DS505: United States — Countervailing Measures on Supercalendered Paper from Canada

DS505: United States — Countervailing Measures on Supercalendered Paper from Canada

The Latest News:

On August 27,  2018, the United States notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report.

 

The Dispute

On July 5, 2018, the WTO Panel handling the dispute initiated by Canada against the United States of America (“USA”) regarding supercalendered paper (“SC paper”) circulated its report.  The report has not been adopted or appealed at this time.

The third parties are Brazil, China, the European Union, India, Japan, South Korea, Mexico and Turkey.

On March 30, 2016, Canada requested consultations with the USA with respect to the USA’s countervailing duties on SC paper, and the investigation underlying the imposition of those duties.  Canada’s request for consultations also concerned alleged ongoing conduct regarding the application of adverse facts available to “discovered” information during the course of a countervailing duty (“CVD”) investigation.  Canada had claims that the measures are inconsistent with numerous articles of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”)  Article VI:3 of the GATT 1994.

After consultations failed to resolve the dispute, Canada requested that the Dispute Settlement Board (“DSB”) establish a panel, which the DSB did on July 21, 2016.

 

The Key Findings of the Panel Report (as written by the WTO Secretariat under its own responsibility)

This dispute concerns the imposition by the USA of certain countervailing measures on imports of SC Paper from Canada, as well as the United States’ alleged ongoing conduct of applying adverse facts available (“AFA”) in respect of programmes discovered during the course of a CVD investigation.

Canada presented a series of claims concerning:

  • The United States Department of Commerce’s (“USDOC’s”) determinations in the original CVD investigation with respect to Port Hawkesbury Paper LP (“PHP”), including claims regarding the provision of electricity to PHP by Nova Scotia Power Incorporated (“NSPI”); the assistance under the hot idle funding and the Forestry Infrastructure Fund (“FIF”); and the provision of stumpage and biomass;
  • The USDOC’s determinations in the original CVD investigation with respect to Resolute FP Canada Inc. (“Resolute”), including the claims regarding the application of AFA in relation to information discovered at verification; Resolute’s purchase of Fibrek General Partnership (“Fibrek”); and the alleged subsidies provided under the Federal Pulp and Paper Green Transformation Programme (“PPGTP”), the Ontario Forest Sector Prosperity Fund (“FSPF”) and the Ontario Northern Industrial Electricity Rate (“NIER”) programme;
  • The USDOC’s determinations in the original CVD investigation with respect to the all-others rate affecting the non-investigated companies Irving Paper Ltd. (Irving) and Catalyst Paper Corporation (“Catalyst”);
  • The USDOC’s determinations in the expedited reviews conducted for the non-investigated companies Irving and Catalyst; and (e) the United States’ alleged “ongoing conduct” of applying AFA in respect of programmes discovered during the course of a CVD investigation, or “Other Forms of Assistance-AFA” measure.

On the claims concerning the USDOC’s determination in the original CVD investigation with respect to PHP, the Panel concluded as follows:

  • The USDOC acted inconsistently with Article 1.1(a)(1)(iv) of the SCM Agreement, by making a finding of entrustment or direction with respect to the provision of electricity by NSPI.
  • The USDOC acted inconsistently with Articles 1.1(b) and 14(d) of the SCM Agreement, when it determined that the provision of electricity by NSPI to PHP conferred a benefit.
  • The USDOC acted inconsistently with Article 12.8 of the SCM Agreement, by failing to disclose to interested parties the essential fact that, in the view of the USDOC, Section 52 of the Public Utilities Act entrusted or directed NSPI to provide electricity to all customers, including PHP.
  • The USDOC acted inconsistently with Article 1.1(b) of the SCM Agreement, by finding that the hot idle funding conferred a benefit on PWCC/PHP.
  • The USDOC acted inconsistently with Article 1.1(b) of the SCM Agreement, by finding that the second FIF amount conferred a benefit on PWCC/PHP.
  • The USDOC acted inconsistently with Article 11.3 of the SCM Agreement, by failing in its obligation to evaluate the accuracy and adequacy of the evidence in the application with respect to the existence of a benefit in the provision of stumpage and biomass by the Government of Nova Scotia to PHP.

