WT/DS516/1  
G/L/1170  
G/ADP/D116/1  
 
15 December 2016  
(16-6846) Page: 1/3 
  Original: English  
 
 EUROPEAN UNION – MEASURES RELATED TO PRICE COMPARISON MET HODOLOGIES   
REQUEST FOR CONSULTA TIONS BY CHINA  
The following communication, dated 12 December 2016 , from the delegation of China  to the 
delegation of the European Union  and to the Chairperson of the Dispute Settlement Body, is 
circulated in accordance with Article  4.4 of the DSU.  
 
_______________  
 
 
1. My authorities have instructed me to request the European Union ("the EU") to enter into 
consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994 
("GATT 1994"), and Article 17 of the Agreement on Implementation of Article VI of the GATT 1994 
("Anti-Dumping Agreement "). 
2. This re quest identifies the measures at issue in Section A, and indicates the legal basis for 
China's complaint in Section B.  
A. Measures at issue  
3. The measures at issue in this request include Articles 2(1) to 2(7) of Regulation (EU) 
2016/1036 ("the Basic Regulation ").1 Articles 2(1) to 2(6) of the Basic Regulation set out rules in 
EU law for determining normal value in anti -dumping proceedings. Article 2(7) of the Basic 
Regulation sets out a different regime that applies to the calculation of normal value for import s 
from so -called "non -market economy" countries.  Article 2(7)(b), which expressly names China, 
provides that the rules set forth in Articles 2(1) to 2(6) for calculating normal value for a specific 
producer shall apply only if that producer is able to sub stantiate that so -called "market economy" 
conditions prevail in respect of the manufacture and sale by that producer of the like product 
concerned. To do so, the producer must establish that it meets the criteria set out in 
Article  2(7)(c). Article 2(7)(b)  provides that, for all producers unable to make this showing, the 
normal value calculation rules set forth in Article 2(7)(a) shall apply. Under Article 2(7)(a), normal 
value shall be determined on the basis of prices or constructed value in a surrogate 
"market -economy" third country.  
B. Legal basis of the complaint  
4. When China acceded to the WTO, China and other WTO Members agreed that, for a 
transitional period of fifteen years, China -specific treaty provisions would apply to the 
determination by other Membe rs of certain elements of "price comparability" in anti -dumping 
proceedings involving Chinese imports.  Specifically, under paragraph 15(a)(ii) of the Protocol on 
the Accession of the People 's Republic of China ("Accession Protocol "), importing WTO Members  
were, subject to certain conditions, exceptionally permitted to use a methodology not based on a 
strict comparison with domestic prices or costs in China. Paragraph 15(d) provides that "[i]n any 
                                                
1 The full title of the Basic Regulation is:  Regulation (EU) 2016/1036 of the European Parliament and of 
the Council of 8 June 2016 on protection against dumped imports from countries not members of the European 
Union, publi shed in the Official Journal of the European Union, L 176, 30.6.2016, p. 21.  The Basic Regulation 
was preceded by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped 
imports from countries not members of the European Comm unity, published in the Official Journal of the 
European Union, L 343, 22.12.2009, p. 51.  WT/DS516/1 • G/L/1170 • G/ADP/D116/1  
 
