WORLD TRADE  
ORGANIZATION   
WT/DS414/R 
15 June 2012 
 
 (12-3102) 
 Original:   English 
  
 
     
 
    
 
  
CHINA - COUNTERVAILING AND  ANTI-DUMPING DUTIES 
ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL 
STEEL FROM THE UNITED STATES 
 
 
Report of the Panel 
 
 
 
 
  WT/DS414/R 
 Page i 
 
 
  TABLE OF CONTENTS 
Page 
 
I.  INTRODUCTION .................................................................................................................. .. 1 
II.  FACTUAL ASPECTS .............................................................................................................. 1 
III. PARTIES' REQUESTS FOR FIND INGS AND RECOMMENDATIONS......................... 2  
A.  THE UNITED STATES  ................................................................................................................... 2  
B.  CHINA  .............................................................................................................................. ............ 4 
IV.  ARGUMENTS OF THE PARTIES ........................................................................................ 4  
V.  ARGUMENTS OF THE THIRD PARTIES .......................................................................... 4  
VI.  INTERIM REVIEW ................................................................................................................ . 4 
A.  INTRODUCTION  ........................................................................................................................... 4  
B.  PARTIES ' REQUESTS FOR CHANGES TO THE INTERIM REPORT  ..................................................... 4  
1.  Paragraph 7.28 ................................................................................................................ .......... 4 
2.  Paragraph 7.91 ................................................................................................................ .......... 5 
3.  Paragraphs 7.105, 7.108 and 7.111 .......................................................................................... 5  
4.  Paragraph 7.206 ............................................................................................................... ......... 5 
5.  Paragraph 7.365 ............................................................................................................... ......... 5 
6.  Paragraphs 7.527, 7.629, 7.635 and footnote 601 (footnote 604 in the Final 
Report) ....................................................................................................................... ................ 6  
7.  Paragraph 7.530 ............................................................................................................... ......... 6 
8.  Footnote 525 (footnote 528 in the Final Report), paragraph 7.549 ...................................... 6  
9.  Footnote 602 (footnote 605 in the Final Report), paragraph 7.630 ...................................... 7  
10.  Paragraph 7.637 ............................................................................................................... ......... 7 
VII. FINDINGS ...................................................................................................................... ........... 8 
A.  GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION , THE APPLICABLE 
STANDARD OF REVIEW AND BURDEN OF PROOF  .......................................................................... 8  
1.  Treaty Interpretation ......................................................................................................... ....... 8 
2.  Standard of Review ............................................................................................................ ....... 8 
3.  Burden of Proof ............................................................................................................... .......... 9 
B.  WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 11.2  AND 11.3  OF THE SCM 
AGREEMENT IN INITIATING AN INVESTIG ATION WITH RESPE CT TO CERTAIN 
PROGRAMMES  ..............................................................................................................................  9 
1.  Provisions at issue ........................................................................................................... .......... 9 
2.  Factual Background ............................................................................................................ ..... 9 
3.  Arguments of the United States ............................................................................................. 10  
4.  Arguments of China ............................................................................................................ .... 14 
5.  Arguments of third parties .................................................................................................... . 17 
6.  Evaluation by the Panel ....................................................................................................... ... 18 
C.  WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.4.1  OF THE SCM 
AGREEMENT AND 6.5.1  OF THE ANTI -DUMPING AGREEMENT BECAUSE MOFCOM 
FAILED TO REQUIRE ADEQUATE NON -CONFIDENTIAL SUMMARIES  ........................................... 41  
1.  Provisions at issue ........................................................................................................... ........ 41 
2.  Factual Background ............................................................................................................ ... 41 WT/DS414/R 
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  3.  Arguments of the United States ............................................................................................. 41  
4.  Arguments of China ............................................................................................................ .... 44 
5.  Arguments of third parties .................................................................................................... . 47 
6.  Evaluation by the Panel ....................................................................................................... ... 48 
D. 
WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 12.7  OF THE SCM 
AGREEMENT IN ITS USE OF FACTS AVAILAB LE IN CALCULATING THE SUBSIDY RATES 
(FOR THE TWO KNOWN RESPONDENTS ) UNDER CERTAIN PROCUREMENT PROGRAMMES  ......... 56 
1.  Introduction .................................................................................................................. ........... 56  
2.  Arguments of the United States ............................................................................................. 56  
3.  Arguments of China ............................................................................................................ .... 61 
4.  Arguments of third parties .................................................................................................... . 64 
5.  Evaluation by the Panel ....................................................................................................... ... 64 
E.  WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 12.2.2  OF THE ANTI -
DUMPING AGREEMENT BECAUSE IT DID NOT DISCLOSE THE DATA AND CALCULATIONS 
USED TO ESTABLISH THE DUMPING MARGINS  ........................................................................... 76  
1.  Provision at issue ............................................................................................................ ......... 76 
2.  Factual Background ............................................................................................................ ... 77 
3.  Arguments of the United States ............................................................................................. 77  
4.  Arguments of China ............................................................................................................ .... 78 
5.  Arguments of third parties .................................................................................................... . 79 
6.  Evaluation by the Panel ....................................................................................................... ... 80 
F.  WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 22.3  OF THE SCM 
AGREEMENT BECAUSE IT FAILED TO PR OVIDE SUFFICIENT INFORMATION ON THE 
FINDINGS AND CONCLUSIONS OF LAW IT C ONSIDERED MATERIAL WITH RESPECT TO 
THE BENEFIT DETERMINATION UNDER THE GOVERNMENT PROCUREMENT STATUTES  ............. 82  
1.  Provision at issue ............................................................................................................ ......... 82 
2.  Factual Background ............................................................................................................ ... 83 
3.  Arguments of the United States ............................................................................................. 83  
4.  Arguments of China ............................................................................................................ .... 84 
5.  Arguments of third parties .................................................................................................... . 84 
6.  Evaluation by the Panel ....................................................................................................... ... 85 
G.  WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 6.8, 6.9, 12.2,  12.2.2  AND 
ANNEX II OF THE ANTI -DUMPING AGREEMENT IN RELATION TO THE "ALL OTHERS " 
RATE FOR UNKNOWN EXPORTERS IN THE ANTI -DUMPING DUTY INVESTIGATION  ..................... 90  
1.  Whether China acted inconsistently with  Article 6.8 and paragraph 1 of Annex 
II of the Anti-Dumping Agreement in using facts available to calculate the dumping margins for unknown exporters ............................................................................ 90  
2.  Whether China acted inconsistently with Article 6.9 of the Anti-Dumping 
Agreement by failing to inform interes ted parties of the essential facts under 
consideration in calculating the "all others" dumping margin .......................................... 96  
3.  Whether China acted inconsistently with Articles 12.2 and 12.2.2 of the Anti-
Dumping Agreement in relation to the public notice and explanation of its determination of the "all others" dumping margin ........................................................... 100  
H. 
WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE VI :2 OF THE GATT 1994 ............... 102  
1.  Provision at issue ............................................................................................................ ....... 102  WT/DS414/R 
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  2.  Arguments of the United States ........................................................................................... 103  
3.  Arguments of China ............................................................................................................ .. 103 
4.  Evaluation by the Panel ....................................................................................................... . 103 
I.  WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.7,  12.8,  22.3  AND 22.5  
OF THE SCM AGREEMENT IN RELATION TO THE "ALL OTHERS " RATE FOR UNKNOWN 
EXPORTERS IN THE COUNTERVAILING DUTY INVESTIGATION  ................................................. 104  
1.  Whether China acted inconsistently with Article 12.7 of the SCM Agreement in 
using facts available to calculate the subsidy rate for unknown exporters ..................... 104  
2.  Whether China acted inconsistently with Article 12.8 of the SCM Agreement by 
failing to inform interested parties of the essential facts under consideration in 
calculating the "all others" subsidy rate ............................................................................. 108  
3.  Whether China acted inconsistently with Articles 22.3 and 22.5 of the SCM 
Agreement in relation to the public noti ce and explanation of its determination 
of the "all others" subsidy rate ............................................................................................ 1 11 
J.  PRICE EFFECTS ANALYSIS  ........................................................................................................ 112  
1.  Whether China acted inconsistently with Articles 15.1 and 15.2 of the SCM 
Agreement and Articles 3.1 and 3.2 of the Anti-Dumping Agreement in relation 
to MOFCOM's analysis of the pri ce effects of subject imports ........................................ 112  
2.  Whether China acted inconsistently with Articles 12.8 of the SCM Agreement 
and 6.9 of the Anti-Dumping Agreement in  failing to disclose the essential facts 
under consideration in relation to its price effects analysis .............................................. 132  
3.  Whether China acted inconsistently with Articles 22.5 of the SCM Agreement 
and 12.2.2 of the Anti-Dumping Agreement  in relation to the public notice and 
explanation of its price effects determination ..................................................................... 137  
K.  CAUSATION ANALYSIS  ............................................................................................................ 140  
1.  Whether China acted inconsistently with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement and 15.1 and 15.5 of  the SCM Agreement with respect to 
MOFCOM's causation analysis ........................................................................................... 140  
2.  Whether China acted inconsistently with Articles 12.8 of the SCM Agreement 
and 6.9 of the Anti-Dumping Agreement in  failing to disclose the essential facts 
under consideration in relation to non-subject imports in its causation anaylsis ........... 151  
3.  Whether China acted inconsistently with Articles 22.5 of the SCM Agreement 
and 12.2.2 of the Anti-Dumping Agreement  in relation to the public notice and 
explanation of its causation analysis with respect to non-subject imports ...................... 156  
L.  WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 1 OF THE ANTI -DUMPING 
AGREEMENT AND ARTICLE 10 OF THE SCM AGREEMENT  ........................................................ 159  
1.  Provisions at issue ........................................................................................................... ...... 159 
2.  Arguments of the United States ........................................................................................... 160  
3.  Arguments of China ............................................................................................................ .. 160 
4.  Evaluation by the Panel ....................................................................................................... . 160 
VIII. CONCLUSIONS AND RECOMMENDATION ................................................................ 161  
A.  CONCLUSIONS  ......................................................................................................................... 161  
B.  RECOMMENDATION  ................................................................................................................. 162  
 WT/DS414/R 
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  LIST OF ANNEXES 
 
ANNEX A 
 
 
EXECUTIVE SUMMARIES OF THE FIRST WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
Contents Page 
Annex-A-1 Executive Summary of the First Written Submission of the 
United States A-2 
Annex A-2 Executive Summary of the First Written Submission of China A-11 
 
 
ANNEX B 
 
 
WRITTEN SUBMISSIONS, OR EXECUTIVE SUMMARIES THEREOF, 
OF THE THIRD PARTIES 
 
Contents Page 
Annex B-1 Executive Summary of the Third Party Written Submission of 
Argentina B-2 
Annex B-2 Executive Summary of the Third Party Written Submission of the 
European Union B-4 
Annex B-3 Third Party Written Submission of Honduras B-8 
Annex B-4 Executive Summary of the Third Party Written Submission of 
Japan B-11 
Annex B-5 Executive Summary of the Third Party Written Submission of the 
Kingdom of Saudi Arabia B-17 
Annex B-6 Executive Summary of the Third Party Written Submission of 
Korea B-21 
 
 
ANNEX C 
 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF, OF 
THE PARTIES AT THE FIRST SUBSTANTIVE MEETING 
 
Contents Page 
Annex C-1 Executive Summary of the Opening Statement of the United States 
at the First Meeting of the Panel C-2 
Annex C-2 Executive Summary of the Opening Statement of China at the First 
Meeting of the Panel C-10 
Annex C-3 Closing Statement of the United States at the First Meeting of the 
Panel C-15 
Annex C-4 Closing Statement of China at the First Meeting of the Panel C-17 
 
  WT/DS414/R 
 Page v 
 
 
  ANNEX D 
 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF OF 
THE THIRD PARTIES AT THE FIRST SUBSTANTIVE MEETING 
 
Contents Page 
Annex D-1 Third Party Oral Statement of Argentina  D-2 
Annex D-2 Executive Summary of the Third Party Oral Statement of the 
European Union  D-4 
Annex D-3 Third Party Oral Statement of Honduras  D-7 
Annex D-4 Executive Summary of the Third Party Oral Statement of India D-9 
Annex D-5 Third Party Oral Statement of Japan  D-14 
Annex D-6 Third Party Oral Statement of the Kingdom of Saudi Arabia D-18 
Annex D-7 Third Party Oral Statement of Korea  D-20 
 
 
ANNEX E 
 
 
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
Contents Page 
Annex-E-1 Executive Summary of the Second Written Submission of the 
United States E-2 
Annex E-2 Executive Summary of the Second Written Submission of China E-11 
 
 
ANNEX F 
 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF, OF 
THE PARTIES AT THE SECOND SUBSTANTIVE MEETING 
 
Contents Page 
Annex F-1 Executive Summary of the Op ening Statement of China at the 
Second Meeting of the Panel F-2 
Annex F-2 Executive Summary of the Open ing Statement of the United States 
at the Second Meeting of the Panel F-7 
Annex F-3 Closing Statement of China at the Second Meeting of the Panel F-15 
Annex F-4 Closing Statement of the United States at the Second Meeting of 
the Panel F-17 
 
 
 
 WT/DS414/R 
Page vi  
 
   
ANNEX G 
  
REQUEST FOR THE ESTABLISHMENT OF A PANEL 
 
Contents Page 
Annex G-1 Request for the Establishment of a Panel by the United States  G-2 
 
 
ANNEX H 
  
RELATIONSHIP BETWEEN DOMESTIC PRODUCTION AND SUBJECT IMPORTS 
 
Contents Page 
Annex H-1 Relationship between dom estic production and subject imports 
  (BCI redacted) H-2 
  WT/DS414/R 
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  TABLE OF CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Argentina – Ceramic Tiles  Panel Report, Argentina – Definitive Anti-Dumping Measures on Imports of 
Ceramic Floor Tiles from Italy , WT/DS189/R, adopted 5 November 2001, 
DSR 2001:XII, 6241  
Argentina – Poultry 
Anti-Dumping Duties  Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from 
Brazil , WT/DS241/R, adopted 19 May 2003, DSR 2003:V, 1727  
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Brazil – Retreaded Tyres  Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded 
Tyres , WT/DS332/AB/R, adopted 17 D ecember 2007, DSR 2007:IV, 1527  
Canada - Aircraft Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft , 
WT/DS70/R, adopted 20 August 1999, upheld by Appellate Body Report WT/DS70/AB/R, DSR 1999:IV, 1443 
Canada – Wheat Exports and 
Grain Imports  Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004, 
DSR 2004:VI, 2739  
EC – Bed Linen Panel Report, European Communities – Anti-Dumping Duties on Imports of 
Cotton-Type Bed Linen from India , WT/DS141/R, adopted 12 March 2001, as 
modified by Appellate Body Report WT/DS141/AB/R, DSR 2001:VI, 2077 
EC – Countervailing 
Measures on DRAM Chips Panel Report, European Communities – Countervailing Measures on Dynamic 
Random Access Memory Chips from Korea , WT/DS299/R, adopted 
3 August 2005, DSR 2005:XVIII, 8671 
EC – Fasteners (China)  Appellate Body Report, European Communities – Definitive Anti-Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R, 
adopted 28 July 2011  
EC – Fasteners (China) Panel Report, European Communities – Definitive Anti-Dumping Measures on 
Certain Iron or Steel Fasteners from China , WT/DS397/R and Corr.1, adopted 
28 July 2011, as modified by Appellate Body Report WT/DS397/AB/R 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed 
Salmon from Norway , WT/DS337/R, adopted 15 January 2008, and Corr.1, 
DSR 2008:I, 3 
EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable 
Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/R, adopted 
18 August 2003, as modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, 2701 
Guatemala – Cement I Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland 
Cement from Mexico , WT/DS60/R, adopted 25 November 1998, as reversed by 
Appellate Body Report WT/DS60/AB/R, DSR 1998:IX, 3797 
Guatemala – Cement II  Panel Report, Guatemala – Definitive Anti-Dumping Measures on Grey 
Portland Cement from Mexico , WT/DS156/R, adopted 17 November 2000, 
DSR 2000:XI, 5295  
India - Autos Panel Report, India – Measures Affecting the Automotive Sector , 
WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 
1827 
Japan – DRAMs (Korea) Appellate Body Report, Japan – Countervailing Duties on Dynamic Random 
Access Memories from Korea , WT/DS336/AB/R and Corr.1, adopted 
17 December 2007, DSR 2007:VII, 2703 
Japan – DRAMs (Korea) Panel Report, Japan – Countervailing Duties on Dynamic Random Access 
Memories from Korea , WT/DS336/R, adopted 17 D ecember 2007, as modified 
by Appellate Body Report WT/DS336/AB/R, DSR 2007:VII, 2805 
Korea – Certain Paper Panel Report, Korea – Anti-Dumping Duties on Imports of Certain Paper from 
Indonesia , WT/DS312/R, adopted 28 November 2005, DSR 2005:XXII, 10637 WT/DS414/R 
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  Short Title Full Case Title and Citation 
Mexico – Anti-Dumping 
Measures on Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted 
20 December 2005, DSR 2005:XXII, 10853 
Mexico – Anti-Dumping 
Measures on Rice Panel Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, 
Complaint with Respect to Rice , WT/DS295/R, adopted 20 December 2005, 
as modified by Appellate Body Repor t WT/DS295/AB/R, DSR 2005:XXIII, 
11007 
Mexico – Olive Oil Panel Report, Mexico – Definitive Coun tervailing Measures on  Olive Oil from 
the European Communities , WT/DS341/R, adopted 21 October 2008, DSR 
2008:IX, 3179 
Mexico – Steel Pipes and Tubes Panel Report, Mexico – Anti-Dumping Duties on Steel Pipes and Tubes from 
Guatemala , WT/DS331/R, adopted 24 July 2007, DSR 2007:IV, 1207 
US – Anti-Dumping and 
Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R, 
adopted 25 March 2011 
US – Anti-Dumping and Countervailing Duties (China) Panel Report, United States – Definitive Anti-Dumping and Countervailing 
Duties on Certain Products from China , WT/DS379/R, adopted 25 March 2011, 
as modified by Appellate Body Report WT/DS379/AB/R 
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semi conductors (DRAMS) from Korea , 
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, 8131  
US – Countervailing Duty 
Investigation on DRAMS Panel Report, United States – Countervailing Duty Investigation on Dynamic 
Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/R, adopted 20 July 2005, as modified by Appellate Body Report WT/DS296/AB/R, DSR 2005:XVII, 8243 
US – Export Restraints Panel Report, United States – Measures Treating Exports Restraints as 
Subsidies , WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI, 
5767 
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, adopted 
23 August 2001, DSR 2001:X, 4697 
US – Offset Act (Byrd Amendment)  Panel Report, United States – Continued Dumping and Subsidy Offset Act of 
2000 , WT/DS217/R, WT/DS234/R, adopted 27 January 2003, as modified by 
Appellate Body Report WT/DS217/AB/ R, WT/DS234/AB/R, DSR 2003:II, 
489 
US – Oil Country Tubular 
Goods Sunset Reviews 
(Article 21.5 – Argentina) Panel Report, United States – Sunset Reviews of Anti-Dumping Measures on 
Oil Country Tubular Goods from Argentina – Recourse to Article 21.5 of the 
DSU by Argentina , WT/DS268/RW, adopted 11 May 2007, as modified by 
Appellate Body Report WT/DS268/AB/RW, DSR 2007:IX-X, 3609 
US – Softwood Lumber II GATT Panel Report, Panel on United States – Measures Affecting Imports of 
Softwood Lumber from Canada , SCM/162, adopted 27 October 1993, BISD 
40S/358 
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571 
US – Softwood Lumber IV Panel Report, United States – Final Countervailing Duty Determination with 
Respect to Certain Softwood Lumber from Canada , WT/DS257/R and Corr.1, 
adopted 17 February 2004, as modified by Appellate Body Report 
WT/DS257/AB/R, DSR 2004:II, 641 
US – Softwood Lumber V  Panel Report, United States – Final Dumping Determination on Softwood 
Lumber from Canada , WT/DS264/R, adopted 31 August 2004, as modified by 
Appellate Body Report WT/DS264/AB/R, DSR 2004:V, 1937   WT/DS414/R 
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  Short Title Full Case Title and Citation 
US – Softwood Lumber VI 
(Article 21.5 – Canada)  Appellate Body Report, United States – Investigation of the International 
Trade Commission in Softwood Lumber from Canada – Recourse to 
Article 21.5 of the DSU by Canada , WT/DS277/AB/RW, adopted 9 May 2006, 
and Corr.1, DSR 2006:XI, 4865  
US – Tyres (China) Appellate Body Report, United States – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/AB/R, 
adopted 5 October 2011 
US – Wool Shirts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R, adopted 23 May 1997, 
and Corr.1, DSR 1997:I, 323  
 WT/DS414/R 
Page x  
 
  TABLE OF ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation  Full Reference 
Additional Application New Subsidy Allegations Ap plication (20 July 2009) (Exhibits CHN-5 and 
US-16) 
AK Steel AK Steel Corporation 
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994 
Application Petition for the Anti-Dumping and Anti-Subsidy Investigation (29 April 2009) 
(Exhibits CHN-2 and US-2) 
ATI ATI Allegheny Ludlum Corporation 
AUV Average unit value 
Baosteel Baosteel Group Corporation 
DSU Understanding on Rules and Procedur es Governing Settlement of Disputes 
Final Determination MOFCOM, Final Determination [2010] No. 21 (10 April 2010) (Exhibits 
CHN-16 and US-28) 
Final Disclosure MOFCOM, Memorandum Regarding the Factual Disclosure on the Dumping 
Margin and Ad Valorem Subsidy Rate for Grain Oriented Flat-Rolled 
Electrical Steel Antidumping and C ountervailing Cases (15 March 2010) 
(Exhibit US-26) 
Final Injury Disclosure MOFCOM, Essential Facts under Considerati on which Form the Basis of the 
Determination on Industry Injury, 5 March 2010 (Exhibits CHN-29 and 
US-27) 
GATT 1994 General Agreement on Tariffs and Trade 1994 
GOES Grain oriented flat -rolled electrical steel 
MOFCOM Ministry of Commerce of the People's Republic of China 
POI Period of investigation 
Preliminary Determinatio n MOFCOM, Preliminary Determinati on [2009] No. 99 (10 December 2009) 
(Exhibits CHN-17 and US-5) 
SCM Agreement Agreement on Subsidies and Countervailing Measures 
USD US dollars 
VRA Voluntary restraint agreement 
WISCO Wuhan Iron and Steel Corporation 
WTO Agreement Marrakesh Agreement Esta blishing the World Trade Organization 
 
 
  WT/DS414/R 
 Page 1 
 
 
 I. INTRODUCTION 
1.1 On 15 September 2010, the United States requested consultations with China under Articles 4 
of the Understanding on Rules and Procedures Gove rning the Settlement of Disputes (the DSU), 
Article XXII:1 of the General Agreement on Tariffs  and Trade of 1994 (the GATT 1994), Article 30 
of the Agreement on Subsidies and Countervailing M easures (the SCM Agreement) (to the extent that 
Article 30 incorporates Article XXIII of the GAT T 1994), and Article 17.3 of the Agreement on 
Implementation of Article VI of the General Agreement on Ta riffs and Trade 1994 (the Anti-
Dumping Agreement) with respect to China' s measures imposing countervailing duties and anti-
dumping duties on grain oriented flat-rolled electri cal steel (GOES) from the United States, as set 
forth in the Ministry of Commerce of the Peopl e's Republic of China (MOFCOM) Notice No. 21 
[2010], including its annexes.1  The consultations were held on 1 November 2010.  The consultations 
failed to resolve the dispute.  
1.2 On 11 February 2011, the United States requested, pursuant to Article 6 of the DSU, 
Article 17.4 of the Anti-Dumping Agreement, and Ar ticle 30 of the SCM Agreement, that the Dispute 
Settlement Body (the DSB) establish a Panel to examine this matter.2   
1.3 At its meeting on 25 March 2011, the DSB establis hed a panel pursuant to the request of the 
United States in document WT/DS414/2, in  accordance with Article 6 of the DSU. 
1.4 The Panel's terms of reference are the following:   
To examine, in the light of the relevant pr ovisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by the United States in document WT/DS414/2 and to make such findings as will assist the DSB in making 
the recommendations or in giving the rulings provided for in those agreements. 
1.5 Following the agreement of the parties, the Pa nel was composed on 10 May 2011 as follows:   
 Chairman:  Mr John Adank 
  Members: Mr Anthony Abad 
   Mr Jan Heukelman 
 1.6 Argentina; the European Union; Honduras; Indi a; Japan; Korea; Saudi Arabia and Viet Nam 
reserved their rights to participate in the Panel proceedings as third parties.   
1.7 The Panel met with the parties on 15-16 Septembe r and 6-7 December 2011.  It met with the 
third parties on 16 September 2011.  The Panel issued its interim report to the parties on 
24 February 2012.  The Panel issued its final report to the parties on 1 May 2012.   
II. FACTUAL ASPECTS 
2.1 The United States challenges various aspects of  the measures imposing countervailing duties 
and anti-dumping duties on GOES from the United Stat es.  The measures are set forth in MOFCOM's 
Notice No. 21 [2010], including its annexes.
3  The United States claims that the measures are 
                                                      
1 WT/DS414/1. 
2 WT/DS414/2. 
3 Final Determination [2010] No. 21 (10 April 2010)  ("Final Determination"), Exhibit CHN-16 and 
Exhibit US-28. WT/DS414/R 
Page 2  
 
 inconsistent with China's commitments and ob ligations under the GATT 1994, the Anti-Dumping 
Agreement and the SCM Agreement.   
2.2 An application for initiation of an anti-dum ping and countervailing duty investigation was 
filed on 29 April 2009 by two Chinese steel producers, namely Wuhan Iron and Steel (Group) Corporation (WISCO) and Baosteel Group Corporation (Baosteel).  The applicants alleged that 27 
federal and state laws provided co untervailable subsidies to the United States producers of GOES.  
The application also estimated a dumping margin for GOES imports from the United States of 25%.  Finally, the application alleged that the imports  of GOES from the United States and Russia caused 
and threatened injury to the Chinese domestic i ndustry.  On 1 June 2009, MOFCOM initiated anti-
dumping, countervailing duty and injury investigati ons.  In the countervailing duty initiation notice, 
MOFCOM initiated on 22 of the 27 federal and state laws that the applicants had alleged provided 
countervailable subsidies.  On 20 July 2009, the a pplicants filed new subsid y allegations regarding a 
further 10 federal and state laws.  On 19 August 2009, MOFCOM initiated an  investigation covering 
six of these programmes. 
2.3 On 10 December 2009, MOFCOM published its  preliminary determination.  MOFCOM 
calculated ad valorem  subsidy rates of 11.7% for AK Steel Corporation (AK Steel) and 12% for ATI 
Allegheny Ludlum Corporation (ATI).  The "all others" subsidy rate repor ted in the preliminary 
determination was 12%.  MOFCOM calculated pr eliminary dumping margins of 10.7% for AK Steel, 
19.9% for ATI and 25% for "all others".   
2.4 Prior to issuing its final determination, MOFC OM released a final disclosure document, in 
which it revealed that the "all others" subsidy a nd dumping rates had increased to 44.6% and 64.8% 
respectively.   
2.5 On 10 April 2010, MOFCOM issued its final determination for the anti-dumping and 
countervailing duty investigati ons.  MOFCOM calculated ad valorem  subsidy rates of 11.7% for AK 
Steel, 12% for ATI and 44.6% for "all others".  MO FCOM applied a dumping margin of 7.8% to AK 
Steel, 19.9% to ATI and 64.8% to "all others".   MOFCOM found that China's domestic GOES 
industry sustained material injury and that there was a causal link between the injury and the dumped 
imports of GOES from Russia and the dumped and subsidized imports of GOES from the 
United States.   
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
A. T
HE UNITED STATES  
3.1 In its written submissions, the United States requested the Panel to find: 
(a) China acted inconsistently with Articles 11.2 and 11.3 of the SCM Agreement when 
it initiated a countervailing duty investigation with respect to 11 of the programmes 
included in the application; 
(b) China acted inconsistently with Articles 12.4.1 of the SCM Agreement and 6.5.1 of 
the Anti-Dumping Agreement because it faile d to require adequa te non-confidential 
summaries of confidential information included in the application; 
(c) China acted inconsistently with Article 12.7 of the SCM Agreement because its use 
of facts available for known exporters was improper;  WT/DS414/R 
 Page 3 
 
 
 (d) China acted inconsistently with Articl e 12.2.2 of the Anti-Dumping Agreement 
because it failed to make available to the respondent companies the calculations used 
to determine these companies' final dumping margins; 
(e) China acted inconsistently with Article 22.3 of the SCM Agreement because it failed 
adequately to explain the findings and c onclusions supporting its determination that 
the competitive bidding process under the United States Government procurement 
statutes at issue did not result in pr ices that reflected market conditions; 
(f) China acted inconsistently with Articles 6.8 and 6.9 of the Anti-Dumping Agreement 
because it applied anti-dumping duties based on facts available to "unknown" United 
States exporters and did not disclose the essential facts that led to that result; 
(g) China acted inconsistently with Articles 12.2 and 12.2.2 of the Antidumping 
Agreement because MOFCOM failed to provi de in sufficient detail the findings and 
conclusions leading to application of f acts available to "unknown" United States 
producers/exporters.  MOFCOM also failed to  provide "all relevant information" on 
the facts underlying its determination that r ecourse to facts available was warranted in 
the calculation of the "all others" antidumping rate; 
(h) China acted inconsistently with Article  VI:2 of the GATT 1994 because the "all 
others" anti-dumping duty levied by China wa s greater in amount than the appropriate 
margin of dumping; 
(i) China acted inconsistently with Articl es 12.7, 12.8, 22.3 and 22.5 of the SCM 
Agreement because it applied countervaili ng duties based on facts available to 
"unknown" United States exporters and provi ded no detail in its final determination 
or final disclosure documents regarding the findings that led to the application of 
facts available; 
(j) China acted inconsistently with Articles 3. 1, 3.2, 6.9 and 12.2.2 of the Anti-Dumping 
Agreement and Articles 15.1, 15.2, 12.8 a nd 22.5 of the SCM Agreement because its 
price effects analysis was not based on pos itive evidence and it did not engage in an 
objective examination of the evidence.  Furt her, China did not disclose the essential 
facts supporting its price effects analysis a nd did not offer an adequate explanation 
for its price effects findings;  
(k) China acted inconsistently with Articles 3. 1, 3.5, 6.9 and 12.2.2 of the Anti-Dumping 
Agreement and Articles 12.8, 15.1, 15.5 a nd 22.5 of the SCM Agreement because its 
causation analysis was not supported by positive evidence or based on an objective 
examination of the evidence.  Further, China failed to disclose the essential facts 
supporting its analysis and did not provide an adequate explanation for its causation 
findings; and 
(l) Consequently, China also acted inconsiste ntly with Article 1 of the Anti-Dumping 
Agreement and Article 10 of the SCM Agreement. 
3.2 Pursuant to Article 19.1 of the DSU, the Un ited States requests the Panel to recommend that 
China bring its measures into conformity with the Anti-Dumping Agreement, the SCM Agreement 
and the GATT 1994. WT/DS414/R 
Page 4  
 
 B. 
CHINA  
3.3 China requests the Panel to reject the United St ates' claims in their entirety, finding instead 
that, with respect to each of them, China acted cons istently with all of its obligations under the WTO 
Agreements. 
IV. ARGUMENTS OF THE PARTIES 
4.1 The arguments of the parties are set out in their written submissions, oral statements to the 
Panel and their answers to questions.  Executive summaries of the parties' written submissions, and 
their oral statements or executive summaries ther eof, are attached as addenda to this Report in 
Annexes A, C, E and F (see List of Annexes, pages iv-vi). 
V. ARGUMENTS OF TH E THIRD PARTIES 
5.1 India and Viet Nam did not submit third party written submissions, while Viet Nam did not 
submit a third party oral statement.  The arguments  of Argentina; the European Union; Japan and 
Korea are set out in their written submissions, oral statements and answers to questions. The arguments of Honduras and Saudi Arabia are set out in their written submissions and oral statements. 
The arguments of India are set out in its oral stat ement.  The third parties' written submissions and 
oral statements, or executive summari es thereof, are attached as addenda to this Report in Annexes B 
and D (see List of Annexes, pages iv-vi). 
VI. INTERIM REVIEW 
A. I
NTRODUCTION  
6.1 On 24 February 2012, the Panel submitted its  Interim Report to the parties.  On 
16 March 2012, both parties submitted written request s for review of precise aspects of the Interim 
Report.  On 30 March, the United States submitted comments on China's requests for review.  Neither 
party requested that the Panel hol d an interim review meeting. 
6.2 The Panel explains below its response to issues of a substantive nature raised by the parties in 
their comments on the Interim Report.  The Panel has also corrected a number of typographical errors 
identified by the parties. 
6.3 Due to changes as a result of our review, the numbering of the footnotes in the Final Report 
has changed from the Interim Report.  The text belo w refers to the footnote numbers in the Interim 
Report, with the footnote number in the Final Report in parentheses for ease of reference.   
B. PARTIES ' REQUESTS FOR CHANGES TO THE INTERIM REPORT  
1. Paragraph 7.28 
6.4 China submits that the Panel's description of its argument regarding whether the United States 
made a prima case  under Article 11 is incomplete.  China requests that the Panel supplement the 
description to reflect the argument that the United Stat es failed to engage in a serious evaluation of the 
evidence that accompanied th e application at issue. 
6.5 The United States does not agree that the Inte rim Report incorrectly characterizes China's 
argument.  However, if the Panel agrees to amend the description of China's argument, the 
United States requests that the Panel note the sec tions of the United States' first and second written 
submissions where it addressed the contents of the application and each allegation.  WT/DS414/R 
 Page 5 
 
 
 6.6 The Panel has expanded upon its description of Chin a's argument in paragraph 7.28, so that it 
is in the level of detail requested by China.  The Panel has also accepted the United States' request, by 
referencing the sections of its submissions th at the United States relies upon as addressing the 
contents of the application (see footnote 19). 
2. Paragraph 7.91 
6.7 The United States requests some minor changes to  the wording in the penultimate sentence of 
paragraph 7.91, in order to add greater clarity to the sentence. 
6.8 China does not comment on this request. 
6.9 The Panel has decided to accommodate the United States' request and has made the 
adjustments sought. 
3. Paragraphs 7.105, 7.108 and 7.111 
6.10 The United States submits that the Panel should ch ange references to the "Economic Stimulus 
Package" to the "Economic Stimulus Plan" in its own descriptions of the alleged subsidy and when 
describing the arguments made by the United St ates, as this is the correct terminology. 
6.11 China does not comment on this request. 
6.12 The Panel notes that Exhibits CHN-8 and US -29 refer to the programme at issue as the 
"Economic Stimulus Plan" rather than the "Economic  Stimulus Package".  Therefore, the Panel has 
accommodated the United States' request. 
4. Paragraph 7.206 
6.13 The United States suggests a minor change to the wording of the final sentence of paragraph 
7.206. 
6.14 China does not comment on this request. 
6.15 In the Panel's view, the United States' suggest ed change does not alter the meaning of the 
sentence, but perhaps makes the Panel's statement in the sentence more definitive.  The Panel has 
decided to accommodate the United States' request in  order to add greater clarity and force to the 
sentence at issue. 
5. Paragraph 7.365 
6.16 China submits that the first sen tence of paragraph 7.365 should be struck from the Report.  
The sentence in question states: "[a]rguably, if the United States' claim were one of substance, 
regarding for example the benefit determinati on under Articles 1.1(b) or 14(d) of the SCM 
Agreement, we may find certain problems with the reasoning used by MOFCOM".   
6.17 The United States does not comment upon China's request. 
6.18 The Panel has removed the sentence from the Re port, on the basis that it is not strictly 
necessary to its reasoning.  The Panel has al so added a new footnote to paragraph 7.365 
(footnote 357) to emphasise that the United States' claim was not one of substance and Article 22.3 of 
the SCM Agreement does not discipline the substan tive adequacy of an investigating authority's 
reasoning. WT/DS414/R 
Page 6  
 
 6. Paragraphs 7.527, 7.629, 7.635 and footnote  601 (footnote 604 in the Final Report) 
6.19 China argues that the Panel's use of the term s "regrettably", "failed to", "failure" and 
"impaired", as used variously in paragraphs 7.527, 7.629, 7.635 and footnote 601 (footnote 604 in the 
Final Report), is inappropriate.  According to Chin a, these terms convey value judgments that are not 
appropriate in a panel's description of what ha ppened during the course of panel proceedings.  
Further, China argues that the term "impaired" ma y inadvertently reflect some judgment by the Panel 
of intent by China to frustrate the Panel's analysis .  According to China, where there is no breach of 
the relevant general and/or special panel working procedures, it is inappropriate for a panel to use 
language that suggests a motive or intent outside the confines of these rules and obligations. 
6.20 The United States disagrees with China's objecti ons and argues that other panels have used 
the term "regret" to refer to the conduct of a party during a proceeding.
 4  Further, the term "impaired" 
was used by the Panel as part of a factual statement about the impact on the Panel's work. 
6.21 The Panel has reflected on the terminology used  in the paragraphs at issue and, where it 
considers appropriate, has made some of the changes requested by China. 
7. Paragraph 7.530 
6.22 China considers the Panel's statement in the fi fth sentence of paragraph 7.530, namely that 
"such prices should be adjusted to ensure that they  are properly comparable", suggests that the Panel 
is articulating a mandatory methodology the authority  must follow.  China believes it would be more 
appropriate to state that the authority should either  adjust the prices to ensure comparability, or 
otherwise explain why specific adjustments are not n ecessary in a particular situation.  China suggests 
that there may be cases in which adjustments woul d be immaterial.  For example, China posits a 
scenario in which there are two grades of a product, on e priced at $10/unit and one priced at $12/unit.  
China suggests that, if there were a finding of price undercutting of $5/unit, any adjustment would be immaterial, since the $2/unit difference between th e two products could ne ver change the overall 
existence of undercutting. 
6.23 The United States disagrees that the Panel' s statement is articulating a mandatory 
methodology that authorities must follow.  The United States understands the point in the final clause 
of the sentence to be that when making a finding  of price undercutting, the prices being compared 
need to be comparable.  The United States asserts that China's proposed revision of the second clause 
would appear to provide an authority with the abilit y to use non-comparable prices.  The United States 
also asserts that China's hypothetical is confusing since it appears to be re ferring to two different 
domestic prices, while the Panel is discussing the comparison between imported and domestic prices.  
Should the Panel decide to rephrase the last clause of  the sentence, the United States suggests that the 
clause could be rephrased as:  "and the authority s hould ensure that the prices it is using for its 
comparison are properly comparable." 
6.24 The Panel has decided to adjust the fifth sente nce of the paragraph to clarify that, for the 
purpose of price comparisons, prices should always be comparable.   
8. Footnote 525 (footnote 528 in the Final Report), paragraph 7.549 
6.25 China suggests deleting the last sentence of footnote 525 (footnote 528 in the Final Report) at 
paragraph 7.549.  According to China, there is no basis before the Panel to express any opinion on 
                                                      
4 The United States refers in this regard to the Panel Report, Canada – Aircraft,  para. 9.178, and Panel 
Report, India – Autos , para. 6.54.  WT/DS414/R 
 Page 7 
 
 
 whether new capacity has higher costs than expandi ng existing capacity.  China contends that the 
Panel might properly note this as an issue the au thority should address, but the Panel should not use 
any language that prejudges what the authority might find on this issue. 
6.26 The United States contends that the last sente nce of footnote 525 (footnote 528 in the Final 
Report) accurately describes the record before th e Panel and should not be deleted.  The Panel 
correctly observed that the United States explained that improvements in existing facilities were 
unlikely to engender the same degree of start- up costs as opening an entirely new facility.  The 
United States contends that if this statement were  not true, China (unlike the United States) had access 
to the information from the confidential MOFCOM r ecord with which to rebut it.  China did not do 
so. 
6.27 The Panel has decided not to accommodate China' s request.  The United States' argument that 
creating new capacity is likely to incur greater co sts than merely improving existing capacity is 
relevant to the Panel's findings.  In making its fi ndings, the Panel is entitled to rely on relevant 
United States arguments that were not contested by China. 
9. Footnote 602 (footnote 605 in the Final Report), paragraph 7.630 
6.28 China disagrees with the first sentence of para graph 7.630, and the last two sentences of 
footnote 602 (footnote 605 in the Final Report).   China submits that the first sentence of paragraph 7.630 and the entire footnote 602 (footnot e 605 in the Final Report) are unnecessary to the 
Panel's analysis and should be deleted.  China asser ts that the relevant issue is completely addressed 
by paragraph 7.632.  China submits that, although it may not have been able to provide the precise number for the capacity utilization in 2008 because of  confidentiality concerns, China did provide a 
confidential range that provided upper and lower limits that more narrowly prescribed the actual 
number.  China contends that when a party provid es a range and states the actual number is within 
that range, it is no longer reasonable for the other pa rty to make assumptions that generate a number 
outside the range.  
6.29 The United States disagrees with China's request that the Panel delete the first sentence of 
paragraph 7.630 and footnote 602 (footnote 605 in the Final Report).  According to the United States, 
the first sentence of paragraph 7.630 is a factually  accurate description of the United States' argument 
and China has no basis to object to the inclusion of a United States argument in the Report.  The 
United States further asserts that the statement and accompanying footnote are directly related to the 
remainder of paragraph 7.630 so th ey are not "unnecessary" and should be retained.  Finally, with 
respect to China's use of a range of numbers, the United States considers that the Panel properly noted 
in the final sentence of footnote 602 (footnote 605 in the Final Report) that China's mere assertion of 
error, without providing the actual underlying data, is insufficient to reject the basic point being made by the United States. 
6.30 The Panel has decided not to accommodate China's request.  The first sentence of 
paragraph 7.630 describes an argument made by the Un ited States that is highly relevant to the Panel's 
subsequent analysis.  Furthermore, footnote 602 (footnote 605 in the Final Report) clarifies the 
reasons the Panel was not able to reject the Unite d States' argument on the basis of China's simple 
assertion of error.   
10. Paragraph 7.637 
6.31 China believes the statement "it is clear" in the second sentence of paragraph 7.637 is 
inappropriate.  Given the Panel's earlier discussion of  the limitations on its analysis, China contends 
that it is hard to see how the conclusion could be "c lear".  In this situation, China believes the phrase 
"it appears" more appropriately describes the situation.   WT/DS414/R 
Page 8  
 
 6.32 The United States asserts that the fact that the information available to the Panel was limited 
does not mean that there can be no clear conclusi ons drawn from it.  Moreover, the Panel's statement 
is qualified by stating the increase was "at least " partially responsible for the accumulation of 
inventory.  According to the United States, theref ore, the Panel's use of the phrase "it is clear" is 
entirely appropriate. 
6.33 The Panel has reconsidered the wording it used  in the second sentence of paragraph 7.637 and 
has decided to adjust it to accommodate China's request.  
VII. FINDINGS 
A. 
GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION , THE APPLICABLE STANDARD OF 
REVIEW AND BURDEN OF PROOF  
1. Treaty Interpretation 
7.1 Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the 
existing provisions of the covered agreements "in accordance with customary rules of interpretation of 
public international law".  It is generally accepted th at the principles codified in Articles 31 and 32 of 
the Vienna Convention on the Law of Treaties are such customary rules.5   
2. Standard of Review 
7.2 Panels generally are bound by the standard of  review set forth in Article 11 of the DSU, 
which provides, in relevant part, that: 
[A] panel should make an objective assessment of the matter  before it, including an 
objective assessment of the facts of the cas e and the applicability of and conformity 
with the relevant covered agreements. 6 (emphasis added) 
7.3 According to the Appellate Body, the "objective assessment" to be made  by a panel reviewing 
an investigating authority's determination is to be informed by an examination of whether the agency 
provided a reasoned and adequate explanation as to: (i) how the evidence on the record supported its 
factual findings; and (ii) how those factua l findings supported the overall determination.7 
7.4 The Appellate Body has also commented that a panel reviewing an investigating authority's 
determination may not conduct a de novo  review of the evidence or substitute its judgment for that of 
the investigating authority.  A panel must limit its  examination to the evidence that was before the 
agency during the course of the investigation and must take into account all such evidence submitted 
by the parties to the dispute.8  At the same time, a panel must not  simply defer to the conclusions of 
the investigating authority.  A panel's examinatio n of those conclusions must be "in-depth" and 
"critical and searching".9   
                                                      
5 Done at Vienna, 23 May 1969, 1155 United Nations Treaty Series 331 (1980); 8 International Legal 
Materials 679 (1969). 
6 Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreem ent sets forth a specific 
standard of review applicab le to anti-dumping disputes. 
7 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 186. 
8 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 187. 
9 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 - Canada) , para. 93.  WT/DS414/R 
 Page 9 
 
 
 3. Burden of Proof 
7.5 The general principles applicable to the allo cation of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert and prove its claim.
10  Therefore, as the complaining party, the United States bears the burden of 
demonstrating that certain aspects of the anti-dum ping and countervailing duty measures at issue are 
inconsistent with the Anti-Dumping Agreemen t, the SCM Agreement and the GATT 1994.  The 
Appellate Body has stated that a complaining party will satisfy its burden when it establishes a prima 
facie  case, namely a case which, in the absence of eff ective refutation by the defending party, requires 
a panel, as a matter of law, to rule  in favour of the complaining party.11  Finally, it is generally for 
each party asserting a fact to provide proof thereof.12 
B. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLES 11.2  AND 11.3  OF THE SCM 
AGREEMENT IN INITIATING AN INVESTIGATION WITH RESPECT TO CERTAIN PROGRAMMES  
1. Provisions at issue 
7.6 The United States' claim relates to Articles 11. 2 and 11.3 of the SCM Agreement.  These 
provide, relevantly: 
11.2  An application under paragraph 1 shall include sufficient evidence of the 
existence of (a) a subsidy and, if possible,  its amount, (b) injury within the meaning 
of Article VI of GATT 1994 as interpreted by this Agreement, and (c) a causal link 
between the subsidized imports and the alleged injury.  Simple assertion, unsubstantiated by relevant evidence, cannot  be considered sufficient to meet the 
requirements of this paragraph.  The appli cation shall contain such information as is 
reasonably available to the applicant on the following: 
 ...  (iii) evidence with regard to the exis tence, amount and nature of the subsidy 
in question. 
11.3  The authorities shall review the accu racy and adequacy of the evidence 
provided in the application to determine wh ether the evidence is sufficient to justify 
the initiation of an investigation. 
2. Factual Background 
7.7 On 27 April 2009, two Chinese steel producers, WISCO and Baosteel, filed an application 
with MOFCOM, requesting relief under China's an ti-dumping and countervailing duty laws on behalf 
of China's domestic GOES industry.  The applicants  alleged that United States producers of GOES, in 
particular, AK Steel and ATI, had engaged in injurious dumping and had benefited from various 
countervailable subsidies.   
7.8 In relation to the subsidies, the applicants alleged that 27 federal and state laws, including 
several federal procurement statutes, provided countervailable subsidies to the United States 
companies.  On 1 June 2009, MOFCOM initiated a countervailing duty investig ation in relation to 22 
of the 27 programmes included in the application. 
                                                      
10 Appellate Body Report, US – Wool Shirts and Blouses , p. 14.  
11 Appellate Body Report, EC – Hormones, para. 104. 
12 Appellate Body Report, US – Wool Shirts and Blouses , p. 14. WT/DS414/R 
Page 10  
 
 7.9 On 20 July 2009, the applicants filed new subs idy allegations regarding 10 federal and state 
laws.  MOFCOM initiated a countervailing duty inves tigation in relation to six of the programmes 
included in the additional application. 
7.10 In its claim under Articles 11.2 and 11.3 of the SCM Agreement, the United States challenges 
the initiation of an investigation in relation to six of the programmes included in the original 
application and five of the programmes included in  the additional application.  Therefore, the 
United States' challenge regarding the initiation of th e investigation relates to 11 programmes, namely 
the Medicare Prescription Drug, Improvement a nd Modernization Act of 2003; the Economic 
Recovery Tax Act of 1981, the Tax Reform Act of  1986; the Steel Import Stabilization Act of 1984; 
the State of Indiana Steel Industry Advisory Serv ice; grace periods for meeting the Clean Air Act 
emissions standards; the "supply of electricity to the steel industry at a low price"; the "supply of 
natural gas to the steel industry at a low price"; a "subsidy to coal for the steel industry"; the 2003 
Economic Stimulus Plan of Pennsyl vania; and Pennsylvania's Alternative Energy Funding Program.   
3. Arguments of the United States 
7.11 According to the United States, the initiation by MOFCOM of the countervailing duty 
investigation in relation to 11 United States fede ral and state programmes was inconsistent with 
Articles 11.2 and 11.3 of the SCM Agreement. 
(a) Article 11.2 of the SCM Agreement 
7.12 The United States notes that Article 11.2 re quires that "an application…shall include 
sufficient evidence of the existen ce of…a subsidy".  Read in the context of Article 1 of the SCM 
Agreement, Article 11.2 requires that an applica tion to initiate a counter vailing duty investigation 
include sufficient evidence of the ex istence of a financial contribution, a benefit (requirements for the 
existence of a subsidy) and specificity (since Part  III of the SCM Agreement applies only if a subsidy 
is specific).
13  According to the United States, Article 11. 2(iii), which refers to evidence "with regard 
to the existence, amount and nature of the subsidy in question", supports its position.14 
7.13 With respect to what evidence is  "sufficient" in a petition, the United States refers to the 
second sentence of Article 11.2, which provides that  "simple assertion, unsubstantiated by relevant 
evidence, cannot be c onsidered sufficient".15  To meet the standard fo r "sufficient evidence", an 
application must contain a degree of actual evidence.16  The panel in US - Offset Act (Byrd 
Amendment) noted that Article 11.2 ensures that "inves tigations are not initiated on the basis of 
frivolous or unfounded suits".17  The United States also argues that while it is not necessary for an 
applicant definitively to establish the existence of ea ch element of a specific subsidy at the time of 
lodging a petition, there must be at least some evidence of financial contribution, benefit and 
specificity.  The United States rejects China's attempt to rely on "the broader context provided by the 
application" in place of evidence for one  or more of the necessary elements.18 
7.14 In relation to the GOES investigation, the United States argues that for 11 of the programmes 
investigated by MOFCOM, the initial and additiona l applications included no evidence of basic 
                                                      
13 United States' first written submission, para. 74 and United States' response to Panel question 37. 
14 United States' first written submission, para. 74. 
15 United States' first written submission, para. 74. 
16 United States' second written submission, para 4, citing Panel Reports, Mexico – Steel Pipes and 
Tubes, para. 7.24 and Guatemala – Cement II , para. 8.53 (both discussing Article 5.2 of the Anti-Dumping 
Agreement). 
17 United States' first written submission, para. 74, quoting Panel Report, US – Offset Act (Byrd 
Amendment), para. 7.61 
18 United States' response to Panel question 1, para. 6.  WT/DS414/R 
 Page 11 
 
 
 subsidy elements and were based on simple assertion.   Further, the applications did not state that 
relevant information was not "reasonably available".19  The United States alleges deficiencies in the 
application in relation to the following programmes: 
(i) Medicare Prescription Drug, Improvement and Modernization Act 
7.15 The United States argues that the application in cluded no evidence indicating that the alleged 
subsidy was specific.  According to the United St ates, the statement in the AK Steel Annual Report 
indicating that AK Steel sponsors the relevant type of healthcare plan to qualify for the subsidy does not indicate that the company was the only such co mpany to do so, or that it was one of a limited 
group of such companies.  Further, there was no evidence to indicate that "sponsors of retiree 
healthcare benefit plans that included a qualified prescription drug benefit" was a de jure  or de facto  
specific group. 
(ii) Economic Recovery Tax Act of 1981 
7.16 The United States notes that the Economic Recove ry Tax Act of 1981 was in effect for only 
two years and ceased to operate 27 years prior to the period of investigation.  The United States 
argues that the application contained no evidence indi cating that a benefit existed during the period of 
investigation.  According to the United States, China' s speculation, after the fact, that it is possible the 
subsidy could have been allocated over time, and th at the allocation period, which was never alleged 
in the first place, could have exceeded 20 years,  is inadequate to support a decision to initiate.
20 
(iii) Tax Reform Act of 1986 
7.17 The United States complains that the applicant fa iled to provide any evidence indicating that a 
benefit could exist during the period of investigatio n in relation to subsidies allegedly provided 24 
years prior to this period. 21 
(iv) Steel Import Stabilization Act of 1984 
7.18 According to the United States, the application was deficient due to lack of evidence of the 
existence of a financial contribution.  The applica tion alleged that the voluntary restraint agreements 
(VRAs) established under the Steel Import Stabili zation Act constituted a price support mechanism 
within the meaning of Article 1.1(a)(2) of the SCM Agreement.22  However, the sole evidence relied 
upon by the petitioner was that the VRAs "effectiv ely provided" steel producers with a price support 
mechanism.  According to the Un ited States, this is not evidence that the VRAs constituted "price 
support" within the meaning of the SCM Agreement.23 
(v) State of Indiana Steel Advisory Service 
7.19 The United States argues that the application in cluded no evidence that the State of Indiana 
Advisory Service constitutes a financial contribution.  The applicant merely stated that the Advisory 
Service constitutes the provision of a good or servi ce and that the programme was "indicative" of a 
                                                      
19 United States' first written submission, paras. 76-77.  The United States responds to China's 
argument that it did not engage in a serious evaluatio n of the evidence that acco mpanied the application and 
therefore did not make a prima facie case under Article 11, by noting that it addressed the contents of the 
application and each allegation at para. 78 of its firs t written submission, paras. 4-36 of its second written 
submission and in Exhibits US-2, US-16, US-29, US-30 and US-31. 
20 United States' opening statement at the first meeting of the Panel, para. 8. 
21 United States' second written submission, para. 13. 
22 United States' second written submission, para. 14. 
23 United States' second written submission, para. 15. WT/DS414/R 
Page 12  
 
 financial contribution and could "quite plausi bly" have constituted a financial contribution.
24  T h e  
United States contends that no evidence was provi ded indicating that a study would be performed 
under the programme and, even if it were, whether it w ould be available to the steel industry.  Finally, 
the United States argues that the application did not indicate what the benefit under the programme 
would be.25 
(vi) Grace periods for compliance with the Clean Air Act 
7.20 According to the United States, the application appears to allege that steel companies were 
given a three year postponement for compliance with certain environmental standards in the Clean Air 
Act and that this "special envi ronmental immunity is virtually an income support to the steel 
industry".  However, the United States argues that  the application included insufficient evidence of 
actual income or price support within the mean ing of Article 1.1(a)(2) of the SCM Agreement.26  With 
respect to benefit, the United States notes that the "special environmental immunity" ended on 31 December 1985.  The applicant did not provide evidence indicating how a benefit could exist in relation to a grace period that expired more than 20 years prior to the start of the period of investigation.
27 
(vii) 2003 Economic Stimulus Plan of Pennsylvania 
7.21 According to the United States, the petition did not include sufficient evidence of specificity 
in relation to the 2003 Economic Stimulus Plan of Pennsylvania.  Noting that there are steel production facilities in Pennsylvania does not constitute  evidence that steel is a "favoured" industry.  
Although a focal point of the programme was to provide "[r]esources that allow our traditional industries, especially manufacturing, to access new technology", the United States argues that this was 
only one of seven focal points.  In fact, the Plan "sought to serve a wide variety of economic sectors, 
industries and firms".
28 
(viii) Pennsylvania's Alternative Energy Funding Programme 
7.22 The United States argues that the applicati on was deficient in providing evidence of 
specificity.  The application asserted that "looking  at the full range, the applicants could easily 
discover the fact that…most…grantees were from en ergy or steel industries" and that the steel 
industry "was absolutely one of the most important  receivers".  The United States argues that it is 
unclear how these statements provide sufficient evidence of specificity.29  The United States also 
argues that the application did not provide evidence of the existence of a benefit.  MOFCOM ignored 
evidence provided by the United States demonstratin g that, for the most part, the programme was not 
operational during the period of investigation.  For th e part of the programme that was operational, the 
United States provided evidence that the respondent companies did not receive a benefit.   
(ix) Natural Gas 
7.23 The United States argues that the petition include d no evidence of a financial contribution, 
benefit or specificity in relation to the alle gation that GOES producers received a countervailable 
                                                      
24 United States' second written submission, paras. 16-17. 
25 United States' second written submission, paras. 16-17. 
26 United States' second written submission, para. 18. 
27 United States' second written subm ission, para. 20.  In response to Panel question 39, the 
United States confirms that it is not challenging MOFCOM 's initiation of an investigation with respect to the 
1990 amendments to the Clean Air Act. 
28 United States' second written submission, paras. 28 -30; United States' response to Panel question 5, 
paras. 13-15 and United States' opening statement at the first meeting of the Panel, para. 7.  
29 United States' second written submission, para. 32.  WT/DS414/R 
 Page 13 
 
 
 subsidy through the pricing of natural gas.  The ev idence provided by the applicants demonstrated that 
the natural gas market was deregulated in 1985, at which time users negotiated directly with 
producers to set prices.30  China does not point to any evidence in  the application to indicate that the 
United States Government sets prices, let alone sets pr ices in a discriminatory manner.  Further, price 
differentiation is not, in and of itself, evidence of sp ecificity.  Finally, to the extent the applicants 
argued that subsidies were provided to natural g as producers, China cannot point to any evidence in 
the application to indicate pass-through of such subsidies.31 
(x) Electricity 
7.24 According to the United States, the petitioners' allegation that GOES producers received a 
subsidy through the pricing of electricity was not supported by evidence of a financial contribution, 
benefit or specificity.  The evidence in the petitio n was consistent with the fact that, while the 
United States Government regulates the provision of el ectricity, it does not set retail electricity prices.  
Further, the evidence did not sup port the applicant's assertion that the United States Government sets 
preferential prices for certain industries and regions.  Price differentiation is not, in and of itself, 
evidence of specificity and China cannot point to  any evidence indicating that the United States 
Government sets prices in a discriminatory fashion.32  In addition, the United States notes that, to the 
extent the applicants argued that subsidies were provided to electricity producers, no evidence was 
cited indicating pass-through of such subsidies to the steel industry.33 
(xi) Coal 
7.25 The United States notes that there was no evidence in the application that any subsidization to 
the coal industry passes-through to the steel industry.   This was merely asserted by the applicants.  
Further, China cannot point to any evidence that th e United States Government sets the price for coal 
or in any way sells coal to the steel industry on preferential terms.   
(b) Article 11.3 of the SCM Agreement 
7.26 The United States claims that China acted in consistently with its obligations under 
Article 11.3 because MOFCOM failed to examine the accuracy and adequ acy of the evidence 
provided to substantiate the exis tence of a subsidy.  Regarding the correct interpretation of 
Article 11.3, the United States cites the panel's interpretation of the analogous provision under the 
Anti-Dumping Agreement in US – Softwood Lumber V , in particular that a panel should determine 
"whether an unbiased and objective investigating au thority would have found that the application 
contained sufficient information to ju stify initiation of the investigation".34 
7.27 According to the United States, for many of the programmes included in the petition, 
evidence of the basic subsidy elements was miss ing.  The United States argues that no reasonable 
investigating authority would have initiated an  investigation of the 11 programmes at issue.35  Prior to 
the initiation, the United States highlighted to MOFCOM the problems with the application.  
Notwithstanding the information provided to it by the United States, MOFCOM initiated the 
countervailing duty investigation with respect to all of the programmes at issue.36   
                                                      
30 United States' second written submission, para. 23. 
31 United States' second written submission, paras. 24-25. 
32 United States' second written submission, para. 21. 
33 United States' second written submission, para. 21. 
34 United States' first written submission, para. 79. 
35 United States' first written submission, para. 80. 
36 United States' first written submission, para. 80 and second written submission, para. 36. WT/DS414/R 
Page 14  
 
 4. Arguments of China 
7.28 China disputes the United States' claim that MO FCOM acted inconsistently with Articles 11.2 
and 11.3 of the SCM Agreement.  In fact, China contends that the United States has not made a prima 
facie  case with respect to its Article 11 claims.  In particular, China argues in its first and second 
written submissions that the United States failed to e ngage in a serious evaluation of the evidence that 
accompanied the application at issue.  Rather, the United States simply asserted that "the petition did 
not contain any evidence" of one or more elements of an actionable subsidy, without referring to the 
information accompanying the application.
37  China also argues that the allegation that the application 
failed adequately to allege one or more elements  of a subsidy with respect to each of the 11 
programmes at issue is in fact incorrect. 
(a) Article 11.2 of the SCM Agreement 
7.29 According to China, Article 11.2 of the SCM Ag reement contains a low application threshold 
that requires far less substantiation and an alysis than claimed by the United States.38  The objective of 
Article 11.2 is to limit the evidentiary burden on the applicant.  Although China agrees with the 
United States that Article 11.2 requires evidence of a financial contribution, benefit and specificity, 
this is qualified by the chapeau to Article 11. 2, which requires only the information "reasonably 
available to the applicant".39  China argues that, given the lack of any direct reference to "specificity" 
in Article 11.2, and the difficulty applicants face in obtaining evidence of specificity, particularly de 
facto specificity, a different and less stringent evid entiary standard exists for this element.40 
7.30 China contends that the jurisprudence relating to the analogous provision under the Anti-
Dumping Agreement, namely Article 5.2, provid es important context for the interpretation of 
Article 11.2 of the SCM Agreement.41  According to China, the panels  that have examined Article 5.2 
of the Anti-Dumping Agreement have held that  applicants need only submit enough evidence to 
justify an investigation and do not need to analyse the evidence or explain the ultimate conclusion.  
China notes "the quantity and quality of the informat ion provided by the applicant need not be such as 
would be required in order to make a preliminary or final determination" and the inclusion of raw 
information is sufficient to overcome the proscription on simple assertion.42   
7.31 Although China's primary position is that the United States has not made a prima facie  case 
under Article 11.2 of the SCM Agreement, China also  seeks to demonstrate that the application for 
initiation included sufficient evidence for each of the 11 programmes at issue: 
(i) Medicare Prescription Drug, Improvement and Modernization Act 
7.32 In response to the United States' claim that th e application did "not include any evidence of 
specificity", China argues that AK Steel's Annual Report, which was annexed to the application, 
stated that the Medicare Act "provides a federal s ubsidy to sponsors of retiree healthcare benefit 
plans" and that AK Steel is such a sponsor.  Acco rding to China, this demonstrates contingent access 
to the subsidy and could indicate the existence of de jure  or de facto specificity.43   
                                                      
37 China's first written submission, paras. 25 and 28 and China's second written submission, paras. 12-
13. 
38 China's first written submission, para. 14. 
39 China's first written submission, paras. 16-17. 
40 China's response to Panel question 37. 
41 China's first written submission, para. 19. 
42 China's first written submission, para. 22. 
43 China's first written submission, paras. 34-36.  WT/DS414/R 
 Page 15 
 
 
 (ii) Economic Recovery Tax Act 1981 
7.33 China disputes the significance of the United Stat es' argument that the application did not 
include any evidence showing that the programme provided a benefit during the period of investigation.  According to China,  implicit in the evidence of a large benefit to the steel industry is a 
claim that a benefit was received during the period of investigation.  There is no requirement to fix a 
benefit allocation period at the time of filing an appli cation.  China concludes that the lack of analysis 
linking evidence of the subsidy in 1981 and 1982 to benefits during the POI does not invalidate the allegation.
44 
(iii) Tax Reform Act 1986 
7.34 In response to the United States' allegation that  the application did not contain evidence of a 
benefit during the period of investigation, Chin a relies upon the explanation provided for in the 
Economic Recovery Tax Act.  Further, China cont ends that the applicant had no evidence before it 
indicating that the programme had been repealed, l eaving open the possibility that it was still in effect 
during the period of investigation.45 
(iv) Steel Import Stabilization Act 1984 
7.35 China disputes the United States' argument that  the application included no evidence that the 
VRAs concluded under the Act c onstituted a financial contribution.  According to China, the 
application included information that actions und er the Act led to "pecuniary benefits" to the 
United States steel industry.  China concludes that whether this could definitively be found to be a 
financial contribution was not for the ap plication conclusively to determine.46  In response to a Panel 
question, China argues that the VRAs caused a tr ansfer of wealth from steel purchasers to the 
United States steel industry, due to higher domestic steel prices.  This could be construed generally as 
a form of price or income support.  Alternatively, China argues that it could be evidence of a financial 
contribution under Article 1.1(a)(1)(iv) of the SCM Ag reement because the effect of the measure is to 
cause a transfer of funds from private parties to the steel industry.47 
(v) State of Indiana Steel Industry Advisory Service 
7.36 China argues that the evidence in  the application demonstrated that the programme provided 
support to the steel industry, including a mandate  to examine laws and problems affecting the 
industry, and that this was "indicative of a financ ial contribution" in the form of the provision of 
goods or services.48  In response to the United States' argument that a study was never actually 
conducted under the programme, China argues that the applicants were dealing with imperfect 
information.49 
(vi) Grace Periods for Compliance with the Clean Air Act 
7.37 China argues that the application articulated a theory regarding the existence of a financial 
contribution, namely the provision of income or price support to the industry through delaying an obligation to invest in clear air technology.  Regarding the United States' argument that the application did not include evidence of benefit, China argues that the applicant provided specific 
estimates of the cost savings associated with the grace periods.  Although the grace periods ended 
                                                      
