WORLD TRADE  
ORGANIZATION   
WT/DS422/R 
8 June 2012 
 (12-2937) 
 Original:   English 
  
 
     
 
    
 
  
UNITED STATES – ANTI-D UMPING MEASURES ON 
CERTAIN SHRIMP AND DIAMOND  
SAWBLADES FROM CHINA 
 
 
 
Report of the Panel 
 
    
 
    WT/DS422/R 
 Page i 
 
 
  TABLE OF CONTENTS 
 
Page 
I.  INTRODUCTION .................................................................................................................. .. 1 
II.  FACTUAL ASPECTS .............................................................................................................. 2 
A.  USDOC  DETERMINATIONS IN THE SHRIMP AND DIAMOND SAWBLADES 
INVESTIGATIONS  ......................................................................................................................... 2  
B.  MEASURES AT ISSUE  ................................................................................................................... 4  
III. PARTIES' REQUESTS FOR FIND INGS AND RECOMMENDATIONS......................... 4  
IV.  ARGUMENTS OF THE PARTIES ........................................................................................ 5  
V.  ARGUMENTS OF THE THIRD PARTIES .......................................................................... 5  
VI.  INTERIM REVIEW ................................................................................................................ . 5 
A.  INTRODUCTION  ........................................................................................................................... 5  
B.  CHINA 'S REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT  ..................... 5  
C.  UNITED STATES ' REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM 
REPORT  .............................................................................................................................. ......... 5 
VII. FINDINGS ...................................................................................................................... ........... 6 
A.  INTRODUCTION AND ROLE OF A PANEL EXAMINING CLAIMS THAT ARE UNOPPOSED 
BY THE RESPONDING PARTY  ....................................................................................................... 6  
B.  BURDEN OF PROOF AND ORDER OF THE PANEL 'S ANALYSIS  ...................................................... 8  
C.  WHETHER CHINA HAS ESTABLISHED THAT THE USDOC  APPLIED ZEROING IN THE 
DETERMINATIONS AT ISSUE  ........................................................................................................ 9  
D.  WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY USED BY THE 
USDOC  IS THE SAME AS THE METHODOLOGY REVIEWED BY THE APPELLATE BODY 
IN US – SOFTWOOD LUMBER V .................................................................................................. 11  
E.  WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY APPLIED BY THE 
USDOC  IS INCONSISTENT WITH ARTICLE 2.4.2  OF THE ANTI-DUMPING AGREEMENT  ............ 12  
F.  APPLICATION OF A SEPARATE RATE ESTABLISHED ON THE BASIS OF MARGINS OF 
DUMPING CALCULATED WITH THE USE OF ZEROING  ............................................................... 14  
VIII. CONCLUSIONS AND RECOMMENDATION .................................................................. 16  
 WT/DS422/R 
Page ii  
 
  LIST OF ANNEXES 
 
 
ANNEX A 
 
FIRST WRITTEN SUBMISSIONS 
OF THE PARTIES OR EXECUTIVE SUMMARIES THEREOF 
 
Contents Page 
Annex A-1 Executive summary of the first written submission of China A-2 
Annex A-2 First written submission of the United States A-10 
  
ANNEX B 
 
WRITTEN SUBMISSIONS OF THE THIRD PARTIES 
 
Contents Page 
Annex B-1 Third-party submission of the European Union B-2 
Annex B-2 Third-party submission of Japan B-5 
Annex B-3 Third-party submission of Thailand B-7 
  
ANNEX C 
 
REQUEST FOR THE ESTABLISHMENT 
OF A PANEL 
 
Contents Page 
Annex C-1 Request for the establishment of a panel by China C-2 
  
ANNEX D 
 
AGREEMENT ON PROCEDURES BETWEEN THE PARTIES 
 
Contents Page 
Annex D-1 Agreement on Procedures be tween China and the United States D-2  WT/DS422/R 
 Page iii 
 
 
  TABLE OF CASES CITED IN THIS REPORT 
 
 
Short Title Full Case Title and Citation 
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 
US – Anti-Dumping Measures 
on PET Bags Panel Report, United States – Anti-Dumping Measures  on Polyethylene Retail 
Carrier Bags from Thailand , WT/DS383/R, adopted 18 February 2010 
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application 
of Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009 
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 
20 April 2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475) 
US – Shrimp (Ecuador) Panel Report, United States – Anti-Dumping Measure on Shrimp from 
Ecuador , WT/DS335/R, adopted on 20 February 2007, DSR 2007:II, 425 
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand , 
WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report 
WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, 2539 
US – Shrimp (Viet Nam) Panel Report, United States – Anti-Dumping Measures on Certain Shrimp from 
Viet Nam , WT/DS404/R, adopted 2 September 2011 
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination on 
Softwood Lumber from Canada , WT/DS264/AB/R, adopted 31 August 2004, 
DSR 2004:V, 1875 
US – Stainless Steel (Mexico) Appellate Body Report, United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R, adopted 20 May 2008 
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 
US – Zeroing (Korea) Panel Report, United States – Use of Zeroing in Anti-Dumping Measures 
Involving Products from Korea , WT/DS402/R, adopted 24 February 2011 
 WT/DS422/R 
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  LIST OF ABBREVIATIONS 
 
 
Abbreviation Full Reference 
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on 
Tariffs and Trade 1994 
CIT United States Court of International Trade 
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes 
PRC People's Republic of China 
USDOC United States Department of Commerce 
USITC United States International Trade Commission 
 
  
 
  WT/DS422/R 
 Page 1 
 
 
 I. INTRODUCTION 
1.1 On 28 February and on 22 July 2011, China re quested consultations with the United States 
concerning an alleged "zeroing" practice by the Un ited States Department of Commerce (USDOC) in 
its anti-dumping measures on two products from China:  (i) certain frozen warmwater shrimp (hereafter "Shrimp"), and (ii) diamond sawbla des and parts thereof (hereafter "Diamond 
Sawblades")
1. 
1.2 On 13 October 2011, China requested the establis hment of a panel pursuant to Article XXIII 
of the GATT 1994, Articles 4 and 6 of the DSU a nd Article 17.4 of the Anti-Dumping Agreement2. 
1.3 At its 25 October 2011 meeting, the Dispute Se ttlement Body (DSB) es tablished this Panel 
pursuant to the request of China in document WT/DS 422/3, 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 re ferred to the DSB by China in document 
WT/DS422/3 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 Panel was composed on 21 December 2011 as 
follows: 
 Chairman: Mr Alberto Juan Dumont 
  
 Members: Mr Ernesto Fernández 
   Ms Stephanie Sin Far Lee  
1.6 The European Union, Honduras, Japan, Korea, Thailand and Viet Nam reserved their rights to 
participate in the Panel proceedings as third parties. 
1.7 After consulting with the parties and seeking the vi ews of the third parties, and in view of a 
joint "Agreement on Procedures"  submitted by the parties
3, the Panel decided not to hold any 
substantive meetings with the pa rties and/or third parties.  
                                                      
