WT/DS350/R 
 Page A-1 
 
 
  ANNEX A 
 
 
FIRST WRITTEN SUBMISSIONS BY  
THE PARTIES 
 
 
Contents Page 
Annex A-1 First Written Submission of the European Communities A-2 
Annex A-2 First Written Submission of the United States A-70 
Annex A-3 Response to the United States' Request for Preliminary Rulings by 
the European Communities A-116 
 WT/DS350/R 
Page A-2  
 
  ANNEX A-1 
 
FIRST WRITTEN SUBMISSION OF THE  
EUROPEAN COMMUNITIES 
 
 
TABLE OF CONTENTS 
 
   Page
 
 
I. INTRODUCTION ................................................................................................................... .7 
II. FACTS .......................................................................................................................... .............8  
A. ORIGINAL INVESTIGATIONS ........................................................................................................8  
1. Imposition of anti-dumping duties ..........................................................................................8  
2. Method of comparing normal value and export price...........................................................8  
3. Model Zeroing .................................................................................................................. .........9  
B. ADMINISTRATIVE REVIEWS ......................................................................................................10  
1. Calculation of Exporter-Specific Du mping Margins and Importer-Specific 
Assessment Rates ............................................................................................................... .....11  
2. Method of comparing normal value and export price.........................................................12  
3. Simple zeroing ................................................................................................................. ........12  
C. SUNSET REVIEWS ......................................................................................................................13  
D. MEASURES AT ISSUE .................................................................................................................13  
1. Continued application of anti-dumping duties which exceed the dumping margin 
which would result from the correct application of the Anti-Dumping Agreement ...........14  
2. The zeroing methodology as applied in 52 anti-dumping proceedings, including 
original investigations, administrative review and sunset review proceedings .................15  
III. CLAIMS AND ARGUMENTS..............................................................................................15  
A. ZEROING :  A METHODOLOGY "AS SUCH " AND "AS APPLIED " PROHIBITED BY WTO  
RULES ............................................................................................................................... .........16  
1. Model Zeroing in Original Investigations.............................................................................16  
2. Simple Zeroing in Admi nistrative Reviews ..........................................................................17  
3. Zeroing in Sunset Reviews .....................................................................................................1 8 
4. Conclusions.................................................................................................................... ..........19  
B. ROLE OF THE PRECEDENT :  VALUE OF THE APPELLATE BODY REPORTS .................................19  
1. Introduction................................................................................................................... ..........20  
2. Reliance on Previous Case-Law in National and International Legal Systems.................21  
(a) Principle of Consistency and Pred ictability of Jurisprudence...................................................21  
(b) Are decisions of higher courts  binding on lower courts?..........................................................22  
3. The WTO dispute settlement system.....................................................................................24   WT/DS350/R 
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  (a) Purpose of the WTO dispute settlement system:  security and predictability...........................24  
(b) The Appellate Body in the WT O dispute settlement system ....................................................24  
4. Precedential value of case la w of the Appellate Body..........................................................24  
5. Precedential value of Appellate  Body reports on zeroing ...................................................26  
6. Conclusions.................................................................................................................... ..........27  
C. CONTINUED APPLICATION IN 18 ANTI -DUMPING MEASURES OF ANTI -DUMPING DUTIES 
AT A LEVEL IN EXCESS OF THE DUMPING MARGIN WHICH WOULD RESULT FROM THE 
CORRECT APPLICATION OF THE ANTI-DUMPING AGREEMENT .................................................28  
1. The Measures at Issue .......................................................................................................... ..28 
2. Violation of Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-Dumping Agreement 
and Articles VI:1 and VI :2 of the GATT 1994.....................................................................31  
3. Violation of Article XVI:4 of the Agreement Establishing the WTO ................................31  
4. Conclusions.................................................................................................................... ..........33  
D. THE ZEROING METHODOLOGY AS APPLIED IN 52 ANTI -DUMPING PROCEEDINGS , 
INCLUDING ORIGINAL  INVESTIGATIONS , ADMINISTRATIVE REVIEW AND SUNSET 
REVIEW PROCEEDINGS ..............................................................................................................33  
1. Original Investigations ........................................................................................................ ...33 
1.1 Purified Carboxymethylcellulose – Netherlands (A-421-811).............................................33  
(a) The Measure at issue........................................................................................................... ......33  
(b) Violation of Article 2.4.2 of the Anti-Dumping Agreement.....................................................35  
(i) "Dumping" and "margins of dumping" are de termined with respect to a product as a 
whole.......................................................................................................................... ...............35  
(ii) The United States failed to establish the ma rgin of dumping with respect to the 
product concerned as a whole ..................................................................................................3 7 
(c) Violation of Article 2.4 of the Anti-Dumping Agreement........................................................38  
(i) "Fair comparison":  an independe nt and overarching obligation ...........................................38  
(ii) "Fair comparison":  a general obligation ................................................................................39  
(iii) Unfairness of the model zeroing comparison method used by the United States .....................39  
(iv) Existing case-law confirms United States model zeroing unfair ..............................................40  
(v) The United States failed to ca rry out a fair comparison...........................................................42  
(d) Conclusions.................................................................................................................... ...........42  
1.2 Other Measu res at Issue........................................................................................................ .42 
1.3 Conclusions.................................................................................................................... ..........42  
2. Administrative Reviews......................................................................................................... .42 
2.1 Ball Bearings from Italy (A-475-801)....................................................................................43  
(a) The measure at issue ........................................................................................................... ......43  
(b) Violation of Articles 2.1, 2.4, 2.4.2 and 9.3 of the Anti-Dumping Agreement ........................44  
(i) The duty must not exceed the margin of dumpi ng as determined with respect to the 
product as a whole............................................................................................................. .......45  WT/DS350/R 
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  (ii)
 The duty must not exceed the dumping margin established in accordance with the fair 
comparison requirement under Article 2.4 of the Anti-Dumping Agreement...........................46  
(iii) Violation of Article 2.4.2 of the Anti-Dumping Agreement.......................................................49  
(1) Interpretation of the term "the existence of margins of dumping during the 
investigatio n phase"........................................................................................................... ...................... 50  
(2) Context of Article 2.4.2 of the Anti-Dumping Agreement.......................................................... 50  
(3) Administrative reviews must comply with the requirements of Article 2.4.2 of the 
Anti-Dumping Agreement......................................................................................................... .............. 51  
(iv) Conclusions.................................................................................................................... ...........52  
(c) Violation of Article 11.2 of the Anti-Dumping Agreement......................................................52  
(d) Conclusions.................................................................................................................... ...........54  
2.2 Other Measu res at Issue........................................................................................................ .54 
2.3 Conclusions.................................................................................................................... ..........54  
3. Sunset Reviews ................................................................................................................. .......54  
3.1 Stainless Steel Sheet & Strip in Coils – Italy (A-475-824) ...................................................55  
(a) The Measure at issue........................................................................................................... ......55  
(b) Violation of Articles 2.1, 2.4 and 2.4.2 of the Anti-Dumping Agreement ...............................56  
(i) Dumping margins used in s unset reviews must be determined with respect to a 
product as a whole............................................................................................................. .......56  
(ii) Dumping margins used in s unset reviews must conform to the disciplines of Article 
2.4 of the Anti-Dumping Agreement .........................................................................................57  
(c) Violation of Articles 11.1 and 11.3 of the Anti-Dumping Agreement .....................................57  
(d) Conclusions.................................................................................................................... ...........58  
3.2 Other Measu res at Issue........................................................................................................ .59 
3.3 Conclusions.................................................................................................................... ..........59  
IV. FINDINGS AND RECOMMENDATION REQUESTED ..................................................59  
 
  WT/DS350/R 
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  TABLE OF CASES 
 
 
Short Title Full Case Title and Citation 
EC – Bed Linen  Panel Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from India , WT/DS141/R, 
adopted 12 March 2001, as modified by the Appellate Body Report, 
WT/DS141/AB/R 
EC – Bed Linen  Appellate Body Report, European Communities – Anti-Dumping 
Duties on Imports of Cotton-Type Bed Linen from India , 
WT/DS141/AB/R, adopted 12 March 2001, DSR 2001:V, 2291 
EC – Sardines Appellate Body Report, European Communities – Trade Description 
of Sardines , WT/DS231/AB/R, adopted 23 October 2002 
EC – Tube and Pipe Fittings European Communities – Anti-Dumping Duties on Malleable Cast 
Iron Tube or Pipe Fittings from Brazil , WT/DS219/R, adopted 
18 August 2003, as modified by Appellate Body Report, WT/DS219/AB/R, DSR 2003:VII, 2701 
Japan – Alcoholic Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, and WT/DS11/AB/R 
(4 October 1996), adopted 1 November 1996 
US – OCTG Sunset Reviews Appellate Body Report, United States – Sunset Reviews of Anti-
Dumping Measures on Oil Country Tubular Goods from Argentina , 
WT/DS268/AB/R (29 November 2004), adopted 
17 December 2004 
US – 1916 Act (EC)  Panel Report, United States – Anti-Dumping Act of 1916 – 
Complaint by the European Communities , WT/DS136/R and Corr.1, 
adopted 26 September 2000, as upheld by the Appellate Body 
Report, WT/DS136/AB/R, WT/D S162/AB/R, DSR 2000:X, 4593 
US – 1916 Act (Japan)  Panel Report, United States – Anti-Dumping Act of 1916 – 
Complaint by Japan , WT/DS162/R and Add.1, adopted 
26 September 2000, as upheld by  the Appellate Body Report, 
WT/DS136/AB/R, WT/DS162/ AB/R, DSR 2000:X, 4831 
US – Corrosion-Resistant 
Steel Sunset Review  Appellate Body Report, United States – Sunset Review of Anti-
Dumping Duties on Corrosion-Resistant Carbon Steel Flat 
Products from Japan , WT/DS244/AB/R, adopted on 
9 January 2004 
US – Offset Act (Byrd Amendment) Panel Report, United States – Continued Dumping and Subsidy 
Offset Act of 2000, WT/DS217/ AB/R, WT/DS234/AB/R, adopted 
27 January 2003 
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on 
Certain Hot-Rolled St eel Products from Japan , WT/DS184/AB/R, 
adopted 23 August 2001 
US – Section 301 Trade Act  Panel Report, United States – Sections 301-310 of the Trade Act of 
1974 , WT/DS152/R (22 December 1999), adopted 27 January 2000 WT/DS350/R 
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  Short Title Full Case Title and Citation 
US – Shrimp (Article 21.5 – 
Malaysia)  Appellate Body Report, United States – Import Prohibition of 
Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of 
the DSU by Malaysia , WT/DS58/AB/RW, (22 October 2001) 
adopted 21 November 2001 
US – Softwood Lumber V  United States – Final Dumping Determination on Softwood Lumber 
from Canada , WT/DS264/R, adopted 31 August 2004, as modified 
by Appellate Body Report, WT/DS264/AB/R, DSR 2004:V, 1937 
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping 
Determination on Softwood Lumber from Canada , 
WT/DS264/AB/R, 11 August 200 4 adopted 31 August 2004, 
DSR 2004:V, 1875 
US – Lumber V (Article 21.5 – Canada)  Appellate Body Report, United States – Final Dumping 
Determination on Softwood Lumb er from Canada – Recourse to 
Article 21.5 of the DSU by Canada , WT/DS264/AB/RW, adopted 
1 September 2006 
US – Shrimp (Ecuador) Panel Report, United States – Anti-Dumping Measures on Shrimp 
from Ecuador , WT/DS335/R, circulated to WTO Members 
30 January 2007, adopted on 20 February 2007 
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ("Zeroing") , 
WT/DS294/AB/R and Corr.1, adopted  9 May 2006  
US – Zeroing (EC) Panel Report, United States – Laws, Regulations and Methodology 
for Calculating Dumping Margins ("Zeroing") , WT/DS294/R, 
adopted 9 May 2006, modified by Appellate Body Report, WT/DS294/AB/R 
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to 
Zeroing and Sunset Reviews , WT/DS322/AB/R, circulated to WTO 
Members 9 January 2007, adopted 23 January 2007 
US – Zeroing (Japan)  Panel Report, United States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/R, circulated to WTO Members 
20 September  2006, adopted 23 January 2007, as modified by 
Appellate Body Report, WT/DS322/AB/R 
  WT/DS350/R 
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  I. INTRODUCTION 
1. The European Communities requests this Pane l to rule on an issue which has been found 
repeatedly inconsistent with WTO rules in previous  cases and, in respect of which, the United States 
has failed to comply with its obligations.  Indeed, in  recent years, the United States has been subject to 
intense WTO dispute settlement proceedings cont esting the use of zeroing when calculating the 
margin of dumping for products in anti-dumping pr oceedings.  In all cases, the Appellate Body has 
clearly interpreted the relevant provisions of the WTO Agreements finding that zeroing as such and as applied by the United States was inconsistent with  WTO rules, in particular with the General 
Agreement on Tariffs and Trade of 1994 (GATT 1994) and the Agreement on Implementation of 
Article VI of the General Agreem ent on Tariffs and Trade 1994 (the Anti-Dumping Agreement ).   
 
2. In view of this consistent interpretation of the relevant pr ovisions of the WTO Agreements, 
the European Communities has decide d not to ask this Panel to rule again on the WTO inconsistency 
of the United States' zeroing methodology in original investigations and in re view investigations "as 
such".  The "as such" WTO inconsistency of  the methodology has already been successfully 
established in US – Zeroing (EC)  and in US – Zeroing (Japan) .  Pursuant to Article 17.14 of the 
Dispute Settlement Understanding, the United Stat es must be considered to have unconditionally 
accepted the Appellate Body's findings on "as such" zer oing.  Since the "as such" practice applies to 
imports from all sources, the European Communities considers that its illegality vis-à-vis  the 
European Communities (and all other WTO Memb ers) is established.  Consequently, the 
European Communities sees no purpose in having the same legal discussion a bout the same facts, 
given that the Dispute Settlement Body has already settled this matter.   
 3. The United States' violation of its obligations  under the mentioned agreements has resulted in 
an excessive imposition and collection of anti-du mping duties as well as their unduly extension 
pursuant to sunset reviews in the 18 measures mentioned in the Annex to the Panel request.
1   
 
4. The European Communities regrets to have b een compelled to bring this dispute settlement 
proceeding before the WTO.  In light of the multip le panel and Appellate Body decisions that have 
already considered this issue and the numerous ne w dispute settlement proceedings that are still 
pending on the same issue, the European Comm unities would have expected compliance from the 
United States, i.e., by eliminating the use of zeroing in all types of anti-dumping proceedings.  Since 
this is not the case, the Europ ean Communities will outline in its First Written Submission the claims 
against the continued application of zeroing in the cases at issue.  As the European Communities will 
explain below, the United States maintains anti-dum ping duties at specific levels on the basis of a 
number of different criteria.  First, pursuant to an original investigation, th e United States establishes 
that dumping has occurred and that, therefore, anti-dum ping duties can be imposed in the form of cash 
deposits required at the time of importation of the products.  Second, pursuant to administrative 
review investigations, the United States adjusts the deposit rate and determines the amount of duties 
to be paid for any individual period.   Third, pursuant to sunset review  investigations, the United States 
looks into the likelihood of continuation or recurren ce of dumping and injury in order to determine 
whether the duties should be revoked.  The Europ ean Communities, thus, challenges the measure in 
the form of the continued imposition of anti-dumping duties.   
 
5. Additionally, the European Communities cont ests the individual results of the different 
investigations carried out by the United States w ith respect to the 18 measures mentioned in the 
Annex to the Panel request, namely in 4 original proceedings, 37 administrative review proceedings 
and 11 sunset review proceedings.   
 
                                                      
1 Exhibit EC-1 (Request for the Establishment of the Panel, WT/DS350/6).   WT/DS350/R 
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  II. FACTS 
A. O
RIGINAL INVESTIGATIONS  
1. Imposition of anti-dumping duties 
6. The imposition of anti-dumping duties in the Un ited States in original investigations can be 
broadly described as follows.  In order to determ ine whether the imposition of anti-dumping measures 
on known exporters of a product under investigation ma y be justified, the United States examines the 
existence and degree of dumping during a given inves tigation period.  This de termination is made by 
the United States Department of Commerce (US DOC) and is published in a Notice of Final 
Determination of Sales at Less Than Fair Value.  The Notice of Final Determination of Sales at Less 
Than Fair Value sets out USDOC's assessment of the existence and degree of dumping.  Following a 
Final Determination of Sales at Less Than Fair  Value, USDOC generally orders the deposit of 
estimated anti-dumping duties.2  The United States International Trade Commission (USITC) then 
determines whether the relevant United States industr y was injured by reason of the dumped imports.   
 7. When USDOC finds dumping and USITC finds that such dumping caused injury to the 
domestic industry, USDOC issues a Notice of Antidumping Duty Order imposing anti-dumping 
duties.
3  That order directs customs to assess an anti-dumping duty equal to the amount by which the 
normal value of the merchandise exceeds the export price, once the administering authority receives 
satisfactory information upon which the assessment may be based.4  The order also requires the 
deposit of estimated anti-dumping duties pending liquidation of future entries.5  Entries of 
merchandise, the liquidation of which has been su spended, are subject to the imposition of anti-
dumping duties under Section 731 of the Tariff Act.6   
 8. Thus, following the publication of an Anti- Dumping Order, duties are imposed and the 
amount of estimated anti-dumping duties must be depos ited at the time of importation of the products 
covered by the order.  However, the final assessment ( i.e., the final collection of the duties) does not 
take place immediately.   
 
2. Method of comparing normal value and export price 
9. In an original investigation, when comp aring normal value and export price, USDOC in 
general uses a weighted-average to weighted-ave rage or a transaction-to-transaction comparison 
method
7;  in most cases, USDOC has app lied the average-to-average method.8  The transaction-to-
transaction method is only used in unusual situati ons, such as when there are very few sales and the 
merchandise sold in each market is identi cal or very similar or is custom-made.9  Exceptionally, the 
investigating authority may compare a weighted -average normal value with individual export 
transactions, if there is a pattern of export prices that differ significantly among purchasers, regions or 
periods of time, and the administering authority ex plains why such differences cannot be taken into 
                                                      
2 As last amended by the Uruguay Round Agreements Act (the "URAA") (the "Tariff Act"), 
Section 735(c), Exhibit EC-2 (Tariff Act – Title VII, particularly Sections 731 to 783).   
3 Tariff Act, Section 735(c)(2).   
4 Tariff Act, Section 736(a)(1).   
5 Tariff Act, Section 736(a)(3).   
6 Tariff Act, Section 736(b)(1).   
7 Tariff Act, Section 777A(d)(1)( A);  see also Regulations on Anti-dumping and Countervailing Duty 
Proceedings adopted by USDOC (the "Regulations"), Sections 351.414 (b)(1) and (2), Exhibit EC-3 
(Regulations).   
8 Regulations, Section 351.414(c).   
9 Regulations, Section 351.414(c).    WT/DS350/R 
 Page A-9 
 
 
  account using a symmetrical method (a situation referred to in the Regulations as "targeted 
dumping").10   
 
3. Model Zeroing 
10. When calculating the magnitude of any margin of dumping in order to determine whether the 
imposition of anti-dumping duties in respect of imports from known expor ters of a product under 
consideration may be justified, and if so wh at the appropriate amount of duty should be, the 
United States used a method commonly referred to as "model zeroing".  The investigating authority, 
as well as determining the overall product scope of the proceeding11, identifies those sales of sub-
products or models in the United States consider ed comparable and incl udes such sales in an 
averaging group.12  An averaging group consists of merchandi se that is identical or virtually identical 
in all physical characteristics.13  Each category of model or sub-product within the subject 
merchandise is assigned a control number (CONNUM).14  A weighted-average-to-weighted-average 
comparison between normal value and export pr ice is made within each averaging group.15  T h e  
amount by which normal value exceeds export price is considered by the United States to be a 
"dumping margin"16 or dumped amount (referred to by the Unite d States as the Potential Uncollectible 
Dumping Duties, "PUDD").17  If export price exceeds normal value (the margin is negative), the 
"dumping margin" or PUDD for that averaging group is considered to be zero.    11. The overall margin of dumping for the product is obtained by aggregating the multiple model-
based comparisons and expressing the result as a percentage.  USDOC calculates both the numerator 
and denominator for the fraction from which the overall percentage is derived.  The numerator is the 
total amount of dumping by model and the denominator  is the total value of all "comparable" export 
transactions.  In adding up the comparison results  by model to calculate the numerator under the 
model zeroing procedures, USDOC included solely th e results for models with positive differences.  
All comparisons with negative differences are disregar ded in the calculation of the numerator.  Thus, 
for models with negative results , USDOC ignores the results of th e comparison of normal value and 
export price.  As a result, the total amount of dumpi ng in the numerator is inflated by an amount equal 
to the excluded negative results.    12. The Standard Anti-Dumping Margin Program used by USDOC when carrying out the comparison between normal value and export price per model in original investigations contains the 
following lines of computer code, or code of s ubstantially the same structure or effect:   
 
PROC MEANS NOPRINT DATA = MARGIN;   WHERE EMARGIN GT 0 ;   
VAR EMARGIN & MUSQTY USVALUE;   
OUTPUT OUT = ALLPUDD (DROP=_FREQ_ _TYPE_) 
SUM = TOTPUDD MARGQTY MARGVAL;   
 13. A detailed explanation of each element of th ese standard procedures is set out in Exhibit EC-
5.  In a nutshell, the Standard Zeroing Proce dures separate those sales with positive margins (GT 0) 
                                                     
 
10 Tariff Act, Section 777A(d)(1)(B) ;  Regulations Section 351.414(f).   See generally the 1997 edition 
of the Import Administration Anti-dumping Manual (the "Manual"), Exhibits EC-4.intro;  EC-4.contents;  and 
EC-4.1 to EC-4.20, in particular, Chapter 6, p. 7, second paragraph;  Chapter 7, pp. 28 and 29.   
11 Tariff Act, Section 771(25).   
12 Regulations, Section 351.414(d)(1).   
13 Regulations, Section 351.414(d)(2).   
14 Manual, Chapter 4, pp. 8 and 9;  Chapter 5, p. 9, second paragraph;  Chapter 9, pp. 23 and 27.   
15 Regulations, Section 351.414(d)(1);  Manual, Chapter 7, pp. 27 and 28;  Chapter 9, pp. 23 and 27.   
16 The European Communities considers that this concept does not correspond to the term "margin of 
dumping" as used in, for example, Articles 2.4.2 and 9.3 of the Anti-Dumping Agreement .   
17 Manual, Chapter 6, p. 9.   WT/DS350/R 
Page A-10  
 
  from sales with negative margins and subtotal the dumping amount ("TOTPUDD") for sales with 
positive margins only.  The sum is kept in the dat aset called "ALLPUDD", which is used to calculate 
the final margin of dumping.    14. The European Communities notes that, on 26  December 2006, the United States announced 
that it had partly implemented the DSB rulings and recommendations in US – Zeroing (EC)  by 
changing the above described methodology, so as to abandon the use of zeroing.
18  The measures at 
issue in this dispute, however, have not been corr ected, and remain tainted by the use of zeroing.   
 B. A
DMINISTRATIVE REVIEWS  
15. The United States has a retrospective assessme nt system under which final liability for anti-
dumping duties is determined after merchandise is imported.19  Under this system, an anti-dumping 
duty liability arises at the time of entry, but duti es are not actually finally assessed at that time.  
Rather, the United States collects se curity in the form of a cash deposit at the time of entry, and 
determines the final amount of duties due on the entry at a later date, based on dumping margins 
during the period of time contemporaneous with the imports, as opposed to the original investigation 
period.    16. Specifically, each year during the anniversary month of the publication of an Anti-dumping Duty Order, a domestic interested party, a foreign government of the exporting/manufacturing country, an exporter or producer covered by an orde r, or an importer of the subject merchandise may 
request an "administrative review"
20 of the amount of duty.21  Each month USDOC publishes in the 
Federal Register a "Notice of Opportunity to Requ est Administrative Review", informing interested 
parties that they may request an "administrativ e review" of the amount of duty, and listing those 
orders with an anniversary month corresponding to  the month of publication of the "Opportunity 
Notice".22  Following a request, USDOC promptly publis hes in the Federal Register a notice of 
initiation, and sends to appropriate interested par ties or other persons questionnaires requesting factual 
information, normally no later than 30 days after th e date of publication of the notice of initiation.  
USDOC then conducts an investigation. Questionna ires request information on export sales, domestic 
sales and costs of production during the period of review.23  USDOC determines the normal value and 
export price of the subject merchandise.24  USDOC conducts, if appropria te, verifications;  issues and 
publishes preliminary and final results in the Federa l Register;  and promptly instructs customs to 
assess anti-dumping duties.  In general, preliminary results must be issued within 245 days after the 
last day of the anniversary month in which the re quest was made, and final results within a further 
120 days, unless these periods are extended.25  In case of judicial review, an injunction against 
                                                      
18 US Notice on Zeroing in Original Investigations (Exhibit EC-6).   
19 Regulations, Sections 351.212 and 351.213.   
20 A "periodic review" is often refe rred to, by reference to the more general title of Section 751 of the 
Tariff Act, as an administrative review under Section 751(a)(1) of the Tariff Act, which reference is sometimes 
shortened to simply "administrative review", in accordance with the defi nition in Section 351.102(b) of the 
Regulations.  Under the Tariff Act, however, the term "administrative review" encompasses all the types of reviews under Section 751 of the Tariff Act (including, for example, so-called new shipper reviews, changed 
circumstances reviews and five year reviews).  In th is submission, the European Communities will refer to 
"administrative review". 
21 Regulations, Section 351.213(b);  Article 9.3.1 of the Anti-Dumping Agreement :  "(…) a request for 
a final assessment of the amount of the anti-dumping duty has been made (…)".   
22 Manual, Chapter 18, p. 3.   
23 Manual, Chapter 18, p. 4. Chapter 4.   
24 Tariff Act, Section 751(a)(2)(A)(i).   
25 Regulations, Section 351.213( h);  Article 9.3.1 of the Anti-Dumping Agreement :  "(…) the 
determination (…) shall take place (…) no rmally within 12 months, and in no  case more than 18 months, after 
the date on which a request for a final assessment of the amount of the anti-dumping duty has been made".    WT/DS350/R 
 Page A-11 
 
 
  liquidation may be requested, in which case suspension of liquidation is continued.26  Within USDOC 
the same team follows the same case from the orig inal investigation through the "administrative 
review" process, in order to ensure cons istency in the handling of the same case.27   
 17. The period of "review" will normally be 12 m onths.  The first "administrative review" period 
will generally be longer, also extending back to the date on which provisional measures were first 
applied or liquidation was first suspended (that is, the withholding of appraisement within the 
meaning of Article 7 of the Anti- Dumping Agreement ).  The results of the first "administrative 
review" are, thus, the collection of the actual am ount of duties and the establishment of a new deposit 
rate.
28   
 
18. Thus, if there is a "administrative review " pursuant to Section 751(a) of the Tariff Act, 
USDOC establishes final liability for the paymen t of anti-dumping duties in relation to the 
investigated period, which entails determining the ex tent to which there have been sales at less than 
fair value (that is, a margin of dumping) during the period of review by the investigated firm.  By 
comparison, in particular, with the original investig ation, the period of time from which the data used 
to calculate the (up-dated) margin of dumping ar e taken, and the period of  time during which export 
transactions to be subject to the duty take place, w ill generally coincide.  This temporal retrospective 
match for the purposes of final liability is the esse ntial point and "basic purpose" of United States 
"administrative reviews".29   
 
19. While, generally, the amount of duties to be asses sed is determined in a "review" of the order 
covering a discrete period of time, if such a review is not requested, duties are assessed at the rate established in the completed "review" covering the mo st recent prior period, or, if no "review" has 
been completed, the deposit rate appli cable at the time merchandise was entered.
30  Thus, if there is no 
"administrative review" for a particular firm, entries from that firm are assessed at the rate applicable 
to the time of entry.31   
 
1. Calculation of Exporter-Specific Dumpin g Margins and Importer-Specific Assessment 
Rates 
20. In administrative review investigations, th e United States always calculates two types of 
margin:  an overall "weighted average dumping margin" for each exporter and importer-specific 
assessment rates.   
 21. The overall weighted average dumping margin which is calculated using zeroing becomes the duty deposit rate that the United States applies to  future entries of the product for the purpose of 
collecting estimated duties, until completion of the next review.   
 
22. The importer-specific assessment rates are used  by the United States to collect definitive anti-
dumping duties for the review period.  The amount of anti-dumping duties owed by each individual importer is calculated on the basis of comparisons between monthly exporter-specific "normal values" 
established on a weighted average basis and prices  of individual export transactions.  The total 
amount of dumping associated with ea ch importer is then aggregated a nd expressed as a percentage of 
                                                     
 
26 Manual, Chapter 18, pp. 6 and 7;  Article 9.3.1 of the Anti-Dumping Agreement , footnote 20:  "It is 
understood that the observance of the time-limits mentioned in this subparagraph and in subparagraph 3.2 may not be possible where the product in question is subject to judici al proceedings".   
27 Manual, Introduction, p. 9.   
28 Regulations, Section 351.213(e).   
29 Manual, Chapter 18, p. 3.   
30 Regulations, Sections 351.212 and 351.213;  Manual, Introduction, p. 7.   
31 Regulations, Section 351.212(a).   WT/DS350/R 
Page A-12  
 
  that importer's United States imports (the assessment ra te).  This assessment rate is then applied to 
imports during the period reviewed.
32   
 23. The final anti-dumping duty liability for past en tries and the new cash-deposit rate for future 
entries is calculated by USDOC and published in a Notice of Final Results of Anti-dumping Duty 
Administrative Reviews.   
 
2. Method of comparing normal value and export price 
24. In administrative review investigations, when  comparing normal value and export price, the 
investigating authority normally uses the average-to-transaction method.
33  When normal value is 
based on the weighted average of sales of the foreig n like product, the averaging of such prices will be 
limited to sales incurred during the contemporaneous month.34   
 
3. Simple zeroing 
25. In administrative review investigations, wh en calculating the magnitude of any margin of 
dumping, the United States uses a method commonly known as "simple zeroing".  When comparing a 
weighted-average normal value with an individua l export transaction, the amount by which normal 
value exceeds export price is considered to be the "dumping margin"35 or amount for that export 
transaction.36  If export price exceeds normal value ( i.e., when the margin is negative), the "dumping 
margin" or amount for that export transaction is considered to be zero.    
26. The overall margin of dumping is calculated by  combining the results of each comparison.  
The total dumping amount (excluding the negative amount s or treating them as zero) is expressed as a 
percentage of the total export price (including all export transactions).  USDOC sums the price 
differences exclusively for those comparisons fo r which there was a positive dumping margin.  All 
comparisons with negative differences are disregar ded from the calculation of the numerator of the 
overall margin fraction.  Thus, where there is a ne gative difference, USDOC ignores the results of the 
comparisons of export transactions and normal value.  As a result, the sum total of dumping is inflated 
by an amount equal to the excluded negative differences.    27. The Standard Anti-Dumping Margin Program employed by USDOC in administrative reviews contains the following lines of computer code, or code of substantially the same structure or 
effect:   
 
PROC MEANS NOPRINT DATA = MARGIN; BY & USCLASS; WHERE EMARGIN GT 0 ; 
VAR WTDMRG WTDQTY WTDVAL; 
OUTPUT OUT = ALLPUD (DROP = _FREQ_ _TYPE_) SUM = TOTPUDD MARGQTY MARGVAL 
 28. A detailed explanation of each element of  these standard procedures is provided in 
Exhibit EC-5.  In short, the Standard Zeroing Procedures separate those transactions with positive 
margins (GT 0) from transactions with negativ e margins and subtotal the dumping amounts 
                                                     
 
32 Regulations, Sections 351.212 and 351.213;  Manual, Introduction, p. 7.   
33 Regulations, Section 351.414 (c)(2);  Manual, Chapter 6, p. 7.   
34 Tariff Act, Section 777A(d)(2);  Regulations, S ection 351.414(e);  Manual, Chapter 6, p. 7.   
35 The European Communities considers that this concept does not correspond to the term "margin of 
dumping" as used in, for example, Articles 2.4.2 and 9.3 of the Anti-Dumping Agreement .   
36 Tariff Act, Section 751(a)(2 )(A);  Section 777A(d)(2).    WT/DS350/R 
 Page A-13 
 
 
  ("TOTPUDD") for transactions with positive margins only.  The sum is kept in the dataset called 
"ALLPUDD", which is used to calculate the final dumping margin.    29. The importer is liable to pay the final anti- dumping duty, as it results from the administrative 
review proceeding.  USDOC sends appraisement inst ructions to customs, determining an "assessment 
rate" and thus the final anti-dumping duty to be paid.
37   
 C. S
UNSET REVIEWS  
30. In sunset review investigations, five year s after publication of an anti-dumping duty order, 
USDOC and USITC, respectively, review whether revocation of the order " would be likely to lead to 
continuation or recurrence of dump ing (…) and of material injury ".  USDOC may determine that 
dumping is likely to continue or recur if th e anti-dumping order were revoked, notably because 
dumping has continued at levels above de minimis  after the issuance of the order.  To find that 
dumping has continued after the issuance of the order, USDOC relies on dumping margins calculated 
in the original investigation and/or in administ rative review proceedings using zeroing.  Although 
sunset reviews do not change the deposit rate for the amount of anti-dumping duty (this continues to 
be determined by the original order or most rece nt administrative review), USDOC is required to 
determine a duty rate that is "likely to prevail" in  the event of revocation of the order and also to 
report this rate to the ITC.38   
 31. In most cases, USDOC considers that the dumpi ng margin found in the original investigation 
should be considered as the rate likely to prevail in the event of revocation of the order, since this is 
the only margin that reflects the behaviour of an exporter or producer without the discipline of an order in place.  USDOC may also consider that th e dumping margin found in previous administrative 
reviews is the one which should be chosen for th e purpose of the sunset review.  In both cases, i.e., 
original investigations or admini strative reviews, dumping margins we re calculated by using model or 
simple zeroing.   
 D. M
EASURES AT ISSUE  
32. Article 6.2 of the Dispute Settlement Unders tanding requires that the Panel request identify 
the specific measures at issue and provide a brie f summary of the legal basis of the complaint 
sufficient to present the problem clearly.  In th e Panel request, the European Communities identified 
the specific measures at issue in the present dispute as follows:   
 
"The measures at issue and the legal basis of the complaint include, but are not limited to, the following:   
 
The continued application of, or the application of the specific anti-dumping duties 
resulting from the anti-dumping orders enumer ated from I to XVIII in the Annex to 
the present request as calculated or maintain ed in place pursuant to the most recent 
administrative review or, as the case may be, original proceeding or changed circumstances or sunset review proceedi ng at a level in excess of the anti-dumping 
margin which would result from the corr ect application of the Anti-Dumping 
Agreement (whether duties or cash deposit rates or other form of measure).   
 
In addition to these measures, the admini strative reviews, or, as the case may be, 
original proceedings or changed circumst ances or sunset review proceedings listed 
                                                     
 
37 Regulations, Section 351.212(b)(1).   
38 Section 752(c)(3) of the Tariff Act of 1930; Section 315.218(e)(2)(i) of USDOC's implementing 
regulation;  and Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and 
Countervailing Duty Orders, Exhibit EC-7, Sunset Policy Bulletin, at para. II.B.   WT/DS350/R 
Page A-14  
 
  in the Annex (numbered 1 to 52) with th e specific anti-dumping orders and are also 
considered by the EC to be measures subj ect to the current request for establishment 
of the panel in addition to the anti-dumping orders.   
 
This includes the determinations in re lation to all companies and includes any 
assessment instructions, whether automatic or  otherwise, issued at any time pursuant 
to any of the measures listed in the Annex.  The anti-dumping duties maintained (in whatever form) pursuant to these orders, a nd the administrative reviews, or, as the 
case may be, original proceedings and changed circumstances or sunset review proceedings listed in the Annex are inconsis tent with the following provisions […]." 
 
33. There are, thus, two sets of measures whic h the European Commun ities challenges in the 
present dispute.    34. First, the European Communities challenges the application or continued application of 
specific anti-dumping duties resulting from the 18 anti-dumping orders in the Annex to the Panel 
request as calculated or maintained in place pursuan t to the most recent administrative review or, as 
the case may be, original proceeding or changed circumstances or sunset review proceeding, since these anti-dumping duties are calculated and are ma intained in place at a level in excess of the 
dumping margin which would result from the correct application of the Anti-Dumping Agreement .   
 
35. Second, the European Communities ch allenges the application of zeroing ( i.e., either using 
the model or simple zeroing technique) as applied in 52 anti-dumping proceedings, including original 
proceedings, administrative review proceedings and s unset review proceedings listed in the Annex to 
the Panel request.    1. Continued application of anti-dumping dut ies which exceed the dumping margin which 
would result from the correct application of the Anti-Dumping Agreement  
36. The European Communities challenges in 18 specific anti-dumping measures
39 the 
application or continued application of anti-dumpi ng duties which were calculated and are maintained 
in place pursuant to the most recent investigati on at a level which exceeds the anti-dumping margin 
which would result from the correct application of the Anti-Dumping Agreement , i.e., without zeroing.   
 
37. In these 18 anti-dumping measures, USDOC has firstly determined in the original 
investigation proceedings the level of anti-dumping duties by applying model zeroing.  In some of these cases, applying simple zeroing, USDOC has reviewed the anti-dumping duties pursuant to administrative reviews and/or maintained them in place pursuant to sunset reviews.  In the latter, 
USDOC determined that dumping was likely to con tinue or recur if the anti-dumping order were 
revoked, notably because dumping has continued at levels above de minimis  after the issuance of the 
order.  To find that dumping has continued afte r the issuance of the order, USDOC relied on dumping 
                                                     
 
39 The 18 anti-dumping measures are the following:  Steel Concrete Reinforcing Bars from Latvia (US 
DOC No A-449-804);  Ball Bearings and Parts Thereof fr om Italy (US DOC No A-475-801);  Ball Bearings and 
Parts Thereof from Germany (US DOC No-A-428-801);  Ball Bearings and Parts Thereof from France (US 
DOC No A-427-801);  Stainless Steel  Bar from France (US DOC No A-4 27-820);  Stainless Steel Sheet and 
Strip in Coils from Germany (US DOC No A-428-825);  Stainless Steel Plate in Coils from Belgium (US DOC 
No A-423-808);  Ball Bearings and Parts Thereof from UK (US DOC No A-412-801);  Stainless Steel Bar from 
Germany (US DOC No A-428-830);  Certain Hot Rolled Carbon Steel Flat Products from the Netherlands (US DOC No A-421-807);  Stainless Steel Bar from Italy (US DOC No A-475-829);  Stainless Steel Sheet & 
Strip in Coils from Italy (US DOC No A-475-824);  Ce rtain Pasta from Italy (US DOC No A-475-818);  Brass 
Sheet & Strip from Germany (US DOC No A-428-602);  Purified Carbonxymethylcellulose from Sweden 
(US DOC No A-401-808);  Purified Carbonxymethylcellulose from the Netherlands (US DOC No A-421-811);  
Purified Carbonxymethylcellulose from Finland (US DOC No A-405-803);  Chlorinated Isocyanurates – Spain 
(US DOC No A-469-814).    WT/DS350/R 
 Page A-15 
 
 
  margins calculated in the original investigation and in administrative review proceedings using 
zeroing.  Regardless of whether duty rates were es tablished pursuant to an original, administrative 
review or sunset review investigation, the anti- dumping duties were calculated and are maintained in 
place at a level exceeding a dumping margin which is consistent with the Anti-Dumping Agreement , 
since they have been determined using zeroing.   
 
38. In short, in this case the European Commun ities is challenging the duty rates currently applied 
in the 18 anti-dumping measures concerned since the dumping margins were established in the 
original investigations and in their subsequent  review proceedings by applying a comparison 
methodology which has already been found "as su ch" –and "as applied" by the United States in 
particular– inconsistent with the Anti-Dumping Agreement  and the GATT 1994 by the Appellate 
Body.    39. In terms of instruments in which they are embodied, the challenged measures refer for each of the 18 anti-dumping measures concerned to the Anti- Dumping Duty Orders as continued or modified 
pursuant to the any administrative review proceedi ng or, as the case may be, original proceeding or 
changed circumstances or sunset review proceedings ( i.e., any measure adopted by the United States 
affecting the duty levels with respect to the 18 measures at issue).    
2. The zeroing methodology as applied in 52 anti-dumping proceedings, including original 
investigations, administrative review and sunset review proceedings 
40. The European Communities al so challenges the use of zeroing (either model or simple 
zeroing technique) as applied in 4 original invest igations, 37 administrative review proceedings 
and 11 sunset review proceedings.  The measures at issue cover:   
 
- With respect to original investigations
, the Final Determination and any amendments to 
the Final Determination.  The Final Determin ation refers to the Issues and Decision 
Memorandum, which in turn refers to the "Mar gin Calculations", that is, the Calculation 
Memoranda and the Final Margin Program Log a nd Outputs for all the firms investigated.  
The measures at issue also include the An ti-dumping Duty Order and any amendments 
including the assessment instructions to wh ich it likewise refers;  and the ITC injury 
determination (on which the Anti-dumping Du ty Order is in any event based).   
 
- With respect to administrative review proceedings , the Notices of Final Results of Anti-
dumping Duty Administrative Reviews, includi ng any amendments, and including all the 
Issues and Decision Memoranda to which they refer, and all the Final Margin Program 
Logs and Outputs to which they in turn refer, for all the firms investigated and each of the 
assessment instructions issued pursuant to  any of the Notices of Final Results.   
 
- With respect to sunset review proceedings , the Continuation of Anti-dumping Duty 
Orders and any amendments including an y assessment instructions;  the Final 
Determination and any amendments to the Fi nal Determination;  the Issues and Decision 
Memorandum, which in turn refers to the "Mar gin Calculations", that is the Calculation 
Memoranda and the Final Margin Program Log a nd Outputs for all the firms investigated.   
 