44 China's first written submission, paras. 37-39. 
45 China's first written submission, para. 40 
46 China's first written submission, paras. 41-42. 
47 China's response to Panel question 38. 
48 China's first written submission, paras. 43-44. 
49 China's opening statemen t at the first meeting of the Panel, para. 15. WT/DS414/R 
Page 16  
 
 more than 20 years ago, China relies on its previo us argument that it is not necessary to allocate a 
benefit across time in the context of an application for initiation.
50 
(vii) 2003 Economic Stimulus Plan of Pennsylvania 
7.38 China argues that there was "circumstantia l evidence of specificity" included in the 
application, which is sufficient for the purposes of Ar ticle 11.2 of the SCM Agreement.  In particular, 
China argues that the evidence demonstrating the prominence of the GOES industry within 
Pennsylvania was evidence of specificity.  Furthe r, the programme included a focus on "resources that 
allow…traditional industries, especially manufactur ing, to access new technology".  China argues that 
a programme emphasizing traditional manufacturing industries suggests the prospect of de facto  
specificity.51  Finally, China rejects the United States' argument that if more than one sector of an 
economy is targeted for support, a finding of suffici ent evidence of specificity is not possible for the 
purposes of initiation.52 
(viii) Pennsylvania's Alternative Energy Funding Plan 
7.39 China argues that the application included evidence that certain defined projects were eligible 
for loans under the programme.  Further, "based on actual utilization, these categories could in fact 
define a very small range of industries that benefited, providing the basis for a de facto  specificity 
finding".  On the question of benefit, China c ontends that evidence that individual respondents 
actually received a benefit under the programme is not  required.  Rather, presenting evidence of the 
"implication of a program focused on clean energy in relation to an industry known to be high polluting" is plausible evidence of the existence of a benefit.
53 
(ix) Natural Gas and (x) Electricity 
7.40 China argues that, contrary to the United Stat es' allegation, the application did provide 
evidence of a financial contribution, benefit and sp ecificity associated with the supply of electricity 
and natural gas to the steel industry.  In partic ular, the application included evidence that the 
United States Government regulates the electricity and natural gas industries and that the average 
price paid by the steel industry for electricity and na tural gas is lower than th e total average price paid 
in the United States and the price paid by other sectors.54   
(xi) Coal 
7.41 China argues that the application included evid ence of subsidies to the coal industry, which 
"is evidence of benefit through an indirect financial contribution" and evidence of the steel industry's 
substantial use of coal, "which goes to the issue of de facto  specificity".55  Further, China argues that 
the Coal Subsidy Act is "directly related to the steel industry's use of coal" and therefore provides 
evidence of a direct financial contribution to the industry.56 
                                                      
50 China's first written submission, paras. 45-46. 
51 China's first written submission, paras. 53-55. 
52 China's response to Panel question 40. 
53 China's first written submission, paras. 56-58. 
54 China's first written submission, paras. 47-50 an d China's response to Panel question 1, para. 11. 
55 China's first written submission, paras. 51-52. 
56 China's response to Panel question 1, para. 14.  WT/DS414/R 
 Page 17 
 
 
 (b) Article 11.3 of the SCM Agreement 
7.42 According to China, Articles 11.2 and 11.3  of the SCM Agreement impose distinct 
obligations.57  Article 11.3 obligates an investigating author ity to satisfy itself that the information in 
an application is sufficient evidence of the existence of a financial c ontribution, benefit and specificity 
for the purposes of initiating an investigation.58  China agrees with the Unite d States that in examining 
whether an initiation is justified, the standard of review to be applied by a panel is "whether an 
unbiased and objective investigating authority woul d have found that the application contained 
sufficient information to justify initiation of the investigation".59  China argues that Article 11.3 does 
not require a full investigation; rather the investiga ting authority's obligation is  only to substantiate a 
need for a more in-depth analysis.60  As a result, the quantity and quality of the information provided 
by an applicant need not be such as would be re quired in order to make a preliminary or final 
determination.61   
7.43 China questions whether the United States has made a prima facie  case under Article 11.3.  In 
particular, the United States' Article 11.3 claim is dependent upon its flawed Article 11.2 claim.62  In 
any event, China argues that MOFCOM's initiation of the investigation with respect to the 11 
programmes at issue before the Panel was consistent with Article 11.3 of the SCM Agreement.  China 
acknowledges that the United States raised certain objections regarding the evidence underlying some 
of the programmes at issue.  However, MOFCOM concluded that these were issues to be resolved 
during the course of the investigation, rather th an issues fatal to initiation of an investigation.63   
5. Arguments of third parties 
(i) Honduras 
7.44 According to Honduras, the evidence required under Article 11.2 cannot consist of mere 
conjecture, speculation or abstract inferences.64  In relation to those programmes at issue that expired 
prior to the period of investigation, Honduras argues that the lack of guidelines in the SCM Agreement regarding the allocation of subsidies ov er time does not lead to an exception to the 
requirement to provide sufficient evidence of the existence of a subsidy under Article 11.2.
65  I n  
relation to the State of Indiana Steel Advisory Service, Honduras argues that the mere creation of an 
entity whose apparent function is to conduct studi es or analyses should not be considered sufficient 
evidence of the existence of a financial contribution.66 
(ii) India 
7.45 India notes that whether the application include d the requirements found in Article 11.2 of the 
SCM Agreement is a question of fact, which Indi a urges the Panel to "evaluate…cautiously and 
keeping in view an objective interpretation of the requirements enunciated under Article 11.2".67 
                                                      
57 China's response to Panel question 1, para. 15. 
58 China's first written submission, para. 59. 
59 China's first written submission, para. 65. 
60 China's first written submission, para. 66. 
61 China's second written submission, para. 17. 
62 China's first written submission, para. 67. 
63 China's first written submission, para. 68. 
64 Honduras's third party statement, para. 6. 
65 Honduras's third party statement, paras. 7-8. 
66 Honduras's third party statement, para. 9. 
67 India's third party statement, paras. 2.2 and 2.10. WT/DS414/R 
Page 18  
 
 (iii) Korea 
7.46 Korea submits that the initiation of a counterva iling duty investigation is supposed to be a 
meaningful step, in which the investigating aut hority carefully examines the information in the 
petition to determine whether an  investigation is justified.
68  Article 11.3 of the SCM Agreement 
requires the investigating authority to examine al l the relevant information and materials in the 
application and to confirm its veracity before making a decision to initiate an investigation.  
According to Korea, an investigating authorit y cannot "passively accept the allegations in the 
petition…and initiate an investigation hoping  to confirm the veracity down the road".69   
(iv) Saudi Arabia 
7.47 According to Saudi Arabia, Articles 11.2 and 11.3 of the SCM Agreem ent establish "strict 
disciplines" to govern the initiation of investigati ons.  The jurisprudence on initiation establishes that 
authorities have an obligation to ensure that th e evidence in an application gives a "reasonable 
indication" of the existence of subsidization.70  Further, Saudi Arabia notes that the "reasonable 
availability" of the evidence to the applicant under Article 11.2 is not determinative of the 
"sufficiency" of the evidence under Article 11.3.71 
6. Evaluation by the Panel 
7.48 The United States claims that China acted inc onsistently with Articles 11.2 and 11.3 of the 
SCM Agreement.  According to the United States , with respect to 11 programmes, the initial and 
additional applications did not meet the requirements of Article 11.2.  Further, under Article 11.3, an 
objective investigating authority would not ha ve found sufficient evidence to initiate the 
investigations.  The Panel notes that the United St ates' claim is the first under Articles 11.2 and 11.3 
of the SCM Agreement in the context of WTO dispute settlement, although the initiation of a 
countervailing duty investigation was considered in  the context of the Tokyo Round Subsidies Code.72   
(a) The relationship between Articles 11. 2 and 11.3 of the SCM Agreement 
7.49 Article 11 of the SCM Agreement sets out certain procedural rules relating to the initiation of 
countervailing duty investigations.  In particular, Article 11.2 of the SCM Agreement sets forth the 
evidence that must be included in an application for initiation submitted to an investigating authority 
by or on behalf of a domestic industry.  Article 11.3 of the SCM Agreement requires an investigating 
authority to review the accuracy and adequacy of the evidence in order to determine whether it is 
"sufficient" to justify initiation of an investigation. 
7.50 The Panel notes that the WTO covered agreemen ts are international agreements between the 
WTO Members.  Consequently, the obligations embodied in them are binding only upon Members 
and not upon private actors.  In the Panel's view, the obligation upon Members in relation to the 
sufficiency of evidence in an application finds expression in Article 11.3 of the SCM Agreement, 
which provides that an investigating authority must assess the accuracy and adequacy of the evidence 
in an application to determine whether it is suffi cient to justify initiation.  The obligation in 
Article 11.3 must be read together with Article  11.2 of the SCM Agreement, which sets forth the 
requirements for "sufficient evidence".  If an investig ating authority were to initiate an investigation 
without "sufficient evidence" before it, this would be inconsistent with Ar ticle 11.3.  Given this 
                                                      
68 Korea's third party submission, paras. 13 and 16. 
69 Korea's third party statement, para. 6. 
70 Saudi Arabia's third party statement, para. 4. 
71 Saudi Arabia's third party submission, paras. 3, 10 and 12. 
72 GATT Panel Report, US – Softwood Lumber II.   WT/DS414/R 
 Page 19 
 
 
 interpretation, the Panel consider s it appropriate to make findings under Article 11.3 with respect to 
the 11 programmes at issue.  The Panel will reach its  conclusions by reference to the requirements for 
"sufficient evidence" set forth in Article 11.2, but  does not consider it necessary to reach separate 
conclusions under this provision.   
(b) Article 11.3 of the SCM Agreement 
7.51 Regarding the standard of review that the Pa nel should apply under Article 11.3 of the SCM 
Agreement, both parties agree with the interp retation of the analogous provision under the Anti-
Dumping Agreement adopted by the panel in US – Softwood Lumber V.  In particular, the parties 
submit that a panel should determine "whether an unbiased and objective investigating authority 
would have found that the applica tion contained sufficient informati on to justify initiation of the 
investigation".73  The Panel agrees with the parties that its role is not to conduct a de novo review of 
the accuracy and adequacy of the evidence to arrive at its own conclusion regarding whether the 
evidence in the application was suffi cient to justify initiation.  Rather, the Panel must consider the 
reasonableness of MOFCOM's conclusions, by refere nce to the test articulated by the panel in US – 
Softwood Lumber V.  
7.52 Under Article 11.3 of the SCM Agreement an i nvestigating authority has an obligation to 
determine whether there is "sufficien t evidence" to justify initiation of an investigation.  Part of this 
analysis must involve an assessment of the accuracy and adequacy of the evidence furnished.  In the 
Panel's view, when evidence not in the application bu t relevant to the decision to initiate is submitted 
to an investigating authority, for example by  an exporting Member, an unbiased and objective 
investigating authority would weigh this evidence in its assessment.  Indeed, this is what the language 
in Article 11.3 implies, in providing that an in vestigating authority has a duty to determine the 
accuracy and adequacy of the evidence in the application.74 
(c) The "sufficient evidence" requirement under Ar ticles 11.2 and 11.3 of the SCM Agreement 
7.53 A major issue in contention between the parties is the meaning of "sufficient evidence" under 
Articles 11.2 and 11.3 of the SCM Agreement.  Ch ina argues that the standard for "sufficient 
evidence" is much lower than that advocated by the United States.   
7.54 The term "evidence" is defined, relevantly, as "the available facts, circumstances, etc. 
supporting or otherwise a belief, propos ition, etc., or indicating whether or  not a thing is true or valid" 
and "information given personally or drawn from a document etc. and tending to prove a fact or 
proposition".  The term "sufficient" is  defined, relevantly, as "adequate".75  The Panel notes that the 
phrase "sufficient evidence" in Articles 11.2 and 11.3 of  the SCM Agreement is used in the context of 
determining whether the initiation of  a countervailing duty investigation is justified.  In making this 
determination, the investigating aut hority is balancing two competing interests, namely the interest of 
the domestic industry "in securing the initiation of an investigation" and the interest of respondents in 
ensuring that "investigations are not initiate d on the basis of frivolous or unfounded suits".76  I t  i s  
clear that at the stage of initiating an investigation,  an investigating authorit y is not required to reach 
definitive conclusions regarding the existence of a s ubsidy, injury or a causal link between the two.  
Rather, as the panel noted in Guatemala – Cement II, an "investigation is a process where certainty on 
                                                      
73 Panel Report, US – Softwood Lumber V, para. 7.78. 
74 Article 13.1 of the SCM Agreement also suggests that  an investigating authority is required to weigh 
the evidence submitted prior to initiation by an exporting Me mber, as a part of the process of "clarifying the 
situation" as to the matters in Article 11.2 of the SCM Agreement. 
75 The Concise Oxford English Dictionary, D. Thompson (ed.) (Clarendon Press, 1995), pp. 467 and 
1392. 
76 Panel Reports, US – Offset Act (Byrd Amendment), para. 7.61 and Guatemala – Cement I, para. 7.52. WT/DS414/R 
Page 20  
 
 the existence of all the elements necessary in order to adopt a me asure is reached gradually as the 
investigation moves forward".
77  Indeed, both parties appear to agree with the reasoning of the panel 
in US – Softwood Lumber V, in examining the analogous provisions under the Anti-Dumping 
Agreement, that "the quantity and the quality of the evidence required to meet the threshold of 
sufficiency of the evidence is of a different st andard for purposes of initiation of an investigation 
compared to that required for a preliminary or final determination".78   
7.55 Therefore, while the amount and quality of th e evidence required at the time of initiation is 
less than that required to reach a final determinati on, at the same time the requirement of "sufficient 
evidence" is also a means by whic h investigating authorities filter those applications that are frivolous 
or unfounded.  Although definitive proof of the existe nce and nature of a subsidy, injury and a causal 
link is not necessary for the purposes of Article 11.3, adequate evidence, tending to prove or 
indicating the existence of these elements, is requi red.  Indeed, in considering the quality of the 
evidence that should be provided in an application be fore an investigation is justified, we note that 
Article 11.2 requires "sufficient evidence of the existence of a subsidy",  meaning that the evidence 
should provide an indication that a subsidy actually  exists.  It is also clear from the terms of 
Article 11.2 that "simple assertion, unsubstantiated by  relevant evidence" is not sufficient to justify 
the initiation of an investigation.   
7.56 According to China, the standard for "sufficient evidence" must be interpreted in the light of 
the requirement in Article 11.2 that the applica tion contain such information as is "reasonably 
available" to the applicant.  In the Panel's view , the fact that an applicant must provide such 
information as is "reasonably available" to it conf irms that the quantity and quality of the evidence 
required at the stage of initiating an investigation is not of the same standard as that required for a 
preliminary or final determination.  However, an i nvestigation cannot be justified where, for example, 
there is no evidence of the existence of a subsidy be fore an investigating authority, even if such 
evidence is not "reasonably available" to the applican t.  Indeed, to justify initiation under Article 11.3, 
an investigating authority must have "sufficien t evidence" (whether from the applicant, exporting 
Member or arising out its own enquiries) and not mere assertion before it.79 
7.57 In the light of these considerations, the Panel c onsiders that the standard advocated by China 
is at times overly permissive, as indicated in the Panel's consideration of the 11 programmes at issue.   
(d) The required evidence 
7.58 Although the parties disagree about the appropria te standard for "sufficient evidence" under 
Articles 11.2 and 11.3 of the SCM Agreement, they concur about the categories of evidence referred 
to under Article 11.2.  In particular, the parties note that evidence of the "existence of a subsidy" 
requires evidence of the existence of a financial contri bution and a benefit.  The parties also agree that 
the reference in Article 11.2(iii) to evidence of the "n ature" of a subsidy refers to whether or not the 
subsidy is specific under Article 2 of the SCM Agreem ent.  However, in response to a Panel question, 
China argues that the lack of any direct refere nce to "specificity" under Article 11.2 suggests a 
different and lower evidentiary standard in relati on to it.  According to China, this distinction 
                                                      
77 Panel Report, Guatemala – Cement II, para. 8.35. 
78 Panel Report, US – Softwood Lumber V, para. 7.84.  
79 In relation to whether evidence must be analysed by an applicant, we note that with respect to each of 
the 11 programmes at issue in this case, the matter in contention between the parties is whether "sufficient evidence" was included in the application, rather than whether included evidence was analysed or not.  In any 
event, we agree with the United States' statement that mere allegations cannot constitute sufficient evidence and 
that an applicant need not engage "in an in-depth analysis of the available information" (United States' response 
to Panel question 3, para. 11).  However, we note that an investigating authority must review the accuracy and 
adequacy of the evidence in  accordance with Article 11.3 of the SCM Agreement.  WT/DS414/R 
 Page 21 
 
 
 recognises the difficulty applicants may face in ob taining evidence of specificity, particularly de facto 
specificity.80 
7.59 The Panel notes that Article 1.1 of the SCM Ag reement provides that a subsidy exists when 
(a) there is a financial contribution or any form of income or price support; and (b) a benefit is thereby 
conferred.  Therefore, the Panel agrees with the pa rties that evidence of the existence of a subsidy 
requires evidence of these two elements.   
7.60 In relation to whether evidence of specificity is  required in an application, the Panel concurs 
with the parties that the reference to evidence of  the "nature of the subsidy" includes evidence 
regarding whether the subsidy is specific.  Article 11 is found within Part V of the SCM Agreement.  
Further, Article 1.2 provides that a subsidy will be subject to Part V only if it is specific within the 
meaning of Article 2.  Therefore, in our view, it is  reasonable to conclude that evidence of the "nature 
of the subsidy" includes evidence regarding whether th e subsidy is specific.  The alternative would be 
that the initiation of an investigation would be justified under Article 11.3,  even though it may be 
clear at the time of initiation that the alleged subsid y is not subject to the disciplines of Part V of the 
SCM Agreement because it is broadly available in a given jurisdicti on.  This would not be effective in 
filtering those applications that are "frivolous or unfounded". 
7.61 The Panel acknowledges that the term "nature" is  used in a number of sections of the SCM 
Agreement, and that it may not necessarily refer to "specificity" in each instance.  For example, the 
reference to "nature" in Article 4.5 of the SCM Agreement appears to refer to whether or not a 
subsidy is prohibited.  However, in the Panel's vi ew, and as both parties agree, a consideration of the 
context in which a term is used can result in  different meanings across different provisions.81  A s  
outlined in the previous paragraph, the context in  which Articles 11.2 and 11.3 are found supports the 
parties' view that the "nature" of a subsidy under Article 11.2 (iii) includes evidence of whether or not an alleged subsidy is specific.   
7.62 Having concluded that the evidence referred to in Article 11.2 of the SCM Agreement 
includes evidence of specificity, the Panel finds no b asis for China's argument that a lower evidentiary 
standard applies in relation to it.  There is nothing within the terms of Articles 11.2 or 11.3 to suggest 
that differing evidentiary standards apply depe nding upon the purpose for which the evidence is 
furnished.  Rather, the same standard of "suffi cient evidence" applies regardless of whether the 
evidence relates to the existence of a fina ncial contribution, benefit or specificity. 
(e) The 11 programmes at issue 
(i) Medicare Prescription Drug, Improvement and Modernization Act 
7.63 The issue in contention between the parties is  whether the application included any evidence 
of specificity in relation to the Medicare Prescr iption Drug, Improvement a nd Modernization Act.  
While the United States claims that the applica tion "did not…include any evidence of specificity"
82, 
China argues that evidence that "coul d represent the existence of either a de jure or de facto specific 
measure" was submitted with the application.83   
7.64 The purported evidence of specificity relied up on by China is a statement from the AK Steel 
Annual Report, annexed to the application, that the subsidy is available to "sponsors of retiree 
                                                      
80 China's response to Panel question 37, para. 1. 
81 For support for this proposition, see Appellate Body Report, Japan – DRAMs (Korea), para. 272.  
For the views of the parties on this matter, see the Un ited States' and China's responses to Panel question 37.  
82 United States' first written submission, para. 78. 
83 China's first written submission, para. 35. WT/DS414/R 
Page 22  
 
 healthcare benefit plans that include a qualified pr escription drug benefit" and that AK Steel is a 
sponsor of such a plan.  The Panel notes that the application also includes a statement that "the 
subsidy…is specific".
84 
7.65 In the Panel's view, the fact that the subsidy pr ogramme is available to sponsors of particular 
healthcare plans does not provide an indication of de jure  specificity.  To the contrary, the evidence 
indicates that eligibility for the subsidy is governed by "objective criteria or conditions" in the sense 
of Article 2.1(b) of the SCM Agreement, which prov ides that, subject to Article 2.1(c), "specificity 
shall not exist" under such circumstances.  Furthe r, the evidence that AK St eel sponsors the relevant 
type of healthcare plan merely indicates that AK Steel is a user of the programme.  In our view, this is 
not sufficient for an unbiased and objective inves tigating authority to conclude there was any 
evidence to indicate that the programme was de facto specific.  For this purpose, at least some 
evidence that, for example, AK Steel was the only user or one of a limited number of users of the programme would be required. 
7.66 Further, the Panel is not convinced by Ch ina's argument that the purported evidence of 
specificity was sufficient in the light of the pe rvasive government support to the United States steel 
industry, which was discernible from the applicati on.  Article 11.2(iii) requires evidence of the 
"nature", namely the specificity, "of the subsidy in question".  In our view, this requires evidence of 
the nature of each alleged subsidy programme.  Ge neral information about government policy, with 
no direct connection to the programme at issue,  is not "sufficient evidence" of specificity. 
7.67 China suggests that direct evidence of de facto  specificity is typically  not reasonably available 
to applicants.
85  However, the fact that an applicant must provide such information as is reasonably 
available to it does not suggest that  an investigating authority is jus tified in initiating an investigation 
under Article 11.3 of the SCM Agreement even though  there is no evidence of specificity before it. 
7.68 The Panel finds that an unbiased and objectiv e investigating authority could not have 
concluded that there was sufficient evidence of specif icity to initiate the investigation in relation to 
this programme.  Therefore, the Panel finds that Ch ina acted inconsistently with Article 11.3 of the 
SCM Agreement.   
(ii) Economic Recovery Tax Act 1981 
7.69 According to the evidence annexed to the a pplication, the Economic Recovery Tax Act 1981 
allowed unprofitable corporations with certain unus able federal income tax credits and deductions 
effectively to sell them to profitable corporations  that could use them to reduce their tax liabilities.86  
The Act operated for a period of two years, expiring in 1983.87   
7.70 The applicants alleged that the United States steel industry received a subsidy under the Act 
to the value of USD 750 million.88  The issue in contention betw een the parties is whether the 
application included sufficient evidence of th e existence of a benefit during the period of 
investigation, where the application proposed and was based upon a period of investigation from 2006 
                                                      
84 Petition for an Anti-Dumping and an Anti-Subsidy I nvestigation (29 April 2009) ("the Application"), 
Exhibit CHN-2, pp. 63-64 and Exhibit US-2, p. 36.  AK Steel Annual Report for 2008 (Annex 15-4 to the Application) ("AK Steel Annual Report 2008"), Exhibit CHN-3, p. 63.  We note that the United States' 
interpretation of the statement on specificity is that "t he subsidy…has the characteristic of special orientation". 
85 See, for example, China's first written submi ssion, para. 36 and China's response to Panel 
question 37, para. 10. 
86 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 133. 
87 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 133 and 
United States' first written submission, para. 78. 
88 Application, Exhibit CHN-2, p. 74.  WT/DS414/R 
 Page 23 
 
 
 through the first quarter of 2009 (i.e. the same as the period of investigation ultimately adopted by 
MOFCOM).89  The purported evidence relied upon by China is a "large benefit" to the steel industry 
when the subsidies were disbursed over a two year period concluding in 1983. 
7.71 In the view of the Panel, in order to impose a countervailing duty, it is necessary that the 
product against which it is imposed be presently subsid ized.  We find support for this in Article 19.1 
of the SCM Agreement, which provides that a countervailing duty may be imposed where the 
"subsidized imports" are causing injury.  Further,  footnote 36 of the SCM Agreement states that a 
countervailing duty is "levied for the purpose of offse tting any subsidy bestowed directly or indirectly 
upon the manufacture, production or export of any me rchandise".  If the product were not currently 
subsidized, there would be no subsidy to offset  and therefore, no basis for the imposition of 
countervailing duties.  The panel in Japan – DRAMs (Korea) agreed that "present subsidization" is 
required before countervailing du ties may be imposed.  In the case of non-recurring or expired 
subsidies, "present subsidization" requires the benefi t of the subsidy to be a llocated to the period of 
investigation and indeed, to the period  of imposition of countervailing duties.90   
7.72 Given that Articles 11.2 and 11.3 of the SCM Ag reement set out the evidence required before 
an investigating authority is justified in initiating a countervailing duty investiga tion, in order to filter 
those applications that are frivolous or unfounded, we  consider that the reference in Article 11.2 to 
evidence of the existence of a subsidy refers to  evidence of the existence of a present subsidy, 
including the existence of a benefit during the expect ed period of investigation.  The alternative would 
be that an investigation would be justified under Ar ticle 11.3, even though it may be clear that there 
was no present subsidization and therefore that  countervailing duties would ultimately not be 
authorized.  
7.73 In the Panel's view, an unbiased and objective i nvestigating authority would not have found 
that the application included "su fficient evidence" to indicate the existence of a benefit during the 
period of investigation proposed by the applicants .  Although the programme ceased to operate more 
than 20 years prior to the period of investigation, the application does not mention the allocation of 
the benefit of the subsidy or allege that it would be appropriate to allocate the subsidy over time, 
much less provide any concrete evidence to this effect.  While we do not disagree with China's 
argument that it may not be appropriate to finalize th e allocation period for the benefit of a subsidy at 
the time of initiation of an investigation, this does not  lead to the conclusion that no evidence or even 
argument regarding "present subsidization" was requ ired in the application.  Although China argues 
that "implicit" in the evidence of a large benefit to the steel industry is a claim that the benefit was 
allocated to the period of investigation, in our view, in the light of the long period between the 
expiration of the programme and the period of inv estigation, an unbiased and objective investigating 
authority would not conclude that such a claim was indeed implicit in the evidence regarding the 
amount of the subsidy. 
7.74 In conclusion, given the absence in the applica tion of even a reference to or an argument 
about allocation of the benefit of the subsidy to the proposed period of investigation, much less the 
inclusion of any evidence in this regard, the Pa nel finds that China acted inconsistently with 
Article 11.3 of the SCM Agreement.  In our view , an unbiased and objective investigating authority 
would not have concluded that initiation was justified. 
                                                      
89 See, for example, Application, Exhibit CHN-2, pp. 9, 97 and 100. 
90 Panel Report, Japan – DRAMs (Korea), paras. 7.349-7.361. WT/DS414/R 
Page 24  
 
 (iii) Tax Reform Act 1986 
7.75 The Tax Reform Act 1986 granted the steel industry a special transition rule to mitigate the 
impact of the repeal of a federal investment tax credit.
91  The application claimed that this resulted in 
a benefit of USD 574 million to the United States stee l industry over the period 1986-1990.  The issue 
in contention between the parties is the same as th at in relation to the Ec onomic Recovery Tax Act, 
namely whether the application included sufficient evidence of the existence of a benefit during the 
period of investigation.  The United States argues that the alleged subsidies referred to in the 
application were provided over 15 years prior to the beginning of the period of investigation.92 
7.76 Similarly to its argument in relation to the Economic Recovery Tax Act, China argues that 
"given the outstanding issue of a potential alloca tion period and petitioners' claim that a benefit was 
received", there was sufficient evidence of benefit in  the application.  Perhaps in an attempt to 
highlight that the applicants were operating with imperfect information about the subsidy programme 
and that they presented the information reasonably av ailable to them, China also argues that there was 
no indication in the evidence collected and presented by the applicants that the programme had been 
repealed, leaving open the possibility that the pr ogramme was still in operation during the period of 
investigation.93   
7.77 In relation to the latter point, the Panel does not  find this line of argument convincing.  The 
evidence in the annex to the application, and cited by  the applicants, states that the cost of the subsidy 
to the government was incurred over the period 1986-1990.94  Further, the evidence cited in the 
application indicates that the Tax Reform Act provided "an exceptional transitional  period" for the 
steel industry to mitigate the repeal of a certain tax credit.  In these circumstances, it is difficult to 
conclude that the programme may still have been in  operation at the time of filing the application, 
particularly in the light of the fact that th e document from which the information was drawn was 
written in 1999 and does not state that any benefit was received after 1990.95 
7.78 For the same reasons as expressed in relation to  the Economic Recovery Tax Act, the Panel 
concludes that China acted inconsistently with Artic le 11.3 of the SCM Agreement.  In particular, the 
evidence in the application indicates that the bene fit of the subsidy was received during the period 
1986-1990, over 15 years prior to the expected period  of investigation.  In these circumstances, we 
consider that an unbiased and objective investigati ng authority would not view information about the 
amount of the benefit to be sufficient evidence of the existence of a benefit during the period of investigation.   
(iv) Steel Import Stabilization Act 1984 
7.79 The annex to the application indicates that under the Steel Import Stabilization Act, VRAs 
restricting imports of steel into the United States were established.  Total imports of steel were capped at 18.5% of market share, with this later increasing to 20.26%. 
7.80 The issue in contention between the parties app ears to be whether the application included 
sufficient evidence of the existen ce of a financial contribution unde r Article 1.1(a)(i) of the SCM 
Agreement, or of "any form of…price support" within the meaning of Article 1.1(a)(2).   
                                                      
91 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 2 and Paying 
the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, pp. 133 and 136-137. 
92 United States' first written submission, para. 78. 
93 China's first written submission, para. 40. 
94 Application, Exhibit CHN-2, pp. 75-76; Subsidies to the U.S. Steel Industry, (Annex 15-1 to the 
Application), Exhibit US-31, p. 2. 
95 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31 and 
United States' first written submission, para. 78.  WT/DS414/R 
 Page 25 
 
 
 7.81 At the outset we note that it is not entirely clear  whether the applicants were alleging that the 
VRAs constituted a financial contribution or a form of price support or both.  The application uses the 
sub-heading "financial contribution", but the sub- section states that that the voluntary restraint 
agreements constituted a "government  compulsory pricing support mechanism".  The sub-section also 
includes a reference to a document prepared by th e American Institute for International Steel, which 
provides that the Steel Import Stabilization Act "pro tected the domestic market share of U.S. steel 
producers…effectively providing them with a government-enforced price support mechanism".96  
However, the application also states that the VRAs constituted a subsidy within the meaning of 
Article 3 of the Chinese Regulations on Countervailing Measures.97  Article 3 effectively replicates 
Article 1.1(a) of the SCM Agreement, including a refe rence to financial contri bution and "any form of 
income or price support".  In its first written submis sion, China contends that the application included 
sufficient evidence of the existence of a financial contribution.  In response to Panel questioning, 
China argues the applicants alleged that the VRAs we re a subsidy within the meaning of Article 3 of 
the Regulations on Countervailing Measures and, according to China, the evidence supported the 
existence of a financial contribution within th e meaning of Article 1.1(a)(1)(iv) of the SCM 
Agreement, although the application did not include the latter assertion.  China notes that, in 
suggesting the VRAs provided a price support mechanism, the applicants did not specifically reference GATT Article XVI.  Nevertheless, the VR As "might be construed generally as a price or 
income support".
98 
7.82 In the Panel's view, the commentary in the ap plication indicates that the applicants were 
focused on the VRAs as a form of price support with in the meaning of Article 1.1(a)(2) of the SCM 
Agreement.  The application twi ce refers to the VRAs as a "government compulsory pricing support 
mechanism" and includes a similar refere nce in the annex to the application.99  Although there is a 
reference to Article 3 of the Regulations on Counterva iling Measures, this Article refers to "any form 
of income or price support", so does not necessaril y indicate that the applicants were alleging the 
existence of a financial contribution, as suggested by  China.  In any event, despite the absence in the 
application of a specific assertion regarding the exis tence of a financial contribution, the Panel will 
assess whether the application included sufficient evid ence of either a financial contribution or price 
support.  This is consistent with the terms of Article 11.2 of the SCM Agreement, which focuses on 
the evidence, rather than the asser tions, included in an application. 
7.83 Regarding whether the application included su fficient evidence that the VRAs constituted a 
form of price support, we note that Article 1.1(a )(2) of the SCM Agreement provides that a subsidy 
shall be deemed to exist if "there  is any form of income or price support in the sense of Article XVI of 
GATT 1994", where Article XVI deals with subsidies th at increase exports or decrease imports.  In 
order to assess whether the application included su fficient evidence of "price support", it is necessary 
to consider the meaning of this te rm under Article 1.1(a)(2).  There is no definition or other form of 
guidance in the SCM Agreement regarding the mean ing of "price support".  Although the Appellate 
Body has commented that the con cept of "income or price support" under Article 1.1(a)(2) broadens 
the range of measures capable of providing s ubsidies beyond those that constitute financial 
contributions, it has not otherwise been required to co nsider the meaning of Article 1.1(a)(2), and nor 
has any WTO dispute settlement panel.100   
7.84 On the one hand, the phrase "any…price s upport" under Article 1.1(a)(2) of the SCM 
Agreement is broad and, on its face, could be read  to include any government measure that has the 
                                                      
96 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 2. 
97 Application, Exhibit CHN-2, p. 80. 
98 China's response to Panel question 38, para. 2. 
99 Application, Exhibit CHN-2, p. 80 and Subsidie s to the U.S. Steel Industry (Annex 15-1 to the 
Application), US-31, p. 2. 
100 Appellate Body Report, US – Softwood Lumber IV, para. 52. WT/DS414/R 
Page 26  
 
 effect of raising prices within a market.  According to Blacks Oxford Dictionary of Economics , price 
support includes "government policies to keep th e producer prices…above some minimum level".
101  
This does not necessarily contradict a broad reading of Article 1.1(a)(2), although it does suggest that 
the government sets or targets a given price, and consequently does not capture every government 
measure that has an incidental and random effect on price.102 
7.85 However, despite the potential for a broad interp retation of the term "price support", reading it 
in the context of Article 1.1(a) of the SCM Agre ement suggests that a more narrow interpretation is 
appropriate.  Under Article 1.1(a)(1)(i)-(iv), the ex istence of each of the four types of financial 
contribution is determined by reference to the acti on of the government concerned, rather than by 
reference to the effects of the measure on a market.  This is consistent with the panel's interpretation 
of "financial contribution" in US – Export Restraints, which the Appellate Body concurred with in US 
– Countervailing Duty Investigation on DRAMS.103  In US – Export Restraints , the panel noted that 
the concept of "financial contribution" was included in the definition of subsidy in order to avoid an effects-based approach to the concept of  a subsidy.  According to the panel: 
[B]y introducing the notion of financial c ontribution, the drafters foreclosed the 
possibility of the treatment of any government action that resulted in a benefit as a 
subsidy.  Indeed, this is arguably the prin cipal significance of the concept of financial 
contribution, which can be characterised as one of the 'gateways' to the SCM 
Agreement, along with the concepts of benefit and specificity.  To hold that the concept of financial contribution is about th e effects, rather than the nature, of a 
government action would be effectively to wr ite it out of the Agreement, leaving the 
concepts of benefit and specificity as th e sole determinants of the scope of the 
Agreement.  
Reading the term "price support" in this context, it is our view that it does not include all government 
intervention that may have an effect on prices, such as tariffs and quantitative restrictions.  In 
particular, it is not clear that Article 1.1(a)(2) was intended to capture all manner of government 
measures that do not otherwise constitute a financial c ontribution, but may have an indirect effect on a 
market, including on prices.  The concept of "pri ce support" also acts as a gateway to the SCM 
Agreement, and it is our view that its focus is on the nature of government action, rather than upon the 
effects of such action.  Consequently, the concept of " price support" has a more narrow meaning than suggested by the applicants, and includes direct govern ment intervention in the market with the design 
to fix the price of a good at a particular level,  for example, through purchase of surplus production 
when price is set above equilibrium.   
7.86 Although neither the Appellate Body nor any WTO dispute settlement panels have been 
required to resolve the meaning of the term "p rice support" under Article 1.1(a)(2) of the SCM 
Agreement, we find some support for our appro ach in the reasoning of a GATT panel, which 
speculated on the circumstances under which "a system which fixes domestic prices to producers at 
above the world price level might be considered a su bsidy in the meaning of Article XVI".  The panel 
agreed that "a system under which a government, by di rect or indirect methods, maintains such a price 
by purchases and resale at a loss is a subsidy".  However, the Panel speculated that "where a 
                                                      
101 Oxford Dictionary of Economics, 3rd ed.,  J. Black (ed.) (Oxford Univers ity Press, 2009), p. 355.   
102 Indeed, the Macmillan Dictionary of Economics,  4th ed.,  D.W. Pearce (ed.), (Macmillian Press Ltd., 
1992) defines a "price support scheme" as " a method of artif icially raising the price of  a good in the market.  
This will give rise to a situation in which supply exceeds demand and would therefore normally result in the government agency responsible for the support having to purchase the excess supplies itself".  A similar 
definition is provided in the Dictionary of Economics, G. Banncok, R.E. Baxter and E. Davis (eds.) (the 
Economist Books, 1999).  This supports a much more narrow concept of price support than suggested in the application. 
103 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 114.  WT/DS414/R 
 Page 27 
 
 
 government fixes by law a minimum price to producers which is main tained by quantitative 
restrictions…there would be no loss to government" and consequently, no subsidy.104  We note that 
the conclusion regarding the latter example is less relevant in the context of the SCM Agreement, 
under which the benefit of a subsidy is defined by reference to market  benchmarks, rather than by the 
cost to government.  However, both examples used by the GATT panel at least illustrate that it 
envisaged "price support" to involve the government se tting and maintaining a fixed price, rather than 
a random change in price merely being a side -effect of any form of government measure. 
7.87 Further, although the SCM Agreement does not include a definition of the term "price 
support", we note that a concept of "market pr ice support" is included in the Agreement on 
Agriculture.  Annex 3 of that Agreement provides that "market price support" is calculated as the 
difference between an external reference pr ice and the "applied administered price".105  This indicates, 
at least for the type of price support contemplated in Annex 3 of the Agreement on Agriculture, that a direct form of government control over domestic  prices is required, in the form of a fixed, 
administered price, rather than a movement in prices being an indirect effect of another form of government intervention. 
7.88 In the light of these considerations, in the Pa nel's view, "any form of…price support" is not 
broad enough to encompass VRAs, which may have an incidental side-effect, of random magnitude, 
on prices.  Therefore, we conclude that an unbi ased and objective investigating authority would not 
have concluded that an investiga tion was justified under Article 11.3 on the basis of the existence of a 
subsidy in the form of price support. 
7.89 In relation to whether the application include d sufficient evidence of the existence of a 
financial contribution under Article 1.1(a)(1), in its first written submission, China argues that the 
evidence indicating that the VRAs resulted in "pecuni ary benefits" to the United States steel industry 
constitutes evidence of a financial contribution.  In response to a Panel questi on, China clarifies that 
its argument relates to Article 1.1(a)(1)(iv) of the SCM Agreement.  In particular, according to China, 
the evidence that the VRAs led to a transfer of w ealth from steel purchasers to the United States steel 
industry "might be seen as evidence of a financial contribution under Article 1.1(a)(1)(iv) of the SCM 
Agreement given the effect of the measure on private parties, causing them to provide a transfer of funds in the form of higher prices".
106   
7.90 The Panel does not agree with the interpretation of Article 1.1(a)(1)(iv) of the SCM 
Agreement that is advocated by China.  In par ticular, the Panel does not consider that when a 
government policy, such as a border measure, has the indirect effect of increasing prices in a market, 
the government has entrusted or directed private cons umers to provide direct transfers of funds to the 
industry selling the good in the affected market.   
7.91 In US – Countervailing Duty Investigation on DRAMS, the Appellate Body found that under 
Article 1.1(a)(1)(iv) the term "entrusts" connotes "t he action of giving responsibility to someone for a 
task or an object" and the term "directs" involv es the exercise of author ity by a government over a 
private body.107  In our view, when the action of a private party is a mere side-effect resulting from a 
government measure, this does not come within the meaning of entrustment or direction under 
Article 1.1(a)(1)(iv).  The fact that the VRAs resulted in private bodies paying increased prices for 
                                                      
104 GATT Panel on Subsidies and State Trading, Report on Subsidies, L/1160, 23 March 1960.  See 
L. Rubini, The Definition of Subsidy and State Aid: WTO and EC Law in Comparative Perspective, (Oxford 
University Press, 2009), pp. 123-125 for discussion of this GATT panel.  
105 This is multiplied by the quantity of production eligib le to receive the applied administered price, to 
calculate the "aggregate measures of support".   
106 China's response to Panel question 38, para. 2. 
107 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, paras. 110-111.  WT/DS414/R 
Page 28  
 
 steel to the United States steel producers was in no way the result of United States Government action 
giving responsibility to purchasers to transfer funds to the steel industry or because the Government 
exercised its authority over the purch asers to ensure that a transfer of  funds would occur.  Therefore, 
the increased revenue that the steel industry receive d after the VRAs came into existence cannot be 
characterised as evidence of a financial contribution. 
7.92 This conclusion accords with our reasoning in an alysing of the meaning of the term "price 
support".
108  In that context, we noted that a financial c ontribution is defined by reference to the nature 
of the government action, rather than by its effects.  Indeed, in US – Countervailing Duty 
Investigation on DRAMS, the Appellate Body agreed with the panel's analysis on this point in US – 
Export Restraints.  The Appellate Body stated:   
Entrustment and direction do not cover 'the situation in which the government 
intervenes in the market in so me way, which may or may not have a particular result 
simply based on the given factual circum stances and the exercise of free choice by 
the actors in that market'.  Thus, governme nt 'entrustment' or 'direction' cannot be 
inadvertent or a mere by-product of gove rnmental regulation…[N]ot all government 
measures capable of conferring benefits would necessarily fall within Article 1.1(a); 
otherwise paragraph (i) through (iv) of Artic le 1.1(a) would not be necessary because 
all government measures conferring benefits, per se, would be subsidies. 
7.93 In the light of the preceding reasons, the Panel concludes that China acted inconsistently with 
Article 11.3 of the SCM Agreement.  In the Pane l's view, an unbiased and objective investigating 
authority would not have concluded that the applic ation included sufficient evidence of the existence 
of price support or a financial contribution.109  The fact that a side-effect of the VRAs was that the 
United States steel industry received increased reve nue does not provide evidence of the existence of 
a financial contribution under Article 1.1(a)(1)(iv).  Further, China's refere nce to the evidence of 
"pecuniary benefits" received by the steel industr y is not evidence of government action within the 
meaning of Article 1.1(a)(1)(i)-(iv).  Therefore, we  find that an unbiased and objective investigating 
authority would not have concluded that sufficient evidence existed to justify an investigation under 
Article 11.3.   
(v) State of Indiana Steel Industry Advisory Service 
7.94 According to the information annexed to the app lication, in 1987 the State of Indiana formed 
a "Steel Advisory Commission to examine state and federal laws affecting the steel industry and to 
consider industry problems such as fo reign competition and economic decline".110 
7.95 The issues in contention between the parties ar e whether the application included sufficient 
evidence of the existence of a financial contribu tion and a benefit.  The purported evidence of a 
financial contribution relied upon by China is the ex istence of "a program es tablished to perform a 
function in support of the steel industry", includi ng a mandate to "examine state and federal laws 
affecting the steel industry and to consider industry problems".111  In relation to evidence of a benefit, 
                                                      
108 See para. 7.85 of this Report. 
109 Indeed, we note that Article 11(1)(b) of the Sa feguards Agreement prohibits the use of voluntary 
export restraints.  This further reinforces our conclusion that voluntary export restraints were not intended to be 
disciplined by the SCM Agreement. 
110 Subsidies to the U.S. Steel Industry (Annex 15-1 to the Application), Exhibit US-31, p. 3. 
111 China's first written submission, para. 44 and Subsidies to the U.S. Steel Industry (Annex 15-1 to 
the Application), Exhibit US-31, p. 3.  WT/DS414/R 
 Page 29 
 
 
 China argues that the fact the government assumed an obligation that might normally be undertaken 
by the industry itself is evidence of the conferral of a benefit.112   
7.96 In relation to whether the application include d sufficient evidence of the existence of a 
financial contribution, the Panel notes that it is  entirely possible that a programme under which a 
government studies the laws and problems affecti ng an industry could give rise to a financial 
contribution in the form of a provision of a good or ser vice.  However, the Panel is not satisfied that 
an unbiased and objective investigating authority coul d have concluded that the application included 
"sufficient evidence" to indicate that this was the case in relation to the Steel Industry Advisory 
Service.  The application includes an assertion that the "government undertook a project which should had been founded by companies with large expense, and therefore provided a large financial 
contribution".
113  Yet the application does not include evidence to indicate that studies under the 
programme were to be provided or ma de available to the steel industry, rather than being for internal 
government use, for the purpose of formulating govern ment policy, for example.  Given that "simple 
assertion unsubstantiated by relevant evidence" is not sufficient under Article 11.2, in the Panel's 
view, further evidence was required from the applic ants tending to indicate that the government was 
providing a good or service under the programme.  The fact that, according to China, the programme 
"quite plausibly" constituted the provision of a good or service is not sufficient.  Rather, some 
evidence, although not definitive proof, to indi cate that the programme conferred a financial 
contribution was required.  
7.97 The United States argues that a further problem in relation to whether the application included 
evidence of a financial contribution was that th ere was no evidence indicating that a study had 
actually been performed under the programme.  In res ponse, China contends that the applicants were 
dealing with imperfect information and did not know  with certainty whether the programme had ever 
produced a study.  Even if such information were not "reasonably available" to the applicants, without 
evidence of the existence of a financial contributio n before it, an unbiased and objective investigating 
authority could not have found initiation to be jus tified under Article 11.3 of the SCM Agreement.  In 
the Panel's view, as indicated in the preceding paragra ph, and also in the light of the fact that there 
was no evidence in the application of a study  having been conducted under the programme, the 
evidence regarding the existence of a financial contribution was not such that an unbiased and 
objective investigating authority could have found an i nvestigation justified.  In  any event, given that 
the programme has been in existence since 1987, it woul d be reasonable to expect the applicants to be 
able to point to some evidence of its use.   
7.98 In the light of the Panel's finding that China acted inconsistently with Article 11.3 with 
respect to the evidence of a financial contribution,  the Panel does not consider it necessary to proceed 
to consider the United States' arguments regarding th e sufficiency of the eviden ce of the existence of a 
benefit.   
(vi) Grace Periods for Compliance with the Clean Air Act 
7.99 The application explains that in 1981, legisl ation granting the steel industry a three-year 
extension on the deadline for complying with the Cl ean Air Act came into force.  The legislation 
extended the deadline from 31 December 1982 until 31 December 1985 and the applicants alleged 
that this reduced the steel i ndustry's costs by USD 3.7 billion.114  The application also refers to a 
                                                      
112 China's response to Panel question 40, para. 4. 
113 Application, Exhibit CHN-2, p. 81. 
114 Application, Exhibit CHN-2, p. 84.  See also, Paying the Price for Big Steel (Annex 15-to the 
Application), Exhibit CHN-4, p. 147. WT/DS414/R 
Page 30  
 
 30 year exception for complying with certain sta ndards in the Clean Air Act Amendment of 1990, 
which was granted to the steel industry in 1989.
115 
7.100  The United States' challenge is limited to the decision to initiate an investigation into the 
allegation that the three-year extension for complia nce with certain environmental standards in the 
Clean Air Act constituted a subsidy.  The United St ates does not challenge China's investigation into 
the 30 year exception granted to the steel industr y in relation to compliance with the Clean Air 
Amendment Act of 1990.116 
7.101  The issue in contention between the parties is  whether the application included sufficient 
evidence of the existence of a financial contribution or "any form of income or price support" within 
the meaning of Article 1.1(a)(2) of the SCM Agre ement, and whether it included sufficient evidence 
of the existence of a benefit during the period of investigation.117 
7.102  The Panel commences its analysis by consideration of the latter point, namely whether the 
application included sufficient evidence of the exis tence of a benefit during the expected period of 
investigation.  We note that the grace period for complying with the Clean Air Act ended on 
31 December 1985.118  The United States argues that the applicants did not indicate how a benefit 
could exist during the period of investigation in circumstances where the grace period ended more 
than 20 years prior to the expected period of invest igation.  This aspect of the United States' claim 
raises the same issues as arose in relation to the alleged taxation subsidies. 
7.103  As indicated in our analysis of the taxati on programmes, in circumstances where a long 
period of time has elapsed between the expiry of the alleged subsidy and the pe riod of investigation, a 
lack of any evidence, or indeed any argument or assertion, regarding whether allocation of the benefit 
to the period of investigation w ould be appropriate, leads us to the conclusion that an unbiased and 
objective investigating authority would not have conc luded that there was sufficient evidence of the 
existence of a benefit during the period  of investigation to justify initiation.119   
7.104  Consequently, the Panel concludes that China act ed inconsistently with Article 11.3 of the 
SCM Agreement.  In the light of this conclusion,  the Panel does not consider it necessary to proceed 
to consider the second issue in contention between th e parties, namely whether, in relation to the 
grace periods for compliance, the application incl uded sufficient evidence of the existence of "any 
form of income or price support" within the mean ing of Article 1.1(a)(2) of the SCM Agreement. 
(vii) 2003 Economic Stimulus Plan of Pennsylvania 
7.105  The evidence annexed to the additional appli cation indicates that Pennsylvania introduced an 
Economic Stimulus Plan aimed at "creating jobs, bolstering business growth, and 
revitalizing…communities".120 
7.106  The issue in contention between the parties is  whether the additional application included 
sufficient evidence of de facto  specificity.  The purported evidence relied upon by China includes 
documentation demonstrating that AK Steel and ATI are located and prominent in Pennsylvania.  
                                                      
115 Application, Exhibit CHN-2, p. 84.   
116 United States' response to Panel question 39, para. 7. 
117 United States' first written submission, para. 78; China's first written submission, paras. 45-46 and 
United States' second written submission, paras. 18-20. 
118 Paying the Price for Big Steel (Annex 15-2 to the Application), Exhibit CHN-4, p. 147. 
119 See paras. 7.71-7.74 and 7.78 of this Report. 
120 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit 
CHN-8.  WT/DS414/R 
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 Further, China contends the evidence in the additiona l application demonstrates that the programme is 
focused on "traditional industries, especially manufacturing".121 
7.107  The Panel does not consider the information regarding the presence and prominence of GOES 
manufacturers in Pennsylvania to be evidence of de facto  specificity.  This information demonstrates 
that AK Steel and ATI may be eligible to be users of the programme, but does not provide any 
evidence that the steel industry is one of a limited number of users or that it receives a 
disproportionately large amount of the subsidy, for example.  The additional application also states 
that "the purpose of the Stimulus Packages is to create jobs, bolster businesses and revitalize 
communities.  To achieve this, the Packages must particularly provide its contributions and preference 
to those influential enterprises and industries in cr eating jobs and bolstering economies, such as steel 
industry.  Indeed, it's not difficult to discover the de facto specificity clearly existed".122  In our view, 
the notion that the steel industry must be one of a limited number of enterprises to receive the subsidy, on the basis that the purpose of the Economic Stimul us Plan is to create jobs, bolster business growth 
and revitalize communities, is mere assertion a nd is not supported by relevant evidence.   
7.108  The second element of China's argument regard ing the sufficiency of the evidence of 
specificity is that the economic development plan included a focus on "resources that allow our 
traditional industries, especially manufacturi ng, to access new technology to enhance their 
productivity".  The parties' arguments regarding whet her this provides evidence of specificity seem to 
reflect different conceptual approaches to the i ssue.  The United States argues that because the 
Economic Stimulus Plan as a whole included si x other focal points, apart from traditional 
manufacturing industries, the information regard ing traditional industries is not evidence of 
specificity.  However, China submits that individua l subsidies within a single piece of legislation or 
measure should be analysed separately.  China argues that otherwise there would be "a huge loophole in the specificity requirement where authorities w ould simply lump different kinds of support for 
different sectors of the economy into a single piece of legislation or measure in order to claim that, in the aggregate, the measure is too diverse or genera lly available to justify a finding of specificity".
123 
7.109  In order to assess whether the information regarding the focus on traditional industries 
constitutes sufficient evidence of specificity, it is necessary for the Panel to determine the appropriate 
conceptual approach to analysing this issue.  If the legislation through which a subsidy is enacted 
necessarily defines the breadth of the specificity  analysis, loopholes in the SCM Agreement may 
arise.  In addition to allowing governments to gr oup specific subsidy programmes together in a single 
piece of legislation to avoid a finding of specific ity, a broadly available s ubsidy programme could be 
found to be specific if extended to each industry th rough separate pieces of legislation.  Consequently, 
in the specificity analysis, a s ubsidy programme should be considered as a whole.  The programme 
should define the breadth of the specificity analysis , rather than the legislation through which it is 
enacted. 
7.110  In the circumstances of this case, we note th at the evidence in the annex to the additional 
application provides that the econo mic development package includes:124 
 Over $2.8 billion dollars in loans, grants, and guarantees; 
                                                      
121 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit 
CHN-8. 
122 New Subsidy Allegations Application (20 July 2 009) ("Additional Application"), Exhibit CHN-5, 
p. 27. 
123 China's response to Panel question 41, para. 6. 
124 2003 Economic Stimulus Plan (Annex 5-32 to the Additional Application) (20 June 2009), Exhibit 
CHN-8. WT/DS414/R 
Page 32  
 
  Programs to leverage funds generati ng at least USD 5 billion in private 
investment in economic and community development projects; 
 Investments in rural, urban, and suburban sites; 
 New capital resources for small cities and communities; 
 Tools to make Pennsylvania a leader in real estate and business development; 
 Incentives and services to attract high-growth firms; 
 Resources that allow our traditional indus tries, especially manufacturing, to 
access new technology to enhance their productivity  
7.111  In response to a Panel question, China appears to argue that the final "focal point" listed 
above is an individual subsidy and that its specific ity should be analysed by reference to the universe 
of industries and enterprises to which it applies.
125  However, an examination of the additional 
application indicates that the app licants treated the Economic Stim ulus Plan as a single subsidy 
programme.  Although it was open to the applican ts to present their arguments on the basis of a 
number of individual subsidy progr ammes all enacted under the Economic  Stimulus Plan, there is no 
indication in the additional application that the app licants did this or viewed the provision of access to 
new technologies as a separate subsidy programme.  Rather, the allegations  regarding financial 
contribution and benefit refer to the programme as a whole, with particular examples provided by 
reference to certain aspects of the programme, including the loans and grants, the research and 
development tax credits and the jo int venture investment guarantees.126  The access to new 
technologies is not referred to by the applicants until the section on specificity.  Certainly, the 
applicants did not provide any arguments regardi ng the existence of a financial contribution and 
benefit in relation to the access to new technologies.  As a result, we cannot find any basis for treating 
this as a separate subsidy programme.  Consequen tly, we consider it appropriate to analyse the 
question of specificity by reference to the Economic  Stimulus Plan as a single subsidy programme.   
7.112  We note that the Economic Stimulus Plan include d a diverse range of "focal points", such as 
economic and community development projects; rura l urban and suburban sites; resources for small 
cities and communities; real estate and business development; and high-growth firms.  The 
information in the additional application indicates th at a number of enterprises or industries may have 
been eligible to receive the alleged subsidies unde r the programme, including, for instance, the real 
estate industry, venture capital partnerships , businesses making research and development 
investments and high-growth enterprises.127  Further, in relation to some  of aspects of the programme, 
such as the provision of loans, grants and guarantees,  it is not clear from the evidence in the additional 
application whether or not these were broadly availa ble.  In our view, the evidence suggests that the 
programme had a much wider application than suggest ed by China.  Consequently, the Panel is not 
convinced that an unbiased and objective inves tigating authority would have found that the 
information regarding a focus on "traditional indu stries, especially manufacturing" was sufficient 
evidence of specificity to justify initiation under Article 11.3 of the SCM Agreement.  
7.113  Finally, we note that China repeats the ar gument made in relation to the Medicare 
Prescription Drug Improvement, and Modernization Act, namely that the purported evidence of specificity was sufficient in the light of the pe rvasive government support to the United States steel 
industry, which was discernible from the application.   For the reasons expressed in relation to the 
Medicare Act, we again do not c onsider this argument convincing.
128 
                                                      
125 China's response to Panel question 41, paras. 5-6. 
126 Additional Application, Exhibit CHN-5, p. 27. 
127 Additional Application, Exhibit CHN-5, p. 26; Research and Development Tax Credit (Annex 5 to 
the Additional Application), Exhibit CHN-6, p. 189 (of the pdf version of the Exhibit) and New Pennsylvania 
Venture Guarantee Programme, Exhibit CHN-6, p. 191 (of the pdf version of the Exhibit). 
128 See 7.66 of this Report.  WT/DS414/R 
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 7.114  Therefore, we conclude that the additional a pplication did not include sufficient evidence of 
specificity for an unbiased and objective investig ating authority to conc lude that initiation was 
justified under Article 11.3 of the SCM Agreem ent.  Although China argues that information 
regarding de facto specificity is typically not reasonably available to appli cants, in the Panel's view, 
an investigating authority must nevertheless have "s ufficient evidence" of specificity before it before 
an investigation is justified under Article 11.3.   
(viii) Pennsylvania's Alternative Energy Funding Plan 
7.115  The evidence in the annex to the additiona l application indicates that the State of 
Pennsylvania invested USD 650 million towards "expa nding the alternative fuel, clean energy and 
efficiency sectors".  Approximately half of the f unding is managed by the Department of Community 
and Economic Development and this part of the programme focuses on "investing in infrastructure, 
economic development projects, alternative ener gy companies and early-stage activities".  The 
remainder of the programme is administered thr ough the Commonwealth Financing Authority, which 
focuses on business assistance through providing loans a nd grants to companies for certain categories 
of projects.129  
7.116  The issue in contention between the parties is  whether the additional application included 
sufficient evidence of the existence of a benefit during the expected period of investigation and 
sufficient evidence of specificity.  The purported evidence of benefit relied upon by China is the 
"implication of a programme focused on clean energy  in relation to an industry known to be high 
polluting".  According to China, evidence that individual respondents actually received a benefit 
under the programme is not required.  The purporte d evidence of specificity relied upon by China is 
the documentation which it claims indicates that th e loan programme was directed at a narrow group 
of beneficiaries.130   
7.117  At the outset, we note that the alleged subs idy to the steel industry, as detailed in the 
additional application, relates to that part of the Alternative Energy Funding Plan administered 
through the Commonwealth Financing Authority.  This is evident because the information in the 
additional application regarding the existence of a financial contribution refe rs to the "provision of 
loans and grants to the local enterp rises for their clean and alternativ e energy projects".  Further, the 
section of the additional application relating to benefit discusses the "provision of loans and grants to 
qualified enterprises".131  The allegations in the additional a pplication regarding the existence of a 
financial contribution, benefit and specificity do not refer to the projects to be managed by the 
Department of Community and Economic Developm ent, namely investment in "infrastructure, 
economic development projects, alternative energy companies and early-stage activities".132   
7.118  In relation to whether the additional applicati on included sufficient evidence of the existence 
of a benefit, China argues that for the purposes of an application, it is not necessary to demonstrate 
that the steel industry actually received a benefit und er the programme.  However, in our view, on the 
of basis the totality of the evid ence before the investigating aut hority, an unbiased and objective 
investigating authority could not have  considered an investigation jus tified under Article 11.3.  This is 
because the United States submitted evidence to MOFC OM demonstrating that the only aspect of the 
programme administered by the Commonwealth Fina ncing Authority under which loans and grants 
were distributed during the period of investigation was the Solar Energy project.  The evidence provided by the United States to MOFCOM included a document, prepared by the Commonwealth Financing Authority, listing eight companies that had had projects approved for loans and grants as of 
                                                      
129 Annex 5 to the Additional Application, (Annex 5- 38, Alternative Energy Funding), Exhibit CHN-6. 
130 China's first written submission, paras. 56-58. 
131 Additional Application, Exhibit CHN-5, p. 29. 
132 Annex 5 to the Additional Application, (Annex 5- 38, Alternative Energy Funding), Exhibit CHN-6. WT/DS414/R 
Page 34  
 
 14 July 2009.
133  None of the companies listed were producers of GOES, or indeed part of the steel 
industry.  As discussed previously in our reasons, when evidence not in the application but relevant to the decision to initiate is submitted to an inv estigating authority, an unbiased and objective 
investigating authority should weigh this eviden ce in its consideration of whether initiation is 
justified.
134  Indeed, this is what the language in Articl e 11.3 implies, namely that an investigating 
authority has a duty to determine the accuracy and adequacy of the evidence in the application.  
Weighing the evidence submitted to MOFCOM by the United States, namely a document prepared by 
a government body indicating that no financial contri bution or benefit was received by the respondent 
companies during the period of investigation, agai nst the additional application which did not include 
any evidence or even an assertion to  the contrary, a reasonable investigating authority could not have 
concluded that an investigation into the programme was justified.  This is because it was clear at the 
time of initiating that there would be no basis to impose countervailing duties against the products 
exported by AK Steel and ATI.  In reaching this conc lusion, we note that the additional application is 
concerned with a benefit to be received directly by  the steel industry, rather than a benefit "passed-
through" from other companies. 
7.119  Therefore, the Panel concludes that China acted  inconsistently with Article 11.3 of the SCM 
Agreement on the basis that an unbiased and objec tive investigating authority could not have 
concluded that there was sufficient evidence of the existence of a benefit to the steel industry during 
the expected period of investigation to justify initiati on.  In the light of this conclusion, the Panel does 
not consider it necessary to proceed to examine wh ether the additional application included sufficient 
evidence of specificity. 
(ix) Natural Gas 
7.120  The issue in dispute between the parties is whether the additional application included 
"sufficient evidence" of the existence of a fina ncial contribution, benefit and specificity under 
Articles 11.2 and 11.3 of the SCM Agreement.  The additional application includes allegations of two 
different types of subsidies.  In particular, the a dditional application contends first, that the United 
States Government regulates the price of natural ga s and provides it to the steel industry at below 
market prices and second, that subsidies provide d to the natural gas industry "pass-through" to the 
steel industry.135   
7.121  The annex to the additional application includ es a significant amount of evidence related to 
the natural gas industry.  In its first written subm ission, China highlights a number of aspects of this 
evidence that it relies upon as "sufficient" for th e purposes of Articles 11.2 and 11.3 of the SCM 
Agreement.  In particular, China notes the evidence of a long history of government regulation of the 
natural gas sector; evidence of price differentiation between the prices paid by the steel industry and 
the average price paid in the economy; and evid ence of subsidies to the natural gas industry.136 
7.122  In relation to the first type of subsidy alle ged in the additional application, namely the 
government provision of goods or services at below market prices, the additional application 
                                                      
