WT/DS264/RW 
 Page D-1 
 
 
  
ANNEX D 
 
 
ORAL STATEMENTS, 1ST/2ND MEETINGS 
 
 
Contents Page 
D-1 Oral Statement of Canada D-2 
D-2 Opening Statement of the United States at the Substantive Meeting of the 
 Panel D-8 
D-3 Oral Statement of the People's Republic of China D-16 
D-4 Third Party Oral Submission by the European Communities D-18 
D-5 Oral Statement by India D-26 
D-6 Oral Statement of Japan at the Third Party Session D-28 
D-7 New Zealand's Oral Statement D-36 
D-8 Oral Statement of Thailand D-39 
D-9 Closing Statement of Canada D-42 
D-10 Closing Statement of the United States at the Substantive Meeting D-45 
 WT/DS264/RW 
Page D-2  
 
  
ANNEX D-1 
 
ORAL STATEMENT OF CANADA 
 
15 November 2005 
  
I. INTRODUCTION 
 
1. Mr. Chairman, distinguished members of the Pa nel, on behalf of Canada I thank you for your 
continued efforts to help resolve this dispute.  Ca nada and the United States are here before you again 
because the United States, in the Section 129 Determin ation, continued to zero.  Consequently, this 
measure suffers from the same flaws as the Final Determination, and is inconsistent with 
Articles 2.4.2 and 2.4 of the Anti-Dumping Agreement .  
 2. Article VI of the GATT and Article 2.1 of the Anti-Dumping Agreement  define "dumping" and 
"margins of dumping" in relation to the product under investigation as a whole .  "Margins of 
dumping" calculated under Article 2.4.2 are for the entire product, as a whole, rather than for the intermediate results of sub-groups, or transaction- to-transaction comparisons.  As zeroing sub-groups 
or transaction-to-transaction comparisons requires an investigating authority to accord less weight to 
some export transactions, a dumping margin that is  calculated using zeroing cannot be representative 
of the product as a whole.  The Appellate Body found that zeroing violated Article 2.4.2 on this basis.  
Article 2.4 requires a "fair comparison", one that takes into account the full  difference between each 
comparison made under the transaction-to-transaction methodology.  
 
3. The United States asserts that zeroing is permitted under the transaction-to-transaction 
methodology.  However, the US argument that such  comparisons can themselves constitute "margins 
of dumping" is nothing more than an attempt to  revive its failed argument from the original 
proceedings, that sub-groups results constitute "m argins of dumping".  Article 2.4.2 requires the 
aggregation of intermediate comparisons to arrive  at "margins of dumping" for the whole product – 
whether these comparisons are sub-groups unde r the weighted-average-to-weighted-average 
methodology or transaction-specific comparisons under the transaction-to-transaction methodology.  The Appellate Body’s straightforward reasoning  applies with equal force to both of these 
methodologies.   
4. In the balance of this presentation, Cana da will demonstrate how the reasoning of the 
Appellate Body applies equally to the use of zeroi ng in the transaction-to-transaction methodology.  
Canada will then respond to US assertions concerning th e meaning of the term "margins of dumping".  
Finally, Canada will turn to the most recent US arguments concerning the Article 2.4 "fair 
comparison" requirement, including its argum ent about mathematical equivalence.   
 II. LEGAL ARGUMENT  
 
A. THE APPELLATE BODY’S INTERPRETATION OF "DUMPING" AND "MARGINS OF 
DUMPING" 
 
5. Consistent with Article VI of the GATT and Article 2.1 of the Anti-Dumping Agreement , 
Article 2.4.2 requires investigating authorities to  establish "margins of dumping" for the product 
under investigation as a whole .  An investigating authority does not treat the product as a whole when 
it zeros non-dumped transaction-to-transaction co mparisons and places greater weight on dumped 
comparisons.  The Appellate Body, in both EC – Bed Linen and in its decision in this dispute, ruled  WT/DS264/RW 
 Page D-3 
 
 
that "margins of dumping" are to be measured fo r the product as a whole and that zeroing violates 
Article 2.4.2 of the Anti-Dumping Agreement .1  
 6. The United States wrongly asserts that the Appellate Body report turned on the phrase "all 
comparable export transactions".  It claims that th is Panel must find that zeroing is permitted because 
this phrase does not appear in the final clause of the first sentence of Article 2.4.2.   
 7. The Appellate Body began its analysis by summarizing the arguments of the participants 
concerning the interpretation of "a ll comparable export transactions" and "margins of dumping".  It is 
these summaries, and not any other analysis, wh ich the United States relies on to support its 
contention that the Appellate Body decisi on hinged on the phrase "all comparable export 
transactions".    8. After summarizing the arguments of the par ticipants, the Appellate Body observed that 
Canada and the United States agreed that "all comp arable export transactions" should be taken into 
consideration, and that this consideration occurred within th e aggregation of the sub-group 
comparisons.  The Appellate Body then found that the actual disagreement between the participants 
related to differing interpretations of the terms "dumping" and "margins of dumping".
2  The Appellate 
Body thus based its analysis on the definitions of "dumping" and "margins of dumping", and not, as 
the United States insists, on the phrase "all comparable export transactions".    
9. The Appellate Body began its analysis of "dumping" and "margins of dumping" by examining 
the meaning of these terms under Article VI of the GATT  and Article 2.1 of the Anti-Dumping 
Agreement .  It interpreted these terms in paragraphs 91 to 100 of its report.  It was only after
 this 
analysis and interpretation of "dumping" and "margi ns of dumping" that the Appellate Body applied 
its legal interpretation of these terms to the use of zeroing under the weight ed-average-to-weighted-
average methodology in the Final Determination.  As a consequence, and contrary to US assertions, 
the Appellate Body did not limit its analysis of " dumping" and "margins of dumping" to the meaning 
of these terms under the weighted-average-t o-weighted-average methodology.    
 10. The Appellate Body has also made clear that its findings as to zeroing were based on the impact of zeroing on margins of dumping, regardless of the calculation methodology used by an 
investigating authority.  In both Corrosion-Resistant Steel and its report in this case, the Appellate 
Body has emphasized that zeroing fails to fully consider some export transactions.
3  The Appellate 
Body recognized that this failure leads to an "inherent bias" through the inflation of "margins of dumping".
4  This bias exists whether applied in the weighted-average-to-weighted-average 
methodology or otherwise.    
 
11. An investigating authority distorts the margin of dumping when it manipulates some "intermediate values" by setting them to zero.  It makes no difference whether the "intermediate 
values" in question come from transaction-to-tran saction comparisons as in this proceeding, or sub-
groups of the product under investigation as in the or iginal proceeding.  In both cases the intermediate 
values have not been properly aggregated into the margin of dumping for the product under 
                                                     
 
1 United States – Final Dumping Determination on Softwood Lumber from Canada, Report of the 
Appellate Body, WT/DS264/AB/R, adopted 31 August 2004, at paras. 93-96, 183(a). [“Appellate Body 
Report”]  European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India , 
Report of the Appellate Body, WT/DS141/AB/R, adopted 12 March 2001, at para. 53, 86(a). [“ EC – Bed 
Linen ”] 
2 Appellate Body Report, at para. 90. 
3 Ibid., at para. 101; United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant 
Carbon Steel Flat Products from Japan , Report of the Appellate Body, WT/DS244/AB/R, adopted 
9 January 2004, at para. 135. [ “US – Corrosion-Resistant Steel ”] 
4 Ibid. WT/DS264/RW 
Page D-4  
 
investigation as Article 2.4.2 contains no express la nguage that permits an investigating authority to 
disregard the results of multiple comparisons at the aggregation stage.
5  As a consequence, 
Article 2.4.2 prohibits zeroing under both of these calculation methodologies.  
B. THE UNITED STATES DISTORTS THE DE FINITION OF "MARGINS OF DUMPING"  
 
12. The United States argues that zeroing is perm itted because "margins of dumping" refers to 
transaction-specific comparisons, rather than "margi ns of dumping" for the product as a whole.  The 
United States advances four arguments to suppo rt its assertion that individual transaction-to-
transaction comparisons constitute separate "margins of dumping".   
 13. The United States first asserts that the meani ng of "margins of dumping" changes depending 
on the calculation methodology selected under Article 2.4.2.
6  The US argument assumes that the 
Appellate Body established the mean ing of "margins of dumping" only in the context of the weighted-
average-to-weighted-average methodology.  The Appellate Body’s reasoning, however, is not so 
limited.  Rather, the Appellate Body interpreted "mar gins of dumping" in the context of Article VI of 
the GATT and Article 2.1 of the Anti-Dumping Agreement  – provisions that apply to the entire Anti-
Dumping Agreement .7 
 14. The term "margins of dumping" also appears, without modification, in a single sentence that 
applies to both the weighted-average-to-weight ed-average and the transaction-to-transaction 
methodologies.
8  It is not possible, as a matter of gramma tical construction, for "margins of dumping" 
to have one meaning for one methodology and anot her meaning for the other, in this sentence. 
 15. In addition, the United States fails to recognise that the Appellate Body relied on Article VI:2, 
which includes a reference to price difference, in su pport of its finding that dumping margins must be 
calculated for the product as a whole.
9  Therefore, the term "price difference" refers to the product as a 
whole and Article VI:2 does not envisage a "mar gin of dumping" being established for individual 
transactions.10   
 16. The US interpretation of "margins of dumping"  is also inconsistent with its treatment of 
transaction-to-transaction comparisons in its S ection 129 Determination.  If these transaction 
comparisons were to constitute "margins of dumping" (and they do  not), Commerce would have had 
to assess whether each of these supposed "margins of dumping" was de minimis  in accordance with 
Article 5.8 of the Anti-Dumping Agreement .  Commerce has done nothing of the sort. 
 
17. The United States derives significance in a separate argument from the use of "margins of 
dumping" in the plural in Article 2.4.2.
11  The Appellate Body has already rejected this argument.12  
Article 2.4.2 refers to "margins" in the plural  because investigating authorities are required to 
calculate a dumping margin for each producer or exporter of the product under investigation.  
Article 2.4.2 does not refer to "margins of dumping" to sanction the existence of separate "margins of 
dumping" for tens of thousands of tran saction-to-transaction comparisons.     
 
                                                      
5 Appellate Body Report, at 100. 
6 Rebuttal Submission of the United States, at para. 37. 
7 See e.g., Appellate Body Report, at paras. 91-96. 
8 United States – Final Dumping Determination on Softwood Lumber from Canada, Report of the 
Panel, WT/DS264/R, adopted 31 August 2004, at para. 7.119, footnote 361. [“Panel Report”] 
9 Appellate Body Report, at para. 94-96. 
10 Rebuttal Submission of the United States, at para. 31. 
11 Ibid., at para. 36. 
12 Appellate Body Report, at footnote 158 and para. 115; and United States – Anti-Dumping Measures 
on Certain Hot-Rolled Steel Products from Japan , Report of the Appellate Body, WT/DS184/AB/R, adopted 
23 August 2001, at para. 118.    WT/DS264/RW 
 Page D-5 
 
 
18. Third, the United States relies on AD Article VI:1 in support of its assertion that specific 
transaction-to-transaction comparisons may constitute "margins of dumping".13  The US reliance on 
this AD Article is misplaced.  AD Article VI:1 prov ides that a resale price may be used to replace the 
export price where a related importer and exporter ra ise export prices to avoid the application of anti-
dumping duties.  This AD Article does not have the re levance that the United States ascribes to it.  It 
affects how export prices are calculated in a particul ar circumstance, not how they are compared to 
normal values to calculate "margins of dumping" for the product as a whole.  19. AD Article VI:1 also provides that where hidden dumping exists, the margin of dumping may be calculated on the basis of the price at which the goods are resold by the importer.  AD Article VI:1 
and Article 2.4.2 both use the phrase "on the basis of" in the same manner to refer to "the underlying 
support for a process".
14  Thus, investigating authorities may make a comparison "on the basis of" – in 
other words, by using – the resale export prices, rather than by using the export prices found on an 
invoice. Nowhere does this article, or any other, say that a transaction-to-transaction comparison 
constitutes a "margin of dumping". 
 
20. Fourth, the United States argues that Article 9.3 of the Anti-Dumping Agreement  
demonstrates that "margins of dumping" are transaction-specific comparisons.15  However, as the 
Appellate Body has observed, pursuant to Article 9. 2, the anti-dumping duties described in Article 9.3 
are "to be imposed in respect of the product  under investigation."16  The US claim that the reference to 
"anti-dumping duties" in Article 9.3 is transaction-sp ecific is thus at odds with the Appellate Body’s 
analysis.   
 
C. THE APPELLATE BODY ALREADY HAS REJECTED US ARGUMENTS CONCERNING 
"NEGATIVE MARGINS OF DUMPING" 
 
21. The United States attempts to repeat its cl aim that there is no such concept as a negative 
margin of dumping under the GATT or the Anti-Dumping Agreement .17  The Appellate Body has 
already rejected this argument.   
22. The United States asserted in the original pro ceedings that the results of multiple comparisons 
in which the weighted-average export price exc eeds the weighted-average normal value may be 
excluded because they do not involve "dumping".  The Appellate Body rejected this argument, 
finding that Commerce’s exclusion of these "non-du mped" or negative intermediate comparisons was 
not in accordance with Article 2.4.2.
18  Moreover, as we have just discussed, the results of transaction-
to-transaction comparisons, whether they are positive or negative, are not "margins of dumping", but 
rather are intermediate comparisons that must be taken into consideration for the product as a whole.  
My colleague, Mr. Owen, will now  continue our presentation. 
 
                                                      
13 Rebuttal Submission of the United States, at paras. 32-33. 
14 Panel Report, at para. 7.210; footnote 355.   
15 Rebuttal Submission of the United States, at para. 38. 
16 Appellate Body Report, at para. 94. 
17 Rebuttal Submission of the United States, at paras. 40-43. 
18 Appellate Body Report, at para. 102. WT/DS264/RW 
Page D-6  
 
D. ARTICLE 2.4 REQUIRES A FAIR COMPAR ISON BETWEEN THE NORMAL VALUE AND THE 
EXPORT PRICE  
 
23. Mr. Chairman, Members of the Panel, the view of the Appellate Body on the obligations 
imposed by Article 2.4 of the Anti-Dumping Agreement is unambiguous.  According to the Appellate 
Body, this provision sets out a general obligation to make a "fair comparison" between an export price 
and a normal value.19  Moreover, the Appellate Body has found th at this general obligation informs all 
of Article 2, and applies, in  particular, to Article 2.4.2.20 
 
24. Despite the unambiguous view of the Appella te Body, the United States continues to assert 
that Article 2.4 addresses only adjustments that are made prior to a comparison.21  In support of this 
assertion, the United States cites only excerpts that speak to the obligation to make the appropriate 
adjustments to ensure price comparability.  The United St ates ignores all other findings that 
demonstrate that the "fair comparison" requirement extends beyond price comparability22, and, in 
particular, to the substantive rules and concep ts relevant to calculating a margin of dumping. 23   
 25. A comparison that does not take into account the entirety of prices of some export transactions reflected in the sub-groups is not a fair comparison under Article 2.4.  Likewise, an 
investigating authority fails to make a "fair co mparison" when it does not take into account the 
entirety of all export prices in transaction-to-transaction comparisons. 
 26. Commerce failed in precisely this manner in the Section 129 Determination.  Faced with 
comparisons where the export price was greater th an the normal value, Commerce changed the actual 
price difference of these comparisons.  The results of  these manipulations do not take into account the 
full difference between the export price and nor mal value, and are not a "fair comparison". 
 