III. CLAIMS AND ARGUMENTS 
41. The European Communities considers that the Un ited States' repeated failure to comply with 
its obligations under the Anti-Dumping Agreement  and the GATT 1994 is particularly flagrant, given 
that the Appellate Body has expressly condemned zeroing several times.   
 42. The European Communities will address first in its submission the main findings of the 
panels and, mainly, the Appellate Body in this re gard.  It will then examine the precedential value of WT/DS350/R 
Page A-16  
 
  these reports in the WTO system and, in particular, the weight that the Panel should grant them when 
ruling in this dispute.  Third, the European Communities will show that the continued imposition of duties in the 18 anti-dumping measures concerned by the United States is contrary to Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-Dumping Agreement , Articles VI:1 and VI:2 of the GATT 1994 as 
well as Article XVI:4 of the Agreement Establ ishing the WTO (WTO Agreement), since the 
United States used zeroing when calculating the dump ing margins in the original proceedings and in 
their subsequent review proceedings.  Finally , the European Communities will show that the 
4 original investigations, 37 administrative review  proceedings and 11 sunset review proceedings 
covering the 18 anti-dumping measures concerned, are inc onsistent with Articles 2.1, 2.4, 2.4.2, 9.3, 
11.1, 11.2 and 11.3 of the Anti-Dumping Agreement  and Articles VI:1 and VI:2 of the GATT 1994, 
since the United States used model or simple zer oing when calculating the dumping margins.   
 A. Z
EROING :  A METHODOLOGY "AS SUCH " AND "AS APPLIED " PROHIBITED BY WTO  RULES  
43. Zeroing has been contested several times in  WTO dispute settlement proceedings in recent 
years.  In all cases, the DSB has adopted the panel or Appellate Body Report finding this 
methodology inconsistent with the Anti-Dumping Agreement  and the GATT 1994.  In particular, the 
interpretation of the Appellate Body as to the use of zeroing when carrying out a weighted average-to-
weighted average (W-W) comparison in original  investigations as well as in cases on weighted 
average-to-transaction (W-T) comparisons in administ rative review proceedings and in sunset review 
proceedings has remained constant, finding that they are inconsistent with the United States' international obligations pursua nt to those Agreements.   
 
44. In the following Sections, the European Co mmunities will examine th e main arguments and 
conclusions of the Appellate Body as regards the use of zeroing in the comparison methodologies applied in the original investigations and re view investigations involved in this case.   
 1. Model Zeroing in Original Investigations 
45. The use of zeroing by the United States in orig inal investigations as d escribed above has been 
found "as such" inconsistent with Article 2.4.2 of the Anti-Dumping Agreement  by the Appellate 
Body.  In US – Zeroing (EC) , the Appellate Body concluded th at "the zeroing methodology, as it 
relates to original investigations in which th e weighted-average-to-weighted average comparison 
method is used to calculate margins of dumping, is  inconsistent, as such, with Article 2.4.2 of the 
Anti-Dumping Agreement ".
40  In doing so, the Appellate Body upheld the findings of the panel, which 
also relied on the consistent inte rpretation of Article 2.4.2 of the Anti-Dumping Agreement  by the 
Appellate Body in previous cases.41   
 46. Indeed, the Appellate Body has also found the same methodology "as applied" by the 
United States inconsistent with Article 2.4.2 of the Anti-Dumping Agreement  on multiple occasions.  
In particular, in US – Lumber V , Canada challenged an anti-dumping duty order issued by the 
United States in respect of Canadian softwood lumber , relating to an original investigation in which 
the weighted-average-to-weighted average compar ison method was used to calculate margins of 
dumping.  The panel had concluded that, by not taking into account all comparable export 
transactions in its zeroing practice in the orig inal anti-dumping investigation at issue, the 
United States violated Article 2.4.2 of the Anti-Dumping Agreement .
42  On appeal, the Appellate Body 
addressed the question of "margins of dumping" in Article 2.4.2 of the Anti-Dumping Agreement .  
The Appellate Body referred to the text of Articles VI:1 and VI:2, second sentence, of the 
GATT 1994 and Articles 2.1, 9.2 and 6.10 of the Anti-Dumping Agreement  to confirm its view that 
that dumping can be found to exist only "for the pr oduct under investigation as a whole, and cannot be 
                                                      
40 Appellate Body Report, US – Zeroing (EC) , para. 222.   
41 Panel Report, US – Zeroing (EC) , paras 7.27 – 7.28.   
42 Appellate Body Report, US – Softwood Lumber V , paras 67-74.    WT/DS350/R 
 Page A-17 
 
 
  found to exist only for a type, model, or category of that product".43  In this regard, it said that the 
results of multiple comparisons at the sub-group le vel through "multiple averaging" are not "margins 
of dumping" within the meaning of Article 2.4.2 of the Anti-Dumping Agreement .  Rather, those 
results reflect only intermediate calculations made by an investigating authority in the context of 
establishing margins of dumping for the product unde r investigation.  Thus, the Appellate Body 
concluded that it is only on the basis of aggregating all these intermediate values that an investigating 
authority can establish margins of dumping for the product under investigation as a whole.44   
 47. The Appellate Body considered some additiona l arguments made by the United States in this 
respect, but rejected them all.  On the one hand,  as regard the US argument based on the historical 
background of Article 2.4.2 of the Anti-Dumping Agreement , the Appellate Body stated that "[t]he 
material to which the United States refers does not,  in our view, resolve the issue of whether the 
negotiators of the Anti-Dumping Agreement intended to prohibit zeroing", noting that the 
United States acknowledged that th e materials do not constitute " travaux préparatoire ".  In any event, 
the Appellate Body stressed that it  had concluded, based on the ordina ry meaning of Article 2.4.2 read 
in its context, that zeroing is prohibited when est ablishing the existence of margins of dumping under 
the weighted-average-to-we ighted-average methodology.
45  On the other hand, the Appellate Body 
rejected the United States' argument that, in finding that "zeroing" is prohibited under Article 2.4.2 of 
the Anti-Dumping Agreement , the panel failed to apply the standard of review set out in 
Article 17.6(ii) of the Anti-Dumping Agreement .46   
 
48. On the basis of the above reasoning, the Appe llate Body upheld the panel's finding that the 
United States acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement  in determining 
the existence of margins of dumping on the basi s of a weighted average-to-weighted average 
comparison methodology incorporating the practice of "zeroing".47   
 
49. Finally, it should be noted that both panels and the Appellate Body ha ve always found the use 
of "zeroing" when a weighted average-to-weighted  average comparison is used to calculate dumping 
margins inconsistent with Article 2.4.2 of the Anti-Dumping Agreement .48   
 50. In light of the above, it can be concluded that the use of "zeroing" when applying a weighted average-to-weighted average comparison methodology  to calculate the dumping margin in original 
investigations is, as such, contrary to Article 2.4.2 of the Anti-Dumping Agreement .  In this respect, as 
mentioned before, the European Communities notes that, on 26 December 2006, the United States 
acknowledged the inconsistenc y of the above described methodology with WTO rules.
49   
 
2. Simple Zeroing in Administrative Reviews 
51. As described above, in administrative review proceedings, when calculating the magnitude of 
any margin of dumping for the purpose of assessi ng an importer's final liability for paying anti-
dumping duties and any future exporter-specific cash  deposit rate, the United States normally uses the 
weighted average-to-transaction method50 and applies the so-called "simple zeroing" method.   
 
                                                      
43 Id., paras 92-94.   
44 Id., paras 95-98.   
45 Id., paras 107-108.   
46 Id., paras 113-116.   
47 Id., para.117.   
48 Appellate Body Report, EC – Bed Linen , para. 66;  Panel Report, EC – Pipe Fittings , para. 7.216;  
and Panel Report, US – Shrimp from Ecuador  (not appealed), paras 7.40 – 7.43.   
49 US Notice on Zeroing in Original Investigations (Exhibit EC-6).   
50 Regulations, Section 351.414 (c)(2);  Manual, Chapter 6, p. 7.   WT/DS350/R 
Page A-18  
 
  52. The use of zeroing by the United States in  administrative review proceedings as described 
above has been found "as such" inconsis tent with Articles 2.4 and 9.3 of the Anti-Dumping Agreement  
and Article VI:2 of the GATT 1994 by the Appellate Body.  In US – Zeroing (Japan)
51, the Appellate 
Body first turned to Article 9.3 of the Anti-Dumping Agreement  and Article VI:2 of the GATT 1994 
and disagreed with the panel's view, affirming ag ain that "dumping" and "margins of dumping" can 
exist only at the level of a product.52  In addition, the Appellate Body rejected the panel's 
consideration of Article 9, recalling its previous holding  in US – Zeroing (EC)53, i.e., that the margin 
of dumping acts as a ceiling  for the total amount of anti-dumping duties.54   
 53. The Appellate Body then considered issues re lated to the operation of "prospective" normal 
value systems, finding that "[u]nder any system of  duty collection, the margin of dumping established 
in accordance with Article 2 operates as a ceiling  for the amount of anti-dumping duties that could be 
collected in respect of the sales made by an exporte r".  Thus, as with the United States' retrospective 
system, "[t]o the extent that duties are paid by an im porter, it is open to that importer to claim a refund 
if such a ceiling is exceeded".   
 
54. On this basis, the Appellate Body reversed the panel's finding that the United States does not 
act inconsistently with Article 9.3 of the Anti-Dumping Agreement  and Article VI:2 of the 
GATT 1994 by maintaining zeroing procedures in administrative reviews.
55   
 55. The Appellate Body then examined the issue of zeroing in administrative reviews under the 
"fair comparison" requirement of Article 2.4 of the Anti-Dumping Agreement .  In this regard, the 
Appellate Body stated that the use of zeroing me ans that anti-dumping duti es are collected in excess 
of the margin of dumping, a methodology which does not involve a "fair comparison".
56  As a result, 
the Appellate Body reversed the panel's findings that zeroing is not, as such, inconsistent with 
Articles 2.1, 9.1, and 9.2 of the Anti-Dumping Agreement  and Article VI:1 of the GATT 1994.57   
 
56. The Appellate Body also found that the use of  zeroing "as applied" in administrative reviews, 
where the United States follows a weighted aver age-to-transaction comparison methodology, is 
inconsistent with Articles 2.1, 2.4, 9.1, and 9.3 of the Anti-Dumping Agreement  and Articles VI:1 and 
VI:2 of the GATT.58   
 3. Zeroing in Sunset Reviews 
57. The Appellate Body has had the occasion to rule  on the inconsistency of the use of zeroing in 
sunset review proceedings in measu res adopted by the United States in US – Zeroing (Japan) .  With 
regard to the specific sunset review determinations at issue, the Appellate Body recalled its previous 
reports according to which the terms "deter mine" and "review" in Article 11.3 of the Anti-Dumping 
Agreement  require a reasoned conclusion "based on" positiv e evidence and a "sufficient factual basis".  
It noted in particular that it has previously deci ded that, when investigating authorities rely on past 
dumping margins in making their likelihood determina tion in a sunset review, these margins must be 
consistent with Article 2.4 of the Anti-Dumping Agreement .
59  The Appellate Body also noted that 
USDOC relied on past margins that were calcula ted during administrative reviews on the basis of 
                                                      
51 Appellate Body Report, US – Zeroing (Japan) .   
52 Id., paras. 149-151.   
53 Appellate Body Report, United States – Zeroing (EC) , para. 130.   
54 Appellate Body Report, US – Zeroing (Japan),  paras. 152-156.   
55 Id., para. 166.   
56 Id., paras 167-169.   
57 Id., paras 170-171.   
58 Appellate Body Report, US – Zeroing (Japan) , paras 174 – 176;  Appellate Body Report, US – 
Zeroing (EC) , para. 135.   
59 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127;  and Appellate 
Body Report, US – Oil Country Tubular Goods Sunset Reviews , para. 180.    WT/DS350/R 
 Page A-19 
 
 
  "simple zeroing".  Having previously concluded that zeroing in administrative reviews is inconsistent 
with Articles 2.4 and 9.3 of the Anti-Dumping Agreement , the Appellate Body found that the 
determinations in the sunset reviews at issu e are inconsistent with Article 11.3 of the Anti-Dumping 
Agreement .   
 
58. On this basis, the Appellate Body reversed  the panel's finding that the United States acted 
consistently with Articles 2 and 11 of the Anti-Dumping Agreement  when, in the sunset reviews at 
issue in that case, it relied on margins of dumpi ng calculated in previous administrative review 
proceedings.  The Appellate Body found instead th at the United States acted inconsistently with 
Article 11.3 of the Anti-Dumping Agreement .   
 
59. Consequently, the Appellate Body has ruled that the use of zeroing in sunset reviews as applied by the United States is inconsistent  with Articles 2.4, 9.3 and 11.3 of the Anti-Dumping 
Agreement .   
 4. Conclusions 
60. From the interpretation of the relevant WTO provisions made by the Appellate Body in recent 
years, it is clear that the use of zeroing ( i.e., failure to offset the results of comparisons of normal 
value and export price to determine any margin of  dumping), in the case of original investigations 
when using a weighted average-to-weighted averag e comparison method, in the case of administrative 
review proceedings when using a weighted averag e-to-transaction comparison method or in sunset 
review proceedings, has been found contrary to WT O rules several times in WTO dispute settlement 
proceedings.    61. This consistent interpretation of the rules clearly states that "dumping" and "margins of 
dumping" can be found to exist only in relation to that product as a whole  as defined by that authority.  
They cannot be found to exist for only a type, mode l, or category of that product.  Nor, under any 
comparison methodology, can "dumping" and "margins of  dumping" be found to exist at the level of 
an individual transaction.  Thus, it is clear that, wh en an investigating authority calculates a margin of 
dumping on the basis of multiple comparisons of norma l value and export price, the results of such 
intermediate comparisons are not, in themselves, "m argins of dumping".  Rather, they are merely 
"inputs" that are to be aggregated in order to est ablish the margin of dumping for the product under 
investigation with respect to each exporter or producer.   
 B. R
OLE OF THE PRECEDENT :  VALUE OF THE APPELLATE BODY REPORTS  
62. To the extent that panels and the Appellate  Body have already analysed model and simple 
zeroing in several disputes and to the extent th at, as explained above, the Appellate Body has found 
the zeroing methodology in weighted average-to -weighted average comparisons in original 
investigations, in weighted average-to-transacti on comparisons in administrative reviews and in 
sunset reviews as being inconsistent with the Anti-Dumping Agreement  and the GATT 1994, it is 
essential to examine, for the purpose of the present di spute –which actually covers the same issues– 
the role of precedents, i.e., what is the value of previous panels and Appellate Body reports, in 
particular of previous Appellate Body reports.   
 
63. In this respect, the European Communities submits that the Panel in this case should not 
deviate from the findings of previo us Appellate Body reports clearly addressing the same matter and 
carrying out a consistent interpretation of the vari ous provisions involved.  Should the Panel wish to 
depart from previous rulings, this should be caref ully considered and based on cogent reasons.   
 WT/DS350/R 
Page A-20  
 
  1. Introduction  
64. In the WTO dispute settlement system, there is no doctrine of stare decisis , or binding judicial 
precedent, by which courts are bound by their previous decisions.  The stare decisis  doctrine which is 
traditionally recognised in common law jurisdictions is, therefore, not applied in the WTO dispute 
settlement system, and this is also generally so in all fields of public international law.
60   
 
65. This can be illustrated by the Statute of the International Court of Justice (ICJ), the highest 
judicial body of the United Nations, competent to  deal with international law disputes between 
sovereign States that have accepted its jurisdiction.  Article 38(1) of the ICJ's Statute sets out the law 
that this Court must apply.  Although these provisions are expressed in terms of the function of 
the ICJ, they reflect the previous practice of arbitr al tribunals and are generally regarded as the most 
complete statement of the sources of international law.61  According to Article 38(1)(d), judicial 
decisions are (only) "subsidiary means for the de termination of [internati onal] law".  Further, 
Article 59 of the ICJ Statute provides that "the decision of the Court has no binding force except as between the parties and in respect of that particular case".
62  These provisions indicate that there is not 
stare decisis  in the ICJ.   
 66. Insofar as they reject the doctrine of binding  judicial precedents, international courts and 
tribunals are said to closely resemble civil law juri sdictions.  In a civil law tradition, lawmaking is 
considered as being a function of the legislature;  contrary to common law judges, civil law judges' 
task is considered to be passive:  they must impl ement legal rules contained mainly in various codes, 
laws and statutes.
63   
 67. However, even if interna tional law has no doctrine of stare decisis  in the sense that judgments 
only bind the parties and onl y with respect to the case in which they are delivered, the absence of 
stare decisis  has not prevented the development of case-law and reliance on such case-law in 
subsequent disputes.  With respect to the ICJ, the Appellate Body noted that " Article 59 [of the ICJ 
Statute] has not inhibited the development by the ICJ (and its predecessor) of a body of case law in 
which considerable reliance on the value of previous decisions is readily discernible ".
64   
 68. Reliance on previous case-law actually flows fro m the necessity to ensure in any legal system 
security, consistency and predictability.  Thus, even where previous decisions are not binding per se , 
reliance on previous case-law is necessary to ensure consistency of such case-law, in particular where 
case-law comes from higher courts or tribunals.    69. The European Communities submits that these principles of security, consistency and 
predictability –which apply in civil law systems and in other international c ourts and tribunals– also 
apply in the framework of the WTO dispute settleme nt system.  These same principles imply that 
panels should rely on previous case-law, and primar ily, when such case-law comes from the Appellate 
Body which is hierarchically supe rior to panels.  The European Communities will explain below these 
principles as contained in national and internationa l legal systems and their application to the WTO 
system.    
                                                     
 
60 Waincymer, WTO Litigation:  Procedural Aspects of Formal Dispute Settlement  (Cameron 
May, 2002) p. 510 (Exhibit EC – 8).   
61 Brownlie, Principles of Public International Law,  (5th ed. 1988), p. 3 (Exhibit EC-9).   
62 ICJ Statute (Exhibit EC-10).   
63 Arnull, the European Union and its Court of Justice  (2006), p. 623 (Exhibit EC-11).   
64 Appellate Body Report, Japan – Taxes on Alcoholic Beverages II , footnote 30, p. 14.    WT/DS350/R 
 Page A-21 
 
 
  2. Reliance on Previous Case-Law in Na tional and International Legal Systems 
(a) Principle of Consistency and Predictability of Jurisprudence 
70. In all legal systems, there is a need for cons istency and predictability in the case-law.  This is 
probably the most important reason underpinning the stare decisis  doctrine in common law systems.  
It is, however, generally admitted that there are limi ts to this doctrine.  In common law systems, the 
highest courts treat previous decisions as "normally bi nding", but they reserve th e right to depart from 
them in certain, narrowly defined, exceptional circumstances.    71. In civil law jurisdictions which do not recognise the principle of stare decisis , the highest 
courts will, however, as a matter of judicial policy an d practice, follow their previous decisions.  This 
is illustrated by the French
65 and Italian66 legal systems.   
 72. The European Court of Justice (ECJ) which is  a hybrid court –part constitutional court, part 
general national court of last instance– also pays specific attention to its earlier case-law.
67  T h e  
general position is that the ECJ is not bound by its prev ious decisions, but that it, in practice, does not 
often depart from them.68   
 73. As outlined above, the ICJ Statute makes cl ear that decisions rendered by the ICJ in a 
particular case between states cannot be binding on other states in dis pute before the Court.  However, 
even if, strictly speaking, the ICJ does not obser ve the doctrine of precedent (except however, in 
matters of procedure), there is no doubt that it stri ves to maintain consistency in its jurisprudence.
69  
As Judge Shahabuddeen  observed:   
 
"The desiderata of consistency, stability and predictability , which underlie a 
responsible legal system , suggest that the Court would not exercise its power to 
depart from a previous decision except with circumspection… The Court 
accordingly pursues a judicial policy of not unnecessarily impairing the 
authority of its decisions ".70  (emphasis added) 
 74. In the Peace Treaties case, Judge Zoricic  adequately explained the value which the ICJ may 
attach to decisions of other international tribunals, including of the ICJ itself:    
" (…) it is quite true that no international court is bound by precedents.  But there is 
something, which this Court is bound to take into account, namely the principles of international law.  If a precedent is firm ly based on such a principle, the Court 
cannot decide an analogous case in a contrary  sense, so long, as the principle retains 
its value".
71   
                                                      
65 David and De Vries, The French Legal System  (1985), p. 113 et seq. discussed by Zweigert and 
Kötz, op.cit ., pp. 262-3 (Exhibit EC-12).   
66 Cappelletti et al., The Italian Legal System:  An Introduction  (1967), at p. 271 discussed by Zweigert 
and Kötz, op. cit ., p. 263  (Exhibit EC-12).   
67 The EU judicial system is of a sui generis  character.  It consists of se veral instances, beginning with 
the European Court of Justice (ECJ), established in 1952.  The ECJ was supplemented in 1988 with the Court of 
First Instance (CFI) which has jurisdiction over cases brought by private parties against decisions of EU 
institutions as well as over cases brought by member st ates against decisions of the European Commission:  
Rosas, "The European Court of Justice: sources of law and methods of interpretation" in The WTO at Ten 
(2006), p. 482 (Exhibit EC-13).   
68 Id.   
69 Brownlie, op. cit.,  pp. 21 -22.   
70 Shahabuddeen , Precedent in the World Court  (1996), p. 239 (Exhibit EC-14).   
71 Interpretation of the Peace Treaties with Bulgaria, Hungary and Romania , Advisory Opinion, ICJ 
Rep 1950, p. 65 at p. 104, Judge Zoricic, Dissenting Opinion, quoted in Shahabuddeen, op.cit ., p. 237.   WT/DS350/R 
Page A-22  
 
  75. Seen in this light it is not surprising to note that the ICJ, like other (international) tribunals, 
frequently invokes previous decisions in order to su pport a decision in a particular case.  This is not 
because previous decisions are regarded as preced ents that would bind the Court as a matter of stare 
decisis .  Previous decisions are invoked because they ar e a statement of what the Court regarded as 
"the correct legal position".
72   
 
76. The importance of previous decisions can also  be found in other inte rnational tribunals or 
courts, including the International Tribunal for th e Law of the Sea (ITLOS), the European Court of 
Human Rights (ECHR) and in International Criminal Tribunals.73   
 
77. Formal rejection of the doctrine of stare decisis  should not be confused with the interest that 
all legal systems have in maintain ing continuity in jurisprudence.  Whether as a matter of doctrine or 
practice, all legal systems place a high value on c onsistency, certainty and predictability of the 
jurisprudence, particularly as regards decisions rendered by the highest courts.  Departures from 
previous decisions are carefully consid ered and require the identification of cogent reasons  for doing 
so.   
 78. In cases where courts, in particular those d ealing with international law, are not formally 
bound by their previous decisions, they will nevertheless consider themselves bound by the 
(international) law as authoritatively expressed in a decision.    
79. A rule such as that expressed by Article 59 of the ICJ's Statute, quoted above, is concerned 
only with the notion that the decision, qua decision, binds only the parties to a particular case.  
However, it does not prevent the decision from bei ng treated in a later case by the same court or 
tribunal as the correct legal position .   
 
(b) Are decisions of higher courts binding on lower courts?   
80. In common law systems, decisions of a higher court are binding on lower courts.
74  While, 
there is no doctrine of binding precedent in civil la w jurisdictions, as a matter of practice, lower courts 
tend to follow the decisions of higher courts, even if there is rarely an explicit legal rule compelling a 
judge to follow the decisions of a higher court.    
81. In the EU judicial system, the Court of First Instance (CFI) will normally uphold ECJ case-
law.  The CFI will follow the precedents set by the ECJ for two reasons.  Firstly, as in the court 
systems of the EC Member States, the lower courts in the hierarchy accepts, as a general rule, the authority of precedents;  secondly, the decision est ablishing the CFI was accompanied by a provision 
allowing appeal of CFI judgements to the ECJ on the grounds of "infringement of Community law".
75  
The precedents set by the Court, of course, are part  of Community law, so that where these are clear 
                                                      
72 Shabuddeen, op.cit ., p. 236.   
73 Treves, "The International Tribunal for the Law of the Sea", in The WTO at 10  (1996), p. 490 at 493 
(Exhibit EC-15);  Reid, A Practitioner's Guide to the European Convention on Human Rights  (2nd ed. 2004), 
p. 51 (Exhibit EC-16);  and Article 21(2) ICC Statut e, which states as follows:  "[T]he Court may apply 
principles and rules of law as interpreted in its previous decisions":  Text of the Rome Statute circulated as 
document A/CONF.183/9 of 17 July 1998 and corrected by procès-verbaux  of 10 November 1998, 
12 July 1999, 30 November 1999, 8 May 2000, 17 January 2001 and 16 January 2002.  The Statute entered into 
force on 1 July 2002 (Exhibit EC-17).   
74 Kmiec, "The Origin and Current Meanings of "Judicial Activism"", Comment, California Law 
Review , October 2004, 1466-1467 (Exhibit EC-18).   
75 ECJ Statute, Article 58:  "An appeal to the Court of Justice shall be limited to points of law.  It shall 
lie on the grounds of lack of compet ence of the Court of First Instance, a breach of procedure before it which 
adversely affects the interests of the appellant as well as the infringement of Community law by the Court of 
First instance" (Exhibit EC-19).    WT/DS350/R 
 Page A-23 
 
 
  and consistent the lower court would regard itself as bound to follow them at risk of its decision being 
set aside on appeal.76   
 82. Similarly, in international legal systems where there are two or more hierarchical tribunals or 
courts, the general rule appears to be that decisions  of the hierarchical higher body are followed by the 
hierarchical lower body, at least insofar as the ratio decidendi , legal principles or points of law are 
concerned.  This is the case, inter alia , of the ECHR
77, the ICTY/ICTR78, and the ICSID.79   
 83. The above survey of national and internationa l legal systems shows that even if there is no 
doctrine of stare decisis , as a matter of judicial practice, all legal systems place a high value on 
consistency, certainty and predictability of jurisp rudence which lead such courts and tribunals to 
follow previous decisions.  Departures from previous  decisions are carefully considered and require 
the identification of important reasons for doing so.    84. The above survey also demonstrates that even  in legal systems where there is no doctrine of 
binding judicial precedents, lower courts follow, as a matter of practice, decisions of higher courts.  
This has probably to do with the fact that higher bodies generally ha ve more limited functions centred 
around settling issues of law while lower bodies' t asks are usually centred around fact-finding and 
dealing with the merits of the cases.  Further, a st atement that a decision of a hierarchically higher 
body is binding on a lower body, w ill normally be confined to the legal principles involved, the ratio 
decidendi .  Still, the ratio decidendi  cannot be distinguished merely because the facts to which it is 
applied are different.   
 85. This does not imply that, in dealing with the me rits of a particular dispute or case, there would 
be no scope whatsoever for lower bodies to develo p the jurisprudence.  However, departures from 
decisions taken by higher courts on issues of law must be carefully considered.  There must be cogent 
reasons  for a lower court or tribunal to depart from the legal positions taken by hi erarchically superior 
courts.  If the lower court or tribunal deviates from what the higher court has considered as the correct 
legal position its decision runs the risk of being st ruck down.  This will be especially the case when 
the higher court has, through a series of decisi ons, endeavoured to create a consistent body of 
jurisprudence on a particular issue.  A lowe r body may express a reasoned disagreement on legal 
principles with the higher body, but this will ultimatel y be for the consideration of the higher body.   
 
86. The European Communities recognises that re ferences to doctrines and practices followed in 
other legal systems, national or international, ar e not determinative of the authority of previous 
decisions –of the Appellate Body– in the WTO dis pute settlement system.  However, the European 
Communities believes that the same principles and con cerns which constitute the basis of a practice in 
other legal systems to follow previous decisions, esp ecially of higher courts, are present in the WTO 
dispute settlement system, taking into account in pa rticular the characteristics of the WTO dispute 
settlement system and the place and functions of  the Appellate Body in such a system.   
 
                                                     
 
76 Neville and Kennedy, The Court of Justice of the European Communities  (2000), pp. 370-377 
(Exhibit EC-20).   
77 Reid, A Practitioner's Guide to the European Convention on Human Rights  (1st ed. 1998), p. 43 
(Exhibit EC-21).   
78 ICTY,  Aleksovski Appeal Judgement , Case No. IT-95-14/1-A, 24 March 2000, para. 113, pp. 47-48 
(Exhibit EC-22).   
79 ICSID Secretariat Discussion Paper, Possible Improvements of the Framework for ICSID 
Arbitration , October 22, 2004;  part VI and Annex, Possible Features of an ICSID Appeals Facility , 
paras. 5, 7, 9 (Exhibit EC-23);  and Working Paper of the ICSID Secretariat, Suggested Changes to the ICSID 
Rules and Regulations , 12 May 2005, para. 4 (Exhibit EC-24).   WT/DS350/R 
Page A-24  
 
  3. The WTO dispute settlement system 
(a) Purpose of the WTO dispute settlement system:  security and predictability 
87. As set out in Article 3(2) of the Dispute Settlement Understanding, the main purpose of the 
dispute settlement system is to " provide security and predictability to the multilateral trading system ".  
This is to be achieved by preserving the right s and obligations of Members under the covered 
agreements and by clarifying the existing provi sions of those agreements in accordance with 
customary rules of international law.  This has to be done without adding or diminishing the rights 
and obligations provided in the covered agreements.   
 88. It follows, according to the European Commun ities, that the most important function of the 
dispute settlement system is to provide security and predictability  to Members and the system as a 
whole by detailing and interpreting the rules and outlin ing the rights and obligations of Members, so 
that they may act accordingly.    89. The importance of security and predictabilit y as an object and purpose of the WTO dispute 
settlement system has been recognised in many panel and Appellate Body reports.
80   
 (b) The Appellate Body in the WTO dispute settlement system 
90. The task of the Appellate Body is to "hear appeals from panel cases".
81  To that extent, it 
occupies a superior position in the WTO dis pute settlement system's hierarchy.   
 
91. The Appellate Body's function is limited to hear  appeals with respect to issues of law or legal 
interpretations developed by a panel in its report.82  The Appellate Body cannot review issues of fact 
or factual findings.  In that respect, the Appe llate Body is somewhat similar to the French Cour de 
Cassation , the highest Supreme Court in France which can only deal with legal issues.  The purpose is 
to ensure that the legal interpretation is c onsistent with the Agreements concerned.   
 
92. The fact that the Appellate Body, unlike pa nels, is a permanent body composed of seven 
permanent members further supports the importance of the Appellate Body in ensuring the security 
and predictability of the multilateral trading system.    93. In light of the foregoing, it appears that the main function of the Appellate Body is, by its 
characteristics ( i.e., the fact that it is a permanent body, that it is superior in the hierarchy and that it 
can only deal with legal issues), to ensure consis tency and coherence in the interpretation of the 
Agreements which can be examined under the disput e settlement system.  In this sense, the Appellate 
Body provides for the correct interpretation of the relevant rules.    4. Precedential value of case law of the Appellate Body 
94. As explained above, there is no stare decisis  in the WTO dispute settlement system.  Panels 
are therefore not, strictly speaking, bound by prev ious findings of the Appellate Body.  However, 
predictability and stability  require a consistent in terpretation of the rules that carefully builds on 
previous decisions and avoids unconsidered departures from previous interpretations.   
 
95. As a preliminary observation, it should be not ed that the Appellate Body as well as panels 
regularly invoke previous decisions –in particular, decisions of the Appellate Body– in their reports 
even if not addressing the issue of the value of such reports.   
                                                     
 
80 See e.g., Panel Report, US – Section 301 Trade Act , para. 7.75.   
81 Article 17.1 of the Dispute Settlement Understanding.   
82 Article 17.6 of the Dispute Settlement Understanding.    WT/DS350/R 
 Page A-25 
 
 
  96. The issue of the value of adopted reports was first addressed by the Appellate Body in 
Japan – Alcoholic Taxes on Beverages , stating that:83   
 
"Adopted panel reports  are an important part of the GATT acquis .  They are often 
considered by subsequent panels.  They create legitimate expectations among 
WTO Members, and, therefore, should be  taken into account where they are 
relevant to any dispute .  However, they are not binding, except with respect to the 
resolving the particular dispute between the pa rties to that dispute.  In short, their 
character and their legal status have not been changed by the coming into force of 
the WTO Agreement".  (emphasis added)  
 
97. In US – Shrimp Article(Article 21.5 – Malaysia) , the Appellate Body confirmed that its 
finding in Japan – Alcoholic Beverages  also applied to Appellate Bo dy reports and explained that:84   
 
"The reasoning in our Report in United States – Shrimp  on which the Panel relied 
was not dicta ;  it was essential to our ruling.  The Panel was right to use it, and right 
to rely on it.  Nor are we surprised that  the Panel made frequent references to our 
Report in United States – Shrimp .  Indeed, we would have expected the Panel to do 
so.  The Panel had, necessarily, to consider our views on this subject, as we had overruled certain aspects of the findings of th e original panel on this issue and, more 
important, had provided interpretative guidan ce for future panels, such as the Panel 
in this case."   
 98. The foregoing supports the view that pa nels should follow previous case law from the 
Appellate Body.  This is even more important wh ere the issues raised are the same, as underlined by 
the Appellate Body in US – OCTG Sunset Reviews .  In US – OCTG Sunset Reviews , the United States 
had appealed the panel's finding that considered the Sunset policy Bulleting to be a measure.  On 
appeal, the United States challenged this finding, argu ing that the panel erred in concluding that the 
SPB is a measure because such a conclusion does not result from "an objective assessment" consistent with Article 11 of the Dispute Settlement Understandi ng, in that the panel "did not explain why the 
findings of the Appellate Body in US – Corrosion-Resistant Steel Sunset Review , as to whether the 
SPB is a measure, 'would be persuasive given the fact ual record in this dispute'".  The Appellate Body 
found that:
85   
 
"Regarding the arguments presented by the United States relating to Article 11 of the DSU, we disagree with the United Stat es that the Panel did not assess objectively 
whether the SPB is a measure.  […] The Panel had before it exactly the same 
instrument that had been examined by the Appellate Body in US – Corrosion-
Resistant Steel Sunset Review ;  thus, it was appropriate for the Panel, in determining 
whether the SPB is a measure, to rely on the Appellate Body's conclusion in that 
case.  Indeed, following the Appellate Body's  conclusions in earlier disputes is 
not only appropriate, but is what would be expected from panels, especially 
where the issues are the same .  Although the Panel may have expressed itself in a 
concise manner, we find no fault in its analysis that could justify ruling that the 
Panel failed to observe its obligations under Article 11 of the DSU".  (emphasis 
added) 
 99. In that case, the Appellate Body has thus cl early stated that panels are bound by the legal 
analysis of the Appellate Body.  This is consiste nt with the purpose of the dispute settlement system 
which is to ensure the security and predictability  of the multilateral trading system and the specific 
                                                     
 
83 Appellate Body Report, Japan – Alcoholic Taxes on Beverages II , p. 14.   
84 Appellate Body Report, US – Shrimp  (Article 21.5 – Malaysia ), para. 107.   
85 Appellate Body Report, United States – OCTG Sunset Reviews , para. 188.   WT/DS350/R 
Page A-26  
 
  task of the Appellate Body, as a hierarchically supe rior body, which decides only on issues of law and 
legal interpretations.    100. In this respect, the European Communities su bmits that, as a result, panels should follow the 
findings of the Appellate Body to the extent that  they relate to the same legal issues and legal 
interpretations.  Panels should only depart from th em should there be serious  reasons and arguments 
to do so.    
5. Precedential value of Appellate Body reports on zeroing 
101. As mentioned in Section III.A, the issue of zeroing has been discussed and examined several 
times within the WTO dispute settle ment system.  Panels and the Appellate Body already examined 
several aspects of zeroing in previous disputes.  In  the context of these disputes, reference has often 
been made to previous findings of the Appellate Body.    102. For instance, in US – Zeroing (Japan) , the Appellate Body expressly referred to its reports in 
US – Softwood Lumber V (Article 21.5)  to justify its conclusion that the use of zeroing in transaction-
to-transaction methodology in the framework of or iginal investigations was inconsistent with 
Article 2.4.2 of the Anti-Dumping Agreement :
86   
 
"We see no reason to depart from the appellate Body's reasoning in US – Softwood 
Lumber V (Article 21.5 – Canada) , which is which is in consonance with the 
Appellate Body's approach in the earlier case of US – Softwood Lumber V and is 
consistent with the fundamental disciplines that apply under the Anti-Dumping 
Agreement and Articles VI:1 and VI:2 of the GATT 1994, as highlighted above".   
 103. Likewise, in US – Zeroing (EC) , the panel noted that the calculation was identical in relevant 
respects to the zeroing methodology considered  by the panels and Appellate Body in EC – Bed Linen  
and US – Softwood Lumber V .  The panel said that it had carefully considered the arguments raised by 
the United States.  However, it noted that these i ssues had already been examined by the Appellate 
Body in US – Softwood Lumber V .  Noting that although previous Appellate Body decisions are not 
strictly speaking binding on panels, there is clearly  an expectation that panels will follow such 
decision in subsequent cases raising issues that the Appellate Body has expressly addressed and 
concluded that it did not believe "it would be appropriate […] to depart from the Appellate Body's 
conclusion that when a margin of dumping is calcu lated on the basis of multiple averaging by model 
type, the margin of dumping for the product in qu estion must reflect the results of all such 
comparisons, including weighted average export pri ces that are above the normal value for individual 
models".
87   
 
104. As regards the use of model zeroing in weight ed average-to-weighted average comparisons in 
original investigations, the Appellate Body has found such practice to be inconsistent with 
Article 2.4.2 of the Anti-Dumping Agreement :  first of all, in EC – Bed Linen , then in US – Lumber V 
and finally, in US – Zeroing (EC) .  As noted by the panel in US – Shrimp from Ecuador :88   
 
"We further note that the Appellate Body Re port in US – Zeroing (EC) also referred 
to its reasoning and finding in US – Softwood Lumber V .  Thus, in our view, there is 
now a consistent line of Appellate Body reports, from EC – Bed Linen to US – 
Zeroing (EC) that holds that "zeroing" in the context of the weighted average -to- weighted average methodology in origin al investigations is inconsistent with 
Article 2.4.2 ".  (emphasis added) 
                                                     
 
86 Appellate Body Report, US – Zeroing (Japan) , para 121.   
87 Panel Report, US – Zeroing (EC) , para. 7.31.   
88 Panel Report, US – Shrimp from Ecuador , para. 7.40.    WT/DS350/R 
 Page A-27 
 
 
  105. As far as the use of simple zeroing in admi nistrative reviews is c oncerned, the Appellate 
Body also found in two cases ( US – Zeroing (EC)  and US – Zeroing (Japan)  that such practice is 
inconsistent with the Anti-Dumping Agreement .  In the second of these two cases, the Appellate Body 
referred to its previous findings in US – Zeroing (EC) .89   
 
106. Therefore, the European Communiti es submits that, even if there is no stare decisis  principle 
applicable in the WTO dispute settlement system a nd that the Panel is therefore entitled to depart 
from previous rulings made on the substantive issues  raised in this proceeding, the Panel should not 
depart from previous rulings, in particular, given that:    
- these are findings of the Appellate Body which is hierarchically superior and only dealing 
with issues of law;   
- these findings have been repeated in several cas es so that there is now a consistent line of 
interpretation;  and 
- especially, to the extent that the Appellate Bo dy has already examined the arguments which 
could be raised by the defendant in this case.   
 
6. Conclusions 
107. The Appellate Body's rulings must, in the view  of the European Communities, be regarded as 
commanding particular authority for panels.  This is  despite the fact that that there is no formal 
doctrine of stare decisis  in the WTO dispute settlement system, and notwithstanding the fact that, 
according to the Article 17.14 of the Dispute Settle ment Understanding, Appellate Body reports only 
bind parties to the dispute at issue.     108. Firstly, Appellate Body decisions should co mmand appropriate respect with panels and 
parties to the proceedings as authoritative pronouncements on the law.  Secondly, the system of 
"negative consensus" for adopti ng reports necessarily puts a high premium on the Appellate Body 
decision's correctness in the first place, since the error-correcting mechanisms cannot easily be 
invoked.  Thirdly, because the Appellate Body is the hierarchically superior body, tasked with 
deciding on issues of law and legal interpretations , panels should follow Appellate Body decisions 
which constitute an authoritative interpretation of the law to be applied by the panel.   
 
109. It is for those reasons that the European Communities submits that the Appellate Body has 
stated that, panel reports –and equally adopted  Appellate Body reports– "create legitimate 
expectations among WTO Members, and, therefore,  should be taken into account where they are 
relevant to any dispute".
90   
 
110. In light of the above, the European Communiti es submits that the Panel in this case should not 
deviate from the findings of previous Appellate Body reports clearly addressing the same matter ( i.e., 
the use of zeroing in original, administrative and sunset proceedings), carrying out a consistent 
interpretation of the various provisions involved, and concluding that the zeroing methodology, when 
aggregating the results of the comparison between norm al value and export price, is inconsistent with 
WTO rules.   
                                                      
89 Appellate Body Report, US – Zeroing (EC) , at para. 155.   
90 Appellate Body Report, Japan – Alcoholic Beverages II , p. 14.   WT/DS350/R 
Page A-28  
 
  C. C
ONTINUED APPLICATION IN 18 ANTI -DUMPING MEASURES OF ANTI -DUMPING DUTIES AT A 
LEVEL IN EXCESS OF THE DUMPI NG MARGIN WHICH WOULD RESULT FROM THE CORRECT 
APPLICATION OF THE ANTI-DUMPING AGREEMENT  
1. The Measures at Issue 
111. The European Communities challenges in th e 18 specific anti-dumping cases mentioned in 
the Annex to the Panel request the application or continued application of anti-dumping duties which 
were calculated and are maintained in place pursuant to the most recent administrative review, or as 
the case may be, original proceeding or changed circ umstances or sunset review proceeding at a level 
which exceeds the anti-dumping margin which woul d result from the correct application of the Anti-
Dumping Agreement , i.e., without zeroing.   
 
