "new" control-based standard advocated by the United States in this dispute differs in no meaningful way from the "old" control-based standard that the United States advocated in US – Anti-Dumping and Countervailing Duties (China).56The new standard advanced by the United States is also irrelevant because it is undisputed that the USDOC's public body findings at issue in this dispute all reflect the prior control-based standard that the Appellate Body found inconsistent with Article 1.1(a)(1).57 China expects the Panel to follow the Appellate Body's ruling in US – Anti-Dumping and Countervailing Duties (China) because that is the only outcome consistent with the security and predictability of the multilateral trading system and with the objective of a prompt settlement of this dispute.58
7.38.
China submits that the identical term for public body in the Spanish text of Article 1.1 of the SCM Agreement – "organismo público" – is used in the plural form in the Spanish text of Article 9.1 of the Agreement on Agriculture to mean "agencies" of a "government". According to China, the requirement to give effect to the integrated nature of the different agreements under the WTO Agreement means that identical terms in different agreements must ordinarily be given the same meaning. China argues that the English terms "public body" and "government agency" must be treated as functional equivalents, since that is how the Spanish texts of the SCM Agreement and the Agreement on Agriculture treat the corresponding terms. Thus, a public body – like a government agency and like an "organismo público" – must be "an entity which exercises powers vested in it by a 'government' for the purpose of performing functions of a 'governmental' character, that is, to 'regulate', 'restrain', 'supervise' or 'control' the conduct of private citizens".59 China considers that the United States provides no support for its assertion that the context and object and purpose of the SCM Agreement and the Agreement on Agriculture are different. China argues that Article 9.1 of the Agreement on Agriculture and Article 1.1(a)(1) of the SCM Agreement in fact have very similar contexts in that each provision addresses the question of what entities other than the government itself may bestow subsidies subject to the disciplines of the respective agreements.60

7.4.4 Main arguments of the United States

7.39.
The United States argues that the Panel should reject China's claims because they rest on a flawed interpretation of the term "public body" in Article 1.1(a)(1) of the SCM Agreement. Interpreted according to the customary rules of interpretation of public international law pursuant to Article 3.2 of the DSU, the term "public body" in Article 1.1(a)(1) means an entity that is controlled by the government such that the government can use that entity's resources as its own.
7.40.
The United States argues that dictionary definitions of "public" and "body" suggest that a public body is an entity of, belonging to, or pertaining to the community as a whole and that nothing in those dictionary definitions would restrict the meaning of that term to an entity vested with, or exercising, government authority. The United States also argues in this regard that if the drafters had wished to convey the meaning of "vested with or exercising governmental authority" they could have used terms such as "governmental body", "public agency", "governmental agency" or "governmental authority".61
7.41.
The United States argues that reading the term "public body" in context supports the conclusion that a public body is any entity controlled by the government such that the government can use that entity's resources as its own. The principle of effectiveness in treaty interpretation requires that the term "public body" be interpreted in a manner that does not make it redundant with the word "government". Thus, the term "public body" in Article 1.1(a)(1) of the SCM Agreement should be interpreted as meaning something other than an entity that performs "functions of a 'governmental' character, that is to 'regulate', 'restrain', 'supervise' or 'control' the conduct of private citizens".62
7.42.
The United States argues that the use of the term "government" as a shorthand reference for the phrase "a government or any public body within the territory of a Member" in Article 1.1(a)(1) of the SCM Agreement does not require a narrow interpretation of the term "public body". While the shorthand reference suggests that government and public body are related, understanding the relationship to be one in which the government has authorized the public body to perform governmental acts would make the term "public body" redundant and would be inconsistent with the dictionary definitions of "public body". Understanding the relationship as one of control of a public body by "a government" (on behalf of the community it represents) gives meaning to both terms and avoids reducing the term "public body" to redundancy. It is also consistent with the dictionary definitions relevant to the term "public body".63
7.43.
The United States argues that the context provided by the term "private body" in Article 1.1(a)(1)(iv) supports an understanding of the term "public body" as an entity controlled by the government such that the government can use the entity's resources as its own. Logically, since the ordinary meaning of the term "public" is the opposite of "private", the term "public" means "provided or owned by the State or a public body rather than an individual".
7.44.
The United States argues that a financial contribution within the meaning of Article 1.1(a)(1) is a conveyance of value and that entities controlled by the government can convey value just as the government can and the value conveyed can be precisely the same as that conveyed by the government. There is no reason why the concept of financial contribution would cover a transaction, for example a direct transfer of funds, in which a Member conveys value directly to an economic actor through its government but not a transaction in which the Member conveys value through an entity that it controls such that it can use that entity's resources as its own.64
7.45.
The United States argues that the context provided by the "entrusts or directs" language in Article 1.1(a)(1)(iv) does not weigh against an understanding of the term "public body" as an entity controlled by the government such that the government can use the entity's resources as its own. The fact that an entity has the "authority" or "responsibility" to do a task, such as selling steel or chemicals, which can be entrusted to another entity if the first entity so chooses, does not mean that the entity has "authority" or "responsibility" to perform governmental functions. Further, even assuming arguendo that the authority or responsibility to entrust or direct is the same as the authority or responsibility to perform governmental functions, it does not follow that all public bodies must have this authority. Additionally, the suggestion that the reference to governmental functions in Article 1.1(a)(1)(iv) relates to the "authority to 'regulate, control, supervise or restrain' the conduct of others" is unsupported by the text. It is circular to read Article 1.1(a)(1)(iv) as requiring that the term "public body" be interpreted as meaning an entity vested with or exercising authority to perform governmental functions.65 The United States considers that the Appellate Body's characterization of governmental functions in Canada – Dairy and US – Anti-Dumping and Countervailing Duties (China) is incomplete in that the organs of a government might perform many other functions that do not involve the regulation, control, supervision, or restraint of individuals or do so only in the broad sense of trying to control the conditions of society and the economy.66
7.46.
The United States argues that the object and purpose of the SCM Agreement support an interpretation of the term "public body" as meaning an entity controlled by the government such that the government can use the entity's resources as its own, without the additional requirement that the entity must be vested with authority from the government to perform governmental functions. Interpreting the term "public body" in this way preserves the strength and effectiveness of the subsidy disciplines and inhibits circumvention because it ensures that governments cannot escape those disciplines by using entities under their control to accomplish tasks that would potentially be subject to those disciplines were the governments themselves to undertake them.67
7.47.
The United States argues that the Panel should make its own evaluation of the meaning of the term "public body" in accordance with the customary rules of interpretation of public international law, taking due account of interpretations of that term in previous WTO dispute settlement proceedings. China's position that the Panel must apply the standard adopted by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) is contrary to the requirement in Article 11 of the DSU that the Panel make "an objective assessment of the matter before it, including an objective assessment of the case and the applicability of and conformity with the relevant covered agreements". In addition, Appellate Body reports have no binding effect other than in the context of the particular dispute between the parties. The United States also argues that China itself is seeking a significant modification of the Appellate Body's interpretation of the term "public body" when China argues that a public body must itself possess authority to regulate, control, supervise or restrain the conduct of others. The United States points out that the interpretation which it is advocating in this dispute is not the same as the interpretation considered by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).68
7.48.
The United States argues that the interpretation of the term "public body" that it proposes in this dispute is similar to the concept of "meaningful control" discussed and relied upon by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) in its analysis of USDOC's determinations that state-owned banks in China were public bodies.69
7.49.
The United States argues that China's argument regarding the use of "organismo público" in Article 9.1 of the Agreement on Agriculture implies that China's position is that a public body is a "government agency". This position is contrary to the principle of effectiveness in treaty interpretation in that it renders the term "public body" redundant or inutile. In making this argument, China also ignores the differences between that provision and Article 1.1(a)(1) of the SCM Agreement.70

7.4.5 Main arguments of third parties

7.50.
Australia submits that the Appellate Body's conclusion in US – Anti-Dumping and Countervailing Duties (China) regarding the interpretation of the term "public body" was that "a public body within the meaning of Article 1.1(a)(1) of the SCM Agreement must be an entity that possesses, exercises or is vested with governmental authority". These descriptions appear to be alternatives to one another. In Australia's view, this conclusion is broader than is indicated in China's submission. In addition, Australia notes that the Appellate Body's discussion of "core" and "key" features of a public body does not fully explain what the other features might be and whether an entity might be considered a public body if it has other features of a public body even if not the core or key ones. Finally, Australia notes that it would not support a view that an entity must be vested with governmental authority in order to be regarded as public body because public bodies have such authority without being vested with it, while the notion of "being vested with" could also transpose artificially to the public body determination the test for "entrustment or direction".71
7.51.
Brazil notes that the "exercise of lawful authority" is a necessary element to the definition of a public body and contends that only when a body is considered to be vested with typical governmental functions and exercises the authority inherent to such functions, may it be classified as public body. Mere link of ownership is not sufficient; rather the entity should be able to be considered part of the government itself. Brazil also argues that an investigating authority should conduct a broader analysis, on a case-by-case basis, going beyond the verification of a governmental majority of assets, in order to determine whether the entity under investigation is, in fact, a public body.72
7.52.
Canada submits that an entity controlled by a government should constitute a public body within the meaning of Article 1.1(a)(1) of the SCM Agreement. Canada submits that such interpretation maintains the effet utile of the term public body and distinguishes it from a "private body". At the same time, this interpretation ensures that the disciplines of the SCM Agreement are given a sufficiently broad scope in terms of the entities to which they apply and as such prevents the creation of loopholes allowing for the circumvention of the SCM Agreement.73
7.53.
The European Union submits that while the Appellate Body Report in US – Anti-Dumping and Countervailing Duties (China) is part of the WTO acquis, it does not provide a definitive interpretation of the term "public body" and can be the subject of further, complementary, clarification in subsequent Appellate Body reports.The European Union considers that the right test for determining if an entity is a public body is one that "focusses on a more specific link between the conduct in question and the government, that is, "'… the use by a government of its resources, or resources it controls …'"." The European Union also suggests that the Panel should determine whether the fact patterns of the 14 challenged investigations are the same for all relevant purposes to the fact patterns of the measures in US – Anti-Dumping and Countervailing Duties (China) and whether the USDOC asked for information, other than ownership information and how such information or lack thereof was assessed by the USDOC, for example what inferences the USDOC may or may not have drawn and/or what other available facts it might have relied on, especially beyond government ownership and control in general terms.74
7.54.
India is of the view that the issue raised in the present dispute concerning the interpretation of the term "public body" is identical to the issue before the Appellate Body in US – Anti-Dumping and Countervailing Duties (China), and the United States has not provided any "cogent" reasons different from those argued in that dispute. Therefore, the Panel must interpret this issue in a consistent manner.75
7.55.
Japan observes that a public body may be an entity which enjoys some form of financial backing or guarantee from the government. This underlying financial backing or guarantee could indicate, under the relevant circumstances, that the entity in question is not seeking its own interest or profits; rather, it advances public policy goals even if it accumulates losses. In Japan's view, mere governmental majority shareholding would not be sufficient to allow an entity to advance such goals without seeking profits.76
7.56.
Korea argues that the Panel should confirm and apply the legal standard established by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) to the facts of this case. Korea is of the view that, subject to the Panel's evaluation of all the information on the record, there is no persuasive reason to disturb the clearly articulated jurisprudence of the Appellate Body in this regard.77
7.57.
Norway agrees with the interpretation of the term "public body" as articulated by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China). Norway considers that Article 1.1(a)(1)(iv) provides important context to the interpretation of the term "public body" and that paragraph 5(c) of the GATS Annex on Financial Services sheds light on the intent of the Members when considering conduct that should be attributable to the government. Norway further argues that just because a public body is vested with the power to exercise certain governmental functions, this does not equate a public body with government in the narrow sense. Norway further highlights that in order to ascertain whether a certain "function" is governmental, relevant factual elements are the practice of the legal order in the relevant WTO Member and the classification and functions of entities within WTO members generally.78
7.58.
Saudi Arabia agrees with the Appellate Body's interpretation of the term "public body" in US – Anti-Dumping and Countervailing Duties (China). Saudi Arabia contends that investigating authorities must base their public body determination on positive evidence establishing that an entity possesses, exercises or is vested with governmental authority. Any evidential weight given by an investigating authority to government ownership or control should not undermine the governmental authority standard.79
7.59.
Turkey argues that government ownership is the most important decisive indicator showing control of the entity in question. An entity controlled by a government should constitute a public body within the meaning of Article 1.1(a)(1) of the SCM Agreement. In the light of the Appellate Body's findings in US – Anti-Dumping and Countervailing Duties (China), Turkey considers that factors other than "shareholder ownership" can be useful indicators in the public body analysis, but are subsidiary to the main legal standard of "government ownership".80

7.4.6 Evaluation by the Panel

7.60.
The question before the Panel is whether in the 12 countervailing duty investigations at issue81 the United States acted inconsistently with Article 1.1(a)(1) of the SCM Agreement when the USDOC found that SOEs that were majority-owned, or controlled, by the Government of China constituted public bodies.82
7.63.
The United States does not contest that in the 12 countervailing duty investigations at issue in this dispute the USDOC actually applied an ownership-based control test in determining whether Chinese SOEs were public bodies.84
7.64.
While we are required by Article 11 of the DSU to make our own objective assessment of the matter before us, the Appellate Body has affirmed that "[f]ollowing the Appellate Body's conclusions in earlier disputes is not only appropriate, it is what would be expected from panels, especially where the issues are the same".85 We therefore begin by reviewing what we consider to be the most relevant findings made by the Appellate Body in order to consider the extent to which they may offer relevant guidance for our objective assessment of China's claim.
7.65.
The meaning of the concept of "public body" in the sense of Article 1.1(a)(1) of the SCM Agreement has been the subject of lengthy interpretative analysis by the Appellate Body in its report in US – Anti-Dumping and Countervailing Duties (China). The Appellate Body observed that:

