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United States - Countervailing Measures on Certain Hot-Rolled Carbon Steel Flat Products from India - Report of the Panel
日期:2014/07/14
作者:The Panel
文件編號:WT/DS436/R
附件下載:WTDS436R.doc
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UNITED STATES – COUNTERVAILING MEASURES ON CERTAIN
HOT-ROLLED CARBON STEEL FLAT PRODUCTS FROM INDIA

Report of the Panel

 

 

 

 


TABLE OF CONTENTS

 

1   Introduction.. 9

1.1   Complaint by India. 9

1.2   Panel establishment and composition. 9

1.3   Panel proceedings. 9

1.3.1   General 9

1.3.2   Working procedures on Business Confidential Information (BCI) 10

1.3.3   Preliminary ruling. 10

2   Factual aspects. 17

2.1   The measures at issue. 17

3   Parties' requests for findings and recommendations. 19

4   Arguments of the parties. 21

5   Arguments of the third parties. 21

6   Interim Review... 21

7   Findings. 40

7.1   General principles regarding treaty interpretation, the applicable standard of review and burden of proof 41

7.1.1   Treaty Interpretation. 41

7.1.2   Standard of Review.. 41

7.1.3   Burden of Proof 41

7.2   The United States' benchmarking mechanism.. 41

7.2.1   Relevant WTO provision. 42

7.2.2   Relevant US provision. 42

7.2.3   Whether Section 351.511(a)(2)(i) to (iii) is inconsistent with Article 14(d) because it fails to assess the adequacy of remuneration from the perspective of the government provider, before assessing whether there is benefit to the recipient 43

7.2.4   The exclusion of government prices from Tier I and II benchmarks. 48

7.2.5   The use of world market prices as Tier II price benchmarks. 50

7.2.6   Whether Section 351.511(a)(2)(iv) is inconsistent with Article 14(d) because it requires the use of delivered prices for benchmarking. 51

7.2.7   Conclusion. 54

7.3   Claims regarding the imposition of countervailing duties in respect of iron ore supplied by NMDC  54

7.3.1   The treatment of NMDC as a public body: Article 1.1(a)(1) 54

7.3.2   USDOC's finding of de facto specificity. 62

7.3.3   USDOC's determination of the existence and quantum of benefit: Article 14. 73

7.3.4   Conclusion. 84

7.4   The USDOC's findings regarding the Captive Mining of Iron Ore Programme and the Captive Mining of Coal Programme: Articles 1.1, 2, 12.5 and 14 of the SCM Agreement 84

7.4.1   The existence of the Captive Mining of Iron Ore Programme (Article 12.5) 84

7.4.2   Specificity of the Captive Mining of Iron Ore Programme (Article 2.1) 88

7.4.3   The provision of goods through the grant of mining rights. 88

7.4.4   Whether Tata was provided captive coal mining rights by the GOI under the Coal Mines Nationalization Act/Captive Mining of Coal Programme. 93

7.4.5   Whether the USDOC properly determined that the Captive Mining of Coal Programme/Coal Mining Nationalization Act is de jure specific. 96

7.4.6   USDOC's determination of benefit regarding the iron ore and coal programmes. 96

7.4.7   Conclusion. 98

7.5   Alleged inconsistencies with respect to the USDOC's treatment of loans provided under the Steel Development Fund. 98

7.5.1   The USDOC's determination that direct transfers of funds were provided by a public body: Article 1.1(a)(1) 98

7.5.2   Alleged inconsistencies with respect to the USDOC's determination of benefit 106

7.5.3   Conclusion. 108

7.6   USITC's injury assessment 108

7.6.1   Whether the SCM Agreement permits "cross-cumulation" in original investigations. 108

7.6.2   Whether Article 15 of the SCM Agreement applies to sunset reviews. 123

7.6.3   Whether certain economic factors were evaluated by the USITC in its injury determination  129

7.7   Whether the use of "facts available" is consistent with Article 12.7 of the SCM Agreement 134

7.7.1   Relevant WTO provisions. 134

7.7.2   Factual background. 134

7.7.3   Main arguments of the parties. 136

7.7.4   Main arguments of the third parties. 137

7.7.5   Evaluation. 139

7.8   Whether new subsidy allegations may be examined in administrative reviews. 155

7.8.1   Relevant WTO provisions. 155

7.8.2   Main arguments of the parties. 156

7.8.3   Main arguments of the third parties. 158

7.8.4   Evaluation. 158

7.9   Alleged inconsistencies with respect to the USDOC's public notice: Article 22.5. 161

7.9.1   Relevant WTO provision. 161

7.9.2   Main arguments of the parties. 161

7.9.3   Evaluation. 164

7.10   Consequential claims under Articles 10, 19.3, 19.4, 32.1 and 32.5 of the SCM Agreement, Article VI of the GATT 1994 and Article XVI:4 of the WTO Agreement 168

8   Conclusions and recommendation.. 168

8.1   Conclusions. 168

8.2   Recommendation. 172

 


List of Annexes

ANNEX A

WORKING PROCEDURES FOR THE PANEL

Contents

Page

Annex A-1

Working Procedures for the Panel

A-2

Annex A-2

Additional Working Procedures for the Panel Concerning Business Confidential Information

A-6

ANNEX B

ARGUMENTS OF INDIA

Contents

Page

Annex B-1

Executive Summary of the First Written Submission of India

B-2

Annex B-2

Executive Summary of India's Submission Against Requests for Preliminary Rulings by the United States

B-9

Annex B-3

Executive Summary of the Oral Opening Statement of India – First Meeting

B-18

Annex B-4

Oral Closing Statement of India – First Meeting

B-25

Annex B-5

Executive Summary of the Second Written Submission of India

B-27

Annex B-6

Executive Summary of the Oral Opening Statement of India – Second Meeting

B-35

Annex B-7

Oral Closing Statement of India – Second Meeting

B-44

ANNEX C

ARGUMENTS OF THE United States

Contents

Page

Annex C-1

Executive Summary of the First Written Submission of the United States

C-2

Annex C-2

Oral Opening Statement of the United States – First Meeting

C-9

Annex C-3

Executive Summary of the Second Written Submission of the United States

C-16

Annex C-4

Executive Summary of the Oral Opening Statement of the United States – Second Meeting

C-24

ANNEX D

ARGUMENTS OF THIRD PARTIES

Contents

Page

Annex D-1

Third Party Written Submission of Australia

D-2

Annex D-2

Executive Summary of the Third Party Oral Statement of Australia

D-4

Annex D-3

Executive Summary of the Third Party Written Submission of Canada

D-6

Annex D-4

Third Party Oral Statement of Canada

D-8

Annex D-5

Executive Summary of the Third Party Written Submission of China

D-10

Annex D-6

Third Party Oral Statement of China

D-14

Annex D-7

Executive Summary of the Third Party Written Submission of the European Union

D-17

Annex D-8

Executive Summary of the Third Party Oral Statement of the European Union

D-21

Annex D-9

Executive Summary of the Third Party Written Submission of the Kingdom of Saudi Arabia

D-24

Annex D-10

Third Party Oral Statement of the Kingdom of Saudi Arabia

D-27

Annex D-11

Third Party Oral Statement of Turkey

D-30

 


CASES CITED IN THIS REPORT

Short title

Full case title and citation

Canada – Aircraft

Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, p. 1377

Canada – Aircraft

Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20 August 1999, upheld by Appellate Body Report WT/DS70/AB/R, DSR 1999:IV, p. 1443

China – GOES

Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R, adopted 16 November 2012

China – GOES

Panel Report, China – Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/R, adopted 16 November 2012, upheld by Appellate Body Report WT/DS414/AB/R

China – Raw Materials

Appellate Body Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R-WT/DS395/AB/R-WT/DS398/AB/R, adopted 22 February 2012

China – X-Ray Equipment

Panel Report, China – Definitive Anti-Dumping Duties on X-Ray Security Inspection Equipment from the European Union, WT/DS425/R, adopted 24 April 2013

EC – Approval and Marketing of Biotech Products

Panel Reports, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R-WT/DS292/R-WT/DS293/R, Add.1 to Add.9, and Corr.1, adopted 21 November 2006, DSR 2006:III, p. 847

EC – Bed Linen
(Article 21.5 – India)

Appellate Body Report, European Communities – Anti‑Dumping Duties on Imports of Cotton‑Type Bed Linen from India – Recourse to Article 21.5 of the DSU by India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965

EC – Countervailing Measures on DRAM Chips

Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005, DSR 2005:XVIII, p. 8671

EC – Fasteners (China)

Appellate Body Report, European Communities – Definitive Anti‑Dumping Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R, adopted 28 July 2011, DSR 2011:VII, p. 3995

EC – Hormones

Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R-WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, p. 135

EC – Selected Customs Matters

Appellate Body Report, European Communities – Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p. 3791

EC – Tube or Pipe Fittings

Appellate Body Report, European Communities – Anti‑Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted 18 August 2003, DSR 2003:VI, p. 2613

EC – Tube or Pipe Fittings

Panel Report, European Communities – Anti‑Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p. 2701

EC and certain member States – Large Civil Aircraft

Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7

EC and certain member States – Large Civil Aircraft

Panel Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685

EU – Footwear (China)

Panel Report, European Union – Anti-Dumping Measures on Certain Footwear from China, WT/DS405/R, adopted 22 February 2012

Japan – DRAMs (Korea)

Appellate Body Report, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, WT/DS336/AB/R and Corr.1, adopted 17 December 2007, DSR 2007:VII, p. 2703

Korea – Alcoholic Beverages

Panel Report, Korea – Taxes on Alcoholic Beverages, WT/DS75/R, WT/DS84/R, adopted 17 February 1999, as modified by Appellate Body Report WT/DS75/AB/R-WT/DS84/AB/R, DSR 1999:I, p. 44

Korea – Dairy

Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR 2000:I, p. 3

Mexico – Anti‑Dumping Measures on Rice

Appellate Body Report, Mexico – Definitive Anti‑Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, p. 10853

Mexico – Anti‑Dumping Measures on Rice

Panel Report, Mexico – Definitive Anti‑Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as modified by Appellate Body Report WT/DS295/AB/R, DSR 2005:XXIII, p. 11007

Thailand – H‑Beams

Appellate Body Report, Thailand – Anti‑Dumping Duties on Angles, Shapes and Sections of Iron or Non‑Alloy Steel and H‑Beams from Poland, WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, p. 2701

US – Anti-Dumping and Countervailing Duties (China)

Appellate Body Report, United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WT/DS379/AB/R, adopted 25 March 2011, DSR 2011:V, p. 2869

US – Carbon Steel

Appellate Body Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779

US – Carbon Steel

Panel Report, United States – Countervailing Duties on Certain Corrosion‑Resistant Carbon Steel Flat Products from Germany, WT/DS213/R and Corr.1, adopted 19 December 2002, as modified by Appellate Body Report WT/DS213/AB/R, DSR 2002:IX, p. 3833

US – Continued Zeroing

Appellate Body Report, United States – Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p. 1291

US – Corrosion‑Resistant Steel Sunset Review

Appellate Body Report, United States – Sunset Review of Anti‑Dumping Duties on Corrosion‑Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, p. 3

US – Countervailing Duty Investigation on DRAMS

Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131

US – Hot‑Rolled Steel

Appellate Body Report, United States – Anti‑Dumping Measures on Certain Hot‑Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, p. 4697

US – Large Civil Aircraft (2nd complaint)

Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012

US – Oil Country Tubular Goods Sunset Reviews

Appellate Body Report, United States – Sunset Reviews of Anti‑Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17 December 2004, DSR 2004:VII, p. 3257

US – Softwood Lumber IV

Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, p. 571

US – Softwood Lumber IV

Panel Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1, adopted 17 February 2004, as modified by Appellate Body Report WT/DS257/AB/R, DSR 2004:II, p. 641

US – Softwood Lumber VI (Article 21.5 – Canada)

Appellate Body Report, United States – Investigation of the International Trade Commission in Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006, and Corr.1, DSR 2006:XI, p. 4865

US – Tyres (China)

Appellate Body Report, United States – Measures Affecting Imports of Certain Passenger Vehicle and Light Truck Tyres from China, WT/DS399/AB/R, adopted 5 October 2011, DSR 2011:IX, p. 4811

US – Upland Cotton

Appellate Body Report, United States – Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005, DSR 2005:I, p. 3

US – Wool Shirts and Blouses

Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1, DSR 1997:I, p. 323

 

 


 

ABBREVIATIONS USED IN THis REPORT

Abbreviation

Description

AD

Anti-dumping

AD Agreement

Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994

AFA

Adverse facts available

AR

Administrative review

BCI

Business confidential information

CFR

Code of Federal Regulations

CVD

Countervailing duty

DSB

Dispute Settlement Body

DSU

Understanding on Rules and Procedures Governing the Settlement of Disputes

ECSC

European Coal and Steel Community

Fed. Reg. (or FR)

Federal Register

FOB

Free on board

GATT 1994

General Agreement on Tariffs and Trade 1994

GOI

Government of India

JPC

Joint Plant Committee

JSIP

Jharkhand State Industrial Policy

JSW

Jindal Steel Works

KIP

State Government of Karnataka's New Industrial Policy and Package of Incentives and Concessions

MAI

Market Access Initiative

MDA

Market Development Assistance

MMDR Act

Mines and Minerals (Development & Regulation) Act, 1957

MML

Mysore Minerals Limited.

NMDC

National Mineral Development Corporation

PLR

Prime lending rate

POR

Period of review

RBI

Reserve Bank of India

SCM Agreement (or ASCM)

Agreement on Subsidies and Countervailing Measures

SDF

Steel Development Fund

SEZ

Special Economic Zone

SGAP

State Government of Andhra Pradesh

SGOC

State Government of Chhattisgarh

SGOG

State Government of Gujarat

SGOJ

State Government of Jharkhand

SGOK

State Government of Karnataka

SGOM

State Government of Maharashtra

TPS

Target Plus Scheme

United States (or US)

United States of America

USC

United States Code

USDOC

United States Department of Commerce

USITC

United States International Trade Commission

Vienna Convention

Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969, 1155 UNTS 331; 8 International Legal Materials 679

VMPL

Vijayanagar Minerals Pvt. Ltd.

WTO

World Trade Organization

 


1  Introduction

1.1  Complaint by India

1.1.  On 24 April 2012, India requested consultations with the United States pursuant to Articles 1 and 4 of the DSU, Article XXII:1 of the GATT 1994 and Article 30 of the SCM Agreement, with regard to the imposition of countervailing duties on certain hot-rolled carbon steel flat products from India by the United States as described in document WT/DS436/1/Rev.1.

1.2.  Consultations were held on 31 May and 1 June 2012, but were unsuccessful in resolving the dispute.

1.2  Panel establishment and composition

1.3.  On 12 July 2012, India requested, pursuant to Articles 4.7 and 6 of the DSU and Article 30 of the SCM Agreement, that the DSB establish a panel with standard terms of reference.[1] At its meeting on 31 August 2012, the DSB established a panel pursuant to the request of India in document WT/DS436/3, in accordance with Article 6 of the DSU.[2]

1.4.  The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by India in document WT/DS436/3 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.[3]

1.5.  On 7 February 2013, India requested the Director-General to determine the composition of the panel, pursuant to Article 8.7 of the DSU. On 18 February 2013, the Director-General accordingly composed the Panel as follows:

Chairperson:   Mr Hugh McPhail

 

Members:               Mr Anthony Abad

                       Mr Hanspeter Tschaeni

 

1.6.  Australia, Canada, China, the European Union, the Kingdom of Saudi Arabia (Saudi Arabia) and Turkey notified their interest in participating in the Panel proceedings as third parties.

1.3  Panel proceedings

1.3.1  General

1.7.  After consultation with the parties, the Panel adopted its Working Procedures[4] and timetable on 8 March 2013. The Panel introduced modifications to its timetable on 18 July 2013.

1.8.  The Panel held a first substantive meeting with the parties on 9-10 July 2013. A session with the third parties took place on 10 July 2013. The Panel held a second substantive meeting with the parties on 8-9 October 2013. On 25 October 2013, the Panel issued the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on 31 January 2014. The Panel issued its Final Report to the parties on 11 April 2014.

1.3.2  Working procedures on Business Confidential Information (BCI)

1.9.  After consultations with the parties, the Panel adopted, on 28 March 2013, additional procedures for the protection of BCI.[5]

1.3.3  Preliminary ruling

1.10.  On 3 May 2013, the United States submitted to the Panel two requests for preliminary rulings concerning the consistency of India's request for the establishment of a panel[6] with Article 6.2 of the DSU. On 21 May 2013, in advance of the first substantive meeting of the Panel with the parties, India provided a written response to the United States' requests for preliminary rulings.

1.11.  On 16 August 2013, the Panel issued the following preliminary rulings to the parties to the dispute.

1.3.3.1  Introduction

1.12.  In its first written submission, the United States submitted two requests for preliminary rulings that certain claims advanced by India in its first written submission fall outside the Panel's terms of reference. The United States' requests are based on Article 6.2 of the DSU, which provides in relevant part:

The request for the establishment of a panel shall … identify the specific measures at issue and provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly.

1.13.  The United States' first request concerns India's claims under Article 11 of the SCM Agreement. In its panel request, India alleged a violation of:

Article 11 of the ASCM because no investigation was initiated or conducted to determine the effects of new subsidies included in the administrative reviews.[7]

1.14.  In its first written submission, India argued claims relating to (i) the alleged failure to initiate an investigation into new subsidies and (ii) the alleged initiation of an investigation despite the insufficiency of evidence in the domestic industry's written application. With respect to the former, India argued its claim under the following heading of its first written submission:

Section XII.C.4: The United States violated Article 11.1 by failing to 'Initiate' an investigation into the New Subsidies.

1.15.  With respect to the claims relating to the initiation of an investigation despite the insufficiency of evidence, India argued its claims under the following headings of its first written submission:

Section XII.C.1: The United States violated Articles 11.1-11.2 by initiating investigation into NMDC and TPS programs in the 2004 AR even when the written application of the domestic industry did not contain sufficient evidence as to the existence, amount and nature of such subsidies.

Section XII.C.2: The United States violated Article 11.9 by initiating investigation into NMDC and TPS programs in 2004, since the written application of the domestic industry did not contain sufficient evidence as to the existence, amount and nature of said alleged subsidies.

1.16.  The United States' second request concerns India's argument in its first written submission with respect to a claim that the United States' 2013 sunset review determination is inconsistent with Article 12.7 of the SCM Agreement. India did not explicitly refer to the 2013 sunset review determination in its panel request.

1.17.  Pursuant to Paragraph 7 of the Panel's working procedures, the Panel invited India to respond to the United States' requests prior to the first substantive meeting of the Panel with the parties.[8] In addition, the Panel posed certain questions relating to the requests for preliminary rulings and gave both parties the opportunity to comment on each other's answers.

1.18.  The United States requested the Panel to make certain findings as a preliminary matter.[9] In contrast, India requested the Panel to reserve its findings on the preliminary ruling requests until the final report.[10] As the United States' requests concern the Panel's terms of reference, and given the clarifications provided by the parties, the Panel decided to issue its rulings prior to the second substantive meeting of the Panel with the parties in order to clarify the scope of the dispute.

1.3.3.2  Arguments of the Parties

1.3.3.2.1  United States

1.19.  The United States requests the Panel to find that India's claims under (i) Article 11 of the SCM Agreement, and (ii) Article 12.7 of the SCM Agreement with respect to a 2013 sunset review determination are outside the Panel's terms of reference because India's panel request fails to comply with the requirements of Article 6.2 of the DSU.

1.3.3.2.1.1  Article 11 of the SCM Agreement

1.20.  The United States recalls that India's panel request only includes a general reference to Article 11 of the SCM Agreement. The United States asserts that Article 11 contains 11 subparagraphs with different obligations, and submits that India failed to identify in its panel request any specific Article 11 obligation that the United States had allegedly violated.[11] Thus, the United States submits that India's panel request failed to comply with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly."[12]

1.21.  Moreover, the United States notes that India's panel request suggests that the alleged violation lies in the failure to initiate or conduct an investigation at all with respect to new subsidies. However, in the United States' view, Article 11 of the SCM Agreement does not contain any obligation to initiate an investigation.[13]

1.22.  With respect to the claims relating to the initiation of an investigation despite insufficient evidence in the domestic industry's written application, the United States points out that India's panel request alleges that "no investigation was initiated or conducted".[14] However, the relevant arguments in India's first written submission allege that the United States erred by actually initiating an investigation into the NMDC and TPS programmes in 2004 despite an insufficient written application. The United States submits that the sufficiency of evidence in an application is a distinct issue from whether an investigation was initiated.[15] Raising due process concerns, the United States contends that it could not have anticipated that India would bring these claims because they were not articulated in India's panel request.[16]

1.3.3.2.1.2  2013 sunset review

1.23.  Concerning India's claims under Article 12.7 of the SCM Agreement with respect to a 2013 sunset review determination, the United States understands India to refer to the final results in the most recent sunset review issued by the US Department of Commerce on 14 March 2013. The United States submits that this determination could not have been included in India's request for consultations or request for the establishment of a panel, since it was issued eight months after the latter.[17] Furthermore, although this sunset review was initiated on 1 November 2010, India does not refer to the initiation in its consultations or panel requests. Thus, the United States submits that the final results of the 2013 sunset review fall outside the Panel's terms of reference.[18]

1.3.3.2.2  India
1.3.3.2.2.1  Article 11 of the SCM Agreement

1.24.  India contends that its panel request need not be identically worded as the claims pursued in its first written submission, and argues that the Panel should examine the panel request as a whole and in light of "attendant circumstances".[19] India contends that the United States attributed an "extremely narrow and acontextual meaning" to India's panel request. India argues that the term "initiated" in its request is to be construed in light of footnote 37 of the SCM Agreement. This would necessarily imply that "India's panel request is directed to the manner in which investigations into new subsidy programs were initiated and conducted", i.e. the fact that they were "not [] initiated, commenced and performed in the manner 'provided [for] in Article 11' of the SCM Agreement."[20]

1.25.  Moreover, India contends that its panel request clearly connects the challenged measures with the relevant obligations under Article 11 of the SCM Agreement.[21] According to India, the United States fails to appreciate that "India's panel request covers violations of all obligations in Article 11, barring those that are obviously and logically inapplicable to the case at hand".[22] India contends that its panel request delineates that violations are limited to (i) Article 11, (ii) the initiation and conduct of investigations, and (iii) new subsidy programmes. Thus, according to India, Articles 11.6, 11.8, 11.10 and 11.11 of the SCM Agreement are logically excluded due to the words used in the panel request. India also argues it has the discretion in its first written submission to only elaborate on a sub-set of the remaining provisions in Article 11 covered by India's panel request, namely Articles 11.1, 11.2 and 11.9. However, India contends that Articles 11.3, 11.4, 11.5 and 11.7 of the SCM Agreement have also been breached, but India chose not to press these violations in its first written submission.[23] Moreover, India submits that all subparagraphs of Article 11 are closely related and interlinked, and the reference to a common obligation, i.e. the manner in which investigations are to be initiated and conducted, is sufficient to meet the standard of Article 6.2 of the DSU.[24]

1.26.  Finally, India contends that the due process rights of the United States have not been prejudiced, and the United States' first written submission shows that it was in a position to file detailed responses to India's claims. India also notes that the claims at issue here only refer to determinations made by the United States and documents made publicly available by the United States. Moreover, the consultations between the United States and India prior to the establishment of this panel revealed India's point of concern with respect to these claims. Therefore, according to India, it cannot be said that "the United States was completely unaware that India would raise claims in relation to sufficiency of evidence for commencing investigations into new subsidies."[25]

1.3.3.2.2.2  2013 sunset review

1.27.  Regarding the 2013 sunset review, India notes that paragraph 5 of its panel request "covers all amendments, replacements, implementing acts or any other related measure in connection with the measures referred herein." India submits that all determinations and orders issued by the United States are measures covered in the panel request, and the 2013 sunset review determination amends the determinations included in the panel request. Referring to the understanding of past panels and the Appellate Body, India notes that the 2013 sunset review determination does not change the nature of the measures challenged, and India has not raised different claims in relation to this determination. India submits that agreeing with the United States' preliminary objection would allow the United States to evade adjudicatory review and prevent a positive resolution of the dispute on a purely technical point.[26]

1.3.3.3  Evaluation

1.28.  The United States' requests for preliminary rulings concern India's claims under (i) Article 11 of the SCM Agreement, and (ii) Article 12.7 of the SCM Agreement with respect to a 2013 sunset review. We examine each request in turn.

1.3.3.3.1  Whether India's panel request relating to Article 11 of the SCM Agreement satisfies the requirements of Article 6.2 of the DSU

1.29.  The main issue before the Panel is whether the general reference to Article 11 of the SCM Agreement in India's panel request provides "a brief summary of the legal basis of the complaint sufficient to present the problem clearly."[27] India contends that its panel request refers to two different inconsistencies with Article 11, namely: (i) the alleged failure to initiate an investigation into new subsidies and (ii) the alleged initiation of an investigation despite the insufficiency of evidence in the domestic industry's written application.[28] We consider each alleged inconsistency separately.

1.3.3.3.1.1  Alleged failure to initiate an investigation into new subsidies

1.30.  It is undisputed that India's panel request refers generally to Article 11 of the SCM Agreement, without explicitly identifying any specific paragraphs of that provision as the legal basis of its complaint. We note that Article 11 contains several paragraphs that set out multiple distinct obligations.

1.31.  While the Appellate Body has explained that when "a provision contains not one single, distinct obligation, but rather multiple obligations, a panel request might need to specify which of the obligations contained in the provision is being challenged"[29], the Appellate Body has also indicated that "compliance with the requirements of Article 6.2 [of the DSU] must be determined on the merits of each case, having considered the panel request as a whole, and in the light of attendant circumstances".[30] Thus, the mere fact that India failed to explicitly specify in its panel request the particular paragraphs of Article 11 at issue does not necessarily mean that India's panel request fails to meet the requirements of Article 6.2 of the DSU. This is because the relevant WTO obligations may nevertheless be identifiable from a careful reading of the panel request as a whole.[31] Accordingly, we shall examine whether a careful reading of India's panel request, including any narrative explanation contained therein[32], permits a sufficiently clear identification of which particular obligation(s) in Article 11 of the SCM Agreement form(s) the legal basis of India's complaint regarding Article 11, to enable us to conclude that it is consistent with Article 6.2 of the DSU.

1.32.  In addition to the general reference to Article 11 of the SCM Agreement, India's panel request explains India's concern that "no investigation was initiated or conducted to determine the effects of new subsidies included in the administrative reviews". This text indicates that the issue raised by India concerns the United States' alleged failure to initiate or conduct an investigation into the effects of new subsidy allegations. We note that similar language in Article 11.1 of the SCM Agreement may contain a "potentially relevant obligation"[33] relating to the initiation of "an investigation to determine the existence, degree and effect of any alleged subsidy".[34] In our view, therefore, the general reference to Article 11 and the above-mentioned narrative explanation together are sufficient to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly", consistent with Article 6.2 of the DSU. Consequently, the claim in Section XII.C.4 of India's first written submission[35] falls within the Panel's terms of reference.[36]

1.3.3.3.1.2  Alleged initiation of an investigation despite the insufficiency of evidence in the domestic industry's written application

1.33.  However, we are not persuaded that the general reference to Article 11 of the SCM Agreement and the above-mentioned narrative explanation in India's panel request are sufficient to bring India's remaining Article 11 claims within the Panel's terms of reference.

1.34.  We note that the arguments in Sections XII.C.1 and XII.C.2 of India's first written submission relate to the fact that an investigation was allegedly initiated despite the fact that the written application of the domestic industry did not contain sufficient evidence as to the existence, amount and nature of certain subsidies.[37] We agree with the United States that whether an investigation was initiated despite insufficiency of evidence is an issue entirely distinct from whether an investigation to determine the effects of new subsidies was initiated or conducted at all.[38] Indeed, the narrative in India's panel request states that "no investigation was initiated or conducted". India contends that its panel request should be read as relating to "investigations not being initiated, commenced and performed in a manner 'provided in Article 11' of the SCM Agreement."[39] We must objectively determine our terms of reference on the basis of the panel request as it existed at the time of filing.[40] In our view, by clearly and only stating that an investigation was not initiated or conducted, India's panel request precludes claims relating to the alleged initiation of an investigation, or the manner in which an investigation was conducted, being included in the scope of the dispute.

1.35.  India submits that the Panel should examine India's panel request in light of "attendant circumstances". India argues that its panel request "covers violations of all obligations in Article 11, barring those that are obviously and logically inapplicable to the case at hand".[41] However, we are unable to reconcile India's view with the general reference to Article 11 read together with the narrative in India's panel request. Had India intended to raise claims under Articles 11.1, 11.2 and 11.9 of the SCM Agreement relating to the initiation of an investigation despite insufficient evidence, India should have provided some summary of the relevant legal basis sufficient to present this particular problem clearly, which in our view it did not. As it is, India's panel request is not reasonably open to the reading advanced by India.[42]

1.36.  India also argues that the due process rights of the United States have not been prejudiced because the claims at issue "only refer to determinations already made by the United States and only refers to documents made publicly available by the United States."[43] We do not consider that the United States would be made aware of the "legal basis of the complaint sufficient to present the problem clearly", simply because India's claims refer to determinations or documents issued by the United States.[44] The fact that the respondent has detailed information relating to the measure at issue does not necessarily imply that the problem raised by the complainant in WTO dispute settlement will become obvious for purposes of Article 6.2 of the DSU. We recall in this regard that, in the context of the AD Agreement, the Appellate Body in Thailand – H-Beams found that even when specific issues were raised before the investigating authority, the "underlying investigation cannot normally, in and of itself, be determinative in assessing the sufficiency of the claims made in a request for the establishment of a panel."[45]

1.37.  Finally, India contends that a certain list of questions filed during consultations reveals India's concerns relating to the claims at issue here.[46] The Panel was not privy to those consultations, and is therefore unable to refer to the substance of the consultations for present purposes. We note in this regard that the Appellate Body in US – Upland Cotton agreed with the finding of the panel in Korea – Alcoholic Beverages that "[w]hat takes place in [] consultations is not the concern of a panel."[47]

1.38.  Thus, with respect to the issue of the initiation of an investigation despite insufficient evidence under Article 11 of the SCM Agreement, we conclude that India's panel request does not comply with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly." Consequently, the arguments in Sections XII.C.1 and XII.C.2 of India's first written submission relate to claims that are not within the Panel's terms of reference.

1.3.3.3.2  Whether the 2013 sunset review is included in the Panel's terms of reference

1.39.  We now turn to India's claims relating to the 2013 sunset review. The main issue before the Panel is whether the 2013 sunset review is one of the "specific measures" (within the meaning of Article 6.2 of the DSU) identified in India's panel request.

1.40.  In considering this issue, we note that the Appellate Body in US – Carbon Steel explained that "compliance with the requirements of Article 6.2 [of the DSU] must be demonstrated on the face of the request for the establishment of a panel … [and] determined on the merits of each case, having considered the panel request as a whole, and in the light of attendant circumstances."[48] The Appellate Body also found that "the identification of a measure within the meaning of Article 6.2 need be framed only with sufficient particularity so as to indicate the nature of the measure and the gist of what is at issue".[49] Accordingly, we shall examine India's panel request as a whole, to determine whether or not that request identifies the 2013 sunset review with the requisite particularity. In this regard, we recall that India's panel request identifies the relevant measures at issue in the following terms:

The United States conducted a countervailing duty (the "CVD") investigation (No. C 533 821) and levied countervailing duties on the subject goods. The provisional measures were imposed with effect from 20 April 2001 and the final measures were imposed with effect from 3 December 2001. The United States concluded a sunset review in 2007 and continued the duties for a further period of five years. The United States also conducted several Administrative Reviews (the "AR") to determine the CVD rate/s to be applied on the imports made during the relevant AR period. The measures continue to be in force. This request covers the countervailing duties applied on the subject goods by the United States from time to time. A non-exhaustive list of determinations, orders, etc. issued by the United States in Case No. C-533-821 is enclosed as Annex 1.[50]

India's panel request also states that it "covers all the amendments, replacements, implementing acts or any other related measure in connection with the measures referred herein."[51]

1.41.  Turning first to the statement that India's panel request "covers the countervailing duties applied on the subject goods by the United States from time to time", we consider that the 2013 sunset review may reasonably be treated as a measure concerned with the application of countervailing duties on the subject goods. We also note that India explicitly referred to the only sunset review determination that had been issued prior to its panel request: the 2007 sunset review. In our view, this indicates that sunset reviews were of interest to India. Finally, we note that India's request "covers … any other related measure in connection with the measures referred herein." We consider that the 2013 sunset review may reasonably be considered a "related measure in connection with the measures" explicitly referred to in India's panel request. Considering these factors together, we are of the view that India's panel request, read as a whole, indicates the nature of the measure and the gist of what is at issue with sufficient particularity to put the United States on notice that the 2013 sunset review, when issued, would be covered by India's claims.

