WT/DS344/R 
 Page B-1 
 
 
 ANNEX B 
 
 
THIRD PARTIES WRITTE N SUBMISSIONS OR  
EXECUTIVE SUMMARIES THEREOF 
 
 
Contents Page 
Annex B-1 Third Party Written Submission of Chile B-2 
Annex B-2 Executive Summary of the Third Party Written Submission of the 
European Communities B-4 
Annex B-3 Executive Summary of the Third Party Written Submission of 
Japan B-9 
 WT/DS344/R 
Page B-2  
 
 ANNEX B-1 
 
 
THIRD PARTY WRITTEN SUBMISSION  
OF CHILE 
 
 
1. Chile would like to thank the Panel for the oppor tunity to present its views in this dispute, in 
which it reserves its third party rights owing to its sy stemic interest in the application of the so-called 
zeroing methodology in its various forms.   
2. Mexico questions the zeroing procedures " as such" as well as their application by the 
United States Department of Commerce (USDOC) in the specific case of Stainless Steel from Mexico , 
both in the original investigation and in five peri odic reviews.  We shall be commenting only on the 
application "as such" of the zeroing procedures, both in  original investigations and in reviews, as we 
are not familiar enough with the factual details of the specific case to comment on the practical application of the procedures.   
3. Bearing this in mind, Chile would like to  note that prior Appellate Body rulings have 
confirmed that this methodology, used both in  dumping investigations and in subsequent 
administrative reviews, is inconsistent with mu ltilateral disciplines.  Chile agrees with those 
conclusions.  Moreover, in US – Zeroing (Japan) , the Appellate Body made two determinations:  
firstly, that the zeroing methodology was inconsistent "as such" with the Agreement on Implementation of Article VI of the General Ag reement on Tariffs and Trade 1994 ("Anti-Dumping 
Agreement") and with Article VI of the Genera l Agreement on Tariffs and Trade 1994 (GATT 1994);  
and secondly, that the zeroing methodology was incons istent with the WTO both in the calculation of 
dumping (on a transaction-to-transaction basis) in original investigations as well as in periodic 
reviews.   
4. The application of the zeroing methodology carries with it a defi nite possibility of 
exacerbating dumping margins or even fabricating them where they do not exist.   
5. We welcome the USDOC's decision to terminat e this practice in the calculation of dumping 
on a weighted average basis in original investigations .  However, we regret that this decision is not 
comprehensive, and although the United States ha s yet to comply with the recommendations and 
rulings of the DSB in the above -mentioned dispute, Chile hopes th at a definitive solution will be 
reached - which clearly calls for a reform that ex cludes the use of the methodology at issue at all 
stages of anti-dumping investigations.   
6. As long as there is no comprehensive and defi nitive solution to this practice which violates 
the Anti-Dumping Agreement and the GATT 1947, ther e will be new challenges like the one raised 
by Mexico, and probably new decisions condemning its u se.  It is not very helpful to insist on using a 
methodology which has been identified as contrary to international rules.   
7. Without prejudice to the above, Chile considers a bilateral solution to be limited by its very 
scope, and it involves costs for the parties and for the system.  To initiate proceedings in the WTO 
knowing full well from repeated precedents what the result will be is a tiresome and costly process.  
Consequently, any definitive solution will have to  be multilateral, involving an express confirmation 
in the Anti-Dumping Agreement of the prohibition of the use of this methodology both in investigations and in subsequent review s under all types of price comparison.    WT/DS344/R 
 Page B-3 
 
 
 8. In conclusion, Chile respectfull y requests the Panel to give full consideration to the Panel and 
the Appellate Body conclusions in th is respect, and in particular to the logic behind those conclusions.  
This would necessarily lead this Panel to concl ude that the zeroing procedures as such, as challenged 
by Mexico, are contrary to Article VI:1 and VI:2  of the GATT 1994 and Articles 2.1, 2.4 and 9.3 of 
the Anti-Dumping Agreement.  Chile hopes that this will happen, but also hopes that the United States 
will comply with the relevant prior recommenda tions and rulings, since only prompt and full 
compliance will ensure the predictability and certainty  of the WTO dispute settlement system.  Not to 
mention – as former US Trade Representative R obert Zoellick once pointed out – that such 
compliance would place the United States in a better position to request the other countries to respect 
trade rules.   
 WT/DS344/R 
Page B-4  
 
