TEAM CODE: 150

11th GNLU INTERNATIONAL MOOT COURT COMPETITION

BEFORE THE

WORLD TRADE ORGANISATIONS - DISPUTE SETTLEMENT BODY

WT/DS/xxx

OXYONIA – TRANSNATIONAL SUBSIDIES ON STRATEGIC MINERALS

CLIMATIA
(CLAIMANT)
V.
OXYONIA
(RESPONDENT)

SUBMISSIONS ON BEHALF OF THE COMPLAINANT

TABLE OF CONTENTS:
LIST OF ABBREVIATIONS........................................................................................................................2
INDEX OF AUTHORITIES:........................................................................................................................3
STATEMENT OF FACTS...........................................................................................................................4
MEASURES AT ISSUE:.............................................................................................................................6
SUMMARY OF PLEADINGS:....................................................................................................................8
LEGAL PLEADINGS:...............................................................................................................................11
1. 20-year supply agreement between UMMC and GRMM:...........................................................11
A. The 20-year supply agreement between UMMC and GRMM is a financial.............................11
contribution within the meaning of Article 1.1(a) (iv) and Article 1.1(a) (iii) of the.....................11
SCM Agreement in the form of government entrustment or direction to a private....................11
to provide goods..........................................................................................................................11
B. The 20-year supply agreement confers a benefit to GRMM within the meaning of...............13
Article 1.1(b) of the SCM Agreement as it gives long-term access to cobalt...............................13
concentrates to GRMM at fixed and below current world-market price.....................................13
C. The 20-year supply agreement is a prohibited subsidy within the meaning of Article 3.1(a) of
the SCM Agreement as it is contingent on export performance..................................................14
2. Loans given by IBD to the Rarisian Government to the extent it was not repaid by Rarisia
(unrepaid loan):...............................................................................................................................15
A. The unrepaid loan given by IBD to the Rarisian Government is a financial contribution by a
public body, namely, IBD, in the form of government payments to a funding mechanism (which,
in this case, is MOC), within the meaning of Article 1.1(a)(1) (iv) of the SCM Agreement...........15
B. The unrepaid loan confers a benefit within the meaning of Article 1.1(b) to, inter alia, GRMM
in terms of increased supply of cobalt concentrates at fixed prices;...........................................16
C. The unrepaid loan is a prohibited subsidy within the meaning of Article 3.1(a) of the SCM
Agreement as it is contingent on the exports of cobalt concentrates from Rarisia to, inter alia,
Oxyonia........................................................................................................................................17
3. Combined effect of export duties imposed on, inter alia, battery-grade cobalt exported from
Oxyonia and long-term supply agreement between GRMM and UMMC........................................18
A. The export duties imposed on exports of, inter alia, battery-grade cobalt exported from
Oxyonia are a form of "income or price support in the sense of Article XVI of GATT 1994.........18
B. The export duties imposed on exports of, inter alia, battery-grade cobalt from Oxyonia
confer a benefit to GreenO by depressing the price of this product in the domestic market.....20
C. The export duties are prohibited subsidies within the meaning of Article 3.1(b) of the SCM
Agreement as the facts surrounding the grant of this subsidy show that this subsidy to GreenO
was de facto contingent on the use of domestic over imported goods.......................................22
REQUEST OF FINDINGS........................................................................................................................24

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LIST OF ABBREVIATIONS
Abbreviations Full Forms
GOO Government of Oxyonia
GRMM Global Refineries of Metal and Minerals
GATT General Agreement on Tariffs and Trade
IDB International Bank of Development
MOC Mining Operation Company
SCM Subsidies Countervailing Measures
UMMC Ultron Metals Mining Company
USD US Dollar

P a g e 2 | 27
INDEX OF AUTHORITIES:

1) Article XVI GATT 1994 –

https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_art16_gatt47.pdf
2) Article XVI GATT 1994 jurisprudence
https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_art16_jur.pdf
3) Article 1 jurisprudence-
https://www.wto.org/english/res_e/publications_e/ai17_e/subsidies_art1_jur.pdf
4) Article 3 jurisprudence-
https://www.wto.org/english/res_e/publications_e/ai17_e/subsidies_art3_jur.pdf
5) GATT 1994 agreement
https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_e.htm
6) SCM agreement
https://www.wto.org/english/res_e/publications_e/ai17_e/subsidies_e.htm
 Article 1- https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm#ArticleI
 Article 3- https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm#ArticleIII
7) WTO analytical index -
https://www.wto.org/english/res_e/publications_e/ai17_e/ai17_e.htm

Appellate body reports

1 Brazil — Export Financing Programme for Aircraft -
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds46_e.htm

2 Canada — Certain Measures Affecting the Renewable Energy Generation Sector –

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds412_e.htm

3 Korea — Measures Affecting Trade in Commercial Vessels-

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds273_e.htm

4 United States — Measures Affecting Trade in Large Civil Aircraft — Second

Complaint- https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds353_e.htm

5 United States — Conditional Tax Incentives for Large Civil Aircraft

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds487_e.htm

6 United States — Final Countervailing Duty Determination with respect to certain

Softwood Lumber from Canada
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds257_e.htm

