7.122  The United States asserts that Australia's view that the “in fact” standard is met only when the subsidy is explicitly tied to exportation or export earnings through some means such as an administrative arrangement should be rejected as it would merge the categories of subsidies “contingent in law” and subsidies “contingent in fact.”  To the United States, Australia's proposed interpretation would effectively write the "in fact" language out of the SCM Agreement thereby partially defeating the purpose of the prohibition in Article 3.  The distinction between the "in law" and "in fact" standard is that "in law" subsidies are explicitly contingent and "in fact" subsidies are implicitly contingent.  The United States posits that these standards are not defined, as Australia suggests, by whether the contingency appears in legislation versus some type of administrative instrument.

7.123 The United States also argues that Australia's position is not supported by the negotiating history of the provision.  The negotiating history of this provision demonstrates that the distinction between an "in fact" and an "in law" export subsidy is that an "in fact" subsidy does not make the conferring of the benefit expressly contingent on export performance, in any form.  The “in fact” standard was included because the countries negotiating the WTO Agreement were concerned that limiting their prohibition to subsidies with express export contingencies would permit governments to escape the sanctions of Article 3.1(a) by merely omitting an explicit reference to export performance from the characterization of the benefit.  As the European Community warned: "experience has shown that government practices may be easily manipulated or modified in order to avoid [a de jure] prohibition...."[97]   A prohibition of subsidies "which are de jure (that is, expressly) made contingent upon export performance is open to circumvention.^"[98]  As a result of these concerns, both "in law" export subsidies -- where government aid is "expressly contingent" upon export performance -- and "in fact" export subsidies -- where the exportation requirement is not explicit -- were included as prohibited subsidies.

7.124 Furthermore, the United States asserts, imposing the requirement that prohibited export subsidies are only those that are explicitly contingent upon exports would defeat the purpose of prohibiting "in fact" export subsidies.If express statements of export contingency were required for both "in law" and "in fact" subsidies, governments could easily circumvent the prohibition in Article 3 by merely deleting explicit references to the export-contingency requirement. This was just the kind of "manipulation" that the "in fact" provision was designed to prevent.  Since export subsidies are considered so egregious by the SCM Agreement that they are prohibited (rather than merely actionable), it seems unlikely that negotiators would have allowed countries to avoid their obligations by clever draftsmanship. Australia’s proposed interpretation should therefore be rejected because it is at odds with the history and purpose of the provision.

7.125  The United States maintains that because Australia argues that both "in law" and "in fact" subsidies must have express statements of export contingency, it is forced to find another difference between these two forms of prohibited subsidies.  Australia therefore suggests that "in law" export subsidies are those created by legislation or regulations, whereas "in fact" export subsidies are those set forth in non-legislative administrative instruments.  Australia proposes that an "in fact" export subsidy may only be found if (1) the document creating the government aid is in the form of an administrative instrument, and (2) that instrument contains an express statement that the aid is export -contingent.  To the United States, it is obvious that Australia has designed this test so that the instruments bestowing the subsidies upon Howe would fall outside of the definition of a prohibited export subsidy.  However, Australia’s attempt to distinguish "in law" and "in fact" subsidies based on the type of document announcing the government aid must fail.

7.126 The United States declares that Australia's theory does not have a rational basis. There is no difference in effect between a government provision included in a law, a regulation or a document issued by a duly authorized government official in the form of an administrative instrument or executive order.  All are issued by a government entity or official with the necessary legal authority to require adherence to its terms. All have the force and effect of law and must be honoured by the nation's public entities and private citizens.  The distinguishing feature of "in law" and "in fact" subsidies cannot therefore be the type of document creating the subsidy -- but whether or not the granting of the benefit is expressly or in fact tied to export performance. 

7.127  Finally, the United States maintains, contrary to Australia’s argument, the United States is not suggesting an expansion of the definition of prohibited export subsidies through the creation of an “unidentified level of exports” test or “trade effects” test.  Australia bases this claim on its view that the United States’ case turns on the argument that some undefined level of exports by an enterprise is indicative of its status as a prohibited subsidy.  Examining a recipient's level of exports does not transform an "in fact" export subsidy case into a "trade effects" case.  The level of an enterprise’s exports is just one factor to be considered in determining whether that enterprise received a prohibited export subsidy.  Footnote 4 to Article 3 does not preclude consideration of the level of exports, it simply proscribes finding a prohibited export subsidy based solely upon the level of exports.  In fact, the explicit reference to level of exports in Article 3 seems to indicate that the drafters specifically contemplated that the level of exports would be taken into account in determining whether an “in fact” subsidy exists.

