WT/DS534/R  
 
9 April 2019  
(19-2215) Page: 1/38 
    
 
  
UNITED  STATES  – ANTI -DUMPING MEASURES APPLYING DIFFERENTIAL 
PRICING  METHODOLOGY TO SOFTWOOD LUMBER FROM CANADA  
REPORT  OF THE PANEL  
 
 
 
 
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  TABLE OF CONTENTS  
1   INTRODUCTION  ................................ ................................ ................................ .........  8 
1.1   Complaint by  Canada  ................................ ................................ ................................ .. 8 
1.2   Panel establishment and composition  ................................ ................................ ............  8 
1.3   Panel proceedings  ................................ ................................ ................................ ....... 8 
1.3.1    General  ................................ ................................ ................................ ..................  8 
2   FACTUAL ASPECTS ................................ ................................ ................................ ...... 9 
3   PARTIES'  REQUEST S FOR FINDINGS AND R ECOMMENDATIONS  ................................ . 9 
4   ARGUMENTS OF THE  PARTIES  ................................ ................................ ....................  9 
5   ARGUMENTS OF THE  THIRD PARTIES  ................................ ................................ .........  9 
6   INTERIM REVIEW  ................................ ................................ ................................ ....... 9 
7   FINDINGS  ................................ ................................ ................................ ................  10 
7.1   General principles r egarding treaty interpretation, the standard of review, and 
burden of proof  ................................ ................................ ................................ ................  10 
7.1.1    Treaty interpretation  ................................ ................................ ..............................  10 
7.1.2    Standard of review ................................ ................................ ................................ . 10 
7.1.3    Burden of proof  ................................ ................................ ................................ ..... 11 
7.2   The USDOC's  dumping determinations in the underlying investigation  .............................  11 
7.2.1    Second sentence of Article  2.4.2 of the Anti -Dumping  Agreement  ................................  12 
7.2.1.1    Provision at issue  ................................ ................................ ................................  12 
7.2.1.2    Factual overview  ................................ ................................ ................................ . 15 
7.2.1.2.1    The USDOC's  evaluation of the conditions for the use of the W -T methodology 
in the underlying investigation  ................................ ................................ ...........................  15 
7.2.1.2.1.1    DPM ................................ ................................ ................................ .............  15 
7.2.1.2.1.2    DPM's  application in the underlying investigation  ................................ ...............  17 
7.2.1.2.2    The USDOC's  application of the W -T methodology in the underlying 
investigation  ................................ ................................ ................................ ...................  17 
7.2.1.3    Evaluation  ................................ ................................ ................................ ..........  18 
7.2.1. 3.1   Identification of pattern under the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement  ................................ ................................ ................................ .. 18 
7.2.1.3.1.1    Whether export price variations across purchasers, regions and time periods 
may be aggregated to find a single  pattern of export prices which differ significantly 
among different purchasers, regions and time periods  ................................ ..........................  19 
7.2.1.3.1.2    Whether a pattern can include export prices to purchasers, regions or time 
periods that differ significantly because they are significantly high er relative to export 
prices to other purchasers, regions or time periods  ................................ ..............................  21 
7.2.1.3.2    Zeroing under the W -T methodology  ................................ ................................ .. 25 
7.2.1.3.2.1    The assumptions underlying the United  States'  mathematical  equivalence 
argument  ................................ ................................ ................................ ........................  28 
7.2.1.3.2.2    Textual and contextual basis for a prohibition on zeroing under the second 
sentence  ................................ ................................ ................................ .........................  34 
7.2.1.3.2.3    Conclusion  ................................ ................................ ................................ .... 36 
7.2.2    Zeroing claims under Article  2.4 of the Anti -Dumping  Agreement  ................................  37 WT/DS534/R  
 
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  7.2.3    Consequential claims und er Articles  1 and 2.1 of the Anti -Dumping  Agreement as 
well as Articles  VI:1 and VI:2 of the GATT 1994  ................................ ................................ ... 37 
8   CONCLUSIONS AND RECOMMENDA TION  ................................ ................................ .. 38 
 
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  LIST OF ANNEXES  
ANNEX  A 
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
Annex  A-2 Additional Working Procedures on Business Confidential Information  10 
Annex A -3 Additional Working Procedures on Open Meetings  12 
Annex  A-4 Timetable for the Panel proceedings  13 
Annex  A-5 Interim Review  15 
ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 First integrated executive summary of the arguments of Canada  18 
Annex  B-2 Second integrated executive summary of the arguments of Canada  23 
Annex  B-3 First integrated executive summary of the arguments of the United  States  30 
Annex  B-4 Second integrated executive summary of the arguments of the United  States  41 
ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Brazil  53 
Annex C -2 Integrated executive summary of the arguments of China  55 
Annex  C-3 Integrated executive summary of the arguments of the European Union  57 
Annex  C-4 Integrated executive summary of the arguments of Japan  59 
 
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  CASES  CITED IN THIS REPOR T 
Short title  Full case title and citation  
Argentina – Import 
Measures  Appellate  Body Reports, Argentina – Measures Affecting the Importation of 
Goods , WT/DS438/AB/R  / WT/DS444/AB/R  / WT/DS445/AB/R , adopted 
26 January 2015, DSR 2015:II, p. 579 
EC – Bed Linen  Appellate  Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India , WT/DS141/AB/ R, adopted 
12 March 2001, DSR 2001:V, p. 2049 
EC – Hormones  Appellate  Body Report, European Communities – Measures Concerning Meat 
and Meat Products (Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 
13 February 1998, DSR 1998:I, p. 135 
US – 
Anti-Dumping  Methodologies  
(China)  Appellate  Body Report, United  States  – Certain  methodologies  and Their 
Application to Anti -Dumping Proceedings Involving China , WT/DS471/AB/R  
and Add.1, adopted 22 May 2017  
US – 
Anti-Dumping  Methodologies  
(China)  Panel Report, United  States  – Certain  methodologies  and Their Application to 
Anti-Dumping Proceedings Involving China , WT/DS471/R  and Add.1, adopted 
22 May 2017, as modified by Appellate  Body Report WT/DS471/AB/R  
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, DSR 2002:IX, 
p. 3779 
US – Continued Zeroing  Appellate  Body Report, United  States  – Continued Existence and Application 
of Zeroing  methodology , WT/DS350/AB/R , adopted 19 February 2009, 
DSR 2009:III, p. 1291 
US – Counte rvailing Duty 
Investigation on DRAMS  Appellate  Body Report, United  States  – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20 July 2005, DSR 2005:XVI, p. 8131 
US – Gasoline  Appellate  Body Report, United  States  – Standards for Reformulated and 
Conventi onal Gasoline , WT/DS2/AB/R , adopted 20 May 1996, DSR 1996:I, 
p. 3 
US – Hot-Rolled Steel  Appellate  Body Report, United  States  – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R , adopted 
23 August  2001, DSR 2001:X, p. 4697 
US – Lamb  Appel late Body Report, United  States  – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopted 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Softwood Lumber V  Appellate  Body Report, United  States  – Final Dumping Determination on 
Softwood Lumber from Canada , WT/DS264/AB/R , adopted 31 August 2004, 
DSR 2004:V, p. 1875 
US – Softwood Lumber V 
(Article  21.5 – Canada)  Appellate  Body Report, United  States  – Final Dumping Determination on 
Softwood Lumber from Canada – Recourse to Article  21.5 of the DSU by 
Canada , WT/DS264/AB/RW , adopted 1 September 2006, DSR 2006:XII, 
p. 5087 
US – Softwood Lumber VI 
(Article  21.5 – Canada)  Appellate  Body Report, United  States  – Investigation of the International 
Trade Commission in Softwood Lumber from Canada – Recourse to 
Article  21.5 of the DSU by Canada , WT/DS277/AB/RW , adopted 9 May 2006, 
and Corr.1, DSR 2006:XI, p. 4865 
US – Stainless Steel 
(Mexico)  Appellate  Body Report, United  States  – Final Anti -Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R , adopted 20 May 2008, 
DSR 2008:II, p. 513 
US – Washing Machines  Appellate  Body Report,  United  States  – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea , WT/DS464/AB/R  and 
Add.1, adopted 26 September 2016, DSR 2016:V, p. 2275 
US – Washing Machines  Panel Report, United  States  – Anti-Dumping and Countervailing Measures on 
Large Residential Washers from Korea , WT/DS464/R  and Add.1, adopted 26 
September 2016, as modified by Appellate  Body Report WT/DS464/AB/R, 
DSR 2016:V, p. 2505 
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 , adopted 23 May 1997, 
and Corr.1, DSR 1997:I, p. 323 WT/DS534/R  
 
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  Short title  Full case title and citation  
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and Methodology 
for Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R , adopted 
9 May 2006, and Corr.1, DSR 2006:II, p. 417  
US – Zeroing (Japan)  Appellate  Body Report, United  States  – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/AB/R , adopted 23 January 2007, DSR 2007:I, 
p. 3 
 
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  ABBREVIATIONS USED I N THIS REPORT  
Abbreviation  Description  
Anti-Dumping  Agreement  Agreement on Implementation of Article  VI of the 
General  Agreement  on Tariffs and Trade 1994  
BCI Business Confidential Information  
CONNUM  product control number  
DPM differential pricing  methodology   
DSB Dispute Settlement Body  
DSU Understa nding on Rules and Procedures Governing the 
Settlement of Disputes  
GATT 1994  General  Agreement  on Tariffs and Trade 1994  
Resolute  Resolute FP Canada Inc.  
T-T transaction -to-transaction  
Tolko  Tolko Marketing and Sales Ltd.  
USDOC  United  States  Department of Commerce  
West Fraser  West Fraser Mills Ltd.  
W-T weighted -average -to-transaction  
WTO World Trade Organization  
W-W weighted -average -to-weighted -average  
 
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  1  INTRODUCTION  
1.1  Complaint by  Canada  
1.1.  On 28 November 2017 , Canada requested consultations with the United  States  pursuant to 
Articles  4 and 10.4 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes (DSU) , Article  XXII:1 of the General  Agreement  on Tariffs and Trade 1994 (GATT 1994) 
and Article  17 of the  Agreement  on Implementation of Article  VI of the General  Agreement  on Tariffs 
and Trade 1994 (Anti-Dumping  Agreement ), with respect to the US anti -dumping measures applying 
the differential pricing  methodology  (DPM) to softwood lumber products from Canada.1 
1.2.  Consultations were held on 17 January 2018.  These consultations failed to settle the dispute.  
1.2  Panel establishment and composition  
1.3.  On 15 March 2018, Canada requested the establishment of a panel.2 At its meeting 
on 9 April 2018, the D ispute Settlement Body (DSB) established a panel pursuant to the request of 
Canada in document WT/DS534/2,  in accordance with Article  6 of the DSU.3 
1.4.  The Panel 's terms of reference are the following:  
To examine, in the light of the relevant provisions of the covered  agreements cited by 
the parties to the dispute, the matter referred to the DSB by Canada  in document 
WT/DS534/2  and to make such findings as will assist the DSB in making the 
recommendations or in giving the rulings provided for i n those  agreement s.4 
1.5.  On 9 May 2018 , Canada requested the Director -General to determine the composition of the 
Panel, pursuant to Article  8.7 of the DSU . On 22 May 2018 , the Director -General accordingly 
composed the Panel as follows:  
Chairperson:  Mr Thinus Jacobsz   
 
Members:   Ms María Valeria Raiteri   
Mr Guillermo Valles  Galmés  
 
1.6.  Brazil, China, the European Union, Japan, Kazakhstan, the Republic of Korea, the 
Russian  Federation, and Viet Nam reserved their rights to participate in the P anel proceedings as 
third parties.5 
1.3  Panel proceedings  
1.3.1   General  
1.7.  After consultation with the parties, the Panel adopted on 20 June 2018 its Working Procedures6, 
Additional Working Procedures on Business Confidential Information  (BCI)7, Additional Working 
Procedures on Open Meetings8, and the timetable. The Panel revi sed its timetable on 
7 December  2018 after consulting the parties .  
1.8.  The Panel held its first substantive meeting with the parties on 12 and 13 September 2018. 
The session wi th the third parties took place on 13 September  2018. The Panel held its second 
substantive meeting with the parties on 4 December 2018 . On 29 January  2019, the Panel issued 
                                                
1 Request for consultations by Canada,  WT/DS 534/1-G/L/1206 -G/ADP/D120/1 (Canada's  consultations 
request).  
2 Request for the establishment of a panel by Canada, WT/DS534/2 (Canada's  panel request).  
3 DSB, Minutes of Meeting held on 9 April 2018 , WT/DSB/M/ 411. 
4 Constitution note of the Panel, WT/DS534/3.  
5 Constitution note of the Panel, WT/DS534/3.  
6 See the Panel's  Working Procedures in Annex  A-1. 
7 See the Panel's  Additional Working Procedures on Business Confidential Information in Annex  A-2. 
8 See the Panel's  Additional Working Procedures on Open Meetings in Annex A -3. WT/DS534/R  
 
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  the descriptive part of its Report to the parties. The Panel issued its Interim Re port to the parties on 
28 February  2019. The Panel issued its Final Report to the parties on 27 March  2019. 
2  FACTUAL ASPECTS  
2.1.  This dispute concerns  anti-dumping measures imposed by the United States Department of 
Commerce (USDOC) following an investigation  on certain softwood lumber products from Canada 
(underlying investigation) . In particular, Canada challenges certain aspects of the dumping 
determinations made by the USDOC  using the DPM.  
3  PARTIES ' REQUESTS FOR FINDING S AND RECOMMENDATION S 
3.1.  Canada requests th e Panel to find as follows:  
a. The USDOC acted inconsistently with the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement  because by applying the DPM in the underlying investigation it9:  
i. failed to find "a pattern of export prices which differ sig nificantly among different 
purchasers, regions or time periods"; and  
ii. used zeroing under the weighted -average -to-transaction (W -T) methodology  provided 
in the second sentence of Article  2.4.2 of the Anti -Dumping  Agreement . 
b. The USDOC acted inconsistently with Article  2.4 of the Anti -Dumping  Agreement  in the 
underlying investigation because as part of the DPM the USDOC used zeroing under the 
W-T methodology  provided in the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement .10 
c. The USDOC acted inconsistently with Articles  1 and 2.1 of the Anti -Dumping  Agreement  
as well as Articles  VI:1 and VI :2 of the GATT 1994 in the underlying investigation as a 
consequence of its violations under Articles  2.4.2 and 2.4 in this inves tigation.11  
3.2.  The United  States  requests that the Panel reject Canada 's claims in their entirety.   
4  ARGUMENTS OF THE PAR TIES  
4.1.  The arguments of the parties are reflected in their executive summaries that were provided to 
the Panel in accordance with paragraph 22 of the Working Procedures (see Annex  B). 
5  ARGUMENTS OF THE THI RD PARTIES  
5.1.  The arguments of Brazil , China, the European Union,  and Japan  are reflected in their executive 
summaries that were provided to the Panel in accordance with paragraph 25 of the Working 
Procedures (see Annex C).12 
6   INTERIM REVIEW  
6.1.  On 28 February 2019, we issued our Interim Report to the parties.  On 7 March 2019, the 
United  States submitted a written request for the Panel to review precise aspects of the Interim 
Report. Canada did not make a written request to review precise aspects of the Interim Report but 
submitted on 13 March 2019 its comments  on the United States' request for interim review.  
                                                
9 Canada 's first written submission, para. 68; response to Panel question after the first meeting of the 
Panel No.  6, para.  17. 
10 Canada 's first written submission, para.  68; response to Panel question after the first meeting of the 
Panel No.  6, para.  17. 
11 Canada 's first written submission, para. 68. 
12 Kazakhstan, the Republic of Korea, the Russian Federation, and Viet Nam did not file a submission, 
nor did they make any statement.  WT/DS534/R  
 
