This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 GENEVA 002614 
 
SIPDIS 
 
PASS USTR FOR DWOSKIN 
STATE/EB/OT FOR CRAFT 
USDA/FAS/ITP FOR SHEIKH, MTND/HENKE, FAA/SE/WILSON 
USDOC FOR SPETRINI, JACOBS, LORENTZEN 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR
SUBJECT: 22-30 SEPTEMBER 2005 MEETINGS OF THE WTO RULES 
NEGOTIATING GROUP 
 
SUMMARY 
 
¶1.  The WTO Rules Negotiating Group held three days of plenary 
meetings to discuss eight papers on antidumping issues and two 
papers related to fisheries subsidies.  There were also 
plurilateral meetings for more in-depth discussions of selected 
elaborated antidumping proposals.  Two U.S. papers, on causation 
and on the lesser duty rule, were discussed in the meetings.  The 
Chairman reiterated his concern over the Group's ability to 
manage the large number of antidumping proposals and emphasized 
the importance of bringing greater focus to the discussions 
through the use of draft texts in written proposals.  The 
Chairman also appointed a New Zealand delegate to serve, on an ad 
hoc basis, as a facilitator in the plurilateral meeting to 
discuss the U.S. causation paper.  The next round of Rules 
Negotiating Group meetings is scheduled for the weeks of 17 and 
24 October 2005. 
 
ANTIDUMPING AND 
COUNTERVAILING MEASURES 
 
Plenary Session 
 
Chairman's Concern re 
Number of Proposals 
¶2.  Rules Negotiating Group Chairman Guillermo Valles Galmes 
began the plenary session by expressing concern over the number 
and nature of the elaborated proposals received.  (Note:  There 
is a three-step process for considering proposals.  Written 
negotiating proposals are introduced formally to the Negotiating 
Group, elaborated for discussion in an informal plenary session, 
and then, if appropriate, and at the discretion of the chairman, 
more closely scrutinized in a plurilateral meeting.  End note.) 
Valles said he is concerned about the group's ability to manage 
the large number of proposals, observing that issues were still 
being raised for the first time.  There were eleven elaborated 
proposals for consideration at this meeting and there were many 
high priority issues that have not yet been elaborated.  The 
negotiating group therefore was in danger of having superficial 
discussions of many proposals, rather than detailed discussions 
of the key issues.  The Chairman urged Members to exercise 
restraint by limiting proposals to address high priority issues 
or issues where compromise is possible.  He also said that the 
discussions needed to be more focused and pragmatic, through the 
use of concrete text-based proposals. 
 
Public Interest Determination 
 
¶3.  Hong Kong China introduced a paper from a subset of the 
Friends of Antidumping Negotiations (Friends) entitled "Further 
Submission on Public Interest," (circulated as TN/RL/GEN/53). 
(Note:  The paper was co-sponsored by Israel, Japan, Korea, 
Norway, Singapore, Switzerland, Chinese Taipei and Thailand. 
Chile was not co-sponsor, but intervened orally in support of it. 
Neither Japan nor Brazil said much in support of the proposal. 
Brazil has privately commented that it was reluctant to adopt the 
formalized procedures outlined in the proposal, even though its 
Council of Ministers makes "public interest" determinations.  End 
note.)  The proposal would require authorities to make a 
determination whether the application of an anti-dumping measure 
is in the "economic interest" of the Member, based upon a 
specified list of factors.  It also includes provisions relating 
to the procedures to be applied by authorities in reaching its 
determination, designed to incorporate comments of the importers, 
consumers and downstream users, but not those of the domestic 
industry. 
 
¶4.  The European Communities said a public interest determination 
should be required as a contribution to "good governance."  The 
public interest "economic balancing" test must be limited 
to analyzing the economic effects of antidumping measures, 
because non-economic considerations (foreign policy, 
environmental, social, etc.) could lead to discriminatory 
application of measures in violation of ADA Article 9.2. The EC 
registered concerns about the possible application of the WTO 
Dispute Settlement system to public interest determinations, even 
if the scope of such reviews were to be limited only to 
procedural aspects.  The United States expressed its concern that 
the dispute settlement body could be asked to overrule a Member 
state's determination of what it considers to be in its own 
"public interest," and noted the absence of guidelines in the 
proposal for assessing comments received. 
 
