RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/211 
12 June 2006 
 (06-2791) 
Dispute Settlement Body 
9 May 2006  
 
 
 
MINUTES OF MEETING 
 
Held in the Centre William Rappard  
on 9 May 2006  
 
Chairman:  Mr.  Muhamad Noor Yacob (Malaysia) 
  
Subjects discussed
: Page  
 
1. European Communities and certain member States – Measures affecting trade 
in large civil aircraft ........................................................................................................ .........1  
(a) Request by the United States for a decision of the DSB.............................................................1  
(b) Request for the establishment of a panel by the United States ...................................................1  
2. United States – Investigation of the International Trade Commission in softwood 
lumber from Canada:  Recourse to Article 21.5 of the DSU by Canada .............................5  
(a) Report of the Appellate Body and Report of the Panel ..............................................................5  
3. United States – Laws, regulations and methodology for calculating dumping 
margins ("Zeroing")............................................................................................................ .....7 
(a) Report of the Appellate Body and Report of the Panel ..............................................................7  
 
 1. European Communities and certain member States – Measures affecting trade in large 
civil aircraft 
(a) Request by the United States for a decision of the DSB (WT/DS316/5) 
(b) Request for the establishment of a panel by the United States (WT/DS316/6) 
1. The Chairman
 proposed that the two sub-items to which he had referred be considered 
separately.  He recalled that the DSB had considered this matter at its meeting on 21 April 2006.  In 
this connection, he drew attention to the co mmunication from the United States contained in 
document WT/DS316/5 and invited the representative of the United States to speak. 
2. The representative of the United States  said that as discussed at the 21 April DSB meeting,  
the first sub-item concerned the request by the United States for a decision of the DSB, which had 
been circulated to Members in document WT/DS 316/5.  At the 21 April DSB meeting, the United 
States had explained the reasons why it was seeking this decision.  The United States had further 
elaborated on its reasons in a document that had been circulated on 4 May as a JOB document.1  That 
                                                      
1 Subsequently circulated in document WT/DS316/8. WT/DSB/M/211 
Page 2  
 
  document responded to the questions that Brazil had raised at the 21 April DSB meeting.  The United 
States wished to thank the delegation of Brazil for pr oviding an opportunity to engage in a discussion 
of the issues that the US request presented.  Th e US written request and its answers to Brazil's 
questions set out the reasons why the United States was seeking this decision at the present meeting.  
Therefore, the US representative would not rep eat them.  However, he wished to address the 
objections to the US request that the EC had raised  at the 21 April DSB meeting.  The EC had first 
objected that the Panel in DS316; i.e. the July 2005 Panel, had already been composed and had established its working procedures.  But this was precisely one reason why the United States was 
seeking to have the second US panel request referre d to the July 2005 Panel.  It had taken a 
substantial investment of time and resources to compose the July 2005 Panel and to establish its 
working procedures.  The United States saw no goo d reason to discard that work and to start over 
again from the beginning.  
3. The EC's second objection was that the July 2005  Panel had taken four procedural decisions.  
None of those decisions provided a reason to reject the US request.  The first decision that the EC had 
cited was the establishment of working procedures fo r the July 2005 Panel.  As he had stated a 
moment ago, this was a reason to agree to the US request, not to reject it.  The second decision that 
the EC had cited was the Panel's establishment of  a deadline for the United States to respond to the 
EC's request for preliminary rulings.  Granting th e US request at the present meeting would have no 
effect on that decision.  It would, however, eliminate the majority of the issues in the EC's request and 
would simplify matters for the Panel. 
4. The third decision that the EC had cited w as a 29 November letter from the Panel to the 
parties.  In actuality, the letter was not a procedur al decision.  Rather, it was an invitation to the 
United States to respond to the EC's request to chan ge the title of the dispute.  The United States had 
filed a letter responding to the Panel's invitati on, and the Panel had taken no further actions.  
5. The final decision that the EC had cited was th e Panel's decision of 1 March 2006 to suspend 
its timetable.  It was remarkable that the EC would cite that decision as a reason to reject the US 
request.  As the EC was aware, the entire purpose fo r requesting the July 2005 Panels in this dispute 
and in DS317 to suspend their timetables was to provide time for addressing the procedural issues 
present both in this dispute and in DS317, and ther eby facilitate the efficient functioning of the 
dispute settlement system.  The EC had also objected to the US request on the grounds that an Annex V procedure had already been carried out un der the July 2005 Panel, and the EC had asserted 
that some of the measures in the second US panel requ est were – to use the EC's words – "not subject 
to" that Annex V procedure.  The United States did not share the EC's point of view.  The Annex V 
facilitator had asked the EC to answer questions a bout nearly all of the measures in the second US 
panel request; the EC had simply refused to answ er those questions.  That choice by the EC had 
nothing to do with the proposed decision. 
6. Next, the EC had objected to the US request on the grounds that the second US panel request 
was substantially broader in scope than the original  request.  But in fact, as the United States had 
explained in its answers to Brazil's questions, there was overlap in the vast majority of the subject 
matter of the two requests.  The second US requ est simply supplemented and provided additional 
details about that first request. 
7. Finally, the EC had asserted that granting the US  request would "severely violate the EC's due 
process rights" because it would allow the United States to "pick and choose the measure and the 
relevant market situation" and deny the EC the "c larity as to which claim and data it needs to respond 
to".  Frankly, the United States did not understand th e EC's point.  The panel requests were clear and 
straightforward, and they set out in considerable deta il the measures and claims at issue.  In the view 
of the United States, granting the US request would enhance clarity and simplify the dispute, not complicate it.  The United States assumed that the EC had accepted that the United States had a right  WT/DSB/M/211 
 Page 3 
 