 ANNEX B-2 
 
 
EXECUTIVE SUMMARY OF TH E THIRD PARTY WRITTEN 
SUBMISSION OF THE EU ROPEAN COMMUNITIES 
 
 I. INTRODUCTION 
 
1. The dispute brought by Mexico against the US  is the latest in a long series of complaints 
regarding "zeroing" practices and methodology in anti-dumping cases.  The EC's written submission 
starts from Mexico's assertion that the issues raised  in this particular panel proceeding have been 
brought up frequently before, and that Mexico's cl aims are supported by a consistent body of WTO 
case law, including in particular by Appellate Body reports.  The EC has not been in a position to 
comment in writing on the US' position on these assertions, as for scheduling reasons it drafted its written submission before receipt of the US' first written submission.  The EC reserves its right to 
comment further in its oral statement, taking into account the US' first written submission.    
2. Assuming however, that Mexico is correct in its assertions, there is an important systemic 
question that arises in the EC's view:  are panels  obliged to follow previous decisions rendered on 
identical questions, in particular those contained in adopted Appellate Body reports?  In its written 
submission the EC, based on a summary of Mexico's case, proceeds with a review of the previous 
case law of the WTO on "zeroing", paying particular a ttention to the reasoning and findings contained 
in the relevant Appellate Body reports.  The EC  then looks into the pr ecedential value of these 
previous decisions, through a two-pronged analysis .  First, it analyses the policy and practices 
observed by other adjudicatory bodies, both at the na tional and international level.  This is followed 
by an examination of the functions of the WTO di spute settlement system, the role of the Appellate 
Body therein and a discussion of the WTO case law on the value of precedent.   
 
3. The EC concludes that the reasoning and findings of the Appellate Body are to be regarded as 
the correct position in law and that in the inter est of ensuring security and predictability of the 
multilateral trading system, this Panel should foll ow the reasoning and findings contained in the 
relevant Appellate Body reports.    
 
II. SUMMARY OF MEXICO'S CASE 
 
4. Mexico argues that the "zeroing procedures" used by the US in an original anti-dumping 
investigation of Stainless Steel from Mexico  are "as such" and "as applied" inconsistent with several 
provisions of the GATT and the Anti-Dumping Agreemen t.  Mexico further argues that the "zeroing 
procedures" used by the US in five periodic review s are "as such" and "as applied" inconsistent with 
the GATT and the Anti-Dumping Agreement.     
III. OVERVIEW OF RELEVANT APPELLATE BODY FINDINGS IN PREVIOUS 
ZEROING CASES 
 
5. The EC agrees with Mexico that "zeroing" h as been contested several times in WTO dispute 
settlement proceedings, and addressed in a series of adopted panel and Appellate  Body reports.  In its 
written submission the EC reviews in some detail th e salient reasoning and findings of the Appellate 
Body ("AB") in each of these reports.   
  WT/DS344/R 
 Page B-5 
 
 
 6. In EC - Bed Linen  the AB found the EC's use of "model zer oing" in original investigations to 
be inconsistent with several provisions of  the Anti-Dumping Agreement.  It held, inter alia , that 
Art. 2.1 read in the light of Art. 2.4.2 of the An ti-Dumping Agreement makes clear that the margins of 
dumping to which Art. 2.4.2 refers are the margins of dumping for the product as a whole;  that in determining a dumping margin for a product, Art. 2.4. 2 refers to a comparison of "all" comparable 
transactions and that a comparison between export prices and normal value that does not take into 
account all transactions does not constitute a "fai r comparison" between export price and normal 
value, as required by Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement.    7. In US - Softwood Lumber V  the US appealed the finding that by not taking into account all 
comparable export transactions in its zeroing practi ce in the original anti-dumping investigation at 
issue, it violated Article 2.4.2 of the Anti-Dumpi ng Agreement.  On appeal , the AB confirmed its 
earlier ruling in EC - Bed Linen  emphasizing that under Article 2.4.2. of the Anti-Dumping 
Agreement "dumping" and "margins of dumping"  can only be established for the product under 
investigation as a whole.  The AB also considered and explicitly rejected a number of arguments that 
have been made since by the US in other zeroing cases on a recurrent basis:  that other dumping 
margin methodologies provided for in Article 2.4.2 ( e.g., the transaction-to-transaction comparison) 
provide "important context" for the permissib ility of "zeroing" under the average-to-average 
methodology in the original investig ation at issue;  the alleged historical background of Art. 2.4.2; 
that the AB need not follow its findings in other cases, in particular EC – Bed Linen , and the standard 
of review set out in Art. 17.6(ii) of the Anti-Dumping Agreement.   
 
