 WORLD TRADE  
ORGANIZATION  WT/DS276/AB/R 
30 August 2004 
 (04-3592) 
 Original:   English 
   
 
     
 
    
 
    
CANADA – MEASURES RELATING TO EXPORTS OF 
WHEAT AND TREATMENT OF IMPORTED GRAIN 
 
  
AB-2004-3 
  
 
    
 
    
Report of the Appellate Body  WT/DS276/AB/R 
 Page i 
 
 
 
I. Introduction................................................................................................................... ..............1  
II. Arguments of the Participants and the Third Participants ..........................................................5  
A. Claims of Error by Canada – Appellant ........................................................................ 5 
1. Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of 
the GATT 1994.................................................................................................5  
B. Arguments of the United States – Appellee.................................................................... 7 
1. Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of 
the GATT 1994.................................................................................................7  
C. Claims of Error by the United States – Appellant ......................................................... 9 
1. Interpretation of Subparagraph (b) of Article XVII:1 of the 
GATT 1994.......................................................................................................9  
2. Assessment of the Measure.............................................................................11  
3. Assessment of the Evidence ...........................................................................11  
4. Article 6.2 of the DSU ....................................................................................13  
D. Arguments of Canada – Appellee ................................................................................ 14 
1. Interpretation of Subparagraph (b) of Article XVII:1 of the 
GATT 1994.....................................................................................................14  
2. Assessment of the Measure.............................................................................15  
3. Assessment of the Evidence ...........................................................................16  
4. Article 6.2 of the DSU ....................................................................................16  
E. Arguments of the Third Participants............................................................................ 17 
1. Australia..........................................................................................................17  
2. China...............................................................................................................19  
3. European Communities...................................................................................20  
III. Issues Raised in This Appeal ................................................................................................... .22 
IV. Relationship Between Subparag raphs (a) and (b) of Article XVII:1 of the GATT 1994 .........22  
A. Analysis of the Relationship Between Subparagraphs (a) and (b) of  
Article XVII:1............................................................................................................... 23 
B. The Significance of a Panel's Order of Analysis.......................................................... 33 
C. The Approach Taken by the Panel in This Case .......................................................... 36 
D. Canada's Conditional Appeal...................................................................................... 43 
V. Interpretation of Subparagraph (b) of Article XVII:1 of the GATT 1994................................44  
A. Making Purchases and Sales Solely in  Accordance with Commercial 
Considerations............................................................................................................. 45 
B. Affording Other Members' Enterprises Ad equate Opportunity to Compete for 
Participation in Purchases or Sales ............................................................................ 50 
C. Canada's Request for Guidance................................................................................... 54 WT/DS276/AB/R 
Page ii  
 
VI.
 Assessment of  the Measure...................................................................................................... .54 
VII. Assessment of the Evidence..................................................................................................... .60 
VIII. Article 6.2 of the DSU ......................................................................................................... .....67  
IX. Findings and Conclusions....................................................................................................... ..73 
 
ANNEX 1: Notification of an Appeal by the United States under paragraph 4 of  
Article 16 of the Understanding on Rules and Procedures Governing  
the Settlement of Disputes (DSU) 
  WT/DS276/AB/R 
 Page iii 
 
 
TABLE OF CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive 
Industry , WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, 
DSR 2000:VI, 2985 
Canada – FIRA GATT Panel Report, Canada – Administration of the Foreign Investment 
Review Act , adopted 7 February 1984, BISD 30S/140 
Canada – Wheat Exports and 
Grain Imports  Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment 
of Imported Grain , WT/DS276/R, circulated to Members 6 April 2004 
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 
25 September 1997, DSR 1997:II, 591 
EC – Bed Linen (Article 21.5 – 
India) Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from India, Recourse to Article 21.5 of the DSU by India , WT/DS141/AB/RW, adopted 24 April 2003 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting 
of Tariff Preferences to Developing Countries , WT/DS246/AB/R, adopted 
20 April 2004 
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding 
Portland Cement from Mexico , WT/DS60/AB/R, adopted 25 November 1998, 
DSR 1998:IX, 3767 
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of Apples , 
WT/DS245/AB/R, adopted 10 December 2003 
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
Korea – Various Measures on 
Beef  Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R, WT/DS169/AB/R, adopted 
10 January 2001, DSR 2001:I, 5 
Korea – Various Measures on 
Beef  Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen 
Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by 
the Appellate Body Report, WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, 59 
Mexico – Corn Syrup (Article 
21.5 – US) Appellate Body Report, Mexico – Anti-Dumping Investigation of High Fructose 
Corn Syrup (HFCS) from the United States, Recourse to Article 21.5 of the DSU  
by the United States , WT/DS132/AB/RW, adopted 21 November 2001, DSR 
2001:XIII, 6675 
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002 
US – Corrosion-Resistant 
Steel Sunset Review Appellate Body Report, United States – Sunset Review of Anti-Dumping 
Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004 WT/DS276/AB/R 
Page iv  
 
Short Title Full Case Title and Citation 
US – Countervailing Measures 
on Certain EC Products Appellate Body Report, United States – Countervailing Measures Concerning 
Certain Products from the European Communities , WT/DS212/AB/R, adopted 
8 January 2003 
US – FSC Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" , WT/DS108/AB/R, adopted 20 March 2000, DSR 2000:III, 1619 
US – FSC Panel Report, United States – Tax Treatment for "Foreign Sales Corporations" , 
WT/DS108/R, adopted 20 March 2000, as modified by the Appellate Body 
Report, WT/DS108/AB/R, DSR 2000:IV, 1675 
US – FSC (Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations", Recourse to Article 21.5 of the DSU by the European Communities , WT/DS108/AB/RW, adopted 29 January 2002 
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3 
US – Lead and Bismuth II Appellate Body Report, United States – Imposition of Countervailing Duties on 
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom , WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, 2595 
US – Section 337 GATT Panel Report, United States Section 337 of the Tariff Act of 1930 , 
adopted 7 November 1989, BISD 36S/345 
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, 
DSR 1998:VII, 2755 
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R, adopted 17 February 2004 
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R, WT/DS249/AB/R, 
WT/DS251/AB/R, WT/DS252/AB/R, WT /DS253/AB/R, WT/DS254/AB/R, 
WT/DS258/AB/R, WT/DS259/AB/R , adopted 10 December 2003 
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717 
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, adopted 
23 May 1997, DSR 1997:I, 323 
 
  WT/DS276/AB/R 
 Page 1 
 
 
WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 
Canada – Measures Rela ting to Exports of 
Wheat and Treatment of Imported Grain 
 
United States – Appellant / Appellee  
Canada – Appellant / Appellee  
 
Australia – Third Participant  
China – Third Participant  
European Communities – Third Participant  
Mexico – Third Participant  
Separate Customs Territory of Taiwan,  
  Penghu, Kinmen and Matsu – Third Participant  
  AB-2004-3 
  Present:  
 Lockhart, Presiding Member 
 Abi-Saab, Member  Taniguchi, Member  
  
I. Introduction 
1. The United States and Canada each appeals certain issues of law and legal interpretations 
developed in the Panel Reports,  Canada – Measures Relating to Exports of Wheat and Treatment of 
Imported Grain   (the "Panel Report").
1   
2. On 6 March 2003, the United States requested th e establishment of a panel to consider a 
complaint against Canada with regard to two categ ories of measures:  one concerning the export of 
wheat by the Canadian Wheat Board (the "CWB")2;  and the other involving the treatment accorded 
by Canada to imports of grain.3  Specifically, the United States asserted that:  (i) the Canadian Wheat 
Board Export Regime (the "CWB Export Regime") is  inconsistent with Cana da's obligations under  
                                                      
1WT/DS276/R, 6 April 2004.  As explained infra , two Panels were established by the Dispute 
Settlement Body (the "DSB") to resolve this dispute.  Th e parties indicated that they did not wish the two Panels 
to issue separate reports in separate documents.  The Pa nels agreed with the parties and decided to issue their 
separate Reports in the form of a single document  (P anel Report, para. 6.2)  On  appeal, neither participant 
objects to the Panels' course of action.    
In this Report, we will refer to the Panel Reports in the singular except where it is necessary to draw a 
distinction between the two Panels.   
2Canada has notified the CWB to the Working Party on State Trading Enterprises of the World Trade 
Organization (the "WTO").  According to this notificatio n, the statutory objective of  the CWB is the marketing 
in an orderly manner, in inter-provincial and export trade, of grain grown in Canada.  The CWB has exclusive 
authority for the sale of wheat and barley grown in the designated area in expo rt markets and for human 
consumption in the domestic market.  The "designated area" includes the Canadian provinces of Manitoba, 
Saskatchewan, Alberta and the Peace River area of the province of British Co lumbia. (G/STR/N/4/CAN) 
3WT/DS276/6. WT/DS276/AB/R 
Page 2  
 
Article XVII:1 of the  General Agreement on Tariffs and Trade 1994   (the "GATT 1994");  and 
(ii) certain measures relating to Canada's bulk grain handling system and to the transportation of grain 
by rail in Canada are inconsistent  with Canada's obliga tions under Article III: 4 of the GATT 1994 and 
Article 2 of the  Agreement on Trade-Related Investment Measures   (the " TRIMs Agreement
 ").4 The 
Panel (the "March Panel") was estab lished by the DSB on 31 March 2003.5  
3. On 13 May 2003, Canada filed a preliminary s ubmission requesting the March Panel to rule 
that the United States' claim against the CW B Export Regime under Article XVII:1 of the 
GATT 1994 was not properly before the Panel becau se the United States' panel request did not meet 
the requirements of Article 6.2 of the  Understanding on Rules and Procedures Governing the 
Settlement of Disputes   (the "DSU").6  On 25 June 2003, the March Panel issued a preliminary ruling 
finding that the United States' request for the establis hment of a panel "did not meet the requirements 
of Article 6.2 of the DSU because it did not adequa tely specify the Canadian laws and regulations 
addressed in the United States' claim under Article XVII of the GATT 1994".7    
4. The United States filed a sec ond panel request on 30 June 2003.8  The second Panel (the "July 
Panel") was established by the DSB on 11 July 2003 a nd it was agreed that the July Panel would be 
composed of the same panelists as the March Panel.9  The proceedings of the March and July Panels 
were harmonized pursuant to Article 9.3 of the DSU.10 
5. The Panel Report was circulated to the Memb ers of the WTO on 6 April 2004.  The July 
Panel found that: 
[t]he United States has failed to est ablish its claim that Canada has 
breached its obligations under Article XVII:1 of the GATT 1994 
because the CWB Export Regime necessarily results in the CWB making export sales that are not in accordance with the principles of 
subparagraphs (a) or (b) of Article XVII:1.
11 
                                                      
4Panel Report, para. 3.1. 
5WT/DSB/M/146. 
6Canada also filed another preliminary submission requesting the March Panel to adopt special 
procedures for the protection of strictly confidential information.  Panel Report, para. 1.7. 
7Panel Report, para. 1.8. 
8WT/DS276/9. 
9WT/DSB/M/152. 
10Panel Report, para. 1.11. 
11Ibid., para. 7.4(a).  WT/DS276/AB/R 
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In addition, the March and July Pa nels found Section 57(c) of the  Canada Grain Act , Section 56(1) 
of the  Canada Grain Regulations , and Sections 150(1) and (2) of the  Canada Transportation Act   to 
be inconsistent with Article III:4 of the GATT 1994.12  The March and July Panels exercised judicial 
economy with respect to the United States' claims agains t these measures under Article 2 of the  
TRIMs Agreement .13  Finally, the March and July Panels found that the United States failed to 
establish its claim that Section 87 of the  Canada Grain Act   is inconsistent with Article III:4 of the 
GATT 1994 and Article 2 of the  TRIMs Agreement .14 
6. The March and July Panels accordingly recommended that: 
... the Dispute Settlement Body request Canada to bring the relevant 
measures into conformity with its obligations under the GATT 1994.
15 (footnote omitted) 
7. On 1 June 2004, the United States notified the DSB of  its intention to appeal certain issues of 
law covered in the Panel Report a nd certain legal interpretations de veloped by the March and July 
Panels, pursuant to paragraph 4 of Article 16 of the DSU, and filed a Notice of Appeal16 pursuant 
to Rule 20 of the  Working Procedures for Appellate Review   (the " Working Procedures ").17  O n  
11 June 2004, the United States f iled its appellant's submission.18  On 16 June 2004, Canada filed an 
other appellant's submission.19  On 28 June 2004, the United States and Canada each filed an 
appellee's submission.20  On that same day, Australia, Ch ina, and the European Communities each 
filed a third participant's submission.21  Also on 28 June 2004, Mexico  and the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu each notified the Appellate Body Secretariat of its 
intention to attend and make statements at the oral hearing.22   
                                                      
12Panel Report, paras. 7.1(a)–(c) and 7.4(b)–(d). 
13Ibid., para. 6.378. 
14Ibid., para. 7.1(d) and 7.4(e). 
15Ibid., paras. 7.3 and 7.6. 
16Notification of an appeal by the United States, WT/DS276/15, 3 June 2004 (attached as Annex 1 to 
this Report). 
17WT/AB/WP/7, 1 May 2003.  
18Pursuant to Rule 21 of the  Working Procedures .  
19Pursuant to Rule 23(1) of the  Working Procedures .  
20Pursuant to Rule 22(1) and Rule 23(3) of the  Working Procedures .  
21Pursuant to Rule 24(1) of the  Working Procedures .  
22Pursuant to Rule 24(2) of the  Working Procedures .  Japan notified the Appellate Body Secretariat, on 
28 June 2004, that it would not be filing a third participant's submission, nor would it attend the oral hearing.  
Chile initially notified, on 28 June 2004, its intention to a ppear at the oral hearing.  On 8 July 2004, however, 
Chile informed the Appellate Secretariat that it would not attend the hearing.  WT/DS276/AB/R 
Page 4  
 
8. The oral hearing was held on 12 July 2004.  Th e participants and third participants each 
presented oral arguments (with the exception of th e Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu) and responded to  questions put to them by the Members of the Division hearing 
the appeal.  
9. This appeal relates to procedural and substa ntive aspects of the United States' claim against 
the CWB Export Regime under Article XVII:1 of the GATT 1994.  Neither Canada nor the 
United States has appealed the March and July Pane ls' findings in respect of the measures concerning 
Canada's imports of grain.   
10. The Panel, in essence, accepted the United St ates' definition of the CWB Export Regime as 
consisting of the following three elements, taken coll ectively:  the "legal framework" of the CWB;  
the "exclusive and special privileges" granted to the CWB by the government of Canada;  and certain 
"actions of Canada and the CWB" relating to the sale of wheat for export.
23   
11. The relevant "legal framework" consists of the  Canadian Wheat Board Act , which is the 
governing statute of the CWB.24  The "exclusive and special priv ileges" referred to by the United 
States include:  the CWB's exclusive right to purchase and sell Western Canadian wheat for export 
and for domestic human consumption;  its right to  set, subject to government approval, the initial 
price paid to farmers upon delivery of the wheat; and the Canadian government's guarantee of this 
initial payment, of the CWB's borrowing, and of  the CWB's  credit sales to foreign buyers. 25  The 
"actions" that are part of the measure as defined by the United States included Canada's alleged failure 
to exercise its authority to oversee the CWB, its approval of the CWB's borrowing plan and guarantee 
of the CWB's borrowing and credit sales, and the approval and guarantee by Canada of the initial 
payments made to farmers upon delivering Western Canadian wheat to the CWB;  as well as the 
CWB's sales of wheat destined for export on a llegedly discriminatory or non-commercial terms.26   
12. The Panel observed that the United States was challenging the CWB Export Regime  
as such .27  According to the Panel, the United States is not "complaining about specific CWB export 
                                                      
23Panel Report, para. 6.12. The United States also referre d, in its initial submissions before the Panel, to 
the CWB's  purchases   of wheat.  The Panel, however, stated that it would be inappropriate for it to make 
findings with respect to the CWB's wheat purchases because the United States did not present and develop specific arguments on this point. (Panel Report, footnote 118 to para. 6.24).  This has not been appealed by the 
United States. 
24Panel Report, para. 6.14. 
25Ibid., para. 6.15. 
26Ibid., para. 6.16. 
27Ibid., para. 6.28.  WT/DS276/AB/R 
 Page 5 
 
 
sale transactions, but the (alleged) fact that the CWB Export Regime necessarily results in non-
conforming 'actions of the CWB' with respect to export sales".28 
13. Before the Panel, and before us, Canada obser ved that the term "CWB Export Regime" is not 
found in Canadian law or practice, but did not object to the United States or the Panel using the term to describe the measure at issue.
29 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by Canada – Appellant   
1. Relationship Between Subpara graphs (a) and (b) of Article XVII:1 of the 
GATT 1994  
14. Canada argues that the Panel erred by failing to consider th e proper relationship between 
subparagraphs (a) and (b) of Ar ticle XVII:1 of the GATT 1994, and in assuming that a breach of 
subparagraph (b) is sufficient to establish a breach of Article XVII:1.  Canada requests the Appellate 
Body to modify the Panel's findings and conclusi ons and find instead that:  (i) a violation of 
Article XVII:1 requires a violation of  subparagraph (a);  (ii) actions that are not discriminatory and do 
not result in a breach of subparagraph (a) of Article XVII:1 should not be considered under 
subparagraph (b);  and (iii) the Panel erred in not  dismissing the United States' case with respect to 
Article XVII:1 on the basis of the failure by th e United States to establish that the CWB Export 
Regime necessarily results in conduct in breach of Article XVII:1(a).   
15. According to Canada, subparagraph (a) is the "principal obligation" in Article  XVII:1.30  
Subparagraph (b) "interprets and tempers" the obligation in Article  XVII:1(a).31  Where a measure 
has been found to be not in accordance with the principles of non-discriminatory treatment under 
Article XVII:1(a), it is still in conformity with Article XVII:1 if it meets the criteria set out in 
Article XVII:1(b). 
16. Canada finds support for its interpretation in th e introductory language of subparagraph (b), 
which states that "[t]he provisions of subparagr aph (a) of this paragra ph shall be understood to 
require ...", as well as in the structure of Article XVII: 1.  This interpretation is also supported by the 
object and purpose of Article XVII, which is to prevent WTO Members from doing indirectly through 
state trading enterprises ("STEs") that which they have  contracted not to do directly with respect to 
                                                      
28Panel Report, para. 6.27. 
29Ibid., para. 6.17;  Canada's appellee's submission, footnote 26 to para. 28. 
30Canada's other appellant's submission, para. 5. 
31Ibid. WT/DS276/AB/R 
Page 6  
 
impermissible discrimination.  The  ad  Note to Article XVII, by providing an example of the type of 
discriminatory conduct that is permissible under Ar ticle XVII, confirms th at subparagraph (b) does 
not establish separate obligations, but rath er tempers the obligation established under 
subparagraph (a). 
17. In Canada's view, its interpretation of the re lationship between subpara graphs (a) and (b) is 
consistent with the interpretation given to Ar ticle XVII by previous GATT/WTO panels.  In 
particular, Canada refers to a statement of the panel in  Canada – FIRA   that the "commercial 
considerations criterion becomes relevant only afte r it has been determined that the governmental 
action at issue falls within the scope of the ge neral principles of non-discriminatory treatment" 
prescribed in the GATT.
32  This statement was later endorsed by the panel in  Korea – Various 
Measures on Beef   when it stated that "the scope of paragraph (b) ...  defines the obligations set out in 
paragraph  (a)".33 
18. Canada contends that the Panel pr oceeded on the in correct "assumption"34 that 
subparagraphs (a) and (b) of Article XVII:1 create separate obligations and that, as a result, a mere 
breach of Article XVII:1(b) is sufficient to establis h a violation of Article XVII:1.  The Panel then 
examined whether the CWB Export Regime conformed to the provisions of Article XVII:1(b).  In 
Canada's view, this constituted le gal error.  Article XVII:1 has an "inescapable internal logic"35 
according to which panels must  first  determine discriminatory practices under subparagraph (a), and 
then consider whether  those   practices accord with co mmercial considerations under 
subparagraph (b).  Nothing in the scheme of Ar ticle XVII permits a pane l to ignore the core 
interpretative issue of the relationship between su bparagraphs (a) and (b) of  paragraph 1, and to 
proceed to apply the provision on the basis of an assumption that "Articles XVII:1(a) and (b) create 
separate obligations and that, as a result, a mere brea ch of Article XVII:1(b) is sufficient to establish a 
violation of Article XVII:1."36  
19. Canada asserts that, having failed to interp ret the correct relationship between the two 
subparagraphs, the Panel then erre d in not making a finding of discriminatory conduct within the 
meaning of Article XVII:1(a) befo re examining the "commerciality" of the conduct of the CWB under 
Article XVII:1(b).37  On the basis of the eviden ce before the Panel and its findings with respect to the 
                                                      
32GATT Panel Report, Canada – FIRA , para. 5.16. 
33Panel Report, Korea – Various Measures on Beef , para. 755. (emphasis added) 
34Canada's other appellant's submission, para. 24. 
35Ibid., para. 39. 
36Ibid., para. 6. 
37Ibid., para. 7.  WT/DS276/AB/R 
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CWB's legal structure and mandate, the Panel should have concluded that the United States failed to 
establish a breach of Article XVII:1(a) and should ha ve dismissed the United States' claim solely on 
this basis without further inquiry as to consistency with Article XVII:1(b).  Ca nada, therefore, submits 
that the Panel committed legal error by not followi ng the proper sequence of steps required in the 
interpretation and application of Article XVII:1.  Ca nada adds that such a conclusion does not affect 
the Panel's findings under subparagraph (b) of Ar ticle XVII:1 and that, therefore, these findings 
should be upheld by the Appellate Body.   
20. Finally, Canada submits a conditional appeal in the event the Appellate Body were to 
consider that the Panel's decision to examine the consistency of the measure with subparagraph (b) of 
Article XVII:1, without first making a determinati on under subparagraph (a), amounts to an exercise 
of judicial economy.  In that case, Canada requests the Appellate Body to conclude that the Panel’s 
failure to resolve the interpretativ e issue regarding the relationship between subparagraphs (a) and (b) 
of Article XVII:1 was an improper exercise of j udicial economy, and to make the "appropriate 
findings".38  According to Canada, the relationshi p between subparagraphs (a) and (b) of 
Article XVII:1 is a critical threshold issue.  Thus, if the Panel's  assumption   that an inconsistency 
with Article XVII:1 can be demonstrated merely by establishing inconsistenc y with subparagraph (b) 
is characterized as an exer cise of judicial economy, then this c onstituted an inappropriate application 
of judicial economy and a failure to resolve the dispute. 
B. Arguments of the United States – Appellee   
1. Relationship Between Subpara graphs (a) and (b) of Article XVII:1 of the 
GATT 1994  
21. The United States submits that the Panel properl y began its analysis by examining the United 
States' claim under Article XVII:1(b). 
22. The United States accepts that subparagraphs (a) and (b) of Article XVII:1 are "related", but 
contends that nothing in the text of that Article  establishes a "hierarchy" am ong the obligations set out 
in each subparagraph.39  In the United States' view, subpara graphs (a) and (b) of Article XVII:1 
"articulate three separate requirements".40  Subparagraph (b) of Article XVII:1 requires that the CWB 
make its sales "solely in accordance with comm ercial considerations."  Subparagraph (b) of 
Article XVII:1 also requires that the CWB afford  the enterprises of other Members an "adequate 
opportunity, in accordance with customary business prac tice, to compete for participation in such ... 
                                                      