 
  to both panel requests, just as the EC asserted a right to both panel requ ests in DS317.  The only 
question was how the subject matter of these panel re quests would best be considered in the Panel 
process.  In sum, the purpose of the US request was to facilitate the efficient functioning of the 
dispute settlement system by having the matter c ontained in the second US panel request considered 
by the 20 July Panel.  Once again, the United St ates hoped that the Members of the DSB would be 
able to agree to it.  It thanked Members in advance for their support. 
8. The representative of the European Communities  said that the United States had put its 
unusual request before the DSB again.  Essentially, the United States had requested that the terms of 
reference of the Panel as established on 20 July 20 05 be modified to be those cited in documents 
WT/DS316/2 and WT/DS316/6.  The EC continued to reject the US request for the same reasons as 
explained at the previous DSB meeting.  None of the arguments raised by the United States at that 
meeting or at the present meeting had led the EC to  reverse its position.  The United States had argued 
that the existing Panel had done "nothing that could be affected by a modification of its terms of 
references".  The EC disagreed.  The United States had proposed to modify ex post  the terms of 
reference of a Panel although the procedure had been  advanced.  In particular:  (i) the Panel had 
already been composed;  (ii) it had adopted its work ing procedures (now suspended);  (iii) it had taken 
a number of procedural decisions2;  and (iv) an Annex V procedure had been carried out and the 
report by the facilitator had been submitt ed to the Panel on 24 February 2006. 
9. Furthermore, despite considerable overlap, the terms of reference of the two Panels differed 
significantly.  In essence, the second Panel was signi ficantly broader in scope and the United States 
was seeking to add further legal claims in this ne w proceeding.  Most of the above measures had not 
been subject to the Annex V procedure in this case.   Moreover, the Annex V procedure in the old case 
covered now outdated facts concerning markets and pr ices.  The United States had proposed a merger 
of the terms of reference in a way that would severely violate the EC's due process rights in a serious prejudice case.  If the United States had its way, it could arbitrarily pick and choose the measure and 
the relevant market situation.  The EC would neve r obtain clarity as to which claim and data it needed 
to respond to. 
10. Finally, but most importantly, there was no legal basis in the DSU for the DSB to take a 
decision to merge two Panels in the circumstances as described above.  Even if there were, it would 
require consensus.  The United States had referred to Article 9.1 of the DSU and had invoked the "US 
– Steel" case precedent.  However, Article 9.1 of the DSU concerned an entirely different situation of multiple complaints by "more than one Member" rega rding "the same matter".  In such situations a 
"single Panel should be established".  Hence, Artic le 9.1 of the DSU envisaged situations where 
multiple complaints by at least two WTO Memb ers were brought relating to the same matter.  
Moreover, it was not "mandatory";  i.e. complainants  did not have an automatic right to the merger.  
Thus, in the "US – Steel" precedent referred to by th e US eight complainants had attacked one and the 
same measure.  The Panel had not been composed a nd no other procedural steps had been taken in 
these cases before they had been merged.  Moreover,  the United States as a defendant had to give its 
agreement.  
11. The case "Indonesia – Cars", which had been cite d by the United States at the previous DSB 
meeting, had again confirmed the EC 's position.  It was a situation of multiple complainants where the 
United States had asked for the establishment of a panel and had asked that the panel previously 
established by the DSB to examine the complaints  of the EC and Japan would also examine its 
complaint.  Furthermore, as with the Steel case and indeed all other cases, the minutes of the DSB 
                                                     
 
2 Letter by the Chairman of the Panel concerning time-table and Working Procedures, dated 
9 November 2005;  Letter by the Chairman of the Panel concerning preliminary rulings, dated 9 November 2005;  Letter by the Chairman of the Pane l concerning the case name of 29 November 2005; 
Communication by the Chairman of the Panel, dated 1 March 2006, concerning suspension. WT/DSB/M/211 
Page 4  
 
