TWN
Info Service on WTO and Trade Issues (Dec14/07)
23 December 2014
Third World Network
WTO
affirms ruling in US-China CVD dispute
Published in SUNS #7942 dated 22 December 2014
Geneva, 19 Dec (Kanaga Raja) -- The Appellate Body (AB) of the World
Trade Organisation (WTO) has upheld an earlier panel ruling that found
that the United States had acted inconsistently with certain provisions
of the Subsidies and Countervailing Measures (SCM) Agreement over
countervailing duty (CVD) measures that it imposed on certain Chinese
products.
In the ruling issued on Thursday, the AB recommended that the Dispute
Settlement Body (DSB) request the United States to bring its measures
found in its Report, and in the Panel Report as modified by the AB's
Report, to be inconsistent with its obligations under the SCM Agreement
into conformity with its obligations under that Agreement.
In its ruling, the AB reversed a number of the panel's findings, and
declined to rule on some of China's claims.
[In a post at the IELP blog, Sungjoon Cho, a trade law academic, has
commented that this AB ruling, and its two important reversals of
the Panel's findings (one on ‘de facto specificity' in paras 4.149
and 4.150 of the Panel's report, and the second on ‘adverse facts
available', in paras 4.195 and 4.196 of the same report) are setting
"New (Higher) Standards in the Countervailing Measure Review".
Prof. Sungjoon Cho is an academic teaching international economic
law at the IIT Chicago-Kent faculty.
["All in all," Cho says, "the AB has criticised the
panel for not doing its own (thorough) analyses and/or relying too
much on the investigating authority's determinations. The obverse
side of this precedent might be that it would shrink the government's
discretion in the domestic subsidy investigation. If a future panel
puts a magnifying glass on the investigating authority's determinations
on these issues, in accordance with this new precedent, the investigating
authority might feel pressured in exercising its discretion, even
though its own court supports such exercise." - SUNS]
In a related development, the DSB adopted on Friday the AB and panel
reports in the dispute raised by India over countervailing measures
imposed by the US on certain hot-rolled carbon steel flat products
from India. The AB had largely upheld the panel ruling and recommended
that the DSB request the US to bring its measures into conformity
with the SCM Agreement.
In the US-China dispute, both the parties had each appealed certain
issues of law and legal interpretations developed in the Panel report.
The dispute concerned countervailing duties imposed by the United
States following 17 countervailing duty investigations initiated by
the US Department of Commerce (USDOC) between 2007 and 2012.
The 17 countervailing duty investigations at issue in this dispute
concern the following products: thermal paper, pressure pipe, line
pipe, citric acid, lawn groomers, kitchen shelving, oil country tubular
goods (OCTG), wire strand, magnesia bricks, seamless pipe, print graphics,
drill pipe, aluminum extrusions, steel cylinders, solar panels, wind
towers, and steel sinks.
The AB first examined the United States' claim that China's panel
request does not provide "a brief summary of the legal basis
of the complaint" as it fails to "plainly connect"
the "facts available" obligation in Article 12.7 of the
SCM Agreement to the 22 investigations listed in the panel request.
On this issue, the AB upheld the Panel's 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 (Dispute
Settlement Understanding) and that China's claims under Article 12.7
were thus within the Panel's terms of reference.
APPELLATE BODY'S ANALYSIS ON THE ISSUE OF BENEFIT
The AB addressed China's appeal of the Panel's findings concerning
the rejection by the USDOC, in the countervailing duty investigations
at issue, of in-country private prices in China as benchmarks for
calculating the benefit conferred by the provision of inputs to the
companies under investigation.
The AB noted that China seeks review of the Panel's interpretation
and application of Article 14(d) and Article 1.1(b) of the SCM Agreement
in relation to the USDOC's decision, in the investigations at issue,
to reject in-country private prices in China as benchmarks on the
grounds that such prices were distorted.
China contends that the legal standard for determining what constitutes
"government" - and, in particular, a "public body"
- for purposes of the financial contribution inquiry under Article
1.1(a)(1)(iii) of the SCM Agreement should also apply when determining
what constitutes "government" for purposes of the selection
of a benefit benchmark under Article 14(d) of the SCM Agreement.