38Canada's other appellant's submission, para. 61.   
39United States' appellee's submission, para. 20. 
40Ibid., para. 2. WT/DS276/AB/R 
Page 8  
 
sales."  Finally, subparagraph (a) of Article XVII:1 re quires that the CWB "act in a manner consistent 
with the general principles of non-discriminatory treatment" in the GATT 1994.  A violation of any of 
these three requirements constitu tes a breach of Article XVII.
41   
23. According to the United States, an examinati on of the ordinary meaning of the terms of 
Article XVII:1(b), in their context and in light of  the object and purpose of the GATT 1994, leads to 
the inevitable conclusion that a violation of either of the requirements of Article XVII:1(b) results in a 
breach of Article XVII.  The ordinary meaning of "to require" is to compel a particular result in order 
to secure compliance with a given law or regulation.  It follows that Article XVII:1(b) compels Canada to ensure that the CWB makes sales solely in accordance with commercial considerations.  In 
addition, subparagraph (b) of Article XVII:1 states th at STEs "shall" make sales solely in accordance 
with commercial considerations and "shall" afford enterprises of other Members an adequate 
opportunity to compete for participation in such sales.  That subparagraph (b) sets out distinct 
obligations that STEs must comply with is conf irmed by the French and Spanish versions of 
Article XVII:1(b), which use the terms " obligation " and " obligación ", respectively.
42   
24. The United States adds that the context of Ar ticle XVII also supports the conclusion that 
Article XVII:1(b) contains specific disciplines on the behaviour of STEs that, if violated, would 
constitute a breach of Article XVII:1.  Article XVII:3 recognizes that STEs can be used "so as to 
create serious obstacles to trade".  These potential obs tacles are addressed in the three requirements of 
Article XVII:1.  In addition, su bparagraph (c) of Article XVII:1 refers to "the principles of 
subparagraphs (a) and (b) of this  paragraph", supporting the ordinary meaning of the terms of 
subparagraphs (a) and (b) as referring to multiple, distinct obligations.  According to the United 
States, Canada's interpretation undermines the obj ect and purpose of the GATT 1994 because, instead 
of contributing to the elimination of discriminato ry treatment in international commerce, it endorses 
such discriminatory treatment by STEs to the disadvantage of commercial actors. 
25. In addition, the United States asserts that Artic le XVII:1 "creates a coherent regime designed 
to discipline STEs that might otherwise engage in trade-distorting conduct".43  The principle of 
effectiveness in treaty interpretation requires subpara graphs (a) and (b) to be read together in a 
harmonious manner.  Such a reading leads to the in evitable conclusion that s ubparagraphs (a) and (b) 
of Article XVII:1 contain distinct and complement ary obligations.  The United States emphasizes that 
the panel in  Korea – Various Measures on Beef   also held that "a conclusion that a decision to 
                                                      
41At the oral hearing, the United States asserted th at a breach of subparagra ph (b) of Article XVII:1 
could also lead to violation of subparagraph (a). 
42United States' statement at the oral hearing. 
43United States' appellee's submission, para. 7.  WT/DS276/AB/R 
 Page 9 
 
 
purchase or buy was not based on 'commercial considerations', would also suffice to show a violation 
of Article XVII."44   
26. For these reasons, the United States requests the Appellate Body to reject Canada's argument 
that the Panel should have found a breach of Articl e XVII:1(a) before turning to Article XVII:1(b) 
and to instead "affirm the Panel's determination that a violation of either of the requirements set forth 
in Article XVII:1(b) is sufficient to establish a breach of Article XVII".45 
27. As regards Canada's conditional appeal, the Unite d States submits that the Panel did not fail 
to decide a threshold issue in this case.  Given that subparagraphs (a) and (b) establish distinct 
obligations, it was proper for the Panel to assume th at an inconsistency with Article XVII:1 can be 
established by demonstrating a viola tion of subparagraph (b).   Indeed, the United States focused its 
case on the requirement in subparagraph (b) that STEs must make sales solely in accordance with 
commercial considerations and, therefore, it was prope r for the Panel to focus its own analysis on this 
requirement. 
C. Claims of Error by the United States – Appellant   
1. Interpretation of Subparagraph (b) of Article XVII:1 of the GATT 1994  
28. The United States argues that the Panel erred in  its interpretation of subparagraph (b) of 
Article XVII:1.  The United States requests the Appella te Body to reverse the Panel's interpretation of 
the first and second clauses of subparagraph (b).  Shou ld the Appellate Body find error in the Panel's 
interpretation of subparagraph (b), the United States  requests that the Appellate Body complete the 
analysis and find that the CWB Export Regime necessar ily results in sales that are not based solely on 
commercial considerations.  
29. First, the United States argues that the Panel incorrectly interpreted the phrase "solely in 
accordance with commercial considerations" in the first clause of Article XVII:1(b), as "simply 
intended to prevent STEs from behaving like 'political' actors."  46  This does not correspond to the 
proper meaning of the phrase "commercial considera tions".  "Commercial considerations" are those 
"experienced by commercial actors".47  Commercial actors are those "engaged in commerce" and they 
"are interested in financial return."48  Such actors do not merely act based on "non-political" 
                                                      
44Panel Report, Korea – Various Measures on Beef , para. 757. 
45United States' appellee's submission, para. 36. 
46Quoting Panel Report, para. 6.94. 
47United States' appellant's submission, para. 3. 
48Ibid., para. 26. WT/DS276/AB/R 
Page 10  
 
considerations.  Rather, they must also act within the limits of their cost constraints, which are 
established by the market.  The United States relies on th e example of an STE that may be able to use 
its special privileges to gain market share through long-run price under-cutting.  For such an STE to 
act as a commercial actor, it would have to sell at prices that, at a minimum, would equal the replacement value of a good.  By requiring that  STEs act solely in accordance with commercial 
considerations, Article XVII:1(b) serves to prev ent them from using their privileges to the 
disadvantage of commercial actors.  This is consis tent, the United States submits, with the object and 
purpose of the GATT 1994, namely reducing barrier s to trade and eliminating discriminatory 
treatment. 
30. The United States alleges that the Panel based its interpretation of "commercial 
considerations" on the premise that not all STEs are used only for commercial purposes.  Thus, the 
Panel "effectively assumed away the very question it was tasked to examine".
49  Finally, the United 
States argues that the Panel's interpretation permits  STEs to use their special privileges to the full 
extent possible, even if this causes discriminati on or other serious obstacles to trade.  The United 
States asks the Appellate Body to reverse the Panel's finding and to conclude that commercial 
considerations are those under whic h commercial actors must operate. 
31. Secondly, the United States contends that the Panel misinterpreted the term "enterprises" in 
the second clause of Article XVII:1(b), concluding th at it referred to enterprises that wish to  buy  
from an STE but not to enterprises that wish to  sell  in competition with an STE.  In so finding, the 
Panel failed to give due considera tion to the ordinary meaning of the term, in its context and in the 
light of the object and purpose of the GATT 1994.   
32. The United States notes that the term "enterprise" is defined as a "business firm" or a 
"company" and, contrary to the Pa nel's conclusion, this definition is not limited to entities that are 
buyers.50  Moreover, the United States points to the cont ext provided in subparagraphs (a) and (c) of 
Article XVII:1, where the term "enterprise" is used  without any indication that its meaning should be 
limited to buyers.  Article XVII:3, which recogni zes that STEs "might be operated so as to create 
serious obstacles to trade", also provides contex tual support, because the characterization of the 
potential obstacles that may result from STEs as "serious" argues against narrowing the ordinary 
meaning of "enterprises";  otherwise, many of these serious obstacles would escape the disciplines of 
Article XVII:1.  The United States adds that the Panel's interpretation of the term "enterprises" as 
limited to buyers is also inconsistent with the object and purpose of the GATT 1994.   
                                                      
49United States' appellant's submission, para. 28. 
50The United States cites in support, The New Shorter Oxford English Dictionary , L. Brown (ed.) 
(Clarendon Press 1993), Vol. I, p. 828.  WT/DS276/AB/R 
 Page 11 
 
 
33. The United States contends that the Panel's examin ation of the relevant context focused solely 
on the phrase "participation in" in the second clause  of Article XVII:1(b), without examining other 
contextual elements of Article XVII or consider ing the object and purpose of the GATT 1994.  This 
led the Panel to adopt an incorrect interpretation of  the term "enterprises" that impermissibly narrows 
"the reach of Article XVII's disciplines".51  The United States, therefore, requests the Appellate Body 
to reverse this interpretation and to find that the term "enterprises" in the second clause of 
subparagraph (b) includes both buyers and sellers. 
2. Assessment of the Measure  
34. The United States argues that the Panel erred in considering only certain aspects of the 
challenged measure and not basing its fi ndings on the measure in its entirety.52  Although the Panel 
properly defined the measure at issue in this di spute, the Panel then proceeded to ignore  the 
privileges granted to the CWB   when it examined the United Stat es' assertion that the CWB's legal 
structure and mandate, together with the privileges granted to it, create an incentive for the CWB to 
discriminate between markets by making some of its sales not solely in accordance with commercial 
considerations.  
35. According to the United States, the Panel only re fered to the privileges granted to the CWB in 
a "conclusory" manner53, but it is not evident from the Panel Re port that the Panel actually examined 
these privileges.  Specifically, the Panel never analyzed how the CWB' s special privileges, which are 
an integral part of the measure, interact with other elements of the CWB Export Regime, nor did the 
Panel examine how the CWB Export Regi me as a whole affects CWB sales.54  Therefore, the Panel's 
conclusion that the CWB Export Regime does not r esult in sales that are not based solely on 
commercial considerations is in error, because this finding was based on an assessment of only part of 
the measure, and not the measure in its entirety.  
3. Assessment of the Evidence  
36. The United States contends that the Panel failed to assess objectively the facts, as required by 
Article 11 of the DSU, because the Panel deliberatel y disregarded or refused to consider evidence 
submitted by the United States. 
                                                      
51United States' appellant's submission, para. 20. 
52In response to questioning at the oral hearing, the Un ited States asserted that its claim of error relates 
to the Panel's application of Article XVII:1. 
53United States' statement at the oral hearing. 
54Ibid. WT/DS276/AB/R 
Page 12  
 
37. According to the United States, even though the Panel itself defined the  Canadian Wheat 
Board Act   as the "legal framework of the CWB", th e Panel ignored evidence on how provisions of 
that Act constrain the independence of the CWB's Board of Directors and the CWB's operations.  The 
United States explains that it presented evidence befo re the Panel showing that the President of the 
CWB's Board of Directors is appointed by the Canadian government and holds office for a term 
determined by the Canadian government; that the Board of Directors reports directly to a Minister of 
the Canadian government and provides detaile d information about CWB activities, holdings, 
purchases, and sales on a monthly basis;  that the Boar d of Directors is required "to act as agent for or 
on behalf of any minister or agent of Her Majesty in right of Canada in respect of any operations that it may be directed to carry out by the Governor in Council"
55;  and, that CWB profits are to be paid 
into a revenue fund of the Canadian government .  According to the United States, the Panel 
disregarded this evidence and chose inst ead to rely solely on the fact that ten of the fifteen directors of 
the CWB Board are elected by farmers rather than  appointed by the government, along with the fact 
that the Canadian government does not exercise day-to-day control over CWB operations, to incorrectly conclude that the CWB is "controlled by" wheat farmers. 
38. In addition, the United States su bmits that the Panel ignored significant facts related to the 
financial operations of the CWB, including the CW B's monopoly right to purchase Western Canadian 
grain for domestic human consump tion and export, the approval and guarantees of initial payments to 
farmers by the Canadian government, and the reimbur sement by the Canadian Parliament of losses 
sustained by the CWB.  The United States argues th at these elements play a fundamental role in 
establishing incentives in the marketplace because they provide the CWB with greater pricing 
flexibility and reduced risk compared to commercial actors.  The United States also alleges that the 
Panel further disregarded the United States' s ubmissions regarding the Canadian government's 
guarantee of all CWB borrowings.  This guarantee allows the CWB to borrow at more favourable 
rates and then loan funds at a higher rate, thereby generating interest income.  This additional revenue, 
the United States submits, is a key element of the CWB's legal framework that gives the CWB 
increased pricing flexibility and, in turn, creat es incentives to make sales in a non-commercial 
manner.  Finally, the United States asserts that th e Panel ignored facts relating to the CWB's credit 
sales pursuant to Section 19(6) of the  Canadian Wheat Board Act . 
39. The United States contends that, had the Pane l considered the evidence presented by the 
United States, the Panel would properly have concl uded that "the CWB's lega l structure and mandate, 
                                                     
 
55Quoting from Section 6(1)(j) of the Canadian Wheat Board Act , submitted by the United States to the 
Panel as Exhibit US-2.  WT/DS276/AB/R 
 Page 13 
 
 
together with the privileges enjoyed by the CWB, create an incentive for the CWB to make sales 
which are not solely in accordance with commercial considerations."56 
4. Article 6.2 of the DSU  
40. The United States asserts that the March Panel erred in finding that Canada's request for a 
preliminary ruling under Article 6.2 of the DSU was filed in a timely manner.  The United States points out that the Appellate Body has previously stat ed that a party must raise procedural objections 
at the earliest possible opportunity
57, something that Canada failed to do in this case. 
41. The United States explains that it made its pane l request on 6 March, 2003, yet Canada failed 
to raise any concerns or object to the sufficiency  of the request at either the 18 March or the 
31 March 2003 meeting of the DSB, in which the request was considered.  Instead, Canada waited 
until 13 May 2003, more than two months after the Un ited States' panel request, to raise its objections. 
42. According to the United States, the facts in this case are analogous to those in  
US – FSC   and in  Mexico – Corn Syrup (Article 21.5 - US) .  The March Panel erred in failing to 
apply the rationale developed by th e Appellate Body in those two cases to the facts of this case.  The 
United States relies on  US – FSC ,  where the Appellate Body concluded that the United States had 
failed to raise its procedural objections in a tim ely manner because it had not raised them at the 
earliest opportunity possible, namely, at the DSB me etings where the request for establishment of the 
panel was considered.58  Furthermore, in  Mexico – Corn Syrup (Article 21.5 - US) , the Appellate 
Body noted that because Mexico waited four  months after the United States submitted its 
communication seeking recourse to Article 21.5 of  the DSU to raise its objections, "Mexico's 
objections could have been viewed as untimely".59  In this case, because Canada failed to raise its 
objection under Article 6.2 of the DSU at either of  the two DSB meetings held after Canada received 
the United States' panel request, the March Panel shou ld have determined that  Canada's objection was 
untimely.  
43. Finally, the United States submits that th e March Panel placed undue weight on Canada's 
letter of 7 April 2003 seeking clarificati on of the United States' panel request.60  A response to that 
                                                      
56United States' appellant's submission, para. 44. 
57Appellate Body Report, US – Carbon Steel , para. 123;  and Appellate Body Report, US – FSC , 
para. 166. 
58Appellate Body Report, US – FSC , para. 165. 
59United States' appellant's submission, para. 65, referring to Appellate Body Report, Mexico – Corn 
Syrup (Article 21.5) , paras. 49–50. 
60United States' statement at the oral hearing.   WT/DS276/AB/R 
Page 14  
 
letter by the United States could not have "cured" the alleged procedural defect in the panel request, as 
recognized by the Appellate Body in  EC – Bananas III .
61     
D. Arguments of Canada – Appellee   
1. Interpretation of Subparagraph (b) of Article XVII:1 of the GATT 1994  
44. Canada submits that the Panel correctly inte rpreted both the first and the second clause of 
subparagraph (b) of Article XVII:1 of the GATT 1994.  Canada, therefore, requests that the Appellate 
Body uphold the Panel's interp retation of subparagraph (b). 
45. Canada argues that the Panel correctly found that the term "commercial considerations" 
should be understood as meaning cons iderations pertaining to commerce and trade, or considerations 
that involve purchases or sales "as mere matters of business".62  This interpretati on is supported by the 
ordinary meaning of the word "commercial" and by it s context.  In particular, the Panel was correct in 
relying on the illustrative list in Article XVII:1(b) of types of "commercial considerations" that an 
STE may take into account (that is, price, quality, availability, marketability, transportation and other 
conditions of purchase or sale).  The Panel determin ed that, if an STE makes purchases or sales based 
solely on elements such as those listed in Artic le XVII:1(b), its purchases or sales would be based 
solely on considerations that relate to, and are characteristic of, commerce and trade.   
46. Canada contends that the Panel's interpretati on is also supported by the object and purpose of 
Article XVII, which, as the Panel recognized, is  to prevent WTO Members from doing indirectly 
through STEs that which they have contracted not to do directly under the GATT 1994.  Nothing in 
Article XVII, or the GATT 1994, suggests that STEs are to be put at a disadvantage in their purchases 
and sales as compared to private traders—especially in  view of the fact that the definition of "STEs" 
includes private sector actors that are gran ted exclusive or special privileges.   
47. According to Canada, the United States misch aracterizes the Panel's reference to "non-
political" considerations as a finding, even though th e Panel's reference was meant simply by way of 
contrast.  Furthermore, Canada argues that the United States attempts, through its proposed interpretation, to read competition disciplines in to Article XVII where none exists.  Neither 
Article XVII, nor indeed the  Marrakesh Agreement Es tablishing the World Trade Organization , 
prohibits "anti-competitive behaviour".  In sum, Article XVII:1(b) does not prevent STEs from using 
their exclusive and special privileges, so l ong as they do so like a rational market actor. 
                                                     
 
61Appellate Body Report, EC – Bananas III , para. 143. 
62Panel Report, para. 6.85.  WT/DS276/AB/R 
 Page 15 
 
 
48. As regards the second clause of Article XVII:1(b) , Canada contends that the Panel correctly 
found that, where an export STE is at issue, the phrase "enterprises of the other Members" in 
Article XVII:1(b) refers only to enterprises of the other Members that are interested in purchasing the 
products offered for sale by the STE.  The phrase "compe te for participation" provides context for the 
interpretation of the phrase "enterprises of other Members".  It is the seller and the purchaser who 
"participate" in a transaction.  Competitors do not pa rticipate in the same "tra nsaction";  rather they 
compete against each other.  Similarly, the phr ase "in accordance with customary business practice" 
provides relevant context.  It is not customary business practice for competitors to "participate" in 
each other's sales, or to assist or cooperate with  competitors.  Rather, customary business practice is 
when an enterprise wins sales at the expense of its  competitors.  Finally, Canada observes that the 
United States' argument that the second clause of paragraph (b) requires STEs to allow their 
competitors to participate in their sales contra dicts its own argument that STEs must act like 
"commercial actors".   
49. In the event, however, that the Appellate Body  were to reverse the Panel's finding that the 
CWB Export Regime does not create an incentive to  make sales not in accordance with commercial 
considerations, Canada would request  the Appellate Body to complete the analysis and find that the 
United States failed, in any event, to establish that the CWB Export Regime  necessarily results   in 
sales not in accordance with Article XVII:1(b). 
2. Assessment of the Measure  
50. Canada contends that the United States' claim that the Panel did not examine the measure in 
its entirety does not appear to be a claim of legal e rror by the Panel in the interpretation or application 
of Article XVII:1.  Instead, although not expressl y mentioned by the United States, its claim would 
appear to fit more properly under Article 11 of th e DSU as an allegation that the Panel did not make 
an objective assessment of the matter.  In this sense,  the United States' failure to cite a legal provision 
in relation to this claim should be sufficient grounds for its dismissal. 
51. Nevertheless, Canada considers that, in the inte rest of resolving the dispute, the Appellate 
Body should address the United States' claim, but under the correct legal provision, namely, 
Article 11 of the DSU.  Contrary to the Unite d States' assertion, the Panel correctly assessed the 
relevance of the privileges at issue in the light of  its interpretation of Article XVII:1(b).  The Panel 
found that "the mere existence" of privileges is not relevant for determin ing whether STEs act in 
accordance with commercial considerations.63  
                                                      
63Canada's appellee's submission, para. 121. WT/DS276/AB/R 
Page 16  
 
3. Assessment of the Evidence
 
52. Canada disagrees with the United States' conten tion that the Panel failed to assess objectively 
the facts of the case, and requests the Appellate Body to dismiss this ground of the United States' 
appeal.  
53. Canada states that the facts described by th e United States as "related to the financial 
operations of the CWB"64 are nothing other than what the Unite d States alleged to be privileges in 
themselves.  Given that the existence of these privil eges was not disputed, and that the United States' 
characterization of how these privileges operate was assumed to be correct by the Panel, the United 
States' assertion that the Panel "ignored" the privileg es cannot succeed.  As to the facts that the Panel 
allegedly ignored and that purport to show that the CWB is not "truly independent"65, Canada 
responds that the United States never mentioned to the Panel the specific provisions of the  Canadian 
Wheat Board Act   that it now alleges the Panel ignored.  Neither has the United States offered any 
basis on which to conclude that this evidence woul d outweigh other evidence considered by the Panel. 
54. Canada also notes that, to succeed in its claim th at the Panel violated Article 11 of the DSU, 
the United States would have to establish that the Pa nel deliberately disregarded or willfully distorted 
the evidence66, a burden that the United States has failed to meet in this case.  Finally, Canada 
observes that the United States' cont ention on appeal that the governme nt of Canada exercises control 
over the CWB is contrary to the position taken by  the United States before the Panel that Canada 
acted inconsistently with its ob ligations under Article XVII:1 because of its alleged lack of 
supervision over the operations of the CWB.67   
4. Article 6.2 of the DSU  
55. Canada requests that the Appellate Body dism iss the United States' claim that the March 
Panel erred in finding that Canada's request for a preliminary ruling was filed in a timely manner. 
56. According to Canada, there is no legal basis fo r the United States' contention that Canada had 
to raise its procedural objection at the DSB meeti ngs in which the panel request was considered.  
First, the United States' reliance on the Appellate Body Report in  US – FSC   is misplaced because the 
issue in that appeal related to a request for c onsultations and not to whether a request for the  
                                                      
64United States' appellant's submission, para. 51. 
65Ibid., para. 50. 
66Canada relies in this regard on Appellate Body Report, EC – Hormones , para. 133. 
67Canada's statement at the oral hearing.  WT/DS276/AB/R 
 Page 17 
 
 
establishment of a panel met the requirements in Arti cle 6.2 of the DSU.  Secondly, the United States 
fails to recognize that whether a panel request meets the requirements of Article 6.2 is an issue that 
becomes relevant only once a panel is established.   In any event, the DSB has no mandate and no 
procedure for ruling on the adequacy of a panel request, as acknowledged by the Appellate Body in  
EC – Bananas III .68   
57. In addition, Canada points out that it did ask the United States for clarification of the panel 
request on 7 April 2003, one week after the establishm ent of the March Panel.  The United States did 
not reply to this request and, in the absence of a reply, Canada had no choice but to seek redress from 
the Panel.  Canada filed its request for a prelim inary ruling only one day after the composition of the 
March Panel was determined.  This was the earli est opportunity at which there was a body in place 
with authority to decide on the adequ acy of the United States' panel request. 
58. Finally, Canada asserts that, although the United States may be correct in arguing that any 
deficiencies in the panel request could not have been  "cured", the argument is irrelevant.  Had the 
United States responded favourably to Canada's lett er of 7 April 2003, then Canada and the United 
States could have sought to agree on new terms of re ference for the Panel, as permitted by Article 7 of 
the DSU. 
E. Arguments of the Third Participants   
1. Australia  
(a) Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of 
the GATT 1994 
59. Australia submits that Article XVII is, in essence, an anti-circumvention provision designed 
to ensure that Members are not able to evad e their non-discrimination obligations under the 
GATT 1994 through the creation and operation of STEs.69  The fundamental obligation in 
Article XVII:1 is one of non-discriminatory treatme nt.  This fundamental obligation is qualified by 
subparagraph (b).  In order to establish a viol ation of Article XVII:1, it would be necessary to 
establish a violation of subparagraph (a) as well as a violation of subparagraph (b). Therefore, there 
cannot be a violation of Article XVII:1 without so me form of discriminatory activity by an STE 
related to purchases or sales, even if that STE fails to act solely in accordance with commercial 
considerations, or if the enterprises of other Me mbers are not afforded adequate opportunity to 
participate in purchases or sales.  This interpretati on finds textual support in the introductory phrase of 
                                                      