… a 'public body' in the sense of Article 1.1(a)(1) connotes an entity vested with certain governmental responsibilities, or exercising certain governmental authority.86

… being vested with, and exercising, authority to perform governmental functions is a core feature of a 'public body' in the sense of Article 1.1(a)(1).87

A public body within the meaning of Article 1.1(a)(1) of the SCM Agreement must be an entity that possesses, exercises or is vested with governmental authority.88

What matters is whether an entity is vested with authority to exercise governmental functions, rather than how that is achieved.89

7.66.
We understand the Appellate Body to have found that the critical consideration in identifying a public body is the question of authority to perform governmental functions. Therefore, an investigating authority must evaluate the core features of the entity in question and its relationship to government, in order to determine whether it has the authority to perform governmental functions.90
7.67.
We are not persuaded by China's argument that the fact that a public body must possess or be vested with authority to exercise governmental functions necessarily means that "[a] public body, like government in the narrow sense, thus must itself possess the authority to 'regulate, control, supervise or restrain' the conduct of others".91 In our view this proposition is not supported by the Appellate Body's findings in US – Anti-Dumping and Countervailing Duties (China). The Appellate Body does not state explicitly in that Report that a public body must have the "effective power to regulate, control, supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority".92 In our view, China misreads the Appellate Body's reference to its prior finding in Canada – Dairy that:

The essence of "government" is, therefore, that it enjoys the effective power to "regulate", "control" or "supervise" individuals, or otherwise "restrain" their conduct, through the exercise of lawful authority. This meaning is derived, in part, from the functions performed by a government and, in part, from the government having the powers and authority to perform those functions. A "government agency" is, in our view, an entity which exercises powers vested in it by a "government" for the purpose of performing functions of a "governmental" character, that is, to "regulate", "restrain", "supervise" or "control" the conduct of private citizens.93

7.68.
We first observe that China's interpretation would equate the term "public body" with the term "government agency", an approach that the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) has not followed.
7.69.
We also observe that the above-mentioned definition of the Appellate Body in Canada-Dairy refers to the "essence" of a government. The use of the word "essence" would indicate that the Appellate Body did not consider that this definition exhausted the scope of the powers and functions that modern governments routinely have or perform.94 As the Appellate Body itself recognized dictionaries are not "the sole source for determining the ordinary meaning of a treaty term".95 Other sources such as the Encyclopædia Britannica demonstrate that the range of functions, tasks and activities that governments perform is quite broad (including not only regulation of the economy but also the provision of goods and services) and depend on how the State actually operates.96 Furthermore, in US – Anti-Dumping and Countervailing Duties (China),the Appellate Body stated that: "the performance of governmental functions or the fact of being vested with, and exercising, the authority to perform such functions are core commonalities between government and public body".97 In our view, governments, either directly themselves or through entities that are established, owned, controlled, managed, run or funded by the government, commonly exercise or conduct many functions or responsibilities that go beyond "the effective power to 'regulate', 'control' or 'supervise' individuals, or otherwise 'restrain' their conduct". Such entities can include SOEs (including banks and other financial institutions); universities, libraries and other academic institutions; scientific research and development centres; hospitals and other healthcare institutions; museums, orchestras, and other cultural organizations; sports organizations; and many others.
7.71.
The Appellate Body specifically rejected the idea that an entity can be found to be a public body based on a notion of control in the sense of the "everyday financial concept of a 'controlling interest' in a company".100 In our view, other than "the effective power to regulate, control, or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority", it is not self-evident that all activities that involve a government in fact constitute "governmental functions". For instance, government ownership or control may be temporary and purely circumstantial — for example where a government takes over an enterprise temporarily in order to save it from going bankrupt, to avoid a strike or to guarantee continuity in the provision of certain services (such as air traffic control services).
7.72.
Therefore, as noted by the Appellate Body, simple ownership or control by a government of an entity is not sufficient to establish that it is a public body. A further inquiry is needed. Indeed, in US – Anti-Dumping and Countervailing Duties (China),the Appellate Body confirmed that, upon review of the USDOC's more comprehensive analysis, certain State-owned commercial banks were properly identified as public bodies.
7.74.
The United States argues in this proceeding that the Panel should interpret "public body" within the meaning of Article 1.1(a)(1) of the SCM Agreement to mean an entity that is controlled by a government such that the government can use the resources of that entity as its own; and that this interpretation is similar to the concept of "meaningful control" relied upon by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) when it upheld the USDOC's findings that certain state-owned commercial banks were public bodies.102 We note that the findings made by the USDOC in the 12 countervailing duty investigations at issue in this dispute were not based on the interpretation of the term "public body" advocated by the United States in this dispute.103 As a consequence, even if we concluded that this interpretation is consistent with the Appellate Body's reliance on the concept of "meaningful control", this could not constitute a basis to find that in the investigations at issue the USDOC's public body findings were consistent with the meaning of the term "public body" as interpreted by the Appellate Body.Therefore we do not consider it necessary to reflect on whether this interpretation is consistent with the "meaningful control" concept used by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).

7.5 WHETHER THE USDOC'S "REBUTTABLE PRESUMPTION" IS INCONSISTENT "AS SUCH" WITH ARTICLE 1.1(A)(1) OF THE SCM AGREEMENT

7.5.1 Introduction

7.76.
In this part of the Report, the Panel addresses China's claim that "the USDOC's 'rebuttable presumption' that majority government-owned enterprises are 'public bodies' is inconsistent, with the covered agreements, as such".104

7.5.2 Main arguments of China

7.77.
China argues that in the final determination issued in July 2009 in the Kitchen Shelving investigation the USDOC stated its policy with regard to analysing whether a firm is a public body, and that this policy is a "rebuttable presumption" that majority government-owned enterprises are "authorities" (public bodies). China argues that this "rebuttable presumption" is a rule or norm of general and prospective application that may be subject to an "as such" challenge in WTO dispute settlement, and which is inconsistent with the proper legal standard for determining whether an entity is a public body under Article 1.1(a)(1) of the SCM Agreement.105
7.78.
In support of its view that the "rebuttable presumption" established by the USDOC in Kitchen Shelving is a rule or norm of general and prospective application, China points out that the USDOC stated that "[i]n most instances majority government ownership alone indicates that a firm is an authority "and that, in order for a party to demonstrate that an entity with majority government ownership is not an authority, the burden would be on that party to "demonstrate that majority ownership does not result in control of the firm". The USDOC subsequently described the "policy" it articulated in Kitchen Shelving as "a rebuttable presumption that majority-government owned enterprises are authorities within the meaning of section 771(5)(B) of the Act". China argues that based on this rebuttable presumption the USDOC has consistently determined in investigations involving imports from China that majority-state-owned input producers are authorities.106
7.79.
China argues, with reference to the Appellate Body report in US – Zeroing (EC), that it has demonstrated that the Kitchen Shelving policy sets forth a rule or norm that is attributable to the United States; that it has demonstrated the precise content of this rule or norm and that it has demonstrated that this rule or norm does have general or prospective application. The Kitchen Shelving policy is a rule or norm attributable to the United States in that it articulates a "policy" to address the "recurring issue" of analysing whether entities controlled by the Government of China are public bodies and thereby "provides guidance and creates expectations among the public and among private actors". Regarding the precise content of the Kitchen Shelving policy, China argues that it has demonstrated that this policy reflects an irrebuttable presumption that a government's control over an entity makes it a public body in all cases. Finally, China argues that the facts refute the argument of the United States that the Kitchen Shelving policy has no general and prospective application on the grounds that it only "describes what has been done in the past". According to China, the express terms of the Kitchen Shelving determination establish that it sets forth a rule or norm that is intended to apply to all subsequent countervailing duty investigations in which the question of whether SOEs are public bodies arises. China considers that its position on the general and prospective character of the Kitchen Shelving policy is corroborated by evidence demonstrating that the USDOC has systematically applied the Kitchen Shelving policy in all subsequent determinations in which the public body issue has arisen.107
7.80.
China rejects the argument of the United States that the Kitchen Shelving policy cannot be subject to WTO dispute settlement because it is mere practice or repeat action. China argues, in this regard, that the Appellate Body has made it clear that the scope of measures that can be challenged in WTO dispute settlement is broad and has not excluded the possibility that concerted action or practice can be susceptible to challenge in WTO dispute settlement. China also argues that the panel report in US – Export Restraints does not support the view that practice cannot be challenged in WTO dispute settlement. China also argues that, unlike the complainant in US – Steel Plate, in this dispute China does not rely exclusively on "repetition of an action" to discern the normative content of the Kitchen Shelving policy.108 China disagrees with the United States that there is an "independent operational status" requirement for a measure to be susceptible to challenge in WTO dispute settlement.109
7.81.
China considers that the Kitchen Shelving policy sets forth a per se legal rule, rather than a mere rule of evidence because parties can only rebut the factual question of whether majority government ownership establishes control of the firm. Parties cannot rebut the USDOC's legal interpretation that government control over a firm makes the latter a public body. Thus, Kitchen Shelving sets forth a per se legal rule pursuant to which the USDOC indicated that it would treat government control as legally determinative of whether an entity is a public body in all subsequent cases.110
7.82.
China contends that the argument of the United States that Kitchen Shelving merely reflects the USDOC's reasoning in the context of a particular investigation is directly contradicted by the text of the Kitchen Shelving determination. In Kitchen Shelving the USDOC applied the rule or norm of general application that it had just articulated in that case as the "policy" to address the "recurring issue" of how to analyse whether particular entities were public bodies. Subsequent cases refer back to the policy articulated in Kitchen Shelving as the only ratio decidendi for the relevant public body findings.111 China argues that the fact that the Kitchen Shelving policy was articulated in the body of a final determination, rather than in a stand-alone document like the Sunset Policy Bulletin, is irrelevant.112
7.83.
China argues, in its first written submission, that the USDOC "rebuttable presumption" that majority government-owned enterprises are public bodies is inconsistent, as such, with Article 1.1(a)(1) of the SCM Agreement because it is premised on the idea that government control over an entity, by itself, is sufficient evidence on which to base a finding that an entity is a "government authority", and that majority government ownership presumptively establishes such control. This is inconsistent with the Appellate Body's interpretation of Article 1.1(a)(1) in US – Anti-Dumping and Countervailing Duties (China), according to whichgovernment control, is insufficient, as a matter of law, to establish that an entity has been vested with authority to perform governmental functions.113
7.84.
China claims that the argument of the United States that the Kitchen Shelving policy does not necessarily result in a breach of Article 1.1(a)(1) of the SCM Agreement because the USDOC has discretion to abandon the policy in the future is based on a mandatory/discretionary distinction, the continued relevance of which is debatable. The fact that, as held by the Appellate Body, non-mandatory measures may be challenged as such logically also implies that on the merits such measures may be found to be inconsistent as such with the relevant provisions of the covered agreements.114 China further submits that even assuming that the mandatory/discretionary distinction were relevant to the Panel's assessment of the merits of China's "as such" claim, the relevant question is not whether the USDOC retains the theoretical discretion to abandon the Kitchen Shelving policy in the future but whether the policy itself provides the USDOC with discretion to act consistently with Article 1.1(a)(1) of the SCM Agreement. In this respect, China argues that the application of the Kitchen Shelving policy always results in a breach of Article 1.1(a)(1) of the SCM Agreement because this policy establishes an irrebuttable presumption that all government-controlled entities are public bodies and thus reflects the same control-based standard that the Appellate Body has found to be insufficient to establish that an entity is a public body.115
7.85.
China argues that because the United States is acting inconsistently, as such, with Article 1.1 of the SCM Agreement, it follows that the United States does not impose countervailing duties in accordance with the requirements of the SCM Agreement and Article VI of the GATT 1994 and thereby acts in violation of Article 10 of the SCM Agreement. It also follows that the United States acts inconsistently with Article 32.1 of the SCM Agreement because it takes specific actions against subsidies that are not in accordance with the provisions of the GATT 1994, as interpreted by the SCM Agreement.116

