WT/DS397/R 
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 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 China E-2 
Annex E-2 Executive Summary of the Second Written Submission of 
the European Union E-12 
 WT/DS397/R 
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 ANNEX E-1 
 
 
EXECUTIVE SUMMARY OF THE SECOND WRITTEN  
SUBMISSION OF CHINA 
 
 I. CLAIMS CONCERNING ARTICLE 9(5) OF COUNCIL REGULATION (EC) 
No. 384/9 OF 22 DECEMBER 1995 ON PROTECTION AGAINST DUMPED IMPORTS FROM COUNTRIES NOT MEMBERS OF THE EUROPEAN COMMUNITY, AS CODIFIED AND REPLACED BY COUNCIL REGULATION (EC) No. 1225/2009 
 1. China claims that Article 9(5) of Counc il Regulation No 384/96 as amended and as codified 
and replaced by Council Regulation (EC) No 1225/2009  is, as such, inconsistent with Articles 6.10, 
9.2, 9.3, 9.4 and 18.4 of the AD Agreement,  Articles I and X:3(a) of the GATT 1994 and 
Article XVI:4 of the WTO Agreement.    
2. The EU starts its First Written Submission with a number of procedural arguments
.  First , 
the EU submits that China's Panel Request failed to  meet the requirement of Article 6.2 of the DSU 
since it failed to "present the problem clearly" with r espect to its claims relating to Articles 6.10, 9.3 
and 9.4 of the AD Agreement and X:3(a) of the GATT 1994.  However, in making this argument, 
the EU confuses the procedural requirements of Artic le 6.2 of the DSU with the substantive analysis 
of the measure at issue.  Indeed, Article 6.2 do es not impose obligations regarding the substantive 
question of whether the "scope" or "content" of the m easure at issue is related to the obligations that 
are claimed to be violated.  The latter question forms part of the substantive issues.  Furthermore, the 
EU's argument that China failed to plainly c onnect the challenged measure with the provisions 
claimed to be violated confuses "claims" and "arg uments".  By alleging that China's Panel Request 
failed to meet the Article 6.2 requirement because it did not explain how the provisions that deal with 
specific legal obligations are violated by the measure at issue, the EU is in fact taking issue with the 
"arguments" relating to the claims made by China.   In the Panel Request, however, only the "legal 
basis" of the complaint must be precisely iden tified.  The arguments relating thereto may be 
progressively developed and clarified during the pro ceedings.  China further points out that the EU 
fails to demonstrate that the alleged failure to meet the Article 6.2 requirements has prejudiced its 
ability to defend its interests, although this is a pr erequisite in order to establish a violation of 
Article 6.2 of the DSU.  Finally, China stresse s that, in addition to these general comments which 
should already be sufficient for the Panel to reject the EU's claim that China's Panel Request failed to 
meet the Article 6.2 requirements, a claim by cl aim analysis leads to the same conclusion.   
 3. Second
, the EU claims that China has expanded the scope of this dispute to "other measures 
and issues" which are outside the Pane l's terms of reference.  First, the EU argues that, since "China's 
Panel Request described the measure at issue as "Article 9(5) of Counc il Regulation No 384/96 as 
amended", and because "Council Regulation No 1225/2 009 did not amend, correct or rectify the 
measure identified by China" but "repeals" Counc il Regulation No. 384/96, Article 9(5) of Council 
Regulation No. 1225/2009 is "a m easure outside the Panel's terms of reference".  However, this 
argument is purely semantic and ignores the fact that  there is absolutely no difference in substance 
between the two provisions.  Second, the EU argues that China's First Written Submission contains "other issues which fall outside the Panel's terms of reference", in particular the calculation and 
determination of dumping margins.  This, however, is a substantive issue that is not relevant for the 
definition of the Panel's terms of reference.  In any event, it is perfectly clear from China's Panel  WT/DS397/R 
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 Request that China considers that Article 9(5) effectively governs not only the imposition of anti-
dumping duties but also the determination of individual dumping margins.    4. Having made these procedural arguments, the EU still addresses China's claims on its merits.  At the outset, it is necessary to address the nature and scope of Article 9(5) of the Basic AD 
Regulation , an issue which underlies several arguments (bot h of a procedural and substantive nature).  
Article 9(5) does not deal with Market Econom y Treatment (MET) but only with Individual 
Treatment (IT) which relates to the question wh ether dumping margin and anti-dumping duty must be 
calculated for the exporting producer from China on an individual or a country-wide basis.  Contrary 
to what the EU argues, Article 9(5) is not limite d to the "very specific issue which refers to the 
imposition of definitive anti-dumping duties".  Whether the conditions set out in Article 9(5) of the 
Basic AD Regulation are fulfilled do not only determ ine for an individual exporting producer whether 
the anti-dumping duty is imposed on an individual basis or a country-wide basis but also whether the dumping margin is calculated on an individual basis or country-wide basis.  Contrary to what the EU submits, whether the dumping margin is determined on an individual or country-wide basis does not 
flow from Article 9(4) of the Basic AD Regulation which only lays down the broad principle that the 
amount of the anti-dumping duty may not exceed th e dumping margin, but from Article 9(5).  This 
position is supported by the description provided by the EU itself in its First Written Submission of 
how anti-dumping duties and dumping margins are determined in case of imports from non-market economy countries, in particular at paragraph 81 of  its First Written Submission.  This is further 
supported by the statements of the EU in various  EU anti-dumping investigations concerning imports 
from, inter alia , China.   
 5. Turning to the claim by claim analysis
, China's rebuttal is as follows.   
 6. China's claim in relation to Article 9.2 of the AD Agreement  is that the obligation in 
Article 9(5) requiring that exporting producers from non-market economy countries fulfill additional 
criteria in order to receive an individual anti- dumping duty instead of a country-wide anti-dumping 
duty is inconsistent with Article 9.2 of the AD Ag reement.  The EU first argues that the measure at 
issue does not fall within the scope of Article 9.2 of the AD Agreement and that Article VI of the 
GATT and Article 9.2 do not require a company spec ific approach to the imposition of anti-dumping 
duties.  China fails to see the connection between th is statement and the scope of the obligation in 
Article 9.2.  Whether investigating authoriti es are permitted to impose anti-dumping duties on a 
country-wide basis in the case of imports from China is a question of interpretation of Article 9.2 itself and does not relate to the scope of Article 9. 2.  It should, therefore, not be examined as a 
preliminary issue.  In any event,  Article 9.2 does not permit an interpretation which would, as a rule, 
require or allow the imposition of anti-dumping duties on a country-wide basis.   
 
