WORLD TRADE  
ORGANIZATION  WT/DS322/R 
20 September 2006 
 
 (06-4371) 
 Original:   English 
  
 
     
 
   
UNITED STATES – MEASURES RELATING TO ZEROING 
AND SUNSET REVIEWS 
  
 
 
 
   
Final Report of the Panel 
 
 
 
    
 
    
 
  WT/DS322/R 
 Page i 
 
 
TABLE OF CONTENTS 
Page  
 
I. INTRODUCTION ................................................................................................................... .1 
A. COMPLAINT OF JAPAN ............................................................................................................................... .1 
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL .................................................................................. 1  
C. PANEL PROCEEDINGS ............................................................................................................................... .. 2 
II. FACTUAL ASPECTS ..............................................................................................................2  
III. REQUESTS FOR FINDINGS AND RECOMMENDATIONS............................................4  
(a) Japan .......................................................................................................................... .................4  
(b) United States .................................................................................................................. .............6  
IV. ARGUMENTS OF THE PARTIES ........................................................................................6  
A. BURDEN OF PROOF AND STANDARD OF REVIEW ........................................................................................ 6  
1. Burden of Proof................................................................................................................ .........6  
(a) United States .................................................................................................................. .............6  
2. Standard of Review............................................................................................................. ......6  
(a) United States .................................................................................................................. .............6  
B. "AS SUCH" CLAIMS ............................................................................................................................... ..... 7 
1. Zeroing Procedures Cha llenged as Measures ........................................................................7  
(a) Japan .......................................................................................................................... .................7  
(b) United States .................................................................................................................. ...........17  
2. "As such" Claims under Article 2 of the AD Agreement  with respect to original 
investigations ................................................................................................................. ..........23  
(a) Margin of Dumping for the Product as a Whole.......................................................................24  
(b) "Fair Comparison" in Article 2 of the AD Agreement ..............................................................34  
3. "As such" Claims under Article 3 of the AD Agreement  with respect to Original 
Investigations................................................................................................................. ..........51  
4. "As such" Claims under Article 5 of the AD Agreement  with respect to Original 
Investigations................................................................................................................. ..........53  
5. "As such" Claims under Articles 2 and 9 of the AD Agreement  with Respect to 
Periodic and New Shipper Reviews.......................................................................................55  
6. "As such" Claims under Article 11 of the AD Agreement with respect to Changed 
Circumstance and Sun set Reviews ........................................................................................66  
7. "As such" Claims with respect to Articles 1 and 18.4 of the AD Agreement  and 
Article XVI:4 of the WTO Agreement  in Relation to Original Investigations....................69  
B. "AS APPLIED " CLAIMS ............................................................................................................................. 70  
1. Claims with respect to an Original Investigation.................................................................70  
2. Claims with respect to Periodic Reviews ..............................................................................72  
3. Claims with respect to  Sunset Reviews .................................................................................76  WT/DS322/R          
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V.
 ARGUMENTS OF THE THIRD PARTIES ........................................................................79  
A. ARGENTINA................................................................................................................... ....................... 79 
1. "As such" Claims............................................................................................................... .....79  
(a) Zeroing Procedures Challenged as Measures ...........................................................................79  
(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations ................................................................................................................. ...........80  
(c) "As Such" Claims under Article 11 of the AD Agreement  with respect to Original 
Investigations. ................................................................................................................ ...........82  
B. CHINA ............................................................................................................................... ....................... 82  
1. "As such" Claims............................................................................................................... .....82  
(a) Zeroing Procedures Challenged as Measures ...........................................................................82  
(b) "As Such" Claims under Article 2 of the AD Agreement with respect to Original 
Investigations ................................................................................................................. ...........83  
(c) "As Such" Claims Under Article 9 of the AD Agreement .........................................................84  
C. EUROPEAN COMMUNITIES ........................................................................................................................ 84  
1. Burden of Proof................................................................................................................ .......85  
2. "As such" Claims............................................................................................................... .....85  
(a) Zeroing Procedures Challenged as Measures ...........................................................................85  
(b) "As Such" Claims under the provisions of Article 2 of the AD Agreement ..............................85  
(c) "As Such" Claims with Respect to Articles 3, 5, 9, and 11 of the AD Agreement ....................89  
D. KOREA ............................................................................................................................... ...................... 90  
1. "As such" Claims............................................................................................................... .....90  
(a) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations ................................................................................................................. ...........90  
(b) "As Such" Claims with Respect to Article 11 of the AD Agreement :  Sunset Reviews ...........92  
E. MEXICO ............................................................................................................................... .................... 93  
1. "As such" Claims............................................................................................................... .....93  
(a) Zeroing Procedures Challenged as Measures ...........................................................................93  
(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations. ................................................................................................................ ...........94  
(c) "As Such" Claims with Respect to Article 9 of the AD Agreement .........................................94  
F. NEW ZEALAND ............................................................................................................................... .......... 95  
1. "As such" Claims............................................................................................................... .....95  
(a) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations ................................................................................................................. ...........95  
G. NORWAY ............................................................................................................................... ................... 96  
1. "As such" Claims............................................................................................................... .....96  
(a) Zeroing Procedures Challenged as Measures ...........................................................................96   WT/DS322/R 
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(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations ................................................................................................................. ...........99  
(c) "As Such" Claims with Respect to Articles 9 and 11 of the AD Agreement .............................99  
H. THAILAND ............................................................................................................................... ............... 101  
1. "As such" Claims............................................................................................................... ...101  
(a) Zeroing Procedures Challenged as Measures .........................................................................101  
(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations ................................................................................................................. .........102  
(c) "As Such" Claims with respect to Articles 1, 2, 9 and 11 of the AD Agreement  and 
Article VI of the GATT 1994 .................................................................................................104  
VI. INTERIM REVIEW.............................................................................................................104  
A. INTRODUCTION ............................................................................................................................... ........ 104  
B. COMMENTS OF THE PARTIES ON ANY RELEVANT ISSUES OF LAW ADDRESSED IN THE APPELLATE 
BODY REPORT IN US - ZEROING (EC) ..................................................................................................... 105  
1. Japan.......................................................................................................................... ............105  
(a) Whether the Panel should follow the Appellate Body's findings in US – Zeroing (EC) ........105  
(b) the zeroing procedures maintained by the Un ited States for use in W-to-W and T-to-T 
comparisons in original investigations are as such inconsistent with Articles 2.1 and 
2.4.2 of the AD Agreement  and Article VI:1 of the GATT 1994;  the anti-dumping 
investigation of imports of certain cut- to-length carbon quality steel products from 
Japan is inconsistent with the same provisions.......................................................................105  
(i) Weighted Average-to-Weighted Average  Comparisons - Model Zeroing...............................105  
(ii) Transaction-to-Transac tion Comparisons - Simple Zeroing ..................................................106  
(c) Withdrawal of claims relating to zeroing procedures in the context of Weighted 
Average–to–Transaction comparisons....................................................................................108  
(d) the zeroing procedures maintained by the Un ited States for use in periodic reviews are 
as such inconsistent with Articles 2.1 and 9.3 of the AD Agreement  and Articles VI:1 
and VI:2 of the GATT 1994;  the eleven periodic reviews challenged by Japan are 
inconsistent with the same provisions.....................................................................................109  
(e) the zeroing procedures maintained by the Un ited States for use in new shipper reviews 
are as such inconsistent with Articles 2.1, 9.3 and 9.5 of the AD Agreement  and 
Articles VI:1 and VI:2 of the GATT 1994..............................................................................112  
(f) the two sunset reviews challenged by Japan are inconsistent with Articles 2.1 and 11.3 
of the AD Agreement  and Article VI:1 of the GATT 1994.....................................................112  
2. United States.................................................................................................................. ........113  
(a) Whether the Panel should follow the Appellate Body's findings in US – Zeroing (EC) ........113  
(b) The Appellate Body’s Conclusion that Au thorities Must Provide Offsets Whenever 
They Conduct Multiple Comp arisons is erroneous.................................................................114  
(c) The Appellate Body’s Conclusion that the Margin of Dumping Cannot be 
Transaction-Specificis erroneous............................................................................................116  
(d) The Appellate Body Failed to Cons ider Key Contextual Arguments.....................................117  
(e) the “as such” finding agai nst zeroing procedures ...................................................................119  WT/DS322/R          
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C. COMMENTS OF THE PARTIES ON THE INTERIM REPORT ........................................................................... 120  
1. Comments of Japan .............................................................................................................. 120 
2. Comments of the United States............................................................................................126  
VII. FINDINGS....................................................................................................................... ......129  
A. INTRODUCTION ............................................................................................................................... ........ 129  
1. The Terms "Model Zeroing" and "Simple Zeroing" as used by Japan in this 
Dispute ........................................................................................................................ ...........129  
2. Findings requested by the Parties .......................................................................................131  
3. Relevant Principles regarding Standard of Review, Treaty Interpretation and 
Burden of Proof................................................................................................................ .....132  
(a) Standard of Review............................................................................................................. ....132  
(b) Rules of Treaty Interpretation................................................................................................. 133 
(c) Burden of Proof ................................................................................................................ ......133  
4. Order of Analysis .............................................................................................................. ....134  
B. CLAIMS REGARDING ZEROING IN THE CONTEXT OF ORIGINAL INVESTIGATIONS ...................................... 134  
1. Claims regarding zeroing procedures as such in the context of original 
investigations ................................................................................................................. ........134  
(a) Whether zeroing procedures, as such, can be the subject of dispute settlement 
proceedings under the DSU and the AD Agreement ...............................................................135  
(i) Arguments of the Parties....................................................................................................... ..135  
(ii) Arguments of Third Parties..................................................................................................... 138 
(iii) Evaluation by the Panel........................................................................................................ ..138  
(b) whether the AD Agreement  and/or the GATT 1994 proscribe zeroing in the context of 
original investigations........................................................................................................ .....146  
(i) Articles 2.1 and 2.4.2 of the AD Agreement and Articles VI:1 and VI:2 of the GATT 
1994 ........................................................................................................................... .............146  
Arguments of the Parties ....................................................................................................... ................ 146  
Arguments of Th ird Parties ..................................................................................................... .............. 148  
Evaluation by the Panel........................................................................................................ ................. 149  
(ii) Article 2.4 of the AD Agreement .............................................................................................170  
Arguments of the Parties ....................................................................................................... ................ 170  
Evaluation by the Panel........................................................................................................ ................. 172  
(iii) Articles 3.1 to 3.5 of the AD Agreement .................................................................................175  
Arguments of the Parties ....................................................................................................... ................ 175  
Evaluation by the Panel........................................................................................................ ................. 175  
(iv) Article 5.8 of the AD Agreement .............................................................................................176  
Arguments of the Parties ....................................................................................................... ................ 176  
Evaluation by the Panel........................................................................................................ ................. 176  
(v) Articles 1 and 18. 4 of the AD Agreement and Article XVI:4 of the WTO Agreement............177   WT/DS322/R 
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2. Model zeroing as applied in the orig inal investigation concerning certain 
cut-to-length carbon quality steel products from Japan ...................................................178  
(a) Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 
1994 ........................................................................................................................... .............178  
(i) Arguments of the Parties....................................................................................................... ..178  
(ii) Evaluation by the Panel........................................................................................................ ..179  
(b) Article 2.4 of the AD Agreement .............................................................................................179  
(i) Arguments of the Parties....................................................................................................... ..179  
(ii) Evaluation by the Panel........................................................................................................ ..179  
(c) Articles 3.1-3.5 of the AD Agreement .....................................................................................179  
(i) Arguments of the Parties....................................................................................................... ..179  
(ii) Evaluation by the Panel........................................................................................................ ..180  
(d) Article 1 of the AD Agreement ................................................................................................180  
C. CLAIMS REGARDING ZEROING IN THE CONTEXT OF PERIODIC REVIEWS AND NEW SHIPPER REVIEWS
............................................................................................................................... ................................ 180  
1. Claims regarding zeroing procedures as such in the context of periodic reviews 
and new shipp er reviews ......................................................................................................18 1 
(a) Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 
1994 ........................................................................................................................... .............181  
(i) Arguments of the Parties....................................................................................................... ..181  
(ii) Arguments of Third Parties..................................................................................................... 182 
(iii) Evaluation by the Panel........................................................................................................ ..182  
(b) Article 2.4 of the AD Agreement .............................................................................................189  
(c) Articles 9.1-9.3 and 9.5 of the AD Agreement ........................................................................190  
(d) Articles 1 and 18.4 of the AD Agreement  and Article XVI:4 of the WTO Agreement ..........190  
2. Claims regarding simple zeroing as applied in the context of certain periodic 
reviews........................................................................................................................ ............190  
D. CLAIMS REGARDING ZEROING PROCEDURES IN THE CONTEXT OF CHANGED CIRCUMSTANCES 
REVIEWS AND SUNSET REVIEWS ............................................................................................................. 191  
1. Zeroing Procedures As Such In the Context of Changed Circumstances Reviews 
And Sunset Reviews............................................................................................................. .191 
(a) Arguments of the Parties....................................................................................................... ..191  
(b) Arguments of Third Parties..................................................................................................... 191 
(c) Evaluation by the Panel ........................................................................................................ ..192  
2. "As applied" claims regarding two sunset reviews............................................................195  
(a) Arguments of the Parties....................................................................................................... ..195  
(b) Evaluation by the Panel ........................................................................................................ ..196  
E. CONCLUSIONS AND RECOMMENDATION ................................................................................................. 199  
 
  WT/DS322/R 
 Page vii 
 
 
LIST OF ANNEXES 
 
 
ANNEX A 
 
 
REQUEST FOR CONSULTATIONS AND REQUEST FOR THE  
ESTABLISHMENT OF A PANEL 
 
 
Contents Page 
Annex A-1 Request for Consultations by Japan A-2 
Annex A-2 Request for the Establishment of a Panel by Japan A-15 
 
 WT/DS322/R          
Page viii  
 
TABLE OF CASES CITED IN THIS REPORT 
 
 
Short Title Full Case Title and Citation 
Argentina – Footwear (EC)  Appellate Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R, adopted 12 January 2000, DSR 2000:I, 515 
Argentina – Footwear (EC)  Panel Report, Argentina – Safeguard Measu res on Imports of Footwear , 
WT/DS121/R, adopted 12 January 2000, as modified by Appellate Body 
Report, WT/DS121/AB/R, DSR 2000:II, 575 
Argentina – Poultry Anti-Dumping Duties Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from 
Brazil , WT/DS241/R, adopted 19 May 2003 
Argentina – Textiles and 
Apparel  Panel Report, Argentina – Measures Affec ting Imports of Footwear, 
Textiles, Apparel and Other Items , WT/DS56/R, adopted 22 April 1998, as 
modified by the Appellate Body Re port, WT/DS56/AB/R, DSR 1998:III, 
1033 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 No vember 1998, DSR 1998:VIII, 3327
Brazil – Aircraft  Appellate Body Report, Brazil – Export Financing Programme for 
Aircraft , WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, 1161 
Brazil – Aircraft  Panel Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/R, adopted 20 August 1999,  as modified by Appellate Body 
Report, WT/DS46/AB/R, DSR 1999:III, 1221 
Canada – Wheat Exports and Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat 
and Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 
2004, DSR 2004:VI, 2739 
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R, adopted 
23 October 2002, DSR 2002:VIII, 3045 
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, 3243 
EC – Audio Cassettes GATT Panel Report, EC – Anti-Dumping Duti es on Audio Tapes in 
Cassettes Originating in Japan , ADP/136 
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, 2049 
EC – Bed Linen Panel Report, European Communities – Anti-Du mping Duties on Imports of 
Cotton-Type Bed Linen from India , WT/DS141/R, adopted 12 March 2001, 
as modified by Appellate Body Report, WT/DS141/AB /R, DSR 2001:VI, 
2077 
EC – Bed Linen  (Article 21.5 – India)
  Panel 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/RW, adopted 24 April 2003, as modified by the 
Appellate Body Report, WT/DS141/AB/RW 
EC – Approval and Marketing of Biotech Products European Communities – Measures Aff ecting the Approval and Marketing 
of Biotech Products , WT/DS291 – US, WT/DS292 – Canada, WT/DS293 – 
Argentina  WT/DS322/R 
 Page ix 
 
 
Short Title Full Case Title and Citation 
EEC – Cotton Yarn GATT Panel Report, European Economic Community – Imposition of 
Anti-Dumping Duties on Imports of Cotton Yarn from Brazil , BISD 42S/17
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, 135 
EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable 
Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/R, adopted 
18 August 2003, as modified by the Appellate Body Report, WT/DS219/AB/R 
EC – Countervailing Measures on DRAM Chips Panel Report, European Communities – Countervailing Measures on 
Dynamic Random Access Memory Chips from Korea , WT/DS299/R, 
adopted 3 August 2005 
Egypt – Steel Rebar  Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar 
from Turkey , WT/DS211/R, adopted 1 October 2002 
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, 3767 
Guatemala – Cement II  Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey 
Portland Cement from Mexico , WT/DS156/R, adopted 17 November 2000, 
DSR 2000:XI, 5295 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 
16 January 1998, DSR 1998:I, 9 
Japan – Alcoholic Beverages II
  Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 
1 November 1996, DSR 1996:I, 97 
Japan – Alcoholic Beverages II
  Panel Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/R, 
WT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by 
Appellate Body Report, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, DSR 1996:I, 125 
Korea – Commercial Vessels Panel Report, Korea – Measures Affecting Trade in Commercial Vessels , 
WT/DS273/R, adopted 11 April 2005 
Korea – Dairy  Appellate Body Report, Korea – Definitive Safeguard Measure on Imports 
of Certain Dairy Products , WT/DS98/AB/R, adopted 12 January 2000, 
DSR 2000:I, 3 
Korea – Dairy  Panel Report, Korea – Definitive Safeguard Measure on Imports of Certain 
Dairy Products , WT/DS98/R and Corr.1, adopted 12 January 2000, as 
modified by Appellate Body Report, WT/DS98/AB/R, DSR 2000:I, 49 
Mexico – Anti-Dumping Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on 
Beef and Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted 
20 December 2005 
Thailand – H-Beams  Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, 
Shapes and Sections of Iron or Non- Alloy Steel and H-Beams from Poland , 
WT/DS122/AB/R, adopted 5 April 2001, DSR 2001:VII, 2701 
 WT/DS322/R          
Page x  
 
Short Title Full Case Title and Citation 
Thailand – H-Beams  Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and 
Sections of Iron or Non-Alloy Steel and H-Beams from Poland , 
WT/DS122/R, adopted 5 April 2001, as modified by Appellate Body Report, WT/DS122/AB/R, DSR 2001:VII, 2741 
US - Anti-Dumping Measures on Oil Country Tubular Goods  Panel Report, United States – Anti-Dumping Measures on Oil Country 
Tubular Goods (OCTG) from Mexico  ("US – Anti-Dumping Measures on 
Oil Country Tubular Goods "), WT/DS282/R, adopted 28 November 2005, 
as modified by Appellate Body Report, WT/DS282/AB/R 
US – 1916 Act (Japan)  Panel Report, United States – Anti-Dumping Act of 1916, Complaint by 
Japan , WT/DS162/R and Add.1, adopted 26 September 2000, as upheld by 
the Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4831 
US – 1916 Act (EC)  Panel Report, United States – Anti-Dumping Act of 1916, Complaint by the 
European Communities , WT/DS136/R and Corr.1, adopted 
26 September 2000, as upheld by the Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4593 
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 
US – Carbon Steel  Panel Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/R and Corr.1, adopted 19 December 2002, as modified by the Appellate Body Report, WT/DS213/AB/R 
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 
US – Countervailing Measures on Certain EC Products Appellate Body Report, United States – Countervailing Measures 
Concerning Certain Products fr om the European Communities , 
WT/DS212/AB/R, adopted 8 January 2003 
US – Countervailing Measures on Certain EC 
Products
  Panel Report, United States – Countervailing Measures Concerning 
Certain Products from the European Communities , WT/DS212/R, adopted 
8 January 2003, as modified by the Appellate Body Report, 
WT/DS212/AB/R 
US – Countervailing Duty Investigation on DRAMs Appellate Body Report, United States – Countervailing Duty Investigation 
on Dynamic Random Access Memory  Semiconductors (DRAMs) from 
Korea , WT/296/AB/R, adopted 20 July 2005 
US – Countervailing Duty 
Investigation on DRAMS Panel Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/R, adopted 20 July 2005, as modified by Appellate Body Report, WT/DS296/AB/R 
US – DRAMS  Panel Report, United States – Anti-Dumping Duty on Dynamic Random 
Access Memory Semiconductors (DRAMS ) of One Megabit or Above from 
Korea , WT/DS99/R, adopted 19 March 1999, DSR 1999:II, 521 
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as 
Subsidies , WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 
2001:XI, 5767  WT/DS322/R 
 Page xi 
 
 
Short Title Full Case Title and Citation 
US – Gambling Appellate Body Report, United States – Measures Affecting the 
Cross-Border Supply of Gambling and Betting Services , WT/DS285/AB/R, 
adopted 20 April 2005  
US – Gasoline  Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 
1996:I, 3 
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 23 
August 2001, DSR 2001:X, 4697 
US – Hot-Rolled Steel  Panel Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/R, adopted 
23 August 2001 as modified by the Appellate Body Report, 
WT/DS184/AB/R 
US – Malt Beverages GATT Panel Report, United States – Measures Affecting Alcoholic and 
Malt Beverages , BISD 39S/206 
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 December 2004 
US – Section 211 Appropriations Act
  Panel Report, United States – Section 211 Omnibus Appropriations Act of 
1998 , WT/DS176/R, adopted 1 February 2002, as modified by the 
Appellate Body Report, WT/DS176/AB/R 
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain 
Shrimp and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, 
DSR 1998:VII, 2755 
US – Softwood Lumber V  Panel Report, United States – Final Dumping Determination on Softwood 
Lumber from Canada , WT/DS264/R, adopted 31 August 2004, as modified 
by the Appellate Body Report, WT/DS264/AB/R 
US – Softwood Lumber V  Appellate Body Report, United States – Final Dumping Determination on 
Softwood Lumber from Canada , WT/DS264/AB/R, adopted 
31 August 2004 
US – Softwood Lumber V
 (Article 21.5 – 
Canada) Panel Report, United States – Final Dumping Determination on Softwood 
Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada , 
WT/DS264/RW, appeal pending 
US – Softwood Lumber VI  Panel Report, United States – Investigation of the International Trade 
Commission in Softwood Lumber from Canada , WT/DS277/R, adopted 
26 April 2004 
US – Steel Plate  Panel Report, United States – Anti-Dumping and Countervailing Measures 
on Steel Plate from India , WT/DS206/R and Corr.1, adopted 29 July 2002 
US – Underwear Appellate Body Report, United States – Restrictions on Imports of Cotton 
and Man-made Fibre Underwear , WT/DS24/AB/R, adopted 
25 February 1997, DSR 1997:I, 11 
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of 
Woven Wool Shirts and Blouses from India , WT/DS33/AB/R and Corr.1, 
adopted 23 May 1997, DSR 1997:I, 323 WT/DS322/R          
Page xii  
 
 
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ("Zeroing") , 
WT/DS294/AB/R, a dopted 9 May 2006 
US – Zeroing (EC) Panel Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing")  ("US – Zeroing (EC) "), 
WT/DS294/R, a dopted 9 May 2006, as modified by Appellate Body Report, 
WT/DS294/AB/R 
                    WT/DS322/R 
Page 1 
 
 
 
 I. INTRODUCTION 
A. COMPLAINT OF JAPAN  
1.1 On 24 November 2004, the Government of Japan ("Japan") requested consultations with the 
Government of the United States of America ("United States") pursuant to Article 4 of the 
Understanding on Rules and Proce dures Governing the Settlement of Disputes ("DSU"), Article XXII:1 
of the General Agreement on Tariffs and Tr ade 1994 ("GATT 1994"), and Article 17.2 of the 
Agreement on Implementation of Article VI of GATT 1994 (the " AD Agreement "), regarding certain 
laws, methodologies, and/or meas ures, including so-called zeroing.1  Consultations were held on 
20 December 2004, which allowed a better understanding of the positions of the parties, but failed to 
achieve a mutually agreed solution of the dispute. 
1.2 On 4 February 2005, Japan requested the estab lishment of a Panel to examine this matter.2 
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL  
1.3 At its 28 February 2005 meeting, the Disput e Settlement Body ("DSB") established a Panel 
pursuant to the request by Japan in document WT/D S322/8, in accordance with Article 6 of the DSU. 
1.4 At that meeting, the parties to the dispute also agreed that the Panel s hould have standard terms 
of reference.  The terms of reference are, therefore, the following: 
"To examine, in the light of the relevant pr ovisions of the covered agreements cited by 
Japan in document WT/DS322/8, the matter re ferred to the DSB by Japan in that 
document, and to make such finding s as will assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements." 
1.5 On 7 April 2005, Japan requested the Directo r-General to determine the composition of the 
Panel, pursuant to paragraph 7 of Article 8 of the DSU.  This paragraph provides: 
"If there is no agreement on the panellists within 20 days after the date of the 
establishment of a panel, at the request of  either party, the Director-General, in 
consultation with the Chairman of the DSB and the Chairman of the relevant Council 
or Committee, shall determine the composition of the panel by appointing the panellists 
whom the Director-General considers mo st appropriate in accordance with any 
relevant special or additional rules or pr ocedures of the covered agreement or covered 
agreements which are at issue in the disput e after consulting with the parties to the 
dispute.  The Chairman of the DSB shall in form the Members of the composition of the 
panel thus formed no later than 10 days after the date the Chairman receives such a 
request." 
1.6 On 15 April 2005, the Director-General acco rdingly composed the Panel as follows: 
   Chairman: Mr. David Unterhalter 
   Members: Mr. Simon Farbenbloom      Mr. José Antonio Buencamino 
 
                                                     
 
1 WT/DS322/1 
2 WT/DS322/8 WT/DS322/R          
Page 2  
 
1.7 Argentina;  China;  the European  Communities;  Hong Kong, China;  India;  Korea;  Mexico;  
New Zealand;  Norway;  and Thaila nd reserved their third-party rights. 
C. P
ANEL PROCEEDINGS  
1.8 The Panel met with the parties on 28- 29 June 2005, 15-16 September 2005 and on 
12 June 2006.3  The Panel met with third parties on 29 June 2005. 
II. FACTUAL ASPECTS 
2.1 At issue in this dispute is the calculation of margins of dumping by the United States 
Department of Commerce ("USDOC") based on a methodology that disregards the amounts by which export prices for certain transactions are above the nor mal value in the process of establishing an overall 
margin of dumping.  Japan refers to this aspect of the USDOCs dumping margin methodology as 
"zeroing procedures"
4 and the "standard zeroing line"5, and presents claims regarding both as such  and 
regarding their application , specifically, in an original investig ation, periodic reviews, and sunset 
reviews. 
2.2 Japan argues that these zeroing procedures can be  challenged as such as a "measure" pursuant 
to the AD Agreement  and the DSU.  The United States disputes th at such a measure exists.  The views of 
the parties regarding the existence of the "zeroing procedures" are described in the Arguments of the 
Parties. 
2.3 Japan also challenges the application of zeroing procedures by the United States in the 
following anti-dumping proceedings with respect to products from Japan: 
Original Investigation 
 
 Notice of Final Determination of Sales at Le ss Than Fair Value: Certain Cut-To-Length 
Carbon-Quality Steel Plate Products from Japan , 64 Fed Reg. 73,215 (29 December 1999) ("CTL 
Plate "). 
 
Periodic Reviews 
 
 Tapered Roller Bearings and Parts Thereof, Fini shed and Unfinished, From Japan, and Tapered 
Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; 
Final Results of Anti-dumping Duty Administrative Reviews , 66 Fed Reg. 15,078 
(15 March 2001) ("Tapered Roller Bear ings and Parts Thereof 1998 - 1999 "). 
 
 Tapered Roller Bearings and Parts Thereof, Fini shed and Unfinished, From Japan, and Tapered 
Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; 
Final Results of Anti-dumping Duty Administrative Reviews , 65 Fed Reg. 11, 767 (6 March 2000) 
("Tapered Roller Bearings and Parts Thereof 1997 - 1998 "). 
 
 Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Romania, Singapore, Sw eden, and the United Kingdom; Final Results of 
Anti-dumping Duty Administrative Reviews and Revocation of Orders in Part , 65 Fed. Reg. 
49,219 (11 August 2001) ("Ball Bearings and Parts Thereof 1998-1999 "). 
 
                                                      
3See para. 6.2. 
4 Japan First Written Submission, paras. 1-2. 
5 Japan Second Written Submission, passim .                   WT/DS322/R 
Page 3 
 
 
 
  Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom; Final Results of 
Anti-dumping Duty Administrative Reviews and Revocation of Orders in Part , 65 Fed. Reg. 
49,219 (11 August 2001) ("Cylindrical Roller Bearings and Parts Thereof 1998-1999 "). 
 
 Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Romania, Singapore, Sw eden, and the United Kingdom; Final Results of 
Anti-dumping Duty Administrative Reviews and Revocation of Orders in Part , 65 Fed. Reg. 
49,219 (11 August 2001) ("Spherical Plai n Bearings and Parts Thereof 1998-1999 "). 
 
 Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Sweden, and the Unite d Kingdom; Final Results of Anti-dumping Duty 
Administrative Reviews and Revocation of Orders in Part , 66 Fed. Reg. 36,551 (12 July 2001) 
("Ball Bearings and Parts Thereof 1999-2000 "). 
 
 Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Sweden, and the Unite d Kingdom; Final Results of Anti-dumping Duty 
Administrative Reviews and Revocation of Orders in Part , 66 Fed. Reg. 36,551 (12 July 2001) 
("Cylindrical Roller Bearings and Parts Thereof 1999 "). 
 
 Anti-friction Bearings (Other Than Tapered Ro ller Bearings) and Parts Thereof From France, 
Germany, Italy, Japan, Sweden, and the Unite d Kingdom; Final Results of Anti-dumping Duty 
Administrative Reviews and Revocation of Orders in Part , 66 Fed. Reg. 36,551 (12 July 2001) 
("Spherical Plain Bearings and Parts Thereof 1999 "). 
 
 Ball Bearings and Parts Thereof From France, Ge rmany, Italy, Japan, and the United Kingdom; 
Final Results of Anti-dumping Duty Administrative Reviews , 67 Fed. Reg. 55,780 
(30 August 2002), as amended by Ball Bearings A nd Parts Thereof From Japan; Amended Final 
Results Of Anti-dumping Duty Administrative Review , 67 Fed. Reg. 63,608 (15 October 2002) 
("Ball Bearings and Parts Thereof 2000-2001 "). 
 
 Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and Singapore: Final 
Results of Anti-dumping Duty Administrative Revi ews, Rescission of Administrative Review in 
Part, and Determination No t To Revoke Order in Part , 68 Fed. Reg. 35,623 (16 June 2003) ("Ball 
Bearings and Parts Thereof 2001-2002 "). 
 
 Anti-friction Bearings and Parts Thereof From Fr ance, Germany, Italy, Japan, Singapore, and the 
United Kingdom: Final Results of Anti-dumping Duty Administrative Reviews, Rescission of 
Administrative Reviews in Part, and De termination To Revoke Order in Part , 69 Fed. Reg. 55,574 
(15 September 2004) ("Ball Bearings and Parts Thereof 2002-2003 "). 
 
Sunset Reviews  
 Final Results of Expedited Sunset Revi ews: Anti-friction Bearings From Japan
, 64 Fed. Reg. 
60,275 (4 November 1999) ("Expedited S unset Review of Anti-friction Bearings "). 
  Corrosion-Resistant Carbon Steel Flat Products From Japan; Final Results of Full Sunset Review 
of Anti-dumping Duty Order , 65 Fed. Reg. 47,380 (2 August 2000) ("Full Sunset Review of 
Corrosion-Resistant Carbon Steel Flat Products "). 
 WT/DS322/R          
Page 4  
 
III. REQUESTS FOR FINDINGS AND RECOMMENDATIONS 
(a) Japan 
3.1 Japan requests that the Panel find that th e United States' zeroing procedures are " as such " 
inconsistent with
6: 
(1)  Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the 
GATT 1994 because, in any type of anti-dumping proceeding, the determination of dumping, 
and the calculation of the dumping margin, is not for the product as a whole;  (2)  Article 2.4 of the AD Agreement  because, in any type of anti-dumping proceeding, the 
zeroing procedures are inherently biased, distor t the comparison of normal value and export 
price and, thus, deprive exporters of a "fair comparison"; 
 (3)  Articles 3.1, 3.2, 3.3, 3.4 and 3.5 of the AD Agreement  because the injury determination 
in original investigations is not based on an "objective examin ation" of "positive evidence" 
regarding the existence and amount of dumping and dumped imports; 
 
(4)  Article 5.8 of the AD Agreement  because the USDOC does not have "sufficient 
evidence" of dumping to assess whether it mu st terminate original investigations; 
 (5)  Articles 9.1, 9.2, 9.3 and 9.5 of the AD Agreement  because margins calculated in 
periodic and new shipper reviews are not establis hed consistently with Articles 2.1, 2.4 and 
2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994, and the United States 
fails to ensure that duties collected do not ex ceed the proper margin of dumping established on 
a fair comparison basis for the product as a whole;  (6)  Articles 11.1, 11.2 and 11.3 of the AD Agreement  because changed circumstances and 
sunset reviews are not conducted on the basis of dumping margins calculated through a fair 
comparison for the product as a whole, as required by Articles 2.1, 2.4 and 2.4.2 of the AD Agreement , and Articles VI:1 and VI:2 of the GATT 1994; and 
 (7)  Article 1 of the AD Agreement  as they are inconsistent with various provisions of the 
AD Agreement  as referred to in (1) – (6) above. 
 
(8)  Japan also requests that the Panel find that, by maintaining the model and simple 
zeroing procedures, the United States acts inconsistently with Article 18.4 of the AD Agreement  
as well as Article XVI:4 of the Marrakesh Agreement Establishing the World Trade 
Organization ("WTO Agreement"). 
 
3.2 Japan further requests that Panel find that, thro ugh the application of the zeroing procedures, 
the anti-dumping measures
7: 
 (1) in CTL Plate , 64 Fed Reg. 73,215, an original in vestigation, are inconsistent with 
Articles 1, 2.1, 2.4, 2.4.2, 3.1, 3.2, 3.3, 3.4, and 3.5 of the AD Agreement  and Articles VI:1 and 
VI:2 of the GATT 1994; 
 
                                                      
6 Japan First Written Submission, paras. 194-197. 
7 The full citations to the following anti-dumping proceedings can be found in the Table following 
para. 2.3 of this Report.                   WT/DS322/R 
Page 5 
 
 
 
  (2) in Tapered Roller Bearings and Parts Thereof 1998 - 1999 , 66 Fed Reg. 15,078, a 
periodic review, are inconsistent with Articles 1,  2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the 
AD Agreement  and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (3) in Tapered Roller Bearings and Parts Thereof 1997 - 1998 , 65 Fed Reg. 11, 767, a 
periodic review, are inconsistent with Articles 1,  2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the 
AD Agreement  and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (4) in Ball Bearings and Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219, a periodic review, 
are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994; 
 
 (5) in Cylindrical Roller Bearings and Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219, a 
periodic review, are inconsistent with Articles 1,  2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the 
AD Agreement  and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (6) in Spherical Plain Bearings and Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219, a 
periodic review, are inconsistent with Articles 1,  2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the 
AD Agreement  and Articles VI:1, and VI:2 of the GATT 1994; 
  (7) in Ball Bearings and Parts Thereof 1999-2000
, 66 Fed. Reg. 36,551, a periodic review, 
are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994; 
 
 (8) in Cylindrical Roller Bearings and Parts Thereof 1999 , 66 Fed. Reg. 36,551, a periodic 
review, are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  
and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (9) in Spherical Plain Bearings and Parts Thereof 1999 , 66 Fed. Reg. 36,551, a periodic 
review, are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  
and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (10) in Ball Bearings and Parts Thereof 2000-2001 , 67 Fed. Reg. 55,780, as amended by, 67 
Fed. Reg. 63,608, a periodic review , are inconsistent with Articles 1,  2.1, 2.4, 2.4.2, 9.1, 9.2, 
and 9.3 of the AD Agreement  and Articles VI:1, and VI:2 of the GATT 1994; 
 
 (11) in Ball Bearings and Parts Thereof 2001-2002 , 68 Fed. Reg. 35,623, a periodic review, 
are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994; 
 
 (12) in Ball Bearings and Parts Thereof 2002-2003 , 69 Fed. Reg. 55,574, a periodic review, 
are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994; 
 
 (13) in Expedited Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 60,275, are 
inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 11.1, and 11.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994;  and 
 
 (14) in Full Sunset Review of Corrosion-Resistant Carbon Steel Flat Products , 65 Fed. Reg. 
47,380, are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 11.1, and 11.3 of the AD Agreement  and 
Articles VI:1, and VI:2 of the GATT 1994. 
 WT/DS322/R          
Page 6  
 
3.3 Pursuant to Article 19.1 of the DSU, Japan  requests that the Panel recommend that the 
United States bring its measures, found to be inconsistent with the WTO Agreement, the AD Agreement  
and the GATT 1994, into conformity with its obligations under those Agreements. 
3.4 Japan draws to the Panel's particul ar attention the urgency of this dispute.  While the dispute is 
pending before the Panel, the United States will seek  to determine the final anti-dumping duty liability 
in the "as applied" periodic reviews, by liquidating these cases one-by-one.  Under United States law, 
following the liquidation of entries, anti-dumping duties paid will not be refunded.  In addition, further 
periodic and sunset reviews for these cases are curren tly being conducted in reliance upon the standard 
zeroing procedures.  Japan wishes to ensure "prompt"  resolution of this dispute, consistent with 
Article 3.3 of the DSU, to avoid further WTO dis putes regarding the over-payment of duties in these 
cases. 
(b) United States 
3.5 The United States requests that the Panel re ject Japan's claims in their entirety.
8 
IV. ARGUMENTS OF THE PARTIES 
4.1 This section of the Report contains a summary of the arguments submitted by the Parties.  As 
noted in paragraph 6.2, infra , the Panel invited the Parties, afte r considering the Parties' specific 
requests relating to the Interim Report of the Panel, but before issuance of its Final Report, to submit 
comments on any relevant issues of law re lating to the Appellate Body Report in US – Zeroing (Japan)9 
- the summary of the comments submitted by the Parties is reflected in paragraph 6.4 et seq . 
A. BURDEN OF PROOF AND STANDARD OF REVIEW  
1. Burden of Proof 
(a) United States10 
4.2 The United States states that, under the WTO, the burden of proving that obligations have not 
been satisfied is on the complaining party.  In US – Carbon Steel , the Appellate Body explained that the 
complaining party bears the burden of proof with resp ect to an "as such" claim as well as an "as applied" 
claim.11  Accordingly, the burden is on Japan to prove that the United States acted in a 
WTO-inconsistent manner with respect to both its "as applied" and its "as such" claims.  The burden is 
not on the United States as a respondent to prove that it acted in a WTO-consistent manner. 
2. Standard of Review 
(a) United States12 
4.3 The United States states that the standard of  review of an investigating authority's 
establishment and evaluation of facts is set forth in Article 17.6(i) of the AD Agreement .  The applicable 
standard of review is whether the authority's establishment of facts was proper and whether its 
evaluation of those facts was objective and unbiased, not whether the panel would have made the same 
                                                      
8 US First Written Submission, para. 110. 
9 The Appellate Body Report in US – Zeroing (EC)  was issued to Members on 18 April 2006, that is, 
before the Panel could circulate its Final Report in this matter to the Parties. 
10 US First Written Submission, paras. 16-17. 
11 Appellate Body Report, US – Carbon Steel , paras. 156-157. 
12 US First Written Submission, paras. 18-24.                   WT/DS322/R 
Page 7 
 
 
 
 establishment and evaluation.  The United States cites US – Steel Plate  which is among a number of 
panels that have summed up the ro le of a panel under Article 17.6(i): 
"The standard requires us to assess the fact s to determine whether the investigating 
authorities' own establishment of facts w as proper, and to assess the investigating 
authorities' own evaluation of those facts to determine if it was unbiased and objective.  
What is clear from this is that we are precluded from establishing facts and evaluating them for ourselves – that is, we may not engage in de novo  review."
13 
4.4 With regards to Article 17.6(ii), the United States asserts that a panel must consider whether an 
investigating authority's interpretation of the AD Agreement  is a permissible interpretation.  
Article 17.6(ii) acknowledges that there may be provisions of the AD Agreement  that "admit[] of more 
than one permissible interpretation."  Where that is  the case, and where the investigating authority has 
relied upon one such interpretation, a panel is to find  that interpretation to be in conformity with the 
Agreement.14 
4.5 The United States argues that the negotiators of the AD Agreement  saw fit to make specific 
provision for those instances in which the custom ary rules of treaty interpretation would find a 
provision of the AD Agreement  susceptible to more than one permissible reading.  That very fact 
provides context for the interpretation of the AD Agreement .  It reflects the negotiators' understanding 
that they had left a number of issues unresolved, a nd that customary rules of interpretation would not 
always yield only one permissible reading of a given provision.  The negotiators also recognized that 
they could not possibly foresee ever y interpretive question in the c onduct of highly technical and 
complex anti-dumping proceedings.  They understood that, with re gard to many of these complex 
issues, the established practices of national authorities at the time of the AD Agreement 's conclusion 
differed, and that the AD Agreement  should allow sufficient flexibility for authorities to continue their 
different practices. 
4.6 The United States states that, in applying Artic le 17.6(ii) to the present case, the Panel should 
recall that there may be multiple permissible in terpretations of particular provisions in the 
AD Agreement .  Accordingly, the Panel should reject Japan's claims where the position of the 
United States is the result of a permissible interpretation. 
B. "AS SUCH" CLAIMS  
1. Zeroing Procedures Challenged as Measures  
(a) Japan15 
4.7 Japan argues that zeroing is an integral part of USDOC procedures for calculating margins of 
dumping. 
                                                      
13 Panel Report, US – Steel Plate , para. 7.6;  see also Panel Report, Argentina – Poultry Anti-Dumping 
Duties , para. 7.45 (Under Article 17.6(i), panels "may not engage in de novo  review"); Panel Report, Egypt – Steel 
Rebar , paras. 7.8 and 7.14 (acknowledging that Article 17.6(i) precludes de novo  review); Panel Report, 
Guatemala – Cement II , para. 8.19 ("We consider that is not our role to perform a de novo  review of the evidence 
which was before the investigating authority in this case."). 
14 Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.341 and n. 223 ("We recall that, in 
accordance with Article 17.6(ii) of the AD Agreement , if an interpretation is 'permissible', then we are compelled 
to accept it."). 
15 Japan First Written Submission, para. 11-64;  Japa n Executive Summary to First Written Submission, 
paras. 2-10; Japan Second Written Submission, paras. 6- 39, 72-82;  Japan Executive Summary to Second Written 
Submission, paras. 5-17. WT/DS322/R          
Page 8  
 
4.8 Japan argues that in calculating dumping margin s in any anti-dumping proceeding, the USDOC 
compares normal value and export price using one of th e three methods set forth in Article 2.4.2 of the 
AD Agreement : the comparison of "a weighted average norma l value with a weighted average of prices 
of all comparable export transactions" ("W-to-W" co mparison); the comparison of a normal value and 
export prices on a transaction-to-transaction basis"  ("T-to-T" comparison), and the comparison of a 
weighted average normal value to prices of indi vidual export transactions ("W-to-T" comparison). 
4.9 Japan argues that Zeroing is an integral part  of the USDOCs procedures for each of the three 
methods of comparison.  Specifically, the USDOC maintains two different zeroing procedures which 
Japan labels: "model zeroing", which is part of the W-to-W comparison method, and "simple zeroing", 
which is part of the T-to-T and W-to-T comparison methods.
16  Zeroing is part of the standard 
calculation procedures used by the USDOC in calc ulating dumping margins under all three comparison 
methods and in all types of anti-dumping proceedings. 
4.10 Japan underlines that its claims regarding the WTO-inconsistency of the model and simple 
zeroing procedures are not tied to the use of these pr ocedures in any particular type of anti-dumping 
proceeding, or as part of any particular method of comparison.  Japan claims that both of the zeroing 
procedures are "as such" WTO-inconsistent irrespectiv e of the type of proceeding and also the method 
used to compare normal value and export price.  Jap an explains "model zeroing" and "simple zeroing" 
in turn. 
4.11 Japan posits that, in calculating a dumping margin on a W-to-W basis, the United States 
proceeds in three steps.  In the first step, the USDOC sub-divides the product as a whole into a series of 
"averaging groups"17 or "models."  An averaging group consists  of goods that are identical or virtually 
identical in all physical characteristics.18  A W-to-W comparison between normal value and export 
price is made within these models.19  There are three possible outcomes to these model-based 
comparisons.20  Normal value may exceed export price for a particular model, in which case there is a 
positive price difference for the model (what United States' domestic law calls a "dumping margin"21); 
export price may exceed normal value, in which case the price difference or amount of dumping for the 
model is negative; or, finally, normal value and ex port price may be equal, in which case the price 
difference or margin22 is zero.  The overall margin of dumping for the product is obtained by 
aggregating the multiple model-based comparisons a nd expressing the result as a percentage.  In the 
second step of the calculation procedures, the USDO C calculates both the numerator and denominator 
for the fraction from which the overall percentage is derived.  The numerator is the total amount of 
dumping23 by model and the denominator is the total value of all comparable export transactions.  
Under the model zeroing procedures, in summing the comparison results by model to calculate the 
                                                      
16 As part of its explanation of the US' margin calculation procedures, Japan submits the testimony of 
Valerie Owenby, an expert in the US' computer programmi ng procedures.  Japan First Written Submission, para. 
12; Exhibit JPN-1 ("Owenby Statement"). 
17 19 C.F.R. section 351.414(d)(1) (Exhibit JPN-3). 
18 19 C.F.R. section 351.414(d)(2) (Exhibit JPN-3). 
19 19 C.F.R. section 351.414(d)(1) (Exhibit JPN- 3); USDOC Anti-Dumping Manual, Chapter 7, pages 
27-28 (Exhibit JPN-5.B); and Chapter 9, pages 23 and 27 (Exhibit JPN-5.C). 
20 Japan First Written Submission, para. 18;  Exhibit JPN-1 ("Owe nby Statement"). 
21 Title VII of the Tariff Act of 1930, as amended by the Uruguay Round Agreem ents Act (1994), Section 
771(35)(A) ("Tariff Act") (Exhibit JPN-2). 
22 Initially Japan refers to "price difference" an d "price difference or amount of dumping", but 
subsequently refers to "intermediate comparison re sult".  See Japan Response to Panel Questions, dated 
19 October 2005 ("Japan 19 October 2005 Answers"), pa ra. 90, and Japan Comments on US Response to Panel 
Questions, dated 19 October 2005 ("Japan Comments on US 19 October 2005 Answers"), para. 41. 
23  At first Japan refers to "the total amount of dumping", but subsequently referred to "an aggregation of 
the comparison result".  See  Japan 19 October 2005 Answers, para.90, and Japan Comments on US 
19 October 2005 Answers, para. 41.                   WT/DS322/R 
Page 9 
 
 
 
 numerator, the USDOC includes so lely the results for models with positive differences.  All 
comparisons with negative differences are disregarde d in the calculation of the numerator.  Thus, for 
models with negative results, the USDOC purposefully  ignores the results of the comparison of normal 
value and export price.  As a result, the sum total am ount of dumping in the numerator is inflated by an 
amount equal to the excluded negative results.  In  calculating the denominator of the fraction, the 
USDOC includes the total value of all comparable export transactions for all models. In the final step of 
the calculation procedures, the USDOC expresses th e fraction as a percentage overall margin of 
dumping, known in the United States' la w as the "weighted average dumping margin".24 
4.12 Japan states that simple zeroing is very similar to model zeroing.  The key difference stems 
from the differences between the W-to-W comparison,  on the one hand, and the T-to-T and W-to-T 
comparisons, on the other.  Whereas the W-to-W comparison is based on a comparison of export transactions grouped by model, the other two methods  are based on comparisons with individual export 
transactions.  Thus, instead of zeroing by model,  the USDOC zeroes by individual export transaction 
under the simple zeroing procedures.  After iden tifying comparable export transactions, the USDOC 
compares export price for these transactions with eith er a weighted average normal value (W-to-T) or 
transaction-specific normal value (T-to-T).  Thus, the USDOC calculates the price difference (what United States' law calls the "dumping margin") for each comparable export transaction.  Again, there 
are three possible outcomes to these comparisons.  Normal value may exceed export price for a 
particular transaction, in which case the United St ates considers that there is a positive "dumping 
margin" or intermediate comparison result for the tr ansaction; export price may exceed normal value, in 
which case the difference or intermediate comparison result for the transaction is negative; or, finally, 
normal value and export price may be equal, in wh ich case the difference or intermediate comparison 
result is zero.  As in the W-to-W comparison, in step  two, to derive a margin of dumping or an overall 
"weighted average dumping margin" for the produc t, the USDOC aggregates the multiple transaction 
comparisons undertaken and expresses the result as a pe rcentage.  Again, the USDOC sums the price 
differences exclusively for those comparisons for wh ich there was a positive intermediate comparison 
result.  All comparisons with negative differences are disregarded from the calculation of the numerator 
of the overall margin fraction.  Thus, where ther e is a negative difference, the USDOC purposefully 
ignores the results of the comparisons of export tran sactions and normal value.  As a result, the sum 
total of dumping is inflated by an amount equal to  the excluded negative differences.  As with model 
zeroing, the USDOC retains the total sales value of all comparable export transactions in the 
denominator.  In the final step of the calculati on procedures, the USDOC expresses the fraction as a 
percentage overall margin of dumping or "weighted average dumping margin". 
4.13 In light of this overview of the United St ates' procedures for calculating the margins of 
dumping, Japan turns to the descr iption of the measures at issue.
25  Japan explains that the USDOC 
relies  on computer programmes to manipulate the large quantity of  data that it obtains in anti-dumping 
proceedings.  In order to execute dumping calculati ons efficiently, it maintains standard computer 
programmes, which act as a model for use whenever the USDOC develops a specific computer programme in a particular anti-dumping proceeding.   The nature and purpose of these standard 
computer programmes are described in the USDOCs Import Administration Anti-Dumping Manual ("Manual").
26  The Manual demonstrates that the USDOC maintains standard computer programmes to 
conduct and manage the entire process of calculating ma rgins of dumping in anti-dumping proceedings.  
The Manual notes that "consistency is achieved by insuring that the standard programmes conform with 
current AD calculation methodology".27  The Manual further states that "calculation consistency occurs 
when every programme uses the same standard cal culation methodology" – presumably the "proper" 
                                                      
24 Tariff Act, Section 771(35)(B) (Exhibit JPN-2). 
25 Exhibit JPN-1 – Owenby Statement. 
26 Exhibits JPN-5 to 5.C. 
27 Exhibit JPN-5.C, page 8. WT/DS322/R          
Page 10  
 
methodology.
28   In other words, Japan argu es, every programme that is a pplied by the United States in 
a particular proceeding must use "the same sta ndard calculation methodology", and that methodology 
must "conform" to the Administration's current methodological requirements, which are set out in the standard programmes.
29  The Manual also indicates that one of the standard computer programmes that 
the USDOC maintains is the AD Margin Calculation Programme.30  The Manual, therefore, shows that 
the USDOC maintains standard computer progr ammes, including the AD Margin Calculation 
Programme, that apply on a generalized and prospective basis. 
4.14 Japan posits that the USDOC maintains standa rd computer programmes for both original 
investigations and periodic reviews, which contain co mputer code that executes every procedure and/or 
combination of procedures applicable to an anti-dumping proceeding.31  The model and simple zeroing 
procedures are contained in these programmes.  
4.15 The United States' overall "weighted average dumping margin" calculation in original 
investigations, periodic reviews and new shipper reviews32, Japan argues, involves a three-step process.  
In Step 1 , the United States executes the procedures n ecessary to carry out the multiple W-to-W, 
W-to-T, or T-to-T comparisons on a model- or transaction-specific basis.  Under the variables 
UMARGIN and EMARGIN, the USDOC captures the per-unit (UMARGIN) and total (EMARGIN) 
difference between normal value and export price fo r each of the multiple comparisons.  In model 
zeroing, UMARGIN and EMARGIN reflect the per-un it and total intermediate comparison result for 
each model, and in simple zeroing they reflect the per-unit and total intermediate comparison result for 
each export transaction.  Where normal value exceeds export price, UMARGIN and EMARGIN are positive values.  Where export price exceeds norma l value, UMARGIN and EMARGIN are negative, 
and where export price and normal value are e qual, UMARGIN and EMARGIN are zero.  The 
United States retains data for export price, norma l value, UMARGIN, EMARGIN, and numerous other 
variables, in a dataset called "MARGIN". 
4.16 According to Japan, Steps 2 and 3
 of the overall dumping margin calculation are executed 
pursuant to the procedures in the "Calculate Ov erall Margin" section of the standard computer 
programmes.  Japan points out that, unlike a number of other sections in the standard programmes, the 
"Calculate Overall Margin" section does not cont ain computer-coded "switches" that permit the 
USDOC to turn the procedures in this section "off"  or "on".  This is because the procedures for 
calculating the overall percentage "weighted average dumping margin", including the standard zeroing 
procedures, are always part of the programming proc edures, and are used in every margin calculation.  
Moreover, since at least 1993, the USDOC has not al tered the essence of the procedures for calculating 
the overall "weighted average dumping margin", including the standard zeroing procedures. 
4.17 Japan argues that, in Step 2 , the USDOC derives the denominator  and numerator  for a fraction 
that is used to calculate the overall percentage wei ghted average dumping margin for the product.  First, 
the USDOC derives the denominator  of the fraction, which is the total value of all comparable export 
transactions.  To do this, the programming procedures extract from the MARGIN dataset, and sum, the 
sales values of all models or transactions.  Next, the USDOC derives the numerator  of the fraction, 
which is the total positive  intermediate comparison result for all m odels or transactions.  This time, the 
programme extracts from the MARGIN dataset, and sums, the positive  EMARGIN values, by model or 
transaction.  The programme selects from among a ll of the multiple model or transaction-specific 
                                                      
28 Exhibit JPN-5.C, page 8. 
29 Exhibit JPN-5.C, page 8. 
30 Referred to at Exhibit JPN-5.C, pages 9 and 30. 
31 Exhibits JPN-6 and 7. 
32 Japan notes that in both changed circumstances revi ews and sunset reviews, the US generally does not 
determine a new dumping margin, but instead relies on a margin calculated in the original investigation or a 
previous periodic review.                   WT/DS322/R 
Page 11 
 
 
 
 comparisons those with positive intermediate compar ison result.  Japan argues that the United States 
thus disregards all negative intermediate comparison r esults by inserting into this step a specific line of 
programming code:  WHERE EMARGIN GT 0.  This line instructs the SAS application to ignore all negative intermediate comparison results when deri ving the numerator.  This single line of computer 
programming represents the zeroing procedure at issue.  Japan refers to this as the "standard zeroing 
line".
33 
4.18 Japan asserts that, using the va riables created in Step 2 , in Step 3  of the procedure the overall 
percentage "weighted average dumping margin" is computed.  The United States divides the total 
positive intermediate comparison result (i.e . the numerator) by the total value of all comparable export 
transactions (i.e. the denominator), and multiplies the result by 100 to express the ratio as a percentage.  
This final percentage figure is the overall "wei ghted average dumping margin" for the product. 
4.19 In periodic reviews, Japan claims, the United Stat es always calculates two types of margins: an 
overall "weighted average dumping margin" for each e xporter, and importer-specific assessment rates.  
The overall "weighted average dumping margin" is  calculated using the programming procedures 
described, including the standard simple zeroing pro cedures.  That margin becomes the duty deposit 
rate that the United States applies to  future entries of the product for the purpose of collecting estimated 
duties, until completion of the next periodic review .  The standard computer programme for a periodic 
review includes an extra section of programming c ode to calculate the importer-specific assessment 
rates.  The importer-specific assess ment rates are used by the Un ited States to collect definitive 
anti-dumping duties for the review period.  The duties are collected from the importers of goods, rather 
than the exporters.  However, as the overall "weight ed average dumping margin" is calculated for an 
exporter, the USDOC must "allocate" an exporte r's dumping margin among the importers of that 
exporter's subject merchandise.  In essence, throu gh the importer-specific calculation procedures, the 
USDOC divides among the importers the total amount of dumping duties due for the product (i.e. the 
numerator  in the overall dumping fraction is divided among the different importers ).  This sub-divided 
figure is the numerator in a new fraction for each im porter.  The denominator is based on the total 
entered value of imports, by importer, as declared to United States Customs. The standard computer 
programme for periodic reviews contains program ming procedures to calculate both, and each section 
of the computer programme includes the standard  zeroing line by which all negative dumping amounts 
are disregarded.  
4.20 Japan asserts that the standard programmes serv e as models whenever the USDOC develops a 
case-specific programme for use in anti-dumping proceedings.  When a case-specific computer 
programme is formulated, however, the integrity of the standard programme is retained, and crucially, 
the standard zeroing line is always included unchanged.  
4.21 Japan claims that, in terms of Article 6.2 of the DSU, the standard model and simple zeroing 
procedures as well as the standard zeroing line are th e specific "measures" that are challenged "as such" 
in this dispute.  These measures are "administrative procedures" within the meaning of Article 18.4 of 
the AD Agreement .  In recent anti-dumping disputes the Appella te Body clarified the interpretation of 
the word "measure" as used in Article 6.2 of the DSU,  in the context of "as such" claims.  Japan points 
out that the Appellate Body explained thr ee important points for the current dispute. 
4.22 First, in US – Corrosion-Resistant Steel Sunset Review , the Appellate Body stated that the word 
"measure" extends to any act or omission by a Member  and that "acts setting forth rules or norms that 
are intended to have general and pr ospective application" "could constitu te a 'measure'".  The Appellate 
                                                      
33 When the USDOC uses the per-unit difference (UMARGIN) instead of the total difference 
(EMARGIN), a specific line of programming code inse rted into this step is "WHERE UMARGIN GT 0". WT/DS322/R          
Page 12  
 
Body further observed that this view "serv es the purpose of preventing future disputes".
34  Second, in 
US – Oil Country Tubular Goods Sunset Reviews  and in US – Corrosion-Resistant Steel Sunset Review , 
the Appellate Body suggested that an alleged "measu re" is assessed in WTO law irrespective of its legal 
character or status in domestic law.35 
4.23 In other words, claims Japan, the determin ation in WTO law is based on the "content and 
substance" of an act and not its "form and nomenclature".36  Japan points out that the United States 
appears to consider that the standard zeroing procedures and the standard zeroing line cannot be 
measures if they are not manifested in US domestic laws and regulations.37  Japan notes that the 
United States has advocated the contrary position in EC – Approval and Marketing of Biotech Products , 
in which it has argued that an "unwritten pro cedure" is a measure for purposes of WTO dispute 
settlement.38  The same reasoning applies in the case of the AD Agreement  as in the case of the 
SPS Agreement , the covered agreement involved in the EC – Approval and Marketing of Biotech 
Products dispute.39  Japan argues that it would be all too easy  for Members to evade their obligations 
under the AD Agreement  – and other covered agreements – if  unwritten rules and procedures could 
escape WTO scrutiny.40 
4.24 Third, the Appellate Body in Guatemala – Cement I  and US – Corrosion-Resistant Steel Sunset 
Review  and the Panel in Korea – Commercial Vessels suggested that a "measure" need not be binding or 
mandatory in domestic law.41 
4.25 Japan states that it brought the present dispute pursuant to the AD Agreement , Article 17 which, 
together with the DSU, sets fort h the rules applicable to the set tlement of anti-dumping disputes.  
Nothing in the Agreement  limits the types of measures that may, as such, be the subject of dispute 
settlement.42  Furthermore, under Article 18.4 of the AD Agreement , Members are required to ensure the 
conformity of their "laws, regulations and administrative procedures" with that Agreement .  As the 
Appellate Body explained, the quoted phrase "seems  to us to encompass the entire body of generally 
applicable rules, norms and standards adopted by Members in connection with the conduct of 
anti-dumping proceedings".43  An "as such" dispute under the AD Agreement  may, therefore, concern 
"administrative procedures", which are rules, norms or standards of general and prospective 
application. 
4.26 Japan also argues that the ordinary meaning of th e word "administrative," in Article 18.4 of the 
AD Agreement , refers to the "conduct or management of a ffairs"; and a "procedure" is "a system of 
proceeding; proceeding, in reference to its mode or method".44  In particular, the meaning of the word 
                                                      
34 Japan First Written Submission, para. 49. 
35 Japan First Written Submission, para. 51. 
36 Japan Second Written Submission, para. 9; US – Corrosion-Resistant Steel Sunset Review , 
footnote 87. 
37 Japan Second Written Submission, para. 9; US Re sponse to the Panel's Questions after the First 
Substantive Meeting of the Panel with the Par ties ("US 20 July 2005 Answers"), para. 2. 
38 Japan Second Written Submission, para. 10; Japan Executive Summary to Second Written 
Submission, para. 8; US First Written Submission, EC – Approval and Marketing of Biotech Products , para. 82. 
39 Japan Executive Summary to Second Written Submission, para. 8. 
40 Japan Executive Summary to Second Written Submission, para. 8. 
41 Japan Executive Summary to First Written Submission, para. 7; Appellate Body Report, US – 
Corrosion-Resistant Steel Sunset Review , paras. 81-88; Appellate Body Report,  US – Oil Country Tubular Goods 
Sunset Reviews , para. 187.  See also Panel Report, Korea – Commercial Vessels , para. 7.63. 
42 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 86. 
43 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 87. 
44 New Shorter Oxford English Dictionary , 1993 edition (Lesley Brown, ed.), Vol. 1, p. 28 
("administrative"); Vol. 2, p. 2363 ("procedure") (Exhibit JPN-4).  The New Shorter Oxford English Dictionary  
                   WT/DS322/R 
Page 13 
 
 
 
 "procedure" includes "computers: a set of in structions for performing a specific task".45  Thus, an 
"administrative procedure", in Article 18.4, is a system or method, including a set of computer instructions, used by investigating authorities to conduct or manage anti-dumping proceedings. 
4.27 Japan argues that the standard model and simp le zeroing procedures set forth in the USDOCs 
standard computer programmes, as well as the standard zeroing line in the programmes, are 
"administrative procedures" under Article 18.4 of the AD Agreement  that are "as such" measures.  In 
particular, the zeroing procedures are a pre-dete rmined, standardized system or method for 
mechanistically conducting and managing, on a unif orm and predictable basis, an aspect of the 
USDOCs margin calculations in all anti-dumping proceedings, irrespective of the method of 
comparison used.  Through standard computer-coded instructions, the procedures automatically select 
only positive  price differences between normal value and expo rt price for inclusion in the calculation of 
the dumping amount in the numerator of the overall dumping margin calculation. 
4.28 Japan argues there is overwhelming and uncontest ed record evidence that the United States 
maintains standard zeroing procedures that are measures for purposes of WTO dispute settlement and 
that constitute "administrative procedures" within the meaning of Article 18.4 of the AD Agreement .
  
Japan points out that the United States has not provide d evidence of a single instance in which it did not 
use its zeroing procedures.  The continued use of zeroing procedures in a T-to-T comparison by the 
USDOC in the implementation of the recommendation and ruling of the DSB in US – Softwood 
Lumber V  46 further confirms that the zeroing procedures are rules, norms or standards of general and 
prospective application. 
4.29 Among the evidence that Japan uses to show the existence and the substance of the standard 
zeroing procedures, Japan points to numerous statem ents by the USDOC, the United States Department 
of Justice ("USDOJ") and the United States domes tic courts, which confirm the existence and the 
substance of the standard zeroing procedures that  Japan challenges as "as such" measures.  These 
official US government statements also explain th e operation of the zeroing procedures in a manner that 
is fully consistent with Japan's description of these measures.   Thus, the passages cited by Japan from 
the United States Government and from the US dom estic courts contain unequivocal statements 
attesting to the long-standing existence and the content of the zeroing procedures as a general and 
prospective rule in margin calculations. 
4.30 Japan also submits that the USDOC Import Administration Anti-Dumping Manual 
demonstrates that the USDOC has developed and maintains a standard calculation methodology and 
that this methodology is reflected in the standa rd programme.  Japan asserts that the standard 
programmes are written in such a way that the zer oing procedure is executed automatically in the 
margin calculation process.  As a part of the standa rd programmes, the standard zeroing line is found in 
every margin calculation programme applied by the USDOC in specific anti-dumping proceedings, 
including the 26 case-specific computer programmes subm itted by Japan.  The cons istent application of 
zeroing procedures demonstrates the generalized, norma tive and prospective nature of the application 
of these procedures.  Japan presents testimony from Ms. Valerie Owenby, an expert in the US anti-dumping computer programming procedures, who stated that, since 1993, she is unaware of any 
                                                                                                                                                                    
 
defines a "method" as "[a] mode of procedure; a (defined or systematic) way of doing  anything, esp. (w. 
specifying wd or wds) in accordance w ith a particular theory or as asso ciated with a particular person". 
45 New Shorter Oxford English Dictionary , 1993 edition (Lesley Brown, ed.), Vol. 2, p. 2363 
("procedure") (Exhibit JPN-4). 
46 See Notice of Determination Under Section 129 of the Uruguay Round Agreements Act: 
Anti-Dumping Measures on Certain Softwood Lumber Products From Canada , 70 Fed. Reg. 22636 (2 May 2005).  
Exhibit JPN-27.  See also Original  Investigation Computer Programm e: URAA Section 129 Proceeding on 
Softwood Lumber from Canada (Final Determination), Exhibit JPN – 24. WT/DS322/R          
Page 14  
 
case-specific margin calculation programme in any US  anti-dumping proceeding, in which the standard 
zeroing line did not feature.  In short, Japan submits  that the totality of the evidence in this dispute 
demonstrates that the standard zeroing procedur es constitute a general rule, norm or standard 
susceptible of challenge under the Anti-Dumping Agreement  and the DSU. 
4.31 Japan argues that the standard zeroing line is an instrument setting forth rules or norms that are 
intended to have general an d prospective application
47.  As noted, according to its ordinary meaning, the 
term "administrative procedures" includes "a set of  [computer] instructions for performing a specific 
task".  The United States acknowledges that the com puter programmes at issue and the specific lines of 
computer code in them are "a set of computer instructions".48  The standard zeroing line is comprised of 
computer-coded instructions that expressly direct the execution of the standard zeroing procedures and, 
therefore, forms a part of the USDOCs "administra tive procedures" for calculating margins of dumping. 
4.32 Japan acknowledges that the United States points out  a small, but unspecified, number of cases, 
in which the USDOC did not use the standard zeroing line because it did not use SAS computer 
software.  Even in the handful of instances when the standard zeroing line was not applied, Japan states 
that the standard zeroing procedures were always  used.  In particular, the United States admits that, in 
these instances, negative comparison results were excluded using other software or, even, manually.49  
Japan argues that the fact that the standard zeroing  line is not used in every investigation does not 
deprive these computer-coded instructions of thei r quality as a rule, norm or standard of general 
application.  A rule may, by definition, be gene ral in character although not necessarily applied.  
without exception, in all circumstances.  
4.33 Japan observes the United States' argument that the standard computer programme cannot be a 
measure because, first, Japan has "not even identified a 'standa rd computer programme'" and "there is 
no single computer programme to be challenged as su ch for every programme is tailored to each case";  
and, second,  Japan has not shown that the standard programmes in their entirety are generally 
applicable.  In response, Japan argues that, first, it had identified and submitted two programmes that 
the USDOC itself styles as "standard programmes".  Japan  also demonstrated that the standard zeroing 
line features in the two standard programmes a nd is also included in a series of case-specific 
programmes.  Second , where the contested measure constitutes a sm all part of a larger instrument, Japan 
asserts that it is unnecessary to look beyond the measure and examine other parts of the instrument that 
are not part of the dispute.  Third , as explained, the standard zeroing line is a rule, norm or standard of 
general and prospective application.  
4.34 Japan argues that the United States is incorrect in suggesting that Japan has not demonstrated 
that the zeroing procedures mandate a viola tion of the United States' WTO obligations.50  Although 
Japan firmly believes that a measure does not have to  be mandatory to be inconsistent as such with 
WTO law, Japan has submitted ove rwhelming and uncontested evidence that the standard zeroing 
procedures and the standard zeroing line mandate a vi olation of WTO obligations.  Japan notes that the 
Appellate Body has not yet opined definitively on  the relevance of the mandatory/discretionary 
doctrine51, and that the mandatory/discretionary distinction is, at most, an "analytical tool" to assist in 
deciding if a measure is WTO-consistent, but that this tool must not be applied "mechanistically".52  In 
US – Corrosion-Resistant Steel Sunset Review , US – Carbon Steel  and US – 1916 Act , the 
                                                      
47 Appellate Body Report, US – OCTG from Argentina , para.187. 
48 US First Written Submission, para. 36. 
49 US 20 July 2005 Answers, para. 9. 
50 See Japan Second Written Submission, paras. 72- 82; US 20 July 2005 An swers, paras. 13-16. 
51 Japan Opening Statement, First Substantive Meeting of the Panel with the Parties, paras. 14-18; 24.  
Japan 20 July 2005 Answers, para. 28-39.  Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , 
para. 93. 
52 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 93.                   WT/DS322/R 
Page 15 
 
 
 
 Appellate Body found that the mandatory/discretionary distinction must be analyzed in the light of the 
burden of proof and, therefore, of the evidence as a whole.53 
4.35 In short, Japan argues, the zeroing procedures and the standard zeroing line preclude the 
United States from complying with its WTO obligations.  The zeroing procedures and the standard 
zeroing line prevent the United States from calcula ting a margin of dumping for the "product" as a 
whole on the basis of a "fair comparison", as required by the AD Agreement  and the GATT 1994.  The 
evidence of the consistent application of the measur es confirms this and also demonstrates that the 
USDOC treats the zeroing procedures as well as the sta ndard zeroing line as a binding part of its margin 
calculation procedures. 
4.36 Japan notes that, in its 20 July  2005 Answers, the United Stat es argues that a measure does not 
mandate a violation of WTO law if an executive au thority retains discretion to avoid a breach of 
WTO.54  The United States goes on to argue that the USDOC Assistant Secretary has the discretion to 
decide whether to provide "offsets" in any particular investigation.55  In other words, according to the 
United States, the zeroing procedures are as such  WTO-consistent because the USDOC Assistant 
Secretary could decide not to apply them in an inves tigation or could change them.  Japan states that the 
United States is incorrect that executive discretion not to apply or to change a measure necessarily 
renders the measure WTO-consistent.  In US – 1916 Act , the measure at issue permitted the US 
Department of Justice ("USDOJ") to initiate crim inal enforcement proceedings on a discretionary 
basis.56  The United States argued that the criminal  provisions of the measure were not, as such, 
WTO-inconsistent because violations could be a voided through the USDOJs di scretion not to enforce 
these provisions.57  The Appellate Body disagreed, finding that  the criminal provisions of the measure 
were WTO-inconsistent, even though they  might not be applied by the USDOJ.58 
4.37 Japan argues that, in reaching this conclusion,  the Appellate Body cited approvingly the 
adopted GATT panel report in US – Malt Beverages .  In that dispute, an executive authority also 
enjoyed discretion not to apply the c ontested measures.  Indeed, in contr ast to the circumstances of this 
dispute, one of the measures was not applied at all and the other only "nominally" so.59  Despite this, the 
Panel found that the executive discretion not to apply the measures did not render them 
GATT-consistent.60 
4.38 Japan asserts that there is, therefore, a di stinction between two types of measure:  first, a 
measure that, in terms of its substantive content, mandates WTO-inconsistent action as a rule, with the 
executive enjoying discretion not to apply the measure in any individual case; and, second , a measure 
                                                      
53 Japan 20 July 2005 Answers, paras. 28 – 39. 
54 US 20 July 2005 Answers, para. 3.  The US  cited a statement by the Appellate Body in  US – Section 
211 Appropriations Act  (para. 259) to support its position that the mere existence of discretion to avoid a WTO 
violation renders a measure WTO-consistent.  However, co ntrary to the US' assertion, the Appellate Body framed 
the issue as a matter of a presumption  of compliance that can be rebutted by evidence relating to the consistent 
application of the measure.  Japan emphasizes that there is no room for such a presumption in this case because the 
standard zeroing procedures and the Standard Zeroing Li ne are measures that, in terms of their substantive 
content, mandate WTO-inconsistent actio n as a rule.  See Japan Second Written Submission, para. 78.  It is also 
worth noting that, in US – Section 211 Appropriations Act , the Appellate Body rejected the US' argument that 
"discretionary regulations, issued under a separate law,  cured the discriminatory aspects of the [mandatory] 
measure at issue."  See Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review,  footnote 94. 
55 US 20 July Answers, para. 11. 
56 Appellate Body Report, US – 1916 Act , paras. 90 and 91. 
57 Appellate Body Report, US – 1916 Act , para. 84. 
58 Appellate Body Report, US – 1916 Act , para. 91. 
59 Panel Report, US – Malt Beverages , paras. 5.58 and 5.60. 
60 Panel Report, US – Malt Beverages , paras. 5.39 and 5.60. WT/DS322/R          
Page 16  
 
that, by its own terms, does not require (but permit s) the executive to take WTO-inconsistent action.  
The substantive content of the first measure is WT O-inconsistent, whereas the substantive content of 
the second is not defined in the absence of executive action.  According to US – 1916 Act  and US – Malt 
Beverages , the first measure is WTO-inconsistent, despite  the possibility that th e executive may or may 
not apply the measure in certain cases. 
4.39 Japan argues that the distinctions established in US – 1916 Act  and US – Malt Beverages  serve 
a valuable anti-circumvention purpose.  Members c ould very simply and indefinitely evade their WTO 
obligations, maintaining and consistently applying WTO-inconsistent  general rules, if these rules were 
held to be as such WTO-consistent on the grounds th at the Member's executive might, one day, decide 
not to apply them.  This is particularly so for "administrative procedures" under the AD Agreement  that, 
by their very nature, are often adopted by an executive authority that could easily retain discretion not to 
apply them. 
4.40 Japan argues that this line of GATT and WTO case-law is particularly apposite in the 
circumstances of the current dispute.  The zeroi ng procedures have been maintained by the USDOC 
since before the AD Agreement  entered into force in 1995.  Althou gh the United States asserts that the 
USDOC Assistant Secretary has discretion not to appl y the procedures in a particular investigation, it 
has failed to show a single instance where this happe ned.  The alleged discretion is, therefore, more 
theoretical than real.  In any event, following US – 1916 Act  and US – Malt Beverages , the 
USDOC discretion not to apply the zeroing procedures  in a particular investigation is irrelevant. 
4.41 Japan argues that the issue is not whether the USDOC Assistant Secretary could decline to 
apply the zeroing procedures in a particular investig ation; nor is the issue whether the USDOC  could 
change the zeroing procedures.  All laws, regulati ons and procedures are subject to change, whether 
they are mandatory or not.  Instead, the issue is wh ether the zeroing procedures themselves – in terms of 
their substantive content – mandate a violation of WTO obligations as a rule.  As the evidence shows, 
the answer to this question is plainly, "yes".  Under the zeroing procedures, negative comparison results 
are systematically and mechanically discarded in the calculation of the numerator, representing the 
apparent total amount of dumping.  In terms of the zer oing procedures, there is no other alternative.  As 
the USDOC put it, notwithstanding the USDOC Assistant Secretary's alleged discretion, " we do not 
allow " "offsets" that compensate for negative comparison results.
61  This is also borne out by the 
uncontested evidence of the consistent application of the zeroing procedures, which shows that the 
USDOC treats the measure as a binding part of its pr ocedures.  There can, therefore, be no presumption 
that the USDOC Assistant Secretary will not apply the zeroing procedures. 
4.42 In response to the Panel's questions regarding how  the consistent application of a procedure of 
zeroing can establish the existence of a measure a nd whether the measure challenged "as such" can be 
identified simply by reference to its consistent ap plication, Japan argues th at it does not identify the 
zeroing procedures "simply by reference"  to their consistent application.62  Japan argues that it has 
relied on several categories of evidence – the US DOC Anti-Dumping Manual;  standard zeroing line; 
statements by the USDOC, USDOJ, and United States c ourts;  the Valerie Owenby Statement;  and the 
consistent application of the zer oing procedures demonstrated in 26 case-specific programmes – which 
taken together demonstrate that the zeroing proced ures constitute a general rule, norm, or standard 
maintained by the United States for calculating dumping margins.  Japan argues that, in a case such as 
this, where a Member has failed to publish a gene ral measure in written form, a Member can draw 
evidence from other sources to establish the existen ce of the measure, and challenge it "as such". 
                                                      
61 See Issues and Decision Memorandum for the An ti-Dumping Duty Administrative Reviews of 
Anti-friction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, 
Japan, Singapore, and the United Kingdom for the Period of Review 1 May 2002, through 30 April 2003, Comment 1 (at 12-14) (15 Sept. 2004 ) (emphasis added ).  Exhibit JPN-21.D. 
62  Japan 19 October 2005 Answers, paras. 2-12.                   WT/DS322/R 
Page 17 
 
 
 
 4.43 Further, where a Member has failed to publish a ge neral rule, a consistent pattern of regulatory 
behaviour can indicate that the Member adopted, in the past, a general and prospective rule, 
particularly, for example, when the pattern of be haviour is extremely cons istent, over an extended 
period of time, in a variety of regulatory situations.  In answering a question by the Panel whether Japan 
contends that the zeroing procedure at issue can be challenged as a practice, Japan answers that the 
Panel should not attach too much significance to the description by the USDOC, the USDOJ, and the 
United States courts of zeroing as a "practice" as a matt er of domestic legal parlance, but should instead 
focus on the substance and content of the measure at is sue.  In this connection, Japan also asserts that its 
request for the establishment of a panel specifically  identifies the zeroing procedures as the measure at 
issue and describes their substantive content.  Wh ether or not the request includes "practice" is 
irrelevant because Japan is not challenging mere practice.63  Japan also submits, in response to a 
question of the Panel, that a "policy" of system atically applying the same methodology in dumping 
margin calculations can be found to be WTO-incons istent if the policy is a general rule, norm or 
standard with prospective application.64 
(b) United States65 
4.44 The United States argues that the Panel should re ject Japan's "as such" claims, that USDOCs 
"standard computer programme" is not a measure, an d that USDOCs "standard computer programmes" 
are tailored to each proceeding and do not mandate any action.  The United States argues that the "as such" claims set forth in Japan's panel request ar e limited to one so-called measure – the "computer 
programme".  Identified as "USDOCs AD Margin Ca lculation computer programme" in section B.1(a) 
prior to the listing of articles allegedly violated
66,  Japan's first submission only addresses what it refers 
to as the "computer programmes" as the measures subject to dispute settlement.67  The United States 
interprets the core of Japan's argument as being lim ited to the "standard zeroing line" in the "computer 
programmes".68 
4.45 The United States discusses whether the "standard computer programme" as alleged by Japan is 
a "measure" as understood under Article 6.2 of the DSU.   The Appellate Body has indicated that an 
instrument setting out rules or norms of gene ral application could be challenged "as such".69  First,  
Japan variously refers to "computer programme" an d "computer programmes".  This distinction is 
important.  In fact, there is no single computer progr amme to be challenged "as such".  USDOC staff do 
                                                      
63 Japan 19 October 2005 Answers, paras. 13-17 (citing Appellate Body Report, US – 
Corrosion-Resistant Steel Sunset Review , footnote 87). 
64 Japan 19 October 2005 Answers, para. 18. 
65 US First Written Submission, para. 29-37; US Executive Summary to First Written Submission, paras. 
4-9; US Second Written Submission, paras. 5-22; US Executive Summary to Second Written Submission, paras. 
2-13. 
66 That section of the panel request vaguely refers to "other related procedures" and states that these are 
collectively referred to as "zeroing", but Japan never id entifies what these "other related procedures" are.  
Moreover, in specifying the articles violated, Japan refers to "the Zeroing procedure" but does not explain what "the Zeroing procedure" is.  Paragraph 2 refers to "Un ited States laws, regulations and administrative procedures 
described above  . . . ", yet no laws, regulations, or administrative procedures were described above (except 
perhaps the computer programme, which is not a law, regulation, or administrative procedure). 
67  Japan First Written Submission, para. 57. 
68  See Japan First Written Submission, paras. 60-61.  Moreover, the US argues that Japan has failed to 
identify any measure to which its claims concerning the is sue of offsets when using the transaction-to-transaction 
methodology apply.  The US has not used the transaction-to-transaction methodology in any of the measures 
Japan challenges "as applied".  In addition, none of the computer programmes identified by Japan utilize the 
transaction-to-transaction comparison methodology. 
69  Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 187;  Appellate Body 
Report, US – Corrosion-Resistant Steel Sunset Review , para. 82. WT/DS322/R          
Page 18  
 
not apply a uniform computer programme to every case; instead, the computer programmes are tailored to each one.  Japan implicitly acknowledges as much in its exhibits; if there were only one computer 
programme, then Japan would not have had to incl ude the computer programme for each determination 
in its exhibits.
70  Accordingly, Japan has not even identif ied a "standard computer programme", and it 
would thus be difficult to conclude that it has identified a measure at all. 
4.46 Further, argues the United States, Japan's argum ent on the "computer programmes" themselves 
are limited to one line in the programmes, the so -called "standard zeroing line".  The United States 
claims that Japan does not even attempt to argue that the "standard computer programmes" meet the 
criteria to be measures.  For example, Japan argues that the "standard zeroing line" is "generalized and 
prospective", without addressing the  computer programmes in their entirety.71  For this reason as well, 
Japan has not met its burden of demonstrating that  the computer programmes are measures subject to 
dispute settlement. 
4.47 The United States states that in any event, even  in the context of a particular proceeding, 
whether one looks at an entire computer programme or one line in the computer programme, these are simply convenient tools to allo w USDOC official s to calculate dumping margins accurately and 
efficiently.  USDOC officials tell the computer programme s what to do, rather than the opposite.  In that 
regard, it is difficult to see how a computer progra mme, or one line of a computer programme, is an 
instrument that sets out rules or norms, nor do they have general or prospective application.  They do 
not have general application because they are tailo red for each case.  Similarly, they do not have 
prospective application because they apply only to th e particular case and do not apply to future cases. 
4.48 The United States argues also that USDOCs "Sta ndard Computer Programmes" are tailored to 
each proceeding and do not mandate any action.  If a pa rticular instrument is challenged as such, then, to 
be found WTO-inconsistent, it must mandate a breach.  The mandatory/discretionary doctrine has been 
consistently applied in GATT and WTO dispute settleme nt proceedings.  The test reflects the fact that, 
as the Appellate Body has noted, panels may not  presume bad faith on the part of Members.
72  Thus, if a 
measure provides a Member with the discretion to act in a WTO-consistent manner, it may not be 
presumed that the Member will exercise that discretion in bad faith.73  Therefore, even if USDOC 
computer programmes were considered to be measures , they cannot be found to be inconsistent with the 
WTO Agreements because they do not mandate any action, and Japan has not argued that they do.  
These programmes do not preclude the USDOC deci sion-maker from offsetting negative dumping 
margins, nor do they require the USDOC decision- maker to ignore negative dumping margins.  If the 
USDOC decision-maker decided to offset negative dum ping margins in a particular case, his decision 
would be implemented simply by using a different set of computer instructions. 
4.49 The United States thus argues that Japan has refe rred to nothing in US law which would support 
the conclusion that computer programmes are an ything but the means by which decision-makers 
implement their decisions, or that such programmes require decision-makers to act in any particular 
way. 
4.50 Moreover, the United States argues that neither Jap an's first submission, its statements before 
the Panel, nor its answers to Panel questions de monstrate how what it refers to as the "zeroing 
                                                      
70 The US notes, in this regard, that Ms. Owenby te stifies that USDOC may have "anywhere from two to 
five separate standard programmes to calculate a dumping margin."  Owenby Statement, para. 8 (Exhibit JPN-1). 
71  Japan First Written Submission, para. 60. 
72  Appellate Body Report, Brazil – Aircraft , para. 114. 
73  The US argues that this does not preclude the possib ility that a particular obligation, by its terms, 
prohibits such discretion.                   WT/DS322/R 
Page 19 
 
 
 
 procedures" and the "standard zeroing line" are me asures, let alone whether they mandate a breach.74  
Instead, Japan's submissions gloss over key issues while making a series of unsubstantiated assertions. 
4.51 The United States argues that, in its attempt to secure an "as such" finding against the 
United States, Japan challenges so-called "zeroi ng procedures" as a measure subject to dispute 
settlement.  However, Japan still has not identifie d any actual measure of the United States that 
corresponds to these "zeroing procedures," nor could it.  Indeed, Japan in its first submission 
acknowledged that the very term "zeroi ng procedures" is Japan's invention75 – and in that submission 
Japan failed to explain just how these "procedures" are a measure of the United States, and therefore 
subject to WTO dispute settlement.  Japan's answers to Panel questions further acknowledge that what it 
terms "zeroing procedures" do not actually exist, except  to the extent that they are supposedly "applied" 
via the so-called "standard zeroing line."  In other wo rds even if these "zeroing procedures" exist, they 
have no "functional life of their own".76 
4.52 The United States argues that Japan attempts to avoid the obvious conclusion that these 
procedures do not exist and are not measures at all by inaccurately conflating the discussion of what 
may constitute a measure for dispute settlement pu rposes generally with what constitutes a law, 
regulation, or administrative procedure for purposes of the AD Agreement .  Japan states that "the 
measure at issue must be an act attributable to the United States ... and it must form part of the generally 
applicable rules, norms or standards maintain ed by USDOC in connection with the conduct of 
anti-dumping proceedings"77  Not only does Japan fail to explain ho w something that doesn't exist is an 
"act"78, but Japan also omits one component of the analytical framework on which it relies:  Under that 
approach, an "act" can be a measure subject to di spute settlement, without regard to a particular 
application of the alleged measure, only if that "act" sets forth rules or norms intended to have 
generalized and prospective application.  Japan has provided no analysis as to how these non-existent 
procedures set forth rules or norms intended to have  generalized and prospective application; Japan 
simply states that it is so.79 
                                                      
74  The US notes Japan's statement in its answers to the Panel questions that it "reserves its right" to 
pursue arguments against several additional "measures:" an  alleged "invariable practice," "the Manual," and US 
legislation and regulations.  However, Japan's "reservation" contains several flaws.  First , "practice" is not an 
alleged measure within the Pane l's terms of reference, and second , at this point, Japan may not introduce any 
evidence with respect to the Anti-Dumping Manual and US legislation and regulations.  
With respect to the Panel's terms of reference, Article 6.2 of the DSU  requires a Member, in its panel 
request, to "identify the specific measur es at issue".  Japan did not identify "p ractice" (or "invariable practice") as 
a "measure" in its panel request.  Th erefore, any claim against "practice" would be beyond the terms of reference 
of this dispute. 
With respect to "the Manual", US legislation, or US regulations, Japan did not present any evidence in its 
first written submission, and paragraph 14 of the Panel's Working Procedures precludes Japan from doing so in the 
future.  Paragraph 14 states that parties shall submit factual evidence no later than during the first substantive 
meeting .  In addition, were Japan to present evidence at this late stage of the proceedings, this would deprive the 
US of a full opportunity to defend its interests. 
75 Japan First Written Submission, para. 1. 
76  See Panel Report, US – Export Restraints, para. 8.85. 
77 Japan 20 July 2005 Answers, para. 7. 
78  The US also argues that Japan simply offers the conclusory statement that  "the standard zeroing 
procedures ... are certainly an 'act' that can constitute 'measures' for dispute settlement purposes."  Japan 20 July 
2005 Answers, para. 2.  Not only does Japan fail to substan tiate this assertion, but it seems to indicate that there is 
more than one procedure, more than one act, and more than one measure, all encomp assed within the invention 
"zeroing procedures".  This supports the view that the so-called "zeroing  procedures" are no more than the 
repeated response to a particular set of ci rcumstances – the very situation the panel in US – Steel Plate considered 
not to be a measure(Para. 7.22.) ( emphasis added ). 
79  Japan 20 July 2005 Answers, para. 26. WT/DS322/R          
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4.53 The United States asserts that, because these "zer oing procedures" do not exist, they cannot 
mandate a breach of any WTO obligation.
80  Nevertheless, Japan attempts to argue to the contrary by 
misapplying the Appellate Body's an alysis of whether a measure manda tes a breach.  Japan argues that 
"evidence of the 'consistent app lication' of the measure" may be relevant for purposes of the 
mandatory/discretionary analysis.81  But Japan's answer to Questi on 11 reveals the flaw in its 
application of this analysis to  the "zeroing procedures":  The starting point of the analysis is the "' text of 
the relevant legislation or legal instruments '",82 which " may be supported " by other evidence.83  The 
Appellate Body later stated that when "a measure is challenged 'as such,' the starting point for an 
analysis must be the measure on its face".84  Nothing in the DSU, nor in any Appellate Body report, 
suggests that "consistent application" can supplant  the analysis of the measure itself, or obviate the need 
even to identify the measure which is supposedly be ing applied, which is what Japan would have the 
Panel do.  The United States points out that a closer review of the Appellate Body's reasoning in US – Carbon Steel  reinforces the conclusion that Japan is si mply distorting the concept of "consistent 
application" as it may legitimately be used to assist  in determining the meaning of a measure.  The 
Appellate Body explained: 
"[s]uch evidence [of the scope and mean ing of municipal law] will typically
 be 
produced in the form of the text of the rele vant legislation or legal instruments, which 
may be supported, as appropriate , by evidence of the consistent application of such 
laws, the pronouncements of domestic cour ts on the meaning of such laws, the 
opinions of legal experts and the writings of recognized scholars.  The nature and 
extent of the evidence required to satisfy the burden of proof will vary from case to 
case."85 
4.54 The United States argues that the Appellate Body's emphasis on the case-by-case nature of the 
evidence necessary to determine the scope and mean ing of a measure reflects both the differences 
among the municipal legal systems of Members as well as the different types of measures they maintain.  For example, the Appellate Body noted  that "pronouncements of domestic courts on the 
meaning of such laws" may be relevant in some case s.  In the US municipal legal system, such court 
decisions are a fundamental interpretive tool.
86  For example, if the US Supreme Court were to interpret 
the term "black" in a particular statute as including "d ark grey", an examination of the text of the statute 
alone could easily yield an incorrect result, as the US Supreme Court interpretation would be binding on 
US authorities. 
4.55 Likewise, the United States states, an examination of the "consistent application" of a law must 
be undertaken "as appropriate", and in a manne r which reflects the actual manner in which the 
municipal legal system of a Member operates.  For ex ample, if a complaining party were to argue that a 
statute requires a defending Member's authorities to do X, but the authorities in applying that law had 
consistently interpreted it as requiri ng Y, the consistent application c ould be relevant to disproving the 
complainant's interpretation.  Likewise, if courts had consistently interpreted a statute in the same 
                                                      