1.3.3.3.3  Conclusion

1.42.  The Panel concludes that, with respect to the alleged failure to initiate or conduct an investigation into the effects of new subsidy allegations under Article 11 of the SCM Agreement, India's panel request complies with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly." Consequently, the arguments in Section XII.C.4 of India's first written submission relate to a claim that falls within the Panel's terms of reference. In addition, the Panel concludes that the 2013 sunset review is within the Panel's terms of reference. Therefore, we will consider these claims and the arguments pertaining to them in our disposition of the issues in this case.

1.43.  However, the Panel concludes that, with respect to the issue under Article 11 of the SCM Agreement relating to the alleged initiation of an investigation despite the insufficiency of evidence in the domestic industry's written application, India's panel request does not comply with the requirement of Article 6.2 of the DSU to "provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly." Consequently, the arguments in Sections XII.C.1 and XII.C.2 of India's first written submission relate to alleged claims that fall outside the Panel's terms of reference, and we will not consider them or make any rulings with respect to the alleged claims.

2  Factual aspects

2.1  The measures at issue

2.1.  This dispute concerns the imposition by the United States of countervailing duties on imports of certain hot-rolled carbon steel flat products from India. India has challenged the following measures, and their amendments, replacements, implementing acts or any other related measure in connection with them:

a.      Original Investigation

i.        Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Determination With Final Antidumping Duty Determinations: Certain Hot-Rolled Carbon Steel Flat Products From India:, 66 FR 20240-01, 20 April 2001;

ii.       Issues and Decision Memorandum – Final Results of the Countervailing Duty Investigations: Certain Hot-Rolled Carbon Steel Flat Products From India, 66 ITADOC 49635, 21 September 2001;

iii.     Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products From India, 66 FR 49635-01, 28 September 2001;

iv.     Injury Determination: Hot-Rolled Steel Products from China, India, Indonesia, Kazakhstan, Netherlands, Romania, South Africa, Taiwan, Thailand, and Ukraine, 701-TA-405-408 and 731-TA-899-904 and 906-908, Pub. 3468, United States International Trade Commission, November 2001;

v.      Amended Final Results of Countervailing Duty Orders: Certain Hot-Rolled Carbon Steel Flat Products From India and Indonesia, 66 FR 60198-01, 3 December 2001; and

vi.     Countervailing Duty Order in the Investigation: Certain Hot-Rolled Carbon Steel Flat Products from India, 8 January 2002;

b.     Administrative Review: POR 20 April 2001 through 31 December 2002 (2002 administrative review)

i.        Preliminary Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 69 FR 907-01, 7 January 2004;

ii.       Issues and Decision Memorandum – Final Results of the Countervailing Duty Investigation: Certain Hot-Rolled Carbon Steel Flat Products From India, 69 ITADOC 26549, 6 May 2004; and

iii.     Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 69 FR 26549-01, 13 May 2004;

c.      Administrative Review: POR 1 January 2004 through 31 December 2004 (2004 administrative review)

i.        Preliminary Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 71 FR 1512-01, 10 January 2006;

ii.       Issues and Decision Memorandum – Final Results of Administrative Review of the Countervailing Duty Order : Certain Hot-Rolled Carbon Steel Flat Products from India, 71 ITADOC 28665, 10 May 2006; and

iii.     Final Results of Countervailing Duty Administrative Review: Certain Hot-rolled Carbon Steel Flat Products from India, 71 FR 28665-01, 17 May 2006;

d.     Sunset Review

i.        Issues and Decision Memorandum – Final Results of Expedited Sunset Reviews of the Countervailing Duty Orders: Certain Hot-Rolled Carbon Steel Flat Products from Argentina, India, Indonesia, South Africa, and Thailand, 71 ITADOC 70960, 7 December 2006;

ii.       Final Results of the Expedited Five-Year (Sunset) Reviews of the Countervailing Duty Orders: Certain Hot-Rolled Carbon Steel Flat Products from Argentina, India, Indonesia, South Africa, and Thailand, 71 FR 70960-03, 7 December 2006;

iii.     Injury Determination – Hot-Rolled Steel Products from China, India, Indonesia, Kazakhstan, Argentina, Romania, South Africa, Taiwan, Thailand, and Ukraine, 701‑TA-404-408 and 731-TA-898-902 and 904-908(Review), Pub. 3956, United States International Trade Commission, October 2007; and

iv.     Continuation of Antidumping Duty and Countervailing Duty Orders – Certain Hot‑Rolled Carbon Steel Flat Products from India, Indonesia, the People's Republic of China, Taiwan, Thailand, and Ukraine, 72 FR 73316-03, 27 December 2007;

e.     Administrative Review: POR 1 January 2006 through 31 December 2006 (2006 administrative review)

i.        Preliminary Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 73 FR 1578-02, 9 January 2008;

ii.       Issues and Decision Memorandum – Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products From India, 73 ITADOC 40295, 7 July 2008; and

iii.     Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products From India, 73 FR 40295-02, 14 July 2008;

f.       Administrative Review: POR 1 January 2007 through 31 December 2007 (2007 administrative review)

i.        Preliminary Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 73 FR 79791-01, 30 December 2008;

ii.       Issues and Decision Memorandum – Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 74 ITADOC 20923, 29 April 2009; and

iii.     Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 74 FR 20923-01, 6 May 2009;

g.     Administrative Review: POR 1 January 2008 through 31 December 2008 (2008 administrative review)

i.        Preliminary Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 75 FR 1496-01, 11 January 2010;

ii.       Issues and Decision Memorandum – Final Results of Countervailing Duty Administrative Review: Certain Hot-Rolled Carbon Steel Flat Products from India, 75 ITADOC 43488, 19 July 2010; and

iii.     Final Results of Countervailing Duty Administrative Review – Certain Hot-Rolled Carbon Steel Flat Products from India, 75 FR 43488-01, 26 July 2010.

2.2.  The challenged measures also cover the following provisions of the United States Tariff Act, 1930 as codified in the United States Code, Title 19, Chapter 4, Subtitle IV (US statue), and the United States Code of Federal Regulations, Title 19, Volume 3, Chapter III, Part 351 (US regulations), and their amendments, replacements, implementing acts or any other related measure in connection with them:

a.      19 CFR § 351.511(a)(2)(i) to (iii);

 

b.     19 CFR § 351.511(a)(2)(iv);

 

c.      19 USC § 1677(7)(G);

 

d.     19 USC § 1675a(a)(7);

 

e.     19 USC § 1675b(e)(2);

 

f.       19 USC § 1677e (b); and

 

g.     19 CFR § 351.308.

 

3  Parties' requests for findings and recommendations

3.1.  India requests the Panel to find that:

a.      The provisions contained in 19 CFR § 351.511(a)(2) (i) to (iii) are inconsistent "as such" with Article 14(d) of the SCM Agreement;

b.     The provision contained in 19 CFR § 351.511(a)(2)(iv) is inconsistent "as such" with Article 14(d) of the SCM Agreement;

c.      The provision contained in 19 CFR § 351.511(a)(2)(iv) is inconsistent "as such" with Articles 19.3 and 19.4 of the SCM Agreement;

d.     The provisions contained in 19 USC § 1677(7)(G), 19 USC § 1675a(a)(7) and 19 USC § 1675b(e)(2) are "as such" inconsistent with Articles 15.1, 15.2, 15.3, 15.4 and 15.5 of the SCM Agreement;

e.     The provisions contained in 19 USC § 1677e (b) and the implementing regulations contained in 19 CFR § 351.308 are "as such" inconsistent with Article 12.7 of the SCM Agreement;

f.       In connection with the provision of "High Grade Iron Ore" by the NMDC:

i.        The United States' determination as to the existence of financial contribution is inconsistent with Article 1.1(a)(1) of the SCM Agreement;

ii.       The United States' determination of specificity is inconsistent with Articles 2.1(c) and 2.4 of the SCM Agreement;

iii.     The United States' determination as to the existence and calculation of benefit is inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement; and

iv.     The United States' imposition of countervailing duty is inconsistent with Articles 19.3 and 19.4 of the SCM Agreement;

g.     In connection with the provision of "Captive Mining Rights of Iron Ore":

i.        The United States' identification of, and investigation into, the program is inconsistent with Article 12.5 of the SCM Agreement;

ii.       The United States' determination that grant of mining rights amounts to provision of iron ore is inconsistent with Article 1.1(a)(1)(iii) of the SCM Agreement;

iii.     The United States' determination regarding specificity is inconsistent with Articles 2.1(c) and 2.4 of the SCM Agreement;

iv.     The United States' determination as to the existence and calculation of benefit is inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement; and

v.      The imposition of countervailing duties by the United States is inconsistent with Articles 19.3 and 19.4 of the SCM Agreement;

h.     In connection with the provision of "Captive Mining Rights for Coal":

i.        The United States' determination that grant of mining rights amounts to provision of coal is inconsistent with Article 1.1(a)(1)(iii) of the SCM Agreement;

ii.       The United States' determination regarding specificity is inconsistent with Articles 2.1(a) and (b) of the SCM Agreement;

iii.     The United States' determination as to the existence and calculation of benefit is inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement; and

iv.     The imposition of countervailing duties by the United States is inconsistent with Articles 19.3 and 19.4 of the SCM Agreement;

i.        In connection with "SDF":

i.        The United States' determination that the loans from SDF constituted a financial contribution is inconsistent with Article 1.1(a)(1)(i) of the SCM Agreement;

ii.       The United States' determination regarding existence and calculation of benefit is inconsistent with Articles 1.1(b) and 14(b) of the SCM Agreement; and

iii.     The imposition of countervailing duties by the United States is inconsistent with Articles 19.3 and 19.4 of the SCM Agreement;

j.       The injury determination by the United States is inconsistent with Articles 15.1, 15.2, 15.3, 15.4 and 15.5 of the SCM Agreement;

k.      The initiation of investigation into new subsidies during Administrative Reviews is inconsistent with Articles 11.1, 11.2 and 11.9 of the SCM Agreement;

l.        The failure to invite India for consultation at the time of initiating investigation into new subsidies is inconsistent with Article 13.1 of the SCM Agreement;

m.   The investigation into new subsidies during Administrative Reviews is inconsistent with Articles 21.1 and 21.2 of the SCM Agreement;

n.     The failure to issue a public notice of initiation of investigation into new subsidies during Administrative Reviews is inconsistent with Article 22.1 and Article 22.2 of the SCM Agreement;

o.     The application of adverse facts available standard is inconsistent with Article 12.7 of the SCM Agreement;

p.     The United States' determinations are inconsistent with Article 22.5 of the SCM Agreement; and

q.     As a consequence of inconsistencies mentioned hereinabove, the United States' determinations are inconsistent with Articles 10 and 32.1 of the SCM Agreement, Article VI of the GATT 1994 and Article XVI: 4 of the WTO Agreement.

3.2.  Pursuant to Article 19 of the DSU, India requests the Panel to suggest the following specific ways by which the United States may bring its measures into conformity with the SCM Agreement, the GATT 1994 and the WTO Agreement:

a.      the United States repeals or amends the impugned provisions of law; and

b.     the United States withdraws the countervailing duty on hot-rolled carbon steel flat products from India.

3.3.  The United States requests that the Panel reject India's claims in this dispute.

4  Arguments of the parties

4.1.  The arguments of the parties, other than in their answers to questions, are reflected in their written submissions, oral statements or executive summaries thereof, provided to the Panel in accordance with paragraph 17 of the Working Procedures adopted by the Panel (see Annexes B and C).

5  Arguments of the third parties

5.1.  The arguments of the third parties, other than in their answers to questions, are reflected in their written submissions, oral statements or executive summaries thereof, provided to the Panel in accordance with paragraph 17 of the Working Procedures adopted by the Panel. These arguments are attached as addenda to this Report in Annexes D-1-D-11. The arguments of Australia, Canada, China, the European Union and Saudi Arabia are reflected in their written submissions, oral statements or executive summaries thereof, while the arguments of Turkey are reflected in its oral statement.

6  Interim Review

6.1  Introduction

6.1.  On 31 January 2014, the Panel submitted its Interim Report to the parties. On 21 February 2014, both parties submitted written requests for review of precise aspects of the Interim Report. On 14 March 2014, both parties submitted written comments on each other's written requests. Neither party requested that the Panel hold an interim review meeting.

6.2.  The Panel explains below its response to substantive issues raised by the parties in their comments on the Interim Report. The Panel has also corrected a number of typographical errors and other non-substantive errors, including those identified by the parties. Due to changes as a result of our review, certain numbering of the paragraphs and footnotes in the Final Report has changed from the Interim Report. The text below refers to the numbers in the Interim Report, with the numbers in the Final Report in parentheses for ease of reference.

6.2  United States' requests for changes to the Interim Report

6.2.1  Paragraph 7.51 (paragraph 7.51 of the Final Report)

6.3.  The United States requests that paragraph 7.51 be modified to include an explanation of Section 351.511(a)(2)(ii) itself.[52]

6.4.  India disagrees with the United States' request, because paragraph 7.51 is part of the Panel's evaluation. If the United States' suggestion is to be included, India (i) submits that it may be more appropriately placed in the paragraph summarizing the United States' submissions, and (ii) requests that India's position also be included, as explained in its written comments.[53]

6.5.  We have decided not to accommodate the United States' request. Paragraph 7.51 is part of our evaluation, and sets forth our understanding of the measures at issue and resolution of the claim. In the absence of evidence regarding how the USDOC determines the availability of benchmarks, and bearing in mind the United States' reply to Panel question No. 84, the Panel is not persuaded that the United States has established that a standard referring to "a world market price where it is reasonable to conclude that such price would be available to purchasers in the country in question"[54] necessarily provides the type of analysis of "prevailing market conditions" envisaged by the Panel in this paragraph.

6.2.2  Paragraph 7.63 (paragraph 7.62 of the Final Report)

6.6.  The United States requests the Panel to note that India did not provide any evidence in support of India's specific argument at issue.[55]

6.7.  India disagrees with the United States' request, because India's claim at issue is an "as such" claim which does not depend on any factual evidence. In addition, India recalls that paragraph 7.63 is part of the Panel's evaluation. If the United States' suggestion is included, India (i) submits that it may be more appropriately placed in the paragraphs summarizing the United States' submissions, and (ii) requests that India's position be also included, as explained in its written comments.[56]

6.8.  We have decided not to accommodate the United States' request, because we are able to resolve India's claim as a matter of law, without assessing whether India has established any factual basis for that claim.

6.2.3  Paragraph 7.87 (paragraph 7.86 of the Final Report)

6.9.  The United States requests that paragraph 7.87 be modified to reflect that there is no evidence that Clause 49 applied to NMDC during the review periods, and consequently there is no need for the Panel to address the significance of Clause 49 on the question of whether NMDC directors are independent.[57] The United States also proposes deletion of the last sentence of paragraph 7.87.

6.10.  India disagrees with the bulk of United States' requests. India submits that it did not concede to any non-compliance of Clause 49. In addition, India objects to the unfounded selective deletion proposed by the United States. India proposes the deletion of the entire paragraph 7.87.[58]

6.11.  For the most part, we have decided not to accommodate the United States' requests. We do not consider that the WTO-consistency of the USDOC's public body determination should hinge on whether or not Clause 49 was complied with, since in any event that provision does not regulate the conduct of NMDC's governmental directors. We have, though, deleted the last two sentences of paragraph 7.87.

6.2.4  Paragraph 7.124 (paragraph 7.123 of the Final Report)

6.12.  The United States requests the Panel to add a reference to the Panel Report in US – Upland Cotton as further support for the Panel's interpretation.[59]

6.13.  India disagrees with the United States' request. India submits that the specific reference suggested by the United States concerns a factual finding in US – Upland Cotton and does not relate to the Panel's evaluation in paragraph 7.124. Alternatively, India submits a number of other references that the Panel could consider.[60]

6.14.  We have decided not to accommodate the United States' request. While a reference to the findings in US – Upland Cotton would not be inconsistent with our evaluation, our reasoning focuses more on the issue of limited access.

6.2.5  Paragraph 7.179 (paragraph 7.178 of the Final Report)

6.15.  The United States submits that the description of its arguments relating to India's alleged "comparative advantage" is incomplete, and suggests a revision to paragraph 7.179.[61]

6.16.  India submits that, if the Panel accepts the United States' suggestions, the Panel should clarify that the text reflects the position of the United States. In addition, India requests the Panel to revise paragraph 7.176 (paragraph 7.175 of the Final Report) to fully capture India's arguments.[62]

6.17.  We have modified paragraphs 7.176 and 7.179 to reflect the comments of both parties.

6.2.6  Paragraph 7.186 (paragraph 7.185 of the Final Report)

6.18.  The United States requests that paragraph 7.186 be modified to reflect that India failed to present any actual evidence of a comparative advantage.[63]

6.19.  India disagrees with the United States' request, because paragraph 7.186 is part of the Panel's evaluation and the United States' contention is already included in paragraph 7.179 (paragraph 7.178 of the Final Report), which summarized the United States' arguments.[64]

6.20.  We have decided not to accommodate the United States' request, because we are able to resolve India's claim without assessing whether India advanced evidence of any comparative advantage.

6.2.7  Paragraph 7.199 (paragraph 7.198 of the Final Report)

6.21.  The United States requests that paragraph 7.199 be modified to accurately reflect the United States' arguments.[65]

6.22.  India does not comment on this request.

6.23.  We have decided to accommodate the United States' request and have made the adjustment sought.

6.2.8  Paragraph 7.251 (paragraph 7.250 of the Final Report)

6.24.  The United States requests the Panel to correct a factual inaccuracy with respect to the Indian laws at issue, and reconsider its findings in this respect.[66]

6.25.  While India agrees with the factual inaccuracy identified by the United States, India submits that the Panel's conclusions need not be modified.[67]

6.26.  We have corrected the factual inaccuracy in our evaluation, and modified paragraph 7.247 (paragraph 7.246 of the Final Report), which also refers to this matter, and paragraph 7.251 accordingly.

6.2.9  Paragraph 7.311 (paragraph 7.310 of the Final Report)

6.27.  The United States requests that a footnote be added to the end of paragraph 7.311 to reflect that India does not dispute that the PLRs were the only interest rates on record that were comparable to SDF loans examined in the 2006 administrative review.[68]

6.28.  India does not comment on this request.

6.29.  We have decided to accommodate the United States' request and have made the adjustment sought.

6.2.10  Paragraphs 7.324 and 7.325 (paragraphs 7.323 and 7.324 of the Final Report)

6.30.  The United States requests that paragraphs 7.324 and 7.325 be modified to reflect that imports from India were subsidized and dumped, and that all subsidized imports from other countries were also dumped.[69]

6.31.  India does not comment on this request.

6.32.  We have decided to accommodate the United States' requests and have made the adjustments sought, albeit not in the precise manner proposed by the United States.

6.2.11  Paragraph 7.376 and footnote 521 to paragraph 7.390 (paragraph 7.375 and footnote 646 to paragraph 7.389 of the Final Report)

6.33.  The United States submits that the US provision referred to in these paragraphs is not at issue in this dispute, and India has acknowledged this fact. The United States requests that these paragraphs be revised accordingly.[70]

6.34.  India does not comment on this request.

6.35.  We have decided to partly accommodate the United States' requests. Although the United States contends that India acknowledged that the relevant provision is not at issue in this dispute, we note India only accepted that "the said provision has nothing to do with cumulation in changed circumstances review".[71] Thus, we have modified footnote 491 (footnote 616 of the Final Report) accordingly. However, we also note that India contends that "the sunset review [can be] conducted post such countries becoming members of the WTO."[72] For this reason, we have decided not to accommodate the United States' request regarding footnote 521.

6.2.12  Paragraphs 7.410, 7.415-7.418, 7.421 and 7.299 (paragraphs 7.409, 7.414‑7.417, 7.420 and 7.298 of the Final Report), and abbreviations table

6.36.  The United States submits that it may be confusing to refer to the US measures at issue using the abbreviation "AFA", defined as "adverse facts available", since this expression does not reflect the legal operation of such measures. The United States requests deleting the abbreviation "AFA Provisions" from the abbreviations table, and changing the references in the mentioned paragraphs to the expression "U.S. facts available provisions".[73]

6.37.  India does not comment on this request.

6.38.  We note that "AFA Provisions" is an expression repeatedly used in India's submissions and statements. Thus, a reference to it, including in the abbreviations table, is necessary for a proper understanding of India's arguments, as summarized in paragraphs 7.410 and 7.415-7.418. For this reason, we have decided not to accommodate the United States' requests in these places. We note, however, that paragraphs 7.421 and 7.299 do not specifically summarize India's arguments. Thus, although the USDOC itself uses the abbreviation "AFA", we have decided to accommodate the United States' request with respect to these paragraphs, and have modified them accordingly.

6.2.13  Paragraph 7.419 (paragraph 7.418 of the Final Report)

6.39.  The United States requests a change to the wording in paragraph 7.419.[74]

6.40.  India does not comment on this request.

6.41.  We have decided to accommodate the United States' request and have made the adjustment sought.

6.2.14  Paragraphs 7.453 and 7.460 (paragraphs 7.452 and 7.459 of the Final Report)

6.42.  The United States requests changes to the wording in paragraphs 7.453 and 7.460 to reflect the proper standard of review of the Panel.[75]

6.43.  India does not comment on this request.

6.44.  We have decided to accommodate the United States' requests and have made the adjustments sought.

6.3  India's requests for changes to the Interim Report

6.3.1  Paragraphs 1.34-1.38 (paragraphs 1.34-1.38 of the Final Report)

6.45.  India requests that the Panel examine the term "initiated" in India's panel request in light of footnote 37 of the SCM Agreement. India recalls its argument that the statement in its panel request that "no investigation was initiated or conducted" should be read as no investigation was "initiated, commenced and performed in the manner 'provided [for] in Article 11' of the SCM Agreement".[76] India contends that "the Panel simply ignored the legal basis of India's claim", despite being required to evaluate such legal basis.[77]

6.46.  The United States submits that India's request must be disregarded for the same reasons the Panel rejected India's arguments in its Interim Report. In addition, the United States notes that India's request is not for "review precise aspects of the interim report", but rather for the Panel to evaluate India's claim.[78]

6.47.  We have decided not to accommodate India's request. We note that India's arguments, referred to above, were summarized in paragraph 1.24 of the Interim Report (paragraph 1.24 of the Final Report), and specifically addressed and rejected in paragraph 1.34. However, for the sake of clarity, we have made minor modifications to paragraph 1.34, including adding a sentence in footnote 39 to paragraph 1.34 (footnote 39 of the Final Report).

6.3.2  Section 7.2: India's third ground

6.48.  India requests the Panel to evaluate the specific and independent ground raised by India, as the Panel has neither recorded nor evaluated such ground in the Interim Report.[79]

6.49.  The United States disagrees with India's request, because the Panel has in fact both noted and discussed India's argument at issue.[80]

6.50.  We have decided not to accommodate India's request, because the matter raised by India is already addressed effectively by our evaluation set forth in Section 7.2.3. The fact that we have not followed the order set forth in India's first written submission does not mean that parts of India's claims have been overlooked, or misrepresented.

6.51.  The third ground identified by India relates, in India's words, to the "hierarchical approach" provided for in Section 351.511(a)(2)(i)-(iii). This is evident from paragraphs 71 and 72 of India's first written submission. We addressed the issue of "hierarchical preference" in Section 7.2.3. In further support of its third ground, India also argues in its first written submission that "without the United States proving that the 'provision [of goods] is made for less than adequate remuneration', there is no benefit conferred by providing the goods".[81] This issue again relates to the substance of Section 7.2.3. The overlap with matters raised in Section 7.2.3 is further evidenced by the opening phrase of paragraph 67 of India's first written submission, which refers the reader to a previous section of India's submission. In that section, India argues that the "adequacy of remuneration referred to in Article 14(d) must be assessed from the perspective of whether the remuneration is adequate to the provider of the goods or not".[82] Again, this is precisely the matter addressed in Section 7.2.3.

6.3.3  Section 7.2: India's sixth ground

6.52.  India requests the Panel to evaluate the specific and independent ground raised by India, as the Panel has neither recorded nor evaluated such ground in the Interim Report.[83]

6.53.  The United States disagrees with India's request, because the Panel has in fact both noted and considered India's argument at issue.[84]

6.54.  We have decided not to accommodate India's request, because the matter raised by India is already addressed effectively in our findings. We note that this ground is based on India's allegations that the Tier-II approach (i) countervails the exporting Member's "comparative advantage"[85], and (ii) gives preference to the method "that is not in relation to the market in question"[86]. As stated above, we have already evaluated and rejected these arguments in our findings.

6.3.4  Paragraph 7.20 (Paragraph 7.20 of the Final Report)

6.55.  India requests the Panel to (i) re-evaluate its argument concerning "commercial considerations" as an independent ground to challenge the measures at issue, and (ii) modify paragraph 7.20 by correcting one of its references and replacing the first sentence as proposed by India.[87]

6.56.  The United States disagrees with India's requests, because the Panel has examined and rejected India's proposed two-step analysis, and contrary to India's statement, the first sentence and the reference at paragraph 7.20 support the Panel's view.[88]

6.57.  We have decided not to accommodate India's request. With respect to India's first point, as stated in footnote 80 (footnote 195 of the Final Report), India's argument concerning "commercial considerations" is no longer relevant once one rejects the notion that Article 14(d) of the SCM Agreement requires a two-step analysis. For this reason, there is no need for us to evaluate this argument as an independent ground.

6.58.  Turning to India's second point, in our view, the Panel's statement is a fair representation of paragraph 50 of India's first written submission, where India states that "a given 'remuneration' may be 'adequate' under Article 14(d) even if there is a difference between the price in question and the price for the similar goods transacted between private parties in the market concerned". Furthermore, we considered it unnecessary to include a reference to paragraphs 58-62 of India's first written submission, since paragraph 63 of that submission makes it clear that the basic issue addressed in those paragraphs concerns the fact that USDOC "determines a remuneration to be inadequate merely on the basis of a price difference with a certain benchmark price (i.e. Tier-I and Tier-II method), without actually evaluating whether the remuneration is otherwise justified by market or commercial considerations (i.e. Tier-III method)." This is precisely the point addressed by the Panel.

6.3.5  Paragraphs 7.19 and 7.31 (paragraphs 7.19 and 7.31 of the Final Report)

6.59.  India recalls that India raised separate and independent arguments on the first and second sentences of Article 14(d) of the SCM Agreement, and submits that the Panel erroneously treated these two grounds as if they were one. India requests the Panel to correct this error and review its evaluation in the relevant paragraphs accordingly.[89]

6.60.  The United States disagrees with India's request, because the Panel found that it was not necessary to evaluate India's arguments with respect to "commercial considerations" in light of the fact that the adequacy of remuneration is assessed from the perspective of the recipient and not the government provider.[90]

6.61.  We have decided not to accommodate India's request. As noted above, footnote 80 (footnote 195 of the Final Report) makes it clear that, once Article 14(d) of the SCM Agreement is interpreted properly, the issue of "commercial considerations" is not legally relevant. Furthermore, India improperly suggests that the Panel's findings in section 7.2.3 are concerned exclusively with the first sentence of Article 14(d), when in fact, at paragraph 7.33 (paragraph 7.33 of the Final Report), the Panel also considers aspects relating to the second sentence thereof, particularly the requirement that the adequacy of remuneration be assessed "in relation to prevailing market conditions … in the country of provision".

6.3.6  Section 7.2: India's second ground

6.62.  India requests the Panel to evaluate the specific and independent ground raised by India, as the Panel has failed to do so in the Interim Report.[91]

6.63.  The United States disagrees with India's request, because the Panel has already considered and rejected India's argument at issue.[92]

6.64.  We have decided not to accommodate India's request, because, as noted above, footnote 80 (footnote 195 of the Final Report) makes it clear that, once Article 14(d) of the SCM Agreement is interpreted properly, the issue of "commercial considerations" is not legally relevant.

6.3.7  Paragraphs 7.26 and 7.28 (paragraphs 7.26 and 7.28 of the Final Report)

6.65.  India requests the Panel to clarify the language in paragraphs 7.26 and 7.28, because while the former appears to present a possibility, the latter suggests a more definitive conclusion.[93]

6.66.  The United States disagrees with India's request, because the United States considers the language used by the Panel in the paragraphs at issue appropriate, in light of the text of Article 14(d) of the SCM Agreement.[94]

6.67.  We have decided to accommodate India's request. Thus, we have amended paragraph 7.28 to more closely reflect the language in Article 14(d) of the SCM Agreement.

6.3.8  Section 7.2.5.2: comparative advantage

6.68.  India requests the Panel to evaluate the specific ground raised by India, as the Panel has neither recorded nor evaluated such ground in the Interim Report.[95]

6.69.  The United States disagrees with India's request, because the Panel is not required to include a recitation and separate discussion of every argument put forward by the parties. In any event, the United States submits that the Panel has already both fully considered and rejected India's arguments with respect to an alleged "comparative advantage". If the Panel decides to accommodate India's request, the United States requests the Panel to similarly record the United States' submissions in respect of comparative advantage.[96]

6.70.  We have decided to partly accommodate India's request. Thus, we have included a footnote at the end of paragraph 7.51 (paragraph 7.51 of the Final Report) with a cross-reference to the Panel's treatment of India's comparative advantage argument at paragraph 7.63 (paragraph 7.62 of the Final Report).

6.3.9  Paragraph 7.47 (paragraph 7.47 of the Final Report)

6.71.  India requests that paragraph 7.47 be modified to accurately reflect India's position. India also requests the Panel to revise its findings in paragraph 7.50 (paragraph 7.50 of the Final Report) accordingly.[97]

6.72.  The United States disagrees with India's request, because the Panel has accurately captured India's primary argument, and the Panel need not include a separate discussion of every argument put forward by the parties. Moreover, the United States also contends that India's argument at issue lacks factual or legal basis.[98]

6.73.  We have decided not to accommodate India's request, as we see no need to amend our description of the "main arguments" made by India. India's argument regarding the use of out‑of‑country benchmarks "every time there is lack of information relating to in-country benchmark" is clearly linked to this main argument, in the sense that India suggests that the United States' uses lack of information "as an excuse to desecrate the … very narrow exception that has been tailored by the Appellate Body for extreme cases".[99] Once it is established by the Panel that the exception identified by the Appellate Body is not as narrow as India suggests, India's concern about that exception allegedly being "desecrate[d]" becomes moot.

6.74.  Regarding the so-called "exhaustion" of Tier I benchmarks, we note that India is referring to an argument, at paragraph 29 of its second written submission, made in response to an argument by the United States regarding the object and purpose of the SCM Agreement. Since the Panel did not consider it necessary to evaluate this US argument in its findings, there is similarly no need for the Panel to evaluate India's response to this argument.

6.3.10  Paragraph 7.49 (paragraph 7.49 of the Final Report)

6.75.  India submits that the Appellate Body in US – Softwood Lumber IV referred to the use of out of country benchmarks in "very limited" circumstances. India request the Panel to replace the phrase "appropriate circumstances" with the phrase "very limited circumstances".[100]

6.76.  The United States disagrees with India's request, because the use of the phrase "appropriate circumstances" is fully consistent with the Appellate Body Report in US – Softwood Lumber IV. In addition, the United States contends that India repeats arguments which the Panel has considered and properly rejected in the Interim Report.[101]

6.77.  We see no need to make the change proposed by India. Out-of-country benchmarks may be used in appropriate circumstances, irrespective of how limited those circumstances may be.

6.3.11  Paragraph 7.60 (paragraph 7.60 of the Final Report)

6.78.  India submits that the Panel has taken India's arguments out of context, and requests the Panel to (i) review its findings in paragraph 7.60 and Section 7.2.6.3 accordingly, and (ii) delete paragraph 7.61 (paragraph 7.61 of the Final Report).[102]

6.79.  The United States disagrees with India's requests, because contrary to India's assertions the Panel has accurately captured India's arguments.[103]

6.80.  We have decided not to accommodate India's requests. We do not agree with India that the Panel has considered an extract from India's oral statement at the first substantive meeting out of context. Paragraph 15 of India's first oral statement expresses the concern that the delivered price will be applied "even if the government price in question does not include such delivery charges". India then refers to the application of this mandatory requirement in cases "where the price under challenge" is ex works. At paragraph 16 of its oral statement, India asserts that the delivered price adjustment is made "[e]ven where the prevailing 'conditions of sale' for the transaction of the goods in question do not include transportation or other delivery charges, such as when goods are being transacted on an ex-works basis" (bold emphasis added). India then explains that "this method allows the United States to consider something more than the actual remuneration received by the provider of the goods, which disregards the plain words of Article 14(d)" (bold emphasis added). These subsequent references to the "transaction in question" and the "remuneration received by the provider of the goods" confirm the Panel's understanding of India's argument, and make it clear that the reference in paragraph 15 of India's oral statement was not an isolated case taken out of context by the Panel. The argument is also made at paragraph 8 of India's first written submission, where India indicates that "[e]ven if the government price is at ex‑factory level, ocean freight, delivery charges and import duties are included in the benchmark price to arrive at delivered prices".