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Statement of Jurisdiction

The petitioner humbly submits to the jurisdiction of Hon’ble SUPREME COURT and H

P a g e 4 | 27
 7

STATEMENT OF FACTS
OXYONIA – TRANSITIONAL SUBSIDIES ON STRATEGIC MINERALS

1. The price of petroleum rose in 20137 and hence petrol powered cars were displaced by
electric powered cars. GreenO Motor Company headquartered in Oxyonia and FuturZ
Cars headquartered in Climatia were the biggest manufacturers of e-cars (70% of total
global production.). The batteries used in e-cars were made of lithium-ion, cobalt and
other metals.

2. Oxyonia and Climatia were highly industrialized economies and have world’s most
innovative companies in it. They were also very important members of WTO and have
also set up IDB which gives loan to only developing countries and LDCs.

3. There were no cobalt reserves in Oxyonia and Climatia. Worlds 65% of cobalt reserves in
Rarisia in Adumtiuman mines (50%) and Minera in Conda mines (15%). The cobalt
produced in Adumtiuman mines is produced as the primary product whereas in Conda
mines it is produced as a by-product of copper.

4. A contract of 15 years came into being in 2007 which gave the exclusive rights of
exploration and mining in Adumtiuman mines to UMMC for which UMMC paid a pre-
agreed amount on per metric ton of cobalt.

5. In 2023, UMMC was on the verge of collapse and government of Minera was unwilling
to renew their previous 15 year contract until GOO rescued UMMC by giving 25 billion
USD and acquiring 25% minority stake in return through its sovereign investment fund.

6. In 2037, when Adumtiuman mines had the largest exports of cobalt concentrate in the
world, GRMM one of the biggest cobalt refineries who already had long term contract
with Rarisia, tried to sign a long term contract with UMMC for exporting the
concentrated cobalt. After many negotiations the Enson Brothers (founders and 51%
shareholders of UMMC) agreed to sign a 20 year contract with GRMM to supply half of

P a g e 5 | 27
 its cobalt concentrates to GRMM for 20 years at a fixed price of 90000 USD per metric
ton.

7. MOC had the exclusive right given by the MMO to obtain cobalt from Conda mines.
GRMM entered in a 20 year supply contract with MOC under which MOC is required to
supply at least one-third of the cobalt concentrates to GRMM for 20 years at a fixed price
of 90000 USD.

8. In order to discourage the export of cobalt concentrates, Rarisian government imposed

100% duties on exports of certain minerals including cobalt and also exempted foreign
investors who set up refineries in Rarisia.

9. Conda mines needed development as the demands of cobalt concentrates were increasing.
MOC and Rarisian government approached to IDB in 2036 for a loan. IDB transferred a
loan of 5 billion USD to MOC at 2% interest rate in January 20137 on two conditions. (i)
The Rarisian government would revoke its decision to impose 100% export duties on the
export of cobalt concentrates for a period of 20 years. (ii) The loan given would be used
for building an expressway from Conda mines to Randon port and to increase the
production in Conda mines. Following which the cobalt obtained from the mines
increased by 75% by the end of 2038 and has been constant since then

10. GRMM by 2038 had become the largest refiner and producer of battery grade cobalt.
40% of its refined battery-grade cobalt was exported to both GreenO and FuturZ. In
February 2038, GOO imposed 50% export duties on refined cobalt including battery-
grade cobalt.

11. A public hearing on the request of GRMM was held on 1 st march 2038 between the CEO
of GRMM (Rudy), CEO of GreenO (William) and the finance minister of Oxyonia. The
minister suggested that GRMM supplied all its battery grade cobalt to GreenO for which
William was ready to agree if they got the cobalt at a good price. On 29 th June 2038 Rudy
conveyed to the finance ministry that GRMM and GreenO have entered into a 10 year
agreement pursuant to which GRMM will exclusively supply all its battery-grade cobalt
to GreenO but GreenO has the right to purchase cobalt from companies other than
GRMM if available at profitable prices.

12. GRMM supplied cobalt to GreenO at a rate which was 30-40% less than the market price
and no foreign company could match the price of GRMM who still remained profitable

P a g e 6 | 27
 due to its long term contracts with cobalt concentrates at a fixed price which is generally
lower than the market price. GreenOs export doubled between 2039-2042.

13. FuturZs condition worsened as both the biggest cobalt concentrates supplied the
concentrates to Oxyonia and the prices of battery-grade cobalt increased as the demand of
battery grade cobalt increased but its supply reduced. The lawyers of FuturZ persuaded
the initially skeptic government of Climatia to challenge the measures of the SCM
agreement and to establish a panel request for the same.