7.128 According to the United States, there is a significant difference between examining whether a subsidy was tied to exportation at the time it was granted (as is necessary in an "in fact" subsidy case) and what happens after a subsidy is conferred (as is required in an actionable subsidy case).  Actionable subsidy cases examine the adverse effects of a subsidy evidenced by injury to a Member's domestic industry, nullification or impairment of a Member's benefits, or serious prejudice to a Member's interests.[99]   The definition of "serious prejudice" also looks to the consequences of a subsidy, such as whether subsidized goods displaced a member's goods in the subsidizing country or in a third country market, whether  significant price undercutting occurred, or whether a subsidized primary product was able to increase its world market share.^.[100]   Regardless of the particular standard, all of these inquiries examine the subsidy's effect after it has been granted.  They do not address the facts as they existed at the time of the granting of the subsidy.

7.129  The United States asserts that nothing in the arguments it has presented suggests that a subsidy would necessarily be considered an “export subsidy” simply because exports increased after a subsidy was granted.  In this case, the Panel must consider the facts underlying the decision to grant the aid which existed at the time the government made the decision and whether that decision was tied to actual or anticipated exportation or export earnings.  The United States has not suggested that, in this case or any future case, an increase in exports after a subsidy has been provided could retroactively alter the nature of the subsidy.  The United States has, therefore, not used a "trade effects" test for an "in fact" export subsidies case.  Instead, the U.S. government has presented evidence of Howe's export performance at the time the decision to grant the subsidies was made, and Howe’s expected export performance as anticipated at that time.  This evidence meets the standard for determining an "in fact" subsidy set forth in footnote 4 to Article 3.1(a) of the SCM Agreement, which, as explained above, permits the consideration of an enterprise’s level of exports.

7.130 Australia states that Article 3.1(a) of the SCM Agreement only prohibits subsidies that are contingent upon export performance, i.e. that favour exports over domestic sales. Australia notes that the United States has continued to quote selectively from the EC Uruguay Round negotiating paper, MTN/GNG/NG10/W/31, and to omit EC comments that underline that the issue in that paper for both de jure and de facto export subsidies was in respect of subsidies that favour exports. 

7.131 Australia also asserts that the United States mischaracterizes the points made by Australia regarding “in fact” in saying that it would effectively write the “in fact” language out of the SCM Agreement.   The United States appears to consider that “in law” is synonymous with “expressly”.  Of course, Australia states, “in law” means that it would be set out expressly in a legal instrument.  However, it is quite possible for the granting of a subsidy to be expressly contingent upon export performance through administrative actions without it being expressly set out in law.  Australia asserts that the Panel needs to address the meaning of “in law” and “in fact” under the SCM Agreement and not how the United States might consider that de jure and de facto should be used outside the WTO context.  Under the Vienna Convention, the Panel needs to look at the ordinary meaning given to the words “in law”.  If, under the treaty, this were supposed to mean “expressly”, as the United States seemed to be proposing, then it would have said so.

7.132 In the view of Australia, the purpose of the “in fact” provision is to provide a way of dealing with the situation where the administration of a subsidy programme allows the disbursement of funds to favour exports, i.e. to provide subsidies to firms tied to export performance.  Interpreting the provision in this way is not to write the “in fact” standard out of the SCM Agreement, as suggested by the United States.  Instead, according to Australia, what it achieves is: (a) to make it consistent with the language of the agreement: (b) to make it consistent with the language in Article 11 of the DSU by which panel cases have to be assessed; and (c) to make it consistent with a workable and balanced view of the object and purpose of Article 3.1(a) of the SCM Agreement. To allow a violation case to be won on weak inferential grounds would be at odds with a rules-based system. An “in fact” case may often be difficult to prove.  However, the SCM Agreement provides fast, effective means of relief from adverse effect on a multilateral and unilateral level through Parts III and V.  In the absence of a case under Parts III or V, it is highly questionable that a weak case, missing the facts to demonstrate that the granting of the measure was in fact tied to export performance, should be able to be addressed through Part II of the SCM Agreement.

