RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/502
11 March 2002
(02-1204)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
IMPLEMENTATION-RELATED ISSUES REFERRED TO THE
COMMITTEE BY MINISTERS
Review by the SCM Committee of the Provisions of the Agreement on Subsidies
and Countervailing Measures Regarding Countervailing Duty Investigations
Replies from Brazil to Questions from Egypt, Australia, European Communities,
the United States, Japan and Canada
The following communication, dated 7 March 2002, has been received from the Permanent
Mission of Brazil.
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In this document, Brazil provides answers to  questions posed by Members in documents
G/SCM/W/478 (Egypt), G/SCM/W/494 (Australia), G/SCM/W/495 (European Communities),
G/SCM/W/496 (the United States), G/SCM/W/ 497 (Japan), and G/SCM/W/498 (Canada).  These
questions refer to the proposals circulated by Brazil in document G/SCM/W/464, as regards
countervailing duty investigations, specifically in connection with “facts available” and reviews
provisions.
I. FACTS AVAILABLE
I.1. Introduce provisions on use of “facts a vailable” such as those in Annex II of the
Antidumping Agreement
(a) EGYPT (G/SCM/W/478)We agree with these two proposals (Brazil’s and India’s) because there are no detailed
provisions for them in the SCM Agreement
(b) AUSTRALIA (G/SCM/W/494)Does Brazil consider that “facts available” sh ould be used by investigating authorities
where a firm has provided data but the investig ating authorities may not accept the adequacy of
the information?
Does Brazil consider that “facts available” enables the investigating authorities to reject
all information provided?G/SCM/W/502
Page 2
What constitutes “necessary information” (Art. 12.7)? For example, if, by law,
information cannot be revealed to third partie s, would statements by interested parties
constitute “necessary information”?
(c) EUROPEAN COMMUNITIES (G/SCM/W/495)Can Brazil clarify whether such changes would have any bearing on the guidelines for
investigating authorities under Annexes II and I II of the ASCM, in particular concerning those
provisions which shift the burden of proof on the government of the exporting country (e.g.
Annex II, section II paragraph 2 ASCM)?
(d) USA (G/SCM/W/496)Could Brazil explain what its experience has been with countervailing duty
investigations?
Could Brazil explain why it sees the need to  introduce more detailed “facts available”
provisions for the SCM Agreement?
(e) JAPAN (G/SCM/W/497)Japan understands that this proposal intends that the use of “facts available” should be
more exceptionally permitted.  Japan shares Br azil’s intent that the use of “facts available”
should be qualified as the exceptional resort.  In  addition, Japan appreciates that this proposal
considers the harmonization of the provisions of  countervailing duty investigation with those of
anti-dumping duty investigation.
(f) CANADA (G/SCM/W/498)
Brazil makes reference to the “facts available” as per Annex II of the AD Agreement as
a possible model for the SCM Agreement.  Would Brazil modify the provisions found at
Annex II of the AD Agreement for purposes of the SCM Agreement and, if so, what changes
would they propose?
Does Brazil have any suggestions as to what would constitute reliable sources for
ascertaining the existence and amount of subsid y in situations where an interested Member or
an interested party refuses access to , or othe rwise does not provide, the information necessary
to make these determinations?
In terms of “facts available”, would Brazil and India make any distinction between
information provided to the investigation authorities by producers and exporters versus the
government of the country of export?  Would the same rules apply to both types of information
where it was not properly provided to the investigating authorities?
Reply
As mentioned in document G/SCM/W/464, Art. 12.7 of the ASCM establishes the possibility
of making determinations on the basis of the “facts available”.  However the procedures related to the
utilization of these “facts available” are not detailed enough to provide guidance on this matter.
The AD Agreement already establishes guidance for the use of “facts available” in its
Annex II, which details, for instance, the procedures to  be applied in case an interested party refuses
access to information or does not provide the necessary information. These two situations are exactlyG/SCM/W/502
Page 3
those referred to in Art. 12.7 of the ASCM. Given this fact, it is Brazil’s view that there is no reason
why the same procedures should not be applied in CVD investigations. The convenience of the
Brazilian proposal is particularly clear in the situation where AD and CVD investigations on imports
from the same Member are  conducted at the same time, the investigating authorities being obliged to
follow guidelines on the treatment of the informa tion provided in one investigation and not in the
other.
With regard to Australia’s questions, Art. 12.7 clearly establishes that “facts available” could
only be used when an interested party refuses access to information or does not provide the necessary
information. So, Brazil considers that the “facts available” concept allows the investigating authorities
to reject all the information presented only in these  specific circumstances, that is, if this information
does not correspond to the necessary information. It should also be considered that, apparently, the
situation presented by Australia in its first question (investigation authorities not accepting the
“adequacy of the information”) is not envisaged in Art. 12.7. Regarding Australia’s third question, it
should be noticed that the presentation of confidential information is allowed by Art. 12.4; so once theconditions that are established in this Art. 12.4 are respected, that information should be accepted.
