WT/DS335/R 
 Page C-1 
 
 
   
 
ANNEX C 
  
SUBMISSIONS OF THIRD PARTIES 
  
Contents Page 
Annex C-1 Oral Statement of Brazil C-2 
Annex C-2 Answer of Brazil to Question Posed by the Panel C-4 
Annex C-3 Written Submission of Chile C-5 
Annex C-4 Oral Statement of Chile C-6 
Annex C-5 Answer of Chile to Question Posed by the Panel C-7 
Annex C-6 Oral Statement of China C-8 
Annex C-7 Written Submission of the European Communities C-9 
Annex C-8 Answer of the Europ ean Communities to Question Posed 
  by the Panel C-11 
Annex C-9 Oral Statement of India C-13 
Annex C-10 Answer of India to Question Posed by the Panel C-14 
Annex C-11 Oral Statement of Japan C-15 
Annex C-12 Answer of Korea to Question Posed by the Panel C-16 
Annex C-13 Written Submission of Mexico C-18 
Annex C-14 Oral Statement of Mexico C-23 
Annex C-15 Answer of Mexico to Question Posed by the Panel C-25 
Annex C-16 Oral Statement of Thailand C-26 
 WT/DS335/R 
Page C-2  
 
  ANNEX C-1 
 
ORAL STATEMENT OF BRAZIL 
 
3 November 2006 
 
 1. Brazil wishes to thank you for the opportunity  to appear before you today to present our 
considerations about the present dispute. Our deci sion to join as third party derives from both a 
systemic and trade interest in the matter to be exam ined by you. "Zeroing" is an issue of great concern 
for Brazil, as well as for all but one Members of the WTO. In addition, Brazilian exports of shrimp to 
the US market are also affected by an anti-dum ping measure resulting from the same investigation 
that Ecuador has decided to challenge.  2. Given the large and rich body of WTO decisi ons against "zeroing", Brazil could have opted to 
address a series of issues the parties to the dis pute have chosen not to tackle, according to the 
Agreement on Procedures .
1 Nonetheless, and in order not to o ffer an excuse for the United States to 
depart from the bilateral commitment established therein, we will present only some general 
comments on "zeroing" in the context of the so- called "weighted average-to-weighted average" 
comparison at the original investigation stage.  
3. In no way, though, Brazil's decision should be  read as acquiescence to interpretations such as, 
for instance, that the prohibition on "zeroing" wo uld result from, and be stifled by, a very narrow 
reading of Article 2.4.2 and the Anti-Dumping Agreem ent as a whole. We reaffirm that it is clear 
under the AD Agreement that "zeroing" is never
 permissible. 
 
4. For Brazil, the issue at stake in this case is qu ite simple.  In short, "zeroing inflates the margin 
of dumping for the product as a whole"2, "may lead to an affirmative determination that dumping 
exists where no dumping would have been established in the absence of zeroing"3 and, also in the 
words of the Appellate Body, that methodology encloses an "inherent bias"4 that, according to Brazil, 
"taints", any investigation or review. "Zeroing" is, by definition, the denial of the parameters of 
objectivity and fairness that permeate the whole AD Agreement and are expressly referred to in 
Article 17.6. By resorting to "zeroing", an inves tigating authority's assessment of the facts cannot be 
"unbiased and objective", thus rendering the results of  the investigation inconsistent with the WTO 
rules.  5. As mentioned before, there exists a str ong body of WTO decisions condemning "zeroing". 
Not surprisingly, most of those decisions are dir ected at the United States, which remains the only 
WTO Member to systematically use "zeroing" in its anti-dumping investigations and reviews. For 
the moment, the Appellate Body has had three oppor tunities to reiterate the inherent illegality of 
"zeroing" as practiced by the United States. I refe r the panel to the Appellate Body reports in US – 
Softwood Lumber V (DS 264, original and compliance proceedings) and US – Zeroing  (DS 294, at the 
request of the EC). A fourth pronouncement by the Appellate Body – hopefully the last one – is 
expected to be handed out early January. 
 
                                                     
 
1 Exhibit ECU-1 to Written Submission of Ecuador. 
2 United States – Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R, 
adopted 31 August 2004. 
3 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan , WT/DS244/AB/R, adopted on 9 January 2004, at para.135. 
4 Idem , ibidem .  WT/DS335/R 
 Page C-3 
 
 
  6. Despite this, the United States insists to pr olong litigation on a matter that should have been 
out of the multilateral agenda since long ago. Today' s case is one more example of such tactics, but 
the list would still enco mpass at least other three recent di sputes touching upon US "zeroing": 
US – Continued Existence and Application of Zeroing Methodology  (DS 350), US – Final Anti-
Dumping Measures on Stainless Steel from Mexico  (DS 344), and US – Measures relating to Shrimp 
from Thailand  (DS 343). 
 7. We are convinced that the option chosen by th e United States will even tually reveal – as it is 
already doing – its absolute inad equacy to the objective pursued. We regret, however, that, at the 
same time, such an option may pose considerable ri sks to the credibility of the multilateral system for 
the resolution of disputes. 
 8.  The fact that the United St ates has been able to sign the Agreement on Procedures  with 
Ecuador is a clear signal that not even the United States believes "zeroing" is permissible under the 
AD Agreement. Why not end once and for all the a pplication of "zeroing" in its AD procedures, 
instead of forcing other Members to engage in l itigation, albeit in an ap parently fastened and 
simplified procedure? Also, why insist, on appeal , on the maintenance of decisions in frontal 
opposition to previous reports of the Appellate Body, as illustrated by the compliance panel in 
US – Softwood Lumber V  and the panel in the dispute brought by Japan against "zeroing"? The US 
decision to continue the disputes gives the strong impression that the United States may be comfortable with such a high rate of risk to the security and predictability the WTO dispute settlement 
system is supposed to provide. 
 Mr. Chairman, Members of the Panel,  9. Let me conclude by saying that, given that the parties to the dispute have not revoked 
Article 11 of the DSU, you are bound by the requireme nt of assessing objectively the facts of the case. 
We believe that you are fully equipped to find that  the AD measure applied against Ecuador's shrimp 
exports to the United States constitutes a clear viol ation of the AD Agreement. Ecuador has made its 
prima facie  case. The respondent has not contested the accuracy of Ecuador's claims. On top of that, 
the Appellate Body has undeniably made it clear that  "zeroing" in the "weighted average-to-weighted 
average" comparison of normal value and export pri ces during original investig ations is inconsistent 
with Article 2.4.2 of the AD Agreement. Simple as it may seem, your task is, in our view, of a 
significant relevance. Brazil is confident that this Panel will provide us with a new and strong nail in 
the US "zeroing"'s coffin.  Thank you, very much. 
 WT/DS335/R 
Page C-4  
 
  ANNEX C-2  
 
ANSWER OF BRAZIL TO QUESTION 
POSED BY THE PANEL 
 
13 November 2006 
 
 
Q1. What does your delegation consider is the ro le of a Panel in a case like this one, where 
there is no substantive disagreement between the Pa rties as to the inconsis tency of a measure with 
one or more cited provisions of a covered Agreemen t? Can the Panel limit itself to sanctioning the 
mutual understanding of the parties, or must the Panel, on its own, determine whether the 
measure at issue is inconsistent with the cited provisions? 
 Reply
 