68Appellate Body Report, EC – Bananas III , para. 142. 
69Australia's statement at the oral hearing. WT/DS276/AB/R 
Page 18  
 
subparagraph (b), which reads "[t] he provisions of subparagraph (a ) of this paragraph shall be 
understood to require...", and is furt her confirmed by the interpretative note to Article XVII:1.   
(b) Interpretation of Subparagraph (b) of Article XVII:1 of the 
GATT 1994 
60. Australia submits that the United States has misc haracterized the Panel's finding in respect of 
the phrase "solely in accordance with commercial consid erations" and the Panel's remark that the first 
clause of Article XVII:1(b) is intended to prevent ST Es from behaving like political actors.  The Panel 
used the term "political actors" merely to c ontrast its understanding of the provision with the 
United States' contention that "commercial consid erations" are those under which commercial actors 
must operate.  As the Panel correctly observed, the term "commercial actors" is not used in 
Article XVII:1(b).   Nothing in Article XVII suppor ts the proposition that export STEs are prevented 
from using their exclusive or special privileg es to the disadvantage of "commercial actors". 
61. According to Australia, the Panel correctly in terpreted the term "enterprises" in the second 
clause of Article XVII:1(b).  Although a broad defin ition may be given to the term "enterprise", the 
interpretation of this term in the context of Artic le XVII:1(b) must be conditioned by the type of 
enterprise established or maintained by a WTO Me mber.  This case concerns an STE involved in 
export sales.  Consequently, the other party to any such transaction—that is, "the enterprises of the 
other Members"—must be an enterprise wishing to buy from the CWB. 
(c) Assessment of the Measure 
62. Australia states that it understands the United Stat es' claim that the Panel did not examine the 
measure in its entirety as one grounded in Article 11 of the DSU.  Furthermore, Australia submits 
that, contrary to the United States' assertion, the Panel examined the CWB Export Regime as a whole 
and did not rely on one element of the measure to the exclusion of others.  The Panel neither ignored 
the effect of the privileges granted to an STE nor  failed to examine their interaction with the 
obligations stemming from Article XVII:1. 
(d) Assessment of the Evidence 
63. Australia submits that the Panel did not fail to make an objective assessment of the facts 
presented by the United States.  The fact that the Panel did not accord the same weight as the United 
States to certain privileges granted to the CWB, whet her part of the CWB's legal framework or not, is 
not sufficient in itself to establish a violation of Article 11 of the DSU.  In addition, even if the Appellate Body were to find that the Panel erre d by disregarding evidence submitted by the United  WT/DS276/AB/R 
 Page 19 
 
 
States, the error would not be egregious enough to ri se to the level required to demonstrate that the 
Panel did not fulfill its oblig ations under Article 11. 
2. China  
(a) Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of 
the GATT 1994 
64. China submits that, if an STE is found, under s ubparagraph (b) of Article XVII:1, to have 
made its purchases or sales solely on the basis of co mmercial considerations and to have afforded to 
the enterprises of the other WTO Members an ad equate opportunity to compete, then the non-
discrimination requirement set out in subparagra ph (a) would have been met by the WTO Member 
maintaining or establishing that STE. 
(b) Interpretation of Subparagraph (b) of Article XVII:1 of the 
GATT 1994 
65. China states that the United States mischaracteri zes the Panel's interpretation of the term 
"commercial considerations" in the first clause of  Article XVII:1(b).  The Panel did not equate 
"commercial considerations" only to "non-political" c onsiderations.  China points to paragraph 6.94 of 
the Panel Report, where the Panel uses the term "etc." to mean that there may be other non-
commercial considerations besides those that are politi cal in nature.  China al so takes issue with the 
example used by the United States to illustrate its argu ments.  In China's view, gaining market share is 
a commercial consideration, and replacement value is not always a reliable indicator of commercial 
conduct because there are situations in which a comme rcial actor does not sell its products at or above 
replacement value, such as the disposition of perishabl es, inventory liquidation, or market penetration.   
66. China agrees, moreover, with the Panel's interp retation of the term "enterprises" as qualified 
by the other terms in the second clause of Article  XVII:1(b) of the GATT 1994, such as the phrase "to 
compete for participation in such purchases or sales" .  In this context, and when examining an STE 
involved in exports, the term "enterprises" can refer only to "buyers".   
67. Finally, China contends that the interpretation of Article XVII:1(b) must be consistent with 
the object and purpose of Article XVII, which gives WTO Members the right to establish STEs and grant them exclusive and special privileges.  Th e interpretation of the terms "enterprises" and 
"commercial considerations" proposed by the United States would nullify these rights. WT/DS276/AB/R 
Page 20  
 
(c) Assessment of the Measure 
68. China contends that the Panel did examine the measure identified by the United States in its 
entirety and that this examination included an an alysis of the privileges granted to the CWB. 
(d) Assessment of the Evidence 
69. China asserts that the Panel made an objective a ssessment of the facts of the case as required 
by Article 11 of the DSU.  The Panel considered  the privileges granted to the CWB and concluded 
that these privileges, together with the CWB's legal structure and mandate, could not create an incentive for the CWB to make some of its sal es in a non-commercial manner.  In assessing the 
evidence submitted to it, the Panel was not under an obligation to make the United States' case.   
3. European Communities
 
(a) Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of 
the  GATT 1994 
70. According to the European Communities, a vi olation of Article XVII:1 does not necessarily 
require that the consistency with subparagraph (a ) be examined before addressing the consistency 
with subparagraph (b).  In its view, subparagraphs  (a) and (b) of Article XVII:1 of the GATT 1994 do 
not have identical scope, although they are inter-rela ted.  Subparagraph (b) does not contain a separate 
obligation, however, but rather defines the non- discrimination obligation in subparagraph (a).  
Hence, if it is established that an STE does not make purchases or sales in accordance with 
commercial considerations as require d by subparagraph (b), then it follows logically that the STE did 
not act consistently with the general principles of non-discriminatory treatment, as required by 
subparagraph (a).   
(b) Interpretation of Subparagraph (b) of Article XVII:1 of GATT 1994 
71. The European Communities agrees with the Pane l's interpretation of the phrase "commercial 
considerations" in the first clause of Article XVII:1( b), but finds that the Panel's reference to "non-
political" considerations "rather diffuses than clarifies" the scope of the phrase.70  The phrase 
"commercial considerati ons" should be interpreted in the lig ht of normal (private) commercial 
behaviour.  The ordinary meaning of this phrase, as well as its context, illustrate that an STE should 
act just as a private company would react on the market.  An STE may have a different market power due to its exclusive and special rights, but the text of Article XVII:1(b) of the GATT 1994 does not 
state that these advantages should be disregar ded when interpreting the term "commercial 
                                                     
 
70European Communities' third participant's submission, para. 16.  WT/DS276/AB/R 
 Page 21 
 
 
considerations".  In fact, such  a premise would be difficult to  apply as the determination of 
"commercial considerati ons" would then require all kinds of adjustments that are not even 
contemplated under Article XVII:1(b) of the GATT 1994.  For this reason, the European 
Communities considers that the sole benchmark for interpreting the term "com mercial considerations" 
is to determine whether the market behaviour of an STE is in accordance with normal private 
commercial behaviour. 
72. The European Communities disagrees, however, w ith the Panel's interpretation of the term 
"enterprises" in the second clause of Article XVII: 1(b) as limited, in the case of an export STE, to 
buyers.  It concedes that on the basis of the ordina ry meaning of the term "participation" as "having a 
part or share", the application of the second clause of  Article XVII:1(b) to "sellers" in a case involving 
an export STE, while not being excluded, might appear difficult.  Nevertheless, the phrase "to 
compete" in the second clause of subparagraph (b) would support the conclusion that the term 
"enterprises" includes sellers.  The inclusion of "sellers" within the scope of the second clause of 
subparagraph (b), moreover, is necessary to count erbalance an STE's special  privileges, especially 
considering that the use of such privileges is perm itted by the first clause of that subparagraph.  
(c) Article 6.2 of the DSU 
73. The European Communities disagre es with the United States' contention that, if a defending 
party does not raise an objection regarding the suffici ency of a panel request at the meetings of the 
DSB at which the panel request is considered, it is  precluded from raising such an objection before the 
panel.  Such an interpretation does not find support in the jurisprudence of the Appellate Body regarding Article 6.2 of the DSU.  
74. In the present case, Canada made its request for a preliminary ruling immediately after the 
composition of the March Panel was determined. This was the earliest possible moment at which the objection could meaningfully have been raised during the panel proceedings.  The DSB has no 
mandate to deal with this kind of objection.  Mo reover, the March Panel did not err in attaching 
significance to the fact that the United States failed to  respond to Canada's request for clarification of 
7 April 2003.  A response by the United States to  Canada's letter of 7 April 2003 might have 
contained elements that could have assisted the Marc h Panel in the interpretation of the United States' 
request.  Nor was the March Panel unjustified in recalling that the good faith obligations under 
Article 3.10 of the DSU apply to both parties.  The fact that the United States did not react to Canada's 
letter would seem to suggest that the United States was not willing to correct the legal problems that 
were the subject of Canada's objection and, hen ce, it cannot be said that the timing of Canada's 
request caused prejudice to the United States. WT/DS276/AB/R 
Page 22  
 
75. The European Communities submits, therefore, that the Appellate Body should uphold the 
March Panel's finding that Canada's request for a preliminary ruling was filed in a timely manner. 
III. Issues Raised in This Appeal 
76. The following issues are ra ised in this appeal: 
(a) whether the July Panel erred in not cons idering the "proper" relationship between 
subparagraphs (a) and (b) of Article XV II:1 of the GATT 1994 and in proceeding to 
examine the consistency of the CWB Export Regime with Article XVII:1(b) without 
first having found a breach of Article XVII:1(a); 
(b) whether the July Panel erred in its interpretation of subparagraph (b) of 
Article XVII:1 and, specifically, in its interpretation of the phrase "solely in accordance with commercial considerations" in the first clause of that provision, and 
of the term "enterprises" in the second clause; 
(c) whether the July Panel failed to examine the CWB Export Regime in its entirety; 
(d) whether the July Panel failed to discharge  properly its duties under Article 11 of the 
DSU by disregarding evidence submitted by  the United States in relation to the 
CWB's legal framework;  and 
(e) whether the March Panel erred in refusi ng to dismiss Canada's request for a 
preliminary ruling under Article 6.2 of th e DSU on the grounds that the request was 
not raised in a timely manner. 
 
IV. Relationship Between Subparagraphs (a) and (b) of Article XVII:1 of the GATT 1994 
77. Canada and the United States each appeals aspects of the Panel's interpretation and 
application of Article XVII:1 of the GATT 1994.  Canada's appeal relates to the  relationship   
between subparagraph (a) a nd subparagraph (b) of Article XVII:1 and the analytical approach adopted 
by the Panel in this regard.  The United States' appeal relates to the Panel's  interpretation of 
subparagraph (b)   of Article XVII:1;  to the Panel's  application   of this interpretation  to the CWB 
Export Regime ;  and to the Panel's ultimate finding th at the United States had not established any 
inconsistency with the principles of subparagraphs (a) or (b) of  Article XVII:1 of the GATT 1994.
71  
                                                      
71Panel Report, paras. 6.151 and 7.4(a).  WT/DS276/AB/R 
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We analyze first the issue appealed by Canada and consider the issues appealed by the United States 
in Sections V to VIII of this Report.  
78. In considering Canada's appeal, we first anal yze the relationship between subparagraphs (a) 
and (b) of Article XVII:1.  Next, we consider wh en the order of analysis adopted by a panel may 
constitute legal error.  Then we examine the appro ach taken by the Panel in this case in order to assess 
whether that approach was consistent with our vi ew of the relationship be tween subparagraphs (a) 
and (b) of Article XVII:1 and whether the sequence of analysis amounted to legal error.  Finally, we 
address a separate, conditional, appeal made by  Canada relating to "judicial economy".   
A. Analysis of the Relationship Between Subparagr aphs (a) and (b) of Article XVII:1   
79. The Panel began its analysis of  subparagraph (b) of Article XV II:1 by setting out the positions 
of the parties on the relationship between subpa ragraph (a) and subparagr aph (b).  The Panel 
contrasted the United States' view that these subp aragraphs each contains separate, independent 
obligations, with Canada's view that subpara graph (b) does not create separate, independent 
obligations, but simply "interpret[s] and temper[s]" the "operative" obligation set out in subparagraph (a).
72  The Panel decided that, in the light of its ultimate finding that the United States 
had not, in any event, established that the CWB Expor t Regime is inconsistent with the principles of 
subparagraph (b) of Article XVII:1, it did not need to take a view on the relationship between the two 
subparagraphs.73  The Panel thus explained its approach to  deciding the issues before it as follows:  
... for the sake of argument, the Panel will proceed [to examine the 
allegations made by the United States under subparagraph (b) of Article XVII:1] on the assumption that an inconsistency with 
Article XVII:1 can be established me rely by demonstrating that an 
STE is acting contrary to the principles of subparagraph (b).
74 
(footnote omitted;  emphasis added)  
80. Canada challenges the approach taken by the Pa nel.  In Canada's view, the Panel erred in 
failing to consider the proper relationship between s ubparagraphs (a) and (b) of  Article XVII:1, and in 
assuming that a breach of subparagraph (b) is sufficient to establish a breach of Article XVII:1.  
                                                      
72Panel Report, paras. 6.52–6.57. 
73Ibid., paras. 6.58–6.59. 
74Ibid., para. 6.59. WT/DS276/AB/R 
Page 24  
 
81. For Canada, subparagraph (a) is the "pri ncipal obligation" in Article  XVII:1.
75  
Article XVII:1 has an "inescapable internal logic"76 according to which panels must  first  "determine 
the existence of discriminatory practices under Article  XVII:1(a)", and, "[w]here such practices have 
been found, it must then determine whether  those   practices are not in accordance with commercial 
considerations" under subparagraph (b).77  In this case, having failed to interpret the correct 
relationship between the two subpa ragraphs, the Panel erred becau se it did not make a finding of 
discriminatory conduct within the meaning of  Article XVII:1(a) before examining the 
"commerciality" of the conduct of  the CWB under Article XVII:1(b).78  According to Canada, the 
Panel should have concluded that the Unite d States had failed to establish a breach of 
Article XVII:1(a) and should have dismissed the United States' claim solely on this basis, without 
further inquiry as to consistenc y with Article XVII:1(b).   
82. The United States "agrees that subparagra ph (b) and subparagra ph (a) are related"79, but 
contends that nothing in the text of that Article  establishes a "hierarchy" am ong the obligations set out 
in each subparagraph.80  Relying on a statement from the panel in  Korea – Various Measures on 
Beef,  the United States argues that a breach of either of the requirements in subparagraph (b), or a 
breach of subparagraph (a), establishes a breach of Article XVII:1.81  The United States argues that 
"[s]ubparagraph (a)'s general prohibition on discrimin atory treatment addresses one obstacle to trade 
[and] subparagraph (b) is properly understood as placing additional constraints on STE behavior to 
address the multiple obstacles to trade that STEs can create."82  The United States suggests that: 
Whether characterized as a separate obligation or as an additional 
requirement that flows from s ubparagraph (a), the commercial 
considerations requirement is a sp ecific discipline on STE behavior 
that is mandated by subparagraph (b).83 
83. Furthermore, the United States underlines that the case it made before  the Panel focused on 
the requirement in subparagraph (b) that STEs must  make sales solely in accordance with commercial 
                                                      
75Canada's other appellant's submission, para. 5. 
76Ibid., para. 39. 
77Ibid., para. 39. (original emphasis) 
78Canada's other appellant's submission, para. 7. 
79United States' appellee's submission, para. 20. 
80Ibid. 
81Ibid., paras. 14 and 17. 
82Ibid., para. 21. 
83Ibid., para. 19.   WT/DS276/AB/R 
 Page 25 
 
 
considerations.84  Accordingly, it was proper for the Panel to focus its own analysis on this 
requirement. 
84. Before assessing the approach taken by the Pane l in this case, we consider the relationship 
between the first two subparagraphs of Article XVII:1, which provide: 
(a) Each Member undertakes that if it establishes or maintains a 
State enterprise, wherever located , or grants to any enterprise, 
formally or in effect, exclusive or special privileges,* such enterprise 
shall, in its purchases or sales involving either imports or exports, act 
in a manner consistent with the general principles of non-
discriminatory treatment prescribed in this Agreement for governmental measures affecting imports or exports by private traders. 
(b) The provisions of subparagraph ( a) of this paragraph shall be 
understood to require that such ente rprises shall, having due regard to 
the other provisions of this Agre ement, make any such purchases or 
sales solely in accordance with commercial considerations,* 
including price, quality, availability, marketability, transportation and other conditions of purchase or sale, and shall afford the enterprises of the other Members adequate opportunity, in accordance with 
customary business practice, to co mpete for participation in such 
purchases or sales. 
85. Subparagraph (a) of Article XVII:1 contains a number of different elements, including both 
an acknowledgement and an obligation.  It recogni zes that Members may establish or maintain State 
enterprises or grant exclusive or special privile ges to private enterprises, but requires that,  if they do 
so,  such enterprises must, when they are involved in  certain types of transactions ("purchases or sales 
involving either imports or exports"), comply with a specific requirement.  That requirement is to act consistently with certain principles containe d in the GATT 1994 ("general principles of non-
discriminatory treatment ... for governmental meas ures affecting imports or exports by private 
traders").  Subparagraph (a) seeks to ensure that a Member cannot, through the creation or 
maintenance of a State enterprise or the grant of exclusive or special priv ileges to any enterprise, 
engage in or facilitate conduct that would be condemned as disc riminatory under the GATT 1994 if 
such conduct were undertaken directly by the Member itself.  In other words, subparagraph (a) is an 
"anti-circumvention" provision.
85   
                                                      
84United States' appellee's submission, para. 35. 
85Australia expressed a similar sentiment in its statement at the oral hearing, as did the Panel in 
para. 6.39 of the Panel Report and footnote 133 thereto. WT/DS276/AB/R 
Page 26  
 
86. Each of the elements of subparagraph (a) raises,  in turn, a number of interpretative questions, 
including:  (i) which enterprises  are subject to the requirement set forth in subparagraph (a);  
(ii) what  transactions  qualify as "purchases or sales involving either imports or exports";  and 
(iii) which  principles   of the GATT 1994 fall under the "general principles of non-discriminatory 
treatment prescribed in this Agreement for governme ntal measures affecting imports or exports by 
private traders".  The first two of these interpretativ e questions define the scope of application of the 
requirement in subparagraph (a).  The third question goes to the nature of the requirement itself.   
87. This requirement, which lies at the core of s ubparagraph (a), is a requirement that STEs not 
engage in certain types of discriminatory conduct.   When viewed in the abstract, the concept of 
discrimination may encompass both the making of dis tinctions between similar situations, as well as 
treating dissimilar situations in a formally identical manner.
86  The Appellate Body has previously 
dealt with the concept of discrimination and the meaning of the term "non-discriminatory"87, and 
acknowledged that, at least insofar as the making of  distinctions between similar situations is 
concerned, the ordinary meaning of discrimin ation can accommodate both drawing distinctions 
per se ,  and drawing distinctions  on an improper basis.88  Only a full and proper interpretation of a 
provision containing a prohibition on discrimination will reveal which type of differential treatment is 
prohibited.  In all cases, a claimant alleging  discrimination   will need to establish that differential 
treatment has occurred in order to succeed in its claim.   
88. In this case, the Panel did not consider whic h types of discrimination are covered by the 
reference to "the principles of non-discrim inatory treatment" in Article XVII:1(a).89  Nor has any 
participant in this appeal asked us to do so.   
89. Instead, the question we are asked to cons ider is how subparagraph (a) relates to 
subparagraph (b) of Article XVII:1.  In our view, the an swer to that inquiry is not found in the text of 
subparagraph (a).  Rather, the words that bear most  directly on the relationship between the first two 
paragraphs of Article XVII:1 are found in the ope ning phrase of subparagraph (b), which states that 
the "provisions of subparagraph ( a) of this paragraph  shall be understood to require  that such 
enterprises shall ...". (emphasis added)  This phrase makes it abundantly clear that the remainder of 
subparagraph (b) is dependent upon the content of su bparagraph (a), and operates to clarify the scope 
                                                      
86See the reasoning of the Appellate Body with resp ect to Article III:4 of the GATT 1994 in its Report 
in  Korea – Various  Measures on Beef , para. 136, referring to the GATT Panel Report, US – Section 337 .  As 
this case does not include any claim based on discrimination arising from  formally identical treatment ,  we do 
not address this type of discrimination in our discussion. 
87Appellate Body Report, EC – Tariff Preferences , paras. 142 –173.  In that case, the Appellate Body 
examined the meaning of the term "non-discriminatory" in footnote 3 to paragraph 2(a) of the Enabling Clause. 
88Appellate Body Report, EC – Tariff Preferences , para. 153. 
89Except to the extent identified  infra ,  para. 115.  WT/DS276/AB/R 
 Page 27 
 
 
of the requirement not to discriminat e in subparagraph (a).  We note, particularly, the use of the words 
"shall be understood".  Elsewhere in the GATT 199490, and throughout the covered agreements91, 
these words are used, together with the verb "to me an", to define the scope or to clarify the  meaning   
of the term that precedes it.  In our view, the words "shall be understood" serve the same purpose 
when used together with the verb "to require", that  is, to define the scope of or to clarify the  
requirement   in the preceding provision.92  Thus, the opening phrase in subparagraph (b) of 
Article XVII:1 supports Canada's view that the  principal source  of the relevant obligation(s) in 
Article XVII:1(a) and (b) is, indeed, fou nd in "[t]he provisions of subparagraph ( a)".93   
90. Subparagraph (b) also refers to " such  enterprises", which can mean  only the STEs defined in 
subparagraph (a).  In addition, su bparagraph (b) twice refers to " such  purchases or sales".  It is clear 
that the word "such" in this phrase must refer to  the purchases and sales identified in subparagraph (a), 
namely the "purchases or sales [of STEs] involving either imports or exports".94  Thus, the word 
"such" in subparagraph (b) confirms the link betw een the two subparagraphs, and ties the content of 
subparagraph (b) back to subparagraph (a).   
91. Having examined the text of subparagraphs (a) a nd (b) of Article XVII:1, it is our view that 
subparagraph (b), by defining and clarifying the requ irement in subparagraph (a ), is dependent upon, 
rather than separate and independe nt from, subparagraph (a).  We now turn to the context of these 
provisions to see whether it confirms this preliminary view.  
                                                      
90See, for example:  Article VI:3 ("[t]he term 'count ervailing duty' shall be understood to mean...");  
Article XXIV:2 ("a customs territory shall be understoo d to mean...");  Article XXIV:8(a) ("[a] customs union 
shall be understood to mean...");  Article XXIV:8(b) ("[a ] free-trade area shall be under stood to mean ...");  and 
Article XXXII:1 ("[t]he Members to this Agreem ent shall be understood to mean ...").   
91See, for example:  Article 1 of the Agreement on Safeguards  ("[t]his Agreement establishes rules for 
the application of safeguard measures  which shall be understood to mean those measures provided for in 
Article XIX of GATT 1994");  Artic le 4.1(a), (b) and (c) of the Agreement on Safeguards ("'serious injury' shall 
be understood to mean ...", "'threat of serious injury' sh all be understood to mean ...", and "a 'domestic industry' 
shall be understood to mean ...");  footnote 36 to Article 10 of the  Agreement on Subsidies and Countervailing 
Measures (the " SCM Agreement ") ("[t]he term 'countervailing duty' shall be understood to mean ...");  paras. 2 
and 4 of the Understanding on the Balance-of-P ayments Provisions of the General Agreement on Tariffs and 
Trade 1994  ("[price-based measures] shall be understood to incl ude ...", and "[t]he term 'essential products' shall 
be understood to mean ...");  and Article 1.3 and footnote 9 to Article 36 of the Agreement on Trade-Related 
Aspects of Intellectual Property Rights  ("the nationals of other Members shall be understood as ...", and "[t]he 
term 'right holder' in this Section shall be understood as having the same meaning as ...").   
92We need not decide, in this appeal, whether subparagraph (b)  exhaustively   defines the scope of the 
requirement set out in subparagraph (a).  
93In our view, the French and Spanish versions of the opening phrase of subparagraph (b) also support 
the view that the basis of the  obligation  placed on STEs is found in the provis ions of subparagraph (a):  "[l]es 
dispositions de l'alinéa a) du présent paragraphe devront être inte rprétées comme imposant à ces entreprises 
l'obligation ... de ...."; "[l] as disposiciones del apartado a) de este párrafo deberán interpretarse en el sentido de 
que imponen a estas empresas la obligación ... de ...". 
94We note that both participants expressed this same view in response to questioning at the oral 
hearing. WT/DS276/AB/R 
Page 28  
 
