21/04/2013 Delivery | Westlaw India

Westlaw India Delivery Summary

Request made by : NOVUS IP USER
Request made on: Sunday, 21 A!"#, 2013 at 01:4$ IS%

&ontent %ye: &ases, 'e("s#at"on, U) &ases, U)
'e("s#at"on, U) *ou!na#s, U) &u!!ent
A+a!eness, EU ,ate!"a#s and &u!!ent
A+a!eness
%"t#e : Subs"d"es and t-e .%O /u!"s!uden0e
1e#"2e!y se#e0t"on: &u!!ent 1o0ument
Numbe! o3 do0uments de#"2e!ed: 1
4 2013 %-omson Reute!s Sout- As"a P!"2ate '"m"ted
21/04/2013 Delivery | Westlaw India Page2
International Trade Law & Regulation
2002
Subsidies and the WTO jurisprudene
,a!5 &#ou(-
Subjet! Inte!nat"ona# t!ade
"eywords! Inte!nat"ona# t!ade6 Subs"d"es
Legislation! A(!eement on Subs"d"es and &ounte!2a"#"n( ,easu!es 1774 8.%O9
A(!eement on A(!"0u#tu!e 1774 8.%O9
*Int. T.L.R. 109 Introdution
A subs"dy "s de3"ned as a 3"nan0"a# 0ont!"but"on ("2en by a (o2e!nment o! any ub#"0 body
+"t-"n t-e te!!"to!y o3 a .%O ,embe! +-"0- 0on3e!s a bene3"t to a se0"3"0 "ndust!y:1
;o+e2e!, a d"st"n0t"on "s made bet+een (ene!a# subs"d"es and se0"3"0 subs"d"es:
Subs"d"es !o2"ded to any "ndust!y o! 3"!m +"t-out #"m"tat"ons a!e to#e!ated be0ause t-ey
do not d"sto!t !esou!0e a##o0at"ons: On t-e ot-e! -and, subs"d"es ("2en to a se0"3"0
"ndust!y o! 3"!m a!e not to#e!ated be0ause t-ey a#te! ma!5et 0osts and !"0es:2 Subs"d"es
0an be used to !omote e<o!ts 8e<o!t subs"d"es9 o! be (!anted to an "ndust!y
!e(a!d#ess o3 +-et-e! "ts !odu0ts a!e e<o!ted o! not 8domest"0 subs"d"es9: A!t"0#es VI
and =VI o3 >A%% 1774 dea# +"t- subs"d"es but a!e 2e!y b!"e3: A!t"0#e =VI 0ons"sts o3 3"2e
a!a(!a-s: one on t-e not"3"0at"on !o0edu!e6 one on t-e (!ant"n( o! ma"ntenan0e o3 a
subs"dy, "n0#ud"n( any 3o!m o3 !"0e suo!t to "n0!ease e<o!ts o! de0!ease "mo!ts6 one
on t-e a2o"dan0e o3 e<o!t subs"d"es +"t- an e<#"0"t !o-"b"t"on o3 e<o!t subs"d"es sa2e
"n t-e 0ase o3 !"ma!y !odu0ts6 and one on t-e !e2"e+ !o0edu!e a#"0ab#e to A!t"0#e
=VI: No de3"n"t"on o3 subs"dy "s !o2"ded "n A!t"0#e =VI: A!t"0#e VI, on t-e ot-e! -and,
enab#es .%O ,embe!s to "mose 0ounte!2a"#"n( dut"es "n t-e e2ent t-at subs"d"sat"on
0auses o! t-!eatens to 0ause mate!"a# "n/u!y to a domest"0 "ndust!y !odu0"n( a #"5e
!odu0t: 1u!"n( t-e U!u(uay !ound ,embe!s de0"ded to e<and t-e subs"dy !u#es by
adot"n( t-e A(!eement on Subs"d"es and &ounte!2a"#"n( ,easu!es 8?S&, A(!eement@9:
%-"s a!t"0#e !e2"e+s t-e #ead"n( .%O 0ases "n t-e 3"e#d o3 subs"d"es de0"ded by ane#s and
t-e Ae##ate Aody:
The S#$ %greement and the %greement on %griulture
%-e S&, A(!eement d"st"n(u"s-es bet+een prohibited subsidies, a0t"onab#e subs"d"es
and nonBa0t"onab#e subs"d"es: %-e on#y 0ate(o!y o3 subs"d"es so 3a! 0-a##en(ed be3o!e
ane#s and t-e Ae##ate Aody "s t-at o3 prohibited subsidies, "n0#ud"n( e<o!t
subs"des:3 A0t"onab#e subs"d"es a!e to#e!ated by .%O ,embe!s !o2"ded t-at t-ey do not
8a9 0ause "n/u!y to t-e domest"0 "ndust!y o3 anot-e! ,embe!6 8b9 nu##"3y o! "ma"! t-e
bene3"ts ot-e! ,embe!s a!e a00!u"n( unde! t-e S&, A(!eement6 o! 809 0ause se!"ous
!e/ud"0e to t-e "nte!ests o3 anot-e! ,embe!:4 NonBa0t"onab#e subs"d"es a!e (ene!a##y
to#e!ated be0ause t-ey a!e not ("2en to a se0"3"0 "ndust!y o! 3"!m, but to t-e +-o#e
"ndust!y o! a## 3"!ms !odu0"n( a #"5e !odu0t:$ E<0et"ona##y, a 2e!y na!!o+ 0ate(o!y o3
se0"3"0 subs"d"es a!e 0ons"de!ed nonBa0t"onab#e, name#y a"d to "ndust!"a# !esea!0-,
!e("ona# de2e#oment o3 d"sad2anta(ed !e("ons, and t-e en2"!onment:C
%-e A(!eement on A(!"0u#tu!e, on t-e ot-e! -and, a##o+s ,embe!s to use e<o!t
subs"d"es +"t-"n t-e 3!ame+o!5 o3 A!t"0#e 3 o3 t-e A(!eement on A(!"0u#tu!e !o2"ded t-at
21/04/2013 Delivery | Westlaw India Page3
t-ey a!e not "n e<0ess o3 t-e 0omm"tment #e2e#s ne(ot"ated +"t- ot-e! ,embe!s:
WTO jurisprudene
%-e!e -as been s"(n"3"0ant#y "n0!eased a0t"2"ty by .%O ,embe!s "n t-e 3"e#d o3 subs"d"es:
In t-e #ast se2en yea!s 11 subs"dy d"sutes -a2e been de0"ded t-!ou(- t-e .%O d"sute
sett#ement me0-an"sm,D *Int. T.L.R. 110 +-e!eas on#y 1C subs"dy 0ases +e!e b!ou(-t
unde! t-e d"sute sett#ement me0-an"sm o3 >A%% 174D "n $0 yea!s:E S"< ot-e! d"sutes
a!e 0u!!ent#y end"n( +"t- .%O ane#s:7 Subs"dy "n2est"(at"ons -a2e ma"n#y been
0ommen0ed "n t-e ast a(a"nst t-e stee# "ndust!y, 3o##o+ed by 0-em"0a#s, te<t"#es, and
0"2"# a"!0!a3t, +"t- t-e Un"ted States as t-e ma/o! use! 3o##o+ed by &anada: In t-e #ast
se2en yea!s .%O ane#s and t-e Ae##ate Aody -a2e -ad t-e oo!tun"ty to 0#a!"3y
se2e!a# "mo!tant !"n0"#es o3 !e#e2an0e to subs"d"es:
Leading ases
%-e!e -a2e !e0ent#y been 3"2e 0ases "n2o#2"n( t-e substant"2e !o2"s"ons o3 t-e S&,
A(!eement, and one 0ase "n2o#2"n( t-e substant"2e !o2"s"ons o3 t-e A(!eement on
A(!"0u#tu!e dea#"n( +"t- subs"d"es: %-e 0ases be#o+ +"## be ana#ysed by !e3e!en0e to t-e
!o0edu!e, "ssues and !esu#t:
#anada&&%irra't Subsidies II()
On *anua!y 2E, 2002 a ane# !u#ed a(a"nst &anada !e(a!d"n( subs"d"es !o2"ded "n t-e
3o!m o3 e<o!t 0!ed"ts and #oan (ua!antees to t-e domest"0 a"!0!a3t "ndust!y
8Aomba!d"e!9 +-"0- !odu0es and su#"es /ets to A"! ."s0ons"n A"!#"nes &o!o!at"on: %-"s
0ase "s a 0ont"nuat"on o3 Canada--Aircraft Subsidies I.11
A!aF"#Gs ma"n a!(ument +as t-at t-e &anada A00ount !o(!amme unde! t-e E<o!t
1e2e#oment &o!o!at"on 8?E1&@9 !o(!amme, +as an e<o!t subs"dy "n0ons"stent +"t-
A!t"0#e 3:18a9 o3 t-e S&, A(!eement: As a !e#"m"na!y matte!, A!aF"# !equested t-e ane#
to 3"nd t-at t-e &anada A00ount and In2est"ssement Huebe0 !o(!ammes 0onst"tuted ?as
su0-@ e<o!t subs"d"es: %-e Pane# 3ound t-at ne"t-e! !o(!ammes mandated
subs"d"sat"on be0ause t-ey d"d not 0onta"n any 3o!m o3 e<#"0"t (o2e!nment ass"stan0e
and t-e 0on3e!!a# o3 a bene3"t to t-e domest"0 "ndust!y 8Aomba!d"e!9: %-e!e3o!e, t-e
!o(!ammes d"d not 0onst"tute an e<o!t subs"dy "n0ons"stent +"t- A!t"0#e 3:18a9 o3 t-e
S&, A(!eement: In t-"s 0onte<t, t-e Pane# !e#"ed on t-e mandato!y/d"s0!et"ona!y
!"n0"#e +-"0- "s 0ons"de!ed an essent"a# !"n0"#e o3 "nte!nat"ona# t!ade #a+ 3o!
assess"n( t-e 0omat"b"#"ty/"n0omat"b"#"ty o3 a nat"ona# measu!e +"t-"n t-e .%O
a(!eements:
;o+e2e!, t-e Pane# 3ound t-at se0"3"0 t!ansa0t"ons 0a!!"ed out unde! t-e &anada
A00ount !o(!amme +e!e "n0ons"stent +"t- &anadaGs ob#"(at"ons unde! A!t"0#es 1 and
3:18a9 o3 t-e S&, A(!eement be0ause a 3"nan0"a# 0ont!"but"on +as 0on3e!!ed to A"!