 As Brazil pointed out in its Or al Statement of 3 November, the procedural agreement between 
Ecuador and the United States – the so-called 'Agr eement on Procedures' (Exhib it ECU-1) – have not, 
and could not have, revoked Article 11 of the DSU. 
 In addition, solely from the text of that bila teral agreement, it does not appear to be possible 
to necessarily conclude that there is no substantive dispute or disagreement between the parties. The 
United States committed only to not contesting Ecuador 's (limited) claims. The text of the bilateral 
agreement does not spell out any US assent on th e righteousness of Ecuador's claims, although a 
decision not to contest the complainant's case would, in practice, seem very unlikely if the respondent truly believes its measure is WTO-consistent. 
 As an illustration of the US position, Brazil refers  the Panel to the US Oral Statement, where it 
is said that '[…] the submission of the European Communities ("EC") […] makes assertions that are 
false. […] [T]he EC asserts that th e United States has rec ognized 'that zeroing is inconsistent with the 
'Anti-Dumping Agreement' [footnot e omitted], even though the EC know full well that a panel recently 
agreed with the United States that 'zeroing' is not always WTO-inconsistent."
1 
 Finally, the Panel's task derives from, and is limited by, the terms of reference established by the 
DSB in accordance with Article 7 of the DSU, which were not modified by the 'Agreement on Procedures'. 
 In light of the above, this Panel is, ther efore, bound by the duty to 'make an objective 
assessment of the matter before it, including an obj ective assessment of the facts of the case and the 
applicability of and conformity with the relevant c overed agreements, and make  such other findings as 
will assist the DSB in making the recommendations or  in giving the rulings  provided for in the 
covered agreements'. In order to discharge its burde n, the Panel may even resort to Article 13 of the 
DSU to seek relevant information, if it deems appropriate and necessary.  
 If, however, this Panel considers that the bilate ral agreement reflects the absence of substantive 
disagreement between the parties to the dispute and constitutes a mutually agreed solution, it should 
follow Article 12.7 of the DSU, third sentence. Its report should, thus, be  limited to 'a brief description 
of the case and to reporting that a solution has b een reached'. For Brazil, echoing systemic concerns 
expressed by other third parties to  this proceeding, panels are not  intended to simply homologate 
bilateral agreements. In fact, by the very terms of Article 12.7, panels are not entitled to make findings 
and recommendations in case a bilateral solution for the dispute has been found by the parties. 
                                                      
1 US Opening Statement, at para. 4.  WT/DS335/R 
 Page C-5 
 
 
  ANNEX C-3  
 
WRITTEN SUBMISSION OF CHILE 
 
30 October 2006 
 
 1. Chile thanks the panel for this opportunity to submit its point of views on this dispute. We 
reserved our third party rights in view of our syst emic interest involved in  the allegations made by 
Ecuador.  However, considering th e understanding reached by Ecuador and the United States, we will 
limit to express some general comments. 
 2. Chile regrets that the United States continues applying "zeroing" methodology despite that  reiterated reports by Panels and th e Appellate Body have concluded that the use of this methodology 
in determining anti-dumping margins is inconsiste nt with Article 2.4.2 of the Agreement on the 
Implementation of Article VI of GATT 1994 (An ti-Dumping Agreement), even in cases against the 
United States.  Furthermore, we regret that this situation, until now, has not been enough to amend its 
laws and administrative practices on the matter.  3. Chile expresses its satisfaction for the cons tructive manner through which both parties, but 
particularly the United States, have faced this di spute and the situation arising from the lack of 
legislative and administrative amendments to eliminate zeroing methodology. This bilateral 
agreement shows that the Dispute Settlement U nderstanding provides for the necessary flexibilities 
for parties in order to adjust the procedures in specific issues, bearing always in mind the main 
objective of the system, namely the prompt and satis factory settlement of the matters raised under the 
mechanism.  Thus, examples as this , of an efficient handling of DSU's flexibilities, should make us 
reflect carefully on some of the proposals presented during the DSU negotiations. 
 4. Notwithstanding the above, a bilateral solu tion such as the one reached in this case is 
constrained by its own scope and involves high costs for the parties and the system, for instance, to 
initiate a procedure knowing beforehand its outcome .  Hence a definitive and multilateral solution 
(erga omnes ) to the use of the zeroing methodology is  required which implies, necessarily, the 
amendment of the relevant laws and administrative practices of the Unites States.  
 5. We would like to end pointing out that we ar e pleased that the Department of Commerce has 
initiated a public consultation pro cess in order to eliminate such methodology and we expect that the 
conduct shown by the United States in this case reflect s a signal of a deep change that benefits all 
WTO Members. 
   WT/DS335/R 
Page C-6  
 
  ANNEX C-4 
 
ORAL STATEMENT OF CHILE 
 
3 November 2006 
 
 1. I should like to thank you, Mr Chairman, and the members of the Panel for giving my country the opportunity to express its views on this dispute.  With regard to the understanding reached by 
Ecuador and United States I shall limit my comments to the following points. 
2. Chile regrets the fact that the United States is continuing to apply the methodology of zeroing, 
despite the fact that a number of Panel and Appellate  Body reports have concluded that the use of that 
methodology for the determination of anti-dumping marg ins is inconsistent with Article 2.4.2 of the 
Anti-Dumping Agreement.  Furthermore, we deplore the fact that, despite such conclusions and the 
express recognition by the United States in its wr itten submission that the methodology of zeroing is 
inconsistent with the Anti-Dumping Agreement, the United States has not amended its laws and 
administrative practices in this field.  
3. Without prejudice to the merits contained in  bilateral understandings such as that reached by 
Ecuador and United States, in general terms they are r estricted by their own scope of application, i.e., 
their effects only apply to the parties to the agreemen t, while what is required in this particular case is 
a multilateral solution ( erga omnes ).  The amendment by the United States of the relevant laws and 
administrative practices in such a way as to prohibi t the use of the methodology of zeroing by the 
investigating authorities is the only definitive solu tion and the only means by which the United States 
will be able to bring its laws  and regulations into conform ity with its WTO obligations. 
4. Thank you very much.   WT/DS335/R 
 Page C-7 
 
 
  ANNEX C-5 
 
ANSWER OF CHILE TO QUESTION 
POSED BY THE PANEL 
 
13 November 2006 
 
 
Q1. What does your delegation consider is the role  of a Panel in a case like this one, where 
there is no substantive disagreement between the Parties as to the inconsistency of a measure 
with one or more cited provisions of a covered Agreement? Can the Panel limit itself to sanctioning the mutual understanding of the parti es, or must the Panel, on its own, determine 
whether the measure at issue is inconsistent with the cited provisions?  
 
1. Article 11 of the Dispute Settlement Understa nding (DSU) provides that panels should make 
an objective assessment of the matter before them, including an objective assessment of the facts of 
the case and the applicability of and conformity  with the relevant covered agreements. 
2. Pursuant to the aforementioned provision, the ro le of the Panel in the dispute in question, 
given the agreement reached by the Parties, is to make an objective assessment of the facts of the case 
on the basis of the submissions by Ecuador that are not contested by the United States.  Subsequently, 
it must carry out an objective assessment of the app licability of the covered agreements on the basis of 
the submissions by Ecuador not contested by the Unit ed States (the law).  Finally, it must objectively 
assess the conformity of the measure with those agre ements, again on the basis of the submissions by 
Ecuador not contested by the United States. 
3. In particular, the Panel should review the pr ecedents in the matter (cited by Ecuador) which 
corroborate that country's submissions and which we re likewise not contested by the United States. 
4. On the basis of the above-mentioned steps, th e Panel should conclude that the measure at 
issue is inconsistent, as claimed by Ecuador (wit hout this being contested by the United States). 
  WT/DS335/R 
Page C-8  
 
  ANNEX C-6 
 
ORAL STATEMENT OF CHINA 
 
3 November 2006 
 
  Firstly, China wishes to thank you for giving us this opportunity to appear before you today 
and make this statement.  
 Secondly, China wishes to make several co mments on the procedural aspect of the present 
dispute.  Although WTO members still have divergent views on accelerated process of the panel and appellate proceeding in the DSU negotiations con cerning disputes related to measures previously 
found inconsistent, it is interesting to note the two pa rties have managed to put it into practice in this 
case. 
 
