1. US-Countervailing Measures (China)
Jeremy Lutes
Marouen Mansour
Miroslava Mircheva

2. Context of the case
This dispute brought by the government of China (“China”) is one of the largest and longest-running in the history of the WTO. (Still Pending)
China claims that the challenge measures are inconsistent with:
Article VI of the GATT 1994;  
Articles 1.1, 2, 11.1, 11.2, 11.3, 12.7 and 14(d) of the SCM Agreement; and  
Article 15 of the Protocol of Accession of China.

3. Context of the case cont.
China advances claims with respect to 97 individual alleged breaches of various provisions of the SCM Agreement
These alleged breaches concern 17 different CVD investigations conducted since 2007 by the US Department of Commerce into Chinese products imported into the US.
The Chinese products concerned by these investigations consist of solar panels; wind towers; thermal paper; coated paper; tow behind lawn groomers; kitchen shelving; steel sinks; citric acid; magnesia carbon bricks; pressure pipe; line pipe; seamless pipe; steel cylinders; drill pipe; oil country tubular goods; wire strand; and aluminum extrusions.
China makes sweeping factual generalizations regarding the various investigations and fails to adequately link its broad legal arguments with the specific facts of the determinations.

4. History of the case
On 25 May 2012, China requested consultations with the US concerning the imposition of CVD measures by the US on certain products from China. 
On 20 August 2012, China requested the establishment of a panel. At its meeting on 31 August 2012, the DSB deferred the establishment of a panel.
At its meeting on 28 September 2012, the DSB established a panel. Australia, Brazil, Canada, the European Union, India, Japan, Korea, Norway, the Russian Federation, Turkey and Viet Nam reserved their third party rights. Subsequently, Saudi Arabia reserved its third party rights.
On 14 November 2012, China requested the Director-General to determine the composition of the panel. On 26 November 2012, the Director-General composed the panel.

5. Panel and Appellate Body proceedings
The panel circulated its report on July 14, 2014.  The panel found that Commerce’s determinations in 12 investigations that certain state-owned enterprises were “public bodies”  were inconsistent with Article 1.1(a)(1) of the SCM Agreement. 
On August 22, 2014, China appealed the panel’s findings regarding Commerce’s calculation of benchmarks, specificity determinations, and use of facts available.
On August 27, 2014, the United States cross-appealed the panel’s finding that a section of China’s panel request setting forth claims related to Commerce’s use of facts available was within the panel’s terms of reference.
The Appellate Body held a hearing in Geneva on October 16-17, 2014. 
On December 18, 2014, the Appellate Body circulated its report.
16 January 2015, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report

6. Reasonable period of time & Implementation of adopted reports & Compliance proceedings
 On 13 February 2015, the United States informed the DSB that it intended to implement the DSB's recommendations and rulings in a manner that respects its WTO obligations, and that it would need a reasonable period of time to do so. 
On 26 June 2015, China requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. 
On 9 October 2015, the Award of the Arbitrator was circulated to Members. The Arbitrator determined the reasonable period of time as 14 months, 16 days. The reasonable period of time will thus expire on 1 April 2016.
On 15 April 2016, China and the United States informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.
 On 8 July 2016, China requested, pursuant to Article 21.5 of the DSU, the establishment of a compliance panel.
15 November 2016, the Chairperson of the compliance panel informed the DSB that the compliance panel expected to issue its final report to the parties in the second half of 2017.

7. Brief Review of the Panel
Background:
In this dispute, China/CVD2 (DS437), China alleged that the United States had acted inconsistently with the SCM Agreement in 17 countervailing duty investigations with respect to Commerce’s determinations on public bodies, applications of facts available, calculations of benchmarks, determinations of specificity, and decisions to initiate investigations

8. The panel Findings
On Facts Available, China brought 48 challenges under Article 12.7 of the SCM Agreement to Commerce’s use of “facts available” when making findings of facts in the face of non-cooperation by respondent companies or China. The panel found that China had not established that the United States had acted inconsistently with the Agreement in 42 of those instances, and declined to make findings in the remaining six, finding that those claims were outside its terms of reference.
On Benchmarks, China brought claims on 12 investigations. The panel found that China failed to establish that Commerce acted inconsistently with the obligations of Article 14(d) on all 12 investigations.
On Specificity, with respect to 12 investigations, China brought four claims against Commerce’s determinations that the subsidies at issue were specific under Article 2.1 of the SCM Agreement. The United States prevailed on three of those claims, and China prevailed on one.
On Initiations, China brought 20 challenges to Commerce’s initiation of investigations of particular subsidies under Article 11 of the SCM Agreement, and the panel found that the China had not established that the United States had acted inconsistently with the Agreement in the challenges related to public bodies and specificity.
On Public Bodies, the Panel found that, in 12 investigations, Commerce’s determinations that certain SOEs were public bodies were inconsistent with Article 1.1(a)(1) of the SCM Agreement.
On Regional Specificity, China brought seven challenges to Commerce’s findings that certain subsidies were regionally specific under Article 2.2 of the SCM Agreement, and the panel found that China had established that Commerce acted inconsistently with the Agreement in six of those investigations.
On Export Restraints, China brought claims on two investigations. The panel found that China established that Commerce acted inconsistently with Article 11.3 when it initiated these two investigations without adequate evidence of the existence of a subsidy.