1 WT/DS422/1 and WT/DS422/1/Add.1. 
2 WT/DS422/3. 
3 Agreement on Procedures between  China and the United States, WT/DS422/4, Exhibit CHN-1.  The 
Agreement is attached to this Report as Annex D-1.  The Agreement provides, inter alia , that the parties would, 
in the event China requests the establishment of a pane l, work to reach agreement on working procedures aimed 
to expedite the panel proceedings.  In this context, the parties would agree to reques t that they file only one 
written submission each, and that the Panel forego meetings  with the parties, or, at most, have only one such 
meeting.  The Agreement further provi des that the United States would not  contest China's claims that the 
measures identified in China's panel request are inconsis tent with Article 2.4.2, first sentence, of the Anti-
Dumping Agreement on the grounds stated in US – Softwood Lumber V .  The Agreement further indicates that 
the scope of China's panel request does not include any claim regarding the margin of dumping calculated for 
Zhanjiang Guolian in the Shrimp investigation or "the margin of dumping determined solely on the basis of adverse facts available" in either the Shrimp or Diamond Sawblades investigation.  Finally, the Agreement 
provides that China should not ask that the Panel suggest ways in which the United States could implement the 
Panel's recommendations pursuant to the second sentence of Article 19.1 of th e DSU, and that the United States 
should implement the Panel's recomm endations by recalculating relevant margins of dumping and issuing a new 
determination in order to render the measures at issu e consistent with the DSB's recommendations and rulings WT/DS422/R 
Page 2  
 
 1.8 The Panel submitted its Interim Report to the parties on 5 April 2012 and submitted its Final 
Report to the parties on 3 May 2012. 
II. FACTUAL ASPECTS 
A. USDOC
 DETERMINATIONS IN THE SHRIMP AND DIAMOND SAWBLADES INVESTIGATIONS  
2.1 This dispute concerns the alleged use by the USDOC of zeroing in the calculation of margins 
of dumping in its original investigations in  the Shrimp and Diamond Sawblades anti-dumping 
proceedings.   
2.2 The United States initiated the Shrimp investigation on 27 January 20044.  The USDOC 
issued its final determination in this investigation on 8 December 20045.  The final determination 
indicates that the USDOC calculated the fo llowing margins of dumping for the four 
exporters/producers selected for individual exam ination:  Allied, 84.93 per cent;  Yelin, 
82.27 per cent;  Red Garden, 27.89 per cent;  Zhanjiang Guolian, 0.07 per cent (i.e. de minimis ).  In 
addition, the USDOC applied a "separate rate" of  55.23 per cent, corresponding to the weighted-
average of the margins of dumping calculate d for Allied, Yelin, and Red Garden, to 
35 exporters/producers who were not selected for individual examination but had established their 
independence from the government6.  Finally, the USDOC applied a "PRC-wide rate" of 
112.81 per cent to exporters/producers not selected fo r individual examination who did not establish 
their independence from the government or who faile d to respond to the USDOC's questionnaires.  On 
1 February 2005, the USDOC issued an amended fina l determination and an anti-dumping duty order.  
                                                                                                                                                                     
and the Anti-Dumping Agreement.  At the organizational meeting, the parties confirmed their request that the 
Panel not hold any meeting with the parties and third parties. 
4 Notice of Initiation of Antidumping Duty Investigations:  Certain Frozen and Canned Warmwater 
Shrimp From Brazil, Ecuador, India, Thailand, the People's Republic of China and the Socialist Republic of Vietnam , 69 Fed. Reg. 3876 (27 January 2004), Exhibit CHN-2. 
5 Notice of Final Determination of Sales at Less Than Fair Value:  Certain Frozen and Canned 
Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997  (8 December 2004), 
Exhibit CHN-3. 
6 In proceedings involving imports from "non-market economies", including China, the USDOC 
applies a rebuttable presumption that all companies within  the country are essentially operating units of a single 
government-wide entity and, thus, sh ould receive a single anti-dumping du ty rate, the "country-wide rate" 
("PRC-wide rate" in the investigations at issue).  Expo rters wishing to rebut this presumption must demonstrate 
the absence of government control, both de jure  and de facto , over their export activities, pursuant to a set of 
criteria established by the USDOC.  Respondents who sa tisfy these criteria are elig ible to receive a margin 
separate from the country-wide rate.  Where, as was the case in the Shrimp and Diamond Sawblades 
investigations, the USDOC has limited its examination, the respondents found eligible for a separate rate either 
receive an individual margin, if select ed for individual examination, or the "separate rate", if not selected for 
individual examination.  This "separate rate" normally corresponds to the weighted-average of the margins of exporters/producers selected for indivi dual examination, excluding zero and de minimis  margins and margins 
calculated entirely on the basis of facts available.  (Chi na's first written submission, para. 7;  Declaration of 
Valerie Owenby, (hereafter VO Statement), Exhibit CHN- 18, para. 78;  United States' first written submission, 
footnote 6;  Notice of Preliminary Determination of Sales at Less Than Fair Value, Partial Affirmative 
Preliminary Determination of Critical Circumstances and Postponement of Final Determination:  Certain 
Frozen and Canned Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 42654 (16 July 
2004), Exhibit CHN-4, pp. 42660-42661;  Notice of Final Determination of Sales at Less Than Fair Value:  
Certain Frozen and Canned Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997 (8 
December 2004), Exhib it CHN-3, p. 71002;  Preliminary Determination of Sales at Less Than Fair Value, 
Postponement of Final Determination, and Preliminar y Partial Determination of Critical Circumstances:  
Diamond Sawblades and Parts Thereof from the People's Republic of China , 70 Fed. Reg. 77121 (29 December 
2005), Exhibit CHN-21, pp. 77124-77128;  and Final Determination of Sales at Less Than Fair Value and Final 
Partial Affirmative Determination of Critical Circumstances:  Diamond Sawblades and Parts Thereof from the 
People's Republic of China , 71 Fed. Reg. 29303 (22 May 2006), Exhibit CHN-13, pp. 29307-29308).  WT/DS422/R 
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 In the amended final determination, the USDOC recalculated the margin of dumping for Allied 
at 80.19 per cent to correct a ministerial error.  As a consequence of this change, the USDOC also 
recalculated the separate rate, to 53.68 per cent,  corresponding to the weighted-average of the 
dumping margin for Allied, as revised, and of the dumping margins for Yelin and of Red Garden, as 
calculated in the final determination7.  On 17 August 2006, the USDOC issued a second amended 
final determination, in which it applied the separate rate to an additional 11 Chinese 
exporters/producers who had previously been subject to the PRC-wide rate8.  
2.3 The USDOC subsequently issued a remand de termination on 2 September 2010, which 
revised the scope of the investigation to incl ude dusted shrimp pursuant to a decision of the 
United States Court of International Trade (CIT)9.  This was followed by an amendment of the anti-
dumping duty order on 26 April 201110.  On 29 April 2011, following positive sunset review 
determinations by the USDOC and the United St ates International Trade Commission (USITC), the 
USDOC published a notice of continuation of the anti-dumping order11.  Finally, the USDOC 
further issued a second remand determina tion on 24 May 2011 in which, following 
another decision of the CIT, it recalculated the margins of dumping for Allied (to 5.07 per cent) and 
Yelin (to 8.45 per cent)12.  
2.4 The USDOC initiated an anti-dumping inv estigation on Diamond Sawblades from, inter alia , 
China on 21 June 200513.  The USDOC's final determination was issued on 22 May 2006.  In this final 
determination, the USDOC calculated the following margins of dumping:  (i) individual margins of 
2.50 per cent for AT&M, 34.19 per cent for Bosun and 48.50 per cent for Hebei Jikai;  (ii) a separate 
rate of 20.72 per cent;  (iii) a PRC-wide rate of 164.09 per cent14.  On 22 June 2006, the USDOC 
issued an amended final determination to correct mi nisterial errors in the final determination, and 
revising AT&M's dumping margins to 2.82 per cent, Bosun's dumping margin to 35.51 per cent, and 
                                                      