92. The United States argues that its position concerning the relationship between 
subparagraphs (a) and (b) is supported by the text of subpara graph (c) of Article XVII:1, which 
provides that:  
No Member shall prevent any enterpri se (whether or not an enterprise 
described in subparagraph ( a) of this paragraph) under its jurisdiction 
from acting in accordance with the principles of subparagraphs ( a) 
and ( b) of this paragraph. 
The United States emphasizes the use of the plural word "principles" in this provision, arguing that it 
supports the United States' position that subparagr aphs (a) and (b) contain "multiple, distinct 
obligations".
95  In our view, however, the United States ' reliance on the word "principles" is 
misplaced.  On the one hand, subpar agraph (a) itself refers, in the plural , to certain "general principles 
of non-discriminatory treatment".  Arguably, the refe rence made in subparagra ph (c) could be read as 
a reference to precisely these "principles" set out in subparagraph (a).96  On the other hand, the word 
"principles" in subparagraph (c) may well refer to principles in subparagraph (a) along with  other  
principles in subparagraph (b).  Even then, such  principles could be principles derived from and 
dependent on the principles in subparagraph (a).97  In other words, the mere use of the plural word 
"principles" does not reveal the nature of such principles or the relationship among them.  
93. To us, reference in subparagraph (c) to  "the principles of subparagraphs ( a) and ( b)" simply 
highlights that the two provisions must be read togeth er in order to ensure that account is taken of all 
the principles relevant to the scope of the non-discrim ination requirement.  This is further reinforced 
by a similar reference to "the provisions of subpar agraphs (a) and (b)" in the first sentence of the  ad  
Note to Article XVII:1.98  Indeed, throughout Article XVII, wh enever subparagraph (b) is referred to, 
it is always referred to  together with  subparagraph (a).  In contrast , subparagraph (a) is referred to, 
                                                      
95United States' appellee's submission,  para. 5.  See also para. 22. 
96We are not suggesting that the word "principles" in subparagraph (c) should be read in this manner, 
but rather that the mere use of the pl ural form of the word does not have th e significance that  the United States 
seeks to attach to it.  
97We observe that subparagraph (c) uses the word "pri nciples" and not "requirements" or "obligations".  
This stands in contrast to subparagraph (b), which refe rs to the provisions of subparagraph (a) as "requir[ing]" 
particular conduct from STEs.  This contrast is even more marked in the French and Spanish versions of the 
text, which in subparagraph (b) explicitly refer to "l'ob ligation" and "la obligación" imposed by the provisions of 
subparagraph (a), but in subparagraph (c) refer to the "principes énoncés aux alinéas a) et b)" and  "los 
principios enunciados en los apartados   a) y  b)", respectively. 
98The first sentence of that  ad  Note explains that: 
The operations of Marketing Boards, which are established by Members and 
are engaged in purchasing or selling, are subject to the provisions of 
subparagraphs (a) and (b).  WT/DS276/AB/R 
 Page 29 
 
 
alone, in certain provisions of Article XVII.99  We see these references as confirming that 
subparagraph (b) is dependent on, rather  than separate from, subparagraph (a). 
94. We note also the last sentence of the  ad  Note to Article XVII:1, which provides: 
[t]he charging by a state enterprise of different prices for its sales of a 
product in different markets is not precluded by the provisions of this Article, provided that such different prices are charged for 
commercial reasons, to meet cond itions of supply and demand in 
export markets. 
This  ad  Note is attached to Article XVII:1 as a whol e, rather than to either subparagraph (a) or 
subparagraph (b) alone.  This sentence of the ad Note confirms that at least one type of differential 
treatment—price differentiation—is c onsistent with Article XVII:1  provided that  the reasons for 
such differential prices are commercial in nature, and gives an example of such commercial reasons 
("to meet conditions of supply and demand in export markets").  Thus, this Note also contemplates 
that determining the consistency or inconsiste ncy of an STE's conduct with Article XVII:1 will 
involve an examination of  both  differential treatment and of commercial considerations. 
95. The United States also relies on the first part of Article XVII:3, which provides: 
Members recognize that enterprises  of the kind described in 
paragraph 1 ( a) of this Article might be operated so as to create 
serious obstacles to trade;   
The United States emphasizes that this text constitu tes explicit recognition by Members of the risk 
that STEs might be operated to create serious obstacles to trade.
100  Moreover, according to the United 
States, the object and purpose of the GATT 1994  inter alia , is "to substantially reduce barriers to 
trade and eliminate discriminatory tr eatment in international commerce".101  Thus, reasons the United 
States, subparagraph (b) of Article XVII:1 cannot, as Canada suggests, be interpreted as "tempering" 
the obligation in subparagraph (a).  Rather , this provision must be interpreted as  adding   
constraints—in addition to the prohibition on di scriminatory treatment—to the behaviour of STEs.  
96. We are unable to accept the United States' view.  We agree that Article XVII:3 forms part of 
the relevant context for determining the rela tionship between subparagr aphs (a) and (b) of 
Article XVII:1.  Yet we see as much significance in the  second   part of Article XVII:3 as in the first.  
                                                      
99In addition to the opening phrase of paragraph 1( b), paragraph (3) and subparagraphs 4(a) and (c) 
refer to "enterprise[s] of the kind described in paragraph 1( a)" of Article XVII. 
100United States' appelllee's submission, para. 21. 
101Ibid., para. 23. WT/DS276/AB/R 
Page 30  
 
Immediately following the "recognition" that ST Es might cause serious obstacles to trade, the 
provision continues: 
... thus negotiations on a reciprocal  and mutually advantageous basis 
designed to limit or reduce such obstacles are of importance to the 
expansion of international trade. 
97. To us, this provision expl icitly recognizes that,  notwithstanding   the existence of certain 
disciplines on STEs in Article XVII:1, these alone may not suffice to prevent the various ways in 
which STEs might create obstacles to trade, and th at additional measures to limit or reduce such 
obstacles should therefore be pursued through ne gotiation.  Thus, this provision constitutes 
acknowledgement by the GATT contracting parties of the  limitations   inherent in Article XVII:1, and 
recognizes that Article XVII:1 cannot serve as the sole legal basis for eliminating  all  potential 
obstacles to trade relating to STEs.  The United States argument, however—that we should use 
Article XVII:3 to read Article XVII:1 as a complete code governing STEs—would turn 
Article XVII:3 on its head.  
98. As we have seen, through its reference to th e "general principles of non-discriminatory 
treatment prescribed in this Agreement for governme ntal measures affecting imports or exports by 
private traders", Article XVII:1 imposes an oblig ation on Members not to use STEs in order to 
discriminate in ways that would be prohibited if undertaken directly by Members.  Yet even if Article XVII:1 itself did not exist, this would not imply that STEs would be subject to no disciplines 
under the GATT 1994.  For example, the express provisions of Article II:4 of the GATT 1994
102 and 
the  ad  Note to Articles XI, XII, XIII, XIV and XVIII103 constrain the behaviour of STEs.  Other  
                                                      
102Article II:4 provides: 
If any Member establishes, maintains or authorizes, formally or in effect, a 
monopoly of the importation of any pr oduct described in the appropriate 
Schedule annexed to this Agreement, such monopoly shall not, except as 
provided for in that Schedule or as  otherwise agreed between the parties 
which initially negotiated the concession, operate so as to afford protection 
on the average in excess of the amount of protection provided for in that 
Schedule.  The provisions of this paragraph shall not limit the use by Members of any form of assistance to domestic producers permitted by 
other provisions of this Agreement. 
103The ad  Note to Articles XI, XII, XIII, XIV and XVIII provides: 
Throughout Articles XI, XII, XIII, XIV and XVIII, the terms "import 
restrictions" or "export restrictions" include restrictions made effective 
through state-trading operations.  WT/DS276/AB/R 
 Page 31 
 
 
provisions of the GATT 1994, notably Article VI, also apply to the activities of STEs.104  We need not 
identify, for purposes of this appeal, all of the provisions of the GATT 1994 that may apply to STEs, 
nor consider how these disciplines interact with and reinforce each other.  We do, however, believe 
that these other provisions reveal that, even in 1947,  the negotiators of the GATT created a number of 
complementary requirements to address the differe nt ways in which STEs could be used by a 
contracting party to seek to circumvent its obliga tions under the GATT.  The existence of these other 
provisions of the GATT 1994 also supports the view  that Article XVII was never intended to be the 
sole source of the disciplines imposed on STEs under that  Agreement.  This is al so consistent with the 
view that Article XVII:1 was intended to impose di sciplines on one particular type of STE behaviour, 
namely discriminatory behaviour, rather than to co nstitute a comprehensive c ode of conduct for STEs.  
Moreover, as the Panel observed, since the conclu sion of the Uruguay Round, a number of additional 
obligations, under different covere d agreements, operate to further constrain the behaviour of STEs.105   
99. Having thus reviewed the relevant contex t, we are confirmed in our view that 
subparagraphs (a) and (b) are necessar ily related to each other.  S ubparagraph (a) is the general and 
principal provision, and subparagraph (b) explains it  by identifying types of differential treatment in 
commercial transactions.  It appears to us that these types of differential treatment would be the most 
likely to occur in practice and, therefore, that mo st if not all cases under Article XVII:1 will involve 
an analysis of both subparagraphs (a) and (b). 
100. For all these reasons, we are of the view that subparagraph (a) of Article XVII:1 of the GATT 
1994 sets out an obligation of non-discrimination106, and that subparagraph (b) clarifies the scope of 
that obligation.  We therefore disagree with th e United States that subparagraph (b) establishes 
separate requirements that are independent of subparagraph (a). 
101. We observe that the participants in this a ppeal highlight the different positions taken by 
previous panels with respect to the relationship be tween subparagraphs (a) and (b) of Article XVII:1.  
Canada relies in particular on the statement in the 1984 GATT panel report in  Canada –  FIRA   that: 
                                                      
104We note that different views exist as to whethe r, or the extent to which, Article III of the 
GATT 1994 would also apply to STEs, although we take no view on this issue for purposes of this appeal.  
These different views are discussed in W. Davey, "Article XVII GATT: An Overview" in T. Cottier and 
P. Mavroidis (eds.), State Trading in the Twenty-First Century  (The University of Michigan Press, 1998), p. 17 
at 26.  (Exhibit CDA-13 submitted by Canada to the Panel) 
105Panel Report, paras. 6.104 –6.105, referring to the Agreement on Agriculture , the SCM Agreement , 
and the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 . 
106Specifically, subparagraph (a) requires that STEs "act in a manner consistent with the general 
principles of non-discriminatory treatment prescribed in this Agreement for govern mental measures affecting 
imports or exports by private traders". WT/DS276/AB/R 
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... sub-paragraph (b) does not establish a separate general obligation to allow enterprises to act in  accordance with commercial 
considerations, but merely defines the obligations set out in the preceding sub-paragraph ...  For these reasons, the Panel considers 
that the commercial considerations criterion becomes relevant only 
after it has been determined that the governmental action at issue 
falls within the scope of the gene ral principles of non-discriminatory 
treatment prescribed by the General Agreement.
107  
102. In contrast, the United States relies on the following statements of the WTO panel in  
Korea – Various Measures on Beef 108:  
A conclusion that the principle of  non-discrimination was violated 
would suffice to prove a violation of Article XVII; similarly, a 
conclusion that a decision to purchase or buy was not based on 
"commercial considerations", would also suffice to show a violation 
of Article XVII.109 (emphasis added) 
103. In our view, it is not clear that the panel in  Korea – Various Measures on Beef   intended this 
statement to have the meaning that the United States seeks to ascribe to it.  In the same section of its 
report, that panel also made the following statemen ts:  "Article XVII.1(a) establishes the general 
obligation on [STEs] to undertake their activiti es in accordance with the GATT principles of non-
discrimination"110 and "[t]he GATT jurisprudence has also made  clear that the scope of paragraph (b), 
which refers to commercial cons iderations, defines the obligations set out in paragraph (a)."111 
104. Moreover, immediately before it made the statem ent quoted by the United States in support of 
its view of the relationship between subpa ragraphs (a) and (b), the panel in  Korea – Various 
Measures on Beef   stated that: 
[t]he list of variables that can be used to assess whether a state-
trading action is based on commercial consideration (prices, availability etc…) are to be used to  facilitate the assessment whether 
the state-trading enterprise has acted in respect of the general 
principles of non-discrimination.
112 
                                                      
107GATT Panel Report, Canada – FIRA , para. 5.16. 
108The report in  Canada – FIRA  was adopted in 1984, and the report in Korea – Various Measures on 
Beef was adopted in 2001. 
109Panel Report, Korea – Various Measures on Beef , para. 757.  The panel's findings under 
Article XVII:1 of th e GATT 1994 did not form part of the appeal in that case. 
110Panel Report, Korea – Various Measures on Beef , para. 753. 
111Ibid., para. 755. 
112Ibid., para. 757.  WT/DS276/AB/R 
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These sentences emphasize the link between subparagra phs (a) and (b), rather than their separate 
nature.  Moreover, that same panel also quoted, with emphasis and apparent  approval, the sentence 
from the panel report in  Canada – FIRA   that includes the following statement:  "[subparagraph (b)] 
does not establish a separate general obligation to  allow enterprises to act in accordance with 
commercial considerations, but merely defin es the obligations set out in the preceding 
subparagraph".113    
105. We are therefore not persuaded that the panel in  Korea – Various Measures on Beef   meant 
to adopt an interpretative approach at odds with the one taken by the panel in Canada – FIRA , or to 
suggest that subparagraph (b) contains obligations i ndependent of the obligatio n in subparagraph (a).  
We consider both the approach set out by the panel in  Canada – FIRA   as well as the overall 
approach of the panel in  Korea – Various Measures on Beef   to accord with our own view of the 
relationship between subparagraphs (a) and (b) of Article XVII:1. 
106. Our conclusions regarding the relations hip between subparagraphs (a) and (b)114 imply that a 
panel confronted with a claim that an STE has acted  inconsistently with Article XVII:1 will need to 
begin its analysis of that claim under subparagraph (a ), because it is that provision which contains the 
principal obligation of Article XVII:1, namely the re quirement not to act in a manner contrary to the 
"general principles of non-discriminatory treatment prescribed in [the GATT 1994] for governmental measures affecting imports or exports by private traders."  At the same time, because both subparagraphs (a) and (b) define th e scope of that non-discrimination obligation, we would expect that 
panels, in most if not all cases, would not be in  a position to make any fi nding of violation of 
Article XVII:1 until they have properly in terpreted and applie d both provisions.
115 
B. The Significance of a Panel's Order of  Analysis    
107. Canada asserts that the Panel failed to carry out an analysis under subparagraph (a), and that it 
committed an error of law by proceeding to analy ze the United States' claim under subparagraph (b), 
without having found an inconsis tency under subparagraph (a).  In  its argument, Canada invokes  
Canada – Autos  , where the Appellate Body held that the panel had "erred in its interpretative 
                                                      
113Panel Report, Korea – Various Measures on Beef , para. 756. 
114Supra , paras. 99 and 100. 
115We are not asked, in this appeal, to rule on whether it might be possible for a panel to find a 
violation of Article XVII:1 based solely on an analysis undertaken under subparagraph (a)—without conducting any analysis under subparagraph (b)—and we make no finding in this regard.  The question before us is, rather, 
whether it might be possible for a panel to find a violation of Article XVII:1 based solely on an analysis 
undertaken under subparagraph (b)—without conducting any analysis under subparagraph (a).  In other words, although we accept that subparagraph (b) identifies two examples of conduct   consistent  with the obligation set 
forth in subparagraph (a), we make no finding as to  whether subparagraph (b) also serves to define, 
exhaustively, the type of conduct that is  inconsistent  with the obligation in subparagraph (a).    WT/DS276/AB/R 
Page 34  
 
approach"
116 in determining whether the measure at issu e was inconsistent with the most-favoured-
nation ("MFN") obligation contained in Article II of the  General Agreement on Trade in Services  
(the " GATS "), without having completed, as the first step of its analysis, an examination of whether 
the measure at issue constituted a "measure[ ] … affecting trade in services" within the meaning of 
Article I:1 of the  GATS .  We note that, in so finding, the Appellate Body recalled its ruling in  US – 
Shrimp .  There the Appellate Body found the pa nel to have erred in examining the  chapeau   of 
Article XX  before having   determined that the measure at issue was provisionally justified by virtue 
of falling within the scope of one of the sub-paragraphs of Article XX, and cautioned that a panel may 
not ignore the "fundamental structure and logic" of a provision in deciding the proper sequence of steps in its analysis.
117   
108. In contrast to these two cases, in  US – FSC ,  the Appellate Body declined to find that the 
panel had erred by beginning its examination of the Euro pean Communities' claim under 
Article 3.1(a) of the  Agreement on Subsidies and Countervailing Measures (the " SCM Agreement ") 
with the general definition of "subsidy" set forth in Ar ticle 1.1 to that Agreement, rather than with the 
last sentence of footnote 59 to the Agreement.118  The Appellate Body explained that:  
... the relationship between Artic le 1.1 and footnote 59 of the 
SCM Agreement  is, therefore, different in this way from the 
relationship between the chapeau of  Article XX of the GATT 1994 
and the particular exceptions listed in sub-paragraphs (a) to (j) of that 
Article.  In ... United States – Shrimp ... we observed that the 
application of the general standards of the chapeau of Article XX of the GATT 1994 is rendered very difficult, if not impossible, if the 
treaty interpreter does not, first, identify and exam ine the specific 
exception at issue.
119 
109. Thus, in each case it is the  nature of the relationship betw een two provisions that will 
determine whether there exists a mandatory sequen ce of analysis which, if not followed, would 
amount to an error of law.  In some cases, this re lationship is such that a failure to structure the 
analysis in the proper logical sequence will have reperc ussions for the substance of the analysis itself.  
As the Appellate Body explained in  Canada – Autos , "a panel may not ignore the 'fundamental 
structure and logic' of a provision in deciding the proper sequence of steps in its analysis,  save at the 
peril of reaching flawed results ".120  In addition, as noted in  US – Shrimp , it is imperative that a panel 
                                                      
116Appellate Body Report, Canada – Autos , para. 152.   
117Appellate Body Report, US – Shrimp , para. 119.  See also Appellate Body Report,  US –Gasoline , 
p. 22, DSR 1996:1 at 20.   
118Appellate Body Report, US – FSC , para. 89. 
119Ibid., footnote 99 to para. 89. 
120Appellate Body Report, Canada – Autos , para. 151. (footnote omitted;  emphasis added)  WT/DS276/AB/R 
 Page 35 
 
 
identify the type of measure that has been provisi onally justified under a par ticular subparagraph of 
Article XX before analyzing it under the  chapeau   of that Article because:   
When applied in a particular case, the actual contours and contents of 
these standards will vary as the kind of measure under examination 
varies. ... The standard of "arbitrary discrimination", for example, 
under the chapeau may be different for a measure that purports to be necessary to protect public morals than for one relating to the products of prison labour.
121 
110. In this case, we have already determined th at the two subparagraphs  of Article XVII:1 are 
closely interrelated.  As we have said, a pa nel faced with a claim of inconsistency with 
Article XVII:1(a) and (b) will, in most if not all cases, need to analyze and apply  both  provisions in 
order to assess the consistency of the measure at issue.  Subparagraph (b) sets forth two specific 
conditions with which an STE must comply if  allegedly discriminatory conduct falling, prima facie ,  
within the scope of subparagraph (a) is to be found consistent with Article XV II:1.  Yet, in order to 
know whether the conditions in (b) are satisfied, a panel must know  what  constitutes the conduct 
alleged to be inconsistent with the principles of non-discriminatory treatment in the GATT 1994 .  
A panel will need to identify at least the differential treatment at issue.  The outcome of an assessment 
under subparagraph (b) of whether the differentia l treatment is consistent with commercial 
considerations may depend, in part, upon whether the alleged discrimination relates to pricing, 
quality, or conditions of sale, and whether it is di scrimination between export markets or some other 
form of discrimination.   
111. It follows that, logically, a panel cannot assess wh ether particular practices of an allegedly 
discriminatory nature accord with commercial cons iderations without first identifying the key 
elements of the alleged discrimination.  We emphasize that we are  not  suggesting that panels are 
always obliged to make specific factual and legal fi ndings with respect to each element of a claim of 
discrimination under subparagra ph (a) before undertaking  any  analysis under subparagraph (b).  
Rather, because a panel's analysis and application of  subparagraph (b) to the facts of the case is, like 
subparagraph (b) itself, dependent on the obligation set  forth in subparagraph (a), panels must identify 
the differential treatment alleged to be discriminator y under subparagraph (a) in order to ensure that 
they are undertaking a proper inquiry under subparagraph (b).  
112. For these reasons, we are of the view that a failure to identify  any  conduct alleged to 
constitute discrimination contrary  to the general principles of the GATT 1994 for governmental 
measures affecting imports or exports by private traders  before   undertaking an analysis of the  
                                                      
121Appellate Body Report, US – Shrimp , para. 120. WT/DS276/AB/R 
Page 36  
 
consistency of an STE's conduct with  subparagraph (b) of Article XVII: 1 would constitute an error of 
law.  Had the Panel in this case simply  ignored   the issue of possible discrimination within the 
meaning of Article XVII:1(a) and passed immediat ely to its analysis under subparagraph (b), we 
would have no difficulty—based on our analysis  above of the relationship between the two 
provisions—concluding that the Panel erred in its inte rpretative approach.  Yet this does not appear to 
us to be what the Panel did.  We set out in th e next sub-section our unders tanding of how the Panel 
conducted its analysis in this case.  
C. The Approach Taken by the Panel in This Case   
113. In assessing the approach taken by the Panel to the first two subparagraphs of Article XVII:1, 
we begin with the claim that was before it.  In its requests for establishment of the panels, the United 
States claimed that the "CWB Export Regime" is:  
• inconsistent with paragr aph 1(a) of Article XVII   of the 
GATT 1994, pursuant to which the Government of Canada has 
undertaken that the CWB, in its purchases or sales involving wheat exports, shall act in a manne r consistent with the general 
principles of non-discriminatory treatment prescribed in the 
GATT 1994;  and  
• inconsistent with paragr aph 1(b) of Article XVII  of the 
GATT 1994, pursuant to which the Government of Canada has 
undertaken that the CWB shall make such purchases or sales 
solely in accordance with commercial considerations and shall 
afford the enterprises of other WTO Members adequate opportunity, in accordance with customary business practice, to compete for such purchases or sales.   
The apparent inconsistency of  the CWB Export Regime with 
Canada's obligations under Article  XVII of the GATT 1994 includes 
the absence of any mechanism, and th e failure of the Government of 
Canada to take actions, to ensu re that the CWB makes purchases or 
sales involving wheat exports in accordance with  the requirements 
set forth in paragraphs 1(a) and 1(b) of Article XVII.
122 (emphasis 
added) 
114. As a preliminary matter we emphasize that the Panel did not, in its analysis, simply ignore 
subparagraph (a) and commence with subparagraph (b) of Article XVII:1.   Instead, the Panel began its 
analysis of the United States' claim by consideri ng subparagraph (a) of Artic le XVII:1.  The Panel 
identified two interpretative issues arising thereunder in  the context of this dispute:  (i) the obligation 
imposed on Members establishing or maintaining an  STE;  and (ii) the meaning of the phrase in 
                                                      
122WT/DS/276/9, pp. 1–2.  See also WT/DS/276/6, p. 1.  WT/DS276/AB/R 
 Page 37 
 
 
subparagraph (a) "the general prin ciples of non-discriminatory treatment prescribed in this Agreement 
for governmental measures affecting imports or exports by private traders".123  The Panel noted that, 
like the parties, it would use the term "STE" to de note both State enterprises established or maintained 
by, as well as enterprises granted exclus ive or special privileges by, Members.124  On the first issue, 
the Panel found that "under Article XVII:1(a), non-conforming conduct by a Member's STE engages 
that Member's responsibility under international la w, even in the absence of intervention of the 
Member itself ".125 
115. Turning to the second interpretative questi on arising under subparagr aph (a), the Panel 
referred to the two allegedly discriminatory practi ces of the CWB challenged by the United States:  
"(i) discrimination in the terms of sale between differe nt export markets;  and (ii) discrimination in the 
terms of sale between export mark ets, on the one hand, and the do mestic market of the Member 
establishing or maintaining the STE, on the other hand."126  As regards the meaning of the phrase "the 
general principles of non-discriminatory treatment prescribed in this Agreement for governmental 
measures affecting imports or exports by private trad ers" in subparagraph (a), the Panel agreed with 
the parties that:   
... the phrase "the general principles of non-discriminatory treatment 
prescribed [in the GATT 1994] for governmental measures affecting 
imports or exports by private traders" includes the general principles of most-favoured-nation treatment as enshrined in Article I:1 of the GATT 1994.
127 
116. At this stage of its analysis, the Panel could have chosen a number of possible analytical 
approaches.  For example, the Panel could have decide d to focus more closely on  the first logical step 
of the analysis, namely subparagraph (a).  Howe ver, the Panel chose not to do so.  Instead, it 
proceeded to analyze the United States' arguments under subparagraph (b) of  Article XVII:1 "on the 
assumption that the United States' view [that the general principles of non-discriminatory treatment in 
subparagraph (a) also refer to discrimination between export markets and an export STE's home 
market] is correct"128, and assuming that subparagraph (b) contains separate, independent 
obligations.129  
                                                      