133 United States' Comment Regarding the Initiation Based on the New Allegations, (17 Aug. 2009) 
Exhibit US-29, p. 6 and second attachment to the Comment, "Pennsylvania - State of Innovation:  
Commonwealth Financing Authority" (see link to "Commonwealth Financing Authority Approved Projects - Energy Programs", i.e. the last page of the second att achment to the Comment).  We  note that there appears to 
be an error on p. 6 of the Comment (Exhibit US-29).  In particular, the United States refers to the "Geothermal 
and Wind Energy" project as the only project operational during the period of investigation.  However, an examination of the list prepared by the Commonwealth Financing Authority indicates that it was the Solar 
Energy project under which loans and grants had been distributed as of 14 July 2009. 
134 See para. 7.52 of this Report.   
135 Additional Application, Exhibit CHN-5, pp. 12-13. 
136 China's first written submission, para. 49.  WT/DS414/R 
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 discusses historical regulation by the United States G overnment of natural gas prices.  The additional 
application also states that despite the "l oosening of regulation…over the natural gas 
industry…industrial enterprises still had no other choice but to buy natural gas from the network 
companies at regulated prices".137  However, an examination of the evidence regarding the 
United States natural gas industry in the annex to the additional application does not support the 
applicant's position that the government currently regulates natural gas prices.  In particular, the 
evidence suggests a history of government regulation of  natural gas prices, with a gradual decrease in 
the degree of regulation, to the current situation of  market determined prices.  The evidence provides 
that in 1985, the Federal Energy Regulatory Co mmission published Decree 436, which opened up the 
function of the delivery of natural gas "to allow the u ser to negotiate directly with the producer to set 
the price".138  Further, in 1989 the Natural Gas Wellhea d Decontrol Act was passed, which abolished 
all regulation over the wellhead price of gas.  Th e Act required abolition of the price regulation by 
1993, from which time the market determined the natural gas price.139  Finally, in 1992, the Federal 
Energy Regulatory Commission published Decree 636,  which abolished "take-or-pay" contracts and 
reorganized network companies to allow users to choose any producer of natural gas.140 
7.123  Although China argues that the additional application includes evidence of "continued 
vestiges of government price regulation through  lower-reach development companies", we do not 
agree with this reading of the evidence.141  The evidence regarding the history of government 
regulation of the natural gas industry, found in the an nex to the additional application, indicates that, 
when the government began loosening its regulation over the industry "the lower-reaches distribution 
companies (LDC) and industrial corporations still had no other choices but to purchase gas from 
network companies at the regulated price".142  However, the annex states that Decree 436, published 
in 1985, required network companies to "open the fu nction of delivering natural gas to all natural gas 
users including low-reaches selling companies…and to a llow the user to negotiate directly with the 
producer to set the price".143  As indicated in the preceding paragr aph, the government continued with 
further deregulation after Decree 436.  Therefore, China's reference to government price regulation 
through lower-reach development companies is a re ference to historical regulation and does not 
provide support for the allegation that the govern ment currently provides na tural gas to the steel 
industry at below market prices. 
7.124  As well as the evidence in the additional a pplication indicating that the United States 
Government does not regulate natural gas prices, this was drawn to MOFCOM's attention in the 
United States' comments on the new subsidy allegati ons.  In its comments, the United States noted 
that "the natural gas market was deregulated in the 1980s.  The market described by petitioners no 
longer exists (if, indeed, it ever existed).  GOES producers purchase natural gas on the open 
market".144 
                                                      
137 Additional Application Exhibit CHN-5, p. 13.  
138 Annex 5 to the Additional Application, (Annex 5-16, Overview and Comments on the U.S. 
Government Regulation of the Natural Gas Market), pp. 4-5, Exhibit CHN-6. 
139 Annex 5 Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government 
Regulation of the Natural Gas Market), p. 5, Exhibit CHN-6. 
140 Annex 5 to Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government 
Regulation of the Natural Gas Market), p. 5, Exhibit CHN-6. 
141 China's first written submission, para. 49. 
142 Annex 5 to Additional Application, (Annex 5-16, Overview and Comments on the U.S. Government 
Regulation of the Natural Gas Market), p. 4, Exhibit CHN-6.  
143 Annex 5 to the Additional Application, (Annex 5-16, Overview and Comments on the U.S. 
Government Regulation of the Natural Gas Market), p. 4, Exhibit CHN-6.  
144 United States' Comment Regarding the Initiation Based on the New Allegations (17 August 2009), 
Exhibit US-29, p. 3. WT/DS414/R 
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 7.125  Therefore, in the light of the evidence provi ded by the applicants themselves, which was 
supplemented by comments from the United States  to MOFCOM prior to initiation, the Panel 
concludes that China acted inconsistently with Ar ticle 11.3 of the SCM Agreement.  In the Panel's 
view, an unbiased and objective investigating author ity could not have concluded that there was 
sufficient evidence of a financial contribution or a benefit, in the form of government provision of a 
good or service at below market prices, to justify initiation under Article 11.3 of the SCM 
Agreement.
145  The evidence indicates that natural gas is  purchased by the steel industry at prices 
determined by the market.   
7.126  With respect to the second type of subsidy refe rred to in the additional application, namely 
indirect subsidization of the steel industry via subs idies provided to the natural gas industry, the Panel 
is not convinced that an unbiased and objective inv estigating authority coul d have found that the 
additional application included sufficient evidence of specificity to justify initiation under Article 11.3 
of the SCM Agreement.   
7.127  The Panel is satisfied that the additional appli cation includes evidence of subsidies granted to 
the natural gas industry.146  Regarding the existence of a benef it to the steel industry, the additional 
application includes an allegation, although no supporting evidence, of "pass-through" of the 
subsidies to the steel industry.  The position of Chin a appears to be that an allegation of pass-through 
of a subsidy from an upstream to a downstream produ cer is sufficient for the purposes of initiating an 
investigation.  The Panel does not consider it n ecessary to resolve what ty pe of evidence of pass-
through is required at the stage of initiating an inv estigation.  This is becau se, even assuming that the 
additional application included sufficient evidence of pass-through of the benefit to the steel industry, 
an unbiased and objective investigating authority coul d not have concluded that there was sufficient 
evidence of specificity.   
7.128  Although the subsidies could be specific to the natu ral gas industry, the applicants alleged that 
the subsidies ultimately flow through to the steel  industry, with steel being the product to be 
countervailed.  In these circumstanc es, some evidence that  the steel industry falls within a category of 
"certain enterprises" to which the subsidy is specifi c is required.  However, there is no evidence that 
any pass-through that occurs is specific to the steel industry.  In particular, if an allegation of pass-
through is accepted for the purposes of the applicati on, there is no reason to assume that the benefit 
did not pass-through to all purchasers of natural gas, ra ther than to the steel industry specifically.  In 
this regard, we note the panel's statement in US – Softwood Lumber IV that where a subsidy is 
provided in the form of the provision of a good by the government, where the good is in the form of a 
natural resource, there is no implication that such  a subsidy is necessarily specific, precisely because 
such goods may be used by an indefinite number of industries.147  Similarly, in this case, the subsidy 
to the natural gas industry may "pass-through" to an indefinite number of industries that purchase 
natural gas. 
7.129  Although China appears to rely upon evidence of price differentiation to indicate "the 
possibility of…specificity",148 in circumstances where we have found that natural gas prices are set by 
the market, we have no basis to conclude that an y price differentiation indicates that pass-through is 
                                                      
145 Although it does not seem to be the case, if it was the intention of the applicants that countervailing 
duties be imposed to counteract injury arising from the time when the government did regulate prices, the 
application suffers from the same problem as it does in relation to the taxation programmes.  In particular, it 
does not include any evidence or arguments to su pport the existence of present subsidization. 
146 See, for example, Annex 5 to the Additional Application, (Annex 5-2, Federal Financial 
Interventions and Subsidies in Energy Markets 2007).  
147 Panel Report, US – Softwood Lumber IV, para. 7.116. 
148 China's first written submission, para. 49.  WT/DS414/R 
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 specific to the steel industry.  There is nothing to indicate this is the case rather than the price 
differentiation being due to market forces. 
7.130  Finally, the Panel notes that China makes a gene ral argument that evidence of specificity may 
not be "reasonably available" to applicants.149  In the Panel's view, whether or not this is the case, an 
investigating authority must nevert heless have "sufficient evidence" of specificity before it, whether 
provided by the applicants or otherwise, before an investigation can be justified.  The Panel is not 
convinced that this was the case. 
7.131  Therefore, with respect to the second type of subsidy alleged in the additional application, 
namely indirect subsidization of the steel industry via subsidies provided to the natural gas industry, 
the Panel finds that an unbiased and objective inve stigating authority could not have concluded that 
the additional application included sufficient evid ence of specificity to justify initiation under 
Article 11.3 of the SCM Agreement. 
(x) Electricity 
7.132  The issue in contention between the parties is  whether the additional application included 
sufficient evidence of the existence of a financial contribution, benefit and specificity in accordance 
with Articles 11.2 and 11.3 of the SCM Agreement.  The applicants alleged that the United States 
electricity industry, including its pricing, is la rgely controlled by the United States Government and 
that electricity is provided to th e steel industry at a low price.  The applicants also argued that 
subsidies provided to the electricity in dustry pass-through to the steel industry. 
7.133  Before addressing the substance of the United States' claim, we note that the additional 
application includes a number of exhi bits related to the electricity industry in the United States.  For 
the purposes of our analysis, we have found the follow ing information in the exhibits to be of most 
relevance: 
(i) The Federal Energy Regulatory Commission regulates interstate power transmission 
and the wholesale electricity market.  The regulation of the wholesale market includes examining and approving the power price.  In particular, every power company 
submits a tariff table to the Federal En ergy Regulatory Commission, which has the 
power to adjust and amend the table if it is not in line with the public interest
150; 
(ii) There are also state-based electric power re gulatory institutions that regulate the price 
for power distribution and in-state retail sales151; 
(iii) The additional application also indicates that  there are four categories of companies 
that make up the United States electricity industry: (a) public power companies that 
are "operated by privates"; (b) indepe ndent power generating companies; (c) 
municipal power companies owned by local governments; and (d) the hydropower regulatory bureaus belonging to the Federal Government
152; and 
                                                      
149 See, for example, China's respon se to Panel question 1, para. 10. 
150 Annex 5 to the Additional Application, (Annex 5-16 Reform of the U.S. Electric Power System; 
Annex 5-11, Report of the U.S Regulatory System on Electric Power). 
151 Annex 5 to the Additional Application, (Annex 5 --16 Reform of the U.S.  Electric Power System; 
Annex 5-11, Report of the U.S Regulatory System on Electric Power). 
152 Annex 5 to the Additional Application, (Annex 5-11, Report of the U.S Regulatory System on 
Electric Power.) WT/DS414/R 
Page 38  
 
 (iv) There is differentiated pricing in the electricity market, with the steel industry 
receiving a lower price than some other industries and a lower price than the national average.
153 
7.134  In its comments on the additional applica tion, the United States adds the following 
information about the United States electricity industry:154 
(i) There are no national policies directing the electricity industry to provide energy to 
the steel industry at lower prices; 
(ii) There is no agency that sets retail pri ces for electricity for the entire country; 
(iii) Any difference in price paid by the steel industry for electricity is due to a "bulk 
discount" negotiated directly between the steel industry and the electricity company; 
(iv) Differences in prices are due to market forces; 
(v) Steel producers pay less for electricity b ecause they purchase it from non-utilities at a 
substantial discount; and 
(vi) One of the GOES companies in the United States receives its electricity purely from 
private entities. 
7.135  With respect to the alleged direct subsidies to the steel industry, assuming arguendo that the 
additional application included sufficient evidence of the existence of a financial contribution, namely 
the provision of goods or services by the government, or by a private body entrusted or directed by the government, the Panel is not convinced that the add itional application included sufficient evidence of 
the existence of a benefit, such that an unbiased  and objective investigating authority could have 
considered initiation of an investigation to be jus tified.  The additional application asserts that "the 
amount of subsidy for this program shall be the di fference between the prefer ential electricity power 
price actually paid by the companies concerned and the normal market electricity power price payable to the companies concerned".
155  However, the additional applica tion does not include evidence of the 
appropriate market benchmark price, or evidence that the comparison between the benchmark and the 
price charged to the steel industry was perform ed by the applicants.  Although the additional 
application compares the price paid by the steel in dustry with the national average electricity price 
and with two selected industries, it is not clear why these constitute comparisons to an appropriate 
market benchmark.  Indeed, if the electricity indus try operates as the applicants asserted, namely that 
the government intervenes to set prices, rather than  market forces doing so, a benchmark chosen from 
within this system would not appear to represent a market price. 
7.136  Similarly, even assuming that the government interv enes in the electricity market to provide it 
to the steel industry at below market prices, there is nothing to suggest that the steel industry alone 
benefits from this intervention, or that access to this subsidy is otherwise limited to "certain 
enterprises".  The additional application includes br oad assertions regarding specificity, including "the 
[United States Government]… controls the electri city power price of electricity power companies 
owned or controlled by the government to provide low-priced electricity to the steel industry…such 
preferential treatment sp ecific to a certain industry is cl early characterised as specific".156  However, 
                                                      
153 Annex 5 to the Additional Application, (Annex  5-13 Average Prices of Purchased Electricity, 
Natural Gas and Steam, 2002). 
154 United States' Comment Regarding the Initiation Based on the New Allegations (17 August 2009), 
Exhibit US-29, pp. 2-3 and attachments. 
155 Additional Application, Exhibit CHN-5, p. 10. 
156 Additional Application, Exhibit CHN-5, p. 10.  WT/DS414/R 
 Page 39 
 
 
 the additional application does not include evidence to  indicate that the alleged subsidy is indeed only 
provided to the steel industry or to a limited group  of beneficiaries.  In our view, an unbiased and 
objective investigating authority could not have concl uded that the differentiated pricing in the market 
provided sufficient evidence of specificity.  In fact , the evidence of the wide range of prices charged 
by the electricity industry in the United States te nds to suggest that deviation from the market 
benchmark price, whatever that may be, is widespr ead.  In general, the arguments in the additional 
application that the Government intervenes in the pric ing of electricity specifically to benefit the steel 
industry are somewhat speculative.   
7.137  The additional application also includes an a llegation of pass-through of subsidies from the 
electricity industry to the steel industry.157  To the extent the allegation of pass-through relates to 
private companies that are entrusted or directed to pr ovide electricity to the steel industry at particular 
prices, including being directed to pass-through s ubsidies, the preceding pa ragraph of our  reasoning 
applies.  In particular, apart from assertion, th ere was not sufficient evidence in the additional 
application for an unbiased and objective investiga ting authority to conclude that the steel industry 
specifically benefits from this intervention.   
7.138  To the extent the allegation of pass-through refers  to subsidies provided to private electricity 
companies that are not directed by the government to provide electricity to the steel industry at particular prices, we refer to our analysis of the allegations of pass-through in relation to the natural 
gas industry.
158  Even assuming that the additional appli cation included sufficient evidence of pass-
through of the benefit to the steel industry, an un biased and objective investigating authority could not 
have found that the additional application included sufficient evidence of specificity.  Although the 
subsidies could be specific to the electricity indu stry, the applicants alleged that the subsidies 
ultimately flowed through to the steel industry, with steel being the product to be countervailed.  In 
these circumstances, some evidence that the steel industry falls within a category of "certain 
enterprises" to which the subsidy is specific is re quired.  However, there is no evidence that any pass-
through that occurs is specific to the steel industry.   In particular, if an allegation of pass-through is 
accepted for the purposes of the application, there is no reason to assume that the benefit did not pass-
through to all purchasers of electricity, rather than  to the steel industry specifically.  Although China 
appears to rely upon evidence of pr ice differentiation for this purpose,159 in circumstances where a 
private company is setting the price for electricity, without direction from the government, which is the focus of our analysis in this paragraph as opposed to the preceding one, there is no basis to 
conclude that any price differentiation indicates that  pass-through is specific to the steel industry.  
There is nothing to indicate this is the case rather than the price differentiation being due to market 
forces.  
7.139  Therefore, the Panel finds that the additional application included insufficient evidence for an 
unbiased and objective investigating authority to  conclude that initiation was justified under 
Article 11.3 of the SCM Agreement.   
(xi) Coal  
7.140  The issue in contention between the parties is  whether the additional application included 
sufficient evidence of the existence of a financial c ontribution, benefit and specificity for the purposes 
of Articles 11.2 and 11.3 of the SCM Agreement.   The additional application alleges that the 
                                                      
157 Additional Application, Exhibit CHN-5, pp. 8-10. 
158 See paras. 7.126-7.130 of this Report. 
159 China's first written submission, para. 47.   WT/DS414/R 
Page 40  
 
 United States Government provides subsidies to the coal industry and that the subsidies "pass-
through" to the steel industry, which is a major user of coal.
160 
7.141  The Panel notes that the additional application in cluded some evidence of subsidization of the 
coal industry, although not through the American Clean Energy Security Act 2009, which did not 
exist during the proposed period of investigation.161   
7.142  In relation to whether the additional applica tion included sufficient evidence of pass-through 
of the benefit of the subsidies from the coal industry to the steel industry, we note that the additional 
application included an allegation that the subsidies to the coal industry would "no doubt allow the subsidized companies to…confer consider able benefits to the GOES producers".
162  The additional 
application does not include any suppor ting evidence for this statement. 
7.143  Again, in a similar manner to our reasoning in relation to the alleged pass-through of natural 
gas subsidies, the Panel does not consider it necessary to determine what evidence would be 
"sufficient" under Articles 11.2 and 11.3 for the purposes of tending to prove the "pass-through" of a 
benefit from an upstream to a downstream entity.  This is  because, in any event, in the Panel's view an 
unbiased and objective investigating authority c ould not have concluded that the additional 
application included sufficient evidence tending to indicate that any subsidy to the steel industry was 
specific.  Although the subsidies may have been speci fic to the coal industry, the applicants alleged 
that the subsidies ultimately flow through to the st eel industry, with steel being the product to be 
countervailed.  In these circumstanc es, some evidence that  the steel industry falls within a category of 
"certain enterprises" to which the subsidy is specific is required. 
7.144  In the section on specificity, the additional application asserts that "coal is an important 
energy input for the steel industry".163  Further, China argues that "the steel industry's substantial use 
of coal…goes to the issue of de facto  specificity".164  However, this is not evidence indicating or 
tending to prove specificity.  It does not demonstrat e that the coal subsidies pass-through to a limited 
number of enterprises or in a disproportionately large amount to the steel industry, for example.   
7.145  The application also relies upon a history of government support to the steel industry as 
evidence of specificity.165  However, as indicated in our anal ysis of the Medicare Prescription Drug, 
Improvement and Modernization Act, Article 11. 2(iii), which sets out categories of evidence for 
which sufficient evidence is  necessary before an investigation is  justified under Artic le 11.3, requires 
evidence of the nature "of the subsidy in question" .  In our view, this requires evidence of the 
specificity of each alleged subsid y programme.  General information about government policy, with 
no direct connection to the programme at issue,  is not "sufficient evidence" of specificity. 
                                                      
160 Additional Application, Exhibit CHN-5, pp. 15-16.  
161 For evidence of subsidization see Annex 5 to the Additional Application, (Annex 5-2, Federal 
Financial Interventions and Subsidies in Energy Markets 2007).  Also, see Annex 5 to the Additional Application, (Annex 5-19, US House of Representatives  Passes the American Clean Energy Security Act) for 
evidence that the American Clean Ener gy Security Act was only at the Ho use of Representatives stage in mid-
2009.  See also, United States' Comment Regarding the Initiation Based on the New Allegations (17 August 2009), Exhibit US-29, p. 3 and Unite d States' first written submission, para. 78.   
In its response to Panel question 1, para. 14, China suggests that the Clean Energy Security Act 
provides a direct financial contribution to the steel industry.  In response to this, we refer to the foregoing evidence indicating that the Act did not exist during the period of investigation. 
162 Additional Application, Exhibit CHN-5, p. 16.  
163 Additional Application, Exhibit CHN-5, p. 16.  
164 China's first written submission, para. 51. 
165 Additional Application, Exhibit CHN-5, p. 16  and China's first written submission, para. 51.  WT/DS414/R 
 Page 41 
 
 
 7.146  Although China argues that evidence of de facto  specificity is typically not reasonably 
available to applicants, in the Panel's view, an  investigating authority must nevertheless have 
"sufficient evidence" of specificity before it to ju stify an investigation unde r Article 11.3 of the SCM 
Agreement. 
7.147  In the light of the preceding reasons, the Pa nel concludes that an unbiased and objective 
investigating authority would not have found that  the additional application contained sufficient 
information of specificity to justify initiation of the investigation.  Consequently, China acted inconsistently with Article 11. 3 of the SCM Agreement.   
(f) Conclusion 
7.148  The Panel concludes that China acted inconsiste ntly with Article 11.3 of the SCM Agreement 
in relation to each of the 11 programmes at issue.   
C. 
WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.4.1  OF THE SCM AGREEMENT 
AND 6.5.1  OF THE ANTI -DUMPING AGREEMENT BECAUSE MOFCOM FAILED TO REQUIRE 
ADEQUATE NON -CONFIDENTIAL SUMMARIES  
1. Provisions at issue 
7.149  Article 12.4.1 of the SCM Agreement and Ar ticle 6.5.1 of the Anti-Dumping Agreement 
provide: 
The authorities shall require [interested Members or] interested parties providing 
confidential information to furnish non-c onfidential summaries thereof.  These 
summaries shall be in sufficient detail to permit a reasonable understanding of the 
substance of the information submitted in confidence.  In exceptional circumstances, 
such [Members or] parties may indicate that  such information is not susceptible of 
summary.  In such exceptional circumst ances, a statement of the reasons why 
summarization is not possible must be provided.166 
2. Factual Background 
7.150  The applicants sought and obtained from MOFCOM  confidential treatment in relation to a 
number of types of information, liste d in Part II-1 of the application.167  Consequently, broad 
categories of information about GOES were redact ed from the application, including the total 
domestic output, the applicants' total output, the dom estic sales price, domestic consumption and the 
applicants' sales revenue, costs and pre-tax profit.  The United States argues that  the applicants did not 
provide adequate non-confidential summaries of the information.   
3. Arguments of the United States 
7.151  The United States submits that Article 12.4.1 of  the SCM Agreement and Article 6.5.1 of the 
Anti-Dumping Agreement require parties to furnis h adequate non-confidential summaries, allowing 
for a reasonable understanding of the substance of the confidential information.168  The United States 
interprets China's position as claiming the existence of "exceptional circumstances", to excuse it from 
                                                      
166 Where only the SCM Agreement incl udes the references to Members. 
167 Application, Exhibit US-2, p. 79.  Part II-1 of the application lists 15 categories of information in 
relation to which the applicants sought and obtained confidential treatment from MOFCOM.   
168 United States' second written submission, para. 38. WT/DS414/R 
Page 42  
 
 the obligation of providing non-confidential summaries.  The United States notes that this was never 
asserted during the course of the investigation and is post hoc  rationalization.
169   
7.152  According to the United States, an examination of the petition demonstrates that the 
applicants intended Part II of the petition to cons titute the non-confidential summary of the redacted 
information.  This is clear because page 2 of th e petition states that "a non-confidential summary of 
the confidential information was provided along with this petition" and Part I of the petition directs 
the reader to consult Part II of the petition fo r the purported non-confidential summaries.  Further, 
Part II is entitled "non-confidential summary".170  The United States argues that the purported non-
confidential summaries in Part II are "utterly inadequate" and say almost nothing about the 
"substance" of the confidential information submitted.171   
7.153  The United States suggests that MOFCOM could have used any of a number of techniques to 
summarize the information in a manner that woul d have preserved its conf identiality, while still 
allowing interested parties to have a reasonable understanding of the substa nce of the information 
submitted.  The United States gives the example of  presenting numerical data as a trend-line or in 
indexed fashion, instead of in absolute terms.172 
7.154  The United States characterizes China's response to  its claim as suggesting that an "adequate" 
non-confidential summary need only be provided if an interested party objects to the manner in which confidential information is summarized.  However, th e United States argues that whether an interested 
party objects during the proceeding to the adequacy  of a summary is irrelevant to whether the 
obligations in Articles 12.4.1 of the SCM Agreem ent and 6.5.1 of the Anti-Dumping Agreement are 
met.
173  The United States also argues that China's s ubmissions reflect a mistaken view that an 
investigating authority's obligation to ensure th at the interested parties furnish adequate non-
confidential summaries may be excused if there is  some subsequent "non-confidential analysis" 
contained in the investigating authority's own determinations.174   
7.155  The United States' primary position is that Part  II of the petition contains the purported non-
confidential summaries.  However, the United States contends that even if the general statements 
"scattered" throughout Part-I of the petition coul d be relied upon as summarizing the confidential 
information, as argued by China, the supposed summa ries in the body of the petition are inadequate.  
Unlabelled trend lines and year-over-year percenta ge changes without the necessary context of 
absolute values (in the form of an  average, for example) are inade quate.  Further, the absence of a 
label or other form of identification linki ng the purported non-confidential summaries, found 
throughout the petition, with the redacted information,  is a factor that undermines the adequacy of the 
summaries.  According to the United States, it was not practicable for interested parties to piece 
together information from the record  to create non-confidential summaries.175  The United States 
addresses the arguments of China in relation to each of the categories of confidential information that 
it challenges as inadequately summarized: 
                                                      
169 United States' second written submission, para. 46. 
170 United States' second written submission, para. 47; United States' response to Panel question 9, 
para. 21; and United States' opening statement at the first meeting of the Panel, para. 17. 
171 United States' first written submission, para. 83 and United States' second written submission, 
para. 47. 
172 United States' first written submission, para. 86. 
173 United States' second written submission, paras. 39-40. 
174 United States' second written submission, paras.  41-42 and United States' response to Panel 
question 8, para. 19. 
175 United States' second written submission, paras. 37 and 48; United States' response to Panel 
question 9, para. 22 and United States' response to Panel question 45, para. 8.  WT/DS414/R 
 Page 43 
 
 
 (i) Output of the applicants, total output of GOES in China, proportion of the applicant's output 
in relation to China's total output 
7.156  According to the United States, at no point  does China assert that the non-confidential 
summary of the output of the applicants was sufficien t.  Rather, China contends that the "details are 
not needed" or that the "main point" was standing a nd that this was evident from the other information 
provided.  The United States argues that China requires the respondents to engage in guesswork to 
surmise an understanding or "the poi nt" of the substance of the confidential information.  Further, 
China's reliance on "Appendix 13" as summarizing the ou tput of the applicants is inapposite.  The 
petition does not contain a single reference to Appe ndix 13 and it is impossible to determine whether 
the applicants relied on Appendix 13 for their output figures.  Therefore, it is not possible to 
determine whether Appendix 13 provides an adequate non-confidential summary.176 
(ii) The Chinese Industry 
7.157  Regarding trends in domestic c onsumption, the United States argues that redacting the data on 
the consumption of GOES in China and stating that  it represents "a growth of about 50% over 2006", 
does not provide a reasonable understanding of the red acted information.  Without absolute values, it 
is impossible to attribute any meaning to th e statement that there was 50% growth.   
7.158  With respect to the trends in domestic pr oduction, the United States argues that stating 
domestic output grew less rapidly than imports does not shed light on the contents of the redacted information, namely the numerical data on dom estic output over the period 2006-2008.  Further, 
China's reliance on percentage changes more than fi fty pages later in the petition is not credible and 
would require respondents to engage in a fish ing expedition for the missing information.   
7.159  Regarding trends in domestic pr ices, the United States contends that stating "the price of 
subject imports was always lower than that of the applicants" does not shed light on the contents of 
the redacted information, namely the domestic pr ice per ton.  China's reliance on unlabelled trend 
lines in a section of the petition disconnected fro m the Chinese domestic industry discussion is an 
inadequate summary of the information.
177 
(iii) Similarity or likeness of production techniques 
7.160  The United States notes that the application simply  redacts certain information.  Therefore, 
the respondents could not comment meaningfully on the "like product" issue.178 
(iv) Change of price 
7.161  The United States' position is that the trend lines found in the petition are an inadequate 
summary of the pricing data.  The United States argues that trend lines need to be labelled to provide 
necessary context.179 
(v) Dumping margin of GOES imports from the United States 
7.162  In response to China's position that the United States could have performed reverse 
engineering to obtain the redacted data, the United States argues that this is an admission that the non-
                                                      
176 United States' second written submission, paras. 49-51. 
177 United States' second written submission, paras. 52-56. 
178 United States' second written submission, para. 57. 
179 United States' second written submission, para. 58. WT/DS414/R 
Page 44  
 
 confidential summary was inadequate.  It is not acce ptable to require respondents to make educated 
guesses regarding information for which a non-confidential summary was not provided.
 180 
(vi) Apparent consumption of GOES in China 
7.163  The United States contends that the purported summaries of the consumption of GOES in 
China are inadequate.  The reliance by China on Table 23 of the petition does not advance China's 
case, because the information in it is entirely redact ed, with no cross-reference to a summary in any 
other section of Part I of the petition.181  Further, the "percentage change" discussed fifty pages earlier 
in the petition is merely a statement that consump tion grew by 50% between 2006 and 2008.  Finally, 
in relation to China's reliance upon Table 32 of the petition, the United States notes that the table does 
not provide a proper contextual framework to a llow the substance of the information to be 
understood.182 
(vii) Suppressing or depressing effects on domestic prices 
7.164  The United States argues that year-on-year perc entage changes in domestic average prices are 
not an adequate non-confidential summary because th e significance of the absolute changes is not 
revealed.  Unlabelled trend lines are also inadequate.183 
(viii) Influence on the Chinese domestic industry 
7.165  The United States contends that a significant porti on of the injury indicia data is missing some 
or all of the non-confidential summary information.  In particular, aside from the fact that year-over-
year percentage changes are not an adequate non-confidential summary, they are not provided on a 
consistent basis for all indicators.184 
(ix) Statistics and information about dumping by the United States 
7.166  According to the United States, China does not contest its claim that the petitioners provided 
an inadequate summary of this category of confidential information.185 
4. Arguments of China 
7.167  China disputes the United Stat es' claims under Articles 12.4. 1 of the SCM Agreement and 
6.5.1 of the Anti-Dumping Agreement.  In par ticular, China argues that proper non-confidential 
summaries were provided in Part I of the petition and that these summaries were later supplemented 
by the non-confidential analysis by MOFCOM in its determination and by the parties in their arguments to MOFCOM.
186  China does not invoke the "exceptional circumstances" exemption under 
Articles 12.4.1 of the SCM Agreement and 6.5.1 of  the Anti-Dumping Agreement.  Rather, China 
argues that the adequacy of the non-confidential su mmaries should be assessed in the context of the 
circumstances of the investigation.  In particular, China argues that in the GO ES investigation the fact 
that there were only two Chinese producers constitutes an "exceptional circumstance".187  I n  t h i s  
context, if an authority were to aggregate the data provided by all domestic producers in order to 
provide a non-confidential summary to interested pa rties, each domestic producer would be able to 
                                                      
180 United States' second written submission, para. 59. 
181 United States' response to Panel question 46, paras. 12-13. 
182 United States' second written submission, paras. 60-61. 
183 United States' second written submission, para. 62. 
184 United States' second written submission, para. 63. 
185 United States' response to Panel question 12, para. 23. 
186 China's first written submission, paras. 71 and 87.  
187 China's response to Panel question 11, paras. 40-41.  WT/DS414/R 
 Page 45 
 
 
 disaggregate the data to reveal the confidential info rmation submitted by its competitor.  This would 
not adequately protect the confidential information.188   
7.168  According to China, Article 12.4.1 of the SCM Agreement and Article 6.5.1 of the Anti-
Dumping Agreement do not require complete or perfect  disclosure.  Rather, the summary must be in 
"sufficient detail" to allow a reasonable understanding  of the information, in the light of the purpose 
for which the information is submitted.189  In determining whether a summary permits a "reasonable 
understanding" of the confidential information, rele vant context, such as the importance of precise 
numerical information to an argument and whethe r there is public information that can provide 
context for the missing information, should be co nsidered.  China argues that the United States' 
approach, requiring a statement of reasons if a single number is missing, is too impractical and 
mechanical.190 
7.169  China contends that the United States mistakenly  focuses on the statements in Part II of the 
petition, assuming that they are the non-confidential su mmaries.  Part II of the petition clearly states 
that the "petitioners made explanations in the pub lic version of the petition about the part that were 
applied for confidential treatment".191  Part II was included "to identify each category of information 
for which confidential treatment was requested, to  justify confidential treatment on the basis of 
competitive or adverse effects, and to ensure that other parties fully understood what information was 
redacted".192   
7.170  In addressing Part I of the petition, China understands the United States to be arguing that it 
cannot comprehend the non-confidential summaries becau se they are in the substantive portion of the 
text of the petition (Part I), rather than in the por tion of the text which describes the categories of 
information for which confidential treatment was sought.193  China responds to this argument by 
noting that Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement do not address the manner in which a non-confidential summary  should be identified or the form it should 
take.  In particular, there is no requirement for the non-confidential information to be "linked" to the 
information being summarized.
194 
7.171  China addresses each of the topic areas that Un ited States claims was treated confidentially 
but was not adequately summarized: 
(i) Output of petitioners and standing 
7.172  China acknowledges that a table regarding the production of the petitioners was redacted.  
However, China reasons that the information was re levant to the standing of the petitioners.  As the 
public version of the petition makes a factual asserti on of standing, this is sufficient to allow a 
reasonable understanding of the table. China also ar gues that there was evidence in the public version 
of the petition indicating that the two petitioners ma ke up the entire Chinese GOES industry, therefore 
satisfying the standing criteria under WTO rules.195 
                                                      
188 China's first written submission, para. 136. 
189 China's first written submission, para. 89. 
190 China's response to Panel question 11, para. 44. 
191 China's first written submission, para. 90. 
192 China's response to Panel question 10, para. 39. 
193 China's second written submission, para. 30. 
194 China's second written submission, paras. 24 and 31. 
195 China's first written submission, paras. 93-96. WT/DS414/R 
Page 46  
 
 (ii) Chinese domestic industry 
7.173  China notes that a section of the petition detailin g trends in the Chin ese GOES industry had 
specific numbers deleted.  China argues that the de leted information was summarized either in the 
same section or elsewhere in the public version of the petition.  For example, trends in consumption 
were summarized through the provision of percenta ge changes in domestic apparent consumption; 
trends in domestic production were summarized by contrasting the rate of growth of imports with the 
rate of growth of domestic shipments and by pr oviding the specific growth percentages in another 
section of the petition; trends in  domestic prices were summarized by asserting that import average 
unit values were below the average unit values of the petitioners and by graphing trend lines.
196 
(iii) Similarity or likeness of production techniques 
7.174  China argues that information about specific production processes was confidential but that a 
"general overview of the basic points" of this information was provided. 197 
(iv) Change of price 
7.175  China notes that information on specific aver age unit values of the petitioners' product was 
removed from a table.  However, the public versi on of the petition includes a non-confidential version 
of the information in the form of trend lines, comparing relative domestic and import prices.198  
According to China, when read in conjunction with public import prices, the trend lines allow 
interested parties to understand both the relative tr end in prices and the magnitude of the price 
differential over time.199 
(v) Dumping margins for GOES from the United States 
7.176  China notes that the petitioners' estimates of freight costs and the numbers derived from that 
information are deleted from the petition.  Howeve r, China contends that disclosing the relevant 
methodology and the majority of numbers is an ad equate summary.  Further, based on the formula 
and numbers disclosed, some of the missing in formation could have been derived by the 
United States.200 
(vi) Apparent consumption of GOES in China 
7.177  China argues that deleted information about th e apparent level of dom estic consumption was 
summarized in the form of year-to-year percentage changes. 201 
(vii) Suppressing or depressing effects on domestic prices 
7.178  China submits that data on average unit va lues for the domestic product was summarized 
through the use of trend lines and percentage changes.202 
                                                      
196 China's first written submission, paras. 97-101. 
197 China's first written submission, paras. 102-103. 
198 China's first written submission, para. 104. 
199 China's second written submission, para. 33. 
200 China's first written submission, paras. 105-109. 
201 China's first written submission, paras. 110-116. 
202 China's first written submission, paras. 117-121.  WT/DS414/R 
 Page 47 
 
 
 (viii) Influence on the Chinese domestic industry 
7.179  Actual numbers regarding the state of the domes tic industry were deleted.  However, China 
states that for each indicator a percentage change was provided as a non-confidential summary.203 
(ix) Statistics and information about dumping by the United States 
7.180  China relies upon the same summary as it doe s for the category "dumping margin of 
GOES".204 
5. Arguments of third parties 
(i) Argentina 
7.181  Argentina submits that the objective of Article 6.5.1 of the Anti-Dumping Agreement and 
Article 12.4.1 of the SCM Agreement is to guarant ee a right of defence to interested parties.  
MOFCOM should have required the interested pa rties to furnish non-confidential summaries.205   
7.182  According to Argentina, providing year-on-y ear percentage changes and trend lines not 
labelled to scale does not constitute an adequate non-confidential summary because information on 
absolute values should be provided.  However, Arge ntina submits that absolute values should not be 
required for production costs, due to th e sensitivity of this information. 
(ii) European Union 
7.183  The European Union argues that Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of 
the SCM Agreement not only impose an obligation on the interested party to provide a non-confidential statement, but also impose an obligation on investigating authorities to require that such a 
statement be provided.
206   
7.184  The European Union is not convinced by Chin a's position that "exceptional circumstances" 
within the meaning of Articles 6.5.1 of the Anti-Dumping Agreement and 12.4.1 of the SCM 
Agreement exist when there are only two producers.  In the European Union's view, in cases where 
there are only two producers, it is still possible to prepare non-confidential summaries (in the form of 
indices, for example).207 
(iii) India 
7.185  India submits that Article 6.5.1 of the Anti-Dumping Agreement is of critical importance in 
preserving the balance between the interests of confid entiality and the ability of interested parties to 
defend their rights in an investigation.208   
(iv) Korea 
7.186  Korea notes that in its anti-dumping investig ations, the Korea Trade Commission utilizes 
"percentage numbers" in lieu of actual numbers, as a form of non-confidential summary.  However, if 
indices or other alternative means of summariza tion would reveal confidential information (for 
                                                      
203 China's first written submission, paras. 122-128. 
204 China's response to Panel question 12, para. 45. 
205 Argentina's third party submission, paras. 8 and 11. 
206 European Union's third party submission, para. 4. 
207 European Union's third party statement, para. 16. 
208 India's third party statement, para. 3.2. WT/DS414/R 
Page 48  
 
 example, when only two or three firms are invol ved), "such information may warrant confidential 
treatment".
209 
6. Evaluation by the Panel 
(a) Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement 
7.187  The issue in contention between the parti es is whether the applicants provided non-
confidential summaries of the confidential informati on redacted from the application, in accordance 
with the requirements of Articles 12.4.1 of th e SCM Agreement and 6.5.1 of the Anti-Dumping 
Agreement. 
7.188  Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement oblige 
investigating authorities to require interested partie s, and interested Members in the case of the SCM 
Agreement, to furnish non-confidential summaries of any confidential information provided.  The 
summaries must permit a "reasonable understanding" of the substance of the confidential information 
submitted.  In the Panel's view, the broad nature  of the requirement to furnish non-confidential 
summaries applies to confidential information submitte d in an application, as well as to information 
submitted in the course of an investigation.  Ar ticles 12.4.1 and 6.5.1 permit an exemption to the 
requirement to provide non-confidential summaries when "exceptional circumstances" exist, which 
render the confidential information incapable of summa rization.  However, in such a case, a statement 
of reasons why summarization is not possible must be provided. 
7.189  The obligations in Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping 
Agreement fall upon the investigating authorities.  Th e Appellate Body agreed with this interpretation 
in EC – Fasteners (China).  The Appellate Body found that in respect of information treated as 
confidential under Article 6.5, Artic le 6.5.1 imposes an obligation on the investigating authority to 
require that a non-confidential summary  of the information be furnished.210  The Appellate Body 
noted that this accommodates the concerns of  confidentiality, transparency and due process.211  Where 
"exceptional circumstances" exist,  such that non-confidential information is not susceptible of 
summary, Article 6.5.1 requires that the party id entify the exceptional circumstances and provide a 
statement explaining why summarization is not possibl e.  The investigating authority must scrutinize 
such statements to determine whether th ey establish "exceptional circumstances".212   
7.190  An issue in contention between the parties in  the circumstances of this case is when the 
obligation to furnish a non-confidential summary ari ses.  In particular, China argues that the "non-
confidential summaries provided in the application its elf were later supplemented by non-confidential 
analysis provided by MOFCOM in its determinati on, and by the parties in their arguments to 
MOFCOM".213  In the Panel's view, China's reasoning in this regard is not convincing.  Given the 
Appellate Body's statement that Article 6.5.1 of  the Anti-Dumping Agreement affords "due process" 
to interested parties in an investigation, Chin a's argument that non-confidential information submitted 
in the application can be summarized  in the investigating authority's determination is problematic.  In 
order to allow an interested party the opportunity  to defend its interests, the summary of the 
                                                      
209 Korea's third party response to Panel question 2. 
210 Appellate Body Report, EC – Fasteners (China), para. 542. 
211 Appellate Body Report, EC – Fasteners (China), para. 542. 
212 Appellate Body Report, EC – Fasteners (China), para. 544.  A number of panels have also taken 
this approach, see in particular, Panel Reports, Guatemala – Cement II, para. 8.213; Mexico – Steel Pipes and 
Tubes, para. 7.379; EC – Fasteners (China), para. 7.515, US – Oil Country Tubular Goods Sunset Reviews 
(Article 21.5 – Argentina), para. 7.135; and Mexico – Olive Oil, para. 7.89.  These panels held that meaningful 
interpretation of the provisions must impose an obligation on the investigating authorities  to require interested 
parties to provide a statement of reasons regarding why summarization is not possible. 
213 China's first written submission, para. 84.  WT/DS414/R 
 Page 49 
 
 
 confidential information needs to be provided befo re the investigating authority has reached its 
determination.  Further, Articles 12.4.1 of th e SCM Agreement and 6.5.1 of the Anti-Dumping 
Agreement expressly provide that the authorities shall require " interested parties  providing 
confidential information to furnish non-confidential su mmaries thereof".  It is difficult to read this 
obligation as being fulfilled when an investigating authority  produces a summary of information 
submitted to it. 
7.191  The parties also disagree regarding the releva nce of whether a respondent contests the issue 
the subject of the summary.  In its first written submission, in defending the adequacy of its non-
confidential statements with respect to certain cate gories of information, China variously notes that 
"this issue was not seriously contested" by the respondents.  However, whether or not a respondent 
makes a substantive challenge rega rding the subject matter that has been treated confidentially does 
not affect the standard for an adequate non-c onfidential summary under Articles 12.4.1 of the SCM 
Agreement or 6.5.1 of the Anti-Dumping Agreement.   Indeed, without an adequate non-confidential 
summary, the ability of an interested party to  contest the relevant issue is compromised. 
7.192  Finally, with respect to whether the "exceptiona l circumstances" exemption is at issue, in 
response to a Panel question, China clarifies that , in the event the Panel finds the non-confidential 
summaries inadequate, it does  not invoke the exceptional circumstances exemption.  Indeed, the text 
of the provisions at issue, and the Appellate Body an d panel reports, clearly state that if information is 
not susceptible of summarization, the party must identify the exceptional circumstances and provide a 
statement explaining why summarization is not possibl e.  The investigating authority is required to 
scrutinize such statements to determine whether they  establish "exceptional circumstances".  It is clear 
that this did not occur in the context of this case.  However, although it does not rely on the 
exemption, China contends that the adequacy of the non-confidential summaries should be assessed in 
the light of the "exceptional circumstance" that  there were only two Chinese producers of GOES, 
making it difficult for summaries of aggregate data adequately to protect the confidentiality of the 
information.   
7.193  In considering China's argument in this rega rd, we note that Articles 12.4.1 of the SCM 
Agreement and 6.5.1 of the Anti-Dumping Agreemen t explicitly establish the standard by which the 
sufficiency of non-confidential summaries is to be  assessed, namely by reference to whether the 
summaries "permit a reasonable understanding of th e substance of the information submitted in 
confidence".  If the information is not susceptible of summary, for example because it would not be 
possible to summarize the information while still pr eserving its confidentiality, the provisions allow 
for an exemption to the requirement to furnis h a non-confidential summary.  However, if this 
"exceptional circumstance" exemption is not invoked, as in this case, there is no basis to conclude that 
purported "exceptional circumstances" alter the standa rd that applies under Articles 12.4.1 and 6.5.1.  
Therefore, the Panel will assess the adequacy of  the non-confidential summaries by reference to 
whether they "permit a reasonable understanding of th e information submitted in confidence".  If they 
do not, the fact that there were only two Chinese producers of GOES will not alter the conclusion that 
China acted inconsistently with Articles 12.4.1 and 6.5.1. 
(b) Part II of the application 
7.194  The major issue in contention between the pa rties is where in the application the non-
confidential summaries can be found.  While the United States contends that the purported non-confidential summaries are the genera l statements found in Part-II of the application, China contends 
that non-confidential summaries can be found throughout Part-I of the application.   
7.195
 We note that within Part-I of the application, there are several sections in which confidential 
information, generally numerical, has been redact ed.  The end of each section containing redacted 
information includes the phrase "[p]lease see Part II- 2, Non-confidential summary [x] for confidential WT/DS414/R 
Page 50  
 
 information".
214  Part II-2 of the application is entitled "non-confidential summary" and its 
introductory paragraph, in China's versi on of the English translation, provides: 
For the convenience of interested parties to  have a general idea about the confidential 
information, the petitioner hereby summari ze the confidential information applied 
including the narratives and annex marked **. 
7.196  By contrast, the United States' translation of  the opening paragraph of Part II-2 provides: 
To help other interested parties to access to comprehensive information the 
petitioners applied for confidential treatment, the petitioners made explanations in the 
public version of the petition about the pa rt that were applied for confidential 
treatment, and below are non-confidential summaries of the appendices that have 
been applied for confidential treatment.215 
7.197  A review of the application provides support for the United States' position that the applicants 
intended Part II-2 of the application to provide  the non-confidential summaries of the redacted 
information.  This is due to the consistent instru ctions in the body of the application, following 
redacted sections, to consult Part II of the application for summaries of the non-confidential 
information.  Further, the title to Part II-2 is "non-confidential summ ary", which somewhat 
undermines China's argument that Part II merely id entifies each category of information for which 
confidential treatment was requested and justifi es the confidential treatment for each category.  
Further, China's English translation of the introducto ry paragraph to Part II-2 states that "the petitioner 
hereby summarize[s] the confiden tial information applied".    
7.198  We note that Part II-2 of the application consists  of short and general statements regarding the 
nature of the information treated as confidential.  Fo r example, the section in Part II-2 that refers to 
the redacted information regarding "change in price" provides: 
This part involves sales price of the subj ect merchandise by the petitioners from 2006 
to February 2009.  As they are business pr oprietary of the petitioners, disclosure of 
which will seriously harm the interest of the petitioners; therefore, the petitioners 
applied for confidential treatment of the information. 
7.199  Therefore, in the Panel's view, the "summaries"  in Part II-2 provide minimal descriptions of 
the nature, rather than the substa nce, of the information treated as  confidential.  Indeed, China does 
not even attempt to argue that the summaries in Part II-2 are sufficient under Articles 12.4.1 of the 
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement. 
7.200  Consequently, the Panel concludes that Part II of the application was intended to provide the 
non-confidential summaries of the confidential info rmation, but the summaries are inadequate under 
Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.   
(c) Part I of the application 
7.201  Although the Panel concludes that Part II of th e application was intended to provide the non-
confidential summaries, we note China's argument th at neither Article 12.4.1 of the SCM Agreement 
nor Article 6.5.1 of the Anti-Dumping Agreem ent specify that the required non-confidential 
                                                      
214 Application, Exhibit US-2 (English translation), see for example pp. 4 and 5.  
215 Application, Exhibit US-2 (English translation), p. 79.  We note that the equivalent paragraph in the 
English translation of the application submitted by Chin a does not include a statemen t that earlier parts of the 
application included non-confidential summaries (see, Exhibit CHN-2, p. 126).  WT/DS414/R 
 Page 51 
 
 
 summaries must take a particular form or be labe lled in a particular manner.  Consequently, China 
argues that non-confidential summaries can be inters persed throughout the body of an application and 
still provide a reasonable understanding of the substance of the confiden tial information.  Even if we 
were to accept China's argument that non-confid ential summaries can be found in Part I of the 
application, as indicated in the reasons which fo llow the Panel is not convinced that the purported 
summaries provide a reasonable understanding of the substance of the confidential information. 
7.202  At the outset, we note certain problems with some of the summaries relied upon by China.  In 
particular, in some instances, China's position is that a non-confidential summary has been furnished 
within the meaning of Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement when it is possible to infer the "mai n point" of the confidential information from the 
context surrounding the redaction.  In our view, this is not what is envisaged as a non-confidential 
summary under the SCM and Anti-Dumping Agreements .  Articles 12.4.1 and 6.5.1 explicitly require 
the interested party furnishing the confidential inform ation to provide a summary thereof, rather than 
requiring other interested parties to infer, derive and piece together a possible summary of the confidential information.  The following analysis  of a selection of the categories of confidential 
information redacted from the application high lights the problems with the purported summaries 
relied upon by China.  Given our conclusion that cer tain categories of confid ential information were 
not adequately summarized in Part I of the applica tion, we have not considered it necessary to proceed 
to analyse each of the nine categories set out in the United States' first written submission.
216 
(i) Output of the petitioners, total output of GOES in China, proportion of the petitioners' output 
in China's total output 
7.203  Table 1 of the application includes information about the output of each applicant, the total 
output of GOES in China and the proportion of total output of each of the two applicants over the period 2006 through the first quarter of 2009.  A ll of the numerical information in the table is 
redacted.  The information in the application th at China claims summari zes the table includes: 
(i) an assertion that the applicants met the standing requirements under the Chinese 
regulations; 
(ii) the discussion of the domestic industry in the application, which mentions only two 
producers.  China argues that this indicat es that the applicants account for 100% of 
the domestic industry; and 
(iii) Appendix 13 to the application, which pr ovides figures for the total domestic GOES 
output and the output of each applicant over the period 2006-2007, and estimates for 
2008 and beyond.
217  
7.204  China argues that Table 1 was included in the application for the purpose of demonstrating 
that the applicants met the standing requireme nts under the Anti-Dumping and SCM Agreements.  
Although the United States argues that "standing" was not mentioned in the application, it is included 
in China's version of the English translation of th e application.  While the United States' translation 
does not include the term "standing", the descripti on under Table 1 makes clear that whether the two 
companies "qualify for petitioners" was at issue.218 
                                                      
216 United States' first written submission, para. 83. 
217 GOES Supply: Domestic Output Growth Insignificant, while Import Pressure Mounts, CICC 
(Appendix 13 of the Application), Exhibit CHN-13. 
218 Application, Exhibit CHN-2, p. 9 and Exhibit US-2, pp. 3-4. WT/DS414/R 
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 7.205  According to China, the assertion that the a pplicants met the standing requirements under 
WTO rules is an adequate summary of the confid ential information redacted from Table 1 of the 
application.  However, we recall the Appellate Body's statement that Article 6.5.1 of the Anti-
Dumping Agreement accommodates the concerns of c onfidentiality, transparency and due process.  In 
the Panel's view, to accommodate the concern of due process, interested parties must have access to a 
summary of the confidential information that is re lied upon to draw certain conclusions, so that those 
conclusions may be challenged.  Simply relyi ng on the conclusion as the non-confidential summary 
does not provide interested parties with a means to  challenge whether the confidential information in 
fact provides a basis for the conclu sion drawn. China's position is that  interested parties reading the 
application should assume that the applicants correc tly interpreted the redacted data to reach the 
conclusion relating to standing.  In our view, this is not what is envisaged by Articles 12.4.1 of the 
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.  Rather, it is necessary to provide a summary of the substance of the confidential inform ation and not merely to assert the conclusions that 
may be drawn from it. 
7.206  With respect to the discussion of the domestic industry, China relies on Part I(1)(i)(d) of the 
application, which discusses the technology investment s made by the two applicants and also states 
that "in recent years, major steelmakers in China are making huge investments to expand GOES 
production capacity to satisfy domestic demand.  Up to now, most capacities built with newly added 
investment are ready for production".
219  In our view, this does not make it as clear as China asserts 
that the domestic industry consisted of only tw o producers.  Although China argues that "it was 
common knowledge" that there were only two producers in the Chinese GOES industry and "this was 
widely known from the public press reports about the Chinese industry", this begs the question of why 
the information was treated as confidential.220  If information is treated as confidential in an 
application or investigation, the obligation to provide a non-confidential summary of it cannot be 
avoided by claiming that the info rmation is public in any event. 
7.207  Finally, China relies upon Appendix 13 as a summary of Table 1 of the application.  
However, we find reliance on this a ppendix to be problematic.  Appendi x 13 is referenced twice in the 
body of the application:  first, in explaining the use of the export price to the European Union as the normal value, and second, in claiming the existence of threat of material injury.  In both instances, it 
is relied upon for the information it includes regarding the state of the steel markets in the United States and Russia.
221  In no place in the application, least of all in relation to Table 1, is the 
information in Appendix 13 regardi ng domestic output of GOES in China referenced.  It is uncertain 
whether the data in Appendix 13 is the source for th e confidential information in Table 1 or provides a 
summary of it.  Indeed, the information in Ap pendix 13 includes actual values only up to and 
including 2007, with estimates of output provi ded for 2008 and beyond.  Given this mismatch 
between the data in Table 1 and Appendix 13, and th e stated purpose in the body of the application for 
the inclusion of Appendix 13, in our view it does not provide readers of the application with a 
summary of the confidential information redacted from Table 1. 
7.208  Consequently, even if we were to accept China's argument that the non-confidential 
summaries are to be found in Part I rather than Pa rt II of the application, the information relied upon 
by China as the summary of the confidential inform ation redacted from Table 1 is inadequate under 
Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement.   
                                                      
219 Application, Exhibit US-2, pp. 4-5. 
220 China's first written submission, para. 95. 
221 Application, Exhibit CHN-2, pp. 36, 116.  WT/DS414/R 
 Page 53 
 
 
 (ii) Apparent consumption of GOES in China 
7.209  Tables 23 and 24 of the application redact data  on the annual domestic apparent consumption 
of GOES over the period 2006 through the first quarter of 2009.  China relies upon the following sections of the application as the non-conf idential summaries of this information: 
(i) Percentage changes in domestic apparent c onsumption on page 5 of the application.  
In particular, page 5 states that sinc e 2006, domestic appare nt consumption has 
maintained a year-on-year growth rate of 20%.  By 2008, there had been a growth of 50% over 2006 levels. 
(ii) Table 32 of the application provides year-on-year percentage changes from 2006 to 
2007 and from 2007 to 2008.  These figures are also discussed in the commentary on 
causation following Tables 32 and 33. 
(iii) Appendix 13 to the application, which pr ovides public data on apparent domestic 
consumption over the period 2006-2007, with estimates for 2008 and beyond. 
7.210  The United States and China disagree regarding wh ether year-on-year percentage changes can 
provide an adequate non-confidential summary of the confidential information on the apparent 
domestic consumption of GOES in China.  According to the United States, it is impossible to gain a 
reasonable understanding of the substance of the redacted information b ecause, in the absence of 
information about the absolute values, "growth of about 50%" could mean growth from 100 to 150 or 100,000 to 150,000.
222  The United States argues that absolute  values could have been reported as an 
average without disclosing the confidential information.223  However, a review of Tables 23 and 24 in 
the application indicates that the tables report data in  the form of annual averages, including redacting 
the data on the annual average domest ic apparent consumption.  Theref ore, it is the annual averages of 
domestic apparent consumpti on of GOES that is treated as confidential in the application.  Given that 
the United States has not brought a claim regarding the classification of particular types of information, including annual averages, as confidential under Articles 6.5 of the Anti-Dumping Agreement or 12.4 of the SCM Agreement, its ar gument that the very information treated as 
confidential should have been disclosed under Ar ticles 6.5.1 of the Anti-Dumping Agreement and 
12.4.1 of the SCM Agreement is not convincing. 
7.211  However, in the Panel's view, there remain  significant problems with the purported 
summaries of the confidential information relied upon by  China.  In particular, there is a mismatch 
between the redacted information and the allege d summaries.  Table 32 includes the percentage 
change in domestic apparent  consumption between 2006 to 2007 and between 2007 to 2008.  
Although the information redacted from Tables 23 and 24 includes a figure for apparent domestic 
consumption in the first quarter of 2009, no percenta ge change or other form  of summary is provided 
for this in Table 32 or elsewhere in the applicati on, including on page 5.  Therefore, even accepting 
China's arguments regarding the adequacy of y ear-on-year percentage changes as a means of 
summarizing confidential information, the summary is de ficient in any event, w ith respect to the data 
for the first quarter of 2009.   
7.212  With respect to China's reliance upon Appendix 13 of the application as a form of non-
confidential summary, we recall our previous discussi on of this Appendix at paragraph 7.207 of this 
Report. 
                                                      
222 United States' second written submission, para. 60. 
223 United States' response to Panel question 45, para. 8. WT/DS414/R 
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 7.213  Finally, we note the United States' argument that  China would require respondents to "piece 
together a puzzle of data and information scatte red throughout the petition".  This is because 
information 50 pages prior to, and 8 pages after,  Tables 23 and 24 is supposed to summarize the 
information redacted from Tables 23 and 24.
224  On the one hand, the Panel notes that Articles 12.4.1 
of the SCM Agreement and 6.5.1 of the Anti-Dump ing Agreement do not include any requirements 
regarding the form a non-confidential summary must  take.  However, on the other hand, given the 
lack of cross-referencing and the mismatch betw een the redacted information and the purported non-
confidential summaries, a respondent may be confused  regarding whether the summary information is 
based on the same data source as the redacted information and thus  represents the "non-confidential" 
summary.  In this sense, the due process objective of Articles 12.4.1 and 6.5. 1 may be undermined, as 
an interested party may not be aware that the red acted information has in fact been summarized and 
can be contested. 
7.214  In the light of this reasoning, even if we were  to accept China's argument that year-on-year 
percentage changes in domestic  apparent consumption may cons titute non-confidential summaries, 
there remain significant problems with the summa ries relied upon by China, such that they are 
inadequate under Articles 12.4.1 and 6.5.1 of the SCM and Anti-Dumping Agreements.   
(iii) Influence on the Chinese domestic industry 
7.215  The section of the application describing the impact of the dumped imports on the domestic 
industry includes 24 tables of data, from which eith er all or a significant portion of the data is 
redacted.225  China relies upon year-on-year percentage changes as the relevant non-confidential 
summaries, provided either within the relevant tabl es or in the accompanying commentary.  China 
again relies upon Appendix 13 as providing a non-confidential summary of some of the factors at 
issue.   
7.216  Again, even accepting that year-on-year percen tage changes may constitute a form of non-
confidential summary, there remain certain gaps in the summaries provided in the section of the 
application examining the impact of the dumped imports on the domestic industry, as outlined in the 
following paragraphs. 
7.217  Figures for the injury indicators are provide d separately for each applicant, WISCO and 
Baosteel.  Generally, the percentage change in  each indicator from 2006 to 2007 and from 2007 to 
2008 is provided for WISCO.  However, summary data  is generally not provided for Baosteel.  We 
note that Baosteel commenced production in May 2008 and therefore, the redacted information 
presumably included absolute values for Baosteel for 2008 and the first quarter of 2009.226  Further, 
China did not claim that such information was incapable of summarization due to "exceptional 
circumstances" under Articles 12.4.1 of the SCM Agreement or 6.5.1 of the Anti-Dumping Agreement.  In Table 38, summary data is provi ded for Baosteel, by breaking the data down and 
providing quarter-on-quarter changes, indicating th at some form of summarization was possible for 
Baosteel.  Therefore, for those tables where no summary data is provided for Baosteel, and the 
subsequent commentary also fails to summarize the in formation, we cannot conclude that China acted 
consistently with Articles 12.4.1 of the SCM Ag reement or 6.5.1 of the Anti-Dumping Agreement.
227   
7.218  For some of the tables in which no summary data is provided for Baosteel, year-on-year 
changes for WISCO and for the total industry are pr ovided.  Therefore, it is possible to derive 
                                                      
224 United States' second written submission, para. 61. 
225 Application, Exhibit US-2, pp. 61-72. 
226 Application, Exhibit US-2, p. 67.  
227 Application, Exhibit US-2.  For instances of this, see Tables 27, 34, 42 and 50, pp. 61, 65-66, 69 and 
72.  WT/DS414/R 
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 Baosteel's contribution in 2008 and the first quarter of 2009.228  However, where an interested party is 
required to perform its own calculations in order to derive its own summary of the confidential 
information, this is an indication that the party providing the confidential information did not furnish 
an adequate summary to the investigating author ity in accordance with Articles 12.4.1 of the SCM 
Agreement and 6.5.1 of the Anti-Dumping Agreement. 
7.219  Although year-on-year percentage changes are ge nerally provided for WISCO, in relation to a 
number of tables a percentage change for only one y ear is provided, with the summary data for the 
other annual change missing.229  Finally, in a number of instances, no year-on-year summary is 
provided for either WISCO or Baosteel.  In these cases, there is some limited commentary following the redacted tables.
230   
7.220  In the light of these observations, even if we  were to accept China's theory that the non-
confidential summaries can be found in Part I of th e application, the purported summaries relied upon 
by China are deficient in a number of respects.  C onsequently, we cannot conc lude that the summaries 
provide a reasonable understanding of the substan ce of the confidential information in accordance 
with Articles 6.5.1 of the Anti-Dumping Agre ement and 12.4.1 of the SCM Agreement. 
(iv) Dumping Margin of GOES imports from the United States 
7.221  China argues that the dumping margins for GO ES were adequately summarized because the 
methodology for calculating the margins was outlined  and the vast majority of numbers were 
provided in Part I of the application.  Given th e Panel's conclusions rega rding the numerous problems 
with the purported non-confidential summaries in relation to the three preceding categories of 
confidential information, we do not consider it n ecessary to reach a defin itive conclusion regarding 
whether, in this context, outlining the met hodology for calculating the dumping margins was 
sufficient to permit a reasonable understanding of substance of the redacted information.   
7.222  However, in relation to China's argument th at, based on the formulas and numbers disclosed, 
interested parties could derive much of the missi ng data, the Panel feels it necessary to comment that 
this kind of process is not what is envisaged by  Articles 12.4.1 of the SCM Agreement and 6.5.1 of 
the Anti-Dumping Agreement.  The Articles explic itly require parties to furnish non-confidential 
summaries of any information submitted in confidence.  Where other interested parties are required to 
derive their own summary and make educated  guesses about the substance of the redacted 
information, the requirements of Articles 6.5.1 and 12.4.1 are not met.  
(d) Conclusion 
7.223  The Panel concludes that Part II-2 of the app lication was furnished by the applicants as the 
non-confidential summary required under Articles 12. 4.1 of the SCM Agreement and 6.5.1 of the 
Anti-Dumping Agreement.  However, the purported summaries in Part II are inadequate in permitting 
a reasonable understanding of the substance of  the information submitted in confidence. 
                                                      
228 Application, Exhibit US-2.  For instances of this, see Tables 28, 29, 31 and 40, pp. 61-62, 63-64, 
and 68. 
229 Application, Exhibit US-2.  For instances of this, see commentary following Tables 41 and 45 on 
pp. 69 and 71. 
230 For example, the commentary accompanying Table 30 indicates that the sales volume to output rate 
was dropping for the applicants over the period 2006-2009.  With respect to Table 33 , the commentary indicates 
that market share for the applicants rose between 2006 a nd 2007 and then fell in 2008.  Finally, with respect to 
Table 36, no summary information is provided for Baosteel, apart from a statement that its capacity utilization 
rate was low (see Application, Exhibit US-2, pp. 63, 65 and 67.) WT/DS414/R 
Page 56  
 
 7.224  As highlighted in the preceding reasons, the Pa nel has analysed the information on the basis 
of China's argument that the non-confidential summari es can be found in Part I of the application.  
The Panel has concluded that, for at least some of the categories of confidential information, there are 
deficiencies in the purported summaries relied upon by  China, such that they do not provide a 
reasonable understanding of the substance of the conf idential information.  In addition, we are not 
convinced by that aspect of China's defence whic h suggests that a non-confidential summary exists 
where an interested party is able to derive, or infer from the context, the possible nature of the 
confidential information.  Rather, there is an explicit obligation under Articles 6.5.1 of the Anti-
Dumping Agreement and 12.4.1 of the SCM Agreement for an interested party submitting confidential information to furnish a summary of it.  It  is not for other interested parties to derive their 
own summary based on the context from which the information is redacted.
231   
7.225  Accordingly, the Panel concludes that China act ed inconsistently with Articles 12.4.1 of the 
SCM Agreement and 6.5.1 of the Anti-Dumping Agreement. 
D. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE 12.7  OF THE SCM AGREEMENT IN ITS 
USE OF FACTS AVAILABLE IN CALCULATING THE SUBSIDY RATES (FOR THE TWO KNOWN 
RESPONDENTS ) UNDER CERTAIN PROCUREMENT PROGRAMMES  
1. Introduction 
7.226  MOFCOM applied facts available to calcula te the subsidy rates for the two known 
respondents, AK Steel and ATI.  MOFCOM found th at the respondents had not cooperated with its 
investigation, since they had failed to provide certain sales data. 
7.227  The United States contends that MOFCOM's reliance on facts available was improper, and 
therefore contrary to China's obligations  under Article 12.7 of the SCM Agreement. 
7.228  China asks the Panel to reject the United States' claim. 
2. Arguments of the United States 
7.229  The United States denies that the two respondents failed to provide requested information, or 
that they otherwise impeded MOFCOM's invest igation.  The United States asserts that the 
respondents cooperated, responded to  MOFCOM's questionnaires, and to the extent they did not 
provide information it was because MOFCOM's own questionnaires did not require it.  The 
United States asserts that the two respondents e ngaged with MOFCOM on its terms throughout the 
investigation. 
7.230  Regarding the information actually used by MOFC OM once it resorted to facts available, the 
United States also contends that there were no facts available on the record supporting MOFCOM's 
choice of a 100% utilization rate, i.e. a rate indi cating that all domestic sales of GOES and non-GOES 
products by the respondents were subsidized. 
(a) Failure to cooperate / provide data 
7.231  The United States notes that, in its original August 2009 questionnaire, MOFCOM gave the 
following general instructions for the respondents: 
                                                      
231 Although not expressly stipulated in Articles 12.4.1 of the SCM Agreement or 6.5.1 of the Anti-
Dumping Agreement, the Panel notes the important contri bution to transparency, and to assisting parties in 
gaining a reasonable understanding of the substance of  the confidential information, that labelling non-
confidential summaries as such provides.  WT/DS414/R 
 Page 57 
 
 
 Please read questions carefully before answer ing.  When answering a question, please 
write the question down first and put your answer directly below it and point out the support evidence to it.  If the questio n does not apply to you, please write down 
explicitly, "this question does not apply to my company" and state the reasons.
232  
7.232  The United States asserts that, in addition, MOFCOM posed the following questions under 
the heading "government procurement programs" re lating to the applicants' government procurement 
allegations: 
(1) Please answer all the questions listed by Annex I.   
 