27. The United States is also incorrect when it asserts that Article 2.4 cannot prohibit zeroing 
because such a prohibition would lead to mathem atical "equivalence" in the outcomes of the 
weighted-average-to-weighted -average and weighted-avera ge-to-transaction methodologies.
24  T h i s  
assertion raises questions about the operation of the th ird methodology in Article 2.4.2 – the targeted 
dumping methodology.   
 28. The targeted dumping provision has never been applied by Canada or th e United States, and it 
is not clear exactly how the provision should wo rk in practice.  The only way mathematical 
equivalence would be achieved between the third me thodology and another woul d be if both were to 
examine the exact same data set.  But, examining th e same data set would defeat the entire purpose of 
the third methodology and effectively read it out of Article 2.4.2.    29. The third methodology is designed to address the problem of targeted dumping.  When an 
investigating authority determines that a pattern of  export prices differs significantly among different 
purchasers, regions or time periods it is permitt ed to use the third methodology, comparing the 
weighted-average normal value to the targeted transactions.  The targeted dumping methodology, 
therefore, by definition, would not be  applied to all export transactions.  
 
                                                     
 
19 EC –Bed Linen , at para. 59. 
20 Ibid. 
21 Rebuttal Submission of the United States, at para. 11. 
22 EC – Bed Linen , at para. 55; US – Corrosion-Resistant Steel , at para. 134; Egypt – Definitive Anti-
Dumping Measures on Steel Rebar from Turkey , Report of the Panel, WT/DS211/R, adopted October 1, 2002, at 
paras. 7.333-7.334; United States – Laws, Regulations and Methodology for Calculating Dumping Margins 
(Zeroing) , Report of the Panel, WT/DS294/R, circulated October 31, 2005, at para. 7.256. [“ US – Zeroing ”] 
23 US –Zeroing , at para. 7.262. 
24 Rebuttal Submission of the United States, at paras. 19-25.  WT/DS264/RW 
 Page D-7 
 
 
30. The US assumption that applying this methodol ogy to all transactions would also fail to 
address the problem of targeted dumping.  If the targeted export transactions were dumped at a 
hypothetical margin of 20% (as, for example are the transactions labelled with a letter "A" in US 
Exhibit 4), calculating an 8.79% margin on all tr ansactions will not address the targeted dumping.  
Rather, a 20% margin should be calculated for the exports fitting the pattern, and other exports should 
be analysed and treated appropriately. 
 31. Once an investigating authority has identifie d certain export transactions as different under 
the last sentence of Article 2.4.2, it is fair to  analyze them separately.  Because the problem of 
targeted dumping can be addressed by application of  the third methodology the use of zeroing in that 
methodology is not required.  
 32. Although Commerce has never applied the th ird methodology, US anti-dumping regulations 
concerning the targeted dumping methodology appear  to support this view.  They provide that 
Commerce will normally limit the application of th e weighted-average-to-transaction methodology to 
those sales that relate to targeted dumping.
25   
 33. The United States claims th at Canada accepted zeroing under the third methodology under 
Article 2.4.2.  As the United States well knows, Ca nada clarified with the Appellate Body that it did 
not take the position that zeroi ng is permitted under this methodology.
26 
 III. CONCLUSION 
 
34. To conclude, the Appellate Bo dy ruled against zeroing in an investigation.  The United States, 
claiming to conform, continued to zero by changing methodologies.  Canada has shown that the use of 
zeroing under the transaction-to-transaction methodolog y results in investigating authorities treating 
some export transactions as if they were less than they actually are.  Zeroing under the transaction-to-
transaction methodology fails to establish "margins of dumping" for the product as a whole.  Zeroing 
in this methodology suffers from the same deficienci es that led the original panel and the Appellate 
Body to find the use of zeroing inconsistent with Article 2.4.2 of the Anti-Dumping Agreement .  
Moreover, a margin of dumping calculated using zero ing cannot, by its very nature, satisfy the "fair 
comparison" requirement of Article 2.4 of the Anti-Dumping Agreement . 
 
35. Canada requests that this Panel find that Co mmerce’s use of zeroing under the transaction-to-
transaction methodology in the Section 129 Determinati on is inconsistent with  Articles 2.4.2 and 2.4 
of the Anti-Dumping Agreement ; and that, as a consequence, the United States has not brought its 
measures into conformity with the reco mmendations and rulings of the DSB.  
 
36. Mr. Chairman, Members of the Panel, we would like to thank you for your attention and, we will, of course, answer any questions you might have. 
                                                     
 
25 19 C.F.R. Section 351. 414(f)(2). (Exhibit CDA-6) 
26 Letter from R. Behboodi, First Secretary of the Mission of Canada to V. Hughes, Director, Appellate 
Body Secretariat (28 September 2004). (Exhibit CDA-7) WT/DS264/RW 
Page D-8  
 
  
 
ANNEX D-2 
 
OPENING STATEMENT OF  THE UNITED STATES 
AT THE SUBSTANTIVE ME ETING OF THE PANEL  
 
15 November 2005 
 
 1. Mr. Chairman and members of the Panel, the United States welcomes this opportunity to meet with you to discuss the issues raised in this dispute.  
2. The issues before the Panel are straightfo rward.  In the Section 129 Determination, 
Commerce took into consideration every export  transaction by each of the exporting companies 
analyzed.  For each transaction, Commerce compared  the transaction to the most appropriate normal 
value transaction to determine whether it was dumpe d, and so has fulfilled the US obligations under 
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994  
("AD Agreement").  For each company, the total amount of dumping found was based on the results 
of these transactions.  Canada would have us go further and use any non-dumped transactions to 
reduce or offset the total amount of dumping found with respect to the dumped transactions.  However, as we have explained in our submissions, there is no textual basis for such an obligation. 
 3. Following adoption of the Dispute Settlement  Body’s ("DSB") recommendations and rulings 
in this dispute
1, the United States Department of Comme rce ("Commerce") revised its methodology 
for establishing the existence of marg ins of dumping in its softwood lumb er investigation.  Instead of 
using the average-to-average methodology, it u sed a transaction-to-transaction methodology, as 
provided for in Article 2.4.2 of the AD Agreem ent.  Based on the transaction-to-transaction 
comparisons, some transactions were sold at less than normal value while others were not.  Commerce 
aggregated the results of those comparisons for which the export price was below normal value (that 
is, sales for which there was dumping).  It did not use non-dumped sales to offset that aggregation by the amount that the export price for those non-dum ped transactions exceeded the respective normal 
values.  The results of Commerce’s revised approach were set forth in a new determination, known as 
the "Section 129 Determination."
2 
 
4. The issues for this Panel are whether, pursuan t to Article 2.4.2 or 2.4 of the AD Agreement, 
any dumping that Commerce found in transaction-to -transaction comparisons was required to be 
offset by the results of non-dumped comparisons.  Ca nada has failed to establish the existence of such 
an obligation.  No such obliga tion exists in Article 2.4.2 because the transaction-to-transaction 
comparison provision differs significantly from the average-to-average comparison provision.  The 
phrase "all comparable export transactions," which was the basis for requiring an offset when using 
the average-to-average comparison methodology in the underlying dispute, is absent from the provision at issue in the present dispute.  
                                                     
 
1 Panel Report, United States – Final Dumping Determination on Softwood Lumber from Canada , 
(WT/DS64/R)(“ US - Softwood Lumber (Panel) ” adopted along with the Appellate Body Report 
(WT/DS64/AB/R)( “US - Softwood Lumber (AB) ”) on 31 August 2004. 
2 Notice of Determination Under Section 129 of th e Uruguay Round Agreements Act; Anti-Dumping 
Measures Concerning Certain Softwood Lumber Products From Canada , 70 Fed. Reg.  22,636 at 22,645 to 
22,646 (Dep’t Commerce 2 May 2005) (“Section 129 Determination”) (Exhibit CDA-1).  WT/DS264/RW 
 Page D-9 
 
 
 5. Moreover, the "fair comparison" provision in Ar ticle 2.4 of the AD Agreement did not require 
Commerce to apply the results of non-dumped comp arisons as an offset to dumped comparisons.  
Article 2.4 prescribes adjustments to be made before  transactions are compared, in order to ensure that 
those comparisons are fair.  It does not speak to the aggregation of results after  transactions are 
compared. 
 
6. Indeed, if Article 2.4 were construed as a ge neral requirement to provide an offset when 
aggregating the results of multiple comparisons, it would render the results of the targeted dumping 
comparison methodology, in the second sentence of Ar ticle 2.4.2, mathematically identical to the 
average-to-average comparison methodology.  Under the customary rules of interpretation of public 
international law, a treaty interpreter is to a void reading a provision in a way that would render 
another provision without effect.  Accordingly, Artic le 2.4 is not a basis for requiring an offset for 
non-dumped transactions.  
Standard of Review
 
 
7. Before we discuss in more detail the argumen ts supporting the consiste ncy of the Section 129 
Determination with Articles 2.4.2 and 2.4, it is important to take a moment to discuss the standard of 
review applicable to this proceeding.  The relevant standard of review for these issues is set forth in 
Article 17.6(ii) of the AD Agreement.  As we have explained, applying customary rules of 
interpretation, neither Article 2.4.2 nor 2.4 contains the obligation claimed by Canada. 
 
8. As the party asserting that the United States is in breach of Articles 2.4.2 and 2.4, Canada bears the burden of demonstrating that the Sectio n 129 Determination is in consistent with those 
provisions.  For the reasons set forth in our written submissions, and as we will elaborate in a moment, it has not met that burden. 
 
9. Canada does not dispute that it bears the burden of proof, and it recognizes that 
Article 17.6(ii) provides the applicable standard of review.
3  However, it construes that standard in a 
way that is not supported by the text.   In particular, Canada states that "the second sentence of 
[Article 17.6(ii)] provides that panels may dete rmine in exceptional circumstances that a measure 
rests upon a provision that has more than one ‘permissible’ interpretation."4 
 
10. We do not see this dispute as one where the Pa nel would find that either provision "admits of 
more than one permissible interpreta tion".  Rather, there is no textual basis to read either provision as 
including the obligation urged by Canada.  But even  aside from that error by Canada, Canada further 
errs by arguing for reading a reference to "exceptio nal circumstances" into Article 17.6(ii).  Quite to 
the contrary, it is not only in "e xceptional circumstances" that a panel "may determine . . . that a 
measure rests upon a provision that has more than on e ‘permissible’ interpretation".  Rather, in any 
case in which a panel finds that a relevant provision admits of more than one permissible interpretation it must  uphold a measure that rests on one of those permissible interpretations.  Indeed, 
the panel in the dispute Argentina - Definitive Anti-Dumping Duties on Poultry from Brazil
5 did not 
find "exceptional circumstances" when it applied Ar ticle 17.6(ii) and found that one permissible 
reading of the provision at issue meant that Brazil’s claim failed.  
 
11. Canada goes on to argue that the Panel may fi nd that a provision admits of more than one 
permissible interpretation only if "it could not discern the ordinary meaning of the provision".6  
                                                      
3 Canada Second Written Submission, paras. 5-7. 
4 Canada Second Written Submission, para. 5. 
5 Panel Report, Argentina - Definitive Anti-Dumping Duties on Poultry from  Brazil , WT/DS241/R, 
para. 7.341 (adopted 19 May 2003). 
6 Canada Second Written Submission, para. 6. WT/DS264/RW 
Page D-10  
 
 Again, this dispute does not involv e a situation where Canada’s propo sed reading is "permissible", but 
even aside from this, Canada’s cons truction finds no support in the text .  Canada seems to suggest that 
the first and second sentences of Article 17.6(ii) relate to each other in a hierarchical way, and that the 
second sentence applies only if the Panel is not able  to discern a provision’s interpretation under the 
rule prescribed by the first sentence.  But this simp ly is not so.  The second sentence plainly envisions 
that a finding that a provision admits of more than  one permissible interpretation will be the result of 
the application of customary rules of interpretati on of public international law.  The statement from 
the Appellate Body report in US - Hot-Rolled Steel  that Canada quotes is not to the contrary.
7 
 
12. Canada concludes its discussion of the standard  of review by denying that it "has departed 
from a ‘textual basis’ for its interpretation of Article 2.4.2 in this case".8  Yet, as we will see, 
Canada’s argument is not based on the text of Article 2.4.2, but instead rests primarily on an attempt to extend the conclusions of the panel and Appellate Body reports in the underlying dispute while 
ignoring that the conclusions were based on language  – specifically, the phrase "all comparable export 
transactions" – that is absent from the provision now at issue.  Significantly, it was Canada’s own 
arguments that urged the panel a nd Appellate Body to base its orig inal conclusions on that language.
9  
Now it has abandoned those text-based arguments in fa vour of a more vaguely defined construction of 
Article 2.4.2 that has no basis in text.  13. In short, Canada has urged on the Panel an erroneous construction of the applicable standard 
of review under which a panel may find an interpreta tion of Article 2.4.2 or 2.4 to be permissible only 
in the "exceptional circumstance" in which th e customary rules of interpretation of public 
international law do not permit the panel to discern th e meaning of those provisions.  Not only is this 
argument unsupported by the text, but it simply mak es no sense.  It suggests inexplicably that the 
Panel may find a permissible interpretation of AD Ag reement provisions not by applying customary 
rules of interpretation of public in ternational law, but rather, by ap plying some other, unidentified set 
of rules.  Accordingly, the Panel should reject Canada’s proposed c onstruction of Article 17.6(ii).  We 
turn now to Canada’s particular argum ents concerning Articles 2.4.2 and 2.4. 
 The Reasoning of the Appellate Body Concerni ng the Average-to-Average Methodology Does Not 
Extend to the Transaction-to-Transaction Methodology  
 
14. Canada’s principal Article 2. 4.2 argument is that "[t]he reas oning of the Appellate Body [in 
the underlying dispute] applies to the transaction-to-transaction methodology".10  Canada starts with 
the premise that, in its original determination,  Commerce made average-to-average comparisons 
based on sub-groups, which resulted in "intermediat e values".  According to Canada, the Appellate 
Body found that when Commerce aggregated the "intermediate values", it could not exclude any 
"intermediate values".  Canada then asserts that tr ansaction-to-transaction comparisons also result in 
"intermediate values".  Therefore, Canada concludes, when aggregating the "intermediate values" from transaction-to-transaction comparisons, Co mmerce must include all such "intermediate 
values".
11 
 15. Canada is wrong.  The fatal flaw in Cana da’s argument is that it completely ignores 
distinctions between the average-to-average  comparison methodology and the transaction-to-
                                                     
 
7 Canada Second Written Submission, para. 6 ( quoting  Appellate Body Report, United States - Anti-
Dumping Measures on Certain Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, para. 60 (adopted 
23 August 2001)). 
8 Canada Second Written Submission, para. 7. 
9 See US First Written Submission, para. 14 ( citing  Canada Appellee’s Submission (Exhibit US-1), 
para. 22); id., para. 19 ( citing  Canada Second Written Submission (Original) (Exhibit US-3), para. 142). 
10 Canada First Written Submission, par. 27. 
11 See Canada Second Written Submission, paras. 11-13.  WT/DS264/RW 
 Page D-11 
 
 
 transaction comparison methodology.  Canada incorrec tly assumes that, except for the identity of the 
things being compared (i.e., individual transacti ons rather than weighted averages of groups of 
transactions), the methodologies are the same and, therefore, any AD Agreement obligations found to 
apply to the first must apply to the second.  That  assumption is wrong for the following reasons.  It 
ignores a key textual difference between the two methodologies as provided in Article 2.4.2.  
Additionally, it ignores the fact that the term "mar gins of dumping" has a different meaning in the 
context of transaction-to-transaction comparisons th an it does in the context of average-to-average 
comparisons.   
 Canada ignores a key textual difference between the average-to-average methodology and the 
transaction-to-transaction methodology  
 