7 Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty 
Order:  Certain Frozen Warmwater Shrimp From the People's Republic of China , 70 Fed. Reg. 5149 
(1 February 2005), Exhibit CHN-5.  The amended final determination and order also excluded canned shrimp from the scope of the investigation. 
8 Certain Frozen Warmwater Shrimp from the People's Republic of China:  Notice of Second Amended 
Final Determination of Sales at Less Than Fair Value , 71 Fed. Reg. 47484 (17 August 2006), Exhibit CHN-6. 
9 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand, 
and the Socialist Republic of Vietnam:  Notice of Amended Final Determinations of Sales at Less Than Fair Value Pursuant to Court Decision , 75 Fed. Reg. 53947 (2 September 2010), Exhibit CHN-7. 
10 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand, 
and the Socialist Republic of Vietnam:  Amended Antidumping Duty Orders in Accordance with Final Court Decision , 76 Fed. Reg. 23277 (26 April 2011), Exhibit CHN-8. 
11 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand, 
and the Socialist Republic of Vietnam:  Continuation of Antidumping Duty Orders, 76 Fed. Reg. 23972 
(29 April 2011), Exhibit CHN-11. 
12 Certain Frozen Warmwater Shrimp From the People's Republic of China:  Notice of Amended Final 
Determination of Sales at Less Than Fair Value Pursuant to Court Decision , 76 Fed. Reg. 30100 
(24 May 2011), Exhibit CHN-9.  We no te that the USDOC did not recalculate the separate rate as a result of the 
second remand determination.  (China's first writte n submission, para. 11;  China's response to Panel 
question No. 2;  United States' response to Panel question No. 2). 
13 Initiation of Antidumping Duty Investigations:  Diamond Sawblades and Parts Thereof from the 
People's Republic of China and the Republic of Korea , 70 Fed. Reg. 35625 (21 June 2005), Exhibit CHN-12. 
14 Final Determination of Sales at Less Than Fair Value and Final Partial Affirmative Determination 
of Critical Circumstances:  Diamond Sawblades and Parts Thereof from the People's Republic of China , 
71 Fed. Reg. 29303 (22 May 2006), Exhibit CHN-13. WT/DS422/R 
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 the separate rate to 21.43 per cent
15.  The USDOC issued the anti-dumping order on 
4 November 200916. 
B. MEASURES AT ISSUE  
2.5 With respect to the Shrimp investigation,  China challenges the anti-dumping order, as 
amended and extended, and the USDOC's final dete rminations, as amended, leading to this order17.  
The specific aspects of these measures challenged by China are:  (i) the use by the USDOC of the 
zeroing methodology in determining Allied, Yelin and Red Garden's dumping margins;  and (ii) the 
USDOC's reliance on individual dumping margins calc ulated with zeroing in calculating the separate 
rate, as amended18. 
2.6 With respect to the Diamond Sawblades i nvestigation, China challenges the final 
determination, amende d final determination and anti-dumping order19.  The specific aspect of these 
measures challenged by China is the use by the USDOC of the zeroing methodology in determining AT&M's dumping margin, as amended
20.   
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS 
3.1 China requests that the Panel find that21: 
(a) in the calculation of the dumping margins for Allied, Yelin and Red Garden in the 
Shrimp investigation, by the use of the zeroing methodology, the United States acted inconsistently with Article 2.4.2, firs t sentence, of the Anti-Dumping Agreement; 
(b) in the calculation of the separate rate in the Shrimp investigation, by relying on 
company-specific dumping margins that we re calculated with the use of the zeroing 
methodology, the United States acted inconsiste ntly with Article 2.4.2, first sentence, 
of the Anti-Dumping Agreement; and, 
(c) in the calculation of the dumping margin for AT&M in the Diamond Sawblades 
investigation, by the use of the zeroing methodology, the United States acted inconsistently with Article 2.4.2, first sentence, of the Anti-Dumping Agreement.  
3.2 The United States does not oppose China's requests for the above findings
22.  
                                                      
15 Notice of Amended Final Determination of Sales at Less Than Fair Value:  Diamond Sawblades and 
Parts Thereof from the People's Republic of China , 71 Fed. Reg. 35864 (22 June 2006), Exhibit CHN-14. 
16 Diamond Sawblades and Parts Thereof From the People's Republic of China and the Republic of 
Korea: Antidumping Duty Orders , 74 Fed. Reg. 57145 (4 November 2009), Exhibit CHN-15.  The USITC had 
originally issued a negative injury determination, which was successfully challenged by the US petitioners 
before the CIT.  As a result of the CI T decision, the USITC changed its determination to one of threat of injury.  
This explains why the order was issued more than two years after the amended final determination. 
17 China indicates that this includes the determinations, orders, and continuation of the order discussed 
above.  (China's first written submission, para. 19 and footnote 29). 
18 China's first written submission, para. 20.  Thus, China does not challenge the de minimis  rate 
calculated for Zhanjiang Guolian or the PRC-wide rate.  (China's first written submission, para. 7). 
19 China's first written submission, para. 21.  Thus, China does not challenge the dumping margins 
calculated for other individually-examined exporters/prod ucers, the separate rate, or the PRC-wide rate.  
(China's first written submission, footnote 36). 
20 China's first written submission, para. 22. 
21 China's first written submission, para. 68. 
22 United States' first written submission, para. 8.  WT/DS422/R 
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 IV. ARGUMENTS OF THE PARTIES 
4.1 The arguments of the parties are set out in their written submissions to the Panel and their 
answers to the Panel's questions.  The parties'  submissions (or executive summaries thereof) are 
attached to this Report as Annexes A-1 a nd A-2 (see List of Annexes, page ii). 
V. ARGUMENTS OF TH E THIRD PARTIES 
5.1 The arguments of the European  Union, Japan and Thailand ar e set out in their respective 
third-party submissions to the Panel and are attached  to this Report as Annexes B-1 to B-3 (see List of 
Annexes, page ii).  While Honduras, Korea and Viet Nam also reserved their right to participate in the 
Panel proceedings as third parties, they did not submit a third-party submission.    
VI. INTERIM REVIEW 
A. INTRODUCTION  
6.1 On 5 April 2012, the Panel submitted its Interim Report to the parties.  On 16 April 2012, the 
parties submitted written requests for review of precise aspects of the Interim Report.  On 20 April 2012, the parties submitted written comments on each other's requests for interim review.   
6.2 As explained below, the Panel has made a numbe r of minor adjustments to the Report in light 
of the parties' comments.  The numbering of para graphs and footnotes in the Final Report remains 
unchanged from the Interim Report.   
B. C
HINA 'S REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT  
6.3 China requests that we make a number of ch anges to correct inaccuracies in the Panel's 
citations to certain USDOC determ inations submitted by China as exhibits in footnotes 16 and 24.  
The United States agrees with the ch anges proposed by China.  China further requests that we correct 
a typographical error in paragraph 7.2, and that we  modify the paragraphs of China's first written 
submission which are referenced in footnote 43 .  The United States did not comment on these 
requests.  We have made the changes requested by China.  
6.4 China requests that we amend paragraph 7.4 and footnote 27 to clarify that only the 
third sentence of Article 12.7 of the DSU, and not  the entirety of this provision, applies where a 
mutually agreed solution is reached.  We have amended paragraph 7.4 and footnote 27 as suggested 
by China.  
C. UNITED STATES ' REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT  
6.5 The United States requests that we make certain ch anges to footnote 6 to make it clear that the 
separate rate assigned to an individual respondent who qualifies for such a rate is not based on an 
individual investigation of that r espondent.  We have made certain ch anges to footnote 6 in order to 
address the United States' concerns.  We have , however, not implemented the United States' 
suggestion to use the term "separate rate average".  Rather, consistent with the terminology used in the 
remainder of the Report and the terminology used by the parties in their submissions to the Panel, we 
consider it appropriate to refer to the rate at issue as the "separate ra te", but explain that it corresponds 
to the weighted-average of the individual rates de termined for individually-examined respondents.  
6.6 The United States requests that we replace the te rm "extended" with "revised" in the first 
sentence of paragraph 2.3.  The United States consid ers that the latter more accurately reflects the 
nature of the change to the scope of the Shrimp  investigation to include dusted shrimp in the WT/DS422/R 
Page 6  
 