7. The EU further submits that Article 9.2 does not require that anti-dumping duties are imposed on an individual basis for each supplier involved and that, even assuming that such a principle exists, 
it is not correct to argue that the only exception to th is principle is where it is impracticable to do so 
because of the large number of suppliers involved.  China submits that a correct interpretation of 
Article 9.2 pursuant to the principles of treaty inte rpretation leads to the conclusion that anti-dumping 
duties must, as a rule, be imposed on an individual basi s and that, even if this principle is not absolute, 
Article 9.2 does not allow investigating authoriti es to impose automatically a country-wide duty on 
exporting producers from non-market economy countries.   This position is supported by the "ordinary 
meaning" of the relevant terms of Article 9.2,  in particular, the terms "appropriate amounts", 
"sources" and the obligation to "name the supplie r(s)" and the exception thereto when this is 
"impracticable".  The ordinary meaning of the word "impracticable" or "not practicable" as defined in 
the relevant edition of the New Shorter Oxford Dic tionary implies something which is not feasible, 
unable to be carried out, impossible in practice.  This position is further supported by the context of 
the provision, in particular Articles 6.10 and 9.4 of  the AD Agreement, the object and purpose of the 
AD Agreement, that is, to set out the specific conditions under which anti-dumping measures may be WT/DS397/R 
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 imposed and the preparatory works of Article 8 of  the Kennedy Round Anti-Dumping Code.  Finally, 
China points out that the EU's argument that China's Protocol of Accession codifies the understanding that China is not yet a market economy country and that this implies that all provisions of the AD Agreement, including Article 9.2, must be in terpreted as authorizing a special treatment for 
exporting producers from China, fails.  It is factually incorrect since no such understanding is 
included in China's Protocol of Accession.  More over, China is now a market economy country, as 
acknowledged by many WTO Members.  In any event, whether or not China is a market economy country is irrelevant for this dispute.  The oblig ations in Article 9.2 and 6.10 do not distinguish 
between market economy and non-market economy countries.    
8. With respect to China's claim that Artic le 9(5) of the Basic AD Regulation violates 
Article 6.10 of the AD Agreement , including the chapeau of Article 6.10 and Article 6.10.2, the EU's 
preliminary argument that Article 9(5) does not fall within the scope of Article 6.10 must be rejected since Article 9(5) effectively deals with the question whether dumping margins for Chinese exporting 
producers are determined on an individual or a country-w ide basis.  On the substance of the claim, the 
EU argues that there would be exceptions other th an the one referred to in Article 6.10 second 
sentence (i.e. sampling) to the rule requiring that  dumping margins are determined on an individual 
basis and that in the case of imports from non- market economy countries, the State, and not the 
individual exporting producers, is to be regarded  as the actual "producer" for which a margin of 
dumping will be determined.  It is , however, clear from the wording and context of Article 6.10 that 
the use of sampling is the only permissible exception to  the general rule contained in the first sentence 
of Article 6.10.  Furthermore, the reasoning applied by the Panel in Korea – Certain Paper  cannot be 
used by analogy in the context of Article 9(5) since the examination under the latter provision is 
totally different from the situation examined by th e Panel in that case.  Even considering that one 
could apply the reasoning of Korea – Certain Paper  by analogy, it is clear that that the Article 9(5) of 
the Basic AD Regulation test applies criteria which go far beyond the conditions found to be 
acceptable in that case.  Moreover, Article 9(5) is discriminatory as it only applies in the case of 
imports of non-market economy countries.  There is no objective justification for this treatment since 
there is no reason why the risk or "circumvention"  or "manipulation" would be less in countries 
considered as being market economy countries than  in those regarded as being non-market economy 
countries.  Finally, the object and purpose of  the AD Agreement and the preparatory works of 
Article 6.10 support the finding that Article 9(5) of the Basic AD Regulation is inconsistent with 
Article 6.10 of the AD Agreement.   
 9. In relation to China's claim that the EU violates Article 9.3 of the AD Agreement by 
applying an anti-dumping duty which is determined on the basis of a country-wide dumping margin for those exporting producers that do not fulfill th e conditions set out in Article 9(5) of the Basic 
AD Regulation, the EU first argues that Article 9(5) do es not fall within the scope of Article 9.3 of the 
AD Agreement.  Article 9(5), however, will determine whether the duty is based on an individual or a 
country-wide dumping margin and thus falls within th e scope of Article 9.3.  On the substance, the 
EU argues that Article 9(5) does not violate Artic le 9.3 of the AD Agreement because it is permitted 
under Articles 9.2 and 6.10 to determine a single country-wide anti-dumping duty and a country-wide 
dumping margin for "the actual source of price discrimination", namely the State, in the case of 
imports from non-market economy countries.  Howeve r, this argument fails since these provisions do 
not permit investigating authorities to determine automatically a single country-wide dumping margin 
and a country-wide anti-dumping duty for all exporting producers who fail to me et the IT criteria.  
The application of Article 9(5) leads to a result where exporting producers who sold at export prices 
which are higher than the average export price de termined for non-IT exporting producers are subject 
to a duty which exceeds their individual dumping margin as established under Article 2.  The 
imposition of an anti-dumping duty which is higher than the individual dumping margin is a clear 
violation of Article 9.3 of the AD Agreement.     WT/DS397/R 
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 10. With respect to China's claim under Article 9.4 of the AD Agreement , the EU's preliminary 
claim that Article 9(5) does not fall within the scope of Article 9.4 must be rejected.  Indeed, Article 9(5) imposes specific conditions that must  be met before exporting producers included in the 
sample or which have obtained individual examina tion can receive an individual anti-dumping duty.  
Article 9(5) thus clearly falls within the scope of Article 9.4 since this Article specifically deals with 
the imposition of duties where sampling is used.  Chin a's claim under Article 9.4 is twofold.  First, 
China claims that Article 9(5) violates Artic le 9.4 since the anti-dumping duty applied to the 
cooperating non-sampled exporting producers pursuant to  Article 9(6) of the Basic AD Regulation is 
based on the weighted average margin of dumping of all sampled exporting producers, including those that do not qualify for IT and for which the dumping margin is not based on their own export 
prices.  The rebuttal by the EU is contradicted by its own practice.  Second, China claims that 
Article 9(5) of the Basic AD Regulation also violat es Article 9.4 since it requires that the non-sampled 
exporters who benefit from an "individual examinati on" demonstrate that they comply with the IT 
criteria laid down in Article 9(5) while Article 9.4 expressly requires investigating authorities to 
unconditionally "apply an individual anti-dumping duty to imports from any exporter or producer not 
included in the examination who has provided th e necessary information during the course of the 
investigation, as provided for in subparagraph 10.2 of Article 6".  China notes that the EU does not 
submit any argument in rebuttal to that second part of its claim.    11. China further claims that the EU violates Article I:1 of the GATT 1994  since the specific 
conditions imposed by Article 9(5) only apply to so-called "non-market economy countries".  
Contrary to what the EU alleges, there is no conf lict between the AD Agreement and Article I:1 of the 
GATT 1994.  Furthermore, it needs to be stressed that  a product is not different in nature, as alleged 
by the EU, depending on whether it originates in a market economy or a non-market economy country 
and that the conditions to be me t under Article 9(5) are not origin -neutral.  On the contrary, the 
advantage granted depends exclusively on the origin  of the product under investigation.  As such, 
these conditions amount to discrimination with r espect to the origin of like products.   
 12. China further challenges the manner in which Article 9(5) of the Basic AD Regulation is 
administered by the EU under Article X:3(a) of the GATT 1994  since it is not administered in a 
uniform and reasonable manner.    
13. Furthermore, since Article 9(5) of the Basi c AD Regulation "as such" violates Articles 6.10, 
9.2, 9.3 and 9.4 of the AD Agreement and Articles I:1 and X:3(a) of the GATT 1994, it automatically 
follows that the EU is also in violation of Article XVI:4 of the Agreement Establishing the WTO 
and Article 18.4 of the AD Agreement .   
 II. CLAIMS CONCERNING COUNCIL REGULATION (EC) No 91/2009 OF 
26 JANUARY 2009 IMPOSING A DEFINI TIVE ANTI-DUMPING DUTY ON 
IMPORTS OF CERTAIN IRON AND STEEL FASTENERS FROM CHINA 
 
14. China first claims that by making the benefit of an  individual dumping margin and the 
imposition of an individual anti-dumping duty dependent on compliance with the conditions set 
out in Article 9(5) of the Basic AD Regulation , the EU violated Articles 6.10, 9.2 and 9.4 of the 
AD Agreement.  The EU's defense is limited to tw o arguments.  First, it submits that China's claim 
under Article 9.4 is outside the Panel's terms of reference.  However, as is clear from the Panel 
Request as a whole, the issue which is being challe nged "as such" is being challenged "as applied" 
with respect to the second measure at issue and given that Article 9.4 of the AD Agreement has been 
included in China's Panel Request in connection with its challenge of Article 9(5) "as such", China's 
claim that Article 9(5) as applied in the anti-dumping fasteners investigation violates Article 9.4 is properly within the Panel's terms of  reference.  Second, the EU submits that China is challenging a 
non-existent measure since in the anti-dumping inves tigation concerned IT was granted to all sampled 
and individually examined cooperation suppliers that requested IT.  The EU, however, distorts China's WT/DS397/R 
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 claim since China does not challenge  the fact that the sampled and individually examined cooperating 
exporters did not receive IT or could, hypothetically , have failed to meet the Article 9(5) conditions.  
Instead, China challenges the non-auto matic character of the benefit of an individual dumping margin 
and an individual anti-dumping duty for the Chinese exporting producers in the anti-dumping investigation which led to the measure at issue.   
 