7.5.3 Main arguments of the United States

7.86.
The United States argues that China has failed to establish that the Kitchen Shelving discussion necessarily results in a breach, nor has China shown that discussion is a "measure". First, the United States argues that to succeed in an "as such" challenge China must demonstrate that the discussion in Kitchen Shelving necessarily results in the USDOC acting in a WTO-inconsistent manner. The United States contends that China has failed to do so and that the challenged discussion simply explains the USDOC's historic approach, at the time of Kitchen Shelving, to the public body issue. That discussion does not commit the USDOC to any future course of action and does not necessarily lead to any action inconsistent with any WTO provision. Even labelling the Kitchen Shelving discussion as a "policy" or "practice" by the USDOC would not necessarily result in a breach of the SCM Agreement because it is well-established as a matter of US domestic law that the USDOC can change a practice or policy at any time provided it is permissible under the statute and the USDOC has a reason for doing so. The United States argues that the Kitchen Shelving discussion is an explanation of the USDOC's past practice, which can be changed adapted, modified or abandoned at any time and that it is intended to explain the USDOC's actions, not to create binding rules.117
7.87.
Second, the United States contends that the USDOC's discussion in Kitchen Shelving is not a "measure" and therefore that discussion cannot result in a breach. Even labelling the discussion as a "policy" or "practice" does not lead to the conclusion that China has established the existence of a measure that can be challenged because an administrative practice is not a "measure". The United States refers to the panel findings in US – Export Restraints and US – Steel Plate as support for the view that practice has no independent operational status and can therefore not be challenged as a "measure".118 The United States argues that even with China's broad and problematic definition of a measure as "any act or omission attributable to a WTO Member", the explanation in Kitchen Shelving is not an "act or omission" because, on its own, it does not do or accomplish anything and has no "independent operational status such that it could independently give rise to a WTO violation". As a discussion of the USDOC's historic approach to the public body issue, it is descriptive rather than prescriptive.119 The United States argues that China has not found any causation between the Kitchen Shelving memorandum and any other action by the United States that would indicate that it is an "act" or is "doing something".120 The United States also argues that the USDOC's references to the Kitchen Shelvingdiscussion in other determinations that followed do not establish it as a "measure" or give it "legal effect".121
7.88.
The United States considers that the discussion in Kitchen Shelving does not have "general and prospective application". There is no indication in that discussion that the USDOC intended the Kitchen Shelving reasoning to apply to all cases, nor "to conclusively treat all entities controlled by the Government of China as 'public bodies' in all cases …". The United States argues that, on the contrary, the language used in Kitchen Shelving indicates that the USDOC would in the future examine evidence and arguments that "majority ownership does not result in control of the firm" and would consider "all relevant information".122 In this connection, the United States distinguishes the Kitchen Shelving discussion from the USDOC's policy bulletin found to be a "measure" in US – Oil Country Tubular Goods Sunset Reviews and also discussed in US – Corrosion-Resistant Steel Sunset Review, which provided "guidance regarding the conduct of sunset reviews".123 The United States contends that China's argument that the Kitchen Shelving discussion creates an "irrebutable presumption" that all government-controlled entities are public bodies ignores the context and the plain language of the Kitchen Shelving determination because the USDOC's statement in Kitchen Shelving did not address the issue of whether or not all government-controlled entities are public bodies under the SCM Agreement.124
7.89.
The United States claims that China can cite to no prior dispute in which a panel or Appellate Body has found that an investigating authority's explanation of its reasoning in the context of a trade remedy investigation is a "measure" that can be challenged "as such". Only stand-alone policy documents with stated prospective effect, or well-established methodologies reflected in computer programming, have been found to be measures.125 The United States also argues that China's argument that the Kitchen Shelving discussion is a measure that can be challenged as such is inconsistent with Article 22.5 of the SCM Agreement because it would transform the provision of reasons, an obligation under Article 22.5, into an independent measure.126
7.90.
The United States argues that China's statement that the Kitchen Shelving policy is the only ratio decidendi mentioned by the USDOC in its public body findings made subsequent to Kitchen Shelving is an unsupported assertion as China fails to identify a single case that solely uses the Kitchen Shelving memorandum as the reasoning for relevant public body findings. The United States submits that public body findings in proceedings subsequent to Kitchen Shelving were based upon the facts and circumstances of each investigation and not solely reliant on the reasoning in Kitchen Shelving.127

7.5.4 Main arguments of third parties

7.91.
The European Union contends that the nature of the alleged measure, of the rebuttable presumption, is that of a rule of evidence rather than a rule of substance. The European Union considers that it may be reasonable that the authority draws an inference, at the end of an investigation, after having posed precise questions that have not been fully answered, and after having provided a prior indication of the inference that is intended to draw. However, it may not necessarily be reasonable for an authority to posit the same inference at the outset of the investigation in the form of a presumption. In the European Union's view, this specific procedural context must inform the Panel's consideration of whether or not China has demonstrated the existence and precise content of the measure at issue.128

7.5.5 Evaluation by the Panel

7.5.5.1 Relevant excerpt from the Kitchen Shelving Issues and Decision Memorandum

7.92.
We begin our assessment of this claim by looking at the relevant excerpt of Kitchen Shelving, where, according to China, the USDOC first articulated its policy. We find it is the appropriate starting point for examining whether China has established the existence and content of the "measure" at issue and subsequently, its alleged inconsistency, on an "as such" basis, with Article 1.1(a)(1) of the SCM Agreement. The relevant part of the USDOC's Issues and Decision Memorandum in Kitchen Shelving provides the following:

The Department considers firms that are majority-owned by the government to be "authorities" within the meaning of section 771(5)(B) of the Act. This treatment is reflected in the CVD Preamble,[135] which identifies "treating most government-owned corporations as the government itself" as a longstanding practice. It is also reflected in numerous determinations in which the Department has treated government-owned firms providing such goods and services as electricity, water, natural gas, and iron ore as authorities without any discussion of the matter or any questioning of this treatment by the parties to the proceeding.[136]

[ORIGINAL FOOTNOTES]

135 See CVD Preamble, 63 Fr at 65402.

136 See, e.g., Final Magnesium from Canada at "Exemption from Payment of Water Bills; Steel Products from Argentina at Regional Tariff Zones for Natural Gas); Steel Sheet and Strip from Korea at Electricity Discounts Under the Requested Load Adjustment Program; and Hot-Rolled Steel from India at Iron Ore.

However, in certain cases, including certain instances involving firms with majority government ownership, the Department has considered additional relevant information to support its determination that firms should be treated as authorities for purposes of the countervailing duty law. Because our approach to analyzing whether a firm is an authority has become a recurring issue particularly in CVD investigations of imports from the PRC, we are taking this opportunity to clearly state our policy in this regard.

One of the earliest instances in which the Department was faced with the issue of whether a business (as opposed to a ministry or policy bank) should be treated as a government entity was in a 1987 investigation of fresh cut flowers from the Netherlands.[137] Specifically, in that investigation, we considered whether Gasunie, a firm that was fifty percent owned by the government, was conferring a subsidy through its provision of natural gas to the flowers growers.

[ORIGINAL FOOTNOTE]

137See Flowers from Netherlands.

Because the government did not have a controlling interest in Gasunie, the Department looked to other indicators and determined that the government provided subsidies through Gasunie. In some subsequent cases, where it was unclear whether a firm was an authority based on ownership information alone, the Department examined broadly similar indicators as in the flowers case, namely: 1) government ownership; 2) the government's presence on the entity's board of directors; 3) the government's control over the entity's activities; 4) the entity's pursuit of governmental policies or interests; and 5) whether the entity is created by statute.

Commerce does not analyze each of these "five factors" for every firm in every case, however. In most instances, majority government ownership alone indicates that a firm is an authority. Indeed, a careful examination of the five factors reveals that when a government is the majority owner of a firm, factors one through four are largely redundant. If the government owns a majority of the firm's shares, then the government would normally appoint a majority of the members of the firm's board of directors who, in turn, would select the firm's managers, giving the government control over the entity's activities.

It has been argued that government-owned firms may act in a commercial manner. We do not dispute this. Indeed, the Department's own regulations recognize this in the case of government owned banks by stating that loans from government-owned banks may serve as benchmarks in determining whether loans given under government programs confer a benefit. However, this line of argument conflates the issues of the "financial contribution" being provided by an authority and "benefit". If firms with majority government ownership provide loans or goods or services at commercial prices, i.e., act in a commercial manner, then the borrower or purchaser of the good or service receives no benefit. Nonetheless, the loans or good or service is still being provided by an authority and, thus, constitutes a financial contribution within the meaning of the Act.

For the reasons given above, it normally is not necessary for the Department to apply the five factor analysis in situations where the provider of the financial contribution is majority government owned. This does not preclude parties from arguing that firms with majority government ownership are not authorities, but to succeed in such an argument a party must demonstrate that majority ownership does not result in control of the firm. Such situations may exist, but they are rare. Where majority ownership does not exist, the Department will consider all relevant information regarding the control of the firm, including, where appropriate and necessary, some or all of the five factors discussed above, in determining whether the firm should be treated as an authority.

In this investigation, the GOC holds a majority ownership position in certain of the wire rod producers that supply Wire King. Consistent with the policy explained above, we are treating these producers as "authorities" and, hence, the wire rod they provide to Wire King confers a countervailable subsidy to the extent that it is sold for LTAR and is specific.[138]

[ORIGINAL FOOTNOTE]

138 See Memorandum Accompanying the Final Determination, "Analysis Concerning Authorities" dated July 20, 2009 ("Authorities Memorandum")

7.5.5.2 Whether the USDOC's "rebuttable presumption" is a "measure" and if so, whether it can be challenged "as such"

7.93.
As a starting point, we note that the parties disagree on whether the "rebuttable presumption", as set out in the Kitchen Shelving Issues and Decision Memorandum, is a "measure" that can be challenged under WTO dispute settlement proceedings. The United States considers that the relevant articulation is only a discussion in the context of an investigation that cannot be challenged, while China argues that it reflects a policy statement. The parties further disagree on whether the challenged "rebuttable presumption" is a measure that can be challenged on an "as such" basis.
7.94.
We now turn to examine, firstly, whether the "rebuttable presumption" policy, as framed by China in this dispute, constitutes such a "measure" and, secondly, whether it can be challenged "as such".

a. Is the rebuttable presumption/Kitchen Shelving discussion a "measure" susceptible to WTO dispute settlement?

7.102.
Moving to the facts of the present dispute, in order to decide whether the so-called "rebuttable presumption" or "Kitchen Shelving policy" is a "measure", we start by looking at the available text describing the challenged measure. The most direct characterisation of the "rebuttable presumption" comes from the USDOC itself when it introduces the discussion in the Kitchen Shelving Issues and Decision Memorandum by stating that: "Because our approach to analysing whether a firm is an authority … we are taking this opportunity to clearly state our policy in this regard". (emphasis ours) We see no reason to question the USDOC's acknowledgment and portrayal of a "policy" regarding its own approach to interpreting whether an entity is a public body. Further, the countervailing duty Preamble characterises this approach as a "long standing practice". The introductory language of the countervailing duty Preamble also clarifies that these rules "deal with countervailing duty methodology" and "codify certain administrative practices".
7.103.
We also observe that this policy has been applied consistently over a long period of time. The USDOC states in the Kitchen Shelving Issues and Decision Memorandum that its practice "is also reflected in numerous determinations in which the Department has treated government-owned firms providing such goods and services as electricity, water, natural gas, and iron ore as authorities without any discussion of the matter or any questioning of this treatment by the parties to the proceeding". Some of the determinations cited by the USDOC were made several decades ago. China has also provided evidence demonstrating that this methodology has been applied in all the challenged cases subsequent to the "policy" announcement in the Kitchen Shelving Issues and Decision Memorandum as well.140
7.104.
The language of this policy is not "mandatory" as it does not have any legal effect upon the USDOC. It is its own internal policy. It does provide, though, that the USDOC would normally apply first the "rebuttable presumption" and only if there are convincing arguments and evidence to the contrary would the USDOC reconsider its by-default approach. The text does not define what such arguments or evidence could be, nor what weight they might have over the USDOC's standard approach. On the contrary, the text presumes that such occasions would be "rare" and shifts the burden of proof on the interested parties to prove a negative.
7.105.
Finally, the issue is not what the status of the "rebuttable presumption" within the domestic legal system of the United States is but rather whether it is a "measure" that may be challenged within the WTO system. It may be that the policy articulated in the Kitchen Shelving Issues and Decision Memorandum is not "binding" upon the USDOC under US law and that the USDOC is free to depart from that policy at any time. However, as the Appellate Body has stated, it is not for us to opine on matters of United States domestic law. Our mandate is confined to clarifying the provisions of the WTO Agreement and to determining whether the challenged measure is consistent with those provisions.141
7.106.
Based on the above, we understand what is challenged is not a mere "discussion" limited to the Kitchen Shelving investigation or the Kitchen Shelving Issues and Decision Memorandum as such, rather it is the "policy" which is expressed through that Issues and Decision Memorandum. This policy has been applied both before and subsequent to the Kitchen Shelving Issues and Decision Memorandum. In our view, the scope of this "policy" concerns the legal standard that the USDOC applies by default to determine that a majority government-owned entity is a public body. We therefore find that what is challenged is a measure susceptible to WTO dispute settlement.

b. Can the rebuttable presumption/Kitchen Shelving discussion be challenged "as such"?