 Nevertheless, we believe that  there are some important elements that the panel should not 
neglect when dealing with the present dispute.   Firstly, Article 12.7 of the DSU states:  "Where a settlement of the matter among the parties to the dispute has been found, the report of the pane l shall be confined to a brief description of the 
case and to reporting that a solution has been reach ed". According to Article 12.7, the panel should 
refrain itself from making a determination concerni ng the consistency of measures under review if 
disputing parties have reached a solution. In the present case, it seems that the two parties have 
reached agreement on how to settle the dispute. We al so note neither party in this dispute referred in 
its first written submission to Articles 3.6, or 12.7 of the DSU.  They choose not to settle the dispute 
directly. Instead, the comp laining party requested the panel to conclude the measure in dispute was 
inconsistent with relevant WTO rules, and the de fending party did not make any rebuttal. We have 
concerns in this regard since this practice certainly will have systemic implications to future disputes. 
  We are also concerned how the panel will di scharge its obligation of making an objective 
assessment of the matter before it in accordance with Article 11 of the DSU.  The parties are entitled 
to request a panel to suspend its work or produ ce a brief description of the case under circumstance of 
a mutually satisfactory solution in  accordance with the DSU.  Howeve r, can disputing parties ask a 
panel to make an automatic finding following their b ilateral agreement, and, does this approach mean 
that understanding reached by both parties may be auto matically translated into a finding of a panel 
and the recommendation of the DSB?  Apparently the DSU does not provide clear answers. We 
believe the reflections of the pane l will be helpful to all Members. 
  It leads to the conclusion of China's oral stat ement and I wish to thank you for your patience. 
  WT/DS335/R 
 Page C-9 
 
 
  ANNEX C-7 
 
WRITTEN SUBMISSION OF THE 
EUROPEAN COMMUNITIES 
 
30 October 2006 
 
 
1. The Parties mutually agreed  an "Agreement on Procedures"1, 5 days after the Panel was 
established, by which they agree : 
• to co-operate and expedite the Panel pro ceedings, allowing for the adoption of a final 
report by the DSB no later than 31 October 2006; that there should be working procedures that provide for one written subm ission and at most one meeting; and the 
exchange of draft submissions; 
• the US will not contest Ecuador's claim that the measures identified in Ecuador's request for 
the establishment of the Panel are inc onsistent with Article 2.4.2 of the Anti-Dumping 
Agreement , on the grounds stated in th e Appellate Body Report in US-Softwood Lumber V ; 
• Ecuador will not request that the Panel sugg est, pursuant to Article 19.1, second sentence, 
of the DSU, ways in which the US could implement the Panel's recommendations; 
• a reasonable period of time within the meaning of Article 21.3(b) of the DSU of six 
months, beginning on the date on wh ich the DSB adopts the Panel Report; 
• the US will recalculate the relevant margins of dumping to render them consistent with 
the findings of the Panel, including the cash de posit rate, with prospective effect; and that 
• certain matters will not be raised by Ecuador , such as consistency with other provisions 
of the Anti-Dumping Agreement ; the position with respect to Exportadora de 
Alimentos S.A. and (by implication) the a pplication in time of the implementation and 
(by implication) the method used for recalculation of the dumping margin. 
 2. The Agreement on Procedures thus contains paragraphs by which the Parties agree on the 
procedures that are to govern certain aspects of the Pa nel proceedings. It also contains paragraphs by 
which the Parties agree that the US will not contest  the claim; Ecuador will not request the Panel to 
suggest, pursuant to Article 19.1 of the DSU, ways  in which the US could implement the Panel's 
recommendations; and by which the manner and timi ng of implementation are agreed. Thus, in the 
opinion of the EC, the Agreement on Procedures not only resolves certain procedural issues, it also 
represents, at least in part, a resolution or solution of the dispute between the Parties. 
 
3. Following the conclusion of the Agreement on Pr ocedures, the Panel was composed and issued 
a timetable providing for the exchange  of written and oral pleadings a nd the issuing of a Panel Report. 
 4. The Parties notified the Agreement on Procedures to the WTO on 25 October 2006.
2 
 
                                                      
1 Agreement on Procedures between Ecuador and the United States in the dispute United States – Anti-
Dumping Measure on Shrimp from Ecuador (WT/DS335), Exhibit Ecu-1 (the "Agreement on Procedures") to Written Submission of Ecuador. 
2 WT/DS335/8. WT/DS335/R 
Page C-10  
 
  5. Neither Party refers in its fi rst written submission to Articles 3.6,
3 or 12.74 of the DSU. 
 6. It appears to the EC that what the Parties appear  to have in mind is an innovative approach, rather 
in the nature of a court sanctioned agreement between th e Parties. In the opinion of the EC, the ability of 
parties to a dispute to agree certain matters, and to th en have such agreement translated into findings and 
recommendations of a panel and eventually the DSB, of equal weight in practice vis a vis  other WTO 
Members as a "conventional" panel report, may not be unlimited. The EC believes that its concerns in this respect may be shared by other Members of the WTO.  A panel has a basic obligation under Article 11 of 
the DSU to make an objective assessm ent of the matter before it, incl uding an objective assessment of the 
facts of the case. Such assessment shou ld include the facts, ev idence and legal argumen t. In the opinion of 
the EC, where certain matters are put to the Panel as ag reed between the parties, that might consequently 
have an effect on the precise terms of the findings that the panel can make, which findings are eventually to be adopted by the DSB. A panel should therefore exercise particular care in this respect, particularly 
where, as in this case, the dispute touches on ma tters that the complaining party does not pursue. 
 
7. In the particular factual circumstances of the present case, the EC naturally welcomes the 
resolution of the dispute, and do es not object to the manner of proceeding chosen by the Parties. 
However, the EC wishes to emphasise that the ma nner of proceeding chosen by the Parties evidently 
cannot affect the rights of WTO Members which ar e not parties to the Agreement on Procedures. 
Similarly, the EC wishes to emphasise that, on the substance of the matter, nothing in the Agreement 
on Procedures or the envisaged Panel Report can affect the rights of other WTO Members. 
 
8. Finally, also on the substance of the matter,  the EC welcomes the US recognition that zeroing is 
inconsistent with the Anti-Dumping Agreement . The EC hopes and trusts that the US will treat all WTO 
Members in the same way when it comes to the quest ion of zeroing. Specifically, the EC recalls that 
all Members, including the US, have affirmed their adherence to the principles for the management of 
disputes; that the dispute settlement system is  a central element in providing security and 
predictability to the multilateral trade system; that th e prompt settlement of disputes is essential to the 
effective functioning of the WTO and the maintena nce of a proper balance between the rights and 
obligations of the Members; that all Members have agreed to engage in DSU procedures in good faith 
in an effort to resolve disputes; and that all Memb ers undertake to accord sympathetic consideration to 
representations made by any other Member.
5 
 
9. In the light of such considerations, the EC trusts that the US will also not contest similar 
zeroing claims with which it is currently confronted,6 or with which it will be confronted in the future. 
 10. Furthermore, the EC trusts that the US will forthwith take the necessar y steps to terminate the 
"as such" measures by which the US  maintains its zeroing methodology. 
 