15. China claims that the EU's standing determination
 violated Article 5.4 of the 
AD Agreement.  The EU raises on a preliminary basi s three procedural objections which must all be 
rejected.  Indeed, (i) China has consulted with the EU concerning its Article 5.4 claim as required by 
Article 4 of the DSU;  (ii) China's Panel Request  is specific and presents the problem clearly, as 
required by Article 6.2 of the DSU;  and (iii)  the EU erroneously submits that the standing 
determination is governed exclusively by the No tice of Initiation 2007/C 267/11 and not by Council 
Regulation (EC) No. 91/2009.  China's claim that the EU's standing determination violated Article 5.4 
of the AD Agreement is based on three main arguments.  First , the EU failed to examine whether the 
figure for total EU production was reliable and correct.  In this respect, the EU in fact argues that it is 
permissible for investigating authorities to base themselves exclusively on the information submitted 
in the Complaint when making their standing determin ation.  However, the approach proposed by the 
EU is not consistent with the "examination"  requirement in Article 5.4 which imposes on 
investigating authorities the obligation to "investig ate", that is, "inquire into" the degree of support 
for, or opposition to, the application and this imposes something more than merely accepting the 
information provided by the complainants.  Second , the EU did not properly examine the degree of 
support for, or opposition to, the application expressed  by domestic producers of the like product prior 
to the initiation.  A mere statement that the matter has been "examined" and/or "determined" is not 
enough to demonstrate that the EU effectiv ely conducted an examination.  Third , the EU improperly 
concluded that the application had been made by or  on behalf of the domestic industry.  According to 
the EU, China failed to make a prima facie  case.  However, in order to determine whether the 
threshold of Article 5.4 of the AD Agreement is met,  it is necessary to at least identify, on the one 
hand, the production figure of th ose producers expressly supporting th e application and, on the other 
hand, the total domestic production of the like pr oduct.  In its First Written Submission, China 
provided substantial evidence which demonstrates that neither the determination of the production 
figure of the complainants, nor the figure of total domestic production was correct and that the threshold of 25% was not met.  These elements are sufficient to meet the prima facie  case threshold.  
The EU, however, fails to rebut the evidence and ev en remains silent with respect to some of the 
arguments raised.  In other words, the EU failed to rebut the prima facie  case made by China.   
 16. China further demonstrated that the EU's determination of the "domestic industry"
 
violated Articles 4.1 and 3.1 of the AD Agreement , for at least five reasons.  First , by excluding 
from the domestic industry EU producers that did no t make themselves known within 15 days of the 
initiation of the investigation or that did not sup port the complaint, the EU violated Articles 4.1 
and 3.1 of the AD Agreement.  As a preliminary remark, it must be noted that China's claim is 
covered by the Request for Consultations.  With resp ect to China's claim that there is a violation of 
Article 4.1, the EU submits that there is no viol ation given that Article 4.1 gives investigating 
authorities the discretion to choose the producers to be included in the "domestic industry" as long as 
the producers thus selected represent a "major propor tion" of the total domestic production.  However, 
apart from the two explicit exclusions provided in Article 4.1, there are no other categories of 
producers that the investigating authorities may exclude from the outset  from the definition of the 
domestic industry.  This is plainly co nsistent with the Panel's findings in EC – Salmon (Norway) .  
Furthermore, these findings are not limited to cate gories of producers "which produce a particular 
type of the like product" but concern any category of producers of the like product other than those set 
out in Article 4.1.  Moreover, the justification give n by the EU to explain why it did exclude certain 
categories of producers is not relevant.  This exclusi on also constitutes a violation of Article 3.1 of the 
AD Agreement.  Contrary to the assertions of the EU, it is clear that the objective determination of the 
domestic industry is an integral part of an objective injury examination.  By restricting the definition  WT/DS397/R 
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 of the domestic industry to only those producers that came forward within the 15-day period, the EU 
investigating authorities made it more likely that  the Community industry only included producers 
supporting the investigation and, as a result, made it more likely that injury would be found.    17. Second
, the domestic industry as defined by th e EU does not include domestic producers 
whose collective output constitutes a major propor tion of the total domestic production for two 
reasons.  First, the total EU production figure is unde restimated and based on unreliable data.  Second, 
the Community producers included in the defin ition of the domestic industry do not represent a 
"major proportion" of the total domes tic production of the like product.  In relation to this argument, it 
has to be pointed out that, although the EU states that a major proportion "is not something that can be 
determined in the abstract or based on specific pe rcentages", it immediately contradicts itself by 
submitting that "there exists a legitimate presump tion that producers representing 25% or more of 
total domestic production constitute "a major proportion" of such pr oduction".  Moreover, the Basic 
AD Regulation expressly provides that the "major propor tion" requirement of Article 4.1 is identical 
to the 25% test which is used in  the framework of the standing determination.  This link established 
by the EU between the "major proportion" test in Article 4.1, which deals with the domestic industry 
definition, and the 25% test in Article 5.4 which concerns the standing determination, even in the 
form of a "presumption", is manifestly erroneous and legally flawed.  In the investigation that led to 
the measure at issue, the EU did not examin e whether the domestic producers constituting the 
domestic industry fulfilled the major proportion re quirement.  Moreover, the producers constituting 
the domestic industry failed to meet the major proportion requirement in light of the specific 
circumstances of the case: they  are not representative of the whole domestic production;  it was 
practically feasible for the investigating authorities to include more producers than those actually included in the domestic industry;  the producers in cluded in the "domestic industry" represented only 
a small portion of the total number of producers;  and the investigating authorities excluded categories 
of producers other than the ones referred to in Article 4.1 (i) and (ii).   
 
18. Third
, the domestic industry was not defined in re lation to the Investigation Period and this 
constitutes a violation of Article 3.1 of th e AD Agreement.  This is confirmed, inter alia , by the 
Panel's findings in Argentina – Poultry Anti-Dumping Duties .   
 19. Fourth
, the EU violated 3.1 of the AD Agreement si nce it made an injury determination with 
respect to a sample that was not representative of th e domestic industry, first, to the extent that the 
"domestic industry" was defined in violation of  Article 4.1 and, second, even assuming that the 
domestic industry has been defined correctly – quod non –, the sample has not been selected in 
conformity with Article 3.1 since the only criteri on used by the investigating authorities was the 
producers' volume of production.   
 
20. Fifth , the EU's determination of the "domestic i ndustry" violated Articles 4.1 and 3.1 of the 
AD Agreement since it included in the domestic indu stry and the sample a number of producers that 
were related to the exporters or  importers or were themselves im porters of the allegedly dumped 
product.    
21. China further claims that the EU's determinations concerning the product concerned and 
the like product violated Articles 2.1 and 2.6 of the AD Agreement .  First , the investigating 
authorities included in the product concerned produc ts that were not like.  The EU argues that 
Article 2.1 of the AD Agreement only imposes obligati ons with respect to the meaning of "dumping" 
and "margin of dumping" and how they are calculate d and not with respect to the selection of the 
product concerned.  However, a correct interpreta tion of Articles 2.1 and 2.6 of the AD Agreement, 
based on the ordinary meaning of their terms and in  their context and in li ght of the object and 
purpose of the AD Agreement, leads to the conclu sion that the product concerned must include only 
"like" products.  By including in the scope of  the product concerned both special and standard 
fasteners, which are not "like", the EU thus viol ated Articles 2.1 and 2.6 of the AD Agreement.  WT/DS397/R 
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 Second
, the EU violated Articles 2.1 and 2.6 of the AD Agreement by concluding that the fasteners 
produced and sold by the Community industry in th e Community, the fasteners produced and sold on 
the domestic market in China, those produced and sold on the domestic market in India and those 
produced in China and sold to the Community are alike.  The EU argu es that China's claim is without 
object.  This is, however, based on a distortion of China's claim.   
 