16. Article 2.4.2 provides for three alternative comparison methodologies in an investigation.  
The drafters used different language to descr ibe each different methodology.  Consequently, an 
interpretation applicable to one methodology cannot be presumed applicable to the other 
methodologies. 
 17. Under the first methodology, "the existence of  margins of dumping during the investigation 
phase" may be established "on the basis of a compar ison of a weighted average normal value with a 
weighted average of all comparable export tran sactions".  Under the second methodology, "the 
existence of margins of dumping during the inves tigation phase" may be established "by a comparison 
of normal value and export prices on a transaction-to-t ransaction basis".  Notably, the latter provision 
makes no reference to "all comparable export transactions".  18. In this dispute, Canada dismisses that textual difference as irrelevant.  In fact, it even goes so 
far as to claim that, in the underlying dispute, "[ t]he phrase ‘all comparable export transactions’ was 
not central to the Appellate Body’s findings that in termediate comparisons must be aggregated to 
arrive at margins of dumping".
12  But, that statement ignores the Appellate Body’s own language.  As 
we already have noted, the Appellate Body em phasized that the terms "all comparable export 
transactions" and "margins of dumping" "should be interpreted in an integrated manner".13 
 19. Canada would have this Pane l believe that the Appellate Body’s conclusion in the underlying 
dispute turned entirely on its interpretation of the term "margins of dumping", separate from the term 
"all comparable export transactions" and that, accord ingly, the Appellate Body’s reasoning can be 
applied automatically to this dispute.  However, as the Appellate Body made clear, it did not examine 
the term "margins of dumping" in isolation.  It examined that te rm to understand what it means to 
establish margins of dumping "on the basis of a co mparison of a weighted average normal value with 
a weighted average of all comparable export transactions".
14  
 20. In focusing its analysis this way, the Appella te Body followed the path originally suggested 
by Canada’s own argument.  Ca nada had not argued that the unde rlying panel report should be 
affirmed on the theory that "margins of dumping" can be established only when all of the results of 
comparisons – both dumped and non-dumped – under any of the Article 2.4.2 methodologies are 
aggregated.  Rather, Canada specifically argued that  the original panel’s conclusion was "consistent 
with the ordinary meaning of the requirement in Article 2.4.2 that ‘all comparable export transactions’ be included in a weighted-average to weighted-average dumping calculation".
15 
 
                                                      
12 Canada Second Written Submission, para. 16. 
13 US - Softwood Lumber (AB) , para. 85. 
14 See US - Softwood Lumber (AB) , para. 86. 
15 Canada Appellee’s Submission (Exhibit US-1), para. 22; see also  Canada Second Written 
Submission (Original) (Exhibit US-3), paras. 141-42. WT/DS264/RW 
Page D-12  
 
 21. Moreover, the Appellate Body made quite cl ear that it was avoiding interpreting the term 
"margins of dumping" with reference to any cont ext other than the average-to-average comparison 
methodology.  Indeed, the Appellate Body explicitly declined to consider the other two methodologies 
in Article 2.4.2 as relevant context for the interpretive question in the underlying dispute.
16  In short, 
given the clear focus of the Appellate Body’s analysis on the average-to-average comparison 
methodology, the Panel should reject Canada’s suggestion that it mechan ically apply that analysis to 
the textually different transaction-to-transaction comparison methodology.  22. Canada also asserts that Commerce must pr ovide offsets for non-dumped transactions because 
no AD Agreement provision expressly permits it not to do so.
17  In Canada’s view, offsetting is 
required absent any text explicitly allowing an inv estigating authority not to offset.  But as with 
Canada’s main Article  2.4.2 argument, this variation ignores a cr itical aspect of the analysis that led to 
the Appellate Body’s conclusion in the underlying dispute.  23. Under the Appellate Body’s analysis in the underlying dispute, it is not the case that the 
absence  of language prohibited  Commerce from declining to provide an offset when aggregating the 
results of average-to-average comparisons.  Rather, under the Appellate Body’s reasoning, the presence  of particular language – the phrase "all comparable export transactions" – required  
Commerce to provide an offset.  Since that language is not present in the provision now at issue, 
Commerce was not required to provide an offset in aggregating the results of transaction-to-
transaction comparisons. 
 
 Canada incorrectly assumes that "margins of dum ping" means the same thing in the context 
of the average-to-average methodology as it does in the context of the transaction-to-
transaction methodology  
 24. Additionally, without any basis, Canada assumes that the term "margins of dumping" means 
the same thing in the context of average-to-a verage comparisons as it does in the context of 
transaction-to-transaction comparisons.  As we explained in our second written submission, that 
assumption is manifestly incorrect.
18 
 25. The term "margin of dumping" may refer to the result of a transaction-to-transaction 
comparison.  This is evident from Article VI:2 of the GATT 1994, which refers to a "margin of 
dumping" as a "price difference".  As the term "price " is a transaction-specific concept, it must be the 
case that the difference in price between two part icular transactions may constitute a "margin of 
dumping".  Put another way, it is not the case that a margin of dumping is established only when the 
price differences resulting from multiple transaction- to-transaction comparisons for a given product 
are aggregated. 
 26. Canada relies heavily on the fact that in th e context of average-to-average comparisons, the 
Appellate Body found that "margin of dumping" is a concept pertaining to "the product under 
investigation as a whole".
19  But that finding was specific to that  context and cannot be generalized to 
other contexts.  In particular, it does not follow logically from the Appellate Body’s finding that a 
"price difference" – that is, the result of a comp arison between two transaction-specific facts – cannot 
be a "margin of dumping".  The fact that "margin of dumping" means something different in the transaction-to-transaction context than in the aver age-to-average context is a further reason for 
rejecting Canada’s suggestion that the Appellate Bo dy’s reasoning simply be applied automatically to 
the present dispute. 
                                                     
 
16 US - Softwood Lumber (AB) , paras. 104-05. 
17 Canada Second Written Submission, para. 21. 
18 See US Second Written Submission, paras. 29-39. 
19 See Canada Second Written Submission, paras. 9-10.  WT/DS264/RW 
 Page D-13 
 
 
  
 Canada’s argument is not supported by "concerns"  allegedly expressed by the Appellate Body  
 
27. Finally, Canada attempts to support its Ar ticle 2.4.2 argument with vague reference to 
"concerns" supposedly expressed by the Appellate  Body in a dispute that did not address the 
permissibility of declining to provide offsets in aggregating the results of transaction-to-transaction 
comparisons in the investigation phase of an anti-dumping proceeding.20  Of course, generally stated 
"concerns" that the Appellate Body may have expressed  in another dispute have absolutely nothing to 
do with the question before this Panel and, ind eed, were peripheral to the question before the 
Appellate Body in the dispute at  issue.  As such, they were dicta  and should not be relied upon by the 
Panel. 
 28. The Appellate Body report on wh ich Canada relies is the report in US - Corrosion-Resistant 
Steel Sunset Review .
21  At issue there was use of an aver age-to-transaction comparison methodology 
in an assessment proceeding, as opposed to us e of the transaction-to-transaction comparison 
methodology in an investigation, which is at issue here.  Since that dispute concerned an assessment 
proceeding, it did not involve  Article 2.4.2 at all, as that article pertains only to inv estigations.  Thus, 
it is difficult for us to see how Canada can rely on the report in that dispute to support its suggested 
interpretation of Article 2.4.2.  29. Because the Appellate Body in US - Corrosion-Resistant Steel Sunset Review  was examining 
an entirely different issue in an entirely different context, dicta from that dispute have no relevance to 
the dispute at hand.  Accordingly, the Panel should re ject Canada’s attempt to rely on such statements 
to support its Article 2.4.2 argument.  
The Section 129 Determination is Consistent With Article 2.4
 
 
 Canada fails to satisfy its burden  of proving its Article 2.4 claim.  
 
30. We turn now to Canada’s Article 2.4 argum ent, an argument that it makes in a mere six 
paragraphs in its two written submissions.  In its  first written submission, Canada simply quoted two 
fragments from the Appellate Body reports in EC – Bed Linen  and US – Corrosion-Resistant Steel 
Sunset Review , providing no actual analysis whatsoever.22  As we discussed in our first written 
submission, neither of the fragments quoted is rele vant to the present dispute.  As Canada made no 
other argument, it failed to meet its burden of proof.23 
 31. Remarkably, Canada’s second written subm ission added no argument to support its 
Article 2.4 claim.  Instead, Canada simply repeated quotes from the EC – Bed Linen  and US – 
Corrosion-Resistant Steel Sunset Review  reports.
24  With respect to US – Corrosion-Resistant Steel 
Sunset Review , Canada even went so far as to effec tively acknowledge that the Appellate Body 
statements on which it relies amount to dicta .  Thus, it stated that " regardless whether the 
United States actually zeroed  in US – Corrosion-Resistant Steel Sunset Review , the Appellate Body’s 
statement that zeroing introduces an ‘inherent bias’ remains valid".25  In other words, Canada 
concedes that the Appellate Body statement was not based on a measure before the Appellate Body 
but was instead dicta .   
 
                                                      
20 Canada Second Written Submission, paras. 25-26. 
21 See Canada Second Written Submission, para. 26. 
22 Canada First Written Submission, paras. 28-29 
23 US First Written Submission, paras. 23-26. 
24 Canada Second Written Submission, paras. 29-31. 
25 Canada Second Written Submission, para. 30 n.35 (emphasis added). WT/DS264/RW 
Page D-14  
 
 32. In effect, Canada is taking selected Appe llate Body statements, separating them from the 
contexts in which they were made, disregarding wh ether they pertained to conduct found "actually" to 
have occurred, and asking this Panel to treat those statements as determinative of the question now in 
dispute.  Such use of Appellate Body dicta  is improper.  Apart from the fact that there is no stare 
decisis  in WTO dispute settlement, and so such stat ements cannot themselves determine the question 
in this dispute
26, such out-of-context quotation of dicta  from a previous report does not contribute 
reasoning that provides useful guidance to this Panel.  
 Canada’s suggested interpretation of Article 2. 4 is erroneous, as it w ould render provisions 
of Article 2.4.2 redundant of one another.  
 33. Simply stated, Canada’s Artic le 2.4 argument is that "by definition, zeroing cannot yield a fair 
comparison".
27  This proposition does not distinguish among the three alternative comparison 
methodologies set forth in Article 2.4.2.  Canada does not state that "zeroing cannot yield a fair 
comparison" under the average-to-average and transac tion-to-transaction methodologies.  It just states 
that "by definition, zeroing cannot yield a fair co mparison".  On its face, this absolute proposition 
applies to all three methodologies in Article 2.4.2, including the average-to-transaction methodology – even though, in the underlying proceeding, Canada conceded that "zeroing is permitted under the third 
methodology".
28 
 34. It is precisely because Canada’s "fair comp arison" proposition applies indiscriminately to all 
three Article 2.4.2 comparison methodologies that it must be incorrect.  Under that proposition, it 
would be impermissible not to provide offsets when  aggregating the results of average-to-transaction 
comparisons pursuant to the targeted dumping comparison methodology in the second sentence of Article 2.4.2.  But providing offsets in that situa tion would lead to the same mathematical result as 
from applying the average-to-average methodology, as illustrated in Exhibit US-4.  This is not the 
outcome expected under the customary rules of interp retation of public interna tional law.  A provision 
of the AD Agreement should not be construed in  a manner that would render another provision 
without effect.
29 
 35. Moreover, Canada’s assertion that the Appellate  Body has interpreted the "fair comparison" 
requirement in Article 2.4 to require offsets in aggregating results under each of the Article 2.4.2 
comparison methodologies is flatly contradicted by the Appellate Body’s approach in the underlying 
dispute.  In its appeal from the original panel re port, the United States asked the Appellate Body to 
consider the transaction-to-transaction and average- to-transaction provisions of Article 2.4.2 as 
context for interpreting the average-to-average provi sion.  The Appellate Body declined to do so on 
the ground that this would require it to "exami n[e] first whether zeroing is permitted under those 
methodologies".
30  In other words, the Appellate Body did not take it to be a foregone conclusion that 
"by definition, zeroing cannot yield a fair comparison".  
                                                      
26 Appellate Body Report, United States - Anti-Dumping Measures on Oil Country Tubular Goods 
(OCTG) from Mexico , WT/DS282/AB/R, para. 129 (adopted 2 Nov. 2005) (“We observe, first, that the DSB 
rulings in US – Oil Country Tubular Goods Sunset Reviews  cannot, in and of themselves, ‘establish’ that there 
was no WTO-consistent basis for the USITC’s likelihood-of-injury determination in the case before us now, 
even though there may be factual similarities between the two cases.”) 
27 Canada Second Written Submission, para. 30. 
28 US – Softwood Lumber (AB) , para. 105 n.164. 
29 See United States - Laws, Regulations and Methodology for Calculating Dumping Margins 
(“Zeroing”) (“US - Zeroing (Complaint by EC) ”), para. 7.266 (circulated 31 Oct. 2005); see also Appellate 
Body Report, United States – Standards for Reformulated and Conventional Gasoline , WT/DS2/AB/R, p. 23 
(adopted 20 May 1996); Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, 
WT/DS10/AB/R, WT/DS11/AB/R, p. 12 (adopted 1 Nov. 1996); Panel Report, Egypt – Definitive Anti-
Dumping Measures on Steel Rebar from Turkey , WT/DS211/R, para. 7.277 (adopted 1 Oct. 2002).   
30 US – Softwood Lumber (AB) , para. 105.  WT/DS264/RW 
 Page D-15 
 
 
  
36. Finally, as the panel discussed in  the recently circulated report in US – Zeroing  (Complaint by 
EC), with respect to the so-called issue of "zeroing"  in assessment proceedings, any analysis of the 
"fairness" of a methodology should be discerned from a "standard of appropriateness or rightness 
within the four corners of the Anti-Dumping Ag reement which would provide a basis for reliably 
judging that there has been an unfair departure from that standard".31  To this end, the panel found that 
the fact that one assessment methodology may result in a higher margin than another may only be 
deemed "unfair" if the other methodology could be  determined to be the only "correct" methodology 
pursuant to the text of the AD Agreement.32 
 
37. The text of Article 2.4.2 explicitly permits the use of transaction-to-transaction comparisons 
to determine the existence of margins of dumping.   Article 2.4.2, however, contains no language 
requiring the aggregation of the results of transac tion-to-transaction comparisons, nor does it contain 
language addressing the manner in which such results ma y be aggregated.  To that extent, it is clear 
that there is no "standard of appropriateness or ri ghtness within the four co rners of the Anti-Dumping 
Agreement" which would provide a basis for this Pa nel to consider the fairness of denying offsets 
without engaging in the creation of rights or obligat ions in a manner inconsiste nt with Article 3.2 of 
the DSU.  
Conclusion
 
 38. In conclusion, we want to thank the Panel ag ain for this opportunity to address the issues in 
this dispute, and we look forward to responding  to any questions that the Panel may have. 
                                                     
 
31 US - Zeroing  (Complaint by EC), para. 7.260. 
32 US - Zeroing  (Complaint by EC), para. 7.260.   WT/DS264/RW 
Page D-16  
 
  
 
ANNEX D-3  
 
ORAL STATEMENT OF THE 
PEOPLE'S REPUBLIC OF CHINA 
 
16 November 2006 
  
 Mr. Chairman, distinguished members of the Pa nel, it is my great honour to appear before 
you today to present the views of the People’s Republic of China as a third party to this dispute. I do 
not intend to restate all the comments contained in our written submission.  Rather, considering that 
China has systemic interests in the correct interpretation on the Anti-Dumping Agreement, in this 
third party session, I would like to focus on the clarif ication of Article 2.4.2 and Article 2.4 of the AD 
Agreement as well as their application in this dispute. 
  First, with respect to 2.4.2 of the AD Agreem ent, China believes that the determination of 
dumping margin shall be based on the product at issue as a whole, rather than certain individual transactions that are conducted at a particular pri ce level.  However, in the underlying proceeding, the 
US DOC’s practice of zeroing in transaction-to-transaction comparisons, in fact, excludes those 
transactions in which the export prices are higher th an the normal value.  For the purpose of a fair 
comparison under Article 2.4.2, China believes that  the investigation authority should take into 
account "all comparable export transactions" in the entire process of determining the existence of 
dumping of the product, and should not be limited only to the weighted average-to-weighted average 
comparisons.  
 