 2 September 2010 remand determination.   We have made the change s uggested by the United States.  
For the same reason, the United States requests that we  delete the term "extende d" in paragraph 2.5.  
China objects to this second request, and we decl ine to make the modification suggested by the 
United States.  The term "extended" in paragraph 2.5 refers to the continuation of the anti-dumping 
order following the USDOC and USITC's sunset revi ew determinations, and not to the modification 
of the product scope of the Shrimp investigation.   Moreover, paragraph 2.5 describes the measures 
challenged by China, and our use of the term "exten ded" in this paragraph mirrors China's use of the 
same term in its first written submission. 
6.7 The United States considers that the quotations to two Appellate Body Reports contained in 
paragraph 7.29 do not adequately re flect the role that each panel plays in the dispute settlement 
process.  The United States submits that the right s and obligations of WTO Members flow, not from 
panel or Appellate Body reports, but from the text of the covered agreements.  The United States adds 
that while prior reports have an important place in  the dispute settlement process, Article 11 of the 
DSU defines a panel's responsibility to carry out its own objective examination of the matter before it, 
including the "applicability of and conformity with th e covered agreements".  Further, Article 3.2 of 
the DSU directs a panel to make that examination through an interpretation of the relevant treaty 
provisions in accordance with the customary rules of interpretation of public international law.  The 
United States considers that a concern over consis tency with a prior report adopted by the DSB should 
not and cannot override these provisions, which do not direct a panel to apply or defer to previously 
adopted reports.  The United States adds that pa ragraph 7.29 is, in any event, not essential to the 
Panel's analysis.  The United States therefore requ ests that we delete paragraph 7.29.  China does not 
comment on this request for review.  The United Stat es has not convinced us that the reference to the 
two Appellate Body statements at issue in paragra ph 7.29 is inappropriate or that the Appellate Body 
has erred in making these statements.  In consequen ce, we decline the United States' request and have 
not deleted paragraph 7.29. 
VII. FINDINGS 
A. I
NTRODUCTION AND ROLE OF A PANEL EXAMINING CLAIMS THAT ARE UNOPPOSED BY THE 
RESPONDING PARTY  
7.1 China claims that the United States acted inconsis tently with Article 2.4.2, first sentence, of 
the Anti-Dumping Agreement by using zeroing to  calculate margins of dumping in its final 
determinations and orders, as ame nded and extended, in the Shrimp  and Diamond Sawblades original 
investigations, and in relying on margins of dumping calculated with zeroing in establishing the 
separate rate applied in the Shrimp investigation.   China contends that the USDOC's use of zeroing 
affected the determination of the dumping margin s and has led the USDOC to find dumping where 
none would have otherwise been found, or has led the USDOC to calculate inflated dumping margins
23.   
7.2 China submits that in the two investigations at  issue, the USDOC used a five-step approach 
(which China terms the "Five Components") in calculating the dumping margins for the 
exporters/producers which the USDOC selected for individual examination24.  According to China, 
the USDOC: 
                                                      
23 China's first written submission, para. 59. 
24 China notes that, on 27 December 2006 the USDOC modified its dumping margin procedure in 
original investigations to eliminate zeroing where the average-to-average comparison methodology was used, 
but that this modification was only applied in pending and future investigations as of the effective date of the USDOC's notice of modification (22 February 2007).  Since the Shrimp and Diamond Sawblades investigations 
were finished in 2005 and 2006 respectively, this modification was not applied in any of the determinations at  WT/DS422/R 
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 i. identified different "models" (i.e., typ es) of products using "control numbers" 
(CONNUM) that specify the most relevant product characteristics; 
ii. calculated weighted-average US prices and weighted-average normal values on a 
model-specific basis for the entire period of investigation;  
iii. compared the weighted-average normal valu e of each model to the weighted-average 
US price for that same model; 
iv. in order to calculate the dumping margin for an exporter, summed the amount of 
"dumping" for each model and then divided it by the aggregate US price for all models;  and  
v. before summing the total amount of dumpi ng for all models, effectively set all 
negative margins on individual models to zero
25.  
7.3 China submits that the zeroing methodology applie d by the USDOC in the investigations at 
issue is the same as the one which the Appellate Body found to be in consistent with Article 2.4.2 of 
the Anti-Dumping Agreement in US – Softwood Lumber V26.   
7.4 The United States does not contest China's cl aims.  The parties have not, however, 
characterized their shared view of the substan tive aspects of the dispute as a "mutually agreed 
solution", and thus the third sentence of Article 12.7 of the DSU does not apply27.  We therefore start 
by considering whether the lack of substantiv e disagreement between the parties affects our 
responsibilities as a panel. 
7.5 We note that the panels in US – Shrimp (Ecuador)  and, subsequently, US – Shrimp 
(Thailand) , US – Anti-Dumping Measures on PET Bags , and US – Zeroing (Korea) were presented 
with a similar situation.  Indeed each of th ese panels examined claims, unopposed by the 
United States, that were virtually identical to Ch ina's legal claims in the dispute before us.  
7.6 Each of these panels considered that notwithst anding the fact that the claims before them 
were unopposed, they were still bound by Article 11 of the DSU28 to make an "objective assessment 
                                                                                                                                                                     
issue in this dispute.  (China's first wr itten submission, footnote 31, referring to Antidumping Proceedings:  
Calculation of the Weighted-Average Dumping Margin During an Antidumping Investigation;  Final 
Modification , 71 Fed. Reg. 77722 (27 December, 2006), Exhibit CHN-16;  and Antidumping Proceedings:  
Calculation of the Weighted-Average Dumping Margins in Antidumping Investigations;  Change in Effective Date of Final Modification , 72 Fed. Reg. 3783 (26 January 2007), Exhibit CHN-17). 
25 China's first written submission, paras. 23-24.   
26 China's first written submission, paras. 63-64. 
27 When a mutually agreed solution is reached, the third sentence of Article 12.7 of the DSU provides 
that a panel's Report shall be "confined to a brief description of the case and to reporting that a solution has been 
reached".   
28 Article 11 reads, in relevant part: 
The function of panels is to assist the DSB in discharging its responsibilities under this 
Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an  objective assessment of  the facts of the case 
and the applicability of and conformity with th e relevant covered agreements, and make such 
other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements. 
Further, we note that Article 17.6 of the Anti-Dump ing Agreement is also relevant to a panel's factual 
and legal assessment of an anti-dumping determination by an investigating authority.  However, the United States does not contest China's claims, and we need not consider the application of this provision in 
detail. WT/DS422/R 
Page 8  
 
