WT/DS471/AB/R  
11 May 2017  
(17-2519) Page: 1/65 
  Original: English  
 
 UNITED STATES – CERTAIN METHODOLOGIE S AND THEIR APPLICAT ION 
TO ANTI -DUMPING PROCEEDINGS INVOLVING CHINA  
AB-2016-7 
Report of the Appellate  Body WT/DS471/AB/R  
 
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  Table of Contents  
 
1   INTRODUCTION  ................................ ................................ ................................ ..........  9 
2   ARGUMENTS OF THE PAR TICIPANTS  ................................ ................................ .........  15 
3   ARGUMENTS OF THE THI RD PARTICIPANTS  ................................ ..............................  15 
4   ISSUES RAISED IN THI S APPEAL  ................................ ................................ ..............  15 
5   ANALYSIS OF THE APPE LLATE  BODY  ................................ ................................ .........  16 
5.1   China's claims pertaining to the USDOC's applica tion of the Nails test and its use of 
the W -T methodology in the three challenged investigations  ................................ ..................  16 
5.1.1   Background  ................................ ................................ ................................ ..........  17 
5.1.2   The first and third alleged quantitative flaws  ................................ ..............................  19 
5.1.2.1    Whether the Panel erred under the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement in rejecting China's claim in res pect of the first alleged 
quantitative flaw  ................................ ................................ ................................ ..............  19 
5.1.2.2    Whether the Panel erred under the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement in rejecting China's claim in respect of the third alleged 
quantitative flaw  ................................ ................................ ................................ ..............  25 
5.1.2.3    Whether the Panel failed to comply with Article  17.6(i) of the Anti -Dumping 
Agreement  ................................ ................................ ................................ ......................  29 
5.1.3   Qualitative issues  ................................ ................................ ................................ ... 30 
5.1.4   Use of averages in determining a "pattern"  ................................ ................................  35 
5.1.5   Whether the Panel erred  under Article 2.4.2 of the Anti -Dumping Agreement in 
suggesting that comparison methodologies may be combined to establish dumping 
margins  ................................ ................................ ................................ ..........................  42 
5.2   The AFA Norm  ................................ ................................ ................................ ..........  43 
5.2.1   Panel's findings  ................................ ................................ ................................ ..... 44 
5.2.2   Rules or norms of general and prospective application  ................................ .................  47 
5.2.3   Whether the Panel erred in finding that China has not demonstrated that the AFA 
Norm is a norm of general and prospective application  ................................ ..........................  50 
5.2.4   China's request for completion – general and prospective application  ............................  53 
5.2.5   China's request for completion – Article  6.8 and paragraph  7 of Annex  II to the 
Anti-Dumping  Agreement  ................................ ................................ ................................ .. 57 
5.2.6   Conclusion  ................................ ................................ ................................ ............  60 
6   FINDINGS AND CONCLUS IONS  ................................ ................................ ..................  61 
6.1   The USDOC's application of the Nails test and i ts use of the W -T methodology in the 
three challenged investigations  ................................ ................................ ..........................  61 
6.2   The AFA  Norm  ................................ ................................ ................................ ..........  63 
6.3   Recommendation  ................................ ................................ ................................ ...... 64 
 WT/DS471/AB/R  
 
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  ABBREVIATIONS USED I N THIS REPORT   
Abbreviation  Description  
AFA Norm  Adverse Facts Available  Norm  
alleged target price  weighted -average price to the alleged target in a particular CONNUM  
Anti-Dumping Agreement  Agreement on Implem entation of Article  VI of the General  Agreement on Tariffs 
and Trade 1994  
BCI business confidential information  
Additional Working 
Procedures on BCI  Additional working procedures adopted by the Panel for the protection of BCI, 
attached as Annex A -2 to th e Panel Report  
Coated Paper  investigation  USDOC [A570 -958] Antidumping Duty Investigation of Certain Coated Paper 
Suitable for High -Quality Print Graphics Using Sheet -Fed Presses from the 
People's Republic of China  
CONNUM  control number  
CONNUM -specific weighted -
average price  the weighted -average export price in a specific CONNUM  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
GATT  1994 General Agreement on Tariffs and Trade 1994  
Nails test  Methodology used by the USDOC in anti -dumping investigations to identify "a 
pattern of export prices which differ significantly among different purchasers, 
regions or time periods"  
NME non-market economy  
OCTG  investigation  USDOC [A570 -943] Antidumping Duty  Investigation of Oil Country Tubular 
Goods from the People's  Republic of China  
Panel  Panel in these proceedings  
Panel Report  Panel Report, United States – Certain Methodologies and Their Application to 
Anti-Dumping  Proceedings Involving China , WT/DS471/ R 
PRC People's Republic of China  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
Steel Cylinders  investigation  USDOC [A570 -977] Antidumping Duty Investigation of High Pressure Steel 
Cylinders from the People's  Republic of China  
third a dministrative review 
in PET Film  USDOC [A570 -924] Antidumping Duty Administrative Review, 2010 -2011, of 
Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of 
China  
three challenged 
investigations  Coated Paper , OCTG,  and Steel Cylinders  investigations  
T-T transaction -to-transaction  
USCAFC  United States Court of Appeals for the Federal Circuit  
USCIT  United States Court of International Trade  
USDOC  United States Department of Commerce  
USDOC Antidumping Manual  USDOC Enforcement and Compliance Antidumping Manual, Chapter 10: 
Non-Market Economi es 
USDOC Policy Bulletin 
No. 05.1 USDOC Import Administration Policy Bulletin , No. 05.1, Separate -Rates Practice 
and Application of Combination Rates in Antidumping Investigations involving 
Non-Market Economy Countries  
Working Procedures  Working Procedures for Appellate Review, WT/AB/WP/6, 16  August  2010 
W-T  weighted average -to-transaction  
WTO World Trade Organization  
W-W weighted average -to-weighted average  
 WT/DS471/AB/R  
 
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  PANEL EXHIBITS  CITED IN THI S REPORT  
Exhibit 
No. Short title (if any)  Description  
CHN-1 
revised   First expert statement by Prof essor  Dr Peter Egger 
(26 February 2015)  
CHN-2  First expert statement by Lisa Tenore (28 February 2015)  
CHN-3 Coated Paper , target ed dumping 
memorandum  USDOC [A570 -958] Antidumping Duty Investigation of  Certain  
Coated Paper Suitable for High -Quality Print Graphics Using 
Sheet ‒Fed Presses from the People's Republic of China , Final 
Targeted Dumping Memorandum (20 September 2010)  
CHN-6 OCTG , post AD determin ation 
analysis : Tianjin Pipe  USDOC [A570 -943] Antidumping Duty Investigation of Oil 
Country Tubular Goods from the People's  Republic of China, 
Post Preliminary Determination Analysis of Targeted Dumping: 
Results for Tianjin Pipe (Group) Co. ( 2 March 2010 )  
CHN-23 USDOC Antidumping Manual  USDOC  Enforcement and Compliance  Antidumping Manual, 
Chapter 10 (2009) : Non -Market Economies  
CHN-64 Coated Paper , I&D memorandum  USDOC [A570 -958] Antidumping Duty Investigation of  Certain  
Coated Paper Suitable for High -Quality Print Graphics Using 
Sheet ‒Fed Presses from the People's Republic of China , Issues 
and Decision Memorandum (20 September 2010)  
CHN-66 Steel Cylinders , I&D 
memorandum  USDOC [A570 -977] Antidumping Duty Investigation of High 
Pressure Steel Cylinders from the People's  Republic of China, 
Issues and Decision Memorandum (30 April 2012)  
CHN-77 OCTG , I&D memorandum  USDOC [A570 -943] Antidumping Duty Investigation of Oil 
Country Tubular Goods from the People's  Republic of China, 
Issues and Decision Memorandu m (13 April 2010)  
CHN-92  Oxford  English Dictionary online, definition of "significant"  
CHN-109 USDOC Policy Bulletin No. 05.1  Import Administration Policy Bulletin, No. 05.1, Separate -
Rates Practice and Application of Combination Rates in 
Antidumping In vestigations involving Non -Market Economy 
Countries  (5 April 2005)  
CHN-114 Bicycles , final AD determination  USDOC [A570 -843] Antidumping Duty Investigation of 
Bicycles from the People's Republic of China,  Notice of Final 
Determination (30 April 1996)  
CHN-123 Jiangsu v.  United States  USCIT , Jiangsu Changbao Steel Tube Co., Ltd v. 
United  States, 884 F.Supp.2d 1295 (CIT 2012)  
CHN-126 1996-1997 administrative review 
in Sebacic Acid  USDOC [A570 -825] Antidumping Duty Administrative Review  
for Sebacic Acid from  the People's Republic of China, 
Preliminary Results (9 April 1998)  
CHN-132 Huaiyin v.  United States  USCAFC , Huaiyin Foreign Trade Corp. v. United States, 
322 F.3d 1369 (Fed. Cir. 2003)  
CHN-134 East Sea Seafoods v. United 
States  USCIT , East Sea Seafoods  LLC v. United States, 
703 F.Supp.2d 1336 (CIT 2010)  
CHN-148 Hubbel Power Systems v. United 
States  USCIT, Hubbel Power Systems, Inc. v. United States , 
884 F.Supp.2d 1283 ( CIT 2012)  
CHN-163 Peer Bearing v. United States  USCIT , Peer Bearing Co.-Changshan  v. United States , 
587 F.Supp.2d 1319 (CIT 2008)  
CHN-167 2011-2012 administrative review 
in Shrimp  USDOC [A570 -893] Antidumping Duty Administrative Review 
for Frozen Warmwater Shrimp from the People's Republic of 
China,  2011-2012,  Decision Memorandum (12  March 2013)  
CHN-205 2012-2013 administrative review 
in Aluminum  USDOC [A570 -967] Antidumping Duty Administrative Review 
for Aluminum Extrusions from the People's Republic of China, 
2012-2013, Decision Memorandum (18 June 2014)  WT/DS471/AB/R  
 
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  Exhibit 
No. Short title (if any)  Description  
CHN-272 2005-2006 administr ative review 
in Bags USDOC [A570 -886] Antidumping Duty Administrative Review 
for Polyethylene Retail Carrier Bags from the People's Republic 
of China, 2005 -2006, Preliminary Results 
(10 September  2007)  
CHN-274 2006-2007 administrative review 
in Bags USDOC  [A570 -886] Antidumping Duty Administrative Review 
for Polyethylene Retail Carrier Bags from the People's Republic 
of China, 2006 -2007, Preliminary Results (9 September 2008)  
CHN-298 2011 administrative review in 
Furniture  USDOC [A570 -890] Antidumping Du ty Administrative Review 
for Wooden Bedroom Furniture from the People's Republic of 
China,  2011,  Decision Memorandum (1 February  2013)  
CHN-313 2007-2008 administrative review 
in Honey  USDOC [A570 -863] Antidumping Duty Administrative Review 
for Honey from  the People's Republic of China,  2007-2008,  
Preliminary Results (23 December 2009)  
CHN-433 2011-2012 administrative review 
in Glycine  USDOC [A570 -836] Antidumping Duty Administrative Review 
for Glycine from the People's Republic of China, 2011 -2012, 
Decision Memorandum (29 November 2012)  
CHN-438 2005-2006 administrative review 
in Tapered Roller Bearings  USDOC [A570 -601] Antidumping Duty Administrative Review 
for Tapered Roller Bearings and Parts Thereof, Finished or 
Unfinished, from the People's Republi c of China, 2005 -2006, 
Preliminary Results (26 March 2007)  
CHN-439 2004-2005 administrative review 
in Freshwater Crawfish Tail Meat  USDOC [A570 -848] Antidumping Duty Administrative Review 
for Freshwater Crawfish Tail Meat from the People's Republic 
of Ch ina, 2004 -2005, Preliminary Results (10 October 2006)  
CHN-441 2003-2004 administrative review 
in Porcelain -on-Steel Cooking 
Ware USDOC [A570 -506] Antidumping Duty Administrative Review 
for Porcelain -on-Steel Cooking Ware from the People's 
Republic of Chi na, 2003 -2004, Notice of Preliminary Results 
(22 December 2005)  
CHN-487 2012-2013 administrative review 
in Solar USDOC [ A-570-979] Antidumping Duty  Administrative Review 
for Crystalline Silicon Photovoltaic Cells,  whether or not 
assembled into m odules, f rom the People's Republic of China, 
2012-2013, Decision Memor andum for Final Results 
(7 July 2015)  
USA-23 Steel Cylinders , final  AD 
Determination for Beijing Tianhai  USDOC [A570 -977] Antidumping Duty Investigation of  High 
Pressure Steel Cylinders from the  People's Republic of China, 
Analysis of the Final Determination for Beijing Tianhai 
Industry Co., Ltd ( 30 April 2012)  
 WT/DS471/AB/R  
 
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  CASES CITED IN THIS REPORT  
Short Title  Full Case Title and Citation  
Argentina – Import Measures  Appellate Body Reports, Argentina – Measures Affecting the Importation of 
Goods , WT/DS438/AB/R  / WT/DS444/AB/R  / WT/DS445/AB/R , adopted 
26 January 2015  
Australia – Salmon  Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R , adopted 6 November 1998, DSR 1998:VIII, p. 3327  
Canada – Dairy 
(Article  21.5 ‒ New Zealand 
and US II)  Appellate Body Report, Canada – Measures Affecting the Importation of Milk 
and the Exportation of Dairy Products – Second Recourse to Article 21.5 of the 
DSU by New Zealand and the United States , WT/DS103/AB/RW2 , 
WT/DS113/AB/RW2 , adopted 17 January 2003, DSR 2003:I, p. 213  
Canada – Renewable Energy 
/ Canada – Feed-in Tariff 
Program  Appellate Body Reports, Canada – Certain Measures Affecting the Renewable 
Energy Generation Sector / Canada – Measures Relating to the Feed -in Tariff 
Program , WT/DS412/AB/R  / WT/DS426/AB/R , adopted 24 May 2013, 
DSR 2013:I, p. 7  
Chile – Price Band System 
(Article  21.5 – Argentina)  Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse t o Article 21.5 of the DSU 
by Argentina , WT/DS207/AB/RW , adopted 22 May 2007, DSR 2007:II, p. 513  
China – GOES  Appellate  Body Report, China – Countervailing and Anti -Dumping Duties on 
Grain Oriented Flat -Rolled Electrical Steel from the United  States , 
WT/DS414/AB/R, adopted 16 November 2012, DSR  2012:XII, p. 6251  
China – HP-SSST (Japan) / 
China – HP-SSST (EU)  Appellate Body Reports, China – Measures Imposing Anti -Dumping Duties on 
High-Performance Stainless Steel Seamless Tubes ("HP -SSST") from Japan / 
China – Measures Imposing Anti -Dumping Duties on High -Performance 
Stainless Steel Seamless Tubes ("HP -SSST") from the European Union , 
WT/DS454/AB/R  and Add.1 / WT/DS460/AB/R  and Add.1, adopted 
28 October  2015 
China – Raw Materials  Appellate Body Reports, China – Measures Related to the Exportation of 
Various Raw Materials , WT/DS394/AB/R  / WT/DS395/AB/R  / WT/DS398/AB/R , 
adopted 22 February 2012, DSR 2012:VII, p. 3295  
EC – Asbestos  Appellate Body Report, European Communities – Measures Affecting Asbestos 
and Asbestos -Containing Products , WT/DS135/AB/R , adopted 5 April 2001, 
DSR 2001:VII, p. 3243  
EC – Bed Linen  Appellate  Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India , WT/DS141/AB/R, adopted 
12 March 2001 , DSR 2001:V, p.  2049 
EC ‒ Bed Linen (Article 21.5 
– India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India – Recourse to Article  21.5 of the 
DSU by India , WT/DS141/AB/RW , adopted 24 April 2003, DSR 2003:III, p.  965 
EC – Fasteners (China)  Appellate Body Report, European Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R , 
adopted 28 July 2011, DSR 2011:VII, p. 3995  
EC – Fasteners (China) 
(Article 21.5 – China) Appellate Body Report, European Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China – Recourse to Article 
21.5 of the DSU by China , WT/DS397/AB/RW  and Add.1 , adopted 
12 February  2016 
EC – Hormones  Appellate Body  Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 13 February 1998, 
DSR 1998:I, p. 135  
EC – IT Products  Panel Reports, European Communities and its member States – Tariff 
Treatment of Certain Informatio n Technology Products , WT/DS375/R  / 
WT/DS376/R  / WT/DS377/R , adopted 21 September 2010, DSR 2010:III, 
p. 933 
EC – Poultry  Appellate Body Report, European Communities – Measures Affecting the 
Importation of Certain Poultry Products , WT/DS69/AB/R , adopted 2 3 
July 1998, DSR 1998:V, p. 2031  
EC – Poultry  Panel Report, European Communities – Measures Affecting the Importation of 
Certain Poultry Products , WT/DS69/R , adopted 23 July 1998, as modified by 
Appellate Body Report WT/DS69/AB/R, DSR 1998:V, p. 2089  WT/DS471/AB/R  
 
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  Short Title  Full Case Title and Citation  
EC – Seal Products  Appellate Body Reports, European Communities – Measures Prohibiting the 
Importation and Marketing of Seal Products , WT/DS400/AB/R  / 
WT/DS401/AB/R , adopted 18 June 2014, DSR 2014:I, p. 7  
EC – Selected Customs 
Matters  Appellate Body Report, European Communities – Selected Customs Matters , 
WT/DS315/AB/R , adopted 11 December 2006, DSR 2006:IX, p. 3791  
EC – Tube or Pipe Fittings  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from B razil, WT/DS219/AB/R , adopted 
18 August 2003, DSR 2003:VI, p. 2613  
EC and certain member 
States – Large Civil Aircraft  Appellate  Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7  
Guatemala – Cement I  Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding 
Portland Cement from Mexico , WT/DS60/AB/R , adopted 25 November 1998, 
DSR 1998:IX, p. 3767  
Korea – Dairy  Appellate Body Re port, Korea – Definitive Safeguard Measure on Imports of 
Certain Dairy Products , WT/DS98/AB/R , adopted 12 January 2000, 
DSR 2000:I, p. 3  
Mexico – Anti-Dumping 
Measures on Rice  Appellate Body Report, Mexico – Definitive Anti -Dumping Measures on Beef 
and Ri ce, Complaint with Respect to Rice , WT/DS295/AB/R , adopted 
20 December 2005, DSR 2005:XXII, p. 10853  
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
p. 3779 
US ‒ Carbon Steel (India)  Appellate Body Report, United States – Countervailing Measures on Certain 
Hot-Rolled Carbon Steel Flat Products from India , WT/DS436/AB/R , adopted 
19 December 2014, DSR 2014:V, p. 1727  
US – Continued Zeroing  Appellate Body Report , United States – Continued Existence and Application of 
Zeroing Methodology , WT/DS350/AB/R , adopted 19 February 2009, 
DSR 2009:III, p. 1291  
US – Corrosion -Resistant 
Steel Sunset Review  Appellate Body Report, United States – Sunset Review of Anti -Dumping Duties 
on Corrosion -Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R , adopted 9 January 2004, DSR 2004:I, p. 3  
US – Countervailing and 
Anti-Dumping Measures 
(China)  Appellate Body Report, United States – Countervailing and Anti -Dumping 
Measu res on Certain Products from China , WT/DS449/AB/R  and Corr.1, 
adopted 22 July 2014, DSR 2014:VIII, p. 3027  
US – Large Civil Aircraft 
(2nd complaint)  Appellate Body Report, United States – Measures Affecting Trade in Large Civil 
Aircraft (Second Complaint) , WT/DS353/AB/R , adopted 23 March 2012, 
DSR 2012:I, p. 7  
US – Oil Country Tubular 
Goods Sunset Reviews  Appellate Body Report, United States – Sunset Reviews of Anti -Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R , 
adopted 17 De cember 2004, DSR 2004:VII, p. 3257  
US – Section 211 
Appropriations Act  Appellate Body Report, United States – Section 211 Omnibus Appropriations 
Act of 1998 , WT/DS176/AB/R , adopted 1 February 2002, DSR 2002:II, p. 589  
US ‒ Softwood Lumber V 
(Article  21.5 – Canada)  Appellate Body Report, United States – Final Dumping Determination on 
Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by 
Canada , WT/DS264/AB/RW , adopted 1 September 2006, DSR 2006:XII, 
p. 5087 
US – Stainless Steel 
(Mexico)  Appellate Body Report, United States – Final Anti -Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R , adopted 20 May 2008, DSR 
2008:II, p. 513  
US – Steel Safeguards  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports o f Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10 December 2003, 
DSR 2003:VII, p. 3117  
US – Tuna II (Mexico) 
(Article 21.5 – Mexico)  Appellate Body Report, United States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of 
the DSU by Mexico , WT/DS381/AB/RW  and Add.1, adopted 3 December 2015  WT/DS471/AB/R  
 
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  Short Title  Full Case Title and Citation  
US – Underwear  Appellate Body Report, United State s – Restrictions on Imports of Cotton and 
Man-made Fibre Underwear , WT/DS24/AB/R , adopted 25 February 1997, 
DSR 1997:I, p. 11  
US – Underwear  Panel Report, United States – Restrictions on Imports of Cotton and Man -made 
Fibre Underwear , WT/DS24/R , adopted 2 5 February 1997, as modified by 
Appellate Body Report WT/DS24/AB/R, DSR 1997:I, p. 31  
US – Washing Machines  Appellate Body Report,  United States – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea , WT/DS464/AB/R  and 
Add.1, adopted 26 September 2016  
US – Washing Machines  Panel Report, United States – Anti-Dumping and Countervailing Measures on 
Large Residential Washers from Korea , WT/DS464/R  and Add.1, adopted 
26 September 2016, as modified by Appellate Body Report WT/DS464/A B/R 
US – Wheat Gluten  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R , 
adopted 19 January 2001, DSR 2001:II, p. 717  
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R , adopted 
9 May 2006, and Corr.1, DSR 2006:II, p. 417  
US – Zeroing (Japan)  Appellate  Body Report, United  States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3  
US – Zeroing (Japan)  Panel Report, United States – Measures Relating to Zeroing and Sunset 
Reviews , WT/DS322/R , adopted 23 January 2007, as modified by 
Appellate  Body Report WT/DS322/AB /R, DSR 2007:I, p. 97  
 WT/DS471/AB/R  
 
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WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 
United States – Certain Methodologies and 
Their Application to Anti -Dumping 
Proceedings Involving China  
 
China , Appellant  
United States , Appellee  
 
Brazil , Third Participant  
Canada , Third P articipant  
European Union , Third Participant  
India, Third Participant  
Japan , Third Participant  
Korea , Third Participant  
Norway , Third Participant  
Russian Federation , Third Participant  
Saudi Arabia, Third Participant  
Separate Customs Territory of Taiwan, Pe nghu,  
 Kinmen and Matsu , Third Participant  
Turkey , Third Participant  
Ukraine , Third Participant  
Viet Nam , Third Participant  
 AB-2016-7 
 
Appellate Body Division:  
 
Bhatia , Presiding Member  
Ramírez -Hernández , Member  
Servansing , Member  
 
 
 
1  INTRODUCTION  
1.1.  China  appeals certain issues of law and legal interpretations developed in the Panel Report,  
United States – Certain Methodologies and Their Application to Anti -Dumping Proceedings 
Involvi ng China1 (Panel Report). The Panel was established on 26 March 2014 to co nsider a 
complaint by China2 with respect to the consistency of certain United  States measures with the 
Agreement on Implementation of Article VI of the General Agreement on Tarif fs and Trade 1994 
(Anti­Dumping Agreement) and the General Agreement on Tarif fs and Trade 1994 (GATT 1994) .  
1.2.  Before the Panel, China raised three sets of claims  in relation to certain methodologies  used 
by the United States Department of Commerce (USDOC)  in anti -dumping proceedings against 
China. These claims concerned : (i) the USD OC's use of the weighted average -to-transaction (W -T) 
methodology in three anti -dumping investigations and one administrative review ; (ii) the USDOC's  
treatment of multiple economic operators from a non -market econom y (NME) as a single 
NME­wide entity;  and (iii) the manner in which the USDOC determine s anti-dumping  duty rates for 
NME-wide entities , as well as the level of such duty rates .3 
1.3.  In respect of the USDOC's use of the W-T methodology, China challenged: (i) several aspects 
of the USDOC's application of the "Nails t est"4 in three anti -dumping investigations involving 
                                               
1 WT/DS471 /R. 
2 Panel Report, para. 1.3. See also R equest for the Establishment of a Panel by China , WT/DS 471/5 and 
Corr.1 . 
3 Panel Report, para. 2.1.  
4 The Panel explained:  
[T]he USDOC used what it called the N ails test to meet the requirements under the pattern 
clause of Article 2.4.2 to find a pattern of export prices which differ significantly among different 
purchasers or time periods. Under the Nails test, the USDOC sought to establish whether the 
pattern o f export prices to an allegedly targeted purchaser or time period (alleged target) 
differed significantly from export prices to n on-targeted purchasers or time periods 
(non-targets) . … 
The Nails test consisted of two sequential stages. The first stage is r eferred to as the "standard 
deviation test" and the second stage is what [the Panel referred]  to as the "price gap test". … 
[T]he objective of the standard deviation test was to find a pattern of export prices which WT/DS471/AB/R  
 
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  exports of  oil co untry  tubular goods  (OCTG )5, certain coated paper suitable for high -quality print 
graphics using sheet -fed presses  (Coated Paper )6, and high pressure steel cylinders  (Steel 
Cylinders )7 from China (the three challenged investigations) on an "as  applied" basis; and (ii) the 
USDOC's use of "zeroing" in the third  administrative review of exports of polyet hylene 
terephthalate film  (PET Film)8 from China on an "as  applied" basis .9 
1.4.  With regard to the USDOC's treatment of multiple economic operators as one NME -wide 
entity , China raised both "as such" and "as applied" claims. The "as such" claims concerned what 
China termed the "Single Rate Presumption ". China alleged that the USDOC operate s on the 
presumption that all exporters from an NME country comprise a single entity under common 
government control, and that the USDOC assign s a single margin of dumping and a single 
anti-dumping duty rate to such entity. China further submitted t hat, in order to rebut the 
Single  Rate Presumption and obtain an individually determined margin of dumping, an exporter 
has to prove, through the "Separate Rate Test", an absence of government control, both in law 
and in fact, over that exporter's activiti es. China's "as applied" claims concerned the USDOC's 
application of the Single Rate Presumption in 13 anti-dumping investigations and 25  administrative 
reviews involving Chinese exporters.10 
1.5.  Regarding the manner in which the USDOC determines  anti-dumping d uty rates for NME-wide 
entities , as well as the level of such duty rates , China raised both "as such" and "as  applied" 
claims. China's "as applied" claims concerned th e USDOC's determination of anti -dumping duty 
rates for the People's Republic of China (PR C)-wide entity  in 13 anti-dumping investigations and 
17 administrative reviews involving Chinese exporters.11 Specifically, in relation to each of these 
determinations, China challenged : the USDOC's alleged failure to specify the information required 
to cal culate a margin of dumping and to notify exporters accordingly; the USDOC's recourse to, 
and use of, facts avail able; and the level of the anti -dumping duty rates assigned to the PRC­wide 
entity. China's "as such" claims concerned the manner in which the U SDOC uses facts available 
when determining the anti -dumping duty rates for non -cooperating NME -wide e ntities under what 
China referred to as the use of " Adverse Facts A vailable Norm" (AFA  Norm12).13 
1.6.  In the Panel Report, circulated to Members of the World Tra de Organization (WTO) on 
19 October  2016, the Panel found that: 
a. with respect to the USDOC's use of the W -T methodology in the three challenged 
investigations:  
i. the United States acted inconsistently  with Article 2.4.2 of the 
Anti­Dumping  Agreement in the OCTG and Coated Paper  investigations because of 
                                                                                                                                               
differed among different purchasers, reg ions or time periods within the meaning of the pattern 
clause of Article 2.4.2, whereas the objective of the price gap test was to find whether the 
differences identified under the standard d eviation test were significant.  
(Panel Report, paras.  7.3-7.4 (fn s omitted))  
5 USDOC [A570 -943] Antidumping Duty Investigation of Oil Country Tubular Goods from the 
People's  Republic of China.  
6 USDOC [A570 -958] Antidumping Duty Investigation of  Certain  Coated Paper Suitable for High -Quality 
Print Graphics Using Sheet -Fed Presses from the People's Republic of China.   
7 USDOC [A570 -977] Antidumping Duty Investigation of High Pressure Steel Cylinders from the 
People's  Republic of China.  
8 USDOC [A570 -924] Anti -Dumping Administrative  Review, 2010 -2011, of Polyeth ylene Tere phthalate 
Film, Sheet, and Strip from the People's Republic of China.  
9 Panel Report, para. 2.2.  
10 Panel Report, para. 2.3. The specific anti-dumping investigations and administrative reviews 
challenged by China  in this regard  are listed  in footnote 20 to  paragraph  3.1.d of the Panel Report.  
11 Panel Report, para. 2.4. The specific anti-dumping investigations and administrative reviews 
challenged by China  in this regard  are listed  in footnote  21 to paragraph  3.1.e of the Panel Report . 
12 Before the Panel, Ch ina described the precise content of the AFA Norm as follows:  
[W]henever [the] USDOC considers that an NME -wide entity has failed to cooperate to the best 
of its ability, it systematically makes an adverse inference and selects, to determine the rate for 
the NME -wide entity, facts that are adverse  to the interests of that fictional entity and each of 
the producers/exporters included within it.  
(Panel Report, para. 7.422 (quoting China's opening statement at the second Panel meeting, para.  63 
(emphasis origi nal)))  
13 Panel Report, para. 2.4.  WT/DS471/AB/R  
 
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  the fourth quantitative flaw  with the Nails test , which led the USDOC to disregard 
non-target prices below the "alleged target price " under the price gap test14, and  
because of the first SAS programming error15 that occurred in the application of the 
price gap test16; 
ii. the United States acted inconsistently with Article  2.4.2 of the 
Anti­Dumping  Agreement in the three challenged  investigations  because of the 
USDOC's explanations  under the second sentence of this pro vision , which were 
premised on the use of the W -T methodology with zeroing , and because of the 
USDOC's failure to provide an explanation as to why the transaction -to-transaction 
(T-T) methodology could not take into account appropriately the significant 
differences in the relevant export prices17; 
iii. the United States acted inconsistently with Article 2.4.2 of the 
Anti­Dumping  Agreement in the three challenged  investigations by applying the 
W-T methodology to all export transactions18; 
iv. the United States acted in consistently with Article 2.4.2 of the 
Anti­Dumping  Agreement in the three challenged  investigations  because the USDOC 
used zeroing in the dumping margin cal culations when applying the 
W­T methodology19; 
v. China had not established that the United States acte d inconsistently with 
Article  2.4.2 of the Anti -Dumping Agreement in the Steel Cylinders  investigation 
because of the fourth quantitative flaw with the Nails test , which allegedly led the 
USDOC to disregard non -target prices below the alleged target price under the price 
gap test20; 
vi. China had not established that the United States acted inconsistently with 
Article  2.4.2 of the Anti -Dumping Agreement in the three challenged  investigations 
by reason of the first21, second22, and third23 alleged quanti tative flaws  with the 
Nails test24; 
vii. China had not established that the United States acted inconsistently with 
Article  2.4.2 of the Anti -Dumping Agreement because of the second alleged  
 