 Further, China believes that since the AD Agreement contains no preference of one 
methodology over the other in Article 2.4.2 in rela tion to the weighted-average-to-weighted-average 
methodology and transaction-to-transaction methodology,  it should be interpreted to mean that those 
two methodologies shall follow the same reasoned prin ciple in an anti-dumping investigation, and it 
should also be reasonable to assume that adopting either of those methodology should not lead to 
materially different results.  Therefore, the zeroing practice prohibited in weighted-average-to-
weighted-average methodology should not be used  in the transaction-to-transaction methodology. 
  Second, with respect to 2.4 of the AD Agreem ent, China believes that Article 2.4 imposes on 
Members a general obligation of making a fair co mparison between export pr ice and normal value in 
determining the existence of dumping and calculating dumping margin.  It is clear that the zeroing 
methodology with the "inherent bias" will certainly  violate the requirement of "fair comparison" 
provided in Article 2.4 of the AD Agreement.    By adopting zeroing, the US DOC failed to ta ke into account all the export transactions, as we 
have mentioned and analyzed in our written submission.  As a result, it essentially distorted the fair 
basis for comparison.  China recalls that the Appe llate Body stated in the EU- Bed Linen that " we are 
also of the view that a compar ison between export price and normal va lue that does not take fully into 
account the prices of all comparable export transactions – such as the pr actice 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 by Article 2.4.2. " 
 
 In conclusion, China is of the view that, th e U.S. DOC’s practice of zeroing in transaction-to-
transaction comparisons in 129 Determin ation is inconsistent with Artic le 2.4.2 of the AD Agreement.   WT/DS264/RW 
 Page D-17 
 
 
 Besides, as the zeroing is formulated with an i nherent bias that distorts the comparison of normal 
value and export price, it is inconsistent with the "fair comparison" requirement in Article 2.4 of the 
AD Agreement.    Mr. Chairman, this concludes the third party st atement of the People’s Republic of China.  I 
hope China’s view in this dispute would prove to be helpful.  Thank you very much for your attention. WT/DS264/RW 
Page D-18  
 
  
 
ANNEX D-4 
 
THIRD PARTY ORAL SUBMISSION 
BY THE EUROPEAN COMMUNITIES 
 
16 November 2005 
  
TABLE OF CONTENTS 
 
Page
 
 
I. INTRODUCTION ................................................................................................................. 19  
II. INDIVIDUAL TRANSACTIONS ARE NOT NORMAL VALUES AND 
RESULTS OF INTERMEDIATE JUXTAPOSITIONS ARE NOT MARGINS OF DUMPING ..................................................................................................................... ..19
 
III. CONSISTENCY BETWEEN ARTICLES 2 AND 3 .......................................................... 19  
IV. TARGETED DUMPING....................................................................................................... 21  
V. SINGLE TRANSACTION ALLEGE DLY CAUSING INJURY ...................................... 21  
VI. NEGOTIATING HISTORY................................................................................................. 22  
VII. COMMENTS ON THE SECOND WR ITTEN SUBMISSIONS....................................... 23  
VIII.  CONCLUSION ..................................................................................................................... .25 
  WT/DS264/RW 
 Page D-19 
 
 
 I. INTRODUCTION 
 
1. Mr. Chairman, Members of the Panel, in this oral statement the European Communities 
would first like to explain why it does not agree with certain aspects of the written third party 
submission of New Zealand.  We would then lik e to comment on the second written submissions of 
the parties.  Finally, we would like to conclude by offering you a brief overview of what we see as the 
key issue in this case.  
II. INDIVIDUAL TRANSACTIONS ARE NOT NORMAL VALUES AND RESULTS OF 
INTERMEDIATE JUXTAPOSITIONS ARE NOT MARGINS OF DUMPING 
 
2. New Zealand appears to consider
1 that an investigating authority is entitled to take one 
transaction in the domestic market, in isolation, a nd, without further explanation, assume that the 
price at which that transaction is concluded is a "normal value"; and that when the transaction-to-
transaction method is used there are multiple nor mal values, and therefor e multiple margins of 
dumping.  The European Communities disagrees, for th e reasons set out in its written submission.  In 
particular, New Zealand does not give any meaning to th e word "basis", as it is twice used in the first 
sentence of Article 2.4.2;  New Zealand uses the pl ural ("transactions" or "n ormal values"), when the 
Anti-Dumping Agreement  uses the singular; and New Zealand seeks to insert the words "normal 
value" before the word "transaction" in the final phrase of the first sentence of Article 2.4.2, when 
those words do not in fact appear in the text of that provision. 
 
III. CONSISTENCY BETWEEN ARTICLES 2 AND 3 
 
3. One of the objections (but not the only objection) raised against zeroing in the EC-Bed Linen  
and US-Softwood Lumber V  cases was an internal inconsistency in the reasoning of the investigating 
authority : considering some expor ts to be "non-dumped" for the purposes of Article 2 (concerning the 
determination of dumping); yet part of the volume of "dumped" imports for the purposes of Article 3 (concerning determination of injury).  New Zealand attempts to respond to this objection by proposing 
what it refers to as a "symmetrical"
2 approach : if an export is considered non-dumped in the context 
of Article 2, it should also be considered  non-dumped in the context of Article 3. 
 
4. New Zealand’s reasoning, however, does not hold good.  
 5. First, New Zealand’s proposition addresses only one
 of the objections to zeroing raised in the 
previous cases (consistency between the analysis under Articles 2 and 3).  It does not address the 
arguments derived from the text of Articles 2.4 a nd 2.4.2, having regard to context, object and 
purpose, as set out in the written third party submission of the European Communities. 
 6. Second, New Zealand’s proposition is interna lly inconsistent, and inconsistent with the Anti-
Dumping Agreement , as we will now explain.  Before doing so, however, the European Communities 
would recall that New Zealand refers to three "s ub-methods" in the context of the transaction-to-
transaction method.  We will refer to these as the first, second and third T-T sub-methods – to avoid 
confusion with the three methods set out in Article  2.4.2 (weighted average-to-weighted average;  
transaction-to-transaction; and weighted average-to-transaction).   
                                                     
 
1 See, for example, New Zealand written third part y submission, para 3.04:  “The purpose of the 
transaction-to-transaction methodology is to compare export prices in each  transaction with the prices in 
comparable normal value  transactions”. (emphasis added) 
2 New Zealand written third party submission, para 3.08. WT/DS264/RW 
Page D-20  
 
 7. Let us consider the "first T-T s ub-method" referred to by New Zealand
3.  We assume a 
situation where we have one domestic transaction of 1 tonne at 100; 1 tonne of exports at 90, with a 
positive "dumping amount" of 10; and 1 tonne of exports at 105 with a negative "dumping amount" 
of 5.  In the context of Article 2, in New Zeala nd’s "first T-T sub-method", any negative intermediate 
results will "offset" any positive intermediate results  - in our example leading to a final "margin of 
dumping" of 2.56 % (5 expressed as a percentage of 195). Howeve r, in the context of Article 3, in the 
injury analysis, New Zealand would appear to be  suggesting that there should be a volume of 
"dumped" imports of 1 tonne; and the "magnitude of the margin of dumping" for those "dumped" 
imports will therefore be 11.11 % (10 expressed as a percentage of 90).4  In short, according to 
New Zealand, there are going to be two "margins of  dumping" – one for the analysis under Article 2; 
and a different one for the injury analysis under Ar ticle 3.  The European Communities does not agree 
that this is a legally perm issible interpretation of the Anti-Dumping Agreement .  Absent targeted 
dumping, for a given exporter there is one margin  of dumping, which is the same for both Article 2 
and Article 3.  
8. New Zealand cannot save its analysis by asserting,  with respect to the above example, that the 
"margin of dumping" in the injury analysis will in f act also be 2.56 %, because in order to achieve that 
result, New Zealand would have to bring into the calculation the volume of what it calls "non-dumped" transactions – which is precisely what it has said must be excluded from the injury analysis.  
In any event, if this is what New Zealand means, it is simply agreeing with the position of Canada and 
the European Communities. 
 
9. In short, New Zealand’s attempt to de -couple the volume of dumped imports from the 
magnitude of any margin of dumping must fail, b ecause these two concepts are, by definition, 
inseparable, since they both depend on the threshol d question of what is meant by "dumping" and 
"margin of dumping" – terms defined in Article VI  of the GATT 1994, which definitions are further 
elaborated in Article 2 of the Anti-Dumping Agreemen t. 
 10. The correct answer in the above example is much simpler, and the same under both Articles 2 
and 3. The margin of dumping is 2.56 % a nd the volume of dumped imports is 2 tonnes. 
 11. The "second T-T sub-method" referred to by New Zealand
5 is inconsistent with Articles 2.4 
and 2.4.2 for the reasons set out in the European  Communities written third party submission.  The 
European Communities would point out that this "s econd method" is likely to inflate the margin of 
dumping (in the example it would be 11.11%  (10 expressed as a percentage of 90)) even more than 
the "zeroing" used in the "third T-T sub-method" referred to by New Zealand.  
12. The "third T-T sub-method" referred to by Ne w Zealand is vitiated for the same reason as the 
"first T-T method".  It would result, under Article 2, in a margin of dumping of 5.13 % (10 expressed as a percentage of 195); and under Article 3 in a different
 margin of dumping of 11.11 %  (10 
expressed as a percentage of 90).  That does not constitute a permissible interpretation of the Anti-
Dumping Agreement . 
 
13. Finally, if, at the end of the day, all that Ne w Zealand is saying is that the margin of dumping 
for both dumping and injury purposes will be 2.56 %, 11.11 % or 5.13 % depending on which method 
is selected by the investigating au thority, then it is not saying very much at all.  The issue of 
                                                      
3 New Zealand written third party submission, para 3.04. 
4 New Zealand written third party submission, footnote 12 : “Where all transactions are included in the 
calculation [we take this to refer to the first T-T sub-method], the volumes of the goods with negative or de 
minimis  dumping margins are incorporated into the volume of non-dumped  goods for the purposes of assessing 
other causes of injury to the domestic industry.” 
5 New Zealand written third party submission, para 3.04.  WT/DS264/RW 
 Page D-21 
 
 
 symmetry between Articles 2 and 3 is only one part of the discussion.  Achieving such symmetry is a 
necessary, but not sufficient requirement, when calcu lating a lawful margin of dumping.  In fact, 
given that a margin of dumping is an objective concept, and cannot depend on the arbitrary or 
capricious selection of one methodology or anothe r by an investigating authority, all that 
New Zealand’s submissions illustrate is that its a pproach to zeroing in the context of the transaction-
to-transaction method cannot be correct.   
 
IV. TARGETED DUMPING 
 
14. New Zealand repeatedly refers to the con cept of "targeted dumping" in support of its 
proposition that, in the context of the transac tion-to-transaction method, individual export 
transactions, taken in isolation, may be consid ered to have been "dumped" and "targeted".6  T h e  
European Communities does not agree.  15. First, this assertion does not address the argu ments derived from the text, context and object 
and purpose, as set out in the European Communities written third party submission.  
 16. Second, in the view of the European Comm unities, it is the second sentence of Article 2.4.2 
that addresses the problem of so-called "targete d dumping".  That provision may be invoked when 
there is a "pattern" of export prices which diffe r significantly among different purchasers, regions or 
time periods, and the necessary explanation is provided.  A single transaction, taken in isolation, is not 
a "pattern". 
 
V. SINGLE TRANSACTION ALLEGEDLY CAUSING INJURY 
 
17. New Zealand asserts that a single "dumped" export transaction can cause injury.  There are 
two serious objections to that proposition. 
 18. The first objection is essentially a legal one.  The concept of dumping is defined in the Anti-
Dumping Agreement  entirely independently of the concept of injury.  If there is no dumping, the fact 
that there is one export transaction made at a low price and which penetrates the domestic market of the importing Member is entirely irrelevant:  if there is no dumping, there can be no dumping causing 
injury, and that is an end of the matter.  Just because an exporter competes successfully on price once 
in the domestic market of the importing Member, that fact is irrelevant to the question of what is 
meant by "dumping" under the Anti-Dumping Agreement . 
 19. The second objection is essentially an economic  one.  The European Communities agrees 
with New Zealand that the Anti-Dumping Agreement  is aimed at unfair competition, but not at fair 
competition
7;  and that "fair competition" includes (by definition) some  competition on price.  It 
necessarily follows that some basic appreciation of wh at is supposed to be competing with what is an 
essential part of any objective and even-handed analys is.  The Appellate Body has indicated that a 
"market" is "an area of economic activity in which buyers and sellers come together and the forces of 
supply and demand affect prices".8  It follows that once an investigating authority has defined the 
parameters of its investigation, particularly in  terms of product, region and time, it has essentially 
taken as a premise that the same forces of supply and demand affect all prices within those 
parameters.  Absent good reason (namely, a pattern of  targeted export transactions, as provided for in 
the second sentence of Article 2.4.2), there is no basi s for departing from that premise only for certain 
aspects of the analysis.  In these circumstances, to speak of one export tran saction causing "injury" to 
the domestic industry of the importing Member ma kes no more sense than to  speak of that same 
                                                      
6 For example, New Zealand written third party submission, paras 1.03, 3.12, 3.13, 3.14, 3.21. 
7 New Zealand written third party submission, para 3.01. 
8 Appellate Body Report, US-Upland Cotton , para 404. WT/DS264/RW 
Page D-22  
 
 transaction causing injury to the exporter itself.  Just as the concept of dumping must be assessed by 
reference to the reasonable market parameters est ablished by the investigating authority, so the 
concept of something causing injury by unfair comp etition can only be assessed by reference to all 
relevant events within those same parameters.
9 
 VI. NEGOTIATING HISTORY 
 
20. With regard to New Zealand’s invocation of  "preparatory work" within the meaning of 
Article 32 of the Vienna Convention, the European  Communities would point out that the meaning of 
Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement  – as outlined in the European Communities 
written third party submission, results from Article 31 of the Vienna Convention, and particularly 
from the ordinary meaning of the text, having regard  to context and object and purpose.  New Zealand 
is invoking the negotiating history not to "confirm" this  meaning, but to contradict it.  The application 
of Article 31 of the Vienna Convention does not leave the meaning "ambiguous or obscure" and does 
not lead "to a result which is manifestly absurd or  unreasonable", within the meaning of Article 32 of 
the Vienna Convention.  For this reason alone, New Zealand’s submission’s regard the negotiating 
history should be rejected.  21. With regard to Exhibit NZ-1, the European  Communities would point out that this document 
is not part of "the preparatory work of the treat y" within the meaning of Article 32 of the Vienna 
Convention – "the treaty" in this case being the Anti-Dumping Agreement .  It is not therefore a lawful 
basis for interpretation by this Panel. In fact, ba sed on the terms of referen ce in Annex B of Exhibit 
NZ-1, the document would not even appear to be part of the negotiating history of the Kennedy 
Round Code – the group being primarily "convene d for the purpose of exchanging information 
regarding the technical requirements of existing le gislation on dumping and countervailing duties in 
their respective countries".  
 