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  6.2.  The requests made at the interim review stage as well as the Panel's discussion and disposition 
of those requests are set out in Annex A -5. 
7  FINDINGS  
7.1  General principles regarding treaty interpretation, the standard of review, and burden 
of proof  
7.1.1   Treaty interpretation  
7.1.  Article  3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the 
existing provisions of the covered  agreement s "in accordance with customary rules of interpretation 
of public international law". Article  17.6(ii) of the Anti -Dumping  Agreement  similarly requires panels 
to interpret that  agreement 's provisions in accordance with the customary rules of interpretation of 
public international law.13 The principles codified in  Articles  31 and 32 of the Vienna Convention on 
the Law of Treaties are generally accepted as such customary rules.  
7.1.2   Standard of review  
7.2.  Article  11 of the DSU provides, in relevant part, that:  
[A] panel should make an objective assessment of the matter befor e it, including an 
objective assessment of the facts of the case and the applicability of and conformity 
with the relevant covered  agreement s. 
In addition, Article  17.6 of the Anti -Dumping  Agreement  sets forth the special standard of review 
applicable to d isputes under the Anti -Dumping  Agreement : 
(i) in its assessment of the facts of the matter, the panel shall determine whether 
the authorities ' establishment of the facts was proper and whether their evaluation of 
those facts was unbiased and objective. If the establishment of the facts was proper 
and the evaluation was unbiased and objective, even though the panel might have 
reached a different conclusion, the evaluation shall not be overturned;  
(ii) the panel shall interpret the relevant prov isions of the  Agreement  in accordance 
with customary rules of interpretation of public international law. Where the panel finds 
that a relevant provision of the  Agreement  admits of more than one permissible 
interpretation, the panel shall find the authorit ies' measure to be in conformity with 
the Agreement  if it rests upon one of those permissible interpretations.  
7.3.  Thus, Article  11 of the DSU and Article  17.6 of the Anti -Dumping  Agreement  together establish 
the standard of review we will apply with respect t o both the factual and the legal aspects of the 
present dispute.  The Appellate  Body has explained that when a panel is reviewing an investigating 
authority 's determination, the "objective assessment" standard in Article  11 of the DSU requires a 
panel to re view whether the authority has provided a reasoned and adequate explanation as 
to (a) how the evidence on the record supported its factual findings; and (b) how those factual 
findings support the overall determination.14 In reviewing an investigating author ity's determination, 
a panel should not conduct a de novo review of the evidence, nor substitute its judgment for that of 
the investigating authority. A panel must limit its examination to the evidence that was before the 
investigating authority during the  investigation15 and must take into account all such evidence 
submitted by the parties to the dispute.16 At the same time, a panel must not simply defer to the 
                                                
13 Article  17.6(ii) of the Anti -Dumping  Agreement also provides that if a panel finds that a provision of 
the Ant i-Dumping  Agreement admits of more than one permissible interpretation, it shall uphold a measure 
that rests upon one of those interpretations.  
14 Appellate  Body Reports, US – Countervailing Duty Investigation on DRAMS , para.  186; US – Lamb , 
para. 103. 
15 Article 17.5(ii) requires a panel to examine the matter based on the facts made available to the 
authorities.  
16 Appellate  Body Report, US – Countervailing Duty Investigation on DRAMS , para.  187. 
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  conclusions of the investigating authority; a panel 's examination of those conclusions must be 
"in-depth" and "critical and searching".17 
7.4.  In the context of Article  17.6(i) of the Anti -Dumping  Agreement , the Appellate  Body has 
clarified that while the text of this provision is couched in terms of an obligation on a panel, in effect 
it defines when an inv estigating authority can be considered to have acted inconsistently with the 
Anti-Dumping  Agreement  in the course of its "establishment" and "evaluation" of the relevant 
facts.18 Therefore, a panel must assess if the establishment of the facts by the invest igating authority 
was proper and if the evaluation of those facts by that authority was unbiased and objective.19 
If these broad standards have not been met, a panel must hold the investigating 
authority 's establishment or evaluation of the facts to be inco nsistent with the 
Anti-Dumping  Agreement .20 
7.1.3   Burden of proof  
7.5.  The general principles applicable to the allocation of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO  Agreement  must assert 
and prove its claim.21 Therefore, as the complaining party in this proceeding, Canada bears the 
burden of demonstrating that the challenged aspects of the measures at issue are inconsistent with 
the Anti -Dumping  Agreement  and the GATT 1994. The  Appellate  Body has stated that a complaining 
party will satisfy its burden when it establishes a prima facie  case, namely a case which, in the 
absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule 
in favour of the complaining party.22 Finally, it is generally for each party asserting a fact to provide 
proof thereof.23 
7.2  The USDOC 's dumping determinations in the underlying investigation  
7.6.  In the underlying investigation, the USDOC used the DPM to examine whether the  export prices 
of the Canadian producers showed "a pattern of export prices which differ[ed] significantly among 
different purchasers, regions or time periods".24 Finding that the export prices of Canadian producers 
Resolute  FP Canada Inc. (Resolute) , Tolko  Marketing and Sales Ltd. (Tolko) , and West Fraser Mills 
Ltd. (West Fraser)  (three Canadian producers) showed such a pattern, the USDOC examined whether 
the weighted -average -to-weighted -average (W -W) methodology  could take into account those price 
differen ces, and explained that it could not.25 Thus, the USDOC decided not to apply the 
W-W methodology , and instead determined the margins of dumping of the three Canadian producers 
by comparing a normal value established on a weighted average basis with the pric es of individual 
export transactions ( i.e. the W-T methodology ), which is the  methodology  provided in the second 
sentence of Article  2.4.2 of the Anti -Dumping  Agreement . The USDOC applied the W -T methodology  
to all export transactions of the three Canadian  producers, and used zeroing when doing so.26 
7.7.  Canada challenges certain aspects of these determinations under the second sentence of 
Article  2.4.2 and Article  2.4 of the Anti -Dumping  Agreement , claiming, as noted  in 
paragraph  3.1 above, that in applying the DPM in the underlying investigation the USDOC:  
a. failed to identify a "pattern" consistent with the second sentence of Article 2.4.2 of the 
Anti-Dumping  Agreement  thereby acting inconsistently with this second sentence; and 
                                                
17 Appellate  Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , para.  93. 
18 Appellate  Body Report, US – Hot-Rolled Steel , para.  56. 
19 Appellate  Body Report, US – Hot-Rolled Steel , para.  56. 
20 Appellate  Body Report, US – Hot-Rolled Steel , para.  56. 
21 Appellate  Body Report, US – Wool Shirts and Blouses , p. DSR 1997:1, p.  337. 
22 Appellate  Body Report, EC – Hormones , paras.  98 and 104.  
23 Appellate  Body Report, US – Wool Shirts and Blouses , p. DSR 1997:1, p.  337. 
24 Canada's  first written submission, para.  22; United  States'  first written submission, para.  15. 
25 Canada's  first written submission, paras.  23-24; United  States'  first written submission, para.  15. The 
USDOC did not explain why the T -T comparison could not take into account those price differences.  
26 Canada's  first written submission, paras.  26-27; United  States'  first written submission, paras.  15 and 17.  
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  b. used zeroing while applying the W -T methodology  provided in the second sentence  of 
Article  2.4.2,  thereby acting inconsistently with this second sentence  as well as  Article  2.4 
of the Anti -Dumping  Agreement . 
7.8.  In addition, Canada claims that as a consequence of violations under the second sentence of 
Article  2.4.2 and Article  2.4 in the underlying investigation , the USDOC also acted inconsistently 
with Articles  1 and 2.1 of the Anti -Dumping  Agreement  as well as Articles  VI:1 and VI :2 of the 
GATT  1994.27 
7.9.  We recall  that the panel and the Appellate  Body in US – Washing Machines  examined similar 
sets of claims under the second sentence of Articles  2.4.2 and 2.4 brought by Korea against the 
United  States . The panel and the Appellate  Body upheld Korea 's claims in that dispute and found 
that: 
a. the DPM is, as such, inconsistent with Article 2.4.2 of the Anti -Dumping  Agreement  
because it fails to find "a pattern" consistent with the pattern clause28; and  
b. Articles  2.4.2 and 2.4 of the Anti -Dumping  Agreement  do not permit zeroing under the 
W-T methodology .29 
7.10.   Canada relies on the findings of  the Appellate  Body in presenting its arguments, and asks us 
to reach the same conclusions that the Appellate  Body did with respect to these two sets of claims.30 
The United  States  argues that the Appellate  Body's findings in US – Washing Machines  were 
incorrect, and asks us to not follow them.31 We will first examine Canada 's claims under the second 
sentence of Article  2.4.2 of the Anti -Dumping  Agreement , followed by its claim under Article  2.4 of 
the Anti -Dumping  Agreement  and the consequential claims under  Articles  1 and 2.1 of the 
Anti-Dumping  Agreement  as well as Articles  VI:1 and VI :2 of the GATT 1994 . 
7.2.1   Second sentence of Article  2.4.2 of the Anti -Dumping  Agreement  
7.2.1.1   Provision at issue  
7.11.   Article  2 of the Anti -Dumping  Agreement  is titled "Determination of Dumping". Article  2.4.2 
of the Anti -Dumping  Agreement  sets out the  methodologies  to determine the "margins of dumping" 
while Article  2.1 of the Anti -Dumping  Agreement  as well as Article  VI:1 of the GATT 1994 define 
dumping.  
7.12.   Article 2.4.2 of the Anti -Dumping  Agreement  states:  
Subject to the provisions governing fair comparison in paragraph  4, the existence of 
margins of dumping during the investigation phase shall normally be established on the 
basis of a comparison of a weighted  average normal value with a weighted average of 
prices of all comparable export transactions or by a comparison of normal value and 
export prices on a transaction -to-transaction basis.  A normal value established on a 
weighted average basis may be compared  to prices of individual export transactions if 
the authorities find a pattern of export prices which differ significantly among different 
purchasers, regions or time periods, and if an explanation is provided as to why 
                                                
27 See para.  3.1(c) above.  
28 Panel Report, US – Washing Machines , para.  8.1(a)(ix ); Appellate  Body Report, US – Washing 
Machines , para.  6.3. One distinction between Canada's  and Korea's  claims is that in this dispute Canada makes 
"as applied", and not "as such", claims challenging the use of the DPM in the underlying investigation. 
(Canada's  response to Panel question after the first meeting of the Panel No.  6, para. 17).  
29 Panel Report, US – Washing Machines , paras.  8.1(a)(xii), 8.1(a) (xiii), 8.1(a)(xiv), and 8.1(a)(xv); 
Appellate  Body Report, US – Washing Machines , paras.  6.9-6.10. T he panel in US – 
Anti-Dumping  Methodologies (China)  also found that the second sentence of Article  2.4.2 does not permit the 
use of zeroing under the W -T methodology. (Panel Report, US – Anti-Dumping  Methodologies (China) , 
para. 7.220).  
30 Canada's  first written submission, para.  3. 
31 See, e.g. United  States'  first written submission, paras.  10, 36 -37, 69 -73, 82 -83, and 86 -87. 
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  such differences cannot be taken int o account appropriately by the use of a weighted 
average -to-weighted average or transaction -to-transaction comparison.  
7.13.   Article  2.4.2 sets out three different  methodologies  to determine the margin s of dumping 
(dumping margin32) of a foreign producer or exporter. The first sentence of Article  2.4.2 sets out the 
two methodologies  that are normally used to determine such a margin. The first  methodology , which 
we refer to as the W -W methodology , requires "a comparison of a weighted  average normal value 
with a weighted average of prices of all comparable export transactions". The second  methodology  
requires "a comparison of normal value and export prices on a transaction -to-transaction basis".  We 
refer to it as the T -T methodology.  
7.14.   The second sentence of Article  2.4.2 sets out the third  methodology  to determine the dumping 
margin. It states that "[a] normal value established on a weighted average basis may be compared 
to prices of individual export transactions" if the following two c onditions are met  by the investigating 
authority : 
a. it finds "a pattern of export prices which differ significantly among different purchasers, 
regions or time periods" (we refer to this part of the second sentence of Article  2.4.2 as 
the pattern clause); an d 
b. it explains why "such differences cannot be taken into account appropriately by the use of 
a [W-W or T -T] comparison" (we refer to this part of the second sentence of Article  2.4.2 
as the explanation clause).  
7.15.   The W -T methodology  is considered an exceptio n because its use is permitted only when these 
two conditions are met.33 The function of the second sentence is to identify and unmask  dumping 
targeted to certain purchasers, to certain regions, or in certain time periods.34 
7.16.   Irrespective of whether the dumpi ng margin is determined under the first sentence or  
pursuant to  the second sentence of Article  2.4.2, it must be determined consistent with the definition 
of "dumping" set out in Article  2.1 of the Anti -Dumping  Agreement35, which states36: 
For the purpose of this  Agreement , a product is to be considered as being dumped, i.e.  
introduced into the commer ce of another country at less than its normal value, if the 
export price of the product exported from one country to another is less than the 
comparable price, in the ordinary course of trade, for the like product when destined for 
consumption in the expor ting country.  
7.17.   Article  VI:1 of the GATT 1994 defines dumping in a similar manner, recognizing that dumping 
occurs when a product is introduced into the commerce of another country at less than the normal 
value. The Appellate  Body has consistently held , rely ing in part on Article  2.1 of the Anti -Dumping 
Agreement  and Article  VI:1 of the GATT 1994 as context,  that dumping and margins of dumping 
must be determined for the product as a whole .37 
7.18.   What this means is that if in applying the W -W methodology , an investigating authority divides 
the product into multiple models, and calculates a model -specific weighted average normal value 
and a model -specific weighted average export price for each model, the "margins of dumping" are 
not the results  of those multiple model -specific comparisons in which the model -specific normal 
                                                
32 An investigating authority is required to find a single overall dumping margin for a foreign producer or 
exporter.  (Appellate  Body Report, US – Continued Zeroing , para.  283).  
33 See e.g. Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 97. 
34 Appellate  Body Reports, EC – Bed Linen , para.  62; US – Washing Machines , para.  5.17. 
35 Appellate  Body Reports, US – Softwood Lumber V (Article  21.5 – Canada) , para. 92; US – Softwood 
Lumber V , para.  93; and US – Zeroing (EC) , para.  125. 
36 By virtue of the opening phrase of Article  2.1 ("[f]or the purpose of this  Agreement"), the definition of 
dumping appl ies throughout the Anti -Dumping  Agreement.  
37 See e.g. Appellate  Body Reports, US – Softwood Lumber V , paras.  93-96; EC – Bed Linen , para.  53; 
and US – Zeroing (EC) , para.  126. The Appellate  Body in US – Washing Machines  recognized that a dumping 
margin det ermined pursuant to the second sentence of Article  2.4.2 must be a margin for the product as a 
whole. But it took the view that a dumping margin for the product as a whole is determined differently under 
this second sentence. (Appellate  Body Report, US – Washing Machines , para.  5.104).  
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  value exceed the model -specific export price.38 Dumping and "margins of dumping" only exist for 
the product as a whole, and not for types, models, or categories of the product.39 Therefore, an 
investigating authority can establish the dumping margin for the product as a whole only by 
aggregating all intermediate values generated on the basis of such model -specific comparison 
results.40 The Appellate  Body has stated in this regard that there is no textual basis under 
Article  2.4.2 to justify taking into account only some  multiple comparison results (i.e. those results 
that are positive because the model -specific weighted average export price is lower than the 
model -specific weighted  average normal value ) to determine the dumping margin for the product as 
a whole.41 If an investigating authority disregards, by treating as zero, those model -specific 
comparison results that are negative because the model -specific weighted average export price is 
higher than the model -specific weighted average normal value, it would fail to take into account the 
prices of "all" comparable export transactions, as is required under the W -W methodology  described 
in the first sentence of Article  2.4.2.42 It would also fail to determine the dumping margin for the 
product as a whole . 
7.19.   If an investigating authority applies the T -T methodology , the transaction -specific 
comparisons where the transaction -specific contemporaneous normal value exceed the 
transacti on-specific export price are not the "margins of dumping" referred in Article  2.4.2.43 
Instead, an investigating authority can establish the dumping margin  for the product as a whole only 
by aggregating all comparison results irrespective of whether the tra nsaction -specific export price is 
higher or lower than the transaction -specific contemporaneous normal value.44 In particular, when 
aggregating such results, an investigating authority is not permitted to disregard, by treating as 
zero, those comparison res ults that are negative because the transaction -specific export price is 
higher than the transaction -specific contemporaneous normal value.45 In reaching this conclusion, 
the Appellate  Body found the reference to "export prices" in the plural in the first se ntence of 
Article  2.4.2, without further qualification, to suggest that all of the results of the transaction -specific 
comparisons generated under the T -T methodology  need to be aggregated to determine the 
dumping margin.46 It took the view that zeroing alt ers the real values of certain export 
transactions.47 Further, it relied on contextual considerations, noting that the two 
"normal"  methodologies  provided in the first sentence, i.e. the W -W and T -T methodologies  fulfil the 
same function.48 Thus, according t o the Appellate  Body it would be illogical to interpret the 
T-T methodology  in a manner that would lead to results that are systemically different from those 
obtained under the W -W methodology , which would be the case if zeroing is permitted under the 
T-T methodology  (while it is precluded under the W -W methodology ).49 Thus, as reflected in the 
                                                
