WORLD TRADE  
ORGANIZATION  RESTRICTED 
WT/DSB/M/324 
17 December 2012 
 (12-6898) 
Dispute Settlement Body 
16 November 2012  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard 
on 16 November 2012 
 
Chairman:  Mr. Shahid Bashir (Pakistan) 
 
 
1. China – Countervailing and anti-dumping duties on grain oriented flat-rolled electrical 
steel from the United States  
(a) Report of the Appellate Body (WT/DS414/AB/R ) and Report of the Panel (WT/DS414/R and 
WT/DS414/R/Add.1) 
1. The Chairman drew attention to the communi cation from the Appellate Body contained in 
document WT/DS414/7 transmitting the Appellate Bo dy Report on:  "China – Countervailing and 
Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States", which 
had been circulated on 18 October 2012 in document WT/DS414/AB/R, in accordance with 
Article 17.5 of the DSU.  He reminded delegati ons that the Appellate Body Report and the Panel 
Report pertaining to this dispute had been circulat ed as unrestricted documents.  He noted that, as 
Members were aware, Article 17.14 of the DSU required that:  "An Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB decides 
by consensus not to adopt the Appellate Body repo rt within 30 days following its circulation to 
Members.  This adoption procedure is without prej udice to the right of Me mbers to express their 
views on an Appellate Body report".  
2. The representative of the United States said that his country thanked the Panel, the Appellate 
Body, and the Secretariat assisting them for their hard work in this dispute.  Grain oriented flat-rolled 
electrical steel (GOES) was a high-tech and high-value magnetic specialty steel.  The countervailing 
duties (CVD) and anti-dumping (AD) duties that Ch ina maintained on US exports of GOES unfairly 
restricted US trade to this important market.  In f act, since China initiated its investigation, US exports 
of GOES to China had fallen to virtually nothing.  Both the Panel and the Appellate Body in this 
dispute had found serious and pervasive deficienci es with China's measures.  The United States 
wished to draw attention to several key findings in cluded in the Reports.  First, the Panel had found 
that China's initiation of the CVD investigation into  several purported subsidies was inconsistent with 
Article 11.3 of the SCM Agreement1, concluding that an objective investigating authority would not 
have initiated an investigation in the first place based on the petition's unsupported allegations.  
Second, the Panel had found that China failed to  require non-confidential summaries of allegedly 
confidential information in breach of Article 12.4.1 of the SCM Agreement, and Article 6.5.1 of the 
                                                      
1 Agreement on Subsidies and Countervailing Measures ("SCM Agreement"). WT/DSB/M/324 
Page 2  
 
  Anti-Dumping Agreement
2, a failure that had prevented the United States and US companies from 
gaining a reasonable understanding of the substance of the information.    
3. Third, the Panel had found that China breached  Article 12.7 of the SCM Agreement because 
there was no factual basis for its determination regard ing the utilization rate of certain programs.  In 
fact, China's determination had actually been contrary  to facts that were on the record.  Fourth, the 
Panel had found that China breached numerous provisions of the SCM and Anti-Dumping 
Agreements by improperly applying duties to ot her US exporters/producers of GOES based on facts 
available.  China had compounded the error by faili ng to disclose the essential facts, and failing to 
explain the findings and conclusions that led to this  result.  Fifth, the Panel had found that China's 
price effects analysis in its injury determinati on underlying both its CVD and AD investigations was 
fundamentally flawed.  Among the numerous deficienci es that had been cited by the Panel were:  (a) 
China's failure to disclose essential facts supporting the analysis;  (b) China's failure to base this 
analysis on positive evidence;  (c) China's failure to engage in an objective examination of the 
evidence;  and (d) China's failure to  offer an adequate explanation for its price effects findings.  Sixth, 
and finally, the Panel had found that China's causati on analysis in its injury determination contained 
the same defects as its price effects analysis.  
4. On appeal, China had only challenged the Panel' s price effects findings.  The Appellate Body 
had fully rejected China's claims and had upheld the fi ndings of the Panel.  In particular, the Appellate 
Body had upheld the Panel's findings that China's pr ice effects analysis was flawed, that China had 
failed to disclose essential facts, and that Chin a had failed to explain its  determination.  The 
United States was of the view that Members would agree that those were serious flaws, which had 
deprived respondents of the opportunity to adequately  defend their interests.  It was striking that 
China's measures were based on such pervasive erro rs and deficiencies.  Furthermore, the problems 
that had been identified in the Reports were not confined to the particular anti-dumping/countervailing 
duties investigations on US GOES that were at issue in this dispute, but had been repeated in other 
investigations, several of which were also subject  to WTO dispute settlement.  In conclusion, the 
United States was pleased to propose that the DSB adopt these important Reports.  The United States 
looked forward to action by China to address the findi ngs in this dispute and more broadly to ensure 
that all of the anti-dumping and countervailing inv estigations that it conduc ted comported with its 
obligations. 
5. The representative of China said that her country  thanked the Appellate Body, the Panel and 
the Secretariat for the considerable efforts devoted to this dispute.  China understood that the parties 
to this dispute had different interpretations of cer tain parts of the Appellate  Body and Panel Reports, 
and appreciated the opportunity to express views on the Reports at the present meeting.  At the outset, China noted that the anti-dumping duty margins dete rmined by the Ministry of Commerce of the 
People's Republic of China (MOFCOM), China's i nvestigating authority, had been upheld, and the 
Panel had agreed that MOFCOM properly relied upon ''facts available" to  determine the subsidy 
margins.  In other words, the US exporters were  selling to China on an unfair basis, and MOFCOM 
had properly found both dumping margins and subsidy margins.   
6. With regard to the injury issues, China a ppreciated that the Appellate Body Report had 
clarified, for all Members, certain issues concerning  an authority's findings of price effects.  The Anti-
Dumping Agreement and the SCM Agreement provide d only a general blueprint as to how authorities 
should identify the existence of adverse price effects in the relevant market.  In that respect, Members 
had divergent interpretations and applications  of the same provisions.  China understood and 
respected that the Appellate Body had to provide fu rther clarification regarding the meaning of those 
key provisions.  In doing so, China agreed with th e Appellate Body's recognition in this proceeding 
                                                      