."s0ons"n A"!#"nes &o!o!at"on "n t-e 3o!m o3 a #oan ("2en unde! mo!e 3a2ou!ab#e
3"nan0"a# te!ms t-an t-ose a2a"#ab#e 3o! A"! ."s0ons"n "n t-e ma!5et: In t-"s 0onte<t, a
bene3"t +as a#so 0on3e!!ed to A"! ."s0ons"n: I"na##y, t-e !o(!amme +as 0ont"n(ent uon
e<o!t e!3o!man0e be0ause "t mandated &anada ?to suo!t and de2e#o &anadaGs
e<o!t t!ade and &anad"an 0aa0"ty to en(a(e "n t-at t!ade and to !esond to
"nte!nat"ona# bus"ness oo!tun"t"es@:
A!aF"# a#so !equested t-e Pane# to 3"nd t-at ot-e! t!ansa0t"ons 0a!!"ed out unde! t-e E1&
!o(!amme +"t- At#ant"0 Sout-east A"!#"nes, At#ant"0 &oast A"!#"nes, &oma"!, )ende## and
A"! Nost!um +e!e "n0ons"stent +"t- A!t"0#es 1 and 3:18a9 o3 t-e S&, A(!eement be0ause
t-ey +e!e o33e!ed unde! mo!e 3a2ou!ab#e 3"nan0"a# te!ms t-an t-ose e<"st"n( "n t-e
ma!5et, so t-at a bene3"t +as 0on3e!!ed on Aomba!d"e!: In a!t"0u#a!, A!aF"# 0#a"med t-at
t-e !eayment te!m o33e!ed to At#ant"0 Sout-east A"!#"nes "n e<0ess o3 10 yea!s
0onst"tuted a bene3"t +"t-"n t-e mean"n( o3 A!t"0#e 1:18b9 o3 t-e S&, A(!eement:12
*Int. T.L.R. 111 %-e Pane# 3ound t-at none o3 t-e t!ansa0t"ons +"t- t-ose 0oman"es
0onst"tuted a subs"dy unde! A!t"0#e 1 o3 t-e S&, A(!eement be0ause "nsu33"0"ent
e2"den0e -ad been !o2"ded +"t- !e(a!d to t-e 0on3e!!a# o3 a bene3"t: A#so, t-e Pane#
3ound t-at e<0eed"n( t-e 10Byea! te!m d"d not mean ipso facto t-at ?3"nan0"n( "s
21/04/2013 Delivery | Westlaw India Page4
!o2"ded on te!ms mo!e 3a2ou!ab#e t-an t-ose a2a"#ab#e to t-e !e0""ent on t-e ma!5et@:
A00o!d"n(#y, t-e Pane# !equested &anada to +"t-d!a+ t-e "##"0"t subs"dy 3o! t-e A"!
."s0ons"n A"!#"nes +"t-"n 70 days 3!om t-e adot"on o3 t-e Pane# Reo!t by t-e 1SA,
u!suant to A!t"0#e 4:D o3 t-e S&, A(!eement:13 %-e Pane# Reo!t +as adoted on
Ieb!ua!y 17, 2002 by t-e 1"sute Sett#ement Aody 8?1SA@9:
#anada&&Dairy *roduts(+
On ,ay 1D, 1777 at t-e !equest o3 Ne+ Jea#and and t-e Un"ted States a ane# !u#ed
a(a"nst &anada "n !e#at"on to an e<o!t da"!y s0-eme !o2"ded to domest"0 !o0esso!s o3
da"!y !odu0ts: %-e 0om#a"nantsG ma/o! a!(uments +e!e t-at &#asses $8d9 and 8e9 o3
t-e Se0"a# ,"#5 S0-eme 0onst"tuted an e<o!t subs"dy "n0ons"stent +"t- &anadaGs
ob#"(at"ons unde! t-e A(!eement on A(!"0u#tu!e:1$ In a!t"0u#a!, t-e e<o!t subs"dy +as
"n e<0ess o3 t-e 0omm"tment #e2e#s &anada -ad unde!ta5en unde! A!t"0#e 3 o3 t-e
A(!eement on A(!"0u#tu!e: A!t"0#e 3:3 o3 t-e A(!eement on A(!"0u#tu!e !eads:
?sub/e0t to t-e !o2"s"ons o3 a!a(!a-s 28b9 and 4 o3 A!t"0#e 7, a ,embe! s-a## not
!o2"de e<o!t subs"d"es #"sted "n a!a(!a- 1 o3 A!t"0#e 7 "n !ese0t o3 t-e a(!"0u#tu!a#
!odu0ts o! (!ous o3 !odu0ts se0"3"ed "n Se0t"on II o3 Pa!t IV o3 "ts S0-edu#e "n e<0ess
o3 t-e bud(eta!y out#ay and quant"tat"2e 0omm"tment #e2e#s se0"3"ed t-e!e"n and s-a##
not !o2"de su0- subs"d"es "n !ese0t o3 any a(!"0u#tu!a# !odu0t not se0"3"ed "n t-at
Se0t"on o3 "ts S0-edu#e:@
&#asses $8d9 and 8e9 o3 t-e Se0"a# ,"#5 S0-eme a##o+ed domest"0 da"!y !o0esso!s, +-o
a!e based "n Onta!"o and Huebe0, to buy m"#5 3o! e<o!t u!oses at #o+e! !"0es t-an
t-e m"#5 dest"ned 3o! t-e domest"0 ma!5et: %-"s 2"o#ated &anadaGs ob#"(at"ons unde!
A!t"0#es 18e9, 3:3, E, 7:18a9 and 809 and 10 o3 t-e A(!eement on A(!"0u#tu!e: %-e m"#5
dest"ned 3o! e<o!t use +as so#d to t-e da"!y !o0esso!s by (o2e!nment a(en0"es su0- as
t-e &anad"an 1a"!y &omm"ss"on 8?&1&@9, t-e P!o2"n0"a# ,"#5 ,a!5et"n( Aoa!ds 8?P,,A@9
and t-e &anad"an ,"#5 Su#y ,ana(ement &omm"ttee 8?&,S,&@9: %-ese a(en0"es +e!e
ma"n#y !esons"b#e 3o! ne(ot"at"n( t-e !"0e +"t- t-e !o0esso!s:
%-e Pane# 3ound t-at &anad"an da"!y !o0esso!s 0ou#d not obta"n m"#5 3!om ot-e! sou!0es
on bette! 0ond"t"ons t-an t-ose o33e!ed by t-e (o2e!nment a(en0"es: None o3 t-e da"!y
!o0esso!s a00essed "mo!ted m"#5 3o! e<o!t use, as "mo!ted m"#5 on#y ente!ed t-e
ma!5et at t-e d"s0!et"on o3 t-e 1ea!tment o3 Io!e"(n A33a"!s and Inte!nat"ona# %!ade and
+as a#+ays so#d by t-e 1ea!tment o3 Io!e"(n A33a"!s and Inte!nat"ona# %!ade at -"(-e!