With regard to the question posed by the EC, Brazil’s proposal does not intend to have any
bearing on the guidelines provided for in Annexes II and III of the ASMC.
With regard to the questions posed by the US, Brazil´s experience as a country that has been
affected by a number of CVD investigations and measures indicates that all Members would benefitfrom sound and clear rules on this subject.
With regard to the questions posed by Canada, Brazil considers that a few modifications
should be done in Annex II in order to adapt it to the ASCM’s language and concepts.  For instance,
where Annex II of the AD Agreement reads “inter ested parties”, it should be read “interested
Members and/or interested parties”; where Annex II reads “normal value”, it should be read  “amount
of subsidy”; and, of course, where Annex II reads “Paragraph 8 of Article 6”, it should be read
“Paragraph 12 of Article 7”.  As independent sources that would constitute reliable sources it could be
mentioned, for instance, Members’ notifications to WTO, public reports of the agencies responsible
for programmes
With regard to the Canadian question on the applicability of the proposed guidelines, as stated
above, Brazil considers that the same rules would apply to the information provided by Governments.
II. REVIEW PROCEDURES
II.1. Introduce provision for assessment of degree of support for review requests
(a) EGYPT (G/SCM/W/478)We disagree with this proposal as the curr ent provision is more flexible, giving the
investigating authority the right to make the review without any request from any party or by
the request of any other interested party
(b) AUSTRALIA (G/SCM/W/494)How does Brazil interpret the provision in Article 21.2 “the authorities ... on their own
initiative ...” shall review the need for the co ntinued imposition of a countervailing duty?
How does Brazil interpret Article 21.2 where “any interested party ... submits positive
information substantiating the need for a review”?G/SCM/W/502
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What would constitute “positive information”?
Does Article 21.2 prevent Members whose products are subject to countervailing duties
from requesting a review?
(c) EUROPEAN COMMUNITIES (G/SCM/W/495)Does Brazil consider that for expiry revie ws, even though Article 21.3 ASCM already
requires a petition “by or on behalf of the domestic industry”, the representativeness
requirement need not be observed since Article 21 does not explicitly refer to Article 11.4
ASCM which contains a definition of “by or on behalf of the domestic industry”?
Concerning interim reviews under 21.2 ASCM any interested party can make a request.
How would Brazil reply to the argument that a requirement for standing only for domestic
producers but not for exporters or importers would be discriminatory?
(d) US (G/SCM/W/496)
Does Brazil agree that the SCM Agreement currently allows for a review procedure
under Article 21, upon request by less than the degree of support required in Article 11?
To what extent would Brazil’s proposal require a change to the SCM Agreement? If a
change to the agreement is not required, please explain, in Brazil’s view, how this proposal
should be effectuated?
(e) JAPAN (G/SCM/W/497)Japan shares Brazil’s intent that the rev iew procedures under Article 21 should comply
with the same procedural discipline that the investigation procedures under Article 11 comply
with.
(f) CANADA (G/SCM/W/498)
As a point of clarification, does the Brazilian proposal regarding “standing“ apply to all
reviews conducted pursuant to Article 21 or just to “sunset” reviews conducted pursuant to
Article 21.3 of the SCM Agreement?
For purposes of determining the degree of industry support for a review conducted
pursuant to Article 21.3 of the SCM Agreement, is Brazil suggesting the adoption of the same
“standing” test in Article 11.4 of the SCM Agreement  or would Brazil modify this test in any
way?
If the “standing” test were adopted for revie ws, should the invest igating authorities
retain the right under Article 21.3 to initiate a review on their own initiative if the request made
by or on behalf of domestic industry did not have an adequate level of support?
Reply
The Brazilian proposal regarding “standing” applies to “sunset” reviews conducted pursuant
to Art. 21.3 of the SCM Agreement and what Brazil suggests is the adoption of the same “standing”
test established in Art. 11.4. As the EC has mentioned, Art. 21.3 already requires that a petition must
be made “by or on behalf of the domestic industry”. In that sense, our proposal does not require aG/SCM/W/502
Page 5
change to the ASCM:  it simply intends to clarify that the expression “by or on behalf of the domestic
industry” should be understood as in Art. 11.4. Brazil considers that it is relevant to make clear that
the same test should be applied in both cases (initiation of investigation and initiation of review).
It is important to emphasize that the Brazilian proposal should not be construed as to impede
the authorities to initiate a review on their own initiative.
With regard to the questions posed by Australia, as it was explained above, the Brazilian
proposal does not refer to Art. 21.2.
II.2.  Introduce provision for notification of Members whose products are subject to review
(a) EGYPT (G/SCM/W/478)
We should ask about the reasons and purposes of this proposal, since it is referred to
with the same meaning in Article 22.7
(b) AUSTRALIA (G/SCM/W/494)
Does Brazil consider that Article 21.4 does not provide for the procedures set down in
Article 12, particularly as regards notification of Members once an application for a review has
been received?
Does Brazil notify interested parties of review proceedings?(c) JAPAN (G/SCM/W/497)
Japan shares Brazil’s intent that the rev iew procedures under Article 21 should comply
with the same procedural discipline that the investigation procedures under Article 11 comply
with.