123Panel Report, para. 6.33.   
124Ibid., footnote 128 to para. 6.33. 
125Ibid., para. 6.43. 
126Ibid., para. 6.45. 
127Ibid., para. 6.48. 
128Ibid., para. 6.50.  
129Ibid., para. 6.59.  WT/DS276/AB/R 
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117. The Panel did so, however, after having interp reted some elements of subparagraph (a) and 
having identified the differential treatment allege d to constitute discrimination inconsistent with 
subparagraph (a).  Moreover, the United States' request for the estab lishment of the panel specifically 
alleged inconsistency w ith subparagraph (a)  and  with subparagraph (b).  This request, along with the 
United States' arguments, identified, in broad outlin e, a number of elements that the United States 
alleged would, if proven, have established inconsistency with the requirement of non-discrimination 
set forth in subparagraph (a).  It was thus only with in this broader analytical framework that the Panel 
chose to focus its analysis, as the United States had focused its arguments, on the provisions of 
subparagraph (b).
130  
118. Furthermore, the Panel emphasized that it w as able to take such an approach only  because of 
the particular nature of the allegation made by the United States in this case .131  Specifically, the 
United States had argued that the  discriminatory treatment   in CWB sales was the  necessary result   
of the CWB's non-commercial behaviour.132  Moreover, the Panel e xpressly acknowledged that  if,  in 
its analysis under subparagraph (b), it found that th e CWB engaged in behavi our inconsistent with 
commercial considerations, then this alone would not  suffice to find a violation of Article XVII:1.  
Rather, the Panel reasoned that, in such an eventual ity, it would have had to reconsider its analysis 
                                                      
130In other words, the Panel did not focus on the provisions of subparagraph (b) to the complete 
exclusion  of subparagraph (a).  To have done so would not have been consistent with our view of the 
relationship between those two provisions.  
131Panel Report, paras. 6.58 –6.59. 
132In so characterizing the United States' arguments,  the Panel relied on a number of statements made 
by the United States, such as: 
... on the facts of this case, a find ing that the CWB makes sales not in 
accordance with commerci al considerations under Article XVII:1(b) 
necessarily leads to the conclusion the CWB is not acting in accordance with the general principles of non-discriminatory treatment.  Under the 
CWB's statutory structure and incentives, it uses its pricing flexibility to 
make sales on non-commercial terms in order to target particular export markets, resulting in a violation of general principles of non-discriminatory 
treatment. 
United States' reply to Panel question No. 20;  Panel Report, Annex A-1, para. 19.  The Panel also referred, in 
footnote 150 to paragraph 6.58, to:  the United States' second written submission, paras. 7 and 11;  the United 
States' first written submission,  para. 78;  and to the United States' s econd oral statement, para. 12, where the 
United States argued that the CWB's alleged practice of selling its excess of high quality wheat at a price discount to meet price competition for lower quality wheat in certain markets (the alleged "protein giveaway") 
also "demonstrates how, in this case, a violation of the standards set forth in Article XVII:1(b) necessarily leads 
to a violation of the non-discriminatory tr eatment standard in Article XVII:1(a)."  WT/DS276/AB/R 
 Page 39 
 
 
with respect to the relationship of that provision with subparagraph (a) befo re making any definitive 
finding of violation of Article XVII:1.133   
119. We emphasize that the above reasoning by th e Panel established the analytical framework 
within which the remainder of its analysis was conducted.  Although certain subsequent statements 
made by the Panel could, if read in isolation, s uggest that it was undertaking a distinct inquiry into 
whether or not the CWB Export Regime creates an  incentive for the CWB to make sales that do not 
accord with commercial considerations134, such statements were made in the context of an inquiry into 
alleged  discriminatory practices .  When examining the consistency of the CWB Export Regime with 
Article XVII:1(b), the Panel began its analysis with the third of the four assertions made by the United 
States, namely:  
... that the CWB's legal structure and mandate, together with the 
privileges granted to it, creat e an incentive for the CWB to 
discriminate betwen markets by making some of its sales in a "non-commercial" manner.
135 
Due to its finding that this assertion had not been est ablished, the Panel never reached any of the other 
assertions made by the United States.   
120. Furthermore, the overarching theme of discrim ination was recalled by the Panel itself in 
reaching its conclusions:  
Since it has not been demonstrated that the CWB has an incentive to 
make sales based on considerations which are not commercial in 
nature, there is no basis for concluding that the CWB  has an 
incentive to discriminate   between markets by selling in some 
markets (or not selling in some markets) on the basis of considerations which are not sole ly commercial in nature. ...   
                                                     
 
133At para. 6.58 of its Report, the Panel explained that: 
... if the United States succeeded in demonstrating that the CWB Export 
Regime necessarily leads to the CWB no t making sales solely in accordance 
with commercial considerations, this  case would present the interpretative 
issue whether an inconsistency with Article XVII:1 could be established 
merely by showing that an STE is acting contrary to the principles of subparagraph (b) of Article XVII:1. 
134For example, at para. 6.135 ("Up to this point,  we have examined whether the United States has 
established ... that the CWB's legal structure and mandate, together with the privilege s granted to it, create an 
incentive for the CWB to make some of its sales not in accordance with commercial  considerations");  and 
para. 6.146 ("we are not persuaded that the CWB's legal structure and mandate, together with the privileges 
enjoyed by the CWB, create an incen tive for the CWB to make sales whic h are not solely in accordance with 
commercial considerations").  
135Panel Report, para. 6.121.  The Panel assumed, for th e purposes of this analysis, that the first two 
assertions of the United States had been established. WT/DS276/AB/R 
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We therefore conclude that the United States has failed to establish its third assertion, to the effect that the CWB's legal structure and mandate, together with the privileges granted to it,  create an 
incentive for the CWB to discriminate   between markets by making 
some of its sales not solely in accordance with commercial 
considerations.   
... Since the United States has failed to establish one of the four 
assertions, we reach the further and consequential conclusion that the United States has not demonstrat ed that the CWB Export Regime 
necessarily results in CWB export sales which are not solely in 
accordance with commercial considerations (and, hence, inconsistent 
with the principle of the first clau se of subparagraph (b) of Article 
XVII:1) and which are inconsistent with the general principles of 
non-discriminatory treatment prescribed in the GATT 1994 for 
governmental measures affecting ex ports by private traders (and, 
hence, inconsistent with the principle of subparagraph (a) of 
Article XVII:1) .
136 (emphasis added) 
121. That the inquiry never departed in nature from an inquiry into differential treatment of an 
allegedly discriminatory nature was also confirmed by the Panel's observation that:  
... there is evidence before us which suggests that the CWB may 
sometimes charge different prices for the same quality of wheat in 
different export markets for commercial reasons, to "reflect various market factors".
137 
122. The above excerpts reveal that, even in undertaking its analysis under subparagraph (b) of 
Article XVII:1, the Panel focused on the differe ntial treatment that constituted the allegedly 
discriminatory conduct by the CWB.  Although the Panel stated that it would conduct its analysis "on 
the  assumption   that an inconsistency with Article  XVII:1 can be established merely by 
demonstrating that an STE is acting contra ry to the principles of subparagraph (b)"138, in our view, the 
Panel identified the differential treatment alleged to constitute discrimina tion under subparagraph (a) 
in a way that ensured that its inquiry under subparagr aph (b) remained within the appropriate context.  
                                                      
136Panel Report, paras. 6.147–6.149.  
137Panel Report, footnote 241 to para. 6.147, referring to the following Exhibits submitted by the 
United States to the Panel:  Exhibits US-21, p. 2; and US-24, p. 10.  Canada itself referred to this footnote at the 
oral hearing in this appeal, and stated that, at least to this extent, "the CWB does engage in price discrimination 
between different markets".  We observe that the position taken by Canada in this regard, as we understand it, 
appears to have some logical inconsistencies.  On the one hand, Canada requests us to rule that the Panel erred in analyzing subparagraph (b) in the absence of a finding of violation under subparagraph (a), and in not 
dismissing the United States claim on the basis of the United States' failure to establish that the CWB Export 
Regime necessarily resulted in conduc t in breach of Article XV II:1(a). (Canada's other appellant's submission, 
para. 60)  
Yet, at the same time, Canada admits that the CWB engages in price discrimination and asks us to 
uphold the findings that the Panel did make under subparagraph (b) of Article XVII:1. (Canada's response to 
questioning at the oral hearing) 
138Panel Report, para. 6.59. (emphasis added)  WT/DS276/AB/R 
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For this reason, the approach taken by the Panel in  this case must be distinguished from the approach 
taken by the panels in  US – Shrimp  and  Canada – Autos.  Those panels proceeded directly to an 
analysis under one provision, without having engaged in  any  analysis under, or made any 
assumptions relating to, a provision setting forth a logically prior analytical step.   
123. Having thus set out, in some detail, the approach  taken by the Panel, we turn to consider 
whether the Panel's order or method of analysis amounted  to an error of law.  It is true, as Canada 
asserts, that the Panel stated that it would proceed on the basis of an  assumption .139  Yet this 
statement taken in isolation does not convey a full sen se of the approach taken by the Panel.  Rather, 
the assumption made by the Panel is informed and supplemented by both the preceding and subsequent parts of its analysis.   
124. Considering the entirety of the analysis undertaken by the Panel, we first note that, although 
the Panel stated that it would evaluate the claim using the interpretation of Article XVII:1(b) put 
forward by the United States, the Pane l used this approach for only   part  of its analysis, namely its 
interpretation of subparagraph (b).  Given that the Panel found that  even  using the United States' 
interpretation, the United States had not establis hed its claim, the assumption ultimately proved 
immaterial.  Secondly, the Panel did  not  ignore subparagraph (a), as it had dealt with it previously 
when it determined that the MFN principle in Artic le I of the GATT is included within the reference 
to the "general principles of non-discriminator y treatment prescribed in [the GATT 1994] for 
governmental measures affecting im ports or exports by private traders" in subparagraph (a)
140 and 
referred to evidence of the price differentiati on practiced by the CWB in its export markets.141  In our 
view, these facts reveal that the Panel identifie d differential treatment that could constitute prima 
facie  discrimination under subparagraph (a), before moving to its anal ysis under subparagraph (b).  
In any event, in applying its in terpretation of subparagraph (b) in this case, the Panel's examination 
was essentially the same as the evaluation that the Pa nel would have been required to make if it had 
chosen first to interpret the relationship between subparagraphs (a) and (b),  and had explicitly found 
that the CWB engages in price differentiation betw een export markets and that such differentiation 
could constitute  prima facie   discrimination falling within the scope  of subparagraph (a).  Therefore, 
although the Panel refrained from explicitly defi ning the relationship between the first two 
subparagraphs of Article XVII:1, its approach w as consistent with our interpretation of that 
relationship.   
                                                      
139Panel Report, para. 6.59.  
140Ibid., para. 6.48. 
141Ibid., footnote 241 to para. 6.147. WT/DS276/AB/R 
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125. In sum, we find that, in the particular circumst ances of this case, the Panel did not err in not 
considering the "proper" relationship between subpa ragraphs (a) and (b) of Article XVII:1 of the 
GATT 1994, or in proceeding to examine the c onsistency of the CWB Export Regime with 
Article XVII:1(b) without first havi ng found a breach of Article XVII:1(a).  It follows that we decline 
Canada's request to find that the Panel erred in  failing to dismiss the United States' claim under 
Article XVII:1 on the basis that the United States fa iled to establish that th e CWB Export Regime is 
inconsistent with Article XVII:1(a).
142 
126. Notwithstanding this finding, we wish to expr ess some concern about the manner in which the 
Panel conducted its analysis of the consistency of  the CWB Export Regime with Article XVII:1(a) 
and (b).  As a general principle, panels are free to structure the order of their analysis as they see fit.  
In so doing, panels may find it useful to take accoun t of the manner in which a claim is presented to 
them by a complaining Member.  Furthermore, pa nels may choose to use assumptions in order to 
facilitate resolution of a particular issue or to en able themselves to make additional and alternative 
factual findings and thereby assist in the resolutio n of a dispute should it proceed to the appellate 
level.143   
127. At the same time, panels must ensure that th ey proceed on the basis of a properly structured 
analysis to interpret the substantive provisions at issue.  As the Appellate Body found in  US – 
Shrimp   and  Canada – Autos ,  panels that ignore or jump over a pr ior logical step of the analysis run 
the risk of compromising or invalidating later findi ngs.  This risk is compounded in the case of two 
legally interrelated provisions, where one of those provisions must, as a matter of logic and analytical 
coherence, be analyzed before the other, as is the case with subparagraphs (a) and (b) of 
Article XVII:1 of the GATT 1994.   
128. Furthermore, an over-reliance on the use of assumpti ons as an aid to analysis can detract from 
the clarity of a panel's analysis or have other advers e effects at the appellate stage.  For example, the 
Appellate Body has observed that: 
[w]e do not see anything improper  per se   in panels making ... 
assumptions .... We note, however, that the cumulation of several 
inter-related assumptions could have affected our ability to complete 
the Panel's legal analysis ... .144 
                                                      
142Canada's other appellant's submission, para. 60. 
143Appellate Body Report, US – Softwood Lumber IV , para. 118. 
144Appellate Body Report, US – Steel Safeguards , footnote 494 to para. 481.  WT/DS276/AB/R 
 Page 43 
 
 
129. The intertwining of analysis and assumption may, in some cases, create a degree of 
uncertainty as to the precise findings that a panel did make.  This could pose difficulties for parties in 
deciding whether and what to appeal.  We thus recommend that when using assumptions as a tool to 
facilitate analysis—which we recognize can be useful —panels ensure that they are clear and explicit 
as to exactly what is assumed and what they  have concluded based on these assumptions. 
130. In this case, the Panel made a number of differe nt assumptions, some of which were layered 
one on top of another.145  In consequence, it is at times diffi cult, when reading the Panel Report, to 
distinguish clearly between the Panel's own  analysis  of the issues before it, and the Panel's use of  
assumptions  taken from the various arguments put forward by the United States.  As we have seen, 
however, these difficulties were not fatal to the Panel's legal analysis. 
D. Canada's Conditional Appeal  
131. In its other appeal, Canada refers to the po ssibility that we might characterize the Panel's 
refusal to rule on the proper relationship between subparagraphs (a) and (b) of Article XVII:1 as an 
exercise of judicial economy.  Should we so char acterize the Panel's appro ach, then Canada requests 
that we find that such approach constituted "an impr oper use of judicial economy", and that we "make 
the appropriate findings."146  Canada emphasizes that a panel may not exercise judicial economy on a  
threshold   issue.   
132. We observe, first, that this ground of Canada's a ppeal is in the nature of a conditional appeal.  
The appeal is predicated on the condition that we consider that the Panel exercised judicial economy 
in declining to make any finding as to the rela tionship between subparagr aphs (a) and (b) of 
Article XVII:1.  If we do not consider that the Panel exercised judicial economy in so proceeding, 
then we need make no finding with respect  to this ground of Canada's appeal.  
133. The practice of judicial economy, which was first employed by a number of GATT panels, 
allows a panel to refrain from making multip le findings that the same measure is  inconsistent   with 
                                                      
145The Panel assumed:  that the phrase "the general principles of non-discriminatory treatment 
prescribed in [the GATT 1994] for governmental measures affecting imports or exports by private traders" 
requires that, in their sales, export STEs not discrimina te between export markets, on the one hand, and their 
home market, on the other hand (Panel Report, para. 6.50 and footnote 146 thereto);  "that an inconsistency with 
Article XVII:1 can be established merely by demonstrating that an STE is acting contrary to the principles of 
subparagraph (b)" (Panel Report, para. 6.59, and footnotes 135 and 136 to paras. 6.41 and 6.42, respectively); that the CWB's privileges give it more flexibility with respect to pricing and other sales terms than a commercial 
actor and that the pricing flexibility resulting from the CWB's privileges enables the CWB to offer "non-
commercial" sales terms and to deny "commercial" enterprises of other Members an adequate opportunity to compete. (Panel Report, para. 6.121 and footnotes 195–196 thereto) 
146Canada's other appellant's submission, para. 61.  Canada does not explain what it considers might be 
such "appropriate findings".   WT/DS276/AB/R 
Page 44  
 
various provisions when a single, or a certain numbe r of findings of inconsistency, would suffice to 
resolve the dispute.
147  Although the doctrine of judicial economy  allows   a panel to refrain from 
addressing claims beyond those necessary to resolve the dispute, it does not  compel   a panel to 
exercise such restraint.148  At the same time, if a panel fails to make findings on claims where such 
findings are necessary to resolve the dispute, then this would constitute a false exercise of judicial 
economy and an error of law. 149  
134. In this case, the Panel itself di d not claim to be exercising judicial economy when it made an 
assumption concerning the relationship between subpara graphs (a) and (b) of Article XVII:1.  The 
Panel made  no  finding of inconsistency with respect to  the CWB Export Regime that would have 
entitled it to exercise judicial economy with respect to other claims.  Moreover, neither Canada nor 
the United States argues that the Panel's approach is properly classified as an exercise of judicial 
economy, nor that the concept of judicial economy must be understood otherwise than as set out 
above.150  In sum, we see no reason to characterize the Panel's use of an assumption concerning the 
relationship between subparagraphs (a ) and (b) of Article XVII:1 as an exercise of judicial economy.  
Accordingly, the condition on which this aspect of Ca nada's other appeal is made is not satisfied and 
we need make no finding in this regard.  
 
V. Interpretation of Subparagraph (b) of Article XVII:1 of the GATT 1994 
135. In this Section we deal with the United States ' appeal relating to the findings of the Panel 
under subparagraph (b) of Article XVII:1 of the GA TT 1994, as well as a request for "guidance" by 
Canada.  
                                                      
147In tracking the history of the practice of judi cial economy, the Appellate  Body observed, in  US – 
Wool Shirts and Blouses ,  that: 
... if a panel found that a measure was  inconsistent  with a particular 
provision of the GATT 1947, it generally did not go on to examine whether 
the measure was also  inconsistent  with other GATT provisions that a 
complaining party may have argued were  violated.  
(Appellate Body Report, p. 18, DSR 1997:1, p. 323 at 339. (emphasis added)) 
148Appellate Body Report, US – Lead and Bismuth II , para. 71. 
149Appellate Body Report, Australia – Salmon , para. 223. 
150Of the third participants, only the European Co mmunities, at the oral hearing in this appeal, 
suggested that the Panel's approach could be vi ewed as an exercise of judicial economy.    WT/DS276/AB/R 
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136. Article XVII:1(b) provides:   
The provisions of subparagraph ( a) of this paragraph shall be 
understood to require that such ente rprises shall, having due regard to 
the other provisions of this Agre ement, make any such purchases or 
sales solely in accordance with commercial considerations,* 
including price, quality, availability, marketability, transportation and other conditions of purchase or sale, and shall afford the enterprises 
of the other Members adequate opportunity, in accordance with 
customary business practice, to co mpete for participation in such 
purchases or sales.  
The United States' arguments, as well as the Panel's findings, focus on the two discrete clauses that 
comprise subparagraph (b).  The Panel decided to  consider the second clause of subparagraph (b) 
before the first clause, observing that the "order in  which the Panel analyses the two clauses is ... of no 
particular importance."
151  Although we agree that, in this instance, the order of the Panel's analysis 
was inconsequential, we will nevertheless consider th e two clauses in the order in which they are set 
out in subparagraph (b).  
A. Making Purchases and Sales Solely in Acco rdance with Commercial Considerations 
137. Before the Panel, the United States argued that  the first clause of subparagraph (b) must be 
interpreted as prohibiting STEs from using their exclus ive or special privileges to the disadvantage of 
"commercial actors".  Having examined the rele vant clause, the Panel declined to accept the 
interpretation put forward by the United States.152  On appeal, the United States challenges, in 
particular, the following statement made by the Panel as part of its reasoning on this issue: 
In our view, the circumstance that STEs are not inherently 
"commercial actors" does not necessarily lead to the conclusion that the "commercial considerations" re quirement is intended to make 
STEs behave like "commercial" actors.   Indeed, we think it should 
lead to a different conclusion, namely, that the requirement in 
question is simply intended to  prevent STEs from behaving like 
"political" actors.
153   
138. According to the United States, this statemen t does not correspond to the proper meaning of 
the phrase "commercial considerations" in the first clause of Article XVII:1(b).  The United States 
contends that "commercial c onsiderations" are "those experienced by commercial actors"154 and that 
                                                      
151Panel Report, para. 6.60. 
152Ibid., para. 6.106. 
153Ibid., para. 6.94.   
154United States' appellant's submission, para. 3. WT/DS276/AB/R 
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commercial actors are those "engaged in commerce"  and "are interested in financial return."
155  Such 
actors do not act merely on the basis of "non-political" considerations.  Rather, they must also act 
within the limits of their cost constraints, whic h are established by the market.  According to the 
United States, by requiring that STEs act solely in accordance with commercial considerations, 
Article XVII:1(b) serves to prevent them from using their privileges to  the disadvantage of 
commercial actors.  The United States thus asks us to  reverse the Panel's finding and to conclude that 
commercial considerations are those under which commercial actors must operate. 
139. We observe that the United States' appeal of th is issue is based on the alleged error made by 
the Panel in interpreting the obligation to ma ke sales solely in accordance with commercial 
considerations as equivalent to an ob ligation to make "non-political" decisions.156  The only "finding" 
under the first clause of Article XVII:1(b) that th e United States asks us to reverse is the Panel's 
statement in paragraph 6.94 of the Panel Report c oncerning "political actors".  In our view, however, 
the United States mischaracterizes the statement made by the Panel.   
140. In examining the United States' appeal on this issue, it is important to view the challenged 
statement made by the Panel in its proper context.   The Panel began its analysis by considering the 
meaning of the term "commercial c onsiderations" in subparagraph (b) and found that this term should 
be understood as meaning  "considera tions pertaining to commerce and tr ade, or considerations which 
involve regarding purchases or sales 'as mere matters of business'."157 The Panel also determined that 
the requirement that STEs act solely  in accordance with such consid erations "must imply that they 
should seek to purchase or sell on terms which are ec onomically advantageous for themselves and/or 
their owners, members, beneficiaries, etc."158  Thus, the Panel interpreted the term "commercial 
considerations" as encompassing a range of different c onsiderations that are defined in any given case 
by the type of "business" involved (purchases or sales), and by the economic considerations that 
motivate actors engaged in business in the relevant market(s).159   
141. The Panel then turned to address several ar guments advanced by the United States with 
respect to the interpretation of the first clause of s ubparagraph (b).  It was in responding to the United 
States' assertion that the requirement that STEs  act "solely in acco rdance with commercial 
considerations" is equivalent to a requirement that  STEs act like "commercial actors" that the Panel 
                                                      
155United States' appellant's submission, para. 26. 
156Ibid., para. 21. 
157Panel Report, para. 6.85. 
158Ibid., para. 6.87. 
159The Panel referred, in this  regard, to the illustrative list found in subparagraph (b) itself:  "including 
price, quality, availability, marketability, transportation a nd other conditions of purchase or sale".  (Panel 
Report, para. 6.86)  WT/DS276/AB/R 
 Page 47 
 
 
made the statement that "the requirement in question is simply intended to prevent STEs from 
behaving like 'political' actors".160  Yet in so doing the Panel expressly stated that it was  not , as the 
United States now suggests that it did, equating "non -commercial" actors with political actors.  It did 
so in a footnote attached to the senten ce deemed objectionable by the United States: 
We use the word "political actors" here merely to contrast our 
understanding of the first clause with that of the United States.  Non-
commercial considerations include, but are not limited to, political 
considerations .161 (emphasis added)   
142. Throughout the remainder of the paragraph in which the challenged statement is found, the 
Panel consistently referred to non-co mmercial considerations as "political, etc.", thereby reinforcing 
its explicit recognition that the universe of non-commerc ial considerations includes, but is not limited 
to, political considerations.  Accord ingly, when the statement is viewed in context, the Panel clearly 
did  not,  as the United States' argument suggests, inte rpret the first clause in subparagraph (b) to 
mean that an STE is free to act in any manner it pleases so long as it is not motivated by "political" 
considerations.   
143. We conclude, in the light of the above, that this  part of the United States' appeal is founded on 
a mischaracterization of the statement made by the Panel in paragraph 6. 94 of its Report.  We, 
therefore, dismiss this ground of appeal.  
144. We nevertheless think it important to observe that the Panel's interpretation of the term 
"commercial considerations" necessarily implies that the determination of whether or not a particular 
STE's conduct is consistent with  the requirements of the first clause of subparagraph (b) of 
Article XVII:1 must be undertaken on a case-by-case basis, and must involve a careful analysis of the 
relevant market(s).  We see no error in the Panel' s approach;  only such an analysis will reveal the 
type and range of considerations  properly considered "commercial" as regards purchases and sales 
                                                      