8. In US – Zeroing (EC1)  the AB was asked to review the panel's findings on the application by 
the US of "zeroing" methodology in anti-dumping proceedings, including origin al investigations, and 
assessment or review proceedings.  The EC had challenged US legal instruments, procedures, 
methodologies and practice related to these types of "zeroing," on both an "as such" and "as applied" 
basis.  On appeal the AB confirmed that the zer oing methodology employed by the US in original 
antidumping investigations ("model zeroing" using average-to-average comparison) was inconsistent 
Art. 2.4.2 of the Anti-Dumping Agreement.  In addition, the AB held that the zeroing methodology applied by the US in the administrative review  process ("simple zeroing" using the average-to-
transaction method) was inconsistent with Artic le 9.3 of the Antidumping Agreement and GATT 
Article VI:2.  The AB referred e xplicitly to its prior rulings in EC – Bed Linen and US – Softwood 
Lumber V .  It held that the margin of dumping establis hed for an exporter or foreign producer operates 
as "a ceiling" for the total amount of anti-dumping duties that can be levied on the entries of the subject product (from that exporter) covered by the duty assessment proceeding.  At the same time, 
the AB addressed and rejected again the US argumen t of the standard of review set out in Anti-
Dumping Agreement Article 17.6(ii).   
 
9. The US also appealed the panel's conclusi on that the zeroing methodology at issue could be 
challenged as a "measure" "as such".  The AB cons idered this matter in some detail, referring to 
earlier case law on the concept of "measure".  As for zeroing methodology as a measure, it noted that 
there is no threshold requirement.  It set out a partic ular standard for such challenges against a "rule or 
norm" constituting a measure of gene ral and prospective application.  On this basis it concluded that 
the zeroing methodology, as it relates to original i nvestigations, in which the average-to-average 
comparison method is used, can be challenged, as such.    10. In US – Softwood Lumber V  (Art. 21.5-Canada) , the AB was asked to review a revised anti-
dumping duty determination by the US ("Section 129 Dete rmination").  In this determination, instead 
of the average-to-average method, the US based the revised duty rates on a comparison of normal 
value and export prices on a transaction-to-transac tion basis, again adopting zeroing methodology.   
 11. The AB rejected the panel's finding that th e US determination in the Section 129 proceeding 
was not inconsistent with Article s 2.4.2 and 2.4 of the Anti-Dumping Agreement.  It analysed WT/DS344/R 
Page B-6  
 