                                               
14 The "price gap test" is explained in paragraphs  7.4 and 7.45 -7.48 of the Panel Report, and in 
paragraph 5.8 below of this Repor t. 
15 The Panel noted that "[t] he first SAS programming error was that instead of comparing th e alleged 
target price gap with the weighted average non -target price gap, as required under the price gap test, the 
USDOC compared the alleged target price gap with each of the individual non -target price gaps which made up 
this weighted average non -targe t price gap ." (Panel Report, para. 7.50)  
16 Panel Report, para. 8.1.a.i.  
17 Panel Report, para. 8.1.a.ii.  
18 Panel Report, para. 8.1.a.iii.  
19 Panel Report, para. 8.1.a.iv.  
20 Panel Report, para. 8.1.a.v.  
21 With respect to the first alleged quantitative flaw, China contended before the Panel that the Nails 
test depended  on the assumption  that the examined export price data were either, in terms of statistics, 
normally distributed, or at least single -peaked and symmetric around the mean . (Panel Report, para. 7.5 6) 
22 With respect to the second alleged quantitative flaw, China contended before the Panel that the 
USDOC used a "one"  standard deviation threshold under the standard deviation test . According to China, this 
was contrary to established statistical convent ions, which require the use of a higher threshold . (Panel Report, 
para. 7.68)  
23 With respect to the third alleged quantitative flaw, China contended before the Panel that it concerned  
the USDOC's application of the price gap test.  To China, this flaw relat ed to the manner in which the USDOC 
calculated the weighted -average non -target price gap and the alleged target pr ice gap and then compared 
them. (Panel Report, para. 7.75)  
24 Panel Report, para. 8.1.a.v i. WT/DS471/AB/R  
 
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  SAS programming error25 that occurred in the application of the price gap test in t he 
OCTG  and Coated Paper  investigations26; 
viii. China had not established that the United States acted inconsistently with 
Article  2.4.2 of the Anti -Dumping Agreement in the three challenged  investigations 
because of the alleged qualitative issues27 with the  Nails test28; and  
ix. China had not established that the United States acted inconsistently with 
Article  2.4.2 of the Anti -Dumping Agreement in the three challenged  investigations 
by finding the relevant "pattern " on the basis of purchaser or time period 
weighted -average export prices  as opposed to individual export transaction prices29; 
b. with respect to the USDOC's use of zeroing in the third administrative review in 
PET Film: 
i. the United States acted inconsistently with Article 9.3 of the 
Anti‒Dumping  Agreement and Article VI:2 of the GATT 1994 because of the USDOC's 
use of zeroing in the dumping margin calculations when applying the W -T 
methodology30; 
c. with respect to the Single Rate Presumption:  
i. the six administrative review determinations31 introduced by China  at the 
Panel's first substantive meeting with the parties fell  within the Panel's term s of 
reference32; 
ii. the Single Rate Presumption constitutes a measure of general and prospective 
application, which is "as  such" inconsistent with Ar ticles 6.10 and 9.2 of the 
Anti-Dumping Agreement33; 
iii. the United States acted inconsistently with Ar ticles 6.10 and 9.2 of the 
Anti­Dumping  Agreement as a result of the  USDOC's  application of the Single Rate 
Presumption in the 38 determinations challenged by China under these provisions34; 
and 
iv. in light of the above findings with respect to the Single Rate Presumption35, the 
Panel  exercised  judicial economy  and made no findings with respect to China's 
"as such" and "as applied " claims under the second sentence of Artic le 9.4 of the 
Anti-Dumping Agreement concerning the Single  Rate Presumption36; and  
                                               
25 The Panel noted that , under the price gap test, t he weighted -average non -target price gap was 
calculated by multiplying each individual non -target gap with its associated weight and dividing the total by the 
total weight associated with those gaps.  The Panel explained that  "[t]he second SAS programming e rror 
occurred in the multiplication of each individual gap with its associated weight. " (Panel Report, para. 7.51)  
26 Panel Report, para. 8.1.a.vi i. 
27 China contended before the Panel that the USDOC "did not consider the reasons for the identified 
differenc es in export prices forming the relevant pattern, as part of its enquiry into whether such differences 
were significant ". (Panel Report, para. 7.105)  
28 Panel Report, para. 8.1.a.viii.  
29 Panel Report, para. 8.1.a.ix.  
30 Panel Report, para. 8.1.b.i.  
31 The specific administrative reviews are listed  in paragraph  7.241 of the Panel Report.  
32 Panel Report, para. 8.1.c.i.  
33 Panel Report, para. 8.1.c.ii.  
34 Panel Report, para. 8.1.c.iii.  
35 See Panel Report, paras. 8.1.c.ii and 8.1.c.iii.  
36 Panel Report, para. 8.1.c.i v. WT/DS471/AB/R  
 
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  d. with respect  to the AFA Norm:  
i. the relevant four administrative review  determinations introduced by China  at 
the Panel's first substantive meeting with the parties37 fell within the Panel's term s of 
reference38; 
ii. China had not demonstrated that the AFA Norm constitutes a norm of general 
and prospective application and, consequently, there was no need to examine 
whether the AFA Norm fell within the Panel's terms of reference, or to  address 
China's "as  such" claims under Article 6.8 of the Anti -Dumping Agreement and 
paragraph  7 of Annex  II thereto39; and  
iii. in light of the above findings of inconsistency under Ar ticles 6.10 and 9.2 of the 
Anti-Dumping  Agreement in relation to the Single Rate Presumption40, the Panel 
exercised judicial economy and made no findings with respect to China's "as applied" 
claims under Articles 6.1, 6.8, 9.4 , and paragraphs  1 and 7 of Annex  II to the 
Anti­Dumping  Agreement concerning the 30  determinations challen ged by China 
under these provisions.41 
1.7.  In accordance  with Article 19.1 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes (DSU), and having found that the United States  acted inconsistently with 
certain provisions of the Anti -Dumping Agreement  and the GATT 1994 , the Panel recommended 
that the United States  bring its measures into conformity with its obligations under those 
Agreements.42 
1.8.  On 18 November 2016 , China  notified the Dispute Settlement Body (DSB) , pursuant to 
Articles  16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the 
Panel Report and certain legal interpretations developed by the Panel , and filed a Notice of 
Appeal43 and an appellant's submission pursuant to Rule  20 and Rule 2 1, respe ctively, of the 
Working  Procedures for Appellate Review44 (Working Procedures).  
1.9.  On 19 November 2016, the United States requested the Appellate Body Division hearing this 
appeal to extend the time  period  for filing a Notice of Other Appeal and  other appellan t's 
submission,  and as a consequence  the time  periods  for filing appellee s' and third participants' 
submissions , pursuant to Rule 16(2) of the Working Procedures . On 21 November 2016, the 
Division invited China and the third participants to comment on the United States' request. On 
22 November 2016, China and the European Union submitted comments.  On 22 November 2016, 
the Division  issued a Procedural Ruling.45 In its ruling, the Division came to the conclusion that 
strict adherence to the time  periods set ou t in the Working Procedures would result in manifest 
unfairness in the particular circumstances of this case. Accordingly, t he Division  extended the time  
periods for filing a Notice of Other Appeal and other appellant's submission, if any;  the appellee's 
submission(s); and  the third participants' submissions .46 
1.10.  On 28 November 2016, the United States informed the Appellate Body, China,  and the  third 
participants that, "[i]n light of the need to focus this appeal on those issues necessary to assist the 
DSB in resolving th is dispute , and ongoing concerns over the Appellate Body's workload and 
demands,  [the United States had ] decided not to file an  other appeal ".47 On 16  December  2016, 
                                               
37 The specific administrative reviews are listed  in footnote 752 to paragraph 7.389 of the Panel Report.  
38 Panel Report, para. 8.1.d.i.  
39 Panel Report, para. 8.1.d.ii. The Division notes that the Panel found, in paragraph 7.454 of its Report, 
that certa in evidence put on the record by China demonstrated the precise content of the AFA  Norm as 
described by China. (See also supra , fn 12) 
40 See Panel Report, para. 8.1.c.iii.  
41 Panel Report, para. 8.1.d.iii.  
42 Panel  Report, para.  8.2. 
43 WT/DS 471/8. 
44 WT/AB/WP/6 , 16 August 2010.  
45 Contained in Annex D -1 of the Addendum to this Report (WT/DS471/AB/R/Add.1).  
46 The revised submission dates are set out in the Procedural Ruling. (See Annex D -1 of the Addendum 
to this Report (WT/DS471/AB /R/Add.1))  
47 On appeal, China raises a conditional challenge to the Panel's exercise of judicial economy with 
respect to China's "as applied" claims under Articles 6.1, 6.8, and paragraphs 1 and 7 of Annex II to the WT/DS471/AB/R  
 
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  the United States filed an appellee's submission.48 On 9  January  2017, Brazil, C anada, the  
European Union, Japan,  and Viet  Nam ea ch filed a third  participant's submission.49 On the same 
day, Norway; Russia; the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu; and 
Turkey each notified its intention to appear at the oral hearing as a third participant.50 On 
10 January  2017, Ukraine notified its intention to appear at the oral hearing as a 
third participant.51 Subsequently, India and Korea each notified its intention to appear at the 
oral hearing as a third participant.52 
1.11.  By letter of 16 January 2017, the Chair of the Appellate Body notified the Chair of the DSB 
that the Appellate Body would not be able to circulate its Report i n this appeal within the 
60-day period pursuant to Article 17.5 of the DSU, or within the 90 -day peri od pursuant to the 
same provision. The Chair of the Appellate Body explained that this was due to a number of 
factors, including the substantial workload of the Appellate Body in 2017, scheduling issues arising 
from overlap in the composition of the Divisi ons hearing different appeals, the number and 
complexity of the issues raised in this and concurrent appellate proceedings, together with the 
demands that these appellate proceedings  place on the WTO Secretariat's translation services, and 
the shortage of staff in the Appellate Body Secretariat.53 By letter of 22 March 2017 , the Chair of 
the Ap pellate  Body informed the Chair of the DSB that the Appellate Body Report in these 
proceedings would be circulated n o later than 11 May 2017 .54 
1.12.  The oral hearing in this  appeal was held on 27 -28 February 201 7. The participants and  
four of the  third participants to this appeal (Brazil , Canada, the European Union, and Japan) made 
oral statements and responded to questions posed by the Members of the Appellate Body Division 
hearing the appeal.   
1.13.  On 16 February 2015, having been requested by the parties  to do so , the Panel decided to 
adopt additional working procedures for the protection of  business confidential information (BCI) 
(Additional Working Procedures on BCI).55 No such  request was received by the Appellate Body. A t 
the beginning of the oral hearing  in these appellate proceedings , the Presiding Member noted that , 
while the Panel record contains  BCI, under the circumstances,  the Division  would assume that all 
information in this appeal shall be treated as confidential in accordance with Article  18.2 of the 
DSU. The Appellate Body has  in the past  highlighted the need to distinguish between "the general 
layer of confidentiality that applies in WTO dispute settlement proceedi ngs, as foreseen in 
Articles  18.2 and 13.1 of the DSU" and "the additional layer of protection of sensitive business 
                                                                                                                                               
Anti-Dumping Agreement. China's challeng e is conditional upon the Appellate Body reversing the Panel's 
findings that the USDOC acted inconsistently with A rticles 6.2 and 9.2 of the Anti -Dumping Agreement by 
applying the Single Rate Presumption in relation to any of the 30 challenged determinatio ns in which the 
USDOC determined a margin of dumping for the NM E-wide entity. (China's appellant's submission, 
paras.  510-511) Given that the United States did not appeal the Panel's finding concerning the Single Rate 
Presumption, the condition to China's challenge is not met.  
48 Pursuant to Rules 16 and 22 of the Working Procedures.  
49 Pursuant to Rules 16 and 24(1) of the Working Procedures. The d eadline for the filing of 
third participant's submissions, including executive summaries of those submissions, w as 9 January 2017, 
5 p.m. All third participants filing a submission did so  within this deadline. Brazil and Viet Nam, however, 
omitted to file an executive summary  along with their submissions . Brazil and Viet Nam subsequently filed their 
executive s ummar ies on 9 January 2017 at 7.30  p.m. and 10 January at 9.30 a.m. respectively, each noting 
that the executive summary had mistakenly not been sent together with the submission.  The Appellate Body 
has held that considerations of due process and "fairness and orderly procedure", as referred to in Rule 16(1) 
of the Working Procedure s, require compliance with established time periods by all participants regarding the 
filing of submissions . (See Appellate Body Report, US – Stainless Steel (Mexico) , para. 164) Thes e 
considerations are also valid with respect to executive summaries of written submissions. In light of the 
foregoing , Brazil and Viet Nam's executive summaries are included  in the Addendu m to this Appellate Body 
Report . 
50 Pursuant to Rule 24(2) of the Wor king Procedures.  
51 Pursuant to Rule 24(4) of the Working Procedures.  
52 On 22 and 23 January 2017, India and Korea, respectively, submitted its delegation list for the 
hearing to the Appellate Body Secretariat and the participants and third participants in this dispute. For the 
purposes of this appeal, the Division has interpreted these actions as notifications expressing the intention of 
India and Korea to attend the hearing pursuant to Rule 24(4) of the Working Procedures.  
53 WT/DS471/9.  
54 WT/DS471/10.  
55 Panel Report, para. 1.9 and Annex A -2. WT/DS471/AB/R  
 
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  information that a panel may choose to adopt".56 The Appellate Body has further emphasized  that, 
"absent any request from the participants, procedures for additional protection of BCI do not apply 
in … appellate proceedings."57 In this dispute , no request for additional protection of BCI  has been 
made on appeal . The Additional Working Procedures on  BCI adopted by the Panel do not cover 
these ap pellate proceedings  and therefore only  the "general layer of confidentiality" under the 
provisions of the DSU applies.  
2  ARGUMENTS OF THE PAR TICIPANTS  
2.1.  The claims and arguments of the participants are reflected in the executive summaries of 
their written sub missions provided to the Appellate Body.58 The Notice of Appeal and the executive 
summaries of the participants' claims and arguments are contained, respectively, in Annexes A 
and B of the Addendum to this Report, WT/DS471/AB/R/Add.1.  
3  ARGUMENTS OF THE THIR D PARTICIPANTS  
3.1.  The arguments of the third participants that filed a written submission are reflected in the 
executive summaries provided to the Appellate Body59, and are contained in Annex C of the 
Addendum to this Report, WT/DS471/AB/R/Add.1.  
4  ISSUES RAISED IN THIS APPEAL  
4.1.  With regard  to the USDOC's application of the Nails test in the OCTG , Coated Paper , and 
Steel Cylinders  investigations , the following issues are raised in this appeal:   
a. in relation to the first and third alleged quantitative flaws with the N ails test:  
i. whether the Panel erred in its interpretation and application of Article  2.4.2 of 
the Anti -Dumping Agreement in finding that China ha s not established that the 
United  States acted inconsistently with this provision in the three challenged  
investigations by reason of the first alleged quantitative flaw with the Nails test;   
ii. whether the Panel erred in its interpretation and application of Article 2.4.2 of 
the Anti -Dumping Agreement in finding that China ha s not established that the 
United  States a cted inconsistently with this provision in the three challenged  
investigations by reason of the third alleged quantitative flaw with the Nails test; and  
iii. whether the Panel acted inconsistently with Article  17.6(i) of the Anti -Dumping 
Agreement in dismissin g China's claim in respect of the first and third alleged 
quantitative flaws with the Nails test;  
b. whether the Panel erred in its interpretation and application of Article  2.4.2 of the 
Anti-Dumping Agreement in finding that China ha s not established that th e United  States 
acted inconsistently with this provision  in the three challenged  investigations by not 
considering the reasons for the differences in export prices when determining whether 
those differences were qualitatively significant;  
c. in relation to t he USDOC's use of weighted -average export prices under the Nails test:  
i. whether the Panel erred in its interpretation and application of Article 2.4.2 of 
the Anti -Dumping Agreement in finding that China ha s not established that the 
United  States acted incon sistently with this provision in the three challenged 
                                               
56 Appellate Body Reports, China – HP-SSST (Japan)  / China – HP-SSST (EU) , para.  5.315 ; US – Tuna II 
(Mexico) (Article  21.5 – Mexico) , para.  5.3. 
57 Appellate Body Report, US – Tuna II (Mexico) (Article  21.5 – Mexico) , para. 5.5.  
58 Pursuant to the Appellate Body Communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11 March 2015).  
59 Pursuant to the Appellate Body Communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11 March 2015).  WT/DS471/AB/R  
 
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  investigations by determining the relevant "pattern " on the basis of 
weighted -average export prices, as opposed to individual export transaction prices; 
and  
ii. whether the Panel acted inconsistently with Article 17.6(i) of the Anti -Dumping 
Agreement by failing to find that the USDOC's use of weighted -average export prices 
was inherently biased; and  
d. whether the Panel erred in its interpretation of Article 2.4.2 of the Anti -Dumping 
Agreement by suggesting th at comparison methodologies may be combined to establish 
dumping margins.  
4.2.  With regard  to the AFA Norm , the following issues are raised in this  appeal:  
a. whether the Panel erred in finding that China has not de monstrated that the 
AFA Norm is a rule or norm of general and prospective application ;  
b. if the Appellate Body  finds that the Panel erred, whether it can complete the analysis 
and find that the AFA Norm is a rule o r norm of general and prospective application that 
can be the subject of an  "as such"  challenge  in WTO dispute settlement; and 
c. if the Appellate Body finds  that the AFA Norm can be the subject of an "as such" 
challenge in WTO dispute settlement, whether it can complete the analysis and find that 
this measure  is inconsistent "as such" with Articl e 6.8 and paragraph 7 of Annex II to the 
Anti-Dumping Agreement.  
5  ANALYSIS OF THE APPELLATE  BODY  
5.1.  We first address China's claims raised on appeal under Article 2.4.2 of the Anti -Dumping 
Agreement regarding the USDOC's application of the Nails test and its use of the W -T methodology 
in the three challenged investigations. We then turn  to China's  claims on appeal regarding the 
AFA Norm .  
5.1  China's claims pertaining to the USDOC's application of the Nails test and its use of 
the W -T methodology in the three chal lenged investigations  
5.2.  On appeal, China challenges  certain findings of the Panel  under Article  2.4.2 of the 
Anti-Dumping Agreement regarding the USDOC's application of the Nails test in the 
three  challenged investigations. Specifically, China  challenges the  Panel's findings regarding : 
(i) the first  and third alleged quantitative flaws with the Nails test60; (ii) China's  claim  pertaining  to 
the consideration of certain qualitative factors when determining whether  prices differ 
"significantly" ; and (iii)  the USDOC's use of weighted -average export prices to establish the 
existence of a "pattern". In addition, China claims  that the Panel erred in suggesting tha t an 
investigating authority may combine  comparison  methodologies to establish  margin s of dumping . 
We fir st make a few observations regarding Article 2.4.2 , as well as  the Nails test that was applied 
by the USDOC in the three challenged investigations. We then address, in turn, the claims raised 
by China on appeal.  
                                               
60 Before t he Panel, China contended that , due to four quantitative flaws with the Nails test, the USDOC 
failed to find, in the three challenged investigations, that "the differences in export prices forming the pattern 
were significant, in a quantitative sense, as r equired under the pattern clause of Article 2.4.2".  (Panel Report, 
para. 7.11) China's appeal is limited to the Panel's findings regarding the  first and third of these alleged 
quantitative flaws.   WT/DS471/AB/R  
 
- 17 - 
 
  5.1.1   Background  
5.3.  Article  2.4.2 of the Anti -Dumpin g Agreement reads:   
Subject to the provisions governing fair comparison in paragraph  4, the existence of 
margins of dumping during the investigation phase shall normally be established on 
the basis of a comparison of a weighted average normal value with a weighted 
average of prices of all comparable export transactions or by a comparison of normal 
value and export prices on a transaction -to-transaction basis. A normal value 
established on a weighted average basis may be compared to prices of individual 
export transactions if the authorities find a pattern of export prices which differ 
significantly among different purchasers, regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriately by th e use of a weighted average -to-weighted average or 
transaction -to-transaction comparison.  
5.4.  The first  sentence of Article  2.4.2 provides for two symmetrical  comparison methodologies  
that "shall normally" be used by investig ating authorities to establish marg ins of dumping : (i) the 
weighted average -to-weighted average ( W-W) methodology, whereby dumping margins are 
established on the basis of a comparison of a weighted average normal value with a weighted 
average of prices of all comparable export transactions;  and (ii) the T -T methodology, whereby 
normal value and export prices are compared on a transaction -specific basis.61 The 
second  sentence of Article  2.4.2, in turn, provides for a comparison methodology that is 
asymmetrical : the W -T methodology, whereby a w eighted average normal value is compared to 
prices of individual export transactions.62 This methodology may be used if the following two 
conditions are met: first, "the authorities find a pattern of export prices which differ significantly 
among different purchasers, regions or time periods"; and, second, "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 transaction -to-transaction comparison."63 As the App ellate Body 
has recognized, "[t] he function of the second  sentence  of Article  2.4.2 is … to enable investigating 
authorities to identify so -called 'targeted dumping' and to address it appropriately ."64 
5.5.  China's claims on appeal under Article 2.4.2 are "as ap plied" claims that pertain to  the 
three challenged investigations, namely, the OCTG , Coated Paper , and Steel Cylinders  
investigation s. In these investigations, the USDOC applied the Nails  test to establish whether there 
was "a pattern of export prices whic h differ significantly " among different purchasers or time 
periods  within the meaning of the second  sentence of Article  2.4.2.65  
5.6.  The Nails test consisted of two sequential stages  that the USDOC would apply after receiving  
an allegation of "targeted  dumping " by a domestic industry petitioner  identifying an  "alleged 
target" .66 First, the "standard deviation test" aimed at "find[ing] a pattern of export prices which 
differed among different purc hasers, regions or time periods ".67 Second, the "price gap test " aimed 
at establish ing whether the differences identified  under the standard deviation test  were 
significant.68 Under both stages , the USDOC would conduct  its initial analysis on a model basis, 
                                               
61 Appellate Body Report, US – Washing Machines , para. 5.15.  
62 Appellate Body Report, US – Washing Machines , para. 5.16.  
63 We refer to these two conditions as the "pattern clause" and the "explanation clause", respectively.  
64 Appellate  Body Report, US – Washing Machines , para. 5.17.  (fn omitted)  See also Appellate  Body 
Report s, EC ‒ Bed Linen , para.  62; US – Zeroing (Japan) , para. 135; and US – Stainless Steel (Mexico) , 
paras. 122 and 127.  
65 Panel Report, para. 7.3. While the pattern clause also refers to a pattern of export prices which differ 
significantly among different regions, the USDOC did not find a pattern on that basis in the three challenged 
investigations. (Ibid., fn 40 thereto)  
66 Panel Report, para. 7.3 (referring to United States' first written submission to the Panel, para.  85) 
and para. 7.40 (referri ng to United States' first written submission to the Panel, para.  86). 
67 Panel Report, para. 7.4.  
68 Panel  Report, para. 7.4.  WT/DS471/AB/R  
 
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  with each model being assigned a control number (CONNUM) .69 The USDO C would examine  only 
those CONNUMs that were sold to both the alleged target and the non -targets.70  
5.7.  The standard deviation test involve d a two -step process.71 The USDOC  would first consider  
whether the weighted -average price to the alleged target in a parti cular CONNUM (the alleged 
target price) was below a benchmark price equal to one standard deviation below the 
weighted ‒average  export  price in that CONNUM  (the CONNUM -specific weighted -average price ).72 
Second , after repeating this exercise across all examined CONNUMs, if the volume of sales in 
CONNUMs where the alleged target price was below the CONNUM -specific weighted -average 
export price exceeded 33% of the total volume of the exporter's sales to the alleged target, the 
USDOC would move  on to the price gap test.73  
5.8.  The price gap test  itself also involve d a two -step process.74 First, t he USDOC would calculat e, 
on a CONNUM -specific basis, the alleged  target price gap  by considering the difference  between 
the alleged target price  and th e next highest weighted -average non-target price . It would also 
calculate, for the same CONNUM, the weighted -average non -target price gap by considering the 
weighted average of th e gaps between individual non -target  weighted -average price s.75 The 
USDOC  would then consider  whether the alleged target price gap exceeded the weighted -average 
non-target price gap. Second, a fter repeating this exercise  across all examined CONNUMs76, if all 
CONNUMs where the alleged target price gap was wider than the weighted -average non -target 
price gap exceeded 5% of the total volume of the sales to the alleged target, the USDOC would 
conclude that the exporter passed the price gap test .77 
5.9.  Applying the Nails test in the three challenged investigations, the USDOC established the 
existence of "pattern [s] of export prices which differ [ed] significantly " among different purchasers 
in the Coated Paper  investigation  and among different time periods in the Steel Cylinders  and 
OCTG  investigation s.78 The USDOC then evaluated the difference between the dumping margins 
calculated using the W -W methodology (without zeroing) and those  calculated using the 
W-T methodology (with zeroing) .79 The USDOC considered that there were  differences in the 
dumping margins that showed that the W -W methodology "conceal[ed] differences in price 
patterns between the targeted and non -targeted groups by averaging low -priced sales to the 
                                               
69 Panel Report, para. 7.40 and fn 52 to para. 7.8.  
70 Panel Report, para. 7.40 (referring to United States' response to Panel que stion No. 109(a), (b), and 
(c), paras. 49 -51; China's response to Panel question No. 109(c), para. 72; and First expert statement by Lisa 
Tenore (Panel Exhibit CHN -2), para. 8).  
71 For a more detailed description of the standard deviation test, see Panel R eport, paras. 7.41 -7.44.  
72 Panel Report, para. 7.41 (referring to United States' first written submission to the Panel, para.  97; 
and China's first written submission to the Panel, para.  68). I n the three challenged investigations , the USDOC 
calculated a weighted standard deviation under the standard deviation test. Like the Panel, for ease of 
reference, we refer to this  as "standard deviation".  (Ibid., fn  135 to para.  7.42)  
73 Panel Report, para. 7.44 (referring to United States' first written submission t o the Panel, para.  100; 
and China's first written submission to the Panel, para.  72). In calculating the total volume of the exporter's 
sales to the alleged target, the USDOC did not include sales  volumes  pertaining to CONNUMs that were not 
sold to both th e alleged target and a non -target. (Ibid. (referring to United States'  response to Panel question 
No. 109(a), para. 51) )  
74 For a more detailed description of the price gap test, see Panel Report, paras.  7.45-7.48.  
75 Panel Report, para. 7.45 (referring to  United States' first written submission to the Panel, para. 101; 
and China's first written submission to the Panel, para. 76). In calculating this weighted -average non -target 
price gap, the USDOC disregarded non -target prices that were lower than the alle ged target price . (Ibid.)  
76 CONNUM s that did not pass the standard deviation test were not  examined under the price gap test . 
(Panel Report, para. 7.48)  
77 Panel Report, para. 7.48 (referring to Steel Cylinders , I&D m emorandum  (Panel  Exhibit  CHN-66), 
p. 23; Coated Paper , I&D m emorandum  (Panel Exhibit  CHN-64), p.  22; and OCTG , I&D m emorandum  
(Panel  Exhibit  CHN-77), Comment 2). The USDOC did not include, in the total volume of the exporter's sales to 
the alleged target, sales volume s in those CONNUMs that were sold only to the alleged target but not to a 
non‒target. ( Ibid. (referring to United States' response to Panel question No. 109(b), para. 50))  
78 Panel Report, para. 7.5 (referring to United States' first written submiss ion to the Panel, para.  106, 
in turn referring to Coated Paper , targeted dumping  memorandum  (Panel Exhibit  CHN-3), p. 4; Steel Cylinders , 
final AD Determination for Beijing T ianhai  (Panel Exhibit  USA-23), Attachment 4, pp.  138 and 158 ; and OCTG , 
post AD determination analysis :Tianjin Pipe (Panel Exhibit  CHN-6), p.  3).  
79 Panel Report, para. 7.6 (referring to United States' first written submission to the Panel, 
paras.  184-186).  WT/DS471/AB/R  
 
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  targeted group with  high-priced sales to the non -targeted group".80 As a result, t he USDOC  applied 
the W -T methodology to all export transactions of the Chinese exporters involved in the 
three  challenged investigations.81  
5.1.2   The first and third alleged quantitative flaws  
5.10.  On appe al, China  claims that the Panel erred in its interpretation and application of the 
second sentence of Article  2.4.2 of the Anti -Dumping Agreement in rejecting its claim in respect of 
the first and third alleged quantitative flaws with the Nails test .82 Moreover, China claims that the 
Panel failed to apply the proper standard of review under Article 17.6(i) of the Anti-Dumping 
Agreement.83 Consequently, China requests us to reverse the Panel's finding s pertaining to the 
first and third alleged quantitative fla ws. China  further requests us to complete the legal analysis 
and find that the USDOC acted inconsistently with the pattern clause in the three  challenged 
investigations, by failing to find, throug h an objective and unbiased evaluation of the facts, 
"a pattern of export prices which  differ significantly " within the meaning of the second sentence of 
Article 2.4.2 .84  
5.11.  Addressing China's claim under Article 2.4.2 of the Anti -Dumping Agreement, the 
United  States responds that  China's appeal implicates the Panel's  weighing and appreciation of 
evidence, which China should have challenge d under Article  11 of the DSU.85 It further argues that 
the Panel made no legal  findings that we could review  and that there are insufficient undisputed 
facts on the record  for us to c omplete the legal analysis .86 The United States also submits that 
China's arguments are baseless, and that China essentially request s that investigating authorities 
be required to adopt a specific mode of numerical analysis  to identify a pattern .87 Moreover , the 
United States submits that  China's arguments  under Article  17.6(i)  of the Anti-Dumping 
Agreement  lack merit .88 Consequently, the United States concludes that we  should uphold the 
Panel's findings  concerning the first and third alleged quantitative flaw s with the Nails test .89  
5.12.  We analyse China's claims under the second sentence of Article 2.4.2 and  under  
Article  17.6(i) of the Anti -Dumping Agreement in turn below.  
5.1.2.1   Whether the Panel erred under the second sentence of Article 2.4.2 of the 
Anti-Dumping Agr eement in rejecting China's claim in respect of the first alleged 
quantitative flaw  
5.13.  The first alleged quantitative flaw with the Nails test  relates to the standard deviation  test 
applied by the USDOC in the three challenged investigations, which aimed at i dentifying whether 
there were export price differences among different purchasers or time periods.90 Under that test, 
the USDOC determined , for each CONNUM considered , whether the alleged target price  was below 
a benchmark price equal to one standard deviat ion below the CONNUM -specific weighted -average 
price.91  
5.14.  Before the Panel, China claimed that the Nails test, and more particularly the use of the 
one standard deviation threshold under that test, depended on the assumption that the examined 
                                               
80 Panel Report, para. 7.6 (quoting United States' first written submission to the Panel, para. 187, in 
turn quoting  Steel Cylinders , I&D m emorandum  (Panel Exhibit  CHN-66), p. 24); and referring to Coated Paper , 
I&D m emorandum  (Panel Exhibit  CHN-64), pp. 23 -24; and OCTG , I&D m emorandum  (Panel Exhibit  CHN-77), 
Comment 2 ).  
81 Panel Report, para. 7.7 (referring to China's first written submission to the Panel, paras. 98 -104, in 
turn quoting OCTG , I&D m emorandum  (Panel Exhibit  CHN-77), Comment 2; Coated Paper , I&D m emorandum  
(Panel Exhibit  CHN-64), pp.  24-25; and Steel Cylinders , I&D m emorandum  (Panel Exhibit  CHN-66), p.  24).  
82 China's Notice of Appeal, paras. 4 -7; appellant's submission, paras. 70 -72.  
83 China's Notice of Appeal, para. 8; appellant's submission, paras. 118 and 123.  
84 China's Notice of Appeal, paras. 9 -10; appellant's submission, paras. 124 -125. 
85 United Sta tes' appellee's submission, para. 69.  
86 United States' appellee's submission, para. 70.  
87 United States' appellee's submission, para. 115. See also para. 71.  
88 United States' appellee's submission, para. 72.  
89 United States' appellee's submission, para. 7 3. 
90 The price gap test was then used to determine whether the differences in export prices identified 
under the standard deviation test were significant. (See para. 5.8.   above)  
91 See para.  5.7.   above.  WT/DS471/AB/R  
 