  meeting of 30 June 1997 indicated that Indonesia had given its approval before the DSB had taken 
that decision. 
12. For all the above reasons as well as the reasons stated during the previous meeting, the EC 
still could not agree to the US request.  The EC c ould agree, however, to the argument that only one 
panel should proceed in this dispute and that the same approach on this procedural aspect should be 
taken in both Aircraft disputes.  The EC had been trying to engage in negotiations on this issue with 
the United States for a very long time, but the Un ited States had not been prepared to discuss a 
solution which would safeguard the rights of both pa rties concerned.  In the absence of an agreed 
solution, a much cleaner and simpler solution than that proposed by the Un ited States would be to 
pursue the case on the basis of the April 2006 terms of reference.  Otherwise, the dispute would 
continue to suffer from birth defects as described above.  Indeed, the EC approach was also legally 
correct, while the US request for a decision to me rge the two cases had no basis in the DSU and WTO 
practice.  The EC however remained open to discu ss how to resolve any practical issues and the EC 
was willing to find a pragmatic solution, but a solu tion which safeguarded the rights of all parties 
concerned. 
13. The representative of Brazil
 said that his country had no comments on the substance of this 
debate between the United States and the EC at th e present meeting, but wished to thank the US 
delegation for its time and efforts devoted to respo nding to Brazil's questions.  Brazil might revert 
with comments on the substance of those answers in due course. 
14. The DSB took note  of the statements. 
15. The Chairman  said that since the DSB was not able to agree to the request by the United 
States contained in document WT/DS316/5, he wish ed to propose to take up sub-item b under this 
agenda item.  He recalled that the DSB had consider ed this matter on 21 April 2006 and had agreed to 
revert to it.  He wished to draw attention to  the communication from the United States contained in 
document WT/DS316/6 and invited the representative of the United States to speak. 
16. The representative of the United States  said that, once again, his country was very 
disappointed that the EC was unable to permit the DS B to take the decision th at the United States was 
seeking under the previous sub-item.  The United St ates had hoped that its explanations and responses 
to the questions of other Members would allow the EC  to reconsider its position.  In any event, in 
light of the EC's decision to prevent referral of the matter in the US panel request to the existing panel 
in DS316, the United States was obliged to pursue esta blishment of a panel in the ordinary way.  At 
the meeting on 21 April, the United States had discu ssed in brief the reasons why it had brought this 
matter to dispute settlement, and did not wish to re peat those points at the present meeting.  The 
United States requested that the DSB establish a new pa nel with respect to the matter contained in the 
US panel request, pursuant to Articles 6 and 7 of the DSU.  
17. The representative of the European Communities   said that the EC had taken note of the 
second US request for the establishment of a panel in this dispute and did not object to its 
establishment.  As regards the substance of the US  request, needless to say it was the prerogative of 
the United States to seek to pursue its rights unde r the WTO Agreements.  However, this did not 
entail a right for the United States to use the disput e settlement system for purely speculative claims.  
Indeed, in the recent "Upland Cotton" dispute, th e United States itself had protested vigorously and 
had prevailed against the inclusion of a measure th at did not exist at the time the panel request had 
been made and considered by the DSB. 
18. Regrettably, that was precisely what the United States itself continued to attempt to do as 
regards alleged measures relating to the Airbus A350  aircraft.  As would be well understood by all, 
neither the DSU nor the SCM Agreement allowed WTO Members to use it against a perceived threat  WT/DSB/M/211 
 Page 5 
 
 
  of subsidization.  A measure subject to WTO disput e settlement must be subject to consultations and 
must also exist at the time of the panel request.  No such alleged support existed for the A350, neither 
at the time the United States had asked for additi onal consultations on this matter, nor now.  No 
commitment had been taken on whether or not EC memb er States wished to invest in this project. The 
EC, therefore, strongly objected to the inclusion of this non-existing measure in the panel request.  
The EC reserved its right to raise this and any ot her objections later before the Panel.  The United 
States was once again seeking the establishment of a panel against the EC and certain member States.  He noted that the EC continued to be the prope r and correct respondent, also for the acts of its 
individual member States.
3  The member States co-operated closely with the EC, which was the sole 
and proper respondent for all measures challenged by the United States.  Indeed, it was entirely false 
to claim that the EC "represents" its member States in this dispute or that these member States had the 
status of respondents.  The violations that were al leged by the United States all related to matters for 
which the EC bore responsibility in the WTO and the EC was, therefore, the only proper respondent.  
Finally, he emphasized that the EC was fully determ ined to defend its legitimate interests and ensure 
that conditions of fair competition prevai led in the production of civil aircraft. 
19. The representative of the United States  said that there were a couple of points that the EC had 
referred to which his delegation wished to make co mments.  First, with respect to who the proper 
respondents were, it was his recollection that th e United States had responded to essentially the same 
point at the previous DSB meeting and, therefore, he  wished to refer Members to what had been stated 
at that time.  With respect to the EC's comme nts about the A350, he thought that it would be 
appropriate for him to simply make clear for the reco rd that in fact all four Airbus governments had 
committed to provide launch aid for the A350 and th at Airbus had confirmed that those commitments 
were legally binding. 
20. The DSB took note  of the statements and agreed  to establish a panel in accordance with the 
provisions of Article 6 of the DSU w ith standard terms of reference. 
21. The representatives of Australia , Brazil , Canada , China , Japan  and Korea  reserved their third-
party rights to participate in the Panel's proceedings. 
2. United States – Investigation of the International Trade Commission in softwood lumber 
from Canada:  Recourse to Arti cle 21.5 of the DSU by Canada 
(a) Report of the Appellate Body (WT/DS 277/AB/RW) and Report of the Panel 
(WT/DS277/RW) 
22. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS277/18 transmitting the Appellate Bo dy Report on:  "United States – Investigation 
of the International Trade Commission in Softwood  Lumber from Canada:  Recourse to Article 21.5 
of the DSU by Canada", which had been  circulated on 13 April 2006 in document 
WT/DS277/AB/RW, in accordance with Article 17.5 of  the DSU.  He reminded delegations that the 
Appellate Body Report and the Panel Report pertaini ng to this case had been circulated as unrestricted 
documents.  He noted that Article 17.14 of the DS U required that:  "An Appe llate Body report shall 
be adopted by the DSB and unconditionally accepte d by the parties to the dispute unless the DSB 
decides by consensus not to adopt the Appellate B ody report within 30 days following its circulation 
to Members.  This adoption procedure is without prejudice to the right of Members to express their views on an Appellate Body report."  
23. The representative of Canada
 said that his country thanked th e Panel, the Appellate Body, and 
the respective Secretariats for their work on the di spute between Canada and the United States in the 
                                                      