 Article 2.4.2 in detail, concluding that zeroing in  the transaction-to-transaction methodology does not 
conform to the requirement of Article 2.4.2.  It not ed explicitly that this interpretation was consistent 
with its previous rulings on "zeroing" related to the average-to- average comparison methodology 
under this provision.  The AB also rejected ar guments based on the "mathematical equivalence" 
argument, for a number of reasons, considering inter alia , the concerns of the panel and the US over 
the weighted average-to-transaction methodology to be overstated.   
 12. The AB then considered and rejected again contextual arguments made by the US based on 
other provisions of the Anti-Dumping Agreement and GATT;  US arguments based on historical 
materials and the US argument on the standard of review of Article 17.6(ii) of the Anti-Dumping 
Agreement.  Finally, the AB stated that the use of zeroing under the transaction-to-transaction 
methodology in the Section 129 Determination, was also inconsistent with the "fair comparison" 
requirement in Article 2.4.    13. In US – Zeroing (Japan) , Japan challenged zeroing methodologies and procedures applied by 
the US in original investigations, periodic revi ews, new shipper reviews, changed circumstances 
reviews and sunset reviews as a "measure" "as such".   Japan also challenged these measures on an "as 
applied" basis in a number of anti-dumping pr oceedings with respect to products from Japan, 
specifically, in one original investigation, various  periodic reviews, and two sunset reviews.  The 
panel concluded that the "zeroing procedures" are a "measure" that can be challenged "as such" and 
found that, in maintaining model zeroing procedures in  the context of original investigations, the US 
acted inconsistently with Article 2.4.2 of the Anti- Dumping Agreement.  However, the panel rejected 
all other challenges by Japan.    14. On appeal the Appellate Body comprehensively reversed the panel's report to the extent that 
the latter had rejected Japan's claims.  Firstly, the AB confirmed its earlier findings that the "zeroing 
procedures" at issue constitute a measure which can  be challenged as such under different comparison 
methodologies and in different stages of anti-dumping pr ocedures.  It reversed the panel's finding that 
the US does not violate Articles 2.4.2 and 2.4 of the Anti-Dumping Agreement by maintaining the zeroing procedures when calculating dumping margin s on the basis of transaction-to-transaction 
comparisons in original investigations.  The AB referred to "fundamental principles" involved in the 
concepts of "dumping" and "margins of dumping";  confirmed its earlier case law on these concepts as 
well as its earlier rulings on "zeroing" as such in or iginal investigations involving the transaction-to-
transaction and average-to-average methods.  Th e Appellate Body again rejected contextual 
arguments made by the US.  The AB also took firm exception to the fact that the panel had come to 
conclusions on the basis of reasoning relating to Art. 2.4.2 of the Anti-Dumping Agreement, which 
the Appellate had rejected earlier.  Moreover, the AB  again rejected arguments and findings that went 
counter to its earlier rulings that zeroing procedur es in original investigations violate the fair 
comparison requirement.    15. The AB also reversed the panel's finding that  the US does not violate Articles 9.3 and 9.5 of 
the Anti-Dumping Agreement and GATT Article VI :2 by maintaining the zeroing procedures in 
periodic reviews and new shipper reviews, referring to  its earlier case law.  Further, the AB reversed 
the panel's finding that zeroing in the context of pe riodic reviews and new shipper reviews is not, as 
such, inconsistent with Article 2.4.  Also in re lation to these investigations, it held that the fair 
comparison requirement was breached.  Further, the Appellate Body reversed the panel's finding that 
zeroing as applied by the US in the 11 periodic review s at issue in this appeal was not inconsistent 
with Articles 2.1, 2.4, 9.1, and 9.3 of th e Anti-Dumping Agreement and GATT Articles VI:1 
and VI:2.  Also on this point the AB referred to earli er rulings.  Finally, the AB reversed the panel's 
finding that the US acted consistently with Artic les 2 and 11 of the Anti- Dumping Agreement when, 
in the sunset reviews at issue, it relied on margin s of dumping that had been calculated using zeroing 
in previous anti-dumping proceedings.  It found instead that the US violated Article 11.3 of the Anti-Dumping Agreement.  Again, the AB referred to its  earlier decisions in relation to this point.    WT/DS344/R 
 Page B-7 
 