7.133 Australia suggests that it may be useful to consider just a couple of possible examples of where the “in fact” provision would apply, i.e. where the administration of a subsidy programme allows the disbursement of subsidies to favour exports.  Any number of hypothetical constructions of this sort can be created, for example:

(a)  the administrators of a scheme have the authority to determine the amount of subsidy being provided to an individual firm and do so on the basis of exports rather than some other criteria such as investment or production; or

(b)  the administrators of a scheme have the authority to discriminate amongst firms in the same industry by not paying the subsidy unless concrete export targets are met.

7.134 Australia submits that the term “in law” needs to be taken as meaning just that: in law. The text of Article 3.1(a) of the SCM Agreement makes the distinction between “in law” and “in fact”.  If the intent was to make the distinction between explicit and implicit, i.e. between expressly and some trade effects test, as seems to be being suggested by the United States, the text would have said so.  For example, it could have read: “subsidies contingent, explicitly or implicitly, upon export performance” with a similar footnote as footnote 4 on “implicitly”.  However, that is not the text.  The distinction is between “in law” and “in fact” where, in both cases, there must be an actual tie with export performance.

7.135 According to Australia, WTO rules on violation are not supposed to be about subjective judgments by panels on trade effects or mind-reading what ministers may have been thinking two years ago.  Article 3.1(a) and footnote 4 of the SCM Agreement are about a panel reaching the conclusion, demonstrated through an objective assessment of facts, that the granting of a subsidy is contingent upon export performance, even though it may not be required in law.

7.136  Australia submits that, in a trivial sense, every panel must undertake a case-by-case examination and analysis of the dispute before it.  However, the issue here is whether the outcome is to be an arbitrary one that could well vary from panel to panel, or whether there is to be the normal consistency and certainty required of a rules-based system with respect for a Member’s sovereignty to be allowed to adopt measures that are not explicitly inconsistent with the WTO Agreement.  The important principle at stake here is the necessity under a rules-based system for governments acting in good faith to be able to determine WTO consistency of proposals in advance of their implementation, and in the absence of a dispute and a panel decision.   Unless a government can know in advance what its obligations are, it would be placed in a situation that would only risk bringing the rules into disrepute.   Indeed, Article 3.2 of the DSU sets out that: “[t]he dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system.” (emphasis supplied by Australia)

7.137 Australia reasserts that Article 3.1(a) of the SCM Agreement uses the phrases of “in law” and “in fact” with “in fact” limited through footnote 4 of the SCM Agreement.  There is nothing in the ordinary meaning of the phrases or in the drafting history to suggest that these expressions should not be taken as meaning other than through either a legislative instrument or, alternatively, through administrative action of some sort.  Indeed, the text requires a complainant to prove that “the facts demonstrate … is in fact tied”. This is not a call for arbitrary judgement, but rather expresses the necessity for the complainant to prove its case that the granting of the subsidy is actually tied to exportation or export earnings.

7.138 According to Australia, the SCM Agreement does not list which facts are to be considered because the issue is one of demonstration of an actual tie and so what needed to be listed was what the granting of the subsidy was to be “tied to”, i.e. “actual or anticipated exportation or export earnings”.   These are the points that had to be listed and listed exhaustively.  The text does not talk of some high proportion of benefits going to exports or the incidence of the subsidy in relation to exports.  It could have, and the United States argued in the Uruguay Round negotiations that it should, but it did not.  Instead, the final text requires a factual demonstration, i.e. an objective demonstration that the granting of the subsidy be tied to exportation or export earnings.

7.139  Australia takes note of the United States' citation from the Appellate Body Report in Japan – Alcoholic Beverages that “the examination requires a comprehensive and objective analysis” and that “it is possible to examine objectively the underlying criteria … to ascertain whether it is applied in a way that affords protection to domestic products.”[101]  Australia states that this is an objective assessment of the impact of the tax measure.  The first sentence of the second paragraph of the United States' citation from the Appellate Body Report[102] underlines that it is the actual measure and not some subjective assessment of the aim of the measure that is at issue.  Moreover, Australia asserts, in that case, the Appellate Body goes on to emphasize that “[t]he dissimilar taxation must be more than de minimis.”[103]  This is quite different from this current dispute, which is not about affording protection in excess of de minimis levels, but rather whether the standard of Footnote 4 of the SCM Agreement is satisfied.  A government can be expected to understand the impact of different taxation arrangements on products.  However, it cannot be expected to foresee what view a panel might have on the incidence of a domestic subsidy.

