Abstract
AbstractThe Appellate Body report in EU–PET (Pakistan) raises distinct questions regarding the need for findings in relation to expired measures, the conditions under which duty drawback schemes may constitute subsidies and the causation methodology to apply under the SCM Agreement. We conclude that the report offers no clear guidance on whether the function and design of WTO dispute settlement require or preclude findings in case of expired measures. We welcome the Appellate Body's conclusion that, in case of duty drawback schemes, the financial contribution element of the subsidy is limited to the excess remission or drawback of import charges. Finally, although the Appellate Body rightly found that authorities are free to choose the methodology for the causation analysis provided that the analysis is complete and objective, the methodology used by the investigating authority in this case shows a number of deficiencies that were not recognized by the Appellate Body.
Highlights
This article discusses the three distinct matters at issue in the appeal in European Union (EU)–PET (Pakistan),1 namely (i) the need for findings in respect of measures that expired after Panel establishment; (ii) the conditions under which duty drawback schemes may constitute subsidies and the calculation of the subsidy amount; and (iii) the causation methodology to apply under the Agreement on Subsidies and Countervailing Measures (SCM Agreement). the question of findings in respect of expired measures continues to lead to disagreements between WTO Members, the Appellate Body has yet to clarify whether the design and function of the WTO dispute settlement system require or preclude findings on expired measures
The report usefully clarifies, in respect of duty drawback schemes, that the investigating authority may consider as a subsidy only the remission paid in excess of the amounts due
Despite the Appellate Body’s conclusion that any methodology for the causation analysis should be permissible as long as it results in a complete and objective analysis, it appears that the methodology used by the investigating authority in this case showed a number of deficiencies that were raised by Pakistan but not recognized by the Appellate Body
Summary
This article discusses the three distinct matters at issue in the appeal in EU–PET (Pakistan), namely (i) the need for findings in respect of measures that expired after Panel establishment; (ii) the conditions under which duty drawback schemes may constitute subsidies and the calculation of the subsidy amount; and (iii) the causation methodology to apply under the Agreement on Subsidies and Countervailing Measures (SCM Agreement).
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