80  The US asserts that Japan states that whether an act is mandatory is not relevant for purposes of 
whether the act is a measure.  Japan 20 July 2005 Answers, para. 8.  It is, however, relevant for purposes of evaluating whether the "act" – if a measur e – breaches a Member's WTO obligations. 
81  Japan 20 July 2005 Answers, para. 31. 
82  Japan 20 July 2005 Answers, para. 31 (quoting US – Carbon Steel , para. 156). 
83 Appellate Body Report, US – Corrosion-Resistant  Steel Sunset Review,  para. 156 ( emphasis added ).  
Further, the US argues that Japan attempts to apply whol esale the Appellate Body's analysis of the Sunset Policy 
Bulletin to these "zeroing procedures", including whether USDOC "treats" the unidentified "zeroing procedures" as "mandatory and/or binding".  Japan 20 July 2005 Answ ers, paras. 28 and 31.  The US is unable to deduce any 
logic in the proposition that USDOC would, or could,  "treat" non-existent proc edures as "mandatory". 
84 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review,  para. 168. 
85 Appellate Body Report, US – Carbon Steel , para. 156 ( emphasis added ). 
86  See, e.g., Marbury v. Madison, 5 US 137 (Cranch) (1803).                   WT/DS322/R 
Page 21 
 
 
 
 manner, that would provide a strong indication of  the statute's meaning, even if a definitive 
interpretation had not been issued by a Member's highest-level court.  Neither of these approaches, 
however, is the way in the which Japan is using "consis tent application".  Japan is simply applying the 
term "consistent application" to an anal ysis which consists of nothing more than assuming  there is a 
measure, "zeroing procedures", which caused a similar result in past proceedings.  Japan is thus simply 
misappropriating a phrase used by the Appellate Body a nd applying it to an illegitimate attempt to have 
the Panel make findings on a non-existent measure. 
4.56 The United States argues that Japan resorts to crea ting a straw man in an attempt to rebut the US 
position.  Japan states that "[e]ssentially, the Un ited States argues that, because the USDOC Assistant 
Secretary is free to abandon the zeroing procedures, the procedures are not binding.  However, the 
United States confuses the binding character of th e existing 'administrative procedures' with the 
USDOC Assistant Secretary's authority to  vary those procedures in the future".87  The United States 
first notes that, notwithstanding Japan's insistence that computer programmes are separate measures 
from "zeroing procedures," and that each is WTO-inconsistent "as such",88 Japan cites a US discussion 
about computer programmes in support of its argument about zeroing procedures.89  More 
fundamentally, Japan's argument is simply illogical.  There is nothing "binding" about something that 
USDOC is free not to do. 
4.57 The United States says that Japan's statement th at "at the oral hearing, the United States 
admitted that ... there is no single instance where the USDOC did not apply the standard zeroing procedures"
90 mischaracterizes the US statement as recogni zing the existence of so-called "zeroing 
procedures", which it did not.  Again, however, clai ms the United States, Japan fundamentally misses 
the point:  there was no measure – "standard zeroi ng procedures" or otherwise – which caused the 
USDOC Assistant Secretary to refrain from providing an offset in past investigations.  Had the 
USDOC  wished to provide an offset in an indi vidual case, he or she could have, and should the 
USDOC Assistant Secretary wish to do so in the future, he or she could.91 
                                                      
87 Japan 20 July 2005 Answers, para. 36. 
88 Japan 20 July 2005 Answers, para. 13 ("in add ition to challenging the standard zeroing line itself, 
Japan challenges the standard zeroing procedures more ge nerally".)  The US argues that if the "standard zeroing 
line" is the expression of the "standard zeroing pro cedures," then it is unclear how the "standard zeroing 
procedures" can be challenged "more generally". 
89 The US asserts that in the cited para graph, the US says that even if " computer programs were found to 
be measures" such programmes cannot be found WTO- inconsistent because they do not mandate action. 
(emphasis added )  In that paragraph, the US says nothing about "zeroing procedures".  Indeed, the US noted in its 
First Submission that it considered Japan to have limited its claims to the "computer line" and not some 
unidentified "zeroing procedures".  US First Written Submission, para. 29. 
90 Japan 20 July 2005 Answers, para. 22. 
91 The US also argues that Japan has noted that in US – Countervailing Measures on Certain EC 
Products , a "USDOC calculation method" was found to be "as such" inconsistent with the Subsidies and 
Countervailing Measures Ag reement.  Notwithstanding that the "method" in question was not a "calculation 
method", there was no consideration in that dispute of wh ether that "method" was a measure for dispute settlement 
purposes.  Neither the parties, the panel, nor the Appellate Body analyzed whether such a method could be a 
measure, and it is incorrect for Japan to suggest otherwise.  Moreover, as the panel in US – Anti-Dumping 
Measures on Oil Country Tubular Goods noted when presented with analog ous circumstances, "[w]e do not 
consider that Members are limited in pr esenting their arguments in a particular dispute by the arguments made, or 
not made, in previous disputes, even if those previous disputes involved a related or similar topic".  Panel Report, US – Anti-Dumping Measures on Oil Country Tubular Goods, para. 7.176. 
The US further points out that, to the extent Japa n is arguing that the US DOC Assistant Secretary's 
decisions not to provide offs ets in each prior determination transform t hose individual decisions collectively into a 
measure that mandates a breach, the panel in US – Steel Plate  already considered, and dismissed, such an 
approach, stating that just because "a particular response to a particular set of circumstances has been repeated, 
 WT/DS322/R          
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4.58 The United States argues that Jap an also asserts that it has submitted "overwhelming evidence" 
that the "zeroing procedures" and the "standard  zeroing line" are "mandatory and/or binding"
92 and that 
the "United States has not only failed to offer 'persu asive evidence in rebuttal', it has not offered any 
evidence whatsoever".93  Not surprisingly, Japan provides no c itation to this supposedly overwhelming 
evidence.  Indeed, Japan has offered no evidence  that the "zeroing procedures" or the "zeroing line" are 
mandatory. 
4.59 The United States posits that Japan's quest for an "as such" finding against the United States 
also leads it to challenge a so-called "standard zeroing line".  In short, Japan h as failed to establish that 
a single line of computer programming sets forth rules or norms that are intended to have generalized and prospective application.  Indeed, Japan cannot do so:  By its very nature, a computer line is applied  
in a particular determination; it cannot set fort h rules or norms intended to have generalized and 
prospective application. 
4.60 The United States asserts that Japan's answers to the Panel's questions only reinforce the 
analytical flaws in its results-oriented approach, not only with respect to whether the computer line is a 
measure but also with respect to whether the "mea sure" mandates a breach.  For example, Japan argues 
that "[o]n the face of the measure, inclusion of negative results is simply not an option ... .  The evidence 
drawn from the terms of the measure, therefore, demonstrates that the measure mandates certain regulatory conduct".
94  This analysis is simply wrong.  It ignores the fact that a line in a computer 
programme, or even a computer programme itself, cannot "mandate" regulatory behaviour.  Nothing in 
the "terms" of the computer line requires USDOC to refrain from providing an offset.  Rather, it is USDOC that decides whether the "lin e" will be applied or not and that decision is made in each and 
every determination precisely because there is no re quirement that is general and prospective in 
nature.
95 
4.61 In response to the Panel's ques tion asking the United States to identify its law, regulations, and 
administrative procedures which govern the calcu lating of dumping margins and any published or 
publicly available documents that explain these, the United States claims that there are no laws, 
regulations, or administrative procedures which gove rn offsets for non-dumped transactions in margin 
calculations.96  The United States points out that, while section 771(35) of the Tariff Act of 1930 
defines the terms "dumping margin" and "weighted average dumping margin", domestic courts have 
found this section not to govern this issue and the US Court of Appeals for the Federal Circuit has held 
that this section neither prohibits nor requires the USDOC to grant offsets. 
4.62 In response to a question of the Panel, with r espect to "as such" claims, how a Member could 
establish the existence of a measure that is not writte n down independently of its repeated application 
                                                                                                                                                                     
and may be predicted to be repeated in the future, does no t, in our view transform it into a measure".  Panel Report, 
US – Steel Plate , para. 7.22. 
92 Japan 20 July 2005 Answers, paras. 28 and 34. 
93 Japan 20 July 2005 Answers, paras. 34. 
94 Japan 20 July 2005 Answers, para. 35. 
95 The US argues that Japan appears to be attempting to use the Appellate Body's analysis of an actual 
document, such as the Sunset Policy Bulletin, to justify its argument that the "zeroing line"  is a measure.  A review 
of the Appellate Body's analysis of the text of the Sunset Policy Bulletin exposes the flaw in Japan's approach.  In 
US – Corrosion-Resistant Steel Sunset Review, the Appellate Body evaluated whether it could "complete the 
analysis" as to whether the Sunset Policy Bulletin  was inconsistent with Article 11.3 of the AD Agreement .  "At 
issue is whether the [the Sunset Policy Bulletin] goes further and instructs USDOC to attach decisive or 
preponderant weight to [certain] factors in every case  ... ."  Appellate Body Report, US – Corrosion-Resistant 
Steel Sunset Review , para. 176 ( emphasis added ).  Nothing in the "text" of the "zeroing line" contains an 
instruction to USDOC to refrain from providing offsets in every case. 
96 US 19 October 2005 Answers, paras. 1-3.                   WT/DS322/R 
Page 23 
 
 
 
 and absent an admission of its existence, the United States argues97 that a Member may present 
circumstantial evidence to dem onstrate the existence of an unwritten measure.  Thus, in EC – Approval 
and Marketing of Biotech Products , the United States cited to references and statements by senior EC 
and member State officials regarding the EC's morato rium on granting approvals to products made with 
biotechnology to demonstrate the existence of the mo ratorium.  The United States also argues that the 
Appellate Body acknowledged in US – Countervailing Duty Investigation On DRAMS  that it was not 
inappropriate for the US administering authority to look to circumstantial evidence that the Government 
of Korea had directed Korean banks to provide  advantageous loans to the domestic industry.98  Second , 
the United States argues that, while a party may estab lish the existence of a measure independently of 
its repeated application, finding the existence of  a measure based on consis tent application is an 
exercise in circular reasoning – to state that a so -called "measure" has been  "consistently applied" 
presupposes the very existence of that "measure".  As a result, there must be evidence establishing the 
existence of a measure that is independent of its "repeated application".  Third , the United States argues 
that Japan is confusing the concept of "consistent application" with "consiste nt results" and is assuming 
that there is a measure that is causing those results.  Fourth , the United States claims that Japan is 
erroneously asking the Panel to rule on a Member's  exercise of discretion in a uniform manner by 
inferring the existence of a measure  that does not exist, in order to make findings against the 
non-existent measure.  The United States argues that  such a request undermines the credibility of the 
WTO dispute settlement system. 
4.63 In response to a question of the Panel whether a policy systematically applying a particular 
dumping calculation could be found to be WTO-incons istent, the United States argues that if the term 
policy is used to describe the fact that an act has been repeated in a given number of cases, there is in 
fact no instrument independent of the individual acts and therefore no measure subject to dispute 
settlement.  By contrast, if the term policy is u sed in the sense of an instrument which exists 
independently of its application in individual cases and which may cause the act to occur in individual 
cases, that policy might be a measure and could be ex amined for its WTO-consistency if found to be a 
measure.  The United States also claims that, with re gard to a policy that exists independently of its 
application, the policy would be WTO-inconsistent  only if it required authorities to use a methodology 
which, when applied, w ould be WTO-inconsistent. 
2. "As such" Claims under Article 2 of the AD Agreement  with respect to original 
investigations 
4.64 Japan argues that the United States' maintaining of  zeroing procedures in original investigations 
is inconsistent with Article 2 of the AD Agreement  and Article VI of the GATT 1994.  Japan argues that 
first, dumping and the margin of dumping should be determined for the product as a whole ; second , a 
dumping determination must be based on a fair comparison  of normal value and export price for the 
product as a whole, and, third  that model and simple zeroing are inconsistent with both these 
obligations, respectively. 
4.65 The United States argues that Japan has not identif ied any textual support for its contention that 
Article VI of the GATT 1994 and the AD Agreement  require investigating authorities to offset dumping 
with export transactions that exceed normal value.  Neither Japan's reliance on the "fair comparison" 
provision of Article 2.4, its references to Artic le 2.4.2, nor its "product as a whole" arguments 
(arguments based on prior Appellate Body reports lim ited to the use of average-to-average comparisons 
in investigations) support the broad offset obligation Japan argues exists.99 
                                                      
97 US 19 October 2005 Answers, paras. 6-10. 
98 Appellate Body Report, US – Countervailing Duty Investigation On DRAMS , para. 150. 
99 US Second Written Submission, para. 23. WT/DS322/R          
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4.66 The arguments of the Parties regarding these issues will be discussed infra . 
(a) Margin of Dumping for the Product as a Whole 
 Japan
100 
 4.67 Japan argues that Article 2 of the AD Agreement  sets forth the "agreed disciplines" for 
determining the existence of dumping and also calculating the margin of dumping.
101   Japan points out 
that the Appellate Body held that there are "no other provisions in the AD Agreement  according to 
which Members may calculate dumping margins".102  Article 2.1 of the AD Agreement  states that: 
For the purpose of this Agreement,  a product  is to be considered as being dumped , i.e. 
introduced into the commerce of another count ry at less than its normal value, if the 
export price of the product exported from one country to another is less than the 
comparable price … for the like product when destined for consumption in the exporting country.  ( emphasis added ) 
4.68 Japan asserts that this definitio n reiterates the definition of "dumping" in Article VI:1 of the 
GATT 1994.
103  Japan explains that Article VI:1 sets forth a definition of dumping and, significantly, it 
defines dumping by reference to "a product".  It states  that "a product" is dumped "if the [export] price 
of the product" is less than the comparable domestic pri ce "for the like product", or less than "the cost of 
production of the product".  Each one of these textual indications in Article VI:1 shows that dumping is 
determined for the product as a whole and that the determination is based on a comparison of prices for 
the product.  There is nothing in the text to suggest that dumping is determined for individual 
transactions or groups of transactions.  The text of Artic le VI:1 is reflected, of course, in the text of 
Article 2.1 of the AD Agreement , which also refers to the dumping of "a product" and also provides that 
the determination is based on a comparison of "the export price of the product" and "the comparable 
price … for the like product". 
4.69 The Appellate Body has held that Artic le 2.1, – which "applies to the entire AD Agreement " – 
makes "clear … that dumping is defined in relation to  a product as a whole," and not in relation to "a 
type, model, or category" of a product.104  Interpreting the term "margin of dumping," as defined by 
Article VI:2 of the GATT 1994, the Appellate Body he ld that "'margins of dumping' can be found only 
for the product under investigation as a whole, and cannot  be found to exist for a product type, model, or 
category of that product".105  Because Article 2.1 applies to the "entire" AD Agreement , it also applies to 
Article 2.4.2 and, in consequence, "margins of dumping" in Article 2.4.2 must also be established for 
the product as a whole.106 
4.70 Japan argues that, although the margin of dumping must be established for the product as a 
whole, an investigating authority is entitled to calculate that margin on the basis of "multiple 
                                                      
100 Japan First Written Submission, para. 76-80, 92 -101; Japan Executive Summary to First Written 
Submission, paras. 12-13; Japan Second Written Submission, paras. 18-26, 42-55; Japan Executive Summary to 
Second Written Submission, paras. 40-55. 
101 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
102 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
103 Appellate Body Report, US – Softwood Lumber V , para. 92. 
104 Appellate Body Report, US – Softwood Lumber V , para. 93; Appellate Body Report, 
US – Corrosion-Resistant Steel Sunset Review , para. 126. 
105 Appellate Body Report, US – Softwood Lumber V , para. 96, 94. This definition is further supported by 
Article 9.2 and 6.10. 
106 Appellate Body Report, US – Softwood Lumber V , paras. 93 and 96.                   WT/DS322/R 
Page 25 
 
 
 
 comparisons" for sub-divisions of the product.107  However, Japan states that the Appellate Body 
emphasized that: 
"[T]he results of the multiple comparis ons at sub-group level are, however, not 
'margins of dumping' within the meaning of Article 2.4.2.  Rather, those results reflect 
only intermediate calculations made by an i nvestigating authority … .  Thus, it is only 
on the basis of aggregating all these 'intermediate value' that  an investigating authority 
can establish margins of dumping for the product under investigation as a whole. 
 ... 
If an investigating authority has chosen  to undertake multiple comparisons, the 
investigating authority necessarily has to take into account the results of all those 
comparisons in order to establish margins of dumping for the product as a whole under Article 2.4.2."
108 
4.71 Japan argues that the Appellate Body in US – Softwood Lumber V  held that this interpretation of 
margins of dumping is confirmed by other provisions of the AD Agreement .109  Article 6.10 expressly 
states that "an individual margin of dumping" sh all be calculated for each known producer or exporter 
of the "product under investigation".  Articles 6.10.2 and 9.5 contain similar language.  These 
provisions demonstrate that a single margin of dum ping is calculated for the  product and not multiple 
margins, one for each transaction or for each group of  transactions.  Additionally, Article 9.2 of the 
AD Agreement , as well as Article VI:2 of the GATT 1994, provide that anti-dumping duties are 
imposed in respect of a "product".  Duties are, therefor e, applied to a product, as a whole, in all its forms 
– and not to a sub-grouping of a product.  The Appellate Body concluded its reasoning as follows: 
"Our view that 'dumping' and 'margins of dumping' can only be established for the 
product under investigation as a whole is in consonance with the need for consistent 
treatment of a product in an anti-dumping i nvestigation.  Thus, having defined the 
product under investigation, the investigating authority must treat that product as a 
whole for, inter alia , the following purposes:  determination of the volume of dumped 
imports, injury determination, causal li nk between dumped imports and injury to 
domestic industry, and calculation of the ma rgin of dumping.  Moreover, according to 
Article VI:2 of the GATT 1994 and Article 9.2 of the AD Agreement , an anti-dumping 
duty can be levied only on a dumped product. For all these purposes, the product under investigation is treated as a whole …"
110 
4.72 Japan states that this is a clear statement that the product scope of an anti-dumping action 
remains constant from the investigation through to the imposition of duties.  The "product" subject to dumping and injury determinations is the same as the product subject to duties, and it always refers to 
product as a whole.  Japan claims that the Appe llate Body's finding bears out not only Japan's 
interpretation of the term "margin of  dumping" in Article 2.4.2 for purpo ses of an original investigation, 
but also its interpretation of that term in Article  9 for purposes of periodic and new shipper reviews.  
Equally, the Appellate Body's ruling highlights that , in reviews under Articles 11.2 and 11.3, margins 
relied upon must be calculated for the "product" as a whole. 
4.73 Japan argues that model and simple zeroing as well as the standard zeroing line prevent the 
USDOC from making a dumping determination for the produc t as a whole.  In an original investigation, 
                                                     
 
107 Appellate Body Report, US – Softwood Lumber V , para. 97. 
108 Appellate Body Report, US – Softwood Lumber V , paras. 97- 98 (emphasis in original). 
109 Appellate Body Report, US – Softwood Lumber V , para. 94. 
110 Appellate Body Report, US – Softwood Lumber V , para. 99. WT/DS322/R          
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the USDOC generally uses a W-to-W comparison, including model zeroing, to compare normal value 
and export price.  Japan submits that model zeroing is   "as such" inconsistent with the requirements in 
Articles 2.1 and 2.4.2 of the AD Agreement , and Articles VI:1 and VI:2 of the GATT 1994, because the 
USDOC fails to determine the existence of dumpi ng, and calculate a margin of dumping, for the 
product as a whole.  Japan argues that this issue was explicitly addressed by the Appellate Body in 
US – Softwood Lumber V , albeit on an "as applied" basis.  In th at dispute, the Appellate Body examined 
the United States' use of model zeroing in an original  investigation.  It held that an investigating 
authority is entitled to compare normal value an d export price through multiple comparisons, by 
model.
111  However, the Appellate Body underscored that: 
"If an investigating authority has chosen  to undertake multiple comparisons, the 
investigating authority necessarily has to take into account the results of all those 
comparisons in order to establish margins of dumping for the product as a whole under Article 2.4.2."
112
 
The Appellate Body concluded that it was inconsistent with Article 2.4.2 for the USDOC to exclude the 
results of comparisons for certain models (i.e. thos e with a negative price difference) in creating an 
aggregate result for the product.113  Equally, because the Appellate Body's reasoning derived from the 
language in Article 2.1114, the failure to establish the margin of dumping for the product as a whole, as 
defined in Article 2.1, as well as in Articles VI:1 a nd VI:2 of the GATT 1994, is inconsistent with those 
Articles.  In reaching its conclusion, the Appellate Body noted that the AD Agreement  does not 
"express[ly] … permit[] an investigating authority to disregard the results of multiple comparisons at 
the aggregation stage".115   It added that, "when the negotiators s ought to permit investigating authorities 
to disregard certain matters, they did so explicitly".116 
 4.74 Japan argues that the same reasoning equally app lies to the instant case.  Model zeroing is "as 
such" inconsistent with Articles 2.1 and 2.4.2 of the AD Agreement  and with Articles VI:1 and VI:2 of 
the GATT 1994.  Through the standard zeroing line, after identifying comparable export transactions 
and grouping them into models, and after comparing export price for each model with normal value, the 
USDOC automatically disregards all negative results  of comparisons where export price for the model 
is higher than normal value for that model.  In ot her words, negative comparison results are not included 
in the calculation of the total amount of dumping.  Ho wever, the Appellate Body held that, if the results 
of all comparisons are not taken into account, the dum ping determination and the margin of dumping 
are not for the product as a whole.
117  Therefore, by maintaining the model zeroing procedures, the 
United States does not and cannot determine a margin of dumping for the product as a whole; instead, 
the United States' zeroing procedures are designed a nd structured to determine the existence of 
dumping, and calculate a dumping margin, on a partia l basis, taking account of only certain comparison 
results and not the entirety of the compar ison results for the product as a whole. 
4.75 Japan argues that the same reasoning also dictat es that the simple zeroing procedures, in an 
original investigation, are "as such" incons istent with Articles 2.1 and 2.4.2 of the AD Agreement  and 
also with Articles VI:1 and VI:2 of the GATT 1994.  By way of illustration, Japan provides an example in which the United States used simple zeroing in an original investigation.
118  That was in the 
re-determination of the dumping margin for impor ts of softwood lumber from Canada, where normal 
                                                      
111 Appellate Body Report, US – Softwood Lumber V , para. 97. 
112 Appellate Body Report, US – Softwood Lumber V , para. 98 (e mphasis in original ). 
113 Ibid, para. 102. 
114 Ibid, para. 93. 
115 Ibid, para. 100. 
116 Ibid, para. 100. 
117 Ibid, paras. 93 and 98. 
118 Exhibit JPN-8.                   WT/DS322/R 
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 value and export price were compared on a T-to-T basis.119  As illustrated in this example, the simple 
zeroing procedures also operate in circumstanc es where the USDOC has engaged in "multiple 
comparisons" of normal value and export price, this  time on the basis of individual export transactions 
and corresponding individual normal values that th e USDOC has identified as comparable.  Once again, 
after identifying comparable export transactions a nd normal values, and comparing export price for 
these transactions with the relevant normal value,  the USDOC maintains a procedural "filter" that 
automatically discards the results of comparisons  from the calculation process where export price 
exceeds normal value.  Thus, for simple zeroin g, in calculating the overall margin, the USDOC 
aggregates the results of only certain of the "multiple  comparisons" it undertakes, disregarding others.  
The overall margin of dumping does not, therefore, reflect all of the multiple comparisons undertaken.  
However, as the Appellate Body held, if the results of all comparisons are not taken into account, the 
dumping determination and the margin of dumping are not for the product as a whole.120 
4.76 Thus, as with model zeroing, by maintaining the simple zeroing procedures, the United States 
does not and cannot determine a dumping margin for th e product as a whole; instead, the United States' 
procedures are structured to determine the existe nce of dumping, and calculate a dumping margin, on a 
partial basis of only certain comparison results, overlooking the entirety of the comparisons for the 
product as a whole.  In consequence, the model and simple zeroing procedures are "as such" inconsistent with Article s 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the 
GATT 1994. 
4.77 Japan states that by ignoring the Appellate Body's  interpretation of Articles 2.1, 2.4.2, 6.10 and 
9.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994, the United States 
disingenuously counters that neither the "GATT 1994 [n]or the AD Agreement  create an obligation to 
calculate a margin of dumping for the product as a whole".
121  This is plainly wrong and, in effect, 
invites the Panel to reverse panel and Appellate Body repor ts adopted by the DSB.  According to Japan, 
on the United States' view, dumping determinations deliberately confined to a sub-grouping of a 
product – even a single transaction – could justif y the imposition of duties on the product as a whole.  
4.78 Japan lays out that the United States also ar gues that margins of dumping under Article 2.4.2 
and Article VI may be transaction-specific because they involve a comparison of prices which "are 
established and exist on a transaction-specific basis".122  This is an absurd argument, claims Japan.  The 
fact that prices can be determined  in the marketplace on a transaction- specific basis does not mean that 
the words "product", "dumping" and "margin of dumping" have a transaction-specific ordinary 
meaning under the Vienna Convention .  Japan points out that investigating authorities, including the 
USDOC, routinely aggregate prices for transactions into prices for a product, and, as a result, there is no 
necessity to determine margins for individual transactions simply because prices can be transaction-specific. 
4.79 Japan also claims that the United States' argument on Ad Article VI:1 suffers from the same 
misconception.  Ad Article VI:1 does not indicate that margins of dumping are calculated for 
sub-groupings of a product; rather, it addresses the price  that may be used for certain export transactions 
in calculating the margin of dumping for the product.  The Ad Article does not purport to alter the 
requirement in Article VI:1 that dumping, and ma rgins of dumping, are determined for a product.  
Instead, consistent with Article VI, the term "margin of dumping" in the Ad Article can, and must, be 
read to refer to the ma rgin for the "product". 
                                                     
 
119 Owenby Statement, para. 20 and Exhibit JPN-8. 
120 Appellate Body Report US – Softwood Lumber V , paras. 93 and 98. 
121 US 20 July  2005 Answers, para. 60. 
122 US 20 July 2005 Answers, paras. 46, 47 and 52. WT/DS322/R          
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4.80 Japan notes, in that regard, that  the definition of "margin of dumping" in Article VI:2 of the 
GATT 1994 is consistent with the definitio n of "dumping" in Article 2.1 of the AD Agreement  and in 
Article VI:1 of the GATT 1994, namely that the ex istence and magnitude of dumping are determined 
for the product as a whole.  The second sentence of Ar ticle VI:2 states that the margin of dumping is 
"the price difference" determined in accordance with Ar ticle VI:1.  Article VI:1 sets forth a definition of 
dumping and, significantly, it defines dumping by refe rence to "a product".  Also, in language that 
speaks unmistakably of a product-wide dumping margin, the first sentence of Arti cle VI:2 clarifies that 
"an anti-dumping duty" levied on "a ny dumped product" shall not exceed  "the margin of dumping in 
respect of such product ".  These provisions demonstrate that "the price difference" in question is the 
price difference for the "product", not for individua l transactions or for sub-groups of transactions.  
4.81 Japan further argues that the requirement to determine a margin of dumping for the product is 
consistent with the fact that the dumping margin h as product-wide consequences, in particular: for the 
determination of the volume of dumped imports; th e pursuit of the investigation; and the imposition and 
collection of duties.
123  If the United States were correct th at the price difference for an individual 
transaction constitutes a margin, the result would be  that product-wide consequences – including the 
imposition of duties in excess of bound tariff rates – can be derived from the uncertain foundation of the 
price of a single export transaction.  Japan recalls that in EC – Tube or Pipe Fittings , the Appellate Body 
emphasized that, through the duration of the period of investigation, the Anti-Dumping Agreement  aims 
to avoid subjecting dumping determinat ions "to market fluctuations or other vagaries that may distort a 
proper evaluation."124  The requirement to determine a ma rgin for the product pursues the same 
objective because relying on the price difference for an individual transaction, or for an 
unrepresentative group of transactions, would inevitably s ubject determinations to the "vagaries" of the 
marketplace.  
4.82 Japan argues that, although the United States attemp ts to ignore the Appellate Body's rulings on 
the meaning of the word "product", in its arguments on Article 5.8 of the AD Agreement  the 
United States is forced to acknowledge that its interpretation is untenable.125  Article 5.8 provides that 
the authorities must terminate an investigation if "the margin of dumping is de minimis ".  Japan points 
out that, if the United States were correct that a margin is established for each transaction, the 
authorities would have to terminate an inves tigation if any of the multiple margins were de minimis .  To 
avoid this consequence, the United States propo ses that, for purposes of Article 5.8 alone, the 
comparison results must be aggregated to produce a margin of dumping for the product as a whole.  
4.83 Japan observes that the United St ates argues that this "aggregation" obligation applies only to 
Article 5.8.  However, nothing in the text of the AD Agreement  justifies such an obligation in Article 5.8 
but not in Articles 2, 9 and 11.  Article 2 is the sole provision setting forth "agreed disciplines" for calculating dumping margins "for the purpose of" the Agreement.
126  The duty to aggregate comparison 
results stems from the word "product" in Article 2,  not from Article 5.8, and, therefore, applies 
throughout the AD Agreement . 
4.84 Japan argues that the United States' proffered ju stification for the allegedly unique duty in 
Article 5.8127 applies with equal – if not greater – force to other aspects of anti-dumping proceedings.  
Indeed, it is difficult to see any distinction with respect to the suggested justification between a de 
minimis  margin and a non- de minimis  margin.  By determining a greater than de minimis  margin, the 
authorities establish that dumping exists, as a result of which they continue the investigation and, 
                                                      
123 Japan's Opening Statement at the Second Substa ntive Meeting of the Panel with the Parties, 
paras. 34-39. 
124 Appellate Body Report, EC – Tube of Pipe Fittings , para. 80. 
125 See, e.g., US 20 July 2005 Answers, para. 60. 
126 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
127 US 20 July 2005 Answers, para.56.                   WT/DS322/R 
Page 29 
 
 
 
 ultimately, may impose duties.  Japan  states that there is, therefore, no rational basis for conceding that 
termination of an investigation un der Article 5.8 requires a margin of  dumping to be calculated for the 
product as a whole but that no such requirement is imposed by Articles 2, 9 and 11.  To the contrary, the Appellate Body concluded that there must be "c onsistent treatment" of the "product" as a whole, 
throughout an anti-dumping action, from initiation to the imposition of duties. 
4.85 With respect to the United States arguments that the Appellate Body's interpretation of the term 
"margins of dumping" in Softwood Lumber V  is limited to situations i nvolving the W-to-W comparison 
under the first sentence of Article 2.4.2, Japan coun ters that nothing in that decision supports this 
narrow view.  To the contrary, Japan explains in detail that the structure of the Appellate Body's 
analysis involved separate consideration, under sep arate headings, of the phrase "all comparable export 
transactions" in Article 2.4.2, and of the terms " dumping" and "margins of dumping".  The Appellate 
Body noted that there was "no basic disagreement among the participants"
128 regarding the phrase "all 
comparable export transactions" in Article 2.4.2.  Unde r a new heading, it therefore shifted its analysis 
to the terms "dumping" and "margins of dumping" in Article VI:1 of the GATT 1994 and Articles 2.1 
and 2.4.2 of the AD Agreement .  In that analysis, it relied primarily on the definition of the term 
"dumping" in Article 2.1 and Article VI that, it held, "applies to the entire"129 AD Agreement .  
Moreover, in concluding that "dumping" and "margins  of dumping" are determined for the product, the 
Appellate Body never referred to the ph rase "all comparable export transactions".130  Thus, in Japan's 
view, the United States ignores entir ely the detailed structure of the A ppellate Body's reasoning in order 
to reach a conclusion not supported by that reasoning. 
  United States131 
 
4.86 The United States argues that there is no obligation in the AD Agreement  to calculate one 
margin of dumping for the "product as a whole".  Article 2.4.2 establishes an obligation for the 
administering authority to determine whether dumping "exists" for purposes of the Article 5 
investigation phase based on certain methodological c onstraints.  The text of Article 2.4.2 of the 
AD Agreement  does not require Members to calculate a marg in for the "product as a whole" and Japan 
does not establish that such an obligation otherwi se exists.  Article 2.4.2 provides three methodologies 
for comparing export prices to normal values in an i nvestigation:  (1) weighted-average-to-weighted- 
average comparisons;  (2) transaction-to-transaction comparisons;  and, (3) under certain 
circumstances, weighted-average-to-transaction co mparisons.  In most circumstances, each of these 
methodologies will result in multiple comparisons.  This  is self-evident with respect to the second and 
third methodologies, as neither one is limited to the extremely rare circumstance of investigations 
involving only one export transaction.  Under these methodologies, each export transaction will result in a separate comparison.  Article 2.4.2 simply does not address the issue of aggregating the results of 
multiple comparisons.  While the specified met hodologies will, in most cases, lead to multiple 
comparisons between export transactions and nor mal values, Article 2.4.2 does not provide any 
guidance as to how the results of those comparisons ar e to be aggregated to determine a single overall 
margin.  In fact, Article 2.4.2 itself does not require  that the results of those multiple comparisons be 
aggregated at all.  Emblematic of the narrow scope  of Article 2.4.2 is the fact that nothing in 
Article 2.4.2 requires the expression of the margin of  dumping as a percentage.  Article 5.8 is the only 
place in the AD Agreement  where the amount of dumping must somehow be expressed as a percentage 
margin so that it may be measured against the de minimis  standard. 
                                                     
 
128 Appellate Body Report, US – Softwood Lumber V , para. 90. 
129 Ibid, para. 93. 
130 See Japan 19 October 2005 Answers, paras. 60-73. 
131 US First Written Submission, para. 59-71; US Second Written Submission, paras. 51-64, 68-70. WT/DS322/R          
Page 30  
 
4.87 The United States argues that Japan's argument th at offsets are required by the obligation to 
calculate a margin of dumping for the product as a whole is based on Articles 2.1 and 2.4.2 of the 
AD Agreement , and Article VI of the GATT 1994.  However,  the text of Article VI of the GATT 1994 
and Articles 2.1 and 2.4.2 do not refer to the "produ ct as a whole".  Indeed, historically, dumping has 
been viewed as permitting a transaction-oriented analysis.  For example, a group of experts in 1960 
considered that the "ideal method" for applying anti-dumping duties "was to make a determination of 
both dumping and material injury in respect of each single importation of the product concerned".
132  
The AD Agreement  implements Article VI and did not amend this definition of the margin of dumping. 
4.88 The United States argues that Japan's argument relies exclusively on its assumption that the 
terms "margin of dumping" and "margins of dumping" must mean the same thing wherever they are 
mentioned in the GATT 1994 and the AD Agreement ; namely that a "margin of dumping" can only exist 
with respect to all of the export transactions of a single producer or exporter.  The text of the GATT 1994 and the AD Agreement , however, show otherwise.  Th e terms "margin of dumping" and 
"margins of dumping" may apply di fferently, depending on the context in which the term is used.  
Specifically, a margin of dumping can exist when th e price of a single export transaction is less than 
normal value. 
4.89 The United States asserts that the terms "margin of dumping" and "margins of dumping" are 
used at times in the GATT 1994 and the AD Agreement  to refer to the situation where the price of a 
single export transaction is less than normal value.
133  By focusing on "price" in Article VI:2, 
GATT 1994 plainly envisions a margin of dumping being established with respect to individual transactions.  This is confirmed by GATT Note Ad  Article VI:1, which uses the term "margin of 
dumping" in a manner which can only be reasonabl y interpreted to apply on a transaction basis.
134  With 
respect to the AD Agreement , Article 2.4.2 permits the use of three comparison methodologies:  (1) 
average-to-average, (2) transaction-to-transaction, and (3) average-to-transaction.   With respect to at 
least two of these methodologies, there will be multiple comparisons.  If the comparisons reflect a price difference where normal value is gr eater than export price, the pri ce difference will be a margin of 
dumping within the meaning of Article VI:2. 
4.90 The United States argues that the use of the te rm "margin of dumping" in connection with 
assessment proceedings further demonstrates that th e term may refer to the result of a comparison 
involving a single export transaction.  Article 9.3 con cerns "[t]he amount of the anti-dumping duty ... ."  
A duty is specific to an import transaction, and is  often calculated based on the specifics of that 
transaction.  Moreover, some Members utilize a prosp ective normal value system.  In such a system, the 
investigating authority establishes the normal value in the investigation and may update that normal 
value as appropriate.  The Member compares each export transaction with that normal value, and 
determines whether and to what extent that norma l value exceeds the export price.  The amount by 
which normal value exceeds the export price is the margin of dumping for that transaction. 
4.91 The United States further argues that Article 2.4.2 of the AD Agreement  does not oblige 
Members to offset positive and negative dum ping margins and that Japan offers no  textual analysis in 
support of its claim that offsetting is required by Article  2.4.2.  Japan's failure to provide a textual basis 
for its argument is unavoidable because the scope of the AD Agreement  and GATT 1994, with respect to 
the measurement of dumping, is limited by its  terms to instances in which there are positive  differences 
between normal value and export prices.  The United States argues that, in the AD Agreement , the word 
"margin" is modified by the word "dumping", giving it a special meaning.  Paragraph 2 of Article VI of 
                                                     
 
132 Anti-Dumping and Countervailing Duties , Second Report of the Group of Experts, L/1141, adopted 
on 27 May 1960, BISD 9S/195. 
133  US 20 July 2005 Answers, paras. 46-59. 
134  Notably, Japan dismisses the use of the term "margin of dumping" as used in the Note Ad Article VI 
without any analysis of the text of the article itself.  Japan 20 July 2005 Answers. para. 98.                   WT/DS322/R 
Page 31 
 
 
 
 GATT 1994 provides that "[f]or the purposes of this  Article, the margin of dumping is the price 
difference determined in accordance with the provisions of paragraph 1".  When read with the 
provisions of paragraph 1, the "margin of dumping"  is the price difference when a product has been 
"introduced into the commerce of an  importing country at less than its  normal value", i.e. the price 
difference when the product has been dumped.  The United States points out that the provisions of the 
AD Agreement  must be read in conjunction with Article VI of GATT 1994.135  While the AD Agreement  
does not provide a definition of "margin of dumping" , it does define "dumping" in a manner consistent 
with the definition of "margin of dumping" pr ovided in Article VI.  Article 2.1 provides: 
For the purpose of this Agreement, a product is  to be considered as being dumped, i.e. 
introduced into the commerce of another country at less than its normal value, if the 
export price of the product exported from one country to another is less than the 
comparable price, in the ordinary course of trade, for the like pro duct when destined for 
consumption in the exporting country. ( emphasis added)  
The express terms of GATT 1994 provide that the margin of dumping is the amount by which normal 
value "exceeds" export price, or alternatively the am ount by which export price "falls short" of normal 
value.  Consequently, there is no textual support in Article VI of the GATT or the AD Agreement  for the 
concept of "negative dumping".  4.92 Accordingly, the Appellate Body and panels  have never found in the text of the AD Agreement  
an independent obligation to offset margins.  The Appellate Body has, however, twice articulated its 
view that an obligation exists to provide offsets, in EC – Bed Linen  and US – Softwood Lumber V .  In 
both reports, the Appellate Body focused its analysis on the phrase "all comparable export 
transactions"
136 in Article 2.4.2, which applies only to the use of the average-to-average methodology to 
determine "the existence of margins of dumping during the investigation phase. "137  In US – Softwood 
Lumber V , the Appellate Body found only that "zeroing is  prohibited when establishing the existence of 
margins of dumping under the weighted-ave rage-to-weighted-average methodology".138  The 
                                                      
135 The US submits that this interpretative principle has been underscored by the Appellate Body.  In 
Korea - Dairy the Appellate Body stated that: 
 
"[T]he GATT 1994 was incorporated in to the WTO Agreement as one of the 
Multilateral Agreements on Trade in Goods contained in Annex 1A to the WTO 
Agreement.  …  The Agreement on Safeguards is one of the thirteen Multilateral 
Agreements on Trade in Goods contained in Annex 1A of the WTO Agreement.  It is 
important to understand that the WTO Agreement is one treaty."  (paragraph 75) 
 
and in Argentina – Footwear(EC) the Appellate Body stated that: 
  
"Therefore, the provisions of Article XIX of the GATT 1994 and the provisions of the 
Agreement on Safeguards are all provisions of one treaty, the WTO Agreement.  …  
[A] treaty interpreter must read all applicable  provisions of a treaty in a way that gives 
meaning to all of them, harmoniously."  ( paragraph 81) 
 
According to the US this basic principle applies equally to Article VI of the GATT 1994 and the AD Agreement .  
The official title of the AD Agreement  is "Agreement on Implementation of Article VI of the General Agreement 
on Tariffs and Trade 1994."  As an agreement whose obj ect is to implement Article VI of GATT 1994, the 
AD Agreement  is, by its very title, anchored in Article VI of the GATT 1994. 
136 Appellate Body Report, US – Softwood Lumber V , paras. 104, 105, 108; Appellate Body Report, 
EC – Bed Linen (Article 21.5 – India) , paras. 55-60. 
137 US Second Written Submission, para. 65, Appellate Body Report, US – Softwood Lumber V , para. 
108; Appellate Body Report,  EC – Bed Linen (Article 21.5 -- India) , para. 66. 
138 Appellate Body Report, US – Softwood Lumber V , para. 108. WT/DS322/R          
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Appellate Body discussed both the terms "margins of dumping" and "all comparable export transactions" as they are used in Article 2.4.2.
139  While the Appellate Body discussed both, however, 
the textual basis for the Appellate Body's finding lies in the phrase "all comparable export transactions" 
used in Article 2.4.2. 
4.93 In this regard, argues the United States, the Appellate Body's conclusion that "dumping is 
defined in relation to a product as a whole", at mo st, relates only to the determination of whether 
dumping exists when using the average-to -average methodology under Article 2.4.2.140  The phrase "all 
comparable export transactions" does not apply to the transaction-to-transaction methodology or the 
average-to-transaction methodology.  The United Stat es claims that any offsets that occur in this 
context reflect the use of averages  of all export prices and normal values.  That is, in applying the 
average-to-average methodology, the Appellate Body found that a Member may make multiple 
intermediate comparisons.141  However, in order to establish the weighted average margin of dumping 
for "all comparable export transactions", the Appe llate Body concluded that the Member must 
aggregate all of the results of those intermediate  comparisons including those comparisons which are 
not dumped.  The offsets, therefore, are tied to the use of the average-to-average methodology in an 
investigation, and do not ari se out of any independent obligation to offset prices. 
4.94 The United States explains that its argument th at offsets do not arise out of any independent 
obligation is based on the same interpretive reasoning that the United States h as identified with respect 
to the relevance of the "fair comparison" provisions  of Article 2.4 discussed below.  Specifically, the 
targeted dumping (weighted average to transacti on) methodology provided for in the second sentence 
of Article 2.4.2 is provided as an exception to th e symmetrical comparison methodologies in the first 
sentence of Article 2.4.2.  The targeted dumping me thodology is an exceptional basis of comparison to 
the normal bases of comparison found in the first senten ce – nothing more.  It is not an exception to the 
"fair comparison" provisions of Article 2.4.2, nor is it an exception to the "margins of dumping" language contained in the first sentence.  Thus, unl ess the Appellate Body's conclusion was based on the 
phrase "all comparable export transactions", a phrase which is unique to the 
weighted-average-to-weighted-average comparis on methodology, the Appellate Body would have 
rendered the targeted dumping provision a nullity as a matter of mathematics. 
4.95 The United States argues that Japan's argument that the United States must provide some 
recognition of so-called "negative results" has no basis in either Article VI of the GATT 1994 or the AD Agreement .  Nowhere in the text of Article VI or the AD Agreement  is there any reference to a 
"negative result", as argued by Japan, or a "negative ma rgin of dumping".  Because neither Article VI of 
the GATT 1994, nor any provisions of the AD Agreement , recognize the existence of "negative 
margins," neither provides any guidance by which a Member would offset its calculations of dumping 
by "negative margins" for distinct  comparisons.  This is evident from the manner in which Members 
with a prospective normal value system assess anti- dumping duties.  Members who utilize a prospective 
normal value system assess anti-dumping duties on each transaction where normal value exceeds export 
price.  In a transaction where export price is equal to, or exceeds, normal value there is no margin of 
dumping, and thus no anti-dumping duty assessed.  Nonetheless, such Members are not required to provide a refund or a credit for any amount by whic h the export transaction exceeds normal value.  The 
United States points out that Japan argues that in a prospective system a party may obtain a refund of 
anti-dumping duties pursuant to an Article 9.3.2 assess ment proceeding, upon request, and that such a 
proceeding would reflect the offset of non-dumped transactions.
142  However, Article 9.3.2 specifically 
provides that a refund will be granted to "an importe r of the product subject to the anti-dumping duty" 
should a request for such refunds be "duly supporte d by evidence."  Such language does not support the 
                                                      
139 Ibid, paras. 86 - 103. 
140 Ibid, para. 93, 96. 
141 Ibid, para. 97. 
142 Japan 20 July 2005 Answers, para. 104.                   WT/DS322/R 
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 conclusion that refund proceedings necessarily co ver all importers and require offsets for any 
non-dumped export transactions of the exporter, as Japa n implies in its "product as a whole" argument.  
Moreover, the United States argues that there is nothing in the AD Agreement  that suggests that 
Members operating a retrospective duty assessment system have different and, in fact, greater 
obligations to recognize non-dumped transacti ons than Members operating prospective duty 
assessment systems.  There is nothing in Article 9. 3 that requires that duty assessment proceedings be 
conducted over some period of time, rather than on an entry-by-entry basis.  The United States' assessment system operates in a manner comparable to a prospective normal value system, examining 
individual export transactions, albeit using contempor aneous normal values.  Japan has identified no 
textual basis for requiring anything more. 
4.96 The United States argues that the scope of the AD Agreement  and the GATT 1994, with respect 
to the measurement of dumping, is lim ited to instances in which there are positive  differences between 
normal value and export prices.  Because neither Article 2.4.2, nor any other provision of the 
AD Agreement  or the GATT 1994, requires a Member to reduce the amount of dumping found based on 
non-dumped comparisons, Japan's claim should therefore be rejected. 
4.97 Finally, the United States argues that the Appellate Body's Report in US – Softwood Lumber V  
is flawed and should not be followed by this Panel.
143  In US – Softwood Lumber V , the Appellate Body 
found that due to the failure of the USDOC to ac count for non-dumped comparisons in an anti-dumping 
investigation on softwood lumber from Canada, th e United States had acted inconsistently with 
Article 2.4.2 of the AD Agreement .144  The United States believes that the Appellate Body erred in 
finding that the AD Agreement  requires Members, in the investigation phase, to calculate and give credit 
for weighted average comparisons when the export pr ice exceeds the normal value.  The Panel is not 
obligated to follow the Appellate Body's reasoning. 
4.98 The United States argues that the Appellate Body's finding in US – Softwood Lumber V was 
based on a perceived obligation within Article 2.4.2 to  provide an offset in an investigation when the 
investigating authority uses the average-to-average methodology.145  The Appellate Body's finding, 
however, is contradicted by the text and negotiating history of the AD Agreement .  Article 2.4.2 restricts 
the use of the average-to-transaction method, a method that was commonly used in anti-dumping 
investigations before the Uruguay Round.  Article 2.4.2 was not intended to require an offset for 
non-dumped sales in an anti-dumping investigation. 
4.99 The United States asserts that the negotiating hi story confirms that Article 2.4.2 does not 
require an offset for negative dumping.  Pursuant to customary principles of treaty interpretation, as 
reflected in Article 32 of the Vienna Convention on the Law of Treaties , the Panel may have recourse to 
this preparatory material to confirm the meaning arri ved at through the application of the rules reflected 
in Article 31 or to determine the meaning should an  Article 31 analysis leave the meaning ambiguous or 
obscure, or leads to an absurd or unreasonabl e result.  The United States argues that the 
Appellate Body's analysis would have benefited from a considerati on of this negotiating history. 
4.100  The United States points out that, prior to the en try into force of the WTO Agreement, many 
users of the anti-dumping remedy, including the United  States and the EC, determined the existence of 
dumping margins by using the average-to-transaction comparison method.146  Several delegations 
                                                      
143 US First Written Submission, paras. 88-94. 
144 Appellate Body Report, US – Softwood Lumber V , para. 183(a). 
145 Appellate Body Report, US – Softwood Lumber V , para. 104, 105, 108. 
146 Communication from Japan Concerning the Anti-Dumping Code , MTN.GNG/NG8/W/81 
(9 July 1990), at 2; Submission of Japan on the Amendments to the Anti-Dumping Code , MTN.GNG/NG8/W/48 
(3 August 1989), at 5; Communication from the Delegation of Hong Kong , MTN.GNG/NG8/W/51/Add. 1 
 WT/DS322/R          
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sought to negotiate a change in this practice in the Uruguay Round negotiations.
147  The negotiations 
over this "asymmetry" issue were protracted and difficult. 
4.101  The United States explains that Article 2.4.2 of the AD Agreement  was ultimately agreed upon 
specifically to address this "asymmetry" issue.  Arti cle 2.4.2 established the major new requirement that 
in anti-dumping investigations, investigating aut horities would normally establish the existence of 
margins of dumping on the basis of either the average-to-average method or the 
transaction-to-transaction method.  Under Article 2.4. 2, the use of the average-to-transaction method is 
limited to "targeted dumping" situations; i.e. situ ations involving "a pattern of export prices which 
differ significantly among different purchasers, regions or time periods".148  If the 
average-to-transaction method is used in an inves tigation, Article 2.4.2 provides that Members must 
explain "why such differences cannot be taken into account appropriately by the use of a weighted  
average-to-weighted average or tr ansaction-to-transaction comparison". 
4.102  The United States argues that, separately, a number of signatories to the Tokyo Round 
Anti-Dumping Code, including the United States a nd the EC, calculated the final overall margin of 
dumping for a company by aggregating the positiv e dumping amounts for comparisons where normal 
value exceeded export price and dividing that number by the aggregate of all export prices.149  So-called 
"negative margins" (for th ose comparisons where export price exceeded normal value) were not taken 
into account in aggregating the overall amount of dumping.  This approach was well-known by the 
Uruguay Round negotiators and was referred to as ze roing.  Concurrent with the negotiations, zeroing 
was reviewed by two dispute settlement panels  and was found to be consistent with the 
Anti-Dumping Code.150  In the Uruguay Round negotiations, sev eral delegations sought to prohibit 
zeroing and to require an offset for "negative dumping".151  The negotiators did not agree to any such 
requirement.  While negotiators reached agreement to address the "asymmetry" issue through, and to 
the extent provided for in, the language of Article 2.4.2 of the AD Agreement , the Agreement ultimately 
did not address the zeroing issue. 
(b) "Fair Comparison" in Article 2 of the AD Agreement  
 Japan152 
 4.103  Japan argues that, in terms of Article 2.1 of the AD Agreement , in order to determine whether 
dumping has occurred, a comparison must be undertak en between "normal value" and "export price."  
Although Article 2.1 does not state how that compar ison should be undertaken, other provisions in 
                                                                                                                                                                    
 
(22 December 1989), at 4; Communication from the Delegation of Singapore , MTN.GNG/NG8/W/55 
(13 October 1989), at 8. 
147 Id. 
148 AD Agreement , Article 2.4.2. 
149 With respect to the term "margins of dumping" as it is used in Article 2.4.2, the US notes that both the 
GATT 1994 and the AD Agreement  reflect the drafters' use of the term to  refer both to the results of particular 
comparisons between normal value an d export price AND to the overall results of those comparisons. As 
previously discussed, Article 2.4.2 pr ovides three different comparison meth odologies and each will often result 
in multiple "margins of dumping" as the term is used in Artic le 2.4.2.  It is only with respect to Article 5.8, wherein 
it is provided that the investigating authority must terminate an investigation if it determines that the margin of dumping is de minimis , that the AD Agreement  requires Members to determine a single percentage-based margin 
of dumping based on the export price. 
150  See GATT Panel Report, EEC – Cotton Yarn , paras. 500-501; GATT Panel Report, EC – Audio 
Cassettes , para. 356. 
151  See Communication from the Delegation of Singapore , MTN.GNG/NG8/W/55 (13 October 1989), at 
7; Communication from the Delegation of Hong Kong , MTN.GNG/NG8/W/46 (3 July 1989), at 7. 
152  Japan First Written Submission, paras. 82-91;  Japan Second Written Submission, paras. 56-65;  
Japan Second Written Submission, paras. 66-71.                   WT/DS322/R 
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 Article 2 do.  In particular, among the "agreed discip lines" in Article 2 for determining the margin of 
dumping, the first sentence of Article 2.4 of the AD Agreement  states that: 
A fair comparison  shall be made between the export price and the normal value. 
(emphasis added ) 
4.104  Japan asserts that a "comparison" is the "acti on … of observing and estimating similarities, 
differences , etc." between two or more things.153  Consistent with this dicti onary meaning, and also with 
the context in Article 2.1 of the AD Agreement  and Article VI:2 of the GATT 1994, the "comparison" in 
Article 2.4 refers to the "action" by which the aut horities determine, in the words of Article VI:2, "the 
price difference " between normal value and export price for the product as a whole, i.e. the margin of 
dumping.  Thus, as the Panel in Egypt – Steel Rebar  found, "Article 2.4, on  its face, refers to the 
comparison of export price and normal value, i.e. the calculation of the dumping margin  … ".154  This 
comparison process for calculating the dumping ma rgin begins when the "basic establishment"155 of 
normal value and export price is complete, and ends  when "the price difference" for the product as 
whole has been calculated. 
4.105  Japan argues that the AD Agreement imposes certain obligations on investigating authorities as 
to how the "comparison" is to be undertaken.  For instance, under the third sentence of Article 2.4, the 
authorities must make "due allowance" in the comparison for any factors that affect "price 
comparability".  Accordingly, normal value and/or ex port price may need to be adjusted upwards or 
downwards to render them properly comparable.  However, the "comparison"  does not end when these 
adjustments have been made.  Rather, these adjustme nts enable the authorities to conduct the process of 
comparing the adjusted figures for normal value and export price. 
4.106  Japan further points out that Article 2.4.2 offe rs three methods by which the adjusted normal 
value and export price can be compared  (W-to-W,  T-to-T and W-to-T) and the particular method 
chosen by the authorities is a defining feature of the comparison.  Further, in making the comparison 
under one of these methods, authorities may conduct "mu ltiple comparisons", based on sub-divisions of 
the product or individual transactions that disaggregate the product as a whole.156  When the authorities 
decide to make multiple comparisons, the process by which they sub-divide and then re-aggregate the 
product as a whole is also a defining feature of th e comparison because it is central to the manner in 
which "the price difference", or the margin of du mping, is established for the product as a whole. 
4.107  Japan claims that, throughout the "comparison" of normal value and export price, Article 2.4 
imposes a fundamental obligation that limits the discr etion of the investigating authorities.  That 
obligation is to ensure a " fair comparison".  According to the Appellate Body, the requirements of a 
"fair comparison" involve "a general  obligation" that "informs all of Article 2 …".157  In light of the 
panel's findings in Egypt – Steel Rebar , the fairness obligation applies to the provisions of Article 2 that 
relate to "the calculation of the dumping margin …".158  The scope of this general obligation is defined 
by reference to the word "fair."  A ccording to dictionary meanings, a " fair" comparison is one that is 
"unbiased " and " impartial ,," and that "offer[s] an equal chance of success " to all parties affected by an 
investigation.159  The Panel in EC – Tube or Pipe Fittings  held, in the context of Article 2.4, that an 
                                                      
153 New Shorter Oxford English Dictionary , 1993 edition (Lesley Brown, ed.), Vol. 1, page 457 
(comparison) ( emphasis added ) (Exhibit JPN-4). 
154 Panel Report, Egypt – Steel Rebar , para. 7.333 (u nderlining added ). 
155 Panel Report, Egypt – Steel Rebar , para. 7.333. 
156 Appellate Body Report, US – Softwood Lumber V , para. 97. 
157 Appellate Body Report, EC – Bed Linen , para. 59 ( emphasis added ). 
158 Panel Report, Egypt – Steel Rebar , para. 7.333. 
159 New Shorter Oxford English Dictionary , 1993 edition (Lesley Brown, ed.), Vol. 1, page 907 
(emphasis added ) (Exhibit JPN-4). WT/DS322/R          
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"investigating authority must act in an unbiased , even-handed  manner and must not exercise its 
discretion in an arbitrary  manner".
160  This suggests a meaning that is rooted in the basic requirements 
of good faith and fundamental fairness.161  The Appellate Body has observed that "fundamental 
fairness" is known in many jurisdictions " as due process of law or natural justice".162 
4.108  Japan argues that the context of Article 2.4 supports this reading.  Indeed, in the AD Agreement , 
Article 2.4 is far from unique in requiring that an  investigating authority act fairly in making its 
determinations;  the context pr ovided by other provisions of the AD Agreement offers useful guidance 
for the proper construction of the "fairness" obligation in  Article 2.4.  First, other provisions of Article 2 
impose similar requirements.  For example, in US – Hot-Rolled Steel , the Appellate Body stated that 
Articles 2.1 and 2.2.1 require investigating aut horities to assess whether home-market sales are in the 
ordinary course of trade "in an even-handed  way that is fair to all parties  affected by an anti-dumping 
investigation".163  The Appellate Body held that there was a "lack of even-handedness " in the USDOC 
procedures at issue because the "combined applicati on of [the measures] operated systematically to 
raise normal value ", which "disadvantaged exporters".164 
4.109  Second , Japan argues that panels and the Appellate Bo dy have consistently held that, in making 
"injury" determinations under Article 3.1, investiga ting authorities must respect "the basic principles of 
good faith and fundamental fairness".165  This finding is based on the need for authorities to conduct an 
"objective examination".  In EC – Bed Linen (Article 21.5 – India) , the Appellate Body ruled that this 
language requires authorities to reach a result that is " unbiased, even-handed , and fair".166  In US – 
Hot-Rolled Steel , the Appellate Body found that it would not be "even-handed" for investigating 
authorities: 
"[T] to conduct their investigation in such a way that it becomes  more likely  that, as a 
result of the fact-finding or evaluation process, they will determine that the domestic industry is injured."
167 
Japan describes that the Appellate Body also opine d, in that appeal, that fairness precludes an 
investigating authority from " favouring the interests  of any interested party, or group of interested 
parties, in the investigation".168 
 4.110  Third , Japan argues that through the standard of review in Article 17.6(i), the AD Agreement  
effectively imposes a duty on investigating authorities to evaluate facts in an " unbiased  and objective " 
manner.
169  
                                                      
160 Panel Report, EC – Tube or Pipe Fittings , para. 7.178 ( emphasis added ). 
161 The fairness requirement in Article 2.4 is another expression of the principle of good faith, which, the 
Appellate Body observed, "is, at once, a general principle of  law and a principle of general international law, that 
informs the provisions of the AD Agreement  …".  Appellate Body Report, US – Hot-Rolled Steel , para. 101.  See 
also Appellate Body Report, US – Shrimp , para. 158 and n. 156. 
162 Appellate Body Report, EC – Hormones , para. 133; Appellate Body Report, EC – Bed Linen 
(Article 21.5  – India) , para. 179. 
163 Appellate Body Report, US – Hot-Rolled Steel , para. 148 ( underlining added ). 
164 Appellate Body Report, US – Hot-Rolled Steel , para. 154. (underlining added) .  See also para. 155 
("the lack of even-handedness … created prejudice  to exporters.") ( emphasis added ). 
165 Appellate Body Report, US – Hot-Rolled Steel , para. 193; Appellate Body Report, EC  – Bed Linen 
(Article 21.5  – India) , para. 114; Panel Report, EC – Tube or Pipe Fittings , para. 7.226;  Panel Report, US - 
Softwood Lumber VI , para. 7.28. 
166 Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 133 ( emphasis in original ). 
167 Appellate Body Report, US – Hot-Rolled Steel , para. 196 ( emphasis added ). 
168 Appellate Body Report, US – Hot-Rolled Steel , para. 193 ( emphasis added ). 
169 Ibid, para. 56 ( emphasis in original ).                   WT/DS322/R 
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 4.111  Therefore, Japan argues that, under Article 2.4 of the AD Agreement , the process by which 
authorities identify "the price difference" between normal value and export price for the product as a 
whole must not be biased, lack even-handedness, favour  particular interests or outcomes, or otherwise 
distort the facts, in particular to the detriment of exporters or foreign producers. 
4.112  Turning to the specific measures at  issue, Japan argues that model and simple zeroing as well as 
the standard zeroing line prevent a fair compar ison by the USDOC when aggregating multiple 
comparison results into a single, overall margin.  Jap an points out that the Appellate Body has already 
held that the application of model zeroing – which operates in the same  manner and produces the same 
effects as simple zeroing – is inconsistent with Articles 2.4 of the AD Agreement .  In 
US – Corrosion-Resistant Steel , the Appellate Body identified two unf air elements in a comparison that 
includes zeroing: 
(1) Zeroing may lead to an affirmative determ ination that dumping exists in  circumstances 
where no dumping would have been established in the absence of zeroing170;  and, 
 
(2) Zeroing "inflates" the margin of dumping by always excluding from the aggregation 
stage the results of negative comparisons  that would reduce the overall amount of 
dumping if they were included.171 
 
4.113  Immediately after noting these unfair elements, th e Appellate Body found that there is an 
"inherent bias in a zeroing methodology … of this kind".172  Unsurprisingly, Japan argues, the Appellate 
Body took the view that such a comparison "is not a 'fair comparison' between export price and normal 
value, as required by Articles 2.4 and 2.4.2".173 
4.114  Japan argues that the model and simple zeroi ng procedures as well as the standard zeroing line 
at issue involve the same unfair comparison.  Under the measures at issue, th e United States aggregates 
multiple comparison results into a single, overall marg in.  However, by excluding the negative results of 
any comparisons from the aggregation of total du mping, the zeroing procedures overstate the total 
amount of dumping by an amount equal to the excluded negative values.  As a result, the dumping margin is inflated.  Moreover, in situations wh ere the aggregate value of excluded negative results 
exceeds the aggregate value of th e included positive results, the zeroing procedures produce a dumping 
determination where the product as a whole is not du mped.  In consequence, the USDOC conducts its 
investigation "in such a way that it becomes  more likely  that [it] will determine that" there is 
dumping.
174  By rendering a dumping determination more lik ely, and by systematically inflating the 
dumping margin, the zeroing procedures deprive the comparison of normal value and export price of even-handedness.  Instead, the pr ocedures systematically favour the interests of petitioners, and 
systematically prejudice the interests of exporters. 
4.115  Japan states that the Appellate Body has also described the unfairness of zeroing in terms of its 
distorting effects on export price in the comparison of normal value and export price: 
"Zeroing means, in effect , that at least in the case of some  export transactions, the 
export prices are treated as if they were less than
 what they actually are.  Zeroing, 
                                                      
170 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135, quoting the panel 
report in that dispute, at para. 7.159. 
171 Ibid, para. 135. 
172 Ibid, para. 135. 
173 Ibid, para. 135 ( emphasis in original ).  See  also Appellate Body Report in EC – Bed Linen , para. 55. 
174 Appellate Body Report  US – Hot-Rolled Steel , para. 196 ( emphasis added ). WT/DS322/R          
Page 38  
 
therefore, does not take into account the entirety  of the prices  of some  export 
transactions … ."
175 
4.116  These same price-based distortions result, in the same fashion, from both the model and simple 
zeroing procedures.  By improperly excluding all negative comparison results from the aggregation stage, the USDOC effectively attributes a zero value to  the excluded comparisons in question, instead of 
a negative value.  This means that, for the excl uded comparisons, the USDOC treats normal value as 
equal  to export price, whereas, in fact, export price is greater  than normal value.  Accordingly, as a 
result of zeroing, the export transactions considered  in the excluded comparisons are systematically 
"treated as if they were less than what they actually are".
176  Another way to express the same 
price-distortion is that the zeroing procedures systematically treat normal value as if it is higher  than it 
actually is.177  On either view (reduced export price or  raised normal value), through the model and 
simple zeroing procedures, the USDOC distorts th e comparison of normal value and export price by 
interfering with price-based data for home-market or export sales. 
4.117  In other words, Japan claims, like the adjustments envisaged in  Article 2.4, zeroing has the 
effect of altering normal value or export price.   However, whereas adjustments to be made under 
Article 2.4 are designed to ensure "price comparability", zeroing ensures price distortion.  Although the 
United States purposefully disregards the negative r esults of comparisons of normal value and export 
price, it does not provide any compensation in the process of aggregating dumping amounts that 
counter-balances the exclusion of negative results.  Instead, the standard zeroing procedures are 
designed and structured always to be biased in favour  of a particular outcome and particular interests 
(i.e. existence of dumping and the inter ests of petitioners), and conversely are always  biased against 
exporters' interests. 
4.118  Japan argues that, as the zeroing pro cedures are formulated with an in-built bias that distorts the 
comparison of normal value and export price, they ar e inconsistent with the dictates of fundamental 
fairness.  As a result, the model and simple zeroing procedures in original investigations, as well as the 
standard zeroing line, are "as such" inconsistent with Article 2.4. 
4.119  Japan submits that the failur e to establish a margin of dumping for the product as a whole, 
through the standard zeroing procedures, is also inc onsistent with the dictates of fundamental fairness 
as it necessarily results in an unfair comparison, i.e. price distortion and an inflated dumping margin.  In other words, by systematically excluding the results  of certain comparisons, the United States fails to 
determine a margin of dumping for the product as a whole and, simultaneously, engages in an unfair 
comparison, for the reasons stated above.  Therefore,  the model and simple zeroing procedures entail a 
failure to establish a margin of dumping for the product as a whole and also violate the fairness 
requirement in Article 2.4. 
4.120  Japan states that it appears that Japan and the United States, in fact, agree that Article 2.4 
establishes a "general obligation" on investigating authorities to conduct a fair comparison of export price and normal value.
178  This is not surprising as the Appella te Body has already reached the same 
conclusion, says Japan.179  Nonetheless, overlooking the significan ce of that ruling, the United States 
adds that the content of the general requirements of fairness are "exhaust[ed]" by the second through 
                                                      
175 Appellate Body Report  US – Softwood Lumber V , para. 101 ( underlining added ). 
176 Appellate Body Report  US – Softwood Lumber V , para. 101. 
177 Appellate Body Report  US – Hot-Rolled Steel , para. 144. 
178 Japan 20 July 2005 Answers, para. 106; US 20 July 2005Answers, para. 70. 
179 Appellate Body Report, EC – Bed Linen , para. 59.                   WT/DS322/R 
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 fifth sentences of Article 2.4, and asserts that those requirements cannot be "divorce[d]" from the 
adjustments required to establish price comparability.180 
4.121  Japan argues that there are two levels of respon se to this assertion.  First, as an interpretive 
matter, it is incorrect.  As Japan stated in its 20 July 2005 Answers, Article 2.4 prohibits the myriad 
possibilities for unfairness that could taint the comparison of normal value and export price.181  In its 
ordinary meaning, the word "comparison", in Article  2.4, refers to the process or action of discerning 
the difference between normal value and export price.182  The generality of the obligation in the first 
sentence of Article 2.4 applies, therefore, to the entire comparison process and not just to price 
adjustments.  The way in which th e authorities elect to disaggregate and re-aggregate the "product" for 
purposes of the comparison is an integral part of the process of comparing prices for the product.183  The 
authorities cannot, therefore, structure the comparis on in a manner that necessarily inflates the margin 
of dumping and may even generate a margin where th ere would otherwise be none.  Further, confining 
the first sentence of Article 2.4 to a duty to ma ke price adjustments would render that sentence 
redundant because the duty to make adju stments is already set forth in th e remainder of Article 2.4.  The 
first sentence of the provision would, therefore, add nothing to the rest. 
4.122  Japan states that the United States' interp retation would also nullify the disciplines in 
Articles 2.2, 2.3 and 6.6 of the AD Agreement  on calculation and verification of normal value and 
export price.  After carefully calculating and conf irming these values, authorities would be permitted to 
structure the comparison process in such a way that, irrespective of the normal value and export price, 
dumping is found.  This is an absurd result that drafters avoided by intr oducing a general fairness 
requirement. 
4.123  Second , Japan argues that, even if the United States is correct ( quod non ) that the requirements 
of fairness in Article 2.4 cannot be "divorce[d]" from the duty to make price adjustments, Japan prevails.
184  Japan recalls that the zeroing procedures, in substance, involve an adjustment to the prices 
of excluded export transactions.  In the words of the Appellate Body, these transactions are "treated as if 
they were less than what they actually are."185  Thus, the zeroing procedures involve an adjustment to 
the prices being compared.  Japan argues that, under th e third sentence of Article 2.4, the authorities are 
required to adjust for differences between export price and normal value to ensure price comparability.  
The provision also gives a non-exhaustive list of factor s that may give rise to an  adjustment to ensure 
price comparability.  These adjustments are intended to guarantee a "fair comparison".  However, if there are no differences affecting price comparability that compel an adjustment, the authorities are not 
permitted to interfere with prices because the result of such interference is that the values to be 
compared cease to be the producer's or exporter's ow n prices.  Japan argues that, taking the contrary 
position, the United States appears to believe that Article 2.4, on the one hand, requires authorities to 
make adjustments that promote fairness and, on the other hand, permits them to make any other adjustments to prices they see fit.  Japan asserts that it is absurd, how ever, to interpret the Article to 
require the authorities to give with one hand to ensure  fairness that which they can simply remove with 
the other to deny it.  Nothing in the text supports so peculiar an interpretation. 
4.124  Japan asserts that, as a result, the fair comparis on requirement in Article 2.4 does not permit the 
authorities to interfere with normal value and/or export price to arbitrarily produce desired results.  Such 
adjustments are not made to ensure price comparability  and, instead, impermissibly distort prices.  Far 
                                                     
 
180 US 20 July 2005 Answers, para. 73. 
181 Japan 20 July 2005 Answers, para. 113. 
182 Japan First Written Submission, para. 82. 
183 See Japan Opening Statement, First Substantive Meeti ng of the Panel with the Parties, paras. 37 - 38. 
184 US 20 July 2005 Answers, para. 73. 
185 Appellate Body Report, US – Softwood Lumber V , para. 101. WT/DS322/R          
Page 40  
 
from "divorce", Japan's interpretation "marries" the general obligation in Artic le 2.4 with the specific 
requirements in the remaining sentences.  In particul ar, the general obligation is  interpreted to preclude, 
among other things, interference by the authorities with  prices in a manner that undermines adjustments 
made to ensure price comparability. 
4.125  In response to the United States' arguments th at the unfairness of the zeroing procedures cannot 
be demonstrated merely by the fact that zeroing would result in a higher dumping margin, Japan recalls 
that the Appellate Body has noted the use of a zeroing methodology "will tend to inflate the margins 
calculated" and "could, in some in stances, turn a negative margin of  dumping into a positive margin of 
dumping".  Thus Japan argues that the effect of a given methodology in inflating margins, or generating margins that would not otherwise exist, is indeed a relevant consideration in examining whether the 
methodology is fair under Article 2.4.  In this case, that  fact is coupled with the fact that the inflation of 
the margins is a deliberate, and not merely incide ntal, consequence of the methodology and it occurs 
systematically. 
4.126  Japan asserts that the United St ates also incorrectly argues that  the Appellate Body has only 
stated that zeroing is WTO-inconsistent in disput es involving original investigations, but not in the 
context of reviews under Articles 9 and 11.  Japan states that in US – Corrosion-Resistant Steel Sunset 
Review , the Appellate Body examined a claim that the United States acted inconsistently with 
Articles 2.4 and 11.3 of the AD Agreement  by relying, in a sunset review, on dumping margins that were 
calculated in administrative reviews using zeroing.
186  The Appellate Body stated: 
"When investigating authorities use a zeroing methodology such as that 
examined in EC – Bed Linen to calculate a dumping margin, whether in an 
original investigation or otherwise, that methodology will tend to inflate the 
margins calculated. Apart from inflating the margins, such a methodology could, 
in some instances, turn a negative margin  of dumping into a positive margin of 
dumping."187 
 
4.127  Japan further argues that the Appellate Body in that case envisaged that, in sunset reviews, 
Members would violate Articles 2.4 and 11.3 if they were to rely on "legally flawed" dumping margins 
calculated, in investigations or reviews, using a zeroing methodology.188 Japan emphasizes that these 
findings have particular significance for this dispute because the Appellate Body noted in 
US – Corrosion-Resistant Steel Sunset Reviews  that the "flawed" dumping margins in question had 
been calculated in administrative reviews, pursuant to  Article 9.  Therefore, the Appellate Body also 
envisaged that Members would violate the Agreement  by using zeroing to calculate dumping margins in 
administrative reviews. 
4.128  Japan claims that, in light of the Appellate Bo dy's recognition that zeroing would have the same 
distortive effects, "whether in an investigation or othe rwise", i.e. in reviews as well as investigations, it 
would be strange indeed to conclude that the Appe llate Body held that zeroing is WTO-inconsistent 
when used in investigations, but is permissible wh en used in reviews.  Also the Appellate Body 
concluded that "in the absence of uncontested facts on the Panel record, it is not possible for [the 
Appellate Body] to assess whether the meth odology in the administrative reviews [in 
Corrosion-Resistant Steel ] was equivalent in effect  to the methodology [used] in EC – Bed Linen ."189  
Japan argues that these statements show that, if  zeroing in investigations and reviews produce 
"equivalent" distortive effects, Article 2.4 would be violated in both situations. 
                                                      
186 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 133. 
187 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135 ( emphasis added ). 
188 Appellate Body Report,  EC – Bed Linen , para. 127.  See also para. 4.194, below. 
189 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 137 ( emphasis added ).                   WT/DS322/R 
Page 41 
 
 
 
 4.129  Japan further urges the Panel to focus on the f eatures of the measures at issue, and not on 
alternative methodologies that the United States mi ght have adopted to calculate dumping margins. 
Japan argues that the salient features of the zeroing measures at issue are that the United States makes 
an initial comparison for all comparable export transactions , but in aggregating the initial comparison 
results into an overall margin, the United Stat es includes solely the positive comparison results, 
disregarding negative results.  The United States ther eby distorts the prices for the disregarded export 
transactions, and it does so precisely because this w ill generate and inflate the overall dumping margin.  
Finally, the United States applies the determinati on resulting from the "partial" comparison of selected 
transactions to all export transactions on a product-wide basis.  This is so whether the determination is 
used for purposes of an injury determination; to te rminate or pursue an inves tigation; to justify the 
imposition of duties; or to assess the amount of duties due.  Japan recalls that, in US – Softwood 
Lumber  V , the Appellate Body observed that under th e United States' system, the product is 
consistently treated as a whole at a ll stages, except for purposes of zeroing.190  Japan submits that, in 
light of these features, the "partial" comparison that results from the zeroing measures is "inherently 
biased" and not fair, whether it is used in " an original investigation or otherwise ".191  Japan insists that 
the fairness of the United States' measures cannot be  assessed in light of other methodologies that the 
United States might have chosen, but did not. 
4.130  Japan responds to what it calls the central pillar of the United States' defence that prohibiting 
zeroing would render the third method of comparison in Article 2.4.2 a nullity.  In its Opening 
Statement during the First Meeting of the Panel with the Parties and in answers to the Panel's questions, 
Japan has demonstrated the fallacy of this argument.192  The second sentence of Article 2.4.2 
contemplates a different comparison from the symme trical methods that is focused on the export 
transactions making up the pricing pattern that jus tifies recourse to this me thod.  Japan has also 
provided numerical examples that demonstrate th at the second sentence does not necessarily yield the 
same results as the symmetrical methods of comparis on, whether Japan's interpretation of that sentence 
applies or not.193  In the United States' answers to the Panel's questions, it asserts that Japan's 
interpretation of the second sentence has no textual support.  In fact, Japan has provided a careful textual analysis of the words of the provision.  Japan  relies, for example, on the ordinary meaning of the 
following words and phrases:  "pattern of export pri ces";  "differ significantly";  "different purchasers, 
regions or time periods";  and "why such di fferences cannot be taken into account" under the 
symmetrical methods.  In addition, the absence of  the word "all" in the second sentence provides 
additional textual grounds for Japan's interpretation. 
4.131  Japan argues that it is the United States that fails to provide any textual basis for its 
interpretation.  The United States asserts baldly th at the second sentence permits a comparison "using 
the same universe of export transactions as the other two methodologies".
194  I t  a d d s  t h a t  t h e  
asymmetrical comparison "by its very nature" addresses targeted dumping.195  Beyond this, there is 
nothing to indicate what the United States considers the "nature" of the third method to be nor how it 
believes that this method addresses pricing pattern s based on purchasers, regions or time periods.   Japan 
posits that a comparison that uses the entire universe of  export transactions cannot,  "by its very nature", 
address pricing patterns, or the possibility of targeted dumping, confined to a certain group of transactions.  A comparison that relies on all expor t transactions necessarily addresses the prices, and 
any positive comparison results, in all these transactions.  The use of zeroing does not alter this fact.  For 
                                                     
 
190 Appellate Body Report, US – Softwood Lumber V , para. 99. 
191 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135 ( emphasis added ). 
192 Japan Opening Statement, First Substantive Meeting of the Panel with the Parties, paras. 45-58; Japan 
20 July 2005 Answers, paras. 43-53, 56-63 and 66-83. 
193 Japan 20 July 2005 Answers, paras. 69-72 and 78-82. 
194 US 20 July 2005 Answers, para. 25. 
195 US 20 July 2005 Answers, para. 25. WT/DS322/R          
Page 42  
 
example, an examination of prices across the Un ited States may disclose a pricing pattern among 
purchasers in Texas.  The United States would inv estigate the possibility of targeted dumping within 
this pricing pattern in Texas by examining transac tion prices in Maine, Oregon, Alaska and, indeed, 
everywhere else in the United States.  By necessity , the resulting determination would have nothing to 
do with the pricing pattern in Texas.  Rather, any dumping determination would be based on positive 
comparison results from export transactions scattered th rough the entire universe of transactions.  There 
is no basis in the text of the second sentence of Article  2.4.2 for a comparison that is disconnected in this 
way from the pricing pattern.  
4.132  Thus, contrary to the United States' arguments,  the express language of the second sentence of 
Article 2.4.2 mandates a comparison based on a subset  of transactions.  That express language identifies 
the subset in question: those transactions that constitute the pricing "pattern" among "purchasers, 
regions or time periods".  A targeted selection of tr ansactions is permitted to take into account the price 
differences within this pattern.  That targeted selection addresses the po ssibility that the pattern may be 
the result of targeted dumping.  When the pattern  has been identified, and the selection made, the 
authorities must conduct a fair comparison of all trans actions within the pattern.  As the Appellate Body 
held in US – Softwood Lumber V , the express language of Article 2.4.2 does not permit authorities to 
disregard the results of the pricing comparisons undertaken.
196  Accordingly, Japan argues that the 
United States' argument that a prohibition on zeroing  would nullify the third method of comparison is 
without merit. 
4.133  In response to the Panel's question asking why Jap an regards it as permissible to exclude export 
transactions that are not a part of  a "pattern" pur suant to the second sentence of Article 2.4.2 from the 
denominator of the dumping margin calculation, Jap an argues that the purpose of the second sentence of 
Article 2.4.2 is to allow Members to combat ta rgeted dumping that might be indicated through 
particular pricing patterns among differe nt purchasers, regions, or time periods.197  Japan states that by 
explicitly requiring the authorities to explain why a W-to-W or T-to-T comparisons will not take 
"appropriate account" of the prices differences, the second sentence of Article 2.4.2 presupposes that 
the third comparison methodology, which uses a pricing pattern to establish the existence of the margin 
of dumping on the basis of the specific transactions wi thin the pricing pattern, will enable the authorities 
to take appropriate account of those differences. 
4.134  Japan submits that its interpretation is c onsistent with the USDOCs targeted dumping 
regulation.  This regulation recognizes that, in a situation that may involve  "targeted dumping," the 
W-to-T comparison is confined to the export transact ions making up the pricing pattern.  Specifically, 
the Regulations state that where "there is targeted  dumping in the form of export prices ... that differ 
significantly among purchasers, regions, or periods of time" " the Secretary normally will limit the 
application of the average-to-transaction method to  those sales that constitute targeted dumping  ... ".198  
In other words, Japan claims, the United States appe ars to agree that the W-to-T method in the second 
sentence is confined to the export transactions making  up the pricing pattern and does not extend to the 
entire universe of export transactions. 
4.135  The United States replies that its Regulations  do not support Japan's position because, in 
addition to applying the W-to-T method to the tr ansactions in the pattern, the USDOC will apply a 
W-to-W comparison method to the remaining export transactions199, and argues that, without zeroing, 
this combination of methodologies would produce the same result as a single W-to-W comparison.  In 
response, Japan argues that for the United States' redundancy argument to be correct as a matter of law, 
                                                      
196 Appellate Body Report, US – Softwood Lumber V , para. 100. 
197 Japan 19 October 2005 Answers, paras. 50-54. 
198 USDOC Anti-dumping regulations, 19 C.F.R. § 351.414(f)(2) ( emphasis added ).  Exhibit JPN-03. 
199 Response of the US to Japan's Opening Statement at the Second Substantive Meeting of the Panel 
with the Parties, para. 3.                   WT/DS322/R 
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 a Member must be required  to conduct a further symmetrical comparison for the remaining transactions 
(i.e. W-to-W or T-to-T).  That is, the AD Agreement  must compel authorities to conduct a combined 
comparison using two of the methodologies in Article 2. 4.2.  Nothing in Article 2.4.2 indicates any such 
requirement.  In terms of Article 2.4.2, each of the methods of comparison constitutes, on its own, a 
basis for determining "the existence of margins of  dumping".  Thus, Japan argues that the "individual 
margin of dumping"200 established for an exporter or producer under any one of the three comparison 
methods201 constitutes a valid and sufficient dumping determina tion on its own.202  Japan points out that 
the United States' argument is contradictory because,  while it insists that there is no obligation to 
calculate a single margin for all export transactions pertaining to the product, to preserve its redundancy 
argument under the second sentence of Article 2.4.2,  the United States also ar gues that the authorities 
are obliged to conduct a comparison for all export transactions pertaining to the product. 
4.136  Furthermore, Japan holds the position that the second sentence of Article 2.4.2 constitutes an 
exception to the requirement to determine the margin of dumping for a product as a whole203.  Finally, 
when asked by the Panel whether in a situation where the third method of comparison is used to 
determine the anti-dumping duty, the AD Agreement  permits the imposition of duties to be imposed on 
all imports of the subject product, Japan answers in the affirmative.204  Japan argues that, according to 
the Appellate Body "the rules on the determination  of the margin of dumping are distinct and separate 
from the rules on the imposition and collection  of anti-dumping duties."205  Japan explains that when a 
Member makes a determination of a dumping ma rgin under any of the three methodologies under 
Article 2 and an affirmative injury and causation de termination under Article 3, Article 9 permits the 
imposition of duties on all entries of the product into the territory of the importing Member.  Japan adds, 
however, that the liability for duties imposed on the basis of a dumping determination under the second 
sentence of Article 2.4.2 would be subject to review  under either Article 9.3.1 or 9.3.2.  While Japan 
notes that it has not taken a position with regards to  the applicability of Article 2.4.2 to review 
proceedings, Japan argues that a question may arise whether authorities would be permitted to use such 
a W-to-T method in its exceptional form in review  proceedings(i.e. confined to a limited group of 
transaction making up a pricing pattern). 
4.137  Leaving aside its interpretation of the second sente nce of Article 2.4.2, Japan argues that the 
United States "nullity" argument places a very high  burden on the United States.  To show that the 
prohibition of zeroing "nullifies" the second senten ce of Article 2.4.2, the United States must 
demonstrate that, without zeroing, Members are requi red to calculate margins in a manner that will 
always result in the same outcome for the two comp arison methods.  There is no nullity just because the 
two methods may produce the same outcome in some circumstances. Japan ar gues that it has shown, 
however, that without zeroing, the W-to-W and W- to-T methods would produce different results in 
certain circumstances – for example, when Me mbers base the comparison on a weighted average 
normal values determined for different time peri ods.  Specifically, Japan provides numeric examples 
demonstrating that the results differ as between the comparison methodologies authorized by the 
anti-dumping statute of the United States itself – i.e. a W-to-W comparison methodology in which the weighted average normal value is calculated over th e entire period of investigation, and a W-to-T 
comparison methodology in which the weighted averag e normal value is calculated on a monthly basis. 
                                                     
 
200 Article 6.10 of the AD Agreement . 
201 This assumes that, for the third methodology, the pr erequisites in the second sentence of Article 2.4.2 
have been satisfied. 
202 Japan considers that, in situations in which the third methodology is used to calculate the margin of 
dumping on the export sales that comprise the pricing pattern, the AD Agreement  does not preclude Members from 
conducting a separate symmetri cal comparison (though it does  not compel the Member to do so either), as the US 
says it would for the export transactions that do not form part of the pattern. 
203 Japan Opening Statement, First Substantive Mee ting of the Panel with the Parties, para. 54. 
204 Japan 21 September 2005 Answers, paras. 55-57. 
205 Appellate Body Report, EC – Bed Linen (Article 21.5) , para. 124. WT/DS322/R          
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4.138  The United States responds that "Japan offers no te xtual analysis to support its theory that the 
methodologies set on in Article 2.4.2 were crafte d on the assumption that Members would be using 
different bases for calculating the weighted average normal value" in W-to-W and W-to-T comparisons, 
respectively.
206  Japan argues that this is an incorrect way to present the issue.  Japan submits that the 
text does not suggest an "assumption" that a singl e "basis for calculating the weighted average normal 
value" must be used under Article 2.4.2.  The signifi cant point is that the text of the Article itself does 
not prohibit  a Member from using "different bases" for calculating the weighted average normal value 
in the two situations.  In other words, Article 2. 4.2 was crafted on the "assumption" that Members could 
choose to use different bases for calculating the we ighted average normal value in the W-to-W and 
W-to-T comparisons.  So long as Members are not prohibited from using different  bases (including 
different time periods) to calculate the "W" in the W-to-W and W-to-T comparisons, the outcomes of 
the comparisons will almost inevitably differ b ecause the groups of transactions making up the 
weighted average normal value will differ. 
4.139  Japan points out that the United States does not suggest that the AD Agreement  compels 
Members to use the same time bases in the two situa tions.  Indeed, the United States' domestic law itself 
authorizes the contrary because the USDOC is perm itted to use different time "bases" for calculating 
the "W" in the W-to-W comparison in investigations  and in the W-to-T comparison in administrative 
reviews.207  Moreover, Japan argues that the United Stat es does not deny that different outcomes will 
result from the use of different time bases. Japan asser ts that the fact that methods overlap in those 
circumstances does not nullify the third method because a Member may also choose to do otherwise, as 
the United States itself has done. 
 United States208 
 4.140  The United States argues that Article 2.4 of the AD Agreement does not contain obligations 
with respect to zeroing.  The United States argues th at the obligation to make a "fair comparison" under 
Article 2.4 does not create an obligation to provide for offsets.  Article 2.4 addresses only the required 
adjustments that must be made to export price and normal value in order to account for "differences 
which affect price comparability".  Not only does the te xt of Article 2.4 itself not provide an obligation 
with respect to offsets, but to interpret the obliga tion to make a "fair comparison" – as Japan does – as 
the basis for a general requirement to provide o ffsets would render the targeted dumping methodology 
in Article 2.4.2 superfluous.  As such, the Unite d States asserts that Japan's claims based on the 
obligation to make a "fair comparison" under Article 2.4 should be rejected. 
4.141  The United States argues that an an alysis of Japan's claims necess arily begins with the text of 
Article 2.4.  From the text, it is clear that Article 2.4 establishes the obligation that a fair comparison be 
made between normal value and e xport price and provides detailed guidance as to how that fair 
comparison is to be made.  Article 2.4 recognizes th at the normal value and export transactions to be 
compared may occur, inter alia , (a) with respect to models with differing physical characteristics, (b) at 
distinct levels of trade, (c) pursuant to different terms and conditions, and (d) in varying quantities.  The 
United States argues that the first sentence of Ar ticle 2.4 creates a general obligation to make 
appropriate adjustments to ensure that export pri ces and normal values are comparable before margin 
calculations are undertaken.
209  The remainder of Article 2.4 provides examples of the types of 
adjustments that the administering authority is obliged  to make in pursuit of price comparability.  There 
is no basis for an interpretation of Article 2.4 th at divorces the obligation to make a fair comparison 
                                                      
206 US Second Written Submission, para. 40. 
207 Compare  Section 777A(d)(1)(A) of the Tariff Act of 1930, as amended, with Section 777A(d)(2). 
208 US First Written Submission, paras. 44-53; US Second Written Submission, para. 34, 36-37, 26-32¸ 
US First Written Submission, paras. 54-58; US Second Written Submission, paras. 39-47. 
209 US 20 July 2005 Answers, paras. 70-73.                   WT/DS322/R 
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 from the allowances required to establish price comp arability.  Article 2.4 itself does not specifically 
address the establishment of the margin of dumping. 
4.142  The United States argues that the focus of Article  2.4 is on how the authorities are to select 
transactions for comparison and make the appropria te adjustments for differences that affect price 
comparability.  As the panel in Egypt – Steel Rebar explained: 
"... [A]rticle 2.4 in its entirety, including it s burden of proof requirement, has to do with 
ensuring a fair comparison, through various adjustments as appropriate, of export price and normal value."
210 
 
The panel's discussion in Egypt- Steel Rebar  of the scope of the fair comparison language in Article 2.4 
was expressly quoted and supported by the panel in Argentina – Poultry Anti-Dumping Duties .211  
Every Appellate Body and panel report that has tu rned on the question of price comparability has 
narrowly interpreted Article 2.4 to address pre- comparison price adjustments that affect the 
comparability of prices between markets.212  The panel in US – Softwood Lumber V  summarized the 
scope of Article 2.4 when it found: 
 
"An examination of a request for an Article 2.4 adjustment should therefore start with a 
determination of whether a difference betw een the export price and the normal value 
exists.  That is, a difference between the pri ce at which the like product is sold in the 
domestic market of the exporting country and that at which the allegedly dumped 
product is sold in the importing country.  Ultimately, this provision requires that 
differences exist between two markets.  If there is no difference affecting the products 
sold in the markets concerned, for instance, where the packaging of the allegedly 
dumped product and that of the like product sold in the domestic market of the exporting country is identical, in our view, an adjustment would not be required to be 
made by that provision. "
213(emphasis added ) 
 
4.143  Accordingly, as the Appellate Body stated in US – Hot-Rolled Steel , "an examination of 
whether USDOC acted consisten tly with Article 2.4 of the AD Agreement  must focus on . . . whether 
there were 'differences', relevant  under Article 2.4, which affected the comparability of export price and 
normal value".214  Thus, Japan's proposed interpretation of Article 2.4 to encompass the results  of 
comparisons between export price and normal value is erroneous; Article 2.4 does not apply to the 
results  of comparisons. 
4.144  The United States argues that Japan  has not offered any argument as to how an offset to the 
dumping found on one export transaction as a result of a distinct export transaction having been sold at 
above normal value would be considered an adjust ment or other comparison criterion that falls under 
Article 2.4.  Quite the opposite, Japan itself recogni zes a distinction between the adjustments that are 
required pursuant to Article 2.4 in order to make a "fair comparison", and zeroing.215  Accordingly, the 
United States claims, because the "fair comparison" oblig ation in Article 2.4 refers to the required price 
                                                      
210 Panel Report , Egypt – Steel Rebar , para. 7.335. 
211 See Panel Report Argentina – Poultry Anti-Dumping Duties , paras. 7.264–7.265, Panel Report, 
U  – Softwood Lumber V , para. 7.356; Appellate Body Report, US – Hot-Rolled Steel,  para. 179. 
212  See, e.g., Panel Report, US – Softwood Lumber V , para. 7.356; Appellate Body Report, 
US – Hot-Rolled Steel,  para. 179, Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7 265; Panel 
Report, Egypt – Steel Rebar , para. 7.269. 
213  Panel Report, US – Softwood Lumber V , para. 7.356. 
214 Appellate Body Report, US – Hot-Rolled Steel,  para. 179. 
215  Japan First Written Submission, para. 107. WT/DS322/R          
Page 46  
 
adjustments, it does not create an obligation with r espect to how the results of those comparisons are 
treated. 
4.145  The United States notes that Japan appears to be ar guing that in addition to the appropriate price 
adjustments envisioned in Article 2.4, the United States is obligated to provide some form of 
compensation in the process of aggregating the results of its price comparisons to negate the effect of 
not allowing an offset for sales that exceed normal value.
216  The focus of Article 2.4, however, is 
limited to the selection of comparable transactions and the making of appropriate adjustments to those 
transactions so as to render them comparable.  Japan has not shown – and, logically, cannot show – that 
the result of a comparison between two particular transactions is a difference affecting the price comparability of two completely different transactions.
217  Even as described by  Japan, an offset 
requirement would be applied to the results  of comparisons, and would not pertain to the comparisons 
themselves.218  Consequently, it falls outsi de the scope of Article 2.4.219 
4.146  Not content with the text of the Article 2.4 as written, argues the United States, Japan now seeks 
to read into the phrase "fair comparison" the word s "good faith" in an attempt to create a new 
obligation.220  However, the customary rule of interpretation reflected in Vienna Convention  Article 31 
calls for a "good faith" reading of the actual text of an agreement, in its context and in light of the 
agreement's object and purpose; substituting or inserting wo rds into the text that are not there – even if 
those words are "good faith" – is not in fact a good faith reading.  The principles of interpretation set forth in Article 31 "neither require nor condone the imputation into a treaty of words that are not there or 
the importation into a treaty of concepts that were not intended".
221  As discussed above, a proper 
reading of the actual language of the AD Agreement  yields the conclusion that the phrase "fair 
comparison" in Article 2.4 simply has nothing to do with offsetting. 
4.147  The United States argues that, in EC – Bed Linen , the Appellate Body found that the EC had an 
obligation to provide offsets arising out of the use of an average-to-average comparison methodology in 
an investigation pursuant to Article 2.4.2.222  The Appellate Body, however, made no findings with 
respect to Article 2.4.  The Appella te Body focused its analysis on th e fact that Article 2.4.2 requires 
investigating authorities to "compare the weighted average normal value with the weighted average of 
prices of all comparable export transactions".223  While the Appellate Body report contains a conclusory 
sentence regarding the "fair comparison" requirement, th e report contains no textual analysis of the "fair 
comparison" requirement nor any explanation as to how or why the EC's methodology was unfair.224  
The basis for the Appellate Body's finding was limited to  the need for an investigating authority to use 
"all comparable export transactions" in the app lication of the average-to-average comparison 
methodology.225 
4.148  The United States asserts that, in US – Corrosion-Resistant Steel Sunset Review , the Appellate 
Body found that it was "unable to rule" on whet her the United States acted inconsistently with 
                                                      
216 Japan First Written Submission, para. 107. 
217 US Second Written Submission, para. 35. 
218 Japan First Written Submission, para. 2. 
219 The US notes that Japan's "as applied" claims includ e claims of inconsistency with Article 18.4 of the 
AD Agreement  and Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization  
("WTO Agreement").  Assuming for purposes of argume nt that Japan's positions regarding "symmetry" and 
offsets for "negative dumping" are valid, Japan fails to ex plain how the obligations of these provisions relate to 
determinations made in specific anti-dumping proceedings.  Accordingly, the Panel should reject Japan's claims. 
220 Japan First Written Submission, para. 36. 
221 Appellate Body Report, India – Patents (US) , para. 45. 
222 Appellate Body Report, EC – Bed Linen , para. 66. 
223 Ibid, para. 55. 
224 Ibid, para. 55. 
225 Ibid, paras. 55-60.                   WT/DS322/R 
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 Article 2.4 and Article 11.3.226  While Japan cites to the Appellate Body's language in 
US – Corrosion-Resistant Steel Sunset Review  as to the "fair comparison requirement," the statements 
to which Japan refers were made abse nt any analysis of the text of the AD Agreement , did not provide 
any reasoning beyond reference to the EC – Bed Linen report, and were in the context of a dispute in 
which the Appellate Body was unable to "complete the analysis."  Accordingly, the reasoning of the 
Appellate Body in US – Corrosion-Resistant Steel Sunset Review  provides no basis to conclude that the 
fair comparison requirement establishes an i ndependent obligation to provide offsets. 
4.149  The United States asserts that, in US – Softwood Lumber  V, the Appellate Body specifically 
recognized that the issue before it was whether off sets were required under the average-to-average 
methodology found in Article 2.4.2.227  The basis for its finding was the obligation in Article 2.4.2 that 
"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 . . . ."228  At no point did the Appellate Body in US – Softwood 
Lumber  V reference or rely upon Article 2.4 as part of its analysis.  Furthermore, even though the parties 
in that dispute referenced other comparison methodologies found within Article 2.4.2 in their 
arguments, the Appellate Body declined to address any obligation to provide offsets in any context 
other than that of the average-to-a verage comparison methodology before it.229 
4.150  The United States argues that belying Japan's misc haracterization of the Appellate Body's prior 
findings as speaking to an offset requirement pursuant to the "fair comparison" language, in 
US – Softwood Lumber  V the Appellate Body expressly indicated that the scope of its determination 
was limited: 
"[I]n this appeal, we are not required to , and do not address, the issue of whether 
zeroing can, or cannot, be used under the other methodologies prescribed in Article 2.4.2, namely, comparing normal value and export prices on a transaction-to-transaction basis (the "tra nsaction-to-transaction methodology"), or 
comparing a normal value established on a weighted average basis to prices of 
individual export transactions (the "weighted-average-to-individual methodology")."
230 
 
4.151  The Appellate Body also explained th e limited scope of its findings in EC – Bed Linen :  
"When examining the practice of 'zeroing' in the original dispute, we noted that the 
requirements of Article 9 do not have a bearing on Article 2.4.2, because the rules on 
the determination of the margin of dumpi ng are distinct and separate from the rules on 
the imposition and collection of anti-dumping duties."231 
Thus, Japan's suggestion that the A ppellate Body has resolved the issu e as to offsets in contexts other 
than an average-to-average methodology in an inves tigation is contradicted by the Appellate Body's 
own statements. 
 