The AB said that in conducting the necessary analysis to determine
whether in-country prices are distorted, an investigating authority
may be called upon to examine various aspects of the relevant market.
Although a government's predominant role as a supplier in the market
makes it likely that prices will be distorted, the distortion of in-country
prices must be established on the basis of the particular facts underlying
each countervailing duty investigation, it added.
While the AB agreed with China that there is a single definition of
the term "government" for purposes of the SCM Agreement,
it does not follow that, in determining the appropriate benefit benchmark
under Article 14(d), investigating authorities are required to limit
their analysis to an examination of the role played in the market
by government-related entities that have been properly found to be
government in the narrow sense or public bodies.
It said that the pricing behaviour of entities operating in the market,
including government-related entities that have not been found to
be public bodies, may be relevant to examine whether the government
acts through such government-related entities so as to exert market
power and distort in-country prices.
Therefore, it added, the selection of a benchmark for the purposes
of Article 14(d) cannot, at the outset, exclude consideration of in-country
prices from any particular source, including government-related prices
other than the financial contribution at issue.
This is because the issue of "whether a price may be relied upon
for benchmarking purposes under Article 14(d) is not a function of
its source, but rather, whether it is a market-determined price reflective
of prevailing market conditions in the country of provision."
As a consequence, prices of government-related entities other than
those of the entity providing the financial contribution at issue
need to be examined to determine whether they are market determined
and can therefore form part of a proper benchmark.
In sum, the AB rejected China's argument that recourse to an alternative
benchmark is inconsistent with Article 14(d) if it is established
that the SOEs (State-owned enterprises) at issue were equated with
government without meeting the legal standard articulated by the Appellate
Body in US - Anti-Dumping and Countervailing Duties (China) for purposes
of determining whether an entity is a public body.
Instead of hinging on whether a government-owned entity has been properly
found to constitute a public body, a finding of inconsistency with
Article 14(d) in the selection of a benefit benchmark depends on whether
or not the investigating authority properly evaluated whether the
prices proposed as the benefit benchmark are market determined such
that they can be used to establish whether the remuneration is less
than adequate.
"Thus, while we agree with China that there is a single definition
of the term ‘government' for purposes of the SCM Agreement, it does
not follow that, in determining the appropriate benefit benchmark
under Article 14(d), investigating authorities are required to limit
their analysis to an examination of the role played in the market
by government-related entities that have been properly found to constitute
government in the narrow sense or public bodies," said the AB.
China argues that the Panel acted inconsistently with Article 11 of
the DSU in finding that China had failed to establish the "factual
premise" of its claims, i. e. that the USDOC actually treated
SOEs as public bodies and thus as part of the government in the collective
sense in the context of the benefit analysis in the OCTG, Solar Panels,
Pressure Pipe, and Line Pipe countervailing duty investigations.
The AB said that it does not agree with China's interpretation of
Article 14(d). In order to establish a prima facie case of inconsistency
under Article 14(d), it is neither necessary nor sufficient to demonstrate
that the SOEs at issue were equated with government without meeting
the legal standard for a finding that such entities constitute "public
bodies" articulated by the Appellate Body in US - Anti-Dumping
and Countervailing Duties (China).
The AB underlined that rather than hinging on whether an SOE has been
properly found to be a "public body", a finding of inconsistency
with Article 14(d) in the selection of benefit benchmarks depends
on whether or not the investigating authority properly evaluated whether
prices proposed as a benefit benchmark are market determined such
that they can be used to establish whether remuneration is less than
adequate.
Having rejected China's arguments concerning the Panel's findings
regarding the legal predicate of China's claims, the AB saw no need
to make additional findings with respect to China's claim regarding
the factual predicate of its claims under Article 11 of the DSU in
order to provide a positive solution to this dispute.
In examining China's claim that the Panel erred in its application
of Article 14(d) of the SCM Agreement to the determinations at issue,
the AB said it does not consider that the Panel applied the standard
required by Article 14(d) of the SCM Agreement, as properly interpreted,
to the determinations challenged by China.
Instead, without properly examining the USDOC's analysis in each of
the challenged determinations, the Panel found that China had failed
to establish that "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".