MEASURES AT ISSUE:
1. 20-year supply agreement between UMMC and GRMM:

A. The 20-year supply agreement between UMMC and GRMM is a financial

contribution within the meaning of Article 1.1(a) (iv) and Article 1.1(a) (iii) of the

SCM Agreement in the form of government entrustment or direction to a private

to provide goods.

B. The 20-year supply agreement confers a benefit to GRMM within the meaning of
Article 1.1(b) of the SCM Agreement as it gives long-term access to cobalt

concentrates to GRMM at fixed and below current world-market price.

C. The 20-year supply agreement is a prohibited subsidy within the meaning of

Article 3.1(a) of the SCM Agreement as it is contingent on export performance.

2. Loans given by IDB to the Rarisian Government to the extent it was not repaid by
Rarisia (unrepaid loan):

A. The unrepaid loan given by IDB to the Rarisian Government is a financial

contribution by a public body, namely, IDB, in the form of government payments to a
funding mechanism (which, in this case, is MOC), within the meaning of Article
1.1(a)(1) (iv) of the SCM Agreement;

B. The unrepaid loan confers a benefit within the meaning of Article 1.1(b) to, inter

alia, GRMM in terms of increased supply of cobalt concentrates at fixed prices;

P a g e 7 | 27
 C. The unrepaid loan is a prohibited subsidy within the meaning of Article 3.1(a) of
the SCM Agreement as it is contingent on the exports of cobalt concentrates from
Rarisia to, inter alia, Oxyonia.

3. Combined effect of export duties imposed on, inter alia, battery-grade cobalt exported
from Oxyonia and long-term supply agreement between GRMM and UMMC :

A. The export duties imposed on exports of, inter alia, battery-grade cobalt exported
from Oxyonia are a form of "income or price support in the sense of Article XVI of
GATT 1994";

B. The export duties imposed on exports of, inter alia, battery-grade cobalt from
Oxyonia confer a benefit to GreenO by depressing the price of this product in the
domestic market;

C. The export duties are prohibited subsidies within the meaning of Article 3.1(b) of
the SCM Agreement as the facts surrounding the grant of this subsidy show that this
subsidy to GreenO was de facto contingent on the use of domestic over imported
goods.

P a g e 8 | 27
SUMMARY OF PLEADINGS:

1. 20 YEAR SUPPLY AGREEMENT BETWEEN UMMC AND GRMM

a. The 20-year supply agreement between UMMC and GRMM is a financial
contribution within the meaning of Article 1.1(a)(iv) and Article 1.1(a)(iii) of the
SCM Agreement in the form of government entrustment or direction to a private
body to provide good.

It is humbly submitted before the panel that the 20-year supply agreement between
UMMC and GRMM is a financial contribution which falls within the purview of Article
1.1(a)(iv) and Article 1.1(A)(iii) of the SCM Agreement in the form of government
entrustment or direction to a private body to private good.

b. The 20-year supply agreement confers a benefit to GRMM within the meaning of
Article 1.1(b) of the SCM agreement as it gives long term access to cobalt
concentrates to GRMM at fixed and below current world market prices.

It is humbly submitted before the panel that the 20-year supply agreement between
GRMM and UMMC has conferred financial contribution and benefit to GRMM as it avails
the cobalt concentrates at the price of 90000USD per metric tons (in accordance to the
agreement) while the current market price of cobalt concentrates in between Year 2037-2041
have been on a rise and therefore gives GRMM a long term access (20-year agreement) at
fixed prices.

c. The 20-year supply agreement is a prohibited subsidy within the meaning of article
3.1(a) of the SCM agreement as it is contingent on export performance.

P a g e 9 | 27
 It is humbly submitted before the panel that the subsidy provided to GRMM on cobalt is a
prohibited subsidy as because an export-oriented company is required to stay in business
and the objective of a subsidy program is to promote domestic and international sales but,
in this case, it is directly affecting the international sales of cobalt and its market price
and thus it is contingent on export performance.

2. Loans given by IBD to the Rarisian Government to the extent it was not repaid
by Rarisia

a. The unrepaid loan given by the IBD to the Rarisian Government is a financial
contribution by a public body namely IBD, in the form of government payments
to a funding mechanisms (which is MOC), within the meaning of Article 1.1(a)(1)
(iv) of the SCM agreement.

It is humbly submitted before the panel that the loan granted to MOC was a financial
contribution made by IBD as a government payment which later benefitted MOC and confers
within the meaning of Article 1.1(a)(1)(iv) of the SCM agreement.

b. The unrepaid loan confers a benefit within the meaning of article 1.1(b) to inter
alia, GRMM in terms of increased supply of cobalt concentrates at fixed price.

It is humbly submitted before the panel that unrepaid loan conferred a benefit to GRMM as it
is as the 20-year supply agreement gives long term access of cobalt concentrates to GRMM at
a fixed price of 90000 USD per metric tonne.

c. The unrepaid loan is a prohibited subsidy within the meaning of Article3.1 (a) of
the SCM agreement as it is contingent on the exports of cobalt concentrates from
Rarisia to, inter alia, Oxyonia.