(2) Does your company attend bidding when selling products to government?  If yes, 
please explain the specific bidding pro cedure and bidding rules as well as the 
agencies and departments to which your company submit bid tender.   
 
(3)  Please provide all the relevant information (not limited to the subject merchandise), in 
the form of tables, regarding government pr ocurement signed within the POI as well 
as those not performed within the POI, wh ich includes: the specific names of the 
purchaser, purchasing time, name of purchased products, the supply quantity, [value], price, payment and the contract progress, etc.  The contract, bid tender etc. related evidence shall be provided.  The selling price of the involved products that are sold to 
other private purchaser shall be provided as well. 
 
(4)  Please provide the information regarding dom estic sales of all the products in POI, in 
the form of tables.  The quan tity and [value] of each product sold to each client shall 
be provided.
233 
 
7.233  The United States contends that, in response to questions 2 and 3, AK Steel answered that, as 
demonstrated by the sale data for subject merchandise provided in the parallel anti-dumping 
proceeding, the company did not sell any GOES to any government entity during the POI.  AK Steel 
continued: "[a]s a result, this alleged s ubsidy program is not relevant to AK Steel."234  T h e  
United States asserts that ATI provided a similar answer.235  The United States asserts that, pursuant 
to MOFCOM's instructions, AK Steel noted that  no government procurement was signed during the 
POI, and therefore the question was inapplicable. 
7.234  The United States submits that, in  response to Question 4, which only relates to the POI, and 
which does not contain the proviso "not limited to  the subject merchandise" found in Question 3, AK 
Steel referred MOFCOM to the sale data for s ubject merchandise provided in the parallel anti-
dumping proceeding.236  ATI indicated that the qu estion was "[n]ot applicable."237  The United States 
contends that, in the light of the fact that AK St eel and ATI did not use the alleged program, and none 
of the predicates for reporting data in response to  Question 3 were met, the summary quantity and 
value data requested in Question 4 were superfluous. 
7.235  The United States acknowledges that MOFCOM issued a deficiency letter regarding the 
respondents' replies to the above questions.  The United States asserts that, in its deficiency letter 
                                                      
232AK Steel, Original Questionnaire Response, Aug. 10, 2009 (BCI), Exhibit US-11, p. 6; AK Steel, 
Revised Questionnaire Response, Sept. 9, 2009 (BCI), Exhibit US-14, p. 6. 
233 China's first written submission, para. 147. 
234 AK Steel, Original Questionnaire Resp onse, (BCI), Exhibit US-11, pp. 21-22. 
235 Exhibit US-38, at 19 (“not applicable”). 
236 AK Steel, Original Questionnaire Resp onse, (BCI), Exhibit US-11, pp. 21-22. 
237 Excerpt from ATI Questionnaire Response, Exhibit US-38, p. 19. WT/DS414/R 
Page 58  
 
 issued 10 August 2009, regarding government procur ement, MOFCOM appears to request transaction 
data, but at the same time explains that if the f acts are such that the requ est is not applicable, the 
respondents should demonstrate inapplicability:  
The prima facie evidence owned by the Inv estigating Authority showed that your 
company's products (not limited to the produc t concerned) could have been sold to 
the USG or public bodies, or have been sold to contractors of relevant projects who 
have been bound by the Buy America Act.  There was a possibility that the prices of 
these transactions was higher than then market prices and consequently brought 
benefit to your company.  Therefore, so long as your company's products were sold in 
the domestic market, the transactions shall be reported.  If your company was of the 
view that, regarding the product concerned and your company's other products, there 
was no purchase from the government or public body, or there was no transaction bound by the Buy America Act, it was your  company who shall bear the burden of 
proof.
238 
7.236  According to the United States, both of MOFCOM 's requests are predicated on the existence 
of government procurement transactions.  In the original questionnaire, MOFCOM asked for volumes 
of information for "signed" procurement contracts and sales of "involved" products to private parties.  
In the new subsidy questionnaire, MOFCOM asked  for sales "under the influence" of any "Buy 
American" law.  The United States submits that, in  the absence of any procurement sales, a company 
would have no transactional data to report, and the quantity and value data requested by MOFCOM 
for the POI in the original questionnaire would be irrelevant. 
7.237  The United States explains that, in its revised  questionnaire response dated 9 September 2009, 
AK Steel attached a customer list showing that  the government did not purchase any AK Steel 
products (i.e. GOES or non-GOES) during the POI – including products unrelated to subject 
merchandise, and revised its narrative response to address the question as clarified by the deficiency letter.
239  In its separate deficiency letter response, also dated September 9, 2009, AK Steel explained 
that it was impossible to know what its custom ers did with its products.  According to the 
United States, AK Steel's customer list and explan ation were responsive to the deficiency letter.240   
According to the United States, therefore, AK Stee l did not impede the investigations; it explained 
why the question was not applicable.  The United States notes, moreover, that MOFCOM did not follow-up with any additional questions on this subject or otherwise suggest that AK Steel's explanation was not adequate.  The United States asserts that AK Steel only learned of MOFCOM's 
dissatisfaction with its response when MOFCOM  issued the preliminary determination. 
7.238  Regarding ATI, the United States asserts that AT I attached a customer list to its revised 
questionnaire response and pointed to the financ ial statements submitted with its original 
questionnaire response to establish the fact that ATI made no sales of the subject merchandise (i.e. GOES) to the United States Government.  ATI also pointed out that MOFCOM could confirm the 
inapplicability of the question to ATI when MOFCOM conducted the on-site verification. 
7.239  The United States asserts that MOFCOM failed to react to the respondents' supplemental 
questionnaire responses until issuance of its preliminary determination on 14 December 2009.  The United States asserts that this appears to be the first instance where MOFCOM highlighted any need 
for transaction data without conditions .  The United States contends that, in response to MOFCOM's 
                                                      
238AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3; ATI Deficiency Letter 
(26 August 2009), Exhibit CHN-20, p. 3. 
239 AK Steel, Revised Questionnaire Response (BCI), Exhibit US-14, p. 25. 
240 GOES Supply: Domestic Output Growth Insignificant, while Import Pressure Mounts, CICC 
(Appendix 13 of the Application), Exhibit CHN-13, p. 3.  WT/DS414/R 
 Page 59 
 
 
 approach in the preliminary determination, AK Steel  submitted the sales data for subject merchandise 
as an exhibit to its comments on the preliminary de termination about a week before the verification 
began.241  The United States asserts that ATI appeared to have decided that it no longer had an 
opportunity to engage with MOFCOM, as it conclude d that MOFCOM had a pre-determined result in 
mind.  The United States suggests that, as demonstrated by MOFCOM's treatment of AK Steel's sales 
data, ATI's decision was correct. 
7.240  The United States submits that, in its January 2010 CVD verification memo, MOFCOM 
acknowledges that the sales data submitted by AK Steel is at least partially responsive, but nonetheless rejects the sales data because  of past supposed "non-cooperation": 
Since the investigation authority had already given explanations to relevant issues and 
offered the respondent a chance of re-s ubmitting the responses, the investigation 
regret to see that AK Steel Corporati on still didn't answer the questions for 
Government Procurement Program as requi red by the questionnaire.  Therefore, 
though AK Steel Corporation provided some of its domestic sales data in the Comments on Preliminary Determination, the investigation authority would not 
verify those sales data in the anti-subsidy verification.
242 
7.241  According to the United States, MOFCOM theref ore refused to verify the sales data, which 
were already in its possession, and had been veri fied in the parallel anti-dumping proceeding.  
Regarding the customer lists, AK Steel submitted a written request to verify the customer lists.  The United States asserts that MOFCOM, however, did not verify the lists.
243 
7.242  The United States notes that China complained  that the companies' failure to provide 
transaction data prior to the verification denied  MOFCOM "the ability to plan efficiently" for 
verification.244  The United States suggests that, to the ex tent that MOFCOM may have suffered any 
inconvenience, however, this was simply the resu lt of its own questionnaire and the apparent 
differences between the instructions in the questi onnaire and what MOFCOM actually wanted.  The 
United States contends that if MOFCOM deemed transactional data necessary from the outset without 
regard to whether a company participated in gove rnment procurement during the relevant period, its 
questionnaire should have so stated from the outset.  
(b) Factual basis for 100% utilization rate 
7.243  The United States contends that, even if an inves tigating authority is entitled to resort to facts 
available, the investigating authority does not ha ve carte blanche in choosing which facts, or 
information, to rely on.  The United States asserts that the investigating authority must take into 
account the information actually provided by the exporter.  The United States relies in this regard on 
the following findings of the Appellate Body in Mexico – Anti-Dumping Measures on Rice : 
We understand that recourse to facts ava ilable does not permit an investigating 
authority to use any information in whatev er way it chooses....to the extent possible, 
an investigating authority using "facts  available" in a countervailing duty 
investigation must take into account all the substantiated facts provided by an 
interested party, even if those facts ma y not constitute the complete information 
                                                      
241 AK Steel, Comments on Preliminary Determination, Exhibit 1, Customer Lists (BCI), Exhibit US-
23. 
242 MOFCOM, the Disclosure Letter for Fundamental Facts of the Verification on AK Steel 
Corporation in the GOES Anti-Subsidy Investigation, 3 Mar. 2010  (BCI), Exhibit US-24, p. 3. 
243 United States' first written submission, para. 105. 
244 China's first written submission, para. 151. WT/DS414/R 
Page 60  
 
 requested by the party...the facts available to the agency are generally limited to those 
that may reasonably replace the information that an interested party failed to 
provide.
245     
7.244  Regarding the context of Article 12.7 of the SCM Agreement, the United States submits that 
the Appellate Body has compared the Anti-Dumpi ng Agreement to the SCM Agreement, and stated 
that an investigating authority is obliged to cons ider information submitted by an interested party:  
Like Article 6 of the Anti-Dumping Agreem ent, Article 12 of the SCM Agreement as 
a whole sets out evidentiary rules th at apply throughout the course of 
the...investigation, and provides also for due process rights that are enjoyed by interested parties throughout...an investigation....[T]his due process 
obligation...requires the investigating author ity...to take into account the information 
submitted by an interested party.
246 
Though the SCM Agreement does not have a facts available Annex, "it would be 
anomalous if Article 12.7 of the SCM Agre ement were the permit the use of facts 
available in countervailing duty investigati ons in a manner markedly different from 
that in anti-dumping investigations."247   
7.245  The United States argues that MOFCOM appears to have concluded that if a company does 
not provide some  information, or if the information provided does not perfectly fit the request to 
which it responds, MOFCOM may reject all information provided by the company.  The 
United States recalls that the respondents provided sa les data showing that they did not sell subject 
merchandise to the United States Government.  AK Steel additionally provided customer lists 
showing that it did not make any direct sales to the United States Government.  The United States 
contends that MOFCOM rejected these facts, which were verifiable, and assumed that the United States companies sold all of their output to the United States Government, and that this output 
garnered a 25% price premium.  The United States submits that there are no facts available on the record to support MOFCOM's conclusion that th e respondents sold all of their output to the 
Government.   
7.246  The United States contends that MOFCOM ignored  information on the record demonstrating 
that the respondents did not sell exclusively to the US Government or Government contractors.  The 
United States explains that, to calculate the amount  of the alleged "subsidy" to producers resulting 
from the procurement programs, MOFCOM assumed that AK Steel and ATI sold all of their output to 
the government under programs requiring the paymen t of a 25% price premium.  Had MOFCOM not 
entirely disregarded the factual information actually  supplied by the companies, it could not have 
assumed that the companies sold all of their out put to the government.  At most, AK Steel, for 
example, could have sold 29% of its output to i ndustries with some relation to construction.   
MOFCOM required AK Steel's 10-K annual report be transl ated in its entirety.  Page 2 of that report 
provides the percentage of AK Steel's sales attribut able to three market segments.  In 2008, the 
percentages were: 
· Automotive: 32%;  
· Infrastructure and Manufacturing: 29%; and  · Distributors and Converters: 39%.
248  
 
                                                      
245 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , at para. 294. 
246 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , at para. 292. 
247 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, at para. 295. 
248 AK Steel Annual Report for 2008, (Annex 15-4 of the Application), Exhibit CHN-3, p. 2.  WT/DS414/R 
 Page 61 
 
 
 7.247  The United States asserts that MOFCOM improperl y ignored this information on the record.  
The United States contends that, to the extent that  any AK Steel products could have made their way 
through commerce to government construction contractors, these sales would be included in the 
infrastructure and manufacturing segment.  Because neither automotive manufacturers nor distributors 
and converters include construction contractors, sales to these market segments are necessarily 
unaffected by the government procurement statutes under investigation.   The United States asserts 
that if MOFCOM was going to ignore all evidence  indicating that AK Steel sold nothing to the 
government, MOFCOM should have at least lim ited its subsidy calculation to AK Steel's 
United States sales of products for the infrastructure and manufacturing segment, or 29% of the company's United States sales.   
3. Arguments of China 
(a) Failure to cooperate / provide data 
7.248  China submits that MOFCOM's requests for da ta, and the underlying theory of indirect 
subsidization, were well articulated and plainly understood by the respondents.  Regarding question 3 
in MOFCOM's original questio nnaire, China asserts that Question 3 went to the issue of 
acknowledged utilization under the program.  The expor ters were to report all transactions during the 
POI involving government purchases, not limited to the subject merchandise, as well as information on the selling price for the same products in tr ansactions outside the program.  Question 4 was 
broader.  It sought a simple tabulation of all domes tic sales by product in the POI, including quantity, 
value, and customer.  According to China, the qu estions were unambiguous in  referring to both GOES 
and non-GOES products. 
7.249  China notes that AK Steel's response to Question 3 only concerned sales of GOES to 
government entities during the POI.  AK Steel did not provide any information regarding sales of non-GOES products to government entities during the PO I.  China notes that AK Steel's reply to 
Question 4 referred only to sales data for GOES tr ansactions submitted for the purpose of the anti-
dumping proceeding.  Regarding ATI, China notes that ATI merely stated that Questions 3 and 4 were 
inapplicable to the company or its affiliates.   China notes that, ultimately, AK Steel provided 
transaction data for GOES products only, whereas ATI submitted no transaction data at all (not even 
for GOES).  According to China, therefore,  neither respondent provided sales data for all (i.e. GOES 
and other steel) products over the period of investigation, as requested by MOFCOM.  China asserts 
that both respondents had understood the questions to refer to both GOES and non-GOES products, as 
AK Steel argued that data for non-GOES products w as irrelevant, and ATI stated that it did not 
benefit from any subsidies for either GOES or non-GOES products.
249 
7.250  China submits that MOFCOM's deficiency le tter was even clearer in requiring transaction 
data for all products, since it stated that "so lo ng as your company's products were sold in the 
domestic market, the transactions shall be reported".  The deficiency letter al so stated that, before 
making any arguments as to whether or not transac tions involved government entities, or were bound 
by the Buy America Act, "it was of the first im portance that [respondents] respond completely and 
accurately to the questions of the Investigati ng Authority".  China submits that MOFCOM's 
deficiency letter could not have been clearer.250 
7.251  China contends that AK Steel's r esponse to the deficiency letter wa s similar to its reply to the 
original questionnaire, although AK Steel did provide a table listing all customers of its products (i.e. 
GOES and non-GOES).  However, China notes th at AK Steel still did not provide non-GOES 
                                                      
249 China's response to Panel question 19, paras. 74 and 76. 
250 China's response to Panel question 19, para. 78. WT/DS414/R 
Page 62  
 
 transaction data.  In addition, China notes that AK Steel also made the following remarks in an 
accompanying letter: 
With regard to government procurement, AK Steel provides in Exhibit II.3 of the 
Revised Subsidy Questionnaire Response a lis t of all its customers during the period 
of investigation ("POI") grouped by product category. This list demonstrates that AK 
Steel did not sell either the subject merchandise or any other product to any 
government entity during the POI.  
To the extent MOFCOM is requiring AK Steel to demonstrate that none of the steel it 
sold to non-government entities was used in  a project that was subject to the "Buy 
America" or similar act, MOFCOM is impos ing an impossible burden.  AK Steel has 
no reason to know what its customers do with their purchases. Because such a 
substantial proportion of AK Steel's products  are sold to service centers, which resell 
the products to end users, there is no wa y to find out.  Moreover, as stated in AK 
Steel's questionnaire response, even if the government ultimately overpaid for a 
project incorporating steel that may have originated with AK Steel, the entity that 
received the overpayment did not provide any of that overpayment to AK Steel, 
which received only a market-determined price for its product.
251        
7.252  According to China, "AK Steel had thrown down the gauntlet" by being argumentative.252  
China further contends that MOFCOM needed the tr ansaction data precisely in order to test AK 
Steel's assertions that it "has no reason to know what  its customers do with their purchases", and that 
"even if the government ultimately overpaid for a proj ect incorporating steel that may have originated 
with AK Steel, the entity that received the overpayme nt did not provide any of that overpayment to 
AK Steel, which received only a market-determined price for its product".  China submits that AK Steel's continued refusal to respond again seriously impeded the investigation.  China submits that 
ATI's response to the deficiency letter was even le ss forthcoming, since it provided only a customer 
list for GOES, and stated that it did not sell GOES to any government entities. 
7.253  China acknowledges that AK Steel did ultimatel y submit transaction data for sales of GOES 
during the POI (i.e. the same data that had alread y been submitted in the anti-dumping proceeding), 
after issuance of MOFCOM's preliminary determinati on.  According to China, though, the data came 
150 days after the original deadline for submission, 142 days after the extended deadline for submission, 126 days after the deadline for the second opportunity provided by MOFCOM to respond, and just 3 business days before the commenc ement of verification.  Moreover, the data was 
limited to GOES transactions ev en though AK Steel clearly understood that Question 4 of the initial 
questionnaire was seeking POI transaction data on all sales. 
7.254  Furthermore, China notes that even the United States appears to concede that, at the very 
latest, MOFCOM's requests for data  were clear as of issuance of th e 26 August 2009 deficiency letter.  
China notes in this regard the US statement, in describing the deficiency letter, that "MOFCOM… 
demanded that the respondents prove non-use of th e alleged programs by providing detailed sales 
information for all products and all custom ers over the POI and the preceding 14 years".
253 
(b) Factual basis for 100% utilization rate 
7.255  China contends that MOFCOM reasonably dete rmined, based on the "facts available", the 
degree of utilization of the Government Purchase of Goods Program.  China notes the United States' 
                                                      
251 AK Steel, Response to Deficiency Letter (9 September 2009), Exhibit US-13, pp. 3-4. 
252 China's response to Panel question 19, para. 79. 
253 United States' response to Panel question 8, para. 30.  WT/DS414/R 
 Page 63 
 
 
 argument that, according to AK Steel's 10-K repor t, only sales within the infrastructure and 
manufacturing segment, representing 29% of total sales,  could be relevant to the program at issue.254  
China contends that the use of this 29% figure, however, does not represent the most reasonable "facts 
available," given the circumstances of this par ticular case.  China asserts that MOFCOM had four 
alternatives before it:  (1) find 0% utilization; (2) find 29% utilization; (3) find some other degree of 
utilization; or (4) find 100% utilization, as it did in the preliminary determination.  China submits that, 
after considering these alternatives, and comparing each of them relative to the others based on the 
facts before MOFCOM – including critically th e nature and degree of non-cooperation – MOFCOM 
reasonably determined that 100% utilization was the most reasonable "facts available" in this 
particular case. 
7.256  China asserts that the first option, 0% utiliza tion, was inconsistent with the record, which 
showed at least some degree of utilization of the program.  China asserts that this fact has been 
conceded by the United States.  Ch ina also asserts that the variou s arguments by the United States 
respondents had always focused on direct utilization,  and consciously avoided (or admitted) indirect 
utilization.  China states that, given the MOFCOM focus on both direct and indirect utilization, the 
available facts strongly suggested that the degree of  utilization was not 0% and was some other figure. 
7.257  China identifies "several serious problems" with  the second option of 29% utilization.  First, 
although AK Steel asserted that only the releva nt segment was the "facility and manufacturing 
industry segment" – which represented 29% of the AK Steel sales for calendar year 2008 – 
MOFCOM had no factual support for this assertion.   China contends that a customer in the 
"automobile manufacturing" segment might well ha ve produced items that were sold to the 
government or were used in some construction project.   Similarly, a customer in the "distributor and 
converters" segment might well have resold ite ms to the government or government related 
construction projects. 
7.258  Second, China asserts that the 29% figure came  from a financial report prepared for the 
calendar year 2008, which does not relate specifical ly to the period of investigation (March 2008 
through February 2009).  MOFCOM had no equiva lent figure for the period of investigation. 
7.259  Third, China asserts that the 29%  alternative came very late in the process, in AK Steel's 
comments on the preliminary determination, a submission not filed until 30 December 2010.  Coming on the very eve of the verification, MOFCOM was una ble fully to evaluate and test this alternative 
during the verification. 
7.260  Fourth, this alternative was filed on the same  day – 30 December  2010 as the final AK Steel 
effort belatedly to respond to the MOFCOM request fo r information.  Yet even at this late date, AK 
Steel still did not respond properly, and provided tr ansaction data only for a subset of the customers 
that had been previously identified.  Indeed, AK St eel did no more than submit data that it had readily 
available for months.  So instead of making a good faith effort finally to respond to the request, AK Steel yet again decided it could pick and choose ho w and whether to respond.  Thus, rather than 
submitting data that would allow MOFCOM to ascerta in the actual rate of utilization, AK Steel 
submitted proposed 29% without any factual basis. 
7.261  Regarding the third option, of some other rate of utilization, China identifies two 
"fundamental flaws".  First, as a factual matter MOFCOM had no data fro m respondents that would 
allow it to determine some other number in which it would have any degree of confidence.  Second, 
as a legal matter a utilization figure not grounded in  the record evidence would not qualify as "facts 
available", for it would not be a "fact" in any sense of that term, and would be pure speculation by 
MOFCOM. 
                                                      
254 United States' first written submission, paras. 97-98.   WT/DS414/R 
Page 64  
 
 7.262  Regarding the fourth option, of 100% utili zation, China contends that MOFCOM had 
announced this figure in its preliminary determination,  and thereby squarely put this alternative into 
play and made that fact clear to all the parties.   China notes that, with full knowledge that MOFCOM 
was actively considering 100% utilization, AK Steel  still refused to cooperate.  Instead, it made a 
calculated judgment that it was somehow better off proposing 29% rather than submitting the 
information needed to determine the actual degree of utilization, and allowing that information to be 
verified. 
7.263  According to China, MOFCOM knew the correct  utilization was more than 0%.  MOFCOM 
also had a reasonable basis to believe the correct utilization was more than 29%, since AK Steel had 
proposed that alternative rather than providing the requested data.  Furthermore, MOFCOM had no 
information with which it could determine some a lternative more than 29% but less than 100%, in 
large part due to the refusal of ATI  to provide  any information and AK Steel to provide complete 
information.  In these circumst ances, China asserts th at the "facts available" announced in the 
preliminary determination proved still to be the most reasonable "facts available" for the final 
determination. 
4. Arguments of third parties 
(a) Korea 
7.264  Korea argues that Annex II of the Anti-Dumping Agreement sheds some light on the 
application of facts applicable in  the context of countervailing duty investigations.  In particular, 
according to Korea, an investigating authority is  required to consider the information actually 
provided by a respondent, even if the respondent  does not submit all the requested information.
255 
(b) Saudi Arabia 
7.265  In Saudi Arabia's view, the standards that appl y to the use of facts available in anti-dumping 
proceedings apply equally to countervailing duty proceedings.  Saudi Arabia argues that if an 
authority receives information from a respondent, it must  use that information if the respondent acted 
to the best of its ability.  Facts available shoul d only be used to fill in gaps in the necessary 
information.  Further, facts available must not be used in a punitive manner.256 
5. Evaluation by the Panel 
7.266  There are two main issues raised by the United States' Article 12.7 claim.  First, did 
MOFCOM properly find that the respondents faile d to cooperate with MOFCOM's requests to 
provide transaction data for domestic sales of  GOES and non-GOES products during the POI?  
Second, did MOFCOM properly apply a 100% utilizati on rate when determining the extent to which 
respondents' domestic sales of GOES and non-GOES pr oducts during the POI were subsidized?  We 
address each of these issues in turn, after first cons idering the text and oblig ations inherent in the 
relevant provision. 
(a) Provision at issue 
7.267  The United States' claim is brought under Ar ticle 12.7 of the SCM Agreement, which 
provides: 
                                                      
255 Korea's third party submission, paras. 19 and 21. 
256 Saudi Arabia's third party submission, paras. 14, 16 and 20-21.  WT/DS414/R 
 Page 65 
 
 
 In cases in which any interested Member or  interested party refuses access to, or 
otherwise does not provide, necessary info rmation within a reasonable period or 
significantly impedes the investigation, preliminary and final determinations, 
affirmative or negative, may be made on the basis of the facts available. 
(b) Did MOFCOM properly find that the responde nts failed to cooperate with MOFCOM's 
requests to provide transaction data for dom estic sales of GOES and non-GOES products 
during the POI? 
7.268  In order to resolve this first issue, we begin by examining the relevant requests for 
information made by MOFCOM, and the respondents' responses to those requests.  We then examine 
MOFCOM's finding of non-cooperation, and consider wh ether that finding was justified by the facts.  
Thereafter, we consider a United States argument that data requested by MOFCOM was not 
"necessary" within the meaning of Article 12.7 of the SCM Agreement. 
7.269  The relevant requests for information were set out in Questions 3 and 4 of MOFCOM's 
original questionnaire, as clarified by deficien cy letters issued by MOFCOM on 26 August 2009.  
Questions 3 and 4 of the original questionnaire were worded as follows: 
(3)  Please provide all the relevant info rmation (not limited to the subject 
merchandise), in the form of tables, regard ing government procurement signed within 
the POI as well as those not performed with in the POI, which includes: the specific 
names of the purchaser, purchasing time, name of purchased products, the supply quantity, [value], price, payment and the contract progress, etc.  The contract, bid tender etc. related evidence shall be provi ded.  The selling price of the involved 
products that are sold to other privat e purchaser shall be provided as well. 
(4)  Please provide the information regardin g domestic sales of all the products in 
POI, in the form of tables.  The quantit y and [value] of each product sold to each 
client shall be provided.
257 
7.270  In its initial questionnaire response, AK Steel re plied to Question 3 in the following terms: 
As demonstrated in Table 4-2 of AK Steel's Antidumping questionnaire response, the 
company did not sell any GOES to any government entity during the POI.  As a result, this alleged subsidy progr am is not relevant to AK Steel.
258 
7.271  AK Steel provided a similar response to Question 4: 
Please see Table 4-2 in AK Steel's Antidumping Questionnaire Response for a list of 
companies that purchased GOES from AK Steel during the POI.259 
7.272  In its initial questionnaire response, ATI made  the following introductory remarks to its 
replies to inter alia Questions 3 and 4.   
This question does not apply to Allegheny Ludlum or the ALC Affiliates because no 
subsidies provided pursuant to  the [relevant procurement programmes] benefitted the Subject 
                                                      
257 China's first written submission, para. 147. 
258 AK Steel, Original Questionnaire Re sponse (BCI), Exhibit US-11, p. 22. 
259 AK Steel, Original Questionnaire Re sponse (BCI), Exhibit US-11, p. 22. WT/DS414/R 
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 Merchandise or like or similar products during the POI and the 14-year period prior to 
March 1, 2008.
260 
 
7.273  Thereafter, ATI simply asserted that Questions 3 and 4 were "not applicable".  
7.274  On 26 August 2009, MOFCOM issued letters identifying a number of deficiencies in the 
respondents' replies to the original questionnair e.  For present purposes, we first note that the 
deficiency letter addressed to AK Steel explaine d that MOFCOM was maintaining separate records 
for the parallel anti-dumping and countervail procee dings.  Accordingly, MOFCOM stated that the 
consequence of AK Steel referring to Table 4-2 of  its anti-dumping questionnaire response (as it did 
in response to Question 3) "was that essentially , the company failed to respond to relevant 
questions…"261 
7.275  Second, we note that the deficiency letters a ddressed to AK Steel a nd ATI explained that 
MOFCOM was investigating the possibility of both dir ect and indirect subsidization.  In particular, 
MOFCOM explained that "the subsidy that could be investigated in an anti-subsidy proceeding is not 
limited to a subsidy that is directly related to the product concerned".  The deficiency letter also 
stated: 
Regarding Government Purchase of Goods Program , the prima facie evidence 
owned by the Investigating Authority s howed that your company's products (not 
limited to the product concerned) could have  been sold to the USG or public bodies, 
or have been sold to contractors of relevant projects who have been bound by the Buy 
America Act . There was a possibility that the pri ces of these transactions was higher 
than the market prices and consequently br ought benefit to your company. Therefore, 
so long as your company's products were sold in the domestic market, the transactions shall be reported. If your comp any was of the view that, regarding the 
product concerned and your company's ot her products, there was no purchase from 
the government or public body, or there was no transaction bound by the Buy 
America Act , it was your company who shall bear the burden of proof. If your 
company was of the view that even if othe r products were benefite d by subsidizations 
but no effect would be conferred to the product concerned, it was your company who 
shall prove the benefit genera ted through purchase of other products did not have any 
effect to various aspects of the product con cerned such as the cost and the pricing. 
Before making these arguments, it was of the first importance that your company 
respond completely and accurately to the qu estions of the Investigating Authority.
262 
7.276  AK Steel filed a revised questionnaire response on 9 September 2009.  In its revised response, 
AK Steel submitted a table listing all customers for all its products.  AK Steel also stated: 
With regard to government procurement, AK Steel provides in Exhibit II.3 of the 
Revised Subsidy Questionnaire Response a lis t of all its customers during the period 
of investigation ("POI") grouped by product category. This list demonstrates that AK 
Steel did not sell either the subject merchandise or any other product to any 
government entity during the POI.  
To the extent MOFCOM is requiring AK Steel to demonstrate that none of the steel it 
sold to non-government entities was used in  a project that was subject to the "Buy 
America" or similar act, MOFCOM is impos ing an impossible burden.  AK Steel has 
                                                      
260 Excerpt from ATI Questionnaire Response, Exhibit US-38, p. 19. 
261 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 1. 
262 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3 (emphasis in original).  WT/DS414/R 
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 no reason to know what its customers do with their purchases. Because such a 
substantial proportion of AK Steel's products  are sold to service centers, which resell 
the products to end users, there is no wa y to find out.  Moreover, as stated in AK 
Steel's questionnaire response, even if the government ultimately overpaid for a 
project incorporating steel that may have originated with AK Steel, the entity that 
received the overpayment did not provide any of that overpayment to AK Steel, 
which received only a market-determined price for its product.263 
7.277  In its revised initial questionnaire response da ted 9 September 2009, ATI submitted a list of 
its GOES customers, and stated that it did not sell GOES to any government agencies.  ATI did not submit any information relating to sales of non-GOES products. 
7.278  In its preliminary determination, MOFCOM ma de the following findings regarding the nature 
of MOFCOM's requests for information, and the quality of the respondents' replies: 
[T]he Investigating Authority asked the responding companies to provide information 
about the domestic sales for all of their products; 
… 
Because the responding companies did not provide transaction information, the 
Investigating Authority could not determine whether their products were sold to the 
government or public bodies or their project contractors, and whether the transaction 
prices were abnormal, etc.  Therefore, the transaction price between the responding 
companies and the entity which might have received the payment of premium cannot be proved to be market price; 
… 
The responding companies did not cooperate in the investigation as they did not 
provide relevant information and data;
264 
7.279  MOFCOM made the following findings  in its final determination: 
the original questionnaire issued to the responding companies on 26 June 2009 put 
forward the requirement that the responding companies should report the status of all 
domestic sales, which has never changed; 
… with regard to the government purchase of goods program, under the circumstances 
that the responding companies failed to c ooperate and provide the status of their 
domestic sales, the Investigating Authority c onsidered that their products (not limited 
to the product concerned) may be sold to the USG or public bodies, or relevant 
project contractors…; 
… 
                                                      
263 AK Steel, Response to Deficiency Letter, (9 September 2009), Exhibit US-13, pp. 3-4. 
264 Preliminary Determination [2009] No. 99 (10 December 2009) ("Preliminary Determination") 
Exhibit CHN-17, pp. 34-37. WT/DS414/R 
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 for examining if the subsidy confers any benefits to recipients, the responding 
companies should cooperate with the investig ation and provide the domestic sales of 
all the products; 
… Although AK Steel Corporation submitte d the domestic sales of the product 
concerned as exhibit to its comment on preliminary determination this responding 
company nonetheless failed to submit the re quired information i.e. the information 
about domestic sales of all of its products in a reasonable time as requested by the 
Investigating Authority and by doin g so, impeded future investigation;
265 
7.280  On 30 December 2009, in comments on MOFCOM's preliminary determination, AK Steel 
submitted POI transaction data for GOES.  This was the same sales data that AK Steel had submitted 
in the parallel anti-dumping investigation.  ATI provided no additional information to MOFCOM. 
7.281  In considering whether or not MOFCOM's findi ng of non-cooperation was justified by the 
facts, we first examine the issue of whether or not MOFCOM could properly be considered to have 
requested transaction data for domestic sales (of both GOES and non-GOES products) by respondents 
during the POI.  We then examine the extent, if an y, to which respondents complied with this request. 
7.282  According to China, both Questions 3 and 4 of MOFCOM's initial questionnaire required 
respondents to provide transaction data for sales of all products during the POI.266  China asserts that 
MOFCOM repeated its request for transaction data in its deficiency letters, with an accompanying 
explanation as to the need for such data.  The Unite d States disagrees.  According to the United States, 
it only became clear that MOFCOM was making unqualified requests for transaction data when 
MOFCOM issued its preliminary determination.   Until then, the United States contends that 
MOFCOM's requests for transaction data (in its orig inal questionnaire and deficiency letters) were 
predicated on the existence of government procurem ent transactions.  According to the United States, 
in the original questionnaire MOFCOM only request ed transaction data for "government procurement 
signed within the POI".  In the deficiency letter,  MOFCOM requested transaction data, but permitted 
the respondents to prove that the government did not purchase their products, or that other 
transactions were not subject to the alleged procurement programs. 
7.283  We do not read Questions 3 and 4 of MO FCOM's initial questionnaire as requiring the 
submission of transaction data for all domestic sales of all products during the POI, as alleged by 
China.  The request for transaction data in Question 3 is predicated on the existence of government 
procurement contracts.  While we accept China's ar gument that Question 3 relates to both GOES and 
non-GOES products ("not limited to the subject merchandise"), the request for transaction data 
contained in Question 3 is contingent on the existe nce of government procurement contracts.  In the 
absence of government procurement contracts,  no transaction data need be provided. 
7.284  Nor do we read Question 4 of the initial questionnaire as requiring the submission of 
transaction data for all domestic sale s of all products during the POI.  While the reference to "sales of 
all the products" could be understood to mean  both GOES and non-GOES (even though the "not 
                                                      
265 Final Determination [2010] No. 21 (10 April 2010) ("Final Determination"), Exhibit CHN-16, 
pp. 41-43. 
266 See, for example, China's response to Panel question 19, para. 73 ("Question 3 went to the issue of 
acknowledged utilization under the program.  The exporters  were to report all transactions during the POI 
involving government purchases, not limited to the subject merchandise, as well as information on the selling 
price for the same products in transactions outside the program.  Question 4 was broader.  It sought a simple tabulation of all domestic sales by product in the POI,  including quantity, value, and customer") (emphasis in 
the original).  WT/DS414/R 
 Page 69 
 
 
 limited to the subject merchandise" formulation of  Question 3 is not used), we do not understand 
Question 4 to require transaction data.  Rather, the instruction to provide "the quantity and [value] of 
each product sold to each client" could legitimatel y be understood by respondents as requiring only 
the submission of aggregate, rather than transaction-specific, data. 
7.285  That being said, we consider that the scope of  Questions 3 and 4 was effectively revised by 
the deficiency letters issued to respondents on 26 August 2009.  While we regret MOFCOM's failure 
to reformulate Questions 3 and 4 so as to remove  all uncertainty, on balance we consider that 
MOFCOM was entitled to consider that the overall e ffect of the deficiency letters was to put the 
respondents on notice that MOFCOM was in fact see king transaction data for all domestic sales of all 
products during the POI.  In this regard, we not e MOFCOM's explanation of its concern that the 
respondents' products ("not limited to the subject merchandise") could have been sold to the 
United States Government, public bodies or government  contractors, and that "the prices of these 
transactions" could have been above market.  Of gr eater significance is MOFCOM's instruction that 
"so long as your company's products were sold in  the domestic market, the transactions shall be 
reported".  In our view, MOFCOM was entitled to co nsider that it had informed respondents (through 
the deficiency letters) that, notwithstanding the mo re limited scope of Questions 3 and 4 of the 
original questionnaire, MOFCOM was actually seek ing transaction data for all domestic sales of all 
products during the POI.  To the extent responde nts still considered MOFCOM's request to be 
unclear, they could have contacted MOFCOM to seek further clarification.  There is no evidence that they did so.  Nor is there any evidence that r espondents sought additional time in which to comply 
with MOFCOM's request.  
7.286  As explained above, the United States accepts th at MOFCOM requested transaction data, but 
claims that the requests for transaction data  were conditional until issuance of MOFCOM's 
preliminary determination.  According to the Un ited States, the deficiency letter "permitted the 
respondents to prove that the government did not pu rchase their products, or that other transactions 
were not subject to the alleged procurement programs."
267  We disagree.  While the deficiency letter 
referred to the possibility of respondents demonstr ating that there were no government procurement 
transactions, or transactions involving government c ontractors under the Buy America Act, or that 
there was no pass through of subsidies on non-GOES pr oducts to GOES, the deficiency letter clearly 
stated that "[b]efore making these arguments, it was of the first importance that your company respond completely and accurately to the qu estions of the Investigating Authority".
268  MOFCOM was 
therefore entitled to consider that it had properly informed respondents that transaction data should in 
any event be provided, notwithstanding the possib ility of respondents presenting additional arguments 
regarding the question of indirect subsidization.269 
                                                      
267 United States' second written submission, para. 74. 
268 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 3. 
269 We also note that the United States' argument is  inconsistent with its assertion that MOFCOM's 
26 August 2009 deficiency letter "demanded that the respondents prove non-use of the alleged programs by 
providing detailed sales information fo r all products and all customers ov er the POI and the preceding 14 years 
in a revised submission" (United States' response to Panel question 23, para. 30, footnote omitted).  It is also 
inconsistent with the United States' statement that "[i]n the subsidy questionnaires issued to AK Steel and ATI, 
MOFCOM demanded volumes of information unrelated to the subject merchandise.  For example, MOFCOM demanded that AK Steel provide detailed transaction data fo r billions of dollars in transactions involving carbon 
steel, stainless steel, non-orie nted electrical steels, and tu bular products – products that are neither inputs for 
GOES nor substitutable for GOES" (United States' first written submission, para. 19, footnotes omitted).  
Furthermore, comments made by the United States during the underlying proceeding indicate that the 
United States understood MOFCOM to have requested transaction-specific data. Thus, in comments made on 
MOFCOM's preliminary determination, the United States asserted that MOFCOM had "unreasonably requested that the two respondent companies report all individual domestic sales of all products produced by the 
companies of whatever type" (Exhibit US -4, p. 3, emphasis in original).  The context of this statement makes it WT/DS414/R 
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 7.287  Having established that MOFCOM could properly  be considered to have requested POI 
transaction data for domestic sales of GOES and non -GOES products, we now consider the extent, if 
any, to which respondents complied with this request .  As explained above, ATI failed to provide any 
transaction data for any domestic sales of any prod ucts for any period.  In our view, MOFCOM was 
consequently entitled to treat ATI as non-cooperativ e for the purpose of Article 12.7 of the SCM 
Agreement. 
7.288  AK Steel provided transaction data for domestic sales of GOES during the POI.  However, 
AK Steel only submitted that data on 30 December  2009, in its comments on MOFCOM's preliminary 
determination.  AK Steel did not submit this data in response to the requests set forth in MOFCOM's 
deficiency letter.
270  Given AK Steel's failure to respond ade quately to MOFCOM's deficiency letter, 
and given AK Steel's failure to include any non- GOES data when it did finally provide transaction 
data in its comments on MOFCOM's preliminary dete rmination, we consider that MOFCOM was also 
entitled to treat AK Steel as non-cooperative for the purpose of Article 12.7 of the SCM Agreement. 
7.289  The United States asserts that AK Steel had actually made a timely submission of its GOES 
sales data, as it was submitted within the deadlin e provided for comments on MOFCOM's preliminary 
determination.  We understand the United States to be referring to Annex II, paragraph 3 of the Anti-
Dumping Agreement, which provides that "[a]ll info rmation which is … supplied in a timely fashion 
… should be taken into account when determinations are made".  In the light of the guidance provided 
by the Appellate Body in Mexico – Anti-Dumping Measures on Rice ,271 and given "the need for the 
consistent resolution of disputes arising fro m anti-dumping and countervailing duty measures",272 we 
agree that, as a matter of law, Annex II of the An ti-Dumping Agreement provides relevant context for 
our evaluation of the United States' claim under Artic le 12.7 of the SCM Agreement.  As a matter of 
fact, though, the United States' argument is only valid if one accepts that the relevant deadline was 
that concerning comments on the preliminary determin ation.  As explained above, this was not the 
case, as the request for transaction data had effectiv ely been made in MOFCOM's deficiency letters 
(and AK Steel failed to submit its GOES transaction da ta within the deadline for responses to those 
deficiency letters).  Accordingly, AK Steel's submission was not "timely". 
7.290  We note the additional United States argument that transaction data for sales of GOES was 
not "necessary" within the meaning of Article 12. 7 of the SCM Agreement because MOFCOM was 
only going to use this data as a tool to inform its verification strategy, and because this data had 
already been provided in the parallel anti-dumping proceeding.273  The issue of whether or not the 
requested data is "necessary" is important, as Article 12.7 of the SCM Agreement only concerns the 
provision of "necessary" information.  If respondents had failed to provide information that was not 
"necessary", the Article 12.7 facts available mechan ism would not have been available to MOFCOM. 
                                                                                                                                                                     
clear that the United States was referring to a request made before the preliminary determination was issued, 
thereby further undermining the United States' argumen t that MOFCOM's unqualified request for transaction 
data only became apparent in the preliminary determination. 
270  We have already explained that MOFCOM effectiv ely requested this data in its deficiency letter 
dated 26 August 2009, and that the deadline for responses to the deficiency letter was 9 September 2009 (see para. 7.285). 
271 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 295. 
272 Declaration on Dispute Settlement Pursuant to th e Agreement on Implementation of Article VI of 
the General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing 
Measures, adopted by the Trade Negotiations  Committee on 15 December 1993. 
273 United States' response to Panel question 52(iv).  Th e United States also contends that the aggregate 
quantity and value data requested in MOFCOM's Questi on 4 was not "necessary", si nce aggregate data would 
not have helped MOFCOM to identify allegedly anomalous transactions (United States' response to Panel 
question 52 (iii), para. 21).  As explained above, we co nsider that, through its deficiency letters, MOFCOM had 
effectively made it clear to respondents that it was no longer interested in merely aggregate sales data.  
Accordingly, the United Stat es' argument has no merit.  WT/DS414/R 
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 7.291  Regarding the use to which the requested data was to be put, we acknowledge that China has 
asserted that the requested data was need ed to allow planning for verification.274  However, China also 
contends that "it is wrong to consider the requested data as only a tool for verification".275  According 
to China, MOFCOM might have used the data to identify anomalous transactions, to identify needs 
for additional information, or to determine that a different approach should be used.  We accept 
China's argument.  Given MOFCOM's investigation of alleged indirect subs idization, we are not 
persuaded that MOFCOM would only have used the data to prepare for verification.  Furthermore, 
even if the requested data were onl y to be used to assist the author ity in planning for verification, 
verification forms an important part of the investig ative process.  Thus, even information that is only 
needed to prepare for verification might still be tr eated as "necessary" for the purpose of Article 12.7 
of the SCM Agreement. 
7.292  Nor are we persuaded by the United Stat es' argument that transaction data was not 
"necessary" for MOFCOM's countervail investiga tion because it was on MOFCOM's record in the 
parallel anti-dumping proceeding.  First, we reca ll that MOFCOM's deficiency letter to AK Steel 
specifically addressed this issue, informing AK Stee l that the consequence of AK Steel referring to 
Table 4-2 of its anti-dumping questionnaire respon se "was that essentially, the company failed to 
respond to relevant questions…"276  Second, the anti-dumping record only contained data for domestic 
sales of GOES.  It did not contain data for non-GOES transactions.  In the light of these 
considerations, we do not consider that MOFCOM was precluded from treating the requested data as 
"necessary" within the meaning of Article 12.7 of the SCM Agreement for the purpose of its 
countervailing duty investigation. 
7.293  Finally, we note that the United States has made a number of references to the "burden"277 
imposed by MOFCOM's requests for information,  particularly concerning MOFCOM's apparent 
request for data covering a total of 15 years.  Chin a submits that "this might constitute part of the 
exercise in determining whether the respondents acted  to the best of their ability within the meaning 
of Annex II, paragraph 5 of the AD Agreement , and the implications thereof under Annex II, 
paragraph 7.  But this is left to speculation.   The argument is not articulated anywhere".278  We agree 
that the United States has not explained how the alleged burden imposed on respondents might 
influence our evaluation of the United States' claim under Article 12.7 of the SCM Agreement.279  Nor 
has the United States explained how an overly burden some request for transaction data, if any were 
made, would have prevented responde nts from submitting any transaction data in a timely manner.    
Although the United States asserts that "[b]ecause of  the volumes of information requested, neither 
AK Steel nor ATI could fulfil all of the requests made in the CVD proceeding",280 there is no 
evidence that either respondent st ated that they were unable to provide the relevant transaction data 
within the deadline imposed by MOFCOM.  Rather, respondents complained that the requested data, 
concerning alleged indirect subs idization, was not relevant.281 
                                                      
274 China's response to Panel question 20, para. 86. 
275 China's response to Panel question 56, para. 30. 
276 AK Steel Deficiency Letter (26 August 2009), Exhibit CHN-19, p. 1. 
277 See, for example, United States' first written submission, para. 24. 
278 China's second written submission, para. 44. 
279 We recall that the United States has not filed any substantive claim concerning MOFCOM's reliance 
on the theory of indi rect subsidization. 
280 United States' first written submission, para. 20. 
281 See, for example, ATI's assertion that  MOFCOM's request for non-GOES data "is 
overly-burdensome, unreasonable, and w ill yield information that is completely irrelevant to the determination 
of whether GOES benefited from countervailable subsidies during the POI" (Excerpt from ATI Supplementary 
Response, Exhibit US-39, pp. 21-22).  WT/DS414/R 
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 7.294  For the above reasons, we conc lude that MOFCOM properly found that the respondents failed 
to cooperate with MOFCOM's requests to provide  transaction data for domestic sales of GOES and 
non-GOES products during the POI. 
(c) Did MOFCOM properly apply a 100% utilization ra te when determining the extent to which 
respondents' domestic sales of GOES and non-GOES products during the POI were 
subsidized? 
7.295  We recall that the United States' claim is based  on Article 12.7 of the SCM Agreement, which 
allows investigating authorities to use information or facts to fill gaps in the record resulting from 
non-cooperation on the part of interested parties.   
7.296  The facts available mechanism provided for in Article 12.7 of the SCM Agreement means 
that the work of an investigating authority shoul d not be frustrated or hampered by non-cooperation 
on the part of interested parties.  As stated by the Appellate Body, though, "[w]ith respect to the facts 
that an agency may use when faced with missi ng information, the agency's discretion is not 
unlimited".
282  The Appellate Body has also stated that, in  applying facts available, the investigating 
authority is expected to employ the best information, or facts, available.283  Implicit in the requirement 
that the best facts available be u sed is a more fundamental requirement that facts must be used.  In 
other words, even when applying facts available, an  investigating authority's determination must have 
a factual foundation.284  We emphasise this point because of the United States' argument that there 
was no factual support for MOFCOM's decisi on to apply a 100% utilization rate.   
7.297  In response to the United States argument, Ch ina suggests that MOFCOM had to choose a 
rate between 0 and 100%, but knew th at a rate of 0% would be ina ccurate, because of record evidence 
allegedly showing certain sales to the United Stat es Government.  China also suggests that MOFCOM 
considered the rate of 29% proposed by AK Steel to be inadequate, as AK Steel was presumed to be 
proposing a rate that was less than actual utili zation.  China suggests that the 100% rate was 
appropriate because the facts available announced in MOFCOM's preliminary determination "proved 
still to be the most reasonable 'facts available' for the final determination".285 
7.298  We begin our evaluation with the observation that  there is no justification for the application 
of a 100% utilization rate, or any indication of the factual foundation for this rate, in MOFCOM's 
final determination.  Nor has China referred to extr acts from the final determination in support of its 
arguments. 
7.299  However, China has directed the Panel to f acts available allegedly announced in MOFCOM's 
preliminary determination.  In response to a question from the Panel asking China to identify 
precisely which facts available were announced in th e preliminary determination, China referred the 
Panel to 11 pages of the preliminary determination.   China summarized the relevant facts available as: 
(i) statutes and regulations denying effective acces s to foreign-produced steel, (ii) evidence from 
applicants concerning the use of the respondents' products in construction, (iii) the refusal of 
respondents to provide requested information, and the reasonable inference to be drawn from that 
refusal to cooperate, and (iv) data indicating that  the United States composite price for steel was seven 
per cent higher than a World composite price.286  In reviewing the 11 pages identified by China, we 
                                                      
282 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 289. 
283 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 289. 
284 This basic point is acknowledged by China.  See China's first written submission, para. 187 
("Legally, a utilization figure not grounded in the record  evidence would not qualify as 'facts available' – it 
would not be a 'fact' in any sense of that term, and would be pure speculation by MOFCOM").   
285 China's second written submission, para. 75. 
286 In its comments on China's response to Panel question 55, the United States contends that 
MOFCOM improperly assumed that all sales concer ned carbon steel, and that all of the procurement  WT/DS414/R 
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 see no explanation by MOFCOM of how the factors identified by China were used by MOFCOM to 
support MOFCOM's determination that all of the respondents' domestic sales of all products were 
made to government entities or government cont ractors.  Instead, MOFCOM simply stated: 
The responding companies did not cooperate in the investigation as they did not 
provide relevant information and data. Th erefore, pursuant to Article 21 of the 
Regulations on Countervailing Measures , the Investigating Authority determined the 
benefits under this program based on the facts available. Under the circumstance that the Investigating Authority did not get an swers to the relevant questions of the 
questionnaire from the responding companies, it was deduced that all the products of 
the responding companies sold in domestic sales were sold to the government, public 
bodies or project contractors thereof, at the highest premium, i.e., at a price 25% 
higher than that of foreign products.
287 
7.300  There is no additional explanation by MOFCOM of the basis on which "it was deduced" that 
all sales were made to government entities or govern ment contractors.  MOFCOM did observe that it 
"cannot be ruled out that these products may have b een sold to the USG and public bodies, or to those 
project contractors who are subject to the Buy American Act ".288  However, a statement by MOFCOM 
that products "may" have been sold to govern ment entities, or government contractors, does not 
provide any factual basis for the conclusion that all domestic sales (of all products) were made to 
government entities or government contractors.  
7.301  The above extract from MOFCOM's preliminary de termination begins with a reference to the 
respondents' failure to cooperate.  MOFCOM's refe rence to the respondents'  failure to cooperate 
suggests that MOFCOM considered that the fact of  non-cooperation by itself was sufficient to justify 
the application of a 100% utiliza tion rate.  Indeed, China has stated that MOFCOM drew "reasonable 
inferences" from such non-cooperation.289  China also contends that "authorities may draw certain 
inferences – plainly adverse -- from [the] failure to cooperate, and the breadth of inferences available 
grows commensurate with the level of non-co-operation".290 
7.302  We disagree with China.  In our view, the use of facts available should be distinguished from 
the application of adverse inferences.  While  paragraph 7 of Annex II of the Anti-Dumping 
Agreement states that non-cooperation by an interest ed party "could lead to a result which is less 
favourable to the party than if the party did coopera te", we see no basis in Annex II for the drawing of 
                                                                                                                                                                     
programmes applied a 25% price premium.  We are pr esently considering the extent, if any, to which 
MOFCOM was entitled to determine that all domestic sales were made to government entities or government construction contractors.  We do not consider that the United States' claim under Article 12.7 of the SCM 
Agreement has been argued in a way that challenge s MOFCOM's finding of a 25% price premium, or 
MOFCOM's finding that all sales concerned carbon steel.  In its first written submission, the United States asserts that "to calculate the amount  of the alleged 'subsidy' to produ cers resulting from the procurement 
programs, MOFCOM assumed that AK Steel and ATI sold all of their output to the government under programs 
requiring the payment of a 25% price premium.  Had MO FCOM not entirely disregarde d the factual information 
actually supplied by the companies, it could not have assumed that the companies sold all of their output to the 
government" (United States' first written submission, para. 89, footnote omitted).  Thus, the focus of the 
United States is on MOFCOM's alleged disregard of factual information in finding that respondents sold all of 
their output to the government, rather than on MOFCOM's  finding that all such sales benefited from a 25% price 
premium. 
287 Preliminary Determination, Exhibit CHN-17, p. 37. 
288 Preliminary Determination, Exhibit CHN-17, p. 36.  A similar observation was made on p. 35: "the 
Investigating Authority considered that their products (not  limited to the product concerned) may be sold to the 
USG or public bodies, or relevant project contractors constrained by the "Buy American Act". 
289 China's response to Panel question 55, para. 28. 
290 China's first written submission, para. 163. WT/DS414/R 
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 adverse inferences.  In our view, the purpose of th e facts available mechanism is not to punish non-
cooperation by interested parties.  As explained by  the Appellate Body, the purpose of Article 12.7 of 
the SCM Agreement is rather to "ensure that the fa ilure of an interested party to provide necessary 
information does not hinder an agency's investigation" , in the sense that "the provision permits the use 
of facts on record solely for the purpose of replacing information that may be missing".
291  While non-
cooperation triggers the use of facts available, non- cooperation does not justify the drawing of adverse 
inferences.  Nor does non-cooperation justify de terminations that are devoid of any factual 
foundation.  Accordingly, MOFCOM was still requ ired to establish a factual foundation for its 
determination that the utilization rate of certain  subsidy programmes by the respondents was 100%.  
In the light of our review of both the preliminar y and final determination, we find that MOFCOM 
failed to do so.  
7.303  We further observe that, not only did MOFCOM fail to establish any factual basis for a 100% 
utilization rate, but MOFCOM's application of this rate was actually at odds with information on the 
record suggesting that a lesser rate of utilization should be applied.292 In considering such record 
information, we note that the 100% utilization rate  effectively means that the two respondents made 
all of their sales, for both GOES and non-GOES pr oducts, to government en tities or to government 
contractors operating under the relevant government  procurement programmes.  Concerning sales of 
GOES to government entities, we note that the reco rd included statements by the United States 
Government to the effect that it had not purchased GOES from either of the respondents.  In addition, 
both respondents provided customer lists indicating that they had not sold any GOES to government 
entities. 
7.304  Pursuant to MOFCOM's theory of indirect subsidization,293 the absence of sales to 
government entities leaves open the possibility that respondents had sold all of their GOES to government contractors.  Given the nature of the government procurement programmes at issue, 
though, this would have meant that all sales were made to government construction  contractors.
294  In 
this regard, the United States had explained to MO FCOM that "GOES, which is primarily used in 
transformers, has no direct appli cation in construction projects".295  ATI had similarly explained to 
MOFCOM that GOES is used in power transformers, and that nearly all of its GOES was "sold 
directly to end-use customers".296  Indeed, MOFCOM itself found that " the main applications [of 
GOES] include [a] variety of industries such as  transformers, rectifiers, reactors, and large 
electric motors etc. industries".297  Given information in MOFCOM's record attesting to the limited 
application of GOES, there would seem to be extrem ely little likelihood that of all of the respondents' 
                                                      
291 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 293. 
292 To be clear, we do not find that MOFCOM was required by Annex II(5) of the Anti-Dumping 
Agreement to use all of the informati on provided by the respondents.  This  is because Annex II(5) only applies 
in respect of interested parties that have "acted to th e best of [their] ability".  In failing to cooperate with 
MOFCOM's requests for data, the respondents did not act to the best of their ability.  However, MOFCOM was 
still required to base its determ ination on "facts" available. 
293 We recall that the United States has not filed any substantive claim concerning MOFCOM's reliance 
on the theory of indi rect subsidization. 
294 The fact that MOFCOM's investigation concerned government construction contractors, rather than 
contractors generally, is evident from MOFCOM's final determination (see, for example, Final Determination, 
Exhibit CHN-16, p. 39: "even if the USG had not purchased the product concerned or other steel product through supply contracts, it failed to  prove that this prog ram had not been used because the government 
purchase of goods included not only the supply contract but also the construction contract. The USG did not 
prove that the contractor had not purchased American steel in the construction contract."). 
295 United States Questionnaire Response, 17 August 2009, Exhibit US-3, p. 65. 
296 Excerpt from ATI Supplementary Response, Exhibit US-39, pp. 21-22 (quoting from ATI's 2008 
financial statements, which were submitted to MOFCOM as Exhibit I to ATI's response to the Enterprise 
Questionnaire on GOES Anti-Subsidy Investigation, 10 August 2009). 
297 Final Determination, Exhibit CHN-16, p. 2.  WT/DS414/R 
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 sales of GOES would have been made to government  contractors operating in the construction sector.  
Based on the information in the record, therefore,  and in the absence of further explanation by 
MOFCOM, we do not consider that an objective and impartial investigating authority could properly 
have found that all of the respondents' sales of GOES were made to government entities or 
government construction contractors. 
7.305  We consider that MOFCOM's determination is particularly flawed in its treatment of AK 
Steel.  AK Steel had submitted lists identifying all of its GOES and non-GOES customers.  These lists indicated that AK Steel did not sell any GOES or non-GOES products to government entities.  
Regarding the possibility of all of AK Steel's sales being made to government construction contractors 
(pursuant to MOFCOM's uncontested theory of indi rect subsidization), MOFCOM's record contained 
AK Steel's 2008 10-K report, which indicates that 32% of AK Steel's net sales in 2008 were attributed 
to the Automotive segment, 29% to the Infrastructure and Manufacturing segment, and 39% to Distributors and Converters.  AK Steel asserted that, to  the extent that any of its products could have 
made their way through commerce to government construction contractors, these sales would be 
included in the "Infrastructure and Manufacturing" segment.  According to AK Steel, its 2008 10-K 
report indicates that sales to government construction contractors could not have accounted for more 
than 29% of its business. 
7.306  According to China, MOFCOM declined to rely on AK Steel's 2008 10-K report for a number 
of reasons.
298  First, China asserts that MOFCOM had no factual support for the assertion that all 
relevant contractor sales would have been booked to  the Infrastructure and Manufacturing sector.  In 
this regard, we note MOFCOM's statement that "it cannot be ascertained that the sales to distributors 
and resellers were not related to government purchase and cons truction contractor's purchase".299  
Upon examining AK Steel's 2008 10-K report, we find that immediately below the list of the relevant segments is a statement that "[t]he Company histor ically has referred to these markets by somewhat 
different names…More specifically, the market previously described as ‘Appliance, Industrial 
Machinery and Equipment, and Construction ' now is referred to as Infrastructure and 
Manufacturing".
300  In our view, this explanation would have prevented - at least without further 
justification - an objective and impartial investig ating authority from rejecting AK Steel's assertion 
that sales to government construction contractors w ould have been booked to the Infrastructure and 
Manufacturing segment.301 
7.307  Second, China asserts that AK Steel's 2008 10-K repo rt did not relate specifically to the POI.  
In our view, though, the factual record before an investigating authority that has found that 
respondents failed to provide necessary information w ill necessarily be compromised to some extent, 
precisely because the necessary inform ation initially requested by the investigating authority has not 
been provided.  However, the fact that information in the record is not perfect does not mean that the 
investigating authority is entitled to ignore it.  AK Steel's 10-K report concerned the calendar year 
2008, which coincided with three-quarters of the POI.   In addition, the 10-K report also included data 
concerning the attribution of AK Steel's net sales in 2006 and 2007.  According to this data, 29% and 
                                                      
298 China's first written submission, paras 181-184. 
299 Final Determination, Exhibit CHN-16, p. 45. 
300 Exhibit I.II.ii to the AK Steel Revised Original Questionnaire Response (AK Steel's 10-K report, 
2008), Exhibit US-9, p. 2, (emphasis added). 
301 Furthermore, although MOFCOM refers to the possibility of the relevant sales being booked to the 
"Distributors and Converters" segment, MOFCOM does  not address the possibility of sales to government 
construction contractors being booked to the "Automotive" segment.  While China argues that "[a] customer in the 'automobile manufacturing' segment might well have produced items that were sold the government or were 
used in some construction project", (China's first wr itten submission, para. 181), China does not identify any 
part of MOFCOM's Final Determination exploring this  possibility, or the likelihood thereof.  This would 
suggest that MOFCOM accepted that AK Steel's sales to  government construction co ntractors would not have 
been booked to the "Automotive" segment. WT/DS414/R 
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 26% of net sales were attributed to Infrastructure and Manufacturing in 2006 and 2007 respectively.  
This data suggests stability in the proportion of AK Steel 's net sales attributed to the Infrastructure and 
Manufacturing segment.  In these circumstances, we do not consider that an objective and impartial 
investigating authority could properly have di smissed outright AK Steel's 2008 10-K report simply 
because its reporting period did not coincide exactly with the POI. 
7.308  Third, China suggests that, because AK Steel's 10K report came only "on the very eve of the 
verification, MOFCOM was unable to fully eval uate and test this alternative during the 
verification".
302  In fact, AK Steel's 10K report was attached  to the application, and had therefore been 
in MOFCOM's possession throughout the investigation.303   
7.309  In the light of the above considerations, we  consider that an objective and impartial 
investigating authority would have attached releva nce to AK Steel's 10-K report when determining 
the applicable utilization rate.  While we do not conclude that the above  considerations should 
necessarily have led MOFCOM to apply a utilization rate of 29%,304 at a minimum a proper 
consideration of AK Steel's 10-K report should have  caused MOFCOM to apply a utilization rate of 
less than 100%. 
7.310  For the above reasons, we find that there is no factual basis for MOFCOM's determination to 
apply a 100% utilization rate.  We also find that, in making this determination, MOFCOM ignored 
record information and evidence indicating that a u tilization rate of less than 100% should have been 
applied. 
(d) Conclusion 
7.311  We reject the United States' claim that MOFCOM 's decision to resort to facts available is 
inconsistent with Article 12.7 of the SCM Agreem ent.  However, we uphold the United States' claim 
that MOFCOM's application of a 100% utilization ra te is inconsistent with Article 12.7 of the SCM 
Agreement. 
E. WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 12.2.2  OF THE ANTI -DUMPING 
AGREEMENT BECAUSE IT DID NOT DISCLOSE THE DATA AND CALCULATIONS USED TO 
ESTABLISH THE DUMPING MARGINS  
1. Provision at issue 
7.312  Article 12.2.2 of the Anti-Dumping Agreement provides: 
 
A public notice of conclusion or suspension of an investigation in the case of an affirmative determination providing for th e imposition of a definitive duty or the 
acceptance of a price undertaking shall contai n, or otherwise make available through 
a separate report, all relevant information on the matters of fact and law and reasons 
which have led to the imposition of final measures or the acceptance of a price undertaking, due regard being paid to the requirement for the protection of 
                                                      