It further found that China had 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.
According to the AB, the Panel failed to examine properly each of
the challenged determinations in the light of the legal standard applicable
under Article 14(d). In particular, the Panel failed to conduct a
case-by-case analysis of whether the USDOC had properly examined whether
the relevant in-country prices were market determined or were distorted
by governmental intervention.
The Panel simply assumed that, because the Appellate Body had faced
a similar situation in US - Anti-Dumping and Countervailing Duties
(China), China had failed to establish that the USDOC acted inconsistently
with the obligations of the United States under Article 14(d) of the
SCM Agreement.
"In the light of our interpretation of Article 14(d) set out
above, the Panel's analysis and reasoning is not sufficient to support
a conclusion that the USDOC properly rejected in-country prices in
China as benchmarks for purposes of the benefit analysis in the challenged
investigations," said the AB.
The AB thus reversed the Panel's finding upholding the USDOC's rejection
of private prices as potential benchmarks in the investigations under
challenge on the grounds that such prices were distorted.
The AB also reversed the Panel's conclusion that China had 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.
Consequently, it reversed the Panel's ultimate finding that China
had failed to establish 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 prices in China in respect
of the OCTG, Solar Panels, Pressure Pipe, and Line Pipe countervailing
duty investigations.
Having reversed the Panel's finding that China had failed to establish
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,
the AB examined China's request to complete the legal analysis and
find that the USDOC determinations that SOEs provided inputs for less
than adequate remuneration in the OCTG, Solar Panels, Pressure Pipe,
and Line Pipe investigations are inconsistent "as applied"
with Article 14(d) and Article 1.1(b) of the SCM Agreement.
The AB noted the Panel's finding that, in each of the underlying investigations
challenged by China, "the USDOC determined that the relevant
input suppliers were public bodies on the grounds that these suppliers
were majority-owned or otherwise controlled by the [Government of
China], either on the basis of the evidence on the record or by assuming
such government ownership or control when the USDOC applied facts
available."
The Panel held that, in the 12 countervailing duty investigations
challenged by China, the United States acted inconsistently with Article
1.1(a)(1) of the SCM Agreement in determining that the relevant "SOEs
were public bodies based solely on the grounds that these enterprises
were (majority) owned, or otherwise controlled, by the GOC [Government
of China]."
The AB noted that the United States has not challenged these findings
by the Panel on appeal. Nor does the United States contest that in
12 of the countervailing duty investigations at issue in this dispute
the USDOC "applied an ownership-based control test" in determining
whether Chinese SOEs were public bodies.
Recalling that it had reversed the Panel's finding upholding the USDOC's
rejection of private prices as potential benchmarks in the investigations
at issue on the grounds that such prices were distorted, the AB also
reversed the Panel's conclusion that China had 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.
Similarly, the AB has reversed the Panel's ultimate finding that China
had failed to establish 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
in respect of the OCTG, Solar Panels, Pressure Pipe, and Line Pipe
countervailing duty investigations.
"We find, instead, 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 by rejecting in-country prices in China as benefit
benchmarks in the context of the OCTG, Solar Panels, Pressure Pipe,
and Line Pipe countervailing duty investigations."
APPELLATE BODY'S RULING ON SPECIFICITY
The AB addressed China's challenge on appeal of the Panel's analysis
regarding determinations of de facto specificity made by the USDOC
in the following 12 countervailing duty investigations: Pressure Pipe,
Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless
Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions, Steel Cylinders,
and Solar Panels.
In these investigations, the USDOC based its determinations of de
facto specificity on the first factor listed in Article 2.1(c) of
the SCM Agreement, namely, the "use of a subsidy programme by
a limited number of certain enterprises".
On whether the Panel erred in finding that the USDOC did not act inconsistently
with Article 2.1 of the SCM Agreement by analysing specificity exclusively
under Article 2.1(c), the AB said that it does not agree with China
that Article 2.1 calls for a strict sequential analysis of its three
subparagraphs in each and every case.
"As we see it, in an investigation where there is no evidence
that allows for a de jure assessment, the application of Articles
2.1(a) and (b) would serve no purpose, and we consequently see no
reason why an investigating authority would, in such instances, be
precluded from proceeding directly to Article 2.1(c) to conduct its
specificity analysis."
