The Appellate Body (AB) report on the “United States –Countervailing Duty Measures on Certain Products from China” (WT/DS437/AB/R) is out. Interestingly, the AB reversed some of panel’s findings. Two reversals stand out: the de facto specificity and adverse facts available. Here go relevant parts of the AB report.
On the de facto specificity
4.149. We agree with the Panel to the extent it suggested that, in the absence of any written instrument or explicit pronouncement, evidence of a "systematic activity or series of activities" may provide a sufficient basis to establish the existence of an unwritten subsidy programme in the context of assessing de facto specificity under the first factor of Article 2.1(c) of the SCM Agreement.
4.150. We find it troubling, however, that the Panel did not provide any case-specific discussion or references to the USDOC's determinations of de facto specificity at issue prior to reaching its conclusion. Indeed, the entirety of the Panel's assessment of China's "as applied" claims with respect to the USDOC's determinations is set out in a single paragraph (…)
On adverse facts available
4.195. Based on the above, it seems to us that the Panel focused, in large part, on the words employed by the USDOC in its determinations rather than on whether the USDOC acted inconsistently with the obligations of the United States under Article 12.7 of the SCM Agreement in connection with the challenged instances of the use of "adverse" facts available that were discussed by the Panel in its Report. (…)
4.196. (…) The Panel was required to assess whether the USDOC's analysis in the underlying investigations was sufficient to establish that its "adverse" facts available determinations were made on the basis of the facts available as required under Article 12.7. Instead of conducting this analysis, the Panel appears to have simply relied on language in the USDOC's determination referring to application of facts available in order to reject China's claims.
All in all, the AB criticized the panel for not doing its own (thorough) analyses and/or relying too much on the investigating authority’s determinations. The obverse side of this precedent might be that it would shrink the government’s discretion in the domestic subsidy investigation. If a future panel puts a magnifying glass on the investigating authority’s determinations on these issues, in accordance with this new precedent, the investigating authority might feel pressured in exercising its discretion, even though its own court supports such exercise.