It is humbly submitted before the panel that the subsidized product (herein cobalt) is an
export industry product and it is contingent on the exports of cobalt concentrates from Rarisia
to Oxyonia.

P a g e 10 | 27
 3. Combined effect of export duties imposed on, inter alia, battery-grade cobalt
exported from Oxyonia and long term supply agreement between GRMM and
UMMC

a. The export duties imposed on exports of, inter alia, battery-grade cobalt exported
from Oxyonia are a form of “income or price support in the sense of Article XVI
of GATT 1994”

It is humbly submitted before the panel the exports duties imposed on exports of battery
grade cobalt from Oxyonia is income of these exports duties imposed on cobalt exports.

b. The export duties imposed on the exports of, inter alia, battery-grade cobalt from
Oxyonia confer a benefit to GreenO by depressing the price of this product in the
domestic market.

The export duties imposed on the exports of battery graded cobalt from Oxyonia has
conferred benefit to GreenO as it depressed the world market price of the product.

c. The export duties are prohibited subsidies within the meaning of Article 3.1(b) of
the SCM agreement as the facts surrounding the grant of this subsidy show that
this subsidy to GreenO was de facto contingent on the use of domestic over
imported goods.

It is humbly submitted before the panel that the export duties are prohibited subsidies and
GreenO was de facto contingent on the use of domestic over imported goods.

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LEGAL PLEADINGS:
1. 20-year supply agreement between UMMC and GRMM:
A. The 20-year supply agreement between UMMC and GRMM is a financial
contribution within the meaning of Article 1.1(a) (iv) and Article 1.1(a) (iii) of the
SCM Agreement in the form of government entrustment or direction to a private
to provide goods.
1.1    For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1)   there is a financial contribution by a government or any public body within the

territory of a Member (referred to in this Agreement as “government”), i.e. where:

(i)     A government practice involves a direct transfer of funds (e.g. grants, loans,  and equity
infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees);

(ii)    Government revenue that is otherwise due is foregone or not collected (e.g. fiscal
incentives such as tax credits)

(iii)   A government provides goods or services other than general infrastructure, or purchases
goods;

(iv)   a government makes payments to a funding mechanism, or entrusts or directs a private

body to carry out one or more of the type of functions illustrated in (i) to (iii) above which
would normally be vested in the government and the practice, in no real sense, differs from
practices normally followed by governments.1

1. Article 1.1 makes clear that the definition of subsidy has two distinct elements i)
financial contribution ii) which confers a benefit which together determine whether a
subsidy exists
1
https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm

P a g e 12 | 27
 2. The concept of subsidy defined in article 1 of the SCM agreement captures situations in
which something of economic value is transferred by a government to the advantage of
a recipient. A subsidy is deemed when there is a financial contribution by a government
and a benefit must be conferred.
3. In Brazil – Aircraft, the Appellate Body emphasized that "a 'financial contribution' and
a 'benefit' [are] two separate legal elements in Article 1.1 of the SCM Agreement, which
together determine whether a subsidy exists2
4. In Canada – Renewable Energy, the Appellate Body noted the implications of the
characterization of a transaction under Article 1.1(a) of the SCM Agreement for the
determination of whether a benefit has been conferred: "[T]he characterization of a
transaction under Article 1.1(a) of the SCM Agreement may have implications for the
manner in which the assessment of whether a benefit is conferred is to be conducted.
For instance, the context provided by Article 14 of the SCM Agreement presents
different methods for calculating the amount of a subsidy in terms of benefit to the
recipient depending on the type of financial contribution at issue. However, although
different characterizations of a measure may lead to different methods for determining
whether a benefit has been conferred, the issue to be resolved under Article 1.1(b)
remains to ascertain whether a 'financial contribution' or 'any form of income or price
support' has conferred a benefit to the recipient.3
5. The term “provides goods” in 1.1(a)(iii) is a function of financial contribution as
UMMC is a body under government and is providing goods here half of the cobalt
concentrates from Adumtiuman mines from Minera to GRMM at a fixed price of 90000
USD per metric ton.
6. Government of Minera directed a private body, UMMC which provided cobalt
concentrates to GRMM which within the meaning of article 1.1(a)(iv) is a financial
contribution.
7. In Korea – Commercial Vessels, the European Communities argued that the Export-
Import Bank of Korea (KEXIM) was a public body on the grounds that, inter alia, it
was created and operated on the basis of a public statute giving the GOK control over
its decision-making. The Panel agreed with the EC that KEXIM was a public body
because it was controlled by government (or other public bodies), and that KAMCO,
KDB and IBK were public bodies also, because they were controlled by the Korean

2
Appellate Body Report, Brazil – Aircraft, para. 157.
3
3 Appellate Body Report, Canada – Renewable Energy, para. 5.130.