Having said that, the AB emphasised that, in previous disputes, the
Appellate Body has also "cautioned against examining specificity
on the basis of the application of a particular subparagraph of Article
2.1, when the potential for application of other subparagraphs is
warranted in the light of the nature and content of measures challenged
in a particular case".
In the present case, the AB recalled that China challenged before
the Panel the USDOC's determinations of de facto specificity with
respect to the provision of inputs in 12 countervailing duty investigations.
The Panel indicated that the unwritten nature of the subsidies led
the USDOC to examine whether those subsidies are specific under the
"other factors" listed in subparagraph (c).
The Panel also observed that it is undisputed that the USDOC's findings
were not based on an explicit limitation of access to the subsidy
by the granting authority or the legislation pursuant to which the
granting authority operates; nor were they based on criteria or conditions
that are spelled out in law, regulation, or other official document.
"Given that China has not pointed to any evidence that was before
the USDOC of the kind that would ordinarily be examined in determining
de jure specificity under subparagraphs (a) and (b), we see no error
in the Panel's assessment of China's claim," the AB said.
In the light of these considerations, the AB upheld the Panel's finding
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).
The AB addressed China's argument that the Panel erred in the interpretation
and application of the term "subsidy programme" in Article
2.1(c) of the SCM Agreement.
China contends that any examination of the first of the "other
factors" under Article 2.1(c) must begin with the identification
of the relevant "subsidy programme". China asserts that
the USDOC provided no evidentiary basis for the existence, scope,
and content of these alleged "programmes".
The AB recalled the Panel's finding that, in each of the challenged
investigations, "[i]n the absence of any written instrument",
the USDOC concluded that the consistent provision by the SOEs in question
of inputs for less than adequate remuneration constitutes a type of
systematic activity or series of activities, and, as a result, that
the provision of such inputs constitutes a "subsidy programme".
The Panel found that this evidence of systematic activity (or a series
of systematic activities) "provided an objective basis for the
USDOC to sufficiently identify subsidy programmes for the purposes
of the first of the ‘other factors' under Article 2.1(c) of the SCM
Agreement in the relevant specificity determinations".
The AB agreed with the Panel to the extent it suggested that, in the
absence of any written instrument or explicit pronouncement, evidence
of a "systematic activity or series of activities" may provide
a sufficient basis to establish the existence of an unwritten subsidy
programme in the context of assessing de facto specificity under the
first factor of Article 2.1(c) of the SCM Agreement.
"We find it troubling, however, that the Panel did not provide
any case-specific discussion or references to the USDOC's determinations
of de facto specificity at issue prior to reaching its conclusion."
Indeed, said the AB, the entirety of the Panel's assessment of China's
"as applied" claims with respect to the USDOC's determinations
is set out in a single paragraph, as follows: "In each of the
challenged investigations, the application alleges that a specific
input is being provided by SOEs for less than adequate remuneration.
In the absence of any written instrument or explicit pronouncement,
the USDOC concluded that this type of systematic activity or series
of activities - the consistent provision by the SOEs in question of
inputs for less than adequate remuneration - constituted a subsidy
programme."
By not providing case-specific discussion or references to the USDOC's
determinations of specificity challenged by China, the AB considered
that the Panel failed to apply Article 2.1(c), as properly interpreted,
to those determinations.
Accordingly, it reversed the Panel's finding that China had not established
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 subsidy programme in each of the specificity determinations at issue.
Having reversed the Panel's finding, the AB recalled China's request
that the AB complete the legal analysis in respect of 15 specificity
determinations in the following 12 countervailing duty investigations:
Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire
Strand, Seamless Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions,
Steel Cylinders, and Solar Panels.
The AB noted that, as part of its challenge before the Panel, China
also argued that the USDOC failed to consider the two factors set
out in the last sentence of Article 2.1(c) of the SCM Agreement relating
to the "diversification of the economic activities within the
jurisdiction of the granting authority" and the "length
of time during which the subsidy programme has been in operation".