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  event, the provisions of subparagraph (a)(ii) shall expire 1 5 years after the date of accession ", 
namely , on 11 December 2016.  Accordingly, from that date, the WTO rules that govern the 
determination by WTO Members of all elements of price comparability now apply to imports from 
China.   However, the European Union  continues to determine normal value on the basis of a 
special calculation methodology unless the producer establishes that it meets certain criteria, as 
set forth below.   Thus, the European Union is in violation of its international obligations.  
5. Specifica lly, following the expiry of paragraph 15(a)(ii), China i s concerned that: 
(i) Articles  2(1) to 2(7) of the Basic Regulation are inconsistent with Article I:1 of the GATT 1994, 
and (ii) Article 2(7) is inconsistent with Articles 2.1 and 2.2 of the Anti-Dumping Agreement , 
Article VI:1 of the GATT 1994, and the second paragraph of the Ad Note to Article VI:1 of the 
GATT 1994 (the "Ad Note" ). 
6. Articles 2(1) to 2(7) of the Basic Regulation provide for differential treatment of Chinese 
imports, as compared to imp orts from other WTO Members.  Specifically, in contrast to the 
treatment afforded imports from other WTO Members, Chinese imports are denied the advantage 
of the rules set forth in Articles 2(1) to 2(6) regarding the determination of normal value, and 
instead face the less favourable rules set forth in Article 2(7), unless Chinese producers satisfy a 
requirement in Article 2(7)(b) to demonstrate that "market economy" conditions prevail. As a 
result, the European Union denies Chinese imports an advantage tha t is enjoyed by imports from 
other WTO Members, contrary to Article I:1 of the GATT 1994. This differential treatment ceased 
to be justifiable when paragraph 15(a)(ii) of China 's Accession Protocol  expired on 
11 December  2016.  
7. Article VI:1 of the GATT 1994  provides that normal value is normally to be determined 
based on domestic prices of the like product or, in the absence of such prices, prices for export to 
a third country or prices constructed from the costs of production in the country of origin.  
Likewise, Article 2.1 of the Anti-Dumping Agreement  provides that normal value is normally the 
price for the like product when sold, in the ordinary course of trade, in the home market of the 
producer/exporter; Article 2.2 of the Agreement  provides for departu re from home market prices 
in certain circumstances.  Articles 2.1 and 2.2 of the Anti-Dumping Agreement  and Article VI:1 of 
the GATT 1994 prohibit the determination of normal value on the basis of third country prices 
and/or costs; doing so is inconsisten t with the obligation under these provisions to, inter alia , 
determine normal value on the basis of domestic prices or on the basis of a producer 's costs of 
production in the country of origin.  Article 2(7) of the Basic Regulation is inconsistent  with 
Articles 2.1 and 2.2 of the Anti-Dumping Agreement  and Article VI:1 of the GATT 1994 because, 
when a producer does not satisfy the requirement in Article 2(7)(b) to demonstrate that "market 
economy" conditions prevail pursuant to the criteria in Article 2(7)( c), Article 2(7) improperly 
requires the EU investigating authority to reject Chinese market prices and costs when calculating 
normal value in favour of third country prices and costs.  
8. The only exception to the rule in Articles 2.1 and 2.2 of the Anti-Dump ing Agreement  and 
Article VI:1 of the GATT 1994 is found in the Ad Note, which permits a Member to depart from a 
strict comparison with domestic prices if the Member satisfies the two conditions set forth in the 
Ad Note.  Article 2(7) of the Basic Regulati on, however, requires the European Union, in defined 
circumstances, to depart from such a strict comparison without satisfying the relevant conditions 
in the Ad Note.  In particular, Article 2(7) does so when a producer does not satisfy the 
requirement in Article 2(7)(b) to demonstrate that "market economy" conditions prevail.  
9. The treatment afforded Chinese imports under Article 2(7) of the Basic Regulation ceased to 
be justifiable when paragraph 15(a)(ii) of China 's Accession Protocol  expired on 11 Decembe r 2016  
and is inconsistent with the  WTO covered agreement s.   
10. As a result of the foregoing, the measures at issue appear to nullify or impair benefits 
accruing to China directly or indirectly under the cited agreements.  
11. This request for consultations also concerns any modification, replacement or amendment to 
the measure identified above, and any closely connected, subsequent measures.2 
                                                
2 At present, China is aware of two legislative processes implicating potential changes to relevant 
provisions of the Basic Regulation: (i) the legislative process in itiated by the European Commission 's Proposal WT/DS516/1 • G/L/1170 • G/ADP/D116/1  
 
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  12. China looks forward to receiving a reply from the European Union to this request, and to 
fixing a mutually convenient date  for consultations.  
__________  
                                                                                                                                                  
for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2016/1036 on 
protection against dumped imports from countries not members of the European Union, dated 9 November 
2016 (CO M(2016) 721 final); and, (ii) the legislative process initiated by the European Commission 's Proposal 
for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 
1225/2009 on protection against dumped imports from cou ntries not members of the European Community 
and Council Regulation (EC) No 597/2009 on protection against subsidised imports from countries not 
members of the European Community (COM(2013) 192 final). This request includes any changes made to the 
Basic Re gulation pursuant to the legislative processes initiated by these proposals.