22. With respect to China's claim that the EU's determinations of dum ping violated Article 2.4 
of the AD Agreement , it must be noted that the EU's preliminary argument that "China fails to refer 
to the relevant Section of Council Regulation No . 91/2009 on the comparison between normal value 
and export price and has thus failed to establish a prima facie  case" is manifestly contradicted by 
China's First Written Submission. China's claim is two-fold. First, the EU investigating authorities 
failed to make the comparison between the expor t price and the normal value on the same basis, 
namely, on the basis of the Product Control Numb ers ("PCNs") that the investigating authorities 
themselves had identified at the beginning of the in vestigation as being necessary to enable a "fair 
comparison".  The EU rephrases China's claim to make  it state that investigating authorities must 
always  follow a particular methodology when maki ng the comparison between export price and 
normal value, namely that the comparison must al ways be made between the export price and the 
normal value on the basis of the PCNs in the abstract.  However, what China claims is that, in light of 
the specific circumstances of the f asteners investigation, the physical  characteristics reflected in the 
PCNs had to be taken into account when making the comparison between normal value and export 
price since such characteristics a ffect the price comparability between export price and normal value.  
By failing to do so, the EU did not make a "fair compar ison" and, therefore, violated Article 2.4 of the 
AD Agreement.  It has to be pointed out that th e EU erroneously presents the PCNs as constituting 
only an "information gathering tool".   That the PCN factors are necessary to make a fair comparison is 
clear, inter alia , from the EU standard questionnaires u sed in the anti-dumping investigation 
concerned.  With respect to the fair comparison st andard itself, the EU considers that requesting the 
necessary information from all interested parties on a PCN basis was sufficient for it to comply with 
the obligations under Article 2.4 of the AD Agreement.   However, to the extent that a comparison is 
made without taking into account differences that affect price comparability, such comparison is not "fair".  In addition to the fact that the physical  characteristics identified in the PCN affect price 
comparability, the EU failed to make a "fair comp arison" for two other reasons.  The investigating 
authorities did not evaluate and a fortiori  did not determine whether the differences in physical 
characteristics reflected in the PCN factors affected  price comparability and whether they had to be 
taken into account for making a "fair" comparison.   Moreover, the investigating authorities had 
included in the PCNs those physical characteristics th at they considered relevant for making a "fair" 
comparison.  Logically, this implied that they had to make at least an evaluation of these differences 
in order to determine whether they were necessary to en sure a fair comparison.  To the extent that the 
investigating authorities subsequently decided to igno re most of the PCN factors previously identified 
as relevant and used another methodology, they we re required to properly and expressly inform all 
interested parties in a timely manner.  By failin g to do so, they prevented the exporting producers 
from making claims that adjustments for differences in  physical characteristics needed to be made.   
 23. Second
, the EU investigating authorities failed to  make appropriate adjustments for the 
differences that affect price comparability, namely  the differences in physical characteristics as 
reflected in the PCN as well as for quality diffe rences.  The EU investigating authorities never 
examined, once they decided to exclude from the PC Ns a number of physical characteristics initially 
used to categorize products, whether the excluded char acteristics were to be considered as differences 
in physical characteristics affecting price comparability and, a fortiori , never determined whether or 
not an adjustment was required.  However, it is cl ear that the characteristics identified in the PCNs 
constitute physical differences that affect price comparability.  The decision to exclude certain 
physical characteristics from the PCNs had nothing to do with an evaluation that these physical characteristics had no effect on price comparability, but , as admitted by the EU itself, related to the 
fact that the Indian producer did not provide the necessary information on a PCN basis.  However, this  WT/DS397/R 
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 cannot be a justification for the EU to simply ignor e those physical characteristics that affect price 
comparability.  In its First Written Submission, the EU tries to defend why it disregarded these factors 
for the purposes of making the comparison.  It has to be emphasized that the mere a posteriori  
rationalizations given by the EU can neither obscure nor cure the fact that during the investigation the 
investigating authorities did not examine whethe r the differences in question affected price 
comparability when making the comparison.  Similarly, no adjustment was made for quality 
differences.  Moreover, the EU appears to argue that , in order for it to comply with the obligation to 
carry out a fair comparison pursuant to Article 2.4, it was sufficient for it to take into account those 
physical characteristics which appeared to be the most important.  However, all differences affecting 
price comparability must be taken into account.  Finally, China stresses th at the Chinese exporting 
producers were not informed of the information whic h was necessary to ensure a fair comparison and 
that the Chinese exporting producers as a whole were  never informed that the comparison had not 
been made on a PCN basis.    24. China claims that the EU violated Articles 3.1 and 3.2 of the AD Agreement when making 
the price undercutting calculations  by failing to make a product comparison on the basis of the full 
PCNs and by comparing standard and special fasteners without making any adjustments for the differences affecting price comparability when de termining the price undercutting margin.  On a 
preliminary basis, it must be noted that China's cl aim was subject to consultations and is within the 
Panel's terms of reference.  On the substance, the EU erroneously considers that the absence of 
requirement in Article 3.2 as to a specific met hodology that should be used for the undercutting 
calculation implies that any methodology is necessarily  consistent with Articles 3.1 and 3.2 of the 
AD Agreement.  However, only methodologies which are objective, i.e. unbiased and even-handed, are consistent with Articles 3.1 and 3.2 of the AD Ag reement.  In order to ensure such an unbiased 
and even-handed undercutting calculation, adjustme nts may be necessary.  Product characteristics, 
such as length and diameter, which were disregarded by the EU in its price undercutting analysis, are 
differences which not only affect costs for the producers but "have a perceived importance to the 
customer" and must, therefore, be taken into account in the framework of the price undercutting 
analysis.  The EU's sole defense is to allege th at "China has failed to adduce evidence that the 
methodology that was followed was not "objective" or not "even-handed"".  In its First Written 
Submission, China has, however, explained and provided supporting evidence as to why the price undercutting calculations made by the EU inves tigating authorities were not unbiased and even-
handed.   
 25. China makes two claims in connection with the examination by the EU investigating 
authorities of the volume of dumped imports .  China claims that the EU violated its obligations 
under Articles 3.1, 3.2, 3.4 and 3.5 of the AD Agreement  first  because the EU included in the 
volume of "dumped imports" imports from Chinese pr oducers that were found not to be dumping and 
second , because it included in the volume of dumped imports all imports from non-sampled 
producers.  With respect to the first claim, the EU argues that no violation can be found in view of the 
low percentage of the imports originating from th e two Chinese exporting producers that were found 
not to be dumping.  The examination of the volume of "dumped imports" which does not exclude outright the volume of imports from producers whic h were found not to be dumping is, however, 
contrary to the direct and clear text of Articles 3.1 and 3.2 of the AD Agreement.  As to the second 
claim, the conclusion that two non-sampled pr oducers which were individually examined in 
accordance with Article 6.10.2 were found not to be dumping constitutes "positive evidence" within 
the meaning of Article 3.1 of the AD Agreement.  To the extent that such information has been 
ignored by the EU investigation authorities when determining the volume of dumped imports, their 
determination that all imports from all non-indivi dually examined producers are "dumped imports" is 
not based on "positive evidence".  As a consequence of these violations of Articles 3.1 and 3.2, the 
EU also violated Articles 3.4 and 3.5 of the AD Agreement.    WT/DS397/R 
Page E-10  
 
 26. China also demonstrated that the EU failed to make an injury determination
 consistent with 
its obligations under Articles 3.1 and 3.4 of the AD Agreement .  First , the EU failed to examine the 
injury factors in relation to a Community industry defined in a consistent manner.  Certain injury 
factors were examined on the basis of the data of  the Community industry as a whole, whereas other 
factors were examined on the basis of the data  of the sampled producers only.  China strongly 
disagrees with the EU's view that both data sets "a re essentially the same and both are interchangeable 
bases for examining injury to the domestic industry".  Furthermore, in the investigation that led to the 
measure at issue, evidence shows that the analysis  of certain injury factors with respect to the 
domestic industry or the sampled producers leads to  different results, thereby demonstrating the 
biased nature of the examination carried out by the investigating authorities.   
 
27. Second , China submits that, on the basis of th e evidence gathered, the EU could not 
objectively conclude that the level of profitab ility was "low" and that the dumped imports had a 
"negative impact on profitability".    
28. Third
, the EU's overall analysis of the impact of dumped imports on the domestic industry is 
not objective and not based on positive evidence.  The EU improperly concluded that the domestic industry suffered injury since an examination of th e relevant factors pursuan t to Article 3.4 of the 
AD Agreement shows a positive state of the domestic industry.  The overall examination of the injury 
factors could not have led to a finding that material injury had been suffered by the domestic industry.  
Indeed, almost all factors regarding the situati on of the EU industry showed a favorable trend 
between 2003 and the IP.  The EU's statement that several factors are to be considered as negative 
developments is manifestly incorrect and contradict ed by its own findings.  The sole factor possibly 
showing a negative trend was a loss of market share in a rapidly growing market.  A finding of material injury, however, cannot solely be based on one negative factor.  Having found that all factors 
showed a positive trend over the period concerned,  the EU should have concluded that the EU 
industry had not suffered material injury.  Fu rthermore, there is no thorough and persuasive 
explanation as to whether and how the positive trends  of most injury factors were outweighed by any 
negative factor.  Finally, the EU authorities failed to provide a persuasive explanation as to how or 
why the trends for market share, sales volume, prof itability, cash flow, return on investments, margins 
of dumping and capacity utilization, effectivel y constitute "negative developments".   
 