22. In any event, in substance, the document does not support New Zealand’s analysis.  It does 
not refer to a "transaction-to-transaction" method.   And the reference to "genuine dumping" may 
simply be taken as a reference to the type of targeted dumping for which provision has now been 
made in the second sentence of Article 2.4.2.  This document therefore requires no further 
consideration by this Panel. 
 
23. With regard to Exhibit NZ-2, the European  Communities would also point out that this 
document is not part of "the preparatory work of the treaty" within the meaning of Article 32 of the 
Vienna Convention, but merely an extract fro m a book expressing certain opinions, and published 
after the conclusion of the treaty.  It is not a lawful  tool for interpretation by this Panel, in support of 
the arguments contained in par as 2.03 to 2.05 of New Zealand’s written third party submission. 
 24. In any event, in truth, the negotiating history of the Anti-Dumping Agreement  fully confirms 
the analysis set out in the Eur opean Communities written third party submission.  It is summarised 
with tolerable accuracy for the purposes of the present discussion at page 1540 and footnote 951 of 
Exhibit NZ-2.  During the negotiations, concerns about the methods of co mparison between export 
price and normal value were driven by a desire to catch "targeted dumping" (precisely the alleged 
problem invoked by New Zealand in its written third party submission); and the eventual compromise 
consisted of the targeted dumping rules, based on purchasers, regions and time periods, contained in 
the second sentence of Article 2.4.2.  There is th erefore no basis for New Zealand’s assertion that the 
transaction-to-transaction method was intended by th e Members to systematically address allegedly 
"targeted" export transactions , considered in isolation
. 
                                                      
9 Appellate Body Report, US-Softwood Lumber V , paras 93 and 96 : dumping and margins of dumping 
“can be found only for the product unde r investigation as a whole, and cann ot be found to ex ist for a product 
type, model, or category of that product.”  WT/DS264/RW 
 Page D-23 
 
 
  
VII. COMMENTS ON THE SECOND WRITTEN SUBMISSIONS 
 
25. Mr. Chairman, Members of the Panel, we now  turn to the second written submissions of the 
parties, and particularly that of the United States. 
 
26. We think it is clear from the rebuttal submissi on of the United States that one of the issues 
that this Panel will need to carefully consider is wh ether or not an investigating authority is entitled to 
assume that the result of each transaction-to-tra nsaction juxtaposition is always a "margin of 
dumping";  the second aggregation stage of the calculation falling outside the scope of the Anti-
Dumping Agreement .  We think that we have demonstrated th at this point of view – analogous to that 
defended by the European Communities in the Bed Linen  case but dismissed by the Appellate Body - 
is erroneous:  particularly by po inting to the term "normal value";  and the word "basis";  and by 
explaining the utility of the transaction-to-transaction method, without zeroing.  The results of transaction-to-transaction comparisons are intermediate results , and it is only when they are 
aggregated, in a second stage of the calculation, that the margin of dumping for that exporter is 
calculated.  27. One of the highly significant consequences is that Canada is not asking for an "offset" or 
adjustment after  the calculation of a margin of dumping.
10  Rather, Canada is asking the United States 
to stop making a zeroing adjustment during the calculation of the margin of dumping; an adjustment 
that is not made for a difference affecting price comparability, and which is therefore, self-evidently, 
inconsistent with the third to fifth sentences of Article 2.4.  28. Mr. Chairman, we do not agree w ith the United States that price is necessarily  "a transaction-
specific fact".
11  First, it is perfectly possible that one transaction (or one invoice) incorporates more 
than one price, perhaps in relation to different m odels. Second, it is perfectly possible, and indeed 
quite common, for exporters and importers to c onclude framework contracts, expressly or by 
implication, indicating an export price that will remain more or less unchanged over time, unless one 
of the parties seeks to re-negotiate the commercial relationship.  Third, we do not agree that an 
investigating authority is entitled to assume  that, in a given market , price variations from one instant 
(region or purchaser) to the next are always  disconnected, in the sense th at they do not together 
constitute the forces of supply and demand that define that very market. 
 29. Rather, if an exporter suddenly increases price from one day to the next an importer will certainly question that and, absent good reason, may seek supplies elsewhere.  Similarly, if an importer is aware that the same product is being sold  to another purchaser at a lower price, it may be 
expected to question that and, absent good reason, se ek supplies elsewhere.  Similarly, if an importer 
is aware that the same product is being sold into an other region at a lower price, it may be expected to 
question that and, absent good reason, seek supplies elsewhere.  Furthermore, from the supply side 
point of view, an exporter’s decision on whether or not to continue to make the necessary investment 
in order to sell into a given export market will not be made on the basis of one transaction, but rather 
on the basis of general performance over time. In short, price is not "transaction specific", but market  
specific; and the whole sense of Article 2.4 of the Anti-Dumping Agreement  is that, if – and only if - 
the export market in reality consists of a number of  sub-markets (by purchaser, region or time), then – 
and only then – is an investigating authority en titled to calculate margins of dumping for each sub-
market.  
30. That brings us, logically, to the second pillar of the United States defence : the repeated and 
erroneous assertion that  Canada’s arguments necessarily  generate an "anomaly" that "cannot be 
                                                     
 
10 United States rebuttal, para 11.  
11 United States rebuttal, para 31 WT/DS264/RW 
Page D-24  
 
 reconciled" with the targeted dumping provis ions, because targeted dumping without zeroing 
necessarily  always produces the same result as the we ighted average-to-weighted average method.
12 
 31. The first and most obvious reason why this argument fails is the words "[s]ubject to the 
provisions governing fair comparison" in the firs t sentence of Article 2.4.2.  These include the 
provisions in the third to fifth sentences of Article 2. 4. If one provision (Article 2.4.2) is "subject to" 
another provision (the third to fifth sentences of Ar ticle 2.4), it means that, in case of conflict, the 
latter provision (the third to fifth sentences of Article 2.4) must prevail.
13  Consequently, it follows 
that the provisions of Article 2.4.2 cannot be interpre ted in such a way as to gi ve rise to a result that 
conflicts with the third to fifth sentences of Article  2.4.  Any such conflict must be "reconciled" in 
favour of the third to fifth sentences  of Article 2.4.  This  being so, the United States errs when it bases 
its reasoning on the assertion (erroneous in any event)  that Canada’s interpretation of Article 2.4 
cannot be "reconciled" with Article 2.4.2, given that the Anti-Dumping Agreement  itself contains a 
rule reconciling any such conflict in favour of  the third to fifth sentences of Article 2.4. 
 
32. This is confirmed by the preparatory work. The New Zealand I and II texts were not qualified 
by the words "[s]ubject to the provisions governing fair comparison in paragraph 2.4", thus leaving some ambiguity about the relationship between these provisions.  In the New Zealand III, Ramsauer text and in the final
 Dunkel Draft the Members decided to eliminate this ambiguity, by inserting the 
words "[s]ubject to the provisions governing fair comparison in paragraph 2.4", thus making it clear 
that, in case of conflict, the former provisions ar e to prevail.  This change marked a significant 
difference, and must be respected. 
 33. The second reason why the United States argume nt must fail is because it is based on the 
erroneous assumption that what an investigating authority must necessarily do in a targeted dumping 
analysis is the same as the zeroing adjustment under discussion in the present case.  But this is not so. 
Article 2.4.2, second sentence, does not specify in every detail how an investigating authority might 
conduct its targeted dumping analysis.  For exampl e, an investigating authority faced with an 
allegation of targeted dumping (perhaps by region) might first perform an intermediate disaggregated 
asymmetrical analysis in order to see whether or not th ere is, in fact, a pattern of export transactions at 
different prices into two different regions (A and B).  If there is a pattern of below normal value 
transactions to region A, but not B, the investiga ting authority might simply proceed to calculate a 
margin of dumping that takes that fact into consideration, but without necessarily making the kind of 
zeroing adjustment made by the US.  In other wo rds, it cannot be excluded that there might be 
different tools available, ranging from the calculatio n of the margin of dumping exclusively on the 
basis of the targeted sales (resulting in the complete exclusion of the high priced export transactions from the calculation (including from the denominator)), to  methods such as "zeroing".  This is, in fact, 
precisely what is foreseen in US municipal anti-du mping law.  Once again, this observation is, in 
itself, sufficient to settle the matter.  34. Third, in any event, even if the investig ating authority would combine the results of its 
analysis for regions A and B and impose an anti-dumping duty on all imports, having first "adjusted" 
the export price of region B, it is perfectly possible to reconcile this with Article  2.4.  Such adjustment 
would be made for a difference (between markets A and B) that affected price comparability (between 
markets A and B; and between AB and the exporter’s home market, C). 
 35. Finally, Mr. Chairman, distinguished Memb ers of the Panel, the European Communities 
considers that the United States argument based on Article 9 of the Anti-Dumping Agreement  is 
circular and without merit.  We take the view that when an anti-dumping duty is levied, an 
                                                     
 
12 United States rebuttal, paras 3, 8 and 19 to 25. 
13 Vienna Convention, Article 30(2) : “When a treaty speci fies that it is subject to … an earlier or later 
treaty, the provisions of th at other treaty prevail.”  WT/DS264/RW 
 Page D-25 
 
 
 investigating authority is still required to comply with the basic rules for calculating a margin of 
dumping, including those in Article 2.4.  We have a specific systemic interest in this matter, it being 
the subject of other DSU proceedings, which have not yet terminated.  
VIII. CONCLUSION 
 
36. Mr. Chairman, distinguished Members of the Panel.  The arguments in this case are becoming increasingly complicated.  So much so that, dare I say  it, one can hardly "see the wood for the trees".  
However, as is so often the case, the truth is both complex and simple at the same time; and to see that it is sometimes helpful to go back to first principles. 
 
37. As Jacob Viner, the father of the anti-dumping rules, observed:  
… sufficient justification is to be found in  the usage of the most authoritative writers 
and in the considerations of economy and precision of terminology for confining the 
term dumping to price-discrimination between national markets .  This definition, I 
venture to assert, will meet all reasonable requirements. 
… The one essential characteristic of dumping, I contend, is price-discrimination 
between purchasers in different national markets.
14 
38. And this is confirmed by the rep eated references to "markets" in the Anti-Dumping 
Agreement , notably in Article 2. 
 
39. The Anti-Dumping Agreement  is a framework agreement, a nd in interpreting it one has to 
think both economically and legally : to do one to the exclusion of the ot her is simply not to do justice 
to the Members’ objectives when they concluded it.  
40. Zeroing, in all its various forms, is essentia lly about market definition, and particularly about 
consistency, as the Appellate Body has made clear in the model zeroing cases.  The United States position in the present case is economic nonsense and legally contrived in the extreme.  Canada’s 
position reflects the true economic and le gal compromise agreed by the Members. 
  Mr. Chairman, Members of the Panel, thank you for your attention. 
                                                     
 
14 Jacob Viner, Dumping, A Problem in International Trade , First Edition 1923, Reprinted 1991, 
Chapter I, The Definition of Dumping , pages 3 and 4 (original emphasis, footnote omitted). WT/DS264/RW 
Page D-26  
 
  
 
ANNEX D-5 
 
ORAL STATEMENT BY INDIA 
 
16 November 2005 
 
  Mr. Chairman, Members of the Panel,   I thank you for having provided India an opportunity to present its views in this dispute. 
Mr. Chairman, the central issue before the Panel is the interpretation of Article 2:4:2 regarding 
determination of dumping margin when using th e methodology of comparison of normal value and 
export prices on a transaction to transaction basis.  Our statement would therefore be limited to the issue of the legal interpretation of Article 2:4:2 an d its interplay with Article 2:4 of the Anti-Dumping 
Agreement.  
 The US has asserted that there is no textual basis to support Canada’s argument that zeroing 
cannot be applied in the transaction to transaction methodology.  The US asserts that Canada ignores 
the textual difference between the provision at issu e in the earlier determination using weighted 
average to weighted average (W to W) methodolog y and the provision now at issue in the transaction 
to transaction (T to T) comparison.  Secondly,  the US notes that Canada assumes, without 
explanation, that when it comes to the aggregati on of multiple values, there is no difference between 
the average to average methodology and th e transaction to transaction comparison.  
  In India’s view, there is no support for the US assertions in the text of Article 2.4.2.  The text does not support the US stand that the transactions giving negative values of dumping margin are to 
be ignored or treated as zero while aggregating du mping margins of intermediate transactions for 
determining a single dumping margin fo r the product under consideration. 
  Article 2.4 mandates that a fair comparison sh all be made between the export price and the 
normal value.  This is an overa rching obligation for determining dumping margin and the comparison 
methodology to be used under Article 2.4.2.  Fa ir comparison between export price and the normal 
value embodies comparison of all transactions unless the text states otherwise.  
  In  EC-Bed linen dispute case , the Appellate Body held that by not taking into account all 
comparisons, the practice of zeroing does not provide a fair comparison between export prices and normal value and is therefore inconsistent with Article  2:4 of the AD Agreement.  In this dispute, the 
Appellate Body also held that "w hatever the method used to calculat e the margins of dumping… these 
margins must be, and can only be established fo r the product under investigation as a whole".  
  In the light of the above, the interpretation of  the US to ignore those transactions that give 
negative value of dumping margin appears flawed as  this does not lead to fair comparison as per the 
obligation under the first sentence of Article 2:4, which requires that, "A fair comparison shall be 
made between the export price and the normal value…".  
  In a situation, where on comparison of individual  transactions at intervening stage, it is found 
that all the transactions show the export price to be higher than the normal value, the result would be a 
negative dumping margin.  This dete rmination however will take into account all the transactions that 
were giving negative dumping margin at the interveni ng stage.  In this process, thus, the investigating 
authority would have taken into consideration all the transactions.  In another situation, by extending  WT/DS264/RW 
 Page D-27 
 
 
 the same logic, where some transactions may give  positive margins and some transactions may give 
negative margins at intervening stage, the overall aggregation of dumping margins for determining a 
dumping margin  for the product as a whole, shall take into  account the results of all the comparisons 
and not only of those that give positive dumping margins.   
 The US determination in ignoring the margins of those transactions that give negative values 
in the intermediate comparisons is incorrect and is not supported by the text of Articles 2:4 and 2:4:2.  
 WT/DS264/RW 
Page D-28  
 
  
 
ANNEX D-6 
 
ORAL STATEMENT OF JAPAN 
AT THE THIRD PARTY SESSION 
 
16 November 2005 
  
I. INTRODUCTION 
 
1. Mr. Chairman, Members of the Panel, Japan w ould like to thank you, and the Secretariat, for 
your efforts in preparing for this hearing.  Mr. Chairman, may I also join previous speakers by 
congratulating on your assuming the chairmanship of this panel.    2. In its Opening Statement this morning, Japan will summarize for you, briefly, why the 
United States’ Section 129 Determination is in consistent with its obligations under the Anti-Dumping 
Agreement .  Japan will also respond to certain arguments advanced by the United States and 
New Zealand in their written submissions.  
II. DUMPING DETERMINATIONS ARE FOR THE PRODUCT UNDER 
INVESTIGATION AS A WHOLE 
 3. In its Third Party Submission, Japan outlined that the Anti-Dumping Agreement  and the 
GATT 1994 require authorities to calculate the existe nce and amount of "dumping" for the "product" 
under investigation.  This obligation derives from the text of both Article 2.1 of the Anti-Dumping 
Agreement  and from Article VI:1 of the GATT 1994, each of which refers to the dumping of a 
product.
1  In turn, because dumping is determined for a product, under Article 2.4.2, the margin or 
amount of that dumping must also be determined for the product as a whole.   
 4. This text-based obligation is in keeping with the fact that the authorities themselves determine 
the product scope of the investigation.  Having done so, the Agreement  requires that they be consistent 
throughout the investigation and, indeed, also in imposing duties.  The product under investigation, as 
a whole, remains the central focus of the pro cess.  The Appellate Body put it in these terms: 
 
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 investigation. 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 Anti-Dumping Agreement , an 
antidumping duty can be levied only on a dumped product. For all these purposes, the 
product under investigation is treated as a whole …
2 
                                                      
1 Appellate Body Report, US – Softwood Lumber V , para. 93.  See also paras. 96, 97, 98, 99 and 102; 
Appellate Body Report, EC – Bed Linen , para. 53, following Panel Report, EC – Bed Linen , para. 6.118. 
2 Appellate Body Report, US – Softwood Lumber V , para. 99.  WT/DS264/RW 
 Page D-29 
 
 
 5. Ignoring the Appellate Body’s  interpretation, the United States contends that, for purposes of 
the T-to-T comparison, there is no obligation to  calculate a margin for the product as a whole.3  This 
is plainly wrong and, in substance, invites the Panel to reverse panel a nd Appellate Body reports 
adopted by the DSB.  The United States’ argument also seeks to destroy the consistency between the 
product scope of dumping determ inations and the resulting anti-dumping duties.  On the 
United States’ view, dumping determinations deliber ately confined to a sub-grouping of a product – 
even a single transaction4 – could justify the imposition of duties on the product as a whole. 
 6. The United States advances four argum ents in support of its position.  First , relying on the 
word "price" in Article VI:2, the United States argues that margins of dumping may be transaction-
specific because they involve a comparison of "price s" that are fixed on a transaction-specific basis.
5  
Mr. Chairman, this is an absurd argument.  The fact that prices are usually determined in the 
marketplace on a transaction-specific basis does not dictate that the words "product", "dumping" and 
"margin of dumping" have a transaction-specific ordinary meaning under the Vienna Convention .   
 