3 EC – LAN;  EC – Shipbuilding  WT/DSB/M/211 
Page 6  
 
  softwood lumber injury case.  Canada welcomed the findings of the Appellate Body in respect of the 
standard of review to be applied by panels in tr ade remedy cases.  In particular, the Appellate Body 
had set out in considerable detail the nature of th e review and the types of steps that a panel was 
required, under the terms of the DSU, to engage in and to take to ensure th at investigating authorities 
of Members had met the obligations set out in the Anti-Dumping and the SCM Agreements. 
24. In that respect, he referred Members to para graph 93 of the Appellate Body Report.  As the 
Appellate Body had noted, a panel may neither conduct a de novo  review of, nor defer completely to, 
the conclusions of investigating authorities.  Rath er, "[a] panel's examination of those conclusions 
must be critical and searching ...".  Both agreemen ts, the Appellate Body had found, required that a 
panel examine "whether, in the light of the eviden ce on the record, the conclusions reached by the 
investigating authority are reasoned and adequate".   A panel must determine whether "the reasoning 
of the authority is coherent and internally consistent".  It must  examine whether the explanations 
provided by the investigating authority take proper account of the "complexities of the data before it". 
25. And specifically in respect of the substantive provisions at issue, the Appellate Body had 
made the following finding, which in Canada's view neatly captured the essence of a panel's 
obligations in threat of injury disputes:  "These provisions enjoin a panel to scrutinize carefully the 
inferences and explanations of the investigating auth ority in order to ensure that any projections or 
assumptions made by it, as to likely future occurre nces, are adequately expl ained and supported by 
positive evidence on the record."  These were the findi ngs of the Appellate Body.  However, in light 
of the fact that the Panel Report had not containe d such a "searching" review, the Appellate Body 
could not proceed to complete the analysis.  This  underlined yet again the importance of a panel's 
careful scrutiny of the conclusions of an investiga ting authority.  Canada continued to consider the 
revised ITC determination to be inconsistent with US WTO obligat ions under the SCM and the Anti-
Dumping Agreements.  Canada requested that th e DSB adopt the Panel and the Appellate Body 
Reports in this matter. 
26. The representative of the United States
 said that his country wished to thank the members of 
the Panel, the Appellate Body and the Secretariat for their hard work.  In particular, the United States 
wished to convey special thanks to the members of  the Panel, who had made themselves available to 
work on this dispute a second time by agreeing to serve in this Article 21.5 proceeding.  As had been widely reported, on 27 April 20 06,  the United States and Canada had reached an agreement on the 
basic terms for settling their decades-old differen ces over softwood lumber trade.  This was a 
welcome development, which should bring to an e nd the present dispute and the other related lumber 
disputes.  Of course, the United States was disappointed  that the Appellate Body had not been able to 
affirm the Panel's findings in this proceeding.  As  the United States had expl ained in its submissions 
to the Panel and the Appellate Body, the Intern ational Trade Commission had faithfully implemented 
the recommendations and rulings from the original dis pute.  In view of the 27 April agreement on the 
basic terms of a settlement, the United States looked fo rward to working with Canada to terminate the 
various disputes that remained pending before the WTO, as well as in other fora.  
27. The representative of th e European Communities
 said that in the present dispute, the EC had 
intervened before the Appellate Body in support of  Canada's claims that the Panel had applied an 
improper standard when reviewing the WTO compatibility of the US measure taken to implement the earlier DSB's ruling.  In the present case, the Pane l had appeared to only require the investigating 
authority to reach a conclusion which was not "unr easonable" or "demonstrably unreasonable".  In the 
EC's view, this was an extremely deferential standard of review wh ich fell short of inquiring into 
whether the investigating authority had reached a conclusion which was unbiased, objective and fully 
supported by the evidence on the record.  The EC, th erefore, welcomed the Appellate Body's finding 
that the Panel had not shown a sufficient degree of  scrutiny to objectively assess, as required by 
Article 11 of the DSU, whether the United States ha d brought its injury determination into conformity 
with its WTO obligations.  The EC wished to commend the Appellate Body for having drawn general  WT/DSB/M/211 
 Page 7 
 