On the claims concerning the USDOC’s CVD determination in the original investigation with respect to Resolute, the Panel concluded as follows:

  • The USDOC acted inconsistently with Article 12.7 of the SCM Agreement, by applying facts available to the discovered programmes.
  • The Panel declined to rule on Canada’s claims under Articles 11.2, 11.3, 12.1, 12.2, 12.3, and 12.8 of the SCM Agreement, regarding the discovered programmes.
  • The USDOC acted inconsistently with Article 1.1(b) of the SCM Agreement, by finding, on the basis of an alleged lack of relevant evidence, that the benefit conferred on Fibrek through the PPGTP was not extinguished when Fibrek was acquired by Resolute.
  • The Panel declined to rule on Canada’s claims under Articles 10, 14, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, regarding the USDOC’s finding that the benefit conferred on Fibrek through the PPGTP was not extinguished when Fibrek was acquired by Resolute.
  • The Panel declined to rule on Canada’s claims under Articles 1.1(b), 10, 14, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, regarding the USDOC’s finding that the benefit conferred on Fibrek was not extinguished when Fibrek was acquired by Resolute, with respect to the alleged assistance discovered during the verification of Fibrek.
  • The USDOC acted inconsistently with Articles 10, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, by attributing to the production of SC Paper subsidies provided to Resolute and Fibrek under the PPGTP, FSPF, and NIER Programmes.
  • The Panel declined to rule on Canada’s claims under Articles 10, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, regarding the attribution to the production of SC Paper of the alleged assistance discovered during the verification of Fibrek.

On the claims concerning the CVD determinations with respect to Irving and Catalyst, the Panel concluded as follows:

  • The USDOC acted inconsistently with Articles 10, 19.1, 19.3, 19.4, and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994, by constructing the all-others rate relying on Resolute’s rate, which was mainly calculated using AFA.
  • The Panel declined to rule on Canada’s claim under Article 12.7 of the SCM Agreement, regarding the construction of the all-others rate relying on Resolute’s rate.
  • The Panel rejected Canada’s claims under Articles 10, 19.1, 19.3, 19.4, and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994, regarding the USDOC’s failure to adjust the all-others rate in respect of subsidies that were not available to non-investigated exporters.
  • The USDOC acted inconsistently with Article 19.3 of the SCM Agreement, by including new subsidy allegations in the context of the expedited reviews undertaken for Catalyst and Irving.
  • The Panel declined to rule on Canada’s claims under Articles 11.2 and 11.3 of the SCM Agreement, regarding the USDOC’s alleged initiation of an investigation into new subsidy allegations during the expedited reviews of Catalyst and Irving.

On the claims concerning the “Other Forms of Assistance-AFA measure”, the Panel concluded as follows:

  • Canada adduced sufficient evidence to establish that the challenged “Other Forms of Assistance-AFA measure” constitutes “ongoing conduct” and, therefore, the Panel did not consider it necessary to address Canada’s argument that the challenged measure amounts to a “rule or norm of general and prospective application”.
  • The unwritten “ongoing conduct” measure challenged by Canada is inconsistent with Article 12.7 of the SCM Agreement.
  • The Panel declined to rule on Canada’s claims under Articles 10, 11.1, 11.2, 11.3, 11.6, 12.1, and 12.8 of the SCM Agreement, with respect to the “Other Forms of Assistance-AFA measure”.

For the full list of documents filed with the WTO, click here.

 

Stay Tuned…

We will provide updates on this blog as the panel report is adopted, appealed and / or implemented.

John Reiterowski, DS Lawyers Canada, LLP

jreiterowski@dsavocats.ca

DS Customs & Trade team located in Paris, Brussels, Montreal, Toronto, Lima, Singapore, Vietnam, Beijing, Guangzhou, Dakar and Cotonou is at your disposal to provide you with additional information.

CONTACT US:

dscustomsdouane@dsavocats.com

 

 

 

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