302 China's first written submission, para. 183. 
303 Furthermore, we query what sort of analysis would have been required for an authority to prepare 
itself to verify the contents of the 10-K report.  While the requisite review might take a considerable amount of 
time during  the verification visit, we fail to see what sort of time-consuming analysis would be needed before  
verification. 
304 The United States' claim is not limited to this sp ecific issue.  The United States' claim concerns the 
broader question of whether or not MOFCOM was entitled to apply a 100% utilization rate.  It is not directly 
concerned with whether or not MOFCOM should,  instead, have applied a 29% utilization rate.  WT/DS414/R 
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 confidential information.  In particular, the notice or report shall contain the 
information described in subparagraph 2.1,  as well as the reasons for the acceptance 
or rejection of relevant arguments or clai ms made by the exporters and importers, and 
the basis for any decision made under subparagraph 10.2 of Article 6.   
7.313  Article 12.2.1 of the Anti-Dumping Agreement pr ovides, relevantly, that a public notice or 
separate report "shall, due regard being paid to the requirement for the protection of confidential 
information, contain…(iii) the margins of dumping established and a full explanation of the reasons 
for the methodology used in the establishment and comparison of the export price and the normal value under Article 2". 
2. Factual Background 
7.314  Following the issuance of the preliminary dete rmination and the final disclosure documents, 
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing 
duty investigations.   
3. Arguments of the United States 
7.315  The United States notes MOFCOM included only bare summaries of its methodologies, 
adjustments and calculations in its preliminary de termination, final disclosure document and final 
determination.  The United States argues that this  is inconsistent with Article 12.2.2 of the Anti-
Dumping Agreement.
305 
7.316  According to the United States, the calculations  employed by an investigating authority to 
determine dumping margins, and the data underlying the calculations, constitute "relevant information 
on matters of fact and law and reas ons which have led to the imposition of final measures" within the 
meaning of Article 12.2.2.  Given that Article 12.2. 2 requires that "all" such relevant information be 
made available, it follows that Article 12.2.2 requi res an investigating authority to release to the 
affected interested parties its final calculations, wh ich are the mathematical basis for arriving at the 
dumping margins.306 
7.317  In response to China's argument that Article  12.2 pertains only to "public notice", the 
United States notes that Article 12.2.2 mentions the possibility of a "separate report" in addition to a 
"public notice".  The "separate report" is a vehicl e for making available all relevant information on 
matters of fact and law and it need not  be public.  Further, Article 12.2.2 mandates that "due regard 
be…paid to the requirement for the protection of confidential information".307  Therefore, the 
United States' position is that China cannot rely on th e fact that the calculations included confidential 
data as an excuse for not making them available.  The United States does not suggest that MOFCOM 
was obliged to disclose confidential information to  parties other than to those parties that the 
information already belonged.  Rather, a res pondent company is entitled to see the calculations 
performed to arrive at the dumping margin applied to it.308  In this regard, the United States argues 
that footnote 23 of the Anti-Dumping Agreement shoul d be read in the context of the requirement in 
Article 12.2.2 to pay "due regard…to the…protection of confidential information".  The United States 
argues that the requirement under footnote 23 to make  the "separate report" available to the public 
cannot outweigh this requirement.309 
                                                      
305 United States' first written submission, para. 113. 
306 United States' first written submission, para. 112. 
307 United States' second written submission, para. 106. 
308 United States' first written submission, para. 115. 
309 United States' response to Panel question 28,  paras. 45-46. WT/DS414/R 
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 7.318  In response to China's argument that if there is any obligation to disclose the final dumping 
calculations it is found under Article 6.9 of the Anti-Dumping Agreement, the United States argues 
that Article 6.9 pertains to the disclosure of essential facts before the final determination is made.  
However, the final dumping calculations, to which the Unite d States' claim relates, cannot be 
disclosed before the final determination.
310 
7.319  Turning to the facts of this case, the United St ates argues that the preliminary determination, 
final disclosure and final determination contain only MOFCOM's vague reas oning and description of 
its methodologies for determining and adjusting th e export price and normal value.  They do not 
include the actual data used in the dumping ma rgin calculations or the calculations themselves. 
MOFCOM should at least have made available (i) adjustments to the starting price to account for 
differences in the circumstances of sale; (ii) revisions  to the data reported by the respondent; and (iii) 
the calculation of constructed normal value.311 
7.320  In response to China's argument that the two e xporters were able to replicate the dumping 
calculations on their own, the United States subm its that MOFCOM did not disclose sufficient 
information to allow this.  In any event, even if the exporters were able to replicate the calculations, 
this would not relieve China of its obligation to  disclose the calculations performed by MOFCOM.  
Without access to the actual calculations, the exporte rs could not check MOFCOM's methodology or 
mathematics for errors.  The United States argues that the ability to check for errors is crucial, in the 
event that an interested party c hooses to exercise its rights to judici al review under Article 13 of the 
Anti-Dumping Agreement, or in the even t a Member seeks WTO dispute settlement.312 
4. Arguments of China 
7.321  With respect to the United States' argument th at MOFCOM was obliged under Article 12.2.2 
of the Anti-Dumping Agreement to release the act ual calculations performed in determining the 
margins of dumping, China contends that the Un ited States has misinterpreted Article 12.2.2.  
According to China, the United St ates' claim is based on bald assertion and is not supported by the 
plain meaning of Article 12.2.2 or any WTO jurisprudence.313 
7.322  Regarding the text of Article 12.2.2 of the Anti-Dumping Agreement, China notes that there 
is no reference in the Article to the "calculation"  of margins of dumping.  The only reference to 
margins is in Article 12.2.1(iii), which is incorporat ed into Article 12.2.2, a nd which requires that the 
"margins of dumping established", rather than the calcu lations themselves, be disclosed in the relevant 
notice.314  Further, the references in Article 12.2.2 to "relevant information on matters of fact and law 
and reasons which have led to the imposition of final measures" and to  "the reasons for the acceptance 
or rejection of relevant arguments or claims" do not articulate any requirement that authorities 
disclose the actual calculations of the margins of dumpi ng.  Finally, there is nothing in the text of the 
provision to suggest that, by virtue of the disclos ures under Article 12.2.2, a respondent should be in a 
position to replicate or check the calculations of the margins of dumping.315 
7.323  According to China, reading Article 12.2.2 of  the Anti-Dumping Agreement in its context 
does not support the United States' position.  The title of Article 12, "Public Notice and Explanation 
of Determinations", indicates that the Article impos es a requirement upon investigating authorities to 
                                                      
310 United States' second written submission, para. 105 and United States' opening statement at the first 
meeting of the Panel, para. 44. 
311 United States' first written submission, para. 113. 
312 United States' second written submission, paras. 107-110; United States' response to Panel 
question 27, paras. 40-44 and United States' opening statement at the first meeting of the Panel, paras. 45-47. 
313 China's second written submission, para. 35. 
314 China's first written submission, para. 203. 
315 China's first written submission, paras. 204-206.  WT/DS414/R 
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 explain their determinations.  China argues that an explanation does not require a repetition of all 
facts, but rather a sufficient description of the fact s to permit an understanding of the causes, context 
and consequences of those facts.316  Further, China contends the requirement in Article 12.2 to 
disclose those findings and conclusions considered "material" by the investigating authority indicates that the methodology, the source of the data and th e final margins should be disclosed, as these are the 
"material" findings in the contex t of determining margins of dumping.  According to China, this 
interpretation is also supported by the requirement in Articles 12.2 and 12.2.1 to provide "sufficient" 
rather than full detail in the explanations.  Finall y, China notes that Article 12.2.1(iii) requires that 
authorities provide a "full explanation of the reasons for the methodology used", which is quite distinct from requiring the calculations of the margins of dumping.
317 
7.324  With respect to the object and purpose of Article 12.2.2, China argues that this is to provide 
interested parties with notice of determinations  made by authorities and an explanation of the 
determinations.  The context suggests that this  notice should consist of the reasons for the 
determination, the methodology used in arriving at  the determination and the results actually reached, 
namely the margins of dumping.  China contrasts this  with the object and purpose of Article 6.9 of the 
Anti-Dumping Agreement, which is to provide the " essential facts" to enable interested parties "to 
defend their interests".  China suggests that pe rhaps the United States' complaint regarding the 
disclosure of the actual calculations may more properl y lie under Article 6.9.  However, even if such 
an Article 6.9 claim were properly before the Panel,  China is not convinced that Article 6.9 requires 
the level of disclosure sought by the United States.318 
7.325  Although China's principal argument is that Article 12.2.2 of the Anti-Dumping Agreement 
does not include a requirement to disclose the calcu lations for the margins of dumping used by an 
investigating authority, China argues that, in any event, the information disclosed by MOFCOM was 
sufficient to allow the respondents to replicate the authority's calculations.319 
5. Arguments of third parties 
(a) European Union 
7.326  In the European Union's view, the calculations and data underlying the dumping margins are 
"essential facts under consideration" that are require d to be disclosed under Article 6.9 of the Anti-
Dumping Agreement.  However, if after the disclos ure under Article 6.9, which occurs prior to the 
final determination, there is any revision to th e data or calculations, this constitutes relevant 
information on matters of fact leading to the impos ition of final measures.  Consequently, this should 
be set out and explained in the public notice or separate report under Article 12.2.2 of the Anti-
Dumping Agreement.  The European Union notes that Article 12.2.2 requires due regard to be paid to 
the protection of confidential information.  Conseque ntly, to the extent the calculations and data are 
confidential information, their disclosure would be made through a "separate report".320 
                                                      
316 China's first written submission, paras. 207-209 a nd China's opening statement at the first meeting 
of the Panel, para. 33. 
317 China's first written submission, paras. 210-214. 
318 China's first written submission, paras. 215-218. 
319 China's first written submission, paras. 222-224 a nd China's opening statement at the first meeting 
of the Panel, para. 34. 
320 European Union's third party response to Panel questions 3 and 4. WT/DS414/R 
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 (b) India 
7.327  India submits that if authorities have provided a sufficiently detailed explanation on how they 
established the margin of dumping, it may not be n ecessary to include the actual data in the public 
notice under Article 12.2.2, keeping in mind the n eed for protection of confidential information.
321 
(c) Japan 
7.328  Japan contends that Article 12.2.2 of the An ti-Dumping Agreement requires an explanation 
that includes the export price and normal value, th e comparison of these figures and the calculation of 
dumping.322  In its third party statement, Japan submits that the disclosure under Article 12 of the 
entire dumping margin calculation is critical for th e exporter to present an effective defence, because 
even a tiny mistake could result in a gr ave distortion of the margin calculation.323  However, in 
response to a Panel question, Japan notes that anti- dumping investigations involve a large volume of 
data and it would be impractical to require the aut horities to cite every individual piece of information 
in the public notice or separate report.  Neverthele ss, the public notice or separate report must include 
all "relevant information", which at least includes the identity of the data and the margin calculation 
methodology.  The information disclosed must be su ch as to allow an exporter to replicate the entire 
dumping margin calculation based on th e raw data the exporter submitted.324 
7.329  Japan notes that Article 12.2.2 requires an author ity to satisfy two requirements at the same 
time, namely the statement of "all relevant information" and the protection of confidential 
information.  The provision does not provide guidance regarding how the authorities should satisfy both obligations.  However, it is clear that the requi rement to protect confidential information does not 
absolve the authority of the responsibility  to provide all relevant information.
325 
6. Evaluation by the Panel 
7.330  The United States complains that MOFCOM did not disclose the data and calculations it used 
to arrive at the dumping margins for AK Steel and ATI and that this is inconsis tent with Article 12.2.2 
of the Anti-Dumping Agreement.  Therefore, the issue for the Panel to determine is whether an 
investigating authority is required to include  such calculations and data in the "public 
notice…or…separate report" under Article 12.2.2 of the Anti-Dumping Agreement. 
7.331  The information that MOFCOM did include in  the final determination consists of a 
description of the methodology used to establish and adjust the normal value and export prices for the 
two respondent companies.  It also includes th e dumping margins and a brief description of the 
methodology used to calculate these margins.326 
7.332  The text of Article 12.2.2 of the Anti-Dumping Agreement provides that a "public 
notice…or…separate report" shall contain "all releva nt information on the matters of fact and law 
which have led to the imposition of final measures… In particular, the notice or report shall contain 
the information described in subparagraph 2.1, as well  as the reasons for the acceptance or rejection of 
relevant arguments or claims".  Therefore, the lis t in Article 12.2.1 of the Anti-Dumping Agreement is 
incorporated into the information on matters of fact and law that must be included in the public notice 
or separate report under Article 12.2.2.  We note that  Article 12.2.1(iii) provides that "the margins of 
                                                      
321 India's third party statement, para. 5.3. 
322 Japan's third party submission, para. 30. 
323 Japan's third party statement, para. 3. 
324 Japan's response to Panel question 6, para. 5. 
325 Japan's response to Panel question 6, paras. 7-8. 
326 Final Determination, Exhibit US-28, pp. 21-27.   WT/DS414/R 
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 dumping established and a full explanation of the reasons for the methodology used in the 
establishment and comparison of the export price a nd the normal value" shall be included in the 
public notice or separate report.   
7.333  Although the requirement to give public notice of "all relevant informa tion on matters of fact 
and law" may appear wide enough to encompass th e data and calculations used to determine the 
dumping margins, this requirement must be read in th e light of the more partic ular obligation spelt out 
in Article 12.2.1(iii), which is incorporated by referen ce into Article 12.2.2.  In the Panel's view, it is 
significant that the text in Article 12.2.1(iii) set s out in detail the information regarding dumping 
margins that must be included in a public notice or separate report, but omits any reference to the 
calculations or data. While Article 12.2.2 provides th at its disclosure obligations apply "in particular" 
to the factors in Article 12.2.1(iii) and to the reas ons for acceptance or rejection of relevant arguments 
or claims, we acknowledge that this is not an exha ustive description of the "relevant information" that 
may be included in a public notice or separate re port under Article 12.2.2.  Nevertheless, some 
relevance must be attributed to the fact that the drafters of Article 12.2 specified with some 
particularity a list of the information required in the public notice or separate report and chose not to 
list the data and calculations used to arrive at a dumping margin, even though, on the United States' 
argument, this is "relevant information" that s hould be included in every public notice or separate 
report issued at the conclusion of an anti-dumping investigation.  Therefore, on the text of Article 12.2.2, which by cross-reference includes the text of Article 12.2.1, it is difficult to conclude 
that there is an obligation to disclose the calculations and data underlying a dumping margin. 
7.334  We find support for this position when read ing Article 12.2.2 of the Anti-Dumping 
Agreement in its context.  The title to Article 12, "Public Notice and Explanati ons of Determinations", 
indicates that Article 12 requires public  notification.  Although Article 12.2.2 also provides for 
disclosure through a "separate report", footnote 23 to the Anti-Dumping Agreem ent states that "where 
authorities provide information and explanation under the provisions of this Article in a separate 
report, they shall ensure that such report is readily  available to the public".  Article 12.2.3 of the Anti-
Dumping Agreement also provides relevant context.  It indicates that only the "non-confidential part" 
of an undertaking need be disclosed in the public  notice or separate report following the acceptance of 
an undertaking.  This also provides an indication that Article 12 of the Anti-Dumping Agreement is concerned with public disclosures and that the ob ligations it contains do not extend to confidential 
information.  The Panel notes that the data underlyi ng a dumping margin calculation is confidential to 
the respondent providing it.  Therefore, it is not su rprising that an obligation to disclose such data 
cannot be found in the text of Article 12.2.2,  which requires notification to the public.   
7.335  In this regard, when confidential informati on does fall within the notification obligations 
under Article 12.2.2, an investigating authority is under dual obligations.  The investigating authority 
must treat the information confidentially, in accordance with Article 6.5 of the Anti-Dumping 
Agreement, but must also disclose the "relevan t information on matters of fact and law" under 
Article 12.2.2, subject to its requirement to pa y due regard to the protection of confidential 
information.  In the Panel's view, the way in whic h an investigating authority should meet these dual 
obligations is to include only a non-confidential su mmary of relevant confidential information in the 
public notice or separate report (which must also be  public).  This would meet the requirements of 
Article 6.5 and also disclose the relevant informati on under Article 12.2.2, while paying due regard to 
the protection of confidential information.  This method of protecting confidential information finds 
expression elsewhere in the Anti-Dumping Agreement.   For instance, under Article 6.5.1, when an 
interested party submits confidential information to an investigating authority, a non-confidential 
summary of such information must also be furnishe d to provide interested parties with a reasonable 
understanding of the information. 
7.336  In the case of confidential data and calculations underlying a dumping margin, we cannot find 
within the text of Article 12.2.2 an obligation to include this information in the relevant public notice WT/DS414/R 
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 or separate report.  In our view, a non-confidential su mmary of such information is provided for in the 
disclosure obligations under Article 12.2.1(iii).  In particular, disclosure of the dumping margins and 
an explanation of the methodology used to arrive at the margins seems to provide a non-confidential 
summary of the relevant information regarding the margins and their calculation.  There is no additional obligation to disclose the actual data a nd calculations and to do so  would be inconsistent 
with Article 6.5 of the Anti-Dumping Agreement.   
7.337  Although the United States argues that the "separ ate report" can be provided on a confidential 
basis to each respondent, and in this way th e data and calculations can be disclosed under 
Article 12.2.2 of the Anti-Dumping Agreement, it is di fficult to reconcile this with footnote 23, which 
requires the separate reports to be "readily ava ilable to the public".  Therefore, given the 
confidentiality of the data and calculations at issu e, we cannot conclude that MOFCOM was required 
to include this information in the public notice or the public separate report.  We find support for this 
conclusion in the reasoning of a number of other pa nels. These panels concl uded that a failure to 
disclose confidential data could not be a violation of Article 12.2.2.
327 
7.338  According to the United States, the data and cal culations used to arrive at dumping margins 
must be included in the public notice or separate re port to allow respondents to check the calculations 
used by an investigating authority.  Although we do not disagree with the United States that the disclosure of the data and calculations may be very  useful for respondents in this regard, we cannot 
find this obligation within the terms of Article 12.2.2.  While Article 6.9 of the Anti-Dumping 
Agreement expressly provides that the disclosure it re quires allows "parties to defend their interests", 
a similar statement cannot be found within Article 12 .  Rather, Article 12.2.2 provides the public with 
notice of affirmative determinations and interested  parties with a public explanation, in sufficient 
detail, of the facts and reasons underlying such de terminations.  In the light of the text of 
Article 12.2.2, and the context in which it is found,  there is no basis to conclude that it requires 
inclusion of the data and calcul ations underlying the dumping margin in the public notice or separate 
report. 
7.339  Therefore, the Panel concludes that China did not  act inconsistently with Article 12.2.2 of the 
Anti-Dumping Agreement in failing to include in th e final determination the data and calculations 
upon which its dumping margin calculations were based. 
F. 
WHETHER CHINA ACTED INC ONSISTENTLY WITH ARTICLE 22.3  OF THE SCM AGREEMENT 
BECAUSE IT FAILED TO PROVIDE SUFFICIENT INFORMATION ON THE FINDINGS AND CONCLUSIONS OF LAW IT CONSIDERED MA TERIAL WITH RESPECT TO THE BENEFIT 
DETERMINATION UNDER THE GOVERNMENT PROCUREMENT STATUTES
 
1. Provision at issue 
7.340  Articles 22.3 of the SCM Agreement provides, relevantly: 
Public notice shall be given of any prel iminary or final determination, whether 
affirmative or negative…Each such notice sha ll set forth, or otherwise make available 
through a separate report, in sufficient deta il the findings and conclusions reached on 
all issues of fact and law considered material by the investigating authorities.   
                                                      
327 Panel Reports, EC – Tube or Pipe Fittings, paras. 7.427 and 7.443; Korea – Certain Paper , 
paras. 7.208, 7.210, 7.314 and 7.316.  WT/DS414/R 
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 2. Factual Background 
7.341  Following the issuance of the preliminary dete rmination and the final disclosure documents, 
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing 
duty investigations.   
3. Arguments of the United States 
7.342  According to the United States, China acted in consistently with Article 22.3 of the SCM 
Agreement because MOFCOM did not provide any rati onale for its conclusion in the preliminary and 
final determinations that compe titive bidding under United States pr ocurement laws does not result in 
market prices.   
7.343  The United States notes that Article 22.3 of th e SCM Agreement requires an investigating 
authority to "set forth…in sufficient detail the fi ndings and conclusions reached on all issues of fact 
and law considered material by the investigating au thorities".  The United States interprets this as an 
obligation to explain findings or conclusions that are "important", "essential" or "relevant" in the 
public notice of a preliminary or fi nal countervailing dut y determination.328  In response to a Panel 
question, the United States confirms that the focu s of Article 22.3 is on the findings and conclusions 
actually reached by an investigating authority.329 
7.344  According to the United States, in its prelimin ary and final determinations, MOFCOM stated 
that "although there is a competitive bidding pr ocess" under the Buy American Act, the scope of 
"participating products" is restricted and therefor e the competitive bidding process does not reflect 
full market competition.  Further, with some ex ception, the competition is only among United States 
steel producers and therefore the price obtained does not reflect true market conditions.330  However, 
at various times throughout the investigation, the United States argued before MOFCOM that the 
prices generated as a result of competitive bidding under the federal procurem ent laws reflect market 
conditions. 331 
7.345  The United States complains that MOFCOM did not provide a sufficient rationale for its 
conclusion that the competitive bidding process under the procurement laws does not result in market 
prices.  Further, MOFCOM did not explain why it disregarded the arguments presented by the 
United States.  According to the United Stat es, MOFCOM's reasoning does not explain its benefit  
determination.  MOFCOM merely  concluded that the United Stat es price was higher than foreign 
prices and that some foreign producers were ex cluded from the competitive bidding process, leading 
to a distorted market.  However, under Article 14( d) of the SCM Agreement, authorities are to use 
market prices in the country of purchase unless they establish that prices are so distorted that the 
market price is unusable.  According to the Unite d States, MOFCOM's flawed logic appears to be 
based on the assumption that any government involv ement in a market leads to distortion and 
unusable benchmark prices.332  Without an adequate explanation, it is impossible to identify how 
MOFCOM arrived at this conclusion.  An adequa te explanation would have discussed how the level 
of government involvement distorted the market to  such an extent that a price derived from a 
competitive bidding process was unusable.333  The United States argues that merely stating vague and 
conclusory assertions is insufficient.334 
                                                      
328 United States' first written submission, para. 117. 
329 United States' response to Panel question 65, para. 45. 
330 United States' first written submission, para. 119. 
331 United States' first written submission, para. 120. 
332 United States' second written submission, paras. 115-117. 
333 United States' response to Panel question 68, para. 51. 
334 United States' comments on China's response to Panel question 65, para. 48. WT/DS414/R 
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 7.346  Therefore, the United States claims that China acted inconsistently with Article 22.3 of the 
SCM Agreement because it did not explain how it found that market prices resulting from the competitive bidding process were distorted.
335   
4. Arguments of China 
7.347  China rejects the United States' argument that it acted inconsistently w ith Article 22.3 of the 
SCM Agreement.  According to China, MOFCOM provided sufficient detail on why the government 
procurement programmes at issue led to a benefit, in  the form of above-market rate payments for the 
provision of goods, to ATI and AK Steel.  Furthe r, MOFCOM addressed the arguments advanced by 
the respondents during the investigation.   
7.348  With respect to the preliminary determination,  China disputes the United States' argument that 
MOFCOM failed to explain why, if a foreign producer is excluded from a competitive bidding 
process, the resulting price is not a market price.   The preliminary determination explains that 
United States producers are afforded a 25% price cu shion over competing foreign prices and that in 
certain states, foreign participation is prohibited.  On the basis of these facts, MOFCOM reached the 
conclusion in the preliminary determination that the resulting price would not reflect a competitive 
market price.336 
7.349  In relation to the final determination, China re jects the United States' contention that it merely 
repeats the findings in the preliminary determina tion and did not address the arguments made by the 
respondents.  According to China, the final de termination includes a factual finding by MOFCOM 
that the import volume excluded from the market was approximately 15% of United States total steel 
consumption.  MOFCOM also quantified the pri ce difference between North American and non-North 
American prices, based upon a submission from AK Steel.  Finally, MOFCOM presented evidence 
from verification noting the extremely limited use of foreign products within Buy American 
projects.337  MOFCOM based its conclusion, namely th at the resulting bidding price could not be 
competitive, on these facts.  China argues that this was an expansion upon the detail in the preliminary 
determination for the purpose of responding to the arguments advanced by AK Steel and ATI.338 
7.350  China agrees with the United States that the obligation under Article 22.3 refers to the 
findings actually reached by an investigating authority , rather than to an objective standard of what 
the authorities should have found.339  According to China, Article 22.3 of the SCM Agreement 
contains obligations of a procedural nature and that it is not appropriate for the United States to 
attempt to bootstrap a substantive claim relating to  Article 14 of the SCM Ag reement to its challenge 
under Article 22.3.340   
5. Arguments of third parties 
(a) India 
7.351  India notes that MOFCOM was obliged to provi de sufficient details regarding how it found 
that the competitive bidding price w as not an acceptable market benchmark.341 
                                                      
335 United States' first written submission, paras. 118 and 121. 
336 China's first written submission, paras. 229-231. 
337 China's opening statemen t at the first meeting of the Panel, para. 41. 
338 China's first written submission, paras. 223-234. 
339 China's response to Panel question 65, para. 54. 
340 China's opening statement at the second meeting of the Panel, paras. 39-40. 
341 India's third party statement, para. 7.1.  WT/DS414/R 
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 (b) Japan 
7.352  Japan contends that the public notice must explain how the evidence on the record supports 
the findings of the market price or benchmark.342   
(c) Korea 
7.353  Korea argues that the sufficiency of the explanation provided by MOFCOM under 
Article 22.3 of the SCM Agreement should be assess ed in the light of Article 14 of the SCM 
Agreement, which is the substantive provision govern ing the benefit determination.  Korea notes that 
the benchmark in a benefit determination should be  based on the prevailing conditions in the market 
in question, unless the market is distorted.  In Ko rea's view, it is not obvious that exclusion of certain 
foreign producers automatically supports the propos ition that the market in question is distorted.  
Korea submits that the Panel should consider whether MOFCOM conducted such an inquiry and 
whether it adequately explained it in accordan ce with Article 22.3 of the SCM Agreement.343 
6. Evaluation by the Panel 
7.354  The United States complains that MOFCOM did not adequately explain, in either the 
preliminary or final determinations, why the ex clusion of foreign producers from the competitive 
bidding process under the United States Government procurement statutes led to the conclusion that 
the resulting prices were not market prices for the purposes of the benefit determination.  According 
to the United States, this is inconsistent  with Article 22.3 of the SCM Agreement. 
7.355  Article 22 of the SCM Agreement sets out a series of requirements regarding the public 
notices and separate reports that must be issued by  investigating authorities.  Article 22.3 of the SCM 
Agreement requires a public notice of a preliminary or final determination, or a separate report, to set 
forth "in sufficient detail the findings and conclusions  reached on all issues of fact and law considered 
material by the investigating authorities".  By way of contrast, Article 22.3, unlike Article 22.5, does not explicitly require public notice of "all relevant information on matters of fact and law and reasons 
which have led to the imposition of final measures" or "the reasons for the acceptance or rejection of 
relevant arguments or claims made by interested  Members and by the exporters and importers".   
7.356  In the Panel's view, and as the parties agree,  the obligation in Article 22.3 of the SCM 
Agreement is procedural in character, relating to the nature of the public notice an investigating 
authority must provide with respect to its substantive determinations.
344  The text of Article 22.3 
indicates that the disclosure required relates to the findings and conclusions actually reached by an 
investigating authority, rather than the findings and conclusions that should reasonably have been 
reached under an objective standard and by reference to  the substantive obligations at issue.  This is 
evident because the text of Article 22.3 refers to th e "findings and conclusions reached on all issues of 
fact and law", rather than the findings and conclusi ons that should reasonably have been reached for a 
given substantive claim.  Further, the obligation relates to the "issues of fact and law considered 
material by the investigating authorities".  This indi cates that the disclosure obligation relates to those 
issues that an investigating authority subjectivel y considers material.  Therefore, in our view, 
Article 22.3 is a procedural provision that does not discipline the substantive adequacy of an 
investigating authority's reasoning.  If this we re not the case, claims under Article 22.3 may be 
difficult to distinguish from substantive claims re lating to preliminary an d final determinations. 
                                                      
342 Japan's third party submission, para. 33. 
343 Korea's third party submission, paras. 40-41. 
344 See United States' response to Panel question 64, para. 44 and China's response to Panel 
question 64, paras. 52-53. WT/DS414/R 
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 7.357  The United States' claim relates to MOFCOM's benefit determination under the United States 
government procurement laws.  The preliminary dete rmination indicates that MOFCOM applied facts 
available in determining the price paid by the government in purchasing GOES.  Seemingly based upon the fact that the obligations regarding domestic  steel procurement do not apply where the use of 
domestic materials increases a project cost by 25 %, MOFCOM determined that the Government 
purchased GOES from AK Steel and ATI at a price 25% higher than that of foreign steel prices.  For 
the purposes of the benefit determination, this purchase price was compared to a market benchmark based on the price of carbon steel in the United States steel market.
345  The United States' claim relates 
to the explanation provided by MOFCOM for its conc lusion that the price paid by the Government, as 
a result of a competitive bidding process, did not reflect "market competition in the usual sense", 
leading to the conclusion that a benefit was conf erred through the purchase of GOES for more than 
adequate remuneration (i.e. for a price above the market price).   
7.358  In the preliminary determination, MOFCOM  provided the following explanation for its 
conclusion that the prices paid by the United States Government were not market prices: 
The Investigating Authority found th at, according to provisions in the Buy American 
Act and other regulations, although there is  competitive bidding process, using steel 
and finished products produced in the U.S.  is required unless there is a waiver.  The 
Investigating Authority holds that this fact  shows that the scope of products allowed 
for bidding under Buy American Act has actually been limited to some extent, and 
thus the bidding is not market competition in the usual sense.  In addition to the public interest exception, the conditions for using foreign products include that, the 
quantity of U.S. iron and steel products is  not enough, or the purchase of U.S. iron 
and steel products would cost 25% higher than foreign products.  In other words, 
when purchases of U.S. iron and steel products do not cost 25% more than foreign products, the foregoing so-called competitiv e bidding is only competition among U.S. 
products.  Of course, it may include a part of foreign products which can participate 
in U.S. government procurement in accorda nce with international agreements (such 
as Agreement on Government Procurement ).  However, the Investigating Authority 
noticed that at the state level of the U.S ., there were still more than a dozen states 
which excluded members of the Agreement on Government Procurement  when 
purchasing construction steel and other goods  (including requirements for the sub-
contract).  That is, in these states (including Pennsylvania), only U.S. iron and steel 
can be used.  Therefore, the Investigati ng Authority considered that the competitive 
bidding restricted the scope of participa ting products, and thus could not reflect the 
full market competition.  Even if there is competition, it is competition only among the U.S. domestic steel products (may include part of the foreign products at the federal level and in some regions).  Hence the price obtained through competitive 
bidding does not reflect the true market conditions.
346 
7.359  In the final determination, MOFCOM did not alter its conclusion and offered the following 
reasoning: 
                                                      
345 Preliminary Determination, Exhibit CHN-17, pp. 37-38.  MOFCOM explained that it could not find 
information on the prices of all steel products, so it us ed prices in the carbon steel  market on the basis that 
carbon steel accounts for the "vast majo rity of steel products".  The price of foreign steel was also limited to 
carbon steel, for the purpose of cons tructing the price paid for GOES by the United States Government.  See 
also, China's opening statement at the second meeting of the Panel, para. 41, in which China emphasizes that an 
out-of-country benchmark was not used, despite the United States' apparent discussion of out-of-country benchmarks in its second written submission, para. 115. 
346 Preliminary Determination, Exhibit CHN-17, pp. 33-34.  WT/DS414/R 
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 The USG argued in the comment on the prelim inary determination that 'the Ministry 
of Commerce did not make any actual analysis before drawing the conclusion that the price obtained by competitive bidding could not reflect real market conditions. This conclusion was not based on explicit evidence and it did not take into account that if 
there were enough bidders, the price afforded by the government would be reduced to 
the minimum production cost.  Under such circumstances, the lowest bidding price 
would become the market price.'  AK Steel Corporation argued in the comment on the preliminary determination that without any evidence that demonstrated the purchase at premium, the Ministry of Commerce simply equalled the exclusion of some foreign products with the absolute purchase at premium by the USG or government 
contractor.  The Investigating Authority f ound in further investigation that the import 
volume of the excluded foreign products usually accounted for 15% of total steel consumption in the U.S.; maybe this rate was not significant, but if this part of foreign products had an even lower pri ce, then the competitive bidding excluded 
these relatively cheaper steel, so the comp etitive bidding cannot demonstrate the real 
market competition.  AK Steel Corporation once mentioned such data in the comment 
on the preliminary determination and claime d: 'when calculating the price difference 
between the American steel or foreign st eel, comparisons should be made between 
the North American price with the forei gn price or non-North American price (such 
as Asian and European prices). Only such calculations could reflect the price gap 
between the North American steel and steel from other markets. If the North 
American price was excluded from the gl obal price, then the calculated price 
difference between the U.S. and foreign st eel products was even more accurate, the 
result would be 11.02%.'  The Investigati ng Authority considered that according to 
the claim, at least it could be confirmed at least that the American steel price (due to the existence of North American Free Trad e Area, the North American price can be 
regarded as the American price) was 10%  higher than the non-North American steel 
prices.  The Investigating Authority consider ed that the bidding price obtained within 
a bidding range that excluded potential low-pr iced bidders cannot reflect real market 
prices.  The competitive bidding had excluded these foreign products of relatively lower price, therefore this competitive bidding cannot reflect the real market 
competition.  In addition, in the verification, the verification team was informed by 
the Federal Expressway Administration that the use of foreign products in their 
projects according to exclusion requirements was less than 1%, while in Pennsylvania, the verification team got to know that the steel produced in America must be used in the infrastructure construction in this state.  In light of the above facts, the Investigating Authority did no t accept in the definitive determination the 
claim from the USG and relevant interested parties that government purchase through 
bidding could obtain the market price so that there was no benefit in this program.
347 
7.360  The United States variously claims that MOFCOM 's explanation in relation to the benefit 
determination was deficient under Article 22.3 of the SCM Agreement in the following respects: 
(i) MOFCOM does not explain why, if a foreign producer is excluded, a price derived 
from the competitive bidding process does not  reflect a market price.  MOFCOM 
does not explain how the evidence supports this conclusion or why it disregarded the 
arguments made before it by the United States348; 
(ii) MOFCOM did not explain how it arrived at the conclusion that the price resulting 
from a competitive process did not reflect ma rket conditions.  Vague and conclusory 
                                                      
347 Final Determination, Exhibit CHN-16, pp. 40-41. 
348 United States' first written submission, para. 121. WT/DS414/R 
Page 88  
 
 assertions are insufficient.
349  Rather, an investigating authority should adequately 
disclose its logic350; 
(iii) MOFCOM did not explain its benefit determ ination.  Rather, "all MOFCOM did was 
conclude that the U.S. price was higher th an foreign prices, and that some foreign 
producers are excluded from the competitive bidding process, leading to a distorted 
market"351; and 
(iv) MOFCOM's "flawed logic appears to be based on the assumption that any 
government involvement in a market leads to a distorted market with prices that are unusable as a benchmark price."
352 
7.361  Therefore, the crux of the United States' comp laint is that, in the light of MOFCOM's 
statement that "there is a competitive bidding pr ocess", MOFCOM did not adequately explain why a 
price derived from such a process, namely the purc hase price paid by the government, would not be 
equal to the market price (and consequently result in a finding of no benefit). 
7.362  At the outset, we note that the United States' cl aim under Article 22.3 of the SCM Agreement 
relates to the adequacy of the explanation in both the preliminary and final de terminations.  However, 
given that it is the final determination that is currently in force and providing the basis for the 
imposition of the countervailing duties, we consider it necessary to make a finding only in relation to 
it.  In our view, making a finding in relation to the preliminary determination would not assist in 
securing a positive solution to this dispute.  In res ponse to a Panel question, the United States agreed 
that it "does not consider it necessary [for the Panel]  to reach a conclusion in relation to both the 
preliminary and final determination".353   
7.363  In the Panel's view, the United States has not made out its claim under Article 22.3 of the 
SCM Agreement.  The United States argues that MO FCOM did not explain why a price derived from 
a competitive bidding process would not be  equal to the market price.  However, in its explanation in 
the final determination, MOFCOM set forth the fact ual findings that it consid ered supported its legal 
conclusion that the United States Government purch ased domestically produced GOES for more than 
adequate remuneration.  In  particular, MOFCOM found: 
(i) the scope of foreign products competing in the bidding process is restricted.  The 
import volume of excluded foreign product s accounts for 15% of steel consumption 
in the United States; 
(ii) although, in accordance with the Government  Procurement Agreement, there may be 
some competition from foreign products, in certain states, including Pennsylvania, 
foreign products are completely excluded; and 
(iii) the North American price for steel is 10% higher than non-North American prices. 
7.364  On the basis of the partial or complete exclus ion of lower priced foreign products from the 
"competitive bidding"354 process, MOFCOM concluded that the bidding would not result in a market 
price.  The United States argues that there is a step  missing in this logic, namely an explanation of 
how this exclusion could result in a non-market pri ce, despite the existence of a "competitive bidding 
                                                      
349 United States' comments on China's responses to Panel questions 64 and 65. 
350 United States' response to Panel question 68, para. 52. 
351 United States' second written submission, para. 114. 
352 United States' second written submission, para. 115.   
353 United States' response to Panel question 67, para. 50. 
354 Final Determination, Exhibit CHN-16, p. 39.  WT/DS414/R 
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 process".  However, MOFCOM explained that, in its view, the lower prices of the excluded goods 
would result in a non-market price even despite its  conclusion that a "competitive bidding process" of 
some sort existed.  The United States does not agree with this conclusion.  It refers to the "flawed 
logic" and "flawed discussion" proffered by MOFCOM.355  It also argues that "[t]he fact that one 
foreign company may have been excluded from what China admitted was a competitive bidding 
process does not mean that a given transaction was not conducted based on prevailing market 
conditions".356   
7.365  The Panel notes that Article 22.3 does not di scipline the substantive adequacy of an 
investigating authority's reasoning.357  MOFCOM included in its public notice the findings and 
conclusions on matters of law that it considered material, and also referred to the material facts it was 
relying upon to reach those conclusions.  There is  nothing to suggest that MOFCOM reached other 
findings or conclusions that it considered material yet did not disclose.  In this respect, we recall that Article 22.3 requires only the findings and conclusions actually  reached by an investigating authority 
to be included in the public notice or separate report, rather than the findings and conclusions that 
should reasonably have been reached, by refere nce to the substantive matter at issue.   
7.366  The United States argues that MOFCOM did not explain why it "chose to disregard 
arguments from the United States".  Unlike Article 22.5 of the SCM Agreement, Article 22.3 does not 
explicitly require the disclosure of the "reasons for the acceptance or rejection of relevant arguments 
or claims made by interested Members and by the ex porters and importers".  In any event, in the final 
determination MOFCOM in fact outlined and resp onded to the arguments presented to it by the 
United States and by AK Steel.  For instance, in re sponse to the United States' contention that, with 
enough bidders, the lowest bid becomes the market price, MOFCOM explained that, in its view, the 
exclusion of foreign GOES, priced lower than United States GOES, and accounting for 15% of steel 
consumption in the United States, would not lead to a market price, even if the bidding between the 
non-excluded steel manufacturers was competitive.  Although the United States may not agree with the substance of this explanation, and may consider that there are certain flaws and gaps in this logic, 
this does not lead to the conclusion that MOFCOM failed to give public notice of the "findings and 
conclusions reached on all issues of facts and la w" it considered material, in accordance with 
Article 22.3 of the SCM Agreement. 
7.367  Consequently, the Panel concludes that China di d not act inconsistently with Article 22.3 of 
the SCM Agreement in relation to the explanation of its benefit determina tion under the government 
procurement statutes.  We have no basis to find that MOFCOM reached other findings and 
conclusions on issues of fact and law that it consider ed material to the issue but did not include in the 
final determination. 
                                                      
355 United States, second written submission, paras. 112 and 115. 
356 United States, second written submission, para. 117. 
357 The United States' claim was not one of substance, for example under Articles 1.1(b) or 14(d) of the 
SCM Agreement.  In our view, the f act that the United States may disagr ee with the substance of MOFCOM's 
reasoning is not relevant to an analysis under Article 22.3 of the SCM Agreement.  WT/DS414/R 
Page 90  
 
 G. 
WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLES 6.8, 6.9, 12.2,  12.2.2  AND ANNEX II 
OF THE ANTI -DUMPING AGREEMENT IN RELATION TO THE "ALL OTHERS " RATE FOR UNKNOWN 
EXPORTERS IN THE ANTI -DUMPING DUTY INVESTIGATION  
1. Whether China acted inconsistently with Article 6.8 and paragraph 1 of Annex II of the 
Anti-Dumping Agreement in using facts availa ble to calculate the dumping margins for 
unknown exporters 
(a) Provisions at issue 
7.368  The United States' claim relates to Article 6. 8 and paragraph 1 of Annex II of the Anti-
Dumping Agreement.  Article 6.8 provides: 
In cases in which an interested party refu ses access to, or otherwise does not provide, 
necessary information within a reasonable period or significantly impedes the 
investigation, preliminary a nd final determinations, affirm ative or negative, may be 
made on the basis of facts available.  The provisions of Annex II shall be observed in the application of this paragraph. 
7.369  Annex II, paragraph 1 reads: 
As soon as possible after the initiation of the investigation, the investigating 
authorities should specify in detail the information required from any interested party, and the manner in which that information shou ld be structured by the interested party 
in its response.  The authorities should also ensure that the party is aware that if 
information is not supplied within a reasonable time, the authorities will be free to make determinations on the basis of the f acts available, including those contained in 
the application for the initiation of the investigation by the domestic industry. 
(b) Factual Background 
7.370  In calculating the anti-dumping rates, MOFCOM applied "facts available" to 
exporters/producers that were "unknown" to it, but  did not apply "facts available" to the two 
investigated exporters, namely AK Steel and ATI.  MOFCOM applied a "facts available" duty rate of 
64.8% to unknown exporters.  
7.371  In relation to the unknown exporters, in in itiating the GOES anti-dumping and countervailing 
duty investigations, MOFCOM i ssued public notices of initiation.  In these notices, MOFCOM 
indicated that any interested party should register for investigation and that failure to register would 
result in the application of best information av ailable.  MOFCOM provided the initiation notices to 
the two known exporters/producers of GOES in the United States and placed the notices on its 
website and in its public reading room.  MOFCOM also notified the United States Embassy in Beijing 
of the initiations and requested that the Embass y notify the relevant exporters and producers.  
However, apart from AK Steel and ATI, no United States producers/exporters of GOES registered for 
investigation.  As a result, in calculating the dumpi ng rate for producers/exporters other than AK Steel 
and ATI, namely for "unknown" exporte rs, MOFCOM applied "facts available". 
(c) Arguments of the United States 
7.372  The United States claims that China acted incons istently with Article 6.8 and paragraph 1 of 
Annex II of the Anti-Dumping Agreement, due to th e improper use of "facts available" in calculating 
the "all others" dumping rate for unknown exporters.  The United States argues that Article 6.8 and 
paragraph 1 of Annex II of the Anti-Dumping Agreemen t, read in the light of Article 6.1, clearly  WT/DS414/R 
 Page 91 
 
 
 establish that a dumping margin based on facts availa ble may only be applied to an entity when the 
authority has specifically asked the pa rty to provide certain information.358 
7.373  The United States argues that China acted inconsis tently with Article 6.8 and paragraph 1 of 
Annex II because MOFCOM applied facts available to firms it did not investigate and to which it did 
not send copies of the questionnaire or give noti ce of the consequences of failing to provide the 
required information.  Apart from AK Steel and AT I, MOFCOM made no attempt to identify other 
United States exporters/producers of GOES.  Rather, MOFOM merely requested that the 
United States Embassy in Beijing "notify the relevant exporters and producers".359 
7.374  The United States rejects China's position that MO FCOM was within its rights to base the "all 
others" rate on facts available because, while Artic le 6.10 of the Anti-Dumping Agreement limits the 
anti-dumping rate that can be applied to known producers/exporters that are not individually 
examined, there are no such limits placed on un known producers/exporters.  The United States argues 
that this overlooks the clear direction in Article  6.1 and paragraph 7 of Annex II to notify all 
interested parties of the information required of th em.  Further, China's argument overlooks the fact 
that Article 6.8 and para graph 7 of Annex II address situations where a party does not cooperate and 
withholds information from the investigating authority .  A failure to cooperate cannot be found where 
there is no evidence that any other producer/exporte r was aware of the investigation or the specific 
information required of it.360 
(d) Arguments of China 
7.375  China's response to the United States' claim is tw ofold, namely that (i) it adequately notified 
all exporters/producers of GOES of the investigation and its requirements; and (ii) in circumstances 
where there is no explicit guidance in the Anti- Dumping Agreement regarding how to determine 
margins of dumping for unknown exporters/producers, Article 6.8 is the most relevant provision to 
apply. 
7.376  China contends that MOFCOM issued a public  notification of the initiation of the GOES 
investigation and indicated in the notice that a ll exporters/producers of GOES should register for 
investigation.  The notification stated that failure  to register within a specified time period would 
result in the application of best information ava ilable.  China submits that the initiation notice was 
provided to the United States, ATI and AK Steel.  It was also posted on MOFCOM's website and placed in the MOFCOM reading room.  According to  China, this satisfied the notice requirements 
under Article 6.1 of the Anti-Dumping Agreement.
361   
7.377  China submits that it followed the general rule in Article 6.10 of the Anti-Dumping 
Agreement by determining individual margins of dumping for each known exporter or producer and 
therefore, Article 9.4 did not apply.  China argues that neither Article 6.10 nor any other provision of the Anti-Dumping Agreement addresses the issue of tr eatment of exporters or producers that are not 
known to the authority and therefore cannot be individually examined.  This means that an investigating authority must exercise its own discret ion in determining how to calculate margins of 
dumping for such exporters or producers.
362   
7.378  China reasons that, in the circumstances of  the case, where "unknown exporters/producers 
[did] not cooperate by making themselves known and pa rticipating in the investigation", the provision 
                                                      
358 United States' first written submission, paras. 158-161. 
359 United States' first written submission, para. 166. 
360 United States' opening statement at the first meeting of the Panel, paras. 59-60. 
361 China's first written submission, paras. 243-244. 
362 China's first written submission, paras. 241-242. WT/DS414/R 
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 most relevant for calculating the anti-dumping marg ins for "unknown and unresponsive" exporters is 
Article 6.8 of the Anti-Dumping Agreement.
363  China's position is that the exporters or producers that 
did not register for the investigation were "not co operating" and therefore the application of facts 
available under Article 6.8 was warranted.  Acco rding to China, this position is supported by 
paragraph 7 of Annex II of the Anti-Dumping Agre ement, which provides that if a party does not 
cooperate, this can lead to a less favourable result for the party.  China argues that if it were to apply 
to unknown exporters an "all others " rate based on the rates applied to cooperating respondents, "there 
would be no incentive for unknown companies to make themselves known and participate in the 
investigation".364   
7.379  Although China is aware of the Appellate Body's decision in Mexico – Anti-Dumping 
Measures on Rice, it argues that there is an important factual distinction between that case and the 
case at hand.  In particular, China contends that in Mexico – Anti-Dumping Measures on Rice, "the 
authority was apparently dealing with many other kno wn exporters.  Indeed a rice association entered 
an appearance on behalf of those other exporte rs that were not individually investigated".365  
Therefore, China argues it is unclear to what extent  the Appellate Body considered the significance of 
the lack of any other exporters or producers, as  was the case in the GOES investigation, when it 
issued its findings.  Further, it is not clear to China that the panel and the Appellate Body in Mexico – 
Anti-Dumping Measures on Rice  considered the policy implications of their decisions.  China has not 
been able to reconcile Mexico – Anti-Dumping Measures on Rice with the need to encourage co-
operation by unknown respondents and with the absence of any guidance in the Anti-Dumping Agreement on how unknown respondents should be treated  in the context of an investigation in which 
the authority is seeking to implement the general rule of Article 6.10.
366 
(e) Arguments of third parties 
(i) India 
7.380  According to India, based on Article 6.8 and paragraph 1 of Annex II of the Anti-Dumping 
Agreement, it appears that facts available may not be applied to an interested party that has not been 
asked to submit any information.367 
(ii) Japan 
7.381  Japan argues that the Anti-Dumping Agreement clearly establishes that an investigating 
authority may not use facts available to determine the margin of dumping for exporters/producers that 
were not given notice of the information required of them.368  According to Japan, a mere request in a 
public notice of initiation posted on a website, that in terested parties make themselves known to the 
authorities, cannot be the basis to apply facts available.369  MOFCOM's notice of initiation did not 
request exporters and producers to submit specific information, but me rely requested them to register 
with MOFCOM.  Therefore, there was no basis to apply facts available.370 
                                                      
363 China's first written submission, paras. 241 and 245. 
364 China's first written submission, paras. 245-246. 
365 China's response to Panel question 15, para. 49. 
366 China's response to Panel question 15, paras. 49-50. 
367 India's third party statement, para. 6.3. 
368 Japan's third party submission, para.43. 
369 Japan's third party submission, para. 47. 
370 Japan's third party statement, para. 14.  WT/DS414/R 
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 (iii) Saudi Arabia 
7.382  In Saudi Arabia's view, the use of facts availa ble is permissible only when the parties have 
been given proper notice both of the information required by the investigating authority, and of the possibility that facts available will be applied in  the event of non-cooperation with the authority.
371 
(f) Evaluation by the Panel 
7.383  In relation to the United States' claim under Ar ticle 6.8 and paragraph 1 of Annex II of the 
Anti-Dumping Agreement, the question before the Pa nel is whether the conditions for the application 
of "facts available" were met.   
7.384  Article 6.8 of the Anti-Dumping Agreement provid es that resort to facts available may occur 
when an interested party (i) re fuses access to necessary information w ithin a reasonable period; (ii) 
otherwise fails to provide necessary information w ithin a reasonable period; or (iii) significantly 
impedes an investigation.  The application of Article  6.8 is also subject to the provisions of Annex II 
of the Anti-Dumping Agreement, paragraph 1 of whic h provides that an investigating authority should 
"specify in detail the information required from any interested party" and "ensure that the party is 
aware that if information is not supplied within a reasonable time, the authorities will be free to make 
determinations on the basis of the facts available".  Further, the United States argues that Article 6.8 
should be read in the light of Article 6.1 of the An ti-Dumping Agreement, which states that interested 
parties "shall be given notice of the info rmation which the authorities require". 
7.385  Therefore, Annex II imposes additional preconditions  for the application of resort to facts 
available, including that investigating authorities give interested parties notice of the precise 
information required of them and of  the consequences of failure to provide the information.  This 
requirement to notify interested parties of th e necessary information also finds expression in 
Article 6.1 of the Anti-Dumping Agreement, which is  relied on as context by the United States.  In the 
circumstances of this case, China argues that MOFCOM satisfied the notice requirement of 
Article 6.1 by providing the notice of initiation to the United States, AK Steel and ATI, posting it on its website and placing it in its reading room.  The United States notes that MOFCOM also asked 
United States embassy officials in Beijing to notif y interested parties of the investigation.   
7.386  The Anti-Dumping Agreement does not include explicit guidance regarding the form in 
which the notice required by Annex II must be provide d to interested parties.  However, paragraph 1 
of Annex II provides that authorities should "ensure th at the party is aware" of the consequences of 
not supplying necessary information.  Arguably, posting a notice in a public place or on the internet will not necessarily ensure this awaren ess in each interested party.  In  any event, in the circumstances 
of this case, it is not necessary for the Panel to r esolve whether notice can ever be adequate if given 
through a public reading room or an internet posting.   This is because the notice of initiation, relied 
upon by China as providing the requisite notification, did not specify in detail the information required of the interested parties for the purposes of  the anti-dumping investigation.  While the notice 
of initiation requested interested parties to provide so me general information at the time of registering 
with MOFCOM, namely "the volume and valu e of exports to China from March 2008 to 
February 2009", MOFCOM replaced more informati on than this with "facts available" for the 
purposes of arriving at an "all others" anti-dumping ra te.  Therefore, it is clear that MOFCOM should 
have provided detailed notice of this further re quired information, although the Panel does not 
comment on the form or manner in which this notice should have been conveyed.  In the view of the 
Panel, paragraph 1 of Annex II and Article 6.1 place the notifica tion obligation on investigating 
authorities and it is difficult to find in the terms of the Anti-Dumping Agreement any obligation on 
unknown exporters to come forward after a genera l public notice of initiation is published.  
                                                      
371 Saudi Arabia's third party statement, para. 13. WT/DS414/R 
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 Consequently, in the Panel's view, China's argument that the notice of initiation met the notification 
requirements embodied in paragraph 1 of Annex II and Article 6.1 cannot be sustained.   
7.387  In relation to the other preconditions for the app lication of facts available found in Article 6.8 
of the Anti-Dumping Agreement, given that the unknown exporters were  not notified of the 
"necessary information" required of them, the Panel cannot conclude that they refused access to or 
failed to provide the information.  Further, Chin a does not advance evidence  to suggest that the 
unknown exporters impeded the investigation.  This conclusion is all the more compelling in the light 
of China's acknowledgment that, apart from AK Steel  and ATI, there were no other exporters of 
GOES in existence during the period of investigation.
372  It is not clear how non-existent exporters 
could possibly refuse to provide informa tion or impede an investigation.   
7.388  The Panel finds support for its reasoning in  the report of the Appellate Body in Mexico – Anti-
Dumping Measures on Rice .  In that case, the Mexican investigating authority, Economía, sent the 
public notice of initiation and a questionnaire to  two known exporters and to the United States 
embassy in Mexico City.  Further, the public notice of initiation gave 30 days for interested parties to 
appear before Economía to submit an official investigation form.  Two exporters as well as an 
industry association appeared of their own initiative and received a questionnaire.373  T h e  
investigating authority ultimately used facts availa ble against all exporters apart from the four that 
received a questionnaire.  The Appellate Body he ld that the second sentence of paragraph 1 of 
Annex II of the Anti-Dumping Agreement conditi ons the use of facts available on making the 
interested party aware that if necessary information is not supplied by it within a reasonable time, the 
investigating authority will be free to resort to fact s available.  According to the Appellate Body, this 
indicates that an exporter must be given the opportunity to provide the information required by the 
investigating authority, before the latter resorts to the use of facts available.  An exporter that is 
unknown to the investigating authority, and therefore not notified of the information required of it, is 
denied the opportunity to provide the information.  Consequently, the Appellate Body concluded that 
an investigating authority that applies facts ava ilable to such exporters acts inconsistently with 
paragraph 1 of Annex II of the Anti-Dumping Agreement and therefore, with Article 6.8.374  A similar 
conclusion was reached by the panel in Argentina – Ceramic Tiles.  The panel held that paragraph 1 
of Annex II "strongly implies that investigating authorities are not entitled to resort to best 
information available in a situation where a pa rty does not provide certain information if the 
authorities failed to specify in detail the information which was required".375   
7.389  The conduct of the investigating authorities in this case and in Mexico – Anti-Dumping 
Measures on Rice  in attempting to give notice to interested parties is remarkably similar.  In response 
to a Panel question, China attempts to disti nguish the facts of the cases by arguing that in Mexico – 
Anti-Dumping Measures on Rice there were many other known exporters, including the members of 
the rice association that appeared in the inves tigation, and that this was not the case before 
MOFCOM, where there were no other known exporters/producers.376  China argues that the Appellate 
Body may not have considered the significance of the "lack of any other producers/exporters" when it 
issued its findings.  However, the Panel does not ag ree with China's interpretation of the Appellate 
Body's findings.  In particular, we are of the view  that the Appellate Body found that only the four 
exporters for which Economía calcula ted an individual margin of dumping were "known", while other 
exporters, including those that may have been me mbers of the industry association that came forward 
during the investigation, were "unknown".  This is  evident from the Appellate Body's finding that, in 
calculating individual dumping margins for the two expor ters included in the application for initiation 
                                                      
372 China's response to Panel question 13, para. 47. 
373 Panel Report, Mexico – Anti-Dumping Measures on Rice, para. 7.179. 
374 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 259-260. 
375 Panel Report, Argentina – Ceramic Tiles, para. 6.55. 
376 China's response to Panel question 15, para. 49.  WT/DS414/R 
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 and the two that came forward of their own initiativ e, Economía determined an individual margin of 
dumping for "each exporter of which it knew at the time " and therefore did not act inconsistently with 
Article 6.10 of the Anti-Dumping Agreement.377  Therefore, the Panel is not convinced by China's 
attempt to distinguish the facts of Mexico – Anti-Dumping Measures on Rice .  If China is attempting 
to highlight that, in this case, apart from AK Steel and ATI, there were in fact no other 
exporters/producers of GOES in existence during the period of investigation, this fact does not seem 
to diminish the relevance of the Appellate Body 's findings.  The Appellate Body suggests that a 
consequence of an exporter being "unknown" is that it is not possible to give it notice of the required 
information.378  The same reasoning extends to, and in fact  applies more forcefully, to non-existent 
exporters.    
7.390  China also argues that in Mexico – Anti-Dumping Measures on Rice, the Appellate Body did 
not consider the policy implications of its decision.  In particular, China submits that preventing resort 
to facts available for unknown exporters creates a lacuna in the Anti-Dumping Agreement, because 
neither Article 6.10, Article 9.4 nor any other provision addresses how an investigating authority 
should determine margins of dumping for unknown e xporters.  While the Panel agrees that there is 
indeed a gap in the Anti-Dumping Agreement rega rding how dumping margins should be calculated 
for unknown exporters, Article 6.8 and Annex II are ve ry explicit regarding the conditions that must 
exist before an investigating authority may resort to facts available.  The exis tence of a lacuna in the 
Anti-Dumping Agreement does not mean that the conditions  should be ignored in or der to fill the gap.  
Although the lack of guidance in the Anti-Dumpi ng Agreement may leave investigating authorities 
with some discretion regarding the calculation of margins of dumping for unknown exporters, in our 
view, this discretion should not extend to acting in consistently with the express terms of Article 6.8 
and paragraph 1 of Annex II.   
7.391  China also submits that it is unable to r econcile the Appellate Body's decision in Mexico – 
Anti-Dumping Measures on Rice  with the need to encourage unknown respondents to cooperate so 
that margins can be established on an individual company basis in accordance  with the general rule 
expressed in Article 6.10 of the Anti-Dumping Agreem ent.  To support its position that adverse facts 
available can be applied to the disadvantage of companies that do not make themselves known to 
investigating authorities, China relies upon one part  of paragraph 7 of Annex II, namely "if an 
interested party does not cooperate…t he situation could lead to a result which is less favourable to the 
party than if the party did cooperate".  However, paragraph 7 also provides that authorities should use 
"special circumspection" when basing their findings  on information from a secondary source.  This 
suggests that the recourse to facts available is not intended to lead to excessive margins of dumping in 
order to encourage cooperation by interested partie s.  Rather, special care to attain as accurate a 
margin as possible must be used, with an ac knowledgment that non-cooperation could nevertheless 
lead to a less favourable result compared with coope ration.  In this regard, we recall our previous 
discussion in which we concluded that an investiga ting authority's discretion is not unlimited in the 
use of facts available and nor is the use of facts available equivalent to the application of adverse 
inferences.  Rather, the best information availabl e must be used and facts available should not be 
applied in a manner to punish non-cooperation.379  We note that the general rule expressed in 
Article 6.10 explicitly applies to each "known" exporter or producer.380  It is not clear that Article 6.10 
establishes a general objective relating to unknown expor ters.  In any event, even if an overriding 
                                                      
377 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 256. 
378 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 259:  "An exporter that is 
unknown  to the investigating authority - and, therefore, is not notified  of the information required to be 
submitted" (emphasis added). 
379 See paras. 7.296 and 7.302 of this Report. 
380 Indeed, the Appellate Body found in Mexico – Anti-Dumping Measures on Rice, para. 255,  that "the 
rule set out in the first sentence of Article 6.10…cov ers the exporters or foreign producers of which the 
investigating authority knows at the time the calculation of margins of dumping is made".   WT/DS414/R 
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 objective exists to encourage unknown exporters to partic ipate in an investigation, so that individual 
margins of dumping can be applied to them, the ac hievement of this objective would not justify a 
violation of the express terms of Article 6.8 of the Anti-Dumping Agreement, which establishes clear 
conditions regarding when it is permissible to  resort to the use of facts available. 
7.392  Therefore, while there is no system of preced ent under the DSU, Chin a has not advanced a 
convincing reason for the Panel to depart fro m the reasoning of the Appellate Body in Mexico – Anti-
Dumping Measures on Rice.   
7.393  In sum, in the view of the Panel, MOFCOM did not notify the "all other" exporters of the 
necessary information required of them and so did not meet one of the preconditions for the 
application of facts available, as found in paragra ph 1 of Annex II of the Anti-Dumping Agreement.  
Further, exporters that were unknown to MOFCOM , and indeed that were non-existent, cannot 
reasonably be held to have refused to provide  necessary information or to have impeded an 
investigation within the meaning of Article 6.8 of the Anti-Dumping Agreement. 
7.394  Therefore, the Panel finds that China acted inc onsistently with Article 6.8 and paragraph 1 of 
Annex II of the Anti-Dumping Agreement. 
2. Whether China acted inconsistently with Article 6.9 of the Anti-Dumping Agreement by 
failing to inform interested parties of the essential facts under consideration in 
calculating the "all others" dumping margin  
(a) Provision at issue 
7.395  Article 6.9 of the Anti-Dumping Agreement provides: 
The authorities shall, before a final determ ination is made, inform all interested 
parties of the essential facts under considera tion which form the basis of the decision 
whether to apply definitive measures.  Such disclosure should take place in sufficient time for the parties to defend their interests. 
(b) Factual Background 
7.396  Following the preliminary determination, and prior to issuing its final determination, 
MOFCOM issued a final disclosure document, including certain disclosures regarding the dumping 
margins and subsidy rates to be applied to th e investigated companies and to the "unknown" 
exporters. 
(c) Arguments of the United States 
7.397  The United States notes that in its preliminary determination, MOFCOM established an "all 
others" dumping rate of 25%, with the explanation that its calculation relied upon facts available for 
"the other U.S. companies who failed to register  responses or to submit responses".  In its final 
disclosure document, MOFCOM revealed that it w as increasing the "all others" rate to 64.8%, "based 
on transaction information of the respondents" pursuant to the facts available method.  In its final determination, MOFCOM applied the "all others" dumping rate of 64.8%, based upon "facts available 
and the information submitted by respondent companies".
381   
7.398  The United States argues that MOFCOM did no t disclose the "essential facts" forming the 
basis for applying an "all others" dumping rate of 64.8%.  Although China argues that it could not 
                                                      
381 United States' first written submission, paras. 168-170.  WT/DS414/R 
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 disclose the essential facts because to do so would have compromised the confidentiality of the 
information supplied by the two respondent compan ies, the United States submits that the facts 
forming the basis to apply facts available in the first place would not have been confidential to the 
respondent companies.  Further, MOFCOM could ha ve publicly summarized th e information used or 
at least disclosed the methodology it employed.  According to the United States, disclosure of the 
essential facts was particularly important, because it  is difficult to understand how MOFCOM used 
the information of the two respondent companies a nd arrived at an "all others" dumping margin more 
than three times as high as the margin for one of th e respondent companies and more than eight times 
as high as the margin for the other.382  The United States argues that without the disclosure of this 
information, it was unable to defend its interests.383 
(d) Arguments of China 
7.399  In relation to the application of facts availabl e to the calculation of the "all others" dumping 
rate, China argues that it provided an adequate explana tion of the basis for the "all others" rate.  In the 
preliminary determination MOFCOM indicated that  the "all others" dumping margins were based on 
the information alleged and contained in the petition.  In relation to the "all others" rate that was 
revealed in the final determination, China ar gues that MOFCOM could provide only a general 
explanation because the "all others" rate was base d upon confidential information of one of the 
responding companies.   
7.400  China argues that because the unknown companies did not c ooperate, the investigating 
authority had an unlimited discretion to arrive at a result less favourable to the non-cooperating 
parties.  Therefore, failing to disclose the details of the calculation had no effect on the ability of the 
parties to defend their interests.384 
(e) Arguments of third parties 
(i) European Union 
7.401  The European Union agrees with the United Stat es on the "essential facts" that should have 
been disclosed in relation to the "all others" dumpi ng rate.  The European Union submits that if the 
United States' allegations are conf irmed with respect to the lack of disclosure, China has acted 
inconsistently with Article 6.9 of the Anti-Dumping Agreement.385 
(ii) Japan 
7.402  With respect to the disclosure required under Article 6.9 of the Anti-Dumping Agreement, 
Japan submits that the disclosure of the "essential facts" must be distinguished from mere individual 
items of evidence.386  Japan argues that the normal value and export prices used to calculate margins 
of dumping in the final determination, and the process to reach ex-factory prices, are "essential facts" 
that should have been disclosed in relation to the calculation of the "all others" dumping rate.387   
                                                      
