|
|
espa�ol - fran�ais - portugu�s |
Search
|
UNITED STATES - MEASURES TREATING
(Continuation) 5.210 In any event, for the United States there is absolutely no factual support
for Canada's doomsday predictions. Most telling, in the ten years since Leather
from Argentina and in the six years since the WTO Agreement entered into force,
doomsday has not arrived. Indeed, the United States asserts, Canada cannot even
find a real life case on which to base its claim. In fact, with respect to
export restraints, the United States has not even had occasion under post-WTO
law to evaluate whether any particular export restraint gave rise to a financial
contribution. Indeed, the United States argues, if one goes even further back
and looks at pre-WTO determinations, one finds that in Lumber III, the DOC found
that the export restraints in three of the four provinces examined did not
satisfy the standard that the DOC employed at the time; the standard that Canada
and the EC falsely claim is the standard under current law.
5.211 For the United States, the most significant point about the "slippery
slope" argument, however, is that the "entrusts or directs" standard - which is
an element both of US law and subparagraph (iv) - requires a causal connection.
The United States argues that some export restraints may satisfy this standard,
others may not. Even for those export restraints that might satisfy this
standard, the requirements of benefit and specificity will operate so as to weed
out certain export restraints and other types of indirect government measures
from the category of actionable subsidies.97
(b) "Private Body"
5.212 The United States asserts that it previously has demonstrated that
dictionary definitions in multiple languages thoroughly undermine Canada's
peculiar interpretation of "private body",98 and further argues that even the EC
does not support Canada's invented requirement for an "organized collectivity."99
(c) To Carry Out One or More of the Type of Functions Illustrated in (i) to
(iii) Which Would Normally Be Vested in the Government and that in No Real Sense
Differs from Practices Normally Followed by Governments
5.213 With respect to the final elements of subparagraph (iv), the United States
argues, Canada offers no explanation as to why an export restraint is incapable
of satisfying these elements.100 Instead, it simply asserts that these elements
cannot be satisfied, and offers no explanation of what these elements mean.
5.214 The United States notes that these elements are discussed in greater
detail in its answers to the Panel's questions. The United States recalls its
position that "normally vested in" and "normally followed by governments" refer
to the functions of taxation and subsidization, and asserts that support for
this position is found in the only reference on point, the 1960 Article XVI:5
Report, which refers to the "functions of taxation and subsidization."
(d) Object and Purpose
5.215 The United States argues that Canada and the EC both object to the US
reliance on the object and purpose of the SCM Agreement, falsely suggesting that
the United States has relied on object and purpose to the exclusion of the text.101
According to the United States, both are wrong.
5.216 In the view of the United States, the US submissions speak for themselves,
and demonstrate that the United States has not ignored the text, but instead has
demonstrated that the text supports the US position. However, the United States
argues, consistent with customary principles of public international law, as
reflected in Article 31 of the Vienna Convention on the Law of Treaties, object
and purpose form part of a single rule of treaty interpretation. For the United
States, in this case in particular, object and purpose are informative on how
the text should be interpreted.
5.217 To the United States, what is particularly telling is its view that
neither Canada nor the EC can plausibly dispute that the object and purpose of
the SCM Agreement - regardless of what weight is attached to it - support the US
position. The United States recalls its previous statement that the primary
object and purpose of the SCM Agreement is to impose disciplines on certain
government measures that distort international trade.102
5.218 The United States objects that Canada seeks to characterize the US
position as "one-dimensional" by referring to a single paragraph from the
Statement Made by the Delegation of Canada at a Meeting Held on 28-29 June 1988,
CAN-106, in which Canada noted that there need to be limits on the use of
countervailing measures.103 While the United States acknowledges that the SCM
Agreement also regulates the use of countervailing measures, it is clear that
this is not its primary purpose. Indeed, the United States submits, virtually
the entirety of CAN-106 speaks to the need to discipline the use of subsidies as
trade-distorting measures. The United States urges the Panel to read CAN-106 in
its entirety. The United States notes that even when speaking of disciplines on
countervailing measures, Canada makes it clear that great care must be taken to
avoid creating a loophole.
5.219 The United States also emphasizes that in its view neither Canada nor the
EC disputes the object and purpose of subparagraph (iv), which is to prevent
governments from doing indirectly what they cannot do directly. For the United
States, if the Panel, in the absence of any facts, were to categorically exclude
export restraints from the definition of Article 1.1, the object and purpose of
subparagraph (iv) would be undermined.