                                                      
226 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 138. 
227 Appellate Body Report, US – Softwood Lumber V, paras. 104, 105, 108. 
228 AD Agreement , Art. 2.4.2 ( emphasis added ).  See Appellate Body Report, US – Softwood Lumber  V, 
paras. 82, 86, 98. 
229 Appellate Body Report, US – Softwood Lumber  V, paras. 104 - 105. 
230 Appellate Body Report, US – Softwood Lumber V , para. 63. 
231 Appellate Body Report, EC – Bed Linen (21.5 – India), para. 124. WT/DS322/R          
Page 48  
 
4.152  The United States argues that, while the "fair co mparison" language refers to adjustments 
necessary to ensure price comparab ility, even if the obligation were somehow read to have some 
meaning beyond this, it would not follow that a "fair comparison" requires an investigating authority to provide an offset to dumping for export transacti ons that exceed normal value in every anti-dumping 
proceeding, no matter the method of comparis on used and no matter the facts before it. 
4.153  The United States argues that customary rules of  interpretation of pub lic international law 
require that an agreement term be interpreted in its context.  Any reading of an obligation of "fairness" 
should thus be informed by the specific rules in the Agreement applicable to the calculation of dumping.  
An approach that conflicts with tho se rules, or which purports to estab lish a standard of fairness that in 
reality is subjective and arbitrary and is not informed  by those rules, is not appropriate.  Fairness should 
only be evaluated through an objective, discernable sta ndard of what is appropr iate and inappropriate, 
as found within the four corners of the Agreement .  Japan argues that because the use of an offset would 
result in a lower margin, the non-use of the offset mu st be unfair.  This subjective conclusion makes 
little sense, unless one may presume, based upon a reading of the text of the AD Agreement , that in all 
cases, the objective test of a margin's "fairness" is th e level of that margin, with a higher margin being 
"unfair" when a lower one is possible.  Japan has pointed to no language with the AD Agreement  which 
would support such a reading of Article 2.4. 
4.154  Further, the United States states that Japan's inte rpretation of the "fair comparison" requirement 
in Article 2.4 to create a general obligation to o ffset dumping margins also cannot be reconciled with 
the remaining text of the AD Agreement  in a manner consistent with customary rules of treaty 
interpretation.  That is because the targeted dum ping methodology, provided for in Article 2.4.2, 
mathematically must yield the same result as an average-to-average comparison if, in both cases, 
non-dumped comparisons are required to offset dum ped comparisons.  In this respect, an offset 
requirement would render the targeted dumping ex ception in Article 2.4.2 a complete nullity. 
4.155  The United States argues that the express terms of Article 2.4.2 demonstrate that the drafters of 
the AD Agreement  did not intend to require that dumped  comparisons be offset with non-dumped 
comparisons in determining an exporter's fina l overall dumping margin.  The "targeted dumping" 
methodology was drafted as an exception to the obliga tion to engage in a symmetrical comparison in an 
investigation.  By the terms of Article 2.4.2, it ma y be used "if the authorities find a pattern of export 
prices which differ significantly among different purchasers, regions or time periods ... ."  When the investigating authority provides an explanation as to why these "differences cannot be taken into 
account appropriately by the use of a weighted average-to-weighted average or transaction-to- 
transaction comparison", it may then use the asymme trical average-to-transaction comparison to 
establish the existence of margins of dumping during the investigation phase. 
4.156  The United States asserts that the targeted dumpi ng methodology is not an exception to the "fair 
comparison" requirement of Article 2.4.  It is only an exception to the symmetrical comparison requirements for investigations set forth in the first sentence of Article 2.4.2.  Article 2.4, on the other 
hand, applies to all those comparison methodologies.  Japan asserts that zeroing violates the "fair 
comparison" obligations of Article 2.4 because it is "inherently biased".
232  However, if Japan is correct, 
then the "fair comparison" obligation, when a pplied to the targeted dumping methodology, would 
require the investigating authority to provide for an offset for tr ansactions that exceed normal value 
even when using the targeted dumping methodology.  If offsetting were required, the overall dumping 
margin calculated for an exporter must, mathematic ally, be the same under a symmetrical comparison 
of weighted averages of normal values and export pr ices, or an asymmetrical comparison of weighted 
average normal values and individual export prices.  Th e United States argues the reason for this is that, 
if offsetting is required, then all non dumped sales (i .e. negative values) will offset the margins on all of 
the dumped sales (i.e. positive values).  It makes no difference mathematically whether the calculation 
                                                      
232 Japan First Written Submission, para. 9, 194.                   WT/DS322/R 
Page 49 
 
 
 
 of the final overall dumping margin is based on comp aring weighted average export prices to weighted 
average normal values or on comparing transaction specific export prices to weighted average normal 
values.  In both cases, the sum total of the positive va lues will be offset by the sum total of the negative 
values, and the results will be the same. 
4.157  The United States argues that an interpretation of Article 2.4 of the AD Agreement  that requires 
such offsets in general would render the distin ctions between the average-to-average and the 
average-to-transaction methodologies in Article 2.4.2 without meaning.  A panel may not interpret a 
provisions of the AD Agreement  in such a way that its express provisions are rendered meaningless or 
superfluous.233  As the Appellate Body has consistently found, "interpretation must give meaning and 
effect to all the terms of a treaty.  An interprete r is not free to adopt a reading that would result in 
reducing whole clauses or paragraphs of  a treaty to redundancy or inutility".234  An interpretation of 
Article 2.4 of the AD Agreement  to require that dumping margins be offset by non-dumped transactions 
is therefore impermissible and must be rejected. 
4.158  The United States points out that Japan disputes th at its interpretation of the fair comparison 
requirement would render the targeted dumping methodol ogy a nullity based on two distinct theories:  
(1) that the targeted dumping methodology allows Members to disregard export transactions not within the pattern of pricing differences, and (2) that the targeted dumping methodology does not necessitate the same result as the average-to -average comparison methodology. 
4.159  With respect to Japan's first theory, the United States has a ddressed the numerous interpretive 
problems with that approach in respon se to several questions from the Panel.
235  Nothing in the text 
indicates that the investigating authority may comp are the weighted-average normal value to only a 
select subset of export transactions.  Japan argues that  if the investigating authority could not focus its 
analysis on just those export transactions that ma ke up the different pricing pattern, the authority 
"would fail to take 'appropriate account' of the pr icing differences discernable in those transactions".236  
Japan misreads the text of Article 2.4.2.  Artic le 2.4.2 does not provide an obligation to take 
"appropriate account" of the prici ng differences discernable in those export transactions.  Instead, 
Article 2.4.2 provides an obligation to explain why a symmetrical methodology does not take appropriate account of such differences.  Th is requirement reinforces that it is the asymmetry of the 
targeted dumping methodology that addresses the pricing differences (i.e.  the masked dumping that 
might otherwise be missed), rather than the selection of a subset of export transactions. 
4.160  The United States argues that, moreover, Japan's proposed interpretation of Article 2.4.2 defies 
Japan's own analysis.  When it suits its argument, Japan contends that "when the negotiators sought to 
permit investigating authorities to disregard certain matters, they did so explicitly".
237  However, Japan 
admits that "Article 2.4.2 does not indicate exactly  how the [average-to-transaction] comparison is 
                                                      
233 See Appellate Body Report, US – Gasoline , p. 23; Appellate Body Report, Japan – Alcoholic 
Beverages II , p. 12; Panel Report, Egypt – Steel Rebar , para. 7.277. 
234 Appellate Body Report, US – Gasoline  at p. 23;  See also Appellate Body Report, Japan – Alcoholic 
Beverages II , p. 12;  Appellate Body Report, US – Underwear , p. 16. 
235 US 20 July 2005 Answers, paras. 24-31. 
236 Japan 20 July 2005 Answers, para. 46.  The US notes that Japan also argues that an asymmetrical 
comparison that includes all export transactions is not directed at the pr icing pattern transactions, nor can it take 
into account the pricing differences in the pattern, "as required by Article 2.4.2".  Japan 20 July 2005 Answers, 
para. 59.  Article 2.4.2 contains no such requirements.  The US submits that Japan confuses the prerequisites for using the asymmetrical methodology (find a pricing pattern, provide an explanation as to why the other 
methodologies do not take into account the relevant price differences) with the methodology itself, which Article 
2.4.2 does not address. 
237 Japan 20 July 2005 Answers, para. 57 (quoting Appellate Body Report, US – Softwood Lumber V , 
para. 100). WT/DS322/R          
Page 50  
 
different from the other two methods of comparison ...".
238  Therefore, without any explicit textual basis 
for disregarding certain export transactions pursu ant to the targeted dumping methodology, Japan 
cannot reconcile its proposed inte rpretation with its analysis. 
4.161  The United States asserts that Japan's second theo ry is no more persuasive.  In response to 
Question 20, Japan reaches the erroneous conclusion that the results of the average-to-average and 
average-to-transaction comparisons would differ, but it does so based on a faulty comparison.  In its 
effort to establish some difference between the two methodologies, Japan compares how the 
United States applies the average-to-average methodolo gy in an Article 5.1 investigation with how the 
United States assesses anti-dumping duties pursuant to Article 9.3.239  While Article 2.4.2 applies to the 
former, it does not apply to the latter and Japan do es not even assert that the use of monthly average 
normal values is the appropriate means of applying the targeted dumping methodology. 
4.162  The United States argues that Japan offers no text ual analysis to support its theory that the 
methodologies set out in Article 2.4.2 were crafted on the assumption that Members would be using different bases for calculating the weighted averag e normal value when using the average-to-average 
comparison than when using the average-to-tran saction comparison during the investigation phase.  
Indeed, the second sentence of Article 2.4.2 merely allows a Member to engage in an asymmetrical 
comparison under certain conditions.  With this contex t in mind, nothing in the text of Article 2.4.2 
suggests that the weighted average normal value in the second sentence is different than the weighted 
average normal value in the first sentence. 
4.163  The United States points out that, in response to  Question 20, Japan provided a chart purporting 
to demonstrate that it was possible, providing offset s, to arrive at a margin of dumping expressed as a 
percentage of export price of 0.67 per cent using an average to average calculati on, while arriving at a 
different percentage (1.34 per cent) comparing an nual average normal values to individual export 
transactions.  Japan's difference, however, is solely th e result of an error in its calculation of the 0.67 per 
cent figure.  Japan arrived at that figure by dividing the per unit  difference between average normal 
value and average export price by the aggregate of the export prices (1.33/198 - 0.67 per cent).  Rather 
than using the per unit difference as the numerator, Japan should have used the aggregate amount of 
dumping (the per unit amount multiplied by the number of units (1.33 * 2 = 2. 66)) as the numerator.  
Dividing the proper numerator by the aggregate of the export prices, Japan would have arrived at a 
percentage margin of 1.34 per cent (2.66/198 = 1.34 per cent).  This 1.34 per cent is identical to the figure Japan obtained using the average-to-transac tion methodology with normal value averaged over 
the full period.
240 
4.164  The United States argues that, thus, a textual an alysis, tested by even the mathematical 
examples provided by Japan, demonstrates that if  offsets are required, then the results of 
average-to-average and average-to-transaction comp arisons would be the same, rendering the targeted 
dumping provision a nullity.  As the Appellate Body indicated in US – Gasoline , such an interpretation 
                                                      
238 Japan 20 July 2005 Answers, para. 46. 
239 Japan 20 July Answers, paras. 75-77. 
240 The US argues that China had a similar error in its chart that purportedly demonstrated that a different 
result would be achieved as between average-to-average  and average-to-transactio n comparisons.  See China 
Answers to Questions from the Panel, Response to Questio n 20, page 5.  On the average-to-average chart, China 
compares an average normal value of 7 to an average export price of 5, finding a per-unit amount of dumping of 2.  
Like Japan, China inserted this per-unit margin to calculate what is supposed to be the overall "dumping margin" 
of 2/15.  If that per-unit amount is multiplied by the volume of export  transactions (3), as it  should be, the 
"dumping margin" in China's chart would be 6/15 - the id entical result arrived at in China's average-to-transaction 
chart.                   WT/DS322/R 
Page 51 
 
 
 
 would not be an appropriate application of the customary rules of treaty interpretation.241  Japan's 
claims based on Article 2.4 should therefore be rejected. 
3. "As such" Claims under Article 3 of the AD Agreement  with respect to Original 
Investigations 
 Japan242 
 4.165  Japan argues that maintaining zeroing procedures in original investigations is inconsistent with 
Article 3 of the AD Agreement .  Japan argues that, pursuant to Article 3.1 of the AD Agreement , a 
determination of injury must be based on an "obj ective examination" of "positive evidence" concerning 
the "volume of the dumped imports," their "effect " on prices of the like domestic product, and the 
"consequent impact" of dumped imports on domestic producers.  According to the Appellate Body, 
"positive evidence" is evidence "of an affirmative,  objective and verifiable character" and "must be 
credible".
243  An "objective examination" is one that "con form[s] to the dictates of the basic principles 
of good faith and fundamental fairness."244  Japan points out that the Appellate Body also found that the 
general obligation set out in Article 3.1 "'informs th e more detailed obligations' in the remainder of 
Article 3."245 
4.166  Japan asserts that several of the other paragraphs of Article 3 impose more specific 
requirements on the investigating authorities' evaluati on of dumped imports.  In particular, Article 3.2 
instructs the investigating authorities to evaluate th e rate of increase in dumped imports and their price 
effects.  In defined circumstances, Article 3.3 allo ws for the cumulative assessment of the "effect" of 
dumped imports from more than one country.  Artic le 3.4 identifies a number of factors that 
investigating authorities must examine in evaluating the impact of dumped imports, including the magnitude of the dumping margin.  Article 3.5 requires that "the dumped imports, through the effects of 
dumping", are causing injury.  Thus, in each of th ese provisions, key aspects of the investigating 
authorities' injury determination are based upon evidence derived from the authorities' dumping 
determination.  In particular, th e dumping determination provides the pertinent evidence regarding: the 
volume of dumped and non-dumped imports  (evaluated under Articles 3.1, 3.2, 3.3, 3.4 and 3.5); the 
rate of increase of dumped imports  (evaluated under Article 3.2 and, possibly, Articles 3.4 and 3.5); the 
prices of dumped and non-dumped imports  (evaluated under Articles 3.2, 3.3, 3.4 and 3.5); and, the 
magnitude of the margin of dumping  (evaluated under Articles 3.4 and 3.5). 
4.167  Japan argues that the model and simple zeroi ng procedures as well as the standard zeroing line 
systematically distort the dumping determination a nd, therefore, also the alleged evidence of dumping 
that is derived from this determin ation and subsequently used to ev aluate the injury factors just 
enumerated.  Because this evidence results from a fl awed dumping determination, it does not meet the 
requirements of "positive evidence".  First , the zeroing procedures fail to produce credible evidence of 
dumping because there is no evidence of dumping for the product as a whole.  In consequence, the 
alleged evidence on the volume of dumped and non-dum ped imports is not positive.  For example, the 
flaws in the calculation procedures may lead to a finding of dumping for a product where there is no 
dumping.  In that event, certain imports are treated as dumped, when they are not.  Second , for the same 
reason, the alleged evidence pertaining to the rate of increase of dumped imports is also not positive.  
                                                     
 
241 Appellate Body Report, US – Gasoline , p. 23. 
242 Japan First Written Submission, paras. 111-121; Japan Opening Statement, First Substantive Meeting 
of the Panel with the Parties, paras. 59-61. 
243 Appellate Body Report, US – Hot-Rolled Steel , para. 192. 
244 Appellate Body Report, US – Hot-Rolled Steel,  para. 193. 
245 Appellate Body Report, US – Hot-Rolled Steel , para. 192, quoting Appellate Body Report, Thailand – 
H-Beams , para 106. WT/DS322/R          
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For example, due to the zeroing procedures, dumped imports may be shown to have increased sharply 
during the period of investigation, whereas in fact th ere might have been:  no dumping at all;  a slight 
increase in dumped imports;  or, even a decline or disappearance of dumped imports.  Third , the alleged 
evidence of the price effects of dumped imports is not credible and, therefore, not positive.  The maintenance of the zeroing procedures means that  the United States International Trade Commission 
("USITC") has no credible basis fo r identifying the portion of imports that are, respectively, dumped 
and non-dumped.  Yet, the precise make-up of th ese two groups of imports determines the prices 
attributed to dumped and non-dumped imports.  Accord ingly, under the zeroing procedures, there is no 
credible basis for determining the prices, or price effects, of these two categories of imports.  Fourth , 
there is also no positive evidence of the magnitude  of dumping because, as the Appellate Body has said 
repeatedly, "zeroing … inflates the margin of dumping for the product as a whole".
246  Because of the 
maintenance of the zeroing procedures, the USITC h as no objective and verifiable basis for evaluating 
the magnitude of the margin of dumping, if any. 
4.168  In other words, Japan argues, the standard zeroi ng procedures, in original investigations, cannot 
generate positive evidence of "dumping".  As a result,  due to the maintenance of the zeroing procedures, 
the USITC has no objective, verifiable or credible evidence on the basis of which to evaluate the 
volume, price effects and impact of dumped imports. 
4.169  Furthermore, Japan points out that an "examina tion" of injury that is not based on positive 
evidence of dumping is not "objective".  In US – Hot-Rolled Steel , the Appellate Body noted that an 
"objective examination" is one that meets the requirements of fundamental fairness.247   Where alleged 
evidence of dumping is obtained from an unfair comp arison of normal value and export price, that 
unfairness does not disappear through the subsequent  examination of the evidence in question under 
Article 3.1.  Instead, the underlying unfairness of th e comparison taints equally the examination of the 
alleged evidence in an injury determination. 
4.170  Japan, therefore, submits that, by maintaining the model and simple zeroing procedures as well 
as the standard zeroing line, the United States acts incons istently with Articles 3.1, 3.2, 3.3, 3.4 and 3.5 
of the AD Agreement  because the zeroing procedures depriv e the USITC of positive evidence for an 
objective examination of injury. 
4.171  In responding to claims made by the United St ates, Japan points out that the United States 
argues that "Japan fails to explain how USDOCs approach necessarily results in a lack of positive 
evidence in any, let alone every  injury determination".248  It adds that "Japan implicitly admits that 
USDOCs approach does not mandate a breach with  respect to the injury determination".249  Contrary to 
these assertions, Japan states that it is not required to prove that the zeroing procedures result in a 
violation of Article 3 in "every inju ry determination".  As the Panel in US – Export Restraints  held, it 
suffices that the zeroing procedures result in a vi olation of Article 3 in certain situations: 
"… [A] measure is inconsistent with WTO rules if that measure mandates action 
inconsistent with WTO rules in particular circumstances , even if in other 
circumstances the action might not be inconsistent with WTO rules."250 
4.172  Japan argues that it has demonstrated that the zeroing procedures do result in violations of 
Article 3 in "particular circumstances", namely wh enever there is a single negative comparison result 
                                                      
246 See, e.g., Appellate Body Report, US – Softwood Lumber V , para. 101. 
247 Appellate Body Report, US – Hot-Rolled Steel , para. 193. 
248 US First Written Submission, para. 103. 
249 US First Written Submission, para. 105. 
250 Panel Report, US – Export Restraints , para. 8.78, citing Appellate Body Report, Argentina – Textiles 
and Apparel , paras. 62-63.                   WT/DS322/R 
Page 53 
 
 
 
 that is excluded from the calculation of the dumping amount.  In its First Written Submission, Japan explained how this could occur.
251  Further, the CTL Plate  investigation provides evidence from an 
anti-dumping proceeding proving that the zeroing procedures do result in injury determinations that are not based on objective, verifiable and credible evidence of dumping.
252  In that investigation, because 
the zeroing procedures overstated the margin of dumpi ng, the evidence of dumpi ng used in the injury 
determination was tainted.  Such evidence is not "positive". 
 United States253 
 4.173  The United States points out that, through its argum ents, Japan fails to show how the standard 
computer programme can require USDOC to breach any WTO obligations.  But even if Japan has 
identified an actionable measure regarding USDOCs dumping determination, the United States argues, 
Japan has failed to explain how USDOCs discreti on to not offset dumpi ng based on non-dumped 
transactions mandates that the USITC breach any WTO obligations. 
4.174  The United States argues that, with respect to its "as such" claims concerning the USITCs 
injury determinations, the crux of Japan's argumen t is that the evidence upon which the USITC bases its 
injury determinations is not  "positive evidence" because it results from a flawed dumping 
determination.
254  Japan fails to explain how USDOCs approach necessarily  results in a lack of positive 
evidence in any, let alone every injury determination.   Indeed, Japan's explanation of its claim is based 
on speculation about a series of consequences that ma y occur because of USDOCs approach.  For 
example, Japan states that "the fl aws in the calculation procedures may lead to a finding of dumping for 
a product where there is no dumping".255  Similarly, Japan states that the "dumped imports may be 
shown to have increased sharply during the period  of investigation, whereas in fact there might  have 
been: no dumping at all; a slight increase in dumped imports; or, even a decline or disappearance of 
dumped imports".256 
4.175  In this regard the United States explains,  Japan  implicitly admits that  USDOCs approach does 
not mandate a breach with respect to the injury determ ination.  The assertion that the approach "might" 
lead to one result or another is not evidence that  it mandates a breach.  The United States thus argues 
that Japan simply has not met its burden of showing that USDOCs application of the standard computer 
programme requires  the USITC to make injury determinations  that are not based on positive evidence 
or that are otherwise inconsistent with Articles 3.1, 3.2, 3.4 and 3.5 of the AD Agreement .257 
4. "As such" Claims under Article 5 of the AD Agreement  with respect to Original 
Investigations 
  Japan258 
 4.176  Japan argues that maintaining zeroing procedures in original investigations as well as the 
standard zeroing line is inconsis tent with Article 5.8 of the AD Agreement.    
4.177  Japan argues that the text of Article 5.8 set s forth circumstances in which investigating 
authorities are obliged to terminate an  investigation.  In particular, authorities must terminate promptly 
                                                     
 
251 Japan First Written Submission, paras. 114-120. 
252 Japan First Written Submission, paras. 167ff. 
253 US First Written Submission, paras. 101-104. 
254 Japan First Written Submission, para. 114. 
255  Japan First Written Submission, para. 115. 
256 Japan First Written Submission, para. 116. 
257 See Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 202. 
258 Japan First Written Submission, paras. 122-130. WT/DS322/R          
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when there is "[in]sufficient evidence of … dumping … to justify proceeding";  and they must terminate 
immediately either (1) where the margin of dumping is de minimis  or (2) where the volume of dumped 
imports is negligible.  Article 5.8 imposes an affirmative  obligation on authorities  because they must be 
"satisfied", on an on-going basis, that there is " sufficient evidence " of dumping to "justify" pursuit of an 
investigation.  As with the phrase "positive eviden ce" in Article 3.1, the phrase "sufficient evidence" 
indicates that the authorities' justification for pursuin g an investigation must be grounded in facts that 
are at once affirmative, objective, verifiable and credible.
259  In the same vein, the panel in 
US – Softwood Lumber V  opined that the sufficiency of evidence, under Articles 5.2 and 5.3 of the 
AD Agreement,  is determined, among others, by reference to "the accuracy and adequacy  of the 
evidence …".260 
4.178  In US – Softwood Lumber V , the Panel also examined whether, under Articles 5.2 and 5.3, there 
was sufficient evidence of dumping to initiate an invest igation.  Like Article 5.8, Articles 5.2 and 5.3 do 
not define the word "dumping".  However, following the approach of the panels in 
Guatemala – Cement  II and Argentina – Poultry , the panel in US –  Softwood Lumber V  ruled that: 
"Article 2 provides guidance regarding the meaning of that term for the purpose of the 
AD Agreement .  We agree … that, in order to de termine whether there is sufficient 
evidence of dumping, an investigating authority cannot entirely disregard the elements 
that configure the existence of th at practice as outlined in Article 2 .  This does not, of 
course, mean that an investigating author ity must perform a full-blown determination 
of dumping in order to initiate an investigation.  Rather, it means simply that an 
investigating authority should take into account the general parameters as to what 
dumping is when inquiring about the sufficiency of the evidence .  The requirement is 
that the evidence must be such that an unbiased and objective in vestigating authority 
could determine that there was sufficient evidence of dumping within the meaning of 
Article 2  … ."261 
4.179  Japan submits that this reasoning applies also to  Article 5.8.  In that regard, the model and 
simple zeroing procedures are inconsistent with Article 5.8 because they deprive the USDOC of 
accurate, adequate or otherwise credible "evidence" of "dumping," within the meaning of Article 2 of 
the AD Agreement . 
4.180  Japan argues that it has explained that the zeroing procedures as well as the standard zeroing 
line are inconsistent with Articles 2.1, 2.4 and 2.4.2 of the AD Agreement , and Articles VI:1 and VI:2 of 
the GATT 1994, because the USDOC fails to determine the existence of dumping, or calculate a margin 
of dumping, for the product as a whole, and becau se the USDOC also fails to engage in a fair 
comparison of normal value and export price due to  the "inherent bias in a zeroing methodology …".262  
As a result, by maintaining the zeroing procedures,  the USDOC never has any accurate or adequate 
evidence of "dumping," much less "sufficient eviden ce" to justify pursuit of an investigation.  
Accordingly, by maintaining the zeroing measures as integral parts of the calculation procedures, the 
USDOC has no adequate basis for knowing, at any point in an investigation, whether it can continue to 
pursue the investigation or must terminate it.  The alleged evidence of dumping upon which the 
USDOC relies, under Article 5.8, is obtained with u tter disregard for the "general parameters of what 
dumping is" because the zeroing procedures themselves disregard those parameters.  Further, as the alleged "evidence" stems from a biased comparison of normal value and export price, it offers no 
                                                     
 
259 Appellate Body Report, US – Hot-Rolled Steel , para. 192. 
260 Panel Report, US – Softwood Lumber V , para. 7.79. 
261 Panel Report, US – Softwood Lumber V , para. 7.80 (underlining added).  See also Panel Report, 
Guatemala – Cement II , para. 8.35 and Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.62. 
262 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135.                     WT/DS322/R 
Page 55 
 
 
 
 grounds for "an unbiased and objective investigating au thority" to conclude that there is sufficient 
evidence to pursue an investigation.263 
4.181  Japan notes that, in its arguments on the meaning of the term "margin of dumping", the United 
States accepts that Article 5.8 requires that the au thorities must aggregate multiple comparison results 
to produce a margin of dumping for the product as a whole.264  The standard zeroing procedures and the 
standard zeroing line prevent the United States from complying with the interpretation it itself 
advances. 
 United States265 
 
4.182  The United States argues that Japan contends that the denial of offsets is "inconsistent with 
Article 5.8 because [it] deprive[s] the USDOC of accura te, adequate or otherwise credible 'evidence' of 
'dumping,' ... ."266  The United States asserts that his argument is entirely dependent on a finding that the 
denial of offsets is inconsistent with Articles 2.1, 2.4 or 2.4.2 of the AD Agreement .267  The 
United States cannot independently act in consistently with Article 5.8 of the AD Agreement , if the 
denial of offsets is not inconsistent with Articles 2.1, 2.4 and 2.4.2.  
4.183  The United States claims that, in addition to being dependent upon a separate violation of 
Articles 2.1, 2.4 or 2.4.2, Japan's argument with resp ect to Article 5.8 is also speculative.  Even if the 
Panel were to find that the United States acted inconsiste ntly with Article 2.1, 2.4 or 2.4.2, Japan has not 
established a factual basis for its allegation with resp ect to Article 5.8.  The United States argues that 
Article 5.8 only requires termination of an inves tigation in cases where the authorities determine that 
the margin of dumping is de minimis .  Japan has not established that, were  it to prevail with respect to its 
claims that the United States acted in breach of Articl es 2.1, 2.4 or 2.4.2, the only margins that could be 
determined in a WTO-consistent manner must be less than de minimis . 
5. "As such" Claims under Articles 2 and 9 of the AD Agreement  with Respect to Periodic 
and New Shipper Reviews 
 Japan268  
 4.184  Japan argues that maintaining zeroing procedur es in periodic and new shipper reviews as well 
as the standard zeroing line is inconsis tent with Articles 2 and 9 of the AD Agreement. 
4.185  Japan states that, under Section 751 of the Tariff Act
269, upon request, the USDOC is authorized 
to conduct "administrative reviews of  determinations."  Pursuant to that statutory provision, the term 
"administrative review" encompasses, among others, "periodic"270 and "new shipper reviews".271  Japan 
explains that, in a periodic review , the USDOC determines the amount of anti-dumping duties to be 
collected on the basis of a retrospective review of dum ping in a defined period, usually 12 months.  The 
USDOC calculates two types of margin in a periodic review.  First , it calculates the overall weighted 
average dumping margin, which is the duty deposit ra te, for an exporter, for the period under review.  
                                                      
263 Panel Report, US – Softwood Lumber V , para. 7.80.  See  also Panel Report, Guatemala – Cement II , 
para. 8.35, and Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.62. 
264 See paras. 4.81 and 4.82. 
265 US 19 October 2005 Answers, paras. 55-56. 
266 Japan First Written Submission, para. 126. 
267 Ibid, para. 127. 
268 ibid, paras. 131-151. 
269 Tariff Act, Section 751(Exhibit JPN-2). 
270 Tariff Act, Section 751(a)(1) (Exhibit JPN-2). 
271 Tariff Act, Section 751(a)(2)(B) (Exhibit JPN-2). WT/DS322/R          
Page 56  
 
The United States applies this rate to future entri es for the purpose of collecting estimated duties, until 
the conclusion of the ne xt review proceeding.  Second , for importers, it calculates an importer-specific 
assessment rate.  This rate is u sed by the United States to assess the definitive amount of duties due for 
the review period.  For both types of margin, the USDOC includes simple zeroing in the standard 
computer programming procedures. 
4.186  Japan explains that, in a new shipper review
, the USDOC also determines an overall weighted 
average margin of dumping and importer-specific assessm ent rates, for any exporters that did not export 
the "product" during the period of investigation.  The period of review in a new shipper review is also 
usually 12 months.  As new shipper reviews are a fo rm of "administrative review", the calculation 
procedures, and programming code, are the same as for periodic reviews. 
4.187  Japan states that, in both periodic and new sh ipper reviews, the USDOC determines the margins 
of dumping on a W-to-T basis by comparing normal value and the export price of individual comparable export transactions from the review peri od.  Accordingly, multiple comparisons are made, 
one for each comparable export transaction.  The ma rgins of dumping are, therefore, based on an 
aggregation of these comparisons.  In both periodi c and new shipper reviews, the USDOC maintains 
and always uses the simple zeroing procedures as part of its standard calculation procedures.  As a 
result, through the standard zeroing line, in aggr egating the results of the multiple comparisons, the 
USDOC disregards all negative comparison results. 
4.188  Japan argues that dumping is always as defined in Article 2 of the AD Agreement .  Japan claims 
that the United States also agrees th at margin calculations under Article 9 are subject to the disciplines 
of Article 2, with the exception of Article 2.4.2.
272  Accordingly, Japan states that there is no dispute 
that, if the standard zeroing procedures and the sta ndard zeroing line violate Article 2.1, they also 
violate Article 9.273 
4.189  Japan understands that the United States conducts periodic and new shipper reviews pursuant to 
the provisions of Articles 9.3 and 9.5, respectively, of the AD Agreement .  The chapeau  of Article 9.3 
provides that "the amount of the anti-dumping duty shall not exceed  the margin of dumping as 
established under Article 2".  Accordingly, this pr ovision establishes "a maximum limit, or ceiling" on 
the amount of anti-dumping duties that can be collected by a Member.274  That ceiling is defined by 
reference to "the margin of dumping as established unde r Article 2".  Japan explains that Article 9.5 of 
the AD Agreement  defines circumstances in which investig ating authorities may determine "individual 
margins of dumping" for any exporters that did not export the "product" during the period of investigation (i.e. new shippers).   Japan understands that the USDO C calculates dumping margins in 
new shipper reviews pursuant to this provision. 
4.190  Thus, Japan argues that the phrase "margin of dumpi ng" appears in Articles 9.1, 9.3, and 9.5.  
Although the phrase is not defined in Article 9,  the chapeau  of Article 9.3, as noted above, provides 
expressly that the "margin of dumping" is "as establis hed under Article 2".  A ccordingly, although the 
rules on the collection of anti-dumping duties and on the calculation of the dumping margin are distinct, 
Article 2 is expressly made relevant in interpre ting the term "margins of dumping" in Article 9.
275  This 
                                                      
272 Japan Second Written Submission, para. 86 (citing US 20 July 2005 Answers, paras. 21 and 81). 
273 Japan Second Written Submission, para. 86. 
274 Appellate Body Report, US – Hot-Rolled Steel , para. 116, where the Appellate Body interpreted the 
words "shall not exceed" in Article 9.3 of the AD Agreement  as establishing "a maximum limit, or ceiling" for the 
all others rate. 
275  Japan argues that, although the Appellate Body observed that the rules relating to duty collection set 
out in Article 9 may not be of relevance in interpreting pr ovisions of Article 2, this finding has no bearing in the 
reverse context, i.e. the relevance of Article 2 where the term "margins of dumping" is interpreted and applied in 
Article 9.  Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 124.                   WT/DS322/R 
Page 57 
 
 
 
 cross-reference to Article 2 is in keeping with the f act that "Article 2 sets ou t the agreed disciplines in 
the AD Agreement  for calculating dumping margins".276 
4.191  Japan points out that the importance of Article 2 to the AD Agreement  as a whole is evident in a 
series of interpretations by the Appellate Body of core  concepts that are defined in Article 2 and that are 
used elsewhere in the AD Agreement .  Thus, the Appellate Body has given a uniform meaning, 
throughout the AD Agreement , to the terms "dumping", "margin of dumping", and "product".  
Consistent with these uniform inte rpretations, it has also indicated that, whenever investigating 
authorities calculate "margins of dumping", they must respect the basic requirements of a "fair 
comparison".  Specifically, in addition to holding that Article 2 sets forth the "agreed disciplines" in the 
AD Agreement  for calculating dumping margins277, Japan argues the Appellate Body has held, inter 
alia, that:  
(a) "the definition of dumping  as contained in Article 2.1 applies to the entire  AD Agreement "278, 
 (b) the word " dumping " in Article 11.3 (sunset reviews)  has the "meaning described in 
Article 2.1"
279, 
 (c) the word " margins " in Article 9.4 (all others rate) has a meaning that is no "different[]" from its 
meaning in Article 2.4.2
280, 
 (d) " margins " relied upon under Article 11.3 (sunset revi ews) must be calculated through a "fair 
comparison," as required by Article 2.4
281, 
 (e) the " product " mentioned in Articles 6.10 (sampling of e xporters) and 9.2 (imposition of duty) is 
the same product that is subject to dumping a nd injury determinations under Articles 2 and 3 
and that product must always be "treated as a whole".
282 
 
The consistent meanings of "dumping", "margin of  dumping", and "product", define the contours of 
"the constituent elements of dumping" and serve to  ensure that, in terms of the obligations under 
Article 18.1, "specific action against dumping " is, indeed, only taken "when [those] constituent 
elements … are present".283 
 
4.192  Japan argues that, as a result of these uniform in terpretations, the USDOCs determination of the 
existence of "dumping", and calculation of "margi ns of dumping", for purposes of periodic and new 
shipper reviews, under Articles 9.3 and 9.5, respectivel y, must be consistent with the definitions of 
those terms in Articles 2.1, 2.4 and 2.4.2 of the AD Agreement  and with Articles VI:1 and VI:2 of the 
GATT 1994.  Article 2.1 of the AD Agreement  requires that the existence and margin of dumping be 
determined for the product as a whole.  Accordingl y, in the event that the investigating authorities 
undertake multiple comparisons in determining a margin under Article 9.3, the results of all of the 
multiple comparisons must be taken into account in  calculating dumping margins for the product as a 
                                                      
276 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
277 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
278 Appellate Body Report, US – Softwood Lumber V , para. 93 ( emphasis added ). 
279 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 126 ( emphasis added ). 
280 Appellate Body Report, US – Hot-Rolled Steel , para. 118 ( emphasis added ). 
281 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , paras. 126 and 127 ( emphasis 
added ). 
282 Appellate Body Report, US – Softwood Lumber V , paras 94 and 99 ( emphasis added ). 
283 Appellate Body Report, US – 1916 Act , para. 122. WT/DS322/R          
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whole.  If the results of some comparisons are disr egarded, the margin is not calculated for the product 
as a whole.
284 
4.193  Japan argues that, in periodic and new shi pper reviews, when the USDOC compares normal 
value and export price on a W-to-T basis, it makes multiple comparisons and aggregates the results.  In 
particular, for each comparable export transaction, a separate comparison is made between the price of 
an individual export transaction and a weighted average normal value.  The USDOC does not, however, 
sum the results of all the comparisons in calcula ting the overall weighted average dumping margin or 
the importer-specific assessment rate.  For both type s of margin, through the standard simple zeroing 
procedures and the standard zeroing lines, after identifying comparable export transactions and 
comparing export price for these transactions with weighted average normal value, the USDOC 
automatically disregards all negative results of co mparisons where export price is higher than normal 
value.  In other words, negative comparison results  are not included in the calculation of the total 
amount of dumping.  Accordingly, the standard simple zeroing procedures, maintained by the USDOC in the standard computer programme for use in peri odic and new shipper reviews, are inconsistent with 
Articles 2.1 and 2.4.2 of the AD Agreement, and also with Articles VI:1 and VI:2 of the GATT 1994, 
because, as the Appellate Body h as affirmed, the existence and the margin of dumping are not 
determined for the product as a whole when the resu lts of all the multiple comparisons undertaken are 
not taken into account.
285 
4.194  Japan recalls its argument that a "fair comparison" is one that meets the requirements of 
fundamental fairness and that is, in particular, unbiased, even-handed, does not favour particular 
interests or outcomes nor distort the facts.  Japan  has also already narrated the Appellate Body's 
previous findings that a comparison that involves model zeroing is unfair.  Japan claims that the model 
and simple zeroing procedures are "as such" inconsiste nt with Article 2.4 because they are formulated 
with an in-built "inherent bias" that distorts the comparison of normal value and export price in 
calculating the margin of dumping for the product as a whole.  For precisely the same reasons stated 
earlier, the simple zeroing procedures maintained by the USDOC for use in comparing normal value 
and export price in periodic and new shipper re views are inconsistent with Article 2.4. 
4.195  Further, Japan argues that, by maintaining the standard zeroing procedures, the United States 
has thus violated Articles 9.1, 9.2, 9.3, and 9.5 of the AD Agreement .  In US – Corrosion-Resistant Steel 
Sunset Review , the Appellate Body was confronted by a claim that, in conducting a sunset review under 
Article 11.3, the USDOC had relied on dumping margins calculated using zeroing procedures in a periodic review, under Article 9.3.1.
286  The Appellate Body held that: 
"If these margins were legally flawed b ecause they were calculated in a manner 
inconsistent with Article 2.4,  this could give rise to an inconsistency not only with 
Article 2.4, but also with Article 11.3 of the AD Agreement ."287 
Accordingly, the Appellate Body held, first, that margins calculated under Article 9.3 are " legally 
flawed " if the margin calculation is inc onsistent with Article 2.4; and, second , it held that, if those 
"legally flawed" margins are used  in a sunset review under Article 11.3, there is a violation of 
Article 11.3.  This follows from the Appellate Body's ruling, in that appeal, that "Article 2 sets out the 
agreed disciplines in the AD Agreement  for calculating dumping margins."288 
 
                                                      
284 Appellate Body Report, US – Softwood Lumber V , para. 98. 
285 Appellate Body Report, US – Softwood Lumber V , paras. 93 and 98. 
286 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 116. 
287 Ibid, para. 127. 
288 Ibid, para. 127.                   WT/DS322/R 
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 4.196  Japan argues that the same reasoning is equally  applicable to duty assessment and collection 
procedures under Article 9 and also to new shipper reviews under Article 9.5.  If the procedures for 
calculating dumping margins in assessments and review s are inconsistent with Article 2, including 
Articles 2.1 and 2.4, then this legal flaw "taints" the duty assessment proceedings  as well.  As noted, the 
terms "margin of dumping" and "product" in Articles 9.1, 9.2, 9.3 and 9.5 have common meanings 
throughout the Agreement  that stem from Article 2.  This is borne out, in particular, by the text of 
Article 9.3, which expressly refers to "the marg in of dumping as established under Article 2".  The 
assessment of anti-dumping duties under Article 9 must, therefore, be premised on a dumping determination, including a fair comparison, for the pro duct as a whole that is consistent with Article 2. 
4.197  Further, Japan argues that Article 9.3 specifically requires that "the amount of the anti-dumping 
duty shall not exceed  the margin of dumping as established under Article 2"(e mphasis added ).  
Therefore, the United States is not allowed to collect anti-dumping duties in excess of the properly 
calculated margin of dumping.  Moreover, in light of this context, an "appropriate amount" of duty, 
under Article 9.2, cannot exceed the maximum lim it of the margin of dumping established under 
Article 2 as well.
289 
4.198  Japan argues that it has already demonstrated, above, that the USDOC fails to calculate the 
margins of dumping on the basis of a fair comparison for the product as a whole and, therefore, acts inconsistently with Articles 2.1, 2.4 and 2.4.2.  As a margin of dumping calculated in this manner is not 
properly "established under Article 2", the duty assess ment proceedings are also legally flawed.  
Moreover, as the zeroing procedures inflate and overs tate the dumping margin, the anti-dumping duty is 
assessed and collected in excess of th e margins that should have been calculated under Article 2 without 
zeroing.
290  Consequently, the United States fails to comp ly with the requirement to ensure that the 
amount of duties collected remains within the limit of  the margin of dumping for the product as a whole. 
4.199  Japan argues that, in conseque nce, because the standard zeroing procedures are inconsistent 
with Article 2, maintaining these procedures for dete rmining dumping margins in a periodic review is 
also inconsistent with Articles 9.1, 9.2 and 9.3.  For the same reasons, it also inconsistent with 
Article 9.5 for the USDOC to maintain such pr ocedures for determining margins in new shipper 
reviews.  In addition, the United States acts inconsis tently with Articles 9.1, 9.2 and 9.3 by failing to 
ensure that the amount of anti-dumping duties does not exceed the margin of dumping established consistently with Article 2. 
4.200  In response to a question of the Panel whether Japan considers that Article 2.4.2 applies to 
proceedings other than investigations within the meaning of Article 5, Japan states that the claims in this 
dispute are based primarily on the obligations to de termine the margin of dumping for the product under 
Article 2.1 and Article VI of the GATT 1994, as well as the "fair comparison" requirement under 
Article 2.4 of the Agreement.
291  Japan claims that it is not disputed  in the present proceedings that these 
provisions apply to margin calculations undertaken both in investigations under Article 5 and in reviews 
under Articles 9.3, 9.5 and 11.2.  Thus, Japan argues, margins of dumping established in any 
anti-dumping proceedings are subject to the disci plines in those provisions, irrespective of the 
applicability of Article 2.4.2 to re view proceedings.  Japan states, how ever, that the possible application 
                                                      
289 Japan argues that, in Argentina – Poultry Anti-Dumping Duties , the panel found that "[i]n the absence 
of any other guidance regarding the appropriateness of the amount of anti-dumping duties, it would appear 
reasonable to conclude that an anti-dumping duty meeting the requirements of Article 9.3 … would be 'appropriate' within the meaning of Article 9.2."  Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 
7.365. 
290 Japan notes that the USDOC assesses and imposes anti-dumping duties in an amount equal to the full 
margin of dumping it calculates.  S ee 19 C.F.R. section 351.212 (b). 
291 Japan 19 October 2005 Answers, para. 47. WT/DS322/R          
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of Article 2.4.2 to proceedings other than Article 5 investigations is not  decisive to the outcome of this 
dispute. 
4.201  Japan points out that the United States wrongly asserts that, because anti-dumping duties are 
usually assessed by customs authorities on individual en tries of a product, this somehow demonstrates 
that margins of dumping are determined by investigating authorities for individual transactions.
292  In 
particular, the United States asserts that, in a prospective normal value system("PNV"), system, 
Members calculate margins for individual transactions.293  Japan claims that i n making this argument, 
the United States confuses the di stinct concepts of the " amount  of anti-dumping duty" and the " margin 
of dumping" under Article 9.3 of the AD Agreement .  Japan recalls that in EC – Bed Linen 
(Article 21.5) , the Appellate Body found that "the im position and collection of anti-dumping duties 
under Article 9 is a separate and distinct phase of  an anti-dumping action that necessarily occurs after 
the determination of dumping, injury, and causation under Articles 2 and 3 has been made294 and it 
added that "the rules on the determination of the margin of dumping are distinct and separate from the 
rules on the imposition and collection of anti-dumping duties."295  Accordingly, in Japan's view, when 
the customs authorities impose and collect anti-dumping duties  on individual entries they are not 
calculating margins of dumping  within the meaning of Article 2.  Rather, the margins of dumping have 
already been determined by the investigating authoriti es, on the basis of Article 2, in investigations or 
reviews.  In terms of Articles 9.1 and 9.3 of the AD Agreement , these margins constitute a ceiling on the 
amount of duties that can be imposed and collected by the customs authorities. 
4.202  Japan argues that the same misconceptions in fect the United States' assertion that in a 
PNV system, the amount of duties imposed by custom s authorities on each entry constitutes a margin of 
dumping.296  The definitions of "dumping" and "margins of dumping" in the AD Agreement  are 
identical for both prospective and retrospective sy stems of duty assessment.  Thus, the differences 
between these systems pertain to way duties  are imposed and collected.  Japan notes that the Appellate 
Body has ruled that these differences have no bear ing on the rules regarding the establishment of 
dumping margins in Article 2, which ap ply in the same way to both systems.297 
4.203  Japan asserts that in a prospective normal valu e ("PNV") system, to assess the amount of duties 
due, a comparison of prices is undertaken for each individual  entry and, on the basis of that comparison, 
a variable duty is imposed on the individual  export transaction concerned.  The calculation and 
imposition of variable anti-dumping duties  in this way – although permissible – does not involve the 
establishment of margins of dumping  within the meaning of Article 2 of the AD Agreement .  Instead, the 
customs authorities mechanically compare import prices with a reference price; they do not and can not 
undertake a comparison that respects the detailed procedur al and substantive rules set forth in Article 2, 
for example, in Article 2.4.  Japan sets out the r easons why the imposition of variable duties in a PNV 
system does not involve the calculation of a margin of dumping, as follows; 
 (a)  First , Article 2.4 requires  that a margin be based on a comparison between "sales made at 
as nearly as possible the same time ".  By definition, a PNV is based on sales made during the period of 
investigation , which ends up to a year before  duties are even imposed.  This stale, historic PNV is then 
applied in imposing duties throughout the life of the anti-dumping action – that is, for up to five years or 
more after  the imposition of anti-dumping duties begins.  As a result, in imposing variable duties, 
customs authorities compare a historic  home market price with a contemporaneous  import price.  This 
means that it is impossible for the customs author ities to comply with the requirement to compare 
                                                      
292 US Second Written Submission, paras. 50, 53 and 54. 
293 US Second Written Submission, para. 53. 
294 Appellate Body Report, EC – Bed Linen (Article 21.5) , para. 123 ( underlining added ). 
295 Appellate Body Report, EC – Bed Linen (Article 21.5) , para. 124. 
296 US Second Written Submission, paras. 54, 57. 
297 Appellate Body Report, EC – Bed Linen (Article 21.5) , para. 124.                   WT/DS322/R 
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 contemporaneous  sales.  As a result, the imposition of variable duties cannot  involve the determination 
of a margin of dumping.   (b)  Second , Article 2.4 imposes an obligation on the authorities to make price adjustments for 
any differences that affect price comparability.
298  Fulfilment of this obligation requires a careful and 
detailed consideration of the comparability of the r espective contemporaneous home market and export 
sales.  In imposing variable duties on the basis of a PNV, customs authorities do not undertake any such 
examination.  
 (c)  Third , the last sentence of Article 2.4 imposes pr ocedural obligations on the authorities: 
"The authorities shall indicate to the parties in qu estion what information is necessary to ensure a fair 
comparison and shall not impose an unreasonable burde n of proof on those parties."  In imposing 
variable duties, the customs authorities do not request  any information from the parties for the purpose 
of a fair comparison nor do they receive and weigh evidence in terms of a burden of proof. 
 
4.204  Japan asserts that the United St ates is, therefore, incorrect in suggesting that "margins of 
dumping" are determined for individual transactions in a PNV system. 
4.205  Japan further argues that the United States overl ooks that, even in a PNV system, the final 
liability for duties must be assessed in a review under Article 9.3.2.  During that review, the authorities 
must establish the "actual margin of dumping" for the review period consistently with the rules in 
Article 2.  Thus, the duties paid on the basis of the original margin must be reviewed in light of "the 
actual margin" for the review period.  Article 9.3.2 presupposes  that, in the prospective system, the 
amount of duties imposed and the margin of dumping are not necessarily equal.  Indeed, if the price difference for each transaction were "the actual margin " for that transaction, there could be no refund 
and the refund procedure would, therefore, be red undant.  The existence of a refund procedure for the 
prospective system demonstrates that the amount  of variable duties imposed on each entry is not the 
margin of dumping for that entry.  Instead, the amount of duties paid on each entry may exceed "the 
actual margin of dumping" calculated for the product,  on the basis of the transactions in the review 
period, and the excessive payments, if any, must  be reimbursed promptly in accordance with 
Article 9.3.2. 
4.206  Japan claims that, as part of its arguments on PNV systems, the United States misleadingly 
attempts to portray its retrospective review as "operating" on an "entry-by-entry basis", like a PNV 
system.
299  Japan argues that this comparison is inapt because the United States' assessment system does 
not operate on an entry-by-entry basis.  As the standard computer programmes demonstrate, in reviews, the USDOC conducts a comparison for all US sales, for the exporters c oncerned, during the review 
period and, on that basis, it inst ructs the US customs service to collect  duties at fixed single rate that 
apply to all entries during the review period.  In Japan's view, this is not like a PNV system. Japan 
claims that, instead of ex amining the WTO-consistency of PNV systems that are not at issue, the Panel 
must pay close heed to the particular features of the zeroing measures that are at issue. 
 United States
300 
 4.207  The United States points out that Japan contends that the Panel should not recognize a 
distinction between the investigation phase and other phases of an anti-dumping proceeding.
301 
                                                      
298 Appellate Body Report, US – Hot-Rolled Steel , para. 178. 
299 US Second Written Submission, para. 59. 
300 US First Written Submission, paras. 72-87; US Second Written Submission, paras. 65, 68, 71-74, 
62-63. 
301 Japan First Written Submission, para. 138, 139, 142, 144. WT/DS322/R          
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Regardless of whether the Panel follows the reasoning in US – Softwood Lumber V , the text of the 
AD Agreement  and prior panel and Appellate Body reports  do not support Japan's claims.  The express 
terms of Article 2.4.2 limit its application to the "i nvestigation phase" of a proceeding.  To require the 
application of Article 2.4.2 to Article 9 asse ssment proceedings would read out of the AD Agreement  
Article 2.4.2's express limitation to  investigations.  Such a result would be inconsistent with the 
principle of effectiveness, which requires that a ll the terms of an agreement be given meaning.
302  Japan 
ignores the plain language of Article 2.4.2 and im properly seeks to expand it to other proceedings. 
4.208  The United States argues that other provisions of the AD Agreement  also expressly limit their 
application to the investigation phase of an anti- dumping proceeding and do not  apply elsewhere.  For 
instance, Article 5.1 refers to "an investigation to  determine the existence, degree and effect of any 
alleged dumping shall be initiated by or on behalf of a domestic industry. "  Article 5.1, thus, is the only 
stage of an anti-dumping proceeding where the inves tigating authority is required to determine the 
"existence" of dumping in the AD Agreement , other than Article 2.4.2.303  Similarly, Article 5.7 
provides that evidence of dumping and injury must  be considered simultaneously "in the decision 
whether or not to initiate an investigation" and "dur ing the course of the investigation".  Panels have 
consistently found that the references to "investig ation" in Article 5 only refer to the original 
investigation and not to subsequent  phases of an anti-dumping proceeding.304  As the Panel found in 
US – Corrosion-Resistant Steel Sunset Review : 
"[T]he text of paragraph 8 of Article 5 refers expressly to the termination of an 
investigation in the event of de minimis  dumping margins.  There is, therefore, no 
textual indication in Article 5.8 that would suggest or require that the obligation in 
Article 5.8 also applies to sunset reviews."305 
4.209  The United States argues that the limited applicabilit y of Article 2.4.2 could not be plainer.  
Article 2.4.2, by its very terms, is limited to th e "investigation phase".  Thus, the text leaves no doubt 
that the Members did not intend to extend these ob ligations to any phase beyond the investigation 
phase.  Indeed, a panel has already recognized that th e application of Article 2.4.2 is expressly limited to 
the investigation phase of an anti-dum ping proceeding.  As the Panel in Argentina – Poultry 
Anti-Dumping Duties found: 
"Article 2.4.2, uniquely among the provisions  of Article 2, relates to the establishment 
of the margin of dumping 'during the investigation phase'."306 
Thus, the ordinary meaning of the term "investigation phase", as it is used in the AD Agreement , does 
not include subsequent phases. 
 
4.210  The United States thus argues that Japan's argume nt that Article 2.4.2 applies in Article 9 
assessment proceedings ignores the clear di stinctions made in the text of the AD Agreement  between 
original investigations and other proceedings, distin ctions that Japan itself recognizes.  Specifically, 
Japan acknowledges that the AD Agreement  distinguishes between the purpose of investigations and 
assessment proceedings, when it notes that Article 2.4. 2 is concerned with establishing the "existence" 
                                                      
302 See,  e.g., Appellate Body Report, Japan – Alcoholic Beverages II , sections G & H (discussing 
fundamental principle of effectiven ess in treaty interpretation); see  also US – 1916 Act , para. 123. 
303 US Second Written Submission, para. 71. 
304 Panel Report, US – DRAMS , para. 521, at footnote 519 ("... investigation" means the investigation 
phase leading up to the final determination of the investigating authority); Panel Report, EC – Bed Linen 
(Article 21.5 – India) , para. 6.114 (Article 5.7 applies to investigations). 
305 Panel Report, US – Corrosion-Resistant Steel Sunset Review , para. 7.70. 
306 Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.357.                   WT/DS322/R 
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 of margins of dumping in the investigat ion phase of an anti-dumping proceeding307, whereas Article 9 
proceedings are concerned with determining the amount of duty assessed.308 
4.211  The United States argues that the limited applicati on of Article 2.4.2 to the investigation phase 
is consistent with the divergent functions of  investigations and other proceedings under the 
AD Agreement .  The Appellate Body has already recognized that investigations and other proceedings 
under the AD Agreement  serve different purposes and have differe nt functions, and therefore are subject 
to different obligations under the Agreement.309  Contrary to Japan's contention, the AD Agreement  
does not require Members to examine whether margin s of dumping "exist" in the assessment phase.  
Article 9 assessment proceedings are not concerned with the existential question of whether injurious 
dumping "exists" above a de minimis  level such that the imposition of anti-dumping measures is 
warranted.  That inquiry would have already been resolved in  the affirmative in the investigation phase.  
Instead, Article 9, by its terms, focuses on the amount  of duty to be assessed on particular entries, an 
exercise that is separate and apart from the cal culation of an overall dumping margin during the 
threshold investigation phase of an anti-dumping proceeding.310 
4.212  The United States argues that the express limitation in Article 2.4.2 to the investigation phase is 
also consistent with the fact that the anti-dumping systems of Members are different for purposes of the 
assessment phase.  The different methods used by  Members include the use of prospective normal 
values, retrospective normal values, and prospective ad valorem assessment.  If the requirements of 
Article 2.4.2 regarding comparison methods applie d to the assessment of anti-dumping duties, this 
divergence of assessment systems would not be possible.  For example, it is not possible to reconcile the 
prospective normal value system used by some Members with a requirement to use either the 
average-to-average or transaction-to-transaction method, because such systems compare weighted 
average normal values to individual export prices to assess dumping duties on individual transactions.  
Thus, to retain the flexibility in assessment systems re flected in Article 9, it was not only appropriate, 
but necessary, to limit the requirements of Article 2.4.2 to the investigation phase. 
4.213  The United States argues that, for the reasons di scussed above, an analysis of the text of 
Article 2.4.2 demonstrates that Article 2.4.2 does not apply to assessment proceedings.  Japan, 
however, argues that Article 2.4.2 is nonetheless a pplicable to assessment proceedings by virtue of 
Article 9.3 of the AD Agreement .  Japan interprets Article 9.3 to mean that all the provisions of Article 2 
– including Article 2.4.2 – are directly applicable in the context of assessment proceedings.311  But 
Japan's interpretation is contrary to the express terms of the AD Agreement .  The general reference to 
Article 2 in Article 9.3 necessarily includes any limitati ons found in the text of Article 2.  Article 2.4.2 
by its own terms is explicitly limited to the investiga tion phase.  The text of Article 9.3, therefore, does 
not support Japan's argument that the requirement s of Article 2.4.2 apply in assessment proceedings. 
4.214  The United States argues that the re ference in Article 9.3 to Article 2 means that the amount of 
anti-dumping duty assessed may not exceed the amount of anti-dumping duty calculated in accordance 
with the general requirements of Article 2, such  as making the various adjustments set forth in 
Article 2.4 necessary to provide a fair comparison.  As the Panel found in Argentina – Poultry : 
                                                      
307 Japan First Written Submission, para. 80. 
308 Japan First Written Submission, para. 149. 
309 See,  e.g., Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 87. 
310 See,  e.g., AD Agreement , Article 9.1 ("the decision whether the amount of anti-dumping duty to be 
imposed shall be the full margin of dumping or less, are decisions to be made by the importing country or customs 
territory");  Article 9.3 ("the amount of anti-dumping duty shall not exceed the margin of dumping as established under Article 2"). 
311 Japan First Written Submission, paras. 135-141. WT/DS322/R          
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"Article 9.3 does not refer to the margin of dumping established 'under Article 2.4.2', 
but to the margin of dumping established 'under Article 2'.  In our view, this means simply that, when ensuring that the amount of the duty does not exceed the margin of 
dumping, a Member should have reference to  the methodology set out in Article 2.  
This is entirely consistent with the introduc tory clause of Article 2, which sets forth a 
definition of dumping 'for the purpose of this Agreement ... '.  In fact, it would not be 
possible to establish a margin of dumping w ithout reference to the various elements of 
Article 2.  For example, it would not be possible to establish a margin of dumping without determining normal value, as provi ded in Article 2.2, or without making 
relevant adjustments to ensure a fair comparison, as provided in Article 2.4."
312 
 
4.215  The United States argues that the context of Article  9 also demonstrates that there is no basis in 
Article 9 to overcome the explicit language in Article  2.4.2, limiting its reach to investigations.  As the 
Panel found in Argentina – Poultry Anti-Dumping Duties : 
"[N]othing in the AD Agreement  explicitly identifies the form that anti-dumping duties 
must take . . . .  As the title of Article 9 of the AD Agreement  suggests, Article 9.3 is a 
provision concerning the imposition and collection of anti-dumping duties.  Article 9.3 provides that a duty may not be collected  in excess of the margin of dumping as 
established under Article 2.  The modaliti es for ensuring compliance with this 
obligation are set forth in s ub-paragraphs 1, 2 and 3 of Article 9.3, each of which 
addresses duty assessment and the reimbursement of excess duties.  The primary focus 
of Article 9.3, read together with sub-pa ragraphs 1-3, is to ensure that final 
anti-dumping duties shall not be assessed in ex cess of the relevant margin of dumping, 
and to provide for duty refund in cases where excessive anti-dumping duties would 
otherwise be collected."
313 
 
4.216  In other words, argues the United States, Article  9 contains certain procedural obligations 
applicable in assessment review s.  However, Article 9 does not prescribe methodologies for assessment 
proceedings such as those established in Article 2.4. 2 for the investigation phase.  Instead, Article 9 
establishes time limits for conducting assessment proceedings, ensuring that respondent companies 
may obtain timely refund of any excess anti-dumping duties collected by a Member. 
4.217  The United States argues that prior Appellate Body reports do not support an offset obligation 
beyond the use of the average-to-average comparis on methodology during the investigation phase.  The 
United States argues that Appellate Body has twice ar ticulated its view that an obligation exists to 
provide offsets, in EC – Bed Linen  and US – Softwood Lumber V .  In both reports, the Appellate Body 
focused its analysis on the phrase "all comparable export transactions"314 in Article 2.4.2, which applies 
only to the use of the average-to-average methodol ogy to determine "the existence of margins of 
dumping during the investigation phase. "315  The Appellate Body at no time has found that such an 
obligation exists with respect to other comparis on methodologies during investigations, or in the 
context of Article 9 duty assessment proceedings and new shipper reviews or Article 11 changed 
circumstance reviews and sunset reviews.316 
                                                      
312 Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.357. 
313 Ibid, para. 7.355. 
314 Appellate Body Report, US – Softwood Lumber , paras. 104, 105, 108; Appellate Body Report, EC – 
Bed Linen (Article 21.5 – India) , paras. 55-60. 
315 Appellate Body Report, US – Softwood Lumber , para. 108; Appellate Body Report, EC – Bed Linen 
(Article 21.5 - India) , para. 66. 
316 See Appellate Body Report, EC – Bed Linen,  para. 62, n. 30 (confirming that Article 2.4.2 is not 
concerned with the collection of anti-dumping dutie s, which is the province of Article 9 of the AD Agreement ).                   WT/DS322/R 
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 4.218  The United States points out, in US – Softwood Lumber V , the Appellate Body "emphasize[d] 
that [the terms "all comparable export transactions" and "margins of dumping"] should be interpreted in 
an integrated manner."317  Accordingly, the Appellate Body's c onclusion that there was an obligation to 
provide offsets when using the average-to-avera ge comparison methodology during the investigation 
phase was the result of its interpretation of "all comp arable export transactions" together with "margins 
of dumping".  The United States argues that any offset s that occur in this context reflect the use of 
averages  of export prices and  normal values.  That is, in applying the average-to-average methodology, 
the Appellate Body found that in order to establis h a margin of dumping for "all comparable export 
transactions", a Member has to aggregate a ll of the results of the model-specific and 
level-of-trade-specific comparisons, including those comparisons that were not dumped.  The offset 
obligation, therefore, is tied to the use of the av erage-to-average methodology and did not arise out of 
any independent obligation to offset prices. 
4.219  The United States argues that therefore the Appe llate Body's analysis with respect to an 
investigation, which pursuant to Article 2.4.2 concer ns a determination of the existence of margins of 
dumping, does not apply to an Article 9.3 assessment proceeding, which concerns the final liability for 
payment of anti-dumping duties – i.e. particular expor t transactions.  Article 9.3 provides that "[t]he 
amount of the anti-dumping duty shall not exceed the margin of dumping ... "( emphasis added ).  Duties 
normally are based on the particular characteristics of the import and are often calculated based on the value/price of that particular import.  For example, duties are often calculated on an ad valorem  basis, 
applying the ad valorem  rate to the price of the import.  They are not calculated using an 
average-to-average comparison methodology, and ther e is no obligation contained within Article 9.3 
which would require an investigati ng authority to a pply such a calculation in an assessment proceeding.  
In fact, the only provision in the AD Agreement  that provides for the use of the average-to-average 
methodology is Article 2.4.2, and by its very terms,  that provision applies only when determining the 
existence of margins of dumpi ng during the investigation phase. 
4.220  The United States asserts that the phrase "durin g the investigation phase" is unique to 
Article 2.4.2.  The word "phase" is  defined as "[a] distinct period or  stage in a process or change or 
development."
318  The use of the definite article "the" with the term "investigation phase" further 
confirms that Article 2.4.2 is limited to a single, di stinct investigation phase.  In fact, extending the 
"investigation phase" would cover a ll proceedings and erode any mean ingful distinction between the 
"investigation phase" and subsequent  phases.  Such an interpretation would effectively read the word 
"phase" out of the text.319 
4.221  Furthermore, the United States points out that the only stage of an anti-dumping proceeding 
where the investigating authority is required to  determine the "existence" of dumping in the 
AD Agreement,  other than Article 2.4.2, is in Article 5.1.  This textual relationship between Article 2.4.2 
and Article 5 stands in stark contrast to th e terminology used in other provisions of the AD Agreement .  
For example, Article 9.5 provides for a "review" of new exporters of subject merchandise, not an 
"investigation," and Article 11 uses terms such as "review" and "determi ne" rather than "investigate".  
Therefore, the use of the phrase "existence of marg ins of dumping during the investigation phase", both 
in terms of its text and its context, indicates th at these words of limitation, which are unique to 
Article 2.4.2, limit the application of Artic le 2.4.2 to Article 5 investigations.   
4.222  The United States states that, wh ile Japan argues that this Panel should expand the Appellate 
Body's findings to all phases of an anti-dumping proceed ing, Japan fails to cite to any text within the 
                                                      
317 Appellate Body Report, US – Softwood Lumber , para. 85. 
318 New Shorter Oxford English Dictionary , p. 2182. 
319 Appellate Body Report, US – Gasoline , p. 23 (noting that a panel may not interpret the  Agreement in 
a manner that would render a provision or language within the Agreement a nullity). WT/DS322/R          
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relevant provisions covering those procedures which supports such an interpretation of the 
Anti-Dumping Agreement.  The United States argues th at Japan has provided no textual or contextual 
argument which would provide for an obligation for inv estigating authorities to provide an offset in any 
Article 9 or Article 11 proceedings.  With respect to  Article 9.3, the language of the provision expressly 
provides that the amount of anti-dumping duties "shall not exceed the margin of dumping as established 
under Article 2."  This general refe rence to Article 2 must necessarily include any specific limitations 
contained therein.  Therefore, the disciplines establis hed in Article 2 with respect to the calculation of 
the margin of dumping apply to Article 9.3 assessment  proceedings, except where otherwise specified.  
Additionally, Japan has also provided no substantive or contextual argument arising out of the text of 
Article 9.5 or Article 11 which woul d provide for an obligation to provi de an offset in the proceedings 
described in those provisions.  
6. "As such" Claims under Article 11 of the AD Agreement with respect to Changed 
Circumstance and Sunset Reviews 
 Japan
320 
 
4.223  Japan claims that maintaining zeroing proce dures and the standard zeroing lines in changed 
circumstances and sunset reviews is inconsistent with Articles 2 and 11 of the AD Agreement .  Japan 
notes that, in Section 751 of the Tariff Act in additi on to periodic and new shipper reviews, the term 
"administrative review" also includes "changed circumstances"321 and sunset or "five-year reviews".322  
In changed circumstances reviews , upon request, the USDOC and the USITC are authorized to review 
an affirmative anti-dumping duty determination, where warranted by changed circumstances, but 
usually no earlier than two years after the pub lication of the notice of the determination.323  In sunset 
reviews, five years after publication of an anti-dumping duty order, the USDOC and the USITC, respectively, review whether revocation of the or der "would be likely to lead to continuation or 
recurrence of dumping … and of material injury".
324  In both changed circ umstances and sunset 
reviews, the USDOC relies on dumping margins calculate d in a prior original investigation or a periodic 
review as the basis for the review determinati on.  Accordingly, the USDOC necessarily relies on 
margins that are calculated using either the model or  simple zeroing procedures, one of which is always 
a feature of the USDOCs margin calculations.  Japan  argues that dumping margins used for purposes of 
Article 11 must be consistent with Article 2 of the AD Agreement .  Japan understands that the 
United States conducts changed circumstances and sunset reviews pursuant to the provisions of 
Articles 11.2 and 11.3, respectively, of the AD Agreement . 
4.224  Japan points out that, in US – Corrosion-Resistant Steel Sunset Review , the Appellate Body 
confirmed that there is: 
"[N]o obligation under Article 11.3 for inves tigating authorities to calculate or rely on 
dumping margins in determining the likelihood of continuation or recurrence of dumping.  However, should investigating authorities choose to rely upon dumping 
margins in making their likelihood determ ination, the calculation of these margins 
must conform to the disciplines of Article 2.4 … . If these margins were legally flawed because they were calculated in a manner incons istent with Article 2. 4, this could give 
                                                     
 
320 Japan First Written Submission, paras. 152-158;  Japan 19 October 2005 Answers, para. 104. 
321 Tariff Act, Section 751(b). 
322 Ibid, Section 751(c). 
323 Ibid, Section 751(b). 
324 Ibid, Section 751(c)(1).                   WT/DS322/R 
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 rise to an inconsistency not only with Article  2.4, but also with Article 11.3 of the AD 
Agreement. "325 
4.225  Japan argues that this reasoning applies equa lly to reviews under Articles 11.2 and 11.3.  
Moreover, in both cases, if an authority elects to rely on a dumping margin, that margin must be 
consistent not only with Article 2.4, but also w ith the requirements in Articles 2.1 and 2.4.2 for 
dumping, and dumping margins, to be calculated for the product as a whole.  Accordingly, in changed 
circumstances and sunset reviews, by relying on margins calculated in prior proceedings using model 
and simple zeroing, the USDOC cannot comply with the obligations in Articles 2.1, 2.4 and 2.4.2, 
because these margins are not based on a fair comp arison and are not calculated for the product as a 
whole. 
4.226  In consequence, Japan argues, the model and si mple zeroing procedures are also inconsistent 
with Articles 11.2 and 11.3 of the AD Agreement because, as margins of dumping calculated using these 
procedures are legally flawed, changed circumstanc es and sunset reviews that rely upon the dumping 
margins are equally flawed.  Al so, because USDOC reviews conducted pursuant to these provisions are 
flawed, the United States also fails to comply  with the obligation in Article 11.1 of the AD Agreement  to 
ensure that anti-dumping duties "remain in for ce only as long as and to the extent necessary to 
counteract dumping." Japan claims that the United States has not disagreed.326  Therefore, Japan argues, 
it is undisputed that, if the standard zeroing proced ures and the standard zeroing line violate Article 2, 
they also violate Article 11.327 
4.227  Japan points out that the United States asserts in paragraphs 98-101 of its First Written 
Submission that Japan has failed to demonstrate th at the magnitude of dumping cited and relied upon by 
the USDOC determinations is determinat ive of its likelihood determinations.   However, Japan argues it 
is disingenuous for the United States to argue that, in  its sunset determinations , it does not rely on the 
dumping margins calculated for respondents in the initia l investigations and periodic reviews in light of 
the fact that the US Congress has expressly manda ted that in sunset reviews, the USDOC " shall  
consider ... the weighted average dumping margins determined in the investigation and subsequent 
reviews ... ".328  The mandatory nature of this obligation is  further demonstrated by:  (1) the specific 
requirement in the USDOCs regulations that responde nts report this information in their substantive 
responses to the USDOCs notice of initiation of sunset reviews329;  and (2) the consistent citation by the 
USDOC, in its sunset determinations, to the previ ous margins in concluding that dumping will recur at 
the specified margin rates in the event that the anti-dumping order were revoked.330  Japan claims that it 
is hard to imagine a clearer inst ance in which an authority "actually  relies" on the specified types of 
information. 
 United States331 
 
                                                      
325 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
326 Japan Second Written Submission, para. 87. 
327 Ibid, para. 87. 
328 Section 752(c)(1) of the Tariff Act of 1930, as added by the Uruguay Round Agreements Act 
(emphasis added ). 
329 See 19 C.F.R. § 351.218d(3)(iii)(A).  Specifically, the USDOC requires each respondent to report its 
"individual weighted average dumping margin ... from the investigation and each subsequent completed 
administrative review ... ". Id 
330 See, e.g., Final Results of Expedited Sunset Reviews: Anti-friction Bearings From Japan, 64 Fed. 
Reg. 60275, 60278 (4 November 1999) (Exhibit JPN-22);  Issues and Decision Memorandum for the Full Sunset 
Review of Corrosion-Resistant Carbon Steel Flat Products From Japan;  Final Results, issue 2, comment 1(2 August 2000) (Exhibit JPN-23.A). 
331 US First Written Submission, paras. 96-100. WT/DS322/R          
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4.228  The United States explains that Japan asserts that its "challenge encompasses the prohibition on 
zeroing under any method of comparing normal value and export price" including "administrative or 
periodic reviews, new shipper reviews, change d circumstances reviews and sunset reviews".
332  Japan 
appears to suggest that its "as such" claims concer ning investigations and assessment proceedings also 
apply to the three types of reviews to which it refe rs.  However, the United St ates argues that Japan does 
not offer any new arguments concerning these types of reviews. 
4.229  The United States argues that it has demonstrated that the Panel should reject Japan's claims 
insofar as investigations and assessment proceedings are concerned.  Specifically, the United States has 
demonstrated that the "fair comparison" obligation of Article 2.4 cannot be read to require offsets in all 
proceedings.  The United States has demons trated that the Appellate Body in US – Softwood Lumber V  
only addressed whether Article 2.4.2 requires an o ffset when the investigating authority uses the 
average-to-average methodology in the investigati on phase and at no time has found that such an 
obligation exists with respect to other comparis on methodologies during investigations, or Article 11 
changed circumstance reviews and sunset reviews.  Moreover, by its own terms, the obligations of 
Article 2.4.2 apply only to the investigation phase,  and not to any other anti-dumping proceeding.  For 
the same reasons, the United States argues that the Panel should reject Japan's claims with insofar as 
new shipper, changed circumstances and sunset reviews are concerned. 
4.230  The United States notes that, with respect to  changed circumstances reviews and sunset 
reviews, Japan argues that USDOC cannot rely on margins calculated in prior proceedings, because 
"these margins are not based on a fair comparison and are not calculated for the product as a whole".333  
However, Japan never demonstrates that USDOC does rely on such margins.  Indeed, neither USDOCs 
determination of "whether the continued applica tion of anti-dumping duties is necessary to offset 
dumping" under Article 11.2, nor its likelihood determ ination in a sunset review under Article 11.3 is 
dependent on any specific magnitude of dumping. 
4.231  The United States claims that Article 11.2 obl igates a Member to terminate an anti-dumping 
duty when the Member determines "that the anti-du mping duty is no longer warranted".  Specifically, 
the Member is charged with determining "whether the continued application of anti-dumping duties is 
necessary to offset dumping ... ".  The Panel in US – DRAMS  found: 
"The word 'continued' covers a temporal re lationship between past and future. ... .  
Thus, the inclusion of the word 'continued' signifies that the investigating authority is 
entitled to examine whether imposition of the dut y may be applied henceforth to offset 
dumping."334 
4.232  The United States states that Article 11.3 provid es that a definitive anti-dumping duty must be 
terminated after five years unless the authorities determ ine that "the expiry of the duty would be likely 
to lead to continuation or recurrence of dumping and injury". 
4.233  Thus, the United States argues that the focu s of a changed circumstances review under 
Article 11.2 and the focus of a sunset review under Ar ticle 11.3 is on future behaviour, i.e. whether the 
continued application of anti-dumping duty is necessar y to offset dumping in the future, and whether 
dumping and injury are likely to continue or recur in th e event of expiry of the duty.  Neither the precise 
amount of dumping in any one year, nor the precise amount  of likely future dumping, is determinative.  
Indeed, such precision is unattainable in what is in evitably a somewhat speculati ve projection of future 
                                                      
332 Japan First Written Submission, para. 6. 
333 Japan First Written Submission, para. 157. 
334 Panel Report, US – DRAMS , para. 6.27.                   WT/DS322/R 
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 behaviour.335  Because neither determination relies on the magnitude of the margin of dumping in any 
of the assessment reviews, Japan has failed to establish a prima facie  case concerning USDOCs 
likelihood determination in either a change d circumstances review or a sunset review. 
7. "As such" Claims with respect to Articles 1 and 18.4 of the AD Agreement  and 
Article XVI:4 of the WTO Agreement  in Relation to Original Investigations 
 Japan336 
 4.234  Japan argues that, as a consequence of the model and simple zeroing procedures' 
inconsistencies with various provisions of Articles 2, 3, 5, 9 and 11 of the AD Agreement , the United 
States also acts inconsistently with Articles 1 and 18.4 of that Agreement  and Article XVI:4 of the WTO 
Agreement . 
4.235  Japan argues that Article 18.4 of the AD Agreement  states that a Member shall "ensure … the 
conformity of its laws, regula tions and administrative procedures with the provisions of this 
Agreement ".  The standard model and simple zeroing pr ocedures are "administrative procedures" that 
do not conform to various provisions of the AD Agreement .  By maintaining these procedures, therefore, 
the United States acts inconsistently wi th its obligations under Article 18.4. 
4.236  In US – 1916 Act , the Appellate Body held that the first sentence of Article 1 of the 
AD Agreement "states that 'an anti-dumping measure' must be consistent with Article VI of the GATT 
1994 and the provisions of the AD Agreement ".
337  In that appeal, the Appellate Body noted that the 
term "anti-dumping measures" "seems to encompass all measures taken against dumping".338  In 
addition, the word encompasses "laws, regulations  and administrative procedures" that set forth 
standards for the conduct of anti-dumping pr oceedings because these are "measures" of an 
"anti-dumping" character.  In that respect, the measure at issue in US – 1916 Act , i.e. the 1916 Act, is a 
"law" under Article 18.4 that was also held to fall with in the scope of Article 1.  Article 1, therefore, 
applies as much to measures taken against dumping as it does to measures taken to enforce 
anti-dumping rules.  Accordingly, as the standard  model and simple zeroing procedures are not 
consistent with various provisions of the AD Agreement , they are also inconsistent with the "principles" 
set forth in Article 1. 
4.237  Japan argues that, similar to Article 18.4 of the AD Agreement , Article XVI:4 of the 
WTO Agreement  states that a Member shall "ensure … the conformity of its laws, regulations and 
administrative procedures with its obligations in th e annexed Agreements".  The annexed Agreements 
include the AD Agreement  and the GATT 1994.  By maintaining the model and simple zeroing 
procedures, which are "administrative procedures" not  in conformity with various provisions of the 
AD Agreement  and the GATT 1994, the United States fails to take all necessary steps to ensure it 
complies with its WTO obligations.  Accordingly, the United States also violates its obligation under 
Article XVI:4 of the WTO Agreement . 
                                                      
335 See,  e.g., Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 341 
(discussing prospective nature of analys is in Article 11.3 reviews).  Although  there is no requirement to quantify 
the amount of dumping likely to continue or recur, the US does so under its domestic law.  USDOC transmits this information to the USITC. 
336 Japan First Written Submission, paras. 159-164. 
337 Appellate Body Report, US – 1916 Act , para. 119. 
338 Appellate Body Report, US – 1916 Act , para. 119 . WT/DS322/R          
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B. "A
S APPLIED " CLAIMS339 
 Japan340 
 4.238  Japan challenges the standard model and simp le zeroing procedures, "as applied", in the 
measures identified in Japan's panel request.  In to tal, Japan challenges 14 specific measures concerning 
three different types of anti-dumping proceeding: one original investigation, 11 periodic reviews and 
two sunset reviews.  Japan states that the United States has, essentially, failed to respond to these "as 
applied" claims.
341 
1. Claims with respect to an Original Investigation342  
4.239  Japan challenges the application of the US DOCs procedures of zeroing in one original 
investigation and claims the investiga tion was inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 3.1, 3.2, 3.3, 
3.4, and 3.5 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994. 
4.240  On 13 December 1999, the USDOC imposed anti-dumping duties in CTL Plate , 64 Fed Reg. 
73,215.343  The ad valorem rate of anti-dumping duty was 10.78 per cent for Kawasaki Steel 
Corporation and all others.344  In calculating the margin of dumping in this investigation, the USDOC 
used a W-to-W comparison, including its standa rd model zeroing procedures.  Specifically, in 
aggregating the results of the multiple model- based comparisons, the USDOC disregarded any 
comparisons with negative results.  The computer  language by which the USDOC eliminated the 
negative comparison results is the standard zeroing line: "WHERE EMARGIN GT 0".  This language is identical to the computer code in the USDOCs sta ndard computer programme.  Without the application 
of the standard zeroing procedures, the margin of  dumping and, hence, the respondent's deposit rate 
would have been lower. 
4.241  Japan argues that, for the reasons Japan has al ready presented model zeroing is inconsistent 
with Articles 2.1 and 2.4.2 of the AD Agreement , and Articles VI:1 and VI:2 of the GATT 1994, 
because relying on these procedures, the USDOC fails  to determine the existence of dumping, or 
calculate a dumping margin, for the product as a whol e.  Indeed, the Appellate Body has already 
considered the United States' use of its model zeroi ng procedures in an investigation, and held that, 
although an investigating authority is entitled to  compare normal value and export price through 
multiple model-based comparisons, the "investigating authority necessarily has to take into account the 
results of all those comparisons in order to establish ma rgins of dumping for the product as a whole 
under Article 2.4.2".
345  The Appellate Body concluded, therefore, that the USDOCs exclusion of the 
comparison results for certain models (i.e. those with a negative result) in obtaining the aggregate result 
for the product as a whole, was incons istent with Article 2.4.2 of the AD Agreement .346  Equally, 
because the Appellate Body's reasoning derived from the language contained in Article 2.1347, the 
failure to determine the existence of dumping, and to calculate the margin of dumping, for the product 
as a whole is inconsistent with Article 2.1, as we ll as with Articles VI:1 and VI:2 of the GATT 1994. 
                                                      
339 See Table following para. 2.3 of this Report. 
340 Japan First Written Submission paras. 65-74, 165-193. 
341 Japan Second Written Submission, para. 88. 
342 Japan First Written Submission paras. 66-69, 167-177; Japan Opening Statement, First Substantive 
Meeting of the Panel with the Parties, paras. 62-64. 
343 Exhibit JPN-10. 
344 Exhibit JPN-10. 
345 Appellate Body Report, US – Softwood Lumber V , para. 98 ( emphasis in original ). 
346 Ibid, para. 102. 
347 Ibid, para. 93.                   WT/DS322/R 
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 4.242  Japan argues that, for the same reasons, the application of the standard model zeroing 
procedures in the CTL Plate investigation renders  the USDOCs dumping determination inconsistent 
with Articles 2.1 and 2.4.2. of the AD Agreement , and with Articles VI:1 and VI:2 of the GATT 1994.  
By automatically disregarding the negative results in calculating the overall margin of dumping in 
CTL Plate , the USDOC did not consider the results of all the comparisons for the product, and thus its 
dumping determination and the margin of dumping are not for the product as a whole. 
4.243  Japan also argues that, for the reasons Japan has stated the USDOCs standard model zeroing 
procedures, as applied in CTL Plate , are inconsistent with the "fair comparison" requirements contained 
in Article 2.4 of the AD Agreement .  The Appellate Body has specifica lly held, in considering a claim 
against these procedures, that there "is an inhe rent bias in a zeroing methodology," and that a 
comparison that inflates the margin of dumping an d could even lead to an affirmative dumping 
determination where no dumping would have been est ablished without zeroing, is not a fair comparison 
between export price and normal value.348  Likewise, the USDOCs use of the model zeroing procedures 
in CTL Plate  resulted in an unfair, biased comparison between export price and normal value.  By 
disregarding all model-based comparisons with a negative result, the USDOC calculated a weighted 
overall dumping margin that was inflated by an amount equal to the excluded negative values.  Also, by 
effectively treating the negative price difference as a zero difference, the USDOC interferes with export 
price for these models by artificially reducing export  price.  This price-distortion also renders the 
comparison of normal value and export price unfair.  The USDOCs application of the standard model 
zeroing procedures in CTL Plate  renders the USDOCs dumping determin ation inconsistent, therefore, 
with the "fair comparison" requirement in Article 2.4 of the AD Agreement . 
4.244  Japan argues that the USITCs inju ry determination in CTL Plate349 is inconsistent with 
Articles 3.1, 3.2, 3.3, 3.4, and 3.5 of the AD Agreement .  Article 3.1 of the AD Agreement  requires that 
an injury determination be based on "an objective examination" of "positive evidence" concerning the 
"volume of the dumped imports", their "effect" on prices of the like domestic product, and the 
"consequent impact" of dumped imports on domestic producers.  The Appellate Body has held that 
"positive evidence" is evidence "of an affirmative,  objective and verifiable character" and "must be 
credible".350  An "objective examination" is one that "con form[s] to the dictates of the basic principles 
of good faith and fundamental fairness".351 
4.245  Japan argues that several aspects of the USIT Cs injury determination are based upon the 
USDOCs dumping determination, including the volume of the dumped imports(pursuant to 
Articles 3.1, 3.2, 3.3, 3.4 and 3.5), the rate of increase of dumped imports(pursuant to Articles 3.2, and 
possibly Articles 3.4 and 3.5), the prices of dumped im ports(pursuant to Articles 3.2, 3.3, 3.4 and 3.5), 
and the magnitude of dumping (pursuant to Articles 3. 4 and 3.5).  As a result of the application of the 
standard model zeroing procedures, the USDOCs dumpi ng determination is flaw ed.  In consequence, 
the evidence of dumping produced by that flawed determination does not meet the requirements of 
"positive evidence" nor permit an "objective examinati on".  In particular, the USITC has no objective, 
verifiable, credible, or otherwise reliable eviden ce regarding the volume of dumped and non-dumped 
imports, the rate of increase of dumped imports, their prices and price effects, and the magnitude of dumping. 
                                                     
 
348 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135. 
349 Cut-To-Length Carbon Steel Plate from Japan , Investigation Nos. 701-TA-387-391 and 
731-TA-816-821(Final), USITC Pub. No. 3273 (January 2000) (Exhibit JPN-10.B) . 
350 Appellate Body Report, US – Hot-Rolled Steel , para. 192. 
351 Appellate Body Report, US – Hot-Rolled Steel , para. 193. WT/DS322/R          
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4.246  Japan argues that as the USITC is re quired to do under United States law
352, it relied on the 
USDOCs dumping determination in CTL Plate  to determine the volume of dumped and non-dumped 
imports, the rate of increase of dumped imports, the prices of dumped imports, and the magnitude of dumping.
353  In so doing, the USITC relied on evidence that stemmed from the incomplete and unfair 
aggregation of model-based comparisons conducte d by the USDOC pursuant to its model zeroing 
procedure.  That evidence is, therefore, not evid ence of dumping for the product as a whole nor, because 
of the biased comparison, is it a reliable indication of  the existence or amount of dumping.  The USITCs 
injury determination in CTL Plate  was, therefore, not based on an "objective examination" of "positive 
evidence", as required by Article 3 of the AD Agreement . 
4.247  In responding to comments by the United States with  regards to injury, Japan points out that the 
United States suggests that Japan's c onclusion with respect to CTL Plate  is "speculative and unfounded" 
because "it does not follow that [USDOC] would have reported different margins of dumping to the USITC had it applied a different approach" to the dumping determination.
354  It continues that, "[i]n the 
absence of such a showing, Japan h as failed to meet its burden …".355  Japan claims that it is the United 
States' argument that is "speculative".  The mere possibility that USDOC would have reported the same 
margin of dumping to the ITC by applying a differe nt approach, does not cure the tainted injury 
determination that was not based on "positive evidence." 
4.248  As a result, Japan has proved an "as applied"  violation of Article 3 in the CTL Plate 
investigation because the USITC relied on evidence in  making its injury determination that was not 
"positive".  Moreover, that "as applied" violation proves that the maintenance of the zeroing procedures 
necessarily results in violations of Article 3 in "particular circumstances". 
4.249  Japan also states that, in US – 1916 Act , the Appellate Body held that the first sentence of 
Article 1 of the AD Agreement "states that 'an anti-dumping measure' mu st be consistent with Article VI 
of the GATT 1994 and the provisions of the AD Agreement ".356  In that appeal, the Appellate Body 
noted that the term "anti-dumping measures" "seems to encompass all measures taken against 
dumping".357  The anti-dumping measure taken in the CTL Plate investigation is subject to Article 1.  In 
light of the fact that the measure is not consistent with various provisions of the AD Agreement  nor with 
Articles VI:1 and VI:2 of the GATT 1994, it is also inconsistent with Article 1 of the AD Agreement . 
2. Claims with respect to Periodic Reviews358 
4.250  Japan challenges 11 anti-dumping measures that r esulted from periodic reviews and claims that 
each of these is inconsistent with Articles 1, 2.1, 2.4,  2.4.2, 9.1, 9.2, and 9.3 of the AD Agreement , and 
with Articles VI:1 and VI:2 of the GATT 1994.  Those cases are as follows: 
(1) On 15 March 2001, the USDOC calculat ed anti-dumping duties in Tapered Roller 
Bearings and Parts Thereof 1998 - 1999 , 66 Fed Reg. 15,078.359  The period of review 
is 1 October 1998 through 30 September 1999, and the rate of the ad valorem  
anti-dumping duty was 14.86% for Koyo Seiko Co., Ltd.360  Without zeroing, the 
                                                      
352 See Tariff Act, Section 771(35)(C)(ii). 
353 Cut-To-Length Carbon Steel Plate from Japan , Investigation Nos. 701-TA-387-391 and 
731-TA-816-821, (Final), USITC Pub. No. 3273, at 24 n.143 (January 2000) (Exhibit JPN-10.B). 
354 US First Written Submission, para. 109. 
355 US First Written Submission, para. 109. 
356 Appellate Body Report, US – 1916 Act , para. 119. 
357 Appellate Body Report, US – 1916 Act,  para. 119. 
358 Japan First Written Submission, paras. 70-73, 178-186. 
359 Exhibit JPN-11. 
360 Exhibit JPN-11.                   WT/DS322/R 
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 results of the dumping margin calculation by  the USDOC would have been negative, 
and no anti-dumping duty would have been collected. 
 (2) On 6 March 2000, the USDOC imposed anti-dumping duties in Tapered Roller 
Bearings and Parts Thereof 1997 - 1998 , 65 Fed Reg. 1,767.361  The period of review is 
1 October 1997 through 30 September 1998, and the rate of the ad valorem  
anti-dumping duty was 17.94% for Koyo Seiko Co., Ltd.362  Without zeroing, the 
USDOC would have calculated a lower anti-dumping margin. 
 