7.140 Australia observes that the United States goes on to say that the Panel should, among other things, focus on “the design, architecture and the structure of the subsidies”, picking up the phrase used by the Appellate Body in Japan – Alcoholic Beverages.[104]  Read in context, the Appellate Body did not mean by “design” the “process of designing”, since that would go back to fathoming the aim of the government concerned.  The “design, architecture and the structure of the subsidies” can only refer to the legal structure of the subsidy arrangements and their administration, rather than the issue of intent or prior measures.  Australia agrees that the Panel needs to look at the contracts, what they actually say, and how they were administered.

7.141 Australia alleges that the United States mischaracterizes the Australian position in respect of the difference between “in law” and “in fact".  They are not the same.  Australia considers that for the “in law” standard to be met it has to be just that – the contingency on export performance must be set out in law.  This is clear from footnote 4 of the SCM Agreement, which refers to “legally contingent”.  By contrast, “in fact” would arise through explicit administrative action rather than being set out in law.  The complainant has the obligation to prove that this is being done.  The way in which a complainant would demonstrate that there is such administrative action will depend on the particular case.

7.142 Australia argues that it is clear from the United States' argument that it misunderstands the point being made by Australia by interpreting the Australian position to mean that an “in fact” export subsidy may only be found if (1) the document creating the government aid is in the form of an administrative instrument, and (2) that instrument contains an express statement that the aid is export-contingent.  Australia did not say that there had to be a document creating the government aid and is not sure what the United States means when its says the “document … is in the form of an administrative instrument.”  There may be a language problem here.   Moreover, Australia certainly did not say that “that instrument” [whatever it might mean] “contains an express statement … .”

7.143 Australia contends that the distribution of any subsidy will have a legal basis and have to be administered to some degree, even if it is only to check the paper work and write out the cheques.  For the “in law” standard to be met, the granting of the subsidy has to be “legally contingent” upon export performance.  By contrast, the “in fact” standard is met when that distribution is still contingent upon export performance but when it is done administratively without it being legally contingent.  For example, the administrative instrument might be Ministerial discretion in giving money to companies on the basis of their export earnings in the previous period.  Conceptually, there are many ways in which this could be done.  However, the payments must be actually tied to exportation or export earnings, either future or past, and this tie must be direct and not the result of some theoretical apportionment by the complainant between domestic and export sales because the company concerned exports.

7.144  Australia insists that it did not say that the complainant needs to find a piece of paper with an explicit tie in it, since that would be too high a threshold and defeat the purpose of preventing circumvention.  However, the complainant must prove that the administration of the granting of the subsidy involved has some form of explicit tie.

7.145  With respect to the United States' argument that it proffered evidence of Howe's high level of exports to show what the Australian government considered at the time the aid was given, Australia argues that the United States clarifies that its legal argument relates only to what might have been considered as future export trends at the time the contracts were executed. Australia thus assumes that “at the time the aid was given” means the time of execution of the contracts rather than the actual time the decisions were taken to make payments after the first payment under the grant contract.  The United States appears to be unconcerned here with what happens afterwards.  To Australia, this appears to still mean that the United States' argument is no more than a level of exports test as the key criterion, rather than a demonstration that the granting of the subsidy is actually tied to exportation or export earnings.  If actual export performance subsequent to the establishment of a programme is irrelevant, including to future payments, then there is no tie.  The United States is not even arguing about the actual impact on exports let alone the legal issue of whether the granting is tied to export performance.

7.146 Australia maintains that the United States is saying that it is not making a case about what actually happens to exports subsequent to the execution of the contracts.  This would mean that if the Panel considered that the issue was not the granting of the grant contract, but rather the granting of the grants under the grant contract, then the United States would consider that its arguments would not apply.