6.81.  Finally, the above-mentioned reference to the remuneration of the provider of the goods (which, in the context of Article 14(d) of the SCM Agreement, would indicate the remuneration to the government provider) is also included in paragraph 89 of India's first written submission, where India asserts that "transportation and other delivery charges can never be considered as 'remuneration' to the provider of goods" in cases where "terms of sale of the goods in question in the country of provision may be on an ex-works or ex-mines, or CIF or FOB, or anything other than 'delivered'".

6.3.12  Section 7.2.6.3: foreclosure of examination of prevailing market conditions

6.82.  India contends that the Interim Report contains no finding on why mandatory foreclosure should or should not be considered an "as such" violation of Article 14(d) of the SCM Agreement, despite India's arguments on this matter. India requests the Panel to evaluate the relevant submissions of India, and review its findings accordingly.[104]

6.83.  The United States disagrees with India's request, because contrary to India's assertions the Panel has considered and rejected India's arguments.[105]

6.84.  We have decided not to accommodate India's request. India's request is based on an understanding of its argument that would not equate "prevailing market conditions" to the specific conditions of sale by the government provider at issue. As noted above, this does not reflect a proper understanding of India's argument.

6.3.13  Paragraph 7.62 (deleted from the Final Report)

6.85.  India queries the relevance of the Panel's evaluation set forth in paragraph 7.62. India notes that the Panel refers to issues pertaining to India's "as applied" claims, whereas the relevant Section of the Report addresses India's "as such" claim.[106]

6.86.  The United States disagrees with India's request, and considers that India's critiques are misplaced.[107]

6.87.  We have decided to delete paragraph 7.62 from our Report. We have amended the introduction to paragraph 7.63 (paragraph 7.62 of the Final Report) accordingly.

6.3.14  Section 7.3.1.4

6.88.  India requests the Panel to evaluate the implications of the United States' admission before the panel in US – Anti-Dumping and Countervailing Duties (China). India submits that the Panel has neither recorded nor evaluated such matter in the Interim Report.[108]

6.89.  The United States disagrees with India's request, because the investigations at issue in the present dispute are wholly distinct from the investigations at issue in US – Anti-Dumping and Countervailing Duties (China), and those statements are simply not relevant to the present dispute.[109]

6.90.  We have decided not to accommodate India's request. Our findings should not be based on any alleged admission by the United States in other WTO dispute settlement proceedings. Rather, our findings should be based on the evidence placed on the record by the parties. As this issue was raised in a footnote to India's first written submission, we consider there is no need to include this matter in the summary of India's "main" arguments.

6.3.15  Footnote 131 (footnote 245 of the Final Report)

6.91.  India requests the Panel to record that the term "governed by" was never explained by the United States in the determination at issue, and that this term was first explained by the United States before this Panel.[110]

6.92.  The United States disagrees with India's request, because India is incorrect in stating that the explanations provided by the USDOC were not contained in the determinations themselves.[111]

6.93.  We have decided not to accommodate India's request, because there is no need to provide the requested clarification. As to whether or not the term "governed by" was explained in the USDOC's determinations at issue, we consider that those determinations speak for themselves.

6.3.16  Paragraph 7.82 and footnote 130 (paragraph 7.81 and footnote 244 of the Final Report)

6.94.  India requests the Panel to review its findings after properly evaluating the implication of certain USDOC's statements in the 2007 administrative review.[112]

6.95.  The United States disagrees with India's request, because there is no inconsistency between the Panel's acknowledgment of the USDOC's statements and the Panel's findings.[113]

6.96.  We have decided not to accommodate India's request. Footnote 130 of the Interim Report explains that, notwithstanding the USDOC's assertion in the relevant issues and decision memorandum, the USDOC had already referred to a factor other than majority government share ownership in a prior determination. There is no contradiction between this statement and the findings of the Panel in paragraphs 7.82-7.84 (paragraphs 7.81-7.83 of the Final Report). Furthermore, the Panel is correct to resolve India's claim on the basis of the totality of the evidence before it.

6.3.17  Paragraph 7.83 (paragraph 7.82 of the Final Report)

6.97.  India requests the Panel to (i) consider that the reference to evidence in the 2007 administrative review is irrelevant to the 2004 and 2006 administrative reviews, as the latter pre‑dated the former; and (ii) record that the United States has specifically admitted before the Panel that "administrative control" was not used in its determinations.[114]

6.98.  The United States disagrees with India's requests. The United States recalls that the Panel has referred to several facts considered by the USDOC in the 2004, 2006 and 2007 administrative reviews. The Interim Report also does not indicate that the evidence referred to in the 2004 administrative review was insufficient to support the USDOC's public body finding. Finally, the United States made no such statements as India contends.[115]

6.99.  We have decided not to accommodate India's requests. First, we do not consider that there is any inaccuracy regarding the last sentence of paragraph 7.83 (paragraph 7.82 of the Final Report). While that sentence refers to evidence of government appointment of directors addressed by the USDOC in the 2007 administrative review, paragraph 7.84 (paragraph 7.83 of the Final Report) also discusses similar evidence of government appointment of directors on USDOC's record of the 2004 administrative review. In addition, paragraph 7.83 cites a statement in USDOC's 2007 Issues and Decision Memorandum to the effect that the 2007 evidence "bolsters" the 2004 evidence. Thus, the fact that the 2007 evidence post-dates the 2004 review does not mean that there was no evidence of government appointment of directors in respect of that earlier review.

6.100.  Second, we do not consider that the United States should be understood to have admitted that USDOC did not rely on "administrative control" in its determinations. The fact that this phrase may not have been used by the USDOC does not mean that the United States is precluded from relying on evidence – on USDOC's record – of "administrative control" in this Panel proceeding.

6.3.18  Paragraphs 7.85-7.87 (paragraphs 7.84-7.86 of the Final Report)

6.101.  India requests the Panel to record the distinction highlighted in the underlying investigation, as well as before the Panel, between GOI nomination and GOI appointment of directors. India also requests the Panel to examine whether NMDC would be a public body considering that the GOI is involved only in the nomination of a majority of NMDC's board as opposed to appointing a very small minority of NMDC's board.[116]

6.102.  The United States does not object to India's request that this argument be recorded by the Panel in its Final Report. The United States submits that this argument does not warrant any changes to the Panel's findings.[117]

6.103.  We have decided to accommodate India's request, and have modified paragraph 7.86 to record India's appointment versus nomination argument. However, we do not consider that this argument alters the Panel's findings. We have also amended the first line of paragraph 7.87.

6.3.19  Paragraph 7.87: content of websites (paragraph 7.86 of the Final Report)

6.104.  India requests the Panel to record India's rebuttal to this issue, including the fact that annual reports are indeed part of the static portion of the website and such published annual reports are not changed.[118]

6.105.  The United States does not object to India's request, and suggests that it could be addressed in existing footnote 140 (footnote 254 of the Final Report). The United States submits that this argument does not warrant any changes to the Panel's findings.[119]

6.106.  We have decided to accommodate India's request, and have included a new footnote 255 in the Final Report and modified paragraph 7.87 accordingly. However, our finding remains unchanged, since it is based on the fact that websites are generally not static. Investigating authorities should not be required to trawl through websites, and ascertain what parts of such websites may or not remain unchanged, particularly given the risk that changes may be made at any time by the host, and websites may even disappear.

6.3.20  Paragraph 7.87: consideration of the record (paragraph 7.86 of the Final Report)

6.107.  India refers to the Panel's finding that the listing agreement has been submitted only before this Panel and is not part of the records of the USDOC. India requests the Panel to fully consider the records of this case, record India's submissions, and review the relevant Panel's findings.[120]

6.108.  The United States disagrees with India's requests. The United States submits that India has no basis for its argument, particularly because India does not point to any record evidence in which the listing agreement was contained or even mentioned.[121]

6.109.  We have decided not to accommodate India's request. At paragraph 210 of its first written submission, India asserted that "Essar submitted that NMDC is not a government authority or a public body since the GOI was not involved in the daily operations of NMDC and that NMDC's operations are managed by an independent board consisting of 13 members". There is nothing in India's first written submission to suggest that, in making its argument, Essar was specifically referring to Clause 49 of the Listing Agreement.

6.3.21  Paragraph 7.87: government involvement (paragraph 7.86 of the Final Report)

6.110.  India requests the Panel to clarify whether it is the Panel's view that any degree of government involvement in the appointment of NMDC's directors will suffice in concluding that NMDC is a public body. Alternatively, India requests that the relevant statement by the Panel be struck from the Report.[122]

6.111.  The United States disagrees with India's clarification request, because this paragraph should not be modified on the basis of the relevance of Clause 49 of the Listing Agreement. While the Interim Report contains an interpretation of Article 1.1(a)(1) of the SCM Agreement, the statement regarding the Listing Agreement does not amount to a general articulation of this provision. However, the United States also requests that the relevant part in paragraph 7.87 identified by India be struck from the Report.[123]

6.112.  As both parties agree on the deletion of the relevant part of the Interim Report, we have amended this paragraph accordingly.

6.3.22  Paragraphs 7.87-7.89 (paragraphs 7.86-7.88 of the Final Report)

6.113.  India requests the Panel to (i) accurately reflect India's arguments; (ii) record that the United States admitted before the Panel that the alleged "administrative control" was never a factor used by the United States in its determinations; and (iii) delete certain findings in paragraphs 7.87-7.89 because they are not aligned with the proper standard of review of the Panel.[124]

6.114.  The United States disagrees with India's requests. The United States fails to see how India's arguments were misrepresented by the Panel. In addition, the United States has never made the admission indicated by India. Finally, the United States submits that India has no basis for arguing that the Panel should delete paragraphs 7.87-7.89 in their entirety.[125]

6.115.  We have decided not to accommodate India's requests. The Panel simply addressed Clause 49 and the issue of Navatna/Miniratna status in its findings in response to arguments presented by India. The fact that such evidence was not on the USDOC's record does not mean that India's arguments should simply have been disregarded by the Panel. Furthermore, India has provided no basis for concluding that the relevant evidence should have been on the USDOC's record. Regarding the issue of whether the United States admitted that "administrative control" was never a factor relied on by the USDOC, the United States' response to Panel question No. 42 speaks for itself.

6.3.23  Paragraph 7.88 (paragraph 7.87 of the Final Report)

6.116.  India requests the Panel to clarify the meaning of the expression "administrative control" as used by the Panel.[126]

6.117.  The United States disagrees with India's clarification request, because this expression is used by NMDC on its own website. The United States submits that the Panel made use of this expression as used by the entity in question, and was not seeking to identify its own characterization of the entity.[127]

6.118.  For the sake of clarity, we have amended the beginning of the second sentence of paragraph 7.88.

6.3.24  Paragraph 7.147 (paragraph 7.146 of the Final Report)

6.119.  India asks the Panel to review its "as applied" findings in light of India's comments on the Panel's "as such" findings.[128]

6.120.  The United States asks us to reject India's request, on the basis of the United States' objections to India's comments regarding the Panel's "as such" findings.[129]

6.121.  We have already explained that there is no need for us to amend our "as such" findings pursuant to India's comments. Accordingly, there is similarly no need for us to amend our "as applied" findings.

6.3.25  Paragraph 7.160-7.166 (paragraphs 7.159-7.165 of the Final Report)

6.122.  India contends that the Panel has committed an error by ruling on matters (in the form of ex post rationalizations) that are not before it.[130]

6.123.  The United States considers that the Panel is cautious with respect to its finding of ex post rationalization. According to the United States, it is therefore appropriate for the Panel to opine on the justification offered by the United States.[131]

6.124.  We do not believe it is necessary to amend our findings. Paragraph 7.160 provides ample explanation of the reasons why we consider it appropriate to include the relevant considerations in our Report.

6.3.26  Paragraph 7.183 (paragraph 7.182 of the Final Report)

6.125.  India asserts that the Panel has failed to provide any referencing for the relevant statements of the NMDC officials.[132] India also asserts that those statements relate to the setting of export/international prices, rather than domestic prices.[133]

6.126.  The United States notes that referencing has been provided by the Panel in footnote 248 (footnote 366 of the Final Report). The United States also asserts that the relevant statements also relate to prices in the domestic market.[134]

6.127.  We observe that the references to the relevant statements are already included in footnote 248 of the Interim Report (footnote 366 of the Final Report). Furthermore, the relevant statements make it clear that domestic prices are set in light of "the negotiated international price".

6.3.27  Section 7.4.1.3

6.128.  India asks the Panel to include certain factual evidence in its findings.[135]

6.129.  The United States asserts that India provides no rationale or explanation for why this information should be included.[136]

6.130.  We decline India's request. It is not evident to us, and India has not explained, why the evidence referred to by India is relevant to the Panel's findings.

6.3.28  Section 7.4.3.4

6.131.  India asked the Panel to include the fact that the royalty paid for the grant accounts for only a certain percentage of the costs borne by the miner. India also asks the Panel to delete its observation in footnote 310 (footnote 429 of the Final Report) regarding an apparent contradiction in India's position. India denies that there is any contradiction in its position. India also asks the Panel to record India's submission that GOI has no control over how much and in what manner the iron ore is mined.[137]

6.132.  The United States asserts that India provides no rationale or explanation for why the proportion of royalty payable should be included in the Panel's findings. The United States asserts that the Panel's evaluation makes it clear that the amount of royalty is irrelevant. Regarding footnote 310 (footnote 429 of the Final Report), the United States contends that the Panel's reference to an inconsistency in India's position is fully supported by the record. The United States also contends that India provides no basis or justification for the Panel to include any reference to India's lack of control over the amount and manner of iron ore mined. The United States asserts that the Panel already rejected India's argument regarding uncertainty, risk and control at paragraphs 7.237-7.238 (paragraphs 7.236-7.237 of the Final Report.[138]

6.133.  We decline India's requests. Concerning the amount of royalty and GOI's lack of control over the extraction, India has not explained – and it is not evident to us – why these issues are necessary for, or relevant to, the Panel's findings. Regarding footnote 310 (footnote 429 of the Final Report), we consider that the inconsistency referred to therein is plain. India's assertion to the contrary is unpersuasive.

6.3.29  Paragraph 7.247 (paragraph 7.246 of the Final Report)

6.134.  India asks the Panel to exclude certain information which, in its view, is confidential.[139]

6.135.  The United States denies that the relevant information is confidential. The United States observes that the relevant information was included in non-confidential submissions to the USDOC, and treated as non-confidential by the USDOC, during the underlying proceedings.[140]

6.136.  We have deleted the quotation containing the information referred to by India. The information was included in a quote which, in light of changes reflecting the scope of the Coal Mining Nationalization Act, need no longer be included in the Panel's findings.

6.3.30  Paragraph 7.261 (paragraph 7.260 of the Final Report)

6.137.  India asks the Panel to amend its findings to reflect India's argument[141] that remuneration received by a government can only be actual, rather than notional.[142]

6.138.  The United States asserts that the Panel already considered and rejected India's argument that government prices be actual as opposed to notional. According to the United States, the question of whether the remuneration received by the government is actual or notional is equivalent to whether remuneration is assessed from the perspective of the government-provider in the first place.[143]

6.139.  We decline to make the change proposed by India. India's argument that the government's remuneration can only be actual, rather than notional, is necessarily premised on its view that the adequacy of remuneration is first assessed from the perspective of the government provider. We have already rejected this view in our findings.

6.3.31  Paragraph 7.262 (paragraph 7.261 of the Final Report)

6.140.  India asks the Panel to review its finding that India's "good faith" claim is outside the Panel's terms of reference. India notes that its request for consultation and request for establishment refer to the nullification or impairment of benefits. India also observes that Article 27 of the Vienna Convention indicates that parties to a treaty are required to interpret and apply treaty obligations in good faith. India also refers to various findings of the Appellate Body in support.[144]

6.141.  The United States asks the Panel to reject India's request. The United States observes that India's request for establishment contains no "good faith" claim. The United States asserts that an allegation of nullification or impairment is not a reference to "good faith".[145]

6.142.  We reject India's request. India has not established that the Panel should address a claim that is not within the Panel's terms of reference, as determined by India's request for establishment. Furthermore, an allegation of nullification or impairment does not amount to an allegation of violation of the principle of "good faith".

6.3.32  Paragraph 7.264 (paragraph 7.263 of the Final Report)

6.143.  India asks the Panel to correct an error regarding the scope of its findings in respect of the USDOC's rejection of certain domestic price information submitted by GOI and Tata.[146]

6.144.  The United States contends that India's comment fails to address the Panel's explanation for its finding, or the connection between the relevant claims. The United States suggests that the scope of the Panel's findings is explained by the scope of India's claims.[147]

6.145.  We acknowledge the inconsistency in our findings, and have amended them accordingly. We have also amended the relevant parts of paragraph 7.266 (paragraph 7.265 of the Final Report), and the Section 8.1 on Conclusions.

6.3.33  Paragraphs 7.404-7.407 (paragraphs 7.403-7.406 of the Final Report)

6.146.  India requests the Panel to clarify a number of legal questions relating to the Panel's assessment of whether certain economic factors were evaluated by the USITC in its injury determination. Recalling certain points listed in the Panel's reasoning, India contends that the only relevant point is the evaluation of factors which are closely related to "growth", "return on investment" and "ability to raise capital". Thus, India requests the Panel to "clarify whether it is of the view that as a matter of law, the USITC complies with Article 15.4 [of the SCM Agreement] simply because it evaluates other factors 'closely related' to 'growth', 'return on investment' and 'ability to raise capital', without actually evaluating these factors themselves."[148]

6.147.  Second, India contends that "return on investment" requires an analysis of profitability in relation to the capital employed during the relevant period. Thus, India requests the Panel to "clarify whether as matter of law, investigating authorities are entitled to skip separate evaluation of 'return on investment', merely because they have separately analyzed capital expenses, without correlating the same with profitability."[149]

6.148.  Finally, India contends that the evaluation of "ability to raise capital" requires a much broader analysis than mere profitability, as it depends on the creditworthiness of a firm and its promoters, other products dealt with by the firm, future outlook of the firm and market, and overall state of affairs of the firm over a certain period of time. Thus, India requests the Panel to "clarify whether as matter of law, investigating authorities are entitled to skip separate evaluation of 'ability to raise capital' by merely analyzing 'profitability'."[150]

6.149.  The United States submits that India's comments on the Interim Report do not identify any specific issues that require clarification, but rather amount to repetition of India's arguments, which the Panel has already rejected.[151]

6.150.  We have decided not to accommodate India's requests. The Appellate Body in EC – Tube or Pipe Fittings stated that the particular facts of each case will determine whether a panel is able to find in the record "sufficient and credible evidence" that a factor has been evaluated, even though a separate record of the evaluation of that factor has not been made.[152] After examining the particular facts of this case, the Panel identified in the record sufficient and credible evidence that the factors at issue were evaluated.[153] On this basis, we refrain from addressing India's queries "as a matter of law".

6.3.34  Paragraph 7.407 (paragraph 7.406 of the Final Report)

6.151.  India notes that the USITC has not provided indexed figures or its analysis with regard to information included in Appendix E, and requests that this be recorded in the Panel's Report.[154]

6.152.  The United States recalls that the information contained in Appendix E was a compilation of the confidential responses of certain domestic producers, and notes that the redacted individual firm data was provided in aggregate form in the USITC's determination at Table VI-8, among other places.[155]

6.153.  We have decided to partly accommodate India's requests. As explained by the United States, Table VI-8 provides in aggregate form the data redacted from Appendix E. For the sake of clarity, however, we have modified footnote 551 (footnote 676 of the Final Report) to address India's request.

6.3.35  Paragraph 7.440 (paragraph 7.439 of the Final Report) and Section 7.5.5.2.1

6.154.  India requests the Panel to correct certain alleged errors and re-evaluate independently all three distinct arguments raised by India. First, India contends that the correct reference to India's argument relating to the punitive application of "facts available" should refer to paragraphs 173‑174, and 188 of its first written submission. Second, India contends that the Panel incorrectly stated that India's arguments relating to the punitive application of "facts available", and the "evaluative, comparative approach" are "inter-dependent". Third, India asks the Panel to examine its argument relating to the United States' consistent application of the challenged provision within the context of India's alternative argument.[156] Finally, on the basis of the above, India requests the Panel to review its findings regarding India's "as applied" claims.[157]

6.155.  According to the United States, India's requests fundamentally relate to whether the Panel has separately and independently recorded and examined India's punitive application argument. The United States submits that the Panel has fully recorded and addressed this argument. In addition, the United States recalls that India challenged the US laws themselves, and not the USDOC's "practice" with respect to the application of "facts available". Thus, the United States asks the Panel to reject India's requests relating to both India's "as such" and "as applied" claims.[158]

6.156.  We have decided not to accommodate India's requests. First, paragraphs 173-174 of India's first written submission do not refer to India's argument, but rather to India's description of the United States' Statement of Administrative Action, and the understanding of the United States' Court of Appeals for the Federal Circuit. Moreover, paragraph 188 of India's first written submission refers to India's alternative argument relating to the WTO compatibility of discretionary provisions. However, paragraph 7.440 of the Interim Report does not refer to India's alternative argument, and thus should not include a reference to this part of India's first written submission.

6.157.  Second, the Panel has not stated that the arguments at issue are "inter-dependent" in paragraph 7.440. India's punitive application argument is summarized at paragraph 7.416 (paragraph 7.415 of the Final Report) as a separate argument, and we specifically addressed it under Section 7.7.5.1.2, which is entitled "adverse conclusions". However, for the sake of clarity, we have modified footnote 608 (footnote 733 of the Final Report), and added a quote from India's first written submission.

6.158.  Third, India's alternative argument at issue relates to whether discretionary measures may be found WTO inconsistent. We have explained at footnote 597 (footnote 722 of the Final Report) that our examination is limited to the US provisions "as such", and not the USDOC's "approach" as a "measure", because India's claims related to the US law "as such". In addition, we have found that the measure at issue is not inconsistent with Article 12.7 of the SCM Agreement. Consequently, as explained at footnote 617 (footnote 742 of the Final Report), we need not address whether the United States' measure at issue is not mandatory and thus cannot breach the United States' obligations under the WTO covered agreements.

6.159.  Finally, having decided not to accommodate India's requests discussed above, we also decide not to accommodate India's corresponding requests relating to its "as applied" claims.

6.3.36  Paragraph 7.465 (paragraph 7.464 of the Final Report)

6.160.  India requests the Panel to explain how the determination in the 2008 administrative review is not contrary to the "facts available" from the 2006 administrative review, taking into account the uncontested definition of "new industrial unit" and that Tata could not fall within this definition.[159] In addition, India requests the Panel to explain whether the determination of 6.06% subsidy margin against Tata for the alleged benefit under certain subsidy programmes was justified under Article 12.7 of the SCM Agreement, when the maximum benefit under the pollution control equipment subsidy and the feasibility study and project report cost reimbursement programme was respectively INR 2 million and INR 0.05 million.[160]

6.161.  The United States asks the Panel to reject India's requests because information from a prior administrative review cannot be used as facts available for a later review when interested parties have not provided, as requested, any relevant information pertaining to the later period.[161]

6.162.  We have decided not to accommodate India's requests. With respect to the subsidy programmes on exemption of electricity duty, capital power generating subsidy, interest subsidy, and stamp duty and registration, and the pollution control equipment subsidy, we have found at paragraph 7.465 that there was a sufficient factual foundation for USDOC's determination, and the information used by USDOC was a reasonable replacement for the missing information in the record of the 2008 administrative review. We recall the United States' arguments, summarized at paragraph 7.463 (paragraph 7.462 of the Final Report), that the USDOC could not have automatically relied on the information submitted in the 2006 administrative review, without any relevant information being provided by interested parties in the 2008 administrative review. In addition, with regard to the 6.06% subsidy rate for the pollution control equipment subsidy, the United States submitted that the USDOC "applied the benefit rate of a cooperating company for a similar program."[162] Finally, at paragraph 7.466 (paragraph 7.465 of the Final Report), we have already upheld India's claim under Article 12.7 of the SCM Agreement regarding the programme on feasibility study and project report cost reimbursement, and thus need not address India's additional argument.

6.3.37  Section 7.7.5.2.9

6.163.  India requests the Panel to consider that the 2013 sunset review determinations are also inconsistent with Article 12.7 of the SCM Agreement to the extent they repeat those instances held inconsistent with this provision in the 2006, 2007 and 2008 administrative reviews.[163]

6.164.  The United States submits that the interim review stage is not an appropriate time to raise new arguments, and that the Panel has already addressed the relevant arguments and evidence submitted by India.[164]

6.165.  We have decided not to accommodate India's request, because it does not change the reasons that led us to conclude, at paragraph 7.480 (paragraph 7.479), that we are unable to evaluate India's claims.

6.3.38  Paragraphs 7.501-7.509 (paragraphs 7.500-7.508 of the Final Report)

6.166.  India requests the Panel to clarify whether the Panel intended to exercise judicial economy with regard to India's claims under Articles 11.1, 13.1, 22.1 and 22.2 of the SCM Agreement. India also requests that the Panel make a specific finding on whether the United States has complied with these provisions. India argues that its claims under these provisions were entirely independent from India's other claims relating to new subsidy allegations.[165]

6.167.  The United States submits that the Panel has correctly addressed India's claims, and asks the Panel to reject India's requests.[166]

6.168.  We have decided not to accommodate India's request. The Panel has not exercised judicial economy with regard to India's claims under Articles 11.1, 13.1, 22.1 and 22.2 of the SCM Agreement. Rather, at paragraphs 7.502-7.508, we explained that as the USDOC was entitled, under Articles 21.1 and 21.2 of the SCM Agreement, to examine new subsidy allegations in the administrative reviews at issue, there was no need to examine the provisions at issue regulating investigations.

7  Findings

7.1.  This case concerns the imposition by the United States of countervailing duties on imports of certain hot-rolled carbon steel flat products from India. India challenges certain provisions of the United States Tariff Act, 1930 "as such" and "as applied" in the context of the relevant countervailing duties investigations. India's claims pertain to various procedural and substantive provisions of the SCM Agreement and, consequently, to Article VI of the GATT 1994 and Article XVI:4 of the WTO Agreement. The United States denies India's claims.

7.2.  We shall begin by examining India's substantive claims. Thereafter, we shall turn to India's procedural claims. Before reviewing India's claims, though, we recall a number of general principles regarding treaty interpretation, standard of review and burden of proof in WTO dispute settlement proceedings.

7.1  General principles regarding treaty interpretation, the applicable standard of review and burden of proof

7.1.1  Treaty Interpretation

7.3.  Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the existing provisions of the covered agreements "in accordance with customary rules of interpretation of public international law". It is generally accepted that the principles codified in Articles 31 and 32 of the Vienna Convention are such customary rules.

7.1.2  Standard of Review

7.4.  Panels are bound by the standard of review set forth in Article 11 of the DSU, which provides, in relevant part:

[A] panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements. (emphasis added)

7.5.  The Appellate Body has stated that the "objective assessment" to be made by a panel reviewing an investigating authority's determination is to be informed by an examination of whether the agency provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its factual findings; and (ii) how those factual findings supported the overall determination.[167]

7.6.  The Appellate Body has also commented that a panel reviewing an investigating authority's determination may not conduct a de novo review of the evidence or substitute its judgment for that of the investigating authority. A panel must limit its examination to the evidence that was before the agency during the course of the investigation and must take into account all such evidence submitted by the parties to the dispute.[168] At the same time, a panel must not simply defer to the conclusions of the investigating authority. A panel's examination of those conclusions must be "in-depth" and "critical and searching".[169]

7.1.3  Burden of Proof

7.7.  The general principles applicable to the allocation of the burden of proof in WTO dispute settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.[170] Therefore, as the complaining party, India bears the burden of demonstrating that the measures at issue from the United States are inconsistent with the WTO agreements invoked by India. The Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima facie case, namely a case which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party.[171] Finally, it is generally for each party asserting a fact to provide proof thereof.[172]

7.2  The United States' benchmarking mechanism

7.8.  India challenges US Regulation Section 351.511(a)(2)(i) to (iv) "as such". Section 351.511(a)(2)(i) to (iii) contains the price benchmarking mechanism to be applied by the USDOC when determining whether or not the provision of goods by a government or public body confers a benefit on the recipient. Section 351.511(a)(2)(iv) provides that price comparisons shall be made at the delivered level.

7.9.  India makes a number of claims regarding the consistency of Section 351.511(a)(2)(i)-(iii) with Article 14(d) of the SCM Agreement. First, India claims that the hierarchical preference provided for in the US benchmarking mechanism conflates two separate issues, namely (i) the adequacy of remuneration paid for the good and (ii) benefit. India claims that, by focusing on the issue of benefit to the recipient, the United States fails to determine the threshold issue of whether or not the remuneration is adequate for the government provider of the good. India contends that there can be no benefit to the recipient of the good if the remuneration is adequate for the government provider, even if the price paid by the recipient is lower than a market benchmark. Second, India claims that prices set by the government provider of goods should be included as part of the "prevailing market conditions" referred to in the second sentence of Article 14(d). Third, India claims that the use of world market prices under Tier II of the benchmarking mechanism is inconsistent with Article 14(d).

7.10.  India submits that Section 351.511(a)(2)(iv) is inconsistent with Article 14(d) and, consequently with Articles 19.3 and 19.4, because the requirement to use delivered prices means that the price benchmark will not relate to prevailing market conditions in the country of provision in all cases.

7.11.  The United States asks the Panel to reject India's claims.

7.2.1  Relevant WTO provision

7.12.  Article 14(d) of the SCM Agreement provides that:

the provision of goods or services or purchase of goods by a government shall not be considered as conferring a benefit unless the provision is made for less than adequate remuneration, or the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service in question in the country of provision or purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).

7.13.  Article 19.3 of the SCM Agreement provides in relevant part:

When a countervailing duty is imposed in respect of any product, such countervailing duty shall be levied, in the appropriate amounts in each case, on a non–discriminatory basis on imports of such product from all sources found to be subsidized and causing injury, except as to imports from those sources which have renounced any subsidies in question or from which undertakings under the terms of this Agreement have been accepted.

7.14.  Article 19.4 of the SCM Agreement provides that:

No countervailing duty shall be levied on any imported product in excess of the amount of the subsidy found to exist, calculated in terms of subsidization per unit of the subsidized and exported product. (footnote omitted)

7.2.2  Relevant US provision

7.15.  The text of Section 351.511(a)(2)(i) to (iv) is reproduced below:

§ 351.511 Provision of goods or services.

(a) Benefit—(1) In general. In the case where goods or services are provided, a benefit exists to the extent that such goods or services are provided for less than adequate remuneration. See section 771(5)(E)(iv) of the Act.

(2) ''Adequate Remuneration'' defined—

(i) In general. The Secretary will normally seek to measure the adequacy of remuneration by comparing the government price to a market-determined price for the good or service resulting from actual transactions in the country in question. Such a price could include prices stemming from actual transactions between private parties, actual imports, or, in certain circumstances, actual sales from competitively run government auctions. In choosing such transactions or sales, the Secretary will consider product similarity; quantities sold, imported, or auctioned; and other factors affecting comparability.

(ii) Actual market-determined price unavailable. If there is no useable market-determined price with which to make the comparison under paragraph (a)(2)(i) of this section, the Secretary will seek to measure the adequacy of remuneration by comparing the government price to a world market price where it is reasonable to conclude that such price would be available to purchasers in the country in question. Where there is more than one commercially available world market price, the Secretary will average such prices to the extent practicable, making due allowance for factors affecting comparability.

(iii) World market price unavailable. If there is no world market price available to purchasers in the country in question, the Secretary will normally measure the adequacy of remuneration by assessing whether the government price is consistent with market principles.

(iv) Use of delivered prices. In measuring the adequacy of remuneration under Paragraph (a)(2)(i) or (a)(2)(ii) of this section, the Secretary will adjust the comparison price to reflect the price that a firm actually paid or would pay if it imported the product. This adjustment will include delivery charges and import duties.

7.16.  We begin by assessing India's claim regarding the hierarchical preference provided for in Section 351.511(a)(2)(i) to (iii).

7.2.3  Whether Section 351.511(a)(2)(i) to (iii) is inconsistent with Article 14(d) because it fails to assess the adequacy of remuneration from the perspective of the government provider, before assessing whether there is benefit to the recipient

7.2.3.1  Main arguments of the parties

7.2.3.1.1  India

7.17.  India considers that (i) adequacy of remuneration for the government provider of a good and (ii) benefit to the recipient are distinct issues. For India, the adequacy of remuneration for the government provider of goods is a "threshold condition to be answered prior to going into the question of benefit".[173] India submits that "unless the remuneration is less than adequate, the question of calculating benefit does not arise within the meaning of Article 14(d)".[174] India submits that the United States' benchmarking mechanism fails to address the adequacy of remuneration prior to an examination of benefit[175], since it contains a preference for determining benefit using Tier I and Tier II price benchmarks, and only provides for a Tier III analysis of the adequacy of remuneration for the government provider when Tier I and II price benchmarks are not available. India submits that, to the extent that adequacy of 'remuneration' to the provider of the goods is not evaluated in every case, the relevant US provisions are inconsistent with the two-pronged approach provided for in the first sentence of Article 14(d).[176]

7.18.  India submits that the fact that Article 14(d) distinguishes between the terms "remuneration" and "benefit" indicates that the concepts are different. India suggests that to argue otherwise would result in a circular provision. According to India, measuring the adequacy of "remuneration" seems to be the pre-requisite for calculating the "benefit" to the recipient. India contends that the verb "remunerate" means "pay (someone) for services rendered or work done"[177] and the noun "remuneration" refers to the "money paid for work or a service".[178] India suggests that this ordinary meaning implies that there is someone who is being remunerated for the work done or services rendered. India notes that, in the case of provision of goods or services, the structure of Article 1.1(b) and Article 14(d) refers to only two entities – the receiver of the goods and the provider of the goods. India asserts that since "benefit" is anyway being assessed from the perspective of the receiver of the goods, the term "remuneration" is to be seen from the perspective of the provider of the goods. In making this argument, India submits that it is not seeking to redefine the term "benefit" using a cost-to-government standard. Indeed, India does not dispute that, once the question of benefit arises, it is "to be measured from the perspective of the recipient of the goods".[179] According to India, though, the adequacy of remuneration for the government provider of the good must be examined before considering whether there is any benefit to the recipient.