(3) On 11 August 2000, the USDOC imposed anti-dumping duties in Ball Bearings and 
Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219.363  The period of review is 1 May 1998 
through 30 April 1999, and the rate of the ad valorem  anti-dumping duty was 6.14% for 
NTN Corporation.364  Without zeroing, the results of the dumping margin calculation 
by the USDOC would have been negative, and no anti-dumping duty would have been 
collected. 
 (4) On 11 August 2000 the USDOC imposed anti-dumping duties in Cylindrical Roller 
Bearings and Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219365  The period of review is 
1 May 1998 through 30 April 1999, and the rate of the ad valorem  anti-dumping duty 
was 3.49% for NTN Corporation.366  Without zeroing, the results of the dumping 
margin calculation by the USDOC would have been negative, and no anti-dumping 
duty would have been collected. 
 (5) On 11 August 2000, the USDOC imposed anti-dumping duties in Spherical Plain 
Bearings and Parts Thereof 1998-1999 , 65 Fed. Reg. 49,219.367  The period of review 
is 1 May 1998 through 30 April 1999, and the rate of the ad valorem anti-dumping duty 
was 2.78% for NTN Corporation.368  Without zeroing, the results of the dumping 
margin calculation by the USDOC would have been negative, and no anti-dumping duty would have been collected. 
 (6) On 12 July 2001, the USDOC imposed anti-dumping duties in Ball Bearings and Parts 
Thereof 1999-2000 , 66 Fed. Reg. 36,551.369  The period of review is 1 May 1999 
through 30 April 2000, and the rates of the ad valorem  anti-dumping duty were 10.10% 
for Koyo Seiko Co., Ltd., 9.16% for NTN Corporation, and 4.22% for NSK Ltd.370  
Without zeroing, the results of the dumping margin calculation by the USDOC for these three respondents would have been negative, and no anti- dumping duty would 
have been collected. 
 (7) On 12 July 2001, the USDOC imposed anti-dumping duties in Cylindrical Roller
 
Bearings and Parts Thereof 1999 , 66 Fed. Reg. 36,551.371  The period of review is 1 
May 1999 through 31 December 1999, and the rates of the ad valorem  anti-dumping 
                                                      
361 Exhibit JPN-12. 
362 Exhibit JPN-12. 
363 Exhibit JPN-13. 
364 Exhibit JPN-13. 
365 Exhibit JPN-14. 
366 Exhibit JPN-14. 
367 Exhibit JPN-15. 
368 Exhibit JPN-15. 
369 Exhibit JPN-16. 
370 Exhibit JPN-16. 
371 Exhibit JPN-17. WT/DS322/R          
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duty were 5.28% for Koyo Seiko Co., Ltd. and 16.26% for NTN Corporation.
372  
Without zeroing, the results of the dumping margin calculation by the USDOC for both respondents would have been negative, a nd no anti-dumping duty would have been 
collected. 
 
(8) On 12 July 2001, the USDOC imposed anti-dumping duties in Spherical Plain 
Bearings and Parts Thereof 1999 , 66 Fed. Reg. 36,551.373  The period of review is 1 
May 1999 through 31 December 1999, and the rate of the ad valorem  anti-dumping 
duty was 3.60% for NTN Corporation.374  Without zeroing, the results of the dumping 
margin calculation by the USDOC would have been negative, and no anti-dumping 
duty would have been collected. 
 (9) On 15 October 2002, the USDOC imposed anti-dumping duties in Ball Bearings and 
Parts Thereof 2000-2001 , 67 Fed. Reg. 55,780, as amended by 67 Fed. Reg. 63,608.375  
The period of review is 1 May 2000 through 30 April 2001, and the rates of the ad 
valorem  anti-dumping duty were 6.07% for NSK Ltd., 2.51% for Asahi Seiko Co., 
Ltd., and 9.34% for NTN Corporation.376  Without zeroing, the results of the dumping 
margin calculation by the USDOC for these three respondents would have been negative, and no anti-dumping duty would have been collected. 
 (10) On 16 June 2003, the USDOC imposed anti-dumping duties in Ball Bearings and Parts 
Thereof 2001-2002 , 68 Fed. Reg. 35,623.377  The period of review is 1 May 2001 
through 30 April 2002, and the rates of the ad valorem  anti-dumping duty were 4.51% 
for NTN Corporation and 2.68% for NSK Ltd.378  Without zeroing, the results of the 
dumping margin calculation by the USDOC for both respondents would have been 
negative, and no anti-dumping duty would have been collected. 
 
(11) On 15 September 2004, the USDOC imposed anti-dumping duties in Ball Bearings and 
Parts Thereof 2002-2003 , 69 Fed. Reg. 55,574.379  The period of review is 1 May 2002 
through 30 April 2003, and the rates of the ad valorem  anti-dumping duty were 5.56% 
for Koyo Seiko Co., Ltd., 2.74% for NTN Corporation, 2.46% for NSK Ltd., and 3.37% for Nippon Pillow Block Co., Ltd.
380  Without zeroing, the results of the 
dumping margin calculation by the USDOC for these four respondents would have 
been negative, and no anti-dumping duty would have been collected. 
 4.251  Japan focuses on one example of these periodic reviews, Ball Bearings and Parts Thereof 
1999-2000 , 66 Fed. Reg. 36,551, and explains the WTO-in consistency of that measure as a result of the 
application of the standard simple zeroing procedures.  The other ten measures are, for identical 
reasons, also WTO-inconsistent.  For all 11 measures,  Japan submits evidence of  the application of the 
simple zeroing procedures.381 
                                                      
372 Exhibit JPN-17. 
373 Exhibit JPN-18. 
374 Exhibit JPN-18. 
375 Exhibit JPN-19. 
376 Exhibit JPN-19. 
377 Exhibit JPN-20. 
378 Exhibit JPN-20. 
379 Exhibit JPN-21. 
380 Exhibit JPN-21. 
381 See Exhibits JPN-11 to 21.C.                   WT/DS322/R 
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 4.252  Japan notes that, on 12 July 2001, the USDOC imposed anti-dumping duties in Ball Bearings 
and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551.382  To determine the anti-dumping duties to be 
collected for entries made during the period of revi ew, i.e. the assessment rate, and to determine the 
deposit rate for future entries, the USDOC calculate d margins of dumping using a W-to-T comparison 
that included the standard simple zeroing procedures.  The USDOC, therefore, made multiple 
comparisons between a weighted average normal valu e and export price for a series of comparable 
individual export transactions.  In terms of the USDOCs standard simple zeroing procedures, in 
aggregating the results of the multiple transaction- based comparisons to obtain the overall weighted 
average dumping margin, only those comparisons for which there were positive results were taken into 
account.  In other words, the USDOC disregarded any comparisons with a negative value.  As a result, 
the sum total amount of dumping was inflated by an  amount equal to the excluded negative values.  
Without zeroing, the results of those calculations would have been negative for each of these three 
respondents, and no anti-dumping duties would have been  assessed or collected.  Japan asserts that the 
computer language by which the USDOC eliminated  the negative comparison results is the standard 
zeroing line, namely "WHERE EMARGIN GT 0;" or "WHERE UMARGIN GT 0;".383  This language 
is identical to the computer code in the USDOCs standard computer programme for periodic reviews.384 
4.253  Japan argues that, under Article 9.3, "the amount  of the anti-dumping duty shall not exceed the 
margin of dumping as established under Article 2".  Consistent with this text, margins of dumping 
calculated in a periodic review under Article 9.3 mu st be calculated in accordance with the "agreed 
disciplines" in Article 2.385  Among those "disciplines", Articles 2.1 and 2.4.2 of the AD Agreement , 
together with  Articles VI:1 and VI:2 of the GATT 1994, requi re that margins of dumping be determined 
for the product as a whole.  As a result, wher e the investigating authority undertakes multiple 
comparisons to determine the margins in a periodic review, it must take account of the results of all of 
the multiple comparisons in the aggregation of co mparison results; not merely those with positive 
values.  Japan argues that, in Ball Bearings and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551, the 
USDOC calculated the overall margin of dumping (or assessment rate) using only those 
transaction-based comparisons for which there was a positive result.  The USDO Cs failure to establish 
the margins of dumping for the product as a whole by considering all of the multiple comparison 
results, including negative ones, resulted in affirmat ive dumping determinations  in Ball Bearings and 
Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551 (and the other te n periodic reviews Japan challenges).  
Accordingly, the application of th e standard simple zeroing procedur es in this periodic review (and the 
other ten periodic reviews) is inconsiste nt with Articles 2.1 and 2.4.2 of the AD Agreement  and also 
Articles VI:1 and VI:2 of the GATT 1994. 
4.254  Japan also argues that the Appellate Body ruled, in US – Corrosion-Resistant Steel , that 
margins of dumping calculated under Article 9.3 must meet the fair comparison requirements of 
Article 2.4.  Japan has already demonstrated that the standard model and simple zeroing procedures are 
inconsistent "as such" with these requirements.  In the same way, the application of the simple zeroing 
procedures in Ball Bearings and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551, also resulted in an 
unfair comparison that is inconsis tent with Article 2.4 of the AD Agreement .  In this periodic review, the 
elimination of comparisons with negative results ge nerated an overall positive dumping margin for each 
respondent, whereas the inclusion of all comparisons would have resulted in a negative figure for all of 
them.  Such a comparison, for the product as a whole, is manifestly unfair. 
                                                      
382 Exhibit JPN-16.  This measure is identified as  Specific Case No. 8 in Japan's panel request. 
383 See Exhibit JPN-1.D, which indicates that the Standard Zeroing Line may be found on lines 1268 and 
1336 of Exhibit JPN-16.A, lines 2622 and 2690 of Exhibit JPN-16.B, and lines 1345 and 1413 of Exhibit 
JPN-16.C. 
384 Exhibit JPN-7 at 16 and 17. 
385 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para 127. WT/DS322/R          
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4.255  Japan asserts that the application of zeroing in these reviews at issue is inconsistent with Article 
9 of the AD Agreement .  Two conditions must be met to satisfy the requirements of Article 9:  (1) the 
margin of dumping to be calculated for the purpose of the duty assessment proceedings must be established consistently with Article 2;  and (2) the amount of anti-dumping duty to be imposed and 
collected must not exceed the ceiling set by such marg ins of dumping.  It therefore follows that if the 
procedures for calculating margins of dumping are inc onsistent with Article 2, including Articles 2.1, 
2.4 and 2.4.2, the application of those same procedures  in a periodic review is also legally flawed.  As 
explained above, the application of simple zeroing in  the calculation of the margins of dumping in Ball 
Bearings and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551, is inconsis tent with Articles 2.1, 2.4 and 
2.4.2, and therefore, the USDOC failed to establish the margin of dumping in the review at issue in a 
manner consistent with Article 2 of the AD Agreement .  Indeed, the USDOC would have determined 
that there were no margins of dumping but for its a pplication of the simple zeroing procedures.  As a 
result, the USDOC seeks to collect anti-dumping duties when it is not entitled to collect any, and thus 
the USDOC acts inconsistently with the second c ondition identified above.  Therefore, the USDOCs 
application of simple zeroing in Ba ll Bearings and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551, to 
calculate the margins of dumping is also incons istent with Articles 9.1, 9.2 and 9.3 of the 
AD Agreement . 
4.256  Finally, Japan argues that in light of the fact that the "anti-dumping measures" applied in Ball 
Bearings and Parts Thereof 1999-2000 , 66 Fed. Reg. 36,551 (and, for the same reasons, the other ten 
periodic reviews challenged) are not cons istent with various provisions of the AD Agreement , they are 
also inconsistent with Article 1 of the AD Agreement . 
3. Claims with respect to Sunset Reviews386 
4.257  Japan claims that anti-dumping measures adopted pursuant to two sunset reviews387 are  
inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 11.1, and 11.3 of the AD Agreement  and Articles VI:1, and 
VI:2 of the GATT 1994, because, in these two review s, the investigating authorities relied on dumping 
margins calculated using the standard zeroing procedures. 
4.258  Japan addresses one of these two measures in deta il, Expedited Sunset Review of Anti-friction  
Bearings , 64 Fed. Reg. 60,275, as the other involves preci sely the same WTO-inconsistencies.  For both 
measures, Japan submits evidence of the reliance upon margins that were calculated using standard 
zeroing procedures.388 
4.259  Japan points out that, on 4 November 1999, the USDOC issued its Final Results in Expedited 
Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 60,275, in whic h it found that revocation of the 
anti-dumping order on Ball Bearings fro m Japan would be likely to lead to continuation or recurrence of 
dumping.389  In making this determination, the USDOC specifically relied on the "margins determined 
in the original investigation a nd subsequent periodic reviews", and concluded that because "dumping 
has continued over the life of the orders, the [USDOC] determines that dumping is likely to continue if 
the orders were revoked".390  Thus, in Expedited Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 
60,275, the investigating authorities relied on dumpi ng margins calculated in the original investigation 
and periodic reviews.  In calculating these margins,  whether using model or simple zeroing procedures, 
the USDOC disregarded all comparisons that gave  rise to a negative result.  Specifically, the 
                                                      
386 Japan First Written Submission, paras. 74, 187-193. 
387 Exhibits JPN-22 and 23. 
388 Exhibits JPN-22 to 23.D. 
389 Exhibit JPN-22. 
390 Exhibit JPN-22.                   WT/DS322/R 
Page 77 
 
 
 
 programmes in question contain the zeroing language: "IF EMARGIN GT 0".391  As a result of the 
USDOCs application of the standard zeroing pr ocedures, the dumping margins were inflated. 
4.260  Japan argues that margins used in a sunset revi ew must be consistent with Article 2 of the 
AD Agreement .  In a sunset review, investigating author ities are not entitled to rely on dumping margins 
calculated using standard zeroing pr ocedures.  As noted above, in US – Corrosion-Resistant Steel 
Sunset Review , the Appellate Body confirmed that there is: 
"no obligation under Article 11.3 for investiga ting authorities to calculate or rely on 
dumping margins in determining the likelihood of continuation or recurrence of dumping. However, should in vestigating authorities choose to rely upon dumping 
margins in making their likelihood determ ination, the calculation of these margins 
must conform to the disciplines of Article 2.4" .392 
4.261  Thus, where investigating authorities elect to rely  on dumping margins calculated in an original 
investigation and/or subsequent periodic reviews, t hose margins must be calculated for the "product" as 
a whole, through a "fair comparison," as required by Articles 2.1, 2.4 and 2.4.2 of the AD Agreement . 
4.262  Japan argues that, in Expedited Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 60,275, 
both the USDOC and the USITC chose to rely on dump ing margins calculated in earlier investigations 
and periodic reviews in reaching their likelihood determinations.393  However, as described above, the 
USDOC used its standard zeroing procedures to calcu late these margins.  According to the Appellate 
Body's findings in US Corrosion-Resistant Steel Sunset Review394, the reliance on margins in a sunset 
review that are calculated in a manner inconsis tent with Articles 2.1, 2.4 and 2.4.2 of the AD Agreement  
means that the determinations in th e sunset reviews are inconsistent with Articles 11.1 and 11.3 of the 
AD Agreement .  In essence, the investigating authorities' conclusions in the Anti-friction Bearings 
Sunset Review, under those provisions, are deprived of  legal validity because they are based, in part, on 
flawed dumping margins.  The same is true of the measures adopted pursuan t to the second sunset 
review at issue.395 
4.263  In addition, Japan argues that, in light of the fact that the "anti-dumping measure" adopted in 
Expedited Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 60,275 (and the second sunset review 
challenged) are not consistent w ith various provisions of the AD Agreement , the measure is also 
inconsistent with Article 1 of the AD Agreement . 
                                                      
391 See Exhibits JPN-22.A at 2 and JPN-22.B at 3, for the zeroing language in Koyo Seiko and NTN's 
original investigation computer programmes. 
392 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127 ( underlining 
added ). 
393 Exhibit JPN-22; Determination of the USITC in Certain Bearings from China, France, Germany, 
Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom , Investigation Nos. AA-1921-143, 
731-TA-341, 731-TA-343-345, 731-TA-391-397, and 731-TA-399 (Review), at 20 n.128, and 94 (Exhibit 
JPN-22.C). 
394 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127. 
395 See USDOC, Issues and Decision Memo for the Full Sunset Review of Corrosion-Resistant Carbon 
Steel Flat Products from Japan; Final Results  at Comment 1 (2 August 2000) (Exhibit JPN-23.A); Determination 
of the USITC in Certain Carbon Steel Products from Australia, Belgium, Brazil, Canada, Finland, France, 
Germany, Japan, Korea, Mexico, Netherlands, Poland, Romania, Spain, Sweden, Taiwan, and United Kingdom , 
Investigations Nos. AA-1921-197, 701-TA-231, 319-320, 322, 325-328, 340, 342, and 348-350, and 731-TA-573-576, 578, 582-587, 604, 607-608, 612, and 614-618 (Review), at 53 n.369 (Exhibit JPN-23.B). WT/DS322/R          
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 United States
396 
 4.264  With regards to Japan's "as applied" claims , the United States addresses both a claim made by 
Japan in the original inv estigation, the CTL Plate
, 64 Fed Reg. 73,215, injury determination,397 and the 
sunset reviews that Japan challenges. 
4.265  With regards to the original investigation in CTL Plate , 64 Fed Reg. 73,215, the United States 
argues that the speculative nature of  Japan's Article 3 challenges is further confirmed by its arguments 
suggesting that the USITC acted inconsistently with the provisions of that Article in reaching certain 
injury determinations.  The United States explains  that Japan contends that USDOCs calculation of 
dumping margins in CTL Plate , 64 Fed Reg. 73,215, rendered the USITCs corresponding injury 
determination inconsistent with Articles 3.1, 3.2, 3.3, 3.4, and 3.5 of the AD Agreement .398  Japan 
argues that the USITC investigation was not objec tive and its determination was not based on positive 
evidence because the USITC had "no objective, verifiable, credib le, or otherwise reliable evidence 
regarding dumped import volumes and pr ices, and the magnitude of dumping".399 
4.266  The United States argues that the Panel should dismiss Japan's claims concerning the CTL 
Plate , 64 Fed Reg. 73,215, injury determination, wh ether or not USDOCs decision not to offset was 
inconsistent with the AD Agreement .  First , as noted above, the Unite d States disagrees with the 
Appellate Body's conclusion that offsets are requi red when using the average-to-average methodology 
under Article 2.4.2.  Therefore, the United States disag rees that USDOCs decision not to "offset" in this 
investigation was WTO-inconsistent.  Second , Japan's assertion that the ma rgins calculated pursuant to 
the average-to-average approach in this investiga tion caused the USITC to act in a manner inconsistent 
with Articles 3.1, 3.2, 3.3, 3.4, and 3.5 is speculative and unfounded. 
4.267  The United States argues that, even assuming that the margin calculations  were inconsistent 
with the AD Agreement , it does not follow that USDOC woul d have reported different margins of 
dumping to the USITC had it applied a different approach.  Because the AD Agreement  provides more 
than one permissible comparison methodology by which dumping margins may be calculated 
(average-to-average, transaction-to-transaction, or in certain circumstances, average-to-transaction), 
Japan cannot presume or establish that USDOC ne cessarily would have calculated different dumping 
margins in CTL Plate , 64 Fed Reg. 73,215.  In the absence of such a showing, the United States argues 
that Japan has failed to meet its burden to demonstr ate that the USITCs injury determination in CTL 
Plate , 64 Fed Reg. 73,215, is inconsistent with  Articles 3.1, 3.2, 3.4 and 3.5 of the AD Agreement . 
4.268  The United States rejects Japan's arguments made wi th respect to the sunset reviews in Sunset 
Review of Anti-friction Bearings , 64 Fed. Reg. 60,275,400 and Full Sunset Review of 
Corrosion-Resistant Carbon Steel Flat Products , 65 Fed. Reg. 47,380401.  The United States points out 
that Japan also asserts that USDOCs calculati on of dumping margins resulted in certain sunset 
determinations by the USITC that were inconsistent with Article 11.3 of the AD Agreement .  Japan 
                                                      
396 US First Written Submission, paras. 105-108. 
397 Cut-To-Length Carbon Steel Plate from Japan , Investigation Nos. 701-TA-387-391 and 
731-TA-816-821, (Final), USITC Pub. No. 3273 (January 2000) (Exhibit JPN-10.B) . 
398 Japan First Written Submission, paras. 69, 173-175. 
399 Japan First Written Submission, para. 174. 
400 Certain Bearings from China, France, Germany, Hungary, Italy, Japan, Romania, Singapore, 
Sweden, and the United Kingdom , Investigation Nos. AA-1921-143, 731-TA-341, 731-TA-343-345, 
731-TA-391-397, and 731-TA-399 (Review), USITC Pub. No. 3309 (June 2000) (Exhibit JPN-22.C). 
401 Certain Carbon Steel Products from Australia, Belgium, Brazil, Canada, Finland, France, Germany, 
Japan, Korea, Mexico, Netherlands,  Poland, Romania, Spain, Sw eden, Taiwan, and United Kingdom , 
Investigations Nos. AA-1921-197, 701-TA-231, 319-320, 322, 325-328, 340, 342, and 348-350, and 731-TA-573-576, 578, 582-587, 604, 607-608, 612, and 614-618 (Review), USITC Pub. 3364 (Nov. 2000) 
(Exhibit JPN-23.B).                   WT/DS322/R 
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 alleges that the USITCs determinations of the likel ihood of continuation or recurrence of injury in 
Sunset Review of Anti-friction Bearings , 64 Fed. Reg. 60,275, and Full Sunset Review of 
Corrosion-Resistant Carbon Steel Flat Products , 65 Fed. Reg. 47,380, are invalid because the USITC 
relied on flawed dumping margins.402  Japan's claims on this issue,  like those regarding the CTL Plate , 
64 Fed Reg. 73,215, injury determination, are speculative and unfounded.403 
V. ARGUMENTS OF THE THIRD PARTIES 
A. ARGENTINA 
1. "As such" Claims  
(a) Zeroing Procedures Challenged as Measures404 
5.1 Argentina points out that Japan contends that  the USDOC maintains what it calls standard 
computer programmes, one of which is the an ti-dumping margin calculation programme.  These 
programmes are in and of themselves "measures" for the purposes of the DSU, and henceforth, 
susceptible of being challenged "as such" before the WTO dispute settlement system.  Whether the 
measure at issue is the programme in its entirety, or a single line of it, is irrelevant for the purpose of the 
decision to be made by the Panel. 
5.2 Argentina argues that whether there is "a" single computer programme or "several" does not 
seem to be of relevance for the matter the Panel has to  resolve provided that all of them contain the line 
that Japan has came to call "the zeroing line"405.  That line mandates  the programme to execute the 
zeroing procedures and is what renders the programme, or this part at least, a measure inconsistent with 
the AD Agreement . 
5.3 With regards to the argument of the United Stat es that the programme (or the line) is not a 
measure because it does not set forth rules or nor ms, of general and prospective application406, or 
mandate a breach of any WTO provision407.  Argentina considers that, throughout its submission, Japan 
has clearly demonstrated otherwise.  It seems cl ear enough that, as Japan has said, "the USDOC relies 
on computer programmes to manipulate the da ta and execute the required calculations".408  Moreover, 
that line is –as Japan has clearly demonstrated - built into the programme itself, self-executing, and 
beyond any possibility of being turned off by the "operator".409  The Appellate Body in US – 
Corrosion-Resistant Steel  Sunset Review clarified broadly enough the sc ope under which the definition 
of "measure" is construed for the purposes of defini ng what is challengeable under the DSU, and the 
standard anti-dumping programme (s) certainly falls into that category. 
                                                      
402  Japan First Written Submission, para. 192. 
403 The US further notes its disagreement with Japa n's characterization that the USITC relied on the 
dumping margins reported by USDOC in the cited cases.  In US – Corrosion-Resistant Steel Sunset Review , the 
Appellate Body recognized that Article 11.3 does not ev en require investigating authorities to rely on dumping 
margins in making their determination of likelihood of continuation or recurrence of dumping.  Appellate Body 
Report, US – Corrosion-Resistant Steel Sunset Review , para. 127.  Likewise, there is nothing in Article 11.3 that 
creates an obligation for investigating authorities to rely on dumping margins in making their determination of 
likelihood of continuation or recurrence of injury. 
404 Argentina Oral Statement at Th ird Party Session ("Argentina Oral Statement"), paras. 4-9. 
405 Japan First Written Submission, para. 39, and Exhibit JPN-1, at para. 15. 
406 US First Written Ssubmission, para. 34. 
407 US First Written Submission, para. 35 
408 Japan First Written Submission, para. 26 
409 Japan First Written Submission, para . 36 and Exhibit JPN-1, para. 14. WT/DS322/R          
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5.4 Argentina argues that it is a well established prin ciple in WTO dispute settlement that the party 
asserting the affirmative of a claim bears the burden to prove it. Argentina is of the opinion that Japan 
has satisfied its burden of proof regarding whether th e programme, is a measure subject to challenge in 
the WTO.  Japan has submitted enough evidence to raise the presumption that the standard 
anti-dumping programme(s) is/are " as such" inconsistent with the AD Agreement , every time that they 
contain a line which invariably produces the same ef fect:  the distortion of the margin of dumping by 
inflating it and, eventually, even inventing dumping where there is none.  As the Appellate Body has 
stated, once a party has made a prima facie  case, the burden of proof switches onto the responding 
party
410 and, hence, it is up to the United States to prove wh at it has sustained, that is, that an operator 
could depart from executing the zeroing procedure, if he deems it necessary. 
5.5 Argentina asks, contrary to the United States' as sertion, what is the so called "zeroing line" if 
not a general rule intended to have ge neral and prospective application.  Argentina claims that it is clear 
that these computer programmes are intended to a pply every time the USDOC has to calculate a 
dumping margin and, consequently, is of  general and prospective application. 
(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations411 
5.6 Argentina argues that the practice and methodology  of zeroing out negative margins is always 
inconsistent with the AD Agreement .  Article 1 establishes that only the anti-dumping measures that are 
in accordance with the provisions of the AD Agreement  would be considered legitimately and 
consistently applied.  Article 2, read in conjunc tion with Article VI GATT 1994, defines exactly what 
can be considered dumping for the purpose of the AD Agreement :  the introduction of a product into the 
territory of another Member at less than the norma l value, which is according to Article VI.1(a) of 
GATT 1994 less than the comparable price, in the normal course of trade. 
5.7 Argentina argues that Article 2.4 indicates that not any comparison  could give rise to a 
determination of dumping but only a fair comparison , providing for all the necessary adjustments to 
allow a fair comparison of the products to take place, be it on the characteristics of the products 
themselves, be it on the different items incorporated  into their prices that could distort their value 
affecting the fairness of the process itself.  With a ll the elements, and after making all the comparisons 
needed, the authority must determine whether:  (a) there is any dumping taking place (Article 2.1) and, 
(b) its magnitude (margin) is in accordance with  Article 2.4.2, being ob liged to terminate the 
investigation in case that the latter do not reach the de minimis threshold established in Article 5.8. 
5.8 Argentina asserts that, in acco rdance with the terms of Article VI, which only permits the 
imposition of duties if the existence of injury or th reat of injury has been demonstrated, Article 3.1 
demands that an injury determination must be based on positive evidence  involving an objective 
examination  (emphasis added) of both, the volume of the dumped imports and its impact on the 
domestic industry.  The margin of dumping determined  according to the provisions referred above, is by 
virtue of Article 3.4, one in a list of many factors that the authority shall  examine (emphasis added).  
This list is not exhaustive but indicative, and alt hough some other factors could be included depending 
on the particularities of each individual case, no single factor of the list should be left without consideration
412.  However, the thorough assessment by th e authority on the factors related to the 
dumped imports must not stop there, the prices and volumes of imports not sold  at dumping prices are 
two of the several factors that Article 3.4 indicates must constitute part of the analysis. 
                                                      
410 Appellate Body Report, US – Wool Shirts and Blouses , para. 14. 
411 Argentina Oral Statement, paras. 10-20. 
412 Panel Report, Argentina – Poultry Anti-Dumping Duties , paragraph 7.314.                   WT/DS322/R 
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 5.9 Argentina explains that, only after these two pro cesses have been completed, the authority must 
decide whether or not anti-dumping duties will be imposed, and, as long as it is practicable, impose a duty less than the full margin that has been determin ed, pursuant to Article 9.1.  However, Argentina 
argues that under no circumstance can the anti-dumpi ng duty exceed the margin of dumping established 
in accordance with Article 2, that is, taking into account the consider ations mentioned above. 
5.10 Given that injurious dumping is a sine qua non  condition for granting the imposition of duties, 
and each of the two determinations (dumping and injury) are subject to the conditions outlined: 
- how could the deliberate "write-off" of so me transactions be consistent with any 
concept of fairness? 
- how could a determination of injury based on an inflated margin of dumping fulfill 
the requirement of being the result of an objective examination of the positive 
evidence? 
- finally, how could the duty assessed using a dumping margin calculated using a  
zeroing methodology be consistent with the requirement of not exceeding the 
margin of dumping? 
 5.11 Argentina argues that zeroing always produces a dumping margin which is not the actual one, 
and hence, cannot be considered neither fair nor a positive evidence, all the less so the grounds for any 
determination which requires to be based on an object ive examination of the factors supporting it.  Just 
for the sake of better illustrating the point against zeroing,  is enough to say that the effect of zeroing is 
the same to that of cutting the export prices that  enter in the comparison, having none of both a 
justification under any of the provisions in the AD Agreement . 
5.12 Argentina argues that, as several panels and the Appellate Body have successively stated, 
zeroing leads to fatal flaws which render the determ inations based on them, inconsistent with the 
provisions of the AD Agreement .  The Appellate Body, in EC-Bed Linen , established clearly and 
univocally that the fair comparison  in Article 2.4 is a general obliga tion that informs all Article 2, and 
that applies specifically to the establishment of margins of dumping in accordance with Article 2.4.2.   
Argentina argues that Article 2.4 is not narro wly confined to the pre-comparison-price- 
adjustment-stage, as the United States pretends
413.  The scope of the obligation in Article 2.4 has been 
defined as "a general obligation that informs all Article 2".  This general obligation is part of Article 2, 
which bears the title "Determination of dumping ", a determination which according to Articles 2 itself 
and VI of GATT 1994, cannot be established otherw ise than through a comparison between Normal 
Value and Export Price.  Had it been intended that fair ness be restricted only to the adjustment stage, the 
choice of this term in lieu  of the term "comparison" woul d have been more appropriate.  
5.13 Argentina asserts that the apparent attempt of  the United States to reduce the whole argument 
concerning the fair comparison to the question of whether it fits the requirements of the so called 
targeted dumping or whether offsettin g is required or not is remarkable414.  However, this case is not 
about those subjects.  The core of the practice under scrutiny in this case is not the offsetting per se , but 
what it implies:  not taking into account all the comp arable transactions for the calculation of the margin 
of dumping. 
5.14 Argentina points out that the Appellate Body in US –  Softwood Lumber V  clearly stated that:  " 
... the word 'all' in 'all comparable export transacti ons' makes it clear that Members cannot exclude from 
a comparison any transaction that is 'comparable'.  Thus, we agree with the Panel that the term 'all 
                                                      
413 US First Written Submission, para. 48. 
414 US First Written Submission, paras. 54 – 58. WT/DS322/R          
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comparable transactions' means that  a Member 'may only compare those export transactions which are 
comparable, but ... it must compare all such transactions'".'
415. 
5.15 Moreover, this could not be otherwise, Argentin a argues, since according  to the very wording 
of Article 2.1, it is clear that dumping can only be  found for a product, and not only for some of the 
transactions on the product under investigation and not others.  This has been recognized by the 
Appellate Body in EC – Bed Linen .  Assuming,  arguendo , that there is no obligation to calculate a 
margin of dumping for the product "as a whole", an d that Article 2.4.2 would not accommodate for that 
obligation, the United States would still have to explain how a calculation in which some of the transactions are simply put aside on account of the sign accompanying the figure would constitute a fair comparison in the terms of Article 2.4. 
(c) "As Such" Claims under Article 11 of the AD Agreement  with respect to Original 
Investigations.
416 
5.16 Argentina states that, apart from the methodology of zeroing in itself, it has a particular interest 
in all the aspects concerning the Unite d States' sunset review procedures.417  Argentina states that, as 
Japan has correctly pointed out in its submission418, the Appellate Body stated in 
US –  Corrosion-Resistant Steel  Sunset Review that, even in proceedings that do not impose the 
obligation to calculate a margin of dumping, such as in sunset reviews under Article 11.3, the margin 
chosen to rely on must conform to the fair comparison requirement of Article 2.4 even if calculated at some other stage in the proceeding, like, for example, the original investigation. 
B. C
HINA  
1. "As such" Claims 
(a) Zeroing Procedures Challenged as Measures419 
5.17 China argues that model and simple zeroing pro cedures are measures that can, as such, be the 
subject of dispute settlement proceedings.  China unde rstands that the Panel shall first examine whether 
the target of this claim, USDOCs model and simple  zeroing procedures, are measures challengeable as 
such. 
5.18 China points out that, in US – Corrosion-Resistant Steel Sunset Review , the Appellate Body 
stated that "any act or omission attributable to a WTO Member can be a measure of that Member …"420  
It then further stated that the measure can be challe nged "as such" before the DSB if it sets forth rules or 
norms that are intended to have ge neral and prospective application.  With respect to Article 18.4 of 
AD Agreement , the words of the Appellate Body in US – Corrosion-Resistant Steel Sunset Review421 
make China believes that the "measure" under Artic le 6.2 of the DSU may be an "administrative 
procedure" which encompasses the entire body of ge nerally applicable rules, norms and standards 
adopted by Members in connection with the condu ct of anti-dumping proceedings.  In sum, China 
understands that a measure challenge d on an "as such" basis under the AD Agreement  can be an 
"administrative procedure" which encompasses the entire  body of generally applicable rules, norms and 
                                                      
415 Appellate Body Report, US – Softwood Lumber V , para.86. 
416 Argentina Oral Statement, para. 21. 
417 Argentina Oral Statement, para. 1. 
418 Japan First Written Submission, para. 156. 
419 China Executive Summary of Third Party Submission ("China Exec. Summary"), paras. 2-8. 
420 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review,  para. 81. 
421 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review,  para. 87 ("T he phrase 'laws, 
regulations and administrative procedures' seems to us to encompass the entire body of generally applicable 
rules, norms and standards adopted by Members in connection with the conduct of anti-dumping proceedings .").                   WT/DS322/R 
Page 83 
 
 
 
 standards that are intended to have  general and prospective applicati on and are adopted by Members in 
connection with the conduct of anti-dumping proceedings. 
5.19 China notes that Japan argues th at the USDOCs model and simple zeroing procedure is not 
developed for one or several certain cases, but is a pre-determined, standardized system or method for 
mechanistically conducting and managing, on a unif orm and predictable basis, an aspect of the 
USDOCs margin calculation in all anti-dumping proceed ings, irrespective of the method of comparison 
used, it is designed to set forth rules or norms th at are intended to have general and prospective 
application.  In this regard, China understands that  the model and simple zeroing procedure may be a 
measure challengeable as such before th e Panel.  China also notes that, in US – Corrosion-Resistant 
Steel Sunset Review , the Appellate Body observed that the issu e does not depend on "the label given" to 
an instrument in domestic law, nor upon its "form or nomenclature", but on the "substance and content 
of the instrument".422 
5.20 As a third party, China takes no view on facts, but China understands that to determine whether 
or not the USDOCs model and simple zeroing pr ocedure (standard computer programmes) is 
inconsistent with the AD Agreement , the Panel should examine the s ubstance and practice/adoption of 
this computer programme. 
(b) "As Such" Claims under Article 2 of the AD Agreement with respect to Original 
Investigations423 
5.21 China argues that model and simple zeroing are in consistent with Article 2.4 and 2.4.2 of the 
AD Agreement . 
5.22 China argues that "margins of dumping" referred to  in Article 2.4.2 must be established for the 
product as a whole.  Using model zeroing, the investigating authority disregards some of the results of multiple comparisons at the aggregation stage by maintaining model zeroing procedures, which makes 
China views that such practice is inconsistent w ith Article 2.4.2 because the investigating authority 
cannot establish a dumping margin for the product as a whole.  By adopting simple zeroing, the 
investigating authority directly disregards those tr ansactions for which the export sales price is higher 
than the normal value, which has the same effect as model zeroing. 
5.23 In sum, China argues that an investigating au thority does not determine a dumping margin for 
the product as a whole either by model zeroing or by simple zeroing.  Therefore, China views that the 
model and simple zeroing are inconsistent  with Articles 2.4 and 2.4.2 of the AD Agreement . 
5.24 China argues that the basis of "fair comparison"  shall cover all comparable transactions for 
export.  By adopting zeroing, the investigating au thorities exclude the relevant export transactions 
which export prices are higher than normal value.  For the excluded comparisons, the investigating 
authority treats normal value as equal to export price, whereas, in fact, export price is greater than normal value.  Moreover, China argues, by adopting zeroing, an investigating authority disregards the 
negative results of any comparisons from the aggregation of total dumping by zeroing.  As a result, the 
dumping margin is inflated or an affirmative de termination that dumping ex ists may be made in 
circumstances where no dumping would have been established in the absence of zeroing.
424 
                                                      
422 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para.87, n.87. 
423 China Exec. Summary, paras. 13-16, 9-12. 
424 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review,  para. 135. WT/DS322/R          
Page 84  
 
5.25 China understands that, as the zeroing is formul ated with an inherent bias that distorts the 
comparison of normal value and export price, it is in consistent with the "fai r comparison" requirement 
in Article 2.4 of the AD Agreement . 
(c) "As Such" Claims Under Article 9 of the AD Agreement
425 
5.26 China argues that Articles 2.4 and 2.4.2 apply to retrospective assessment (periodic review) 
based on Article 9 of the  AD Agreement .  China considers that the "r etrospective assessment" carried 
out in the United States must be consistent with the provisions of Article 9, particularly Articles 9.3 and  
9.3.1 of the AD Agreement . 
5.27 China further argues that retrosp ective assessment is not a review.  "Review" is referred to in 
Articles 11.2 and 11.3 of the AD Agreement .  According to these articles, the main purpose of "review" 
is to determine the necessity for the continued imposition of the anti-dumping duty.  China understands 
that the main purpose of retrospective assessment is  determining the definitive amount of duties instead 
of judging the necessity for the conti nued imposition of the anti-dumping duty. 
5.28 China then argues that dumping margins used for purposes of Article 9 must be consistent with 
Article 2 of the  AD Agreement.  The chapeau of Article 9.3 provides that "the amount of the 
anti-dumping duty shall not exceed the margin of dumping as established under Article 2".  The 
cross-reference to Article 2 is in keeping with the f act that "Article 2 sets ou t the agreed disciplines in 
the AD Agreement  for calculating dumping margins".426  Whenever investigating authorities calculate 
"margins of dumping", they must respect the basic requirements of a "fair comparison".  The USDOCs determination of the existence of "dumping", and cal culation of "margins of dumping", for purpose of 
periodic review, under Article 9.3, must  be consistent with the definiti ons of those terms in Articles 2.4 
and 2.4.2 of the AD Agreement . 
5.29 China argues that the term "during the investigati on phase" in Article 2.4.2 is not limited to the 
original or initial investigation.  Other investig ations which include dumping margin calculation, e.g., 
duty assessment are also covered by the phrase "investigation phase" under Article 2.4.2.  Even if the express terms of Article 2.4.2 limit its application to the original or initial investigation phase, 
Article 2.4.2 still applies to retrospective assess ment because the retrosp ective assessment is the 
continuation of investigation phase instead of revi ew phase.  China argues th at the exercise conducted 
by the United States in the retrosp ective assessment corresponds, objectivel y, to an investigation by an 
investigating authority.  In both cases the procedures are virtually identical:  questionnaires are sent out; 
verification visits take place; and hearings are or ganized.  The main procedural difference between 
original investigation and retrospective assessment li es in the period of investigation.  Furthermore, 
retrospective assessment is applied to ascertain the dumping duty.  China thus considers the 
retrospective assessment to be a continuation of the investigation phase to make definitive 
anti-dumping duties payable. 
C. E
UROPEAN COMMUNITIES  
5.30 The European Communities points out to the fact  that it has itself been a claiming party in 
another case against the United States concerning zeroing.   In that case, the European Communities also 
brought challenges against the very same United States measures that are subject to the present 
proceeding.427 
                                                      
425 China Exec. Summary, paras. 17-26. 
426 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para.127. 
427 European Communities Third Party Submission("EC Submission), para. 1.                   WT/DS322/R 
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 1. Burden of Proof428 
5.31 In the proceeding before this Panel, the Eur opean Communities observes that Japan has set out 
and evidenced the facts, explained which obligations  of the WTO Agreements the measures at issue are 
inconsistent with, and why.  The burden of proof and persuasion lies with or has been shifted to the 
United States. 
5.32 In particular, the European Communities observ es that the United States relies on the phrase 
"during in the investigation phase" in Article 2.4.2 of the AD Agreement  as a key part of its defence, 
arguing that as a result of that phrase, in connection with Article 5.1 of the AD Agreement , the 
disciplines of Article 2.4.2 are limited to original investigations only, and that Article 9 of the 
AD Agreement  does not incorporate the requirements of Article 2.4.2 of the AD Agreement .  The 
European Communities submits that in the circumst ances of this case, the United States bears the full 
burden of persuasion in that regard.429 
2. "As such" Claims 
(a) Zeroing Procedures Challenged as Measures430 
5.33 The European Communities considers that th e model and simple zeroing procedures, 
challenged by Japan, do constitute a measure or a part of a measure, or, at a minimum, an administrative practice within the meaning of Article 18.4 of the  AD Agreement , in particular because they are referred 
to in the US Anti-Dumping Manual and other regulat ory instruments of the United States and because 
there is an automatic, predictable and prospective app lication of these procedures or "practice".  In other 
words, in the view of the European Communities,  there can be no doubt that the procedures and 
computer programmes set out norms.  These norms are "set out" in the sense that  they are expressed in 
the particular computer language used by the Unite d States, and recorded both electronically and on 
paper.
431 
(b) "As Such" Claims under the provisions of Article 2 of the AD Agreement   
5.34 As a preliminary remark432, the European Communities submits that the use of misleading 
premises and vocabulary by the United States should  not bring the focus of this Panel away from 
addressing the root of the dispute.  The European Communities describes this dispute as concerning the 
requirement, embodied in Article 2.4 of the AD Agreement  to make a fair comparison between normal 
value and export price; the rule in Article 2.4 that  adjustments may only be made for differences that 
affect price comparability;  and the requir ement embodied in Article 2.4.2 of the AD Agreement , to 
conduct a weighted average to weighted average comparison that takes account of "all comparable 
export transactions";  and not to conduct an asymmetri cal comparison, unless there is targeted dumping.  
The legal issue is not therefore whether or not the United States is required to "grant" an "offset", but 
rather that it is prohibited from making the adjustme nts it is making; and is not entitled to ignore those 
export transactions that exceed "normal value" in in termediate calculations of "margins of dumping", 
but must treat those transactions the same way as the export transactions that are below the "normal 
value" (unless special circumstances warrant otherwise). 
                                                      
428 European Communities Executive Summary of Third Party Submission ("European Communities 
Exec. Summary"), para. 2. 
429 EC Submission, para. 6. 
430 EC Exec. Summary, para. 23. 
431 EC Submission, paras. 211-214. 
432 Ibid, paras. 8-12. WT/DS322/R          
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 Article 2 applies to the entire AD Agreement
433 
 5.35 The European Communities is of the view that the terms "dumping" and "margin of dumping" 
are defined in Article VI of the GATT 1994, which definitions are further implemented and elaborated 
in Article 2 of the  AD Agreement , which sets forth disciplines for the determination of dumping that are 
applicable and have to be respected throughout the AD Agreement .  This is supported by the text, logic 
and the overall construction of the AD Agreement .  
5.36 The European Communities thus considers that Ar ticle 2 provides a valuable and persuasive, if 
not a primary, context for the interpretation of Article 2.4.2, the scope of which is at the root of the present dispute.  In particular, Article 2 provides by far a more persuasive context for the interpretation 
of Article 2.4.2 than, for example, Article 5 of the AD Agreement . 
 "Model" and "simple" zeroing is inconsistent with Article 2.4, first sentence, of the 
AD Agreement
434 
 
5.37 Within Article 2, Article 2.4, first sentence, of the AD Agreement  imposes an overarching and 
independent obligation of fair comparison.  This  obligation informs all the other provisions of 
Article 2.4, including Articles 2.4.1 and 2.4.2.  Th e character of this obligation is not exhausted by 
either the second to fifth sentences of Article 2.4 or by paragraphs 2.4.1 and 2.4.2. 
5.38 The European Communities argues that "model" and "simple" zeroing is inconsistent with 
Article 2.4, first sentence.  Fairness, in the cont ext of a comparison between domestic sales and export 
sales, requires that, under normal circumstances, the same treatment be applie d to both domestic and 
export sales, i.e. that such sales be treated in a symm etrical way.  Because zeroing, which consists in an 
arbitrary and artificial reduction of the price, is onl y applied to the export sales, there is no symmetrical 
treatment.  The use of an asymmetrical compar ison and the "simple" zeroing method without any 
justification is thus inconsistent w ith the obligation to make a fair co mparison pursuant to Article 2.4 of 
the AD Agreement .  There is also ample evidence that the zeroing methods used by the United States 
have a dramatic effect on the calculation of the dumping margin; an effect that may be far more 
significant than the effects associated with the due  adjustments referred to in Article 2.4 of the 
AD Agreement.  A methodology that systematically inflates the margins of dumping is to be considered 
unfair.  This is also confirmed by the existing case law.435 
5.39 Further, such a methodology also lacks any minimal consistency, essential for any economic 
analysis, on which the AD Agreement  necessarily is premised.436 
 Article 2.4, second to fifth sentences of the AD Agreement437 
 5.40 The European Communities argues that zeroing cons titutes an "undue" adjustment, contrary to 
Article 2.4, second to fifth sentences of the AD Agreement .  Article 2.4, particularly the second to fifth 
sentences thereof, expressly obliges Members to make due allowance or adjustment for "differences 
which affect price comparability".  At the same time, there is an obligation not to make an allowance or 
adjustment when there is no difference affecting pr ice comparability.  When zeroing, the United States 
makes an "allowance" or "adjustment" literally simply  because of a sign (negative) of an intermediate 
difference between what are considered a "normal valu e" and an "export price".  Such an adjustment is 
not made for a difference that affects price comparabilit y, rather the difference it is part of the very price 
                                                     
 
433 Ibid, paras. 13-20.  
434 EC Submission, paras. 21-42. 
435 Ibid, paras. 38-42. 
436 Ibid, paras. 31-36. 
437 Ibid, paras. 43-62.                   WT/DS322/R 
Page 87 
 
 
 
 comparison that the United States is supposed to make.  The United States is therefore not making a "due" allowance, and reverses the effects of the allo wances or adjustments that indeed affect price 
comparability, both in violation of its obligations un der Article 2.4, second to fifth sentences, of the 
AD Agreement . 
5.41 The European Communities does not, however, excl ude the possibility that an adjustment or 
allowance in the context of targeted dumping might be "due", within the meaning of the third sentence 
of Article 2.4, if it is made under the conditions laid  out in the second sentence of Article 2.4.2.  Where 
there is a difference between two distinct export markets (A and B), based on different patterns among 
different purchasers, regions or time periods, and a comparison with normal value (market C) shows, 
for instance, dumping in market A, but not market B, an investigating authority might be justified in not 
"setting-off" the "negative dumping" in market B ag ainst the dumping in market A, since such an 
adjustment would be made for a di fference (between markets A and B) that affected price comparability 
(between markets A and B; and between AB and C). 
 Article 2.4.2 of the  AD Agreement 
 
5.42 The European Communities is of the view that Article 2.4.2 of the  AD Agreement  applies to all 
types of investigations undertaken pursuan t to Article VI of the GATT 1994 and the AD Agreement  in 
which margins of dumping are calculated or relied upon, including original investigations, periodic 
reviews, new shipper reviews, changed circumstances reviews and sunset reviews, for several distinct 
reasons.
438 
5.43 First, neither the word "investigation", nor the words "during the investigation phase" limit the 
scope of the application of Article 2.4.2 to origin al investigations.  Absent a definition or a meaning 
assigned to it by the Members, these words have  to be interpreted in accordance with the 
Vienna Convention  and be given their ordinary meaning, ha ving regard to context, object and purpose. 
5.44 The European Communities points out that the or dinary meaning of the word "investigation", 
referring to a dictionary, is the nature of the activit y carried out by the investigating authority, not the 
material scope of what is examin ed.  When assessing the amount of duty to be paid under its system of 
retrospective assessment, an investigating authority is  required to engage in a "systematic examination" 
or a "careful study".  Article 2.4.2 of the AD Agreement  contains no limiting language in that regard.  To 
read any other limiting language – such as that found in Article 5.1 of the AD Agreement  – into 
Article 2.4.2 of the AD Agreement , when there is no such language there, would be a legal error. 
Article 5.1 of the AD Agreement  is limited to an investigation to  determine the existence, degree and 
effect of any alleged dumping – that is, to an original  investigation.  It is the presence of the words "to 
determine the existence, degree and effect of any alleged dumping" that limit the meaning of the word 
"investigation" in Article 5.1 of the AD Agreement .  The presence of those words in Article 5.1 does not 
say anything about the scope of the word "investigation" in Article 2.4.2, however. 
5.45 In any event, the European Communities st ates, it cannot be argued that the word 
"investigation" in Article 2.4.2 refers to "an inves tigation to determine the existence, degree and effect 
of any alleged dumping", as is referred to in Article 5. 1.  That would mean that the word "investigation" 
is monolithic, in the sense that it can only ever refer to a careful examination and scrutiny of all of the 
three matters referred to in Article 5.1 of the AD Agreement .  That is not supported by the 
AD Agreement .  For instance, it is uncontroversial that in referring to the "effect of any alleged 
dumping", Article 5.1 of the AD Agreement  refers to injury.  Yet, provisions of Article 3 may be applied 
independently from those of Article 2 – for exam ple in a changed circumstances review, or when 
implementing a panel report, or even by a separate investigating authority, as in the United States. 
                                                      
438 EC Submission, para. 63 and paras. 77-80.  WT/DS322/R          
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5.46 The European Communities argues that the wo rds "during the investigation phase" in 
Article 2.4.2 of the AD Agreement  do not limit the scope of Article 2.4.2 of the AD Agreement  to 
Article 5.1 of the AD Agreement .  Rather than Article 5.1, referring to "an investigation to determine the 
existence, degree and effect of any allege d dumping", it is Articles 2 and 9.3 of the AD Agreement  that 
provide a far more convincing context for the interpretation of Article 2.4.2.  For instance, the French 
and Spanish versions of the AD Agreement  confirm that the retrospective assessment under Article 9 
also concerns the existence of dumping, elaborated in Article 2 as a whole.  
5.47 In this respect, the European Communi ties also recalls Article 31(4) of the Vienna Convention  
according to which "[a] special meaning shall be given to a term if it is established that the parties so 
intended".  The European Communities is of the view that it is up to the United States to establish that 
the words "investigation" or "during the investig ation phase" have a limited or defined meaning. 
5.48 The European Communities explains  that the above deliberations do not mean that the phrase 
"during the investigation phase" in Article 2.4.2 is without meaning.  The European Communities 
suggests four different alternative, but not necessarily mu tually exclusive, interpretations of that phrase.  
The phrase may mean:  during the investigation period;  during the period in which the particular type of 
investigation must be concluded;  not during the pr e-investigation phase;  or the words may be merely 
descriptive. 
5.49 Second , in the view of the European Communities, Article 2.4.2 of the  AD Agreement  states 
what it does apply to, not what it does not apply to.  In this regard, unlike the United States municipal 
law, particularly the Statement of Administrative Action, Article 2.4.2 of the  AD Agreement  does not 
contain the words "(not reviews)".  If the Members ha d really wanted to achieve a limited interpretation 
of Article 2.4.2, they would have used a simila r express exclusionary language, such as that in 
Article 2.2.1; Article 2.7; Article 9.4(ii); or Annex II, paragraph 5.  The Members did not do that.  The 
European Communities also argues th at the negotiating history confirms its own views: there is no 
mention in the negotiating history suggesting that Arti cle 2.4.2 should have a limited application to the 
original investigations only.  Similarly, the subsequent practice of WTO Members does not support the 
position of the United States:  the European Commun ities attaches as an exhibit to its submission
439 a 
review of what it believes to be the complete lis t of 105 Members that have notified implementing 
legislation to the WTO, which generally shows th at the words "during the investigation phase" are 
either simply omitted from such implementing legisl ation or that there are numerous instances where 
they are rendered as "during the investigation pe riod".  The European Communities cites this as 
"subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention ; and evidence of 
the Members’ intention within the meaning of Article 31(4). 
5.50 In addition, the European Communities argues that the variable duty provisions of 
Article 9(4)(ii) of the AD Agreement , invoked by the United States, are irrelevant to the interpretation of 
Article 2.4.2.  Furthermore, these provisions do not ex clude the possibility of re fund under Article 9.3.2, 
where the full disciplines of Article 2.4.2 will apply. 
5.51 The European Communities considers that the main purpose of Article 2.4.2 of the 
AD Agreement  is to provide for an exception (asymmet rical comparison in the case of targeted 
dumping) to the normal methods of comparison (symme trical comparison) in order to ensure a fair 
comparison within the meaning of Article 2.4 of the AD Agreement .  An asymmetrical comparison can 
only be used if the circumstances defined in  the second sentence of Article 2.4.2 of the AD Agreement  
are met.  To the extent that such  circumstances are not available, the United States is under an obligation 
to use one of the normally applicable methods provided  for in the first sentence of Article 2.4.2 of the 
AD Agreement . 
                                                      
439 Exhibit EC-9.                   WT/DS322/R 
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 5.52 The model and simple zeroing methods used by the United States are therefore prohibited by 
Article 2.4.2.  When the United States defines the b asic parameters of inves tigation (such as product and 
time period), the United States is obliged to ensure th at the margin of dumping for that product and that 
period of review is calculated in  conformity with that provision .  The United States becomes bound by 
its own logic (unless the exceptional situation describ ed in the second sentence of Article 2.4.2 of the 
AD Agreement  is present).440  The United States cannot conclude, before the final calculation is 
complete, that, in relation to some discrete model or  type or category of exports, when "export price" 
exceeds "normal value", there is no or a zero margin  of dumping.  As found by the Appellate Body, 
"dumping" for the purposes of the AD Agreement  can be found to exist only for the product under 
investigation as a whole, and cannot be found to exist only for a type, model or category of that product. 
5.53 The European Communities claims that this reas oning also applies whenever an investigating 
authority decides to fix the parameters of its investig ation, whether in relation to subject product, time, 
level of trade, region, or any other parameter.  In  all those cases, the investigating authority becomes 
bound by its own logic, and must complete its analysis  on the basis of the same logic.  This is also 
supported by the second sentence of Article 2.4.2 of the  AD Agreement , which refers expressly to 
certain other parameters of the determination, includi ng "time periods".  The same is true in respect of 
any other parameters of the investigation fixed by the investigating authorit y, notably the purchasers 
and regions concerned, these also being matters referr ed to in the second sentence of Article 2.4.2 of the 
AD Agreement . 
5.54 The simple zeroing method used by the United Stat es is, at least potentially, offensive to any 
one of these parameters, because it is performed at the most disaggregated level, that is, at the level of 
individual transactions.  In principle, and due acc ount being taken of all necessary adjustments, any 
transaction during the period of review, at whatever tim e it is made, is considered by the United States 
potentially comparable with any other transaction during the period of review, at whatever time it was 
made.  In other words, instead of treating all the relevant export transactions as a whole, the 
United States methodology results in treating each export transaction individually in the same manner 
as model zeroing results in treating each model separately. 
5.55 In conclusion, the European Communities argues that if the United States were correct in 
respect of both Articles 2.4.2 and Article 2.4 of the AD Agreement , then a vast loophole on the 
fundamental issue of how to calculate a ma rgin of dumping would be opened up in the AD Agreement .  
The results of an original investigation would be  made effectively worthless.  According to the 
European Communities, the rationale for retrosp ective assessment proceedings is not to escape the 
disciplines of the AD Agreement , but to up-date the temporal frame of reference, so that data for normal 
value, export price and imports are taken from the same period.  
(c) "As Such" Claims with Respect to Articles 3, 5, 9, and 11 of the AD Agreement  
5.56 The European Communities consid ers that use of the unlawful zeroing methods by the USDOC 
violates the United States obligations under Article 2 and 2.4.2.  It also inevitably means that the United 
States is in violation of other provisions of the AD Agreement  which govern the procedures for 
subsequent determinations  dependent on a proper establishment of dumping, namely Article 3.1, 3.2 
and 3.5, 5.8, 9.3, 9.5, 11.1, 11.2 and 11.3 as well as Articles 1 and 18.4, and Articles VI:1 and VI:2 of GATT 1994 and Article XVI:4 of the WTO Agreement.
441  
                                                      
440 EC Submission, para. 197. 
441 EC Submission, paras. 202-209 and paras. 224-227. WT/DS322/R          
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D. K
OREA  
5.57 In Korea's view, the zeroing procedures of the United States applied in both the initial 
investigations and the subsequent reviews per se,  or the manner in which they are applied in a particular 
case, are inconsistent with the AD Agreement .442  Korea therefore generally supports the arguments 
raised by Japan in its first submission.443 
1. "As such" Claims 
(a) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations444 
5.58 Korea points out that the United States claims that  as the obligation to make a "fair comparison" 
under Article 2.4 only requires the appropriate adjustment  that must be made for differences that affect 
prices or price comparability between normal value a nd export price, there is no independent obligation 
to offset a "positive" dumping margin and a "nega tive" dumping margin in any calculation of dumping 
margin under Article 2.4.445  In other words, in the absence of the independent obligation to make a "fair 
comparison" under Article 2.4, zeroing in the calculati on of dumping margins is not precluded.  To the 
contrary, Japan argues that there is  a fundamental obligation that requires the investigating authority to 
offset a "positive" dumping margin and a "negative" dumping margin in any calculation of dumping 
margin in order to ensure a "fair comparison" requirement under Article 2.4.446 
5.59 Having agreed with Japan's position on the "fai r comparison" requirement under Article 2.4, 
what is more important, in Korea's view, is that su ch fair comparison requirement must be extended to 
Article 2.4.2.  Specifically, as the first sentence of Article 2.4.2 provides that the methods it describes 
are "[s]ubject to the provisions governing fair comp arisons in paragraph 4", Article 2.4.2 incorporates 
the "fair comparison" requirement of the chapeau of Ar ticle 2.4.  With this, Korea is of the view that 
from the text, it is clearly suggested that there is an  obligation for the investig ating authority to ensure 
the "fair comparison" requirement when using any of  methods described in Article 2.4.2 for comparing 
export price and normal value. 
5.60 Further support for Korea's view can be found in the past decisions of the Appellate Body.  The 
Appellate Body has consistently held that the pr actice of zeroing is inconsistent with the "fair 
comparison" requirement of Article 2.4.2 (as well with  the more general fair comparison requirement of 
the chapeau of Article 2.4.).  In EC-Bed Linen , the Appellate Body relie d on both Article 2.4 and 
Article 2.4.2 in finding zeroing to be in consistent with the requirements of the AD Agreement .  In this 
case, the Appellate body addressed the require ment of Article 2.4.2 and found that: 
"Under [the weighted average] method, the investigating authorities are required to 
compare the weighted average normal va lue with weighted average prices of all 
comparable export transactions … .  By 'zeroing' the negative dumping margins, the European Communities, therefore, did not take fully into account the entirety of the 
prices of some  export transactions, namely, those e xport transactions involving models 
of cotton-type bed linen where 'negative dumping margins were found.  Instead, the 
European Communities treated those export pri ces as if they were less than what they 
were.  This, in turn, inflated the result from  the calculation of the margin of dumping … 
.  Furthermore, we are also of the view that a comparison between export price and 
                                                     
 
442 Republic of Korea Third Party Submission ("Korea Submission"), para. 3. 
443 Korea Submission, para. 3. 
444 Korea Submission, paras. 4-14. 
445 US First Written Submission, paras. 44-48. 
446 Japan First Written Submission, para.85.                   WT/DS322/R 
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 normal value that does not take into account the prices of all comparable export 
transactions – is not a 'fair comparison' between export price and normal value as 
required by Articles 2.4 and 2.4.2."447 
The Appellate Body's subsequent decisions in US-Corrosion-Resistant Steel Sunset Review  and in 
US - Softwood  Lumber V  reaffirmed that zeroing was inconsis tent with both Articles 2.4 and 2.4.2.448 
 5.61 Korea argues that, in the case at hand, as Japan correctly points out, zeroing is the United States' 
longstanding practice used for calculating dumping margins in all anti-dumping proceedings.  As such, by employing zeroing for calculating dumping margin s, the United States always and necessarily gives 
more weight to certain comparisons (those w ith a "positive" dumping margin) than to other 
comparisons (those with a "negative" dumping margin).   The calculation is, therefore, biased in favour 
of finding dumping and not "fair".  Consequently, zeroing that systemically and automatically disregards "negative" dumping margins cannot ensure  the "fair comparison" as required by Articles 2.4 
and 2.4.2. 
5.62 In light of the meaning of Articles 2.4 and 2.4.2 together with the past decisions of the 
Appellate Body, Korea submits, therefore, that such consistent use of zeroing by the United States in 
calculating the overall dumping margin is inconsis tent "as such" as well as "as applied" and is 
inconsistent with the "fair comparison" requirement under Articles 2.4 and 2.4.2. 
5.63 Korea also argues that zeroing must be pr ohibited under all three methods described in 
Article 2.4.2 for comparing export price and normal value.  The United States argues that based on the 
decision of the Appellate Body in US - Softwood Lumber V , where it has found that the weighted 
average-to-weighted average method incorporating zeroi ng is inconsistent with Article 2.4.2, zeroing is 
only prohibited when establishing the margins of dumping under that weighted average-to- weighted 
average method in Article 2.4.2.
449  Korea disagrees.  Korea argu es that the Appellate Body in 
US - Softwood Lumber V  had no option but to address only the issue of whether zeroing is prohibited 
under the weighted average-to-weighted average meth od merely because the issue of whether zeroing is 
also prohibited under other two methodologies (transaction-to-transaction and weighted 
average-to-transaction) was not raised.450  Thus, Korea believes that had that issue been asked to the 
Appellate Body, it would have reached the same c onclusion that zeroing is also prohibited under the 
other two methodologies. 
5.64 Korea submits that zeroing must be prohibited entirely and completely under all three methods 
described in Article 2.4.2.  When the inves tigating authorities choose to engage in multiple 
comparisons, they are required to combine the resu lts of those comparisons to determine the overall 
dumping margins for the product as a whole.451  The methodology used to combine the individual 
                                                      
447 Appellate Body Report, EC-Bed Linen , para, 55. 
448 Appellate Body Report, US-Corrosion-Resistant Steel Sunset Review , para. 134.  The Appellate Body 
found that the European Communities' use of this metho dology "inflated the results from the calculation of the 
margin of dumping".  Korea also emphasizes that a co mparison such as that und ertaken by the European 
Communities in that case is not a "fair comparison" be tween export price and normal value as required by 
Articles 2.4 and 2.4.2.  See also, US-Softwood Lumber V , para. 63.  Korea notes that, in US-Softwood Lumber V , 
the Appellate Body's most recent decision concerning zeroing, the Appellate Body based its analysis solely on the 
language of Article 2.4.2 – and its requirement that the calculation of dumping margins on an weighted 
average-to-weighted average basis must consid er "all comparable export transactions." 
449 US First Written Submission, para. 38. 
450 Appellate Body Report, US-Softwood Lumber  V, paras. 104-105. 
451 Korea notes that, in US-Softwood Lumber V , the Appellate Body held that "[i]t is clear that an 
investigating authority may undertake multiple averaging to establish margins of dumping for a product under 
investigation.  In our view, the results of the multiple  comparisons at the sub-group level are, however, not 
 WT/DS322/R          
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comparisons must include all of the individual comparisons.
452  This is true whether the multiple 
comparisons are made using any of all three methodologies.  However, if zeroing is used in combining the results of individual comparisons, as some i ndividual comparisons with a "negative" dumping 
margin are purposefully and systemically excluded, "all" of the individual comparisons cannot be taken 
into account in the calculation of dumping margin.  As a result, the "fair comparison" that is required 
under Articles 2.4 and 2.4.2 cannot be achieved. 
(b) "As Such" Claims with Respect to Article 11 of the AD Agreement :  Sunset Reviews
453 
5.65 Korea argues that the term "the investigation phase"  in Article 2.4.2 should not be interpreted to 
limit the applicability of Article 2.4.2 only to the "investigation phase".  The United States argues that 
because of the term "during the investigation phase" referred to in Article 2.4.2, the provisions of 
Article 2.4.2 are only applicable to the "inves tigation phrase", but not to subsequent reviews.454  In 
Korea's view, the term "investigation" can enco mpass not only the initial investigation but also 
subsequent proceedings (reviews).  Korea claims th at the Appellate Body's decisions clearly support 
Korea's position.  In US-Corrosion-Resistant Steel Sunset Review , the Appellate Body found that 
reviews under Article 11 "envision a process combin ing both investigatory and adjudicatory aspects"455, 
thereby suggesting that prohibition of zeroing imp licit in Article 2.4.2 also applied to dumping 
calculations in sunset reviews under Article 11.3456  The Appellate Body's decision in this case suggests 
that the term "investigation phase" is properly unders tood in the context of Article 2.4.2 to mean the 
portion of the proceeding (the initial investigation or subsequent reviews) in which the authority 
"investigates" whether dumping has occurred. 
5.66 Furthermore, Korea argues that its position with regard to the interpretation of the term in 
question is further supported by the general practice of the Members w ho consistently and equally apply 
the provisions in Article 2 not only to the initial investigation but also to subsequent review 
proceedings.  The instances where the term "inv estigation" appears in Article 2 are as follows: 
- weighted average per unit costs for the period of investigation (2.2.1) 
- the exporter or producer under investigation (2.2.1.1 and 2.2.2) 
- the exporter or producer in the course of the investigation (2.2.1.1.) 
- costs during the period of investigation (2.2.1.1) 
- other exporters or producers subject to investigation (2.2.2(ii)) 
- in an investigation, the authority shall allow e xporters at least 60 days to have adjusted their 
export prices (2.4.1.) 
- movement in exchange rates during the period of investigation (2.4.1) 
- the existence of margins of dumping dur ing the investigation phase. (2.4.2) 
 
                                                                                                                                                                     
"margins of dumping" within the meaning of Article 2. 4.2.  Rather, those results reflect only intermediate 
calculations made by an investigating authority in the context of establishing margins of dumping for the product 
under investigation.  Thus, it is only on the basis of  aggregating all these "int ermediate values" that an 
investigating authority can establish margins of dumpi ng for the product under consideration as a whole".  
US-Softwood Lumber , para. 97. 
452 Korea notes that the Appellate Body explained that "[ t]here is no textual basis under Article 2.4.2 that 
would justify taking into account the 'result' of only some multiple comparisons in the process of calculating 
margins of dumping, while disregarding other 'results'.  If an investigating authority has chosen to undertake 
multiple comparisons, the investigating authority necessar ily has to take into account the results of all those 
comparisons in order to establish margins of dumping for the product as a whole under Article 2.4.2". Appellate Body Report, US-Softwood Lumber , para. 98.  See also, paras. 99-100. 
453 Korea Submission, paras. 15-21. 
454 US First Written Submission, paras. 76. 
455 Appellate Body Report, US-Corrosion-Resistant Steel Sunset Review , para. 111. 
456 Ibid, para. 127.                   WT/DS322/R 
Page 93 
 
 
 
 5.67 Korea claims that it is a reasonable interpretation that the term "investigation" in these instances 
includes the subsequent investigati ons, such as the review investigations, as it is the general practice 
that the Members usually apply tho se provisions of Article 2 in the subsequent proceedings following 
the initial investigation.  There is, therefore, no reason to carve out Article 2.4.2 from applying 
provisions of Article 2 in all proceedings involving the calculation of a dumping margin. 
5.68 Furthermore, Korea suggests that apart from the prohibition of zeroing under all three methods 
described in Article 2.4.2, zeroing must also be prohibited in all anti-dumping proceedings, including 
both the initial investigation as well as subsequent reviews.  If the AD Agreement  is interpreted 
otherwise to mean that zeroing is only prohibited in the initial investigation, bu t is not in subsequent 
reviews, the result is fundamentally unfair and absurd.  For example, if an exporter maintains the same 
pricing behaviour both in the initial investigation and subsequent reviews, the dumping margin would 
be in most case higher in subsequent reviews where zeroing is employed.  Particularly, in the case of a retrospective duty assessment where zeroing is sy stemically and automatically employed in 
determining the final duty liability, the result in the above example will efficiently invalidate the effect 
of prohibition of zeroing in the initial investigation. 
5.69 Therefore, Korea submits that the term "i nvestigation phase" should be interpreted to 
encompass not only the initial investigation bu t also subsequent proceedings (reviews). 
E. M
EXICO  
1. "As such" Claims 
(a) Zeroing Procedures Challenged as Measures457 
5.70 Mexico argues that Japan used appropriate terms in its "as such" claims.  The "as such" claims 
in this case concern what Japan refers to as "standa rd model" and "simple zeroing procedures".  Japan 
terms these measures "administrative procedures"  within the meaning of Article 18.4 of the 
AD Agreement .  Such procedures obviously include the computer programmes used by the USDOC. 
5.71 Mexico argues that the United States would ap pear to believe that since the computer 
programmes are subject to the wishes of the official using them, they may not be challenged "as such", 
because "as such" they do not mandate any action.458  It should be pointed out that for the purposes of a 
dispute settlement proceeding, any act or omission attributable to a WTO Member may be deemed a 
"measure".  Moreover, "acts setting forth rules or  norms that are intended to have general and 
prospective application" are measur es subject to WTO dispute settlement.459  Normally, such acts or 
omissions are attributable to State bodies, including  those relating to the Execu tive.  In this case the 
computer programme or programmes are used by officials of the United States Executive and, 
according to the United States, are means by wh ich decision-makers implement their decisions.460  They 
come under what Japan terms "administrative proce dures", i.e. they are part of the measure under 
challenge.  The United States has not argued that US DOC officials are free to disregard information 
about the calculation of dumping margins that they obtain by using the computer programmes.  It would 
appear, on the contrary, that the United States fully assumes that officials using the programmes are in 
one way or another required to consider the resu lts they produce.  The programmes thus imply a 
compulsory guideline to be followe d by the United States authorities. 
                                                      
457 Mexico Third Party Submission ("Mexico Submission") paras. 5-6. 
458 US First Written Submission, paras. 35 and 36. 
459 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 187. 
460 US First Written Submission, para. 37. WT/DS322/R          
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(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations.
461 
5.72 Mexico argues that, although zeroing has been found in previous cases to be inconsistent with 
the WTO Agreements, the United States continues to  argue that its methodology is permissible in 
administrative reviews, and even seeks to discredit th e reasoning of the panel and the Appellate Body in 
US – Softwood Lumber V  which noted specifically that "Article  2.4.2 requires that the existence of 
margins of dumping has to be established … on the basis of a comparison of the 
weighted-average-normal-value with the weighted  average of prices of all comparable export 
transactions, that is, for all transactions involvi ng all types of the product under investigation".462  In the 
light of that finding, Mexico agrees with Japan that the United States'  zeroing procedures are 
inconsistent as such with its WTO obligations. 
5.73 Mexico argues that Articles 2.4 and 2.4.2 of the AD Agreement  prohibit zeroing.  Article 2.4 of 
the AD Agreement  lays down the basic principle that "[a] fair comparison shall be made between the 
export price and the normal value".  This implie s a separate obligation to determine the relevant 
dumping margin by means of a fair method of comparison that takes into account sales of the subject 
product in all export transactions, which necessaril y precludes zeroing "negative margins".  This 
obligation applies equally to original investigati ons and to reviews, as already confirmed by the 
Appellate Body in US – Corrosion-Resistant Steel Sunset Review :463 
"When investigating authorities use a zeroing methodology such as that examined in 
EC – Bed Linen to calculate a dumping margin , whether in an original investigation or 
otherwise , that methodology will tend to inflate the margins calculated.  Apart from 
inflating the margins, such a methodology c ould, in some instances, turn a negative 
margin of dumping into a positive margin of dumping.  As the Panel itself recognized in the present dispute, "zeroing … may lead to an affirmative determination that dumping exists where no dumping would have been established in the absence of zeroing".  Thus, the inherent bias in a zeroing methodology of this kind may distort not 
only the magnitude of a dumping margin, but also a finding of the very existence of 
dumping."  (e mphasis added and footnote omitted)  
5.74 Mexico also refers to Article 2.4.2 of the AD Agreement .  Thus, in determining the margin of 
dumping for a product under investigation, the inves tigating authority must include in the comparison 
the prices of all comparable export transactions, otherwise it would not be making a "fair comparison", in breach of Article 2.4 and 2.4.2 of the AD Agreement .  Mexico agrees with Japan that unless the results 
of all the comparisons are taken into account, the de termination of dumping and the margin of dumping 
cannot be applied to the product as a whole.  This would amount to non-fulfilment of obligations under 
Article 2.1 and 2.4.2 and under 2.4 as re gards the fair comparison obligations. 
(c) "As Such" Claims with Respect to Article 9 of the AD Agreement 
464 
5.75 Mexico argues that Article 2.4.2 applies to duty assessment procedures under Article 9.  
Besides advising against following panel and Appellate Body findings concerning Article 2.4.2 of the 
AD Agreement ,465 Mexico argues that the United States seeks to  confine the scope of those findings to 
original investigations, arguing that a reading of Ar ticle 2.4.2 shows that this provision does not apply 
to administrative reviews because it contains the re strictive phrase "during the investigation phase".  
                                                      
461 Mexico Submission, paras. 7-10. 
462 Panel Report, US – Softwood Lumber V  , para. 7.224. 
463 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135. 
464 Mexico Submission, paras. 11-13. 
465 US First Written Submission, paras. 89-95.                   WT/DS322/R 
Page 95 
 
 
 
 Mexico asserts that it is clear from Article 9 of the AD Agreement , however, that the obligations under 
Article 2 likewise apply when the amount of a duty is  determined in an administrative review, since 
Article 9.3 prescribes that "the amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2".  Article 9 thus refers to Article 2 as a whole and without restrictions.  It 
therefore requires investigating authorities to a pply Article 2.4.2 in determining the amount of 
anti-dumping duties in their reviews.  In Mexico's opinion, all the obligations set in Article 2 of the AD Agreement  are directly applicable in US administrative reviews, since the requirement in Article 9.3 
to determine the amount of an anti-dumping duty (if on e is imposed) at a level that does not exceed the 
margin of dumping established under Article 2 a pplies retrospectively as well as prospectively. 
F. N
EW ZEALAND  
1. "As such" Claims 
(a) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations466 
5.76 New Zealand argues that it is recognised that dumping is to be condemned if it causes or 
threatens material injury to an  established industry.  The purpose of the imposition of dumping duties 
therefore is to provide a remedy to redress the unfair pricing practices of private companies.  It is aimed at protecting against unfair competition.  The de tailed procedures for how Members are to go about 
determining whether dumping has taken place and whethe r a remedy may be applied were initially laid 
out in Article VI of GATT and have been progressive ly developed through negot iating rounds since that 
time.  The current text set out in the AD Agreement  is a product of the Uruguay Round negotiations – 
negotiations which were often fraught with the fi nal text being a "compromise" between opposing 
positions.  New Zealand believes that this negotiating history should be borne in mind by the Panel in 
assessing the validity of the Japanese arguments in this dispute. 
5.77 New Zealand argues that there appears to be a difference of view on what the negotiating 
history of the AD Agreement  shows.  For New Zealand it is clear that the AD Agreement  gave some 
latitude to Members in deciding which methodology to use to calculate dumping margins because the 
circumstances for different export products can diffe r.  Article 2.4.2 refers to three methodologies – 
weighted average to weighted average; transaction-to -transaction; and weighted average to transaction.  
Curbs were placed on the situations in which the third methodology might be used, but these were not 
applied to the other two methodologies.  These met hods are used to calculate whether dumping has 
occurred, in other words whether unf air trade has occurred as a result of pricing practices.  New Zealand 
has a systemic interest in ensuring that the right to use the transaction-to-transaction methodology is 
preserved as a fair way of making a comparison of the export price and the normal value of the product 
in the exporting country and establishing a dumping margin. 
5.78 New Zealand argues that by concentrating on the calculation of dumping margins under 
Article 2.4, Japan loses sight of the process as a whole.  The text of the AD Agreement  lays out the 
elements that must be met to enable a remedy to be applied to address dumping.  There must be a 
determination of whether dumping has occurred.  An analysis must be undertaken of whether there is 
material injury to the domestic industry.  If these cond itions are met, there must be a causal analysis of 
the effect of the dumped imports, and the effect of  other factors, including un-dumped imports, on the 
domestic industry.  If it is established that the dumpe d imports are causing material injury or threat 
thereof to the domestic industry, a remedy may be applied to dumped imports.  This process as a whole 
has relevance when one is assessing the validity of cer tain actions taken by a Member in applying a 
remedy to redress dumping.  It means that how dum ping margins are calculated has implications for the 
                                                     
 
466 New Zealand Oral Statement, paras. 2-7. WT/DS322/R          
Page 96  
 
determination of material injury, the causation analysis , and the remedy that may or may not be applied.  
In New Zealand's view, a proper interpretation of the AD Agreement  must take this holistic perspective. 
5.79 New Zealand expresses its concerns regarding the attempts of some Members to reinterpret the 
decisions of the Appellate Body and to give them wider application than is the case.  The 
Appellate Body in US – Softwood Lumber V  upheld the panel's finding that the United States acted 
inconsistently with Article 2.4.2 of the AD Agreement  in "determining the existence of margins of 
dumping on the basis of a methodology incorporating the practice of 'zeroing'".
467  The Appellate Body 
expressly confined the issue in that  case to the weighted average to weighted average methodology, not 
the transaction-to-transaction methodology.468  Furthermore, the Appellate  Body based its reasoning in 
part on the particular wording of Article 2.4.2 as it re lates to the weighted aver age to weighted average 
methodology.469  To make the same analogy in the case of  the transaction-to-transaction methodology 
would be to read words into the AD Agreement  which are not there.  New Zealand is of the view that 
attempts to misinterpret the decisions of the Appella te Body should be seen for what they are.  Such 
misinterpretation will not assist in the resolution of this dispute. 
5.80 In conclusion, New Zealand believes that the negotiating history on the particular matters 
before the Panel is relevant to the interpretation of the AD Agreement  on these matters.  New Zealand 
also submits that the Panel should consider carefully the text of the AD Agreement  as it relates to the 
different methodologies used to calculate dumping margins and view the calculation of dumping 
margins as but one element in the process which allo ws the legitimate application of dumping remedies.  
In New Zealand's view, the conclusions in respect of one methodology are not necessarily the same for 
another methodology. 
G. NORWAY  
1. "As such" Claims 
(a) Zeroing Procedures Challenged as Measures470 
5.81 Norway argues that the referen ce to measures, and types of measures, that can be challenged 
before a WTO panel in a case concerning the AD Agreement  can be found in many provisions. 
5.82 Norway points out that the scope of Article 3.3 of the DSU is very broad.  It follows from the 
interpretation of this Article  by the Appellate Body in US-Corrosion-Resistant Steel Sunset Review  that 
in principle any act or omission attributable to a WTO Member can be assumed to be a measure by that 
Member for the purposes of dispute settlement proceedi ngs.  Norway argues that the wide reach of the 
notion of "measure" is also evident from Article 18.4 of the AD Agreement , which refers not only to 
laws or regulations, but also to "administrative procedures" as measures subject to the disciplines of the 
AD Agreement .  Indeed, Article 17.3 of the AD Agreement , which concerns disputes relating to the 
agreement, only makes reference to the "effects" of  any action by another Member, and not to specific 
types of measures. 
5.83 Norway states that the Appellate Body has expr essed itself on the reach of the notion "measure" 
on several occasions with specific relevance to the AD Agreement .  In US-Corrosion-Resistant Steel 
Sunset Review  the Appellate Body held that: 
                                                      
467 Appellate Body Report, US – Softwood Lumber V , para. 117. 
468 Ibid, Appellate Body Report, US – Softwood Lumber V , para. 104. 
469 Appellate Body Report, US – Softwood Lumber V , paras. 86-90.  See also Appellate Body Report, EC 
– Bed Linen , para. 55. 
470 Norway Third Party Statement ("No rway Statement"), paras. 10-31.                   WT/DS322/R 
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 "In addition, in GATT and WTO dispute settle ment practice, panels have frequently 
examined measures consisting not only of particular acts applied only to a specific situation, but also of acts setting forth rules or norms that are inte nded to have general 
and prospective application.  In other words, instruments of a Member containing rules 
or norms could constitute a 'measure', irresp ective of how or whether those rules or 
norms are applied in a particular instance .  This is so because 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.  This objective would be frustrated if instruments setting out rules or norms 
inconsistent with a Member's obligations c ould not be brought before a panel once they 
have been adopted and irrespective of any pa rticular instance of application of such 
rules or norms.  It would also lead to a multiplicity of litigation if instruments embodying rules or norms could not be challenged as such, but only in the instances of their application.  Thus, allowing claims against measures, as such, serves the purpose 
of preventing future disputes by allowing the root of WTO-inconsistent behaviour to be 
eliminated."
471 (emphasis added ) 
5.84 Norway argues that the Appellate Body stated in the same ruling that there is no threshold 
requirement in Article 17.3 of the AD Agreement  that the measure in question be of a certain type: 
"The provisions of the AD Agreement  setting forth a legal basis for matters to be 
referred to consultations and t hus to dispute settlement, are also cast broadly.  Article 
17.3 establishes the principle that when a complaining Member 'considers' that its 
benefits are being nullified or impaired 'by another Member or Members', it may 
request consultations.  This  language underlines that a measure attributable to a 
Member may be submitted to dispute settle ment provided only that another Member 
has taken the view, in good faith, that the measure nullifies or impairs benefits accruing 
to it under the AD Agreement .  There is no threshold requirement, in Article 17.3, that 
the measure in question be of a certain type ."472 (emphasis added ) 
5.85 Norway explains that the Appellate Body also held that the provisions of Article 18.4 of the 
AD Agreement  have a certain relevance in relation to th e question of what type of measure may be 
submitted to dispute settlement under the agreement.  The phrase "laws, regulations and administrative 
procedures" has been interpreted very broadly to en compass all generally applicable rules, norms and 
standards adopted by Members in connection with anti-dumping proceedings: 
"The provisions of Article 18.4 of the AD Agreement  are also relevant to the question 
of the type of measure that may, as such, be submitted to dispute settlement under that 
Agreement. Article 18.4 contains an exp licit obligation for Members to 'take all 
necessary steps, of a general or particular  character' to ensure  that their 'laws, 
regulations and administrative procedures' ar e in conformity with the obligations set 
forth in the AD Agreement .  Taken as a whole, the phrase 'laws, regulations and 
administrative procedures' encompasses the en tire body of generally applicable rules, 
norms and standards adopted by Members in connection with the conduct of 
anti-dumping proceedings.   The scope of each element in this phrase must be 
determined for the purposes of WTO law and not  simply by reference to the label given 
to various instruments under the domestic law of each WTO Member.  This 
determination must be based on the content and substance of the instrument, and not 
merely on its form or nomenclature.  Otherwi se, the obligations set forth in Article 18.4 
                                                      
471 Appellate Body Report, US-Corrosion Resistant Steel Sunset Review , para. 82. 
472 Ibid, para. 86. WT/DS322/R          
Page 98  
 
would vary from Member to Member depe nding on each Member's domestic law and 
practice ."473 (emphasis added ) 
In the same ruling the Appellate Body concluded: 
 
"This analysis leads us to conclude that ther e is no basis, either in the practice of GATT 
and the WTO generally or in the provisions of the AD Agreement , for finding that only 
certain types of measures can as such be challenged in dispute settlement procedures 
under the AD Agreement .  Hence, we see no reason for concluding that, in principle, 
non-mandatory measures cannot be challenged 'as such'."474 
 
5.86 Norway argues that it is quite clear from the Appellate Body's statement that there is no 
limitation on the type of measure that can "as such" be the subject of dispute settlement under the DSU  
or the AD Agreement .  In principle even non-mandatory measure s can be challenged "as such".  Because 
in principle any type of measure can "as such" be challenged in dispute settle ment procedures under the 
AD Agreement , Norway argues that the question becomes whether the anti-dumping margin computer 
programme must be considered to be a "measure" w ithin the WTO and for the purpose of anti-dumping 
proceedings.  The ordinary meaning of the word "m easure" is an action taken to achieve a purpose.  
There can be no doubt that the anti-dumping margin programme containing the standard zeroing procedures qualifies as an action taken to achieve a purpose – the purpose of overstating the margin of 
dumping.  The only article in the AD Agreement  that mentions different types of measures is 
Article 18.4, which uses the term "laws, regulations and administrative procedures". 
5.87 Norway argues that the phrase "laws, regulati ons and administrative procedures" has been 
interpreted by the Appellate Body in US-Carbon Steel  to encompass the entire body of generally 
applicable rules, norms and standards adopted by Members in connection with the conduct of 
anti-dumping proceedings.
475  Norway is of the view that the anti-dumping margin programme must be 
considered a norm or standard adopted by the United States in connection with the conduct of 
anti-dumping proceedings.  In the same ruling the Appella te Body stated that the definition of the scope 
of each element in the phrase must be based on the content and substance of the instrument, and not 
merely on its form or nomenclature.476 
5.88 Norway argues that, therefore, the fact that the zeroing procedures in the anti-dumping margin 
programme are abstract; that they are not published in the Federal Register; that they do not bear the 
title "law" or "regulation"; that they are not adopted  by the US Congress but by the USDOC;  that the 
Department is entitled to change or  withdraw them for the purposes of future determinations; and that 
they are not relevant in US courts, cannot be deci sive for whether these procedures are a "measure" for 
the purpose of anti-dumping proceedings. 
5.89 Norway argues that it must be quite clear that the anti-dumping margin computer program is a 
norm/standard adopted by Members in connection with the conduct of an ti-dumping proceedings, and 
the content and substance of this instrument make  this even clearer.  Norway believes that the 
anti-dumping margin programme and the procedures it contains may be a set of normative rules that apply mechanistically and automatically to a given set of facts without further human intervention.  There is no room for administrative or judicial in terpretation.  The effect of the standard zeroing 
procedures in future cases is utterly predictable.  The standard zeroing procedures in the anti-dumping 
margin programme provide certainty and security (at least for US industry) for the conduct of future 
trade.  They mandate zeroing in all cases, and continue  to do so until changed.  Norway has noted the 
                                                     
 
473 Appellate Body Report, US-Corrosion Resistant Steel Sunset Review, para. 87. 
474 Appellate Body Report, US-Corrosion Resistant Steel Sunset Review, para. 88. 
475 Ibid, para. 87. 
476 Ibid, para. 87.                   WT/DS322/R 
Page 99 
 
 
 
 arguments presented by the United States to the effect  that the Assistant Secretary of Commerce for 
Import Administration may change the Anti-dumping Manual, and the practices set out therein, "without notice", and that the anti-dumping margin  programme is "discretionary" as opposed to 
"mandatory".  This argument is false, however, as all types of measures are su bject to changes.  The 
important issue here is that they are prescriptive for a certain WTO-inconsistent result until they are 
changed and for as long as they remain unchanged. 
5.90 Norway argues that, allowing the anti-dumping ma rgin programme to be challenged "as such" 
is thus the only way to eliminate the root of the WT O-inconsistent conduct.  In this regards, Norway 
refers to the reasoning of the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews
477 
when it determined that the Unite d States Sunset Policy Bulletin was a measure challengeable under the 
WTO.  For the above reasons, the anti-dumping ma rgin programme containing the standard zeroing 
procedures is a "challengeable" measure under WTO law "as such". 
(b) "As Such" Claims under Article 2 of the AD Agreement  with respect to Original 
Investigations478 
5.91 While Norway agrees with Japan in its line of argumentation with respect  to the inconsistency 
of zeroing with Article 2 of the AD Agreement  –that the margin of dumping must be determined for the 
product as a whole and that a dumping determination must  be based on a fair comparison, it is Norway's 
view that it has already been established by the Appellate Body in a number of cases479 that the practice 
of zeroing is inconsistent with the AD Agreement .  The Appellate Body has clearly stated that there is 
only one method of calculating dumping margins in the AD Agreement  and that is in accordance with 
the provisions of Article 2.4 and 2.4.2 of the Agreement. 
(c) "As Such" Claims with Respect to Articles 9 and 11 of the AD Agreement480 
5.92 Norway states that one of the questions in this case is whether Articles 2.1, 2.4 and 2.4.2, of the 
AD Agreement  apply not only to original investigations but, also to reviews.  The United States argues 
that this is not the case, essentially on the basis of two arguments:  (1) that Article 2.4.2 is the provision 
that eventually prohibits zeroing, and (2) that Article  2.4.2 is not applicable to "retrospective assessment 
reviews" or "new shipper reviews", "changed circum stances reviews" and "sunset reviews" as they are 
not "investigations".  Norway states that these argum ents are without merit.  The Appellate Body has 
clearly stated that there is only one met hod of calculating dumping margins in the AD Agreement  and 
that is accordance with the provisions of Article 2.4 of the Agreement – which includes Article 2.4.2.  
This was most recently stated in the US-Corrosion- Resistant Steel Sunset Review in connection with 
the interpretation of Article 11.3 of the Agreement concerning "sunset reviews": 
"However, should investigating authorities choose to rely upon dumping margins in 
making their likelihood determination, the calculation of these margins must conform to the disciplines of Article 2.4. We see no other provision in the AD Agreement  
according to which Members may calculate dumping margins.  In the CRS sunset 
review, USDOC chose to base its affirma tive likelihood determination on positive 
dumping margins that had been previously cal culated in two particular administrative 
reviews.  If these margins were legally fl awed because they were calculated in a 
                                                      
477 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 187. 
478 Norway Statement, para. 7. 
479 See, e.g., Appellate Body Report, EC – Bed linen , para. 55; Appellate Body Report, US – Corrosion 
Resistant Steel Sunset Review , paras. 127-135; Appellate Body Report, US – Softwood Lumber V , para. 101. 
480 Norway Statement, paras. 32-44. WT/DS322/R          
Page 100  
 
manner inconsistent with Article 2.4, this could give rise to an inconsistency not only 
with Article 2.4, but also with Article 11.3 of the AD Agreement ."481  (emphasis added ); 
"It follows that we disagree with the Pane l's view that the disciplines in Article 2 
regarding the calculation of dumping margins do not apply to the likelihood determination to be made in a sunset re view under Article 11.3.  Accordingly, we 
reverse the Panel's consequen tial finding, in paragraph 8(1 )(d)(iii) of the Panel Report, 
that the US did not act inconsistently with Article 2.4 of the AD Agreement  in the CRS 
sunset review by relying on dumping margins alleged by Japan to have been calculated 
in a manner inconsistent with Article 2.4. "482  (emphasis added ); 
and 
"As explained above, if a likelihood dete rmination is based on a dumping margin 
calculated using a methodology inconsistent with  Article 2.4, then this defect taints the 
likelihood determination too.  Thus, th e consistency with Article 2.4 of the 
methodology that USDOC used to calculate the dumping margins in the administrative reviews bears on the consistency with  Article 11.3 of USDOCs likelihood 
determination in the CRS sunset review.  In the CRS sunset review, USDOC based its 
determination that "dumping is likely to con tinue if the [CRS] order were revoked" on 
the "existence of dumping margins" calculated in the administrative reviews.  If these 
margins were indeed calculated using a methodology that is inconsistent with 
Article 2.4 – an issue that we examine be low – then USDOCs likelihood determination 
could not constitute a proper foundation fo r the continuation of anti-dumping duties 
under Article 11.3 ."483  (emphasis added ) 
5.93 Norway points out that the Appellate Body in US-Corrosion-Resistant Steel Sunset Review  
went on to recall its findings in the EC-Bed Linen  case, and stated that: 
"When investigating authorities use a zeroing methodology such as that examined in 
EC-Bed Linen to calculate a dumping margin, whether in an original investigation or 
otherwise , that methodology will tend to inflate the margins calculated.  Apart from 
inflating the margins, such a methodology c ould, in some instances, turn a negative 
margin of dumping into a positive margin of dumping.  As the Panel itself recognised in the present dispute, 'zeroing … may lead  to an affirmative determination that 
dumping exists where no dumping would have been established in the absence of zeroing'.  Thus, the inherent bias in a zeroing methodology of this kind may distort not 
only the magnitude of a dumping margin, but also a finding of the very existence of 
dumping."
484  (emphasis added ) 
Norway argues that the word "o therwise" makes it particularly clear that the findings of the 
Appellate Body in this case are just as valid whenever a margin of dumping is calculated, and not just in 
original investigations. 
 
