WT/DS471/R/Add.1  
 
19 October 2016 
(16-5650) Page: 1/84 
  Original: English  
 
  UNITED STATES – CERTAIN METHODOLOGIE S AND THEIR APPLICAT ION 
TO ANTI -DUMPING PROCEEDINGS INVOLVING CHINA  
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to C to the Report of the Panel to be found in document  
WT/DS471/R . 
 
 
_______________  
 
 WT/DS471/R/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex A -2 Additional Working Procedures of the Panel concerning Business Confidential 
Information  A-7 
 
ANNEX B  
ARGUMENTS OF THE PAR TIES 
CHINA 
Contents  Page  
Annex  B-1 First part of the executive summary of the arguments of China  B-2 
Annex  B-2 Second part of the executive summary of the arguments of China  B-11 
 
UNITED STATES  
Contents  Page  
Annex  B-3 First part of the executive summary of the  arguments of the United  States  B-20 
Annex  B-4 Second part of the executive summary of the arguments of the United  States  B-32 
 
ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  C-1 Executive summary of the arguments of Brazil  C-2 
Annex  C-2 Executive summary of the arguments of Canada  C-6 
Annex  C-3 Executive summary of the arguments of the European Union  C-8 
Annex  C-4 Executive summary of the arguments of Japan C-12 
Annex  C-5 Executive summary of the arguments of Korea C-17 
Annex  C-6 Execu tive summary of the arguments of Norway  C-22 
Annex  C-7 Executive summary of the written  submission of  Turkey  C-25 
Annex  C-8 Executive summary of the arguments of Viet Nam  C-28 
 
 
 WT/DS47 1/R/Add.1  
 
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  ANNEX  A 
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex A -2 Additional Working Procedures of the Panel concerning Business Confidential 
Information  A-7 
 WT/DS471/R/Add.1  
 
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  ANNEX A -1 
WORKING PROCEDURES O F THE PANEL  
Adopted on 11 February 2015  
 
 
1. In its proceedings, the Panel shall follow the rel evant provisions of the Understanding on 
Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following 
Working Procedures shall apply.  
General  
 
2. The deliberations of the Panel and the documents submitted to it shall be kept con fidential. 
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter 
"party") from disclosing statements of its own positions to the public. Members shall treat as 
confidential information submitted to the Panel by another Member which the submitting Member 
has designated as confidential. Where a party submits a confidential version of its written 
submissions to the Panel, it shall also,  upon request of a Member, provide a non -confidential 
summary of the information contained in its submissions that could be disclosed to the public.  
3. The parties shall treat business confidential information in accordance with the procedures 
set forth in the Additional Working Procedures of the Panel Concerning Business Confidential 
Information.  
4. The Panel shall meet in closed session. The parties, and Members having notified their 
interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU  
(hereafter "third parties"), shall be present at the meetings only when invited by the Panel to 
appear before it.  
5. Each party and third party has the right to determine the composition of its own delegation  
when meeting with the Panel. Each party and third party shall have the responsibility for all 
members of its ow n delegation and shall ensure that each member of such delegation acts in 
accordance with the DSU and these Working Procedures, particularly with regard to the 
confidentiality of the proceedings.  
Submissions  
 
6. Before the first substantive meeting of the Pa nel with the parties, each party shall submit a 
written submission in which its presents the facts of the case and its arguments, in accordance 
with the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the 
second substant ive meeting of the Panel, a written rebuttal, in accordance with the timetable 
adopted by the Panel.  
7. A party shall submit any request for a preliminary ruling at the earliest possible opportunity 
and in any event no later than in its first written submiss ion to the Panel. If China requests such a 
ruling, the United States shall submit its response to the request in its first written submission. If 
the United States requests such a ruling, China shall submit its response to the request prior to 
the first su bstantive meeting of the Panel, at a time to be determined by the Panel in light of the 
request. Exceptions to this procedure shall be granted upon a showing of good cause.  
8. Each party shall submit all factual evidence to the Panel no later than during the first 
substantive meeting, except with respect to evidence necessary for purposes of rebuttal, answers 
to questions or comments on answers provided by the other party. Exceptions to this procedure 
shall be granted upon a showing of good cause. Where such e xception has been granted, the Panel 
shall accord the other party a period of time for comment, as appropriate, on any new factual 
evidence submitted after the first substantive meeting.   WT/DS47 1/R/Add.1  
 
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  9. Where the  original language of exhibits is not a WTO working languag e, the submitting party 
or third party shall submit a translation into the WTO working language of the submission  at the 
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits 
upon a showing of good cause. Any obj ection as to the accuracy of a translation should be raised 
promptly  in writing, preferably no later than the next filing or meeting (whichever occurs earlier) 
following the submission which contains the translation in question. Any objection shall be 
accompanied by a detailed explanation of the grounds of objection and an alternative translation.  
10. In order to facilitate the work of the Panel, each party and third party  is invited to make its 
subm issions in accordance with the WTO Editorial G uide for Panel  Submissions attached as 
Annex  1, to the extent that it is practical to do so .  
11. To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout  the 
course of the dispute. For example, exhibits submitted by China could be numbered CHN -1, 
CHN-2, etc. If the last exhibit in connection with the first submission was numbered CHN -5, the 
first exhibit of the next submission thus would be numbered CHN -6. 
Questions  
 
12. The Panel may at any time pose questions to the parties and third parties, orally or in 
writing, including prior to each substantive meeting.   
Substantive meetings  
 
13. Each party shall provide to the Panel the list of members of its delegation i n advance of each 
meeting with the Panel and no later than 5.00  p.m. the previous working day.  
14. The first substantive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall invite China to make an opening statement to present its case first. 
Subsequently, the Panel shall invite the United States to present its point of view. Before 
each party takes the floor, it shall provide the Panel and other participants at the 
meeting with a provisional written version of its statement. Ea ch party shall make 
available to the Panel and the other party the final version of its opening statement as 
well a s its closing statement, if any, preferably at the end of the meeting, and in any 
event no later than 5.00  p.m. on the first working day foll owing the meeting.  
b. After the conclusion of the statements, the Panel shall give each party the opportunity to 
ask each other questions or make comments, through the Panel. Each party shall then 
have an opportunity to answer these questions orally. Each par ty shall send in writing, 
within a timeframe to be determined by the Panel, any questions to the other party to 
which it wishes to receive a response in writing. Each party shall be invited to respond in 
writing to the other party's written questions withi n a deadline to be determined by the 
Panel.  
c. The Panel may subsequently pose questions to the parties. Each party shall then have an 
opportunity to answer these questions orally. The Panel shall send in writing, within a 
timeframe to be determined by it, an y questions to the parties to which it wishes to 
receive a response in writing. Each party shall be invited to respond in writing to such 
questions within a deadline to be determined by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with China presenting its statement first.  
15. The second substantive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall ask the United States if it wishes to av ail itself of the right to present its 
case first. If so, the Panel shall invite the United States to present its opening statement, 
followed by China. If the United States chooses not to avail itself of that right, the Panel 
shall invite China to present its opening statement first. Before each party takes the ..... WT/DS471/R/Add.1  
 
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  floor, it shall provide the Panel and other participants at the meeting with a provisional 
written version of its statement. Each party shall make available to the Panel and the 
other party the final  version of its opening statement as well a s its closing statement, if 
any, preferably at the end of the meeting, and in any event no later than 5.00  p.m. of 
the first working day following the meeting.  
b. After the conclusion of the statements, the Panel sha ll give each party the opportunity to 
ask each other questions or make comments, through the Panel. Each party shall then 
have an opportunity to answer these questions orally. Each party shall send in writing, 
within a timeframe to be determined by the Pan el, any questions to the other party to 
which it wishes to receive a response in writing. Each party shall be invited to respond in 
writing to the other party's written questions within a deadline to be determined by the 
Panel.  
c. The Panel may subsequently p ose questions to the parties. Each party shall then have an 
opportunity to answer these questions orally. The Panel shall send in writing, within a 
timeframe to be determined by it, any questions to the parties to which it wishes to 
receive a response in w riting. Each party shall be invited to respond in writing to such 
questions within a deadline to be determined by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with the  party that presented its opening statement 
first, presenting its closing statement first.  
Third parties  
 
16. The Panel shall invite each third party to transmit to the Panel a written submission prior to 
the first substantive meeting  of the Panel with the pa rties, in accordance with the timetable 
adopted by the Panel.  
17. Each third party shall also be invited to present its views orally during a session of this first 
substantive meeting, set aside for that purpose. Each third party shall provide to the Panel th e list 
of members of its delegation in advance of this session and no later than 5.00  p.m. the previous 
working day.  
18. The third party session shall be conducted as follows:  
a. All third parties may be present during the entirety of this session.  
b. The Panel sh all first hear the arguments of the third parties in alphabetical order. Third 
parties present at the third party session and intending to present their views orally at 
that session, shall provide the Panel, the parties and other third parties with provisi onal 
written versions of their statements before they take the floor. Third parties shall make 
available to the Panel, the parties and other third parties the final versions of their 
statements, preferably at the end of the session, and in any event no lat er than 
5.00 p.m. of the first working day following the session.  
c. After the third parties have made their statements, the parties may be given the 
opportunity, through the Panel, to ask the third parties questions for clarification on any 
matter raised in  the third parties' submissions or statements. Each party shall send in 
writing, within a timeframe to be determined by the Panel, any questions to a third party 
to which it wishes to receive a response in writing.  
d. The Panel may subsequently pose question s to the third parties. Each third party shall 
then have an opportunity to answer these questions orally. The Panel shall send in 
writing, within a timeframe to be determined by it, any questions to the third parties to 
which it wishes to receive a respons e in writing. Each third party shall be invited to 
respond in writing to such questions within a deadline to be determined by the Panel.  WT/DS47 1/R/Add.1  
 
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  Descriptive part  
 
19. The description of the arguments of the parties and third parties in the descriptive part of 
the Pane l report shall consist  of executive summaries provided by the parties and third parties, 
which shall be annexed  as addenda to the report. These executive summaries shall not in any way 
serve as a substitute for the submissions of the parties and third part ies in the Panel's examination 
of the case.  
20. Each party shall submit executive summaries of the facts and arguments as presented to the 
Panel in its written submissions and oral statements, in accordance with the timetable adopted by 
the Panel . These summa ries may also include a summary of responses to questions . Each such 
executive summary shall not exceed 15 pages. The Panel will not summarize in the descriptive 
part of its report, or annex to its report, the parties' responses to questions.  
21. Each third pa rty shall submit an executive summary of its arguments as presented in its 
written submission and statement in accordance with the timetable adopted by the Panel. This 
summary may also include a summary of responses to questions, where relevant. The execut ive 
summary to be provided by each third party shall not exceed 6  pages.  
Interim review  
 
22. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with t he Panel, in accordance 
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no 
later than at the time the written request for review is submitted.  
23. In the event that no further meeting with the Panel is requested , each party may submit 
written comments on the other party's written request for review, in accordance with the timetable 
adopted by the Panel. Such comments shall be limited to commenting on the other party's written 
request for review.  
24. The interim repo rt, as well as the final report prior to its official circulation, shall be kept 
strictly confidential and shall not be disclosed.  
Service of documents  
 
25. The following procedures regarding service of documents shall apply:  
a. Each party and third party  shall s ubmit all documents to the Panel by filing them with 
the DS  Registry (office No. 2047) .  
b. Each party and third party shall file 7 paper copies of all documents it submits to the 
Panel. However, Exhibits may be filed in 3 CD-ROMs or DVD s and 4 paper copies. The 
DS Registrar shall stamp the documents with the date and time of the filing. The paper 
version shall constitute the official version for the purposes of the  record of the dispute.  
c. Each party and third party shall also provide an electronic copy of all documents it 
submits to the Panel at the same time as the paper versions, preferably in Microsoft 
Word format, either on a CD -ROM, a DVD or as an e -mail attachment. If the electronic 
copy is provided by e -mail, it should be addressed to DSRegistry@wto.org , with a copy 
to Gabrielle.Marceau@wto.org , Muslum.Yilmaz@wto.org  and Sagnik.Sinha@wto.org . 
CD-ROMs or DVDs shall be filed with the DS Registry.  
d. Each party shall serve any document submitted to the Panel directly on the other party. 
Each party shall, in addition, serve on all third parties its written submissions in advance 
of the first substantive meeting with the Panel. Each third party shall serve any 
document submitted to the Panel directly on the parties and all other third parties. Each 
party and third party shall confirm, in writing, that copies have been served as requi red 
at the time it provides each document to the Panel.  WT/DS471/R/Add.1  
 
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  e. Each party and third party  shall file its documents with the DS Registry and serve  copies 
on the other party (and third parties where appropriate) by 5.00  p.m. (Geneva time) on 
the due dates establish ed by the Panel.  A party or third party may submit  its documents 
to another party or third party in electronic  format only,  subject to the recipient party or 
third party's prior written approval and provided that the Panel Secretary  is notified . 
f. The Panel shall provide the parties with an electronic version of the descriptive part, the 
interim report and the final report, as well as of other documents as appropriate. When 
the Panel transmits to the parties or third parties both paper and electronic versions  of a 
document, the paper version shall constitute the official version for the purposes of the 
record of the dispute.  
26. The Panel reserves the right to modify these procedures as necessary, after consultation 
with the parties.  
 
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  ANNEX A -2 
ADDITIONAL WORKIN G PROCEDURES OF THE PANEL CONCERNING  
BUSINESS CONFIDENTIA L INFORMATION  
Adopted on 16 February 2015  
 
 
1. These procedures apply to any business confidential information (BCI) that a party wishes to 
submit to the Panel that was previously treated by  the U.S. De partment of Commerce  as 
confidential or proprietary information protected by Administrative Protective Order  in the course 
of the anti-dumping  duty proceedings relevant to  this dispute . However, these procedures do not 
apply to information that is availabl e in the public domain.  In addition, these procedures do not 
apply to any BCI if the person who provided the information in the course of the relevant  
proceedings agrees in writing to make the information p ublicly available.  
2. The first time that a party su bmits to the Panel BCI , as defined above , from an entity that 
submitted that information in one of the  relevant proceedings , the party shall also provide, with a 
copy to the other party, an authorizing letter from the entity.  That letter shall authorize b oth 
China  and the United States  to submit in this dispute, in accordance with these procedures, any 
confidential information submitted by that entity in the course of those proceedings.  
3. If an entity refuses to grant the authorization letter, a party may br ing the situation to the 
attention of the Panel. The Panel shall consider what steps to take, which may include requesting 
information pursuant to Article 13 of the DSU.  
4. No person may have access to BCI except a member of the Secretariat or the Panel, an 
employee of a party or third party, and an outside advisor for the purposes of this dispute to a 
party or third party.  However, an outside advisor is not permitted access to BCI if that advisor is 
an officer or employee of an enterprise engaged in the pro duction, export, or import of the 
product s that were the subject of the proceedings  relevant to  this dispute.  
5. A party or third party having access to BCI shall treat it as confidential, i.e., shall not 
disclose that information other than to those persons authorized to receive it pursuant to these 
procedures.  Each party and third party shall have responsibility in this regard for its employees as 
well as any outside advisors used for the purposes of this dispute.  BCI obtained under these 
procedures may be  used only for the purpose of providing information and argumentation in this 
dispute and for no other purpose.  
6. The party submitting BCI shall mark the cover and/or first page of the document containing 
BCI, and each page of the document, to indicate the p resence of such information. The specific 
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]].  The 
first page or cover of the document shall state “Contains business confidential information on 
pages xxxxxx”, and eac h page of the document shall contain the notice “Contains Business 
Confidential Information” at the top of the page.  
7. Where a party submits a document containing BCI to the Panel, the other party or any third 
party referring to that BCI in its documents, in cluding written submissions and oral statements, 
shall clearly identify all such information in those documents.  All such documents shall be marked 
as described in paragraph 6.  In the case of an oral statement containing BCI, the party or third 
party mak ing such a statement shall inform the Panel before making it that the statement will 
contain BCI, and the Panel will ensure that only persons authorized to have access to BCI pursuant 
to these procedures are in the room to hear that statement.  
8. The Panel wi ll not disclose BCI, in its report or in any other way, to persons not authorized 
under these procedures to have access to BCI.  The Panel may, however, make statements of 
conclusion drawn from such information.  Before the Panel circulates its final repor t to the WT/DS471/R/Add.1  
 
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  Members, the Panel will give each party an opportunity to review the report to ensure that it does 
not contain any information that the party has designated as BCI.  
9. Submissions containing BCI will be included in the record forwarded to the Appella te Body in 
the event of an appeal of the Panel's Report.  
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  ANNEX B  
ARGUMENTS OF THE PAR TIES 
CHINA  
Contents  Page  
Annex  B-1 First part of the executive summary of the arguments of China  B-2 
Annex  B-2 Second part of the executive summary o f the arguments of China  B-11 
 
UNITED STATES  
Contents  Page  
Annex  B-3 First part of the executive summary of the arguments of the United  States  B-20 
Annex  B-4 Second part of the executive summary of the arguments of the United  States  B-32 
 
 
 WT/DS471/ R/Add.1  
 
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  ANNEX B -1 
FIRST PART OF THE EX ECUTIVE SUMMARY OF T HE ARGUMENTS OF CHIN A 
I. USDOC 's Application of its Targeted Dumping Methodology in Three Original 
Investigations  
A. USDOC failed to comply with the conditions on the use of the exceptional 
W-T comparison methodolog y under Article 2.4.2, second sentence  
1. According to Article 2.4.2, second sentence, the first condition under which a Member may 
depart from the "normal " symmetrical comparison methodologies – i.e., when it may depart from 
using the weighted average -to-weighted average ( "W-W") or transaction -to-transaction ( "T-T") 
comparison methodologies, and instead use the exceptional weighted -average -to-transaction ( "W-
T") comparison methodology – is that there must exist "a pattern of export prices which differ 
significantly among different purchasers, regions or time periods ".  Once a relevant "pattern " has 
been identified, an investigating authority must satisfy the  second  condition, which is to  explain  
why the pattern "cannot be taken into account appropriately " through the application of the 
symmetrical comparison methodologies.  
2. In evaluating an investigating authority 's approach to determining whether these two 
conditions are satisfied, a WTO panel must apply the standard of review set forth in Article 17.6(i)  
of the Anti-Dumping Agreement .  In particular, "panels must assess if the establishment of the 
facts by the investigating authorities was proper  and if the evaluation of those facts was unbiased 
and objective ".1 
3. For the below reasons, USDOC failed to c omply with the two conditions on the use of the 
exceptional W -T comparison methodology under Article 2.4.2, second sentence, in each of the 
three challenged determinations.  
1. USDOC 's failed to comply with the condition to identify a relevant 
pricing patte rn 
a. USDOC used the statistical tools of its own choice in an arbitrary 
and biased manner  
4. An investigating authority is not obliged under the Anti-Dumping Agreement  to have 
recourse to any specific  statistical tools in addressing the first condition un der Article 2.4.2, second 
sentence.  However, China argues that the United States failed to use the tools of its own choice in 
a manner that would have enabled it to establish the facts properly and to evaluate them in an 
unbiased and objective manner.  
5. In order to assess whether the first condition for having recourse to the exceptional W -T 
comparison methodology was met, i.e., to assess the existence of a "pattern ", USDOC applied the 
so-called Nails Test in the three challenged determinations.2  However , to be potentially 
meaningful as an analytical tool, the Nails Test hinges on the assumption that the distribution of 
the examined export prices was, at the minimum, single -peaked and symmetric around the mean.  
Across the three challenged determinations,  although in some CONNUMs the export price data 
came close to being normally distributed, this was not generally the case.  Thus, China 's claims as 
to USDOC 's failure to demonstrate that the identified export price differences were "significant " in 
a quant itative sense, are not dependent on the assumption that the observed export prices were 
"normally distributed ".  Rather, it is the Nails Test, and therefore the validity of the US position, 
that depends on that assumption.  
6. China 's three main substantive  criticisms of the Nails Test can be summarized as follows:  
7. First, the threshold of a single standard deviation from the mean, USDOC 's primary tool for 
its Pattern Test, is insufficient for reaching a reliable conclusion that an observed set of prices 
differ in a relevant way.  Such a low threshold is insufficient to draw a conclusion that a random 
                                               
1 Appellate Body Report, US – Hot-Rolled S teel, para. 56 (emphasis original).  
2 OCTG  OI, Coated Paper  OI, and Steel Cylinders OI. WT/DS471/ R/Add.1  
 
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  price observation is significantly different from other price observations in a given distribution, or 
whether, by contrast, it falls within that distribution .  If USDOC had instead used thresholds 
consistent with the established statistical conventions for determining quantitative significance, 
none of the alleged -target units in any of the three challenged determinations  would have fallen 
below the threshold price.  
8. Second , it was inappropriate for USDOC to attribute "significance " to wider price gaps in the 
tail of the price distribution compared to price gaps closer to the mean, because this is an inherent 
feature  of every peaked distribution with tails.  
9. Third, the US approach to consider only  the gap between non -targeted weighted -average 
export prices which are greater than the weighted -average export prices  to the allegedly 
"targeted " group led to an inherent bias in the design of the Nails Test, undul y increasing the 
likelihood of a finding that a price difference was "significant ", and hence of an ultimate finding of 
"targeted dumping ". 
b. USDOC 's reliance, in the Nails Test, on weighted -average prices 
instead of individual export transactions runs af oul of the treaty 
text and biased the test towards finding a "pattern " 
10. USDOC 's use of weighted -average prices for purposes of the Nails Test was inconsistent with 
Article 2.4.2, second sentence, for two reasons:  first, the US approach is inconsistent with the 
legal requirement to focus on individual export prices;  and, second , USDOC 's reliance on 
customer or time period averages ignored within -customer and within time -period price variances.  
As a result, USDOC systematically biased the standard devia tion used in the Pattern Test, drawing 
it closer to the mean, which improperly qualified more sales as "targeted " than would have been 
the case had USDOC calculated the one -standard -deviation threshold based on individual 
transaction prices.  
c. USDOC faile d to assess whether export prices differed 
"significantly " in a qualitative sense  
11. Both a quantitative  and a qualitative  dimension are inherent in the concept of "significance ".  
Variations in prices that can be explained by reference to normal factors in the relevant market are 
not "prices which differ significantly ", in qualitative  terms, for purposes of Article  2.4.2.  USDOC 's 
application, in the three challenged determinations, of its Pattern and Price Gap Tests did not 
consider any qualitative facto rs in determining whether prices to the alleged target should be 
considered "low" relative to any other prices charged by the exporter under investigation.  Instead 
of considering what price differences might be normal within an industry or over time, USDO C 
mechanically applied the Nails Test and did not provide any explanation as to why prices passing 
its various thresholds could not arise from normal market dynamics undistorted by "targeted 
dumping ". 
2. USDOC failed to comply with the condition to provide  a reasoned 
and adequate explanation as to why the relevant pricing pattern 
could not appropriately be taken into account using the 
symmetrical comparison methodologies  
12. The explanation provided by USDOC as to why the relevant pricing pattern could not 
appropriately be addressed using a symmetrical comparison methodology in the three challenged 
determinations suffer from three fundamental flaws:  
13. First, the explanation provided by USDOC in each of the three challenged determinations 
was excessively br ief;  it consisted of a single assertion as to the reason why a symmetrical 
comparison methodology was inappropriate.  The "explanation " provided no analysis whatsoever of 
the characteristics of the identified "pattern " that led USDOC to the conclusion tha t it could not use 
the symmetrical comparison methodologies.  
14. Second , contrary to the US argument, the "explanation " required by the second sentence of 
Article 2.4.2 must include a discussion of both the W -W and T -T comparison methodologies.  In 
order p roperly to interpret the "or" in the second sentence of Article 2.4.2, one must take into 
account the context provided by the first sentence of Article 2.4.2, which contains the general rule, 
which is that "normally " an authority is to use a symmetrical co mparison methodology to calculate 
a margin of dumping.  Hence, recourse to the exceptional W -T comparison methodology is only WT/DS471/ R/Add.1  
 
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  allowed if neither  of the symmetrical comparison methodologies can take into account 
appropriately the identified pricing pattern.  
15. Third, USDOC 's explanation is based on the untenable assumption that, under the W -T 
comparison methodology under Article 2.4.2, second sentence, the application of zeroing 
procedures is somehow permissible.  However, the US position disregards that, f or the W -T 
comparison methodology, the Anti-Dumping Agreement  imposes the same prohibition against the 
use of zeroing as in the context of both the W -W or T -T comparison methodologies.  A 
fundamental principle undergirding the Agreement  is that a margin of  dumping must be calculated 
for the product as a whole, regardless whether the calculation is under the first or second sentence 
of Article 2.4.2 (or in a review under Article 9.3).  And zeroing impermissibly prevents the 
determination of a margin of dumpi ng for the product as a whole.  
B. USDOC violated the treaty limits on an authority 's discretion when 
applying the W -T comparison methodology pursuant Article 2.4.2, second 
sentence  
1. USDOC unduly applied the W -T comparison methodology to all 
export sales instead of limiting the application of W -T to those 
sales that comprise the relevant pricing pattern  
16. An investigating authority must limit the application of the W -T comparison methodology 
solely to those sales that comprise the relevant pricing patter n.  China 's position rests on the 
following grounds:  
17. First, the express textual connection in Article 2.4.2 between the concepts of the "export 
prices which differ significantly " and "the prices of individual export transactions " denotes a 
parallelism between the scope of those transactions which fall into the relevant pricing pattern and 
the scope of application of the W -T comparison methodology.  
18. Second, Article 2.4.2 limits the scope of application of the W -T comparison methodology to 
the extent n ecessary to "take into account appropriately " a relevant pricing pattern.  The second 
sentence allows price differences to be taken into account "appropriately ", and not in a generalized 
or excessive manner.  Again, there is parallelism between the scope o f the problem (a relevant 
pricing pattern that cannot be taken into account "appropriately ") and the exceptional remedy 
provided.  
19. Third, a general principle in WTO law is that an exception takes precedence over a general 
rule only to the extent of the conflict between the two provisions.  Like other provisions of the 
covered agreements, Article 2.4.2 lays down a general rule that a symmetrical methodology 
should "normally " be used.  The exception allowing use of the W -T comparison methodology takes 
precedence over this general rule only to the extent necessary to "take{} into account 
appropriately " a relevant pricing pattern.  For sales outside this pattern (for example, sales to 
customers, regions or time periods other than those found to be targeted, o r sales of models or 
types of the product for which no relevant pricing pattern has been found), no conflict between the 
first and second sentences of Article 2.4.2 exists, and therefore, an authority must use a 
symmetrical comparison methodology.  The res ults of all intermediate comparison results must 
then be aggregated in order to generate a margin of dumping for the product as a whole.  
20. Finally , China notes that a "relevant pricing pattern " necessarily can exist only in a subset  of 
export sales.  The  process of discerning a "pattern " serves to distinguish  prices that fall within  the 
pattern from those that fall outside  the pattern.  Indeed, the United States ' position that the 
pattern must include all sales because "an export price cannot ‘differ sign ificantly ' on its own "3 is 
at odds with the pattern of prices actually identified by the Nails Test  applied by USDOC in the 
three challenged determinations.  A fundamental element of the Nails Test is that it seeks to find 
"patterns " by reference to models , as well as by time (in OCTG  and Steel Cylinders ) or by 
customer (in Coated Paper ).  In this way, USDOC identified pricing patterns in respect of some 
models and not others.  Having isolated the pattern in this limited way, USDOC was obliged to 
apply the exceptional W -T comparison methodology solely to the pattern it had identified, i.e., to a 
subset of the observed export sales.  
                                               
3 US First Written Submission, para. 202.  WT/DS471/ R/Add.1  
 
- B-5 - 
 
  21. For all these reasons, there was no basis for USDOC in the three challenged determinations 
to apply the W -T comparison metho dology to all sales of an exporter.  
2. The United  States ' reliance on the concept of mathematical 
equivalence is unavailing to justify its use of zeroing when 
applying the W -T comparison methodology in investigations  
22. Zeroing is not permissible when app lying the W -T comparison methodology in investigations, 
just as it is impermissible when using the W -T comparison methodology in reviews.  The contrary 
position is inconsistent with the "exporter -specific " and "product -related " aspects4 of the 
foundational  concept of dumping, which, as the Appellate Body has consistently explained, is not a 
transaction -specific concept.  Since "dumping " cannot be found to exist at the level of individual 
transactions, there is no justification for failing to take account of  any transaction -specific 
intermediate comparison results when aggregating comparison results in order to yield a margin of 
"dumping ". 
23. The United States attempts in vain to re -litigate the "mathematical equivalence " argument, 
which has consistently bee n rejected by the Appellate Body.5  As the Appellate Body has explained, 
it is possible to generate results using the W -T comparison methodology that are different from 
those arising from the use of the W -W comparison methodology.  For instance, nothing in  Article 
2.4.2 prevents an investigating authority from dividing the period of investigation into several time 
periods for purposes of calculating weighted average normal values to compare with individual 
export transactions under the W -T comparison method ology.  As China has demonstrated, using 
different temporal bases for normal value means that mathematically different  results will 
generally arise.  
24. Although it is true that the earlier disputes in which the Appellate Body addressed the 
"mathematical e quivalence " argument did not involve an actual application of the W -T comparison 
methodology under Article 2.4.2, second sentence, t he disciplines that constrain how to use the 
W-T comparison methodology (including the prohibition on the use of zeroing pro cedures) apply 
equally regardless of the proceedings in which that methodology is used.  
II. USDOC's Application of its Targeted Dumping Methodology in an Administrative 
Review  
A. USDOC 's application of zeroing procedures in PET Film AR3 is inconsistent 
with Article 9.3 of the Anti-Dumping Agreement  
25. Although the Anti-Dumping Agreement  does not restrict the ability of an investigating 
authority to use the W -T comparison methodology in administrative reviews, the use of zeroing  
"for purposes of assessing f inal liability for payment of anti -dumping duties " in an administrative 
review is prohibited.6  Instead, as detailed in several Appellate Body Reports, duty liability must 
not exceed the margin of dumping  determined for the product as a whole.7  Accordingl y, it is 
inconsistent with Article 9.3 of the Anti-Dumping Agreement  and Article VI:2 of the GATT 1994 to 
disregard intermediate comparison results yielding negative margins when aggregating the results 
of multiple comparisons of normal value and export pr ices.  USDOC 's resort to zeroing to assess 
liability for anti -dumping duties in PET Film AR3 is, therefore, inconsistent with the United States ' 
obligations under the WTO agreements.  
                                               
4 See, e.g., Appellate Body Report, US – Stainless Steel (Mexico) , para. 94.  
5 See, e.g., Appellate Body Report, US – Softwood  Lumber V (Article 21.5 Canada) , paras. 97 -100;  
Appellate Body Report, US – Zeroing (Japan) , para. 146;  Appellate Body Report, US – Stainless Steel 
(Mexico) , para. 126;  Appellate Body Report, US – Continued Zeroing , paras. 296 -298. 
6 Appellate Body Repo rt, US – Continued Zeroing , para. 285.  
7 See, e.g., Appellate Body Reports,  US – Zeroing (EC) , paras. 132 -133;  US – Zeroing (Japan) , paras. 
108-115, 166 and 174 -176;  US – Stainless Steel (Mexico) , paras. 97 -139;  and  US – Continued Zeroing , 
paras. 276 -287 and 314 -316. WT/DS471/ R/Add.1  
 
- B-6 - 
 
  B. The US argument depends on the untenable assumption that the second 
sentence of Article 2.4.2 somehow applies not only to original 
investigations, but also to administrative reviews  
26. As regards the third administrative review in PET Film , China 's challenge focuses on 
USDOC 's application of zeroing procedures in connection  with applying the W -T comparison 
methodology.  Thus, China 's claim must be analyzed pursuant to Article 9.3 of the Anti-Dumping 
Agreement , which governs reviews.  China considers that, while investigating authorities may 
apply the W -T comparison methodolo gy in administrative reviews, there is no doubt that the WTO 
disciplines on how an investigating authority may apply the W -T comparison methodology govern 
the application of that methodology in all types of proceedings (reviews and investigations) 
equally.  
27. The US defense against China 's claim appears to depend on the untenable assumption that 
the second sentence of Article 2.4.2 somehow applies to administrative reviews and not only to 
original investigations.  Yet, the precise terms of the treaty text ("…during the investigation phase 
. . .") allow only one conclusion:  re course to the exceptional methodology under Article 2.4.2, 
second sentence, is only available in original investigations.  Thus, even if the use of zeroing were 
permitted in original i nvestigations in connection with applying the W -T comparison methodology 
under Article 2.4.2, second sentence, which is not the case, such permission would not extend to 
the duty assessment phase governed by Article 9.3 of the Anti-Dumping Agreement . 
III. The Single Rate Presumption for Non -Market Economies, As Such, and As Applied 
in 38 Challenged Determinations is Inconsistent with Articles 6.10, 9.2 and 9.4 of 
the Anti-Dumping Agreement  
28. In anti -dumping proceedings involving countries considered by US DOC to be "non-market 
economies " (or "NMEs "), USDOC presumes that all producers/exporters from the country 
concerned are part of a single, government controlled entity to which USDOC assigns a single rate.  
In order to rebut this presumption, a producer/ex porter must prove both de jure  and de facto  
absence of government control.  China shows – by reference to evidence including USDOC Policy 
Bulletin 05.01, USDOC 's Antidumping Manual, the records of the proceedings at issue, rulings of 
US courts and a sample  of 40 original investigations and 52 administrative reviews issued by 
USDOC in proceedings involving NMEs since 2001 – that this "Single Rate Presumption ", including 
the "Separate Rate Test " through which it may be rebutted, is a norm of general and prosp ective 
application that may be challenged as such in WTO dispute settlement.  This norm is materially the 
same as the norm proven to exist and successfully challenged by Viet Nam in US – Shrimp II (Viet 
Nam)  and is closely analogous to the EC measure that was found to be WTO -inconsistent by the 
Appellate Body in EC – Fasteners . 
29. Article 6.10 requires that, for "each known exporter or producer ... of the product under 
consideration ", an authority shall "determine an individual margin of dumping " unless an  exception 
specifically contemplated by the Agreement  applies.  The Single Rate Presumption, as such and as 
applied in the 38 challenged determinations,8 violates Article 6.10 because USDOC does not 
determine an individual margin of dumping for each of the  known producers/exporters who are 
grouped into the single NME -wide entity by means of the presumption.  Instead, in order to qualify 
for an individual margin, all producers/exporters from China, or any other country deemed to be 
an NME by USDOC, must rebu t the presumption that they are part of the single NME -wide entity 
by demonstrating that they satisfy USDOC 's Separate Rate Test.  Although it is clear that 
authorities may, based on facts and evidence, determine that two or more respondents in an anti -
dumping proceeding have such close affiliations that they may be treated as a single exporter, 
USDOC 's presumption  of singularity in NME cases, and the imposition of the burden on Chinese 
producers/exporters to rebut it, have no basis in the covered agreement s.  In particular, 
paragraph 15 of China 's Protocol of Accession  does not justify the Single Rate Presumption in 
relation to China.  The exception to the generally applicable anti -dumping rules contained in 
                                               