5.220 Finally, the United States argues, Canada claims that the SCM Agreement's
method of designating practices as either prohibited, actionable, or
non-actionable supports its view that export restraints should be excluded from
the definition of Article 1.1.104 According to the United States, if anything the
opposite is true. If export restraints were categorically excluded from Article
1.1, they essentially would be rendered non-actionable, and the Panel
effectively would be rewriting the SCM Agreement. In the US view, the drafters
of the SCM Agreement presumably provided a definition of "subsidy" so that each
particular government measure (not each category of measure) could be evaluated
on the basis of its own facts and circumstances.
5. Conclusion
5.221 Based on the foregoing, the United States renews its request that the
Panel dismiss Canada's complaint by making the preliminary rulings described in
paragraph 125 of the US Request. Should the Panel decline to dismiss Canada's
complaint, the United States renews its request that the Panel make the findings
described in paragraph 87 of the US First Submission.
G. SECOND ORAL STATEMENT OF CANADA
5.222 Canada asserts that it has demonstrated that the measures in question
treat an export restraint as a financial contribution and that an export
restraint is not a financial contribution under Article 1.1(a)(1) of the SCM
Agreement. Canada submits that the US response has been that; first, the
measures do not "require" the US to treat an export restraint as a financial
contribution, but leave it to Commerce to determine on a case-by-case basis; and
that second, export restraints can constitute a financial contribution if there
is merely a "causal relationship" between an export restraint and a provision of
the good to domestic users. These positions, according to Canada, rewrite both
US law and the SCM Agreement.
5.223 With regard to its first argument, Canada states, the United States relies
primarily on assertions that the measures leave Commerce sufficient flexibility
in any case to decide that an export restraint is not a financial contribution.
To Canada, this alleged flexibility is illusory as the measures have already
determined that an export restraint will satisfy the financial contribution
requirement.
5.224 Canada submits that while the United States argues that the measures are
open to interpretation on a case by case basis the US repeatedly states that it
cannot say how any export restraint would be treated under US countervailing
duty law, and has failed to provide this Panel with a single example of an
export restraint that it would not consider to be a financial contribution. In
Canada's view, every instance of alleged flexibility turns out to be an example
in which an export restraint was not considered to be a subsidy because there
was no benefit, or there was no export restraint in the first place.
5.225 Canada notes that the second part of the US argument rests on a claim that
subparagraph (iv) is satisfied if there is a causal relationship between a
government action and the provision of a good. In Canada's view, the US analysis
is not sustainable under the ordinary meaning of the language of subparagraph
(iv) in its context and in light of the object and purpose of the Agreement.
There is simply no way to explain why subparagraph (iv) is written as it is if
it were intended to mean what the US claims.
5.226 To the extent the measures contain any element of discretion, Canada
asserts, it is not of a nature that enables the United States to invoke the
mandatory/discretionary distinction as a defence. Such treatment of export
restraints is inconsistent with subparagraph (iv), because an export restraint
does not fall within the plain meaning of that provision. For Canada, the US
claims to the contrary reflect the continuing effort by the United States to
maintain the open-ended definition of "subsidy" that it tried, but failed, to
obtain during the negotiation of the SCM Agreement.
5.227 In Canada's view, this dispute reveals a fundamental difference of opinion
as to the government actions that fall under the definition of "financial
contribution" in Article 1.1. On the one hand, Canada and the European
Communities have advanced a position that relies on the ordinary meaning of the
language in its context, and provides certainty and predictability to the
operation of the SCM Agreement. The United States has advanced an interpretation
of "financial contribution" that is so broad that any government action that
causes a benefit will be considered a "financial contribution", thus, in effect,
reading the "financial contribution" element out of the Agreement. For Canada,
this expands its scope to such an extent that the certainty and predictability
achieved by the negotiators is lost.
5.228 Canada submits that the fundamental approach of the United States is aptly
summarized in paragraph 2 of its second written submission, where the United
States asserts that export restraints "are regarded as 'subsidies' in the normal
economic sense of the term," which means that export restraints must be capable
of being subject to countervailing duties. According to Canada, this logic
echoes the failed US effort in the Uruguay Round to define "subsidy" as any
government action that led to a "benefit". In Canada's view, arriving at the
definition of a subsidy was one of the most important achievements of the Round,
an achievement that the position of the United States seeks to ignore. The
United States begins with a subsidy in the so-called "vernacular" and works
backwards to conclude that an export restraint must be a subsidy under the
Agreement. Canada asserts that the United States, in the context of export
restraints, in effect implemented the agreement it tried to negotiate instead of
the one agreed to.