 
 IV. PRECEDENTIAL VALUE OF THESE APPELLATE BODY FINDINGS 
 
16. The conventional wisdom is that there is no stare decisis  in the WTO dispute settlement 
system, and that panel and Appellate Body reports  are considered binding only on the immediate 
parties to the dispute.  Stare decisis  is characteristic for national legal systems of the common law 
tradition.  In international law generally, this doc trine of binding precedent is not formally accepted.  
Consequently, insofar as it does not formally acknowledge stare decisis , the WTO dispute settlement 
system is not unique among international adjudicatory bodies.    17. However, there are important considerations that qualify th e principles outlined above.  All 
legal systems, whether national or internati onal, and regardless of formal adherence to stare decisis , 
have an interest in ensuring continuity of the juri sprudence.  Further, in all legal systems decisions 
rendered by hierarchically superior courts or tribuna ls are generally followed by subsidiary bodies.   
 18. As to the first consideration, whether as a matter of doctrine or practice, all legal systems 
place a high value on consistency, certainty and predictability of the jurisprudence of their 
adjudicatory bodies, particularly as regards decisions  rendered by the highest courts.  In common law 
systems change of precedent is done relatively rare ly and with great aforethought and discussion.  The 
highest courts in civil law systems, despite forma lly rejecting the doctrine of binding precedent, also 
follow their previous decisions as a matter of judicial policy and practice.  Further, the policy and practice of international courts and tribunals dem onstrate that the need for ensuring consistency and 
predictability of the jurisprudence also pr evails in the international arena.   
 19. Consequently, formal rejection of the doctrine of stare decisis  should not be confused with 
the interest that adjudicatory systems have in main taining continuity in the case law.  Departures from 
previous decisions are carefully considered and re quire the identification of cogent reasons for doing 
so.  Even where adjudicatory bodies are not formal ly bound by their previous decisions, they will 
nevertheless consider themselves bound by the la w as authoritatively expressed in a decision.  
Further, the general rule that a judicial or arb itral decision only binds the immediate parties does not 
prevent that decision from being treated in a later case as the correct legal position.   
 20. The second consideration relates to whether lower courts or tribunals need to follow decisions 
rendered by hierarchically superior bodies.  Also  on this question the practice and principles observed 
in other dispute settlement systems is noteworthy.  In common law jurisdictions the primary function 
of an appellate court is to give pr edictability and stability to the field of law it judges.  This is done in 
large part by stare decisis  which obliges subsidiary bodies to follow the rulings of higher courts in 
their jurisdiction.  But in civil law jurisdictions as well, lower courts tend to follow decisions of higher 
courts, even in the absence of an explicit legal ru le to that effect.  In the international arena 
adjudicatory systems with a hierarchical structure are less common.  However, where there is an 
appellate structure, the prevailing rule seems to be  again that decisions of the hierarchically higher 
body are followed by the subsidiary body, at the ve ry least insofar as points of law are concerned.  
This does not mean that there would be no scope wh atsoever for subsidiary bodies to develop the case 
law.  It does mean however, that departure from d ecisions taken by higher courts on issues of law 
must be carefully considered and based on cogent reasons.   
 21. The EC submits that the a bove considerations also apply in the WTO dispute settlement 
system.  A paramount function of this system is to create and maintain a uniform body of rules.  This 
is clearly reflected in Art. 3(2) DSU, according to which, inter alia , the dispute settlement system 
aims at providing "security and predictability to th e multilateral trading system".  The Appellate Body 
occupies a superior position in the hierarchy of th is system (Art. 17.4; 17.6 and 17.13 DSU).  The 
primary function of the Appellate Body is to pr ovide predictability and stability to the multilateral 
trading system through its decisions on issues of law covered in panel reports and legal interpretations 
developed by panels.   WT/DS344/R 
Page B-8  
 
 22. It is not disputed that Appellate Body repor ts do not have precedential effect or automatic 
applicability, qua reports, beyond the immediate par ties.  However, it is unquestionable that when 
interpreting the covered agreements , the Appellate Body aims at ensuring consistency in its case law 
(see:  AB's reasoning and findings in US – Softwood Lumber V  (paras. 109-112) referring to AB's 
previous reasoning and findings in Japan – Alcoholic Beverages II (at 108)  and US – Shrimp 
(Article 21.5 – Malaysia )  (para.109)).   
 23. Are WTO panels obliged to follow Appellate Body decisions?  The Appellate Body itself has 
stated that a panel that takes account of the reas oning in an adopted Appellate Body report commits 
no "error" ( US – Shrimp (Article 21.5 – Malaysia)  (para. 109)).  But it does not follow, a contrario , 
that panels would be free to depart from Appe llate Body reports on issues of law and legal 
interpretations.  The Appellate Body has explic itly stated panel reports – and equally adopted 
Appellate Body reports − "create legitimate expectations among WTO Members, and, therefore, 
should be taken into account where they are relevant to any dispute" ( Japan – Alcoholic Beverages II  
(at 108-109)).  Further, the Appellate Body has ex plicitly ruled that panels are bound by the legal 
analysis of the Appellate Body "especi ally where the issues are the same" ( US – Oil Country Tubular 
Goods Sunset Reviews  (para.188)).  The EC submits that as th e Appellate Body is the hierarchically 
superior body, tasked with deciding on issues of law and legal interpretations, its rulings must be 
regarded as commanding particular authority for pane ls as authoritative pronouncements on the law.   
 