!"0es t-an t-e domest"0 ones: A00o!d"n(#y, a bene3"t to t-e da"!y !o0esso!s +as
0on3e!!ed "n 2"o#at"on o3 A!t"0#e 7:18a9 o3 t-e A(!eement on A(!"0u#tu!e: %-e Pane# a#so
3ound t-at su0- a 0on3e!!a# +as !o2"ded by t-e (o2e!nment o3 &anada t-!ou(-
(o2e!nment a(en0"es "n 2"o#at"on o3 A!t"0#e 7:18a9 o3 t-e A(!eement on A(!"0u#tu!e:1C
I"na##y t-e Pane# 3ound t-at 0#asses $8d9 and 8e9 o3 t-e Se0"a# ,"#5 S0-eme +e!e
0ont"n(ent ?uon e<o!t e!3o!man0e@ be0ause t-ey +e!e on#y a2a"#ab#e to domest"0
da"!y !o0esso!s 3o! e<o!t u!oses: A00o!d"n(#y t-e Pane# !equested &anada to b!"n(
t-e measu!e "nto 0om#"an0e +"t- "ts .%O ob#"(at"ons unde! t-e A(!eement on
A(!"0u#tu!e: On *u#y 1$, 1777 &anada aea#ed and on O0tobe! 13, 1777 t-e Ae##ate
Aody u-e#d t-e ane# !u#"n(:
#ompliane panel
On *u#y 11, 2001 a 0om#"an0e ane# +as estab#"s-ed unde! A!t"0#e 21:$ o3 t-e 1SU:
A00o!d"n( to Ne+ Jea#and and t-e Un"ted States, t-e &omme!0"a# E<o!t ,"#5 s0-eme
8?&E,@9BBt-e ne+ !o(!amme set u by &anada to ma!5et m"#5 outs"de &anada, st"##
0onst"tuted an e<o!t subs"dy "n0ons"stent +"t- &anadaGs ob#"(at"ons unde! t-e
A(!eement on A(!"0u#tu!e:
%-e ma"n a!(uments o3 Ne+ Jea#and and t-e Un"ted States +e!e t-at &anada 0ont"nued
to subs"d"se t-e da"!y !o0esso! "ndust!y 3o! e<o!t u!oses "n e<0ess o3 t-e
0omm"tment #e2e#s "t -ad unde!ta5en unde! A!t"0#e 3 o3 t-e A(!eement on A(!"0u#tu!e:
Io! Ne+ Jea#and and t-e Un"ted States, t-e &E, s0-eme +as an e<o!t subs"dy 0o2e!ed
unde! t-e A(!eement on A(!"0u#tu!e be0ause a ayment +as 0on3e!!ed to t-e domest"0
da"!y !o0ess"n( "ndust!y t-!ou(- t-e same (o2e!nment a(en0"es "n2o#2ed "n 0#asses
21/04/2013 Delivery | Westlaw India Page5
$8d9 and *Int. T.L.R. 112 8e9 o3 t-e Se0"a# ,"#5 S0-eme:1D In a!t"0u#a!, t-e &E,
s0-eme a##o+ed domest"0 da"!y !o0esso!s to buy m"#5 3o! e<o!t u!oses at #o+e!
!"0es t-an t-e m"#5 dest"ned 3o! t-e domest"0 ma!5et:1E
Io! t-e se0ond t"me, t-e Pane# suo!ted t-e 0om#a"nantsG a!(uments: %-e Pane# 3ound
t-at t-e &E, s0-eme +as an e<o!t subs"dy "n0ons"stent +"t- A!t"0#e 7:1809 o3 t-e
A(!eement on A(!"0u#tu!e, be0ause a substant"a# (o2e!nment "nte!2ent"on -ad o00u!!ed
"n t-e 3o!m o3 an a##o0at"on o3 quotas +-"0- !e2ented domest"0 da"!y !odu0e!s 3!om
se##"n( m"#5 outs"de t-e a##o0ated quota on t-e domest"0 ma!5et:17 ,o!eo2e!, a system o3
moneta!y ena#t"es +as set u by t-e >o2e!nment o3 &anada and "ts P!o2"n0es, "n
a!t"0u#a! Onta!"o and Huebe0, "n 0ase e<o!t !odu0t"on +as d"2e!ted "nto t-e domest"0
ma!5et:
%-e Pane# a#so 3ound t-at &anada -ad nu##"3"ed and "ma"!ed t-e bene3"ts Ne+ Jea#and
and t-e Un"ted States -ad obta"ned unde! t-e A(!eement on A(!"0u#tu!e by b!ea5"n( t-e
!u#es set out "n t-e A(!eement: On Setembe! 4, 2001 &anada aea#ed: It 0#a"med t-at
t-e ayment to t-e da"!y "ndust!y +as not an e<o!t subs"dy as set out "n A!t"0#e 7:1 809
o3 t-e A(!eement on A(!"0u#tu!e:
On 1e0embe! 3, 2001 t-e Ae##ate Aody !e2e!sed t-e Pane#Gs 3"nd"n(: In a!t"0u#a!, t-e
Ae##ate Aody 3ound t-at t-e &E, sa#es d"d not !equ"!e any (o2e!nment e!m"t to se##
m"#5 outs"de &anada be0ause sa#es +e!e, t-"s t"me, 3!ee#y ne(ot"ated bet+een t-e
!odu0e!s and t-e !o0esso!s: A00o!d"n(#y t-e!e +as not a ?ayment@ +"t-"n t-e
mean"n( o3 A!t"0#e 7:1 809: A#so, t-e >o2e!nment d"d not 3o!0e t-e da"!y !o0esso!s to
e<o!t sa#es as no ob#"(at"on to do so +as "mosed on t-em: ;o+e2e!, t-e e2"den0e
!odu0ed by Ne+ Jea#and and t-e Un"ted States d"d not a##o+ t-e Ae##ate Aody to
0om#ete "ts ana#ys"s: As a !esu#t, t-e Ae##ate Aody +as unab#e to ma5e
!e0ommendat"ons to t-e ,embe!s: On 1e0embe! 1E, 2001 t-e 1SA adoted t-e Pane#
and Ae##ate Aody Reo!ts: ;o+e2e!, on *anua!y 1D, 2002 a se0ond 0om#"an0e ane#
!equest +as subm"tted by Ne+ Jea#and and t-e Un"ted States to t-e 1SA a3te! t-e
Ae##ate Aody +as unab#e to 0om#ete "ts ana#ys"s and ma5e !oe! !e0ommendat"ons
to &anada:
,nited States&&-oreign Sales #orporations.)
%-e Io!e"(n Sa#es &o!o!at"ons 8?IS&@9 s0-eme !o2"ded 3o! by Se0t"ons 721B72D o3 t-e
U:S: Inte!na# Re2enue &ode and !e#ated measu!es estab#"s-es a se0"a# ta< t!eatment 3o!
3o!e"(n sa#es 0o!o!at"ons: %-"s s0-eme e<emts U:S: 0oman"es 3!om ta<es t-at +ou#d
ot-e!+"se -a2e to be a"d on t-e"! e<o!t sa#es: %-e Ae##ate Aody u-e#d t-e E:U:Gs
0#a"m t-at t-"s s0-eme 0onst"tuted an e<o!t subs"dy ("2"n( U:S: 0oman"es an un3a"!
ad2anta(e and 0!eat"n( ma/o! d"sto!t"ons o3 "nte!nat"ona# t!ade +-"0- 0ost t-e U:S:
bud(et a!ound K3:$ b"##"on ea0- yea!:21 %-e d"sute "s !em"n"s0ent o3 t-e >A%%/1IS&
d"sute o3 17D2 +-e!e t-e Eu!oean &ommun"t"es as5ed a ane# to 3"nd t-at t-e U:S:
1omest"0 Inte!nat"ona# Sa#es &o!o!at"on #a+ +as "n 2"o#at"on o3 A!t"0#e =VI:4 o3 >A%%
174D: %-e Pane# on t-at o00as"on 3ound t-at t-e 1IS& #e("s#at"on +as a subs"dy,
"n0ons"stent +"t- t-e Un"ted StatesGs >A%% ob#"(at"ons:22
A IS& "s a s-e## 0omany o3 a U:S: 0o!o!at"on estab#"s-ed "n a ta< -a2en 8mo!e t-an 70
e! 0ent a!e "n t-e V"!("n Is#ands, Aa!bados and >uam9 +-ose a"m "s to se!2e as a
2e-"0#e 3o! U:S: e<o!ts and "n t-"s +ay !edu0e t-e ta< due by 1$ e! 0ent to 30 e!
0ent:
%-"s d"sute +as "n"t"ated by an E:U: 0om#a"nt o3 No2embe! 1E, 177D t-at t-e IS&
s0-eme +as "n0ons"stent +"t- U:S: ob#"(at"ons unde! A!t"0#es III:4 and =VI o3 >A%% 1774,
A!t"0#es 3:18a9 and 8b9 o3 t-e S&, A(!eement, and A!t"0#es 3 and E o3 t-e A(!eement on
A(!"0u#tu!e: On *u#y 1, 177E, t-e E:U: !equested t-e estab#"s-ment o3 a ane#: In t-e
!equest 3o! a ane#, t-e E:U: "n2o5ed A!t"0#e 3:18a9 and 8b9 o3 t-e S&, A(!eement, and
A!t"0#es 3 and E, 7 and 10 o3 t-e A(!eement on A(!"0u#tu!e but d"d not u!sue t-e 0#a"ms
unde! t-e >A%% 1774: At "ts meet"n( on Setembe! 22, 177E, t-e 1SA estab#"s-ed a
ane#:
%-e Pane# 3ound t-at, t-!ou(- t-e IS& s0-eme, t-e Un"ted States -as a0ted
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"n0ons"stent#y +"t- "ts ob#"(at"ons unde! A!t"0#e 3:18a9 o3 t-e S&, A(!eement as +e## as
+"t- "ts ob#"(at"ons unde! A!t"0#e 3:3 o3 t-e A(!eement on A(!"0u#tu!e 8and 0onsequent#y
+"t- "ts ob#"(at"ons unde! A!t"0#e E o3 t-at A(!eement9: %-e !eo!t o3 t-e Pane# +as
0"!0u#ated to ,embe!s on O0tobe! E, 1777:23 On No2embe! 2C, 1777, t-e Un"ted States
not"3"ed "ts "ntent"on to aea# 0e!ta"n "ssues o3 #a+ and #e(a# "nte!!etat"ons de2e#oed
by t-e Pane#:
*Int. T.L.R. 113 %-e !eo!t o3 t-e Ae##ate Aody +as 0"!0u#ated to ,embe!s on
Ieb!ua!y 24, 2000: %-e Ae##ate Aody u-e#d t-e Pane#Gs 3"nd"n( t-at t-e IS& measu!e
0onst"tuted a !o-"b"ted subs"dy unde! A!t"0#e 3:18a9 o3 t-e S&, A(!eement: ;o+e2e!,
t-e Ae##ate Aody !e2e!sed t-e Pane#Gs 3"nd"n( t-at t-e IS& measu!e "n2o#2ed ?t-e
!o2"s"on o3 subs"d"es to !edu0e t-e 0osts o3 ma!5et"n( e<o!ts@ o3 a(!"0u#tu!a# !odu0ts
unde! A!t"0#e 7:18d9 o3 t-e A(!"0u#tu!e A(!eement and, "n 0onsequen0e, !e2e!sed t-e
Pane#Gs 3"nd"n(s t-at t-e Un"ted States -ad a0ted "n0ons"stent#y +"t- "ts ob#"(at"ons unde!
