DS: United States — Measures Treating Export Restraints as Subsidies

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Key facts

 

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Summary of the dispute to date

The summary below was up-to-date at

Consultations

Complaint by Canada.

On 19 May 2000, Canada requested consultations with the US regarding certain US measures that treat a restraint on exports of a product as a subsidy to other products made using or incorporating the restricted product if the domestic price of the restricted product is affected by the restraint. The measures at issue included provisions of the Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA) (H.R. 5110, H.R. Doc. 316, Vol. 1, 103d Cong., 2d Sess., 656, in particular at 925-926 (1994)) and the Explanation of the Final Rules, US Department of Commerce, Countervailing Duties, Final Rule (63 Federal Register 65,348 at 65,349-51 (Nov. 25, 1998)) interpreting section 771(5) of the Tariff Act of 1930 (19 USC. § 1677(5)), as amended by the URAA. Canada’s claims were as follows:

• Canada considered that these measures were inconsistent with US obligations under Articles 1.1, 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 because these measures provide that the US will impose countervailing duties against practices that are not subsidies within the meaning of Article 1.1 of the SCM Agreement.
   
• Canada also considered that the US has failed to ensure that its laws, regulations and administrative procedures are in conformity with its WTO obligations as required by Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.

On 24 July 2000, Canada requested the establishment of a panel. At its meeting on 4 August 2000, the DSB deferred the establishment of a panel.

 

Panel and Appellate Body proceedings

Further to a second request to establish a panel by Canada, the DSB established a panel at its meeting on 11 September 2000. Australia, the EC and India reserved their third-party rights. On 23 October 2000, the Panel was composed. The Panel circulated its report on 29 June 2001. The Panel concluded that:

• an export restraint as defined in this dispute cannot constitute government-entrusted or government-directed provision of goods in the sense of subparagraph (iv) and hence does not constitute a financial contribution in the sense of Article 1.1(a) of the SCM Agreement; and
   
• Section 771(5)(B)(iii) read in light of the SAA and the Preamble to the US CVD Regulations is not inconsistent with Article 1.1 of the SCM Agreement by “requir[ing] the imposition of countervailing duties against practices that are not subsidies within the meaning of Article 1.1”.
   
• with respect to those of Canada’s claims not addressed above, the Panel concluded that in light of considerations of judicial economy, it was neither necessary nor appropriate to make findings thereon. The Panel therefore made no recommendations with respect to the US’ obligations under the SCM and WTO Agreements.

The DSB adopted the Panel Report on 23 August 2001.