The Panel found that the USDOC acted inconsistently with the obligations
of the United States under Article 2.1(c) of the SCM Agreement by
failing to take these two factors into account in each of the determinations
of de facto specificity challenged by China.
The Panel's findings relate to both the USDOC's identification of
the "jurisdiction of the granting authority" and the nature
and scope of the relevant "subsidy programme".
These findings by the Panel were not challenged by the United States
on appeal and they therefore stand, said the AB.
In the light of these findings, and having laid out the legal standard
that applies under Article 2.1(c) insofar as it relates to the first
factor under Article 2.1(c), "we see limited value, for purposes
of resolving the dispute between the parties, in completing the legal
analysis with respect to the issue of whether the USDOC sufficiently
identified and substantiated the existence of a ‘subsidy programme'
in each of the determinations at issue."
"Moreover, it would seem to us that much of the evidence regarding
the existence of the alleged subsidy programmes in this dispute has
not been subject to the Panel's scrutiny," said the AB.
As noted, the Panel, however, did not refer to any of the challenged
countervailing duty determinations on the record in reaching its finding
that the provision of inputs was "systematic".
"Nor do we consider the participants to have addressed sufficiently,
in their submissions, the issues of whether the USDOC sufficiently
identified and substantiated the existence of a ‘subsidy programme'
in each of the determinations at issue. In these circumstances, we
do not complete the legal analysis with respect to this particular
aspect of China's appeal."
On China's argument that the Panel erred in its application of Article
2.1 of the SCM Agreement to China's claim concerning the USDOC's failure
to identify a "granting authority" in the specificity determinations
at issue, the AB said that while it has disagreed with China's argument
that identification of the jurisdiction for purposes of the specificity
analysis must always be preceded by identification of the granting
authority, it agreed with China that the Panel conducted an extremely
cursory analysis in assessing China's claim.
As noted by China, in applying Article 2.1 to the USDOC's specificity
determinations, the Panel "dismiss[ed] China's claim in a single
sentence".
Referring to excerpts of the USDOC's determinations of de facto specificity
provided by the United States, the Panel reasoned simply that "it
appear[ed] ... that the relevant jurisdiction was at the very least
implicitly understood to be China in the challenged investigations."
The AB said that this was the only basis for the Panel's ultimate
conclusion that China had failed to establish that the USDOC acted
inconsistently with Article 2.1 of the SCM Agreement by failing to
identify explicitly the relevant granting authority, and ergo the
relevant jurisdiction, in the specificity determinations at issue.
"We find it troubling that, in addressing China's ‘as applied'
claims in relation to the USDOC's determinations at issue, the Panel
concluded that the relevant jurisdiction was ‘at the very least implicitly
understood to be China in the challenged investigations' without any
case-specific discussion of the USDOC's determinations at issue or
any other evidence on the record, despite the fact that relevant evidence
had been presented to the Panel."
By not providing case-specific discussion or references to the USDOC's
determinations of specificity challenged by China, the AB considered
that the Panel failed to apply Article 2.1(c), as properly interpreted,
to those determinations.
Accordingly, the AB reversed the Panel's finding that China had failed
to establish 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, and ergo the relevant jurisdiction,
in each of the specificity determinations at issue.
The AB then addressed China's request for the AB to complete the legal
analysis in respect of 15 determinations of de facto specificity in
the following 12 countervailing duties investigations: Pressure Pipe,
Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless
Pipe, Print Graphics, Drill Pipe, Aluminum Extrusions, Steel Cylinders,
and Solar Panels.
The AB recalled the Panel's finding that the USDOC acted inconsistently
with the obligations of the United States under Article 2.1(c) of
the SCM Agreement by failing to take into account, in each of the
determinations of de facto specificity challenged by China, "the
extent of diversification of the economic activities within the jurisdiction
of the granting authority" and the "length of time during
which the subsidy programme has been in operation".
In the light of these findings by the Panel, which relate both to
the USDOC's identification of the jurisdiction of the granting authority
and to the nature and scope of the relevant "subsidy programme",
and, having laid out the legal standard that applies under Article
2.1(c) insofar as it relates to the first factor under Article 2.1(c),
"we see limited value, for purposes of resolving the dispute
between the parties, in completing the legal analysis with respect
to the issue of whether the USDOC sufficiently identified the jurisdiction
of the granting authority in each of the determinations at issue."