38 See e.g. Appellate  Body Report, US – Softwood Lumber V , para.  97. 
39 Appellate  Body Report, US – Softwood Lumber V , paras.  93 and 96.  
40 Appellate  Body Report, US – Softwood Lumber V , para.  97. 
41 Appellate  Body Report, US – Softwood Lumber V , para.  98. 
42 Appellate  Body Report, EC – Bed Linen , para.  55. 
43 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 94. 
44 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , paras.  87 and 94. The 
Appellate  Body found the reference to "export prices" in the plural in the first sentence to suggest that the 
comparison under the T -T methodology will generally involve multiple export transactions, and the reference to 
"a comparison" in the singular to suggest that this  methodology requires an overall calculation exercise 
involving aggregation of those multiple transactions.  
45 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 88. 
46 Appellate  Body Re port, US – Softwood Lumber V (Article  21.5 – Canada) , para. 88. 
47 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 88. 
48 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 93. 
49 Appellate  Body Report, US – Softwood Lumber V (Article  21.5 – Canada) , para. 93. The 
Appellate  Body noted that while the W -W methodology, as described in the first sentence of Article  2.4.2, 
requires a comparison based on a weighted average of prices of "all" comparable export tr ansactions, the first 
sentence does not use similar terms while describing the T -T methodology. However, the Appellate  Body took 
the view that the phrase "all comparable export transactions" is used while describing the W -W methodology 
because under this  methodology if an investigating authority makes comparisons based on groups or models, it 
must include in each group only those export transactions that are comparable, but must include all 
comparable export transactions corresponding to the group.  Such a s cenario does not arise under the 
T-T methodology, and thus the phrase "all comparable export transactions" is not pertinent in the context of 
the T-T methodology. Thus, it concluded that no inference could be drawn from the absence of this phrase in 
the de scription of the T -T methodology in the first sentence of Article  2.4.2. (Appellate  Body Report, US – 
Softwood Lumber V (Article  21.5 – Canada) , para. 91). 
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  findings in numerous panel and Appellate Body reports , zeroing is prohibited under the W -W and 
T-T methodologies . 
7.20.   Like under the T -T methodology , the application of the W -T methodology  may yield multiple 
comparison results. How exactly these comparison results must be aggregated under the 
W-T methodology  is a subject of dispute in this case, and thus separately discussed as part of our  
legal analysis be low. 
7.2.1.2   Factual overview  
7.2.1.2.1   The USDOC 's evaluation of the conditions for the use of the W -T methodology  
in the underlying investigation  
7.21.   Following the requirements under US law in the underlying investigation, the USDOC 
determined the dumping margin of the Canadi an producers using the W -T methodology  when it 
found "a pattern of export prices that differ [ed] significantly" and explained why the 
W-W methodology could not account for such differences.50 The USDOC used the DPM to meet these 
requirements.  
7.2.1.2.1.1   DPM 
7.22.   In the fir st stage of the DPM, the USDOC examined whether the export sales of an investigated 
producer or export er showed a pattern of export prices that differed significantly among different 
purchasers, regions and time periods.51 In the second stage of the DPM, th e USDOC examined 
whether it could appropriately account for such differences using only the W -W methodology .52 When 
it explained that it could not account for such differences using only the W -W methodology , it 
considered it appropriate to use the W -T metho dology .53 
7.23.   To meet the pattern requirements in the first stage of the DPM, the USDOC used what it 
referred as the Cohen 's d test and the ratio test. It used the Cohen 's d test to examine whether the 
investigated producer 's or exporter 's prices of merchandise to a distinct purchaser, region or time 
period differed significantly from the prices of its comparable merchandise to all other purchasers, 
regions or time periods  respect ively.54 The purpose of the Cohen 's d test was not to evaluate whether 
a pattern existed.55 Instead, the USDOC discerned the pattern under the ratio test based on the 
extent of the prices that differed significantly.56 
                                                
50 USDOC, Issues and decision memorandum dated 1 November 2017 for the final affirmative 
determinatio n of sales at less than fair value and affirmative final determination of critical circumstances of 
certain softwood lumber products from Canada ( Final issues and decision memorandum) , (Exhibit CAN -1), 
p. 55. 
51 USDOC, Decision memorandum dated 23 June 2017  for the preliminary determination in the 
antidumping duty investigation of certain softwood lumber products from Canada ( Preliminary issues and 
decision memorandum) , (Exhibit CAN -3), p.  14; United  States'  response to Panel question after the first 
meeting of the Panel No.  8(b), para.  30. 
52 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  14. 
53 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  15. To examine whether the 
W-W methodology could appropriately take into accoun t such differences, the USDOC examined the difference 
between a dumping margin calculated under the W -W methodology (without zeroing) and a dumping margin 
calculated under the appropriate alternative methodology (described in paragraph 7.28 below), based on the 
results of the Cohen's  d test and the ratio test. (Ibid. p.  14). The USDOC used zeroing under the 
W-T methodology when calculating the margin unde r the appropriate alternative methodology. When it found a 
meaningful difference between these two dumping margins it explained that the differences in prices could not 
be taken into account appropriately under the W -W methodology. Such a meaningful differ ence arose 
when  (a) there was a 25% relative change in the dumping margin obtained under the W -W methodology and 
the dumping margin obtained under the appropriate alternative methodology, provided the dumping margins 
obtained under both  methodologies were above de minimis ; or (b) when the dumping margin under the 
W-W methodology was de minimis  but under the appropriate alternative  methodology was above de minimis . 
(Ibid. p. 15). 
54 Final issues and decision memorandum , (Exhibit CAN -1), p.  58. 
55 Final issues and decision memorandum , (Exhibit CAN -1), p.  58; United  States'  response to Panel 
question after the second meeting of the Panel No.  8(b), para.  30. 
56 Final issues and decision memorandum , (Exhibit CAN -1), p.  58. 
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  7.24.   Under the Cohen 's d test, the USDOC comp ared the weighted average price to a specific 
purchaser (or specific region, or specific time period)  with the weighted average price to all other 
purchasers  (or all other  regions , or all other time periods ). This test was done on a model -by-model 
basis.57 To illustrate, let us assume that Foreign Producer Z exports the product under investigation 
to four US  purchasers, which are Purchasers A, B, C, and D. The USDOC would apply the 
Cohen 's d test with respect to each of these four purchasers on a model basis . Thus, the USDOC 
would calculate the weighted average price (mean price) of all export transactions with respect to a 
particular model (CONNUM58) to Purchaser A.59 This was the test grou p. The USDOC would also 
calculate a weighted average price of all expor t transactions other than those made  to Purchaser A 
with respect to that particular model.60 This was the comparison group.  
7.25.   The USDOC used the Cohen's d coefficient  to consider whether the difference in the weighted 
average prices to the test group and the comparison group was significant.61 In particular,  to assess 
the magnitude of this difference,  the USDOC calculated a Cohen 's d coefficient using the following 
formula62: 
d=(weighted  average  export  price )test
group- (weighted  average  export  price )comparison
group
√(variance )test
group- (variance )comparison
group
2 
7.26.   When the Cohen 's d coefficient based on this formula was 0.8 or above, the USDOC found a 
significant difference in the weighted average export price to the test group and that to the 
comparison gro up.63 The USDOC found such a significant difference  irrespective of whether the  
weighted average price to the test group was significantly higher  or significantly lower  than that to 
the comparison group.64 Thus, in our illustration above, irrespective of whe ther the weighted average 
price to Purchaser A in the test group met the 0.8 threshold because it was significantly higher or 
significantly lower tha n the weighted average price in the comparison group, the export prices to 
Purchaser A in the test group wo uld pass the Cohen 's d test. This exercise would be repeated for 
Purchasers B, C, and D. This exercise would also be repeated for different regions, and for different 
time periods.65 
7.27.   The export transactions of purchasers, regions and time periods that passe d the 
Cohen 's d test were set aside for separate consideration under the ratio test.66 Under the ratio test, 
the USDOC aggregated the export transactions to purchasers, regions and time periods that passed 
the Cohen 's d test to identify a single pattern.67 
7.28.   When the aggregate value of the export transactions to purchasers, regions and time periods 
that passed the Cohen 's d test accounted for 66% or more of the value of all export transactions, 
the USDOC considered applying the W -T methodology  to all export tra nsactions.68 When the 
aggregate value of the export transactions to purchasers, regions and time periods that passed the 
                                                
57 Canada's  first written submission,  para. 14; United  States'  first written submission, paras.  56-57. 
58 The USDOC uses the nomenclature CONNUM or control numbers to refer to different models of the 
product under investigation.  
59 United  States'  first written submission, paras.  57-58; Canada's  first written submission, para.  16. 
60 Canada's  first written submission, para. 16; United States' first written submission, para. 57.  
61 Final issues and decision memorandum , (Exhibit CAN -1), p.  55. 
62 United States' first written submission, para. 58.  
63 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  14. 
64 Canada's  first written submission, paras.  17-18; United  States'  first written submission, para.  68. 
65 See, e.g. United  States'  first written submission, paras.  56-57. The USDOC would def ine time periods 
by quarter, i.e. three -month periods.  
66 In applying the Cohen's  d test, the USDOC compared the export sales on a CONNUM basis for each 
purchaser, region and time period. If, for instance a particular CONNUM -specific export transaction did not pass 
the Cohen's  d test for a given purchaser, that CONNUM -specific transaction was not included in the ratio test. 
(United  States'  response to Panel question after the second meeting of the Panel No.  1, paras.  1-2). 
67 In aggregating the results of the  Cohen's  d test, the USDOC did not double count export sales that 
passed the Cohen's  d test for more than one category, i.e. by purchaser, region or time period. For example, if 
an export sale passed the Cohen's  d test by purchaser and region, then the USD OC only counted the export 
sale once while aggregating the results of the Cohen's  d test. (United  States'  response to Panel question after 
the first meeting of the Panel No.  1(b), para.  3). 
68 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  14. 
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  Cohen 's d test accounted for more than 33% but less than 66% of the value of all export 
transactions, the USDOC considered applying the W-T methodology  to those export transactions 
that passed the Cohen 's d test and the W -W methodology  to those export transactions that did not 
pass the Cohen 's d test.69 When the aggregate value of the export transactions to purchasers, 
regions and time periods that passed the Cohen 's d test accounted for 33% or less of the value of 
all export transactions, the USDOC applied the W -W methodology  to all export transactions.70 
7.29.   Having met the pattern requirement through the Cohen 's d test and the ratio test, the USDOC 
considered whether the W -W methodology  could take into account appropriately the differences 
identified under the Cohen 's d test. When it explained that it could not, the USDOC applied the 
W-T methodology  to determine the dumping margin of the concerned  foreign  producer  or exporter . 
7.2.1.2.1.2   DPM's application in the underlying investigation  
7.30.   In the underlying investigation, the USDOC found that 73.56%, 72.69%, and 80.83% of 
Resolute's, Tolko's,  and West Fraser 's export transactions respectively passed the Cohen 's d test.71 
These export transactions included sales to purchasers, regions and time periods that passed the 
Cohen 's d test because they were found to be significantly higher  than export prices to other 
purchasers, regions or time periods , as well as prices that passed the Cohen 's d test because they 
were found to be significantly lower  than export prices to other purchasers, regions or time periods .72 
These export transa ctions of Resolute, Tolko, and West Fraser also included transactions to multiple 
purchasers, regions and time periods.73 
7.31.   Thus, as the United  States  confirms, in the underlying investigation the USDOC found "a single 
pattern" of export prices "which differ[ ed] significantly among different purchasers, regions and time 
periods".74 The pattern included export prices to purchasers, regions and time periods that differed 
significantly because they were significantly lower  than other prices , as well as those that differed 
significantly because they were significantly higher  than other prices.75 
7.2.1.2.2   The USDOC 's application of the W -T methodology  in the underlying 
investigation  
7.32.   The export transactions of Resolute, Tolko, and West Fraser that passed the Cohen 's d test 
represented 66%  or more  of the respective value of all export transactions made by these three 
Canadian producers . Thus, after explaining why  the W-W methodology  could not take into account 
appropriately the identified differences in prices , following the DPM  requirements  the USDOC applied 
the W -T methodology  to all export transactions of each of these producers.  
7.33.   In comparing the weighted average normal value with the pr ice of an individual export 
transaction under the W -T methodology , the USDOC disregarded, by treating as zero, those 
comparison results that were negative because the price of the individual export transaction in 
question was higher than the relevant weigh ted average normal value.76 The USDOC determined 
the dumping margin by aggregating the positive comparison results, i.e. those comparison results 
that were positive because the price of the individual export transaction was lower than the relevant 
                                                
69 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  14. 
70 Preliminary issues and decision memorandum , (Exhibit CAN -3), p.  14. 
71 United  States'  first written submission, para.  64; Canada's  first written submission, para.  23. 
72 United  State s' response to Panel question after the first meeting of the Panel No.  1(a), para.  1. 
73 United  States'  response to Panel question after the first meeting of the Panel No.  1(b), para.  2. 
74 United  States'  response to Panel question after the first meeting of  the Panel No.  8(b), para.  30 
(emphasis added). See also Canada's  response to Panel question after the first meeting of the Panel No.  1(b), 
para. 3. 
75 United  States'  response to Panel question after the first meeting of the Panel No.  1(a), para.  1; 
Canada' s response to Panel question after the first meeting of the Panel No.  1(a), paras.  1-2; and 
Canada's  first written submission, para. 17.  
76 United  States'  response to Panel question after the first meeting of the Panel No.  3(b), paras.  18-20. 
The USDOC used  multiple averaging in the underlying investigation, meaning that the USDOC divided the 
product under consideration into different models or CONNUMs, and calculated a weighted average normal 
value for each CONNUM. It compared the weighted average normal va lue in the comparison market with 
US prices, and then aggregated the comparison results. (United  States'  response to Panel question after the 
first meeting of the Panel No.  3(a), para.  17). 
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  weighted average normal value.77 The dumping margin was expressed as a percentage of the total 
value of all US prices for each exporter.78 Thus, the USDOC used zeroing under the W -T methodology  
in the underlying investigation.  
7.2.1.3   Evaluation  
7.34.   We will first review Canada 's claims  under the second sentence of Article  2.4.2 concerning 
the USDOC 's alleged failure to identify a pattern consistent with the pattern clause, and then turn 
to its claim on the use of zeroing under the W -T methodology . In making our findings with resp ect 
to these claims, we recall that Article  11 of the DSU obliges us to "make an objective assessment of 
the matter before [us], including an objective assessment of the facts of the case and the 
applicability of and conformity with the relevant covered  agreement s". Consistent with this 
obligation, as well as with Article  3.2 of the DSU and Article  17.6(ii) of the Anti -Dumping  Agreement , 
we have set out in the sections below our interpretation of the second sentence of Article  2.4.2 of 
the Anti -Dumping  Agreement . We have then examined whether Canada has established that the 
USDOC acted inconsistently with the second sentence of Article  2.4.2, as we have interpreted it . In 
interpreting this provision, we have taken into account the legal interpretations developed in the 
reports of WTO panels and the Appellate  Body, including those set out in the panel and 
Appellate  Body report s in US – Washing Machines . 
7.35.   We have found our understanding of the text of the second sentence of Article  2.4.2 in this 
regard to be consistent with certain aspects of the panel 's and Appellate  Body's interpretation of this 
sentence in US – Washing Machines . However, a s noted below, we have found our understanding of 
this text to differ from certain aspects of the  panel 's and the Appellate  Body's interpretation  in US – 
Washing Machines . For the reasons set out in our report, we respectfully disagree with those aspects 
of the Appellate  Body's and the panel 's interpretation  in US – Washing Machines .79 
7.2.1.3.1   Identification of pattern under the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement  
7.36.   The parties agree, as stated in paragraph 7.31 above, that in the underlying investigation:  
a. the USDOC found "a single pattern" of export prices "which d iffered significantly among 
different purchasers, regions and time periods"; and  
b. this pattern included export prices to purchasers, regions or time periods  that differed 
significantly because they were significantly higher  than export prices to other purch asers, 
regions or time periods . 
7.37.   The parties disagree, however, on whether , as a matter of law,  the pattern clause permits an 
investigating authority to find such a "pattern". Canada asks us to follow the Appellate  Body's finding 
in US – Washing Machines  that the pattern clause does not permit an investigating authority to find 
a "pattern " of the type set out in paragraph 7.36 above. The United  States  considers the 
Appellate  Body's findings to be incompatible with the text of the second sentence of Article  2.4.2, 
and thus asks us to not follow these findings . We commence our analysis by examining the text of 
the pattern clause.  
7.38.   To comply with the  pattern clause, an investigating authority must find:  
a. a pattern ;  
b. of export prices which differ significantly among different purchasers, regions or time 
periods.  
                                                