 
  guidelines to define more precisely what was e xpected from a panel to perform its duty under 
Article 11 of the DSU.  The standard of review to be  applied by a panel was a key legal issue.  It was 
well established that panels were, on th e one hand, prohibited from conducting a de novo  review.  On 
the other hand, panels could not simply defer to the conclusions of the investigating authority.  But, 
striking the right balance between these two extremes might be a difficult exercise.  The clarification 
brought by the Appellate Body was, therefore, very  much welcome. Finally, this case illustrated again 
the need to introduce appropriate remand process.  Whether the United States had brought or not its 
determination in conformity with its WTO obliga tions remained an open question as the Appellate 
Body could not complete the analysis in the ab sence of sufficient uncontested facts.  The present 
dispute settlement provisions left no other solution than to restart a procedure under Article 21.5 of 
the DSU.  This created an unnecessary burden on Me mbers and on the dispute settlement process and 
was contrary to the principle of prompt settlement of disputes. 
28. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS277/AB/RW and the Panel Report contained in  WT/DS277/RW, as reversed by the Appellate 
Body Report. 
3. United States – Laws, regulations and methodology for calculating dumping margins 
("Zeroing") 
(a) Report of the Appellate Body (WT/DS294/AB /R) and Report of the Panel (WT/DS294/R)  
29. The Chairman  drew attention to the communication from the Appellate Body contained in 
document WT/DS294/15 transmitting the Appellate Body Report on:  "United States – Laws, 
Regulations and Methodology for Calculating Du mping Margins ('Zeroing')", which had been 
circulated on 18 April 2006 in document WT/DS294 /AB/R, in accordance with Article 17.5 of the 
DSU.  He wished to remind delegations that the Appellate Body Report and the Panel Report 
pertaining to this case had been circulated as unrestri cted documents.  He noted that Article 17.14 of 
the DSU required that:  "An Appellate Body repor t shall be adopted by the DSB and unconditionally 
accepted by the parties to the dispute unless the DSB decides by consensus not to adopt the Appellate 
Body report within 30 days following its circulation to Members.  This adoption procedure is without 
prejudice to the right of Members to express their views on an Appellate Body report."  
30. The representative of the European Communities  said that first of all, the EC wished to thank 
the members of the Panel and the Appellate Body and the Secretariat for the time and the efforts 
dedicated to resolving the present dispute.  At  first sight, the issue of "zeroing" seemed only 
concerned with highly technical a nd detailed calculation rules, but actually behind this dry concept of 
"zeroing" lay the fundamental issue of how to defi ne and establish one of the key concepts of the 
Anti-Dumping Agreement; i.e. the "margin of dumpi ng".  The EC warmly welcomed the finding of 
the Appellate Body which had clarified that a "m argin of dumping" was (i) in relation to a product 
under investigation as a whole, and (ii) for an exporter or a foreign producer.  Article VI:I of the GATT 1994 and Article 2.1 of the Anti-Dumping Agreem ent made clear that there was no such thing 
as a margin of dumping for certain models, or for i ndividual importers or for specific transactions.  
Any calculation method which did not aggregate all "intermediate values" when multiple comparisons 
had been used in a first stage had necessarily failed to measure the level of dumping practiced at the level of the product and of the exporter.  This me ant, in turn, that the definition of "margin of 
dumping" prohibited "zeroing" methods whether used in  original investigations or in duty assessment 
procedures as rightly decided by the Appellate Body. 
31. The EC also wished to stress another fundame ntal aspect of the Appellate Body Report, 
namely, its conclusion that a challenge might be brought in the WTO against an unwritten measure.  
This was fully consistent with the DSU and previ ous DSB rulings:  the form could not prevail over 
the substance.  As in the present dispute, there we re clearly cases where a Member maintained a norm WT/DSB/M/211 
Page 8  
 
  which violated its WTO obligations without having  expressed that norm into a written document.  
Rejecting the possibility to challenge such norms would lead to an endless loop of litigation thus 
preventing the prompt settlement of disputes and secu rity and predictability of the multilateral trading 
system, which was at the heart of the dispute settlement system.   
32. It was not just the conclusion reached by the Appe llate Body which merited attention, but also 
the clear criteria set for bringing an "as such" ch allenge against an unwritten measure.  The standards 
of evidence were high and the burden of proof heavy.   But in the EC's view , this was justified as, 
unlike with a written measure, the existence itself of the measure might be uncertain.  The only 
reservation that the EC would make related to th e Appellate Body's conclusion that it could not 
examine whether the "zeroing" methodology as used in US administrative reviews was a measure that 
could be challenged as such, and this because of the absence of factual findings by the Panel or 
undisputed facts in the Panel record. 
33. The Panel record had for administrative revi ews exactly the same evidence as that found 
sufficient in respect of original investigations and the United States had not contested the veracity of 
the facts advanced by the EC.  Actually, it seeme d that the Appellate Body had only searched the 
Panel Report for such evidence.  The EC was concer ned about the implication that such an approach 
could have if followed in other cases.  This would indeed mean that the Appellate Body would never 
be in a position to complete the analysis and decide on a claim whenever a panel declined to rule on a 
claim and thus made no factual findings.  The EC noted that in  the "US – Softwood Lumber VI", 
which was also on the agenda of the present meeting,  the Appellate Body had established what factual 
findings would be necessary to complete the analys is, had searched both the Panel Report and record 
for those facts and had finally concluded that they were contested between the parties before declining 
to complete the analysis.  In the EC's opinion, th is was a more appropriate way to decide on whether 
the Appellate Body might or might not complete the analysis. 
34. With this limited reservation in mind, the EC was pleased to support the adoption of the 
Appellate Body Report and the Panel Report, as modi fied by the Appellate Body and expected that 
prompt and full compliance would follow.  The United States would have to revise its specific 
determinations in the 15 original investigations and 16 administrati ve reviews challenged by the EC, 
but also to abandon the use of its "zeroing" met hodology in original inves tigations, thus ceasing the 
practice of "zeroing".  Common sense dictated that the United States, in order to avoid an endless loop 
of litigation and to spare the WTO from further disp utes, should also declare that it would cease to use 
"zeroing" in administrative reviews.  The EC was prepared to work constructively with the 
United States with a view to prompt implementation. 
35. In this respect, the EC wished to welcome the initiative of the US Department of Commerce, 
which, on 6 March 2006, had announ ced its intention to cease the practice of "zeroing".  The EC, 
however, noted that this initiative was very limited in  scope.  It only concerned "zeroing" in weighted-
average-to-weighted-average comparison in original  investigations.  This was certainly a first 
welcome gesture, but it was clearly insufficient to solv e all issues raised by the use of "zeroing" in the 
United States.  The EC also called on the United Stat es to follow its example when faced with similar 
circumstances.  After the condemnation of  its an ti-dumping duty on bed-linen from India, the EC had 
drawn the inevitable conclusion from the DSB's ruling and stopped the practice of "zeroing".  
36. The Appellate Body's findings in the presen t dispute had likewise clear far reaching 
consequences on which the United States could not tu rn a blind eye.  The definition of "margin of 
dumping" was applicable through the whole Anti-Du mping Agreement.  It was applicable in duty 
assessment proceedings, in new-comer reviews and in  changed circumstances reviews.  It was also 
applicable in sunset reviews whenever a dumpi ng margin was calculated or relied on as already 
decided by the Appellate Body in "US – Corrosion Resistant Steel Sunset Review" (DS 244).  It was 
equally applicable whether the comparison of export prices and normal values was made on a  WT/DSB/M/211 
 Page 9 
 