7.19.  India considers that its position is supported by differences in the structure of the various sub-paragraphs to Article 14.[180] According to India, sub-paragraphs (b) and (c) clearly state that the method to calculate benefit is by reference to a "comparable", such that benefit is calculated using a comparative benchmark. India submits that sub-paragraph (d), by contrast, uses a different structure, providing that no benefit may be found unless – and therefore as a threshold issue - remuneration for the government provider is inadequate. India contends that, unlike the structure of sub-paragraphs (b) and (c), Article 14(d) does not specify that benefit shall be established using a comparative benchmark. In particular, Article 14(d) does not state that the provision of goods would confer a benefit as soon as there is a difference in the amount paid by the recipient for the goods provided by the government and the amount the recipient would have to pay to obtain the same goods on the market.

7.20.  India submits that remuneration may be adequate for the government provider of goods even though the price paid by the recipient may be less than a market benchmark.[181] According to India, remuneration paid by the recipient will be adequate for government providers of goods if it is based on commercial considerations, irrespective of the results of comparisons with the price that the recipient would have to pay on the market. India asserts that a price based on commercial considerations will necessarily relate to "prevailing market conditions", as required by the second sentence of Article 14(d). India notes in this regard that Article XVII:1(b) of the GATT 1994 requires state trading enterprises to make any purchases or sales solely in accordance with "commercial considerations", and states that such considerations include "price, quality, availability, marketability, transportation and other conditions of purchase or sale". India contends that the fact that the "commercial considerations" enumerated in Article XVII:1(b) of the GATT 1994 are the same as the "prevailing market conditions" set forth in Article 14(d) of the SCM Agreement must be given meaning. India also refers to WTO case law regarding the interpretation and application of Article XVII:1(b) of the GATT 1994.[182]

7.2.3.1.2  United States

7.21.  The United States asserts that its benchmarking mechanism properly assesses the adequacy of remuneration. The United States submits that Article 14(d) defines "benefit" by reference to the concept "adequacy of remuneration".[183] The United States contends that the essence of the benefit determination under the SCM Agreement is to determine whether the recipient is better off in light of the government financial contribution than if the recipient had relied on the market, a determination which involves assessing whether the recipient obtained something "on terms more favorable than those available in the market."[184] The United States submits that, to do this, an investigating authority must compare the difference between the government price and a private, arm's-length benchmark price. To the extent that the government price is less than the market benchmark price, the remuneration for the government is not adequate, and a benefit is conferred on the recipient. The United States submits that the analysis under Article 14(d) is therefore not the two-step process suggested by India, but rather a (single) comparative exercise.[185]

7.22.  The United States argues that the structure of Article 14(d) is no different from that of Article 14(b) or (c). The United States asserts that a consistent structure is employed throughout these provisions, since each provision identifies a condition that must be satisfied in order to establish that a benefit has been conferred.[186] The United States contends that each sub-paragraph of Article 14 provides for a determination of the existence of a benefit based on some deviation between what a recipient has actually paid and what they would otherwise have paid according to a benchmark price. For loans, subparagraph (b) prescribes that a benefit exists if there is a "difference" in the price of a governmental loan versus a "comparable commercial loan." For loan guarantees, subparagraph (c) similarly identifies a benefit if there is a "difference" between the amounts a firm pays for a loan with a government guarantee compared with what a "firm would pay on a comparable commercial loan absent the government guarantee." For the provision of goods and services, subparagraph (d) states that a benefit exists if the government provides the goods or services in exchange for "less than adequate remuneration" or if the government purchases such goods or services for "more than adequate remuneration." The United States contends that terms such as "less than" or "more than" are comparative in nature, just like the term "difference" in Article 14(b) and (c).

7.23.  The United States rejects India's argument that remuneration will necessarily be adequate in relation to the prevailing market conditions if it is based on commercial considerations. The United States contends that nothing in the text of Article 14(d) states or implies that "prevailing market conditions" means "in accordance with commercial considerations."

7.2.3.2  Main arguments of the third parties

7.2.3.2.1  European Union

7.24.  The European Union asserts that India's claims appear to be based on flawed interpretations of Article 14(d) of the SCM Agreement. The European Union contends that the perspective of the provider of the goods or services, in the sense of whether the government makes a reasonable return when providing the goods or services in question, is not dispositive in determining the existence of "benefit" under Article 1.1(b) or its amount in accordance with Article 14(d) of the SCM Agreement. The perspective of the provider advocated by India is similar to the "cost to the government" approach that has already been rejected to determine the existence of "benefit" under Article 1.1(b) of the SCM Agreement. According to the European Union, the Appellate Body Report in Canada – Aircraft stands for the proposition that a "benefit" is to be determined, not by reference to whether the transaction imposes a net cost on the government, but rather by reference to whether the terms of the financial contribution are more favourable to what is available to the recipient on the market.

7.2.3.2.2  Saudi Arabia

7.25.  Saudi Arabia submits that, in determining whether the government provision of a good confers a benefit, an investigating authority may use a benchmark other than private, in-country prices in "very limited" circumstances. Article 14(d) of the SCM Agreement establishes domestic market prices as the principal standard for determining whether and to what extent a benefit is conferred by the provision of a good. Price is foremost among the "prevailing market conditions" enumerated in Article 14(d) and it should be the first reference point used by an investigating authority to determine benefit. Saudi Arabia asserts that in order to reject private, in-country benchmarks when determining whether a government-provided good confers a benefit, an investigating authority must establish that domestic prices of that good are "distorted". The government's predominant role in the domestic market might support an investigating authority's finding that private prices are distorted, but it may not serve as a per se proxy for price distortion. Saudi Arabia contends that although external benchmarks may be used in very limited situations, they should be avoided because they are inherently incapable of reflecting prevailing in-country market conditions, and because they negate comparative advantages. Saudi Arabia contends that where an investigating authority has established price distortion, it should use in-country, cost‑based benchmarks instead of external benchmarks.

7.2.3.3  Evaluation

7.26.  The first sentence of Article 14(d) provides that the government provision of a good "shall not be considered as conferring a benefit unless the provision is made for less than adequate remuneration". In our view, the word "unless" in the first sentence of Article 14(d) establishes a clear textual connection between the existence of benefit on the one hand, and the adequacy of remuneration on the other. If remuneration is found to be inadequate, the subsidy may be considered to confer a benefit. If the remuneration is found to be adequate, the subsidy may not be considered to confer a benefit. There is nothing in the text of Article 14(d) to suggest that the question of the adequacy of remuneration is a separate threshold issue, such that the question of benefit only arises – as a separate and subsequent matter – after the question of adequacy of remuneration has been resolved.

7.27.  India asserts that "in explaining how … 'benefit' is to be calculated, Article 14(d) refers to a second term 'remuneration'".[187] India's statement is consistent with our view that the first sentence of Article 14(d) establishes a clear textual connection between the issues of benefit and adequacy of remuneration. Indeed, it is precisely for this reason that, as acknowledged by India, Article 14(d) refers to the term "remuneration" in explaining how "benefit" is to be calculated.

7.28.  India goes on to argue that the use of different terms - "benefit" and "remuneration" - "suggests that the word 'remuneration' is not intended to be the same as 'benefit' and to argue otherwise, would only result in a circular provision".[188] In our view, the circularity alluded to by India would only arise if the issues of adequacy of remuneration and benefit were assessed separately, but on the basis of the same standard. As explained above, though, we do not consider that Article 14(d) envisages the issues of adequacy of remuneration and benefit being assessed separately. Rather, assessing the adequacy of remuneration is part of the process of determining whether a benefit exists. Our understanding is not affected by the use of the distinct terms "remuneration" and "benefit" in Article 14(d). The term "remuneration" relates to the sum that is paid for the good provided by the government. The term "benefit", by contrast, relates to the notion that the recipient received the good on terms more favourable than it could have obtained that good from the market. These terms are necessarily different, since they relate to different notions, and thereby allow for the possibility that the level of remuneration will not confer a benefit in all cases. However, although the terms "remuneration" and "benefit" are different, they are nevertheless connected by the concept of adequacy, establishing that a given amount of "remuneration" may be considered to confer a "benefit" if it is not adequate.

7.29.  As for the perspective from which the adequacy of remuneration should be assessed, we note India's argument that since "benefit" is determined from the perspective of the receiver of the goods, "remuneration" should be assessed from the perspective of the provider of the goods.[189] India's argument that the adequacy of remuneration and benefit may be assessed in respect of different entities is based on its argument that the adequacy of remuneration and benefit should be assessed separately. Since we have rejected this argument, and find that determining the adequacy of remuneration is part of the process of determining whether benefit exists, we also exclude the possibility of assessing the adequacy of remuneration and existence of benefit in respect of different entities.

7.30.  We note that India does not dispute the United States' argument that "benefit" should be assessed by reference to the recipient.[190] It is well established in WTO dispute settlement that this is the case, and that a benefit is conferred when a financial contribution makes the recipient better off than it would have been relative to what is available through the market. Since benefit is established from the perspective of the recipient, and since the adequacy of remuneration forms part of the assessment of benefit, the adequacy of remuneration must also, in our view, be established from the perspective of the recipient. Furthermore, since benefit is assessed by reference to the market, so too must be the adequacy of remuneration.[191]

7.31.  India suggests that an assessment of the adequacy of remuneration from the perspective of the recipient, by reference to the market, ignores relevant context concerning the alleged decision by the drafters of Article 14 to adopt a different structure for sub-paragraph (d) than for sub‑paragraphs (a), (b) and (c). India notes in this regard that Article 14(a) provides that no benefit shall be conferred unless the provision of equity capital is "inconsistent" with usual investment practice. India also notes that sub-paragraphs (b) and (c) provide that no benefit shall be conferred unless there is a "difference" between the amount paid by the recipient (for the loan and loan guarantee, respectively) and the amount that the recipient would have to pay on the market. India contends that sub-paragraph (d) of Article 14, by contrast, provides for a "more comprehensive framework". India notes that the drafters of Article 14(d) did not specify that benefit would be conferred once there is a difference between the amount paid by the recipient to the government and the amount that the recipient would have paid on the market. According to India, this means that the adequacy of remuneration is not determined by simply comparing the government price to a market benchmark.

7.32.  We are not persuaded by India's reliance on alleged structural differences in Article 14. We agree with the United States[192] that the first sentence of Article 14(d) provides for a comparative analysis in the same way that sub-paragraphs (b) and (c) of Article 14 do. In the context of the provision of goods, the comparative analysis envisaged by Article 14(d) concerns the question of whether the remuneration is "less than" adequate. The phrase "less than" is comparative in nature, requiring a comparison between the government price and a price that is representative of adequate remuneration in the market, as determined in relation to the prevailing market conditions. The fact that Article 14(d) does not use the term "difference" does not detract from the comparative nature of the analysis inherent in the first sentence of Article 14(d).[193]

7.33.  Furthermore, the second sentence of Article 14(d) provides that the adequacy of remuneration shall be assessed in relation to the prevailing market conditions. This textual consideration prompted the Appellate Body to state in US – Softwood Lumber IV that "private prices in the market of provision will generally represent an appropriate measure of the "adequacy of remuneration" for the provision of goods".[194] Thus, the Appellate Body has also accepted that the structure of Article 14(d) allows Members to assess the adequacy of remuneration, and therefore existence of benefit, by comparing the government price to a market benchmark. Once it is established that the price paid to the government provider is less than the price that would be required by the market, assessed in relation to prevailing market conditions, the remuneration afforded by the government price is inadequate, and a benefit is conferred.[195]

7.34.  Finally, we observe that India's claims are brought under Article 14(d) of the SCM Agreement. The title of Article 14 explains that Article 14 is concerned with the "Calculation of the Amount of a Subsidy in Terms of the Benefit to the Recipient". Even India acknowledges that "all the guidelines present in Article 14 have been provided in the context of determining the benefit conferred on the recipient".[196] In this context, it would be incongruous to find that the United States has violated a provision of Article 14 by doing precisely what Article 14 is concerned with, namely calculating benefit in terms of benefit to the recipient, simply because it did not first, as a separate matter, determine the adequacy of remuneration to the government provider of the good.

7.35.  For the above reasons, we reject India's claim that Section 351.511(a)(2)(i) to (iii) "as such" is inconsistent with Article 14(d) of the SCM Agreement because it fails to require that the adequacy of remuneration be assessed from the perspective of the government provider before assessing benefit to the recipient.

7.2.4  The exclusion of government prices from Tier I and II benchmarks

7.2.4.1  Main arguments of the parties

7.36.  India claims that the United States' benchmarking mechanism is inconsistent with Article 14(d) of the SCM Agreement because the mechanism excludes the use of government prices as Tier I or II benchmarks. India submits that this is contrary to the requirement in Article 14(d) that benchmarks for the government provision of goods should be determined in relation to "prevailing market conditions" in the country of provision. According to India, government prices form part of the "prevailing market conditions".

7.37.  The United States contends that its benchmarking mechanism does not, in fact, exclude government prices in all cases.[197] The United States asserts that Section 351.511(a)(2)(i) allows for the inclusion of prices from government sales where those prices are market-determined, such as through competitively run government auctions. Where this is not the case, the United States submits that government prices for the provision of goods must be excluded from the Article 14(d) benchmarks because, according to established WTO case law, the term "benefit" requires a comparison of the financial contribution received by the recipient to what it would otherwise receive on the market.

7.2.4.2  Evaluation

7.38.  As a factual matter, we observe that India does not dispute the United States' assertion that government prices are not excluded from the benchmarking mechanism in all cases. The factual premise for India's claim is therefore undermined.

7.39.  Furthermore, we consider that it would be circular, and therefore uninformative, to include the government price for the good provided by the government in the establishment of the market benchmark when assessing whether such governmental provision confers a benefit. In addition, as noted above, benefit is assessed in relation to the market. Since governments may set prices in order to pursue public policy objectives, rather than market-based profit maximization, we see no basis for requiring investigating authorities to include government prices when determining market benchmarks in the context of Article 14(d). In particular, we do not consider that investigating authorities should be required to treat government prices as being representative of "prevailing market conditions" within the meaning of the second sentence of that provision.

7.40.  Our approach to this issue is consistent with the following findings by the Appellate Body in US – Softwood Lumber IV:

Although Article 14(d) does not dictate that private prices are to be used as the exclusive benchmark in all situations, it does emphasize by its terms that prices of similar goods sold by private suppliers in the country of provision are the primary benchmark that investigating authorities must use when determining whether goods have been provided by a government for less than adequate remuneration. In this case, both participants and the third participants agree that the starting-point, when determining adequacy of remuneration, is the prices at which the same or similar goods are sold by private suppliers in arm's length transactions in the country of provision. This approach reflects the fact that private prices in the market of provision will generally represent an appropriate measure of the "adequacy of remuneration" for the provision of goods. However, this may not always be the case. As will be explained below, investigating authorities may use a benchmark other than private prices in the country of provision under Article 14(d), if it is first established that private prices in that country are distorted because of the government's predominant role in providing those goods.[198]

7.41.  We consider it noteworthy that the Appellate Body consistently refers to private prices in the above extract. It is private prices in the country of provision that are the "primary benchmark" for assessing the adequacy of remuneration.

7.42.  According to India, the above findings by the Appellate Body mean that the government price may only be rejected as a price benchmark in situations where the government is the sole or dominant provider of the goods.[199] We disagree. Because governments are generally not profit-maximizers, but instead often pursue public policy objectives when providing goods to recipients in their territory, government prices need not be presumed to reflect market principles. When the government is not dominant in a market, the non-market aspect of government pricing will generally not distort private prices in that market. In such cases, those domestic private prices may serve as a benchmark for the purpose of Article 14(d). When the government is dominant in a market, as was the case in US – Softwood Lumber IV, the non-market aspect of government prices may distort private prices in the domestic market, such that those domestic prices may not then be used as an Article 14(d) benchmark. In such cases, private prices in other markets may be used as benchmarks, provided they are properly adjusted to reflect the prevailing market conditions in the country of provision. Thus, the fact that a government is not dominant in its domestic market does not mean (as argued by India) that the government's prices are likely to reflect market principles, and therefore be indicative of prevailing market conditions. It simply means that those government prices, which in any event need not be presumed to reflect market principles (because the government's pricing may be determined by policy objectives other than profit-maximization), would likely not have distorted private prices in that market, such that those private prices may serve as benchmarks for the purpose of Article 14(d).

7.43.  India also relies[200] on the following findings by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China):

Although the Panel did not explicitly rule on the issue, it stated that one possible interpretation of "commercial" could be that any loan made by the government would ipso facto not be "commercial". In our view, it would not be correct to conclude that any loan made by the government (or by private lenders in a market dominated by the government) would ipso facto not be "commercial". We see nothing to suggest that the notion of "commercial" is per se incompatible with the supply of financial services by a government. Therefore, the mere fact that loans are supplied by a government is not in itself sufficient to establish that such loans are not "commercial" and thus incapable of being used as benchmarks under Article 14(b) of the SCM Agreement. An investigating authority would have to establish that the government presence or influence in the market causes distortions that render interest rates unusable as benchmarks.[201]

7.44.  India refers in particular to the Appellate Body's statement that "it would not be correct to conclude that any loan made by the government (or by private lenders in a market dominated by the government) would ipso facto not be 'commercial'". We do not understand this statement to mean that government prices should necessarily be used as market benchmarks for the purpose of Article 14(d). Noting in particular the last sentence in the above extract, which refers to potential distortions caused by government presence or influence in the market, we understand the Appellate Body to be repeating, for the purpose of Article 14(b), the approach that it took in US – Softwood Lumber IV in respect of Article 14(d), as outlined above. Indeed, we observe that in US – Anti-Dumping and Countervailing Duties (China) the Appellate Body subsequently referred expressly to the issue of distortion caused by government intervention:

notwithstanding the differences between Article 14(b) and (d) … [r]eading Article 14(b) as always requiring a comparison with loans denominated in the same currency as the investigated loans, even in circumstances where all loans in the same currency are distorted by government intervention, would lead to a comparison with government distorted loans, thus frustrating the purpose of Article 14(b). If loans in a given market and in a given currency are distorted by government intervention, an investigating authority should be permitted, in certain circumstances also under Article 14(b), to use a benchmark other than "a comparable commercial loan which the firm could actually obtain on the market".[202]

7.45.  We are therefore not persuaded by India's reliance on the findings of the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).

7.46.  For the above reasons, we reject India's claim that the United States' benchmarking mechanism is "as such" inconsistent with Article 14(d) of the SCM Agreement because it excludes the use of government prices as Tier I and II price benchmarks.

7.2.5  The use of world market prices as Tier II price benchmarks

7.2.5.1  Main arguments of the parties

7.47.  India claims that the United States' benchmarking mechanism violates Article 14(d) because it provides for the use of world market (Tier II) price benchmarks whenever Tier I in-country benchmarks are not available. There are three components to India's claim. First, India submits that the text of Article 14(d) per se excludes the use of out-of-country benchmarks.[203] Second, India submits that out-of-country benchmarks may in any event only be used in situations where the market of the country of provision is distorted because of the predominant role of the government provider.[204] Third, India submits that the United States' benchmarking mechanism fails to require that the conditions prevailing in the country from which the Tier II benchmark is taken relate to the market conditions prevailing in the country of provision.[205]

7.48.  The United States[206] rejects India's assertion that the text of Article 14(d) precludes out‑of‑country benchmarks. The United States asserts that the Appellate Body has confirmed that out-of-country prices may be used. The United States contends that a contrary interpretation would mean that where in-country prices do not exist or are not useable, the rights and obligations contained in the SCM Agreement would cease to apply.

7.2.5.2  Evaluation

7.49.  We are not persuaded by India's assertion that Article 14(d) per se excludes the use of out‑of‑country benchmarks. The fact that out-of-country benchmarks may be applied in the context of Article 14(d) was clarified by the Appellate Body in US – Softwood Lumber IV. We are guided by the findings of that case, and therefore conclude that the use of out-of-country benchmarks in appropriate circumstances is not inconsistent with Article 14(d).

7.50.  Nor are we persuaded by India's assertion that out-of-country benchmarks may only be used in the context of Article 14(d) of the SCM Agreement in situations where the market in the country of provision is distorted because of the predominant role of the government provider. There is nothing in the text of that provision to support India's assertion. Furthermore, while India relies on the findings of the Appellate Body in US – Softwood Lumber IV, we note that the Appellate Body's findings in that case were necessarily circumscribed by the facts of that case. Since that case concerned a situation in which the government provider of goods did, in fact, play a predominant role in the market, the Appellate Body only addressed the application of out‑of‑country benchmarks in that situation. Indeed, the Appellate Body expressly stated that "[c]onsidering that the situation of government predominance in the market, as a provider of certain goods, is the only one raised on appeal by the United States, we will limit our examination to whether an investigating authority may use a benchmark other than private prices in the country of provision in that particular situation".[207] However, this does not mean that the reasoning underlying the Appellate Body's findings in that case can not apply, with equal force, in other situations, in which the government is not a predominant provider.

7.51.  We next consider India's assertion that the United States' benchmarking mechanism fails to require that Tier II benchmarks must relate to the prevailing market conditions in the country of provision. In this regard, we note that the benchmarking mechanism implements 19 U.S.C. § 1677(5)(E), which provides that "the adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service being provided or the goods being purchased in the country which is subject to the investigation or review".[208] Since the overarching statutory provision requires that the adequacy of remuneration must in all cases be assessed in relation to the prevailing market conditions in the country of provision, in law Tier II benchmarks applied pursuant to the implementing regulation (i.e. Section 351.511(a)(2)(ii)) must also relate to the prevailing market conditions in the country of provision. Accordingly, there is no basis for India's claim that the United States' benchmarking mechanism "as such" provides for the use of Tier II benchmarks that do not reflect prevailing market conditions in the country of provision.[209]

7.52.  For these reasons, we reject India's claim that the use of world market prices as Tier II benchmarks provided for in Section 351.511(a)(2)(ii) "as such" is inconsistent with Article 14(d) of the SCM Agreement.

7.2.6  Whether Section 351.511(a)(2)(iv) is inconsistent with Article 14(d) because it requires the use of delivered prices for benchmarking

7.53.  India submits that Section 351.511(a)(2)(iv) "as such" is inconsistent with Article 14(d), and consequently also Articles 19.3 and 19.4[210], of the SCM Agreement because it mandates that the government provider price and the benchmark price be compared on a delivered basis.

7.2.6.1  Main arguments of the parties

7.2.6.1.1  India

7.54.  India contends that the mandatory use of delivered prices in the benchmarking mechanism ignores the Article 14(d) requirement that the adequacy of remuneration is to be determined in "relation to the prevailing market conditions", including conditions of sale, in the country of provision. India submits that the second sentence of Article 14(d) requires that consideration of the prevailing market conditions for the goods in question in the country of provision includes an assessment of the "conditions of … sale" prevailing in the country of provision, for the goods in question. India contends that the use of delivered prices is a legal fiction contrary to Article 14(d) in cases where the conditions of sale prevailing in the country of provision do not include delivery.[211] India contends that, in such cases, the mandatory inclusion of delivery charges (including import duties where relevant) eliminates the possibility of adjustments for the terms and conditions of sale prevailing in the country of provision[212]. India submits that Section 351.511(a)(2)(iv) is inconsistent with Articles 19.3 and 19.4 for "substantially the same reasons".[213]

7.2.6.1.2  United States

7.55.  The United States submits that India's objection to adjustments for delivery costs is based on its flawed position that the adequacy of remuneration under Article 14(d) of the SCM Agreement should be a determination with respect to the provider of the goods, using a cost‑to-government analysis. The United States contends that the adequacy of remuneration should rather be assessed with respect to the recipient. The United States also contends that the Article 14(d) guidelines contemplate adjustments for prevailing market conditions, conditions which explicitly include transportation.

7.56.  The United States asserts that an ex-works price does not include the cost incurred by the purchaser for getting a purchased input to its factory door; an ex-works price therefore is not reflective of the prevailing market conditions from the perspective of the recipient. Prevailing market conditions are such that a private purchaser (in making a purchasing decision) and a private seller (in setting a price at which to sell the good) would consider all of the costs associated with getting the good to the purchaser's factory in establishing the market negotiated price. The United States asserts that India's interpretation would artificially isolate delivery costs from the price of a good and therefore shield it from the actual prevailing market conditions. According to the United States, such an interpretation would not fulfil the purpose of the Article 14(d) benchmark comparison – which is to assess whether the recipient is better off than it would have been absent that financial contribution.

7.57.  The United States submits that as India has not demonstrated that Section 351.511(a)(2)(iv) is inconsistent with Article 14(d), it also has not demonstrated any inconsistency with Articles 19.3 and 19.4.

7.2.6.2  Main arguments of the third parties

7.2.6.2.1  European Union

7.58.  The European Union submits that the determination of the adequacy of the remuneration under Article 14(d) of the SCM Agreement requires the identification of a proper comparator in the marketplace of the country of provision, i.e., the prices at which the same or similar goods are sold or bought by private suppliers in arm's length transactions in the country of provision. If such prices are distorted in that market, thus rendering the comparison required under Article 14(d) of the SCM Agreement circular, it may be necessary to have recourse to an external proxy benchmark or to a constructed proxy duly adjusted that somehow relates or refers to, or is connected with, the conditions prevailing in the market of the country of purchase. The European Union contends that, in the absence of an actual price that is available on the market for the same product (e.g., because all prices are distorted because of the government intervention or, simply because the government controls prices or is the only provider), the comparison envisaged in the benefit analysis can be made by using a proxy for what would have been paid on a comparable purchase of goods that could have been obtained on the market in the absence of the distortion (i.e., by reference to market principles) and, if needed, by making appropriate adjustments in order to avoid in particular the countervailing of genuine comparative advantages. The European Union submits that once the proper benchmark price has been identified, either in‑country, outside-country or constructed proxy, the comparison required to determine the existence and amount of benefit has to be made at the same level of trade.

7.2.6.3  Evaluation

7.59.  We begin by evaluating India's Article 14(d) claim. India contends that the mandatory use of delivered prices means that price benchmarks will not relate to prevailing market conditions in the country of provision "even if the government price in question does not include such delivery charges"[214], such as in situations where the government provider sells the relevant good ex-works or, in the case of minerals, ex-mine.[215]

7.60.  We consider that India's argument is flawed, for it conflates the "prevailing market conditions" referred to in the second sentence of Article 14(d) with the contractual terms and conditions of the government provision under investigation. As explained above, investigating authorities are entitled to assess the adequacy of remuneration from the perspective of the recipient, using market benchmarks that relate to the "prevailing market conditions" in the country of provision.[216] We do not consider that such market benchmarks need mirror the contractual terms on which the government provider sells its good, since government prices are not an indicator of the prevailing market conditions.[217] In this regard, we agree with the United States that the terms "prevailing market conditions" and "conditions of sale" in the second sentence of Article 14(d) do not relate to the specific contractual terms on which the government provides goods. Instead, these terms relate to the general conditions of the relevant market, in the context of which market operators engage in sales transactions. It is for this reason that Article 14(d) includes such factors as "availability" and "marketability", even though these factors could not properly be considered as contractual terms.

7.61.  Furthermore, we recall that we have rejected India's claim that the United States' benchmarking mechanism is inconsistent with Article 14(d) of the SCM Agreement because it excludes the use of government prices as Tier I and II price benchmarks. Consistent with this finding, we also reject the notion that the contractual terms on which a government provides goods must necessarily be considered to establish or reflect prevailing "market" conditions in the country of provision. Because of the propensity for governments to pursue public policy objectives in providing goods to recipients in their territory, it is possible that contractual terms set by governments are not set in accordance with "market" principles, and therefore do not reflect prevailing "market" conditions.

7.62.  We also reject India's argument that the use of delivered price benchmarks "nullifies the comparative advantage of the country of provision in terms of being able to provide the goods in question locally".[218] To the extent that a delivered price benchmark relates to the prevailing market conditions in the country of provision, it will reflect any comparative advantage that such country might have. In this regard, we note the following finding by the Appellate Body in US – Softwood Lumber IV:

It is clear, in the abstract, that different factors can result in one country having a comparative advantage over another with respect to the production of certain goods. In any event, any comparative advantage would be reflected in the market conditions prevailing in the country of provision and, therefore, would have to be taken into account and reflected in the adjustments made to any method used for the determination of adequacy of remuneration, if it is to relate or refer to, or be connected with, prevailing market conditions in the market of provision.[219]

As discussed above, import transactions occur even in situations where minerals may be sourced locally, and such import transactions necessarily relate to prevailing market conditions in India because they are made by entities in India operating subject to Indian market conditions.

7.63.  For the above reasons, we reject India's claim that Section 351.511(a)(2)(iv) "as such" is inconsistent with Article 14(d) of the SCM Agreement. For the same reasons, we also reject India's consequent claims under Articles 19.3 and 19.4 of the SCM Agreement.

7.2.7  Conclusion

7.64.  In light of the foregoing, we reject India's claim that Section 351.511(a)(2)(i)-(iv) "as such" is inconsistent with Article 14(d) of the SCM Agreement. We also reject India's claim that Section 351.511(a)(2)(iv) "as such" is inconsistent with Articles 19.3 and 19.4 of the SCM Agreement.

7.3  Claims regarding the imposition of countervailing duties in respect of iron ore supplied by NMDC

7.65.  India raises a number of claims regarding the USDOC's determinations, in the 2004, 2006, 2007 and 2008 administrative reviews, that NMDC provided specific subsidies to Essar, ISPAT, JSW and Tata in the form of iron ore sold for less than adequate remuneration. India's claims concern: USDOC's treatment of NMDC as a public body; USDOC's finding of de facto specificity; and USDOC's determination of the existence and quantum of benefit.

7.3.1  The treatment of NMDC as a public body: Article 1.1(a)(1)

7.3.1.1  Relevant WTO provision

7.66.  Article 1.1(a)(1) of the SCM Agreement provides:

For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1)      there is a financial contribution by a government or any public body within the territory of a Member (referred to in this Agreement as "government"), i.e. where:

(i)  a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees);

(ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives such as tax credits);

(iii)        a government provides goods or services other than general infrastructure, or purchases goods;

(iv)        a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions illustrated in (i) to (iii) above which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments.

7.3.1.2  Main arguments of the parties

7.3.1.2.1  India

7.67.  India claims that the USDOC improperly focused on the GOI's 98% shareholding in NMDC, contrary to Article 1.1(a)(1) of the SCM Agreement. According to India, the USDOC failed to consider whether NMDC fulfilled two essential public body criteria: (i) the carrying out of governmental functions, and (ii) the exercise of governmental power or authority.

7.68.  India's arguments concerning the alleged deficiencies in the USDOC's determination that NMDC is a public body rely heavily on findings made by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China). India begins by noting the finding by the Appellate Body that the essence of 'government' is that it enjoys the effective power to "regulate, control, or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority."[220] According to India, the Appellate Body reiterated that this finding was derived, in part, from the functions performed by a government and, in part, from the government having the powers and authority to perform those functions. According to India, therefore, an entity only constitutes a public body if it performs a governmental function, and has the powers and authority to perform that function.[221]

7.69.  India contends that the USDOC failed to conduct the analysis described by the Appellate Body.[222] India states that the USDOC focused instead on the fact that GOI held a 98% shareholding in NMDC.[223] According to India, such an approach was condemned by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) in the following terms:

the mere fact that a government is the majority shareholder of an entity does not demonstrate that the government exercises meaningful control over the conduct of that entity, much less that the government has bestowed it with governmental authority. In some instances, however, where the evidence shows that the formal indicia of government control are manifold, and there is also evidence that such control has been exercised in a meaningful way, then such evidence may permit an inference that the entity concerned is exercising governmental authority.[224]

7.70.  India claims that, in focusing on the GOI shareholding in NMDC, the USDOC failed to examine whether NMDC has been vested with the power and authority to perform governmental functions; whether NMDC has the power and authority to direct or entrust a private body; and whether NMDC is, in fact, exercising governmental functions, i.e. regulate, control, or supervise individuals, or otherwise restrain conduct.[225] India also contends that the USDOC made no attempt to cite any evidence or undertake any analysis as to whether the "indicia of government control" was manifold, over and above the mere majority holding of the government, as well as whether this control was exercised in any meaningful way. India submits that, as a result, the USDOC's determination that NMDC constitutes a public body is inconsistent with Article 1.1(a)(1) of the SCM Agreement.