Changed Circumstances Reviews 
 
¶5.  Japan introduced an elaborated proposal from the Friends 
entitled "Proceedings under Article 11.2," circulated as 
TN/RL/GEN/52.  The proposal would make it easier to obtain 
Article 11.2 changed circumstances reviews and would introduce 
certain presumptions that would increase the likelihood that 
measures would be terminated.  The EC questioned the underpinning 
of the proposals, by noting that the paper ignored the key issue 
involved- whether the "change" in circumstances was a temporary 
development, a result of the imposition of the measure, or a 
permanent change justifying the revocation or modification of the 
measure.  The U.S. intervention focused on the proponents' 
failure to take into account the different contexts involved in 
original investigations and in reviews, where measures are 
already in place. 
 
Causation of Injury 
 
¶6.  The United States introduced its enhanced proposal, entitled 
"Causation (ADA Article 3.5; ASCM Article 15.5), circulated as 
TN/RL/GEN/59.  The proposal would reaffirm that an authority is 
not required to determine that dumped imports are the sole cause 
of injury to the domestic industry, nor must it quantify nor 
weigh the various factors contributing to the injury.  The 
authority would be required to examine known factors other than 
dumped imports and provide a reasoned explanation that, 
notwithstanding any other contributing factors, dumped imports 
have made a material contribution to the injury or threat 
thereof. 
 
¶7.  The U.S. proposal attracted relatively mild criticism from 
the Friends, who had previously submitted a proposal that would 
make the causation test much more stringent.  The Friends argued 
that the U.S. proposal focused on what investigating authorities 
did not need to consider in making their analysis of causation of 
injury, rather than on what should be considered and the standard 
to be applied.  Several Members asked for clarification of terms 
used in the proposal, including the meaning of "weighing," 
"isolating" and "material contribution." Brazil endorsed the 
general thrust of the paper, but raised several questions about 
it.  Australia, Canada, Egypt, India, China made generally 
positive comments, but also posed specific questions.  The EC was 
relatively non-committal in posing questions for 
clarification. 
 
Product under Consideration 
Cumulation 
 
¶8.  Brazil introduced two papers address interrelated topics, 
"Proposal on Product under Consideration," circulated as 
TN/RL/GEN/50, and "Proposal on Cumulation," circulated as 
TN/RL/GEN/51. (Note:  The Product under Consideration paper was 
co-sponsored by Chile, Israel, Korea, Singapore, Switzerland and 
Thailand; the Cumulation paper was co-sponsored only by Brazil, 
Switzerland and Thailand.)  Neither proposal attracted much 
support or interest from the group, with several Members 
questioning how an investigating authority would be able to make 
a determination of the "product under consideration," as proposed 
by Brazil.  They noted that the kind of detailed information 
about conditions of competition contemplated by Brazil for 
defining product subject to an investigation is not generally 
available to authorities before initiation.  The United States 
also noted the practical difficulty customs officials would have 
in enforcing a measure based on such non-physical criteria. 
Several Members also questioned why imports should be mandatorily 
cumulated in determining causation of injury, and the rationale 
for not cumulating imports from different investigations that are 
destined for different geographical areas or at a different time. 
 
Transparency 
 
¶9.  Norway presented its paper entitled "Proposal on Issues 
Relating to Evidence, Public Notice and Explanation of 
Determinations under Articles 6 and 12 of the ADA," circulated as 
TN/RL/GEN/49.  (Note:  Norway privately said the proposal is 
meant to address procedural deficiencies in the EC system that 
became apparent during its history of antidumping investigations 
of Norwegian salmon.  End note.)  The twelve-page Norwegian 
proposal would impose stringent procedural requirements on 
investigating authorities with respect to the identifying foreign 
exporters and producers, obtaining information, assisting 
respondents in providing information, and conducting 
verifications.  It would also require that reasoned explanations 
be provided for non-acceptance of any information provided by 
respondents. 
 
¶10.  The United States expressed its general support for 
improving transparency in antidumping investigations and noted 
that some of the items the U.S. had previously proposed were 
included in the Norwegian paper.  However, some of the Norwegian 
proposals had been drafted without regard to the practical 
constraints under which authorities operate and particular 
aspects were simply unworkable.  The EC said it favored 
improvements in transparency, but then launched into a point-by- 
point critique of Norway's proposal.  They concluded by saying 
that many of the items raised in the proposal were capable of 
resolution in the Committee on Antidumping Practices Working 
Group on Implementation, and that hours would be required to 
resolve each of the items in the proposal.  Some developing 
countries predictably emphasized the costs and burdens for their 
authorities. 
 
U.S. Comments on 
Lesser Duty Proposals 
 
¶11.  The United States gave a brief presentation of the paper 
entitled "Further Comments on the Lesser Duty Proposals," 
circulated as TN/RL/GEN/58.  The paper identifies U.S. concerns 
regarding proposals, from the Friends and from India, to require 
the application of the so-called "lesser duty rule."  The paper 
notes that the methodologies proposed for defining "margin of 
injury" do not take into account the factors that the antidumping 
agreement provide for defining whether or not injury exists.  The 
paper also raises concerns with respect to the complexity and 
costs involved in requiring a lesser-duty analysis, and with the 
non-transparent practices that are currently being used by some 
Members that purport to apply the lesser duty rule. 
 