A!t"0#e 3:3 o3 t-e A(!"0u#tu!e A(!eement: %-e Ae##ate Aody 3u!t-e! 3ound t-at t-e
Un"ted States a0ted "n0ons"stent#y +"t- "ts ob#"(at"ons unde! A!t"0#es 10:1 and E o3 t-e
A(!"0u#tu!e A(!eement by a#y"n( e<o!t subs"d"es, t-!ou(- t-e IS& measu!e, "n a
manne! +-"0- !esu#ts "n, o! t-!eatens to #ead to, 0"!0um2ent"on o3 "ts e<o!t subs"dy
0omm"tments +"t- !ese0t to a(!"0u#tu!a# !odu0ts: %-e Ae##ate Aody em-as"sed,
-o+e2e!, t-at "t +as not !u#"n( t-at a ,embe! must 0-oose one 5"nd o3 ta< system o2e!
anot-e! so as to be 0ons"stent +"t- t-at ,embe!Gs .%O ob#"(at"ons: %-e 1SA adoted
t-e Ae##ate Aody Reo!t and t-e Pane# Reo!t, as mod"3"ed by t-e Ae##ate Aody
Reo!t, at "ts meet"n( on ,a!0- 20, 2000:24 Pu!suant to A!t"0#e 21:3 o3 t-e 1SU, t-e
Un"ted States "n3o!med t-e 1SA on A!"# D, 2000 o3 "ts "ntent"on to "m#ement t-e
!e0ommendat"ons o3 t-e 1SA "n a manne! 0ons"stent +"t- "ts .%O ob#"(at"ons:
#ompliane panel
On Au(ust 20, 2001, a 0om#"an0e ane# estab#"s-ed at t-e !equest o3 t-e E:&: a(a"nst
t-e Un"ted States 3ound t-at t-e IS& Reea# and E<t!ate!!"to!"a# In0ome E<0#us"on A0t o3
2000 8?E%I A0t@9, +-"0- !e#a0ed t-e IS& !o2"s"ons +as "n 2"o#at"on o3 t-e .%O
A(!eement on Subs"d"es and &ounte!2a"#"n( ,easu!es 8?S&,@9, t-e A(!eement on
A(!"0u#tu!e and >A%% 1774: %-e S&, A(!eement sets out t-e mu#t"#ate!a# d"s0"#"ne
!e(u#at"n( t-e !o2"s"on o3 subs"d"es and t-e use o3 0ounte!2a"#"n( measu!es to !emo2e
t-e "n/u!y 0aused by subs"d"sed "mo!ts: %-e A(!eement on A(!"0u#tu!e estab#"s-es a
numbe! o3 (ene!a##y a#"0ab#e !u#es +"t- !e(a!d to t!adeB!e#ated a(!"0u#tu!a# measu!es
!"ma!"#y "n t-e a!eas o3 domest"0 and e<o!t subs"d"es: >A%% 1774 sets out t-e ma"n
!u#es 3o! t!ade "n (oods su0- as mostB3a2ou!edBnat"on and nat"ona# t!eatment:
%-e ma"n E:U: a!(uments +e!e t-at t-e E%I A0t +as a ?subs"dy@ +"t-"n t-e mean"n( o3
A!t"0#e 1:1: o3 t-e S&, A(!eement and t-at 0e!ta"n e<t!ate!!"to!"a# "n0ome e<0#uded 3!om
ta<at"on +as "n0ons"stent +"t- A!t"0#e III:4 o3 >A%% 1774: %-e Un"ted States 0#a"med t-at
t-e E:U: d"d not -a2e enou(- e2"den0e to suo!t "ts a!(uments: %-e Pane# a00eted t-e
E:U: a!(uments: It 3ound t-at t-e E%I A0t +as a subs"dy +"t-"n t-e mean"n( o3 A!t"0#e 1:1
o3 t-e S&, A(!eement be0ause a ?3"nan0"a# 0ont!"but"on@ +as !o2"ded by t-e U:S:
>o2e!nment "n t-e 3o!m o3 a ta< 0on0ess"on on e<t!ate!!"to!"a# "n0ome: A 0on3e!!a# o3 a
?bene3"t@ +as a#so !o2"ded: U:S: ta< aye!s "n2o#2ed "n a t!ansa0t"on 0an e<0#ude 3o!e"(n
t!ade "n0ome 3!om t-e"! (!oss "n0ome, so t-at t-ey do not -a2e to ay a 0e!ta"n amount
o3 ta< to t-e U:S: aut-o!"t"es: %-e subs"dy +as 3"na##y ?0ont"n(ent uon e<o!t
e!3o!man0e@ be0ause t-e e<"sten0e and amount o3 "t deended on t-e e<"sten0e o3
"n0ome a!"s"n( 3!om e<o!ts o3 U:S: !odu0ts:
%-e Pane# a#so 3ound t-at 0e!ta"n E%I measu!es 0ond"t"on"n( a00ess to "n0ome ta<
ad2anta(es "n !ese0t o3 0e!ta"n !odu0ts +e!e "n 2"o#at"on o3 A!t"0#e III:4 o3 >A%% 1774:
In a!t"0u#a!, use o3 3o!e"(n !odu0ts by U:S: manu3a0tu!e!s d"d not a##o+ t-em to obta"n
t-e ad2anta(e, "n t-e 3o!m o3 t-e e<0#us"on 3!om ta< o3 t-e o!t"on o3 e<t!ate!!"to!"a#
"n0ome t-at "s qua#"3y"n( 3o!e"(n t!ade "n0ome a2a"#ab#e unde! t-e E%I A0t, +-"#e use o3
domest"0 !odu0ts d"d: %-"s 0!eated an "n0ent"2e to use domest"0 !odu0ts o2e! 3o!e"(n
!odu0ts and t-us ?#ess 3a2ou!ab#e t!eatment@ +as a00o!ded to 3o!e"(n !odu0ts "n
2"o#at"on o3 A!t"0#e III:4 o3 >A%% 1774: %-e E%I measu!es a#so -ad a ne(at"2e "ma0t on
21/04/2013 Delivery | Westlaw India Page7
t-e ?0ond"t"ons o3 0omet"t"ons@ as domest"0 !odu0ts +e!e !e3e!!ed o2e! 3o!e"(n ones:
%-e Pane# !e#"ed on t-e .%O /u!"s!uden0e set out "n Canada--Autos +-e!e t-e Ae##ate
Aody !u#ed t-at:
?%-e #essB3a2ou!ab#e t!eatment ob#"(at"on "n A!t"0#e III:4 -as been 0ons"stent#y
"nte!!eted as a !equ"!ement to ensu!e e33e0t"2e equa#"ty o3 oo!tun"t"es bet+een
"mo!ted !odu0ts and domest"0 !odu0ts: In t-"s !ese0t, "t -as been -e#d t-at, s"n0e a
3undamenta# ob/e0t"2e o3 A!t"0#e III "s t-e !ote0t"on o3 t-e e<e0tat"ons on t-e
0omet"t"2e !e#at"ons-" bet+een "mo!ted and domest"0 !odu0ts, a measu!e 0an be
3ound to be "n0ons"stent +"t- A!t"0#e III:4 be0ause o3 "ts otent"a# d"s0!"m"nato!y "ma0t
on "mo!ted !odu0ts:@2$
I"na##y, t-e Pane# 3ound t-at t-e E%I A0t 0!eated a #e(a# ent"t#ement 3o! !e0""ents to
!e0e"2e e<o!t subs"d"es +"t- !ese0t to s0-edu#ed and uns0-edu#ed a(!"0u#tu!a#
!odu0ts, "n 2"o#at"on o3 t-e Un"ted StatesGs ob#"(at"ons unde! t-e A(!eement on
A(!"0u#tu!e: A00o!d"n(#y t-e Pane# !equested t-e Un"ted States to b!"n( "ts measu!e "nto
0om#"an0e +"t- "ts .%O ob#"(at"ons: On O0tobe! 1$, 2001 t-e Un"ted States aea#ed:
An o!a# -ea!"n( +as -e#d *Int. T.L.R. 114 on No2embe! 2C and 2D: On *anua!y 14,
2002 t-e Ae##ate Aody u-e#d t-e Pane# !u#"n(: %-e Un"ted States 0ou#d no+ 3a0e
san0t"ons +o!t- mo!e t-an K4 b"##"on:
,nited States&&/0port restraints.1
On *une 27, 2001, a .%O ane# !u#ed t-at t-e Un"ted States 0ou#d not 0ounte!2a"# e<o!t
!est!a"nts 8?"nd"!e0t subs"d"es@9 3!om &anada unde! U:S: 0ounte!2a"#"n( duty #a+: &anada
a!(ued t-at, "n t-"s d"sute, t-e Un"ted States 0ou#d not t!eat e<o!t !est!a"nts as
subs"d"es be0ause t-ey d"d not meet one o3 t-e 0!"te!"a set out "n t-e S&, A(!eement,
name#y t-e ?3"nan0"a# 0ont!"but"on@ 0!"te!"on: %-e S&, A(!eement 0onta"ns a de3"n"t"on o3
subs"dy unde! A!t"0#e 1: A subs"dy "s de3"ned as 8a9 a 3"nan0"a# 0ont!"but"on, 8b9 ("2en by