                                                     
 
3 "Mutually agreed solutions to matters formally raised under the consultation and dispute settlement 
provisions of the covered agreements shall be notifie d to the DSB and the relevant Councils and Committees, 
where any Member may raise any point relevant thereto." 
4 "Where the parties to the dispute have failed to develop a mutually satisfactory solution, the panel 
shall submit its findings in the form of a written report to  the DSB. In such cases, the report of a panel shall set 
out the findings of fact, the applicability of relevant provisions and the basic rationale behind any findings and 
recommendations that it makes. Where a settlement of the matter among the parties to the dispute has been 
found, the report of the panel shall be confined to a br ief description of the case and to reporting that a solution 
has been reached." 
5 DSU, Articles 3.1, 3.2, 3.3, 3.10 and 4.2. 
6 Such as, for example, DS322 United States – Measures Relating to Zeroing and Sunset Reviews  
(on appeal); DS350 United States – Continued Existence and Application of Zeroing Methodology ; DS344 
United States – Final Anti-Dumping Measures on Stainless Steel from Mexico .  WT/DS335/R 
 Page C-11 
 
 
  ANNEX C-8 
 
ANSWER OF THE EUROPEAN COMMUNITIES 
TO QUESTION POSE D BY THE PANEL 
 
13 November 2006 
 
 
Q1. What does your delegation consider is the role of a Panel in a case like this one, where 
there is no substantive disagreement between the Par ties as to the inconsistency of a measure  with 
one or more cited provisions of a covered Agreement ? Can the Panel limit itself to sanctioning 
the mutual understanding of the parties , or must the Panel, on its own , determine whether the 
measure at issue is inconsistent with the cited provisions ? (emphasis added) 
 
2. The European Communities thanks the Panel for its question, and respectfully responds as 
follows.  3. Article 11 of the DSU
1 is entitled " Function of Panels " (the term "function" having a similar 
meaning to the term "role" used in the question). It provides as follows : 
 
The function of panels is to assist the DSB in discharging its res ponsibilities under this 
Understanding and the covered agreements.  Accordingly, a panel should make an objective 
assessment  of the matter  before it, including an objective assessment of the facts  of the case 
and the applicability of  and conformity with  the relevant covered agreements, and make such 
other findings  as will assist the DSB in making the recommendations or in giving the rulings 
provided for in the covered agreem ents.  Panels should consult regularly with the parties to the 
dispute and give them adequate opportunity to  develop a mutually satisfactory solution. 
 4. Thus, Article 11 of the DSU does not expressly refer to a panel "sanctioning the mutual 
understanding of the parties". Rather it refers to  a panel making an "objective assessment" and making 
"findings". Such an "objective assessment" and such "findings" are always made by a panel "on its own", in the sense that the panel takes sole responsibility for them, and is not compelled  to follow the 
opinion of one or both Parties.  
5. An "objective assessment" of the matter includes an assessment of the facts  and evidence  
relating to the existence and precise content of the measure at issue; the interpretation of the relevant  
legal provisions ; and the consistency  of the measure at issue with the relevant legal provisions. The 
precise "findings" to be made by a panel may depend on all the circumstances of the case, and 
particularly whether certain matters have been ad mitted by the Defending Party, or agreed between 
the Parties. 
 
6. We comment first on the position with respect to facts . There is a distinction between a panel 
directly and autonomously finding the relevant f acts; and a panel finding that the Parties have agreed  
the relevant facts. In the former  case, the factual and evidential record placed before a panel allows 
the panel to directly and autonomously find the facts, having regard to the burden of proof. The 
admission or agreement of the Defending Party may be  part of the evidence taken into consideration 
by the panel. In the latter  case, what a panel might objectively find is that the Complaining Party has 
asserted and the Defending Party admitted certain facts, or that the Parties have agreed  certain facts. 
Whether the circumstances limit a panel's findings to  the latter, or permit the former, depends on all 
the facts of the case. In the presen t case, the European Communities believes that the Panel probably 
                                                     
 
1 EC third party written submission, para 6. WT/DS335/R 
Page C-12  
 
  has sufficient basis on which to objectively make, directly and autonomously, the necessary findings 
of fact.  7. We turn next to the question of eviden ce. A Complaining Party should normally adduce 
evidence  to support its factual assertions as part of its prima facie  case. The documented agreement of 
the Defending Party as to the facts may be releva nt evidence. A panel should make clear on what 
evidence it bases whatever factual findings it make s. As indicated above, in the present case, the 
European Communities believes that the Panel proba bly has sufficient evidentiary basis on which to 
objectively make, directly and autonomously, the necessary findings of fact.  
8. Next, we consider the question of the interpretation of the relevant legal provisions .  The 
European Communities believes that this is an area in which a panel needs to exercise particular care 
to ensure that an agreement between the parties is  not automatically presented in a final panel report 
as an autonomous finding by the panel. Once ag ain, the European Communities would distinguish 
between a panel directly and autonomously making th e relevant findings; and a panel finding that the 
Parties have agreed  the relevant legal interpretations. Wh ether the circumstances limit a panel's 
findings to the latter, or permit the former, depends on all the facts of the case. In the present case, the 
European Communities believes that the Panel probabl y has sufficient basis on  which to objectively 
make, directly and autonomously, the necessar y findings. However, the European Communities 
observes that the Agreement on Procedures is in certa in respects obviously laconic, since it refers only 
to the Appellate Body Report in US-Softwood Lumber V , whereas, as is very well known, the zeroing 
issue has since been the subject of other Appellate Body case law. In these circumstances, the 
European Communities would expect any report drawn up by this Panel not to conflict with such case 
law, and indeed to faithfully reflect it, as Mexi co explains in its third party written submission.
2 
 9. Finally, we turn to the question of the consistency  of the measure at issue with the relevant 
provisions of the covered agreements. The European  Communities considers that this may also be 
delicate, although less so than the preceding issu e. Once again, the Eur opean Communities would 
distinguish between a panel directly and autonomous ly making the relevant findings of inconsistency; 
and a panel finding that the Parties have agreed  that the measure at issue is inconsistent with a 
provision of the covered agreements. Whether the ci rcumstances limit a panel's findings to the latter, 
or permit the former, depends on all the facts of  the case. In the present case, the European 
Communities believes that the Panel probably has sufficient basis on which to objectively make, 
directly and autonomously, the necessary findings. And in either case , the European Communities 
believes that such finding would translate into a recommendation to the US that it bring the measure 
at issue into conformity, thus effectively protec ting Ecuador's rights under Article 21.5 of the DSU. 
 
10. In summary, in the opinion of the European Co mmunities, the role (or function) of a panel in 
a case like this one is to make an objective assessm ent of the matter placed before it, including an 
objective assessment of the facts, evidence, and c onsistency with the cove red agreements, and to 
make such findings as the facts, evidence and argum ent permit it to make. It would not fulfil this 
function by simply "sanctioning the mutual understanding of the parties". 
 