 
  weighted-average-to-weighted-average basis, or on a transaction-to-transaction basis.  The United 
States should, therefore, stop "zeroing" in all thre e reviews, not just duty assessment proceedings, and 
also when comparison was conducted on a transaction- to-transaction basis.  Any other attitude would 
only lead to a multiplication of disputes and undermine support for the anti-dumping instrument. 
37. The representative of the United States  said that his country found the Report of the Appellate 
Body deeply troubling.  Indeed, the United States was so troubled by this Report that it had taken 
what was, for the United States, the unusual step  of setting out its views at length in a written 
document, which currently was being distributed in  the meeting room.  The United States had also 
requested that this document be circulated to all Members as a DS document.4  He assured delegations 
that he did not intend to read this document at  the present meeting.  Instead, he would simply 
summarize those aspects of the Report that should cause Members concern.  He said he would make 
four points and a brief concluding remark.  First, in finding against the use of "zeroing" in the post-
investigation phases of an anti-dumping proceeding, the Appellate Body had relied upon the rationale 
that the term "margin of dumping" always referred to "the product as whole".  This rationale was 
much broader than the rationale that the Appellate  Body used in the "Bed Linens" and "Lumber" 
disputes.  In those disputes, the Appellate Body had found that the use of "zeroing" in investigations 
involving the average-to-average comparison method was inconsistent with the specific requirements 
of the first sentence of Article 2.4.2 of the Anti- Dumping Agreement.  By contrast, the Appellate 
Body's new rationale ultimately was based upon GA TT Article VI and Article 2.1 of the Antidumping 
Agreement.  This new rationale had serious implications for othe r provisions of the Anti-Dumping 
Agreement and the manner in which Members had administered their anti-dumping regimes.  He 
would not discuss these implications in detail here ;  they had been addressed in the US written 
document.  In brief, however, it appeared that the Appellate Body's reas oning rendered inutile the 
targeted dumping provision of Article 2.4.2.  It w ould also require dramatic changes to the operation 
of prospective normal value systems and the use of constructed value. 
38. A second troubling aspect of the Report was related to the first;  namely, that even though the 
implications of the "product as a whole" rationale had been pointed out to the Appellate Body, it had 
not even discussed them in its Report.  By contrast, both the Panel in this dispute and the panel in the 
"Lumber Anti-Dumping" Article 21.5 proceeding had discussed the implications of the "product as a whole" rationale in a thorough and rigorous manner.   Indeed, the brevity of the Appellate Body's 
analysis was difficult to square with the standards that it had established for panels let alone those it 
had established for Members' domestic authorities in trade remedy matters. 
39. Third, there was the Appellate Body's treatment  of the Panel's "as such" finding regarding 
"zeroing" as a "methodology".  The United States did not disagree with the analytical framework set out by the Appellate Body regarding written or unwr itten measures.  The problem was that instead of 
examining whether the Panel had properly applied th is framework, the Appellate Body had embarked 
upon its own de novo  analysis regarding the so-called "norm of zeroing".  The Appellate Body had 
made its own findings based upon its  own consideration of evidence concerning which the Panel had 
made no factual findings or that the parties contested .  In so doing, the Appellate Body had departed 
from its own "rigorous" standard for "as such" cl aims, and the United States still did not know the 
identity of the measure of general and prospect ive application that allegedly caused the US 
Department of Commerce to zero. 
40. Finally, the Appellate Body had failed to address the US legal arguments regarding the 
mandatory/discretionary distinction.  Inexplicably , the Appellate Body had repackaged the US legal 
arguments as ones relating to the Panel's handling of  the facts under Article 11 of the DSU.  As a 
result, in a break from previous GATT and WTO reports, there was a finding of an "as such" breach without a corresponding finding that the so-called "measure" actually caused the Member in question 
                                                     