5.229 Canada notes that the United States argues that the SAA, the Preamble and
Commerce practice are not measures at all and, even if they were, what they
direct regarding export restraints is of no real effect as they do not require
any particular action of Commerce. For Canada, these measures clearly are
measures under GATT and WTO law. If they have no import, Canada submits, then
the United States has made great efforts to creating meaningless interpretations
of its statute. In Canada's view these are not empty measures. They
authoritatively direct Commerce to treat an export restraint as a financial
contribution.
5.230 Canada submits that the United States attempts to keep the measures in
clinical isolation from each other, but nevertheless itself recommends that the
panel look to how the measures "relate to each other, under [its] domestic law."
For Canada, this approach is grounded both in common sense and in WTO case law.
The Panel in United States - Section 301 noted that statutory and non-statutory
elements of a Member's domestic law are "often inseparable and should not be
read independently from each other when evaluating the overall conformity of the
law with WTO obligations."
5.231 Canada notes that the SAA is an "authoritative expression" of the US
Administration's and Congress's views regarding the "interpretation and
application" of the WTO Agreements and is to be regarded as such in US judicial
proceedings. Canada submits that it gives Commerce explicit direction as to how
it is to treat export restraints. This is made abundantly clear by the statement
in the SAA that "Article 1.1(a)(1)(iv) of the Subsidies Agreement and Section
771(5)(B)(iii) encompass indirect subsidy practices like those which Commerce
countervailed in the past" (i.e. the export restraints in Leather and in
Lumber). Canada argues that this statement does not read "may encompass" or
"could encompass". Despite this clarity, and the clear direction in the SAA that
the "entrusts or directs" standard be interpreted broadly, Canada argues, the
United States insists that the SAA does not provide direction to Commerce on how
the statute is to be interpreted. In Canada's view, the United States downplays
the significance of the SAA because of what it terms Commerce's "freedom" to
make up its own mind.
5.232 Canada notes that the United States asserts that "all that the SAA
'authoritatively' says is that Commerce must follow the standard set forth in
Section 771(5)", and that the SAA expresses no position on indirect subsidies.
For Canada, the US view seems to be that the entire discussion in the SAA on
what Article 1.1(a)(1)(iv) of the SCM Agreement and Section 771(5)(B)(iii)
encompass should be read as Congress refraining from pre-judging the
consideration of export restraints. Canada submits that this assertion is belied
by the very purpose of the SAA as an affirmative, authoritative expression as to
how the legislation is to be interpreted and applied.
5.233 Canada argues that the United States further downplays the text of the SAA
by characterizing statements made in the Korea Stainless Steel cases as simply
the expression of "[Commerce's] non-binding opinion that the results under the
new standard in subparagraph (iv) may not differ significantly from the results
that would have obtained under [Commerce's] pre-WTO standard." Canada submits
that what Commerce actually said, however, was that "the clear and unambiguous
language of the SAA is that Congress intended the specific types of indirect
subsidies found to be countervailable" in the cited pre-WTO cases are to
continue to be countervailable under the new law. For Canada, this is a clear
and unambiguous statement of Commerce's position, made in direct response to the
argument that loans by private foreign banks could not constitute financial
contributions.
5.234 In Canada's view, to say that Congress simply left the issue to be decided
by Commerce cannot be reconciled with the clear statements contained in the SAA
and confirmed in other legislative history such as the Senate Joint Report on
the URAA105 and more recently in Congressional statements concerning Canadian
softwood lumber only two weeks ago.106
5.235 Canada argues that the US description of the Preamble as reflecting
Commerce's "tentative opinions" is at odds with what the Preamble says. For
Canada, nothing in the Preamble suggests that the views expressed in it are in
any way "tentative" or preliminary, and Commerce's past reliance on it in the
Korea Stainless Steel cases makes clear that Commerce has not treated the
Preamble as "tentative". In Canada's view, this US argument is also belied by US
court cases and the United States' use of a preamble in WTO dispute settlement
proceedings. There is nothing "tentative" in Commerce's conclusion that the
standard under the URAA is no narrower than the standard under pre-WTO law and
its reliance on the SAA discussion of pre-WTO case law regarding export
restraints to make this statement. Canada argues that the Preamble cannot be
considered "tentative" when it clearly states that Commerce will enforce the
"entrust or directs" provision vigorously and that Commerce agrees with "those
commenters who urged the Department to confirm that the current standard is no
narrower than the prior U.S. standard for finding an indirect subsidy as
described in�[Lumber]."