                                                     
 
2 Mexico third party written submission, paras 8 to 15.  WT/DS335/R 
 Page C-13 
 
 
  ANNEX C-9 
 
ORAL STATEMENT OF INDIA 
 
3 November 2006 
 
 1. India thanks you for having provided us an o pportunity to present our views as a third party in 
this dispute.  The issue of zeroing is of extreme systemic importance to the multilateral trading system. It is regrettable that the United States continues to apply the "zeroing" methodology for 
determining anti-dumping margins despite the clear c onclusion reached in several reports of Panels 
and the Appellate Body that use of this methodolog y is inconsistent with Article 2.4.2 of the Anti-
Dumping Agreement. Not only is the US continuing to use this methodology but has not yet taken steps to amend its laws and administrative practices in the matter.  
2. Mr. Chairman, we have noted that the US has agreed not to contest the claim of Ecuador in 
this case. We have also noted their stated intentio n to initiate a public consu ltation process in order to 
eliminate use of this methodology. We are, howev er, unaware as to how, whether and when this 
process will lead to an actual elimination of their u se of the "zeroing" methodology.    We are also 
uncertain of the impact of this specific decision not  to contest the claim of Ecuador on their continued 
use of this methodology on a wide range of produc ts exported to them from several other countries, 
whose trade flows into the US are unduly hampered.  That the US continues to prefer the process of 
litigation on this issue is evident from three other rece nt disputes dealing with their use of "zeroing".  
 3. Mr. Chairman, we are convinced that the US w ill eventually be forced to realise the futility of 
pursuing the use of "zeroing". However, we remain d eeply concerned at the impact of their prolonged 
use of this methodology on the credibility and pred ictability of the multilateral dispute settlement 
system. The time has come, in our opinion, to send out a clear and unified signal on the 
unacceptability of the use of " zeroing" by any WTO Member. 
 WT/DS335/R 
Page C-14  
 
  ANNEX C-10 
 
ANSWER OF INDIA TO QUESTION 
POSED BY THE PANEL 
 
13 November 2006 
 
 
Q.1 What does your delegation consider is the role of a Panel in a case like this one, where 
there is no substantive disagreement between the Parties as to the inconsistency of a measure 
with one or more cited provisions of a covered Agreement? Can the Panel limit itself to sanctioning the mutual understanding of the parti es, or must the Panel, on its own, determine 
whether the measure at issue is inconsistent with the cited provisions? 
 
Reply
 
  India believes that the parties in this case ha ve reached an agreement that is in substance 
comparable to a mutually agreed solution.  Howe ver, the Agreement on Procedures is not a mutually 
agreed solution within the meaning of Article 3. 6 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes (the "D SU"), such as was used, for example, in Japan – Import 
Quotas on Dried Laver and Seasoned Laver (DS323).  
  Accordingly, we consider that the pane l must comply with its obligation under DSU 
Article 11 to make "an objective assessment of the matter before it, including an objective assessment 
of the facts of the case and the applicability of and co nformity with the relevant covered agreements." 
  In this case, the panel's obligation under Artic le 11 of the DSU to examine and resolve the 
claim put forward by Ecuador is not affected by the fact that the United States has indicated that it will not contest Ecuador's claim.  Even though the United States is not contesting the 
claim, the panel must still examine whether Ecuador has made a prima facie case that the use 
of zeroing in the measure at issue was inconsiste nt with Article 2.4.2 and make a finding on that 
issue.
1 
 
                                                      
1As the Appellate Body stated in the EC - Hormones  dispute, at para. 104, "a prima facie  case is one 
which in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule 
in favour of the complaining party."  WT/DS335/R 
 Page C-15 
 
 
  ANNEX C-11 
 
ORAL STATEMENT OF JAPAN 
 
3 November 2006 
 
  I do not have any prepared oral statement t oday but I would like to touch upon a few words 
briefly.  
 First, I am very curious to know what the pa rties expect from the Panel proceedings under the 
circumstances of the almost mutually agreed solution, which is reflected in the document 
WT/DS335/8.  It seems to me that both parties ar e already in a position to submit the MAS (mutually 
agreed) solution under 3.6 of the DSU.  
 In substance, in the field of zeroing, we accep t the conclusion of the parties that the measures 
are inconsistent with Article 2.4.2, first senten ce, on the grounds stated in the Softwood Lumber 
Appellate Body Report, which said "dumping" a nd "margins of dumping" can only be established 
for the product as a whole".  This is in paragraph 99 .  In this context, I would also like to draw the 
attention of the Panel that the WTO dispute settleme nt has accumulated the important jurisprudence in 
the field of zeroing since this Lumber Appellate Body Report, such as Softwood Lumber 21.5 and  
EC-Zeroing.  The Softwood Lumber 21.5 Appellate  Body Report, paragraph 92, quoting the EC-
Zeroing Appellate Body Report, para graph 126, said:  "The Appellate Body underscored that its 
previous finding concerning the inconsistency of  zeroing under the w-to-w methodology 'was based 
not only on Article 2.4.2, first sentence, but also on the context found in Article 2.1 of the Anti-Dumping Agreement'."  I expect that this Panel would take into account such jurisprudence for its 
analysis in an appropriate manner. 
  We welcome that the United States admitted the inconsistency of zeroing by w-to-w comparison in investigations but, of course, this does not prejudge Japan's position on legal 
interpretation about zeroing in a broader context at all.  
 Finally, the EC third party submission touched upon the importance of the implementation.  
Japan is of the same view as the EC on this point.  
 WT/DS335/R 
Page C-16  
 
  ANNEX C-12 
 
ANSWER OF KOREA TO QUESTION 
POSED BY THE PANEL 
 
13 November 2006 
 
 
Q1. What does your delegation consider to be th e role of a Panel in a case like this one, 
where there is no substantive disagreement betw een the Parties as to the inconsistency of a 
measure with one or more cited provisions of a covered Agreement? Can the Panel limit itself to 
sanctioning the mutual understanding of the parti es, or must the Panel, on its own, determine 
whether the measure at issue is inconsistent with the cited provisions? 
 
1. Article 12.7 of the DSU makes a dichotomy of  the situation where a panel shall submit its 
report. One is where the parties to the dispute have  failed to develop a mutually satisfactory solution 
and the other one is where a settlement of the matte r among the parties to the dispute has been found.  
 
2. In the latter situation, mutually agreed so lutions shall be notified to the DSB pursuant to 
Article 3.6 of the DSU and the report of the panel sh all be confined to a brief description of the case 
and to reporting that a solution has been reach ed, according to Article 12.7 of the DSU. 
 3. In the case at hand, the parties to the dispute have not yet notified mutually agreed solutions 
to the DSB. Therefore, even if there is no s ubstantive disagreement between the parties as to the 
inconsistency of the measure at issue with cited pr ovisions of a covered agreement, a settlement of the 
matter stipulated in Article 12.7 of the DSU has not yet been found among the parties to the dispute.  
The United States only agreed not to contest the Ecuador's claim, which does not necessarily mean 
that the US admitted the inconsistency of its me asure with relevant prov isions of the covered 
agreement in question. In its first written su bmission, the US only acknowledges that Ecuador's 
descriptions are accurate, and recognizes that the DS B ruled that the measure was inconsistent with 
the relevant provisions in other case
1.  Moreover, Ecuador still requests the panel to find that the 
US acted inconsistently with Article 2.4.2. of the Anti-Dumping Agreement2 
 4. Since there has been no notification of a mutu ally agreed solution and the complaining party 
continues to request the findings of the panel,  the panel shall discharge its responsibilities in 
accordance with the panel's terms of reference. The function of the panel should be fulfilled as 
requested in the relevant provisions of the DSU.   5. If the panel limits itself to sanctioning the mutual understanding of the parties in a case like this one, the following problems may arise: 
 
• Under Article 12.7 of the DSU, where the partie s to the dispute have failed to develop a 
mutually satisfactory solution, the report of a panel shall set out the findings of fact, the applicability of relevant provisions and th e basic rationale behind any findings and 
recommendations that it makes. If the panel limits itself to sanctioning the mutual understanding of the parties, it could not pr ovide in its report the above mandatory 
elements, in particular, basic rationale of its findings, because a mere sanctioning could 
                                                     
 
1 US first written submission para. 5. 
2 Ecuador's first written submission para. 22.  WT/DS335/R 
 Page C-17 
 
 
  not be accepted as a "rationale". A dictiona ry defines rationale as a "reasoned exposition, 
esp. one defining the fundamental reasons  for a course of action and behaviour"3. 
 
