australia – subsidies provided to producers and exporters of

automotive leather

Recourse by the United States to Article 21.5 of the DSU

            The following communication, dated 4 October 1999, from the Permanent Mission of the United States to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the DSU.

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            On 16 June 1999, the Dispute Settlement Body (DSB) adopted the report of the Panel in "Australia ‑ Subsidies Provided to Producers and Exporters of Automotive Leather" (WT/DS126).   The Panel report concluded that a $A30 million grant provided by the Australian government to Howe & Co. Pty. Ltd. (Howe) was a prohibited export subsidy in violation of Article 3.1(a) of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).  The Panel report recommended that Australia withdraw the subsidy within 90 days.

            On 15 September 1999, the Australian government announced in a media release that it had implemented the Panel report's recommendation by terminating the grant contract with Howe and that Howe had repaid $A8.065 million of the $A30 million grant.  Australia stated that this repayment constituted the “prospective element” of the grant because it was “the proportion of grant monies found to be applied to the sales performance targets contained in the Grant Contract for the period from 14 September 1999 until the end of the Grant Contract on 30 June 2000.”