a (o2e!nment o! any ub#"0 aut-o!"ty +"t-"n t-e te!!"to!y o3 a .%O ,embe!, 809 +-"0-
0on3e!s a bene3"t: A## t-!ee o3 t-ese e#ements must be sat"s3"ed "n o!de! 3o! a subs"dy to
e<"st:
%-e Un"ted States 0ontended t-at &anada 3a"#ed to "dent"3y t-e se0"3"0 domest"0 #a+
+-"0- t-ey 0#a"med mandates t-e U:S: aut-o!"t"es to t!eat e<o!t !est!a"nts as subs"d"es:
A00o!d"n(#y, t-e Un"ted States d"d not 2"o#ate "ts .%O ob#"(at"ons unde! t-e S&,
A(!eement:
%-e Pane# suo!ted t-e U:S: a!(uments be0ause t-e U:S: 0ounte!2a"#"n( duty #a+ +as
s"#ent on t-e quest"on o3 +-et-e! e<o!t !est!a"nts +e!e mandato!y "n natu!e: %-e Pane#
!e#"ed on t-e mandato!y/d"s0!et"ona!y do0t!"ne set out "n ot-e! ane# and Ae##ate Aody
!eo!ts:2D Io! e<am#e, "n United States--Anti-dumping Act of !6 8?t-e 171C A0t@9 t-e
Ae##ate Aody sa"d t-at:
?Pane#s de2e#oed t-e 0on0et t-at mandato!y and d"s0!et"ona!y #e("s#at"on s-ou#d be
d"st"n(u"s-ed 3!om ea0- ot-e!, !eason"n( t-at on#y #e("s#at"on t-at mandates a 2"o#at"on
o3 >A%% ob#"(at"ons 0an be 3ound as su0- to be "n0ons"stent +"t- t-ose ob#"(at"ons:@
;o+e2e!, t-e Pane# a00eted &anadaGs a!(uments t-at e<o!t !est!a"nts "n t-"s d"sute
+e!e not a subs"dy unde! t-e S&, A(!eement be0ause t-ey d"d not 0onst"tute a
?3"nan0"a# 0ont!"but"on@: In a!t"0u#a!, t-e Pane# !e/e0ted t-e U:S: a!(ument t-at e<o!t
!est!a"nts 3e## unde! A!t"0#e 1:1:8a98198"29 o3 t-e S&, A(!eement +-e!e t-e!e "s on#y a
?3"nan0"a# 0ont!"but"on@, "3:
?a (o2e!nment ma5es ayments to a 3und"n( me0-an"sm, o! ent!usts o! d"!e0ts a !"2ate
body to 0a!!y out one o! mo!e o3 t-e tye o3 3un0t"ons "##ust!ated "n 8"9 to 8 """9 abo2e
+-"0- +ou#d no!ma##y be 2ested "n t-e (o2e!nment and t-e !a0t"0e, "n no !ea# sense,
d"33e!s 3!om !a0t"0es no!ma##y 3o##o+ed by (o2e!nments@:
%-e Pane# !e/e0ted t-e U:S: b!oad "nte!!etat"on o3 ?3"nan0"a# 0ont!"but"on@ +-e!e e<o!t
!est!a"nts and an "nt!us"on o! (o2e!nment d"!e0t"on to se## !odu0ts domest"0a##y +e!e
?3un0t"ona##y equ"2a#ent@ and t-e!e3o!e 0o2e!ed unde! t-e !o2"s"on: %-e Pane# +ent on
to say t-at su0- an a!oa0- +ou#d oen t-e doo! to 3a!B!ea0-"n( 0onsequen0es "n t-e
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dete!m"nat"on o3 ?3"nan0"a# 0ont!"but"on@, "n 0ont!ast to t-e ob/e0t"2es o3 t-e S&,
A(!eement, +-"0- a!e to ta05#e on#y un#a+3u# and se0"3"0 (o2e!nment be-a2"ou!: In
a!t"0u#a!, t-e U:S: a!oa0- seemed to "m#y t-at any (o2e!nment measu!e t-at
0!eates ma!5et 0ond"t"ons 3a2ou!ab#e to a !odu0t "n t-e domest"0 ma!5et 0ou#d be
0ons"de!ed a ?3"nan0"a# 0ont!"but"on@ unde! t-e S&, A(!eement: ;o+e2e!, t-e Pane#
3ound t-at on#y an e<#"0"t a0t"on o3 de#e(at"on o! 0ommand 0ou#d 0onst"tute a ?3"nan0"a#
0ont!"but"on@ +"t-"n t-e mean"n( o3 A!t"0#e 1:1:8a98198"29 8na!!o+ "nte!!etat"on9: As t-e
Pane# 3ound t-at t-e Un"ted States +as not "n 2"o#at"on o3 "ts .%O 0omm"tments +"t-
!ese0t to t-e mandato!y/d"s0!et"ona!y "ssue, "t d"d not !equ"!e t-e Un"ted States to
0-an(e "ts domest"0 #a+: At "ts meet"n( on Au(ust 23, 2001 t-e 1SA adoted t-e Pane#
Reo!t:
2ra3il&&%irra't subsidies.4
On *une 1E, 177C &anada "n"t"ated a .%O d"sute sett#ement !o0edu!e a(a"nst A!aF"#
o2e! t-e Programa de #inanciamento as $%porta&'es 8?PROE=@9 0!eated by t-e A!aF"#"an
>o2e!nment to suo!t e<o!ts by t-e nat"ona# a"!0!a3t "ndust!y: %+o tyes o3 3"nan0"n(
+e!e used by A!aF"# to en0ou!a(e t-e a0qu"s"t"on o3 A!aF"#"an a"!0!a3t by 3o!e"(n
u!0-ase!s: Io!e"(n u!0-ase!s 0ou#d u!0-ase A!aF"#"an a"!0!a3t t-!ou(- a #oan made by
a ban5 o! ot-e! 3"nan0"n( aut-o!"ty o! t-!ou(- a #ease +-e!e a u!0-ase ot"onB
ob#"(at"on at t-e end o3 t-e #eas"n( +as made: On0e t-e t!ansa0t"on -ad ta5en #a0e, t-e
A!aF"#"an >o2e!nment "ssued nat"ona# t!easu!y bonds to t-e ban5 o! 3"nan0"n( "nst"tut"ons
t-at 3"nan0ed t-e u!0-ase o3 t-e a"!0!a3t: %-e #end"n( ban5 o! 3"nan0"n( "nst"tut"on t-en
assed on t-e ayment to t-e a"!0!a3t u!0-ase! "n t-e 3o!m o3 !edu0ed "nte!est:
Em!esa A!as"#e"!a de Ae!onLut"0a S:A: 8?Emb!ae!@ 9 +as t-e ma"n bene3"0"a!y o3 PROE=
ayments:27
On *une 1E, 177C &anada !equested 0onsu#tat"ons +"t- A!aF"#, but 0onsu#tat"ons 3a"#ed to
!ea0- a sat"s3a0to!y and am"0ab#e so#ut"on: On Setembe! *Int. T.L.R. 115 1C, 177C
&anada !equested t-e estab#"s-ment o3 a ane# and a ane# +as estab#"s-ed on *u#y 23,
177EBBt+o yea!s #ate! due to A!aF"#Gs ob/e0t"ons to "ts estab#"s-ment: %-e Pane# 3"na##y
"ssued "ts !eo!t as an un!est!"0ted do0ument on A!"# 14, 1777:
&anada 0om#a"ned t-at PROE= !e!esented an e<o!t subs"dy e<#"0"t#y 3o!b"dden by t-e
S&, A(!eement:30 A!aF"# a(!eed +"t- &anada t-at PROE= ayments +e!e a subs"dy, but
d"sa(!eed +"t- &anada 0#a"m"n( t-at PROE= ayments +e!e se0"3"0a##y made 3o! t-e
bene3"t o3 t-e 3o!e"(n u!0-ase! o3 Emb!ae! a"!0!a3t and t-e!e3o!e d"d not 0onst"tute an
e<o!t subs"dy !o2"ded to "ts a"!0!a3t "ndust!y:31 A!aF"# a#so a!(ued t-at, as a
de2e#o"n( 0ount!y, "t s-ou#d be a##o+ed to 5ee e<o!t subs"d"es 3o! e"(-t yea!s be0ause
.%O de2e#o"n( ,embe!s -a2e no ob#"(at"on to e#"m"nate su0- !a0t"0es 3o! t-at e!"od
o3 t"me:
%-e Pane# 3ound t-at PROE= ayments +e!e an e<o!t subs"dy be0ause t-ey +e!e a
3"nan0"a# 0ont!"but"on (!anted by a (o2e!nment to a se0"3"0 "ndust!y ?uon e<o!t
e!3o!man0e@: %-e Pane# a#so !u#ed t-at A!aF"# -ad 2"o#ated t-e e"(-tByea! -aseBout
!equ"!ement, as "t -ad a#!eady 0omm"tted "tse#3 to ma5"n( PROE= ayments on Emb!ae!