¶12.  The European Communities recognized that U.S. concerns with 
respect to a mandatory lesser duty rule were serious and deserved 
consideration.  However, the EC has been applying the lesser duty 
rule for years and has not experienced any obstacles that were 
not insurmountable.  The EC was willing to address the concerns 
of others and wanted to make the lesser duty rule   part of the 
standard practice of all antidumping users.  Japan, Brazil, 
Chile, Hong Kong, India, Korea, Turkey, and Peru expressed 
support for making the application of the lesser duty rule 
mandatory.  Indonesia, Argentina and Egypt expressed reservations 
about making the application of the lesser duty rule mandatory. 
Thailand suggested the possibility of allowing Members to apply 
different lesser duty methodologies, as long as the methods 
applied were transparent and predictable. 
 
¶13.  During the discussion, several proponents acknowledged that 
the "margin of injury" they were advocating as a limit to the 
applied antidumping duty bore no relationship to the overall 
injury being suffered by the domestic industry.  In response, the 
United States replied that if the "injury margin" does not in 
fact address actual injury, then the application of the lesser 
duty rule is really industrial policy to regulate imports and 
would not appear to meet the requirement, under Article 9.1 of 
the Antidumping Agreement, that the lesser duty "would be 
adequate to remove the injury to the domestic industry." 
 
Sunset Review 
 
¶14.  Canada introduced its paper, entitled "Sunset Reviews," 
circulated as TN/RL/GEN/61.  The Canadian proposal calls for 
procedural changes in the conduct of sunset reviews, rather than 
the imposition of a mandatory revocation after a stated period. 
(Note:  The Friends have advocated mandatory revocation after 
five years.  End note.) The EC supported the proposal, although 
it acknowledged that it might have some problems with particular 
details.  The EC expressed concern that other Members have been 
renewing antidumping orders automatically, against the spirit of 
the antidumping agreement.  Several other Members, including the 
United States and Thailand, expressed general support for the 
paper and posed some technical questions.  Some Friends recalled 
their joint proposal for the automatic revocation of orders after 
5 years.  Brazil posed a technical question about the Canadian 
proposal, without referring back to the Friends' proposal for 
automatic revocation. 
 
Plurilateral Sessions 
 
¶15.  Plurilateral meetings were held for more detailed and 
focused technical discussions of the U.S. paper on causation and 
the Friends' papers on changed circumstances reviews, public 
interest and sampling.  Prior to the discussion of the U.S. paper 
on causation, Rules Group Chairman Valles recalled his desire to 
focus better the discussions in the plurilaterals meetings, by 
limiting discussions in the sessions to specific proposed texts. 
He announced his intention to ask some participants, in their 
personal capacities as "friends of the chair," to facilitate the 
discussions.  The facilitators would be nominated on an ad hoc 
basis for particular issues, in consideration of the technical 
complexity of the subject and the need to retain balance.  The 
nomination of a facilitator to assist on a topic is not meant to 
impart any particular status to the issue under discussion.  The 
Chairman then named Bruce Cullen, a New Zealand delegate, acting 
as a "friend of the chair," to facilitate the discussion of the 
U.S. paper on causation.   The Chairman also noted that he 
intended to "vary the geometry of the participation in the 
discussions."  (Note:  The plurilateral meeting to discuss the 
U.S. causation paper was attended by the United States, EC, 
Canada, Australia, New Zealand, Japan, Hong Kong China, Brazil, 
Korea, Argentina, India, Egypt and China. End note.) 
 
FISHERIES SUBSIDIES 
 
Aquaculture 
 
¶16.  The Negotiating Group had a plenary meeting to resume its 
discussion of a paper from Australia, New Zealand and Ecuador 
entitled "Contribution to the Discussion on the Framework for 
Disciplines on Fisheries Subsidies - Aquaculture," circulated as 
TN/RL/GEN/54 (1 July 2005).  New Zealand re-introduced the paper 
by observing that the Group's July discussion as reflecting 
Members' views that aquaculture would not be expressly covered in 
strengthened disciplines, both because current rules were 
adequate to address it and strengthened rules on wild fisheries 
would discipline the areas where there was a potential link 
between wild and farmed fisheries (e.g., use of wild fish as 
feedstock for fish farms).  New Zealand, however, emphasized the 
growing importance of the sector and cautioned that Members 
should not lose sight of the possibility of circumvention of 
strengthen rules on wild fisheries through a shifting of 
subsidies to aquaculture.  The EC expressed agreement with the 
sense of the room that aquaculture was not the target of new 
disciplines and that its consideration would further complicate 
the negotiations.  China and India intervened briefly to reaffirm 
their view that aquaculture should not be included. 
 