 of the facts of the case and the applicability of and conformity with the rele vant covered agreements, 
and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements"
29.  We agree with this approach and apply it in our 
consideration of China's claims. 
B. BURDEN OF PROOF AND ORDER OF THE PANEL 'S ANALYSIS  
7.7 The general principles regarding the allocati on of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO agreement by another Member assert and prove its claim.  Generally, ther efore, China, as the complaining party, has to 
make a prima facie  case of violation of the relevant provisi ons of the WTO agreements it invokes, 
before the burden shifts to the responding party,  the United States, to rebut China's arguments.  
7.8 The US – Shrimp (Ecuador)  panel recalled that the Appellate Body has held that a "panel errs 
when it rules on a claim for which the complaining party has failed to make a prima facie  case"
30.  On 
this basis, the panel considered that the fact that  a claim is uncontested is not a sufficient basis to 
conclude in favour of the complainant.  Rather, the panel concluded, the complaining party must 
make a prima facie  case of violation of a WTO agreement before any burden shifts to the respondent: 
[N]otwithstanding the fact that the United States is not seeking to refute Ecuador's 
claims, we must satisfy ourselves that Ecuador has established a prima facie  case of 
violation, and notably that it has presented "evidence and argument ... sufficient to identify the challenged measure and its b asic import, identify the relevant WTO 
provision and obligation contained therein, and explain the basis for the claimed inconsistency of the measure with that provision"
31.  
7.9 This approach was later followed by the panels in US – Shrimp (Thailand) , US – Anti-
Dumping Measures on PET Bags , and US – Zeroing (Korea)32.  We agree with the reasoning of these 
panels and adopt a similar approach to the issue of the burden of proof in our assessment of China's 
claims.  Accordingly, notwithstanding the fact that  the United States does not contest China's claims, 
we can only find in favour of China if we are satisfied that China has at least established a prima facie  
case of violation under the provision it invokes.   
7.10 Our evaluation of China's claims follows the orde r of analysis adopted by these prior panels.  
We examine, in turn, whether China has establis hed that:  (i) the USDOC applied zeroing in the 
determinations at issue;  (ii) the methodology used by USDOC in the measures at issue is similar to 
the one reviewed by the Appellate Body in US – Softwood Lumber V ;  and (iii) the United States acted 
inconsistently with Article 2.4.2 of the Anti-Dump ing Agreement, on the basis of the reasoning of the 
Appellate Body in US – Softwood Lumber V .   
7.11 We examine China's claim with respect to the separate rate applied by the USDOC in the 
Shrimp investigation in a distinct section at the end of our findings.  
                                                      
29 Panel Reports in US – Shrimp  (Ecuador) , para. 7.3;  US – Shrimp (Thailand) , para. 7.19, US – Anti-
Dumping Measures on PET Bags , para. 7.5;  and US – Zeroing (Korea) , paras. 7.16-17. 
30 See Panel Report, US – Shrimp (Ecuador) , para. 7.10 (citing Appellate Body Report, US – 
Gambling, para. 139).  A prima facie  case "is one which, in the absence of  effective refutation by the defending 
party, requires a panel, as a matter of law, to ru le in favour of the complaining party presenting the prima facie  
case".  (Appellate Body Report, EC – Hormones , para. 104, citing Appellate Body Report, US – Wool Shirts and 
Blouses , p. 14). 
31 Panel Report, US – Shrimp (Ecuador) , para. 7.11. 
32 Panel Reports in US – Shrimp (Thailand) , para. 7.21;  US – Anti-Dumping Measures on PET Bags , 
para. 7.7;  and US – Zeroing (Korea), para. 7.20.  WT/DS422/R 
 Page 9 
 
 
 C. WHETHER CHINA HAS ESTABLISHED THAT THE USDOC  APPLIED ZEROING IN THE 
DETERMINATIONS AT ISSUE  
7.12 In support of its factual assertion that the USDOC applied zeroing in its dumping margin 
calculations in the Shrimp and the Diamond Sawblad es investigations, China submits as evidence the 
Issues and Decision Memoranda accompanying the USDOC's final determination in each 
investigation, as well as an expert statement from Ms Valerie Owenby (hereafter "VO Statement").  
The VO Statement reviews the methodology employ ed by the USDOC in the calculation of the 
dumping margins and attaches a number of exhibi ts, including computer programming logs and 
outputs as well as analysis memoranda generated by the USDOC during the investigations and 
provided to Ms Owenby by the exporter/producer concerned33.   
7.13 We note the following in respect of this evidence submitted by China. 
7.14 First, the computer programming logs emana ting from the USDOC submitted by China and 
attached to the VO Statement each contain a line with the following instruction "WHERE 
EMARGIN GT 0".  This programming line, which we hereafter refer to as the "zeroing line", instructs 
the programme to include only those comparison results  that are positive (i.e. greater than zero) in the 
calculation of the total amount of dumping and ther efore causes the programme to ignore negative 
results34.  China submits such computer programmi ng logs, containing the zeroing line, for each 
exporter/producer (Allied, Yelin and Red Garden in the Shrimp investigation and AT&M in the 
Diamond Sawblades investigation) and in each case, for at least the most recent dumping margin 
calculation for each exporter/producer35.  
7.15 Second, the Issues and Decision Memorandum acco mpanying the final determination in the 
Shrimp investigation contains a statement in which the USDOC acknowledg es that it used model 
zeroing in calculating margins of dumping in th at determination.  The USDOC states that it: 
… made model-specific comparisons of weighted-average export prices with 
weighted-average normal values of comparab le merchandise [and] then combined the 
dumping margins found based upon these comparisons, without permitting non-
                                                      
33 The VO Statement explains that where a USDO C computer programme is executed, a log is 
generated which repeats the programming statements in the computer programme, and provides notes on the 
execution and operation of the computer programme.  Further, the programming software used by the USDOC 
provides the ability to print out data while the prog ramming code is processing;  these printouts are the 
"outputs".  The VO Statement adds that the USDOC typically releases a hard copy of the log and output of the 
computer programme used to generated the dumping margin calculation to the respondent.  VO Statement, Exhibit CHN-18, para. 46.  The VO Statement also explains  that, with the exception of Allied in respect of the 
Shrimp amended final determination,  each of the investigated companie s provided Ms Owenby  with electronic 
versions of the USDOC's final computer programmes rel eased to them, and copies of the databases that the 
USDOC used to generate its margin calculations.  (VO Statement, Exhibit CHN-18, para. 47 and footnote 27). 
34 China's first written submission, para. 57 an d VO Statement, Exhibit CHN-18, para. 38. 
35 China does not provide the USDOC's computer programming log for Allied in the final 
determination and amended final determination and for AT&M in the final determination but provides them for 
each of the other relevant determinati ons and exporters/producer s.  Concerning the Shrimp investigation, Yelin's 
dumping margin was most recently calculated in the second  remand determination;  the zeroing line is found at 
p. 23 of Attachment II to Exhibit CHN-18-VO-8, which contains the printout of the USDOC's programming log.  
Allied's dumping margin was most recen tly calculated in the second remand determination;  the zeroing line is 
found at p. 26 of Attachment II to Exhibit CHN-18-VO-17.  Red Garden's dumping margin was only calculated in the final determination;  the zeroing line is found at p. 81 of Exhibit CHN-18-VO-20.  AT&M's dumping 
margin was most recently calculated in the Diamond Sawb lades amended final determination;  the zeroing line 
is found at p. 61 of Attachment II to  Exhibit VO-26.  The USDOC  acknowledges that each of these logs, as well 
as each of the other logs submitted by China, orig inates from the USDOC.  (United States' first written 
submission, para. 4 and footnote 5 and United States' response to Panel question No. 5). WT/DS422/R 
Page 10  
 
 dumped comparisons to reduce the dumping margins found on distinct models of 
subject merchandise , in order to calculate the weighted-average dumping margin
36. 
(emphasis added) 
7.16 Likewise, the Issues and Decision Memorandum accompanying the final determination in 
Diamond Sawblades states that: 
The Department interprets [the statutory definition of dumping] to mean that a 
dumping margin exists only when normal valu e is greater than export or constructed 
export price. As no dumping margins exist with respect to sales where normal value 
is equal to or less than export or c onstructed export price, the Department will not 
permit these non-dumped sales to offset the amount of dumping found with respect to 
other sales "37. (emphasis added) 
7.17 This language effectively acknowledges the USDO C's use of zeroing to calculate margins of 
dumping in its final determination in  each of the two investigations. 
7.18 Third, the VO Statement generally establishes th at the USDOC applied zeroing in calculating 
the dumping margin in each of the successive determin ations in each investigation, with respect to 
each individually-examined exporter/producer.  The VO Statement applies a four-step analysis in 
examining each calculation38, by which it:  (i) duplicates the USDOC's dumping margin calculations;  
(ii) identifies where each of the "Five Components"  occurs in each calculati on, and cross-references 
the duplicate results with other record evidence to  confirm the USDOC's application of zeroing;  
(iii) modifies the duplicate calculations to elim inate zeroing by turning off the zeroing line (to 
demonstrate the impact of zeroing);  and (iv) compares the results of each set of calculations to 
quantify the impact of zeroing39. 
7.19 Fourth, the United States acknowledges the accura cy of China's description of the USDOC's 
use of zeroing in its calculation of the dumping margins challenged by China40.   
7.20 On the basis of this evidence, we are satisfi ed that China has established that the USDOC 
applied zeroing when calculating the dumping margin s for Yelin, Allied and Red Garden in its final 
determinations and orders, as ame nded and extended, in the Shrimp investigation, and in calculating 
the dumping margin for AT&M in its final and am ended final determinatio ns and order in the 
Diamond Sawblades investigation. 
                                                      