P a g e 13 | 27
 government: "[A]n entity will constitute a 'public body' if it is controlled by the
government (or other public bodies). If an entity is controlled by the government (or
other public bodies), then any action by that entity is attributable to the government, and
should therefore fall within the scope of Article 1.1(a)(1) of the SCM Agreement."4
8. Government of Minera had given the right to exploration and mining of Adumtiuman
mines to UMMC. UMMC provided half of its cobalt concentrates to GRMM at a fixed
price of 90000 USD per metric ton under a 20 year agreement in 2037.
9. Henceforth, the function of supplying cobalt concentrates to GRMM by UMMC is a
financial contribution under the meaning of article 1.1(a) (iv) and Article 1.1(a) (iii) of
the SCM Agreement.

B. The 20-year supply agreement confers a benefit to GRMM within the meaning of
Article 1.1(b) of the SCM Agreement as it gives long-term access to cobalt
concentrates to GRMM at fixed and below current world-market price.

Article 1.1(b)    a benefit is thereby conferred.5

10. A subsidy is deemed when there is a financial contribution by a government and a

benefit must be conferred.
11. In US – Large Civil Aircraft (2nd complaint), the Appellate Body summarized that a
determination of "benefit" under Article 1.1(b) of the SCM Agreement seeks to identify
whether the financial contribution has made "the recipient 'better off' than it would
otherwise have been, absent that contribution".6
12. There is a financial contribution made to GRMM on the product named cobalt
concentrates and hence there is a presence of a benefit conferred.
13. A benefit here is conferred as the 20-year supply agreement gives long-term access of
cobalt concentrates to GRMM at a fixed price of 90000 USD per metric tonne.
14. In 2037 GRMM and UMMC came into a 20 year supply agreement of supply of half of
the cobalt concentrates of Adumtiuman mines mined by UMMC to GRMM at a fixed
rate of 90000 USD per metric tonne

4
14 Panel Report, Korea – Commercial vessels, para. 7.50.
5
https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm
6
142 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), paras. 635 – 636, 662, and 690
(referring to Appellate Body Report, Canada – Aircraft, para. 157).

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 15. The prices of cobalt have increased after the year 2037 and have reached up to 120000
USD per metric tonne and GRMM had access to the cobalt concentrates at a fixed price
of 90000 USD per metric tonne.

C. The 20-year supply agreement is a prohibited subsidy within the meaning of Article
3.1(a) of the SCM Agreement as it is contingent on export performance.

Article 3.1    Except as provided in the Agreement on Agriculture, the following subsidies,
within the meaning of Article 1a), shall be prohibited:

(a)    Subsidies contingent, in law or in fact, whether solely or as one of several other
conditions, upon export performance7

16. The subsidised product here is cobalt and it is directly contingent on export
performance as the cobalt industry is export oriented and has export potentials. The
cobalt is processed and used in stages i.e. concentrated cobalt, refined cobalt, battery-
grade cobalt. Export is necessary for all the stages and procedures.

17. UMMC is an organisation that has the mandate to support export trade and the capacity
to engage in that trade and to respond to international business opportunities and the
sales of cobalt to the recipient have all been export sales.

18. Cobalt is exported from Minera to Oxyonia in concentrated from by UMMC to GRMM
and GRMM further converts it into refined form, the product and its sales are all been
export sales.

19. The subsidy provided to GRMM on cobalt is a prohibited subsidy as because an export-
oriented company is required to stay in business and the objective of a subsidy
programme is to promote domestic and international sales but in this case it is directly
affecting the international sales of cobalt and its market price.

7
https://www.wto.org/english/docs_e/legal_e/24-scm.pdf

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 20. The Appellate Body in US – FSC (Article 21.5 – EC) noted that Article 3.1(a) provides
that "subsidies contingent, in law or in fact, whether solely or as one of several other
conditions, upon export performance" are prohibited. The Appellate Body referred also
to its statement in Canada – Aircraft that "contingent" means "conditional" or
"dependent for its existence on something else" and said that the grant of the subsidy
must be conditional or dependent upon export performance.

21. Henceforth the 20 year supply agreement is prohibited subsidy within the meaning of
article 3.1(a) as it is contingent on export performance.

2. Loans given by IBD to the Rarisian Government to the extent it was not repaid by
Rarisia (unrepaid loan):
A. The unrepaid loan given by IBD to the Rarisian Government is a financial
contribution by a public body, namely, IBD, in the form of government payments to a
funding mechanism (which, in this case, is MOC), within the meaning of Article 1.1(a)
(1) (iv) of the SCM Agreement

1.1    For the purpose of this Agreement, a subsidy shall be deemed to exist if:

(a)(1)   there is a financial contribution by a government or any public body within the

territory of a Member (referred to in this Agreement as “government”), i.e. where:
 

(i)     A government practice involves a direct transfer of funds (e.g. grants, loans,  and equity
infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees); 

(ii)    Government revenue that is otherwise due is foregone or not collected (e.g. fiscal
incentives such as tax credits)

(iii)   A government provides goods or services other than general infrastructure, or purchases
goods;

(iv)   a government makes payments to a funding mechanism, or entrusts or directs a private

body to carry out one or more of the type of functions illustrated in (i) to (iii) above which