160Panel Report, para. 6.94. (footnote omitted)   
161Ibid., footnote 175 to para. 6.94. WT/DS276/AB/R 
Page 48  
 
made in those markets, as well as how those consider ations influence the actions  of participants in the 
market(s).
162   
145. At the same time, our interpretation of the re lationship between subpara graphs (a) and (b) of 
Article XVII:1163 necessarily implies that the scope of the inquiry to be undertaken under 
subparagraph (b) must be governed by the principles of subparagraph (a).  In other words, a panel 
inquiring whether an STE has acted solely in accordance with commercial considerations must 
undertake this inquiry with respect to the market(s ) in which the STE is alleged to be engaging in 
discriminatory conduct.  Subparagraph (b) does not give panels a mandate to  engage in a broader 
inquiry into whether, in the abstract, STEs are acting "commercially".   The disciplines of 
Article XVII:1 are aimed at preventing certain types of discriminatory behaviour.  We see no basis for 
interpreting that provision as imposing comprehens ive competition-law-type obligations on STEs, as 
the United States would have us do.   
146. Before leaving this issue, we refer to an a dditional argument advanced by the United States.  
The United States observes that Article XVII recogn izes the risk that STEs with special privileges 
may be able to use those privileges to the disad vantage of commercial actors in a given market.  
According to the United States, to eliminate that ri sk, Article XVII:1(b), therefore, constrains STEs to 
act "solely in accordance with commercial cons iderations."  For the United States, because 
commercial actors naturally conduct their business on the basis of commercial considerations, the first 
clause of Article XVII:1(b) necessarily must preven t an STE from using its privileges in a way that 
creates serious obstacles to trade and disadvantages such commercial actors.164  The United States 
emphasizes that the Panel's interpretation, that th e first clause of subparagraph (b) does not prohibit 
STEs from using their privileges, must be wrong because it "permits STEs to use their special privileges to the full extent possible, even if th is causes discrimination or other serious obstacles to 
trade"  and that "[t]his is no discipline at all".
165   
                                                      
162We note, for example, Canada's observation that:   
[t]he way that a particular enterprise weighs and applies "commercial 
considerations" depends on the circumstances in which it operates, 
including the size of the enterprise, the characteristics of the market in which it operates, the type of organisation it is, its financial circumstances 
and the degree of competition in the market.  For example, a large enterprise 
with significant assets may be willing to sell on credit terms that a smaller 
enterprise would not.  Both enterprises would be acting in accordance with 
commercial considerations, even though their conduct is opposite.  
(Canada's appellee's submission, para. 56) 
163Supra , Section IV:A. 
164United States appellant's submission, para. 23. 
165Ibid., para. 29.  WT/DS276/AB/R 
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147. Canada, Australia, China, and the European Co mmunities all disagree with the United States' 
reasoning.  Essentially, they argue that accepting the United States' view of Article XVII:1(b) would 
force STEs to refrain from using  any  of the special rights or privileges that they may enjoy and, 
thereby, put them at a competitive  disadvantage   as compared to private enterprises, which can and 
do exercise any and all market power they can mu ster.  These participants argue that any such 
interpretation would be inc onsistent with the explicit recognition, in Article XVII:1, that Members are 
entitled to establish and maintain STEs and to gran t them exclusive or special privileges.   
148. The Panel found that it could not accept the Un ited States' position for two main reasons.  
First, it was not supported by the text  of subparagraph (b) itself.  Rather: 
... the only constraint the first clau se of subparagraph (b) imposes on 
the use by export STEs of their exclus ive or special privileges is that 
these privileges must not be used to make sales which are not driven exclusively by "commercial cons iderations" as we understand that 
term.  Whether particular sales by an export STE are driven 
exclusively by commercial considerations must be assessed in light 
of the specific circumstances surrounding these sales, including the nature and extent of competition in the relevant market.
166   
149. We agree with this statement by the Panel, and observe that it does not imply, as the United 
States suggests, that Article XVII:1 contains "no discipline at all".167  In fact, the Panel's approach 
emphasizes that whether an STE is in compliance with the disciplines in Article XVII:1 must be 
assessed by means of a market-based analysis, rather than simply by determining whether an STE has 
used the privileges that it has been granted.  In arguing that Article XVII:1(b) must be interpreted as 
prohibiting STEs from using their exclusive or speci al privileges to the disadvantage of "commercial 
actors", the United States appears to construe Ar ticle XVII:1(b) as requiring STEs to act not only as 
commercial actors in the marketplace, but as  virtuous  commercial actors, by tying their own hands.  
We do not see how such an interpretation can be reconciled with an analysis of "commercial 
considerations" based on market forces.  In othe r words, we cannot accept that the first clause of 
subparagraph (b) would, as a gene ral rule, require STEs to refrain from using the privileges and 
advantages that they enjoy because such use might "disadvantage" private enterprises.  STEs, like 
private enterprises, are entitled to exploit the advant ages they may enjoy to their economic benefit.  
Article XVII:1(b) merely prohibits STEs fro m making purchases or sales on the basis of non-
commercial considerations.   
                                                      
166Panel Report, para. 6.103.  
167United States' appellant's submission, paras. 3 and 29. WT/DS276/AB/R 
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150. Moreover, we see force in the second reason th at the Panel gave for rejecting the purposive 
interpretation put forward by the United States:  th at such an interpretation, which attributes a very 
broad scope to Article XVII:1, takes no account of th e disciplines that apply to the behaviour of STEs 
elsewhere in the covered agreements.
168  The Panel referred, in this regard, to the provisions of the  
SCM Agreement , Article VI of the GATT 1994 and the  Agreement on Implementation of Article VI of 
the General Agreement on Tariffs and Trade 1994 ,  and the  Agreement on Agriculture .169 
151. It follows that we also agree with the Panel' s ultimate conclusion that it could not accept the 
arguments put forward by the United States because: 
... neither the text of the first clause of subparagraph (b) nor "logic" 
requires or authorizes us to interpret the first clause so as to prevent export STEs from using their exclusiv e or special privileges to the 
disadvantage of "commercial actors".
170 
B. Affording Other Members' Enterprises Adequate Oppor tunity to Compete for 
Participation in Purchases or Sales 
152. Before the Panel, the United States argued that  the second clause of subparagraph (b), which 
requires STEs to "afford the enterp rises of the other Members adequate opportunity ... to compete for 
participation in such purchases or sales" should in th is case be interpreted to mean that the CWB must 
offer the requisite opportunity to "any enterprise th at is competing for participation in CWB wheat 
sales, including enterprises competing to purchase wheat from the CWB ( i.e., wheat buyers) and those 
enterprises selling wheat in th e same market as the CWB ( i.e., wheat sellers)."171  The Panel, however, 
was: 
... unable to accept the United States' view that, in the case of an 
export STE, the "enterprises of the other [Members]" may include 
enterprises selling the same product as that offered for sale by the export STE in question ( i.e., the competitors of the export STE).
172 
153. The United States appeals this finding by the Pane l.  According to the United States, the Panel 
failed to interpret the term "enterprises" according to its ordinary meaning, read in its context and in 
the light of the object and purpose of the GATT 1994.  The United States asserts that the Panel's incorrect interpretative approach led it to the erroneous conclusion that this term referred to  
                                                     
 
168Panel Report, paras. 6.104 –6.105. 
169See also  supra , para. 98 and footnote 105 thereto. 
170Panel Report, para. 6.106. 
171Ibid., para. 6.61. 
172Ibid., para. 6.72.  WT/DS276/AB/R 
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enterprises that wish to  buy  from an STE, but not to enterprises that wish to  sell  in competition with 
an STE.173  In so finding, the Panel adopted an inte rpretation that, according to the United States, 
"impermissibly narrows the reach of Article XVII's disciplines".174  The United States requests us to 
reverse this interpretation and to find that the term "enterprises" in the second clause of 
subparagraph (b) includes both buyers and sellers. 
154. The second clause of Article XVII:1(b) provides: 
[the provisions of subparagraph (a ) are to be understood to require 
that STEs] shall afford the enterpri ses of the other Members adequate 
opportunity, in accordance with customary business practice, to compete for participation in such purchases or sales. 
155. The United States correctly points out that the ordinary meaning of the word "enterprises", 
which is used in this phrase, includes both enterprises that buy and enterprises that sell.
175  T h i s  
observation alone, however, does not resolve the inte rpretative question raised.  The meaning of the 
word must also be examined within its context, pa rticularly the phrase "compete for participation in 
such purchases or sales".   
156. In the abstract, competition to participate in  purchases and sales could include competition to 
participate as a buyer, as a seller, or both.  Howe ver, the clause under examination does not refer, in 
the abstract, to  any  purchases and sales.  Rather, it refers to " such  purchases or sales", repeating the 
phrase found in the first clause of subparagraph (b).  As discussed in our analysis above176, this phrase 
in subparagraph (b) of Article XV II:1 refers back to the activiti es identified in subparagraph (a), 
namely the purchases and sales of an STE involving imports or exports.   
157. In other words, the second clause of subpara graph (b) refers to purchases and sales 
transactions where:  (i) one of the parties involved in the transaction is an STE;  and (ii) the 
transaction involves imports to or exports from the Member maintaining the STE.  Thus, the 
requirement to afford an adequate oppor tunity to compete for participation ( i.e., taking part with 
others177) in "such" purchases and sales (import or expor t transactions involving an STE) must refer to 
the opportunity to become the STE's counterpart in the transaction,  not  to an opportunity to replace 
the STE as a participant in the transaction.  If it we re otherwise, the transaction would no longer be 
                                                      
173United States appellant's submission, para. 12.   
174Ibid., para. 20.   
175Indeed, the Panel itself made a similar observation at para. 6.68 of its Report.  See  infra , para. 159. 
176Supra , para. 90. 
177The word "participation" is defined as "[t]he action or an act of taking part with others ( in  an action 
or matter)". ( Shorter Oxford English Dictionary , 5th ed., W.R. Trumble, A. Stevenson (eds.) (Oxford University 
Press, 2002), Vol. 2, p. 2107) WT/DS276/AB/R 
Page 52  
 
the type of transaction described by the phrase " such  purchases or sales" in the second clause of 
Article XVII:1(b), because it would not involve an STE as a party.  Thus, in transactions involving 
two parties, one of whom is an STE seller, the word "enterprises" in the second clause of 
Article XVII:1(b) can refer  only  to buyers.
178   
158. Turning to the reasoning of the Panel on this issu e, it is important, as a first step, to consider 
how the Panel approached this issue.  The United States' appeal focuses on th e word "enterprises" and 
suggests that the Panel's ruling, that "enterprises" means enterprises that buy and not enterprises that 
sell, is plainly erroneous.  However, this is not what  the Panel ruled.  Rather, the Panel engaged in an 
interpretation of the second cl ause of Article XVII:1(b),  not  simply of the word "enterprises" within 
that clause.   
159. The Panel began by observing that, taken alone, th e word "enterprises" in the second clause of 
Article XVII:1(b) could encompass both the enterprises of other Members seeking to buy from an 
exporting STE, as well as the enterprises of other Members seeking to sell a product in competition 
with an exporting STE.179  The Panel read the remainder of the second clause of Article XVII:1(b), 
however, as consistent with a narrower meaning of the word "enterprises" within that clause.  In 
particular, the Panel found that the interpretation of the term "enterprises" was informed by the 
stipulation, within the same clause, that the relevant  "enterprises" be afforded an adequate opportunity 
"to compete for  participation  in such purchases or sales". (emphasis added)  The Panel took account 
of the fact that the types of enterprise fa lling within the scope of the second clause of 
Article XVII:1(b) will be influenced by whether th e STE involved in the purchase or sale is a buyer or 
a seller.  In the light of this observation, the Panel considered that the phrase "compete for   
                                                      
178We also note that the text of th e second clause of Article XVII:1(b) qualifies the obligation to 
provide "adequate opportunity ... to co mpete for participation" with the ph rase "in accordance with customary 
business practice."  In this regard, Canada argues, in paragraph 76 of its appellee's submission, that: 
... customary business practice is not fo r competitors to “p articipate” in each 
other’s sales, or to assist or cooperat e with competitors (except, perhaps, in 
consortiums, but then they would no longer be “competitors” in the specific context of such a transaction).  Rather , customary business practice is for an 
enterprise to win sales at the expense of its competitors. 
179Panel Report, para. 6.68.  WT/DS276/AB/R 
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participation " (emphasis added) was critical in ascertaining the meaning of "enterprises" in the 
preceding phrase:   
... we think it cannot equally be said that enterprises selling the same 
product as an export STE compete to "participate", or to "have a part 
or share", in an export STE's sales.  To be sure, enterprises selling the 
same product as an export STE may "compete" with an export STE for sales in general.  But we are not persuaded that, in their capacity 
as sellers, such enterprises "compete for participation in [the relevant export STE's] sales".
180    
160. The Panel's analysis of the second clause of Article XVII:1(b), thus, closely resembles our 
own, and we agree with it.  At the same time, we  wish to highlight that, in interpreting the second 
clause of Article XVII:(b), the Panel set itself a na rrow task, based on the case before it.  The Panel 
limited its interpretation of the requirement in th e second clause of subparagraph (b) to the extent 
necessary to answer the question whether the United States was correct in asserting that the obligation 
to afford adequate opportunity to compete fo r participation in purchases or sales extended to 
enterprises selling wheat in the same market as the CWB ( i.e., wheat sellers), or whether that 
obligation extended only to enterprises co mpeting to purchase wheat from the CWB ( i.e., wheat 
buyers).  The Panel did not determine the full ambit of the requirement to "afford adequate 
opportunity ... to compete for participation" in relevant purchases and sales.  Nor do we.  The Panel 
expressly recognized the possibility that, in other ci rcumstances, particular enterprises could act both 
as a buyer and as a seller.181  The Panel also explicitly stated that it was not asked to, and was  not,  
ruling on the scope of the obligation in th is clause with respect to STEs that act as  purchasers ,  rather 
than as  sellers  .182   
161. It follows that the Panel interpreted the second requirement in subparagraph (b) of 
Article XVII:1 only to the extent necessary to resolv e the specific case before it and to dispose of the 
United States' argument that the CWB was required, under the second clause of Article XVII:1(b), to afford adequate opportunity to compete to "those enterprises selling wheat in the same market as the 
CWB ( i.e., wheat sellers)".
183  To that extent, we uphold the Panel' s findings that the term "enterprises 
of the other Members" in the second clause of  subparagraph (b) of Article XVII:1 includes 
"enterprises interested in buying the products offered for sale by an export STE"184 but not 
                                                      
180Panel Report, para. 6.69. (footnote omitted) 
181See Panel Report, footnotes 157 and 161 to paras. 6.69 and 6.71, respectively.  We note that none of 
the participants or third participants has suggested that this is the case in the markets in which the CWB was 
alleged to be engaging in discriminatory conduct.   
182See Panel Report, para. 6.73 and footnote 164 thereto. 
183Panel Report, para. 6.61. 
184Ibid., para. 6.73. WT/DS276/AB/R 
Page 54  
 
"enterprises selling the same product as that offered for sale by the export STE in question ( i.e., the 
competitors of the export STE)."
185 
C. Canada's Request for Guidance  
162. Canada states that it would welcome "guidan ce" from the Appellate Body as to whether a 
conditional request to complete the analysis of a pa rticular issue should be raised in an appellee's 
submission filed pursuant to Rule 22 of the  Working Procedures ,  or in an other appellant's 
submission filed pursuant to Rule 23.186  Canada seeks this guidance in connection with a conditional 
request that it made in both its other appe llant's submission and its appellee's submission.187  T h e  
request is that, if the Appellate Body reverses the Panel's interpretation of Article XVII:1(b), the 
Appellate Body complete the analysis and find th at the United States has not established that the 
CWB Export Regime necessarily results in a breach of Article XVII:1(b).188   
163. As we have not reversed the Panel's interp retation of subparagraph (b) of Article XVII:1189, 
the condition on which Canada's request to complete th e analysis is made has not been satisfied.  We 
note that neither the United States nor any of the th ird participants has addressed the issue of the 
proper method for raising a conditional request to comp lete the analysis in their submissions in this 
appeal.  Nor does Canada offer its own view on this i ssue.  In the circumstances of this appeal, it is 
neither necessary nor appropriate for us to provi de "guidance" on the issue of how conditional 
requests to complete the analysis are prop erly brought before the Appellate Body.190 
 
VI. Assessment of the Measure 
164. We examine next the United States' argument that the Panel erred by failing to examine the 
CWB Export Regime in its entirety.  According to  the United States, although the Panel correctly  
                                                      
185Panel Report, para. 6.72. 
186Canada's other appellant's submission, para. 56. 
187Ibid., paras. 56–58;  Canada's appellee's submission, para. 170. 
188Canada's other appellant's submission, paras. 57–58 and 64.  In paragraph 56, Canada explained that 
it was making the conditional request in its other appellant's submission in "the interest of ensuring that full notice is given to the Parties and possible third participants  of the issues that may arise in this proceeding."  
189Supra , paras. 143, 151 and 161. 
190We observe, in this respect, that Article 17.9 of the DSU provides for the Appellate Body to consult 
with the Director-General of the WTO an d the Chair of the DSB in amending its Working Procedures.  In 
accordance with the DS B Decision of 19 December 2002 (WT/DSB/31 ), the DSB Chair al so consults with 
WTO Members on amendments proposed by the Appellate Body.  The Appellate Body monitors the operation 
of the  Working Procedures  closely, and recognizes that a need for revision may arise from time to time.  We 
believe that issues such as the one referred to by Cana da in this appeal could usefully be addressed in the 
context of future revision.    WT/DS276/AB/R 
 Page 55 
 
 
defined the measure at issue as consisting of three elements, the Panel failed to analyze one of those 
elements, namely the exclusive and sp ecial privileges granted to the CWB.191  The United States 
alleges that this constituted legal error by the Panel in its application of Article XVII:1 to the facts of 
the case.192  
165. Canada argues that this ground of the Unite d States' appeal should be examined under 
Article 11 of the DSU because "the United States clai ms not a legal error as such, but rather that the 
Panel did not adequately, correctly, or objectively assess the matter before it".193  Canada requests us 
to find that the Panel did not fail to make an objec tive assessment of the matter before it in accordance 
with Article 11 of the DSU.194   
166. As we explained above, the Panel identifie d the measure at issue as the CWB Export 
Regime.195  It defined this as including:  the legal framework of the CWB, the exclusive and special 
privileges granted to the CWB by the government of  Canada, and certain acti ons by Canada and the 
CWB relating to the sale of wheat for export.196  The Panel further identified the privileges at issue as:  
(i) the exclusive right to purchase and sell Wester n Canadian wheat for export and domestic human 
consumption;  (ii) the right to set, subject to government approval, the initial price payable for 
Western Canadian wheat destined for export or dom estic human consumption;  (iii) the government 
guarantee of the initial payment to producers of W estern Canadian wheat;  (iv) the government 
guarantee of the CWB's borrowing;  and (v) government guarantees of certain CWB credit sales to foreign buyers.
197  In addition, the Panel understood the United States as challenging the CWB Export 
Regime "as a whole"198 and as arguing that "it is the combina tion of the various elements of the CWB 
Export Regime, not any one element taken in isola tion, that necessarily results in the CWB making 
non-conforming export sales".199  Finally, the Panel noted that the United States is challenging the  
                                                      
191United States' appellant's submission, paras. 35 and 37. 
192United States' response to questi oning at the oral hearing. 
193Canada's appellee's submission, para. 88.  This view is shared by Australia and China. (Australia's 
third participant's submission, para. 66;  Chin a's third participant's submission, para. 23) 
194Canada's appellee's submission, para. 171. 
195Supra , paras. 10–12. 
196Panel Report, para. 6.12. 
197Ibid., para. 6.15.  
198Ibid., para. 6.26. 
199Ibid., para. 6.25. WT/DS276/AB/R 
Page 56  
 
CWB Export Regime as such.
200  On appeal, the United States acknowledges that the Panel "correctly 
defined th[e] measure".201  Thus, the Panel's identification of the measure at issue is not before us.  
167. At the outset of its examination of the c onsistency of the CWB Export Regime with 
Article XVII:1, the Panel explained that the Unite d States' claim rested on "four broad assertions"202, 
and that the United States would have to demonstrat e each of its four assertions in order to succeed in 
its claim.  As we have seen203, the Panel proceeded in its analysis  beginning with the third assertion, 
namely:  
... that the CWB's legal structure and mandate, together with the 
privileges granted to it, creat e an incentive for the CWB to 
discriminate betwen markets by making some of its sales in a "non-
commercial" manner.204 
The United States is not alleging, on appeal, th at the Panel erred by adopting this approach. 
168. The United States' claim on appeal is that, in analyzing the third assertion, the Panel examined 
the legal structure and mandate of the CWB205, but did not examine the privileges granted to the 
CWB.  Before addressing the point raised by Canada about the legal basis of the United States' claim, 
we will examine whether the Panel, in fact, "ign ored" the privileges granted to the CWB, as the 
United States contends.206 
169. We observe, first, that the Panel did not overl ook the privileges granted to the CWB.  As we 
have seen, the Panel identified the relevant  privileges correctly, and in some detail.207  Thereafter, the 
                                                      
200Panel Report, para. 6.28. 
201United States' appellant's submission, para. 31. 
202Panel Report, para. 6.110.  These "four broad assertions" are:  (i) that the privileges enjoyed by the 
CWB give it more flexibility with respect to pricing and ot her sales terms than a "commercial actor";  (ii) that 
the alleged pricing flexibility resulting from the CWB's privileges enables the CWB to offer "non-commercial" 
sales terms (contrary to the first clause of subparagraph  (b) of Article XVII:1) and thus to deny "commercial" 
enterprises of other Members an adequate opportunity  to compete (contrary to the second clause of 
subparagraph (b));  (iii) that the CWB's legal mandate an d structure, together with the privileges granted to it, 
create an incentive for the CWB to discriminate between markets by making some of its sales in a  
"non-commercial" manner;  and (iv) that the government of Canada is not taking any steps to ensure that CWB 
export sales conform to the principles of subparagraphs (a) and (b) of Article XVII:1. (Panel Report, paras. 6.110–6.114)  
203Supra , para. 119. 
204Panel Report, para. 6.121.  The Panel assumed, for th e purposes of this analysis, that that first two 
assertions of the United States had been established. 
205The United States, however, makes a separate clai m that, in examining the legal structure and 
mandate of the CWB, the Panel disregarded facts presente d by the United States.  We address this claim in the 
next section of this Report. 
206United States' appellant's submission, paras. 4 and 35–40. 
207Supra , para. 166.  WT/DS276/AB/R 
 Page 57 
 