36 Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain Frozen and 
Canned Warmwater Shrimp from the People's Republic of China  (29 November 2004), Exhibit CHN-19, p. 23. 
37 Issues and Decision Memoran dum for the Final Determination in the Antidumping Duty 
Investigation of Diamond Sawblades and Parts Thereof from the People's Republic of China  (15 May 2006), 
Exhibit CHN-22, p. 25. 
38 With the exception that the VO Statement only reviews the calculation of AT&M's dumping margin 
in the Diamond Sawblades amended final determination, a nd not in the final determination.  Further, because 
Ms Owenby was not provided with the USDOC's log for Allied in the amended final determination, she had to 
recreate the USDOC's calculations for Allied's margins in this determination. 
39 VO Statement, Exhibit CHN-18, para. 43 ff.  Exhibit CHN-18-VO-2 provides a table identifying the 
specific line and page number where each "com ponent" occurs in each margin calculation. 
40 United States' first written submission, para. 2.  WT/DS422/R 
 Page 11 
 
 
 D. WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY USED BY THE USDOC  IS THE 
SAME AS THE METHODOLOGY REVIEWED BY THE APPELLATE BODY IN US – SOFTWOOD 
LUMBER V 
7.21 The Appellate Body described zeroing as applied by the USDOC in the Softwood Lumber  
investigation as follows:  
First, USDOC divided the product under i nvestigation (that is, softwood lumber from 
Canada) into sub-groups of identical, or broadly similar, product types. Within each 
sub-group, USDOC made certain adjustment s to ensure price comparability of the 
transactions and, thereafter, calculated a weighted average normal value and a weighted average export price per unit of the product type. When the weighted average normal value per unit exceeded the we ighted average export price per unit for 
a sub-group, the difference was regarded as the "dumping margin" for that 
comparison. When the weighted average normal value per unit was equal to or less 
than the weighted average export price per unit for a sub-group, USDOC took the view that there was no "dumping margin" for that comparison. USDOC aggregated the results of those sub-group comparisons in which the weighted average normal 
value exceeded the weighted average export price – those where the USDOC 
considered there was a "dumping margin" – after multiplying the difference per unit 
by the volume of export transactions in that  sub-group. The results for the sub-groups 
in which the weighted average normal value was equal to or less than the weighted 
average export price were treated as zero for purposes of this aggregation, because there was, according to USDOC, no "dumping margin" for those sub-groups. Finally, USDOC divided the result of this aggregati on by the value of all export transactions 
of the product under investigation ( including the value of export transactions in the 
sub-groups that were not in cluded in the aggregation ).  In this way, USDOC obtained 
an "overall margin of dumping", for each exporter or producer, for the product under 
investigation (that is, softwood lumber from Canada). … Thus, as we understand it, 
by zeroing, the investigating authority treats as zero the difference between the 
weighted average normal value and the wei ghted average export price in the case of 
those sub-groups where the weighted averag e normal value is less than the weighted 
average export price. Zeroing occurs only at the stage of aggregation of the results of 
the sub-groups in order to establish an  overall margin of dumping for the product 
under investigation as a whole
41. (emphasis original, footnote omitted). 
7.22 China contends that the "Five Components" methodology applied by the USDOC in the 
Shrimp and Diamond Sawblades investigations matches this description of the methodology 
employed by the USDOC in the investigation at issue in US – Softwood Lumber V .  China explains 
that they are "substantially identical  in all legally relevant respects"42.   
7.23 The evidence provided by China, which we have reviewed in the previous section of our 
findings, including the extensive discussion and identification of each of the "Five Components" in 
the VO Statement, satisfies us that in the determin ations at issue the USDOC did, in fact, follow the 
methodology described by China43.  Thus, China has established that in  the original investigations at 
                                                      
41 Appellate Body Report, US – Softwood Lumber V, paras. 64-65.   
42 China's first written submission, para. 64. 
43 In addition, in relation to the first component, Ch ina cites to certain passages from the text of the 
preliminary determinations in the Shrimp and Diamond Sawblades investigations that demonstrate that the 
USDOC sought comments from interested parties on the re levant product characteristics criteria, i.e. to define 
the CONNUM.  (China's first written subm ission, paras. 28 and 52, referring to Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Par tial Affirmative Preliminary Determination of Critical WT/DS422/R 
Page 12  
 
 issue, the USDOC:  (i) identified different models or types of products;  (ii) calculated weighted-
average US prices and weighted-average normal va lues on a model-specific basis for the entire period 
of investigation;  (iii) compared the weighted-a verage normal value of each model to the weighted-
average US price for that same model
44;  (iv) calculated the dumping margin for an exporter by 
summing up the results of those model-specific co mparisons, and then dividing the resulting amount 
by the aggregate US price for all models;  and;  (v), as we have already found, when summing the 
total amount of dumping for all models, ignored the results of model-specific comparisons for which 
the weighted-average US price exceeded the weight ed-average normal value.  We agree with China 
that this methodology is identical to the one described by the Appellate Body in US – Softwood 
Lumber V . 
7.24 Moreover, not only does the United States acknowledge that China's description of the 
methodology used by the USDOC in the determinations at issue is accurate45, the United States also 
acknowledges that the reasoning of the Appellate Body in US – Softwood Lumber V  is applicable with 
respect to China's claims in the present dispute46.  
7.25 In light of these considerations, we are satis fied that China has demonstrated that the 
methodology applied by the USDOC to calculate dumpi ng margins in the investigations at issue is 
identical to the one th at the USDOC used in US – Softwood Lumber V , which the Appellate Body 
found to be inconsistent with Article 2.4.2 of the Anti-Dumping Agreement in that dispute. 
E. WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY APPLIED BY THE USDOC  IS 
INCONSISTENT WITH ARTICLE 2.4.2  OF THE ANTI-DUMPING AGREEMENT  
7.26 We now turn to the legal analysis of China' s claims, i.e., whether the measures challenged by 
China are inconsistent with Article 2.4.2, first sentence, of the Anti-Dumping Agreement .  This 
sentence reads as follows:   
Subject to the provisions governing fair comparison in paragraph 4, the existence of 
margins of dumping during the investiga tion phase shall normally be established on 
the basis of a comparison of a weighted average normal value with a weighted 
average of prices of all comparable export transactions or by a comparison of normal 
value and export prices on a transaction-to-transaction basis.   
7.27 We recall that China relies on the Appellate Body Report in US – Softwood Lumber V to 
argue that the United States acted inconsistently with this provision47.  The panel in US – Shrimp 
(Ecuador) explained its understanding of the Appellate Body's reasoning in US – Softwood Lumber V 
as follows: 
                                                                                                                                                                     