8 Aluminum OI, Aluminum AR1, Aluminum AR2, Coated Paper  OI, Shrimp OI, Shrimp AR7, Shrimp AR8, 
Shrimp AR9, OTR Tires  OI, OTR Tires AR5, OTR Tires AR3, OCTG  OI, OCTG AR1, Solar OI, Solar AR1, Diamond 
Sawblades OI, Diamond Sawblades AR1, Diamo nd Sawblades AR2, Diamond Sawblades AR3, Diamond 
Sawblades AR4, Steel Cylinders  OI, Wood Flooring OI, Wood Flooring AR1, Wood Flooring AR2, Ribbons OI, 
Ribbons AR1, Ribbons AR3, Bags OI, Bags AR3, Bags AR4, PET Film OI, PET Film AR3, PET Film AR4, PET Film  
AR5, Furniture OI, Furniture AR7, Furniture AR8, Furniture AR9. WT/DS471/ R/Add.1  
 
- B-7 - 
 
  paragraph 15 of that Protocol  is limited to certa in matters relating to the determination of Chinese 
normal values.  
30. Article 9.2 requires that, when imposing anti -dumping duties, an authority must "name the 
supplier or suppliers of the product concerned ", thereby specifying such suppliers, in order to  
collect duties in "the appropriate amounts " from each supplier or suppliers.9  In other words, the 
authority must apply individual duties to each individually -identified producer/exporter unless an 
exception specifically contemplated by the Agreement  applies.  The Single Rate Presumption, as 
such and as applied in the 38 challenged determinations, violates Article 9.2 because USDOC does 
not name each of the producers/exporters that are grouped into the single NME -wide entity for 
purposes of imposing anti -dumping duties, and thereby fails to apply to them individual duties and 
duties in the appropriate amounts.  Instead, in order to be named and to qualify for individual 
anti-dumping duties, a distinct producer/exporter must rebut the presumption that it is part of the 
single NME -wide entity by means of the Separate Rate Test.  Again, this presumption and the 
requirement to rebut it have no basis in the covered agreements.  
31. Article 9.4, second sentence, applies when the authority has exercised its discreti on to limit 
the investigation under the second sentence of Article 6.10.  It confers additional rights  upon 
producers and exporters who are "not included in the examination " and who would ordinarily, 
therefore, be the subject of an anti -dumping duty that c omplies with the disciplines prescribed by 
the first sentence of Article 9.4.  The second sentence provides, in relevant part, that such 
producers/exporters must receive an individual duty in cases where they "provide{} the necessary 
information " to allow the authority to determine an individual  margin for such a respondent "as 
provided for in subparagraph 10.2 of Article 6 ".  Article  6.10.2, in turn, requires the calculation of 
individual margins of dumping for non -selected respondents who voluntarily subm it the necessary 
information in a timely manner, unless it would be unduly burdensome to do so.  
32. The Separate Rate Test violates Article 9.4, second sentence, because – regardless of 
whether a fictional NME -wide entity  is considered to be "included in t he examination " – at least 
some of the producers/exporters included within  the NME -wide entity are not included in the 
examination in a manner that generates an individual margin of dumping or individual duty for 
them.  Such respondents cannot receive an i ndividual margin of dumping or anti -dumping duty 
rate by submitting the "necessary information ", as contemplated by Article 9.4.  Instead, such 
respondents must additionally  meet the Separate Rate Test.  By imposing an additional  condition 
for receipt of i ndividual duties that is not contemplated by Article 9.4, the Single Rate 
Presumption, including the Separate Rate Test, as such and as applied in the 38 challenged 
determinations, violates Article 9.4, second sentence.  
IV. The Methodology through which US DOC Determined the Rate for the Fictional 
PRC-Wide Entity in 30 Challenged Determinations was Inconsistent with 
Articles  6.1, 6.8, 9.4 and Annex II of the Anti-Dumping Agreement  
33. Having presumed, in each of the 13 challenged investigations, the existenc e of a PRC -wide 
entity, USDOC proceeded to determine a single dumping rate for the PRC -wide entity, including all 
of the producers/exporters included within it.10  A PRC -wide entity rate was also determined in 17 
challenged reviews.11  In the remaining 8 c hallenged determinations, USDOC did not determine a 
PRC-wide entity rate.12 
34. Pursuant to Article 6.10, investigating authorities must, as a rule, determine an individual 
margin of dumping for each known producer/exporter of the product under investigati on.  China 
understands that, in each determination, USDOC purported to determine an individual rate for the 
fictional PRC -wide entity, including all of the distinct producers/exporters included within it.  In 
determining such an individual margin of dumpin g, investigating authorities must observe the 
procedural requirements set forth in Article 6 of the Anti-Dumping Agreement.  These procedural 
                                               
9 Appellate Body Report, EC – Fasteners , para. 339.  
10 Aluminum OI, Coated Paper OI, Shrimp OI, OTR Tires OI, OCTG  OI, Solar OI, Diamond Sawblades OI, 
Steel Cylinders OI, Wood Flooring OI, Ribbons  OI, Bags OI, Pet Film OI, Furniture OI. 
11 Aluminum AR1, Aluminum  AR2, Shrimp  AR7, Shrimp AR8, OTR Tires  AR5, Solar AR1, Diamond 
Sawblades AR1, Diamond Sawblades  AR2, Diamond Sawblades AR3, Diamond Sawblades AR4, Wood Flooring 
AR1, Wood Flooring AR2, Ribbons AR1, Ribbons AR3, Bags AR3, Furniture AR7, Furniture AR8. 
12 Shrimp AR9, OTR Tires  AR3, OCTG AR1, Bags AR4, PET Film AR3, PET Film AR4, PET Film AR5, 
Furniture AR9. WT/DS471/ R/Add.1  
 
- B-8 - 
 
  protections seek to ensure that authorities make an  accurate determination of whether, and if so, 
in what magnitud e, there is dumping by an individual producer/exporter.  
35. In pursuit of an accurate determination, the Anti-Dumping Agreement  expresses a 
preference in favor of information submitted by the individual producer/exporter concerned 
(primary  information).  I n order to obtain primary information from the respondent  and accord the 
respondent due process, the first step required of an authority in connection with the evidence to 
be used in a determination of dumping is to give notice of the information that it r equires  from 
interested parties, followed by the grant of ample opportunity  for interested parties to present 
evidence  in writing (Article 6.1).  China claims that, in the determinations in which it determined a 
PRC-wide entity rate, USDOC acted inconsiste ntly with Article  6.1.  This is because, in order to 
determine an individual rate for the fictional PRC -wide entity, including all of the respondents 
grouped into it, the information that USDOC "require{d} " included all of the information regarding 
the US sales and the normal value comparators for all those distinct respondents.  Only by 
obtaining this information could USDOC calculate a margin of dumping for an entity comprised of 
all those distinct respondents.  Yet, USDOC:  (i) failed to request the deta iled information 
necessary to calculate a margin of dumping for the PRC -wide entity, including from the distinct 
respondents comprising the entity, and thereby failed to give notice of the required information; 
and (ii) failed to give the PRC -wide entity, including the distinct respondents comprising it, ample 
opportunity to submit relevant evidence for that determination.  
36. The Anti-Dumping Agreement recognizes, in its Article 6.8, that an interested party might 
refuse access to, or otherwise not provide , primary information that is necessary for the authority 
to make preliminary or final determinations, including in respect of the existence and magnitude of 
dumping.  Article 6.8 establishes that, in such cases, the authority may resort to "facts availabl e", 
including secondary source information, to replace missing information, provided that the authority 
observes the requirements of Annex II of the Anti-Dumping Agreement .  Like the facts available 
provision of the SCM Agreement , Article 6.8 and Annex II allow an authority to "‘reasonably 
replace  the information that an interested party failed to provide ', with a view to arriving at an 
accurate determination ".13 
37. Consistent with the objective of ensuring accurate  determinations, Annex II provides for 
authorities to use the "Best Information Available in Terms of Paragraph 8 of Article 6 ", and lays 
down specific requirements that must be observed:  (i) before an authority may resort to facts 
available at all;  and, (ii) if the conditions for resorting to facts available have been met, in 
selecting amongst the facts available.  
38. With respect to (i) – that is, the pre -conditions for resort to facts available – Paragraph 1 of 
Annex II echoes a requirement of Article 6.1.  It conditions recourse to "facts av ailable " in respect 
of an interested party upon the authority having "specif{ied} in detail the information required " 
from that interested party.  Additionally, the authority must have informed the interested party 
concerned that facts available may be use d if the required information is not supplied within a 
reasonable period of time.  In other words, there is no basis for recourse to facts available, if the 
required information has not, first, been requested  by the authority.  Further, facts available may  
only be used to replace the specific information that the authority required but did not receive 
from an interested party.  In this way, Article 6.8 and Annex II of the Anti-Dumping Agreement  
are concerned with overcoming the absence of information that i s necessary  to complete a 
determination.  According to the Appellate Body, "{i}t is the absence of this particular information  
that the use of the ‘facts available ' is designed to mitigate ".14 
39. China claims that, although USDOC purported to determine an  individual rate for the entire 
PRC-wide entity (including all of the respondents grouped into it), USDOC failed to "specify in 
detail " the information that it required to determine an individual margin of dumping for the PRC -
wide entity in each of the rel evant determinations, as required by Article 6.8 and Annex II(1).  
Accordingly, USDOC did not have a valid basis to resort to facts available in setting a rate for the 
fictional PRC -wide entity and the respondents it contained in the challenged determinati ons in 
which it determined a PRC -wide entity rate.  
                                               
13 Appellate Body Report, US – Countervailing Measures (China) , para. 4.178 (empha sis added by the 
Appellate Body, footnotes omitted);  see also and Appellate Body Report, US – Carbon Steel (India) , 
para. 4.416.  
14 Appellate Body Report, US – Carbon Steel (India) , para. 4.416 (emphasis added, footnote omitted).  WT/DS471/ R/Add.1  
 
- B-9 - 
 
  40. With respect to (ii) – that is, the criteria for selecting amongst the facts available once the 
conditions for resorting to facts available have been met by the authority –  Annex II specifies that 
the "facts to be employed are expected to be ‘best information available '",15 which is to say, the 
"most fitting or ‘most appropriate ' information ",16 such that "there can be no better information 
available to be used in the particular circumstances ".17  In this way, Article 6.8 and Annex II 
contemplate selection of reasonable  replacements for missing facts, so as to allow the authority to 
render an accurate  determination.  The Anti-Dumping Agreement imposes obligations on the 
process followed by an investigat ing authority to identify the best available information.  
Specifically, paragraph 7 of Annex II requires that an authority exercise "special circumspection " in 
the selection of facts available where such facts are drawn from secondary sources.  This requi res 
a comparative evaluation of all the information that is available, in which "all substantiated facts 
on the record must be taken into account ".18  Thus, where inferences must be drawn from the 
facts and circumstances of the case at hand, these need to take account of all the facts and 
circumstances, including the circumstances by virtue of which information is missing.  Inferences 
made by the investigating authority must be reasonable , so that they allow the authority 
reasonably to replace the necessary  information that is missing.  For this reason, the Appellate 
Body has emphasized that such inferences "cannot be made on the basis of procedural 
circumstances alone ".19  Negative inferences based solely on the procedural circumstance of non -
cooperation, w ithout considering the circumstances in which non -cooperation arose, as well as all 
the other facts and circumstances, cannot qualify selected information as the "best" information, 
as required under Article 6.8 and Annex II.  
41. China claims that, when se lecting the secondary source information to use as facts available 
to determine a rate for an NME -wide entity, USDOC applies the Use of Adverse Facts Available 
norm.  Under this norm, whenever USDOC finds non -cooperation by the NME -wide entity, it follows 
a process that selects adverse information from amongst the available secondary source 
information to set the rate for the fictional entity.  It does not use a process that selects 
reasonable replacements, using the best information available, so as to ren der an accurate 
determination.  Instead, USDOC selects adverse information because it makes an adverse  
inference based solely on the finding of non -cooperation and without regard to the circumstances 
under which the finding of non -cooperation was made, whi ch frequently include that USDOC 
presumes  non-cooperation.  USDOC selects adverse facts to set the rate for the fictional NME -wide 
entity, even in cases where it has not sought the information required to calculate a rate for such 
an entity, meaning it doe s so even where the conditions for resort to facts available have not been 
met at all.  
42. China demonstrates the existence of the Use of Adverse Facts Available norm by reference 
to USDOC 's practice in anti -dumping proceedings, the Antidumping Manual, sta tements by 
USDOC, statements by US courts, as well as a sample of 64 determinations in which USDOC 
determined an NME -wide entity rate.  This evidence, which indicates that USDOC always selects 
adverse facts to determine the NME -wide entity rate whenever it  deems an NME -wide entity to be 
non-cooperative, shows the precise content of the norm, that it is attributable to the United 
States, and that it has general and prospective application in anti -dumping proceedings involving 
countries considered by USDOC to  be NMEs.  
43. China claims that this norm (both as such and as applied in 28 of the 30 determinations in 
which it determined a rate for the PRC -wide entity)20 is inconsistent with Article 6.8 and Annex II, 
because the norm establishes a process that, by de sign, causes USDOC rigidly to select adverse  
information, which, in turn, leads USDOC not to engage in a process to identify the best 
information through an exercise "special circumspection ".  Contrary to the duty of "special 
circumspection ", the norm effe ctively prevents USDOC from exploring relevant facts and 
                                               
15 Appellate Body Report,  Mexico – Anti-Dumping Measures on Rice , para. 289.  
16 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 289.  
17 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 289.  
18 Appellate Body Report, US – Carbon Steel (India ), para. 4.419, referring to Appellate Body Report, 
Mexico – Anti-Dumping Measures on Rice , para. 294.  
19 Appellate Body Report, US – Carbon Steel (India) , para. 4.422.  
20 Aluminum OI, Coated Paper OI, Shrimp OI, OTR Tires OI, OCTG  OI, Solar OI, Diamond Sa wblades OI, 
Steel Cylinders OI, Wood Flooring OI, Ribbons  OI, Bags OI, Pet Film OI, Furniture OI, Aluminum AR1, 
Aluminum  AR2, Shrimp  AR7, Shrimp AR8, Solar AR1, Diamond Sawblades AR1, Diamond Sawblades  AR2, 
Diamond Sawblades AR3, Wood Flooring AR1, Wood Fl ooring AR2, Ribbons AR1, Ribbons AR3, Bags AR3, 
Furniture AR7, Furniture AR8. WT/DS471/ R/Add.1  
 
- B-10 - 
 
  circumstances other than its finding of non -cooperation when selecting the PRC -wide entity rate.  
USDOC thus does not select replacements for missing facts because they are reasonable ;  instead 
it selects facts because they yield a rate for an NME -wide entity that is adverse – i.e., an "adverse 
facts available " rate, in USDOC parlance.  
44. China also shows that USDOC violated the requirements of Article 6.8 and Annex II in each 
of the challenged deter minations in which it determined a rate for the PRC -wide entity, regardless 
of whether or not USDOC applied a norm of general and prospective application.  Specifically, in 28 
of the 30 relevant determinations, USDOC violated Article  6.8 and Annex II becau se it failed to use 
a process that selected reasonable replacements, using the best information available, so as to 
render an accurate determination.  Instead, it selected adverse information to assign the rate for 
the PRC -wide entity due to an adverse  inference based on the finding of non -cooperation, and 
without regard to the circumstances under which the finding of non -cooperation was made.  
Further, in all 30 of the determinations in which it determined a rate for the PRC -wide entity, 
USDOC selected inf ormation to replace missing information in determining the PRC -wide entity 
rate from among the available secondary sources without conducting the comparative, evaluative 
process required.  USDOC also failed, in each relevant determination, to provide a rea soned and 
adequate explanation as to how the secondary source information it selected was the best 
available information, in terms of Article 6.8 and Annex II.  
45. Finally, where an investigating authority relies upon Article 6.10 to sample a subset of all  
producers/exporters for individual examination, Article  9.4 establishes disciplines upon any anti-
dumping duty that is applied to producers/exporters not included in the examination.  Thus, when 
an authority resorts to sampling, a rate must be either an individual rate , complying with the 
procedural requirements relating to the determination of an individual margin of dumping in Article 
6, or it may be an "all others " rate that is subject to Article 9.4.  
46. USDOC used sampling in each of the challenged de terminations in which it determined a 
PRC-wide entity rate.  The rate assigned to the PRC -wide entity – including each of the distinct 
respondents that was grouped into the fictional entity – in each of these determinations was 
different from and higher th an the rate assigned to the non -individually investigated separate rate 
respondents.  The rule in Article 9.4 governs "any" anti-dumping duty applied to non-individually 
investigated  producers/exporters, whenever sampling is used, and does not permit such rates to 
exceed the calculated ceiling level or otherwise vary in a manner inconsistent with Article 9.4.  
Accordingly, to the extent that the PRC -wide entity and the respondents included within it were not 
the subject of individual examination in any of t he challenged determinations in which a PRC -wide 
entity rate was determined, USDOC failed to observe the requirements of Article 9.4 with respect 
to the rate assigned to the PRC -wide entity, including the producers/exporters within that fictional 
entity.  
 WT/DS471/ R/Add.1  
 
- B-11 - 
 
  ANNEX B -2 
SECOND  PART OF THE EXECUTIV E SUMMARY OF THE ARG UMENTS OF CHINA  
I. USDOC 'S APPLICATION OF ITS  TARGETED DUMPING MET HODOLOGY IN THREE 
ORIGINAL INVESTIGATI ONS VIOLATES ARTICLE  2.4.2  
A. The United States misunderstands the relevance of the standard o f factual 
review under Article 17.6(i) of the Anti-Dumping Agreement for the 
Panel 's assessment of USDOC 's application of the Nails Test  
1. China does not rely on Article 17.6(i) of the Anti-Dumping Agreement  as an independent 
basis for any of its legal cl aims.  China 's claims against USDOC 's application of the Nails Test in the 
three challenged determinations are claims of violation of Article 2.4.2 of the Anti-Dumping 
Agreement .  However, contrary to the United States ' view, Article 17.6(i) does more than  merely 
establish limits for a panel 's review of the factual assessment undertaken by investigating 
authorities in the context of domestic anti -dumping proceedings.  The standard of factual review 
for panels necessarily also illuminates the substantive req uirements incumbent upon an 
investigating authority when it establishes and evaluates the facts.  China has demonstrated that, 
when applying the Nails Test in the three challenged determinations, USDOC 's establishment of 
the facts was not proper, and its e valuation of the facts fell short of being unbiased and objective, 
as contemplated by Article 17.6(i).  Accordingly, the Panel must conclude that USDOC failed to 
identify a relevant pricing pattern consistent with Article 2.4.2, second sentence.  
B. USDOC f ailed to comply with the conditions on the use of the exceptional 
W-T comparison methodology under Article 2.4.2, second sentence  
1. USDOC failed to comply with the condition to identify a relevant 
pricing pattern due to three sets of fundamental flaws  
a. USDOC used its chosen statistical tools in an arbitrary and biased 
manner  
2. Having chosen to employ particular statistical tools to assist in its analysis, USDOC failed to 
use those tools in a manner that permits a proper establishment of the facts, and a n unbiased and 
objective evaluation of those facts.  It therefore failed to establish the existence of a relevant 
pricing pattern consistently with Article 2.4.2, second sentence.  
3. China 's claim does not rest on the assumption that the data in any of the  challenged 
proceedings establish a particular price distribution.  Rather, it is the Nails Test, and therefore the 
validity of the US arguments, that depends on that assumption, despite the United States ' 
protestations to the contrary.  Depending on the a ctual form of the price distribution in a given 
case, the multiplicity of flaws affecting the Nails Test becomes manifest, as follows:  
4. In all instances in which a given price distribution is not single -peaked and symmetrical 
around the mean, and hence m ay not necessarily have a left -hand tail, the first stage of the Nails 
Test (i.e., the Pattern Test) is plagued by the initial fundamental flaw identified by China.  This 
flaw is that without a symmetrical, single -peaked distribution, the concept of a stan dard deviation 
cannot function as a meaningful threshold for determining whether or not a relevant pricing 
pattern exists.  
5. Alternatively, even in instances involving a distribution that is single -peaked and 
symmetrical around the mean and thus has a lef t-hand tail, a fundamental flaw infects the second 
stage of the Nails Test (i.e., the Price Gap Test).  This flaw exists because the Test treats as 
significant something that is inherent in distributions that are single -peaked and symmetric around 
the mean .  Specifically, the Price Gap Test treats the occurrence of wider price gaps among the 
ATs in the left -hand tail of the distribution (after discarding equally low -priced NTs) as significant, 
even though wider price gaps in the tails are an inherent charac teristic of distributions with tails.  
6. The United States does not contest the accuracy of China 's statistical arguments but asserts 
that they are irrelevant as USDOC did not rely on the one -standard deviation threshold as a tool to 
draw statistical infer ences.  Yet, USDOC 's subjective  characterization of the Nails Test is no 
substitute for the Panel 's obligation to engage in an objective  assessment of the nature of that 
Test.  An objective evaluation reveals that the Nails Test uses both the terminology a nd tools of WT/DS471/ R/Add.1  
 
- B-12 - 
 
  statistical analysis, albeit in an arbitrary and inadequate fashion.  Having decided to apply an 
approach that usurps statistical concepts to assess whether sets of observed export prices differ in 
a relevant way, the United States cannot avoid  the legal consequences by pretending that this 
approach was used for some other purpose.  
b. USDOC 's reliance, in the Nails Test, on weighted -average prices 
instead of individual export transactions is inconsistent with the 
treaty text and biased the Nails  Test towards finding the presence 
of a "pattern " 
7. USDOC 's application of the Nails Test in the three challenged determinations further failed to 
identify a relevant pricing pattern consistently with Article 2.4.2, second sentence, because it 
relied on w eighted -average prices instead of individual export transactions.  
8. There are two reasons why the US approach is inconsistent with Article 2.4.2.  First, the US 
approach is inconsistent with the treaty requirement that an investigating authority focus on 
individual export prices for purposes of identifying a relevant pricing pattern.  Second , USDOC 's 
reliance on customer or time period averages ignored within -customer and within time -period price 
variances.  As a consequence, USDOC systematically drew the one-standard -deviation threshold 
too close to the mean, which caused USDOC to improperly qualify more sales as "targeted " than 
would have properly been the case.  
c. USDOC failed to assess whether the observed export prices 
differed "significantly " in a qua litative sense  
9. Variations in export prices that can be explained by factors that are normal in the relevant 
market are not "prices which differ significantly ", in qualitative  terms, for purposes of Article  2.4.2, 
second sentence.  Yet, in the three chal lenged determinations, USDOC mechanically applied the 
Nails Test and did not provide any explanation as to why prices passing its various thresholds 
could not arise from market dynamics undistorted by "targeted dumping ".  Contrary to the United 
States ' insistence, there is no reason why a proper consideration of the qualitative  dimension of 
"significance " would prevent an investigating authority from identifying a relevant pricing pattern 
in a situation in which the exporter concerned has actually engaged i n targeted dumping.  
10. In at least one of the three challenged determinations, Steel Cylinders  OI, the exporter 
advanced a plausible explanation of the observable price fluctuations in the steel market.  
USDOC 's summary dismissal of these arguments as an unsupported assumption was insufficient.  
USDOC, in its role as the investigating authority, could easily have requested the exporter to 
supplement the record with evidence necessary to make an informed determination regarding this 
critical issue.  USDOC c ould have done so even if it were true that the exporter 's initial case brief 
failed to cite record evidence to support the assertion that the increase in underlying steel prices 
had an impact on the prices of steel cylinders.  At the very least, in order to demonstrate, in a 
WTO-consistent manner, the existence of a pattern of export prices that differ "significantly ", 
USDOC would have had to provide a reasoned and adequate explanation as to why the dynamics 
in the steel market identified by the exporter c ould not have been the reason for the observed 
export price differences.  
2. USDOC failed to comply with the condition to provide a reasoned 
and adequate explanation as to why the relevant pricing pattern 
could not be taken into account appropriately using the 
symmetrical comparison methodologies  
11. Once a relevant pricing pattern has been identified, an investigating authority must satisfy 
the second  condition of Article 2.4.2, second sentence, and explain  why the pattern "cannot be 
taken into account appr opriately " through the application of the symmetrical comparison 
methodologies.  The explanations provided by USDOC in the three challenged determinations 
suffer from three fundamental flaws:  
First, the "explanation " provided by USDOC in the three challe nged determinations 
provided no analysis whatsoever of the characteristics of the identified "pattern " that 
led USDOC to the conclusion that it could not use the symmetrical comparison 
methodologies.  
Second , the "explanation " required by the second sente nce of Article 2.4.2 must 
include a discussion of both the W -W and T -T comparison methodologies.  USDOC 
does not contest that it did not address the T -T comparison methodology.  WT/DS471/ R/Add.1  
 
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  Third, USDOC 's explanation, as provided in the three challenged determination s, is 
based on the untenable assumption that, under the W -T comparison methodology 
pursuant to Article 2.4.2, second sentence, the application of zeroing procedures is 
somehow permissible.  
C. USDOC violated the treaty limits on an authority 's discretion wh en 
applying the W -T comparison methodology pursuant to Article 2.4.2, 
second sentence  
1. USDOC improperly applied the W -T comparison methodology to all 
export sales instead of limiting the application of W -T to those 
sales that comprised the relevant prici ng pattern  
12. An investigating authority must limit the application of the W -T comparison methodology 
solely to those sales that comprise the relevant pricing pattern, i.e., the targeted sales in targeted 
CONNUMs.  Importantly, if an investigating authori ty identifies the existence of a pattern in 
relation to some models, and not others, the authority must apply the exceptional W -T comparison 
methodology subject to the same limitation – i.e., solely to the pattern it identifies in those 
particular models.  Applying the W -T comparison to a broader group of export sales for which no 
pattern has been identified, on the other hand, is arbitrary and disproportionate.  China has 
demonstrated in great detail that this important limitation flows from the language o f Article 2.4.2, 
in context, and in light of the object and purpose of the Anti-Dumping Agreement . 
13. Contrary to what USDOC did in the three challenged determinations, the application of the 
W-T comparison methodology to the sales comprising the "pattern " must be combined with the 
application of one of the standard comparison methodologies (W -W or T -T) to the remaining, non -
targeted, export sales, in order to ensure that the investigating authority properly calculates a 
WTO-consistent dumping margin for t he product as a whole.  
2. The Unite d States ' reliance on the concept of mathematical 
equivalence is unavailing to justify its use of zeroing when 
applying the W -T comparison methodology in investigations  
14. The fact that the Appellate Body has not specifi cally encountered the question whether 
zeroing is prohibited under Article 2.4.2, second sentence, does not mean, as the United States 
implies, that zeroing is permitted under that provision.  The jurisprudence illuminates foundational 
concepts in the Anti-Dumping Agreement that enjoy significance well beyond the immediate 
context in which they were decided.  Of particular note, the fact that "dumping " and a "margin of 
dumping " are "exporter -specific " and "product -related " concepts is fundamental to the arc hitecture 
of the Anti-Dumping Agreement .1  These fundamental characteristics of the concepts of dumping 
and margin of dumping apply across all provisions of the Anti-Dumping Agreement .  Indeed, 
towards the end of these proceedings the United States has exp licitly conceded that "dumping " 
and "margins of dumping " mean the same thing across all provisions of the Anti-Dumping 
Agreement , including Article 2.4.2, second sentence.  Zeroing, by contrast, is based on a 
transaction -specific understanding of the conce pts of "dumping " and "margins of dumping " that is 
inconsistent with the entire architecture of the treaty.  
15. The United States is plainly wrong when it insists that, unless zeroing were permitted under 
Article 2.4.2, second sentence, that provision would  be rendered inutile.  As China has 
demonstrated, the use of different temporal bases for the weighted average normal value when 
using the W -W and W -T comparison methodologies will generally lead to mathematically different  
results.  China does not argue t hat investigating authorities must use different temporal bases for 
normal value.  What matters for the Panel 's assessment is that proceeding in that manner is a 
WTO-consistent way by which the second sentence of Article 2.4.2 will not be rendered inutile.  
16. Furthermore, the proper way for an investigating authority to "unmask targeted dumping " is 
not by applying WTO -inconsistent zeroing procedures, but rather by ensuring that it correctly 
identifies the scope of the relevant pricing pattern to which it w ill subsequently apply the 
exceptional W -T comparison methodology, provided that it can explain why use of the symmetrical 
comparison methodologies would not allow the pricing pattern appropriately to be taken into 
account.  In other words, the "unmasking of targeted dumping " is achieved through the proper 
identification of "a pattern of export prices which differ significantly among different purchasers, 
regions or time periods ".  The treaty, however, grants no authority to discard the fundamental 
                                               
1 See, e.g., Appellate Body Report, US – Stainless Steel (Mexico) , para. 94.  WT/DS471/ R/Add.1  
 
- B-14 - 
 
  principl e that a margin of dumping must be determined for the product as a whole, in order to 
"unmask targeted dumping ". 
II. CHINA 'S CLAIMS UNDER ARTIC LE 9.3 OF THE ANTI -DUMPING AGREEMENT  AND 
ARTICLE VI:2 OF THE GATT 1994 REGARDING  USDOC 'S APPLICATION OF ITS  
TARGE TED DUMPING METHODOL OGY IN AN ADMINISTRA TIVE REVIEW  
17. The United States ' defense of USDOC 's use of zeroing in PET Film  AR3 hinges on the 
untenable assumption that the second sentence of Article 2.4.2 somehow applies to administrative 
reviews as well as o riginal investigations.  The United States is wrong to assert that this is an issue 
of first impression for the Panel.  The well -established principles governing the manner in which an 
investigating authority may apply the W -T comparison methodology, and t he well -litigated 
understanding of the foundational concepts of "dumping " and "margins of dumping ", apply to all 
types of proceedings, including original investigations and the various types of reviews.  
18. China has demonstrated that the ordinary meaning to be given to the phrase "during the 
investigation phase " in Article 2.4.2, considered in its context, and in light of the object and 
purpose of the Anti-Dumping Agreement , allows only one conclusion – namely, that Article 2.4.2, 
second sentence, applies solely to original investigations and not to reviews.  Thus, even if the use 
of zeroing were permitted  in original investigations when applying the W -T comparison 
methodology under Article 2.4.2, second sentence, which is  not the case, such permission woul d 
not extend to the duty assessment phase governed by Article 9.3.  
19. According to the United States, it is "logical " for the W -T comparison methodology to 
operate in the same manner, whether in original investigations or in administrative reviews, 
whenev er the conditions for recourse to the exceptional comparison methodology under 
Article  2.4.2, second sentence, are met.  Yet, t he United States errs because the application of the 
W-T comparison methodology in the context of Article 9.3 reviews is not subj ect to the 
preconditions of Article 2.4.2, second sentence.  Thus, in Article 9.3 any reference to Article 2.4.2 
– whether or not it authorizes the use of zeroing – for the purpose of illuminating the authority to 
use the W -T comparison methodology would b e irreconcilable with the drafters ' express choice in 
Article 2.4.2 to limit the scope of application of that provision to original investigations.  
III. THE UNITED STATES ' TERMS OF REFERENCE O BJECTIONS IN CONNECT ION WITH 
CHINA 'S NON -MARKET ECONOMY TREAT MENT CLAIMS   
A. Six administrative reviews issued after filing of China 's First Written 
Submission fall within the Panel 's terms of reference  
20. The Panel should reject the United States ' contention that the six reviews issued by USDOC 
after the filing of Ch ina's First Written Submission and submitted to the Panel during the course of 
the First Hearing2 fall outside the Panel 's terms of reference.  Panels may have jurisdiction over 
measures which have been adopted subsequent to the panels ' establishment if th ey are closely 
connected to those identified by name in a panel request.3  In its Panel Request, China specified 
that "any closely connected, subsequent measures " to measures identified by name and falling 
within the same 13 anti -dumping proceedings are wi thin the Panel 's terms of reference.4  In its 
First Written Submission, China put the United States on notice that it considered the relevant six 
reviews to be within the scope of the dispute, including by informing the Panel that they had been 
initiated, and by providing the Panel with the issued preliminary determinations.  Each of these six 
reviews is closely connected to the measures identified by name in the Panel Request because 
they involve "the imposition, assessment and collection of duties under t he same anti -dumping 
order ".5  
21. The United States was given adequate notice and has had ample opportunity to respond to 
China 's claims in respect of these measures.  Exclusion of any of the six reviews would further 
delay settlement of the dispute that China legitimately brought before the DSB in February 2014, 
contrary to the principle of prompt settlement enshrined in Article 3.3 of the DSU.  The fact that 
                                               
2 OTR Tires AR5, Solar AR1, Diamond Sawblades AR4, Wood Flooring AR2, PET Film AR5, Furniture AR9. 
3 See, e.g., Appellate Body Report, EC – Chicken Cuts, para. 156;  Appellate Body Report, US – Zeroing 
(Japan) (Article 21.5 – Japan) , paras. 121, 125, 130.  
4 See Annexes 3 -5 to China 's Panel Request, WT/DS471/5.  
5 Appellate Body Report, US – Zeroing (EC) (A rticle 21.5 – EC), para. 230 (quoting Appellate Body 
Report, US – Continued Zeroing , para. 181).  See also Appellate Body Report, US – Zeroing (Japan) 
(Article  21.5 – Japan) , para. 116.  WT/DS471/ R/Add.1  
 