• In accordance with Article 11 of the DSU, a panel should make an objective assessment 
of the matter before it including the applicab ility of and conformity with the relevant 
covered agreement. A mere sanctioning of th e mutual understanding of the parties is far 
short of being objective assessment. The Appe llate Body expressed that they fail to see 
how any panel could be expected to make an 'objective assessment of the matter', as 
required by Article 11 of the DSU, if it c ould only refer in its reasoning to the specific 
provisions cited by the parties in their claims4. It was further noted that a panel's 
interpretation of the text of a relevant  WTO Agreement cannot be limited by the 
particular arguments of the parties to a dispute5. 
 
• In accordance with Article 7.1 of the DSU, the panel shall examine the matter referred to 
the DSB in the light of relevant provisions. According to a dictionary, "examine" means 
"to look at, inspect, or scrutinize carefully or in detail"6. If the panel limits itself to 
sanctioning the mutual understanding of the parties, it is difficult to say that the matter in 
question has been "examined" by the panel.  
 
• In accordance with Article 7.2 of the DSU, th e panel shall address the relevant provisions 
cited by the parties to the dispute. Korea is of the view that "address" requires a certain level of analysis, reasoning and examination. It is questionable that mere sanctioning 
could reach the minimum threshold to become "address". 
 
• Article 3.2 of the DSU stipulates that the dispute settlement system of the WTO is a 
central element in providing security and pred ictability to the multilateral trading system. 
If a panel confines its role to sanctioning the mutual understanding of the parties, it would 
be difficult to maintain security and predicta bility to the multilateral trading system when 
the parties to the other future dispute mutually understand differently on the similar/identical measure. Furthermore, desp ite the mutual understanding of the parties 
which is in line with the mutual understa nding made by other parties in the previous 
disputes, if a panel determines differently on its own, the security and predictability 
would be also difficult to be maintained. 
 6. Bearing in mind the above aspects, Korea belie ves that the panel must determine on its own 
whether the measure at issue is inconsistent with  the cited provisions, as long as there has been no 
notification of a mutually agreed solution. Dis puting parties' understanding has no legal effect of 
constraining the function of a panel until such under standing is converted into a mutually agreed 
solution and notified to the DSB accordingly.  
                                                     
 
3 Collins English Dictionary 21st century edition (5th edition 2000) 
4 Appellate Body Report on Argentina – Footwear (EC), para. 74. 
5 Panel Report on Australia – Automotive Leather II (Article 21.5 – US), para. 6.19 
6 Collins English Dictionary 21st century edition (5th edition 2000) WT/DS335/R 
Page C-18  
 
  ANNEX C-13 
 
WRITTEN SUBMISSION OF MEXICO 
 
30 October 2006 
 
Page  
 I. INTRODUCTION  ................................................................................................................  19 
 
 A. Model Zeroing is clearly prohibite d under Article 2.4.2............................................ 19 
 B. This Panel should apply the correct legal reasoning set forth 
by the Appellate Body, not the erroneous reasoning applied by two recent panels .............................. ........................ .............................. .............. 20 
 C. United States' continued unwillingness to modify its WTO 
inconsistent Zeroing Practice .................................................................................... 21 
 
II. CONCLUSION ..................................................................................................................... 22  
 
T
ABLE OF CASES  
 
Short Title Full Case Title and Citation 
EC – Bed Linen  Appellate Body Report, European Communities – Anti-Dumping 
Duties on Imports of Cotton- Type Bed Linen from India , 
WT/DS141/AB/R, adopted 12 March 2001, DSR 2001:V, 2049 
Japan– Alcoholic Beverages II Appellate Body Report, Japan– Taxes on Alcoholic Beverages,  
WT/DS8/AB/R, adopted 1 Nove mber 1996, DSR 1996:I, 97. 
US– OCTG (Argentina) Appellate Body Report, United States – Sunset Reviews of Anti-
Dumping Measures on Oil C ountry Tubular Goods from 
Argentina, WT/DS268/AB/R, adopted 17 December 2004.  
US – Softwood Lumber V  Appellate Body Report, United States – Final Dumping 
Determination on Softwood Lumber from Canada , 
WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, 1875 
Appellate Body Report, United States – Final Dumping 
Determination on Softwood Lumber from Canada – Recourse to 
Article 21.5 of the DSU by Canada , WT/DS264/AB/RW, 
adopted 1 September 2006 US – Softwood Lumber V (Article 21.5) 
Panel Report, United States – Final Dumping Determination on 
Softwood Lumber from Canada – Recourse to Article 21.5 of the 
DSU by Canada , WT/DS264/RW, adopted 1 September 2006, as 
modified by Appe llate Body Report, WT/DS264/AB/RW 
US – Zeroing (Japan) Panel Report, United States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/R, 20 September 2006 (currently 
before Appellate Body) 
Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ("Zeroing") , 
WT/DS294/AB/R, adopted 9 May 2006 US – Zeroing (EC I) 
Panel Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ("Zeroing") , 
WT/DS294/R, adopted 9 May 2006, as modified by the 
Appellate Body Report, WT/DS294/AB/R  WT/DS335/R 
 Page C-19 
 
 
  I. INTRODUCTION 
 
1. The Government of Mexico appreciates this  opportunity to present its views in this 
proceeding.   Mexico has entered this dispute as a Thir d Party because Mexican imports have been 
harmed by the United States' systematic applicat ion of the identical WTO-inconsistent zeroing 
methodology.  This practice of the United States c ontravenes the United States obligations under the 
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 
("AD Agreement"). This case provides the opportuni ty to reaffirm these obligations and to 
compliance by the United States.  
2. Mexico welcomes the agreement reached by Ecuador and the United States with respect to 
the course of this dispute.  As Mexico understands it, pursuant to this agreement the United States will 
not contest Ecuador's claim before the Panel.  In ad dition, the United States has stated that if certain 
findings are made by the Panel, it intends to revi se its anti-dumping determin ation to be consistent 
with the Panel's ruling.  Such redetermination by  the United States' authorities will be conducted on 
an expedited basis pursuant to the domestic Unite d States "Section 129" implementation procedures.  
Mexico commends this procedural action and consider s that it should be followed in other disputes 
involving this practice.  3. Given the circumstances, the outcome of this  dispute is beyond doubt.  In this context, 
Mexico wishes to share several observations with th e Panel that Mexico believes are important to the 
Panel's decision. 
 
A. Model Zeroing is prohibited under Article 2.4.2 
 
4. The model zeroing methodology at issue in Ecuador's claim is identical  to the measure that 
was before the Appellate Body in US-Softwood Lumber V  and US – Zeroing (EC I)  and found to be 
inconsistent with the United States obligati ons under Article 2.4.2 of the AD Agreement. 
 5. The Appellate Body and dispute settlemen t panels have, on more than one occasion, 
thoroughly considered the consistency of the Unite d States' methodology with Article 2.4.2 of the 
AD Agreement and have without exception found that  it is inconsistent with the United States' 
obligations under that provision.   
 6. Given the existence of a series of prior Pa nel and Appellate Body reports that support the 
view that model zeroing is inconsistent with article 2.4.2, the value of such reports becomes a relevant 
issue here. In this regard, Mexico would like to r ecall that while previous decisions "are not binding, 
except with respect to resolving the particular  dispute" those conclusions "create legitimate 
expectations among WTO Members"
1  Mexico agrees, in this case,  with the Appellate Body's 
assertion to the effect that "following the Appellate Body's conclusions in earlier disputes is not only 
appropriate, but is what would be expected from panels, especially where the issues are the same"2  In 
sum, in order to maintain the security and predicta bility of the multilateral trading system, aside from 
the agreement reached between the United States and Ecuador, this Panel should likewise find that the 
United States' model zeroing methodology applied in the case of Ecuador is inconsistent with 
Article 2.4.2 of the AD Agreement.  7. By entering into such a procedural agreemen t, the United States effectively recognizes that its 
model zeroing methodology is not consistent with ar ticle 2.4.2 of the AD Agreement.  Thus, as there 
is no valid defense under any of the covered agreem ents against such practice, the United States has 
chosen not to contest Ecuador's allegations in this sense.   
                                                     
 
1 Appellate Body Report, Japan – Alcoholic Beverages II , page 15. 
2 Appellate Body Report, US– OCTG (Argentina), para. 188.  WT/DS335/R 
Page C-20  
 
  B. This Panel should apply the correct legal  reasoning set forth by the Appellate Body 
 
8. Although there is unanimity in the rulings of prior panels and the Appe llate Body with respect 
to the conclusion that model zeroi ng is inconsistent with Article  2.4.2, there have been some 
differences in the legal reasoning that has been empl oyed by panels in reaching that conclusion.   
 
