Facts of the Case

On August 17, 1993, the United States Department of Commerce (USDOC) imposed definitive countervailing duties (CVDs) on carbon steel originating in Germany. The imposition of these duties was based on an investigation by USDOC in which it was determined that certain German producers had benefited from five countervailable subsidy programs at a total ad valorem rate of 0.60 percent.

On September 1, 1999, the USDOC gave notice of the automatic initiation of a sunset review of these duties, in accordance with Article 21.3 of the Agreement on Subsidies and Countervailing Measures (the SCM Agreement). The United States found, in the course of its review, that withdrawal of CVDs would have led to a recurrence of subsidization and injury. The USDOC calculated the amount of countervailable subsidy to be 0.54% ad valorem, inasmuch as two of the original five subsidy programs had been terminated between the time of the original investigation and that of the administrative review.

Issues raised before the Panel

The European Communities complained that the US review was inconsistent with US obligations under the SCM Agreement. In the view of the European Communities, the United States should have withdrawn the CVDs when they found that the amount of countervailable subsidy to be 0.54% ad valorem. The European Communities argued that Article 11.9 of the SCM Agreement provided support for its argument in this respect; Article 11.9 obliges WTO Members to terminate original subsidy investigations when the amount of subsidy is calculated to fall below a de minimis standard of 1% ad valorem.