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  export price da ta were either, "in terms of statistics ", normally d istributed, or at least 
single -peaked and symmetric .92 China submit ted that the United States  acted inconsistently with 
the pattern clause by applying the Nails test in the three challenged investigations without  
assessing whether the data were normally distributed , or at least single -peaked  and symmetric .93  
5.15.  The Panel considered  that the issues were whether the Nails test was of such a nature that 
it could only be  used if the export price data were normally  distributed, or single -peaked  and 
symmetric,  and, if so, whether the USDOC verified that the data in the three challenged 
investigations were so distributed.94 In addressing the first of these two issues, t he Panel 
considered  China's argument that a large number of prices may be below the one standard 
deviation threshold  when data are not normally distributed , or single -peaked  and symmetric .95 The 
Panel considered that this "would not necessarily preclude an investigating authority from finding 
that such low  prices differ significantly from other higher prices".96 The Panel also disagreed with 
China  that such prices cannot form a pattern  within the meaning of the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement .97 Finally, the Panel  saw no correla tion between  the 
"supposed statistical problem " alleged  by China  and what the USDOC was trying to achieve 
through the standard deviation test.98  
5.16.  Based on the above , the Panel found  that "China ha [d] not shown that the Nails test is of 
such a nature that it  could only be used if the export price data were normally distributed or 
single -peaked and symmetric", and that it was therefore "irrelevant " that the USDOC  did not verify 
whether the export price data in the three challenged investigations were so distributed .99 
Consequently, t he Panel found that China had not established that the United States acted 
inconsistently with Article  2.4.2 in the three challenged  investigations by reason of the first alleged 
quantitative flaw.100  
5.17.  On appeal, China claims that the Panel erred in failing to develop and apply a proper legal 
standard under the pattern clause.101 Specifically, China argues that a test involving the concept of 
standard deviation, such as the Nails test,  does not allow the authority to draw "valid conclusio ns" 
unless the data form a normal  or a single -peaked and  symmetric al distributio n.102 
The United  States responds that the Panel finding at issue is a factual finding103, and that China's 
appeal reveals that it is in fact challenging the Panel's weighing and ap preciation of  facts, in 
particular,  evidence related to "the study of statistics" , as well as to "the Nails test and how it 
operates" .104 The United States thus submits that we should dismiss China's claim as China should 
have but failed to raise a claim under Article 11 of the  DSU.105 Accordingly, the first question 
before us is whether China's claim pertaining to the first alleged quantitative flaw could be raised 
on appeal as a claim regarding the Panel's interpretation or application of Article  2.4.2 of the  
Anti-Dumping Agreement.  
5.18.  We recall that t he Appellate Body has stated that, in most cases, the issue raised by a 
particular claim "will either  be one of application of the law to the facts or an issue of the objective 
                                               
92 Panel Report, para. 7.56 (referring to China's comments on the United States' response to Panel 
question No. 93, para. 3) and para. 7.57 (referring to China's response to Panel question No. 6(c), para. 45; 
and response to Panel question No. 6(a),  para. 36).  
93 Panel Report, para. 7.56.  
94 Panel Report, para. 7.59.  
95 Panel Report, para. 7.62.  
96 Panel Report, para. 7.62.  
97 Panel Report, para. 7.63.  
98 Panel Report, para. 7.64.  
99 Panel Report, para. 7.67.  
100 Panel Report, para. 8.1.a.vi. See also p ara. 7.67.  
101 China's appellant's submission, para. 69.  
102 China's appellant's submission, para. 71. 
103 The United States argues that the Panel rejected China's claim on the basis that  it had not  
establish ed the factual premise of its claim, namely, that the  Nails test depended on the assumption that the 
data were normally distributed , or single -peaked  and symmetric . (United States' appellee's submission, 
paras.  80-81) 
104 United States' appellee's submission, paras. 87 -88. See also para. 82.  
105 United States' a ppellee's submission, para. 96.  WT/DS471/AB/R  
 
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  assessment of facts, and not both ".106 At the same time, t he Appellate  Body has recognized that it 
is often difficult to distinguish clearly between issues that are purely legal or purely factual, or are 
mixed issues of law and fact.107 The Appellate  Body has clarified , however,  that "'[t]he  consistency 
or inconsistency of a given fact or set of facts with the requirements of a given treaty provision ' is 
a question of legal characterization and, therefore, a legal question. "108 With these considerations 
in mind, we assess whether, as the United Stat es contends, the Panel finding at issue is a factual 
finding and  whether China  is challenging  the Panel's weighing and appreciation of  evidence .  
5.19.  In its analysis of China's claim, t he Panel considered that there was no  textual basis in 
Article  2.4.2 t o limit a pattern to "outliers".109 The Panel also disagree d with "China's contention 
that where a large number of export transactions are made at prices that are one  standard 
deviation below the CONNUM -specific weighted -average price, such prices cannot form the  
relevant pattern  within the meaning of the pattern clause of Article  2.4.2."110 The Panel 
considered, b ased on the text of  the second  sentence  of Article 2.4.2 , that a pattern, as properly 
understood under that provision,  may be composed of a large number o f transactions. On this 
basis, the Panel found that China had not shown that the Nails test could only be used if the export 
price data were normally distributed , or single -peaked and symmetric .111 What the Panel 
ultimately found is that China had  failed to show that  the Nails test relied on an implicit  
assumption regarding the distribution of the export prices for that test to identify  properly  a 
pattern within the meaning of the second  sentence  of Article  2.4.2.  This is a legal conclusion 
reached by the Pan el in light of its interpretation of the pattern clause as allowing a pattern to be 
composed of a large number of transactions. In reaching this conclusion, the Panel addressed the 
legal issue of whether the USDOC failed to identify a pattern of export pri ces which differ 
significantly within the meaning of the  second  sentence of Article  2.4.2 because of the first alleged 
quantitative flaw in the three challenged investigations . Therefore, while w e agree with the 
United  States that  the manner in which  the N ails test operates  and whether the Nails test is 
premised on an assumption tha t data are distributed in  a certain manner involve factual 
considerations112, the Panel's finding regarding the first alleged quantitative flaw involves a legal 
characterization an d addresses a legal issue under the second sentence of Article 2.4.2.  
5.20.  Turning to China's appeal, China submits that  the USDOC would have had to examine the 
underlying price distribution  to confirm that the distribution is normal, or single -peaked and 
symme trical for the Nails test to be capable of establishing the existence of a pattern "in an 
objective and unbiased manner" .113 This is because, according to China, if the export price data 
distribution is neither normal nor single -peaked and symmetrical, the N ails test will lead to 
arbitrary conclu sions as to the existence of a pattern .114 Contrary to the United States' 
suggestion115, the essence of China's appeal is not to challenge the Panel's weighing and 
appreciation of evidence pertaining to certain statistica l principles or the Nails test . What China 
takes issue with  is the Panel's assessment of whether the Nails test applied  by the USDOC  in the 
three challenged investigations identified a pattern  consistently with the second  sentence  of 
Article  2.4.2. Based o n the foregoing, we consider that China's  claim pertaining to the first alleged 
quantitative flaw should be treated as one concerning the Panel's interpretation  and application  of 
the second  sentence  of Article  2.4.2.  We therefore reject the United States'  contention that we 
                                               
106 Appellate  Body Report, EC – Fasteners (Article 21.5 – China) , para. 5.46 (quoting Appellate  Body 
Report, China – GOES , para. 183 , in turn quoting Appellate  Body Report, EC and certain member States – 
Large Civil Aircraft , para. 872 ( emphasis original) ).  
107 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para. 872.  
108 Appellate  Body Report, EC – Fasteners (Article 21.5 – China) , para. 5.46 (quoting Appellate  Body 
Report, China – GOES , para. 183 , in turn quoting Appellate  Body Report, EC ‒ Hormones , para.  132).  
109 Panel Report, para. 7.61.  
110 Panel Report, para. 7.63.  
111 Panel Report, para. 7.67. In its analysis, the Panel also considered that there was  "no correlation 
between the supposed statistical problem highlighted by China, namely , that a large number of export price 
transactions will be one standard deviation below the CONNUM -specific weighted average export price when 
data are not normally distributed or single -peaked and symmetric and what the USDOC was trying to achieve 
through  the use of the one standard deviation threshold, i.e. identify whether the weighted average export 
price to the alleged target was lower than the CONNUM -specific weighted average export price ". (Ibid., 
para. 7.64)  
112 United States' appellee's submission, p ara. 94.  
113 China's appellant's submission, para. 71.  
114 China's appellant's submission, para. 93.  
115 United States' appellee's submission, paras. 87 -88. WT/DS471/AB/R  
 
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  should dismiss China's claim because  China should have but failed to raise a claim under Article 11 
of the  DSU.116 
5.21.  Having reached this conclusion, we address  the merit of China's claim  under the 
second  sentence of Article 2.4.2 of the Ant i-Dumping Agreement.  We recall that the first condition 
set forth in the second sentence of Article  2.4.2 is that " the authorities find a pattern of export 
prices which differ significantly among different purchasers, regions or time periods ". 
In US ‒ Wash ing Machines , the Appellate  Body considered that a pattern is "[a] regular and 
intelligible form or sequence discernible in  certain actions or situations".117 Accordingly,  there must 
be regularity to the sequence of "export prices which differ significantly"  and this sequence must 
be capable of being understood.118 In particular, the word "intelligible" excludes the possibility of a 
pattern merely re flecting random price variation .119 This means that an investigating authority is 
required to "identify a regular s eries of price variation s relating to one or more particular 
purchasers, or one or more particular regions, or one or more particular time periods to find a 
pattern ".120 Although the Appellate  Body recognized that a pattern may be identified in a variety of 
factual circumstances, it  considered that the relevant "pattern" for the purposes of the 
second  sentence  of Article  2.4.2 comprises prices that are significantly lower  than other export 
prices121, as identified either among different purchasers, or among  different  regions, or among 
different time periods.122 The Appellate  Body concluded:  
[A] "pattern" for the purposes of the second  sentence  of Article  2.4.2 comprises all the 
export prices to one or more particular purchasers which differ significantly from the  
export prices to the other purchasers because they are significantly lower  than those 
other prices, or all the export prices in one or more particular regions which differ 
significantly from the export prices in the other regions because they are signific antly 
lower  than those other prices, or all the export prices during one or more particular 
time periods which differ significantly from the export prices during the other time 
periods because they are significantly lower  than those other prices .123 
5.22.  Under  the second sentence of Article 2.4.2 , it is the investigating authority that is tasked 
with establishing the existence of such a pattern. This provision , however, does not prescribe a  
particular  method for identifying a pattern . We thus agree with the Panel that while the pattern 
clause  "specifies what an investigating authority should find … it does not prescribe how an 
investigating authority should make such a finding. "124 Accordingly, investigating authorities enjoy 
a margin of discretion regarding the meth ods or tools they wish to use  in establishing the 
existence of a pattern. However, irrespective of the method used, investigating authorities are 
required to identify "a pattern of export prices which differ significantly among different 
purchasers, region s or time periods" within the meaning of the second sentence of Article 2.4.2 
and consistently with their obligations under the Anti -Dumping Agreement.  
5.23.  China acknowledges  that the USDOC was free to use statistical tools  to identify a pattern  in 
the three challenged investigations.125 According to China , however,  statistical tools cannot be 
applied in a way that is disconnected from the analytical framework in which they were developed, 
or in disregard of the assumptions on which they rest.126 China argues that  using a one standard 
deviation  threshold , "according to statistics, should generate output of 15.87% of sales beyond the 
[one standard deviation] threshold ".127 By contrast, w hen the data distribution is not normal or 
single -peaked and symmetrical , large qu antities of sales (sometimes more than 50%) may fall 
                                               
116 United States' appellee's submission, para. 96.  
117 Appellate  Body Report, US – Washing Machines , para. 5.25  (quoting Panel  Report, US ‒ Washing 
Machines , para.  7.45). The participants agree with this definition. ( China's appellant's submission, para. 82; 
United States' appellee's submission, para. 32 ) 
118 Appellate  Body Report, US – Washing Machines , para. 5.25.  
119 Appellate  Body Report, US – Washing Machines , para. 5.25 (referring to Panel  Report, US ‒ Washing 
Machines , para.  7.45).  
120 Appellate Body Report, US – Washing Machines , para. 5.32 . 
121 Appellate Body Report, US – Washing Machines , para. 5.36 . 
122 Appellate Body Report, US – Washing Machines , para. 5.34 . 
123 Appellate Body Report, US – Washing Machines , para. 5.36. (emphasis original)  
124 Panel Report, para. 7.37. (emphasis original)  
125 China's appellant's submission, para.  88. 
126 China's appellant's submission, para s. 69 and  89.  
127 China's  appellant's submission, para. 109.  WT/DS471/AB/R  
 
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  below the one standard deviation threshold.128 To China, the USDOC thus identif ied prices that 
were "quite typical  of the relevant market , thereby undermining the exceptional nature of the 
W-T comparison m ethodology" .129 While acknowledging that a properly identified pattern under 
the second sentence of Article 2.4.2 may be composed of a large number of export transactions130, 
China takes issue with the fact  that the Nails test "routinely" discerned large quant ities of sales 
below  the one standard deviation threshold.131 China concludes that, if the export price data are 
not normally distributed, or single -peaked and symmetric, using a one standard deviation 
threshold will lead to "arbitrary conclusions" as to the  existence of a pattern.132 China specifies 
that its claim is rooted in the legal concepts of "pattern" and "significance" used in the pattern 
clause.133  
5.24.  The United States responds that nothing in the second  sentence  of Article  2.4.2 compels an 
investigating authority to undertake the particular kind of "statistical probability analysis" 
discussed by China, even if that authority choose s to use the concept of standard deviation .134 
Moreover, the United States argues that, under the Nails test, the USDOC was  not engaging in a 
statistical analysis, and that it did not make statistical inferences.135 Rather, according to the 
United  States, the USDOC used the one standard deviation threshold as "a transparent, 
predictable, and objective metric to characterize an export er's pricing behavior".136  
5.25.  As recalled above,  a pattern  may not reflect random price variation, in the sense that the 
sequence of "export prices which differ significantly" must be both regular and intelligible .137 As 
the Appellate  Body has noted, in agreemen t with the panel in US – Washing Machines , 
"[i]f particular prices are observed to differ in respect of a particular purchaser, region or time 
period, those prices may be treated as a regular and intelligible form or sequence relating to that 
purchaser, re gion or time period" , and "[t]he price differences are 'regular' and 'intelligible' 
because they pertain only to that particular purchaser, region or time period."138  
5.26.  Regarding the term "significantly" in the pattern clause, China observes that , "with regar d 
to statistics", the adjective "significant" is defined as "unlikely to have occurred by chance 
alone".139 As the Appellate  Body in US ‒ Washing Machines  noted,  the adjective "significant" can 
be defined as "important, notable or consequential" .140 It thus su ggests  something that is more 
than just a nominal or marginal difference in prices.141 As the Appellate Body also observed, 
"[u]nder the second sentence of Article  2.4.2, the something that must be important, notable, or 
consequential is the difference in ex port prices. "142 We consider, therefore, that t he term 
"significantly"  as used in the pattern clause should not be read as conveying the specialized 
statistical  meaning  suggested by China.  
5.27.  With these considerations in mind, we observe that neither the text of the second sentence 
of Article 2.4.2  of the Anti -Dumping Agreement  nor the context suggests  how many export prices 
may fall within a pattern under the second sentence of Article  2.4.2 in proportion to the number of 
export prices outside the pattern . The second  sentence  of Article 2.4.2  does not specify whether a 
pattern can comprise  only a small proportion of all transactions. Under that provision, t he 
investigating authority  is tasked with  identify ing prices that fall within the pattern  because those 
                                               
128 China's appellant's submission, para. 109. As China further argues, "when the authority relies on a 
standard -deviation -based threshold without having tested for the shape of the underlying price distribution, an 
unknow n number of export prices will fall below … that threshold ". (Ibid., para.  90) 
129 China's appellant's submission, para. 110. (emphasis original)  
130 China's response to questioning at the oral hearing.  
131 China's appellant's submission, para. 109. To China, t his is "symptomatic" of a serious flaw. (Ibid.)  
132 China's appellant's submission, para. 93.  
133 China's appellant's submission, para. 83; response to questioning at the oral hearing.  
134 United States' appellee's submission, paras 117 -122 and 129.  
135 United States' appellee's submission, para. 130.  
136 United States' appellee's submission, para. 133.  
137 Appellate  Body Report, US – Washing Machines , para. 5.32.  
138 Appellate  Body Report, US – Washing Machines , para. 5.34 (quoting Panel  Report,  US ‒ Washing  
Machin es, para. 7.46). 
139 China's appellant's submission, para. 83 (quoting Oxford English Dictionary Online, definition of 
"significant", <http://www.oed.com/view/Entry/179569?redirectedFrom=Significant#eid >, accessed 
4 February  2015 (Panel Exhibit CHN -92). (emp hasis added)  
140 Appellate  Body Report, US – Washing Machines , para. 5.62.  
141 Appellate  Body Report, US – Washing Machines , para. 5.62.  
142 Appellate  Body Report, US – Washing Machines , para. 5.62.  WT/DS471/AB/R  
 
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  prices form a regular and intelligible  sequence of "export prices which differ significantly"  in that 
they differ significantly from other prices  and pertain to one or more purchasers (or regions or 
time periods) as compared to the other purchasers (or regio ns or time periods) . As set out  above, 
the price differences are regular and intelligible because they pertain only to the "targeted"  
purchaser, region , or time period.143 Moreover, a s the Appellate Body has found, "t he 
distinguishing factor that allows that  authority to discern which export prices form part of the 
pattern would be that the prices in the pattern differ significantly from the prices not in the 
pattern."144  
5.28.  We now turn to China's argument that the Nails test "routinely" discerned large quantitie s of 
export prices  below  the one standard deviation threshold.145 Neither the text of the 
second  sentence of Article 2.4.2 nor the context suggests the proportion of export prices that may 
fall below a given price threshold when the investigating authority i s in the process of identifying a 
pattern within the meaning of that provision.146 Under the second sentence of Article 2.4.2, prices 
in the pattern need to differ significantly from  the prices not in the pattern.147 We also recall that a  
"pattern" comprises all the export prices to one or more particular purchasers (or one or more 
regions or one or more time periods) which differ significantly from the export prices to  the other 
purchasers (or regions or time periods) because they are significantly lower  than those other 
prices .148 In our view, that a large number of export prices may fall below the one standard 
deviation threshold does not necessarily preclude an investigating authority from finding that the 
export prices to the "target" (be it a purchaser, a re gion, or a time period) differ significantly from 
the other export prices and form a pattern within the meaning of the second sentence of 
Article  2.4.2.  
5.29.  Assuming the export prices to the "target" are found to differ from the other export prices in 
a case where a large number of individual export prices fall below the one standard deviation 
threshold, the pattern clause also requires the investigating authority to determine whether these 
differences are significant. In addition, the  second  sentence  of Artic le 2.4.2 requires that an 
explanation be provided as to why these differences cannot be taken into account appropriately by 
the use of a W -W or T -T comparison before an investigating authority may apply the 
W-T methodology. As the Appellate  Body has stated , the explanation clause  "contemplates that 
there may be circumstances in which targeted dumping could be adequately addressed through 
the normal symmetrical comparison methodologies" .149 Consequently, our un derstanding of the 
pattern clause does not  undermi ne the exceptional nature of the W -T methodology.150 
5.30.  Finally, we note the Panel's statement that there is "no correlation" between the "supposed 
statistical problem " China highlighted and what the USDOC was trying to achieve.151 The Panel 
distinguished between  (i) the issue  raised by China that a large number of individual export prices  
may fall below the one standard deviation threshold where the data distribution is not normal or 
single -peaked and symmetrical; and (ii)  the objective of the standard deviation test as applied by 
the USDOC in the three challenged investigations, which was to  identify  on the basis of weighted -
average prices  whether the weighted -average export price to the alleged  target  was lower than 
the CONNUM -specific weighted -average price. As  the Panel observed, "[t] he USDOC did not apply 
the Nails test to a data set which co nsisted of individual export transaction prices and did not seek 
to identify how many export transactions fell one standard deviation below the CONNUM -specific 
weighted av erage export price. "152 On appeal, China argues that the act of averaging reduces the 
number of data points, but "in no way  affect s how the underlying export prices are distributed ".153 
                                               
143 Appellate  Body Report, US – Washing Machines , para. 5.34 . 
144 Appellate  Body Report, US – Washing Machines , para.  5.26.  
145 China's appellant's submission, para. 109.  
146 At the oral hearing, and in light of the Appellate Body report in US – Washing  Machines , the 
United  States agreed with the European Union that the "pa ttern transactions" are all of the export transactions 
to the alleged target, not all the export transactions that fall below the one standard deviation threshold.  
147 Appellate  Body Report, US – Washing Machines , para.  5.26.  
148 Appellate  Body Report, US – Washing Machines , para.  5.36.  (emphasis original)  
149 Appellate  Body Report, US – Zeroing (Japan) , para.  131. See also Appellate  Body Report, 
US ‒ Washing Machines , para.  5.18.  
150 Appellate  Body Report, US – Washing Machines , para. 5.18 . See also Appellate Bo dy Reports,  
US ‒ Zeroing (Japan) , para.  131; and US ‒ Softwood Lumber V (Article  21.5 – Canada) , paras.  86 and  97. 
151 Panel Report, para. 7.64.  
152 Panel Report, para. 7.64.  
153 China's appellant's submission, para. 112.  WT/DS471/AB/R  
 
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  It further argues that using averages "increase[ed] the likelihood that [a lleged target] sales 
[would] be found below the one -standard -deviation threshold."154 We see merit in China's 
allegation that , whether or not averages are used, the distribution of the underlying individual 
export prices itself does not change. We are also n ot excluding the possibility that a given 
distribution of individual export price s may make it more likely that the weighted -average price to 
the "target" falls below the one standard deviation threshold. However, as we considered above, 
the fact that a la rge number of export transactions are made at low prices and may fall below the 
one standard deviation threshold does  not necessarily preclude an investigating authority from 
finding that the export prices  to the "target"  differ significantly from the othe r export  prices  and 
form a pattern within the meaning of the second sentence of Article  2.4.2.  
5.31.  In sum, that a large number of export prices may fall below the one standard deviation 
threshold where the distribution of the export price data is  not normal or  single -peaked and 
symmetrical  does not necessarily preclude an investigating authority from finding that the export 
prices to the "target" differ significantly from the other export prices and form a pattern within the 
meaning of the second sentence of Ar ticle 2.4.2. Accordingly, we consider that China has not 
established that the standard deviation test as applied by the USDOC in the three challenged 
investigations  is only capable of identifying prices that differ from other export prices and form a 
pattern within the meaning of the second sentence of Article 2.4.2 where the distribution of the 
export price data is normal , or single -peaked and symmetrical. On this basis, we find that China 
has not established that the Panel erred in its interpretation or a pplication of the second sentence 
of Article  2.4.2 of the Anti -Dumping Agreement in rejecting China's  claim in respect of the first 
alleged quantitative flaw with the Nails test as applied in the three challenged investigations.  
5.1.2.2   Whether the Panel erred un der the second sentence of Article 2.4.2 of the 
Anti-Dumping Agreement in rejecting China's claim in respect of  the third alleged 
quantitative flaw  
5.32.  The third alleged quantitative flaw with the Nails test  relates to the price gap  test applied by 
the USDOC in the three challenged investigations  in order  to determine  whether the differences 
identified under the standard deviation test  were significant.155 As set out above, under that test, 
the USDOC would examine , on a CONNUM -specific basis, whether the alleged target price gap was 
wider  than the weighted -average non -target price gap .156  
5.33.  Before the Panel, China submitted that, "in terms of statistics" , in the case of any "peaked " 
data distribution with  "tails", the gap between any two given prices located at the t ail is inherently 
wider than the gaps at the peak.157 Therefore, China argued, when the USDOC found the alleged 
target pr ice gap, which was based on prices located at the tail, to be wider than the weighted -
average non -target price gap, which was based on pr ices located nearer to the peak, it merely 
confirmed an "inherent feature of every peaked distribution with tails", rather than identify ing 
export prices which differ significantly  within the meaning of the second  sentence  of Article 2.4.2 
of the Anti -Dump ing Agreement .158  
5.34.  The Panel considered  that the first issue  was whether  it is factually correct that, in the three 
challenged investigations, the alleged target price gap was based on prices located at the tail of 
the data distribution and the weighted -average non -target price gap  was based  on prices located 
nearer to the peak of that di stribution .159 The Panel stated that , "if [it found]  this assumption to be 
factually correct, [it would]  have to examine whether the USDOC acted inconsistently with the 
pattern  clause of Article  2.4.2 because when it compared the alleged target price gap, based on 
prices located at the tail of the distribution , with the weighted average non -target price gap, based 
on prices nearer to the peak, it only confirmed an inherent featu re of every peaked distribution 
with tails ."160  
                                               
154 China's appellant's submission, par a. 113.  
155 Panel Report, paras. 7.4 and 7.75.  
156 Panel Report, para. 7.75. See also para.  5.8.   above.  
157 Panel Report, para. 7.75.   
158 Panel Report, para. 7.76 ( quoting  China's second written submission to the Panel, para. 43 
(emphasis omitted by the Panel)).   
159 Panel Report, para. 7.78.  
160 Panel Report, para. 7.78.  WT/DS471/AB/R  
 
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  5.35.  After having explained the concepts of "peaks" and "tails"161, the Panel addressed 
China's  argument  that, if the export price data were "normally " distributed, the alleged target price 
would "by definition " be located at the tail of th at distribution.162 The Panel observed that  China 
had presented evidence that, in the three challenged investigations, the export price data were not 
normally distributed or even single -peaked and symmetric.  The Panel could therefore not conclude 
that the alleged target price was , as alleged by China,  located at the tail of the distribution  
"by definition ".163 The Panel further considered that China did not show that, even though the 
export price data were not normally distributed in the  three challenged investigations, the 
distribution still had a tail, and that the alleged target price was located at the tail .164 The Panel 
concluded that "China ha[d]  not shown that the assumption on which the third alleged quantitative 
flaw rests, which i s that the alleged target price gap was based on prices located at the tail of the 
distribution of the export price data, is factually correct insofar as the three challenged 
investigations are concerned. "165 On this basis, the Panel rejected China's claim i n respect of the 
third alleged quantitative flaw  with the Nails test .166  
5.36.  On appeal, China submits  that "the Panel was … wrong to dismiss [its] argument that, even 
assuming the existence of a 'normal' distribution, USDOC's attribution of 'significance' to wi der 
price gaps in the 'tail' of the price distribution compared to price gaps closer to the 'mean' merely 
confirmed an inherent feature of such distributions."167 The United  States responds that the Panel 
finding at issue is a factual finding168, and that Chin a's appeal reveals that it is in fact challenging 
the Panel's weighing and appreciation of facts.169 The United States thus submits that we should 
decline to rule on China's arguments  because  China should have but failed to  raise a claim under 
Article  11 of the DSU.170 Accordingly, the first question before us is whether China's claim 
pertaining to the third alleged quantitative flaw could be raised on appeal as a claim regarding the 
Panel's interpretation or application of Article  2.4.2 of the Anti -Dumping Agr eement. In addressing 
this issue, we assess whether, as the United States contends, the Panel finding at issue is a factual 
finding and  whether  China  is challenging  the Panel's weighing and appreciation of  evidence.  
5.37.  As set out in paragraph 5.35.  above, t he Panel rejected China's claim in respect of the 
third alleged quantitative flaw on the sole basis that China ha d not shown that it was  "factually  
correct " that the alleged target price gap was based on prices located at the ta il of the distribution 
of the export price data  in the three challenged investigations.171 In reaching this finding, t he 
Panel did not examine the legal issue of whether the USDOC acted inconsistently with the pattern 
clause because , when it applied the pric e gap test in cases of peaked distribution s with tails , the 
USDOC  only confirmed an inherent feature of that type of distribution . In our view, the Panel's 
finding in respect of the third alleged quantitative flaw hinges on the Panel's assessment of China' s 
factual allegations as to whether the alleged target price gap was based on prices located at a tail 
of a distribution in each of the three challenged investigations.  In rejecting China's claim in respect 
of the third alleged quantitative flaw, the Panel  nonetheless addressed the legal issue of whether 
                                               
161 As the Panel explained,  normally distributed data, when graphically represented, take the shape of a 
bell. That bell has a single peak in the middle of the bell cu rve and two tails, one on the left and one on the 
right. In that type of distribution, t he weighted average of all prices is at the peak . Also, most  of the prices are 
concentrated  at the peak,  whereas fewer prices are located at the tail.  The Panel further  noted that "[b] oth 
parties agree that the gaps between any two given prices located at the tail of the distribution are wider  than 
that at the peak of the distribution if there is normal or single -peaked and symmetric distribution. " 
(Panel  Report, paras. 7.79-7.80)   
162 Panel Report, para. 7.81.  
163 Panel Report, para. 7.81.  
164 Panel Report, para. 7.82.  
165 Panel Report, para. 7.82. See also para. 7.84.  
166 Panel Report, para. 7.84.  
167 China's appellant's submission, para. 72. (fns omitted)  
168 The United States as serts that the Panel rejected China's claim "without having to interpret and 
apply the  pattern clause of Article 2.4.2  because China failed to establish the factual premise underlying its 
claim ." (United States' appellee's submission, para. 99)  
169 The Unite d States refers to China's arguments that:  (i) the fact that the third quantitative flaw arises 
only when the price distribution has a left tail does not mean that China did not demonstrate that the 
assumption on which that flaw rests is factually correct ; (ii) even if not normally distributed, the data for some 
of the CONNUMs had left t ails; and (i ii) in every case, either the first or third quantitative flaw or both arose, 
but there is no way to know which flaw arose in a given case, because the USDOC dec lined to examine the 
data distribution in the three challenged investigations.  (United States' appellee's submission, paras.  102-104 
(referring to China' s appellant submission, paras.  115-116))  
170 United States' appellee's submission, para. 105.  
171 Panel Re port, para. 7.84.  WT/DS471/AB/R  
 