5.94 Norway argues that, with regard to retrospec tive assessment reviews, this is furthermore, 
abundantly clear from the chapeau to paragraph 3 of Article 9, which states that "[t]he amount of the anti-dumping duty shall not exceed the margin of dump ing as established under Article 2".  This creates 
                                                     
 
481 Appellate Body Report, US-Corrosion Resistant Steel Sunset Review , para. 127. 
482 Ibid, para. 128. 
483 Ibid, para. 130. 
484 Ibid, para. 135.                   WT/DS322/R 
Page 101 
 
 
 
 a clear and unambiguous link between the dumping duty imposed, reassessed or collected and the disciplines in Article 2 governing the calculation of dumping margins. 
5.95 Norway states that the United States tries to escape the reach of this chapeau by arguing that 
Article 2.4 applies, but not sub-paragraph 4.2, due to the existence of the word "investigation" in 
Article 2.4.2, and by arguing that the disciplines on methodologies and the prohibition against zeroing 
are only based on this sub-paragraph.  These arguments are also flawed, claims Norway.  First, there is 
nothing in Article 9.3 that bars the application of Article 2.4.2.  To the contrary, there is a clear reference to calculations of dumping margins, an i ssue squarely within Article 2.4.2.  Second, the 
Appellate Body has interpreted the prohibition of zeroing based not on Article 2.4.2 as such but on the 
requirement of a "fair comparison" in Article 2.4.  No rway refers in this regard to a statement by the 
Appellate Body in EC-Bed Linen .
485  Third, because what the United States is doing in its retrospective 
assessment reviews, new shipper reviews, changed ci rcumstances reviews and sunset reviews is similar 
to what it does in original investigations.  For all pr actical purposes it is a new investigation.  If the reach 
of Article 2.4.2 is excluded from all but original in vestigations there would be no disciplines left to 
ensure fairly computed dumping margins.  This would be contrary not only to the "fair comparison" 
requirement, but also to the explicit statement by the Appellate Body in US-Corrosion-Resistant Steel 
Sunset Review486 referred to above. 
5.96 In conclusion, Norway argues that it is clear fro m the above that the prohibition on zeroing also 
applies to retrospective assessment reviews, new sh ipper reviews, changed circumstances reviews and 
sunset reviews as they are not "investigations". 
H. THAILAND  
1. "As such" Claims 
(a) Zeroing Procedures Challenged as Measures487 
5.97 Thailand agrees with Japan that the United St ates' zeroing methodology constitutes a "measure" 
subject to WTO dispute settlement.  Thailand ge nerally agrees with Japan's description of the 
United States' practice of zeroing.  However, Thaila nd does not consider that the distinction made by 
Japan between so-called "model" ze roing and "simple zeroing" has any practical meaning or relevance 
to the legal issues in this case.  These terms are labe ls created by Japan itself.  In practice, the zeroing 
methodology is exactly the same regardless of whet her the initial comparisons between export price and 
normal value are done on a transaction-to-transaction,  average-to-average, or transaction-to-average 
basis. 
5.98 Thailand recalls that the Appellate Body has stat ed that "in principle, any act or omission 
attributable to a WTO Member can be a measure of  that Member for purposes of dispute settlement 
proceedings".488  The Appellate Body has also explained that Article 18.4 of the AD Agreement  is 
relevant to the determination of what measur es may be subject to dispute settlement.  In US – Oil 
Country Tubular Goods Sunset Reviews , the Appellate Body found that the sunset policy bulletin at 
issue in that dispute was a measure with "norma tive value, as it provides administrative guidance and 
creates expectations among the public and among priv ate actors".  The Appellate Body also emphasised 
                                                      
485 Appellate Body Report, EC-Bed Linen , para. 55. 
486 Appellate Body Report, US-Corrosion Resistant Steel Sunset Review , para. 135. 
487 Thailand Executive Summary of the Third Party Submission ("Thailand Exec. Summary"), paras. 3, 
6-11. 
488 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 81. WT/DS322/R          
Page 102  
 
that the sunset policy bulletin constituted a "me asure" because it was "intended to have general 
application, as it is to apply to all the su nset reviews conducted in the United States". 
5.99 Thailand argues that these factors apply equally to the zeroing methodology.  This measure is 
not laid out either in the United States' anti-dumpi ng laws or the administra tive regulations of the 
USDOC.  However, the manner in which an inves tigating authority promulgates and implements 
normative, generally applicable administrative pro cedures cannot be dispositive of the classification of 
those procedures for the purposes of the AD Agreement .  In this case, Japan h as shown that the zeroing 
methodology – reflected in the same computer pr ogramming language – has been applied in every 
determination by the United States since at least  1993.  The USDOC has (successfully) defended the 
methodology before the US courts and the United St ates has apparently not departed from the practice 
in any anti-dumping determination.  The USDOC t hus apparently treats the zeroing methodology as 
binding.  Thus, the zeroing methodology has, like the sunset policy bulletin at issue in US – Oil Country 
Tubular Goods Sunset Reviews , normative value, in that it has both general and prospective application.  
In these circumstances, the zeroing methodology is cl early one of the "generally applicable rules, 
norms, and standards adopted by [the United States ] in connection with the conduct of anti-dumping 
proceedings" and therefore a "measure " subject to WTO dispute settlement. 
5.100  Thailand states that the zeroing methodology has been applied, explained, and defended in 
innumerable US anti-dumping determina tions, including all of those listed by Japan in its request for the 
establishment of a panel.  Thus, the computer progr amming language is one aspect of an "administrative 
procedure" within the meaning of Article 18.4 of the AD Agreement  that has been adopted by the 
United States with normative  and general application. 
5.101  Thailand argues that the fact that the same pr ogramming language is used in every computer 
programme to determine dumping margins by the United States is sufficient to establish that it is one of 
the United States' "laws, regulations and administra tive procedures" within the meaning of Article 18.4 
of the AD Agreement  and a measure that may be challenged as such in dispute settlement proceedings.  
Also, the fact that other aspects of the computer  programmes change from case to case, while the 
Standard Zeroing Line does not, supports Japan 's contention that the zeroing methodology has 
normative and general application.  In addition, the United States has failed to provide any evidence to 
suggest that the zeroing methodology is not general or  prospective in its application – that it is not 
applied or even that it applies differently in certain instances. 
5.102  Thailand claims that the United States has not  provided any evidence that under the zeroing 
methodology there is any discretion or flexibility as to how or whether to use the methodology in the 
determination of dumping margins.  In these circumst ances, therefore, there is no need to perform the 
additional qualitative analysis of individual instances of the applica tion of the challenged measure of 
the kind described by the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews .  
Assuming, arguendo , however, that a qualitative analysis is  required, Japan has provided sufficient 
evidence regarding the specific anti-dumping determina tions it challenges on an "as applied" basis to 
enable the Panel to conduct that analysis. 
(b) "As Such" Claims under Article 2 of the 
AD Agreement  with respect to Original 
Investigations489 
5.103  Thailand argues that the zeroing methodology at issue is inconsistent with Articles 2.4 and 
2.4.2 of the AD Agreement .  The requirement of a fair comparison in Article 2.4 of the AD Agreement  
imposes a fundamental obligation on investigat ing authority to avoid biased and inaccurate 
determinations of dumping margins.   The Appellate Body has confirmed that this obligation "informs 
                                                      
489 Thailand Exec. Summary, paras. 12-19.                   WT/DS322/R 
Page 103 
 
 
 
 all of Article 2".490  This includes Article 2.4.2, which, in  any event, specifically incorporates by 
reference the fair comparison requirement of Article  2.4 ("subject to the provisions governing fair 
comparison in paragraph 4 ..."). 
5.104  Moreover, Thailand claims, the Appellate Body h as also stated that "the inherent bias in a 
zeroing methodology of this kind may distort not only the magnitude of a dumping margin, but also a 
finding of the very existence of dumping".491  Systematically excluding non-dumped transactions from 
the calculation of overall dumping margins under the zeroing methodology is the equivalent of treating 
tall people as being of average height in calculating th e average height of a larger group.  In both cases, 
the result is distorted and inaccurate.  Article 2.4 of the AD Agreement  prohibits the use of such an 
inherently distorted methodology to make a fair comparison between export price and normal value. 
5.105  Thailand argues that the United States attempts to portray Japan as seeking an "offset" to a 
previously-calculated dumping margin to tilt the co mparison in favour of the Japanese exporter.  
However, at one point in the calculation of dumping margins – and it does not matter when this occurs – 
the United States adjusts at least some of the prices fo r the export transactions at issue so that the export 
price is no longer greater than the normal value for those transactions.  Rather than Japan seeking an 
adjustment, therefore, the US practice constitutes an adjustment that is  neither permitted under 
Article 2.4 of the AD Agreement  nor, by any definition of the term, can be considered fair. 
5.106  Thailand expresses that Articles VI and VI:2  of the GATT 1994, and Article 2.1 of the 
AD Agreement  all refer to dumping and the determination of dumping margins in terms of a "product" 
rather than selected transactions in that product.  Thus, neither Article VI of the GATT 1994 nor the 
AD Agreement  authorises WTO Members to unfairly influence the calculation of dumping for a product 
by not fully accounting for certain export transacti ons in that product simply because they may exceed 
normal value. 
5.107  In effect, the United States argues that aspects of the determination of dumping margins are not 
subject to the rules of Article 2.  However, Th ailand argues that the United States has not explained 
what constraints, if any, apply to those aspects of the determination, or how its position is consistent 
with the requirements of Articles 1 and 18.1 of the AD Agreement . 
5.108  Thailand also points out that the Appellate Body found in US – Softwood Lumber V  that the 
reference to "margins of dumping" in Article 2.4. 2 refers to the calculation of overall dumping margins 
for the product as a whole, rather than transaction-  or model-specific comparisons.  The Appellate 
Body's finding did not differentiate between any typ es of zeroing or otherwise suggest that its finding 
that zeroing was not permissible was dependent on which methodology the United States used under 
Article 2.4.2 to make multiple comparisons at the sub-group level. 
5.109  Thailand asserts that the targeted dumping provisi on of Article 2.4.2 does not permit zeroing.  
A failure to use the zeroing methodology would not render this provision inutile by cancelling out the 
differences between the different comparison methodol ogies.  Thailand claims that the United States 
has not explained how it makes any of the necessary fi ndings described in this provision in using the 
zeroing methodology.  The fair comparison requirement applies to all of Article 2.4.2, including the 
targeted dumping provision.  The text of the targeted dumping provision does not authorise an additional zeroing adjustment after the selection of  the appropriate comparis on methodology and before 
the calculation of the overall dumping margin for the product under consideration.  Thus, Article 2.4.2 
contains no textual support for the United States'  argument that the zeroing methodology is essential to 
the operation of that provision. 
                                                     
 
490 Appellate Body Report, EC – Bed Linen , para. 59. 
491 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 135. WT/DS322/R          
Page 104  
 
(c) "As Such" Claims with respect to Articles 1, 2, 9 and 11 of the AD Agreement  and Article VI of 
the GATT 1994
492 
5.110  Thailand submits that margins of dumping must be  determined in accordance with Article 2 in 
all circumstances, including both original investigati ons and subsequent review s under Article 9.  This 
is consistent with both the definitions  of terms of Articles 1 and 2 of the AD Agreement  and Article VI 
of the GATT 1994, as discussed above.  It is also cons istent with the provisions of Article 9.3, which 
expressly refers to "the margin of  dumping established under Article 2. 
5.111  Thailand disagrees, therefore, with the United States' argument that Article 9 reviews are 
concerned with fundamentally different matters than original investigations.493  The margins calculated 
by the United States in its Article 9 reviews may affe ct not just the amount of duties an exporter must 
ultimately pay (although that itself is an important consideration that requires close adherence to the 
provisions of the AD Agreement ) but also decisions whether to terminate anti-dumping measures in 
reviews under Article 11.2, changed circumstance re views, or under Article 11.3, sunset reviews. 
VI. INTERIM REVIEW 
A. INTRODUCTION  
6.1 The Panel submitted its interim report to the pa rties on 8 March 2006.  On 22 March 2006, both 
parties requested that the Panel revise precise aspects of the interim report.  Neither party requested an 
interim meeting.  On 5 April 2006, both parti es submitted comments on the other party's request for 
interim review.  The Panel has carefully considered the arguments made by the parties in their request 
for interim review and addresses them in paragraph 6.65 et seq. , infra , in accordance with Article 15.3 
of the DSU.494  
6.2 On 20 April 2006, the Panel informed the parties that it had completed its review of the 
comments made by the parties during the interim revi ew process and was now in a position to issue its 
final report to the parties.  The Panel also indicated  that it was aware of the findings of the Appellate 
Body in its report issued on 18 April 2006 in US – Zeroing (EC)  and that it recognized that these 
findings had a direct bearing on the contents of the interim report.  The Panel therefore requested the 
parties to convey their views on whether the Panel should proceed to reconsider the findings in the 
interim report in light of the Appellate Body Report in US – Zeroing (EC)  and, if so, how the Panel 
should adjust its timetable and working procedures in or der to provide the parties with an opportunity to 
express views on any relevant issues of law addressed in  that Appellate Body Report. In their responses 
to this communication of the Panel both parties indica ted that they wished to have an opportunity to 
submit comments on the Appellate Body Report in US – Zeroing (EC).   In light of these responses, the 
Panel on 26 April 2006 invited the parties to subm it their written comments on any relevant issues of 
law addressed in the Appellate Body Report in US – Zeroing (EC)  by 10 May 2006 and to submit 
comments on each other's comments by 17 May 2006.  Following a request by the United States on 17 May 2006, the Panel decided to hold a meeting with the parties, which took place on 12 June 2006. 
6.3 The comments by the parties on the Appellate Body Report in US – Zeroing (EC) are 
summarized in paragraph 6.4 et seq. , infra . 
                                                     
 
492 Thailand Exec. Summary, paras. 20-21. 
493 US First Written Submission, paras. 79-80. 
494 Section VI of this report, entitle d "Interim Review" therefore forms part of the final findings of the 
panel report, in accordance with Article 15.3 of the DSU.                    WT/DS322/R 
Page 105 
 
 
 
 B. COMMENTS OF THE PARTIES ON ANY RELEVANT ISSUES OF LAW ADDRESSED IN THE APPELLATE 
BODY REPORT IN US - ZEROING (EC)  
1. Japan 
(a) Whether the Panel should follow the Appellate  Body's findings in US – Zeroing (EC) 495 
6.4 Although Japan recognizes that the Panel in th e present dispute is not bound to follow the 
Appellate Body’s ruling in US – Zeroing (EC) , it argues that the close simi larity between the measures 
in the two disputes means that it would be appropriate for the Panel to do so.  Japan asserts that it is the 
Panel's task, pursuant to Articles 3.2 and 3.3 of the DSU , to facilitate the prompt settlement of this 
dispute in a manner that promotes the security and predictability of the trading system.  These ends 
would not be served by acceding to a request from one party to the dispute in US – Zeroing (EC) to 
disregard the Appellate Body’s findi ngs unfavourable to it on the ground that that party considers the 
findings “not persuasive”496. 
6.5 Japan contends that the Appellate Body Report in US – Zeroing (EC)  is significant for this 
dispute in two broad ways.  First , the Appellate Body upheld the panel’s finding that the “zeroing 
methodology” used by the United States in W-to-W co mparisons in original investigations constitutes a 
rule of general and prospective application th at can be challenged “as such” in WTO dispute 
settlement.497  Second , the Appellate Body held that the United States’ application of the zeroing 
methodology in W-to-T comparisons in certain periodic reviews498 is inconsistent with Article 9.3 of 
the AD Agreement  and Article VI:2 of the GATT 1994 becau se “dumping” and “margins of dumping” 
must be determined for the “product” as a whol e, not individual transactions, and all multiple 
comparison results must, therefore, be taken fully into account in the dumping determination.  Japan 
argues that these rulings have several impor tant consequences for the present dispute. 
(b) the zeroing procedures maintained by the Un ited States for use in W-to-W and T-to-T 
comparisons in original investigations are as such  inconsistent with Articles 2.1 and 2.4.2 of the 
AD Agreement  and Article VI:1 of the GATT 1994;  the anti-dumping investigation of imports 
of certain cut-to-length carbon quality steel produc ts from Japan is inconsistent with the same 
provisions 
(i) Weighted Average-to-Weighted Aver age Comparisons - Model Zeroing499  
6.6 Japan comments that the Appellate Body in US – Zeroing (EC)  upheld the panel’s finding that 
the “zeroing methodology” used by the United States in weighted average-to-weighted 
average("W-to-W") comparisons in original investigat ions constitutes a rule of  general and prospective 
application that can be challenged “as such” in WTO dispute settlement.500  The Appellate Body held 
that to establish the existence of a rule or nor m that can be challenged as such in WTO dispute 
settlement, the complainant must prove: (1) that the rule or norm is attributable to the responding 
                                                      
495 Japan Comments on the relevant issues of law addressed in the Appellate Body Report in 
U  – Zeroing (EC) (WT/DS294/AB/R) ("Japan Comments"), paras. 2-3; Japan Response to US Comments on the 
Appellate Body Report in US – Zeroing (EC)  ("Japan Response to US Comments"), para. 17.  
496 US Comments on the relevant issues of law addressed in the Appellate Body Report in US – Zeroing 
(EC) (WT/DS294/AB/R)("US Comments"), para. 3. 
497 Appellate Body Report, US – Zeroing (EC) , paras. 204 and 205.  Japan refers to the “panel” in US – 
Zeroing (EC) , as distinct from the “Panel” in this dispute. 
498 In US – Zeroing (EC) , the Appellate Body refers to reviews conducted pursuant to Article 9.3 of the 
AD Agreement  as “administrative” or “duty assessment reviews”.  The Panel refers to these as “periodic reviews”.  
499 Japan Comments, paras 4-9, 19-20. 
500 Appellate Body Report, US – Zeroing (EC) , paras. 204 and 205. WT/DS322/R          
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Member; (2) the precise content of the rule; and (3) that the rule or norm has general and prospective 
application.
501  The Appellate Body agreed with the parties and third participants that it was not 
necessary for the alleged rule or norm to be “e xpressed in the form of a written instrument”.502  The 
Appellate Body also held that the evidence substant iating the existence of such a rule or norm can 
include “proof of the systematic applic ation of the challenged ‘rule or norm’”.503  
6.7 According to Japan, the Appellate Body's ruling indicates that the Panel in the present dispute 
correctly found in its interim findings that the model and simple “zeroing procedures” are “as such” measures, particularly because the evidence relied on by the Panel in this dispute is more extensive than 
the evidence of record in US – Zeroing (EC) .  In this respect, Japan contends that all the categories of 
evidence which the Appellate Body considered important in US – Zeroing (EC)  are also before the 
Panel in the present dispute and, in addition, the Pane l in the present dispute has statements available to 
it from United States’ government agencies and c ourts that were not in the record of US – Zeroing 
(EC) .
504  In these circumstances, Japan believes that the Panel in this dispute should affirm its interim 
findings on this issue505, relying on the categories of evidence to which the Appellate Body referred. 
6.8 On the basis of the Appellate Body’s reasoning in US – Zeroing (EC) , Japan sees no reason for 
the Panel to reconsider its conclusion that model ze roing is inconsistent w ith Article 2.4.2 of the 
AD Agreement .  Additionally, because the A ppellate Body emphasized in US – Zeroing (EC)  that the 
prohibition against zeroing stems from Article 2.1, as well as Article 2.4.2506, Japan submits that the 
Panel should find that the maintenance of model zeroing in original investigations is inconsistent with 
both Articles 2.1 and 2.4.2.  Furthermore, because the definition of “dumping” derives from Article VI:1 of the GATT 1994 as well as Article 2.1, the Panel should find that the United States acts 
inconsistently with Articles 2.1 and 2.4.2 of the AD Agreement , and Article VI:1 of the GATT 1994, by 
maintaining model zeroing procedures in the context of or iginal investigations.  It follows that the Panel 
should also find that the application of these pr ocedures renders the anti-dumping investigation of 
imports of certain cut-to-length carbon quality steel products from Japan inconsistent with the same 
provisions. 
(ii) Transaction-to-Transaction Com parisons - Simple Zeroing
507 
6.9 According to Japan, although the Appellate Body in US – Zeroing (EC)  was not asked to rule 
upon whether zeroing is prohibited in original in vestigations when using a T-to-T comparison 
methodology, the reasoning underlying  its findings dictates that the maintenance of simple zeroing 
procedures in the context of T-to-T comparisons in or iginal investigations is inconsistent with Articles 
2.1 and 2.4.2 of the AD Agreement  and Article VI:1 of the GATT 1994.   
6.10 In US – Zeroing (EC) , the Appellate Body emphasized that  “the definition of ‘dumping’ as 
contained in Article 2.1 applies to the entire Agreement”.508  Relying on this de finition, the Appellate 
Body held that “under the AD Agreement and Article VI of the GATT 1994,  ‘dumping’ and ‘margins of 
dumping’ must be established for the product under investigation as a whole.”509  The Appellate Body’s 
interpretation is, therefore, that the pr oduct-wide definition of “dumping” applies throughout  the 
                                                      
501 Appellate Body Report, US – Zeroing (EC) , para. 198. 
502 Appellate Body Report, US – Zeroing (EC) , paras. 193 - 194. 
503 Appellate Body Report, US – Zeroing (EC) , para. 198. 
504 Interim Panel Report, para. 6.47  (final report, para. 7.52).  
505 Interim Panel Report, paras. 6.45 – 6.50 (final report, paras. 7.50-7.55). 
 506 Appellate Body Report, US – Zeroing (EC) , para. 126 (“This finding was based not only on 
Article 2.4.2, first sentence, but also on the context found in Article 2.1 of the AD Agreement .”) 
507 Japan Comments, paras. 21-30; Japan Response to US Comments, paras. 8-9 
508 Appellate Body Report, US – Zeroing (EC) , para. 125 (quoting US – Softwood Lumber V , para. 93) 
(footnote omitted).  
509 Appellate Body Report, US – Zeroing (EC) , para. 126.                   WT/DS322/R 
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 AD Agreement .  Moreover, Japan notes that this interpretati on of Article 2.1 was applied in the context 
of the first sentence of Article 2.4.2 in US – Softwood Lumber V , which contains both the W-to-W and 
T-to-T comparison methods.510     
6.11 Consistent with these statements, the Appellate Body in US – Zeroing (EC)  applied the 
definition of "dumping" to determin ations made in two different typ es of anti-dumping proceedings that 
occur at different stages of an anti-dumping action – original investigations and periodic reviews.  The 
Appellate Body has additionally stated that the same  interpretation applies to dumping determinations 
made for purposes of sunset reviews.511 
6.12 The Appellate Body’s reasoning also contradicts the contention that the W-to-W and T-to-T 
comparison methods are fundamentally different because the former envisages a weighted average 
comparison of “all comparable export prices”, wher eas the latter envisages a comparison with a single 
export price in an individual export transaction.  In US – Zeroing (EC) , the periodic review measures at 
issue involved comparisons made with a single export price for an individual export transaction.  Nonetheless, the Appellate Body held: 
"… [I]f the investigating authority establis hes the margin of dumping on the basis of 
multiple comparisons made at an intermedia te stage, it is required to aggregate the 
results of all of the multiple comparisons, including those where the export price exceeds the normal value.  If the investiga ting authority chooses to undertake multiple 
comparisons at an intermediate stage, it is not  allowed to take into account the results of 
only some multiple comparisons, while disregarding others."
512 
6.13 Thus, according to Japan, the fact that th e comparison methodology involves a series of 
intermediate comparisons made with the prices of  individual export transactions does not alter the 
definition of “dumping” and “margin of dumping”, wh ich is derived from Article 2.1 and not Article 
2.4.2.  Rather, where multiple comparisons are made  with the prices of individual export transactions, 
the authorities must take fully into account all comparison results.  It follows that the USDOCs 
maintenance of the simple zeroing procedure for use in T-to-T comparisons in original investigations is 
inconsistent with Article s 2.1 and 2.4.2 of the AD Agreement  and Article VI:1 of the GATT 1994 
because it fails to result in a “margin of dumping” for the “product” as a whole. 
6.14 According to Japan, the objections expressed by the United States to this aspect of the 
Appellate Body's findings in US – Zeroing (EC) ignore the fact that the Appellate Body’s statements are 
based on an interpretation of the text of Article 2.1 of the AD Agreement and Article VI:1 of GATT 
1994, in particular, the word “product(s)”.  Moreover,  the previous reports to which the Appellate Body 
referred, themselves provided an interpretation of the text and context of the relevant provisions.  
Specifically, in US – Softwood Lumber V , the Appellate Body’s interpreta tion of Article 2.1 and Article 
VI:1 is based on the text of these two provisions, as well as the context in Articles 2.4.2, 6.10 and 9.2.513  
In Japan's view, it is, therefore, simply incorrect to  suggest that the Appellate Body’s interpretation does 
not stem from treaty text.514  
                                                      
510 Appellate Body Report, US – Zeroing (EC) , para. 126. 
511 Appellate Body Report, US – Zeroing (EC) , paras. 263(a)(i) (periodic reviews) and (b) (original 
investigations), and footnote 220 para. 129 (sunset reviews).  
512 Appellate Body Report, US – Zeroing (EC) , para. 127 (quoting US – Softwood Lumber V , para. 99).  
See also para. 132. 
513 See Japan Answers to the Second Set of Questions by the Panel of 21 September 2005, paras. 60 to 73.  
514 Japan Response to US Comments, para. 8. WT/DS322/R          
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6.15 In addition, according to Japan, the United Stat es' critique of the Appellate Body’s reliance on 
Article 6.10 of the AD Agreement  subtly alters the text of Article 6.10. Article 6.10 requires the 
determination of “an individual margin of dumpi ng for each known exporter or producer concerned of 
the product”.  The word “individual” qualifies the wo rd “margin”, and not “exporter or producer” as the 
United States suggests.  The provision, therefore, envisages that a single margin is determined for a 
single producer/exporter, for the product.  Japan argues that this provides contextual confirmation of the 
Appellate Body’s reading of Articles 2.1 and 9.3.  Mo reover, in Japan's view, the text of Article 6.10 
cannot support the view that “dumping” and th e “margin of dumping” can be determined for each and  
every  transaction or model.  Otherwise, if every tr ansaction- or model-specific comparison constituted a 
“margin of dumping”, there would be multiple marg ins – one for each transaction or model – and not 
“an individual margin of dumping” for “the product”.
515 
6.16 In response to the United States argument s that the Appellate Body reasoning in US – Softwood 
Lumber V  was limited to comparisons relating to “mu ltiple averaging”, Japan argues that it was the 
United States that failed to appreciate the importance in the repeated references by the Appellate Body 
to “multiple comparisons”.  The Appellate B ody noted that, under a W-to-W comparison, the 
authorities may conduct “multiple averaging” rather than a single weighted average normal value and 
export price.  When the authorities choose to enga ge in multiple averaging, they make multiple 
comparisons, one for each averaging group.  The dispute in US – Softwood Lumber V  concerned the 
treatment of the results of these multiple comparisons.  Based on Article 2.1 and VI:1, the Appellate Body ruled that in determining the margin of dum ping for the “product”, negative multiple comparison 
results cannot be disregarded, but must be a ggregated together with the positive results.
516 By applying 
the same interpretation of these provisions in US – Zeroing (EC) , the Appellate Body engaged in 
consistent interpretation of the AD Agreement  and the GATT 1994, and not in “distortion” of the 
previous reports.517  Indeed, contrary to the United States’ ar gument, if the Appellate Body had upheld 
the panel report, it would have invol ved a departure from its rulings in US – Softwood Lumber V  and 
EC – Bed Linen . 
(c) Withdrawal of claims relating to zeroing procedures in the context of Weighted 
Average–to–Transaction comparisons518 
6.17 Japan's claims in respect of the USDOC simp le zeroing procedures initially covered both 
T-to-T and W-to-T comparison methodologies.  Howe ver, in Japan's comments to the Appellate Body 
Report in US – Zeroing (EC) , Japan withdrew its claims against simple zeroing procedures in the 
context of the application of the W-to-T comparison methodology.  In doing so, Japan noted that 
although the Appellate Body’s findings did not expr essly address the permissibility of zeroing in the 
exceptional circumstances set forth in th e second sentence of Article 2.4.2 of the AD Agreement , Japan 
considered that zeroing is prohibited in the situa tion contemplated in the second sentence of Article 
2.4.2.  Nonetheless, given the f act that the USDOC Regulations addressing pricing patterns have never 
been applied, and also given the uncertainti es regarding the United States’ rules for dumping 
comparisons where there is a relevant pricing pattern , Japan considered it appropriate to withdraw its 
complaint regarding the use of zeroing under the second sentence of Article 2.4.2. 
6.18 Japan disagrees with the argument of the United States that the withdrawal of this claim 
supports its view that the zeroing procedures are not an “as such” measure, particularly in T-to-T comparisons in original investigations.  Japan not es that the uncertainty surrounding the United States’ 
“targeted dumping” methodology relates to aspects of the comparison method other  than the use of 
zeroing.  Japan maintains that the zeroing proce dures apply to W-to-T comparisons under the second 
                                                     
 
515 Japan Response to US Comments, para. 9. 
516 Appellate Body Report, US – Softwood Lumber V , paras. 97, 98 and 99.  
517 US Comments, para. 48. 
518 Japan Comments, paras. 31-32; Japan Opening Statement at the Third Meeting with the Panel, para. 9.                   WT/DS322/R 
Page 109 
 
 
 
 sentence of Article 2.4.2 - the United States’ oft-stat ed and vigorous defence of its right to zero under 
this sentence suggests that Japan might  be correct.  Japan also clarifies,  for the record, that it did not and 
does not make any claims regarding the "targeted dumping" regulations of USDOC. 
6.19 Japan also explains that the USDOC standard  zeroing procedures constitute a single rule of 
general and prospective application, that mandates the systematic disregard of negative intermediate 
comparison results determined on a model- or tr ansaction-specific basis in calculating dumping 
margins under any method of comparison and in any type of anti-dumping proceeding.519  Thus 
referring to the Panel’s interim finding that the zer oing procedures do, indeed, constitute “a single rule 
or norm” maintained for use by the United States520, Japan clarifies that there is a single measure  that 
applies to W-to-W comparisons, T-to-T comparisons and W-to-T comparisons, used in any type of 
anti-dumping proceeding, rather than a separate zeroing measure applicable to each of these 
comparison methods, as the United States suggested.  With respect to the single zeroing measure , Japan 
makes a series of claims , that necessarily differentiate between th e different treaty provisions that apply 
to the different types of comparison and to th e different types of anti-dumping proceeding.  
6.20 Japan further argues that the f act that the zeroing procedures have been applied only once under 
a T-to-T comparison does not support the view that the procedures do not constitute a general rule; nor 
does this fact suggest that the zeroing procedures do not apply to T-to-T comparisons.  Indeed, to the 
contrary, the application of zeroing in a T-to-T comparison in implementing the DSB’s recommendations and rulings in US – Softwood Lumber V  confirms the generality of the United States’ 
zeroing rule.  In any event, an “as such” challenge can be made even if a rule has never been applied.
521 
(d) the zeroing procedures maintained by the United St ates for use in periodic reviews are as such 
inconsistent with Articles 2.1 and 9.3 of the AD Agreement  and Articles VI:1 and VI:2 of the 
GATT 1994;  the eleven periodic reviews challenge d by Japan are inconsistent with the same 
provisions522 
6.21 Japan argues that the methodology applied by the United States in the periodic reviews found to 
be WTO-inconsistent in US – Zeroing (EC)  is exactly the same as the simple zeroing procedures that 
Japan challenges “as such” and “as applied” in the cont ext of periodic reviews in this dispute.  The 
reasons that led the Appellate Body to conclude that the periodic reviews were WTO-inconsistent 
should, therefore, lead this Panel to the same conclusion with respect to Japan’s “as such” and “as 
applied” challenges in periodic reviews. 
6.22 In US – Zeroing (EC) , the panel did not examine whether th e United States maintains an as such 
“zeroing” measure for purposes of periodic reviews and instead ruled that, in any event, zeroing is 
permissible in periodic reviews.523  The EC appealed this finding.  The Appellate Body ruled that, in 
light of its findings that certain periodic reviews were WTO-inconsistent because of the application of 
the zeroing methodology,   
"… we declare moot, and of no legal effect , the Panel's finding, in paragraph 8.1(g) of 
the Panel Report, that the zeroing methodology used by the United States in 
administrative reviews is not inconsistent, as such, with Articles 1, 2.4, 2.4.2, 9.3, 11.1, 
                                                      
519 See further Japan Rebuttal Submission of 12 August 2005, Section II. 
520 Interim Panel Report, para. 6.48.  See also footnotes 546 and 557.  
521 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Reviews , para. 87. 
522 Japan Comments, paras. 33-40; Japan Response to US Comments, paras. 11-16. 
523 Panel Report, US – Zeroing (EC) , paras. 7.91 to 7.106. WT/DS322/R          
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11.2, and 18.4 of the Anti-Dumping Agreement , Articles VI:1 and VI:2 of the GATT 
1994, and Article XVI:4 of the WTO Agreement ."
524 (emphasis added)  
6.23 Thus, according to Japan, the Appellate Body did not uphold the Panel’s “as such” findings 
and, instead, declared them null.  However, beca use the panel had made no factual findings that 
demonstrated the existence of an “as such” zeroing measure in periodic reviews, the Appellate Body 
was unable to complete the analysis of the EC’s “as such” claims on this issue.525 
6.24 Japan contends that the Panel’s interim findings avoid this unsatisfactory failure to resolve the 
dispute because the Panel found that the zeroing pro cedures constitute a general rule, regardless of the 
method of comparison used and regardless of the type  of proceeding in which margins are calculated.526  
The Panel held in its interim findings that “the terms ‘model zeroing’ and ‘simple zeroing’ used by 
Japan do not correspond to two different rules or norms but simply refer to different manifestations of a 
single rule or norm.”527   
6.25 Japan considers that the Panel’s findings are corr ect in view of the totality of the evidence of 
record.  As a result, there is a single measure  that applies to W-to-W comparisons, T-to-T comparisons 
and W-to-T comparisons, used in any type of anti-dumping proceeding. 
6.26 In light of the Appellate Body’s findings in US – Zeroing (EC) , Japan submits that the Panel 
should find that the simple zeroing procedures in pe riodic reviews are "as such" inconsistent with 
Articles 2.1 and 9.3 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994.  The reasoning 
that led the Appellate Body to conclude that the application  of zeroing to periodic reviews leads 
inescapably to the conclusion that the zeroing pro cedure itself is “as such” WTO-inconsistent in 
periodic reviews.  
6.27 As regards the eleven periodic review determina tions that it has challenged, Japan notes that it 
has submitted evidence showing that, absent the system atic disregard of negative comparison results, 
the margin of dumping and, hence, the level of de finitive duties in each peri odic review would have 
been lower.528  Pursuant to US – Zeroing (EC) , the Panel should find that these measures are 
inconsistent with Article 9.3 and Article VI:2.  Furthermore, because the violations of these provisions 
stem from the definition of “dumping” in Article 2.1 and Article VI:1, the Panel should also find a 
violation of these provisions. 
6.28 Japan rejects the United States contention that the Appellate Body failed to “to address and 
consider important contextual arguments” in relation to this issue, specifically the arguments relating 
to: targeted dumping; importer-specific assessmen t; prospective normal value (“PNV”) systems; and 
the construction of normal value.529  The fact that the Appellate Body did not address  all of the 
contextual arguments in the manner that the Unite d States wishes, does not, according to Japan, mean 
that the arguments were not fully considered  by the Appellate Body.  In Section II of the report, the 
Appellate Body summarized the “important contextual  arguments” that the parties elected to make in 
writing.530  There are no grounds for suggesting that the A ppellate Body failed to consider arguments it 
summarized in its report.  It is also not tenable to  suggest that the Appellate  Body heard oral argument 
                                                      
524 Appellate Body Report, US – Zeroing (EC) , para. 227. 
525 Appellate Body Report, US – Zeroing (EC) , para. 228. 
526 Interim Panel Report, para. 6.48 (Final Report, para. 7.53) 
527 Interim Panel Report, footnotes 540, 546 and 557 (Final Report, footnotes 688,694 and 708). 
528 Japan First Written Submission, paras. 178 ff. 
529 US Comments, paras. 25, 26, 29, 34, 38, 39 and 48. 
530 See, e.g., Appellate Body Report, US – Zeroing (EC) , paras. 38, 44, 45, 71 and 77.                    WT/DS322/R 
Page 111 
 
 
 
 on Article 2.2 but did not consider that argument.   In Japan's view, the Appellate Body’s findings 
expressly respond to contextual argum ents that were allegedly ignored.531 
6.29 Specifically, Japan is of the view that the Appe llate Body expressly rejected the United States’ 
argument that margins can be determined on an  import- or importer-specific basis in periodic 
reviews.532  Nonetheless, it ruled that Members are entitled to assess liability for anti-dumping duties on 
an import- or importer-specific basis.533  In keeping with this finding, the Appellate Body held that 
Members are entitled to assess liability fo r duties on the basis of a PNV.534  In making these findings, 
the Appellate Body effectively distinguished between  the rules governing the determination of margins 
and the rules governing the imposition of duties, as it has done before.535  Therefore, the amount of duty 
imposed on a particular import does not necessarily equal the margin of dumping.  In short, as the 
Appellate Body has held, the rules on th e imposition of duties in Article 9 have no bearing on the rules 
on determination of margins in Article 2.536 Therefore, the United States’ arguments on import- and 
importer-specific assessment, and PNV systems, are red-herrings. 
6.30 However, Japan argues, because of the chapeau  of Article 9.3, the rules on the determination of 
margins do have a bearing on the imposition of duties.  As the Appellate Body held, the total amount of 
anti-dumping duties cannot exceed the margin of dump ing established for all transactions covered by 
the review period.537  The chapeau  of Article 9.3 applies equally  to reviews conducted under the 
prospective and retrospective duty imposition systems.   Thus, under both systems, the maximum level 
of protection afforded by anti-dumping duties is equal to the margin of dumping for the product, for the review period.  There is no “disparity” between the two systems of duty imposition.
538   
6.31 With respect to the “contextual arguments” relati ng to targeted dumping, Japan considers that 
there was no need for the Appellate Body to expressl y address that issue.  Th e second sentence sets forth 
an exceptional method of comparison that applies sole ly in the exceptional situation in which the two 
conditions set forth in that provision are met.  Absent fulfilment of these two conditions, the second 
sentence of Article 2.4.2 is simply irrelevant: an exception cannot justify the maintenance or application 
of a measure in circumstances where the exception does not apply.  This is the conclusion reached by 
the Appellate Body in EC – Bed Linen , in which the EC attempted to justify zeroing in a W-to-W 
comparison by reference to the second sentence of Artic le 2.4.2.  The Appellate Body dismissed this 
argument, observing that the second sentence applies solely in limited circumstances that were not 
applicable in that dispute.539  In this dispute, the zeroing procedures apply without regard to the 
existence of the two conditions in the second sentence of Article 2.4.2.  Ind eed, to Japan’s knowledge, 
the United States has never  found that these two conditions have been  satisfied.  In these circumstances, 
the exceptional comparison methodology under the sec ond sentence of Article 2.4.2 cannot justify the 
zeroing procedures. 
                                                      
531 Japan Response to US Comments, paras. 11-16. 
532 Appellate Body Report, US – Zeroing (EC) , para. 128. 
533 Appellate Body Report, US – Zeroing (EC) , para. 131. 
534 Appellate Body Report, US – Zeroing (EC) , footnote 234. 
535 Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 124.  
536 Appellate Body Report, EC – Bed Linen (Article 21.5 – India) , para. 124.  
537 Appellate Body Report, US – Zeroing (EC) , para. 130. 
538 US Comments, para. 33. 
539 Appellate Body Report, EC – Bed Linen , para. 62. WT/DS322/R          
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(e) the zeroing procedures maintained by the United States for use in new shipper reviews are as 
such inconsistent with Articles 2.1, 9.3 and 9.5 of the AD Agreement  and Articles VI:1 and VI:2 
of the GATT 1994
540 
6.32 According to Japan, the USDOC determines ma rgins of dumping in the same way in new 
shipper and periodic reviews.  For purposes of bot h proceedings, the USDOC maintains simple zeroing 
procedures that exclude negative comparison results, thereby preventing the determination of a margin 
of dumping for the product as a whole.541  Thus, Japan argues that in the case of new shipper reviews, 
the legal issue that the Panel in the present dispute must address is whether the term “individual margins 
of dumping” in Article 9.5 refers to a marg in for the “product” as a whole.  Following US – Zeroing 
(EC) , Japan believes that it must. 
6.33 The Appellate Body in US – Zeroing (EC) stated that the product-wide definition of “dumping” 
and “margin of dumping” applies throughout the AD Agreement .  It also held that this definition applied 
to periodic and sunset reviews.542  In the view of Japan, there is no  alternative definition of the term 
“margin of dumping” suggested in Article 9.5 of the AD Agreement and no basis for considering that the 
Agreement -wide definition in Article 2.1 does not apply to Article 9.5.   
6.34 Japan argues that the text of Article 9.5 is si milar to the text of Article 6.10 because both 
provisions refer to “individual” margins of dumping established for an exporter or foreign producer.  
Thus, for each exporter or foreign producer, the Agreement  expressly contemplates the determination of 
a single  margin of dumping for the product .  In Japan's view, this language underscores that a single, 
overall dumping determination is made for the product as a whole, even if based on multiple comparisons undertaken at the sub-product level.  In contrast, Japan argues that this language cannot 
support the view that “dumping” and the “mar gin of dumping” can be determined for each and  every  
transaction or model.  Otherwise, there would be multiple margins for each exporter or foreign producer 
– one for each transaction or model – and not “an i ndividual margin of dumpi ng” for “the product”. 
6.35 In these circumstances, Japan s ubmits that Article 9.5 requires that investigating authorities 
establish margins of dumping for the “product” as a whole.   Thus, if the investigating authorities elect to 
determine a margin on the basis of multiple compar isons, they must aggregate the results of all 
comparisons.  Under the simple zeroing procedures, the USDOC systematically disregards all negative results of multiple comparisons.  In consequence,  the simple zeroing procedures mandate that USDOC 
fails to determine “individual margins of dumping” fo r exporters or foreign producers for the “product” 
as a whole.  Japan contends that this  violates Articles 2.1 and 9.5 of the AD Agreement  and Article VI:1 
of the GATT. Furthermore, by maintaining the simp le zeroing procedures in new shipper reviews, the 
United States also acts inconsistently with Article  9.3 and Article VI:2 of the GATT, because the 
systematic disregard of negative comparison results  necessarily results in an amount of anti-dumping 
duties that exceeds the margin of dumping for th e new shipper for the “product” as a whole. 
(f) the two sunset reviews challenged by Japan are inconsistent with Articles 2.1 and 11.3 of the 
AD Agreement  and Article VI:1 of the GATT 1994
543   
6.36 Japan challenges two sunset reviews on the gr ounds that the USDOC relied on margins of 
dumping determined in original investigations and periodic reviews using the zeroing procedures.544  
Because the margins on which the USDOC relied we re “legally flawed” through the use of zeroing, 
they cannot constitute a proper fou ndation for a determination in a sunset review.  As a result, the 
                                                      
540 Japan Comments, paras. 41-44. 
541 Japan First Written Submission, paras. 16, 133-134. 
542 Appellate Body Report, US – Zeroing (EC) , paras. 127 and footnote 220. 
543 Japan Comments, paras. 45-50. 
544 See Exhibits JPN-22 and JPN-23.                   WT/DS322/R 
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 challenged sunset reviews are tainted by the same legal flaws that infect the margins of dumping from earlier proceedings on which the USDOC relied. 
6.37 With respect to these two sunset reviews, the Panel found that: 
"[T]here is sufficient evidence before us to conclude that in maki ng its determinations 
that revocation of anti-dumping order would result in continuation or recurrence of 
dumping, USDOC did rely on margins of dumping established in prior proceedings."
545 
6.38 The Panel continued: 
"We also note, however, that since in these two sunset reviews USDOC relied upon the 
continued existence of margins of dumpi ng after the issuance of the anti-dumping 
order as support for its determination of lik elihood of continuation or recurrence of 
dumping, the margins of dumping relied upon by USDOC were margins calculated during periodic reviews, not margins calcu lated in the original investigations."
546 
6.39 However, the Panel rejected Japan’s claims in  its interim findings for the following reason:  
"Since we have found that the AD Agreement  does not proscribe simple zeroing in 
periodic reviews within the meaning of Artic le 9.3, we cannot find that by relying on 
margins of dumping calculated in periodic reviews on the basis of simple zeroing USDOC acted inconsistently with the AD Agreement ."
547 
6.40 Thus, the sole reason for rejecting Japan’s “as a pplied” claims was a perception that zeroing is 
permissible in periodic reviews.  The Appellate Bo dy has now held that zeroing “is not allowed” in 
periodic reviews under Articles 2.1 and 9.3 of the AD Agreement , and Article VI:1 of the 
GATT 1994.548  Thus, following US – Zeroing (EC) , the Panel should find that the two sunset reviews 
challenged by Japan violate Article 11.3 of the AD Agreement  because the USDOC improperly relied 
on margins of dumping calculated in periodic reviews using zeroing.  Because the violations of Article 11.3 stems from Article 2.1 and Article VI:1, Japan  submits the two challenged sunset reviews also 
violate these provisions. 
2. United States 
(a) Whether the Panel should follow the Appellate Body's findings in US – Zeroing (EC)
 549 
6.41 According to the United States, adopted prio r panel and Appellate Body reports create 
legitimate expectations among WTO Members550, and it is for that reason that the reasoning and 
findings in such reports should be taken into account.  Although the Appellate Body found in 
US – Zeroing (EC)  that the USDOC assessment of anti-dumping duties as applied in certain 
administrative proceedings challenged by the Europ ean Communities was inconsistent with Article 9.3 
                                                      
545 Interim Panel Report, para. 6.233 (Final Report, para. 7.255). 
546 Interim Panel Report, para. 6.235. (Final Report, para. 7.256). 
547 Interim Panel Report, para. 6.235 (Final Report, para. 7.256).  
548 Appellate Body Report, US – Zeroing (EC),  para. 127. 
549 US Comments on the Appellate Body Report in US – Zeroing (EC)  ("US Comments"), paras. 4-9;  US 
Opening Statement at the Third M eeting of the Panel, para. 3.  
550 Appellate Body Report, Japan – Alcohoic Beverages II , p. 14.  WT/DS322/R          
Page 114  
 
of the AD Agreement  and Article VI:2 of the GATT 1994, this Panel is not bound to follow the 
reasoning of the Appellate Body in that report.
551 
6.42 The United States is of the view that the reasoning of the Appellate Body in US – Zeroing (EC) 
is simply not persuasive.  The United States asserts that the Appellate Body findings in 
US  –  Zeroing  (EC) were not based on a reasoned analysis of th e text of the applicable agreements, but, 
rather primarily, on prior Appellate  Body reports – and a misapprehension of those reports, at that.  
According to the United States, the Appellate Body gr afted inapposite findings from one set of factual 
circumstances onto another, and failed to consider contextual arguments demonstrating that such an 
approach would create severe logical problems of  interpretation not only with respect to the 
AD Agreement , but also with respect to the GATT 1994.  The United States asserts that, by contrast, in 
its Interim Report, the Panel in this dispute provi ded a detailed, reasoned analysis of the text of 
Article VI of the GATT 1994 and the AD Agreement , as have two other panels addressing the USDOCs 
denial of offsets in various phases of the antidumpi ng proceeding.  These reports, drafted by panellists 
with substantial experience in the administration of  antidumping laws, all come to the same conclusion 
– that the AD Agreement  does not require offsets in assessment revi ews.  Thus, in the view of the United 
States, the Appellate Body in US – Zeroing (EC)  simply erred and the Panel in this dispute should not 
adopt either its reasoning or its findings.552 
(b) The Appellate Body’s Conclusion that Author ities Must Provide Offsets Whenever They 
Conduct Multiple Comp arisons is erroneous553  
6.43 The United States argues that th e Appellate Body Report in US – Zeroing (EC)  fails to address 
fully the terms of the covered agreements, in light of their context, and in light of the object and purpose 
of the agreements.  Instead, accordi ng to the United States, the Appella te Body interprets its own report 
language, removed from the context of the agreement' s provisions to which it related, in order to 
achieve the result of requiring offsets in all contexts .  The United States asserts that the Appellate Body 
in US – Zeroing (EC)  based its analysis less on the text of the AD Agreement  than on its prior reports, 
particularly US – Softwood Lumber V .  The United States contends that one example of this is the 
Appellate Body's heavy reliance on its interpretati on of the term “product as a whole”, which according 
to the United States, is a term that is nowhere found in the AD Agreement  or Article VI of the 
GATT 1994. 
6.44 The United States submits that in US – Zeroing (EC) , the Appellate Body divorced the phrase 
“product as a whole” (a phrase which was the creation of  the Appellate Body) from its original context 
– use of average-to-average comparisons in an inv estigation.  In so doing, the Appellate Body also 
divorced the creation of that concept from its limited applicability in the context of Article 2.4.2.  The 
Appellate Body simply decided that the applicabilit y of the concept “product as a whole” is not limited 
to the interpretation of obligations relating to mu ltiple averaging.  It did so by asserting that in US - 
Softwood Lumber V the requirement to calculate margins of dumping for the “product as a whole” 
meant that offsets must be provided not only when aggregating intermediate values in the context of 
multiple averaging , but when undertaking “ multiple comparisons ” more generally.554  In the view of the 
                                                      
551 Appellate Body Report, US – Zeroing (EC) , para. 263(a)(i). 
552 US Comments on the Appellate Body Report in US – Zeroing (EC) , paras. 4-9; US Opening 
Statement at the Third Substantive Meeting of the Panel with the Parties, paras. 4-16, 21. 
553 US Comments, paras. 10-18;  US Comments on Japan's Comments on the Appellate Body Report in 
US – Zeroing  (EC) , paras. 1-10.  
554 The Appellate Body in US – Zeroing (EC)  states that the “Appellate Body specified that, while an 
investigating authority may choose to undertake multiple comparisons or multiple averaging at an intermediate 
stage to establish margins of dumping, ‘ it is only on the basis of aggregating all these ‘intermediate values’ that an 
investigating authority can establish margins of dumping  for the product under investigation as a whole.”  
Para. 126, citing the Appellate Body Report in US – Softwood Lumber V , para. 97.  To the contrary, however, in 
                   WT/DS322/R 
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 United States, that statement is simply wrong555, because the reasoning in US – Softwood Lumber V was 
expressly limited to comparisons in connection with multiple averaging, not all so-called “multiple 
comparisons” more generally.   
6.45 The United States argues that Appellate Bo dy’s assumption that the analysis in US – Softwood 
Lumber V is applicable to all instances when there are multiple comparis ons, rather than just multiple 
averaging, is particularly egregious because althoug h the Appellate Body has suggested that Members 
have a choice as to whether to use “multiple comp arisons” in calculating the margin of dumping, the 
inevitable consequence of the Appellate Body’s reasoning would be that Members must, in fact, 
aggregate transactions in order to calculate a margin  of dumping.  Thus, United States argues that not 
only is the Appellate Body’s assertion that “an investigating authority may choose to undertake multiple 
comparisons”556 simply wrong, but it means that the Appellate Body, based on a phrase it created and 
that is not in the text of the AD Agreement , has prohibited zeroing in ev ery circumstance in which a 
Member calculates a margin of dumping. 
6.46 The United States recalls that the Panel in this  dispute expressly recognized that the reasoning 
in US – Softwood Lumber V is limited to multiple averaging in the context of the first sentence of Article 
2.4.2 of the AD Agreement  and is therefore simply inappli cable in the context of assessment 
proceedings.  Furthermore, the United States argues that  in its Interim Report, the Panel correctly found 
that the expression ‘product as a whole’ does not appear in Article 2.1 of the AD Agreement  and 
Article VI:1 and VI:2 of the GATT 1994, and that these provisions contain no language that explicitly 
addresses the issue of whether dumping can only be found to exist at an aggregate level.557  Rather, 
according to the United States, the Panel noted that, pursuant to the text of Article VI, dumping is 
essentially a price difference.558  Pursuant to Article VI:1 and VI:2 of the GATT 1994, a margin of 
dumping exists when the price of a product is less than its normal value.  The Panel found that this 
definition of the margin of dumping as a price di fference could “easily be applied to individual 
transactions and does not require an examination of export transactions at an aggregate level.”559  In this 
light, the United States submits that the Panel’s analysis is based firmly on the text of the AD Agreement  
and the GATT 1994 and should therefore be confirmed.560 
6.47 The United States also notes that if the Appellate Body’s analysis were correct, and zeroing is 
inconsistent with Article 2.1 of the AD Agreement and Article VI of the GATT 1994, then it begs the 
question: Why did the Appellate Body’s analysis in EC - Bed Linen and US - Softwood Lumber V hinge 
                                                                                                                                                                     
paragraph 97 of that report, the Appellate Body expressly referenced “multiple averaging” and “multiple 
comparisons at the sub-group level .” (emphasis added). 
555 The Appellate Body now considers zeroing to be prohibited whenever a Member engages in “multiple 
comparisons” but declined to address whether zeroing is also prohibited in transaction-to-transaction comparisons 
in investigations.  Notwithstanding the logical flaw in that view, to the extent the Appellate Body may consider zeroing to be prohibited only where “multiple comparisons” occur,  it is worth recalling that the US has 
demonstrated that its assessment system results in  the same assessment of antidumping duties as a 
transaction-by-transaction, pr ospective normal value system , but only if the US. system  is permitted to “zero.”  
See US Comments on Japan Answers to 2nd Panel Questions, para. 36.  See Interim Report, n. 624.  Otherwise, to 
equalize the two systems, zeroing would have to also be prohibited in transaction-by-transaction assessment 
systems, which is akin to requiring authorities to compensate an individual for individual importations for which normal value is less than the export price.  
556 Appellate Body Report, US – Zeroing (EC) , para. 126 (emphasis added).  
557 Interim Panel Report, para. 6.98 (Final Report, para. 7.104). 
558 Interim Panel Report, para. 6.99 (Final Report, para. 7.106) 
559 Interim Panel Report, para. 6.99 (footnote omitted)  (Final Report, para. 7.105).  
560 This Panel’s finding concerning the definition of the “margin of dumping” as a price difference in 
Articles VI:1 and VI:2 is echoed by a recently circul ated panel report concerning Canada’s recourse to 
Article 21.5 of the DSU in the softwood lumber dispute,  US – Softwood Lumber V (Article 21.5) , para. 5.27. WT/DS322/R          
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on Article 2.4.2, and specifically the phrases “mar gins of dumping” and “all comparable export 
transactions”?  More perplexing still, according to  the United States, is the fact that in Softwood 
Lumber  V , the Appellate Body declined to consider  contextual arguments about the other two 
comparison methodologies because it would first have to determine whether offsets were required in 
those comparison methodologies.  Similarly, in the US – Zeroing(EC) report, the Appellate Body 
contends that its analysis therein does not necessarily  mean that offsets are required in the other two 
methodologies under Article 2.4.2.  Thus, the Unite d States argues that the Appellate Body’s careful 
restraint with respect to the other comparison met hodologies in Article 2.4.2 is difficult to reconcile 
with the broader assertions in US – Zeroing(EC)  regarding Article 2.1 and Article VI of the 
GATT 1994. 
6.48 In response to Japan's comments on the Appellate Body's findings in US – Zeroing (EC) , the 
United States argues that Japan continues to cite to  the Appellate Body Report, without discussing the 
actual text of the GATT 1994 or the AD Agreement .  According to the United States, Japan fails to 
demonstrate how the Appellate Body’s reasoning is b ased on a textual analysis of the agreements and 
Japan fails to engage in any textua l analysis itself.  Furthermore, th e United States contends that Japan's 
comments not only show that it misunderstands the A ppellate Body Report, but also that zeroing is a 
permissible interpretation of the AD Agreement .   
6.49 The United States asserts that Japan and the Appellate Body (and the EC) cannot agree as to 
why “zeroing” is allegedly prohibited outside of th e context of original investigations using the 
average-to-average comparison methodology, and that this discrepancy exposes th e basic fact that those 
seeking to find a prohibition on zeroing in all contex ts have a very difficult time identifying precisely 
where in the AD Agreement  that prohibition is found.  The United States argues that the logical 
conclusion of all of the arguments regarding zeroing – including the fact that the complaining parties 
and the Appellate Body cannot agree as to how zeroing is prohibited
561 – indicate that the 
AD Agreement  does not prohibit zeroing, and these arguments are simply results-driven.  In the 
United States view, the plain fact is that the AD Agreement  at the very least permits the interpretation of 
the United States (and of Members such as the EC, at least  in the past) and, as a result, the use of zeroing 
cannot be found inconsistent with United States obligations.  
(c) The Appellate Body’s Conclusion that the Marg in of Dumping Cannot be Transaction-Specific 
is erroneous562 
6.50 The United States submits that the Appellate B ody’s conclusion that the margin of dumping 
cannot be transaction-specific because Article 6.10 of the AD Agreement requires the margin of 
dumping to be calculated for each exporter is without  basis.  According to the United States, the 
Appellate Body’s analysis proceeds on the false pr emise that a margin of dumping cannot both be 
exporter-specific and transaction-specific.  The United States submits that Article 6.10 simply provides 
that a Member must calculate a margin for each i ndividual exporter or prod ucer – as opposed to one 
margin for all exporters or producers (or, as it was described in Mexico – Anti-Dumping Measures on 
Rice, “company-specific” versus “country-wide”).563  It says nothing about whether the margin must be 
based on more than one transaction, and it does not prohibit the calculation of a margin of dumping on a transaction-specific basis.  The Unite d States also argues that the Spanish text of Article 6.10 supports 
its interpretation. 
6.51 The United States is of the view that the result of the Appellate Body’s assertion that the margin 
cannot be calculated on a transaction-specific basis is that an in vestigating authority must  calculate the 
                                                     
 
561 According to the US, Japan does not even agree with  itself, as evidenced by its sudden about-face on 
zeroing in the targeted dumping context in Article 2.4.2. 
562 US Comments, paras. 19-24; US Opening Statement at the Third Meeting of the Panel, paras. 17-20. 
563 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , paras. 208, 217.                   WT/DS322/R 
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 margin of dumping based on all of the exporter’s tr ansactions.  However, the United States contends 
that it is difficult to see how this can be done wit hout requiring the aggregation of multiple comparisons.  
In this sense, according to the United States, the Appellate Body’s interpre tation of Article 6.10 as 
precluding transaction-specific margins of dumping renders hollow its suggestion that authorities 
undertake multiple comparisons as a matter of choice.564  Furthermore, the Appellate Body's approach 
cannot be reconciled with its own assertion that it makes no finding with respect to the other two 
methodologies under Article 2.4.2.565  In this regard, the United States notes that the Appellate Body 
states that Article 6.10 applies in investigations.  However, the transaction-to-transaction and targeted 
dumping methodologies under Article 2.4.2 will, unless there is only one export transaction, always 
result in multiple comparisons.  The United States argues that if, as the Appellate Body contends, 
Article 6.10 requires not simply the calculation of a margin of dumping for an individual exporter but rather a margin of dumping for an individual exporter based on all of that exporter’s transactions, then it 
is impossible for a Member to calculate a margin of dumping without aggregating multiple comparisons. 
6.52 The United States submits that the Appella te Body’s reasoning has other perverse 
consequences for Article 2.4.2.  For example, it re nders the phrase “all comparable export transactions,” 
as the Appellate Body has understood it, redundant.  The United States recalls that the Appellate Body 
has argued that Article 6.10 requires not just marg ins of dumping for individual exporters, but margins 
of dumping based on all of the exporter’s transactions.  According to the United States, if that is true, 
then it calls into question the meaning the Appellate  Body ascribed to the phrase “all comparable export 
transactions” in US – Softwood Lumber V .  If Article 6.10 requires consideration of all export 
transactions, and Article 2.1 requires offsets when making multiple comparisons of those transactions, 
then it is unclear why the Appellate Body in US – Softwood Lumber V  considered the phrase “all 
comparable export transactions,” in conjunction with  the phrase “margins of dumping,” to require the 
very same outcome. 
6.53 The more logical interpretation of the AD Agreement , according to the United States, is the one 
the Panel followed in this dispute, namely:  that the requirement to provide offsets articulated in 
US – Softwood Lumber V  is limited to the weighted-average  to weighted-average methodology in 
investigations based on the phrases “margins of dum ping” and “all comparable export transactions” in 
the first sentence of Article 2.4.2; that margins of dumping elsewhere in the Agreement may be calculated on a transaction-specific basis, consiste nt with Article VI of the GATT 1994 and the 
common understanding of that Article as expressed by the Group of Experts in 1960; and that Members 
are not obliged to give refunds on non-dumped transactions. 
(d) The Appellate Body Failed to C onsider Key Contextual Arguments
 566 
6.54 The United States contends that the Appellate Body failed to address contextual arguments 
demonstrating that the terms “dumping” and “margi ns of dumping” cannot invariably refer to the 
product as a whole.  Specifically, the United States subm its that the Appellate Body failed to address the 
                                                      
564 Appellate Body Report in  US – Zeroing (EC) , para. 127.  Further, even on its own terms, the Appellate 
Body’s statement that Members “choose” to engage in “m ultiple comparisons” is simply incorrect.  It will be 
difficult for authorities to avoid having to undertake multiple comparisons, whether in the form of multiple averaging of sub-groups or transaction-specific calculations.  Here again, the Appellate Body is removing from its 
original context a statement it made in an earlier report and applying that statement more broadly in a manner that 
makes no sense.  Specifically, the Appellate Body’s discussion of “choosing” multiple comparisons in the Lumber 
report was related to the choice of multiple averaging i.e . “multiple comparisons at the subgroup level. ” - 
paras. 97-98 (emphasis added) .  However, in the US – Zeroing (EC)  report, the Appellate Body characterizes its 
statement regarding “choosing” as applying to multiple comparisons, and not multiple averaging. 
565 Appellate Body Report, US – Zeroing (EC), para. 203. 
566 US Comments, paras. 25-39. WT/DS322/R          
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nullification of the targeted dumping provision of Artic le 2.4.2, the argument that margins of dumping 
may be calculated on a transaction-specific basis, the implications for prospective normal value 
systems, and the consequences of invariably de fining “dumping” and “margins of dumping” in 
reference to the product as a whole for the third co untry and constructed norma l value provisions of 
Article 2.2. 
6.55 The United States argues that a general obligation to establish margins of dumping for the 
product as a whole, regardless of the comparison me thodology used and regardless of the phase of the 
antidumping proceeding, would nullify the targeted dumping provision of the second sentence of Article 2.4.2.  Whereas the Panel in this dispute
567, and the panels in two other disputes568, recognized 
this consequence, and that such an interpretation is  inconsistent with the principle of effective treaty 
interpretation, the Appellate Body in US – Zeroing (EC)  failed to address the text of the agreements and 
the logical analysis leading to this conclusion.  Th e Appellate Body thereby ignored customary rules of 
treaty interpretation. 
6.56 In addition, the United States contends that the Appellate Body's finding that the margins of 
dumping to which Article 9.3 refers must be est ablished on an exporter/producer-specific basis, 
aggregating all of the exporter’s transactions, lacks persuasive reasoning.  In particular, the United 
States argues that the Appellate Body failed to identify  an applicable textual basis for its conclusion.  
Moreover, the Appellate Body failed to address the significant change in duty assessment obligations 
that its finding would create.  Thus, the United St ates argues that the Appe llate Body's ruling cannot 
serve as a basis to alter the Panel's finding in this disp ute that nowhere in the text of Article 9 is there any 
support for the conclusion that an exporter-oriented procedure, based on aggregated export transactions, 
is required in a prospective duty assessment system. 
6.57 The United States also argues that the Appellate  Body’s finding cannot be reconciled with 
prospective normal value systems.  In this regard, th e United States contends that the implications of the 
Appellate Body’s reasoning extend beyond what appear s to have been contemplated.  The Appellate 
Body asserts that its analysis does not mean that  Members are prevented from using a prospective 
normal value system to calculate liability for payment.569  However, prospective normal value systems, 
to the extent that they calculate a margin of dumping at all after the imposition of the order, do so on a 
transaction-by-transaction basis.  According to the United States, if the Appellate Body is correct, and 
margins of dumping must be calculated on the b asis of all of the exporter’s transactions, then 
prospective normal value systems have been based  on the erroneous premise that updating the normal 
value is an appropriate substitute for subsequent re fund proceedings.  Without such a proceeding, there 
would be no way to calculate the margin of dumping on the basis of all of the exporter’s transactions.  
But with such a proceeding, the prospective normal valu e system would become indistinguishable from 
the US retrospective assessment syst em.  The only alternative is that  prospective normal value systems 
are somehow exempt from the obligation to calculate  a margin of dumping for “all” of the exporter’s 
transactions.  But if that is true, then prospectiv e normal value systems are effectively permitted to 
“zero” – the result of which would be that prospective normal value systems are permitted  to assess 
greater duties than other assessment systems are permitted to assess.570  Nothing in the text of the 
AD Agreement  suggests that the Members intended to create such a disparity. 
                                                      
567 Interim Panel Report, paras. 6.101, 6.110, 6.124, 6.134, 6.137 (Final Report, paras. 7.108, 7.159, 
7.127,7.137 and 7.140). 
568 US – Softwood Lumber V (Article 21.5) , para. 5.52; US – Zeroing (EC) , para. 7.266. 
569 Appellate Body Report, US – Zeroing (EC) , para. 234. 
570 The comparison of transaction-by-transaction a ssessment and the US assessm ent system in the US 
comments on Japan Answers to the Second Set of Panel Questions demonstrates that if zeroing is prohibited with 
respect to the US system, then greater  duties are assessed on a transaction-by-transaction basis.  This is simply 
because in a transaction-by-transaction basis, no refund is given for non-dumpe d transactions, which is, of course, 
another way of setting the comparison at zero.  It is unclear why setting the comparison at zero would be 
                   WT/DS322/R 
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 6.58 Finally, the United States asserts that the Appe llate Body’s finding is inconsistent with the 
manner in which Members use third country transac tions and calculate cons tructed normal value as 
alternatives to home market sales as the basis for no rmal value in accordance with Article 2.2 of the 
AD Agreement .  In particular, recalling the Article 21. 5 panel's finding on this question in 
US  – Softwood Lumber V , the United States argues that if the term “margin of dumping” as used in 
Article 2.2 of the AD Agreement  referred to a margin established for the product as a whole, this would 
radically alter the way Members applied Article 2.2.   The United States notes that it presented this 
argument to the Appellate Body in US – Zeroing (EC) , and that the Appellate Body failed to address it, 
or provide any reasoning to refute it. 
6.59 Because the Appellate Body in US – Zeroing (EC) failed to address the contextual arguments 
demonstrating that the terms “dumping” and “margi ns of dumping” cannot invariably refer to the 
product as a whole, the United States argues that the Appellate Body's report provides no guidance, let alone compelling reasoning, for this Panel to reconsider these issues. 
(e) the “as such” finding against zeroing procedures
571   
6.60 The United States recalls that the Appellate Body in US – Zeroing (EC)  explained that dispute 
settlement can include not only acts applying a law, bu t also “‘acts setting forth rules or norms that are 
intended to have general a nd prospective application.’”572 Furthermore, according to the United States, 
the Appellate Body in US – Zeroing (EC)  noted that “‘acts setting forth rules or norms that are intended 
to have general and prospectiv e application’ are measures subj ect to WTO dispute settlement.”573  Thus, 
the United States contends that the Appellate Body held  that a rule or norm must be part of an act or 
instrument taken by a Member in order to be a measure – even if that act or instrument is unwritten, or is 
not transparent.  According to the United States, th e Appellate Body found that it is not sufficient to 
identify a rule or norm in the descr iptive sense, that is to say, that the Member has done something “as a 
rule” or “normally.”  The Member must have done  something that creates a rule or norm that is 
prescriptive, that is intended to have genera l and prospective application. 
6.61 The United States notes that the Appellate Body in US – Zeroing (EC)  emphasized that a panel 
“must not lightly assume” the existence of a measure providing a rule or norm of general application 
that is not in the form of a written document574, emphasizing that “particular rigour” is required on the 
part of a panel to support a conclusi on as to the existence of a measure.575  The Appellate Body 
explained that the complaining party must meet a “high threshold” in demonstrating such a measure.576   
6.62 Although the United States finds the standards artic ulated by the Appellate Body to be correct, 
it argues that the Appellate Body did not apply them in US – Zeroing (EC) .  Thus, the United States 
submits that the Panel in this dispute should not fo llow the Appellate Body's model of how to apply the 
analytical approach it described.  Nevertheless, th e Panel in this dispute should apply the standards 
articulated by the Appellate Body; and in doing so, the United States contends that the Panel should 
reject Japan's "as such" claim.  According to the Un ited States, Japan identified no act or instrument of 
the United States, and failed to demonstrate in any wa y that there is any measure of the United States 
with general and prospective application that pr escribes “zeroing.”  Thus, the United States requests 
                                                                                                                                                                     
permissible at the time of importation, but not during an assessment proceeding that examines past transactions on 
an aggregate basis. 
571 US Comment, paras. 40-47;  US Comments on Japan's Comments, paras. 11-26; US Opening 
Statement at the Third Meeting of the Panel, paras. 25-26. 
572 Appellate Body Report, US – Zeroing(EC) , para. 188. 
573 Ibid, para. 189. 
574 Ibid, para. 196. 
575 Ibid, para. 198. 
576 Ibid, para. 198. WT/DS322/R          
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that the Panel reconsider its findings in light of th e correct standard articulated in the Appellate Body 
report. 
6.63 In response to Japan's comments on the releva nce of the Appellate Body's findings in 
US – Zeroing (EC) to its "as such" claims, th e United States argues that Japan’s abandonment of its "as 
such" claim in relation to the W-to-T comparison methodology fundamentally contradicts, and thereby 
undermines, its arguments in this dispute, particul arly with respect to its “as such” challenge to a 
so-called “methodology” of “zeroing” in T-to-T calcula tions in investigations.  The United States notes 
that Japan is purportedly dropping a claim against an actual measure (the USDOC targeted dumping regulation) and instead pursuing a claim against a “methodology” evidenced by its use by USDOC in exactly one instance.  Thus, according to the United St ates, Japan admits that it lacks the evidence to 
establish a prima facie  case for its as-such claim against an act ual regulatory provisi on of a Member – 
an actual, undisputed measure – which has not been app lied.  In the view of the United States, this only 
reinforces the lack of a prima facie  case for Japan’s as-such claim against a supposed T-to-T 
“methodology” which is not reflected in any act or instrument of the responding Member and for which the sole evidence for its existence is  the fact that the United States h as used a T-to-T approach once.  
6.64 The United States also contends that the Panel in  this dispute should di smiss Japan's "as such" 
claim in relation to simple zeroing in new shipper reviews because as with its other “as such” claims, 
Japan is seeking an as-such finding against a descrip tion, and not a measure.  According to the United 
States, Japan never identifies any act or instrume nt setting forth a rule or norm of prospective 
application concerning zeroing in new shipper review s; it merely says that the USDOC has done this.  
Moreover, Japan supports this assertion on the basis of a single example of a determination that is not 
even the subject of this dispute.
577  None of the determinations that Japan has challenged in this dispute 
was a new shipper review.  Furthermore, the United  States contends that Japan makes no effort to 
explain how there is an “as such” measure which cau sed the single example of zeroing in a new shipper 
review it cites, let alone any broader use of zeroing in new shipper reviews.  Thus, the United States 
argues that Japan’s request for an as-such finding in  new shipper reviews does not meet even the most 
basic requirements for a prima facie  case, and it should be rejected. 
C. COMMENTS OF THE PARTIES ON THE INTERIM REPORT  
1. Comments of Japan 
6.65 Japan requests that the Panel amend paragraph 6.22 of the interim report578 to include a 
reference to the USDOC Anti-Dumping Manual.  Since it is factually correct that Japan has referred to 
this Manual as additional evidence to support its pos ition on the nature of the zeroing procedures, we 
have amended this paragraph as requested by Japan. 
6.66 Japan requests that the Panel delete the fifth sentence of paragraph 6.41 of the interim report579 
because in Japan's view this sentence can be considered to suggest that the existence of discretion not to 
apply the standard zeroing line is important to the Pa nel's finding that the zeroing  line is not a measure, 
which is in contradiction with the Panel's finding in paragraph 6.52 of the interim report580  that the 
Assistant-Secretary's discretion to decide not to a pply the zeroing procedures in a particular instance 
has no bearing on the normative character of the zeroing methodology.  The United States disagrees with this proposed change.  
                                                     
 
577 Japan First Submission, para. 133. 
578 Paragraph 7.22 of the Final Report.   
579 Paragraph 7.46 of the Final Report.  
580 Paragraph 7.57 of the Final Report.                    WT/DS322/R 
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 6.67 The point made in paragraph 6.41 of the interim report581 is that what Japan has termed the 
standard zeroing line is simply a line of computer co de which can only be executed in a particular case 
if a decision is taken to apply it in that case.  By contrast, paragraph 6.52 of the interim report582 pertains 
not to the standard zeroing line but to the zeroing me thodology which, as explained in paragraph 6.42 of 
the interim report583, is distinct from the standard zeroing line.   Since paragraphs 6.41 and 6.52 of the 
interim report thus address different issues, there is no inconsistency between the statement in the fifth 
sentence of paragraph 6.41 of the interim report and our finding in paragraph 6.52 of the interim report 
that the existence of discretion does not affect th e character of the zeroing methodology as a rule or 
norm of general and prospective app lication.  We therefore decline to make the change requested by 
Japan to paragraph 6.41 of the interim report.   
6.68 Japan requests that the Panel amend the first sen tence in paragraph 6.48 of the interim report584 
because in Japan's view this sente nce uses a formulation that suggests that the concept of dumping can 
be applied in relation to individual transactions.  Specifically, Japan proposes that "which provides that 
non-dumped export sales are not allowed to offset margins found on dumped export sales" be replaced 
with "i.e. not allowing the negative price differenc es found on US sales that were priced below normal 
value to offset the positive price differences found on other US sales..." 585  Japan proposes the same 
amendment to the text of footnote 540 of the interim report.586  The United States opposes these changes 
proposed by Japan.  
6.69 In the first sentence of paragraph 6.48 of the interim report587 the Panel finds that the statements 
referred to in the preceding paragraph provide evidence  of the existence of a norm "which provides that 
non-dumped export sales are not allowed to offset margins found on dumped export sales".  Our 
characterization of this norm reflects the terminol ogy used in the statemen ts quoted in the preceding 
paragraph upon which we rely as evidence demonstrati ng the existence of that norm.  Thus, we do not 
believe it would be appropriate to change this sente nce as suggested by Japan.  However, in order to 
accommodate Japan's concern, we have added a footnote  to the first sentence of paragraph 6.48 of the 
interim report to explain the reason for our use of this terminology.  
6.70 Japan proposes an amendment to paragraph 6.57 of the interim report588 to reflect the fact that 
Japan's argument regarding the need for consistent tr eatment in terms of the product scope is not limited 
to the original investigation.  Japan  suggests that the last part of the paragraph be amended to read "and 
the need for consistent treatment of a product in an anti-dumping investigation and throughout the life 
of an anti-dumping action".  The United States opposes this suggestion.  
6.71 Although the United States is correct that stric tly speaking the change proposed by Japan is 
perhaps unnecessary because this sec tion only addresses the issue of wh ether zeroing is prohibited in 
the context of original investigations, it is also true  that this proposed change is consistent with the 
arguments presented by Japan in these proceedings.589  Since paragraph 6.57 of the interim report is 
simply intended to provide a brief summary of Japan's arguments, we have accepted the change 
proposed by Japan.  
                                                      
581 Paragraph 7.46 of the Final Report.  
582 Paragraph 7.57 of the Final Report.  
583 Paragraph 7.47 of the Final Report.  
584 Paragraph 7.53 of the Final Report.  
585 There is a manifest error in the suggestion of Japan regarding the first sentence of paragraph 7.48 in 
that, as noted by the US, "negative price differences found on US sales that were priced below  normal value" 
obviously should read "negative price differences found on US sales that were priced above  normal value".   
586 Footnote 688 of the Final Report.  
587 Paragraph 7.53 of the Final Report.  
588 Paragraph 7.62 of the Final Report. 
589 See, e.g., Japan Second Written Submission, para. 43.  WT/DS322/R          
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6.72 Japan proposes a change to paragraph 6.60 of the interim report
590 to clarify that Japan argues 
that a review under Article 9.3.2 of the AD Agreement  involves a determination of a margin of dumping 
for the 'product'.  Japan specifically proposes that the penultimate sentence of the paragraph be changed 
as follows: 
"In addition, even in a prospective normal value system final liability for payment of 
anti-dumping duties, must, if requested,  be determined in a review under Article 9.3.2 
that involves a determination of the margin of dumping for the product, for the review 
period ."  
We note that the penultimate sentence of paragraph 6.60 of the interim report is based on paragraph 32 
of the oral statement of Japan at the second meeting of  the Panel and that the change proposed by Japan 
is consistent with that paragraph except for the add ition of the words "if requested".  We have therefore 
accepted Japan's proposal to change the penultimate se ntence of paragraph 6.60 of the interim report 
except for the words "if requested".  
6.73 Japan proposes that in the first sentence of paragraph 6.61 of the interim report591 and in the 
second sentence of paragraph 6.70  of the interim report592 the word  "necessarily"  be inserted between 
"comparison" and "produces" to better reflect Japan 's argument.  We agree that Japan's suggested 
change would render these sentences more accurate a nd we have therefore made the change requested 
by Japan.  
6.74 Japan proposes a change to the third sentence of paragraph 6.61 of the interim report593 to make 
it clear that Japan refers to the determination of normal value for different time periods merely as an 
example to demonstrate that without zeroing the average-to-average and average-to-transaction 
comparisons still produce different results.  Japan propo ses that this sentence be changed to read: "Thus, 
an average-to-transaction comparison will produce a r esult different from that of an average-to-average 
comparison for example if the average normal values in the two comparisons are calculated on different 
bases ."  The United States disagrees with this change.  
6.75 We decline to make the change requested by  Japan.  Paragraph 6.61 of the interim report594 
identifies the two bases advanced by  Japan as support for its argument  that an average-to-transaction 
comparison without zeroing does not necessarily yield a resu lt identical to that of an average-to-average 
comparison: first, the use of a normal value estab lished for a different time period and second, the 
limitation of the comparison to those export transactions  that constitute the pattern of targeted dumping.  
Since Japan has not described any other scenario in which, without zeroing, the average-to-transaction 
method would yield a result different from the aver age-to-average comparison, the addition of the 
words "for example" would be factually incorrect.   
6.76 Regarding paragraph 6.90 of the interim report595, Japan observes that the primary thrust of 
Japan's claims stems from the definition of "dumping"  and "margin of dumping" in Article 2.1 of the 
AD Agreement  and from the "fair comparison" requirement in Article 2.4 and not from Article 2.4.2 of 
the AD Agreement .  Japan therefore urges the Panel to addr ess what it characterizes as its main claims.  
The United States disagrees with this request.  
                                                      
590 Paragraph 7.65 of the Final Report. 
591 Paragraph 7.66 of the Final Report.  
592 Paragraph 7.146 of the Final Report. 
593 Paragraph 7.66 of the Final Report.  
594 Paragraph 7.66 of the Final Report.  
595 Paragraphs 7.87 and 7.152 of the Final Report.                   WT/DS322/R 
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 6.77 We explain in paragraphs 6. 90-6.92 of the interim report596 our view that, having found that by 
maintaining model zeroing procedures in the cont ext of original investigations USDOC acts 
inconsistently with Article 2.4.2 of the AD Agreement , it is appropriate to exercise judicial economy 
with respect to Japan's claims under Articles 2.1 and 2.4 of the AD Agreement  and Article VI:1 and VI:2 
of the GATT 1994.  Japan does not advance any argument to demonstrate that this exercise of judicial 
economy was not within our discretion.  In partic ular, Japan does not explain why additional findings 
under Articles 2.1 and 2.4 of the AD Agreement  and Article VI:1 and VI.2 of the GATT 1994 would be 
necessary to resolve the dispute.  We therefore decline to address the claims of Japan under these 
provisions.  
6.78 Japan proposes to change to the first senten ce of paragraph 6.125 of the interim report597 as 
follows: "Japan does not contest that the averag e-to-transaction method in the second sentence of 
Article 2.4.2 would be redundant if the United States demonstrated that  it always and necessarily  
yielded a result identical to that of the average-to -average comparison method in the first sentence of 
Article 2.4.2."  Japan explains that this change is  necessary to reflect that it is the United States which 
has advanced the argument that without zeroing the average-to-transaction method will always produce 
the same results as the averag e-to-average comparison.  The United States opposes the change 
requested by Japan.  
6.79 We decline to make this suggested change.  That  it is the United States that makes the argument 
that without zeroing the average-to-transaction comp arison will always yield the same results as the 
average-to-average comparison is sufficiently clear  from the context, particularly the immediately 
preceding paragraph.  Therefore, Japan has not offe red a compelling explanation of why the suggested 
change is necessary.  
6.80 Japan requests that the Panel de lete the last sentence of paragraph 6.126 of the interim report598 
because in Japan's view this sente nce gives a misleading impression of  Japan's argument.  Japan points 
out that it has argued that the text of Article 2.4.2 itself does not prohibit a Member from using different 
bases for calculating the weighted average normal va lue and that this argument is a legal argument 
based on text that does not require Japan to adduce evid ence.  Japan also points out that in stating that 
Article 2.4.2 that Article 2.4.2 was crafted on th e assumption that Members could use different bases for 
calculating normal values Japan used terminology (" crafted") and ("assumption") used by the United 
States but was making an argument based on the text of the AD Agreement .  The United States opposes 
this proposed change.  
6.81 We agree with Japan that the last sentence of  paragraph 6.126 of the interim report does not 
correctly reflect Japan's argument.  By stating that Japan failed to adduce "evidence" to substantiate its 
assertion that the second sentence of Article 2.4.2 was crafted on the assumption that Members could apply the average-to-transaction method by calcula ting an average normal value on a basis different 
from the basis used to calculate the average normal value in the av erage-to-average comparison, the 
sentence suggests that this assertion of Japan was a factual assertion separate from Japan's interpretation 
of the text.  In light of our review of the releva nt paragraphs of Japan's opening statement at the second 
meeting, we conclude that Japan's statement that  "Article 2.4.2 was crafted on the assumption that 
Members could choose to use different bases for calcu lating the weighted aver age in the W-to-W and 
W-to-T comparisons" is based on its argument that th e text of Article 2.4.2 does not prohibit a Member 
from using different bases for calculating the weighted average normal value in the two situations.  To 
                                                     