382 United States' second written submission, paras. 132-133 and United States' opening statement at 
the first meeting of the Panel, para. 66. 
383 United States' first written submission, para. 175. 
384 China's first written submission, paras. 247-248 a nd China's opening statement at the first meeting 
of the Panel, para. 47.   
385 European Union's third party submission, paras. 21-24. 
386 Japan's third party submission, para. 6. 
387 Japan's third party submission, para. 19. WT/DS414/R 
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 (iii) Saudi Arabia 
7.403  Saudi Arabia notes that the disclosure of " essential facts" under Article 6.9 of the Anti-
Dumping Agreement must occur prior to the final dete rmination, to allow sufficient time for parties to 
defend their interests.  Further, the "essential facts"  must be explicitly identified as such, so that the 
parties know whether a particular fact is important.
388 
(f) Evaluation by the Panel 
7.404  In its preliminary determination, MOFCOM es tablished an "all others " dumping rate of 25% 
for unknown exporters.  In the final disclosure documen t, released prior to the final determination, 
MOFCOM indicated that the rate had increased to 64.8%. 
7.405  In relation to the "all others" dumping rate , the following disclosures were made by 
MOFCOM: 
(i) The preliminary determination stated "[ r]egarding the other U.S. companies who 
failed to register to respond or to submit responses, in accordance with Article 21 of 
the Anti-Dumping Regulation, the Investigation Authority decided to adopt the obtained and best information available to  make the determination as for dumping 
and dumping margin".
389 
(ii) The final disclosure document provided that the "margin for all other American 
companies was calculated based on tran saction information of the respondents 
pursuant to Article 21 of the Antidumping Regulations".390 
7.406  The United States argues that MOFCOM did no t disclose the "essential facts" forming the 
basis for applying an "all others" dumping rate of 64.8%.  In particular MOFCOM did not reveal: 
(i) the facts relating to the United States companies refusing access to necessary 
information or significantly impeding the investigation391; 
(ii) the facts leading to the conclusion that 64 .8% was the appropriate "all others" rate; 
(iii) the "transaction information" from the two respondents that formed the basis for the 
64.8% "all others rate"; or 
(iv) the facts underpinning the calculation of the 64.8% rate and the details of the 
calculation.392 
7.407  In the Panel's view, the obligation under Artic le 6.9 of the Anti-Dumping Agreement requires 
investigating authorities to discl ose those facts underlying the final findings and conclusions in 
respect of the essential elements that must exis t for the application of definitive anti-dumping 
duties.393  In an anti-dumping investigation, the essentia l elements include the existence of dumping, 
                                                      
388 Saudi Arabia's third party submission, para. 25. 
389 Preliminary Determination, Exhibit US-5, p. 17. 
390 Memorandum Regarding The Factual Disclosure On The Dumping Margin and Ad Valorem 
Subsidy Rate for Grain Oriented Flat-Rolled Electrical Steel Antidumping and Countervailing Cases, 15 March 2010, ("Final Disclosure form"), Exhibit US-26, p. 41. 
391 United States' opening statement at the first meeting of the Panel, para. 65. 
392 United States' first written submission, para. 173. 
393 In this regard, see Panel Report, Mexico - Olive Oil, para. 7.110, where the Panel examines the 
analogous provision under the SCM Agreement.  WT/DS414/R 
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 injury and causation.  We agree with those panels  that have noted the disclosure obligation does not 
apply to the reasoning  of the investigating authorities, but rath er to the "essential facts" underlying the 
reasoning.394 
7.408  In our view, China acted inconsistently with its  disclosure obligations under Article 6.9 of the 
Anti-Dumping Agreement in relation to the "all othe rs" dumping rate.  In particular, in reaching its 
conclusion on the existence of dumping by "all othe r" exporters, MOFCOM must have considered a 
number of facts leading to the conclusion that the use of "facts available" was warranted.  In the 
circumstances of this case where, apart from AK Steel and ATI, there were in fact no other exporters 
of GOES, it is not clear on what basis MOFCOM  concluded that non-exis tent exporters refused 
access to necessary information or otherwise impeded th e investigation.  Therefore, in order to allow 
the United States, as an interested party, to defe nd its interests, it was vital that MOFCOM disclose 
the factual basis for its use of  best information available. 
7.409  Further, MOFCOM revealed that it relied upon certain facts submitted by the respondents in 
finding the existence of dumping by "all other" expor ters at a margin of 64.8%.  However, MOFCOM 
did not disclose the particular information from the respondents upon which the dumping margin was 
based.  In the circumstances of this case, some indication of the information from the respondents 
which formed the basis of the "all others" dumping ra te seems particularly important given the large 
disparity between the "all others" rate and the rates for the respondents.  It is certainly not self-evident 
how such a large disparity could have arisen, in ci rcumstances where the rates were apparently based 
upon the same set of facts.  In our view, some disclosure in this rega rd to allow the United States to 
defend its interests was required under Artic le 6.9 of the Anti-Dumping Agreement. 
7.410  We note China's argument that the transaction information upon which MOFCOM relied in 
calculating a dumping rate of 64.8% was confidential to the respondents.  In this regard, we note that 
where information which is by nature confidential, or is submitted to an investigating authority on a 
confidential basis, is also part of the "essential fact s under consideration", an investigating authority is 
under dual obligations.  On the one hand, Article 6.5 of the Anti-Dumping Agreement requires that 
confidential information be treated as such and not be disclosed without the permission of the party 
submitting it.  On the other hand, Article 6.9 requires that the essential facts be disclosed so that interested parties may defend their interests.  Artic le 6.9 does not include a carve-out in relation to 
confidential information.  Therefore, in our view, when information is both confidential but also part 
of the "essential facts under consideration", the oblig ation to disclose the information is nevertheless 
binding.  However, where the party submitting the c onfidential information does not give permission 
for the information to be disclosed, the investig ating authority could m eet its obligations under 
Article 6.9 through the use of non-confidential summaries  of the "essential" but confidential facts.  
Therefore, in our view, a non-confidential summary of the information from the respondents which formed the factual basis of the "all others" dumping rate should have been prepared and disclosed for 
the purposes of Article 6.9 of the Anti-Dumping Agreement. 
7.411  In failing to disclose these facts underlying the "all others" dumping rate, the ability of the 
United States to defend its interests was compromise d.  We disagree with China's suggestion to the 
contrary, which is based on the argument that MOFCOM had "unlimited discretion" to arrive at a result less favourable to the unknown companies that did not cooperate.  As i ndicated in our reasoning 
in relation to the United States' claim under Article  6.8 of the Anti-Dumping Agreement, the premise 
of China's argument fails, due to our conclusion th at the unknown, non-existent companies did not fail 
to cooperate.  Further, as indicated in our analys is of Article 6.8 and Annex II of the Anti-Dumping 
                                                      
394 Panel Reports, Argentina – Poultry Anti-Dumping Duties, para. 7.228; US – Oil Country Tubular 
Sunset Reviews (Article 21.5 – Argentina), para. 7.148 and EC – Salmon (Norway), para. 7.808. WT/DS414/R 
Page 100  
 
 Agreement, an investigating authority does not  have unlimited discretion in applying facts 
available.
395   
7.412  Consequently, we find that China acted inconsis tently with Article 6.9 of the Anti-Dumping 
Agreement in failing to disclose certain "essential fact s" forming the basis of the conclusion that "all 
other" exporters were dumping at a rate of 64.8%.   
3. Whether China acted inconsistently with Arti cles 12.2 and 12.2.2 of the Anti-Dumping 
Agreement in relation to the public notice and explanation of its determination of the "all others" dumping margin  
(a) Provisions at issues 
7.413  Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement provide, relevantly: 
12.2 Public notice shall be given  of any preliminary or final determination…Each 
such notice shall set forth, or otherwise ma ke available through a separate report, in 
sufficient detail the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities. 
12.2.2 A public notice of conclusion or susp ension of an investigation in the case of 
an affirmative determination providing for the imposition of a definitive duty or the 
acceptance of a price undertaking shall contai n, or otherwise make available through 
a separate report, all relevant information on the matters of fact and law and reasons 
which have led to the imposition of final measures or the acceptance of a price undertaking, due regard being paid to the requirement for the protection of 
confidential information.  In particular, the notice or report shall contain the 
information described in subparagraph 2.1,  as well as the reasons for the acceptance 
or rejection of relevant arguments or clai ms made by the exporters and importers, and 
the basis for any decision made under subparagraph 10.2 of Article 6.   
(b) Factual Background 
7.414  Following the issuance of the preliminary determ ination and the final disclosure document, on 
10 April 2010, MOFCOM issued its final determin ation for the anti-dumping and countervailing duty 
investigations. 
(c) Arguments of the United States 
7.415  The United States claims that China acted incons istently with Articles 12.2 and 12.2.2 of the 
Anti-Dumping Agreement.  In particular, in the preliminary determination, the final disclosure 
document and the final determination, MOFCOM faile d to disclose the rationale for its decision to 
apply facts available in calculating the "all others" dumping margin.  The United States argues that the 
single sentence in the preliminary and final determin ations, simply stating that the "all others" rate 
was calculated on the basis of facts available, is insufficient to satisfy the requirements of 
Articles 12.2 and 12.2.2.
396   
                                                      
395 See, for example, para. 7.391 of this Report. 
396 United States' first written submission, paras. 179-182.  WT/DS414/R 
 Page 101 
 
 
 (d) Arguments of China 
7.416  China argues that it provided an adequate explanation of the basis for the "all others" rate.  In 
this regard, China relies upon the same arguments as it did in relation to the United States' claim 
under Article 6.9 of the Anti-Dumping Agreement.  In particular, China argues that MOFCOM could 
provide only a general explanation in the final determination because the "all others" rate was based 
upon confidential information of one of the responding companies. 397   
(e) Arguments of the third parties 
(i) Japan 
7.417  According to Japan, under Article 12.2.2 of th e Anti-Dumping Agreement the reasons for all 
factual and legal issues related to an authority's final determination must be disclosed.  Authorities 
cannot pick and choose the issues on which they will provide an explanation.398   
(ii) Saudi Arabia 
7.418  According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement must contain sufficient detail to allow interested parties to discern either the significance or lack thereof of the factors the inv estigating authority was obligated to address in its 
analysis.
399 
(f) Evaluation by the Panel 
7.419  The United States argues that China acted in consistently with its obligations under 
Articles 12.2 and 12.2.2 of the Anti-Dumping Agreement on the basis that MOFCOM did not provide the factual and legal basis underlying its resort to "facts available" for the purposes of calculating the 
"all others" dumping rate  for unknown exporters.
400   
7.420  We note that a number of other panels have ex ercised judicial economy in relation to claims 
under Articles 12.2 or 12.2.2 of the Anti-Dumping Ag reement in circumstances where a substantive 
inconsistency with another provision of the Anti-Dumping Agreement has been found.401  However, 
in the circumstances of this case, the Panel is of the view that findings under the public notice 
provisions may be relevant in the context of implem entation.  Consequently, we consider that such 
findings will be useful in reaching a positive solution  to the dispute and therefore we will proceed to 
examine the United States' claims in this regard.402   
7.421  The information in the preliminary determinati on relating to the "all ot hers" dumping rate is 
set forth in paragraph 7.405 of this Report.  The fi nal determination states that for those United States 
companies that neither responded to the inv estigation nor submitted questionnaire responses, 
                                                      
397 China's first written submission, paras. 247-248 a nd China's opening statement at the first meeting 
of the Panel, para. 47.  See also, summary of Ch ina's argument at para. 7.399 of this Report.   
398 Japan's third party submission, para. 26. 
399 Saudi Arabia's third party submission, para. 44. 
400 In its first written submission, the United States quotes the text of Article 12.2 of the Anti-Dumping 
Agreement.  Although in paras. 180 and 182 of its first written submission the United States refers to 
"Article 12" of the Anti-Dumping Agreement, the arguments in paras. 179-180 are based on the text of Article 12.2.  Therefore, we infer that the United States' reference to Article 12 in paras. 180 and 182 is intended 
to be a reference to Article 12.2, and we have made a finding accordingly.  This  is consistent with the 
United States' panel request (see WT/DS414/2, para. 11). 
401 See, for example, Panel Report, EC – Bed Linen, para. 6.259. 
402 See also, the United States' response to Panel question 29. WT/DS414/R 
Page 102  
 
 MOFCOM applied "the best information ava ilable and facts already known and [used] the 
information submitted by the responding companie s to make determination on dumping and dumping 
margin".
403 
7.422  The United States' position is that the prelim inary and final determinations should have 
disclosed the factual and legal basis for MOFCOM's resort to "facts available", including the facts 
supporting a finding that the unknown exporters refused  access to, or otherwise did not provide, 
necessary information within a reasonable period,  or significantly impeded the investigation.404   
7.423  Although the United States' claim relates to bot h the preliminary and final determinations, 
given that it is the final determination that is currently in force and providing the basis for the 
imposition of anti-dumping duties, we consider it necessar y to make findings only in relation to it.  In 
our view, making a finding in relation to the pr eliminary determination would not assist in the 
securing a positive solution to the dispute. 
7.424  The decision to resort to facts available to de termine the existence and the margin of dumping 
in relation to "all other" exporte rs is one step in the process leading to the imposition of a final 
measure, within the meaning of Article 12.2.2 of the Anti-Dumping Agreement.  In the Panel's view, 
the final determination did not set forth "all rele vant information on matters of fact" or the 
"findings…reached on all issues of fact" s upporting the conclusion th at unknown, indeed non-
existent, exporters refused to provide necessary info rmation or otherwise impe ded the investigation. 
7.425  Further, the final determination does not set fort h the relevant matters of fact, or the findings 
and conclusions reached on all issues of fact, lead ing to the conclusion the 64.8% was the appropriate 
anti-dumping margin for "all other" exporters.  Al though the final determination states that best 
information available was used, including informa tion submitted by the responding companies, it is 
now clear that MOFCOM applied adverse  facts available to calculate the dumping margin.  However, 
there is no indication of this in the final determination and it still re mains unclear exactly what factual 
findings MOFCOM made to support a dumping of marg in of 64.8%, which differs markedly from the 
rate calculated for the tw o respondent companies. 
7.426  Consequently, the Panel concludes that MOFCOM  did not disclose in "sufficient detail the 
findings and conclusions reached on all issues of fact" or "all relevant information on matters of fact".  
Therefore,  we find that China acted inconsistently  with Articles 12.2 and 12.2.2 of the Anti-Dumping 
Agreement. 
H. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE VI :2 OF THE GATT 1994 
1. Provision at issue 
7.427  Article VI:2 of the GATT 1994 provides, relevantly: 
In order to offset or prevent dumping, a contracting party may levy on any dumped 
product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product.   
                                                      
403 Final Determination, Exhibit CHN-16, p. 31. 
404 United States' first written submission, para. 181.  WT/DS414/R 
 Page 103 
 
 
 2. Arguments of the United States 
7.428  The United States claims that Ch ina acted inconsistently with Article VI:2 of the GATT 1994 
because the duties China levied on the "all other" companies that were unknown to the investigating 
authority were greater in amount than the appropriate margin of dumping. 
7.429  The United States refers to its argument that China impermissibly assigned an adverse facts 
available margin of 64.8% when calculating the "a ll others" margin for companies that were unknown 
to the investigating authority.  As a result of the adverse assumptions made in this calculation, the 
anti-dumping duty levied on the unknown companies was greater in amount than the margin of dumping that could have permissibly been calculated under the Anti-Dumping Agreement.
405 
3. Arguments of China 
7.430  In response to the United States' claim under Ar ticle VI:2 of the GATT 1994, China refers the 
Panel to its substantive arguments regard ing the "all others" anti-dumping duty rate.406 
4. Evaluation by the Panel 
7.431  The United States' claim under Article VI:2 of the GATT 1994 challenges the amount of the 
anti-dumping duty levied by MOFCOM on the "all other" unknown exporters.  The Panel has 
previously concluded that the manner in which MOFCOM calculated the "all others" anti-dumping 
duty rate, and the way in which it disclosed the facts underlying this calculation, are inconsistent with 
both substantive and procedural provisions of the Anti-Dumping Agreement, namely Articles 6.8, 6.9 
and 12.2.2. 
7.432  Given that we have upheld the United States' claims under the Anti-Dumping Agreement with 
respect to the "all others" anti-dumping duty rate, it is not necessary also to make a finding with 
respect to this measure under Article VI:2 of the GATT 1994.  The Appellate Body found in Canada 
– Wheat Exports and Grain Imports  that the practice of judicial economy "allows a panel to refrain 
from making multiple findings that the same measure is inconsistent with various provisions when a 
single, or a certain number of findings of inconsistency, would suffice to resolve the dispute".407  In 
our view, the findings made under Articles 6.8, 6.9, 12.2 and 12.2.2 of the Anti-Dumping Agreement 
with respect to the "all others" anti-dumping duty rate are such as to allow the DSB to make 
sufficiently precise recommendations and rulings in or der to ensure the effective resolution of this 
dispute.408  Therefore, we exercise judicial economy  in relation to the United States claim under 
Article VI:2 of the GATT 1994. 
                                                      
405 United States' first written submission, para. 185. 
406 China's first written submission, para. 251. 
407 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 133.  
408 See also, Appellate Body Reports, Brazil – Retreaded Tyres, para. 257 and Australia – Salmon, 
para. 223. WT/DS414/R 
Page 104  
 
 I. 
WHETHER CHINA ACTED INCONS ISTENTLY WITH ARTICLES 12.7,  12.8,  22.3  AND 22.5  OF THE 
SCM AGREEMENT IN RELATION TO THE "ALL OTHERS " RATE FOR UNKNOWN EXPORTERS IN 
THE COUNTERVAILING DUTY INVESTIGATION  
1. Whether China acted inconsistently with Article 12.7 of the SCM Agreement in using 
facts available to calculate the s ubsidy rate for unknown exporters  
(a) Provision at issue 
7.433  The United States' claim relates to Article 12.7 of the SCM Agreement.  Article 12.7 
provides: 
In cases in which any interested Member or  interested party refuses access to, or 
otherwise does not provide, necessary info rmation within a reasonable period or 
significantly impedes the investigation, preliminary and final determinations, 
affirmative or negative, may be made on the basis of facts available.   
(b) Factual Background 
7.434  In calculating the subsidy rates, MOFCOM applie d "facts available" to both the investigated 
and the "unknown" exporters, although the rationale for doing so, and the "facts available" relied 
upon, were different for the two categories of exporters.  MOFCOM's method for notifying the 
initiation of an investigation was the same as  that outlined in relation to the anti-dumping 
investigation, described at para graph 7.371 of this Report.  We recall that, apart from AK Steel and 
ATI, no United States producers/exporters of GOES re gistered for investigation.  As a result, in 
calculating the "all others" subsidy rate for prod ucers/exporters other than AK Steel and ATI, 
MOFCOM applied "facts available".   
(c) Arguments of the United States 
7.435  The United States notes that in its final dete rmination MOFCOM publis hed an "all others" 
subsidy rate of 44.6%, a rate more  than two times higher than the hi ghest rate for an investigated 
company.  MOFCOM provided no explanation regard ing how it arrived at this figure, apart from a 
reference indicating that it had made use of "facts available".409 
7.436  The United States argues that the use of facts available in calculating the "all others" rate is 
inconsistent with Article 12.7 of the SCM Agreement.  MOFCOM appears to have determined that by 
failing to register as respondents, "all other" prod ucers/exporters failed to provide MOFCOM with 
necessary information and thereby triggered the use of  facts available.  However, the United States' 
position is that, read in the context of Article 12. 1, the use of facts available under Article 12.7 is 
conditioned on the investigating authority specifyi ng in sufficient detail the information required and 
alerting the interested party that failure to supply such information will result in a determination based 
on facts available.410  According to the United States, apart from AK Steel and ATI, MOFCOM did 
not identify the existence of any other United St ates exporters/producers of GOES.  Indeed, the 
United States notes China's response to a Panel ques tion, in which it acknowledges that "there are no 
other U.S. producers" of GOES, apart from AK Steel and ATI.  According to the United States, this 
                                                      
409 United States' first written submission, para. 124. 
410 United States' first written submission, para. 129.  WT/DS414/R 
 Page 105 
 
 
 begs the question of what basis China had to appl y adverse facts available to non-existent entities for 
failure to cooperate.411   
7.437  Even if it were appropriate for MOFCOM to make use of facts available, the United States 
maintains that the manner in which MOFCOM applie d facts available was incorrect.  According to 
the Appellate Body in Mexico – Anti-Dumping Measures on Rice , in applying facts available, all 
substantiated facts on the record of  the investigation must be taken into account and "facts available" 
must only fill in information an interested part y refused access to or failed to provide.  The 
United States argues that to obtain a facts availa ble subsidy rate of 44. 6%, MOFCOM must have 
included in its calculation the unsupported factual assertions contained in the petition, relating to 
subsidy programmes that MOFCOM ultimat ely found to be non-countervailable.412  I n  s o  d o i n g ,  
MOFCOM ignored substantiated facts on the record , namely that certain programmes did not provide 
specific subsidies.413   
(d) Arguments of China 
7.438  In response to the United States' argument that MOFCOM did not give notice to all interested 
parties before applying facts available, Chin a responds that MOFCOM provided notice to the 
United States Government, AK Steel and ATI.  It also placed a copy of the petition in its public 
reading room and published public notices of initiation.  On this basis, China concludes that "notice 
was thereby given to each known interested party".414 
7.439  In relation to the United States' complaint th at the manner in which MOFCOM applied facts 
available was inconsistent with Article 12.7 of the SCM Agreement because substantiated facts on the 
record were ignored, China confirms that the facts ar e "as identified by the United States".  Further, in 
response to a Panel question, China explicitly acknow ledges that "the 'all others' subsidy rate for 
unknown exporters contained programmes found by MOFCOM not to confer countervailable 
subsidies on the two known respondents".415 
(e) Arguments of the Third Parties 
(i) European Union 
7.440  The European Union argues that the inclusion of programmes found during the course of the 
investigation not to be countervailable in the calcula tion of the all others subsidy rate constitutes an 
abusive use of facts available, contrary  to Article 12.7 of the SCM Agreement.416 
(ii) India 
7.441  According to India, the conclusion that can be drawn from Article 6.8 and paragraph 1 of 
Annex II of the Anti-Dumping Agreement, namely th at facts available may not be applied to an 
                                                      
411 United States' second written submission, para. 120.  In the United States' response to Panel 
question 13, the United States submits that even though it knows of no other producers of GOES, apart from AK 
Steel and ATI, the "all others" rates would apply to any new United States shipper of GOES to China. 
412 United States' second written submission, para. 124. 
413 United States' first written submission, paras. 136-137.  
414 China's first written submission, para. 238 and Chin a's opening statement at the first meeting of the 
Panel, para. 43. 
415 China's response to Panel question 14, para. 48 .  See also, China's first written submission, 
para. 239, where China indicates that the "all others" rate was derived from the estimate of the subsidy margin found in the petition and based on all programmes under investigation. 
416 European Union's third party submission, para. 16. WT/DS414/R 
Page 106  
 
 interested party that has not b een asked to submit any informa tion, can also be drawn from 
Article 12.7 of the SCM Agreement.
417 
(iii) Japan 
7.442  According to Japan, the "basic discipline" unde r the Anti-Dumping Agreement, namely that 
an investigating authority may not use facts av ailable to determine the margin of dumping for 
exporters/producers that were not given notice of th e information required of them, also applies under 
the SCM Agreement, by virtue of Articles 12.1 and 12.7.  This is supported by the Appellate Body's 
comment in Mexico – Anti-Dumping Measures on Rice that "it would be anomalous if Article 12.7 of 
the SCM Agreement were to permit the use of 'facts available' in countervailing duty investigations in 
a manner markedly different from that in anti-dumping investigations".418   
(iv) Korea 
7.443  According to Korea, Article 12.7 is concer ned with due process, and the Panel should 
carefully review whether the due process rights have been adequately respected in this case.419 
(v) Saudi Arabia 
7.444  In Saudi Arabia's view, the standards that appl y to the use of facts available in anti-dumping 
proceedings apply equally to counter vailing duty proceedings.  Further, facts available should only be 
used to fill in gaps in the necessary informa tion and must not be used in a punitive manner.420   
(f) Evaluation by the Panel 
7.445  The United States' claim under Article 12.7 of  the SCM Agreement raises two questions for 
the Panel to determine.  First, whether the conditi ons for the application of facts available to the 
unknown exporters were met and second, whether the manner in which facts available were applied 
was consistent with Article 12.7.   
(i) Whether the conditions for the application of facts available were met 
7.446  The Panel recalls that the investigating author ity took the same steps to attempt to notify 
interested parties as it did in the context of the anti-dumping investigation.421  The United States' 
claim raises the question of whether, despite the ab sence in the SCM Agreement of an equivalent to 
Annex II of the Anti-Dumping Agreement, an investig ating authority is required to notify interested 
parties of the "necessary information" before th e investigating authority may resort to facts 
available.422  In this regard, the Panel considers that Article 12.1 provides relevant context for the 
interpretation of "necessary information" in Article 12.7.  In particular, Article 12.1 provides that 
interested parties "shall be given notice of the information which the authorities require".  This 
confirms that it is for the investigating author ities to define the parameters of the "necessary 
information" and to give interested parties notice of  this information.  Ther efore, even in the absence 
of an equivalent to Annex II, the Panel consider s that a similar conclusion to that reached under 
Article 6.8 of the Anti-Dumping Agreement is appropr iate.  In particular, in the absence of being 
notified of the "necessary information" in the context of a particular investigation, it is difficult to 
conclude that unknown exporters refused access to or failed to provide necessary information or 
                                                      
417 India's third party statement, paras. 6.3-6.4. 
418 Japan's third party statement, para. 16. 
419 Korea's third party statement, para. 10. 
420 Saudi Arabia's third party submission, paras. 14, 16 and 20-21. 
421 See para. 7.371 of this Report. 
422 This issue is also considered at para. 7.289 of this Report.  WT/DS414/R 
 Page 107 
 
 
 otherwise impeded the investigation.  Indeed, in th e circumstances of this case, where there were in 
fact no other exporters/producers of GOES during th e period of investigation, apart from AK Steel 
and ATI, a conclusion that non-existent exporters refused to provide information or impeded the 
investigation seems illogical.423   
7.447  We note that our conclusion finds support in the reasoning used by other panels to have 
considered Article 12.7 of the SCM Agre ement.  In particular, the panel in Mexico – Anti-Dumping 
Measures on Rice noted that exporters not given notice of th e information required of them cannot be 
considered to have failed to  provide necessary information.424  Further, in US – Anti-Dumping and 
Countervailing Duties (China), the United States' investigating authority did not request specific 
necessary information because it did not realize the need for such information until late in the 
investigation.  The panel held that this circumstance  did not warrant the resort to facts available.  The 
panel noted that Article 12.7 of the SCM Agreement permits recourse to facts available only when an 
interested party (i) refuses access to  necessary information within a r easonable period; (ii) otherwise 
fails to provide such information within a reaso nable period; or (iii) significantly impedes the 
investigation.425  The panel held that the exporters in  question did not refu se access to necessary 
information.  Rather, it was clear that the investig ating authority did not ever request the information 
to be provided.426  Consequently, the panel found that n one of the conditions permitting the recourse 
to facts available were satisfied and the United St ates had acted inconsiste ntly with Article 12.7.427 
7.448  In sum, the Panel concludes that in applying "facts available" to exporters that were not 
notified of the information required of them, and that did not refuse to provide necessary information 
or otherwise impede the investigation, China act ed inconsistently with Article 12.7 of the SCM 
Agreement. 
(ii) The manner in which facts available were applied 
7.449  In the Panel's view, the United States' has a strong claim that MOFCOM applied facts 
available in a manner inconsistent with Article 12.7 of the SCM Agreement by including programmes 
found by MOFCOM not to confer countervailable s ubsidies in the calculation of the "all others" 
subsidy rate.  Indeed, China does not seriously co ntest this aspect of the United States' case, but 
merely confirms that the calculation of the "all others" subsidy rate occurred in this manner.   
7.450  The Panel recalls the Appe llate Body's findings in Mexico – Anti-Dumping Measures on Rice 
regarding the way in which facts available may be applied under Article 12.7 of  the SCM Agreement.  
The Appellate Body noted that although the SCM Agreement does not include an equivalent to 
Annex II of the Anti-Dumping Agreement, this does not mean that there are no conditions under the 
SCM Agreement to govern which "facts" might be "a vailable" for an investigating authority to use 
when a respondent fails to provide necessary information.428  According to the Appellate Body, 
Article 12 of the SCM Agreement "set[s] out eviden tiary rules that apply throughout the course of 
the…investigation".429  The Appellate Body held that the due process obligation under Article 12.1, 
namely that an interested party be permitted to present all the evidence it considers relevant, 
concomitantly requires that the investigating au thority, where appropriate, take into account the 
information submitted by an interested party.  Furt her, the Appellate Body found that Article 12.7 is 
intended to ensure that the failure of an inter ested party to provide necessary information does not 
                                                      
423 See China's response to Panel question 13, para. 47. 
424 Panel Report, Mexico – Anti-Dumping Measures on Rice, footnote 211. 
425 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.9. 
426 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.15. 
427 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 16.16. 
428 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 291. 
429 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 292. WT/DS414/R 
Page 108  
 
 hinder an agency's investigation.  Therefore, the provision permits the use of facts available only for 
the purpose of replacing information that may be missing, in order to arrive at an accurate subsidization or injury determination.
430  The Appellate Body concluded that the recourse to facts 
available does not permit an investigating author ity to use any information in whatever way it 
chooses.  The recourse to facts available is "not  a licence to rely on only part of the evidence 
provided".431  Rather, to the extent possible, an inves tigating authority making use of facts available 
must take into account all of the substantiated facts on the record. 
7.451  In the view of the Panel, the conclusion reach ed by the Appellate Body finds support within 
the terms of Article 12.7 of the SCM Agreement.  The fact that resort to facts available is conditioned 
on refusal to supply necessary information suggests that it should be used to replace only that 
information to which the refusal relates.  Further, the Panel accords significance to the fact that China 
does not address the Appellate Body's findings or s uggest any reasons for the Panel to depart from 
them, despite a specific Panel ques tion to China asking it to commen t on this aspect of the reasoning 
in Mexico – Anti-Dumping Measures on Rice.432   
7.452  Therefore, the Panel concludes that by ignoring substantiated facts on the record, namely that 
certain programmes included in the application did not confer countervailable subsidies, China acted 
inconsistently with Article 12.7 of the SCM Agreement. 
2. Whether China acted inconsistently with Article 12.8 of the SCM Agreement by failing 
to inform interested parties of the essentia l facts under consideration in calculating the 
"all others" subsidy rate  
(a) Provision at issue 
7.453  Article 12.8 of the SCM Agreement provides: 
The authorities shall, before a final determ ination is made, inform all interested 
Members and interested parties of the essen tial facts under consideration which form 
the basis of the decision whether to appl y definitive measures.  Such disclosure 
should take place in sufficient time for the parties to defend their interests. 
(b) Factual Background 
7.454  Following the preliminary determination, and prior to issuing its final determination, 
MOFCOM issued a final disclosure document, in cluding certain disclosures regarding the subsidy 
rates to be applied to the investigated co mpanies and to the "unknown" exporters.   
(c) Arguments of the United States 
7.455  The United States explains that in its prelim inary determination, MOFCOM established an 
"all others" subsidy rate of 12%.  Prior to the final determination, MOFCOM released its final 
disclosure document, in which it revealed that the "all others" subsidy rate had increased to 44.6%.  
The only explanation given for the increase was that  MOFCOM had relied on "facts available" in its 
calculation.433  Although the United States objected to the unexplained increase, MOFCOM imposed 
                                                      
430 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 292-293. 
431 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 294. 
432 China's response to Panel question 15. 
433 United States' first written submission, para. 144.  WT/DS414/R 
 Page 109 
 
 
 an "all others" subsidy rate of 44.6%  in its final determination.  MO FCOM explained that the rate was 
calculated according to inform ation submitted by the petitioner.434   
7.456  The United States argues that MOFCOM did no t disclose the "essential facts" forming the 
basis for its imposition of a 44.6% all others subs idy rate.  The United States argues that this is 
particularly troublesome given that MOFCOM ch anged its calculation, and the basis for its 
calculation, including to the use of facts available,  between the preliminary and final determinations, 
resulting in a nearly quadrupling of the subsidy ra te.  The United States and interested companies 
were unable adequately to defend their interests be cause they were unaware of the factual basis for 
MOFCOM's determination.435 
(d) Arguments of China 
7.457  In response to the United States' claim that MO FCOM failed to inform the parties of the 
"essential facts" under consideration forming the basi s of the application and calculation of the all 
others subsidy rate, China argues that the final discl osure and the final determination revealed that the 
all others rate was based upon information disclosed  by the petitioners.  China states that in its 
submissions, the United States readily identified this  as the source of the information underlying the 
all others rate.436 
(e) Arguments of third parties 
(i) European Union 
7.458  The European Union agrees with the United Stat es on the "essential facts" that should have 
been disclosed in relation to the "all others" subsid y rate.  The European Union submits that if the 
United States' allegations are conf irmed with respect to the lack of disclosure, China has acted 
inconsistently with Article  12.8 of the SCM Agreement.437 
(ii) Japan 
7.459  In relation to the "all others" subsidy rate, Jap an argues that the government actions which the 
investigating authority characterizes as a subsidy, and the calculation of the per-unit ad valorem  
subsidy rates, are "essential facts" to be discl osed in accordance with Article 12.8 of the SCM 
Agreement.438   
(iii) Saudi Arabia 
7.460  Saudi Arabia notes that the disclosure of "essential facts" under Article 12.8 of the SCM 
Agreement must occur prior to the final determinat ion, to allow sufficient time for parties to defend 
their interests. 439 
                                                      
434 United States' first written submission, para. 145. 
435 United States' first written submission, paras. 149-152. 
436 China's first written submission, para. 240; China's opening statement at the first meeting of the 
Panel, para. 44 and China's response to Panel question 25, para. 101. 
437 European Union's third party submission, paras. 17-20. 
438 Japan's third party submission, paras. 23-24. 
439 Saudi Arabia's third party submission, para. 25. WT/DS414/R 
Page 110  
 
 (f) Evaluation by the Panel 
7.461  In its preliminary determination, MOFCOM est ablished an "all others" subsidy rate of 12% 
for unknown exporters.  In the final disclosure documen t, released prior to the final determination, 
MOFCOM indicated that the rate had increas ed to 44.6%.  The final disclosure stated: 
"The margin for all other American comp anies was calculated based on information 
submitted by the petitioners pursuant to artic le 21 of the CVD regulations" [where 
Article 21 of the Chinese regulations pertains to the use of facts available].
440 
7.462  According to the United States, MOFCOM should also have disclosed: 
(i) the facts leading to the conclusion that th e use of "facts available" was appropriate; 
(ii) the facts leading to the conclusion that 44 .6% was the appropriate subsidy rate; and 
(iii) the facts underpinning the calculation of the 44.6% rate and the details of the 
calculation.441 
7.463  Article 12.8 of the SCM Agreement requires the disclosure of the essential facts under 
consideration "which form the basis of the decisi on whether to apply definitive measures".  We agree 
with the statement of the panel in Mexico – Olive Oil that "essential facts" are those that underlie an 
investigating authority's final findings and conclusi ons in respect of the essential elements that must 
be present for the application of definitive measures.  In the case of a countervailing duty 
investigation, these elements are s ubsidization, injury and causation.442  Given that an investigation 
must be terminated and countervailing duties cannot be imposed where the amount of subsidization is 
de minimis, the rate of subsidization also forms the basi s of the decision whether to apply definitive 
measures.  Therefore, the essential facts underlying an  investigating authority's conclusions regarding 
the amount of subsidization should also be disclosed under Article 12.8. 
7.464  In our view, China acted inconsistently with the disclosure obligations under Article 12.8 of 
the SCM Agreement.  In particular, MOFCOM's fi nding of subsidization was based upon a number of 
underlying facts, including those leading to the conc lusion that the application of "facts available" was 
warranted.  In the circumstances of this case, wh ere China acknowledges that there were in fact no 
other exporters of GOES, apart from AK Steel and ATI, it is not clear how non-existent exporters 
failed to provide necessary information or otherw ise impeded the investigation.  MOFCOM should 
have disclosed the facts leading to this conclusion in  order to allow interested parties to defend their 
interests. 
7.465  Further, the "facts available" actually relied upon by MOFCOM, resulting in a subsidy rate of 
44.6%, should have been disclosed in accordance w ith Article 12.8 of the SCM Agreement.  Given 
the significant increase in the "all others" subsidy ra te between the preliminary determination and the 
final disclosure, and the large disparity between the all others "facts available" subsidy rate and the 
rates calculated for the known exporters, a more detailed disclosure of the "essential facts" under 
consideration leading to an "all others" rate of  44.6% was required to allow the United States to 
defend its interests. 
                                                      
440 Final Disclosure document, Exhibit US-26, p. 41. 
441 United States' first written submission, para. 148 and United States' opening statement at the first 
meeting of the Panel, para. 62. 
442 Panel Report, Mexico – Olive Oil, para. 7.110.  WT/DS414/R 
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 7.466  Therefore, the Panel finds that China acted inconsistently with Article 12.8 of the SCM 
Agreement in failing to disclose certain essential fact s underlying its decision to apply an "all others" 
subsidy rate of 44.6%. 
3. Whether China acted inconsistently with Ar ticles 22.3 and 22.5 of the SCM Agreement 
in relation to the public notice and explanatio n of its determination of the "all others" 
subsidy rate  
(a) Provisions at issue 
7.467  Articles 22.3 and 22.5 of the SCM Agreement provide: 
22.3 Public notice shall be given of an y preliminary or final determination, 
whether affirmative or negative…Each such notice shall set forth, or otherwise make 
available through a separate report, in suffi cient detail the findings and conclusions 
reached on all issues of fact and law considered material by the investigating authorities.   
22.5 A public notice of conclusion or suspen sion of an investigation in the case of 
an affirmative determination providing for the imposition of a definitive duty…shall 
contain…all relevant information on the ma tters of fact and law and reasons which 
have led to the imposition of final m easures…due regard being paid to the 
requirement for the protection of confiden tial information.  In particular, the 
notice…shall contain…the reasons for the acceptance or rejection of relevant arguments or claims made by …the exporters and importers. 
(b) Factual Background 
7.468  Following the issuance of the preliminary dete rmination and the final disclosure documents, 
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing 
duty investigations.   
(c) Arguments of the United States 
7.469  The United States claims that China acted inconsistently with Articles 22.3 and 22.5
443 of the 
SCM Agreement on the basis that MOFCOM did not  provide, in the public notice of the final 
determination, any rationale for its decision to  apply adverse facts available to "all other" 
United States producers/exporters of GOES.  Furt her, the final determination did not include 
information on the facts and reasons that led MOFCOM  to conclude that a 44.6% subsidy rate was an 
appropriate "all others" rate, an explanation of wh ich was particularly necessary given that the subsidy 
rates for the two respondent companies were substa ntially lower.  The United States also complains 
that MOFCOM did not reveal the facts underpinning the calculation of the 44.6% rate and the details 
of the calculation itself.444  The United States argues that MOFCOM's failure is particularly 
troublesome given that MOFCOM changed its "all ot hers" rate calculation, and the basis for it, 
between the preliminary and final determinations.445 
                                                      
443 United States' response to Panel question 30. 
444 United States' response to Panel question 30, para. 50. 
445 United States' response to Panel question 30, para. 52. WT/DS414/R 
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 (d) Arguments of China 
7.470  China does not provide arguments in response to the United States' claim.
446 
(e) Arguments of third parties 
(i) Japan 
7.471  Japan notes that under Article 22.5 of the SCM Agreement, the reasons for all factual and 
legal issues related to an authority's final determ ination must be disclosed.  Authorities cannot pick 
and choose the issues on which they will provide an explanation.447   
(f) Evaluation by the Panel 
7.472  The United States' claims under Articles 22.3 and 22.5 of the SCM Agreement relate to the 
explanation in the final determination regarding th e "all others" subsidy rate  for unknown exporters.  
The final determination states "[f]or other U. S. companies who did not submit questionnaire 
responses, the Investigating Aut hority made a determination on Ad Valorem subsidy rate according to 
the information submitted by the Petitioners pursue to Article 21 of the Anti-Subsidy Regulations " 
(where Article 21 relates to the use of facts available).448 
7.473  Articles 22.3 and 22.5 of the SCM Agreement require that the public notice of a final 
determination (or otherwise a separate report), set forth in sufficient detail the findings and 
conclusions reached on all issues of fact and law cons idered material by the investigating authorities.  
Article 22.5 also requires that the reasons leading to the imposition of final measures be disclosed.   
7.474  The final determination does not set forth the relevant matters of fact leading to the 
conclusion that 44.6% was the appropriate subsidy ra te for "all other" exporters.  Although the final 
determination states that the "all others" subsid y rate was based upon information submitted by the 
applicants, it is now clear that this included information on programmes that MOFCOM had found 
not to constitute countervailable subsidies.  Howeve r, there was no indication of this in the final 
determination and it was not clear from the determin ation what relevant facts led to an "all others" 
rate that was substantially higher than the subs idy rate calculated for the two known exporters.  
Consequently, the Panel concludes that MOFCOM di d not disclose in "sufficient detail the findings 
and conclusions reached on all issues of fact" or "all relevant information on matters of fact".  
Therefore, China acted inconsistently with Ar ticles 22.3 and 22.5 of the SCM Agreement.   
J. PRICE EFFECTS ANALYSIS  
1. Whether China acted inconsistently with Ar ticles 15.1 and 15.2 of the SCM Agreement 
and Articles 3.1 and 3.2 of the Anti-Dum ping Agreement in relation to MOFCOM's 
analysis of the price effects of subject imports 
(a) Introduction 
7.475  MOFCOM conducted a single injury and causation analysis pertinent to both the anti-
dumping and countervailing duty inves tigations.  Further, a cumulative assessment of injury was 
performed, which collectively took into account  GOES imports from both the United States and 
                                                      
446 See Part F of China's first written submission, where China responds on ly to the claims under 
Articles 12.7 and 12.8 of the SCM Agreement in rela tion to MOFCOM's determination of the "all others" 
countervailing duty rate for unknown exporters. 
447 Japan's third party submission, para. 26. 
448 Final Determination, Exhibit US-28, p. 49.  WT/DS414/R 
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 Russia.  In its final determination, MOFCOM f ound that China's GOES industry sustained material 
injury and that there was a causal link between th is injury and the dumped imports of GOES from 
Russia, and the dumped and subsidized imports of GOES from the United States.  In the course of its 
injury analysis, MOFCOM found that the effect of subject imports was to "significantly depress[] and 
suppress[] the price of domestic like products."449 
7.476  The United States challenges MOFCOM's finding  that the dumped and subsidized imports 
had significant price effects.  In particular, the United States challenges MOFCOM's findings on price undercutting, price depression and price suppression.  The United States contends that MOFCOM's 
analysis of these price effects is conclusory, fails to reflect an objective examination of the evidence, 
and is not based on positive evidence.  The United States contends that MOFCOM's price effects 
analysis is therefore contrary to Articles 3.1 and 3.2 of the Anti-Dumping Agreement, and 
Articles 15.1 and 15.2 of the SCM Agreement. 
7.477  China submits that MOFCOM properly found adverse price effects from the increasing 
volume of subject imports.  In particular, China asserts that MOFCOM properly found price suppression and price depression in 2008 and 2009.  China submits that MOFCOM did not make 
specific findings about price undercutting, and w as not required to do so.  Furthermore, China 
contends that even if the Panel were to find MOFCOM's analysis of price effects to be WTO-inconsistent, the Panel should still affirm the ove rall finding of causation under Article 3 of the Anti-
Dumping Agreement and Article  15 of the SCM Agreement. 
(b) Provisions at issue 
7.478  Articles 3.1 and 3.2 of the Anti-Dumping Agreement provide: 
3.1 A determination of injury for purposes of Article VI of GATT 1994 shall be 
based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) th e consequent impact of these imports on 
domestic producers of such products. 
3.2 With regard to the volume of the dumped imports, the investigating 
authorities shall consider whether there h as been a significant increase in dumped 
imports, either in absolute terms or re lative to production or consumption in the 
importing Member.   With regard to the effect of the dumped  imports on prices, the investigating authorities shall consider wh ether there has been a significant price 
undercutting by the dumped imports as compar ed with the price of a like product of 
the importing Member, or whether the effect of such imports is otherwise to depress 
prices to a significant degree  or prevent price increases, which otherwise would have occurred, to a significant degree.  No one or several of these factors can necessarily 
give decisive guidance. 
7.479  Articles 15.1 and 15.2 of the SCM Agreement are identical, except that the phrase "dumped 
imports" is replaced by the phrase "subsidized imports". 
(c) Arguments of the United States 
7.480  The United States submits that Article 3.1 of the Anti-Dumping Agreement and Article 15.1 
of the SCM Agreement impose two important requiremen ts regarding injury determinations.  The first 
is that the determination be based on "positive evid ence", which the Appellate Body has described as 
                                                      
449 Final Determination, Exhibit CHN-16, page 59. WT/DS414/R 
Page 114  
 
 evidence that is "relevant and pertinent with resp ect to the issue being decided, and that has the 
characteristics of being inheren tly reliable and trustworthy".
450  The second requirement is that the 
injury determination involve an "objective examinat ion" of the volume of the dumped or subsidized 
imports, their price effects and the impact on th e domestic industry.  The Appellate Body has found 
that an "objective examination" must be conducted in good faith, must be based on data that provides 
an accurate and unbiased account of what is being examined and must be conducted without 
favouring the interests of any particular party.451 
7.481  The United States also notes that Article 3.2 of the Anti-Dumping Agreement and 
Article 15.2 of the SCM Agreement describe in furt her detail the nature of the examination that 
authorities must conduct to determine the price e ffects of dumped or subsidized imports.  In 
particular, the investigating authority must cons ider whether the imports have resulted in price 
undercutting, price depression or price suppression in the domestic market.  The United States 
challenges each of these three alleged aspects of MOFCOM's analysis.452  In doing so, the 
United States first establishes that MOFCOM's de termination was indeed based on both volume and 
price effects, rather than volume effects only.   
(i) Price Undercutting 
7.482  The United States notes that MOFCOM does not expressly make a finding of significant price 
undercutting.  Nevertheless, the United States argues that several of its findings suggest that an 
essential predicate of the price effects analysis is that the prices for the imports under investigation 
were lower than the prices of domestically produced  products.  The United States notes that China has 
acknowledged that MOFCOM made findings a bout the "low prices" of subject imports.453  According 
to the United States, MOFCOM purported to rely on in formation about the price levels of the imports, 
and found that these price levels were "low" in comparison with the domestic like product. 
7.483  Furthermore, although the United States accepts the proposition (as argued by China) that an 
investigating authority can make a finding of si gnificant price effects without finding significant 
underselling, the United States relies on the panel report in EC – Salmon (Norway)  to argue that the 
question of significant price underselling must in any event be considered  (even if there is ultimately 
no determination that significant price underselling ex ists).  Furthermore, the United States contends 
that examination of relative price levels of the domestically produced product and the imports under 
investigation is an important element in ascerta ining whether price depression or suppression is 
actually the effect of the imports, as opposed to some other factor. 
7.484  With respect to the substance of MOFCOM 's alleged price undercutting findings, the 
United States argues that MOFCOM never disclosed any underlying facts that would support the 
finding that the exporters of GOES adopted a "low pr ice" strategy.  There is no indication regarding 
how MOFCOM conducted a price comparison and the only price comparison result reported is that 
the imports under investigation were not priced lo wer than domestically produced products during the 
first quarter of 2009.454  Further, the United States contends that the undisclosed and unspecified 
"records" of the petitioners in which the low price strategy of the exporters is allegedly reflected 
                                                      
450 United States' first written submission, para. 207. 
451 United States' first written submission, para. 208. 
452 United States' first written submission, para. 209. 
453 China's first written submission, para. 296.  See also, China's opening statement at the first meeting 
of the Panel, para. 57. 
454 United States' first written submission, paras. 210-211.  WT/DS414/R 
 Page 115 
 
 
 cannot constitute positive evidence of low "prices" absent some proof that the records reflect the 
prices actually charged by the exporters.455 
(ii) Price Depression 
7.485  The United States makes arguments about both (i) the actual existence of significant price 
depression during the period of investigation, and (ii) whether any such price depression can properly 
be attributed to subject imports.  According to the United States, it is not enough for the investigating 
authority merely to demonstrate price depression.  The authority must also establish that any price depression was an effect of the dumped or subsidized imports. 
7.486  Regarding the existence of significant price depression per se , the United States argues that 
MOFCOM's price depression analysis is devoid of evid entiary support and is contradicted by the only 
available evidence.  The sole price depression finding made by MOFCOM was that "[b]ecause subject 
merchandise was kept at a low price, and the impor t volumes of subject merchandise increased greatly 
since 2008, domestic producers had to lower their pr ices to keep market shar e".  The United States 
notes MOFCOM's finding that domestic prices incre ased by 6.66% in 2007 and by 14.53% in 2008.  
The United States contends that MOFCOM never ma de a finding that depression occurred in 2008.  
The United States notes that, according to China,  MOFCOM had quarterly domestic price data 
showing that prices decreased by 15.3% in the last quarter of 2008.
456  However, the United States 
contends that the only finding made by MOFCOM  in respect of 2008 was that domestic prices 
increased by 14.53% in that year.  The United St ates asserts that, according to the information 
disclosed by MOFCOM, the only period during which prices for domestically produced GOES declined was the first quarter of 2009, when pri ces dropped by 30.25%.  The United States further 
asserts that MOFCOM failed to explain how any such price depression was "significant". 
7.487  The United States asserts that MOFCOM purported to show that price depression was an 
effect of subject imports by relying on comparis ons between "low" import pr ices and allegedly higher 
prices for domestically produced products.  The Un ited States contends that this finding was not 
supported by positive evidence.  The United States a sserts that MOFCOM did not collect information 
in a manner designed to yield accurate or unbiased information about price levels.  For instance, 
nothing in MOFCOM's determinations indicates th at it relied upon actual pricing data.  Rather, 
MOFCOM references only average unit values for th e imports, without providing an explanation of 
why average unit data was a reasonable proxy fo r pricing data.  Further, MOFCOM relied upon 
average unit values that were an aggregate of Russian and United States imports, even though 
separate data would have been available.
457  Finally, MOFOCM collapsed all transactions for 2006, 
2007 and 2008 into a single observation for each calenda r year.  In the light of this, the United States 
argues that MOFCOM manipulated the data to  minimize its accuracy and comprehensiveness.458 
7.488  Concerning the issue of whether any price depression in the last quarter of 2008 could 
properly be attributed to subject imports, the Unite d States asserts that China does not contend, and 
there is no indication in the portions of the MOFCOM  record disclosed to the Panel, that MOFCOM 
conducted any similar quarterly analysis concer ning other factors pertinent to whether price 
depression was the effect of the imports.  Withou t the comprehensive quarterly analysis that 
MOFCOM failed to conduct, the record indicates no  more than increasing imports were coincident 
with increasing domestic prices for certain portions of 2008, but were coincident with declining prices for other portions of 2008.  In such circumstances,  attributing the price declines for a portion of the 
year to the imports under investigation is not a conc lusion that "is reasoned and adequate, in light of 
                                                      
455 United States' first written submission, para. 214. 
456 See China's response to Panel question 33, para. 121. 
457 United States' first written submission, paras. 216-217. 
458 United States' first written submission, para. 221. WT/DS414/R 
Page 116  
 
 the evidence on the record and other plausible alternative explanations."
459  MOFCOM's use of 
quarterly data for 2008 only for the purpose of exam ining domestic price leve ls "was selective and 
provided only a part the picture" of what might have caused any pricing declines in the fourth 
quarter.460  The United States contends that MOFCOM therefore failed to undertake an objective 
examination of the data. 
7.489  The United States notes MOFCOM's finding that price depression existed in the first quarter 
of 2009.  The United States contends, though, th at the import volume of GOES during this period, 
relative to Chinese consumption, did not increase "grea tly".  The market share of imports increased by 
1.17%, which was almost the same as the increase in  the domestic industry's market share, namely 
1.04%.  Further, the price of the imports under i nvestigation during the first quarter of 2009 was in 
fact higher than the prices for domestically produced products.461  For these reasons, the United States 
submits that price depression in the first quarter of 2009 could not properly be treated as an effect of 
subject imports. 
(iii) Price Suppression 
7.490  As for price depression, the United States makes arguments about both (i) the actual existence 
of significant price suppression during the period of investigation, and (ii) whether any such price 
suppression can properly be attributed to subject im ports.  According to the United States, it is not 
enough for the investigating authority merely to de monstrate price suppression.  The authority must 
also establish that any price suppression was an e ffect of the dumped or subsidized imports. 
7.491  The United States notes that MOFCOM's pr ice suppression conclusion concerning 2008, 
namely that "the sales price for the domestic like pr oduct failed to cover rising costs", is not supported 
by positive evidence.  In particular, MOFCOM disclosed no information regarding the domestic 
industry's cost levels during the period of investiga tion.  In fact, the information that MOFCOM did 
disclose indicates that pre-tax profits increased in 2008.  The United States argues that this is not consistent with the usual understanding of price s uppression, namely that prices and sales revenue do 
not increase commensurately with cost.  The United St ates argues that, contrary to the requirements of 
Article 3.2 of the Anti-Dumping Agreement and Ar ticle 15.2 of the SCM Agreement, China did not 
identify any evidence to demonstrate that the impor ts under investigation prevented price increases 
that would otherwise have occurred.
462  The United States contends that, in the light of MOFCOM's 
finding that domestic prices increased by 14.53%  in 2008, MOFCOM would need to have established 
that the imports under investigation precluded the domestic industry from achieving price hikes significantly greater than 14.53%.  This MOFCOM failed to do. 
7.492  The United States contends that materials Chin a introduced to the Panel in connection with 
the first written submission raise serious questions  about whether MOFCOM's analysis of changes in 
the "price-cost differential" was objective.  MO FCOM's analysis assumes that the underlying cost 
structure of the industry was static from 2007 to 2008, and that the only factors that changed were the volume and pricing of the imports under investigation.  According to the United States, though, there 
were significant changes in the domestic industry's structure from 2007 to 2008.  In particular, the 
United States notes that, according to the appli cants, domestic producer Ba osteel began production 
operations in May 2008.
463  When they begin production, steel production facilities frequently incur 
                                                      
459 The United States refers to the Appellate Body Report in US – Anti-Dumping and Countervailing 
Duties (China) , para. 516. 
460 The United States refers in this regard to the Appellate Body Report in  Mexico – Anti-Dumping 
Measures on Rice , para. 176. 
461 United States' first written submission, paras. 223-226. 
462 United States' first written submission, paras. 229-230. 
463 Application, Exhibit CHN-2, pp. 95, 102-03.  WT/DS414/R 
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 high start-up costs.464  The increased costs associated with a ne w facility can skew any analysis of the 
industry's ability to recover costs.  The United States asserts that MOFCOM apparently did not 
examine, and certainly made no findings, whethe r the Chinese industry in  2007 and the Chinese 
industry in 2008 were actually comparable for purpose of cost comparisons. 
7.493  The United States contends that, even assuming arguendo that a comparison of 2007 and 
2008 cost data is valid, China overlooks a central poi nt that is critical to the analysis required by 
Article 3.2 of the Anti-Dumping Agreement and Ar ticle 15.2 of the SCM Agreement.  In certain 
circumstances, an industry may forego price increa ses for its own benefit, and not as a response to 
import competition.  If an industry can sell greater quantities exercising some price restraint – which may be achieved either by cutting prices or by not  fully passing through cost increases to purchasers – 
its overall revenues and profits may increase despite the fact that the ratio of cost to sales revenues on 
a per unit basis will also be rising.  According to  the United States, the experience of China's GOES 
industry during 2008 illustrates this.  During 2008, sales quantities of the Chinese GOES industry 
increased by 5.04%.  Because, as previously explai ned, the prices the domestic industry charged also 
increased that year, sales revenues in creased by 20.3%.  As a result, the industry's pre-tax profit 
increased by 1.24% in 2008.
465  Thus, the information disclosed by MOFCOM indicates that, because 
it was able to garner additional sales, the Chin ese industry's financial c ondition improved in 2008 
notwithstanding the increase in the per unit ratio of co st to sales revenues.  In the light of these 
circumstances, to satisfy the requirements of Ar ticles 3.2 and 15.2, MOFCOM needed to provide 
some reasoned explanation of why the change in the per-unit ratio was significant.  It did not do so.  
7.494  With respect to MOFCOM's price suppression finding for the first quarter of 2009, the 
United States argues that the finding was not based upon an objective examination of the record.  
MOFCOM found that the "great increase" in quantit y of imports during the first quarter of 2009 was 
the cause of the adverse change in the domestic industry's price-cost differential during the first 
quarter of 2009.  However, in reaching this c onclusion, MOFCOM relied on data relating to only 
three months of a 39 month period of investigation.466  According to the United States, an analysis of 
the entire data set for the period of investigation as a whole indicates that there was not a sufficient 
nexus between increasing quantities of subject merchandise and significant price suppression.  For example during the period 2006-2008, although the quantity of imports increased, the domestic 
industry's prices and profits also increased.
467  Therefore, the evidence indicates that the Chinese 
GOES industry was able to increase revenues more ra pidly than its costs rose, notwithstanding a large 
increase in the quantity of imports under investigation.   The United States argues that by confining its 
examination to data relating to th e first quarter of 2009, MOFCOM's analysis was skewed and failed 
to reflect an objective ex amination of the evidence.468  The United States also contends that, although 
China argues that the 2009 data indicate a conti nuation of the price suppression found in 2008, the 
absence of any basis for MOFCOM's finding of price suppression in 2008 also undermines its finding of price suppression in the first quarter of 2009. 
7.495  Furthermore, the United States submits that MO FCOM's stated reason for finding that the 
increasing ratio of costs to sales revenues in the firs t quarter of 2009 was the effect of the subject 
imports was the purported "low price" strategy  adopted by the importers under investigation.
469  The 
                                                      
464 See "Scheduling a Successful Start-Up", Iron Age , July 1992, Exhibit US-40, p. 2 (noting that new 
steel production facilities can be characterized by various start-up problems which can seriously impact 
earnings). 
465 Essential Facts Under Consideration Which Form the Basis of the Determination on Industry Injury, 
5 March 2010, ("Final Injury Disclosure docume nt"), Exhibit CHN-29, sec. VI(3), (5), (6). 
466 United States' first written submission, paras. 231-232. 
467 United States' first written submission, paras. 232-234. 
468 United States' first written submission, paras. 234 and 236. 
469 Final Determination, Exhibit CHN-16, sec. VI (Industry Injury)(III)(3). WT/DS414/R 
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 United States recalls its argument (in respect of pr ice depression) that there is no positive evidence 
that the imports followed a "low price" policy and China does not even attempt to defend this finding. 
(d) Arguments of China 
7.496  China argues that MOFCOM correctly analysed  price effects and that the United States' 
arguments to the contrary are without merit. 
(i) Price undercutting 
7.497  China notes that the United States' arguments concerning price undercutting rest on the 
mistaken premise that MOFCOM made price under cutting findings.  However, China submits that 
MOFCOM relied on the low prices of subject imports  only as a supporting factor and did not make a 
specific finding of price undercutting.
470  Furthermore, China contends that MOFCOM had positive 
evidence supporting its statements regarding "low prices".  While China asserts that MOFCOM did 
not go into as much detail about this secondary i ssue because it not make any detailed and specific 
findings of price undercutting, China contends that the record clearly supported MOFCOM's 
statements about "low price".  China refers in this  regard to evidence in th e public version of the 
application which, according to China, was conf irmed by confidential information collected by 
MOFCOM. 
7.498  Further, contrary to the United States' argu ments, China contends that it was under no 
obligation to find price underc utting under Article 3.2 of the Anti-Dumping Agreement or 
Article 15.2 of the SCM Agreement.471  In this regard, China notes that the United States itself 
concedes that an authority is not required to make a determination of price undercutting.  As to the 
issue of whether or not price undercutting must be  "considered", China disagrees with the finding by 
the panel in EC – Salmon (Norway)  that the question of price undercu tting must be considered.  China 
contends that the text of both Article 3.2 and Artic le 15.2 uses the key term "or."  In other words, the 
authority "shall consider" either price undercutting or price depression or price suppression.  Nothing 
in the text suggests that all three must each be  considered.  An authority may "consider" price 
depression and price suppression, and by doing so fully comply with the obligations in Article 3.2 and 
Article 15.2.  In addition, the United States' view th at analysis of price underc utting is essential is at 
odds with the absence of any requirement for the authorities to use any particular methodology.  To the extent that an obligation to "consider" pr ice undercutting does exist, China contends that 
MOFCOM's determination properly discussed the issu e of relative prices.  After considering all the 
facts, though, MOFCOM chose to base its determ ination on price depression and price suppression. 
7.499  Furthermore, China submits that any con cerns about price undercutting do not affect 
MOFCOM's conclusions about price depression or pr ice suppression.  China contends that both price 
depression and price suppression can occur regardless of whether subject import prices are higher or 
lower than domestic prices. 
7.500  Regarding the United States' argument that MO FCOM failed to engage in an analysis of 
"transaction prices,"
472 China contends that MOFCOM did not pursue specific findings on price 
undercutting in this particular case because it did not believe such findings were the most appropriate 
analytic tool given the data available in this case.   Moreover, MOFCOM also had to take into account 
the fact that it would be conducting analysis b ased on cumulated subject imports, so that any 
transaction specific data would be blurred and ob scured when combined on a cumulated basis. For 
                                                      
470 China's first written submission, paras. 255-256. 
471 China's first written submission, para. 301. 
472 United States' response to Panel question 32, para. 63.  WT/DS414/R 
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 both of these reasons, MOFCOM focused the broade r measure of average prices as reflected in 
average unit values. 
(ii) Price depression 
7.501  China submits that MOFCOM properly made findings of price depression for 2008 and 2009 
on the basis of positive evidence.  Although the Un ited States argues that a price depression finding 
was made only for 2009, China states that MOFCOM  found price depression in  both 2008 and 2009 
and cites statements on the record to support this.  China argues that the po sitive evidence to support 
this finding was the domestic pricing data before MOFCOM.473  Although in the final determination 
MOFCOM's findings were based on average domestic prices over an annual basis, which did not demonstrate price depression over 2008, China subm its that MOFCOM had collected quarterly data 
showing that domestic prices fell by 15.3% in the last quarter of 2008.
474 
7.502  In relation to the price depression finding for the first quarter of 2009, China submits that the 
United States' arguments are related to causation a nd do not acknowledge the "undisputed fact" that in 
early 2009 domestic prices fell by more than 30%.  China further contends that, even if the gain in 
subject import volume in early 2009 was modest relative to the market,475 the increase was still an 
increase of more than 23% compared to the comp arable period in 2008.  Moreover, domestic prices 
still fell sharply in early 2009.  China contends th at the United States argument looks at early 2009 in 
isolation, and ignores the fact that the 1.17 percenta ge point gain in market share was in addition to 
the 5.6 percentage point increase in market share that  had just taken place the year before.  Even more 
telling, the United States overlooks the impact of th e further gain in United States market share.  
China asserts that the gain of 1.17 percentage point s of market share over one quarter would annualize 
to a gain of 4.7 percentage points – almost as large as  the gain in subject import market share in 2008.  
Moreover, the United States argument does not acknow ledge the effect of subject import volume in 
2008 on prices in 2009.   China asserts that, in the light of the large increase of subject imports in 
2008 and the 5.5 percentage point gain of market  share, domestic producers began 2009 concerned 
about their shipments and market share and decided to  lower prices to stop the loss of market share.  
According to China, the underlying facts and MOFC OM's discussion of those facts mean that the 
pricing trends in late 2008 and early 2009 need to be considered together. 
7.503  China notes the United States argument that MOFCOM found that price depression was an 
effect of the low price of subject imports.  Ch ina asserts that price depression can occur with or 
without price undercutting, in the sense that pri ce depression does not depend on any comparison with 
subject import price levels.  China further asserts that price depression can result from the volume of 
subject imports.  China contends that the United St ates implicitly admits as much, when it argues that 
the price depression "was not solely  because imports were increasing."476  China contends that this is 
what MOFCOM found, in the sense that the volume of subject imports increased significantly in 2008 
and began to capture market share, and the domestic industry reacted by lowering their prices to try to 
retain market share, which lead to the price de pression.  According to China, MOFCOM found that 
the "sharp increase" in the volume of subject  imports depressed domestic industry prices.  
Furthermore, China submits that Article 3.2 of th e Anti-Dumping Agreement and Article 15.2 of the 
SCM Agreement require only the showing of the existence  of the adverse price effects – the declining 
prices (price depression), or the price-cost squeeze and declining profitability (price suppression) – 
and do not require any explanation as to the causes of these adverse price effects. 
                                                      
