In this post, I'm going to explain what I meant in the last post. No doubt a few people saw what I was getting at. But I know that, with the beginning of the academic year, a lot of new students are reading this blog, and there's a good chance it was all lost on them.
The basic issue is the meaning of "export subsidies." More specifically, the issue is how to determine whether subsidies are "contingent" "in fact" upon export performance, under SCM Agreement Article 3.1(a). Of course, the first sentence of footnote 4 explains that: "This standard is met when the facts demonstrate that the granting of a subsidy, without having been made legally contingent upon export performance, is in fact tied to actual or anticipated exportation or export earnings." But this just raises the question of how to determine whether the subsidy is "tied to" actual or anticipated exportation or export earnings.
I think it's safe to say, based on a couple past cases, that if export is a necessary or sufficient condition for receiving the subsidy, that would constitute a "tie" and, thus, "contingency." But what else is covered? What is the general standard to apply? Here's what I said in the last post about the situation in EC - Aircraft:
Did structuring the repayments in this way affect Airbus' thinking about whether to sell for export or on the domestic market? Would structuring the repayments in the alternative ways suggested by the U.S. -- based on dates, or tying the repayments to smaller sales numbers -- have had an impact on the amount of exports relative to domestic sales?
What I was getting at was the following. One way to look at the relationship between subsidies and export is to ask whether the subsidies encourage companies to export, in the sense of providing an incentive to export rather than sell domestically. If you want to put this in traditional GATT terms, perhaps you could refer to this as the "conditions of competition" as between exports and domestic sales. By favoring export sales through a subsidy, this subsidy encourages producers to export instead of selling domestically.
But maybe this is too narrow. An alternative approach might find that export subsidies exist even where the subsidy does not prefer exports over domestic sales. Rather, it might be enough if the subsidy encourages more exports, even if it applies equally to domestic sales and encourages them as well. If you have a subsidy that will, by its nature, result in more exports, maybe that is enough to demonstrate export contingency.
One of these might be what the U.S. had in mind in the parts of its submission I quoted in the last post. On the other hand, the U.S. might have been thinking of something completely different. There are a lot of possibilities for how this standard could work.
So that's what I meant in the last post. I'll be curious to see what the EU has to say about this in its submission, and it would be great if the Appellate Body would clarify its previous statements on the issue.