7.3.1.2.2  United States

7.71.  The United States' disputes the interpretation of the term "public body" adopted by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China), on which India's claim is based. The United States contends that neither India nor the Appellate Body explain why the interpretation of the term public body should be based on the issue of whether an entity performs governmental functions, or is vested with, and exercises, the authority to perform such functions. The United States submits that, when interpreted according to the customary rules of treaty interpretation of public international law pursuant to Article 3.2 of the DSU[226], the term "public body" means an entity that is controlled by the government such that the government can use that entity's resources as its own. The United States contends that the USDOC's treatment of NMDC as a public body is consistent with this approach.

7.72.  In the alternative, the United States contends that the USDOC's treatment of the NMDC as a public body is in any event consistent with the interpretation by the Appellate Body in US – Anti‑Dumping and Countervailing Duties (China). The United States rejects India's argument that the USDOC's determination that the NMDC is a public body was based solely on a determination that India owned over 98% of the NMDC.[227] According to the United States, record evidence also indicates that NMDC has the authority to perform Indian government functions. The United States notes in this regard that the USDOC also found that the NMDC, as a state-owned mining company, was governed by the GOI's Ministry of Steel.[228] The United States points in this regard to record evidence of NMDC's own website, which declared that the "NMDC was established as a fully owned Government of India Corporation in 1958 with the objective of developing all minerals other than coal, petroleum oil and atomic minerals. NMDC is under the administrative control of the Ministry of Steel & Mines, Department of Steel, Government of India."[229] The United States also asserts that during the 2004 review verification, Indian and NMDC officials explained that the GOI was heavily involved in the selection of the directors of the NMDC, a few of whom were directly appointed by the Ministry of Steel.[230] Furthermore, during the 2007 review, GOI further explained that it appoints 2 directors and had approval power over an additional 7 directors out of a total of 13 directors. According to the United States, the USDOC explicitly found that this evidence supported its determinations that the NMDC was "part of the GOI".[231]

7.73.  In addition, the United States notes that the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) stated that "the legal order of the relevant Member may be a relevant consideration whether or not a specific entity is a public body."[232] The United States submits that, in the legal order of India, the NMDC performs a government function. The United States maintains that record evidence in the relevant reviews shows that the Indian government, i.e., the state and federal governments, owns all the mineral resources on behalf of the Indian public[233], and that the Indian federal government has the final approval of the granting of mining leases for iron ore.[234] According to the United States, therefore, it is a function of the government of India to arrange for the exploitation of public assets, in this case iron ore. The United States asserts that the GOI specifically established the NMDC to perform part of this function, i.e., "developing all minerals other than coal, petroleum oil and atomic minerals."[235] The United States also asserts that, during the USDOC's verification in the 2004 administrative review, an official from the Indian Ministry of Steel identified the NMDC as a strategic company which was monitored and reviewed by the government because it provided a specific service to the Indian public. The United States submits that, because the NMDC is exploiting public resources on behalf of the Indian government, the owner of the resources, the NMDC is performing a government function in India.

7.3.1.3  Main arguments of the third parties

7.3.1.3.1  Australia

7.74.  Australia asserts that the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) concluded that a public body is an entity that possesses, exercises or is vested with governmental authority, which is to be determined on a case-by-case basis having regard to all the relevant facts, which may point in different directions. Australia considers that the Appellate Body's conclusion suggests that a public body must meet one of three descriptions – an entity that possesses governmental authority, an entity that exercises governmental authority, or an entity that is vested with governmental authority. In Australia's view, these descriptions are alternatives to one another and are not cumulative. Australia further submits that one relevant criterion for examining a "public body" under Article 1.1(a)(1) of the SCM Agreement should be to what extent the government controls the entity.

7.3.1.3.2  Canada

7.75.  Canada contends that the appropriate interpretation of the term "public body" is that it is an entity controlled by the government. According to Canada, such an interpretation is consistent with the context of Article 1.1(a)(1) and the object and purpose of the SCM Agreement.

7.3.1.3.3  China

7.76.  China submits that the legal interpretation regarding public body developed by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) should be followed by the Panel in this case and should serve as the foundation for any findings regarding the public body determination at issue.

7.3.1.3.4  European Union

7.77.  The European Union submits that the Appellate Body Report in US – Anti-Dumping and Countervailing Duties (China) had to be unconditionally accepted by the parties to that dispute and is now part of the acquis of the WTO dispute settlement system, implying that, absent cogent reasons, the same legal question will be resolved in the same way in a subsequent case. The European Union asserts that, in that case, the Appellate Body sought a balance between the US approach, with its emphasis on ownership and control in general terms and China's approach, with its emphasis on governmental authority and function.

7.3.1.3.5  Saudi Arabia

7.78.  Saudi Arabia submits that, for the purposes of finding the existence of a financial contribution under Article 1.1(a)(l) of the SCM Agreement, a public body must possess, exercise or be vested with "governmental authority", which is the power of an entity to command or compel a private body. The unique "defining elements" of the term "government" – "the effective power to regulate, control, or supervise individuals, or otherwise restrain their conduct, through the exercise of lawful authority" – also define the term "public body". Saudi Arabia contends that possessing or exercising governmental authority is distinct from being owned or controlled by the government, and the two concepts are not interchangeable. Saudi Arabia asserts that a government-owned or controlled entity might be a public body, but only where the government has delegated to the entity the ability to "control or govern the actions of a private body". According to Saudi Arabia, the government's delegation of authority, not its ownership or control, thus dictates the entity's status as a public body.

7.3.1.4  Evaluation

7.79.  India's claim is brought under Article 1.1(a)(1) of the SCM Agreement. That provision refers to financial contributions that are provided by any government or "public body". India's claim challenges the determination by the USDOC that the NMDC constitutes a "public body". The term "public body" was interpreted by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China). The Appellate Body issued its report in that case in March 2011, after the relevant USDOC determinations that the NMDC is a public body. India's arguments rely heavily on the findings of the Appellate Body in that case, to the point that India asserts that the USDOC's analysis "falls short of the test specified by the Appellate Body"[236] in that case. While we are required by Article 11 of the DSU to make our own objective assessment of the matter before us, the Appellate Body has affirmed that "[f]ollowing the Appellate Body's conclusions in earlier disputes is not only appropriate, it is what would be expected from panels, especially where the issues are the same".[237] We therefore begin by reviewing what we consider to be the most relevant findings made by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China), in order to consider the extent to which they may offer relevant guidance for our objective assessment of India's claim challenging the USDOC's determination that the NMDC is a "public body" in this case. In this regard, we observe the following findings made by the Appellate Body:

288.        As we see it, the juxtaposition of the collective term "government" on the one side and "private body" on the other side, as well as the joining under the collective term "government" of both a "government" in the narrow sense and "any public body" in Article 1.1(a)(1) of the SCM Agreement, suggests certain commonalities in the meaning of the term "government" in the narrow sense and the term "public body" and a nexus between these two concepts. When Article 1.1(a)(1) stipulates that "a government" and "any public body" are referred to in the SCM Agreement as "government", the collective term "government" is used as a superordinate, including, inter alia, "any public body" as one hyponym. Joining together the two terms under the collective term "government" thus implies a sufficient degree of commonality or overlap in their essential characteristics that the entity in question is properly understood as one that is governmental in nature and whose conduct will, when it falls within the categories listed in subparagraphs (i)-(iii) and the first clause of subparagraph (iv), constitute a "financial contribution" for purposes of the SCM Agreement.

290.        … As we see it, the[] defining elements of the word "government" inform the meaning of the term "public body". This suggests that the performance of governmental functions, or the fact of being vested with, and exercising, the authority to perform such functions are core commonalities between government and public body.

317.        Having completed our analysis of the interpretative elements prescribed by Article 31 of the Vienna Convention, we reach the following conclusions. We see the concept of "public body" as sharing certain attributes with the concept of "government". A public body within the meaning of Article 1.1.(a)(1) of the SCM Agreement must be an entity that possesses, exercises or is vested with governmental authority. Yet, just as no two governments are exactly alike, the precise contours and characteristics of a public body are bound to differ from entity to entity, State to State, and case to case. Panels or investigating authorities confronted with the question of whether conduct falling within the scope of Article 1.1.(a)(1) is that of a public body will be in a position to answer that question only by conducting a proper evaluation of the core features of the entity concerned, and its relationship with government in the narrow sense.

318.        In some cases, such as when a statute or other legal instrument expressly vests authority in the entity concerned, determining that such entity is a public body may be a straightforward exercise. In others, the picture may be more mixed, and the challenge more complex. The same entity may possess certain features suggesting it is a public body, and others that suggest that it is a private body. We do not, for example, consider that the absence of an express statutory delegation of authority necessarily precludes a determination that a particular entity is a public body. What matters is whether an entity is vested with authority to exercise governmental functions, rather than how that is achieved. There are many different ways in which government in the narrow sense could provide entities with authority. Accordingly, different types of evidence may be relevant to showing that such authority has been bestowed on a particular entity. Evidence that an entity is, in fact, exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority, particularly where such evidence points to a sustained and systematic practice. It follows, in our view, that evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions. We stress, however, that, apart from an express delegation of authority in a legal instrument, the existence of mere formal links between an entity and government in the narrow sense is unlikely to suffice to establish the necessary possession of governmental authority. Thus, for example, the mere fact that a government is the majority shareholder of an entity does not demonstrate that the government exercises meaningful control over the conduct of that entity, much less that the government has bestowed it with governmental authority. In some instances, however, where the evidence shows that the formal indicia of government control are manifold, and there is also evidence that such control has been exercised in a meaningful way, then such evidence may permit an inference that the entity concerned is exercising governmental authority.

319.        In all instances, panels and investigating authorities are called upon to engage in a careful evaluation of the entity in question and to identify its common features and relationship with government in the narrow sense, having regard, in particular, to whether the entity exercises authority on behalf of government. An investigating authority must, in making its determination, evaluate and give due consideration to all relevant characteristics of the entity and, in reaching its ultimate determination as to how that entity should be characterized, avoid focusing exclusively or unduly on any single characteristic without affording due consideration to others that may be relevant.[238]

7.80.  We understand the Appellate Body to have found that the critical consideration in identifying a public body is the question of governmental authority, i.e. the authority to perform governmental functions. In the Appellate Body's own words, "being vested with governmental authority is the key feature of a public body".[239] The relevant entity must be shown to have been vested with such authority, or to have actually exercised such authority through the performance of governmental functions. To determine whether an entity has governmental authority, an investigating authority must evaluate the core features of the entity and its relationship to government. Governmental control of the entity is relevant if that control is "meaningful". Indeed, the Appellate Body explicitly stated that "evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions".[240]

7.81.  India contends that the USDOC's determination that NMDC constitutes a public body is based solely on the fact that GOI holds 98%[241] of the shares in NMDC and asserts that to be inadequate, referring to the Appellate Body's statement that "the mere fact that a government is the majority shareholder of an entity does not demonstrate that the government exercises meaningful control over the conduct of that entity".[242] We do not agree with India's understanding of the USDOC's determination. In reviewing the USDOC's 2004 administrative review determination, we observe that the USDOC found that "the NMDC is a mining company governed by the GOI's Ministry of Steel and that the GOI holds 98 percent of its shares".[243] This language in the USDOC's determination indicates that the USDOC's public body determination is not based solely on the GOI's shareholding in NMDC[244], for it makes clear that the USDOC's determination is also based on NMDC being "governed by" GOI. To us, this indicates that the USDOC looked to the question of control of NMDC, and thus we consider that the USDOC's determination that the NMDC constitutes a public body was based on considerations of government control as well as government ownership. In this regard, we agree with the Appellate Body that, in certain circumstances, a body may be found to be public in nature when it is subject to "meaningful control" by governmental, and therefore public, authorities. We also agree with the Appellate Body that "meaningful control" may not be established on the basis of government shareholding alone, but a combination of government shareholding plus other factors indicative of control may suffice. We shall therefore examine whether the USDOC's determination amounts to a proper finding that the NMDC is subject to "meaningful control" by the GOI.

7.82.  The United States submits that[245], in addition to GOI's shareholding in NMDC, the USDOC's determination that NMDC is "governed by" the GOI[246] is based on record evidence demonstrating that: (i) the GOI was heavily involved in the selection of directors of the NMDC, some of whom were directly appointed by the Ministry of Steel; and (ii) the NMDC's own website stated that NMDC is under the "administrative control" of GOI. The United States also refers to evidence in the 2007 administrative review that the GOI had reported in a questionnaire response that it appointed two directors and had approval power over an additional seven out of 13 total directors.

7.83.  In respect of GOI involvement in the appointment of NMDC's directors, we note that there was evidence on the USDOC's record indicating that GOI officials informed USDOC at verification for the 2004[247] administrative review that the NMDC's chairman, or managing director, and four functional directors are full-time directors selected by a Board that is part of the GOI. GOI officials also informed the USDOC that there are two part-time directors from, and appointed by, the Ministry of Steel.[248] In addition, the USDOC stated in its Issues and Decision Memorandum for the 2007 administrative review:

The information on the record of the instant review only further bolsters the Department's prior determinations that the NMDC is a GOI authority capable of providing a financial contribution within the meaning of section 771(5)(D)(iii) of the Act. For example, with regard to the NMDC's 13 board members, information from the GOI indicates that it directly appoints two members and approves the appointments of an additional seven members.[249]

7.84.  India contends that the fact that GOI approves the nomination of NMDC directors "is irrelevant to the determination of whether NMDC is a public body or not".[250] According to India, "shareholding and appointment of directors are merely two sides of the same coin". India suggests that just as an entity is not a public body simply because of government shareholding, an entity is also not a public body simply because of government involvement in the appointment of its directors.

7.85.  We disagree with India. In our view, government involvement in the appointment of an entity's directors (involving both nomination and direct appointment) is extremely relevant to the issue of whether that entity is meaningfully controlled by the government, because government involvement in the appointment of an entity's directors suggests that the relationship between the government and that entity is closer than it would be if the government simply held a shareholding in that entity. While a government shareholding indicates that there are formal links between the government and the relevant entity, government involvement in the appointment of individuals – including serving government officials – to the governing board of an entity suggests that the links between the government and the entity are more substantive, or "meaningful", in nature. Indeed, we observe that in US – Anti-Dumping and Countervailing Duties (China) the Appellate Body implicitly accepted that an investigating authority's determination that certain entities constitute public bodies could be based on evidence indicating that the chief executives of those entities were "government appointed", and "the party retain[ed] significant influence in their choice".[251]

7.86.  India also argues[252] that the relevance of certain directors being appointed or nominated by the GOI is reduced by the fact that in India the independence of non-governmental directors is guaranteed by Clause 49 of the Listing Agreement with Stock Exchanges. The United States contends that the Listing Agreement had not been submitted to the USDOC, and should therefore not be considered by the Panel. We note that the Listing Agreement is contained in an Annexure to NMDC's Annual Report.[253] While GOI informed the USDOC that all financial details of the NMDC are available at its website, and provided USDOC with NMDC's website address, GOI did not provide the USDOC with hard copies or screen-prints of any financial documentation posted on that website, including the NMDC's Annual Report or any Annexures thereto.[254] Since websites are not static, it is not reasonable to expect investigating authorities to base their determinations on the contents of a website on any given day.[255] In our view, investigating authorities are entitled to require interested parties wishing to refer to website material to submit hard copies thereof. Furthermore, although GOI did refer to NMDC's financial details being available on NMDC's website in response to a request for NMDC's financial report[256], GOI made no specific reference to NMDC's Annual Report generally, or Clause 49 of the Listing Agreement in particular, when responding to USDOC's questions regarding the role of GOI in NMDC's operations.[257] For these reasons, we are not persuaded that the USDOC should have taken account of Clause 49 when considering GOI involvement in the appointment of directors.

7.87.  Regarding the issue of the "administrative control" of the NMDC, we note that petitioners submitted hard copies of material taken from the NMDC's own website stating that "NMDC is under the administrative control of the Ministry of Steel & Mines, Department of Steel Government of India."[258] Although the NMDC website does not specify what precisely is meant by "administrative control", the fact that an entity is under the "administrative control" of the government suggests that the relationship between that entity and the government is very different from the relationship that would normally prevail between a private body and the government. Accordingly, in the context of government ownership and government involvement in the appointment of directors, such evidence provides additional support for a finding that an entity is under the "meaningful control" of the government.

7.88.  India contends that NMDC in fact enjoyed a "significant amount of autonomy" from GOI, as a result of having been granted either "Miniratna" or "Navratna" status during the relevant review periods.[259] India refers in this regard to certain notifications set forth in Exhibits IND-72 1(2) and 72 2(1). We note that the first paragraph of the GOI document set forth in Exhibit IND‑72 1(2) refers to the GOI "[t]urning selected public sector enterprises into global giants". We also note that the first paragraph of the GOI document set forth in Exhibit IND-72 2(1) explains that the greater autonomy referred to by India is granted "to make the public sector more efficient and competitive". So long as public sector enterprises are involved, we are not persuaded that the grant of a greater degree of autonomy is necessarily at odds with a determination that such public sector enterprises constitute public bodies. India has not suggested that "Miniratna" or "Navratna" companies are effectively private in nature.

7.89.  We recall our assessment that, in certain circumstances, a body may be found to be public in nature when it is subject to "meaningful control" by the government. We further recall that government shareholding, when combined with other factors, may well be indicative of the government's "meaningful control" of an entity. We consider that the USDOC's determination, when viewed in light of the above-mentioned record evidence, effectively amounted to a determination that the NMDC was under the "meaningful control"[260] of GOI.[261] Accordingly, we reject India's claim that the USDOC's determination that NMDC is a public body is inconsistent with Article 1.1(a)(1) of the SCM Agreement.

7.3.2  USDOC's finding of de facto specificity

7.90.  By virtue of Article 1.2 of the SCM Agreement, the Agreement only applies to subsidies that are specific. Accordingly, countervailing duties may only be levied on imports that benefit from specific subsidies. According to Article 2 of the SCM Agreement, subsidies may be de jure (Article 2.1(a) & (b)) or de facto (Article 2.1(c)) specific.

7.91.  The USDOC determined in the 2004 administrative review that the NMDC's provision of high-grade iron ore is de facto specific "because the actual recipient of the subsidy is limited to industries that use iron ore, including the steel industry, and is thus limited in number".[262] India challenges the USDOC's determination of de facto specificity. The United States asks the Panel to reject India's claim.

7.3.2.1  Relevant WTO provision

7.92.  Article 2 provides in relevant part:

2.1  In order to determine whether a subsidy, as defined in paragraph 1 of Article 1, is specific to an enterprise or industry or group of enterprises or industries (referred to in this Agreement as "certain enterprises") within the jurisdiction of the granting authority, the following principles shall apply:

(a)  Where the granting authority, or the legislation pursuant to which the granting authority operates, explicitly limits access to a subsidy to certain enterprises, such subsidy shall be specific.

(b)  Where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to. The criteria or conditions must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification.

(c)  If, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in subparagraphs (a) and (b), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme by a limited number of certain enterprises, predominant use by certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy. In applying this subparagraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation.

2.3  Any subsidy falling under the provisions of Article 3 shall be deemed to be specific.

2.4  Any determination of specificity under the provisions of this Article shall be clearly substantiated on the basis of positive evidence.

7.3.2.2  Main arguments of the parties

7.3.2.2.1  India

7.93.  India claims that the USDOC's determination of de facto specificity is inconsistent with Articles 2.1(c) and 2.4 of the SCM Agreement because: the USDOC failed to show that the subsidy discriminated in favour of "certain enterprises" over a comparative set of other, similarly-situated enterprises; the USDOC based its determination of specificity on limitations inherent in the nature of the product; the USDOC failed to establish that the subsidy was used by a limited number of certain enterprises; the USDOC failed to examine all the mandatory factors listed in Article 2.1(c); and the USDOC failed to determine de facto specificity on the basis of positive evidence.

7.3.2.2.1.1  Discrimination in favour of certain enterprises

7.94.  Noting the reference to "certain enterprises" in the chapeau of Article 2.1, India submits that, in order to demonstrate specificity under any of the three paragraphs of Article 2.1, it is necessary to show that the subsidy is available to certain known and particularized enterprises, as opposed to all entities in general.[263] India submits in particular that an investigating authority must demonstrate that the subsidy favours certain enterprises over a comparative set of other entities that are similarly-situated with regard to their potential/capability to receive the subsidy in question.[264] According to India, there must be a showing of discrimination against a comparative set of other entities that would, but for the governmental instrument or conduct, also have had access to the subsidy in question.[265]

7.95.  India claims that the USDOC failed to identify any comparative set of entities that had been discriminated against in terms of eligibility for the alleged subsidy provided by NMDC.[266] India contends that the USDOC's finding of specificity was not based on any action on the part of NMDC or GOI to restrict the sale of iron ore to a limited set of industries.[267] India contends that no such restrictions were in place, and that the sale of iron ore from NMDC is open to any person willing to pay the market price sought by NMDC.[268] India denies that NMDC or GOI directly or indirectly influences the nature and type of enterprises that may purchase iron ore from NMDC.[269]

7.96.  India also submits that the USDOC should have examined specificity under Articles 2.1(a) and (b) of the SCM Agreement before proceeding to apply Article 2.1(c).[270]

7.3.2.2.1.2  Limitations inherent in the nature of the product

7.97.  India submits that, rather than establishing that a comparative set of entities had been discriminated against, the USDOC simply relied on the inherent characteristics/attributes of the product at issue.[271] India asserts that as a matter of basic common sense, because of the nature of the product, a given raw material may be capable of being used only by certain types of industries, depending on the nature and use of the raw material involved.[272] India contends that such inherent limitations concerning the nature of the product cannot directly be changed or influenced by government actions.

7.3.2.2.1.3  USDOC's alleged failure to demonstrate that the subsidy was used by a limited number of certain enterprises

7.98.  India notes that, according to Article 2.1(c) of the SCM Agreement, a subsidy may in fact be specific notwithstanding any appearance of (de jure) non-specificity when, inter alia, there is "use of a subsidy programme by a limited number of certain enterprises". India contends that the USDOC should have shown that the "limited number" of entities benefiting from the subsidy was part of a broader set of "certain enterprises".[273] According to India, because the term "certain enterprises" is shorthand for the beneficiaries in question, what the United States needs to prove is that the programme in question was being used by only a limited number of users within the set of beneficiaries. India contends that it is not relevant whether the entire set of beneficiaries was limited in number.[274]

7.99.  India submits that the USDOC's determination was unclear as to the subsidy being obtained by a "limited number" of entities within a broader set of "certain enterprises".[275] In particular, India contends that it is unclear whether the USDOC considered: (i) that the users of iron ore were the "certain enterprises", and that the subsidy was only made available to a "limited number" of users within that set; or (ii) that (all) the users of iron ore constitute the "limited number" of entities within some broader, but undefined, category of "certain enterprises".[276] India submits that, as a result of such uncertainty, the USDOC's determination is inconsistent with Article 2.1(c).

7.3.2.2.1.4  USDOC's alleged failure to examine all mandatory factors listed in Article 2.1(c)

7.100.  India notes that, according to Article 2.1(c) of the SCM Agreement, a finding of de facto specificity must take into account "the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation".[277] India contends that the USDOC failed to take account of these two mandatory factors, contrary to Articles 1.2 and 2.1(c).

7.3.2.2.1.5  USDOC's alleged failure to base its finding of specificity on positive evidence

7.101.  India notes that, pursuant to Article 2.4 of the SCM Agreement, "[a]ny determination of specificity under the provisions of this Article shall be clearly substantiated on the basis of positive evidence".

7.102.  India submits that, although the USDOC determined that the sale of iron ore by NMDC was de facto specific since the actual receipt of the subsidy would only be "limited to industries that use iron ore, including the steel industry, and is thus limited in number", there is no evidence on record indicating that NMDC only made iron ore available to users of iron ore, or that only users of iron ore purchased from NMDC.[278] India asserts that the USDOC rather assumed that iron ore was being purchased from NMDC only by users of iron ore. India submits that the USDOC's determination was devoid of positive evidence, contrary to Article 2.4.

7.3.2.2.2  United States

7.103.  As an initial matter, the United States submits that India errs in requesting the Panel to find a U.S. measure inconsistent with Article 2.1.[279] According to the United States, Articles 2.1(a) and 2.1(c) of the SCM Agreement are definitional provisions that do not contain obligations.

7.3.2.2.2.1  Discrimination in favour of certain enterprises

7.104.  The United States rejects India's argument that a determination of specificity can only be made with reference to a "comparative set" of "similarly-situated" entities[280], with consideration of whether the actual use of the subsidy is limited to certain enterprises, i.e., a subset of that group.[281] The United States submits that Article 2.1(c) of the SCM Agreement does not state that specificity can only be found if a subset of similarly situated entities receives the subsidy. Rather, the United States submits that Article 2.1(c) provides that de facto specificity may be found in light of the "use of a subsidy programme by a limited number of certain enterprises."[282] The United States asserts that if a limited number of enterprises use the programme, this fact supports a finding of specificity. For the United States, the question a panel or investigating authority must answer when considering whether a subsidy programme is used by "a limited number of certain enterprises" is whether the "certain enterprises" constitute a discrete segment of the economy.[283] According to the United States, this assessment is made with respect to the economy of the Member concerned (rather than with respect to a broader category of similarly-situated enterprises, as alleged by India). In addition, the United States rejects India's argument that specificity should be examined under Articles 2.1(a) and (b) of the SCM Agreement before proceeding to apply Article 2.1(c).[284]

7.3.2.2.2.2  Limitations inherent in the nature of the good

7.105.  The United States also disagrees with India's argument that if the inherent characteristics of a good, rather than the government programme, limits the uses of that good to certain enterprises, the programme cannot be found to be specific.[285] The United States submits that a similar argument was rejected by the panel in US – Softwood Lumber IV, when Canada argued that the provision of standing timber was not specific because it was the inherent characteristics of the standing timber, rather than the Government of Canada, that limited the number of enterprises that uses standing timber.[286] According to the United States, the panel found that Article 2 permits a specificity finding precisely because the use of the good is limited to certain enterprises.

7.3.2.2.2.3  USDOC's alleged failure to demonstrate that the subsidy was used by a limited number of certain enterprises

7.106.  The United States contends that the positive evidence supporting the USDOC's determination that the iron ore programme was used by a limited number of certain enterprises consists of a list of 43 NMDC customers identified on the NMDC website, most of which were iron and steel companies.[287] The United States also contends that the Dang Report demonstrates that the total Indian domestic consumption of iron ore was accounted for by steel producers and pig and sponge iron producers[288], with the overwhelming majority, approximately 76%, being used by steel producers.[289]

7.3.2.2.2.4  USDOC's alleged failure to examine all mandatory factors listed in Article 2.1(c)

7.107.  The United States submits that USDOC did account for India's economic diversification and the length of time during which the subsidy programme operated. According to the United States, the USDOC considered that the facts and circumstances of the challenged specificity determination demonstrated that neither of these factors would affect the conclusion that the provision of iron ore was specific.[290] The United States denies that the USDOC was required to address these factors explicitly.

7.108.  The United States contends that the USDOC accounted for the fact that India's economy is highly diverse by specifically recognizing a variety of Indian industries such as polyethylene terephthalate film and resin in the challenged investigation.[291] The United States asserts that the USDOC also determined that only a limited number of enterprises use iron ore, in contrast to the large number of industries in the Indian economy.

7.109.  The United States submits that the evidence underlying USDOC's specificity findings with respect to high-grade iron ore led to the conclusion that the issue of the duration of that programme's operation was not relevant to the subsidy programme at issue. The United States contends that because the USDOC found that "the actual recipient of the subsidy is limited to industries that use iron ore, including the steel industry, and is thus limited in number"[292], no additional analysis of the duration of the subsidy was necessary. This is because the only industries that could receive the subsidy over time would still be defined as part of the original, limited group of beneficiaries – those that use iron ore.

7.110.  According to the United States, when record evidence and the circumstances of an investigation demonstrate that the issues of diversification and duration of the subsidy would not affect the specificity analysis, and no party argues to the contrary, USDOC is not required to make explicit determinations as to those aspects of the de facto analysis. The United States relies in this regard on the finding by the panel in EC – Countervailing Measures on DRAM Chips that an investigating authority need not make explicit findings regarding these considerations when other parties fail to raise the issue: "[t]he record does not indicate that the parties ever raised the issue that the disproportionate use of the Programme's funds ... was somehow to be explained by the lack of diversification of the Korean economy or the length of time the programme had been in operation. We therefore do not find it unreasonable that the EC did not include in the Final Determination any explicit statement regarding these matters."[293] The United States contends that no party challenged USDOC's specificity findings with respect to the sale of high-grade iron ore, and no party suggested that either limited economic diversification or the duration of the subsidy programme was relevant to the limited number of industries benefiting from that programme.[294]

7.3.2.2.2.5  USDOC's alleged failure to base its finding of specificity on positive evidence

7.111.  The United States submits that the USDOC's determination of specificity was based on positive evidence. The United States refers in this regard to the above-mentioned evidence (taken from the NMDC website and Dang Report) regarding the use of domestic iron ore by iron and steel producers.

7.3.2.3  Main arguments of the third parties

7.3.2.3.1  Canada

7.112.  Canada disagrees with the interpretation of Article 2.1 of the SCM Agreement suggested by India. Canada submits that the ordinary meaning of the text of Article 2.1 does not require the use of "comparative sets" of "similarly-situated entities" in order to determine specificity. According to Canada, Article 2.1 is not a non-discrimination obligation, as India seems to suggest.

7.3.2.3.2  China

7.113.  China submits that Article 2.1 contemplates an analysis in a manner that the assessment of de facto specificity under Article 2.1(c) must follow the initial appearance of non-specificity concluded as a result of the analysis under Article 2.1 subparagraphs (a) and (b). According to China, an investigating authority is therefore obliged first to consider the principles set out in subparagraphs (a) and (b), and may proceed to the "other factors" under subparagraph (c) only if the application of the prior principles under subparagraphs (a) and (b) has led to an appearance of non-specificity. China also considers that a "subsidy programme" must have been identified and substantiated when an investigating authority evaluates specificity under the first two "other factors" under Article 2.1(c).

7.3.2.3.3  European Union

7.114.  The European Union disagrees with India's argument that Article 2.1(c) pre-supposes an appropriate "comparative set" of "similarly situated" firms. Contrary to what India asserts, Article 2.1 is not addressed towards an issue of discrimination: rather, it addresses the issue of specificity.

7.3.2.3.4  Saudi Arabia

7.115.  Saudi Arabia submits that, when determining de facto specificity under Article 2.1(c) of the SCM Agreement, investigating authorities must take into account the level of diversification of economic activities in the exporting country. The explicit diversification requirement of Article 2.1(c) obligates investigating authorities to consider the broader economic context in which a subsidy programme operates. Saudi Arabia asserts that de facto specificity cannot be applied in the same way to less diversified developing countries as it would be applied to a fully developed, diversified economy. Such an approach would penalize less diversified, developing economies for seeking to diversify and develop in a WTO-consistent manner. That is exactly what the diversification requirement of Article 2.1(c) was designed to prevent. Saudi Arabia further submits that de facto specificity may not be determined solely on the basis of the inherent characteristics of a good or service. First, there is nothing in the text of the SCM Agreement that permits a finding of specificity on this basis. Second, investigating authorities have an affirmative obligation under the SCM Agreement to "clearly substantiate" determinations of de facto specificity on the basis of positive evidence relating to the four factors found in Article 2.1(c). Authorities may not avoid this obligation by simply referring to the "inherent characteristics" of a good. Third, this expansive interpretation could also render the specificity determination under Article 2 redundant – the investigating authority need only determine (under Article 1) the nature of the "good" which is provided, and that determination would often automatically justify a finding of de facto specificity. Finally, any decision on whether de facto specificity may be based solely on a good's inherent characteristics may not penalize less diversified economies in express violation of Article 2.1(c).

7.3.2.4  Evaluation

7.116.  Before examining India's claims, we consider the United States' argument that Articles 2.1(a) and 2.1(c) are merely definitional provisions, devoid of any legal obligations.[295] We also consider India's argument that the USDOC should have examined specificity under Articles 2.1(a) and (b) of the SCM Agreement before applying Article 2.1(c).[296]

7.3.2.4.1  Are Articles 2.1(a) and (c) merely definitional?

7.117.  The United States submits that Article 2.1 is definitional, and does not contain obligations. The United States submits, therefore, that there can be no finding of inconsistency with that provision.