- B-15 - 
 
  there have been significant procedural delays in these proceedings has not prevented USDOC from 
continuing to adopt determinations in anti -dumping proceedings involving China that do not 
conform with the requirements of the Anti-Dumping Agreement .  China should thus not be forced 
to initiate new disputes, or wait to initiate compliance proceedings.  T his would not only result in 
delay with respect to the settlement of this dispute, it would also further burden the WTO dispute 
settlement system as a whole.  
B. All of China 's arguments and evidence are within the Panel 's terms of 
reference  
22. Contrary t o the United States ' assertions, there is no flaw in the manner in which China 's 
claim with regard to the Use of Adverse Facts Available was put before the Panel.  China 's Panel 
Request identifies this specific measure and clearly presents the legal basis for the complaint.  The 
Panel Request goes further than necessary by specifying that the problem arises because of 
USDOC 's failure "to use the best information available and special circumspection when basing its 
findings on information from secondary sour ces".6  
23. Moreover, despite the United States ' contentions, all of China 's arguments with regard to the 
Use of Adverse Facts Available norm as well as the arguments in response to the Panel 's questions 
are equally within the Panel 's terms of reference.  Arguments need not be specified in a panel 
request, and may be progressively developed and clarified throughout the proceedings before a 
panel.  Development and clarification of arguments may result from responses to questions or 
counter -arguments raised b y an opponent.  Similarly, all of the evidence that China submitted in 
response to the Panel 's questions is within the Panel 's terms of reference.  Although the United 
States objects to evidence submitted by China in response to questions from the Panel, t he 
working procedures are clear that parties may submit evidence which is necessary to respond to 
the Panel 's questions.  The United States has had ample opportunity to respond to the evidence 
submitted by China.  
IV. CHINA'S CLAIMS UNDER  ARTICLES 6.10, 9. 2 AND 9.4, SECOND SE NTENCE, 
REGARDING THE SINGLE  RATE PRESUMPTION AS SUCH AND AS APPLIED IN 38 
CHALLENGED DETERMINA TIONS  
24. In anti -dumping proceedings involving countries considered by USDOC to be "non-market 
economies " (or "NMEs "), USDOC presumes that a ll producers/exporters from the country 
concerned are part of a single, government controlled entity to which USDOC assigns a single rate.  
In order to rebut this presumption, a producer/exporter must satisfy USDOC 's Separate Rate Test 
by proving both de jure and de facto absence of government control.  China refers to this 
presumption as the "Single Rate Presumption ".  The United States conceded in response to 
questions from the Panel that this presumption has been applied in every anti -dumping 
determinati on involving China  issued since 1991 – including the 38 determinations challenged by 
China.  Nonetheless, the United States contest that the Single Rate Presumption is a norm of 
general and prospective application.  It argues that China has not substantia ted the precise 
content of the norm and that all that China has shown is repeated past conduct.   
25. The evidence before the Panel demonstrates that, contrary to the United States ' position, 
the Single Rate Presumption is a norm of general and prospective  application.  Despite the United 
States ' assertions, it is not necessary for China to show that the detailed requirements of the 
Separate Rate Test are part of the precise content of the challenged norm.  Additionally, as to 
general and prospective applic ation, the evidence of consistent application, in combination with the 
United States ' inability to identify even a single contrary example issued since 1991, demonstrates 
that the norm has been invariably applied by USDOC for more than a decade.  This inva riable 
conduct, together with evidence including USDOC Policy Bulletin 05.01 and the Antidumping 
Manual (which describe the presumption in a manner indicative of general and prospective 
application), as well as statements in individual determinations (whic h show that USDOC draws 
guidance from its previous decisions and practice), reveal that what is at issue goes beyond past 
conduct.  The United States ' attempts to downplay the language of these categories of evidence 
are, in each case, unconvincing.  Consi deration of all of the evidence together provides an 
overwhelming basis upon which the Panel must find the existence of a general and prospective 
norm.  
26. On the merits, the United States has failed to rebut China 's claims under Articles 6.10, 9.2 
and the  second sentence of Article 9.4 against the Single Rate Presumption.  The Single Rate 
                                               
6 See China 's Panel Request, WT/DS471/5, para. 26.   WT/DS471/ R/Add.1  
 
- B-16 - 
 
  Presumption imposes a condition upon access to individual rates for Chinese and other NME 
respondents, without any justification under the Agreement .  Contrary to the Uni ted States ' 
assertions, the Appellate Body in EC – Fasteners was correct to find that singularity cannot be 
presumed .  Although it can be permissible to group legally distinct respondents into single entities, 
an investigating authority must have facts and  evidence in support of a determination to do so.  
USDOC 's Single Rate Presumption operates in the absence of facts or evidence, and, therefore, 
cannot justify denial of the rights that each  Chinese producer/exporter enjoys under Article 6.10, 
9.2, and 9.4 , second sentence, of the Agreement.     
V. CHINA'S CLAIMS UNDER  ARTICLES 6.1, 6.8 AN D ANNEX II(1) REGARD ING 
USDOC'S FAILURE TO R EQUEST NECESSARY INF ORMATION IN 30 CHALL ENGED 
DETERMINATIONS  
27.  Having presumed, in each of the 13 challenged investigations, the existence of a PRC -wide 
entity, USDOC proceeded to determine a single dumping rate for the PRC -wide entity, including all 
of the producers/exporters included within it.7  A PRC -wide entity rate was also determined in 17 
challenged reviews.8  In the rem aining 8 challenged reviews, USDOC did not determine a PRC -wide 
entity rate.9   
28. China challenges each of the relevant 30 determinations in which USDOC determined a rate 
for the PRC -wide entity under Articles 6.1, 6.8 and Annex II(1) of the Agreement .  In each of 
these determinations, USDOC failed to request the information necessary to calculate a margin of 
dumping for the entity but nevertheless purported to determine an individual rate for the entity.  
China argues that, through failing to request thi s necessary information, USDOC failed to give 
notice of the required information and thereby also failed to provide appropriate rights of defense 
in the sense of Article 6.1.  China also argues that, in each of these 30 determinations, USDOC 
resorted to fa cts available to replace the information necessary to calculate a margin of dumping 
for the PRC -wide entity even though it did not have a valid basis for doing so under Article 6.8 and 
Annex II(1) because it had failed to specify in detail the information required to determine the 
PRC-wide entity rate.  
29. The United States has not denied that USDOC failed to request the information necessary to 
calculate a margin of dumping for the respondents included within the PRC -wide entity.  The 
United States nevert heless argues that this failure was justified on the facts of certain groups of 
measures.  However, China has demonstrated that USDOC 's failure to request information was not 
justified in respect of any of the groups of measures addressed by the United Sta tes.    
30. First, USDOC 's express findings of non -cooperation by the PRC -wide entity in 2010 of the 
relevant 30 challenged determinations cannot justify USDOC 's failure to request the information 
required to calculate a margin of dumping for the PRC -wide entity.  Each of these express findings 
of non -cooperation was based on presumption instead of fact because USDOC extended a finding 
of non -cooperation by a subset of respondents included within the PRC -wide entity to the fictional 
entity as a whole.  Howe ver, USDOC had no basis in law or fact to attribute the conduct of one 
respondent to the other respondents included within the PRC -wide entity.  The absence of 
information relating to one respondent in the PRC -wide entity does not obviate the need for 
information from the remaining respondents included within the fictional entity.  There is no 
justification for replacing information required from other respondents included within the PRC -
wide entity, in the absence of any request for that information from t hose respondents.  
31. Second , USDOC 's failure to request the necessary information cannot be justified in relation 
to the remaining 1011 of the relevant 30 challenged determinations in which USDOC resorted to 
facts available without expressly saying so.  Contrary to the United States ' assertions, the 
disciplines of Article 6.8 and Annex II are not limited to instances in which an investigating 
                                               
7 Aluminum OI, Coated Paper OI, Shrimp OI, OTR Tires OI, OCTG  OI, Solar OI, Diamond Sawblades OI, 
Steel Cylinders OI, Wood Flooring OI, Ribbons  OI, Bags OI, PET Film OI, Furniture OI. 
8 Aluminum AR1, Aluminum  AR2, Shrimp  AR7, Shrimp AR8, OTR Tires  AR5, Solar AR1, Diamond 
Sawblades AR1, Diamond Sawblades  AR2, Diamond Sawblades AR3, Diamond Sawblades AR4, Wood Flooring 
AR1, Wood Flooring AR2, Ribbons AR1, Ribbons AR3, Bags AR3, Furniture AR7, Furniture AR8. 
9 Shrimp AR9, OTR Tires  AR3, OCTG AR1, Bags AR4, PET Film AR3, PET Fi lm AR4, PET Film AR5, 
Furniture AR9. 
10 Aluminum OI, Aluminum AR1, Aluminum AR2, Coated Paper OI, Shrimp OI, Shrimp AR7, Shrimp AR8, 
OTR Tires OI, OCTG  OI, Solar OI, Solar AR1, Diamond Sawblades OI, Steel Cylinders OI, Wood Flooring OI, 
Ribbons  OI, Ribbons  AR3, Bags OI, PET Film OI, Furniture OI, Furniture AR7. 
11 OTR Tires AR5, Diamond Sawblades AR1, Diamond Sawblades AR2, Diamond Sawblades AR3, 
Diamond Sawblades AR4, Wood Flooring AR1, Wood Flooring AR2, Ribbons AR1, Bags AR3, Furniture AR8. WT/DS471/ R/Add.1  
 
- B-17 - 
 
  authority expressly states that it has resorted to facts available.  Rather, these disciplines apply 
whenever an i nvestigating authority, in substance, replaces information from an interested party 
with facts available.  China has shown that, in all 10 relevant challenged determinations, USDOC, 
in substance, replaced with facts available all or some of the information  necessary to calculate a 
margin of dumping for the PRC -wide entity, including all of the producers/exporters included within 
that entity.  Thus, USDOC acted inconsistently with Article 6.8 and Annex II(1) by replacing, with 
facts available, necessary info rmation that USDOC had failed to seek from the producers/exporters 
included within the PRC -wide entity.    
32. Even if the Panel were to take the view that USDOC did not resort to facts available in the 
relevant 10 determinations, USDOC 's failure to reques t the required information in these 
determinations would nevertheless be inconsistent with Article 6.1.  Contrary to the United States ' 
assertions, the "information which the authorities require " under Article 6.1, is the information that 
the Agreement  dictates an investigating authority requires in order to make a particular 
determination.  If an authority is to determine an individual margin of dumping for a respondent 
consistent with the Agreement , the information necessary to calculate such a margin of dumping is 
objectively required by the authority.  Accordingly, by purporting to determine an individual 
margin for the PRC -wide entity in each of the relevant 10 challenged determinations, without 
giving notice of the information necessary to calculate su ch a margin, USDOC acted inconsistently 
with Article 6.1 in each of these determinations.  
VI. CHINA'S CLAIMS UNDER  ARTICLE 6.8 AND ANNE X II(7) AGAINST USDO C'S USE 
OF ADVERSE FACTS AVA ILABLE IN 30 CHALLEN GED DETERMINATIONS A ND THE 
USE OF ADVERSE FACTS  AVAI LABLE NORM  
33. Whenever USDOC considers that an NME -wide entity has failed to cooperate to the best of 
its ability, USDOC systematically draws an adverse inference and selects, to determine the rate for 
the NME -wide entity, facts that are adverse to the in terests of that entity and each of the 
producers/exporters included within it.  China refers to this process as the "Use of Adverse Facts 
Available norm ".  The process subject to the Use of Adverse Facts Available norm causes USDOC 
to select rates that, by  design, are adverse to the interests of the NME -wide entity and each of the 
producers/exporters included within the entity, whenever it is triggered.   
34. The evidence before the Panel demonstrates, contrary to the United States ' position, that 
the Use o f Adverse Facts Available norm is a norm of general and prospective application.  Despite 
the United States ' arguments, there is no need for China to prove that USDOC always selects the 
highest rate on the record for NME -wide entities.  China does not chal lenge a result such as the 
selection of the highest rate on the record, but rather a selection process , which, when triggered, 
is based uniformly on inferences that are adverse to the interests of the NME -wide entity, and each 
of the producers/exporters in cluded within it.  Moreover, China does not allege that this process is 
triggered in each anti -dumping determinations involving countries deemed to be NMEs by the 
United States, but only in those determinations that involve a finding of non -cooperation by the 
NME-wide entity.   
35. Moreover, contrary to the United States ' assertions, the evidence as to general and 
prospective application also demonstrates that what is at issue goes beyond repeated past 
conduct.  China has demonstrated that the norm has been  consistently applied in a representative 
sample of all the investigations and reviews issued since China 's WTO accession relating to 
countries deemed by USDOC to be NMEs.  In combination with the United States ' inability to 
identify even a single contrary  example, this evidence demonstrates that the norm has been 
invariably applied by USDOC for more than a decade.  This invariable conduct, together with 
evidence including the Antidumping Manual and statements by US courts (which describe aspects 
of the nor m in a manner indicative of general and prospective application), as well as statements 
by USDOC in individual determinations (which show that USDOC relies on its past application of 
the norm as a justification and motivation for taking the same approach i n new determinations) 
demonstrates that what is at issue goes beyond past conduct.  An analysis of all this evidence 
together reveals a norm of general and prospective application that provides administrative 
guidance and sets expectations on a consistent and predictable basis.   
36. On the merits, China has demonstrated that the Use of Adverse Facts Available norm 
necessarily results in a violation of Article 6.8 and Annex II(7) in defined circumstances.  In 
particular, the norm is WTO -inconsistent when th e non -cooperation that triggers the norm is 
presumed and not genuine non -cooperation, and when USDOC itself has not requested necessary 
information.  This is because the duty to exercise special circumspection requires an authority to WT/DS471/ R/Add.1  
 
- B-18 - 
 
  have careful regard t o all the facts and circumstances, including the fact that respondents have not 
genuinely failed to cooperate, or the fact that the authority has not sought necessary information.  
Inferences drawn from the facts and circumstances must be reasonable infere nces in light of those 
facts and circumstances.  Thus, when USDOC draws an adverse inference and selects adverse 
facts available based on presumed  non-cooperation by an NME -wide entity, it necessarily violates 
Article 6.8 and Annex II(7).  The same is true  in circumstances where USDOC has not sought the 
necessary information to determine a rate for an NME -wide entity.  
37. Despite the United States ' assertions, USDOC 's corroboration efforts in some cases cannot 
remedy the WTO -inconsistency of the challenged  norm.  A corroborated rate remains, and is 
explicitly described by USDOC as, "adverse facts available ".  At best, corroboration refines the 
specific rates chosen as adverse facts available and the degree to which that rate is adverse.  
Importantly, corrob oration does not take account of the cooperation by respondents included 
within the NME -wide entity or USDOC 's failure to request necessary information from those 
interested parties.  Consequently, corroboration cannot cure the norm 's inconsistency in thes e 
defined circumstances.  
38. USDOC 's application of the Use of Adverse Facts Available norm and selection of adverse 
facts available in 28 challenged determinations is also inconsistent with Article 6.8 and 
Annex  II(7).  In each of the relevant 28 challen ged determinations in which the Use of Adverse 
Facts Available norm was triggered, USDOC considered the NME -wide entity to be non -cooperative 
based on presumption  instead of fact.  Specifically, in 2012 of these 28 challenged determinations, 
USDOC extended  a finding of non -cooperation by a subset of respondents included within the PRC -
wide entity to the entity as a whole.  In the remaining 813 of these 28 challenged determinations, 
USDOC pulled forward the finding of non -cooperation from an earlier phase of  the proceeding, 
triggering the Use of Adverse Facts Available norm by continuing to presume non -cooperation in 
the instant review.  In the circumstances of these determinations, even assuming arguendo that 
USDOC was justified to resort to facts available to replace missing information, the duty of special 
circumspection means that USDOC was not justified in drawing adverse inferences and selecting 
adverse facts available.  
39. China has also demonstrated that USDOC failed to exercise special circumspection and 
select reasonable replacements for the missing information in Diamond Sawblades AR4 and OTR 
Tires AR5.  In these two challenged determinations, the Use of Adverse Facts Available norm was 
not triggered because USDOC did not consider the PRC -wide entity  to be non -cooperative but 
rather acknowledged that the PRC -wide entity and the respondents included within it had been 
fully cooperative.  In these cases, even assuming arguendo that USDOC was justified to resort to 
facts available to replace missing info rmation, USDOC failed to follow a process designed to select 
the "best" facts available for the PRC -wide entity, including all of the respondents included within 
that entity.  This is because USDOC partially relied on adverse facts available rates to repla ce the 
missing information despite its finding of cooperation by the PRC -wide entity.    
40. In response to the Panel 's questions, the United States did not deny that USDOC did not use 
special circumspection in the sense of Article 6.8 and Annex II(7) in Diamond Sawblades AR4, OTR 
Tires AR5, as well as the other 8 reviews14 in which USDOC did not make an express  finding of 
non-cooperation in the same phase of the proceeding.  Instead, the United States argued that 
there was no occasion for USDOC to use spec ial circumspection because USDOC did not apply facts 
available to the PRC -wide entity, including the producers/exporters included within that entity.  
However, as noted above, in substance, USDOC replaced information with facts available in each 
of these 1 0 determinations and was, therefore, subject to the disciplines of Article 6.8 and 
Annex  II(7).  USDOC failed to comply with these disciplines.    
VII. CHINA'S CLAIM UNDER ARTICLE 9.4, FIRST S ENTENCE, REGARDING T HE RATE 
DETERMINED IN 30 CHA LLENGED DETERMIN ATIONS  
41. Finally, China argues that in each of the 30 challenged determinations in which USDOC 
determined a rate for the PRC -wide entity, USDOC acted inconsistently with Article 9.4, first 
sentence.  Article 9.4 applies whenever a producer/exporter has "not {been} included in the 
                                               
12 Aluminum OI, Aluminum AR1, Aluminum AR2, Coated Paper OI, Shrimp OI, Shrimp AR7, Shrimp AR8, 
OTR Tires OI, OCTG  OI, Solar OI, Solar AR1, Diamond Sawblades OI, Steel Cylinders OI, Wood Flooring OI, 
Ribbons  OI, Ribbons AR3, Bags OI, PET Film OI, Furniture OI, Furnitur e AR7. 
13 Diamond Sawblades AR1, Diamond Sawblades AR2,  Diamond Sawblades AR3, Wood Flooring AR1, 
Wood Flooring AR2, Ribbons AR1, Bags AR3, Furniture AR8. 
14 Diamond Sawblades AR1, Diamond Sawblades AR2,  Diamond Sawblades AR3, Wood Flooring AR1, 
Wood Flo oring AR2, Ribbons AR1, Bags AR3, Furniture AR8. WT/DS471/ R/Add.1  
 
- B-19 - 
 
  examination ".  The question whether Article 9.4 applies to an individual producer/exporter is one 
of legal characterization that must be determined by reference to the facts of each case.  A 
properly determined individual margin of dumping results from "examination " of a respondent, and 
therefore is not subject to Article 9.4.  However, the same is not necessarily true for an improperly 
assigned individual rate which may not have resulted from "individual examination " in the sense  of 
the Agreement.  In such a case, a Member may act inconsistently with Article 9.4 in addition  to 
provisions addressing the proper process for determining an individual rate such as Articles 6.1, 
6.8, and Annex II.  
42. The evidence before the Panel indi cates that the PRC -wide entity and most of the individual 
respondents included within the entity were not properly included in the examination in the sense 
of Article 9.4, first sentence.  In particular, the severe flaws in USDOC 's process  for determining 
the PRC -wide entity rate mean that the PRC -wide entity was  not properly subject to individual 
examination.  Specifically, USDOC requested the information necessary to calculate a margin of 
dumping from few, if any, respondents included in the entity.  That  being the case, USDOC was 
obliged to arrive at the outcome specified under the Agreement ;  namely, application of a rate 
consistent with Article 9.4.  
43. Nevertheless, USDOC failed to adhere to the disciplines of Article 9.4, first sentence, in each 
of the relevant 30 challenged determinations.  In many of these 30 challenged determinations, the 
rate assigned to the PRC -wide entity is clearly above the permissible level, because it is higher 
than even the highest calculated margin in the same phase.  In t he remaining relevant challenged 
determinations, other comparators show that the rate assigned to the PRC -wide entity is not a 
neutral all others rate that is appropriate and non -discriminatory.  Accordingly, China has 
demonstrated that USDOC acted inconsi stently with Article 9.4, first sentence, in all the 30 
challenged determinations in which it determined a rate for the PRC -wide entity.  
 
 WT/DS471/ R/Add.1  
 
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  ANNEX B -3 
FIRST PART OF THE EX ECUTIVE SUMMARY OF T HE ARGUMENTS OF THE UNITED STATES  
I. INTRODUCTION  
1. At stake in this dispute is whether Members have the ability to "unmask " dumping concealed 
by a pattern of export prices which differ significantly, and whether Members have the ability to 
provide a remedy for dumping by exporters in non -market economy countries, such  as China.   
China proposes interpretations of the AD Agreement that are divorced from the customary rules of 
interpretation.  The Panel should find that all of China 's proposed interpretations of the AD 
Agreement simply are not supported by the ordinary me aning of the text of the agreement, in 
context, and in light of the object and purpose of the agreement.  Accordingly, all of China 's legal 
claims lack merit, and should be rejected.    
II. RULES OF INTERPRETAT ION, STANDARD OF REV IEW, AND BURDEN OF P ROOF  
2. Article  3.2 of the DSU provides that the dispute settlement system of the WTO "serves to 
preserve the rights and obligations of Members under the covered agreements, and to clarify the 
existing provisions of those agreements in accordance with customary r ules of interpretation of 
public international law. "  The applicable standard of review to be applied by WTO dispute 
settlement panels is that provided in Article 11 of the DSU and, with regard to antidumping 
measures, Article 17.6 of the AD Agreement.  Pe r these standards, the Panel should "review 
whether the authorities have provided a reasoned and adequate explanation as to (i) how the 
evidence on the record supported its factual findings; and (ii) how those factual findings support 
the overall determina tion."  It is a "generally -accepted canon of evidence " that "the burden of 
proof rests upon the party, whether complaining or defending, who asserts the affirmative of a 
particular claim or defence. "  Accordingly, China, as the complaining party, must esta blish a prima 
facie case before the United States, as the defending party, has the burden of showing consistency 
with that provision.  
III. CHINA 'S CLAIMS UNDER ARTIC LE 2.4.2 OF THE AD A GREEMENT  
3. When and how a Member may utilize the methodology describe d in the second sentence of 
Article 2.4.2 of the AD Agreement are questions of first impression for the Panel.  Article 2.4.2, by 
its express language, describes a particular set of circumstances in which it may be appropriate for 
an investigating authorit y to employ the alternative, average -to-transaction comparison 
methodology to, in the words of the Appellate Body, "unmask targeted dumping. " Through its "as 
applied " challenges in this dispute, China seeks nothing less than to read the second sentence of 
Article 2.4.2 out of the AD Agreement.  The Panel should not countenance China 's efforts in this 
regard.  
China 's Claims Related to the Coated Paper, OCTG, and Steel Cylinders Investigations  
4. Article 2.4.2 sets forth three comparison methodologies for de termining the "existence of 
margins of dumping. "  The two primary comparison methodologies are the average -to-average 
and transaction -to-transaction comparison methodologies.  The Appellate Body has observed that 
"there is no hierarchy between them " and "it would be illogical to interpret " them "in a manner 
that would lead to results that are systematically different. " 
5. The second sentence of Article 2.4.2 describes a third comparison methodology, the 
average -to-transaction comparison methodology, which m ay be used only when two conditions are 
met.  First, an investigating authority must "find a pattern of export prices which differ significantly 
among different purchasers, regions or time periods " and, second, the investigating authority must 
provide an e xplanation "as to why such differences cannot be taken into account appropriately by 
the use of a weighted average -to-weighted average or transaction -to-transaction comparison. "  
The Appellate Body has observed that the third methodology is an "exception. " As an exception, 
the third comparison methodology, logically, should  "lead to results that are systematically WT/DS471/ R/Add.1  
 
- B-21 - 
 
  different " from the two "normal " comparison methodologies when the conditions for its use have 
been met.   
The "Pattern Clause " 
6. The "pattern c lause" in the second sentence of Article 2.4.2 requires finding a regular and 
intelligible form or sequence of export prices that are unlike in an important manner or to a 
significant extent as between different purchasers , regions, or time periods.  An in vestigating 
authority examining whether a "pattern of export prices which differ significantly " exists should 
employ rigorous analytical methodologies and view the data holistically.  
7. China "acknowledges that an investigating authority is not bound by [t he] Anti-Dumping 
Agreement  to structure [its] enquiry into the existence of a relevant pricing pattern in any specific 
manner, " but nevertheless proposes a narrow interpretation of the "pattern clause " that would 
impose rigid, specific requirements on an i nvestigating authority 's assessment of the existence of a 
pattern of export prices which differ significantly.  Such requirements are not supported by the 
text of the second sentence of Article 2.4.2 of the AD Agreement.  
8. China argues that one of the "key characteristics " of a pattern is that "the observations 
comprising the pattern may be discerned – that is, distinguished – from that which is not part of 
the pattern. "  China 's arguments lack any foundation in the text of the second sentence of 
Article  2.4.2 or in logic.  On its face, the text of Article 2.4.2 contemplates a pattern of export 
prices that would transcend multiple purchasers, regions, or time periods.  Furthermore, the 
relevant "pattern " is "a pattern of export prices which differ significa ntly among different 
purchasers, regions, or time periods. "  Such a "pattern " necessarily includes both lower and higher 
export prices that "differ significantly " from each other .  Logically, an investigating authority might 
examine all of an exporter 's export sales in search of "a pattern, " and likely may find that "a 
pattern " exists which consists of all of the exporter 's export sales, including lower export prices to 
certain purchasers, regions, or time periods and higher export prices to other purchaser s, regions, 
or time periods.   
9. In each of the challenged investigations , the USDOC applied a two -part test – the Nails test 
– to determine whether a pattern of export prices that differed significantly among different 
purchasers, regions, or time period s existed.  In doing so, the USDOC used analytically sound 
methods that relied upon objective criteria and verified factual information submitted by 
respondents.  As reflected in the discussion in the final issues and decision memoranda, the 
USDOC undertoo k a rigorous, holistic examination of the exporters ' export prices in order to 
ascertain whether there existed a regular and intelligible form or sequence of export prices that 
were unlike in an important manner or to a significant extent as between differ ent purchasers , 
regions, or time periods.  In addition to explaining its analytical approach, the USDOC addressed 
numerous arguments raised by interested parties concerning the methodology applied in the 
examination of the existence of a pattern of export prices.  Accordingly, the USDOC did not act 
inconsistently with the requirements of the "pattern clause " of Article 2.4.2.  
10. China argues that the USDOC "failed properly to identify as 'significant ', in a quantitative, 
statistical  sense, the differences among export prices that it found to be a part of a relevant 
pricing pattern. "  The premises of China 's statistical arguments are flawed.  There are any number 
of ways that an investigating authority might examine export prices and identify a "pattern " within 
the meaning of the "pattern clause " of the second sentence of Article 2.4.2.  Nothing in the second 
sentence of Article 2.4.2 compels an investigating authority to undertake the particular statistical 
analysis discussed by China, even if the investigat ing authority chooses to utilize certain statistical 
tools.  The basic logical premise of China 's arguments is equally flawed.  China contends that the 
Nails test applied by the USDOC in the challenged antidumping investigation is not suitable to 
perform a  particular type of statistical analysis.  However, the Nails test does not involve the type 
of statistical analysis discussed by China.  China 's statistical criticism of the Nails test simply is 
inapposite.  China seeks to replace the USDOC 's balanced app roach with one of the extremes 
noted by the USDOC, namely that only prices at the very bottom of the price distribution ( i.e., 
outliers that are more than two standard deviations from the average market price of all of an 
exporter 's transactions) are suffi cient to distinguish the alleged "target " from others.  The sole 
justification for this extreme approach is China 's insistence on the use of a particular type of 
statistical analysis, which the AD Agreement does not require.  WT/DS471/ R/Add.1  
 
- B-22 - 
 
  11. China argues that there is a "[q]ualitative dimension of 'significant ' price differences " and 
that "it is appropriate to consider whether quantitative differences in prices reflect factors 
unconnected with targeted dumping , particularly where variations in price reflect normal or re gular 
dynamics of the relevant product market. "  However, a qualitative analysis, to the extent that the 
particular facts suggest that such an analysis is relevant, would be employed to assess how the 
export prices differ from each other, not why the expor t prices are different.  That latter question 
is not germane to an application of the "pattern clause. "  Additionally, China 's reasoning is 
unsound.  Low prices of sales, if they are below normal value, still constitute evidence that would 
support an affir mative finding of dumping, regardless of the intention of the exporter.  The 
"reason " for the low prices changes nothing.  In the challenged investigations, the USDOC was not 
obligated to examine why there were significant differences in export prices, and  the USDOC did 
not act inconsistently with Article 2.4.2 by not doing so.  
12. China argues that, "in order to identify a meaningful pattern, the investigating authority 
must assess such a pattern by observing the prices of individual export sales transacti ons."  
However, nothing in the text of the second sentence of Article 2.4.2 prohibits the use of weighted 
averages in connection with an investigating authority 's analysis of a "pattern " within the meaning 
of the "pattern clause. "  The text of the second s entence of Article 2.4.2 simply does not support 
China 's proposed interpretation, and actually supports the opposite conclusion.  The proper focus 
is not on individual export prices per se , or on differences between export prices to a given 
purchaser, regi on, or time period, but on differences in export prices among different  purchasers, 
regions, or time periods.  China is also incorrect to suggest that the use of weighted averages 
would lead an investigating authority to "overlook the individual prices. "  When the USDOC 
undertook analyses pursuant to the "pattern clause " in the challenged investigations, it took into 
account all of the export prices for U.S. sales reported by each exporter during the period of 
investigation.   
The "Explanation Clause " 
13. The second condition in the second sentence of Article 2.4.2, the "explanation clause, " 
provides that an investigating authority may utilize the alternative comparison methodology only 
"if an explanation is provided as to why such differences cannot be take n into account 
appropriately by the use of a weighted average -to-weighted average or transaction -to-transaction 
comparison. "  The "explanation clause " requires a reasoned and adequate statement by the 
investigating authority that makes clear or intelligibl e or gives details of the reason that it is not 
possible in the dumping calculation or computation to deal or reckon with export prices which 
differ significantly in a manner that is proper, fitting, or suitable using one of the normal 
comparison methodolo gies set forth in the first sentence of Article 2.4.2.  Since  an investigating 
authority may choose between the average -to-average and transaction -to-transaction comparison 
methodologies, and since they yield systematically similar results, there would be no purpose in 
requiring an investigating authority to discuss both the average -to-average and transaction -to-
transaction comparison methodologies in the "explanation " provided under Article 2.4.2.    
14. In the challenged investigations, the USDOC considere d whether observed price differences 
could be taken into account using the average -to-average comparison methodology.  The USDOC 
evaluated the difference between what the weighted average dumping margin would have been as 
calculated using the average -to-average comparison methodology and the average -to-transaction 
comparison methodology.  The USDOC concluded that the average -to-average method does not 
take into account such price differences because there is a meaningful difference in the weighted -
average d umping margins when calculated using the average -to-average method and the average -
to-transaction method.  The USDOC provided a reasoned and adequate statement that makes 
clear or intelligible or gives details of the reason that it is not possible to deal or reckon with 
export prices which differ significantly in a manner that is proper, fitting, or suitable using one of 
the normal comparison methodologies set forth in the first sentence of Article 2.4.2.  Accordingly, 
the "explanation " that the USDOC provi ded in the challenged investigations is not inconsistent with 
Article 2.4.2.  
Application of the Average -to-Transaction Comparison Methodology to All Sales  
15. China claims that the USDOC acted inconsistently with Article 2.4.2 in the challenged 
investigat ions by applying the alternative, average -to-transaction comparison methodology to all 
sales when, in China 's view, "the exceptional [average -to-transaction] comparison methodology WT/DS471/ R/Add.1  
 