2 Agreement on Implementation of Article VI of th e General Agreement on Ta riffs and Trade 1994  
("AD Agreement").  WT/DSB/M/324 
 Page 3 
 
 
  that the Agreements did not compel the use of any single methodology for a finding of adverse price 
effects.  More specifically, China agreed with the Appellate Body's confirmation that, although a price 
undercutting analysis was one possible tool in the pr ice effects analysis, it was not a requirement in 
every case.  In that regard, the Appellate Body had properly confirmed that authorities must be permitted to undertake their investigations in a manner  that was responsive to the particular facts at 
issue. 
7. However, China had misgivings regarding other aspects of the Appellate Body's review of the 
Panel Report.  As a gene ral matter, China believed that it was im portant for the Appellate Body to pay 
particular attention to the findings of the author ity, and how the Panel ha d viewed those findings.  
Ultimately, it was the findings of the authority that were at issue in a dispute settlement proceeding.  
If a panel misconstrued those findings and resolved ambiguities against the authority, the Appellate 
Body had an obligation to look beyond the Panel Re port.  In this proceeding, the Panel had essentially 
redrafted  the language of MOFCOM's price eff ects finding, criticizing MOFCOM's comparison of 
prices even though MOFCOM had never made any findings of price undercutting.  The Appellate 
Body, like the Panel, should base its findings and conclusions on the determination of the authority, 
not on a characterization of that determination.  In conclusion, although China may not agree with all 
the findings of the Appellate Body and the Panel, as always, China respected the conclusions of the 
Appellate Body and the Panel, and would make an effort to work towards implementing those 
findings in a WTO-consistent manner. 
8. The representative of the Kingdom of Saudi Arabia said that his country thanked the Panel, 
the Appellate Body and the Secretariat for their work  in this dispute.  Saudi Arabia had joined as a 
third party in this dispute for systemic reasons.  Like other WTO Members, Saudi Arabia had a strong 
interest in maintaining a balanced interpreta tion of the Anti-Dumping Agreement and the SCM 
Agreement.  Saudi Arabia had not taken the floor to comment on the substantive issues that were in 
dispute either before the Panel or the Appellate  Body, nor did it intend to comment on every matter 
addressed in the two Reports.  Instead, Saudi Ar abia wished to comment briefly on three key 
interpretive issues arising from the Appellate Body's d ecision.  First, Saudi Arabia wished to comment 
on the Appellate Body's interpretation of Artic les 3.2 of the Anti-Dumping Agreement and the 
parallel provision of Article 15.2 of the SCM Agreem ent, both of which related to the determination 
of injury.  Those provisions were critical, as they he lped to define the scope of the obligations under 
which an investigating authority must act in order to  make a WTO-consistent injury determination.   
9. Saudi Arabia agreed with the Appellate Body th at "an investigating authority is required to 
consider the relationship between subject imports  and prices of like domestic products, so as to 
understand whether subject imports  provide explanatory force for the occurrence of significant 
depression or suppression of domestic prices".  This  was consistent with Saudi Arabia's position 
during the appeal.  Saudi Arabia agreed with the Panel that investigating authorities must consider 
whether price depression and price suppression were an  "effect" of the imports.  Saudi Arabia was 
pleased that the Panel's ruling had been upheld, and ag reed with the Appellate Body that the outcome 
of this inquiry would enable the authority to ha ve a "meaningful basis for its determination as to 
whether subject imports, through such price effect s, are causing injury to the domestic industry". 
10. Second, Saudi Arabia also agreed with the Appe llate Body's interpretations of Article 6.9 of 
the Anti-Dumping Agreement and Article 12.8 of th e SCM Agreement related to the "essential facts 
under consideration".  The Appellate Bo dy had interpreted "essential facts"  to refer to ''those facts that 
were significant in the process of reaching a deci sion as to whether or not to apply definitive 
measures".  Saudi Arabia shared that view and had argued that those provisions must permit interested 
parties to defend fully their interests by requiring au thorities to disclose all record evidence relating to 
the elements that must exist for the application of definitive measures.  Therefore, Saudi Arabia also 
agreed with the Appellate Body's view that di sclosing the essential facts under consideration was 
"paramount for ensuring the ability of the parti es concerned to defend their interests".   WT/DSB/M/324 
Page 4  
 