112. The application or continued application of anti-dumping duties as described above is a 
measure which can be subject to assessment of conformity by the Panel.  The Appellate Body 
affirmed in US – Corrosion-Resistant Steel Sunset Review  that, in principle, any act or omission 
attributable to a WTO Member can be a "measure" of that Member for purposes of WTO dispute 
settlement proceedings, and that the concept of a measure within the meaning of the Dispute 
Settlement Understanding encompasses certain acts or instruments irrespective of their application in 
specific instances.  The Appellate Body characteris ed such acts or instruments as "acts setting forth 
rules or norms that are intended to have general a nd prospective application" and "instruments of a 
Member containing rules or norms".  Not allowing claims against instruments setting out rules or 
norms inconsistent with a Member's obligations  would frustrate the objective of protecting the 
security and predictability to conduct future tr ade and lead to a multiplicity of litigation.91   
 113. The Appellate Body also pointed out that Article 17.3 of the Anti-Dumping Agreement  
contains no threshold requirement that a measure s ubmitted to dispute settlement be of a certain type
92 
and that the phrase "laws, regulations and administrative procedures" in Article 18.4 of the Anti-
Dumping Agreement  implies that "the entire body of generally  applicable rules, norms and standards 
adopted by Members in connection with the conduc t of anti-dumping proceedings" can be challenged 
within the dispute settlement system.93   
 114. A measure can exist where there is evidence of a generally applicable rule or norm of 
prospective application, such as when there is a c onsistent practice that can only be explained by the 
existence of a general rule that is being applied.  In US – Zeroing (Japan) , the Appellate Body 
confirmed that the US "zeroing procedures" unde r different comparison methodologies, and in 
different stages of anti-dumping proceedings, do not correspond to separate rule s or norms, but simply 
reflect different manifestations of a single rule or norm .
94   
 
115. The European Communities is thus not ch allenging the zeroing methodology "as such" since 
the WTO inconsistency of such a practice has alr eady been established in previous disputes, in 
particular in US – Zeroing (EC)  and in US – Zeroing (Japan) .  Instead, the European Communities 
challenges the use of the zeroing methodology in 18 specific anti-dumping measures, in other words, 
with respect to 18 specific products originating in sp ecific Member States of the EC.  In this respect, 
the European Communities submits that , in addition to the violations of  the relevant provisions of the 
Anti-Dumping Agreement  and the GATT 1994 resulting from the use of zeroing in the specific 
administrative or sunset review proceedings, the application (since the original Anti-Dumping Order) 
and continued application by the United States of anti-dumping duties in the cases contained in the Annex to the Panel request at a level which excee ds a WTO consistent dumping margin is also a 
                                                     
 
91 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 82.   
92 Id., para. 86.   
93 Id., para. 87.   
94 Appellate Body Report, US – Zeroing (Japan) , at para 88.    WT/DS350/R 
 Page A-29 
 
 
  measure adopted by the United States whic h is equally incons istent with the Anti-Dumping Agreement  
and the GATT 1994.    116. The following diagrams will serve to illustrat e the position of the European Communities in 
this respect.  In Case 1  contained in the Annex to the Panel request, it can be observed that the 
United States first established a dumping margin in the original investigation (17.21 per cent) in a 
manner inconsistent with WTO rules, i.e., by applying model zeroing. Imports of the product 
concerned were subject to securities ( e.g., cash deposits) as of the date of publication of the Anti-
Dumping Order.  Then, in subsequent administra tive review proceedings, one company requested the 
review of its duties.  In all of them, the United States calculated the margin of dumping by applying 
another methodology found inconsistent with WTO rules, i.e., simple zeroing.  This means that the 
United States retrospectively collected an incorr ect amount of duties and established a new exporter-
specific margin, subject to securities at the time of importation, with respect to that company for the 
following year.  Once five years had passed, pursuant to a sunset review, the United States considered 
that dumping would likely recur in the future and established the new dumping margin level at the 
rate imposed in the original investigation.  Once again, the United States imposed duties in a manner 
and levels contrary to WTO rules.   
Continued Application of Duties (Case 1)
Steel Concrete Reinforcing Bars – Latvia
17.21% 17.21%
3.01%5.24%5.94%
024681012141618
Original Investigation Administrative Review
(2002/2003)Administrative Review
(2003/2004)Administative Review
(2004/2005)          Sunset Review         
(Feb 2007)LM All Others
 
117. The same effect can be observed in all the cas es mentioned in the Annex to the Panel request.  
For the sake of simplicity, the Eu ropean Communities will refer to Cases 2 and 6 to show the same 
effect.   WT/DS350/R 
Page A-30  
 
  Continued Application of Duties (Case 2)
Ball Bearings and Parts Thereof – Italy
2.52%68.29%
5.88% 4.79%
2.87%68.29%69.99%
7.65%
2.59%1.38%69.99%
5.08%
051015202530354045505560657075
Origi nal
InvestigationAdministrative
Review
(2001/2002)Administrative
Review
(2002/2003)Administrative
Review
(2003/2004)Administrative
Review
(2004/2005)Sunset Review
(Sept 2006)
All Others Rate = 155.27% FAG IT SKF
 
Continued Application of Duties (Case 6) 
Stainless Steel Sheet and Strips in Coils – Germany 
13.48%
2.45%9.50%
7.03%
3.72%13.48%
0246810121416
Original Investigation Administrative Review
(2001/2002)Administrative Review
(2002/2003)Administrative Review
(2003/2004)Administrative Review
(2004/2005)      Sunset Review     
(Aug. 2005)TKN All Others
 
118. As can be seen, the European Communiti es is challenging the adoption of anti-dumping 
duties with respect to the 18 measures mentioned in the Annex to the Panel request insofar as the 
original duty levels and subsequent review levels are inconsistent with WTO rules, as a result of the 
use of zeroing by the United States.    
119. Consequently, the European Communities su bmits that the 18 measures brought before the 
Panel are the duty rates applied in the 18 anti-dum ping proceedings concerned.  Since the dumping  WT/DS350/R 
 Page A-31 
 
 
  margins where established in the or iginal proceedings and in their subsequent reviews by applying a 
comparison methodology which has already been found "as such" and "as applied" inconsistent with 
the Anti-Dumping Agreement  and the GATT 1994 by the Appellate Body, the European Communities 
submits that the United States has infringed several provisions of the Anti-Dumping Agreement  and 
the GATT 1994.   
 
2. Violation of Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-Dumping Agreement and 
Articles VI:1 and VI:2 of the GATT 1994 
120. The European Communities submits that the continued application of anti-dumping measures 
in the 18 measures mentioned in the Annex to the Panel request, insofar as such duties have been 
calculated by using zeroing, are inconsistent with  Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-
Dumping Agreement  and Articles VI:1 and VI:2 of the GATT 1994.   
 121. For the sake of brevity, the European Comm unities will not here re-sate the arguments which 
respect to these violations, since these are id entical to the arguments submitted by the 
European Communities in Section III.D below.  Th erefore, the European Communities refers the 
Panel to that Section in support of this claim, the arguments therein equally applying with respect to 
the present measures and claims.    
3. Violation of Article XVI:4 of the Agreement Establishing the WTO 
122. In addition to the violation of  the relevant provisions of the Anti-Dumping Agreement  and the 
GATT 1994, the European Communities also submits  that the United States, by continuing the 
application anti-dumping duties with zeroing in the 18 measures contained in the Annex to the Panel 
request, has violated Article XVI:4 of the Agre ement Establishing the WTO (WTO Agreement).   
 
123. The European Communities notes that, norma lly, the determination of a breach of any 
provision of any WTO covered agreement gives automa tically rise to a violation of Article XVI:4 of 
the WTO Agreement.  This provision reads as follows:    
"Each Member shall ensure the conformity of its laws, regulations and 
administrative procedures with its obligations as provided in the annexed 
Agreements."   
 124. As stated by the panel in US – 1916 Act (Japan ):   
 
"[I]f a provision of an 'annexed Agreement' is breached, a violation of Article XVI:4 immediately occurs.  GATT 1994 is one of  the 'annexed Agreements' within the 
meaning of Article XVI:4.  Since we found  that provisions of Article VI of the 
GATT 1994 has been breached, we conclude that, by violating this provision, the United States violates Article XVI:4 of the WTO Agreement."
95   
 
125. Similarly, the panel in US – 1916 Act (EC)  found that:   
 
"If Article XVI:4 has any meaning, it is that when a law, regulation or 
administrative procedure of a Member has been found incompatible with the WTO 
obligations of that Member under any ag reement annexed to the WTO Agreement, 
that Member is also in breach of its obligations under Article XVI:4."96   
 
                                                      
95 Panel Report, US – 1916 Act (Japan) , para. 6.287.   
96 Panel Report, US – 1916 Act (EC) , para. 6.223.   WT/DS350/R 
Page A-32  
 
  126. Since the use of model and simple zeroing in or iginal investigation, ad ministrative and sunset 
review proceedings violates Articles 2. 4, 2.4.2, 9.3, 11. 1, 11.3 of the Anti-Dumping Agreement  and 
Articles VI:1 and VI:2 of the GATT 1994, it follows that the United States has not ensured the conformity of its laws, regulations and administra tive procedures with the obligations established in 
those WTO agreements.  In this respect, the Eu ropean Communities submits that the United States 
violated Article XVI:4 of the WTO Agreement.   
 127. In addition, the European Communities claims  that the United States violated Article XVI:4 
of the WTO Agreement insofar as this provision also establishes a clear obligation for all WTO 
Members to ensure the conformity of their existi ng laws, regulations, and administrative procedures 
with the obligations in the covered agreements.
97  This obligation becomes more evident in cases 
where an adopted DSB report has concluded that a specific law, regulation or administrative practice, as such and as applied in numerous cases, is contrary to several provisions of the Anti-Dumping 
Agreement  and the GATT of 1994.   
 
128. In this respect, the European Communities subm its that the findings of the Appellate Body as 
adopted by the DSB in specific disputes create an  independent international obligation for the losing 
party in that dispute to comply.  As noted by Jo hn H. Jackson, "an adopted dispute settlement report 
establishes an international law ob ligation upon the Member its ques tion to change its practice to 
make it consistent with the rules of the WTO Ag reement and its annexes".  According to Jackson, 
Article XVI:4 of the WTO Agreement "can serve as an  important basis for the notion that the result of 
the DS procedure is to establish an internationa l law obligation to comply with the results and 
applications made in the DS process".
98    
 129. The objective of protecting security and predictability  needed to conduct future trade would 
be frustrated if instruments setting out rules or norms  inconsistent with a Me mber's obligations would 
remain in place despite the findings of an adopted  DSB report declaring their inconsistency with 
WTO rules.  It would also lead to a multiplicity of endless litigation.  Thus, allowing claims against 
measures which are the result of the application of instruments or norms which have been found as 
such inconsistent with WTO rules serves the purpo se of preventing future disputes by allowing the 
root of WTO-inconsistent behaviour to be eliminated.    
130. Moreover, in case Members ignore a clear ruling and refuse to change their laws or practices, 
it can be argued that a violation of the duty of good faith  would arise.  The principle of good faith 
requires a party to a treaty to refrain from acti ng in a manner which would defeat the object and 
purpose of the treaty as a whole or the treaty provision in question.
99   
 
131. The zeroing procedures invariably employed  by USDOC in original investigation, 
administrative and sunset review proceedings menti oned in the Annex to the Panel request violate the 
obligations set forth in various provisions of WTO agreements.  This has been the conclusion of the 
reports adopted by the DSB on 9 May 2006, with respect to US – Zeroing (EC)  and on 
23 January 2007, concerning US – Zeroing (Japan) .  The European Communities considers that, at 
least as of the date of adoption of the first Appe llate Body report declaring the zeroing procedures 
inconsistent with WTO rules, it became clear that  the United States was obliged to comply with the 
recommendation to "bring the measure into conformity" with its obligations in the future.  Most of the 
                                                      
97 Appellate Body Report, EC – Sardines , at para. 213. A similar obligation is contained in Article 18.4 
of the Anti-Dumping Agreement :  "Each Member shall take all necessary steps, of a general or particular 
character, to ensure, not later than th e date of entry into for ce of the WTO Agreement fo r it, the conformity of 
its laws, regulations and administrative procedures with th e provisions of this Agreement as they may apply for 
the Member in question".   
98 John H. Jackson, "International Law Status of  WTO Dispute Settlement Reports:  Obligation to 
Comply or Option to "Buy Out", 98 American Journal of International Law  109 (2004), Exhibit EC-25.   
99 Panel Report, US – Byrd Amendment , at para 7.64.    WT/DS350/R 
 Page A-33 
 
 
  cases mentioned in the Annex to the Panel request, as far as the latest dumping margin determination 
leading to the current anti-dumping duties is concerne d, were issued after that date, thereby ignoring 
the obligation established in the adopted DSB reports.    132. Consequently, by maintaining and applying the model and simple zeroing procedures, which 
are administrative procedures not in conformity with various provisions of the Anti-Dumping 
Agreement  and the GATT 1994, the European Communities submits that the United States failed to 
take all necessary steps to ensure it complies with its WTO obligations.  Accordingly, the 
United States also violated its obligation unde r Article XVI:4 of the WTO Agreement.   
 4. Conclusions 
133. In light of the above, the European Communitie s submits that the United States has failed to 
comply with its obligations pursuant to Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-Dumping 
Agreement , Articles VI:1 and VI:2 of the GATT 1994 as well as Article XVI:4 of the WTO 
Agreement, by using zeroing when calculating dumpi ng margins in the original proceedings and in 
their subsequent review proceedings menti oned in the Annex to the Panel request.   
 
D. T
HE ZEROING METHODOLOGY AS APPLIED IN 52 ANTI -DUMPING PROCEEDINGS , INCLUDING 
ORIGINAL INVESTIGATIONS , ADMINISTRATIVE REVIEW AND SUNSET REVIEW PROCEEDINGS  
134. The European Communities also submits that th e 4 original investigations, 37 administrative 
review proceedings and 11 sun set review proceedings covering the 18 anti-dumping measures 
concerned are inconsistent with Ar ticles 2.1, 2.4, 2.4.2, 9.3., 11.1, 11.2 and 11.3 of the Anti-Dumping 
Agreement and Articles VI:1 and VI:2 of the GA TT 1994.  Indeed, as the European Communities will 
show below, the United States used model or si mple zeroing when calculating the dumping margins 
in those cases.  The Euro pean Communities will address first the cl aims with respect to the original 
investigations concerned, to then continue with  the arguments concerning administrative and sunset 
review proceedings.   
 
1. Original Investigations 
135. The European Communities considers that th e United States has failed to comply with its 
obligations under the Anti-Dumping Agreement  and the GATT 1994 with respect to the 
determinations carried out in the original investig ations contained in the Annex to the request for 
establishment of the Panel (Cases XV to XVIII).  The European Communities will describe below the 
main facts and findings made by the US in Case XVI , Purified Carboxymethylcellulose – Netherlands 
(A-421-811), No. 50 (Exhibit EC-26), and the violations of the Anti-Dumping Agreement  and the 
GATT resulting thereof.  For the sake of simplicity , the European Communities will not repeat the 
same arguments with respect to the other three orig inal investigations.  The relevant sections of 
USDOC determination showing the use of model zeroi ng in the other cases will be mentioned instead.   
 
1.1 Purified Carboxymethylcellulose – Netherlands (A-421-811) 
(a) The Measure at issue 
136. In the "Notice of Antidumping Duty Orders" published in the Federal Register100, margins of 
dumping of 14.88 per cent (Noviant B.V.), 13.39 per cent (Akzo Nobel) and 14.57 per cent (all 
others) were calculated with respect to the period of investigation from 1 April 2003 to 
31 March 2004 and the product concerned.    
                                                     
 
100 Exhibit EC-26, Appendix I, pp. 28277 and 39735.   WT/DS350/R 
Page A-34  
 
  137. The application of the standard program and, thus zeroing, to Noviant BV  is reflected in the 
program code as follows:
101   
 
PROC MEANS NOPRINT DATA = MARGIN; 
   WHERE EMARGIN GT 0; 
   VAR EMARGIN QTYU VALUE; 
   OUTPUT OUT = ALLPUDD  (DROP = _FREQ_ _TYPE_)           SUM = TOTPUDD MARGQTY MARGVAL; RUN; 
 
138. The application of zeroing is also reflected in the program log as follows:
102   
 
6934 6935  PROC MEANS NOPRINT DATA = MARGIN; 6936     WHERE EMARGIN GT 0;  
6937     VAR EMARGIN QTYU VALUE; 
6938     OUTPUT OUT = ALLPUDD  (DROP = _FREQ_ _TYPE_) 6939            SUM = TOTPUDD MARGQTY MARGVAL; 6940  RUN; 
 
NOTE:  There were 243 observations r ead from the data set WORK.MARGIN. 
      WHERE EMARGIN>0; 
NOTE: The data set WORK.ALLPUDD has 1 observations and 3 variables. NOTE: PROCEDURE MEANS used (Total process time):       real time           0.01 seconds       cpu time            0.02 seconds 
 
139. The relevant tables containing the calculations with respect to Noviant BV  show that zeroing 
was used in this case.
103  Indeed, on Page 22 the percentage of value with AD margins (63.3199) and 
the percentage of quantity with AD margins ( 69.1105) can be found.  Thus, for the remaining 
transactions, no dumping was found and no offsets we re provided.  The final anti-dumping duty rate 
using zeroing was 14.8815.   
 
140. The tables containing the calculations with respect to Noviant BV  without zeroing show that, 
with the same data, the final anti-dum ping margin would have been 12.1508 ( i.e., by taking 100 per 
cent of the transactions and offsetting po sitive and negative dumping margins found).104   
 
141. Consequently, in this case, to determine th e anti-dumping duties to be imposed as a result of 
the original investigation proceeding, USDOC calculated margins of dumping using a W-to-W 
comparison that included the standard model zeroing procedures.  In aggregating the results of the 
multiple comparisons to obtain the overall weighted  average dumping margin, only those comparisons 
for which there were positive results were taken into account.  In this respect, USDOC disregarded 
any comparisons with a negative valu e.  As a result, the sum total amount of dumping was inflated by 
an amount equal to the excluded negative values.  Without zeroing, the results of those calculations 
would have been lower.    
                                                     
 
101 Exhibit EC-26, Appendix III, p. 31 of the Program Code, Calculate overall margin.   
102 Exhibit EC-26, Appendix IV, p. 56 of the Program Log, Calculate overall margin.   
103 Exhibit EC-26, Appendix V.   
104 Exhibit EC-26, Appendix V, p. 23.    WT/DS350/R 
 Page A-35 
 
 
  (b) Violation of Article 2.4.2 of the Anti-Dumping Agreement 
142. The European Communities submits that the "model zeroing" method used by the 
United States in this case is not in conformity with  its obligations contained in Article 2.4.2 of the 
Anti-Dumping Agreement .   
 
143. As mentioned in Section III.A, several panels  and the Appellate Body have repeatedly found 
inconsistent with Article 2.4.2 of the Anti-Dumping Agreement105 the use of "model zeroing" in 
original investigations.  In particular, in a recent case, i.e., US – Anti-Dumping Measure on Shrimp 
from Ecuador , the panel, after explaining the Appella te Body's reasoning on this issue in US – 
Softwood Lumber V , affirmed that:   
 
We further note that the A ppellate Body report in US – Zeroing (EC)  also referred to 
its reasoning and findings in US – Softwood Lumber V .  In our view, there is now a 
consistent line of Appellate Body reports , from EC – Bed Linen to US – Zeroing 
(EC) that holds that "zeroing" in the context of the weighted average-to-
weighted average methodology in original investigations (first methodology in the first sentence of Article 2.4.2) is inconsistent with Article 2.4.2 .
106  (emphasis 
added) 
 144. The European Communities submits that, followi ng the findings of the Appellate Body in the 
above-mentioned disputes, the Panel in the presen t case should conclude on the same basis that 
zeroing in the context of the weighted average-to-weighted average methodology in original 
investigations is inconsistent  with Article 2.4.2 of the Anti-Dumping Agreement .   
 145. The European Communities also  notes that the United States fa iled to contest the claim of 
inconsistency with Article 2.4.2 of the Anti-Dumping Agreement  before the Appellate Body in US – 
Zeroing (EC)
 as well as before the panels in US –Zeroing (Japan) , and US – Zeroing (Ecuador) .  In 
fact, USDOC has published a Notice indicating its inten tion to eliminate the use of zeroing in original 
investigations when comparisons are made on an average-to-average basis.107   
 146. Regardless of this, for the sake of complete ness, the arguments supporting the claim that the 
United States failed to complied with Article 2.4.2 of the Anti-Dumping Agreement  when using 
"model zeroing" in original investigatio ns are explained and detailed below.   
 
(i) "Dumping" and "margins of dumping" are de termined with respect to a product as a whole 
147. Article 2.4.2 of the Anti-Dumping Agreement  provides that:   
 
Subject to the provisions governing fair co mparison in paragraph 4, the existence of 
margins of dumping  during the investigation phase shall normally be established 
                                                     
 
105 See Panel Report, EC – Bed Linen , para. 6.119; Appellate Body Report, EC – Bed Linen , para. 66;  
Panel Report, US – Lumber V , para. 7.224;  Appellate Body Report, US – Lumber V , para. 117;  Panel Report, 
US – Zeroing (EC) , para. 7.32;  Panel Report, US – Shrimp from Ecuador , para. 7.43.   
106 Panel Report, US – Shrimp (Ecuador) , para. 7.40.   
107 See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin During an 
Antidumping Investigation , 71 FR 77722 (USDOC) (27 December 2006) (final modification), stating that it is 
"modifying its methodology in antidumping investigations" to "no longer make average-to-average comparisons 
in investigations without providing offsets for non-dumped comparisons".  See also Antidumping Proceedings:  
Calculation of the Weighted-Average Dumping Margins in Antidumping Investigations , 72 FR 3783 (USDOC) 
(26 January 2007), stating that the effective date for implementation of this modification was 22 February 2007.  In addition, on 9 April 2007 the United States publicly announced that it is implementing the WTO panel 
decision in US – Zeroing (EC)  with respect to twelve original determinations disputed in that case (Exhibit EC-
27).   WT/DS350/R 
Page A-36  
 
  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.  A normal value established on a weighted average basis may be compared to prices of 
individual export transactions if the authorities find a pattern of export prices which 
differ significantly among different purchasers,  regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriately by the use of a weighted average-to-weighted average or transaction-
to-transaction comparison.  (emphasis added) 
 
148. Article 2.1 of the Anti-Dumping Agreement  provides that:   
 
For the purpose of this Agreement, a product  is to be considered as being dumped , 
i.e. introduced into the commerce of another country at less than its normal value, if 
the export price of the product  exported from one country to another is less than the 
comparable price, in the ordinary course of trade, for the like product  when 
destined for consumption in the exporting country.  (emphasis added) 
 149. This definition reiterates the definition of  "dumping" in Article VI:1 of the GATT 1994.
108  
Thus, it is clear from Article 2.1 that "dumping" is  determined in relation to a specific product as 
defined by the investigating authority.  As not ed by the Appellate Body, Article 2.1 of the Anti-
Dumping Agreement  makes "clear (…) that dumping is defined in relation to a product as a whole", 
and not in relation to a "type, m odel or category" of a product".109  Given that Article 2.1 applies to 
the entire Anti-Dumping Agreement  (since Article 2.1 clearly indicates that the definition included 
therein is laid down "for the purpose of this Agre ement"), it also applies to Article 2.4.2 of the Anti-
Dumping Agreement  and, thus, "margins of dumping" under Artic le 2.4.2 must also be established for 
the product as a whole.110   
 150. Consequently, it flows from Article VI:1 of the GATT 1994 and Articles 2.1 and 2.4.2 of the 
Anti-Dumping Agreement  that "dumping" and "margin of dumping" can only exist with respect to the 
product as a whole and not with respect to a cate gory, type or model of that product.   
 
151. Other provisions in the Anti-Dumping Agreement  also provide contextual support to this 
conclusion.  First, Article VI:2 of the GATT 199 4 provides that "in order to offset or prevent 
dumping, a contracting party may levy on any dumpe d product an anti-dumping duty not greater in 
amount that the margin of dumping in respect of that product".  Second, Article 9.2 of the Anti-
Dumping Agreement  also refers to the imposition of an anti-dumping duty with respect to a product .  
Third, Article 6.10 of the Anti-Dumping Agreement  also states that "the authorities shall, as a rule, 
determine an individual margin of dumping fo r each known exporter or producer concerned of the 
product under investigation ".  Thus, in light of these provisions, it clear that "dumping" and "margins 
of dumping" can only be defined with respect to a product and not with respect to a category, model 
or type of that product.    
152. The necessity to determine margins of dumpi ng for the product as a whole does not prevent, 
however, investigating authorities from calculating in termediate results with respect to various 
averaging groups.  In other words, investigating au thorities are entitled to calculate a dumping margin 
on the basis of multiple comparisons  for sub-divisions of the product.
111  However, the results of these 
multiple comparisons at the sub-group level do not  constitute "margins of dumping" within the 
                                                      
108 Appellate Body Report, US – Softwood Lumber V , para. 92.   
109 Appellate Body Report, US – Softwood Lumber V , para. 93, Appellate Body Report, US – 
Corrosion-Resistant Steel Sunset Review , para. 126.   
110 Appellate Body Report, US – Softwood Lumber V , para. 93 and 96.   
111 Id., para. 97.    WT/DS350/R 
 Page A-37 
 
 
  meaning of Article 2.4.2 of the Anti-Dumping Agreement  but only intermediate calculations.112  It is 
only on the basis of aggregating all these intermed iate values that an investigating authority can 
establish a margin of dumping for the product under investigation as a whole.113   
 153. As the Appellate Body pointed out in US – Softwood Lumber V , this analysis is not affected 
by the use of the plural "margins of dumping" in article 2.4.2 of the Anti-Dumping Agreement .  
Indeed, pursuant to Article 6.10 of the Anti-Dumping Agreement  which provides that authorities shall, 
as a rule, determine an individual margin of dum ping for each known exporter or producer concerned 
of the product under investigation, as soon as there are more than one producer or exporter in an 
investigation, there should be several dumping marg ins.  Similarly, nothing precludes investigating 
authorities to investigate more than one country in a single proceeding.
114  For these reasons, a single 
proceeding may result in more than one margin of dumping.  Therefore, the plural used in 
Article 2.4.2 of the Anti-Dumping Agreement  with respect to margins of dumping has logic to it, 
independently from the fact that investigating au thorities choose to calculate dumping on the basis of 
averaging groups.   
 
154. This analysis is similarly unaffected by the us e of the word "comparable" in Article 2.4.2 of 
the Anti-Dumping Agreement .  From the moment the investigating authorities define the product 
under investigation and consider that it was suffici ently comparable to justify the calculation of a 
single dumping margin and the imposition of a singe dut y, the investigating authority is not entitled to 
decide that certain models, namely those where th e "export price" exceeded the "normal value", have 
ceased to become comparable.   
 155. Accordingly, in determining the existence of dumping, and in calculating the margin of 
dumping for the product as a whole, Articles 2.1 and 2.4.2 of the Anti-Dumping Agreement , together 
with Articles VI:1 and VI:2 of the GATT 1994, pr ohibit a Member from disregarding the results of 
any multiple comparisons undertaken by the authoriti es.  As explained below, in the case at hand, the 
United States failed to comply with these requirements.    
(ii) The United States failed to establish the ma rgin of dumping with respect to the product 
concerned as a whole 
156. In this case, the United States defined the product as follows:  "all purified 
carboxymethylcellulose (CMC), sometimes also refe rred to as purified sodium CMC, polyanionic 
cellulose, or cellulose gum, which is a white to o ff–white, non–toxic, odorless,  biodegradable powder, 
comprising sodium CMC that has been refined a nd purified to a minimum assay of 90 per cent.  
Purified CMC does not include unpurified or crude CMC, CMC Fluidized Polymer Suspensions, and CMC that is cross–linked through heat treatment. Purified CMC is CMC that has undergone one or 
more purification operations which, at a minimu m, reduce the remaining salt and other by–product 
portion of the product to less than ten percent.  Th e merchandise subject to this investigation is 
classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheading 
3912.31.00".  The United States then decided to make "averaging groups" for the purpose of determining dumping and calculating the dumping margins for each exporter.  The European Communities submits that while the Unite d States was entitled to calculate dumping on the 
basis of multiple comparisons at sub-group leve ls, this could not be done in breach of the 
requirements of Article 2.4.2, namely to determ ine dumping margins for the product as a whole.   
 157. When combining the intermediate results cal culated for each averaging group, in order to 
calculate the margin of dumping of the product under investigation, the United States disregarded 
                                                     
 
112 Id.   
113 Id., paras 93 and 99:  "We see no basis, under the Anti-Dumping Agreement , for treating the very 
same sub-group transactions as "non-dumped" for one purpose and "dumped" for other purposes".   
114 Articles 3.3(a) and 6.10 of the Anti-Dumping Agreement .   WT/DS350/R 
Page A-38  
 
  those averaging groups for which the export price exceeded the normal value, thereby inflating the 
overall margin of dumping for the product concerned.
115   
 158. For these reasons, the European Communities c onsiders that the United States, once having 
defined the product subject to the anti-dumping pro ceeding, could not zero the negative intermediate 
results calculated for certain averaging groups.  This  is inconsistent with the obligation arising under 
Article 2.4.2 of the Anti-Dumping Agreement .   
 (c) Violation of Article 2.4 of the Anti-Dumping Agreement 
159. The European Communities also  submits that the United States failed to comply with the 
basic principle of fair comparison  enshrined in Article 2.4 of the Anti-Dumping Agreement  when 
applying model zeroing in the case at hand.    
(i) "Fair comparison":  an inde pendent and overarching obligation 
160. Pursuant to Article 2.1 of the Anti-Dumping Agreement , in order to determine whether 
dumping has occurred with respect to a given product, a comparison must be made between the 
normal value and export price of that product.  Article 2.4 of the Anti-Dumping Agreement  clarifies 
how this comparison must be made.  It provides that:    
A fair comparison shall be made between the export price and the normal value.  
This comparison shall be made at the same level of trade, normally at the ex-factory 
level, and in respect of sales made at as nearly as possible the same time.  Due 
allowance shall be made in each case, on its merits, for differences which affect 
price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical char acteristics, and any other differences which 
are also demonstrated to affect price comparability.  In the cases referred to in 
paragraph 3, allowances for costs, in cluding duties and taxes, incurred between 
importation and resale, and for profits accrui ng, should also be made.  If in these 
cases price comparability has been affected , the authorities shall establish the normal 
value at a level of trade equivalent to th e level of trade of the constructed export 
price, or shall make due allowance as warranted under this paragraph.  The 
authorities shall indicate to the parties in question what information is necessary to 
ensure a fair comparison and shall not impose an unreasonable burden of proof on 
those parties.   
 161. Thus, the first sentence of Article 2.4 requir es that a fair comparison be made between the 
export price and normal value.  Th is requirement under Article 2.4 to  make a fair comparison between 
the export price and the normal value constitutes an independent and overarching  obligation.  In other 
words, the scope of the "fair comparison" requirement  in Article 2.4 is not exhaustively determined by 
the remainder of the paragraph regarding the step s to be taken to carry out price comparability.
116  It 
means that the legal obligation created by the firs t sentence of Article 2.4 is independent from the 
other obligations created in the second an d third sentences of Article 2.4 of the Anti-Dumping 
Agreement .   
 
162. This interpretation is confirmed by the modi fication brought to that provision in the Uruguay 
Round Anti-Dumping Agreement .  Indeed, the text of the Uruguay Round Anti-Dumping Agreement  
contains an important and significant innovation by co mparison with the text of the previous Tokyo 
                                                      
115 See Exhibit EC-26, Appendix IV (Program Log used in this case containing the zeroing line – 
WHERE EMARGIN GT 0).   
116 Panel Report, US – Zeroing (EC) , para. 7.2;  and Appellate Body Report, US – Zeroing (EC) , 
para. 146.    WT/DS350/R 
 Page A-39 
 
 
  Round Anti-Dumping Code, in which the equivalent  or similar provisions to the first and second 
sentences of Article 2.4 of the Uruguay Round Anti-Dumping Agreement  were contained in the same 
sentence.117  In the Uruguay Round Anti-Dumping Agreement , however, the words "fair comparison 
(…) between the export price and the normal value"  were lifted up and placed on their own in a new 
first sentence of Article 2.4.  This change conf irms that Article 2.4 contains and overarching and 
independent obligation to ma ke a fair comparison.   
 
(ii) "Fair comparison":  a general obligation 
163. The requirement pursuant to Article 2.4 to ma ke a fair comparison between the export price 
and the normal value is not limited to the price comp arability under paragraph 4 of Article 2.  In other 
words, the "fair comparison" obligation constitutes a general  obligation which applies not to only to 
price comparability under Article 2.4 but also  to sub-paragraphs 2.4.1 and 2.4.2.   
 164. This is supported by the fact that Article  2.4.2 expressly indicates that the rule included 
therein is "subject to the provisions govern ing fair comparison in paragraph 4".   
 
165. The general character of the "fair compar ison" obligation has been underlined by the 
Appellate Body in EC – Bed Linen :   
 
"Article 2.4 sets forth a general obligation  to make a "fair comparison" between 
export price and normal value.  This is a general obligation, that, in out view, 
informs all of Article 2 but applies, in  particular, to Article 2.4.2 which is 
specifically made 'subject to the provisions governing fair comparisons in [Article 2.4]."
118  (emphasis added) 
 
(iii) Unfairness of the model zeroing comparison method used by the United States 
166. The European Communities submits that th e obligation imposed by Article 2.4 of the Anti-
Dumping Agreement  to conduct a fair comparison preclude d the model zeroing comparison method 
used by the United States in this case.    167. The term "fair" is generally understood to connote impartiality, even-handedness or lack of 
bias.
119  However, the use of model zeroing unde r the weighted averag e-to-weighted average 
comparison methodology when aggregating the resu lts of the "averaging groups" comparisons for 
purposes of calculating the "margins of dumping" is inherently biased.    168. The model zeroing comparison method involves an unfair comparison.  By excluding the negative results of any comparisons from the aggr egation of total dumping, the zeroing procedures 
overstate the total amount of dumping by an amount  equal to the excluded negative values.  As a 
result, the dumping margin is inflated.  Moreover, in situations where the aggregate value of excluded 
negative results exceeds the aggregate value of th e included positive results , the zeroing procedures 
produce a dumping determination where the product as a whole is not dumped.  In consequence, 
                                                     
 
117 Tokyo Round Anti-Dumping Code, Article 2.6, first sentence:  "In order to effect a fair comparison 
between the export price and the domest ic price in the exporting country (or the country of origin) or, if 
applicable, the price established pursuant to the provision s of Article VI:1 (b) of the General Agreement, the two 
prices shall be compared at the same le vel of trade, normally at the ex-factor y level, and in respect of sales made 
at as nearly as possible the same time".   
118 Appellate Body Report, EC – Bed Linen , para. 59;  see also Panel and Appellate Body Reports, 
US – Zeroing (EC) , paras 7.254- 7.255 and 146 respectively.   
119 According to the dictionary, fair means "just, unbiased, equitable, impartial, legitimate, in 
accordance with the rules of standards"  and "offering an equal chance of  success" (Shorter Oxford English 
Dictionary;  5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University Press, 2002), Vol.1, p.915), quoted 
by the Appellate Body in US – Lumber V (Article 21.5) , para. 138.   WT/DS350/R 
Page A-40  
 
  USDOC conducts its investigation "in such a way that it becomes  more likely  that [it] will determine 
that" there is dumping.
120  By rendering a dumping determination more likely, and by systematically 
inflating the dumping margin, the zeroing procedur es deprive the comparison of normal value and 
export price of even-handedness.  Instead, the pro cedures systematically favour the interests of 
petitioners, and systematically prejudi ce the interests of exporters.   
 
169. The use of model zeroing could even lead to  a situation where dumping is found while there 
is in fact no dumping.  In the case at hand, the dramatic effect which the inherently biased zeroing method used by the United States had on the outcome  of the calculation for Noviant B.V. was an 
automatic increased in the duties by 2.73 per cent.  The other exporting companies were also subject 
to the same calculation, leading to the same infla tionary effect on the margins of dumping calculated.   
 170. Therefore, the method of zeroing which the United States employs is biased because when an 
exporter makes some sales above normal value and so me sales below normal value, the use of zeroing 
will inevitably result in a margin higher than would otherwise be calculated.  A methodological 
choice that systematically and inevitably results in a higher margin when there has been no change in 
pricing behaviour is inherently biased and unfair and is thus inconsistent with the Anti-Dumping 
Agreement .   
 
(iv) Existing case-law confirms United States model zeroing unfair 
171. The above-mentioned conclusions are confirmed by the findings of the Appellate Body in the 
EC – Bed Linen case:   
 
"Article 2.4 sets forth a general obligati on to make a "fair comparison" between 
export price and normal value.
121   
 
Furthermore, we are also of the view that a comparison between export price and 
normal value that does not fully take into account the prices of all comparable 
export transactions – such as the practice of "zeroing" at issue in this dispute – is not 
a "fair comparison" between export price and normal value, as required by Article 2.4 and by Article 2.4.2".
122   
 
172. They are further confirmed by the findings of the Appellate Body in US-Carbon Steel from 
Japan :   
 
"However, should investigating authorities choose to rely upon dumping margins in making their likelihood determination, the calculation of these margins must 
conform to the disciplines of Article 2.4.  We see no other provision in the Anti-
Dumping Agreement according to which Members may calculate dumping margins.  
In the CRS sunset review, USDOC cho se to base its affirmative likelihood 
determination on positive dumping margins that  had been previously calculated in 
two particular administrative reviews.  If these margins were legally flawed because 
they were calculated in a manner inconsistent with Article 2.4, this could give rise to 
an inconsistency not only with Article 2. 4, but also with Article 11.3 of the Anti-
Dumping Agreement .
123   
 
It follows that we disagree with the Panel's view that the disciplines in Article 2 
regarding the calculation of dumping ma rgins do not apply to the likelihood 
                                                      
120 Appellate Body Report, US – Hot-Rolled Steel , para. 196.   
121 Appellate Body Report, EC – Bed Linen , para. 59.   
122 Id. para. 55.   
123 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 127.    WT/DS350/R 
 Page A-41 
 
 
  determination to be made in a sunset re view under Article 11.3. Accordingly, we 
reverse the Panel's consequential finding, in paragraph 8(1)(d)(ii) of the Panel 
Report, that the United States did not act inconsistently with Article 2.4 of the Anti-
Dumping Agreement in the CRS sunset review by relying on dumping margins 
alleged by Japan to have been calcu lated in a manner inconsistent with 
Article 2.4.124   
 
As explained above, if a likelihood dete rmination is based on a dumping margin 
calculated using a methodology inconsistent w ith Article 2.4, then this defect taints 
the likelihood determination too.  Thus, the consistency with Article 2.4 of the 
methodology that USDOC used to calculate the dumping margins in the 
administrative reviews bears on the cons istency with Article 11.3 of USDOC's 
likelihood determination in the CRS sunset  review.  In the CRS sunset review, 
USDOC based its determination that "dumpi ng is likely to continue if the [CRS] 
order were revoked" on the "existence of  dumping margins" calculated in the 
administrative reviews.  If these marg ins were indeed calculated using a 
methodology that is inconsistent with Articl e 2.4 – an issue that we examine below – 
then USDOC's likelihood determination c ould not constitute a proper foundation for 
the continuation of anti-dumping duties under Article 11.3".125   
 173. The Appellate Body went on to recall its findings in the EC – Bed Linen case, and stated that:   
 
"When investigating authorities use a zeroing methodology such as that 
examined in EC-Bed Linen to calculate a dumping margin , whether in an 
original investigation or otherwise, that methodology will tend to inflate the 
margins calculated .  Apart from inflating the margins, such a methodology could, 
in some instances, turn a negative marg in of dumping into a positive margin of 
dumping.  As the Panel itself recognized in the present dispute, "zeroing … may lead to an affirmative determination th at dumping exists where no dumping would 
have been established in the absence of zeroing".  Thus, the inherent bias in a 
zeroing methodology of this kind may di stort not only the magnitude of a 
dumping margin, but also a finding of the very existence of dumping ."
126  
(emphasis added) 
 174. These conclusions were agai n confirmed by the panel in US – Softwood Lumber V , the issue 
before the panel being whether United States mode l zeroing was "consistent with the obligations 
imposed by Article 2.4.2 and the "fair comp arison" requirement in Article 2.4 of the Anti-Dumping 
Agreement ".
127  The Appellate Body in that case again found that:   
 
"[z]eroing means, in effect , that at least in the case of some export transactions, the 
export prices are treated as if they were l ess 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 tr ansactions in those sub-groups in which 
the weighted average normal value is less th an the weighted average export price.  
Zeroing thus inflates the margin of dumping for the product as whole."   
 
                                                      
124 Id., para. 128.   
125 Id., para. 130.   
126 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 135.   
127 Panel Report, US – Softwood Lumber V , paras 7.196.   WT/DS350/R 
Page A-42  
 
  175. Finally, the Appellate Body in US – Zeroing (Japan) , again, confirmed that the use of model 
zeroing in original investigations was, as such, inconsistent, inter alia , with the fair comparison 
principle enshrined in Article 2.4 of the Anti-Dumping Agreement .
128   
 
(v) The United States failed to  carry out a fair comparison 
176. The European Communities submits that, in  the present case, the model zeroing methodology 
used by the United States involved an inherent bias that had the effect of inflating the margin of 
dumping.  The determination in this case was ther efore inconsistent with the obligation imposed on 
the United States by Article 2.4 of the Anti- Dumping Agreement to make a fair comparison between 
normal value and export price.  The model zeroing method used by the United States was not fair 
within the meaning of Article 2.4 of the Anti-Dumping Agreement .  It failed to duly reflect the actual 
prices of the export transactions that took place during the period of investigation, as it should have 
done once the United States had fixed the parameters of its investigation in terms of subject product.   
 (d) Conclusions 
177. In light of the foregoing, the European Co mmunities submits that the United States violated 
Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement  as well as Articles VI:1 and VI:2 of the 
GATT 1994 when using model zeroing in the original investigation proceedings mentioned in the Annex to the Panel request as Case XVI.    
1.2 Other Measures at Issue 
178. The European Communities submits that the othe r three original investigations contained in 
the Annex to the request for establishment of the Pane l are inconsistent with Articles 2.4 and 2.4.2 of 
the Anti-Dumping Agreement  on the basis of the same argument s mentioned above.  For the sake of 
simplicity, the European Communities will not repeat  the arguments mentioned before.  Instead, in 
Exhibits EC-28 to 30, the relevant sections of th e United States' determination showing the use of 
model zeroing are mentioned.   
 