- B-23 - 
 
  under Article 2.4.2 of the Anti-Dumping Agreement  must be limited solely to  sales comprising the 
relevant pricing pattern " and "may not be applied to all sales. "  China 's claims lack merit.  When 
the conditions for the use of the exceptional comparison methodology are met, nothing in the 
second sentence of Article 2.4.2 suggests that the use of the alternative methodology is 
constrained as China proposes.  The Appellate Body did not definitively declare in US – Zeroing 
(Japan)  that Article 2.4.2 limits an investigating authority 's application of the average -to-
transaction methodol ogy only to those transactions found to have been priced significantly lower 
than other transactions.  
16. China 's proposed interpretation of Article 2.4.2 is at odds with the Appellate Body 's 
recognition that the alternative methodology provides Members a means to "unmask targeted 
dumping. "  "Masked " or "targeted dumping " involves both sales below normal value, which are 
evidence of dumping, as well as sales above normal value, which may mask such dumping.  
"Targeted dumping " is "unmasked " by also applying the average -to-transaction comparison 
methodology to those higher -priced sales, and by ensuring that the higher -priced sales do not 
offset dumping that properly should be evidenced by the lower -priced sales when the conditions 
for using the exceptional, av erage -to-transaction comparison methodology are met.    
17. China 's arguments also are at odds with other prior findings of the Appellate Body.  For 
example, given that the Appellate Body has found that dumping is an exporter -specific concept 
and the margin  of dumping must be determined for the product under investigation as a whole, it 
would be an untenable interpretation of Article 2.4.2 to require an investigating authority to limit 
its application of the average -to-transaction comparison methodology to t ransactions "for which 
'targeted dumping ' has been found ."  China also departs from prior Appellate Body findings when it 
suggests that the alternative, average -to-transaction comparison methodology should be applied 
on a model -specific basis.  That would appear to be directly contrary what the Appellate Body said 
about the so -called "targeted dumping " provision in EC – Bed Linen .   
Zeroing in Connection with the Average -to-Transaction Comparison Methodology  
18. China 's claims that the USDOC acted inconsis tently with Article 2.4.2 of the AD Agreement 
by using zeroing in connection with the average -to-transaction comparison methodology are 
without merit.  The Appellate Body has never found that zeroing is impermissible in the context of 
the application of th e average -to-transaction comparison methodology when the conditions set 
forth in the second sentence of Article 2.4.2 are met.    China is incorrect when it argues that "the 
logic of the Appellate Body 's reasoning " in prior disputes means that zeroing is i mpermissible when 
the alternative, average -to-transaction comparison methodology is used to determine "margins of 
dumping " under the second sentence of Article 2.4.2.  
19. An examination of the text and context of Article 2.4.2 of the AD Agreement leads to the 
conclusion that zeroing is permissible – indeed, it is necessary – when applying the alternative, 
average -to-transaction comparison methodology, if that "exceptional " comparison methodology is 
to be given any meaning.  This accords with and is the logi cal extension of the Appellate Body 's 
findings relating to zeroing in previous disputes.   That the average -to-transaction comparison 
methodology is an exception to the normal comparison methodologies, and that it can be used to 
"unmask targeted dumping " is strong contextual support for the proposition that the rules that 
apply to the average -to-transaction comparison methodology are different from the rules that 
apply to the normal comparison methodologies.  Interpreting the second sentence of Article 2.4.2  
of the AD Agreement in a manner that would lead to the average -to-transaction comparison 
methodology systematically yielding results that are identical or similar to the results of the normal 
comparison methodologies would deprive the second sentence of A rticle 2.4.2 of any meaning; it 
would no longer be "exceptional " and would no longer provide a means to "unmask targeted 
dumping. "  Such an interpretation would not be consistent with the customary rules of 
interpretation of public international law, in pa rticular the "principle of effectiveness. " 
20. If zeroing is prohibited in both the average -to-average and average -to-transaction 
comparison methodologies, then both methodologies will always yield identical results.  This is true 
because, for both methodo logies, all of the normal value and export price data that are fed into 
the calculations and all of the calculations that are performed are identical.  The mathematical 
operations simply are conducted in a different order under the two methodologies.  Thos e 
mathematical operations can be rearranged to reveal that the two calculation methodologies, 
without zeroing, actually are identical.   Three mathematical principles underlie the mathematical WT/DS471/ R/Add.1  
 
- B-24 - 
 
  equivalence argument:  the associative, commutative, and distrib utive principles.  Mathematical 
equivalence can be demonstrated using hypothetical examples, but the problem is not merely 
hypothetical.  Even with all of the complexities of weighted averaging, numerous models, and 
various adjustments to ensure price comp arability, the actual result in the challenged antidumping 
proceedings, if zeroing is prohibited under both methodologies, would be that the average -to-
average and the average -to-transaction comparison methodologies would yield mathematically 
equivalent re sults.  The Appellate Body has considered the "mathematical equivalence " argument 
in previous disputes, but the factual situations of those disputes can be distinguished from the 
factual situation here, and the Appellate Body 's prior consideration of the a rgument neither 
supports nor compels rejection of the argument in this dispute.  
21. The meaning of the second sentence of Article 2.4.2 can be confirmed through recourse to 
documents from the negotiating history of the AD Agreement, which reflect that Cont racting 
Parties on both sides of the asymmetry/zeroing/targeted dumping issue understood that the three 
issues were linked and that zeroing was understood to be a key feature of the asymmetrical 
comparison methodology, and essential for its application to address masked dumping.  
China 's Claims Related to the PET Film Third Administrative Review  
22. China 's claims that "the United States acted inconsistently with Article 9.3 of the Anti-
Dumping  Agreement and Article VI:2 of the GATT 1994 by applying zeroing  procedures in an 
administrative review of the anti -dumping order concerning PET Film from China " lack merit.  
China 's claims fail because they are dependent upon the Panel finding that the use of zeroing is 
impermissible when applying the alternative, ave rage-to-transaction comparison methodology 
pursuant to the second sentence of Article 2.4.2 of the AD Agreement.  However, as we have 
demonstrated, zeroing is permissible – indeed, it is necessary – when applying the alternative, 
average -to-transaction com parison methodology.  Accordingly, when an antidumping duty is 
calculated in an administrative review pursuant to the second sentence of Article 2.4.2 – i.e., using 
the alternative, average -to-transaction comparison methodology, with zeroing – that antidum ping 
duty necessarily does not exceed the margin of dumping as established under Article 2 of the AD 
Agreement.  On the contrary, it is, by definition, the margin of dumping as established under 
Article 2 of the AD Agreement.  
23. While the Appellate Body h as found previously that the use of zeroing in administrative 
reviews, including in connection with the use of an average -to-transaction comparison 
methodology, is inconsistent "as such " with the AD Agreement, the Appellate Body has never 
found that zeroin g is impermissible in connection with the application of the alternative, average -
to-transaction comparison methodology pursuant to the second sentence of Article 2.4.2 of the AD 
Agreement.  As with investigations, the permissibility of using zeroing in ad ministrative reviews 
when applying the alternative, average -to-transaction comparison methodology provided in the 
second sentence of Article 2.4.2 is an issue of first impression for the Panel.  
IV. CHINA HAS FAILED TO ESTABLISH THAT THE U NITED STATES HAS B REACHED 
ARTICLES 6.10 AND 9. 2 ON ACCOUNT OF AN A LLEGED 'SINGLE RATE 
PRESUMPTION ' 
A. China Has Failed To Establish a Rule Or Norm Of General And Prospective 
Application That May Be Challenged "As Such "  
24. China 's "as such " claims cannot be sustained becau se China 's evidence fails to establish that 
the so -called Single Rate Presumption is a "rule" or "norm of general and prospective application " 
that can be challenged "as such. "  In particular, China has not demonstrated that USDOC 's 
treatment of Chinese co mpanies rises to the level of a measure challengeable "as such ", that is, a 
measure that expresses a rule or norm of general and prospective application.   Even assuming 
that China has demonstrated the existence of such a measure, "particular rigor is requ ired … to 
support a conclusion as to the existence of a 'rule or norm ' that is not expressed in the form of a 
written document. "  China has not met this high evidentiary burden.  Specifically, a complainant in 
order to discharge its high burden must demons trate, at the very least:  (1) that the rule or norm 
embodied in that measure is attributable to the responding Member; (2) the precise content of the 
rule or norm; and (3) that the rule or norm has general and prospective application.   WT/DS471/ R/Add.1  
 
- B-25 - 
 
  25. The extent of China 's arguments with respect to these three elements rests with its faulty 
claim that the proffered evidence establishes that the so -called Single Rate Presumption is a rule 
or norm of general and prospective application, the third element.   
26. With re spect to Policy Bulletin 05.1, upon which China relies as evidence of a purported rule 
or norm of general and prospective application, China quotes language it describes as a 
"statement of policy. "  However, the precise language China quotes is not from th e section in 
Policy Bulletin 05.1 that it actually titled "Statement of Policy, " but in the "Background " section.  
The referenced language is also speaking only to an "NME antidumping investigation, " and thus 
cannot be extended to periodic review proceedin gs.  The Antidumping Manual, upon which China 
similarly relies, is also not availing to China 's argument.  It clearly states on the very first page 
that it "is for the internal training and guidance of Import Administration (IA) personnel only, and 
the pra ctices set out herein are subject to change without notice.  This manual cannot be cited to 
establish DOC practice ." 
27. China also tries to establish that the alleged Single Rate Presumption has general and 
prospective application by attempting to import the panel 's findings in US – Shrimp II  (Viet Nam) .  
A prior panel 's findings cannot alleviate China 's own burden.  Moreover, in any event, the panel 's 
findings in that dispute concern an alleged norm which differs in material respects from the 
measure Chin a has raised here.   
28. China cites to prior USDOC determinations involving non -market economy cases.  These 
documents do not help China meet its burden of establishing that the so -called "single rate 
presumption " is an unwritten measure.  Moreover, it is  critical to note that the referenced 
statements are taking place in the context of specific investigations rather than any document that 
purports to reflect a general and prospective measure.  Thus, even under China 's presentation, 
these documents only il lustrate what USDOC has practiced in particular instances in the past.  
Legally, past practice is insufficient to establish the existence of a measure because repeated 
application in and of itself only proves that repeated applications occurred.  
29. Moreov er, USDOC is not applying the same outcome to every case without consideration of 
the record evidence or a party 's arguments, but evaluates, in each instance where a party 
provides such information and argument, whether that party is under common governmen t 
control.  Moreover, the Government of China could request that USDOC re -examine its NME status 
under U.S. antidumping duty law.  Given that this flexibility exists, and USDOC does not 
automatically reach the same outcome in each case, China has failed to  demonstrate that this is 
anything more than a "consistent practice " that USDOC applied in a discrete number of cases.  
30. Finally, China cites certain decisions from U.S. domestic courts.  The quoted language from 
these decisions do not establish what USD OC will do in the future, but speaks to it being "within 
Commerce 's authority to employ a presumption of state control for exporters in a nonmarket 
economy " and that such a presumption – because it is not required by U.S. law – is subject to 
change at any time.  More fundamentally, these decisions – like those at issue in in Thailand – 
Cigarettes (Philippines)  – are necessarily decisions evaluating particular complaints rather than 
authoritative statements of future policy.  
B. China Has Misapplied The Legal  Analysis  
31. Legally, China fails to recognize that the critical issue in the provisions that it invokes is that 
not every legal entity is necessarily a distinct exporter or producer under the AD Agreement.  To 
the contrary, these provisions permit inves tigating authorities to treat the export activity of 
multiple companies as the pricing behavior of a single exporter or producer.  Factually (and 
legally), China fails to address the basis for USDOC 's treatment of Chinese firms as part of a single 
governme nt entity (China 's Accession Protocol and Working Party Report), or USDOC 's continued 
finding that China should be treated as an NME.  Moreover, China does not address that the 
information solicited by the United States allows Chinese firms to demonstrate whether they 
should be treated as part of a common Chinese government entity or not.  Because of such 
failings, China 's various claims of breach are deficient and must fail.  
32. In applying Article 6.10 of the AD Agreement, the initial question is to ident ify the entity, or 
group of entities, that constitute each known "exporter " or the known "producer. " China has no WT/DS471/ R/Add.1  
 
- B-26 - 
 
  basis for asserting that related entities, simply because they may be organized as a formal matter 
as separate companies, must be treated as i ndividual exporters for the purpose of Article 6.10.  
Similarly, Article 9.5 of the AD Agreement establishes an obligation to carry out a review to 
determine an "individual " margin of dumping for a new shipper "provided that the[] exporter[] or 
producer[] can show that they are not related to any of the exporters or producers in the 
exporting country who are subject to the anti -dumping duties on the product. "  This provision 
indicates that such an exporter that cannot demonstrate that it is not related to a n exporter or 
producer subject to the duty would not be entitled to an "individual " margin of dumping.  
33. Accordingly, depending on the facts of a given situation, an investigating authority may 
reasonably consider actual commercial activities and relati onships of companies in deciding 
whether they should be treated as a single exporter or producer as opposed to simply accepting 
their nominal status as legally distinct companies.  This textual analysis is consistent with the 
Appellate Body findings in EC – Fasteners , which in turn approvingly drew from the panel report 's 
findings in Korea – Certain Paper .   
34. Article 9.2 provides that "when " antidumping duties are being imposed, they shall be 
collected in appropriate amounts on a non -discriminatory basis  from all sources, i.e., imposed on 
imports from all sources found to be dumped and at the appropriate rate.  Differences in duty 
rates must reflect differences in the dumping margin for the source.  
35. Contrary to China 's arguments, nothing in the text of  Article 9.2, as with the text of Article 
6.10, precludes USDOC from treating multiple companies as a single entity, including, where 
appropriate, a China -government entity.  China 's attempts to rely on EC – Fasteners  to avoid this 
interpretation is mispla ced because it ignores the Appellate Body 's conclusion in that dispute that 
"if the State instructs or materially influences the behavior of several exporters in respect of prices 
and output, they could be effectively regarded as one exporter …  and a singl e margin and duty 
could be assigned to that single exporter. "   
C. China 's Protocol Of Accession Supports Treating Companies as Part of a 
Single PRC Entity in Antidumping Proceedings  
36.   China 's Protocol of Accession supports treating companies as part o f a single China -
government entity in antidumping proceedings.  Under the Protocol, a Member can presume that 
non-market economy conditions prevail in China, as the starting point for a discussion about the 
extent to which market economy conditions actuall y prevail, to decide whether market treatment 
for Chinese respondents is warranted.  This approach preserved for Members the flexibility to 
adjust their antidumping policy and practice depending on the progression of China 's reforms.  
37. The Accession Prot ocol, particularly Article 15, provides important context in terms of 
deciding which entities in China should be considered as a single entity for purposes of Article 
6.10.  In particular, the Protocol supports USDOC 's: (1) decision to calculate the normal  value for 
the industry in question based on an NME methodology and its continued use of this methodology; 
(2) recognition that multiple companies may comprise a single exporter or producer, i.e., a single 
China -government entity; and (3) understanding reg arding export price and output that the 
Government of China exerts control or material influence over entities located in China and can 
impact such decisions.  
1.  Normal Value  
38. Specifically, Paragraph 15 of the Accession Protocol indicates that China co nfirmed on 
accession that importing WTO Members need not calculate normal value on the basis of Chinese 
prices or costs for an industry subject to an antidumping investigation.  Paragraph 15 further 
indicates, in part, that "the non -market economy provisio ns" of paragraph 15 shall no longer apply 
to a specific industry or sector in situations where China "establish[ed], pursuant to the national 
law of the importing WTO Member, that market economy conditions prevail in a particular industry 
or sector. "   WT/DS471/ R/Add.1  
 
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  2. Treating Multiple Companies in China as Part of a China -
Government Entity  
39. The descriptions of its economy in the Working Party Report indicated that China planned to 
develop an economy where the State continued to play a predominant role.  Members expr essed 
concern about the significant level of influence of the Government of China on its economy and 
how such influence could affect trade remedy proceedings.  Paragraph 15 of the Accession Protocol 
specifically reflects the concern among Members that gove rnment influence may create special 
difficulties in determining cost and price comparability in the context of antidumping 
investigations, and that a strict comparison with Chinese costs and prices might not always be 
appropriate.   
40. Thus, underlying th e Accession Protocol is evidence that non -market economy conditions 
prevail in China until otherwise demonstrated.  The understanding that market economy conditions 
do not prevail and the logical consequence that this entails state control over firms, resu lting in 
treating certain enterprises as parts of a government -controlled entity, is not inconsistent with 
Article 6.10.  The Accession Protocol thus supports the conclusion that USDOC may consider that 
there exists a China -government entity to which expor ters belong.   
3.  Pricing and Output of Exports  
41. China 's Accession Protocol also provides the basis by which an importing Member may 
presume that China controls or materially influences all entities and thereby consider all exporters 
or producers as pa rt of a single China -government entity absent positive evidence to the contrary.  
USDOC 's finding that the Government of China is legally or operationally in a position to exercise 
restraint or direction over entities located in China and can impact their decisions about the 
production, pricing, or costs of products destined for consumption in China is not subject to 
dispute.  As a result, given that China 's Accession Protocol provides importing Members the basis 
on which to presume that the Government of C hina exerts control or material influence over 
commercial entities with respect to the pricing and output of products destined for consumption in 
China, it is also reasonable to presume that that the Government of China simultaneously exerts 
control or mat erial influence over these entities with respect to the pricing and output of identical 
or similar products destined for export.   
D. The Findings From EC-Fasteners  Are Inapposite  
42. As an initial matter, the United States believes the analysis in EC – Fasteners  to be internally 
inconsistent.  Specifically, in EC – Fasteners , the Appellate Body correctly recognized that state 
control is a basis to treat nominally distinct entities as a single entity, yet rejected doing so on the 
basis of China 's Accession Protocol, which memorializes precisely those types of concerns.  This 
dispute, however, is factually different than EC – Fasteners as well as US – Shrimp II .   
43. First, USDOC actually collects and evaluates information that goes directly to whether 
Chine se respondents should be afforded individual treatment or not.  USDOC 's separate rate 
analysis allows for an in -depth and individualized review of a company 's relationship with the 
Chinese government.  EC – Fasteners did not preclude such examination, but rather noted the 
examination in that dispute, the IT Test, was flawed because the relevant criteria denied individual 
treatment to producers and exporters with "little or no structural or commercial relationship with 
the State and whose pricing and output decisions are not interfered with by the State. "  Here, 
China makes no similar claim against USDOC 's Separate Rate Test, but rather takes issue that any 
such test is required at all.     
44. Second, USDOC has engaged in a determination that China is a non -market economy.  At no 
time during the 13 challenged investigations and 19 challenged reviews proceedings did China, or 
any Chinese exporter, request that USDOC reconsider China 's non -market economy status.  Thus, 
China cannot invoke EC – Fasteners and US – Shrimp II  to argue that USDOC erred by designating 
China a non -market economy solely on the basis of the Accession Protocol.   
45. Third, the evidence China puts forward for its as -applied claims is deficient here.  Principally, 
China relies on Table SRP , which appears to be a compilation of quotes from various antidumping 
proceedings.  This table proves nothing because it simply provides extracted generalized quotes WT/DS471/ R/Add.1  
 
- B-28 - 
 
  rather than any evidence of concrete treatment by USDOC with respect to any of the partic ular 
participants in any of the respective proceedings.  For example, nowhere in Table SRP does China 
present evidence to indicate whether the China -government entity was under examination for 
purposes of Article 6.10.  Likewise, China 's table fails to dem onstrate as -applied breaches of 
Articles 6.10 and 9.2 because it is does not demonstrate that any actual exporter or producer 
failed to receive an individual margin or confirm whether circumstances that triggered such a 
denial were inconsistent with the AD  Agreement.  
46. In sum, USDOC 's conclusion that multiple companies in China are part of the China -
government entity is based on a permissible, and, indeed, eminently reasonable, interpretation of 
Articles 6.10 and 9.2.  Therefore, the United States request s that the Panel dismiss China 's claims 
under both these provisions, both "as such " and as applied in the 32 challenged determinations.  
V. CHINA 'S ARTICLE 9.4 CLAIMS  MUST FAIL  
47. Article 9.4 applies only to the "anti-dumping duty applied to imports from e xporters or 
producers not included in the examination. "  In other words, Article 9.4 does not govern the rate 
assigned to those companies that have been included in the examination.  Article 9.4 is thus 
inapplicable either to the alleged unwritten measure "as such " or as applied because China has not 
established this predicate condition.  China makes no attempt to demonstrate that the China -
government entity was not included in the examination, and therefore, Article 9.4 is implicated.  In 
any event, in eac h of the 13 challenged antidumping proceedings, the China -government entity 
received its own rate, and thus, Article 9.4 does not apply.  Beginning with the original 
investigations in each of the 13 challenged proceedings the China -government entity receiv ed its 
own rate based on facts available consistent with Article 6.8 of the AD Agreement.  
48. China argues that Article 9.4 does not allow an investigating authority to differentiate 
between those non -selected companies that are uncooperative, and those no n-selected companies 
that are cooperative.  Rather, according to China, the phrase "any anti -dumping duty applied " 
means that there can only be one rate applied to the non -selected companies.  The text of 
Article  9.4 of the AD Agreement actually provides t hat any antidumping duty for those producers 
or exporters not under examination "shall not exceed " the weighted -average margin of dumping 
for the investigated exporters or producers, and restricts the use of zero and de minimis  margins 
and margins based on  facts available in calculation of that ceiling.  China thus improperly seeks to 
create a new obligation to calculate a "single " rate.   
VI. CHINA HAS FAILED TO ESTABLISH THAT THE U NITED STATES BREACHE D 
ARTICLE 6.8 AND ANNE X II OF THE AD AGREE MENT  
A. China Has Failed To Establish That USDOC 's Use Of Facts Available In 
Assigning A Rate To The China -Government Entity As A Rule Or Norm Of 
General And Prospective Application That May Be Challenged "As Such " 
49. China has not established that USDOC 's use of fac ts available in assigning a rate to the 
China -government entity constitutes a measure which expresses a rule or norm of general and 
prospective application.  Specifically, China fails to specify the purported norm 's precise content or 
that it has general a nd prospective application.  
50. China appears to allege that the content of this norm is that USDOC selects "adverse facts " 
when USDOC finds non -cooperation by the China -government entity.  China fails though to explain 
what qualifies a fact as adverse.  T he investigating authority does not know whether the 
information it has selected is indeed adverse or potentially favorable because the ideal information 
is missing.  China also makes several inconsistent statements with respect to whether a finding of 
non-cooperation – what China refers to as the "trigger condition " for the norm – is also part of this 
alleged norm, which cast further doubt on the content of this norm.   
51. Furthermore, China has not demonstrated a norm of general and prospective applicati on 
that may be challenged as such.  The determination to apply facts available to the China -
government entity, and its selection of the rate to apply to the China -government entity, continues 
to be a case -by-case determination that will reflect the facts o f a given case.  Moreover, the U.S. WT/DS471/ R/Add.1  
 
- B-29 - 
 
  statutory and regulatory framework provides USDOC with the discretion to make such a 
determination based on the facts and information before it.   
52. The evidence China submits in support of the existence of the norm is  also clearly deficient.  
China 's sample of USDOC 's NME cases over a 12 -year period does not demonstrate the existence 
of a norm or rule of general and prospective application but rather demonstrates that the use of 
facts available varies in every proceedi ng based on the facts and circumstances at issue.  Likewise, 
the Antidumping Manual merely describes instances in which USDOC "may" apply adverse 
inferences in selecting the available facts to determine the rate for the China -government entity, 
not any gen eral and prospective rule.  The judicial decisions cited by China are adjudications over 
issues decided in prior antidumping proceedings and do not constitute a pronouncement on what 
USDOC will do prospectively.  Finally, USDOC 's own statements cited by Ch ina provide no insight 
into the challenged determinations as these statements provide an incomplete context for the 
selection of facts available, as demonstrated by the analysis and actual selection in the challenged 
cases.  
B. China Has Misapplied The Lega l Analysis With Respect To Article 6.8 And 
Annex II Of The AD Agreement  
53. China 's interpretation of Article 6.8 and Annex II of the AD Agreement are flawed in key 
respects.  First, China misinterprets the terms "any interested party " and "necessary infor mation " 
in Article 6.8 to argue that USDOC must request from each company within the China -government 
entity information pertaining to the calculation of a dumping margin, i.e., issue a dumping 
questionnaire to each of these companies, before it resorts to  facts available.  Such a reading of 
Article 6.8 is not supported by its text, nor shared by any previous panel or the Appellate Body.  
Moreover, such an interpretation would seriously undermine the ability of investigating authorities 
to determine appropr iate dumping margins and "to proceed[] expeditiously " in reaching 
determinations in accordance with Article VI of the GATT 1994 and the AD Agreement.  Indeed, 
China 's strained interpretation disregards that an investigating authority requires information f or 
determinations separate from the dumping margin determination.  
54. Second, China argues that where an investigating authority collapses multiple entities into a 
single exporter, the investigating authority may rely on facts available only if it requeste d this 
specific information from all companies within that exporter.  China is incorrect.  To avoid a 
potential scenario in which the China -government entity shifts its exports through the 
producer/exporter of the China -government entity which is assigned the lowest rate, an 
investigating authority must apply the same antidumping duty rate to all of the China -government 
entity 's exports.  Moreover, if companies within the China -government entity do not provide 
requested information, the investigating author ity must determine what this means for the China -
government entity.  Further, where a company that is part of the China -government entity has 
been notified of and fails to respond to an initial request for quantity and value information, the 
investigating authority may find that the company, and by extension, the China -government 
entity, has failed to respond to a request for necessary information and has significantly impeded 
the progress of the proceeding.  Finally, China mischaracterize the present dispu te because it 
ignores that USDOC may need to rely on facts available if it did not have the necessary 
information to calculate a dumping margin for the NME -government entity because of the non -
cooperation of all or nearly all  companies within the entity.  
55. Third, China misinterprets the term "special circumspection " as stated in paragraph 7 of 
Annex II.  China argues the term requires the investigating authority to consider whether it 
requested such information from each of the members of the China -gover nment entity.  Article 6.8 
does not limit the type of information or the parties from whom the information was requested in 
the way China advocates here.  Moreover, an investigating authority (such as USDOC) may find 
that certain companies within the NME -government entity have failed to cooperate by failing to 
respond to an initial request for quantity and value information or failing to provide requested 
information pertaining to the actual calculation of a dumping margin.  In each instance, the 
investigat ing authority may also find that such a failure has significantly impeded the proceeding.   WT/DS471/ R/Add.1  
 
- B-30 - 
 
  C. USDOC 's Use Of Facts Available With Respect To The China -Government 
Entity Is Not "As Such " Inconsistent With Article 6.8 And Annex II  
56.  Nothing in Article 6. 8 or Annex II limits the application of facts available to those facts that 
are most favorable to the interests  of a party who fails to supply information, nor does the 
ordinary meaning of the term "facts available " speak to which facts should be selected.   Rather, 
the permission to apply the "facts available " in making a determination pursuant to Article 6.8 
means that an administering authority, when faced with a situation in which necessary facts have 
not been supplied, may apply those facts that are oth erwise available – and will have to make 
inferences in deciding to how to select from the available facts.  As Annex II(7) recognizes, when 
facts available are applied "this situation could lead to a result which is less favourable to the party 
than if the  party did cooperate. "  Thus, the use of an "adverse inference " in this context does not 
mean the application is punitive, it simply reflects that the selection of information from the 
available information takes into account the party 's failure or refusal  to provide the necessary 
information, as the Appellate Body found in US – Carbon Steel (India) .  Moreover, USDOC 's use of 
an "adverse inference " in this context is not based upon a "speculative adverse inference " as was 
employed in China -GOES , where the i nvestigating authority ignored substantiated facts .   
57. Annex II of the AD Agreement establishes certain requirements when investigating 
authorities must resort to facts available to make their determinations.  By following the 
safeguards established in Annex II, investigating authorities are able to select information that is 
considered the "best information available " consistent with the aim of Article 6.8 and Annex II to 
allow administering authorities to make determinations and complete their investig ations.  
58. Where USDOC relies on secondary information, the relevant domestic instruments direct 
that USDOC "shall, to the extent practicable, corroborate that information from independent 
sources reasonably at [its] disposal. "  The relevant regulation de fines the term "corroborate " to 
mean that USDOC "will examine whether the information to be used has probative value. "  In 
doing so, USDOC considers the reliability and relevance of the information to be used as facts 
available.  Where USDOC finds the info rmation is unreliable or not relevant to the non -cooperating 
party being examined, USDOC rejects such information as "facts available ", as required by law.  In 
fact, the USDOC rejected certain information as "facts available " in many of the challenged 
determinations.   
59. The actual determinations referenced by China also demonstrate there is no rule or norm of 
general or prospective application when USDOC selects facts available to be applied to the non -
cooperating China -government entity, or any other no n-cooperating party for that matter.   
USDOC is neither prevented from evaluating the information on the record in selecting information 
to be used as facts available, nor is it prevented  from exercising special circumspection in 
determining whether the in formation selected has probative value.  These determinations 
demonstrate that USDOC engaged in the required "comparative, evaluative assessment " of the 
information it may use as a proxy for the China -government entity 's rate.   
60. China 's second and thir d claims concerning the purported norm are inconsistent with DSU 
Article 6.2 because China did not raise these claims on an "as such " basis in its panel request.  
These claims concern USDOC 's initial decision to apply facts available, i.e., its finding tha t the 
China -government entity is non -cooperative on the basis of the non -cooperation of one or more 
companies within the China -government entity.  Accordingly, these claims must be rejected 
because they are outside of the Panel 's terms of reference, and ar e not otherwise identified by 
China as being part of a norm of general and prospective application.  
D. China Has Not Established Its As -Applied Claims  
61. As an initial matter, in seven of the challenged determinations, USDOC did not make a 
determination based on "facts available ".  Rather, in these particular determinations, USDOC 
assessed duties at the cash deposit rate and thus, the duty rate previously established from a 
previous period of investigation or review continued to apply.  Where USDOC did ma ke a facts 
available determination in a challenged proceeding, the evidence demonstrates that USDOC 
notified companies within the China -government entity of the necessary information required, and 
appropriately determined that a failure to respond to this request for information warranted the 
use of facts available for the China -government entity.  In these 19 determinations, USDOC WT/DS471/ R/Add.1  
 
- B-31 - 
 
  applied facts available, using one of the following, depending on the information available: (1) a 
rate from the domestic indus try's application; (2) a rate calculated for a cooperative respondent in 
a previous period of review; or (3) a rate calculated from a cooperative respondent 's transactional 
information in the current period of investigation.  Each determination met the req uirements under 
Article 6.8 and Annex II:  each had a factual foundation; no substantiated fact contradicted the 
information selected; and nothing indicated the information selected was an unreasonable 
replacement for the missing information.  
VII. THE PANE L SHOULD REJECT CHIN A'S CLAIMS THAT USDOC ACTED 
INCONSISTENTLY WITH ARTICLE 6.1 OF THE A D AGREEMENT  
62. Per the text itself, Article 6.1 concerns proper notice of the information required by an 
investigating authority, not the substantive type of informati on it must seek.  Article 6.1 does not 
apply if the investigating authority does not require certain information, or is not asking for such 
information at that point in the proceeding.  Thus, even assuming, arguendo , that the 
investigating authority is see king the wrong information in determining a dumping margin for the 
NME-government entity, Article 6.1 is concerned with whether the investigating authority gave 
notice of the information that it has determined that it requires and is seeking from parties.  
63. Article 6.1 must also be read in conjunction with Article 6.8 and Annex II of the AD 
Agreement.  Where the investigating authority has properly determined that a party has failed to 
respond to a request for information or otherwise significantly impede d the proceeding, despite 
having notice of the request and the consequences of not cooperating, Articles 6.8 and 6.1 
together do not require the investigating authority to continue to allow that party opportunities to 
provide information.  Therefore, China 's argument that an investigating authority must request the 
specific information necessary for the calculation of a dumping margin from all companies within 
the NME -government entity is unsupported by the text of Article 6.1, and also ignores the realitie s 
of an antidumping proceeding and the different circumstances of all interested parties.  Moreover, 
in each of the 26 challenged proceedings, the evidence confirms that USDOC (1) properly notified 
all companies within the China -government entity of the in formation which USDOC required, and 
(2) permitted companies within the China -government entity ample opportunity to present in 
writing all evidence which they considered relevant.   
VIII.  CONCLUSION  
64. For the foregoing reasons, the United States respect fully requests that the Panel reject 
China 's claims.  
 
