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Decisions of the Appellate Body of the World Trade Organization

United States-Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom

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Joel P. Trachtman

WTO Appellate Body Report. United States-Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom, AB-2000-1, WT/DS138/AB/R (00-1896), adopted by Dispute Settlement Body, 7 June 2000. United States, Appellant; European Communities, Appellee; Brazil and Mexico, Third Participants. Division: Matsushita, El-Naggar and Lacarte-Mur. Major topics addressed by Appellate Body: `Amicus Curiae' Briefs; Agreement on Subsidies and Countervailing Measures; Definition of `Subsidy'; Definition of `Benefit'.

1. Abstract

This case deals with the knotty question of whether privatization at arm's length of a previously subsidized company `extinguishes' the subsidy. That is, where the new investors pay fair market value for the privatized assets, can the new entity still be considered to benefit from the earlier subsidy. The US Department of Commerce took the position that it could. The panel, and the Appellate Body, found that under the Agreement on Subsidies and Countervailing Duties (the SCM Agreement), the US was required to engage in reviews that would determine on a current basis whether the subsidy still existed. Furthermore, the panel and Appellate Body determined that under the facts of this case, the subsidy was extinguished by the privatization.

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