a3te! 2002:
In ,ay 1777, A!aF"# aea#ed 0e!ta"n "ssues o3 t-e Pane# Reo!t, but t-e Ae##ate Aody
u-e#d t-e Pane#Gs 3"nd"n(s and !e0ommended t-at A!aF"# +"t-d!a+ t-e subs"dy +"t-"n 70
days: S"n0e t-e measu!e +as not +"t-d!a+n a3te! 70 days, &anada !equested t-e
estab#"s-ment o3 t-e o!"("na# ane# unde! t-e .%O 1"sute Sett#ement Unde!stand"n(:32
In ,ay 2000, t-e Pane# Reo!t +as 0"!0u#ated amon( .%O ,embe!s and t-e Pane# 3ound
t-at A!aF"#Gs measu!es to 0om#y +"t- t-e !e0ommendat"ons o3 t-e .%O aut-o!"t"es
e"t-e! d"d not e<"st o! +e!e not 0ons"stent +"t- t-e S&, A(!eement: A!aF"# aea#ed t-e
Pane# Reo!t, and t-e Ae##ate Aody u-e#d 3o! t-e se0ond t"me t-e Pane#Gs 3"nd"n(s:
&anada t-en !equested t-e 1SA to susend 0on0ess"ons to A!aF"# o3 &KD00 m"##"on e!
yea!: A!aF"# !equested an a!b"t!ato! to estab#"s- t-e e<a0t amount o3 0on0ess"ons &anada
+as a##o+ed to susend, and a!b"t!ato!s 3"<ed t-e amount o3 &K344:2 m"##"on e! yea! "n
Au(ust 2000: On 1e0embe! 12, 2000 A!aF"# "n3o!med t-e 1SA o3 0-an(es "t -ad made to
0om#y +"t- "ts ob#"(at"ons unde! t-e S&, A(!eement: ;o+e2e! to &anada, t-e
21/04/2013 Delivery | Westlaw India Page!
measu!es +e!e st"## "n0ons"stent +"t- A!aF"#Gs ob#"(at"ons unde! t-e S&, A(!eement: On
*anua!y 22, 2001, "t !equested t-e 1SA to !e3e! t-e matte! to t-e o!"("na# ane#: %-e
0om#"an0e ane# +as estab#"s-ed at t-e 1SA meet"n( on Ieb!ua!y 1C, 2001: On *u#y 2C,
2001 t-e 0om#"an0e ane# 3ound t-at PROE= +as no+ 0ons"stent +"t- t-e S&,
A(!eement: On Au(ust 23, 2001 t-e 1SA adoted t-e Reo!t:
#anada&&%irra't subsidies I55
In !esonse to Emb!ae!, A!aF"# !equested 0onsu#tat"ons +"t- t-e >o2e!nment o3 &anada
o2e! (o2e!nment !o(!ammes 3!om +-"0- Aomba!d"e! In0:, t-e ma/o! manu3a0tu!e! o3
0"2"# a"!0!a3t "n &anada, bene3"ted: On ,a!0- 10, 177D 0onsu#tat"ons +e!e -e#d bet+een
t-e t+o (o2e!nments but 3a"#ed to !ea0- a sat"s3a0to!y so#ut"on: On *u#y 10, 177E A!aF"#
!equested t-e estab#"s-ment o3 a ane# and a ane# +as estab#"s-ed on *u#y 23, 177E:
Un#"5e Emb!ae!, Aomba!d"e! "n2o#2ed mo!e t-an one e<o!t subs"dy a"d to t-e 0"2"#
a"!0!a3t "ndust!y o3 &anada:
Unde! t-e 177D Onta!"o !o(!amme, Aomba!d"e! +as a##o+ed to u!0-ase s-a!es o3 t-e
;a2"##and ;o#d"n(s 0omany at a !"0e 3"<ed "n 1772: Io! A!aF"# t-"s !"0e ?d"d not !e3#e0t
t-e 2a#ue added by Mt-eN 0ont!"but"ons made by t-e &anad"an and Onta!"o >o2e!nments
bet+een 1772 and 177D@ and t-e!e3o!e t-e &anad"an manu3a0tu!e! -ad obta"ned a
?bene3"t@ "n0ons"stent +"t- "ts ob#"(at"ons unde! A!t"0#e 1:18b9 o3 t-e S&, A(!eement:
Unde! t-e &anada/Huebe0 subs"d"a!y a(!eement, t-e >o2e!nment o3 &anada and t-e
>o2e!nment o3 Huebe0 a(!eed on 3und"n( "ndust!"a# !o/e0ts a"med at "m!o2"n( t-e
0omet"t"2eness o3 Huebe0Gs e0onomy: A!aF"# 0#a"med t-at t-"s 0ont!"but"on -ad 0on3e!!ed
a ?bene3"t@ to t-e !e("ona# a"!0!a3t "ndust!y "n0ons"stent +"t- &anadaGs .%O ob#"(at"ons
unde! t-e S&, A(!eement:
Unde! t-e So0"OtO de 1O2O#oement Indust!"e# du HuObe0 8?S1I@9 ass"stan0e +as
!o2"ded to t-e !e("ona# a"!0!a3t "ndust!y ese0"a##y t-!ou(- t-e Ae!osa0e Indust!y
1e2e#oment Iund: A!aF"# 0#a"med t-at t-e S1I -ad been se0"3"0a##y des"(ned to
!omote t-e e<o!t o3 !odu0ts and se!2"0es 3!om Huebe0:
Unde! t-e E<o!t 1e2e#oment A0t, &anada set u a se0"3"0 !o(!amme to suo!t
&anadaGs e<o!t t!ade: t-e E<o!t 1e2e#oment &o!o!at"on 8E1&9: %-e !o(!amme
o33e!ed se2e!a# 3"nan0"a# and abso!t"on !"s5 se!2"0es t-at 0onst"tuted a subs"dy a00o!d"n(
to A!aF"#:34
In a## t-e abo2eBment"oned &anad"an !o(!ammes t-e Pane# 3ound no s"(ns o3
(o2e!nment *Int. T.L.R. 116 subs"d"es a"d to t-e 0"2"# a"!0!a3t "ndust!y: In t-e E1&
d"sute t-e Pane# 3ound t-at t-e E<o!t 1e2e#oment &o!o!at"on P!o(!amme +as a
subs"dy but d"d not -a2e enou(- e2"den0e to !o2e t-at t-e !o(!amme +as (!anted
?uon e<o!t e!3o!man0e@:
Un#"5e t-ose !o(!ammes, t-e %e0-no#o(y Pa!tne!s-" &anada 8?%P&@9 and &anada
A00ount 0onst"tuted an e<o!t subs"dy "n t-e Pane#Gs 2"e+: Unde! t-e %P&, &anada
!o2"ded ass"stan0e to t-e &anad"an 0"2"# a"!0!a3t "ndust!y: %-e %P& "s a te0-no#o(y
"n2estment 3und t-at suo!ts (o2e!nment "n"t"at"2es "n ae!osa0e, and de3en0e, and
ass"(ns (!ants to e<o!t o!"ented a"!0!a3t 0oman"es: &anada A00ount, on t-e ot-e!