 
 WT/DS471/ R/Add.1  
 
- B-32 - 
 
  ANNEX B -4 
SECOND  PART OF THE EXECUTIV E SUMMARY OF THE ARG UMENTS OF THE UNITED STATES  
I. INTRODUCTION  
1. China continues to propose interpretations of the covered agreements that are untenable 
and inc onsistent with the customary rules of interpretation of public international law.  China still 
has failed to establish that the United States has breached any provision of the Agreement on 
Implementation of Article VI of the General Agreement on Tariffs an d Trade 1994  (the "AD 
Agreement ") or the General Agreement on Tariffs and Trade 1994  ("GATT 1994 "). 
II. CHINA 'S CLAIMS RELATED TO USDOC 'S APPLICATION OF THE  ALTERNATIVE, 
AVERAGE -TO-TRANSACTION COMPARIS ON METHODOLOGY SET F ORTH IN THE 
SECOND SENTENCE OF A RTICLE 2.4.2 OF THE AD AGREEMENT ARE WITHOU T 
MERIT  
2. China 's proposed interpretations are untenable, in particular because they would read the 
second sentence of Article 2.4.2 out of the AD Agreement entirely.  While China attacks the Nails 
test applied by t he U.S. Department of Commerce ( "USDOC ") in the challenged antidumping 
investigations, China does not describe how, in its view, an investigating authority should discern 
whether there exists a pattern of export prices which differ significantly among diff erent 
purchasers, regions, or time periods.     
A. The "Pattern Clause " Does Not Require Investigating Authorities To Utilize 
any Particular Type of Statistical Analysis  
3. China insists that it is "not arguing that the Anti-Dumping Agreement compels the a doption 
of any particular statistical method or particular standard deviation threshold or multiple thereof. "  
However, at every turn, the arguments China advances belie that assertion. China 's arguments are 
all premised on the notion that a statistical pr obability analysis – or China 's own version of such an 
analysis – is the standard against which the Nails test is to be measured.  We have shown that  
USDOC makes no assumptions (whether implicit or explicit) concerning the probability distribution, 
let alo ne assume the existence of a particular type of probability distribution, and we have not 
suggested that the Nails test would meet the requirements for statistical probability analysis  as 
understood by China or even "as generally recognized in the field of  statistics. "  That, of course, is 
not the standard against which the Nails test is to be measured.  The question before the Panel, 
which China appears to misunderstand, is whether USDOC 's application of the Nails test in the 
challenged investigations is c onsistent with the terms of the "pattern clause " of the second 
sentence of Article 2.4.2 of the AD Agreement.  We have shown that it is.  
4. China refers to the Appellate Body report in US – Upland Cotton (Article 21.5 – Brazil) .  
There are no parallels bet ween the facts in that dispute and the facts here, and that portion of the 
US – Upland Cotton (Article 21.5 – Brazil) Appellate Body report does not contain findings that are 
relevant to the Panel 's resolution of this dispute.  
5. China asserts that, "USDOC  designed the test as a statistical tool to conduct a probability 
analysis for purposes of assessing whether a set of observed export prices differed in a relevant 
way."  China 's assertion is wrong, and it is plainly contradicted by what USDOC said at the time it 
made its determinations.   
6. China 's interpretation of the "pattern clause " limits it to identifying random and aberrational 
outliers, or "unusually low " export prices.  This interpretation, however, is incorrect.  The terms of 
the second sentence  of Article 2.4.2 do not refer to "unusually low export prices. "  Further, China 's 
position is contrary to the logic of the second sentence of Article 2.4.2.   Dumping may be 
"targeted " even in a situation where lower -priced sales are not "unusual " or "outliers."  Lower 
prices may not be unusual and may not appear to be outliers at all.   WT/DS471/ R/Add.1  
 
- B-33 - 
 
  B. The "Pattern Clause " Does Not Require Investigating Authorities To 
Analyze Export Sales on an Individual Basis  
7. China argues that the second sentence of Article 2.4.2  of the AD Agreement establishes a 
"legal requirement to focus on individual export prices " and refers to the Appellate Body report in 
US – Zeroing (Japan) .  To the extent that the Panel takes into account the Appellate Body 's 
discussion in paragraph 135 o f the US – Zeroing (Japan)  Appellate Body report, it should exercise 
caution in doing so.  As was the case in US – Softwood Lumber V (Article 21.5 – Canada)  and US – 
Stainless Steel (Mexico) , the US – Zeroing (Japan) dispute did not involve an actual appli cation of 
the alternative, average -to-transaction comparison methodology.  Furthermore, the Appellate 
Body expressly was not making findings of legal interpretation that resulted from an analysis 
undertaken pursuant to the customary rules of interpretation .  Additionally, the Appellate Body 
simply was not addressing the question of whether or not it is permissible for an investigating 
authority to use weighted averages when examining export prices to determine if a "pattern " 
exists.  While China quotes from  the Appellate Body report, it offers no explanation for its 
assertion that the statements it quotes "strongly support China 's interpretation. "   
8. China contends that its reading of the second sentence of Article 2.4.2 "ensures parallelism  
between the an alysis of whether the W -T comparison methodology may be used and the 
substantive nature of the W -T comparison methodology, which by definition focuses on individual 
export prices. "  However, China 's proposed reading lacks textual and contextual support.  
9. China complains that "[i]t would be incongruous to interpret this text to permit an 
investigating authority to overlook the individual prices. "  We have explained that USDOC did not 
"overlook " any individual prices.  Calculating weighted averages of the e xport prices to each of the 
purchasers is a way for the investigating authority to analyze the "hundreds or even thousands " of 
export prices and make a judgment about differences not among all of the hundreds or thousands 
of export prices, but among the sm all number of purchasers.  China 's argument once again reveals 
that China is seeking to impose statistical probability analysis as the standard against which an 
investigating authority 's examination must be measured.   
C. The "Pattern Clause " Does Not Requ ire Investigating Authorities To 
Examine Why Export Prices Are Different  
10. In China 's view, even after the investigating authority has found a pattern, the investigating 
authority must then conduct a second, independent investigation of what those differ ences mean, 
including an inquiry into why they exist at all.  Regardless of whether China frames its argument in 
terms of discerning an exporter 's intent  or identifying reasons  for the pattern of export prices that 
differ significantly, nothing in the text  of the "pattern clause " requires an investigating authority to 
conduct a separate examination of why expor t prices differ significantly. Certain third parties 
agree.   
11. In China 's view, any numerical difference in export prices can be explained away.  The 
quantitative difference between the export prices, in China 's view, does not matter.  China 's 
proposed interpretation is untenable, and, as we have explained, it is inconsistent with prior 
Appellate Body findings regarding the meaning of the term "significant. " 
12. While China argues that the numerically large differences in export prices that USDOC 
observed in the challenged investigations were, for purportedly qualitative reasons, not significant, 
China 's arguments go toward explaining why the prices were different, or giving reasons for the 
price differences.  They do not address how, qualitatively, the differences, which were numerically 
large, were not important or notable.   
13. China appears to acknowledge that there was no information in the admi nistrative records of 
the coated paper and OCTG antidumping investigations that would have been relevant to an 
analysis of the kind of "qualitative factors " China discusses, and this is because the interested 
parties did not raise the issue of "qualitative  factors " or present evidence to USDOC about that 
issue.  In the steel cylinders antidumping investigation, as we have explained, USDOC responded 
to an argument by BTIC concerning increases in steel prices and determined that the argument 
was "merely an un supported assumption without the support of record evidence. "   WT/DS471/ R/Add.1  
 
- B-34 - 
 
  D. China Has Failed To Establish that Certain SAS Programming Errors 
Constitute a Breach of the AD Agreement  
14. China confirms that it is "challenging " the SAS programming errors, but adds no thing that 
would support a finding that an inadvertent error amounts to a breach of any provision of the WTO 
Agreement.  
15. China continues to offer the Panel no explanation of how the identified SAS programming 
errors could reflect a failure to provide a reasoned and adequate explanation or a failure to 
establish the facts properly and evaluate them in a manner that was unbiased and objective.  
There are no parallels between the facts in US – Upland Cotton (Article 21.5 – Brazil)  and the facts 
here, and th e portion of the US – Upland Cotton (Article 21.5 – Brazil) Appellate Body report to 
which China refers does not contain findings that are relevant to the Panel 's resolution of this 
dispute.   
16. China acknowledges that "correction of the two types of pro gramming errors does not lead 
to a situation in which the Price Gap Test would no longer be passed for at least one CONNUM in 
OCTG OI and Coated Paper  OI."  So, it is clear that the finding China seeks from the Panel related 
to the programming errors is ad visory and not necessary to secure a positive solution to the 
dispute.   
E. USDOC 's Explanations in the Coated Paper, OCTG, and Steel Cylinders 
Antidumping Investigations Are Not Inconsistent with the "Explanation 
Clause " of the Second Sentence of Article 2.4.2 of the AD Agreement  
17. It is logical for an investigating authority to examine the extent to which dumping would be 
masked by a normal comparison methodology, in contrast to the alternative comparison 
methodology, as it considers whether a normal co mparison methodology can "take into account 
appropriately " the pattern of export prices that differ significantly.  In other words, logically, some 
manner of comparison is necessary to test whether the average -to-average comparison 
methodology or the avera ge-to-transaction comparison methodology can more "appropriately " 
take into account a pattern of significantly differing export prices.  Such a comparative exercise is 
precisely what USDOC undertook in the challenged antidumping investigations.  It is uncl ear what 
more, beyond such a comparative exercise, would be needed to satisfy the requirements of the 
"explanation clause. " 
18. China complains that comparing the result of the average -to-transaction comparison 
methodology (with zeroing) and the result of the average -to-average comparison methodology 
(without zeroing) is insufficient because, China argues, the use of zeroing is not permitted in the 
application of the alternative, average -to-transaction comparison methodology.  However, as 
demonstrated in th e U.S. first written submission, and as discussed further below, zeroing is 
permissible – indeed, it is necessary – when applying the alternative, average -to-transaction 
comparison methodology, if that "exceptional " comparison methodology is to be given an y 
meaning.   
F. The "Explanation Clause " of the Second Sentence of Article 2.4.2 of the AD 
Agreement Does Not Require an Investigating Authority to Discuss Both 
the Average -to-Average and Transaction -to-Transaction Comparison 
Methodologies in Its Explanati on 
19. While the Appellate Body has not previously addressed the particular legal question that is 
before the Panel, neither in US – Softwood Lumber (Article 21.5 – Canada) nor in any other 
dispute, the logical extension  of the Appellate Body findings is t hat the exceptional, average -to-
transaction comparison methodology should  "lead to results that are systematically different " 
when the conditions for its use have been met.  Accordingly, as the U.S. first written submission 
demonstrates, an investigating a uthority is not obligated to include a discussion of both the 
average -to-average and the transaction -to-transaction comparison methodologies in the 
"explanation " it provides pursuant to the second sentence of Article 2.4.2 of the AD Agreement.  
20. China al so discusses the Appellate Body report in US – Zeroing (Japan) .  We have already 
commented on the passage from the US – Zeroing (Japan) Appellate Body report in response to WT/DS471/ R/Add.1  
 
- B-35 - 
 
  question 17.  China, in an attempt to support its argument, refers to "grammatical convention " 
and provides to the Panel a dictionary definition of the word "either. "  In doing so, China appears 
to invite the Panel to apply a Vienna Convention analysis to the language in the US – Zeroing 
(Japan) Appellate Body report.  Of course, an adop ted report is not treaty language, and China 's 
suggestion that this dispute should turn on a Vienna Convention analysis of a potentially ambiguous 
passage of the US – Zeroing (Japan)  Appellate Body report only serves to highlight the weakness of 
China 's argument.   
G. USDOC 's Application of the Alternative Average -to-Transaction 
Comparison Methodology to All Sales  
21. China continues to argue that USDOC was required to apply the alternative, average -to-
transaction comparison methodology on a model -specific  basis, and limit its application only to 
certain models, because USDOC, China asserts, "decide[d] to identify the existence of a 'pattern ' 
in a limited, model -specific, way. "  China appears to misunderstand USDOC 's analysis and also 
misunderstands the App ellate Body report in EC – Bed Linen . 
22. USDOC did not "seek[] to find 'patterns ' by reference to models " in the challenged 
investigations.  Instead, USDOC established the existence of "a pattern " – within the meaning of 
the second sentence of Article 2.4 .2 – based on all of a respondent 's sales of subject merchandise.  
This is evident from USDOC 's discussion of its application of the Nails test in the challenged 
determinations.   
23. China utterly fails to grapple with the import of the Appellate Body 's findings in EC – Bed 
Linen .  Despite the Appellate Body 's findings in EC – Bed Linen , China continues to suggest that 
"an investigating authority may assess the existence of relevant pricing patterns on a model -
specific basis, " but the Appellate Body has cl early rejected this proposition and there is no support 
for it in the text of the second sentence of Article 2.4.2 of the AD Agreement.  
H. China 's Arguments Concerning the Appellate Body 's Zeroing Findings Lack 
Merit  
24. While the Appellate Body has addres sed zeroing in numerous prior disputes involving 
different comparison methodologies, it has never found that zeroing is impermissible in the context 
of the application of the average -to-transaction comparison methodology when the conditions set 
forth in th e second sentence of Article 2.4.2 are met.  China also argues that the Appellate Body 
has previously "rejected " the mathematical equivalence argument.  The U.S. first written 
submission discusses at some length the Appellate Body 's prior consideration of the mathematical 
equivalence argument and demonstrates that the Appellate Body 's findings in previous disputes 
neither support rejection of the "mathematical equivalence " argument nor compel its rejection.  
25. China further contends that "the function of A rticle 2.4.2, second sentence, is found in that it 
allows a different process , as opposed to requiring a different outcome , in determining the margin 
of dumping in the presence of a relevant pricing pattern. "  China misses the point of the U.S. 
argument.  The United States does not argue that the alternative, average -to-transaction 
comparison methodology necessarily must yield a different outcome.  The outcome may or may 
not be different, depending on the facts.  
26. China argues that the Appellate Body 's findings related to the meaning of the term "margin 
of dumping " compel the conclusion that zeroing is impermissible in connection with the application 
of the alternative, average -to-transaction comparison methodology.  China 's reasoning is flawed, 
and China 's argument bears no connection whatsoever to the text of Article 2.4.2 of the AD 
Agreement or prior Appellate Body findings.  
27. It is crucial to recognize that, when the Appellate Body has found prohibitions on zeroing in 
the past, while it has discussed contextual elements that support its interpretations, such as the 
meaning of the term "margin of dumping, " those interpretations, on a basic level, are rooted in the 
text of the first sentence of Article 2.4.2 of the AD Agreement.  There is no similar text ual basis in 
the second sentence of Article 2.4.2 for finding a prohibition on the use of zeroing in connection 
with the application of the alternative, average -to-transaction comparison methodology when the 
conditions for its use have been met.   WT/DS471/ R/Add.1  
 
- B-36 - 
 
  I. China 's Effort To "Avoid " Mathematical Equivalence Is Unpersuasive  
28. China does not dispute that, everything else being equal, mathematical equivalence results 
if the average -to-average comparison methodology and the average -to-transaction comparison 
methodol ogy (without zeroing) are applied to the data from the challenged antidumping 
investigations.  The dispute between the parties is not about arithmetic or algebra.  It is about so -
called "assumptions " related to the calculation of normal value.  It is China 's assumptions that are 
untenable and without explanation.  Each of the scenarios in Exhibit CHN -497 depends on and is 
exclusively premised on manipulating the calculation of normal value for the application of the 
average -to-transaction comparison methodo logy while not making any similar change to the 
calculation of normal value for the application of the average -to-average comparison methodology.  
Yet, China fails to explain why changing the calculation of the normal value  used in the application 
of the n ormal average -to-average comparison methodology and the exceptional average -to-
transaction comparison methodology would in any way address a pattern of significantly differing 
export prices  among different purchasers, regions, or time periods.  There is no  logical reason why 
an investigating authority would do so and China has not explained how calculating normal value 
differently would assist an investigating authority to, in the words of the Appellate Body, "unmask 
targeted dumping. " 
29. There also is no textual basis in Article 2.4.2 of the AD Agreement to support calculating 
normal value differently for the purposes of applying the average -to-average and average -to-
transaction comparison methodologies set forth in the first and second sentences of Articl e 2.4.2, 
respectively.  The phrase "weighted average normal value " in the first sentence of Article 2.4.2 is 
nearly identical to and conveys the same meaning as the phrase "normal value established on a 
weighted average basis " in Article 2.4.2, second sent ence.  
30. The United States does not argue that the investigating authority 's flexibility to use monthly 
normal values is limited by the terms of Article 2.4.2 of the AD Agreement.  China simply has 
failed to explain the logic of changing the basis of the calculation of the weighted -average normal 
value as part of the effort to "unmask " dumping concealed by a pattern of significantly differing 
export prices.     
31. While China attempts to avoid mathematical equivalence, it expends no effort to advance an 
interpretation of the second sentence of Article 2.4.2 that would give that provision meaning or 
permit investigating authorities to use the alternative, average -to-transaction comparison 
methodology to, in the words of the Appellate Body, "unmask targeted dumping. " 
32. The scenarios presented in Table 4 of Exhibit CHN -497 support the argument made in the 
U.S. opening statement at the first panel meeting concerning the unpredictability of changing the 
basis for the calculation of normal value in the manner t hat China proposes.  The results are 
unpredictable and not systematic, and they bear no relationship to the pattern of significantly 
differing export prices or the aim of the second sentence of Article 2.4.2 to "unmask targeted 
dumping. "  
33. China also ar gues that the U.S. mathematical equivalence argument "fails to grapple with 
the relevance of the T -T methodology, " which "will generally yield results that are different from 
both W -W and W -T methodologies, even though zeroing is not permissible under the T-T 
methodology. "  China 's observation does not support its position.  The United States has never 
argued that the transaction -to-transaction comparison methodology should lead to the same result 
as either the average -to-average comparison methodology or t he average -to-transaction 
comparison methodology (without zeroing).  The Appellate Body has found that there is no 
hierarchy between the average -to-average and transaction -to-transaction comparison 
methodologies and they should not be interpreted in a way that would "lead to results that are 
systematically different. "  This does not mean that the outcomes of these two methodologies 
should be mathematically the same .   
J.  "As Applied " Claims Related to the PET Film Third Administrative Review  
34. China 's arguments that prior Appellate Body findings establish that zeroing is "never 
permissible " in administrative reviews and that recourse to the alternative, average -to-transaction 
comparison methodology is "only available in original investigations " are incor rect. WT/DS471/ R/Add.1  
 
- B-37 - 
 
  35. The Appellate Body has never found that the use of zeroing in an administrative review is 
impermissible when it is used in connection with the application of the alternative, average -to-
transaction comparison methodology pursuant to the second se ntence of Article 2.4.2 of the AD 
Agreement.  China 's reading of the Appellate Body report in US – Zeroing (EC)  is untenable.  The 
Appellate Body did not endorse the US – Zeroing (EC)  panel 's legal reasoning concerning the term 
"during the investigation ph ase" in Article 2.4.2.   
36. China 's argument that "recourse to the exceptional methodology under Article 2.4.2, second 
sentence, is only available in original investigations " and is not available in assessing the precise 
amount of antidumping duty in admi nistrative reviews is not supported by the text of Articles 2.4.2 
and 9.3 of the AD Agreement or by logic.  Article 9.3 of the AD Agreement provides that "[t]he 
amount of the anti -dumping duty shall not exceed the margin of dumping as established under 
Article 2. "  A margin of dumping established pursuant to the second sentence of Article 2.4.2 is a 
margin of dumping established under Article 2.  Even if the term "during the investigation phase " 
is interpreted in the manner for which China argues, the impli cation simply would be that there is 
no requirement  to apply the comparison methodologies described in Article 2.4.2 in the context of 
administrative reviews.  It would not follow, logically, that it would be impermissible for an 
investigating authority to  apply those comparison methodologies in administrative reviews.   
III. CHINA 'S CLAIMS AND ARGUMEN TS CONCERNING THE AL LEGED SINGLE RATE 
PRESUMPTION AND THE ALLEGED USE OF ADVER SE FACTS AVAILABLE N ORMS DO 
NOT COMPORT WITH THE  DSU OR THE PANEL 'S WORKING PROC EDURES  
A. The Six New Determinations China Introduced During The First 
Substantive Meeting Are Not Within The Panel 's Terms Of Reference  
37. China introduced six new antidumping determinations during the course of the first 
substantive meeting that are in fact "new measures " that are not within the Panel 's terms of 
reference and cannot be challenged in this dispute.  These new measures are outside the scope of 
this dispute because China did not consult with the United States over them in accordance with 
Article 4.4 of the DSU or identify them in its Panel Request per Article 6.2 of the DSU.   
38. China fails to recognize that under the DSU, the concept of – and need to identify – 
"measures " is discrete from the concept of and need to identify the requisite "legal basis of the 
complaint. "  Thus, whatever the level of precision with respect to the legal basis  put forward by 
China, it is irrelevant for whether the requirement to identify the measure  in both the Request for 
Consultations and the Panel Request has  been fulfilled.  Moreover, when China concedes that only 
particular arguments from China 's first written submission may even be relevant for a particular 
determination, this only further highlights that these determinations are new measures.     
B. China 's Recent Arguments Are Contrary to the Panel 's Working Procedures 
and the DSU  
39. China has presented extensive arguments that properly belonged in its first written 
submission per paragraph 6 of the Panel 's Working Procedures.  Indeed, the situation here is more 
prejudicial than in the EC – Fasteners  dispute (in which a previous panel has similarly been faced 
with a situation in which China  provided evidence and arguments going to its primary case well 
beyond its first submission) because the substantive deficiency is qualitatively higher.  Moreover, 
unlike EC – Fasteners , which concerned a single antidumping determination, the present dispute 
entails dozens and dozens of determinations increasing the potential prejudice upon the United 
States and undermin ing its rights to present a full defense, including by having sufficient time to 
prepare its submissions (DSU Article 12.4) and to receive the facts of China 's case and China 's 
arguments before  presenting its own first submission (DSU Article 12.6 & Append ix 3, para. 4).   
IV. CHINA STILL HAS NOT ESTABLISHED THE EXIS TENCE OF AN ALLEGED "SINGLE 
RATE PRESUMPTION " NORM OR AN ALLEGED "ADVERSE FACTS AVAILA BLE" 
NORM  
40. China 's challenge to both a purported "Single Rate Presumption " norm and a purported 
"Adverse Facts Available " norm rests on China meeting the "high threshold " that such unwritten 
norms exist.  China has not shown the existence of anything with independent operational effect, WT/DS471/ R/Add.1  
 
- B-38 - 
 
  in the sense of doing something or requiring something to be done, which could establish the 
existence of such norms as measures.  China does not show the existence of norms that affect 
USDOC 's behavior generally and prospectively.  Regarding the alleged Adverse Facts Available 
norm, China has additionally failed to articulate the content of the purported norm.  Consequently, 
China 's "as-such" challenges to these alleged measures must fail.         
A. China 's Evidence Still Fails to Demonstrate That The Alleged Single Rate 
Presumption Norm Applies Generally and Prospectively  
1. The Evidence Generally  
41. China 's purported evidence does not show that any alleged Single Rate Presumption has any 
type of general and prospective application, let alone legally binding effect.   
a. Policy Bulletin 05.1  
42. The first piece of evidence th at China relies upon is a statement taken from Policy Bulletin 
05.1.  That statement does not establish the existence of a rule that has independent operational 
effect or otherwise directs USDOC 's future conduct.  The cited statement is located in a sectio n 
titled "Background " and, thus, does not demonstrate that the alleged Single Rate Presumption has 
a "normative " character.  China 's attempt to equate Policy Bulletin 05.1 with the Sunset Policy 
Bulletin at issue in US –OCTG Sunset Reviews  is also misplace d, particularly as in that dispute, 
unlike in this dispute, Argentina challenged the Sunset Policy Bulletin ( "SPB") itself as a measure.   
43. Moreover, China 's excerpted language when put next to the adjoining sentences makes clear 
that what, if anything,  may happen in the future is a particular procedure concerning a separate 
rate application.  Critically, China has not explained what words in the proffered excerpt will 
"necessarily give rise " to the alleged Single Rate Presumption.  To the extent China r elies on the 
language noting the "Department presumes ", the use of the present tense confirms that, at most, 
the USDOC is describing conduct in the past up to the present.     
b. Antidumping Manual  
44. China relies on three sentences from the Antidumping M anual to assert the existence of the 
norm.  China does not explain how or why any of the text in these sentences establishes or 
otherwise supports its contention that the alleged Single Rate Presumption will "necessarily give 
rise" with respect to particul ar situations in the future.     
45. Instead, China asserts these statements serve "as a justification  and a motivation  for the 
decision in the instant investigation or review. "  Justification, however, does not speak to general 
and prospective application .  With respect to motivation, the cited statements do not in any way 
evince in any respect future and general application.  Moreover, the Antidumping Manual contains 
an explicit disclaimer and USDOC, nearly 10 years ago, had explicitly, and publicly state d in a 
memorandum that the manual is not meant to be relied upon by the public   
c. Rulings by U.S. Courts  
46. The language referenced from the various court decisions do not support the existence of a 
norm of general and prospective effect. These statement s simply note, at most, that USDOC has 
done something previously, and then done something different at a subsequent time.  The 
statements also note that it is well settled under U.S. law that USDOC may undertake such 
actions.  The fact that a particular ex ercise of discretion is lawful under a Member 's domestic legal 
framework does not mean that this is the only choice available under domestic law, nor that the 
agency will continue to exercise its discretion in the exact same way in the future.   
d. Tabulat ed statements from 38 challenged determinations 
and Statements from other sampled determinations  
47. The various tabulations, such as Table SRP, provided by China are nothing but the string of 
cases that the Appellate Body explicitly described as insuffici ent evidence – and thus do not prove WT/DS471/ R/Add.1  
 
- B-39 - 
 
  the existence of the alleged norm.  Indeed, nowhere in its submissions does China actually direct 
the Panel as to what aspect or entry in the table proves general and prospective application.   
2. The Evidence With Resp ect to the Separate Rate Test  
48. As China implicitly concedes through its reference to a "first element, " China 's alleged norm 
is different from the unwritten norm alleged in US – Shrimp II (Viet Nam ).  Specifically, China 
alleges that the alleged norm in cludes two elements, the latter involving a Separate Rate Test.  
Furthermore, China has not identified in its submissions what evidence China is putting forward to 
establish the general and prospective nature of this second element.   
B. China 's Evidence S till Fails to Demonstrate The Content of The Alleged 
Adverse Facts Available Norm  
49. China 's own description of the alleged Use of Adverse Facts Available Norm ( "Adverse Facts 
Available Norm ") highlights three critical defects.  First, while China recogn izes at the outset that a 
norm must apply "whenever, " its own description of the purported norm is lacking in that regard.  
Second, China has failed to specify what constitutes "adverse information " or "adverse facts. "  
Third, China 's reference to the "process" employed by USDOC failed to identify the discrete 
conduct that is required by the alleged norm.  
C. China 's Evidence Still Fails to Demonstrate The Existence of an Alleged 
Adverse Facts Available Norm with General and Prospective Application  
50. The s tatements cited by China do not speak to the actual selection of facts.  Moreover, as 
these statements are phrased conditionally – "in many cases " or "[o]ccasionally " – China cannot 
reasonably claim that they evince general and prospective application.   
V. CHINA HAS FAILED TO ESTABLISH THAT THE U NITED STATES HAS BRE ACHED 
ARTICLES 6.10 AND 9. 2 ON ACCOUNT OF A "SINGLE RATE PRESUMPT ION" 
A. China 's Arguments Fail to Address That USDOC May Treat Nominally 
Distinct Respondents as a Single Entity  
51. China has fa iled to satisfy its prima facie  case because all of its arguments go to the first, 
inapposite question of treatment of individual companies. Where an entity has been properly 
established, there is no basis to evaluate further whether the individual compani es properly within 
the entity have been assigned an individual margin and duty.  
B. China Has Otherwise Failed To Establish Its Prima Facie  Case That The 
Alleged Single Rate Presumption Is As Such Or As Applied Inconsistent 
With Articles 6.10 and 9.2  
52. China does not explain for those cases in which the China -government entity is not under 
review, how the alleged Single Rate Presumption precludes individual producers/exporters who are 
grouped within the entity from receiving an individual margin of dumpin g.  Additionally, China has 
not demonstrated through evidence that the rate assigned to the China -government entity is 
inconsistent with Article 9.2 in each challenged investigation.  It bears emphasis that China has 
not addressed U.S. arguments concerning  USDOC 's Separate Rate Application and Separate Rate 
Certification.  Specifically, USDOC asks a company to provide information that goes to whether the 
company 's export activities are controlled by the Chinese Government.  The questions asked by 
USDOC go t o factors that the Appellate Body in EC – Fasteners  found could be considered to 
ascertain situations "which would signal that, albeit legally distinct, two or more exporters are in 
such a relationship that they should be treated as a single entity. "     
53. China 's failure to put forward the requisite evidence means that is unclear whether evidence 
gathered from the Separate Rate Test was relied upon, and not any presumption.  Because of the 
particularized circumstances, it was incumbent upon China to demo nstrate the exporters, 
producers, or suppliers were denied an individual rate in the challenged proceedings.  In other 
words, in a particular proceeding no company may have been treated as part of the China -WT/DS471/ R/Add.1  
 
- B-40 - 
 
  government entity on account of a presumption, or  a company may have been so treated on the 
basis of record evidence.      
C. China Has Not Addressed The Importance Of China 's Accession Protocol 
And The Working Party Report  
54. As the United States has established, China 's Accession Protocol and Working  Party Report 
provide both a legal and factual predicate for USDOC 's treatment of Chinese companies as part of 
a single China -government entity.  Paragraph 15 of the Accession Protocol, placed in proper 
context, and relevant provisions of the Working Party  Report, provide the basis for USDOC 's 
recognition that multiple companies may comprise a single China -government entity.   
55. An interpretation of Section 15 that construes it exclusively as a derogation for how normal 
value may be calculated for Chinese  respondents would create serious problems for investigating 
authorities trying to address injurious dumping.  Indeed, a particular irony to such an 
interpretation is that companies that are found not to be part of the China government entity could 
be disa dvantaged in antidumping investigations in comparison to those under the control of the 
Chinese government, since the Chinese government could potentially manipulate export price by 
rechanneling sales though different legal entities under its control.   
56. A more logical interpretation is that Section 15 's silence on export price is simply a reflection 
that there was no need to explicitly reference the issue in order for Members to address it.  At 
least two reasons justify such silence.  First, explicit re ference is not required because it is 
addressed by implication.  Second, Members viewed existing mechanisms being used in Chinese 
antidumping investigations at the time of China 's accession –treating Chinese companies as part of 
a single China -government e ntity absent evidence demonstrating independence – as sufficient to 
address concerns arising with export price.   
VI. CHINA 'S ARTICLE 9.4 CLAIMS  MUST FAIL  
57. China 's arguments fail because Article 9.4 applies only where the China -government entity 
is not  under examination.  Where the China -government entity receives its own rate, the facts in a 
proceeding will often, if not always, subject the China -government entity to examination.   In 
several of the referenced determinations, the China -government entity  received its own rate 
pursuant to Article 6.8 of the AD Agreement and was subject to examination.   
A. China Has Failed To Establish A Prima Facie  Case That The Alleged Single 
Rate Presumption Is As Such Or As Applied Inconsistent With The Second 
Obligati on Of Article 9.4  
58. There are two critical defects to China 's "as such " claim.  First, Article 9.4 does not govern 
the rate assigned to those companies that have been included in the examination.  Moreover, 
China must demonstrate that the China -governmen t entity is not under examination.  In nearly 
every determination referenced by China, the China -government entity received its own rate 
pursuant to Article 6.8 of the AD Agreement and was subject to examination.  In those few 
determinations referenced by China in which the China -government entity was not under review or 
in which USDOC assigned the China -government entity a rate from a previous proceeding, China 
has not explained how Article 9.4 is implicated.   
59. This leads to the second defect in China 's claim.  The crux of China 's claim here – that the 
alleged Single Rate Presumption is "as such " inconsistent with the second obligation of Article 9.4 
– rests on the applicability of the very particular situation described in Article 6.10.2 and the last 
sentence of Article 9.4.  China ignores that the last sentence of Article 6.10.2 does not provide for 
an automatic  right to an individual rate for those companies not included in the examination, but 
creates certain prerequisite conditions. China does not p oint to a single example where there 
exists such a company that has met these conditions.   WT/DS471/ R/Add.1  
 
- B-41 - 
 
  B. China Has Failed To Establish That USDOC Acted Inconsistently With The 
First Obligation Of Article 9.4 In The 26 Challenged Determinations  
60. China argues that USDOC acts inconsistently with Article 9.4 's first obligation concerning the 
"ceiling rate for the level of duties that may be applied to non -selected exporters or producers " in 
26 challenged determinations.  However, in 19 of the challenged determinations , the China -
government entity was under examination and received its own rate pursuant to Article 6.8.  The 
pertinent issue is USDOC 's treatment of the China -government entity as a whole , rather than 
simply the treatment of the individual companies. For th ose seven (7) determinations in which 
USDOC assigned the China -government entity a rate from a previous proceeding, China has not 
explained how Article 9.4 is implicated.   
VII. CHINA HAS NOT DEMONSTRATED THAT USDOC WAS REQUIRED TO SEND A 
DUMPING QUESTIONN AIRE TO ALL MEMBERS OF THE CHINA -GOVERNMENT 
ENTITY IN 26 OF THE CHALLENGED DETERMINATIONS  
61. China has failed to establish that the United States has breached Articles 6.1, 6.8, and 
Annex II of the AD Agreement for the 26 challenged determinations.  Despi te the numerous 
requests for information made by USDOC, China 's claims focus instead on the information that was 
not requested.  Specifically, China 's argument is that USDOC was required to send a dumping 
questionnaire to all members of the China -governmen t entity in all instances, no matter the 
circumstances.  Nothing in the AD Agreement requires so.      
A. China 's Article 6.1 Claims With Respect to the 26 Challenged 
Determinations Are Legally And Factually Deficient  
62. China continues to put forth an i nterpretation of Article 6.1 of the AD Agreement which 
purports to govern not just an investigating authority 's procedural obligations with respect to 
notifying parties "of the information which the authorities require ", but also the content of the 
informa tion required for a certain determination.  The substantive  issue of which information is 
required for a particular determination is addressed elsewhere in the AD Agreement.   
B. China Has Not Demonstrated That USDOC Resorted To Facts Available In 7 
Challe nged Determinations1 
63. The record is undisputed that USDOC did not make a finding of noncooperation in these 7 
reviews.  As found by the panel in US – Shrimp  II (Viet Nam) , applying a rate that had previously 
been determined in a prior proceeding does n ot equate to a determination that is governed by 
Article 6.8.  Additionally, with respect to China 's "as such " claim, according to China, the alleged 
Use of Adverse Facts Available norm is only triggered where USDOC makes a finding of 
noncooperation.  Beca use USDOC did not make such a finding with respect to these 7 reviews, the 
alleged norm was not triggered per China 's own definition.  
C. China Has Not Established That USDOC Acted Inconsistently With Article 
6.8 and Annex II(1) In Tires AR5 and Diamond Saw blades AR4  
64. In Tires AR5, that part of the China -government entity that USDOC found to be cooperative 
did not represent the entirety of the entity.  In Diamond Sawblades AR4, USDOC made no findings 
with respect to the level of cooperation of the China -government entity.  Importantly, in both of 
these reviews, because China has not demonstrated that USDOC resorted to facts available, it has 
failed to demonstrate any inconsistency with Article 6.8 and Annex II(1).   
D. China Has Not Demonstrated That USDOC 's Resort To Facts Available In 
The 19 Challenged Determinations Is Inconsistent With Article 6.8 And 
Annex II(1)  
65. The crux of China 's as applied arguments with respect to USDOC 's resort to facts available is 
that in each determination USDOC could not resort to facts available because it did not send a 
                                               
1 These are (1) Diamond Sawblades AR1, (2) Diamond Sawblades AR2, (3) Diamond Sawblades AR3, 
(4) Furniture AR8, (5) Retail Bags AR3, (6) Ribbons AR1, and (7) Wood Flooring AR1.  WT/DS471/ R/Add.1  
 
- B-42 - 
 
  dumping questionnaire to each and every member of the China -government entity, regardless of 
the circumstances.  USDOC 's determination to resort to facts available in assigning a margin to the 
China -gover nment entity in the 19 challenged proceedings is consis tent with Article 6.8 and 
Annex  II(1) because the China -government entity was notified of a request for and failed to 
provide necessary information.   
66. China argues that resort to facts available ba sed on the failure of certain companies within 
the China -government entity to respond to a request for quantity and value information is not a 
proper basis to reach a finding of noncooperation.  However, if a party could pick and choose what 
information it  submits, it would be incentivized to only selectively disclose information that 
benefits its interests rather than ensure the most appropriate determination.     
VIII.  CHINA 'S CLAIMS CONTINUE TO CONFUSE USDOC 'S RESORT TO FACTS AVAILABLE 
WITH THE SUBSEQUEN T SELECTION OF FACTS AVAILABLE  
67. Two of China 's three "as such " claims should be found outside of the Panel 's terms of 
reference because they are related not to the alleged Use of Adverse Facts Available norm, but 
rather, to USDOC 's resort to facts avai lable through a finding of noncooperation.  These are:  
China 's claim that "USDOC, as a result of the Use of Adverse Facts Available norm, select{s} a 
facts available rate for NME -wide entities based on the (frequently presumed) procedural 
circumstances of  non-cooperation{,} " and China 's claim that "USDOC, as a result of the Use of 
Adverse Facts Available norm, select{s} Adverse Facts Available in circumstances when it has not 
requested the necessary information{.} "      
IX. CHINA HAS FAILED TO ESTABLISH TH AT THE UNITED STATES BREACHED 
ARTICLE 6.8 AND ANNEX II IN SELECTING THE FACTS AVAILABLE FOR THE 
CHINA -GOVERNMENT ENTITY  
A. In Selecting From Among The Available Facts, USDOC Performed A 
Comparative, Evaluative Assessment  
68. USDOC considers the universe o f information on the record.  This included information 
contained in the domestic parties ' application for initiating an anti -dumping investigation, 
information that was obtained during the course of the investigation or administrative review, such 
as dump ing margins from cooperating parties, data on sales transactions and normal value 
provided by those cooperating parties, and any other information obtained by USDOC during the 
course of the investigation or review.  USDOC considered all of this information  and selected from 
among the facts available, taking a party 's non -cooperation into account.   
69. USDOC then ensured that the rate selected had probative value, meaning it was both 
reliable and relevant, by checking the selected rate with independent sour ces of information on the 
record.  USDOC performed this comparative, evaluative assessment at least twice during each 
determination:  at the preliminary determination or results, and again at the final determination or 
results.  Apart from this examination , USDOC also considers whether the rate selected is 
aberrational or unusual, is not reflective of the missing information, and therefore should be 
rejected for use as facts available.    
B. USDOC 's Process Did Not Automatically Select The Highest Available  Rate  
70. If the "the highest of " language cited by China accurately reflected USDOC 's determinations, 
then the rates selected would be the highest rates available.  In the challenged determinations in 
which USDOC resorted to facts available, the highest rate was rejected in many cases based upon 
an examination of the probative value of such rates.  The same point holds with respect to China 's 
reliance on the U.S. court rulings it cites.  In Lifestyle Enterprise, Inc. v. United States , China 
ignores the co urt's language that such rates "must be reasonably accurate estimates of 
respondents ' rates" and instead focuses on the language of a "built-in increase " as a deterrent.  In 
so doing, China fails to realize that the notion of deterring non -cooperation is n o more than taking 
account of a party 's failure to cooperate.   
71. China also points to the term "sufficiently adverse " as if USDOC performs a test to ensure 
the rate selected is adverse enough to deter non -compliance.  There is no test to determine WT/DS471/ R/Add.1  
 
- B-43 - 
 
  wheth er a rate is "sufficiently adverse " to induce cooperation.   Rather, by taking into account the 
party's non -cooperation, USDOC may apply an inference that may be unfavorable, which may 
incentivize a party to cooperate.    
72. In the challenged determinations , China is unable to point to any rate in which the evidence 
supporting that rate has greater probative value for the non -cooperating entity as a whole .  
Instead, China breaks apart the NME -entity into component parts to make its argument that the 
rate sel ected is inaccurate.  In doing so, China concedes that the comparator or benchmark that it 
insists be used as the hallmark of accuracy – i.e., the all others rate - is not a reasonable 
replacement for a party that has "genuinely " failed to cooperate.   
73. China argues that the rate assigned to separate rate companies is an appropriate 
comparison rate in determining whether the rate assigned to the China -government entity is 
"adverse " or a reasonable replacement for missing facts.  However, those companies that receive 
a separate rate have demonstrated that they are eligible for a separate rate, and, in certain 
proceedings, cooperated by responding to a request for Q&V information.  In contrast, those 
companies that are within the China -government entity fai led to demonstrate that they are eligible 
for a separate rate, and, in those proceedings at issue, the entity itself failed to cooperate.   
74. China points to factors that it claims USDOC does not consider when selecting a facts 
available rate for the Chi na-government entity, including the rates of cooperating respondents, the 
rate assigned as the all others rate, the age of the selected information, and information about the 
non-cooperative company 's age and size.  However, USDOC does consider the rates o f cooperating 
respondents and the all others rate but, depending on the facts and circumstances of the particular 
case, may find that this information has less probative value because it does not correspond with a 
party's non -cooperation.   
X. THE PANEL MA Y EXERCISE JUDICIAL ECONOMY ON CLAIMS RE LATING TO THE 
USE OF ADVERSE FACTS  AVAILABLE NORM OR DI SMISS THEM UNDER ART ICLE 
6.2 OF THE DSU   
75. If the Panel finds for China on any of its claims against the alleged Single Rate Presumption, 
then additional find ings under Articles 6.1, 6.8, and Annex II and Article 9.4 would not contribute 
to a positive resolution of the dispute because such findings – and the underlying analysis – would 
not be relevant in resolving the dispute.  
76. China asserts that relevant d escription in the panel request of China 's facts available claims 
is contained only in the following, general phrase: "inconsistent with the obligations of the United 
States under Article 6.8 and Annex II of the Anti -Dumping Agreement. "  This phrase, howev er, is 
so lacking in specificity that all of China 's claims under Article 6.8 and Annex II would fail to 
comply with the requirement of Article 6.2 of the DSU.  
XI. CONCLUSION  
77. For the reasons set forth above, along with those set forth in other U.S. wr itten filings and 
oral statements, the United States respectfully requests that the Panel reject China 's claims.  
 