9. China’s Appeal & U.S. Cross appeal
On August 22, 2014, China appealed the panel’s findings regarding Commerce’s calculation of benchmarks, specificity determinations, and use of facts available. 
On August 27, 2014, the United States cross-appealed the panel’s finding that a section of China’s panel request setting forth claims related to Commerce’s use of facts available was within the panel’s terms of reference. 
The Appellate Body held a hearing in Geneva on October 16-17, 2014. 

10. Key Articles in Appellate body
Article 12: (Evidence): 12.7: In cases in which any interested Member or interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available.
Article 14: (Calculation of the Amount of a Subsidy in Terms of the Benefit to the Recipient): 14(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).
Article 2: Specificity: 2.1: 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
Article 6: Serious Prejudice: 6.2: Notwithstanding the provisions of paragraph 1, serious prejudice shall not be found if the subsidizing Member demonstrates that the subsidy in question has not resulted in any of the effects enumerated in paragraph 3. 

11. Issues Raised in the Appeal
The Panel erred in finding that China's panel request, as it relates to its claims under Article 12.7 of the SCM Agreement, is not inconsistent with Article 6.2 of the DSU
The Panel erred in finding that China had failed to establish that the USDOC acted inconsistently with the obligations of the United States under Article 14(d) and Article 1.1(b) of the SCM Agreement
The Panel erred in finding that the USDOC did not act inconsistently with the obligations of the United States under Article 2.1 of the SCM Agreement by analyzing specificity exclusively under Article 2.1
The Panel erred in rejecting China's claims that the USDOC acted inconsistently with the obligations of the United States under Article 2.1(c) of the SCM Agreement by failing to identify a "subsidy programme
The Panel erred in rejecting China's claims that the USDOC acted inconsistently with the obligations of the United States under Article 2.1 of the SCM Agreement by failing to identify a granting authority
The Panel failed to make an objective assessment of the matter before it and therefore acted inconsistently with Article 11 of the DSU.

12. Appellate Body report
On benchmarks, the Appellate Body reversed the Panel and found that Commerce’s determination to use out-of-country benchmarks in four CVD investigations was inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement.
On specificity, the Appellate Body rejected one of China’s claims with respect to the order of analysis in de facto specificity determinations. However, the Appellate Body reversed the Panel’s findings that Commerce did not act inconsistently with Article 2.1 when it failed to identify the “jurisdiction of the granting authority” and “subsidy programme” before finding the subsidy specific.
On facts available, The Appellate Body accepted China’s claim that the Panel’s findings regarding facts available are inconsistent with Article 11 of the DSU, and reversed the Panel’s finding that Commerce’s application of facts available was not inconsistent with Article 12.7 of the SCM Agreement. Lastly, the Appellate Body rejected the U.S. appeal of the Panel’s finding that China’s panel request failed to meet the requirement of Article 6.2 of the DSU to present an adequate summary of the legal basis its claim sufficient to present the problem clearly.

13. Adoption of Panel Recommendations
Majority state-owned enterprises do not constitute “public bodies” as defined under SCM article 1.1(a)(1) in 12 cases.
USDOC failed to prove the existence of an unwritten subsidy program. (SCM 2.1(c))
USDOC failed to prove jurisdiction of granting authority.
For CVDs involving solar panels, print graphics, various types of pipe, kitchen shelving, lawn groomers, steel cylinders and aluminum extrusions. For thermal paper, citric acid, OCTG, wire strand, seamless and line pipe.

14. Appellate Body Findings
Inconsistent Measures
Consistent Measures
USDOC’s rejection of Chinese market prices in its benefits analysis in 4 CDV cases due to market distortion. (SCM 1.1(b) and 14(d)))
USDOC specificity of benefit analysis did not need to be conducted in sequential order of subparagraphs. (SCM 2.1 (a)(b)(c))

15. Actions Taken January 16th DSB adopts Appellate Body report.
February 13th 2015 the U.S. stated that it would respect the DSB’s recommendations.
After U.S. and China failed to agree on reasonable timeframe to enact recommendations, China filed for binding arbitration to set time limit.
On October 9th, 2016 time set at 14 months 16 days. Expiration April 1st, 2016.

16. Further Actions
By April 16th 2016 China called for compliance panel be established to review U.S.’ failure to bring accord with DSB’s recommendations.
The U.S. filed first report under 21.5 panel proceedings initiated by China on February 6th, 2017.
Final decision expected in late 2017.

17. Arguments of U.S.
China’s attempt to redefine state-owned enterprises under a narrow definition is unwarranted since original panel disagreed.
U.S. conducted thorough analysis proving that Chinese prices are not market determined.
Revised determinations on CVDs using 129 proceedings from Uruguay round.
Stopped using “rebuttal policy” in regards to specific CVD (Kitchen Shelves)

18. Resolution and Conclusions
Case will go to a panel for decision.
U.S. is right to challenge China on issue of state-owned enterprises. It has shown sufficient proof of Chinese Government influence in these instances, and in the overall in the economy.
U.S. has conducted thorough market research to re-evaluate the CVDs under issue.

19. Thank you!
Team 7