-and, "s a 3"nan0"n( !o(!amme o3 t-e E<o!t 1e2e#oment &o!o!at"on 8?E1&@9: %-e
E1&Gs u!ose "s to suo!t and de2e#o &anadaGs e<o!t t!ade: %-e Pane# 3ound t-at t-e
a0t"2"t"es !o2"ded to t-e &anad"an 0"2"# a"!0!a3t "ndust!y unde! t-e t+o !o(!ammes +e!e
"n 2"o#at"on o3 &anadaGs .%O ob#"(at"ons: Unde! t-e %P&, &anadaGs ass"stan0e to
Aomba!d"e! 0onst"tuted an e<o!t subs"dy on t-e bas"s o3 t-e %P& bus"ness #ant !e0o!ds
!o2"ded by &anada to t-e Pane#: ,o!eo2e! unde! &anada A00ount, be0ause o3 &anadaGs
!e3usa# to !o2"de deta"#ed "n3o!mat"on on t-e !o(!amme to t-e Pane# on t-e (!ounds
t-at su0- "n3o!mat"on +as !o!"eta!y, t-e Pane# 3ound t-e !o(!amme "n0ons"stent +"t-
&anadaGs .%O ob#"(at"ons unde! t-e S&, A(!eement:
As "n t-e Emb!ae! 0ase, t-e Pane# Reo!t +as aea#ed: %-e Ae##ate Aody u-e#d t-e
Pane#Gs 3"nd"n( and "n a!t"0u#a! 3ound t-at t-e %P& ass"stan0e !o2"ded to t-e domest"0
0"2"# a"!0!a3t "ndust!y +as an e<o!t subs"dy !o-"b"ted unde! t-e S&, A(!eement: At t-e
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1SA meet"n( "n No2embe! 1777, &anada announ0ed t-at "t -ad +"t-d!a+n t-e measu!es
and "m#emented t-e Pane# and Ae##ate Aody Reo!t de0"s"ons: ;o+e2e!, A!aF"#
!equ"!ed t-e estab#"s-ment o3 t-e o!"("na# ane# be0ause "t +as d"ssat"s3"ed +"t- t-e
measu!es "m#emented by &anada:3$ %-e 0om#"an0e ane# 3ound t-at &anada -ad
"m#emented t-e !e0ommendat"on o3 t-e Pane# and Ae##ate Aody Reo!ts 0on0e!n"n(
t-e %P& !o(!amme: ;o+e2e!, "t 3ound t-at &anada 3a"#ed to +"t-d!a+ t-e &anada
A00ount !o(!amme to t-e &anad"an a"!0!a3t "ndust!y: ."t- !e(a!d to t-e #atte! 3"nd"n(,
t-e !e2"e+ ane# 0ons"de!ed t-at t-e measu!es ta5en by &anada +e!e not su33"0"ent to
ensu!e t-at 3utu!e &anada A00ount t!ansa0t"ons "n t-e &anad"an !e("ona# a"!0!a3t se0to!
+ou#d 0on3o!m +"t- t-e "nte!est !ate !o2"s"ons o3 t-e OE&1 A!!an(ement and +ou#d
t-e!eby qua#"3y 3o! t-e sa3e -a2en "n "tem 859 o3 Anne< 1 o3 t-e S&, A(!eement: On ,ay
22, 2000 A!aF"# not"3"ed "ts "ntent"on to aea# 0e!ta"n "ssues o3 #a+ and #e(a#
"nte!!etat"ons de2e#oed by t-e Pane#: %-e Ae##ate Aody 3ound t-at t-e 0om#"an0e
ane# e!!ed "n de0#"n"n( to e<am"ne one o3 A!aF"#Gs a!(uments to t-e e33e0t t-at t-e
!e2"sed %P& !o(!amme +as "n0ons"stent +"t- A!t"0#e 3:18a9 o3 t-e S&, A(!eement:
A00o!d"n(#y, A!aF"# 3a"#ed to estab#"s- t-at &anada -ad not "m#emented t-e
!e0ommendat"ons o3 t-e 1SA: %-e 1SA adoted t-e Ae##ate Aody and t-e Pane#
Reo!ts, as mod"3"ed by t-e Ae##ate Aody Reo!t, at "ts meet"n( on Au(ust 4, 2000:
*ratie and interpretation
%-e 0ases summa!"sed abo2e !o2"de (u"dan0e !e(a!d"n( t-e S&, A(!eement, A!t"0#e
=VI o3 >A%% 1774, and t-e A(!eement on A(!"0u#tu!e:
I"2e 0ases dea# +"t- t-e de3"n"t"on o3 a subs"dy and e<o!t subs"dy as set out "n A!t"0#es 1
and 3 o3 t-e S&, A(!eement and one +"t- a de3"n"t"on o3 subs"dy and e<o!t subs"dy as
set out "n A!t"0#es 1, 3, E, 7 and 10 o3 t-e A(!eement on A(!"0u#tu!e: Aot- A(!eements
0ondemn subs"dy !a0t"0es to t-e e<tent t-at t-ey do not meet t-e !"(o!ous 0!"te!"a set
out "n t-ese !o2"s"ons: In t-e #ast se2en yea!s ane#s and t-e Ae##ate Aody -a2e
"nte!!eted t-ese !o2"s"ons "n a 2e!y na!!o+ +ay: On#y subs"d"es "n +-"0- a 3"nan0"a#
0ont!"but"on, "n t-e 3o!m o3 (o2e!nment t!ans3e! o3 3unds, (o2e!nment !e2enue 3o!(one
o! not 0o##e0ted, and (oods and se!2"0es so#d at a #o+e! !"0e t-an t-e domest"0 !"0e
+e!e deemed to be "n0ons"stent +"t- t-e S&, A(!eement o! t-e A(!eement on
A(!"0u#tu!e: ;o+e2e!, not a## 3"nan0"a# 0ont!"but"ons +e!e 3ound "n0ons"stent +"t- t-e
.%O !o2"s"ons:
Io! e<am#e, "n t-e U.S.--$%port )estraints t-e Pane# made "t 0#ea! t-at t-e te!m
?3"nan0"a# 0ont!"but"on@ meant e<#"0"t (o2e!nment a0t"ons o! 0ommands to ass"st a
domest"0 "ndust!y and 0ou#d not "n0#ude a (o2e!nment measu!e +-"0- set u bette!
ma!5et 0ond"t"ons 3o! t-e domest"0 !odu0ts: Ot-e!+"se 3a!B!ea0-"n( 0onsequen0es "n t-e
dete!m"nat"on o3 t-e te!m +ou#d be "nt!odu0ed "n 0ont!ast +"t- t-e ob/e0t"2es o3 t-e S&,
A(!eement: In Canada--*air+ Products t-e 3"nan0"a# 0ont!"but"on too5 t-e 3o!m o3 (oods
so#d at a #o+e! !"0e:
A#so, t-e te!ms ?bene3"t@, as set out "n A!t"0#e 1:18b9 o3 t-e S&, A(!eement, and ?uon
e<o!t e!3o!man0e@, as set out "n A!t"0#e 3:18a9 o3 t-e S&, A(!eement, -a2e !e0e"2ed
st!"0t "nte!!etat"on by ane#s and t-e Ae##ate Aody "n t-e ast se2en yea!s: In
Canada--Aircraft Subsidies II A!aF"# 0ou#d not !o2e t-at t-e E1& t!ansa0t"ons +e!e made
a2a"#ab#e to t-e !e0""ent 8At#ant"0 Sout-east A"!#"nes9 on te!ms mo!e 3a2ou!ab#e t-an
t-ose a2a"#ab#e "n t-e ma!5et: In Canada--Aircraft Subsidies I A!aF"# 0ou#d not !o2e t-at
*Int. T.L.R. 117 t-e E1& !o(!amme +as a subs"dy (!anted ?uon e<o!t
e!3o!man0e@ be0ause "t -ad not !o2"ded su33"0"ent e2"den0e to susta"n t-e 0#a"m: %-"s
s-o+s t-at t-e e2"den0e to be !odu0ed "s d"33"0u#t but, at t-e same t"me, 2"ta# 3o!
,embe!s to a!(ue t-e 0ase "n a su00ess3u# +ay be3o!e t-e ane#s and t-e Ae##ate
Aody:
In t+o 0ases t-e !"n0"#e o3 mandato!y/d"s0!et"ona!y #a+ +as an "mo!tant e#ement:
Pane#s and t-e Ae##ate Aody made "t 0#ea! t-at on#y measu!es t-at mandate a 2"o#at"on
o3 t-e .%O a(!eements 0ou#d be 0-a##en(ed:
I"na##y, "n t-!ee 0ases, !e0ou!se to A!t"0#e 21:$ o3 t-e 1SU +as made: %-"s a#so s-o+s
21/04/2013 Delivery | Westlaw India Page
-o+ d"33"0u#t "t "s 3o! t-e d"sut"n( ,embe!s to a(!ee on "m#ementat"on and ma5e a
qu"05 and 0o!!e0t a#"0at"on o3 t-e !e0ommendat"ons o3 t-e ane#s and t-e Ae##ate
Aody:
Int: %:':R: 2002, E849, 107B11D
1:
A!t"0#e 1 o3 t-e A(!eement on Subs"d"es and &ounte!2a"#"n( ,easu!es 8?S&,@9:
2:
Ae2"(#"a Jamett", ?%-e U!u(uay Round A(!eement on Subs"d"es: A Io!+a!d 'oo5"n(
Assessment@ 278C9 ,ourna- of .or-d /rade 177$, : $BD:
3:
Pa!t II o3 t-e S&, A(!eement dea#s +"t- prohibited subsidies:
4:
Pa!t III o3 t-e S&, A(!eement dea#s +"t- a0t"onab#e subs"d"es:
$:
Pa!t IV o3 t-e S&, A(!eement dea#s +"t- nonBa0t"onab#e subs"d"es:
C:
A!t"0#e E:18b9 o3 t-e S&, A(!eement:
D:
.%/1S222, Canada--$%port Credits and 0oan 1uarantees for )egiona- Aircraft 6
.%/1S174, United States--2easures /reating $%port )estraints as Subsidies 6
.%/1S137, Canada--Certain 2easures Affecting t3e Automoti4e Industr+ 6 .%/1S13E,
United States--Imposition of Counter4ai-ing *uties on Certain 5ot-)o--ed 0ead and
6ismut3 Carbon Stee- Products 7riginating in t3e United 8ingdom 6 .%/1S10E, United
States--9/a% /reatment for #oreign Sa-es Corporations: 6 ./;*S(3< 3< Canada--
2easures Affecting Importation of 2i-= and t3e $%portation of *air+ Products 6
.%/1S12C, Austra-ia--Subsidies Pro4ided to Producers and $%porters of Automoti4e
0eat3er 6 .%/1SD0, Canada--2easures Affecting t3e $%port of Ci4i-ian Aircraft 6
.%/1S4C, 6ra>i---$%port #inancing Programme for Aircraft 6 .%/1S$4,$$,$7 and C4,
Indonesia--Certain 2easures Affecting t3e Automoti4e Sectors? .%/1S22, 6ra>i---
2easures Affecting *esiccated Coconut.