_______________  
 
 
 
 
 WT/DS471/R/Add.1  
 
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 ANNEX  C 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  C-1 Executive summary of the arguments of Brazil  C-2 
Annex  C-2 Executive summary of the arguments of Canada  C-6 
Annex  C-3 Executive summary of the arguments of the European Union  C-8 
Annex  C-4 Executive summary of the arguments of Japan C-12 
Annex  C-5 Executive summary of the arguments of Korea C-17 
Annex  C-6 Executive summary of the arguments of Norway  C-22 
Annex  C-7 Executive summary of the written  submission of  Turkey  C-25 
Annex  C-8 Executive summary of the arguments of Viet Nam  C-28 
 WT/DS471/R/Add.1  
 
- C-2 - 
 
 
 ANNEX C -1 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF BRAZIL  
1.  Brazil 's participation in this dispute will focus on the conditions for the use of the second 
sentence of Article 2.4.2, on the operation of the W -T comparison method (or "third method ") and 
on Article 6.8 of the Anti -Dumping Agreement.  
2.  Regarding the second sent ence of Article 2.4.2, although there are considerable uncertainties 
related to when it could be invoked or how the W -T method should operate in practice, there 
is one aspect that is clear: this method is not expected to be routinely used. Indeed, the situ ation 
described in the second sentence of Article 2.4.2 is a very specific factual situation that 
exceptionally authorizes investigating authorities to use the W -T method to calculate the dumping 
margin. Contrary to the recourse to the W -W and T -T, which " shall normally" be used, recourse to 
the third method is contingent upon the fulfillment of the established requirements. 
This "exceptional nature" was also recognized by the Appellate Body."1 It follows from that 
reasoning that particular attention must b e paid to whether the specific conditions established for 
its use in the Agreement are met.  
3.  The first condition established in the Agreement is that "the authorities find a pattern of export 
prices which differ significantly among different purchasers , regions or time periods". Article 2.4.2 
does not convey a precise definition of what type of variation of export prices matters for the 
purposes of application of the "third method", neither does it require investigating authorities to 
rely on any partic ular methodology to assess the existence of such a pattern. Yet, investigating 
authorities are under the obligation to establish and evaluate the facts under investigation in an 
unbiased and objective manner (article 17.6 of the ADA). In this sense, while a mathematical 
model may confer objectivity to the analysis, what is before the Panel is whether the Nails test can 
be deemed sufficient to establish, in an unbiased and objective manner, in each and every case of 
its application, a pattern for the purpose  of the Article 2.4.2.  
4.  Brazil agrees that there is nothing in the text of the Anti -Dumping Agreement suggesting that 
the investigating authority is compelled to assess why certain export prices were significantly 
lower or differ from each other or to e xamine the intention behind price behavior. However, the 
possibility that both a quantitative and qualitative dimension be taken into account, given the 
exceptional nature of the third method, seems to be undisputed. The respondent itself, based on 
the dec ision of the Appellate Body in US – Large Civil Aircraft2, agrees that "the term "significantly " 
in the "pattern clause " can have both quantitative and qualitative dimensions."3 If this is true, then 
it may be appropriate to consider a qualitative dimensio n in the analysis of the existence of a 
pattern relevant for the purposes of Article 2.4.2 of the Anti -dumping Agreement.   
5.  The finding of a "pattern " must also take into account the object and purpose of the Anti -
Dumping. Brazil and the United States seem to agree that what is to be condemned is injurious 
dumping.4 Accordingly, while many different patterns of export prices might be found in the total 
universe of export transactions, not necessarily all of them would automatically constitute 
"a pattern " within the meaning of the second sentence of Article 2.4.2. It is possible that even 
significant variations between two export prices of a given purchaser, region or time period may 
not be per se  decisive. Brazil is not also convinced that there is "a pattern" within the meaning of 
the second sentence of Article 2.4.2 when all export prices are above normal value5, since in such 
a situation there is no dumping.  
6.  The second condition for the use of the second sentence of Article 2.4.2 is that an explan ation 
is provided as to why the differences in prices cannot be taken into account appropriately by the 
use of the W -W or T -T comparison methods. This is not a trivial obligation. The authority has to 
                                               
1 US – Zeroing (Japan) (Appell ate Body Report, para. 131).  
2 US- Large Civil Aircraft (Second Complaint), AB paragraph1272  
3 US First Written Submission, paragraph 72.  
4 US. First Written Submission, para 48.  
5 U.S. First Written Submission, paras. 169 and 194.  WT/DS471/R/Add.1  
 
- C-3 - 
 
 elaborate further on the reasons why, given the operati onal characteristics of the W -W and the T -T 
methods and the factual particularities of the case under investigation, those methods were not 
appropriate to deal with the differences in export prices. Considering that, from a purely 
mathematical perspective,  all investigations could, in principle, be run with one of the two 
symmetrical comparison methods, the particular aspects of the concrete case need to be explained 
in order to support a decision not to use the symmetrical methods. For example, if dumping is 
heavily concentrated in the first half of the year, the use of the symmetrical methods could 
produce a zero -margin result, when, in fact, there is high dumping in the first half of the year and 
no dumping in the second half. This type of factual situati on should be part of the explanation to 
be provided together with a complementary explanation of why the pattern observed could not be 
tackled by adjusting the period of investigation (POI), for instance. In short, an explanation of the 
peculiarities of th e concrete case, together with an explanation of why the regular tools already at 
the disposal of the investigating authority were not sufficient to enable the use of one of the 
symmetrical methods, is essential to justify the use of third method.  
7.  The "explanation" must contemplate the reasons of why both symmetrical methods cannot be 
used. Had the drafters of the Anti -Dumping Agreement intended that an explanation be limited to 
only one of the symmetrical methods, they would have said so explicitly at the end of the second 
sentence by stating, for example " by the use of one of the symmetrical methods". Finally, a 
positive or higher margin of dumping obtained with the use of third method does not seem a 
legitimate reason per se  to justify its use. Ultim ately, the explanation of why the third method is 
needed cannot be confounded with the results obtained in the dumping margin by any given 
methodology. In sum, for exceptional situations of targeted dumping, an exceptional level of 
explanation is required so as to avoid the temptation to unduly, and illegally, characterize regular 
dumping situations as targeted dumping.  
8.  Another important issue before this Panel is the operation of the third method once the 
conditions for its use are met. More specifical ly, whether "zeroing " should be used for a proper 
operation of this method. There seems to be more doubts than certitudes in this matter. On the 
one hand, whether "zeroing " is permissible in the second sentence of Article 2.4.2 "is an issue of 
first impres sion for the Panel "6. On the other hand, certain conclusions of the Appellate Body in 
past "zeroing " disputes could be of interest in the interpretative exercise that this Panel has to 
undertake, especially the conclusion that the concepts of "dumping " and "margin of dumping " are 
consistently defined in relation to a product under investigation as a whole7. In interpreting the 
relevant findings of the vast jurisprudence regarding "zeroing ", the Panel will have to account for 
the existence of the third metho d and to the principle of "effet utile " of treaty interpretation. How 
this can be done is so far not clear. Some WTO Members have suggested that the W -W and W -T 
would not yield necessarily the same results if the WA normal value in these methods was 
different. The United States advocates that nothing in the Anti -Dumping Agreement suggests that 
such change could be made. The Appellate Body, on its turn, hinted with the possibility that the 
universe of export transactions could be limited to the export transa ctions within the pattern8. 
Such an interpretation raises other doubts, however. With regard to the mathematical equivalence 
argument, it would seem that different mathematical results would be difficult to achieve if there 
are no changes, both from the le gal and from the practical perspective, to the way of comparing 
the WA normal value and the export price in a targeted dumping situation. Ultimately, the answers 
should be found on the basis of the text, object and purpose of the Anti -Dumping Agreement its elf.  
9.  Brazil would also like briefly to comment on another important question raised by this dispute: 
if the interested Member or the interested party is non -cooperative, may dumping determinations 
be made on the basis of "adverse facts available"?   
10.  Article 6.8 of the Anti -dumping Agreement9 requires that the provisions of Annex II be 
observed in its application. Together, they govern how investigating authorities are to proceed so 
as to apply the best available information to make sound dumping d eterminations.  
                                               
6 U.S. First Written Sub mission, para. 214.  
7 US – Softwood Lumber V, Appellate Body Report, paras. 93 and 96.  
8 US – Zeroing (Japan), Appellate Body Report, para. 135.  
9 Antidumping Agreement, Article 6.8: "In cases in which any interested Member or interested party 
refuses acce ss to, or otherwise does not provide necessary information within a reasonable period or WT/DS471/R/Add.1  
 
- C-4 - 
 
 
 11.  Article 6.8 is intended to ensure that the failure of an interested party to provide necessary 
information within a reasonable period or its action to hamper the investigation does not prevent 
authorities from making preliminary or fin al determinations. Simply put, the provision is intended 
to prevent any party from holding the investigating authority hostage by not providing necessary 
information.10 
12.  However, as emphasized by the Appellate Body, an investigating authority's discreti on is not 
unlimited with respect to the facts it may use when faced with missing information. Rather, the 
facts to be employed are expected to be the "best information available". In addition, if secondary 
sources are used, the authority should ascertain f or itself the reliability and accuracy of such 
information by checking it, where practicable, against information contained in other independent 
sources at its disposal, including material submitted by interested parties.11  
13.  Furthermore, the investigat ing authority is not allowed to choose facts that would lead to a 
biased determination of dumping. As the Panel in the Mexico - Anti-Dumping Measures on Rice  
dispute exemplified, Article 6.8 is not intended to operate as a punishment for those parties that  
do not provide such information.12 It is important to recall that Article 6.8 itself foresees that 
either "affirmative or negative [determinations] may be made on the basis of the facts available".  
14.  Nonetheless, Brazil believes that Article 6.8 should  not be interpreted as an obligation to seek 
"neutral" information, as it would also mean to import into the provision an equally harmful bias, 
where parties could benefit from non -cooperating. Rather, Brazil understands that the best 
information available  seems to be the most reliable one, whether positive or negative, and then it 
would be up to the Panel to assess whether the choice of information was actually reasonable.  
15.  In this connection, Brazil draws the Panel's attention to the Panel Report in " EC – 
Countervailing Measures on DRAM Chips" .13 While the investigating authorities are not allowed to 
use facts available in order to punish the non -cooperative parties, these exporters should not be 
somehow rewarded by non -cooperating .14 
16.  In sum, like t he Panel in " EC – DRAM Chips ", in the context of Article 12.7 of the SCM 
Agreement, Brazil considers there is a balance to be found in the interpretation of Article 6.8 and 
Annex II do Anti -dumping Agreement. While the investigating authorities are not all owed to use 
facts available in order to punish the non -cooperative parties, these exporters should not be 
somehow rewarded by non -cooperating .15 
17.  The possibility of using adverse inferences in cases of non -cooperation encompasses any 
situation of failur e in providing necessary information required by the investigating authority, 
either in the form of a full dumping questionnaire or, for instance, an initial questionnaire for the 
purpose of exporters' selection in the context of Article 6.10. In that sens e, Brazil understands that 
any initial questionnaire should be considered "information which the authorities require ", as set 
forth by Article 6.8. For that reason, the failure to respond to this kind of inquiry could justify the 
use of facts available by the investigating authority when determining any final or preliminary anti -
dumping duty. Brazil considers that the dumping determination would not be restrained by the 
limitation specified in Article 9.4.16 In this regard, the panel in EC-Salmon (Norway)  has already 
                                                                                                                                               
significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be 
made on the basis of the facts available."  
10 Mexico - Anti-Dumping Measures on Rice  (Panel Report, para. 7.238)  
11 Mexico - Anti-Dumping Measures on Rice  (Appellate Body Report, para. 289)  
12 Mexico - Anti-Dumping Measures on Rice  (Panel Report, para. 7.238)  
13 Paragraph 7.61.  
14 See also Appellate Body report, US – Hot-Rolled Steel , paragraph 102.  
15 See also Appellate Body report, US – Hot-Rolled Steel , paragraph 102.  
16 9.4     When the authorities have limited their examination in accordance with the second sentence of 
paragraph  10 of Article  6, any anti -dumping d uty applied to imports from exporters or producers not included 
in the examination shall not exceed:  
(i)     the weighted average margin of dumping established with respect to the selected exporters or 
producers or,  
(ii)    where the liability for payment of anti -dumping duties is calculated on the basis of a prospective 
normal value, the difference between the weighted average normal value of the selected exporters or 
producers and the export prices of exporters or producers not individually examined,  provided that the 
authorities shall disregard for the purpose of this paragraph any zero and  de minimis  margins and margins WT/DS471/R/Add.1  
 
- C-5 - 
 
 clarified that the ceiling for the dumping margin for exporters not included in the sample would not 
apply to those parties that failed to provide the requested information for the purpose of 
sampling17. 
 
 
                                                                                                                                               
established under the circumstances referred to in paragraph  8 of Article  6.  The authorities shall apply 
individual duties or normal va lues to imports from any exporter or producer not included in the examination 
who has provided the necessary information during the course of the investigation, as provided for in 
subparagraph  10.2 of Article  6. 
17 European Communities — Anti-Dumping Measur e on Farmed Salmon from Norway  (Panel Report, 
paragraph 7.431)  WT/DS471/R/Add.1  
 
- C-6 - 
 
 
 ANNEX C -2 
EXECUTIVE SUMMARY OF  THE ARGUM ENTS OF CANADA  
I.  THE USDOC APPLICATIO N OF THE NAILS TEST  DOES NOT ESTABLISH T HE REQUISITE 
PATTERN OF EXPORT PR ICES WHICH DIFFER SI GNIFICANTLY  
1.  In the challenged investigation, the USDOC applied the Nails Test , a two -part test composed of 
the standard deviation test and the gap test.  
2.  The Appellate Body has stated that the average -to-transaction methodology may only be used 
if an investigating authority finds a pattern of export prices which differ significantly among 
different purchasers, regions or  time periods ( US – Zeroing (Japan)) . This requires findings that 
clearly demonstrate the existence of: (i)  significant differences in export prices, and (ii) a pattern 
to these differences.  
3.  In relation to the pattern requirement, in its first written submission the United States observes 
that use of the average -to-transaction comparison methodology requires an  investigating authority 
to find "a regular and intelligible form or sequence of export prices, which are unlike in an 
important or notable manne r, or to a significant extent, as between different purchasers , regions, 
or time periods".  The United States describes in detail the various stages of the Nails test  and how 
the Nails test  identifies "targeting". However, it fails to demonstrate that its methodology identifies 
a "pattern".  
4.  The text of Article 2.4.2 makes it clear that the pattern to be identified is one "of export 
prices". The USDOC application of the Nails test  does not meet this requirement because the 
USDOC averages export prices in stead of comparing them to each other. The very nature of an 
average is that it creates a typical value and by so doing obfuscates differences. In averaging 
export prices, the USDOC conceals whether or not there is a form or sequence to those prices.  
5.  The United States argues in its first written submission that the focus should be on differences 
among purchasers, regions or time periods and not individual export prices. However, this 
argument overlooks the requirement that there must be a pattern to the se differences.  
6.  Article 2.4.2 requires a pattern of export prices which "differ significantly". In order for prices to 
"differ", there must be a point of comparison. In its first written submission, the United States 
rightly points out that "[a]n expor t price cannot 'differ significantly' on its own. Given that 
'difference' is a comparative or relative concept, for something to be different, it must differ from 
something else". However, the USDOC distorts its gap test when it ignores lower prices among 
non-targeted prices, thereby eliminating non -targeted prices that may be similar to alleged 
targeted prices.  
7.  The USDOC methodology, as applied, therefore does not include a proper assessment as to 
whether there is a significant difference among prices and whether the variance in export prices 
follows any discernible sequence or "pattern".  
II. THE USE OF ZEROING W HEN APPLYING AVERAGE -TO-TRANSACTION METHODOL OGY 
IS INCONSISTENT WITH  THE ANTI -DUMPING AGREEMENT  
8.  Canada submits that, in addition to the inc onsistencies described above, the USDOC's use of 
zeroing when applying the exceptional average -to-transaction methodology is inconsistent 
with Articles 2.4.2 of the Anti -Dumping Agreement.  
9.  When employing the average -to-transaction methodology, the USDO C calculated an 
intermediate result for each export transaction compared to the weighted average normal value. 
When aggregating these results, the USDOC did not offset the intermediate results of transactions 
for which the export price is lower than the no rmal value with intermediate results of transactions WT/DS471/R/Add.1  
 
- C-7 - 
 
 for which the export price is found to exceed normal value.  Aggregation without offsetting 
is commonly referred to as "zeroing".  
10.  The Appellate Body in US – Zeroing (EC) and US – Softwood Lumber V ( Article 21.5 – 
Canada) has found that the practice of "zeroing" is inconsistent with the Anti -Dumping Agreement 
in the context of both the average -to-average and the transaction -to-transaction methodologies. 
It also reached the same finding in US – Stainle ss Steel (Mexico) and US – Continued Zeroing  
when considering the average -to-transaction methodology in the context of administrative 
reviews.  
11.  The principles espoused in those decisions on zeroing demonstrate that zeroing is also not 
permissible even when an investigating authority employs the exceptional average -to-transaction 
methodology set out in Article 2.4.2 in the context of initial investigations.  
12.  The definition of dumping contained in Article 2.1 of the Anti -Dumping Agreement applies 
throughout the Agreement. When examining the use of zeroing under the transaction -to-
transaction methodology, the Appellate Body found that the concepts of "dumping" and 
"margins  of dumping" can only be found to exist in relation to a product. Because the indi vidual 
comparisons only yield intermediate results and not margins of dumping, margins of dumping 
cannot be found to exist under any methodology at the transaction level ( US – Zeroing (Japan)) . 
13.  This means that even when an investigating authority is j ustified in using the exceptional 
average -to-transaction methodology, the results of the individual comparisons must be aggregated 
to determine the margin of dumping in accordance with Article 2.4.2.  
14.  The United States argues in its first written submi ssion that zeroing is permissible when 
applying the average -to-transaction methodology because failing to do so would lead to results 
that are mathematically equivalent to those obtained through the standard methodologies.  We 
note that the Appellate Body h as already rejected such reasoning ( US – Softwood Lumber V 
(Article  21.5 – Canada)) . Moreover, it does not follow from the fact that a given methodology may 
yield a mathematical difference, that this methodology is permissible under the Anti -Dumping 
Agreem ent. This simple fact does not cure the deficiencies in the U.S. methodology, 
including  those identified in this submission.  
15.  Therefore, the USDOC's use of zeroing in the challenged investigations was inconsistent with 
Article 2.4.2 of the Anti -Dumping  Agreement.  
 
 
 WT/DS471/R/Add.1  
 
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 ANNEX C -3 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF THE EUROPEAN UNION  
I.  INTRODUCTION  
1.  The European Union intervenes in this case because of its systemic interest in the correct and 
consistent interpretation and application of the covered agreements, in particular the GATT 1994 
and the Anti -Dumping Agreement ("AD Agreement"). The European Union's comments focus on: 
(I) the targeted dumping methodology applied by the United States; and (II) the US' methodology 
for dumping determinations with  regard to non -market economies (NME's). This executive 
summary integrates comments made by the European Union in the Third Party Hearing on 
15 July 2015 and in its reply to the written questions by the Panel of 30 August 2015.  
II. TARGETED DUMPING  
2.  The European Union considers that the purpose of the final sentence of Article 2.4.2 of the 
AD Agreement, as reflected in the preparatory work, is to strike a reasonable compromise between 
two different points of view. The first point of view is that whether or not dumping exists must be 
measured by taking into account the average pricing behaviour of an exporter, in both domestic 
and export markets, as well as average costs, irrespective, on the export side, of the purchaser, 
region or time period. Thus, for this purpose, the data universe includes all export transactions to 
all purchasers and regions and in all time periods of the investigation period, to the full value of all 
export transactions, whether they are less or more than the normal value. This is s o whether the 
comparison methodology is weighted average -to-weighted average or transaction -to-transaction. 
The second point of view is that whether or not dumping exists may be measured by comparing 
each export transaction with a normal value, and, if the  export price exceeds the normal value, 
by recording a finding of zero dumping, that is, by not allowing any off -set between positive and 
negative results. The compromise, as enshrined in Article 2.4.2 of the AD Agreement is that 
normally the first rule ap plies; but that exceptionally, if targeted dumping by purchaser, region or 
time period is demonstrated to exist, a normal value established on a weighted average basis may 
be compared to prices of individual export transactions.  
3.  What the final sentence  of Article 2.4.2 of the AD Agreement does is to permit an investigating 
authority to unmask targeted dumping by purchaser, region or time that would otherwise be 
concealed. Thus, in the case of regional targeted dumping, a weighted average -to-weighted 
average comparison might lead to a determination of no dumping. However, a closer examination 
of one particular regional market within the importing Member might reveal that, in fact, 
the relatively low priced and dumped transactions are pouring into that reg ion and devastating the 
local industry, and this is being off -set by relatively high priced transactions to other regions. 
In such a case, what the final sentence of Article 2.4.2 of the AD Agreement does is to permit an 
investigating authority to respond to such a situation, by unmasking the targeted dumping. 
Instead of determining the existence and amount of dumping by reference to the entire territory of 
the importing Member, it is entitled instead to determine the existence of a pattern of export 
prices  which differ significantly among different regions, and unmask the targeted dumping 
accordingly.  
4.  The same observations apply, mutatis mutandis , with respect to targeted dumping by 
purchaser or time period.  
5.  This process is not aptly described as " zeroing" as that term has been used in prior DSB 
reports. It is not something done when calculating a dumped amount. Rather, it is something done 
after a dumped amount has been lawfully calculated in accordance with the provisions of the final 
sentence of Article 2.4.2 of the AD Agreement.  
6.  The point that the European Union has been consistently making during the course of these 
and earlier proceedings is that the particular fact pattern and legal context with which this Panel is 
presented has not previo usly been adjudicated. That is why we disagree with China's approach of WT/DS471/R/Add.1  
 
- C-9 - 
 
 asserting the existence of a generic concept of "zeroing" that past case law has prohibited, leading 
to the conclusion that it is impossible for an investigating authority to unmask ta rgeted dumping 
(for example by region), because the fact of not offsetting the targeted dumped amount against a 
negative amount for non -targets is to be characterised as "zeroing". This is just not helpful, 
because the same term is being used to describe v ery different fact patterns and legal concepts. 
Therefore, if the Panel is nevertheless minded to refer to this issue as "zeroing", the European 
Union would strongly suggest that the Panel consider following the approach adopted in the past 
cases, by adopt ing an appropriate qualifier, such as "regional zeroing" or "purchaser zeroing" or 
"zeroing by time period".  
7.  To put the matter in these terms, the European Union does not agree with China that just 
because the past case law has established that "model  zeroing" and "simple zeroing" are generally 
prohibited, it necessarily follows that "regional zeroing" is prohibited. That is because the final 
sentence of Article 2.4.2 expressly provides for the possibility that there is a pattern of export 
prices that differ significantly among different regions. Thus, even if regional zeroing would 
generally not be permitted, it would certainly be permitted when the exceptional circumstances set 
out in the final sentence of Article 2.4.2 have been demonstrated to exist . The dumped amount 
thus calculated would have been lawfully calculated in accordance with the provisions of the 
AD Agreement. It could therefore lawfully form the basis for the calculation of the margin of 
dumping and thus the rate of anti -dumping duty to  be applied.  
8.  The European Union agrees with the Appellate Body in US – Continued Zeroing that the 
mathematical equivalence argument does not determine the question on the use of different 
methodologies in case of targeted dumping determinations, becau se it is most likely not to hold in 
the case of transaction -to-transaction comparisons, and because the data set changes.  
9.  Furthermore, during the Third Party Hearing Japan explained that,  in order to appropriately 
counteract low -priced transactions to  a "targeted " group, it may be most appropriate to interpret 
the second sentence of Article 2.4.2 as allowing an investigating authority to "focus" on the 
transactions for that particular targeted group, and to establish the margin of dumping on the 
basis of the export prices in that targeted group (e.g. in a region). The European Union understood 
Japan to argue that the dumped amount thereby calculated does not need to be set -off against 
a negative dumped amount with respect to non -targets (that is, the re mainder of the data set). 
An anti-dumping duty may then be imposed at that rate with respect to products destined for that 
region. This would mean that Japan would in fact ignore the exports to non -targets in the 
calculation of the exporter -specific dumpin g margin for the investigated product. Japan would 
apply the same approach, mutatis mutandis , with respect to targeted dumping by purchaser and 
by time period.  
10.  During the oral hearing the European Union explained that it disagreed with Japan's 
proposi tion regarding the levying of the duties insofar as Japan is not taking into account the 
context provided by Article 4.2 of the AD Agreement. We explained that, although Article 4.2 
refers to a situation in which the domestic industry has been interpreted as referring to the 
producers in a certain area, that is, a market as defined in paragraph 1(ii) of Article 4, 
nevertheless it provides relevant contextual guidance disproving Japan's proposition.1 It expressly 
recognises that there may be circumstances in  which the constitutional law of the importing 
Member does not permit the levying of anti -dumping duties only on products consigned for final 
consumption to a particular area. In such circumstances, it provides for the exporters to be given 
the opportunity  to cease exporting at dumped prices or give assurances to that effect pursuant to 
Article 8. It also refers to the possibility of the duties being levied only on products of specific 
producers which supply the area in question. However, if neither of thes e approaches is possible, 
Article 4.2 expressly provides that the importing Member may levy the anti -dumping duties 
"without limitation ". As we explained during the oral hearing, this certainly means at least 
without limitation as to the geographical area.   
                                               
1 The European Union does not consider that, for the purposes of resolving the dispute before it, the 
Panel needs to get into the question of the relationship between the legal concept of a "re gion" within the 
meaning of Article 2.4.2 of the AD Agreement and the legal concept of a "region" within the meaning of 
Article  4.2. We think that the Panel can refer to the term "without limitation" as context in support of a 
refutation of Japan's argumen t without doing that.  WT/DS471/R/Add.1  
 
- C-10 - 
 
 
 11.  What this means is that, contrary to what Japan submits, it remains possible to impose an 
anti-dumping duty on the exporter in Japan's example of regional targeted dumping with respect 
to shipments of all products to the entire geographical area of the importing Member, that is, 
"without limitation" as to geographical scope. The amount of the anti -dumping duty to be imposed 
would be equal to the margin of dumping for that exporter. The margin of dumping for the 
exporter in Japan's example would not b e expressed as a margin of dumping into the targeted 
region, that is, by dividing the dumped amount by the total value of transactions to that region. 
Rather, the margin of dumping for that exporter would be expressed as a margin of dumping into 
the entire  territory of the importing Member, that is, by dividing the dumped amount by the total 
value of all transactions into the importing Member. This would mean that the investigating 
authority would not ignore the exports to non -targets in the calculation of the exporter -specific 
dumping margin for the investigated product. Rather, they would all be taken into account in the 
calculation of the dumping margin.  
12.  With respect to Japan's complaint that this would mean that an anti -dumping duty would 
initially be imposed on products destined for regions where no regional targeted dumping had 
previously occurred, we agree with what we understand the US position to be, that is, that any 
such issues could be addressed (to the extent that this would be necessary at all) during final 
assessment or refund proceedings as provided for in Article 9.3 of the AD Agreement, or through 
the use of a variable duty, as provided for in Article 9.4 of the AD Agreement.  
13.  Finally, the European Union notes that, in a normal anti -dumping calculation, that is, one that 
does not involve any determination of targeted dumping, an investigating authority is not required 
to assess the reason for which dumping is occurring. Rather, the determination of the existence 
and amount of dumping  is based on an objective assessment of the data. If the export price is less 
than the normal value, then dumping exists. The European Union fails to see why the situation 
should be any different under the final sentence of Article 2.4.2 of the AD Agreemen t.  
14.  The reasons for which the dumping might be occurring, and specifically the reasons for the 
existence of the pattern and the use of the weighted average -to-transaction methodology, might 
be relevant to the explanation to be provided pursuant to the  final sentence of Article 2.4.2 of the 
AD Agreement, but such reasons are not relevant to the question of whether or not a pattern of 
relatively low priced exports by purchaser, region or time period, has been demonstrated to exist. 
We think that the term s "pattern" and "significantly" can be understood quantitatively; and we 
agree with the United States that the term can also be understood qualitatively.  
III. SINGLE ENTITY METHOD OLOGIES  
15.  The European Union expects the Panel to follow the guidance pro vided by the Appellate Body 
in EC – Fasteners (China) , where a similar presumption of Single Entity in EU law was found 
inconsistent with Articles 6.10 and 9.2 of the AD Agreement. According to the Appellate Body, 
legal entities may under certain circumsta nces be treated as a single exporter or producer, 
but such singularity cannot be presumed.  
16.  The criteria for establishing singularity may include the existence of corporate and structural 
links between the State and the exporters, such as common contr ol, shareholding and 
management, and control or material influence by the State in respect of pricing and output. The 
European Union considers the criteria referred to by the United States in line with these principles, 
if they are effectively applied to e stablish singularity (and not to rebut a presumption of 
singularity).  
17.  The European Union agrees with the United States that Article 9.4 of the AD Agreement is 
inapplicable to entities which have received an individual rate (which can be a Single Rate  for 
several companies if singularity has been correctly established). Where Article 9.4 of the 
AD Agreement is applicable, it does not require one single "all others" rate, but allows an 
investigating authority to impose more than one such rate. However, any "all others rate" must 
not exceed the ceiling calculated according to Article 9.4 (ii). Where it cannot be calculated 
because there are no reference margins other than zero, de minimis , and facts available 
determinations, Members must provide methodolo gies which are reasonable in view of the specific 
circumstances of the case at hand.  WT/DS471/R/Add.1  
 
- C-11 - 
 
 18.  The European Union anticipates that the Panel will take account of the Appellate Body's 
findings in US – Zeroing (EC)  and in Argentina – Import Measures  when assessin g whether China 
has demonstrated the existence and precise content of a practice of punitive use of facts available. 
The European Union would like to recall that in US – Carbon Steel (India)  the existence of such a 
practice was not challenged by India and hence the findings in that case are not conclusive for the 
present case. The EU expects that when assessing whether China has sufficiently substantiated its 
claim, the Panel will look closely into the characterisation of the measure by China and assess the  
evidence provided in the light of the specific challenge, as indicated by the Appellate Body in 
Argentina – Import Measures .  
19.  On information rights of individual components of the Single Entity under Article 6.1 of the 
AD Agreement, the EU considers that a balance must be found between the fundamental due 
process rights of interested parties and the interest of investigating authorities in efficient and 
expeditious investigations. In the European Union's view, this requires that basic information abou t 
the investigation be given, whenever possible, at the outset of the investigation, to all individual 
companies known by then to the investigating authorities. All companies included within the Single 
Entity should be informed thereof once it is establish ed that they belong to the Single Entity, 
including about the composition of the Entity at that point in time, and about the fact that failure 
to provide complete information for the whole entity might entail the use of facts available for the 
Single Entit y as such (see next paragraph). Subsequently, it will be for the Single Entity to channel 
information to its components and investigating authorities.  
20.  If the Single Entity has been constituted correctly, i.e. not on the basis of a presumption but 
establishing, for each of its companies whether the criteria set out in EC – Fasteners (China)  are 
met, and if all companies included within the Single Entity have been duly informed of their 
inclusion and the consequences thereof, investigating authorities sh ould be allowed to apply facts 
available to the extent the Single Entity has been given notice of the information specifically 
required and failed to provide complete information for the whole Entity. In the European Union's 
view, a different reading would  be in contradiction with the very concept of the Single Entity.  
21.  Finally, the European Union also advocates a balanced approach on the question whether 
failure to cooperate at early stages of the investigation can justify the use of facts available a t 
later stages of the investigation, without giving again all parties notice of the information then 
required. Such balanced approach could consist in giving interested parties from the outset 
maximum notice of the information required throughout the proce edings, but on the other hand 
allowing investigating authorities to cease communication with those respondents which make it 
clear that they do not intend to cooperate.  
IV. CONCLUSION  
22.  The European Union considers that this case raises important questi ons on the interpretation 
of various provisions of the AD Agreement and the GATT 1994. The European Union requests the 
Panel to carefully review the scope of the claims in light of the observations made in its 
submissions.  
 