7.107.
In principle, we share the Appellate Body's view that "allowing claims against measures, as such, serves the purpose of preventing future disputes by allowing the root of WTO-inconsistent behaviour to be eliminated".142 Moreover, the Appellate Body found no basis, either in the practice of the GATT and the WTO generally or in the provisions of the Anti-Dumping Agreement, for finding that only certain types of measures can be challenged "as such" in dispute settlement proceedings under the Anti-Dumping Agreement. The Appellate Body thus saw no reason to conclude that, in principle, non-mandatory measures cannot be challenged as such. In our view, this conclusion should also apply in dispute settlements proceedings under the SCM Agreement.143
7.108.
In United States – Corrosion-Resistant Steel Sunset Review, the Appellate Body stated that measures consist "not only of particular acts applied only to a specific situation, but also of acts setting forth rules or norms that are intended to have general and prospective application [original footnote omitted]. In other words, instruments of a Member containing rules or norms could constitute a "measure", irrespective of how or whether those rules or norms are applied in a particular instance".144
7.109.
The Appellate Body then set out the relevant standard for bringing an "as such" challenge against a "rule or norm". A complaining party must clearly establish, through arguments and supporting evidence, at least that the alleged "rule or norm" is attributable to the responding Member; its precise content; and indeed, that it does have general and prospective application. Evidence may include the concrete instrumentalities and proof of the systematic application of the challenged "rule or norm".145
7.110.
The Panel in US – Zeroing (EC) also concluded that the above findings of the Appellate Body apply even where the measure in question is not "a legal instrument" under the law of a Member and does not bind an administering agency.146 In the same case, the Appellate Body recalled that both participants agreed that an "as such" challenge can, in principle, be brought against a measure that is not expressed in the form of a written document.147
7.112.
In our view, it is clear that the parties do not disagree that the "rebuttable presumption/Kitchen policy" is attributable to the United States as it is applied by the executive branch of the US government in US countervailing duty investigations.
7.115.
In addition, we have also before us evidence regarding the application of this "policy" in all determinations challenged in this dispute that followed the Kitchen Shelving Issues and Decision Memorandum:152

i. Wire Strand: "following the reasons set forth in Racks from the PRC, we have continued to treat majority state-owned input producers as GOC authorities capable of providing wire rod for LTAR."153

ii. Aluminum Extrusions: "following the reasons set forth in Racks from the PRC, we have continued to treat majority state-owned input producers as GOC authorities capable of providing primary aluminum for LTAR."154

iii. Print Graphics: "Having determined that ownership/control is central to deciding whether an enterprise is an authority, the Department looks to whether the enterprise is majority owned or not. … [F]or majority government-owned companies, respondents can rebut the presumption that majority ownership results in control, and the GOC has not done so here. For enterprises that are less than majority-owned by the government, including private companies and FIEs, the Department sought information to ascertain whether those companies are, nonetheless, controlled by the government."155

iv. OCTG: "In [Kitchen Shelving], the Department explained with respect to the five factors test that majority-government-owned firms are normally treated as [public bodies]. Thus, determining the ownership of a company is a threshold matter in our investigations. In the instant investigation, the [Government of China] has identified numerous steel rounds suppliers as SOEs and the information submitted in [Government of China] FIS shows that the state holds a majority ownership position in these firms. As explained further in Comment 9, we are treating these suppliers as [public bodies]."156

v. Seamless Pipe: After initially recalling that "[i]n [Kitchen Shelving], we have established a rebuttable presumption that majority-government-owned enterprises are [public bodies]", the USDOC goes on to find that: "Having determined that ownership and control is central to deciding whether an enterprise is [a public body], the Department looks to whether the enterprise is majority-government-owned or not. As explained above, for majority-government-owned companies, respondents can rebut the presumption that majority ownership results in control, and the [Government of China] has not done so here. For enterprises that are less than majority-owned by the government … the Department sought information to ascertain whether those enterprises are, nonetheless, controlled by the government. While the [Government of China] provided certain ownership information for these companies, it failed to provide the full information needed. Accordingly, … all steel round suppliers are being treated as [public bodies]."157

vi. Steel Cylinders: the USDOC does not expressly refer to Kitchen Shelving but rather to an earlier decision (OTR Tires) that reflects the same substantive "rebuttable presumption" and concludes that "the Department determined that majority government ownership of an input producer is sufficient to qualify it as [a public body]. Thus, we determine these suppliers (sic) are [public bodies]."158

vii. Solar Panels: "For each producer in which the GOC was a majority owner [we stated that] the GOC needed to provide the following information that is relevant to our analysis of whether that producer is an "authority". […] documents that demonstrate the producer's ownership during the POI", etc. … [and] "[a]ny other relevant evidence the GOC believes demonstrates that the company is not controlled by the government."159

viii. Drill Pipe: "with respect to the specific companies that produced the steel rounds purchased by the respondents, we asked the [Government of China] to provide particular ownership information for these producers so that we could determine whether the producers are [public bodies]. Specifically, we stated in our questionnaire that the Department normally treats producers that are majority owned by the government or a government entity as [public bodies]. Thus, for any steel rounds producers that were majority government-owned, the GOC needed to provide the following ownership information if it wished to argue that those producers were not authorities: … Any relevant evidence to demonstrate that the company is not controlled by the government, e.g., that the private, minority shareholder(s) control the company."160

7.116.
The references in the text of the Kitchen Shelving Issues and Decision Memorandum to both previous countervailing duty proceedings, to the countervailing duty Preamble as well as the evidence provided by China on the approach followed in countervailing duty investigations after the Kitchen Shelving proceeding, demonstrate that the application of this policy has been a constant feature of the US countervailing proceedings for a considerable period of time. We recall that the USDOC has stated that the findings of the panel and Appellate Body in US – Anti-Dumping and Countervailing Duties (China) were limited to the four investigations at issue in that dispute. The relevant text provides:

[R]egarding the DSB's reports in the DS 379 proceeding, we note that, while we have reached section 129 final determinations in the four investigations at issue in that dispute, the decisions of the panel and the appellate body regarding whether a producer is an authority (a "public body" within the WTO context) were limited to those four investigations.161

7.118.
We also do not agree with the United States that the discussion in the Kitchen Shelving Issues and Decision Memorandum merely responds to the "specific factual and legal questions in a particular investigation" and "does not have any identifiable legal or normative value over other investigations". This statement is not factually accurate. The relevant part of the text does not discuss the specific facts of the Kitchen Shelving investigation. On the contrary, the USDOC as it states in the Kitchen Shelving Issues and Decision Memorandum, "takes this opportunity to clearly state our policy in this regard". We consider that the USDOC, through the Kitchen Shelving Issues and Decision Memorandum, expressed in more detail its policy on public body that has been effective for some time before that specific investigation. For this reason we also do not agree with the United States' argument that a finding that the Kitchen Shelving policy is a "measure" would compromise Members' obligations under Article 22.5 of the SCM Agreement. The policy reflected in Kitchen Shelving is not an explanation regarding the USDOC's reasoning for the specific factual and legal questions in the Kitchen Shelving investigation alone. It is a policy announcement that has been inserted within the final determination of a countervailing duty proceeding.
7.119.
Based on the above, we find that the challenged measure is a single rule or norm of general and prospective application that provides for finding that majority government-owned entities are public bodies. Therefore, we find that it can be challenged "as such".

7.5.5.3 Is the Kitchen Shelving's rebuttable presumption inconsistent as such with Article 1.1 of the SCM Agreement?

7.120.
We begin our assessment by relying on the Appellate Body's finding in United States – Corrosion-Resistant Steel Sunset Review where it was stated that "When a measure is challenged "as such", the starting point for an analysis must be the measure on its face. If the meaning and content of the measure are clear on its face, then the consistency of the measure as such can be assessed on that basis alone. If, however, the meaning or content of the measure is not evident on its face, further examination is required".162
7.121.
We also take note of the Appellate Body's statement in United States – Corrosion-Resistant Steel Sunset Review that "we have not, as yet, been required to pronounce generally upon the continuing relevance or significance of the mandatory/discretionary distinction. […] We do, nevertheless, wish to observe that, as with any such analytical tool, the import of the "mandatory/discretionary distinction" may vary from case to case. For this reason, we also wish to caution against the application of this distinction in a mechanistic fashion".
7.122.
We also note that both parties agree that for such a claim to be successful the measure should necessarily result in an inconsistency. Within this general framework, we rely on the approach taken by the Appellate Body when faced with analogous considerations163, and follow a similar two-step approach based on: (i) whether the policy obliges USDOC to consider majority-ownership as a sufficient basis for a public body finding; and (ii) whether the policy restricts the USDOC's consideration of evidence relating to factors other than ownership in a particular investigation?

a. Whether the policy obliges the USDOC to consider majority-ownership as a sufficient basis for a public body finding

7.123.
The "rebuttable presumption or Kitchen Shelving policy"164 clearly instructs USDOC to consider by priority evidence of majority-ownership by the government because "in most instances, majority government ownership alone indicates that a firm is an authority".165 The USDOC attaches therefore decisive weight to this factor. Majority-ownership is presumed to constitute sufficient evidence that an entity is a public body. Such a presumption might have had some validity if the Appellate Body had reached an interpretation of the term "public body" based on ownership. However, this is not the case.
7.124.
In our view, a firm evidentiary foundation is required in each case for a proper determination of an entity being a public body. Such a determination cannot be based solely on the mechanistic application of presumptions. The consistency of the "rebuttable presumption" with Article 1.1(a)(1) of the SCM Agreement hinges upon whether it instructs USDOC to treat majority-ownership as determinative or conclusive, on the one hand, or merely indicative or probative, on the other hand, of the likelihood of a public body finding. On the face of the text, this policy is qualified by the word "normally". We understand that this qualifying word seems to suggest that there is some scope for the USDOC not to make an affirmative finding of public body even if the majority-ownership element exists; and also identifies that the USDOC will consider other elements when the majority-ownership element does not exist. However, in our view, what is crucial is that the presumption suggests that majority-ownership will be regarded as conclusive. Although there is never an automatic presumption and the outcome would depend on the facts of the case, absent evidence to the contrary the existence of majority-ownership would necessarily lead to a public body finding.
7.125.
We also take note of the consistent application of this presumption in numerous cases over a long period of time, as mentioned in paragraph 7,115. above as supportive evidence that this policy necessarily leads the USDOC to consider majority-ownership as a sufficient basis for a public body finding.

b. Whether the policy restricts the USDOC to consider evidence other than majority-ownership

7.126.
The USDOC recognises a number of factors other than ownership as potentially relevant to its public body determination. We understand that this list of other factors is not exhaustive.
7.127.
However, the policy establishes that the burden is on an interested party to provide information or evidence that would warrant consideration of any other factors. As a consequence, under the policy of the "rebuttable presumption", the USDOC does not look for other information, unless an interested party raises it. It effectively thus restricts the USDOC to consider other evidence on its own initiative.
7.128.
In conclusion, based on the above considerations and given the Panel's finding regarding the correct interpretation of the term "public body", we find that the "policy" articulated in Kitchen Shelving is also inconsistent on an "as such" basis to the extent it leads the USDOC to act inconsistently with Article 1.1(a)(1) of the SCM Agreement by using the government-majority ownership/control as the basis on which an entity can be a public body contrary to the Appellate Body's finding in US – Anti-Dumping and Countervailing Duties (China) that ownership of an entity by a government, in itself, is not sufficient to establish that an entity is a public body.

7.6 WHETHER THE USDOC'S INITIATIONS OF INVESTIGATIONS ARE INCONSISTENT WITH ARTICLE 11 OF THE SCM AGREEMENT DUE TO INSUFFICIENT EVIDENCE OF A FINANCIAL CONTRIBUTION

7.6.1 Introduction

7.129.
The Panel now turns to the claims advanced by China concerning evidence of a financial contribution in the USDOC's initiation of four investigations, namely Steel Cylinders, Solar Panels, Wind Towers, and Steel Sinks.166
7.130.
The USDOC initiated a countervailing duty investigation in Steel Cylinderson 8 June 2011, pursuant to an application for the initiation of such an investigation filed on 11 May 2011; in Solar Panels on 16 November 2011, pursuant to an application for the initiation of such an investigation on 19 October 2011; in Wind Towers on 24 January 2012, pursuant to an application for the initiation of such an investigation on 29 December 2011; and in Steel Sinks on 27 March 2012, pursuant to an application for the initiation of such an investigation on 1 March 2012.
7.131.
China claims that the USDOC's initiation of these countervailing duty investigations in respect of allegations that SOEs confer countervailable subsidies through their sales of inputs to downstream producers, in the absence of sufficient evidence in the petition to support an allegation that SOEs constitute public bodies within the meaning of Article 1.1(a)(1) of the SCM Agreement, and in the absence of a sufficient review of the petition by the USDOC in respect of this allegation, is inconsistent with Articles 11.2 and 11.3 of the SCM Agreement. Furthermore, as a consequence of these inconsistencies with Articles 11.2 and 11.3, China claims that the United States acted inconsistently with Articles 10 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994.