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  the USDOC failed to identify a pattern of export prices which differ significantly within the meaning 
of the second  sentence of Article 2.4.2 because of this alleged flaw in the three  challenged 
investigati ons.  
5.38.  On appeal, China claims that the Panel erred in dismissing its argument that the USDOC's 
attribution of "significance"  to wider price gaps in the t ail of price distributions compar ed to price 
gaps closer to the peak  amounted to nothing more than a confirmation of an inherent 
characteristic as to the shape of distributions whose existence is implici tly assumed by the test 
itself.172 In support of that claim, China argues  that, inter alia , the "USDOC's failure to test the 
databases [,] to determine if the data were 'normally' distributed or had tails to the left of the 
mean, means that the conclusions reached by USDO C in every case were random 
(or arbitrary )."173 In other words, China argues that, irrespective of the actual distribution of the 
data in the thr ee challenged investigations and whether the relevant distributions had a left tail at 
which the alleged target price gap was located, the USDOC failed to identify a pattern of export 
prices which differ significantly because it failed to consider how the export prices were distributed. 
We thus understand the focus of China's claim to be that the USDOC had an obligation to verify, in 
the three challenged investigations,  whether the data had a left tail and whether the alleged target 
price gap was based on p rices located at that tail so as to avoid drawing random or arbitrary 
conclusions as to the existence of a pattern.  
5.39.  Accordingly, we understand China to take issue with the fact that the Panel assessed its 
claim by considering whether, as a matter of fact,  in the three challenged investigations, the 
alleged target price gap was based on prices located at the tail of the distribution174, instead of 
considering whether the USDOC had an obligation to verify how the data were distributed to 
identify properly a p attern within the meaning of the second sentence of Article 2.4.2. To us, 
whether the factual assessment conducted by the Panel  was indeed relevant to make a finding  
under the second sentence of Article 2.4.2  in respect of the third alleged quantitative fla w is a n 
issue that should be assessed under that provision. Specifically, the issue on appeal is whether the 
Panel erred under the second sentence of Article 2.4.2 in  reject ing, on the basis of factual 
considerations pertaining to the distribution of the e xport price data in the three challenged 
investigations, China's claim that the USDOC failed to identify a pattern of export prices which 
differ "significantly". This closely relate s to the legal issue that was before the Panel , namely, 
whether , because of  the third alleged quantitative flaw in the three challenged investigations , the 
USDOC failed to identify a pattern of export prices which differ significantly within the meaning of  
the second  sentence of Article 2.4.2 . In light of the foregoing, we consid er that China's appeal 
raises a legal issue under Article 2.4.2. W e therefore  reject the United States' contention that we 
should dismiss China's claim  because  China should have but failed to raise a claim under Article  11 
of the  DSU.175 
5.40.  Turning to the merit  of China's claim, we recall China's argument that the "USDOC's failure 
to test the databases [,] to determine if the data were 'normally' distributed or had tails to the left 
of the mean, means that the conclusions reached by USDO C in every case were rando m 
(or arbitrary )."176 The United States argues that China does not  meet its burden  of showing that 
the Nails test, as applied in the three challenged investigations, is inconsi stent with 
Article  2.4.2.177 Specifically, the United States takes issue with the fa ct that, to China, " the actual 
evidence in the underlying investigations about which it has pursued 'as applied ' claims, [that is ], 
the actual export sales data reported by respondent interested parties, does not matter. "178 It also 
argues that China has fai led to support its argument  by using facts from the administrative records 
of the three investigations that are the subject of its "as applied" challenges.  
5.41.  As set out earlier179, under  the second sentence of Article 2.4.2 , it is the investigating 
authority that is tasked with establishing the existence of a pattern. Whereas i nvestigating 
authorities enjoy a margin of discretion as to how they wish to proceed in establishing the 
existence of a pattern, they are required to identify a pattern within the meanin g of the 
                                               
172 China's Notice of Appeal, para. 7.  
173 China's appellant's submission, para. 116. See also para. 6.  
174 See Panel Report, para. 7.78.  
175 See United States' appellee's submission, para. 105.  
176 China's appellant's submission, para. 116. S ee also para. 6.  
177 United States' appellee's submission, paras. 140 -142.  
178 United States' appellee's submission, para. 140.  
179 See para.  5.22.    above.  WT/DS471/AB/R  
 
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  second  sentence of Article  2.4.2 and consistently with their obligations under the Anti -Dumping 
Agreement.  
5.42.  However, w e recall that, in WTO dispute settlement, the burden of proof rests on the party 
that asserts the affirmative of a claim or defen ce. A complaining party will satisfy its burden when 
it establishes a prima facie  case by putting forward adequate legal arguments and evidence.  
Therefore, a responding Member 's measure is considered  WTO-consistent  unless sufficient 
evidence is presented t o establish the contrary.180 In the instant case, China has brought 
"as applied" claims pertaining to the three challenged investigations. It is thus for China to 
demonstrate prima  facie that, because of the third alleged quantitative flaw, the USDOC failed to 
establish the existence of a "pattern of export prices which differ significantly" in the three 
challenged investigations within the meaning of the second  sentence of Article 2.4.2.  
5.43.  On appeal, China emphasizes that "any randomly chosen pair of prices i n the tail of a 
peaked distribution will, by definition, tend to display a bigger gap than a randomly chosen pair of 
prices near the peak."181 This is because in "any peaked distribution of price data … a large mass 
of prices occurs around the price at the p eak, whereas only a few occurrences are found in the 
tails – because observations occur less frequently at those price levels ."182 China clarifies that the 
third alleged quantitative flaw arises in situations in which there is a tail to the left of the mean , 
irrespective of whether the data d istribution is normal , or single -peaked  and symmetrical. 
Conversely, where the relevant data distribution does not have a left tail, that particular flaw does 
not arise.183 
5.44.  As per China's submission, the third alleged quant itative flaw arises where the alleged 
target price gap is based on prices located at the left tail of the data distribution. We consider that, 
in light of China's "as applied " claim, China cannot successfully bring a claim of inconsistency with 
the second sentence of Article  2.4.2 unless it shows that the relevant data distributions in each of 
the three challenged investigations  had a left tail and that  the alleged target price gap was based 
on prices located at th at tail. In our view, the Panel therefore c orrectly considered that 
"the third alleged quantitative flaw rests on the assumption that in the three challenged 
investigations, the alleged target price gap was based on prices located at the tail of the 
distribution of the export price data and the wei ghted average non -target price gap was based on 
prices located nearer to the peak of that distribution. "184 The Panel found that China ha d not 
shown that th is assumption is "factually correct insofar as the three challeng ed investigations are 
concerned"185, and rejected China's claim on this basis.186 In light of on our analysis above, we 
consider that this was sufficient ground for the Panel to reject China's "as applied" claim in respect 
of the third alleged quantitative flaw with the Nails test. Accordingly, t he Panel did not err under 
Article 2.4.2 in rejecting  China's  claim because  "China ha[d] not shown that the assumption on 
which the alleged third  quantitative flaw rests, namely, that the alleged target price gap was based 
on prices located at the tail of the distribution in the three  challenged investigations, is factually 
correct".187 
5.45.  In sum, the Panel considered that " the third alleged quantitative flaw rests on the 
assumption that in the three challenged investigations, the alleged target price gap was ba sed on 
prices located at the tail of the distribution of the export price data and the weighted average 
non-target price gap was based on prices located nearer to the peak of that distribution. "188 
The Panel was correct in rejecting China's claim on the basi s of its finding that China ha d not 
shown that th is assumption is "factually correct insofar as the three challeng ed investigations are 
concerned".189 Therefore , we find that China has not established that the Panel erred in its 
interpretation or application  of the second sentence of Article  2.4.2 of the Anti -Dumping 
                                               
180 See e.g. Appellate Body Reports,  Canada – Dairy (Article  21.5 – New Zea land and US II) , para.  66; 
and Chile – Price Band System (Article  21.5 – Argentina) , para.  134.  
181 China's appellant's submission, para. 104 (referring to First expert statement by Professor Dr Peter 
Egger (26  February 2015) (Panel Exhibit CHN -1 revised) , para. 62).  
182 China's appellant's submission, para. 104.  
183 China's appellant's submission, para. 102 and fn 24 to para. 72.  
184 See Panel Report, para. 7.78.  
185 Panel Report, para. 7.82.  
186 Panel Report, para. 7.84.  
187 Panel Report, para. 7.84.  
188 Panel Repor t, para. 7.78.  
189 Panel Report, para. 7.82.  WT/DS471/AB/R  
 
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  Agreement in rejecting China's claim in respect of the third alleged q uantitative flaw with the 
Nails test as applied  in the three challenged investigations.  
5.1.2.3   Whether the Panel failed to comply wi th Article  17.6(i) of the Anti -Dumping 
Agreement  
5.46.  We now turn to China's claim that the Panel acted inconsistently with Article 17.6(i) of the 
Anti-Dumping Agreement in dismissing China's  claim  regarding the first and  third alleged 
quantitative flaws .190 The United States responds that China makes no effort to substantiate its 
claim under Article 17.6(i).191 Specifically, the United States argues that " China does nothing to 
support its claim beyond referring back to the elaboration of its arguments concerning th e 
interpretation and application of Article 2.4.2 of the  [Anti-Dumping]  Agreement, which were 
presented earlier in China's appellant submission."192 
5.47.  The first sentence of Article  17.6(i) provides that , "in its assessment of the facts of the 
matter, the panel  shall determine whether the authorities' establishment of the facts was proper 
and whether their evaluation of those facts was unbiased and objective." Thus, a claim alleging an  
error of law or incorrect legal interpretation attributed to a panel is diffe rent from a claim that the 
"assessment of the facts of the matter" by that panel is inconsistent with Article  17.6(i). A claim 
under Article  17.6(i) must concern the panel's assessment of the facts of the matter  and must 
involve a showing that the assessme nt is inconsistent with this provision. For this reason, a claim 
under Article  17.6(i)  should not be made merely  subsidiary  to a claim that the panel erred in its 
application of a WTO provision . Moreover, the Appellate  Body has cautioned that it " will not 
interfere lightly with [a] panel's exercise of its discretion" under Article 17.6(i).193 Accordingly , 
"[a]n appellant must persuade [the Appellate Body], with sufficiently compelling reasons, that [it] 
should disturb a panel's assessment of the facts".194
 For a claim  to succeed under Article 17.6(i), it 
is not sufficient for an appellant simply to disagree with the panel's weighing of the evidence, 
without substantiating the claim of error by the panel.195  
5.48.  In support of its claim under Article 17.6(i), China arg ues that , "in dismissing [its] 
arguments regarding the first and third quantitative flaws, the Panel failed to ensure that USDOC's 
establishment of the facts was proper; and by approving the Nails [t]est applied in the 
[three]  challenged determinations, th e Panel permitted USDOC to evaluate the relevant facts in a 
manner that fell short of being objective and unbiased."196 In bringing its claim, China does not 
challenge the Panel's assessment of the facts pursuant to Article  17.6(i). China's claim is neither 
about the Panel's determination of whether the USDOC's establishment of the facts was proper, 
nor is it about the Panel's determination of whether the USDOC's evaluation of those facts was 
unbiased  and objective . China appears merely to take issue with the  Panel's dismissal of its claim 
in respect of the first and third alleged quantitative flaws  with the Nails test . In particular, China 
does not advance any argument that is separate and different from its arguments concerning the 
alleged error in the Panel 's interpretation and application of the second sentence of Article  2.4.2 of 
the Anti -Dumping Agreement. This does not suffice  for us  to find that the Panel failed to comply 
with Article  17.6(i).197 For this reason, we find that China has not established tha t the Panel failed 
to comply with Article  17.6(i) of the Anti -Dumping  Agreement.  
5.49.  In light of all the considerations above, we uphold  the Panel's finding,  in paragraph 8.1.a.vi 
of its Report, that "China has not established that the United States acted inc onsistently with 
                                               
190 China's appe llant's submission, para. 118. See also para. 123.  
191 United States' appellee's submission, para. 150. Moreover, the United States contends  that China's 
claim under Article 17.6(i) of the Anti -Dump ing Agreement must fail because  China should have raised a claim 
also under Article 11 of the DSU . (Ibid., para.  149) 
192 United States' appellee's submission, para.  153 (referring to  China's appe llant's submission, 
para. 123).  
193 Appellate  Body Report,  EC – Tube or Pipe Fittings , para. 125 (quoting Appellate  Body Report, 
EC ‒ Bed Linen (Article 21.5 – India) , para. 169, in turn quoting Appellate Body Report, US – Wheat Gluten , 
para. 151).  
194 Appellate  Body Report,  EC – Tube or Pipe Fittings , para. 125 (quoting Appellate  Body Report, 
EC ‒ Bed Linen (Article 21.5 – India) , para. 170).  
195 Appellate  Body Report, EC – Tube or Pipe Fittings , para.  128.  
196 China's appellant's submission, para. 123.  
197 In reaching this conclusion, we do not need to address whether, as the United States contends, 
China's challenge should have proceed ed also under Article 11 of the DSU.  WT/DS471/AB/R  
 
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  Article  2.4.2 of the Anti -Dumping Agreement in the OCTG , Coated Paper  and Steel Cylinders  
investigations"  insofar as this finding relates to the first and third alleged quantitative flaws with 
the Nails test.198 
5.1.3   Qualitative issues  
5.50.  China clai ms that the Panel erred in its interpretation and application of the second  sentence 
of Article  2.4.2 of the Anti -Dumping Agreement because it failed to recognize that investigating 
authorities are required to consider objective market factors in determini ng whether relevant 
pricing differences are "significant".199 
5.51.  The Panel found that , in determining whether export prices "differ significantly" within the 
meaning of the second sentence of Article 2.4.2 of the Anti -Dumping Agreement, an investigating 
authori ty is not required to consider the reasons for the identified differences in export prices.200 
The Panel further disagreed with China that an investigating authority is required to examine 
whether the quantitatively significant differences in export prices e xamined under the pattern 
clause are unconnected with "targeted dumping".201 The Panel clarified, however, that "the word 
'significant', as used in the pattern clause …, has a qualitative dimension in addition to a 
quantitative one" and that, accordingly, "p urely larger quantitative or numerical differences 
cannot, in all factual circumstances, lead to the conclusion that the identified differences in export 
prices forming the relevant pattern are significant within the meaning of the pattern clause of 
Article 2.4.2, without regard to whether such differences are also qualitatively significant."202 
5.52.  The Panel considered that , "when an investigating authority examines whether observed 
quantitative differences in export prices forming the relevant pattern are quali tatively significant, 
that authority is required to consider how such export prices differ and not why they differ."203 In 
this respect the Panel noted that , "[w]hen examining how export prices differ, the investigating 
authority may find that a given margin  of difference in export prices, which are in mathematical or 
numerical terms, 'sufficiently great', are not 'worthy of attention' and hence not 'significant', in 
light of the circumstances surrounding an investigation, including most importantly the natur e of 
the product under investigation and the relevant industry."204 
5.53.  The Panel thus concluded that "the USDOC was not required to consider the reasons for the 
differences in export prices forming the relevant pattern in order to determine whether those 
differences were qualitatively significant within the meaning of the pattern clause of  Article  2.4.2" 
and, accordingly, "reject[ed] China's claim under the pattern clause of Article  2.4.2 in the 
three  challenged investigations insofar as it relates to the allege d qualitative issues with the 
Nails test."205 
5.54.  China requests us to modify the Panel's interpretation of the second  sentence of 
Article  2.4.2 of the Anti -Dumping Agreement and find that investigating authorities must consider 
qualitative factors when examinin g whether export prices "differ significantly" within the meaning 
of that provision .206 According to China, although investigating authorities may not be required to 
consider an exporter's subjective motivation or intent behind the observed price differences207, 
they are required to consider relevant "objective market factors", such as seasonality or 
market ‒driven fluctuations in the costs of production.208 China thus takes issue with the Panel's 
distinction between how and why prices differ and with the fact tha t the Panel focused on a narrow 
reading of the word "reasons" that was used by China. According to China, a distinction between 
how and why prices differ is meaningless, unless it is equated with a distinction between "objective 
market factors" and "subjec tive intent" .209 Moreover , the Panel should have recognized that China 
                                               
198 Having upheld this finding, we need not examine China's request for completion of the legal analysis.  
199 China's appellant's submission, para. 157. See also paras. 187 -190.  
200 Panel Report, paras. 7.107 -7.108.  
201 Panel  Report, para. 7.109.  
202 Panel Report, para. 7.110.  
203 Panel Report, para. 7.111.  
204 Panel Report, para. 7.111.  
205 Panel Report, para. 7.114.  
206 China's appellant's submission, para. 188. 
207 China's appellant's submission, para. 163.  
208 China's a ppellant's submi ssion, para. 157 .  
209 China's appellant's submission, para. 179.  WT/DS471/AB/R  
 
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  used the word "reasons" to refer to "objective reasons"  – i.e. objective market factors  – not the 
subjective intent of exporters.210 China also highlights that, in its analysis, the Panel r elied on the 
panel's  findings in US – Washing Machines , which have since been reversed on appeal.211 Turning 
to the Panel's finding that the United States did not act inconsistently with the second  sentence of 
Article  2.4.2 with respect to the alleged qualit ative issues with the Nails test, China requests us to 
reverse this finding by the Panel.212 
5.55.  The United States responds that China's proposed interpretation of the second  sentence of 
Article  2.4.2 is at odds with the Appellate  Body's findings in US – Washing  Machines and is not 
supported by the text of that provision.213 The United States argues that the  Panel did not find, as 
China suggests, that investigating authorities are not required to consider "objective market 
factors" in determining whether relevant p rice differences are significant214 and that China's 
alleged "objective market factors" are in fact "reasons" underlying the export price differences, 
which need not be taken into account by investigating authorities.215 According to the 
United  States, seasona lity and market –driven fluctuations in the costs of production, unlike the 
"objective market factors" identified by the Appellate Body in US – Washing Machines , do not 
relate to how the export prices are different and whether the observed differences are s ignificant 
in a qualitative sense. Rather, the United States contends, seasonality and costs fluctuations aim 
to assess whether there are reasons for export price differences other than "targeted dumping".216 
Finally,  for the United States,  China's criticism  of the Panel Report for drawing support from the 
panel report in US – Washing Machines is baseless given that the Panel did not agree with the 
specific finding in that case that was subsequently reversed on appeal.217 
5.56.  The second sentence of Article 2.4.2 of  the Anti -Dumping Agreement states:  
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 
transaction -to-transaction comparison.  
5.57.  In US – Washing Machines , the A ppellate Body interpreted the term "significantly" in the 
pattern clause as having both quantitative and qualitative dimensions , and thus considered that 
assessing the extent of the differences in export prices  in order  to establish whether those export 
prices differ significantly  for the purposes of the second sentence of Article  2.4.2 entails both  
quantitative and  qualitative  dimension s.218 The Appellate Body reversed the panel's finding s in 
US ‒ Washing Machines219, to the extent that  the panel had  found tha t "a pattern of export prices 
which differ significantly among purchasers, regions or time periods" can be established "on the 
basis of purely quantitative criteria".220 
5.58.  In this dispute, t he Panel found that "the word 'significant', as used in the pattern cl ause of 
Article 2.4.2, has a qualitative dimension in addition to a quantitative one. "221 Accordingly, the 
Panel stated that "purely larger quantitative or numerical differences cannot, in all factual 
circumstances, lead to the conclusion that the identified  differences in export prices forming the 
relevant pattern are significant within the meaning of the pattern clause of Article  2.4.2, without 
regard to whether such differences are also qualitatively significant."222 We agree with these 
                                               
210 China's appellant's submission, paras. 180 and 182.  
211 China's appellant's submission, para s. 161 and 176 . 
212 China's appellant's submission, para. 190. See also paras. 156 -158. The request f or reversal itself is 
in paragraph  158 of China's appellant's submission.  
213 United States' appellee's submission, para. 217.  
214 United States' appellee's submission, para. 208.  
215 United States' appellee's submission, paras. 219 –222. 
216 United States' appell ee's submission, paras. 219 -222.  
217 United States' appellee's submission, paras. 242 -246.  
218 Appellate Body Report, US – Washing Machines , para. 5.63.  
219 See Panel Report, US – Washing Machines , paras. 7.52 and 8.1.a.ii. See also paras. 7.119.a and 
8.1.a.v.  
220 Appellate Body Report, US – Washing Machines , para. 5.66.  
221 Panel Report, para. 7.110.  
222 Panel Report, para. 7.110.  WT/DS471/AB/R  
 
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  statements by the Pan el, to the extent  that they are understood as suggesting that the term 
"significantly" in Article 2.4.2 implies that, in all circumstances, a qualitative analysis is also 
required . We do not read these  statements by the Panel to suggest, as the panel in US – Washing 
Machines  did223, that there may be circumstances in which a pattern of export prices which differ 
significantly within the meaning of Article 2.4.2 can be established on the basis of purely 
quantitative criteria. We  therefore disagree with China t hat this Panel drew support from findings 
made by the panel in US ‒ Washing  Machines , which  were subsequently reversed by the 
Appellate  Body because that panel found that differences may be found to be significant based on 
purely quantitative criteria.224 
5.59.  China also contends that the Panel erred in the int erpretation of  the pattern clause, because 
it considered that an investigating authority is not required to take into consideration the 
"objective reasons" for the price differences in its qualitative analysis of whether export prices 
differ significantly.  China equates  these objective reasons underlying the differences in prices with 
the "objective market factors", which the Appellate Body in US – Washing Machines  said must be 
considered in the qualitative assessment of significance.225 China draws a distinction between 
objective reasons, which it contends should be considered under the pattern clause, and subjective 
intent or motivations , which  need not be considered.226 We disagree with China's characterization 
of the terms  "objective reasons", "motivations", and  "objectiv e market factors" . 
5.60.  In US – Washing Machines , the Appellate Body noted that the significance of  price 
differences may be affected by "objective market factors", such as the nature of the product under 
consideration, the industry at issue, the market structu re, or the intensity of competition in the 
markets at issue, depending on the case at hand.227 These objective market factors, however, are 
relevant to the identification of a pattern within the meaning of Article 2.4.2 , insofar as they affect 
the significan ce of the price differences and not because they provide reasons for the price 
differences.  The Appellate Body clarified that the words "significantly" and "pattern" in the 
second  sentence of Article  2.4.2 do not imply an examination into the cause of (or reasons for) the 
differences in prices and that the text of this provision does not impose an additional requirement 
to ascertain whether the significant differences found to exist are unconnected with "targeted 
dumping".228 The Appellate Body noted , in this  regard , that it used the phrase "cause of" the price 
differences or "reasons for" the price differences to refer to the issue of whether the investigating 
authority should consider if the price differences are the result of normal price fluctuations or 
reflect "targeting" conduct to establish the existence of a pattern.229 
5.61.  In addition, the Appellate Body considered that the text of the second sentence of 
Article  2.4.2 does not imply an examination of the motivation for, or intent behind, the differences 
in prices.230 Therefore,  while the pattern clause requires,  in addition to a quantitative  analysis , a 
qualitative analysis of the significance of price differences, it neither requires that an investigating 
authority ascertain the cause of (or objective reasons for) the price differences, nor does it require 
that an authority ascertain the motivation for (or intent behind) the differences in prices.  
5.62.  In US – Washing Machines , the Appellate Body distinguished between the above -mentioned 
"objective market factors" t hat affect the significance of price differences and the reasons for or 
cause  of such price differences, which need not be considered under the pattern clause.231 The 
scope and type of qualitative analysis under the pattern clause is informed by the text of the 
second sentence of Article 2.4.2, which refers to a pattern of export prices which differ 
"significantly". What is relevant to the pattern clause is the qualitative dimension of the 
"significance" of price differences , not a n overall  qualitative analys is of the pattern. An inquiry into 
the cause of , or reasons for , the price difference must thus be distinguished from a qualitative 
assessment of the "significance" of the price differences.  
                                               
223 See Panel Report, US – Washing Machines , paras. 7.52 and 8.1.a.ii. See also paras. 7.119.a and 
8.1.a.v.  
224 See China's appellant's submi ssion, paras. 161 and 176.  
225 China's appellant's submission, paras. 180 -181. 
226 China's appellant's submission, paras. 180 -181. 
227 Appellate Body Report, US – Washing Machines , para. 5.63.  
228 Appellate Body Report, US – Washing Machines , para. 5.65.  
229 Appella te Body Report, US – Washing Machines , fn 173 to para. 5.57. (emphasis omitted)  
230 Appellate Body Report, US – Washing Machines , para. 5.65.  
231 Appellate Body Report, US – Washing Machines , para. 5.66.  WT/DS471/AB/R  
 
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  5.63.  We therefore disagree with China's suggestion232 that the "objecti ve reasons " for differences 
in prices correspond to the "objective market factors" that the Appellate Body in US ‒ Washing 
Machines  considered may be  relevant to the qualitative assessment of whether differences are 
significant .233 In that dispute , the Appel late Body considered that neither the objective reasons nor 
the motivations for differences in prices are relevant to the determination of whether export prices 
differ significantly within the meaning of Article 2.4.2.234 
5.64.  We further note that the Panel state d that , in examining whether price differences are 
qualitatively significant , an investigating authority "is required to consider how such export prices 
differ".235 As the Panel further stated, in so doing, "the investigating authority may find that a 
given margin of difference in export prices, which [is] in mathematical or numerical terms, 
'sufficiently great', [is] not 'worthy of attention' and hence not 'significant', in light of the 
circumstances surrounding an investigation, including most importantly t he nature of the product 
under investigation and the relevant industry."236 The P anel Report  in this dispute , which was 
circulated prior to the Appellate Body r eport in US ‒ Washing Machines , does not refer explicitly to 
"objective market factors" and does not list all the indicative objective market factors  that the 
Appellate Body refers to in US – Washing Machines .237 Nevertheless, the Panel's reference to "the 
circumstan ces surrounding an investigation" and to "the nature of the product under investigation 
and the relevan t industry" make it clear that the Panel  considered  that a qualitative assessment of 
significance under the second sentence of Article 2.4.2 involves  the consideration of factors such 
as those that the Appellate Body mentioned as examples of  "objective  market factors".  
5.65.  China further contends that "[t]he Panel failed to recognize that the qualitative factors to be 
considered are objective market factors, su ch as seasonal pricing cycles (seasonality) or 
market -driven fluctuations in the costs of production."238 In China's view , "the quantitative 
difference between prices at the peak and the trough of a seasonal price cycle may not reveal 
prices that 'differ sig nificantly' in the sense of Article 2.4.2, if the numerical difference is consistent 
with the regular seasonal fluctuations for the 'product under consideration' or 'the industry at 
issue'."239 Moreover, China contends, "[a]nother relevant qualitative dimens ion that may have to 
be exa mined is where the 'industry at issue' is subject to a secular decline in costs of production  
over the course of the relevant time period, which may have a direct impact on the trend 
(or pattern) in prices for the product at issu e."240 The United States responds that requiring an 
investigating authority  to consider seasonality or  cost fluctuations to assess significance would 
mean requiring that authority to examine "the cause of (or reasons for) the differences in 
prices".241 To the United States, seasonality and cost fluctuations go to why export prices differ;  
they do not provide information about how the export prices are different, and whether the 
observed differences are significant.242 
5.66.  We have disagreed243 with China's contention th at the notion of "objective market factors", 
which may be relevant to  the qualitative analysis of the significance of price differences under 
Article 2.4.2, includes , what China calls , "objective reasons" for the price differences.244 
5.67.  Factors such as the nat ure of the product under consideration, the industry at issue, the 
market structure, or the intensity of competition in the markets are "objective market factors" 
relevant to an investigating authority's qualitative evaluation under the pattern clause to t he 
extent  that they speak to the "significance" , or lack thereof , of the differences in export prices. In 
this respect, "objective market factors" may assist an investigating authority in determining 
                                               
232 China's appellant's submission, para. 181.  
233 See Appel late Body Report, US – Washing Machines , para. 5.66.  
234 Appellate Body Report, US – Washing Machines , para. 5.66.  
235 Panel Report, para. 7.111.  
236 Panel Report, para. 7.111.  
237 See Appellate Body Report, US – Washing Machines , para . 5.66.  
238 China's appellant's  submission, para. 157.  
239 China's appellant's submission, para. 169. (emphasis original)  
240 China's appellant's submission, para. 169. (emphasis original)  
241 United States' appellee's submission, para.  219 (quoting Appellate Body Report, US – Washing 
Machine s, para.  5.65).  
242 United States' appellee's submission, para.  222.  
243 See para. 5.63 above.  
244 See China's appellant's submission, para. 180.  WT/DS471/AB/R  
 
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  whether price differences are significant, understood as  "important, notable or consequential".245 
In contrast, factors that provide reasons for price differences and explain whether such differences 
are connected or not to "targeted dumping" are not relevant to the qualitative evaluation of 
whether  those  price d ifferences are significant within the meaning of the pattern clause.  
5.68.  Turning to China's arguments about market -driven fluctuations in the costs of production  
and seasonality , we observe , first, that a decline in the costs of production is not concerned wit h 
the significance of export price differences  but rather  with the very reasons for , or cause of , such 
differences. Price differences may be due to  a decline in the costs of production rather than to 
"targeted dumping". We therefore do not agree with China  that a decline in production costs 
should form part of the investigating authority's qualitative analysis in assessing  the significance of 
price differences under the pattern clause . Regarding season ality, to the extent  that seasonal 
variations in the pr ices of goods explain why export prices vary over time periods , they relate to 
the "reasons" for  the price differences  and thus need not be considered under the pattern clause . 
Nevertheless , to the extent  that seasonal price variations  – which  are inherent  in the nature of a 
product , the industry at issue, or the market structure  – speak to the significance , or lack thereof , 
of such price differences, they may be relevant to the qualitative assessment  under the pattern 
clause of whether identified differenc es in export prices differ "significantly".   
5.69.  In concluding that the reasons for price differences are not relevant to the determination of 
whether export prices differ significantly, we a re aware that the qualitative analysis in the 
second  sentence of Arti cle 2.4.2 may not end with the assessment of the significance of price 
differences under the pattern clause. The second sentence of Article  2.4.2 also requires 
investigating authorities to provide an explanation " 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 ". While the reasons behind differences in export prices are 
not part of the qualitative analysis that is required under the pattern cla use in order  to establish 
whether such differences are significant, such reasons may be relevant to an investigating 
authority's explanation of why the differences in export prices cannot be taken into account 
appropriately by the use of either the W -W or the T-T methodology.246  
5.70.  In light of the above, we consider that the Panel did not err in its interpretation of the 
second  sentence of Article  2.4.2 of the Anti -Dumping Agreement in finding that investigating 
authorities are not required to examine the reaso ns for the relevant differences in export prices247, 
or whether th ose differences are unconnected to "targeted dumping"248, in order to assess whether 
export prices differ "significantly". We also consider that, while it did not explicitly refer to 
"objective market factors" , the Panel correctly concluded that an investigating authority should 
undertake a qualitative analysis of the significance of export price differences. We thus disagree 
with China's contention that the Panel erred in interpreting and applyi ng the second  sentence of 
Article 2.4.2 because it found that "investigating authorities [are not requir ed] to consider 
objective market factors in determining whether relevant prici ng differences are 'significant '".249  
5.71.  We therefore uphold  the Panel's findi ngs, in paragraphs 7.114 and 8.1.a.viii of its Report, 
that "the USDOC was not required to consider the reasons for the differences in export prices 
forming the relevant pattern in order to determine whether those differences were qualitatively 
significant  within the meaning of the pattern clause of Article 2.4.2 " and that , accordingly , "China 
has not established that the United States acted inconsistently with Article 2.4.2 of the 
Anti-Dumping Agreement in the OCTG , Coated Paper  and Steel Cylinders  investi gations because of 
the alleged qualitative issues with the Nails test".  
                                               
245 Appellate  Body Report, US – Washing Machines , para. 5.62.  
246 We note that the panel in US – Washing Machines  found that "the explanation clause is need ed 
because there may be factors other than targeted dumping that may cause export prices to differ" and that 
"[p]rice differences caused by factors other than targeted dumping may 'normally' be taken into account 
appro priately by one of the 'normal' comparison methodologies provided for in the first sentence of 
Article  2.4.2." (Panel Report, US – Washing Machines , para. 7.73) These findings by the panel in 
US ‒ Washing  Machines  were not appealed.  
247 Panel Report, para. 7.108.  
248 Panel Report, para. 7.109.  
249 China's appellant's submission, heading IV.  WT/DS471/AB/R  
 