 
 
 WT/DS471/R/Add.1  
 
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 ANNEX C -4 
EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I.  Introduction  
1.  Due to its systemic interest, Japan will address the proper legal interpretation of the 
Agreement  on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 
("Anti-Dumping Agreement ") as well as the conduct of the United States Department of Commerce 
(the "USDOC ") pertaining to Certain Methodologies and their Application  to Anti -Dumping 
Proceedings involving China.  
II.  Zeroing Is Inconsistent with the Anti -Dumping Agreement When Applyin g the 
Second Sentence of Article 2.4.2  
A. The Appellate Body Consistently  Has Held Zeroing to Be Inconsistent with the 
Anti-Dumping Agreement  
2.  The Appellate Body has consistently held that zeroing is incompatible  with the Anti -Dumping 
Agreement.  It emph asized that dumping and margins of dumping do not pertain to individual 
transactions  or individual models/sub -types of a product , but to a product under investigation as a 
whole .1 This conclusion is not only based on the text of Article 2.4.2 but also on t he definition of 
"dumping " set out in  Article 2.1, which defines the determination of dumping in relation to 
"a product ", as well as on Article VI:2 of the GATT 1994, which allow s a Member and its authorities 
to levy anti -dumping duties with respect to "any [dumped] product " or "such product ". The 
Appellate Body also clarified that the term "dumping " has the same meaning "in all provisions of 
the Agreement and for all types of anti -dumping proceedings, including original investigations, new 
shipper review, and periodic reviews ",2 and that the concepts  of "dumping " and "margin of 
dumping " "should be considered and interpreted in a coherent and consistent manner for all parts 
of the Anti -Dumping Agreement. "3 The Appellate Body emphasized that while an investig ating 
authority may undertake multiple comparisons and/or averaging when calculating margins of 
dumping, the results of such individual calculations are "not 'margins of dumping' within the 
meaning of Article 2.4.2 ", and the authority "necessarily has to t ake into account the results of all 
those comparisons in order to establish margins of dumping for the product as a whole under 
Article 2.4.2. "4 
3.  Zeroing is also inconsistent with the fair comparison obligation under Article 2.4 of the Anti -
Dumping Agre ement . The Appellate Body stated that zeroing "cannot be described as impartial, 
even-handed, or unbiased " (i.e., "fair") in the sense of Article 2.4, because the use of zeroing 
"artificially inflates the magnitude of dumping, resulting in higher margins o f dumping and making 
a positive determination of dumping more likely. "5 The Appellate Body found that zeroing in W-T 
comparisons  in the context of periodic reviews and new shipper reviews is, as such, inconsistent 
with Article 2.4.6  
4.  While the Appellat e Body has not expressly addressed the issue of zeroing with respect to the 
second sentence of Article 2.4.2, nothing in the Anti -Dumping Agreement allows an investigating 
authority to depart from  the consistent interpretation of the Appellate Body that du mping and 
margins of dumping are product -wide, and not transaction -specific , concept s. The second sentence 
                                               
1 Appellate Body Report, US – Softwood Lumber V , paras. 92 -93; Appellate Body Report, US – Zeroing 
(EC), para. 126; Appellate Body Report, US – Stainless Steel (Mexico) , para. 106.  
2 Appellate Body Report, US – Zeroing (Japan) , para. 109. 
3 Appellate Body Report, US – Stainless Steel (Mexico) , para. 94.  
4 Appellate Body Report, US – Softwood Lumber V , para. 98; Appellate Body Report, US – Softwood 
Lumber V (Article 21.5  – Canada) , para. 89; Appellate Body Report, US – Zeroing (EC) , para. 126; Appellate 
Body Report, US – Zeroing (Japan) , para. 121.  
5 Appellate Body Report, US – Softwood Lumber V (Art. 21.5 – Canada) , para. 142; Appellate Body 
Report, US – Zeroing (Japan) , para. 146.  
6 Appellate Body Report, US – Zeroing (Japan) , para . 169. WT/DS471/R/Add.1  
 
- C-13 - 
 
 expressly allows an investigating authority to compare "a normal value established on a weighted 
average basis " ("W") with "prices of individual expo rt transactions " ("T"), but it does not prescribe 
how to deal with the results of such comparison s. Japan emphasizes that the use of the W -T 
comparison methodology to establish the existence of margins of dumping and the use of zeroing 
to disregard the int ermediate comparison results in establishing the margins of dumping are 
clearly distinguished and must not be confused. As such, the permissibility of W -T comparisons by 
no means allows an investigating authority to apply zeroing. With respect to administr ative 
reviews , the Appellate Body has clarified that the application of zeroing under the W -T 
methodology is inconsistent with Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of the 
GATT 1994.7  
B. The Use of Zeroing Is Irrelevant to the Role an d Function of the Second 
Sentence of Article 2.4.2 Which Is to "Unmask " "Targeted Dumping " 
5.  The practice of zeroing cannot be justified in light of the role and function of the second 
sentence of Article 2.4.2  either . The Appellate Body repeatedly confi rmed that the second sentence 
of Article 2.4.2  is an instrument to "unmask " "targeted dumping ".8 
6.  As the second sentence requires differences in export prices to be found "among different 
purchasers, regions or time periods ", targeted dumping may be fou nd when  export prices for 
certain purchasers, regions or time periods "differ significantly " from export prices for other 
purchasers, regions or time periods.  As the Appellate Body clarified, there are "three kinds of 
'targeted' dumping, namely dumping tha t is targeted to certain purchasers, targeted to certain 
regions, or targeted to certain time periods ".9 Japan considers that in order to find targeted 
dumping, export prices to a targeted purchaser, region or time period must overall  "differ 
significantly " from other export prices . Differences in export prices among individual transactions 
or among individual models/subtypes are not relevant for a finding of targeted dumping because 
the second sentence of Article 2.4.2 does not differentiate among individu al transactions or 
individual models/sub -types.  
7.  To "unmask " something is to effectively  remov e a masking effect. Suppose that export prices 
to a particular region (or purchaser or time period) are significantly lower than the export  prices 
for other re gions . Because the first sentence of Article 2.4.2 does not differentiate among different 
purcha sers, regions or time periods, such "targeted " or "selective " pricing could be "masked ", i.e., 
may not be detected and appropriately  counteracted with a margin of dumping established under 
the first sentence of Article 2.4.2 by aggregating all export prices across all regions.  
8.  Therefore , Japan considers that the role and function of the second sentence of Article 2.4.2 is 
to allow the authority to compare the  weighted average normal price ( "W") with the prices of the 
individual transactions ( "T") to "targeted " purchasers, regions or time periods when establishing 
the margin of dumping and to counteract the low -priced transactions to the "targeted " groups with 
the margin of dumping specifically tailored for such groups. In other words, the second sentence 
contemplates the price comparisons that are specifically focused on the prices of the export 
transactions for targeted "purchasers, regions or time periods ". This interpretation is consistent 
with the Appellate Body 's understanding of the second sentence of Article 2.4.2 that the 
application of the W -T comparison methodology may be limited to the "pattern ", which , in the 
Appellate Body 's view, consists of export  prices that differ significantly from other export prices.10 
9.  It should be noted, however, that an investigating authority may not apply the margin of 
dumping established for the "targeted " purchasers, regions or time periods to "non-targeted " 
purchase rs, regions or time periods  because that margin of dumping was established for the 
purpose of unmasking and counteracting the low -priced export transactions to the "targeted " 
groups . Such an application would violate the authority 's obligations under vario us provisions of 
Anti-Dumping Agreement, including Articles 9.1, 9.3 and 11.1.  
                                               
7 Appellate Body Report, US – Stainless Steel (Mexico) , para. 133.  
8 Appellate Body Report, US – Zeroing (Japan) , para. 135; also see Appellate Body Report, US – 
Stainless Steel (Mexico) , para. 127.  
9 Appellate Body Report, EC – Bed Linen , para. 62.  
10 Appellate Body Report, US – Zeroing (Japan) , para. 135.  WT/DS471/R/Add.1  
 
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 10.  In light of the above, t he application of zeroing is at odds with, and goes far beyond, the role 
and function of the second sentence of Article 2.4.2 . It is obvious and log ical that the "masking " 
effect on the "targeted dumping " for certain purchaser, region or time period will be appropriately 
removed by separating and distinguishing the universe of export prices for that purchaser, region 
or time period, from that of the o ther export prices. Picking up export prices that are lower than 
the normal value from among those for the certain  targeted purchaser, region or time period is 
irrelevant to unmask "targeted dumping ".   
C. The Mathematical Equivalence Argument Does Not War rant an Interpretation 
That Zeroing Is Permitted under the Second Sentence of Article 2.4.2  
11.  Turning to the argument of mathematical equivalence, a s the United States itself admits, th is 
argument rests on the assumption that "for both [W -W and W -T] met hodologies, all of the normal 
value and sales data that are fed into the calculations … are identical ".11 This assumption has no 
basis in the Anti -Dumping Agreement.  The Appellate Body explained the U.S. argument in a 
previous dispute, stating it would app ly only "under the specific assumptions of the hypothetical 
scenario ".12 
12.  The Appellate Body ruled in US – Zeroing (Japan)  that u nder the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement, an investigating authority may unmask targeted 
dumping by limiting the "universe " of the dumping investigation to export transactions that 
constitut e a "pattern " when conducting W -T comparison s under that  provision.13 Thus, the export 
prices compared to the weighted average normal value under the second s entence of Article 2.4.2 
would be different from the export prices considered under the first sentence.   
13.  In addition, an investigating authority may use different pools of home market transactions 
when calculating the weighted average normal value for  the W-W comparison and the weighted 
average normal value for the W-T comparison. In this regard, Japan notes that the USDOC has 
applied the W -T comparison methodology pursuant to the second sentence of Article 2.4.2 to 
administrative reviews, in which it seeming ly calculates the normal values on a monthly basis, in 
contrast to the USDOC calculating the normal values on a yearly basis when applying the W -W 
comparison methodology in original investigations.  Japan also emphasizes that the T-T comparison 
metho dology under the first sentence will almost certainly never yield the same results as the W-T 
comparison methodology  under the second sentence . 
III. The Methodology Employed by the USDOC to Invoke the Second Sentence of 
Article  2.4.2 Is Inconsistent with i ts Obligations A s Set Forth in that Provision  
14.  Japan emphasize s that the first sentence of Article 2.4.2 provides that the existence of 
margins of dumping "shall normally " be established in accordance with that sentence. Given that it 
is perfectly norm al to observe certain difference s in export prices of a  product  in a given market , 
such variations are expected to be addressed by the methodologies available under the first 
sentence,  which "shall normally " be used. As such, it is critical to ensure that the requirements of 
the second sentence not be construed so broadly as to capture the kinds of pricing variations that 
are "normally " observed in the market in question.  
A. The Methodology Employed by t he USDOC to Find a "Pattern " Is Inconsistent 
with its Obligations As Set Forth in the Second Sentence of Article 2.4.2  
15.  A textual  interpretation of the term "pattern " suggests that it is "a regular and intelligible form 
or sequence discernible in certain actions or situations ".14 In order to be discernibl e, the 
arrangement or order  must be meaningful to the objective of the analysis . Further, the "pattern " 
referred to  in the second sentence of Article 2.4.2 must also relate to  export prices which "differ 
significantly ". Japan agrees with China and the Unit ed States that the word "significant " is defined 
as "in a significant manner; esp. so as to convey a particular meaning  expressly, meaningfully ".15 
                                               
11 U.S. First Written Submission, para. 237.  Emphasis added.  
12 Appellate Body Report, US – Softwood Lumber V (Art. 21. 5 – Canada) , para. 99.  
13 Appellate Body Report, US – Zeroing (Japan),  para.135 . 
14 Oxford English Dictionary Online (CHN -90). 
15 China 's First Written Submission, para. 137; U.S. First Written Submission, para. 44.  WT/DS471/R/Add.1  
 
- C-15 - 
 
 As such, the term "significantly ", in Japan 's view, has both qualitative and quantitative aspects, 
and there fore the "difference " in export prices  must be qualitative as well as quantitative.16 
It should be also noted that the drafters of the second sentence of Article 2.4.2 did not employ a 
unified, purely quantitative threshold for the determination of a "pattern", but adopted instead the 
phrase "differ significantly ", which sets forth criteria that may be construed on a case -by-case 
basis. Thus, an investigatin g authority must qualitatively assess the differences observed among 
different purchasers, regions or  time periods with respect to the specific fact s before it. Here,  one 
needs to take into account the characteristics of the relevant product  and market,  including the 
price variances of such a product in the market . 
16.  Moreover, Japan also considers that  in order to properly examine whether export prices 
"differ significantly " by comparing  the export prices to certain purchasers, regions or time periods 
with the  export  prices to other purchasers, regions or time periods, an investigating authority must 
ensure that the former prices be comparable  with the latter prices in light of all the facts and the 
evidence before it. In so doing, the authority must take into account various factors that may 
affect the price comparability, such as conditions and terms o f sale, levels of trade, transaction 
scales, seasonal trends, increase or decrease in costs.  
17.  The methodology adopted by the USDOC  in its OCTG  OI, Coated Paper OI and Steel Cylinders  
OI17 in the form of the Nails test is inconsistent with the second se ntence of Article 2.4.2, for it 
appears to have consistently and exclusively relied on purely quantitative and inflexible 
benchmarks such as one standard deviation (pattern test) and  5% (gap test) in order to find a 
"pattern ", and t here is no evidence that  the USDOC examined whether these numerical criteria 
were appropriate for each specific case at hand.  Even if an investigating authority is not prohibited 
from using certain numerical benchmark s or criteria for the assessment as to whether the export 
pricing data at hand meets the requirement under the second sentence  of Article 2.4.2 , it cannot 
ex ante  choose  a unified and inflexible  threshold values that are applicable to all cases. 
The USDOC also failed to interpret the meaning of the results of the appl ication of those criteria in 
a qualitative and holistic manner.  
18.  Japan considers that the problem with the USDOC 's methodology could be particularly 
significant in situations like the Steel Cylinders  investigation , where an investigating authority 
allegedly finds a "pattern " based exclusively on mathematically lower prices in certain months 
during the POI. Such a methodology could unreasonably lead to a finding of a "pattern " in most, 
if not all, situations, because it is perfectly common and usual for export prices to fluctuate over 
time, reflecting various factors such as increase s or decrease s in input costs and seasonal trends.  
19.  The second sentence of Article 2.4.2 requires export prices to differ significantly "among 
different purchasers, region s and time periods "; it does not differentiate between  different 
models  or sub-types  of a product under investigation.  Accordingly , in order to find targeted 
dumping, an investigating authority must find that the export prices to certain purchasers (or 
regions or time periods) differ significantly from the export prices to other purchasers (or regions 
or time periods),  taking into account all models . In this regard, the Nails test is inconsistent with 
the second sentence of Article 2.4.2, because it divides  export transactions for a particular 
purchaser (or region or time period) by different models  and focuses only on deviations of export 
prices observed with respect to certain models in order to identify a "pattern ". 
B. The USDOC Acted Inconsistently with the Second Sentence of Article 2.4.2 by 
Failing to Provide an "Explanation " 
20.  Given the role of the second sentence of Article 2.4.2 of the Anti -Dumping Agreement to 
provide an exception  to the W -W or T -T comparison  methodologies  which "shall normally " be used, 
the obligation to provide an explanation imposes a high standard. This is underscored by the 
context that allows the exception only if the W -W or T -T comparisons "cannot " be used – or if their 
use is "not possible " ("il n'est pas possible ") as the  French text of Article 2.4.2 of the Anti -Dumping 
Agreement puts it.  As explained , export prices usually vary because each export price is 
determined based on various factors, and such variations are expected to be captured by the 
comparison methodologies  available under the first sentence which "shall normally " be used. 
Therefore, an investigating authority is require d to provide an explanation at least as to why the 
                                               
16 China 's First Written Submission, para. 140.  
17 China 's First Written Submission, para. 61.  WT/DS471/R/Add.1  
 
- C-16 - 
 
 
 observed variations in export prices are not a mere reflection of factors that normally exist in a 
given market,  or otherwise why those variations  do not allow to establish an appropriate margin of 
dumping under the first sentence.  
21.  The USDOC 's interpretation of the "explanation " clause of the second sentence of Article 2.4.2 
falls short of  its obligations set forth in that provision . First, under the Nails test the USDOC 
considers the "explanation " clause to be satisfied as soon as it finds a "meaning ful difference " to 
exist between the margin of dumping calculated with the use of the W -T comparison methodology 
(with zeroing) provided for under the second sentence of Article 2.4.2 and the margin of dumping 
calculated with the use of the W -W comparison methodology (without zeroing) provided for under 
the first sentence. However, i n light of t he fact that the USDOC employs zeroing in its W -T 
comparison methodology, while it is barred from doing so in the W -W comparison methodology,  
such an argument renders the "explanation " requirement of the second sentence of Article 2.4.2  
practically inutile . Second, the USDOC does not provide any explanation about  the inability or 
impossibility  to take into account appropriately differen ces in export prices by the use of the W -W 
comparison methodology . Finally, the USDOC fails to  provide any explanation as t o why the price 
differences cannot be taken into account appropriately by the use of the T -T comparison 
methodology . Japan considers that in a situation like the Steel Cylinders  investigation, the T -T 
comparison methodology  could have properly taken into a ccount  increases or decreases in input 
costs and seasonal trends, given that under such a methodology both export transaction s and 
domestic transactions  are to be considered in close temporal proximity . 
IV. The Use of Zeroing in Administrative Review s Is Inconsistent with Article 9.3 of the 
Anti-Dumping Agreement  and Article VI:2 of the GATT 1994  
22.  As explained above, t he Appellate Body has also found that applying zeroing in administrative 
reviews involving the W -T comparison methodology is, as such, i nconsistent with the Anti -
Dumping Agreement.18 Therefore, zeroing in administrative review is inconsistent with Article 9.3 
of the Anti -Dumping Agreement and Article VI:2 of the GATT 1994.  
V.  Conclusion  
23.  Japan appreciates the Panel 's consideration of Japan 's views with regard to the interpretation 
of the provisions of the Anti -Dumping Agreement addressed above.  
 
 
 
 
                                               
18 Appellate Body Report , US – Zeroing (Japan) , para. 166.  WT/DS471/R/Add.1  
 
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 ANNEX C -5 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF KOREA  
I.  The USDOC 's Methodolog y for Invoking the Second Sentence of Article 2.4.2 of the  
Anti-Dumping Agreement Are Inconsistent with the Obligations Set Forth in That 
Provision  
A.  Pattern Clause  
1.  The term "pattern " is defined by the Oxford English Dictionary as "[a] regular and intelligible 
form or sequence discernible in certain actions  or situations. "1 The word "pattern " or its equivalent 
in other  languages implies cer tain important characteristics.  First, any variation in prices may not 
be simply random, but rather must display a disce rnible, regular form or design.  The variation 
must have some relationship to each other so that this form can be discerned (that is, they must 
be "intelligible "). Second, to be "intelligible " or to "serve to govern the execution of something ," 
the pattern must be meaningful to the purpo se of what is being undertaken.  In the context of 
Article 2.4.2, the differences in prices must be meaningful for the purpose of determining whether 
use of the W-T comparison set forth in the second sentence of Article 2.4.2 is justified . 
2.  This conclusion is reinforced by the requirement in Article 2.4.2 that the prices differ not only 
by customer, region or time period, but also that they differ "significantly ." In English, the word 
"significant " conveys both qualitative and quantitative aspects.  Anti-Dumping Agreement use s the 
word "significant " or "significantly " with the intent of conveying a meaning that is qualitative as 
well a s, or instead of, quantitative.  For example, Article 3.2 refers to "significant price 
undercutting " and "significant price depression ." As the A ppellate Body has recognized, the use of 
the term "significant " in this context has both quantitative and qualitative aspects.2 The same is 
true in Article 2.4.2 . 
3.  Conversely, when the Anti -Dumping Agreement seeks to describe a difference in purely 
quantitative  terms, it uses a word other than "significant " in English, "notable " in French or 
"significativo " in Spanish. The Agreement uses the word "large" in English, "grand " or "elevé " in 
French, and "grande " or "elevado " in Spanish.  The clearest example of this word ch oice is found in 
Article 6.10.  
4.  In light of these ordinary meanings and contextual considerations, the use of the word 
"significantly " to describe the price differences that must be found to trigger the W-T comparison  
in Article 2.4.2 mu st mean something other than merely "large" quantitative differences.  Rather, 
the requirement that prices differ "significantly " must mean that the price differences reflect a 
meaning or purpose other than random price variation or price differences that r eflect normal 
commercial factors . 
5.  Prices for agricultural products often follow seasonal pricing patterns, with lower prices during 
the harvest season when supply is greater than in the off season, when prices are higher.  Prices for 
consumer goods are o ften discounted during key holiday seasons, by all market par ticipants, 
not just exporters. Similarly, both domestic and foreign suppliers will tend to charge larger volume 
customers lower prices than they c harge smaller volume customers.  Prices for most p roducts 
normally go up or down over time when the underlyi ng costs of production change. This is most 
evident in the case of many basic commodities, where one or two raw materials constitute a large 
percentage of the cost of producing the finished product,  and in the case of certain high 
                                               
1 OxfordDictionaries.com , Oxford University Press, accessed 7 May 2015 , 
<http://www.oxforddictionaries.com/us/definition/american_english/pattern>.  Similarly, the Oxford English 
Dictionary defines "pattern" as "[a]n arra ngement or order discernible in objects, actions, ideas, situations, 
etc."  The New Shorter Oxford English Dictionary, 4th ed., L. Brown (ed.) (Clarendon Press, Oxford, 1993), 
Vol. 2, p. 2126.  
2 Appellate Body Report, US – Measures Affecting Trade in Large  Civil Aircraft , para. 1272 (citing 
Appellate Body Report, EC – Measures Affecting Trade in Large Civil Aircraft , para. 1218).   WT/DS471/R/Add.1  
 
- C-18 - 
 
 
 technology products, where costs of production typically decline dramatically over the life -cycle of 
the product . 
6.  Contrary to the ordinary meaning of the terms "pattern " and "significantly ," however, 
the USDOC applied i ts so-called "pattern test " and "gap test " as purely quantitative tests. The 
USDOC applied these tests mechanically, and then it analysed only the quantitative differences 
among those average prices; the USDOC never examined the reasons why the alleged "pattern" of 
"significant " price differences exist s.  
B. Explanation Clause  
7.  Under the second sentence of Article 2.4.2 , an investigating authority may use the W -T 
comparison methodology only if it provides "an explanation … as to why such differences cann ot 
be taken into account appropriately by the use of a weighted average -to-weighted average or 
transaction -to-transaction comparison ." The W-T comparison methodology is not permitted if there 
is any way in which the W -W or T -T comparison methodology can pr oduce a dumping margin 
calculation in which the pattern of significantly differing prices to the purchaser (or region, or time 
period) in question can be taken into account appropriately.   
8.  In the Nails test, the USDOC made no pretence of meeting this e xplicit requirement of the 
second sentence of Article 2.4.2.  After finding the existence of "targeting " through a mechanical 
application of its "pattern test " and "gap test ," the USDOC compared the respondents ' dumping 
margins using the W -W comparison meth odology (without zeroing) and the W -T comparis on 
methodology (with zeroing). Based on this comparison , the USDOC determined that there is a 
"meaningful difference ," and concluded that it must apply the W -T comparison methodology to all 
sales.  These "explan ations " are facially inadequate to meet the high standard that the second 
sentence of Article 2.4.2 imposes. Indeed, the USDOC 's statements are wholly conclusory and 
provide no explanation at all . 
9.  A mere comparison of the results from W -W (without zero ing) and W -T (with zeroing) does not 
adequately explain why the two symmetrical comparisons cannot take into account appropriat ely 
the significant difference.  Simply, the margin increase resulting from the W -T comparison comes 
from the use of zeroing. This is problematic because e ven the result of the W -W comparison on the 
same sales data will be different d epending on the use of zeroing.  This implies  that the 
United  States cannot meet the explanation clause without using the zeroing methodology.   
10.  Finally, the explanation  under the Nails test does not address at all why the T-T methodology 
cannot take into account appropriately the pattern of significantly differing prices it found to exist , 
as clearly required by the second sentence of Article 2.4.2.  
C. All the transactions  
11.  The structure and language of Article 2.4.2 confirm that the W -T comparison methodology 
only apply to those transactions determined to have met the criteria for invocation of the 
exception, and not to all export transactions . The Appellate Body in US – Zeroing (Japan ) stated 
that "The prices of transactions that fall within this pattern  must be found to differ significa ntly 
from other export prices. We therefore read the phrase "individual export transactions " in that 
sentence as  referring to the transactions that fall within  the relevant pricing pattern. This universe 
of export transactions would necessarily be more limited than the universe of export transactions 
to which the symmetrical comparison methodologies in the first sen tence of Article 2.4.2 would 
apply . In order to unmask targeted dumping, an investigating authority may limit the application 
of the W -T comparison methodology to the prices of export transactions falling within the relevant 
pattern.3" 
12.  It necessarily follows that the "symmetrical comparison methodologies in the first sentence of 
Article 2.4.2 would apply " to the export transactions not falling with the "pattern of export prices 
which differs significantly among different purchasers, regions or time per iods."  
                                               
3 Appellate Body Report, US – Zeroing (Japan) , para. 135 ; Appellate Body Report, US – Stainless Steel 
(Mexico) , para. 127.  WT/DS471/R/Add.1  
 
- C-19 - 
 
 13.  The United States itself previously shared the Appellate Body 's understanding of the operation 
of the sec ond sentence of Article 2.4.2. As the Appellate Body noted in United States – Softwood 
Lumber V (Article 21.5 - Canada), before the panel in that proceeding the United States indicated 
that if the USDOC found targeted dumping to exist, "the USDOC would apply the weighted 
average -to-transaction comparison methodology to export transactions falling within the 
'pricing  pattern ' and would examin e the other export transactions using the weighted average -to-
weighted average methodology. "4 This understanding  is further reinforced by the USDOC 's original 
targeted dumping regulation , which stated that "…the Secretary normally will limit the applicatio n 
of the average -to-transaction method to those sales that constitute targeted dumping under 
paragraph (f)(1)(i) of this section ."5  
14.  Under the correct interpretation of Article 2.4.2, therefore, application of W -T with zeroing to 
all the transactions will be unnecessarily punitive, and inconsi stent with the second sentence.  
However, once a pattern was found by the problematic Nails test, the US DOC applied the W -T 
comparison methodology with zeroing to the all the transactions.  
15.  Additionally , the U nited States suggested a new concept that is f oreign to the second 
sentence. It argues that a pattern within the meaning of the second sentence encompasses all the 
transactions which are composed of lower and higher prices.6 This new concept is just meritl ess, 
because the United States confuses a situation where the second sentence should be invoked with 
a situation where the fir st sentence should be invoked. Furthermore, the US argument is self -
contradictory , because the Nails test was only applied to the allegedly targeted purchasers, 
regions, or time periods, and did not test whether the export sales to other purchasers, regions, or 
time periods also may have been targeted.  
D. Other Problems in the Nails  Test  
16.  There are  two more problems entrenched in the Nails test. First, the USDOC calculated 
standard deviations based on average export prices, not the act ual "export prices" themselves.  
This approach ignored the textual obligation to analyse "export prices ," not averages , which  
necessarily  made the standard deviation s smaller.  Because of this method, the benchmark price 
(one standard deviation below the average price) was increase d, which also meant the possibility 
of finding a pattern was increase d arbitrarily . 
17.  Second, it does not consider the lower priced transactions below the alleged transaction in 
calculating 'average price gap ' under the 'gap test .' In the example the United States provided, the 
price of $5.75 would be omitted from the gap test .7 The United States acknowledged this problem.  
However, the United States did not provide any reason why it omitted the price. O ne possible 
concern is that if a petitioner wants to protect its market by applying W -T comparison with zeroing 
to all the imported products, it can do so simply by cherry -picking the most possible transactions 
to successfully pass the Nails test. Here an argument can be made that the omission by the 
USDOC passes its role as investigating  authority to the petitioners. Petitioners are private 
companies that are inherently prone  to protect its market share from the imports.  
II. The Use of Zeroing When Applying Article 2.4.2, the Second Sentence, Has No Basis 
under the Anti -Dumping Agreement and Prior Appellate Body Rulings   
18.  The Appellate Body  ruled that  for the purposes of Articles 2.1 and 2.4.2 of the Anti -Dumping 
Agreement, the terms "dumping " and a "margin of dumping " must be established for the "product 
as a whole ."8 Moreover, the Appellate Body has held that the concepts of "dumping " and "margin 
of dumping " are exporter -specific, in that they relate to the aggregated pricing behaviour of the 
exporter.9 The Appellate Body further held that the definition of "dumping " as a product -wide and 
exporter -specific concept must be applied in a coherent and consistent manner to all provisions of 
                                               
4 Appellate Body Report, United States – Softwood Lumber V (Article 21.5 - Canada) , para. 98.  
5 Targeted Dumping Proposed Final Rule, p. 27416; 19 C.F. R. § 351.414(f) (2007).  
6 US First Written Submission, paras. 55, 202, 289.  
7 US First Written Submission, p aras. 91 – 104. 
8 Appellate Body Report, US – Zeroing (EC) , para. 126; Appellate Body Report, US – Softwood Lumber 
V, paras. 92 -93. 
9 Appellate Body Report, US – Continued Zeroing , para. 283; Appellate Body Report, US – Stainless 
Steel (Mexico) , paras. 89 -90; Appellate Body Report, US – Zeroing (EC) , para. 128.  WT/DS471/R/Add.1  
 