Circumstances and Postponement of Final Determination:  Certain Frozen and Canned Warmwater Shrimp 
From the People's Republic of China , 69 Fed. Reg. (16 July 2004), Exhibit CHN-4, pp. 42654 and 42663;  and 
Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and 
Preliminary Partial Determination of  Critical Circumstances:  Diamond Sawblades and Parts Thereof from the 
People's Republic of China , 70 Fed. Reg (29 December 2005), Exhi bit CHN-21, pp. 771 22 and 722130). 
44 The European Union correctly notes that China uses the terms "dumping" and "margins" when 
discussing the results of export price-normal value comparisons at the model level (European Union's third-
party submission, para. 7).  As the European Union observes, the Appellate Body has indicated that "dumping" 
can only exist for the product under investigation as a whole, and that consequently, intermediate comparisons 
between the normal value and the export price at the product level should not be referred to as "dumping margins".   
45 United States' first written submission, para. 2. 
46 United States' first written submission, para. 8. 
47 China's first written submission, para . 61 (citing Appellate Body Report, US – Softwood Lumber V , 
paras. 86-103 and 98).  WT/DS422/R 
 Page 13 
 
 
 The Appellate Body began its analysis with th e text of Article 2.4.2 and noted that the 
question before it was the proper interpreta tion of the terms "all comparable export 
transactions" and "margins of dumping" in Ar ticle 2.4.2. In examining the arguments 
of the parties with respect to these phrases, the Appellate Body concluded that the parties' disagreement centered on whether a Member could take into account "all" 
comparable export transactions only at the sub-group level, or whether such 
transactions also had to be taken into account when the results of the sub-group 
comparisons are aggregated. To examine th at issue, the Appellate Body noted the 
definition of dumping in Article 2.1 of the Anti-Dumping Agreement . The Appellate 
Body found that "it [was] clear from the texts of [Article VI:1 of the GATT 1994 and 
Article 2.1 of the Anti-Dumping Agreement ] that dumping is defined in relation to a 
product as a whole as defined by the inv estigating authority". The Appellate Body 
further considered that the definition of " dumping" contained in Article 2.1 applies to 
the entire Agreement , including Article 2.4.2, and that "'[d]umping', within the 
meaning of the Anti-Dumping Agreement , can therefore be found to exist only for the 
product under investigation as a whole, and cannot be found to exist only for a type, 
model, or category of that product." Next, the Appellate Body relied on its Report in 
EC – Bed Linen , in which it stated that "[w]hatever the method used to calculate the 
margins of dumping ... these margins must be, and can only be, established for the product under investigation as a whole." Thus, the Appellate Body noted that "[a]s 
with dumping, 'margins of dumping' can be found only for the product under 
investigation as a whole, and cannot be found to exist for a product type, model, or 
category of that product." The Appellate Body therefore rejected the United States' arguments in that case that Article 2.4.2 does not apply to the aggregation of the 
results of multiple comparisons at the sub- group level; for the Appellate Body, while 
an investigating authority may undertake mu ltiple averaging to establish margins of 
dumping for a product under investigation, the results of the multiple comparisons at 
the sub-group levels are not margins of dum ping within the meaning of Article 2.4.2; 
they merely reflect intermediate calculations made by an investigating authority in the 
context of establishing margins of dumping fo r the product under investigation. It is 
only on the basis of aggregating all such in termediate values that an investigating 
authority can establish margins of dumping for the product under investigation as a 
whole. On this basis, the Appellate Body held that zeroing, as applied by the USDOC 
in US – Softwood Lumber V : 
mean[t], in effect , that at least in the case of some export transactions, 
the export prices are treated as if they were less than what they actually are. Zeroing, therefore, does not take into account the 
entirety of the prices of some export transactions, namely, the prices 
of export transactions in those sub-groups in which the weighted average normal value is less than the weighted average export price. Zeroing thus inflates the margin of dumping for the product as a whole. 
The Appellate Body on this basis conclude d that the treatment of comparisons for 
which the weighted average normal value is  less than the weighted average export 
price as "non-dumped" comparisons was not in accordance with the requirements of Article 2.4.2 of the Anti-Dumping Agreement. As a result, the Appellate Body upheld 
the Panel's finding that the United States had acted inconsistently with Article 2.4.2 of WT/DS422/R 
Page 14  
 
 the Anti-Dumping Agreement in determining the existence of margins of dumping on 
the basis of a methodology incorporating the practice of zeroing
48. (footnotes omitted) 
7.28 We find this reasoning of the Appe llate Body to be persuasive. 
7.29 Moreover, while prior panel or Appellate Body reports are not, strictly speaking, binding 
upon panels, the Appellate Body has indicated that "[f]ollowing the Appellate Body's conclusions in 
earlier disputes is not only appropriate , it is what would be expected from panels, especially where the 
issues are the same" and that "[t]his is also in li ne with a key objective of the dispute settlement 
system to provide security and predictability to the multilateral trading system"49.  In addition, the 
Appellate Body has in the past cautioned that the failure by a panel to follow previously adopted 
Appellate Body reports addressing the same issues  undermined the development of a coherent and 
predictable body of jurisprudence clarifying Me mbers' rights and obligations under the covered 
agreements as contemplated under the DSU50.   
7.30 In the words of the US – Shrimp (Ecuador)  panel, "there is now a c onsistent line of Appellate 
Body Reports … that holds that 'zeroing' in the c ontext of the weighted average-to-weighted average 
methodology in original investigations … is inconsistent with Article 2.4.2"51.  We recall that the 
United States has advanced no argument to contra dict the reasoning of the Appellate Body in US – 
Softwood Lumber V  and in subsequent decisions that have found the use of zeroing in the context of 
the weighted average-to-weighted average methodology in original investigations inconsistent with 
Article 2.4.2.  Moreover, the issues raised by Chin a's claims are identical in all material respects to 
those addressed by the Appellate Body in US – Softwood Lumber V  and the United States 
acknowledges that the reasoning of the Appellate Body  in that dispute is equally applicable with 
respect to the dumping margins challeng ed by China in the present dispute52.  
7.31 We conclude, on this basis, that China has discharged its burden of establishing a prima facie  
case that the United States has acted inconsistently with  Article 2.4.2, first sentence, by virtue of the 
USDOC's use of zeroing in the determinations at  issue because the USDOC did not calculate the 
dumping margins challenged by China on the basis of the product as a whole and taking into account 
all comparable export transactions.   
7.32 Given that the United States presents no argum ent to rebut the arguments and evidence 
submitted by China, we find that the United Stat es acted inconsistently with Article 2.4.2, 
first sentence, of the Anti-Dumping Agreement due to the USDOC's use of zeroing in the calculation 
of the dumping margins for Allied, Yelin and Red Ga rden in the Shrimp investigation, and of the 
dumping margin for AT&M in the Diamond Sawblades investigation.   
F. APPLICATION OF A SEPARATE RATE ESTABLISHED ON THE BASIS OF MARGINS OF DUMPING 
CALCULATED WITH THE USE OF ZEROING  
7.33 China challenges not only the consistency with Article 2.4.2 of the Anti-Dumping Agreement 
of the USDOC's use of zeroing to calculate individual dumping margins,  but also the consistency with 
the same provision of the USDOC's reliance on du mping margins calculated with zeroing for the 
purposes of establishing the separate rate a pplied in the Shrimp investigation. 
                                                      
48 Panel Report, US – Shrimp (Ecuador), paras. 7.38-7.39. 
49 Appellate Body Report, US – Continued Zeroing , para. 362. 
50 Appellate Body Report, US – Stainless Steel (Mexico) , para. 161. 
51 Panel Report, US – Shrimp (Ecuador) , para. 7.40. 
52 United States' first written submission, para. 8.  WT/DS422/R 
 Page 15 
 