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  5.1.4   Use of average s in determining a "pattern"  
5.72.  We now turn to the Panel's examination of the USDOC's use of weighted -average export 
prices, under the Nails test applied in the three challe nged investigations, to determine a "pattern" 
within the meaning of the second sentence of Article  2.4.2 of the Anti -Dumping  Agreement.250  
5.73.  China appeals the Panel's finding that China ha d not established that the United States 
acted inconsistently with Arti cle 2.4.2 in the three challenged investigations by determining the 
relevant pattern on the basis of averages, as opposed to individual export transaction prices.251 
Specifically, China claims that the Panel erred in its interpretatio n and application of the  
second  sentence of Article  2.4.2 to the three challenged investigations because it found that this 
provision allowed the USDOC to determine a pattern on the basis of averages.252 For China, the 
second sentence of Article  2.4.2 requires that a pattern be det ermined only on the basis of 
individual export prices, not average prices.253 Furthermore, China contends that the USDOC's use 
of averages in the three challenged investigations was inherently biased because it increased the 
likelihood of finding a pattern  under Article  2.4.2, and was thus inconsistent with this provision.254 
In this respect, China also contends that the Panel's evaluation of the USDOC's determination was 
contrary to the standard of review under Article  17.6(i) of the Anti -Dumping  Agreement, be cause 
the Panel  failed to find that the USDOC's use of averages was inherently biased.255 China requests 
us to reverse the Panel's finding in paragraphs  7.128 and 8.1.a.ix of the Panel Report.256 China 
also requests us to complete the analysis and find that th e United States acted inconsistently with 
the second sentence of Article  2.4.2, in the three  challenged investigations, by determining a 
pattern on the basis of averages, as opposed to individual export prices.257 
5.74.  The United States responds that the Panel di d not err in its interpretation of the 
second  sentence of Article  2.4.2 by finding that a pattern for purposes of this provision can be 
determined on the basis of averages.258 To the United States, this provision does not prohibit the 
use of averages under t he pattern clause.259 The United States also contends that China's claim 
under Article 17.6(i) of the Anti -Dumping Agreement must fail because  China's arguments are 
merely consequential of, or made redundant by, its substantive arguments under Article  2.4.2.260 
For these reasons, the United States requests us to reject China's claims.261 Should we reverse the 
Panel's finding at issue, the United States submits that we would be unable to complete the 
analysis, given the lack of sufficient undisputed facts on the r ecord.262 
5.75.  The Panel found that China ha d not established that the United States acted inconsistently 
with Article 2.4.2 in the three  challenged investigations  by finding a pattern on the basis of 
averages .263 Examining the text of the second sentence of Articl e 2.4.2, the Panel concluded that 
this provision does not preclude an investigating authority from finding a pattern on the basis of 
averages. Rather, the Panel considered that Article  2.4.2 provides investigating authorities with 
                                               
250 As noted by the Panel,  in the three challenged investigations,  the USDOC used CONNUM -specific 
weighted -avera ge export prices for each purchaser (in the Coated Paper  investigation) and for each  
time period (in the OCTG  and Steel Cylinders  investigations) in both stages of the Nails test – i.e. the standard 
deviation test and the price gap test. (Panel Report, par as. 7.5 and 7.115) In this Report, we refer to the 
weighted -average export prices relied on by the USDOC in the three  challenged investigations as "averages" or 
"average prices".  
251 China's appellant's submission, para.  126 (referring to Panel Report, paras . 7.115 -7.128).  
252 China's appellant's submission, paras.  126-127, 133, 147, and 153.  
253 China's appellant's submission, paras.  127, 134, and 147.  
254 China's appellant's submission, paras.  128, 144 -146, and 149 -151. 
255 China's appellant's submission, paras.  133, 148, and 153.  
256 China's appellant's submission, paras.  154 and 630.  
257 China's appellant's submission, paras.  155 and 631.  
258 United States' appellee's submission, paras. 161 -162, and 185.  
259 United States' appellee's submission, paras.  9 and 167. T he Uni ted States submits that the focus in 
the second  sentence  of Article  2.4.2 is on the differences in export prices among different purchasers, regions, 
or time periods, not on individual export transactions per se. (Ibid., para  167) In addition, the United S tates 
contends that the average prices reflect the individual export prices, and that the examination of averages and 
of individual export prices are thus not mutually exclusive. (Ibid., paras.  161 and 172 -173) 
260 United States' appellee's submission, paras . 188-191. Moreover, the United States contends  that 
China's claim under Article 17.6(i) of the Anti -Dumping Agreement must fail because  China should have raised 
a claim also under Article 11 of the DSU . (Ibid., para.  187) 
261 United States' appellee's submi ssion, para. 196.  
262 United States' appellee's submission, paras.  198-202. 
263 Panel Report, paras.  7.128 and 8.1.a.ix . WT/DS471/AB/R  
 
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  discretion to determine a  pattern on the basis of averages or individual export prices.264 With 
respect to the question of whether the Nails test was biased towards finding a pattern under 
Article  2.4.2, the Panel considered that China's argument was based on the view that, by relyi ng 
on averages, the USDOC failed to consider variations in the prices for the same  purchaser or time 
period. Given that the Panel had found that the second sentence of Article  2.4.2 provided the 
USDOC with discretion to use individual export transaction pr ices or average prices when 
determining a pattern, the Panel did not believe that the USDOC's determination in the three 
challenged investigations could be considered biased simply because the method that it chose led 
to an outcome that was less favourable  to exporters.265 
5.76.  Turning to our analysis, we first examine China's claim that the Panel erred in its 
interpretation and application of the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement. Thereafter, we examine China's claim that the Panel fa iled to comply 
with Article  17.6(i) of the Anti -Dumping  Agreement.  
5.77.  The second sentence of Article  2.4.2 of the Anti -Dumping  Agreement provides, in relevant 
part, that "[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 ".266  
5.78.  On its face, the text of the pattern clause does not prescribe a specific method for 
identify ing a "pattern", in particular whether individual export transaction prices or average prices 
must be used. Rather, it specifies what an investigating authority must find before resorting to the 
W-T methodology, namely , "a pattern of export prices which di ffer significantly among different 
purchasers, regions or time periods ". Thus, regardless of the particular method chosen, such 
method must be capable of identifying a pattern that is consistent with the requirements stipulated 
in the pattern clause. As ex plained earlier267, in the context of the second sentence of Article  2.4.2 
of the Anti -Dumping  Agreement, a "pattern" is a regular and intelligible form or sequence of 
"export prices which differ significantly". This means that there must be regularity to th e sequence 
of prices and that this sequence must be capable of being understood.268  
5.79.  In Article  2.4.2 of the Anti -Dumping  Agreement, the term "pattern of export prices" is 
followed by the phrase "which differ significantly". The Appellate Body has explained that the 
wording "prices which differ" indicates that the focus of the pattern is on the prices that are found 
to differ. Therefore, while an investigating authority would analyse the prices of all export 
transactions made by the relevant exporter or produ cer to identify a pattern, "the distinguishing 
factor that allows that authority to discern which export prices form part of the pattern would be 
that the prices in the pattern differ significantly from the prices not in the pattern."269 
5.80.  The final part of th e pattern clause specifies that a pattern involves export prices which 
differ significantly in relation to specified groups, namely , "among different purchasers, regions or 
time periods". The term "among" emphasizes membership of a group. Something belongs  to a 
group when it shares certain common characteristics with the other members of that group or has 
some form of relationship with them.270 Specifically in the context of the pattern clause, the term 
"among" serves to specify the parameters in relation to which "export prices which differ 
significantly" may be discerned  – i.e. purchasers, regions or time periods.271  
                                               
264 Panel Report, para.  7.124.  
265 Panel Report, para.  7.127.  
266 The second sentence of Article  2.4.2 of the Anti -Dumping  Agreement also contai ns a 
second  condition for the use of the W -T methodology, namely, that " an explanation [be] provided 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 co mparison. " 
267 See para. 5. 21 above.  
268 Appellate Body Report, US – Washing Machines , paras.  5.25 and 5.27. According to the 
Appellate  Body, this understanding of a pattern excludes the possibility of a pattern merely reflecting random 
price variation. (Ibid. , paras.  5.25 and 5.32)  
269 Appellate Body Report, US – Washing Machines , para.  5.26. See also Appellate Body Report, 
US ‒ Zeroing (Japan) , para.  135. 
270 Appellate Body Report, US – Washing Machines , para.  5.31.  
271 Appellate Body Report, US – Washing Machines , paras.  5.30-5.31. WT/DS471/AB/R  
 
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  5.81.  On the basis of the foregoing, the Appellate Body has explained that a "pattern" within the 
meaning of the second sentence of Article  2.4.2 of t he Anti -Dumping  Agreement comprises all of 
the export prices for one or more purchasers, regions, or time periods which differ significantly 
from, respectively, the export prices for the remaining purchasers, regions, or time periods 
because they are signi ficantly lower than the prices in the latter group.272 
5.82.  We now turn to the question of whether the pattern clause requires the use of individual 
export transaction prices, as opposed to average prices, to determine the existence of a pattern. 
The finding of a  pattern is not centred on the price relationship among the different export 
transactions falling within the pattern, i.e. the transactions to the "targeted" purchaser, region, or 
time period. Rather, the existence of a pattern depends on the price relatio nship between  the 
prices for one group, i.e.  the "targeted" transactions , and the prices for another group, i.e. the 
"non-targeted" transactions. As explained above, the distinguishing factor that allows an 
investigating authority to discern which export p rices form part of the pattern is that the prices in 
the pattern differ significantly from the prices not in the pattern. In addition, the relevant 
difference is one "among" different purchasers, regions or time periods. As explained above, the 
term "among " in the pattern clause serves to specify the parameters in relation to which "export 
prices which differ significantly" may be discerned, i.e.  purchasers, regions or time periods.273 
Thus, we consider that the pattern clause focuses on the price differences  among  different 
purchasers, regions or time periods; not the differences within  the prices for the "targeted" 
purchaser, region, or time period.  
5.83.  We consider that this view is consistent with the function of the second sentence of 
Article  2.4.2, which is t o allow investigating authorities to  identify and address 
"targeted  dumping".274 As a result , an investigating authority may rely on prices of individual 
export transactions or average prices  in order  to find a pattern, provided that the pattern meets 
the re quirements stipulated in the pattern clause. In this regard, we agree with the Panel's 
conclusion that the pattern clause provides investigating authorities with discretion in relation to 
whether a pattern determination is to be based on individual export transaction prices or average 
prices.275 
5.84.  China contends that a focus on individual export prices is consistent with the meaning of the 
term "pattern" in the second sentence of Article  2.4.2 of the Anti -Dumping  Agreement. According 
to China,  the term  "pattern " suggests  "a sufficient number of observations from which an 
intelligible form or arrangement amongst those events can be discerned".276 China explains that, 
when prices are averaged, a large number of observations are collapsed into a single average 
price.  According to China, this "reduces the investigating authority's ability to discern a pattern in 
the array of prices actually charged by an exporter, due to the absence of a sufficient number of 
observations from which an intelligible form or arrangement a mongst those data can be 
discerned" .277 China considers that, to examine whether the observed prices form a pattern  among  
different purchasers, regions or time periods, an investigating authority must properly account for 
the differences within  the prices fo r a given purchaser, region, or time period.278 
5.85.  China's proposed definition of a pattern implies that "a sufficient number of observations" 
must exist within  the prices for the "targeted" purchaser, region, or time  period. As explained 
above, we consider tha t the pattern clause focuses on the price differences among  different 
purchasers, regions, or time periods , not the differences within  the prices for the "targeted" 
purchaser, region, or time period. Moreover, in our view, where all the relevant individual  export 
transaction prices are averaged using weighted -average prices by purchasers, regions, or time 
periods, the differences within the prices for a given purchaser, region, or time period are 
accounted for in those averages.279 In addition, a pattern dete rmined on the basis of averages is 
still based on a collection of individual export prices that form a regular and intelligible form or 
sequence of export prices which differ significantly, in the sense that those prices pertain to one or 
more purchasers, regions, or time periods, and are significantly lower than the export prices for 
                                               
272 Appellate Body Report, US – Washing Machines , para.  5.36.  
273 Appellate Body Report, US – Washing Machines , paras.  5.30-5.31. 
274 Appellate Body Report, US – Washing Machines , paras.  5.17 and 5.28.  
275 Panel Report, para s. 7.123 -7.124.  
276 China's appellant's submission, para.  142. 
277 China's appellant's submission, para.  142. 
278 China's appellant's submission, para.  143. 
279 See United States' appellee's submission, para s. 161, 172-173, and 182 . WT/DS471/AB/R  
 
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  the remaining purchasers, regions, or time periods. We thus agree with the Panel that, when a  
pattern is determined  through the use of averages, the pattern itself  will consis t of individual 
export transactions.280 For these reasons, we disagree with China that the meaning of the term 
"pattern" supports the view that the use of averages is a priori  prohibited by the pattern clause.  
5.86.  China also argues that finding a pattern solely on the basis of individual export transaction 
prices ensures parallelism between the pattern clause  – one of the conditions to use the 
W-T methodology – and the application of the W -T methodology itself, i.e. the comparison 
between the weighted average nor mal value and "prices of individual  export transactions".281 
For China, it would be incongruous to interpret the pattern clause as allowing an investigating 
authority to "overlook" the individual export transaction prices for purposes of determining a 
patter n, when "the very purpose of the second  sentence  is to authorize th e investigating  authority 
to focus on individual export prices when making a comparison with normal value ."282 In addition, 
China contends283 that its interpretation of Article  2.4.2 is consist ent with the Appellate  Body's 
statements in US – Zeroing (Japan) that the term  "individual export transactions" in the second 
sentence of Article  2.4.2 refers to "transactions that fall within the relevant pricing pattern"284, and 
in US – Washing Machines  that the pattern in this provision "focuses on the 'targeted' 
transactions".285 
5.87.  We recall that the first part of the second  sentence of Article 2.4.2 , concerning the 
application of the W -T methodology,  provides that " [a] normal value established on a weighted 
average basis may be compared to prices of individual export transactions ".286 The phrase 
"individual export transactions" appears only in this part of the second sentence.   
5.88.  The structure of the second  sentence of Article  2.4.2 makes clear that this provisio n has 
two distinct parts serving different purposes.287 The first part clarifies that a normal value may be 
compared to prices of "individual export transactions"  in order  to establish the existence of  
margins of  dumping. This serves the purpose of distingui shing the W -T methodology from the 
normally applicable methodologies in the first sentence of Article  2.4.2. The second part of the 
second sentence deals with the conditions that have to be met for an investigating authority to 
have recourse to the W -T methodology. We are not convinced that the reference to "prices of 
individual export transactions" in the first part of the second sentence directly informs or limits 
how a pattern is to be identified  in the second part of the second sentence . China's argumen t 
effectively imports the phrase "individual export transactions" into the pattern clause. Moreover, in 
our view, a pattern determined on the basis of average prices is nonetheless composed of 
individual export transactions to which the W -T methodology may  be applied. In this respect, we 
agree with the United States that individual prices are not "overlooked" by an investigating 
authority when those prices are included in the calculation of averages.288 
5.89.  In addition, unlike China, we do not read the Appellate Body's statements in 
US ‒ Zeroing  (Japan)  and US – Washing Machines  as endorsing a  parallelism between  the 
identification of the  pattern and the application of the W -T methodology to the 
"pattern  transactions" .289 In US – Washing Machines , the Appellate Body  explained that  an 
                                               
280 Panel Report, para.  7.120.  
281 China's appellant's s ubmission , para.  135 (referring to the first part of the second sentence of 
Article  2.4.2 of the Anti -Dumping  Agreement). (emphasis original)  
282 China's appellant's submission, para.  135. 
283 China's appellant's submission, para s. 138-141. 
284 Appellate Body Re port, US – Zeroing (Japan) , para.  135. 
285 Appellate Body Report, US – Washing Machines , para.  5.28.  
286 Emphasis added. The Appellate  Body has considered that the word "individual" in the 
second  sentence  of Article  2.4.2 of the Anti -Dumping  Agreement indicate s that "the W -T comparison 
methodology does not involve all export transactions , but only certain export transactions identified 
individually ". (Appellate  Body Report, US – Washing Machines , para. 5.52 (referring to Panel Report, 
US ‒ Washing Machines , para. 7.22 )) The Appellate  Body has read the phrase " individual export transactions " 
as referring to the universe of export transactions that justify the use of the W -T methodology, namely, the 
"pattern transactions" . (Appellate  Body Reports, US – Washing Machines , para. 5.52; US – Zeroing (Japan) , 
para. 135) 
287 For a similar view, see European Union's third participant's submission, para.  65. 
288 United States' appellee's submission, paras.  172-173. 
289 For ease of reference, we use the term "pattern transactions"  to refer to those transactions that fall 
within the relevant pattern, and we use the term "non -pattern transactions" to refer to those transactions that 
do not fall within that pattern.  WT/DS471/AB/R  
 
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  investigating authority has to consider all of the transactions of a given exporter or producer in 
order to identify a pattern of export prices that differ significantly among different purchase rs, 
regions or time periods.290 In US – Zeroing (Japan) , the Appellate Body explained that an 
investigating authority may apply the W -T methodology only to the individual export transactions 
that fall within the relevant pattern.291 While the analysis under the pattern clause takes into 
account all exp ort transactions of a given exporter or producer, the W -T methodology applies only 
to certain specific export transactions of that exporter or producer. We do not consider  that any 
such parallelism between these two parts of the second senten ce of Article  2.4.2 of the 
Anti-Dumping  Agreement  – which serve different purposes – would  require  an investigating 
authority to determine a pattern under the pattern clause on the basis of individual export 
transaction prices, as opposed to average prices. Rather, as e xplained above, we consider that the 
pattern clause allows an investigating authority to rely on individual export transaction prices or 
average prices  in order  to find a pattern , provided that the pattern meets the requirements 
stipulated in the pattern c lause.292 
5.90.  Moreover , China argues that an investigating authority that relies on averages is unable to 
discern a pattern focused on "targeted" transactions because the scope of a pattern differs 
depending on whether it is determined on the basis of individual  export transactions or average 
prices.293 The United States notes that China does not explain how the scope of a pattern might 
differ depending on whether individual prices or average prices are used in the analysis to 
determine a pattern.294 We recall that, in US – Washing Machines , the Appellate Body explained 
that the "pattern" under the second senten ce of Article  2.4.2 of the Anti -Dumping  Agreement 
includes all of the export prices for the "targeted" purchaser, region, or time period.295 Thus, we 
disagree wi th China that, by relying on average prices, an investigating authority is unable to 
discern a pattern for the purposes of the second sentence of Article  2.4.2. This is because, 
regardless of whether an investigating authority relies on individual export t ransaction prices or 
average prices when determining the existence of a "pattern", the scope of the pattern will remain 
the same, namely , it will comprise all of the export prices for the "targeted" purchaser, region, or 
time period.  
5.91.   We now turn to China' s contention that the Panel failed to take into account that the use of 
average prices in the Nails test reduced the variability of export prices across transactions and per 
purchaser .296 We recall that, in relation to both stages of the Nails test, the USDO C used average 
prices for each purcha ser in the Coated Paper  investigation, and average prices for each  time 
period in the OCTG  and Steel Cylinders  investigations.297 
                                               
290 In US – Washing Machines , the Appellate Body explained that, "[i]n the context of identifying a 
pattern of export prices among, for example, different purchasers, an investigating authority would examine 
the prices of export sales made to one or more purchasers as compared to the prices of export sales made to 
the other p urchasers."  (Appellate Body Report, US – Washing Machines , fn 115 to para.  5.26) Thus, for 
purposes of determining a pattern under the pattern clause, an investigating authority must consider all of the 
transactions of a given exporter or producer to all purchasers, regions , or time periods. As noted above, while 
the authority would analyse the prices of all export sales made by the relevant exporter or producer, the 
distinguishing factor that allows that authority to discern which export prices form part o f the pattern would be 
that the prices in the pattern differ significantly from the prices not in the pattern.  This determination, thus, is 
not focused on the price relationship among the different export transactions falling within the pattern. The 
Appell ate Body then explained that the function of the second sentence of Article  2.4.2 of the 
Anti-Dumping  Agreement is to allow investigating authorities to identify and address "targeted dumping". In 
this context, the Appellate Body stated that, "by comprisin g only the transactions found to differ from other 
transactions, the pattern focuses on the 'targeted' transactions." (Ibid. , para.  5.28) 
291 In US – Zeroing (Japan) , the Appellate Body compared the universe of transactions to which the 
T-T methodology and t he W-T methodology apply. The Appellate Body explained that the phrase "individual 
export transactions" in the first part of the second sentence of Article  2.4.2 of the Anti -Dumping  Agreement 
refers to the transactions that fall within the relevant pattern . In this respect, the Appellate  Body observed that 
the universe of export transactions subject to the W -T methodology would necessarily be more limited than the 
universe of export transactions to which the symmetrical comparison methodologies in the first  sentence of 
Article  2.4.2 would apply. ( Appellate Body Report, US – Zeroing (Japan) , para.  135) 
292 See para. 5.83.    above.  
293 China's appellant's submission, para.  141 (referring to Appellate Body Report, US – Washing 
Machines , para. 5.28) . 
294 United States' appellee's submission, para.  180. 
295 Appellate Body Report, US – Washing Machines , para.  5.36.  
296 China's appellant's submission, para.  144. 
297 Panel Report, paras.  7.5 and 7.115.  WT/DS471/AB/R  
 
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  5.92.  China considers that the USDOC's use of averages in the three challenged investigations 
was inherently biased because it systematically drew the one  standard deviation threshold closer 
to the mean as compared to where the threshold would have been had the USDOC calculated it on 
the basis of individual export transaction prices.298 China contends t hat, as a consequence of this 
bias, there was an increased likelihood that export sales to the "targeted" purchaser or within the 
"targeted" time period fell below the one  standard deviation threshold. In turn, this increased the 
likelihood that the USDOC would find, in the three challenged investigations, the existence of a 
pattern under the second sentence of Article  2.4.2.299 China contends that the Panel should have 
found that, by using average  prices instead of individual export transaction prices, the U SDOC 
introduced a bias towards finding a pattern, and thus failed to identify a pattern consistently with 
the second  sentence  of Article 2.4.2.300 
5.93.  The United  States contends that China fails to demonstrate that the USDOC's application of 
the Nails test in th e three challenged investigations was inconsistent with the second  sentence  of 
Article  2.4.2.301 In addition, the United States contests the evidence provided by China to show 
that, in the three challenged investigations, the outcome was biased as a result o f the USDOC's 
use of average prices.302 
5.94.  The Panel noted that China's argument that the Nails test was biased towards finding a 
pattern is based on China's view that, by relying on average prices, the USDOC failed to take into 
consideration the variations within the prices for each purchaser  or time period. The Panel recalled 
its understanding that the pattern clause does not require the  consider ation of  such variations; 
rather , it provides discretion to investigating authorities to choose between individual e xport 
transaction prices and average prices when determining a pattern. The Panel did not consider that 
"the USDOC's determination in the three challenged investigations could be considered biased, 
simply because the method  that it chose led to an outcome which was less favourable to the 
exporters".303 
5.95.  As noted by the Panel304, China's arguments are directly related to China's view that the 
USDOC should have calculated the standard deviation "on an examination of individual export 
prices, as mandated by the tre aty".305 We have explained above that the second sentence in 
Article  2.4.2 provides investigating authorities with discretion to rely on individual export 
transaction prices or average prices  in order  to find a pattern, provided that this pattern meets the 
requirements stipulated in the pattern clause. For this reason, we agree with the Panel's finding 
that China has not established that the United States acted inconsistently with Article  2.4.2 in the 
three challenged investigations by establishing the releva nt pattern on the basis of averages as 
opposed to individual export transaction prices.306 
5.96.  We note the Panel's statement that, even if it were true that the numerical value of the 
standard deviation would have been higher if the USDOC had relied on individua l export 
transactions in the three challenged investigations, the Panel  could not " find that the 
USDOC's  determination was biased on that basis".307 As explained above, Article  2.4.2 provides 
investigating authorities with discretion to rely on individual ex port transaction prices or average 
prices  in order  to find a pattern. Whether or not the exercise of the discretion may be considered 
biased will depend on the particular facts and specific circumstances of each case. Thus, to the 
extent  that the Panel con sidered that China ha s not demonstrated that the USDOC's use of 
averages in the three challenged investigations was biased308, we agree with the Panel statement. 
                                               
298 China's appellant's submission, para.  149. For  China, mathematically, the act of averaging collapses 
multiple individual observations into a single observation. For this reason, China submits that averaging likely 
leads to a reduction in variability of export prices and, consequently, a lower standard  deviation. (Ibid.)  
299 China's appellant's submission, paras.  150-151. 
300 China's appellant's submission, para. 153.  
301 United States' appellee's submission, para. 192.  
302 United States' appellee's submission, para. 200.  
303 Panel Report, para.  7.127.  
304 Panel R eport, paras. 7.123 and 7.127.  
305 China's appellant's submission, para.  149. 
306 Panel Report, para. 8.1.a.ix.  
307 Panel Report, para.  7.127.  
308 In this respect, the Panel recalled that " China's argument that the Nails test suffered from a 
'systematic bias ' is based on its view that the USDOC failed to take into consideration price variations within 
purchasers or time period s because it aggregated all individual export transaction prices to a purchaser or time 
period to calculate a purchaser or time period averag e." (Panel Report, para.  7.127)  WT/DS471/AB/R  
 
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  We note that our understanding of the Panel statement at issue is in line with the Panel's ultim ate 
conclusion that "China has not established that the United States acted inconsistently with 
Article  2.4.2 … [in the three challenged investigations] by finding the relevant pattern on the basis 
of purchaser or time period averages as opposed to individ ual export transaction prices."309 
5.97.  Finally, we turn to China's claim under Article  17.6(i) of the Anti -Dumping  Agreement. China 
contends that the Panel's evaluation of the USDOC's determination was contrary to the standard of 
review under Article  17.6(i), be cause the Panel failed to find that the USDOC's use of averages 
was inherently biased.310 
5.98.  As explained earlier311, a claim under Article  17.6(i) of the Anti -Dumping  Agreement must 
concern the panel's assessment of the facts of the matter  and involve a showing that the 
assessment is inconsistent with this provision. Thus, a claim under this provision should not be 
made merely  as subsidiary to a claim that the panel erred in its application of a WTO provision . 
5.99.  China claims that the Panel failed to comply with Art icle 17.6(i) because the Panel endorsed 
a WTO -inconsistent test that biased the outcome towards systematically increasing the likelihood 
of finding a pattern under Article  2.4.2 of the Anti -Dumping  Agreement.312 China contends that the 
USDOC's use of average s was inherently biased because it drew the one  standard deviation 
threshold in the Nails test closer to the mean as compared to where the threshold would have 
been had the USDOC calculated it based on individual export transaction prices, as required by 
Article 2.4.2.313 Although China explains in some detail its claim under Article  17.6(i), China does 
not identify, much less challenge, a specific instance of the Panel's assessment of the facts. 
Rather, i t seems to us that China has mostly  recast the argumen ts that it made before the Panel  
under Article  2.4.2. In addition, China does not advance any argument  on appeal  that is separate 
and different from its arguments concerning the alleged error in the Panel's interpretation of 
Article  2.4.2. Thus, we conside r that China has not demonstrated that the Panel failed to comply 
with Article  17.6(i).  
5.100.   In sum, we consider that the existence of a pattern w ithin the meaning of the 
second  sentence of Article  2.4.2 of the Anti -Dumping  Agreement depends on the price relati onship 
between the "targeted" transactions, on the one hand, and the "non -targeted" transactions, on the 
other hand. The distinguishing factor that allows for the determination of a pattern is that the 
prices within the pattern differ significantly from th e prices outside it. We also note that the 
relevant difference is one "among" different purchasers, regions, or time periods. For these 
reasons, we consider that an investigating authority may rely on individual export transaction 
prices or average prices  in order  to find a pattern, provided that this pattern meets the 
requirements stipulated in the pattern clause. In this case, like the Panel314, we consider that 
China has not demonstrated that the United States acted inconsistently with Article  2.4.2 in the  
three challenged investigations by determining the relevant pattern on the basis of average prices. 
In addition, by not advancing any argument that is separate and different from its arguments 
concerning the alleged error in the Panel's interpretation of Article  2.4.2, China has not 
demonstrated that the Panel failed to comply with Article  17.6(i) of the Anti -Dumping  Agreement.  
5.101.   We therefore find that the Panel did not err in its interpretation and application of the 
second sentence of Article  2.4.2 of the Anti-Dumping  Agreement to the three challenged 
investigations when examining the USDOC's use of purchaser or time period averages under the 
Nails test. Furthermore, we find that China has not established that the Panel failed to comply with 
Article  17.6(i)  of the Anti -Dumping  Agreement. Consequently, we uphold  the Panel's finding, in 
paragraph 8.1.a.ix of its Report, that China has not established that the United States acted 
inconsistently with the second sentence of Article  2.4.2 in the three challenged i nvestigations by 
determining the existence of a "pattern" on the basis of average prices, instead of  individual 
export transaction prices.315  
                                               
309 Panel Report, para. 8.1.a.ix.  
310 China's appellant's submission, paras.  133, 148, and 153.  
311 See para.  5.47.    above.   
312 China's appellant's submission, paras.  148 and 153.  
313 China's appellant's  submission, para.  149. 
314 Panel Report, para. 8.1.a.ix.  
315 Having upheld this finding, we need not examine China's  request for completion of the legal analysis.  WT/DS471/AB/R  
 
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  5.1.5   Whether the Panel erred under Article 2.4.2 of the Anti -Dumping Agreement in 
suggesting that comparison methodologi es may be combined to establish dumping 
margins  
5.102.   The Panel  found that the United States ac ted inconsistently with Article  2.4.2 of the 
Anti-Dumping Agreement  by using zeroing under t he W -T methodology in the three  challenged 
investigations  in calculating du mping margins for the concerned Chinese exporters.316 In reaching  
this finding, the Panel added , in footnote  385 of its Report , that it was not suggest ing that "the 
options under Article  2.4.2 for dumping determinations by investigating authorities are limit ed, as 
that would render the second  sentence  of Article 2.4.2 inutile ".317 The Panel added:  
We are cognizant that where an investigating authority applies the [W-T] methodology 
to the export transactions falling within the pattern and one of the two normal 
methodologies to the export transactions falling outside the pattern, and the results of 
the calculations for the export transactions falling outside the pattern show negative 
dumping, it may be necessary, in order to give full meaning to the second  senten ce of 
Article 2.4.2, not to let that negative dumping offset the dumping found within the 
pattern. We make this observation bearing in mind the objective of the 
[W-T] methodology which, as underlined by the Appellate  Body, is to unmask targeted 
dumping.318 
5.103.   China appeals the Panel's interpretation, set out in footnote 385 of its Report,  that "it may 
be necessary, in order to give full meaning to the second sentence of Article 2.4.2, not to let … 
negative dumping [found outside of a pattern] offset the dumping found within the pattern" .319 
According to China, this interpretation is erroneous because it is premised on the understanding 
that an investigating authority may apply the W -T methodology to "pattern transactions" and the 
W-W or T -T methodology to "non -pattern transaction s", and then combine the results of these 
comparison methodologies to establish dumping margins .320 China argues that, in 
US ‒ Washing  Machines , the Appellate  Body clarified that the second sentence of Article  2.4.2 
permits the establishment of margins of dumping solely by applying the W -T methodology to a 
limited universe of export transactions, namely , the "pattern transact ions".321 China thus  requests 
us to declare the Panel's statement  in footnote 385 of its Report moot and of no legal effect.322  
5.104.   The United States does not object to this request .323 In particular, the United States  
acknowledges that, in US – Washing Machines , the Appellate  Body found that Article  2.4.2 does 
not permit the combin ing of comparison methodologies .324  
5.105.   In footnote 385 of its Report, the Panel considered that " it may be necessary, in order to 
give full meaning to the second  sentence  of Article 2.4.2 ", not to let a negative comparison  result 
for "non -pattern transactions" offset a positive  comparison  result for  "pattern  transactions".325 In 
US – Washing Machines326, the Appellate Body stated  that, "[i]n keeping with its function of 
                                               