1.3 Conclusions 
179. From the foregoing, the European Communiti es concludes that the United States violated 
Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement  as well as Articles VI:1 and VI:2 of the 
GATT 1994 when applying model zeroing in the 4 orig inal investigation proceedings mentioned in 
the Annex to the Panel request.   
 
2. Administrative Reviews 
180. The European Communities considers that th e United States has failed to comply with its 
obligations under the Anti-Dumping Agreement  and the GATT 1994 with respect to the 
determinations carried out in the administrative revi ew investigations contai ned in the Annex to the 
request for establishment of the Panel.    181. The European Communities will describe belo w the main facts and findings made by the 
United States in Case II , Ball Bearings and Parts Thereof – Italy (A-475-801), No. 5  (Exhibit EC-31), 
and the violations of the Anti-Dumping Agreement  and the GATT resulting thereof.  For the sake of 
simplicity, the European Communities will not repeat the same arguments with respect to the other 
administrative review proceedings.  The relevant sections of USDOC determination showing the use 
of simple zeroing will be mentioned instead.    
                                                     
 
128 Appellate Body Report, US – Zeroing (Japan) , paras 146 and 147.    WT/DS350/R 
 Page A-43 
 
 
  2.1 Ball Bearings from Italy (A-475-801) 
(a) The measure at issue 
182. In the "Final Results of Anti-Dumping Du ty Administrative Reviews", Notice published in 
the Federal Register129, margins of dumping of 7.65 per cent and of 2.52 per cent were calculated 
respectively for SKF Italy  and for FAG Italy .   
 
183. At point 1 of the Issues and Decisi on Memorandum, entitled "Offsetting of Negative 
Margins", USDOC states its position with regard to  the respondent's arguments concerning zeroing.  
USDOC refers to its established practice.  It explai ns that it considers itself directed by United States 
Statute to use the zeroing methodology.  In partic ular, USDOC insists on the definition of "dumping 
margin" in Section 771(35)(A) of the Act whic h is the "amount by which the normal value exceeds 
the export price and constructed export price of th e subject merchandise".  According to USDOC, this 
means that a dumping margin exists only when norma l value is greater than the export price or the 
Constructed Export Price (CEP).  As no dumping margins exist with respect to sales where normal value is equal to or less than export or CEP, USDOC did not permit these non-dumped sales to offset 
the amount of dumping found with respect to other sales.  USDOC also considered that it had no 
obligation to act on the basis of Appellate Body reports in US – Softwood Lumber  and US – 
Zeroing (EC).
130   
 
184. The application of the standard program and, thus simple zeroing, to FAG Italy  was reflected 
in the Final Margin Program Log as follows:131   
 
MPRINT(US14_MARGINS):  PROC MEANS NOPRINT DATA = MARGCALC; MPRINT(US14_MARGINS):  WHERE EMARGIN GT 0 ; 
MPRINT(US14_MARGINS):  VAR EMARGIN QTYU USVALUE; MPRINT(US14_MARGINS):  WEIGHT WTFACT 
MPRINT(US14_MARGINS):  OUTPUT OUT = ALLPUDD (DROP=_FREQ_ _TYPE_) 
SUM = TOTPUDD MARGQTY MARGVAL; MPRINT(US14_MARGINS):  RUN; NOTE:  There were [155] observations read from the data set WORK.MARGCALC. WHERE EMARGIN>0; NOTE:  The data set WORK.ALLPUDD has [1] observations and [3] variables. 
NOTE:  PROCEDURE MEANS used (Total process time): 
real time 0.01 seconds 
cpu time 0.02 seconds 
 185. In the Final Margin Program Log with respect to SKF Italy , the application of the standard 
program and, thus simple zeroing, was reflected as follows:
132   
 
MPRINT(US14_MARGINS):  PROC MEANS NOPRINT DATA = MARGCALC; MPRINT(US14_MARGINS):  WHERE EMARGIN GT 0 ; 
MPRINT(US14_MARGINS):  VAR EMARGIN QTYU USVALUE; MPRINT(US14_MARGINS):  WEIGHT WTFACT 
MPRINT(US14_MARGINS):  OUTPUT OUT = ALLPUDD (DROP=_FREQ_ _TYPE_) 
SUM = TOTPUDD MARGQTY MARGVAL; MPRINT(US14_MARGINS): RUN; NOTE:  There were [   ] observations read from the data set WORK.MARGCALC. 
                                                     
 
129 Exhibit EC-31, Appendix I.   
130 Exhibit EC-31, Appendix II, p. 11.   
131 Exhibit EC-31, Appendix III, p. 41.   
132 Exhibit EC-31, Appendix IV, pp. 43-44.   WT/DS350/R 
Page A-44  
 
  WHERE EMARGIN>0; 
NOTE:  The data set WORK.ALLPUDD has [ ] observations and [3] variables.   NOTE:  PROCEDURE MEANS used (Total process time):   real time 0.00 seconds 
cpu time 0.01 seconds 
 
186. In both cases, when zeroing is not applied,  the dumping calculations with respect to FAG Italy  
and SKF Italy  show no dumping.  In fact, the dumping marg in would have been negative.  The tables 
containing the calculations with respect to FAG It aly without zeroing show that, with the same data, 
the final anti-dumping margin would have been negative, -30.27 ( i.e., by taking 100 per cent of the 
transactions and taking account of all positive a nd negative instances of dumping found, no dumping 
took place).
133  By contrast, the use of zeroing in this case resulted in duties being imposed at 2.52 per 
cent.    187. Likewise, the tables containing the calculations with respect to SKF Italy  without zeroing 
show that, with the same data, the final anti- dumping margin would have been negative, -4.00.
134  By 
contrast, the use of zeroing in this case resulted in duties being imposed at 7.65 per cent.   
 188. Consequently, in this case, to determine th e anti-dumping duties to be collected for entries 
made during the period of review ( i.e., the assessment rate), and to determine the deposit rate for 
future entries, USDOC calculated margins of dump ing using a W-to-T comparison that included the 
standard simple zeroing procedures.  USDOC, th erefore, made multiple comparisons between a 
weighted normal value and export price for a series of comparable individual export transactions.  In 
terms of USDOC's standard simple zeroing proce dures, in aggregating the results of the multiple 
transaction-based comparisons to obtain the overa ll weighted average dumping margin, only those 
comparisons for which there were positive results were taken into account.  In other words, USDOC 
disregarded any comparisons with a negative value.   As a result, the sum total amount of dumping 
was inflated by an amount equal to the excluded negative values.  Without zeroing, the results of 
those calculations would have been negative for e ach of these two respondents, and no anti-dumping 
duties would have been assessed or collected.    (b) Violation of Articles 2.1, 2.4, 2.4.2 and 9.3 of the Anti-Dumping Agreement 
189. The European Communities considers that, by using the simple zeroing methodology in the 
administrative review at issue, the United States acted  in a manner inconsistent with Articles 2.1, 2.4, 
2.4.2 and 9.3 of the Anti-Dumping Agreement .  This is so because USDOC determination did not 
reflect the margin of dumping for the product as a wh ole.  Rather, USDOC used, without justification, 
an asymmetrical method of comparison between norma l value and export price.  USDOC, therefore, 
did not comply with its obligation to ensure that the amount of the anti-dumping duty collected does 
not exceed the margin of dumping in accordance with Article 9.3 of the Anti-Dumping Agreement .   
 190. The administrative review concerned includes final retrospective assessments as provided for 
in Article 9.3.1 of the Anti-Dumping Agreement .  It is therefore not disputed that such administrative 
review must be consistent with, inter alia , the relevant obligations set out in Article 9.3 of the Anti-
Dumping Agreement , which provides that:   
 
"The amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2."   
 
                                                     
 
133 Exhibit EC-31, Appendices V and VII.   
134 Exhibit EC-31, Appendices VI and VIII.    WT/DS350/R 
 Page A-45 
 
 
  191. Article 9.3 of the Anti-Dumping Agreement  does not prescribe a specific methodology 
according to which the duties should be assessed .  As noted by the Appellate Body in US – 
Zeroing (EC) :   
 
"In particular, a reading of Article 9.3 of the Anti-Dumping Agreement and 
Article VI:2 of the GATT 1994 does not suggest that final anti-dumping duty 
liability cannot be assessed on a transaction- or  importer-specific basis, or that the 
investigating authorities may not use specifi c methodologies that reflect the distinct 
nature and purpose of proceedings govern ed by these provisions, for purposes of 
assessing final anti-dumping duty liability, provided that the total amount of anti-
dumping duties that are levied does not exceed the exporters' or foreign producers' 
margins of dumping."135   
 192. However, although Article 9.3 of the Anti-Dumping Agreement  does not prescribe a specific 
methodology according to which the duties should be assessed, it sets out a requirement regarding the 
amount of the anti-dumping duties to be assessed .  As noted by the Appellate Body:   
 
"[I]nvestigating authorities are required to ensure that the total amount of anti-dumping duties collected on the entries of a product from a given exporter shall not exceed the margin of dumping as established fo r that exporter.  In other words, the 
margin of dumping established for an expor ter or foreign producer operates as a 
ceiling  for the total amount of anti-dumping duties that can be levied on the entries 
of the subject product (from that exporter) covered by the duty assessment proceeding".
136  (emphasis added)  
 193. Given that Article 9.3 explic itly refers to Article 2 of the Anti-Dumping Agreement , it must be 
ensured that the margins of dumping which operate as a ceiling  for the amount of assessed anti-
dumping duties are established in accordance with Article 2.
137   
 
(i) The duty must not exceed the margin of dumping  as determined with respect to the product as 
a whole 
194. As discussed above in Section III.D.1.1(b)(i ), "dumping" and "margins of dumping" as 
defined in Articles VI:1 and VI:2 of  the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement  
are concepts that are strictly defined in relation to the "product" under investigation.138  T he t e rm s  
"dumping" and "dumping margins" in the Anti-Dumping Agreement , therefore, apply to the product 
under investigation as a whole  and do not apply to sub-group levels.139  These definitions apply 
throughout the Agreement in each of the five type s of anti-dumping proceeding (including original 
investigations and administrative reviews) and with respect to all comparison methodologies ( i.e., 
comparisons made on an average-to-average, transa ction-to-transaction, and average-to-transaction 
basis).140   
 
                                                      
135 Appellate Body Report, US – Zeroing (EC) , para. 131.   
136 Appellate Body Report, US – Zeroing (EC) , para. 130.   
137 This is, in addition, consistent with the Appellate Body's finding in US – Corrosion Steel Sunset 
Review  according to which "should investigating authoritie s choose to rely upon dumping margins in making 
their likelihood determination, the calculation of these margins must conform to the disciplines of Article 2.4.  
We see no other provisions in the Anti-Dumping Agreement according to which Members may calculate 
dumping margins" (para. 127).   
138 Appellate Body Report, US – Zeroing (Japan) , para. 110.   
139 Appellate Body Report, US – Softwood Lumber V , para. 102.   
140 Id., para. 93;  and Appellate Body Report, US – Zeroing (Japan) , para. 115. WT/DS350/R 
Page A-46  
 
  195. Investigating authorities may undertake mu ltiple intermediate comparisons between a 
weighted average "normal value" and individual ex port transactions.  However, the results of such 
multiple comparisons are not "margins of dumping"  within the meaning of Article 9.3 of the Anti-
Dumping Agreement .  It is only on the basis of aggregating all these "intermediate values" that an 
investigating authority can establish margins of  dumping for the product under investigation as a 
whole.
141   
 196. The European Communities argues that th e simple zeroing used by USDOC in the 
administrative review at issue did not allow for the calculation of the margin of dumping for the product as a whole.  As explained before, USDOC disregarded the results of the intermediate 
comparisons when the export price exceeded th e contemporaneous average normal value when 
calculating the overall margin of dumping for dete rmining the new exporter-specific cash deposit and 
importer-specific assessment rates.  By systematically disregarding intermediate price comparison results where the export price exceeds the normal va lue, the margin of dumping determined by 
USDOC only partially  reflects the transactions under considerati on and, therefore, fails to reflect the 
product as a whole.   
 197. Accordingly, in the administrative review at issue, the amount of duties assessed by USDOC 
exceeded the foreign producer's or exporter's marg in of dumping for the pr oduct under consideration 
under Article 2.  The European Communities submits that this directly violates the obligation to 
calculate the margin of dumping for the product as a whole and results in collections above the ceiling  
established pursuant to Article 2 of the Anti-Dumping Agreement , and inflated cash deposit rates, and 
are, therefore, inconsistent with Articles 2 and 9.3 of the Anti-Dumping Agreement .
142   
 
(ii) The duty must not exceed the dumping margin  established in accordance with the fair 
comparison requirement under Article 2.4 of the Anti-Dumping Agreement 
198. As a preliminary observation, it should be underlined, as noted by the Appellate Body, that 
one implication of the fact that the fair comparison is expressed in terms of a general and abstract standard is that this requirement is also appli cable to proceedings governed by Article 9.3 of the Anti-
Dumping Agreement .
143   
 199. The European Communities submits that the si mple zeroing method used by the United States 
in the relevant measures at issue results in the calculation of a margin of dumping, whether expressed 
as an amount or a percentage rate, that is unbala nced and inherently biased and, therefore, is 
inconsistent with the fair comparison requirement under Article 2.4 of the Anti-Dumping Agreement .   
 200. As mentioned before, the term "fair" is generally understood to connote impartiality, even-
handedness or lack of bias.
144  Rather than being "fair", the use of simple zeroing in administrative 
reviews is inherently biased because when an exporter makes some sales above normal value and 
some sales below normal value, the use of zeroing w ill inevitably result in a margin higher than would 
otherwise be calculated.  This increase in the margin is not attributable to an y change in the pricing 
behaviour of the exporter.  Rather, this increase is th e direct result of the United States' decision to 
limit the numerator of its dumping calculation to those transactions with positive intermediate 
comparison results.  A methodological choice that systematically and inevitably results in a higher 
                                                      
141 Appellate Body Report, US – Zeroing (EC) , paras 126 and 132.   
142 Id., para. 133; and Appellate Body Report, US – Zeroing (Japan) , para. 155.   
143 Appellate Body Report, US – Zeroing (EC) , para. 146.   
144 According to the dictionary, fair means "just, unbiased, equitable, impartial, legitimate, in 
accordance with the rules of standards"  and "offering an equal chance of  success" (Shorter Oxford English 
Dictionary;  5th edn, W.R. Trumble, A. Stevenson (eds) (Oxford University Press, 2002), Vol.1, p. 915), quoted 
by the Appellate Body in US – Lumber V (Article 21.5) , at para. 138.    WT/DS350/R 
 Page A-47 
 
 
  margin where there has been no change in pricing be haviour is inherently biased and unfair and, thus, 
inconsistent with Article 2.4 of the Anti-Dumping Agreement .   
 201. These conclusions are confirmed if one consid ers the situation from the exporter's point of 
view.  Having been made subject to an anti-dumpi ng duty following the original investigation, an 
exporter will most likely wish to remedy this situat ion by increasing its prices so as to eliminate the 
margin of dumping as established during the original  investigation.  However, the removal of the 
original margin of dumping will not prevent the ex porter from being subject to the further imposition 
of a duty following a United States "administrativ e review" of the amount of duty, unless the exporter 
actually increases its prices by more than the margin of dumping.  This cannot be consistent with the 
general overarching principle that comparisons be tween normal value and export price be fair.   
 202. As mentioned in Section III.A.2 above, prev ious panels and Appella te Body reports have 
confirmed this interpretation of Article 2.4 of the Anti-Dumping Agreement .  In EC – Bed Linen , the 
Appellate Body noted that:   
 
"Furthermore, we are also of the view that a comparison between export price and 
normal value that does not fully take into account the prices of all comparable 
export transactions – such as the practice of "zeroing" at issue in this dispute – is not 
a "fair comparison" between export price and normal value, as required by Article 2.4 and by Article 2.4.2".
145   
 
203. In US – Carbon Steel from Japan, the Appellate Body went on to recall its findings in the 
EC – Bed Linen case, and stated that:   
 
"When investigating authorities use a zeroing methodology such as that examined in 
EC – Bed Linen to calculate a dumping margin, whether in an original investigation 
or otherwise , that methodology will tend to inflate the margins calculated.  Apart 
from inflating the margins, such a methodol ogy could, in some instances, turn a 
negative margin of dumping into a positive margin of dumping.  As the Panel itself 
recognized in the present dispute, 'zeroing … may lead to an affirmative determination that dumping exists wher e no dumping would have been established 
in the absence of zeroing'.  Thus, the inhe rent bias in a zeroing methodology of this 
kind may distort not only the magnitude of a dumping margin, but also a finding of the very existence of dumping".
146  (emphasis added )  
 204. These conclusions were again essentially confirmed by the panel in US – Softwood Lumber V , 
the issue before the panel being whether Unite d States model zeroing was "consistent with the 
obligations imposed by Article 2.4.2 and the "fai r comparison" requirement in Article 2.4 of the Anti-
Dumping Agreement "
147.  The Appellate Body in that case again found that:   
 
"[z]eroing means, 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 tr ansactions in those sub-groups in which 
the weighted average normal value is less th an the weighted average export price.  
Zeroing thus inflates the margin of dumping for the product as whole".148   
 
                                                      
145 Appellate Body Report, EC – Bed Linen , para 55.   
146 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para 135.   
147 Panel Report, US – Softwood Lumber V , paras 7.196.   
148 Appellate Body Report, US – Softwood Lumber V , para 101.   WT/DS350/R 
Page A-48  
 
  205. Similarly, in US – Lumber V (Article 21.5 – Canada) , the Appellate Body concluded that the 
use of zeroing in the Section 129 Determinati on is inconsistent with Article 2.4:   
 
"The term "fair" is generally understo od to connote impartiality, even handedness, 
or lack of bias.  For the reasons stated be low, we consider that the use of zeroing 
under the transaction-to-transaction comparis on methodology is difficult to reconcile 
with the notions of impartiality, evenhande dness, and lack of bias reflected in the 
"fair comparison" requirement in Article 2.4.   
 
First, the use of zeroing under the transaction-to-transaction comparison 
methodology when aggregating the transaction-specific comparisons for purposes of 
calculating the "margins of dumping", distorts the prices of certain export transactions because export transactions ma de at prices above normal value are not 
considered at their real value.  The prices of these export transactions are artificially reduced when zeroing is applied under th e transaction-to-transaction comparison 
methodology.  As the Appellate Body explaine d in the original dispute, "[z]eroing 
means, 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". 
 
Secondly, the use of zeroing in the transaction-to-transaction comparison methodology, as in the weighted average- to-weighted average methodology, tends 
to result in higher margins of dumping.  As the Appellate Body underscored in US – 
Corrosion-Resistant Steel Sunset Review , the use of zeroing:   
 
... will tend to inflate the margins calculated.  Apart from inflating the margins, such 
a methodology could, in some instances, turn a negative margin of dumping into a 
positive margin of dumping. ... Thus, the i nherent bias in a zeroing methodology of 
this kind may distort not only the magnitude  of a dumping margin, but also a finding 
of the very existence of dumping.   
 
In sum, the use of zeroing under the transaction-to-transaction comparison methodology artificially inflates the magnitude of dumping, resulting in higher 
margins of dumping and making a positive de termination of dumping more likely.  
This way of calculating cannot be described as impartial, even-handed, or unbiased.  
For this reason, we do not consider that the calculation of "margins of dumping", on the basis of a transaction-to-transaction co mparison that uses zeroing, satisfies the 
"fair comparison" requirement within the meaning of Article 2.4 of the Anti-
Dumping  Agreement ".
149   
 206. Finally, in US – Zeroing (Japan) , the Appellate Body stated with respect to zeroing in 
administrative reviews that:    
"If anti-dumping duties are assessed on the basis of a methodology involving 
comparisons between the export price and the normal value in a manner which 
results in anti-dumping duties being collected from importers in excess of the amount of the margin of dumping of the exporter or foreign producer, then this methodology cannot be viewed as involving a "fair comparison" within the meaning of the first sentence of Article 2.4.  Th is is so because such an assessment would 
result in duty collection from importers in excess of the margin of dumping 
established in accordance with Article 2, as we have explained previously.  Therefore, Panels and the Appellate Body  have clarified that the use of model 
                                                     
 
149 Appellate Body Report, US – Lumber V (Article 21.5 – Canada) , paras 139 to 142.    WT/DS350/R 
 Page A-49 
 
 
  zeroing in administrative reviews runs against the fair comparison obligation 
contained in Article 2.4 of the Anti-Dumping Agreement".150   
 207. The European Communities submits that, in  the present case, the zeroing methodology used 
by the United States involved an inherent bias that had the effect of inflating (or super-inflating) the 
margin of dumping, and even of turni ng a negative margin into a positive one.
151  Indeed, the 
calculations with respect to FAG Italy  with and without zeroing show that, with the same data, the 
final anti-dumping margin ranges from -30.27 to 2.52 per cent.  A range from -4.00 to 7.65 per cent can be seen with respect to SKF Italy .  The determination in this case was, therefore, inconsistent with 
the obligation imposed on the United States by Article 2.4 of the Anti-Dumping Agreement to make a 
fair comparison between normal value and export price.   
 208. Consequently, the simple zeroing method used by the United States in this case was not fair 
within the meaning of Article 2.4 of the Anti-Dumping Agreement .   
 (iii) Violation of Article 2.4.2 of the Anti-Dumping Agreement 
209. The European Communities submits that by using the asymmetrical method of comparison of 
the second sentence of Article 2.4.2 and by using simple zeroing in the measure at issue, the 
United States breached Article 2.4.2 of the Anti-Dumping Agreement .   
 210. Article 2.4.2 of the Anti-Dumping Agreement  provides that:   
 
"Subject to the provisions governing fair comp arison 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.  A normal 
value established on a weighted average basis may be compared to prices of 
individual export transactions if the authorities find a pattern of export prices which differ significantly among different purchasers,  regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriately by the use of a weighted average-to-weighted average or transaction-
to-transaction comparison."   
 211. Article 2.4.2 thus sets out three comparison methodologies that investigating authorities may use to calculate dumping margins.  The first sente nce of Article 2.4.2 provides for two comparison 
methodologies involving symmetrical comparisons of normal value and export price (weighted 
average-to-weighted average and tr ansaction-to-transaction comparisons).  Article 2.4.2 stipulates that 
these two methodologies "shall normally" be used by i nvestigating authorities to  establish margins of 
dumping.  As an exception to the two normal methodologies, the second sentence of Article 2.4.2 sets out a third comparison methodology which involves an asymmetrical comparison between weighted 
average normal value and prices of individual export transactions.  This methodology may only be used if the circumstances defined in th e second sentence of Article 2.4.2 of the Anti-Dumping 
Agreement are met.   
 212. The European Communities will a ddress below the issue of the application of Article 2.4.2 of 
the Anti-Dumping Agreement to all types of investigations undertaken pursuant to Article VI of the 
GATT 1994 and the Anti-Dumping Agreement in which margins of dumping are calculated or relied 
upon.  In this respect, the European Comm unities submits that Article 2.4.2 of the Anti-Dumping 
                                                     
 
150 Appellate Body Report, US – Zeroing (Japan) , at para. 168.   
151 Exhibit EC-31, Appendices V to VIII.   WT/DS350/R 
Page A-50  
 
  Agreement applies not only in the context of original inv estigation proceedings but also in the context 
of review proceedings, including "administrative reviews".    (1) Interpretation of the term "the existence of margins of dumping during the investigation 
phase"  
213. Article 2.4.2 refers to the determination of  the "existence of margins of dumping during the 
investigation  phase" (emphasis added).  The ordinary mean ing of the word "investigation" indicates a 
systematic examination or inquiry or a careful st udy of or research into a particular subject.152  
According to the European Communities, what that pa rticular subject is may be limited by the terms 
of a particular provision of the Anti-Dumping Agreement .   
 
214. For instance, Article 5.1 of the Anti-Dumping Agreement  refers to an investigation "to 
determine the existence , degree  and effect  of any alleged dumping" such as is conducted in an original 
investigation (emphasis added) .  The words in inverted commas would be redundant if the 
United States' previous assertions about the "limited"  or special meaning of the word investigation 
would be correct.  Similarly, Article 9.5 of the Anti-Dumping Agreement  calls for an investigation into 
the existence and degree of dumping by a new shipper;  Article 11.2 of the Anti-Dumping Agreement  
calls for an investigation into whether or not the continued imposition of the duty is necessary to 
offset dumping or whether injury would be likely to  continue or recur if the duty were removed or 
varied;  Article 11.3 of the Anti-Dumping Agreement  calls for an investigation into whether or not the 
expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury;  and 
Article 9.3.1 of the Anti-Dumping Agreement  calls for an investigation into the amount of anti-
dumping duty that should be retrospectively assessed.    215. It is apparent that in all the above cases,  and particularly when assessing the amount of duty 
to be paid under its system of retrospective asse ssment, an investigating authority is required to 
engage in a "systematic examination" or a "careful study".  Article 2.4.2 of the Anti-Dumping 
Agreement  contains no limiting language in that regard .  To read any other limiting language –such as 
that found in Article 5.1 of the Anti-Dumping Agreement – into Article 2.4.2 of the Anti-Dumping 
Agreement , when there is simply no such language there, would thus be legally incorrect.   
 216. This good faith interpretation is confirmed by the ordinary meaning of all the terms in the 
phrase, considered in isolation and together, includi ng the grammatical structure of the phrase, in its 
context and having regard to its  object and purpose. It is also unequivocally confirmed by the 
preparatory work.    (2) Context of Article 2.4.2 of the Anti-Dumping Agreement
 
217. The application of Article 2.4.2 to all types of investigations in which margins of dumping are 
calculated or relied upon is supported by the context of Article 2.4.2 of the Anti-Dumping Agreement , 
in particular Article VI of the GATT 1994 as well as Article 9.3 of the Anti-Dumping Agreement.   
 218. Article 2.4.2 contains one direct link to other treaty terms:  the term "margins of dumping" in 
Article 2.4.2 has a special defined meaning as pr ovided for in Article VI:2 of the GATT 1994.  
Article VI:1 of the GATT 1994 defines the word "dumping" whilst Article VI:2 of the GATT 1994 
defines the term "margin of dumping".  Thus, whenever, the Anti-Dumping Agreement uses the word 
"dumping", that word has the special meaning given to the defined term "dumping" and whenever the 
Anti-Dumping Agreement uses the term "margin of dumping", that phrase has the special meaning 
given to the defined term "margin of dumping".  Article 2.1 of the Anti-Dumping Agreement 
                                                     
 
152 Investigation:  "The action or process of investig ating;  systematic examin ation;  careful research 
(…).  An instance of this;  a systematic inquiry;  a careful study of a particular subject" (The New Shorter 
Oxford English Dictionary) (Exhibit EC-32).    WT/DS350/R 
 Page A-51 
 
 
  implements the definition of "dumping".  Similarly, Articles 2.1 to 2.4 of the Anti-Dumping 
Agreement implement the definition of "margins of dumpi ng".  There are not other provisions in the 
Anti-Dumping Agreement which concern themselves with how to calculate a margin of dumping.   
 219. Given that Article 2.4 implements the provisions of Article VI:2 of the GATT 1994 
concerning "margins of dumping", it must neces sarily apply across the Agreement.  The term 
"margins of dumping" which has a precise defin ition in Article VI:2 of the GATT 1994 cannot have 
different meanings in the contex t of various investigations.   
 220. As noted by the Appellate Body in US – Corrosion-Resistant Steel , in the framework of 
sunset reviews under Article 11.3 –but this is equally  applicable to administrative reviews– "should 
investigating authorities choose to rely upon dumping margins in making their likelihood determination, the calculation of these margins must c onform to the disciplines of Article 2.4.  We see 
no other provisions in the Anti-Dumping Agreement according to which Me mbers may calculate 
dumping margins".
153   
 
221. This is logical.  If both Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement were limited to 
"original investigations", that would open up in the Anti-Dumping Agreement a vast loophole on the 
fundamental issue of how to calculate a margin of du mping.  In addition, it would make the results of 
an original investigation effectively worthless.  It would void entirely of content the overarching and 
independent obligation contained in Ar ticle 2.4.  This would lead to absurd results, in particular in the 
context of the US anti-dumping system in which the results of retrospective assessments eclipse 
entirely the results of the original investigation.  Indeed, suppose that as a result of an original 
investigation proceeding without zeroing, duties ar e imposed at 5 per cent.  Assuming that the 
exporter made the same number of transactions at equal prices during the following year, the use of zeroing in the first administrative review proceedi ng would automatically inflate the dumping margin 
and the amount to be collected.  In other words,  this would thus allow the United States to re-
introduce unlawful zeroing methodology by the "back door ", in an administrative review conducted as 
soon as possible following the imposition of duties, the results of which would annul entirely the 
results of the original investigation proceeding.    222. Also, according to Article 9.3 of the Anti-Dumping Agreement , "the amount of the anti-
dumping duty shall not exceed the margin of dumpi ng as established under Article 2".  The reference 
to Article 2 must be taken to be a reference to the wh ole of Article 2.  There is no exclusion of parts of 
Article 2 in that cross-reference.  The cross-references in the Anti-Dumping Agreement clarify when 
they refer only to certain paragraphs  or sub-paragraphs of an article or when they are restricted some 
way.  This is not the case of the cross-reference in Ar ticle 9.3 to Article 2.  This confirms that, in the 
context of Article 9.3, a "margin of dumping" is  to be established by reference to the whole of 
Article 2, consistent with the use of the defined term "margins of dumping" in Article 2.4.2.   
 (3) Administrative reviews must comply with th e requirements of Article 2.4.2 of the Anti-
Dumping Agreement  
223. In light of the above, the European Commun ities submits that the phrase "the existence of 
margins of dumping during the investigation phase" in Article 2.4.2 of the Anti-Dumping Agreement  
is not limited to original investigations but  also to other investigation proceedings, e.g., reviews.  
Indeed, there are five different types of anti-dumpi ng proceedings expressly referred to in the text of 
the Anti-Dumping Agreement :  original proceedings  (see, for example, Article 5.9);  changed 
circumstances proceedings  (see, for example, Article 9.5 "normal (…) review proceedings");  sunset 
proceedings  (see, for example, Article 9.5 "normal (…) review proceedings");  and assessment or 
refund proceedings  (see, for example, Article 9.5 "normal (…) review proceedings").  Assessment 
proceedings under Article 9.3.1 or refund proceed ings under Article 9.3.2 are therefore to be 
                                                      
153 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 127.   WT/DS350/R 
Page A-52  
 
  distinguished from original proceedings under Article  5.  These different types of proceedings have 
different purposes and are not all subj ect to all the provisions of the Anti-Dumping Agreement .   
 224. However, all of these proceedi ngs generally involve an investig ation into something.  In the 
case of Article 5, an investigation into the existen ce, degree an effect of any alleged dumping;  in the 
case of Article 9.5 an investigation into the ne w comer's margin of dumping;  in the case of 
Article 11.2, an investigation into whether or not  changed circumstances warrant a variation of the 
duty;  in the case of Article 11.3, an investigation into whether or not expi ry of the duty would be 
likely to lead to continua tion or recurrence of dumping and injury;  and in the case of Article 9.3, an 
investigation into the actual (contemporaneous) marg in of dumping and final liability for payment of 
duties.  Consistent with the definition of the te rm "margin of dumping" in Article VI:2 of the 
GATT 1994, as implemented in all of Article 2, and the cross-reference in Article 9.3 to all of 
Article 2, whenever an authority investigates or relies on a "margin of dumping" in any of these anti-
dumping proceedings, that margin of dumping must  be calculated in a manner consistent with 
Article 2, that is, for the product as a whole .   
 
225. Consequently, as explained in Section III.D.1.1(b), since Article 2.4.2 of the Anti-Dumping 
Agreement  prohibits the zeroing of negative intermediate results calculated for certain transactions, 
the United States also violated this provision in th e administrative review proceeding at issue pursuant 
to Article 9.3 of the Anti-Dumping Agreement .   
 (iv) Conclusions 
226. In light of the foregoing, the European Co mmunities considers that, by using the simple 
zeroing methodology in the administrative review at issu e, the United States violated Articles 2.1, 2.4, 
2.4.2 and 9.3 of the Anti-Dumping Agreement , since USDOC's determination did not reflect the 
margin of dumping for the product as a whole.   
 
(c) Violation of Article 11.2 of the Anti-Dumping Agreement 
227. As mentioned in Section II.B.1, as a result of administrative reviews carried out by the 
United States, duties are collected with respect to a previous period of review (POR) and a revised estimated anti-dumping duty deposit rate is impos ed with respect to future imports.   
 
228. The European Communities argu es that the United States re-inves tigation of the cash deposit 
rate, which is carried out in conjunction with the retrospective assessment proceeding, must also be 
consistent with the obligations set out in Article 11. 2.  That provision refers to the re-investigation of 
the margin of dumping calculated during the orig inal proceeding.  The European Communities 
considers that, if an investigating authority ma kes or relies on a dumping determination for the 
purposes of Article 11.2 of the Anti-Dumping Agreement , it is bound to establish any such dumping 
margin in conformity with the provisions of  Article 2.4, including Article 2.4.2 of the Anti-Dumping 
Agreement .  In this respect, Article 11.2 must be read in conjunction with the other provisions of the 
Anti-Dumping Agreement , including, necessarily, those that cont ain relevant definitions, such as 
Article 2, which defines dumping.    
229. Article 11.2 of the Anti-Dumping Agreement  states that:   
 
"The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided th at a reasonable period of 
time has elapsed since the imposition of the definitive anti-dumping duty, upon 
request by any interested party which su bmits positive informati on substantiating the 
need for a review.
21  Interested parties shall have the right to request the authorities 
to examine whether the continued impositio n of the duty is necessary to offset 
dumping, whether the injury would be likely to continue or recur if the duty were  WT/DS350/R 
 Page A-53 
 
 
  removed or varied, or both.  If, as a resu lt of the review under this paragraph, the 
authorities determine that the anti-dumping du ty is no longer warranted, it shall be 
terminated immediately. 
______________________ 
21 A determination of final liability for payment of anti-dumping duties, as provided for in 
paragraph 3 of Article 9, does not by itself co nstitute a review within the meaning of this 
Article".    
 
230. The focus of Article 11.2 of the Anti-Dumping Agreement  is on reviewing the need to 
continue with the anti-dumping duty.  The principl e remains that insofar as the importing Member 
needs to consider margins of dumping in the cour se of an Article 11.2 review, or varies the anti-
dumping duty as a result of an Article 11.2 review, the margin of dumping shall be established in 
accordance with the provisions of Article 2, and the amount of anti-dumping duty shall not exceed the 
margin of dumping so established.   
 
231. The European Communities submits that the rea ssessment of a cash-deposit rate to be applied 
to future entries also constitutes a "review" of  whether the continued imposition of the anti-dumping 
duty is necessary to counteract dumping that is causing injury.    
232. The European Communities is of  the view that "administrative reviews" carried out by the 
United States comprise two steps:  first, the determ ination of the definitive amount of duties;  and, 
second, the establishment of new exporter-specific deposit rates for future entries.  In this respect, the 
first part would be covered by the provisions in Article 9.3 whereas the second part would fall under 
Article 11.2 of the Anti-Dumping Agreement .   
 
233. Footnote 21 to the Anti-Dumping Agreement , in the context of Article 9.3.1, does not 
contradict this conclusion.  This Footnote states that:    
"A determination of final liability for payment of anti-dumping duties, as provided for in paragraph 3 of Article 9, does not by itself constitute a review within the 
meaning of this Article [Article 11.2 Anti-Dumping Agreement ]."   
 234. The European Communities would like to draw th e Panel's attention to the words "by itself".  
Indeed, the collection of final duties pursuant to an  administrative review falls under Article 9.3.1 of 
the Anti-Dumping Agreement , which calls for an investigation into the amount of anti-dumping duty 
that should be retrospectively assessed.  This, by itself , does not constitute a "review" pursuant to 
Article 11.2 of the Anti-Dumping Agreement .  By contrast, the imposition of new deposit rates for 
future entries after a reassessment of the dumpi ng margin, something which is different from the 
collection of definitive duties, also amounts to a "review" of whether the continued imposition of the 
anti-dumping duty is necessary to counteract dumping that is causing injury.    
235. In this respect, the European Communities wish es to add that the effects of reviews pursuant 
to Article 11.2 of the Anti-Dumping Agreement  and the reassessment of deposit rates for future entries 
in administrative reviews are the same.  Indeed, in administrative reviews
154, the United States fixes 
an up-dated period of review, gathers all necessary data about normal value and export price during 
that new period, re-calculate normal values and ex port prices, make a comparison and re-calculate a 
margin of dumping.  In this sense, the Unites States reviews the current duty levels in light of the most 
recent data, assesses final liability for anti-dumping duties and imposes new deposit rates for future 
entries.    236. In this specific measure at i ssue, as mentioned in Section III.D.2.1, as a result of the unlawful 
zeroing method described in this submission, the marg in of dumping determined by the United States 
                                                     
 
154 See Section II.B above.   WT/DS350/R 
Page A-54  
 
  was not calculated in conformity with Article 2 of the Anti-Dumping Agreement , and particularly 
Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement .   
 237. The United States also acted in this case in a manner inconsistent with  its obligations under 
Article 11.2 of the Anti-Dumping Agreement.  It failed to consider whether or not the imposition of 
the duty was necessary to offset "dumping" as defined in Article 2 of the Anti-Dumping Agreement .  
Rather, the United States sought to justify the con tinued imposition of the duty as necessary to offset 
something that did not constitute dumping w ithin the meaning of Article 2 of the Anti-Dumping 
Agreement .  Indeed, in the measure at issue, the ca lculation of the dumping margin without using 
zeroing would have resulted in a negative result ( i.e., no dumping).   
 
(d) Conclusions 
238. Therefore, the European Communities consider s that United States has violated Articles 2.1, 
2.4, 2.4.2, 9.3 and 11.2 of the Anti-Dumping Agreement  by using the simple zeroing methodology in 
the administrative review proceeding examined herein.   
 
2.2 Other Measures at Issue 
239. Exhibits EC-33 to EC-68 c ontain documents for the other cases, including generally, the Final 
Results, Issues and Decision Memorandum, Final Margin Program Log and Output, and margin calculation without zeroing.  These documents generally  demonstrate:  that simple zeroing was used, 
that there were some negative intermediate margins –set to zero by USDOC; and the super-
inflationary effect of simple zeroing.   
 240. The same unlawful zeroing method was used by th e United States, to similar effect, in each of 
these cases.  Accordingly, for the same reasons, in each of these cases, the United States acted 
inconsistently with the obligations imposed on it by Articles 2.4, 2.4.2, 9.3 and 11.2 of the Anti-
Dumping Agreement .   
 
2.3 Conclusions 
241. In light of the foregoing, the European Co mmunities submits that the United States violated 
Articles 2.4, 2.4.2, 9.3 and 11.2 of the Anti-Dumping Agreement  as well as Articles VI:1 and VI:2 of 
the GATT when using model zeroing in the administra tive reviews included in the Annex to the Panel 
request.   
 
3. Sunset Reviews 
242. As mentioned in Section II.C, in sunset re views, five years after publication of an anti-
dumping duty order, USDOC and USITC review whethe r revocation of the order "would be likely to 
lead to continuation or recurrence of dumping (…) and of material injury".
155  In doing so, USDOC 
relies on dumping margins calculated in a prior origin al investigation or an administrative review as 
the basis for the review determination.  Accord ingly, USDOC necessarily relies on margins that are 
calculated using either the model or simple zeroing procedures, one of which is always a feature of 
USDOC's margin calculations.    
243. The European Communities submits that, with r espect to the sunset reviews contained in the 
Annex to the request for establishment of the Pane l, the United States failed to comply with its 
obligations under the Anti-Dumping Agreement  and the GATT 1994 by relying on dumping margins 
calculated in prior investigati on proceedings using zeroing.   
 
                                                     
 
155 Tariff Act, Section 751(c)(1).    WT/DS350/R 
 Page A-55 
 
 
  244. The European Communities will describe belo w the main facts and findings made by the 
United States in Case XII , Stainless Steel Sheet & Strip in Coils – Italy (A-475-824), No. 42  
(Exhibit EC-69), and the violations of the Anti-Dumping Agreement  and the GATT resulting thereof.  
For the sake of simplicity, the European Communities will not repeat again the same arguments with 
respect to the other 10 cases.  The European Co mmunities submits evidence of the reliance upon 
margins that were calculated using standard zer oing procedures in Exhibits EC-70 to EC-79.   
 
3.1 Stainless Steel Sheet & Strip in Coils – Italy (A-475-824) 
(a) The Measure at issue 
245. In the Notice titled "Continuation of Antidumping Duty Orders on Stainless Steel Sheet and 
Strip in Coils from Germany, Italy, Japan, th e Republic of Korea, Mexico, and Taiwan, and 
Countervailing Duty Orders on Stainless Steel Sheet and Strip in Coils from Italy and the Republic of 
Korea" published in the Federal Register156, the United States decided in the course of the expedited 
sunset review that revocation of the anti-dumping duty order on stainless steel sheet and strip in coils 
from Italy would be likely to lead to continuation or recurrence of dumping at the following 
percentage weighted average percentage ma rgins:  11.23 per cent, with respect to ThyssenKrupp 
Acciai Speciali Terni, S.A . (TKAST ), and 11.23 per cent for all others.   
 246. The Decision Memorandum of the Inte rnational Trade Administration dated 
22 November 2004 (69 FR 67894) states in its Page 4 that:  "After considering the dumping margins 
determined in the investigation and subsequent reviews, the Department determines that it is 
appropriate to report to the USITC for TKAST  and "all others" the rates from the amended final 
determination because they are the only calculate d rates that reflect the behaviour of companies 
without the discipline of the order.  Therefore, we will report to the USITC the rates as published in the amended final determination,  as listed in the next section".
157   
 
247. It can be observed that the duties imposed as a result of the sunset revi ew investigation were 
identical to the duty levels as calcula ted in the original investigation, i.e., 11.23 per cent (see Notice of 
Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order;  
Stainless Steel Sheet and Strip in Coils From Italy , 64 FR 40567, of 27 July 1999).158  It should 
therefore not be disputed that the United States,  in accordance with its regulations, manual of 
proceedings, standard programs, etc, used model ze roing in original investigations, including this 
one.159   
 248. In the case at hand, the result of the program  log in the original investigation proceeding 
shows that zeroing was used:
160   
                                                      
156 Exhibit EC-69, Appendices I and II.   
157 Exhibit EC-69, Appendix III. 
158 Exhibit EC-69, Appendix IV. 
159 Indeed, the European Communities wi ll like to recall several statements made by the United States 
where it acknowledges the use of model zeroing in or iginal investigations in the past (Exhibit EC-80). 
160 Exhibit EC-69, Appendix V. WT/DS350/R 
Page A-56  
 
   
3813  3814  3815 *************************************** 3816 ***  CALCULATE OVERALL MARGIN.  *** 
3817 *************************************** 
3818  3819 PROC MEANS NOPRINT DATA = MARGIN;   3820  VAR VALUE QTY; 3821  OUTPUT OUT = ALLVAL (DROP = _FREQ_  _TYPE_) 
3822   SUM = TOTVAL TOTQTY; 
3823 RUN;    NOTE:   The data set WORK.ALLVAL has 1 observations and 2 variables.   NOTE:   The PROCEDURE MEANS used 0.08 seconds.   
  
