"To examine, in the light of the relevant provisions of the covered agreements cited by Canada in document WT/DS194/2, the matter referred to the DSB by Canada in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."
(i) Section 771(5) of the Tariff Act of 193011("Tariff Act"), as amended by the Uruguay Round Agreements Act, which is the provision of US countervailing duty law that defines the term "countervailable subsidy";
(ii) portions of the Statement of Administrative Action12 accompanying the URAA interpreting Section 771(5) with respect to export restraints;
(iii) portions of the US Department of Commerce Regulations13 (in particular the "Preamble" thereto) interpreting and implementing Section 771(5) and the SAA with respect to export restraints; and
(iv) the ongoing practice of the DOC of treating an export restraint as a "financial contribution" within the meaning of Article 1.1 of the SCM Agreement.
(i) are inconsistent with Article 1.1 of the SCM Agreement and, because they require the imposition of countervailing duties against practices that are not subsidies within the meaning of Article 1.1, are inconsistent with Article 10 (as well as Articles 11, 17, and 19, as they relate to the requirements of Article 10) and 32.1 of the SCM Agreement; and
(ii) for the same reasons, also violate obligations of the United States under both Article XVI:4 of the WTO Agreement and Article 32.5 of the SCM Agreement to ensure conformity of its laws, regulations, and administrative procedures with its obligations under the WTO agreements.
(i) that none of the measures identified by Canada (either in its request for a panel or in its First Written Submission) are inconsistent with Articles 1.1, 10, 11, 17, 19, or 32.1 of the SCM Agreement; and
(ii) that the United States has not failed to ensure that its laws, regulations, and administrative procedures are in conformity with its obligations under Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.
(b) That US "practice" – whether past, present, or future – does not constitute a measure properly before this Panel;
(c) That, because Canada did not include US "practice" under Section 771(5) in its request for consultations, the parties did not actually consult on US "practice", and Canada's panel request fails to adequately identify the US "practice" in question, Canada's claims regarding US "practice" fail to conform to Articles 4.7 and 6.2 of the DSU, and are not properly before this Panel; and
(d) That, because Canada's panel request did not identify the SAA or the Preamble as measures, and because, in any event, neither the SAA nor the Preamble is a measure, Canada's inclusion of the SAA and the Preamble as separate measures in its First Written Submission fails to conform to Article 6.2 of the DSU, and Canada's claims regarding the SAA and the Preamble are not within the Panel's terms of reference.
"We do not believe, however, that Articles 4 and 6 of the DSU … require a precise and exact identity between the specific measures that were the subject of consultations and the specific measures identified in the request for the establishment of a panel.…As stated by the Panel, "[o]ne purpose of consultations … is to 'clarify the facts of the situation', and it can be expected that information obtained during the course of consultations may enable the complainant to focus the scope of the matter with respect to which it seeks establishment of a panel."
"We also will wish to inquire as to the sources of United States … practice, if any, that are relevant to the Department of Commerce's treatment of an alleged export restraint under U.S. countervailing duty law in addition to the Uruguay Round Agreements Act (URAA), the Statement of Administrative Action accompanying the URAA and the Department of Commerce's (DOC) Explanation of its Final Rule."24 (emphasis added)
[I]n the event milk were not directly provided by Canada's governments or their agencies under Classes 5(d) and (e), in our view, it is at least indirectly provided through government-mandated schemes. For there to be such schemes we do not consider it necessary, as argued by Canada, that the federal or provincial governments specifically direct a certain outcome or course of action to be achieved or taken by the CDC, the provincial marketing boards or the CMSMC. (emphasis added).
Industry targeting consists of a government plan or scheme of coordinated measures to assist specific export-oriented industries. While some targeting measures are clearly covered by subsidies disciplines, the application of the Code to other measures is unclear. As a result, there has been extensive debate in the Subsidies Code Committee over whether government "targeting" practices fall within the internationally-accepted definition of a subsidy. To date, however, there has been no agreement as to whether industrial policy-type measures that result in the indirect channelling of resources to a specific industry or sector constitute countervailable subsidies or should be addressed under some other provision of GATT. (emphasis added).
According to the United States, this paragraph sets out the common understanding that there was no agreement as to whether government targeting practices constituted countervailable subsidies, as well as the US position that certain components of "targeting" were already covered by subsidies disciplines.
The United States believes that the Uruguay Round negotiations should clarify what remedies are available for the trade distortions and economic damage associated with targeting and other industrial policy measures that affect trade. The United States is concerned that the international trade rules do not adequately address the trade damage that can result from industrial targeting programs.
[The United States ] found that among the policies most frequently used were the following: protection of the home market, promotion or toleration of cartels, discriminatory or preferential government procurement practices, direction of capital (government to private) to certain enterprises, export restrictions, and manipulation of the user market to reduce the risk associated with product development and commercialization.
"The infrastructure provided at Kwangyang Bay was not provided for the good of the general public;...therefore, it is not "general infrastructure."... Therefore, the infrastructure at Kwangyang Bay is countervailable. Indeed, the "Explanation of the Final Rules" (the Preamble) to the new CVD regulations... specifically cites to the infrastructure provided at Kwangyang Bay in Steel Products From Korea as an example of industrial parks, roads, rail lines, and ports that do not constitute 'general infrastructure,' and which are countervailable.... See CVD Final Rules, 63 FR at 65378-79."73
"More specifically, the United States alleges that when faced with an export restraint, a domestic producer has only one economic choice and that is to sell the restrained good to domestic purchasers of that good. From an economic perspective, this is simply incorrect. It does not inevitably follow that an export restraint will force a domestic producer of the restrained good to sell into the domestic market."91