77 United  States'  response to Panel question after the first meetin g of the Panel No.  3(b), paras.  18-20. 
78 United  States'  response to Panel question after the first meeting of the Panel No.  3(a), para.  17. 
79 See para. 7.107  below. We also disagree for the same reason with the panel and the Appellate  Body 
in US – Anti-Dumping  Methodologies (China)  to the extent the findings of the panel and the Appellate  Body 
differ from the legal interpretation set out in this Report.  
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  7.39.   "Pattern" is defined as "a regular and intelligible form or sequence discernible in certain 
actions or situations".80 Thus, if the export prices do not form "a regular and intelligible form or 
sequence discernible in certain actions or situations", they do not form "a pattern" consistent with 
the pattern clause. The pattern clause also specifies w hat type of pattern an investigating authority 
must find because  it refers to a pattern " of export prices which differ significantly among different 
purchasers, regions or time periods". Thus, export prices which do not differ, or do not differ 
significant ly, among different purchasers, regions or time periods , also do not form "a pattern" 
consistent with the pattern clause.  
7.40.   Further, the use of the singular form in the pattern clause ("a pattern") does not necessarily 
suggest that an investigating authority  cannot find more than one pattern. If the text had used the 
plural form "patterns", an investigating authority may have been required to find more than one 
type of pattern to meet the pattern clause requirements.81 But that is not the case. Thus, while the  
use of "a pattern" suggests that an investigating authority may comply with  the pattern clause by 
identifying only one type of pattern, it on its face does not preclude an investigating authority from 
finding more than one type of pattern.  
7.41.   With these cons iderations in mind, we turn to examine whether the pattern clause permits an 
investigating authority to find a pattern of the type set out in paragraph 7.36 above.  
7.2.1.3.1.1   Whether export price variations across purchasers, regions and time periods 
may be aggregated to find a single  pattern of export prices which differ significantly 
among different purchasers, regions and time periods  
7.42.   The issue before us is w hether the pattern clause permits an investigating authority to  
aggregate  export price variations across purchasers, regions and time periods to find a single  pattern 
of export prices  which differ significantly among different purchasers, regions and time periods . The 
Appellate  Body and the panel in US – Washing Machines  concluded that it does not. Canada relies 
on these findings of the Appellate  Body to contend that in the underlying investigation the USDOC 
failed to find a pattern among different purchasers, regions or time periods  because it aggregated 
differences in prices across three unrelated categories, i.e. purchasers, regions and time periods.82 
The United  States  disagrees with Canada 's arguments.  
7.43.   We note that an investigating authority must identify  a pattern of "export prices which differ 
significantly among different purchasers, regions or time periods". The preposition "among" may be 
defined, inter alia , as "in relation to the rest of the  group [it belongs to]"83 or "esp. of things 
distinguished in kind from the rest of the group" .84 These definitions suggest, as the United  States  
acknowledges, a relationship between one thing, i.e. purchasers, regions or time periods  and other 
things of the  same type, i.e. other purchasers, regions or time periods .85 Thus, as the United  States  
also acknowledges, the use of "among" in the pattern clause shows that an investigating authority 
may not compare prices between purchasers and regions because these two categories are not of 
the same type.86 Instead, the comparisons must be made between e xport prices to different 
purchasers, or different regions, or different time periods, i.e. with respect to categories of the same 
type.87 
                                                
80 The parties agree on this definition. (Canada's  first written submission, para.  38; United  States'  first 
written submission, para . 44). 
81 See e.g. Panel Report, US – Washing Machines , para.  7.143. The panel considered that the use of the 
singular form may simply indicate that a finding of a pattern with respect to any of the three categories set out 
in the pattern clause could poten tially be a sufficient basis to apply the W -T methodology.  
82 Canada's  first written submission, paras.  34 and 41 -42. 
83 Panel Report, US – Washing Machines , para.  7.142 (quoting McMillan Dictionary online, definition of 
"among"); Appellate  Body Report, US – Washing Machines , para.  5.31. (emphasis omitted)   
84 Oxford Dictionaries online, definition of "among" 
http://www.oed.com/view/Entry/6524?redirectedFrom=among#eid  (accessed 20 March 2019). See also 
United  States'  first written submission, para.  46. 
85 The United  States appears to agree with this understanding based on the word " among". 
(United  States'  first written submission, para.  46). 
86 United  States'  response to Panel question after the first meeting of the Panel No.  7, para.  24. 
87 See, e.g. United  States'  response to Panel question after the first meeting of the Panel No.  7, 
para. 24. 
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  7.44.   However, the United  States  contends that such comparisons do not in and of themselves 
identify "a pattern".88 Instead, in the United  States ' view, to identify a pattern among different 
purchasers, regions or time periods  for the foreign producer  or exporter , and the product as a whole, 
an investigating authority needs to examine the producer 's or exporter 's sales holistica lly, and in the 
aggregate.89 The United  States  submits that the USDOC aggregated the differences in export prices 
identified under the Cohen 's d test to determine the extent of those differences and consider the 
producer 's overall pricing behaviour in the U S market for the product as a whole.90 The United  States  
asserts that nothing in the text of the pattern clause suggests that significant differences among 
each category, i.e. purchasers, regions or time periods , cannot be considered together when 
assessing  whether there exists "a pattern of export prices which differ significantly 'among different 
purchasers, regions or time periods '".91 According to the  United  States , the text of the pattern clause 
on its face contemplates a pattern of export prices that tr anscends multiple purchasers, regions or 
time periods , noting that if the pattern clause prohibited the identification of such a single pattern, 
instead of using the preposition "among" only once, it would have used this preposition three times 
(as in amon g purchasers, or among regions, or among time periods).92 We, however,  disagree with 
the United  States ' arguments.  
7.45.   Nothing in the pattern clause suggests that having identified significant differences in export 
prices among different purchasers, or differen t regions, or different time periods, an investigating 
authority is permitted to aggregate those differences to find one single pattern. Instead, we agree 
with the Appellate  Body in US – Washing Machines  that a single "pattern" which comprises prices 
found to be significantly different from other prices across different categories would effectively be 
composed of prices that do not form a regular and intelligible sequence.93 The use of the conjunction 
"or" in the specific context of the pattern clause, that is along with the use of the words "among" 
and "pattern " confirms that the identified pattern must be one of export prices which differ 
significantly among categories of the same type, i.e. different pur chasers, different regions, or 
different time periods. We also disagree with the United  States ' argument that if the pattern clause 
prohibited the identification of a single pattern that aggregates differences in export prices across 
categories, it would h ave used the preposition "among " thrice. Instead, we, like the Appellate  Body 
in US – Washing Machines , consider that the use of "among" thrice in the pattern clause would have 
been superfluous because it would have conveyed the same meaning as the existin g text.94 
7.46.   Further, nothing in the pattern clause precludes an investigating authority from considering 
the extent of the price differences identified under the pattern clause . One would also expect an 
investigating authority to look at  the overall pricing b ehaviour of a foreign producer or  exporter to 
identify a pattern. But we do not consider that it is necessary for an investigating authority to, as 
the United  States  contends, aggregate the identified price differences across different categories to 
addres s those considerations.  
7.47.   In particular, as noted above, the pattern clause does not preclude an investigating authority 
from finding more than one pattern. Thus, having examined the totality of an exporter 's or 
producer 's export sales by purchaser, by regi on, and by time period, an investigating authority could 
find, consistent with the pattern clause, a pattern of export prices which differ significantly among 
different purchasers, a pattern of export prices which differ significantly among different regio ns, 
and a pattern of export prices which differ significantly among different time periods. The 
investigating authority  is free to  examine  the extent of the price differences represented across the 
identified patterns.  
7.48.   Our interpretation  is consistent with that of the Appellate  Body in US – Washing Machines . 
The Appellate  Body noted that its interpretation of the pattern clause did not exclu de the possibility 
that a foreign producer or exporter  could be practising more than one type of targeted dumping  
(that is dumping targeted to purchasers, regions and time periods) , or that an investigating authority 
could find more than one type of patter n.95 However, like us, the Appellate  Body found that the text 
                                                
88 United  States'  response to Panel question after the first meeting of the Panel No.  8(b), para.  28. 
89 United  States'  response to Panel question after the first meeting of the Panel No.  8(b), para.  28. 
90 United  States'  response to Panel question  after the first meeting of the Panel No.  7, para.  26. 
91 United  States'  first written submission, para.  79. (emphasis omitted)  
92 United  States'  first written submission, paras.  79 and 87.  
93 Appellate  Body Report, US – Washing Machines , para.  5.32. 
94 Appellate  Body Report, US – Washing Machines , para.  5.34. 
95 Appellate  Body Report, US – Washing Machines , para.  5.35. 
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  of the pattern clause did not support the United  States ' view that an investigating authority could 
find a single pattern of export prices, which includes variations in export prices across purch asers, 
regions and time periods.  Therefore, we conclude that the pattern clause does not permit an 
investigating authority to find a single pattern that aggregates differences in export prices across 
purchasers, regions and time periods.  
Conclusion  
7.49.   Based on the foregoing, we find that the USDOC acted inconsistently with the second sentence 
of Article  2.4.2 in the underlying investigation because in applying the DPM , and specifically under 
the ratio test,  it aggregated differences in export  prices across unrelated categories, i.e. purchasers, 
regions and time periods to identify a single pattern of export prices which differed significantly 
among different purchasers, regions and time periods.  
7.2.1.3.1.2   Whether a pattern can include export prices to purchasers, regions or time 
periods  that differ significantly because they are significantly higher relative to  export 
prices to other purchasers, regions or time periods  
7.50.   We recall that a foreign producer or exporter 's prices to a US purchaser pass the 
Cohen's d test when the weighted average price to th at purchaser is found to differ significantly from 
the weighted average export price to all other purchasers (same with regions and time periods). 
Otherwise, those prices fail  the Cohen 's d test. But the weighted average export price to a specific 
purchaser  (or a specific region, or a specific time  period)  that passes the Cohen 's d test, may differ 
significantly because this price is significantly lower, or significantly higher , than the weighted 
average price to all other purchasers  (or all other regions, or  all other time  periods) . 
7.51.   Noting that in applying the Cohen 's d test in the underlying investigation the USDOC identified 
both higher -priced and lower -priced export sales to purchasers, regions or time periods as part of 
the purported pattern96, Canada asserts that export prices which differ significantly because they 
are significantly higher, as opposed to significantly lower, cannot form part of the pattern. Canada 
finds support for its view in the Appellate  Body report in US – Washing Machines , where the 
Appellate  Body concluded that the pattern must be limited to  the export transactions to  those  
purchasers, regions or time periods  whose prices are found to  differ significantly because they are 
significantly lower than export prices to other purchasers, re gions or time periods .97 Canada submits  
that this interpretation of the Appellate  Body gives meaning to the word "pattern".98 Further, 
considering the  Anti-Dumping  Agreement  is focused on sales below normal value, and the second 
sentence of Article  2.4.2 is meant to address targeted dumping , an investigating authority must find  
a pattern of low er-priced, not high er-priced export sales.99  
7.52.   The United  States  disagrees with Canad a's arguments as well as the Appellate  Body's findings 
in US – Washing Machines  on which these arguments are based. Noting that as part of the  pattern 
requirements, the DPM , and specifically the Cohen 's d test, looks for export prices to a purchaser, 
region or time  period that are either significantly higher or significantly lower than export prices to 
other purchasers, regions or time periods , the United  States  asserts that the pattern clause does 
not require or foreclose a focus either on lower -priced or higher -priced sales.100 Instead, a pattern 
of export prices which "differ significantly" would necessarily include in the United  States ' view both 
lower -priced and higher -priced export sales that differ significantly from each other.101  
7.53.   However, while observing  that the Cohen 's d test looks for export prices that are either 
significantly higher or significantly lower, the United States asserts that the relevant pattern is not 
limited to export transactions  to those  purchasers, regions or time periods that pass the 
Cohen 's d test. Instead, the pattern could comprise the export transactions to purchasers, regions 
or time periods that pass the Cohen 's d test as well as those that fail the Cohen 's d test, which, we 
                                                
96 Canada's  first written submission, para.  40. 
97 Canada's  first written submission, para.  35 (referring to Appellate  Body Report, US – Washing 
Machines , paras.  5.39-5.43); Appellate  Body Report, US – Washing Machines , para.  5.29. 
98 Canada's  response to Panel question after the first meeting of the Panel No.  10, para.  20. 
99 Canada's  opening statement at the first meeting of the Panel, para.  20. 
100 United  States'  first written submission, para.  68. 
101 United  States'  first written submission, para.  70. 
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  note, effectively means that  the pattern could comprise all export transactions of the investigated 
producer or exporter.102 The United States justifies this view by observing that under the 
Cohen 's d test, the USDOC makes intermediate comparisons by comparing the export price s to each  
purchaser with that to all other purchasers  (same with regions and time periods) . For example, if 
the foreign producer or exporter has three US purchasers, A, B, and C, the USDOC would compare 
the weighted average export price  to Purchaser A with the weig hted average export price to 
Purchasers  B and C; the weighted average export price  to Purchaser B with the weighted average 
export price to  Purchasers C and A; and the weighted average export price  to Purchaser C with the 
weighted average export price to Purchasers A and B. The United  States contends that if the 
weighted average export price  to Purchaser A is significantly lower than the weighted average export 
price to the other purchasers,  "logically" the weighted average export price  to the other purchasers, 
here, Purchasers B and C , would be significantly higher .103 Thus, per the United  States, the pattern 
of export prices which differ significantly would comprise export transactions  to Purchasers A and C 
as well as B.104 
7.54.   Canada challenges the USDOC 's decision to identify as part of the pattern those export prices 
to a specific purchaser, region or time period that passed the Cohen 's d test because they were 
significantly higher (as opposed to just significantly lower) relative to export prices to othe r 
purchasers, regions or time periods. Thus, the issue that we must resolve is whether "a pattern of 
export prices which differ significantly" could include export prices  to purchasers, regions or time 
periods  which differ significantly because they are si gnificantly higher relative to export prices to 
other purchasers, regions or time periods . Our interpretation of the pattern clause suggests that it 
could.  
7.55.    Interpreting the pattern clause taking into account the function of the second sentence of 
Article  2.4.2 suggests that the focus of the pattern is on export prices which "differ significantly" and 
thus not on all export prices.105 However, the pattern clause does not further qualify the export 
prices which "differ significantly" by requiring that they dif fer only because they are significantly 
lower, not significantly higher, relative to export prices to other purch asers, regions or time periods. 
Thus, the pattern clause is silent on this matter.  
7.56.   We recognize that th is silence of the text is not dispositive.106 Indeed, even assuming the 
phrase "export prices which differ significantly" could, in principle, cover export prices to purchasers, 
regions or time periods that are significantly lower as well as significantly high er, these export prices 
must collectively form a regular and intelligible sequence that is discernible in certain actions and is 
capable of being understood (i.e.  they form "a pattern"). We recall that the panel in US – Washing 
Machines  concluded, relying on the definition of pattern as a regular and intelligible form or 
sequence, that prices that are too high and prices that are too low do not belong in the same 
pattern.107 The Appellate Body upheld this finding of the panel, while additionally noting that a  
pattern cannot comprise export prices that differ significantly because they are significantly 
higher.108 However, our interpretation of the text leads us to a different conclusion than that reached 
by the panel and the Appellate Body in US – Washing Machin es. 
7.57.   To us, the silence of the text on whether the export prices that differ significantly must do so  
because they are significantly lower or significantly higher  is explained by  the function of the second 
sentence of Article  2.4.2, which  is to unmask dumpi ng targeted to certain purchasers, regions or 
                                                
102 See e.g. United  States'  response to Panel question after the first meeting of the Panel No.  8(b), 
para. 30. Export transactions that pass the Co hen's  d test, and those that fail the Cohen's  d test, would make 
up the entire universe of export transactions of a foreign producer or exporter.  
103 United  States'  response to Panel question after the first meeting of the Panel No.  8(a), para.  27. 
104 If ther e are multiple export transactions to a purchaser that makes up the test group, the USDOC 
would calculate a single weighted average price to that purchaser. If there are multiple export transactions to 
the purchasers that make up the comparison group, the USDOC would calculate a single weighted average 
price to all these purchasers. Under the Cohen's  d test, the USDOC would make its comparisons based on 
these weighted average prices. However, as explained above, when the weighted average price to the 
purcha ser passes the Cohen's  d test, the USDOC would consider the total value of all export transactions to 
this purchaser under the ratio test.  
105 Appellate Body Report, US – Washing Machines , para.  5.26. 
106 We are aware that the silence of a text is not necessar ily dispositive, as it is possible that the 
requirement with respect to which the text is silent was intended to be included by implication. (Appellate  Body 
Report, US – Carbon Steel , para.  65). 
107 Panel Report, US – Washing Machines , para.  7.144.  
108 Appella te Body Report, US – Washing Machines , paras.  5.36-5.37. WT/DS534/R  
 