7.6.2 Relevant provisions

7.132.
The present claims concern Articles 11.2 and 11.3 of the SCM Agreement, which relevantly provide the following:

11.2 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. The application shall contain such information as is reasonably available to the applicant on the following:

(iii) evidence with regard to the existence, amount and nature of the subsidy in question;

11.3 The authorities shall 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.

7.6.3 Main arguments of China

7.133.
With regard to the United States' claim that China has failed to present a prima facie case, China states generally that is has done the following with respect to each of its claims: (i) identified the challenged measure at issue and provided explicit citations to the portions of the measure pertinent to the claim; (ii) identified the relevant provisions of the SCM Agreement with which it alleges the challenged measures are inconsistent, and presented its understanding of the legal obligation each such provision imposes; and (iii) explained the basis for its claim that each of the challenged measures is inconsistent with the relevant provisions of the SCM Agreement, properly interpreted.167
7.134.
China claims that the USDOC's initiation of four investigations in respect of allegations that SOEs confer countervailable subsidies through their sales of inputs to downstream producers, in the absence of sufficient evidence in the petition to support an allegation that SOEs constitute public bodies within the meaning of Article 1.1(a)(1) of the SCM Agreement, and in the absence of a sufficient review of the petition by the USDOC in respect of this allegation, is inconsistent with Articles 11.2 and 11.3. In particular, China objects to the initiation of the four investigations solely on the basis of evidence of majority government ownership, without any indication that the SOEs were "vested with, and exercising, authority to perform governmental functions".168
7.135.
China has clearly stated in the course of these proceedings that its above claim is contingent on the Panel finding that a public body under Article 1.1(a)(1) is an entity "vested with, and exercising, authority to perform governmental functions", as the Appellate Body held in US – Anti-Dumping and Countervailing Duties (China).169 Indeed, China submits that the initiations are inconsistent with Article 11.3 because they were based on the application of an incorrect legal standard. In this regard, China submits that the USDOC's challenged initiations are based on the application of the same legal standard that China is challenging under Article 1.1(a)(1).170 China argues that when an investigating authority initiates a countervailing duty investigation on the basis of an incorrect legal standard, it necessarily acts inconsistently with Article 11.3. Indeed, China takes the view that the "adequacy" and "sufficiency" of evidence, required by Article 11.3, can only be assessed in relation to a legal standard.171
7.136.
In the course of these proceedings, China stated that, in its view, it would be appropriate for the present Panel to follow the approach taken by the panel in China – GOES, namely to read the obligations in Article 11.3 together with Article 11.2, but to make findings only under Article 11.3.172

7.6.4 Main arguments of the United States

7.137.
The United States submits that China has failed to establish a prima facie case with regard to its claims.173 In particular, the United States submits that initiation decisions are fact-specific, and the question of whether an investigating authority has complied with the standard set out in Article 11 of the SCM Agreement is similarly dependent on the facts presented by each individual application.174
7.138.
Furthermore, the United States rejects China's assertion that the USDOC's initiations were predicated on an incorrect legal standard and argues that regardless of the ultimate legal interpretation of the term "public body", there was adequate evidence within the meaning of Article 11 to support the USDOC's initiations. The United States submits that Article 11 speaks to providing and evaluating evidence; it does not require that applicants allege or that an investigating authority recites any particular standard. For initiation purposes under Article 11, what is required is adequate evidence tending to prove or indicating the existence of a financial contribution by a government or public body, in light of what is reasonably available to the applicant.175
7.139.
However, the United States contends that, even accepting China's interpretation of the term "public body", the USDOC's initiation of investigations was consistent with Article 11 since in US – Anti-Dumping and Countervailing Duties (China) the Appellate Body held that evidence of "meaningful" government control over an entity can serve as relevant evidence that the entity possesses, exercises or is vested with governmental authority.176 The United States argues that the four initiations challenged by China were supported by sufficient evidence tending to prove, or indicating, that public bodies provided goods, under either the definition of "public body" advocated by the United States or the definition of "public body" advocated by China.177

7.6.5 Main arguments of third parties

7.140.
Canada submits that Article 11.3 of the SCM Agreement permits an investigating authority to take into account, when reviewing the sufficiency of the evidence, that access to relevant information may be limited. According to Canada, a subsidizing Member should not be able to evade its obligations under the SCM Agreement because it is in a position to make information relating to subsidies inaccessible or "unavailable".178
7.141.
The European Union considers that the information an applicant might be expected to adduce must be a function of the availability of such information in the public domain. According to the European Union, information and evidence concerning the types of additional factors over and above ownership and control, which the Appellate Body has indicated may be relevant in the assessment of whether an entity is a public body, may prove difficult for an applicant to obtain.179
7.142.
Turkey submits that the determination of sufficiency of evidence and reasonable availability of information is case and fact-specific, and at the investigating authority's discretion. The reasonable availability of information depends in particular on a government's record keeping and publication requirements, on companies' publication requirements, and access to laws and regulations. The non-fulfilment of notification requirements contained in Article 25 of the SCM Agreement adversely affects access to information.180

7.6.6 Evaluation by the Panel

7.143.
We note at the outset that, according to China, it would be appropriate for the present Panel to follow the approach taken by the panel in China – GOES, namely to read the obligations in Article 11.3 of the SCM Agreement together with Article 11.2, but to make findings only under Article 11.3.181
7.144.
In this regard, the panel in China – GOES stated the following:

In the Panel's view, the obligation upon Members in relation to the sufficiency of evidence in an application finds expression in Article 11.3 of the SCM Agreement, which provides that an investigating authority must assess the accuracy and adequacy of the evidence in an application to determine whether it is sufficient to justify initiation. The obligation in Article 11.3 must be read together with Article 11.2 of the SCM Agreement, which sets forth the requirements for "sufficient evidence". If an investigating authority were to initiate an investigation without "sufficient evidence" before it, this would be inconsistent with Article 11.3. Given this interpretation, the Panel considers it appropriate to make findings under Article 11.3 with respect to the 11 programmes at issue. The Panel will reach its conclusions by reference to the requirements for "sufficient evidence" set forth in Article 11.2, but does not consider it necessary to reach separate conclusions under this provision.182

7.145.
This is also in line with statements made by the panel in Mexico – Steel Pipes and Tubes with regard to Articles 5.2 and 5.3 of the Anti-Dumping Agreement.183 We note that the United States does not appear to oppose China's request. As such, in this instance, we find no reason not to limit our findings to Article 11.3, read together with Article 11.2, as requested by China.
7.146.
The Panel agrees with the reasoning of the panel in China – GOES with regard to the meaning of the concept of "sufficient evidence" as used in Articles 11.2 and 11.3 of the SCM Agreement184 and the standard of review that applies to a review of a claim under Article 11.3.185
7.147.
In making its claims, China takes the position that the challenged initiations are inconsistent with Article 11.3 because they were based on the application of an incorrect "legal standard". Indeed, China states that if the Panel agrees that the legal standard applied by the USDOC at the time of initiation with respect to financial contribution is inconsistent with Article 1.1(a)(1), then the USDOC was without a proper basis to conclude that there was sufficient evidence of a financial contribution to justify initiation in the investigations under challenge.186
7.148.
More specifically, China objects to the fact that the applications allege merely that entities that are majority-owned by the Government of China provided inputs to producers, and that this constitutes a financial contribution187, and that the USDOC continued to initiate investigations into allegations concerning subsidies allegedly provided by SOEs based on nothing more than evidence of majority government ownership.188 The United States rejects China's assertion that the USDOC initiated the investigations on the basis of the same control-based standard that the Appellate Body rejected in US – Anti-Dumping and Countervailing Duties (China).189 According to the United States, the USDOC did not explain that it was initiating based upon any particular interpretation of the term "public body".190
7.149.
Article 11.2 states most relevantly that "[a]n application shall include sufficient evidence of the existence of … a subsidy …". Furthermore, Article 11.2(iii) specifies that the application shall contain "evidence with regard to the existence, amount and nature of the subsidy in question". Article 11.3 in turn states that "[t]he authorities shall 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". Evidence of a subsidy must plainly be evidence of a financial contribution by a government or any public body within the territory of a Member, in one of the forms described in Article 1.1(a)(1), that confers a benefit.
7.150.
We agree with the United States that evidence of government ownership of an entity can serve as evidence that the entity is a public body within the meaning of Article 1.1(a)(1). Indeed, the Appellate Body found in US – Anti-Dumping and Countervailing Duties (China) that while evidence of government ownership is in itself insufficient to support a final finding that an entity is a public body, such evidence can serve as evidence that an entity is a public body: "State ownership, while not being a decisive criterion, may serve as evidence indicating, in conjunction with other elements, the delegation of governmental authority".191
7.151.
Furthermore, we agree with the panel in China – GOES that the quantity and quality of the evidence required to meet the threshold of sufficiency of the evidence is of a different standard for purposes of initiation of an investigation compared to that required for a preliminary or final determination.192 Although definitive proof of the existence and nature of a subsidy is not necessary for the purposes of Article 11.3, adequate evidence, tending to prove or indicating the existence of these elements, is required.193
7.152.
As such, we consider that evidence of government ownership may be considered to amount to evidence "tending to prove or indicating" that an entity is a public body capable of conferring a financial contribution.
7.153.
However, China argues that a finding by the Panel that the evidence in the applications was sufficient for initiation purposes despite the application of an incorrect legal standard would amount to a de novo review by the Panel.194 Indeed, China submits that if the Panel were to evaluate whether the evidence before the USDOC would have justified initiation, had the USDOC applied the legal standard adopted by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China), such an evaluation would constitute an improper de novo review.195
7.154.
We do not agree with China's position. In making its case, China focuses on certain evidence contained in the applications, to a large extent overlooking how the USDOC handled such evidence. While China stated in the course of these proceedings that the initiation checklists are where the USDOC provides its reasoning for its initiation determinations, China provides no discussion of that reasoning.196 The initiation checklists in fact do not contain any explanation of the USDOC's understanding of a financial contribution or public body. This is unsurprising since the SCM Agreement does not require an investigating authority to make any findings or explain its understanding of a financial contribution or public body when initiating an investigation. This is in contrast with the requirements imposed by the Agreement on investigating authorities when making preliminary or final determinations. Indeed, Article 22.2 requires that the public notice of the initiation of an investigation contain or make available adequate information on inter alia "a description of the subsidy practice or practices to be investigated". In contrast, Article 22.3 requires that the public notice of any preliminary or final determination set forth in sufficient detail "the findings and conclusions reached on all issues of fact and law considered material by the investigating authority". The distinction between the requirements imposed by Articles 22.2 and 22.3 well reflects the fact that the initiation of an investigation is only a preliminary stage of an investigation, from which point an investigating authority's reasoning is developed. Therefore, we do not consider that a finding by the Panel that the evidence in the applications was sufficient for initiation purposes amounts to a de novo review by the Panel.
7.155.
In light of all of the above, the Panel finds that China has failed to establish that the USDOC acted inconsistently with the United States' obligations under Article 11 of the SCM Agreement by initiating the challenged investigations without sufficient evidence of a financial contribution.197

7.7 WHETHER THE USDOC'S DETERMINATIONS THAT SOES PROVIDED INPUTS FOR LESS THAN ADEQUATE REMUNERATION ARE INCONSISTENT, AS APPLIED, WITH ARTICLES 1.1(B) AND 14(D) OF THE SCM AGREEMENT

7.7.1 Introduction

7.156.
China claims that the USDOC's determinations that SOEs provided inputs for less than adequate remuneration (LTAR) are inconsistent, as applied, with Articles 1.1(b) and 14(d) of the SCM Agreement in the 12 countervailing duty proceedings, namely Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions, Steel Cylinders andSolar Panels.198

7.7.2 Relevant Provisions

7.157.
Article 1 provides the definition of a subsidy as follows:

1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1) there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government"), i.e. where:

(iii) a government provides goods or services other than general infrastructure, or purchases goods;

and

(b) a benefit is thereby conferred.

7.158.
Article 14 provides for the calculation of the amount of a subsidy in terms of the benefit to the recipient, as follows:

For the purpose of Part V, any method used by the investigating authority to calculate the benefit to the recipient conferred pursuant to paragraph 1 of Article 1 shall be provided for in the national legislation or implementing regulations of the Member concerned and its application to each particular case shall be transparent and adequately explained. Furthermore, any such method shall be consistent with the following guidelines:

(d) the provision of goods or services or purchase of goods by a government shall not be considered as conferring a benefit unless the provision is made for less than adequate remuneration, or the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service in question in the country of provision or purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).