APPELLATE BODY'S RULING ON FACTS AVAILABLE
Regarding the scope of China's appeal, the AB noted that China does
not appeal the Panel's interpretation of Article 12.7 of the SCM Agreement.
Nor does China take issue with the standard of review or the "analytical
framework" identified by the Panel.
Instead, China argues that the Panel engaged in a "cursory analysis"
that was inconsistent with the Panel's obligations under Article 11
of the DSU.
The AB said that it seems to the AB that the Panel focused, in large
part, on the words employed by the USDOC in its determinations rather
than on whether the USDOC acted inconsistently with the obligations
of the United States under Article 12.7 of the SCM Agreement in connection
with the challenged instances of the use of "adverse" facts
available that were discussed by the Panel in its Report.
In its analysis of the terminology used by the USDOC, the Panel appears
to suggest that it was responding to China's arguments contained in
its second written submission, wherein China "relie[d] heavily"
on the terminology used by the USDOC.
"We, however, do not see China's arguments before the Panel as
being confined to the terminology used by the USDOC."
In paragraph 177 of its second written submission, for example, China
stated that the USDOC "repeatedly relies on ‘assumptions', ‘adverse
inferences', and similar terminology in order to reach a particular
conclusion".
However, China further explained that, "[i]n none of the 48 instances
at issue does the USDOC identify a single ‘fact' that was ‘available'
on the record to support the conclusion that it reached".
Yet, rather than assessing whether the USDOC had "provided sufficient
explanation of the challenged adverse facts available determinations
to assess whether the USDOC based these determinations on facts",
as it set out to do, the Panel focused on the language and the formulations
used by the USDOC in its determinations, said the AB.
The Panel stated, for example, that it did "not consider it evident
on the face of the statement ‘we have applied an adverse inference
in our choice of the facts available' ... that the determination concerned
is not based on facts."
The Panel did not, however, critically examine such statements in
the USDOC's determinations and memoranda in order to assess whether
the USDOC had complied with the obligations under Article 12.7.
The Panel also stated that it did not consider China "to have
established that each reference to ‘adverse inferences' in the challenged
determinations in fact equates to an ‘assumption'".
According to the AB, the Panel was required to assess whether the
USDOC's analysis in the underlying investigations was sufficient to
establish that its "adverse" facts available determinations
were made on the basis of the facts available as required under Article
12.7.
"Instead of conducting this analysis, the Panel appears to have
simply relied on language in the USDOC's determination referring to
application of facts available in order to reject Chin's claims."
For the foregoing reasons, the AB found that the Panel acted inconsistently
with its obligations under Article 11 of the DSU in assessing China's
claims under Article 12.7 of the SCM Agreement.
Consequently, it reversed the Panel's finding that China had not established
that the USDOC acted inconsistently with the obligations of the United
States under Article 12.7 of the SCM Agreement by not relying on facts
available on the record.
Having reversed the Panel's findings under Article 12.7 of the SCM
Agreement, the AB turned to consider whether it can complete the legal
analysis as requested by China.
"We do not consider that the participants have addressed sufficiently,
in their submissions, the issues that we might need to examine if
we were to complete the legal analysis in this case, including, for
example, whether the USDOC's evaluation of the ‘facts available' was
sufficient in the light of the particular circumstances of each case,
including the nature, quality, and amount of the evidence and information
on the record and the particular determinations to be made. Completing
the legal analysis in such circumstances would, in our view, raise
due process concerns."
For all these reasons, said the AB, "we do not complete the legal
analysis with respect to each of the 42 instances of the use of ‘adverse'
facts available challenged by China."
On China's request that the AB complete the legal analysis with respect
to China's claims of consequential violations under Articles 10 and
32.1 of the SCM Agreement, the AB found that the USDOC's benefit determinations
in the OCTG, Solar Panels, Pressure Pipe, and Line Pipe investigations,
which it had found to be inconsistent with Article 14(d) and Article
1.1(b) of the SCM Agreement, are also inconsistent with the United
States' obligations under Articles 10 and 32.1 of the SCM Agreement.
+