 
V. CONCLUSIONS 
 
24. Mexico asserts that none of the issues raised in  this panel proceeding are new.  The EC agrees 
that Mexico's claims appear to be supported in law by a consistent body of reasoning and findings, 
contained in all reports issued by the Appellate Body since the EC - Bed Linen  case on zeroing in anti-
dumping cases.  The reasoning and findings of the A ppellate Body are, in the EC's view, to be 
regarded as the correct position in law.  In the inte rest of ensuring security and predictability of the 
multilateral trading system, the EC submits that this Panel should follow the reasoning and findings 
contained in these Appellate Body reports.   
 
   WT/DS344/R 
 Page B-9 
 
 
 ANNEX B-3 
 
 
EXECUTIVE SUMMARY OF TH E THIRD PARTY WRITTEN 
SUBMISSION OF JAPAN 
 
 I. INTRODUCTION  
1. The Appellate Body ruled clearly in the past disputes that zeroing procedures may be 
challenged "as such" and are incompatible with Articles VI:2 of the GATT 1994 and Articles 2.4, 
2.4.2, 9.3, 9.5 and 11.3 of the AD Agreement.  Particularly, it found that zeroing is prohibited in all 
circumstances whenever calculating the "margins of dumping",  that is, regardless of the specific 
phase or comparison methods.  For the security and predictability of the multilateral trading system, 
Japan urges the Panel to follow the prior rulings of  the Appellate Body and approve Mexico's claims 
that the zeroing measures are inconsistent "as such" with Articles 2.1, 2.4, 2.4.2 and 9.3 of the AD Agreement.    
 
II. ZEROING PROCEDURES ARE A MEASURE "WHICH CAN BE CHALLENGED 
AS SUCH" 
 
2. In recent anti-dumping disputes, the Appellate Body held that the word "measure" has a broad 
meaning;  an alleged "measure" will be assessed in  WTO law irrespective of its legal character in 
domestic law;  and, significantly, a "measure" need not  be binding or mandatory in domestic law.  In 
US – Corrosion-Resistant Steel , the Appellate Body noted that th e measures examined by the past 
GATT/WTO panels include those consisting of " acts setting forth rules or norms that are intended to 
have general and prospective application" .   
 
3. The USDOC, in calculating overall margins of dumping, always  disregards and treats as zero  
the result of intermediate price comparisons wher e the export price exceeds the normal value in all 
anti-dumping procedures regardless of the types of comparison (a weighted average- to–weighted 
average ("W-W"), a transaction–to–transaction ("T-T") or a  weighted average–to–transaction ("W-
T") comparison) that it adopts.  Such methodology of  margin calculation is exactly what is called 
"zeroing" which should be regarded as a single m easure that can be challenged "as such" under the 
WTO law.   
 
 III. ZEROING USED IN INVESTIGATIONS IS INCONSISTENT "AS SUCH" WITH 
ARTICLES 2.1, 2.4.2 AND 2.4 OF THE AD AGREEMENT 
 
A. T
HE CONCEPT OF "DUMPING " AND "MARGINS OF DUMPING " 
 4. Japan supports the Mexico's contention that zer oing is prohibited "as such" in investigations 
using a T-T comparison.  The Appellate Body held, in US – Softwood Lumber V (Article 21.5 – 
Canada) , that zeroing is prohibited on the "as applied" basis by Articles 2.1, 2.4.2 and 2.4 in original 
investigations using a T-T comparison.    5. Article 2 of the AD Agreement sets forth the "agreed disciplines" for determining "dumping" 
and "margins of dumping".  Japan further notes that  Article 2.1 defines "dumping" as follows:  "For 
the purpose of this Agreement, a product  is to be considered as being dumped " (emphasis added.)  
This definition reiterates the definition of "dumping"  in Article VI:1 of the GATT 1994.  Article VI:2 WT/DS344/R 
Page B-10  
 