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  time periods. The text of the pattern clause supports the view that targeted dumping is masked 
when significantly lower prices to certain purchasers, or certain regions, or in certain time periods 
are masked by  significantly higher export prices to certain other purchasers, or to certain other 
regions, or in certain other time periods. In particular, the text  permits an investigating authority to 
find a pattern, which comprises export prices to purchasers, regio ns or time periods that 
are (a) significantly lower and thus may be masked ; and (b)  significantly higher and thus may be 
masking those lower -priced export sales . Having identified such a pattern, an investigating authority 
is permitted, as noted in paragra ph 7.99 below, to unmask targeted dumping reflected in the pattern 
by applying the W -T methodology to those export transactions that fall within the pattern (while still 
being required to apply a normal W -W or T -T methodology to the non-pattern transactions).  
7.58.   To successfully unmask targeted dumping reflected in the pattern transactions, an 
investigating authority should be permitted to adopt a  methodo logy that deals with such significantly 
higher -priced export sales, which may be masking the significantly lower -priced export sales, as well 
as those lower -priced sales, which may be masked. The second sentence permits an investigating 
authority to do so by applying  the W -T methodology to a pattern that includes both these types of 
export sales. Thus, the silence of the text on whether export prices must "differ significantly" because 
they are significantly higher or significantly lower is explained by the function of the second sentence 
of Article  2.4.2.  
7.59.   We recall  that the Appellate  Body in US – Washing Machines  relied primarily on contextual 
considerations in concluding  that the pattern could only comprise export prices which  differ 
significantly because they are significantly lower . The Appellate Body, after all,  did recognize that 
the text of the second sentence does not expressly specify whether the export prices which differ 
significantly must do so  because they are significantly higher or significantl y lower.109 We, however, 
disagree with these contextual considerations.  
7.60.   For instance, the  Appellate  Body found support for its view in the definition of dumping in 
Article  2.1 of the Anti -Dumping  Agreement and Article  VI:1 of the GATT 1994, noting that dumpe d 
prices refer to export prices that are lower  than the normal value.110 But we do not find this definition 
to offer specific guidance on the issue before us because low -priced export transactions may be 
higher or lower than the normal value, just as high -priced export transactions may be higher or 
lower than the normal value, especially considering that the pattern is not determined by reference 
to normal value. Further, the Appellate  Body's finding was informed by its view that if an 
investigating authority  determines the dumping margin under the second sentence of Article  2.4.2, 
it must apply the W -T methodology only to pattern transactions and exclude the non-pattern 
transactions.111 However, as discussed in paragraphs 7.88-7.99 below, such a methodological 
approach is not consistent with Article  2.4.2 because this provision does not permit an investigating 
authority to exclude non -pattern transactions . Thus, we respectfully  disagree with the contextual 
considerations relied on  by the Appellate  Body to the extent they are based on a methodological 
approach that in our view is not provided under the second sentence of Article  2.4.2.  
7.61.   We also disagree with the panel in US – Washing Machines  insofar as it concluded that prices 
that are too high and prices that are too low do not belong in the same pattern.112 The defin ition of 
pattern does not suggest that prices falling within a pattern need to differ in the same way, i.e. it 
need not comprise only lower -priced export sales, or only higher -priced export sales, to purchasers 
(or regions, or time periods). What is import ant is that the sequence of export prices should form a 
regular and intelligible sequence that is discernible in certain actions and capable of being 
understood. Export prices which "differ significantly" because they are significantly higher or 
significan tly lower could form such a sequence. Such a sequence of significantly higher and 
significantly lower export prices to purchasers, regions or time periods would stand out relative to 
export prices to other purchasers, regions or time periods because they " differ significantly", and 
thus would be capable of being understood. Moreover, the word "pattern" should not be viewed in 
isolation from the other parts of the text that specify what type of pattern an investigating authority 
must find. In so specifying, the pattern clause only requires that the pattern be of export prices 
which differ significantly, and does not prescribe whether they should differ because they are 
                                                
109 Appellate  Body Report, US – Washing Machines , para.  5.29. 
110 See, e.g. Appellate  Body Report, US – Washing Machines , para.  5.29. 
111 See para.  7.71 below.  
112 Panel Report, US – Washing Machines , para.  7.144.  
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  significantly higher or significantly lower relative to export prices to other purchasers, regions or 
time periods. Therefore, the pattern clause does not preclude an investigating authority from finding 
that the pattern includes export prices to purchasers, regions or time periods that "differ 
significantly" because they are significantly highe r relative to export prices to other purchasers, 
regions or time periods.  
7.62.   As we noted above, Canada 's claim  under the second sentence of Article  2.4.2  is based on its 
view that the pattern identified under the pattern clause cannot include export prices to  purchasers, 
regions or time periods which differ significantly because they are significantly higher relative to 
export prices to other purchasers, regions or time periods. We disagree  with this view  based on the 
legal analysis set out above. Thus, we als o disagree with Canada that  the USDOC acted inconsistently 
with the pattern clause because export prices to certain purchasers, regions or time periods passed 
the Cohen 's d test because they were significantly higher relative to export prices to other 
purchasers, regions or time periods.  
7.63.   Our findings with respect to the claim brought by Canada should not, however, be 
misunderstood to mean  that a pattern would comprise all export transactions of a foreign producer 
or exporter.113 The United States asserts, as noted above, that once an investigating authority finds 
that the weighted average export price to a particular purchaser ( Purchaser A in the hypothetical 
discussed in paragraph 7.53) is significantly lower than the weighted average export price to all 
other purchasers ( Purchasers B and C in the hypothetical), the weighted average export price  to 
those other purchasers (i.e. Purchasers B and C ) is significantly higher than the weighted average 
export price to Purchaser A. Thus, the pattern of export prices which "differ significantly" from each 
other per the United States includes all export transactions  to Purchaser A ( because the weighted 
average price to this purchaser is  significantly lower) as well as all export transactions to  Purchasers 
B and C ( because the weighted average export price to these two purchasers is significantly higher ). 
7.64.   We disagree with this argument of the United States b ecause it works when one assumes that 
to meet the pattern clause requirements, an investigating authority must necessarily consider 
whether the weighted average export price to one purchaser differs significantly from the weighted 
average of the export pri ces to all other purchasers combined.114 But this assumption is not grounded 
in the text of the pattern clause. The pattern clause does not prescribe how an investigating authority 
must find a pattern. But it does require an investigating authority to find a  pattern of export prices 
which differ significantly among different purchasers. It does not state that an investigating authority 
must find whether the weighted average export price to one purchaser differs significantly from the 
weighted average of expor t prices to all other purchasers (with the same rationale applying to 
regions and time periods as well). Irrespective of the  methodology used to identify a pattern, the 
pattern ultimately discerned, based on an evaluation of all export sales of the concern ed foreign 
producer or exporter, cannot include export prices which do not differ significantly among different 
purchasers, regions or time periods.  
7.65.   Indeed , as noted in paragraph 7.55 above, we agree with  the Appellate Body in US – Washing 
Machines  that the focus of the pattern is on export prices which "differ significantly" and thus not on 
all export prices.115 The text of th e pattern clause does not suggest that the pattern comprises any 
                                                
113 The United States submits that the USDOC did not find in the underlying investigation that the 
pattern consisted of all export sales. (United States' response to Panel question after the second meeting of the 
Panel No.  4, para.  43). However, as noted earlier, it also contends that a pattern could comprise export 
transactions that pass the C ohen's  d test as well as those that fail the Cohen's  d test, which would effectively 
mean that the pattern would comprise all export transactions of a foreign producer or exporter, even though 
only export prices to certain purchasers, regions or time perio ds pass the Cohen's d test because they are 
found to "differ significantly". (United  States'  response to Panel question after the first meeting of the Panel 
No. 8(b), para.  30). 
114 The United  States contends that the Appellate  Body in US – Washing Machines  rewrote the pattern 
clause by substituting "among" for "from" because the Appellate  Body found that the distinguishing factor that 
would allow the authority to discern which prices form part of the pattern would be that the prices in the 
pattern differ sig nificantly from prices not in the pattern. (United  States'  first written submission, para.  71). It 
appears to us, however, that it is the United  States'  interpretation of the pattern clause that replaces the word 
"among" with "from".  
115 Appellate Body Repor t, US – Washing Machines , para.  5.26. We also consider that a "pattern" that 
includes export prices to purchasers, regions or time periods which do not "differ significantly" would not form 
"a regular and intelligible form or sequence discernible in certai n actions or situations". There would be no 
criteria based on which such a sequence could be discerned or be capable of being understood, and such a 
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  lower - or higher -priced export transaction, or any export transaction priced above or below the 
normal value. The existence of such type of lower -priced and higher -priced export transactions would 
not be a sufficient basis to find a pattern because the pattern clause requires an investigating 
authority to find a pattern of export prices which differ significantly among different purchasers, 
regions or time periods, and not significant differen ces or variations across the prices of all export 
transactions. It follows that if an investigating authority were to find that certain export prices do 
"differ significantly among different purchasers, regions or time periods" and form the relevant 
patter n, that would not present the investigating authority with a carte blanche  to include other 
export prices that do not "differ significantly among different purchasers, regions or time periods" 
in the pattern. Thus, we consider that  a pattern of export pric es which "differ significantly" among 
different purchasers, regions or time periods necessarily excludes export prices which do not  differ 
significantly among different purchasers, regions or time periods.   
Conclusion  
7.66.   Based on the foregoing, we find that Canada has not established that in applying the DPM in 
the underlying investigation the USDOC acted inconsistently with the second sentence of 
Article  2.4.2 by including, in the pattern, export transactions to those purchasers, regions or time 
periods  whose prices differed significantly because they were significantly higher relative to export 
prices to other purchasers, regions or time periods.  
7.2.1.3.2   Zeroing under the W -T methodology  
7.67.   We observed  in paragraph 7.20 above that t he process of comparing a normal value 
established on a weighted average basis with the prices of individual export transactions  may yield 
multiple intermediate comparison results . An in termediate comparison result is positive when the 
price of an individual export transaction is lower than the weighted average normal value. An 
intermediate comparison result is negative when the price of an individual export transaction is 
higher than the  weighted average normal value. An investigating authority uses zeroing under the 
W-T methodology  when, in aggregating the intermediate comparison results , it disregards  by 
treating as zero the negative comparison results and considers only  the positive co mparison results. 
Considering  that in dumping margin calculations the total dumped amount is presented in the 
numerator, the numerator reflects  only the  positive comparison results when zeroing is used (and 
the positive as well as the negative comparison r esults when zeroing is not used). The denominator 
comprises the value of all export transactions, including the value of export transactions that are 
disregarded while determining the total dumped amount. The formula for calculating a dumping 
margin under the W -T methodology  (in percentage) is116: 
Total Dumped Amount (Numerator)
Total Value of all export transactions  (Denominator)×100   
7.68.   The issue in this dispute is whether the second sentence of Article 2.4.2 permits such type of 
zeroing under the W -T methodology . The panels in US – Washing Machines  and US – 
Anti-Dumping  Methodologies  (China)  and the Appellate  Body in US – Washing Machines  concluded 
that the second sentence of Article  2.4.2 does not permit the use of zeroing under the 
W-T methodology .117 One Appellate  Body Member in US – Washing Machines , however, dissented 
from the majority view and found zeroing to be permissible under the W -T methodology . While these 
panels and the Appellate  Body found zeroing to be impermissible under the second sentence, they 
                                                
sequence would not be regular or intelligible. Instead, they would be essentially random variations in pric es. 
Thus, export prices to purchasers, regions or time periods which do not differ significantly relative to export 
prices to other purchasers, regions or time periods cannot form part of the pattern.  
116 Irrespective of whether the dumping margin is determi ned under the W -T methodology, the 
W-W methodology, or the T -T methodology, the numerator would reflect the total dumped amount. However, 
how exactly the total dumped amount is determined would vary based on the  methodology used.  
117 The Appellate  Body's  findings were not based on the unanimous view of all three Appellate  Body 
Members forming the Division. While the majority, i.e. two Members concluded that the second sentence of 
Article  2.4.2 prohibits zeroing under the W -T methodology, one Member disagreed with that conclusion and 
wrote a dissenting opinion. We refer to the findings of the majority as the Appellate  Body findings in US – 
Washing Machines . 
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  acknowledged that the W -T methodology  is an exceptional  methodology  which is designed to 
unmask targeted dumping.118 However, they concluded that th e second sentence of Article  2.4.2 
permits an investigating authority to unmask targeted dumping without using zeroing. This 
conclusion is based on their view on how an investigating authority is supposed to determine the 
dumping margin pursuant to the sec ond sentence of Article  2.4.2.  
7.69.   These panels and the Appellate  Body noted that when an investigating authority determines 
the dumping margin under the second sentence of Article  2.4.2 after meeting the conditions set out 
in this sentence, it is permitted to  apply the W -T methodology  only to those export transactions that 
fall within the relevant pattern.119 Thus, they took the view that the second sentence does not permit 
an investigating authority to apply the W -T methodology  to the non -pattern transactions. However, 
the panels and the Appellate  Body reached different conclusions  on how an investigating authority 
is supposed to treat such non -pattern transactions.  
7.70.   The panels in US – Washing Machines  and US – Anti-Dumping  Methodologies  (China)  did not 
preclude the application of any of the two normal  methodologies , i.e. the W -W or the 
T-T methodology  to the non-pattern transactions.120 Thus, these panels did not preclude that an 
investigating authority could apply a mixed  methodology  wherein the W -T methodology  is applied 
to pattern transactions (but without zeroing) and the W -W or T -T methodology  is applied to 
non-pattern transactions (without zeroing).121 When such a mixed  methodology  is used , the 
intermediate result s calculated by applying the W -T methodology  to pattern transactions and the 
W-W (or T -T) methodology  to non -pattern transactions must be aggregated to calculate one overall 
dumping margin for the foreign producer or exporter. The panels observed  that in aggregating these 
intermediate results, an investigating authority may systematically disregard the intermediate result 
calculated by applying the W -W or the T-T methodology  to non -pattern transactions, when this 
intermediate result is negative.122 When th is intermediate result is positive , the investigating 
authority would add this result to the intermediate result obtained by applying the W -T methodology  
to pattern transactions .123 This way, according to th ese panels, the W -T methodology  could unmask 
targeted dumping by not letting negative dumping outside the pattern offset or "re -mask" the 
dumping within the pattern.124 
7.71.   However, unlike these two panels, the Appellate  Body concluded that the second sentence of 
Article  2.4.2 does not permit the use of a mixed  methodology , thereby disagreeing with the two 
                                                