5.236 Canada submits that in the light of the administrative framework under
which US agencies promulgate regulations, the purported distinction between the
Preamble and the remainder of the regulation is without basis. Likewise, in
Canada's view, there is no basis to the claim that under US law, Commerce's
Preamble to its final regulations must be published in the CFR in order to have
legal effect.
5.237 Canada submits that the United States is incorrect in arguing that there
is no US practice relevant to the treatment of export restraints. Relevant US
practice includes pre-WTO practice which is expressly incorporated in US law
through the SAA and Preamble and post-WTO practice of the Commerce (e.g., Live
Cattle and the Korea Stainless Steel cases) which evidence its commitment to
apply "a standard no narrower than the prior US standard for finding an indirect
subsidy". The Korea Stainless Steel cases left no doubt, according to Canada,
that Commerce practice with respect to indirect subsidies, including export
restraints, follows the dictates of the SAA and Preamble, and claims no scope
for departure from the standard set out in the SAA and Preamble.
5.238 Canada argues that the Live Cattle case is further evidence of Commerce's
view that an export restraint satisfies the "financial contribution" requirement
of Section 771(5)(B)(iii). Canada notes that in the Initiation Memorandum,
Commerce specifically stated that the petitioner had provided "evidence that the
CWB controls exports"; that the petitioner claimed the CWB was limiting the
amount [of feed barley] exported to the United States"; and that the petitioner
had offered "empirical evidence that the CWB restrains exports to the United
States". In Canada's view, Commerce's decision to initiate an investigation of
this allegation on the basis of this evidence means it necessarily concluded
that CWB's "control" over barley exports, if proved to exist, would meet the
standard for a financial contribution under Section 771(5)(B)(iii). Further, in
its final determination, Canada notes, Commerce stated its view that in the
context of export restraints "the provision of a good, whether provided directly
or indirectly, for less than adequate remuneration constitutes a financial
contribution."
5.239 For Canada, if there is any element of discretion in the measures, it is
not of a nature that would allow the United States to invoke the
mandatory/discretionary distinction as a defence. The discretion the United
States claims to exist in the SAA and Preamble has been curtailed such that
Commerce is committed to apply US law inconsistently with the SCM and WTO
Agreements. To effectively invoke this defence, according to Canada, the United
States would have to demonstrate that Commerce has the discretion to disregard
the SAA and Preamble and determine that an export restraint is not a financial
contribution. All of the evidence is, however, to the contrary in Canada's view.
5.240 Canada notes that the definition of "subsidy" in Article 1.1 of the SCM
Agreement is the fundamental basis upon which all actions under the SCM
Agreement are premised. A measure that implements the definition inconsistent
with the Agreement nullifies and impairs the rights of other WTO Members. In
Canada's view, a proper interpretation of subparagraph (iv) of Article 1.1
results in a conclusion that its terms do not encompass export restraints. The
need to show benefit and specificity cannot justify nullifying the financial
contribution element.
5.241 According to Canada, the United States ignores the word "entrusts", thus
ignoring that "entrusts" provides context for the meaning of the word "directs."
While not synonymous with "entrust", Canada argues, the word "direct" shares the
same essential quality of a governmental communication to a private body. The
United States, however, effectively replaces the word "directs" with "causes" in
subparagraph (iv). For Canada, "direct" does not mean "cause." The mere fact
that something occurred does not mean that the government directed someone to do
that thing.
5.242 Moreover, Canada states, the SCM Agreement drafters knew how to use
"cause" or "causal relationships", as they did in Article 15.5, but chose for
subparagraph (iv) the more limiting terms "entrusts or directs". Canada argues
that the United States dismisses the multiple uses of the concept of "causes" in
the Agreement, stating that words have interchangeable or overlapping meanings.
It relies on EC -Bananas, but in that case, Canada argues, the comparison was of
similar language in two related agreements, not of different terms within the
same agreement. In Canada's view, while different agreements may use different
formulations to express similar concepts, within an agreement it is reasonable
to conclude that use of a different term evidences an intent to express a
different concept.
5.243 According to Canada, the dictionary meanings relating to authoritative
instructions are appropriate in this case as they correspond with the wording in
subparagraph (iv). The Concise Oxford Dictionary is precise in this regard. For
"direct" when followed by "to + infinitive", it gives as a meaning "give a
formal order or command to". Canada notes that in subparagraph (iv), the word
"directs" is followed by the infinitive "to carry out".