 
4 Subsequently circulated in document WT/DS294/16. WT/DSB/M/211 
Page 10  
 
  to breach its obligations.  Based on what the United States had heard and had read thus far, the 
Appellate Body Report was being applauded in  some quarters because it had gone beyond what 
negotiators could have achieved.  However, that was just another way of saying that the Report had 
added to or diminished rights and obligations actually agreed to by Members, notwithstanding 
Articles 3.2 and 19.2 of the DSU.  To the extent th at this perception was widely held, the credibility of 
the WTO dispute settlement system was undermined.  To conclude, the United States considered the 
issues presented by this Report to be important, and welcomed a discussion of them with Members. 
41. The representative of Japan
 said that his country welcomed the findings and reasoning of the 
Appellate Body set forth in its Report in the case unde r consideration.  As a third participant, Japan 
had actively participated in, and had made a substa ntive contribution to, the Appellate Body's review 
proceedings in this case.  Japan was also  challenging the US "zeroing" methodology  in separate 
dispute settlement proceedings that was currently und erway (DS322).  Japan also appreciated that the 
Appellate Body had affirmed the arguments advanced  by Japan both in this case (DS294) and its own 
dispute (DS322).  In particular, the Appellate Body Report was significant in the following two ways.  First, the Appellate Body had uphe ld the Panel's finding that the "zeroing" methodology used by the 
United States in W-to-W comparisons in original investigations constituted a rule of general and 
prospective application that could be cha llenged "as such" in WTO dispute settlement.
5 
42. Second, the Appellate Body had held that the US application of the "zeroing" methodology in 
weighted-average-to-transaction co mparisons in certain administrativ e reviews was inconsistent with 
Article 9.3 of the Anti-Dumping Agreement and Artic le VI:2 of the GATT 1994.  Significantly, the 
Appellate Body's reasoning stemmed from the definiti on of "dumping" contained in Article 2.1 of the 
Anti-Dumping Agreement and Article VI of the GA TT 1994 that "applies to the entire Agreement".6  
Thus the Appellate Body had confirmed that "unde r the Anti-Dumping Agreement and Article VI of 
the GATT 1994, 'dumping' and 'margins of dumping' must be determined for the product as a whole" 
for exporters or foreign producers,  not individual transactions, and th at all multiple comparison results 
must, therefore, be taken fully into account in the dumping determination.7 
43. The Appellate Body had continued that, becau se Article 9.3 referred to Article 2, under 
Article 9.3, "the amount of the assessed anti-dumping duties shall not exceed the margin of dumping as established 'for the product as a whole' ".
8  In consequence, the Appellate Body had found that, 
because the USDOC "systematically disregards" the negative comparison results, the "zeroing" 
methodology in the periodic reviews necessarily resulted "in amounts of assessed anti-dumping duties 
that exceed the foreign producers' or exporters' margins of dumping with which the anti-dumping 
duties had to be compared under Article 9.3 of th e Anti-Dumping Agreement and Article VI:2 of the 
GATT 1994".9 
44. Japan considered that these and other findings and reasoning contained in the Appellate Body 
Report were compelling, well-founded and fully consistent with the precedents it had established in the previous cases.  Japan, therefore, strongly support ed the adoption by the DSB of this Appellate Body 
Report and the Panel Report, as modifi ed by the Appellate Body Report.  
45. The representative of Korea
 said that, at the outset, as a third pa rty participant in this dispute, 
Korea wished to express its sincere appreciation for the efforts made by the Appellate Body, the 
Panel, and the Secretariat in this matter.  Kor ea welcomed the Appellate Body's finding that an 
investigating authority's calculation of "the ma rgin of dumping" for purposes of the Anti-Dumping 
                                                      
5 Appellate Body Report, paras. 204 and 205. 
6 Appellate Body Report, para. 125. 
7 Appellate Body Report, para. 126.  See also paras. 128-129. 
8 Appellate Body Report, para. 126. 
9 Appellate Body Report, US – "Zeroing" (EC), para. 133.  WT/DSB/M/211 
 Page 11 
 
 
  Agreement must "aggregate the results of all of the multiple comparisons, including those where the 
export price exceeds the normal value," and that an in vestigating authority "is not allowed to take into 
account the results of only some multiple comparisons, while disregarding others".10  As the Appellate 
Body had found, the practice of "zeroing" empl oyed by the US Department of Commerce in 
administrative reviews could not be reconciled w ith that requirement.  Indeed, no practice of 
"zeroing" – whether based on an average-to-avera ge, transaction-to-transaction, or transaction-to-
average-methodology can be consistent with the requ irement that the calculati on of "the margin of 
dumping" aggregate the results of all of the multiple  comparisons.  Korea looked forward to the swift 
implementation of the Appellate Body's finding in the practice of all Members. 
46. Korea appreciated the logic of the Appellate Body's reasoning, and welcomed the Appellate 
Body's correction of the earlier report by the Panel b ased on a detailed analysis of the language of the 
Anti-Dumping Agreement.  However, Korea beli eved there was an even more fundamental 
justification for this result:  "zeroing" was simply not consistent with the obligation contained in the 
first sentence of Article 2.4 of the Anti-Dumping Ag reement to make a "fair comparison" between the 
export price and normal value.  As Korea had explained during the Panel and Appellate Body 
proceedings, the "fair comparison" requirement of  Article 2.4 was an overarching and independent 
obligation that prevented Members from achiev ing unfair results through unbalanced or biased 
methodologies, such as the practice of "zeroing" that had been addressed in this dispute.  While the 
Appellate Body Report might spell the end of the particular problem of "zeroing", there would, 
undoubtedly, be many other unbalanced or biased me thodologies that would need to be addressed in 
the future under Article 2.4's "fair comparison" requirement. 
47. As a separate matter, Korea also welcomed the Appellate Body's clarification concerning the 
types of measures that might be challenged "as such" in dispute settlement proceedings, and the 
evidentiary requirements for such challenges. 
48. Finally, Korea noted the Appellate Body's inability to "complete the analysis'' on a number of 
issues on which it had rejected the Panel's reasoning.  Fortunately, these issues did not appear to have 
been critical to the resolution of the dispute.  Neve rtheless, they highlighted the need for improvement 
of the WTO's dispute settlement procedures to enable  the DSB to reach a resolution of all material 
issues.  As Members were all well aware, the issue of "zeroing" had been the subject of discussion in 
the negotiations for the improvement and clarificatio n of the Anti-Dumping rules as part of the Doha 
Development Agenda.  Discussions on this issue had also been underway in the Special Session of the 
DSB with a view to further improving the current text  of the DSU.  There was, of course, a difference 
between a decision on the application of the current  rules in a specific dispute, and the process of 
negotiating the rules for future application.  Neve rtheless, the Appellate Body's findings in this 
dispute should provide negotiators with a clearer picture of the rights and obligations of Members 
under the current rules, as well as an indication of areas where further improvement would be needed. 
49. The representative of Mexico  said that his country had participated as a third party in the case 
under consideration and was grateful to the Panel and the Appellate Body for having allowed Mexico 
to express its views in the respective proceedings.  Mexico was pleased with the Appellate Body's 
ruling as it represented a positive step toward elimin ating the use of "zeroing" by WTO Members.  
More specifically, Mexico was of the view that the Appellate Body was right in reversing the Panel's 
finding by determining that there was indeed an "as applied" violation on the part of the United States 
in its use of the "zeroing" methodology for administrativ e reviews.  Mexico reiterated its view that the 
practice of "zeroing" was inconsistent with the Anti-Dumping Agreement when applied to original 
investigations, administrative reviews or any othe r type of investigation envisaged under the Anti-
Dumping Agreement, as well as to any of the vari ous methods for comparing normal value and export 
price.  Mexico believed that as a consequence of the Appellate Body 's ruling, the United States should 
                                                      