118 See, e.g. Appellate  Body Report, US – Washing Machines , paras.  5.17-5.18; Panel Reports, US – 
Washing M achines , para.  7.155; US – Anti-Dumping  Methodologies (China) , fn 385.  
119 Appellate  Body Report, US – Washing Machines , para.  5.55; Panel Reports, US – Washing Machines , 
para. 7.29; US – Anti-Dumping  Methodologies (China) , para.  7.183.  
120 The panel in US – Washing Machines  observed that one might take the view that the combined 
application of the W -T and W -W (or T -T) methodologies is not provided under the second sentence of 
Article  2.4.2. But considering the complainant did not make a claim to that effect, i t assumed that the 
combined application of the two  methodologies (i.e. W -T methodology to the pattern transactions and W -W or 
T-T methodology to the non -pattern transactions) is not precluded. (Panel Report, US – Washing Machines , 
para. 7.161). The panel i n US – Anti-Dumping  Methodologies (China)  noted that to resolve the claim before it, 
it did not need to express a view on how an investigating authority should treat non -pattern transactions while 
determining the dumping margin for the product as a whole. But, it observed that an investigating authority 
may use another  methodology with respect to the non -pattern transactions, provided it complies with 
Article  2.4.2 and other relevant provisions of the Anti -Dumping  Agreement. It did not suggest that the 
non-pattern transactions must be excluded. (Panel Report, US – Anti-Dumping  Methodologies (China) , 
para. 7.182).  
121 In US – Washing Machines , the panel dealt with the use of a mixed  methodology by the USDOC 
wherein the W -T methodology was applied to export transactions that passed the Cohen's  d test and the 
W-W methodology was applied to export transactions that did not pass the Cohen's  d test. 
122 Panel Reports, US – Washing Machines , paras.  7.162 -7.164; US – Anti-Dumping  Methodologies 
(China) , fn 385. 
123 So, to take an example, if the intermediate result calculated by applying the W -T methodology to 
pattern transactions is 500, and that calculated by applying the T -T methodology to non -pattern transactions 
is -500, an investigating authority would disre gard the intermediate result based on non -pattern transactions 
resulting in a dumped amount of 500 (500 + 0). If the intermediate result calculated by applying the 
W-T methodology to pattern transactions is 500, and that calculated by applying the T -T methodology to 
non-pattern transactions is 150, the two results would be added to get a total dumped amount of 650 
(500+150).  
124 Panel Reports, US – Washing Machines , para.  7.162; US – Anti-Dumping  Methodologies (China) , 
fn 385. 
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  panels on this point.125 Instead, in determining the dumped amount pursu ant to the second sentence 
an investigating authority would apply the W -T methodology  only to the pattern transactions and 
exclude the non -pattern transactions.126 Thus, the dumped amount represented in the numerator 
would be based only on results obtained b y applying the W -T methodology  to pattern transactions.127 
The denominator would reflect the value of all export transactions, i.e. the pattern and the 
non-pattern transactions.128 This way, per the Appellate  Body, an investigating authority can address 
target ed dumping that is represented in the pattern by comparing all export transactions identified 
in the pattern with the weighted average normal value.129 Because the non -pattern transactions are 
excluded from the dumping margin calculations, the  negative intermediate result based on such 
non-pattern transactions is not allowed to re -mask the targeted dumping identified in the pattern.130 
According to the Appellate Body, o nce the non -pattern transactions are excluded , there is nothing 
more that needs to be unmasked. Thus, per the Appellate  Body zeroing is not permitted to unmask 
targeted dumping.  
7.72.   Relying primarily on the se findings of the Appellate  Body in US – Washing Machines , Canada  
contends that the second sentenc e of Article  2.4.2 does not permit the use of zeroing under the 
W-T methodology . The United  States  disputes Canada 's submission and asks us not to follow the 
Appellate  Body's findings in US – Washing Machines . Noting that the second sentence of Article  2.4.2 
sets out an exceptional W -T methodology , which is designed to unmask targeted dumping, the 
United  States  asserts that if zeroing is prohibited under the W -T methodology , this  methodology  
would no longer be exceptional, or provide the mean s to unmask tar geted dumping.131 The 
United  States ' assertion is based on its view that because the W -T methodology  is an 
exceptional  methodology , its use should result in a  dumping margin that is systematically different 
from the dumping margin determined under the "norma l" W-W or T -T methodolog y.132 However, if 
zeroing is prohibited under the W -T methodology , this methodology  per the United  States  will "as a 
mathematical certainty, in every case " yield a dumping margin that is identical to the dumping 
margin determined under the W -W methodology .133 In particular, t he United  States  submits  that if 
zeroing is prohibited under the W -T methodology , there will be mathematical equivalence between 
the dumping margin determined under the W -W methodology , the W -T methodo logy, and a 
mixed  methodology  wherein the W -T methodology  is applied to a subset of export transactions and 
the W -W methodology  is applied to the remaining export transactions.134 Such type of mathematical 
equivalence  according to the United  States  will rend er the second sentence of Article  2.4.2 inutile .135 
Canada, however, disputes the United  States ' mathematical equivalence arguments on the grounds 
set out in paragraph  7.76 below.  
7.73.   In addition to disagreeing on whether zeroing is permissible under the second sentence of 
Article  2.4.2, the parties also disagree on whether the dumping margin determined under the 
W-W methodology  provided in the first sentence of Article  2.4.2, and that determined pursuant to  
the second sentence of Article  2.4.2, will be mathematically equivalent in every case if zeroing is 
prohibited under the W -T methodology . We must ascertain whether  the dumping margin determined 
under the W -W methodology  provided in the first sentence of Article  2.4.2 will be mathematically 
equivalent "in every case" to the dumping margin determined pursuant to  the second sentence of 
Article  2.4.2.136 If we find that such type of mathematical equivalence arises in every case, and not 
just in a specific set of circumstances, we will consider the United  States ' mathematical equivalence 
                                                
125 Appellate  Body Reports, US – Washing Machines , paras.  5.129 -5.130; US – 
Anti-Dumping  Methodologies (China) , para.  5.108.  
126 Appellate  Body Report, US – Washing Machines , paras.  5.106 and 5.117.  
127 Appellate  Body Report, US – Washing Machines , para.  5.114.  
128 Appellate  Body Report, US – Washing Machines , para.  5.114.  
129 Appellate  Body Report, US – Washing Machines , para.  5.155.  
130 Appellate  Body Report, US – Washing Machines , para.  5.109.   
131 United  States'  first written submission, paras.  11 and 115.  
132 United  States'  first written submission,  paras.  114-115. 
133 United  States'  first written submission, para.  121. (emphasis added)  
134 United  States'  first written submission, fn  177; response to Panel question after the second meeting 
of the Panel No.  2(a), paras.  13-31. 
135 United  States'  first written submission, paras.  5 and 159.  
136 The United  States requests us to make factual findings confirming that dumping margins calculated 
under the W -W and W -T methodologies will be mathematically equivalent if zeroing is considered im permissible 
under the W -T methodology. (United  States'  first written submission, para.  160; second written submission, 
para. 74). 
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  arguments as part of our assessment o f whether zeroing is permissible  under the 
W-T methodology .137 
7.2.1.3.2.1   The assumptions underlying the United  States ' mathematical  equivalence 
argument  
7.74.   The United  States , as noted above,  asserts that the dumping margin determined under the 
W-W methodology  will be mathematically equivalent in every case to a dumping margin that is 
determined under138: 
a. the W -T methodology , wherein this  methodology  is applied to all export transactions of a 
foreign producer  or exporter ; or  
b. a mixed  methodology , wherein the W -T methodology  is applied to a subset of export  
transactions of that foreign producer or exporter and the W -W methodology  is applied to 
the remaining export transactions.  
7.75.   Canada does not make a formal claim challenging the application of the W -T methodology  to 
all export transactions, instead of only pattern transactions. However, in rebutting the  
United  States ' mathematical equivalence arguments, Canada asserts, relying on the Appellate  Body 
report in US – Washing Machines , as follows:  
a. The second sentence o f Article  2.4.2 does not permit an investigating authority to apply 
the W -T methodology  to all export transactions. Instead, this  methodology  must be limited 
to pattern transactions.139  
b. The Anti-Dumping Agreement  does not permit the use of a mixed  methodolo gy wherein 
the W -T methodology  is applied to pattern transactions and the W -W (or T -T) methodology  
is applied to non -pattern transactions.140 Instead, as the Appellate  Body stated  in US – 
Washing Machines , if an investigating authority applies the W -T method ology  after 
meeting the conditions set out in the second sentence, it must apply this  methodology  
only to pattern transactions.141 Non-pattern transactions must be excluded wh en 
calculating the dumped amount. Therefore, neither the W -W nor the T -T methodology  
must be applied to these non-pattern  transactions.  
7.76.   Canada submits  that if the W -T methodology  is applied correctly , consistent with the 
Appellate  Body's interpretation of the second sentence of Article  2.4.2, i.e. if it is applied to pattern 
transactions alone, the resultant dumping margin will not be mathematically equivalent to the 
dumping margin determined under the W -W methodology  (which must be applied to all export 
transactions).142 In addition, while maintaining that the second sentence do es not permit an 
investigating authority to use a mixed  methodology , Canada nonetheless presents calculations 
showing that the dumping margin based on a W -W methodology  will not be mathematically 
equivalent in all cases to a dumping margin based on a mixed  methodology  wherein the 
W-T methodology  is applied to pattern transactions and the W -W methodology  is applied to 
                                                
137 In US – Softwood Lumber V (Article  21.5 – Canada)  the Appellate  Body stated that "[o]ne part of a 
provision setting forth a  methodology is not rendered inutile  simply because, in a specific set of circumstances , 
its application would produce results that are equivalent to those obtained from the applicat ion of a 
comparison  methodology set out in another part of that provision". (Appellate  Body Report, US – Softwood 
Lumber V (Article  21.5 – Canada) , para.  99 (emphasis added)). We agree with the Appellate  Body that the 
second sentence of Article 2.4.2  is not rendered inutile  if the dumping margin determined under the 
W-W methodology and that determined pursuant to the second sentence of Article 2.4.2 are mathematically 
equivalent only "in a specific set of circumstances".  
138 United  States'  first written submi ssion, fn  177; response to Panel question after the second meeting 
of the Panel No.  2(a), para.  5. 
139 Canada's  responses to Panel question after the first meeting of the Panel Nos.  5(a) and (b), 
paras.  12, 14, and 16.  
140 Canada's  response to Panel question a fter the second meeting of the Panel No.  2(c), para.  1. 
141 Canada's  response to Panel question after the first meeting of the Panel No.  5(a), para. 14.  
142 Canada's  responses to Panel question after the first meeting of the Panel Nos.  5(a) and (b), 
paras.  12, 14, and 16.  
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  non-pattern transactions.143 In the calculations, Canada calculates the normal value under the W -W 
and W -T methodologies  on different temporal b ases.144 
7.77.   We note that both parties ' arguments on mathematical equivalence are directly linked to the 
scope of application of the W -T methodology  and to the treatment of non -pattern transactions. Thus, 
in making our findings on mathematical equivalence we find it necessary to set out our 
understanding on how an investigating authority is supposed to make dumping margin calculations 
when the conditions for the use of the W -T me thodology provided in the  second sentence of 
Article  2.4.2  are met . 
Dumping determinations pursuant to the  second sentence of Article  2.4.2  
7.78.   We consider, as past panels and the Appellate  Body have, that the second sentence of 
Article  2.4.2 does not permit a n investigating authority to apply the W -T methodology  to all export 
transactions. Instead, this  methodology  may be applied only to pattern transactions. However, we 
disagree that non -pattern transactions may  (or must)  be excluded when an investigating aut hority 
makes dumping determinations pursuant to the  second sentence. Instead, an investigating authority 
must apply the W -W or the T-T methodology  to those non -pattern transactions. The intermediate 
result calculated by applying the W -T methodology  to patt ern transactions must be aggregated with 
the intermediate result calculated by applying the W -W or the T-T methodology  to the non-pattern 
transactions. The intermediate result based on non -pattern transactions may not be excluded, 
irrespective of whether that result is positive or negative. We have reached these conclusions based 
on the legal analysis set out below.  
Scope of application of the W -T methodology  
7.79.   The United  States  argues that if an investigating authority properly establishes the condi tions 
for applying the W -T methodology , nothing in the Anti -Dumping  Agreement  would preclude it from 
determining the dumping margin  by applying the W -T methodology  to all export transactions.145 
Canada contends that the W -T methodology  may only be applied to  pattern transactions. Our 
interpretation of the text of the second sentence of Article  2.4.2 shows that this sentence does not 
permit  the application of the W -T methodology  to non -pattern transactions.  
7.80.   The second sentence of Article  2.4.2 does not state that in applying the W -T methodology  an 
investigating authority must compare the normal value established on a weighted average basis with 
the prices of all export transactions. Reading the text of this sentence as a whole, taking into account 
in particula r, the explanation clause, shows that this sentence does not envisage the application of 
the W -T methodology  to all export transactions. Instead, this  methodology  must be limited to those 
export transactions that fall within the pattern that the investigat ing authority identifies under the 
pattern clause.  
7.81.   The explanation clause permits an  investigating authority to apply the W -T methodology  only 
when it explains why "such differences" cannot be taken into account appropriately by using  a W-W 
or T-T comparison. "Such differences" refer to the "export prices which differ significantly" and 
therefore form the relevant pattern.146 To comply with t he explanation clause, an investigating 
authority must explain why the "export prices which differ significantly" and form the relevant 
pattern cannot be taken into account appropriately by the use of a W -W or T -T comparison.  The 
explanation clause does no t require an explanation as to why export prices outside the pattern 
cannot be taken into account appropriately using  a W-W or T -T comparison, or simply an explanation 
of the reasons for using the W -T comparison  (with respect to all export transactions) . Indeed, the 
text of the explanation clause, which closely reflects the text of the Dunkel Draft from the Uruguay 
                                                
143 Canada's  response to Panel question after the second meeting of the Panel No.  2(d), para.  4; 
Canada's  dumping margin calculations under W -W and mixed W -T/W-W methodologies, (Exhibit CAN -33). 
144 Canada uses a mixed  methodology wherein it calcu lates the normal value for the W -T methodology 
based on a quarterly period, and the normal value for the W -W methodology based on an annual period. 
(Canada's  dumping margin calculations under W -W and mixed W -T/W-W methodologies, (Exhibit CAN -33)). 
145 United  States'  response to Panel question after the first meeting of the Panel No.  21, para.  74. 
146 Appellate  Body Report,  US – Washing Machines , para.  5.50. We consider that when the pattern 
clause and explanation clause are read together it becomes clear that " such differences" refer to the "pattern 
of export prices which differ significantly" among different purchasers, regions or time periods.  
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  Round of negotiations, differs in this respect from earlier draft texts from the Uruguay Round, such 
as the New Zealand I text, the New Zealand II text , the New Zealand III  text, and the Ramsauer 
text that permitted recourse to the W -T methodology  provided, inter alia , "the authorities [gave] an 
explanation of the reasons for using such a comparison", i.e. the W -T comparison.147 We consider 
that the  agreed text of the second sentence of Article  2.4.2, and specifically the explanation clause 
is worded the way it is, and does not require an explanation with respect to export transactions 
falling outside the pattern because the second sentence does not contemplate the application of the 
W-T methodology  outside the pattern.  
7.82.   If the W -T methodology  was meant to be applied to non -pattern transactions , the need to 
explain why the W -W or T -T comparison could not take into account appropriately such transactions 
would perhaps be even more compelling.  We stated  above  that the pattern identified under the 
pattern clause includes significantly high-priced export sales to purchasers, regions or t ime periods  
that may be masking significantly lower -priced export sales to other purchasers, regions or time 
periods  and those lower -priced export sales, which may be masked. Thus, these export sales form 
part of the  pattern transactions, and not the  non-pattern transactions. In that sense, there is nothing 
abnormal about the non -pattern transactions. Just because such non -pattern transactions coexist 
with pattern transactions does not mean that the non -pattern transactions become abnormal. 
Instead, these a re the sort of export transactions to which an investigating authority would apply a 
normal  methodology in ordinary circumstances.  Therefore, if the second sentence permitted an 
investigating authority to apply the W -T methodology to non -pattern transactio ns the text would 
have required an explanation (perhaps an even more compelling one) why the W -W or the 
T-T methodology could not appropriately take into account such non -pattern transactions. The 
reason it does not require such an explanation is because t he second sentence does not contemplate 
the application of the W -T methodology to non -pattern transactions.148 
7.83.   We recognize, of course, that non -pattern transactions may be above the weighted average 
normal value and that disregarding comparison results base d on them would lead to a higher overall 
dumping margin for the foreign producer or exporter. But we do not consider that the pattern clause 
or any other part of the second sentence of Article 2.4.2 permit s an investigating authority to 
"unmask" non -patter n transactions above the weighted average normal value by applying the 
W-T methodology . Indeed, a foreign producer or exporter may make multiple export transactions 
within the period of investigation. Many of these export transactions may be higher than a weighted 
average normal value, while others may be lower than the weighted average normal value. The 
existence of such a higher -priced transaction is not a problem per se  because if one were to apply 
the W -W methodology such higher -priced and lower -priced export transactions would be averaged 
out without the possibility to disregard any individual high -priced export transaction.149 Similarly, if 
an investigating authority we re to apply the T -T methodology , it would have to consider the real 
values of such high -priced and low -priced transactions, and not disregard comparison results based 
on either of them. Only when such higher -priced export transactions form part of a patter n of export 
prices which not only differ, but "differ significantly" "among different purchasers, regions or time 
periods", is an investigating authority permitted to unmask such higher -priced export sales to certain 
purchasers, regions or time periods tha t may be masking lower -priced export sales to other 
purchasers, regions or time periods. Permitting an investigating authority to "unmask" non -pattern 
transactions would undermine the prohibition on zeroing under the W -W or T -T methodolog y. 
7.84.   Thus, while we disagree with past panels and the Appellate  Body on the nature of the export 
transactions that fall within the relevant pattern, we agree with them that the second sentence of 
Article  2.4.2 does not permit an investigating authority to apply the  W-T method ology  to export 
transactions falling outside the pattern.  Based on the above, we conclude that the second sentence 
                                                
147 Draft working paper on anti -dumping discussed during the Uruguay Round (6 November 1990) 
(New Zealand I); Draft work ing paper on anti -dumping prepared during the Uruguay Round 
(15 November  1990) (New Zealand II); Draft working paper on anti -dumping prepared during the 
Uruguay  Round (23 November 1990) (New Zealand III); and Draft working paper on anti -dumping prepared 
during the Uruguay Round (26 November 1991) (Ramsauer text).  
148 Panel Report, US – Washing Machines , paras.  7.23-7.24. The panel in US – Washing Machines  
expressed similar views, noting that an explanation is required with respect to pattern transactions beca use 
only pattern transactions should be subject to the W -T methodology.  
149 This averaging effect of the W -W methodology would not have been lost on the Uruguay Round 
negotiators, who would have known that higher -priced and lower -priced domestic and export transactions 
would be averaged out under the W -W methodology, and yet chose it as one of the methodologies that an 
investigating authority shall normally use.  WT/DS534/R  
 