473 China's first written submission, paras. 280-288. 
474 China's response to Panel question 33, para. 121. 
475 United States' first written submission, para. 226. 
476 United States' first written submission, para. 72 (emphasis added). WT/DS414/R 
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 (iii) Price suppression 
7.504  China contends that MOFCOM had positive evid ence for the findings of price suppression in 
2008 and 2009.  According to China, in relati on to the price suppression findings in 2008, the 
United States ignores some of the evidence re lied upon by MOFCOM, and misunderstands other 
aspects of it.  In particular, the United States ignores the statement in the final determination that in 
2008 domestic GOES products failed to absorb rising costs, resu lting in a 7% drop in the cost-price 
differential.  According to China, this was the positive evidence to support MOFCOM's price 
suppression finding for 2008.
477  Further, China rejects the Unite d States' claim that MOFCOM failed 
to disclose cost data, since the price-cost squ eeze documented by MOFCOM for both 2008 and the 
first quarter of 2009 was demonstrated by the drop in per unit profits.  China asserts that the fall in per 
unit profits in the first quarter of 2009 was even more pronounced than the fall in 2008.  China 
contends that MOFCOM was entitled to analyse price suppression on the basis of per unit profits, as neither Article 3.2 of the Anti-Dumping Agreement nor Article 15.2 of the SCM Agreement impose 
any specific requirements as to the methodology for analysing the price suppression. China contends 
that the United States misunderstands the data in argui ng that the small gain in pre-tax profits in 2008 
is inconsistent with price suppression.
478 
7.505  China denies that MOFCOM "assume[d]" that in creasing subject imports "caused" the decline 
in per unit profits.479  Rather, MOFCOM explained that the significant increasing volume of subject 
imports captured significant market share, and this  volume of subject imports forced the domestic 
industry to react by lowering its prices so as to stop the continued loss of market share.  China asserts 
that the prices were lowered because of this comp etition with subject imports , and were thus lower 
than they otherwise would have been. 
7.506  In relation to MOFCOM's price suppression findings for 2009, China contends that the 
United States "essentially concedes the existence of price suppression in the first quarter of 2009".480  
According to China, the United States' arguments about the 2009 price suppression findings are essentially arguments about causation, rather than th e existence of price suppression.  China repeats 
its argument that there is no need to show that a dverse price effects were caused by subject imports.  
According to China, Article 3.2 of the Anti- Dumping Agreement and Article 15.2 of the SCM 
Agreement require only the showing of the existence  of the adverse price effects – the declining prices 
(price depression), or the price-cost squeeze and declining profitability (price suppression) – and do not require any explanation as to the causes of these adverse price effects.   
(e) Arguments of third parties 
(i) European Union 
7.507  With respect to MOFCOM's price undercutting an alysis, the European Un ion notes that it is 
unclear what evidence supports the comparative an alysis of prices mentioned by MOFCOM or the 
finding of the exporters' strategy of charging low pr ices.  According to the European Union, it seems 
that MOFCOM did not rely on any information about act ual pricing levels.  It is also not evident that 
MOFCOM objectively evaluated the exporters' arguments.
481 
7.508  The European Union also submits that it is  not clear on what positive evidence MOFCOM 
based its price depression analysis.  MOFCOM did not specify the period to which its finding of price 
                                                      
477 China's first written submission, paras. 256-264. 
478 China's first written submission, paras. 270-271. 
479 United States' first written submission, para. 79. 
480 China's first written submission, para. 275. 
481 European Union's third party submission, paras. 40-41.  WT/DS414/R 
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 depression refers.  Further, the available evidence do es not support the conclusion that such a finding 
would apply to 2008 or the first quarter of 2009.482 
7.509  The European Union argues that MOFCOM's price suppression findings do not seem to be 
supported by positive evidence.  For example, MO FCOM did not disclose any data concerning the 
domestic industry's cost levels or trends.  Furt her, MOFCOM does not seem to have provided an 
explanation for its finding that in 2008, while the price of domestic products and producers' profits 
were increasing, imports prevented greater pri ce increases than those which occurred.  Finally, 
MOFCOM's price suppression analysis appears to be based upon data concerning only the last three 
months of the investigated period of 39 months.483 
7.510  Therefore, the European Union agrees with  the United States that MOFCOM's price 
undercutting, price depression and price suppression an alyses are inconsistent with Articles 3.1 and 
3.2 of the Anti-Dumping Agreement and 15.1 and 15.2 of the SCM Agreement.484 
(f) Evaluation by the Panel 
7.511  The United States claims that MOFCOM's pric e effects analysis is not based on positive 
evidence and that, in conducting its price effects analysis, MOFCOM did not engage in an objective 
examination of the evidence. 
7.512  We begin by considering the relevant issu es regarding MOFCOM's finding of significant 
price depression.  We then turn to MOFCOM's  finding of significant price suppression.  Before 
concluding, we also address the United States' cl aim regarding MOFCOM's alleged finding of price 
undercutting. 
7.513  In addressing these issues, we recall that it is well established that the role of the Panel is not 
to conduct a de novo  review nor simply defer to the conclusions of the investigating authority.  
Rather, we must determine whether the explanation for the conclusions reached by the investigating 
authority is reasoned and adequate in the light  of other plausible alternative explanations.485  
Furthermore, we must determine whether the qua lity of the evidence relied on by MOFCOM met the 
"positive evidence" standard set forth in Article 3.1 of the Anti-Dumping Agreement and Article 15.1 
of the SCM Agreement.  In this regard, we recall that in US – Hot Rolled Steel, the Appellate Body 
clarified that "positive evidence" relates to the qua lity of the evidence that authorities may rely upon 
in making a determination, and that the evidence "mus t be of an affirmative, objective and verifiable 
character, and it must be credible".486  In addition, the Appellate Body  has referenced with approval a 
description of "positive evidence" as "e vidence that is relevant and pertinent with respect to the issue 
being decided, and that has the characteristics of being inherently reliable and trustworthy."487  We 
must also determine whether MOFCOM undertook an  objective examination of the evidence.  We 
note that the Appellate Body has found that an "o bjective examination" must be conducted in good 
faith, must be based on data that provides an accurate and unbiased account of what is being 
examined, and must be conducted without favour ing the interests of any particular party.488 
                                                      
482 European Union's third party submission, para. 43. 
483 European Union's third party submission, paras. 44-45. 
484 European Union's third party submission, paras. 42, 43 and 46. 
485 See, for example, Appellate Body Report, US – Tyres (China) , para. 280. 
486 Appellate Body Report, US – Hot Rolled Steel, para. 192. 
487 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , paras. 163-164. 
488 United States' first written submission, para. 208. WT/DS414/R 
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 (i) Price depression 
7.514  The United States challenges both MOFCOM's finding of the existence of significant price 
depression per se , and MOFCOM's finding that such price depression was an effect of subject 
imports.  We address each issue in turn. 
 The existence of price depression per se  
7.515  MOFCOM found that domestic prices rose and then fell489 during the period of investigation.  
Specifically, MOFCOM found that: 
[C]ompared with the same period of the previous year, the price of domestic like 
products increased by 6.66% and 14.53% in 2007 and 2008 respectively, and it 
dropped by 30.25% in Q1 2009.490 
7.516  The United States' arguments regarding the existence of price depression per se  are focused 
on the year 2008.  The United States asserts that a ny finding of price depression in 2008 would be 
inconsistent with the above-mentioned evidence that prices rose by 14.53% from 2007 to 2008.  In 
response, China argues that MOFCOM found price depression in both 2008 and the first quarter of 
2009.  Regarding the existence of price depression in 2008, China refers to evidence on MOFCOM's 
record allegedly indicating that pri ces fell in the last quarter of 2008. 
7.517  We do not consider it necessary to address the dispute between the parties regarding the 
existence of price depression in 2008.  Even if  prices did not fall in 2008, MOFCOM's final 
determination contains a finding that  domestic prices did fall by 30.25% in the first quarter of 2009.  
The United States has not challenged this finding.491  Nor has the United States contended that 
MOFCOM was not entitled to treat price depression of  this magnitude as "significant" within the 
meaning of Article 3.2 of the Anti-Dumping Agreem ent and Article 15.2 of the SCM Agreement.  In 
these circumstances, there is no basis for us to conc lude that MOFCOM's determination of significant 
price depression could not rest on its finding that prices fell by 30.25% in the first quarter of 2009. 
 Whether price depression was an effect of subject imports 
7.518  Having upheld MOFCOM's finding of the ex istence of significant price depression per se , we 
now consider the United States' claim against MOFC OM's finding that such price depression was an 
effect of subject imports.  We begin by ex amining whether the provisions relied on by the 
United States, i.e. Article 3.2 of the Anti-Du mping Agreement and Article 15.2 of the SCM 
Agreement, require an investigating authority to de monstrate that the relevant price depression is an 
effect of subject imports.  We then evaluate the relevant findings made by MOFCOM in the light of 
the principal arguments of the parties.  While MOFCOM found that significant price depression was 
an effect of both the increase in volume of subject imports, and the low price thereof, the 
United States' arguments relate primarily to MOFC OM's finding that subject imports were priced 
lower than domestic products.  Accordingly, we limit our examination to MOFCOM's finding that 
price depression was an effect of the low price of subject imports.  We complete our evaluation by considering whether, even if MOFCOM's analysis of  the price effects of subject imports was flawed, 
MOFCOM's finding that price depression was an effect of subject imports might nevertheless stand 
                                                      
489 Final Determination, Exhibit CHN-16, p. 58. 
490 Final Determination, Exhibit CHN-16, p. 58. 
491 The United States' challenge regarding the first qu arter of 2009 is direct ed at MOFCOM's finding 
that price depression was an effect of subject imports (see, for example, United States' first written submission, 
para. 226).  WT/DS414/R 
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 on the basis of MOFCOM's analysis of the effect of the increase in the volume of subject imports in 
depressing domestic prices. 
Whether Article 3.2 of the Anti-Dumping Agre ement and Article 15.2 of the SCM Agreement 
require an investigating authority to demonstrate that the relevant price depression is an effect 
of subject imports. 
7.519  The United States challenges MOFCOM's determin ation that the significant price depression 
found to exist was an effect of subject imports.  The United States' arguments are premised on its 
position that, as a matter of law, an investigating authority is required by Article 3.2 of the Anti-
Dumping Agreement or Article 15.2 of the SCM Ag reement to demonstrate that any price depression 
found to exist is an effect of subject imports.  Ch ina denies that any such obligation is contained in 
these provisions.  According to China, the need to establish a link between price effects and subject 
imports is part of the broader ob ligations in Article 15.5 of the SC M Agreement and Article 3.5 of the 
Anti-Dumping Agreement to establish a causal link between subject imports and material injury 
suffered by the domestic industry.  
7.520  Having regard to the text of the relevant provisi ons, we note that the analysis envisaged by the 
second sentence of Article 3.2 of the Anti-Dump ing Agreement and Article 15.2 of the SCM 
Agreement concerns "the effect of the [dumped/ subsidized] imports on prices."  Furthermore, the 
authority must consider whether "the effect of [dumped/subsidized] imports is … to depress prices to a significant degree".  Accordingly, merely showi ng the existence of significant price depression does 
not suffice for the purposes of Article 3.2 of the Anti-Dumping Agreement and Article 15.2 of the 
SCM Agreement.  An authority must also show that  such price depression is an effect of the subject 
imports. 
7.521  In support of its argument that Article 3.2 of  the Anti-Dumping Agreement and Article 15.2 
of the SCM Agreement do not require an authority to show that adverse price effects are an effect of 
subject imports, China relies on the statement by the panel in EC – Countervailing Measures on 
DRAM Chips  that:  
Article 15.2 of the SCM Agreement does not, as such, require an investigating 
authority to establish a causal link between the subsidized imports and the domestic prices which would require it to examine all other factors affecting domestic prices at the same time…. As written, Article 15.2  focuses on the effect of the subsidized 
imports on prices.
492 
7.522  In our view, the panel in EC – Countervailing Measures on DRAM Chips  was dealing with a 
different issue than the one at hand.  In particular , that panel had to consider Korea's claim that the 
European Communities should have examined a vari ety of factors known to have been affecting 
domestic prices, in addition to subject imports.  Th e panel reasoned that such analysis of all known 
factors was not required under Article 15.2 of the SC M Agreement, but noted that such analysis was 
required under Article 15.5 of the SCM Agreement.  The Panel in the present case is not confronted 
with this issue.  The United States is not suggesti ng that MOFCOM should have considered the effect 
of other known factors on domestic prices.  The United States is merely suggesting that MOFCOM was required, by Article 15.2 of the SCM Agreement,  to consider the effect of subject imports on 
prices.  Furthermore, the panel's statement that "Article 15.2 focuses on the effect of subsidized 
imports on prices" seems to be premised on the noti on that subject imports should, in the context of 
Article 15.2 of the SCM Agreement, be shown to have  an effect on domestic prices.  Indeed, the very 
next sentence in the panel's report (which was omitted  by China) states that "[t]he EC examined the 
effect of the subsidized imports on domestic prices a nd thus, in our view, compli ed with Article 15.2".  
                                                      
492 Panel Report, EC – Countervailing Measures on DRAM Chips , para 7.338. WT/DS414/R 
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 Accordingly, we do not accept that the report of the panel in EC – Countervailing Measures on 
DRAM Chips  stands for the proposition that an authority is not required by Article 15.2 of the SCM 
Agreement to show that the relevant price depression is an effect of subject imports.  As a result, we 
consider that the United States is entitled to pur sue a claim under Article 3.2 of the Anti-Dumping 
Agreement and Article 15.2 of the SCM Agreemen t against MOFCOM's finding that the relevant 
price depression was an effect of subject imports.  We now examine the merits of this claim. 
Whether MOFCOM properly found that price depr ession was an effect of the low price of 
subject imports. 
7.523  The United States' primary arguments against MOFCOM's finding that price depression was 
an effect of subject imports relate to MOFCOM's analysis of the effect of the price of subject imports 
on domestic prices, and MOFCOM's determination that subject imports were priced lower than 
domestic products.  The United States contends th at MOFCOM's findings are not based on an 
objective examination of positive evidence. 
7.524  In this regard, we note MOFCOM's finding that subject import prices were "low" relative to 
domestic prices, and that there was a "pricing po licy" of setting subject import prices lower than 
domestic prices.493  According to China, these findings were based on positive evidence in the 
application, and positive evidence collected by MOFCOM during its investigation.494  W e  s h a l l  
examine the probative value of both types of evidence.   
7.525  Turning first to evidence of "low" prices alle gedly found in the application, we note that 
China refers to two tables showing that the weighted average price of imports from the United States and Russia together, and from the United States separ ately, was lower than the average price charged 
by the applicants during the period of investigation.
495  We note that this evid ence in the application 
was not expressly referenced, or incorporated into , MOFCOM's final determination.  Furthermore, 
regarding the reliability of the evidence, we note th at the evidence indicates that subject import prices 
were lower than domestic prices in both 2008 and the fi rst quarter of 2009.  The fact that this is at 
odds with MOFCOM's own finding that subject impor t prices were not less than domestic prices 
during the first quarter of 2009496 undermines the reliability of the ev idence.  For these reasons, we do 
not consider that the applicants' evidence could properly be treated as "positive evidence" supporting 
MOFCOM's finding that price depression was an effect of subject imports. 
7.526  Turning next to the evidence collected by MOFC OM during its investigation, we shall first 
examine MOFCOM's reliance on a comparison of the average unit values ("AUVs") of subject imports and domestic sales.  We shall then examine MOFCOM's reliance on certain contractual 
documents regarding an alleged "pricing policy" of  setting subject import prices lower than domestic 
prices. 
7.527  Regarding the AUV data collected by MOFCOM, Ch ina asserts that this data revealed a gap 
of 8 to 12% between the AUVs of subject imports and domestic sales.
497  Given the absence of any 
such evidence in MOFCOM's final determination, the Panel asked China to provide the confidential 
AUV data.  In response, China provided ranges of  the relevant AUVs, in order "to protect the 
sensitive [Business Confidential Information] of s howing the exact level of the domestic AUV" of 
                                                      
493 See, for example, Final Determination, Exhibit CHN-16, pp. 58 and 59.  
494 China's second written submission, para. 102.   
495 Application, Exhibit CHN-2, p. 98. 
496 Final Determination, Exhibit CHN-16, p. 70: "the  Investigating Authority did not conclude that 
import price of the product concerned was lower than the price of the domestic like product in Q1 of 2009". 
497 China's second written submission, footnote 95 . The AUVs relied on by MOFCOM represent the 
volume weighted average unit values for all transactions during a given calendar year.   WT/DS414/R 
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 each of the two domestic producers at issue.498  Although China failed to respond fully to the Panel's 
request,499 ultimately the Panel was able to address th e issues raised by the United States using the 
more limited data provided by China.   
7.528  We have a number of misgivings regard ing the AUV data relied on by MOFCOM, 
particularly concerning MOFCOM's failure to cons ider the need for adjust ments to ensure price 
comparability.  First, we note that China has faile d to rebut the United States' argument that the 
subject import and domestic AUVs we re fixed at different levels of trade.  According to the 
United States, the domestic AUVs reflected transact ions between the domestic producer and the end 
user, whereas subject import AUVs were fixed at a higher level of trade, be tween the exporter and the 
first Chinese purchaser, which is typically an importer who resells to end users.  Second, we note that 
the relevant AUVs included products of different gr ades, without any attempt by MOFCOM to adjust 
for differences in physical characteristics.500  The inclusion of different grades is reflected in Exhibit 
US-41, which shows that the relevant grades were classified under at least two different tariff headings.  China did not contest any of the data set forth in that Exhibit.
501  Third, the determination 
of a single price point intended to represent prices throughout the course of an entire year does not 
provide a sufficiently precise basis, in our view, fo r comparing prices.  Given the possibility of prices 
varying over time, an objective and impartial investigating authority would rather conduct 
contemporaneous price comparisons, or at least co mparisons during a relatively short period of time. 
7.529  China does not deny that MOFCOM failed to make  any form of adjustment to ensure price 
comparability.  Rather, China argues that becau se MOFCOM did not make findings of price 
undercutting, "price comparability did not arise as an issue".502  China contends that adjustments were 
not necessary because MOFCOM was not relying on th e magnitude of price undercutting, but simply 
noting the existence503 of price undercutting as a supporting fact for its findings on price depression, 
price suppression, and causation.504 
7.530  We are not persuaded by China's argument.  China concedes that MOFCOM relied on the 
existence of price undercutting.  MOFCOM did so to show that price depression was an effect of the 
low price of subject imports relative to the price of domestic products.  T hus, even though MOFCOM 
did not make a finding of significant price undercutting (i.e. price undercutting of a certain magnitude), MOFCOM did rely on a finding that subject import prices undercut domestic prices.  In 
our view, a proper finding of the existence of pr ice undercutting necessarily entails a comparison of 
prices,
505 and the authority should ensure that the prices it is using for its comparison are properly 
                                                      
498 China's 25 November 2011 response to question (a) of the Panel questions dated 
18 November 2011, p. 1. 
499 The panel notes that China had previously indicated that it was prepared to submit this confidential 
data (China's second written submission, footnote 95). 
500 Even if domestic products and subject imports ar e "like", adjustments to reflect differences in 
physical characteristics might still be necessary. 
501 The United States has also criticised MOFCOM's failure to report separate AUVs for subject 
imports from the United States and Russia respectively (U nited States' first written submission, para. 217).  We 
recall that MOFCOM undertook a cumulative assessment of injury, which the United States has not challenged.  
Accordingly, there is no basis for us to find that MO FCOM should have reported separate AUVs for subject 
imports from the two target countries. 
502 China's response to Panel question 101, para. 142. 
503 China's response to Panel question 105, para. 161. 
504 China's response to Panel question 105, para. 161. 
505 MOFCOM itself acknowledged that it had undertaken a comparison of prices: "the relevant content 
of the determination makes a comparativ e analysis of price.  There is an analysis on the low-price sales of the 
product concerned" (Final Determination, Exhibit CHN-16, p. 70).  While China denies that this refers to any 
finding of price undercutting (China's first written submissi on, para. 299), we see no basis on which to conclude WT/DS414/R 
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 comparable.
506  As soon as price comparisons are made, price comparability necessarily arises as an 
issue.  MOFCOM's reliance on AUVs, without any consideration of the need for adjustments to ensure price comparability, is neither obj ective, nor based on positive evidence. 
7.531  Regarding the evidence supporting MOFCOM's fi nding that there was a "pricing policy" of 
setting subject import prices lower th an domestic prices, MOFCOM stated: 
During the on-the-spot verification, the pe titioner provided contracts and records of 
price setting to show that a pricing policy aiming at setting the price down to a level lower than the price of the domestic like product was adopted by producers of product concerned.
507 
7.532  China submitted the relevant "contracts and records of price" to the Panel in the form of four 
BCI Exhibits, in response to a request from the Panel dated 18 November 2011.  Exhibit CHN-37 
contains a contract between a Russian trading company and a Chinese buyer of subject imports.  
Exhibits CHN-38, 39, and 40 provide examples of  price negotiations between a Chinese supplier and 
its customers.  China contends that in all thr ee examples, "the Chinese supplier quoted a price, the 
customer responded by noting the specific amount by which the Chinese offe r was higher than the 
alternatives available from Russian or U.S. supplie rs, and the Chinese supplier was then forced to 
lower its price".508 
7.533  Turning first to Exhibit CHN-37, we note that this contract establishes prices for certain 
subject imports.  The contract also contains a provi sion whereby, in the words of the applicants, "the 
Russian companies … set their prices lower than [WISCO]".509  While this contract may be of 
relevance regarding the broader re lationship between domestic and subj ect import prices, we note that 
the contract is dated 9 January 2009.  Accordingly, the contract was applicable during the first quarter 
of 2009.  Since MOFCOM found that subject impo rt prices were not lower than domestic prices in 
this period,510 there was no valid basis for MOFCOM to de termine that the Exhibit CHN-37 contract 
actually translated into price undercutting by subject  imports.  Rather, MOFCOM's finding that there 
was no price undercutting in this period undermines th e probative value of Exhibit CHN-37.  In the 
absence of any explanation as to why the Exhibit CHN-37 contract should trump MOFCOM's finding 
that subject imports were not priced lower than dom estic products in the first quarter of 2009, we do 
not consider that an objective and impartial investig ating authority could prop erly have relied on this 
contract to support a finding that subject imports we re priced "lower" than domestic products in that 
period. 
7.534  Regarding Exhibits CHN-38 and 40, we note that these price negotiations occurred in 
February 2009, with delivery scheduled in March and April 2009.  The price negotiations referred to 
in Exhibit CHN-39 occurred in December 2008, with delivery scheduled for January 2009.  Thus, the 
deliveries for all three sets of price negotiations were  scheduled for the first quarter of 2009.  Again, 
we note that MOFCOM found that subject import pri ces were not lower than domestic prices in that 
period.  MOFCOM's finding that there was no pr ice undercutting in this period undermines the 
                                                                                                                                                                     
that MOFCOM is referring to anything other than a comp arative analysis of the pri ce of subject imports relative 
to domestic sales. 
506 It may be, as alleged by China (China's response to Panel question 95(iii), para. 128), that certain 
adjustments would actually inflate subject import price.  In our view, this observation simply confirms the need 
for appropriate adjustme nts to ensure that any price comp arisons made are accurate and valid. 
507 Final Determination, Exhibit CHN-16, p. 58. 
508 China's 25 November 2011 response to question (b) of the Panel questions dated 
18 November 2011, p. 2. 
509 Final Determination, Exhibit CHN-16, p. 59. 
510 Final Determination, Exhibit CHN-16, p. 70: "the  Investigating Authority did not conclude that 
import price of the product concerned was lower than the price of the domestic like product in Q1 of 2009".  WT/DS414/R 
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 probative value of Exhibits CHN-38 and 40.  In the absence of any explanation as to why the evidence 
contained in these Exhibits should trump MOFCOM's finding that subject imports were not priced lower than domestic products in the first quarter of 2009, we do not consider that an objective and 
impartial investigating authority could properly ha ve relied on these negotiations to support a finding 
that subject imports were priced "lower" than domestic products in that period. 
7.535  Finally, we note that MOFCOM also relied on "the drop of the import price of the product 
concerned in Q1 2009" when finding that price depressi on was an effect of subject imports.  In this 
regard, we note MOFCOM's finding that subject impo rt prices fell by 1.25% from the first quarter of 
2008 to the first quarter of 2009.
511  However, MOFCOM also found that subject import prices 
increased by 2.97% and 17.57% in 2007 and 2008 respectively.512  In addition, MOFCOM also found 
that the subject import price was not lower than the dom estic price in the first quarter of 2009.  In the 
absence of any further clarification by MOFCOM, we are not persuaded that an objective and 
impartial investigating authority could properl y have found that, following a 17.57% increase in 
subject import price in 2008, a 1.25% decrease in subject import price in the first quarter of 2009 could have had the effect of depressing domestic pri ces, particularly as subject imports prices in any 
event remained higher than domestic prices in that period. 
7.536  For all of the above reasons, we do not consid er that the evidence available to MOFCOM 
could have allowed an objective a nd impartial investigating authority to determine that subject 
imports were priced lowe r than domestic products. 
Whether MOFCOM's finding that price depression was an effect of subject imports might 
nevertheless stand on the basis of MOFCOM's anal ysis of the effect of the increase in the 
volume of subject imports in depressing domestic prices. 
7.537  We note China's argument that MOFCOM's finding that price depression was an effect of 
subject imports remains valid, despite any flaws in  MOFCOM's analysis of the relative prices of 
subject imports and domestic products, because MOFC OM's finding of causation was also based on 
the effect of the increase in volume of subject im ports.  According to China, since MOFCOM based 
its analysis of causation on both volume effects and price effects, those price effects can support an 
overall finding of causation, even if they might not ha ve been sufficient to justify finding a causal link 
on their own.513  In considering this argument, we al so note China's statements that "MOFCOM 
properly found adverse price effects from the increasing volume of subject imports,"514 that 
MOFCOM drew a "key connection … between the domes tic industry lowering prices in an effort to 
regain market share that had been lost to subject imports",515 and that MOFCOM "relied heavily"516 
on volume effect.  In addition, we note China's asserti on that "[t]he low prices of subject imports were 
discussed more generally as a supporting factor for th e analysis, not as the primary basis of the overall 
finding about price effects."517 
7.538  Having regard to the various st atements made by China, we understand China to argue that 
the increase in the volume of subject imports was the primary basis for MOFCOM's finding that price 
depression was an effect of subject imports, and th at this primary basis for MOFCOM's finding is 
sufficient in and of itself to uphold that finding, ev en if MOFCOM's analysis of the supporting basis, 
i.e. the price effects of subject imports, is flawed.  This argument raises the issue of whether the Panel 
                                                      
511 Final Determination, Exhibit CHN-16, p. 58. 
512 Final Determination, Exhibit CHN-16, p. 58. 
513 China's first written submission, para. 328. 
514 China's first written submission, heading at para. 257. 
515 Chinas' second written submission, para. 81. 
516 China's second written submission, para. 121. 
517 China's first written submission, para. 295. WT/DS414/R 
Page 128  
 
 could uphold MOFCOM's finding that price depression  was an effect of subject imports purely on the 
basis of MOFCOM's findings regarding the volume  effects of subject imports. In addressing this 
issue, we begin by considering whether or not  MOFCOM's final determ ination supports China's 
argument that volume effects were the primary basis for MOFCOM's finding that price depression was an effect of subject imports.  We then consid er certain guidance offered by the Appellate Body. 
7.539  We do not consider that MOFCOM's final de termination supports China's argument that 
volume effects were the primary basis for MOFCOM's finding that price depression was an effect of subject imports.  In suggesting that MOFCOM relied  more heavily on the volume of subject imports 
than the low price thereof, China actually refers to extracts from MOFCOM's final determination that 
appear to lend equal weight to considerations of both subject import volume and price.  For example, 
when arguing that MOFCOM drew a "key conn ection … between the domestic industry lowering 
prices in an effort to regain market shar e that had been lost to subject imports",
518 China refers to 
MOFCOM's determination that: 
Under the impact of the large volume of imports of the product concerned at a low 
price , in order to keep the market share, the price of the domestic like product was 
lowered.519 
7.540  Thus, MOFCOM refers both to the increased volume of subject imports, and the allegedly 
low price thereof. In addition, we note that the re levant sub-section in th e final determination is 
entitled "The impact of the import price  of the product concerned on the price of domestic like 
products".520  In these circumstances, it is difficult to accept that MOFCOM's finding that price 
depression was an effect of subject imports was based primarily on the volume effect of subject 
imports.  In our view, there is nothing in MOFCOM 's determination to indicate that MOFCOM relied 
more heavily on the increase in the volume of subject  imports than it did on the low price thereof for 
the purpose of establishing that price depression was an effect of subject imports. 
7.541  Furthermore, we note the Appellate Body's finding in Japan – DRAMs (Korea)  that: 
[T]here may be cases in which certain interm ediate findings may be so central to the 
ultimate conclusion of an investigating authorit y that an error at an intermediate stage 
of reasoning may invalidate the final conclusion.  Indeed, an evaluation of the significance of the different factors considered  by an investigating authority is at the 
heart of the assessment a panel must make.
521 
7.542  We agree with this finding by the Appellate Body , and we consider that a panel must exercise 
great caution in determining whether or not to enga ge in analyses not undertaken by the investigating 
authority itself.522  There is nothing in MOFCOM's determination to indicate that MOFCOM relied 
more heavily on the volume effects of subject import s than it did on the price effects thereof for the 
purpose of establishing that price depression was an effect of subject imports.  Accordingly, we 
consider that MOFCOM's finding that subject impor ts were priced lower than domestic products was 
so central to MOFCOM's overall conclusion that pr ice depression was an effect of subject imports 
that the above-mentioned flaws in this finding must invalidate MOFCOM's overall conclusion that 
price depression was an effect of subject imports.  In these circumstances, it is not possible to 
                                                      
518 Chinas' second written submission, para. 81. 
519 Final Determination, Exhibit CHN-16, p. 65 (emphasis added). 
520 Final Determination, Exhibit CHN-16, p. 58. 
521 Appellate Body Report, Japan – DRAMs (Korea) , paras. 131-135 (footnotes deleted). 
522 There is nothing in MOFCOM's determination to suggest that MOFCOM itself found that the 
volume effects of subject imports alone were sufficient to conclude that pri ce depression was an effect of subject 
imports.  WT/DS414/R 
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 conclude that MOFCOM's finding that price depress ion was an effect of subject imports might be 
upheld purely on the basis of MOFCOM's findings rega rding  the effect of the increase in the volume 
of subject imports. 
 Conclusion 
7.543  In the light of the foregoing, we find that MO FCOM's determination that price depression 
was an effect of subject imports was neither made pursuant to an objective examination, nor based on 
positive evidence. 
(ii) Price suppression 
7.544  MOFCOM found that there was significant pri ce suppression in 2008 and the first quarter of 
2009.  MOFCOM's principal findings on price suppression were drafted in the following terms: 
Starting from 2008, the selling price of the dom estic like products failed to absorb the 
rising costs, the price-cost differential droppe d by 7% compared with 2007.  In Q1 of 
2009, while the unit cost of sales was rising co mpared to the same period of last year, 
the selling price greatly dropped by 30.25%, which resulted that the cost-price differential dropped continually and greatly by 75% compares to the same period of 
last year.
523 
… To be more specific, the sharp increase of the import volume of the product 
concerned since the beginning of 2008 and th e drop of the import price of the product 
concerned in Q1 2009 significantly depressed and suppressed the price of domestic like products.
524 
7.545  We begin by examining the United States' ch allenge against MOFCOM's finding of the 
existence of price suppression per se .  We then consider the United States' arguments against  
MOFCOM's finding that price suppression was an effect of subject imports. 
 The existence of price suppression per se  
7.546  We are not persuaded by the United States ' argument that MOFCOM was precluded from 
relying on changes in the price-cost ratio between 2007 and 2008, and between the first quarter of 
2008 and the first quarter of 2009, to establish th e existence of price suppression.  We note that 
neither Article 3.2 of the Anti-Dumping Agr eement nor Article 15.2 of the SCM Agreement 
prescribes the manner in which an investigating authority must establish the existence of price suppression.  Nor do these provisions exclude an inv estigating authority's reliance on changes in per 
unit price-cost ratios.  In the light of the text of  these provisions, we consider that an authority is 
entitled to find price suppression whenever prices have not been able to match increases in costs.  
Accordingly, we find no flaws in MOFCOM's relian ce on changes in the price-cost ratio to find the 
existence of price suppression in 2008 and the first quarter of 2009.   
 Whether price suppression was an effect of subject imports 
7.547  To challenge MOFCOM's finding that price suppression was an effect of subject imports, the 
United States relies on the same arguments as it did to challenge MOFCOM's finding that price 
                                                      
523 Final Determination, Exhibit CHN-16, p. 58. 
524 Final Determination, Exhibit CHN-16, p. 59. WT/DS414/R 
Page 130  
 
 depression was an effect of subject imports.  The United States also makes the additional argument 
that MOFCOM failed to consider whether, in the re levant factual circumstances, changes in the price-
cost ratio merely reflected changes in the underlying  cost structure of the domestic industry.  In 
considering these arguments, we recall our finding that, pursuant to Article 3.2 of the Anti-Dumping 
Agreement and Article 15.2 of the SCM Agreement, an  investigating authority must demonstrate that 
price depression is an effect of subject imports.
525  The same necessarily applies in respect of an 
authority's finding of price suppression.  Since MOFCOM relied on the same analysis of the price effects of subject imports to show that both pri ce depression and price suppression was an effect of 
subject imports, the same flaws that undermined MOFCOM's finding that price depression was an effect of subject imports also undermine MOFCOM's finding that price suppression was an effect of 
subject imports.  In these circumstances, we are not  required to consider the United States' additional 
argument concerning alleged changes in the underl ying cost structure between 2007 and the later 
stages of the period of investigation.  We sha ll do so, though, for the sake of completeness.  
7.548  In the factual circumstances of the underlying investigation, we consider that the 
commencement of Baosteel's operations in Ma y 2008 should have caused MOFCOM to examine 
whether the 2008 change in the price-cost ratio was merely a function of the inclusion of the 
additional start-up costs incurred by Baosteel,
526 rather than an adverse effect of subject imports on 
price.  In particular, because of the risk of Baost eel's start-up costs distorting the results of a simple 
analysis of changes in the price-cost ratio, MO FCOM should have consider ed whether the underlying 
cost structure of the domestic industry in 2007 was co mparable to that in 2008 and the first quarter of 
2009.  While China argues that the cost structur es in 2007 and 2008 were comparable because 
Baosteel would also have incurred start-up cost s in 2007, we note that MOFCOM's record only 
includes costs booked by Baosteel as of 2008.527  Accordingly, there is no basis in the record for the 
argument that Baosteel's start-up costs were also  incurred prior to 2008, in a period when no price 
suppression occurred. 
7.549  We do acknowledge that, prior to the arrival of Baosteel in 2008, the existing producer, 
WISCO, had already been expanding capacity.  Howe ver, while some new capacity was introduced in 
2007, a significantly greater amount of new capacity was introduced in 2008.528  In our view, the 
introduction of such a significant amount of new capacity in 2008 should have caused MOFCOM to 
consider the possibility that the change in the pri ce-cost ratio between 2007 and 2008 was, at least in 
part, a reflection of the start-up costs associated with the commencement of Baosteel's operations in May 2008, rather than an effect of subject imports .  An objective and impartial investigating authority 
would have recognized the need to check that the underlying cost structures of 2007 and 2008 were 
comparable, and would have investigated accordingly.
529   
                                                      
525 See paras. 7.519 - 7.522 of this Report. 
526 We note that China does not de ny the United States' argument that the introduction of new steel 
production facilities incurs start-up costs. 
527 Application, Exhibit CHN-2, p. 109, Table 40.  We note that China failed to rebut the United States' 
assertion (made in its reply to Panel question 75, para. 71 ) that "[t]he only pertinent information in the record 
available to the Panel and the United States indicates th at, for purposes of the application, Baosteel did not 
provide MOFCOM with financial performance data for any period prior to 2008". 
528 According to the Final Injury Disclosure docume nt, Exhibit CHN-29, p. 12 , capacity increased by 
35.33% in 2007, and by 53.67% in 2008.  In addition, the capacity added by Baosteel was entirely new, whereas 
the capacity added by WISCO in 2007 was not entirely the result of opening new production facilities, but involved improving the efficiency of existing pro duction facilities (See United States' response to Panel 
question 75, para. 71, referring to the Application,  Exhibit CHN-2, pp. 100 and 107).  We accept the 
United States' view (not contested by China) that the introduction of entirel y new capacity is likely to engender 
greater start-up costs than mere im provements to existing capacity. 
529 The same applies to changes in the price-cost ratio  between the first quarter of 2008 and the first 
quarter of 2009, when capacity incr eased by 80.13%.  As Baosteel commen ced operations only in May 2008,  WT/DS414/R 
 Page 131 
 
 
 7.550  China contends that even if there were start-up costs in 2008, such costs are a natural part of 
business.  China asserts that a domestic industry shoul d be able to expand, incur start-up costs, and yet 
still maintain its profitability.  China asserts that the domestic industry could not do this because of 
the surge in the volume of subject imports during 2008.  We accept that, up to a certain point, the 
market may allow companies to increase prices to recover increased costs, including costs associated 
with starting-up new production facilities.  This  process of price matching increasing cost cannot 
continue indefinitely, though.  After a certain point , the market will consider that the increased costs 
are not commercially reasonable, and that prices shoul d not be allowed to rise accordingly.  The point 
at which this occurs will depend on many factors,  including the relationship between capacity, supply 
(domestic and foreign) and demand.   It is not for the Panel to determine de novo  whether the start-up 
costs incurred by the domestic industry were co mmercially reasonable, such that domestic prices 
should have been able to rise to the full extent of su ch costs.  This is a complex issue that should have 
been considered by MOFCOM.  Instead, MOFCOM simply assumed that (i) prices should have been 
able to rise with costs, and (ii) the only reason pri ces were not able to rise with costs was because of 
the effect of subject imports. 
7.551  In the light of the foregoing, we find that MOFCOM's determination that price suppression 
was an effect of subject imports was not made pur suant to an objective ex amination, based on positive 
evidence. 
(iii) Price undercutting 
7.552  The basic issue raised by the parties is whether or not MOFCOM made a finding of 
"significant price undercutting" within the meani ng of Article 3.2 of the Anti-Dumping Agreement 
and Article 15.2 of the SCM Agreement.  The United States acknowledges that MOFCOM did not 
make an express finding of significant price undercutting, but contends that an essential predicate of MOFCOM's price effects analysis is that prices for subject imports were lower than domestic prices.
530  China denies that MOFCOM made any finding of significant price undercutting. 
7.553  In examining MOFCOM's final determination, we are unable to find any express finding by 
MOFCOM that there was significant price undercu tting by subject imports.  Although, as discussed 
above, MOFCOM purported to establish the exis tence of price undercutting for the purpose of 
showing that price depression and price suppression were  an effect of the relatively lower prices of 
subject imports, MOFCOM did not rely on the magnit ude of such price undercutting.  In particular, 
MOFCOM did not conclude that such price underc utting was "significant" within the meaning of 
Article 3.2 of the Anti-Dumping Agreement or Ar ticle 15.2 of the SCM Agreement.  In these 
circumstances, there is no finding of "signi ficant price undercutting" for us to review. 
(iv) Conclusion 
7.554  For the above reasons, we conclude that MOFC OM's findings regarding the price effects of 
subject imports are inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement, and Articles 15.1 and 15.2 of the SCM Agreement. 
                                                                                                                                                                     
data for the first quarter of 2008 would not have included Baosteel's start-up costs.  Accordingly, MOFCOM 
should also have considered whether the underlying cost struct ure of the first quarter of 2009 was comparable 
with that of the first quarter of 2008.    
530 United States' first written submission, paras. 210 and 211. WT/DS414/R 
Page 132  
 
 2. Whether China acted inconsistently with Articles 12.8 of the SCM Agreement and 6.9 of 
the Anti-Dumping Agreement in failing to disclose the essential facts under 
consideration in relation to its price effects analysis  
(a) Provisions at issue 
7.555  Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement provide: 
The authorities shall, before a final determ ination is made, inform all [interested 
Members and] interested parties of the e ssential facts under consideration which form 
the basis of the decision whether to appl y definitive measures.  Such disclosure 
should take place in sufficient time for the parties to defend their interests.
531 
(b) Factual Background 
7.556  Following the preliminary determination, and prior to issuing its final determination, 
MOFCOM issued a final injury disclosure document,  with the stated purpose of disclosing the "basic 
facts upon which the final injury determination is made". 
(c) Arguments of the United States 
7.557  The United States argues that the price effects anal ysis is inconsistent w ith Article 12.8 of the 
SCM Agreement and Article 6.9 of the Anti- Dumping Agreement because MOFCOM did not 
disclose the "essential facts" underlying the analysis and ultimately forming the basis for its decision 
to apply definitive measures.  The United States ex plains that MOFCOM's injury determination is 
based upon a finding that the allegedly dumped and subs idized imports had significant price effects on 
the like domestic product.  However, in its final injury disclosure document and its final 
determination, MOFCOM disclosed "strikingly fe w facts" regarding pricing.  The United States 
submits that the findings are cursory and lack any apparent evidentiary basis. 
7.558  According to the United States, China does no t dispute MOFCOM's failure to disclose any 
information about price levels for the domestica lly produced product or any comparisons between 
prices for this product and the imports under inv estigation.  The United States rejects China's 
argument that such information was not "essen tial" because MOFCOM did not rely on an 
underselling analysis.  According to the United States, even if MOFCOM did not make a finding of 
significant underselling, it repeatedly referred to the purportedly "low prices" of the imports under 
investigation to justify its findings of price de pression and price suppression.  Information about the 
prices of domestically produced products, and wh ether these prices exceeded import prices, was an 
essential element in MOFCOM's finding that import prices were "low".  However, MOFCOM did not disclose this information.
532 
7.559  The United States argues that MOFCOM did not disclose the following information central to 
its price effects analysis: 533 
(i) information about price levels for the domestically produced product; 
(ii) the source of the information provided concer ning pricing trends for the domestically 
produced product; 
                                                      
531 Where the text in brackets is included only in Article 12.8 of the SCM Agreement and not in 
Article 6.9 of the Anti-Dumping Agreement.   
532 United States' second written submission, para. 162. 
533 United States' first written submission, para. 191 and United States' second written submission, 
para. 164.  WT/DS414/R 
 Page 133 
 
 
 (iii) any comparisons between prices of the dom estically produced product and prices of 
the imports under investigation.  The United States notes that this information would not normally be confidential
534; 
(iv) the purported "strategies" that the exporters of GOES from Russia and the 
United States devised to undercut domestic prices; 
(v) the levels or trends of the domestic industr y costs. The United States argues that this 
information is no more confidential than the other trends concerning the domestic 
industry that MOFCOM disclosed;  
(vi) general information about what aspects of domestic producers' costs were increasing.  
The United States argues that to the extent the domestic industry's costs increased in 
2009, information about the type of costs that increased is critical to understanding 
the basis of MOFCOM's findings on price suppression and depression; or 
(vii) should the Panel agree that MOFCOM found declining prices for domestically 
produced GOES during the fourth quarter of 2008, information about quarterly price 
trends should have been disclosed. 535 
7.560  The United States argues that these facts were cr itical to MOFCOM's price effects analysis, 
which in turn was critical to its affirmative inju ry determination.  The failure to disclose these 
"essential facts" seriously impaired the ability of  interested parties to defend their interests.536   
Further, China provides no explanation regarding why non-confidential summaries of the information on pricing and costs could not be disclosed.
537 
(d) Arguments of China 
7.561  China asserts that, contrary to the United St ates' claim, MOFCOM disclosed all of the 
"essential facts" under consideration, as required by  Article 6.9 of the Anti-Dumping Agreement and 
Article 12.8 of the SCM Agreement.  The disclosur es can be found in the preliminary determination 
and the final injury disclosure report, which are the two documents containing all of the "essential 
facts" on which China relied in the final determination.538 
7.562  According to China, the United States' clai m overlooks the obligations on investigating 
authorities to protect confidential information, which can be found in Articles 6.5 and 12.2.2 of the Anti-Dumping Agreement and Articles 12.4 and 22.5 of the SCM Agreement.  In the light of the fact 
that there were so few companies involved in the investigation, it was not possible to present 
aggregated information without br eaching confidentiality obligations.
539  According to China, the 
United States has not identified any specific piece of information that was both an "essential fact" and 
could be disclosed while maintaining confidentiality.540 
                                                      
534 United States' second written submission, para. 163. 
535 United States' second written submission, para. 165. 
536 United States' first written submission, paras. 195-196. 
537 United States' second written submission, para. 166. 
538 China's first written submission, para. 306 and Chin a's opening statement at the first meeting of the 
Panel, para. 51. 
539 China's first written submission, paras. 307-308.  
540 China's opening statemen t at the first meeting of the Panel, para. 52. WT/DS414/R 
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 7.563  In relation to the five specific pieces of inform ation that the United States complains were not 
disclosed, China responds as follows:
541 
(i) Domestic prices - MOFCOM presented the trend in domestic prices, showing the 
percentage change from year to year.  The actual level of prices was confidential information; 
(ii) Source of information concerning domestic pric e trends - the source of information is 
not an "essential fact".  Moreover, it was " quite clear" to any "reasonable reader" that 
the domestic industry pricing was drawn from the questionnaire responses submitted 
by the Chinese producers; 
(iii) Price comparisons between domestically pr oduced GOES and the subject imports - 
MOFCOM did not make a price undercutting finding and therefore the price 
comparisons were not "essential facts" forming the basis of its decision; 
(iv) Evidence of description of the pricing stra tegies used by the exporters of GOES - 
MOFCOM disclosed the basi c facts concerning the pricing strategies and was under 
no obligation to disclose evidence supporting its  factual statements or further details 
that could compromise the confidentiality of the information; and 
(v) Levels and trends of costs - MOFCOM did disclose the trends in costs.  The level of 
costs was confidential information and therefore could not be disclosed. 
7.564  China concludes that the United States has not made a prima facie  case in relation to its 
claims under Article 6.9 of the Anti-Dumping Ag reement and Article 12.8 of the SCM Agreement.
542 
(e) Arguments of third parties 
(i) European Union 
7.565  If information about price levels for domesti cally produced products was never disclosed to 
the interested parties, the Europ ean Union agrees with the United St ates that this should result in a 
finding that China acted inconsistently with Artic les 12.8 of the SCM Agreement and 6.9 of the Anti-
Dumping Agreement.543 
(ii) Japan 
7.566  With respect to MOFCOM's price effects anal ysis, Japan notes that MOFCOM seems to have 
made certain price comparisons.  For example, in the final determination MOFCOM found that "the 
sale of the product concerned was kept at a low price".544  According to Japan, the results of such a 
price comparison were "essential facts" which shoul d have been disclosed, subject to confidentiality 
issues.545   
(f) Evaluation by the Panel 
7.567  According to the United States, five principal ar eas of MOFCOM's price effects analysis were 
not accompanied by adequate disclosure of the "e ssential facts under consideration" in accordance 
                                                      
541 China's first written submission, paras. 310-314. 
542 China's first written submission, para. 317. 
543 European Union's third party submission, paras. 28-29. 
544 Japan's third party statement, para. 8. 
545 Japan's third party submission, paras. 11-13.  WT/DS414/R 
 Page 135 
 
 
 with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.  In particular, the 
United States claims that MOFCOM did not disclose (i) the price levels for the domestically produced product; (ii) the source of the information on pricin g trends for the domestically produced product; 
(iii) price comparisons between the domestically produced and imported products; (iv) information 
regarding the purported low price "strategies" adopt ed by the United States and Russian exporters of 
GOES; or (iv) the levels or trends  of the domestic industry's costs. 
7.568  The Panel will commence its analysis with a c onsideration of whethe r MOFCOM adequately 
disclosed essential facts on the price comparis on between domestically produced and imported 
products.  China's primary response to the United St ates on this point is that MOFCOM did not make 
a price undercutting finding.  Rather, MOFCOM simp ly noted the low price of subject imports, and 
the relative price levels of such imports in co mparison to the GOES produced in China, as supporting 
evidence for its conclusions regarding price suppr ession and price depression.  Consequently, China 
argues that there were no "essential facts" relating to price comparisons that needed to be disclosed.   
7.569  Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement require 
investigating authorities to "inform all interested  parties of the essential facts under consideration 
which form the basis for the decision whether to apply definitive measures".  In order to apply 
definitive measures at the conclusion of count ervailing and anti-dumping investigations, an 
investigating authority must find dumping or subsidi zation, injury and a causal link  Therefore, the 
"essential facts" underlying the findings and conclusi ons relating to these elements form the basis of 
the decision to apply definitive measures and shoul d be disclosed.  China characterizes its injury 
analysis as based on its price suppression and price depression findings.  Even accepting China's 
argument that it did not make a price undercutting finding, nevertheless, its conclusion regarding the 
"low price" of subject imports was repeated ly referenced throughout its determination.
546  In the 
Panel's view, this conclusion formed an essential pa rt of the reasoning MOFCOM used to support its 
price suppression and price depression findings.  Therefore, MOFCOM was required to disclose not only the conclusion regarding the existence of a "l ow price", but also the "essential facts" supporting 
this conclusion, in order to allow inter ested parties to defend their interests. 
7.570  In response to a Panel question regarding wher e in MOFCOM's determinations information 
regarding "low" or "lower" subject import prices can  be found, China responds that the determinations 
included non-confidential summaries of the inform ation underlying its findings of "low" subject 
import prices.
547  In this regard, China relies upon the following disclosures in the preliminary 
determination and the final injury disclosure document: 
(i) The preliminary determination announces significant margins of dumping, 
demonstrating that United States exporters were charging lower prices in China than 
in their home market; 
(ii) The preliminary determination and the final injury disclosure document state that a 
"pricing policy aiming at setting the price to a level lower than that of the domestic 
like product was adopted when selli ng the product concerned in China"548; 
(iii) The preliminary determination states that "there was no evidence supporting the 
claim" that Russian prices were not causi ng price suppression.  According to China, 
this is a reference to the evidence that the parties had submitted; 
                                                      
546 See, for example, Final Determination, Exhibit CHN-16, pp. 58, 59, 60, 61, 62, 63, 65. 
547 China's response to Panel question 90. 
548 Final Injury Disclosure Document, Exhibit CHN-29, p.15.  WT/DS414/R 
Page 136  
 
 (iv) The final injury disclosure document refers to "data obtained from investigation" to 
highlight that Russian producers had a pricing policy of "setting the price to a lower level than that of the domestic like product"
549; and   
(v) The preliminary determination notes that the United States sales were below normal 
value and were supported by subsidies.  It also notes the declining trend in subject 
import average unit values. 
7.571  We acknowledge China's argument that the price co mparison data at issue is confidential.  As 
indicated in our reasons at paragraph 7.410 of th is Report, where confidential information is an 
"essential fact under consideration", the disclos ure obligations under Articles 12.8 of the SCM 
Agreement and 6.9 of the Anti-Dumping Agreem ent should be met through the use of non-
confidential summaries. 
7.572  In the Panel's view, the non-confidential discl osures relied upon by China do not provide a 
summary of the "essential facts" supporting the finding of "low" subject imports prices.  In particular, disclosures regarding the existence of dumping and s ubsidization are not on point as they do not relate 
to the prices of subject imports, relative to GOE S produced by the domestic Chinese industry, which 
is the matter at issue.  In our view, the existen ce of dumping or subsidization cannot be used to infer 
the relative prices of subject imports and the domestically produced product.
550  Similarly, 
information on the trends in subject import averag e unit values does not indicate that the values are 
"lower" than the values of domestically produced GOES.  Further, a mere reference to the existence of 
evidence to support a certain finding does not disclo se or summarize the "essential facts" underlying 
the finding. 
7.573  In the Panel's view, the references in the pr eliminary determination and the final injury 
disclosure document to the low pricing strategies of  the Russian and United States exporters are also 
insufficient as a summary of the "essential facts" s upporting the conclusion of "low" import prices.  In 
order to allow the respondents to defend their inte rests, a summary of the "essential facts" supporting 
the finding of a "low price strategy" was required, ra ther than merely stating the conclusion that such 
a strategy existed.  In response to a Panel ques tion, China was able to provide additional non-
confidential information regarding the price setting behaviour it was relying upon to conclude that a 
"low price strategy existed".  For example, China stated that "the Chinese supplier quoted a price, the 
customer responded by noting the specific amount by which the Chinese offe r was higher than the 
alternatives available from Russian or U.S. supplie rs, and the Chinese supplier was then forced to 
lower its price".551  This is more specific than the information included in the preliminary 
determination and the final injury disclosure document.552  More importantly, in response to a Panel 
question, China provided non-confidential informati on regarding the dates of the transactions in 
which the "pricing strategies" were allegedly em ployed.  Once provided with this information 
                                                      
549 Final Injury Disclosure Document, Exhibit CHN-29, p.13.  
550 See also the United States' arguments on this po int in United States' comments on China's response 
to Panel question 90, footnote 100. 
551 China's 25 November 2011 response to question (b) of the Panel questions dated 
18 November 2011. 
552 The preliminary determination and the final injury  disclosure included the following statements 
regarding the "pricing strategies" of the United States and Russian producers of GOES:  "the pricing policy 
aiming at setting the price down to a level lower than the price of the domestic like product adopted by 
producers of product concerned"; "the  price of imported GOES was set accord ing to the variation of price of 
like products"; "the materials provided by the petitioner…demonstrated a pricing policy adopted by the 
producers of the product concerned who watched closely the price of the products of major producers in China 
and sold the imported products in a lower price"; and "relevant evidence shows that a pricing policy aiming at setting the price to a level lower than that of the domestic like product was adopted when selling the product 
concerned to the Chinese market".  WT/DS414/R 
 Page 137 
 
 
 regarding the timing of the transactions, the United States was able to challenge before the Panel the 
relevance of the transactions relied upon by Ch ina to support its price depression finding.553  T h i s  
information clearly formed a part of the "essential fa cts" underlying the finding of "low" import prices 
and ultimately the price depression finding.  
7.574  It is clear MOFCOM considered a number of facts leading to the conclusion of "lower" 
subject import prices.  For instance, in its second written submission, China disclosed that over the 
period 2006-2008, the average unit values of subject imports was 8%-12% below the average unit value of domestic shipments.  In response to a requ est from the Panel, China provided, in the form of 
a non-confidential range, the percentage difference be tween the average unit values of subject imports 
and the average unit value of the domestic product fo r 2006, 2007 and 2008.  In the Panel's view, 
these facts were "essential" to MOFCOM's conclusion that subject import prices were "low".  China's 
disclosures during the Panel proceedings demonstrated that the facts could be summarized in non-confidential format.  In the Panel's view, su ch summaries should have been included in the 
preliminary determination or the final injury disclos ure document to allow interested parties to defend 
their interests.   
7.575  The Panel concludes that the failure to discl ose the "essential facts" underlying MOFCOM's 
finding of "low" subject import prices was inconsistent with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.  Given this conclusion, the Panel does not consider it necessary 
to proceed to consider whether MOFCOM's disclosures on other matters, such as costs, were also inconsistent with Articles 12.8 of the SCM Agre ement and 6.9 of the Anti-Dumping Agreement. 
3. Whether China acted inconsistently with Arti cles 22.5 of the SCM Agreement and 12.2.2 
of the Anti-Dumping Agreement in relation to the public notice and explanation of its 
price effects determination  
(a) Provisions at issue 
7.576  Articles 22.5 of the SCM Agreement and 12.2. 2 of the Anti-Dumping Agreement provide, 
relevantly: 
A public notice of conclusion or suspension of an investigation in the case of an 
affirmative determination providing for the imposition of a definitive duty…shall 
contain, or otherwise make available through a separate report, all relevant 
information on the matters of fact and law and reasons which have led to the 
imposition of final measures…due regard be ing paid to the requirement for the 
protection of confidential information.  In  particular, the notice shall contain…the 
reasons for the acceptance or rejection of relevant arguments or claims made by…the 
exporters and importers. 
(b) Factual Background 
7.577  Following the issuance of the preliminary dete rmination and the final disclosure documents, 
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing 
duty investigations.   
                                                      
553 China's 25 November 2011 response to question (b) of the Panel questions dated 18 November 2011 
and United States' 14 December 2011 comments on China's 25 November 2011 response to question (b).  Also, 
see paras. 7.533-7.534 of this Report for the Panel's analysis of the relevance of the contracts, in the light of 
their timing, to the price effects analysis. WT/DS414/R 
Page 138  
 
 (c) Arguments of the United States 
7.578  The United States claims that China acted in consistently with Article 22.5 of the SCM 
Agreement and Article 12.2.2 of the Anti-Dumping Ag reement because its final determination did not 
contain sufficient information regarding its price effects analysis. 
7.579  In the United States' view, it is indisputable th at MOFCOM's analysis of price effects was a 
consideration leading to the imposition of definitiv e measures.  Consequently, Article 12.2.2 of the 
Anti-Dumping Agreement and Article 22.5 of the SCM Agreement require that MOFCOM provide 
"all relevant information" on the facts underlying the price effects analysis.
554  However, the 
United States argues that the price effects analysis is based upon the mere assertion that importers of 
GOES had "policies" or "strategies" of charging low prices.555  The United States contends that the 
final determination does not contain any facts suppor ting this.  Further, the final determination does 
not provide any information concerning price leve ls for the domestically-p roduced product and so 
does not contain any facts supporting a finding that prices of the merchandise under investigation were at any time lower than the prices of the domestically produced product.
556 
7.580  In response to China's argument that MOFC OM relied upon confidential information when 
making its findings on adverse price effects, the United States contends that China has not identified 
what, if any, document may contain the confidentia l findings MOFCOM failed to articulate in the 
final determination.  According to the United Stat es, the parties to an investigation, the exporting 
Member and much less members of a dispute settl ement panel are not supposed to be placed in a 
position of guessing the basis for an authority's findings.557 
7.581  The United States also argues that  China acted inconsistently w ith Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SC M Agreement because MOFCOM did not provide 
adequate reasons for the rejection of the ar guments of the parties opposing the imposition of 
measures.  For example, Russian and United Stat es exporters argued that Chinese producers were 
actually the price leaders in the Chinese GOES ma rket.  MOFCOM dismissed this in a single 
sentence, which was utterly devoid of evidentiary b asis: "[t]he relevant evidence shows that the low 
price policy was adopted when selling the subject merchandise in the Chinese market and forced 
Petitioners to drop the price of like products and ca used the differential between price and cost to 
continue decreasing".558 
(d) Arguments of China 
7.582  China asserts that MOFCOM provided the "relev ant information" and the "reasons" required 
under Article 22.5 of the SCM Agreement and Artic le 12.2.2 of the Anti-Dumping Agreement in 
relation to its price effects findings.  The obligations  under the provisions at issue must be considered 
in the light of an investigating authority's discretion to decide what is material to its determination and 
also the authority's obligations, as expressed in bot h provisions, to protect confidential information.559  
7.583   In response to the United States' argument th at MOFCOM did not provide sufficient detail 
regarding the "pricing strategy" employed by the exporters of GOES, China argues that MOFCOM 
provided as much information as it could, in the light of the need to protect confidential information.  
Further, MOFCOM was not obliged to disclose ever y detail about the pricing strategy.  Rather, only 
                                                      
554 United States' first written submission, paras. 200-201. 
555 United States' first written submission, para. 198. 
556 United States' first written submission, para. 201. 
557 United States' second written submission, para. 168. 
558 United States' first written submission, paras. 202-203. 
559 China's first written submission, paras. 319-321 and 327.  WT/DS414/R 
 Page 139 
 
 
 the information an investigating authority considers "material" need be provided.560  Finally, China 
argues that the United States is mistaken in thinking  that the "pricing strategy" was the centrepiece of 
MOFCOM's findings.  The pricing strategy informa tion was merely used as corroborating evidence to 
support its price suppression and depression findings.561  China also rejects the United States' 
contention that MOFCOM did not provide sufficien t reasons for rejecting the arguments of the 
exporters.562 
(e) Arguments of third parties 
(i) European Union 
7.584  The European Union argues that if the Unite d States' allegations regarding MOFCOM's 
failure to provide a meaningful description of numer ous facts critical to its price effects analysis are 
correct, then China has acted inconsistently with Article 22.5 of the SCM Agreement and 
Article 12.2.2 of the Anti-Dumping Agreement.563   
(ii) Japan 
7.585  Japan submits that because th e analysis of price effects was relevant to the injury 
determination, the authorities were required to pr ovide a sufficiently detailed explanation of it.564 
(iii) Saudi Arabia 
7.586  According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.3 of the SCM Ag reement must contain sufficient detail to allow 
interested parties to discern either the significance  or lack thereof of the factors the investigating 
authority was obligated to address in its analysis.565 
(f) Evaluation by the Panel 
7.587  The United States argues that China acted inc onsistently with Articles 22.5 of the SCM 
Agreement and 12.2.2 of the Anti-Dumping Agreement on the basis that MOFCOM's final determination did not include facts supporting a finding that the United States and Russia had a 
strategy of charging low prices and supporting a finding that the prices of GOES from the United States and Russia were at any time lower th an prices for the domestically produced product.  
The United States also complains that MOFCOM did not provide reasons for the acceptance or 
rejection of the relevant arguments  of the exporters and importers. 
7.588  The Panel will commence its analysis with a consideration of whether MOFCOM provided 
adequate public notice and explanation regardi ng its finding that the prices of GOES from the 
United States and Russia were "lower" than pr ices for the domestically produced product.   
7.589  Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement require that 
the public notice or separate report released at the co nclusion of an investiga tion contain "all relevant 
information on matters of fact and law and reaso ns which have led to the imposition of final 
measures…due regard being paid to the protection of  confidential information".  As indicated at 
paragraph 7.335 of this Report, wh en confidential information also forms part of the "relevant 
                                                      
560 China's first written submission, para. 322. 
561 China's first written submission, para. 323. 
562 China's first written submission, paras. 324-326. 
563 European Union's third party submission, para. 34. 
564 Japan's third party submission, para. 37. 
565 Saudi Arabia's third party submission, para. 44. WT/DS414/R 
Page 140  
 
 information on matters of fact and law", within  the meaning of Articles 22.5 and 12.2.2, an 
investigating authority can meet its dual obligations  to disclose the relevant information while also 
protecting its confidentiality, by providing only a non-confidential summary of the confidential 
information in the public notice or separate report. 
7.590  It is clear that the price effects analysis, in particular the findings of price suppression and 
price depression, were essential elements in MO FCOM's reasoning leading to the imposition of final 
measures.  Even accepting China's argument th at MOFCOM did not make a price undercutting 
finding, but rather relied upon the existence of "l ow" subject import prices to support its price 
suppression and price depression findings, the final dete rmination repeatedly refers to the "low" price 
of subject imports.
566  In the Panel's view, this indicates that the conclusion regarding the "low" price 
of subject imports was an importa nt aspect of MOFCOM's reasoning leading to the imposition of final 
measures.   
7.591  We recall the Appellate Body's observation in US - Countervailing Duty Investigation on 
DRAMS  that "Article 22.5 does not require the agen cy to cite or discuss every piece of supporting 
record evidence for each fact in the final determination".567  We agree with the Appellate Body in this 
regard.  However, given the importance that the conclusion regarding the "lower" price of subject 
imports played in MOFCOM's reasoning, the Panel is of the view that further information on the 
matters of fact leading to this  conclusion was required under Article s 22.5 of the SCM Agreement and 
12.2.2 of the Anti-Dumping Agreement.  It is cl ear that MOFCOM had before it information on the 
prices of subject imports and the prices of the dom estic product and undertook a comparative analysis 
of this information.  For example, in its sec ond written submission, China provided a non-confidential 
summary of the factual information which MOFC OM had before it and relied upon to support its 
conclusion regarding the "low price" of subject impor ts.  In particular, China revealed that over the 
period 2006-2008, the average unit values of subject imports was 8%-12% below the average unit value of domestic shipments.
568  However, the final determination did not include any indication that 
a comparative analysis of prices had been performed  or provide the factual information arising from 
the comparison.   
7.592  Consequently, the Panel concludes that China act ed inconsistently with Articles 22.5 of the 
SCM Agreement and 12.2.2 of the Anti-Dumping Ag reement by failing adequately to disclose "all 
relevant information on matters of fact" underlying  MOFCOM's conclusion regarding the existence of 
"low" import prices.  Given this conclusion, the Panel does not consider it necessary to proceed to 
consider the remainder of the United States' argu ments regarding whether China met its obligations 
under Articles 22.5 and 12.2.2. 
K. CAUSATION ANALYSIS  
1. Whether China acted inconsistently with Ar ticles 3.1 and 3.5 of the Anti-Dumping 
Agreement and 15.1 and 15.5 of the SCM Agreement with respect to MOFCOM's causation analysis 
(a) Introduction 
7.593  The United States argues that MOFCOM's causation analysis is inconsistent with Article 3.5 
of the Anti-Dumping Agreement and Article 15.5 of  the SCM Agreement.  The United States also 
claims that MOFCOM's analysis is inconsistent with Article 3.1 of the Anti-Dumping Agreement and 
                                                      