10 WT/DS294/AB/R, para. 127. WT/DSB/M/211 
Page 12  
 
  put an end, erga omnes , to "zeroing" in all ongoing anti-dumping investigations and administrative 
reviews. 
50. The representative of Hong Kong, China
 said that her delegation wished to thank the 
Appellate Body, the Panel and the Secretariat for their work on this case, which concerned a long-
standing and important issue in the area of anti- dumping, namely the practice of "zeroing" in anti-
dumping proceedings.  Hong Kong, China maintained a k een interest in this case and had participated 
actively in the dispute settlement process as a thir d party.  The "zeroing" methodology was, in her 
delegation's view, inconsistent w ith the provisions of the Anti-Dumping Agreement, whether used in 
the original investigations or in reviews, a nd irrespective of whether the anti-dumping duty was 
assessed on a retrospective or a prospective basis. 
51. Her delegation welcomed the Appellate Body 's findings as instructive and helpful in 
clarifying that the use of "zeroing" in administrative reviews was a violation of Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 199 4.  While it would have been desirable if the 
Appellate Body had made further cl arifications and had further elaborated its analysis in a number of 
areas, her delegation believed that the Appellate Bo dy's rulings, as they were, already sufficed in 
addressing conclusively the question of WTO-cons istency of the "zeroing" methodology.  Hong 
Kong, China believed this decision would enhance th e predictability of the trade, and would help 
reduce any future attempt to produce inflated dum ping margins.  This preserved the rights and 
obligations of Members under the Anti-Dumping Ag reement.  With these observations, Hong Kong, 
China supported the adoption of the Report of the Appellate Body and the Report of the Panel as 
modified by the Appellate Body, and urged the United States to implement the DSB's rulings and 
recommendations forthwith.  Hong Kong, China wish ed to invite other WTO Members to examine 
their present rules and practices on dumping margin calc ulations and to eliminate the use of "zeroing". 
52. The representative of Brazil
 said that, in view of its systemic interests, Brazil had participated 
as a third party to this dispute.  Brazil wished  to thank the Appellate Body, the Panel and the 
Secretariat for their work in the case.  During these pr oceedings, Brazil had stated that this dispute had 
given the dispute settlement mechanism an appropriate  opportunity to clarify the issue of "zeroing" in 
a way that would curb a potential never-ending cycle of litigation.  Brazil was pleased to note that the 
findings of the Appellate Body corroborated its a ssessment.  With reference to both the EC's "as 
applied" and "as such" claims, the Appellate Body had given clear indications that trade remedies 
investigating authorities must treat export prices for what they really were, both in original 
investigations and reviews, and regardless of the type of comparison used.  Although the Appellate 
Body Report formally concerned only "zeroing " in "weighted-average -to-weighted-average" 
comparisons in original investigations and "zeroing" in "weighted-average-to-transaction" 
comparisons in administrative reviews, it containe d an unequivocal statement that the intrinsic 
unfairness of "zeroing" was effectively the same wh ether using the average-to-average, average-to-
transaction, or transaction-to-transaction methodolog y.  In all of these kinds of comparison, if 
"zeroing" was used, export prices were treated as less than what they really were, and the margins of 
dumping would not be established for the product as a w hole.  In line with its previous decisions in 
the trade remedies area, the Appellate Body had sent again the important message that, while the 
WTO Agreements conferred a great flexibility on the investigating authority in terms of 
methodologies to perform its task, such flexibility did not allow for abuse or manipulation of the 
available data.  Brazil expected that the United States would fully implement the DSB's 
recommendations in this case in the shortest period possible.  Brazil was also hopeful that in the 
context of the implementation process and for the be nefit of the whole Membership, the United States 
would abandon the use of "zeroing" in all trade remedies domestic proceedings.  
53. The representative of Argentina  said that, like previous speakers, his country wished to 
express its systemic concern with regard to the delays in implementing the DSB's recommendations 
and rulings.  Prompt compliance with the DSB's recommendations and rulings was a critical element  WT/DSB/M/211 
 Page 13 
 
 
  of the WTO dispute settlement system, and there was no doubt that long delays in implementation 
adversely affected the credibility of the system to th e detriment of all Members.  Argentina, therefore, 
urged the United States to redouble its efforts to  ensure immediate compliance with the DSB's 
recommendations and rulings in this dispute. 
54. The DSB took note  of the statements, and adopted  the Appellate Body Report contained in 
WT/DS294/AB/R and the Panel Report contained in WT/DS294/R, as modified by the Appellate 
Body Report. 
__________