 
596 Paragraphs 7.87-7.88 and 7.152 of the Final Report. 
597 Paragraph 7.128 of the Final Report. 
598 Paragraph 7.129 of the Final Report.  WT/DS322/R          
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properly reflect the legal character of Japan's ar gument, we have redrafted the last sentence of 
paragraph 6.126 of the interim report.
 599    
6.82 Japan suggests that the Panel amend the first tw o sentences of paragraph 6.128 of the interim 
report600 to clarify that Japan's statement on the si gnificance of the word "individual" in the second 
sentence of Article 2.4.2 was made in response to a ques tion of the Panel.  Japan is factually correct that 
it only addressed this issue in response to a question of  the Panel.  We have therefore made the changes 
suggested by Japan.  
6.83 Japan requests the Panel to delete the first sen tence of paragraph 6.130 of the interim report601 
because Japan fails to see why the fact  that Japan's interpretation may yield significantly higher margins 
of dumping renders that interpretation logically in consistent.  The United States disagrees with this 
proposed change. 
6.84 We consider that we have fully explained our view on the various logical inconsistencies in 
Japan's position in paragraphs 6.130-6. 132 of the interim report.  Thus, contrary to what Japan asserts, 
the source of the logical inconsistency is not solely the fact that Japan's interpretation would lead to 
higher margins.  We thus decline to ma ke the change requested by Japan.   
6.85 Japan suggests that the third sentence of  paragraph 6.136 of the interim report602 would be 
clearer if it read: 
"In particular, we see no textual difference between the average-to-transaction method 
and the transaction-to-transaction method that can sustain the view that zeroing is prohibited under one of these methods  of comparison but not the other
".  
We do not consider that the change proposed by Jap an is appropriate.  Following the conclusion drawn 
in the preceding paragraphs that the average-to-transaction method would be inutile  if zeroing were 
prohibited, paragraph 6.136 of the interim report ra ises the question whether there is a basis to argue 
that zeroing is prohibited under the average-to-ave rage and transaction-to-transaction methods but not 
under the average-to-transaction method.  In this regard, the paragraph discusses in particular the 
question whether it is possible to argue that zeroing, while not prohibited under the 
average-to-transaction method, is prohibited under th e transaction-to-transaction method.  It does not 
deal with the question of whether it can be  argued that zeroing is prohibited under the 
average-to-transaction method but not under the transaction-to-transaction method.  While Japan's 
proposed change is thus not appropr iate, we have made a change to the third sentence of the paragraph 
to clarify that the question raised in this sentence is  whether it is possible to argue that zeroing, while not 
prohibited under the average-to-transaction method,  is prohibited under the transaction-to-transaction 
method. 
 6.86 Japan requests us to change para graph 6.159 of the interim report
603 to better reflect Japan's 
argument regarding Article 2.4 by changing " ... because it inflated the margin of dumping and 
artificially reduced export prices" to ".. because it results in an unfair, biased comparison between 
export price and normal value".  This change co rresponds to paragraph 172 of the First Written 
Submission of Japan.  We have therefore accepted it.  
                                                      
599 Paragraph 7.129 of the Final Report.  
600 Paragraph 7.131 of the Final Report. 
601 Paragraph 7.133 of the Final Report.  
602 Paragraph 7.139 of the Final Report.  
603 Paragraph 7.180 of the Final Report.                    WT/DS322/R 
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 6.87 Japan suggests that, in order to properly refl ect Japan's argument, the third sentence of 
paragraph 6.168 of the interim report604 be amended to include the words "as a result of the definitions 
in Article 2.1 and Article VI," before  "the terms ...".  We have accepted this change since it is consistent 
with the arguments of Japan before the Panel.   
6.88 Japan proposes that the first two sentences of paragraph 6.169 of the interim report605 be deleted 
because in Japan's view these sentences do not correctly characterize Japan's arguments.  Japan points out that it has repeatedly stated before the Panel that it takes no position on the issue of the applicability 
of Article 2.4.2 to reviews.  The United States opposes this proposal.  
6.89 The United States is factually correct when it points out that the first two sentences of 
paragraph 6.169 of the interim report reflect statements that Japan has actually made in this proceeding.  
However, we consider that it is appropriate to clar ify that Japan made these statements only in response 
to a Panel Question and to stress that Japan has stated  that in its view it is not necessary for the Panel to 
address the issue of whether Article 2.4.2 of the AD Agreement  applies only to "original investigations".  
We have redrafted para graph 6.169 of the interim report accordingly.  
6.90 Japan requests that the Panel delete para graphs 6.190-6.193 of the interim report
606 because 
they deal with an issue – whether Article 2.4.2 of the AD Agreement  applies to proceedings other than 
investigations - that in Japan's view is not before  the Panel and the disposition of which is not necessary 
for the resolution of this dispute.  Alternatively, Jap an requests that the Panel clarify that Japan takes no 
position on this issue because it believes that zeroi ng is prohibited by Articles 2.1 and 2.4 of the 
AD  Agreement .  The United States opposes this request.  
6.91 Article 2.4.2 of the AD Agreement  is one of the provisions re lied upon by Japan as support for 
its claim that simple zeroing in the context of peri odic reviews and new shipper reviews is inconsistent 
with the AD Agreement .  It is true that we consider th at zeroing is prohibited only where the 
average-to-average comparison is used to determ ine the existence of margins of dumping during the 
investigation phase and that, as a con sequence, whether Article 2.4.2 a pplies to proceedings other than 
investigations does not affect our conclusion that si mple zeroing is not prohibited in periodic reviews 
and new shipper reviews.  This does not mean, howev er, that it is inappropriate for us to address the 
issue of the applicability of Article 2.4.2 on an arguendo  basis607 as additional support for our 
conclusion that Article 2.4.2 does not prohibit simp le zeroing in the calculation of margins of dumping 
in periodic reviews and new shipper reviews.  Second,  we have stated explicitly in paragraph 6.172 of 
the interim report608 that Japan considers that it is not necessar y for the Panel to decide whether or not 
Article 2.4.2 applies to proceedings other than investigations under Ar ticle 5.  Thus, we have clearly 
acknowledged Japan's position on this issue.  Third, we have already expressed a view on the limited 
applicability of Article 2.4.2 in our discussi on in paragraph 6.119 of the interim report609 without 
providing a legal analysis of the basis for taking that vi ew.  It is therefore necessary for us to explain the 
reasons for taking that position.  In light of these c onsiderations we have deci ded to retain paragraphs 
6.190-6.193 of the interim report610, but we have added a footnote to the first sentence of paragraph 
7.211 of the final report to respond to Japan's view th at it is not necessary for the Panel to consider the 
issue of the applicability of Article 2.4.2.  
                                                      
604 Paragraph 7.189 of the Final Report. 
605 Paragraph 7.190 of the Final Report. 
606 Paragraphs 7.212-7.215 of the Final Report. 
607 See first sentence of paragraph 7.211 of the Final Report. 
608 Paragraph 7.193 of the Final Report.   
609 Paragraph 7.122 of the Final Report.  
610 Paragraphs 7.212-7.215 of the Final Report. WT/DS322/R          
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6.92 Japan requests the Panel to amend pa ragraph 6.204 of the interim report
611 to add the phrase 
"[i]t is clear as a factual matter that USDOC app lied simple zeroing in these 11 periodic reviews.  
However, for ... ."  Japan explains that the Panel ha s correctly noted in paragraph 6.46 of the interim 
report that it is clear as a factual matter that USDOC always applies zeroing.  Japan proposes a similar change to paragraph 6.235 of the interim report.
612  The United States opposes both these changes.  
6.93 It has not been disputed that USDOC has app lied simple zeroing in the periodic reviews at 
issue.  The changes proposed by Japan  therefore are factually correct.  On the other hand, it is not clear 
why it is necessary for us to state that USDOC has applied simple zeroing in these reviews when we 
have found that the AD Agreement  does not proscribe simple zeroing in  periodic reviews.  We therefore 
decline to make the changes proposed  by Japan to paragraphs 6.204 and 6.235 of the interim report.  
6.94 Japan requests that the Panel amend paragraph 6.224 of the interim report613 to reflect that 
Japan has claimed that the margin of dumping must be calculated in conformity not only with Article 
2.4 but also with Articles 2.1 and 2.4.2.  Japan propo ses to substitute "Article 2" for "Article 2.4" after 
"in conformity with" in the fourth line of this paragraph.  The United States opposes this suggestion.  
6.95 We decline to make this change.  As written,  paragraph 6.224 of th e interim report already 
refers to Articles 2.1, 2.4 and 2.4.2.  Moreover, the paragraph is an accurate summarization of 
paragraphs 190-191 of the First Submission of Japan.  
6.96 Finally, Japan proposes changes to correct the Fe deral Register reference for one of the periodic 
reviews mentioned in paragraph 2.3 and to correct the short citation forms of several measures referred 
to in paragraphs 2.3, 3.2 and 4.24 9 of the interim report.  Japan also  proposes that the word "average" be 
inserted between "weighted" and "normal value" in th e third sentence of paragraph 4.251.  Japan also 
suggests a number of corrections to typo graphical errors in paragraphs 6.229  and 6.231 of the interim 
report.  We have accepted all these suggested corrections.  
2. Comments of the United States  
6.97 The United States requests that the Panel either delete or amend the last sentence of 
paragraph 6.12 of the interim report614 in order to avoid the negative implication that what is provided 
for in the second sentence of Article 17.6(ii) of the AD Agreement  is not permitted under the DSU.  
Japan has not commented on this proposed change.  
6.98 In order to address the issue raised by the Unite d States we have redrafted the last sentence of 
paragraph 6.12 of the interim report.  
6.99 The United States raises two issues with respect  to paragraphs 6.43-6.45 of the interim 
report.615  First, the United States submits that, contrary to  what is set forth in the report, the Appellate 
Body has not equated norms and measures but has found  that acts or instruments setting forth rules or 
norms of prospective application may be measures.  The United States refe rs in this regard to its Other 
Appellant Submission in US – Zeroing (EC) .  In this dispute Japan has fa iled to identify such an act or 
instrument independent of the specific results wh ich purportedly represent the application of the 
measure.  Second, the United States consider s that paragraph 6.44 of the interim report616 is superfluous 
since neither party has argued that a rule or norm must be in written form.  The United States proposes 
                                                      
611 Paragraph 7.226 of the Final Report.   
612 Paragraph 7.256 of the Final Report.   
613 Paragraph 7.246 of the Final Report.  
614 Paragraph 7.12 of the Final Report.  
615 Paragraphs 7.48-7.50 of the Final Report.   
616 Paragraph 7.49 of the Final Report.                    WT/DS322/R 
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 that the Panel delete paragraph 6.44 of the in terim report and add a sentence to paragraph 6.45617 
indicating that Japan and the United States agree th at where a measure is not written, circumstantial 
evidence may be proffered to demonstrate the existenc e of the measure.  Should the Panel decide not to 
delete paragraph 6.44 of the interim report, the United States requests that a footnote be inserted 
clarifying that the United States did not argue that a measure had to be in written form.   
6.100  Japan requests that the Panel reject the argument of the United States that a rule or norm cannot 
in and of itself be a measure that can be challenge d as such in WTO dispute settlement.  Regarding the 
new sentence proposed by the United States as new fi rst sentence of paragraph 6.45 of the interim 
report, Japan disagrees that the evid ence in this dispute is properly ch aracterized as "circumstantial".  
6.101  In our view, the first argument raised by the Un ited States in respect of paragraphs 6.43-6.45 of 
the interim report618 in essence repeats the argument advanced by the United States during earlier stages 
of this proceeding that there is no act or inst rument causing USDOC to apply zeroing.  While the 
United States disagrees with our approach to that qu estion, we consider that the purpose of the interim 
review process is not to provide another opportunity for a party to re-argue issues that have already been 
discussed in detail in written submissions, oral statem ent and responses to panel questions.  Article 15.2 
of the DSU provides that a party may request a panel "t o review precise aspects of the interim report.."  
By contrast, Article 17 of the DSU provides for an appellate review process with respect to "issues of 
law" and "legal interpretations deve loped by the panel".  We find it significant in this respect that the 
United States has raised the same question in anothe r dispute currently before the Appellate Body and 
that it refers us to the arguments contained in a s ubmission which it has made in that proceeding.  In 
light of these considerations, we conclude that th e first issue raised by the United States regarding 
paragraphs 6.43-6.45 of the interim report does not wa rrant a change to the text of the interim report. 
6.102  With regard to the comments made by the United States on paragraph 6.44 of the interim 
report619, we have added a footnote to the first sentence of this paragraph to make it clear that the 
United States has not taken the position in this disput e that a measure must necessarily exist in written 
form.  
6.103  The United States expresses its disagreement with the Panel's discussion in 
paragraphs 6.46-6.49 of the interim report620 of the relevance of the use of zeroing over time and refers 
the Panel in this respect to the argument in its Other Appellant Submission in US – Zeroing (EC) .  The 
United States submits that the mere fact that a Memb er has acted consistently in the past says nothing 
about whether there is an act or instrument causing th at behaviour and that cons istent behaviour in the 
light of identical facts can be expected of a Member which does not act in an arbitrary manner.  In this 
connection, the United States argues that the last sente nce of paragraph 6.46 of the interim report would 
be more correct if it were phrased:  "Thus, it is clear as a factual matter that USDOC has always applied zeroing."  The United States points out that the fact  that discretion may have been exercised in a 
particular manner in the past does not establish as a factual matter the manner in which it will be 
exercised in the future, as illustrated by the r ecent announcement of USDOC that it will no longer use 
zeroing in investigations involving average-to-ave rage comparisons.  Japan considers that the 
United States repeats an argument which it has advanced  at an earlier stage of the proceeding and which 
the Panel properly rejected in its interim report.  Jap an also submits that the last sentence of paragraph 
6.46 of the interim report is consistent with the stat ements quoted in paragraph 6.47 of the interim report 
and that the recent formal announcement by the USDOC  that it will abandon the use of zeroing shows 
                                                     
 
617 Paragraph 7.50 of the Final Report.  
618 Paragraphs 7.48-7.50 of the Final Report.   
619 Paragraph 7.49 of the Final Report.  
620 Paragraphs 7.51-7.54 of the Final Report.  WT/DS322/R          
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that the zeroing procedures constitute a general rule or norm that even the USDOC recognizes must be 
formally abandoned and replaced with a new procedure.  
6.104  In our view, the argument of the United States th at consistent behaviour in the past is not 
sufficient to conclude that a measure exists that can be challenged as such is not different from the 
argument addressed in paragraph 6.49 of the interim report.
621  As explained in that paragraph, our 
conclusion that a measure exists that can be challeng ed as such is not based simply on the fact that 
USDOC has consistently applied zeroing.  In fact, we explicitly point out that to  base an "as such" claim 
solely on consistent practice would raise serious c onceptual questions but that these questions do not 
arise in this case because the evidence before us indicates not only that USDOC invariably applies 
zeroing but also that it has repeatedly described zeroi ng in terms of a long-standing policy.  Finally, we 
recall our observation above regarding the limited func tion of the interim review process as compared 
to the function of appellate review.   
6.105  The United States disagrees with the Panel's di scussion in paragraph 6.52 of the interim 
report622 of the relevance of the discretion available to the USDOC Assistant Secretary to provide 
offsets or not.  Referring to its Other Appellant Submission in US – Zeroing (EC) , the United States 
submits that the question of whether a Member has discretion to act in a WTO-inconsistent manner is 
separate from the question of whether there is a measur e.  Moreover, there is no basis to conclude from 
past behaviour that future behaviour is predictable or that predictability is the test for identifying a 
measure.  The United States considers that these a nd other assumptions in the interim report regarding 
how to identify a measure have alarming implications .  Japan has not commented on the issues raised by 
the United States regarding this paragraph.  
6.106  The key point in paragraph 6.52 of the interim report is that the fact that USDOC enjoys 
discretion with regard to how it treats export prices that  are higher than the normal value is not a basis to 
conclude that the zeroing methodology is not a rule  or norm of general and prospective application 
given that this discretion has been exercised by ad opting a policy of systematically applying zeroing.  
As in the case of the comments of the United States on paragraphs 6.43-6.45 and paragraphs 6.46-6.49 
of the interim report, the comments of the United States on this paragraph reflect a fundamental 
disagreement with the approach that we have taken in  identifying the existence of a measure that can be 
challenged as such.  As explained a bove, we consider that it is not appropriate to reconsider in the 
interim review process fundamental legal questions th at have already been extensively debated by the 
parties.   
6.107  The United States requests that the Panel delete  the last two sentences of paragraph 6.122623 as 
well as paragraphs 6.123 and 6.135 of the interim report.624  The United States asserts that whether 
dumping may be masked by the application of th e transaction-to-transaction comparison methodology 
was not raised by any party in this dispute nor was it the subject of any questions from the panel.  The 
United States considers that there may be circ umstances in which the transaction-to-transaction 
comparison may mask the existence of dumping and th at while the Panel appears to have concluded 
otherwise, such a conclusion is unnecessary to support the Panel's analysis and is without support in the 
record before the Panel.  Japan opposes th e changes proposed by the United States.  
6.108  We decline to make the changes re quested by the United States.  Fi rst, we consider that it is 
well established that a panel is not obliged to limit its legal reasoning to arguments presented by the 
                                                      
621 Paragraph 7.54 of the Final Report.   
622 Paragraph 7.57 of the Final Report.  
623 Paragraph 7.125 of the Final Report.  
624 Paragraphs 7.126 and 7.138 of the Final Report.                     WT/DS322/R 
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 parties to a dispute.625  Second, the report fully explains why we considered it necessary to raise the 
issue of whether dumping may be masked by a the transaction-to-transaction method.  As stated in 
paragraphs 6.112-6.113 of the interim report626, an important consideration guiding our analysis of 
whether simple zeroing is proscribed in investigations  is the need to interpret Article 2.4.2 in a manner 
that reflects the particular interrelationship between  the three comparison methods identified in Article 
2.4.2 in a logically coherent manner, consistent with the requirement to interpret the terms of a treaty in 
their context and in light of the principle of effectiven ess.  One aspect of this issue, which we analyze in 
paragraph 6.122 627, is the question whether an interpretation of Article 2.4.2 as prohibiting zeroing only 
in the context of the average-to-average me thod is consistent with the nature of the 
average-to-transaction method in the second sentence of Article 2.4.2 as an exception not only to the 
average-to-average method but also to the transaction- to-transaction method.  It is in this particular 
context that the question of whether dumping may be  masked by the transaction-to-transaction method 
necessarily arose.  While we have c oncluded, in light of other textual and contextual elements, that this 
issue is not of decisive importance, we nevert heless consider that our report must provide a 
comprehensive explanation of our reasoning.  
6.109  The United States proposes that the Panel ame nd paragraph 6.221 of the interim report628 to 
make a cross-reference to the Panel's conclu sion in paragraph 6.235 of the interim report629 that reliance 
on margins calculated in periodic reviews under Artic le 9.3 on the basis of simple zeroing is not 
WTO-inconsistent.  The United States provides no expl anation of why this change is necessary.  Thus, 
although the change may not affect the substance of the Panel's reasoning and findings and Japan has 
not opposed it, it is not clear that this change is appropriate. 
6.110  The United States proposes deletion of paragraph 6.234 of the interim report because it 
considers that this paragraph does not reflect the arguments of the United States on this issue.   
6.111  A review of submissions of the United States shows that although it is possible to interpret 
certain statements in the manner s uggested in paragraph 6.234, there is  no statement that expressly and 
unambiguously makes a distinction between the existe nce of margins of dumping and the magnitude of 
margins of dumping.  Therefore we have accepted the proposed deletion of paragraph 6.234 of the 
interim report.  
6.112  Finally, the United States has identifies typogra phical errors in paragraphs 4.61, 4.62, 4.133, 
4.141, 4.141-footnotes 210 and 211, 6.28, 6.52 and 6. 108 of the interim report.  We have accepted all 
these corrections suggested by the United States.  
VII. FINDINGS 
A. INTRODUCTION  
1. The Terms "Model Zeroing" and "Simple Zero ing" as used by Japan in this Dispute 
7.1 The claims of Japan in this dispute pertain to "zeroing", a term used by Japan to refer to the 
calculation by the United States Department of Co mmerce ("USDOC") of a weighted average margin 
                                                      
625 Appellate Body Report, EC – Hormones , para. 156; Appellate Body Report; US – Certain EC 
Products , para. 123; Appellate Body Report, Chile - Price Band Systems , paras. 167-168.   
626 Paragraphs 7.115-7.116 of the Final Report.  
627 Paragraph 7.125 of the Final Report.  
628 Paragraph 7.243 of the Final Report. 
629 Paragraph 7.256 of the Final Report.  WT/DS322/R          
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of dumping
630 for an exporter or producer in a manner that does not fully reflect export prices that are 
above the normal value.  Japan distinguishes betw een "model zeroing" and "simple zeroing".  We note 
that "model zeroing" and "simple zeroing" are not te rms of United States' law but labels used by Japan 
for purposes of this dispute.631 
7.2 By "model zeroing" Japan means the method whereby USDOC makes average-to-average 
comparisons of export price and normal value within  individual "averaging groups" established on the 
basis of physical characteristics ("models"632) and disregards any amounts by which average export 
prices for particular models exceed normal valu e in aggregating the results of these multiple 
comparisons to calculate a weighted average marg in of dumping.  Specifically, "model zeroing" means 
that when USDOC aggregates the results of model-sp ecific, average-to-average  comparisons of normal 
value and export price into a weighted average margin of dumping, the numerator of that margin of 
dumping only includes the results of models for which the average export price is less than the normal 
value. 
7.3 By "simple zeroing" Japan means the method whereby USDOC determines a weighted average 
margin of dumping based on average-to-transaction or transaction-to-transaction comparisons between 
export price and normal value and disregards any amounts by which export prices of individual 
transactions exceed normal value in aggregatin g the results of these multiple comparisons.  
Specifically, "simple zeroing" means that when US DOC aggregates the results of comparisons of 
normal value and export price made on an average-to-transaction basis or on a transaction-to-transaction basis, the numerator of the weighted average ma rgin of dumping only 
includes the results of those comparisons in whic h individual export prices are less than the normal 
value.
 633 
7.4 Japan asserts that USDOC routinely uses model ze roing in original investigations, although 
USDOC recently has also applied simple zeroing when  it calculated a dumping margin in an original 
investigation using the transaction-to-transaction meth od, and that in periodic reviews and new shipper 
reviews USDOC routinely uses average-to-transaction comparisons, including simple zeroing.  Japan 
submits that in changed circumstances reviews and sunset reviews USDOC generally does not calculate 
a new margin of dumping but relies on margins of dum ping calculated in original investigations on the 
basis of model zeroing or on margins of dumping calculated in periodic reviews on the basis of simple zeroing. 
7.5 In addition to the application of zeroing in speci fic instances, Japan cha llenges what it describes 
as "(model and simple) zeroing procedures", which Japan considers to be a measure that can be 
challenged as such, i.e. independently of the application of zeroing in specific instances. 
                                                     
 
630 We note that with regard to periodic reviews and new shipper reviews, Japan challenges zeroing not 
only with respect to the calculation of margins of dumping  but also with respect to the calculation of assessment 
rates . 
631 Japan First Written Submission, para. 6, footnote 6.  
632 USDOC Regulations provide for average-to-average comparisons within "averaging groups" 
established on the basis of various criteria, particularly  physical characteristics and level of trade.  In this 
proceeding, Japan uses the term "model" to refer to averaging groups established on the basis of physical 
characteristics.  Japan First Written Submission, para. 18. 
633 Under both the model zeroing method and the simple zeroing method, the denominator  of the 
weighted average overall margin of dumping calculated by  USDOC always includes the total value of all export 
sales, including export sales at prices above the normal value.                   WT/DS322/R 
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 2. Findings requested by the Parties 
7.6 Japan requests the Panel to make the following findings:634 635 
(a) Model and simple zeroing procedures are as such inconsistent with Articles 2.1 and 
2.4.2 of the Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994 (" AD Agreement" or "Agreement ") and Articles VI:1 and VI:2 
of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") because in any 
type of anti-dumping proceeding the determ ination of dumping, and the calculation of 
the dumping margin, is not for the product as a whole. 
(b) Model and simple zeroing procedures are as su ch inconsistent with Article 2.4 of the 
AD Agreement  because in any type of anti-dumping proceeding these procedures are 
inherently biased, distort the comparison of normal value and export price, and thus deprive exporters of a "fair comparison". 
(c) Model and simple zeroing procedures are as such inconsistent with Articles 3.1-3.5 of 
the AD Agreement  because the injury determination in  original investigations is not 
based on an objective examination of positiv e evidence regarding the existence and 
amount of dumping and dumped imports.  
(d) Model and simple zeroing procedures are as su ch inconsistent with Article 5.8 of the 
AD Agreement  because USDOC does not have suff icient evidence of dumping to 
assess whether it must terminate original investigations.     
(e) Model and simple zeroing procedures are as such  inconsistent with Articles 9.1-9.3 and 
9.5 of the AD Agreement  because margins of dumping established in periodic reviews 
and new shipper reviews are not established consistently with Articles 2.1, 2.4 and 
2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994 and the 
United States fails to ensure that duties collected do not exceed the proper margin of 
dumping established on the basis of a "fair comparison" for the product as a whole.   
(f) Model and simple zeroing procedures are as su ch inconsistent with Articles 11.1-11.3 
of the AD Agreement  because changed circumstances reviews and sunset reviews are 
not conducted on the basis of dumping marg ins calculated through a fair comparison 
for the product as a whole, as required by Articles 2.1, 2.4 and 2.4.2 of the AD 
Agreement  and Articles VI:1 and VI:2 of the GATT 1994.    
(g) As a consequence of the above-mentioned inc onsistencies with various provisions of 
the AD Agreement , model and simple zeroing procedur es are as such inconsistent with 
Article 1 of the AD Agreement . 
                                                     
 
634 Japan First Written Submission, paras. 9-10 and 194-195.  As noted below, in its Second Written 
Submission Japan has also requested that the Panel find that what Japan terms the "standard zeroing line" is 
inconsistent with the provisions cited by Japan. 
635 In its written comments submitted on 10 May 2006 on the Appellate Body Report in 
US –  Zeroing (EC) , Japan withdrew its claim with respect to simple zeroing procedures maintained for use in 
average-to-transaction comparisons in or iginal investigations.  Japan Written Comments on the Relevant Issues of 
Law Addressed in the Appellate Body Report in US – Zeroing (EC)  (WT/DS294/AB/R), paras. 31-32.  WT/DS322/R          
Page 132  
 
(h) By maintaining model and simple zeroing procedures, the United States acts 
inconsistently with Article 18.4 of the AD Agreement  and Article XVI:4 of the WTO 
Agreement.   
(i) Through the application of the zeroing procedures, the anti-dumping measures in the 
original investigation in certain cut-to-length carbon quality steel plate products from 
Japan are inconsistent with Articles 1, 2.1, 2.4.2, 2.4 and 3.1-3.5 of the AD Agreement  
and Articles VI:1 and VI:2 of the GATT 1994.   
(j) Through the application of the zeroing procedures, the anti-dumping measures in 11 
periodic reviews are inconsistent with Articl es 1, 2.1, 2.4, 2.4.2 and 9.1-9.3 of the AD 
Agreement  and Articles VI:1 and VI:2 of the GATT 1994.   
(k) Through the application of the zeroing procedures, the anti-dumping measures in the 
expedited sunset review of anti-friction bear ings (other than tapered roller bearings), 
and parts thereof, from Japan and in the full sunset review of corrosion-resistant carbon 
steel flat products from Japan are inconsistent with Articles 1, 2.1, 2.4, 2.4.2, 11.1 and 11.3 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994.  
7.7 The United States requests the Panel to reject the claims of Japan in their entirety.  
3. Relevant Principles regarding Standard of Review, Treaty Interpretation and Burden of 
Proof 
(a) Standard of Review 
7.8 Article 11 of the Understanding on Rules a nd Procedures Governing the Settlement of 
Disputes("DSU") provides the standard of review for WTO panels in general.  Article 11 imposes upon 
panels a comprehensive obligation to make an " objective assessment of the matter", an obligation 
which embraces all aspects of a panel's examin ation of the "matter", both factual and legal.
636 
7.9 Article 17.6 of the AD Agreement sets forth the special standard of review applicable to 
disputes under the AD Agreement :   
 (i) in its assessment of the facts of the ma tter, the panel shall determine whether the 
authorities' establishment of the facts was proper  and whether their evaluation of those 
facts was unbiased and objective.  If the est ablishment of the facts was proper and the 
evaluation was unbiased and objective, even though the panel might have reached a 
different conclusion, the evalua tion shall not be overturned; 
  (ii) the panel shall interpret the relevant provisions of the Agreement in accordance with 
customary rules of interpretation of public international law.  Where the panel finds 
that a relevant provision of the Agreemen t admits of more than one permissible 
interpretation, the panel shall find the authoriti es' measure to be in conformity with the 
Agreement if it rests upon one of th ose permissible interpretations.  
 
                                                     
 
636 Article 11 of the DSU provides in part:  "The function of panels is to assist the DSB in discharging its 
responsibilities under this Understanding and the covere d agreements.  Accordingly, a panel should make an 
objective assessment of the matter before it, including an  objective assessment of the facts of the case and the 
applicability of and conformity with the relevant covered agreements, and make such other findings as will assist 
the DSB in making the recommendations or in giving the rulings provided for in the covered agreements."                     WT/DS322/R 
Page 133 
 
 
 
 Thus, taken together Article 11 of  the DSU and Article 17.6 of the AD Agreement establish the standard 
of review this Panel must apply with respect to  both the factual and the legal aspects of the present 
dispute.  
(b) Rules of Treaty Interpretation 
7.10 Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the 
provisions of the covered agreements "in accordance with customary rules of interpretation of public 
international law".  It is generally accepted that th ese customary rules are reflected in Articles 31-32 of 
the Vienna Convention on the Law of Treaties ("Vienna Convention" ).  Article 31(1) of the 
Vienna Convention  provides:  
"A treaty shall be interpreted in good faith in accordance with the ordinary meaning to 
be given to the terms of the treaty in their context and in the light of its object and 
purpose."  
7.11 In the context of disputes under the AD Agreement , the Appellate Body has stated that:  
"The  first  sentence of Article 17.6(ii), echoing closely Article 3.2 of the DSU, states 
that  panels  'shall' interpret the provisions of the  AD Agreement  'in accordance with 
customary rules of interpretation of public in ternational law.'  Such customary rules are 
embodied in Articles 31 and 32 of the Vienna  Convention on the Law of 
Treaties   ('Vienna Convention' ).  Clearly, this aspect of Article 17.6(ii) involves no 
'conflict' with the DSU but, rather, confirms that the usual rules of treaty interpretation 
under the DSU also apply to the  AD Agreement . … 
The  second   sentence of Article 17.6(ii) … presupposes   that application of the rules of 
treaty interpretation in Articles 31 and 32 of the  Vienna Convention   could give rise to, 
at least, two interpretations of some provisions of the  AD Agreement ,  which, under 
that Convention, would both be ' permissible   interpretations.'  In that event, a measure 
is deemed to be in conformity with the  AD Agreement 'if it rests upon one of those 
permissible interpretations."637 
7.12 Thus, under the AD Agreement , we are to follow the same rules of treaty interpretation as in any 
other dispute.  The difference is that Article 17.6(ii)  provides explicitly that if we find more than one 
permissible interpretation of a provision of the AD Agreement , we may uphold a measure that rests on 
one of those interpretations. 
(c) Burden of Proof 
7.13 The general principles applicable to burden of proof in WTO dispute settlement require that a 
party claiming a violation of a provision of the WT O Agreement by another Member assert and prove 
its claim.638  Japan as the complaining party must therefore make a prima facie  case of violation of the 
relevant provisions of the relevant WTO agreements, which the respondent must refute.  We also note, 
however, that it is generally for each party asserting a fact, whether complainant or respondent, to 
provide proof thereof.639  In this respect, therefore, it is also fo r the United States to provide evidence for 
the facts which it asserts.  We also recall that a prima facie  case is one which, in the absence of effective 
                                                      
637 Appellate Body Report, US – Hot-Rolled Steel , paras. 57 and 59 ( emphasis in original ). 
638 Appellate Body Report, US – Wool Shirts and Blouses , para. 337.  
639 Appellate Body Report, US – Wool Shirts and Blouses , para. 337.  WT/DS322/R          
Page 134  
 
refutation by the other party, requires a panel, as a matt er of law, to rule in favour of the party presenting 
the prima facie  case.   
4. Order of Analysis 
7.14 Japan first presents claims regarding the zeroi ng procedures as such in relation to "original 
investigations"
640, periodic reviews and new shipper reviews, changed circumstances reviews and 
sunset reviews, and then submits claims regard ing the application of zeroing procedures in one 
investigation and in a number of periodic reviews and sunset reviews.  We do not consider that we are 
bound by this sequence. 641  We decide to examine first the "as such" and "as applied" claims of Japan 
relating to original investigations, followed by an ex amination of the "as such" and "as applied" claims 
of Japan relating to periodic reviews and new ship per reviews and of the "as such" and "as applied" 
claims of Japan relating to changed circ umstances reviews and sunset reviews.  
B. CLAIMS REGARDING ZEROING IN THE CON TEXT OF ORIGINAL INVESTIGATIONS  
7.15 Japan claims that model and simple zeroing procedures, in the context of original 
investigations, are as such inconsistent with (1) Articles 2.1 and 2.4.2 of the AD Agreement  and 
Articles VI:1 and VI:2 of the GATT 1994; (2) Article 2.4 of the AD Agreement ; (3) Articles 3.1-3.5 of 
the AD Agreement ; (4) Article 5.8 of the AD Agreement  and (5) Articles 1 and 18.4 of the 
AD Agreement  and Article XVI:4 of the WTO Agreement.642   
7.16 Japan also claims that the use of model zeroing in an original investigation concerning imports 
of certain cut-to-length carbon quality steel products fro m Japan is inconsistent with (1) Articles 2.1 and 
2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994;  (2) Article 2.4 of the 
AD Agreement ;  (3) Articles 3.1-3.5 of the AD Agreement ;  and (4) Article 1 of the AD Agreement .  
7.17 The Panel examines first the claims of Japan relating to zeroing procedures as such in the 
context of original investigations.  
1. Claims regarding zeroing procedures as such  in the context of original investigations  
7.18 The claims of Japan regarding zeroing procedures in  the context of original investigations raise 
two questions.  First , whether what Japan describes as "zeroi ng procedures" are as such capable of 
being challenged as a measure, independently of th e application of zeroing in specific instances.  
Second , whether the AD Agreement  and/or the GATT 1994 proscribe zeroing in the context of original 
investigations.   
7.19 We examine first whether, independently of the application of zeroing in specific cases, zeroing 
procedures as such can be the subject of  dispute settlement under the DSU and the AD Agreement .   
                                                      
640 Japan uses the term "original investigations" to refe r to investigations within the meaning of Article 5 
of the AD Agreement .  Hereinafter, the terms "original investiga tions", "investigations" and "the investigation 
phase" are used in the same sense, i.e. investig ations within the meaning of Article 5 of the AD Agreement .   
641 As stated by the panel in US – Zeroing (EC) , "a panel is entitled to structure its analysis in a manner 
most appropriate to facilitate the analysis of the issues presented to it".  Panel Report, US – Zeroing (EC) , 
para. 7.13.  
642 As noted above, Japan has withdrawn its claim regarding simple zeroing procedures in relation to the 
average-to-transaction method provided for in the second sentence of Article 2.4.2.  Supra , footnote 635.                   WT/DS322/R 
Page 135 
 
 
 
 (a) Whether zeroing procedures, as such, can be th e subject of dispute settlement proceedings 
under the DSU and the AD Agreement    
(i) Arguments of the Parties 
7.20 Japan asserts that the model and simple zeroing proc edures are contained in a line of computer 
programming code in the Anti-dum ping Margin Calculation Program643, one of the standard computer 
programmes maintained by USDOC.644  Japan terms this line of computer programming code the 
"standard zeroing line".645  Japan asserts that model and simple zeroing procedures are specific 
"measures" within the meaning of Article 6.2 of the DSU and "administrative procedures" within the 
meaning of Article 18.4 of the AD Agreement .  Japan  submits that the term "measure" comprises any act 
or omission by a Member, that the characterizati on or status of an act in domestic law is not 
determinative of its character as a measure in WTO la w, and that whether or not an act is binding under 
municipal law is irrelevant to whether it is a meas ure in WTO law.  In addition, Article 17 of the 
AD Agreement  contains no limitation regarding the types of measure that may as such be the subject of 
dispute settlement, and the phrase "laws, regulations and administrative procedures" in Article 18.4 of 
the AD Agreement  demonstrates that measures that can  be challenged as such under the AD Agreement  
encompass the entire body of generally applicable ru les, norms and standards adopted by Members in 
connection with the conduct of anti-dumping proceedings.  
7.21 Japan submits that an "administrative procedur e" within the meaning of Article 18.4 of the 
AD Agreement  is a system or method, including a set of computer instructions, used by investigating 
authorities to conduct or manage anti-dumping procee dings.  Model and simple zeroing procedures are 
administrative procedures because they are a pre-de termined, standardized system or method for 
mechanistically conducting and managing, on a unif orm and predictable basis, an aspect of the 
USDOCs margin calculation in all anti-dumping proceed ings, irrespective of the method of comparison 
used.  The standard zeroing line is applied on a generalized, normative and prospective basis because 
the standard computer programmes are written in su ch a way that the zeroing procedure is executed 
automatically in the margin calculation process and th e standard zeroing line is found in every margin 
calculation program applied by the USDOC.   
7.22 Japan asserts that the fact that th e zeroing procedures are a rule, no rm or standard of general and 
prospective application is evidenced by the consis tent use of these procedures by USDOC in every 
dumping margin calculation undertaken in at least the past decade, the inclusion of the standard zeroing 
line in the standard computer programme and in  the 26-case specific computer programmes submitted 
by Japan in this dispute, the reference made  to the zeroing procedures in the USDOC Import 
Administration Anti-Dumping Manual, the fact that even in the handful cases in which USDOC did not 
apply the standard zeroing line USDOC used the zer oing procedures by exclud ing negative comparison 
results using other software or even manually, a nd statements of USDOC, the Department of Justice 
                                                      
643 Exhibits JPN-6 and JPN-7 contain copies of this AD Margin Calculation Program, as at 4 April 2002, 
for both original investigations and periodic reviews. 
644 In the case of the calculation of an overall weighted average dumping margin in original 
investigations, periodic reviews and new shipper reviews, the relevant line of computer code that executes (model 
or simple) zeroing is "WHERE EMARGIN GT 0".  In th e case of the calculation of importer-specific assessment 
rates in periodic reviews, the line of programming code that executes simple zeroing is "WHERE UMARGIN GT 
0".  Japan First Written Submission, paras. 39 and 43. 
645 We note that while the First Written Submission of Japan focuses on zeroing procedures as the 
measure challenged as such, in its Second Submission Japan identifies the measures that it challenges as such as 
the zeroing procedures and the standard zeroing line.  At the second m eeting of the Panel with the parties, Japan 
used the notion of "zeroing measures", encompassing both the zeroing procedures and th e standard zeroing line.   WT/DS322/R          
Page 136  
 
and United States' domestic courts confirming the ex istence and content of the zeroing procedures as a 
general and prospective rule.
646   
7.23 Japan emphasizes, in this regard, that it has presented different categories of evidence that, 
taken together, demonstrate that the zeroing pro cedures constitute a general rule, norm or standard 
maintained by the United States for calculating du mping margins.  Whethe r a Member maintains a 
general rule, norm or standard that  can be challenged as such is a question of fact that a panel must 
examine in light of all the evidence before it.  While  such evidence will typically include the text of a 
measure, if a Member has failed to publish a genera l rule, a consistent pattern  of regulatory behaviour 
may provide valuable evidence of the existence of an  "as such" measure.  In the present dispute, the 
evidence of a perfectly consistent pattern of regulat ory behaviour, together with the other evidence of 
record submitted by Japan, supports the conclusi on that USDOC has adopted a general rule, norm or 
standard.  
7.24 Japan asserts that the standard zeroing line647 is an instrument setting forth rules or norms that 
are intended to have general and pr ospective application.  Since com puter instructions are covered by 
the ordinary meaning of "administrative procedures ", the standard zeroing line forms part of the 
USDOCs administrative procedures for calculating margin s of dumping.  That the standard zeroing line 
has not been used in all cases does not deprive it of its quality as a rule, norm or standard of general 
application because a rule may be general in charact er although not necessarily applied in all cases.   
7.25 Japan rejects what it characterizes as an ar gument of the United States that the zeroing 
procedures and the standard zeroing line cannot be meas ures if they are not manifested in domestic laws 
and regulations of the United States.  Whether a measure can be challenged in the WTO does not 
depend upon the label given to a measure under domestic law and whether it is binding.  The assertion 
of the United States that there are no laws, regula tions or administrative procedures which govern the 
calculation of dumping with respect to the issue of  whether an offset is required for non-dumped 
transactions is in contradiction w ith the totality of the evidence wh ich Japan has provided in this 
proceeding, which demonstrates that what Japan ha s termed zeroing procedures constitute a norm or 
rule of general and prospective application and which are therefore administrative procedures.  
7.26 Japan argues that the standard zeroing pro cedures and the standard zeroing line mandate 
violations of WTO obligations.  Although a measure do es not have to be mandatory in order to be as 
such WTO-inconsistent, the zeroing procedures and standard zeroing line are mandatory in the sense 
that they preclude USDOC from complying with th e WTO obligations of the United States.  If a 
measure mandates WTO-inconsistent conduct as a rule, the existence of discretion not to apply that 
measure in an individual case does not render the me asure WTO-consistent.  The issue is not whether 
the USDOC Assistant Secretary can change, or de cide not to apply the zeroing procedures in a 
particular investigation, but whether the zeroing pr ocedures themselves –in terms of their substantive 
content – mandate a violation of WTO obligations as a rule.  
7.27 Japan argues that the Appellate Body Report in US – Zeroing (EC)  confirms that the model and 
simple zeroing procedures are measures that ca n be challenged as such.  Although the European 
Communities and Japan have used different labels, the zeroing procedures are substantively the same 
measures that were challenged as such in US – Zeroing (EC)  and the evidence before this Panel 
regarding the existence of the zeroing procedures as a measure that can be challenged as such is more 
extensive than the evidence th at was before the panel in US – Zeroing (EC) .   
                                                      
646 In support of its position that the zeroing procedures are rules, norms or standards of general and 
prospective application, Japan has also submitted a statement of Ms. Valerie Owenby, an expert in USDOCs 
computer programming procedures and a former employee of USDOC.  Exhibit JPN-1(Owenby Statement).  
647 Supra , footnote  644.                   WT/DS322/R 
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 7.28 The United States  argues that there is no "standard computer programme" that is a "measure" 
within the meaning of Article 6.2 of the DSU beca use USDOC tailors its computer programmes to each 
particular investigation.  In any event, comput er programmes and lines in computer programming are 
tools to calculate margins of dumping accurately an d efficiently rather than  instruments setting forth 
rules or norms that have general and prospective a pplication.  Even if the computer programmes were 
measures, they could not be found to be WTO-inc onsistent because they do not mandate any action and 
do not preclude USDOC from offsetting negative dum ping margins or require USDOC to ignore 
negative dumping margins.  
7.29 The United States argues that Japan has not demons trated how what it refers to as the "zeroing 
procedures" and the "'standard zeroing line" are meas ures, let alone whether these "measures" mandate 
a breach.  Japan has not identified any actual meas ure of the United States that corresponds to the 
"zeroing procedures".  Japan has failed to demonstrate that the "zeroing procedures" are an "act" of the 
United States and how that "act" sets forth rules or norms intended to have ge neralized and prospective 
application.  Japan's reference to "consistent a pplication" as evidence of the binding and mandatory 
nature of the zeroing procedures ignores that, as stated  by the Appellate Body, the starting point of the 
analysis of a measure challenged as such is the te xt of that measure.  Analysis of "consistent 
application" can supplement, but not supplant, analysis of the measure itself on its face or obviate the need even to identify the measure which is supposedly  being applied.  Japan has confused the evidence 
that might demonstrate the scope and meaning of a measure with the very existence of the measure 
itself.  Concluding that a measure exists because of its  consistent application is an exercise in circular 
reasoning.  The evidence establishing the existence of  a measure must be independent of its repeated 
application.  What Japan refers to as "consistent appl ication" in fact is nothing more than "consistent 
results" with an assumption that there is a measure that causes those results.  The United States argues 
that the only evidence presented by Japan in its a ttempt to demonstrate the existence of zeroing 
procedures is evidence of the consistent application of zeroing.  
7.30 The United States asserts that the fact that it has indicated that USDOC has never granted an 
offset for negative dumping margins does not amount to an acknowledgement of the existence of "zeroing procedures".  The United States submits, in  this respect, that Japan has not provided any 
evidence that the zeroing procedures or the zeroing li ne are mandatory.  The United States points out 
that its position is not that a measure must be written but that Japan has pointed to nothing that 
substantiates its assertion that there is a measure called zeroing procedures that USDOC acts in 
accordance with.  The United States does not argue th at the zeroing procedures cannot be measures if 
they are not manifested in United States' domestic  laws and regulations.  The question is whether a 
measure exists, not whether that measure is embodied in a particular form, such as a law or regulation.   
7.31 The United States contends that there are no laws , regulations or administrative procedures 
which govern the calculation of margin(s) of dumping with  respect to the issue of  whether an offset is 
required for non-dumped transactions and that US cour ts have determined that Section 771(35) of the 
Tariff Act of 1930 does not govern this issue.  Th e USDOC Assistant Secretary enjoys discretion to 
provide or not to provide an offset for non-dumped  sales, and that discretion is exercised in each 
investigation. 
7.32 The United States submits that in US – Zeroing (EC)  the Appellate Body articulated the correct 
legal standard for determining when an unwritten measu re exists that can be challenged as such.  This 
standard requires that an act or instrument be found to exist that creates a rule or norm of general and 
prospective application, i.e. a rule or norm in a prescriptive sense, as distingui shed from a rule or norm 
in a merely descriptive sense.  However, the Appella te Body failed to adequately apply this standard 
when it made its own findings based on evidence that either was not relied upon by the panel or that was 
disputed by the parties.  The United States also subm its that the Appellate Body failed to consider legal 
arguments of the United States regarding th e mandatory/discretionary distinction.  WT/DS322/R          
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(ii) Arguments of Third Parties 
7.33 Argentina , China , the European Communities , Korea , Mexico , Norway  and Thailand 
agree with Japan that the zeroing procedures can be challenged as such.  As support for this view they 
rely, in particular, on the reasoning of the Appellate Body in US – Corrosion-Resistant Steel Review 
regarding measures that can be challenged as such .  These third parties consider that the zeroing 
procedures can be considered to be a rule or norm of  general and prospective application.  A number of 
third parties also argue that the zeroing procedur es constitute "administrative procedures" within the 
meaning of Article 18.4 of the AD Agreement .   
(iii) Evaluation by the Panel 
7.34 Neither party contests that, as is well-established in GATT and WTO dispute settlement, it is 
possible for a Member to have recourse to  dispute settlement under the DSU and the AD Agreement  
with respect to certain measures "as such", as disti nguished from the application of measures in specific 
situations.  What is disputed is whether Japan has est ablished that its claims with respect to what it terms 
"zeroing procedures" pertain to a measure of the United States capable of being challenged as such.   
7.35 As we understand the position of the United Stat es, the United States does not dispute that 
USDOC consistently calculates margins of dumping by using a method termed "zeroing" by Japan.
648  
Rather, the United States argues that Japan has not dem onstrated that the fact that USDOC consistently 
calculates margins of dumping in this manner is cau sed by a measure which can be challenged as such, 
i.e independently of the application of zeroing in specific cases.   
7.36 The DSU and the AD Agreement  do not define criteria for determining when measures can be 
challenged "as such".  Thus, we believe that, as a starting point of our analysis of whether zeroing 
procedures can be challenged as such, it is inst ructive to consider how the notion of measures 
challenged "as such" has been interpreted and a pplied in recent WTO dispute settlement cases.   
7.37 The Appellate Body affirmed in US – Corrosion-Resistant Steel Sunset Review  that, in 
principle, any act or omission attributable to a WTO Member can be a "measure" of that Member for purposes of WTO dispute settlement proceedings, and th at, in addition to "particular acts applied only 
to a specific situation", the concept of a measure within the meaning of the DSU encompasses certain 
acts or instruments irrespective of their applica tion in specific instances.  The Appellate Body 
characterized such acts or instruments as "acts settin g forth rules or norms that are intended to have 
general and prospective application" and "instruments  of a Member containing rules or norms".  Not 
allowing claims against instruments setting out rules or  norms inconsistent with a Member's obligations 
would frustrate the objective of protecting the security  and predictability to c onduct future trade and 
lead to a multiplicity of litigation.
649  Following these general consid erations, the Appellate Body 
considered whether there are any limitations upon the types of measures that may as such be the subject 
of dispute settlement under the DSU or the AD Agreement .   
7.38 The Appellate Body considered, in this respect, th at its reasoning for concluding in its report in 
US - 1916 Act  that the AD Agreement  does not preclude a panel from examining legislation as such, 
which was "based on the GATT acquis  and the language of the AD Agreement , in particular 
Articles 17.3 and 18.4", would also apply to the case  under review "where th e relevant measures are 
specific provisions of an administra tive instrument issued by an executive agency pursuant to statutory 
and regulatory provisions".650  Although in the practice under the GATT most of the measures subject, 
                                                      
648 We note, however, that the US does not use the te rm "zeroing" and instead uses the concept of "not 
providing offsets for export transactions that exceed normal value".   
649 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 82.   
650 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 84.                     WT/DS322/R 
Page 139 
 
 
 
 as such, to dispute settlement, were legislation, a broad range of measures could be submitted, as such, 
to dispute settlement.651  The Appellate Body also pointed out that Article 17.3 of the AD Agreement  
contains no threshold requirement that a measure su bmitted to dispute settlement be of a certain type652 
and that the phrase "laws, regulations and admi nistrative procedures" in Article 18.4 of the 
AD Agreement  implies that "the entire body of generally applicable rules, norms and standards adopted 
by Members in connection with the conduct of an ti-dumping proceedings" can be challenged as such.653   
7.39 The Appellate Body concluded from this analysis  that there is no basis for holding that only 
certain types of measure can be challenged as su ch in dispute settlement proceedings under the 
AD Agreement  and that there is therefore no reason for concluding that, in principle, non-mandatory 
measures cannot be challenged as such.654   
7.40 We also note that, in the same case, the Appe llate Body treated the USDOC Sunset Policy 
Bulletin ("SPB") as an instrument that can be challenged as such.655  Subsequently, in US - Oil Country 
Tubular Goods Sunset Reviews , the Appellate Body stated that the fact that the SPB is not binding under 
United States' law and that USDOC is free to depart  from the SPB at any time is not relevant to the 
question of whether the SPB is a measure that  may be challenged in WTO dispute settlement 
proceedings.  In this connection, the Ap pellate Body recalled its statement in US – Corrosion-Resistant 
Steel Sunset Review  that "acts setting forth rules or norms that are intended to have general and 
prospective application" are measures subject to WT O dispute settlement.  The Appellate Body went on 
to observe:   
"In our view, the SPB has normative value,  as it provides administrative guidance and 
creates expectations among the public and among private actors.  It is intended to have 
general application, as it is to apply to  all the sunset reviews conducted in the 
United States.  It is also intended to have prospective application, as it is intended to 
apply to sunset reviews taking place after its issuance.  Thus, we confirm—once again—that the SPB, as such, is subject to WTO dispute settlement."
 656 
7.41 While we realize that the Appellate Body in US – Corrosion-Resistant Steel Sunset Review  did 
not necessarily purport to provide a comprehensive de finition of measures that can be challenged as 
such, we consider that the notion of rules or norm s of general and prospective application connotes an 
essential condition in order for an act to be challengeab le as such.  The fact that an act or instrument 
contains rules or norms of general and prospective application makes it possible to analyze the future 
conduct envisioned by that act or instrument.  We note, in this regard, that in US – Oil Country Tubular 
Goods Sunset Reviews  the Appellate Body stated that:  
                                                      
651 The Appellate Body referred, in th is respect, to its statement in Guatemala - Cement I  that in the 
practice established under the GATT a "measure" may be any act of a Member, whether or not legally binding and 
could even include non-binding administrative guidance".  Appellate Body Report, US – Corrosion-Resistant 
Steel Sunset Review, para. 85. 
652 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 86. 
653 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 87.  
654 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 88. 
655 Thus, the Appellate Body found that Section II.A.2  of the SPB, as such, is not inconsistent with 
Articles 6.10 or Article 11.3 of the AD Agreement  and that, in view of the lack of relevant actual findings by the 
panel or uncontested facts on the record, it could not rule on Japan's claim that Sections II.A.3 and 4 of the SPB are, as such, inconsistent with Article 11.3 of the AD Agreement.   Appellate Body Report, 
US – Corrosion-Resistant Steel Sunset Review, paras. 157 and 190. 
656 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para.187.   WT/DS322/R          
Page 140  
 
"[b]y definition, an 'as such' claim challeng es laws, regulations, or other instruments of 
a Member that have general and prospective application, asserting that a Member's conduct-not only in a particular instance that has occurred but in future situations as 
well-will necessarily be inconsistent  with that Member's WTO obligations .  In essence, 
complaining parties bringing 'as such' challenges seek to prevent Members ex ante  
from engaging in certain conduct."
657  
7.42 In US – Zeroing (EC) , the Appellate Body upheld the conclu sions of the panel in that dispute 
that the zeroing methodology of the United States, as it relates to original investigations in which the 
average-to-average comparison method is used to cal culate margins of dumping, can be challenged as 
such in WTO dispute settlement and is in consistent with Article 2.4.2 of the AD Agreement .658   
7.43 The Appellate Body began its analysis by examin ing the concept of "measure" in Article 3.2 of 
the DSU in which connection it recalled its findings in US – Corrosion-Resistant Steel Sunset Review  
and US – Oil Country Tubular Goods  regarding the types of measures that  can be subject to an "as such" 
challenge.659  In examining whether the zeroing methodology constituted such a measure, the Appellate 
Body considered in light of the text of Articles 17.3 and 18.4 of the AD Agreement  that there is "no basis 
to conclude that 'rules or norms' can be challenged as such only if they have been expressed in the form 
of a written instrument".660  However, the Appellate Body also op ined that a "panel must not lightly 
assume the existence of a 'rule or norm' constituting a measure of general and prospective application, 
especially when it is not expressed in the form of a written document".661  The Appellate Body observed 
in this regard:  
"In our view, when bringing a challenge against such a 'rule or norm' that constitutes a measure 
of general and prospective application, a comp laining party must clearly establish, through 
arguments and supporting evidence, at least that th e alleged 'rule or norm' is attributable to the 
responding Member;  its precise content;  and ind eed, that it does have general and prospective 
application.  It is only if the complaining party meets this high threshold, and puts forward sufficient evidence with respect to  each of these elements, that a panel would be in a position to 
find that the 'rule or norm' may be challenged, as such.  This evidence may include proof of the 
systematic application of the challenged 'rule or no rm'.  Particular rigour is required on the part 
of a panel to support a conclusion as to the existence of a 'rule or norm' that is  not  expressed in 
the form of a written document.  A panel must carefully examine the concrete instrumentalities 
that evidence the existence of the purported 'rule or norm' in order to conclude that such 'rule or 
norm' can be challenged, as such."
662 
7.44 The Appellate Body then reviewed the ev idence before the panel and concluded, 
notwithstanding that there were shortcomings in  the panel's reasoning, that "in the specific 
circumstances of this case, the evid ence before the panel was sufficient to identify the precise content of 
the zeroing methodology; that the zeroing methodology is attributable to the United States, and that it does have general and pr ospective application".
663  It therefore concluded that the zeroing methodology, 
as it relates to original investigations in which th e average-to-average comparison method is used, can 
be challenged as such in WTO dispute settlement.664  The Appellate Body rejected an argument of the 
                                                      
657 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 172 ( emphasis 
added ).  
658 Appellate Body Report, US – Zeroing (EC) , paras. 205 and 222. 
659 Appellate Body Report, US – Zeroing (EC) , paras. 187-189.  
660 Ibid, para. 193.  
661 Ibid, para. 196.  
662 Ibid, para. 198 ( emphasis in  original, footnote omitted ).  
663 Ibid, para. 204.  
664 Ibid, para. 205.                    WT/DS322/R 
Page 141 
 
 
 
 European Communities that the panel had erred by ex ercising judicial economy with regard to the issue 
of whether the Anti-Dumping Manual is a measure that  is, as such, inconsistent with certain provisions 
of the AD Agreement .665  The Appellate Body also agreed with  the panel's conclusion that what was 
referred to as "Standard Zeroing Procedures" did not  constitute a measure that could be challenged as 
such.666  The Appellate Body declined to rule on the conditional appeal of the European Communities 
regarding the "practice" of zeroing as such.667   
7.45 In its submissions to the Panel, Japan describ es the measures that it challenges as such as 
zeroing procedures and standard zeroing line.668  The question we must address is whether it is possible 
to identify the precise content of the zeroing proced ures and the standard zeroing line and whether the 
zeroing procedures and the standard zeroing line are attributable to the United States and can be 
considered to be rules or norms intended to have general and prosp ective application.  
7.46 We are not persuaded, in this respect, by Japan's argument that the standard zeroing line 
constitutes an act setting forth a rule, norm or standard of general application.  The standard zeroing line 
is a particular line of computer code whereby USDOC applies zeroing.669  By itself, the standard 
zeroing line only constitutes an instruction in a com puter programme on how to perform a particular 
aspect of the dumping margin calculation.670  There is nothing in this inst ruction that indicates that it is 
of general and prospective application.  In order for this line to be applicable to a particular 
investigation or review, a decision must be made to include the line in the computer programme used in 
                                                      
665 Ibid, para. 225.  
666 Ibid, para. 231. 
667 Ibid, para. 234.  
 668 We consider that these zeroing procedures and standard zeroing line fall within the scope of the 
measures covered by Japan's request for the establishment of a panel contained in document WT/DS322/8.  We 
note, in particular, that sub-paragr aph 1(a) of this request states; inter alia : 
 "In original investigations, periodic reviews, new shipper reviews, sunset reviews and changed 
circumstances reviews where the re-determination of margins of dumping occurs, the US Department of 
Commerce ('USDOC') disregards intermediate ne gative dumping margins calculated by comparing 
normal value and export price, including on a weighted-average-to-weighted average basis, 
weighted-average-to-transaction basis, and transaction-to-transaction basis, through the USDOCs 
AD  Margin Calculation computer program and other related procedures, in the process of establishing the overall dumping margin for the product as a whole (hereinafter collec tively referred to as 
'Zeroing')…" 
 
Moreover, sub-paragraphs 1(a) (iii)-(vi) and 1(b) (c) an d (d) repeatedly refer to the "Zeroing procedure".  
It is clear, therefore, that in its re quest Japan uses the term "zeroing" to denote the fact that USDOC "disregards 
intermediate negative dumping margins … through the USDOCs AD Margin Calculation Computer Programme 
and other related procedures, in the process of establishing the overall dumping margin for the product as a 
whole".  It is also beyond dispute that the request employs the term "Zeroing procedure". 
669 Supra , footnote 644. 
670 As explained in one of the exhibits submitted by Japan:  "In SAS, the WHERE statement is equivalent 
to an 'if'.  It is a conditional statement that instructs SAS to execute the procedure only if/where a certain condition 
is met.  The line 'WHERE EMARGIN GT 0' in this pr ogramming is the equivalent of saying 'if the EMARGIN 
value for a given observation in the MARGIN dataset is great er than zero then include that observation in this 
calculation".  Statement of Valerie Owenby, p. 9, footnote 8.  Exhibit JPN-1.  In the context of the calculation of importer-specific assessment rates, the line "WHERE UMARGIN GT 0" is a "statement that instructs SAS to sort 
and include in the new dataset POSMARG only those US sales that had positive dumping amounts".  Statement of 
Valerie Owenby, para. 47.  Exhibit JPN-1.  As noted in the same document:  "SAS...is both a software application 
and a computer programming language.  The SAS programming language works only in the SAS software 
application, and it is the tool by which the programm er communicates the calculations and procedures, he/she 
wants the SAS application to execute".  Statem ent of Valerie Owenby, para.27.  Exhibit JPN
-1.  WT/DS322/R          
Page 142  
 
that investigation or review.  The line by itself cannot be a measure; rather there must be something else 
that causes the zeroing line to be applied.
671  We find it significant in this regard that Japan itself has 
characterized the standard zeroing line as "a specifi c expression of, and instrument to carry out" the 
zeroing procedures.  Therefore, we conclude that th e standard zeroing line is not a measure that can be 
challenged as such.  
7.47 We now turn to the issue of wh ether what Japan terms "zeroing procedures" can be considered 
to be a measure that can be challenged as such in light of the criteria enunciated by the Appellate Body, 
particularly in US – Zeroing (EC) .  It is our understanding that by "zeroing procedures", Japan means 
the zeroing methodology per se,  as distinguished from the standard zeroing line.672  The concept of 
zeroing procedures, as used by Japan in this pr oceeding, does not correspond to a provision of 
legislation or regulation of the United States or to any other type of written instrument adopted by the 
United States that explicitly provides for zeroing as a rule or norm of general and prospective 
application.  This raises the question of whether a procedure not to be found in legislation or regulation 
or in some other form of written instrument may nevertheless constitute a measure challengeable as 
such in WTO dispute settlement.  A closely relate d question that arises is whether it is of any 
consequence that the term "zeroing procedures" is  not employed in the anti-dumping legislation and 
practice of the United States but has been created by Japan for the purpose of this dispute settlement 
proceeding.  
7.48 We consider, consistent with the reasoning of the Appellate Body in US – Corrosion-Resistant 
Steel Sunset Review , that the fact that a norm to act in a give n way in a given situation is not contained in 
legislation or regulation does not entail that such  a norm cannot be challenged as such in WTO dispute 
settlement.673  In order for a measure to have the "norma tive value" necessary to render it susceptible of 
being challenged as such, the measure  must meet certain requirements.  Its content must be clear and it 
must be understood by those to whom it will apply th at it will be applied generally and prospectively.  
We also concur with the observation of the panel in US – Zeroing (EC)  that a finding regarding the 
WTO-inconsistency of a norm as such must be b ased on solid evidence enabling a panel to determine 
the precise content of the norm and the future  conduct to which it will necessarily give rise.674  It stands 
to reason that a measure can only have these properti es if it has a legal basis and that a measure is 
unlikely to be capable of being challenged as such in WTO dispute settlement if it is not grounded in the 
                                                      
 671 Our reasoning is similar to that of the panel in US – Zeroing (EC) :   
 
 "[W]e consider that to characterize the 'Standard Zero ing Procedures' as an act or instrument that sets 
forth rules or norms intended to have general and prospective application is somewhat difficult to 
reconcile with the fact that the "Standard Zeroing Procedures" are only app licable in a particular 
anti-dumping proceeding as a result of their inclusion in  the computer programme used in that particular 
proceeding.  The need to incorporate these lines of computer code into each individual programme 
indicates that it is not the "Standard Zeroing Procedures" per se  that set forth rules or norms of general 
and prospective application.  Fo r this reason, we also question whether these "Standard Zeroing 
Procedures" are "administrative pro cedures" within the ordinary meaning of that term as used in 
Article 18.4 of the AD Agreement .  The "Standard Zeroing Procedures" by themselves do not create 
anything and are simply a reflection of something else."  
 
 Panel Report, US - Zeroing (EC) , para. 7.97.  The term "Standard Zeroing Procedures" as used in US – 
Zeroing (EC)  refers to what Japan has termed "standard zeroing line" in this proceeding.  Panel Report, US – 
Zeroing (EC) , para. 7.70.  As noted above, the conclusion of the panel in US – Zeroing (EC)  that the Standard 
Zeroing Procedures could not be challenged as such was upheld by the Appellate Body.   
672 We note, however, that our understanding of the distinction Japan makes between the zeroing 
procedures and the standard zeroing line is based in pa rticular on the arguments of Japan submitted following the 
first meeting of the Panel with the parties and that, as noted above, this distinction is less clear in the First 
Submission of Japan.   
673 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 85 . 
674 Panel Report, US – Zeroing (EC) , paras. 7.102 and 7.104.                     WT/DS322/R 
Page 143 
 
 
 
 relevant domestic legal framework.  However, this does not mean that the measure must necessarily be 
in the nature of legislation or regulation.   
7.49 We also do not consider that the fact that ther e exists no written instrument that explicitly lays 
down a rule or norm of zeroing is of decisive importance.675  We can see no logical basis in the GATT 
and WTO dispute settlement practice for the propositi on that an "as such" claim is only possible where 
a rule or norm of general and prospective applicati on is recorded in a written instrument.  As noted 
above, the Appellate Body has explicitly stated in US – Zeroing (EC)  that a rule or norm need not be 
embodied in a written instrument in order for such a rule or norm to be challenged as such in WTO 
dispute settlement.  
7.50 We recognize that an analysis of an "as su ch" claim regarding a measure not embodied in 
legislation or regulation or other type of written inst rument raises particular problems with respect to  
the evidence required to establish that the measure co nstitutes a rule or norm of general and prospective 
application, especially because, in our view, consistent  practice is to be distinguished from the notion of 
a rule or norm of general and prospective application.676 677  However, in this case the evidence before 
us is sufficient to conclude that a rule or norm exis ts providing for the application of zeroing whenever 
USDOC calculates margins of dumping or duty assessment rates.  
7.51 First , the evidence before the Panel shows that zeroi ng (i.e. the exclusion from the numerator of 
weighted average dumping margins of results of co mparisons in which export prices are above the 
normal value) has been a constant feature of USDOC s practice for a considerable period of time.  The 
line of computer programming code described as the standard zeroing line by Japan678 has been 
included in the vast majority of computer prog rammes used by USDOC to calculate margins of 
dumping and assessment rates in specific cases, and where the line has not been included, USDOC has 
used other methods to exclude export prices higher than the normal value from the numerator of the weighted average margin of dumping.
679  The United States has emphasi zed that the USDOC Assistant 
Secretary enjoys discretion to decide whether to provide for offsets for non-dumped transactions but has 
not identified a single case in which a decision was taken to provide such an offset.  Thus, it is clear as a 
factual matter that USDOC always applies zeroing.   
7.52 Second , the evidence before the Panel also shows th at what is at issue goes beyond the simple 
repetition of the application of a certain methodolog y to specific cases.  The ma nner in which USDOCs 
use of zeroing has been characterized in statem ents by USDOC, other United States' agencies and 
courts in our view confirms that USDOCs consistent application of zeroing reflects a deliberate policy.  
Thus, for example, USDOC has rep eatedly stated that "we do not allow" export sales at prices above 
                                                      
675 We note that the US has not argued that a measure has to be in written form. 
676 In US – Countervailing Measures on Certain EC Products , the Appellate Body made a finding with 
respect to an "administrative practice" and "method".  Appellate Body Report, US – Countervailing Measures on 
Certain EC Products, para. 162 .  However, the Appellate Body subsequently indicated in several cases that it has 
not yet pronounced on the issue of whether "practice" can constitute a "measure" fo r purposes of WTO dispute 
settlement.  Appellate Body Report, US – Gambling , para. 132; Appellate Body Report, Oil Country Tubular 
Goods Sunset Reviews , para. 220.  Japan has stated that it is not ch allenging "mere practice" in this dispute.   
677 In this regard, we have also taken into account the criteria enunciated in paragraph 198 of the 
Appellate Body Report in US – Zeroing (EC).  Supra , para. 7.43. 
678 Supra , footnote 644.  
679 The US has explained that the lines of computer instruction referred to by Japan in this proceeding 
have been developed for use in conjunction with SAS © soft ware and that there have been several instances in the 
past ten years in which USDOC used spreadsheet softwa re instead of the SAS © software to perform margin 
calculations.  In those cases, "the programming which provides that no offset is given for non-dumped sales varied, depending on the programming approach adopted by the Commerce personnel who designed the 
spreadsheet".  US Response to Panel Question 9.  WT/DS322/R          
Page 144  
 
normal value to offset dumping margins on other export sales
680, has referred to its "practice" or 
"methodology" of not providing for offsets for non-dumped sales681, has pointed out that the 
United States Court of Appeals for the Federal Circuit has ruled that the "zeroing practice" i.e not 
allowing US sales not priced below normal value to offset margins found on other US sales, is a reasonable interpretation of the law
682, that the US Congress was aware of USDOCs methodology when 
it adopted the Uruguay Round Agreements Act683, and that not granting an offset for non-dumped sales 
"has consistently been an integral part of the Department's weighted-ave rage-to-weighted-average 
analysis".684  We also note that the United States Departme nt of Justice has stated that USDOC "has 
consistently applied its practice of  treating non-dumped sales as sales with a margin of zero since the 
implementation of the URAA" and has referred to  USDOCs "long-standing methodology" and to "the 
zeroing practice, which has been followed for at l east 20 years" and which "predated the passage of the 
latest major amendment of the Anti-dumping law".685  Finally, the United States Court of International 
Trade has stated that "Commerce's zeroing methodology in its calculation of dumping margins is grounded in long-standing practice".
686   
7.53 In our view, these statements are significant as evidence showing that the consistent use of 
zeroing in specific cases reflects a rule or norm of ge neral and prospective app lication, which provides 
that non-dumped export sales are not allowed to offset margins found on dumped export sales687 and 
which is applied regardless of the basis upon which export price and normal value are compared688 and 
regardless of the type of proceeding in which margins are calculated.  In this connection, we also recall 
our observation above that while a rule or norm of general and prospective application need not be 
embodied in legislation or regulation, a measure is unlikely to have the properties necessary to render it 
susceptible of being challenged as such if it has no b asis in the relevant domestic legal framework.  In 
the case of the zeroing practice or methodology app lied by USDOC, such a basis in domestic law 
clearly exists.  In this regard, we note that the Un ited States Court of Appeals for the Federal Circuit has 
ruled that zeroing is permissible under Section 771(35) of the Tariff Act of 1930.689   
7.54 We consider that the argument of the United States that the evidence of the existence of a 
measure challenged as such must be independent of its repeated application is not relevant in the 
circumstances of this case.  In our view, this is no t a case in which there is no evidence of the existence 
of a measure challenged as such other than the re peated application of a particular methodology in 
specific instances.  The evidence be fore us indicates not only that USDOC invariably applies zeroing 
but also that USDOC has repeatedly described its zeroing methodology in terms of a long-standing policy that it considers to be consistent with its st atutory obligations.  Therefore, while we believe an 
"as such" claim based solely on consistent practice ra ises serious conceptual questions, we consider that 
it is not necessary for us in the present case to opine on those questions.   
                                                     
 
680 Exhibits JPN-21.D and 26. 
681 Exhibits JPN-16.D and 21-D.  
682 Exhibit JPN-21.D. 
683 Exhibit JPN-21D. 
684 Exhibit JPN-27. 
685 Exhibits JPN-28-31. 
686 Exhibit JPN-32. 
687 The fact that we describe this norm as a norm wh ich provides that "non-dumped export sales are not 
allowed to offset margins found on dumped export sales" is  solely intended to reflect the terminology used in the 
statements of US agencies cited in the preceding paragraph.   By using this terminology here we do not intend to 
convey a particular view on the question of whether the concept of dumping can apply to individual export 
transactions.  Our views on that question are set forth below, particularly in paragraphs 7.103-7.106.   
688 Therefore, we consider that the terms "model ze roing" and "simple zeroing" used by Japan do not 
correspond to two different rules or norms but simply refer to different manifestations of a single rule or norm – 
not allowing non-dumped export sales to offset margins on export prices below the normal value.  
689 US Response to Panel Question 37.                    WT/DS322/R 
Page 145 
 
 
 
 7.55 We therefore consider that the evidence before us  is sufficient to identify the precise content of 
what Japan terms "zeroing procedures", that these pr ocedures are attributable to the United States and 
that they are a rule or norm of general and prosp ective application.  While we acknowledge that to 
establish a norm in part on the basis of inferential reasoning is highly unusual, we consider that it is 
justified in the circumstances of this case.  In th e Panel's view, this norm can be characterized as an 
"administrative procedure" within th e meaning of Article 18.4 of the AD Agreement .  Our 
characterization of the zeroing procedures is consiste nt with the conclusion reached by the Appellate 
Body in US – Zeroing (EC)  that the zeroing methodology, as it rela tes to original investigations in 
which the average-to-average comparison me thod is used, can be challenged as such.   
7.56 Since we have been able to discern with precisi on the specific content of a rule or norm with 
respect to how USDOC treats export prices higher th an the normal value in calculating margins of 
dumping, we do not consider that it is of any relevan ce that the term "zeroing procedures" is not used in 
the anti-dumping legislation or practice of the United States.  
7.57 We consider that the character of the zeroin g methodology as a rule or norm of general and 
prospective application is not diminished by the f act that the USDOC Assistant Secretary may change 
this methodology or decide not to apply it in a par ticular case.  While USDOC enjoys discretion with 
regard to how it treats export prices above normal value when calculating weighted average dumping margins or assessment rates, this discretion has been exercised by adopting a policy of systematically 
zeroing.  We agree with the observation of the panel in US – Zeroing (EC)  that the argument that, if an 
agency has discretion to change its methodology there can be no WTO-inconsistency as such, is 
somewhat artificial, at least where a rule or norm h as been applied invariably for a considerable period 
of time because in such a case WTO- inconsistent conduct is as predic table as when WTO inconsistent 
conduct is envisaged in legislation or regulation.
690  Moreover, the general characteristics that give a 
measure normative value may take the form of a discr etion because, for example, a guideline to the 
exercise of a discretion may be of general application and exist independently of the particular exercise 
in each case of the discretion.  
7.58 To conclude, we consider that what Japan te rms "zeroing procedures" is a measure which can 
be challenged as such.   
7.59 In light of our conclusion that what Japan describes as "zeroing procedures" are as such capable 
of being challenged as a measure, independently of th e application of zeroing in specific instances, we 
now proceed to examine whether the AD Agreement  and/or the GATT 1994 proscribe zeroing in the 
context of original investigations.   
                                                      
690  "In our view, the objective of protecting the security  and predictability needed to conduct future trade 
can just as readily be frustrated if well-establishe d norms that systematically and predictably lead to 
WTO-inconsistent actions cannot be challenged or if they can be challenged only if they are 
embodied in a particular type of instrument.  Similarly, not allowing 'as such' claims against such 
norms that are 'the root of WTO-inconsistent be haviour' might well entail a multiplicity of litigation.  
While an agency probably can in most cases more easily depart from its own established norm than 
from a law or regulation, the argument that there cannot be WTO-inconsistency as such if an agency 
has discretion to make a change strikes us as artificia l, at the very least in the case of a norm that has 
been applied invariably for a considerable period of time.  In such a case, WTO-inconsistent conduct 
may be as predictable as when WT O-inconsistent conduct is envisaged in a law or regulation.  We 
also consider that to accord decisive weight to the nature of a particular instrument in which a norm manifests itself creates a risk of addressing sy mptoms rather than causes."  Panel Report, US – 
Zeroing (EC) , para. 7.100.   WT/DS322/R          
Page 146  
 
(b) whether the AD Agreement  and/or the GATT 1994 proscribe zeroing in the context of original 
investigations  
(i) Articles 2.1 and 2.4.2 of the AD Agreement and Articles VI:1 and VI:2 of the GATT 1994 
Arguments of the Parties 
7.60 Japan  submits that it follows from the definition of "dumping" and "margin of dumping" in 
Article 2.1 of the AD Agreement  and Article VI of the GATT 1994 in relation to "a product" and 
"products" that dumping and margins of dumping can be determined only for a product as a whole and 
not in relation to a product type, model or category.  Jap an refers in this respect to the analysis of the 
Appellate Body in US – Softwood Lumber V .  Because Article 2.1 applies to the entire AD Agreement , 
"margins of dumping" in Article 2.4.2 must also  be established for a product as a whole.  While a 
Member is entitled to make multiple comparis ons between export price and normal value for 
sub-divisions of a product, disregarding the results of  any such comparisons is inconsistent with the 
requirement to determine dumping a nd calculate margins of dumping for a product as a whole.  Model 
zeroing applied by USDOC when making average-to-ave rage comparisons in original investigations 
automatically disregards negative results of comp arisons where the normal value is higher than the 
export price, which means that the results of all comparisons are not taken into account and that, as a 
consequence, the determination of dumping and the calculation of the margin of dumping are not for the product as a whole.
  
7.61 Japan argues that the same reasoning dictates that  simple zeroing in the context of original 
investigations is inconsistent w ith Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and 
VI:2 of the GATT 1994.691 692  Japan also refers to the Appellate Body Report in US – Zeroing (EC)  in 
this regard.  
7.62 Japan argues that its view that margins of du mping can only be found to exist for a product 
under investigation as a whole is supported by the te rm "product under investigation" in Article 6.10, 
the fact that Article 9.2 provides for the imposition of  anti-dumping duties in respect of a "product", and 
the need for consistent treatment of a product in an anti-dumping investigation and throughout the life 
of an anti-dumping action.   
7.63 Japan emphasizes that the obligation to dete rmine dumping and margins of dumping for a 
product as a whole stems from Article 2.1 of the AD Agreement  and Article VI of the GATT 1994 and 
does not derive from language specific to Article 2.4. 2.  The fundamental rule that dumping can only be 
established for a product as a whole governs the inte rpretation of "margin(s) of dumping" throughout 
the AD Agreement , with the sole exception being the calculation of a margin of dumping under the 
average-to-transaction method in the second sentence of Article 2.4.2.   
7.64 Japan asserts that the word "p rice" in Article VI of the GATT 1994 and the text of the first 
paragraph of Ad Article VI:1 of the GATT 1994 do not suppo rt an interpretation of "margin of 
dumping" as transaction-specific because they do not a lter the requirement that dumping and margins of 
dumping be found to exist with respect to a product.    
                                                      
691 Japan mentions a determination regarding imports of softwood lumber from Canada as an example of 
the application of simple zeroing in original investigations.  Notice of Determination Under Section 129 of the 
Uruguay Round Agreements Act: Antidumping Measures on Certain Softwood Lumber Products From Canada .  
70 Fed. Reg. 22636 (2 May 2005), Exhibit JPN-27. 
692 As noted above, Japan has withdrawn its claim regarding simple zeroing procedures in relation to the 
average-to-transaction method provided for in the second sentence of Article 2.4.2.  Supra , footnote 635.                   WT/DS322/R 
Page 147 
 
 
 
 7.65 Japan submits that the United States is incorrect  in arguing that the fact that anti-dumping 
duties are assessed on individual entries of a pr oduct demonstrates that investigating authorities 
determine margins of dumping for individual transactions .  In particular, Japan rejects the argument that 
a prospective normal value system involves the establishment of margins of dumping on individual 
transactions.  When imposing and collecting duties on individual entries of a product, including in the 
context of a prospective normal value system, aut horities are not calculating margins of dumping on 
individual transactions.  In addition, even in a prospective normal value system final liability for 
payment of anti-dumping duties must be determined in a review under Article 9.3.2 that involves a 
determination of the margin of dumping for the product,  for the review period.  In any event, the United 
States' system of retrospective duty assessment is not similar to a prospective normal value system.  
7.66 Japan submits that a general prohibition of zer oing does not render the average-to-transaction 
methodology in the second sentence of Article 2.4.2 of the AD Agreement  redundant.  Japan contests 
that without zeroing the average-to-transaction co mparison necessarily produces results identical to the 
results of the average-to-average comparison.  Th us, an average-to-transaction comparison will produce 
a result different from that of an average-to-ave rage comparison if the average normal value is 
calculated on a different basis.  Moreover, th e second sentence of Article 2.4.2 provides for a 
comparison of an average normal value to only those export transactions that constitute the pattern of 
targeted dumping.  Japan claims th at this interpretation of Article 2.4.2 is consistent with the USDOC 
Regulations, which provide that the application of  the average-to-transaction comparison shall be 
limited to the prices that make up the pattern of targeted dumping.  
7.67 The United States  submits that there is no obligation in the AD Agreement  to calculate a 
margin of dumping for the product as a whole.  The text of Article 2.4.2 of the AD Agreement  does not 
require Members to calculate a margin for the pr oduct as a whole.  While the methodologies provided 
for in Article 2.4.2 will generally result in multiple  comparisons, Article 2.4.2 does not address the issue 
of whether, and, if so, how the results of such mu ltiple comparisons are to be aggregated into a single 
overall margin.  The phrase "product as a whole" is not  used in Article VI of the GATT 1994 or in 
Articles 2.1, 2.4 or 2.4.2 of the AD Agreement .   
7.68 The United States submits that the definition of "margin of dumping" in terms of a price 
difference and the manner in which the first paragraph of Ad Article VI:1 of the GATT 1994 uses the 
term "margin of dumping" imply that dumping may be found to exist with respect to individual 
transactions in which export prices ar e less than the normal value.  The AD Agreement  did not alter the 
definition of "margin of dumping" provided in GATT Article VI:2 but, as illustrated by Article 2.4.2, 
the context in which this definition is used in the AD Agreement  may allow it to be applied in more than 
one way.  In the case of the transaction-to-tra nsaction and average-to-transaction comparison 
methodologies, the plural "margins of dumping" is u sed in a manner consistent with the definition of 
"margin of dumping" in GATT Article VI:2 and refe rs to the results of multiple, transaction-specific 
comparisons.  Articles 5.8, 3.3 and 9.3 of the AD Agreement  are other examples of how the meaning of 
"margin(s) of dumping" depends upon the context w ithin which these terms are used.  Whereas Articles 
5.8 and 3.3 refer to a single overall margin of dumpi ng for an exporter or producer, the phrase "margin 
of dumping" in Article 9.3 indicates that the anti- dumping duty for a specific import cannot exceed the 
extent to which the export price for that transacti on falls below normal value.  The United States also 
argues that in a prospective normal value system the amount by which the prospective normal value 
exceeds the export price of a particular transaction is the margin of dumping for that transaction.  
7.69 The United States asserts that there is no textual support for the view that Article 2.4.2 of the 
AD Agreement  obligates Members to offset positive and negative dumping margins.  Consequently, 
panels and the Appellate Body have  never found in the text of the AD Agreement  an independent 
obligation to offset margins.  The finding of the Appellate Body in US – Softwood Lumber V  that 
zeroing is prohibited when establishing margins of dumping under the average-to-average methodology 
in investigations is based on the phrase "all comp arable export transactions", which is unique to the WT/DS322/R          
Page 148  
 
average-to-average comparison, and not on the phrase "margins of dumping".  If the Appellate Body's 
conclusion that zeroing is prohibited were based  not on the "all comparable export transactions" 
language but on "margins of dumpi ng", this would have rendered th e "targeted dumping" methodology 
in the second sentence of Article 2.4.2 a nullity becau se, mathematically, if zeroing is prohibited, the 
overall dumping margin calculated for an exporter must be the same under an average-to-average 
comparison as under an average-to-transaction comparison.   
7.70 In the latter regard, the United States asserts that there is no textual support for Japan's 
arguments that the second sentence of Article 2.4.2 provides for a selection of only those export transactions that make up the pricing pattern envision ed by that provision and that Article 2.4.2 was 
crafted on the assumption that the average normal value in the third methodology in Article 2.4.2 is 
established on a basis different from the averag e normal value in the first methodology.  The 
United States also submits that Japan is incorrect in arguing that the USDOC Regulations provide for 
the application of the third comparison methodol ogy to a subset of export transactions.   
7.71 Moreover, the United States argues that the c onclusion of the Appellate Body Report in 
US – Softwood Lumber V  that Article 2.4.2 of the AD Agreement  requires negative margins to be offset 
when the average-to-average comparison is used is  in contradiction with the text and the negotiating 
history of that provision and should not be followed by this Panel.  The United States also argues that 
the reasoning in the Appellate Body Report in US – Zeroing (EC)  is flawed and should not be followed 
by this Panel.  
7.72 The United States argues that the fact that Article VI of the GATT 1994 and the AD Agreement  
do not recognize the existence of negative margins of dumping is also evident from the fact that 
Members operating a prospective normal value system are not required to provide a refund or credit for 
any amount by which an export transaction exceeds norma l value.  The United States asserts that Japan 
is incorrect in arguing that the retrospective duty assessment system of the United States does not 
determine final liability for payment of anti-dumping duties on an entry-by-entry basis.  
Arguments of Third Parties 
7.73 Argentina , China , the European Communities , Korea , Mexico , Norway  and Thailand  
broadly agree with Japan that model and simple ze roing is inconsistent with Article 2.4.2 of the 
AD Agreement  because it violates the requirement to make  a determination of dumping for the product 
as a whole and is also inconsistent with the "fair comparison" requirement contained in Article 2.4 of 
the AD Agreement  because it inflates the margin of dumping and may even lead to a finding of the 
existence of dumping where no such finding would have been made in the absence of zeroing.
693  A 
number of third parties refer, in this respect , to the analysis of the Appellate Body in EC – Bed Linen , 
US – Corrosion-Resistant Steel Sunset Review  and US – Softwood Lumber V .  Some third parties 
emphasize, in this regard, that the reasoning of the Appellate Body in US – Softwood Lumber V  implies 
that zeroing is prohibited in any context. 
7.74 New Zealand  submits that it is important to bear in mind the negotiating history of the 
AD Agreemen t in considering the validity of Japan's ar guments.  While curbs were placed on the 
situations in which the average-to-transactions met hod might be used, no such curbs were placed on the 
other two methods set out in Article 2.4.2.  In this  respect, New Zealand emphasi zes its systemic interest 
in ensuring that the right to use the transacti on-to-transaction methodology is preserved and disagrees 
with the view that the reasoning of the Appellate Body in US – Softwood Lumber V  applies to the 
transaction-to-transaction method.  New Zealand also points to the need for a holistic perspective in 
                                                      
693 The EC also argues that zeroing amounts to an impermissible adjustment for a difference that does not 
affect price comparability.                    WT/DS322/R 
Page 149 
 
 
 
 which account is taken of the rela tionship between the method of calculating dumping margins and the 
determination of the existence of material injury to a domestic industry caused by dumped imports.   
Evaluation by the Panel  7.75 Japan requests us to find that maintaining mode l and simple zeroing procedures in the context 
of original investigations is inconsistent with Articles 2.1 and 2.4.2 of the AD Agreement  and 
Articles VI:1 and VI:2 of the GATT 1994 because th ese procedures conflict with the requirement to 
determine dumping, and to calculate a margin of dumping, for the product as a whole.  
7.76 Article 2.1 of the AD Agreement  provides: 
 For the purpose of this Agreement, a product is to be considered as being dumped, i.e. 
introduced into the commerce of another country at less than its normal value, if the export 
price of the product exported from one country to an other is less than the comparable price, in 
the ordinary course of trade, for the like pr oduct when destined for consumption in the 
exporting country.  
7.77 Article 2.4.2 of the AD Agreement  provides: 
 Subject to the provisions governing fair comparis on 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 valu e established on a weighted average basis may 
be compared to prices of individual export transac tions if the authorities find a pattern of export 
prices which differ significantly among different pur chasers, regions or time periods, and if an 
explanation is provided as to why such differe nces cannot be taken into  account appropriately 
by the use of a weighted average-to-wei ghted average or transaction-to-transaction 
comparison. 
 