566 See, for example, Final Determination, Exhibit CHN-16, pp. 58, 59, 60, 61, 62, 63, 65. 
567 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 164. 
568 China's second written submission, footnote 95.   WT/DS414/R 
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 Article 15.1 of the SCM Agreement because it does not  comply with the "objective examination" and 
"positive evidence" requirements embodied in those provisions.   
7.594  China asks the Panel to reject the United States' claim. 
(b) Provisions at issue 
7.595  Article 3.1 of the Anti-Dumping Agreement a nd Article 15.1 of the SCM Agreement are set 
out above. 
7.596  Article 3.5 of the Anti-Dumping Agreement provides: 
It must be demonstrated that the dumped imports are, through the effects of 
dumping…causing injury within the meaning of this Agreement.  The demonstration 
of a causal relationship between the dumped imports and the injury to the domestic 
industry shall be based on an examination of all relevant evidence before the 
authorities.  The authorities shall also ex amine any known factors other than the 
dumped imports which at the same time ar e injuring the domestic industry, and the 
injuries caused by these other factors must not be attributed to the dumped imports.  Factors which may be relevant in this respect include, inter alia , the volume and 
prices of imports not sold at dumping prices, contraction in demand or changes in the 
patterns of consumption…the export perform ance and productivity of the domestic 
industry. 
7.597  Article 15.5 of the SCM Agreement is virtuall y identical, with references to "subsidized 
imports" and "subsidies", rather th an "dumped imports" and "dumping". 
(c) Factual Background 
7.598  MOFCOM conducted a single causation analysis pertinent to both the anti-dumping and 
countervailing duty investigations.  Ultimately, MO FCOM found that there was a causal link between 
the dumped imports of GOES from Russia, the dumped and subsidized imports of GOES from the United States and the material injury suffered by the domestic industry.  In establishing causation, MOFCOM rejected arguments that alleged ove rexpansion and overproduction by the domestic 
industry was an alternative cause of injury. 
(d) Arguments of the United States 
7.599  The United States challenges two particular aspects of MOFCOM's causation analysis, 
namely MOFCOM's use of price effects findings , and MOFCOM's examination of the domestic 
industry's increase in capacity and production as a potential alternative cause of injury. 
(i) Use of price effects findings 
7.600  The United States relies upon its claim that MOFCOM's price effects analysis was 
inconsistent with Articles 3.1 and 3.2 of the An ti-Dumping Agreement and Articles 15.1 and 15.2 of 
the SCM Agreement, to argue that China has not established that the imports under investigation had 
any significant price effects.  The United States c ontends that because price effects findings were an 
essential element of MOFCOM's causal link analysis, the flaws in MOFCOM's price effects analysis 
render MOFCOM's causation determ ination inconsistent with Article 3.5 of the Anti-Dumping 
Agreement and Article 15.5 of the SCM Agreement. WT/DS414/R 
Page 142  
 
 (ii) Other causes of injury: domestic c apacity, production, de mand and inventories 
7.601  According to the United States, MOFCOM err oneously concluded that the rapid increase in 
capacity of the domestic GOES industry during the period of investigation, and the consequent 
overproduction and inventory build-up, could not have been a cause of injury to the domestic industry.  The United States argues that there is no positive evidence to support the conclusion that the 
imports under investigation were the sole cause of the massive rise in inventory levels between 2008 
and the first quarter of 2009.  According to the Un ited States, the domestic industry was at least in 
substantial share responsible for the increase because of its decision to expand capacity and 
production far in excess of growth in domestic demand.
569  The United States concludes that because 
there was a known factor other than dumped or subsidized imports causing injury, MOFCOM needed 
to examine this factor as part of a non-attribution analysis.  However, MOFCOM failed to do so.  As a 
result, the United States contends that China acted in consistently with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement and 15.1 and 15.5 of the SCM Agreement.   
7.602  The United States notes that MOFCOM provided three reasons for its determination that 
overexpansion and overproduction was not a cause of injury to the domestic industry.  First, 
MOFCOM found that the domestic industry's capacity expansion was a response to an increase in 
domestic demand.  The United States argues that th ere is nothing in the record disclosed by 
MOFCOM to support this view.  According to the Un ited States, the data on the record indicates that 
the capacity expansion far exceeded any historical or projected increases in domestic demand.570  
Furthermore, even if the domestic industry di d not expand capacity in excess of demand, the 
United States asserts that the domestic industry was in any event not entitled to assume that it could 
expand capacity in such a way that it must displace a ll imports (whether fairly or unfairly traded) in 
order to be able to use that increased capacity to meet demand.  The United States notes MOFCOM's 
additional finding that the domestic producers "restrained their new production,"571 and did not 
increase their production to the same extent that th ey increased their capacity , with the result that 
capacity utilization decreased.  The United Stat es contends, though, that far from having been 
restrained, Chinese producers used their increased capacity to increase production far beyond what the 
market demanded, resulting in sharply increasing inventor ies, particularly in the first quarter of 2009.  
The United States notes in particular that between the first quarters of 2008 and 2009, the domestic 
industry's output increased by 55.23%, although demand only increased by 12.46%.572 
7.603  The United States notes that the second reason relied on by MOFCOM was a purported 
absence of correlation between the domestic industry capacity increases and the inventory build-up.  
The United States argues that this conclusion, relating to a period when capacity and production 
increased far more rapidly than demand, is both counterintuitive and incorrect.  According to the 
United States, an objective examination of the da ta corroborates the common sense proposition that 
the greater the disparity between increases in pr oduction capacity and increases in demand, the more 
likely it is that inventories will rise.573 
7.604  Third, the United States notes MOFCOM's findi ng that "the volume of [subject imports] did 
not increase at a constant speed."  According to th e United States, MOFCOM seems to reason that the 
increase in imports of GOES was so rapid that the entire inventory overhang in the first quarter of 
2009 can be attributed to the imports under investigation.574  The United States argues that there is no 
discernible basis in the record for this finding.  Rather, the evidence indicates that the domestic 
                                                      
569 United States' first written submission, para. 253. 
570 United States' first written submission, para. 247. 
571 China's first written submission, para. 366. 
572 Final Injury Disclosure document, Exhibit CHN-29, secs. VI(1), (2). 
573 United States' first written submission, paras. 249-250. 
574 United States' first written submission, para. 251.  WT/DS414/R 
 Page 143 
 
 
 industry and imports were growing at  approximately the same rate during the period of investigation, 
in response to growing domestic demand.  It was not a case of the imports encroaching upon the 
market share of the domestic industry.575   
7.605  The United States notes that, in addition to the three above-mentioned factors, MOFCOM 
also stated that the United States "did not submit any evidence to substantia te" its comments regarding 
the effect of overexpansion and overproduction on the domestic industry.  The United States denies 
that the parties opposing imposition of duties had th e obligation of submitting evidence to prove that 
the domestic industry's excessive production and con sequent inventory overha ng contributed to its 
injury.576  According to the United States, the only obl igation that the Agreements place on the parties 
is that of identifying "known" factors of injury other than the imports under investigation that the 
authorities should examine.  The United States asser ts in this regard that China has acknowledged577 
that United States exporter ATI brought to MO FCOM's attention that overproduction was 
contributing to any difficulties that the domestic industry may have experienced since 2008.578  The 
United States submits that, because Articles 3.5 and 15.5 state that "[t]he  authorities  shall also 
examine any known factor other than the [unfairly trad ed] imports which at the same time are injuring 
the domestic industry" (emphasis added), the Ag reements placed on MOFCOM the responsibility to 
conduct the requisite examination. 
(e) Arguments of China 
7.606  China denies the United States' claim.  Furthe r, China argues that the United States' claim 
must be analysed according to the standard of review set by the Appellate Body for injury determinations, namely the Pane l should consider whether "the evidence and explanation relied upon 
by the investigating authority reasonably supports its conclusions".  China contends that merely 
demonstrating that another conclusion might have been reached does not demonstrate inconsistency 
with the Anti-Dumping and SCM Agreements.
579 
(i) Use of price effects findings 
7.607  In relation to the United States' argument that  if its price effects arguments are successful, 
then China's causation analysis n ecessarily disintegrates, China argu es that its causal link analysis 
includes a finding of both price and volume effects.  China argu es that even without its price effects 
findings, the adverse volume effects support the finding of a causal link.580  China notes that the 
United States has not challenged MOFCOM's analysis of volume effects.   
(ii) Other causes of injury: domestic c apacity, production, de mand and inventories 
7.608  China disputes the United States' argument that  MOFCOM erroneously concluded that the 
rapid increase in the capacity of the Chinese GOES i ndustry was not a cause of injury.  In particular, 
China notes that MOFCOM fully addressed this factor  after it was raised by one of the respondents, 
ATI.  China argues that, because MOFCOM rece ived no new evidence from ATI, MOFCOM's 
                                                      
575 United States' first written submission, para. 252. 
576 China's first written submission, para. 357; see also  China's opening statement at the first meeting of 
the Panel, para. 57. 
577 China's response to Panel question 36, para. 134. 
578 ATI's Comments on the Preliminary Determination of the Antidumping Investigation on GOES 
from the U.S. and Russia and the Anti-subsidy Investigation on GOES from the U.S. (Industry Injury and 
Causal Link) (Public version) (30 December 2009) ("ATI's Comments on the Preliminary Determination"), 
Exhibit CHN-31, p. 9. 
579 China's first written submission, paras. 336-337. 
580 China's first written submission, paras. 339-341. WT/DS414/R 
Page 144  
 
 analysis must be viewed in the light  of the lack of evidence to support it.
581  Furthermore, China 
contends that all reasons advanced by MOFCOM for dismissing the argument that the increase in domestic capacity severed the causal link were fully supported by the record.   
7.609  China contends that the United States relies on mi sleading percentages to demonstrate that the 
increase in capacity exceeded the in crease in demand.  China asserts that percentage comparisons are 
misleading because of the different bases from which th e relevant percentages are calculated.  China 
argues that the evidence before MOFCOM confirms that domestic capacity did not increase more than 
demand.   
7.610  China also argues that, because of the restraint exercised by domestic producers, the increased 
capacity was not actually fully utilized.
582  Although China concedes that the details were not included 
in the specific response to the alternative cause, Ch ina asserts that MOFCOM had earlier in its final 
determination explained that fro m 2007 to 2008, domestic capacity increased by 53.67% but that 
domestic production increased by only 23.91%.583  China submits that this significant gap confirms 
the restraint by the domestic producers who did no t produce more than the market could bear and 
instead allowed capacity utilization rates to fall. 
7.611  According to China, MOFCOM's finding th at there was no correlation between the 
production capacity change and the inventory change is supported by the data, which indicates that 
the inventory increase corresponds with the increase in  volume of imports rather than the increase in 
production capacity.584  MOFCOM found that the levels of inventory did not correspond with the 
deteriorating condition of the domestic  industry, but that changing levels  of imports did.  According to 
China, this analysis thus confirmed what MO FCOM had already found – that increased domestic 
capacity was not the problem, but rather subject imports were the problem.  China contends that 
MOFCOM's comparison of the relative trends to see whether there was any correlation in the trends 
that would suggest some adverse effects being imprope rly attributed "ensured that it did not 'attribute' 
any effects of the change in domestic  industry capacity to subject imports".585 
7.612  In addition, China submits that the United States has improperly re-characterized the nature of 
the alternative cause at issue here.  China asserts  that, during the proceedings, the arguments focused 
on excess production capacity, and did not discuss excess production.  China contends that now the 
United States has shifted its argument to "overproduction,"586 and "production growing far more 
rapidly than demand,"587 even though these arguments about  excess production had never been 
presented to MOFCOM during the investigation.  China contends that MOFCOM addressed the 
alternative cause that respondents had raised – excess capacity – and it is improper for the 
United States now to propose an alternative cause th at had never been raised before the authorities. 
7.613  Overall, China submits that the United States h as at most proposed an alternative explanation 
for one aspect of domestic industry performance.  China asserts that prior panels have found as 
inadequate non-attribution arguments that do no more  than posit an alternative explanation or a partial 
explanation for the condition of the do mestic industry.  China relies in this regard on the reports of the 
panels in EC – Fasteners  and US – Countervailing Duty Investigation on DRAMS.588 
                                                      
581 China's first written submission, paras. 357-358. 
582 China's first written submission, para. 363. 
583 Final Determination, Exhibit CHN-16, page 60..   
584 China's first written submission, paras. 364-365. 
585 China's second written submission, para. 113. 
586 United States' opening statement at the first meeting of the Panel, para 86. 
587 United States' opening statement at the first meeting of the Panel, para 87. 
588 China refers specifically to Panel Reports, EC – Fasteners (China) , para 7.429, and US – 
Countervailing Duty Investigation on DRAMS , paras. 7.361-362.  WT/DS414/R 
 Page 145 
 
 
 (f) Arguments of third parties 
(i) Argentina 
7.614  Argentina submits that an investigating author ity is required to carry out a non-attribution 
analysis as a part of its causation investigation.  This may include examining whether, in the light of 
their volume or prices, the effects of non-subject imports are such to break the causal link between the 
subject imports and the injury.  This may require an examination of the forms of competition in the 
relevant markets.589 
(ii) European Union 
7.615  The European Union argues that, in the light of  its flawed price effects analysis, MOFCOM 
could not have conducted a correct causal link analys is.  Unless imports have proven significant price 
effects, the investigating authorities cannot find such  imports to be causing injury within the meaning 
of Article 3.1 of the Anti-Dumping Agreement and Ar ticle 15.1 of the SCM Agreement.  Further, any 
causation analysis must take into accoun t the "volume and prices" of imports.590 
(iii) Saudi Arabia 
7.616  Saudi Arabia argues that investigating authoriti es must separate and distinguish the injurious 
effects of dumped imports from the injurious effects of other factors.  It is only through doing this that 
the degree of injury caused by the dumped or subs idized imports can be assessed.  This process 
requires a satisfactory or meaningful explanation of  the nature and extent of the injurious effects 
caused by other factors.591 
(g) Evaluation by the Panel 
7.617  The United States' claim raises issues regardi ng MOFCOM's use of price effects findings, and 
MOFCOM's examination of the domestic industr y's increase in capacity and production as an 
alternative cause of injury.  Be fore addressing the substance of these issues, we first make a number 
of observations regarding the applicable lega l framework for the Panel's evaluation of the 
United States' claim. 
(i) Legal framework 
7.618  In terms of the applicable legal standard, we note that the Appellate Body has provided some 
guidance regarding the interpretation of Article  3.5 of the Anti-Dumping Agreement which we 
consider equally applicable to Article  15.5 of the SCM Agreement.  Thus, in  US - Hot Rolled Steel the 
Appellate Body noted that investigating authorities ar e required, as a part of their causation analysis, 
to examine all "known factors" other than dumped imports which are causing injury to the domestic 
industry.  Where such other known factors are causing  injury, the investigating authority must ensure 
that the injurious effects of these factors are not "attributed" to the dumped imports.  The non-
attribution analysis requires "separating and disti nguishing the injurious effects of the other factors 
from the injurious effects of the dumped imports", rather than making "mere assumptions" about the 
effects of the imports and the other factors.592 
                                                      
589 Argentina's third party submission, paras. 14-15. 
590 European Union's third party submission, paras. 47-48. 
591 Saudi Arabia's third party submission, paras. 38-39. 
592 See, for example, Appellate Body Report, US – Hot-Rolled Steel , para. 226.  WT/DS414/R 
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 7.619  We recall that it is well established that th e role of the Panel is not to conduct a de novo  
review nor simply defer to the conclusions of the i nvestigating authority.  Rather, we must determine 
whether the explanation for the conclusions reached  by the investigating authority is reasoned and 
adequate in the light of other plausible alternativ e explanations.  Furthermore, we must determine 
whether the quality of the evidence relied on by MOFCOM met the "positive evidence" standard set 
forth in Article 3.1 of the Anti-Dumping Agreemen t and Article 15.1 of the SCM Agreement.  We 
must also determine whether MOFCOM undertook an  objective examination of the evidence.  More 
details of our standard of review ar e set forth at paragraph 7.513 above. 
(ii) Use of price effects findings 
7.620  Our evaluation of MOFCOM's findings on price depression and price suppression has 
revealed a number of shortcomings in MOFCOM's analysis of the price effects of subject imports.  
Since MOFCOM relied on the price effects of subj ect imports in support of its finding that subject 
imports caused material inju ry to the domestic industry,
593 the abovementioned shortcomings also 
undermine MOFCOM's conclusion on the causal link betw een subject imports and the material injury 
suffered by the domestic industry. 
7.621  We note China's argument that MOFCOM did not  rely exclusively on the price effects of 
subject imports in the present case, such that MOFCOM's finding of causation might rest on MOFCOM's analysis of the adverse volume effects of the subject imports.  We recall our earlier findings in this regard.
594  In particular, while MOFCOM did indeed rely on both the volume and 
price effects of subject imports, we recall that ther e is nothing in the final determination to suggest 
that volume effects were the primary basis for MOFCOM's findings, or that MOFCOM relied more 
heavily on volume effects than price effects.  Ra ther, MOFCOM's finding that subject imports were 
priced lower than domestic products was centra l to MOFCOM's finding that price depression and 
price suppression was an effect of subject imports , and MOFCOM's overall conclusion that subject 
imports caused material injury to the domestic indus try.  In these circumstances, it is not appropriate 
for us to consider the possibility that MOFCOM's finding of causation might be upheld purely on the 
basis of MOFCOM's analysis of the volume effects of subject imports. 
7.622  We now turn to the United States' argument regarding MOFCOM's evaluation of the domestic 
industry's increase in capacity and production. 
(iii) Other causes of injury: domestic c apacity, production, de mand and inventories 
7.623  For present purposes, we note that Article 3.5 of the Anti-Dumping Agreement and 
Article 15.5 of the SCM Agreement require an inves tigating authority to "examine any known factors 
other than" subject imports "which at the same time are injuring the dom estic industry".  These 
provisions also state that "the injuries caused by these other factors must not be attributed to" the subject imports.  Before considering the applicab ility of these provisions, we must first clarify the 
precise nature of the "other factor" at issue.  We  must also clarify the precise nature of the finding 
made by MOFCOM in respect of that "other factor".   
                                                      
593 Final Determination, Exhibit CHN-16, p. 65 ("The evidence available shows that during the 
investigation period, since the product concerned imported from the U.S. and Russia had been sold in the 
domestic market of China at a price below normal value and at the same time, the product concerned imported 
from the U.S. received subsidy from th e USG, the import of the product conc erned in large quantity and at a low 
price caused material injury to the domestic industry of China").   
594 See paras. 7.537-7.542 of this Report.  WT/DS414/R 
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  The nature of the "other factor" 
7.624  China argues that the United States improperly re-c haracterized the "other factor" at issue, 
shifting its argument to "overproduction,"595 and "production growing far more rapidly than 
demand."596  According to China, during the proceed ings, the arguments focused on excess production 
capacity, and did not discuss excess  production.  China contends that it is improper for the 
United States now to propose an alternative cause th at had never been raised before the authorities. 
7.625  We are not persuaded by China's argument.  In comments made during the course of 
MOFCOM's investigation, the United States stated:   
In 2008, the Chinese industry increased both its capacity and production far in excess 
of any increase in demand.  There is certain ly a colorable argument that the enormous 
increase in Chinese producers' inventories due to the domestic industry's incorrect 
assessment of demand…forced the Chinese indus try to engage in massive price cuts 
during the first quarter of 2009, resulting in operating performance declines during that period.
597 
7.626  The United States' comment clearly refers to th e domestic industry's increase in production, in 
addition to the increase in capacity.  Furthermore,  ATI's comment included the statement that "[t]he 
huge gap between the production capacity and dema nd would necessarily change the supply-demand 
relation which further affected the domestic market price."598  When addressing an unrelated matter in 
its first written submission, China sought to make "a very important point:  capacity does not affect 
the supply-demand balance in the market until that  capacity has been turned into production."599  We 
agree with China's observation.  For this reason, we  consider that ATI's remark about the gap between 
capacity and demand affecting supply and demand w as necessarily premised on the notion that such 
capacity had been turned into production.  Furt hermore, we note that MOFCOM itself referred to 
"production output" when responding to the interested parties' comments.600  In these circumstances, 
China's argument that the issue of the domestic i ndustry's increase in production was not raised before 
MOFCOM is not tenable. 
 The nature of MOFCOM's finding 
7.627  We now turn to the nature of the finding made by MOFCOM, in order to resolve the 
disagreement between the parties regarding the prima facie  case that needs to be established by the 
United States.  The United States alleges that the only finding made by MOFCOM was that the 
domestic industry's increase in capacity and production did not cause injury to the domestic industry.  The United States contends that it need only establish a prima facie  case that MOFCOM's finding that 
the domestic industry's increase in capacity and pr oduction did not cause injury is flawed.  The 
United States asserts that MOFCOM did not conduct any non-attribution analysis in respect of this 
factor.  According to China, though, MOFCOM addressed both issues.  First, MOFCOM found that excess capacity and excess production was not a cause of injury.  Second, MOFCOM discussed (1) 
the correlation between inventory levels and subject  imports, and (2) the lack of correlation between 
inventory levels and changes in production capacity.  According to China, this second discussion both 
confirmed MOFCOM's finding that capacity chang es were not a cause of injury, and served as a non-
                                                      
595 United States' opening statement at the first meeting of the Panel, para 86. 
596 United States' opening statement at the first meeting of the Panel, para 87. 
597 Anti-Subsidy Investigation on Imported Grain Orie nted Flat-Rolled Electrical  Steel Originating in 
the United States: United States' Comments on the Prelim inary Determination, (30 Dec. 2009), Exhibit US-4, 
p. 9. 
598 ATI's Comments on the Preliminary De termination, Exhibit CHN-31, p. 9. 
599 China's first written submission, para. 363. 
600 Final Determination, Exhibit CHN-16, p. 72. WT/DS414/R 
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 attribution analysis.
601  According to China, therefore, the United States must establish a prima facie  
case both that MOFCOM's finding that the domestic industry's increase in capacity and production did not cause injury is flawed, and that MOFCOM's non-attribution analysis is flawed. 
7.628  
It is well established that a proper non-attri bution analysis requires the injury caused by 
"other factors" to be separated and distinguished from th e injury caused by increased imports.602  In 
other words, injury caused by other factors must be cl early identified, to ensure that it is not attributed 
to subject imports.  In the present case, MOFCOM  found that there was no injury caused by the 
domestic industry's increase in capacity and production.   Having made this finding, we do not see how 
MOFCOM could then have identified the injury caused by that factor, and ensured that such injury - 
of which there was allegedly none - was not attribut ed to subject imports.  Accordingly, we reject 
China's argument that MOFCOM undertook a non-attribution analysis in respect of the domestic 
industry's increase in capacity and production.  In  our view, the only finding made by MOFCOM was 
that this factor was not a cause of injury to the do mestic industry.  This, then, is the finding in respect 
of which the United States must establish a prima facie  case.  In particular, the United States has the 
burden of establishing a prima facie  case that MOFCOM's finding that the domestic industry's 
increase in capacity and production did not cause injury  is flawed.  We shall now determine whether 
or not the United States has discharged that bur den in the light of the parties' arguments. 
7.629  The principal arguments set forth in the Unite d States' first written submission concerned the 
relationship between, and changes in, capacity, produc tion, inventories, demand, and the volume of 
subject imports.603  MOFCOM's final determination contai ns only relatively limited information 
regarding these factors.  After determining that a dditional information was necessary in order for the 
Panel to undertake a more complete evaluation of the issues raised by the United States, the Panel 
asked China to provide the confidential data supporting MOFCOM's finding, including data on 
demand, domestic capacity, capacity utiliza tion, domestic production and inventories.604  China failed, 
however, to provide the bulk of the requisite confid ential data.  Indeed, for the most part China failed 
to provide any actual data at all, preferring to  submit indexed summaries and numerical ranges.  
Although the Panel was not provided with access to all of the relevant data , the Panel nevertheless 
evaluates the United States' claim with the more limited information at hand.  
7.630  The United States has asserted, on the basis of th e various estimates that it has prepared, that 
the inventory overhang exceed ed the increase in the volume of subject imports.605  We note that an 
                                                      
601 China's response to Panel question 107(ii), para. 185. 
602 See, for example, Appellate Body Report, US – Hot-Rolled Steel , para. 226  
603 United States' first written submission, paras 246 - 255. 
604 The Panel addressed a fax to China dated 18 November 2011.  In that fax, the Panel requested 
"certain confidential data from Chin a". In particular, the Panel requeste d "[t]he data supporting MOFCOM's 
finding that the domestic industry's increase in capacity and production did not cause any injury, including data 
on demand, domestic capacity, capacity utilization, domestic production and inventories".  China contends that 
the Panel asked only for "data", and "did not specify any particular documents, numbers, or time periods" 
(China's reply to Panel question 105(c),  para. 167).  We reject this argume nt.  In our view, the relevant fax 
clearly requested "confidential data", "including da ta on demand, domestic capacity, capacity utilization, 
domestic production and inventories".  By failing to provide this data, China failed to respond fully to the 
Panel's request. 
605 China has criticised some of those estimates on the basis that the United States made an error 
regarding the amount of domestic capacity as a per cent of demand (China's response to Panel question 105(c), 
para. 174).  In our view, the number used by the United States was based on a not unreasonable reading of an assertion made by China.  (China asserted that "[d]omestic capacity as a per cent of total apparent consumption 
was ranged between [x] and [y] during the period of investigation".  The United States understood that the 
figure "y" corresponded to the capacity as a proportion of demand in 2008.  In our view, it is not unreasonable to interpret China's assertion to mean that the figure "y" indi cated the relevant value in the latter part of the period 
of investigation.)  Furthermore, although China alleged an error by the United States, China failed to state what  WT/DS414/R 
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 important element in MOFCOM's reasoning was indeed  that inventory overhangs were not explained 
by increases in domestic capacity and domestic producti on, but rather by the increase in the volume of 
subject imports from 2007 to 2008.  This is clear from the various references made by MOFCOM to 
the increase in the volume of subject imports in th e following extract from the final determination: 
Due to the increase of import volume of the product concerned in 2008, the increase 
rate of the domestic like product's sales volume decreased greatly. The normal sales 
of the domestic industry of China were seriously suppressed and consequently the 
inventory increased largely. Thirdly, the import volume of  the product concerned did 
not increase at a constant speed. As the Inves tigating Authority had analysed in detail 
in the determination, the imports of the product concerned increased greatly in 2008. 
The increase rate of the import volume of  the product concerned in 2008 and Q1 of 
2009 were higher than the increase rate of the domestic demand of China by 42.55 
percentage points and 11.11 percentage points respectively and higher than the 
increase rate of sales volume of domestic like product by 55.60 percentage points 
and by 8.74 percentage points. 606 
7.631  This understanding is consistent with Chin a's own explanation of MOFCOM's finding.607  
Thus, China explains that, although production kept pace as capacity expanded in 2007, "that situation 
changed when subject imports increased in 2008 and Q1 2009".608  China also explains that "[b]oth 
the large presence and growth of the unfairly traded imports … impeded domestic sales".609  
Furthermore, China asserts that "[e]ven with capac ity increasing in 2007, before the surge in subject 
imports the domestic industry was able to increase its production and shipments, and draw down its 
inventory".610  China asserts that this "situation changed dramatically in 2008", when "subject imports 
surged", allowing subject imports to gain more than  5.56 percentage points of market share "directly 
from the domestic industry".611  According to China, the domestic industry "could not ship any 
additional volume because the unfairly traded subj ect imports seized a large portion of the market".612 
7.632  Thus, according to MOFCOM, the increase in inventories was caused by the increase in 
subject imports, rather than by the increase in the domestic industry's capacity and production.  
Information before the Panel,613 though, indicates that inventor y overhangs would have occurred 
notwithstanding the increase in subject imports, thereby undermining MOFCOM's assessment of this issue.  In this regard, we note that the upper end of the range of 2008 inventory data provided by 
China exceeds the increase in the volume of subject  imports in 2008.  Thus, the range of data 
provided by China indicates that inventories may have increased by more than subject imports.  China's assertion that "the domestic production in 2008 that could not be shipped was due almost 
                                                                                                                                                                     
the correct number should be.  In these circumstances, we do not consider that China's mere assertion of error, 
without providing the actual underlying data, should necessarily cause us to reject the basic point being made by the United States. 
606 Final Determination, Exhibit CHN-16, pp. 72-73. 
607 China's 25 November 2011 response to the Panel questions dated 18 November 2011, pp. 3-7.   
608 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 4. 
609 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 5.  While 
China refers to the both the "presence" and "growth" of subject imports, MOFCOM did not make any finding of injury based on the "presence" of subject imports in 2007.  (Indeed, according to China, "[t]he domestic industry 
had been doing fine in 2006 and 2007" (China's first written submission, para. 254).  Rather, MOFCOM's 
determination, regarding the possible role of the domestic industry's increase in capacity and production, is focused on the "growth" in subject imports between 2007 and 2008). 
610 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 5. 
611 China's 25 November 2011 response to the Panel questions dated 18 November 2011, pp. 5 and 6. 
612 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 6. 
613 See Annex H:  Annex Containing Business Confidential Information.  WT/DS414/R 
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 entirely to the gain in subject imports" confirms that this was indeed the case.
614  In particular, the fact 
that the increase in subject imports accounts for "almost" all of the inventory overhang indicates that part of that overhang was caused by something ot her than the increase in the volume of subject 
imports.  In addition, China has provided a ra nge of data for domestic production in 2008.
615  We  
developed an equivalent range for 2007 production, on the basis of China's assertion that the domestic 
industry increased its producti on by 24% between 2007 and 2008.616  The absolute difference between 
both the lower and the upper numbers of the 2007 and 2008 ranges comfortably exceeds the absolute increase in the volume of subject imports over the same period.  In other words, the increase in production by the domestic industry from 2007 to 2008 was greater than the increase in subject imports, and would have accounted fo r (at least some of) the inventory build-up that could not be 
attributed to the (lesser) increase in subject im ports.  In these circumstances, an objective and 
impartial investigating authority c ould not properly have found that the domestic industry's increase in 
production was not a cause of injury. 
7.633  A similar picture emerges from the limited inform ation available regarding the first quarter of 
2009.  The United States asserts that the domestic i ndustry produced a significant number of tons of 
GOES more than it could ship during the first quart er of 2009.  The United States contends that the 
"quantity of excess production is staggering".
617  Our own calculations confirm that the increase in 
subject imports could only account for a minor portion of the increase in inventories in the first quarter of 2009.  Thus, the amount of domestic producti on directed to inventory in the first quarter of 
2009 was significantly greater than the increase in subj ect imports from the first quarter of 2008 to the 
first quarter of 2009.  Indeed, the increase in inventory in the first quarter of 2009 was even greater 
than the total volume of subject imports in the first quarter of 2009.  Thus, even if there had not been 
any subject imports in the first quarter of 2009, th ere would still have been a substantial increase in 
inventories in this period. 
7.634  Accordingly, the limited information available to us supports the United States' argument that 
domestic capacity
618 and domestic production increased by more  than the increase in the volume of 
subject imports in 2008 and the first quarter of 2009.  This is at odds with MOFCOM's determination 
that the increase in the domestic industry's capacity a nd production was not a cause of injury, and that 
the real cause of the injurious inventories w as the increase in the volume of subject imports. 
7.635  Before concluding, we note China's relian ce on MOFCOM's finding that total domestic 
capacity did not exceed total domestic demand.  We  are unable to verify this finding, because of 
China's failure to provide the underlying data.  Ho wever, even if this finding were accurate, it would 
not change the fact that subject imports did not account for the totality of the injurious inventory 
overhangs. 
7.636  We also note China's argument that ATI had fa iled to support its assertions regarding this 
"other factor" with "public information".  Given th e difficulties we have experienced in obtaining all 
of the information necessary to evaluate the United St ates' claim, we are not persuaded that ATI could 
reasonably have been expected to provide "public in formation" regarding this matter.  Furthermore, 
we do not consider that a respondent is required to provide evidence regarding "other factors".  
Article 3.5 of the Anti-Dumping Agreement and Ar ticle 15.5 of the SCM Agreement provide that 
                                                      
614 China's response to Panel question 105(c), para. 176. 
615 China's response to Panel question 105(c), para. 175. 
616 China's 25 November 2011 response to the Panel questions dated 18 November 2011, p. 6. 
617 United States' comments on China's response to Panel question 105, para. 119. 
618 Since domestic producers were not utilizing 100% of their capacity in 2008 (China's 
25 November 2011 response to the Panel questions dated 18 November 2011, p. 4.  See also Final Determination, Exhibit CHN-16, p. 64: "Capacity utilization had a substantial decline" from 2007 to 2008), 
domestic capacity necessarily exceeded  domestic production in 2008.  WT/DS414/R 
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 "[t]he authorities shall also examine any known fact ors other than the [subject] imports which at the 
same time are injuring the domestic industry".  Accordingly, once the "other factor" becomes 
"known" to the investigating authority, it is fo r the investigating authority to investigate. 
7.637  As explained above, the burden is on the United States to establish a prima facie  case that 
MOFCOM's finding that the domestic industry's increase in capacity and production did not cause 
injury is flawed.  Our evaluation of the United Stat es' arguments in the light of the limited information 
available to us, and our analysis of that information, indicate that the domestic industry's increase in capacity and production were at leas t partly responsible for the accu mulation of inventory in 2008 and 
the first quarter of 2009.  Accordingly, we find that the United States has established a prima facie  
case that MOFCOM's determination that the domest ic industry's increase in capacity and production 
was not a cause of injury is flawed.  We fu rther find that China has failed to rebut that prima facie  
case.  As a result, we find that MOFCOM failed pr operly to examine whether a known factor other 
than subject imports was at the same time injuring the domestic industry, contrary to the obligation set 
forth in the third sentences of Article 3.5 of th e Anti-Dumping Agreement and Article 15.5 of the 
SCM Agreement. 
 Conclusion 
7.638  For all of the above reasons, we conclude that MOFCOM's finding that subject imports 
caused material injury to the domestic industry is in consistent with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement, and Articles 15.1 and 15.5 of the SCM Agreement. 
2. Whether China acted inconsistently with Articles 12.8 of the SCM Agreement and 6.9 of 
the Anti-Dumping Agreement in failing to disclose the essential facts under 
consideration in relation to non-subject imports in its causation anaylsis 
(a) Provisions at issue 
7.639  Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement provide: 
The authorities shall, before a final determ ination is made, inform all [interested 
Members and] interested parties of the e ssential facts under consideration which form 
the basis of the decision whether to appl y definitive measures.  Such disclosure 
should take place in sufficient time for the parties to defend their interests.619 
(b) Factual Background 
7.640  Following the preliminary determination, and prior to issuing its final determination, 
MOFCOM issued a final injury disclosure document,  with the stated purpose of disclosing the "basic 
facts upon which the final injury determination is made".  
(c) Arguments of the United States 
7.641  The United States claims that MOFCOM's failu re to disclose information concerning non-
subject imports is inconsistent with Article 12.8 of the SCM Agr eement and Article 6.9 of the Anti-
Dumping Agreement.  As MOFCOM purported to  consider whether imports not subject to 
investigation were a cause of material injury to th e domestic industry, facts pertaining to such imports 
were essential to its causal link analysis.620  However, MOFCOM disclosed no information regarding 
                                                      
619 Where the text in brackets is included only in Article 12.8 of the SCM Agreement and not in 
Article 6.9 of the Anti-Dumping Agreement. 
620 United States' first written submission, para. 259. WT/DS414/R 
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 the volume and prices of imports from sources other than Russia and the United States.  
Consequently, the United States was unable to prep are a meaningful argument regarding the role of 
such imports in contributing to any material injury to the domestic GOES industry.
621  According to 
the United States, China does not seriously dispute that MOFCOM failed to disclose any information 
about the volume or prices of imports from source s other than Russia and the United States and nor 
does China dispute that such informa tion is essential to a causation analysis.622 
7.642  In response to China's argument that MOFC OM was not required to disclose further 
information about non-subject imports because the in terested parties did not continue to submit 
arguments on the issue, the United States contends th at this turns the purpose of Articles 12.8 of the 
SCM Agreement and 6.9 of the Anti-Dumping Agreem ent on its head.  The provisions do not exist to 
allow authorities to counter arguments parties have made.  Rather, they require authorities to provide 
information so that parties may defend their interests.623 
7.643  According to the United States, in its firs t written submission China for the first time 
discloses detailed information about the volume and value of non-subject imports.  The United States 
contends that if MOFCOM had di sclosed this information, whic h was information essential to any 
reasoned analysis of the issue, the United Stat es may well have developed arguments to submit to 
MOFCOM. 624 
(d) Arguments of China 
7.644  China argues that it did disclose the "essential f acts under consideration" with respect to the 
role of non-subject imports in the causation analys is.  In particular, China cites the preliminary 
determination as identifying non-s ubject imports as an "other" f actor under consideration.  The 
preliminary determination also notes that the imports  under investigation were capturing a larger share 
of the market than non-subject imports.625  This provided notice that China was addressing non-
subject imports and that subject imports were ga ining a share of total imports.  Further, China 
contends that by comparing the percentage loss in  market share experienced by the domestic industry 
with the percentage gain by the imports under invest igation, it was possible for interested parties to 
calculate the gain in market share by non-subject imports (namely, 0.09%).626  With respect to the 
pricing of non-subject imports, China argues that MOFCOM considered this, but only indirectly.  
MOFCOM observed that there was no evidence of the dumping of non-subject imports, but did not otherwise investigate or consider the prices of such imports.
627 
7.645  China also argues that having identified in th e preliminary determination that non-subject 
imports were being considered by MOFCOM, the inte rested parties did not comment on this issue.  
Therefore, China did not need to develop this is sue further.  In addition, China argues that the 
interested parties could have derived informati on about non-subject imports from publicly available 
sources.628   
                                                      
621 United States' first written submission, para. 260. 
622 United States' second written submission, para. 181. 
623 United States' second written submission, para. 185. 
624 United States' second written submission, paras. 186-187. 
625 China's first written submission, para. 373. 
626 China's first written submission, para. 374 and Chin a's opening statement at the first meeting of the 
Panel, para. 58 
627 China's response to Panel question 70, para. 63. 
628 China's first written submission, para. 375 and Chin a's opening statement at the first meeting of the 
Panel, para. 59.  WT/DS414/R 
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 (e) Arguments of third parties 
(i) European Union 
7.646  The European Union argues that any proper cau sation analysis must take into account the 
"volume and prices" of non-subject imports.  MO FCOM appears to have undertaken such an 
assessment, but did not disclose any of the relevant data to the parties.  Therefore, MOFCOM failed to 
comply with Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement.629 
(ii) Japan 
7.647  With respect to the causation analysis, Japan gi ves a number of examples of "essential facts" 
which may underlie an investigating authority's c onclusions, including the facts found relating to the 
effect of non-subject imports and the analys is of the raw data supporting these findings.630  In 
response to China's argument that MOFCOM discl osed the relevant facts in the preliminary 
determination, Japan notes that a preliminary de termination does not always result in sufficient 
disclosure of the "essential facts" before the final determination.  The "essential facts" may change 
between a preliminary determination and an "on-the- spot investigation".  If so, an exporter should be 
informed of any changes in the "essential facts".631 
(f) Evaluation by the Panel 
7.648  The issue in contention between the parties is  whether MOFCOM disclosed the essential facts 
under consideration in relation to its  causation analysis, in particular in relation to the effect of non-
subject imports on the domestic industry.   
7.649  China argues that the following disclosures made in the preliminary determination met the 
requirements of Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement: 
(i) The preliminary determination states, in th e section analysing the other factors that 
may cause injury to the domestic industry, that "[d]uring the POI, the proportion of imports of the subject merchandise as a percentage of China's total imports increased, while the proportion of the volume of GOES imported from Other Countries and regions in total imports continued to drop.  Meanwhile, there is no evidence that 
imports from other countries (regions) ever dumped or received subsidies.  Therefore, 
there is no evidence suggesting that imported GOES from Other Countries and regions caused material injury to China's domestic industry"
632; and 
(ii) The preliminary determination also states, in the section analysing the economic 
factors and indices having a bearing on the state of the domestic industry, that "the market share of like product of China's domestic industry declined by 5.65%...at the 
same period, the share of product concerne d in China market increased by 5.56%".
633  
China argues that this indicates that non-subject imports were responsible for 0.09% of market share loss. 
                                                      
629 European Union's third party submission, paras.48-49. 
630 Japan's third party submission, para. 17. 
631 Japan's third party statement, paras. 10-11. 
632 Preliminary Determination, Exhibit US-5, p. 57. 
633 Preliminary Determination, Exhibit CHN-17, p. 60. WT/DS414/R 
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 7.650  The United States claims that more detailed in formation regarding non-subject imports, in 
particular their volumes and prices, should have been disclosed in accordance with Articles 12.8 of 
the SCM Agreement and 6.9 of the Anti-Dumping Agreement. 
7.651  At the outset, we recall China's argument that it did not need to provide further disclosure 
regarding non-subject imports following the prelim inary determination because the interested parties 
made no further arguments on the issue.  The Panel does not find this line of reasoning convincing.  
Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement are not a means by which authorities respond to arguments made by inte rested parties.  Rather, the provisions allow 
interested parties to "defend th eir interests" through review and response to the essential facts under 
consideration disclosed by the investigating authoriti es.  Indeed, the ability of an interested party to 
submit arguments on the facts under consideration is dependent upon adequate disclosure of those 
facts.  Consequently, if the requirement for an in vestigating authority to disclose information under 
Articles 12.8 and 6.9 were not trig gered until interested parties submitted arguments, the provisions 
may become meaningless.  Further, in relation to th e argument that the interested parties could have 
consulted publicly available info rmation regarding the non-subject im ports of GOES into the Chinese 
market, the Panel notes that the obligations under Articles 12.8 and 6.9 fall upon investigating 
authorities and do not make any distinction between conf idential and publicly available facts.  It is not 
for a respondent to guess at and research the info rmation being considered by an investigating 
authority. 
7.652  Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement require 
investigating authorities to "inform all interested  parties of the essential facts under consideration 
which form the basis for the decision whether to apply definitive measures".  In order to apply 
definitive measures at the conclusion of count ervailing and anti-dumping investigations, an 
investigating authority must find dumping or subsidization, injury and a causal link.  Therefore, the "essential facts" underlying the findings and conclusi ons relating to these elements form the basis of 
the decision to apply definitive measures and should be disclosed.  Our interpretation in this regard 
accords with that of the panel in Mexico – Olive Oil.
634 
7.653  In considering the disclosure obligations unde r Articles 12.8 of the SCM Agreement and 6.9 
of the Anti-Dumping Agreement, the question ari ses regarding whether the "essential facts" are the 
facts that were actually under consideration by the investigating authority, or the facts that should 
have been considered by a reasonable investig ating authority, depending upon the substantive 
obligations at issue.  In this respect, the Pa nel interprets Articles 12.8 and 6.9 as requiring an 
investigating authority to disclose those facts that  are actually under consideration by it (i.e. the body 
of facts before it).  We find support for this in  the text of the provisions, which state that the 
disclosure requirement applies to the "essential fact s under consideration", rather than the essential 
facts that should reasonably be considered in reso lving a claim.  If the standard were otherwise, 
claims under Articles 12.8 and 6.9 may be difficult to distinguish from substantive claims relating to 
the application of definitive measures.  Finally, th e purpose of the disclosure in Articles 12.8 and 6.9 
is to allow parties to "defend their interests".  In order for this to be meaningful, the actual facts under 
consideration are the relevant facts to be disclosed, so that omissions or the use of incorrect facts can 
be challenged. 
7.654  In the circumstances of this  case, the United St ates claims that MOFCOM should have 
disclosed the volume and prices of imports from sources other than Russia and the United States.  In 
examining this claim, it is necessary for the Panel to consider whether the volume and prices of non-
subject imports were "essential facts" under c onsideration by MOFCOM in reaching its final 
determination and, if so, whether the disclosures relied upon by China were sufficient for the purposes 
of Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping Agreement. 
                                                      
634 Panel Report, Mexico – Olive Oil, para. 7.110.  WT/DS414/R 
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 7.655  It is clear that in reaching its conclusion re lating to causation, MOFCOM considered whether 
non-subject imports were an "other " factor that may have caused in jury to the domestic industry.635  In 
the preliminary determination, MOFCOM stated: 
During the POI, the proportion of imports of the subject merchandise as a percentage 
of China's total imports increased, while the proportion of the volume of GOES 
imported from Other Countries and regions in  total imports continued to drop.  
Meanwhile, there is no evidence that impor ts from other countries (regions) ever 
dumped or received subsidies.  Therefore, there is no evidence suggesting that imported GOES from Other Countries and regions caused material injury to China's domestic industry.
636 
7.656  Whether the volume and value of non-subject impor ts were facts actually under consideration 
by MOFCOM, rather than MOFCOM merely reaching a conclusion about the effect of non-subject imports based on the very general information a bout market share disclosed in the preliminary 
determination, is less clear.  While reaching a conclusion about the effects of non-subject imports 
based purely on general information on market share tr ends could potentially be inconsistent with the 
substantive obligations under the SCM and Anti- Dumping Agreements, whether an investigating 
authority acts inconsistently with disclosure ob ligations under Articles 12.8 of the SCM Agreement 
and 6.9 of the Anti-Dumping Agreement depends upon whether it failed to disclose essential facts that 
were actually before it. 
7.657  In the circumstances of this case, the Panel conc ludes that in reaching its finding on the effect 
of non-subject imports, MOFCOM had before it and considered data on the volume of such imports, 
rather than merely the market shares.  In res ponse to a Panel question, China states that "MOFCOM 
considered both the volume and prices of non-subject  imports, but considered the volume directly and 
considered the prices indirectly".
637  In relation to volume, China ar gues that the market share trends 
for non-subject imports, disclosed in the prelimin ary determination, allowed MOFCOM to conclude 
that non-subject imports were not a source of injury  to the Chinese GOES industry.  In this regard, 
China states that "in the light of the analysis  that MOFCOM conducted that showed non-subject 
imports were not gaining market share, MOFCOM  properly considered and addressed this issue".638  
This suggests that MOFCOM had mo re detailed data on volume before it, which it analysed and used 
to derive the information on market share.  Indeed, information about the volume and value of non-subject imports, at least for 2008, was submitted to MOFCOM in an annex to the application.
639  In 
the light of this, we conclude that data on the vol ume of non-subject imports wa s a part of the body of 
facts being considered by MOFCOM as a part of its causation analysis. 
7.658  The Panel considers that the data on volume wa s an "essential fact under consideration" with 
respect to the causation analysis and finding.  For the purposes of Articles 12.8 of the SCM 
Agreement and 6.9 of the Anti-Dumping Agreement, it is insufficient merely to state a general finding 
and conclusion regarding non-subject  imports, namely that as a proportion of total imports into China, 
non-subject imports "continued to drop" and therefor e were not a cause of injury to the domestic 
industry.  Rather, the facts underlying these findings and conclusions should have been disclosed, in 
order to allow parties to "defend their interest s" by challenging the basis for the findings and 
conclusions.  In this case, disclosure of the data on the volume of imports was required. 
                                                      
635 MOFCOM expressly disclosed this in the Preliminary Determination, Exhibit CHN-17, p. 65. 
636 Preliminary Determination, Exhibit US-5, p. 57. 
637 China's response to Panel question 70, para. 61. 
638 China's opening statemen t at the second meeting of the Panel, para. 82. 
639 United States' second written submission, paras. 185-187.  See, 2008 Customs Monthly Imports 
Data (Annex 6 of Petition for an Anti-Dumping and an  Anti-Subsidy Investigations), Exhibit CHN-33. WT/DS414/R 
Page 156  
 
 7.659  Clearly the data on the volume of non-subject imports was not disclosed.  Rather, the 
preliminary determination included (i) a general stat ement about the share of non-subject imports as a 
proportion of total imports; and (ii) a statement from which information regarding the market share of 
non-subject imports in 2008 could be derived, although was not expressly disclosed.  This 
undermined the ability of interested parties to ch allenge the basis for MOFCOM's conclusion that 
non-subject imports were not a cause of  injury to the domestic industry. 
7.660  Consequently, the Panel concludes that China act ed inconsistently with Articles 12.8 of the 
SCM Agreement and 6.9 of the Anti-Dumping Agreem ent in not disclosing the data on volume of 
non-subject imports.  In the light of this conclu sion, the Panel does not consider it necessary to 
proceed to consider whether MOFCOM also failed to  disclose "essential facts under consideration" by 
not disclosing the prices of non-subject imports. 
3. Whether China acted inconsistently with Arti cles 22.5 of the SCM Agreement and 12.2.2 
of the Anti-Dumping Agreement in relation to the public notice and explanation of its 
causation analysis with respect to non-subject imports 
(a) Provisions at issue 
7.661  Articles 22.5 of the SCM Agreement and 12.2. 2 of the Anti-Dumping Agreement provide, 
relevantly: 
A public notice of conclusion or suspension of an investigation in the case of an 
affirmative determination providing for the imposition of a definitive duty…shall 
contain, or otherwise make available through a separate report, all relevant 
information on the matters of fact and law and reasons which have led to the 
imposition of final measures…due regard be ing paid to the requirement for the 
protection of confidential information.  In  particular, the notice…shall contain…the 
reasons for the acceptance or rejection of relevant arguments or claims made by 
[interested Members and by] the exporters and importers.
640 
(b) Factual Background 
7.662  Following the issuance of the preliminary dete rmination and the final disclosure documents, 
on 10 April 2010, MOFCOM issued its final determ ination for the anti-dumping and countervailing 
duty investigations. 
(c) Arguments of the United States 
7.663  The United States claims that Ch ina acted inconsistently with Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SCM Agreement because of its cursory and fact free 
analysis of the effect of non-subject imports.   
7.664  The United States argues that information on th e volume and prices of imports from sources 
other than Russia and the United States was direc tly relevant to MOFCOM's injury analysis.  
However, MOFCOM's final determination disclosed  no information to support its finding that the 
non-subject imports were not a cause of injury, although such information would not have been 
                                                      
640 Where the text in brackets is included only in the SCM Agreement and not in the Anti-Dumping 
Agreement.  WT/DS414/R 
 Page 157 
 
 
 confidential.641  According to the United States, Article  12.2.2 of the Anti-Dumping Agreement and 
Article 22.5 of the SCM Agreement are intended to avoid such opacity in decision-making.642 
7.665  In response to China's argument that non-su bject import market share increased only 
modestly in 2008, the United States contends that MOFCOM made no such finding.  Rather, MOFCOM found that imports "continued to drop", wh ich is not consistent with China's response 
regarding an increase in market share for non-subj ect imports.  According to the United States, the 
"divergence between China's proffered justification for the finding that non-subject imports were not a 
cause of injury to the domestic GOES industry and MOFCOM's stated justification indicates that the 
actual basis for the finding remains unclear".  Con sequently, the final determination does not contain 
"all relevant information on the matters of fact and law" which led MOFCOM to conclude that non-
subject imports were not a cause of injury to the domestic GOES industry.
643  Further, the 
United States argues that China's acknowledgment th at non-subject imports gained market share in 
2008 cannot possibly serve as a factual justification fo r a conclusion that non-subject imports were not 
a cause of injury.644 
(d) Arguments of China 
7.666  China does not clearly distinguish between its arguments that relate to disclosing the 
"essential facts under consideration" and those that relate to the notice requirements under 
Article 12.2.2 of the Anti-Dumping Agreement and Article 22.5 of the SCM Agreement.  In any 
event, in addition to the arguments outlined at pa ragraphs 7.644-7.645 of this Report, China also 
rejects the contention that MOFCOM did not provid e any "factual substantiation" for its conclusions 
on non-subject imports.  China submits that the de monstration that non-subject imports gained only 
0.09% market share is factual substantiation.  Further,  in the light of the failure of the United States to 
use publicly available information to develop ar guments on this issue, MOFOM provided adequate 
discussion of it.645 
(e) Arguments of third parties 
(i) European Union 
7.667  The European Union argues that not providi ng information on non-subject imports in the 
context of the causation analysis falls short of  the transparency requirements embodied in 
Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement.646 
(ii) Saudi Arabia 
7.668  According to Saudi Arabia, the public notices referred to in Article 12.2.2 of the Anti-
Dumping Agreement and Article 22.5 of the SCM Ag reement must contain sufficient detail to allow 
interested parties to discern either the significance  or lack thereof of the factors the investigating 
authority was obligated to address in its analysis.647 
                                                      
641 United States' first written submission, paras. 263-264. 
642 United States' first written submission, paras. 264-265. 
643 United States' second written submission, para. 188. 
644 United States' second written submission, para. 189. 
645 China's first written submission, para. 376.  It is  evident from China's footnote reference to the 
United States' submission that this part of China's submission relates to the claim under Article 12.2.2 of the 
Anti-Dumping Agreement and Article 22.5 of the SCM Agr eement, rather than Article 6.9 of the Anti-Dumping 
Agreement and 12.8 of  the SCM Agreement. 
646 European Union's third party submission, para. 50. 
647 Saudi Arabia's third party submission, para. 46. WT/DS414/R 
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 (f) Evaluation by the Panel 
7.669  The United States argues that the final determina tion did not include "all relevant information 
on matters of fact and law" leading to the impos ition of definitive measures.  In particular, the 
United States argues that the final determination was "essentially devoid of in formation" relating to 
imports from sources other than Russia and the United  States.  According to the United States, the 
final determination contained no information concerning the vol ume and value of non-subject 
imports.  Further, the lack of factual substan tiation for MOFCOM's conclu sion rendered it impossible 
to review.
648  Consequently, the United States claims  that China acted inconsistently with 
Articles 22.5 of the SCM Agreement and 12.2 .2 of the Anti-Dumping Agreement.   
7.670  The final determination included the follow ing statement about non-subject imports: 
During the POI, the proportion of imports of subject merchandise in China's total 
imports had been increasing, while the pr oportion of the volume of GOES imported 
from other countries and regions in total impor ts continued to drop.  Meanwhile, there 
is no evidence that imports from other countries (regions) were ever dumped or subsidized.  Therefore, there is no ev idence suggesting that GOES imported from 
other countries or regions caused material  injury to China's domestic industry.
649 
7.671  The final determination also stated, in the section analysing domestic industry indicators, that 
"in 2008, the market share of like product of Ch ina's domestic industry declined by 5.65%...in the 
same period, the share of the subject mercha ndise in the Chinese market  increased by 5.56%".650  
China argues that this disclosed that non-subject im ports were responsible for 0.09% of market share 
loss. 
7.672  The text of Articles 22.5 of the SCM Agreement and 12.2.2 of the Anti-Dumping Agreement 
can be read relatively broadly, in that "all relevant  information on matters of fact and law and reasons 
which have led to the imposition of final measures" must be included in the public notice or separate 
report.  However, in contrast to Articles 12.8 of the SCM Agreement and 6.9 of the Anti-Dumping 
Agreement, Articles 22.5 and 12.2.2 do not provide that  they allow interested parties to "defend their 
interests".  Rather, the title to Articles 22 of the SCM Agreement and 12 of the Anti-Dumping 
Agreement, indicate that they are directed at provi ding the public with notice of the outcome of an 
investigation and providing interested parties with  an explanation for the outcome reached.  Although 
the explanations may form the basis of a party's re quest for review of a determination, either in 
domestic judicial review proceedings or at the WTO,  the Panel is not convinced that Articles 22.5 and 
12.2.2 necessarily require a second disclosure, this tim e public, of the same detailed information, such 
as datasets, that may have required disclosure unde r Articles 12.8 of the SCM Agreement and 6.9 of 
the Anti-Dumping Agreement. 
7.673  In any event, it is clear that the causation anal ysis is one of the essential elements leading to 
the imposition of final measures.  Therefore, the re levant information on matters of fact and law and 
reasons underlying the causation analysis must be se t forth in the public notice or separate report in 
accordance with Articles 22.5 of the SCM Agreemen t and 12.2.2 of the Anti-Dumping Agreement.  
The causation analysis includes examination of othe r factors, apart from the dumped or subsidized 
imports, that may be injuring the domestic industry.  In this context, MOFCOM  considered the effect 
of non-subject imports on the domestic industry.  However, MOFCOM's disclosure in the final 
determination on this point was extremely limited.  In the section of the determination relating to 
other factors that may have been causing injury , MOFCOM stated that non-subject imports as a 
                                                      
648 United States' first written submission, paras. 262, 264-265. 
649 Final Determination, Exhibit US-28, p. 61. 
650 Final Determination, Exhibit US-28, p. 57.  WT/DS414/R 
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 proportion of total imports "continued to drop".  Wh ile China argues that information on the market 
share of non-subject imports during 2008 could be derived from disclosures in other sections of the 
determination, namely that non-subject imports in creased by 0.09% in 2008, this disclosure was not 
explicit and its relevance to the analysis of the non- subject imports as a factor that could be injuring 
the domestic industry was not clear, particularly in the light of the fact that the information from 
which it could be derived was in a di fferent section of the determination. 
7.674  Even if we were to accept that MOFCOM disclosed that non-subject imports increased by 
0.09% in 2008, the Panel is not convinced that  MOFCOM adequately disclosed all relevant 
information on the matters of fact and law and reasons underlying the conclusion that non-subject 
imports were not injuring the domestic  industry.  As indicated in para graph 7.657 of this Report, it is 
clear that MOFCOM had information before it and undertook some analysis of that information in 
addressing non-subject imports as an "other" cause of in jury.  However, there is no indication of this 
in the public notice.  Indeed, China defends the merits of MOFCOM's conclusion by reference to 
reasons and facts which it states "underscores the reasonableness of MOFCOM's judgment on this 
issue".  For instance, China argues that during the first and fourth quarters of 2008, "subject imports 
gained 21.3 million kgs, while non-su bject imports gained only 8.9 million kgs.  The overall market 
was growing, so both increased.  But unfairly trade subject imports were gaining volume faster, and 
then gaining market share.  Fairly traded non-s ubject imports increased more modestly and did not 
gain market share".651  Given our earlier conclusion that MO FCOM had detailed data on the volume 
of non-subject imports before it652, and that China argues that th is data supports MOFCOM's 
conclusion, it is our view that the public notice fails to set forth "all relevant information on the 
matters of fact and law and reas ons which have led to the impositi on of final measures".  We do not 
consider it necessary to proceed to decide whethe r MOFCOM should also have disclosed the full set 
of data on the volume and prices of non-subject im ports as a part of its final determination. 
7.675  Consequently, in the light of this reasoni ng, the Panel concludes that China acted 
inconsistently with Articles 22.5 of the SCM Agre ement and 12.2.2 of the Anti-Dumping Agreement. 
L. WHETHER CHINA ACTED INCONSISTENTLY WITH ARTICLE 1 OF THE ANTI -DUMPING 
AGREEMENT AND ARTICLE 10 OF THE SCM AGREEMENT  
1. Provisions at issue 
7.676  Article 10 of the SCM Agreement provides, relevantly:   
Members shall take all necessary steps to ensure that the imposition of a countervailing duty 
on any product of the territory of any Member im ported into the territory of another Member 
is in accordance with the provisions of Artic le VI of GATT 1994 and the terms of this 
Agreement. 
7.677  Similarly, Article 1 of the Anti-Dumping Agreement provides, relevantly: 
An anti-dumping measure shall be applied only under the circumstances provided for 
in Article VI of GATT 1994 and pursuant to investigations initiate d and conducted in 
accordance with the provisions of this Agreement.   
                                                      
651 China's opening statemen t at the second meeting of the Panel, para. 88. 
652 See para. 7.657 of this Report. WT/DS414/R 
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 2. Arguments of the United States 
7.678  The United States argues that because China's conduct of the GOES investigation breached 
numerous other provisions of the SCM and Anti-Dumping Agreements, China also breached Articles 10 and 1 of these Agreements respectively.
653   
3. Arguments of China 
7.679  China argues that to the extent it has addressed  all the substantive claims raised by the 
United States and has acted consistently with its obligations, the claims under Articles 10 and 1 of the 
SCM and Anti-Dumping Agreements respectively, should be set aside.654   
4. Evaluation by the Panel 
7.680  The United States' claims under Article 1 of the Anti-Dumping Agreement and Article 10 of 
the SCM Agreement are dependent on the other claims it has brought in this dispute.   
7.681  Therefore, to the extent we have upheld th e United States' claims under the SCM and Anti-
Dumping Agreements, we find that China has also acted inconsistently with Article 10 of the SCM 
Agreement and Article 1 of the Anti-Dumping Agreement. 
                                                      
653 United States' first written submission, paras. 183 and 267. 
654 China's first written submission, paras. 249 and 377-378.  WT/DS414/R 
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 VIII.  CONCLUSIONS AND RECOMMENDATION 
A. CONCLUSIONS  
8.1 In the light of the findings set forth in this  Report, the Panel concludes that China acted 
inconsistently with: 
(a) Article 11.3 of the SCM Agreement, on the basis that MOFCOM initiated 
countervailing duty investigations into each  of the 11 programmes challenged before 
the Panel by the United States, without sufficient evidence to justify this; 
(b) Articles 12.4.1 of the SCM Agreement and 6.5.1 of the Anti-Dumping Agreement, on 
the basis that MOFCOM did not require the applicants to furnish non-confidential summaries in sufficient detail to permit a reasonable understanding  of the substance 
of the information submitted in confidence; 
(c) Article 12.7 of the SCM Agreement in c onnection with MOFCOM's use of a 100% 
utilization rate in calculating the subsid y rates for the two known respondents under 
certain procurement programmes; 
(d) Articles 6.8, 6.9, 12.2, 12.2.2 and para graph 1 of Annex II of the Anti-Dumping 
Agreement, in connection with the resort to facts available to calculate the "all others" 
dumping margin for unknown exporters and due to deficiencies in the related 
essential facts disclosure and pub lic notice and explanation; 
(e) Articles 12.7, 12.8, 22.3 and 22.5 of the SCM Agreement, in connection with the 
resort to facts available to calculate the "all others" subsidy rate for unknown 
exporters and due to deficiencies in the re lated essential facts disclosure and public 
notice and explanation; 
(f) Articles 15.1, 15.2, 12.8 and 22.5 of the SC M Agreement and 3.1, 3.2, 6.9 and 12.2.2 
of the Anti-Dumping Agreement, in connection with MOFCOM's findings regarding the price effects of subject imports and due to deficiencies in the related essential facts disclosure and public notice and explanation; 
(g) Articles 15.1, 15.5, 12.8 and 22.5 of the SC M Agreement and 3.1, 3.5, 6.9 and 12.2.2 
of the Anti-Dumping Agreement, in connection with MOFCOM's finding that subject imports caused material injury to the domest ic industry and due to deficiencies in the 
related essential facts disclosure and public notice and explanation; and 
(h) Article 10 of the SCM Agreement and Article  1 of the Anti-Dumping Agreement, as 
a consequence of the foregoing violations of these Agreements. 
8.2 In the light of the findings set forth in this Re port, the Panel concludes that the United States 
has not established that China acted inconsistently with: 
(a) Article 12.2.2 of the Anti-Dumping Agreemen t by not including in a public notice or 
separate report the data and calculations u sed to determine the respondent companies' 
final dumping margins;  
(b) Article 12.7 of the SCM Agreement due to MOFCOM's resort to facts available to 
calculate the subsidy rates for the two known respondents under certain procurement 
programmes; and WT/DS414/R 
Page 162  
 
 (c) Article 22.3 of the SCM Agreement in c onnection with MOFCOM's explanation of 
the findings and conclusions supporting its determination that the bidding process 
under the United States Government procurem ent statutes at issue did not result in 
prices that reflected market conditions. 
8.3 In the light of the findings set forth in paragr aphs 8.1 and 8.2 of this Report, the Panel does 
not consider it necessary to make findings with  respect to the United States' claims under: 
(a) Article 11.2 of the SCM Agreement; and 
(b) Article VI:2 of the GATT 1994. 
B. R
ECOMMENDATION  
8.4 Under Article 3.8 of the DSU, in cases where th ere is infringement of the obligations assumed 
under a covered agreement, the action is considered prima facie  to constitute a case of nullification or 
impairment of benefits under th at agreement.  Accordingly, to the extent China has acted 
inconsistently with certain provisi ons of the SCM and Anti-Dumping Ag reements, we conclude that it 
has nullified or impaired benefits accruing to the United States under those Agreements. 
8.5 Pursuant to Article 19.1 of the DSU, having fo und China acted inconsistently with certain 
provisions of the SCM and Anti-Dumping Agreements, we recommend China bring its measures into 
conformity with its obligations under those Agreements. 
 
__________