 also defines the term "margin of dumping" by re ference to the "product".  Based on the texts of 
Articles 2.1 and VI, "dumping" and "margins of du mping" must be established for the product under 
investigation as a whole.  This definition of "dum ping" and "margins of dum ping" applies throughout 
the AD Agreement for purposes of all anti-dumping proceedings.  Based on this analysis, in US – 
Zeroing (EC)  and US – Softwood Lumber V , the Appellate Body held that " dumping is defined in 
relation to a product as a whole ".   
 6. On the basis of this interpretation of Article  2.1 and Article VI:1, the Appellate Body further 
found that "if the investigating authority establishe s the margin of dumping on the basis of multiple 
comparisons made at an intermediate stage, it is re quired to aggregate the results of all of the multiple 
comparisons, including those where the export price exceeds the normal value".  This requirement 
under Article 2.1 to aggregate multiple comparison r esults in calculating a margin of dumping for the 
"product" as a whole should be followed, when an  authority conducts multiple model-specific W-W 
comparisons, multiple transactions-specific W-T co mparisons and multiple transaction-specific T-T 
comparisons.   
 
B. D
ETERMINATION OF MARGINS OF DUMPING BASED ON T-TO-T COMPARISONS IN ORIGINAL 
INVESTIGATIONS  
 7. The United states rebuts that "all comparable  export transactions" language in the text of 
Article 2.4.2 of the AD Agreement is the textual basis for an obligation to provide offsets and 
therefore this language in Article 2.4.2 applies only to antidumping investigations and only when 
authorities use the W-W comparison pursuant to Article 2.4. 2.  This interpretation is  apparently false.   
 8. As clarified in US – Softwood Lumber V (Article  21.5 – Canada) , the reference in the first 
sentence of Article 2.4.2 to "a comparison" in the si ngular and to "export prices" in the plural suggests 
the need for an overall calculation exercise involving  aggregation of multiple transactions.  The text 
of Article 2.4.2 indicates that the calculation of a dumping margin using the T-T comparison methodology is a multi-step exercise in which the results of transaction-specific comparisons are 
inputs that are to be aggregated in order to  establish the dumping margin of the product under 
investigation for each exporter or producer.    
9. Japan does not consider that the absence of the phrase "all comparable export transactions" in 
the context of the T-T comparison suggests that zeroing should be permissible under that methodology.  Under T-T comparison, unlike W-W,  all export transactions are taken into account 
individually and matched with the most appropr iate transactions in the domestic market.   
 
C. C
ONTEXTUAL ARGUMENTS RELATING TO THE SECOND SENTENCE OF ARTICLE  2.4.2  OF THE 
AD A GREEMENT  
 10. The United States further rebuts that the gene ral zeroing prohibition would, yielding identical 
results between the W-W and W-T comparison, render the targeted dumping exception in Article 2.4.2 a complete nullity (the "mathematical equivalence" argument).   
 
11. However, in US - Softwood Lumber 
Ⅴ(Article 21.5-Canada) , the Appellate Body decisively 
rejected this argument, by noting that, without actua l application ever by the Unites States of the W-T 
comparison method, the "mathematical equivalence" argument "rests on untested hypothesis".  It also 
noted that, given the exceptional nature of th e method authorized in the second sentence of 
Article 2.4.2, that sentence "alone cannot determ ine the interpretation of the two methodologies 
provided in the first sentence…", and that "there is considerable uncertainty regarding how precisely 
the third methodology should be applied", because it has never been invoked.  Finally, the Appellate  WT/DS344/R 
 Page B-11 
 
 
 Body affirmed that "mathematical equivalence" does not necessarily arise when using W-T and W-W 
comparisons without zeroing.    12. Accordingly, the second sentence of Article 2.4.2 does not provide contextual support for a finding that zeroing is permissible under T-T comparison methodology.   
 
D. A
RTICLE 2.4 OF THE AD AGREEMENT  
 13. The use of zeroing under T-T comparison methodology artificially inflates the magnitude of dumping, resulting in higher margins of dumpi ng and making a positive determination of dumping 
more likely.  Therefore the United States acts inconsistently with Article 2.4 of the  AD Agreement.   
  