P a g e 16 | 27
would normally be vested in the government and the practice, in no real sense, differs from
practices normally followed by governments.8

22. The unrepaid loan is a financial subsidy as mentioned in Article 1.1(a)(i), 1.1(a)(iv) as
there was a loan granted by IBD to MOC for the exports of cobalt concentrates to
GRMM.
23. IBD granted a loan of 5 billion USD to MOC at an interest rate of 2% in a form of
government payments to MOC.
24. The Panel in Korea – Commercial Vessels found that the loans and loan guarantees at
issue fell under Article 1.1(a)(1)(i), rejecting Korea's argument that "financial
contribution" exists only if a public body is engaged in "government practice," such as
regulation or taxation: "Article 1.1(a)(1) states in relevant part that term 'government'
refers to both 'government' and 'public body'. Since the phrase 'government practice' in
Article 1.1(a)(1)(i) therefore refers to the practice of both governments and public
bodies, the practice at issue need not necessarily be purely "governmental" in the
narrow sense advocated by Korea. In this regard, we consider that the concept of
'financial contribution' is writ broadly to cover government and public body actions that
might involve subsidization. Whether the government or public body action in fact
gives rise to subsidization will depend on whether it gives rise to a 'benefit'. Since the
concept of 'benefit' acts as a screen to filter out commercial conduct, it is not necessary
to introduce such a screen into the concept of 'financial contribution.9

25. The concept of subsidy defined in article 1 of the SCM agreement captures situations in
which something of economic value is transferred by a government to the advantage of
a recipient. A subsidy is deemed when there is a financial contribution by a government
and a benefit must be conferred.
26. The loan was given to MOC for increasing production, and to build an expressway from
Conda Mines to the port of Randon, on the southern coast of Rarisia
27. The loan granted to MOC was a financial contribution made by IBD as a government
payment. This further benefited MOC and the government of Rarisia as the entire loan
amount was transferred to MOC in January 2037. Cobalt concentrate obtained from the
Conda Mines and exported from Rarisia increased by 75% by the end of 2038,

8
https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm
9
Panel Report, Korea – Commercial vessels, paras. 7.28

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B. The unrepaid loan confers a benefit within the meaning of Article 1.1(b) to, inter alia,
GRMM in terms of increased supply of cobalt concentrates at fixed prices;

Article 1.1(b)    a benefit is thereby conferred.10

28. The unrepaid loan conferred a benefit to GRMM. GRMM had a 20 year supply
agreement with MOC whereby MOC exported 1/3 rd of cobalt concentrates from conda
mines to GRMM at a fixed rate of 90000 USD per metric tone
29. The prices of cobalt have increased after the year 2037 and have reached up to 120000
USD per metric ton and GRMM had access to the cobalt concentrates at a fixed price of
90000 USD per metric ton.
30. In US – Large Civil Aircraft (2nd complaint), the Appellate Body summarized that a
determination of "benefit" under Article 1.1(b) of the SCM Agreement seeks to identify
whether the financial contribution has made "the recipient 'better off' than it would
otherwise have been, absent that contribution".11
31. There is a financial contribution made to GRMM on the product named cobalt
concentrates and hence there is a presence of a benefit conferred.
32. A benefit here is conferred as the 20-year supply agreement gives long-term access of
cobalt concentrates to GRMM at a fixed price of 90000 USD per metric tonne.
33. The Panel in Canada – Aircraft found that "the only logical basis" for determining
whether the financial contribution places the recipient in a more advantageous position
than it otherwise would have been "is the market".144 According to the Panel: "[A]
financial contribution will only confer a 'benefit', i.e., an advantage, if it is provided on
terms that are more advantageous than those that would have been available to the
recipient on the market.12

C. The unrepaid loan is a prohibited subsidy within the meaning of Article 3.1(a) of the
SCM Agreement as it is contingent on the exports of cobalt concentrates from Rarisia
to, inter alia, Oxyonia.
Article 3.1    Except as provided in the Agreement on Agriculture, the following subsidies,
within the meaning of Article 1a), shall be prohibited:

10
https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm
11
142 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), paras. 635 – 636, 662, and 690
(referring to Appellate Body Report, Canada – Aircraft, para. 157).
12
Panel Report, Canada – Aircraft, para. 9.112.

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 (a)    Subsidies contingent, in law or in fact, whether solely or as one of several other
conditions, upon export performance13

34. The subsidized product here is cobalt and it is directly contingent on export
performance as the cobalt industry is export oriented and has export potentials. The
cobalt is processed and used in stages i.e. concentrated cobalt, refined cobalt, battery-
grade cobalt. Export is necessary for all the stages and procedures.
35. Cobalt concentrates exported from Rarisia to Oxyonia is all export sales and solely
dependent on it. UMMC is an organisation that has the mandate to support export trade
and the capacity to engage in that trade and to respond to international business
opportunities and the sales of cobalt to the recipient have all been export sales.
36. In Canada – Aircraft Credits and Guarantees, the Panel first recalled the text of Article
3.1(a) and found that to "prove the existence of an export subsidy within the meaning of
this provision, a Member must ... establish (i) the existence of a subsidy within the
meaning of Article 1 of the SCM and (ii) contingency of that subsidy upon export
performance"14
37. Cobalt is exported from Rarisia to Oxyonia in concentrated from by MOC to GRMM
and GRMM further converts it into refined form, the product and its sales are all been
export sales.
38. Henceforth the unrepaid loan is prohibited subsidy within the meaning of article 3.1(a)
as it is contingent on exports of cobalt concentrates from Rarisia to Oxyonia.