7. To the contrary, the text of Article VI demons trates that "the price difference" in question is 
that for the "product", not for individual transactions.  Article VI:2 defines the margin of dumping as 
the price difference that must be "determined in accordance with the provisions of paragraph 1".  
Article VI:1, in turn, provides that "[f]or the purpo se of this Article", "a product" is dumped "if the 
[export] price of the product" is less than the comp arable domestic price "for the like product" or less 
than "the cost of production of the product".  This definition of "dumping" in relations to "a product" 
shows that the dumping determination is based on  a comparison of prices for the product.  This 
interpretation is further confirmed by the imme diate context provided in the first sentence of 
Article VI:2, which states that "a n anti-dumping duty" levi ed on "any product" shall not exceed "the 
margin of dumping in respect of such product ".  This provision, therefore, defines the "margin of 
dumping" in terms of the product, not individual transactions.   
 
8. Second , 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.  Specifically, the provision addresses the situation where the import prices for certain export transactions are unr eliable because of an association between the 
exporter and the importer; for these transactions, th e authorities are permitted to use downstream 
resale prices, in the importing Member, in calculating the export price.  The Ad Article does not 
purport to alter the requirement in Article VI:1 th at dumping, and margins of dumping, are determined 
for a product.   
9. The rule in Ad Article VI:1 is now reflected in Article 2.3 of the Anti-Dumping Agreement .  
As the drafters did in the Ad Article, they have, again, incorporated the rule into the treaty without 
disturbing the requirements in Article 2.1 of the Agreement  and Article VI of the GATT 1994 that a 
margin of dumping must be determined for the product under investigation as a whole.  
 10. Third , the United States asserts that the use of the plural "margins of dumping" in 
Article 2.4.2 means that there can be multiple margins for each T-to-T comparison result.  The 
United States is simply recycling an argument it has advanced, and lost, in the original proceedings in 
this dispute
6.   
                                                      
3 United States’ Rebuttal Submission, paras. 26 and 27. 
4 See, for example,  United States’ Rebuttal Submission, paras. 31 and 35. 
5 United States’ Rebuttal Submission, para. 31. 
6 Rejecting this interpretation, the Appellate Body held: “‘margins of dumping’ is in the plural because 
a  single investigation may involve establishing margins of dumping for a number of exporters or producers, and 
may relate to more than one country.”  Appellate Body Report, Softwood Lumber V, para. 115.   WT/DS264/RW 
Page D-30  
 
  
11. In fact, nothing in the text of Article 2. 4.2 supports the United States’ view.  The term 
"margins of dumping" in that provision refers to the "magnitude of dumping".
7  Because Article 2.1 
states that "dumping" exists only for the "product" as whole, the measurement of the amount of that "dumping" can also be calculated only for the "pr oduct" as a whole.  Furthermore, as the opening 
clause of Article 2.1 indicates, the definitions of margin of dumping set forth in Article 2.1, and the 
"margin of dumping", apply "to the entire Agreemen t, which includes, of course, Article 2.4.2".
8  The 
United States also argues that Article 9.3 confirms its views that the "margin of dumping" can be 
determined, for purpose of duty assessment, for a single export transaction.  However, Article 9.3 refers to "margins of dumping" and expressly stat es that margins calculated for purposes of reviews 
must be established consistently with Article 2.  Thus, the definition of "dumping" in Article 2.1 
governs the determination of dumping ma rgins in reviews in Article 9.3. 
 12. The United States argues incorrectly that th e Appellate Body’s interpretation of the term 
"margins of dumping" in the underlying proceeding is limited to situations involving the W-to-W 
comparison under the first sentence of Article 2.4.2 of the Agreement .
9  However, the structure of the 
Appellate Body’s analysis involved separate cons ideration 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"10 regarding the phrase "all 
comparable export transactions".  It therefore shifte d 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 Anti-Dumping 
Agreement .  It relied primarily on the definition of the term "dumping" in Article 2.1 and Article VI, 
that "applies to the entire"11 Anti-Dumping Agreement .  Moreover, in concluding that "dumping" and 
"margins of dumping" are determined for the produc t, the Appellate Body never referred to the phrase 
"all comparable export transactions".  Thus, the United States ignores entirely the detailed structure of the Appellate Body’s reasoning in order to reach  a conclusion not supported by that reasoning. 
 
13. Fourth , and finally, contrary to the United Stat es’ contention, there was no "subsequent 
practice" under the GATT 1947 indicating that the GA TT Contracting Parties agreed that the term 
"margin of dumping" referred to transaction-specific margins.
12  As the Appellate Body stated, "[t]he 
purpose of treaty interpretation is to establish the common  intention of the parties to the treaty".13 The 
practices of some of the Contracting Parties to the GATT 1947, or their action or inaction that the 
United States claims to be th e "circumstance of the conclusions of the GATT 1994 and the Anti-
Dumping Agreement"14 cannot qualify as such, because they hardly "help[] to discern what the 
common intentions of the parties were at the time of the conclusion with respect to the treaty or 
specific provision"15, in this case,  the meaning of the term "margin of dumping".  The United States’ 
arguments regarding a dopted GATT panel reports16 are also misplaced because they do not establish 
"subsequent practice" under the GATT 1947 and they are not binding in WTO law.17 
 
                                                      
7 Appellate Body Report, US – Softwood Lumber V , para. 96. 
8 Appellate Body Report, US – Softwood Lumber V , para.93.. 
9 United States Rebuttal Submission, para. 37.. 
10 Appellate Body Report, US – Softwood Lumber V , para. 90. 
11 Appellate Body Report, US – Softwood Lumber V , para. 93. 
12 The exacting legal standard for establishing th e existence of subsequent practice under the WTO 
agreements and the GATT 1947 is set forth in Appellate Body Report, US – Gambling Services , paras. 191 and 
192.  See also  Appellate Body Report, EC-Chicken Classification , paras. 256 – 258.    
13 Appellate Body Report, EC – Computer Equipment , para. 93 (emphasis original).   
14 See United States Rebuttal Submission, para. 34. 
15 Appellate Body Report, EC – Chicken Classification,  para. 289. 
16 United States’ Rebuttal Submission, para. 34. 
17 Appellate Body Report, Japan – Alcoholic Beverages II , page 13.  WT/DS264/RW 
 Page D-31 
 
 
 14. Mr. Chairman, Japan will now turn to New Z ealand’s arguments on this issue.  New Zealand 
appears to recognize that dumping margins must be de termined for the product as a whole.  Indeed, it 
states explicitly that the T-to-T methodology must involve a selection of transactions "which are representative of the ‘product as a whole’."
18 
 
15. However, New Zealand does not accept the l ogic of its own arguments.  Elsewhere in the 
submission, it sets forth three alternative methods of conducting a T-to-T comparison, two of which 
involve the systematic disregard of all negativ e T-to-T comparison results.  Specifically, under 
New Zealand’s second T-to-T method, it says, " only dumped transactions are included in the 
determination".  And, under the third method, zeroi ng is used to eliminate negative results from the 
calculation of the total amount of dumping.19 
 16. New Zealand’s approach is tantamount to a determination that the excluded export 
transactions do not form part of the "product".  However, the export transactions producing negative 
and positive comparison results are all part of th e "product" and all comparison results must be 
included in the overall determination. 
 17. New Zealand also argues that the way a dumpi ng margin is calculated must be understood in 
light of the way an injury determination is conducted.
20  For New Zealand, in an injury determination, 
"only those transactions found to be dumped are taken into account ".21  In consequence, it says, "to 
preserve symmetry, the determination of the marg in of dumping may be based only on those dumped 
transactions so taken into account".22 
 18. However, contrary to these argu ments, injury determinations are not based solely on 
transactions found to be dumped.  As noted above, in US – Softwood Lumber V , the Appellate Body 
ruled that the "determination of the volume of dum ped imports, injury determination, causal link 
between dumped imports and injury to domestic i ndustry, and calculation of the margin of dumping" 
all relate to the product as a whole.
23  
 19. New Zealand also argues that "there should be a symmetry" between the determination of 
dumping, injury, the causal relationship, and th e imposition of anti-dumping duties.  However, 
without making a product-wide determination, it is not clear how New Zealand’s approach could 
ensure symmetry or consistency because du ties are applied to the product as a whole.
24   
New Zealand’s approach effectively severs the link be tween subjects of the determination of dumping 
and the imposition of anti-dumping duties.25  However, the Anti-Dumping Agreement  requires that a 
product-wide margin determination provide the b asis for the product-wide imposition of duties.  
 
20. The United States’ Section 129 Determination fa ils to meet the requirement to determine a 
margin for the product because negative comparison r esults were excluded from the calculation of the 
total amount of dumping.  The Determination is, theref ore, inconsistent with Articles 2.1 and 2.4.2 of 
the Anti-Dumping Agreement , as well as with Article VI of the GATT 1994. 
 
                                                      
18 New Zealand’s Third Party Submission, para. 3.22. 
19 New Zealand’s Third Party Submission, para. 3.04.   
20 New Zealand’s Third Party Submission, para. 3.03. 
21 New Zealand’s Third Party Submission, para. 3.09. 
22 New Zealand’s Third Party Submission, para. 3.09. 
23 Appellate Body Report, U.S. – Softwood Lumber V , para. 99. 
24 Appellate Body Report, U.S. – Softwood Lumber V , para. 94. 
25 The Appellate Body found that “import transactions attributable to a particular producer or exporter 
need not be separated into two categories – dumped a nd non-dumped transactions.”  Appellate Body Report, EC 
– Bed Linen (Article 21.5) , footnote 177. WT/DS264/RW 
Page D-32  
 
 III. A MARGIN OF DUMPING MUST BE BASED ON A FAIR COMPARISON OF 
NORMAL VALUE AND EXPORT PRICE 
 
21. Mr. Chairman, Japan has set forth, in detail,  in its Third Party Submission that Article 2.4 
imposes a general obligation for the investigating authorities to conduct a fair comparison of normal 
value and export price.  Rather than repeat t hose submissions, Japan will address certain arguments 
made by the United States and New Zealand.  22. It is worth recalling at the outset that the A ppellate Body has twice ruled that zeroing does not 
meet the requirements of a fair comparison.
26  It held that zeroing is "inherently biased" because it 
"inflates" the margin of dumping by the value of the excluded negative intermediate comparison 
results.  And zeroing may even create a margin of du mping that would not otherwise exist.  Because 
the United States disagrees with these findings, it inv ites the Panel to pretend that they were never 
made.  
23. The United States contends that zeroing occurs after  the comparison of normal value and 
export has happened, whereas Article 2.4 a pplies solely to price adjustments made before  the 
comparison is performed.
27  The Unites States is wrong that Article 2.4 applies only to pre-
comparison price adjustments.  The word "compariso n" refers to the process by which the authorities 
calculate the margin of dumping for the product.  That process necessarily in cludes the way that the 
authorities aggregate and disaggregate the product for purposes of the comparison.28  The authorities 
cannot structure that comparison in a manner that systematically prejudices the interests of foreign 
producers and exporters.   24. Further, the United States’ argument that the fi rst sentence of Article 2.4 refers only to a duty 
to make price adjustments renders that sentence redundant, because the duty to make adjustments is 
already set forth in the remainder of Article 2.4.  The first sentence of the provision would, therefore, 
add nothing to the rest.    25. The United States’ interpretation would also nu llify the disciplines in Articles 2.2, 2.3 and 6.6 
of the Agreement  on calculation and verification of normal value and export price.  After carefully 
calculating and confirming these values, authorities w ould be permitted to structure the comparison 
process in such a way that, irresp ective of the normal value and ex port price, dumping is found. 
 26. The United States interpretation produces ab surd results.  On the United States’ view, 
Article 2.4, on the one hand, requires authorities to make "pre-comparison" adjustments that promote 
fairness and, on the other hand, permits them to make  any "post-comparison" adjustments they see fit.  
Nothing in the text supports the view that the Artic le requires the authorities to give with one hand to 
ensure fairness that which they can simp ly remove with the other to deny it.  
 27. New Zealand suggests a "fair" me thodology is one that targets the " dumped goods " through 
the exclusion of negative comparison results.
29  Mr. Chairman, New Zealand turns the idea of fairness 
on its head.  The purpose of the comparison is to ascertain whether or not there is dumping .  Yet, 
because only the positive comparison results are a ggregated on New Zealand’s approach, dumping 
will almost certainly be found.  As a result, as shown by New Zealand’s reference to a methodology 
that targets "dumped goods", an objective inquiry becomes a self-fulfilling prophecy.  But as the 
                                                      
26 Appellate Body Report, EC – Bed Linen , paras. 55 and 59; Appellate Body Report, US – Corrosion-
Resistant Steel Sunset Reviews , paras. 134 and 135. 
27 United States’ Rebuttal Submission, para. 11. 
28 See Japan’s Third Party Submission, para. 16. 
29 New Zealand’s Third Party Submission, paras. 3.12 and 3.14.  WT/DS264/RW 
 Page D-33 
 
 
 Appellate Body said in EC – Bed Linen (Article 21.5 – India) , the "result" of the authorities’ 
investigation cannot be "predetermined by the methodology itself".30 
 28. Mr. Chairman, the Section 129 Determination involves just such  an unfair comparison.  By 
systematically excluding all negative comparis on results, the United States made a finding of 
dumping considerably more likely and it also inflated the amount of the margin.  The unfair 
comparison involves bias that operates exclusively to  benefit the United States’ own lumber industry 
and systematically to the detriment of Canadian pr oducers and exports.  This constitutes a violation of 
Article 2.4.  IV PROHIBITION OF ZEROING UNDER ARTICLE 2.4 DOES NOT NULLIFY THE 
THIRD COMPARISON METHOD IN ARTICLE 2.4.2 OF THE ANTI-DUMPING 
AGREEMENT 
 
29. The United States argues that a prohibition of zeroing would nullify the W-to-T comparison 
in the second sentence of Article 2.4.2 of the Anti-Dumping Agreement .
31 
 30. It asserts that in mathematical terms, th e W-to-W and W-to-T comparisons would produce 
identical results, absent zeroing.  However, this  assumes wrongly that all other things are treated 
equally.  In particular, the argument presupposes th at the same basis for calculating the weighted 
average normal value must  always  be used for the W-to-W and W-to-T comparison method.  
However, nothing in the text of Article 2.4.2 or any other provisions precludes the Member from 
using a different calculation basis for normal value.  Even in US domestic law, there are differences in 
the ways that the USDOC conducts W-to-W and W-to-T  comparisons that ensure that the results of 
the two comparisons would not be the same.  For example, the US statute itself prescribes that the 
weighted average normal value is to be calculate d using different time peri ods (and hence different 
pools of transactions) in W-to-W comparisons in orig inal investigations and in W-to-T comparisons in 
periodic reviews.
32  As a result, the weighted average norma l values will differ in the two situations, 
and the comparisons of those different normal values with export prices mathematically will not 
collapse into the same outcome.  31. Second, and more importantly, the text of th e second sentence of Article 2.4.2 suggests that a 
W-to-T comparison can be conducted in a way that would not produce the same result as a W-to-W 
comparison.  Article 2.4.2 provides for three methods of comparison.  The first two are "symmetrical" methods that compare normal value and export price on the same basis, either on a W-to-W or a T-to-T basis.  Article 2.4.2 does not provide restrictions or conditions for using either symmetrical comparison method. 
 