9. The Appellate Body has consis tently followed a coherent and textually-based interpretation of 
the agreements.  In contrast, WTO panels (the panels in US – Softwood Lumber V  (21.5) and US – 
Zeroing (Japan) ) have applied an incorrect reasoning that fails, in Mexico's view, to consider the 
AD Agreement in its totality.  This erroneous reasoning should be reject ed by this panel in favour of 
the coherent textually-based interpretation of th e AD Agreement set forth by the Appellate Body. 
 10. Mexico notes specifically that the panels in US-Softwood Lumber (Article 21.5)  and, more 
recently, in US – Zeroing (Japan) , erroneously sought to explain the inconsistency of model zeroing 
with the terms of Article 2.4.2 as flowing solely fro m the unique textual reference that exists in the 
first sentence of Article 2.4.2 to "all comparable  export transactions."  According to these panel 
decisions, the requirement recognized by the Appellate  Body to calculate a margin of dumping with 
reference to the "product as a whole" is derived solely and exclusively from the "all comparable 
export transactions" langu age of Article 2.4.2.
3 
 11. The Appellate Body's ruling in US-Softwood Lumber V  demonstrates why the reasoning 
utilized by these two Panels was not correct.  The Appellate Body noted, and the United States 
agreed, that "multiple averaging" by models is permitted under Article 2.4.2 and was not a matter in 
contention.
4  What was under contention, however, was whether the results of  such intermediate 
comparisons are properly considered "margins of dumping" within the meaning of the AD Agreement 
and for purposes of Article 2.4.2 in particular.  Th e United States argued that such intermediate or 
"sub-group level" comparison results are "margins of dumping."   
 12. In this sense, the Appellate Body found that th e interpretation of the United States lacks merit.  
The Appellate Body began its analysis with the text of Article VI:1 of GATT 1994, which defines 
"dumping" as occurring where "products
 of one country are introduced into the commerce of another 
country at less than the normal value of the products " (emphasis added).  This definition is reiterated 
in Article 2.1 of the AD Agreement, whic h likewise speaks in terms of a "product " being dumped 
when the export price of the "product " is less than the comparable price, in the ordinary course of 
trade, for the like "product " when destined for consumption in the exporting country. 
 13. The Appellate Body also explained in US-Softwood Lumber V that its finding that "dumping" 
and "margins of dumping" can only be established fo r the product under investigation "as a whole" is 
"in consonance with the need for consistent treat ment of a product in antidumping investigation."
5  In 
particular, the "product," as defined by the investigating authorities in the given case, must be treated "as whole" for determining the volume of imports, in jury, causation, and calculation of the margin of 
dumping.  Thus, it is impermissible under the AD Agreement to treat some export transactions as 
                                                     
 
3See, e.g., Panel Report,  US – Zeroing (Japan)(Panel)  para. 7.82;  Panel Report, US – Softwood 
Lumber (21.5)(Panel)  at para. 5.21  
4 Appellate Body Report, US-Softwood Lumber V , para. 80 ("We note that there is no disagreement 
among the participants in this dispute as to the permissibility of "multiple averaging" under Article 2.4.2.  All participants agree that an investigating authority may choose to divide the product under investigation into 
product types or models for purposes of calculating a weighted average normal value and a weighted average 
export price for the tr ansactions involving each product type or  model or sub-group  of "comparable" 
transactions."). 
5 See id , para. 99.   WT/DS335/R 
 Page C-21 
 
 
  "dumped" for certain purposes (such as injury de termination) and not dumped for other purposes 
(such as calculating margins of dumping).  14. In sum, contrary to erroneous asser tions in certain recent panel decisions,
6 the Appellate 
Body's reasoning with regard to the c oncept of the "product as a whole" in US – Softwood Lumber V , 
did not turn solely or principally, on the particul ar phrasing "all comparable export transactions" in 
the first sentence of Article 2.4.2.  Rather, the A ppellate Body correctly reasoned that "dumping" and 
"margins of dumping" are concepts that find meani ng in the Agreement with reference to the product 
under investigation taken as a whole.  This concep t of "product as a whole" is itself fundamentally 
derived from the textual references to the "product" under investigation in Article VI:1 and VI:2 of 
GATT 1994, Article 2.1, and elsewhere in the Agreement ( e.g., Articles 9.2 and 6.10).7 
 15. Finally, the reasoning adopted by the Panel in US-Softwood Lumber  V (21.5) was flatly 
rejected when the dispute reached the Appellate Body.
8  Mexico notes that the similar reasoning 
employed by the Panel in US-Zeroing (Japan)  is currently before the Appellate Body and a rejection 
of this erroneous reasoning is again to be expected.   
 
C. The United States' has not yet modifi ed its WTO-inconsistent Zeroing Practice 
 
16. Mexico would like to draw the attention of the Panel to the unwillingness of the United States 
to modify its WTO-inconsistent zeroing practice in  response to the prior findings of the Appellate 
Body. 
 17. Following the WTO Panel decision in US – Zeroing (EC I) , the United States initiated a 
domestic legal process that purported to implement th e panel's findings with respect to model zeroing 
applied in the original investigations.
9  However,  to date, the United States continues to apply the 
invalidated model-zeroing methodology in new or iginal investigations claiming that the 
implementation process "has not run its course."10  As USDOC argued in a recent anti-dumping 
determination:   
"[I]t is premature to determine precisely ho w the United States will implement the panel 
recommendation. With respect to the recent Appellate Body Report in [ US – Zeroing (EC I) ], 
the United States has not yet gone through the statutorily mandated process of determining 
whether to implement the report. . . . As such , the WTO dispute settlement proceedings have 
no bearing on whether the Department's denial of  offsets in this investigation is consistent 
with US law . . . Accordingly, the Department will continue in this investigation to deny 
offsets to dumping based on export transactions that exceed normal value."
11 
 
18. It is regrettable that Ecuador has also f ound it necessary to resolve this matter through the 
WTO dispute settlement procedures despite the Appella te Body's multiple decisions that this practice 
is WTO-inconsistent.  Indeed, in view that there is  no longer a defense against this practice, it seems 
coherent to us that the United States had agreed in  this proceeding not to contest Ecuador's claims. 
                                                      