7.7.3 Main arguments of China

7.159.
China argues that the USDOC used out-of-country benchmarks in the benefit calculation on the basis of market distortion caused by the predominant role of the government. China argues that the USDOC used its public body findings as the essential factual predicate to find that the government, in the collective sense of the term, plays a "predominant" role in the market for the relevant input.199 In doing so, China argues that, in fact, Commerce applied the same erroneous ownership/control test for finding SOEs were government suppliers in both the financial contribution and distortion analysis.200
7.160.
China submits that these facts are evident on the face of the excerpts provided in Exhibits CHI-1 and CHI-124, and are not in dispute.201
7.161.
China's legal claim is based on two legal arguments, namely (i) that the interpretation of the term "public body" established in US – Anti-Dumping and Countervailing Duties (China) should be applied for determining whether an entity is a government supplier for purposes of the distortion inquiry under Article 14(d);202 and (ii) that the above argument stands because, the only legitimate potential cause of "distortion" that the Appellate Body has ever recognised is where "the government's role in providing the financial contribution is so predominant that it effectively determines the price at which private suppliers sell the same or similar goods".203
7.162.
China further argues that Article 1.1(a)(1) of the SCM Agreement sets forth a single definition of the term "government" which applies throughout the SCM Agreement, covering also Article 14(d).204 The government that provides the financial contribution is "a government or any public body"; an entity that is neither of these two should not be a government supplier under Article 14(d).205 China considers that it follows, as a matter of law, from the finding of the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) that government ownership and control alone must be an insufficient basis on which to conclude that the provision of goods by an SOE is the conduct of a government supplier or indicate "government involvement" for purposes of the distortion inquiry.206 China further argues that the application of a different legal standard would result in a nonsensical outcome where an entity being found to be a "private body" under Article 1.1(a)(1) could be considered a government supplier under Article 14(d).207 In addition, China contends that, contrary to the US – Anti-Dumping and Countervailing Duties (China) jurisprudence, the USDOC rejected the relevance of evidence other than government ownership and market share in its benchmark determinations.208 In China's view, SOE presence in the market could support a distortion finding only if the SOEs at issue were properly found to be public bodies within the meaning of Article 1.1(a)(1).209
7.163.
According to China, the distortion inquiry is not premised on a generic governmental "ability to affect prices" or "the potential for government to influence prices in this market" as this statement expands the Appellate Body's jurisprudence210 in an impermissible way.211
7.164.
Moreover, China dismisses the United States' argument that the US – Anti-Dumping and Countervailing Duties (China) supports the US position because, in China's view, the Appellate Body decided the case in the posture that was presented to it and did not address the same question of legal interpretation as in the present dispute.212
7.165.
China finally argues that the USDOC did not rely on any "other facts" beyond SOE presence in a market because, in the seven investigations where this occurred, these facts did not provide an independent basis for the USDOC's findings, rather only "further" evidence, and both "low level of imports" and "export restraints" cannot say anything about the extent to which the government may be a predominant supplier in a given market, without the principal finding of SOE market share as the appropriate foundation. China further argues that export restraints should not be part of the distortion analysis because they do not constitute a financial contribution nor do they involve a government "pricing strategy" capable of forcing private prices to align with a government price.213

7.7.4 Main arguments of the United States

7.166.
The United States dismisses China's arguments and contends that China erroneously conflates two separate legal analyses, that of the financial contribution and that of benefit, contrary to the Appellate Body jurisprudence.214 The United States finds support in the Appellate Body finding in US – Anti-Dumping and Countervailing Duties (China) where the Appellate Body examined the USDOC's use of out-of-country benchmarks and, notwithstanding its decision concerning public bodies, upheld the USDOC's determinations. The United States argues that the Appellate Body's benchmark findings did not concern whether or not SOEs are public bodies, but rather whether the extent of SOE involvement in a marketplace supported a determination consistent with Article 14(d) that prices in that market were distorted and thus the use of an external benchmark was appropriate.215 Further, the Appellate Body's findings also support the view that Article 14(d) is focused exclusively on the adequacy of the remuneration, which is the test for determining benefit. While the term "government" appears in Article 14(d), it is only in the context of the financial contribution analysis, not benefit analysis, which is a different inquiry, while the term "government supplier" appears nowhere in Article 14(d).216 According to the United States, the Appellate Body finding also demonstrates that a public body analysis is not an essential factual predicate for the market distortion analysis and that these findings are different because the underlying inquiries (the entity providing the financial contribution and the adequacy of remuneration) are fundamentally different.217 In addition, the United States argues that there is no basis in the text of the SCM Agreement for China's assumption, when it discusses the term "private body", that unless an entity has been found to be a public body or is part of the government in the narrow sense, it cannot be taken into account when an authority examines price distortion in the benchmark analysis.218 The United States thus contends that the USDOC's determinations regarding SOEs being public bodies are legally and factually separate from its distortion analysis on the basis of SOEs/government's involvement.219
7.167.
In addition, the United States contends that China mischaracterises the analyses underlying and facts of the USDOC's determinations.220 In the United States' view, China has not established that in each challenged investigation the USDOC equated SOEs with public bodies.221 The United States contends that even if China had established that the USDOC equated SOEs with public bodies for its benefit analysis, it would not support China's argument. Instead, it would demonstrate that the USDOC considered the ownership or control test was appropriate to an analysis of distortion of private prices in the relevant market.222 The USDOC did not deem the market share held by SOEs equivalent to the market share held by the government itself. Rather, the USDOC used data on domestic production, consumption and market share as provided by China in response to the USDOC's Questionnaires.223 Moreover, the United States argues that it is inaccurate, as also shown in Exhibit CHI-124, that each of the USDOC's distortion determinations was relying exclusively on the degree of government production in the Chinese market. The USDOC relied on other facts as well.224 Moreover, where China failed to provide information that USDOC requested to assess the government's role in the relevant input market, the USDOC's benefit findings, based on facts available, are consistent with Article 12.7 of the SCM Agreement and consequently not inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement.225
7.168.
Furthermore, the United States claims that China erroneously considers that distortion can be found only when a government's role in the market is so predominant that the benefit analysis becomes circular. In the United States' view, the distortion analysis is made on a case-by-case basis and although sometimes the government's predominant role may be sufficient on its own, there can be also other circumstances under which an investigating authority may reach a distortion finding.226
7.169.
For example, the United States contends that the term "predominance" also refers to "market power" which the Appellate Body has equated with the ability to influence prices;227 government ownership or control, can therefore be an appropriate test for determining the government's ability to affect private prices in the relevant market.228 SOE presence in a particular market is evidence of such ability.229 Government ownership or control—in and of itself—is an appropriate test for determining whether SOE presence in a given market indicates government involvement in that market.230 Where the government maintains a controlling ownership interest in SOEs, the government, like any owner of a company, has the ability to influence that entity's prices. In addition, the United States contends that the larger the SOE presence vis-à-vis private producer and import presence, the stronger the market power of the SOEs and, through the SOEs, the government and its ability to affect private prices in the relevant market. Moreover, the United States recalls that the USDOC also considers other forms of government involvement in the market beyond SOE presence.231

7.7.5 Main arguments of third parties

7.170.
Australia argues that, on the basis of previous findings of the Appellate Body, the use of out-of-country benchmarks is not inconsistent with Article 14(d) of the SCM Agreement but such possibility is very limited and must be made on a case-by-case distortion analysis.232
7.171.
Brazil focuses its comments in clarifying the concept of "market power" in relation to the concept of "predominance" of government in the market. In Brazil's view, governments may play different roles in different markets. The objectives pursued and the way in which governments act in their respective markets seem to provide context to understand the concept of "market power" and, therefore, of predominance. Brazil also highlights that the description of "prevailing market conditions" under Article 14(d) mirrors textually the "commercial considerations" in Article XVII of the GATT 1994. The language in Article XVII could inform how a government should be deemed to act under prevailing market conditions, with adequate remuneration. In such a case, a government would not be using its power and market share to influence prices. Consequently, in-country benchmarks should not, for this reason alone, be discarded.233
7.172.
Canada considers that price distortion may arise not only where the government itself is a supplier of the good, but also where the suppliers of the good are owned and controlled by the government. The latter suppliers, such as SOEs, do not need to be public bodies under Article 1.1(a)(1) of the SCM Agreement to be in a position to distort private prices in the market and for these prices to constitute an improper benchmark as a result. In Canada's view, this is confirmed by the Appellate Body decision in US-Anti-Dumping and Countervailing Duties (China). Canada thus submits that an investigating authority may reject the use of in-country private transaction prices for a good where the evidence on the record shows that private prices are distorted because of the predominant role of government-controlled entities in the market as providers of the same or similar good.234
7.173.
The European Union notes its understanding that, according to China, this claim would appear to be largely consequential on the preceding public body claim. As a result, the role of government market share or predominance is not per se at issue. Consequently, the Panel should reject China's claim if it considers that China has failed to demonstrate that either the public body determinations are WTO inconsistent or that the benefit determinations rest upon the public body determinations. Further, the European Union refers to the Appellate Body's findings in US – Softwood Lumber IV and states its agreement with the United States' concurrence with the Appellate Body in that respect.235
7.174.
Korea recalls the Appellate Body's finding that an investigating authority cannot refuse to consider evidence relating to factors other than government market share and simply base itself on a finding that the government is the predominant supplier of the relevant goods. In Korea's view, the USDOC's benefit analysis in the determinations at dispute was closely related and even dependent on its "government ownership-determinative" public body findings. Consequently, Korea argues that if the public body findings of the USDOC are found to be inconsistent with the SCM Agreement, its benefit findings should be equally inconsistent.236
7.175.
Saudi Arabia claims that alternative benchmarks may be used only where it has been established that domestic prices of the good at issue are distorted; while the government's predominant role as a supplier of that good in the home market may not be used as a per se proxy for price distortion; and finally government predominance may not be found simply because SOEs sell the good and have a significant share of the home market. Moreover, in Saudi Arabia's view, the same standard for defining "government" or "public body" under Article 1.1(a)(1) must apply when determining whether the government is the predominant supplier of a good such that prices of that good are distorted and the benefit must be calculated under Article 14(d) using an alternative benchmark.237
7.176.
Turkey submits that an investigating authority may reach a finding that prices are distorted based on the government's predominant role in the market on the basis of various possible factual situations. Either because the government is a supplier of the investigated product, or because it owns and controls suppliers of the relevant product, or because it regulates the supply or price of the raw material of the product concerned; or on the basis that government entities or public bodies interfere to the domestic market price of the investigated product. Turkey considers that the overwhelming role of the state in the domestic market is a strong proxy that domestic prices fail to reflect the levels that are normally observed in market conditions free from government intervention.238

7.7.6 Evaluation by the Panel

7.7.6.1 Introduction

7.177.
The first question before the Panel is whether China has established that the USDOC found in each of the challenged determinations of market distortion that SOEs were public bodies and thus part of the government in its collective sense.
7.178.
The second question before the Panel is whether Article 14(d) allows for the resort to an external benchmark only in a situation where a government's role in providing a financial contribution is so predominant that it distorts private prices in the market.

7.7.6.2 The factual premise of China's claims

7.179.
China argues that the only "fact" that is relevant for purposes of determining whether the USDOC is acting inconsistently with Article 14(d) of the SCM Agreement is that the USDOC premised its recourse to an out-of-country benchmark in each of the 12 investigations under challenge on an impermissible equation of SOEs with the government.239 China claims that the USDOC's equation of SOEs with the government is explicitly or implicitly based on its interpretation that entities majority-owned and controlled by the government are public bodies.
7.180.
The evidence before us does not support China's assertion. Our review of the relevant Issues and Decision Memoranda reveals that it is only in a few cases that the USDOC's findings of a predominant role of the government in the relevant market, because of the market share of SOEs, refer to the SOEs as public bodies. The first such investigation is Kitchen Shelving, where the relevant text provides the following:

The GOC has reported that SOEs accounted for approximately 46.12 percent of the wire rod production in the PRC during the POI. The GOC further reported that 1.85 percent of wire rod producers were classified as "collectives." In the final determination of LWRP from the PRC, the Department affirmed its decision to treat collectives as government authorities. Therefore, we find that the GOC has direct ownership or control of at least 47.97 percent of wire rod production. While this is not a majority of the production, the substantial market share held by the SOEs shows that the government plays a predominant role in this market. (emphasis added)

7.181.
The above excerpt seems to acknowledge that at least the "collectives" were considered by the USDOC to be public bodies and thus part of the government's role in the market.
7.182.
In both OCTG240 and Seamless Pipe241, which referred to the provision of "steel rounds and billets", the USDOC relied on Adverse Facts Available to determine that certain public bodies were taken into account in assessing the government's role in the market. In both investigations, the USDOC found that:

"GOC authorities" play a significant/predominant role (respectively) in the PRC market for steel rounds and billets and the prices actually paid in the PRC for this input during the POI are not an appropriate tier one benchmark under section 351,511(a)(2)(i) of our regulations.

7.183.
The last case where it is explicit that the government's predominant role is based on the market share of SOEs on the basis that they are "authorities" (public bodies) is Solar Panels242,where the part of the determination dealing with this point states that:

The Department has preliminarily determined that all the producers of polysilicon purchased by the respondents during the POI are ‘‘authorities'' within the meaning of section 771(5)(B) of the Act. Because the GOC did not provide the production volumes for any of the polysilicon producers in the PRC, the Department cannot determine, on the basis of production volumes, what percentage of total domestic production or total domestic consumption is accounted for by the producers determined to be "authorities". Therefore, we have determined whether polysilicon consumption in the PRC is dominated by the GOC based on the number of producers that are "authorities". In addition to the 30 producers determined to be "authorities", the GOC reports it maintains an ownership or management interest in another seven, bringing to 37 the number of producers through which the GOC influences and distorts the domestic market for polysilicon, out of a total universe of 47 producers in the PRC. Therefore, we determine that the GOC is the predominant provider of polysilicon in the PRC and that its significant presence in the market distorts all transaction prices. As such, we cannot rely on domestic prices in the PRC as a ‘‘tier-one'' benchmark. For the same reasons, we determine that import prices into the PRC cannot serve as a benchmark.

7.184.
In another case, Steel Cylinders, the USDOC characterised SOEs as "government-owned providers" but it stopped short of characterising them as "authorities (public bodies)", so it is not clear whether the USDOC took them into account in its benefit analysis on the basis of a finding that they are public bodies and thus part of the government in the collective sense.243
7.185.
In addition, China's argument that the USDOC's consideration of the level of imports and of the existence of export restraints does not provide an independent basis for the USDOC's findings is also not supported by the text of all the relevant determinations. More specifically, the low level of imports provides only "further support" to an initial finding of the government's predominant role in Kitchen Shelving and Wire Strand. However, in Seamless Pipe, Print GraphicsandSteel Cylinders the USDOC seems to take this element into account on equal footing with the other reasons before reaching a distortion finding.244 Similarly, we find that the existence of certain export restraints is considered as a stand-alone factor for the market distortion finding in Wire Strand, Seamless Pipe245 while it could arguably be an additional factor confirming the government's predominant role in Kitchen ShelvingandAluminum Extrusions.
7.186.
Moreover, China's argument that the USDOC applied the same framework for evaluating whether market prices for a particular input in China are distorted is not accurate. Each determination's analysis is somewhat different from another depending on the facts before the USDOC. In our view, some determinations are based on the market share of government-owned/controlled firms in domestic production alone246, others on adverse facts available247, others on the market share of the government plus the existence of low level of imports248 and/or export restraints.249
7.187.
Furthermore, after examining also the USDOC's benefit findings on the basis of Adverse Facts Available (AFA)250, we observe that China's claim that the USDOC based its findings solely on the lack of information regarding state ownership is not accurate. For example, in Lawn Groomers, the USDOC applied AFA because the GOC failed to provide, among other information, information on domestic consumption and in Drill Pipe because the GOC failed to provide information on both domestic production and consumption.
7.188.
We would thus conclude that China has not established its claim's basic factual premise, i.e. that the USDOC has actually treated SOEs as public bodies and thus part of the government in the collective sense in the context of the benefit analysis in each challenged determination. Moreover, we have found that several other factual assertions made by China are also not supported by the evidence before us.