3824  3825 PROC PRINT DATA = ALLVAL ( SYMBOLGEN:   Macro variable PRINTOBS resolves to 10 3825   OBS = &PRINTOBS); 
3826  TITLE3 "TOTAL VALUE AND QUANTITY OF U.S. SALES";  
3827 RUN;    NOTE:   The procedure PRINT used 0.02 seconds.     
3828  
3829 PROC MEANS NOPRINT DATA = MARGIN; 3830  WHERE EMARGIN GT 0;   3831  VAR PCTEMARG;   3832  OUTPUT OUT = MINMAX (DROP = _FREQ_  _TYPE_) 
3833  MIN = MINMARG MAX = MAXMARG; 
3834 RUN; 
  249. The tables containing the results of the preliminary calculations show that, with zeroing, the 
dumping margin found for TKAST  was 3.52461 whereas, with the same data but without zeroing, no 
dumping would have been found (-12.94723).  The fi nal determination with out zeroing would have 
resulted in a negative dumping margin (-0.41), rather than 11.23 per cent.
161   
 (b) Violation of Articles 2.1, 2.4 and 2.4.2 of the Anti-Dumping Agreement 
(i) Dumping margins used in sun set reviews must be determined with respect to a product as a 
whole 
250. In sunset reviews, pursuant to Article 11.3 of the Anti-Dumping Agreement , investigating 
authorities must determine whether the expiry of th e duty that was imposed at the conclusion of an 
original investigation would be likely to lead to continuation or recurrence of dumping .   
 
251. Article 11.3 of the Anti-Dumping Agreement  does not define the word "dumping".  However, 
the definition of dumping which is laid down in Ar ticle VI:1 of the GATT 1994 and in Article 2.1 of 
the Anti-Dumping Agreement  applies to sunset reviews.  Indeed , the words "for the purposes of this 
                                                     
 
161 Exhibit EC-69, Appendices VI and VII.  WT/DS350/R 
 Page A-57 
 
 
  Agreement" in Article 2.1 clearly indicate that the definition of dumping contained in that provision 
applies to the entire Agreement, including its Article 11.3.  This interpretation is supported by the fact 
that Article 11.3 of the Anti-Dumping Agreement  does not indicate, expressly or implicitly, that 
"dumping" has a different meaning in the context of sunset reviews than in the rest of the Anti-
Dumping Agreement .  As a result, in sunset reviews, the question for the investigation authorities is 
whether the expiry of the duty would be likely to l ead to continuation or recurrence of dumping of the 
product subject to the duty (that is, to the introdu ction of that product into the commerce of the 
importing country at less than its normal value).162   
 252. As indicated above, Article 2.1 of the Anti-Dumping Agreement  makes clear that dumping is 
defined in relation to a product as a whole and not in relation to a type, model or category of a 
product.  Thus, if dumping margins are used in the likelihood-of-dumping determination in sunset 
reviews, they must be determined for the product as a whole.    
(ii) Dumping margins used in s unset reviews must conform to the disciplines of Article 2.4 of the 
Anti-Dumping Agreement 
253. In a sunset review, investigating authoriti es are not entitled to rely on dumping margins which 
are inconsistent with the Anti-Dumping Agreement , in particular with Article 2.  In US – Corrosion-
Resistant Steel , the Appellate Body clarified that:   
 
"Article 2 sets out the agreed disciplines in the Anti-Dumping Agreement for 
calculating dumping margins.  As observed earlier, we see no obligation under 
Article 11.3 for investigating authorities to calculate or rely on dumping margins in determining the likelihood of continuati on or recurrence of dumping.  However, 
should investigating authorities ch oose to rely upon dumping margins in 
making their likelihood determination, the calculation of these margins must 
conform to the disciplines of Article 2.4 .  We see no other provisions in the Anti-
Dumping Agreement according to which Members may calculate dumping margins.  
In the CRS sunset review, USDOC cho se to base its affirmative likelihood 
determination on positive dumping margins that  had been previously calculated in 
two particular administrative reviews.  If these margins were legally flawed because 
they were calculated in a manner inconsistent with Article 2.4, this could give rise to 
an inconsistency not only with Article 2. 4, but also with Article 11.3 of the Anti-
Dumping Agreement ".
163  (emphasis added) 
254. Thus, if investigating authorities decide to rely on dumping margins calculated in original 
investigations or subsequent administrative review investigations, those margins must be calculated in 
a manner consistent with Article 2.4 of the Anti-Dumping Agreement .   
 
255. The European Communities submits that to the extent that the dumping margins on which 
USDOC relied in this sunset review have been  determined on the basis of zeroing, they are 
inconsistent with Articles 2.1, 2.4 and 2.4.2 of the Anti-Dumping Agreement .  Indeed, as mentioned 
before, the USDOC relied on the dumping margins pub lished in the amended fi nal determination as 
the only ones reflecting the behaviour of companies without the discipline of the order.164  These had 
been calculated by using model zeroing.165   
 (c) Violation of Articles 11.1 and 11.3 of the Anti-Dumping Agreement 
256. Articles 11.1 and 11.3 of the Anti-Dumping Agreement  provide that:   
                                                     
 
162 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 109.   
163 Id., para. 127.   
164 Exhibit EC-69, Appendix III, p. 4.   
165 Exhibit EC-69, Appendices V to VII.   WT/DS350/R 
Page A-58  
 
  "11.1 An anti-dumping duty shall remain in force only as long as and to the extent 
necessary to counteract dumping which is causing injury."   
 
"11.3 Notwithstanding the provisions of pa ragraphs 1 and 2, any definitive anti-
dumping duty shall be terminated on a date not later than five years from its 
imposition (or from the date of the most recent review under paragraph 2 if that 
review has covered both dumping and injury , or under this paragraph), unless the 
authorities determine, in a review initiated before that date on their own initiative or 
upon a duly substantiated request made by  or on behalf of the domestic industry 
within a reasonable period of time prior to that date, that the expiry of the duty 
would be likely to lead to continuation or recurrence of dumping and injury.  The 
duty may remain in force pending the outcome of such a review."   
257. As highlighted by the Appellate Body in US – Corrosion-Resistant Steel , if a likelihood 
determination under Article 11.3 of the Anti-Dumping Agreement  is based on a dumping margin 
calculated using a methodology inconsistent with Artic le 2.4, then this defect taints the likelihood 
determination too and, thus, USDOC's likeliho od determination could not constitute a proper 
foundation for the continuation of anti- dumping duties under Article 11.3 of the Anti-Dumping 
Agreement .   
 258. Even if an investigating authority does not rely on margins of dumping calculated since the 
original proceeding, it must still necessarily rely on the margin of dumping calculated in the original 
proceeding itself.  That is because the terms "recu r" and "continue" necessarily relate to something 
that not only is going to occur in the future, but which also occurred in the past .  If there is nothing in 
the past, there is nothing that can recur or continue .  Consequently, at least in the case where the use 
of zeroing in the original proceeding had the effect of creating a more than de minimis  dumping 
margin, when in fact there was no dumping or only a de minimis  amount of dumping, then the sunset 
measure will by definition  be inconsistent with the Anti-Dumping Agreement .   
 259. On the basis of the foregoing, the European  Communities submits that by relying in this 
sunset review on margins calculated in prior proceedings using model zeroing, USDOC did not 
comply with its obligations pursuant to Articles 2.1, 2.4 and 2.4.2 because these margins were not 
based on a fair comparison and not calculated for the product as a whole.
166  As a result, USDOC 
acted in breach of Article 11.3 of the Anti-Dumping Agreement .  Also, because USDOC reviews 
conducted pursuant to these provisions are flawed , the United States failed to comply with the 
obligation in Article 11.1 of the Anti-Dumping Agreement .   
 260. These conclusions were also reached by the Appellate Body in US – Zeroing (Japan) .  In that 
case, the Appellate Body noted that since USDOC re lied on margins of dumping established in prior 
proceedings in its likelihood-of-dumping determin ation which were calculated during administrative 
reviews on the basis of simple zeroing and since such zeroing is inconsistent with Articles 2.4 and 9.3, 
the likelihood-of-dumping determinations in sunset  reviews on the basis of those previous dumping 
margins are inconsistent with Article 11.3 of the Anti-Dumping Agreement .
167   
 
(d) Conclusions 
261. Therefore, the European Communities submits that the United States violated Articles 2.1, 
2.4, 2.4.2, 11.1 and 11.3 of the Anti-Dumping Agreement  in the sunset review mentioned in the Annex 
to the Panel request as Case XII , No. 42  when relying on margins of dumping calculated in prior 
investigations using the zeroing methodology.   
 
                                                      
166 Id.   
167 Appellate Body Report, US – Zeroing (Japan) , para. 184 – 187.    WT/DS350/R 
 Page A-59 
 
 
  3.2 Other Measures at Issue 
262. The European Communities submits that the othe r 10 sunset review proceedings contained in 
the Annex to the request for establishment of the Pane l are inconsistent with Articles 2.1, 2.4, 2.4.2, 
11.1 and 11.3 of the Anti-Dumping Agreement  on the basis of the same arguments mentioned above.  
For the sake of simplicity, the Eu ropean Communities will not repeat  these arguments.  Instead, in 
Exhibits EC-70 to EC-79, the relevant sections of USDOC's determinations showing the use of 
zeroing are mentioned.    
3.3 Conclusions 
263. In light of the foregoing, the European Communities submits that the United States has 
violated Articles 2.1, 2.4, 2.4.2, 11.1 and 11.3 of the Anti-Dumping Agreement  in the sunset reviews 
mentioned in the Annex to the Panel request when  relying on margins of dumping calculated in 
previous proceedings using the zeroing methodology.    
IV. FINDINGS AND RECOMMENDATION REQUESTED 
264. For the reasons stated above, the European  Communities respectfully requests this Panel to 
make the following findings:    
• The United States failed to comply with Articles 2.4, 2.4.2, 9.3, 11.1, 11.3 of the Anti-
Dumping Agreement , Articles VI:1 and VI:2 of the GATT 1994, and Article XVI:4 of the 
WTO Agreement since it continues applying duties which were calculated by using zeroing in 
the 18 anti-dumping measures mentioned in the Annex to the Panel request.   
 
• The United States violated Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement  as well as 
Articles VI:1 and VI:2 of the GATT 1994 when applying model zeroing in the 4 original investigation proceedings mentioned in  the Annex to the Panel request.   
 
• The United States violated Articles 2.4, 2.4.2, 9.3 and 11.2 of the Anti-Dumping Agreement  as 
well as Articles VI:1 and VI:2 of the GATT when using model zeroing in 
the 37 administrative review proceedings in cluded in the Annex to the Panel request. 
• The United States violated Articles 2.1, 2.4, 2.4.2, 11.1 and 11.3 of the Anti-Dumping 
Agreement  in the sunset review proceedings men tioned in the Annex to the Panel request 
when relying on margins of dumping calculated in prior investigations using the zeroing methodology.   
 
265. The European Communities notes that, contrary  to Article 4.2 of the Dispute Settlement 
Understanding, the United States has so far failed to give duly consideration to the European 
Communities' representations on this matter.  In view of the obligations contained in Article 3 of the 
Dispute Settlement Understanding, in particular the obligation for WTO Members to engage in 
procedures in good faith in an effort to resolve di spute, the European Communities once again invites 
the United States to comply with its obligations under the WTO Agreements.   
 
266. In order to make effective these obligations, the European Co mmunities requests this Panel to 
recommend, pursuant to Article 19 of the Dispute Se ttlement Understanding, that the United States 
takes the steps necessary to bring its measures into conformity with the cited WTO provisions.  In 
particular, in the view of the European Communitie s, the Panel should suggest that the United States 
cease using zeroing when calculating dumping margin s in any anti-dumping proceeding with respect 
to the 18 measures mentioned in the Annex to the Panel request or any other.  This recommendation 
will be appropriate to help promote the resolution of the dispute.    WT/DS350/R 
Page A-60  
 
  LIST OF EXHIBITS 
 
 EC-1   Request for Establishment of the Panel (DS350) 
 
EC-2   Tariff Act 1930 (extract)  EC-3   Regulations (in three parts)  
EC-4   Manual (by Chapter) 
 EC-5   Detailed Explanation of Computer Language  EC-6   US Notice on Zeroing in Original Investigations  
EC-7   Sunset Policy Bulletin 
 EC-8  Waincymer, WTO Litigation:  Procedural Aspects of Formal Dispute 
Settlement (Cameron May, 2002), p.510 
 
EC-9  Brownlie, Principles of Public International Law (5th ed. 1988) pp. 3-5, 
pp. 20-21 
 EC-10   ICJ Statute  
EC-11   Arnull, The European Union and its Court of Justice (2006) pp. 622-638 
 EC-12  Zweigert and Kötz, An Introductio n to Comparative Law (3rd ed. 1988), 
pp. 256-265 
 EC-13  Rosas, "The European Court of Justice:  sources of law and methods of 
interpretation", in The WTO at Ten (2006), pp. 482-489 
 EC-14   Shahabuddeen, Precedent in the World Court (1996), pp. 234-241  EC-15  Treves, "The International Tribunal for the Law of the Sea", in The WTO 
at 10, (1996), pp. 490-500 
 EC-16  Reid, A Practitioner's Guide to th e European Convention on Human Rights 
(2nd ed. 2004), p. 51 
 EC-17   ICC Statute 
 
EC-18  Kmiec, The Origin and Current M eanings of "Judicial Activism", Comment, 
California Law Review, October 2004, 1422-1477 
 EC-19   ECJ Statute 
 
EC-20  Neville and Kennedy, The Court of  Justice of the European Communities 
(2000), pp. 370-377 
 EC-21  Reid, A Practitioner's Guide to th e European Convention on Human Rights 
(1st ed. 1998), p. 43 
  WT/DS350/R 
 Page A-61 
 
 
  EC-22  International Criminal Tribunal for the former Yugoslavia:  Prosecutor 
v. Zlatko Aleksovski, Case No. IT-95-14/1-A, Judgement 24 March 2000, pp. 41-48 and Declarati on of Judge David Hunt 
 EC-23  ICSID Secretariat Discussion Pa per, "Possible Improvements of the 
Framework for ICSID Arbitration", 22 October 2004 
 EC-24  ICSID Secretariat Working Paper, "Suggested Changes to the ICSID Rules 
and Regulations", 12 May 2005 
 
EC-25  Jackson, "International Law Status  of WTO Dispute Settlement Reports:  
Obligation to Comply or Option to "Buy Out", 98 American Journal of International Law 109 (2004) 
 EC-26   [A-421-811] Purified Carboxymethylcellulose from the Netherlands (No. 50) 
Appendix I: Final USDOC Determinat ion (70 FR 28275) and Final Order 
(70 FR 39734) 
Appendix II: USITC Determ ination (70 FR 39334) 
Appendix III: Program Code of Noviant BV Appendix IV: Program Log of Noviant BV Appendix V: Tables containing calculations with zeroing for Noviant BV 
Appendix VI: Tables containing calculations without zeroing for 
Noviant BV 
 EC-27  Issues and Decision Memorandum for the Final Results of the Section 129 
Determinations (9 April 2007) 
 
EC-28   [A–401-808] Purified Carboxymethylcellulose from Sweden (No. 49)    Appendix I: USDOC Determination (70 FR 28278)    Appendix II: USITC De termination (70 FR 39334) 
   Appendix III: Final Order (70 FR 39734)  
EC-29   [A–405-803] Purified Carboxymethylcellulose from Finland (No. 51) 
 Appendix I:  USDOC Determination (70 FR 39734)  Appendix II: USITC Dete rmination (70 FR 39334) 
 Appendix III: Final Order (70 FR 28279) 
 
EC-30   [A–469-814] Purified Carboxymethylcellulose from Spain (No. 52) 
 Appendix I: USDOC Determination (70 FR 24506)  Appendix II: USITC Determ inations (70 FR 36205) 
 Appendix III: Final Order (70 FR 36562) 
   Appendix IV: Program Log of Aragonesas Delsa S.A.  
EC-31   [A-475-801] Ball Bearings and Parts Thereof from Italy (No. 5) 
 Appendix I: USDOC Determination (71 FR 400064)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Logs of FAG  Appendix IV: Program Logs of SKF 
 Appendix V: Tables containing calculations with zeroing for FAG 
 Appendix VI: Tables containing calculations with zeroing for SKF  Appendix VII: Tables containing calculations without zeroing for FAG  Appendix VIII: Tables containing calculations without zeroing for SKF 
 
EC-32   Investigation, New Shorter Oxford English Dictionary  WT/DS350/R 
Page A-62  
 
  EC-33   [A-449-804] Steel Concrete Re inforcing Bars from Latvia (No. 1) 
 Appendix I: Notice of Final Results (71 FR 74900)  Appendix II: Issues and Decision Memorandum  Appendix III: Program used with respect to LM  Appendix IV: Program Log of LM 
 Appendix V: Tables containing LM's calculations with zeroing 
 Appendix VI: Tables containing LM's calculations without zeroing 
 EC-34   [A-449-804] Steel Concrete Re inforcing Bars from Latvia (No. 2) 
 Appendix I: Notice of Final Results (71 FR 7016) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program used with respect to LM 
 Appendix IV: Program Log of LM  Appendix V: Tables containing LM's calculations with zeroing  Appendix VI: Tables containing LM's calculations without zeroing  
   
EC-35   [A-449-804] Steel Concrete Re inforcing Bars from Latvia (No. 3) 
   Appendix I: Notice of Final Results (69 FR 74498) 
 Appendix II: Program used with respect to LM 
 Appendix III: Program Log of LM  Appendix IV: Tables containing LM's calculations with zeroing 
 Appendix V: Tables containing LM's calculations without zeroing 
 EC-36   [A-475-801] Ball Bearings and Parts Thereof from Italy (No. 6)    Appendix I: Notice of Final Results (70 FR 54711) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Log of FAG Italy 
 Appendix IV: Program Log of SKF Italy  Appendix V: Table containing calculations with zeroing for FAG Italy  Appendix VI: Table containing calculations with zeroing for SKF Italy  Appendix VII: Table containing calculations without zeroing for FAG Italy  Appendix VIII: Tables containing calculations without zeroing for SKF Italy 
 
EC-37   [A-475-801] Ball Bearings and Parts Thereof from Italy (No. 7)   Appendix I: Notice of Final Results  (69 FR 55574) + amendment (69 FR 
62023) 
 Appendix II: Issues and Decision Memorandum  
 Appendix III: Program Log of SKF Italy 
 Appendix IV: Program Log of FAG Italy  Appendix V: Table containing calculations with zeroing for FAG Italy  Appendix VI: Tables containing calculations without zeroing for FAG Italy  Appendix VII: Tables containing calculations with zeroing for SKF Italy  Appendix VIII: Tables containing calculations without zeroing for SKF Italy 
 
EC-38   [A-475-801] Ball Bearings and Parts Thereof from Italy (No. 8)    Appendix I: Notice of Final Results (68 FR 35623) 
 Appendix II: Issues and Decision Memorandum  Appendix III: Program Log for SKF Italy 
 Appendix IV: Program Log for FAG Italy 
 Appendix V: Table containing calculations with zeroing for FAG Italy  Appendix VI: Table containing calculations without zeroing for FAG Italy  Appendix VII: Tables containing calculations with zeroing for SKF Italy  Appendix VIII: Tables containing calculations without zeroing for SKF Italy 
  WT/DS350/R 
 Page A-63 
 
 
  EC-39   [A-428-801] Ball Bearings and Parts Thereof from Germany (No. 10) 
 Appendix I: Notice of Final Results (71 FR 40064)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of SKF Germany  Appendix IV: Program Logs of FAG Germany 
 Appendix V: Tables containing calculations with zeroing for FAG 
 Appendix VI: Tables containing calculations without zeroing for FAG  Appendix VII: Tables containing calculations with zeroing for SKF  Appendix VIII: Tables containing calculations without zeroing for SKF 
 
EC-40   [A-428-801] Ball Bearings and Parts Thereof from Germany (No. 11) 
 Appendix I: Notice of Final Results (70 FR 54711)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of FAG Germany  Appendix IV: Program Log of SKF Germany 
 Appendix V: Table containing cal culations with zeroing for FAG 
Germany 
 Appendix VI: Tables containing calculations with zeroing for SKF 
Germany 
 Appendix VII: Table containing cal culations without zeroing for FAG 
Germany 
 Appendix VIII: Tables containing calculations without zeroing for SKF 
Germany 
 EC-41   [A-428-801] Ball Bearings and Parts Thereof from Germany (No. 12) 
  Appendix I: Notice of Final Results  (69 FR 55574) + amendment (69 FR 
63507) 
 Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of SKF Germany  Appendix IV: Program Log of FAG Germany  Appendix V: Table containing calculations with zeroing for SKF Germany  Appendix VI: Tables containing calculations without zeroing for SKF 
Germany 
 Appendix VII: Tables containing calculations with zeroing for FAG 
Germany 
 Appendix VIII: Tables containing calculations without zeroing for FAG 
Germany 
 
EC-42   [A-428-801] Ball Bearings and Parts Thereof from Germany (No. 13) 
 Appendix I: Notice of Final Results (68 FR 35623)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of SKF Germany  Appendix IV: Program Log of FAG Germany 
 Appendix V: Table containing calculations with zeroing for SKF Germany 
 Appendix VI: Table containing cal culations without zeroing for SKF 
Germany 
  Appendix VII: Table containing calcu lations with and without zeroing for 
FAG Germany 
 
EC-43   [A-427-801] Ball Bearings and Parts Thereof from France (No. 15) 
 Appendix I: Notice of Final Results (71 FR 40064)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Logs of SKF France 
 Appendix IV: Tables containing calculations with zeroing for SKF France WT/DS350/R 
Page A-64  
 
   Appendix V: Tables containing calculations without zeroing for SKF 
France 
 EC-44   [A-427-801] Ball Bearings and Parts Thereof from France (No. 16) 
 Appendix I: Notice of Final Results (70 FR 54711) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Log of SKF France  Appendix IV: Table containing calculations with zeroing for SKF France  Appendix V: Tables containing calculations without zeroing for SKF 
France 
 
EC-45   [A-427-801] Ball Bearings and Parts Thereof from France (No. 17)   Appendix I: Notice of Final Results  (69 FR 55574) + amendment (69 FR 
62023) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Log of SKF France 
 Appendix IV: Program Log of SNR  Appendix V: Table containing calculations with zeroing for SKF France  Appendix VI: Table containing cal culations without zeroing for SKF 
France 
 Appendix VII: Tables containing calculations with zeroing for SNR 
 Appendix VIII: Tables containing calculations without zeroing for SNR 
 EC-46   [A-427-801] Ball Bearings and Parts Thereof from France (No. 18)   Appendix I: Notice of Final Results  (68 FR 35623) + amendment (68 FR 
43712) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Code of SKF France  Appendix IV: Program Log of SKF France  Appendix V: Table containing calculations with zeroing for SFK France  Appendix VI: Tables containing calculations without zeroing for SKF 
France 
 
EC-47   [A-427-820] Stainless Steel Bar from France (No. 20)    Appendix I: Notice of Final Results (71 FR 30873)  EC-48   [A-427-820] Stainless Steel Bar from France (No. 21) 
   Appendix I: Notice of Final Results (70 FR 46482) 
 EC-49   [A-428-825] Stainless Steel Sheet and Strip in Coils from Germany (No. 22) 
 Appendix I: Notice of Final Results (71 FR 74897)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Code of TKN 
 Appendix IV: Program Log of TKN 
 Appendix V: Tables containing calculations with zeroing for TKN 
  Appendix VI: Tables containing calculations without zeroing for TKN  EC-50   [A-428-825] Stainless Steel Sheet and Strip in Coils from Germany (No. 23) 
 Appendix I: Notice of Final Results (70 FR 73729) 
 Appendix II: Issues and Decision Memorandum  Appendix III: Program Code of TKN  Appendix IV: Program Log of TKN  Appendix V: Tables containing calculations with zeroing for TKN 
 Appendix VI: Tables containing calculations without zeroing for TKN  WT/DS350/R 
 Page A-65 
 
 
  EC-51   [A-428-825] Stainless Steel Sheet and Strip in Coils from Germany (No. 24) 
 Appendix I: Notice of Final Results (69 FR 75930)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Code of TKN  Appendix IV: Program Log of TKN 
 Appendix V: Tables containing calculations with zeroing for TKN 
 Appendix VI: Tables containing calculations without zeroing for TKN 
 EC-52   [A-428-825] Stainless Steel Sheet and Strip in Coils from Germany (No. 25) 
 Appendix I: Notice of Final Results (69 FR 6262) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Code of TKN  Appendix IV: Program Log of TKN  Appendix V: Tables containing calculations with zeroing for TKN  Appendix VI: Tables containing calculations without zeroing for TKN 
 
EC-53   [A-423-808] Stainless Steel Plate in Coils from Belgium (No. 27)    Appendix I: Notice of Final Results (70 FR 72789) 
 Appendix II: Issues and Decision Memorandum 
 EC-54   [A-423-808] Stainless Steel Plate in Coils from Belgium (No. 28) 
 Appendix I: Notice of Final Results (69 FR 74495) 
 Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of U&A Belgium  Appendix IV: Tables containing calculations with zeroing for U&A 
Belgium 
 Appendix V: Tables containing calculations without zeroing for U&A 
Belgium 
 EC-55  [A-412-801] Ball Bearings and Parts Thereof from the United Kingdom 
(No.30) 
 Appendix I: Notice of Final Results (70 FR 54711) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Log of Barden/FAG 
  Appendix IV: Tables containing calcu lations with and without zeroing for 
Barden/FAG 
 
EC-56  [A-412-801] Ball Bearings and Parts Thereof from the United Kingdom 
(No. 31) 
 Appendix I: Notice of Final Results (69 FR 55574)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of Barden/FAG  Appendix IV: Tables containing calculations with zeroing for Barden/FAG 
 Appendix V: Tables containing calculations without zeroing for 
Barden/FAG 
 EC-57   [A-428-830] Stainless Steel Bar from Germany (No. 33)   Appendix I: Notice of Final Results  (71 FR 42802) + amendment (71 FR 
52063) 
 Appendix II: Program Code of BGH 
  Appendix III: Tables containing calculations with and without zeroing for 
BGH WT/DS350/R 
Page A-66  
 
  EC-58   [A-428-830] Stainless Steel Bar from Germany (No. 34) 
 Appendix I: Notice of Final Results  (69 FR 32982)  Appendix II: Program Code of BGH  Appendix III: Tables containing cal culations with zeroing for BGH 
 Appendix IV: Tables containing calculations without zeroing for BGH 
 
EC-59  [A-421-807] Certain Hot–Rolled Carbon Steel Flat Products from the 
Netherlands (No. 35) 
  Appendix I: Notice of Final Results  (72 FR 28676) + amendment (72 FR 
34441) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Code of Corus Staal  Appendix IV: Program Log of Corus Staal  Appendix V: Tables containing calculations with zeroing for Corus Staal  Appendix VI: Tables containing calculations without zeroing for Corus 
Staal 
 EC-60  [A-421-807] Certain Hot–Rolled Carbon Steel Flat Products from the 
Netherlands (No. 36) 
 Appendix I: Notice of Final Results (70 FR 18366)  Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Code of Corus Staal 
 Appendix IV: Program Log of Corus Staal  Appendix V: Tables containing calculations with zeroing for Corus Staal  Appendix VI: Tables containing calculations without zeroing for Corus 
Staal 
 
EC-61  [A-421-807] Certain Hot–Rolled Carbon Steel Flat Products from the 
Netherlands (No. 37) 
  Appendix I: Notice of Final Resu lts (69 FR 33630) + amended Final 
Results (69 FR 43801) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Log of Corus Staal  
  Appendix IV: Program Log of Corus Staal and Program Log of the 
amended Final Results 
  Appendix V: Table containing calculations with zeroing for Corus Staal 
amended Final Results 
  Appendix VI: Tables containing calculations without zeroing for Corus 
Staal 
 EC-62    [A-475-829] Stainless Steel Bar from Italy (No. 39) 
 Appendix I: Notice of Final Results (69 FR 32984)  Appendix II: Program Log of Forini 
 Appendix III: Calculations  with zeroing for Forini 
 EC-63   [A-475-824] Stainless Steel Sheet and Strip in Coils from Italy (No. 40)   Appendix I: Notice of Final Resu lts (70 FR 7472) + Amended Final 
Results (70 FR 13009) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Program Code of TKAST  Appendix IV: Program Log of TKAST  Appendix V: Tables containing calculations with zeroing for TKAST  Appendix VI: Tables containing calcu lations without zeroing for TKAST 
  WT/DS350/R 
 Page A-67 
 
 
  EC-64    [A-475-824] Stainless Steel Sheet and Strip in Coils from Italy (No. 41) 
 Appendix I: Notice of Final (68 FR 69382)  Appendix II: Issues and Decision Memorandum  Appendix III: Program Log of TKAST  Appendix IV: Tables containing calculations with zeroing for TKAST 
 Appendix V: Tables containing calculations without zeroing for TKAST 
 EC-65   [A-475-818] Certain Pasta from Italy (No. 43) 
 Appendix I: Notice of Final Results (72 FR 7011)  Appendix II: Program Log of Atar 
 Appendix III: Tables containing calculations with zeroing for Atar 
 EC-66   [A-475-818] Certain Pasta from Italy (No. 44) 
 Appendix I: Notice of Final Results (70 FR 71464)  Appendix II: Issues and Decision Memorandum 
 Appendix III: Table containing calculations without zeroing 
 EC-67   [A-475-818] Certain Pasta from Italy (No. 45) 
 Appendix I: Notice of Final Results (70 FR 6832)  Appendix II: Issues and Decision Memorandum  Appendix III: Table containing calculations without zeroing 
 
EC-68   [A-475-818] Certain Pasta from Italy (No. 46)   Appendix I: Notice of Final Results (69 FR 6255) + amendment 
(69 FR 22761) 
 Appendix II: Issues and Decision Memorandum 
 
EC-69   [A-475-824] Stainless Steel Sheet & Strip in Coils from Italy (No. 42) 
 Appendix I: Notice of Final Results (69 FR 67894)  Appendix II: Continuation Order  Appendix III: Issues and Decision Memorandum 
  Appendix IV: Notice of Amended Fi nal Determination of Sales at Less 
Than Fair Value and Antidumping Duty Order (64 FR 40567) 
 Appendix V: Program Log of TKAST (Original investigation proceeding) 
  Appendix VI: Calculations with  zeroing for TKAST (Preliminary 
Determination of Investigation) 
  Appendix VII: Calculations without  zeroing for TKAST (Preliminary and 
Final) 
 EC-70   [A-449-804] Steel Concrete Re inforcing Bars from Latvia (No. 4) 
 Appendix I Notice of Final Results (72 FR 16767)  Appendix II Issues and Decision Memorandum   Appendix III Antidumping Duty Order (66 FR46777) 
 Appendix IV Program Log of LM (O riginal Investigation Proceeding) 
 EC-71   [A–475–801] Ball Bearings And Parts Thereof from Italy (No. 9)   Appendix I: Notice of Final Resu lt (70 FR 58183) + Continuation Order 
(71 FR 54469) 
 Appendix II: Issues and Decision Memorandum 
 Appendix III: Original Order (54 FR 20903) 
 EC-72   [A-428-801] Ball Bearings and Parts Thereof from Germany (No. 14) 
 Appendix I: Notice of Final Results (70 FR 58183) 
 Appendix II: Continuation Order (71 FR 54469) WT/DS350/R 
Page A-68  
 
   Appendix III: Issues and Decision Memorandum 
 Appendix IV: Original Order (54 FR No. 92, 15 May 1989) 
 EC-73   [A-427-801] Ball Bearings and Parts Thereof from France (No. 19) 
 Appendix I: Notice of Final Results (70 FR 58183) 
 Appendix II: Continuation Order (71 FR 54469) 
 Appendix III: Issues and Decision Memorandum  Appendix IV: Original Order (54 FR No. 92, 15 May 1989) 
 EC-74   [A–428–825] Stainless Steel Sheet and Strip in Coils from Germany (No. 26) 
 Appendix I: Notice of Final Results (69 FR 67896) 
 Appendix II: Continuation Order (70 FR 44886)  Appendix III: Issues and Decision Memorandum  Appendix IV: Original Order (64 FR 40557) 
 
EC-75   [A–423–808] Certain Stainless Steel Plate in Coils from Belgium (No. 29) 
 Appendix I: Notice of Final Results (69 FR 61798)  Appendix II: Continuation Order (70 FR 41202)  Appendix III: Issues and Decision Memorandum  Appendix IV: Original Order (64 FR 27756) 
 
EC-76  [A-412-801] Ball Bearings and Parts Thereof from the United Kingdom 
(No. 32) 
 Appendix I: Notice of Final Results (70 FR 58183)  Appendix II: Continuation Order (71 FR 54469)  Appendix III: Issues and Decision Memorandum 
 Appendix IV: Original Orders (54 FR No. 92, 15 May 1989) 
 EC-77  [A-421-807] Certain Hot–Rolled Carbon Steel Flat Products from the 
Netherlands (No. 38) 
 Appendix I: Notice of Preliminary Results (72 FR 7604)  Appendix II: Final Results and Revocation Order (72 FR 35220) 
 Appendix III: Issues and Decision Memorandum, Section 129 
Determinations 
 Appendix IV: Issues and Decision Memorandums  Appendix V: Original Order (66 FR  50408) + amendment (66 FR 55637) 
 
EC-78   [A-475-818] Certain Pasta from Italy (No. 47) 
   Appendix I: Notice of Final Results (72 FR 5266)   Appendix II: Notice of Antidumpi ng Duty Order and Amended Final 
Determination of Sales at Less Than Fair Value (61 FR 38547) 
  Appendix III: Issues and Decision Memo  for the Expedited Sunset Reviews 
of the Antidumping Duty Orders on Certain Pasta from Italy and Turkey; 
Final Results (66 FR 51015) 
  Appendix IV: Continuation of Countervailing and Anti-dumping Duty 
Orders: Pasta from Italy and Turkey, and Clad Steel Plate From Japan (66 FR 57703) 
 
EC-79   [A- 428-602] Brass Sheet and Strips from Germany (No. 48) 
 Appendix I: Notice of Final Results (71 FR 4348)  Appendix II: Continuation Order (71 FR 16552)  Appendix III: Issues and Decision Memorandum  Appendix IV: Original Order (52 FR 35750) 
  WT/DS350/R 
 Page A-69 
 
 
  EC-80  Statements made by the Unite d States acknowledging the use of model 
zeroing in original investigations in the past 
  WT/DS350/R 
Page A-70  
 
  ANNEX A-2 
 
FIRST WRITTEN SUBMISSION OF  
THE UNITED STATES 
 
  
TABLE OF CONTENTS 
    Page
 
 
TABLE OF REPORTS............................................................................................................... .........72  
I. INTRODUCTION ..................................................................................................................7 5 
II. FACTUAL BACKGROUND.................................................................................................76  
A. THE ARTICLE 5 INVESTIGATION PHASE ....................................................................................76  
B. THE ASSESSMENT PHASE ..........................................................................................................78  
III. PROCEDURAL BACKGROUND ........................................................................................78  
IV. GENERAL PRINCIPLES......................................................................................................78  
A. BURDEN OF PROOF ....................................................................................................................78  
B. STANDARD OF REVIEW .............................................................................................................79  
1. The Applicable Standard of Review is Whether the Authority's Measure Rests 
on a Permissible Interpretation of the AD Agreement........................................................79  
2. The Panel Should Make an Objective A ssessment of the Matter Before It and 
Not Add to or Diminish the Rights and Obligations Provided in the Covered 
Agreements ..................................................................................................................... .........80  
V. ARGUMENT....................................................................................................................... ....82  
A. REQUEST FOR PRELIMINARY RULINGS .....................................................................................83  
1. The EC Requested Establishment of the Panel on Measures Not Included in its 
Request for Co nsultations ...................................................................................................... 84 
2. The EC May Not Expand the Panel's Terms of Reference by Including in its 
Request for Establishment of a Panel Specific Measures Not Included in its Request for Co nsultations ...................................................................................................... 85
 
3. The EC Requested Establishment of the Panel on Measures That Were Not 
Final at the Time of its Panel Request...................................................................................89  
B. THE UNITED STATES METHODOLOGY FOR ASSESSING ANTIDUMPING DUTIES IS 
CONSISTENT WITH THE OBLIGATIONS IN THE AD AGREEMENT ...............................................90  
1. Article 2.1 of the AD Agreement and Article VI of the GATT 1994 ..................................92  
2. Article 2.4.2.................................................................................................................. ............96  
3. Article 2.4.2, Second Sentence .............................................................................................100  
4. Article 9...................................................................................................................... ............102  
5. Article 2.4.................................................................................................................... ...........108   WT/DS350/R 
 Page A-71 
 
 
  6.  Article 11.2 Is Not Applicable to Ar ticle 9.3 Assessment Proceedings.............................110  
C. THE EC'S CLAIMS WITH RESPECT TO SUNSET REVIEWS .......................................................111  
D. THE EC'S CLAIMS WITH RESPECT TO INVESTIGATIONS .........................................................111  
E. WTO  AGREEMENT ARTICLE XVI:4........................................................................................112  
VI.  CONCLUSION ..................................................................................................................... 114 
LIST OF EXHIBITS............................................................................................................... ...........115  
 WT/DS350/R 
Page A-72  
 
  TABLE OF REPORTS 
 
 
Short Form Full Citation 
Argentina – Poultry  Panel Report, Argentina – Definitive Anti-Dumping Duties on  Poultry 
from Brazil , WT/DS241/R, adopted 19 May 2003 
Brazil – Aircraft (AB)  Appellate Body Report, Brazil – Export Financing Programme for 
Aircraft , WT/DS46/AB/R, adopted 20 August 1999 
Brazil – Desiccated Coconut 
(AB)  Appellate Body Report, Brazil – Measures Affecting Desiccated 
Coconut , WT/DS22/AB/R, adopted 20 March 1997 
EC – Audiocassettes  GATT Panel Report, European Communities – Anti-Dumping Duties 
on Audio Tapes in Cassettes Originating in Japan , ADP/136, 
circulated 28 April 1995 (unadopted) 
EC – Bed Linen  (Article 21.5) (Panel)  Panel Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Line n from India – Recourse to 
Article 21.5 of the DSU by India , WT/DS141/RW, adopted 
24 April 2003, as modified by the Appellate Body Report, 
WT/DS141/AB/RW 
EC – Bed Linen  (Article 21.5) (AB)  Appellate Body Report, European Communities – Anti-Dumping 
Duties on Imports of Cotton - Type Bed Linen from India – Recourse 
to Article 21.5 of the DSU by India , WT/DS141/AB/RW, adopted 
24 April 2003 
EC – Cotton Yarn  Committee on Anti-Dumping Practices, Panel Report, EC – 
Imposition of Anti-Dumping Duties on Imports of Cotton Yarn from 
Brazil , ADP/137, adopted 30 October 1995 
Egypt – Rebar  Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel 
Rebar from Turkey , WT/DS211/R, adopted October 1, 2002 
Guatemala – Cement I (AB)  Appellate Body Report, Guatemala – Anti-Dumping Investigation 
Regarding Portland Cement from Mexico , WT/DS60/AB/R, adopted 
25 November 1998 
India – Patents  (AB)  Appellate  Body Report, India – Patent Pharmaceutical and 
Agricultural Chemical Products,  WT/DS50/AB/R, adopted 
16 January 1998 
Indonesia – Autos  Panel Report, Indonesia – Certain Measures Affecting the Automobile 
Industry , WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R, 
adopted 23 July 1998 
Japan – Alcohol Taxes (AB)  Appellate Body Report, Japan – Taxes on Alcoholic Beverages, 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R adopted 1 November 1996 
Mexico – HFCS 
(Article 21.5) (AB)  Appellate Body Report, Mexico – Anti-Dumping Investigation of 
High-Fructose Corn Syrup (HFCS) from the United States:  Recourse 
to Article 21.5 by the United States , WT/DS132/AB/RW, adopted 
21 November 2001 
US – 1916 Act (EC) (Panel)  Panel Report, United States – Anti-Dumping Act of 1916 , 
WT/DS136/R, adopted 26 September 2000, as modified by the Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R  WT/DS350/R 
 Page A-73 
 
 
  Short Form Full Citation 
US – 1916 Act (Japan) 
(Panel)  Panel Report, United States – Anti-Dumping Act of 1916 , 
WT/DS162/R, adopted 26 September 2000, as modified by the 
Appellate Body Report, WT/DS136/AB/R, WT/DS162/AB/R 
US – 1916 Act (AB)  Appellate Body Report, United States – Anti-Dumping Act of 1916 , 
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000 
US – Certain EC Products (AB)  Appellate Body Report, United States – Import Measures on Certain 
Products from the European Communities , WT/DS165/AB/R, adopted 
10 January 2001 
US – Corrosion-Resistant 
Steel CVD (AB)  Appellate Body Report, United States – Countervailing Duties on 
Certain Corrosion-Resistant Carbon Steel Flat Products from Germany , WT/DS213/AB/R, adopted 19 December 2002 
US – Corrosion-Resistant 
Steel Sunset Review (Panel)  Panel Report, United States – Sunset Review of Anti-Dumping Duties 
on Corrosion - Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/R, adopted 9 January 2004, as modified by the Appellate 
Body Report, WTDS244/AB/R 
US – Corrosion-Resistant 
Steel Sunset Review (AB)  Appellate Body Report, United States – Sunset Review of Anti-
Dumping Duties on Corrosion - Resistant Carbon Steel Flat Products from Japan , WT/DS244/AB/R, adopted 9 January 2004 
US – Cotton Subsidies 
(Panel)  Panel Report, United States – Subsidies on Upland Cotton , 
WT/DS267/R, adopted 21 March 2005, as modified by the Appellate 
Body Report, WT/DS267/AB/R 
US – DRAMS AD  Panel Report, United States – Anti-dumping Duty on Dynamic 
Random Access Memory Semiconductors (DRAMS) of One Megabit 
or Above From Korea , WT/DS99/R, adopted 19 March 1999 
US – Gambling (AB)  Appellate Body Report, United States – Measures Affecting the Cross-
Border Supply of Gambling and Betting Services , WT/DS285/R, 
adopted 20 April 2005 
US – Gasoline (AB)  Appellate Body Report, United States - Standards for Reformulated 
and Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996. 
US – Hot-Rolled Steel (AB)  Appellate Body Report, United States – Anti-dumping Measures on 
Certain Hot-Rolled Steel Products from Japan , WT/DS184/AB/R, 
adopted 23 August 2001 
US – OCTG from Argentina (AB)  Appellate Body Report, United States – Sunset Reviews of Anti-
Dumping Measures on Oil Country Tu bular Goods from Argentina , 
WT/DS268/AB/R, adopted 17 December 2004 
US – OCTG from Mexico (Panel)  Panel Report, United States – Anti-Dumping Measures on Oil Country 
Tubular Goods (OCTG) from Mexico , WT/DS282/R, adopted 
28 November 2005, as modified by the Appellate Body Report, 
WT/DS282/AB/R 
US – Offset Act  (Byrd Amendment ) (AB)  Appellate Body Report, United States – Continued Dumping and 
Subsidy Offset Act of 2000 , WT/DS217/AB/R, WT/DS234/AB/R, 
adopted 27 January 2003 
US – Section 211 (AB)  Appellate Body Report, United States – Section 211 Omnibus 
Appropriations Act of 1998, WT/DS176/AB/R, adopted 
1 February 2002 
US – Shrimp AD Measure 
(Ecuador)  Panel Report, United States – Anti-Dumping Measure on Shrimp from 
Ecuador , WT/DS335/R, adopted 20 February 2007  WT/DS350/R 
Page A-74  
 
  Short Form Full Citation 
US – Shrimp (Article 21.5) 
(Panel)  Panel Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products – Recourse to Article 21.5 by Malaysia , 
WT/DS58/RW, adopted 21 November 2001, as modified by the 
Appellate Body Report, WT/DS58/AB/RW 
US – Softwood Lumber CVD Final (Article 21.5) (AB)  Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from 
Canada – Recourse to Article 21.5 of the DSU by Canada , 
WT/DS257/AB/RW, adopted 20 December 2005 
US – Softwood Lumber 
Dumping (AB)  Appellate Body Report, United States - Final Dumping Determination 
on Softwood Lumber from Canada , WT/DS264/AB/R, adopted 
31 August 2004 
US – Softwood Lumber 
Dumping (Article 21.5) 
(Panel)  Panel Report, United States – Final Dumping Determination on 
Softwood Lumber from Canada – Rec ourse to 21.5 of the DSU by 
Canada , WT/DS264/RW, adopted 1 September 2006, as modified by 
the Appellate Body Report, WT/DS264/AB/RW 
US – Softwood Lumber Dumping (Article 21.5) (AB)  Appellate Body Report, United States – Final Dumping Determination 
on Softwood Lumber from Canada – R ecourse to 21.5 of the DSU by 
Canada , WT/DS264/AB/RW, adopted 1 September 2006 
US – Underwear (AB)  Appellate Body Report, United States – Restrictions on Imports of 
Cotton and Man-Made Fibre Underwear , WT/DS24/AB/R, adopted 
25 February 1997 
US – Zeroing (EC) (Panel)  Panel Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins , WT/DS294/R, adopted 9 May 2006, 
as modified by the Appellate Body Report, WT/DS294/AB/R 
US – Zeroing (EC) (AB)   Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins , WT/DS294/AB/R, 
adopted 9 May 2006 
US – Zeroing (Japan)  (Panel)  Panel Report, United States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/R, adopted 23 January 2007, as modified 
by the Appellate Body Report, WT/DS322/AB/R 
US – Zeroing (Japan) (AB)  Appellate Body Report, United States – Measures Relating to Zeroing 
and Sunset Reviews , WT/DS322/AB/R, adopted 23 January 2007 
  WT/DS350/R 
 Page A-75 
 
 
  I. INTRODUCTION 
1. It is a fundamental principle of customary ru les of interpretation of public international law 
that any interpretation must address the text of th e agreement and may not impute into the agreement 
words and obligations that are not there.1  Further, in settling disputes among Members, WTO dispute 
settlement panels and the Appellate Body "cannot add to or diminish the rights and obligations 
provided in the covered agreements".2   
 2. The European Communities ("EC"), in asserting its claims for relief, relies heavily on prior 
Appellate Body reports, asserting that "the Pane l should not depart from" prior Appellate Body 
reports.  Although the EC acknowledges that there is no obligation for a panel to follow the reasoning 
of prior reports, the EC attempts to establish some legal threshold for departure from those prior 
reports.  However, the rights and obligations of th e Members flow, not from panels or the Appellate 
Body, but from the text of the covered agreements.  Article 11 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes ("DSU") plainly requires each panel to make its 
own objective assessment of the matter before it, in cluding an objective assessment of the facts and 
the applicability of and conformity with the relevant covered agreements.   
 3. The EC's challenges, in this dispute, necessarily require that this Panel read an obligation into 
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994  
("AD Agreement") and Article VI of the General Agreement on Tariffs and Trade 1994  
("GATT 1994"), notwithstanding the fact that there is  no textual basis for the obligations that the EC 
proposes.  Namely, the EC seeks to read into the agreements an obligation to reduce antidumping 
duties on dumped imports by the amounts by which any other imports covered by the same assessment proceedings exceed normal value.  The positi on of the United States is that such an offset 
or credit need not be granted in the assessme nt phase of an antidumping proceeding.   
 