6 See para. 9  supra .  
7 See, e.g., Appellate Body Report, US-Softwood Lumber V  at para. 99. 
8 See, Appellate Body Report, US-Softwood Lumber V (Article 21.5)  at paras. 92 (noting that "[t]he 
Appellate Body underscored that its previous finding concerning the inconsistency of zeroing under the 
weighted average-to-weighted average comparison methodology 'was based not only on Article 2.4.2, first 
sentence, but also on the context found in Article 2.1 of the Antidumping Agreement .'"). 
9 See Antidumping Proceedings:  Calculation of the Weighted Average Dumpi ng Margin During an 
Antidumping Duty Investigation , 71 Fed. Reg. 11189 (Dep't Commerce)(March 6, 2006).   
10 See Diamond Sawblades and Parts Thereof  from the People's Republic of China , 71 Fed. 
Reg. 29,303 (Dep't Commerce) (22 May 2006)(final determination of sales at less than fair value).   
11 Ibid. WT/DS335/R 
Page C-22  
 
  II. CONCLUSION 
 
19. Mexico respectfully requests that the Panel be mindful of this communication and of the 
circumstances described above in formulating its r ecommendations at the conclusion of this dispute, 
and appreciates the opportunity to participate in this proceeding as a Third Party and to submit its 
views relating to United States' model zeroing methodology. 
  WT/DS335/R 
 Page C-23 
 
 
  ANNEX C-14 
 
ORAL STATEMEN T OF MEXICO 
 
3 November 2006 
 
  Mexico is grateful for this opportunity to express its views on this dispute and, in order to take full advantage of the opportunity, we should like, fi rst of all, to draw the Panel's attention to the 
content of our written submission presented on 30 October and, secondly, to make the following 
systemic comments on the nature and objectiv es of the WTO dispute settlement procedures. 
 1. We are in favour of the parties seeking creativ e alternatives so as to make efficient use of the 
mechanism.  Thus, we recognize that the DSU gi ves the parties flexibility to settle disputes.  
This case is a clear example of that, which is why this factor should be taken into account 
alongside the following comments. 
2. The written submission of the United States a nd its participation in the agreement reached 
with Ecuador represent in our opinion a positive move towards achieving the elimination of 
the practice of zeroing, but we are dismayed that this effort does not extend to stopping the United States from applying this practice in other circumstances.  That would represent a significant saving in resources for all the WT O Members who, like us, have suffered the 
illegal application of this practice. 
3. The European Communities draws attention in its third party submission to a Panel's 
obligation to "make an objective assessment of th e matter before it" and we share the concern 
to which this could give rise in the way in which it is presented by the European 
Communities.  However, we trust that by c oncentrating on the facts of this dispute, 
particularly the existence of an agreement between the parties on the content of their 
complaints and responses, this Panel will be able  to carry out effectively its duties, without 
producing precedents that might limit or jeopardize the rights of other Members or the outcome of other decisions by other Panels. 
4. From the agreement reached between Ecuador and the United States, Mexico infers that the 
fact that the United States does not contest Ecua dor's allegation that the measures identified in 
these proceedings are inconsistent with the firs t sentence of Article 2.4.2 of the Anti-Dumping 
Agreement would mean, in the present case, that in principle there is no dispute per se .  It is 
our understanding that this shared interpretati on should not affect other proceedings or the 
interpretation of Members' rights, particularly in the case of the Anti-Dumping Agreement. 
5. Given the nature of this dispute, we believe  that a preferable course of action by which the 
parties might resolve their differences, would have  been to act in accordance with Article 5 or 
Article 25 of the Dispute Settlement Understanding (DSU).  Since that has not been done, this 
Panel should particularly bear in mind that  an agreement between two parties on the 
interpretation of a specific rule cannot, by virt ue of the rule of negative consensus, be a 
substitute for the authoritative interpretation which only the Members as a whole can adopt 
pursuant to Article IX of the WTO Agreement (Marrakesh Agreement Establishing the World 
Trade Organization). WT/DS335/R 
Page C-24  
 
  6. Finally, with regard to the working procedur es adopted by the Panel, we understand that they 
were adopted in conformity with Article 12. 1 of the DSU.  We are concerned that the 
agreement between the parties, which is now public, could send the wrong signal that it is the 
parties in a dispute who determine the procedure that the Panel must follow.  We would be grateful if that were clarified in your report. 
 
 With these comments we conclude our oral statement.  Thank you very much. 
 
  WT/DS335/R 
 Page C-25 
 
 
  ANNEX C-15 
 
ANSWER OF MEXICO TO QUESTION 
POSED BY THE PANEL 
 
13 November 2006 
 
 
Q1. "What does your delegation consider is the role of a Panel in a case like this one, where 
there is no substantive disagreement between the Parties as to the inconsistency of a measure 
with one or more cited provisions of a covered Agreement? Can the Panel limit itself to sanctioning the mutual understanding of the parti es, or must the Panel, on its own, determine 
whether the measure at issue is inconsistent with the cited provisions?"  
 
 By way of response to this question, Mexico would refer the Panel to the text of our oral 
submission of 3 November last and welcomes th e opportunity to make the following additional 
comments:  
1. The idea of sanctioning the mutual understandi ng of the parties is a practice followed in 
private commercial arbitration proceedings and othe r types of arbitration such as Investor-State 
proceedings
1, under which an agreed settlement between the parties may be treated as equivalent to an 
arbitral award.  However, the effects of panel d ecisions may be very different from those obtained in 
the sphere of private commercial law, mainly becau se, in the case of WTO proceedings, an agreement 
between two parties on the interpretation of a specifi c rule cannot, by virtue of the rule of negative 
consensus, be a substitute for the authoritative in terpretation which only the Members as a whole can 
adopt pursuant to Article IX of the WTO Agreem ent (Marrakesh Agreement Establishing the World 
Trade Organization).  Otherwise, there is a risk that  interpretations agreed bilaterally by two parties, 
with the approval of panels, might not be approved by the other Member s.  In view of the foregoing, 
and in addition to the views already expressed in our  oral submission, Mexico considers that this 
Panel should not limit itself to sanctioning th e mutual understanding of the parties. 
   
                                                     
 
1 See for example Rule 43 (Settlement and Discon tinuance) of the ICSID (International Centre for 
Settlement of Investment Disputes) Rules of Procedure for Arbitration Proceedings, and Article 26 (Award by 
Consent) of the ICC (International Cham ber of Commerce) Arbitration Rules. WT/DS335/R 
Page C-26  
 
  ANNEX C-16 
 
ORAL STATEMEN T OF THAILAND 
 
3 November 2006 
 
 1. Mr. Chairman and Members of the Panel:  Th ailand appreciates the opportunity to present its 
views on this matter to the Panel today.  
2. We reserved our third party rights under Artic le 10.2 of the Dispute Settlement Understanding 
because imports of Thai shrimp into the United Stat es are also subject to the US practice of zeroing 
described by Ecuador in its first written submission.
1  Thailand firmly believes that this practice is 
inconsistent with the WTO Anti-Dumping Agreemen t because it results in the imposition of an anti-
dumping duty greater than the actual margin of dum ping for the product concerned, and is currently 
contesting the US application of zeroing to Thai shrimp imports in another dispute. 
 3. Therefore, Thailand generally welcomes that the United States does not contest the 
inconsistency of its zeroing practice with Article 2.4.2 of the Anti-Dumping Agreement.  We view 
this as a positive development, and urge the Unite d States to abandon the use of zeroing in all 
instances in which it is applied as soon as possible. 
 
4. Thailand also notes that the US Department of Commerce has recently declared its intention 
to abandon the use of zeroing with average-to-avera ge comparisons in antidumping investigations.  
We would appreciate further details from the United States on the execution of that intention in light 
of this dispute. 
 
5. Finally, Thailand will be happ y to respond to any questions th e Panel may have.  Again, we 
thank you for the opportunity to present our views today.  
__________ 
  
                                                     
 
1 First Written Submission of Ecuador, 19 October 2006.