3. Combined effect of export duties imposed on, inter alia, battery-grade cobalt
exported from Oxyonia and long-term supply agreement between GRMM and UMMC.
A. The export duties imposed on exports of, inter alia, battery-grade cobalt exported
from Oxyonia are a form of "income or price support in the sense of Article XVI of
GATT 1994

Article XVI Subsidies

Section A

13
https://www.wto.org/english/docs_e/legal_e/24-scm.pdf
14
Panel Report, Canada – Aircraft Credits and Guarantees, para. 7.16.

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 Subsidies in General
If any contracting party grants or maintains any subsidy, including any form of
income or price support, which operates directly or indirectly to increase exports of
any product from, or to reduce imports of any product into, its territory, it shall notify
the CONTRACTING PARTIES in writing of the extent and nature of the
subsidization, of the estimated effect of the subsidization on the quantity of the
affected product or products imported into or exported from its territory and of the
circumstances making the subsidization necessary. In any case in which it is
determined that serious prejudice to the interests of any other contracting party is
caused or threatened by any such subsidization, the contracting party granting the
subsidy shall, upon request, discuss with the other contracting party or parties
concerned, or with the CONTRACTING PARTIES, the possibility of limiting the
subsidization.
Section B
The contracting parties recognize that the granting by a contracting party of a subsidy
on the export of any product may have harmful effects for other contracting parties,
both importing and exporting, may cause undue disturbance to their normal
commercial interests, and may hinder the achievement of the objectives of this
Agreement.

Accordingly, contracting parties should seek to avoid the use of subsidies on the
export of primary products. If, however, a contracting party grants directly
ARTICLES XVI AND XVII 27 or indirectly any form of subsidy which operates to
increase the export of any primary product from its territory, such subsidy shall not be
applied in a manner which results in that contracting party having more than an
equitable share of world export trade in that product, account being taken of the
shares of the contracting parties in such trade in the product during a previous
representative period, and any special factors which may have affected or may be
affecting such trade in the product.15

39. The export duties imposed on exports of battery-graded cobalt from Oxyonia is a
income or price support as because of these export duties imposed on cobalt exports,

15
https://www.wto.org/english/docs_e/legal_e/gatt47.pdf

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 GRMM came into a 10 year agreement with GreenO giving GreenO the exclusive rights
of all the battery graded cobalt of GRMM.
40. GRMM was the world’s largest cobalt refining company and only GreenO had the right
to purchase its entire battery grade cobalt
41. The market price of Cobalt was depressed all over the world and GreenO which is
headquartered in Oxyonia was purchasing cobalt at 30-40% lower rates than world
market prices
42. It was agreed during the meetings of the Preparatory Committee at Geneva in 1947 that
the granting of reduced internal transport charges on goods for export “would be subject
to the provisions of Article [XVI] if it operates directly or indirectly to increase the
exports of any product16
43. The report of the Preparatory Committee on its discussions at London on the ITO
Charter notes that, in revising the US Draft Charter, “Wherever the Draft Charter has
words such as ‘injury to the trade of a member’, it was thought advisable to say
‘prejudice to the trade of a member'. It was felt that this wording would in practice
facilitate application”.17
44. The report of the Preparatory Committee on its discussions at London on the ITO
Charter notes that “The word ‘limiting’ … is used in a broad sense to indicate
maintaining the subsidization at as low a level as possible, and the gradual reduction in
subsidization over a period of time where this is appropriate18

B. The export duties imposed on exports of, inter alia, battery-grade cobalt from
Oxyonia confer a benefit to GreenO by depressing the price of this product in
the domestic market

45. In the 1980 Panel Report on “European Communities - Refunds on Exports of Sugar -
Complaint by Brazil” “The Panel concluded that in view of the quantity of Community
sugar made available for export with maximum refunds and the non-limited funds
available to finance export refunds, the Community system of granting export refunds