32. The third method of comparison is the "asymmetrical" W-to-T method of comparison set forth in the second sentence of Article 2.4.2.  Un like the symmetrical comparisons, the investigating 
authorities are entitled to use this method of comp arison exclusively in exceptional circumstances. 
 33. According to the text, the circumstances jus tifying the use of the exception arise where the 
investigating authorities find that there is "a pattern " of " export prices which differ significantly " 
among purchasers, regions or time periods.  Accordi ng to its ordinary meaning, a pricing "pattern" 
                                                     
 
30 Appellate Body Report, EC – Bed Linen  (Article 21.5 – India) , para. 132. 
31 United States’ Rebuttal Submission, paras. 19–25. 
32 Compare Section 777A(d)(1)(A) of the Act, which, in original investigations, authorizes the 
calculation of a weighted average of the normal values (impliedly over the entire period investigated) with 
Section 777A(d)(2), which, in periodic reviews, provides for the calculation of weighted average normal value over “a period not exceeding the calendar month that corresponds most closely to the calendar month of the 
individual export sale.” WT/DS264/RW 
Page D-34  
 
 exists where, among all export transactions, there is discernible configuration of prices by purchasers, 
time periods or regions.  34. The second requirement for recourse to the third methodology is that the authorities must explain why the significant pricing differences could not be "taken into account appropriately" by use 
of either of the symmetrical methods of comparis on.  Thus, although Article 2.4.2 does not indicate 
exactly how the W-to-T comparison is different from the other two methods of comparison, the 
distinguishing features of the third method must be rooted in the exceptional circumstances that justify its use.  In consequence, the third methodol ogy must enable authorities to focus the comparison 
on the export transactions making up the pricing "pattern".  If the authorities do not focus on those 
transactions, they would fail to take "appropriate account" of the pricing differences discernible in 
those transactions.  35. To enable the authorities to focus on the tran sactions in the "pattern", the text supports a 
methodology that includes the targeted selection of particular export transactions (i.e. those in the 
pattern) for comparison with normal value.  By selecting certain transactions for comparison, and 
excluding others, authorities can focus on the transactions making up the pricing pattern.  This targeted selection of export transactions enables th e authorities to address properly targeted dumping. 
 36. Conversely, if the comparison under the third methodology were to include all export 
transactions (or a fully representative sample), the methodology would not address the transactions in 
the pricing pattern and would, therefore, not "take into account appropriately" the significant pricing 
differences in that pattern, as require d by the text of Article 2.4.2. 
 37. When a pricing pattern has been identified, the authorities must conduct a fair comparison that takes into account all transactions making up th e pattern.  The existence of an export pricing 
"pattern" does not mean that there is dumping, ta rgeted or otherwise.  Instead, like the other 
methodologies, the third methodology under second senten ce of Article 2.4.2 is intended to enable 
authorities to determine whether there is dumping and to calculate the dumping margin. 
 38. Because the universe of transactions used  in a W-to-T comparison comprises only the 
transactions in the pricing pattern, the results of this comparison will be different from comparisons 
under the symmetrical methods in the first sentence of Article 2.4.2.  There is, therefore, no basis for 
the United States concerns that a prohibition on zeroing would nullify the W-to-T comparison in the 
second sentence of Article 2.4.2.  
V. THE NEGOTIATING HISTORY DOES NOT SUPPORT THE UNITED STATES 
 
39. New Zealand argues that, although not entirely clear, the negotiating history of the Anti-
Dumping Agreement  indicates that zeroing is permitted.
33  Because the ordinary meaning of the 
Agreement  under Article 31 of the Vienna Convention  is neither ambiguous nor absurd, it is not 
necessary for the Panel to examine the negotiating history.    
40. In any event, in the original proceedings in  this dispute, the Appellate Body examined the 
negotiating history of the Anti-Dumping Agreement  and concluded that it did not support the view that 
zeroing is permissible.
34  It added that, when the drafters intended to permit Members to exclude 
certain elements from their determinations, they did so expressly.  It noted, though, that there is no 
                                                      
33 New Zealand’s Third Party Submission, paras. 2.01–2.05. 
34 Appellate Body Report, U.S. – Softwood Lumber V , paras. 107 and 108.  WT/DS264/RW 
 Page D-35 
 
 
 express authority to exclude negative comparison results.35  The documents that New Zealand has 
submitted, purportedly as negotiating hist ory, do not alter these conclusions.36 
 
VI. CONCLUSION 
 41. Mr. Chairman, by continuing to apply its zeroing procedures in the Section 129 
Determination, the United States disregards the fi ndings of this Panel and the Appellate Body.  The 
Section 129 Determination is tainted by the same flaws as the original determination in this dispute.  
In making both determinations, the United States fa iled to reach conclusions for the "product" under 
investigation and it failed to conduct a fair comp arison.  These failures result in violations of 
Articles 2.1, 2.4 and 2.4.2 of the Anti-Dumping Agreement  and Article VI of the GATT 1994.  And 
the consequence is that the advantages the United States’ industry derives from zeroing are prolonged, 
as is the prejudice to Canadian producers and exporters.    42. Mr. Chairman, members of the Panel, staff of  the Secretariat, Japan thanks you for your 
attention. 
 
                                                     
 
35 Appellate Body Report, US – Softwood Lumber V , para. 100. 
36 Exhibits NZ-1 and NZ-2. WT/DS264/RW 
Page D-36  
 
  
 
ANNEX D-7 
 
NEW ZEALAND'S ORAL STATEMENT 
 
16 November 2005 
 
 
1. Mr Chairman, Members of the Panel, New Zealand welcomes this opportunity to present its views to the Panel in this dispute.  New Zealand h as joined this dispute not only for systemic reasons, 
but also because we have an inte rest in the use of the transaction-to-transaction methodology in the 
calculation of dumping margins.  Our submission is based on what we see as a permissible interpretation of the Anti-Dumping Agreement  which is specifically preserved under Article 17.6 of 
that Agreement.   
 
2. At the heart of this dispute is whether the pr actice of ‘zeroing’ is inconsistent with the WTO 
Agreement when used in conjunction with th e transaction-to-transaction methodology in anti-
dumping investigations.  New Zealand not es that while the Appellate Body in US-Softwood Lumber 
has considered that the practice of zeroing is precl uded in the weighted av erage-to-weighted average 
methodology, the question of whethe r zeroing is permissible when using the transaction-to-transaction 
methodology has not been addressed by the Appellate Body.  In fact, the Appellate Body was very 
careful to note that its analysis applied to th e weighted average-to-wei ghted average methodology 
only.  3. The purpose of the transaction-to-transacti on methodology is to compare actual export prices 
for each shipment with the prices of comparable normal value transactions in the exporter’s domestic 
market.  New Zealand prefers to use this met hodology due to the relatively small number of 
shipments entering the New Zealand domestic market.  Consistent with the approach of the experts 
who worked on the development of the Tokyo Anti- Dumping Code, New Zealand considers that this 
is a fair methodology which targets more precisely the dumping taking place.  
4. In considering the use of the transaction-to -transaction methodology, it is important to note 
that the determination of dumping cannot be seen in isolation from the other elements of the Anti-
Dumping Agreement .  Aside from a determination as to whether dumping has occurred, there must 
also be an analysis of whether there is material in jury to the domestic industry.  If these elements are 
met, there must be a causal analysis of the effect of the dumped imports, and the effect of other 
factors, including the volume and prices of imports not sold at dumping prices, on the domestic 
industry.  This process has relevance when assessing th e validity of certain actions taken by a Member 
in applying a remedy to redress dumping.  How dumping margins are calculated must be considered alongside the determination of material injury, the causation analysis, and the remedy that may or may 
not be applied – in other words, a holistic approach must be taken.   
5. Article 2 of the Anti-Dumping Agreement  provides the framework for the determination of the 
existence of dumping.  Under Article 2.4.2 thr ee methodologies may be used to calculate dumping 
margins: weighted average-to-wei ghted average; transaction-to-transaction; and weighted average-to-
transaction.  While curbs were placed on the situa tions in which the latter methodology might be used, 
these were not applied to the other two methodologies. 
 
6. New Zealand has indicated in its submission that in using the transaction-to-transaction 
methodology, there are three primary methods of determining margins of dumping, one of which 
involves zeroing.  The Anti-Dumping Agreement does not necessarily dictate that any one of the three  WT/DS264/RW 
 Page D-37 
 
 
 methods be used.  In all three ways of using the transaction-to-transaction methodology, the non-
dumped transactions are considered when comp leting the injury and causation analysis under 
Article 3.5 of the Agreement.  7. In New Zealand’s view there should be symme try between the manner in which the existence 
of dumping is established, the injury analysis un der Article 3, the causal relationship between the 
dumping and material injury or threat thereof,  and how the anti-dumping remedy is applied.  
Symmetry preserves fairness in the anti-dumping investigation as a whole.  There is support for a symmetrical approach  in the context of the Anti-Dumping Agreement .  For example, Article 3 makes 
a distinction between the effect of dumped impor ts on prices, and the impact of non-dumped imports 
on producers.  Article 9 makes it plain that an ti-dumping duties are to be applied only to dumped 
imports, and at a level no greater than the margin of dumping.    8. When using any of the three primary me thods within the transaction-to-transaction 
methodology, only those transactions found to be dumped are taken into account in the analysis of the 
volume and price effects and consequent economic  impact on the domestic industry of dumped 
imports.  Therefore, in order to preserve symmetr y, the determination of the margin of dumping may 
be based only on those dumped transactions so take n into account.  In the same way, symmetry is 
preserved by taking into account those transactions f ound to be non-dumped in the analysis of the 
volume and prices of imports not sold at dumping pr ices.  This ensures "consistent treatment" and 
"even-handedness" in the anti-dumping investigation.   
 
9. New Zealand wishes to highlight two aspects rela ted to the determination of the existence of 
dumping: "fair comparison" under Article 2.4; and th e interpretation of "product" under Article 2.1. 
 10. The calculation of dumping margins must m eet the "fair comparison" requirement of 
Article 2.4.  This requirement shoul d be interpreted in a way which h as regard to the context in which 
it is used.  This context includ es the specific rules relating to anti-dumping investigations and the 
nature of the methodologies used to determine the existence of dumping margins that are expressly 
allowed by the Agreement.      11. The calculation of dumping margins using the transaction-to-transaction methodology is 
inherently a "fair comparison" as it targets the dumping that is occurring while still taking into 
account the impact of dumped and non-dumped imports  on the domestic industry.  This is the case 
irrespective of the particular method used to calculate dumping margins under the transaction-to-
transaction methodology.  By contrast, the weighted  average-to-weighted average methodology is not 
as targeted, may not reflect the range of dumping ma rgins in an investigation, and may not fully 
address the material injury being caused or  threatened by the dumped imports.   
 12. Turning to the interpretation of the term "pr oduct" in Article 2.1 - the Appellate Body in the 
EC-Bed Linen  case took into account this term when inte rpreting the margins of dumping referred to 
in Article 2.4.2.  It considered that margins of dumping should be established for the "product as a whole".  In comparing the normal value and the export price on a transaction-to-transaction basis, the 
individual transactions where dumping has been found to exist are compared to determine whether 
dumping is considered to exist for the product under investigation.  In this way the transaction-to-
transaction methodology targets the importation of th e product that is being dumped.  It does not 
attempt to calculate dumping on the basis of the averaging of transactions for all
 sales of the product.  
 
13. The interpretation of "pro duct" in Article 2.1 of the Anti-Dumping Agreement  has to be seen 
in light of the context of Article 2.4.2.  The term  "product", when used in relation to the transaction-
to-transaction methodology, must reflect the nature  of that methodology.  That methodology selects 
individual transactions for analysis which are repres entative of the "product as a whole".  Therefore, 
in relation to the transaction-to-transaction methodol ogy, the "dumping of a product" referred to in WT/DS264/RW 
Page D-38  
 
 Article 2.1 means the dumping established through th e selection of comparable individual transactions 
representing the product which is the subject of the anti-dumping investigation.  Comparisons must be made at the same level of trade and at as nearly as possible the same time, with due allowance being 
made for differences affecting price comparability.  Any of the three methods which may be used to 
calculate the dumping margins using a transacti on-to-transaction methodology can be used to 
establish that dumping exists.  
 14. In conclusion, New Zealand considers that there is no textual support in the Anti-Dumping 
Agreement for an obligation
 to take non-dumped transactions into account in establishing the 
existence of dumping margins under Article 2.4. 2 when using the transaction-to-transaction 
methodology.  Indeed, it is permissible to interpre t Article 2.4.2 as permitting a Member to take into 
account only dumped imports in establishing the existe nce of dumping margins under Article 2.  Such 
permissible interpretations are specifically preserved under Article 17.6(ii) of the Anti-Dumping 
Agreement . 
  WT/DS264/RW 
 Page D-39 
 
 
  
 
ANNEX D-8 
 
ORAL STATEMEN T OF THAILAND 
 
16 November 2005 
 
 
I. INTRODUCTION 
 
1. Mr. Chairman and Members of the Panel:  Th ailand appreciates the opportunity to present its 
views on this matter to the Panel today.  In genera l, Thailand supports the ar guments made by Canada 
in its first written submission.1  Accordingly, Thailand will provide just a few additional views in 
today’s proceeding.   
II. THE ZEROING METHODOLOGY IS IN CONSISTENT WITH ARTICLES 2.4 AND 
2.4.2 OF THE ANTI-DUMPING AGREEMENT 
 
2. Thailand submits that the zeroing methodology is  inconsistent with Articles 2.4 and 2.4.2 of 
the Anti-Dumping Agreement, regardless of what me thod is initially used to compare export prices to 
normal values.  The fair comparison requirement of  Article 2.4 imposes a fundamental obligation on 
the investigating authority to avoid biased and inac curate determinations of dumping margins.  The 
Appellate Body has confirmed that this obligation "informs all of Article 2,"
2 and hence includes 
Article 2.4.2 of the ADA.  
 3. Moreover, the Appellate Body has 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".  ADA Article 2.4 thus prohib its the use of such an inherently distorted 
methodology to make a comparison between  export price and normal value.   
 4. In addition, the Appellate Body has found th at the reference to "margins of dumping" in 
Article 2.4.2 refers to the calculation of overall du mping margins for the produ ct as a whole, rather 
than transaction- or model-specific comparisons.  In the words of the Appellate Body in US – 
Softwood Lumber V , "the results of the multiple comparis ons at the sub-group level are . . . not 
"margins of dumping" within the meaning of Article 2.4.2. . . .  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."
3  The Appellate Body went on to find that the United States 
acted inconsistently with ADA Article 2.4.2 by "d etermining the existence of margins of dumping on 
the basis of a methodology incorporating the practice of zeroing".4  In Thailand's view, the Appellate 
Body's finding neither differentiated between types of  zeroing, nor suggested that the permissibility of 
zeroing was dependent on which methodology the Unite d States used under Article 2.4.2 to make 
multiple comparisons at the sub-group level.  Thus, the Appellate Body's reasoning applies equally in 
situations in which aggregate dumping margins ar e determined using the transaction-to-transaction 
comparison method.   
 