7.118.  We acknowledge that Article 2 defines the scope of subsidies that are subject to the disciplines of the SCM Agreement. We also acknowledge that the Appellate Body emphasised that Article 2.1 imposes "principles" rather than "rules".[297] That being said, we note that Article 2.4 refers to a "determination" of specificity being made under the provisions of Article 2. Except in situations envisaged by Article 2.3, such determination is made – explicitly or implicitly – every time that a Member finds that a subsidy falls within the scope of the SCM Agreement. In our view, a panel may reasonably find that such "determination" is either consistent, or inconsistent, with the principles set forth in Article 2.1(a)-(c). We note that, consistent with this approach, the Appellate Body in US – Anti-Dumping and Countervailing Duties (China)[298] upheld the panel's finding that the United States had not acted inconsistently with its obligations under Article 2.1(a). Implicit in the Appellate Body's finding is a determination that Article 2.1(c) does contain legal obligations that a Member may be found not to have complied with.

7.3.2.4.2  Sequential application of sub-paragraphs (a), (b) and (c) of Article 2.1

7.119.  Regarding India's argument that the USDOC should have examined specificity under Articles 2.1(a) and (b) of the SCM Agreement before applying Article 2.1(c), we observe that, the Appellate Body has stated that the sub-paragraphs of Article 2.1 need not be applied sequentially in all cases. The Appellate Body explicitly "recognize[s] that there may be instances in which the evidence under consideration unequivocally indicates specificity or non-specificity by reason of law, or by reason of fact, under one of the subparagraphs, and that in such circumstances further consideration under the other subparagraphs of Article 2.1 may be unnecessary".[299] We note that there is no suggestion in the USDOC's determinations that the provision of iron ore by the NMDC was restricted by law. Nor has India suggested that this would have been a relevant consideration. Accordingly, we consider that the USDOC was entitled to proceed directly to consider, in the context of Article 2.1(c), whether the provision of the NMDC's iron ore was restricted in fact.

7.3.2.4.3  Discrimination in favour of certain enterprises

7.120.  India submits that a subsidy can only be specific if it discriminates, in terms of access or eligibility, between similarly-situated entities. India's discrimination argument is based on a statement by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) that the principles set forth in Articles 2.1(a) and (b) concern the issue of whether the "conduct or instruments of the granting authority discriminate or not".[300] India contends that there cannot be discrimination "unless there are entities other than the 'certain enterprises' that would have, but for the governmental instrument or conduct, had access to the subsidy in question".[301] India contends that "a conclusion that a program is specific to 'certain enterprises' under Articles 2.1(a) and (b) can only be reached in the context of a 'comparative set', whereby an investigating authority can determine that the subsidy only benefits 'certain enterprises' over this 'comparative set'". According to India, this "comparative set" "must consist of 'similarly-situated' entities, i.e. entities that share a mutual or common relation/degree of similarity as the 'certain enterprises' in question, such that entities covered thereby would have otherwise been capable of receiving the subsidy in question".[302] India contends that the same approach must also apply to de facto specificity under Article 2.1(c), since all three sub-paragraphs of Article 2.1 are all concerned with the same issue, namely specificity.[303]

7.121.  We are not persuaded by India's argument. Article 2.1(a), which deals with de jure specificity, provides that a subsidy shall be specific when the granting authority or relevant legal instrument "explicitly limits access to a subsidy to certain enterprises". Article 2.1(c), in respect of de facto specificity, similarly provides that a subsidy shall be specific inter alia when a subsidy programme is "use[d] … by a limited number of certain enterprises". These two provisions complement one another. Article 2.1(a) concerns limitations on access to subsidies that exist in law. Article 2.1(c) concerns limitations on access that are not expressly provided for in legal instruments, but whose existence may nevertheless be determined by reference to facts. In both cases, what matters is the existence of a restriction on access to the subsidy, in the sense that the subsidy is available to certain enterprises, industries, or groups of enterprises or industries, but not to others. The entities with access to the subsidy are referred to in the chapeau to Article 2.1 as "certain enterprises". Once access to the subsidy is shown to be limited to those "certain enterprises" (either de jure or de facto), the subsidy is specific. There is no requirement to show that the subsidy is at the same time not available to other, undefined – but similarly situated – entities. Article 2.1 simply makes no provision for such requirement. The focus of Article 2.1 is on the "certain enterprises", and their limited access to the subsidy. Article 2.1 is not concerned with other enterprises, and whether or not such other enterprises have been discriminated against.

7.122.  By limiting access to a subsidy to certain enterprises, a Member will necessarily prevent other enterprises from also accessing that subsidy. This goes without saying, since any restriction on access to a subsidy implies that access will be denied to other enterprises. If other enterprises were not deprived access to the subsidy, that subsidy would be generally available, and therefore not "specific" within the meaning of Article 2.1 of the SCM Agreement. The point, though, is that Article 2 is not concerned with the identity or nature of the excluded entities. Thus, if a law limits access to a subsidy to steel producers, specificity may be established pursuant to Article 2.1. Article 2.1 is not concerned with the entities that are implicitly excluded from access to that subsidy. In particular, Article 2.1 is not concerned with whether the excluded entities are aluminium producers, refrigerator producers or farmers. Nor is Article 2.1 concerned with the issue of whether the excluded entities are like, or similarly situated, to the steel producers who do have access.

7.123.   Although India states that "a finding of specificity cannot arise simply because a subsidy is made available to certain enterprises rather than the entire economy", this is precisely what the text of Article 2.1 provides. Let us recall in this regard that Article 2.1(a) applies when a legal instrument "explicitly limits access to a subsidy to certain enterprises". Thus, once the subsidy is made available to certain enterprises only, the text of Article 2.1(a) requires that such a subsidy shall be found to be specific.[304] There is no requirement in Article 2.1(a) to conduct any further analysis regarding the nature of the entities to which the subsidy is not made available. As explained above, the same applies in respect of specificity established pursuant to Article 2.1(c).

7.124.  Furthermore, we observe that Article 2 contains no reference to the notion of "discrimination". The basis for India's argument regarding discrimination reposes rather on a statement made by the Appellate Body in US – Anti-Dumping and Countervailing Duties (China) to the effect that the principles set forth in Articles 2.1(a) and (b) concern the issue of whether the "conduct or instruments of the granting authority discriminate or not".[305] Given our review of the text of Article 2.1, we are not persuaded that the Appellate Body's solitary[306] use of the term "discriminate" suggests that Article 2.1 should be interpreted in the manner suggested by India. This is because there is no suggestion in the Appellate Body's analysis or findings that, having determined that access to a subsidy is limited to certain enterprises, an investigating authority must also determine that access is denied to other, similarly situated entities. Thus, when interpreting Article 2.1(a), the Appellate Body found that "a subsidy is specific under Article 2.1(a) of the SCM Agreement when the explicit limitation reserves access to that subsidy to 'certain enterprises'".[307] The Appellate Body did not state that a subsidy is specific when access is reserved to "certain enterprises", and access is denied to other similarly situated entities. Furthermore, when reviewing the panel's evaluation of the investigating authority's determination of specificity, the Appellate Body concluded that the panel's acknowledgment that the investigating authority's determination "that the alleged subsidy was explicitly limited" by certain documents was "a proper and a sufficient basis for the Panel to conclude that the USDOC had not acted inconsistently with Article 2.1(a) of the SCM Agreement in determining [that the relevant programme] was de jure specific".[308] Again, there is no suggestion by the Appellate Body that, in addition to determining that access to the subsidy was limited to "certain enterprises", the investigating authority should also have determined that access was denied to other, similarly situated entities. Thus, there is no meaningful support for India's discrimination argument in the findings of the Appellate Body in US – Anti-Dumping and Countervailing Duties (China).

7.125.  Further, in cases where the "certain enterprises" represent the totality of an industry, a requirement that the recipient of a financial contribution must be compared to a "comparative set" of "similarly situated entities" would make little, if any, sense. Assuming the industry is defined by the products it produces, there will generally be no "similarly-situated" entities that the relevant industry could be part of. In such cases, the "similarly-situated" entities and the "certain enterprises" would be the same, such that it would not be possible to establish that similarly situated entities were excluded from the subsidy. While India's approach to specificity would suggest that specificity could not be established in such circumstances, such approach is clearly at odds with the plain language of Article 2.1 as discussed above.

7.126.  For all of the above reasons, we reject India's argument that specificity under Article 2 must be established on the basis of discrimination in favour of "certain enterprises" against a broader category of other, similarly situated entities.

7.3.2.4.4  Limitations inherent in the nature of the product

7.127.  India contends that the USDOC's determination of de facto specificity, based on entities that use iron ore being limited in number, can only be justified if the 'comparative set' of excluded entities comprises the entire economy of India. According to India, "considering the entire economy as the 'comparative set', including industries and enterprises that are inherently incapable of using iron ore, results in the automatic and mechanistic application of the specificity requirement, thereby robbing it of its value and purpose", since it "will result in an affirmative finding of de facto specificity in all cases where the government is involved in providing raw materials".[309] India submits that specificity should not be established on the basis of limited use under Article 2.1(c) in cases where, because of the nature of the subsidized product, the use of that product is necessarily restricted to a limited number of entities.

7.128.  In accordance with Article 32 of the Vienna Convention, supplementary material may be used to assist in interpretation of the terms of a treaty "to confirm the meaning resulting from the application of Article 31" or to determine the meaning if the interpretation according to Article 31 "(a) leaves the meaning ambiguous or obscure; or (b) leads to a result with is manifestly absurd or unreasonable." In this context, India refers to the Second Cartland Draft circulated in the Negotiating Group on Subsidies and Countervailing Measures in September 1990, in which the concept of de facto specificity was enunciated in draft Articles 4.1(c) and (d):

(c) Where discretion is exercised in the course of the administration of a subsidy, specificity shall not be deemed to exist if there is a clear indication, substantiated on the basis of positive evidence, that discretion has not been exercised so as to limit access to the subsidy to certain enterprises or to award amounts of subsidy so as to direct the subsidy to certain enterprises. In this regard, information on the frequency with which applications for the subsidy are refused and the reasons for such refusal shall, in particular, be considered.

(d) A subsidy may be specific in fact if it can be demonstrated, on the basis of facts which were known - or should have been known - to the granting authority at the time of establishment of the subsidy programme, that the subsidy would be limited to certain enterprises.***

***It remains for signatories to address the issue of limited access as a result of the inherent characteristics of goods, services or extraction or harvesting rights provided by a government.[310]

7.129.  According to India, the absence of the asterisked footnote in the final text of the SCM Agreement shows that "there was no consensus among the negotiating members on the issue of determining specificity based solely on the inherent characteristics of the goods". According to India, Article 2.1(c) of the SCM Agreement cannot be interpreted in a manner that would indirectly incorporate into the treaty what the negotiators could not originally agree on.

7.130.  We are not persuaded by India's arguments. Regarding India's reliance on the above‑mentioned negotiating history, we first note that such negotiating history would only become relevant if the Panel were to conclude that the interpretation set out in the preceding sub‑section "(a) leaves the meaning ambiguous or obscure; or (b) leads to a result which is manifestly absurd or unreasonable." This is not the case here. As explained above, our interpretation of Article 2.1(c), based on the text, in its context and in view of the object and purpose of the provision, is clear and is contrary to India's position. Second, the fact that negotiators reserved the right to consider "the issue of limited access as a result of the inherent characteristics of goods", but ultimately did not include any provisions regarding this issue in the final version of the SCM Agreement, does not, as India argues, require the conclusion that negotiators could not agree to include a provision concerning specificity based on the inherent characteristics of goods. It, in our view, may suggest that negotiators addressed the issue, and concluded that no such provision was necessary. What is clear, is that the SCM Agreement, as agreed by Members, does not provide for any special regime in cases where access to a subsidy is limited by the inherent characteristics of goods.

7.131.  In terms of India's broader argument, we recall our earlier findings to the effect that once it is established that access to the subsidy is limited, that subsidy is specific within the meaning of Article 2. Thus, if access is limited by virtue of the fact that only certain enterprises may use the subsidized product, the subsidy is specific. As explained above, there is no need for a further consideration regarding the nature of the excluded entities. Similarly, there is no need, in such cases, to establish that the excluded entities would also have been able to use the subsidized product. We note that a similar issue was addressed by the panel in US – Softwood Lumber IV, reaching essentially the same conclusion:

We first address Canada's argument that a subsidy is specific only when the authority deliberately limits access of this subsidy to certain enterprises within the group of enterprises eligible or naturally apt to use the subsidy. In our view, Article 2 SCM Agreement is concerned with the distortion that is created by a subsidy which either in law or in fact is not broadly available. While deliberate action by a government to restrict access to a subsidy that is in principle broadly available, through the use of discretion, could well be the basis for a finding of de facto specificity, we see no basis in the text of Article 2, and 2.1 (c) SCM Agreement in particular, for Canada's argument that if the inherent characteristics of the good provided limit the possible use of the subsidy to a certain industry, the subsidy will not be specific unless access to this subsidy is limited to a sub-set of this industry, i.e. to certain enterprises within the potential users of the subsidy engaged in the manufacture of similar products. Article 2 speaks of the use by a limited number of certain enterprises or the predominant use by certain enterprises, not of the use by a limited number of certain eligible enterprises. In the case of a good that is provided by the government - and not just money, which is fungible – and that has utility only for certain enterprises (because of its inherent characteristics), it is all the more likely that a subsidy conferred via the provision of that good is specifically provided to certain enterprises only. We do not consider that this would imply that any provision of a good in the form of a natural resource automatically would be specific, precisely because in some cases, the goods provided (such as for example oil, gas, water, etc.) may be used by an indefinite number of industries. This is not the situation before us. As Canada acknowledges, the inherent characteristics of the good provided, standing timber, limit its possible use to "certain enterprises" only.[311]

7.132.  We agree with this reasoning, which we consider to be consistent with our approach outlined above.

7.133.  For the above reasons, we reject India's argument that if the inherent characteristics of the subsidized good limit the possible use of the subsidy to a certain industry, the subsidy will not be specific unless access to this subsidy is further limited to a sub-set of this industry.

7.3.2.4.5  USDOC's alleged failure to demonstrate that the subsidy was used by a limited number of certain enterprises

7.134.  India submits that because the term "certain enterprises" is shorthand for the beneficiaries in question, the USDOC needed to prove that the programme was being used by only a limited number of users within this set of beneficiaries.[312] India submits that it is not relevant whether the entire set of "certain enterprises" was limited in number.

7.135.  India's argument is based on a proposed distinction between "users" and "beneficiaries" that is not provided for in Article 2.1(c) of the SCM Agreement. As we explain above, Article 2.1 refers to "certain enterprises". Article 2.1 does not refer to other "users" of the relevant subsidy programme. Nor does it refer to "certain enterprises" as "beneficiaries". Furthermore, as explained above, Articles 2.1(a) and (c) are concerned with situations where access to a subsidy is limited to the same category of "certain enterprises". An authority may determine that a subsidy is specific – in the sense that access to that subsidy is limited to "certain enterprises" – pursuant to Article 2.1(c) by relying on the fact that the number of "certain enterprises" using the subsidy is limited. It is the category of "certain enterprises" that is relevant for this numerical exercise, just as it is the category of "certain enterprises" that is relevant for the purpose of Article 2.1(a). Accordingly, there was no obligation on the USDOC to establish that only a "limited number" within the set of "certain enterprises" actually used the programme.

7.3.2.4.6  USDOC's alleged failure to examine all mandatory factors listed in Article 2.1(c)

7.136.  The text of Article 2.1(c) expressly requires that, in the context of a determination of de facto specificity, "account shall be taken" of the extent of diversification of the relevant economy and the length of time that the relevant programme has been in operation. Our evaluation of the USDOC's compliance with that requirement must be based on the USDOC's determinations, and other contemporaneous USDOC documents. In reviewing USDOC's determinations, we see nothing to indicate that the USDOC did actually take account of the two factors identified by India. Nor has the United States pointed us to any other contemporaneous document in which the USDOC did so. Accordingly, we find that the USDOC failed to comply with the Article 2.1(c) requirement to take those factors into account when determining whether the provision of goods by NMDC is de facto specific.

7.137.  We note the United States' argument that the USDOC accounted for the fact that India's economy is highly diverse by specifically recognizing a variety of Indian industries such as polyethylene terephthalate film and resin in the challenged investigation.[313] However, this argument merely alludes to a number of references made by the USDOC to prior proceedings in which the United States imposed trade remedies on imports from India. The USDOC referred to these proceedings in order to address issues totally unrelated to its determination of de facto specificity.[314] Furthermore, we do not consider that isolated references to a limited number of prior trade remedy proceedings involving imports from a Member is necessarily sufficient to establish the economic diversity of that Member. Accordingly, we are unable to accept that such references suffice to demonstrate that the USDOC took into account the economic diversification of India for the purpose of Article 2.1(c).

7.138.  We also note the United States' argument that the evidence underlying USDOC's specificity findings with respect to high-grade iron ore led to the conclusion that the issue of the duration of that programme's operation was not relevant to the subsidy programme at issue. The United States contends that because the USDOC found that "the actual recipient of the subsidy is limited to industries that use iron ore, including the steel industry, and is thus limited in number"[315], no additional analysis of the duration of the subsidy was necessary. Since there is no statement to this effect in the USDOC's determinations, nor in any contemporaneous documentation, we are unable to take this argument into account when considering whether or not the USDOC complied with the requirements of Article 2.1(c).

7.3.2.4.7  USDOC's reliance on positive evidence

7.139.  We recall that the USDOC determined that the provision of iron ore by the NMDC is specific because provision is "limited to industries that use iron ore, including the steel industry".[316] India claims that there was no evidentiary basis for the USDOC's finding that NMDC only made iron ore available to users of iron ore, or that only users of iron ore purchased from NMDC.

7.140.  In response to India's argument, the United States refers to evidence on the USDOC's record regarding NMDC's customer base. This evidence is set forth in Exhibit USA-69, and concerns a list of 43 customers enumerated in a document posted on the NMDC's website.[317] The United States contends that most of these customers are iron and steel companies. India does not dispute this. Our own review of the evidence referred to by the United States indicates, on the basis of the relevant companies' names, that many of the companies enumerated in the above‑mentioned list are indeed concerned with the iron and steel business. Accordingly, and particularly in light of India's failure to dispute the United States' categorization of the NMDC's customers, we find that there is no factual basis for India's Article 2.4 claim that the USDOC's determination of de facto specificity was not based on positive evidence.

7.3.3  USDOC's determination of the existence and quantum of benefit: Article 14

7.141.  India's claims relate to the USDOC's determinations that, by providing iron ore for less than adequate remuneration, the NMDC conferred a benefit on its customers. India submits that, in assessing the existence and quantum of benefit in the 2006, 2007 and 2008 administrative reviews, the USDOC violated Articles 1.1(b) and 14(d) of the SCM Agreement because: the USDOC used price benchmarks to assess benefit to the recipient, without first considering the adequacy of the remuneration for NMDC; the USDOC failed to apply certain Tier I benchmarks; the USDOC used benchmark prices adjusted for delivery charges; and the USDOC excluded NMDC export prices from the world benchmark price. The United States asks the Panel to reject India's claims.

7.3.3.1  Relevant WTO provision

7.142.  Article 14(d) of the SCM Agreement is set forth above.[318] Article 1.1(b) of the SCM Agreement provides that a subsidy may only be deemed to exist if "a benefit is … conferred" by the relevant financial contribution.

7.143.  Our evaluation of India's claims also requires us to consider Article 12.4 of the SCM, which provides:

Any information which is by nature confidential (for example, because its disclosure would be of significant competitive advantage to a competitor or because its disclosure would have a significantly adverse effect upon a person supplying the information or upon a person from whom the supplier acquired the information), or which is provided on a confidential basis by parties to an investigation shall, upon good cause shown, be treated as such by the authorities. Such information shall not be disclosed without specific permission of the party submitting it.

7.3.3.2  USDOC's use of benchmark price comparisons to assess benefit to the recipient, without first considering the adequacy of the remuneration for NMDC

7.3.3.2.1  Main arguments of the parties

7.144.  India submits that, because of the hierarchical preference for using Tier I and II benchmark comparisons set forth in Section 351.511(a)(2)(i)-(iii), the USDOC acted inconsistently with Article 14(d) by failing to determine whether the price charged by NMDC was adequate for NMDC itself, prior to applying the Tier I and II benchmarks to determine benefit to the recipient. India submits that USDOC ignored record evidence indicating that NMDC's prices were based on commercial considerations, such that the revenue received by NMDC was adequate.

7.145.  The United States asks[319] the Panel to reject India's claim, for the same reasons that it asks the Panel to reject India's "as such" claim discussed above.

7.3.3.2.2  Evaluation

7.146.  We recall that we have already rejected India's claim of inconsistency of Section 351.511(a)(2)(i)-(iii) "as such". India's present claim concerns Section 351.511(a)(2)(i)‑(iii) "as applied". India's present claim is dependent on its "as such" claim.[320] For the same reasons that we rejected India's "as such" claim, we also reject India's claim against Section 351.511(a)(2)(i)-(iii) "as applied".

7.3.3.3  USDOC's treatment of Tier I benchmarks

7.147.  India claims that the USDOC acted inconsistently with Article 14(d) by failing to apply certain Tier I, i.e. in-country, benchmarks to assess sales by the NMDC of high grade iron ore lumps and fines, despite a preference for in-country benchmarks being set forth in Article 14(d). There are two elements to India's claim. First, India claims that the USDOC failed, in the 2006, 2007 and 2008 administrative reviews, to consider the use of domestic price information submitted by Tata and GOI during the 2006 administrative review. Second, India challenges the USDOC's refusal to apply the in-country benchmark it determined for ISPAT to other Indian steel producers.

7.3.3.3.1  USDOC's alleged failure to consider domestic price information submitted by Tata and GOI
7.3.3.3.1.1  Main arguments of the parties

7.148.  India's claim concerns (i) price charts submitted by GOI and Tata, that were compiled by the Mine Owners/Goa Mineral Ore Exporters Association, and (ii) a letter submitted by Tata in which a private iron ore supplier quotes existing and revised prices for sales of high grade iron ore to Tata.[321]

7.149.  India claims that the USDOC improperly failed to use the above-mentioned price charts and price quote as Tier I benchmarks, and opted to use Tier II (out-of-country) benchmarks instead. India submits that the USDOC simply failed to consider the use of the relevant domestic price information as potential Tier I benchmarks, and failed to provide the reasons for doing so.[322] India contends that the United States' attempts to justify USDOC's rejection of this data during the Panel proceedings constitute ex post rationalizations that should be rejected in limine.

7.150.  The United States rejects India's assertion that the USDOC should have used the price data submitted by GOI and Tata as Tier I benchmarks. With respect to the price charts, the United States contends that, because the parties involved in the transactions are generally not identified in the charts, there was no way to determine if the prices were in fact private or governmental. The United States asserts that, of the three parties that are identified in the charts, two are state-owned companies (MML and Orissa). The United States also contends that there was no record evidence or explanation provided in or accompanying the charts to demonstrate that the prices represented actual private market transactions, as required by US law. Further, the United States contends that the specific percentage of iron ore content is not identified in the data. The United States asserts that this is an important factor in assessing the value of iron ore.

7.151.  With respect to the price quote provided by Tata, the United States submits that this could not be used as a Tier I benchmark because it is a proprietary document containing confidential information. The United States asserts that the price quote provided by Tata was "easily susceptible to disclosure"[323], since the data were so limited in scope that if USDOC used it as a benchmark, the proprietary numbers provided in the quote could be reverse calculated by the companies to which that benchmark was subsequently applied.

7.152.  The United States denies that it is relying on ex post rationalizations to defend the USDOC's rejection of relevant domestic price information. The United States contends that the USDOC was not required to make any determination regarding the potential use of the price data as Tier I benchmarks as "none of the parties argued that the information contained in the association chart should be used in calculating the appropriate benchmarks".[324] The United States further contends that the arguments now characterized by India as ex post rationalizations were merely made by the United States in response to arguments raised by India in its first written submission.

7.3.3.3.1.2  Evaluation

7.153.  Before addressing the parties' substantive arguments, we first address India's argument that the rationalization provided by the United States for the USDOC not using the price information proffered should be rejected by the Panel because it was provided ex post.

Whether the United States' arguments constitute ex post rationalization

7.154.  It is well established that a Member may not offer during dispute settlement proceedings a new rationale for its investigating authority's determinations. For example, the Appellate Body noted in US – Tyres (China) that it "has previously clarified that a panel's examination of the conclusions of an investigating authority 'must be critical and searching, and be based on the information contained in the record and the explanations given by the authority in its published report.' The Appellate Body has also clarified that during panel proceedings a Member is precluded from providing an ex post rationale to justify the investigating authority's determination".[325] An investigating authority's determinations must be evaluated in light of the rationale provided contemporaneously by that investigating authority. We note, in this regard, that there is no reference to the domestic price data at issue in the USDOC's preliminary or final determinations, or in any other contemporaneous USDOC document, even though (as acknowledged by the United States[326]) domestic prices "are the primary benchmark"[327] for assessing the adequacy of remuneration. Nor is there any explanation by the USDOC of why it applied Tier II instead of Tier I benchmarks. Indeed, there is nothing contemporaneous with the determinations to suggest that the USDOC actually rejected the domestic price data for the reasons presented by the United States during these proceedings.

7.155.  The United States contends that the USDOC was not required to make any determination regarding the potential use of the price data as Tier I benchmarks as "none of the parties argued that the information contained in the association chart should be used in calculating the appropriate benchmarks".[328] In considering this argument, we note that the United States acknowledges that domestic price information was requested by the USDOC for benchmarking purposes.[329] Given the context in which the information was requested, and supplied by interested Indian parties, we consider that those parties submitting that information could reasonably have expected that it would be used, or at least considered, for the purpose of establishing Tier I benchmarks. In this context, the United States' argument that interested parties did not expressly assert that the relevant information should be used for benchmarking purposes is unpersuasive.

7.156.  For these reasons, we find that the United States' explanation of the USDOC's rejection of certain domestic price information for Tier I benchmarking purposes constitutes ex post rationalization, which we are bound not to consider when evaluating India's claim.

Whether India has established a prima facie case in support of its claim

7.157.  Our finding that the United States has advanced ex post rationalizations in support of USDOC's actions does not, however, resolve the matter before us. In order for India's claim to prevail, India must first establish a prima facie case in support of that claim, before we turn to substantive consideration of the United States' defence of USDOC's actions.

7.158.  We recall that private domestic prices are the "primary benchmark" for assessing benefit under Article 14(d) of the SCM Agreement.[330] According to India, the domestic price information submitted by GOI and Tata "contained the market prices of iron ore in India".[331] Our review of the information in question shows that it does relate to domestic prices in India. In our view, therefore, it should have been considered for potential use as price benchmarks by the United States. Accordingly, we find that India has established a prima facie case in support of its claim. Since India's prima facie case is not rebutted by any contemporaneous rationale or justification in the USDOC's determinations, we uphold India's claim that the USDOC's failure to consider the relevant domestic price information for use as Tier I benchmarks is inconsistent with Article 14(d), and therefore Article 1.1(b), of the SCM Agreement.

7.159.  Notwithstanding the above finding, we believe that the United States' implementation of a DSB recommendation to bring its measures into conformity in this regard may be facilitated if we consider the rationale provided by the United States to justify the USDOC's rejection of the domestic sales information as Tier I benchmarks. Such consideration may also be relevant in the event that the Appellate Body reverses our finding that the United States has advanced ex post rationalization, and wishes to complete the analysis of India's claim. For these reasons, we will go on to address the United States' arguments in this regard.

Consideration of the rationale provided by the United States

7.160.  We begin with the United States' assertion that the USDOC was entitled to reject price information concerning sales identified as having been made by government-owned entities.[332] We recall that we have already found that Article 14(d) does not require an investigating authority to rely on a government's domestic prices when determining market benchmarks.[333] Accordingly, and for the same reasons, we consider that the USDOC would have been entitled to reject government price information when determining its price benchmarks.

7.161.  Regarding the United States' argument that the USDOC had no means of knowing whether or not the relevant price information concerned government or private suppliers, we agree with the United States that an investigating authority is not required to determine price benchmarks on the basis of price information pertaining to unidentified entities.

7.162.  We also agree with the United States that an investigating authority is not required to determine price benchmarks on the basis of information that is not shown to pertain to actual transactions. We consider that Article 14(d) allows sufficient discretion[334] to allow Members to require actual transaction data for purposes of determining a benchmark if they choose. That being said, we note India's contention that the USDOC's alleged insistence on actual transaction price data for Tier I benchmarks is inconsistent with the USDOC's use of price "negotiation" information as Tier II benchmarks.[335] Upon reviewing the price information used by the USDOC as Tier II benchmarks[336], we note that it is taken from charts entitled "Iron Ore Prices in the Japanese Market".[337] The United States has explained that the data in the charts concerns actual pricing. While this may indeed be the case, we are not persuaded that the price charts submitted by the GOI and Tata should be treated any differently, particularly since they are similarly entitled "Prices of Iron Ore".[338] In the absence of any compelling explanation to the contrary, we see no reason why information labelled "Prices of Iron Ore" should not be treated as actual transaction prices, in the absence of any factual basis for concluding that the information is not, in fact actual transaction price data.

7.163.  Regarding the price quote submitted by Tata, we consider that the USDOC was entitled to reject that quote on the basis that it did not specify the exact percentage of iron ore content, but rather only indicated whether it was low grade or high grade. Although the designation of low or high grade would have indicated whether the iron content was above or below 64%, the precise percentage of iron content is important in determining prices, because iron ore is priced per unit of iron content, and the USDOC made adjustments to reflect this.[339] It would not have been appropriate for the USDOC to determine price benchmarks based on information that did not reflect the precise iron content of the iron ore involved.

7.164.  India contends[340] that the USDOC should have sought additional clarification from the GOI and/or Tata before rejecting the domestic price information submitted by them. The United States submits that the USDOC was not required to seek additional clarification, since it had not made a facts available determination. According to the United States, the USDOC was not required to seek further clarification relating to any deficiencies in order to employ other benchmark data found to be more suitable.[341] The United States notes that, in any event, the USDOC had informed GOI and Tata that their information was deficient, and yet neither interested party chose to remedy that deficiency.[342] India has also clarified that it "is not arguing that the United States must continuously seek the same information again and again".[343] Bearing in mind the USDOC did not apply Tier II benchmarks on the basis of facts available, and considering that India does not deny that the USDOC had already sought additional clarification from GOI and Tata, we are not persuaded by India's argument that the USDOC should have sought further clarification before rejecting the domestic price information submitted by them.

7.165.  With respect to the price quote provided by Tata, the United States also submits that this information could not be used as a Tier I benchmark because it is a proprietary document containing confidential information that was easily susceptible to disclosure. In response to this argument, India contests the confidentiality of the relevant document.[344] However, India does not deny that Tata requested confidential treatment for that document.[345] While India might consider that the USDOC's treatment of the price quote as confidential is misplaced, this is not a matter that we are required to address in this dispute. Since India does not contest that the information was submitted and treated as confidential but is easily susceptible to disclosure (through reverse calculation), we see no basis to consider that the USDOC should have used the price quote as a Tier I benchmark to assess NMDC's sales to other purchasers.

7.3.3.3.2  USDOC's non-application of the ISPAT Tier I price benchmark to other producers
7.3.3.3.2.1  Main arguments of the parties

7.166.  India claims that, during the 2006 administrative review, the USDOC improperly declined to use the in-country benchmark that it had established for ISPAT when considering whether NMDC had provided Essar and JSW with iron ore for less than adequate remuneration. India contends that the USDOC improperly relied on the fact that the ISPAT benchmark was based on confidential information regarding the price at which that steel producer had purchased iron ore from another supplier. India claims that the USDOC's improper reliance on the confidentiality of the information was inconsistent with Article 14(d) of the SCM Agreement, because of that provision's preference for the use of domestic price benchmarks.

7.167.  India acknowledges that, by virtue of Article 12.4 of the SCM Agreement, confidential information submitted to an investigating authority "shall not be disclosed without specific permission of the party submitting it." Nevertheless, India denies that Article 12.4 justified the non-use of the ISPAT benchmark in respect of Essar and JSW.[346] India submits that, whereas Article 12.4 prohibits the disclosure of confidential information, that provision does not prohibit the use of such information by the investigating authority (in respect of other interested parties). In response to a question from the Panel, India contends that the USDOC could have used the information without disclosing "the nature and source of such information".[347]

7.168.  The United States submits that the USDOC properly declined to use certain ISPAT price benchmark for Essar and JSW, because to do so would have resulted in the unauthorized disclosure of confidential information to those entities. The United States refers in this regard to the ability of those two entities to reverse calculate the underlying confidential information on the basis of their rate of subsidization. The United States submits that the fact that the USDOC could not ensure the data would not be used by other parties once disclosed reinforces that the USDOC could not disclose the data under Article 12.4.

7.3.3.3.2.2  Evaluation

7.169.  We note that Article 12.4 of the SCM Agreement obliges an investigating authority not to "disclose" confidential information provided to it. India's claim hinges on the issue of whether or not the USDOC could have used the confidential domestic price information submitted by ISPAT (and used by the USDOC to determine a Tier I benchmark price for ISPAT) as a Tier I benchmark to assess sales of iron ore by NMDC to Essar and JSW, without disclosing that confidential information to those entities.