 
Panel expressly and repeatedly referred to the CWB' s privileges.  At the outset of its analysis, the 
Panel explained that it would examine "the asserti on that the CWB's legal structure and mandate, 
together with the privileges granted to it , create an incentive for the CWB to discriminate between 
markets by making some of its sales in a 'non-commercial' manner."208  In the paragraphs following 
this statement, the Panel frequently referred to the existence, if not the details of, such privileges.209   
170. For example, the Panel explicitly mentioned, at paragraph 6.129 of its Report, that "the CWB 
might,  due to the privileges it enjoys ,  sell wheat at lower prices than 'commercial actors' could offer". 
(emphasis added)  Furthermore, as it reached the end of its reasoning on the third pillar of the United 
States' claim, the Panel explained that: 
In summary, ... we are not persuaded that the CWB's legal structure 
and mandate, together with the privileges enjoyed by the CWB , create 
an incentive for the CWB to make sales which are not solely in 
accordance with commercial considerations.210 (emphasis added) 
The Panel concluded that it: 
... [saw] nothing in the legal structure of the CWB, its mandate, or its 
privileges   which would create an incentive for the CWB to 
discriminate between markets for reasons which are not 
commercial.211 (emphasis added) 
Thus, we cannot agree with the United States that the Panel "ignored" the privileges accorded to the 
CWB in examining the consistency of the CW B Export Regime with Article XVII:1.   
171. The United States acknowledged at the oral hearing that the Panel referred to the CWB's 
privileges, but contends that the Panel did not cons ider them beyond their mere mention.  We are not 
persuaded that the Panel's examination of the privile ges was inadequate, especially in the light of the 
Panel's definition of the measure at issue and its in terpretation that Article XVII:1(b) does not prevent 
an STE from using its special privileges, an inte rpretation that we have confirmed on appeal.212    
172. In rejecting the interpretation of Article XVII:1( b) put forward by the United States, the Panel 
stated that it could not "interpret the first clause so as to prevent export STEs from using their exclusive or special privileges to gain a competitive advantage in the marketplace".
213  The Panel, 
                                                      
208Panel Report, para. 6.121. (emphasis added) 
209See, for example, Panel Report, paras. 6.128–6.129, 6.135, 6.141, and 6.145–6.147. 
210Panel Report, para. 6.146.  
211Ibid., para. 6.147.  
212Supra , para. 151. 
213Panel Report, para. 6.100. WT/DS276/AB/R 
Page 58  
 
moreover, explained that it did not believe "that pa rticular sales by an export STE could be regarded 
as not in accordance with 'commercial' considerations  merely because the specific terms of these sales 
could not have been offered in the absence of the exclusive or special privileges granted to the export 
STE".
214  It would appear that, in the light of its  interpretation of Article XVII:1(b), the Panel 
considered that the special privileges had limited relevance for its analysis of the United States' 
assertion that the legal mandate and structure of the CWB, together with the privileges granted to it, 
create an incentive for the CWB to discriminate be tween markets by making some of its sales in a 
"non-commercial" manner.  Although the Panel coul d have been more explicit in explaining the 
limited relevance that the special privileges ha d for its analysis of the possible incentive to 
discriminate between markets, the Panel did say: 
... that the fact that an export STE like the CWB might, due to the 
privileges it enjoys , sell wheat at lower prices than "commercial 
actors" could offer would not, in itself, justify the conclusion that such sales would not be in accordance with commercial 
considerations.
215 (emphasis added)     
173. We observe, moreover, that the United Stat es argued before the Panel that the "non-
conforming" sales of the CWB were the result of the various elements of the CWB Export Regime operating in combination.
216  According to the Panel, the United States acknowledged that "not any 
one element taken in isolation" would lead to the "non-conforming" sales.217  The United States' 
contention on appeal that the Panel failed to make a discrete analysis of one aspect of the measure, 
that is, the special privileges granted to the CWB, thus appears inconsistent  with its position before 
the Panel that the three constituent elements of th e CWB Export Regime operate in combination.  As 
we see it, given the arguments of the United Stat es, the Panel accorded the privileges appropriate 
attention in its analysis and there was no reason why the Panel had to examine the CWB's special 
privileges in isolation.218 
174. In sum, we are not persuaded that the Panel "i gnored" the CWB's privileges or that the Panel's 
analysis of these privileges was inadequate in the light  of its definition of the measure at issue and its 
interpretation of Article XVII:1(b). 
                                                      
214Panel Report, para. 6.101. 
215Ibid., para. 6.129, referring in footnote 213 thereto to para. 6.101 of the Panel Report.  
216Panel Report, para. 6.25. 
217Ibid. 
218As the Panel explained, the United States does not challenge the fact that the CWB has been granted 
the special privileges and acknowledged  that "Article XVII does not forbid a WTO Member from providing an 
STE with such extensive privileges [as those enjoyed by the CWB], even if such privileges could distort markets 
to the detriment of other WTO Members. "  (Panel Report, footnote 123 to para. 6.26 thereto, quoting from the 
United States' first written submission to the Panel, para. 3)  WT/DS276/AB/R 
 Page 59 
 
 
175. Before concluding on this issue, we consider  Canada's submission that the United States' 
claim that the Panel did not examine the measure  in its entirety should have been made under 
Article 11 of the DSU.219  Although the United States recognized that it could also have pursued its 
claim under Article 11 of the DSU, it chose in this  case to characterize its claim as an error by the 
Panel in the application of Article XVII:1.220    
176. We agree with Canada that this claim of error f its more properly under Article 11 of the DSU.  
The Appellate Body has stated previously that th e measure at issue (and the claims made by the 
complaining Member) make up the " matter   referred to the DSB" for the purpose of Article 7 of the 
DSU.221   In this sense, the United States' argument th at the Panel did not examine the measure in its 
entirety relates to the Panel's examination of the "mat ter".  Article 11 of the DSU sets out the duties of 
a panel, including that it "should make an objective assessment of the  matter   before it". (emphasis 
added)  Therefore, as we see it, the United States'  allegation that the Panel did not examine the 
measure in its entirety amounts to an allegation th at the Panel did not "make an objective assessment 
of the matter" under Article 11 of the DSU.   
177. Although an appellant is free to determin e how to characterize its claims on appeal222, at the 
same time due process requires that the legal basis of  a claim be sufficiently clear to allow an appellee 
to respond effectively.  This is especially the case when the claim is an allegation that the panel did 
not make an objective assessment of the matter as  required by Article 11 of the DSU because, by 
definition, such a claim will not be found in the request for the establishment of the panel and, 
therefore, the panel will not have referred to it in the panel report.223   
178. In this appeal, Canada expressly requests that  we examine the United States' claim, albeit 
under Article 11 of the DSU, even though Canada cons iders that the failure to cite the proper legal 
basis would be sufficient grounds for dismissal.224  In the preceding paragraphs, however, we rejected 
                                                      
219Australia and China agree with Canada's position.  (Australia's third participant's submission, 
para. 66; China's third participant's submission, para. 23) 
220United States' response to questioning at oral hearing. 
221Appellate Body Report, Guatemala – Cement I , para. 72. (emphasis added) 
222In Japan – Apples , the Appellate Body stated that "a pa rty has the prerogative to pursue whatever 
legal strategy it wishes in conducting its case". (Appellate  Body Report, para. 136).  This statement was made in 
the context of discussing how a party pu rsues its claims at the panel stage. 
223Appellate Body Report, US – Countervailing Measures on Certain EC Products , para. 74.  The 
Appellate Body has emphasized that "a claim, by an appell ant, that a panel erred under Article 11 of the DSU, 
and a request for a finding to this e ffect, must be included in the Notice of  Appeal, and clearly articulated and 
substantiated in an appellant's submission with specific arguments." (Appellate Body Report, US – Corrosion-
Resistant Steel Sunset Review , footnote 60 to para. 71;  see also Appellate Body Report, Japan – Apples , 
para. 127;  and Appellate Body Report, US – Steel Safeguards , para. 498)   
224Canada's appellee's submission, para. 89. WT/DS276/AB/R 
Page 60  
 
the United States' claim that the Panel failed to exam ine the measure in its entirety.  Therefore, there 
is no need for us to make a ruling under Article 11 of the DSU in this regard.
225  
 
VII. Assessment of the Evidence 
179. We will now examine the United States' assertion that the Panel failed to make an objective 
assessment of the facts, as required by Article 11 of the DSU, because the Panel "deliberately 
disregarded" evidence submitted by the United Stat es in relation to the CWB's legal framework.226  
Specifically, the United States contends that, even though the Panel itself defined the  Canadian 
Wheat Board Act   as an essential element of the measure at  issue, the Panel "ignored evidence" on 
how provisions of that Act limit the independence of the CWB's Board of Directors and the CWB's 
operations.227  In addition, the United States submits that  the Panel "ignored significant facts" related 
to the financial operations of the CWB228 and "deliberately disregarded" the fact that the Canadian 
government guarantees CWB borrowing.229  Finally, the United States contends that the Panel 
"ignored" facts relating to the CWB's credit sales.230  According to the United States, the Panel's 
disregard of these facts led the Panel to conclude erroneously that the CWB is "controlled by" wheat 
farmers and that the CWB's legal framework does not  provide an incentive for the CWB to make sales 
that are not solely in accordance with commercial considerations.231  
180. Canada rejects the United States' contention th at the Panel ignored facts submitted by the 
United States.  In Canada's submission, the facts that the United States describes as related to the 
financial operations of the CWB are nothing other than what the United States alleged to be the 
special privileges granted to the CW B, which the Panel did not "ignore".232  Canada states, moreover, 
that the United States' assertion on appeal that th e Panel erred in finding that the CWB is controlled 
by farmers contradicts the United States' allegation before the Panel that Canada did not meet its 
                                                      
225We examine, in the following section of this Report, the United States' allegation that the Panel 
failed to discharge its duty under Artic le 11 of the DSU because the Panel disregarded facts submitted by the 
United States. 
226United States' appellant's submission, para. 5.  The United States relies on the Appellate Body's 
reasoning in EC – Hormones to support its claim.  (United Stat es' appellant's submission, paras. 41 –43, referring 
to Appellate Body Report, EC – Hormones , para. 133) 
227United States' appellant's submission, para. 47.  See also, United States' appellant's submission, 
para. 50. 
228United States' appellant's submission, para. 51. 
229Ibid., para. 53. 
230Ibid., para. 54. 
231Ibid., para. 55. 
232Canada's appellee's submission, para. 142.  WT/DS276/AB/R 
 Page 61 
 
 
obligations under Article XVII:1 of the GATT 1994 because of the  lack  of government supervision 
over the CWB.233       
181. Article 11 of the DSU states that "a panel s hould make an objective assessment of the matter 
before it,  including an objective assessment of the facts of the case ". (emphasis added)  The Appellate 
Body has explained that: 
... Article 11 requires panels to take account of the evidence put 
before them and forbids them to wilfully disregard or distort such evidence.  Nor may panels make affirmative findings that  lack a 
basis in the evidence   contained in the panel record.  Provided that 
panels' actions remain within these parameters, however, we have 
said that "it is generally within th e discretion of the Panel to decide 
which evidence it chooses to util ize in making findings", and, on 
appeal, we "will not interfere lightly with a panel's exercise of its discretion".
234
  (emphasis added) 
As for the standard of review that is applicable on appeal, the Appellate Body has further stated that: 
[i]n assessing the panel's appreci ation of the evidence, we cannot 
base a finding of inconsistency under Article 11 simply on the conclusion that we might have r eached a different factual finding 
from the one the panel reached.  Rather, we must be satisfied that the 
panel has exceeded the bounds of its discretion, as the trier of facts, 
in its appreciation of the evidence.
 235 
Although in  EC – Hormones   the Appellate Body recognized that the deliberate disregard of the 
evidence could constitute a failure by the panel to  make an objective assessment of the facts under 
Article 11 of the DSU, the Appellate Body went on to explain that "disregard" of the evidence: 
... impl[ies] not simply an error of judgment in the appreciation of 
evidence but rather an egregious e rror that calls into question the 
good faith of a panel.  A claim that a panel disregarded or distorted the evidence submitted to it is, in eff ect, a claim that the panel, to a 
greater or lesser degree, denied the party submitting the evidence fundamental fairness, or what in many jurisdictions is known as due 
process of law or natural justice.
236 (footnote omitted)  
182. Consistent with the Appellate Body's reasoning in  US – Carbon Steel ,  we will examine first 
whether the findings of the Panel being challenged on appeal by the United States had a "basis in the 
                                                      
233Canada's statement at the oral hearing. 
234Appellate Body Report , US – Carbon Steel , para. 142 quoting from Appellate Body Report,  
EC – Hormones , and Appellate Body Report, US – Wheat Gluten . (footnotes omitted) 
235Appellate Body Report, US – Wheat Gluten , para. 151. 
236Appellate Body Report, EC – Hormones , para. 133. WT/DS276/AB/R 
Page 62  
 
evidence".  We will then examine whether the Pa nel disregarded evidence submitted by the United 
States.   
183. The two findings of the Panel that the United States asserts are erroneous as a result of the 
Panel having disregarded evidence are that:  (i) "t he CWB is controlled by the producers whose grain 
the CWB markets"
237, and (ii) the United States "failed to est ablish ... that the CWB's legal structure 
and mandate, together with the privileges grante d to it, create an incentive for the CWB to 
discriminate between markets by making some of its sales not solely in accordance with commercial 
considerations".238  The Panel based its first finding on the fact that the majority  of the CWB's Board 
of Directors are elected by wheat farmers and the fact that the government of Canada "does not control, or interfere in, the day-to-day operations of the CWB".
239  On appeal, the United States has 
acknowledged that it does not dispute either of these facts.240  We also see no obvious flaw in the 
Panel's reliance on these two facts and conclude, theref ore, that the Panel had a factual basis for its 
finding that "the CWB is controlled by the producers whose grain the CWB markets".   
184. In respect of the second finding challenged by the United States, we note that the Panel 
discussed several facts that it found relevant in reach ing its conclusion that the United States "failed to 
establish ... that the CWB's legal structure and manda te, together with the privileges granted to it, 
create an incentive for the CWB to discriminate be tween markets by making some of its sales not 
solely in accordance with commercial considerations ".  These facts included its prior finding that the 
CWB is controlled by wheat farmers;  the duties imposed on the Board of Directors by the Canadian 
Wheat Board Act241;  the CWB's mandate242;  evidence that the CWB can defer sales and purchases 
depending on market conditions243;  the existence of evidence in the record "to suggest that, in some 
cases, the CWB may not be prepared to sell at all, even at the best price possible"244;  and the factual 
evidence adduced by the United States regarding actual CWB sales behaviour, which the Panel found 
did not prove the United States' allegation that the CWB has an incentive to make sales that are not 
solely in accordance with commercial considerations.245  Again, the United States does not contest 
any of these factual findings in this appeal.  We find, therefore, that the Panel did not err in  
                                                      
237Panel Report, para. 6.122. 
238Ibid., para. 6.148. 
239Ibid., para. 6.122. 
240United States' response to questi oning at the oral hearing. 
241Panel Report, para. 6.123.  
242Ibid., para. 6.127. 
243Ibid., para. 6.127. 
244Ibid., para. 6.131. 
245Ibid., para. 6.146.  WT/DS276/AB/R 
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concluding, on the basis of the f acts that it examined, th at the United States "failed to establish ... that 
the CWB's legal structure and mandate, together with  the privileges granted to it, create an incentive 
for the CWB to discriminate between  markets by making some of its  sales not solely in accordance 
with commercial considerations".   
185. We now turn to the specific facts that the Unite d States alleges the Panel disregarded.  As we 
explained earlier, the United States does not dispute the Panel's findings that a majority of the CWB's 
Board of Directors are elected by farmers rather than appointed by the government, and that the 
government of Canada does not exercise day-to -day control over the activities of the CWB.246  Rather, 
the United States argues that the Panel disregarde d other facts submitted by the United States that 
demonstrate that the CWB Board of Directors is not "truly independent"247, namely that:  (i) the 
President of the CWB's Board of Directors is appoi nted by the Canadian government and holds office 
for a term determined by the Canadian government;  (ii) the Board of Directors of the CWB reports to 
a Minister of the Canadian government and provides information concerning CWB activities, holdings, purchases and sales on a monthly basis;  (iii ) the CWB Board of Directors is required to "act 
as agent for or on behalf of any minister or agent of  Her Majesty in right of Canada in respect of any 
operations that it may be directed to carry out by the Governor in Council"
248;  and (iv) that CWB 
profits are to be paid into a reve nue fund of the Canadian government.249  These facts were evident, 
according to the United States, from the provisions of the Canadian Wheat Board Act , which the 
United States submitted as evidence to the Panel as Exhibit US-2.  
186. As we said earlier250, the Appellate Body has previously he ld that "it is generally within the 
discretion of the Panel to decide which ev idence it chooses to utilize in making findings".251  
Accordingly, the Panel's decision not to rely on some of the facts that the United States claims to have 
submitted would not, by itself, constitute legal erro r.  To succeed in its claim that the Panel 
disregarded the evidence submitted to it, the United States would have to demonstrate that the Panel 
                                                      
246United States' response to questi oning at the oral hearing. 
247United States' appellant's submission, para. 50. 
248Ibid., quoting from Section 6(1)(j) of the Canadian Wheat Board Act , submitted by the United States 
to the Panel as Exhibit US-2. 
249United States' appellant's submission, para. 50. 
250Supra , para. 181, quoting from Appellate Body Report, US – Carbon Steel , para. 142. 
251Appellate Body Report, EC – Hormones , para. 135.  The Appellate Body further observed that "[t]he 
Panel cannot realistically refer to all statements made by the experts advising it and should be allowed a 
substantial margin of discretion as to which statements  are useful to refer to explicitly."  (Appellate Body 
Report, EC – Hormones , para. 138)   WT/DS276/AB/R 
Page 64  
 
exceeded its discretion and that the Panel made, in effect, an "egregious error".
252  In our view, the 
United States has not put forward arguments that demonstrate such an error.   
187. With respect to the Panel's findings that the CWB is controlled by wheat farmers, Canada 
asserts that the United States "never mentioned th e provisions that it now alleges that the Panel 
ignored", but rather "simply submitted the entirety of the  CWB  Act".253  Our review of the panel 
record confirms that the United States did not ma ke specific arguments on the provisions that it now 
alleges were disregarded by the Panel.  Rather, as Canada asserts, the United States focused its 
arguments before the Panel on demonstrating that th e Canadian government acted inconsistently with 
Article XVII:1 of the GATT 1994 because it did  not  adequately supervise the CWB.254  As the 
following excerpt illustrates, before the Panel, th e United States emphasized the influence of wheat 
farmers, rather than of the Canadian gov ernment, on the CWB's Board of Directors: 
... since 1998, the CWB has been gove rned by a 15-person Board of 
Directors.  The Board president and four directors are selected by 
Canada, and the remaining ten directors are elected by grain 
producers.  Thus, the CWB is currently governed by a Board of Directors the majority of whom are elected by producers.
255 (footnote 
omitted)   
This excerpt contrasts with the United States' allega tion, on appeal, that the Panel erred by finding that 
the CWB Board of Directors is "controlled by" wh eat farmers, and that the Panel would have 
concluded otherwise had it not disregarded the fact th at the President of the Board of Directors of the 
CWB is appointed by the Canadian government and the fact that the President's term is determined by 
the Canadian government.  In any event, the following statement from the Panel Report clearly 
demonstrates that the Panel was aware that the President of the CWB's Board of Directors is appointed by the Canadian government and that the Pr esident's term of office  is determined by the 
Canadian government: 
                                                     
 
252Appellate Body Report, EC – Hormones , para. 133;  Appellate Body Report, EC – Bed Linen 
(Article 21.5 -  India) , para. 177. 
253Canada's appellee's submission, para. 144. 
254See, for example, Panel Report, para. 4.193, and the Requests for Establishment of the Panel, 
WT/DS276/6 and WT/DS276/9.  In paragraph 64 of its first written submission to the Panel, the United States 
argued: "[i]f, as Canada asserts, Canada has no control or influence over the CWB, than [sic] Canada has not complied–and, under its current regulatory structure, ca nnot comply—with its obligation to ensure that the 
CWB meets the standards in Article XVII regarding wheat exports."   
255United States' first written submission to the Panel,  para. 18.  See also Panel Report, para. 6.112.  WT/DS276/AB/R 
 Page 65 
 
 
Ten of the Board's directors are elected by Western Canadian producers of wheat and barley, the remaining five, including the president
, are appointed by Canada's Governor in Council, i.e., by the 
Government of Canada.  With the exception of the president , 
directors hold office for a maximum term of four years, and may 
serve up to three terms. 256  (footnotes omitted;  underlining added)  
188. As for the provision of the  Canadian Wheat Board Act   that provides for directions from 
Canada's Governor in Council to the CWB's Board of Directors257, we have not found any indication 
in the panel record that the United States specificall y raised this provision to support its arguments.  
Furthermore, contrary to what the United States cont ends, the Panel did not disregard the fact that the 
CWB may receive instructions from Canada's Gover nor in Council, as it expressly referred to such 
possibility in footnote 200 to para graph 6.122 of the Panel Report.258  This footnote suggests that the 
Panel referred to this provision, not because it was specifically raised by the United States, but rather 
because it was raised by Canada as part of its defence.     
189. We have not found any indication in the panel r ecord that the United States raised, before the 
panel, the fact that the Board of Directors of th e CWB reports and provides information to a Minister 
of the Canadian government as evidence that the CWB Board of Directors is controlled by the 
Canadian government.259  Neither has the United States indicated , on appeal, where it made such an 
argument in its submissions before the Panel.260     
190. Neither do we find any indication in the panel r ecord that the United States specifically raised 
the alleged fact that CWB profits are to be paid into a revenue fund of the Canadian government.   
The United States did make arguments relating to the pr ofits of the CWB, but it did so in the context 
of arguing that the CWB has an incentive to make  sales not solely in accordance with commercial 
considerations because its objective is to  maximize revenues rather than profit.261  This argument was 
                                                      
256Panel Report, para. 6.122. 
257The United States is referring to Section 6(1)(j) of the Canadian Wheat Board Act . 
258The Panel referred to Section 18(1) of the Canadian Wheat Board Act , which deals specifically with 
directions from the Governor in Council to the CWB.  Section 6(1)(j) of the Canadian Wheat Board Act , the 
provision raised on appeal by the United States, provide s that the powers of the CWB include acting as an agent 
in respect of any operations directed to be carried out by the Governor in Council. 
259This may be due to the fact that  the United States chose to focus its arguments before the Panel on 
demonstrating that the Canadian government did not adequately supervise the CWB.  Before the Panel, the 
United States did mention that the CWB's borrowing plan is submitted to the Canadian Minister of Finance on an annual basis.  (United States' first written submission to  the Panel, para. 29)  However, this was mentioned in 
relation to the Canadian government's guarantee of CWB borrowing.  The United States' allegation relating to 
this subject is examined below.  See  infra , para. 192.  
260The portions of the panel record indicated by the United States in response to questioning at the oral 
hearing do not refer to this point.  (United States ' response to questioning  at the oral hearing) 
261Panel Report, para. 6.112. WT/DS276/AB/R 
Page 66  
 
addressed and rejected by the Panel.
262   In rejecting the United States' argument, the Panel observed 
that "the objective of the CWB in selling wheat is not to make a profit for itself", but that instead "[a]ll 
the revenue obtained by the CWB from the sale of wheat is pooled and returned to Western Canadian 
wheat producers at the end of the crop year".263  
191. In our view, it is incumbent upon a party to id entify in its submissions the relevance of the 
provisions of legislation—the evidence—on which it relies to support its arguments.  It is not 
sufficient merely to file an entire piece of legislati on and expect a panel to discover, on its own, what 
relevance the various provisions may or may not have for a party's lega l position.  We are not satisfied 
that the United States argued the relevance before  the Panel of the various provisions of the  Canadian 
Wheat Board Act   on which it now relies.  In any event, its position before the Panel appears at odds 
with the one that it has adopted in this appeal , namely that the Canadian government exercises 
considerable influence on the CWB.  Therefore, we do not agree with the United States that the Panel 
disregarded facts relevant to the independence of the CWB and we see no failure by the Panel in this 
respect to comply with its duty under Article 11 of the DSU. 
192. The other category of facts that the United States  contends the Panel disr egarded relates to the 
CWB's financial operations, borrowing and sales of grain on credit.  Specifically, the United States 
alleges that the Panel ignored the following facts:   (i) the CWB's monopoly right to purchase Western 
Canadian wheat and to sell that wheat for domestic  human consumption and export;  (ii) the approval 
and guarantee of the initial payments to farmer s by the Canadian government;  and (iii) the 
reimbursement by the Canadian Parlia ment of losses sustained by the CWB.264  In addition, the 
United States asserts that the Panel disregar ded the Candian government's guarantee of CWB 
borrowing and of the CWB's sales of grain on credit pursuant to Section 19 of the  Canadian Wheat 
Board Act .265   
193. As Canada argues, however, the facts described  by the United States as related to the CWB's 
financial operations, borrowing and sales of grain on  credit correspond exactly with what the United 
States described as the CWB's special privileges, na mely:  (i) the exclusive right to purchase and sell 
Western Canadian wheat for export and domestic human consumption;  (ii) the right to set, subject to government approval, the initial price payable for Western Canadian wheat destined for export or 
domestic human consumption;  (iii) the government guarantee of the initial payment to producers of 
Western Canadian wheat;  (iv) the government guarantee of the CWB's borrowing;  and (v) 
                                                     
 
262Panel Report, paras. 6.133 –6.134. 
263Ibid., para. 6.133. (footnote omitted) 
264United States' appellant's submission, para. 51. 
265Ibid., paras. 53 –54.  WT/DS276/AB/R 
 Page 67 
 
 
government guarantees of certain CWB credit sales to foreign buyers.266  On the one hand, when the 
United States laid out the elements that compri se the CWB Export Regime before the Panel, the 
United States chose to portray the CWB's special pr ivileges as an element that is separate from the 
legal framework of the CWB.267  On the other hand, the United States now contends that the Panel 
disregarded certain provisions of the  Canadian Wheat Board Act .  These provisions are, themselves, 
the source of the CWB privileges challenged by th e United States  In our view, the United States 
cannot have it both ways:  it cannot succeed in fau lting the Panel's assessment of the facts by seeking 
to blur the separation that the United States itsel f drew between the CWB's legal framework and the 
CWB's special privileges.268 
194. In the previous section of this Report, we found that, contrary to the United States' claim, the 
Panel did not fail to examine the special privileges of the CWB.269  The United States is asking us, 
under the appearance of a claim that the Panel overl ooked the legal provisions that give rise to them, 
to review for a second time whether the Panel examin ed the CWB's special privileges.  Having found 
that the Panel did not fail to examine the privileges,  we see no basis for us to find now that the Panel 
failed to meet the requirements of Article 11 of the DSU by disregarding them. 
195. In sum, we are not persuaded that the Panel di sregarded or ignored the evidence submitted to 
it, or committed an "egregious error"  in the appreciation of the evidence.270  Nor do we conclude that 
the Panel exceeded the bounds of its discretion, as the trier of facts, in its appreciation of the evidence.
271 
196. We, therefore, reject the United States' assertion that the Panel did not make an objective 
assessment of the facts of the case as required by Article 11 of the DSU.  
 