29. Fourth
, the EU improperly considered the displacement of EU products by imports from 
China in some market segments as being relevant.  The injury analysis is premised on the distinction 
between the two market segments of special and st andard fasteners.  For all injury factors which 
showed a positive trend, the EU investigating authorit ies claimed that they should not be regarded as 
"positive" since this "positive" aspect was merely du e to the shift from standard to special fasteners 
which merely attenuated the allege d injurious consequences of dumping.  As a result, the injury 
analysis is de facto  exclusively based on the standard fasten er market segment and is, therefore, 
inconsistent with Articles 3.1 and 3.4 of the AD Agreement.    30. China further submits that the EU violated Articles 3.1 and 3.5 of the AD Agreement
 in 
concluding that dumped imports caused  material injury to the domestic industry, for two main 
reasons.  First , the EU failed to demonstrate that dumped  imports are, through the effects of dumping, 
causing injury to the domestic industry.  This includ es two sets of arguments.  The first argument is 
that a causal link cannot be demonstrated on the sole  basis of a mere "coincidence" in time between 
the alleged injury and the increase in the volume of alleged dumped imports.  The second argument is 
that a finding of a causal relationship between dump ed imports and injury must necessarily be based 
on positive evidence.  The EU did not produce any ev idence showing that the shift by the domestic 
industry towards the production of special fasteners was due to the dumped imports.  There is, therefore, no basis for the investigating authoriti es to conclude that dumped imports have caused 
injury to the domestic industry.     WT/DS397/R 
 Page E-11 
 
 
 31. Second , the EU failed to properly assess the injurious effects of other known factors, more in 
particular, the increase in raw material prices and the export performance of the Community industry.  
The non-attribution test as developed in the WTO case  law requires an identification of the nature and 
extent of the injurious effects as well as a satisfact ory explanation of the nature and extent of the 
injurious effects of the other factors, as disti nguished from the injurious effects of the dumped 
imports.  The latter explanation must be clear and unambiguous and the r eason provided cannot be a 
mere "assertion".  However, the EU's analysis of the "increase in raw material prices" does not meet 
this requirement.  With respect to the export perform ance, China's main claim is  that, on the basis of 
the facts on the record, the investigating authorities could not come to the conclusion that the export 
performance of the domestic industry was not a source of material injury.  The EU thus violated 
Articles 3.1 and 3.5 of the AD Agreement by cons idering this factor as not causing injury and, 
therefore, by failing to conduct the non-attribution test.  In addition, the EU violated Articles 3.1 and 3.5 of the AD Agreement by using the data c oncerning all producers in the Community while the 
injury determination was made with respect to the domestic industry as defined by the EU.   
 
32. China's last claim relates to the violation by the EU of the procedural requirements 
imposed by Articles 6 and 12 of the AD Agreement .  The fundamental lack of transparency 
permeating all stages of the investigation has pr evented Chinese exporting producers from effectively 
defending their interests.  The breach of their due process rights is so substantial that it should lead this Panel to recommend that the measure be withdr awn.  The EU tries to dismiss China's claims on 
the basis of a number of procedural tactics, i.e. by claiming that China did not submit any evidence or 
that the evidence is not relevant, that the claims and arguments are presented in a confusing way or for 
other obscure reasons.  The EU, however, does not pr esent any valid evidence that could rebut China's 
prima facie  case on the substance.  At the outset, it is  necessary to make some general comments
.  In 
China's view, the obligation set out in the first sentence of Article 6.2 is so broad that a finding of violation of Article 6.4 necessarily entails a violat ion of Article 6.2 first sentence.  Furthermore, 
contrary to what the EU seems to consider, a comp laining party may claim the violation of different 
obligations, in this case Articles 6.4 and 6.9, with r espect to the same set of facts.  Moreover, the EU 
intends to create confusion between, on the one hand,  the claims made by China and, on the other 
hand, the arguments and evidence submitted to support such claims.  As eviden ce to support its claims 
under Article 6.4, China has referred to the Defi nitive Regulation, as well  as to the Disclosure 
Documents and the correspondence between cert ain Chinese exporting producers and the EU 
investigating authorities.  When China refers to  the Disclosure Documents and/or the Definitive 
Regulation as part of the evidence concerning its cl aim under Article 6.4, China is not claiming that 
these documents do not contain the essential facts as re quired under Article 6.9.  In fact, the EU is 
forced to rewrite China's claims and argument s in order to be able to rebut them.   
 
33. China demonstrated the following due process violations by the EU
:  (i) the EU failed to 
disclose the identity of the comp lainants, thereby violating Articles 6.5, 6.2 and 6.4 of the 
AD Agreement;  (ii) the EU failed to disclose info rmation concerning the nor mal value determination 
including product types and the comparison with export prices including any adjustments for differences affecting price comparability thereby violati ng Articles 6.5, 6.2, 6.4 and 6.9;  (iii) the EU 
violated Articles 6.5, 6.2 and 6.4 since the non-c onfidential versions of the Community producers' 
questionnaire responses and the questionnaire response of the producer in the analogue country were 
largely deficient;  (iv) the EU violated Article 6. 5, 6.2 and 6.4 by failing to make Eurostat data 
available in the non-confidential file and by failing to  provide an explanation as to how the estimation 
of the production in the EU had been made;  (v) the EU violated Articles 6.2, 6.5 and 6.9 through its 
findings on the domestic industry;  (vi) the EU viol ated Article 12.2.2 by failing to state all relevant 
information concerning its IT determinations;  (v ii) the EU violated Article 6.5 by disclosing a 
document entitled "Assessment of Market Economy Tr eatment Claims by nine producers in the 
PRC";  (viii) the EU violated Article 6.1.1 of the AD Agreement by limiting the time period for the submission of MET and/or IT questionnaire responses to 15 days as of the date of publication of the 
Notice of Initiation.   WT/DS397/R 
Page E-12  
 
 ANNEX E-2 
 
 
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION  
OF THE EUROPEAN UNION 
 
 I. INTRODUCTION 
 
1. The European Union takes i ssue with China's attempt to disregard the numerous and precise 
arguments raised by the European Union under Articl es 4.2, 4.3, 4.5, 4.7, 6.2, 7.1 and 11 of the DSU .  
As a matter of fact, the European Union's First Written Submission has addressed all the claims raised 
by China in its Panel Request and its First Written Submission, going even beyond in many aspects of 
what was required, due to the lack of both factual evidence and clarity of the legal arguments made by 
China. Pursuant to Article 11 of the DSU , the European Union requests the Panel to examine whether 
China has complied with the fundamental rules contained in the DSU  when making its claims in the 
present dispute.    II. CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF COUNCIL 
REGULATION NO 384/96, AS AMENDED 
 
A. P
ANEL 'S TERMS OF REFERENCE  
 
2. The European Union maintains that China's Pa nel Request failed to meet the requirements of 
Article 6.2 of the DSU with respect to its claims  relating to Articles 6.10, 9.3 and 9.4 of the Anti-
Dumping Agreement and Article X:3(a) of the GATT 1994.  The European Union disagrees with 
China's views on Article 6.2 of the DSU.  Article 6. 2 of the DSU thus does not require that the brief 
summary of the legal basis of the complaint amounts to an "argument" (somet hing which is developed 
at a later stage in the course of the panel proceedings );  however, it requires that the brief summary of 
the legal basis of the complaint explains how and why the measure at issue violates the WTO 
obligation in question in a sufficient manner to presen t the problem clearly.  Put simply, if a panel 
request identifies a measure in a precise manner but then includes legal claims which do not directly 
pertain to the operation of the measure, the responde nt Member is left wondering how that measure 
can be the source of the alleged impairment.   
 
3. In its Panel Request, China challenged a pr ecise measure (i.e., Article 9(5) of Council 
Regulation No 384/96, as amended) as being "as such " inconsistent with certain provisions of the 
Anti-Dumping Agreement and the GATT 1994.  In view of the "as such" nature of China's claim and 
the requirement that the complaining Member has to state unambiguously the specific measures which 
are subject to "as such" claims, the European Un ion was puzzled when reading in China's Panel 
Request as well as its First Written Submission that th e brief summary of the legal claims related to 
other issues (such as the calculation or determina tion of dumping margins, the level of anti-dumping 
duties, and the imposition of anti-dumping duties in a specific context such as sampling) which are not addressed by the specific measure at hand.  In any event, the European Union considers that, in 
view of the "as such" nature of China's claim, any disagreement between the parties on the scope of 
the measure at issue should be resolved by examin ing the text of Article 9(5) of Council Regulation 
No 384/96.  The text of Article 9(5) of Council Re gulation No 384/96 leaves no doubt that the issue 
contained in that provision refers to the impositi on of anti-dumping duties.  When Article 9(5) of 
Council Regulation No 384/96 is seen in the context of its other provisions, the same conclusion is 
reached about its meaning and content.  In any even t, the European Union has also explained in its 
First Written Submission how Article 9(5) of Coun cil Regulation No 384/96 operates in practice.   WT/DS397/R 
 Page E-13 
 
 
 Consequently, the measure at issue id entified by China in its "as such " claim the Panel is requested to 
examine is Article 9(5) of Counc il Regulation No 384/96, on its face, and not everything which may 
derive from the determination provided for by that  provision, or anything under the other provisions 
of the same regulation that may sequentially come  after the Article 9(5) determination during the 
investigation.   
 
