The AB has emphatically endorsed India`s position that a Public Sector Undertaking (PSU) shall be treated as a "public body" only when they possess governmental authority and discharge governmental functions. This ruling would provide significant relief to exporters who buy raw materials from PSUs such as SAIL or NMDC. The ruling also has world-wide implications on how the WTO disciplines on subsidies can be applied against alleged financial contributions from State-owned enterprises.
The AB also agreed with India that the United States` benefit methodology while calculating the benefit in the case of sale of iron ore by NMDC is unfounded. The AB confirmed the Panel`s reasoning that proxies indicating domestic prices cannot be ignored in determining benchmarks under the ASCM.
The AB Report is also relevant with regard to a number of other systemic issues concerning the implementation of ASCM. For instance, on the aspect of determining an appropriate benchmark to determine benefit, it has now been clarified that investigating authorities cannot presumptively reject government-related prices as relevant benchmarks; in applying adverse inferences against non-cooperating parties, investigating authorities cannot arbitrarily choose to apply any inference, but instead account for all substantiated facts; and in selecting one fact over another in such cases, the finding is to be supported by reasoning and evaluation. This AB ruling will usher in transparency in the conduct of investigations by all the Member countries.
Further, the AB has ruled that investigating authorities do not have the unfettered right to add new subsidies in the course of reviews of existing CVD measures. Only new subsides that are closely linked to subsidies examined earlier can be added in a review proceeding. This has significant systemic implications on the United States' practice of indiscriminately including new subsidies during annual Administrative Reviews.
India will actively monitor the implementation of this ruling by the United States in order to ensure that the interests of Indian exporters are fully protected. India`s efforts in this dispute show case its commitment to ensuring a level playing field for its industry. India recognizes with appreciation the contribution made by various stakeholders including the domestic industry, the law firm and the various departments who worked in close coordination to achieve this result.
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