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  of Article  2.4.2 does not permit an investigating authority to apply the W -T methodology  to all export 
transactions. Instead, the W -T methodology  may be applied only to pattern transactions.  
Treatment of non -pattern transactions under the second sentence of 
Article  2.4.2  
7.85.   The W -T methodology  may be applied only to pattern transactions. Does this mean that the 
non-pattern transactions must be simply excluded while calculating the total dumped amount 
pursuant to the second sentence of Article  2.4.2 (per the Appellate  Body's methodological appro ach 
in US – Washing Machines )? Or does this mean that an investigating authority must apply either the  
W-W or the T-T methodology  to the non -pattern transactions? If an investigating authority must 
apply either the W -W or the T-T methodology  to the non -pattern transactions, the application of 
these normal  methodologies  would generate an intermediate result based on such non -pattern 
transactions that may be negative or positive. Is an investigating authority permitted to exclude  this 
intermediate result when  it is negative but add it (to the intermediate result based on pattern 
transactions) when it is positive? We must resolve these questions because the overall dumping 
margin determined under the W -W methodology  and that determined pursuant to the  second 
sentence of Article  2.4.2 will not be mathematically equivalent in every case if (a) non -pattern 
transactions are excluded under the W -T methodology150, or (b) non -pattern transactions are 
excluded when the intermediate result based on them  is negative .151 
7.86.   Canada contends that the explicit authorization under the second sentence of Article  2.4.2 to 
focus on pattern transactions  also provides the basis for disregarding non-pattern transactions.152 
Thus, Canada asserts , relying on the Appellate  Body Report in US – Washing Machines , that 
non-pattern transactions must be excluded when the dumping margin is determined under the 
second sentence of Article  2.4.2. But Canada subm its that assuming  Article 2.4.2  permits  the use of 
a mixed  methodology , an investigating authority cannot exclude the intermediate result based on 
non-pattern transactions  when it is negative .153  
7.87.   The United  States  argues that a dumping margin determined pursuant to the second sentence 
of Article  2.4.2 by excluding non -pattern transactions "cannot credibly be called a margin of dumping 
for the 'product as a whole'".154 The United  States  submits that "one of the major flaws" of this 
                                                
150 In rejecting the United  States'  mathematical equivalence arguments in US – Washing Machi nes, the 
Appellate  Body noted that "[c]omparing normal value with 'pattern transactions'  only will not normally yield 
results that are mathematically or substantially equivalent to the results obtained from the application of the 
W-W [ ] methodology to all export transactions". ( Appellate  Body Report, US – Washing Machines , para.  5.163 
(emphasis original)). In addition, the Appellate  Body considered that the mere fact that the application of the 
W-T methodology to pattern transactions may lead to a result t hat is equivalent to the result obtained by 
applying the W -W methodology to pattern transactions is neither relevant nor reads the W -T methodology out 
of the second sentence of Article  2.4.2. (Appellate  Body Report, US – Washing Machines , para.  5.165).  
151 The panel in US – Washing Machines  noted that when the non -pattern transactions are dumped 
(i.e. the intermediate result based on such transactions is positive), aggregating the result of the 
W-W methodology (without zeroing) for non -pattern transactions wi th the result of the W -T methodology 
(without zeroing) for pattern transactions would lead to the same margin of dumping as the application of the 
W-W methodology (without zeroing) to all export transactions. The margin of dumping changes, however, 
when th e non -pattern transactions are not dumped (i.e. the intermediate result based on such transactions is 
negative), and when that amount of negative dumping outside the pattern is systematically disregarded while 
aggregating it with results of the W -T methodo logy. (Panel Report, US – Washing Machines , fn 299). The 
United  States agrees that mathematical equivalence will not arise in this case. (United  States'  response to 
Panel question after the second meeting of the Panel No.  2(b), para.  33). However, the Unit ed States submits 
that this does not solve the problem of mathematical equivalence because the application of the W -W or the 
W-T methodology to the same set of export transactions without zeroing will yield mathematically equivalent 
results. (United  States ' response to Panel question after the second meeting of the Panel No.  2(b), para.  33). 
In our view, the relevant question is whether the overall dumping margin determined under the 
W-W methodology and that determined pursuant to the second sentence of Art icle 2.4.2 are mathematically 
equivalent. If we were to find that Article  2.4.2 permits an investigating authority to (a) apply the 
W-T methodology only to pattern transactions, or (b) exclude the intermediate result based on non -pattern 
transactions when it is negative, we would conclude that the overall dumping margin determined under the 
W-W methodology and that determined pursuant to the second sentence of Article  2.4.2 would not be 
mathematically equivalent in every case.  
152 Canada's  response to Panel q uestion after the first meeting of the Panel No.  15(a), para.  35. 
153 Canada's  response to Panel question after the second meeting of the Panel No.  2(c), paras.  2-3. 
154 United  States'  first written submission, para.  95. 
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  methodological approach is that it requires an investigating authority to disregard evidence of 
dumping from non -pattern transactions.155 With respect to the use of a mixed  methodology  pursuant 
to the second sen tence,  the United  States  submits that the Anti -Dumping  Agreement  does not 
preclude such a  methodology .156 The United  States  also observes  that the panel in US – Washing 
Machines  stated that when the intermediate result based on non -pattern transactions is ne gative , it 
may be excluded  so that negative dumping in respect of non -pattern transactions does not  re-mask 
dumping in the pattern.157 
7.88.   We commence our analysis by noting that both sentences of Article  2.4.2 must be interpreted 
bearing in mind the context pro vided by Article  2.1 of the Anti -Dumping  Agreement  and Article  VI:1 
of the GATT 1994, which define dumping. Article  VI:2 of the GATT defines the margin of dumping 
as the difference between the normal value and the export price, and establishes the link between 
dump ing and margin of dumping.158 The margin of dumping reflects the magnitude of dumping.159 
The Appellate  Body has, as noted above, relied on these provisions as context in concluding that 
dumping and margins of dumping must be determined for the pro duct as a whole. The 
Appellate  Body has stated that the notion that a product is introduced into the commerce of another 
country at less than its normal value, as provided in Article  VI:1 of the GATT 1994, suggests that 
the exporter 's dumping determination  must be based on "the totality of an exporter 's transactions" 
of the subject merchandise over the period of investigation.160  Considering Article 2.1 of the 
Anti-Dumping Agreement and Article VI :1 of the GATT 1994 inform our interpretation of not just the 
first sentence of Article 2.4.2, but also its second sentence, we consider that dumping determinations 
must be based on the totality of an exporter 's transactions even when the conditions for the use of 
the W -T methodology under this second sentence are me t. 
7.89.   Article  2.4.2, on its face, does not create any exceptional rule allowing an investigating 
authority to exclude the totality of an exporter 's transactions or the pricing behaviour outside the 
identified pattern when the conditions set out in the second sentence of Article  2.4.2 are met. Is 
such a rule included by implication? Reading Article  2.4.2 in context and in light of the object and 
purpose of the Anti -Dumping  Agreement  suggests no. Instead, the absence of such a rule makes 
sense.  
7.90.   Let us consider t he following questions . For the purpose of Article  2.1 of the 
Anti-Dumping  Agreement  and Article  VI:1 of the GATT 1994, a product is considered dumped when 
it is introduced into the commerce of another country at less than its normal value. Could 
non-pattern transactions  be priced below normal value? Yes, they could because export transactions 
outside th e pattern may be priced below  the normal value, just as they may be priced above it. Is 
an investigating authority permitted to exclude  the pricing behaviour  outside the pattern  when it 
calculates the overall dumping margin of a foreign producer or exporte r? Nothing in the 
Anti-Dumping  Agreement  would suggest so. Indeed, to properly assess the pricing behaviour of a 
foreign producer  or exporter , and to determine whether it is in fact dumping the product under 
consideration, and if so, by what margin, it is obviously necessary to take into account the prices of 
all the export transactions of that foreign producer or exporter .161 Otherwise, the magnitude of 
dumping, which is reflected in the margin of dumping , may be understated or overstated.  
7.91.   We are cognizant t hat in finding that an investigating authority must exclude non -pattern 
transactions while determining the dumped amount  pursuant to the second sentence  of Article  2.4.2, 
the Appellate  Body stated that this sentence  "says nothing about including transactio ns that are not 
part of the pattern in the comparison process that is required to establish margins of dumping".162 
However, what is relevant is not that the text says nothing about including  transactions that are not 
part of the pattern, but that the text s ays nothing about excluding  transactions that are not part of 
the pattern , when an investigating authority determines the dumping margin for the product as a 
whole . The silence of the text on this matter may be contrasted with other provisions of the 
                                                
155 United  States'  response to Panel ques tion after the first meeting of the Panel No.  14(a), para.  50. 
156 United  States'  response to Panel question after the second meeting of the Panel No.  2(c), para.  35. 
157 United  States'  response to Panel question after the second meeting of the Panel No.  2(c), para. 35 
(referring to Panel Report, US – Washing Machines , para.  7.162).  
158 See, e.g. Appellate  Body Report, US – Zeroing (Japan) , para.  110. 
159 Appellate  Body Report, US – Zeroing (Japan) , para.  110. 
160 Appellate  Body Report, US – Stainless Steel (Mexico) , para. 98. 
161 Appellate  Body Report, US – Zeroing (Japan) , para.  111. 
162 Appellate  Body Report, US – Washing Machines , para.  5.109.  
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  Anti-Dumping  Agreement , including Articles  2.2.1, 2.2.2, and 2.3 of the Anti -Dumping  Agreement , 
which set out specific rules on when an investigating authority may reject certain transactions or 
data.163 The existence of such specific rules in other parts of the Anti -Dumping  Agreement  suggests 
that if the drafters of the Anti -Dumping  Agreement  had intended to allow an investigating authorit y 
to disregard non -pattern transactions, which could well be the m ajority of the export transactions of 
a foreign producer  or exporter , they would have provided rules to this effect.  Therefore, the silence 
of the text in this regard appears deliberate.  
7.92.   Further, while the Appellate  Body took the view that the exclusion of  non-pattern transactions 
ensures that targeted dumping identified in the pattern is not re -masked by comparison results 
based on non -pattern transactions, the purpose of the second sentence of Article  2.4.2 is to unmask 
targeted dumping through the applic ation of the W -T methodology , and not by simply disregarding 
non-pattern transactions .164 Otherwise, the text could have simply stated that an investigating 
authority is permitted to apply the W -W or T -T methodology  to a limited set of export transactions 
that make up the pattern and disregard the non -pattern transactions.165 Instead, we are concerned 
that in requiring an investigating authority to make its dumping determination based on pattern 
transactions alone, the Appellate  Body's approach artificially lim its or increases  the total dumped 
amount, reflected in the numerator, while the denominator reflects the real value of all export 
transactions. Such a determination is not based on a proper evaluation of the evidence on record, 
and thus cannot be a method provided for in the second sentence of Article  2.4.2.  
7.93.   Our understanding of the text is also consistent with  what the Appellate  Body considered the 
object and purpose of the Anti -Dumping  Agreement , which is to allow Members to deal with injurious 
dumping by  allowing them to take anti -dumping measures to counteract injurious dumping and 
imposing disciplines on the use of such anti -dumping measures.166 The 
Appellate  Body's methodological approach of excluding non -pattern transactions frustrates this 
object and purpose of the Anti -Dumping  Agreement  because  it does not allow an investigating 
authority  to calibrate the anti -dumping measures  to respond to  the actual level of injurious dumping, 
as reflect ed in the totality of the pricing behaviour of  a foreign pr oducer  or exporter . 
7.94.   We also disagree that the first sentence of Article  2.4.2 precludes the application of the W -W 
(or T-T) methodology  to non -pattern transactions alone because this  methodology  must be applied 
to all export transactions, and not just a su bset of those transactions, i.e. the non -pattern 
transactions.167 Instead, reading the two sentences of Article  2.4.2 together, and in proper context, 
shows that neither the first sentence nor the second sentence permits an investigating authority to 
simply exclude non -pattern transactions.  
                                                
163 Article  2.3 of the Anti -Dumping  Agreement for instance permits an investigating authority to reject 
the price of an export transaction and construct it instead where "it appears to the authorities concerned that 
the export price is unreliable because of association or a compensatory arrangement between the exporter and 
the importer or a third party". Article  2.2.1 of th e Anti -Dumping  Agreement permits an investigating authority 
to disregard in determining normal value, when certain conditions are met, the sales of the like product in the 
domestic market of the exporting country or the sales to third countries, which are below per unit costs of 
production plus administrative, selling, and general costs. Articles  2.2.2(i) -(iii) of the Anti -Dumping  Agreement 
provide alternative methods that an investigating authority must use when the amounts for administrative, 
selling, and  general costs and for profits cannot be based on actual data pertaining to production and sales in 
the ordinary course of trade of the like product by the foreign producer or exporter under investigation.  
164 The Appellate Body's  view was based on its findi ng that the pattern comprises export prices to 
purchasers, regions or time periods which "differ significantly" because they are significantly lower (and not 
significantly higher) than export prices to other purchasers, regions or time periods. We, for the  reasons set 
out above, disagree with this finding. Therefore, we also disagree with the Appellate Body's  view, which is 
informed by this finding.  
165 The dumping margin obtained by applying the W -T methodology (without zeroing) to pattern 
transactions will be mathematically equivalent to a dumping margin obtained by applying the 
W-W methodology to the same pattern transactions. Thus, we do not see why there would be the need to 
provide for the W -T methodology if the same result could be obtained simply by li miting the W -W methodology 
to pattern transactions.  
166 Appellate  Body Report, US – Washing Machines , para.  5.52. 
167 Canada's  response to Panel question after the second meeting of the Panel No.  2(c), para.  1; 
response to Panel question after the first meeting of the Panel No. 17, para. 38;  and Appellate  Body Report, 
US – Washing Machines , paras.  5.121 -5.122.  
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  7.95.   Take the "normal" W -W methodology  for instance. In setting out this  methodology , the first 
sentence of Article  2.4.2 states that the margins of dumping under this  methodology  shall be based 
on a comparison of a weighted a verage normal value with a weighted average of "prices of all 
comparable  export transactions".168 The second sentence requires an investigating authority  to 
explain why "such differences", i.e. the differences in the pattern  identified by that authority , cannot 
be taken into account appropriately by the use of a W -W or T -T comparison . Once an investigating 
authority provides such an explanation, consistent with the explanation clause, it has proper basis 
to conclude that the universe of "all comparable  export transactions" under the W -W methodology  
excludes those export transactions that fall within the pattern.  
7.96.   In such a situation, the universe of comparable export transactions under the 
W-W methodology  is limited to the non -pattern transacti ons, but it includes all such comparable 
(non-pattern) transactions. Thus, an investigating authority would apply the W -W methodology  to 
all non -pattern transactions. The intermediate result obtained by applying the W -W methodology  
must be aggregated with the intermediate result obtained by applying the W -T methodology  to 
pattern transactions, to determine the overall dumping margin for the product as a whole. The same 
considerations apply when an investigating authority applies the T -T methodology  to the n on-pattern 
transactions.  
7.97.   However, an investigating authority is not permitted to disregard the intermediate result 
obtained by applying the W -W (or T -T) methodology  to non -pattern transactions when the result is 
negative. The requirement to consider "all" comparable export transactions precludes an 
investigating authority from selectively excluding  any comparable export transaction. It also 
precludes an investigating authority from collectively excluding  all such comparable export 
transactions, which would be the case if an investigating authority disregards the comparison result 
based on non -pattern transactions because  it is negative.  
7.98.   While the dumping margin may well be higher if an investigating authority excludes the 
negative intermediate result based o n non -pattern transactions, the second sentence is designed to 
unmask targeted dumping, not ensure a higher dumping margin. Nothing in Article 2.4.2 suggests 
that whenever a pattern is found to exist , the overall dumping margin for the foreign producer or 
exporter shall be  systemically higher than the dumped margin determined under the first sentence 
of Article  2.4.2.169  
7.99.   In sum, we conclude that if the conditions set out in the  second sentence of Article  2.4.2 are 
met, an investigating authority is permitted to apply the W -T methodology  to the pattern 
transaction s, but must apply the W -W or T -T methodology  to the non -pattern transactions. The first 
sentence of Article  2.4.2 does not cease to apply just because an investi gating authority is permitted 
by the second sentence to apply the W -T methodology  to the pattern transactions  that cannot be 
taken into account appropriately under the W -W or T -T methodology . Instead, the W -W or the 
T-T methodology  must be applied to the n on-pattern transactions, which may be taken into account 
appropriately under these normal  methodologies . 
7.100.   The dumping margin determined pursuant to  the second sentence where the 
W-T methodology  is applied to pattern transactions (without zeroing) and the W -W methodology  is 
applied to non -pattern transactions (without zeroing) will in every case  be mathematically equivalent 
to the dumping margin based on the application of the W -W methodology  to all export transactions, 
provided the weighted average normal value s used under the W -W and W -T methodologies  are the 
same. We will consider below whether such type of mathematical equivalence affects the effet utile  
of the second sentence of Article  2.4.2. 
7.2.1.3.2.2   Textual and contextual basis for a prohibition on zeroing under the second 
sentence  
7.101.   We have concluded that the W -T methodology  may be applied only to the pattern 
transactions while a "normal"  methodology  must be applied to the non-pattern transaction s. We 
have also concluded that the pattern transactions include export transactions to purchasers, regions 
                                                