4. Should the Panel find that China's Panel Request plainly connects the challenged measure with the provisions of the covered agreements in  accordance with Article 6.2 of the DSU (quod non), 
the European Union submits that the Panel s hould refrain from examining China's claims under 
Articles 6.10, 9.2, 9.3 and 9.4 of the Anti-Dumpi ng Agreement and Article X:3(a) of the GATT 1994 
since the specific measure described by China in its Panel Request (i.e., Article 9(5) of Council 
Regulation No 384/96) does not fall within the scope of  the obligations contained in the provisions of 
the covered agreements invoked by China.    5. The European Union also requests the Panel to refrain from examining measures and issues 
outside its terms of reference in relation to China' s "as such" claim, including Article 9(5) of Council 
Regulation No 1225/2009, any matters pertaining to  the calculation or individual determination of 
dumping margins, or any other matters raised by Ch ina in its First Written Submission or in any other 
subsequent submission which is di fferent from the one specifically identified by China in its Panel 
Request (i.e., Article 9(5) of Council Regulation No 384/96, insofar as it provides for the imposition 
of anti-dumping duties on a country-wide basis or on an individual basis, if certain criteria are met, in 
the case of imports from non-market economy countries).   
 B. A
RTICLE 9(5)  OF COUNCIL REGULATION NO 384/96  "AS SUCH " IS IN CONFORMITY WITH THE 
PROVISIONS INVOKED BY CHINA  
 
6. For the reasons mentioned in our First Wr itten Submission, the European Union maintains 
that Article 9(5) of Council Regulation No 384/96 is as such consistent with the provisions invoked 
by China.  In particular, the European Union w ill address China's claim under Article 9.2 of the Anti-
Dumping Agreement, by examining that provision a nd referring to Article 6.10, where relevant, as 
context to address the relationship between thes e two provisions, and to China's Protocol of 
Accession.  The European Union will also brie fly address China's claim under Article I:1 of the 
GATT 1994.   
 
1. Claim under Article 9.2 of the Anti-Dumping Agreement 
 
7. China's understanding of Articles 6.10 and 9.2 of the Anti-Dumping Agreement is flawed on 
numerous grounds.  First, Article 6.10 does not contai n a strict rule requiring investigating authorities 
to always determine dumping margins on an indivi dual basis.;  rather, that provision contains a 
preference for determining individual dumping margin s and then refers to one affirmative situation 
(i.e., sampling) where such a preference "may" not be followed.  Second, contrary to what China 
asserts, Article 6.10 does not contemplate only one exception (i.e., sampling) where investigating authorities are permitted to depart from the genera l principle of determining dumping margins on 
individual basis.  The second sentence of Article 6.10  on sampling is simply an affirmative statement 
relating to (i) the conditions for sampling and (ii) the composition of the sample.  There is no direct 
link between the general principle of the first sen tence and the possibility of sampling in the second 
sentence.  These two sentences are simply two affirmativ e statements of what an authority ought to do 
in general (individual margin determination), and what it is allowed to do (sampling).  The 
interpretation that Article 6.10, first sentence, does not contain a strict obligation and sampling is just 
but one situation where the preference for the individual determination of dumping margins does not need to be followed is supported by the existence of other situations where the preference mentioned 
in Article 6.10, first sentence, may not apply.  Third, as the relevant case-law has clarified, 
Article 6.10 should not be interpreted as requiring the determination of dumping margins for each WT/DS397/R 
Page E-14  
 
 legal entity in all cases, regardless of whether th ey are economically related to each other.  
Investigating authorities are allowed to determin e one dumping margin for related companies as a 
whole.  Article 6.10, first sentence, would require  the identification of the actual exporters/producers 
in an investigation as a condition precedent to the determination of the dumping margin.  Once the 
single producer has been identified, investigati ng authorities would be able to impose anti-dumping 
duties on the basis of that identification.  Fourth, Article 9.2 does not contain a strict rule to impose 
anti-dumping duties on individual basis; rather Article 9.2 expressly allows for the imposition of anti-dumping duties on a country-wide basis.  This is al so the consequence of the preference or guiding 
principle contained in Article 6.10, first sentence.  Fi fth, even if Article 9.2 could be read as requiring 
the imposition of anti-dumping duties on an individual  basis, its third sentence provides for exceptions 
to that obligation (other than sampling) when it is "impracticable" to do so.  Even by its own 
admission, China concedes that such  situation arises not only in cases where sampling is used but also 
in other situations, such as when certain suppliers  are not known.  The fact that anti-dumping duties 
do not need to be imposed on individual basis in  other situations (e.g ., non-cooperating suppliers) 
mirrors the fact that there are more situations (oth er than sampling) where the investigating authorities 
can depart from the general rule cont ained in Article 6.10, first senten ce.  In sum, th e European Union 
considers that Article 9.2, when interpreted by  using Article 6.10 as a context, does not support 
China's claim that there is a strict obligation to  impose anti-dumping duties on an individual basis, 
with the only exception of the sampling situation.   Indeed, Article 6.10 allows investigating 
authorities to depart from the general rule to de termine dumping margins on an individual basis in 
other situations than in the sampling scenario.  Likewise, Article 9.2 perm its the imposition of duties 
on a country-wide basis in other cases than the sampling scenario, in particular when it is 
impracticable to do so on an individual basis.    8. Following the rationale of Article 9.2 of the Anti-Dumping Agreement, Article 9(5) of 
Council Regulation No 384/96 contains certain crite ria to assess when it is impracticable to impose 
anti-dumping duties on an individual basis in the case of imports from non-market economy countries.  
These criteria serve to identify whethe r the applicant company is related to the State, i.e., the actual 
supplier, or is an independent, non-related supplier.  If the appl icant company is considered as a 
supplier acting independently from the State, that IT supplier is considered an  independent exporter or 
producer and the source of the alleged price discrim ination.  Then, an individual anti-dumping duty 
will be specified for that IT supplier in the provisio nal and/or definitive measure.  In contrast, if the 
applicant company is considered as a supplier not acting independently from the State, that non-IT 
supplier is not considered a genuine  exporter or producer, but related to State (which is ultimately the 
actual producer and the source of the alleged price discrimination).  Then, that non-IT supplier will be subject to the country-wide duty rate.  If the supplier is not acting independently of the State, there is 
also a risk that the actua l producer of the product concerned (i.e., China) would channel all its exports 
through the company with the lowest duty-rate, th ereby undermining the main objective of the anti-
dumping measure, i.e., to offset or prevent dumping.    9. The European Union also di sagrees with China's contention that Article 9.2 requires the 
imposition of anti-dumping duties on an individual basis since this provision refers to the collection of 
anti-dumping duties in the "appropriate amounts (…) from all sources found to be dumped and 
causing injury".  The European Union also disag rees with China's argument that the term 
"impracticable" in the third sentence of Article 9. 2 refers to something which is "not feasible in 
practice", rather than "ineffective" and covers onl y situations in which the specific action (i.e., of 
naming the suppliers and determining the duties app licable to them) is not feasible for practical 
reasons.   
 