7.78 Articles VI:1 and VI:2 of the GATT 1994 provide: 
1. The contracting parties recognize that dump ing, by which products of one country are 
introduced into the commerce of another count ry at less than the normal value of the 
products, is to be condemned if it causes or th reatens material injury to an established 
industry in the territory of a contracting part y or materially retards the establishment of 
a domestic industry.  For the purposes of this Article, a product is to be considered as 
being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another 
   ( a) is less than the comparable price, in the ordinary course of trade, for 
the like product when destined for consumption in the exporting country, or, 
    ( b) in the absence of such domestic  price, is less than either 
 
 (i) the highest comparable price for the like product for export to 
any third country in the ordinary course of trade, or 
 
 (ii) the cost of production of the product in the country of origin 
plus a reasonable addition for selling cost and profit. 
 WT/DS322/R          
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Due allowance shall be made in each case for differences in conditions and terms of 
sale, for differences in taxation, and for ot her differences affecting price comparability. 
  2. In order to offset or prevent dumping, a contracting party may levy on any dumped 
product an anti-dumping duty not greater in amount than the margin of dumping in 
respect of such product.  For the purposes of th is Article, the margin of dumping is the 
price difference determined in accordance with the provisions of paragraph 1. 
 7.79 We will examine first Japan's claims that maintaining model zeroing procedures in the context 
of original investigations is in consistent with these provisions.   
 Model zeroing
694 
 
7.80 Model zeroing, as that term is used by Japan, involves average-to-average comparisons of 
export price and normal value within individual aver aging groups established on the basis of physical 
characteristics.695  We note that the panels in EC – Bed Linen , EC – Tube or Pipe Fittings,  
US – Softwood Lumber V  and the Appellate Body in EC – Bed Linen  and US – Softwood Lumber V  have 
found that in circumstances where an authority est ablishes the existence of margins of dumping during 
the investigation phase by making multiple, model-by-model comparisons between average export prices and average normal values and by aggregating th e results of those comparisons into an overall 
margin of dumping, Article 2.4.2 of the AD Agreement requires  that the results of all those comparisons 
be fully taken into account in the numerator of the overall margin of dumping.
696  In other words, model 
zeroing, a method under which the numerator of the overall margin of dumping does not include results 
of comparisons in which average export prices of specific models of a product are above average normal values for those models, has repeatedly been  found to be prohibited by Article 2.4.2 of the 
AD Agreement  in recent WTO dispute settlement cases when used to establish the existence of margins 
of dumping during the investigation phase.   
7.81 We note, in this regard, the argument of the United States that the reasoning underlying the 
conclusion of the Appellate Body in US - Softwood Lumber V  regarding the inconsistency with 
Article 2.4.2 of zeroing applied in connection with an average-to-average comparison in the 
establishment of margins of dumping during the inv estigation phase is flawed and should not be 
followed by this Panel.  As support for its position, the United States refers in particular to the historical 
background to the AD Agreement .
697  
7.82 We have carefully considered these arguments of the United States, in accordance with the 
obligation contained in Article 11 of the DSU to  "make an objective assessment of the matter".698  We 
consider, however, that the language used in  the first sentence of Article 2.4.2 of the AD Agreement  
warrants the conclusion that model zeroing is pro scribed.  This follows in particular from the 
requirement in the first sentence of Article 2.4.2 th at the weighted average normal value be compared 
with a weighted average export price that reflects the prices of all comparable export transactions  and 
from the fact that this sentence does not contain la nguage that indicates that margins of dumping can be 
determined in respect of individual models of a produc t.  We note, in this regard, the reasoning that has 
led several panels and the Appellate Body to conclude that the text of the firs t sentence of Article 2.4.2 
                                                      
694 We recall that we have concluded that what Japan terms "model zeroing" and "simple zeroing" are 
different manifestations of a single rule or norm.  Supra , footnote 688. 
695 Supra , para. 7.2. 
696 Panel Report, EC – Bed Linen , paras. 6.110-6.119; Appellate Body Report, EC – Bed Linen , paras. 
46-66; Panel Report, EC – Tube or Pipe Fittings , paras. 7.213-7.219; Panel Report, US – Softwood Lumber V , 
paras. 7.196-7.226; Appellate Body Report, US – Softwood Lumber V , paras. 76-117.  
697 US First Written Submission, paras. 89-94.  
698 Supra , footnote 636.                   WT/DS322/R 
Page 151 
 
 
 
 prohibits the use of model zeroing.699  We also note that the arguments presented by the United States700 
are similar to arguments of the United States th at were rejected by the Appellate Body in US – Softwood 
Lumber V .701   
7.83 Thus, we consider that model zeroing in the cont ext of an average-to-average comparison when 
the existence of margins of dumping is established du ring the investigation phase is inconsistent with 
Article 2.4.2 of the AD Agreement .   
7.84 We recall our conclusion that a measure exists that requires the use of zeroing and that model 
zeroing is one aspect of this measure.702  In light of our interpretation that model zeroing in the 
establishment of the existence of margins of dumping du ring the investigation phase  is inconsistent with 
Article 2.4.2 of the AD Agreement , we find that this measure produces WTO-inconsistent conduct.703   
7.85 In light of the foregoing, we c onclude that model zeroing procedur es in the context of original 
investigations are, as such, inconsistent with Article 2.4.2 of the AD Agreement .   
7.86 The Panel therefore finds that by maintaining model zeroing procedures in the context of 
original investigations USDOC acts inc onsistently with Article 2.4.2 of the AD Agreement.   
7.87 We exercise judicial economy with respect to Jap an's claims that the model zeroing procedures 
in the context of original investigations are inconsistent as such with Article 2.1 of the AD Agreement  
and Articles VI:1 and VI:2 of the GATT 1994.  In this respect, we have taken into account the 
considerations articulated by the Appellate Body w ith respect to the exercise of judicial economy.  
Thus, we note the statement of the Appellate Body Report in Canada - Wheat Exports and Grain 
Imports that: 
"The practice of judicial economy, which was first employed by a number of GATT 
panels, allows a panel to refrain from maki ng multiple findings that the same measure 
is  inconsistent  with various provisions when a single, or a certain number of findings 
of inconsistency, would suffice to resolve the dispute.  Although the doctrine of judicial economy allows  a panel to refrain from addressing claims beyond those 
necessary to resolve the dispute, it does not  compel  a panel to exercise such restraint.  
At the same time, if a panel fails to make  findings on claims where such findings are 
necessary to resolve the dispute,  then this would constitute a false exercise of judicial 
economy and an error of law."
704 (emphasis in original;  footnotes omitted)   
7.88 The Appellate Body has also stated in  Australia – Salmon  that a panel is under a duty "to 
address those claims on which a finding is necessary in order to enable the DSB to make sufficiently 
precise recommendations and rulings so as to allow for prompt compliance by a Member with those 
recommendations and rulings."705  In US – Zeroing (EC) , the Appellate Body upheld the exercise of 
judicial economy by the panel in that dispute with  regard to claims of the European Communities under 
Articles 2.4 and 9.3 of the AD Agreement  on the grounds that findings on those claims were not 
                                                      
699 As discussed below, this reasoning led to the development of the concept of "product as a whole"; 
infra , paras. 7.92-7.99. 
700 US First Written Submission, paras. 89-94. 
701 Appellate Body Report, US – Softwood Lumber V , paras. 16 and 107-108.  
702 Supra , para. 7.58 and footnote 688. 
703 We note that in US – Zeroing (EC) , the Appellate Body rejected an ar gument of the US that the panel 
in that case had acted inconsistently with Article 11 of the DSU by not applying the mandatory/discretionary 
distinction in finding that the zeroing methodology was inconsistent with Article 2.4.2.  
 704 Appellate Body Report, Canada – Wheat Exports and Grain Imports , para. 133.  
705 Appellate Body Report, Australia – Salmon , para. 223.  WT/DS322/R          
Page 152  
 
necessary to secure a "positiv e solution" to the dispute or a "satisf actory settlement of the matter" within 
the meaning of, respectively, Articles 3.7 and 3.4 of the DSU.
706  
7.89 The issue in respect of which Japan requests us to make findings under Article 2.1 of the 
AD  Agreement  and Articles VI:1 and VI:2 of the GATT 1994 is exactly the same issue on which we 
have already made a finding of incons istency with Article 2.4.2 of the AD Agreement .  We therefore 
consider that our finding that maintaining model zeroi ng procedures is inconsiste nt with Article 2.4.2 of 
the AD Agreement  will enable the DSB to make "sufficiently precise recommendations and rulings" and 
that in order to secure a "positive so lution" to the dispute or a "satisfactory settlement of the matter" it is 
not necessary to make additional findings on the same issue under Article 2.1 of the AD Agreement  and 
Article VI:1 and VI:2 of the GATT 1994.707   
Simple zeroing708 
7.90 We now turn to an examination of  Japan's claims that maintaining simple zeroing  procedures in 
the context of original investigations is in consistent with Articles 2.1 and 2.4.2 of the AD Agreement  
and Articles VI:1 and VI:2 of the GATT 1994.709  
7.91 With respect to Article 2.1 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994, 
Japan argues that the reasoning of the Appellate Body in US – Softwood Lumber V  regarding model 
zeroing necessarily implies that simple zeroing710 in original investigations is also inconsistent with 
these provisions because, like model zeroing, simple zeroing amounts to a failure to determine dumping, and to calculate a margin of dumping, for the product as a whole.  Japan also argues that, 
although the Appellate Body Report in US – Zeroing (EC)  did not address the issue of whether zeroing 
is prohibited if a transaction-to-transaction comparis on is used in an original investigation, the 
reasoning of the Appellate Body in that report dict ates that conclusion in that it confirms that the 
requirement to determine dumping and margins of  dumping for the product under investigation as a 
whole applies throughout the AD Agreement .   
7.92 In considering whether, as argued by Japan, th e "product as a whole" concept as used by the 
Appellate Body in US – Softwood Lumber V  necessarily supports Japan's claim regarding simple 
zeroing, it is important to recall that the issue befo re the Appellate Body in that dispute was whether 
Article 2.4.2 of the AD Agreement  proscribes zeroing in the context of "multiple averaging".
711  The 
term "multiple averaging" refers to a met hod whereby an authority divides a product under 
                                                      
706 Appellate Body Report, US – Zeroing (EC) , para. 250.  
707 Japan has reiterated its request for findings under Article 2.1 of the AD Agreement  and Article VI of 
the GATT 1994 regarding model zeroing procedures in orig inal investigations in its written comments of 10 May 
2006 on the Appellate Body Report in US – Zeroing (EC) .  Japan submits that because the Appellate Body has 
emphasized in that report that the prohibition of zeroing stems from Article 2.1 as well as Article 2.4.2 of the AD Agreement  the Panel should find that model zeroing procedures in original investigations, as such and as 
applied, are inconsistent with both Artic les 2.1 and 2.4.2.  The Pa nel should also find that because the definition of 
dumping derives from Article VI of the GATT 1994, the US acts inconsistently with that provision.   Japan 
Written Comments on the Relevant Issues of La w Addressed in the Appellate Body Report in US – Zeroing (EC)  
(WT/DS294/AB/R), para. 20.  We consider that these argum ents of Japan are insufficie nt reason to change our 
conclusion that additional findings on the claims of Japan under Article 2.1 of the AD Agreement  and Article VI of 
the GATT 1994 are not necessary.   
708 We recall that we have concluded that what Japan terms "model zeroing" and "simple zeroing" are 
different manifestations of  a single rule or norm.  Supra , footnote 688. 
709 As noted above, Japan has withdrawn its claim regarding simple zeroing procedures in relation to the 
average-to- transaction method provided for in the second sentence of Article 2.4.2.  Supra , footnote 635.  
710 The meaning of the term "simple zeroing" as used by Japan in this dispute is explained in para. 7.3. 
711 We note that in a written communication circulated  in document WT/DS294/18 the US has essentially 
incorporated the text of this paragraph in the vers ion in which it appeared in the Panel's Interim Report.                      WT/DS322/R 
Page 153 
 
 
 
 investigation into product types or models, calcula tes a weighted average normal value and a weighted 
average export price for each product type or model and then aggregates the results of these 
comparisons to derive an overall margin of dumping.712  The Appellate Body agreed with the 
participants that Article 2.4.2 of the AD Agreement  permits such multiple averaging and noted that the 
participants disagreed on the proper interpretation of  the terms "all comparable export transactions" and 
"margins of dumping" in Article 2.4.2.  The Appella te Body noted that the participants disagreed on 
whether the requirement to take into account "all co mparable export transactions" can be satisfied at a 
sub-group level or whether this require ment extends to the aggregation stage.713  With respect to the 
interpretation of the term "margins of dumping", the Appellate Body stated that  the "disagreement turns 
on the question of whether that term applies to the product under investigation as a whole, or, at the 
sub-group level,  when multiple averaging is undertaken ".714 715  In its analysis of this question, the 
Appellate Body consistently characterized the issue before it in terms of whether the terms "dumping" 
and "margins of dumping" apply at the produc t or "sub-group" or "sub-product" level716 and concluded, 
in light of, inter alia , Article 2.1 of the AD Agreement  and Article VI:2 of the GATT 1994, that dumping 
and margins of dumping can be found to exist only fo r a product as a whole and not for "a type, model or 
category of that product".717  In other words, the Appellate Body used the notion of "the product [under 
investigation] as a whole" to make a distinction between the product as a whole, on the one hand, and 
                                                      
712 Appellate Body Report, US – Softwood Lumber V , para. 80.  The Appellate Body observed that, as 
noted by the panel, multiple averaging is not necessarily based on product types or models and can be based on 
other factors, such as level of trade.   
713 Appellate Body Report, US – Softwood Lumber V , paras. 82-83.  
714 Appellate Body Report, US – Softwood Lumber V , para. 84 (emphasis added).   
715 The Appellate Body stated that the terms "all co mparable export transactions" and "margins of 
dumping" in Article 2.4.2 "should be interpreted in an integrated manner".  Appellate Body Report, US – Softwood 
Lumber V , para. 85.  After describing the differing views of the participants on the meaning of the term "all 
comparable export transactions", the Appellate Body obs erved that their disagreement "centres on how the results 
of multiple comparisons are interpreted and aggregated wh en all comparable export transactions have admittedly 
been taken into account at the sub-group level" and that "this disagreement flows, in essence, from the participants'' respective interpretations of the terms ' dumping' and 'margins of dumping' in the Anti-Dumping 
Agreement – whether these terms apply at the product or sub-product level.  We therefore turn now to an analysis 
of these terms as used in Article 2.4.2 of the AD Agreement ".  Appellate Body Report, US – Softwood Lumber V , 
para. 90.  Our view on the relationship between "margins of dumping" and "all comparable export transactions" in 
the Appellate Body's reasoning in US – Softwood Lumber V  is consistent with the analysis of the
 Panel in 
US – Softwood Lumber V (Article 21.5) .  We concur with that Panel's view th at "it [is] not appropriate to focus on 
the Appellate Body's interpretation of the term 'margins of dumping', in isolation from the phrase 'all comparable 
export transactions'".  Panel Report, US – Softwood Lumber V (Article 21.5) (appeal pending), para. 5.21.  
716 Appellate Body Report, US – Softwood Lumber V, paras. 90-91, 97, 99, 101 to 103, and 115. 
717 Appellate Body Report, US – Softwood Lumber V, paras. 93 and 96 . WT/DS322/R          
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"sub-group", "sub-product", "type", "m odel" or "category" on the other.
 718  The terminology used by 
the Appellate Body in this respect is inti mately linked to the multiple averaging method.719   
7.93 Thus, in US – Softwood Lumber V  the Appellate Body used the phrase "product as a whole" in 
its analysis of whether the term "margins of dumping", as used in Article 2.4.2 of the AD Agreement, 
"applies to the product under investigation as a whol e, or, at the sub-group level, when multiple 
averaging is undertaken".  The Appellate Body cons idered that since margins of dumping can be found 
only for the product under investigation as a whole, it follows that, while "an investigating authority 
may undertake multiple averaging to establish marg ins of dumping for a product under investigation 
...the results of the multiple comparisons at the sub- group level are... not 'margins of dumping' within 
the meaning of Article 2.4.2.  Rather, those results reflect only intermediate calculations made by an 
investigating authority in the context of establishing margins of dumping for the product under 
investigation".720  We see nothing in the relevant paragr aphs in the Appellate Body Report in 
US – Softwood Lumber  V to indicate that the Appellate Body c onsidered that its reasoning regarding the 
requirement to determine dumping and margins of dumping for the product as a whole has implications 
going beyond the question of whether, in the contex t of a multiple averaging methodology, the terms 
"dumping" and "margins of dumping" must be und erstood to apply at a product or sub-product or 
sub-group level.   
7.94 In this respect, we note that the Appellate Body Report in US – Softwood Lumber V  nowhere 
discusses the issue of whether or not the terms " dumping" and "margins of  dumping" can apply to 
transactions.  Moreover, the Appellate Body stated several times that it was not addressing the issue of 
whether zeroing can be used under other me thodologies provided for in Article 2.4.2.721  In rejecting an 
argument of the United States that these other methodologies were important as context for the 
consideration of whether zeroi ng is permitted under the average-to-average methodology, the 
Appellate Body stated that it "fail[ed]to see how [it]  could find that the transaction-to-transaction and 
average-to-individual methodologies could provide contextual support for the United States' interpretation of Article 2.4.2 without examining first whether zeroing is permitted under those 
methodologies ".
722   We concur, in this regard, with the view of the panel in US – Softwood Lumber V 
(Article 21.5)  that "[t]he fact that the Appellate Body dec lined to extend its interpretation of 'margins of 
dumping' from the context of the W-W methodology to the T-T methodology suggests strongly that that 
                                                      
718 The Appellate Body Report in US – Softwood Lumber V  refers to the statement in paragraph 53 of the 
Appellate Body Report in EC – Bed Linen  that "whatever the method used to calculate the margins of dumping, in 
our view, these margins must be, and can only be, established for the product  under investigation as a whole" . 
(original emphasis)   The context of this statement clearly indicat es that the Appellate Body was drawing a 
distinction between "the product as a whole", on the one hand, and "types or models of the product under 
investigation", on the other.  Appellate Body Report, EC – Bed Linen , paras. 49, 53, 55 and 57.  The Panel in 
US – Softwood Lumber V (Article 21.5)  stated, with respect to the "product as a whole" concept as used by the 
Appellate Body in US – Softwood Lumber V , that "[i]n light of the Appellate Body's own description of "the 
product as a whole", we believe that the Appellate Body si mply used the phrase "product as a whole" to emphasise 
the difference between establishing a margin of dumping for a single  model of the product under investigation on 
the one hand, and establishing a margin of dumping for the product under investigation writ large, in all its types, 
models or categories".  Panel Report, US – Softwood Lumber V (Article 21.5) (appeal pending), footnote 33.  We 
agree with the Panel's observation.   
719 It is significant, in this regard, that the term "sub-group" is used in US – Softwood Lumber V  in the 
sense of "sub-groups in which the wei ghted average normal value is less than the weighted average export price".  
Appellate Body Report, US – Softwood Lumber V , paras. 99 and 101.  Similarly, the "comparisons" the results of 
which may not be excluded in calculating a margin of du mping for the product under investigation as a whole are 
"comparisons for which the weighted average normal value is less than the weighted average export price".  
Appellate Body Report, US – Softwood Lumber V , paras. 102-103.  
720 Appellate Body Report, US – Softwood Lumber V , para. 97.  
721 Appellate Body Report, US – Softwood Lumber V , paras. 63, 77 and 104-105.  
722 Appellate Body Report, US – Softwood Lumber V, para. 105 ( emphasis added ).                    WT/DS322/R 
Page 155 
 
 
 
 interpretation was indeed limited to the situation where the term 'margins of dumping' is used in 
conjunction with the phrase 'all comparable export transactions'."723   
7.95 We note, however, that in US – Zeroing (EC)  the Appellate Body used the concept of "the 
product as a whole" in a manner that suggests that th e relevance of that concept is not limited to the 
establishment of the existence of margins of dum ping under the average-to-average method provided 
for in the first sentence of Article 2.4.2 of the AD Agreement .  In that dispute, the Appellate Body found 
that the United States had acted inconsistently with Articles 9.3 of the AD Agreement  and Article VI:2 
of the GATT 1994 by applying zeroing in the administrative reviews at issue.724  This ruling appears to 
be based on the following reasoning.   
7.96 First , the Appellate Body interpreted the term "margin of dumping" in Article 9.3 of the 
AD Agreement  and Article VI:2 of the GATT 1994 in light of a requirement, derived from Article 2.1 of 
the AD Agreement  and Article VI of the GATT 1994, to establish dumping and margins of dumping for 
the product under investigation as a whole, as di scussed in the Appellate Body Reports in EC – Bed 
Linen  and US - Softwood Lumber V .725  The Appellate Body considered that since Article 9.3 of the 
AD Agreement  refers to Article 2, "under Article 9.3 of  the Anti-Dumping Agreement and Article VI:2 
of the GATT 1994, the amount of the assessed anti -dumping duties shall not exceed the margin of 
dumping 'as established' for the product as a whole' ".726  As a consequence, 
"...if the investigating authority establishes the margin of dumping on the basis of multiple 
comparisons made at an intermediate stage , it is required to aggregate the results of all of the 
multiple comparisons, including those where the export price exceeds the normal value.  If the 
investigating authority chooses to undertake multiple comparisons at an intermediate stage, it is 
not allowed to take into account the results of only some multiple comparisons, while 
disregarding others."727  
7.97 Second , the Appellate Body rejected the view of the United States that in duty assessment 
proceedings the term "margins of dumping" can be  interpreted as applying on a transaction-specific 
basis.  The Appellate Body considered that it follows from the meaning of the term "margin of 
dumping" in Article 9.3 of the AD Agreement  and Article VI:2 of the GATT 1994, interpreted in light of 
Article 6.10 of the AD Agreement, that "margins of dumping for a product must be established for 
exporters or foreign producers".728 729  Therefore, under Article 9.3 of the AD Agreement  and Article 
VI:2 of the GATT 1994 "investigating authorities are required to ensure that the total amount of 
anti-dumping duties collected on the entries of a product from given export er shall not exceed the 
margin of dumping established for that exporter".730  
7.98 Based on these two considerations i.e. the requi rement to determine dumping and margins of 
dumping for the product as a whole and the notion that in the AD Agreement  the term "margin of 
                                                      
723 Panel Report, US – Softwood Lumber V (Article 21.5) (appeal pending),  para. 5.20.  
724 Appellate Body Report, US – Zeroing (EC) , para. 135.  
725 Appellate Body Report, US – Zeroing (EC) , paras. 124-126. 
726 Appellate Body Report, US – Zeroing (EC ), para. 127. 
727 Appellate Body Report, US – Zeroing (EC) , para. 127 ( emphasis added ).  
728 Appellate Body Report, US – Zeroing (EC) , para. 128.  
729 In support of the view that "the term 'margin of dumping' in the Anti-Dumping Agreement  in general 
refers to the margins of dumping for exporters or fore ign producers" the Appellate Body also referred to the 
Appellate Body Reports in Mexico – Anti- Dumping Measures on Rice , US – Hot-Rolled Steel  and US – 
Corrosion-Resistant Steel Sunset Review.  The Appellate Body also found support for this  view in "the notion of  
dumping, which is designed to counteract the foreign producer's or exporter's pricing behaviour".  Appellate Body 
Report, US – Zeroing (EC) , para. 129.  
730 Appellate Body Report, US – Zeroing (EC) , para. 130.  WT/DS322/R          
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dumping" in general refers to margins of dumping of exporters or foreign producers, the Appellate 
Body reasoned that, in order to determine whethe r the use of zeroing in administrative reviews is 
inconsistent with Article 9.3 of the AD Agreement  and Article VI:2 of the GATT 1994, "the 
anti-dumping duties collected on all entries of the subject product from a given exporter or foreign producer" must be compared with "that exporter's or foreign producer's margin of dumping for the 
product as a whole" and that, "if a margin of a dumping is calculated on the basis of multiple 
comparisons made at an intermediate stage", the anti-dumping duties assessed must be compared with 
margins of dumping of exporters or foreign producer s "that reflect the results of all of the multiple 
comparisons carried out at an inte rmediate stage of the calculation".
731  The Appellate Body then found 
that because in the administ rative reviews at issue USDOC employed a methodology that 
systematically disregarded the results of individu al comparisons in which export price exceed normal 
value, the amounts of anti-dumping duties assessed exceeded the foreign producers' or exporters' 
margins of dumping with which the anti-dumping duti es had to be compared under Article 9.3 of the 
AD Agreement  and Article VI:2 of the GATT 1994.732   
7.99 We have carefully considered the arguments of Jap an in favour of a broader application of the 
"product as a whole" concept in a manner consistent  with the reasoning of the Appellate Body in 
US – Zeroing (EC) .  However, while we recognize the important  systemic considerations in favour of 
following adopted panel and Appellate Body reports, we  have decided not to adopt that approach for the 
reasons outlined below. 733    
7.100  First , we consider that there are difficulties in  discerning the precise meaning and scope of 
application of the phrase "multiple comparisons...a t an intermediate stage" as used in the 
Appellate Body Report in US – Zeroing (EC) .734  The Appellate Body did not elaborate upon the 
meaning of that phrase and did not explain in any detail what particular aspect of the methodology employed by USDOC in the administrative reviews at issue in US – Zeroing (EC)  involved "multiple 
comparisons...at an intermediate stage".  It is possible that, as used by the Appellate Body in 
US – Zeroing (EC) , the phrase "multiple comparisons at an inte rmediate stage" should be interpreted to 
mean that whenever there are "multiple comparisons" th ere is by definition an "intermediate stage".  It 
is also possible, however, to interpret this phrase to refer only to those multiple comparisons that 
involve a particular "intermediate stage".  In the c ontext of the dispute before the Appellate Body, the 
concept of an "intermediate stage" could perhaps be  related to the manner in which USDOC divides the 
universe of transactions under consideration for the purpose of determining margins of dumping in duty 
assessment proceedings.  Thus, we cannot exclude th e possibility of a reading of the Appellate Body 
                                                     
 
731 Appellate Body Report, US – Zeroing (EC ), para. 132.  
732 Appellate Body Report, US – Zeroing (EC) , para. 133.  
733 It is well established that panel and Appellate Body reports are not binding, except with respect to 
resolving the particular dispute between the parties to the dispute, but that such reports create "legitimate 
expectations" among WTO Members and should therefore be taken into account where they are relevant to any dispute.  Appellate Body Report, US – Softwood Lumber V , paras. 109-112; Appellate Body Report , Japan 
Alcoholic Beverages II , pp. 12-15; Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , para.109.  The 
Appellate Body has stated that "...following the Appellate Body's conclusions in earlier disputes is not only appropriate, but is what would be ex pected from panels, especially where the issues are the same".  Appellate 
Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 188.  This notion of an "expectation" that 
panels will follow Appellate Body re ports (as well as panel reports) is  supported by important systemic 
considerations, including the objective, referred to in  Article 3.2 of the DSU, of providing security and 
predictability to the multilateral trading system.  At the same time, a panel is under an obligation under Article 11 
of the DSU to "make an objective assessment of the matter  before it, including an objective assessment of the facts 
of the case and the applicability of and conformity with th e relevant covered agreements..."  Moreover, Article 3.2 
of the DSU requires a panel "to clarif y the existing provisions of those ag reements in accordan ce with customary 
rules of interpretation of public international law" and provides that "[r]ecommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in covered agreements". 
734 Appellate Body Report, US – Zeroing (EC) , paras. 126-127 and 132.                   WT/DS322/R 
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 reasoning as applicable only to certain kinds of multipl e comparisons.  It is perhaps significant, in this 
regard, that the Appellate Body recalle d, in paragraph 127 of its report in US – Zeroing (EC),  that in 
US – Softwood Lumber V  it had not addressed "the issue of zeroing in the context of the other 
methodologies set out in Article 2.4.2" and that it st ated in paragraph 203 that it was "not making any 
finding here with respect to the consistency of  the zeroing methodology, as such, with the second or 
third methodology set forth in Article 2.4.2 for establishing the existence of margins of dumping".  We also note that, although the Appellate Body Report in US – Zeroing (EC)  states that a Member "may 
choose" to undertake "multiple comp arisons...at an intermediate stage"
735, it is unclear from the Report 
what is the basis for and the extent of the discretion en joyed in this regard by Members.  For example, it 
is difficult to see how a Member can choose  not to make multiple comparisons between export price and 
normal value if it uses the transaction-to-transaction method or the average-to-transaction method provided for in Article 2.4.2 of the AD Agreement  since these two methods by definition almost always 
involve multiple comparisons of some kind.  Simila rly, if a Member compares normal value and export 
price on an average-to-average basis, as provided for in the first sentence of Article 2.4.2, it may well be 
obligated , depending upon the facts of particular case, to use multiple averaging and thus to make 
multiple comparisons in order to take into account differences affecting price comparability, as required 
by the introductory clause to Article 2.4.2.   
7.101  Second , as discussed above
736, the Appellate Body Report in US – Softwood Lumber V  uses the 
phrase "product as a whole" as part of an analysis  under the first sentence of Article 2.4.2 of the 
AD Agreement  of whether zeroing is permitted in the context of "multiple averaging" and does not 
address the issue of whether zeroing is permitted in the context of "multiple comparisons"  
generally.737  In this respect, the Appellate Body relied on the terms "product" and "products" in GATT 
Article VI and in Article 2.1 of the AD Agreement  to interpret the term "margins of dumping" in the first 
sentence of Article 2.4.2, which, it observed, shoul d be interpreted in an integrated manner with the 
phrase "all comparable export transactions".  In US – Zeroing (EC),  by contrast, the Appellate Body 
appeared to embrace the interpretation that the refere nce to "product" and "products" in Article VI of 
the GATT 1994 and in Article 2.1 and other provisions of the AD Agreement  by itself suffices to 
conclude that zeroing is prohibited whenever "multiple comparisons at an intermediate stage are made".  
The Appellate Body Report in US – Zeroing (EC)  provides no explanation of this shift from the use of 
the "product as a whole" concept as context to interp ret the term "margins of dumping" in the first 
sentence of Article 2.4.2 of the AD Agreement  in connection with multiple averaging, on the one hand, 
to the use of this concept as an autonomous legal basis for a general prohibition of zeroing, on the other.  
In this regard, we note, in particular, that the A ppellate Body does not discuss why the fact that in the 
context of multiple averaging the terms "dumping"  and "margins of dumping" cannot apply to a 
sub-group  of a product logically leads to the broader conclusion that Members may not distinguish 
between transactions  in which export prices are less than normal value and transactions  in which 
export prices exceed normal value.   
7.102  Third , as explained below, we consider that it is permissible to interpret Articles 2.1 and 2.4.2 
of the AD Agreement  and Article VI of the GATT 1994 to mean that there is  no general  requirement to 
                                                      
735 Appellate Body Report, US – Zeroing (EC), para. 126.  
736 Supra , paras. 7.92-7.94. 
737 Thus, with respect to the statement in para graph 126 of the Appellate Body Report in US – Zeroing 
(EC)  that "an investigating authority may choose to undertake multiple comparisons or multiple averaging at an 
intermediate stage  to establish margins of dumping" ( emphasis added ), we note that the first two sentences in 
paragraph 97 of the Appellate Body Report in US – Softwood Lumber V  refer to "multiple averaging" and 
"multiple comparisons at the sub-group level" but no to  "multiple comparisons at an intermediate stage".  
Similarly, with respect to the penultimate sentence of paragraph 126 of the Appellate Body Report in US – 
Zeroing (EC) , we note that paragraph 102 of the Appellate Body Report in US – Softwood Lumber V  states that 
"the terms 'dumping' and 'margins of dumping' in Article VI of the GATT 1994 and the Anti-Dumping Agreement 
apply to the product under investigation as a whole and do not apply to  sub-group levels ". (emphasis added )   WT/DS322/R          
Page 158  
 
determine dumping and margins of dumping for the product as a whole, which, by itself or in conjunction with a requirement to establish margin s of dumping for exporters or foreign producers
738, 
entails a prohibition of zeroing other than in the c ontext of the average-to-average comparison method 
in the first sentence of Article 2.4.2 of the AD Agreement .  This view is based on an analysis of the 
words "product" and products" as used in Article 2.1 of the AD Agreement  and Article VI of the 
GATT 1994 and of the text of Article 2.4.2 of the AD Agreement .  In addition, as discussed below in 
connection with Japan's claims regarding periodic re views, we also consider that such a general 
prohibition is not supported by the provisions of Article 9 of the AD Agreement .   
The words" product" and "products" as used in Artic le 2.1 of the AD Agreement and Article VI of the 
GATT 1994  
7.103  The textual basis of the argument of Japan that Article 2.1 of the AD Agreement  and Article VI 
of the GATT 1994 must be interpreted as proscribing ze roing in general is the fact that these provisions 
define the terms "dumping" and "margins of dumping" in relation to "product(s)".739  According to 
Japan, "product" in these provisions must be unders tood as "product as a whole" and thereby excludes 
the possibility of applying the terms "dumping" and "m argins of dumping" to models, types, categories, 
sub-groups and transactions.  In the context of Japan's claim regarding simple zeroing, it is in particular 
the claim that these terms cannot apply to transactions  that must be examined.   
7.104  We note that the expression "product as a whole" does not appear in Article 2.1 of the 
AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994.  Japan's argument that, by virtue of a 
requirement to determine dumping, and to calculate  a margin of dumping, for the product as a whole, 
Article 2.1 of the AD Agreement  and Article VI of the GATT 1994 prohibit zeroing under any 
comparison method, is based upon the proposition that th e mere use of the word "product" means that 
the concept of dumping, by definition, cannot apply to  individual transactions and inherently entails the 
need to examine export transactions at an aggregate le vel and to accord the same weight to export prices 
that are above normal value as to export prices that are below normal value.740  We disagree with that 
interpretation.  In our view, Article 2.1 of the AD Agreement  and Article VI of the GATT 1994, 
interpreted in accordance with the rules of the Vienna Convention,  do not compel the conclusion that the 
words "product" and "products" m ean that these provisions necessarily require such an examination of 
export transactions at an aggregate level.  
7.105  Thus, Japan has not explained how such a requi rement to examine export transactions at an 
aggregate level flows naturally from the ordinary meaning  of the words "product" and "products" in 
                                                      
738 As discussed above, in US – Zeroing (EC)  the Appellate Body based its finding that the use of zeroing 
in certain administrative reviews was in consistent with Article 9.3 of the AD Agreement  both on the notion that 
dumping and margins of dumping must be determined for the product as a whole and on the notion that the term 
"margin of dumping" in the AD Agreement  in general refers to the margin of dumping for exporters or foreign 
producers, which it derived from Article 6.10 of the AD Agreement .  We discuss the question whether Article 6.10 
is of relevance to the issue of zeroing below in paras. 7.109-7.111. 
739 Japan has also referred to provisions such as Article 6.10 and 9.2 of the AD Agreement  as support for 
its position.   
740 Thus, Japan asserts with respect to Article VI of the GATT 1994 that "[j]ust as the term 'dumping' is 
defined in relation to the product as a whole, this Article e xplicitly states that the relevant price is for the 'product', 
not a subpart of the product or a single transaction."  Japan Second Written Submission, para. 46.  Ja pan observes 
that in terms of the definition in Article 2.1 of the AD Agreement  " 'dumping' is for a product and not for individual 
transactions".  Japan Opening Statement  at the Second Substantive Meeting of the Panel with the Parties, para. 22.  
Japan argues that Articles VI:1 and VI:2 of the GATT 1994  "demonstrate that the 'price difference' in question is 
the price difference for the 'product', not for individual transactions".  Japan Response to Panel Question 44, 
para. 36.  Similarly, Japan states that "Article 2.1 of the AD Agreement  and Article VI of the GATT  1994 define 
'dumping' and 'margins of dumping' in relation to a product.  As a result, dumping margins must be determined for 
the product, not for particular transactions".  Japan Response to Panel Question 53, para. 53.                   WT/DS322/R 
Page 159 
 
 
 
 Article 2.1 of the AD Agreement  and Article VI:1 and VI:2 of the GATT 1994.  In this regard, we agree 
with the view of the Panel in US – Softwood Lumber V (Article 21.5)  that "there is nothing inherent in 
the word 'product[]' (as used in Article VI:1 of the GATT 1994  and Article 2.1 of the AD Agreement ) to 
suggest that this word should preclude the possibility of establishing margins of dumping on a 
transaction-specific basis, although this should not imply that a margin of dumping established with 
respect to a particular transaction is sufficient to  impose an anti-dumping measure on all subsequent 
imports of the product".741 
7.106  The Panel has also not been presented w ith compelling arguments as to why the context  in 
which the words "product" and "product s" are used in Article 2.1 of the AD Agreement  and Article VI of 
the GATT 1994 supports the interpretation proffered by Japan.  The fact that dumping is defined in the 
GATT 1994 and in the AD Agreement  as occurring when a product is introduced into the commerce of 
another country at less than its normal value, i.e. when the price  of a product is less than its normal value 
in our view undermines the argument that it is not permissible to interpret the concept of dumping as 
being applicable to individual sales transactions.  We fail to see why the notion that "a product is 
introduced into the commerce of another country" ca nnot apply to a particular export sale and would 
necessarily require an examination of different export sales at an aggregate level.  Similarly, the notion 
of a margin of dumping as the price difference  that exists when one price is less than another price (or 
constructed value) can easily be applied to individual transactions a nd does not require an examination 
of export transactions at an aggregate level.742  The terms "export price of a product exported from one 
country to another" in Article 2.1 of the AD Agreement  and "the price of the product exported from one 
country to another" in Article VI:1  of the GATT 1994 can reasonably be interpreted to mean the price of 
the product in a particular export transaction.  
7.107  Therefore, the ordinary meaning of the words "p roduct" and "products", read in the context of 
the definition of "dumping" and "margin of dumping"  in which they are used in Article 2.1 of the 
AD Agreement  and Article VI of the GATT, provides no su pport for the view that these words give rise 
to a general prohibition of zeroing by requiring an examination of export transactions at an aggregate 
level.  We note, in this respect, that the record of past discussions in the framework of the GATT shows 
that historically the concept of dumping has been unde rstood to be applicable at  the level of individual 
export transactions.743   
7.108  Apart from the particular context in which the wo rds "product" and "products" are used in the 
definition of the terms "dumping" and "margi ns of dumping" in Article 2.1 of the AD Agreement  and 
Article VI of the GATT 1994, it is also necessary to  consider the use of these words elsewhere in the 
                                                      
741 Panel Report, US – Softwood Lumber V (Article 21.5) (appeal pending), footnote 32.  
742 Japan argues that the fact that prices can be es tablished in the marketplace on a transaction-specific 
basis does not mean that the words "product", "dumping" and "margin of dumping" in the GATT 1994 and in the AD Agreement  have a transaction-specific meaning.  Japan asserts that "investigating authorities routinely 
aggregate prices for transactions  into prices for a product" and concludes fr om this that the fact  that prices can be 
transaction-specific does not nece ssarily mean that margins of dumping are determined for individual 
transactions.  Second Written Submission of Japan, para. 45.   The question before the Panel, however, is whether 
the term "price difference" indicates that dumping and marg ins of dumping may be found to exist with respect to 
particular transactions.  While it may be true that it is po ssible to "aggregate" prices for some particular purposes, 
the words "price" and "price difference" clearly do not require  an examination of export transactions at an 
aggregate level.   
743 The Second Report of the Group of Experts on Anti-Dumping and Countervailing Duties , adopted on 
27 May 1960, notes that "the ideal method of fulfilling [the principles th at the imposition of an anti-dumping is 
only justified if a product is found to be dumped and to cause or threaten material injury] was to make a 
determination in respect of both dumpi ng and material injury in respect of each single importation of the product 
concerned".  BISD 9S/194, para. 7.  See also Panel Report, US – Softwood Lumber V (Article 21.5)  (appeal 
pending), para. 5.63. WT/DS322/R          
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GATT 1994 and the AD Agreement  as relevant context.  Japan has failed to explain how its 
interpretation of the words "product" and "products " as precluding the application of a provision to 
individual transactions is c onsistent with the meaning of these word s when used elsewhere in Article VI 
of the GATT 1994, other provisions of the GATT 1994 and the AD Agreement .  We see no basis for the 
view that when other provisions of Article VI, of the GATT 1994 or of the AD Agreement  use the words 
"product" or "products", this necessarily precludes th e application of such provisions to individual 
transactions.  Thus, for example, the phrase "importation of any product" used in Article VI:6 and other 
provisions of the GATT 1994 does not mean that th ese provisions inherently cannot apply to an 
individual import transaction.
744  Similarly, when Article VII:3 of  the GATT 1994 refers to "the value 
for customs purposes of any imported product", the me re use of the word "product" cannot reasonably 
be interpreted to preclude the possibility to apply th is term to the value of a product in a particular 
import transaction.  If the word "product" in Article  VII:3 does not necessarily require an examination 
of transactions at an aggregate level, we cannot see why such an examination is nevertheless required 
by the use of that word in Articles VI:1 and VI:2.745 
7.109  Japan relies on Article 6.10 of the AD Agreement  as contextual support for the proposition that 
dumping and margins of dumping must be determined for the product as a whole.746   
7.110  The issue before us is whether the AD Agreement  must be interpreted to mean that in 
determining dumping and margins of dumping authorities must necessarily carry out an aggregate analysis of export transactions in which export  prices above normal value are accorded the same 
significance as export prices below normal va lue.  In our view, Article 6.10 of the AD Agreement  does 
not support such an interpretation.  
7.111  Article 6 of the AD Agreement  contains provisions designed to ensure transparency and due 
process in the conduct of anti-dumping investigations.  In that contex t, Article 6.10 provides that, as a 
rule, authorities must determine an individual margin of dumping for each known exporter or producer of the product under investigation but also lays down cer tain rules that must be observed when it is not 
possible to determine such an individual marg in of dumping.  Neither the phrase "product under 
investigation" nor the reference to an individual marg in of dumping for an exporter or producer in our 
view provides any guidance with respect to the pr ecise methodology to be used for the purpose of 
calculating that margin of dumping.  As in Article 2.1 of the AD Agreement  and Articles VI:1 and VI:2 
of the GATT 1994, the use of the word "product" in Article 6.10 does not exclude the possibility of 
applying the concept of dumping to individual transactions.  Even assuming arguendo  that the notion of 
an "individual margin of dumping for each known exporter or producer"
747 implies an obligation to 
determine a single margin of dumping for each known e xporter or producer based on an analysis of the 
                                                      
744 Panel Report, US – Softwood Lumber V (Article 21.5) (appeal pending)  para. 5.23.  As stated there, 
"[a] review of the use of these terms [in Article VI of the GATT 1994] does not support the proposition that 
'product' must always mean the entire universe of export ed product subject to an anti-dumping investigation".  
745 Our view that it is not possible to infer from the words "product" and "products" that the concept of 
dumping cannot apply to individual export transactions does not imply that we consider that a Member may on the 
basis of a finding that some export sales under considera tion are dumped (and are causing injury) impose a duty on 
all subsequent imports of that product without in any wa y taking into account the relative significance of those 
dumped sales compared to other, non-dumped sales under consideration.   
746 Japan points out that in US – Softwood Lumber V  the Appellate Body used the phrase " product  under 
investigation" in Article 6.10 to confirm its view that dumping and margins of dumping can only be found for the 
product as a whole.  Japan also argues that in US – Zeroing (EC) , the Appellate Body has held that Article 6.10 
confirms that Article 2.1 of the AD Agreement  requires that margins of dumping be determined for foreign 
producers and exporters, for the product as a whole.  
747 In our view, an "individual" margin of dumping of an exporter or foreign producer within the 
meaning of Article 6.10 is a margin of dumping based on an examination of data pertaining to that particular 
exporter or foreign producer.  In this sense, the indi vidual character of the margin carries no particular 
implications regarding the methodology for determining the margin.                    WT/DS322/R 
Page 161 
 
 
 
 totality of the export transactions under considera tion, it does not necessarily follow that in deriving 
such a single margin an authority mu st accord the same weight to tr ansactions in which the export price 
is above the normal value as to transactions in wh ich the export price is below the normal value.  
Nothing in the text of Article 6.10 indicates that such a margin may not be calculated as an overall 
weighted average margin of dumping in which the numerator consists of the sum of the amounts by 
which export prices are less than normal value and th e denominator reflects the total value of all export 
transactions.748  Nor do we see on what basis it could be argued that such an approach to the calculation 
of margins of dumping is inconsistent with the fact that Article 9.2 of the AD Agreement  provides for 
the imposition of an anti-dumping duty on a "product" or  with "the need for consistent treatment of a 
product during an anti-dumping investigation and throughout the life on an anti-dumping action".749   
7.112  We conclude from our analysis that the fact th at the terms "dumping" and "margin of dumping" 
in Article 2.1 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994 are defined in relation 
to "product" and "products" does not warrant the conclusion that these terms, by definition, cannot 
apply to individual transactions and inherently requ ire an examination of export transactions at an 
aggregate level in which the same weight is accorded to export prices that ar e above normal value as to 
export prices that are below normal value.   
Article 2.4.2 of the AD Agreement 
7.113  In addition to these considerati ons relating to the use of the words "product" and "products" in 
Article 2.1 of the AD Agreement  and Article VI of the GATT 1994,  we consider that Japan's argument 
that the concept of a "product as a whole", as discussed in US – Softwood Lumber V , provides a 
sufficient basis for a general prohibition of zeroing ca nnot be reconciled with a coherent interpretation 
of Article 2.4.2 of the AD Agreement .  
7.114  Our analysis of Article 2.4.2 is structured as follows.  First , we articulate a key consideration 
guiding our analysis, namely the need for an internally coherent interpretation.  Second , we explain the 
lack of a textual foundation of a general prohibiti on of zeroing in the text of this provision.  Third , we 
identify some considerations that could be advanced in favour of an interpretation of this provision as 
prohibiting zeroing more broadly than only in the context of the average-to-average method.  Fourth , 
we analyze the logical impossibility of reconciling a general prohibition of zeroing with the express 
provision for the use of an average-to-transacti on method in the second sentence of Article 2.4.2.  
Need for an internally coherent interpretation of Article 2.4.2  
7.115  A fundamental consideration in our anal ysis of whether Article 2.4.2 of the AD Agreement  
supports the existence of a general prohibition of zer oing is that this provision defines three specific 
methodologies regarding the establishment of th e existence of margins of dumping during the 
investigation phase.  The specification of these methodologies is of considerable interpretive 
significance.  In our view, an understanding as to whet her or not there exists a general prohibition of 
zeroing must engage with these specific methodologies e xplicitly provided for in Article 2.4.2 as part of 
a single provision.  The first sentence of Article 2. 4.2 defines the average-to-average method and the 
transaction-to-transaction method as the two methods th at Members shall normally use for this purpose.  
The second sentence of Article 2.4.2 provides that an average-to-transaction comparison may be used if 
a particular pattern of export prices exists and if an  explanation is provided of why that pattern cannot 
be taken into account appropriately by using one of the two normal methods.  In other words, the second 
sentence lays down the conditions under which an av erage-to-transaction method may be used as an 
                                                      
748 We concur with the reasoning in paragraph 5.25 of the Panel Report in US – Softwood Lumber V 
(Article 21.5)  (appeal pending).   
749 Supra , para. 7.62. WT/DS322/R          
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exception to the use of one of the two normal methods  set out in the first sente nce.  Our assessment of 
whether or not the use of zeroing under a particular  comparison method is inconsistent with Article 
2.4.2 cannot be based on an analysis of that method in isolation but must be the result of an interpretation that reflects the particular interrela tionship between these three methods in a logically 
coherent manner.   
7.116  We recall in this respect that Article 31 of the Vienna Convention  provides that the context in 
which terms are used in a treaty must be taken into account as one element in their interpretation.  We 
also recall that the Appellate Body  has consistently referred to the principle of effectiveness, which it 
has characterized as   "[o]ne of the corollaries of 'the general rule of interpretation' in the Vienna 
Convention "
750 and "[a] fundamental tenet of treaty inte rpretation flowing from the general rule of 
interpretation set out in Article 31".751  According to this principle of effectiveness, or effet utile , "[a]n 
interpreter is not free to adopt a reading that woul d result in reducing whole clauses or paragraphs of a 
treaty to redundancy or inutility"752 and "a treaty interpreter must read all applicable provisions of a 
treaty in a way that gives meaning to all of them, harmoniously".753  
7.117  As discussed above, zeroing has already been found to be inconsistent with Article 2.4.2 if 
applied in the context of the average-to-average transaction method when establishing the existence of 
margins of dumping during the investigation phase.  In  determining whether zeroing is also inconsistent 
with Article 2.4.2 if used in connection with othe r comparison methods, we must adopt an interpretation 
that gives full effect, on the one hand, to the natu re of the transaction-to-transaction method as one of 
the two normal comparison methods which is used for the same purpose and which is subject to the 
same conditions as the average-to-average method.  On  the other hand, we must give full effect to the 
average-to-transaction method as an exception to the nor mal methods provided for in the first sentence.   
Lack of support in the text of Article 2.4.2 for a general prohibition of zeroing  
7.118  We note that the text of Article 2.4.2 of the AD Agreement  does not expressly address the 
question whether a Member may apply the zeroing me thod when establishing the existence of margins 
of dumping during the investigation phase on the basi s of the transaction-to-transaction method or the 
average-to-transaction method of comparing export price and normal value.  
7.119  The first sentence of Article 2.4.2 indicates that one of the two normal methods of establishing 
the existence of margins of dumping during the inves tigation phase is "by a comparison of normal value 
and export prices on a transaction-to-transaction basis" .  The natural meaning of "a comparison ..on a 
transaction-to-transaction  basis" is a comparison between a normal value in a particular transaction and 
an export price in a particular transaction.754  When compared to the other two methods provided for in 
Article 2.4.2 - the average-to-average method, on the one hand, and the average-to-transaction method, 
on the other - the distinguishing feature of the transaction-to-transaction method is its focus on individual transactions, with respect to both normal value and export price.  While Article 2.4.2 thus 
provides that the existence of margins of dump ing may be established by making comparisons of 
normal value and export prices in individual transac tions, it does not expressly address the question of 
the nature of the precise methodology that an investig ating authority must use to convert the results of 
                                                     
 
750 Appellate Body Report, US – Gasoline , p.23.  
751 Appellate Body Report, Japan – Alcoholic Beverages , p. 12.  
752 Appellate Body Report, US – Gasoline , p.23.  
753 Appellate Body Report, Argentina – Footwear , para. 81. 
 754 Thus, the existence of the transaction-to-transaction method contradicts Japan’s argument that by 
definition normal value cannot be based on the price of a single transaction but must necessarily be based on 
“multiple transactions for the like product as a whole”.   Japan Comments on the US Answers to the Panel’s 
Questions Following the Third Substantive Meeting with the Parties, paras. 6-7.                     WT/DS322/R 
Page 163 
 
 
 
 transaction-specific comparisons into "margins of dumping".755  Even assuming that the term "margins 
of dumping" in Article 2.4.2 cannot apply to the results of individual transaction-to-transaction 
comparisons and must necessarily be understood to require aggregation of the results of multiple 
comparisons756, the fact remains that Article 2.4.2 provides no guidance on the specific methodology to 
be used in such an aggregation of results of mu ltiple comparisons.  Because "dumping" occurs when the 
export price of a product is less than its normal valu e, the fact that Article 2.4.2 expressly permits the 
use of a transaction-to-transaction comparison in our view logically means that a Member may treat transactions in which export prices are less than norma l value as being more relevant than transactions 
in which export prices exceed normal value.
757  Thus, in the context of the transaction-to-transaction 
methodology in the first sentence of Article 2.4.2 the term "margins of dumping"  can be understood to 
mean the total amount by which transaction-specific export prices are less than transaction-specific 
normal values.758  Therefore, we can see no language in Article  2.4.2 from which it is possible to derive 
a requirement that, if an authority uses a method wh ereby a weighted average margin of dumping is 
expressed as a fraction, the denominator of which consists of the total value of export sales759, the 
numerator of that fraction must include both amounts by which export prices of individual transactions 
are below the normal value and amounts by which e xport prices of other transactions exceed normal 
value.  
                                                      
755 See also the observations of the Panel in US – Softwood Lumber V (Article 21.5) (appeal pending) 
paras. 5.17 and 5.18.  
756 We realize of course that, in the context of its analysis of zeroing in connection with multiple 
averaging, the Appellate Body has stated in US – Softwood Lumber V  that results of multiple comparisons at the 
sub-group level are "intermediate values" and are not "margins of dumping" within the meaning of Article 2.4.2.   Appellate Body Report, US – Softwood Lumber V , para. 97. 
757 Japan asserts that the transaction-to-transaction method involves a “comparison of normal value and 
export prices  on a transaction-to-transaction basis” and that th e use of the plural word “prices” shows that the 
margin of dumping cannot be based on the price of a single export transaction.  More generally, Japan asserts, in 
this regard, that each of the comparison methods provided for in Article 2.4.2 requires that a comparison be made 
with the “prices” of multiple “export tran sactions”, not the price of single tran saction.  Japan Comments on the US 
Answers to the Panel’s Questions Following the Third Su bstantive Meeting with the Parties, paras. 8-13.  
Assuming, however, that the use of the plural “prices” and “export transactions” must necessarily be interpreted to 
mean that margins of dumping can only be established under Article 2.4.2 on the basis of a consideration of “multiple export transactions”, it does not logically follow that a Member may not treat a transaction in which the 
export price is below the normal value differently from a nother transaction in which the export price is above the 
normal value.    
758 In this regard, we concur with the view of the Panel in US – Softwood Lumber V (Article 21.5): "In the 
absence of any definition of the phrase 'margins of dumping' in Article 2.4.2, and in the absence of any obligation 
under the T-T methodology to ensure that 'all comparab le export transactions' are represented in a weighted 
average export price, we see no reason why a Member may not, when applying the transaction-to-transaction 
comparison methodology, establish the 'margin of dumping' on the basis of the total amount by which 
transaction-specific export prices are less  than the transaction-specific normal va lues.  In such cases, the margin of 
dumping  clearly would reflect the price difference for dumped , rather than non-dumped , exports of the product by 
a particular exporter.  In our view, this would be a permissible interpretation of the relevant part of the first 
sentence of Article 2.4.2, even though it does not reflect the full results of all comparisons.  In other words, when 
establishing the amount of dumping for the purpose of calculating a margin of dumping under the T-T comparison 
methodology, an investigating authority need not include  in its calculations the results of comparisons where 
export price exceeds normal value." (emphasis in original)   Panel Report, US – Softwood Lumber V (Article 21.5) 
(appeal pending ), para. 5.28  (emphasis in origina;, footnote omitted ).  
759 Under the zeroing methodology at issue in this dispute USDOC includes the value of all export prices 
in the denominator of a weighted average margin of dumping.  Therefore, the issue before us is not whether 
Article 2.4.2 is to be interpreted as allowing an authority  to disregard completely the results of comparisons in 
which export price is above the normal value.   Rather, the issue is whether Ar ticle 2.4.2 requires that Members 
accord the same importance to export prices above norm al value as to export prices below normal value by 
including both negative and positive differences between export price and normal value in the numerator of a 
weighted average margin of dumping.   WT/DS322/R          
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7.120  These arguments regarding the apparent lack of a clear textual foundation to interpret 
Article 2.4.2 as prohibiting zeroing in relation to the transaction-to-transaction method in our view also apply to the average-to-transaction method.  Read to gether with the first sentence, the second sentence 
of Article 2.4.2 provides that the existence of margins of dumping during the investigation phase may 
be established on the basis of a comparison of an average normal value to prices of individual export 
transactions.  As in the case of the transaction–t o-transaction method, Article 2.4.2 provides no 
guidance regarding the manner in which results of multiple, average-to-transaction comparisons must 
be converted into margins of dumping and contains no language from which it is possible to conclude 
that, in the process of aggregating results of su ch multiple comparisons into margins of dumping, 
comparisons in which the export price is above norma l value must necessarily be taken into account in 
exactly the same manner as comparisons in wh ich the export price is below normal value. 
Possible considerations in favour of an interpretation of Article 2.4.2 in light of a general prohibition of 
zeroing  
7.121  A conclusion that the text of a particular provi sion does not explicitly address an issue does not 
end the process of interpretation.  The rules of treaty interpretation in the Vienna Convention  direct us to 
consider the potential relevance of other elements.   
7.122  Article 2.4.2 of the AD Agreement  sets forth rules on comparisons of export price and normal 
value for the purpose of establishing "the existenc e of margins of dumping during the investigation 
phase".  We concur with the analysis by the panel in  US – Zeroing (EC)  that the applicability of 
Article 2.4.2 is limited to investigations  within the meaning of Article 5 of the AD Agreement.760  In that 
specific context, a determination of the existen ce of dumping is one of the necessary conditions to 
justify the application of an anti-dumping measure, wh ich frequently takes the form of a duty applied to 
all future entries of the product s ubject to investigation.  The establi shment of the existence of margins 
of dumping in Article 2.4.2 thus serves a purpose fundamentally different from the purpose of other 
types of proceedings, such as duty assessment proceed ings within the meaning of Article 9.3 of the 
AD Agreement .  It could be argued that since Article 2.4.2 does not focus on individual export 
transactions but contemplates an examination of a uni verse of export transactions to determine whether 
dumping "exists" such as to warrant the introductio n of an anti-dumping measure applicable to all 
subsequent imports of the product (if it is also fo und that dumped imports cause material injury to a 
domestic industry), an investigating authority must ha ve regard to the overall results of the totality of 
the comparisons.   
7.123  With regard to this fundamental purpose of Article 2.4.2, there is no logical basis to distinguish 
between the average-to-average compar ison method, on the one hand, and the 
transaction-to-transaction and average-to-transaction comparison methods, on the other.  Each of these 
methods is used as a basis to est ablish the existence of margins of dumping during the investigation 
phase.  Since Article 2.4.2 prohibits zeroing when  the existence of margins of dumping during the 
investigation phase is established on the basis of the average-to-average comparison methodology, it 
could be argued that it is illogical to interp ret Article 2.4.2 as permitting zeroing when the 
transaction-to-transaction method and the average- to-transaction method are used for precisely the 
same purpose.   
7.124  In addition, the average-to-average method a nd the transaction-to-transaction method have the 
same normative status in that in normal circumstances Members are required to use either of these methods.  The choice of the transaction-to-tra nsaction method is not subject to any special 
considerations compared to the average-to-average method.  In light of this normative equivalence 
between the transaction-to-transaction method and th e average-to-average method, it could be argued 
                                                     
 
760 Infra , paras.7.211-7.215.                     WT/DS322/R 
Page 165 
 
 
 
 that it would be illogical if zeroing were prohibite d under the average-to-average method but not under 
the transaction-to-transaction method.  
7.125  Moreover, to interpret Article 2.4.2 as prohi biting zeroing only in the context of the 
average-to-average method also raises a question regarding the useful effect of the 
average-to-transaction method.  The second sentence of Article 2.4.2 envisions use of an 
average-to-transaction method as an exception to the methods in the first sentence in situations in which 
a particular configuration of export prices exists , i.e. "a pattern of export prices which differ 
significantly among different purchasers, regions or ti me periods".  The logical premise of the second 
sentence is that in certain circumstances it is im possible to take this pattern of export prices 
appropriately into account by using one of the two methods described in the first sentence.  In this 
regard, we note the observation made by the panel in US – Zeroing (EC)  that the second sentence of 
Article 2.4.2 addresses the issue of "targeted dumping"  and that this sentence acknowledges that use of 
the symmetrical comparison methodologies in the first sentence "may mask the existence of targeted 
dumping with respect to specific purchasers, regions or time periods."761  However, if zeroing is 
permitted under the transaction-to-transaction method, we find it somewhat difficult to see how the 
existence of such targeted dumping would be masked  when export price and normal value are compared 
on a transaction-to-transaction basis.  Therefore, to interpret Article 2.4.2 as permitting the use of 
zeroing under the transaction-to-transaction method raises the question under what circumstances it 
would not be possible to take account of a pattern of export prices described in the second sentence of 
Article 2.4.2 by using the transaction-to-transaction method.   
7.126  However, while we realize that certain anomali es arise if Article 2.4.2 is interpreted as only 
prohibiting the use of zeroing in connection with the average-to-average comparison method, we 
consider that an interpretation of Article 2.4.2 as prohibiting zeroing under all comparison methods is 
even more problematic from the perspective of a coherent approach to the interpretation of 
Article 2.4.2.762  
The implications of a general prohibition of zeroi ng for the average-to-transaction method provided for 
in the second sentence of Article 2.4.2 of the AD Agreement  
7.127  We consider, in particular, that, as argued by th e United States, such a general prohibition of 
zeroing cannot be reconciled with the average-to-t ransaction comparison method provided for in the 
second sentence of Article 2.4.2.  If zeroing is pr ohibited in the case of th e average-to-transaction 
comparison, the use of this method will necessarily always yield a result identical to that of an 
average-to-average comparison.763  Given that the average-to-transaction methodology by its express 
terms is available to Members as a means to address a particular pattern of export prices that cannot be 
taken into account appropriately by the two normal methods set forth in the first sentence of Article 2.4.2, an interpretation which means that the average-to-transaction method will always produce 
the same results as the av erage-to-average method is fundamentally inconsistent with the very rationale 
of the average-to-transaction method.
764  The principle of effective treaty interpretation means that we 
may not interpret the second sentence of Article 2.4.2 as providing for a comparison method that always 
                                                      
761 Panel Report, US – Zeroing (EC) , para. 7.266. 
762 Supra , paras. 7.115-7.117. 
763 Mathematically, if zeroing is prohibited under the average-to-transaction method, the sum total of 
amounts by which export prices are ab ove normal value will offset the sum total of the amounts by which export 
prices are less than normal value.   
764 Panel Report, US – Zeroing (EC) , para. 7.266; Panel Report, US – Softwood Lumber V (Article 21.5) 
(appeal pending), para. 5.52.    WT/DS322/R          
Page 166  
 
yields the same outcome as one of the two methods in the first sentence to which it provides an exception.
765 
7.128  Japan does not contest that the average-to -transaction method in the second sentence of 
Article 2.4.2 would be redundant if it always yielded a result identical to that of the average-to-average 
comparison method in the first sentence of Article 2.4.2.  Japan asserts, however, that to interpret 
Article 2.4.2 as prohibiting zeroing under all comparison methods does not render the 
average-to-transaction method redundant b ecause an average-to-transaction comparison will produce a 
result different from that of an average-to-average comparison, even if zeroing is prohibited.  Japan 
argues that a different outcome will result if the average normal value under the average-to-transaction 
comparison is calculated on a different basi s from the average normal value under the 
average-to-average method766, or if, as explicitly provided for in the second sentence of Article 2.4.2, 
the average-to-transaction method is applied by comp aring an average normal value to a subset of the 
universe of export transactions, namely those export tr ansactions that constitute the pattern of targeted 
dumping, and which is thus a smaller universe of export transactions than used under the 
average-to-average method.   
7.129  Regarding Japan's argument that, if zeroing is prohibited, an average-to-transaction comparison 
will produce a result different from that of an aver age-to-average comparison if the average normal 
value is established on a different basis, we see nothi ng in the text of Article 2.4.2 that suggests any 
distinction between the bases upon which the normal va lue is established under the average-to-average 
method, on the one hand, and under the average-to-tra nsaction method, on the other.  There exists no 
substantive difference between "a weighted average norm al value" in the first sen tence of Article 2.4.2  
and "a normal value established on a weighted average basis" in the second sentence of that provision.  
Moreover, the average-to-transaction method provi ded for in the second sentence is manifestly 
designed to address a problem arising from a particular pattern of export prices, not domestic prices .  
Thus,  Japan's interpretation of the second sentence as contemplating an average normal value 
established on a basis different from the average nor mal value referred to in the first sentence of 
Article 2.4.2 is without support in the text of Artic le 2.4.2 and has no logical relationship to the purpose 
of the average-to-transaction method.  In this r espect, we see no merit in Japan's argument that 
Article 2.4.2 does not prohibit a Member from using different bases for calculating the average normal 
values in the average-to-average comparison and the average-to-transaction comparison and that 
Article 2.4.2 was thus crafted on the assumption th at Members could choose to use different bases for 
calculating the average normal value under these two methods. 767 
                                                      
765 As noted above, in Japan's written comments of  10 May 2006 on the Appellate Body Report in 
US – Zeroing (EC)  Japan withdrew its claim with respect to simple zeroing under the average-to-transaction 
method provided for in the second sentence of Article 2.4.2.  In our view, the fact that there is no longer a claim before us regarding simple zeroing under the average-to-transaction method under the second sentence of Article 
2.4.2 does not in any way detract from the significance of  this sentence as an importa nt contextual element that 
must necessarily be taken into account in  any analysis of the issu e of zeroing.  The "produc t as a whole" analysis, 
as articulated by Japan in this proceeding , posits a general principle applicable throughout the AD Agreement : 
differences between export price and no rmal value, positive or negative, must  be equally taken into account.  The 
result of the application of this general principle to the average-to-transaction method in the second sentence of Article 2.4.2 is that that method always yields the same outcome as the average-to-average method in the first 
sentence, thereby depriving the average-to-transaction me thod of its effectiveness as an exception to the two 
methods in the first sentence.  That a prohibition of zeroing based on the "pr oduct as whole" reasoning negates the 
effectiveness of an entire clause in Article 2.4.2, a pr ovision that explicitly deals with a key aspect of the 
methodology for establishing margins of dumping, shows that the "product as a whole" argument is seriously 
flawed from a perspective of a coherent approach to treaty interpretation.   
766 As an example, Japan points out that USDOC calcula tes average normal values on an annual  basis in 
original investigations but on a monthly basis in periodic reviews . 
767 Japan Opening Statement at Second Substantive Meeting of the Panel with the Parties, para. 62.                   WT/DS322/R 
Page 167 
 
 
 
 7.130  Japan's argument that the second sentence of Article  2.4.2 authorizes Members to restrict their 
inquiry to a subset of export transactions, namely those export transactions that constitute the "pattern 
of export prices", in our view is also unsupported by the text of that sentence.  The first part of the 
second sentence of Article 2.4.2 makes it unambiguously clear that what is authorized by that sentence 
is a comparison of a normal value established on a wei ghted average basis to prices of individual export 
transactions, as a departure from the requirement to use one of the two symmetrical methods defined in the first sentence of Article 2.4.2.  The average-to -transaction method is different from the two methods 
defined in the first sentence only in that it is "asy mmetrical".  In particular, the second sentence of 
Article 2.4.2 contains no words that express the idea th at an authority may restrict the universe of export 
transactions which are compared to the average normal value.  The sente nce simply refers to "prices of 
individual export transactions" without any indication that "transactions" in this connection refers to a 
smaller universe of transactions than in the case of the average-to-average and transaction-to-transaction comparison methods.   
7.131  In response to a question from the Panel, Japan states that the word "individual" in" individual 
export transactions" in the second sentence of Article 2. 4.2, when contrasted with "all" in the first 
sentence, provides support for its interpretation that  the average-to-transaction method provides for a 
comparison of an average normal value to export prices of the transactions that make up a pattern of export prices.  In our view, Japan's response is not consistent with the contex t within which the word 
"individual" is used in the second sentence of Article 2.4.2.  The difference between the 
average-to-average and average-to-transaction met hods is a difference between a comparison of "a 
weighted average normal value with a weighted  average of prices of all comparable export 
transactions", on the one hand, and a comparison of a "normal value established on a weighted average 
basis" with "prices of individual export transactions" on the other.  When viewed in the context of the 
average-to-transaction method as an excep tion to the average-to-average and the 
transaction-to-transaction methods, the expression "p rices of individual export transactions" in the 
second sentence simply refers to prices establishe d on the basis of individual transactions, as 
distinguished from an average of all prices.  Ther efore, the expression "individual export transactions" 
describes the basis upon which export prices are comp ared to an average normal value and does not 
confine the range of export transactions covered by the comparison.  Moreover, under Japan's approach 
the term "individual export transactions" is depr ived of its effectiveness because the prohibition of 
zeroing means that the numerator of the average margin of dumping must reflect any differences, 
positive and negative, between export prices of the tran sactions that constitute the pattern of targeted 
dumping.  This means, in effect, that under Japan's interpretation of the average-to-transaction method 
an average normal value must be co mpared to the average export price of  the transactions that constitute 
the pattern of targeted dumping.  Under Japan's interpretation, the notion of the methodology provided 
for in the second sentence of Ar ticle 2.4.2 as an average-to- transaction  method completely looses its 
meaning.   
7.132  With respect to Japan's argument that its pos ition that an authority may make a targeted 
selection of export transactions finds support in the "tak en into account appropriately" language in the 
second sentence of Article 2.4.2, we consider that Japan  misinterprets the role of this language.  This 
language has no role other than in the context of th e requirement to explain why the pattern of export 
prices cannot be addressed through the use of the average-to-average method or the 
transaction-to-transaction method.  The second sen tence of Article 2.4.2 does not contain an 
independent requirement or authorization to design a comparison methodology in such a way as to take 
appropriate account of a particular pa ttern of export prices.  We also consider that Japan is incorrect in 
arguing that a pattern of targeted dumping can only  be taken into account appropriately through the 
selection of a subset of the export transactions.  If an asymmetrical comparison is made, a pattern of 
targeted dumping will automatically manifest itself in  the results of that comparison, if zeroing is 
permitted.   WT/DS322/R          
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7.133  Japan's interpretation of the second sentence of  Article 2.4.2 as permitting an investigating 
authority to confine a comparison to those export transactions that constitute targeted dumping also 
suffers from logical inconsistencies.  In particular, Japan argues that in a situation envisioned by the 
second sentence of Article 2.4.2, the "fair comparis on" requirement prohibits zeroing with regard to 
those export transactions that constitute targeted dumping but that export prices of export transactions 
that fall outside the "pattern of export prices" may be excluded not only from the numerator but also 
from the denominator  of a weighted average margin of dumping.
768  Thus, Japan interprets this method 
in a manner that, by enabling an investigating authority  to confine its analysis to a subset of the export 
transactions and to completely disregard export prices  that are outside the "pattern of export prices" 
may well yield an overall margin of dumping signifi cantly higher than a comparison in which all export 
transactions are included in the denominator and in which zeroing is applied to compute the numerator 
of the average margin of dumping.   
7.134  In the latter regard, we note that Japan takes the view that if an  authority has limited its inquiry 
to particular regions, purchasers or time-periods , it may nevertheless impose under Article 9 of the 
AD Agreement  anti-dumping duties on all entries of the pr oduct into the territory of the importing 
Member.769  We consider that this position is fundamenta lly inconsistent with the general approach of 
the AD Agreement  regarding the scope of application of anti-dumping duties.  Article 4 of the 
AD Agreement  very carefully defines the circumstan ces in which it is permissible to impose 
anti-dumping duties on all imports into a Member's customs territory on the basis of the effect of dumped imports in a part of that territory.  There is no basis in the AD Agreement  for the view that, 
absent the circumstances described in Article 4, a determination of dumping based on the effect of 
dumped imports in a part of a Member's territory can justify the imposition of anti-dumping duties on all 
imports of the product into that entire territory.  Sp ecifically, nothing in Article 2.4.2 indicates that the 
second sentence provides authority for such an application of anti-dumping duties.  Nor can we a see legal basis in Article 2.4.2 or in other provisions of the AD Agreement  for the view that a Member may 
impose an anti-dumping duty on all imports of a pro duct on the basis of a determination of dumping 
which is limited to particular customers or time-p eriods and completely disregards any other export 
sales.  
7.135  We also see a contradiction between Japan's argument  that an authority may restrict its analysis 
to a sub-set of the export transactions and Japan's general position that dumping must be determined for 
a product as a whole.  By its express terms, the second sentence of Article 2.4.2 is only a departure from the first sentence of Article 2.4.2.  Thus, if there is an obligation flowing from the definition of dumping 
to determine dumping for the product as a whole, there is no textual basis to conclude that such an 
obligation does not apply to the second sentence of Article 2.4.2.
   While Japan asserts that the second 
sentence of Article 2.4.2 is an ex ception to the requirement to determine a margin of dumping for a 
product as a whole, it has failed to indicate the precise textual basis for that view.   
7.136  Finally, Japan has not submitted any material rela ting to the negotiating history of Article 2.4.2 
to support its view that the second sentence of Artic le 2.4.2 provides for a comparison of an average 
normal value with a more limited universe of expor t transactions than under the average-to-average 
method.   
7.137  To conclude, we consider that the arguments of  Japan to support its position that, even without 
zeroing, an average-to-transaction comparison will produ ce a result that is different from the result of an 
average-to-average comparison are not compelling.   Thus, Japan has not effectively rebutted the 
argument of the United States that, without zeroing, the average-to-transaction method always yields 
results that are identical to those of the average-to-average method and that, as a consequence, if zeroing 
is always prohibited, the second sentence of Article 2.4. 2 is deprived of its effectiveness.  Therefore, we 
                                                      
768 Japan Response to Panel Question 49.  
769 Japan Response to Panel Question 50.                    WT/DS322/R 
Page 169 
 
 
 
 conclude that Article 2.4.2 cannot be interprete d to mean that zeroing is prohibited under the 
average-to-transaction method and that the second sen tence of Article 2.4.2 thus contradicts the 
existence of a general prohibition of zeroing.770   
Summary of the Panel's analysis of Article 2.4.2 of the AD Agreement  
7.138  Our analysis shows, first, that the text of Article 2.4.2 of the AD Agreement does not expressly 
address the issue of whether a Member may apply zer oing when it establishes the existence of margins 
of dumping during the investigation phase on the basi s of the transaction-to-transaction method or the 
average-to-transaction method.  Second , whether Article 2.4.2 is inte rpreted as prohibiting zeroing only 
under the average-to-average method or under all th ree comparison methods, both interpretations pose 
problems in terms of a logically coherent approach to the interpretation of this provision that takes into 
account the interrelationship between the three methods in  a manner that is consistent with the principle 
of effective treaty interpretation.  On the one hand, if Article 2.4.2 is interpreted to mean that zeroing is 
prohibited only in connection with the average-to-ave rage comparison method, certain anomalies arise.  
Thus, for instance, absent a prohibition of zeroing, there is a question as to why it would not be possible 
for a Member confronted with a "pattern of export prices" within the meaning of the second sentence of 
Article 2.4.2 to address such a pattern by using th e transaction-to-transaction method.  On the other 
hand, to interpret Article 2.4.2 as prohibiting zeroing under all three methods, including the 
transaction-to-transaction method and the average-to -transaction method, also gives rise to serious 
anomalies.  In particular, such an interpretation would completely deprive the average-to-transaction 
method of its effectiveness as an exception to the u se of the two normal comparison methods set out in 
the first sentence of Article 2.4.2.  In effect, an  interpretation that zeroing is prohibited under all 
comparison methods effectively means that the average-to-transaction method becomes indistinguishable in its results from the average-to-average comparison method.  
7.139  We realize that it could be argued that Article 2. 4.2 must be interpreted to mean that zeroing is 
prohibited under the average-to-average and tr ansaction-to-transaction methods but not in the 
average-to-transaction method.  However, we see no textual support for such an interpretation.  In 
particular, we see no textual difference betw een the average-to-transaction method and the 
transaction-to-transaction method that can sustain th e view that zeroing, while not prohibited under the 
average-to-transaction method is prohibited under th e transaction-to-transaction method.  While these 
methods obviously differ with respect to the basis upon which the normal value is established, they do 
not differ with respect to the establishment of export  prices.  A transaction-to-transaction comparison is 
a comparison between prices of individual transactio ns in the domestic market, on the one hand, and 
prices of individual transactions in the export market , on the other.  Thus, the export prices in the 
transaction-to-transaction method are "prices of individual export transactions" as is the case under the average-to-transaction method.  Therefore, the expr ession "prices of individual export transactions" in 
the second sentence of Article 2.4.2 does not distin guish the average-to-transaction method from the 
transaction-to-transaction method.  We see no textual basis in Article 2.4.2 for the view that such 
"prices of individual export transactions" must be taken into account under the 
transaction-to-transaction method in a different mann er than under the average-to-transaction method.  
7.140  We are compelled to conclude that the result of our analysis is somewhat imperfect in terms of 
a logically coherent interpreta tion of Article 2.4.2 of the AD Agreement .  While ideally a coherent 
interpretation would yield a single answer to the ques tion of whether Article 2.4.2 allows for the use of 
zeroing under any of the three comparison methods, we have found that such a single answer may not be 
possible.  We have identified some possible considera tions in favour of the view that a prohibition of 
                                                     
 
770 Our view that the second sentence of Article 2.4.2 would be deprived of effectiveness if interpreted in 
light of a general prohibition of zeroing is consistent with the analysis of the Panel in US – Softwood Lumber V 
(Article 21.5) .  Panel Report, US – Softwood Lumber V  (Article 21.5)  (appeal pending), para. 5.52.   WT/DS322/R          
Page 170  
 
zeroing under the average-to-average method must also apply to the other two comparison methods, 
notably the transaction-to-transaction method.  Howeve r, our analysis has also ineluctably led to the 
very serious difficulties posed by an approach that interprets Article 2.4.2 to mean that zeroing is 
prohibited under all comparison methods set out in that  provision.  In the latter regard, it is our view 
that, on balance, the interpretation that zeroing is prohibited under all circumst ances is more anomalous 
and in conflict with the requirement of effective tr eaty interpretation than the interpretation that zeroing 
is prohibited only under the first comparison method.  To interpret Article 2.4.2 as prohibiting zeroing 
under all methods means that the average-to-transact ion method collapses into the average-to-average 
comparison method set forth in the first sentence.  This would completely defeat the objective of 
providing an exceptional method that enables Members to address certain patterns of export prices that 
cannot be effectively dealt with through the av erage-to-average or transaction-to-transaction 
comparison.  Such an interpretation can be consid ered to be manifestly absurd and unreasonable 
because it means that the average-to -transaction method will in effect be the same as one of the two 
methods to which it is an exception. 
7.141  We have found that (1) the fact that the terms "dumping" and "margin of dumping" in 
Article 2.1 of the AD Agreement  and Articles VI:1 and VI:2 of th e GATT 1994 are defined in relation to 
"product" and "products" does not warrant the conclu sion that these terms, by definition, cannot apply 
to individual transactions and inherently require an examination of export transactions at an aggregate 
level in which the same weight is accorded to e xport prices that are above normal value as to export 
prices that are below normal value;
771 and (2) the text of Article 2.4.2 of the AD Agreement does not 
support the view that the AD Agreement  and GATT Article VI must be interpreted to mean that there 
exists a general prohibition of zeroing.772 773   
7.142  Thus, we conclude that it is permissible w ithin the meaning of Article 17.6(ii) of the 
AD Agreement  to interpret Article VI of the GA TT 1994 and relevant provisions of the AD Agreement 
to mean that  there is  no general  requirement to determine dumping and margins of dumping for the 
product as a whole, which, by itself or in conjunction with a requirement to establish margins of 
dumping for exporters or foreign producers, entails a general prohibition of zeroing.   
7.143  In light of all the foregoing considerations, the Panel finds  that by maintaining simple zeroing 
procedures in the context of original investig ations USDOC does not act inconsistently with 
Articles 2.1 and 2.4.2 of the AD Agreement  and Article VI:1 and VI:2 of the GATT 1994.   
(ii) Article 2.4 of the AD Agreement  
Arguments of the Parties 7.144  Japan  claims that model and simple zeroing are as such inconsistent with Article 2.4 of the 
AD Agreement  mainly because they violate the obligation to  make a fair comparison expressed in the 
first sentence of that provision.  Japan asserts that th e word "comparison" as used in the first sentence of 
Article 2.4 means the action by which an investig ating authority determines the price difference 
between normal value and export price for the product as a whole, i.e. the margin of dumping.  This 
"comparison" does not end when authorities have made due allowance for factors affecting price 
comparability.  The "fair comparison" requirement, wh ich is a general obligation that informs all of 
Article 2 and which also applies to the calculation of the margin of dumping, means that the process by 
which authorities identify "the price difference" between normal value and export price for the product 
                                                     
 
771 Supra , paras. 7.103-7.112. 
772 Supra , paras. 7.113-7.140. 
773 In addition, as discussed in connection with Japan's claims regarding periodic reviews, we also 
consider that such a general prohibition is not supported by  the provisions on duty assessment in Article 9 of the 
AD Agreement.                    WT/DS322/R 
Page 171 
 
 
 
 as a whole must not be biased, lack even-handedn ess, favour particular interests or outcomes or 
otherwise distort the facts, in particular to th e detriment of exporters or foreign producers.  
7.145  Japan submits that model and simple zeroin g prevent USDOC from making a fair comparison 
as required by Article 2.4.  The Appellate Body has already held that zeroing is unfair within the 
meaning of Article 2.4 of the AD Agreement  because it may lead to a finding of dumping where no 
dumping would be found in the absence of zeroing and because it inflates the margin of dumping by 
excluding results of negative comparisons that w ould reduce the overall amount of dumping if they 
were included.  The model and simple zeroing proced ures at issue in this case deprive the comparison of 
normal value and export prices of even-handedness b ecause they overstate the amount of dumping and 
render a dumping determination more likely and th ereby systematically favour the interests of 
petitioners and prejudice the interests of exporters.  They also distort the comparison by effectively treating export prices as less than what they actually are and fail to determine a margin of dumping for 
the product as a whole.  
7.146  Japan submits that a general prohibition of zer oing does not render the average-to-transaction 
methodology in the second sentence of Article 2.4.2 redundant.  Japan contests that without zeroing the 
average-to-transaction comparison necessarily pro duces results identical to the results of the 
average-to-average comparison.  Thus, an aver age-to-transaction comparison will produce a result 
different from that of an average-to-average compar ison if the average normal value is calculated on a 
different basis.  Moreover, the second sentence of Ar ticle 2.4.2 provides for a comparison of an average 
normal value to only those export transactions that c onstitute the pattern of targeted dumping.  Japan 
claims that this interpretation of Article 2.4.2 is consistent with the USDOC Regulations, which provide 
that the application of the average-to-transaction co mparison shall be limited to the prices that make up 
the pattern of targeted dumping.  
7.147  The United States  argues that Article 2.4 of the AD Agreement  does not contain obligations 
with respect to zeroing.  First , the "fair comparison" obligation in Article 2.4 refers to the adjustments 
necessary to account for differences between expor t price and normal value that affect price 
comparability.  The focus of Article 2.4 is on ho w the authorities are to select transactions for 
comparison and make the appropriate adjustments fo r differences affecting price comparability.  Thus, 
Article 2.4 applies to the required price adjustments and not to how the results of those comparisons are 
treated.  Japan's attempt to read a "good faith" obligati on into Article 2.4 is inc onsistent with customary 
rules of treaty interpretation.  Second , Japan's interpretation of the "fair comparison" requirement in 
Article 2.4 to create a general obligation to off set dumping margins cannot be reconciled with the 
remaining text of the AD Agreement  in a manner consistent with customary rules of treaty 
interpretation.  To interpret Article 2.4 to requi re offsets for negative dumping margins renders the 
distinction between the average-to-average comp arison and the average-to-transaction comparison 
meaningless.  
7.148  In the latter regard, the United States asserts that there is no textual support for Japan's 
arguments that the second sentence of Article 2.4.2 provides for a selection of only those export transactions that make up the pricing pattern envision ed by that provision and that Article 2.4.2 was 
crafted on the assumption that the average normal value in the third methodology in Article 2.4.2 is 
established on a basis different from the averag e normal value in the first methodology.  The 
United States also submits that Japan is incorrect in arguing that the USDOC Regulations provide for 
the application of the third comparison methodol ogy to a subset of export transactions.   
7.149  The United States argues that th e Appellate Body Reports in EC – Bed Linen
, 
US – Corrosion-Resistant Steel Sunset Review  and US – Softwood Lumber V  do not provide a basis to 
conclude that the "fair comparison" requirement in  Article 2.4 creates an independent obligation to 
provide offsets for export transactions that exceed nor mal value.  In any event, even if the "fair 
comparison" requirement were not limited in scope  to allowances to reflect differences in price WT/DS322/R          
Page 172  
 
comparability, it would not follow that not to provid e offsets for export prices above normal value is 
unfair.  Fairness should only be evaluated through an objective, discernable standard of what is 
appropriate and inappropriate, as found within the four corners of the AD Agreement .  Thus, the simple 
fact that the non-use of offsets leads to a higher marg in of dumping does not suffice to conclude that it is 
unfair.  
Evaluation by the Panel 
7.150  Japan requests us to find that maintaining mode l and simple zeroing procedures in the context 
of original investigations is inc onsistent with Article 2.4 of the AD Agreement  because these procedures 
are inherently biased, distort the comparison of no rmal value and export price, and thus deprive 
exporters of a fair comparison.   
7.151  Article 2.4 of the AD Agreement  provides:  
 A fair comparison shall be made between the export price and the normal value.  This 
comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible th e same time.  Due allowance shall be made in 
each case, on its merits, for differences which aff ect price comparability, including differences 
in conditions and terms of sale, ta xation, levels of trade, quantities, physical characteristics, and 
any other differences which are also demonstrated to affect price comparability.  In the cases 
referred to in paragraph 3, allowances for cost s, including duties and taxes, incurred between 
importation and resale, and for profits accruing, s hould also be made.  If in these cases price 
comparability has been affected, the authorities shall establish the normal value at a level of 
trade equivalent to the level of trade of th e constructed export price, or shall make due 
allowance as warranted under this paragraph.  Th e authorities shall indicate to the parties in 
question what information is necessary to ensure  a fair comparison and shall not impose an 
unreasonable burden of proof on those parties.  ( footnote omitted ) 
 
Model zeroing  
 7.152  We have found that maintaining model zeroing procedures in the context of original 
investigations is inconsistent  with Article 2.4.2 of the AD Agreement .
774  We do not consider it 
necessary to make a finding on whether maintaining mode l zeroing procedures in the context of original 
investigations is also inconsis tent with Article 2.4 of the AD Agreement .  Our finding that model 
zeroing is inconsistent with Article 2.4.2 of the AD Agreement  pertains to the fact that when USDOC 
calculates the weighted average margin of dumping for an exporter or producer, it does not include in 
the numerator of that margin of dumping any amounts by which average export prices for particular models are higher than the average normal values fo r those models.  Exactly the same issue – the 
non-inclusion in the numerator of the weighted av erage margin of dumping of differences between 
average export prices and average normal values if average export prices are higher than average 
normal values-is challenged by Japan under Article 2.4 of the AD Agreement .  We refer in this respect to 
the general considerations guiding our exercise of  judicial economy that we have set out above.
775  We 
note that the panels in EC – Tube or Pipe Fittings , US – Softwood Lumber V  and US – Zeroing (EC)  also 
declined to make findings on claims that zeroi ng is inconsistent with  Article 2.4 of the AD Agreement  
after finding that model zeroing is inconsistent with Article 2.4.2.776   
                                                      
774 Supra , para. 7.86 
775 Supra , paras.7.87-7.88. 
776 Panel Report, EC – Tube or Pipe Fittings , para. 7.219; Panel Report, US – Softwood Lumber V , para. 
7.226; Panel Report, US – Zeroing (EC),  paras. 7.33 and 7.108.  We note that in US – Zeroing (EC) , the 
Appellate Body found that the panel in that dispute had not committed an error of law in exercising judicial 
                   WT/DS322/R 
Page 173 
 
 
 
 Simple zeroing 
7.153  Japan's main argument in support of this clai m is that zeroing is inconsistent with the 
requirement expressed in the first sentence of Article 2.4 that a fair comparison  be made between the 
export price and the normal value.  The parties have expressed divergent interpretations of the scope of 
application and substantive meaning of this "fai r comparison" comparison requirement and on whether 
an interpretation of this requirement as the basis fo r a general prohibition of zeroing is compatible with 
other provisions of the AD Agreement , particularly the average-to-transaction method provided for in 
the second sentence of Article 2.4.2.   
7.154  We consider that the requirement of a fair comparison set out in the first sentence of Article 2.4 
is an independent legal obligation th at is not defined exhaustively by the specific requirements set out in 
the remainder of Article 2.4 and is not limited in sc ope to the issue of adjustments to ensure price 
comparability.  In this regard, we agre e with the analysis of the panel in US – Zeroing (EC)  regarding 
the scope of the "fair comparison" obligation.  First , as stated by that panel, not to give independent 
meaning to the "fair comparison" requireme nt would render this provision inutile.  Second , the structure 
of Article 2.4 suggests that the chapeau of Article 2.4 and its sub-paragraphs must be interpreted as a 
whole.  Third , the "comparison" referred to in Articles 2.4.1 and 2.4.2 of the AD Agreement  is the 
"comparison" in Article 2.4.  Fourth , the "fair comparison" requirement explicitly applies also to the 
subject matter of Article 2.4.2 by virtue of the phrase "subject to the provisions governing fair comparison in paragraph 4" in Article 2.4.2.
777  We also note that the Appella te Body has stated that the 
"fair comparison" requirement in Article 2.4 of the AD Agreement  constitutes a "general obligation" 
which "informs all of Article 2" but which "applies in particular to Article 2.4.2".778   
7.155  While the "fair comparison" requirement constitut es an independent legal obligation, its precise 
meaning must be understood in light of  the nature of the activity at issu e.  The concept of "fairness" is 
potentially a rich concept with different meanings in  different contexts.  One meaning of "fairness" is 
that "like" must be compared with "like".  This  is the requirement that comparisons should not be 
arbitrary.  Fairness can also be understood to mean th at once an authority has determined the universe of 
transactions that it will compare it must take account of the results of all the comparisons made in 
respect of those transactions and may not limit its an alysis to those results that tend to support an 
affirmative finding of dumping.   
7.156  Moreover, it could be argued that if, as stated by the Appellate Body, zeroing is unfair when 
used in conjunction with the first methodology in Article 2.4.2779, it stands to reason that zeroing is also 
unfair if applied in the context of the other comp arison methodologies.  We note that the Appellate 
Body itself has made statements that  could be interpreted to reflect a view that zeroing is unfair because 
of its effect on the magnitude of the margin of dumping, a view that would not seem to limit the unfairness of this method only to zeroing used in co nnection with the average-to-average comparison 
method to establish the existence of margins of dumpi ng during the investigation phase.  In particular, 
we note the statement that:  
                                                                                                                                                                    
 
economy with regard to a claim of the EC that the application of zeroing in an original investigation is inconsistent 
with Article 2.4 of the AD Agreement  after the panel had found that zeroing was inconsistent with Article 2.4.2.  
Appellate Body Report, US – Zeroing (EC) , para. 250. 
777 Panel Report, US – Zeroing (EC) , paras. 7.252-7.258.  
778 Appellate Body Report, EC – Bed Linen , para. 59.  
779 Appellate Body Report, EC – Bed Linen , para. 55:  "... we are also of the view that a comparison 
between export price and normal value that does not take fully into account the prices of all comparable export 
transactions – such as the practice of zeroing at issue in this dispute – is not a 'fair comparison' between export 
price and normal value, as required by Article 2.4 and Article 2.4.2" ( emphasis in original ). WT/DS322/R          
Page 174  
 
"In  EC – Bed Linen , we upheld the finding of the panel that the European 
Communities acted inconsistently with Article 2.4.2 of the  AD Agreement by using a 
'zeroing' methodology in the anti-dumping investig ation at issue in that case.  We held 
that the European Communities' use of this methodology 'inflated the result from the calculation of the margin of dumping.'   We also emphasized that a comparison such as 
that undertaken by the European Communiti es in that case is not a 'fair comparison' 
between export price and normal value as required by Articles 2.4 and 2.4.2.   
When investigating authorities use a zeroing methodology such as that examined in  
EC – Bed Linen to calculate a dumping margin, whether in an original investigation or 
otherwise, that methodology will tend to in flate the margins calculated.  Apart from 
inflating the margins, such a methodology c ould, in some instances, turn a negative 
margin of dumping into a positive margin of dumping.  As the Panel itself recognized in the present dispute, 'zeroing ... may lead  to an affirmative determination that 
dumping exists where no dumping would have been established in the absence of zeroing.'  Thus, the inherent bias in a zeroing methodology of this kind may distort not 
only the magnitude of a dumping margin, but also a finding of the very existence of 
dumping."
 780   
7.157  We also note, however, that to date the Appellate Body has never actually made a legal finding  
in a specific case that the use of zeroing is  inconsistent with Article 2.4 of the AD Agreement on its own 
(i.e. as an independent legal obligation).  We do not consider, in this regard , that the Appellate Body 
Reports in EC – Bed Linen  and US – Corrosion-Resistant Steel Sunset Review  provide a sufficiently 
detailed legal analysis of the "fair comparison" requi rement in general and its applicability to the issue 
of zeroing in particular, to warrant the conclusion that this requirement must be interpreted to mean that 
zeroing is prohibited in all circumstances.  We find it highly significant in this regard that, as discussed 
above, in US – Softwood Lumber V  the Appellate Body declined to  answer the question of whether 
zeroing is permitted under the transaction-to-transac tion and the average-to-transaction comparison 
methods.781  In our view, the present dispute has raised fundamental questions regarding the 
interpretation of the "fair comparison" requirement in relation to zeroing that were not considered in the 
Appellate Body reports in EC – Bed Linen  and US – Corrosion-Resistant Steel Sunset Review.  In 
particular, we do not see in those reports any analysis  of the question of whether an interpretation that 
the "fair comparison" requirement proscribes zeroing whenever margins of du mping are calculated can 
be reconciled with other provisions of the AD Agreement  in accordance with the principle of effective 
treaty interpretation.   
7.158  In our view, the somewhat indeterminate standard of fairness underlying the "fair comparison" 
requirement may not be interpreted in a manner that renders more specific provisions of the 
AD Agreement  completely inoperative.  We agree, in the latter regard, with the view expressed by the 
panel in US – Zeroing (EC)  that the "fair comparison" requirement  cannot have been intended to allow 
a panel to review a measure in light of a necessarily  somewhat subjective judgement of what fairness 
means in the abstract and in complete  isolation from the substantive context.782  In the present case, the 
relevant "substantive context" in our view indicat es that the "fair comparison" requirement cannot be 
interpreted to create a general prohibition of zeroing.  
7.159  As explained above, such a general prohibition would be inconsistent with the principle of 
effective treaty interpretation, especially because it would render th e average-to-transaction method 
provided for in Article 2.4.2 of the AD Agreement  indistinguishable from the average-to-average 
method and thereby deprive the average-to-transaction method of its effectiveness as an exception to 
                                                      