5.244 Canada states that an export restraint does not entrust or direct a
private body to provide goods to anyone, and that the United States itself views
an export restraint "�as limiting the opportunities available to the producer of
the restrained good." According to Canada, an export restraint will limit the
export of goods but this is not the same as directing someone to provide those
goods. Canada asserts that the United States concedes that a producer always has
choices but discounts such choices as a matter of commercial reality, which is
Canada's own point. In particular, absent a measure that truly directs a
producer to provide goods to someone, that producer will exercise the choice
that is in its best interest.
5.245 According to Canada, if the position of the United States were correct,
then any government action that in some way caused lower prices would become a
financial contribution as there would be some causal relationship between it and
the behaviour of private market operators. In Canada's view, had this been the
intention of the drafters of the SCM Agreement, they could have accomplished it
by simply defining a subsidy as any government action that causes a benefit and
is specific. Canada states that the need to show benefit and specificity cannot
justify nullifying the financial contribution element.
5.246 Canada states that the United States argues that the fact that producers
have choices is consistent with the position that an export restraint is a
direction to provide goods, and that the United States reaches this conclusion
through a reductio ad absurdum proposition that even where a producer truly is
ordered to provide goods, the producer would have the option of breaking the
law. Canada notes that the United States argues (and Canada agrees) that this is
not a real choice. The choices Canada described were economic and, moreover,
legal choices available to the producer.
5.247 According to Canada, the United States misconstrues the portion of
subparagraph (iv) referring to "� one or more of the type of functions
illustrated in (i) to (iii) �", by saying that this phrase must be read to
include functions of the same "general character" as those in those
subparagraphs despite the fact that the provision directly links the functions
in subparagraph (iv) with the functions set out in subparagraphs (i)-(iii).
Canada states that the United States also reads "illustrated" as connoting
undefined functions sharing general characteristics of the functions in those
subparagraphs. That is, rather than "illustrated" meaning "making clear or
evident by way of example", it is broadened to include functions outside of
those subparagraphs. In Canada's view, the effect is to impose disciplines on a
range of private actions that are not subject to discipline when performed by
governments, an untenable result.
95
See, e.g.
Canada's Oral Statement, para. 25 ("The U.S. view would mean that any
government action that affects the marketplace (that is, individual buyers and
sellers) would 'entrust or direct a private body.'").
96 Id., para. 27.
97 According to the United
States, the EC makes a sort of "reverse slippery slope" argument when it claims
that export restraints can be addressed under Article XI of GATT 1994. As a
legal matter, according to the United States, this argument is clearly wrong and
inconsistent with prior EC positions. The United States notes that in
Indonesia - Certain Measures Affecting the Automobile Industry, WT/DS54/R,
WT/DS55/R, WT/DS59/R, WT/DS64/R, Report of the Panel adopted 23 July 1998, paras.
14.29-14.36, the panel agreed with the position of the United States, Japan
and the EC that a measure could be actionable under both the SCM Agreement
and Article III of GATT 1994. In particular, the panel noted the existence of
footnote 56 to Article 32.1 of the SCM Agreement, which recognizes that actions
against subsidies remain possible under other provisions of GATT 1994. Id.,
para. 14.36, note 659. For the United States, as a factual matter this argument
is clearly wrong, because not all export restraints will violate Article XI, and
even those that do may be subject to one or more exceptions under Article XX of
GATT 1994.
98 US First Submission ,
paras. 40-44.
99 EC Submission ,
para. 28.
100 See ,
Canada's First Submission, para. 93; and Canada's Oral Statement,
para. 28.
101 The United States
asserts that the EC's accusation is particularly troubling, given that in its
submissions, the EC did not even conduct a textual analysis of Article 1.1 in
general, or subparagraph (iv) in particular.
102 US First Submission,
paras. 13-20; US Answers to Questions 18-19 (Second Set).
103 Canada's Oral
Statement , para. 34.
104 Id .,
para. 36.
105 Uruguay Round Agreements Act: Joint Report of the Comm.. on Finance,Comm. on
Agriculture, Nutrition, and Forestry, Comm. on Governmental Affairs, United
States Senate, 103d Cong., S. Rep. 103-412 at 91 (1994). (Exhibit CAN-134)
106 147 Congressional Record S1158 (daily ed. 7 February 2001) (statement of Sen. Snowe). (Exhibit CAN-135) |
|