Third Participant Oral Submission of Australia

(DS379/AB-2010-3)

Geneva, 13 January 2011

Download print version

United States - Definitive Anti-Dumpin and Countervailing Duties on Certain Products from China - Third Party Oral Submission of Australia [PDF 87 KB]

A. Introduction

1. Mr Chairman, Members of the Division, Australia welcomes this opportunity
   to present its views on some of the issues in this dispute.
2. Australia believes that these proceedings raise core definitional issues
   relating to the Agreement on Subsidies and Countervailing Measures. These
   include: the definition of "public body" and the concurrent application
   of anti-dumping and countervailing measures.

B. Public Body

1. There are three terms of relevance in Article 1 of the Subsidies
   Agreement: "governments", "public body", and "private
   body" that has been entrusted or directed by a government to make a financial
   contribution. Australia notes the Panel's finding in Japan -Alcoholic
   Beverages II that "[a]n interpreter is not free to adopt a reading
   that would result in reducing whole clauses or paragraphs of a treaty to redundancy
   or inutility."¹ Australia also notes the
   statement of the Appellate Body in US - Upland Cotton that "a
   treaty interpreter must read all applicable provisions of a treaty in a way
   that gives meaning to all of them, harmoniously."²
   These statements are consistent with fundamental principles of treaty interpretation.
2. In its Appellate submission China argued that the actions of a publicly
   owned or controlled enterprise should be presumed private, and only fall within
   the scope of the Subsidies Agreement if such an enterprise is exercising powers
   vested in it by government.³A private entity
   falls within the scope of Article 1.1(a)(1)(iv) of the Subsidies Agreement
   if it is entrusted or directed by government to make a financial contribution
   which would "normally be vested in the government". If, as China
   submits, a "public body" must exercise powers vested in it by government,
   the test for a "public body" would overlap to such an extent with
   the test for "private body" under Article 1.1(a)(1)(iv) of the Subsidies
   Agreement as to render the term of "public body" inutile.⁴

Factors to be considered in determining government control

1. Australia agrees that the criterion concerning "government
   control" set forth by the Panel in this dispute is a proper basis for
   determining whether an entity is a "public body" within the meaning
   of Article 1.1(a)(1)(i) of the Subsidies Agreement.
2. However, Australia agrees with the concerns expressed by the EU,⁵
   Brazil⁶, and Japan⁷in
   their Third Participant Written Submissions that while government ownership
   may be highly relevant evidence of "government control", it is not
   necessarily dispositive and other factors should also be considered.⁸
   This is consistent with the panel decision in Korea -Commercial Vessels,
   which considered not only government ownership but also the government's
   authority over an entity's operations in determining whether it was controlled
   by the government.⁹

The ILC Articles

1. Australia submits that the ILC Articles offer no interpretive
   assistance in this case. Further, Australia submits that the ILC Articles
   do not have to be found to be inconsistent with Article 1.1(a)(1) of the Subsidies
   Agreement, under the principle of lex specialis, in order not to
   apply in the present case.
2. As Australia discussed in its written submission, in its view Article 1
   of the Subsidies Agreement is not an attribution rule.¹⁰
   However, even if Article 1 of the Subsidies Agreement were found to be an
   attribution rule, as the Panel in this case seemed to suggest,¹¹it is not inconsistent with the ILC Articles. The ILC Articles only
   appear to be inconsistent due to China's misapplication of them.¹²
3. As the US noted in its Appellate Submission "... there is simply no
   indication that the Appellate Body or any prior panel has accepted or endorsed
   the proposition that the Draft Articles prevent government-owned or government-controlled
   entities from being considered public bodies unless they are performing governmental
   functions pursuant to government authority, as China argues". ¹³

C. Concurrent Application of Anti-Dumping and Countervailing Measures

1. Neither the Agreement on Implementation of Article VI of
   the General Agreement on Tariffs and Trade 1994 nor the Subsidies Agreement
   address concurrent or parallel antidumping and countervailing investigations.
   The Agreements do not specify that consideration of the imposition of the
   full dumping margin or the full amount of the subsidy must take into account
   other trade remedy actions that may be underway in the importing country.
2. In Australia's view, a strict reading of these provisions, as carried out
   by the Panel at first instance, is necessary to maintain the integrity of
   these provisions. Australia submits that the provisions should only be read
   to permit countermeasures for the specific subsidy or dumping that has been
   investigated in that particular investigation and not take into account factors
   outside the investigation.
3. A broader reading of the relevant provisions of the Anti-Dumping and Subsidies
   Agreements as an implied mechanism to prevent double remedies for the same
   injury, would in Australia's view, compromise the integrity of the link between
   the injury and the investigation.
4. Australia submits that the Appellate Body might consider the question of
   whether Article 11.2 of the Anti-Dumping Agreement could address the situation
   of double remedies. If, following the imposition of anti-dumping and countervailing
   duties, a review were to be conducted, authorities might find that the continued
   imposition of the anti-dumping duty would no longer meet the Article 11.2
   test that "the continued imposition of the duty is necessary to offset
   dumping" nor that "the injury would be likely to continue or recur
   if the duty were removed or varied".
5. Australia submits that the Appellate Body might also consider the question
   of whether Article 21.2 of the Subsidies Agreement could similarly address
   the situation of double remedies. If, following the imposition of anti-dumping
   and countervailing duties, a review were to be conducted, authorities might
   find that the continued imposition of the countervailing duty would no longer
   meet the Article 21.2 test that "the continued imposition of the duty
   is necessary to offset subsidization" nor that "the injury would
   be likely to continue or recur if the duty were removed or varied".

Conclusion

1. Australia thanks the Chairman and Members of the Division for
   this opportunity to present its views on some of the issues in this dispute.

• ¹Panel Report, Japan - Taxes on Alcoholic Beverages, WT/DS8/R, WT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by Appellate Body Report WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, 125, Para.6.22
• ² China Appellant Submission, para. 94, quoting Appellate Body Report, United States - Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, 3, para. 549.
• ³ China Appellant Submission, paras 28 - 30.
• ⁴ Following the argument in Brazil's Third Party Written Submission para 22, the only difference between a "public body" and "private body" covered by Article 1.1(a)(1)(iv) of the Subsidies Agreement would seem to be whether the activity is engaged in by the entity on a regular or occasional basis.
• ⁵ EU Third Participant Written Submission para 19.
• ⁶Brazil Third Participant Written Submission para 26.
• ⁷ Japan Third Participant Written Submission para 14.
• ⁸ Such a view should also allay the concerns of Brazil in its Third Party Written Submission para 8, that ownership will automatically deem a body to be a "public body".
• ⁹ ;Panel Report, Korea - Measures Affecting Trade in Commercial
  Vessels, WT/DS273/R, adopted 11 April 2005, DSR 2005:VII, 2749, para.7.50.
• ¹⁰ Australia Third Participant Written Submission paras 12
  - 15.
• ¹¹ Panel Report para 8.90.
• ¹² Australia Third Participant Written Submission paras 22
  - 24. Note in the EU Third Participant Written Submission footnote 43 that the
  EU looks to Article 8 when interpreting "public bodies", not to Article
  5 as China suggests.
• ¹³ US Appellee Submission para 132.