                                                      
1 First Written Submission of Canada, 22 June 2005.   
2 Appellate Body Report, EC – Bed Linen , para. 59. 
3 Appellate Body Report, US – Softwood Lumber V , para. 97 (emphasis in original). 
4 Ibid., para. 117. WT/DS264/RW 
Page D-40  
 
 5. The United States attempts to portray Canada  as seeking an "offset" to the results of 
individual comparisons "when a ggregating the results of multiple transaction-to-transaction 
comparisons".
5  However, it is the United States, not Ca nada, that seeks to make such an offset by 
asserting the right to include the results of only some  of the multiple comparisons in its aggregation.  
For other comparisons, the United States asserts the ri ght to adjust the results of these comparisons so 
that the export price is no longer greater than the normal value for those comparisons.  Therefore, the 
US practice constitutes an adjustme nt that is neither permitted under Article 2.4 of the ADA nor, by 
any definition of the term, can be considered fair.    6. The United States in effect argues th at because the phrase "all comparable export 
transactions" in Article 2.4.2 does not refer to transaction-to-transaction comparisons, there is no 
prohibition on using the zeroing methodology in a ggregating the results of such comparisons.  
However, it presumably would not be a fair comparison to make transaction-to-transaction 
comparisons and, in aggregating the results, simply to omit some of those results.  If it would not be 
permissible simply to exclude these results, then a fortiori it is not permissible to exclude or adjust 
some of those results for the sole reason that the results of those comparisons are favourable to the 
exporters.    7. The text of Article VI of the GATT and of the ADA supports this position.  First, the fair 
comparison requirement of Article 2.4 prohibits  the use of zeroing following a transaction-to-
transaction comparison.   
 
8. Second, Article VI of the GATT defines dumping as the process by which " products  of one 
country are introduced into the commerce of anothe r country at less than the normal value of the 
products".
6  Article VI: and Article VI:2 consistently emphasize dumping is to be determined on the 
basis of a product,  not selected transactions in a product. 
 
9. Third, Article 2.1 of the ADA refers to a "product" and notes that a product is said to be 
dumped when "the export price of the product" is less than the comparable price "for the like product".   10. Thus, Article VI of the GATT 1994 and Artic le 2.1 of the ADA envisage the eventual 
determination of the margin of dumping for the product at issue by comparing an aggregate export 
price for that product with an aggregate normal va lue.  This can be achieved by using different 
methodologies to determine margins at a sub-group le vel, be it an average-to-average or transaction-
to-transaction methodology.  But it cannot be achieve d if some of the transactions at issue are not 
properly reflected in the determination of the overa ll export price and normal value.  As the Appellate 
Body has stated, the investiga ting authority must aggregate all these 'intermediate values' in order to 
"establish margins of dumping for the product under investigation as a whole".
7 
 11. By not fully taking into account all transacti on-to-transaction comparisons in determining the 
aggregate dumping margin "in respect of such product", the United States imposes an anti-dumping duty greater in amount than the actual margin of dumping in respect of such product, calculated on the 
basis of all relevant transactions in that product.  
 
                                                     
 
5 First Written Submission of the United States, 7 July 2005 ("US First Submission"), para. 2. 
6 GATT 1994, Article VI:1 (emphasis added). 
7 Appellate Body Report, US – Softwood Lumber V , para. 97 (emphasis in original).  WT/DS264/RW 
 Page D-41 
 
 
 III. CONCLUSION  
 
12. Thailand trusts that these views will assist th e Panel in its consideration of these issues.  
Thailand will be happy to respond to any questions the Panel may have.  Again, we thank you for this 
opportunity to present our views.   
 WT/DS264/RW 
Page D-42  
 
  
 
ANNEX D-9 
 
CLOSING STATEMENT OF CANADA 
 
17 November 2005 
  
1. Mr. Chairman, Members of the Panel, Canada  takes this opportunity to thank you once again 
for your time and diligent work on this case. 
 2. We also take this opportunity to revisit with you the one issue that is in dispute here:  zeroing 
under the transaction-to-transaction methodology.  
3. We are here because the United States, con fronted with the need to bring itself into 
compliance, chose to zero again in the Section 129 Determination.  This choice resulted in the United 
States acting in a manner inconsistent with Articles 2.4.2 and 2.4 of the Anti-Dumping Agreement .   
 4. I would first like to set out what is meant by " zeroing" in the context of this dispute.  I will 
then briefly comment on the discussion we have ha d surrounding Article 2.4 and finally turn to our 
arguments regarding Article 2.4.2. 
 5. So what is "zeroing"?  In the original inv estigation, the United States calculated "margins of 
dumping" using a weighted-average-to-weighted-a verage methodology.  The United States made 
multiple separate comparisons for various product s ub-groups.  It then aggregated the intermediate 
results of these multiple comparisons.  However, be fore it did so, the United States changed to zero all 
negative results.  This manipulation of the negative r esults – that is, the action of "zeroing" – inflated 
the "margins of dumping".  And the United States w as found to have acted inconsistently with its 
WTO obligations on this basis.  6. The United States did the same thing in its new transaction-to-transaction methodology.  It 
made multiple comparisons on a transaction-to-tra nsaction basis.  And this method too produced 
intermediate values.  The United States then aggreg ated these intermediate results – something that is 
no different from what it was required to do in  its weighted-average-to-weighted-average 
methodology.  Again, however, in doing so, the Unite d States changed all negative results to zero.   
 
7. With respect to the question of whether Ar ticle 2.4 prohibits zeroing under the transaction-to-
transaction methodology, the United States claims, in re buttal, that the fair comparison requirement in 
Article 2.4 is limited to adjustments affecting pr ice comparability.  However, the fair comparison 
requirement in the first sentence of Article 2.4 is a separate and distinct obligation from the 
requirement to ensure price comparability in th e second sentence of the Article.  As we have 
demonstrated, the US interpretation of the firs t sentence would render it redundant.  And it also 
contradicts the Appellate Body’s clear statements on this issue. 
 8. The United States also argues that zeroing must be permissible because, otherwise the 
targeted dumping methodology would produce a mathem atically equivalent r esult to the result that 
would be obtained in the weighted-average-to-weig hted-average methodology.  The burden is on the 
United States to show that the targeted dumping pr ovision could not have meaning or utility without 
zeroing.  It has failed to satisfy this burden.  It is not enough to say that US municipal law does not permit a different application.  Canada, as well as the EC, Japan and Thailand have all provided 
hypothetical examples of how the targeted dumping provision could be applied in particular cases,  WT/DS264/RW 
 Page D-43 
 
 
 without zeroing.1  Nothing the United States has said chang es the fact that zeroing causes an "inherent 
bias" in the calculation of "margins of dumping," a nd is therefore prohibited by the "fair comparison" 
requirement of Article 2.4.  9. Turning now to Article 2.4.2., as you have heard, the United State dislikes the term "zeroing".  
Instead of acknowledging that some intermediate va lues are negative, the United States persists in 
referring to those negative values  as "offsets" and argues it has no obligation to recognize these 
negative values and offset positive values.  But this is  just plainly wrong.  An investigating authority 
has an obligation to determine a "margin of dumping"  for the product as a whole.  And that obligation 
includes respecting all the results, not changing the results of intermediate values to zero when they 
are aggregated. 
 10. I want to take you back to the text that is at issue in this dispute – Article 2.4.2, first sentence.  
This provision requires the United States to ensure th at the results of its comparisons reflect the full 
value of the transactions analyzed (that is, the "p roduct as a whole").  This obligation results from a 
textual interpretation of the provision, which we have set out in our submissions to you.
2 
 11. The Appellate Body, when it
 interpreted the very same provision, upheld the original panel’s 
findings on zeroing through the fo llowing reasoning.  It first a ddressed the phrase "all comparable 
export transactions", which the United States sugg ested was the key to the Appellate Body’s 
reasoning.  The Appellate Body determined that the "zeroing" issue did not turn on this phrase.3  Next, 
the Appellate Body interpreted the term "margins of  dumping" and "dumping" in the first sentence of 
Article 2.4.2.  The Appellate Body found that:4 
 
• These terms relate to the product under inves tigation as a whole – not a type, model or 
category of that product; 
 
• The requirement to calculate "margins of dum ping" means that multiple comparisons at the 
sub-group level are only intermediate va lues – not "margins of dumping";  and 
 
• The calculation of "margins of dumping" requir es the aggregation of intermediate values at 
the sub-group level to arrive at a margin of dumping for the product as a whole.  
 12. The Appellate Body concluded that when  aggregating these intermediate values, the 
United States was not permitted to change negative values to zero.  The Appellate Body also found 
that Article 2.4.2 contains no express language th at permits disregarding the true value of a 
comparison result when such values are aggregated to arrive at the "margin of dumping" for the product as a whole.
5  And the United States can point to no language in the text of Article 2.4.2, first 
sentence, that permits them to disregard the negative results of intermediate comparisons. 
 
13. Let’s come back again to what is before you in these implementation proceedings.  The only 
question is whether, in the light of this legal reasoning and the recommendations and rulings of the 
DSB, did the United States bring its measure into  conformity when it continued to zero under the 
transaction-to-transaction methodology.  When an i nvestigating authority aggregates the results of 
multiple comparisons it must fully reflect those re sults in coming to a "margin of dumping"?  The 
United States did not do what it was required to do, when it treated negative results as zero.  
                                                      
1 See Exhibit CDA-8. 
2 First Written Submission of Canada, at paras. 21-27.  Second Written Submission of Canada, at 
paras 8-15. 
3 Appellate Body Report, at paras. 86-90.   
4 Ibid., at paras. 97-98. 
5 Ibid.  at para. 100. WT/DS264/RW 
Page D-44  
 
 Therefore, its use of zeroing under the transacti on-to-transaction methodology must be found to be 
inconsistent with Article 2.4.2.    14. The United States argues that nothing in the text of Article 2.4.2 prohibited it from doing so.  Specifically, the United States argues that it may change the meaning of "dumping" and "margins of 
dumping" in the first sentence of Article 2.4.2 an d ignore the Appellate Body’s reasoning.  Why?  
Because, according to the United States, the meani ng of "margins of dumping" has now changed and 
has become the result of any of the tens of thousa nds of comparisons in its transaction-to-transaction 
methodology.  The United States also claims that the Appellate Body’s prior reasoning does not apply 
in this case because the reasoning is the result of the phrase "all comparable export transactions" and 
that phrase does not attach to the transaction-to-transaction methodology. 
 15. However, the meaning of the term "margins  of dumping" – and that of "dumping" – cannot 
change in this single sentence.  That is, th ese terms prohibit the United States from changing the 
underlying facts of a case.  Negative intermediate  comparison results are negative intermediate 
comparison results.  They are not "margins of dumping". Negative results are not
 positive results, nor 
are they zero.  To establish "margins of dumpi ng" within the meaning of Article 2.4.2, the 
intermediate results of those multiple transaction- specific comparisons must be aggregated for the 
product as a whole.  And the term "margins of dumpi ng", as confirmed by the Appellate Body in this 
very case, prohibits the United States from changing negative values to "zero". 
 
16. For all these reasons, there is no question that the United States has failed to comply with the 
DSB’s rulings, and its recommendation to bring its measures into conformity with its WTO obligations.  Canada therefore requests that this Pane l find that the use of zeroing by the United States 
under the transaction-to-transaction methodology in the Section 129 Determination is inconsistent 
with Articles 2.4.2 and 2.4 of the Anti-Dumping Agreement 
 
17. Mr. Chair, members of the Panel, we are appreciative of your continued attention and hard work on this dispute.  And Canada thanks you.   WT/DS264/RW 
 Page D-45 
 
 
  
 
ANNEX D-10 
 
CLOSING STATEMENT OF THE UNITED STATES 
AT THE SUBSTANTIVE ME ETING OF THE PANEL 
 
17 November 2005 
  1. Mr. Chairman, Members of the Panel, in cl osing, the United States would like to thank you 
again for agreeing to serve on this Panel.  We a ppreciate the time you have taken out of your busy 
schedules to address this important matter.  We would also like to thank the members of the 
Secretariat for all of their hard work on this matter. 
 2. Our closing statement is very brief.  In many  respects, the comments that we offered after the 
third party session and in the further questions a nd answers this morning captured the two most 
important legal issues before you: the interpretati on of "margins of dumping" and the nullification of 
the targeted dumping methodology. 
 3. With respect to the term "margins of dumping," you will recall that the United States’ 
argument is that the term must be interpreted in its relevant context.  That is precisely what the 
Appellate Body did in the underlying proceeding, in terpreting it in an integrated manner with "all 
comparable export transactions."  It is neither illogi cal nor surprising that, when interpreting that term 
in the context of comparisons between normal va lue and export price on a transaction-to-transaction 
basis, we arrive at a different interpretation.  As  we discussed yesterday, it is Canada’s position that 
margins of dumping must be interpreted in th e same way throughout the Anti-Dumping Agreement 
that does not withstand scrutiny – whether in the c ontext of Article 9.3, where Canada’s approach 
would offset one importer’s dumping duties with a nother importer’s non-dumped prices, Article 2.2 
which we discussed this morning, or  elsewhere in the AD Agreement. 
 4. With respect to the nullification of the targeted dumping methodology, we had a very interesting discussion of hypotheticals – with Chri stmas turkeys passing through, and Canada even 
suggesting that, in order to prevail, the United St ates must rebut "unstated assumptions" that Canada 
had not even thought of.  If we can move from hypot heticals to reality for a moment, we should return 
to the text of the second sentence of Article 2.4.2.  As mentioned earlier, that text, in a narrative form, 
is a classic "if – then" provision.  It simply provides that if certain conditions exist, then authorities 
may make comparisons between normal value and expor t price on an average-to-transaction basis.  It 
provides no exception to any other provision of th e AD Agreement, nor does any other provision of 
the AD Agreement suggest that, when the conditions of the second sentence of Article 2.4.2 exist, the 
requirements of that other provision do not apply.  Mr. Chairman, that is the reality of the agreement.  
The targeted dumping comparison methodology is just  an exception to the average-to-average or 
transaction-to-transaction comparison methodologies.  As the United States demonstrated in its 
Exhibit US-4, Canada’s approach would nullify that  exception by mathematically requiring the same 
result as from the average-to-average comparison methodology. 
 
5. Because the United States has brought its m easure into conformity with its Anti-Dumping 
Agreement obligations, the Panel s hould dismiss Canada’s complaint. 
 6. Mr. Chairman, Members of the Panel, this concludes our closing statement.  Thank you.