16
EPCT/127, p. 1; EPCT/B/SR.22. p. 5-6.
17
London Report p. 16
18
London Report, p. 16, para. (d).

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 on sugar had been applied in a manner which in the particular market situation
prevailing in 1978 and 1979, contributed to depress sugar prices in the world market,
and that this constituted a serious prejudice to Brazilian interests, in terms of Article
XVI:1. “The Panel found that the Community system of export refunds for sugar did
not comprise any pre established effective limitations in respect of either production,
price or the amounts of export refunds and that the Community system had not been
applied in a manner so as to limit effectively neither exportable surpluses nor the
amount of refunds granted. Neither the system nor its application would prevent the
European Communities from having more than an equitable share of world export trade
in sugar. The Panel, therefore, concluded that the Community system and its application
constituted a permanent source of uncertainty in world sugar markets and therefore
constituted a threat of serious prejudice in terms of Article XVI:119
46. The export duties imposed on exports of battery-graded cobalt from Oxyonia left
GRMM with no choice other than supplying all its battery graded cobalt to GreenO
entirely. GreenO became profitable by getting cobalt at prices which were 30-40% less
than the market prices.
47. This conferred a benefit to GreenO as it depressed the domestic price of the product
creating serious prejudice to other companies and countries
48. The 1960 Report of the Panel on Subsidies on “Review Pursuant to Article XVI:5”
examined the circumstances under which price support systems which fix domestic
producer prices at a level higher than the world price level might be considered a
subsidy in the meaning of Article XVI. “It was generally agreed that a system under
which a government, by direct or indirect methods, maintains such a price by purchases
and resale at a loss is a subsidy. Such purchases would need only to cover part of the
production to involve a subsidy and, in determining loss on resale, such expenses as
holding stocks should be taken into account. The Panel considered, however, that there
could be other cases in which a government maintained a fixed price above the world
price without resort to a subsidy. One such case might be that in which a government
fixes by law a minimum price to producers which is maintained by quantitative
restrictions or a flexible tariff or similar charges. In such a case there would be no loss
to the government, and the measure would not be governed by Article XVI20

19
L/5011, adopted on 10 November 1980, 27S/69, 97, paras. (f) and (g)
20
3 L/1160, adopted on 24 May 1960, 9S/188, 191, para. 11.

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 C. The export duties are prohibited subsidies within the meaning of Article 3.1(b) of
the SCM Agreement as the facts surrounding the grant of this subsidy show that
this subsidy to GreenO was de facto contingent on the use of domestic over
imported goods.

Article 3.1    Except as provided in the Agreement on Agriculture, the following

subsidies, within the meaning of Article 1, shall be prohibited:
(b)    subsidies contingent, whether solely or as one of several other conditions, upon
the use of domestic over imported goods.21

49. In Canada – Renewable Energy, the Appellate Body noted that Article 3.1(b) of the
SCM Agreement "regulates so-called import-substitution subsidies, which are one of
only two kinds of subsidies prohibited under the SCM Agreement.22
50. The subsidy granted to GreenO was contingent on the use of domestic over imported
goods.
51. GRMM was a company located in Oxyonia and GreenO was also headquartered in
Oxyonia and all the battery graded cobalt was purchased by GreenO so the use of the
battery-graded cobalt was domestic and the subsidy to GreenO was contingent upon the
same.
52. In US – Tax Incentives, the Appellate Body noted that Article 3.1(b) of the SCM
Agreement does not prohibit the subsidization of domestic production per se but rather
the granting of subsidies contingent upon the use of domestic over imported goods. The
Appellate Body distinguished these two situations as follows: "We recall that, by its
terms, Article 3.1(b) does not prohibit the subsidization of domestic "production" per se
but rather the granting of subsidies contingent upon the "use", by the subsidy recipient,
of domestic over imported goods.70 Subsidies that relate to domestic production are
therefore not, for that reason alone, prohibited under Article 3 of the SCM Agreement.
71 We note in this respect that such subsidies can ordinarily be expected to increase the
supply of the subsidized domestic goods in the relevant market, thereby increasing the
use of these goods downstream and adversely affecting imports, without necessarily

21
https://www.wto.org/english/docs_e/legal_e/24-scm_01_e.htm#ArticleIII
22
Appellate Body Report, Canada – Renewable Energy, para. 5.6.

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 requiring the use of domestic over imported goods as a condition for granting the
subsidy."23
53. US – Tax Incentives, the Appellate Body stated that a subsidy would be "contingent"
upon the use of domestic over imported goods "if the use of those goods were a
condition, in the sense of a requirement, for receiving the subsidy24
54. Henceforth the export duties are prohibited subsidies within the meaning of article
3.1(b) the subsidy granted to GreenO was contingent on the use of domestic over
imported goods.

23
Appellate Body Report, US – Tax Incentives, para. 5.15
24
Appellate Body Report, US – Tax Incentives, para. 5.7.

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REQUEST OF FINDINGS

Whereof in the light of the Issues Raised, Arguments Advanced and Authorities relied on, the
complainant requests this panel to find that:
1) The 20- year supply agreement should be counted as a prohibited subsidy.
2) The unrepaid loan is a prohibited subsidy as it is contingent on exports of cobalt
concentrates from Rarisia to, inter alia, Oxyonia.
3) The subsidy to GreenO was in fact contingent on the use of domestic over imported
goods, the export duties are prohibited subsidies.

All of which is most humbly and respectfully submitted,

Counsel on behalf of complainant,
150C

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