7.170.  The confidential information in question concerns the price at which another domestic mine sold iron ore to ISPAT. India has not contested the confidentiality of this information. The United States has demonstrated to our satisfaction[348] that, if the USDOC had used that confidential information as a Tier I benchmark for Essar or JSW, those entities would have been able to reverse calculate – using the rate of subsidization determined by USDOC, and the price at which they purchased iron ore from NMDC – the price at which ISPAT had purchased iron ore from the other domestic supplier. In other words, the USDOC's use of the relevant confidential information to determine price benchmarks for Essar and JSW would necessarily have disclosed that information to those entities, contrary to the requirements of Article 12.4. While India contends that the USDOC could have used the relevant information without disclosing the "nature and source" thereof[349], India has failed to provide any details as to how this might have been achieved by the USDOC.

7.171.  We decline to interpret Article 14(d) in a manner that would require an investigating authority to breach the confidentiality obligation provided for in Article 12.4 of the SCM Agreement. Accordingly, we reject India's claim that the USDOC violated Articles 1.1(b) and 14(d) by failing to apply the ISPAT Tier I benchmark price to assess sales of iron ore by NMDC to Essar and JSW in the 2006 administrative review.

7.3.3.4  Claims against the USDOC's use of "as delivered" price benchmarks

7.172.  In the 2006, 2007 and 2008 administrative reviews, the USDOC compared the NMDC price for certain types of iron ore with the price charged by an Australian producer of iron, adjusted for import duties and ocean freight from Australia to India. The USDOC compared the NMDC price for other types of iron ore with the delivered price paid by an Indian producer for iron ore from Brazil (including ocean freight and import duties). India claims that the USDOC's use of such "as delivered" benchmark prices is inconsistent with Article 14(d) of the SCM Agreement.

7.3.3.4.1  Main arguments of the parties

7.173.  India submits that the benchmarks should have been assessed at the ex-mine level, to reflect the prevailing market conditions in India which, according to India, included the ex-mine sales made by NMDC. India notes that, in requiring that the adequacy of remuneration be assessed in relation to the prevailing market conditions, Article 14(d) includes "price" as one such condition. According to India, the prices in the Indian market include both private and government/NMDC prices. India submits that the USDOC's use of delivered prices precluded any adjustment of the price benchmarks to the ex-mine level, even though NMDC prices were set at that level.

7.174.  India submits that the USDOC failed to determine, in applying these benchmarks, whether the prevailing market conditions in Australia and Brazil reflected the market conditions prevailing in India. India submits that the USDOC merely presumed that this was so, without undertaking any comparison between the market conditions prevailing in Australia and Brazil, and those prevailing in India.[350]

7.175.  India also submits that the inclusion of all delivery charges in the relevant benchmarks nullifies the comparative advantage that India has in being able to locally source iron ore for Indian steel producers. India argues that it is a comparative advantage for a country that users of the natural resources can procure it locally without having to suffer the costs and risks associated with their import from a different country.[351] India contends that the benchmarks used by the United States, which are under challenge, relate to iron ore sourced from outside India that were inflated to include delivery charges in all cases (including ocean freight). According to India, these benchmarks effectively represent the cost incurred by an Indian steel maker, in the event it is forced to procure iron ore by way of import. India argues that this method is built on the artificial premise that iron ore is otherwise not available in India forcing Indian steel makers to import iron and bear the costs and risks associated with international trade. India, therefore, argues that adopting benchmark prices that include all delivery charges on imported iron ore nullifies the comparative advantage that India has in being able to locally source iron ore for Indian steel makers.[352]

7.176.  The United States rejects India's argument that the USDOC improperly presumed that the Australian and Brazilian market conditions were identical to the prevailing Indian market conditions. The United States asserts, as an initial matter, that the Brazilian price relied on by the USDOC represents the price at which an Indian steel company, Essar, actually purchased iron ore from Brazil and had it delivered to its facility in India. The United States contends that the Brazilian delivered price, therefore, is not an out-of-country price, but is rather an in-country price between private parties.[353] Concerning the USDOC's use of certain Australian prices, the United States submits that such prices do relate to the prevailing market conditions in India. The United States contends in this regard that iron ore is a highly traded commodity, and that Australian iron ore can be imported into India. The United States also recalls that the Article 14(d) guidelines require that the benchmark price be determined based upon "the prevailing market conditions ... in the country of provision." The United States submits that, unless the delivery charges are included in a world market benchmark, the world market benchmark does not satisfy the Article 14(d) guideline that the price be based on market conditions in the country of provision. According to the United States, the use of an ex-mine price in Australia would be a pure Australian price, and not the price of Australian iron in relation to the prevailing market conditions in the Indian market.

7.177.  The United States also disagrees with India that the "prevailing market conditions" should be determined in light of NMDC sales at the ex-mine level. The United States denies that the phrase "prevailing market conditions" must be interpreted to refer to the specific terms of the government sales in question.[354] The United States asserts that the term "prevailing market conditions" should not be read so narrowly, since Article 14(d) does not direct that the benchmark must be limited to the specific terms of the government price being compared for benchmark purposes. According to the United States, to limit the comparison to the specific terms of the government sale would be to force a Member to ignore the actual more general prevailing market conditions, such as the fact that the true cost of an input to a producer includes all of the delivery charges to get the input to the producer's facility for use.[355] The United States notes in this regard that a producer cannot use an input which is not delivered to the factory. The United States also submits that the essence of the benefit analysis under Article 14 of the SCM Agreement is to determine whether the recipient is better off than it would have been absent the government action. The United States asserts that the only way to make that determination is to assess whether the recipient obtained something "on terms more favourable than those available in the market"[356], to the exclusion of government prices. The United States suggests that comparing the government price with a benchmark price that includes government prices (be they domestic or export prices), would result in a circular comparison.[357] The United States notes in this regard that the Appellate Body has stated that the "primary benchmark" for determining the benefit for goods sold at less than adequate remuneration is "prices of similar goods sold by private suppliers in the county of provision."[358] The United States submits that, by specifically using the term "private" suppliers, which means the opposite of public[359], the Appellate Body recognized that the preferred benchmark prices are private prices rather than government prices.[360]

7.178.  The United States submits that India has not provided any evidence of the existence of comparative advantage.[361] The United States notes India's reference to India having "certain raw materials" and the ability to extract and use those materials.[362] The United States contends that India does not explain why this gives India a comparative advantage over, for instance, Australia, which also has the same materials and the ability to extract and use (including export) them. The United States asserts that, because the Dang Report demonstrates that Australia has more iron ore reserves and exports more iron ore than India[363], any adjustment for comparative advantage would in fact not be in India's favour.[364] Moreover, the United States notes that India misuses the macroeconomic concept of "comparative advantage" in its arguments. The United States asserts that India offers no source to support the proposition that "the risk and expense of international transactions" has anything to do with comparative advantage. Rather, according to the United States, "comparative advantage" - as opposed to "competitive advantage" - is the advantage one country has over another in the production of a particular good relative to other goods if, as compared with the other country, it produces that good less inefficiently than it produces other goods. It is the United States' contention that India appears to confuse these terms.[365]

7.3.3.4.2  Evaluation

7.179.  India makes three distinct arguments in support of its Article 14(d) claim against the world price benchmarks used by the USDOC. First, India challenges the USDOC's use of benchmark prices set at the delivered level, despite the fact that prices were set by the NMDC at the ex-mine level. Second, India asserts that the USDOC failed to make the adjustments necessary to ensure that the Australian and Brazilian delivered price benchmarks reflected prevailing market conditions in India. Third, India contends that the world benchmark price applied by the USDOC countervailed India's comparative advantage.

7.3.3.4.2.1  Whether the USDOC's price benchmarks should have been set at the ex-mine level

7.180.  India's argument is based on its claim against Section 351.511(a)(2)(iv) "as such". In both cases, India contends that the use of delivered prices means that price benchmarks do not relate to prevailing market conditions in India which, according to India, should be determined by reference to the fact that the NMDC provided iron ore at the ex-mine level. For the same reasons that we rejected India's "as such" claim, we also reject the present argument.

7.3.3.4.2.2  Whether the Australian and Brazilian prices used by the USDOC reflect prevailing market conditions in India

7.181.  We begin by considering the USDOC's Brazilian price benchmark in isolation. We observe that this benchmark was based on an actual transaction in which an Indian steel producer purchased iron ore from a Brazilian mine on a delivered (and therefore imported) basis. Since the transaction was made by an Indian steel producer established in India, the transaction necessarily related to the prevailing market conditions in India. It was in light of those prevailing market conditions that the Indian steel producer engaged in the transaction, notwithstanding the cost of transporting the iron ore from the Brazilian mine to its facility in India. As a result, the Brazilian transaction, including delivery charges, reflects and relates to the prevailing market conditions in India, consistent with the second sentence of Article 14(d).

7.182.  Regarding the USDOC's use of Australian and Brazilian prices more generally, we note that, upon verification, NMDC officials explained that "international prices … end up becoming the international benchmark prices for their own contract negotiations". Those officials also explained that "India must compete with Australia, Brazil and other countries so it must follow the Tex Report's prices to remain competitive". NMDC officials further stated that, "[i]n setting the price in the domestic market, … NMDC reviews the negotiated international price when determining how much the purchaser would be willing to pay to import".[366] Since NMDC sets its domestic prices in light of competition from Australia and Brazil, and therefore in light of how much an Indian steel producer "would be willing to pay to import" iron ore from mines in those countries, we are not persuaded by India's assertion that Australian and Brazilian prices, adjusted for delivery to steel producers in India, do not relate to the prevailing market conditions in India. Since such prices indicate what an Indian steel producer would be "willing to pay", they necessarily relate to the prevailing market conditions in India.

7.183.  Given the existence of record evidence establishing the relationship between the delivered Australian and Brazilian iron ore prices used by the USDOC and prevailing market conditions in India, we reject India's argument that the USDOC acted inconsistently with Article 14(d) of the SCM Agreement by failing to adjust those delivered prices to reflect the market conditions prevailing in India.

7.3.3.4.2.3  Whether the USDOC's actions nullified India's comparative advantage

7.184.  India's argument regarding comparative advantage is based on the existence of iron ore in India. According to India, "the comparative advantage for [a country with natural resources] lies in the fact that users of the natural resources can procure it without having to suffer the costs and risks associated with their import from a different country".[367]

7.185.  Expressed in these terms, we consider that India's comparative advantage argument is essentially resolved by our findings regarding the USDOC's use of Australian and Brazilian price benchmarks, discussed above. In light of record evidence that Indian steel producers actually imported iron ore from overseas, and that NMDC set its domestic prices in light of import competition, there is no factual basis for the argument that India's comparative advantage was such that users of iron ore had no need to engage in import transactions. Accordingly, we reject India's argument that the price benchmarks applied by the USDOC nullified India's comparative advantage.

7.3.3.5  The inconsistent treatment of NMDC export prices

7.3.3.5.1  Main arguments of the parties

7.186.  India asserts that NMDC's export prices to Japan were excluded from the world benchmark price in the 2006, 2007 and 2008 administrative reviews, even though they had been included in the world benchmark price in the 2004 administrative review (and in the preliminary determination for the 2006 review). India claims that, to avoid inconsistency, the USDOC should also have taken NMDC's export prices into account when determining the Tier II benchmark prices for the 2006, 2007 and 2008 reviews. India contends that there was no risk that NMDC's export prices would be subsidized, since NMDC would have no desire to confer any benefit on Japanese steel-makers. India also claims that the USDOC was in any event required by the chapeau of Article 14 to explain why, in those reviews, it departed from the approach it had adopted in the 2004 review.

7.187.  The United States disagrees with India's argument that the USDOC should have included certain NMDC export prices in its world benchmark price. The United States suggests that comparing the government price with a benchmark price that includes government prices (be they domestic or export prices), would result in a circular comparison.[368] The United States notes in this regard that the Appellate Body has stated that the "primary benchmark" for determining the benefit for goods sold at less than adequate remuneration is "prices of similar goods sold by private suppliers in the county of provision."[369] The United States submits that, by specifically using the term "private" suppliers, the Appellate Body recognized that the preferred benchmark prices are private prices rather than government prices.[370]

7.188.  Regarding the use of the NMDC export price in calculating the world market price benchmark in the 2004 review and not in the 2006, 2007 and 2008 reviews, the United States contends that the exclusion of the export price from the world benchmark price in these subsequent reviews was merely correcting the mistaken inclusion of that price in the 2004 review.[371]

7.3.3.5.2  Evaluation

7.189.  We recall that we have already found that Article 14(d) does not require an investigating authority to rely on a government's domestic prices when determining market benchmarks.[372] This is because a government may set prices on the basis of public policy considerations rather than market principles. We consider that the same risk arises in respect of a government's export pricing. For example, a government might provide goods to export customers for less than adequate remuneration in order to promote domestic production and employment. For this reason, we reject India's claim that the USDOC should have used NMDC's export prices to determine Tier II benchmark prices in the 2006, 2007 and 2008 administrative reviews.

7.190.  India also claims that the USDOC failed to comply with the obligation in the chapeau of Article 14 to "adequately explain[]" why it did not apply the same approach in the later reviews as it did in the 2004 review. India contends that the USDOC was required "in the event the method employed or the benchmark used was modified during the course of the proceedings, [to] provide a sufficient/good enough reason or justification as to how and why such modification was made".[373]

7.191.  The chapeau of Article 14 requires that the application of the "method used by the investigating authority to calculate the benefit to the recipient … to each particular case shall be transparent and adequately explained". The requirement in the chapeau of Article 14 that the application of a benefit methodology be "transparent" conveys the sense that such application should be set out in such a fashion that it can be easily understood or discerned. The obligation to "adequately explain[]" conveys the sense of making clear or intelligible, and giving details of how the methodology was applied.[374] We agree with the United States that the adequacy of an investigating authority's explanation should be assessed on a case-by-case basis.[375]

7.192.  We observe that, in its preliminary determination for the 2006 administrative review, the USDOC continued to apply the Tex Report benchmarks that it had applied in previous reviews.[376] Thus, in its preliminary determination for the 2006 administrative review, the USDOC applied benchmarks based in part on NMDC's export prices (reported in the Tex Report), just as the USDOC had done in the 2004 administrative review. In its subsequent Issues and Decision Memorandum for the 2006 administrative review, though, the USDOC explained that it had revised the benchmark used in its preliminary determination by excluding the NMDC prices that had been reported in the Tex Report. The USDOC explained that it did so because the NMDC prices pertain to "the very government provider at issue".[377] In our view, the USDOC's explanation of its change in approach in respect of the NMDC export prices is clear and intelligible, and is easily understood and discerned. Accordingly, we reject India's claim that the USDOC's explanation of this matter is inconsistent with the requirements of the chapeau of Article 14 of the SCM Agreement.

7.3.4  Conclusion

7.193.  For the reasons set forth above, we reject India's claims that the USDOC's treatment of the NMDC as a public body is inconsistent with Article 1.1(a)(1) of the SCM Agreement. We uphold India's claim that the USDOC's determination of de facto specificity is inconsistent with Article 2.1(c) of the SCM Agreement because the USDOC failed to take account of all the mandatory factors set forth in that provision. However, we reject India's claim that the USDOC violated the Article 2.4 requirement to base its determination of specificity on positive evidence.

7.194.  We reject most elements of India's claim that the USDOC's determination of the existence and quantum of benefit is inconsistent with Articles 1.1(b) and 14(d) of the SCM Agreement and the chapeau of Article 14. However, we uphold that claim in respect of the USDOC's treatment of domestic price information submitted by GOI and Tata, in respect of which the United States sought to rely on ex post rationalization.

7.4  The USDOC's findings regarding the Captive Mining of Iron Ore Programme and the Captive Mining of Coal Programme: Articles 1.1, 2, 12.5 and 14 of the SCM Agreement

7.195.  In its 2006 administrative review, the USDOC investigated new subsidy allegations regarding captive mining rights for iron ore and coal. The USDOC found that GOI provided financial contributions to steel producers by providing them with iron ore and coal through the grant of captive mining rights (i.e. rights that allowed steel producers to mine iron ore and coal for their own internal use). The USDOC found that such captive mining rights were provided under the Captive Mining of Iron Ore Programme and the Captive Mining of Coal Programme.[378] The USDOC found that the Captive Mining of Iron Ore Programme was de facto specific because "the provision of captive iron ore mining rights is limited to certain enterprises, such as steel producers".[379] The USDOC found that the Captive Mining of Coal Programme was de jure specific because "preference is given in the allocation of coal blocks to steel producers whose annual production capacity exceeds one millions tons".[380] The USDOC found that the captive mining programmes conferred a benefit on steel producers after (i) constructing a notional price for the extracted iron ore and coal and (ii) comparing that notional price to a Tier I/II benchmark price.

7.196.  India makes a number of challenges against the USDOC's findings. India's claims concern: the existence of any Captive Mining of Iron Ore Programme (Article 12.5); the de facto specificity of any Captive Mining of Iron Ore Programme (Article 2.1(c)); the USDOC's determination that steel producers were provided with goods by GOI through the grant of mining rights (Article 1.1(a)(1)); the USDOC's finding that GOI granted Tata coal mining rights (Article 1.1(a)(1)); the USDOC's finding that the Captive Mining of Coal Programme is de jure specific (Articles 2.1(a) and (b)); and the USDOC's assessment of benefit using a notional price for the extracted iron ore and coal (Articles 1.1(b) and 14).

7.4.1  The existence of the Captive Mining of Iron Ore Programme (Article 12.5)

7.197.  India claims that the USDOC violated Article 12.5 of the SCM Agreement by failing to satisfy itself as to the accuracy of information on the basis of which it determined the existence of the Captive Mining of Iron Ore Programme.[381] India submits that such programme does not exist.

7.198.  The United States asks the Panel to reject India's claims. The United States asserts that the USDOC satisfied itself as to the accuracy of information, consistent with Article 12.5, by finding that the information on which it relied was from official reports commissioned by the GOI, to which members of the Indian steel industry contributed, and newspaper articles by independent press sources.

7.4.1.1  Relevant WTO provision

7.199.  Article 12.5 provides in relevant part:

the authorities shall during the course of an investigation satisfy themselves as to the accuracy of the information supplied by interested Members or interested parties upon which their findings are based.

7.4.1.2  Main arguments of the parties

7.200.   India contends that, rather than satisfying itself of the accuracy of the information supplied by interested parties (as required by Article 12.5), the USDOC simply relied on bare assertions by the petitioner[382] that the GOI operated a Captive Mining of Iron Ore Programme. India asserts that, in doing so, the USDOC overlooked information on the record, including supporting documents relied upon by the US domestic industry, clearly showing that the GOI scheme granted mining rights simpliciter, and that there was no specific GOI programme allocating captive mining rights.

7.201.  India submits that the USDOC's determination regarding the alleged Captive Mining of Iron Ore Programme is factually incorrect since record evidence shows that India granted mining rights for iron ore on a first-come-first-served basis, without regard to whether the applicants were engaged in captive mining (i.e. whether they were integrated steel producers or stand-alone miners). India contends that "the GOI scheme granted mining rights simpliciter and there was no specific GOI program allotting captive mining rights".[383] According to India, the GOI "only grants 'mining leases' for iron ore. Whereas some of the licensees may be using it for captive consumption, others may only be engaged in selling the extracted iron ore".[384] Furthermore, India contends that "all the lessees … are granted concessions on the same terms and conditions".[385] India also refers to statements made by Tata to the USDOC indicating "that GOI does not favour steel producers over independent miners of iron ore either in terms of allocation of rights or payment of royalty".[386] India further refers to expert evidence submitted to the USDOC indicating that "there is no provision in the Indian mining law that allows captive mines to pay a reduced or special rate".[387]

7.202.  The United States submits that the USDOC properly determined that the GOI provided captive mining rights for iron ore based on information on the record. The United States contends that India's focus on its mining laws suggests that the USDOC determined that there is a de jure captive mining programme, whereas the USDOC actually determined that there is a de facto programme. The United States acknowledges that the alleged policy is not provided for in India's mining laws, but claims that the existence of such policy is nevertheless "widely known".[388] According to the United States, India's arguments regarding Indian mining law are inconsistent with evidence on the USDOC's record indicating that GOI "has a captive iron ore mining policy under which it has granted captive mining rights to four steel companies".[389] The United States refers in this regard to two reports commissioned by GOI, and a series of press clippings.

7.203.  The first report relied on by the United States is the "Dang Report". The United States observes that the Dang Report envisages that the "[p]olicy of captive mining leases should continue".[390] The second report relied on by the United States is the "Hoda Report". The United States observes that the Hoda Report contains a section entitled "Allocation of Captive Mines to Steel Makers"[391] which, according to the United States, "contains a discussion of whether the captive mining policy should be expanded".[392] The United States also observes that the Hoda Report identifies one of the interested groups in the discussion as "steel mill owners with captive mines".[393]

7.204.  Regarding press clippings, the United States notes that an article from the Times of India suggests that if the recommendations of the Hoda Report are followed, captive mining may be eliminated. The United States also observes that other press clippings refer to four Indian steel producers as having captive mines.

7.4.1.3  Evaluation

7.205.  This claim concerns the USDOC's determination of the existence of the Captive Mining of Iron Ore Programme. The United States does not claim that the Captive Mining of Iron Ore Programme is contained in any Indian law or regulation, or otherwise set forth in writing. Rather, the United States submits that the existence of the Captive Mining of Iron Ore Programme was properly ascertained by the USDOC by reference to record evidence.

7.206.  We do not exclude the possibility that Members might opt to provide specific subsidies pursuant to programmes or policies that are not expressed in writing. If the existence of such programme or policy is properly established (and assuming the other requirements of the SCM Agreement are met), an investigating authority may impose countervailing duties on imports benefiting from such programme or policy. We emphasise, though, that the existence of such a subsidy programme or policy must be properly established by the relevant investigating authority. In this regard, we observe that Article 12.5 of the SCM Agreement requires that an investigating authority must satisfy itself as to the accuracy of the information on which its findings – including those concerning the existence of countervailed subsidy programmes – are based.

7.207.  We shall review all of the record evidence cited by the United States as supporting the USDOC's determination of the existence of the Captive Mining of Iron Ore Programme. We shall also consider the probative value of that evidence viewed in its totality. In this way, we shall evaluate whether the USDOC properly established the existence of the Captive Mining of Iron Ore Programme on the basis of accurate information, as required by Article 12.5.

7.208.  The first piece of record evidence cited by the United States is the Dang Report. The United States notes that the Dang Report refers to the GOI's "[p]olicy of captive mining leases". We observe that the Dang Report was prepared by an Expert Group commissioned by GOI to "formulat[e] guidelines for preferential grant of mining leases" for inter alia iron ore "by state governments".[394] The GOI took this initiative because state governments had "shown inclination to accord preference to applicants who agree to put up mineral based downstream industry within the State boundaries", even though the MMDR Act "does not appear to provide any legitimacy for such stipulation".[395] The Dang Report explains that "[a]gainst this background, Ministry of Steel constituted a Group of Experts to undertake an in-depth examination and frame a set of uniform National Guidelines for a System of Preference to be followed in grant of leases for iron ore, manganese and chrome ore".[396]

7.209.  The Dang Report confirms the existence of captive mining in the Indian industry. Thus, in describing the structure of the Indian iron ore industry, the Dang Report states that iron ore "[m]ining is undertaken both by steel companies, who operate captive mines, and exclusively mining companies".[397] However, the mere fact that captive iron ore mining exists does not mean ipso facto that there is a Captive Mining of Iron Ore Programme, or any other policy to favour captive miners. It simply means that mining licences have been provided to steel producers, which then engage in mining and consume the minerals they extract. Of greater significance, in our view, is that despite referring to the factual existence of captive mining, the Dang Report does not refer to captive mining leases being provided pursuant to any Captive Mining of Iron Ore Programme. Nor, indeed, is there reference to any such programme or policy in the very section of the Dang Report that purports to describe the "policy and regulatory frame work for the grant and operation of leases".[398]

7.210.  As part of its Conclusion, the Dang Report states that it is necessary "to encourage and involve larger integrated steel plants … to safeguard their raw material security".[399] Such encouragement in the future could benefit captive mining. However, there is nothing in the Dang Report to suggest that such encouragement of captive iron ore mining already existed at the time it was drafted.

7.211.  In light of the above observations, we are not persuaded that the single reference in the Dang Report to the "[p]olicy of captive mining leases"[400] provides support for determining the existence of a Captive Mining of Iron Ore Programme. We consider it highly relevant that, although the Dang Report describes the Indian iron ore industry, and the policies applicable to that industry, there is no reference to any programme or policy benefiting captive mining. Nor is there any suggestion that mining leases were provided to steel producers on terms any different than those provided to other miners. Indeed, it is entirely possible that the reference to a "[p]olicy of captive mining leases", on which the United States relies, was merely intended to refer back to the fact that mining leases are provided to steel companies, and to suggest that mining leases should continue to be provided to steel producers.

7.212.  The next piece of evidence referred to by the United States is the Hoda Report. The United States refers in particular to a section of that Report entitled "Allocation of Captive Mines to Steel Makers"[401] which, according to the United States, "contains a discussion of whether the captive mining policy should be expanded".[402] We observe, though, that the United States does not identify any reference in the Hoda Report to any captive mining policy or programme. Although the Hoda Report again confirms the existence of captive mines, like the Dang Report, it does not identify any Captive Mining of Iron Ore Programme, or any GOI policy in favour of such mines. Moreover, the Hoda Report does not, in fact, refer to the possibility of "expanding" such policy, as alleged by the United States. While the Hoda Report does consider whether, as a matter of future policy, iron ore mining licences should be awarded "exclusively" to captive miners[403], the Hoda Report does not indicate that the exclusive award of iron ore mining licences to captive miners would constitute an "extension" of any existing policy in their favour.

7.213.  The United States points to the statement in the Hoda Report that "[s]tand alone mining and captive mining should continue to exist".[404] The United States also emphasises that one of the groups interested in the Hoda process was "steel mill owners with captive mines".[405] We recall, though, that the factual existence of captive mining does not demonstrate ipso facto that a Captive Mining of Iron Ore Programme, or any policy in favour of captive mining, also exist. It simply means that mining licences have been awarded to steel producers that consume the minerals they extract.

7.214.  Given the absence of any reference in the Hoda Report to any Captive Mining of Iron Ore Programme, or any policy in favour of captive mining, we do not consider that the Hoda Report provides support for determining the existence of a Captive Mining of Iron Ore Programme. Indeed, the Hoda Report actually states that "under the current dispensation … all miners [are treated] alike".[406] On its face, this statement would seem to exclude the possibility that any policy or programme in favour of captive mining of iron ore might exist. This apparent inconsistency was not addressed by the USDOC.

7.215.  Regarding the Times of India article relied on by the United States, we note that this is merely a report on the contents of the Hoda Report.[407] We therefore do not consider that the article provides any additional support for the alleged existence of the Captive Mining of Iron Ore Programme than the Hoda Report itself. The United States refers to other press articles identifying four Indian steel producers as having captive mines.[408] Again, however, the fact that steel producers hold mining leases does not mean ipso facto that there is a distinct programme for captive mining.

7.216.  We acknowledge that, in principle, the existence of a subsidy programme that is not expressed in writing might be established on the basis of evidence which, although not particularly instructive when viewed individually, becomes more insightful and probative when viewed as a whole. We do not consider that this is one of those cases. We see nothing in the evidence reviewed above to suggest that, even when viewed together, they provide a sufficient basis to establish the existence of a Captive Mining of Iron Ore Programme. Nor has the United States explained how the existence of the Captive Mining of Iron Ore Programme might be established on the basis of the ensemble of the evidence.

7.217.  For the above reasons, we find that the USDOC did not have sufficient basis to properly determine the existence of the Captive Mining of Iron Ore Programme. We therefore uphold India's claim that the USDOC failed to determine the existence of the Captive Mining of Iron Ore Programme on the basis of accurate information, as required by Article 12.5.

7.4.2  Specificity of the Captive Mining of Iron Ore Programme (Article 2.1)

7.218.  India claims that the USDOC's determination that the Captive Mining of Iron Ore Programme is de facto specific is inconsistent with Articles 2.1(c) and 2.4 of the SCM Agreement. The United States asks the Panel to reject India's claim. The United States submits that, because India has a Captive Mining of Iron Ore Programme which is limited to four steel companies, the programme is de facto specific within the meaning of Article 2.1(c) because the captive mining rights are provided to a limited group of enterprises.

7.219.  In light of our finding that the evidence relied upon by the United States does not suffice to support USDOC's determination that a Captive Mining of Iron Ore Programme exists, which is therefore inconsistent with Article 12.5 of the SCM Agreement, there is little if any sense in our evaluating whether or not the USDOC properly found the purported programme to be de facto specific. We therefore exercise judicial economy in respect of India's Article 2.1 and 2.4 claims in respect of the Captive Mining of Iron Ore Programme.

7.4.3  The provision of goods through the grant of mining rights

7.220.  The USDOC determined that the grant of mining licences under the Captive Mining of Iron Ore and Captive Mining of Coal Programmes constituted a financial contribution in the form of the provision of a good[409] (i.e. iron ore and coal). India claims that the USDOC's determination that the grant of the mining rights for iron ore and coal amounts to the provision of goods is inconsistent with Article 1.1(a)(1)(iii) of the SCM Agreement.[410] The United States asks the Panel to reject India's claim.

7.221.  In light of our finding that the evidence relied upon by the United States does not suffice to support USDOC's determination that a Captive Mining of Iron Ore Programme exists, we considered exercising judicial economy in respect of the part of India's claim regarding the provision of iron ore. However, since we must in any event address India's claim regarding the provision of coal, we evaluate India's claim in full.

7.4.3.1  Relevant WTO provision

7.222.  Article 1.1(a)(1)(iii) of the SCM Agreement is set forth above.[411]

7.4.3.2  Main arguments of the parties

7.223.  India acknowledges that the panel and Appellate Body in US – Softwood Lumber IV accepted that the grant of stumpage rights, i.e. the right to fell standing trees, constitutes the provision of a good within the meaning of Article 1.1(a)(1)(iii). However, India contends that not every governmental action that may ultimately result in goods being made available would amount to a financial contribution. India submits that merely making goods available does not amount to "provid[ing]" goods within the meaning of Article 1.1(a)(1)(iii). India refers[412] to findings by the Appellate Body in US – Softwood Lumber IV to argue that, for the government to be providing a good, not only must the government have control over the availability of that specific good, but there must also be a "reasonably proximate relationship" between what has been "provided" by government on the one hand and the 'good' in question on the other.[413] According to India, it is the governmental action itself that should directly result in the provision of the goods, and not the intervening acts of non-governmental bodies.[414]

7.224.  India submits that, unlike the grant of a right to fell trees, there is no "reasonably proximate relationship" between the grant of mining rights and the availability of the extracted iron ore or coal.[415] India asserts that in the case of the stumpage programmes covered in the US – Softwood Lumber IV case, the undisputed factual findings were that at the time of granting the right to harvest standing timber, the amount of standing timber actually available was already known, and the right to harvest granted through the stumpage contract also transferred ownership over the timber. According to India, therefore, there was an absolute and direct link between the rights granted by the government and the 'good' in question. India submits that a "reasonably proximate relationship" arose in that case because there was no intervening act between the right to harvest "standing timber" (governmental action) and the extracted "standing timber"' (the good in question). India contends that this is not the case in respect of the grant of mining rights.

7.225.  India notes that the panel in US – Softwood Lumber IV recognized the difficulty of building a "reasonably proximate relationship" between the grant of mining rights and the provision of the extracted minerals in the following footnote to its Report. India refers in particular to the panel's statement that "there is a clear difference between tenure agreements concerning standing timber and the granting of extraction rights in the case of minerals or oil, or fishing rights where the owner of the right is not at all certain what and how much of it he will find, and what he pays for is the right to explore a particular site and the chance of finding something.[416]

7.226.  According to India, the licence to mine does not lead to a guaranteed transfer of marketable minerals. India submits that the uncertainty inherent in mining activities (regarding what and how much will be found), as well as the need for significant intervention (between the grant of the mining licence and the extraction of minerals) through private conduct, make the link between the grant of mining rights by the government and the actual iron ore or coal extracted too remote to fulfil the "reasonably proximate relationship"[417] standard applied by the Appellate Body.

7.227.  The United States submits that the USDOC properly determined that the provision of the right to mine iron ore constitutes the provision of goods as set out in Article 1.1(a)(1)(iii) of the SCM Agreement, and therefore is a financial contribution under Article 1.1(a)(1) of the SCM Agreement.

7.228.  Regarding India's argument that the GOI did not "provide" iron ore and coal to steel producers, because there is no "reasonably proximate relationship" between the provision of mining rights and the provision of the minerals themselves[418], the United States contends that India's suggested interpretation is not supported by the text of the SCM Agreement. According to the United States, the ordinary meaning of "provides" is to "make available," in addition to "supply or furnish for use" and "to put at the disposal of."[419] The United States suggests that India does not appear to contest this interpretation[420], even though a mining lease makes available, supplies and furnishes for use, and puts at the disposal of the owner, the good that is covered by the lease.