7.147 Regarding the United States comments that there is a significant difference between examining whether a subsidy was tied to exportation at the time it was granted and what happens after a subsidy is conferred, Australia states that the issue of prohibition under Article 3.1(a) of the SCM Agreement must be strictly construed.  There is multilateral remedy for adverse effect under Part III of the SCM Agreement, including adverse effect caused by exports.  The SCM Agreement makes provision for remedy under both Parts III and V where exports are causing adverse effect, in particular where there is an increase in exports that causes serious prejudice.  In such circumstances, especially where Article 6.1(a) of the SCM Agreement applies, increased exports would usually make a case of serious prejudice difficult to rebut.  A principle of interpretation is that:

[o]ne of the corollaries of the “general rule of interpretation” in the Vienna Convention is that interpretation must give meaning and effect to all the terms of the treaty.   An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.[105]

Australia submits that the “in fact” test in Article 3.1(a) of the SCM Agreement is not there to deal with all cases where exports are causing injury. Rather it is there to deal with the situation of “in law or in fact” as Australia has described it.  Members have Part III of the SCM Agreement to seek multilateral remedy in other cases.

(b) operational considerations

7.148 Australia adds that, apart from the issue of maintaining the balance of rights and obligations about what was negotiated in the Uruguay Round, a key issue here is to ensure that the interpretation of the disciplines under Article 3.1(a) is workable.  This is not a situation where WTO rules are being implemented through domestic legislation, such as for countervailing.  In that case, domestic law- makers and the courts will converge to a practical arrangement, which is in conformity with WTO obligations.  The obligations of officials are domestic: to implement the domestic law subject to judicial review.  The situation is quite different where officials have to give advice to their government, and ministers have to make decisions on that advice, about conformity of proposed new programmes with WTO rules.  Of course, countervailing duty legislation has to go through this once, i.e. when changes are put in place, but not on a day-to-day basis when being implemented domestically.  However, with industry policies in goods, services and intellectual property, officials have to give advice every day on the WTO-consistency of new policy proposals.

7.149 Australia underlines that it is critical that officials be able to give advice on clear-cut rules. Australia can accept that, in early stages, there may be some differences in view over rules, without being absolutely certain that that envelope for manoeuvre will be maintained after a dispute.  But that is quite different from a situation where some form of de facto test would make it virtually impossible to give clear advice.

7.150 Australia states that it is a long-standing integral part of the GATT, and now the WTO, that there is always a small risk of a non-violation case.  Australia states that government officials give advice on this where required, for example on subsidies in respect of bindings.  However, that does not involve a treaty commitment.  Ministers have to know whether an action would breach a treaty.  They can accept that there might be complaints of the non-violation type, but that is absolutely different from a case of violation of a treaty commitment.  If this dispute led to an outcome where a Member’s government can never be certain about whether it is consistent with its WTO obligations, except by not having a policy at all, that will serve to bring the system into disrepute.  Governments will not accept an edict that subsidies or some other policy instrument are going to be somehow banned by the back door.  Indeed, one potential outcome is that governments will take less care rather than more.

7.151 Australia asserts that the structure of the SCM Agreement was to give greater certainty to governments in the provision of subsidies.  The aim of defining a subsidy was to give greater certainty about what sort of measures might be subject to multilateral action and to countervailing duty action.  The aim of the "red/amber/green" distinction was also to give safe harbour for green subsidies and to provide a more effective remedy for adverse effects case. In reality, there was little change to the categories of prohibited subsidies.  Subsidies falling under Article 3.1(b) of the SCM Agreement were already covered (apart from GATT exceptions) by Article III of GATT (or indeed also under the WTO by paragraph 1 of the Annex to the Agreement on Trade-Related Investment Measures).  Any interpretation that pushed back the boundaries of Article 3.1(a) of the SCM Agreement would lead to governments and industry being once again placed in the situation of great uncertainty about future action under the WTO.

7.152 Australia states that governments and industry can accept rules that apply to all Members provided that they know the ground rules, and provided that the status of proposed measures is clear. Members would all have difficulties dealing with a situation where no one would know until there was a WTO challenge.  The situation would become absurd if, in addition, the success or otherwise of a challenge depended on economic developments or newspaper articles.  The problems would be further compounded if the rules were seen to be different for small and large Members in their application.  It would be a retrograde step for the WTO if Members with large domestic markets and numerous firms were implicitly subject to different rules than smaller Members with smaller domestic markets, and possibly single sellers, but a reliance on other markets for growth due to economic factors such as returns to scale.