316 Panel Report, para . 7.220 . See also  para. 8.1.a.iv.  
317 Panel Report, fn 385 to para. 7.220. (emphasis original)  
318 Panel  Report, fn 385 to para. 7.220.  
319 China's Notice of Appeal, para. 21 (quoting Panel Report, fn 385 to para. 7.220); appellant's 
submission, para. 191 (quoting Panel Report, fn 385 to para. 7.220).  
320 China's Notice of Appeal, para.  21; appellant's submission, para. 191.  
321 China's appellant's submission, para. 195 (referring to Appellate  Body Report, US – Washing 
Machines , para. 5.122).  
322 China's Notice of Appeal, para. 22; appellant's submission, para. 197.  
323 United States' appelle e's submission, para. 250.  
324 United States' appellee's submission, para. 249 (referring to Appellate Body Report, US – Washing 
Machines , paras.  5.124 and 5.130 ). 
325 In this context, the Panel relied on the panel 's finding in US – Washing Machines  that Article 2.4.2 
allows an investigating authority to disregard the negative result obtained for the "non-pattern  transactions" 
under the W -W or T -T methodology , when agg regating such result  with those obtained in the calculations for 
the "pattern transactions" u nder the W -T methodology. (Panel Report, fn 385 to para. 7.220 (referring to 
Panel Report, US – Washing Machines , paras.  7.161-7.163 and 7.167 )) 
326 In US – Washing Machines , the Appellate  Body was faced with the USDOC's practice of applying the 
W-T methodol ogy to certain transactions and the W -W methodology to the remaining transactions and 
disregarding or setting to zero the intermediate comparison result arising from the W -W methodology if it was 
negative. This practice was referred to as "systemic disrega rding". (Appellate Body Report, US ‒ Washing 
Machines , paras. 5.78 -5.79)  WT/DS471/AB/R  
 
- 43 - 
 
  allowing an investigating a uthority to effectively address 'targeted dumping'"327, the 
second  sentence of Article  2.4.2 allows an investigating authority to establish margins of dumping 
by applying the W -T comparison methodology only to "pattern transactions", to the exclusion of 
"non-pattern transactions".328 The Appellate Body considered that the "targeted dumping" 
identified from the consideration of "pattern transactions" would be "re -masked" if negative 
comparison results arising from "non -pattern transactions" were considered.329  
5.106.   The Panel , however,  referred to "an investigating authority appl[ying] the 
[W-T] methodology to the export transactions falling within the pattern and one of the two normal 
methodologies to the export transactions falling outside the pattern".330 To the extent  that the 
Panel  was suggest ing that investigating authorities may combine the W -T methodology applied to 
"pattern transactions" with the W -W or the T -T methodology applied to "non -pattern transactions" 
in order to establish dumping margins , this does not a ccord with t he conclusions of the 
Appellate  Body in US ‒ Washing Machines . The re, the  Appellate Body considered that the 
second  sentence of Article  2.4.2 " does not provide for a mechanism whereby an investigating 
authority would co nduct separate comparisons for 'pattern transactions'  under the W -T comparison 
methodology and for ' non-pattern tra nsactions'  under the W -W or T -T comparison methodology, 
and exclude from its consideration the result of the latter if it yields an overall negative 
comparison result, or aggregate it with the W-T comparison results for the 'pattern transactions'  if 
it yields an overall positive comparison result ".331 The Appellate Body thus concluded that , while 
"the second sentence allows an investigating authority to establish the existence of mar gins of 
dumping by comparing a ' normal va lue establis hed on a weighted average basis'  with 'pattern 
transactions'  only", "Article  2.4.2 does not permit the combining of comparison methodologies for 
the purposes of establishing dumping and margins of dumping in accordance with the second 
sentence ".332 
5.107.   As in US – Washing Machines , we consider  that the second sentence of Article  2.4.2 allows 
an investigating authority to establish margins of dump ing by applying the W -T methodology only 
to "pattern transactions" and that Article  2.4.2 does not permit th e combining of comparison 
methodologies.333 In circumstances where the requirements of the second  sentence of Article  2.4.2 
are fulfilled, an investigating authority may establish margins of dumping by comparing a weighted 
average normal value with export pr ices of "pattern transactions ", while excluding 
"non-pattern  transactions" from the numerator, and dividing the resulting amount by all the export 
sales of a given exporter or foreign producer.334  
5.108.   In light of the above , we declare m oot the Panel's statement s, in footnote 385 of its 
Report , to the extent that these statements are premised on the erroneous understanding that 
Article  2.4.2 of the Anti -Dumping Agreement permits the combining of comparison methodologies 
to establish dumping margins.  
5.2  The AFA Norm  
5.109.   In this section, we address China's claim of error on appeal in connection with the 
AFA Norm. Before the Panel, China contended that the AFA  Norm is an unwritten rule or norm of 
general and prospective application that can be the subject o f an "as such" c hallenge in 
WTO dispute settlement. China claimed that the AFA  Norm is inconsistent with Article  6.8 and 
paragraph  7 of Annex  II to the Anti -Dumping  Agreement.335 China described the precise content of 
the AFA Norm in the following manner:  
[W]henever [the] U SDOC considers that an NME -wide entity has failed to cooperate to 
the best of its ability, it systematically makes an adverse inference and selects, to 
                                               
327 Appellate Body Report, US – Washing Machines , para. 5.109.  
328 Appellate Body Report, US – Washing Machines , para. 5.129.  
329 Appellate Body Report, US – Washing Machines , para. 5.109.  
330 Panel  Report, fn 385 to para. 7.2 20. 
331 Appellate  Body Report, US – Washing Machines , para. 5.123 . 
332 Appellate  Body Report, US – Washing Machines , para. 5.124.  
333 Appellate  Body Report, US – Washing Machines , para s. 5.124 and  5.129.  
334 Appellate  Body Report, US – Washing Machines , para. 5.130. 
335 Panel Report, paras.  7.397 -7.399 and 7.416.  AFA Norm stands for Adverse Facts Available Norm, 
which China alleges is a rule or norm of genera l and prospective application. (China's appellant's submission, 
para. 198)  WT/DS471/AB/R  
 
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  determine the rate for the NME -wide entity, facts that are adverse  to the interests of 
that fictional en tity and each of the producers/exporters included within it.336 
5.110.   Examining first whether the AFA  Norm could be challenged "as such" in WTO dispute 
settlement, the Panel found that the AFA  Norm is attributable to the United  States337, and that its 
precise conten t corresponds to the description made by China.338 The Panel found, however, that 
China had not demonstrated that the AFA  Norm has general and prospective application, so that it 
could be challenged "as such" in WTO dispute settlement.339 
5.111.   China appeals the Pan el's finding that China had not demonstrated that the AFA  Norm 
constitutes a norm of general and prospective application.340 China claims that the Panel erred in 
its articulation and application of the legal standard for establishing that a rule or norm has 
"prospective application ". This is because, according to China, the Panel erroneously required 
"certainty" of future application for a rule or norm to be challenged "as such" in WTO dispute 
settlement.341 China requests us to reverse the Panel's finding in p aragraphs  7.479 and 8.1.d.ii  of 
the Panel Report.342 In addition, China makes two requests for completion. First, China requests us 
to complete the analysis and find that the AFA  Norm constitutes a rule or norm of general and 
prospective application that can  be challenged "as such" in WTO dispute settlement.343 
Second,  China requests us to complete the analysis and find that the AFA  Norm is inconsistent 
with Article  6.8 and paragraph  7 of Annex  II to the Anti -Dumping  Agreement.344 
5.112.   The United States responds that the Panel did not err in its articulation and application of 
the legal standard for establishing that a rule or norm has prospective application .345 The 
United  States submits that the Panel did not require that the future application of the alleged 
AFA Norm be demonstrated with "certainty" to establish whether it has prospective application.346 
To the United States, China's claim on appeal concerns the Panel's assessment  of the facts and, 
accordingly, should have been brought under Article  11 of the DSU.347 Finally, the United States 
requests us to reject both of China's requests for completion because: (i)  China's claims under 
Article  6.8 and Annex  II to the Anti -Dumping  Agreement are outside the Panel's terms of 
reference; (ii) Appellate  Body findings on the all eged AFA  Norm would not contribute to a positive 
resolution of this dispute; (iii)  the Appellate  Body is not in a position to complete the analysis; and 
(iv) in any event, China's claims are without merit.348 
5.113.   We begin our analysis below by summarizing the re levant Panel findings concerning the 
AFA Norm. We then address the legal standard for establishing whether a rule or norm has 
"general and prospective application ". Thereafter, we examine whether the Panel erred in its 
articulation and application of this standard. Finally, we address each of China's requests for 
completion.  
5.2.1   Panel's findings  
5.114.   The Panel examined whether the AFA  Norm constitutes a  rule or  norm of general and 
prospective application that can be challenged "as such" in WTO dispute settlement.349 The Panel 
recalled that, for an "as such" challenge against a rule or norm of general and prospective 
application, the complaining Member must demonstrate: (i)  that the alleged rule or norm is 
                                               
336 Panel Report, para.  7.422 (quoti ng China's opening statement at the second  Panel  meeting, para.  63 
(emphasis original) ). 
337 Panel Report, para.  7.456.  
338 Panel Report, paras.  7.454 -7.455.  
339 Panel Report, paras.  7.477 -7.479 and 8.1.d.ii.  
340 China's appellant's submission, paras.  202, 263, 38 0, and 636 (referring to Panel Report, 
paras.  7.457-7.479  and 8.1.d.ii).  
341 China's appellant's submission, paras.  212, 227 -231, 270, 387, 393, 395 -396, 399, and 414.  
342 China's appellant's submission, paras.  232, 395, 415, 437, and 636.  
343 China's appellant' s submission, paras.  420, 436 -437, and 637.  
344 China's appellant's submission, paras.  439, 509, and 637.  
345 United  States' appellee's submission, paras.  314, 338 -339, 342, 354, and 360 -361. 
346 United  States' appellee's submission, paras.  339-341. 
347 United  States' appellee's submission, paras.  316 and 369 -370. 
348 United  States' appellee's submission, paras.  253, 255 –257, 287, 371, 379, 387, 392, 399, 411 -412, 
416, 418, 431, and 438. 
349 Panel Report, para.  7.415.  WT/DS471/AB/R  
 
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  attributable to the responding Member; (ii)  the precise content of the alleged rule or norm; and 
(iii) that the alleged rule or norm has general and prospective application.350 The Panel found that 
the AFA  Norm is attributable to the United States.351 The Panel al so found that the 73 USDOC 
anti-dumping determinations put o n the record by China demonstrate the precise content of the 
AFA Norm, as described by China.352 
5.115.   The Panel then examined whether the AFA  Norm has general and prospective application. 
The Panel considered that a measure has "general application" to the extent  that it affects an 
unidentified number of economic operators, including domestic and foreign producers.353 In 
addition, the Panel explained that a measure has "prospective application" if it is intended to apply 
in future situations after its issuance.354 In this regard, the Panel noted that, for a measure to have 
prospective application, it must provide the same level of security and predictability of continuation 
into the future typically associated with rules or norms.355 
5.116.   Turning to the evidence submitted by China, the Panel noted that the USDOC  Enforcement 
and Compliance Antidumping Manual356 (USDOC Antidumping Manual ) provides that the NME -wide 
rate "may" be based on adverse facts available in certain situations.357 According to the Panel, the 
permissive languag e used in the  USDOC Anti dumping  Manual only recognizes the authority of the 
USDOC to base an NME -wide rate on adverse facts available; it does not express what approach 
the USDOC will or should adopt. The Panel thus considered that the USDOC Anti dumping Manual 
does not support China's view that the AFA  Norm has general and prospective application.358 With 
respect to the three  decisions  of the United States Court of International Trade359 (USCIT)  relied 
upon by China , the Panel considered that they do not suppor t China's contention that the 
AFA Norm has general and prospective application.360 
5.117.   In relation to the 73 USDOC anti -dumping determinations, the Panel noted that several of 
them refer to the USDOC's "practice" of selecting a rate for a "non-cooperating NME -wide entity " 
that is "sufficiently adverse" to ensure that the uncooperative party does not obtain a more 
favourable result by failing to cooperate than if it had fully cooperated.361 The Panel also observed 
                                               
350 Panel Report, para.  7.419 (referring to Appellate  Body Reports, US – Zeroing (EC) , para.  198; and 
Argentina – Import Measures , para.  5.104).  
351 Panel Report, para.  7.456. The Panel recalled that, according to China, the AFA  Norm arises from 
acts or omissions of the USDOC. Given that the USDOC is an organ of the Government of the United States, 
the Panel concluded that the acts that give rise to the AFA  Norm are attributable to the United States. ( Ibid., 
paras.  7.420 and 7.456)  
352 Panel Report, paras.  7.454 -7.455. For the Panel, the 73 anti -dumping determina tions put on the 
record by China show that, whenever the USDOC made a finding that an NME -wide entity failed to cooperate to 
the best of its ability, it adopted adverse inferences and, in determining the duty rate for the NME -wide entity, 
selected facts fr om the record that were adverse to the interests of such entity, and the exporters included 
within it. ( Ibid., para.  7.454) The Panel considered that the other two sets of evidence submitted by China – 
the USDOC Antidumping Manual  (Panel Exhibit CHN -23) and excerpts from three USCIT decisions  (Panel 
Exhibits CHN -134, CHN -148, and CHN -163) – did not support China's description of the precise content of the 
AFA Norm. (Panel Report, para.  7.455)  
353 Panel Report, para.  7.457 (referring to Appellate  Body Reports,  US – Underwear , p. 13, DSR 1997:I, 
p. 21; EC – Poultry , para.  113; and Panel Reports, US – Underwear , para.  7.65; EC ‒ Poultry , para.  7.65; 
EC ‒ IT Products , para.  7.159).  
354 Panel Report, para.  7.457 ( quoting  Appellate  Body Report, US – Oil Country Tubular Goods Sunset 
Reviews , para.  172).  
355 Panel Report, para.  7.457 ( quoting  Appellate  Body Reports, Argentina – Import  Measures , 
para. 5.182).  
356 Panel Exhibit CHN -23. 
357 Panel Report, para 7.460 (referring to the USDOC Antidumping Manual (Panel Exhibit CHN -23) 
pp. 7-8)). 
358 Panel Report, paras.  7.461 -7.462.  
359 USCIT decisions, East Sea Seafoods v. United States (Panel Exhibi t CHN -134); Hubbel Power  
Systems v. United States (Panel Exhibit CHN -148); Peer Bearing v. United States (Panel Exhibit CHN -163).  
360 Panel Report, paras.  7.464 -7.467. For the Panel, the USCIT's decisions in Peer Bearing v. 
United  States and Hubbel Power Sy stems v. United States  relate to the magnitude or level of anti -dumping 
duties, and not the process described in the AFA  Norm. The Panel considered that the USCIT's decision in 
East Sea Seafoods v. United States  acknowledges that adverse inferences have be en used to calculate 
NME-wide margins up to present, but does not shed light on the prospective application of this method of 
calculation.  (Ibid., para.  7.464 (referring to Peer Bearing v. United States (Panel Exhibit CHN -163), p.  1327), 
para. 7.465 (refer ring to Hubbel Power Systems v. United States (Panel Exhibit CHN -148), p. 1288), and 
para. 7.466 (referring to East Sea Seafoods v. United States (Panel Exhibit CHN -134), p. 1354, fn 15))  
361 Panel Report, paras.  7.469 and 7.472.  WT/DS471/AB/R  
 
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  that the USDOC described the selection of the highes t margin in the petition or the highest rate 
calculated in any segment of the proceedings as a "practice", "standard practice", or "normal 
practice", which has consistently been upheld by the USCIT and the  United States Court of Appeals 
for the Federal Cir cuit ( USCAFC ).362 In each of the 73  determinations, the USDOC followed the 
same course of action: upon finding non -cooperation by the NME -wide entity, the USDOC drew 
adverse inferences and selected facts that were adverse to the interest s of that entity and the 
exporters within it.363 The Panel considered that, by referring to its practice in every 
determination, the USDOC's conduct reflected an invariable and standard approach whenever the 
USDOC found that an NME -wide entity failed to cooperate to the best of its ability.364 The Panel 
also found it significant that there was no evidence of determinations made during a period of over 
12 years in which the USDOC did not follow this practice.365 
5.118.   The Panel considered that the Appellate  Body's reasoning in Argentina – Import Measures  
stands for the proposition that not every norm that may continue to be applied in the future can 
be considered, for that reason alone, a norm that is prospective in nature.366 Rather, according  to 
the Panel, the future application of a measure  must achieve a "certain degree of security and 
predictability typically associated with rules or norms."367 Thus, in the Panel's view, the relevant 
inquiry was whether the evidence on the record demonstrates, with the level of security and 
predictability "t ypically associated with rules or norms", that the AFA  Norm will be applied 
generally and prospectively.368 
5.119.   The Panel agreed with China that the USDOC's treatment of non -cooperating NME -wide 
entities in these determinations reflects more than mere repetition  of conduct.369 In the Panel's 
view, "[t]his practice constitutes evidence that the USDOC has invariably engaged in th at same 
conduct" and "it may even constitute evidence that the USDOC is likely to engage in the same 
conduct in the future".370 Also, t he Pane l did not exclude that "the invariable application of the 
alleged AFA  Norm over several years might create the expectation that, in a case where an 
NME-wide entity is found to be non -cooperating, the USDOC may, again, draw adverse inferences 
and select fac ts that are adverse to the interests of the entity and the exporters within it."371 
In addition, the Panel did "not disagree that prior practice may provide the USDOC with 
administrative guidance for future action."372  
5.120.   The Panel, however, was not persuaded th at the practice reflected in the 73  anti-dumping 
determinations on the record was sufficient to demonstrate that the AFA  Norm has prospective 
application.373 This is because "it [did] not demonstrate that the USDOC will continue to follow the 
same course of action in the future."374 The Panel also considered that "the fact that economic 
operators could reasonably expect the occurrence of certain conduct, or that the USDOC may find 
guidance in previous determinations, is insufficient to ascertain with the necess ary level of security 
and predictability the prospective application of the alleged AFA  Norm."375 Consequently, the Panel 
considered that a finding that the USDOC's practice at issue has prospective application 
                                               
362 Panel Report, para.  7.469.  
363 Panel Report, paras.  7.471.  
364 Panel Report, paras.  7.469 and 7.472.  
365 Panel Report, para.  7.472.  
366 Panel Report, para.  7.474 (referring to Appellate  Body Reports, Argentina – Import Measures , 
paras.  5.181 -5.182).  
367 Panel Report, para.  7.474. The Panel a lso referred to the Appellate  Body's statement in Argentina – 
Import Measures  that "nothing in the [p]anel's reasoning indicates that it considered the TRRs measure to 
have the same level of security and predictability of continuation into the future typic ally associated with rules 
or norms". (Ibid. (quoting Appellate  Body Reports, Argentina – Import Measures , para.  5.182) ) 
368 Panel Report, para.  7.476 (quoting Appellate  Body Reports, Argentina – Import Measures , 
para. 5.182 ; and referring to Appellate  Body Report, US – Zeroing (EC) , para. 198). See also Panel Report, 
paras.  7.470 and 7.472.  
369 Panel Report, para.  7.472.  
370 Panel Report, para.  7.475.  
371 Panel Report, para.  7.476.  
372 Panel Report, para.  7.476.  
373 Panel Report, para.  7.475.  
374 Panel Report, para.  7.475. (emphasis original)  
375 Panel Report, para.  7.476. The Panel also stated that the USDOC's p ractice emanating from these 
73 determinations does not provide the level of security and predictability of continuation into the future 
typically associated with rules or norms. ( Ibid., para.  7.475 ( referring to  Appellate  Body Reports, Argentina – 
Import Measures , para.  5.182) ) WT/DS471/AB/R  
 
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  "would  amount to speculation – albeit well -grounded – about the prospective application of the 
alleged AFA  Norm; certainty thereof, however, is not supported by record evidence."376 The Panel 
thus concluded that the evidence on the record does not support China's assertion that the 
AFA Norm has prospecti ve application. In light of this finding, the Panel did not consider it 
necessary to assess whether the AFA  Norm has general application.377 
5.121.   Having found that China had not demonstrated that the AFA  Norm constitutes a norm of 
general and prospective applicat ion, the Panel did not examine whether this alleged norm is 
"as such" inconsistent with Article  6.8 and paragraph  7 of Annex  II to the Anti -Dumping 
Agreement.378 
5.2.2   Rules or norms of general and prospective application  
5.122.   China's appeal calls for us to examine the  requirements for a measure to be considered a 
rule or norm of general and prospective application that can be the subject of an "as such" 
challenge in WTO dispute settlement. At the outset, we observe that Articles  3.3, 4.4, and 6.2 of 
the DSU refer to "m easures" that are challenged in WTO  dispute settlement. The Appellate Body 
has explained that, in principle, any act or omission attributable to a WTO Member can be a 
measure of that Member for  the purposes of dispute settlement proceedings .379 Thus, it is c lear 
that a broad range of measures can be challenged in WTO dispute settlement.380 
5.123.   The specific measure at issue, whether it is written or unwritten, and how it is described, 
characterized, and challenged by a complainant, will inform the kind of evidence a  complainant is 
required to submit and the elements that it must prove in order to establish the existence of the 
measure challenged.381 The manner in  which a complainant challenges a measure affects the type 
of analysis conducted in WTO dispute settlement a nd the possible recommendations and rulings of 
the DSB.  
5.124.   The Appellate Body has noted that the distinction between "as such" and "as applied" 
challenges neither governs the definition of a measure for purposes of WTO dispute settlement, 
nor defines exhaust ively the types of measures susceptible to challenge.382 Rather, this distinction 
serves as an analytical tool to facilitate the understanding of the nature of a measure at issue. 
Measures need not fit s quarely within one of these two  categories in order to be susceptible to 
challenge in WTO dispute settlement.383 For example, in US – Continued Zeroing , the 
Appellate  Body considered that the measure at issue was "ongoing conduct " that consisted of the 
continued use of the zeroing methodology in successive admin istrative reviews by which duties in 
each of the 18  cases  identified  were maintained.384 In EC and certain member States – Large Civil 
Aircraft , the Appellate  Body did not exclude the possibility that "concerted action or practice" could 
be susceptible to ch allenge in WTO  dispute settlement.385 In Argentina – Import Measures , the 
measure at issue comprised several individual trade -related requirements operating together as 
part of a single measure in pursuit of a "managed trade" policy. That measure was conside red to 
have systema tic and continued application.386 
5.125.   Thus, in WTO dispute settlement, a challenge may be raised with respect to measures that 
are neither individual instance s of application of a measure , nor rule s or norm s of general and 
prospective applicat ion. A measure may share certain attributes with both. "Measures" need not be 
compartmentalized into categories in order to be challengeable in WTO dispute settlement. T he 
                                               
376 Panel Report, para. 7.476.  
377 Panel Report, para.  7.476. See also  paras.  7.477 -7.479 and 8.1.d.ii.  
378 Panel Report, para s. 7.479  and 8.1.d. ii. 
379 Appellate Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 81.  
380 See Appellate Body Reports, Guatemala – Cement I , fn 47 to para.  69; EC and certain member 
States – Large Civil Aircraft , para.  794; and Argentina – Import Measures , paras. 5.106 and 5.109.  
381 Appellate Body Reports, Argentina – Import Measures , paras.  5.108 and 5.110.  
382 Appellate Body Reports, US – Continued Zeroing , para. 179; Argentina – Import Measures , 
para. 5.102.  
383 Appellate Body Reports, US – Continued Zeroing , para. 179; Argentina – Import Measures , 
para. 5.102.  
384 Appellate Body Report, US – Continued Zeroing , para s. 181 and 183 . 
385 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para.  794. 
386 Appellate  Body Reports, Argentina – Import Me asures , paras.  5.126, 5.141, 5.143, and 5.145 -5.146.  WT/DS471/AB/R  
 
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  term "measure " in Articles  3.3, 4.4, and 6.2 of the DSU is sufficiently broad to enc ompass various 
types of acts or omissions attributable to a WTO  Member.  
5.126.   This appeal concerns an "as such" challenge to an unwritten rule or norm of general and 
prospective application. The Appellate Body has explained that the rationale for allowing 
challe nges against measures "as such" is that " the disciplines of the GATT and the WTO, as well as 
the dispute settlement system, are intended to protect not only existing trade but also the security 
and predictability needed to conduct future trade ."387 This obje ctive " would be frustrated if 
instruments setting out rules or nor ms inconsistent with a Member's  obligations could not be 
brought before a panel … irrespective of any par ticular instance of application of such rules or 
norms."388 
5.127.   When bringing an "as such" challenge against such a rule or norm, a complaining party 
must clearly establish that the rule or norm is attributable to the responding Member; the precise 
content of the rule or norm; and that the rule or norm has general and prospective application.389 
Ascertaining whether the rule or norm has general and prospective application  is necessary 
because "as such" challenges seek to prevent the responding Member from engaging in certain 
conduct in general and in the future, as opposed to addressing particular instances of application 
that are occurring or have occurred.  The Appellate Body has clarified that both written and 
unwritten measures can be  the subject of a challenge in WTO  dispute settlement.390 When written 
rules or norms are challenged "as such", the precise content, attribution , as well as the general 
and prospective nature of the rule or norm may be readily discernible from the document itself, its 
official character, or the manner in which it was elaborated, adopted , or enacted. When  an 
unwritten ru le or norm is challenged "as such", a complainant will be required to adduce 
arguments and supporting evidence  to demonstrate the precise content, attribution , and general 
and prospective nature of the rule or norm.  
5.128.   In the present dispute , the participants  have not appealed the Panel findings concerning 
the precise content of the unwritten AFA  Norm  and that it is attributable to the United States.391 
We therefore focus our analysis on the elements of "general application" and "prospective 
application".  
5.129.   In US ‒ Zeroing (EC) , the Appellate Body agreed with the panel that the measure at issue 
in that dispute – the zeroing methodology – had general and prospective application. The 
Appellate Body relied  on, inter alia , the facts that the zeroing methodology was inv ariably applied 
for an extended period of time ; that instances of non -application had not been identified ; that it 
was part of a standard program ; and that it reflected a deliberate policy.392 In US – Oil Country 
Tubular Goods Sunset Reviews , the Appellate  Body found that the United States' Sunset Policy 
Bulletin had "normative value " because  it provided "administrative guidance " and created 
"expectations among the public and among private actors" ; had "general application" because  it 
was to apply  to "all the  sunset reviews  conducted in the United States" ; and had " prospective 
application"  because  it was "intended to apply to sunset reviews taking place after its issuance ".393 
Therefore, while certain elements may contribute to demonstrating that a measure has b oth 
general and prospective application, other elements may speak more specifically to the general or 
prospective character of the measure.  
5.130.   We now turn to the meaning of "general application" of rules or norms that can be 
challenged "as such" in WTO disput e settlement. In so doing, we draw guidance from the term 
"general application" in Articles  X:1 and X:2 of the GATT  1994.394 The Appellate Body's reading of 
the term as it appears in those provisions is relevant to the notion of "general application" as it 
                                               
387 Appellate  Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 82.  
388 Appellate  Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 82. (fn  omitted)  
389 Appellate Body Reports, US – Zeroing (EC) , para.  198; Argentina – Import Measures , para.  5.104.  
390 Appellate  Body Report, US – Zeroing (EC) , para.  193. 
391 See Panel Report, paras. 7.455 -7.456.  
392 Appellate Body Report, US – Zeroing (EC) , paras. 201 -204. 
393 Appellate  Body Report, US – Oil Country Tubular Goods Sunset Reviews , para.  187. (fn  omitted)  
394 Article X:1 of the GATT 1994 refers to "[l] aws, regulations, judicial decisions and administrative 
rulings of general application ", and Article X:2 of the GATT 1994 refers to " measure [s] of general application".  
In this respect, we observe that Article  X of the GATT  1994 concerns the "[p]ublication and [a]dministration of 
[t]rade [r]egulations", which fall into the broader category of measures of general and prospective application 
that ca n be challenged in WTO dispute settlement.  WT/DS471/AB/R  
 
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  characterizes rules or norms that can be the subject of an "as such" challenge in WTO dispute 
settlement. In US – Underwear , the Appellate  Body interpreted the term "measures of general 
application "395 in Article  X:2 of the GATT  1994. It considered that, whil e the safeguard measure at 
issue "was addressed to particular, i. e. named, exporting Members …[,] the measure did not try to 
become specific as to the individual persons or entities engaged in exporting the specified textile 
or clothing items to the import ing Member and hence affected by the proposed restraint" .396 
In EC ‒ Poultry , the Appellate Body interpreted the phrase "[l] aws, regulations, judicial decisions 
and administrative rulings of general application "397 in Article  X:1 of the GATT  1994. It considered 
that, while a measure addressed to a specific company or appli ed to a specific shipment would not 
qualify as a measure of general application, a measure would be of general application to the 
extent that it "affects an unidentified number of economic operators".398 We therefore consider 
that a rule or norm has "general  application" to the extent that it affects an unidentified number of 
economic operators.  
5.131.   In relation to the meaning of "prospective application", we note that China and the 
United  States disagree on the requirements for demonstrating that a measure has p rospective 
application. China argues that a rule or norm has prospective application where conduct is likely, 
predictable, possible to anticipate, or can be reasonably expected to continue399, and that a 
complainant is not required to show with "certainty" t hat a measure will continue to apply in the 
future.400 The United States contends that the prospective application of a measure is determined 
by examining " whether the measure in question was intended to apply in the future , including 
whether the measure ref lects a deliberate policy that goes beyond mere repetition of conduct. "401 
5.132.   The Appellate Body has explained that a rule or norm has "prospective application" to the 
extent that it applies in the future.402 In this respect, we do not consider that in order to 
demonstrate prospective application, a complainant is required to show with "certainty" that a 
given measure will apply in future situations.403 A complainant would not be able to show 
"certainty" of future application, because any measure, including rules or  norms, written or 
unwritten, may be modified or withdrawn in the future. The mere possibility that a rule or norm 
may be modified or withdrawn , however,  does not remove the prospective nature of that measure. 
Rather, where prospective application is not s ufficiently clear from the constitutive elements of the 
rule or norm, it may be demonstrated through  a number of factors. The existence of an underlying 
policy , which is implemented by the rule or norm , is a relevant element in establishing the 
prospective  nature of that rule or norm.404 In addition, the more frequent, consistent, and 
extended the repetition of conduct is, the more probative such conduct will be in revealing, 
together with other factors, such an underlying policy.405 In this regard, the Appella te Body has 
explained that relevant evidence may include proof of the systematic application of the challenged 
rule or norm.406 Where ascertainable, the design, architecture, and structure of the rule or norm 
may also be relevant in identifying the underlyin g policy and  prospective nature of that rule or 
norm. In addition, the extent to which a particular rule or norm provides administrative guidance 
for future conduct  and the expectations it creates among economic operators that it will be applied 
in the fut ure, are also relevant in establishing the prospective nature of that rule or norm.407  
5.133.   The examination of whether a rule or norm has general and prospective application may 
vary from case to case. We do not exclude that additional factors  may be relevant in  this 
assessment depending on the particular facts and specific circumstances  of the case at hand.  
                                               