VIII.  Article 6.2 of the DSU 
197. We turn, finally, to the United States' claim th at the Panel erred in declining to dismiss 
Canada's preliminary objection to the adequacy of the request for the establishment of the panel on the 
grounds that it was not made in a timely manner.   
                                                      
266United States' appellant's submission, para. 33; United States' first written submission to the Panel, 
paras. 21–36;  and Panel Report, para. 6.15.  
267Panel Report, para. 6.12. 
268Canada expressed a similar view in its appellee's submission, para. 138. 
269Supra , para. 174. 
270Appellate Body Report, EC – Hormones , para. 133. 
271Appellate Body Report , US – Carbon Steel , para. 142;  Appellate Body Report, US – Wheat Gluten , 
para. 151. WT/DS276/AB/R 
Page 68  
 
198. First, we set out briefly the facts relevant to th is issue.  The United States filed its request for 
the establishment of the panel on 6 March 2003.
272  The United States' panel request was considered at 
DSB meetings held on 18 Marc h and 31 March, and the Marc h Panel was established on 
31 March 2003.273  On 7 April 2003, Canada sent a letter to the United States indicating that the 
United States' panel request did not meet the requi rements of Article 6.2 of the DSU and requesting 
that the United States "promptly identify the specifi c measures at issue and provide a brief summary 
of the legal basis for its complaint".274  The United States did not respond to this request.275  T h e  
Director-General determined the composition of the March Panel on 12 May 2003.276    
199. The day after the composition of the March Pane l was determined, Canada requested that the 
Panel rule, as a preliminary matter, that the United States' claim under Article XVII of the 
GATT 1994 was not properly before it because the Un ited States had failed to identify the specific 
measures at issue as required by Article 6.2 of the DSU. 
200. Following the receipt of preliminary written submi ssions on this issue, the March Panel ruled, 
on 25 June 2003, as follows:  
... taken as a whole, the United States' panel request does not 
sufficiently establish the identity of  the "laws" and "regulations" at 
issue in the Article XVII claim.  In particular, the identification of the measure at issue in this claim is inadequate because it creates significant uncertainty regarding th e identity of the precise measures 
at issue and thus impairs Canada's  ability to "begin preparing its 
defence" in a meaningful way.
277 (footnotes omitted) 
                                                      
272WT/DS276/6. 
273WT/DSB/M/145 and WT/DSB/M/146.  
274Panel Report, para. 6.10, subpara. 55, quoting fr om Canada's preliminary written submission to the 
Panel, para. 30.   
275Panel Report, para. 6.10, subpara. 55. 
276The Director-General determined the composition of the March Panel, pursuant to Article 8.7 of the 
DSU, in response to a request made by Canada on 2 May 2003.  (WT/DS276/7)  Article 8.7 provides, in 
relevant part:  
If there is no agreement on the panelists within 20 days after the date of the 
establishment of a panel, at the request of either party, th e Director-General, 
in consultation with the Chairman of the DSB and the Chairman of the relevant Council or Committee, shall determine the composition of the 
panel ... 
277Panel Report, para. 6.10, subpara. 28.  The March Panel, however, rejected Canada's allegations that 
the United States' claims under Article 2 of the  TRIMs Agreement   and the claim agains t one of the measures 
related to the transportation of grain did not meet the re quirements of Article 6.2 of the DSU. (Panel Report, 
para. 6.10, subparas. 46 and 52)  WT/DS276/AB/R 
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201. The March Panel also refused to "decline Cana da's request for a preliminary ruling on the 
grounds that it was not raised in a timely manner"278, reasoning that: 
... in the circumstances of the present case, we cannot reasonably 
conclude that  solely   because Canada did not raise its objections at 
the relevant DSB meetings, Canada's  request for a preliminary ruling 
should be denied.279 (emphasis added) 
In its reasoning, the March Panel referred to th e letter sent by Canada to the United States on  
7 April 2003, observing that: 
... Canada's letter of 7 April 2003 was not answered by the 
United States.  If the United States had provided sufficient clarification of its panel request  to Canada, Canada might, for 
instance, have refrained from requesting a preliminary ruling.
280 
202. On appeal, the United States does not challenge the March Panel's finding that the request for 
the establishment of the panel did not conform to the requirements in Article 6.2 of the DSU.   Rather, 
the United States' appeal relates to th e Panel's finding in respect of the  timeliness   of Canada's request 
for a preliminary ruling.   
203. The United States contends that Canada should have put forward its objections to the panel 
request at the DSB meetings of 18 and 31 Ma rch 2003 in which the request was considered.281  At the 
oral hearing, the United States explained that it is not arguing that, as a general rule, preliminary 
objections to a panel request must be raised at  the DSB meeting in which the panel request is 
considered.  Instead, the United States submits that, in  this particular case, Ca nada should have raised 
its preliminary objection earlier and that the DSB me etings in which the panel request was considered 
presented earlier opportunities to raise the objection.  The United States also states that the Panel gave undue weight to the fact that the United States di d not respond to Canada's letter of 7 April 2003.
282  
Canada responds that there is no legal basis for th e United States' contention that Canada should have 
                                                      
278Panel Report, para. 6.10, subpara. 64. 
279Ibid., subpara. 63.  
280Ibid., subpara. 60.  
281United States' appellant's submission, para. 62. 
282In its appellant's submission, the United States asserts that the March Panel erred by implying that 
the United States could have "cured" any deficiencies in the panel request by responding to Canada's letter of 
7 April. (United States' appellant's submission, para. 66)  See  infra , para. 212.   
At the oral hearing, however, the United States clarified that it was no t raising this point as a separate 
claim of error.  Rather, the United St ates argued that the March Panel placed too much weight on the fact that 
Canada sent the letter of 7 April requesting clarification.   (United States' response to questioning at the oral 
hearing)   WT/DS276/AB/R 
Page 70  
 
raised its objections at the DSB meetings in which the panel request was considered.
283  According to 
Canada, its objection was timely because it was rais ed only one day after the composition of the Panel 
was determined, which was "the earliest opportunity  at which there was a body in place with the 
authority to decide the issue".284 
204. The issue before us in this appeal is whethe r the March Panel was correct in concluding that, 
under the particular circumstances of this case, Ca nada's preliminary objection, which was filed the 
day after the composition of the March Panel was determined, was timely. 
205. Article 3.10 of the DSU provides that WTO Members will engage in dispute settlement 
procedures in good faith in an effort  to resolve the dispute.  In  US – FSC ,  the Appellate Body stated 
that the: 
... principle of good faith requires that responding Members 
seasonably and promptly bring claime d procedural deficiencies to 
the attention of the complaining Member, and to the DSB or the 
Panel , so that corrections, if needed, can be made to resolve disputes.  
The procedural rules of WTO dispute settlement are designed to promote, not the development of litigation techniques, but simply the 
fair, prompt and effective resolution of trade disputes.
285 (emphasis 
added) 
The Appellate Body has also held that "in the in terests of due process, parties should bring alleged 
procedural deficiencies to the attention of a panel at the earliest possible opportunity".286    
206. As regards objections to the  adequacy   of panel requests, the Appellate Body has stated that 
compliance with the requirements of Article 6.2 of the DSU must be determined on the merits of each 
case.287  Similarly, it would appear to us that a determination as to the  timeliness   of an objection 
raised under Article 6.2 must be examined on a case- by-case basis.  This is consistent with the 
discretion given to panels, under the DSU, to deal  with specific situations that may arise in a 
particular case and that are not explicitly regulated.288  Furthermore, under Article 12 of the DSU, it is 
the panel that sets the timetable for the panel proceedi ngs and, therefore, it is the panel that is in the 
                                                      
283Canada's appellee's submission, para. 160.  The European Communities expresses a similar view.  
(European Communities' third participant's submission, para. 38) 
284Canada's appellee's submission, para. 163. 
285Appellate Body Report, US – FSC , para. 166.  
286Appellate Body Report, US – Carbon Steel , para. 123. 
287Ibid., para. 127.  See also Appellate Body Report, Korea – Dairy , para. 127. 
288Appellate Body Report, EC – Hormones , footnote 138 to para. 152.  See also Appellate Body 
Report, US – FSC (Article 21.5) , paras. 247 –248.  WT/DS276/AB/R 
 Page 71 
 
 
best position to determine whether, under the partic ular circumstances of each case, an objection is 
raised in a timely manner. 
207. Having said this, we agree with the March Panel that, in the particular circumstances of this 
case, Canada's objection was not filed in an untim ely manner.  Canada raised its written objection 
only one day after the composition of  the March Panel was determined.289  We see no error in the 
March Panel's view that this constituted the "ear liest possible opportunity" in which Canada could 
have raised its objection and sought a ruling from the Panel.290  Indeed, only a month and a half had 
passed between the establishment and the compos ition of the March Panel, and a little over two 
months had passed since the request for the establishment of the panel was submitted by the United States.   
208. As the March Panel observed
291, this stands in sharp contrast with the situation in  US – FSC ,  
on which the United States relies to support its view th at the objection should have been raised at the 
DSB meetings in which the panel request was consid ered.  In that case, the United States raised an 
objection to the European Communities' request fo r consultations a year after it had received the 
request for consultations.292  Moreover, that panel expressly found that "the United States consciously 
chose not to seek clarification ... at the point it received the request for consultations".293   
209. In this case, Canada sought clarification from the United States, by letter of 7 April 2003, 
before making its request for a preliminary ruling.  Although Canada's letter of 7 April was sent seven 
                                                      
289Before the March Panel, Canada claimed to have raised the issue during consultations, but the 
United States disputed this claim.  The March Panel noted  that there appeared to be  no formal record of the 
consultations and, as a consequence, it was "unable to determine whether or not Canada raised an objection 
during the consultations". (Panel Report, para. 6.10, subpara. 55 and footnotes 49 and 50 thereto.)   
290Panel Report, para. 6.10, subpara. 58. 
291Ibid., subpara. 62. 
292Appellate Body Report, US – FSC , para. 165.  The European Communities requested consultations 
on 18 November 1997 and the United St ates raised its objection in a Re quest for Preliminary Findings filed 
before the panel on 4 December 1998, pr ior to the filing of the parties' fi rst written submissions. (Panel Report, 
US – FSC , para. 1.1 and footnote 19 to para. 4.7)  Specif ically, the United States ar gued that the European 
Communities' request for consultations was defective beca use it did not meet the requirements of Article 4.2 of 
the SCM Agreement , which provides: 
A request for consultations under paragraph 1 shall include a statement of 
available evidence with regard to the existence and nature of the subsidy in 
question. 
Moreover, in US – FSC , the parties held three separate rounds of consultations over a period of nearly 
five months.  (See Appellate Body Report, US – FSC , para. 162 and footnote 167 thereto)  In the present case, 
the parties held only one round of formal consultations, on 31 January 2003. (Panel Report, para. 1.2) 
293Appellate Body Report, US – FSC , para. 162, quoting from Panel Report, US – FSC , para. 7.10.  It is 
unnecessary for us to decide, in this case, whether differe nt considerations may be relevant to the determination 
of the timeliness of an objection to a request for consulta tions as opposed to the timeliness of an objection to a 
request for the establishment of a panel. WT/DS276/AB/R 
Page 72  
 
days after the Panel had been established, it was sent several weeks before the Panel's composition 
was determined.
294  The United States did not respond to Canada's request for clarification.295   
210. For all these reasons, we find that, in the particular circumstances of this case, the Panel did 
not err in declining to dismiss Canada's prelim inary objection on the grounds that it was untimely.296   
211. We do not mean to suggest that a responding part y is foreclosed from seeking clarification of 
a panel request during the DSB meetings at which th e panel request is considered, or that it would 
never be useful to do so.297  In the particular circumstances of this case, however, the March Panel 
found that it would have been unreasonable to c onclude that Canada's objection was untimely  solely   
because Canada had not raised the objection at the DSB meetings.298  The Panel observed, in this 
respect, that it could not assume "that the United States would have amended its panel request if 
Canada had raised concerns at a relevant DSB meeting".299  In these circumstances, we see no reason 
to disturb the March Panel's finding that Canada's failure to raise its objection at the DSB meetings in 
which the panel request was considered was not su fficient, on its own, to render the request for a 
preliminary ruling untimely.   
212. Before leaving this issue, we turn to the Unite d States' assertion that the March Panel erred by 
implying that "if the United States had responded to Canada's letter of April 7, 2003 ... the United 
States could have cured the alleged pro cedural defect in that panel request".300  The United States 
contends that this is the "implication"301 that flows from the following statement by the Panel: 
                                                      
294Canada explained that it used the time between the filing of the request for the establishment of the 
panel and the DSB meeting at which the Panel was established "to hold interdepartamental consultations on the panel request which it considered unclear". (Panel Report, para. 6.10, footnote 55 to subpara. 59) 
295According to Canada, the United States explained before the Panel that it had not responded to the 
letter of 7 April 2003 because it had considered that Cana da was engaging in "litigation techniques".  (Canada's 
appellee's submission, para. 163) 
296Panel Report, para. 6.10, subpara. 64.  
297Canada and the European Communities assert that it is futile for a party to raise an objection at a 
DSB meeting because the DSB has no mandate to entertain an  objection to a panel request.  (Canada's appellee's 
submission, para. 162; European Communities' third participant's submission, para. 40).  Although the Appellate 
Body has previously stated that "a panel request is normally not subjected to detailed scrutiny by the DSB", this does not imply that a responding party is barred from seeking clarification of a panel request at a DSB meeting.  
(Appellate Body Report, EC – Bananas III , para. 142.) 
298Panel Report, para. 6.10, subpara. 63.   
299Ibid., subpara. 60. 
300United States' appellant's submission, para. 66. 
301Ibid., para. 7.  WT/DS276/AB/R 
 Page 73 
 
 
... Canada's letter of 7 April 2003 was not answered by the United States.  If the United States had provided sufficient clarification of its panel request  to Canada, Canada might, for 
instance, have refrained from requesting a preliminary ruling.  Indeed, Canada stated so at the preliminary hearing.
302 (footnote 
omitted) 
We do not find that this statement carries the "implication" alleged by the United States.  In fact, as 
the United States acknowledges303, the March Panel expressly rejected such an implication when it 
stated that "the United States  could not have 'cured'   any inconsistencies with Article 6.2 of its panel 
request subsequent to the establishment of this Panel".304  In any event, at the oral hearing, the 
United States stated clearly that it is not pursu ing this allegation as a separate claim of error.305  
Accordingly, we need not address this issue further. 
213. Having upheld the March Panel's refusal to di smiss Canada's preliminary objection on the 
grounds that it was untimely306, we also uphold the March Panel's conclusion, reproduced in 
subparagraph 32 of paragra ph 6.10 of the Panel Report, that "those portions of the United States' panel 
request which deal with the Article XVII claim fail to satisfy the requirements of Article 6.2 [of the 
DSU] insofar as they do not 'identif y the specific measures at issue'". 
 
IX. Findings and Conclusions 
214. For the reasons set out in this Report, the Appellate Body: 
(a) (i)  finds  that the July Panel did not err in not considering the "proper" 
relationship between subpa ragraphs (a) and (b) of Article XVII:1 of the 
GATT 1994;  and, therefore, declines  Canada's request to find that the Panel 
erred by examining the consistency of the CWB Export Regime with Article XVII:1(b) without first havi ng found a breach of Article XVII:1(a); 
(ii)  finds
 no error in the July Panel's interpre tation, in paragraph 6.94 of the Panel 
Report, of the phrase "solely in accordance with commercial considerations" in the first clause of Article XVII:1(b), nor in the Panel's interpretation, in 
                                                     
 
302Panel Report, para. 6.10, subpara. 60.  
303United States' appellant's submission, footnote 66 to para. 66.  
304Panel Report, para. 6.10, footnote 57 to subpara. 60. (emphasis added) 
305United States' response to questi oning at the oral hearing. 
306Supra , para. 210. WT/DS276/AB/R 
Page 74  
 
paragraphs 6.72 and 6.73 of  its Report, of the term "enterprises" in the second 
clause of that provision; 
(iii)  finds
 that the July Panel did not fail to examine the CWB Export Regime in 
its entirety;  
(iv)  finds  that the July Panel did not disregard evidence submitted by the United 
States in relation to the CWB's legal fr amework and, therefore, did not act 
inconsistently with its duty under Article  11 of the DSU to make an objective 
assessment of the facts of the case;  and consequently 
(v)  upholds  the July Panel's finding, in paragr aphs 6.151 and 7.4(a) of the Panel 
Report, that the United States failed to establish its claim that Canada is in 
breach of its obligations under Ar ticle XVII:1 of the GATT 1994;  and 
(b) upholds  the March Panel's finding, in subparagr aph 64 of paragraph 6.10 of the Panel 
Report, refusing to dismiss Canada's request  for a preliminary ruling under Article 6.2 
of the DSU on the ground that it was not rai sed in a timely manner and, consequently, 
also upholds  the March Panel's conclusion, in su bparagraph 32 of paragraph 6.10 of 
the Panel Report, that with respect to the claim under Article XVII of the 
GATT 1994, the United States' request for est ablishment of a panel failed to satisfy 
the requirement of Article 6.2 of the DSU to  "identify the specific measures at issue". 
215. As the Panel's findings of inconsistency un der Article III:4 of the GATT 1994 were not 
appealed, it is not for us to make any recommendati on regarding those findings.  Given that we have 
upheld the Panel's findings that the United Stat es failed to establish that Canada has acted 
inconsistently with its obligations under Artic le XVII:1 of the GATT 1994, we do not make any 
additional recommendation to the DSB pursuant to Article 19.1 of the DSU.  
  WT/DS276/AB/R 
 Page 75 
 
 
 
Signed in the original at Geneva this 13th day of August 2004 by: 
 
 
 
  
_________________________ 
John Lockhart 
Presiding Member 
    
 _________________________ _________________________ 
 Georges Abi-Saab Yasuhei Taniguchi 
 Member Member 
 
 WT/DS276/AB/R 
Page 76  
 
ANNEX 1 
 
 
WORLD TRADE  
ORGANIZATION  WT/DS276/15 
3 June 2004 
 (04-2364) 
 Original:   English 
   
CANADA – MEASURES RELATING TO EXPORTS OF 
WHEAT AND TREATMENT OF IMPORTED GRAIN
 
 
Notification of an Appeal by the United States  
under paragraph 4 of Article 16 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU)  
    The following notification, dated 1 June 2004,  from the Delegation of the United States, is 
being circulated to Members.   
_______________ 
 
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review, the 
United States hereby notifies its decision to appeal  to the Appellate Body certain issues of law 
covered in the Report of the March Panel and July Panel
1 on Canada – Measures Relating to Exports 
of Wheat and Treatment of Imported Grain   (WT/DS276/R) and certain legal interpretations 
developed by the March Panel and July Panel in this dispute. 
 1. The United States seeks review by the Appella te Body of the March Panel's legal conclusion 
in its preliminary ruling of June 25, 2003, that Ca nada's request for a preliminary ruling on Article 6.2 
of the Understanding of Rules and Procedures Governing the Settlement of Disputes  ("DSU") was 
filed in a timely manner and that by implication a r esponse to Canada's letter of April 7, 2003 could 
"cure" any breach of Article 6.2 of the DSU.  Th ese findings are in error, and are based on erroneous 
findings on issues of law and related legal interpre tations, including those found in paragraphs 53 to 
64 of the Panel's preliminary ruling.
2 
 
2. The United States seeks review by the Appellate  Body of the July Panel's legal conclusion 
that the Canadian Wheat Board ("CWB") Export Regi me is consistent with  Canada's obligations 
under Article XVII of the General Agreement on Tariffs and Trade 1994  ("GATT 1994").  This 
finding is in error, and is based on erroneous  findings on issues of law and related legal 
interpretations, including, for example:   
(a) that the phrase "enterprises of the other [Members]" in Article XVII:1(b) is limited to those 
enterprises that wish to purchase products from a state trading enterprise ("STE");
3 
                                                      
1As distinguished in the Panel Report, paras. 1.4 and 1.10. 
2See Panel Report, para. 6.10. 
3See, e.g., Panel Report, paras. 6.66 – 6.73;  6.150.  WT/DS276/AB/R 
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 (b) that the phrase "solely in acco rdance with commercial considerations" in Article XVII:1(b) is 
a narrow requirement "simply intended to prevent STEs from behaving like 'political' actors" and not intended to prevent STEs from using th eir special and exclus ive privileges to the 
disadvantage of commercial actors;
4  and 
 
(c) that "the CWB's legal structure and manda te, together with the special and exclusive 
privileges granted to it," does not create an in centive for the CWB to make sales which are 
not "solely in accordance with commercial cons iderations," and that this finding alone is 
sufficient to determine that therefore the CWB Export Regime as a whole does not 
necessarily result in making sales which are not "solely in accordance with commercial 
considerations," as required by Article XVII:1.5 
 3. The United States seeks review by the Appellate  Body, pursuant to Article 11 of the DSU, of 
the July Panel's assessment of the CWB's legal frame work as being limited solely to the structure of 
the CWB's Board of Directors and the lack of day- to-day government control over the operations of 
the CWB, and not including the special and exclusive privileges granted under the  CWB Act .
6  The 
United States further seeks review by the Appellate Body, pursuant to Article 11 of the DSU, of the 
July Panel's assessment that the CW B is "controlled by" grain producers.7  In both situations, the 
Panel's complete disregard for other evidence submitte d by the United States, such as elements of the 
CWB Act   and Canada's control and influence over the CWB,8 is inconsistent with the Panel's duty to 
make an objective assessment of the matter before it. 
 
__________ 
 
                                                      
4See, e.g., Panel Report, paras. 6.86 – 6.106. 
5See, e.g., Panel Report, paras. 6.110 – 6.135;  6.146 – 6.149. 
6See, e.g., Panel Report, paras. 6.122 – 6.124. 
7See, e.g., Panel Report, paras. 6.122 – 6.124. 
8See, e.g., U.S. First Submission, paras. 22, 24 (referring to CWB monopoly right of purchase and sale 
under CWB Act ); U.S. First Submission, para. 24 (referring to prices established jointly by CWB and the 
Government of Canada under CWB Act ); U.S. First Submission, para. 16 n. 19 (referring to Government of 
Canada's absorption of any losses sustained by the CWB under CWB Act ). 