4. And the actual situation is far different from th e EC's claim that there is a "consistent" line of 
reasoning in past WTO panel and A ppellate Body reports on the issue of offsets.  Three WTO panels 
consisting of trade remedies experts have examined whether there is an obligation to provide offsets 
beyond the context of average-to-average comparisons in an investigation.  In every case, the panel of 
experts determined that the customary rules of interpretation of public international law do not 
support a reading of the AD Agreement or the GATT 1994 that extends a zeroing prohibition beyond 
the use of average-to-average co mparisons in an investigation.
3   
 5. Nevertheless, the A ppellate Body has adopted an interp retation of the AD Agreement that 
includes a general prohibition of zeroing.  Using reasoning that has shifted from dispute to dispute, these Appellate Body reports have found, despite th e contrary interpretation offered by the panels, 
that a general prohibition of zeroing reflects the only permissible interpretation of the AD Agreement.  
The EC's claims in this dispute rely entirely on  that conclusion.  The United States respectfully 
disagrees with the reasoning in these Appellate Body reports that the only permissible interpretation 
of the AD Agreement includes a general prohibition of zeroing.  Accordingly the United States 
requests that this Panel refrain from adopting the Appellate Body's interpretation.  Instead, the 
United States requests that this Panel remain faithfu l to the text of the AD Agreement and find that the 
United States' interpretation outside the context of average-to-average comparisons in investigations 
is permissible.    
                                                     
 
1 India – Patents (AB) , para. 45.   
2 Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article 19.2;  
see id ., Article 3.2.   
3 US – Zeroing (Japan) (Panel) , paras. 7.216, 7.219, 7.222, 7.259;  US – Softwood Lumber Dumping 
(Article 21.5) (Panel) , paras. 5.65, 5.66, 5.77;  US – Zeroing (EC) (Panel) , paras. 7.223, 7.284.   WT/DS350/R 
Page A-76  
 
  6. As the United States will demonstrate, in order to accept the EC's arguments, one must 
suspend disbelief and pretend that assessment proceed ings are investigations and that the alternative 
assessment methods contemplated by Article 9.3 of the AD Agreement do not exist.   
 7. As the United States will explain below, the provisions of the WTO agreements invoked by 
the EC do not require that an offset or credit be granted for "negative dumping" in assessment 
proceedings and do not require the use of the average-to-average or transaction-to-transaction method 
in assessment proceedings.    8. The EC's claims as to WTO inconsistency of the challenged sunset reviews should be 
rejected, as the EC has not demonstrated that a cal culation done in accordance wi th the EC's approach 
would result in zero or de minimis  dumping margins in the cited cases.   
 9. The EC's claim with resp ect to Article XVI:4 of the Agreement Establishing the World Trade 
Organization ("WTO Agreement") depends on a finding of inconsistency with provisions of the 
AD Agreement and GATT 1994, which the EC has not demonstrated.  Consequently, there is no 
breach of Article XVI:4.  The EC has further attemp ted to interpret Article XVI:4 in a novel manner 
that would significantly alter the nature of the WTO dispute settlement system and directly contradict 
the WTO Agreement.  The EC's attempt should be rejected.    10. In addition, as set out below, the United Stat es requests a preliminary ruling that the measures 
that were not subject of consultations but instead ap peared for the first time in the EC's panel request 
fall outside of the scope of the Pane l's terms of reference.  Contrary to Articles 4.4., 4.7 and 6.2 of the 
DSU and Articles 17.3, 17.4 and 17.5 of the AD Agr eement, the EC seeks to expand the matter in this 
dispute beyond the measures upon which consultations were requested.  Moreover, insofar as the EC 
has added indeterminate measures, th e Panel should find that they are outside of the Panel's terms of 
reference because they do not comply with the speci ficity requirement of Article 6.2 of the DSU.   
 
II. FACTUAL BACKGROUND 
11. The US antidumping duty law is designed to provide domestic producers with a remedy 
against injurious dumping.  The US statute govern ing antidumping proceedings is the Tariff Act of 
1930, as amended ("the Tariff Act").  The Tariff Act,  consistent with the AD Agreement, provides for 
two distinct phases in antidumping proceedings.  The first stage of the antidumping proceeding is the 
investigation phase.  The US Department of  Commerce ("Commerce") will determine whether 
dumping existed during the period of investigati on by calculating an overall weighted average 
dumping margin for each foreign producer/exporter inv estigated.  Separately, the US International 
Trade Commission ("ITC") determines whether an indus try in the United States is materially injured 
by reason of the dumped imports.   
 12. If Commerce finds that dumping existed during the period of investigation, and if the ITC 
determines that a US industry was injured by r eason of dumped imports, the investigation phase ends 
and the second phase of the antidumping proceedi ng – the assessment phase – begins.  In the 
assessment phase, the focus is on the calculati on and assessment of antidumping duties on specific 
entries by individual importers.   
 A. T
HE ARTICLE 5 INVESTIGATION PHASE  
13. With respect to the investigation phase, US law provides that Commerce will normally use 
the average-to-average method for comparable transactions during the period of investigation.4  
US law also provides for the use of  transaction-to-transaction comparisons5 and, provided that there is 
                                                      
4 19 C.F.R. 351.414(c)(1) (Exhibit EC-3).   
5 19 U.S.C. 1677f-1(d)(1)(A) (Exhibit EC-2).    WT/DS350/R 
 Page A-77 
 
 
  a pattern of prices that differs significantly by region or time period, among other things6, for use of 
the average-to-transaction method.7   
 14. In the investigation phase, Commerce must  resolve the threshold question of whether 
dumping "exists" such that the imposition of an antidumping measure is warranted.  
Section 771(35)(A) of the Tariff Act defines "dumping margin", for the purposes of US law, as "the 
amount by which the normal value exceeds the export pr ice or constructed export price of the subject 
merchandise".
8  Thus, for purposes of US law, the "dumping margin" is the result of a specific 
comparison between an export price (or constr ucted export price) and the normal value for 
comparable transactions.  When average-to-average  comparisons are used, similar export transactions9 
are grouped together and an average export price is calculated for the comparison group which is 
compared to a comparable normal value.  Some of these comparisons could result in dumping margins while other comparisons might result in no dumping margin.    15. Section 771(35)(B) of the Tariff Act defi nes "weighted average dumping margin" as the 
"percentage determined by dividing the aggregate dumping margins determined for a specific exporter 
or producer by the aggregate export prices and constructed export prices of such exporter or 
producer".
10  Thus, to calculate a single weighted  average dumping margin for each foreign 
exporter/producer individually examined in an investigation, Commerce has summed the total amount 
of dumping found for each comparison group for that exporter/producer in the United States during 
the period of investigation.  After 22 February 2 007, in making average-to-average comparisons in 
investigations, Commerce intends to provide offset s for non-dumped comparisons that reduce the total 
amount of dumping found by the amount by which an y comparison reflected an average export price 
in excess of normal value.11  For example, Commerce did provide su ch offsets in the investigation of 
certain activated carbon from the People's Republic of China.12   
 
16. Commerce then divides the aggregate amount from the sum of the comparison groups by the 
aggregate export prices of all US sales by the exporter/producer during the period of investigation to 
arrive at the "weighted average dumping margin".13   
 17. If the overall weighted average dumping ma rgin for a particular exporter/producer is de 
minimis , the exporter/producer is excl uded from any antidumping measure.
14  If the overall weighted 
average dumping margin for each exporter/producer is de minimis , the antidumping proceeding is 
terminated.15  If Commerce and the ITC make final affirm ative determinations of dumping and injury, 
respectively, then Commerce orders the impos ition of antidumping duties (an "antidumping duty 
order" or, simply "order" in US parlance).16  The issuance of an antidumping duty order completes the 
investigation phase.   
                                                      
6 This pattern commonly is referred to as "targeted dumping".   
7 19 U.S.C. 1677f-1(d)(1)(B) (Exhibit EC-2).   
8 19 U.S.C. 1677(35)(A) (Exhibit EC-2).   
9 Similarity of export transactions is generally de termined on the basis of product characteristics.  
Therefore, comparison groups are common ly referred to as "models".  However, other factors affecting price 
comparability are taken into account, e.g., level of trade.   
10 19 U.S.C. 1677(35)(B) (Exhibit EC-2).   
11 See Antidumping Proceedings:  Calculation of the Weighted-Average Dumping Margin During an 
Antidumping Investigation;  Final Modification , 71 Fed. Reg. 77,722 (27 December 2006);  Antidumping 
Proceedings:  Calculation of the Weighted-Average Dumping Margins in Antidumping Investigations;  Change 
in Effective Date of Final Modification , 72 Fed. Reg. 3,783 (26 January 2007) (Exhibit EC-6).   
12 See Final Determination of Sales for Less Than Fa ir Value:  Certain Activated Carbon from the 
People's Republic of China , 72 Fed. Reg. 9,508 (2 March 2007) (Exhibit US-1).   
13 19 U.S.C. 1677(35)(B) (Exhibit EC-2).   
14 19 C.F.R. 351.204(e)(1) (Exhibit EC-3).   
15 19 U.S.C. 1673d(c)(2) (Exhibit EC-2).   
16 19 U.S.C. 1673e(a) (Exhibit EC-2).   WT/DS350/R 
Page A-78  
 
  B. T
HE ASSESSMENT PHASE  
18. Unlike investigations, which are subject to a single set of rules, the AD Agreement provides 
Members with the flexibility to adopt a variety of systems to deal with the assessment phase.  There 
are two basic types of assessment systems – prospec tive and retrospective.  In a prospective system, 
normal values or an ad valorem  duty rate are established and applie d to the merchandise subject to the 
antidumping measure upon importation on an entry-by-entry basis.  While ad valorem  systems apply 
duties to all subject imports, in prospective normal value systems, those imports for which the export 
price is greater than or equal to the normal value do not result in duty liability.  However, no offset is 
provided on other transactions where the export price is below normal value.    
19. The United States has a retrospective assess ment system.  Under the US system, an 
antidumping duty liability attaches at the time of en try, but duties are not actually assessed at that 
time.  Rather, the United States collects security in th e form of a cash deposit at the time of entry, and 
determines the amount of duties due on the entry at a later date.  Specifically, once a year (during the anniversary month of the orders) interested parti es may request a review to determine the amount of 
duties owed on each entry made during the previous year.
17  Antidumping duties are calculated on a 
transaction-specific basis and are paid by the im porter of the transaction, as in prospective duty 
systems.  If the final antidumping duty liability ends up being less than  the cash deposit, the difference 
is refunded.  If no review is requested, the cash de posits made on entries during the previous year are 
automatically assessed as the final duties.  To simplify the collection of duties calculated on a 
transaction-specific basis, the absolute amount of  duties calculated for the transactions of each 
importer are summed up and divided by the total entered value of that importer's transactions, 
including those for which no duties were calculated.  US customs authorities then apply that rate to 
the entered value of the imports to collect the correct total amount of duties owed.    
III. PROCEDURAL BACKGROUND 
20. This dispute began when the EC re quested consultations on 2 October 2006.
18  O n  
9 October 2006, the EC filed a second request fo r consultations that included two additional 
administrative reviews.19  The United States and the EC held consultations on 14 November 2006, and 
28 February 2007.    21. On 10 May 2007, the EC requested the establishment of a panel.
20  On 4 June 2007, the 
Dispute Settlement Body established a panel pursuant to the EC's revised request.   
 
IV. GENERAL PRINCIPLES 
A. BURDEN OF PROOF  
22. The AD Agreement imposes obligations on the authorities that they must satisfy, but the 
burden of proving that those obligations have not been satisfied is on the complaining party.  In US – 
Corrosion-Resistant Steel CVD , the Appellate Body explained that the complaining party bears the 
burden of proof:    
                                                     
 
17 The period of time covered by US assessment proceedings is normally twelve months.  However, in 
the case of the first assessment proceeding following the investigation, the period of time may extend to a period 
of up to 18 months in order to cover all entries that may have been subject to provisional measures.   
18 WT/DS350/1 (3 October 2006).  The EC had originally filed a request for consultations on 
22 September 2006, but discovered that it had omitted a measure.  The EC withdrew that request on October 2 
in favour of its 2 October 2006 request.   
19 WT/DS350/1 Add. 1 (11 October 2006).   
20 WT/DS350/6 (11 May 2007).  As detailed below, the EC added additional measures that were not 
contained in its consultation request.    WT/DS350/R 
 Page A-79 
 
 
  [t]he complaining Member bears the burden of proving its claim.  In this regard, we 
recall our observation in US – Wool Shirts and Blouses  that:   
 
… it is a generally-accepted canon of eviden ce in civil law, common law and, in 
fact, most jurisdictions, that the burden of proof rests upon the party, whether 
complaining or defending, who asserts th e affirmative of a particular claim or 
defence .  (emphasis added).21   
 23. Accordingly, the burden is on the EC to prove  that US measures exist that are inconsistent 
with US obligations under the rele vant covered agreement.  The bur den is not on the United States to 
prove that it acted in a WTO-consistent manner.    B. S
TANDARD OF REVIEW  
1. The Applicable Standard of Review is Whether the Authority's Measure Rests on a 
Permissible Interpretation of the AD Agreement 
24. Article 11 of the DSU defines generally a pane l's mandate in reviewing the consistency with 
the covered agreements of measures taken by a Me mber.  In a dispute involving the AD Agreement, a 
panel must also take into account the standard of revi ew set forth in Article 17.6(ii) with respect to an 
investigating authority's interpretation of provisions of the AD Agreement.22  Article 17.6(ii) states:   
 
the panel shall interpret the relevant prov isions of the Agreement in accordance with 
customary rules of interpretation of public international law.  Where the panel finds 
that a relevant provision of the Agreement admits of more than one permissible interpretation, the panel shall find the author ities' measure to be in conformity with 
the Agreement if it rests upon one of those permissible interpretations.   
 
25. The question under Article 17.6(ii) is whether an  investigating authority's interpretation of the 
AD Agreement is a permissible interpretation.  Arti cle 17.6(ii) confirms that there are provisions of 
the Agreement that "admit[] of more than one permi ssible interpretation".  Where that is the case, and 
where the investigating authority has relied upon one such interpretation, a panel is to find that 
interpretation to be in conformity with the Agreement.
23   
 26. The explicit confirmation that there are provi sions of the AD Agreement that are susceptible 
to more than one permissible reading provides cont ext for the interpretation of the AD Agreement.  
This provision reflects the negotiators' recognition th at they had left a number of issues unresolved 
and that customary rules of interpretation would no t always yield only one permissible reading of a 
given provision.   
 27. One panel recalled that "in accordance with Article 17.6(ii) of the AD Agreement, if an 
interpretation is 'permissible', then we are compelled to accept it".
24  Similarly in this case, it is useful 
to bear in mind that Article 17.6(ii) applies and th ere may be multiple permissible interpretations of 
particular provisions in the AD Agreement.   
 
                                                      
21 US – Corrosion-Resistant Steel CVD (AB), paras. 156-157 (footnote omitted).   
22 See EC – Bed Linen (Article 21.5) (AB) , paras. 108, 114, and 118.   
23 See Argentina – Poultry , para. 7.341 and n. 223.   
24 Argentina – Poultry , para. 7.45 (stating that under Article 17.6(i), panels "may not engage in de novo  
review").   WT/DS350/R 
Page A-80  
 
  2. The Panel Should Make an Objective Asses sment of the Matter Before It and Not Add 
to or Diminish the Rights and Obligations Provided in the Covered Agreements 
28. Article 11 of the DSU requires a panel to ma ke an objective assessment of the matter before 
it, including an objective assessment  of the facts and the applicability of and conformity with the 
relevant covered agreements.  Th e Appellate Body has explained that the matter includes both the 
facts of the case (and the specific measures at issu e in particular) and the legal claims raised.
25  
Articles 3.2 and 19.2 of the DSU contain the fundamental principle that the findings and recommendations of a panel or the Appellate Body, and the recommenda tions and rulings of the DSB, 
cannot add to or diminish the rights and obliga tions provided in the covered agreements.   
 
29. The EC engages in a long discourse on the EC's particular view of muni cipal law, other legal 
systems and fora, and urges that the Panel should not "deviate" from prior Appellate Body reports 
addressing the issue of zeroing.
26  In essence, the EC is urging the Panel to rubber-stamp those prior 
reports that are favorable to the EC's position, to disregard those panel reports that demonstrate that 
the EC's position is contrary to the agreed text  of the WTO agreements, and to ignore the Panel's 
obligations under Article 11 of the DSU to conduct an  objective assessment of the matter before it.  
The EC, in relying so extensively on examples from outside the WTO dispute settlement context, 
highlights the fact that there is no support for its approach in the DSU, which governs the Panel's review of the consistency of the measures with the WTO Agreement.  A panel is bound to make an 
objective assessment under Article 11 of the DSU, and must not make findings and recommendations 
that add to or diminish the rights and ob ligations in the covered agreements.   
 
30. The EC erroneously argues that the "WTO inc onsistency of . . . [zeroing] has already been 
established in previous disputes".
27  EC citations to evidence before  separate panels and the Appellate 
Body do not permit the Panel to simply adopt tho se findings here without an objective assessment of 
the facts at issue.  The panel in US – Subsidies on Upland Cotton  rejected Brazil's request that the 
panel simply accept and apply the reasoning of a prior panel, as modified by the Appellate Body.  In 
declining to do so, the panel stated that there was "no basis in the text of the DSU . . . for such 
incorporation by reference of claims and argumen ts made in a previous dispute nor for a quasi-
automatic application of findings, recommendati ons and rulings from a previous dispute".28   
 31. Ironically, while arguing that a panel should follow the reasoning of prior panel and Appellate 
Body reports, the EC appears to have a starkly di vergent view of the WTO dispute settlement system 
than prior panel and Appellate Body reports.  The EC  begins from a rather startling premise - it claims 
that the "main purpose" of the dispute settlement syst em is to "provide security and predictability to 
the multilateral trading system."
29  Users of the dispute settlement system could be forgiven for 
thinking that the main purpose of the dispute se ttlement system was to resolve disputes.   
 
32. Furthermore, while prior adopted panel a nd Appellate Body reports  create legitimate 
expectations among WTO Members30, this Panel is not bound to follow the reasoning set forth in any 
Appellate Body report.  In this instance, the EC  urges the Panel to follow prior Appellate Body 
                                                      
25 Guatemala – Cement I (AB), para. 73.   
26 See EC First Written Submission, paras. 63, 110.  The EC appears to advocate that the Panel 
disregard its duty under Article 11 of the DSU when it asserts that the Panel should not depart from previous 
Appellate Body findings on zeroing "to the extent that the Appellate Body has alread y examined the arguments 
which could be raised by the defendant in this case".  EC First Written Submission, para. 106.  The Panel is 
required to make an "objective assessment" of this case,  and cannot simply refuse to examine the arguments of 
the United States because the EC alleges that they are similar to those made in another dispute that was the 
subject of an adopted Appellate Body report.   
27 See EC First Written Submission, paras. 115.   
28 US – Cotton Subsidies (Panel) , paras. 735 - 739.   
29 EC First Submission, para. 87.   
30 Japan  – Alcohol Taxes (AB) , para. 14.    WT/DS350/R 
 Page A-81 
 
 
  findings in order to ensure the "security and pred ictability" referred to in  Article 3.2 of the DSU.31  
However, read in its context in Article 3.2, the re ference to security and pred ictability in Article 3.2 
supports the opposite conclusion.  The rights and oblig ations of the Members flow, not from panel or 
Appellate Body reports, but from the text of the cove red agreements.  In this regard, the "security and 
predictability" referred to in the first sentence of Ar ticle 3.2 results from the application of the correct 
interpretive approach set forth in the second sente nce of Article 3.2 - the customary rules of 
interpretation of public international law - to the provisions of the WTO Agreement.  A result which 
adds to or diminishes the rights or obligations of  Members provided in the covered agreements is 
prohibited by the third sentence of Article 3.2 an d is therefore the antithesis of the "security and 
predictability" referred to in the first sentence of  Article 3.2.  This conclusion does not change 
because the result in question had previously been reached by the Appellate Body.   
 33. Appellate Body reports should be taken into account only to the extent that the reasoning is 
persuasive.  The Appellate Body itself has stated  that its reports are not binding on panels.
32  While 
the reasoning in such reports may be taken in to account, Members are free to explain why any 
reasoning or findings should not be taken into account.33  Therefore, although the dispute settlement 
system serves to resolve a particular dispute, and to clarify agreement provisions in the context of 
doing so, neither panels nor the A ppellate Body can issue authoritative interpretations that are binding 
with respect to another dispute.    34. The EC argues that the Appellate Body in US – OCTG Sunset Reviews (AB)  "clearly stated 
that panels are bound by the legal analysis of the Appellate Body".
34  The Appellate Body in that case, 
however, merely said that it would expect panels to follow earlier conclusions where issues are the 
same, not that panels are legally bound by prior Appellate Body reports.  The Appellate Body's 
statement does not represent the incorporation of the doctrine of stare decisis  into the WTO dispute 
settlement system, nor could it.   
 
35. The EC further asserts that "the Panel shoul d not depart" from prior Appellate Body reports 
on zeroing because the Appellate Body occupies a "s uperior position" in the WTO hierarchy, is a 
"permanent body", and "provides for the corr ect interpretation of the relevant rules".35  None of this is 
provided for in the DSU.  Although the Appellate Body undeniably has an important role in the WTO dispute settlement system, panels also possess funda mental responsibilities unde r Articles 3.2, 11, and 
19.2 of the DSU, and are not free to ignore them be cause one party refers to  Appellate Body findings 
on a similar issue in another dispute.  Panels must make an objective assessment of the matter, and must correctly apply the customary rules of interpre tation of public international law, even when this 
requires a conclusion different from that reached in an earlier report.    
36. In connection with reports dea ling with "zeroing", the panel in US – Zeroing (Japan)  
appreciated that panels are not bound to apply r easoning and findings of the Appellate Body on the 
subject.
36  The panel, explaining why it departed from the Appellate Body reasoning on certain 
aspects of the zeroing claim, recognized that alt hough Appellate Body reports  should be taken into 
account when they are relevant to a dispute, "a panel is under an obligation under Article 11 of the 
                                                      
31 See EC First Written Submission, paras. 94, 99.   
32 See US – Softwood Lumber Dumping (AB), para. 111 ( citing Japan – Alcohol Taxes (AB) and US – 
Shrimp (Article 21.5) (AB) ).  As the Appellate Body noted in US – Softwood Lumber , adopted reports "are not 
binding, except with respect to resolving the partic ular dispute between the parties to that dispute".  US –
 Softwood Lumber (AB) , para. 111 (quoting Japan – Alcohol Taxes (AB) ).  Panels also have recognized that they 
are not bound by previous WTO panel reports.  See Argentina – Poultry , para. 7.41 ("We note that we are not 
bound to follow rulings contained in adopted WTO panel reports.").   
33 US – Softwood Lumber Dumping (AB), n. 175.   
34 EC First Written Submission, para. 99.   
35 EC First Written Submission, paras. 90, 93, 106.   
36 The United States provides below specific analysis as to why previous Appellate Body reports are 
inapposite to this case.   WT/DS350/R 
Page A-82  
 
  DSU to 'make an objective assessment of the matte r before it, including an objective assessment of 
the facts of the case and the applicability of and conformity with the relevant covered 
agreements...'".
37  Further, as the panel noted, "Article 3.2 of the DSU requires a panel 'to clarify the 
existing provisions of those agreements in accordance with customary rules of interpretation of public 
international law' and provides that '[r]ecommenda tions and rulings of the DSB cannot add to or 
diminish the rights and obligations provided in covered agreements.'"38   
 37. Likewise, recently in US- Shrimp AD Measure (Ecuador) , the panel correctly stated that in 
accordance with its obligations under Article 11 of th e DSU, it had to satisfy itself that Ecuador had 
established a prima facie case by presenting evidence and arguments  to identify the measure being 
challenged and explaining the basis for the claime d inconsistency of zeroing with a WTO provision, 
despite the fact that the responding party di d not contest the claims made by Ecuador.
39  The panel 
stated that:    
[T]he fact that the United States does not c ontest Ecuador's claims is not sufficient 
basis for us to summarily conclude that Ecuador's claims are well-founded.  Rather, 
we can only rule in favour of Ecuador if we are satisfied that  Ecuador has made a 
prima facie case.
40   
 38. Lastly, the United States notes that the EC's  claim that prior Appellate Body reports 
"constitute an authoritative interpretation of the law"
41 cannot be reconciled with  Article IX:2 of the 
Marrakesh Agreement Establishing  the World Trade Organization, which confers the "exclusive 
authority to adopt interpretations" of the covered agreements upon the Ministerial Conference and the 
General Council.42  Therefore, while the dispute settlement system serves to resolve a particular 
dispute, and to clarify Agreement provisions in the context of doing so, neither panels nor the 
Appellate Body have the "authority" to adopt inte rpretations that would be binding with respect to 
another dispute.  The same flaw applies to the EC's novel argument concerning Article XVI:4 of the 
Marrakesh Agreement as well, as discussed further below.    
V. ARGUMENT 
39. The US argument is structured in the following manner.  First, in Section A, the United States 
requests that the Panel make preliminary rulings regard ing the scope of its terms of reference.  As we 
demonstrate, the Panel should limit its terms of reference to those final measures that were first 
identified in the consultation request, and subseque ntly in the panel request.  Moreover, the EC's 
additional measures, to the extent that they are deem ed indeterminate, also are outside of the panel's 
terms of reference because they do not comply with the specificity requirement of Article 6.2 of the 
DSU.   
 
40. In Section B, the United States responds  to the EC's claims concerning assessment 
proceedings.  The United States will demonstrate th at for purposes of an assessment proceeding, there 
is no WTO requirement to offset "negative dumpi ng" or use the average-to-average method or 
                                                     
 
37 US – Zeroing (Japan) (Panel) , para. 7.99 and n. 733.    
38 US – Zeroing (Japan) (Panel) , para. 7.99 and n. 733.   
39 US – Shrimp AD Measure (Ecuador) , paras. 7.10-7.11 ( quoting US – Gambling  (AB), para. 141).   
40 US – Shrimp AD Measure (Ecuador) , para. 7.9.   
41 See EC First Submission, para. 108.   
42 The Appellate Body recognized this point in one of its earliest reports, when it noted that 
"Article IX:2 of the WTO Agreement provides:  "The Ministerial Conference and the General Council shall 
have the exclusive authority to adopt interpretatio ns of this Agreement and of the Multilateral Trade 
Agreements".  Article IX:2 provides further that such decisions "shall be taken by a three-fourths majority of the Members".  The fact that such an 'exclusive author ity' in interpreting the treaty has been established so 
specifically in the WTO Agreement is  reason enough to conclude that such authority does not exist by 
implication or by inadvertence elsewhere".  Japan – Alcohol Taxes (AB), p. 13.    WT/DS350/R 
 Page A-83 
 
 
  transaction-to-transaction method.43  Therefore, the Panel should reject the EC's claims as to 
assessment proceedings.    41. In Section C, the United States refutes the EC 's argument that Commerce's determinations in 
the challenged sunset reviews are inconsistent w ith AD Agreement Articles 11.1, 11.3, 2.1, 2.4 and 
2.4.2.  In Section D, the United States addresses th e EC's "as applied" claim with respect to four 
original investigations.  Finally, in Section E, the United States responds to the EC's claim with 
respect to Article XVI:4 of the WTO Agreement.  Because the EC has not demonstrated inconsistency 
with provisions of the AD Agreement and GATT 1994, there can be no breach of Article XVI:4.  The 
United States also will demonstrate that the EC's br oad interpretation of Article XVI:4 would lead to a 
distortion of the WTO dispute settlement system, and should be rejected.   
 A. R
EQUEST FOR PRELIMINARY RULINGS  
42. The United States requests a preliminary ruling that the measures appearing for the first time 
in the EC's panel request are not within the Panel's te rms of reference.  Contrary to Articles 4.4, 4.7, 
6.2 and 7.1 of the DSU, and Articles 17.3, 17.4 and 17.5 of the AD Agreement, the EC seeks to 
expand the matter in this dispute beyond the m easures upon which consultations were requested.44   
 43. First, among the 52 alleged measures (called "proceedings" by the EC) the EC specifically 
identifies in the Annex to its panel request, 14 are not within the Panel's terms of reference.  These 
14 specific alleged measures were not identified in the EC's consultation request and were not the 
subject of consultations;  they therefore fall out side of the Panel's terms of reference.   
 44. Second, the EC adds in its panel request a clai m against "[t]he continue d application of, or the 
application of the specific anti-dumping duties resulting from the anti-dumping orders ... calculated or maintained in place pursuant to the most recent admi nistrative review, or, as the case may be, original 
proceeding or changed circumstances or sunset  review proceeding" in 18 enumerated cases.
45  The 
United States assumes that this request refers to  the most recent measure included for each of the 
18 cases listed in the Annex.  To the extent that th e EC's request does not refer to the most recent 
identified measure, but to any most recent measure, it refers to an indeterminate number of alleged 
measures.  Indeterminate measures that are no wher e specifically identified would not fall within the 
Panel's terms of reference.  Like  the 14 alleged measures mentioned above, the EC did not identify the 
continued application of, or the application of  the anti-dumping duties resulting from the 18 listed 
cases – either specifically or generally – in its consultation request.    45. Insofar as the EC's added measure concerning the application and continued application of 
antidumping duties is deemed indeterminate, the Pa nel should find that it is outside of the Panel's 
terms of reference because it does not comply with the specificity requirement of Article 6.2 of the 
DSU.    46. Finally, four of the ne wly alleged measures were preliminary results from on-going 
proceedings in which no final determination had been made at the time of the panel request.  For this 
additional reason, the Panel should rule that these four on-going proceedings are not within its terms 
of reference.   
 
                                                     
 
43 Or, put differently, that it is permissible under th e WTO agreements to use the average-to-transaction 
method in assessment proceedings with respect to situations other than those involving "targeted dumping".   
44 US – Shrimp (Article 21.5) (Panel) , para. 5.6 ("We note that, as confirmed by the Appellate Body, a 
panel has the responsibility to determine its jurisdiction and that assessing the scope of its terms of reference is 
an essential part of this determination" (Citing US – 1916 Act (AB), para. 54)).   
45 See WT/DS350/6 (11 May 2007) at para. 2;  see also  EC's First Submission, para. 111.   WT/DS350/R 
Page A-84  
 
  1. The EC Requested Establishment of the Panel on Measures Not Included in its Request 
for Consultations 
(a) The Measures Contained in the EC's Original Consultation Request 
47. The EC's consultation request of 2 Octobe r 2006, was explicitly limited to 38 specific 
measures.
46  Paragraph 2(b) of the cons ultation request refers to " [t]he specific antidumping 
administrative reviews listed in Annex I to the present request, and any assessment instructions issued 
pursuant to them..." (emphasis added).  Annex I lists  33 specific administrative reviews, one of which 
was an on-going proceeding at the time of the consultation request.47  Similarly, paragraph 2(c) of the 
consultation request describes the investigations  covered by the consultation request as "[t] he specific 
dumping determination in the original  investigations listed in Annex III to the present request, and any 
automatic assessment instructions issued pursuant to them..." (emphasis added).  Annex III lists four 
specific final determinations of antidumping original  investigations.  Finally , paragraph 2(d) of the 
consultation request describes the single sunset review covered by the consultation request as " [t]he 
specific Sunset review determination in the case listed in Annex II to the present request" (emphasis 
added).  Annex II lists one specific sunset review determination.   
 
48. The EC's additional consultation request of 9 October 2006, to its initial consultation request 
added two administrative reviews to  the annex of the original cons ultation request, one of which was 
an ongoing proceeding at the time of the addendum.48  Accordingly, the EC identified a total of 38 
specific measures and 2 on-going proceed ings in its consultation request.   
 
(b) The EC's Panel Request Explicitly Identifi es Additional Alleged Measures that were not 
Identified in its Request for Consultations 
49. In contrast to the consultation request, the EC 's panel request identified 52 specific measures:  
the original 38 measures plus 14 additional allege d measures, including 7 final and 3 on-going 
additional sunset reviews49, and 3 final and 1 on-going a dditional administrative reviews.50  None of 
                                                      
46 See WT/DS350/1 (3 October 2006).  Paragraph 2(a) of the consultation request of 2 October 2006 
specifies as the subject of consulta tions:  "The United States regulations, zeroing methodology, practice, 
administrative procedures and measures for determining the dumping margin in reviews mentioned under point 1(a) above and which the EC considers are inconsistent with several provisions of the AD Agreement , 
GATT 1994 and the Marrakech Agreement establishing the World Trade Organization".  Paragraph 2 of the 
EC's panel request does not identify these same alleged measures.   
47 See WT/DS350/1 (3 October 2006) (identifying Steel Concrete Reinforcing Bars from Latvia , 
71 Fed. Reg. 45,031 (Aug. 8, 2006) (preliminary results)).   
48 WT/DS350/1/Add. 1 (11 October 2006) (identifying Stainless Steel Sheet and Strip in Coils from 
Germany , 71 Fed. Reg. 45,024 (Aug. 8, 2004) (preliminary results)) (Exhibit EC-49).   
49 Compare  WT/DS350/6 (11 May 2007), Annex, with WT/DS350/1 (3 October 2006), Annex;  
WT/DS350/1/Add.1 (11 October 2006), Annex.  The additional sunset reviews include the final sunset review determinations:  Ball Bearings and Parts Thereof from Italy , 71 Fed. Reg. 54,469 (Sept. 15, 2006) (Exhibit EC-
71);  Ball Bearings and Parts Thereof from Germany , 71 Fed. Reg. 54,469 (Sept. 15, 2006) (Exhibit EC-72);  
Ball Bearings and Parts Thereof from France , 71 Fed. Reg. 54,469 (Sept. 2006) (Exhibit EC-73);  Stainless 
Steel Sheet and Strip in Coils from Germany , 70 Fed. Reg. 44,886 (Aug. 4, 2005) (Exhibit EC-74);  Stainless 
Steel Plate in Coils from Belgium , 70 Fed. Reg. 41,202 (July 18, 2005) (Exhibit EC-75);  Ball Bearings and 
Parts Thereof from the United Kingdom , 71 Fed. Reg. 54,469 (Sept. 15, 2006) (Exhibit EC-76);  Stainless Steel 
Sheet and Strip in Coils from Italy , 70 Fed. Reg. 44,886 (Aug. 4, 2005) (Exhibit EC-69).  The panel request also 
includes on-going sunset review determinations Steel Concrete Reinforcing Bars from Latvia , 72 Fed. 
Reg. 16,767 (April 5, 2007) (USITC had not yet determined injury at time of panel request) (Exhibit EC-70);  
Certain Hot Rolled Carbon Steel Flat Products from the Netherlands , 72 Fed. Reg. 7604 (16 Feb. 2007) 
(preliminary results) (Exhibit EC-77);  and Certain Pasta from Italy , 72 Fed. Reg. 5266 (5 Feb. 2007) (USITC 
had not yet determined injury at time of panel request) (Exhibit EC-78).   
50 Compare  WT/DS350/6 (11 May 2007), Annex, with  WT/DS350/1 (3 October 2006), Annex;  
WT/DS350/1/Add.1 (11 October 2006), Annex.  The additional final administrative review results are:  Steel  WT/DS350/R 
 Page A-85 
 
 
  these 14 alleged measures were referenced in th e consultation request, and none were formally 
included in consultations.    50. The EC's panel request also added a new request that the panel review:    
The continued application of, or the application of the specific anti-dumping duties 
resulting from the anti-dumping orders enumer ated from I to XVIII in the Annex to 
the present request as calculated or maintain ed in place pursuant to the most recent 
administrative review or, as the case may be, original proceeding or changed circumstances or sunset review proceeding at a level in excess of the anti-dumping 
margin which would result from the correct application of the Anti-Dumping 
Agreement (whether duties or cash deposit rates or other form of measure).
51   
 51. The United States assumes that this additional request refers to the continued application of, 
or the application of, the specific anti-dumping duti es for the most recent of the measures specifically 
listed for each of the 18 cases in the Annex.  To the extent that the EC's request does not refer to the 
most recent identified measure, it refers to an i ndeterminate number of alle ged measures in connection 
with the 18 cases.  In this event, the EC would be  challenging zeroing "as applied" in the calculation 
of antidumping duties under original investigati ons, and an indeterminate number of past 
administrative reviews, past changed circumstances re views, and past sunset reviews.  The new claim 
also would challenge the calculation of antidumping duties in an indeterminate number of current 
and/or future reviews that Commerce allegedly is concluding or will conclude at some point in the 
future.    52. With this additional request, the EC would be  suggesting that there is some measure or are 
some measures, with respect to the orders, separ ate and apart from the particular determinations 
identified in its Annexes, that contain calcula tions of antidumping duties.  The EC does not 
specifically identify any of these alleged measures.  These alleged past and future measures to which 
the EC appears to allude were not formally a part of its consultation request, and were not included in 
request for consultations.    
2. The EC May Not Expand the Panel's Terms of Reference by Including in its Request for 
Establishment of a Panel Specific Measures Not Included in its Request for 
Consultations 
(a) Consultations Must be held Regarding a Specific Measure Before a Member may Refer that 
Measure to the DSB 
53. A panel's terms of referen ce are determined by the complaining party's request for the 
establishment of a panel, which pursuant to Article 6.2 of the DSU, must "identify the specific 
measures at issue " (emphasis added).  However, a Member may not request the establishment of a 
panel with regard to any measure;  rather, it may only file a panel request with respect to a measure 
upon which the consultations process has run its cour se.  Specifically, Article 4.7 of the DSU provides 
that a complaining party may request establishment of a panel only if "the cons ultations fail to settle a 
dispute".   
 