E:
Austra-ia--Subsid+ on Ammonium Su-p3ate 8AIS1 II/1EE96 #rance--Assistance to $%ports
of .3eat and .3eat #-our 8AIS1 DS/4C96 Income /a% Practices 2aintained b+ 6e-gium
8AIS1 23S/12D96 United States--Income /a% 0egis-ation @*ISCA 8AIS1 23S/7E96 Income
/a% Practices 2aintained b+ #rance 8AIS1 23S/11496 Income /a% Practices 2aintained
b+ t3e Bet3er-ands 8AIS1 23S/13D96 $$C--)efunds on $%port Sugar 8AIS1 2CS/27096
$$C--)efunds on $%port Sugar--comp-aint from 6ra>i- 8AIS1 2DS/C796 United States--
Initiation of a counter4ai-ing dut+ in4estigation into SoftCood 0umber Products from
Canada @IA 8AIS1 34S/17496 United States--Co--ection of Counter4ai-ing *uties on Bon-
)ubber #ootCear 6 $$C--Pa+ments and Subsidies Paid on Processors and Producers of
7i-seeds and )e-ated Anima--#eed Proteins 8AIS1 3DS/EC96 United States--
Counter4ai-ing *uties on #res3< C3i--ed and #ro>en Por= from Canada 8AIS1 3ES/3096
Canada--Counter4ai-ing *uties on Imports of 1rain Corn from t3e United States 8AIS1
37S/41196 United States--Counter4ai-ing 2easures Against Imports of #res3 and C3i--ed
At-antic Sa-mon 6 Austra-ia--Imposition of Counter4ai-ing *uties on Imports of 1-ace
C3erries from #rance and Ita-+ in App-ication of t3e Austra-ian Customs Amendment Act
!! 6 6ra>i---Imposition of Pro4isiona- and *efiniti4e Counter4ai-ing *uties on 2i-=
PoCder and Certain /+pes of 2i-= from t3e $uropean $conomic Communit+. See
CCC.Cto.org;eng-is3;tratopDe;dispuDe;gt47dsDe.3tm.
7:
.%/1S20C, United States--Anti-dumping and Counter4ai-ing 2easures on Stee- P-ate
21/04/2013 Delivery | Westlaw India Page2
from India 6 .%/1S212, United States--Counter4ai-ing 2easures Concerning Certain
Products from t3e $uropean Communities 6 .%/1S213, United States--Counter4ai-ing
*uties on Certain Corrosion-)esistant Carbon Stee- #-at Products from 1erman+ 6 .%/1S
21DB234, United States--Continued *umping and Subsid+ 7ffset Act of 2((( 6
.%/1S221, United States--Section 2!@cA@A of t3e Urugua+ Agreements Act 6 and
.%/1S23C, United States--Pre-iminar+ *eterminations Cit3 respect to Certain SoftCood
0umber from Canada.
10:
.%/1S222, Canada--$%port Credits and 0oan 1uarantees for )egiona- Aircraft.
11:
%-e Pane# +as not estab#"s-ed unde! A!t"0#e 21:$ be0ause 8a9 A!aF"# d"d not !equest t-e
!e2"e+ o3 "m#ementat"on o3 t-e Canada--Aircraft Subsidies I !eo!t, and 8b9 A!aF"#Gs
0#a"ms a!e d"33e!ent and b!oade! t-an t-ose b!ou(-t unde! Canada--Aircraft Subsidies I.
%-e!e3o!e t-e!e +e!e t-e 0ond"t"ons 3o! A!aF"# to !equ"!e t-e estab#"s-ment o3 a ne+
ane#:
12:
A!aF"# noted t-at A!t"0#e 21 o3 t-e Se0to! Unde!stand"n( on E<o!t &!ed"ts 3o! &"2"#
A"!0!a3t 8t-e OE&1 A!!an(ement9 !o2"des 3o! a ma<"mum !eayment te!m 3o! !e("ona#
a"!0!a3t o3 10 yea!s:
13:
A!t"0#e 4:D o3 t-e S&, A(!eement !o2"des t-at a ane# -as to !e0ommend to t-e 1SA
t-at t-e subs"dy be +"t-d!a+n +"t-out de#ay and -as to se0"3y t-e t"mee!"od a##o+ed
3o! su0- +"t-d!a+a#:
14:
.%/1S103, 113, Canada--2easures Affecting t3e Importation of 2i-= and t3e
$%portation of *air+ Products BBRe0ou!se to A!t"0#e 21:$ o3 t-e 1SU by Ne+ Jea#and and
t-e Un"ted States:
1$:
%-e A(!eement on A(!"0u#tu!e sets out t-e !u#es t-at a!e "ntended to !edu0e suo!t and
!ote0t"on 3o! a(!"0u#tu!a# !odu0ts "n t-e a!ea o3 domest"0 and e<o!t subs"d"es:
1C:
%-ese a(en0"es +e!e deemed to be a!t o3 t-e >o2e!nment o3 &anada be0ause t-ey
+e!e estab#"s-ed and oe!ated +"t-"n t-e #e(a# 3!ame+o!5 set u by 3ede!a# and
!o2"n0"a# #e("s#at"on:
1D:
A ?ayment@ must be unde!stood as a (!atu"tous a0t, "n u!su"t o3 a o#"0y ob/e0t: In t-"s
0ase t-e o#"0y ob/e0t "n t-e a!ea o3 t-e e<o!t subs"d"es "s t-e (o2e!nmentGs st"mu#at"on
o3 e<o!ts to d"sose o3 t-e su!#uses o3 m"#5 "n t-e domest"0 ma!5et:
1E:
In 0ont!ast, &anada a!(ued t-at t-e &E, s0-eme +as not an e<o!t subs"dy be0ause t-e
m"#5 o33e!ed to !o0esso!s 3o! e<o!ts +as at a 0omme!0"a# ma!5et !ate:
17:
%-"s !est!"0t"on +as m"t"(ated by t-e oss"b"#"ty to se## m"#5 on t-e domest"0 ma!5et 3o!
an"ma# 3eed u!oses:
20:
.%/1S10E, United States--/a% /reatment for 9#oreign Sa-es Corporations:.
21:
.%/1S10E/AA/R, United States--/a% /reatment for 9#oreign Sa-es Corporations:.
22:
Io! an "nBdet- #e(a# ana#ys"s o3 t-e 1IS& d"sute see R:E: ;ude0, $nforcing
Internationa- /rade 0aC--t3e $4o-ution of t3e 2odern 1A// 0ega- S+stem< Autte!+o!t-
21/04/2013 Delivery | Westlaw India Page3
'e(a# Pub#"s-e!s 817739, : $7B100:
23:
.%/1S10E/R, United States--/a% /reatment for 9#oreign Sa-es Corporations:.
24:
.%/1S10E/1, United States--/a% /reatment for 9#oreign Sa-es Corporations:.
2$:
.%/1S137/AA/R, Canada--Certain 2easures Affecting t3e Automoti4e Industr+.
2C:
.%/1S174/R, United States--2easures /reating $%port )estraints as Subsidies.
2D:
%-e 3"!st t"me t-"s "ssue +as !a"sed +as "n United States--Sections 3(-3( of t3e /rade
Act of !74 8.%/1S1$29:
2E:
.%/1S4C/R, 6ra>i---$%port #inancing Programme for Aircraft.
27:
Emb!ae!, 3ounded "n 17C7, as a (o2e!nmentBo+ned 0omany, be0ame a su00ess3u# 3"!m
"n 177$ +-en "t +as !"2at"sed:
30:
%-e A!aF"#"an system a##o+ed 0omme!0"a# a"!#"nes to sa2e u to U:S:K3:$ m"##"on e!
a"!0!a3t: .%/1S4C/R, 6ra>i---$%port #inancing Programme for Aircraft< : 10$:
31:
In ot-e! +o!ds, 3o! A!aF"#, PROE= ayments must -a2e been 0ons"de!ed ayments
"n0u!!ed by e<o!te!s o! 3"nan0"a# "nst"tut"ons "n obta"n"n( t-e 0!ed"t: ibid.< : 14B1$:
32:
Pu!suant to A!t"0#e 21:$ o3 t-e 1SU:
33:
.%/1SD0/R, Canada--2easures Affecting t3e $%port of Ci4i- Aircraft.
34:
A ?bene3"t@ +as 0on3e!!ed be0ause t-e !o(!amme a##o+ed t-e 3"nan0"n( o3 u to E$ e!
0ent o3 Aomba!d"e! /ets so#d by t-e &anad"an 0omany to ASA -o#d"n(s 8a subs"d"a!y o3
1e#ta A"! '"nes and a!ent 0omany o3 At#ant"0 Sout-east A"!#"nes9:
3$:
Pu!suant to A!t"0#e 21:$ o3 t-e 1SU:
4 2013 S+eet P ,a<+e## and "ts &ont!"buto!s