  11. Third, Saudi Arabia also shared the Appellate Body's interpretive approach to Article 12.2.2 
of the Anti-Dumping Agreement and Article 22.5 of the SCM Agreement, regarding the disclosure in 
the public notice of "all relevant information on th e matters of fact and law and reasons which have 
led to the imposition of final measures...".  Saudi Ar abia agreed with the Appellate Body that those 
two provisions "capture the principle that those pa rties whose interests are affected by the imposition 
of final anti-dumping and countervailing duties are en titled to know, as a matter of fairness and due 
process, the facts, law and reasons that have led to  the imposition of such duties".  Saudi Arabia also 
shared the Appellate Body's position that "all rele vant information on the matters of fact" meant 
"those facts that are required to understand an i nvestigating authority's price effects examination 
leading to the imposition of final measures…".  Some of those issues were technical in nature but the 
broader principles that they raised were far from t echnical.  The issues highlighted by Saudi Arabia at 
the present meeting were directed towards the br oader objective of maintaining a proper balance 
between the efficient administration of trade reme dy laws and the requirement that redress may be 
provided only against unfairly traded imports.  Saudi  Arabia considered that the Appellate Body's 
rulings in this dispute would help maintain the balance that was intended when the Anti-Dumping and 
SCM Agreements had been negotiated. 
12. The representative of China said that, in its pr evious statement, her delegation had made 
comments only on the key points with regard to th is dispute.  However, since Saudi Arabia had 
expressed some concerns about other aspects, China wi shed to make further comments.  With regard 
to non-confidential summary issue and the "all othe rs" rate issue, China had some concerns, but 
recognized that the Panel had made further clarifi cation with regard to the Anti-Dumping Agreement 
and the SCM Agreement, which gave clearer guida nce for Members to implement those provisions.  
However, China would further discuss those provision s with other Members, in a detailed manner, at 
another occasion.  With respect to the US remark  that China maintained some measures in other 
investigations, she wished to note that it was Ch ina's constant position that Members should refrain 
from abusing trade remedy measures, which impeded free trade.  Investigations by the Chinese 
authority had been based on the application of do mestic industry, and any investigation would not 
have been initiated unless the authority had review ed the application and had determined that an 
investigation was justified.  China, like other Me mbers, had proceeded with the investigations in 
accordance with the discretion permitted by the An ti-Dumping Agreement and the SCM Agreement.  
With respect to the initiation of the countervailing in vestigation, she said that China had to admit that 
China learned from other Members,  including the United States.  This was the first countervailing 
investigation initiated by the Chinese authority.  Ch ina had initiated investigati ons into certain subsidy 
programmes, among others, which we re petitioned by the domestic industry.  It had eventually 
determined that those programmes were not c ountervailable and had precluded the authority from 
calculating the subsidy rate.  As a general matter, Ch ina agreed with the Panel that the threshold of 
initiation as required by the SCM Agreement should be complied with and the initiation should be 
justified with sufficient evidence provided in the application. 
13. The representative of the United States said that  it may already be quite apparent but the 
United States wished to add that it did not share ma ny of China's characterizations of the Reports that 
would be adopted at the present meeting.  The Unit ed States wished to simply invite Members to 
take a look at the Reports.  The United States wa s of the view that the Reports confirmed the 
understanding that it had advocated at the present meeting.  
14. The DSB took note of the statements, and adopt ed the Appellate Body Report contained in 
document WT/DS414/AB/R and the Pa nel Report contained in docume nt WT/DS414/R and Add.1, as 
upheld by the Appellate Body Report. 
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