168 Emphasis added.  
169 Other provisions of the Anti -Dumping  Agreement, such as Annex II(7), provide that the results may 
be less favourable in the situations set out therein.  
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  or time periods  for which the export prices are found to "differ significantly" because (a) they are 
significantly higher (and thus may be masking  the lower -priced export  sales) or (b) they are 
significantly lower (and thus may be masked  by higher -priced export  sales). But higher -priced export 
transactions mask lower -priced export transactions only when they are above the normal value.170 
Thus, it is onl y by comparing "[a] normal value established on a weighted average basis" with the 
"prices of individual export transactions" that an investigating authority can ascertain whether the 
high-priced export transactions are indeed masking lower -priced export t ransactions. Once the 
investigating authority applies the W -T methodology  it would be able to identify those export 
transactions that are being masked, and those export transactions that are masking them.  
7.102.   Having  identified the higher -priced export transactions within the pattern that are masking 
lower -priced export transactions in th at pattern, is an investigating authority permitted to unmask 
such higher -priced export transactions by treating their value as zero ? The text of the second 
sentence doe s not explicitly state that an investigating authority is permitted to disregard, by 
treating as zero, those export transactions that are priced above the weighted average normal 
value.171 However, again, the silence of the text on this matter is not disposi tive. Instead, to 
determine whether an investigating authority is permitted to zero such higher -priced export 
transactions, we must interpret the text of the second sentence in context and in light of the function 
of the second sentence of Article  2.4.2.  
7.103.   The second sentence permits an investigating authority to compare a weighted average 
normal value with the prices of "individual" export transactions. Qualification of the term "export 
transactions" by "individual" rather than "all" suggests that the dumpin g margin under the 
W-T methodology  need not be based on the comparison results of all export transactions.172 Instead, 
interpreting the second sentence in light of its function, and taking into account the word "individual", 
which can be defined as "[e]xisti ng as a separate indivisible entity; numerically one; single, as 
distinct from others of the same kind; particular" or "single; separate"173, suggests that an 
investigating authority may distinguish those individual export transactions that mask  other export  
transactions from those individual export transactions that are being masked . It follows that the 
authority may treat these individual transactions differently when making its dumping 
determinations under the W -T methodology . In particular, having identif ied through the application 
of the W -T methodology  the individual export transactions that mask other export transactions, and 
those individual export transactions that are being masked, an investigating authority is not required 
to re-mask the individual export transactions above the weighted average normal value  but may 
instead treat them as zero.  
7.104.   Our view is supported by contextual elements. The W -T methodology  is distinct from the 
"normal"  methodologies  provided in the first sentence of Article  2.4.2. I t is an exception, and unlike 
the two normal  methodologies , its function is to unmask targeted dumping. Thus, unlike the W -W 
and T -T methodologies , which as noted in paragraph 7.19 above, fulfil the same function and are 
meant to give systemically similar results, the W -T methodology  fulfils a different function, and is 
                                                
170 Canada states that in the broadest sense of the term "mask", higher -priced sales to a particu lar 
purchaser, region or time period may mask lower -priced sales to others within the same category regardless of 
their relationship with normal value. (Canada's  response to Panel question after the second meeting of the 
Panel No.  6, para.  12). Canada prov ides no explanation in support of this statement. In any case, we disagree 
with this statement for we do not see how higher -priced export sales would mask lower -priced sales when, for 
instance, both are above normal value. Thus, whether or not higher -priced sales are actually masking 
lower -priced sales can only be ascertained through the application of a  methodology that takes into account 
the difference between the export price and normal value.  
171 In US – Washing Machines , the Appellate Body relied on the reference to "prices of individual export 
transactions" in the plural, which it noted was not qualified by any reference to normal value, to support its 
view that zeroing was impermissible under the second sentence of Article 2.4.2. (Appellate Body Report,  US – 
Washing Machines , para. 5.154). However, we do not find the use of the plural form in the second sentence of 
Article 2.4.2 to suggest that zeroing is impermissible under this sentence. Instead, the phrase "a normal value 
established on a weighted ave rage basis may be compared to prices of individual export transactions" is a 
description of the W -T methodology, which permits an investigating authority to compare a weighted average 
normal value with the prices of multiple export transactions.  
172 This vie w accords with that of the dissenting Member in US – Washing Machines  who noted that the 
second sentence of Article  2.4.2 puts emphasis on the selection of individual export transactions. 
(Appellate  Body Report, US – Washing Machines , para.  5.201).  
173 Appel late Body Report, US – Washing Machines , para.  5.49 (quoting the definitions of "individual" in 
Oxford Dictionaries online).  
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  not meant to give results that are systemically simi lar to that obtained under either the W -W 
methodology or the T-T methodolog y. 
7.105.   However, if one of the two normal  methodologies , i.e. the W -W methodology , systemically 
and in every case gives a result that is mathematically equivalent to the dumping margin d etermined 
pursuant to the  second sentence of Article  2.4.2, this would suggest that the W -T methodology  is 
unable to fulfil its function. We  consider such type of mathematical equivalence to be a symptom of 
an underlying problem, which is the inability of the W -T methodology  to unmask targeted dumping. 
Certain adjustments to the examined data may well break  mathematical equivalence in some cases. 
For example, as Canada notes, if in using a mixed W -W and W -T methodolog y an investigating 
authority changes the  temporal bases of the normal value used under the W -W and 
W-T methodologies  respectively, the resultant overall dumping margin may be different from that 
calculated by applying the W -W methodology  to all export transactions.174 But Canada (or any third 
party) does not assert, and we do not consider, that the Anti -Dumping  Agreement  requires an 
investigating authority to change the normal value in this manner.175 More to the point, we do not 
see, and Canada does not show, how  such a  change in the temporal basis for normal value 
calculation s would allow an investigating authority to unmask targeted dumping. Thus, while 
adjustments of these types may well break mathematical equivalence, such type of adjustments 
would only make the symp tom, rather than the underlying problem, disappear.  
7.106.   Considering the raison d'être  of the W -T methodology  is to unmask targeted dumping, the 
inability of this  methodology  to do so will render this  methodology  inutile . We recall that an 
interpreter is not fr ee to adopt a reading that would result in reducing whole clauses or paragraphs 
of a treaty to redundancy or inutility.176 Therefore, contextual considerations also support our view 
that the second sentence of Article 2.4.2 does not prohibit zeroing u nder th e W-T methodology . 
Based on the above, we find that an investigating authority is permitted to use zeroing while applying 
the W -T methodology to the pattern transactions.177  
7.107.   We are aware that our conclusion s in this Report  differ from th ose of the panel and  the 
Appellate  Body in US – Washing Machines  as well as the panel in US – Anti-Dumping  Methodologies 
(China) .178 This is the result of our objective assessment of the facts of this case, and the applicability 
of, and conformity with, the relevant covered agreements . We have carefully considered these 
reports of the panel s and the Appellate  Body, and found convincing or cogent reasons to arrive at 
conclusions different from those  of the Appellate  Body in US – Washing Machines  as well as the 
panels in US – Washing Machines  and US – Anti-Dumping  Methodologies (China) .179 
7.2.1.3.2.3   Conclusion  
7.108.   Based on the foregoing, we find that Canada has failed to establish that the USDOC acted 
inconsistently with the second sentence  of Article  2.4.2 by  using zeroing under the W -T methodology  
in the underlying investigation . 
                                                
174 See, e.g. Canada's  response to Panel question after the second meeting of the Panel No.  2(d), 
para. 4. 
175 Panel Report, US – Washi ng Machines , para.  7.165. The panel stated that there was no textual basis 
to conclude that the "normal value established on a weighted average basis", as referred in the second 
sentence of Article  2.4.2, is different from the "weighted average normal valu e", as referred in the first 
sentence of Article  2.4.2.  
176 Appellate  Body Report, US – Gasoline , DSR 1996:I, p.  21. 
177 Considering we have concluded that the second sentence of Article 2.4.2 does not require an 
investigating authority to re -mask the individu al export transactions in the pattern that are above the weighted 
average normal value, we do not consider that by using zeroing under the second sentence of Article 2.4.2 an 
investigating authority fails to make its dumping determinations based on the tot ality of an exporter's  or 
foreign producer's  export transactions. Instead, having considered the prices of all the export transactions of 
that foreign producer or exporter, an investigating authority is permitted to exclude, by treating as zero, those 
individual export transactions in the pattern that are above the weighted average normal value and thus 
masking the prices of other export transactions.  
178 See also paras. 7.62 and  7.88-7.99 above.  
179 See, e.g. Appellate Body Report, US – Stainless Steel (Mexico) , para. 160.  
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  7.2.2   Zeroing claims under Article  2.4 of the Anti -Dumping  Agreement  
7.109.   Article  2.4 of the Anti -Dumping  Agreement  requires "[a] fair comparison  … between the 
export price and the normal value". Canada contends that the use of zeroing under the second 
sentence of Article  2.4.2 is inconsistent with the "fair compariso n" obligation because (a) zeroing 
inflates the dumping margin generated under the W -T methodology ; and (b) zeroing ignores the 
actual export price of a transaction made above normal value and instead deems that the export 
price is equal to the normal value .180 The United  States  notes that the text of Article  2.4 of the 
Anti-Dumping  Agreement  says nothing about whether zeroing is fair or unfair.181 The United  States  
also asserts that the Appellate  Body has found zeroing to be unfair and inconsistent with Article  2.4 
in previous disputes only when it has found zeroing to be inconsistent with other provisions of the 
Anti-Dumping  Agreement .182 
7.110.   We recall  that in US – Washing Machines  the Appellate  Body found zeroing under the 
W-T methodology  to be inconsistent with Article 2.4 of the Anti -Dumping  Agreement . The 
Appellate  Body found that setting the value of intermediate negative comparison results to zero 
under the W -T methodology  has the effect of inflating the magnitude of dumping, thus resulting in 
higher margins of dumping, while also making a positive determination of dumping more likely when 
the export prices above normal value exceed those that are below normal value.183 However, the 
Appellate  Body's finding under Article  2.4 was based on its finding that zeroing is prohibited under 
the second sentence of Article  2.4.2. For instance, in making its findings under Article  2.4 it noted 
that by setting to zero "individual export transactions" that yield a negative comparison re sult, an 
investigating authority fails to compare "all" comparable export transactions that form the applicable 
"'universe of export transactions ' [i.e. pattern transactions] as required under the second sentence 
of Article  2.4.2, thus failing to make a 'f air comparison ' within the meaning of Article  2.4".184 It also 
recalled while making its findings under Article  2.4 its earlier finding that zeroing under the second 
sentence of Article  2.4.2 is not required to identify and address targeted dumping.185 Therefo re, we 
consider the Appellate  Body's findings under Article  2.4 to be dependent on its findings that zeroing 
is impermissible under the second sentence of Article  2.4.2.  
7.111.   We have already found that the second sentence of Article  2.4.2 permits zeroing under  the 
W-T methodology  to the extent this  methodology  is limited to pattern transactions. Thus, the 
Appellate  Body's findings in US – Washing Machines  offer us limited guidance on whether we should 
find zeroing under the W -T methodology  to be inconsistent wi th Article  2.4. Instead, we must 
consider whether zeroing under the second sentence of Article  2.4.2 could be impermissible under 
Article  2.4 even if it is permissible under the second sentence of Article  2.4.2.  Canada has not 
provided any independent basi s for us to find that zeroing under the W -T methodology  is inconsistent 
with the "fair comparison" obligation of Article  2.4 even if zeroing under this methodology is  
consistent with the second sentence of Article  2.4.2.186  
7.112.   Based on the foregoing , we find that Canada has not established that the USDOC acted 
inconsistently with Article  2.4 of the Anti -Dumping  Agreement  in the underlying investigation 
because it used zeroing under the W -T methodology  provided in the second sentence of Article  2.4.2 
of the Anti -Dumping  Agreement . 
7.2.3   Consequential claims under Articles  1 and 2.1 of the Anti -Dumping  Agreement  as 
well as Articles  VI:1 and VI :2 of the GATT 1994  
7.113.   Canada claims  that as a consequence of the violations under the second sentence of 
Article  2.4.2 a nd Article  2.4 of the Anti -Dumping  Agreement , the USDOC acted inconsistently with 
                                                
180 Canada's  first written submission, paras.  60-61. 
181 United  States'  first written submission, para.  193. 
182 United  States'  first written submission, para.  206. 
183 Appellate  Body Report, US – Washing Machines , para.  5.180.  
184 Appellate  Body Report, US – Washi ng Machines , para.  5.180.  
185 Appellate  Body Report, US – Washing Machines , para.  5.181.  
186 See, e.g. Canada's  first written submission, paras.  58-63. Canada relies on past reports of the 
Appellate  Body that found zeroing to be impermissible under Article  2.4 only after finding that zeroing was 
inconsistent with other provisions of the Anti -Dumping  Agreement. Thus, these reports are not directly relevant 
in assessing whether Article  2.4 prohibits the use of zeroing under the W -T methodology, even if zeroing is  
permissible under the second sentence of Article 2.4.2.  
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  Articles  1 and 2.1 of the Anti -Dumping  Agreement  as well as Articles  VI:1 and VI :2 of the GATT  1994 
in the underlying investigation. We have concluded that the USDOC acted in consistently with the 
second sentence of Article  2.4.2 in the underlying investigation because it identified a single pattern 
that aggregates differences in export prices across purchasers, regions and time periods, which the 
second sentence does not permi t. We have rejected other aspects of Canada 's claims under the 
second sentence of Article  2.4.2 as well as its claim under Article  2.4. 
7.114.   We consider our findings under the second sentence of Article  2.4.2 and under Article  2.4 to 
be sufficient to resolve this dispute. Therefore, we  do not find it necessary to address 
Canada 's claims under Articles  1 and 2.1 of the Anti -Dumping  Agreement  as well as Articles  VI:1 
and VI :2 of the GATT 1994.187  
7.115.   Based on the foregoing , we exercise  judicial economy on Canada 's claims under Articles  1 
and 2.1 of the Anti -Dumping  Agreement  as well as Articles  VI:1 and VI :2 of the GATT 1994.  
8  CONCLUSIONS AND RECO MMENDATION  
8.1.  For the reasons set forth in this Report, we find that in applying the DPM in the underlying 
investigation the United States acted inconsistently with : 
a. Article 2.4.2 of the Anti -Dumping Agreement by aggregating differences in export prices 
across unrelated categories, i.e. purchasers, regions and time periods to identify a single 
pattern of export prices which differed significantly among different purchasers, regions 
and time periods.  
8.2.  For the reasons set forth in this Report, we find that Canada has failed to demonstrate that in 
applying the DPM in the underlying investigation the Unit ed States acted inconsistently with:  
a. Article 2.4.2 of the Anti -Dumping Agreement by including, in the pattern, export 
transactions to those purchasers, regions or time periods whose prices differed 
significantly because they were significantly higher relat ive to export prices to other 
purchasers, regions or time periods.  
b. Article 2.4.2 of the Anti -Dumping Agreement by using zeroing under the W -T methodology 
provided in the second sentence of Article 2.4.2.  
c. Article 2.4 of the Anti -Dumping Agreement by using zeroing under the W -T methodology 
provided in the second sentence of Article 2.4.2.  
8.3.  For the reasons set forth in this Report, we do not need to address, and exercise judicial 
economy on, Canada 's consequential claims under  Articles  1 and 2.1 of the 
Anti-Dumping  Agreement as well as Articles  VI:1 and VI :2 of the GATT 1994 . 
8.4.  Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie  to constitute a case of 
nullification or impairment. We conclude that, to the extent the measure at issue is inconsistent with 
the Anti -Dumping Agreement, it has  nullified or impaired benefits accruing to Canada  under this 
agreement.  
8.5.  Pursuant to Article 19.1 of the DSU, we re commend that the United States  bring its measure 
into conformity with its obligations under the Anti -Dumping Agreement.  
__________  
                                                
187 Panels are not required to address each and every claim. Instead, a panel is only required to address 
those claims that are necessary to resolve a dispute. (Appellate  Body Report, Argentina – Impor t Measures , 
para. 5.190).