780 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , paras. 134-135.   
781 Appellate Body Report, US – Softwood Lumber V , para. 105.  
782 Panel Report, US – Zeroing (EC) , para. 7.261.                    WT/DS322/R 
Page 175 
 
 
 
 the normal methods set out in the first sentence of Article 2.4.2.783  Similarly, a general prohibition of 
zeroing would undermine the effectiv eness of provisions in Article 9 that in our view clearly permit 
Members to assess anti-dumping duties on a transaction-specific basis.784  There is nothing in the 
second sentence of Article 2.4.2 or in Article 9 th at indicates that these provisions establish exceptions 
to the "fair comparison" requirement of Article 2.4.   Therefore, if the "fair comparison" requirement 
operates to prohibit zeroing, it necessarily also applies in the context of these provisions.  Consequently, 
it is impossible, in our view, to reconcile the propos ition that the "fair comparison" requirement must be 
interpreted to create a general prohibition of zeroi ng with the second sentence of Article 2.4.2 and the 
provisions on duty assessment in Article 9 in a manner  consistent with the requirement of effective 
treaty interpretation. 785   
7.160  Finally, while we realize that Article 2.4.2 must be interpreted in light of the "fair comparison" 
requirement contained in Article 2.4 of the AD Agreement , we cannot interpret this requirement in a 
manner that would undermine the effectiveness of Article 2.4.2. 
7.161  In light of these considerations, the Panel finds  that by maintaining simple zeroing procedures 
in the context of original investigations USDOC doe s not act inconsistently with Article 2.4 of the 
AD Agreement .  
(iii) Articles 3.1 to 3.5 of the AD Agreement 
Arguments of the Parties 
7.162  Japan claims that maintaining zeroing procedures in  original investigati ons is inconsistent 
with Articles 3.1 to 3.5 of the AD Agreement  because, as a consequence of the systematic distortion of 
the margin of dumping resulting from the zeroing procedures, injury determinations are not objective in 
that they are not based on positive evidence as required by Article 3.1 on the volume of dumped and non-dumped imports, the rate of increase of dumped  imports, the prices of dumped and non-dumped 
imports and the magnitude of the margin of dumping.   
7.163  The United States  argues that Japan's "as such" and " as applied" claims are speculative and 
unfounded.  Japan fails to explain how the USDOCs approach necessarily results in a lack of positive 
evidence in any, let alone every injury determination.   Japan's explanation of its claims is based on a 
speculation about conseque nces that may occur.  
Evaluation by the Panel  7.164  Japan requests us to make a finding that the m odel zeroing procedures that we have found to be 
inconsistent with Article 2.4.2 of the AD Agreement  in the context of original investigations are also 
inconsistent with Articles 3.1-5 of the AD Agreement .  A panel may exercise judicial economy where it 
                                                     
 
783 Supra , paras. 7.127-7.137. 
784 Infra , paras. 7.196-7.209. 
785 Our reasoning also applies to the argument of Japa n that even under a narrow interpretation of the 
scope of the "fair comparison" requirement zeroing is in consistent with that requir ement because zeroing amounts 
to an allowance for a difference that does not affect price comparability.   Japan  Second Written Submission, 
paras. 61-64.   The second sentence of Article 2.4.2 is not an excep tion to the obligation in Article 2.4 to make due 
allowance for differences affecting price comparability.  C onsequently, if zeroing is prohibited by Article 2.4 as 
an allowance for a difference that does not affect price co mparability, that prohibition also applies in the context of 
the average-to-transaction method provided for in the second  sentence of Article 2.4.2.  We also note that in 
US – Zeroing (EC ) the Appellate Body upheld the finding of the panel in that dispute "that zeroing is not an 
impermissible allowance or adjustment under Article 2.4, third to fifth sentences".  Appellate Body Report, US – 
Zeroing (EC) , para. 159.  
 WT/DS322/R          
Page 176  
 
is claimed that the same measure is inconsistent w ith more than one provision if it considers that 
multiple findings under various provisions are not necessary to resolve the dispute.
786  We realize that 
panels that have found that dete rminations of dumping were inc onsistent with Article 2 of the 
AD Agreement  or that determinations of the existence a nd amount of subsidies were inconsistent with 
relevant provisions of the Agreement on Subsidies and Countervailing Measures (" SCM Agreement "), 
have not refrained from addressing claims regarding determinations of injury under Article 3 of the 
AD Agreement  or Article 15 of the SCM Agreement .  We also note, however, that in those cases the 
claims submitted with respect to injury determina tions had an independent basis in Article 3 of the 
AD Agreement  or Article 15 of the SCM Agreement and were not premised upon the existence of an 
inconsistency of the determ ination of dumping with the AD Agreement  or an inconsistency of the 
determination of the existence a nd amount of a subsidy with the SCM Agreement .787   
7.165  In the present case, however, Japan's claims under Article 3 of the AD Agreement  with respect 
to model zeroing procedures as such are entirely depe ndent upon the inconsistenc y of this measure with 
Article 2 of the AD Agreement .  Japan asserts that the inconsistency of the model zeroing procedures 
with Article 2 results in an in consistency with Article 3 in that a distorted finding of dumping 
necessarily prevents an authority from making an objective examination b ased on positive evidence.  
Japan submits no grounds to support this claim that  do not depend upon a finding of inconsistency of 
model zeroing procedures with Article 2 of the AD Agreement .  Absent such independent grounds, we 
consider that it is not necessary to make a finding on Japan's claims under Article 3 of the 
AD Agreement with respect to model zeroing procedures in the context of original investigations.  
7.166  Since we have found that by maintaining simple zeroing procedures in the context of original 
investigations, USDOC does not act inconsistently with Articles 2.1 and 2.4.2 of the AD Agreement , 
Articles VI:1 and VI:2 of the GATT 1994 and Article 2.4 of the AD Agreement , we also find that 
USDOC does not act inconsistently with Articles 3.1-3.5 of the AD Agreement  in this respect. 
(iv) Article 5.8 of the AD Agreement 
Arguments of the Parties 7.167  Japan  claims that maintaining zeroing procedures in  original investigations is inconsistent 
with Article 5.8 of the AD Agreement  because the zeroing procedures deprive USDOC of an adequate 
and credible basis for determining whether there is  sufficient evidence of dumping to justify proceeding 
with an investigation.  
7.168  The United States argues that, apart from being dependent upon a separate violation of 
Articles 2.1, 2.4 or 2.4.2 of the AD Agreement , Japan's argument with respect to Article 5.8 is also 
speculative.  Japan has not established that, were it to prevail with respect to its claims that the 
United States acted in breach of Artic les 2.1, 2.4 or 2.4.2, the only ma rgins that could be determined in 
a WTO-consistent manner must be less than de minimis . 
Evaluation by the Panel 7.169  Japan requests us to make a finding that the m odel zeroing procedures that we have found to be 
inconsistent with Article 2.4.2 of the AD Agreement  in the context of original investigations are also 
inconsistent with Article 5.8 of the AD Agreement .  A panel may exercise judicial economy where it is 
claimed that the same measure is inconsistent with more than one provision if it considers that multiple 
                                                     
 
786 Supra , paras.7.87-7.88. 
787 E.g., Panel Report, EC –Bed Linen ; Panel Report, EC – Tube or Pipe Fittings ; Panel Report, 
US – Countervailing Duty Investigation on DRAMs ; Panel Report, EC – Countervailing Measures on DRAM 
Chips .                    WT/DS322/R 
Page 177 
 
 
 
 findings under various provisions are not necessary to resolve the dispute.788  Japan's claim under 
Article 5.8 of the AD Agreement  with respect to model zeroing procedures as such is entirely dependent 
upon the inconsistency of this measure with Article 2 of the AD Agreement .  Japan asserts that the 
inconsistency of the model zeroing procedures with Artic le 2 results in an inconsistency with Article 5.8 
because the model zeroing procedures deprive USDOC  of an adequate and credible basis for 
determining whether there is sufficient evidence of dump ing to justify proceeding with an investigation.  
Japan submits no grounds to support this claim that  do not depend upon a finding of inconsistency of 
zeroing procedures with Article 2 of the AD Agreement .  Absent such independent grounds, we 
consider that it is not necessary to make a fi nding on Japan's claim under Article 5.8 of the 
AD Agreement with respect to model zeroing procedures in the context of original investigations.  
7.170  Since we have found that by maintaining simple zeroing procedures in the context of original 
investigations USDOC does not act inconsistently with Articles 2.1 and 2.4.2 of the AD Agreement , 
Articles VI:1 and VI:2 of the GATT 1994 and Article 2.4 of the AD Agreement , we also find that 
USDOC does not act inconsistently with Article 5.8 of the AD Agreement  in this respect. 
(v) Articles 1 and 18. 4 of the AD Agreement an d Article XVI:4 of the WTO Agreement  
7.171  We do not make findings on the claims of Japan that by maintaining model zeroing procedures 
in the context of original investigations USDOC acts inconsistently with Articles 1 and 18.4 of the 
AD Agreement  and Article XVI:4 of the WTO Agreement.  When presented with claims under Articles 
1 and 18 of the AD Agreement  and XVI:4 of the WTO Agreement based on alleged violations of other 
provisions of the AD Agreement  panels have either dismissed, or  refrained from making findings on, 
such dependent or consequential claims where th e claims upon which these claims were dependant 
were unfounded or have considered  it unnecessary to decide such de pendent claims where the claims 
upon which they were depe ndant were well founded.  
7.172  For instance, the panel in US – Anti-Dumping Measures on Oil Country Tubular Goods  
rejected an argument of Mexico that any finding th at the United States acted inconsistently with any 
provision of the AD Agreement  necessitated a consequential finding that the United States also acted 
inconsistently with Articles 1, 18.1 and 18.4 of the AD Agreement , Article VI of the GATT 1994 and 
Article XVI:4 of the WTO Agreement: 
"Mexico's claims under Articles 1, 18.1 and 18.4 of the AD Agreement , Article XVI:4 
of the WTO Agreement, and Article VI of the GATT 1994 are, as Mexico acknowledges, consequential claims.  That is, any finding of violation under these 
claims would rest entirely on the basis of a finding of violation of one or another of the 
asserted specific provisions of the AD Agreement .  There are no independent bases for 
these claims.  Thus, addressing these consequential claims would provide neither the parties nor other Members with additiona l guidance in terms of understanding the 
obligations established by the AD Agreement .  Nor would it aid in implementation of 
any DSB recommendation where a violation of one of those obligations has been found 
to exist.  We therefore do not consider it either necessary or appropriate to address these claims, and in the exercise of judicial economy make no findings with respect to them."
789  
                                                      
788 Supra , paras.7.87-7.88. 
789 Panel Report, US – Anti-Dumping Measures on Oil Country Tubular Goods, para. 7.189 .  In the same 
dispute, the Appellate Body found that the Panel had not committed an error of law when in light of its finding that 
a determination by the USDOC was inconsistent with Artic le 11.3, it decided to exercise judicial economy with 
regard to a claim under Article 2.  According to the Appellate Body, Mexico had failed to explain why an 
 WT/DS322/R          
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7.173  The panel in US – Zeroing (EC)  considered that, having found that zeroing in original 
investigations was inconsistent  with Article 2.4.2 of the AD Agreement , it was not necessary to make 
findings on dependent claims, including claims under Articles 1 and 18 of the AD Agreement  and 
Article XVI:4 of the WTO Agreement.
790 791   
7.174  We concur with the reasoning of the panels  in the above-mentioned cases regarding the 
disposition of consequential claims.  Addressing the claims of Japan regarding model zeroing 
procedures under Articles 1 and 18.4 of the AD Agreement  and Article XVI:4 of the WTO Agreement 
would neither provide additional guidance with respect  to steps to be taken to implement the Panel's 
recommendation regarding the violation on which that recommendation is dependant nor provide 
guidance in terms of understanding the obligations of the AD Agreement . 792  
7.175  Since we have found that simple zeroing procedures in the context of original investigations are 
not inconsistent with Articles 2.1, 2.4.2 and 2.4 of the AD Agreement   and Articles VI:1 and VI:2 of the 
GATT 1994 we find that by maintaining simple zeroing procedures in the context of original 
investigations USDOC does not act inconsistently with Articles 1 and 18.4 of the AD Agreement and 
Article XVI:4 of the WTO Agreement.   
2. Model zeroing as applied in the original investigation concerning certain cut-to-length 
carbon quality steel products from Japan  
(a) Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994 
(i) Arguments of the Parties  
7.176  Japan  claims that by using model zeroing in th e anti-dumping investigation of imports of 
certain cut-to-length carbon qua lity steel products from Japan793, USDOC acted inconsistently with 
Articles 2.1 and 2.4.2 of the AD Agreement  and with Articles VI:1 and VI:2 of the GATT 1994 in that it 
failed to determine the existence of dumping, and to calculate a margin of dumping, for the product as a whole by not taking into account the results of all the comparisons for the product.   
7.177  The United States  does not submit arguments specifically relating to the use of zeroing in this 
investigation.  In connection with  Japan's "as such" claims, the Unite d States denies that there exists a 
requirement to determine dumping for the product as a whole which prohibits zeroing and also argues 
                                                                                                                                                                    
 
additional finding under Article 2 was necessary to resolve the dispute.  In that connection, the Appellate Body 
also observed that it did not find it necessary to consider Mexico's arguments concerning Articles 1 and 18.3 of the 
AD Agreement .  Appellate Body Report, US – Anti-Dumping Measures on Oil Country Tubular Goods, para. 178 
and footnote 274. 
790 "The Panel also perceives no need to pronounce on the dependent claims raised by the EC under 
Articles 1; 3.1, 3.2 and 3.5; 5.8; 9.3; and 18.4 of the AD Agreement , Articles VI:1 and VI:2  of the GATT 1994 and 
Article XVI: 4 of the WTO Agreement.  Deciding such dependent claims would provide no additional guidance as to the steps to be undertaken by the US in order to implement our recommendation regarding the violation on 
which it is dependent."  Panel Report, US – Zeroing (EC),  para. 7.34 ( footnote omitted ).  
791 Cf. Panel Report, Argentina – Poultry Anti-Dumping Duties , paras. 7.369-7.370 and Panel Report, US 
– Softwood Lumber V , paras. 7.377-7.378. 
792 We also note that in US – Zeroing (EC)  the Appellate Body did not consider it necessary to make 
findings under Articles 1 and 18.4 of the AD Agreement  and Article XVI.4 of the WTO Agreement after finding 
that the zeroing methodology, as applied by USDOC in th e administrative reviews at issue, was inconsistent with 
Articles 9.3 of the AD Agreement  and Article VI:2 of the GATT 1994.  Appellate Body Report, US – Zeroing 
(EC) , para. 172.  
793 Notice of Final Determination of Sales at Less than Fair Value: Certain Cut-To-Length 
Carbon-Quality Steel Plate from Japan ,  64 Fed. Reg. 73215 (29 D ecember 1999), Exhibit JPN-10.                   WT/DS322/R 
Page 179 
 
 
 
 that the reasoning of the Appellate Body in US – Softwood Lumber V  is flawed and should not be 
followed by this Panel.  
(ii) Evaluation by the Panel 
7.178  We recall that in our analysis above of mode l zeroing procedures, as such, we have endorsed 
the findings of previous panel and A ppellate Body reports that zeroing is  inconsistent with Article 2.4.2 
of the AD Agreement  when applied in the context of averag e-to-average comparisons when establishing 
margins of dumping during the investigation phase.794  In that context, we have also explained why we 
consider that the arguments of the United States regarding the reasoning of the Appellate Body's 
analysis in US – Softwood Lumber V  are insufficient to warrant reconsideration of that finding.   
7.179  In light of the foregoing, we find that by using model zeroing in the anti-dumping investigation 
of imports of certain cut-to-length carbon qua lity steel products from Japan, USDOC acted 
inconsistently with Article 2.4.2 of the AD Agreement.   
(b) Article 2.4 of the AD Agreement   
(i) Arguments of the Parties 
7.180  Japan submits that the use of model zeroing in  the anti-dumping investigation of imports of 
cut-to-length carbon quality steel products from Japa n was inconsistent with the fair comparison 
requirement of Article 2.4 of the AD Agreement  because it resulted in an unfair, biased comparison 
between export price and normal value. 
7.181  The United States argues that Article 2.4 of the AD Agreement  contains no obligations with 
respect to zeroing. 
(ii) Evaluation by the Panel 
7.182  We exercise judicial economy with respect to this claim of Japan.795  
(c) Articles 3.1-3.5 of the AD Agreement  
(i) Arguments of the Parties 
7.183  Japan submits that the use of model zeroing in the anti-dumping investigation of imports of 
cut-to-length carbon quality steel products from Japan was inconsistent with Articles 3.1-3.5 of the 
AD Agreement  because it distorted the determination of  dumping and thus led to an injury 
determination not based on an objectiv e examination of positive evidence.  
7.184  The United States  rejects the argument that the USITCs injury determination was not based on 
positive evidence regarding the volume of dumped imports and the magnitude of dumping because, 
firstly, the decision not to offset negative margins was WTO-consistent and, secondly, Japan's argument 
is speculative because it cannot be presumed that a different methodology would have resulted in 
different margins of dumping.  
                                                      
794 Supra , paras. 7.75-7.86.  
795 Supra , paras. 7.87-7.88 and 7.152. WT/DS322/R          
Page 180  
 
(ii) Evaluation by the Panel 
7.185  Japan requests us to make a finding that the measure  that we have found to be inconsistent with 
Article 2.4.2 of the AD Agreement  is also inconsistent with Articles 3.1-5 of the AD Agreement .  A 
panel may exercise judicial economy where it is claime d that the same measure is inconsistent with 
more than one provision if it considers that multiple  findings under various provisions are not necessary 
to resolve the dispute.
796  We recall our reasoning above in connection with Japan's claims under 
Article 3 in relation to the model zeroing procedures as such in the context of original investigations.  
As in the case of Japan's claims under Articles 3.1-3.5 with respect to the model zeroing procedures as such, Japan's claims under Article 3.1-3.5 with respect  to the application of zeroing in the investigation 
of imports of certain cut-to-length carbon quality steel products from Japan are entirely dependent upon 
the inconsistency of this measure with Article 2 of the AD Agreement .  Absent any independent grounds 
to support the claims of Japan under Article 3 of the AD Agreement we do not consider it necessary to 
make findings on these claims.  
(d) Article 1 of the AD Agreement  
7.186  We do not consider it necessary to make a finding on the claim of Japan that the use of model 
zeroing in the anti-dumping investigation of imports of cut-to-length carbon quality steel products from 
Japan was inconsistent with Article 1 of the AD Agreement  as a consequence of the inconsistency with 
various provisions of the AD Agreement  and Article VI of the GATT1994.
797  
C. CLAIMS REGARDING ZEROING IN THE CONTEX T OF PERIODIC REVIEWS AND NEW SHIPPER 
REVIEWS  
7.187  Japan claims that maintaining simple zeroing procedures in the context of periodic reviews798 
and new shipper reviews799 is inconsistent with (1) Articles 2.1 and 2.4.2 of the AD Agreement  and 
Articles VI:1 and VI:2 of the GATT 1994; (2) Article 2.4 of the AD Agreement ; (3) Articles 9.1-9.3 and 
9.5 of the AD Agreement; and (4) Articles 1 and 18.4 of the AD Agreement  and Article XVI:4 of the 
WTO Agreement.   
7.188  Japan also claims that, as a consequence of simple zeroing, anti-dumping measures resulting 
from 11 periodic reviews800 are inconsistent with Articles 2.1 and 2.4.2 of the AD Agreement  and 
                                                      
796 Supra , paras. 7.87-7.88. 
797 Supra , paras.7.171-7.174. 
798 By "periodic review" Japan means the "periodic review of the amount of Anti-dumping duty" 
pursuant to Section 751(a)(1) of the Tariff Act, which requires the administering authority to review and determine the amount of any anti-dumping duty at least once during each 12-month period beginning on the
 
anniversary of the date of publication of an anti-dumping duty order if a request for such a review  has been 
received.   
799 The term "new shipper review", as used by Japan, means a review conducted pursuant to Section 
751(a)(2)(B) of the Tariff Act, which provides for a review to determine an individual weighted average margin of 
dumping for an exporter or producer of merchandise subject to an anti-dumping duty order if the administering authority receives a request from an exporter or producer  establishing that such exporter or producer did not 
export the merchandise during the period of investigation a nd that the exporter or producer is not affiliated with 
any exporter or producer who exported the subject merchandise during that period.   
800 Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan, and Tapered 
Roller bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Final Results 
of Anti-dumping Duty Administrative Reviews , 66 Fed. Reg. 15078 (15 March 2001); Anti-friction Bearings (other 
Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, 
Sweden, and the United Kingdom; Final Results of Anti-dumping Duty Administrative Reviews and Revocation of 
Orders in Part , 65 Fed. Reg. 49219 (11 August 2000); Anti-friction Bearings (Other Than Tapered Roller 
Bearings) and Parts Thereof from France, Germany, Italy, Japan, Sweden, and the United Kingdom; Final 
Results of Anti-dumping Duty Administrative Reviews and Revocation of Orders in Part , 66 Fed. Reg. 36551 
                   WT/DS322/R 
Page 181 
 
 
 
 Articles VI:1 and VI:2 of the GATT 1994; (2) Article 2.4 of the AD Agreement ; (3) Articles 9.1-9.3 of 
the AD Agreement; and (4) Article 1 of the AD Agreement.   
1. Claims regarding zeroing procedures as such  in the context of periodic reviews and new 
shipper reviews 
(a) Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994 
(i) Arguments of the Parties801 
7.189  Japan asserts that  in conducting periodic reviews pur suant to Article 9.3 of the AD Agreement  
and new shipper reviews pursuant to Article 9.5 of the AD Agreement  USDOC determines weighted 
average dumping margins for exporters and assessment rates for individual importers by using simple 
zeroing procedures.  Because the first sentence of Ar ticle 9.3 refers to "the margin of dumping as 
established under Article 2" the term "margin of dumpi ng" in Article 9 must be interpreted in light of 
Article 2 of the AD Agreement .  Moreover, as a result of the definiti ons in Article 2.1 and Article VI, the 
terms "dumping", "margins of dumping" and "pro duct" have a uniform meaning throughout the 
AD Agreement .  It follows that the simple zeroing procedures maintained by USDOC in relation to 
periodic reviews and new shipper reviews are inc onsistent with Articles 2.1 and 2.4.2 of the 
AD Agreement  and with Articles VI:1 and VI:2 of the GATT 1994 because they fail to provide for a 
determination of dumping, and calcu lation of a margin of dumping, for the product as a whole.  Japan 
submits that the Appellate Body has already found in US – Zeroing (EC)  that the zeroing methodology 
at issue in this dispute in the context of periodic reviews is WTO-inconsistent.  
7.190  In response to Panel Question 12, Japan submits  that the phrase "during the investigation 
phase" in Article 2.4.2 of the AD Agreement  does not limit the application of that provision to original 
investigations and that there is nothing in the context or object and purpose of the AD Agreement  to 
suggest that the permissible bases of comparison be tween export price and normal value provided for in 
Article 2.4.2 do not apply to Articles 9 and 11.  Article 9.3 expressly states that the calculation of 
margins of dumping under that provision is subject to Article 2 as a whole and does not exclude 
Article 2.4.2.  However, Japan argues that in a ny event, whether or not Article 2.4.2 applies to 
proceedings other than investigati ons under Article 5 is not decisive to the outcome of this dispute 
because the obligation to determine dumping, and to calculate a margin of dumping, for the product as a 
whole applies to the entire AD Agreement .  In the latter regard, Japan indicates that it takes no position 
on the issue of whether Article 2.4.2 applies to an ti-dumping proceedings other than investigations and 
considers that the Panel does not need to decide this issue.  
7.191  The United States  submits that there is no obligation in the AD Agreement  to establish one 
margin of dumping for the product as a whole.  The Unites States considers that the reasoning of the 
Appellate Body in US – Zeroing (EC)  is unpersuasive.  The United States also submits that since the 
text of Article 2.4.2 expressly limits its applicab ility to "the investigati on phase", Article 2.4.2 only 
applies to investigations within the meaning of Article 5 of the AD Agreement .  The limited application 
                                                                                                                                                                     
(12 July 2001); Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and the United Kingdom; 
Final Results of Anti-dumping Duty Administrative Reviews , 67 Fed. Reg. 55780 (30 August 2002); Ball Bearings 
and Parts Thereof From France, Germany, Italy, Japan, and Singapore:  Final Results of  Anti-dumping Duty 
Administrative Reviews, Resci ssion of Administrative Review in Part and Determination Not to Revoke Order in 
Part, 68 Fed. Reg. 35623 (16 June 2003); Anti-friction Bearings and Parts Thereof From France, Germany, Italy, 
Japan, Singapore, and the United Kingdom: Final Results of Anti-dumping Duty Administrative Reviews, 
Rescission of Administrative R eviews in Part, and Determination To Revoke Order in Part , 69 Fed. Reg. 55574 
(15 September 2004).  
801 See supra , paras. 7.20-7.32 for the arguments of the parties on whether zeroing procedures, as such, 
are measures that can be challenged in WTO dispute settlement.  WT/DS322/R          
Page 182  
 
of Article 2.4.2 to the investigation phase is consiste nt with the divergent functions of investigations 
and other proceedings under the AD Agreement  and with the existence of various types of duty 
assessment systems.  The United States submits that Article 9 of the AD Agreement  does not incorporate 
the requirements of Article 2.4.2.  The general refe rence in Article 9.3 to Article 2 necessarily includes 
any limitation found in the text of Ar ticle 2.4.2.  Since Article 2.4.2 is  by its own terms limited to the 
investigation phase, Article 9.3 cannot incor porate the requirements of Article 2.4.2.  
(ii) Arguments of Third Parties 
7.192  China , the European Communities,  Korea , Mexico, Norway and Thailand  argue that 
maintaining simple zeroing procedures in the cont ext of periodic reviews to assess the amount of 
anti-dumping duties is inconsistent with Article 2.4.2 of the AD Agreement .  Article 2.4.2 applies to 
such reviews because Article 9.3 requires that th e amount of the anti-dumping duty not exceed "the 
margin of dumping as established under Article 2".  The phrase "during the investigation phase" in 
Article 2.4.2 does not limit the applicability of Article  2.4.2 to investigations within the meaning of 
Article 5 of the AD Agreement .  In the latter regard, the Europ ean Communities argues that in the 
absence of a definition of "investigatio n" in Article 2.4.2, this word must be interpreted in light of its 
ordinary meaning of "a systematic examination or inquiry or a careful study of or research into a 
particular subject".  In this sense, the word "inv estigation" also applies to Articles 9 and 11.  The 
European Communities also argues that the context of the word "investigation" in Article 2.4.2 
demonstrates that it is not limited to investigations w ithin the meaning of Article 5.1, that it is possible 
to give meaning to the phrase "during the investigation phase" without interpreting it as limiting the scope of application of Article 2.4.2 and that the negotiating history of the AD Agreement  and 
"subsequent practice" within the meaning of Article 31(3)(b) of the Vienna Convention  support the 
view that "during the investigation phase" does not limit the applicability of Article 2.4.2 to 
investigations under Article 5.1.   
(iii) Evaluation by the Panel 
7.193  Japan claims that by maintaining simple zeroing procedures to calculate margins of dumping 
and importer-specific assessment rates in periodic reviews and new shipper reviews USDOC violates 
Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994.  In support of 
this claim, Japan submits that Article 2.1 of the AD Agreement  and Article VI of the GATT 1994 require 
that dumping be determined to exist, and that a margin of dumping be calculated, for the product as 
whole, a requirement that applies throughout the AD Agreement  and which prohibits zeroing in any 
proceeding.  Thus, Japan's claim that simple zeroing in the context of periodic reviews and new shipper 
reviews is inconsistent with Articles 2.1 and 2.4.2 of the AD Agreement  and Article VI:1 and VI:2 of the 
GATT 1994 is based on exactly the same reasoning as Japan's claims relating to model and simple 
zeroing in the context of original investigations.
802   
7.194  In this respect, we recall that in our analysis of the claims of Japan in respect of zeroing in 
relation to investigations within the meaning of Article 5 of the AD Agreement  we have concluded that 
it is permissible within the meaning of Article 17.6(ii) of the AD Agreement  to interpret Article VI of the 
GATT 1994 and relevant provisions of the AD Agreement to mean that  there is  no general  requirement 
to determine dumping and margins of dumping for the product as a whole, which, by itself or in conjunction with a requirement to establish margin s of dumping for exporters or foreign producers, 
entails a general prohibition of zeroing.
803  Specifically, in light of the ordinary meaning and context of 
the use of the words "product" and "products", we have  concluded that the mere fact that "dumping" and 
                                                      
802 While Japan contests that Article 2.4.2 of the AD Agreement  only applies to investigations within the 
meaning of Article 5, Japan has expressl y stated that it considers that it is not necessary for the Panel to decide 
whether or not Article 2.4.2 applies to proceedings other than investigations under Article 5.  
803 Supra , para.7.142.                   WT/DS322/R 
Page 183 
 
 
 
 "margins of dumping" are defined in relation to  "product" and "products" does not warrant the 
conclusion that under Article 2.1 of the AD Agreement  and Article VI of the GATT 1994 the existence 
of dumping and margins of dumping can only be established on the basis of an aggregate examination of export transactions in which export prices that are higher than the normal value are accorded the 
same significance as export prices that are less than the normal value.
804  We have also concluded that 
the text of Article 2.4.2 of the AD Agreement  does not support the view that the AD Agreement  and 
Article VI of the GATT 1994 must be interpreted to mean that there exists a general prohibition of 
zeroing.805  In the latter regard, we have explained our view that to interpret Article 2.4.2 of the AD 
Agreement  in light of a general prohibition of zeroing under any comparison method would deprive the 
average-to-transaction method provided for in the sec ond sentence of Article 2.4.2 of its effectiveness 
and would thus be inconsistent with the principle of effective treaty interpretation.806   
7.195  Moreover, while we note that Japan finds support fo r its claims with resp ect to simple zeroing 
in periodic reviews and new shipper reviews in th e findings and reasoning of the Appellate Body in US 
– Zeroing (EC),  we recall in that regard that we have poi nted to the difficulties of interpretation of the 
meaning and scope of application of the phrase "multiple comparisons ...at an intermediate stage" as 
used in the Appellate Body Report in US – Zeroing (EC)807  and to the limited explanation in that 
Appellate Body Report as to why the "product as a whol e" concept is applicable more broadly than in 
the specific context of "multiple averaging" in wh ich it is used in the Appellate Body Report in US - 
Softwood Lumber V .808  
7.196  We find that there are important considerations specific to Article 9 of the AD Agreement  that 
lend further support to the view that it is permissi ble within the meaning of Article 17.6(ii) of the 
AD Agreement  to interpret Article VI of the GA TT 1994 and relevant provisions of the AD Agreement 
to mean that  there is  no general  requirement to determine dumping and margins of dumping for the 
product as a whole, which, by itself or in conjunction with a requirement to establish margins of dumping for exporters or foreign producers, entails a general prohibition of zeroing.   
7.197  Article 9.3 of the AD Agreement  provides: 
The amount of the anti-dumping duty shall not exceed the margin of dumping as established 
under Article 2. 
 
 9.3.1 When the amount of the anti-dumping duty is assessed on a retrospective basis, 
the determination of the final liability fo r payment of anti-dumping duties shall take 
place as soon as possible, normally within 12 months, and in no case more than 
18 months, after the date on which a request for a final assessment of the amount of the anti-dumping duty has been made.  Any refund shall be made promptly and normally in not more than 90 days following the determ ination of final liability made pursuant to 
this sub-paragraph.  In any case, where a refund is not made within 90 days, the 
authorities shall provide an explanation if so requested. 
 
 9.3.2 When the amount of the anti-dumpi ng duty is assessed on a prospective basis, 
provision shall be made for a prompt refund,  upon request, of any duty paid in excess of 
the margin of dumping.  A refund of any su ch duty paid in excess of the actual margin 
of dumping shall normally take place within 12 months, and in no case more than  
                                                     
 
804 Supra , para. 7.112. 
805 Supra , para. 7.141. 
806 Supra , paras. 7.127-7.137. 
807 Supra , para. 7.100. 
808 Supra , para. 7.101. WT/DS322/R          
Page 184  
 
18 months, after the date on which a request  for a refund, duly supported by evidence, 
has been made by an importer of the product subject to the anti-dumping duty.  The refund authorized should normally be made  within 90 days of the above-noted  
decision. 
 
  9.3.3 In determining whether and to wh at extent a reimbursement should be made 
when the export price is constructed in accordance with paragraph 3 of Article 2, 
authorities should take account of any change  in normal value, any change in costs 
incurred between importation and resale, and any movement in the resale price which is duly reflected in subsequent selling prices,  and should calculate the export price with 
no deduction for the amount of anti-dumping duties paid when conclusive evidence of 
the above is provided. (footnote omitted) 
 
7.198  Article 9.3 requires that the amount of the anti-dumping duty  not exceed the margin of dumping 
as established under Article 2.  Articles 9.3.1 and 9.3.2 specify certain rules to implement this 
requirement when the amount of the anti-dumping duty  is assessed on a retrospective basis 
(Article 9.3.1) or on a prospective basis (Article 9.3.2).  In the context of Article 9.3, a margin of dumping is calculated for the purpose of determining the final liability for payment of anti-dumping 
duties  under Article 9.3.1 or for the purpose of determining the amount of anti-dumping duty that must 
be refunded under Article 9.3.2.  An anti-dumping duty is paid  by an importer in respect of a particular 
import of the product on which an anti-dumping duty has been imposed.  An importer does not incur 
liability for payment of an anti-dumping duty in respect of the totality of sales of a product made by an 
exporter to the country in question but only in respect of sales made by that exporter to that particular 
importer.  Thus, the obligation to pay an anti-dumping duty is incurred on an importer - and 
import -specific basis.  
 
7.199  Since the calculation of a margin of dumping in th e context of Article 9.3 is part of a process of 
assessing809 the amount of duty that must be paid or that must be refunded, this importer- and 
import-specific character of the payment of anti- dumping duties must be taken into account in 
interpreting the meaning of "margin of dumping".  In  our view, the interpretation advanced by Japan, 
according to which a margin of dumping under Article 9.3 must be determined on the basis of an aggregate examination of export prices during a revi ew period in which export prices above the normal 
value carry the same weight as export prices below the normal value, is inconsistent with the importer- 
and import-specific character of the obligation to pay an anti-dumping duty.  The implication of such an 
interpretation is that, if a Member applies a retrospective duty assessment system, a Member may be precluded from collecting anti-dumping duties in respect of particular export transactions at prices less 
than normal value to a particular importer at a pa rticular point of time because of prices of export 
transactions to other importers at a different point in time that exceed normal value.  We find it 
significant, in this respect, that Article 9.3 contains no language requiring such an aggregate 
examination of export transactions in determini ng final liability for payment of anti-dumping duties 
under Article 9.3.1 or in determining the amount, if any, of refund due under Article 9.3.2.
810   
                                                      
809 Under Article 9.3 an anti-dumping is assessed either on a retrospective basis or on a prospective basis. 
It follows from this context that the word "assess(ed)" in Article 9.3 refers to the timing of the determination of the  
amount of the anti-dumping duty, (more particularly, the timing of that determination relative to the importation 
of the product).   
 810 Article 9.3.2 also does not require that "the actual margin of dumping" be determined in respect of a 
particular period of time.  Japan asserts that in an assessment proceeding the margin of dumping must be 
determined in relation to a "review period".  Response of Japan to Panel Question 55(c).  However, the concept of 
a "review period" does not appear in Article 9.3.2.  As a consequence, there is no textual basis to read into Article 9.3.2 a requirement to conduct an examination at an aggregate level by linking the phrase "actual margin" 
to "review period".                     WT/DS322/R 
Page 185 
 
 
 
 7.200  We consider, in this respect, that Article 9.4(ii) of the AD Agreement  is important contextual 
support for the view that the term "margin of dumping"  as used in Article 9.3 does not require a Member 
to carry out an aggregate examination of export pri ces in which the same weight is accorded to export 
prices that exceed the normal value as to export pr ices that are less than the normal value.   
7.201  Article 9.4(ii) expressly refers to the calcula tion of the liability for payment of anti-dumping 
duties on the basis of a prospective normal value.811  Under such a system, the amount of liability for 
payment of anti-dumping duties is determined at the time of importation on the basis of a comparison 
between the prices of individual export tran sactions and the prospective normal value.812  Under this 
system, an importer who imports a product the export price of which is equal to or higher than the 
prospective normal value cannot incur liability for pa yment of anti-dumping duties.  There is no textual 
support in Article 9 for the proposition that export pr ices in other transactions are of any relevance in 
this respect.813   
7.202  Japan argues that the argument of the United Stat es that in a prospective normal value system 
margins of dumping are determined with respect to individual transactions confuses the distinct 
concepts of the "amount of the anti-dumping duty" , on the one hand, and the "margin of dumping", on 
the other.814  Japan argues, in this regard, that "w hen the customs authorities impose and collect 
anti-dumping duties on individual entries they are not calculating margins of dumping within the meaning of Article 2".
815  Japan considers that the collection of  a variable duty on an entry-by-entry 
basis in a prospective normal system does not involve the establishment of margins of dumping in respect of individual export transactions because the act ual margin of dumping in such a system is only 
determined in a review under Article 9.3.2.
816  Thus, Japan asserts that in a prospective normal value 
system "... the final liability for duties must be assessed in a review under Article 9.3.2".817   
7.203  In our view, to deny the relevance of the relati onship that exists in Article 9.3 between "margin 
of dumping" and the payment of an anti-dumping duty is illogical and contrary to the text and purpose 
of Article 9.  Article 9.3 expressly establishes a relationship between the amount of anti-dumping duty 
and the margin of dumping by providing that "the amount of the anti-dumping duty shall not exceed the 
margin of dumping as established under Article 2".  Although "amount of anti-dumping duty" and 
"margin of dumping" may be "distinct concepts", that  does not mean that the fact that Article 9.4(ii) 
expressly refers to a prospective normal value system is without relevance to the interpretation of the 
concept of "margin of dumping" as used in Article 9.818  Nothing in the text of Articles 9.3 and 9.4 
                                                      
811 Article 9.4(ii) provides that an anti-dumping duty  applied to imports of exporters or producers not 
examined individually shall not exceed, "where the liability for payment of anti-dumping duties is calculated on 
the basis of a prospective normal value, the difference be tween the weighted average no rmal value of the selected 
exporters or producers and the export prices of exporters or producers not individually examined." 
812 See also Panel Report, US – Softwood Lumber V (Article 21.5)  (appeal pending) para. 5.53  ("Under a 
prospective normal value duty system, anti-dumping duties are assessed as individual import transactions occur, 
by comparing a transaction-specific export pri ce against a prospective normal value.")  
813 See also Panel Report, US – Softwood Lumber V (Article 21.5) , (appeal pending) paras. 5.53-5.57.  
814 Japan Opening Statement at the Second Substantive M eeting of the Panel with th e Parties, para. 27.   
815 Ibid, para. 28.   
816 Ibid, 30 and 32. 
817 Ibid, para. 32. 
818 Japan argues that its position is supported by  the distinction drawn by the Appellate Body in 
paragraphs 123-124 of its report in EC – Bed Linen (Article 21.5 – India) between the determination of the margin 
of dumping, on the one hand, and the imposition and collection of anti-dumping duties, on the other.  However, 
read in light of footnote 155, it is clear that paragraphs 123-124 of this report discuss the distinction between the 
determination of the existence of margins of dumping under Article 2.4.2, on the one hand, and the imposition and collection of anti-dumping duties under Article 9, on the other.  These paragraphs contain no discussion of the 
relationship between "amount of anti-dumping duty" and "margin of dumping" in the specific context of Article 9.  
 WT/DS322/R          
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indicates that, as implied by Japan's interpretation,  if an anti-dumping duty has been collected on a 
particular transaction in which the export price is below the prospective normal value, authorities must 
subsequently re-assess the amount of that duty by calculating a margin of dumping that reflects prices of other export transactions, including prices of export transactions that are higher than the normal value.
819   
7.204  In this regard, we consider that Japan's argumen t that in a prospective normal value system final 
liability for payment of anti-dumping duties must be  determined through a review procedure under 
Article 9.3.2 is inconsistent with the prospective  nature of such a system.  It is clear from the text of 
Article 9.4(ii) of the AD Agreement  that in a prospective normal system " liability for payment of 
anti-dumping duties  is calculated on the basis of a prospective normal value".  Although Article 9.3.2. 
provides for a refund procedure when the amount of  anti-dumping duties is assessed on a prospective 
basis, a requirement that arguably also applies to pr ospective normal value systems referred to in Article 
9.4(ii), a refund procedure in a prospective duty assessment system is not a determination of final 
liability for payment of anti-dumping duties .  The phrase "determination of the final liability for 
payment of anti-dumping duties" is used in Artic le 9.3.1 in connection with retrospective duty 
assessment procedures but does not figure in Article 9.3.2.   
7.205  We therefore consider that, notwithstanding the po ssibility of a refund, liability for payment of 
anti-dumping duties is final in a prospective normal value system at the time of importation of a 
product.  Because in such a system liability for paym ent of anti-dumping duties is incurred only to the 
extent that prices of individual export transactions are below normal value, we consider that the fact that 
express provision is made in the AD Agreement  for this sort of system confirms that the concept of 
dumping can apply on a transaction-specific basis to prices of individual export  transactions below the 
normal value and that the AD Agreement  does not require that in calculating margins of dumping the 
same significance be accorded to export prices above the normal value as to export prices below the 
normal value.   
7.206  If in a prospective normal value system individua l export transactions at prices less than normal 
value can attract liability for payment of anti-dumping du ties, without regard to whether or not prices of 
other export transactions exceed normal value,  we see no reason why liability for payment of 
anti-dumping duties may not be similarly assessed on the basis of export prices less than normal value 
in the retrospective duty assessment system applied by the United States that is the subject of Japan's "as 
such" and "as applied" claims in this dispute.   
7.207  We note, in this regard, that Japan has criticized  a statement made by the United States in its 
Second Submission that "[t]he US assessment system  operates in a manner comparable to a prospective 
normal value system, examining individual export transactions, albeit using contemporaneous normal 
values".820  Japan asserts that this statement is misl eading because in review proceedings USDOC does 
not assess duties on each entry of a pr oduct but undertakes multiple comp arisons to determine a single 
overall margin of dumping for all transactions  in the review period and a single overall 
importer-specific assessment rate fo r each importer that will apply to future entries of the product.  
Japan asserts that "whereas an entry-by-entry co mparison would arrive at multiple entry-specific 
                                                                                                                                                                     
Thus, we fail to see how this report supports Japan's pos ition that the basis upon which liability for payment of an 
anti-dumping duty is incurred is without relevance to the interpretation of the concept of margin of dumping in 
Article 9.3.   
819 We note, in this respect, the observation in the panel report in US – Softwood Lumber V (Article 21.5)  
(appeal pending) that "...in the context of a prospec tive normal value duty assessment system, the 'margin of 
dumping' referred to in Article 9.3 is the transaction-sp ecific margin of dumping established in respect of the 
specific import transaction being assessed".  Panel Report, US – Softwood Lumber V (Article 21.5)  (appeal 
pending), para. 5.53.  
820 US Second Written Submission, para. 63.                     WT/DS322/R 
Page 187 
 
 
 
 conclusions that would each have regulatory con sequences for a single entry, the United States' 
assessment system arrives at a single conclusion pur portedly for all transactions, and that conclusion 
has product-wide consequences."821   
7.208  The issue before us is whether the AD Agreement  must be interpreted to mean that in 
determining whether dumping exists and in calcula ting margins of dumping Members are obligated to 
accord the same weight to export prices above the normal value as to export prices below the normal 
value.  The express reference in Article 9.4(ii) to a prospective normal value system in our view is an 
important reason why the answer to this question mu st be negative because it demonstrates that liability 
for payment of anti-dumping duties may be based on  a comparison of a prospective normal value and 
prices of individual export transactions below the normal value. 822  We note, in this regard, that the 
United States has simply suggested that its duty assess ment system is "comparable" to a prospective 
normal value system in that it determines liability fo r individual export transactions.  That USDOC does 
not examine and assess a duty on each transaction individua lly at the time the transaction takes place but 
examines a number of transactions on a retrospectiv e basis and calculates a single margin of dumping 
and a single assessment rate for importers does not mean that the system cannot be said to be 
"comparable" to a prospective normal value system  in that the amount of liability for payment of 
anti-dumping duties is determined by the extent to wh ich prices of particular import transactions are 
below the normal value.  As stated by the United States, "the total amount of anti-dumping duties collected [in the US duty assessment] system is th e same as if duties were collected on each import 
transaction".
823  We see no textual basis in Articles 9.3 and 9.4 for the view that if an authority assesses 
the amount of the anti-dumping duty on a retrospectiv e basis by examining export transactions that have 
occurred during a certain period, it is obligated to  take into account export prices above the normal 
value that it would not have been required to take  into account if it had applied a prospective normal 
system.  
7.209  We conclude that Article 9.3 of the AD Agreement , especially when interpreted in light of the 
express reference to a prospective normal value system  in Article 9.4(ii), lends further support to the 
view that it is permissible within the meaning of Article 17.6(ii) of the AD Agreement  to interpret 
Article VI of the GATT 1994 and relevant provisions of the AD Agreement to mean that  there is  no 
general requirement to determine dumping and marg ins of dumping for the product as a whole, which, 
by itself or in conjunction with a requirement to establish margins of dumping for exporters or foreign 
producers, entails a general prohibition of zeroing.   
7.210  With respect to Article 2.4.2 of the AD Agreement , one of the provisions invoked by Japan in 
support of its claim regarding simple zeroing proce dures in relation to periodic reviews and new shipper 
reviews, we recall our finding that Article 2.4.2 do es not support the view that zeroing is prohibited 
outside the context of the average-to-average co mparison method when estab lishing the existence of 
margins of dumping during the investigation phase.824  Therefore, whether or not Article 2.4.2 applies 
                                                      
821 Japan Response to Panel Question 43, para. 34.   
822 We note that in paragraph 131 and accompanying footnote 234 of its Report in US – Zeroing (EC)  the 
Appellate Body explains that the text of Article 9.3 of the AD Agreement  does not suggest that final anti-dumping 
liability cannot be assessed on a transaction- or importer-sp ecific basis and that the possibility that aggregation of 
results of multiple comparisons might result in a negative value does not mean that authorities would be required 
to compensate an importer for the amount of that nega tive value or that liability for payment of anti-dumping 
duties may not be based on a prospective normal value.  It is not entirely clear precisely how we should understand these statements, given that the Appellate Body has also explained that Article 9.3 requires that the total amount of 
anti-dumping duties collected on all entries of the subjec t product be compared with an exporter's or foreign 
producer's margin of dumping for the product as a whole.   
823 US Comments on Japan's Answers to the Panel's que stions in connection with the Second Substantive 
Meeting of the Panel with the Parties, para. 36.   
824 Supra , paras. 7.113-7.140 WT/DS322/R          
Page 188  
 
to proceedings under Article 9 of the AD Agreement does not affect  our conclusion  that the use of 
simple zeroing in such proceedings is not prohibited.   
7.211  Even assuming, arguendo , that Article 2.4.2 were to be construed as prohi biting zeroing under 
any comparison method, we would not uphold Japan's claim because we do not consider that Article 2.4.2 can be interpreted to be applicab le to reviews under Articles 9.3 and 9.5 of the 
AD Agreement .
825  Bearing in mind Article 17.6(ii) of the AD Agreement , we find that it is permissible 
to interpret Article 2.4.2 as being applicable only to in vestigations within the meaning of Article 5 of the 
AD Agreement .  In this respect, we consider that  the fact that Article 9.3 of the AD Agreement  provides 
that the amount of the anti-dumping duty must not exceed the margin of dumping "as established under 
Article 2" and does not specifically exclude Article 2.4. 2 is not sufficient to conclude that Article 2.4.2 
applies to reviews under Article 9.  The reference made  in Article 9.3 to "Article 2" in general cannot 
override the limitation on the applicability of Article  2.4.2 expressed in the text of that provision.826   
7.212  The question of the applicability of Article 2.4. 2 has been the subject of detailed argumentation 
and analysis in the recent panel report in US – Zeroing (EC).  We agree with the reasoning and 
conclusion of the majority of that panel regarding the limited applicability of Article 2.4.2.  We find the 
following points particularly pertinent in this regard.   
7.213  First , Article 2.4.2 of the AD Agreement  applies to the establishment of "the existence of 
margins of dumping during the investigation phase".827  Thus, the phrase "during the investigation 
phase" defines when Article 2.4.2 is applicable.  In terpreting "during the investigation phase" to apply 
to any activity of an investigating authority that  involves the calculation of an anti-dumping margin 
would deprive that phrase of its useful effect becau se it would essentially apply whenever an authority 
determines a margin of dumping.  By contrast, interp reting "during the investig ation phase" in light of 
Article 5, the provision of the AD Agreement  that is the most specific w ith regard to the concept of 
investigation, makes it possible to make a meaningf ul distinction between the investigation phase and 
other phases.828  Second , whereas there is textual similarity between Articles 2.4.2 and Article 5.1 of the 
AD Agreement , the AD Agreement  does not describe the purpose of proceedings under Articles 9 and 11 
in terms of establishing "the existence of margin s of dumping during the investigation phase" but uses 
rather different terminology in these provisions.829   
7.214  Third , while the AD Agreement  does not define the word "investigation," it does not follow that 
"investigation" in Article 2.4.2 must necessarily be interpreted in accordance with a generic dictionary 
                                                      
825 We recall that Japan has expressly stated that it considers that it is not necessary for the Panel to 
decide whether or not Article 2.4.2 applies to proceedings other than investigations under Article 5.  Nevertheless, 
we consider it appropriate to address this issue as add itional support for our view that simple zeroing is not 
prohibited in the context of periodic reviews and new shipper reviews.  We also note that in our analysis of whether Article 2.4.2 contains a general prohibition of zeroing, we have already indicated that we agree with the 
view that Article 2.4.2 is limited in its application to  investigations within the meaning of Article 5.  ( supra , 
paragraph 6.119).  We consider that we must state the reasons for that position. 
826 As stated by the panel in US – Zeroing (EC) :  
"If Article 2 itself  provides that Article 2.4.2 does not apply in the case of reviews under Article 9.3, that 
is not overridden by the fact that 'Article 2' is speci fically referred to in Article  9.3.  Absent anything 
explicitly to the contrary, that reference to 'Article 2' in Article 9.3 must be  read as including  any 
limitation that is expressed in Article 2 itself."  Panel Report, US – Zeroing(EC) , para. 7.146 ( emphasis in 
original ). 
827 In US – Softwood Lumber V , the Appellate Body stated that "Article 2.4.2 of the AD Agreement  
permits the use of three methodologies, applicable during the investigation phase , for establishing the existence of 
margins of dumping".  Appellate Body Report, US – Softwood Lumber V , para. 76 ( emphasis added ). 
828 Cf. Panel Report, US – Zeroing (EC) , paras. 7.153-7.155.  
829 Panel Report, US – Zeroing (EC ), paras. 7.156-7.157.                    WT/DS322/R 
Page 189 
 
 
 
 definition of that word.  The concept of "investigation" in the AD Agreement  in most cases refers to the 
particular phase  of the proceeding  in which the authorities determine whether conditions exist 
justifying the imposition of an anti-dumping measure.830  That "investigation" has a specific meaning is 
also apparent from the fact that Articles 11.4 and 12.3  provide that certain rules contained in Article 6 
applicable to "investigations" shall also apply to "reviews" and from the distinction made in Article 18 
between "investigations" and reviews.831  Fourth , reports of panels and the Appellate Body provide 
ample support for the view that investigations are phases or stages that are distinct from other phases or 
stages of anti-dumping and countervailing duty proceed ings, that there is a difference between the 
purpose of investigations and the purpose of other phases of anti-dumping or countervailing duty 
proceedings, and that provisions that  apply to investigations do not ipso facto  apply to other stages or 
phases of anti-dumping and countervailing duty proceedi ngs, such as sunset reviews under Article 11 of 
the AD Agreement  or Article 21 of the SCM Agreement .832 833 
7.215  Finally, we agree with the majority of the panel in US – Zeroing (EC)  that the arguments of the 
European Communities concerning possible alternativ e interpretations of "during the investigation 
phase", subsequent practice, negotiating history and object and purpose of Article 9.3 and the 
AD Agreement  do not support its position that Article 2. 4.2 is not limited in its application.834  
7.216  In light of the foregoing, the Panel finds that by maintaining simple zeroing procedures in the 
context of periodic reviews and new shipper re views USDOC does not act inconsistently with 
Articles 2.1 and 2.4.2 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994.  
(b) Article 2.4 of the AD Agreement  
7.217  The arguments of Japan and the United States on whether Article 2.4 of the AD Agreement  
proscribes the use of simple zeroing in periodic revi ews and new shipper reviews are identical to their 
arguments on whether Article 2.4 proscribes zeroing in the context of investigat ions within the meaning 
of Article 5 of the AD Agreement .835  
7.218  In respect of investigations, we have found th at simple zeroing is not inconsistent with 
Article 2.4 of the AD Agreement .836  That finding was based on our conclusion that to interpret the "fair 
comparison" requirement of Article 2.4 as creati ng a general prohibition of  zeroing would undermine 
the effectiveness of other provisions of the AD Agreement.  We have also explained why we consider 
that an interpretation that zeroing is prohibited under any comparison method and in any type of 
proceeding is not supported by the provisions in  Article 9 on the assessment of the amount of 
anti-dumping duties. 
                                                      
830 Ibid, paras. 7.158-7.167.  
831 Ibid, paras. 7.168-7.169. 
832 Panel Report, US – Zeroing (EC ), paras. 7.771-7.188.  We also note, in this respect, the recent 
Appellate Body Report in US – Anti-Dumping Measures on Oil Country Tubular Goods, which confirmed that, 
because of the expression "anti-dumping investigations", Article 3.3 of the AD Agreement does not apply to sunset 
reviews under Article 11.   Appellate Body Report, US – Anti-Dumping Measures on Oil Country Tubular Goods , 
para. 170. 
 833 With regard to the distinction between the purpose of investigations and proceedings under 
Article 9.3 of the AD Agreement , we recall our analysis above that th e argument that in duty assessment 
proceedings under Article 9.3 export transactions must be considered on an aggregate basis is inconsistent with the text and purpose of that provision.   
834 Panel Report, US – Zeroing (EC) , paras. 7.189-7.220. 
835 This also applies to arguments submitted by China, the European Communities, Norway and Thailand 
in support of their view that maintaining simple zeroing procedures in the context of reviews under Article 9 is inconsistent with Article 2.4 of the AD Agreement.   
 
836Supra , paras. 7.153-7.161. WT/DS322/R          
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7.219  In light of the foregoing, the Panel finds  that by maintaining simple zeroing procedures in the 
context of periodic reviews and new shipper revi ews, USDOC does not act inconsistently with 
Article 2.4 of the AD Agreement .  
(c) Articles 9.1-9.3 and 9.5 of the AD Agreement  
7.220  Japan argues that the inconsistency of simple zero ing procedures, as such, with Articles 2.1, 
2.4 and 2.4.2 of the AD Agreement  necessarily gives rise to violations of Articles 9.1-9.3 and 9.5 of the 
AD Agreement .  
7.221  We have found that by maintaining simple zer oing procedures in the context of periodic 
reviews and new shipper reviews USDOC does not act in consistently with Articles 2.1 and 2.4.2 of the 
AD Agreement,  Articles VI:1 and VI:2 of the GATT 1994 and Article 2.4 of the AD Agreement .  
Therefore, we reject Japan's consequential claims under Articles 9.1-9.3 and 9.5 of the AD Agreement .  
7.222  The Panel finds  that by maintaining simple zeroing procedures in the context of periodic 
reviews and new shipper reviews USDOC does not act inconsistently with Articles 9.1-9.3 and 9.5 of 
the AD Agreement .  
(d) Articles 1 and 18.4 of the AD Agreement  and Article XVI:4 of the WTO Agreement 
7.223   We have found that by maintaining simple zeroing procedures in the context of periodic 
reviews and new shipper reviews USDOC does not act in consistently with Article 2.1 and 2.4.2 of the 
AD Agreement, Articles VI:1 and VI:2 of the GATT 1994 and Article 2.4 of the AD Agreement .  
Therefore, we reject Japan's consequentia l claims under Articles 1 and 18.4 of the AD Agreement  and 
Article XVI:4 of the WTO Agreement.  
7.224  The Panel finds  that by maintaining simple zeroing procedures in the context of periodic 
reviews and new shipper reviews USDOC does not act inconsistently with Articles 1 and 18.4 of the 
AD Agreement  and with Article XVI:4 of the WTO Agreement.  
2. Claims regarding simple zeroing as applied in the context of certain periodic reviews  
7.225  Japan submits that in 11 periodic reviews
837 USDOC acted inconsistently with Articles 1, 2.1, 
2.4.2, 2.4 and 9.1 to 9.3 of the AD Agreement  and with Articles VI:1 and VI:2 of the GATT 1994 by 
using simple zeroing.  The arguments of Japan in su pport of these claims are the same as in the case of 
Japan's "as such "claims relating to periodic reviews and new shipper reviews.   
7.226  For the reasons explained in the previous section, we reject the claims of Japan that simple 
zeroing as applied in these periodic reviews is inc onsistent with Articles 2.1 and 2.4.2 of the 
AD Agreement, Articles VI:1 and VI:2 of the GATT 1994 and Article 2.4 of the AD Agreement.   
Therefore, we also reject Japan's consequential cl aims that the application of simple zeroing in these 
reviews is inconsistent with Articles 1 and 9.1-9.3 of the AD Agreement .  
7.227  The Panel finds  that by applying simple zeroing in 11 periodic reviews USDOC did not act 
inconsistently with Articles 1, 2.1, 2.4.2, 2.4 and 9.1-9.3 of the AD Agreement  and with Articles VI:1 
and VI:2 of the GATT 1994. 
                                                      
837 Supra , footnote 800.                   WT/DS322/R 
Page 191 
 
 
 
 D. CLAIMS REGARDING ZEROING PROCEDURES IN THE CONTEXT OF CHANGED CIRCUMSTANCES 
REVIEWS AND SUNSET REVIEWS  
7.228  Japan  claims that maintaining zeroing procedures in the context of "changed circumstances" 
reviews838 and "sunset" reviews839 is inconsistent as such with Articles 2 and 11 of the AD Agreement .   
7.229  Japan also claims that USDOC acted incons istently with Articles 2 and 11 of the AD Agreement  
in two specific sunset review proceedings.  
1. Zeroing Procedures As Such In the Cont ext of Changed Circumstances Reviews And 
Sunset Reviews 
(a) Arguments of the Parties 7.230  Japan argues that in conducting changed circum stances reviews and sunset reviews USDOC 
relies on margins of dumping that have been calculate d in prior original investigations or periodic 
reviews using either model zeroing or simple zeroi ng.  It follows from the Appellate Body Report in 
US – Corrosion-Resistant Steel Sunset Review that if in a changed circum stances review under Article 
11.2 of the AD Agreement  or a sunset review under Article 11.3 of the AD Agreement  an authority elects 
to rely on a dumping margin, that margin must be consistent not only with Article 2.4 of the 
AD Agreement  but also with the requirements contained in  Articles 2.1 and 2.4.2 to determine dumping 
and dumping margins for the product as a whole.  By relying on margins of dumping calculated in prior proceedings on the basis of model zeroing or simple  zeroing, USDOC thus violates Articles 2.1, 2.4.2 
and 2.4 of the AD Agreement .  As a consequence, USDOC fails to comply with Articles 11.2 and 11.3 of 
the AD Agreement  and with the obligation in Article 11.1 to ensure that anti-dumping duties remain in 
force only as long as, and to the extent necessary, to counteract dumping.   
7.231  The United States  submits that the Panel should reject  Japan's "as such" claims regarding 
changed circumstances reviews and sunset review s because the "fair comparison" requirement in 
Article 2.4 of the AD Agreement  cannot be read to require offsets in all proceedings and the 
Appellate Body in US – Softwood Lumber V  only addressed the issue of the use of offsets in the context 
of the average-to-average methodology under Article 2. 4.2, which by its own terms is only applicable to 
investigations.  The United States also argues that  Japan has never demonstrated that in changed 
circumstances reviews and sunset reviews USDOC do es rely on margins of dumping calculated in prior 
proceedings.  Because of the prospective nature of  the determinations made by the USDOC in such 
reviews, these determinations are not dependent up on any specific magnitude of dumping.  Thus, Japan 
has failed to establish a prima facie  case with respect to the USDOCs likelihood determination in either 
a changed circumstances review or a sunset review.   
(b) Arguments of Third Parties 
7.232  The European Communities , Korea  and Norway  argue that since Article 2.4.2 of the 
AD Agreement  applies to reviews under Article 11, mainta ining zeroing procedures in the context of 
such reviews is inconsiste nt with Article 2.4.2.  Argentina  and Norway  also submit that maintaining 
zeroing procedures in the context of reviews under Article  11 is inconsistent with Article 2.4, and refer 
to the Appellate Body report in US – Corrosion-Resistant Steel Sunset Review
 as support for this 
position.  
                                                      
838 By "changed circumstances" review, Japan m eans a "review based on changed circumstances" 
provided for in Section 751(b) of the Tariff Act.  
839 By "sunset" review, Japan means a five-year review provided for in Section 751(c) of the Tariff Act.  WT/DS322/R          
Page 192  
 
(c) Evaluation by the Panel 
7.233  Japan's claims concern changed circumstances re views and sunset reviews, which are subject 
to, respectively, Articles 11.2 and 11.3 of the AD Agreement :  
11.2 The authorities shall review the need for the continued imposition of the duty, 
where warranted, on their own initiative or , provided that a reasonable period of time 
has elapsed since the imposition of the definitive anti-dumping duty, upon request by 
any interested party which submits positive information substantiating the need for a 
review.  Interested parties shall have the right to request the authorities to examine 
whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or r ecur if the duty were removed or varied, or 
both.  If, as a result of the review under this  paragraph, the authorities determine that 
the anti-dumping duty is no longer warranted, it shall be terminated immediately. 
11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive 
anti-dumping duty shall be terminated on a da te not later than five years from its 
imposition (or from the date of the most recen t review under paragraph 2 if that review 
has covered both dumping and injury, or under this paragraph), unless the authorities 
determine, in a review initiated before that  date on their own initiative or upon a duly 
substantiated request made by or on behalf of the domestic industry within a reasonable 
period of time prior to that date, that the e xpiry of the duty would be likely to lead to 
continuation or recurrence  of dumping and injury.  The duty may remain in force pending the outcome of such a review. ( footnotes omitted)  
7.234  Articles 11.2 and 11.3 are silent on the issue of whether in reviews contemplated by these 
provisions authorities are required to calculate margin s of dumping.  In this regard, the Appellate 
Body's Report in US – Corrosion-Resistant Steel Sunset Review states  the following on the relationship 
of Article 2 to Article 11.3 of the AD Agreement :  
"Article 2 sets out the agreed disciplines in the  Anti-Dumping Agreement  for 
calculating dumping margins.  As observed earlier, we see no obligation under 
Article 11.3 for investigating authorities to calculate or rely on dumping margins in determining the likelihood of continuation or  recurrence of dumping.  However, should 
investigating authorities choose to rely upon dumping margins in making their likelihood determination, the calculation of these margins must conform to the disciplines of Article 2.4.  We see no other provisions in the  Anti-Dumping 
Agreement  according to which Members may calcu late dumping margins.  In the CRS 
sunset review, USDOC chose to base its affirmative likelihood determination on 
positive dumping margins that had been pr eviously calculated in two particular 
administrative reviews.  If these margins were legally flawed because they were 
calculated in a manner inconsistent with Ar ticle 2.4, this could give rise to an 
inconsistency not only with Article 2.4,  but also with Article 11.3 of the  Anti-Dumping 
Agreement ."
840 
7.235  In US – Anti-Dumping Measures on Oil Country Tubular Goods , the Appellate Body noted: 
"As a separate matter, we refer to Mexico's characterization of the finding in 
paragraph 127 of the Appellate Body Report in  US – Corrosion-Resistant Steel Sunset 
Review .  According to Mexico, the Appellate Body  clarified in that appeal that, when 
an investigating authority 'uses a specific methodology that the Anti-Dumping 
                                                      
840 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127 (footnote omitted)                   WT/DS322/R 
Page 193 
 
 
 
 Agreement does not require, the authority must not apply that methodology in a manner that otherwise conflicts with the Ag reement.'  In fact, the Appellate Body 
found in  US – Corrosion-Resistant Steel Sunset Review  that, 'should investigating 
authorities choose to rely upon  dumping margins [in the context of a sunset review 
determination], the calculation of these marg ins must conform to the disciplines of 
Article 2.4.'  Thus, the Appellate Body Report in  US – Corrosion-Resistant Steel 
Sunset Review  does not stand for the proposition that a WTO-inconsistent 
methodology used for the calculation of a dumpi ng margin will, in and of itself, taint a 
sunset review determination under Article  11.3.  The only way the use of such a 
methodology would render a sunset review  determination inconsistent with 
Article 11.3 is if the investigating authority  relied upon  that margin of dumping to 
support its likelihood-of-dumping or lik elihood-of-injury determination."
841 
7.236  While Japan asserts that in changed circumstance s reviews and sunset reviews "USDOC relies 
on dumping margins calculated in a prior original inv estigation or a periodic review as the basis for the 
review determination"842, the United States asserts that Japan has not demonstrated that USDOC in fact 
relies on such margins in making its determinations in  these proceedings.  We recall that this claim of 
Japan is a claim with respect to the zeroing proce dures as such.  Specifically, what Japan challenges as 
such is USDOCs reliance, in changed circumstan ces reviews and sunset reviews, upon margins of 
dumping calculated in prior proceedings in a WTO-inc onsistent manner.  In lig ht of our view on the 
conditions necessary for a measure to be capable of being challenged as such, i.e. independently of its 
application in specific instances, and assuming that the reasoning of the Appellate Body on reliance of 
margins of dumping in the context of Article 11.3 is equally applicable to Article 11.2, a key factual question before the Panel is whether a rule or norm of general and prospective application exists by 
virtue of which USDOC relies on margins of dumpi ng calculated in prior proceedings to support its 
determinations in changed circumstances reviews and sunset reviews.   
7.237  In its First Written Submission, Japan refers to the Owenby Statement as factual support for its 
assertion that USDOC relies on these dumping margins in the context of changed circumstances reviews and sunset reviews.   
"I am unaware of a single changed circumstance or sunset review proceeding where the 
USDOC calculated a margin.  Where appli cable, the USDOC relies on the margins it 
calculated in earlier stages of the case as th e basis for these determinations.  Thus, 
changed circumstance and sunset determinati ons reflect the model or simple zeroing 
procedure used in the 'earli er' margin calculations upon which the determinations are 
based."
 843   
7.238  We also note that Japan rejects as follows the argument of the United States that it has not 
demonstrated that USDOC relies on margins of dump ing in changed circumstances reviews and sunset 
reviews:   
"The United States asserts in paragraphs 98-101 of its First Written Submission that 
Japan has failed to demonstrate that the ma gnitude of dumping cited and relied upon by 
the USDOC determinations is determina tive of its likelihood determinations.   
However, it is disingenuous for the Unite d States to argue that, in its sunset 
determinations, it does not rely on the dumping margins calculated for respondents in 
the initial investigations and periodic reviews in light of the fact that the US Congress 
                                                      
841 Appellate Body Report, US – Anti-Dumping Measures on Oil Country Tubular Goods,  para. 181.  
842 Japan First Written Submission, para. 154.  
843 Exhibit JPN-1, para. 24;  Japan First Written Submission, footnote 200. WT/DS322/R          
Page 194  
 
has expressly mandated that in sunset reviews, the USDOC " shall  consider ... the 
weighted average dumping margins determined  in the investigation and subsequent 
reviews ... ."  The mandatory nature of this obligation is further demonstrated by:  (1) 
the specific requirement in the USDOCs regulations that respondents report this information in their substantive responses to  the USDOCs notice of initiation of sunset 
reviews; and (2) the consistent citation by the USDOC, in its sunset determinations, to 
the previous margins in concluding that dumping will recur at the specified margin 
rates in the event that the anti-dumping order were revoked.  It is hard to imagine a clearer instance in which an authority " actually relies" on the specified types of 
information."
844     
7.239  Japan cites to the Final Results of Expedited Sunset R eviews: Anti-friction Bearings from 
Japan845  and to the Issues and Decision Memorandum for the Full Sunset Review of 
Corrosion-Resistant Carbon Steel Flat Products from Japan846 to support its assertion that USDOC 
consistently cites to "the previous margins in conc luding that dumping will recur at the specified margin 
rates in the event that the anti-dumping order were revoked".  
7.240  In our view, these arguments of Japan do not constitute a sufficient evidentiary basis to 
conclude that a rule or norm of general and prospective application exists by virtue of which USDOC 
relies on margins of dumping calculated in prior proceedings to support  its determinations in changed 
circumstances reviews and sunset reviews.   
7.241  First , Japan's response to Panel Question 60 only  addresses the issue of whether USDOC relies 
on historical dumping margins in sunset reviews .  It does not address the issue of whether USDOC 
relies on such margins in changed circumstances reviews .  With respect to changed circumstances 
reviews, the only information provided by Japan as factual support for its argument that USDOC relies on historical margins of dumping is the statement by Valerie Owenby in Exhibit JPN-1. In our view, a 
statement of that nature cannot be a sufficient basi s for a finding that a rule or norm of general and 
prospective application exists.  
7.242  Second , with regard to sunset reviews, we consider  that the fact that Section 752(c)(1) of the 
Tariff Act847 requires the USDOC to consider  "the weighted average dumping margins determined in 
                                                      
844 Japan Response to Panel Question 60, para. 104 ( footnotes omitted ). 
845 Exhibit JPN-22. 
846 Exhibit JPN-23.A 
 847 Section 752(c)(1) of the Tariff Act provides:  
 
 "(c) DETERMINATION OF LIKELIHOOD OF C ONTINUATION OR RECURRENCE OF DUMPING.  
  (1) IN GENERAL. - In a review conducted under Section 751(c), the administering authority shall 
determine whether revocation of an anti-dumping duty or der or termination of a suspended investigation 
under Section 734 would be likely to lead to continuation or recurrence of sales of the subject merchandise at 
less than fair value.  The administering authority shall consider - 
 
 ( A) the weighted average dumping margins determined in the investigation and subsequent reviews, and 
 
 (B) the volume of imports of the subject merchandise for the period before and the period after the issuance 
of the anti-dumping duty order or accep tance of the suspension agreement. 
  (2) CONSIDERATION OF OTHER FACTORS. - If good cause is shown, the administering authority 
shall also consider such other price, cost, market, or economic factors as it deems relevant. 
 
                   WT/DS322/R 
Page 195 
 
 
 
 the investigation and subsequent reviews" and that , as provided for in Section 752 (c)(3) of the Tariff 
Act, USDOC provides to the USITC "the magnitude of the margin of dumping that is likely to prevail if the order is revoked or the suspended investigation is terminated" does not automatically mean that 
USDOC "relies on" margins of dumping in making its determination as to whether "revocation of an 
anti-dumping duty order or termination of a suspe nded investigation would be likely to lead to 
continuation of or recurrence of sales of the subject merchandise at less than fair value".  As explained 
by the Appellate Body, USDOC relies on margins of  dumping calculated in prior proceedings when 
such margins form part of the basis to support  a determination of likelihood of recurrence or 
continuation of dumping.
848  That USDOC considers  dumping margins determined in the investigation 
and subsequent reviews and reports  to the USITC the margins likely to prevail in the event of 
revocation of an anti-dumping duty does not mean that  such margins are part of the rationale of 
USDOCs determinations regarding likelihood of continuation or recurrence of dumping.849  Therefore, 
Japan uses the term "rely on" in a sense that is diffe rent from the manner in wh ich it has been used by 
the Appellate Body.  Japan thus has failed to provi de factual support for its position that USDOC relies 
on historical margins of dumping in the sense in  which the Appellate Body used that term.  
7.243  We conclude that Japan has failed to adduce evid ence necessary to establish that a rule, norm or 
standard of general and pr ospective application exists by virtue  of which USDOC relies on margins of 
dumping calculated in prior proceedings to support  its determinations in  changed circumstances 
reviews and sunset reviews.  We emphasize that we do not make a factual finding that USDOC does not 
rely on such margins in this context.  Rather, we consider that based upon the evidence presented by 
Japan we cannot find that USDOC relies on such margin s.  We are mindful that we may not make a case 
for a party.   
7.244  In light of the foregoing, the Panel finds  that Japan has failed to make a prima facie  case that by 
maintaining zeroing procedures in the context of changed circumstances reviews and sunset reviews 
USDOC acts inconsistently with Articles 2 and 11 of the AD Agreement .  
2. "As applied" claims regarding two sunset reviews 
(a) Arguments of the Parties 
7.245  Japan  claims that anti-dumping measures adopted pursuant to two sunset reviews are 
inconsistent with the AD Agreement  and GATT 1994 because in these reviews the investigating 
authorities relied on dumping margins calculated usi ng the standard zeroing procedures.  This "as 
                                                                                                                                                                     
 (3) MAGNITUDE OF THE MARGIN OF DUMPING. - Th e administering authority shall provide to the 
Commission the magnitude of the margin of dumping that is likely to prevail if the order is revoked or the suspended investigation is terminated.  The administering authority shall normally choose a margin that was determined under Section 735 or under s ubsection (a) or (b)(1) of Section 751."
 
848 Supra , para. 7.235. 
849  Our view that the issue of the reporting by USDOC  of a margin of dumping to the USITC is distinct 
from the issue of  whether USDOC relies on previously calculated margins of dumping to support a determination 
in a sunset review is consistent w ith the analysis of the  panel in US – Anti-Dumping Measures on Oil Country 
Tubular Good.  That panel  observed that "we can find no provision of the AD Agreement , and Mexico has cited 
none, that requires such 'reporting' of a margin likely to pr evail – this appears to be an element of US law that is 
not derived from an element of the AD Agreement ".  Panel Report, US – Anti-Dumping Measures on Oil Country 
Tubular Goods , para. 7.83.  Thus, while we note that in the two cases referred to by Japan (the sunset reviews of 
anti-friction bearings from Japan and of corrosion-resistant carbon steel flat products from Japan) USDOC applied 
what it described as its normal policy of reporting to the USITC a margin of dumping from the original 
investigation, this does not constitute evidence of the exis tence of a normal policy with respect to the issue of 
whether USDOCs relies on margins of du mping calculated in prior proceedings to support  its determinations in 
sunset reviews. WT/DS322/R          
Page 196  
 
applied" claim of Japan concerns the Final Results of Expedited Sunset Reviews:  Anti-friction Bearings 
From Japan
850 and the Final Results of Full Sunset Review:  Corrosion-Resistant Carbon Steel Flat 
Products From Japan .851  
7.246  In support of this claim, Japan asserts th at, as confirmed by the Appellate Body in US – 
Corrosion-Resistant Steel Sunset Review , if an investigating authority, in making a determination under 
Article 11.3 of the AD Agreement  of the likelihood of continuation or recurrence of dumping, relies 
upon dumping margins, those margins must be calcula ted in conformity with Article 2.4 of the 
AD Agreement  and that where the authority relies upon dumping margins calculated in an original 
investigation and/or subsequent periodic reviews, t hose margins must thus be calculated for the product 
as whole through a fair comparison, as required by Articles 2.1, 2.4 and 2.4.2 of the AD Agreement .   
7.247  Japan argues that in the two sunset reviews at issue both the USDOC and the USITC relied 
upon on dumping margins calculated in earlier inves tigations and periodic reviews in reaching their 
likelihood determination.  As a consequen ce of the reliance on dumping margins calculated 
inconsistently with Articles 2.1, 2.4 and 2.4.2 of the AD Agreement , the determinations made in these 
sunset reviews are inconsistent with Articles 11.1 and 11.3 of the AD Agreement .  Because the measures 
adopted pursuant to these two sunset reviews are inconsistent with vari ous provisions of the 
AD Agreement , they are also in violation of Article 1 of the AD Agreement .  
7.248  The United States  rejects the claims of Japan regardi ng these two sunset reviews, insofar as 
they concern the determinations made by the US ITC, as speculative and unfounded because, assuming 
that the dumping margins reported to the USITC were  calculated in a manner inconsistent with the 
AD Agreement , it does not follow that the USDOC would have reported  different margins if it had used 
a different methodology.  The United States also di sagrees with Japan's assertion that in these two 
sunset reviews the USITC relied on the dumping marg ins reported by the USDOC.  The United States 
argues that the Appellate Body has recognized th at Article 11.3 does not require investigating 
authorities to rely on dumping margins in making thei r determination of likelihood of continuation or 
recurrence of dumping and that, likewise, Article 11. 3 does not create an obligation for investigating 
authorities to rely on dumping margins in making thei r determination of likelihood of continuation or 
recurrence of injury.  
(b) Evaluation by the Panel 
7.249  We examine first the factual evidence adduced by Japan as support for its assertion that in the 
two sunset reviews at issue the USITC and US DOC relied upon historical margins of dumping.  
7.250  As factual support for its assertion that the USITC relied on dumping margins calculated by the 
USDOC in previous proceedings, Japan has submitted excerpts from the USITC Determinations and 
Views  in the sunset reviews of certain b earings and of carbon steel products.   
7.251  With respect to both cases, Japan specifically refers to statements in footnotes that refer to the 
dumping margins determined by USDOC:  
"... Section 752 of the Act states that 'the  Commission may consider the magnitude of 
the margin of dumping' in making its determin ation in a five-year review investigation 
... .  The statute defines the 'magnitude of the margin of dumping' to be used by the Commission in five-year review investigations as 'the dumping margin or margins determined by the administering authority under section 1675a(c)(3) of this title.' ... 
Commerce found the following dumping margins:  TRBs – China, 0 to 29.40 percent; 
                                                     
 
850 64 Fed. Reg. 60275 (4 November 1999).  Exhibit JPN-22.  
851 65 Fed. Reg. 47380 (2 August 2000).  Exhibit JPN-23.                   WT/DS322/R 
Page 197 
 
 
 
 Hungary 7.42 percent; Japan, 0.71 to 20.56 percent (TRBs four inches and under), 36.21 to 36.52 percent (TRBs over four inches), 36.53 percent for all TRBs from NTN Bearing;  and Romania 8.70 percent;  BBs – France, 56.50 to 66.42 percent;  Germany, 31.29 to 132.25 percent;  Italy, 68.29 to 155.57 percent;  Japan, 2.55 to 106.61 percent;  
Romania, 39.61 percent;  Singapore, 25.08 percent;  Sweden, 105.92 percent;  and 
United Kingdom, 44.02 to 54.27 percent;  CRBs – France, 11.03 to 18.37 percent;  Germany, 52.43 to 76.27 percent;  Italy, 212.45 percent;  Japan, 4.00 to 51.21 percent;  Sweden, 13.69 to 27.38 percent;  and United Kingdom, 43.36 to 72.65 percent;  SPVBs – France;  39 percent;  Germany;  74.88 to 118.98 percent;  and Japan, 84.26 to 92.00 
per cent ... .";
852 and 
"...Section 752(a)(6) of the Act states that 'the Commission may consider the 
magnitude of the margin of dumping' in maki ng its determination in a five-year review 
investigation..  ...  The statute defines the magnitude of dumping to be used by the Commission in the five year review investig ations as 'the dumping margin or margins 
determined by the administering authority under section 1675a(c)(3) of this title'.  ...  
Commerce expedited its review of the anti-dumping order on corrosion-resistant from all subject countries.  It assigned sunset margins as follows:  Australia;  24.96 percent;  Canada, 11.71 to 22.70 percent;  France, 29.41 percent;  Germany, 10.02 percent;  Japan, 36.41 percent;  and Korea, 17.70 ...."
853 
7.252  These statements demonstrate that the USITC re called that the Tariff Act provides that the 
USITC may consider the magnitude of the margin of dumping in a five-year review and that, in this 
connection, the USITC noted the sp ecific margins of dumping determined by the USDOC.  Nothing in 
these statements indicates whether and how the USITC actually relied upon these margins as support 
for its conclusion that revocation of the anti-dumping duty orders was likely to lead to the continuation or recurrence of material injury within a reasonably foreseeable time.   
7.253  Regarding the sunset review of certain bear ings, Japan also refers to page 94 of the 
Determinations and Views of the Commission .  Although Japan has not identified the particular passage 
which it considers to be significant,  we note that th is page contains a comment, as part of a separate and 
dissenting opinion of one Commissioner, to the effect that USDOCs findings that duties had been absorbed on subject imports of ball bearings from France, Germany, Italy, Japan, Singapore and the 
United Kingdom, are reflected in the dumping marg ins that USDOC had determined would likely 
prevail if the anti-dumping duty orders were revoked.
854  However, there is no information before the 
                                                      
852 Certain Bearings from China, France, Germany,  Hungary, Italy, Japan, Romania, Singapore, 
Sweden, and the United Kingdom, Investigations Nos. AA-1921-143, 731-TA-341, 343-345, 391-397, and 399 
(Review); Excerpts from Volume I: Dete rminations and View s of the Commission , USITC Publication No. 3309, 
(June 2000), p.20, footnote 128.  Exhibit JPN-22.C. 
853 Certain Carbon Steel Products from Australia, Belgium, Brazil, Canada, Finland, France, Germany, 
Japan, Korea, Mexico, Netherlands, Poland, Romani a, Spain, Sweden, Taiw an and United Kingdom, 
Investigations Nos. AA-1921-197, 701-TA-231, 319-320, 322, 325-328, 340, 342, and 348-350, and 
731-TA-573-576, 578, 582-587, 604, 607-608, 612, and 614-618 (Review); Determinations and Views of the 
Commission , USITC Publication No. 3364 (November 2000), p.53, footnote 369.  Exhibit JPN-23.B.  Certain 
Bearings from China, France, Germany, Hungary, Italy, Japan, Romania, Singapore, Sweden, and the United 
Kingdom, Investigations Nos. AA-192 1-143, 731-TA-341, 343-345, 391-397 , and 399 (Review); Excerpts from 
Volume I: Determinations and Views of the Commission , USITC Publication No. 3309, (June 2000), p.20, 
footnote 128.  Exhibit JPN-22.C. 
854 Certain Bearings from China, France, Germany, Hungary, Italy, Japan, Romania, Singapore, 
Sweden, and the United Kingdom, Investigations Nos. AA-1921-143, 731-TA-341, 343-345, 391-397, and 399 (Review);  Excerpts from Volume I: Dete rminations and Views of the Commission , USITC Publication No. 3309, 
(June 2000), p. 94.  Exhibit JPN-22.C. WT/DS322/R          
Page 198  
 
Panel as to whether other USITC Commissioners al so considered that this factor supported an 
affirmative determination of like lihood of recurrence of material injury.  In the absence of such 
information, the mere reference to a comment made by one individual Commissioner is not sufficient to 
conclude that the USITC actually  relied upon dumping margins calculated in prior proceedings as 
support for its finding that revocation of the anti-dum ping order on imports of ball bearings from Japan 
would be likely to lead to continuation or recurrence of material injury to an industry in the 
United States within a reasonably foreseeable time.  
7.254  In light of the foregoing, we conclude that Jap an has not substantiated the assertion that, in 
determining that revocation of the anti-dumping orde rs on imports of ball bear ings from Japan and on 
imports of certain carbon steel products from Japan w ould likely lead to continuation or recurrence of 
material injury to an industry in the United St ates within a reasonably foreseeable time, the USITC 
actually relied upon dumping margins calculated by USDOC in prior proceedings.  
7.255  By contrast, there is sufficient evidence before us  to conclude that in making its determinations 
that revocation of anti-dumping order would result in continuation or recurrence of dumping, USDOC 
did rely on margins of dumping established in pr ior proceedings.  In the sunset review of 
corrosion-resistant carbon steel from Japan, USDOC considered that "the existence of dumping 
margins after the issuance of the order is highly prob ative of the likelihood of continuation or recurrence 
of dumping".855  Similarly, in the sunset review of anti-friction bearings from Japan, USDOC 
considered that:  
"In the instant proceedings, dumping margins above de minimis  continue to exist with 
respect to each of the orders.  Therefore, given that dumping has continued over the life 
of the orders, the Department determines th at dumping is likely to continue if the 
orders were revoked.  Because we have b ased this determination on the fact that 
dumping continued at levels above de minimis , we have not addressed the comments 
submitted by Torrington and MPB with respect  to 'good cause', nor have we addressed 
the arguments of other interested parties regarding the condition of the US market".856  
7.256  We also note, however, that since in these two sunset reviews USDOC relied upon the 
continued existence of margins of dumping after the issuance of the anti-dumping order as support for 
its determination of likelihood of continuation or recurrence of dumping, the margins of dumping relied 
upon by USDOC were margins calculated during pe riodic reviews, not margins calculated in the 
original investigations.  Since we have found that the AD Agreement  does not proscribe simple zeroing 
in periodic reviews within the meaning of Article 9.3, we cannot find that by relying on margins of 
dumping calculated in periodic reviews on the basis of simple zeroing USDOC acted inconsistently 
with the AD Agreement .   
7.257  In light of the foregoing, the Panel finds  that USITC and USDOC did not act inconsistently 
with Articles 2 and 11 of the AD Agreement  by relying on dumping margins calculated in previous 
proceedings in the sunset reviews of corrosion-r esistant carbon steel from Japan and of anti-friction 
bearings from Japan. 
                                                      
855 Issues and Decisions Memo for the Full Sunset Review of Corrosion-Resistant Carbon Steel Flat 
Products from Japan; Final Results , 2 August 2000, p.6   
856 Final Results of Expedited Sunset Revi ews: Anti-friction Bearings from Japan , 64 Fed. Reg. 
(4 November 1999), p. 60275 at 60278.                   WT/DS322/R 
Page 199 
 
 
 
 E. CONCLUSIONS AND RECOMMENDATION  
7.258  In light of our findings above, we conclude that: 
(a) By maintaining model zeroing  procedures in the context of original investigations 
USDOC acts inconsistently with Article 2.4.2 of the AD Agreement .  
(b) By using model zeroing in the anti-dumping investigation of imports of cut-to-length 
carbon quality steel products from Japan USDOC acted inconsistently with Article 2.4.2 of the AD Agreement .  
7.259  We also conclude that: 
(a) By maintaining simple zeroing procedures in  the context of original investigations 
USDOC does not act inconsistently with Articl es 1, 2.1, 2.4.2, 2.4, 3.1-3.5, 5.8 and 
18.4 of the AD Agreement , Articles VI:1 and VI:2 of the GATT 1994 and 
Article XVI:4 of the WTO Agreement.   
(b) By maintaining simple zeroing procedures in the context of periodic reviews and new 
shipper reviews USDOC does not act inconsiste ntly with Articles 1, 2.1, 2.4.2, 2.4, 
9.1-9.3, 9.5 and 18.4 of the AD Agreement,  Articles VI:1 and VI:2 of the GATT 1994 
and Article XVI:4 of the WTO Agreement.  
(c) By applying simple zeroing in 11 periodic reviews USDOC did not act inconsistently 
with Articles 1, 2.1, 2.4.2, 2.4, 9.1-9.3 of the AD Agreement  and Articles VI:1 and VI:2 
of the GATT 1994. 
(d) Japan has failed to make a prima facie  case that by maintaining zeroing procedures in 
the context of changed circumstances reviews and sunset reviews USDOC acts 
inconsistently with Articles 2 and 11 of the AD Agreement . 
(e) By relying on dumping margins calculated in  previous proceedings in the sunset 
reviews of corrosion-resistant carbon steel from Japan and of anti-friction bearings from Japan USITC and USDOC did not act incons istently with Articles 2 and 11 of the 
AD Agreement . 
7.260  We have also concluded, on grounds of judici al economy, that it is not necessary for the Panel 
to make findings on:  
(a) the claims of Japan that maintaining mode l zeroing procedures in the context of 
original investigations is inc onsistent with Articles 1, 2.1, 2.4, 3.1-3.5, 5.8 and 18.4 of 
the AD Agreement , Articles VI:1 and VI:2 of the GATT 1994 and Article XVI:4 of the 
WTO Agreement; and 
(b) the claims of Japan that the use of model zeroing in the anti-dumping investigation of 
imports of cut-to-length carbon quality steel pr oducts from Japan was inconsistent with 
Articles 1, 2.4 and 3.1-3.5 of the AD Agreement . 
7.261  Under Article 3.8 of the DSU, in cases where th ere is infringement of the obligations assumed 
under a covered agreement, the action is considered prima facie  to constitute a case of nullification or 
impairment of benefits under that agreement.  Ac cordingly, we conclude that to the extent the 
United States acted inconsistently with the provisions of the AD Agreement , it has nullified or impaired 
benefits accruing to Japan under the AD Agreement .  WT/DS322/R          
Page 200  
 
7.262  We therefore recommend  that the Dispute Settlement Body request the United States to bring 
its measures into conformity w ith its obligations under the AD Agreement . 
_______________