395 Emphasis added.  
396 Appellate  Body Report, US – Underwear , p. 21, DSR 1997:I, p. 29.  
397 Emphasis added.  
398 Appellate  Body Report, EC – Poultry , para. 113 (quoting Panel Report, US – Underwear , para. 7.65).  
399 China's  appellant's submission, paras. 318 and 359.  
400 China's appellant's submission, paras. 318, 360, 364, and 367.  
401 United States' appellee's submission, para. 351.  
402 Appellate  Body Reports, US – Oil Country Tubular Goods Sunset Reviews , paras.  172 and 187; 
US ‒ Corrosion -Resistant Steel Sunset Review , para. 82 . 
403 See China's appellant's submission, paras.  294 and 364.  
404 See Appellate  Body Reports,  US – Zeroing (EC) , paras. 201 and 204 -205; and US ‒ Zeroing (Japan) , 
paras. 85 and 88 (quoting Panel Report,  US - Zeroing (Japan) , para.  7.52).  
405 See Appellate  Body Reports, US – Zeroing (EC) , para.  204; and US – Zeroing (Japan) , para.  85 
(quoting Panel Report,  US – Zeroing (Japan) , para. 7.52).  
406 Appellate  Body Report, US – Zeroing (EC) , para.  198. 
407 Appellate  Body R eport, US – Oil Country Tubular Goods Sunset Reviews , para.  187. WT/DS471/AB/R  
 
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  5.2.3   Whether the Panel erred in finding that China ha s not demonstrated that the AFA 
Norm is a norm of general and prospective application  
5.134.   China claims that the  Panel erred in finding that it has not demonstrated that the 
AFA Norm is a norm of general and prospective application . According to China, the Panel 
erroneously required that a complaining party must demonstrate with "certainty" that a "rule or 
norm" wil l be applied in the future for it to have "prospective application" and thus be 
challengeable "as such" in WTO dispute settlement.408 China  contends that, across all types of 
measures that have been challenged in past disputes, including rules or norms of ge neral and 
prospective application, panels and the Appellate  Body have not adopted a "legal standard of 
'certainty'"409 in relation to either written or unwritten measures.410 China also contends that the 
Panel's examination of the AFA  Norm is at odds with the Panel's examination of the Single Rate 
Presumption.411 This is because, in relation to the Single Rate Presumption, the Panel did not 
require China to demonstrate with "certainty" that this rule or norm will be applied in the future for 
it to have prospectiv e application.412 China observes that, in relation to the AFA  Norm, the Panel 
recalled the Appellate Body's statement that an unwritten rule or norm must display the "requisite " 
or "necessary level  of security and predictability of continuation into the futu re typically associated 
with rules or norms" .413 China contends that the Panel considered this "necessary level" to be 
"certainty".414 China submits that , in reaching this conclusion, the Panel erred in the interpretation 
and application of Articles 3.3 and 6. 2 of the DSU.415 
5.135.   The United States responds that the Panel did not rely on a "legal standard of 'certainty '" 
when examining the prospective nature of the alleged AFA Norm.416 The United States observes 
that China's argument relies only on " one instance in whic h the Panel employed the word 
'certainty ' with respect to the alleged AFA Norm" .417 The United States submits that, in past 
disputes, establishing the prospective application of  a rule or norm was done by examining 
"whether the measure in question was intend ed to apply in the future, including whether the 
measure reflects a deliberate policy that goes beyond mere  repetition of conduct."418 In the 
United  States' view, the Panel applied the correct legal standard to determine the prospective 
application of the al leged AFA  Norm . This is because the Panel considered that prospective 
application can be established to the extent that the articulation or application of a rule or norm 
demonstrates that it is intended to be applied in the future.419 In addition, t he United  States 
contrasts the Panel's findings concerning the alleged AFA Norm with that of the Single Rate 
Presumption . The United States  suggests that , "[i]n comparison to the evidence on the Single Rate 
Presumption, which the Panel found contained multiple sour ces articulating the prospective nature 
of the challenged measure, the lack of similar articulation of the alleged AFA Norm in any of the 
evidence advanced by China was key to the Panel 's finding that the alleged norm does not possess 
prospective applicati on."420 The United States suggests that "China's grievance is essentially that 
the Panel did not find China' s evidence to be sufficient to support its allegation" .421 Given that 
China has not brought a claim under Article  11 of the DSU, the United States reque sts us to 
"decline to rule on China's arguments".422 
5.136.   Before turning to China's claims concerning the AFA Norm, the Panel made findings 
concerning the Single Rate Presumption, which it determined to be a rule or norm of general and 
                                               
408 China's appellant's submission, paras.  212, 227 -231, 270, 387, 393, 395 -396, 399, and 414.  
409 China 's appellant's submission, para . 360. 
410 China's appellant's submission, paras.  212, 229, an d 360.  
411 The Single Rate Presumption is described in paragraph 1.4.  of this Report.  
412 China's appellant's submission, para. 229.  
413 China's appellant's submission, para. 211.  
414 China's appellant's submission, paras . 211-212. 
415 China's appellant's submission, para.  202. 
416 United States' appellee's submission, para. 339.  
417 United States' appellee's submission, para. 339.  
418 United States' appellee's submission, para.  351. The United States submits that, when examining 
whether the measure in question was intended to apply in the future, panels and the Appellate Body have 
often relied on the responding Member's own characterization of the measure in question. (Ibid.)  
419 United States' appellee's submission, para. 340.  
420 United States ' appellee's submission, para. 362 (referring to Panel Report, para s. 7.337  and 7.447 
(fns omitted)) . 
421 United States' appellee's submission, para. 314.  
422 United States' appellee's submission, para.  370. WT/DS471/AB/R  
 
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  prospective application challengeable  "as such" in WTO dispute settlement.423 Furthermore, in 
assessing whether the AFA Norm has prospective application, the Panel compared the evidence 
pertaining to the future application of the AFA Norm with its earlier findings regarding the 
Single  Rate Presumption.424 For this reason, we find it appropriate to consider the Panel' s findings 
regarding the Single  Rate Presumption in order to elucidate the Panel's understanding of when a 
rule or norm has prospective application.  
5.137.   The Panel considered that the USDOC  Antidumping Manual and USDOC Policy Bulletin 
No. 05.1425 support China's argument that the Single Rate Presumption has general and 
prospective application "as a practice or policy ".426 In addition, for the Panel, the US CAFC and 
USCIT decisions , and the anti -dumping determinations on the record  show that the Single Rate 
Presumption forms part of a "USDOC policy ".427 Finally, the Panel observed that "any legal 
instrument, including laws and regulations, may be subject to repeal or amendment in the futur e", 
but that this "does not necessarily remove the general and prospective nature of such legal 
instruments at a given point in time".428 
5.138.   As noted earlier, a rule or norm has "prospective application" to the extent that it applies 
in the future.429 A complaina nt, however,  cannot be required to show  with "certainty" that a rule or 
norm  will apply in the future  because a ny measure, including rules or norms, may be modified or 
withdrawn in the future, and this mere possibility does not remove the prospective natur e of a 
measure . Rather, as explained above, where prospective application is not sufficiently clear from 
the constitutive elements of a rule or norm, it may be demonstrated through a number of factors. 
We consider that the Panel did not require China to demonstrate w ith "certainty" that the 
Single  Rate Presumption will be applied in the future . This aspect of the Panel's assessment of the 
Single Rate Presumption is in line with our understanding of "prospective application" , as explained 
earlier . 
5.139.   In relatio n to the AFA  Norm, the Panel noted that the USDOC described the selection of the 
highest margin in the petition or the highest rate calculated as a "practice", "standard practice", or 
"normal practice", which has consistently been upheld by the USCIT and t he USCAFC.430 For the 
Panel, the fact that the USDOC referred to its practice in every determination indicates that the 
conduct reflected an invariable and standard approach whenever the USDOC found that an 
NME-wide entity failed to cooperate to the best of its ability.431 The Panel considered that the 
USDOC's actions in these determinations reflect more than mere repetition of conduct.432 In the 
Panel's view, this "may even constitute evidence that the USDOC is likely to engage in that same 
conduct in the future ".433 The Panel also did not exclude that "the invariable application of the 
alleged AFA  Norm over several years might create the expectation" that the USDOC may again 
                                               
423 Panel Report, para. 7.339.  
424 Panel Report, para. 7 .467.  
425 USDOC Policy Bulletin No. 05.1 (Panel Exhibit CHN -109).  
426 Panel Report, para. 7.324. For the Panel, the repeated use of the term "will" in the USDOC 
Policy Bulletin No.  05.1 was indicative of conduct that will be applied in the future . (Ibid. , para. 7.317 ) The 
Panel also considered that "the purpose of  [the USDOC Antidumping Manual]  is to provide USDOC officials with 
'internal training and guidance ' on the practices or current policies set out therein, including the Single Rate 
Presumption", and th at these practices or policies are t o be applied in all future anti -dumping proceedings 
involving NME countries.  (Ibid. , para. 7.322 ) 
427 Panel Report, para. 7.326  (referring to USCIT decisions , Jiangsu v. United States  (Panel 
Exhibit  CHN-123), pp. 1310 -1312; East Sea Seafoods v. Unite d States  (Panel Exhibit  CHN-134), p.  1354; and 
Peer Bearing v. United States  (Panel Exhibit  CHN-163), p.  1325; and USCAFC  decision , Huaiyin v.  United 
States  (Panel Exhibit  CHN-132), p. 1378 ), and para.  7.328 ( referring to Bicycl es, final AD determination  
(Panel  Exhibit  CHN-114), p.  19036; 1996-1997 administrative review in Sebacic Acid  (Panel Exhibit  CHN-126), 
p. 17368; 2005-2006 administrative review in Bags (Panel Exhibit  CHN-272), p.  51590; and 2006-2007 
administrative review in Bags (Panel Exhibit  CHN-274), p. 52284).  
428 Panel Report, para.  7.323.  
429 Appellate  Body Reports, US – Oil Country Tubular Goods Sunset Reviews , paras.  172 and 187; 
US ‒ Corrosion -Resistant Steel Sunset Review , para. 82 . 
430 Panel Report, para.  7.469.  
431 Panel Report, para.  7.472.  
432 Panel Report, para.  7.472.  
433 Panel Report, para.  7.475.  WT/DS471/AB/R  
 
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  follow this course of action.434 In addition, the Panel did "not disagree that prior practic e may 
provide the USDOC with administrative guidance for future action."435 
5.140.   Relying on the Appellate Body's reasoning in Argentina – Import Measures , the Panel  
considered that not every norm that may continue to be applied in the future will amount to a 
prospective measure.436 Rather, according to the Panel, the future application of a measure must 
meet a "certain degree of security and predictability typically associated with rules or norms" .437 
Thus, in the Panel's view, it was required to assess whether the ev idence on the record establishes 
that the future application of the AFA Norm achieves such a level of security and predictability.438 
In this respect , the Panel was not convinced that the practice reflected in the 73  anti-dumping 
determinations was sufficien t to demonstrate prospective application of the AFA  Norm439, because 
"it [did] not demonstrate that the USDOC will continue to follow the same course of action in the 
future."440 The Panel further considered that the fact that e conomic operators could reasonab ly 
expect certain conduct, or that the USDOC may find guidance in previous determinations, is 
insufficient to establish the AFA Norm's prospective application with the necessary level of security 
and predictability.441 Consequently, the Panel considered that , in relation to the AFA Norm , the 
evidence amounted to "speculation – albeit well -grounded – about the prospective application of 
the alleged AFA  Norm; certainty thereof, however, is not supported by record evidence."442 
5.141.   We consider that, when compared to t he Panel's analysis of the Single  Rate Presumption, 
the Panel applied a different standard to examine the prospective nature of the AFA  Norm. In 
relation to both measures challenged by China, the Panel concluded that there was evidence on 
record of a consi stent and standard USDOC practice, over several years, in relation to 
anti-dumping proceedings involving NME countries . For the Single Rate Presumption, the Panel 
also noted that the USCAFC and USCIT decisions  on the record  considered the USDOC practice or  
policy to be " settled ", "established and judicially affirmed ", "not in conflict with the Statute ", and 
"to some extent, sanctioned ", "upheld ", or "approv[ed by the USCAFC] ".443 For the AFA  Norm, the 
Panel considered that the USDOC's actions reflect more tha n mere repetition of conduct444, and 
noted that the USDOC described the conduct at issue as having been consistently upheld by the 
USCIT and the USCAFC.445 We note that the Panel considered that the amount of evidence 
revealing the USDOC's practice was higher in relation to the Single Rate Presumption when 
compared to the evidence concerning the AFA  Norm. Notwithstanding the difference in the amount 
of evidence, the Panel required something more  in relation to the legal standard applied to the 
AFA Norm. In that  respect, the Panel considered that "the future application of a measure must 
achieve a certain degree of security and predictability typically associated with rules or norms ."446 
The Panel, however, did not identify precisely what this level or degree is , or how a determination 
is to be made as to whether a rule or norm  achieves it . The Panel then found that "certainty" of 
the prospective or future application of the AFA Norm was not supported by record evidence.447 In 
                                               
434 Panel Report, para.  7.476.  
435 Panel Report, para.  7.476.  
436 Panel Report, para.  7.474 (referring to Appellate  Body Reports, Argentina – Import Measures , 
paras.  5.181 -5.182).  
437 Panel Report, para.  7.474.  
438 Panel Report, para.  7.476 ( referring to  Appellate  Body Reports, Argentina – Import Measures , 
para. 5.182 ; and US – Zeroing (EC) , para. 19 8). See also Panel Report, paras.  7.470 and 7.472.  
439 Panel Report, para.  7.475.  
440 Panel Report, para.  7.475. (emphasis original)  
441 Panel Report, para.  7.476.  
442 Panel Report, para. 7.476.  
443 Panel Report, para. 7.326.  (fns omitted)  
444 Panel Report, para.  7.472. 
445 Panel Report, para.  7.469.  
446 Panel Report, para. 7.474  (referring to Appellate Body Reports, Argentina – Import Measures , 
para. 5.182 ). The Appellate Body in Argentina – Import Measures  did not purport to articulate the legal 
requirements for establis hing the "prospective application" of a "rule or norm" . Rather, the Appellate Body 
statement referred to by the Panel was made in the context of a claim under Article  11 of the DSU by 
Argentina pursuant to which the panel in that dispute would have "uncrit ically accepted the complainants' 
characterization of the content of the alleged TRRs measure and failed to ensure that its findings were based 
on the record evidence and supported by sufficient reasoning" . (Appellate Body Reports, Argentina – Import 
Measu res, para.  5.162)  
447 Panel Report, para. 7.476. In relation to the Single Rate presumption, the Panel did not require that 
China demonstrate with "certainty" that the measure will be applied in the future for it to have "prospective 
application". T he Panel expressly noted that any legal instrument, including laws and regulations, may be WT/DS471/AB/R  
 
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  our view, the Panel's reasoning is circul ar because it suggests that the prospective application of a 
rule or norm would be found to exist if it corresponds to the level or degree of continuation into 
the future of a rule or norm.   
5.142.   In addition, as noted earlier, a complainant is not required to s how with "certainty" that a 
given measure will apply in future situations for that measure to have prospective application. 
Thus, by requiring "certainty" of future applic ation, the Panel's  examination of the prospective 
nature of the AFA  Norm is at odd s with the legal standard for establish ing the prospective 
application of a rule or norm.448  
5.143.   For the reasons above, we conclude that the Panel erred in finding that China ha s not 
demonstrated that the AFA Norm has "prospective application" and is therefore a norm of general 
and prospective application. Consequently, we reverse  the Panel's findings in paragraphs 7.479  
and 8.1.d.ii of its Report.  
5.2.4   China's request for completion  – general and prospective application  
5.144.   Having reversed the Panel's finding that China ha s not demonstrated that the AFA Norm is 
a norm of general and prospective application , we turn to China's request for us to complete the 
analysis and find that the AFA  Norm has general and prospective application. For China, the 
AFA Norm has general applic ation as it does not relate to "specific economic operators, but rather 
to the general class of economic operators " that the USDOC could potentially include within an 
NME-wide entity.449 China also contends that applying the correct legal standard to the rel evant 
factual findings of the Panel demonstrates that the AFA Norm has prospective application.450 
5.145.   The United States responds that we should not complete the analysis and find that the 
alleged AFA Norm has general application , given the lack of necessary fin dings by the Panel and 
uncontested facts on the record.451 In particular, t he United States contends that the Panel Report 
lacks findings on the scope of application of the alleged AFA  Norm, and that the evidence 
submitted by China was contested before the P anel.452 In addition, the United States contends that 
the evidence before the Panel was insufficient to demonstrate that the alleged AFA  Norm has 
prospective application.453 
5.146.   In previous disputes, the Appellate  Body has completed the legal analysis with a view to 
facilitating the prompt settlement and effective resolution of disputes.454 The Appellate  Body has 
done so where the factual findings in the panel report, undisputed facts on the panel record, and 
admitted facts provided it with a sufficient basis for con ducting its own analysis.455 The 
Appellate  Body has declined to complete the legal analysis in light of the complexity of issues, the 
absence of full exploration of issues before the panel, and considerations pertaining to parties' due 
process rights.456 Moreo ver, the Appellate  Body has declined to complete the legal analysis where 
doing so was not required to resolve the dispute.457  
5.147.   In examining below whether the AFA Norm has general and prospective application, we 
also assess whether the conditions for us to c omplete the analysis are present in this dispute . We 
                                                                                                                                               
subject to repeal or amendment in the future, and this would not necessarily remove the prospective nature of 
that instrument. ( Ibid., para.  7.323)  
448 Contrary to the United S tates' argument, we do not consider that China's claim concerns the Panel's 
assessment of the evidence and thus should have been brought under Article  11 of the DSU. 
(See United  States' appellee's submission, paras.  367-370) Rather, as explained above, we find error with the 
standard applied by the Panel to the AFA  Norm . 
449 China's appellant's submission, para.  432. 
450 China's appellant's submission, paras. 416 and 419.  
451 United States' appellee's submission, paras. 416 and 418.  
452 United States' appellee's su bmission, paras. 425 and 431.  
453 United States' appellee's submission, paras.  361-364. 
454 See Appellate  Body Reports, EC and certain member States – Large Civil Aircraft , para.  1178; 
US ‒ Large Civil Aircraft (2nd complaint) , para.  1351;  and EC – Asbestos , para. 78.  
455 See Appellate Body Reports, Australia – Salmon , paras. 209, 241, and 255; Korea – Dairy , paras. 91 
and 102; US – Large Civil Aircraft (2nd complaint) , para. 653; US – Section 211 Appropriations Act , para. 343; 
and EC – Asbestos , paras. 78 -79. 
456 See Appellate  Body Reports, Canada – Renewable Energy / Canada – Feed-in Tariff Program , 
para. 5.224; and EC ‒ Seal Products , paras. 5.63 and 5.69.  
457 Appellate  Body Report, US – Steel Safeguards , para. 431.  WT/DS471/AB/R  
 
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  first examine whether the AFA  Norm has "general application". As noted earlier, a rule or norm will 
have "general application" to the extent that it affects an unidentified number of economic 
operators, instead of economic operator s specified in that rule or norm.458  
5.148.   China contends that the AFA  Norm has general application by relying on certain statements 
made by the Panel pertaining to the AFA  Norm and the Single Rate Presumption. According to 
China, the AFA Norm concerns the USDOC's determination of the rate for an NME -wide entity that 
is identified by the USDOC through operation of the Single Rate Presumption.459 China notes that 
the Panel found that, under the Single Rate Presumption, "the USDOC presumpti vely includes 
within the NME -wide entity all producers/exporters of a product under consideration in 
anti-dumping proceedings from a country that the United  States considers to be a non -market 
economy ."460 In addition, referring to the 73 anti -dumping determ inations it submitted to the 
Panel, China contends that the AFA  Norm applies in all investigations and reviews that involve 
imports from an NME country.461 China contends that the AFA  Norm concerns the general class of 
economic operators that the USDOC could  potentially include within an NME -wide entity.462 
5.149.   The United  States contends that the alleged AFA  Norm does not have general application 
because no evidence or findings demonstrate that it affects an unidentified number of economic 
operators.463 The United  States submits that the alleged AFA  Norm merely "constitutes particular 
treatment accorded to the China -government entity in an antidumping proceeding involving 
uncooperative exporters or producers that are part of the China -government entity."464 
5.150.   Before the P anel, China described the precise content of the AFA Norm in the following 
manner:  
[W]henever [the] USDOC considers that an NME -wide entity has failed to cooperate to 
the best of its ability, it systematically makes an adverse inference and selects, to 
determine the rate for the NME -wide entity, facts that are adverse  to the interests of 
that fictional entity and each of the producers/exporters included within it.465 
5.151.   The Panel found that the 73 anti -dumping determinations on  the record demonstrate the 
precise  content of the AFA  Norm as described by China. According to the Panel, these 
determinations show that, "whenever the USDOC made a finding that an NME -wide entity failed to 
cooperate to the best of its ability, it adopted adverse inferences and, in determi ning the duty rate 
for the NME -wide entity, selected facts from the record that were adverse to the interests of such 
entity, and the exporters included within it."466 
5.152.   The unappealed Panel finding concerning the precise content of the AFA  Norm suggests 
that this norm is a measure of general application because it affects an unidentified number of 
economic operators. The AFA  Norm is not addressed to  specified  economic operators, in the sense 
that the companies that will be subject to the AFA  Norm can be identi fied independently of any 
specific application of this norm. In addition, we note that the description of the precise content of 
the AFA  Norm does not impose any express limitation on the economic operators from an 
NME country that may be included within a n NME -wide entity that is subject to the AFA  Norm. This 
means, in our view, that any economic operator from an NME  country may be included within such 
an NME -wide entity.  
5.153.   We also note the connection between the AFA  Norm and the Single Rate Presumption. For  
the Panel, pursuant to the Single Rate Presumption, exporters in  USDOC  anti-dumping 
proceedings involving NME countries are presumed to form part of an NME -wide entity and are 
assigned a single anti -dumping duty rate, unless an exporter demonstrates, thro ugh the fulfilment 
                                               
458 See para.  5.130.    above.  
459 China's appellant's submission, para. 429 (referring to Panel Report, para. 7.480).  
460 China's appellant's submission, para. 430 (referring to Panel Report, para.  7.361).(emp hasis original)  
461 China's appellant's submission, para. 431  and fn 450 thereto . 
462 China's appellant's submission, para. 432.  
463 United  States' appellee's submission, para. 377.  
464 United  States' appellee's submission, para. 377.  
465 Panel Report, para.  7.422 ( quoting China's opening statement at the second  Panel  meeting, para.  63 
(emphasis original) ). 
466 Panel Report, para.  7.454.  WT/DS471/AB/R  
 
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  of the criteria set out in the Separate Rate Test467, an absence of de jure  and de facto 
governmental control over its export activities.468 The Panel found that the Single Rate 
Presumption has general application because it applies to all "NME exporters " involved in original 
investigations and administrative reviews conducted by the United States.469  
5.154.   We note that the application of the Single Rate Presumption may result in the 
establishment of NME -wide entities. In turn, these NME -wide entiti es will be subject to the 
AFA Norm where the USDOC finds that they have failed to cooperate to the best of their ability. 
Therefore, the AFA  Norm would apply to the same group of economic operators subject to the 
Single Rate Presumption – namely , economic operators from an NME  country involved in 
anti-dumping proceedings – whenever those economic operators do not demonstrate "an absence 
of de jure  and de facto governmental control over [their] export activities "470, and do not 
cooperate in the anti -dumping in vestigation to the best of their ability.471 Thus, we consider that 
the Panel's finding that the Single Rate Presumption is a measure of general application supports 
the conclusion that the AFA  Norm is also a measure of general application.472 
5.155.   Finally, the 73 anti-dumping determinations put on the record by China also support the 
conclusion that the AFA  Norm has general application. As noted above, the Panel considered that 
these determinations demonstrate the precise content of the AFA Norm as described by Chi na.473 
We note that the 73  determinations covered a wide range of products, from saw blades to steel 
cylinders , paper, shrimps, furniture , and photovoltaic cells474, and that the specific companies that 
were deemed part of the NME -wide entity also varied great ly. In our view, the wide and varied 
coverage of these determinations is a further indicator of the general scope of the AFA  Norm. This 
means that the AFA  Norm is not limited to specifi ed economic operators, but rather covers any 
economic operator that may  be included within an NME-wide entity subject to the AFA  Norm.  
5.156.   In light of the above, we conclude  that, based on the findings in the Panel Report and 
undisputed facts on the Panel record, the AFA  Norm has "general application" because  it affects an 
uniden tified number of economic operators.  
5.157.   We now turn to examine whether the AFA  Norm has "prospective  application". As noted 
earlier, a rule or norm will have "prospective  application" to the extent that it applies in the 
future.475 We also recall our above find ing that a complainant is not required to show with 
"certainty" that a given measure will continue to apply in the future. Rather, where prospective 
application is not sufficiently clear from the constitutive elements of a rule or norm, it may be 
demonstra ted by a number of factors . These include: the existence of an underlying policy that is 
implemented by the rule or norm; the systematic application of the challenged rule or norm; the 
design, architecture, and structure of the rule or norm; the extent to which the rule or norm 
provides administrative guidance for future conduct ; and the expectations it creates among 
economic operators that the rule or norm will be applied in the future.476 
5.158.   China identifies a number of findings  by the Panel  that it views as  being sufficient to show 
that the AFA  Norm has prospective application.477 The United States responds that the evidence 
                                               
467 The Separate Rate Test is described in paragraph 1.4.  of this Report.  
468 Panel Report, para.  7.311.  
469 Panel Report, para.  7.337.  
470 Panel Report, para.  7.311.  
471 Panel Report, para.  7.454.  
472 The group of economic operators subject to the Single Rate Presumption may not overlap entirely  
with the group of economic operators subject to the AFA Norm  where certa in economic operators demonstrate 
the absence of governmental control (and thus are excluded from the NME -wide entity), or where NME -wide 
entities are considered to cooperate  in the anti -dumping proceedings  to the best of their ability.  In our view, 
even w here the AFA  Norm applies to a sub -group of the economic operators subject to the Single Rate 
Presumption, the AFA  Norm would still apply to an unidentified number of economic operators because it is not 
possible to specify the economic operators affected by this norm outside the context of an application of the 
AFA Norm to a particular NME -wide entity.  
473 Panel Report, para.  7.454.  
474 See Panel Report, fns  875 and 876 to para.  7.444 . 
475 Appellate  Body Reports, US – Oil Country Tubular Goods Sunset Reviews , paras. 172 and 187; 
US ‒ Corrosion -Resistant Steel Sunset Review , para. 82 . 
476 See para.  5.132.    above.   
477 China's appellant's submission, para.  419. WT/DS471/AB/R  
 
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  before the Panel was insufficient to demonstrate that the alleged AFA  Norm has prospective 
application.478  
5.159.   We observe that, in the context o f examining whether China had demonstrated the precise 
content of the AFA  Norm, the Panel noted that, "[i]n the USDOC's view, selecting the highest 
margin from any segment of the proceedings [in cases of non -cooperation] 'reflects a common 
sense inference that the highest prior margin is the most probative evidence of current margins, 
because, if it were not so, the importer, knowing of the rule , would have produced current 
information showing the margin to be less' ."479 In the same context, the Panel also ob served that, 
in several determinations, the USDOC referred to its "practice" of ensuring that the margin is 
"sufficiently adverse as to effectuate the purpose of the facts available role to induce respondents 
to provide the [USDOC] with complete and accura te information in a timely manner".480 In our 
view, these Panel statements mean that the AFA  Norm implements, or is part of, an underlying 
policy. The implementation of an underlying policy is an element that supports the conclusion that 
the AFA  Norm has pro spective application.  
5.160.   The Panel also observed that , in several of the 73 USDOC anti -dumping determinations  on 
the record , the USDOC described the selection of the highest margin in the petition or the highest 
rate calculated in any segment of the proceedin gs as a "practice", "standard practice", or "normal 
practice", which has consistently been upheld by the USCIT and the USCAFC.481 We agree with the 
Panel  that the USDOC's conduct amounted to more than mere repetition of conduct.482 We also 
agree with the Panel  that the invariable application of the AFA  Norm during a period of over 
12 years might create expectations for economic operators that the norm will continue to apply in 
the future, and that prior practice may provide the USDOC with administrative guidanc e for future 
actions.483 As explained above, the systematic application of the challenged norm over an 
extended period of time, as well as the extent to which it provides administrative guidance for 
future conduct and creates expectations among economic oper ators, are all relevant factors  that 
indicate  the prospective application of a rule or norm.  
5.161.   We observe that, at the end of its analysis, the Panel introduced the requirement of 
"certainty" in relation to the prospective application  of the AFA  Norm . Purpo rting to apply this 
understanding to the facts in this dispute, the Panel state d that it was not persuaded that the 
practice reflected in the 73 anti -dumping determinations on the record is sufficient to demonstrate 
that "the USDOC will continue to follow the same course of action in the future."484 The Panel then 
concluded that the USDOC's practice emanating from these 73 determinations does not provide 
the "level of security and predictability of continuation into the future typically associated with 
rules or norms."485 We consider that the legal proposition advanced by the Panel at 
paragraphs  7.474 -7.475 of its Report, as well as the tentative language and the conclusion in 
paragraph 7.476 of its Report486, reflect the "certainty" requirement  in respect of 
                                               
478 United States' appellee's submission, paras.  361-364. 
479 Panel Report, para.  7.446. (emphasis adde d) The Panel identified instances where the USDOC 
referred to the fact that non -cooperating parties are "knowing of the rule ." (See Panel Report, fn.  886 to 
para. 7.446 (referring to 2011-2012 administrative review in Glycine  (Panel  Exhibit  CHN-433), p. 7;  
2007-2008 administrative review in Honey  (Panel Exhibit CHN -313), p.  68252; 2003-2004 administrative 
review in Porcelain -on-Steel Cooking Ware  (Panel Exhibit  CHN-441), p. 76029;  2005-2006 administrative 
review in Tapered Roller Bearings  (Panel Exhibit  CHN-438), p. 14080; and 2004-2005 administrative review in 
Freshwater Crawfish Tail Meat  (Panel Exhibit  CHN-439), p. 59436) ) We note that, in addition to the exhibits 
mentioned by the Panel, the USDOC referred to the same phrase  in three more determinations, namely , 
2011-2012 administrative review in Shrimp  (Panel Exhibit CHN-167), p. 8; 2012-2013 administrative review in 
Aluminum  (Panel Exhibit CHN -205), p. 18; and 2011 administrative review in Furniture  (Panel  Exhibit  
CHN-298), p. 14.  
480 Panel Report, para.  7.445.  
481 Panel Report, para s. 7.469  and 7.472 . 
482 Panel Report, para.  7.472. The Panel noted that "[t]he sample includes determinations covering a 
period of over 12 years, with the most recent determination dating from 7 July 2015 (the first administrative 
review in Solar)." (Ibid. (referring to 2012 -2013 administrative review in Solar (Panel Exhibit CHN -487))  
483 Panel Report, para s. 7.475 -7.476.  
484 Panel Report, para.  7.475. (emphasis original)  
485 Panel Report, para. 7.475.  
486 At paragraph  7.476 of its Report, w e note that the Panel employed somewhat tentative language in 
its statements – namely , the terms "[w]e do not exclude", "[w]e … do not disagree", "might" and "may". In 
particular, the Panel stated that it "[did] not exclude  that the invariable application of the alleged AFA Norm 
over several years might create  the expectation that, in a case where an NME -wide entity  is found to be 
non-cooperating, the USDOC may, again, draw adverse inferences and select facts that are adverse to the WT/DS471/AB/R  
 