10. China argues that the European  Union has separate rules to de al with the issue of related 
companies and that Article 9(5) of Council Regulation No 384/96 applies in addition to them.  The European Union considers that the application of rules to consider related companies or companies  WT/DS397/R 
 Page E-15 
 
 
 belonging to the same group as one single entity either before or after or in addition to Article 9(5) of 
Council Regulation No 384/96 is irrele vant in the present dispute.   
 11. The European Union also considers that th e relationship between non-IT suppliers and the 
State is similar to that addressed by the panel in Korea – Certain Paper .  In that case, the reasoning of 
the panel sought to identify the actual source of pric e discrimination and thus determine an individual 
dumping margin for the actual supplier reflecting its real economic structure, duly delineated in legal 
and factual terms.  In order to do so, the panel ex amined the close relationship of three companies and 
concluded that they were related in view of the f act that (i) one company owned a majority of shares 
of the three companies and thus had a considerably  controlling power over the operations of its three 
subsidiaries;  (ii) there was a significant comm onality with respect to the management of the 
three companies, where most of th e directors of each company were present as directors of the other 
companies;  (iii) the three companies concerned had the ability to shift products among themselves to 
harmonise their commercial activities to fulfil co mmon corporate objectives;  and (iv) the three 
companies made almost all thei r domestic sales through one company.  Similarly, the criteria under 
Article 9(5) of Council Regulation No 384/96 exam ine whether the Chinese su ppliers act sufficiently 
independently from the State by examining, inter a lia, that (i) the majority of the shares belong to 
private persons, and not to the State;  that (ii) State officials appearing on the board of Directors or holding key management positions are in minority;  that (iii) export prices and quantities, and conditions and terms of sale are freel y determined, rather than directed or controlled by the State;  and 
that (iv) State interference is not such as to perm it circumvention of measures if individual exporters 
are given different rates of duty.  In this sense,  the criteria contained in Article 9(5) of Council 
Regulation No 384/96 aim at examining whether th e applicant companies are related through the 
State.  Thus, like in Korea – Certain Paper , the reasoning behind these criteria is to identify the actual 
source of price discrimination, the single supplier of the product concerned.  Only by doing so, the 
anti-dumping duty imposed will address the actual source of price discrimination effectively.   
 
12. Moreover, the European Union observes that  the notion of whether producers are "related" 
appears in Article 4.1(i) of the Anti-Dumping Agre ement and thus may serve as context to interpret 
this implicit notion in Article 6.10.    13. Finally, the European Union considers that China's Protocol of Accession cannot be read in 
such a narrow manner.  The term "domestic" in Pa ragraph 15(a) of China's Protocol of Accession 
seems to address the fact that domestic prices in China are significantly distorted due to State intervention in the economy.  However, the term  "market economy conditions" also encompasses the 
situation when State intervention in the economy incl uding international trade is so substantial that 
operators cannot act independently from the State in th eir export activities.  This is the case of China.  
Likewise, the term "sale" also includes "export" sales.  Thus, the terms "market economy conditions" 
in Paragraph 15(i) and (ii) of China's Protocol of Accession would appear to allow investigating 
authorities to have recourse to "a methodology that  is not based on a strict comparison with domestic 
prices or costs in China (…) in determining price comparability under Article VI of the GATT 1994 and the Anti Dumping Agreement".  A methodology wh ich considers the State as the actual producer 
of the product concerned and uses information av ailable to compare export prices of the actual 
producer with an analogue country normal value is also "a methodology that is not based of a strict 
comparison with domestic prices or costs in China".    
2. Claim under Article I:1 of the GATT 1994 
 14. The European Union notes that China's argu ment is based on the presumption that the Anti-
Dumping Agreement does not allow for treating suppliers from non-market economy countries 
differently.  In other words, China assumes what  it pleads for (i.e., that Article 9(5) of Council 
Regulation No 384/96 violates certain provisions of the Anti-Dumping Agreement) in order to 
conclude that there is no conflict with Article I:1 of the GATT 1994.  Such a circular argument should WT/DS397/R 
Page E-16  
 
 be rejected.  More so where there are other re ferences in the Anti-Dumping Agreement which allow 
WTO Members to treat non-market economy countries differently.    
III. CLAIM 1:  ARTICLE 9(5) OF COU NCIL REGULATION NO 384/96 "AS APPLIED" 
IN COUNCIL REGULATION NO 91/2009 (ARTICLES 6.10, 9.2 AND 9.4 OF THE 
ANTI-DUMPING AGREEMENT ) 
 
15. The European Union observes China has not raised any additional arguments in connection 
with this claim.  Thus, the European Union request s the Panel to reject Ch ina's claim that Council 
Regulation No 91/2009 is incons istent with Articles 6.10, 9.2 and 9.4 of the Anti-Dumping 
Agreement.   
 
IV. CLAIM 2:  STANDING OF THE EU DOMESTIC INDUSTRY FOR THE PURPOSES 
OF INITIATION (ARTICLE 5.4 OF THE ANTI-DUMPING AGREEMENT ) 
 16. The European Union observes China has not raised any additional arguments in connection 
with this claim.  In fact, by implication, it woul d appear that China acknowledges that the standing 
determination was properly made.  Thus, the European  Union respectfully request s the Panel to reject 
China's claims.    
V. CLAIM 3:  DETERMINATION OF "DOMESTIC INDUSTRY" (ARTICLES 4.1 AND 
3.1 OF THE ANTI-DUMPING AGREEMENT ) 
 
17. China claims that the EU's determination of "domestic industry" violated Articles 4.1 and 3.1 
of the Anti-Dumping Agreement .  In particular, China presents five sets of claims against the EU's 
determination of the domestic industry.  In its firs t written submission, the EU explained why all five 
of these claims are to be rejected.  In its oral st atement, China has failed to rebut any of the EU's 
arguments.  The EU therefore refers to the argum ents presented in its first written submission.   
 18. The EU clarifies that the EU authorities di d not exclude any domestic producers but simply 
defined the domestic industry based on all tho se producers which made themselves known within 
15 days following initiation and which expr essed a willingness to cooperate.  China has 
acknowledged that it is permissible to use reasonabl e deadlines to determine the scope of the domestic 
industry.  China has failed to even attempt to dem onstrate that this deadline was not reasonable.  The 
use of this deadline for purposes of defining th e domestic industry was an entirely reasonable and 
objective way of grouping all c ooperative domestic producers, and was thus a method which did not 
"favour either side".   
 
19. Article 4.1 does not require an authority to in clude producers that indicate from the outset that 
they are not going to cooperate.  The EU's appr oach is an entirely reas onable approach which is 
consistent with the discretion that is given to aut horities by Article 4.1 and the lack of a hierarchy of 
preference in this provision.    
20. In respect of the question whether 27% of production is a "major proportion", China accepted 
in the course of the oral hearing that "a major pr oportion" could be much less than 100%, and even 
less than 25 % depending on the circumstances of the case.  Given this acknowledgement it is all the 
more revealing that China has still failed to demons trate why 27 % is not an important, significant or 
serious proportion in the particular circumstances of  this case, even though this is what the panel in 
Argentina – Poultry Anti-Dumping Duties  considered it was required to do in order to demonstrate a 
violation of Article 4.1.  The only two particular "circumstances" that China refers to are either 
completely irrelevant such as the number of producers or simply a different packaging of the erroneous argument made in its fi rst written submission that the term "a major proportion" has to be  WT/DS397/R 
 Page E-17 
 
 
 as close as practically possible to 100%.  Neither explains why 27% of production is not an important 
part of production.    21. China did not even attempt to re-but the EU's  arguments in respect of the lack of merit of 
China's claims in respect of the time period for th e determination of the major proportion requirement, 
the representativeness of the sampled producers when compared to total production or the need to 
exclude related producers.    22. In sum, the EU reiterates its request that  the Panel reject all of China' claims under 
Articles 3.1 and 4.1 of the Anti-Dumping Agreement in respect of the EU's definition of the domestic 
industry.   
 
VI. CLAIM 4:  SELECTION OF THE PR ODUCT CONCERNED (ARTICLES 2.1 AND 
2.6 OF THE ANTI-DUMPING AGREEMENT ) 
 23. The European Union observes China has not raised any additional arguments in connection 
with this claim.  Thus, the European Union request s the Panel to reject Ch ina's claim that Council 
Regulation No 91/2009 is inconsiste nt with Articles 2.1 and 2.6 of the Anti-Dumping Agreement.   
 
VII. CLAIM 5:  DETERMINATION OF DUMPING (ARTICLE 2.4 OF THE ANTI-
DUMPING AGREEMENT 
 
24. China alleges that the EU failed to make a fa ir comparison as required by Article 2.4 of the 
AD Agreement between normal value and export pr ice because the authority did not base this 
comparison on the full Product Control Number ("PC N").  In the first written submission, the 
European Union explained why China's claims based on the alleged failure to use the full PCN are in 
error and should be rejected by the Panel.  China did not address any of these arguments in its oral 
statement.  The EU therefore reiterates its view that  China has failed to establish a prima facie case of 
violation.    25. In the absence of any prescribed methodology an d taking into consideration the fact that 
comparisons were made between normal value and export price between products based on the 
two main drivers that the exporters themselves cons idered to be affecting price comparability, it is 
clear that China has failed to demonstrate that  the comparison that was made was not a "fair 
comparison" as required by Article 2.4.    26. China's argument raised in the course of the hearing that it did not know what the difference 
was between special and standard fasteners, and that this lack of transparency hindered the defence of 
the Chinese exporters' interests at the time of the i nvestigation and of China in the current proceedings 
is clearly contradicted by the facts on the record.    27. In sum, China failed to demonstrate that  the authority violated its obligations under 
Article 2.4 of the Anti-Dumping Agreement.   
 