- C-20 - 
 
 
 the Anti -Dumping Agreement, regardless of the specific anti -dumping proceeding and of the 
particular comparison methodology applied b y the investigating authority.  
19.  The Appellate Body also observed that the Anti -Dumping Agreement deals w ith "injurious 
dumping, " and that the very purpose of an anti -dumping duty is to counteract injury caused by 
"dumped imports " to the domestic industry producing a "like product ." For this reason, the 
concepts of "dumping ," "injury ," and "margin of dumping " are "interlinked and should be 
considered and interpreted in a coherent and consistent manner for all parts of the Anti -Dumping 
Agreement ."10 In US – Stainless Steel (Mexico) , the Appellate Body summarized the above 
jurisprudence .11 
20.  These findings of  the Appellate Body are dispositive of the interpretation advanced by the 
USDOC as a basis for applying zeroing under the se cond sentence of Article 2.4.2.  The use of 
zeroing invariably results in the USDOC disregarding or artificially reducing to zero the  results of 
W-T comparisons when aggregating those results for the purposes of calculating the margin of 
dumping for the product as a whole and for each individua l exporter or foreign producer.  For this 
reason, it is inconsistent with the second sentence o f Article 2.4.2 . 
21.  The United States supports its position, inter alia , by arguing the following three points: 
unmasking, exception , and mathematical equivalence.  However, all of these theories fail for the 
following reasons.  
A. Unm asking  
22.  The Unit ed States argue s that an investigating authority should use W -T with zeroing to all 
the transactions in order to unmask the targeted dumping.  Based on this unmasking theory, 
the United States has been applying the zeroing methodology to all the transaction s, once it had 
found a pattern . However, t he United States ' assertion based on the "unmasking " theory is simply 
baseless.  
23.  First of all, the use of the term, "unmask ," does not provide the United States with 
justification of using zeroing. T he meaning of "unmasking " as guided by the Appellate Body is to 
"find" or "distinguish " a pattern where prices differ significantly, not to raise the margins of 
dumping as a remedy for the injury caused by the targeted dumping. The use of zeroing as 
employed by the U SDOC does not contribute to "unmask " targeted dumping. The use of zeroing 
simply inflates the margin of dumping, which ha s nothing to do with unmasking.  Therefore, the 
"unmasking " theory is flawed.  
24.  Second, the problem of masking also exists in W -W and T-T comparison, because lower prices 
and higher prices co -exist in the symmetrical comparison as well. Nonetheless, the Appellate Body 
has ruled against the use of zeroing in W -W and T -T comparison . If the U .S. argument on 
"unmasking " should be accepted by this Panel, the United States has to provide persuasive 
evidence of why the use of zeroing is necessary to unmask particularly in the case of targeted 
dumping situation, as opposed to the clear and consistent Appellate Body rulings against the use 
of zeroing in W -W and T -T where the problems of masking also exist.  The United States failed to 
do so.  
B. Exception  
25.  The United States asserts that the second sentence  of Article 2.4.2 is an exception, and 
therefore, a new interpretation is required , and th e Appellate Body rulings d o not apply to this 
situation. With the "exception " argument , the United States is trying to prolong the life of zeroing 
through the unacceptable interpretation of the second sentence.  
26.  The United States shares the same under standing with Korea with respect to the Appellate 
Body rulings on the concepts of "dumping " and "margin of dumping. "12 However, the United States 
                                               
10 Appellate Body Report, US – Continued Zeroing , para. 284; see also  Appellate Body Report, US – 
Stainless Steel (Mexico) , para. 94; Appellate Body Report, US – Zeroing (Japan) , para.114.  
11 Appella te Body Report, US – Stainless Steel (Mexico) , para. 94.  
12 US First Written Submission, para. 216. WT/DS471/R/Add.1  
 
- C-21 - 
 
 omitted the equally important Appellate Body 's ruling that these concepts must apply with equal 
force to the entire Anti -Dumping Agreement. Obviously, Article 2.4.2, the second sentence is also 
a provision of the Anti -Dumping Agreement. The United States cannot avoid this Appellate Body 
ruling by arguing that the seco nd sentence is an "exception."  
27.  Moreover, the exception argument misleads this Panel. The Appellate Body found that the 
second sentence may be applied in an "exceptional " situation . The Appellate Body did not even 
mention that the second sentence is an "exception " to the existing jurisprudence und er the Anti -
Dumping Agreement. Therefore, the consistent Appellate Body ruling that the concepts of 
"dumping " and "margins of dumping " must apply with equal force to the second sentence as well.   
C. Mathematical Equivalence  
28.  The United States seems to acknowledge that the issue of mathematical equivalence is just a 
matter of assumption.  Korea agrees . The issue is whether the United States ' assumption is 
consistent w ith the second sentence or not.  The United States adopted an assumption in favour of 
itself to produce mathematical equivalence . However, its logic is just vulnerable.  This is true 
because the Appellate Body in US – Stainless Steel (Mexico)  and US – Zeroing (Japan)  also found 
that mathematical equivalence may occur under certain circumstances,  (a.k.a., assumptions) and 
therefore, the second  sentence would not be inutile.   
29.  The United States is trying to argue that the meanings of the terms in the first sentence and 
the second sentence of Article 2.4.2 are the same.13 However, the plain read ing of the first and 
second sentences demonstrates that the meanings o f the terms could be different.  In the first 
sentence, it is stated "a weighted average normal value, " while in the second sentence it is stated, 
"a normal value established on a weighte d average basis. " If the drafters were to intend the same 
meaning, they should have drafted as such . However, they did not. Therefore, there is no clue in 
the provision that these two normal values should be the same.   
30.  Second, more accurate comparison  would be possible if the normal value is changed,  and thus 
allowed a W-W or T -T comparison to properly and "appropriately " take into account price 
differences. For example, the use of monthly normal values would allow a more precise 
comparison of prices t hat may be changing over time.  Prices may change over time because of 
seasonality, or becaus e costs are changing over time.  By comparing the monthly average export 
sale in one month to the monthly average normal value for the same month, the adjusted W -W 
method might well appropriately take into account the price differences. Similarly, in W -T 
comparison, comparing a specific export sale in one month to the monthly average normal value 
for the same month, the adjusted W in the W -T comparison might well take  into account the price 
differences. The key point is that the method for determining the W for normal value is not fixed, 
and can be adjusted to better reflect the particular circumstances of a case . 
31.  Korea notes that the USDOC itself uses monthly com parisons in administrative reviews, 
because it considers monthly normal values to be more contempo raneous and thus more accurate.  
This shift from annual average normal value to monthly average normal value is a routine part of 
the USDOC practice. The US DOC does not limit monthly normal value to some cases; it applies 
this more contemporaneous approach to all its administrative reviews  for the market economies .  
32.  Once one recognizes that there are some reasons to use a different normal value, 
mathematica l equivalence is broken.  As an argument for treaty interpretation, mathematical 
equivalence (relying on the inutile principle) only works when it exists in all cases.  Mathematical 
equivalence in some cases, or even most cases, does not establish that a tre aty provis ion has 
been rendered inutile.  
 
 
                                               
13 See US First Written Submission paras. 219 – 227. WT/DS471/R/Add.1  
 
- C-22 - 
 
 ANNEX C -6 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF NORWAY  
I.  THE USE OF ZEROING  
A.   Interpretation of the Anti -Dumping Agreement  
1.  The Appellate Body has pointed out on several occasions that it is clear from t he opening 
phrase of Article 2.1 – "[f]or the purposes of this Agreement " – that the definition of "dumping " 
contained in that article applies to the entire Anti -Dumping Agreement.1 According to the Appellate 
Body, "dumping " and "dumped imports " must have "the same meaning in all provisions of the 
Agreement and for all types of anti -dumping proceedings, including original investigations, 
new shipper reviews, and periodic reviews ".2  
2.  The Appellate Body has repeatedly found that the texts of Article 2.1 o f the Anti -Dumping 
Agreement and Article VI:1 of the GATT 1994 clearly indicate that "dumping " and "margins of 
dumping " must be established for the "product as a whole ", as opposed to at the individual 
transaction level.3 Furthermore, the Appellate Body ha s concluded that the concepts of "dumping " 
and "margin of dumping " are exporter -specific,4 and that "a single margin of dumping is to be 
established for each individual exporter or producer investigated ".5 The cohesive interpretation of 
these terms by the Appellate Body precludes an interpretation of "dumping " and "margins of 
dumping " to the effect that these may be considered on a transaction -specific basis, 
including  under the second sentence of Article 2.4.2.  
3.  Moreover, the Appellate Body has held tha t Articles 2.4.2 and 2.4 of the Anti -Dumping 
Agreement require aggregation of all results of intermediate comparisons when calculating the 
dumping margin.6 In US – Softwood Lumber V , the Appellate Body ruled that the individual 
comparisons only represent "intermediate values " that the investigating authority had to 
aggregate in order to arrive at the margin of dumping for the product as a whole. Furthermore, 
the investigating authority "necessarily has to take into account the results of  all those 
compariso ns in order to establish margins of dumping for the product as a whole under 
Article  2.4.2".7 Disregarding or artificially reducing to zero the results of intermediate comparisons, 
through the application of zeroing, is at odds with this and thus inconsist ent with Article 2.4.2.  
4.  This interpretation has been confirmed by the Appellate Body, both in the context of the 
"transaction -to-transaction " methodology,8 as well as in the context of the "weighted -average -to-
transaction " methodology in administrativ e reviews.9  
5.  Norway cannot see anything in the wording of the second sentence of Article 2.4.2 that 
suggests a different interpretation. On the contrary, Norway agrees with China that although the 
second sentence of Article 2.4.2 provides an exception from the first sentence in terms of the 
                                               
1 Appellate Body Reports, US – Corrosion -Resistant Steel Sunset Review , para. 109; Appellate Body 
Repor t, US - Softwood Lumber V , para. 93;  US – Zeroing (EC) , para. 125;  US – Stainless Steel (Mexico) , 
para. 84; and US – Zeroing (Japan) , para. 109.  
2 Appellate Body Report, US - Zeroing (Japan),  para. 109. See also Appellate Body Report, US - 
Softwood Lumber  V, para. 93.  
3 Appellate Body Report, EC – Bed Linen, para. 53; Appellate Body Report, US – Softwood Lumber V , 
paras. 92 -93 and 96; Appellate Body Report, US – Zeroing (EC) , para 126.  
4 Appellate Body Report, US – Stainless Steel (Mexico ), para. 94; Appel late Body Report; US – Zeroing 
(EC), paras. 128 -129. 
5 Appellate Body Report, US – Continued Zeroing , para. 283. See also Appellate Body Report, US – 
Zeroing (EC) , para. 128; Appellate Body Report, US - Stainless Steel (Mexico) , para. 89.  
6 Appellate Body Report, EC – Bed Linen , para, 53;  and Appellate Body Report, US – Softwood Lumber 
V, para. 97.  
7 Appellate Body Report, US – Softwood Lumber V , para. 98 (emphasis original).  
8 Appellate Body Report, US – Softwood Lumber V (Art 21.5 – Canada) , paras. 85 -124. 
9 Appellate Body Report, US - Stainless Steel (Mexico),  para. 133.  WT/DS471/R/Add.1  
 
- C-23 - 
 
 comparison methodology  used to compare normal value and export price in investigations, this is 
not an exception from the requirement to determine "margins of dumping ".10  Furthermore, the 
object and purpose of the pr ovision is to address possible dumping targeted at particular 
purchasers, regions or time periods. These dumping situations reflect a pricing strategy where the 
exporter dumps prices on specific purchasers, regions or time periods, while retaining higher p rices 
for other sales. The very nature of targeted dumping thus necessitates a reference to the overall 
pricing behaviour  of the exporter, in order to identify this type of dumping. A logical consequence 
of this is that dumping cannot take place at the lev el of each individual transaction. This was 
reflected in US – Stainless Steel (Mexico)  when the Appellate Body noted that "[a] proper 
determination as to whether an exporter is dumping or not can only be made on the basis of an 
examination of the exporter 's pricing behaviour as reflected in all of its transaction over a period of 
time".11 
B.  The negotiating history of the Anti -Dumping Agreement  
6.  Norway notes that the United States claims that the negotiation history of the Anti -Dumping 
Agreement confirms  that zeroing should be permissible under the second sentence of 
Article  2.4.2.12 As Norway understands it, the gist of this argument seems to be that 
communications of two delegations and minutes of a negotiating meeting could be read as proof 
that the asy mmetrical comparisons, that is comparisons between individual export transactions 
and weighted average normal value in anti -dumping investigations, and zeroing, were viewed as 
the same thing. Norway strongly disagrees with this assumption. In our opinion, the material only 
show that some Members were concerned about the use of zeroing in "weighted -average -to-
transaction " comparisons. This is indeed very different from deducting a permission of applying 
zeroing when using the said comparison methodology.  
7.  Furthermore, we note that the United States has previously described the negotiating history of 
Article 2.4.2 in quite a different way. In US – Softwood Lumber V , the United States argued that 
there were two practices employed by Members to establish "margins of dumping " at the time of 
the Uruguay Round negotiations that were relevant for the interpretation of Article 2.4.2. The first 
practice consisted of making "asymmetrical " comparisons, while the second practice was zeroing. 
The United States asserted  that, because the negotiators were able to agree only on the issue of 
"asymmetry ", it would be reasonable to expect that, absent modified text in the Anti -Dumping 
Agreement addressing zeroing, that practice would continue to be consistent with the Anti -
Dumping Agreement.13 In that particular case, the United States clearly saw these two practices as 
two separate issues.14 The Appellate Body did not agree with the United States in those 
proceedings. Similarly, the material at hand does not in any way prove th at the negotiators 
intended to allow zeroing when applying the third comparison methodology.  
C.  The obligation to make a "fair comparison " 
8.  Moreover, the use of zeroing when applying this third comparison methodology is inconsistent 
with the obligation  of Article 2.4 of the Anti -Dumping Agreement to make a "fair comparison " 
between the export price and the normal value. The term "fair" has been interpreted by the 
Appellate Body to connote "impartiality, even -handedness or lack of bias ".15 The Appellate B ody 
has found that zeroing tends to inflate the margins calculated, and that it can, in some instances, 
turn a negative margin of dumping into a positive margin of dumping.16 Thus, the Appellate Body 
has emphasised that there is an "inherent bias " in zeroin g,17 and that "this way of calculating 
cannot be described as impartial, even -handed or unbiased ".18 As with the other two comparison 
methodologies, the use of zeroing while applying the "weighted -average -to-transaction " 
methodology distorts certain facts re lated to the investigation and contains an inherent bias, 
                                               
10 First Written Submission of China paras. 217 -218. 
11 Appellate Body Report, US – Stainless Steel (Mexico) , para. 98.  
12 First Written Submission of the United States, paras. 242 -250. 
13 Appellate Body Report, US – Softwood Lumber V , para. 107.  
14 Appellate Body Report, US – Softwood Lumber V,  para. 108.  
15 Appellate Body Report, US – Softwood Lumber V (Art. 21.5 – Canada) , para. 138.  
16 Appellate Body Report,  US – Corrosion Resistant Steel Su nset Review , para. 135.  
17 Appellate Body Report,  US – Corrosion Resistant Steel Sunset Review , para. 135.  
18 Appellate Body Report, US – Softwood Lumber V (Art. 21.5 – Canada),  para. 142.  WT/DS471/R/Add.1  
 
- C-24 - 
 
 making a positive determination of dumping more likely. This is clearly in violation of the "fair 
comparison " obligation of Article 2.4 of the Anti -Dumping Agreement.  
II. THE MATHE MATICAL EQUIVALENC E ARGUMENT  
9.  The United States argues that prohibiting the use of zeroing under the weighted average -to-
transaction comparison methodology would lead to results that are "mathematically equivalent " to 
the comparison methodologies under the first sentenc e of the provision. According to the United 
States, this would render the second sentence of Article 2.4.2 redundant. The United States draws 
this conclusion from findings by the Appellate Body in other disputes that the first two comparison 
methods should  not "lead to results that are systematically different ".19 Thus, the United States 
asserts that the third comparison method "logically " should lead to results that are systematically 
different, and that any interpretation to the contrary would mean that Ar ticle 2.4.2 would 
no longer be "exceptional " and therefore inutile.20 Norway  disagrees with this reasoning.   
10.  The mathematical equivalence argument  is based on the assumption that the investigating 
authority must use the same set of pricing data. This i s a consequence of the United States ' 
interpretation of the term "a weighted average normal value " in the first sentence as meaning the 
same as "a normal value established on a weighted average basis " in the second sentence. In 
Norway 's view, this interpre tation is incorrect, and it does not follow from the wording of 
Article  2.4.2 that these two normal values should be the same. On the contrary, an investigating 
authority may use different pools of home market transactions when calculating the two differen t 
normal values. We would also point to the fact that this argument has already been rejected by 
the Appellate Body.21 
11.  In any event, the  "mathematical equivalence " argument is misleading. The focus of the 
exceptional methodology in the second sentence of Article 2.4.2 is, after having examined all 
transactions, to show a pattern of dumping targeted at particular purchasers, regions or time 
periods. What is then allowed is to address such targeted dumping with targeted measures.  
 
 
                                               
19 United States ' First Written Submission, para. 229.  
20 United States ' First Written Submission, paras. 229 -230. 
21 Appellate Body Report, US – Softwood Lumber V (Art. 21.5 – Canada) , para. 99.  WT/DS471/ R/Add.1  
 
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 ANNEX C -7 
EXECUTIVE SU MMARY OF THE  WRITTEN SUBMISSION  OF TURKEY 
I.  INTRODUCTION  
1.  The Republic of Turkey (hereinafter referred to as "Turkey ") welcomes this opportunity to 
submit her views as a third party in this case. Turkey 's objective is to contribute to the accurate 
and consistent interpretation of the Agreement on the Implementation of Article VI of GATT 1994 
(hereinafter referred to as "ADA"). 
2.  Turkey will not elaborate on the particular facts presented by the Parties, rather, underlining 
her systematic interest, Turkey would like to limit her third party submission to the discussion on 
the rights and obligations of an investigating authority under Article 2.4.2 of the ADA.  
II. INTERPRETATION OF THE SECOND SENTENCE OF ARTICLE 2.4.2  
3.  Turkey observes that the dis cussion concerning the legal interpretation of the second sentence 
of Article 2.4.2 of the ADA has already become a frequently addressed subject in several panel 
proceedings. Turkey 's third part contribution in some of these proceedings aimed to bring a cl ear 
perspective to this contentious issue which is cardinal to understand the methodology on how the 
dumping margin will be calculated in case of "targeted dumping ". 
4.  Turkey understands that the arguments presented by the parties concerning this issue f ocus 
primarily on the interpretation of the conditions that trigger the use of weighted average normal 
value -individual transactions comparison (hereinafter referred to as "W-T comparison " or "W-T") 
and whether this methodology, by definition, renders the use of zeroing inevitable and most 
importantly legal. Turkey will address these two issues separately.  
Interpretation of the conditions concerning W -T comparison   
5.  In Turkey 's understanding the second sentence of Article 2.4.2 of the ADA, on its face, 
stipulates one substantive and one procedural condition. Article 2.4.2 reads as follows:  
2.4.2.[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 such differences cannot be taken into account appropriately by the use 
of a weighted average to weighted average or transacti on to transaction 
comparison. (emphasis added)  
6.  As the substantive condition, the investigating authority has to reach a conclusion that a 
pattern of export prices displaying a significant difference among purchasers, regions or time 
periods is present.  As the procedural condition, the investigating authority has to bring an 
explanation why these differences cannot be taken into account appropriately by the use of the 
usual comparison methodologies.  
7.  The article refrains from elaborating on the method ology on how the "pattern of significantly 
different export prices " will be established. In that manner, the drafters of the article have given 
legal leeway to the investigating authority to define the steps that lead to the conclusion that a 
pattern of si gnificantly differing export prices among purchasers, regions and time periods is 
present. Turkey understands that investigating authority has discretion to employ any 
methodology that is appropriate to analyze whether the export sales display a pattern wh ich may 
also include statistical data analysis. Neither in the ADA nor in the case law there is any obligation 
to use specific means to construct the pattern test.1 Nevertheless, the investigating authority 
                                               
 Turkey  requested that its written submission  serve as its executive summary.  
1 China 's first written submission, p.154; United Sta tes' first written submission, p.116  WT/DS471/R/Add.1  
 
- C-26 - 
 
 is under the obligation to act in an even -handed and unbiased manner while defining the 
mechanics of the methodology to evaluate the existence of a possible pattern.  
8.  The United States of America (hereinafter referred to as "U.S") interprets the word "pattern " 
in a contextual manner and underlines tha t a "pattern " shows a regular and intelligible form or 
sequence of export prices which significantly differ among purchasers, regions and time periods2. 
Turkey considers that the assessment focusing on a group of export transactions, to understand 
whether a pattern exists, primarily depends on the examination whether transactions repeat 
themselves consistently during the investigation period and such repetition form a structure that 
significantly differ among purchasers, regions and time periods. As a matte r of fact, such an 
evaluation puts weight equally on the transactions itself and the export sales as a whole to 
pinpoint whether the repeating lines in export sales form a grouping or differing structure.  
9.  As explicitly stipulated in the Article 2.4.2, such a pattern should not only differ among 
purchasers, regions and time periods but that difference must be significant in scale. Turkey is in 
the same line with the case law that "significant " has a meaning of "notable, important or 
consequential " 3. We equally agree that the word "significant " may have both quantitative and 
qualitative aspects that necessitate a more comprehensive look to the definition4. Yet, Turkey 
considers that, in Article 2.4.2, the quantitative aspect of the word "significant " becomes more 
pronounced than its qualitative side. The negotiation history confirms such a conclusion. In Carlise 
I and II texts, this part has been drafted as "[w]hen a significant portion of export sales .". This 
phrase turns into "significant degree " in New Zealand I and II texts. In New Zealand III 
(Ramsauer) text "significant degree " is omitted altogether. The last version of this part of the 
sentence receives its final shape in Dunkel Draft which is formulated as " …[d]iffer significantly 
among purchasers,  regions or time periods .."5. In Turkey 's understanding the words "degree " and 
"portion ", as used in the previous version of the text, reveal implicitly that the drafters aimed to 
design the article so that the word "significantly " could show a level of co mparison that is 
quantifiable and discernable.  
10.  Closely connected with this point, Turkey disagrees with the argument that the targeted sales 
of the product under consideration should be necessarily an outcome of a specific intent. According 
to this a pproach, usual commercial practices, based on seasonality or other commercially driven 
rationales, are perfectly plausible if the differing export prices display a pattern in line with the 
expected results of these practices6. Turkey underlines that neithe r the reading of Article 2.4.2 nor 
the examination of case law confirms the possibility that so called "usual commercial " practices are 
rendering targeted dumping plausible7.  
11.  Finally, the plain reading of the Article 2.4.2 shows that the W -T comparis on acts as an 
exception and that the investigating authority can resort to the methodology only under certain 
conditions8. As an expected result of the due process requirement, diversion from the general rule 
requires an explanation on why normal methodolo gies, stipulated in the first sentence of 
Article  2.4.2, cannot be used appropriately. Turkey understands that this explanation should be in 
such a context that it should not deprive the interested parties from using their right of presenting 
evidences the y consider relevant.  
The relevance of zeroing in W -T comparison methodology  
12.  At this stage of the proceedings Turkey refrains from commenting on the specifics of the 
U.S. methodology and on mathematical equivalence argument.  
                                               
2 United States ' first written submission, para.36  
3 US – Large Civil Aircraft (Second Complaint) (AB), para. 1272 (citing  US -Upland Cotton (AB), 
para.426)   
4 Ibid, para.1272  
5 Understanding The WTO Anti -Dumping Agree ment; Negotiating History and Subsequent 
Interpretation; James P.Durling, Matthew R.Nicely (Cameron May International Law and Policy, 2002); p.93 -95 
6 China 's first written submission, para.  143 
7 United States ' first written submission, para.78  
8 U.S. - Softwood Lumber VI, Article 21.5 (Panel), para.5.33  WT/DS471/ R/Add.1  
 
- C-27 - 
 
 13.  Nevertheless, Turkey underscores once more that the second sentence of Article 2.4.2 
operates as an exception to the first sentence part of the Article and that the rules and procedures 
to be followed differ in terms of legal obligations and burden of explanation.  
14.  Turkey  understands that the W -T comparison methodology was designed to address a specific 
case, namely targeted dumping. In this framework, it should be assessed carefully whether 
applying the legal discipline that was devised to mark the boundaries of the norma l comparison 
methodologies of the first sentence of Article 2.4.2 can really fit the exceptional structure of the 
comparison methodology stipulated in the second half of the Article.  
15.  As a matter of legal interpretation, Turkey would like to share her  view that the application of 
the legal discipline envisaged for the first two methodologies shown in Article 2.4.2 may act 
contrary to the legal rationale of this provision stipulated in the second half of Article 2.4.2 and 
erode the effectiveness of the results expected from the W -T comparison methodology which 
is exceptional in nature and asymmetric in terms of comparison structure.  
III. CONCLUSION  
16.  With these comments, Turkey expects to contribute to the legal debate of the parties in 
this case, an d would like to express again its appreciation for this opportunity to share its views on 
this relevant debate, regarding the interpretation of the ADA.  
 
 WT/DS471/R/Add.1  
 
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 ANNEX C -8 
EXECUTIVE SUMMARY OF  THE ARGUMENTS OF VIETNAM  
I  Introduction  
1.  In this third party exe cutive summary, Viet Nam comments on two issues as follows:  
(i) The United States Department of Commerce 's (USDOC) application of the 
"targeted  dumping " methodology in its determinations  is inconsistent with the 
obligations of the United States under Artic le 2.4.2 of the Anti -Dumping Agreement;  
(ii) The USDOC 's presumption that all producers/exporters are part of a single government -
controlled "NME-wide entity " and its application of an NME -wide rate to all 
producers/exporters from NMEs that do not successf ully demonstrate that they are not 
subject to government control and are entitled to a separate rate is inconsistent with the 
requirements of Articles 6.10 and 9.2 and 9.4 of the Anti -Dumping Agreement.   
II The USDOC 's "targeted dumping " methodology viola tes Article 2.4.2 of the Anti -
dumping Agreement because it does not comply with the conditions that govern 
recourse to W -T comparison methodology  
2.  The second sentence of Article 2.4.2 of the Anti -Dumping Agreement establishes an exception 
whereby invest igating authorities are authorized to depart from the default rule mandating the use 
of a symmetrical comparison methodology to determine a margin of dumping. These conditions 
include, among other things, the existence of a "pattern " of prices that "differ significantly among 
different purchasers, regions or time periods ", as well as a meaningful explanation why the two 
"normally " used comparison methodologies are insufficient to capture such differences.  
3.  Article 2.4.2 second sentence must be interpret ed in a manner that preserves the useful effect 
of these conditions. These conditions must not be converted into mere formalities that are easily 
satisfied by an investigating authority in many cases. However, that appears to be precisely what 
the United S tates would have the panel do.  
4.  Under the Nails Test, the USDOC examined the existence of pricing patterns when targeted 
dumping was alleged by petitioners. To determine whether a pricing pattern exists, under the 
Nails Test approach, the United States uses one standard deviation as one of the criteria. 
Whatever the discretion of an investigating authority, this would appear to be far too low a 
threshold for the phrases "pattern " and "differ significantly ". Viet Nam would urge the panel to 
engage in a th orough statistical and quantitative analysis of this point. Additionally, Viet Nam 
assumes that, in the event that the W -T methodology may be used, it may only be applied to the 
transactions found to "differ significantly ", that is, within the pattern. Out side of the pattern, 
one of the two "normal " transactions shall be used.  
5. Also, Viet Nam is concerned that the USDOC ' practice reduces to an empty formality the 
requirement to provide an "explanation " as to why the two "normally " applicable  methodologies  
cannot be used. First, the U.S. fails to provide any explanation with respect to the T -T 
methodology, contrary to the plain meaning of Article 2.4.2. Second, the explanation that the W -W 
methodology "conceals " certain price differences is merely a descrip tion of what any averaging 
process entails by its very essence. Finally, saying that the W -T methodology with zeroing yields a 
higher margin than the W -W methodology without "zeroing " is not an explanation why price 
differences "cannot be taken into accoun t appropriately " by the W -W methodology. When "zeroing " 
is applied, the margins of dumping will always be higher than if zeroing is not applied because of 
the absence of any offset for the margin by which exp ort prices exceed normal value.  Recourse to 
the W-T methodology cannot be driven, or justified, by the fact that the application of 
"zeroing " will always result in the highest possible dumping margin.  Nothing in Article 2.4.2 
supports such an interpretation when choosing among the possible methodologie s for determining 
the margins of dumping.  WT/DS471/ R/Add.1  
 
- C-29 - 
 
 6.  Moreover, "zeroing" is as prohibited under the W -T comparison methodology as it is prohibited 
under the W -W and T -T methodologies under the second sentence of Article 2.4.2 of the Anti -
dumping Agreement. Viet N am disagrees with the United States ' reading of the second sentence of 
Article 2.4.2 of Anti -dumping Agreement as permitting recourse to the "zeroing " methodology. 
The W-T comparison is an exception to the comparison methodologies in the first sentence of 
Article 2.4.2, but is not an exception to the fair comparison requirement of Article 2.4. Therefore, 
if "zeroing " is considered "unfair ", it would be "unfair " and equally impermissible to "zero" when 
using the "targeted dumping " methodology.  
III The USDOC 's Single Rate Presumption for NME is inconsistent with the United State ' 
obligations under Articles 6.10, 9.2 and 9.4 of the Anti -dumping Agreement  
7.  The Single Rate Presumption is, as such, inconsistent with the United States ' obligation under 
Article 6.10 and 9.2 of the Anti -dumping Agreement. It is because under the Single Rate 
Presumption, the USDOC fails to determine an individual margin of dumping for each exporter or 
producer, and fails to specify duties for each supplier separately. The USDOC , by conditioning 
access to individual duties upon proof of absence of government control through the Separate Rate 
Test, the Single Rate Presumption, as such, also violates Article 9.4 of the Agreement.  
1.  The USDOC 's "NME-Wide Entity " Rate is inconsiste nt with the requirements of 
Articles 6.10 and 9.2 of the Anti -Dumping Agreement  
8.  A presumption that all producers and exporters are part of a single NME -wide entity to which a 
single dumping rate is assigned, is inconsistent with the obligations establi shed in (1) Article 6.10 
of the Anti -Dumping Agreement to determine an individual margin of dumping for each exporter or 
producer; and (2) Article 9.2 of the Anti -Dumping Agreement to specify duties for each supplier 
separately.  
a. The plain language of Ar ticles 6.10 and 9.2 of the Anti -Dumping Agreement 
requires the calculation of individual anti -dumping margins and assessment of 
individual anti -dumping duties   
9.  Article 6.10 articulates an authority 's obligation to determine individual anti -dumping mar gins 
for exporters under investigation. The plain language of Article 6.10 imposes a mandatory 
requirement, with an explicit exception. It is unambiguous: an authority must determine an 
individual anti -dumping margin for all known producers or exporters, s ubject to the limited and 
defined exception.  
10.  Article 9.2, like Article 6.10, imposes a general requirement that exporters and suppliers be 
individually identified.  Unless the authority can demonstrate that the factual circumstances fit 
within the def ined exception in each provision, it has failed to comply with the obligations within 
these a rticles.  
b. The USDOC 's practice of determining the NME -wide entity rate is, as such, 
inconsistent with Articles 6.10 and 9.2 of the Anti -Dumping Agreement  
11.  The USDOC 's presumption of the existence of an NME -wide entity and the application of an 
NME-wide entity rate does not comply with the plain language of Articles 6.10 and 9.2. 
These  provisions require an authority to determine anti -dumping margins and impose  anti-
dumping duties on an individual basis. The USDOC 's use of an "NME-wide entity " rate is 
inconsistent with this unambiguous obligation.  
12.  The USDOC 's practice violates the requirement of Articles 6.10 and 9.2 that authorities 
determine individual  anti-dumping margins and anti -dumping duties to exporters and producers. 
The NME -wide entity is not an individual exporter/producer, but rather is a collection of exporters 
and suppliers that the USDOC collapses into a single entity without performing the c ollapsing 
analysis required under Article 6.10 . 
13.  The USDOC 's practice does not fit within the single, limited exception to the requirements of 
Articles 6.10 and 9.2: that it would be impracticable to individually ide ntify exporters and 
suppliers.  WT/DS471/R/Add.1  
 
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 2.  The USDOC 's practice of determining the NME -wide entity rate is, as such, 
inconsistent with Article 9.4 of the Anti -Dumping Agreement  
14.  Article 9.4 provides the parameters to be followed when calculating an anti -dumping duty 
where the administering autho rity has limited individual examination to only selected 
exporters/producers, pursuant to Article 6.10 of the Anti -Dumping Agreement. As discussed 
above, Article 6.10 requires the administering authority to determine an individual margin of 
dumping for eac h known producer or exporter.1  In exceptional circumstances, the authority may 
limit the number of exporters/producers individually investigated.2  Article 9.4 governs such a 
situation and limits the discretion of an authority when calculating the anti -dumping margins of 
exporters/producers not individually investigated.  
15.  Article 9.4, exclusively, governs the anti -dumping duty applied to companies not selected for 
individual examination. The article does not provide for exceptions: where examination h as been 
limited, the calculation of the rate for all other exporters/producers is governed by Article 9.4. 
Article 9.4 then explicitly instructs the authority on the maximum permissible anti -dumping rates 
that can be applied to the exporters not individ ually investigated or reviewed.   
16.  The USDOC 's failure to assign an NME -wide entity a rate consistent with the methodology 
required by Article 9.4 of the Anti -Dumping Agreement for all companies not individually 
investigated amounts to a violation, as such , of the United States ' WTO obligat ions.  
17.  The USDOC 's practice requires that the NME -wide entity receive a rate that is distinct from the 
"separate rate " that is calculated in a manne r consistent with Article 9.4. The USDOC 's Manual 
states that "[i]n an antidumping investigation, all companies other than those that have been 
determined to be eligible for a separate rate are part of the NME entity and receive the NME -wide 
rate."3 This follows the USDOC 's discussion on how rates are to be calculated for companies that 
are eligible for a separate rate; namely, in a manner that is generally consistent with Article 9.4 of 
the Anti -Dumping Agreement.  
18.  Under the USDOC 's practice, the NME -wide entity does not receive a rate consistent with 
Article 9.4, des pite its non -selection as an individually investigated company. The Anti -Dumping 
Agreement requires that companies not selected for individual examination, per Article 6.10, are to 
receive rates calculated pursuant to Article 9.4. The NME -wide entity quali fies as a company not 
selected for individual examination. The USDOC 's failure to assign the NME -wide entity an Article 
9.4-consistent rate is a violation, as such, of the Anti -Dumping Agreement . 
IV Conclusion  
19.  For the reasons explained above, Viet Nam  would like to urge the Panel to rule that the 
USDOC ' "targeted dumping " methodology as well as other aspects of its approach to the W -T 
methodology, are inconsistent with Article 2.4.2 of the Anti-dumping Agreement  as well as Articles 
VI:1 and VI:2 of the  GATT 1994.  
20.  Also, Viet Nam would like to request the Panel to find that the USDOC ' Single Rate 
Presumption, as such, is inconsistent with Article 6.10, 9.2, and 9.4 of the Anti-dumping 
Agreement.  
 
 
__________  
                                               
1 Article 6.10 of the Anti -Dumping Agreement.  
2 Ibid. 
3 Chapter 10, Non -Market Economies (NME), Department of Commerce 20 09 Antidumping Manual, p. 7.