7.7.6.3 The appropriate interpretation of Article 14(d) of the SCM Agreement with regard to when an investigating authority can resort to an out-of-country benchmark

7.189.
We understand that China's approach regarding the reading of the Appellate Body report in US – Softwood Lumber IV is that the only circumstance under which an investigating authority can resort to an external benchmark is when the government's role as the provider of the financial contribution is so predominant that it distorts private prices in the market.
7.190.
However, in our view, both the panel and the Appellate Body in US – Softwood Lumber IV have suggested that there can be other circumstances that could justify an investigating authority's decision to use an alternative benchmark. We find support for this understanding in the Appellate Body's following statements:

[…] the Panel nevertheless acknowledged that "it will in certain situations not be possible to use in-country prices" as a benchmark, and gave two examples of such situations, neither of which is found to be present in the underlying countervailing duty investigation: (i) where the government is the only supplier of the particular goods in the country; and (ii) where the government administratively controls all of the prices for those goods in the country. In these situations, the Panel reasoned that the "only remaining possibility would appear to be the construction of some sort of a proxy for, or estimate of, the market price for the good in that country.251

7.191.
We also consider important another statement of the Appellate Body in the same dispute:

Considering that the situation of government predominance in the market, as a provider of certain goods, is the only raised on appeal by the United States, we will limit our examination to whether an investigating authority may use a benchmark other than private prices in the country of provision in that particular situation.252

7.192.
The above statements show that the Panel and the Appellate Body in US – Softwood Lumber IV did not provide an exhaustive list of the circumstances under which an authority can resort to out-of-country benchmarks. We also find that China has not explained sufficiently why the relevant Appellate Body findings in US – Softwood Lumber IV support its position.
7.193.
In addition, we see merit in the argument of the United States that a government can distort prices in other ways than through its role as a provider of the financial contribution.
7.194.
Moreover, we recall that the Appellate Body was faced with a very similar situation in US – Anti-Dumping and Countervailing Measures (China). In that case, the Appellate Body, after having found that the USDOC's findings on "financial contribution" were inconsistent with Article 1.1(a)(1) of the SCM Agreement because of an erroneous interpretation of the term "public body", upheld the USDOC's use of out-of-country benchmarks in the same determinations.253 The Appellate Body's benchmark findings did not concern whether or not SOEs are public bodies (and thus government) but rather whether the extent of SOE involvement in a marketplace supports a determination consistent with article 14(d) that prices in that market were distorted and thus the use of out-of-country benchmarks was appropriate.254
7.195.
We find that the USDOC's benchmark analysis in the presently challenged investigations is very similar to the approach followed in USDOC's determinations reviewed by the Appellate Body in US – Anti-Dumping and Countervailing Measures (China). We find it appropriate to rely on the Appellate Body's reasoning that "given the evidence regarding the government's predominant role as the supplier of the goods […] and having considered evidence of other factors, […] the USDOC could, consistently with Article 14(d) of the SCM Agreement, determine that private prices were distorted and could not be used as benchmarks for assessing the adequacy of remuneration".255
7.196.
In light of the above consideration, we conclude that apart from the fact that China has not sufficiently substantiated the factual premises of its "as applied" claims for each investigation challenged, China's claims also fail on the grounds that they rest on an erroneous interpretation of Article 14 (d) of the SCM Agreement.
7.197.
In light of the above, we find that China has not established that the USDOC acted inconsistently with the obligations of the United States under Article 14(d) or Article 1.1(b) of the SCM Agreement by rejecting in-country private prices in China as benchmarks for the relevant challenged investigations.

7.8 WHETHER THE USDOC'S DETERMINATIONS REGARDING THE SPECIFICITY OF ALLEGED INPUT SUBSIDIES ARE INCONSISTENT WITH ARTICLES 2.1 AND 2.4 OF THE SCM AGREEMENT

7.8.1 Introduction

7.198.
The Panel now turns to the claims advanced by China concerning the USDOC's specificity determinations across 12 investigations, namely Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions, Steel Cylinders and Solar Panels.256
7.199.
In each of these investigations, the USDOC made a finding of de facto specificity with respect to one or several inputs as follows: in the Pressure Pipeinvestigation, the USDOC made a finding of de facto specificity with respect to the provision of stainless steel coil; in the Line Pipe investigation, with respect to the provision of hot-rolled steel; in the Lawn Groomers investigation, with respect to the provision of hot-rolled steel; in the Kitchen Shelving investigation, with respect to the provision of wire rod; in the OCTG investigation, with respect to the provision of steel rounds; in the Wire Strand investigation, with respect to the provision of wire rod; in the Seamless Pipe investigation, with respect to the provision of steel rounds; in the Print Graphics investigation, with respect to the provision of caustic soda; in the Drill Pipe investigation, with respect to the provision of steel rounds as well as green tubes; in the Aluminum Extrusions investigation, with respect to the provision of primary aluminium; in the Steel Cylindersinvestigation, with respect to the provision of hot-rolled steel as well as seamless tube steel and billets; and in the Solar Panels investigation, with respect to the provision of polysilicon.257
7.200.
China claims that the USDOC's specificity determinations are inconsistent with Articles 2.1 and 2.4 of the SCM Agreement because the USDOC failed to make a proper determination on the basis of positive evidence that the alleged provision of inputs for less than adequate remuneration was specific to an enterprise or industry or group of enterprises or industries in the above input subsidy investigations. Furthermore, as a consequence of these inconsistencies with Articles 2.1 and 2.4, China claims that the United States acted inconsistently with Articles 10 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994.

7.8.2 Relevant provisions

7.201.
Article 2.1 of the SCM Agreement reads as follows:

2.1 In order to determine whether a subsidy, as defined in paragraph 1 of Article 1, is specific to an enterprise or industry or group of enterprises or industries (referred to in this Agreement as "certain enterprises") within the jurisdiction of the granting authority, the following principles shall apply:

(a) Where the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises, such subsidy shall be specific.

(b) Where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to. The criteria or conditions must be clearly spelled out in law, regulation, or other official documents, so as to be capable of verification.

(c) If, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme by a limited number of certain enterprises, predominant use by certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises…In applying this subparagraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation. (footnotes omitted)

7.202.
Article 2.4 of the SCM Agreement, in turn, states the following:

2.4 Any determination of specificity under the provisions of this Article shall be clearly substantiated on the basis of positive evidence.

7.8.3 Main arguments of China

7.203.
China claims that, in 14258 input subsidy investigations, the USDOC's findings of specificity are inconsistent with Articles 2.1 and 2.4 of the SCM Agreement, because the USDOC failed to make a proper determination, on the basis of positive evidence, that the alleged provision of inputs for less than adequate remuneration was specific to an enterprise or industry or group of enterprises or industries.
7.204.
In support of its claim, China presents evidence in order to show that, in each of the relevant specificity determinations, the USDOC applied one and the same "legal standard". China refers to this as an ""end-use" approach" to specificity since it is based exclusively on an examination of the end uses of the particular input that the USDOC has decided to investigate. More specifically, China submits that the USDOC's specificity determinations follow a predictable format, whereby the USDOC begins from the unstated premise that it should evaluate specificity at the level of the particular input that it decided to investigate as a potentially countervailable subsidy; during the investigation, the USDOC seeks information from the respondents concerning the types of enterprises or industries that make use of this particular input; the USDOC then invariably determines that the types of enterprises or industries that make use of the input are "limited in number"; because the USDOC finds in each instance that the types of enterprises or industries that make use of a particular input are limited in number, the USDOC concludes that the recipients of the subsidy are specific.259 In China's view, the excerpts from the USDOC's Issues and Decision Memoranda and preliminary determinations cited in Exhibit CHI-1, and provided in Exhibit CHI-122, show that the USDOC applied this legal standard.260 Further to this, China provides a short discussion of the facts in three investigations to "illustrate the consistent pattern of these determinations".261
7.205.
China claims that the end-use approach to specificity applied by the USDOC suffers from the four following flaws: (i) failure to apply the first of the "other factors" under Article 2.1(c) in light of a prior "appearance of non-specificity" resulting from the application of the principles laid down in subparagraphs (a) and (b); (ii) failure to identify a "subsidy programme"; (iii) failure to identify a "granting authority"; and (iv) failure to take into account the factors in the final sentence of Article 2.1(c).262
7.206.
China argues that the USDOC's failure to carry out the four aspects of a specificity analysis required under Article 2.1(c) is "evident" from the excerpts cited in Exhibit CHI-1 and provided in Exhibit CHI-122, since the USDOC was entirely silent with respect to these four factors.263 The USDOC's findings demonstrate, on their face, that the USDOC applied an incorrect interpretation of Article 2.1(c).264
7.207.
Firstly, China submits that the USDOC failed to apply the first of the other factors under Article 2.1(c) in light of a prior appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b), as required under Article 2.1. Indeed, China argues that an investigating authority must first consider the principles set forth under subparagraphs (a) and (b).265 This argument is primarily based on the ordinary meaning of the first sentence of Article 2.1(c), and the clause "notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b)". According to China, the use of the word "if" immediately before this clause introduces a condition that must be satisfied before an investigating authority "may" consider the other factors specified in the remainder of Article 2.1(c).266 In addition, China points to the context and framework of Article 2.1 as support for its position. In this regard, China argues that subparagraphs (a) and (b) have primacy in the overall structure of Article 2.1 and must feature in any Article 2.1 analysis, whereas subparagraph (c) is an exception that may be taken into account when the prior application of subparagraphs (a) and (b) has resulted in an appearance of non-specificity.267 China finds support for its position in prior findings by the Appellate Body, particularly in US – Anti-Dumping and Countervailing Duties (China) and US – Large Civil Aircraft (2nd complaint).268
7.208.
Secondly, China submits that the USDOC failed to identify any subsidy programme, as required under the first of the other factors in Article 2.1(c). In China's view, a subsidy programme indicates a series of subsidies that is planned. As such, there must be evidence that the subsidies at issue were "intended" and "planned" as a distinct "series of subsidies";269 that there was a "plan or outline" requiring SOEs to provide subsidised inputs to downstream producers of manufactured products.270 China seems to suggest that such a planned series of subsidies will always be evidenced by either one or several written documents, or an express act or pronouncement by the granting authority.271 In that regard, China argues that the USDOC has provided no evidentiary support for the existence of the alleged subsidy programmes, and has merely assumed their existence. In particular, China argues that the USDOC should have provided a reasoned and adequate explanation in its published determination of how the evidence on the record supported the existence of the alleged programmes. Furthermore, the USDOC failed to explain why the alleged input subsidy programmes were separate programmes, instead of a single overarching programme.
7.209.
Thirdly, China submits that the USDOC failed to identify the relevant granting authority, as required under Article 2.1. According to China, it is the proper identification of the relevant granting authority that situates the analysis of specificity within a particular governmental jurisdiction, as required by the chapeau of Article 2.1.272
7.210.
Fourthly, China submits that the USDOC failed to consider the factors in the final sentence of Article 2.1(c), namely "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 programme had been in operation", as required by that provision.273