IV. THE ZEROING PROCEDURES IN PERIODIC REVIEWS 
 14. The United States contends that in periodic reviews, the term "margins of dumping" in 
Article 9.3 of the AD Agreement can be interprete d to apply on a transaction–specific basis and that 
therefore the provision of this Article permits th e determination of transaction specific margins in 
periodic reviews.    15. The chapeau  of Article 9.3 of the AD Agreement, which governs periodic reviews, states 
"[t]he amount of the anti-dumping duty shall not exceed the margin of dumping as established under 
Article 2".  Based on this requirement as well as the ones under Article VI:2 of the GATT 1994 and 
Article 9.1 of the AD Agreement, the margin of  dumping established for an exporter or foreign 
producer operates as a ceiling for the total amount of anti-dumping duties that can be levied on the 
entries of the subject product (from that exporte r) covered by the duty assess ment proceeding.   
 
16. The express reference to Article 2 in the chapeau of Article 9.3 includes, among others, 
Article 2.1, which defines "dumping" for purposes of the entire AD Agreement in relation to the 
"product" under investigation as a whole.  In US – Zeroing (EC) , the Appellate Body made an explicit 
interpretive connection between th e "product as a whole" requirement of Article 2.1 and dumping 
determinations under Article 9.3.  Based on the in terpretation of Article 2.1 mentioned earlier, for 
purposes of periodic reviews as well, the inves tigating authority must aggregate all multiple 
comparison results to establish a margin of dumping for the "product" under investigation as a whole.   
 17. The Appellate Body clearly rejected the Unite d States' argument that, in a periodic review, 
"dumping" and "margins of dumping" can be determin ed on an importer- or an import-specific basis.  
The Appellate Body explained in US – Zeroing (EC)  that "[e]stablishing margins of dumping for 
exporters or foreign producers is consistent w ith the notion of dumping, which is designed to 
counteract the foreign producer's or exporter's pricing behavior.  Under Article 9.3 of the Anti-
Dumping Agreement and Article VI:2 of the GATT 1994, margins of dumping are established for 
foreign producers or exporters".    
18. The Appellate Body also recognized that neither the AD Agreement nor the GATT 1994 
prevents Members from assessing  duties on an import - or importer-specific basis, provided that the 
total amount of duties levied does not exceed the margin of dumping for the "product", for the 
exporter or foreign producer.  
19. In periodic reviews, the United Stat es calculates:  (1) a margin for each exporter  that becomes 
the duty deposit rate for all entries of the product e xported to the United States by that exporter until 
the next review;  and (2) an importer -specific assessment rate based on the total amount of dumping 
attributable to each importer, which determines that  importer's liability for the review period.   
 WT/DS344/R 
Page B-12  
 
 20. In light of its interpretation of Articles 9. 3 and VI:2, in conjuncti on with other relevant 
provisions including Articles 2.1 and VI:1, the Appellate Body in US – Zeroing (EC)  found that "the 
methodology applied by the USDOC in the administ rative reviews at issue resulted in amounts of 
assessed anti-dumping duties that exceeded the forei gn producers' or exporters' margins of dumping 
with which the anti-dumping duties had to be compared".  Accordingly, the zeroing methodology is 
inconsistent with Article 9.3 of the  AD Agreement and Article VI:2 of the GATT 1994.   
 21. The United States criticizes this conclusion on the grounds that if a Member is unable to 
calculate and assess the duties on a transaction-specifi c basis, importers of the merchandise for which 
the amount of dumping is greatest will actually have  an advantage over their competitors who import 
at fair value prices because they will enjoy the bene fit of offsets that result from their competitors' 
fairly priced imports.    22. However, anti-dumping duties are designed to counteract an exporter's pricing, and not an importer's, and because it is exporters that creat e a situation of dumping, the maximum amount of 
duties must be assessed in relation to exporter's ma rgin of dumping.  Furthermore, if duties are 
imposed on importers, it must be ensured that the total amount of duties does not exceed the exporter's 
margins of dumping.  The above-mentioned situatio n on which the United Stat es bases its criticism is 
consistent with the exporter-associated nature  of the notion of dumping, not importer.