7.153 Australia underlines that the Panel needs to bear in mind that whatever comes out of this Panel must result in an operational and workable system for governments acting in good faith if the WTO subsidies regime is not to be brought into disrepute. A government knows well when it provides greater protection for individual products such as in the GATT 1994 Article III:2 case cited by the United States.  However, by contrast, it could not know in advance what view a panel would take if the grounds put forward by the United States were to be adopted by the Panel and the Appellate Body.

7.154 Similarly, Australia continues, if a government was paying money on the basis of export performance through administrative action, it would know that that was the case and it would know that it was in breach of its WTO obligations.  The situation would be clear to the government concerned.  However, by contrast, the United States' position is that even if a government knows that its decisions have absolutely nothing to do with exports, it might still be found to be in breach of its WTO obligations.  A government would be faced with the situation where if a company, or some of the companies in an industry, are export-oriented or even just export, a panel might find that its WTO obligations had been inadvertently breached. That is not a viable situation, and underlines that the United States' approach to treaty interpretation would lead to absurd results.

7.155 Australia states that, in a rules-based system, officials must be able to give clear advice to governments whether proposals are consistent or inconsistent with WTO obligations, i.e. whether treaty obligations would be breached.  This cannot be done on the basis that, for example, some firms in an industry depend on exports for their viability. In any small country many industries export and, regardless of the proportion of their product that they export, depend on other markets for achieving profitability and some economies of scale. The United States' position is that potentially a subsidy to a firm that does not export at all, and has no intention of exporting, can be a prohibited export subsidy under Article 3.1(a) of the SCM Agreement.   This sort of scenario underlines that the United States' logic can lead to any number of absurd situations.

7.156 Australia reiterates that a rules-based system must provide clear guidance to governments about the nature of their WTO obligations.  Governments can accept that where market developments lead to allegations of adverse effects by other Members, then there may be non-violation cases brought, including cases under Part III of the SCM Agreement, or alternatively exports can be subject to countervailing duty action.  There is nothing new about that.  What governments would find hard to accept is a situation where they would have no guidance and where they would breach treaty obligations quite inadvertently without prior warning.

7.157 Australia submits that the United States' position on the “in fact” standard would provide no guidance to Members about what might constitute a prohibited subsidy.  It would provide carte blanche for trying to close markets through Part II of the SCM Agreement.  Where a Member is suffering adverse effects it has other remedies, including countervailing action, which is subject to detailed rules.  Indeed, virtually any case where subsidized imports are such as to cause material injury in an importing Member’s market would provide sufficient evidence to be an “in fact” export subsidy in the eyes of the United States.  This would serve to make much of Part III of the SCM Agreement redundant, inconsistent with the normal rules of treaty interpretation.

7.158  In addition, Australia continues, the way in which the United States has pursued the issue of the ICS and EFS gives rise to concerns about due process.  These schemes do not apply to automotive leather.  The view of the United States that the nature of a prior scheme affects the legal nature of a subsequent scheme has no basis.  It would make the task of governments ensuring compliance with their international obligations all that much more difficult and conceptually could result in the absurd situation where two Members could have exactly the same scheme but their legal nature would be different because of differences in their prior arrangements.  This just highlights the unreasonable basis of the position of the United States.  For the Panel to reach some conclusion about the legal status of a measure that no longer exists and has never been subject to a dispute panel under the GATT system or the WTO, would be inconsistent with the central principle that Members’ measures are presumed to be in conformity unless successfully challenged under the appropriate dispute settlement procedures.

7.159 The United States responds that it is the nature of legal rules that they are drafted in general terms and cannot be expected to provide bright-line tests for specifically resolving al hypothetical scenarios.  That is why there are rules of treaty interpretation to help resolve interpretative issues and dispute settlement panels to apply general legal rules to particular factual situations.  The drafters of the SCM Agreement chose to include an "in fact" standard, which by its nature requires a fact-based, case-by-case approach in its application.  If the "in fact" provision of Article 3.1(a) is to fulfill the purpose for which it was intended -- to prevent circumvention in fact of the prohibition in law against export subsidies -- a case-by-case approach is necessary.  If the drafters had regarded a case-by-case approach as undermining the stability of the WTO system, they obviously would not have included an "in fact" standard in the prohibition.