7.8.4 Main arguments of the United States

7.211.
The United States firstly argues that China has failed to make a prima facie case with respect to its claims that the USDOC's specificity determinations were inconsistent with Article 2 of the SCM Agreement. More specifically, the United States submits that China has not discussed the elements of the USDOC's analysis on a case-by-case basis, and explained why each analysis is inconsistent with Article 2.274 Furthermore, China has not provided support for its argument that the USDOC should have disregarded evidence relating to the existence of a subsidy programme constituting the provision of an input for less than adequate remuneration.275
7.212.
In addition to the above, the United States argues that China bases its challenge regarding the USDOC's specificity determinations on four incorrect interpretations of Article 2.1.
7.213.
Firstly, the United States rejects China's claim that Article 2.1 contains any order of analysis. According to the United States, the purpose of the dependent "notwithstanding" clause in the first sentence of Article 2.1(c) is to convey that a finding of non-specificity under subparagraphs (a) or (b) does not prevent further consideration of a subsidy under (c). Furthermore, the instruction in the chapeau of Article 2.1 that certain principles apply neither explicitly nor implicitly mandates the manner in which an investigating authority should apply these principles in a specificity analysis. In addition to the above, the evidence before the USDOC unequivocally indicated that the subsidies were not specific under subparagraph (a), thus any consideration under subparagraphs (a) or (b) was unnecessary. Finally, the Appellate Body has repeatedly confirmed that there is no mandatory order of analysis in Article 2.1, and that subparagraphs (a) through (c) are principles that should be concurrently applied in a manner appropriate given the facts of any particular specificity analysis.276
7.214.
Secondly, the United States submits that Article 2.1 does not require an investigating authority to identify a formal subsidy programme. A subsidy programme can just as well be formally or informally established through its operation, a "series of activities or events".277 Furthermore, the United States argues that its investigating authority's findings on the existence of subsidy programmes were supported by the record of the investigations. The subsidy programmes evaluated under Article 2.1(c) were the use of a specific input being provided for less than adequate remuneration by a limited number of enterprises.278 Finally, in response to China's argument that the USDOC did not explain why the alleged input subsidy programmes were different programmes instead of a single overarching programme, the United States contends that there was no basis for the USDOC to assume the existence of such a scheme in the absence of any evidence on the record of such a single overarching scheme.279 The United States in addition points out that China itself refutes the existence of such a scheme.280
7.215.
Thirdly, the United States argues that it is not necessary to analyse and identify the granting authority as part of its specificity analysis under Article 2, when the granting authority has already been identified as part of the financial contribution analysis under Article 1.1. However, the United States clarified in the course of the proceedings that it is not claiming that the SOEs are the granting authorities.281 The United States further argued that the relevant inquiry for the purposes of the specificity analysis is what jurisdiction the subsidy is available in, and pointed out that, in each case, the USDOC considered the jurisdiction within which it was conducting the specificity analysis to be China.282
7.216.
Fourthly, the United States argues that a requirement to "take into account" the two factors in the last sentence of Article 2.1(c) does not mean that an investigating authority must explicitly analyse the two factors in every investigation. No such analysis is required where there is no reason to believe that either factor would alter the specificity analysis.283

7.8.5 Main arguments of third parties

7.217.
Canada submits that Article 2.1 of the SCM Agreement sets out several principles that assist in determining whether a subsidy is specific, but does not require a specific order of analysis. In some cases, certain principles may not be relevant to the specificity analysis at all. In the absence of any allegation that there were formal limitations or objective factors relevant to the specificity analysis, the facts of the dispute between China and the United States seem to exemplify a situation where an analysis under subparagraphs (a) and (b) of Article 2.1 is not required.284 Furthermore, Canada argues that the identification of the granting authority may not be a strict necessity when conducting a specificity analysis. Canada recalls the Appellate Body's statement in US – Large Civil Aircraft (2nd complaint) that the analysis under Article 2.1 focuses on ascertaining whether access to the subsidy in question is limited to a particular class of eligible recipients. Moreover, with regard to the application of the criteria in the last sentence of Article 2.1(c), Canada argues that there should not be an obligation on an investigating authority to mechanically address the state of diversification of the economy. Citing the panel report in US – Softwood Lumber IV, Canada argues that where it is well-established that an economy is highly diversified, this fact is likely to be taken into account by an investigating authority in its analysis of de facto specificity.285
7.218.
The European Union notes that in US – Anti-Dumping and Countervailing Duties (China), the Appellate Body statedthat the principles in Article 2.1 of the SCM Agreement are to be applied concurrently, although it may not be necessary to consider all sub-paragraphs in all cases, and caution should be exercised when applying one sub-paragraph if the potential for the application of the others is warranted on the facts of the case. The Appellate Body confirmed this in US – Large Civil Aircraft (2nd complaint). Therefore, the Panel should consider the circumstances in which it is permissible to resort directly to sub-paragraph (c). Furthermore, it would be for China to provide evidence that different public bodies in different industries provide diverse inputs as part of a single subsidy "programme".286 With regard to the identification of a subsidy programme more specifically, the European Union notes that if a subsidy is granted to all firms in a particular sector or industry, or using a particular product, then each of the subsidies in question is de jure specific. In addition, there is reason to believe that, as a matter of fact, the Member in question is operating a subsidy programme, even if it is unwritten or if the text of the relevant measure is undisclosed.287
7.219.
Saudi Arabia submits that investigating authorities must take into account the level of diversification of economic activities in the exporting country when determining de facto specificity under Article 2.1(c) of the SCM Agreement.288

7.8.6 Evaluation by the Panel

7.220.
In essence, China argues that the USDOC applied one and the same legal standard289, namely an end-use approach, in making its specificity findings in each of the challenged investigations, and that this legal standard is contrary to Articles 2.1 and 2.4 of the SCM Agreement in the following four specific respects: (i) failure to apply the first of the "other factors" under Article 2.1(c) in light of a prior "appearance of non-specificity" resulting from the application of the principles laid down in subparagraphs (a) and (b); (ii) failure to identify a "subsidy programme"; (iii) failure to identify a "granting authority"; and (iv) failure to take into account the factors in the final sentence of Article 2.1(c).290
7.221.
We consider the application of what China calls an end-use approach to be fairly evident from the excerpts cited in Exhibit CHI-1 and provided in Exhibit CHI-122, where the USDOC's specificity determination is explicitly based on the finding that the industries using a specific input are limited in number.291 While this is somewhat less evident in the investigations where the USDOC's specificity determinations are based on "facts available"292, the United States itself seems to suggest that the USDOC followed one and the same approach across all of the challenged investigations.293
7.222.
Furthermore, we consider it to be quite evident on the face of the evidence provided by China that this end-use approach does not apply Article 2.1 of the SCM Agreement in the manner interpreted by China with regard to the application of the subparagraphs of Article 2.1, the identification of a "subsidy programme", and the two factors in the final sentence of Article 2.1(c).
7.223.
As China challenges four specific aspects of what it calls the end-use approach applied by the USDOC in its specificity determinations, the Panel will address each of these aspects in turn.294

a. Application of the subparagraphs of Article 2.1 of the SCM Agreement

7.224.
One aspect of China's claim under Article 2 of the SCM Agreement relates to the application of the subparagraphs of Article 2.1. In terms of the facts, there seems to be no disagreement between the parties that the USDOC did not conduct a specificity analysis under subparagraphs (a) and (b) in the challenged investigations, but merely under subparagraph (c).295 Therefore, the question before the Panel is whether a correct application of Article 2.1(c) must always follow the application of subparagraphs (a) and (b), or whether it may, in certain circumstances, be permissible for an investigating authority to proceed directly to a specificity analysis under Article 2.1(c). In particular, we note that the parties advance somewhat differing interpretations of statements made by the Appellate Body regarding the relationship between each of the subparagraphs of Article 2.1 of the SCM Agreement. The Panel will address these below.
7.225.
With regard to the ordinary meaning of the first sentence of Article 2.1(c), the parties disagree on what the application of "other factors" is conditional upon. According to China, the ordinary meaning of the first sentence of Article 2.1(c) clearly conditions any evaluation of "other factors" under that provision on a prior "appearance of non-specificity" resulting from the application of the principles laid down in subparagraphs (a) and (b).296 The United States, however, takes the view that the ordinary meaning of the first sentence of Article 2.1(c) indicates that the evaluation of "other factors" is conditional upon the existence of "reasons to believe that the subsidy may in fact be specific", and that a finding of non-specificity under subparagraphs (a) or (b) does not prevent further consideration under subparagraph (c).297
7.226.
We do not agree with the interpretation advanced by China. The word "if" in Article 2.1(c) refers to the clause "there are reasons to believe that the subsidy may in fact be specific". As such, Article 2.1(c) conditions the possibility to consider other factors upon the existence of "reasons to believe that the subsidy may in fact be specific", notwithstanding any appearance of non-specificity resulting from the application of subparagraphs (a) and (b). The Appellate Body has indeed clarified that "Article 2.1(c) proceeds where "there are reasons to believe that the subsidy may in fact be specific"", and that such reasons "relate to the factors set in subparagraph (c)".298 However, we note that the clause "reasons to believe that the subsidy may in fact be specific" is not the focus of China's present claim.299
7.227.
The fact that the clause "notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b)" is placed between "if" and "there are reasons to believe that the subsidy may in fact be specific" does not mean that "if" relates to what comes directly after. The "notwithstanding …" clause could equally have been placed in last position, as follows: "if there are reasons to believe that the subsidy may in fact be specific, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b), other factors may be considered". This is in fact what has been done in the Spanish version of Article 2.1(c): "Si hay razones para creer que la subvención puede en realidad ser específica aun cuando de la aplicación de los principios enunciados en los apartados a) y b) resulte una apariencia de no especificidad, podrán considerarse otros factores".300 As such, the clause "notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b)" signifies that the principles embodied in subparagraph (c) can be applied even if the application of the principles in subparagraphs (a) and (b) indicates an appearance of non-specificity, provided there are "reasons to believe that the subsidy may in fact be specific".
7.228.
In terms of the context of the first sentence of Article 2.1(c), China considers that subparagraphs (a) and (b) have primacy and must feature in any concurrent application of Article 2.1, while subparagraph (c) is of the nature of an exception that may be taken into account if the application of subparagraphs (a) and (b) leads to an appearance of non-specificity. According to the United States, the reference in the chapeau of Article 2.1 to the fact that certain "principles … apply" to a specificity analysis neither implicitly nor explicitly mandates the manner in which an investigating authority should apply the principles in any particular factual circumstance. In this regard, we note that China's position is linked to its views on what can amount to a "subsidy programme". In particular, China explains that it considers subparagraphs (a) and (b) to have primacy within the framework of Article 2.1 since subsidies will normally be administered pursuant to legislation, and it therefore makes sense for an evaluation of specificity to start with any written instrument.301 Indeed, China takes the position that an examination of the principles in subparagraphs (a) and (b) would have led the USDOC to realise that there is no legislation or other type of official measure providing for the alleged subsidies, and no programme.302
7.229.
It is explicit in the chapeau of Article 2.1 that subparagraphs (a), (b) and (c) set out "principles", as opposed to "rules", as highlighted by the Appellate Body.303 The Appellate Body has furthermore specified that these principles must be applied "concurrently"304, meaning "running together … as parallel lines"; "going on side by side"; "occurring together"; "existing or arising together"; "conjoint, associated".305 The Panel agrees with China to the extent that the subparagraphs of Article 2.1 follow a certain logical structure, and this has also been recognised by the Appellate Body: "the structure of Article 2.1 suggests a sequence for their application in which application of the principles in subparagraphs (a) and (b) precedes the application of the principle in subparagraph (c)".306 However, the Panel does not consider this logical structure in Article 2.1 to translate into procedural rules that investigating authorities must follow in each specificity analysis under that provision. This is in line with a certain degree of flexibility recognised by the Appellate Body in the application of the principles in Article 2.1. Indeed, the Appellate Body has stated that the structure of Article 2.1 indicates that the application of subparagraph (c) will "normally" follow the application of subparagraphs (a) and (b).307 The application of these principles must take into account the "various legal and factual aspects of a subsidy in any given case", as well as the "nature and content of measures challenged in a particular case" when applying these principles, and "there may be instances in which the evidence under consideration unequivocally indicates specificity or non-specificity by reason of law, or by reason of fact, under one of the subparagraphs, and that in such circumstances further consideration under the other subparagraphs of Article 2.1 may be unnecessary".308
7.230.
In our view, the set of facts before us in this dispute embody such circumstances. Indeed, it is undisputed that the USDOC's findings are not based on an explicit limitation of access by the granting authority or the legislation pursuant to which the granting authority operates; nor are they based on criteria or conditions that were spelled out in law, regulation, or other official document. It was the unwritten nature of the subsidies that the USDOC found to exist that led it to consider "other factors" under subparagraph (c).
7.231.
Therefore, with respect to China's claim on the application of the subparagraphs of Article 2.1 of the SCM Agreement, the Panel finds that, given the nature of the subsidies that the USDOC found to exist, the USDOC did not act inconsistently with Article 2.1 by analysing specificity exclusively under Article 2.1(c).

b. Identification of a subsidy programme

7.232.
Turning to another, related aspect of China's claim, we note at the outset that it is uncontested that the USDOC's challenged specificity determinations were made under the first of the "other factors" of Article 2.1(c) of the SCM Agreement.309
7.233.
The parties appear to agree that the analysis of specificity under the first of the "other factors" of Article 2.1(c), namely the "use of a subsidy programme by a limited number of certain enterprises", requires some form of identificationof a "subsidy programme". However, the parties essentially disagree on two closely-related aspects, namely what amounts to a "subsidy programme" and how a "subsidy programme" can be identified and evidenced, and whether the USDOC identified and evidenced a "subsidy programme" in each challenged investigation.
7.234.
China suggests that it would be highly unusual for there to be no written evidence of a subsidy programme, and even in the unusual case in which there is no written evidence, the subsidy programme would be reflected in express pronouncements by the granting authority.310 With regard to how the USDOC actually identified subsidy programmes in the investigations at issue, China states that the USDOC has merely referred in its determinations to input-specific programmes, such as the "provision of wire rod for LTAR program".311 However, China argues that this is not sufficient to properly identify a subsidy programme, since the USDOC has failed to provide evidentiary supportforthe existence of these alleged programmes.312
7.235.
The United States takes the view that a subsidy programme can be identified and evidenced through the operation of the subsidy itself and its recipients313, by the stream of subsidies to "certain enterprises" using such a subsidy programme.314 The United States claims that in Aluminum Extrusions, for example, the application alleged, and contained sufficient evidence for purposes of initiation, that primary aluminium was being provided by SOEs to primary aluminium consumers in China for less than adequate remuneration, and that the provision of the input was specific to a limited number of users.315