 
 7.34 China argues that since the calculation of the sep arate rate in the Shrimp investigation was 
based on a weighted-average of the dumping margin s of mandatory respondents, the calculation of the 
separate rate in the Shrimp investigation "neces sarily incorporates" the inconsistent zeroing 
methodology, and thus violates Article 2.4.2, first sentence, of the Anti-Dumping Agreement53.   
7.35 The evidence submitted by China indicates that  the USDOC did, indeed, rely on margins of 
dumping calculated with zeroing to derive the separ ate rate, as amended, applied in the Shrimp 
investigation.  In both the final determinati on and the amended final determination, the USDOC 
applied as separate rate the weighted-average of the margins calculated fo r the three individual 
respondents that had margins above zero or de minimis54.  As we have found above, these margins 
had, in turn, been calculated with the use of zeroing55.  
7.36 We note that Article 2.4.2 of the Anti-Dumping Agreement imposes disciplines on the 
determination of dumping margins, and more specifi cally, on the manner in which the export price 
should be compared to the normal value in establishing these margins.  On its face, Article 2.4.2 does not appear to address the question of the applica tion of anti-dumping duties, including the duties 
which may be applied on imports from exporters/pr oducers not selected for individual examination.  
China has not, in our view, satisfactorily explained how Article 2.4.2 could provide the legal basis for 
a finding of inconsistency with respect to the separate rate
56.  The fact that margins of dumping are 
                                                      
53 China's first written submission, para. 67 and Chin a's response to Panel question No. 1 (both quoting 
Panel Report, US – Shrimp (Ecuador) , para. 7.42). 
54 As indicated above in footnote 12, the USDOC did not revise the separate rate in subsequent 
determinations. 
55 Notice of Final Determination of Sales at Less Than Fair Value:  Certain Frozen and Canned 
Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997  (8 December 2004), 
Exhibit CHN-3, Exhibit CHN-3, p. 71003;  Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Antidumping Duty Order:  Certain Frozen Warmwater Shrimp From the People's Republic of China , 
70 Fed. Reg. 5149 (1 February 2005), Exhibit CHN-5, p. 5150; and  Antidumping Duty Investigation of Certain 
Frozen and Canned Warmwater Shrimp from the People’s Republic of China – Calculation of the Weighted 
Average Section A rate  (26 January 2005), Exhibit CHN-20, discussed in China's first written submission, 
paras. 47-49.  In addition, China has established  that at least two of these three ma rgins were impacted by the 
use of zeroing.  However, the evidence submitted by China indicates that the margin of dumping for Yelin in the 
final determination, which is the one that was used in the calculation of the separate rate in both the final and the amended final determinations, does not change when zeroing is eliminated.  (China's response to Panel 
question No. 4 and VO Statement, Exhibit CHN-18, paras. 59-61). 
56 We asked the following question to China:  
… Please explain how and why, in your view, Article 2.4.2 provides a legal basis for a finding 
of violation with respect to the separate rate applied in the Shrimp investigation (as opposed to the margins calculated for exporters/producers selected for individual examination).  In so 
doing, please refer to the text and context of Article 2.4.2 and to any prior panel or Appellate 
Body decision which you consider to support an interpretation of Article 2.4.2 as imposing disciplines with respect to a "separate rate" or, more generally, to a rate applied to  
exporters/producers not selected for individual investigation. 
China answered as follows:  …Where, as here, the "margins of dumping" for individually investigated exporters are 
calculated inconsistently with Article 2.4.2, th e Separate Rate calculated on that basis must 
necessarily violate Article 2.4.2.  In other word s, the source of the WT O-inconsistency of the 
Separate Rate is the application of "zeroing" in the calculation of "margins of dumping" for 
individually investigated exporters in violation of Article 2.4.2 and th e reliance thereof.   
 Support may be found in US – Shrimp (Ecuador) .  The panel in that dispute correctly found 
that, in an identical situation, the calculation of the separate rate based on individual margins 
calculated with the use of zeroing "necessarily in corporates this inconsistent methodology [of 
zeroing] ".  Also noted by the US – Shrimp (Ecuador)  panel, the United States agreed to this 
view …. (China's response to Panel question No. 1) (footnotes omitted)   WT/DS422/R 
Page 16  
 
 inconsistent with Article 2.4.2 does not necessarily mean  that a separate rate calculated on the basis of 
such margins is also, itself, inconsistent with that same provision
57.   
7.37 Furthermore, like the panel in US – Shrimp (Ecuador) , we note that neither the Panel nor the 
Appellate Body Report in US – Softwood Lumber V  addressed explicitly the i ssue of the inconsistency 
of the "all others" rate as calculated by the USDOC in the Softwood Lumber  investigation58.    
7.38 That said, we recall that in addressing Ecuador's cl aim with respect to the "all others" rate in 
that dispute, the US – Shrimp (Ecuador)  panel observed as follows: 
[W]e consider that our finding that Ecuador has established that the calculation of the 
margins of dumping for [some of the individually-investigated exporters] was inconsistent with Article 2.4.2 means that the calculation of the "all others" rate as 
the weighted average of the individual rat es necessarily incorporates this inconsistent 
methodology
59. (emphasis added, footnote omitted) 
7.39 We agree with this observation of the US – Shrimp (Ecuador)  panel.  We have found that the 
United States acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by using 
zeroing in the calculation of the margins of dumpi ng for individually-examined exporters/producers.  
Following the reasoning of the US – Shrimp (Ecuador)  panel, this means that the calculation of the 
separate rate on the basis of these margins necess arily incorporates the WTO-inconsistent zeroing 
methodology60.    
VIII.  CONCLUSIONS AND RECOMMENDATION 
8.1 In light of the above findings, we conclude  that the USDOC acted inconsistently with 
Article 2.4.2 of the Anti-Dumping Agreement by us ing zeroing in the calculation of dumping margins 
for Allied, Yelin and Red Garden in  its final determination in the Sh rimp investigation, as amended, 
and in the calculation of AT&M's dumping margin  in its final determination in the Diamond 
Sawblades investigation, as ame nded, as well as in the corres ponding anti-dumping duty orders, as 
amended and extended. 
8.2 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 that agreement.  Accordingly, we conclude that the United States has 
nullified or impaired benefits accruing to China under the Anti-Dumping Agreement.  Pursuant to 
Article 19.1 of the DSU, having found that th e United States has acted inconsistently with 
Article 2.4.2 of the Anti-Dumping Agreement as set out above, we recommend that the United States 
bring its measures into conformity with  its obligations under this Agreement. 
 
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57 We note that in US – Shrimp (Viet Nam) , the panel found that the investigating authority's reliance on 
margins of dumping calculated with zeroing to establish th e separate rate was inconsistent with Article 9.4 of 
the Anti-Dumping Agreement.  The panel did not, however, pronounce itself on the question of the consistency 
of the separate rate applied in that case with other provisions, including Articles 2.4 and 2.4.2 of the Anti-
Dumping Agreement.  (Panel Report, US – Shrimp (Viet Nam) , paras. 7.212-227, 7.229). 
58 Panel Report, US – Shrimp (Ecuador) , para. 7.42. 
59 Panel Report, US – Shrimp (Ecuador) , para. 7.42. 
60 We note that the parties agree that the rationale of para. 7.42 of the Panel Report in US – Shrimp 
(Ecuador)  should apply with regard to the separate rate in the Shrimp investigation.  (United States' response to 
Panel question No. 2;  China's first written submission, pa ra. 67;  China's response to Panel question No. 1).