VIII. CLAIM 6:  PRICE UNDERCUTTING ANALYSIS (ARTICLES 3.1 AND 3.2 OF THE 
ANTI-DUMPING AGREEMENT ) 
 
28. China argues that the EU violated Articl es 3.1 and 3.2 of the AD Agreement since the 
authority allegedly failed to make a price undercutti ng analysis on the basis of the full PCN.  In the 
first written submission the EU explained the reasons  why China's claim is to be rejected.  Once 
again, none of the EU's arguments were addressed in China's opening oral statement.  In addition, and 
as clarified in response to a number of the Panel' s questions, China cannot seriously argue that it was 
not aware of how the product groups  were constituted or what the methodology was that was followed WT/DS397/R 
Page E-18  
 
 for the price undercutting analysis.  China's own e xhibit CHN-50 which is an example of a disclosure 
document sent to the Chinese producers clearly explains  it all in great detail.  Three weeks were given 
to exporters to comment on this approach.  No  comments challenging the reasonableness of the 
methodology of the price undercutting comparison were  received.  China has failed to provide any 
evidence to show that the price undercutting analys is was not conducted in an objective manner given 
the broad discretionary power given to author ities under Article 3.2 in this respect.   
 
29. In sum, China's claims under Articles 3.1 and 3.2 of the Anti-Dumping Agreement in respect 
of the price undercutting analysis are to be rejected.    IX. CLAIM 7:  EXAMINATION OF THE VOLUME OF DUMPED IMPORTS 
(ARTICLES 3.1, 3,2, 3.4 AND 3.5  OF THE ANTI-DUMPING AGREEMENT ) 
 
30. China argues that the EU violated its obligati ons under Articles 3.1, 3.2, 3.4 and 3.5 because 
the authority failed to exclude the volume of two e xporters that were found not to be dumping from its 
volume analysis under Article 3.2 and because the authority assumed for the purposes of that same 
volume analysis that all non-examined exporters were  dumping.  For the reasons  explained in its first 
written submission, the EU requests the Panel to rej ect China's claim in this respect.  China did not 
even attempt to rebut the EU's arguments at the time of the first substantive meeting with the Panel.   
 31. The European Union requests the Panel not to a pproach this matter in a mechanistic fashion.  
The Appellate Body has warned against such a me chanistic approach on many occasions, thus calling 
for a substantive over a formalistic approach. It is  not so that any inclusion of non-dumped imports 
would necessarily, and ipso facto constitute a violati on of Articles 3.1 and 3.2.  A violation will exist 
only if the failure to do so jeopardizes the objectivit y of the examination.  As explained before, as 
well as in our First Written Submission, such was not th e case in respect of the fasteners investigation.   
 
32. Furthermore, the facts on the record show that in the fasteners case, all sampled producers 
were found to be dumping.  Indeed, in the fast ener case, 100% of the sampled producers representing 
61% of exports from the cooperating companies and 39% of total exports from the People's Republic 
of China were all found to be dumping.  Clearly the authority's extrapolation of dumping in respect of 
the non-sampled exporters on this basis was not in error.   
 
33. China's claims under Articles, 3.1, 3.2, 3.4 and 3.5 of the Anti-Dumping Agreement are 
therefore to be rejected.    
X. CLAIM 8:  IMPACT OF DUMPED IMPORTS ON DOMESTIC PRODUCERS 
(ARTICLES 3.1 AND 3.4 OF THE ANTI-DUMPING AGREEMENT ) 
 
34. China argues that the EU violated its obligations under Articles 3.1 and 3.4 of the Anti-
Dumping Agreement  to objectively examine the impact of the dumped imports on the situation of the 
domestic industry.  China presents four equally flawed  arguments in this respect.  In the first written 
submission, it was clearly demonstrated why all four are in error.  China fail ed to even attempt to 
rebut these arguments in its oral statement.   
 35. It is recalled that China's claim lacks mer it since the record clearly shows that the EU 
authorities  did consistently use data relating only to the same domestic industry .  WTO case law 
confirms that China is wrong to suggest that the mere fact that the EU authorities examined certain 
factors on the basis of data relating to a representa tive sample of the domestic industry while other 
factors were examined based on data relating to a ll producers that are part of the domestic industry 
vitiated the objectivity of the analysis.     WT/DS397/R 
 Page E-19 
 
 
 36. China's claim in respect of the treatment of the factor profitability is based on an incorrect 
understanding of the reasonable and nuanced explana tion provided by the EU authorities.  Moreover, 
in the first written submission, the European Union explained at length that it is simply not so that 
market share was the "sole factor possibly showing a negative trend", as erroneously argued by China.  
It is certainly not so that the EU authorities concl uded that injury existed "after having found that all 
factors showed a positive trend over the period concer ned", as China wants the Panel to believe.  Nor, 
of course is it factually correct to argue, as does Chin a in its Closing Oral Statement, that the injury 
determination was based "solely on a loss of poten tial sales".  The EU authorities made an objective 
determination of the facts in respect of all of these important factors, and provided a reasonable and reasoned analysis of how these facts support a determination of injury to the domestic industry.  
China's argument in respect of market displacement is also simply factually incorrect since the EU 
authorities did not make a finding of market displaceme nt, but related its injury finding to fasteners as 
a whole.    37. In view of the foregoing, the European Union requests the Panel to reject China's claim that 
Council Regulation No 91/2009 violates Articles 3.1 and 3.4 of the Anti-Dumping Agreement .   
 
XI. CLAIM 9:  CAUSATION AND NON-ATTRIBUTION ANALYSIS ARTICLES 3.1 
AND 3.5 OF THE ANTI-DUMPING AGREEMENT ) 
 
38. China claims that the EU's causation and non-a ttribution analysis violated Articles 3.1 and 3.5 
of the Anti-Dumping Agreement .  For the reasons explained in the first written submission, China's 
claim is without merit.  Once again, in the oral st atement China completely failed to address let alone 
rebut any of the EU's arguments in respect of  the causation and non-attribution analysis.   
 39. It is recalled that China's causation-related argument unduly limits the injury to a loss of 
market share and is contradicted by the facts on th e record.  China's allegati on that the authority did 
not adequately distinguish the effects of other fact ors such as the increase in raw material prices and 
the export performance of the EU industry is equally uns ubstantiated.  It is cl ear from the record that 
export performance was not a factor of injury and that  the authority examined the role of the increase 
in raw material prices but found that there did not exist a similar direct link between the increase in raw material prices and the loss of market share as was found to exist in respect of the dumped 
imports.  China's claims under Articles 3.1 and 3.5 of the Anti-Dumping Agreement relating to the 
authority's non-attribution analysis  are thus to be rejected.   
 
XII. CLAIM 10:  CHINA'S PROCEDURAL CLAIMS UNDER ARTICLES 6 AND 12 OF 
THE ANTI-DUMPING AGREEMENT 
 40. Rather than clarifying its position on its pr ocedural claims under Articles 6 and 123 of the 
Anti-Dumping Agreement , China preferred to add to the confusio n in its first oral statement.  Not a 
single serious argument was advanced on the procedur al claims, no evidence was provided.  Instead, a 
new 14
th claim seemed to be in the making when Ch ina asserted that "no information was given on 
how price undercutting was calculated".  However, it is wholly unclear on what basis this claim is 
made.  In these circumstances the Eu ropean Union is not in a position to defend itself in the face of 
speculation and mere assertions.  It is simply  not acceptable to accuse the European Union of 
"obscure reasons" when China continuously and rep eatedly fails to respect the most basic rules of 
dispute settlement procedures.  The "matter" before the Panel is not a continuously moving target.  It 
is fixed in the Panel request in which the complainant has to present the problem clearly .   WT/DS397/R 
Page E-20  
 
 XIII. CONCLUSION 
 
41. In view of the foregoing, the European Union re quests the Panel to reject all of China's claims 
and arguments, finding instead that, with respect  to each of them, the European Union acted 
consistently with all its  obligations under the Anti-Dumping Agreement , the GATT 1994  and the 
WTO Agreement .   
   
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