7.229.  The United States understands India to rather argue that the ordinary meaning of "provides" is somehow limited or circumscribed, in the sense that "there must … be a 'reasonably proximate relationship' between what has been provided by government on the one hand and the 'good' in question on the other."[421] The United States understands that the basis for India's "reasonably proximate relationship" test appears to be a phrase from the Appellate Body report in US – Softwood Lumber IV. According to the United States, India quotes a passage from that report in which the Appellate Body considered an argument by Canada that the provision of rights to a good by a government cannot be considered the provision of a good because, in that case, the term "would capture every property law in a jurisdiction."[422] The United States notes that, in rejecting that contention, the Appellate Body stated that it could not see "how … general governmental acts" of the type referred to by Canada would fall within the Appellate Body's interpretation of "provides a good," since such acts would be "too remote" from the act of provision.[423] Rather, the "government must have some control over the availability of a specific thing being 'made available.'"[424] The United States suggests that, viewed in its entire context, the Appellate Body's reference to "reasonably proximate relationship" is intended to distinguish "general acts" of government from those where the government controls the good in question and then makes those goods available to a recipient. The United States submits that the GOI act in question – the provision of mining rights for iron ore and coal – is not "general" (like a property law), but rather is a specific provision of rights to goods over which the government has control.

7.230.  The United States notes India's suggestion that while the provision of rights to some goods, such as the right to harvest a stand of timber, may constitute the provision of a good under Article 1.1(a)(1)(iii), the right to in situ mineral deposits does not constitute the provision of goods because the provision of the minerals is "too remote" from the government action of providing a good. The United States submits that Article 1.1(a)(1)(iii) provides for no distinction on the basis that it takes more effort to find and mine minerals than it does to harvest a stand of trees.[425] The United States contends that India erroneously relies on a footnote from the panel report in US ‑ Softwood Lumber IV in which the panel indicated that, in deciding that harvesting rights to timber constituted the provision of goods, it was not deciding whether the provision of rights to in situ minerals constituted the provision of goods.[426] The United States asserts that the panel explicitly stated that it was not expressing a view as to whether extraction rights did or did not constitute the provision of goods within the meaning of Article 1.1.(a)(1)(iii). Furthermore, the United States contends that the panel actually suggested that the distinction it might draw was not on the basis of the nature of the good to which rights were provided, but rather the nature of the right. Thus, the panel stated that if the right at issue in that dispute had consisted of "the right to explore a particular site and the chance of finding something," the panel might have viewed the provision of rights differently. The United States contends that the rights at issue in this case are not mere rights of exploration, but rather rights to mine iron ore and coal that is known to exist, and for which the recipients only pay if they actually extract the good.

7.4.3.3  Main arguments of the third parties

7.4.3.3.1  European Union

7.231.  The European Union agrees with the United States that, taking into account the facts and circumstances of this case, the grant of mining rights for iron ore and coal does amount to the "provision" of a good within the meaning of Article 1 of the SCM Agreement. In the opinion of the European Union, India has not established any meaningful distinction between the facts of US – Softwood Lumber IV and the facts of this case.

7.4.3.3.2  Saudi Arabia

7.232.  Saudi Arabia submits that a government's granting of extraction rights is not covered by the definition of a "financial contribution" in Article 1.1(a)(1) of the SCM Agreement. In particular, extraction rights are intangible assets that do not constitute "goods" under Article 1.1(a)(1)(iii). Panel and Appellate Body rulings support the distinction between goods and intangible extraction rights. The Appellate Body has stated that government acts do not constitute the provision of a good unless (i) the government has control over the availability of the good in question and (ii) there is a reasonably proximate relationship between the government action and the enjoyment of the tangible goods by the recipient. Saudi Arabia contends that neither of these requirements is met where the government grants intangible extraction rights. Saudi Arabia submits that the granting of a right to exploit a nation's in situ natural resources is a sovereign function that the Panel should distinguish from the government's actual provision of those resources.

7.4.3.4  Evaluation

7.233.  Article 1.1(a)(1)(iii) of the SCM Agreement states that there is a financial contribution when a government or public body "provides" goods for less than adequate remuneration. India disputes the USDOC's determination that the GOI "provided" iron ore and coal through the grant of rights to mine those minerals.[427] India's claim is based on the alleged lack of proximity between the provision of the right to mine and the extracted iron ore and coal.

7.234.  The concept of goods being "provided" through the grant of rights to those goods was addressed by the Appellate Body in US – Softwood Lumber IV. The Appellate Body found in relevant part:

68.  Having considered the meaning of the term "goods", we now turn to consider what it means to "provide" goods, for purposes of Article 1.1(a)(1)(iii) of the SCM Agreement. Canada argues that stumpage arrangements do not "provide" standing timber. According to Canada, all that is provided by these arrangements is an intangible right to harvest. At best, this intangible right "makes available" standing timber. But, in Canada's submission, the connotation "makes available" is not an appropriate reading of the term "provides" in Article 1.1(a)(1)(iii). In contrast, the United States argues that the Panel's interpretation that stumpage arrangements "provide" standing timber is correct. The United States contends that, where a government transfers ownership in goods by giving enterprises a right to take them, the government "provides" those goods, within the meaning of Article 1.1(a)(1)(iii).

69.  Again, we begin with the ordinary meaning of the term. Before the Panel, the United States pointed to a definition of the term "provides", which suggested that the term means, inter alia, to "supply or furnish for use; make available". This definition is the same as that relied upon by USDOC in making its determination that "regardless of whether the Provinces are supplying timber or making it available through a right of access, they are providing timber" within the meaning of the provision of United States countervailing duty law that corresponds to Article 1.1(a)(1)(iii) of the SCM Agreement. We note that another definition of "provides" is "to put at the disposal of". 

70.  Notwithstanding these definitions, Canada submits that the meaning of the term "provides" in Article 1.1(a)(1)(iii) of the SCM Agreement should be limited to the supplying or giving of goods or services. Canada raises two arguments to support this view. First, Canada suggests that the terms "provides goods" and "provides services" cannot be read to include the mere "making available" of goods or services, because "[t]o 'make available services' … would include any circumstance in which a government action makes possible a later receipt of services and to 'make available goods' would capture every property law in a jurisdiction". Secondly, Canada points to the use of the term "provide" in Articles 3.2 and 8 of the Agreement on Agriculture and in Article XV:1 of the General Agreement on Trade in Services (the "GATS") to suggest that "provides", when used in the context of the granting of subsidies, requires the actual giving of a subsidy. 

71.  With respect to Canada's first argument, we do not see how the general governmental acts referred to by Canada would necessarily fall within the concept of a government "making available" services or goods. In our view, such actions would be too remote from the concept of "making available" or "putting at the disposal of", which requires there to be a reasonably proximate relationship between the action of the government providing the good or service on the one hand, and the use or enjoyment of the good or service by the recipient on the other. Indeed, a government must have some control over the availability of a specific thing being "made available".[428]

7.235.  We agree with these findings by the Appellate Body, and are guided by them. As explained below, we consider that, in certain circumstances, a government might properly be determined to have provided goods by making them available through the grant of extraction rights.

7.236.  India submits that, because of the uncertainties involved in mining operations, and because of the amount of work required by the mining entity to extract the iron ore and coal once the lease has been granted, the grant of the mining lease by the GOI is too remote from the extracted minerals to be treated as the "provision" of a good within the meaning of Article 1.1(a)(1)(iii).

7.237.  We are not persuaded by India's argument. As a preliminary matter, we observe that India's approach lacks legal certainty, for it would lead to different results, depending on the complexity of the process required to extract the relevant mineral, or the uncertainty regarding the amount of mineral to be extracted.

7.238.  More fundamentally, India's approach is at odds with the meaning of the term "provides". We agree with the Appellate Body in US – Softwood Lumber IV that to "provide" means to "make available", or "put at the disposal of". Given the GOI's direct control over the availability of the relevant minerals, the GOI's grant of rights to mine those minerals essentially made those minerals available to, and placed them at the disposal of, the beneficiaries of those rights. The grant of a mining lease is more than a mere "general governmental act" that simply facilitates the mining operation. The grant of the right to mine allows the beneficiary to extract government-owned minerals from the ground, and then use those minerals for its own purposes, such as in the production of steel. In our view, this means that the GOI's grant of the right to mine is "reasonably proximate" to the use or enjoyment of the minerals by the mining entity for the grant of a mining right to be treated as the provision of a good within the meaning of Article 1.1(1)(a)(iii) of the SCM Agreement.[429]

7.239.   We acknowledge that the panel in US – Softwood Lumber IV seems to have expressed some doubts about treating the grant of certain rights as the provision of a good under Article 1.1(a)(1)(iii):

we note that there is a clear difference between tenure agreements concerning standing timber and the granting of extraction rights in the case of minerals or oil, or fishing rights where the owner of the right is not at all certain what and how much of it he will find, and what he pays for is the right to explore a particular site and the chance of finding something. In so noting, we do not mean to express a view as to what extent, if at all, this uncertainty would be relevant to a determination whether the granting of such extraction rights represented the provision of goods within the meaning of Article 1.1 (a) (1) (iii) SCM Agreement, an issue which is not before us.[430]

7.240.  This statement does not affect our conclusion. First, we observe that the panel expressly refrained from making any findings on the matter at hand. Second, and more importantly, in our view, the panel's statement refers to a possibly relevant difference between rights to extract goods, and rights to explore and, if anything is found, extract the goods. The present case concerns the provision of mining rights, that is the right to extract minerals from known sites, rather than the right to explore or prospect, and, if anything is found, extract it.[431] By acquiring mining rights, steel companies have paid for more than "the right to explore a particular site and the chance of finding something".[432] This is further confirmed by the fact that, according to evidence on the USDOC's record, miners pay royalties under the relevant mining leases per unit of extracted mineral.[433] In these circumstances, we consider that the obiter statement of the panel in US – Softwood Lumber IV is not in any event pertinent to our decision, and does not require us to change our views.

7.241.  For the above reasons, we reject India's claim that the USDOC's determination that the GOI provided goods through the grant of mining rights for iron ore and coal is inconsistent with Article 1.1(a)(1)(iii) of the SCM Agreement.

7.4.4  Whether Tata was provided captive coal mining rights by the GOI under the Coal Mines Nationalization Act/Captive Mining of Coal Programme

7.242.  The USDOC imposed countervailing duties on imports of steel produced by Tata. The USDOC determined that the GOI had provided Tata with a good, coal, through the grant of captive coal mining rights[434] under the Coal Mines Nationalization Act, which USDOC also refers to as the Captive Mining of Coal Programme.[435] India claims that Tata was not provided any coal mining rights by the GOI under the Coal Mines Nationalization Act (or indeed any other instrument), and thus the USDOC's determination is inconsistent with Article 1.1(a)(1)(iii).

7.4.4.1  Main arguments of the parties

7.243.  India asserts that Tata was granted a coal mining licence in 1907 by the Raja of Ramgarh, i.e. prior to India attaining independence, and therefore independent of the GOI. India contends that the lease was renewed from time to time, and extended for a term of 999 years in 1946 (still prior to Indian independence and thus independent of the GOI). India submits that Tata continues to mine coal under the said lease, rather than any lease granted by GOI.[436] India denies that Tata was granted any coal mining lease by the GOI under the Coal Mining Nationalization Act, or any amendment thereto. India contends that Tata's coal mines were expressly exempted from that Act.[437] Furthermore, India submits that Tata did not, and was not required to, obtain any additional or new lease from the GOI once the MMDR Act entered into force.[438] Furthermore, India denies that any lease granted to Tata required that producer to captively consume the extracted coal. According to India, the concept of captive mining rights was non-existent in any policy/law existing at the time that Tata's lease was granted or extended.[439]

7.244.  The United States[440] asserts that there is no evidence for India's assertion that the requirement in the Coal Mines Nationalization Act, as amended in 1976, that leases for coal mining be restricted to captive mining by public companies, steel companies and power companies does not apply to Tata Steel's lease. The United States maintains that India acknowledges that "in 1976 GOI introduced a condition that coal mining rights will be restricted to companies in the public sector, companies engaged in the production of steel and power, washing of coal and such other uses the GOI may prescribe."[441] The United States submits that India does not identify any specific language in the amended law that exempts Tata Steel's mining lease from restrictions in the law. The United States contends that India fails to recognize that while Tata Steel's "mining facilities" may have been exempt from the nationalization law, the coal that Tata Steel is mining was not. According to the United States, Tata Steel pays the GOI a royalty under the coal mining laws to extract the coal. For the United States, therefore, even though Tata's lease has not been reissued by GOI, Tata is clearly required by the coal law to pay the GOI the royalties established by the law.

7.4.4.2  Evaluation

7.245.  India's claim concerns the USDOC's factual determination that Tata was granted captive coal mining rights by the GOI under the Coal Mining Nationalization Act, which the USDOC also refers to as the Captive Coal Mining Programme.[442] In determining that GOI granted Tata captive coal mining rights under the Coal Mining Nationalization Act, the USDOC observed that "in its questionnaire response, Tata acknowledged that the GOI and the State Government of Jharkhand (GOJ) granted it captive coal mining rights".[443] India submits that the USDOC's observation is incorrect and contrary to record evidence.[444] The United States defends the USDOC's observation by referring to Tata's 1 November 2007 Questionnaire Response. According to the United States, in its Questionnaire Response Tata "explicitly notes the existence of 'captive mining operations' as well as its obligations to 'pay the mining royalty in terms of the MMDR Act'".[445]

7.246.  Looking at Tata's 1 November 2007 Questionnaire Response, we note that Tata informed the USDOC that "Tata was operating two coking coal mines".[446] Tata further explained that GOI "took over the management of 214 coking coal mines and 12 coke oven plants" in October 1971, but not those owned and/or managed by Tata.[447] Tata also explained that when coking coal mines were nationalized by the GOI in May 1972, pursuant to the Coking Coal (Nationalization) Act, Section 36 of that Act excluded entities, including Tata, that were engaged in the production of iron and steel. Tata also explained that the 1973 Coal Mining Nationalization Act covered non‑coking coal mines, and that it "is not required to obtain any licence or a mining lease for these coal mines either under the Coal Mines (nationalization) Act or under the MMDR Act".[448]

7.247.  We also note Tata's explanation that upon Indian independence in 1947, the mining leases it had been granted by the Raja of Ramgur were transferred to the State Government of Bihar, pursuant to the Bihar Land Reforms Act of 1950. Tata explains that the State Government will continue to hold this lease until it expires in 2945. Tata also explains that the MMDR Act specifies the royalties that it must pay to the State Government to operate under that lease.[449]

7.248.  Having reviewed Tata's Questionnaire Responses in full, we do not consider that there was a sufficient evidentiary basis for the USDOC's statement that Tata had "acknowledged that the GOI … granted it captive coal mining rights" under the Coal Mining Nationalization Act. There is no reference in Tata's Questionnaire Responses to any lease having been provided by the GOI under the Coal Mining Nationalization Act, or indeed any other instrument. Rather, Tata stated unequivocally in its original Questionnaire Response that it "is not required to obtain any licence or a mining lease for these coal mines either under the Coal Mines (nationalization) Act or under the MMDR Act".[450] Tata also stated in its Supplemental Questionnaire Response that "it has neither applied for nor obtained any coal mining licence from [GOI]".[451]

7.249.  We recall the United States' argument that Tata notes the existence of its captive mining operations in its original Questionnaire Response. However, the fact that Tata has captive coal mining operations says nothing about the legal basis of any lease or licence under which those operations are carried out. Regarding the United States' argument that Tata acknowledged that it pays royalties under the MMDR Act, we recall that the countervailed programme is the Coal Mining Nationalization Act. The United States has not established that Tata's obligation to pay royalties under the MMDR Act somehow depends on a lease having been granted under the Coal Mining Nationalization Act. Furthermore, because Tata explained that royalties under the MMDR Act are paid to the State Government rather than the GOI[452], the fact that Tata pays royalties under the MMDR Act does not establish that Tata was granted any mining lease by the GOI.

7.250.  The United States further defends the USDOC's determination in these proceedings by arguing that in 1976 GOI amended the 1973 Coal Mining Nationalization Act to provide that coal mining rights will be restricted to companies in the public sector, companies engaged in the production of steel and power, washing of coal and such other uses the GOI may prescribe. The United States submits that India does not identify any specific language in the amended law that exempts Tata Steel's mining lease from this restriction. While we recognize that India has not identified any provision exempting Tata from the restriction that coal mining rights will be restricted to inter alia steel companies, we observe that the USDOC failed to establish that Tata's coking coal mines were covered by the original enactment of the 1973 Coal Mining Nationalization Act (which, according to record evidence[453], concerns non-coking coal mines). In these circumstances, we believe that the onus is on the United States to identify evidence on the USDOC's record that would support a conclusion that, notwithstanding the initial exemption of Tata's coking coal mining operations from the scope of the (non-coking) Coal Mining Nationalization Act, the 1976 Amendment reversed that exemption and brought those coking coal operations within the scope of that Act. The United States has failed to identify any provision in the 1976 Amendment, or any other instrument or evidence, that would have this effect. Moreover, there is nothing before us to suggest that USDOC actually considered this matter in making its determination.

7.251.  The United States suggests that the Coal Mining Nationalization Act would apply to Tata because although Tata's mines may have been exempted from nationalization, "the coal that Tata Steel is mining was not".[454] The United States supports this argument with the statement that Tata "pays the GOI a royalty under the coal mining laws to extract the coal, the rights to which it is purchasing on a per unit basis from the GOI for internal consumption".[455] The United States further asserts that India's response to Panel question No. 97 "confirms that if Tata failed to pay royalties under the Coal Mining Nationalization Act, the State Government would be permitted to sue Tata to reclaim these royalties. This legal obligation to pay royalties under the Act confirms that Tata is a beneficiary under the Act".[456] We are unable to accept the factual premise of the United States' arguments, because India has established that Tata's obligation to pay royalties derives from the MMDR Act, rather than the Coal Mining Nationalization Act.[457] As explained above, this was also made clear to the USDOC by Tata during the course of the 2006 administrative review.

7.252.  In light of the above considerations, we conclude that the USDOC's determination that GOI granted Tata a financial contribution in the form of a captive coal mining lease under the countervailed programme, i.e. the Captive Mining of Coal Programme/Coal Mining Nationalization Act, lacks a sufficient evidentiary basis. We therefore uphold India's Article 1.1(a)(1)(iii) claim against this determination.[458]

7.4.5  Whether the USDOC properly determined that the Captive Mining of Coal Programme/Coal Mining Nationalization Act is de jure specific

7.253.  In light of our above finding upholding India's claim against the USDOC's determination that GOI granted Tata captive mining rights under the Coal Mining Nationalization Act, it is not necessary for us to resolve India's claim regarding the USDOC's determination that the Captive Mining of Coal Programme/Coal Mining Nationalization Act is de jure specific. We therefore exercise judicial economy in respect of this claim.

7.4.6  USDOC's determination of benefit regarding the iron ore and coal programmes

7.254.  India makes a number of claims regarding the USDOC's determination that the Captive Mining of Iron Ore and Coal Programmes conferred a benefit by providing goods for less than adequate remuneration. The USDOC determined benefit by constructing notional government prices, and then comparing those prices with Tier I and Tier II benchmarks. The USDOC constructed the notional government prices by calculating a per unit price for the captive mining fees paid to GOI, and then adding per unit operational mining costs, which consisted of materials, labour, depreciation, overhead, and royalties.

7.255.  India submits that the USDOC's constructed notional government price methodology is inconsistent with Articles 1.1(b) and 14 of the SCM Agreement, and the principle of good faith. India also submits that the USDOC's use of the relevant Tier I and Tier II benchmarks is inconsistent with Article 14(d) of the SCM Agreement. The United States asks the Panel to reject India's claims.

7.4.6.1  India's claims against the USDOC's notional government price methodology

7.4.6.1.1  Main arguments of the parties

7.256.  India contends that because GOI only provided the rights to mine minerals, rather than the extracted minerals themselves, the USDOC violated Articles 1.1(b) and 14(d) of the SCM Agreement by applying a methodology for determining benefit that compared a notional government price for extracted minerals to benchmark prices.[459] India submits that the costs incurred by an Indian miner in extracting the mineral and the reasonable profit, if any, that a miner may obtain upon using/selling such extracted mineral does not devolve on the GOI and cannot form part of the 'remuneration' to be received by the GOI.

7.257.  India also recalls its earlier argument that the term 'remuneration' as used in Article 14(d) of the SCM Agreement relates to the compensation receivable by the provider and is independent of the benefit, if any, that may be conferred on the receiver.[460] According to India, the USDOC should have assessed the adequacy of the remuneration for the GOI before assessing whether there was any benefit to the recipient. India contends that the USDOC could have assessed the adequacy of remuneration for the GOI by analysing the royalty rate charged by GOI in comparison to royalty rates in other countries.[461]

7.258.  The United States submits that India erroneously argues that the existence of benefit should be determined by reference to the cost to the government of the financial contribution. The United States contends that the Article 14 guidelines for determining benefit state that a benefit calculation shall be based on the benefit to the recipient.

7.259.  The United States disagrees with India's argument that USDOC was required to compare the mining rights at issue to a benchmark based on royalty rates in other countries. The United States asserts that the benefit potentially provided by a mining rights programme is the mineral that is obtained by the producer taking advantage of the programme. The United States contends that it would be inappropriate in this case to use the price of mining rights in other countries as a benchmark, because the mining rights at third country prices are not available in the Indian market. The United States asserts that the use of such a price would not reflect the prevailing market conditions in India, as required by the guidelines in Article 14(d).

7.4.6.1.2  Evaluation

7.260.  India's claim against the USDOC's notional price methodology is premised on two arguments that, for reasons already addressed, we do not accept. First, we recall our finding that the USDOC was entitled to treat the provision of mining leases as the provision of a good within the meaning of Article 1.1(a)(1)(iii) of the SCM Agreement. Thus, we reject India's argument that the steel producers were only provided the right to mine minerals, rather than the extracted minerals themselves. Second, we recall our earlier rejection of India's argument that the adequacy of remuneration should be assessed from the perspective of the government, before assessing whether there is any benefit to the recipient. In our view, the USDOC was entitled to assess adequacy of remuneration as part of its benefit analysis, and to make that assessment from the perspective of the recipient, using a benchmarking methodology. Since the USDOC needed a government price for the provided "good" against which to compare the relevant benchmarks, we consider that it was reasonable for the USDOC to construct a notional government price for the extracted minerals. We note that, apart from challenging the USDOC's basic methodology, India has not challenged the manner in which the relevant notional government prices were constructed by the USDOC. For these reasons, we reject India's claim that such methodology is inconsistent with Article 1.1(b) and 14(d) of the SCM Agreement.

7.261.  We note that India has also alleged that the USDOC's notional government price methodology is inconsistent with the principle of good faith. We agree with the United States' argument[462] that India's good faith claim falls outside the Panel's terms of reference, since it is not provided for in India's panel request.[463]

7.4.6.2  India's claims against the Tier I and Tier II price benchmarks applied by the USDOC

7.262.  India challenges certain aspects of the Tier I and Tier II price benchmarks against which the notional government prices for iron ore and coal were compared.

7.263.  For iron ore, the USDOC compared the notional government price benchmarks with the same Tier II benchmarks that it used to determine benefit in respect of sales of iron ore by the NMDC. India repeats the claims it made against those benchmarks in the context of the NMDC.[464] We recall that we have already upheld India's claim regarding the USDOC's rejection of certain domestic price information submitted by GOI and Tata when assessing benefit in the context of the NMDC. That information was also rejected by the USDOC when assessing benefit in the context of the Captive Mining of Iron Ore. For the same reasons, we uphold India's Article 14(d) claim regarding the USDOC's rejection of the relevant domestic price information when assessing benefit in the present context also.

7.264.  For coal, the USDOC applied a Tier I benchmark based on actual delivered prices paid by an Indian company for importing coal from a private supplier in Australia. We understand India to claim that the USDOC's use of a delivered price is inconsistent with Article 14(d) of the SCM Agreement.[465] We recall that we have already rejected a very similar argument made in the context of India's claims concerning the NMDC.[466] As we explained, an actual import transaction price, as delivered, necessarily relates to the prevailing market conditions in the country of import. Accordingly, and for the same reasons, we reject the present claim also.

7.4.7  Conclusion

7.265.  For the reasons set forth above, we uphold India's claims that (i) the United States acted inconsistently with Article 12.5 of the SCM Agreement by failing to determine the existence of the Captive Mining of Iron Ore Programme on the basis of accurate information, and (ii) the United States acted inconsistently with Article 1.1(a)(1)(iii) of the SCM Agreement by determining without sufficient evidentiary basis that GOI granted Tata a financial contribution in the form of a captive coal mining lease under the Captive Mining of Coal Programme/Coal Mining Nationalization Act. We also uphold India's Article 14(d) claim regarding the USDOC's rejection of certain domestic price information when assessing benefit under the Captive Mining of Iron Ore Programme. We reject India's remaining claim in connection with the Captive Mining of Coal Programme.

7.5  Alleged inconsistencies with respect to the USDOC's treatment of loans provided under the Steel Development Fund

7.266.  India challenges the USDOC's determination that loans provided under the Steel Development Fund (SDF) constitute direct transfers of funds by a public body. India also challenges the USDOC's determination that such loans conferred any benefit on the recipient steel producers. The United States asks the Panel to reject India's claims.

7.5.1  The USDOC's determination that direct transfers of funds were provided by a public body: Article 1.1(a)(1)

7.267.  India's claims concern the USDOC's determination that the SDF loans are provided by a "public body" within the meaning of Article 1.1(a)(1) of the SCM Agreement; various aspects of the USDOC's determination that there were "direct transfers of funds" within the meaning of Article 1.1(a)(1)(i); and the USDOC's determination in the 2008 administrative review, on the basis of facts available, that "potential direct transfers of funds" were provided, within the meaning of Article 1.1(a)(1)(ii).

7.268.  Article 1.1(a)(1) of the SCM Agreement is set forth above.[467]

7.5.1.1  Whether SDF loans are provided by a public body

7.5.1.1.1  Factual clarification by the Panel

7.269.  We begin by clarifying the precise scope of the relevant USDOC determinations. In particular, we consider it necessary to clarify which entity was determined by the USDOC to provide the financial contributions at issue. We also consider it necessary to clarify whether that entity was determined to be part of the Indian government, or a public body.

7.270.  In its preliminary determination in the original investigation, the USDOC found:

We preliminary determine that the GOI directed the contribution of funds for the SDF within the meaning of section 771(5)(B) of the Act, by levying price increases on steel products which were routed into the SDF. Furthermore, because the Secretary of the Ministry of Steel has a major leadership role in the JPC and the SDF Managing Committee, the bodies that issue and administer loans under the SDF, we preliminarily determine that the GOI exercises control over the way in which funding is disbursed under this program. Therefore, we preliminarily determine that loans under the SDF constitute a financial contribution within the meaning of section 771(5)(D)(i) of the Act.[468]

7.271.  In its Issues and Decision Memorandum preceding the final determination in the original investigation, the USDOC stated:

As discussed in the Preliminary Determination and in more detail below, the Department has determined in this proceeding that the SDF Management Committee is a government body.

[T]he SDF operates as a government entity, that all lending decisions are decisions ultimately made by the GOI, and that the decision to forgive SDF loans is also a decision made by the GOI.[469]

7.272.  The references by the USDOC to a "governmental body" raise the issue of whether the USDOC determined that the financial contributions at issue were provided by the GOI, or whether they were provided by a "public body" within the meaning of Article 1.1(a)(1) of the SCM Agreement. If provided by a public body, the question arises whether both the JPC and SDF Managing Committee were found to have provided the financial contributions, or only the latter entity.

7.273.  In its first written submission, India proceeded on the basis that the USDOC had found that SDF loans were provided by JPC and the SDF Managing Committee, and challenged the USDOC's designation of these entities as "public bodies".[470] In response to a question from the Panel, the United States asserted that the USDOC determined that "the SDF Managing Committee in particular was a public body that made all final decisions on SDF loans, including setting the terms and approving waivers".[471] We understand this to mean that the phrase "government body" used by the USDOC is synonymous with the phrase "public body" in the SCM Agreement. We also understand the United States' response to have clarified that the USDOC determined that the SDF loans were provided by the SDF Managing Committee, a public body, rather than by the GOI itself. Furthermore, since the United States made no reference to any determination by the USDOC that the JPC constituted a public body, or provided any financial contributions, we understand that the USDOC did not determine that the JPC Committee provided the SDF loans. We observe that India had not challenged the United States' description of the USDOC's determination.

7.274.  In light of the above clarifications, we proceed with our analysis on the basis that the USDOC determined that SDF loans were provided by the SDF Managing Committee, in its capacity as a public body. We shall now examine whether the USDOC's determination that the SDF Managing Committee is a public body is inconsistent with Article 1.1(a)(1) of the SCM Agreement, as alleged by India.

7.5.1.1.2  The USDOC's determination that the SDF Managing Committee constitutes a public body

7.275.  Like India's claim regarding the NMDC, India's claim against the USDOC's determination that the SDF Managing Committee is a public body is based primarily on the findings of the Appellate Body in the US – Anti-Dumping and Countervailing Duties (China) proceedings. We recall that the Appellate Body issued its report in that case in March 2011, after the relevant USDOC determinations that the SDF Managing Committee is a public body. India submits that, because the USDOC failed to establish that the SDF Managing Committee performs governmental functions, or has the authority to do so, the USDOC failed to comply with the standard laid down by the Appellate Body in that case.[472] India contends that the USDOC's determination was based rather on governmental control allegedly resulting from the fact that the members of the SDF Managing Committee are officials of the GOI.[473] India suggests that such a determination is akin to a determination of public body status based on majority government ownership which, India recalls, was condemned by the Appellate Body in the above-mentioned case.

7.276.  Consistent with our evaluation of India's claim against the USDOC's determination that the NMDC is a public body, we do not accept India's argument that a determination of public body status may not be based on a finding of governmental control. Provided an investigating authority finds that a government's control of an entity is "meaningful", we consider that such finding may suffice to support a determination that the entity is a public body within the meaning of Article 1.1(a)(1) of the SCM Agreement. Furthermore, while "meaningful control" may not be established on the basis of government shareholding alone, a combination of government shareholding plus other factors indicative of such control may suffice. We shall therefore examine whether the USDOC's determination in respect of the SDF Managing Committee can be understood as a finding that the SDF Managing Committee is subject to "meaningful control" by the GOI.

7.277.  In respect of its 2001 determination, the USDOC explained in its Issues and Decision Memorandum that:

the Secretary of the Ministry of Steel, an official one level removed from the Minister of Steel, is the Chairman of the SDF Managing Committee. We further learned that the other three members on the SDF Managing Committee consist of the following GOI officials: the Secretary of Expenditure, the Secretary of the Planning Commission, and the Development Commissioner for Iron and Steel. In addition, during verification we reviewed numerous notes and minutes from SDF Management Committee meetings. The documents from the meetings demonstrate the SDF Management Committee's ability to control and direct loan approvals, interest payments on SDF loans, and SDF loan waivers. See page 5 and Exhibits 11 and 12 of the GOI Verification Report. Therefore, based on the evidence on the record of this proceeding, we determine that the SDF operates as a government entity, that all lending decisions are decisions ultimately made by the GOI, and that the decision to forgive SDF loans is also a decision made by the GOI.[474]

7.278.  We recall our earlier finding that government involvement in the appointment of an entity's directors is one factor that might indicate meaningful government control. We consider that the relationship between the government and the entity is even closer when the management of the entity is composed exclusively of serving government officials. In our view, India is mistaken in arguing that government appointment of serving government officials is akin, in terms of control, to government shareholding. While government shareholding indicates formal links of ownership between the government and the relevant entity, which may or may not entail a degree of control, the appointment by the government of serving government officials to actually manage an entity in itself demonstrates a degree of control, as the individuals making the decisions for the entity, i.e., exercising control, are public officials acting in their official capacity.[475] Thus, in this situation, the links between the government and the entity will be more substantive, or "meaningful", in nature. We recall in this regard that the SDF Managing Committee was composed of the Secretary of the Ministry of Steel, the Secretary of Expenditure, the Secretary of the Planning Commission, and the Development Commissioner for Iron and Steel. The USDOC found explicitly that the Secretary of the Ministry of Steel served on the SDF Managing Committee in his capacity as head of the Commission for Iron and Steel.[476] In our view, the United States is correct to argue that, as a result of its composition, the SDF Managing Committee was under the "complete control" of the GOI.[477] For this reason, we reject India's claim that the USDOC's determination that the SDF Managing Committee constitutes a public body is inconsistent with Article 1.1(a)(1) of the SCM Agreement.

7.279.  Having established that the USDOC properly determined that the SDF Managing Committee constitutes a public body, we now examine whether the USDOC properly determined that the SDF Managing Committee provided "direct transfers of funds" within the meaning of Article 1.1(a)(1)(i) of the SCM Agreement.

7.5.1.2  Whether the USDOC properly determined that SDF Managing Committee provided "direct" "transfers" of funds

7.280.  India challenges t