                                                                                                                                                                    
 
Concrete Reinforcing Bars from Latvia , 71 Fed. Reg. 45,031 (Aug. 8, 2006) (identified as preliminary results in 
consultation request) (Exhibit EC-65);  Stainless Steel Sheet and Strip in Coils from Germany , 71 Fed. Reg. 
45,024 (Aug. 8, 2006) (identified as preliminary re sults in consultation request) (Exhibit EC-49);  and Certain 
Pasta from Italy , 72 Fed. Reg. 7011 (14 Feb. 2007) (Exhibit EC-65).  The additional on-going administrative 
review result is Certain Hot Rolled Carbon Steel Flat Products from the Netherlands , 70 Fed. Reg. 71,523 
(11 December 2006) (preliminary results) (Exhibit EC-59).   
51 WT/DS350/6 (11 May 2007).   WT/DS350/R 
Page A-86  
 
  54. In turn, Article 4.4 of the DSU provides that a request for consultations must state the reasons 
for the request "including identification of the measures at issue and an indication of the legal basis 
for the complaint" (emphasis added).    55. Thus, there is a clear progression between th e measures discussed in consultations conducted 
pursuant to Article 4 of the DSU and the measures id entified in the request to establish a panel which 
in turn, form the basis of the panel's terms of  reference.  Indeed, the Appellate Body in Brazil – 
Aircraft  stated that:  
 
Articles 4 and 6 of the DSU . . . set forth a process by which a complaining party 
must request consultations, and consultations  must be held, before a matter may be 
referred to the DSB for the establishment of a panel.
52   
  Moreover, the Appellate Body has found that  "as a general matter, consultations are a 
prerequisite to panel proceedings".
53   
 
56. These rules apply with equal force to di sputes brought under the AD Agreement, and the 
AD Agreement itself clarifies further the relati onship between consultati ons and panel requests.54  
Article 17.4 of the AD Agreement states that a Member may only refer "the matter" to the DSB following a failure of consultations to achieve a mu tually agreeable solution, and final action by the 
administering authorities of the importing Member to levy definitive antidumping duties or to accept 
price undertakings.  In Guatemala - Cement (AB) , the Appellate Body explained that what constitutes 
the "matter" is the "key concept in defining the sco pe of a dispute that may be referred to the DSB 
under the Anti-Dumping Agreement  and, therefore, in identifying the parameters of a panel's terms of 
reference in an anti-dumping dispute".
55  The Appellate Body analyzed the "matter" referenced in 
Articles 17.3 through 17.6 of the AD Agreemen t and found that the specific requirements in 
Article 6.2 of the DSU – identification of the speci fic measure at issue and the legal basis for the 
claim – define the "matter" and, accord ingly, the panel's terms of reference.56  The Appellate Body 
also found that the term "matter", has this same me aning in Article 17.3, relating to the request for 
consultations, and Articles 17.4 and 17.5, relating to the referral of a matter to the DSB and the 
request for the formation of a panel to examine the matter.57   
 
57. Article 17.3 states that the consultations are to  be held with the view of "reaching a mutually 
satisfactory resolution of the matter ".  Moreover, Article 17.4 provides that when "consultations 
pursuant to [Article17.3 of the AD Agreement] have failed to achieve a mutually agreed solution" and 
"final action has been taken", by the admi nistering authorities, a Member "may refer  the matter  to the 
Dispute Settlement Body ("DSB")".  And, under Artic le 17.5, the DSB "shall, at the request of the 
complaining party, establish a panel to examine the matter " (emphasis added).  In all cases, the matter  
encompasses the specific measure or  measures identified by the complaining party, and the legal basis 
for the complaint.    58. Articles 17.3, 17.4, and 17.5, along with Articles 4 and 6 of the DSU, therefore set forth a process by which a complaining party must request consultations on a specific matter before that 
                                                     
 
52 Brazil – Aircraft (AB) , para. 131.   
53 Mexico – HFCS (Article 21.5) (AB) , para. 58.   
54 Pursuant to DSU Article 1.2 and Appendix 2, in disputes arising under the AD Agreement, the 
provisions of the DSU "apply subject to such special or additional rules and procedures on dispute settlement 
contained in the covered agreements as are identified in Appendix 2", that is, Articles 17.4 through 17.7 of the 
AD Agreement.  To the extent of an y differences, which do not exist here, between the rules of the DSU and the 
AD Agreement, the special rule s and procedures in Articles 17.4 to 17.7 would apply.  See DSU, Article 1.2.   
55 Guatemala – Cement I (AB) , para. 70.   
56 Guatemala – Cement I (AB) , paras. 71-73.   
57 Guatemala – Cement I (AB) , para. 76.    WT/DS350/R 
 Page A-87 
 
 
  matter may be referred to the DSB for the establis hment of a panel.  Moreover, pursuant to these 
provisions, a panel's terms of refe rence cannot include measures which were outside of the request for 
consultations.    59. Similar issues have arisen in a previous dispute.  In US – Import Measures on Certain EC 
Products , the Appellate Body upheld the panel's finding that a par ticular action taken by the 
United States was not part of the panel's terms of reference, because the EC , while referring to that 
action in its panel request, had faile d to request consultations upon it.  In particular, the EC's request 
for consultations made reference to the increased bonding requirements levied by the United States as 
of 3 March 1999, on EC listed products in connection with the EC Bananas  dispute, but not to US 
action taken on 19 April 1999, to impose 100 perc ent duties on certain designated EC products.
58  
When the EC sought findings with respect to both the March 3rd measure and the April 19th action, the 
panel found that the March 3rd measure and April 19th action were legally distinct, and that the 
April 19th action did not fall within the panel's terms of reference.59   
 
60. The Appellate Body upheld th e Panel's finding.  The Appellate Body found that because the 
consultation request did not refer to the April 19th action, and as the EC admitted at the oral hearing 
that the April 19th action "was not formally  the subject of the consultations", it was not a measure in 
that dispute and fell outside the panel's terms of reference.60   
 (b) Because the EC's Panel Request Contained Measu res That were not the Subject of Its Request 
for Consultations, these Additional Measures do  not fall within the Panel's Terms of 
Reference 
61. The EC's panel request explicitly introduced to the dispute 14 new administrative review and 
sunset review determinations.  None of these allege d measures were a subject of the EC's consultation 
request.   
 
62. The EC also requested establishment of a pane l as to "the continued application of, or the 
application of the specific antidumping duties resu lting" from the determinations in the 18 cases 
identified in the Annex to its panel request.  The EC's  request for consultations did not contain either a 
specific or general reference to these alleged measures.    
63. The situation in this dispute resembles that in US Import Measures .  As in that or any other 
dispute, the scope of the measures subject to refe rral to the DSB is delineated by the consultation 
request and, absent a request for consultations, a meas ure may not be placed before a panel.  The EC's 
consultation request made no mention of any of the additional measures, and accordingly, these 
"measures" do "not fall within th e Panel's terms of reference".
61 
 
64. Permitting the EC to request a panel with resp ect to measures on which consultations have not 
been held would also have dangerous systemic c onsequences for the WTO dispute settlement system.  
The very purpose of consultations and any practical  utility that they provide would be completely 
undermined if a complainant could add complete ly new measures upon which no consultations had 
been held, to a request for the establishment of a panel.  To allow a complaining party to have 
recourse to panel proceedings without having cons ulted on a measure would deny both parties the 
opportunity to attempt to settle their differences and resolve the dispute, contradicting the role stated 
in Article 3.3 of the DSU of the dispute settlement  system in providing the "prompt settlement" of 
situations where one Member considers that its benefits under the covere d agreements are being 
nullified or impaired by measures taken by another Member.  It is also unclear how such an outcome 
                                                      
58 US – Certain EC Products (AB) , para. 70.   
59 US – Certain EC Products (AB) , para. 82.   
60 US – Certain EC Products (AB) , para. 70.   
61 US – Certain EC Products (AB) , para. 70.   WT/DS350/R 
Page A-88  
 
  would advance the purpose of consultations;  we note in this connection that Article 4.1 of the DSU 
calls on Members "to strengthen and improve the effectiveness of the consultation procedures 
employed by Members".  65. For these reasons, the United States respectfu lly requests the Panel to find that the 14 new 
alleged measures specifically identified in the EC 's panel request, along with the "application and 
continued application of duties" relating to the 18 cases referenced in the EC's panel request, are not 
within this Panel's terms of reference.    (c) The EC's Reference to "18 Cases" Do Not Comport with the Specificity Requirements of 
Article 6.2 
66. The EC in its panel request identified as additional "measures"  "the continued application of, 
or the application of the specific anti-dumpi ng duties resulting from the anti-dumping orders 
enumerated from I to XVIII in the Annex to the pr esent request as calculated or maintained in place 
pursuant to the most recent administrative revi ew or, as the case may be, original proceeding or 
changed circumstances or sunset review proceeding".
62  The United States assumes that this request 
refers to the most recent of the measures specifica lly listed for each of the proceedings for each of 18 
cases in the Annex.  However, to the extent that the EC's request does not refer to the most recent 
identified measure, it refers to an indete rminate number of alleged measures.   
 67. A general reference to an indeterminate num ber of measures does not satisfy the requirement 
of Article 6.2 of the DSU that a panel request "identify the specific measures at issue" (emphasis 
added).  Each measure that calculates and sets marg ins of dumping is a legally distinct measure.  To 
challenge legally distinct measures, a Member must identify specifically each measure in its 
consultation and panel requests.
63  The EC did not comply with this requirement.  Accordingly, 
neither these 18 cases nor any additional proceed ings that flow from these 18 cases, beyond the 
measures specifically identified in both the consu ltation and panel requests, can be included within 
this Panel's terms of reference.64   
 68. Permitting the EC to expand th e terms of reference to include the indeterminate measures not 
specifically identified would cause severe prejudice to the United States.  Individual assessment 
proceedings relate only to certain named compani es covered by the review proceeding.  The EC, 
inasmuch as its challenge relate s to certain enumerated proceedings, limits the application of its 
challenge to certain companies named in the Annex of its panel request.  It  is, however, conceivable 
that (1) companies other than those named in the EC's Panel Request, might have been reviewed in 
one or more of the particular segments being chal lenged, and (2) that the orders the EC identifies 
cover companies in addition to those the EC has iden tified.  Thus, this raises the question of not only 
which proceedings the EC is challenging, but also wh ether the EC is limiting its challenge to only the 
companies named in the Annex of its panel request.    69. Because the United States has had no opportunity to consult with the EC with respect to these 
indeterminate number of alleged measures, it was una ble to seek further clarity regarding the scope 
and effect of the measures the EC is challenging.  Without prior consultations on specific measures, a 
Member cannot adequately respond to  allegations brought by another Member.  This inability causes 
prejudice to the United States when making its argumen ts before the Panel, and deprives the Panel of 
a full argument on the matter.    70. Moreover, in addition to l acking in clarity, any attempt by the EC to assert a broad, all 
encompassing challenge to "18 cases", and suggest that its claim covers any and all individual 
                                                     
 
62 See WT/DS350/6 (11 May 2007).   
63 See US – Certain EC Products (AB) , para. 76.   
64 See US – Certain EC Products (AB) , para. 70.    WT/DS350/R 
 Page A-89 
 
 
  proceedings which flow from these cases is untenab le.  By failing to identify specific measures at 
issue, the EC has failed to establish a prima facie case as to the orders in general, or to any proceeding 
that it has not specifically named.  Original i nvestigations and assessment reviews, even when 
pertaining to the same subject merchandise, are di fferent processes which serve distinct purposes.  
The purpose of an investigation is to determine th e existence, degree, and effect of any alleged 
dumping, while the purpose of an assessment review is to determine the amount of the duty to be 
assessed on previous imports of subject merchandise and the estimated dumping duty to be applied to 
future imports.  A challenge and finding by a panel with respect to one administrative proceeding does 
not necessitate the same type of finding as to a ll proceedings that encompass the same subject 
merchandise.   
 
71. The Appellate Body recognized in US – Softwood Lumber CVD (21.5)(AB)  separate 
proceedings to be independent of each other and that they operate under their own timelines and 
procedures .65  In that instance, the Appellate Body fou nd the Section 129 determination and the first 
assessment review decision with respect to pass through to be linked because the administrative 
review referenced the WTO proceedings and findings.66  However, by tailoring its finding to the 
narrow facts of that case, and by indicating that it did not intend its finding to  be broadly applicable, 
the Appellate Body effectively conveyed that un less the particular facts dictate otherwise, each 
proceeding should be treated as its own measure.67   
 
3. The EC Requested Establishment of the Panel on Measures That Were Not Final at the 
Time of its Panel Request 
72. As mentioned above, four of the alleged me asures identified in the panel request were 
preliminary results of assessment reviews.68  They do not constitute "final action" within the meaning 
of Article 17.4 of the AD Agreement, and thus ca nnot serve as the basis for requesting establishment 
of a panel.   
 
73. A matter may only be referred to a panel if "f inal action has been taken by the administering 
authority".69  The EC, however, alerts the Panel that some  of the matters it ha s referred to the DSB 
relate to proceedings that are not final by prominen tly disclosing in its panel request that the measures 
it challenges are "Final Results ( unless otherwise specified )", and by identifying the one on-going 
administrative review and one of the on-goi ng sunset reviews as "Preliminary results".70  The EC also 
                                                      
65 US – Softwood Lumber CVD Final (21.5) (AB) , para. 88.   
66 See US – Softwood Lumber CVD Final (Article 21.5) (AB) , paras. 90-92.   
67 US – Softwood Lumber CVD Final (Article 21.5) (AB) , para. 93.   
68 See WT/DS350/6, Annex:  List of Cases ( identifying Certain Hot Rolled Carbon Steel Flat Products 
from the Netherlands , 70 Fed. Reg. 71,523 (December 11, 2006) (preliminary results) ( see Exhibit EC-59);  
Certain Hot Rolled Carbon Steel Flat Products from the Netherlands , 72 Fed. Reg. 7604 (16 Feb. 2007) 
(preliminary results) ( see Exhibit EC-77);  Steel Concrete Reinforcing Bars from Latvia , 72 Fed. Reg. 16,767 
(April 5, 2007) (USITC has not yet determined injury) (Exhibit EC-70);  Certain Pasta from Italy , 72 Fed. 
Reg. 5266 (5 Feb. 2007) (USITC has not yet determined injury) (Exhibit EC-78).  See WT/DS350/1 
(3 October 2006) ( identifying Steel Concrete Reinforcing Bars from Latvia , 71 Fed. Reg. 45,031 (8 Aug. 2006) 
(preliminary results) (Exhibit EC-33).  See WT/DS350/1/Add. 1 (11 October 2006) ( identifying Stainless Steel 
Sheet and Strip in Coils from Germany , 71 Fed. Reg. 45,024 (8 Aug. 2006) (preliminary results) (Exhibit EC-
49).   
69 AD Agreement, Art. 17.4. A provisional measure ma y only be challenged when it " has a significant 
impact and the Member that requested consultations co nsiders that the measure was taken contrary to the 
provisions of paragraph 1 of Article 7".  The EC has neither alleged nor demonstrated that these criteria have 
been met with respect to the preliminary results identified.   
70 WT/DS350/6, Annex:  List of Cases (p.11) (emphasis added);  Certain Hot Rolled Carbon Steel Flat 
Products from the Netherlands , 72 Fed. Reg. 7604 (16 Feb. 2007) (preliminary results) ( see Exhibit EC-77);  
Certain Hot Rolled Carbon Steel Flat Products from the Netherlands , 70 Fed. Reg. 71,523 (11 Dec. 2006) 
(preliminary results) ( see Exhibit EC-59).   WT/DS350/R 
Page A-90  
 
  omits from its panel request reference to the final IT C decisions and final orders in two of the sunset 
reviews because these proceedings also were on-going at the time the EC submitted its panel request.  
These four on-going proceedings challenged by the EC are not "final action[s] . . . taken by the administering authority of the importing Member to levy definitive anti-dumping duties".
71  To the 
contrary, at the time of the panel request, no d ecision had been made to levy definitive duties.72  
Indeed, it was entirely possible that no definitive anti-dumping duty would be levied, or would 
continue to be levied at all.    74. Submitting a request for establishment of a panel to review proceedings that are not final is 
not permitted by Article 17.4 of the AD Agreement.  Nor are measures that are not yet in existence at 
the time of panel establishment within a panel's terms of reference under the DSU.
73  We respectfully 
request that the Panel find that the four on-going pro ceedings are not within its terms of reference.   
 B. T
HE UNITED STATES METHODOLOGY FOR ASSESSING ANTIDUMPING DUTIES IS CONSISTENT 
WITH THE OBLIGATIONS IN THE AD AGREEMENT  
75. To the extent the EC challenges the WTO-consistency of the zeroing methodology as applied 
in assessment proceedings, as we demonstrate below, th e EC's claims directly contradict the text of 
the AD Agreement.  The methodology used by the United States to calculating antidumping duties in 
the assessment proceedings in question is WTO-consistent.    76. The AD Agreement provides no general obliga tion to consider transactions for which the 
export price exceeds normal value as an offset to the amount of dumping found in relation to other 
transactions at less than normal value.  The excl usive textual basis for an obligation to account for 
such non-dumping in calculating margins of dumping appears in connection with the obligation found 
in Article 2.4.2 that "the existence of marg ins of dumping during the investigation 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 . . . ".
74  This particular text of 
Article 2.4.2 applies only within the limited contex t of determining whether dumping exists in the 
investigation phase when using the average-to-ave rage comparison methodology in Article 2.4.2.75  
There is no textual basis for the additional obligations  that the EC would have this Panel impose.   
 77. In US – Softwood Lumber Dumping (AB),  the Appellate Body specifically recognized that the 
issue before it was whether zeroing was prohib ited under the average-to-average comparison 
methodology found in Article 2.4.2.
76  Thus, the report found only that "zeroing is prohibited when 
establishing the existence of margins of dumping u nder the weighted-average-to-weighted-average 
methodology".77  The Appellate Body reached this conclu sion by interpreting the terms "margins of 
dumping" and "all comparable export transactions" as th ey are used in Article 2.4.2 in an "integrated 
manner".78  In other words, the term "all comparab le export transactions" was integral to the 
interpretation that the multiple comparisons of average normal value and average export price for 
                                                      
71 AD Agreement, Art. 17.4.   
72 Steel Concrete Reinforcing Bars from Latvia , 72 Fed. Reg. 16,767 (5 April 2007) (USITC has not yet 
determined injury) (Exhibit EC-70);  Certain Pasta from Italy , 72 Fed. Reg. 5266 (5 Feb. 2007) (USITC has not 
yet determined injury) (Exhibit EC-78).   
73 See, e.g, US – Subsidies on Upland Cotton (Panel) , para. 7.158 (finding that a measure that had not 
yet been adopted could not form a part of the Panel's terms of reference);  Panel Report, Indonesia – Certain 
Measures Affecting the Automobile Industry (Panel) , para. 14.3 (agreeing with the responding party that a 
measure adopted after the establishment of the panel was not within the panels terms of reference).   
74 Emphasis added.  See US – Softwood Lumber Dumping (AB) , paras. 82, 86, and 98.   
75 US – Zeroing (Japan) (Panel) , para. 7.213;  US – Zeroing (EC) (Panel) , para. 7.197;  US – Softwood 
Lumber Dumping (Article 21.5) (Panel) , para. 5.65-5.66 and 5.77.   
76 US – Softwood Lumber Dumping (AB) , paras. 104, 105, and 108.   
77 US – Softwood Lumber Dumping (AB) , para. 108.   
78 US – Softwood Lumber Dumping (AB) , paras. 86 - 103.    WT/DS350/R 
 Page A-91 
 
 
  averaging groups did not constitute an average-to -average comparison of all comparable export 
transactions unless the results of all such comparis ons were aggregated.  Th e obligation to provide 
offsets, therefore, was tied to the text of the provision addressing the use of the average-to-average 
comparison methodology in an investigation, and did not arise out of any independent obligation to offset prices.   
 
78. The EC's argument that there is either a ge neral prohibition of "zeroing", or one specifically 
applicable to the more particular context of assessment proceedings, cannot be reconciled with the 
interpretation articulated in US – Softwood Lumber Dumping (AB) , wherein the phrase "all 
comparable export transactions" in Article 2.4.2 m eant that zeroing was prohibited in the context of 
average-to-average comparisons in investigations.  If, as the EC seems to argue, there is a general 
prohibition of zeroing that applies in all proceedings and under all comparison methodologies, the meaning ascribed to "all comparable export transacti ons" by the Appellate Body in that dispute would 
be redundant of the general prohibition of zeroing and therefore "inutile".   
 
79. The need to avoid such redundancy was recognized in US – Zeroing (Japan) (AB) when the 
Appellate Body changed its interp retation of this phrase.  In US – Softwood Lumber Dumping (AB) , 
"margins of dumping" and "all comparable export tr ansactions" were interpreted in an integrated 
manner.  The Appellate Body found that in aggreg ating the results of the model-specific comparisons, 
"all" comparable export transactions must be account ed for.  Thus, the phrase necessarily referred to 
all transactions across all models of the product under investigation, i.e., the product "as a whole".  
The textual reference "all comparable export tran sactions" was the basis for the Appellate Body to 
conclude that "product" must mean "product as whol e" and margins of dumping may not be based on 
individual averaging group comparisons.  The Appella te Body subsequently relied on this "product as 
a whole" concept, although in a manner detached fro m its underlying textual basis, in concluding that 
margins of dumping cannot be calculated for individual transactions.
79   
 
80. However, in US – Zeroing (Japan) (AB) , the Appellate Body  reinterpreted "all comparable 
export transactions" to relate solely to all transac tions within a model, and not across models of the 
product under investigation.80  In doing so, the Appellate Body abandoned the only textual basis for 
its reasoning in US – Softwood Lumber Dumping (AB) .81   
 
81. In making its own "objective assessment", however, this Panel must give particular 
consideration to the special standard of review for matters arising under the AD Agreement – that a 
Member's measure may not be found inconsistent w ith the obligations set fo rth in the AD Agreement 
if the measure is based on a permissible interpreta tion of the AD Agreement.  Accordingly, for the 
reasons set forth below, the Panel should not a dopt reasoning and conclusi ons from Appellate Body 
reports that reject a permissible interpretation of the AD Agreement.   
 
                                                      
79 US – Zeroing (EC) (AB), paras. 126, 127;  US – Softwood Lumber Dumping (21.5) (AB), 
paras. 89, 114;  US – Zeroing (Japan) (AB), paras. 121, 122, 151.   
80 US – Zeroing (Japan) (AB) , para. 124 ("[T]he phrase 'all comp arable export transactions' requires 
that each group include only transactions  that are comparable and that no othe r transaction may be left out when 
determining margins of dumping under [the average-to-average comparison] methodology").   
81 The United States raised these points in its DSB statement and communication of 20 February 2007 
(Exhibit US-2).  See also , Communication from the United States, WT/DS294/16, and Communication from the 
United States, WT/DS294/18.   WT/DS350/R 
Page A-92  
 
  1. Article 2.1 of the AD Agreement and Article VI of the GATT 1994
82 
82. As an initial matter, Article 2.1 of the AD Agreement and Article VI:1 of the GATT 1994 are 
definitional provisions that, "read in isola tion, do not impose independent obligations".83  
Nevertheless, these definitions are important to the interpretation of other provisions of the 
AD Agreement at issue in this dispute.  In partic ular, it is most significant that Article 2.1 of the 
AD Agreement and Article VI of the GATT 1994 do not define "dumpi ng" and "margins of dumping" 
so as to require that export transactions be exam ined at an aggregate level.  The definition of 
"dumping" in these provisions references "product . . . introduced into the commerce of another 
country at less than its normal value".  This defi nition describes the real-world commercial conduct by 
which a product is imported into a country, i.e., transaction by transaction.84  Thus, dumping is 
defined as occurring in the course of a commercial transaction in which the product, which is the 
object of the transaction, is "introduced into th e commerce" of the importing country at an export 
price that is "less than normal value".    83. In addition, the term "less than normal va lue" is defined as when the "price of the product 
exported . . . is less than the comparable price . . . ".
85  Again, this definition describes the real-world 
commercial conduct of pricing such that one price is less than another price.  The ordinary meaning of 
"price" as used in the definition of dumping is the "payment in purchase of something".86  T h i s  
definition "can easily be applied to individual tr ansactions and does not require an examination of 
export transactions at an aggregate level".87   
 
84. The "dumping" definition's description of the conduct that antidumping duties are intended to 
remedy provides strong contextual support for the interpretation of these provisions that permits an 
authority to examine dumping in relation to the particular conduct described, i.e., individual import 
transactions.  Thus, in the US – Zeroing (Japan) dispute, the panel correctly concluded that the 
definition of dumping itself "undermines the argument  that it is not permissible to interpret the 
concept of dumping as being applicable to individual sales transactions".88   
 85. In other words, dumping – as defined under these provisions – may occur in a single transaction.  There is nothing in the GATT 1994 or the AD Agreement that suggests that injurious 
dumping that occurs with respect to one transact ion is mitigated by the occurrence of another 
transaction made at a non-dumped price.  Indeed, th e commercial reality is that the foreign producer 
or exporter itself exclusively enjoys the benefit of the extent to which the price of a non-dumped 
export transaction exceeds normal value.    86. In US – Zeroing (Japan) , the panel noted that "the record of past discussions in the 
framework of GATT shows that historically the concept of dumping has been understood to be 
applicable at the level of individual export transactions".
89  Well before the recent debate about 
"zeroing" or "offsets", a Group of Experts convened to  consider numerous issues with respect to the 
                                                      
82 Because Articles 2.1 and 2.4 of the AD Agreemen t do not impose independent obligations, to the 
extent the EC is claiming that the challenged measures ar e inconsistent with "obligations" found in either 2.1 
or 2.4, the EC fails to establish the existence of any obligations pursuant to these definitional provisions, and 
therefore, the EC's claims mu st necessarily depend on Article 2.4.2.  If, however, the Panel elects not to follow 
the reasoning employed in prior Appellate Body findings ( see e.g., US – Zeroing (Japan) (AB) , para. 140), and 
finds the application of zeroing in reviews inconsistent with Articles 2.1 and 2.4, then the Panel may exercise 
judicial economy and need not reach the EC's argument as to Article 2.4.2.   
83 US – Zeroing (Japan) (AB) , para. 140.   
84 See US – Zeroing (EC) (Panel) , para. 7.285.   
85 Article VI:1 of the GATT 1994, Ar ticle 2.1 of the AD Agreement.   
86 New Shorter Oxford English Dictionary (1993) , p. 2349.   
87 US – Zeroing (Japan) (Panel) , para. 7.106.   
88 US – Zeroing (Japan) (Panel), para. 7.106.   
89 US – Zeroing (Japan) (Panel), para. 7.107 and n.743.    WT/DS350/R 
 Page A-93 
 
 
  application of Article VI of the GATT 1947.  In th is report, the Group of Experts considered that the 
"ideal method" for applying antidumping duties "was to make a determination of both dumping and material injury in respect of each single importation of the product concerned".
90    
 87. Taking the same view, the panel in US – Softwood Lumber Dumping (Article 21.5) reasoned:   
 
In referring to a "determination . . . of . . . dumping . . . in respect of each single importation of the product concerned", the Group of Experts clearly envisaged the calculation of transaction-specific margins of dumping.  This would suggest that the Group of Experts did not consider that there was anything in the definition of 
dumping set forth in Article VI of the GATT that would preclude the calculation of 
such transaction-specific margins.
91   
 88. Thus, as the panel in US – Zeroing (Japan) found, "historically the concept of dumping has 
been understood to be applicable at the level of individual export transactions".
92   
 
89. It bears recalling that the AD Agreement was negotiated against the background of the 
Antidumping Code and the antidumping investig ation methodologies of individual Contracting 
Parties under the Code.  The methodology of not offsetting dumping based on comparisons where the 
export price was greater than normal value was ex amined by two GATT panels and was found to be 
consistent with the Antidumping Code.93  In view of these findings, the Uruguay Round negotiators 
actively discussed whether the use of "zeroing" should be restricted.94  The text of Article VI of the 
GATT 1947, however, did not change as a result of the Uruguay Round agreements.95  The normal 
inference one draws from the absence of a change in language is that  the drafters intended no change 
in meaning.96   
 
90. The EC's claims in this dispute depend on a contrary interpretation of these provisions 
holding that "dumping" and "margins of dumping"  apply to the product under investigation "as a 
whole" and do not apply to sub-group levels.97  The EC claim depends on the reasoning set forth in 
the Appellate Body reports in US – Zeroing (EC) and US – Zeroing (Japan)98, which rejected the 
notion that dumping may occur with  respect to an individual transac tion in the absence of the textual 
basis that was present in EC – Bed Linen (AB) and US – Softwood Lumber Dumping (AB) .  This 
interpretation relies on the term "product" as being solely and exclusively synonymous with the 
                                                      
90 Anti-Dumping and Countervailing Duties , Second Report of the Group of Experts, L/1141, adopted 
on 27 May 1960, BISD 9S/194, para. 7.   
91 US – Softwood Lumber Dumping (Article 21.5) (Panel),  para. 5.64.   
92 US – Zeroing (Japan) (Panel), para. 7.107.   
93 See, e.g., EC – Audiocassettes,  para. 360;  EC – Cotton Yarn , para. 502.   
94 See, e.g., Communication from Japan , MTN.GNG/NG8/W/30 (20 June 1988), item I.4(3), in which 
Japan expressed concern about a methodology wherein "negative dumping margins, i.e., the amount be which 
export price exceeds normal value, are ignored";  Proposed Elements for a Framework for Negotiations:  
Principles and Objectives for Anti-dumping Rules, Communication from the Delegation of Singapore , 
MTN.GNG/NG8/W/55 (Oct. 13, 1989), at item II.E.(d) (proposing that in calculating dumping margins 
"'negative' dumping should be taken into account, i.e. if certain transactions are sold  for more than the normal 
value in the foreign market, that excess should be balanc ed off against sales of merchandise at less than normal 
value");  Communication from the Delegation of Hong Kong,  MTN.GNG/NG8/W46 (July 3, 1989), at 7.   
95 Similarly, the text of Article 2.1 of the AD Agreement mirrors the text of the Tokyo Round 
Antidumping Code.   
96 Instructive in this regard is US – Underwear (AB) , p. 17, in which the Appellate Body found that the 
disappearance in the Agreement on Textiles and Clothing  of the earlier Multi-Fibre Agreement  provision for 
backdating the operative effect of a restraint measure, "s trongly reinforced the presum ption that such retroactive 
application is no longer permissible".  The corollary, however, is that when a provision is not changed, there is a presumption that behaviour that previously was permissible remains permissible.   
97 See EC First Submission, para. 194.   
98 EC First Submission, para. 195, fn. 141 and para. 197, fn. 142.   WT/DS350/R 
Page A-94  
 
  concept of "product as a whole".  In particular, it  denies that the ordinary meaning of the word 
"product" or "products" used in Article 2.1 of  the AD Agreement and Article VI of the GATT 1994 
admits of a meaning that is transaction-sp ecific.  However, as the panel report in US – Zeroing 
(Japan) explained, "[T]here is nothing inhe rent in the word 'product[]' (as used in Article VI:1 of the 
GATT 1994 and Article 2.1 of AD Agreement) to suggest that this word should preclude the 
possibility of establishing margins of dumpi ng on a transaction-specific basis . . . ".
99   
 91. In US – Softwood Lumber Dumping (AB) , the Appellate Body reasoned that zeroing was not 
permitted in the context of "multiple averaging" , on the basis of the phrase "all comparable export 
transactions", but did not explain how zeroing coul d be prohibited in the context of "multiple 
comparisons" generally.  In contrast to US – Softwood Lumber Dumping (AB) , in US – Zeroing (EC) 
(AB)  a new interpretation was embraced, such that  the "product as a whole" concept led to the 
conclusion that zeroing is prohibited whenever "multiple comparisons" are made.  The phrases 
"product as a whole" and "multiple comparisons" do not appear in the AD Agreement, but were 
derived from interpretations based on the phrase "all comparable export transactions", which appears 
only in connection with average-to-average comparis ons in investigations.  In considering this, the 
Panel in US – Zeroing (Japan)  found:   
 
no explanation of this shift from the use of the "product as a whole" concept as 
context to interpret the term "margins  of dumping" in the first sentence of 
Article 2.4.2 of the AD Agreement in connection with multiple averaging, on the 
one hand, to the use of this concept as an autonomous legal basis for a general 
prohibition of zeroing, on the other.  In this regard, we note, in particular, that the Appellate Body does not discuss why the f act that in the context of multiple 
averaging the terms "dumping" and "margins of dumping" cannot apply to a  sub-
group  of a product logically leads to the broader conclusion that Members may not 
distinguish between  transactions  in which export prices are less than normal value 
and transactions  in which export prices exceed normal value.
100   
 
Thus, the "product as a whole" concept as adopted does not support a claim that the challenged measures are inconsistent because of some general prohibition of zeroing present in all proceedings 
and under all comparison methods.   
 
92. Examination of the term "product" as used throughout the AD Agreement and the 
GATT 1994 demonstrates that the term "product" in  these provisions does not exclusively refer to 
"product as a whole".  Instead, "product" can have either a collective meaning or an individual meaning.  For example, Article 2.6 of the AD Agre ement – which defines the term "like product" in 
relation to "the product under consid eration" – plainly uses the term "product" in the collective sense.  
By contrast, Article VII:3 of the GATT 1994 – which refers to "[t]he value for customs purposes of any imported product" – plainly uses the term "product" in the individual sense of the object of a particular transaction ( i.e., a sale involving a specific quantity of merchandise that matches the criteria 
for the "product" at a particular price).  Therefore,  it cannot be presumed that the same term has such 
an exclusive meaning when used in Article 2. 1 of the AD Agreement and Article VI of the 
GATT 1994.   
 
93. As the panel in  US – Softwood Lumber Dumping (Article 21.5)  explained, "an analysis of the 
use of the words product and products throughout the GATT 1994, indicates that there is no basis to equate product with "product as a whole". . . T hus, for example, when Article VII:3 of the GATT 
refers to "the value for customs purposes of any im ported product", this can only be interpreted to 
                                                     
 
99 US – Zeroing (Japan) (Panel) , para. 7.105 ( quoting US – Softwood Lumber Dumping (Article 21.5) 
(Panel) , n.32).   
100 US – Zeroing (Japan) (Panel) , para. 7.101.    WT/DS350/R 
 Page A-95 
 
 
  refer to the value of a product in a particular import transaction."101  The panel detailed numerous 
additional instances where the term "product", as used in the AD Agreement and GATT 1994 do not 
support a meaning that is solely, and exclusively, synonymous with "product as a whole":    
To extend the Appellate Body's reference to  the concept of "product as a whole" in 
the sense that Canada proposes to the T- T methodology would entail accepting that 
it applies throughout Article VI of GA TT 1994, and the AD Agreement, wherever 
the term "product" or "products" appears.  A review of the use of these terms does not support the proposition that "product" must always mean the entire universe of exported product subject to an anti-dumping investigation.  For instance, 
Article VI:2 states that a contracting party "may levy on any dumped product" an 
anti-dumping duty.  Article VI:3 provides that "no countervailing duty shall be levied on any product".  Article  VI:6(a) provides that no contracting party shall levy 
any anti-dumping or countervailing duty on the importation of any product...".  Similarly, Article VI:6(b) provides that a contracting party may be authorized "to 
levy an anti-dumping or countervailing dut y on the importation of any product".  
Taken together, these provisions suggest that  "to levy a duty on a product" has the 
same meaning as "to levy a duty on the impor tation of that product".  Canada's 
position, if applied to these provisions, woul d mean that the phrase "importation of a 
product" cannot refer to a single import transaction.  In many places where the words product and products are used in Article VI of the GATT 1994, an 
interpretation of these words as necessarily referring to the entire universe of 
investigated export transactions is not compelling.
102   
 Indeed, in a prospective normal value system, a duty is necessarily levied on an import basis, and not 
on a product as a whole basis.   
 
94. In sum, the terms "product" and "products" ca nnot be interpreted in such an exclusive manner 
so as to deprive them of one of their ordinary mean ings, in particular the "product" or "products" that 
are the subject of individual transactions.  Theref ore, the words "product" and "products" as they 
appear in Article 2.1 of the AD Agreement and Article VI of the GATT 1994 cannot be understood to 
provide a textual basis for an interpretation that requires margins of dumping established in relation to 
the "product" must necessarily be established on an  aggregate basis for the "product as a whole". 
 
95. Likewise, examination of the term "margi ns of dumping" itself provides no support for the 
EC's interpretation of the term as solely, and ex clusively, relating to the "product as a whole".
103  As 
the panel in US – Softwood Lumber Dumping (Article 21.5)  observed:   
 
Article VI:2 of the GATT 1994 provides that, for the purposes of Article VI, "the margin of dumping is the price differen ce determined in accordance with the 
provisions of paragraph 1" of  Article VI.  Paragraph 1 of  Article VI defines dumping 
as a practice "by which products of one count ry are introduced into the commerce of 
another country at less
 than the normal value of the products" (emphasis supplied).  
...  Article VI:1 provides that "a product is to be considered as being introduced into 
the commerce of an importing country at less  than its normal value, if the price of 
the product exported from one count ry to another (a) is less  than the comparable 
price, in the ordinary course of trade, for the like product in the exporting country" (emphasis supplied).  In other words, ther e is dumping when the export "price" is 
less
 than the normal value.  Given this definition of dumping, and the express 
linkage between this definition and th e phrase "price difference", it would be 
                                                      
101 US – Softwood Lumber Dumping (Article 21.5) (Panel) , para. 5.23, n. 36.   
102 US – Softwood Lumber Dumping (Article 21.5) (Panel) , para. 5.23.   
103 See EC First Submission, paras. 196.   WT/DS350/R 
Page A-96  
 
  permissible for a Member to interpret the "price difference" referred to in 
Article VI:2 as the amount by which the e xport price is less than normal value, and 
to refer to that "price difference" as the "margin of dumping".
104   
 Thus, the panel saw "no reason why a Member may not . . . establish the "margin of dumping" on the 
basis of the total amount by which transaction-spec ific export prices are less than the transaction-
specific normal values".
105  Although the panel was examining margins of dumping in the context of 
the transaction-to-transaction comparison method in i nvestigations under Article 2.4.2, its reasoning is 
equally applicable to margins of dumping establishe d on a transaction-specific basis in an assessment 
proceeding under Article 9.3.   
 
96. Additionally, the term "margin of dumpi ng", as used elsewhere in the GATT 1994 and the 
AD Agreement, does not refer exclusively to the aggr egated results of comparisons for the "product as 
a whole."  As used in the Note Ad Article VI:1, which provides for importer-specific price 
comparison, the term "margin of dumping" cannot rela te to aggregated results of all comparisons for 
the "product as a whole" because an exporter or fo reign producer may make export transactions using 
multiple importers.  97. Similarly, the term "margin of dumping" as us ed in Article 2.2 of the AD Agreement would 
require the use of constructed value for the "produ ct as a whole", even if the condition precedent for 
using constructed value under Article 2.2 relates onl y to a portion of the comparisons.  The panel in 
US – Softwood Lumber Dumping (21.5)  observed that this "would run counter to the principle that 
constructed normal value is an alternative to be u sed only in the limited circumstances provided for in 
Article 2.2. . . .  We are not convinced that  the Appellate Body c ould have intended its US – Softwood 
Lumber Dumping  findings to be applied in this manner.
106   
 
98. Nevertheless, the EC asserts that it is "only on the basis of aggregating . . . "intermediate 
values" . . . that an investigating authority can establish margins of dumping for the product under investigation as a whole".
107  In this regard, the reasoning of the Appellate Body reports relied upon 
by the EC is unpersuasive because it is contrary to  the great weight of evidence indicating that the 
concepts of dumping and margin of dumping have  long been understood as relating to individual 
transactions, as evidenced by the report of the Group of Experts, the reports of the GATT panels, the 
well-established practice of Members utilizing antid umping regimes, the negotiating history of the 
AD Agreement, as well as the ordinary meaning of the text the relevant provisions of the 
AD Agreement, the Antidumping Code, the GATT 1947 and the GATT 1994.  Accordingly, 
Article 2.1 of the AD Agreement and Article VI of the GATT 1994 do not define the terms 
"dumping" and "margin of dumping" such that export transactions must necessarily be examined at an 
aggregate level.   
 