Reply
In view of the fact that the initiation of a review under Art. 21.3 implies that the duty may
remain in force pending the outcome of such a review, it is important that, before this initiation,
Members whose products may be subject to such re view shall be notified of this possibility and
invited for consultations with the aim of clarifying the situation and arriving at a mutually agreed
solution.
Article 21. 4 establishes that the provisions of Art. 12 regarding evidence and procedures
shall apply to any review. By analogy,  there is no reason why the procedures of notification and
consultation as established by Art. 13 should not apply to the reviews.
Regarding the questions posed by Australia related to the notification of petitions received, it
should be considered that the procedures referred to in Art. 22 relate to the initiation of an
investigation/review, and not to the reception of a petition.
With regard to the question posed by Egypt, it should be clarified that Article 22.7 refers to
the notification due upon the initiation as well as to the other notifications due in the course of theinvestigation. It does not refer to the notification prior to the initiation of the investigation, which is
the precise object of the Brazilian proposal.G/SCM/W/502
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Regarding Australia’s question about Brazilian procedures on notification, Brazil’s has not
initiated any review of countervailing duty yet.
II.3.  Introduce provision for prior consultati on with affected Members before initiating
review and during its course
(a) EGYPT (G/SCM/W/478)We agree with this proposal to give the part ies the opportunity to present their point of
view and argument, and we propose to add this to Article 13 (consultation)
(b) AUSTRALIA (G/SCM/W/494)How could the consultations proposed by Braz il fit within the time frames set for a
review?
(c) US (G/SCM/W/496)Brazil states that there is no explicit obligation that Members subject to a review be
offered consultations prior to and during the review process.  Could Brazil please explain,
therefore, whether this proposal would require a change to the SCM Agreement?  If a change to
the agreement is not required, please explain, in  Brazil’s view, how this proposal should be
effectuated?
(d) JAPAN (G/SCM/W/497)Japan shares Brazil’s intent that the rev iew procedures under Article 21 should comply
with the same procedural discipline that the investigation procedures under Article 11 comply
with.
(e) CANADA (G/SCM/W/498)Brazil is proposing that “interested parties” be offered the opportunity for consultations
prior to the initiation of a review under Article 21 and throughout the period of the review.Brazil also makes reference to the consultation  process outlined in Article 13 of the SCM
Agreement.  Could Brazil indicate how it might, for example, adopt or modify Article 13 to
make it applicable to the conduct of reviews carried out under Article 21?  Could Brazil also
indicate whether the right of consultation should  be available to all “interested parties” or just
to Members as provided for in Article 13 of the Agreement?
Reply
As it was mentioned above, the Brazilian proposal refers to procedures of consultations
established in Art. 13 that involve only the exporting Members of the products of which may be or aresubject to sunset review. Brazil considers that its proposal does not require a change to the ASCM:  it
simply intends to clarify that  all the procedures followed in an investigation should be applied in a
review, including the opportunity for consultation.G/SCM/W/502
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II.4. Introduce detail in Article 19.3 concerning expedited review of new exporters
(a) EGYPT (G/SCM/W/478)This proposal does not provide a new s ubject and the current provisions in the
Agreement are better in this context
(b) AUSTRALIA (G/SCM/W/494)What specific provisions would Brazil include in Article 19.3 in regard to expedited
reviews for new exporters?
(c) EUROPEAN COMMUNITY (G/SCM/W/495)
Can Brazil please explain in what way the provisions of Article 19.3 ASCM should be
“detailed”?
(d) US (G/SCM/W/496)
Could Brazil please explain what types of detail should be added to Article 19.3 and the
reasons for these additions?
(e) JAPAN (G/SCM/W/497)
Could Brazil please provide concrete examples which Brazil conceives disadvantageous
in implementing the present provision of the ASCM?
(f) CANADA (G/SCM/W/498)
Brazil is proposing that the provisions of Article 19.3 in respect of expedited reviews
require more details.  Could Brazil delineate the current deficiencies with this provisions and
indicate what additional details would be required.
Reply
From Brazil’s point of view, the ASCM provisions do not establish procedures to be followed
in expedited reviews.  Brazil considers that as Art. 19.3 established that the “investigating authorities
promptly  establish an individual countervailing duty rate for that exporter", it is necessary to define
how fast should the investigating authorities resp ond to a complaint and the duration of the review
(for instance, in an accelerated manner, as established by Art. 9.5 of the Antidumping Agreement?).
An aspect related to the previous issue refers to the difficulty facing investigating authorities
to initiate and conclude a new exporter investigation “promptly” in those cases where there is not
sufficient data to calculate an individual amount of subsidy.
This situation would happen, for instance, in the case where  a new exporter has only
exported a small quantity during the course of the investigation, or after the imposition of the duty. In
that case, if the company  requests a review unde r Art. 19.3, the investigating authority would have
very limited data available to determine the individual amount of subsidy.
Brazil considers that further discussion and guidance is needed on this subject.
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