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  "prospective  application " that the Panel applied to the AFA  Norm. We have concluded above that 
the Panel  erred by requiring China to demonstrate with "certainty" that the AFA  Norm will be 
applied in the future. In our view, the final part of the Panel's analys is – where the erroneous 
"certainty" requirement  is introduced  – does not detract from the Panel's earlier analysis 
concerning the factors relevant to establishing "prospective application " as properly interpreted.  
5.162.   Thus, the Panel made certain findings and  statements that lead to the conclusion that the 
AFA Norm has prospective  application, namely , that the AFA Norm was consistent ly and 
systematic ally applied by the USDOC over an extended period of time, and that the AFA  Norm 
implements an underlying policy , provides administrative guidance, and creates expectations 
among economic operators.  
5.163.   In light of the above, we conclude  that, based on the findings in the Panel Report and 
undisputed facts on the Panel record, the AFA  Norm has " prospective  application"  in the sense that 
it reflects a policy by the USDOC, it provides administrative guidance for future action, it generates 
expectations among economic operators, and it therefore will continue to be applied in the future . 
5.164.   In light of the unappealed Panel find ings that the AFA  Norm is attributable to the 
United  States487 and that its content corresponds to the description made by China488, and having 
found that the AFA Norm has both general and prospective application, we find that the AFA Norm 
is a rule or norm of  general and prospective application that can be challenged "as such" in 
WTO dispute settlement.  
5.2.5   China's request for completion  – Article  6.8 and paragraph  7 of Annex  II to the 
Anti-Dumping  Agreement  
5.165.   Having found that the AFA  Norm is a rule or norm of gen eral and prospective application, 
we turn to China's request for us to complete the analysis and find that the AFA  Norm is 
inconsistent with Article  6.8 and paragraph  7 of Annex  II to the Anti -Dumping  Agreement.489 China 
argues that the AFA  Norm prompts the USDOC to draw adverse inferences and select adverse 
facts as a response to a single factor – i.e. non -cooperation  – without establishing that such 
inferences can reasonably be drawn and that such facts are the "best" information available in the 
particular  circumstances .490 China submits that the inferences that can reasonably be drawn from 
all of the facts and circumstances may be different from the inferences that might arise from 
non-cooperation alone.491 For China, as a result of the AFA  Norm, the USDOC ove rlooks relevant 
procedural circumstances492, fails to exercise special circumspection, and fails to select the best 
information available, as required by Article  6.8 and paragraph  7 of Annex  II.493 
5.166.   The United  States responds that the Appellate  Body should dism iss China's request for 
completion because  China's claims under Article  6.8 and Annex  II are outside the Panel's terms of 
reference .494 The United States additionally submits that the Appellate  Body is not in a position to 
complete the analysis495, and that China's claims are without merit.496 The United States also 
contends that Appellate  Body findings on the AFA  Norm would not contribute to a positive 
resolution of this dispute .497 
5.167.   We first turn to the United States' argument concerning the Panel's terms of refer ence. 
The United  States submits that China's claims under Article  6.8 and Annex  II are outside the 
Panel's terms of reference because paragraph  26 of China's panel request does not identify the 
                                                                                                                                               
interests of the entity and the exporters within it ." The Panel also "[did] not disagree  that prior practice may 
provide the USDOC with administrative guidance for future action."  (Panel Report, para.  7.476 ) (emphasis 
added)  
487 Panel Report, para.  7.456.  
488 Panel Report, para.  7.454. 
489 China's appellant's submission, paras.  439, 509, and 637.  
490 China's appellant's submission, paras.  441 and 480 . 
491 China's appellant's submission, para s. 483-485. 
492 China's appellant's submission, para.  442. 
493 China's appellant's submission, paras.  441, 497, and 507-508. 
494 United  States ' appellee's submission, paras.  255, 379, 387, and 392.  
495 United  States' appellee's submission, paras.  256–257, 416, and 418.  
496 United  States' app ellee's submission, paras.  256, 399, 411 -412, and 438.  
497 United  States' ap pellee's submission, paras.  253 and 287 . WT/DS471/AB/R  
 
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  precise obligations alleged to have been breached by the Unite d States. Rather, it refers to an 
entire portion of the Anti -Dumping  Agreement – namely , Annex  II – that contains multiple 
obligations.498 
5.168.   The Appellate Body has explained that merely listing articles in the panel request may fall 
short of the standard in Ar ticle 6.2 of the DSU  where the listed articles establish multiple distinct 
obligations.499 In this respect, the Appellate Body has examined the narrative of a panel request 
when considering whether the panel request as a whole sufficiently identifies the par ticular 
obligations that form the legal basis of the complaint.500 
5.169.   We note that China's panel request alleges that "the United  States fails to use the best 
information available and special circumspection when basing its finding s on information from 
secondar y sources ."501 We observe that paragraph  7 of Annex  II to the Anti -Dumping  Agreement 
contains similar wording providing that, "[i]f the authorities have to base their findings … on 
information from a secondary source, … they should do so with special circums pection." 
Paragraph  7 is the only paragraph in Annex  II that concerns an investigating authority's obligation 
to exercise special circumspection when basing findings on information from a secondary source. 
Thus, we consider that the general reference by Ch ina to Annex  II, together with the narrative 
included in its panel request, provides "a brief summary of the legal basis of the complaint 
sufficient to present the problem clearly" that comports with the standard set forth in Article  6.2 of 
the DSU.  
5.170.   We now  turn to China's claim under Article  6.8 and paragraph  7 of Annex  II to the 
Anti-Dumping  Agreement. Article 6.8 provides : 
In cases in which any interested party refuses access to, or otherwise does not 
provide, necessary information within a reasonable per iod or significantly impedes the 
investigation, preliminary and final determinations, affirmative or negative, may be 
made on the basis of the facts available. The provisions of Annex  II shall be observed 
in the application of this paragraph.  
5.171.   Paragraph  7 of Annex  II provides : 
ANNEX  II 
BEST INFORMATION AVAILABLE IN TERMS OF  
PARAGRAPH  8 OF ARTICLE  6 
… 
7. If the authorities have to base their findings, including those with respect to 
normal value, on information from a secondary source, including the informat ion 
supplied in the application for the initiation of the investigation, they should do so with 
special circumspection. In such cases, the authorities should, where practicable, check 
the information from other independent sources at their disposal, such a s published 
price lists, official import statistics and customs returns, and from the information 
obtained from other interested parties during the investigation. It is clear, however, 
that if an interested party does not cooperate and thus relevant inform ation is being 
withheld from the authorities, this situation could lead to a result which is less 
favourable to the party than if the party did cooperate.  
                                               
498 United  States ' appellee's submission, para s. 255, 379 -380, 387, 390, and 392.  
499 Appellate  Body Report s, Korea – Dairy , para.  124; China – Raw Materials , para.  220. See also 
Appellate Body Reports,  EC ‒ Fasteners (China) , para.  598; and US – Carbon Steel , para.  130. 
500 Appellate  Body Report, US – Countervailing and Anti-Dumping  Measures (China) , paras.  4.25-4.30. 
The Appellate Body has noted that compliance with the requirements of Article  6.2 of the DSU must be 
determined on the merits of each case, having considered the panel request as a whole, and in light of 
attendant circumstances. ( Appellate  Body Report,  US – Carbon Steel , para.  127. See also Appellate Body 
Reports, EC and certain member States – Large Civil Aircraft , para.  787; and EC – Selected Customs Matters , 
para. 168) 
501 Request for the Establishment of a Panel by China, dated 13 February 2014, WT/DS471/5, para. 26.  WT/DS471/AB/R  
 
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  5.172.   The Appellate  Body has explained  that, when relying on facts available, an investigating 
authority mu st use those facts available that reasonably replace the necessary information that an 
interested party failed to provide with a view to arriving at an accurate determination.502 
Ascertaining which "facts available" reasonably replace the missing "necessary information" calls 
for a process of reasoning and evaluation of all substantiated facts on the record.503 In such a 
process, no substantiated facts on the record can be a priori  excluded from consideration.504 In 
addition, an investigating authority may be cal led upon to draw inferences from the evidence 
before it in order to reach a conclusion. The manner or procedural circumstances in which 
information is missing can be relevant to an investigating authority's use of "facts available".505 
Determinations under A rticle 6.8, however, must be based on "facts" that reasonably replace the 
missing "necessary information" in order to arrive at an accurate determination, and thus cannot 
be made on the basis of procedural circumstances alone.506  
5.173.   Article  6.8 provides that t he provisions in Annex  II shall be observed where an 
investigating authority resorts to the use of "facts available". Paragraph  7 of Annex  II sets forth 
that, if the authorities have to base their findings on information from a secondary source, 
including information supplied in the application for the initiation of an investigation, they should 
do so with special circumspection and, where practicable, check the information from other 
independent sources at their disposal. The Appellate  Body has considered that this provision is 
indicative that investigating authorities should undertake a process of reasoning and evaluation 
when selecting the facts available that reasonably replace the missing "necessary information" to 
arrive at an accurate determination.507 
5.174.   Given that the Panel neither explored nor made any finding s in relation to whether the 
AFA Norm is inconsistent with Article  6.8 and paragraph  7 of Annex  II, we examine whether there 
are sufficient findings in the Panel Report and undisputed facts on the Panel record for us to 
conduct our own analysis.  
5.175.   We recall that the Panel found that the 73 anti -dumping determinations put on the record 
by China demonstrate the precise content of the AFA Norm as described by China.508 Before the 
Panel, China described the  precise content of the AFA Norm in the following manner:  
[W]henever [the] USDOC considers that an NME -wide entity has failed to cooperate to 
the best of its ability, it systematically makes an adverse inference and selects, to 
determine the rate for the N ME-wide entity, facts that are adverse  to the interests of 
that fictional entity and each of the producers/exporters included within it.509 
                                               
502 Appellate  Body Reports, Mexico – Anti-Dumping Measures on Rice , paras.  293-295; US ‒ Carbon 
Steel (India) , para. 4.416.  Given the similarities between the text of Article  12.7 of the Agreement in Subsidies 
and Countervailing Measures (SCM  Agreement) and Article  6.8 of the Anti -Dumping  Agreement and that both 
provisions permit an  investigating authority, under certain circumstances, to fill in gaps in the information 
necessary to arrive at a conclusion as to dumping or subsidization and injury, we consider that the 
interpretation of Article  12.7 of the SCM  Agreement developed by t he Appellate Body in Mexico – Anti-Dumping 
Measures on Rice  and US – Carbon Steel (India)  is relevant to the understanding of the legal standard applied 
under Article  6.8 and paragraph  7 of Annex  II to the Anti -Dumping  Agreement.  
503 Appellate  Body Reports, Mexico – Anti-Dumping Measures on Rice , para.  294; US ‒ Carbon Steel 
(India) , para. 4.419.  
504 Appellate  Body Reports, Mexico – Anti-Dumping  Measures on Rice , para.   294; US – Carbon Steel 
(India) , para. 4.419.  
505 Appellate  Body Report,  US – Carbon Steel (Ind ia), para s. 4.420  and 4.422 . Article  6.13 of the 
Anti-Dumping  Agreement provides that investigating authorities "shall take due account of any difficulties 
experienced by interested parties", which includes interested parties that have not provided the "ne cessary 
information" referred to in Article  6.8 of the Anti -Dumping  Agreement. The kinds of difficulties experienced by 
interested parties to be taken into account by an investigating authority in having recourse to Article  6.8 could 
relate to, inter alia , the nature and availability of the evidence being sought, the adequacy of protection 
accorded by an investigating authority to the confidentiality of information, the time period provided to 
respond, and the extent or number of opportunities to respond. (Ibid., para. 4.422 ) 
506 Appellate  Body Report,  US – Carbon Steel (India) , paras.  4.422 and 4.468.  
507 Appellate  Body Report, US – Carbon Steel (India) , para. 4.425. See also Appellate Body Report, 
Mexico – Anti-Dumping  Measures on Rice , para.  289. 
508 Panel Rep ort, para.  7.454.  
509 Panel Report, para.  7.422 (quoting China's opening statement at the second  Panel  meeting, para.  63 
(emphasis original) ). WT/DS471/AB/R  
 
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  5.176.   As noted above, there are no findings by the Panel on whether the AFA  Norm is 
inconsistent with Article  6.8 and paragr aph 7 of Annex  II. In particular, the Panel did not explore 
much less make any findings concerning the process of reasoning and evaluation undertaken by 
the USDOC prior to selecting "facts available" to replace missing information.  
5.177.   On appeal, China argues  that the AFA  Norm prompts the USDOC to draw adverse 
inferences and select adverse facts as a response to non -cooperation  alone.510 The United  States 
contends that nothing in the Panel Report suggests that the "USDOC is laboring under conditions 
that prevent  it from selecting facts that constitute reasonable and reliable replacements for the 
missing information."511 China's and the United States' arguments on appeal mostly concern 
whether the USDOC relied on non -cooperation as the only relevant procedural circu mstance when 
resorting to "facts available". China and the United States do not sufficiently engage with the 
extent to which, under the AFA  Norm, the USDOC selects facts that reasonably replace the missing 
"necessary information" in order to arrive at an a ccurate determination.  
5.178.   For an evaluation  of the conformity of the AFA  Norm with Article  6.8 and paragraph  7 of 
Annex  II, we would need to  examine  the process of reasoning and evaluation of all substantiated 
facts on the record adopted by the USDOC for its selection of which "facts available" reasonably 
replace the missing "necessary information". In deciding whether we are able to complete the 
analysis, we take into consideration the absence of Panel findings and sufficient undisputed facts 
on the Panel rec ord, as well as the arguments made by the participants on appeal. Under these 
circumstances, we are unable to evaluate the process that the USDOC undertakes for its selection 
of which "facts available" reasonably replace the missing "necessary information"  with a view to 
arriving at an accurate determination.  
5.179.   For these reasons , we do not accede  to China's request for us to complete the analysis in 
relation to whether the AFA  Norm is inconsistent with Article  6.8 and paragraph  7 of Annex  II to 
the Anti -Dumpi ng Agreement. Therefore , we need not examine the United States' contention s that 
Appellate  Body findings on the AFA  Norm would not contribute to a positive reso lution of this 
dispute, and that China's claims are without merit.512 
5.2.6   Conclusion  
5.180.   In sum, a rule or  norm has "general application" to the extent that it affects an 
unidentified number of economic operators. In addition, we consider that a rule or norm has 
"prospective application" to the extent that it applies in the future. In this respect, in order to  
demonstrate prospective application, a complainant is not required to show with "certainty" that a 
given measure will apply  in the future. Rather, where prospective application is not sufficiently 
clear from the constitutive elements of the rule or norm, it may be demonstrated through a 
number of other factors: the existence of an underlying policy that is implemented by the rule or 
norm; the systematic application of the challenged rule or norm ; the design, architecture, and 
structure of the rule or norm ; the extent to which the rule or norm provides administrative 
guidance for future conduct; and the expectations it creates among economic operators that the 
rule or norm will be applied in the future. We find that the Panel erred by requiring "certainty" o f 
future application  when examining whether the AFA  Norm has "prospective application". 
Consequently, we reverse  the Panel's findings , in paragraphs 7.479  and 8.1.d.ii of its Report , that 
China ha s not demonstrated that the AFA Norm is a norm of general an d prospective application . 
5.181.   In relation to China's request for us to complete the analysis and find that the AFA  Norm is 
a rule or norm of general and prospective application, we consider that the unappealed Panel 
finding concerning the precise content of t he AFA  Norm suggests that this norm is a measure of 
general application because it affects an unidentified number of economic operators. The 
AFA Norm does not impose any express limitation s on economic operators from NME countr ies that 
may be included with in NME -wide entit ies subject to the AFA  Norm. The connection between the 
AFA Norm and the Single Rate Presumption also supports the conclusion that the AFA  Norm has 
"general application". This is because the Panel found that the Single Rate Presumption is a 
measure of general application, and the AFA  Norm applies to the same group of economic 
operators subject to the Single Rate Presumption whenever the economic operators fail to 
                                               
510 China's appellant's submission, paras.  441, 480, and 487 . 
511 United  States ' appellee's submission, para.  403. 
512 See United  States' appellee's submission, paras.  253, 256, 257, 287, 399, 411 -412, 416, and 418.  WT/DS471/AB/R  
 
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  demonstrate an absence of governmental control over their export activities an d fail to cooperate 
in the anti -dumping investigation to the best of their ability. Moreover , the fact that the 
73 anti-dumping determinations put on the record by China covered a wide range of products and 
companies is a further indicator that the AFA  Norm has "general application". For these reasons, 
based on the findings in the Panel Report and undisputed facts on the Panel record, we find that 
the AFA  Norm has "general application" . 
5.182.   In addition, we consider that the Panel's findings concerning the AFA  Norm mean that this 
norm will continue to be applied in the future by the USDOC. The Panel made statements 
demonstrating that the AFA  Norm has "prospective application", namely , that the AFA  Norm was 
consistently and systematically applied by the USDOC over  an extended period of time , and that 
the AFA  Norm implements an underlying policy, provides administrative guidance, and creates 
expectations among economic operators. For these reasons, based on the findings  and statements  
in the Panel Report and our leg al analysis, we find that the AFA  Norm has "prospective 
application" .  
5.183.   In light of the unappealed Panel findings that the AFA  Norm is attributable to the 
United  States513, and that its content corresponds to the description thereof made by China514, as 
well as  our conclusion s above that the AFA  Norm has general and prospective application, we find 
that the AFA  Norm is a rule or norm of general and prospective application that may be challenged 
"as such" in WTO dispute settlement.  
5.184.   In relation to China's request for us to complete the analysis and find that the AFA  Norm is 
inconsistent with Article  6.8 and paragraph  7 of Annex  II to the Anti -Dumping  Agreement, we 
consider that the general reference by China to Annex  II, together with the narrative included in 
its panel request, provides "a brief summary of the legal basis of the complaint sufficient to 
present the problem clearly" consistently with the standard of Article  6.2 of the DSU. The Panel , 
however,  made no findings on whether the AFA  Norm is inconsistent w ith Article  6.8 and 
paragraph  7 of Annex  II to the Anti -Dumping  Agreement. In particular, the Panel did not explore 
the process of reasoning and evaluation undertaken by the USDOC prior to selecting "facts 
available" to replace missing  "necessary  informati on". For an evaluation  of the conformity of the 
AFA Norm with Article  6.8 and Annex  II, we would need to examine the process of reasoning and 
evaluation undertaken by the USDOC for its selection of which "facts available" reasonably replace 
the missing "ne cessary information". In deciding whether we are able to complete the analysis, we  
have taken into consideration the absence of Panel findings and sufficient undisputed facts on the 
Panel record, as well as the arguments made by the participants on appeal.  Under these 
circumstances, we are unable to evaluate the process undertaken by the USDOC for its selection of 
which "facts available" reasonably replace the missing "necessary information" with a view to 
arriving at an accurate determination. Consequently , we do not accede  to China's request for 
completion of the analysis.  
6  FINDINGS AND CONCLUS IONS  
6.1.  For the reasons  set out in this Report, the Appellate  Body makes the following findings and 
conclusions.  
6.1  The USDOC's application of the Nails test and its use of  the W -T methodology in the 
three challenged investigations  
6.2.  In relation to the first alleged quantitative flaw with the Nails test, we consider that the fact 
that a large number of export prices may fall below the  one standard deviation threshold where 
the distribution of the export price data is  not normal , or single -peaked and symmetrical  does not 
necessarily preclude an investigating authority from finding that the export prices to the "target" 
differ significantly from the other export prices and form a  pattern within the meaning of the 
second sentence of Article  2.4.2 of the Anti -Dumping  Agreement. Accordingly, we consider that 
China has not established that the standard deviation test as applied by the USDOC in the 
three  challenged investigations  is only capable of identifying prices that differ from other export 
prices and form a pattern within the meaning of the second sentence of Article 2.4.2 where the 
distribution of the export price data is normal , or single -peaked and symmetrical. On this basis, we 
                                               
513 Panel Report, para.  7.456.  
514 Panel Report, para.  7.454.  WT/DS471/AB/R  
 
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  find that China has not established that the Panel erred in its interpretation or application of the 
second sentence of Article  2.4.2 of the Anti -Dumping Agreement in rejecting China's  claim in 
respect of the first alleged quantitative flaw with the Nai ls test as applied in the three challenged 
investigations.  
6.3.  In relation to third alleged quantitative flaw with the Nails test, the Panel considered that "the 
third alleged quantitative flaw rests on the assumption that in the three challenged investigatio ns, 
the alleged target price gap was based on prices located at the tail of the distribution of the export 
price data and the weighted -average non -target price gap was based on prices located nearer to 
the peak of that distribution."515 The Panel was correct  in rejecting China's claim on the basis of its 
finding that China ha d not shown that th is assumption is "factually correct insofar as the 
three  challeng ed investigations are concerned".516 Therefore , we find that China has not 
established that the Panel err ed in its interpretation or application of the second sentence of 
Article  2.4.2 of the Anti -Dumping Agreement in rejecting China's claim in respect of the 
third alleged quantitative flaw with the Nails test as applied in the three challenged investigations . 
6.4.  We also find that China has not established that the Panel failed to comply with Article  17.6(i) 
of the Anti -Dumping  Agreement in relation to both the first and third alleged quantitative flaws 
with the Nails test.  
a. Consequently, we uphold  the Panel's fi nding,  in paragraph 8.1.a.vi of its Report, that 
"China has not established that the United States acted inconsistently with Article  2.4.2 
of the Anti -Dumping Agreement in the OCTG , Coated Paper  and Steel Cylinders  
investigations"  insofar as this finding r elates to the first and third alleged quantitative 
flaws with the Nails test.  
6.5.  In relation to the qualitative issues with the Nails test, we consider that the Panel did not err 
in its interpretation of the second sentence of Article 2.4.2 of the Anti -Dumpin g Agreement in 
finding that investigating authorities are not required to examine the reasons for the relevant 
differences in export prices , or whether those differences are unconnected to "targeted dumping" , 
in order to assess whether export prices differ  "significantly". We also consider that, while it did 
not explicitly refer to "objective market factors", the Panel correctly concluded that an 
investigating authority should undertake a qualitative analysis of the significance of export price 
differences.  We thus disagree with China's contention t hat the Panel erred in interpreting and 
applying the second sentence of Article 2.4.2 because it found that "investigating authorities 
[are not requir ed] to consider objective market factors in determining whether  relevant prici ng 
differences are 'significant'" .517 
a. Consequently, we uphold  the Panel's findings, in paragraphs 7.114 and 8.1.a.viii of its 
Report, that "the USDOC was not required to consider the reasons for the differences in 
export prices forming the rel evant pattern in order to determine whether those 
differences were qualitatively significant within the meaning of the pattern clause of 
Article 2.4.2 " and that, accordingly, "China has not established that the United States 
acted inconsistently with Artic le 2.4.2 of the Anti -Dumping Agreement in the OCTG, 
Coated Paper  and Steel Cylinders  investigations because of the alleged qualitative issues 
with the Nails test".  
6.6.  In relation to the USDOC's use of averages  to establish the existence of a pattern  in the th ree 
challenged investigations, we consider that the existence of a pattern within the meaning of the 
second sentence of Article  2.4.2 of the Anti -Dumping  Agreement depends on the price relationship 
between the "targeted" transactions, on the one hand, and the "non -targeted" transactions, on the 
other hand. The distinguishing factor that allows for the determination of a pattern is that the 
prices within the pattern differ significantly from the prices outside it. We also note that the 
relevant difference is  one "among" different purchasers, regions, or time periods. For these 
reasons, we consider that an investigating authority may rely on individual export transaction 
prices or average prices  in order  to find a pattern, provided that this pattern meets the 
requirements stipulated in the pattern clause. In this case, like the Panel518, we consider that 
                                               
515 Panel Report, para. 7.78.  
516 Panel Report, para. 7.82.  
517 China's appellant's submission, heading IV . 
518 Panel Report, para. 8.1.a.ix.  WT/DS471/AB/R  
 
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  China has not demonstrated that the United States acted inconsistently with Article  2.4.2 in the 
three challenged investigations by determining the relevant patt ern on the basis of average prices. 
In addition, by not advancing any argument that is separate and different from its arguments 
concerning the alleged error in the Panel's interpretation of Article  2.4.2, China has not 
demonstrated that the Panel failed t o comply with Article  17.6(i) of the Anti -Dumping  Agreement. 
We theref ore find that the Panel did not err in its interpretation and application of the 
second  sentence of Article  2.4.2 of the Anti -Dumping  Agreement to the three challenged 
investigations whe n examining the USDOC's use of purchaser or time period averages under the 
Nails test. Furthermore, we find that China has not established that the Panel failed to comply with 
Article  17.6(i) of the Anti -Dumping  Agreement.  
a. Consequently, we uphold  the Pane l's finding, in paragraph  8.1.a.ix of its Report, that 
China has not established that the United States acted inconsistently with the 
second  sentence of Article  2.4.2 in the three challenged investigations by determining 
the existence of a "pattern" on the  basis of average prices, instead of  individual export 
transaction prices.  
6.7.  In relation to the Panel's statements in footnote 385 of the Panel Report, we consider  that, as 
in US – Washing Machines , the second sentence of Article  2.4.2 of the Anti -Dumping  Agreement 
allows an investigating authority to establish margins of dumping by applying the 
W-T methodology only to "pattern transactions" and that Article  2.4.2 does not permit the 
combining of comparison methodologies.519 In circumstances where the requirem ents of the 
second  sentence of Article  2.4.2 are fulfilled, an investigating authority may establish margins of 
dumping by comparing a weighted average normal value with export prices of "pattern 
transactions", while excluding "non -pattern  transactions" fr om the numerator, and dividing the 
resulting amount by all the export sales of a given exporter or foreign producer.520  
a. Consequently , we declare moot the Panel's statements , in footnote 385 of its Report , 
to the extent that these statements are premised on the erroneous understanding that 
Article  2.4.2 of the Anti -Dumping Agreement permits the combining of comparison 
methodologies to establish dumping margins.  
6.2  The AFA  Norm  
6.8.  We consider that a rule or norm has "general application" to the extent that it affect s an 
unidentified number of economic operators. In addition, a rule or norm has "prospective 
application" to the extent that it applies in the future. In this respect, in order to demonstrate 
prospective application, a complainant is not required to show w ith "certainty" that a given 
measure will apply  in the future. Rather, where prospective application is not sufficiently clear 
from the constitutive elements of the rule or norm, it may be demonstrated through a number of 
other factors: the existence of an  underlying policy that is implemented by the rule or norm; the 
systematic application of the challenged rule or norm; the design, architecture, and structure of 
the rule or norm; the extent to which the rule or norm  provides administrative guidance for fu ture 
conduct; and the expectations it creates among economic operators that the rule or norm will be 
applied in the future. We find that the Panel erred by requiring "certainty" of future application  
when examining whether the AFA  Norm has "prospective app lication".  
a. Consequently, we reverse  the Panel's findings , in paragraphs 7.479  and 8.1.d.ii of its 
Report , that China has not demonstrated that the AFA  Norm constitutes a norm of 
general and prospective application . 
6.9.  In relation to China's request for us to complete the analysis and find that the AFA  Norm is a 
rule or norm of general and prospective application, we consider that the unappealed Panel finding 
concerning the precise content of the AFA  Norm suggests that this norm is a measure of general 
applicat ion because it affects an unidentified number of economic operators. The AFA  Norm does 
not impose any express limitation s on economic operators from NME countr ies that may be 
included within NME -wide entit ies subject to the AFA  Norm. The connection between  the AFA  Norm 
and the Single Rate Presumption also supports the conclusion that the AFA  Norm has "general 
application". This is because the Panel found that the Single Rate Presumption is a measure of 
                                               
519 Appellate  Body Report, US – Washing Machines , para. 5.129.  
520 Appellate  Body Report, US – Washing Machines , para. 5.130.  WT/DS471/AB/R  
 
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  general application, and the AFA  Norm applies to the sa me group of economic operators subject to 
the Single Rate Presumption whenever the economic operators fail to demonstrate an absence of 
governmental control over their export activities and fail to cooperate in the anti -dumping 
investigation to the best of  their ability. Moreover, the fact that the 73  anti-dumping 
determinations put on the record by China covered a wide range of products and companies is a 
further indicator that the AFA  Norm has "general application". For  these reasons, based on the 
finding s in the Panel Report and undisputed facts on the Panel record, we find that the AFA  Norm 
has "general application" . 
6.10.  In addition, we consider that the Panel's findings concerning the AFA  Norm mean that this 
norm will continue to  be applied in the future by  the USDOC. The Panel made statements 
demonstrating that the AFA  Norm has "prospective application", namely , that the AFA  Norm was 
consistently and systematically applied by the USDOC over an extended period of time , and that 
the AFA  Norm implements an und erlying policy, provides administrative guidance, and creates 
expectations among economic operators. For these reasons, based on the findings in the Panel 
Report and our legal analysis, we find that the AFA  Norm has "prospective application" .  
a. In light of the unappealed Panel findings that the AFA  Norm is attributable to the 
United  States521, and that its content corresponds to the description thereof made by 
China522, as well as our conclusion s above that the AFA  Norm has general and 
prospective application, w e find that the AFA  Norm is a rule or norm of general and 
prospective application that may be challenged "as such" in WTO dispute settlement.  
6.11.  In relation to China's request for us to complete the analysis and find that the AFA  Norm is 
inconsistent with Art icle 6.8 and paragraph  7 of Annex  II to the Anti -Dumping  Agreement, we 
consider that the general reference by China to Annex  II, together with the narrative included in 
its panel request, provides "a brief summary of the legal basis of the complaint suffic ient to 
present the problem clearly" consistently with the standard of Article  6.2 of the DSU. The Panel , 
however,  made no findings on whether the AFA  Norm is inconsistent with Article  6.8 and 
paragraph  7 of Annex  II to the Anti -Dumping  Agreement. In parti cular, the Panel did not explore 
the process of reasoning and evaluation undertaken by the USDOC prior to selecting "facts 
available" to replace missing  "necessary  information ". For an evaluation  of the conformity of the 
AFA Norm with Article  6.8 and Annex  II, we would need to examine the process of reasoning and 
evaluation undertaken by the USDOC for its selection of which "facts available" reasonably replace 
the missing "necessary information". In deciding whether we are able to complete the analysis, we  
have taken into consideration the absence of Panel findings and sufficient undisputed facts on the 
Panel record, as well as the arguments made by the participants on appeal.  
a. Under these circumstances, we are unable to evaluate the process undertaken by th e 
USDOC for its selection of which "facts available" reasonably replace the missing 
"necessary information" with a view to arriving at an accurate determination. 
Consequently, we do not accede  to China's request for completion of the analysis . 
6.3  Recommendati on 
6.12.  The Appellate  Body recommends  that the DSB request the United States to bring its 
measure s found  in this Report, and in the Panel  Report as modified by this Report, to be 
inconsistent with the Anti -Dumping  Agreement and the GATT  1994, into conformity wi th those 
Agreements.  
                                               
521 Panel Report, para.  7.456.  
522 Panel Report, para.  7.454.