Architecture of Disciplines 
 
¶17.  Solomon Islands introduced a paper entitled "Architecture on 
Fisheries Subsidies Disciplines," circulated as 
TN/RL/GEN/57/Rev.2 (13 September 2005) on behalf of Members 
characterizing themselves as "small vulnerable coastal states." 
(The paper was co-sponsored by Antigua and Barbuda, Barbados, the 
Dominican Republic, Fiji, Grenada, Guyana, Jamaica, Papua New 
Guinea, St. Kitts and Nevis, St. Lucia, the Solomon Islands, and 
Trinidad and Tobago.  End note.) The paper describes the 
dependency of these countries on foreign aid and argues that 
several types of programs should be carved out from new 
disciplines: (1) development assistance; (2) assistance to 
artisanal or small scale fisheries; (3) access fees through 
fisheries access agreements; and (4) fiscal incentives to 
facilitate development of these Members' coastal fisheries (such 
as support for processing facilities).  The Solomon Islands 
called for an express footnote to Article 1 of the SCM Agreement 
to exclude development assistance from the definition of subsidy. 
While the co-sponsors expressed neutrality as between the "top 
down" and "bottom up" approaches, so long as they were exempted, 
their interventions - even more than the paper itself - 
emphasized several themes associated with the bottom up 
(Japanese) approach: skepticism about the use of the traffic 
light approach and the WTO's competence to fashion new 
disciplines. 
 
¶18.  A number of delegations were active in the discussion that 
followed, including India, Sri Lanka, Mauritius, Thailand and 
Turkey.  They essentially called for special and differential 
treatment (S&D) provisions that would exclude them from 
strengthened disciplines, although some (Thailand, Turkey) 
indicated that these provisions should be part of overall 
strengthened disciplines.  Several delegations, including Peru 
and Chile (Friends of Fish), raised concerns with the co- 
sponsors' apparent press for creating a new category of 
developing countries while other Members, most notably Korea, 
urged that any S&D treatment only be granted to small economies 
that are "too small to have an impact on fish stocks."  Chinese 
Taipei noted that the top down approach would rule out the 
possibility of any flexibility ("policy space") for developing 
countries to develop their fisheries in the future.  Japan also 
argued that the concerns of the co-sponsors could best be 
addressed by the bottom up approach and emphasized aspects of the 
paper that supported its position, e.g., the statement that 
subsidies were not harmful if given in a sustainably managed 
fishery. 
 
¶19.  Brazil stated that two aspects of the paper were consistent 
with its position: the importance of conservation measures and 
the ability for developing countries to develop their fisheries. 
New Zealand stressed that the top down approach provided ample 
flexibility to address the co-sponsors' concerns and expressly 
stated that development assistance and access payments should be 
exceptions to new disciplines. In an important caveat, New 
Zealand stressed that the country receiving an access payment was 
not the focus of these negotiations; rather, the concern was with 
the country providing the payment and only if it did not recover 
the cost of the payments from its industry that benefits from the 
access.  New Zealand also made the point that de minimis 
provisions need further exploration - a point that the US and 
others have begun to contemplate as a way to focus the 
negotiations. 
 
¶20.  The European Community said Members needed to "minimize the 
intrusiveness of strengthened disciplines," in addition to S&D 
provisions, adding that it was "terrible" that the co-sponsors 
would have to come to Geneva to justify their subsidies.  The EC 
also suggested that a discussion of S&D treatment should not wait 
until after the general strengthened disciplines are identified. 
[COMMENT: This intervention appeared to align the EC more closely 
with the Japanese/Korean position than in previous meetings.] The 
United States stated that the top down approach could address the 
concerns raised by the co-sponsors and emphasized the progress 
the negotiations had made, taking note of the technical work on 
specific fisheries categories and Brazil's contribution. 
 
¶21.  There was reconfirmation in the room that special and 
differential treatment is a critical element of strengthened 
disciplines and that the co-sponsors, as small economies, would 
likely be accorded such treatment. There was concern, however, 
about the interpretation of what is meant by small-scale and 
artisanal fisheries.  At the request of some of the paper's co- 
sponsors, the Secretariat will prepare a compilation of 
definitions of artisanal and small-scale fisheries used in 
various fora.  Shark