2. Article 2.4.2 
99. The text and context of the relevant pr ovisions of the AD Agreement, interpreted in 
accordance with customary rules of interpretation of public international law,  do not support a general 
prohibition against zeroing that would apply in th e context of assessment proceedings.  The express 
terms of Article 2.4.2 limit its application to the "i nvestigation phase" of a proceeding.  To require the 
application of Article 2.4.2 to Article 9 assessment proceedings would read out of the AD Agreement 
                                                      
104 US – Softwood Lumber Dumping (Article 21.5) (Panel),  para. 5.27.   
105 US – Softwood Lumber Dumping (Article 21.5) (Panel),  para. 5.28.   
106 US – Softwood Lumber Dumping (Article 21.5) (Panel),  para. 5.62.   
107 EC First Submission, para. 195.    WT/DS350/R 
 Page A-97 
 
 
  Article 2.4.2's express limitation to investigations.  Such a result w ould be inconsistent with the 
principle of effectiveness, under which all the te rms of an agreement should be given meaning.108   
 100. Article 2.4.2 provides as follows:  
Subject to the provisions governing fair comp arison in paragraph 4 of this Article, 
the existence of margins of dumping during the investigation 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.  
(Emphasis added) 
 101. Other provisions of the AD Agreement al so expressly limit their application to the 
investigation phase of an antidumping proceeding,  and do not apply elsewhere.  For instance, 
Article 5.1 refers to "an investig ation to determine the existence, degree and effect of any alleged 
dumping shall be initiated by or on behalf of a domes tic industry".  Similarly, Article 5.7 provides that 
evidence of dumping and injury must be considered  simultaneously "in the decision whether or not to 
initiate an investigation" and "during the course of th e investigation".  Panels have consistently found 
that the references to "investigation" in Article 5 only refer to the original investigation and not to 
subsequent phases of an antidumping proceeding.
109  As the panel found in US – Corrosion-Resistant 
Steel AD Sunset Review :   
 
[T]he text of paragraph 8 of Article 5 re fers expressly to the termination of an 
investigation in the event of de minimis  dumping margins.  There is, therefore, no 
textual indication in Article 5.8 that would suggest or require that the obligation in 
Article 5.8 also applies to sunset reviews.110   
 
102. The limited applicability of Article 2.4.2 could not be plainer.  Article 2.4.2, by its very terms, 
is limited to the "investigation phase".  Thus, the text leaves no doubt that the Members did not intend to extend these obligations to any phase beyond the investigation phase.  Accordingly, a panel has 
already recognized that the application of Article 2. 4.2 is expressly limited to the investigation phase 
of an antidumping proceeding.  As the panel in Argentina – Poultry  found:   
 
Article 2.4.2, uniquely among the provisions of Article 2, relates to the establishment of the margin of dumping "during the investigation phase".
111   
 Thus, the ordinary meaning of the term "investiga tion phase," as it is used in the AD Agreement, does 
not include subsequent phases, such as assessment reviews.   
 103. Similarly, the panel in US – Zeroing (EC)  conducted a thorough analysis of the text of the 
AD Agreement, finding that ""during the investig ation phase" constitutes a unique limitation of scope 
of Article 2.4.2", which serves to contradict ar guments that "during the investigation phase" has 
general meaning applicable to other parts of the AD Agreement.
112  In summation, the panel found:   
 
                                                      
108 See, e.g.,  Japan – Alcohol Taxes (AB) , sections G & H (discussing fundamental principle of 
effectiveness in treaty interpretation);  see also US – 1916 Act (AB) , para. 123.   
109 US – DRAMS AD , para. 521, at footnote 519 ("investigation" means the investigation phase leading 
up to the final determination of the investigating authority);  EC – Bed Linen (Article 21.5) (Panel) , para. 6.114 
(Article 5.7 applies to investigations).   
110 US – Corrosion-Resistant Steel Sunset Review (Panel) , para. 7.70.   
111 Argentina – Poultry , para. 7.357.   
112 US – Zeroing (EC) (Panel) , para. 7.188;  see also id. , paras. 7.146-7.188.   WT/DS350/R 
Page A-98  
 
  First, the phrase "the existence of marg ins of dumping during the investigation 
phase" in Article 2.4.2 read in its ordinary meaning in the context of the AD Agreement  as a whole means that Article 2.4.2 applies to the phase of the 
"original investigation" i.e. the investiga tion within the meaning of Article 5 of the 
AD Agreement  as opposed to subsequent phases of duty assessment and review.  
Second, our interpretation of the meaning of this phrase as limiting the applicability 
of Article 2.4.2 to investigations within th e meaning of Article 5 is also consistent 
with the distinction made between inves tigations and subsequent proceedings in 
various Appellate Body decisions.  Third,  alternative meanings suggested by the 
European Communities are implausible at  best and deny this phrase any real 
function, in contradiction with princi ples of interpretation.  Fourth, this 
interpretation is entirely consistent with different functions played by "original 
investigations" and duty assessment proceedings. . . .
113   
 The panel in US – Zeroing (EC) , when making is own objective assessment of the facts before it, in 
accordance with the customary prin ciples of international law, provided a thorough and solid review 
of the text and context of Article 2.4.2.
114  In this regard, we request th at this Panel find persuasive the 
reasoning put forth by the panel in US – Zeroing (EC) .   
 104. The EC further argues that the phrase "the existence of margins of dumping during the investigation phase" in Article 2.4.2 is not limited  to original investigations because all of the 
antidumping proceedings employed by Commerce "generally involve an investigation into 
something".
115  The text of the AD Agreement and prior panel and Appellate Bo dy reports, however, 
do not support this argument.    105. Article 18.3 of the AD Agreement explicitly r ecognizes the difference between investigations, 
which may lead to the imposition of a measure , and "reviews" of existing measures.  In Brazil –
 Desiccated Coconut (AB) , the Appellate Body, analyzing an iden tical distinction in Article 32.3 of 
the Agreement on Subsidies and Countervailing Measures  ("SCM Agreement"), noted that the 
imposition of "definitive" duties (an "order" in  US parlance) ends the investigative phase.
116  T h i s  
distinction is also present in the substa ntive provisions of the AD Agreement.   
 
106. The Appellate Body and prior panels have also  consistently found that the provisions in the 
AD Agreement with express limitations to investigati ons are, in fact, limited to the investigation 
phase of a proceeding.  In evaluating whether restrictions on cumulation in investigations were equally applicable to sunset reviews, the Appellate  Body noted that Article 3.3 of the AD Agreement 
– like Article 2.4.2 – "plainly speaks to anti-dumping investigations . . . .  It makes no mention of 
injury analyses undertaken in any proceeding other than  original investigations . . . . [T]he text of 
Article 3.3 plainly limits its applicability to original investigations".
117  The Appellate Body's finding 
confirms the approach taken by prior panels.  For example, the panel in US – DRAMS AD  found that 
the term "investigation" means "the investigative phase leading up to the final determination of the 
investigating authority".118   
 
107. The EC, citing the dictionary definition of "investigation", argues that Article 2.4.2 is 
applicable in all phases of antidumping proceedi ngs because all proceedings necessarily involve a 
                                                      
113 US – Zeroing (EC) (Panel) , para. 7.220.   
114 See US – Zeroing (EC) (Panel) , paras. 7.220  and 7.6-7.7.   
115 EC First Submission, paras. 223-224.   
116 Brazil – Desiccated Coconut (AB) , p. 9.  See, also, US – Hot-Rolled Steel (AB) , paras. 53, 61 
(distinguishing between Article 21.2 reviews and the original determination in an investigation).   
117 US – OCTG from Argentina (AB) , paras. 294, 301.   
118 US – DRAMS AD , para. 6.87, footnote 519, discussing Article 5 of the AD Agreement.    WT/DS350/R 
 Page A-99 
 
 
  "systemic examination or inquiry or a careful study of or research into a particular subject.119  The 
panel in US – Zeroing (EC) , however, squarely rejected "that the decisive element regarding the 
interpretation of the scope of Article 2.4.2 is the wo rd 'investigation' which has not been defined in the 
AD Agreement and which must therefore be interp reted strictly by reference to a dictionary 
definition".120   
 
108. The consistency with which th e Appellate Body and panels ha ve recognized the distinctions 
between investigations and other segments of an  antidumping proceeding is consistent with the 
distinct purpose of the investigation phase, which is to establish as a threshold matter whether the 
imposition of an antidumping measure is warranted .  Other phases (such as Article 9 assessment 
proceedings or Article 11 sunset reviews) have  different purposes.  Whereas the purpose of an 
investigation is to determine whether a remedy ag ainst dumping should be provided, the purpose of an 
assessment proceeding is to determine the precise amount of that remedy.    109. It is further not accurate, as the EC infers in  its submission, that a margin is "established" 
when Commerce performs a periodic review.
121  It would be more accurate to describe the three 
principal calculations performed in a periodic review as:  (1) the calculation of margins of dumping for each export transaction;  (2) the calculation of an assessment rate for each importer on the basis of 
the margins of dumping of the importer's transactions  from each exporter/producer during the period 
examined;  and (3) the calculation of a cash deposit ra te for future entries of each exporter/producer 
on the basis of the margins of dumping of the expor ter/producer's transactions during the period 
examined.  In this regard, the provisions of US law relating to each calculation are:  19 U.S.C. 
1675(a)(2)(A) (providing that Commerce shall determine the margin of dumping for each entry of the subject merchandise), and 19 U.S.C. 1675(a)(2)(C) (pr oviding that the determination of the margin of 
dumping for each entry shall be the basis for the asse ssment of antidumping duties and for deposits of 
estimated duties ( i.e., the cash deposit)).   
 
110. Finally, the limited applicati on of Article 2.4.2 to the investigation phase is consistent with 
the divergent functions of investigations and other proceedings under the AD Agreement.  The 
Appellate Body has already recognized that in vestigations and other proceedings under the 
AD Agreement serve different purposes and have diffe rent functions, and therefore are subject to 
different obligations under the Agreement.
122  Thus, contrary to the EC's apparent contention, the 
AD Agreement does not require Members to examin e whether margins of dumping exist in the 
assessment phase.123  Article 9 assessment proceedings are not concerned with the existential question 
of whether injurious dumping exists above a de minimis  level such that the imposition of antidumping 
measures is warranted.  That inquiry would have al ready been resolved in the affirmative in the 
investigation phase.  Instead, Article 9, by its te rms, focuses on the amount of duty to be assessed on 
particular entries, an exercise that is separate and apart from the calculation of an overall dumping 
margin during the threshold investigatio n phase of an antidumping proceeding.   
 111. The express limitation in Article 2.4.2 to the i nvestigation phase is also consistent with the 
fact that the antidumping systems of Members are different for purposes of the assessment phase.  The different methods used by Members include the use of prospective normal values, retrospective 
normal values, and prospective ad valorem assessment.  If the requirements of Article 2.4.2 regarding 
comparison methods applied to the assessment of antidumping duties, this divergence of assessment 
systems would not be possible.  For example, it is  not possible to reconcile the prospective normal 
value system used by some Members with a require ment to use either the average-to-average or 
                                                     
 
119 EC First Submission, para. 213.   
120 US – Zeroing (EC) (Panel) , para. 7.151.   
121 EC First Submission, para. 222.   
122 See, e.g. , US – Corrosion-Resistant Steel Sunset Review (AB) , para. 87.   
123 See EC First Submission, para. 222. ("This confirms that, in the context of Article 9.3, a 'margin of 
dumping' is to be established by reference to the whole of Article 2 . . .").   WT/DS350/R 
Page A-100  
 
  transaction-to-transaction method, because such systems compare we ighted average normal values to 
individual export prices to assess dumping duties on in dividual transactions.  Thus, to retain the 
flexibility in assessment systems reflected in Article  9, it is not only appropriate, but necessary, to 
limit the requirements of Article 2.4.2 to the investigation phase.    3. Article 2.4.2, Second Sentence 
112. In addition, such a general prohibition of zer oing that applies beyond the context of average-
to-average comparisons in inves tigations, would be inconsistent  with the remaining text of 
Article 2.4.2, which provides for an alternative "targeted dumping" methodology that may be utilized 
in certain circumstances.  The "targeted dumpi ng" methodology was drafted as an exception to the 
obligation to engage in symmetrical comparisons in an  investigation.  By the terms of Article 2.4.2, it 
may be used "if the authorities find a pattern of export prices which differ significantly among different purchasers, regions or time periods . . . ".  When the investigating authority provides an 
explanation as to why these "differences cannot be taken into account appropriately by the use of a 
weighted average-to-weighted average or transacti on-to-transaction comparison", it may then use the 
asymmetrical average-to-transaction comparison to establish the existence of margins of dumping 
during the investigation phase.    113. The mathematical implication of a general prohibition of zeroing, however, is that the 
targeted dumping clause would be reduced to inu tility.  That is because the targeted dumping 
methodology, provided for in Article 2.4.2, mathema tically must yield the same result as an average-
to-average comparison if, in both cases, non-dumpe d comparisons are required to offset dumped 
comparisons.
124  In this respect, a general zeroing prohibition would render the targeted dumping 
exception in Article 2.4.2 a complete nullity.  Su ch an interpretation would be disfavoured under a 
key tenet of customary rules of treaty interpretation, namely that an "interpretation must give meaning 
and effect to all the terms of a treaty".125   
 
114. In US  – Zeroing (EC) , US – Softwood Lumber Dumping (Article 21.5) and US – Zeroing 
(Japan) , each of the panels recognized that the cu stomary rules of interpretation of public 
international law precluded an interpretation th at rendered the targeted dumping provision of 
Article 2.4.2 redundant.126  The panel in  US – Zeroing (EC) found that a general prohibition of 
zeroing that applied to the targeted dumping methodology "would deny the second sentence [of 
Article 2.4.2] the very function for which it was created".127  The fact that, under a general zeroing 
prohibition, the average-to-average comparison me thod and the average-to-transaction comparison 
method would yield identical results was recognized by each of the panels.128   
                                                      
124 The reason for this is that, if offsetting is required, then all non-dumped sales ( i.e., negative values) 
will offset the margins on all of the dumped sales ( i.e., positive values).  It makes no difference mathematically 
whether the calculation of the final overall dumping margin is based on comparing weighted-average export 
prices to weighted-average normal values or on comp aring transaction-specific e xport prices to weighted-
average normal values.  In both cases, the sum total of the positive values will be offset by the sum total of the 
negative values, and the results will be the same.   
125 US – Gasoline (AB) , p. 23.   
126 US – Zeroing (EC) (Panel),  para. 7.266, US – Softwood Lumber Dumping (Article 21.5) (Panel),  
para. 5.52, US – Zeroing (Japan) (Panel), para. 7.127.   
127 US – Zeroing (EC) (Panel), para. 7.266, see also  US – Softwood Lumber Dumping (Article 21.5) 
(Panel), para. 5.52 ("[A] general prohibition of zeroing . . . would deprive the second sentence of Article 2.4.2 
of effect");  US – Zeroing (Japan) (Panel),  para. 7.127 ("If zeroing is prohib ited in the case of the average-to-
transaction comparison, the use of this method will nece ssarily always yield a result identical to that of an 
average-to-average comparison"). 
128 US – Zeroing (EC) (Panel),  para. 7.266 ("In fact, under such an interpretation the alternative 
asymmetrical comparison methodology w ould as a matter of mathematics pro duce a result that was identical to 
that of the first average-to-average methodology");  US – Softwood Lumber Dumping (Article 21.5) (Panel) , 
para. 5.76 ("[A] prohibition of zeroing under the targeted dumping comparison methodology . . . would result in  WT/DS350/R 
 Page A-101 
 
 
  115. Despite the findings of fact  of the panels that the results of the targeted dumping methodology 
"will necessarily always yield a result identical to  that of an average-to-average comparison",129 under 
a general prohibition of zeroing, the Appellate Body  has found this concer n to be "overstated".130  The 
Appellate Body has asserted that mathematical equi valence will occur only in "certain situations"131 
and represents "a non-tested hypothesis"132 because "[the United States] has never applied the 
[targeted dumping] methodology, nor provided exam ples of how other WTO Members have applied 
this methodology".133  These objections, however, are not pers uasive.  First, the panels have 
specifically addressed all of the situations under which it was argued that mathematical equivalence 
would not obtain and found these situations did not represent methodologies consistent with the 
AD Agreement.134  The targeted dumping provision is re ndered inutile if the only alternative 
methodologies that do not result in mathematical equi valence are, themselves, not consistent with the 
AD Agreement.  Second, mathematical equivalence is  not a "non-tested hypothesis" because the EC, a 
Member that actively utilizes this methodology is actua lly faced with this problem in administering its 
antidumping duty regime, as described in detail below.    
116. In its most recent report to address this i ssue, the Appellate Body dismissed the redundancy 
caused by mathematical equivalence by concluding th at it may be permissible to apply the targeted 
dumping methodology to a subset of export transactions.
135  The United States is unaware of any 
Member ever having done this, nor has any Member ever suggested it would administer its antidumping regime in this manner.  The language  of the AD Agreement says nothing about selecting 
a subset of transactions when conducting a target ed dumping analysis.  The Appellate Body has 
drawn its conclusions about "zeroing" from its inte rpretation of "dumping" as relating to a "product", 
i.e., a "product as a whole".  The targeted dumping provision provides that when certain conditions 
are met, Members are permitted to compare aver age normal values to transaction-specific export 
prices.  If the Appellate Body is correct that dumping may only be determined for the product as a 
whole (which the United States does not concede), there is no textual basis for inferring that the 
targeted dumping comparison methodology is an exception to that provision (which, as Article 2.1 
provides, applies throughout the AD Agreement).  The targeted dumping provision simply provides an exception to the average-to-average or transac tion-to-transaction comparison requirement of the 
first sentence of Article 2.4.2.  Consequently, the use of a subset of export transactions as a means of 
avoiding mathematical equivalency would also appear  to be inconsistent with the AD Agreement.   
 
117. This mathematical equivalenc y problem with the Appellate Bo dy's recent interpretation of 
Article 2.4.2 cannot be ignored, particularly when  Members such as the EC, are actively involved in 
administering antidumping duty regimes that apply the targeted dumping provision.  Indeed, the redundancy that results from this mathematical e quivalence appears to have already led the EC, 
attempting to reconcile the issue before its munici pal tribunals, to advance an interpretation of the 
AD Agreement that is contrary to the interpretatio n the EC necessarily relies on in this dispute.  
Specifically, the Council of the European Union argued before the Court of First Instance that:    
the asymmetrical method, as compared with  the first symmetrical method, makes 
sense only if the zeroing technique is applied.  Without that mechanism, that method 
                                                                                                                                                                    
 
a margin of dumping mathematically equivalent to that established under W-W comparison methodology");  
US – Zeroing (Japan) (Panel), para. 7.127 n. 763 ("Mathematically, if zeroing is prohibited under the average-
to-transaction method, the sum total of  amount by which export prices are above normal value will offset the 
sum total of the amounts by which export prices are less than normal value").   
129 US – Zeroing (Japan) (Panel),  para. 7.127.   
130 US – Softwood Lumber Dumping (Article 21.5) (AB),  para. 100.   
131 US – Zeroing (Japan) (AB), para. 133.   
132 US – Softwood Lumber Dumping (Article 21.5) (AB), para. 97.   
133 US – Softwood Lumber Dumping (Article 21.5) (AB),  para. 97.   
134 See, US – Zeroing (Japan) (Panel) , paras. 7.127-7.137;  US – Zeroing (EC) (Panel) , para. 7.266;  
US – Softwood Lumber Dumping (Article 21.5) (Panel), paras. 5.33-5.52.   
135 US – Zeroing (Japan) (AB), para. 135.   WT/DS350/R 
Page A-102  
 
  would mathematically lead to the same r esult as the first symmetrical method and it 
would be impossible to prevent the non-dumped exports from disguising the dumping of the dumped exports.
136   
  The Court agreed, finding that:   
 
as the Council pointed out in its written proceedings, the zeroing technique has 
proved to be mathematically necessary in orde r to distinguish, in terms of its results, 
the asymmetrical method from the first symmetr ical method.  In the absence of that 
reduction, the asymmetrical method will always yield the same result as the first 
symmetrical method . . . .
137   
 Thus, in effect, the EC itself, a Member that has used the average-to-transaction comparison in 
investigations, when addressing this issue before domestic tribunals, agrees with the United States and 
the panel reports cited above, that a general pr ohibition of zeroing applied equally to both assessment 
proceedings and original investig ations, would render the average-to-transaction comparison inutile.   
 118. The redundancy of the targeted dumping provisi on of Article 2.4.2 occurs as a consequence 
of any interpretation that results in a general prohibition of zeroing, whether derived from the 
definitional language of Article 2.1 of the AD Ag reement and Article VI of the GATT 1994 or from 
the "fair comparison" requirement of Article 2.4 of  the AD Agreement, or otherwise.  Accordingly, 
the Panel should summarily reject any contention th at zeroing is necessarily prohibited in all contexts 
under all comparison methodologies, including with  respect to assessment proceedings.  "An 
interpreter is not free to adopt a reading that woul d result in reducing whole clauses or paragraphs of a 
treaty to redundancy or inutility."
138   
 4. Article 9 
119. For the reasons discussed above, an analysis of  the text of Article 2.4.2 demonstrates that 
Article 2.4.2 does not apply to asse ssment proceedings.  The EC, however, argues that Article 2.4.2 is 
nonetheless applicable to assessment proceedings by virtue of the cross reference in Article 9.3 to 
Article 2 of the AD Agreement.
139  Article 9.3 provides:   
 
The amount of the anti-dumping duty shall not exceed the margin of dumping as 
established under Article 2.   
 120. However, the general reference to Article 2 in Article 9.3 necessarily includes any limitations 
found in the text of Article 2.  As discussed above, Article 2.4.2 by its own te rms is explicitly limited 
to the investigation phase.  The text of Article 9. 3, therefore, does not support the EC's argument that 
the requirements of Article 2.4.2 apply in assessment proceedings.    121. The reference in Article 9.3 to Article 2 means that the amount of antidumping duty assessed 
may not exceed the amount of antidumping duty calculated in accordance with the general 
requirements of Article 2, such as making the various  adjustments set forth in Article 2.4 necessary to 
provide a fair comparison.  As the panel found in Argentina – Poultry :   
 
                                                     
 
136 Case T-274/02, Ritek Corp. v. Council of the European Union, 24 October 2006, para. 94 (Exhibit 
US-3).  Notwithstanding making this argument before its municipal tribunals, the EC has taken a contrary 
position in WTO dispute proceedings.  See, e.g. Softwood Lumber Dumping (Article 21.5) (AB) , para. 49 ("The 
European Communities rejects the 'mathemati cal equivalence' argument. . .").   
137 Ritek Corp., para. 109 (Exhibit US-3).   
138 US – Gasoline (AB) , p. 23.   
139 EC First Submission, para. 224.    WT/DS350/R 
 Page A-103 
 
 
  Article 9.3 does not refer to the margin of dumping established "under 
Article 2.4.2," but to the margin of dumping established "under Article 2".  In our view, this means simply that, when ensu ring that the amount of the duty does not 
exceed the margin of dumping, a Member should have reference to the methodology 
set out in Article 2.  This is entirely consistent with the introductory clause of 
Article 2, which sets forth a definition of dumping "for the purpose of this 
Agreement . . . ".  In fact, it would not be possible to establish a margin of dumping without reference to the various elements of  Article 2.  For example, it would not be 
possible to establish a margin of dumping without determining normal value, as 
provided in Article 2.2, or without making relevant adjustments to ensure a fair 
comparison, as provided in Article 2.4.
140   
 122. The context of Article 9 also demonstrates that  there is no basis in Article 9 to overcome the 
explicit language in Article 2.4.2, limiting its re ach to investigations.  As the panel found in 
Argentina – Poultry : 
 
[N]othing in the AD Agreement explicitly identifies the form that anti-dumping 
duties must take . . . .  As the title of Article 9 of the AD Agreement suggests, Article 9.3 is a provision concerning the imposition and collection of anti-dumping 
duties.  Article 9.3 provides that a duty ma y not be collected in excess of the margin 
of dumping as established under Article 2.  The modalities for ensuring compliance 
with this obligation are set forth in sub-para graphs 1, 2 and 3 of Article 9.3, each of 
which addresses duty assessment and the reimbursement of excess duties.  The primary focus of Article 9.3, read together w ith sub-paragraphs 1-3, is to ensure that 
final anti-dumping duties shall not be assessed in excess of the relevant margin of dumping, and to provide for duty refund in cases where excessive anti-dumping 
duties would otherwise be collected.
141   
 123. In other words, Article 9 contains certain procedural obligations applicable in assessment 
reviews.  However, Article 9 does not prescribe methodologies for assessment proceedings such as 
those established in Article 2.4.2 for the investigati on phase.  Instead, Article 9 establishes time limits 
for conducting assessment proceedings, ensuring that respondent companies may obtain timely refund 
of any excess antidumping duties collected by a Member.
142   
 124. Relying on its extension of Article 2.4.2 to assessment proceed ings, the EC seems to suggest 
that the United States may only make "asymmetrical" comparisons in such proceedings when it finds 
that the prerequisites of Article 2.4.2 for "targeted dumping" have been met ( i.e., "a pattern of export 
prices which differ significantly among different purchases, regions, or time periods").
143   The EC's 
argument is without merit.  Not only are the Artic le 2.4.2 restrictions on the investigation phase 
irrelevant in assessment proceedings, but Article 9 expressly provides for comparisons between weighted average normal values and individual export transactions in assessment proceedings, 
notwithstanding the EC's description of such comparisons as "asymmetrical".  The EC is thus arguing that the Panel ignore the text of not just one, but two provisions of the AD Agreement.   
 
125. Article 9.4(ii) explicitly provides for the cal culation of antidumping duties, in the assessment 
phase, on the basis of a comparison of weighted av erage normal values and individual export prices, 
stating that the amount of duty shall not exceed:   
                                                     
 
140 Argentina – Poultry , para. 7.357.    
141 Argentina – Poultry , para. 7.355.    
142 Article 9.3.1 and Article 9.3.2, respectively, es tablish for retrospective and prospective assessment 
systems timetables with respect to the amount of time within which final liability for payment of antidumping 
duties is to be determined or refunds of any duty paid in excess of the margin of dumping are to made.   
143 EC First Submission, para. 211.   WT/DS350/R 
Page A-104  
 
  where the liability for payment of anti-dumping duties is calculated on the basis of a 
prospective normal value, the difference between the weighted average normal value 
of the selected exporters or producers and the export prices of exporters or producers 
and the export prices of exporters or pr oducers not individually examined.   
 
This provision plainly indicates that there is nothing exceptional about assessing antidumping duties 
on the basis of comparisons of weighted average normal values with individual export prices.    126. In fact, the calculation of transaction-speci fic antidumping duties in assessment reviews has 
been found to be entirely consistent with the AD Agreement.  In Argentina – Poultry, the panel found 
the Argentine prospective normal value assessment  system to be fully consistent with the 
AD Agreement.
144  Under that assessment system, the authorities imposed duties on a transaction-by-
transaction basis when particular export prices were  below the weighted average normal value.  The 
United States agrees with the EC's position in that case that:    
Article 9.3.1 envisages the possibility to co llect duties on a retrospective basis, 
which, by definition, presupposes the possibility to calculate the dumping margins on the basis of data for individual ship ments or for time-periods outside the 
investigation period.
145   
 As the EC acknowledged in Argentina – Poultry , the AD Agreement does not specify the form which 
duties must take in assessment reviews.  Moreover,  the reference in Article 9.3 to Article 2 does not 
overcome the limiting language in Article  2.4.2 which, by its own terms, limits its obligations to "the 
investigation phase".    127. There is simply no textual basis in the AD Agreement for the EC's assertion that Article 9.3 
requires the application of Article 2.4.2 in assessment proceedings.  Article 9 of the AD Agreement 
relates, as its title indicates, to the imposition a nd collection of antidumping duties.  In particular, 
Article 9.3 states that the "amount of the anti-dumping duty shall not exceed the margin of dumping as established under Article 2".  For the reasons set  forth in detail above, the term "margin of 
dumping", as defined in Article 2.1 of the AD Agre ement and Article VI of the GATT 1994, may be 
applied to individual transactions.  This understanding of the term "mar gin of dumping" is particularly 
appropriate in the context of antidumping duty assessment.  In the real world of administering 
antidumping regimes, the individual transactions are both the means by which less than fair value prices are established and the mechanism by which the object of the transaction ( i.e., the "product") is 
"introduced into the commerce of the importing c ountry".  Likewise, antidumping duties are assessed 
on individual entries resulting from those individual transactions.  Therefore, the obligation set forth 
in Article 9.3 to assess no more in antidumping duties than the margin of dumping, is similarly 
applicable at the level of individual transactions.    128. The EC's apparent claim under Article 9.3 of  the AD Agreement is that the amount of the 
antidumping duty has exceeded the margin of dumping established under Article 2.
146  This claim 
however necessarily depends upon whether the EC's preferred interpretation of the "margin of 
dumping", which precludes any possibility of transaction-specific margins of dumping, is the only 
permissible interpretation of this term as used in  Article 9.3 of the AD Agreement.  Under such a 
view, a Member breaches Article 9.3 by failing to provide offsets, because Members are required to 
calculate margins of dumping on an exporter-specific basis for the product " as a whole " and, 
consequently, a Member is required to aggregate the results of " all" "intermediate comparisons ", 
including those for which the export price exceeds the normal value.  The United States notes that the 
terms upon which such an interpretation rests ar e conspicuously absent from the text of both 
                                                      
144 Argentina – Poultry , paras. 7.345-7.367.   
145 Argentina – Poultry , Annex C-2, para. 33.   
146 EC First Submission, para. 224.    WT/DS350/R 
 Page A-105 
 
 
  Articles 2.1 and 9.3, and thus such an interpretation  is not mandated by the definition of dumping 
contained in Article 2.1, as described in detail above.    129. As the panel in US – Zeroing(EC)  correctly concluded, there is "no textual support in 
Article 9.3 for the view that the AD Agreem ent requires an exporter-oriented assessment of 
antidumping duties, whereby, if an average normal value is calculated for a particular review period, 
the amount of anti-dumping duty payable on a particul ar transaction is determined by whether the 
overall average of the export prices of all sales made by an exporter during that period is below the average normal value".
147  The Panel in US – Zeroing (Japan)  similarly rejected the conclusion that 
the "margin of dumping under Article 9.3 must be  determined on the basis of an aggregate 
examination of export prices during a review peri od in which export prices above the normal value 
carry the same weight as export prices below the normal value ...".148   
 130. In US – Zeroing (Japan) , the panel found that "there are im portant considerations specific to 
Article 9 of the AD Agreement that lend further support to the view that it is permissible . . . to 
interpret Article VI of the GATT 1994 and relevant provisions of the AD Agreement to mean that 
there is no general requirement to determine dum ping and margins of dumping for the product as a 
whole, which, by itself or in conjunction with a requirement to establish margins of dumping for exporters or foreign producers, enta ils a general prohibition of zeroing".
149  In particular, the panel 
explained that such a requirement is inconsistent  with the importer-and import-specific obligation to 
pay an antidumping duty:   
 
In the context of Article 9.3, a margin of dumping is calculated for the purpose of determining the final liability for payment of anti-dumping duties  under Article 9.3.1 
or for the purpose of determining the amount of anti-dumping duty  that must be 
refunded  under Article 9.3.2.  An anti-dumping duty is paid by an importer in 
respect of a particular import of the product on which an anti-dumping duty has been 
imposed.  An importer does not incur liability for payment of an anti-dumping duty in respect of the totality of sales of a product made by an exporter to the country in question but only in respect of sales made by that exporter to that particular importer.  Thus, the obligation to pay an anti-dumping duty is incurred on an importer- and import- specific basis.  Since the calcula tion of a margin of dumping in 
the context of Article 9.3 is part of a process of assessing the amount of duty that 
must be paid or that must be refunded, this importer- and import-specific character 
of the payment of anti-dumping duties must be taken into account in interpreting the meaning of "margin of dumping."
150   
 
131. Similarly, the panel in US – Zeroing (EC)  explained:   
 
In our view, the fact that in an assessment  proceeding in Article 9.3 the margin of 
dumping must be related to the liability incurred in respect of particular import transactions is an important element that distinguishes Article 9.3 proceedings from 
investigations within the meaning of Article  5.  ... [I]n an Article 9.3 context the 
extent of dumping found with respect to a par ticular exporter must be translated into 
                                                     
 
147 US – Zeroing (EC) (Panel) , para. 7.204 ("In our view, if the drafters of the AD Agreement had 
wanted to impose a uniform requirement to adopt an exporter oriented-method of duty assessment, which would have entailed a significant change to the practice and legi slation of some participants in the negotiations, they 
might have been expected to have indicated this more clearly."). 
148 US – Zeroing (Japan) (Panel) , para. 7.199.  The panel in US – Zeroing (EC)  expressed essentially 
the same view.  US – Zeroing (EC) (Panel) , paras. 7.204 - 7.207 and 7.220-7.223.   
149 US – Zeroing (Japan) (Panel) , para. 7.196.   
150 US – Zeroing (Japan) (Panel) , para. 7.198 - 7199 (emphasis in the original).   WT/DS350/R 
Page A-106  
 
  an amount of liability for payment of antidumping duties by importers in respect of 
specific import transactions.
151   
 132. The panel's understanding of Article 9.3 is, at  a minimum, a permissible interpretation of the 
provision.  Indeed, the EC's interpretation of "margi n of dumping" as used in Article 9.3, if applied, 
would fundamentally alter the antidumping practices of numerous Members using this remedy and 
render many of these systems difficult, if not impossibl e, to administer.  In particular, under the EC's 
interpretation of Article 9.3, antidumping duties would be prevented from fulfilling their intended 
purpose under Article VI:2 of the GATT 1994, because im porters that contribute the most to injurious 
dumping would be favoured over other importers (a nd domestic competitors) that price fairly, and 
prospective normal value systems would be rendered retrospective, as described further below.   
 133. Although, as stated by the Appellate Body in US – Zeroing (Japan),  dumping involves 
differential pricing behaviour of exporters or producers between its export market and its normal 
value
152, dumping nevertheless occurs at the level of i ndividual transactions.  Moreover, the remedy 
for dumping provided for in Article VI:2 of GATT 1994, i.e., antidumping duties, are applied at the 
level of individual entries for which importers incur the liability.  In this way, the importer may be 
induced to raise resale prices to cover the amount  of the antidumping duty, thereby preventing the 
dumping from having further injurious effect.  If instead, the amount of the antidumping duty must be reduced to account for the amount by which some ot her transaction was sold at above normal value, 
possibly involving an entirely different importer, then the antidumping duty will be insufficient to 
have the intended effect.  The importer of th e dumped product would remain in a position to 
profitably resell the product at a price that continues to  be injuriously dumped.  For this reason, if the 
EC's interpretation of the margin of dumping is adopted as the sole permissible interpretation of 
Article 9.3, the remedy provided under the AD Agreement and the GATT 1994 will be prevented 
from addressing injurious dumping.   
 
134. These concerns led the panel in US – Zeroing (Japan) to reject the same interpretation that the 
EC offers in this dispute.  The panel observed th at the implication of this interpretation was that 
Members with retrospective assessment systems "may be precluded from collecting anti-dumping duties in respect of particular export transactions at prices less than normal value to a particular 
importer at a particular point of time because of pr ices of export transactions to other importers at a 
different point in time that exceed normal value".
153  The panel found that this result was not 
supported by the text of Article 9.3, which "c ontains no language requiring such an aggregate 
examination of export transactions in determin ing final liability for payments of antidumping 
duties . . . ".    
135. It also follows that if a Member is una ble to calculate and assess the duties on a transaction-
specific basis, importers of the merchandise for which the amount of dumping is greatest will actually 
have an advantage over their competitors who impor t at fair value prices because they will enjoy the 
benefit of offsets that result from their competitors' fairly priced imports.  Indeed, even if one were 
not to impose duties on importers whose entries were  not responsible for the finding of dumping, the 
importers buying at non-dumped prices would sti ll be significantly disadvantaged because the 
importers buying at the dumped prices would still have  a cost advantage, since the duties they pay on 
the dumped merchandise would be reduced by the amount by which the non-dumped merchandise 
exceeded normal value.    136. As the panel in US – Softwood Lumber Dumping (Article 21.5)  observed, the perverse 
incentives created by providing offsets also arise in the context of prospective assessment systems:   
 
                                                     
 
151 US – Zeroing (EC) (Panel),  para. 7.201.   
152 US – Zeroing (Japan) (AB) , para. 156.   
153 US – Zeroing (Japan) (Panel) , para. 7.199.    WT/DS350/R 
 Page A-107 
 
 
  [An] obligation to take all (including non-dumped) comparisons into account in 
determining the margin of dumping for the product as a whole ... is illogical, as it would provide importers clearing dumped transactions with a double competitive advantage vis-à-vis other importers:  first,  they would benefit from the lower price 
inherent in a dumped transaction;  second,  they would benefit from offsets, or 
credits, "financed" by the higher prices paid by other importers clearing non-
dumped, or even less-dumped, transactions.   
 ... 
Again, this makes no sense in the cont ext of a prospective normal value duty 
assessment system, becau se (as even Canada acknowledges) the "margin of 
dumping" at issue is a transaction-specific price difference calculated for a specific 
import transaction.  And if other comparisons for the product as a whole were somehow relevant, offsets would have to be provided for non-dumped transactions, 
with the result that one importer could request a refund on the basis of a margin of dumping calculated by reference to non-dumped transactions made by other 
importers.  We are unable to accept that the Appellate Body could have intended 
such absurd results to follow from its interpretation of the phrase "margins of 
dumping" in US - Softwood Lumber V.
154   
 137. Further, the EC's interpretation of Article 9.3, requiring that antidumping duty liability be 
determined for the product "as a whole", is inconsis tent with the specific provision in Article 9 that 
recognizes the existence of prospective normal value systems of assessment.
155  Article 9.4(ii) of the 
AD Agreement "expressly refers to the calculation of  the liability for payment of antidumping duties 
on the basis of a prospective normal value system".156  Under such a system, the amount of liability 
for payment of antidumping duties is determined at the time of importation on the basis of a comparison between the price of the individual e xport transaction and the prospective normal value.
157  
For example, an importer who imports a product the e xport price of which is equal to or higher than 
the prospective normal value cannot incur liability fo r payments of antidumping duties.  The converse 
is also true.  A liability for a dumped sale would be  determined by comparing the price of individual 
export transaction with prospective normal value and the prices of other transactions have no 
relevance to this determination.158  As the panel in US – Zeroing (Japan)  found, "there is no textual 
support in Article 9 for the proposition that export pr ices in other transactions are of any relevance".159    
 
138. Because in a prospective normal value syst em, liability for antidumping duties is incurred 
only to the extent that prices of individual export transaction are below the normal value, the panel in US – Zeroing (Japan)  concluded, "the fact that express provision is made in the AD Agreement for 
this sort of system confirms that the concept of  dumping can apply on a transaction-specific basis to 
prices of individual export transaction below the normal value and that the AD Agreement does not 
require that in calculating margins of dumping the same significance be accorded to export prices 
above the normal value as to export prices below the normal value".
160   
 
                                                      
154 US – Softwood Lumber Dumping (Article 21.5) (Panel) , paras. 5.54-5.57.   
155 See EC First Submission, para. 194-195.   
156 US – Zeroing (Japan) (Panel) , para. 7.201.   
157 US – Zeroing (Japan) (Panel) , para. 7.201;  See also  US – Softwood Lumber Dumping (Article 21.5) 
(Panel) , para. 5.53.   
158 US – Softwood Lumber Dumping (Article 21.5) (Panel) , para. 5.53 ("Under a prospective normal 
value duty assessment system, anti-dumping duties are assessed as individual import transactions occur, by 
comparing a transaction-specific export price against a prospective normal valu e . . . .  In the context of such 
transaction-specific duty assessment, it makes no sense to talk of a margin of dumping being established for the 
product as whole, by aggregating the results of all compar isons, since there is only one comparison at issue.").   
159 US – Zeroing (Japan) (Panel) , para. 7.201.   
160 US – Zeroing (Japan) (Panel) , para. 7.205;  see also  US – Zeroing (EC) (Panel) , para. 7.206.   WT/DS350/R 
Page A-108  
 
  139. If in a prospective normal value system indi vidual export transactions at prices less than 
normal value can attract liability for payment of anti dumping duties, without regard to whether or not 
prices of other export transactions exceed normal va lue, there is no reason why liability for payment 
of antidumping duties may not be similarly assessed on the basis of export prices less than normal value in the retrospective system s applied by the United States.
161   
 
140. Further, accepting the EC's interpretation th at a Member must aggregate the results of "all" 
comparisons on an exporter-specific basis would re quire that retrospective reviews be conducted, 
even in a prospective normal value syst ems, in order to take into account " all" of the exporters' 
transactions.  The results of the retrospective revi ew would be to determine antidumping duty liability 
on a retrospective basis.  This result, however, is contrary to the very concept of the prospective 
normal value system.  As the panel in US – Zeroing (Japan) explained, the "liability for payment of 
anti-dumping duties is final in prospective normal value system at the time of importation of a product".
162  In effect, prospective normal value systems will become retrospective, a conclusion also 
reached in a Canadian parliamentary report on potential changes to its prospective normal value 
system.163  In that report and at its trade policy review, Canada expressed its view that in a prospective 
normal value system, each entry provides a margin of dumping.164  If, in fact, Members had intended 
prospective normal value systems to have such re views, one would have expected Members to have 
provided for this in explic it agreement language.   
 
5. Article 2.4 
141. The text of Article 2.4 requires that a "fair comparison shall be made between the export price 
and the normal value".  The text of Article 2.4,  however, does not resolve whether any particular 
assessment of antidumping duties exceeds the margin of dumping because the text of Article 2.4 does 
not resolve whether "dumping" and "margins of dum ping" are concepts that apply to individual 
transactions.  Nor does the text resolve whether,  for purposes of assessing antidumping duty liability, 
a margin of dumping may be specific to each importe r that is liable for payment of the antidumping 
duties.  Indeed, the text of Article 2.4 does not resolve the question of whether zeroing is "fair" or "unfair".  As the panel in US – Zeroing (Japan) noted, the "precise meaning of" the "fair comparison" 
requirement "must be understood in light of  the nature of the activity at issue".
165  The panel 
                                                      
161 US – Zeroing (Japan) (Panel) , para. 7.208 ("We see no textual basis in Articles 9.3 and 9.4 for the 
view that if an authority assesses the amount of the anti-dumping duty on a retrospective basis by examining 
export transaction that have occurred du ring a certain period, it is obligated to take into account export prices 
above the normal value that it would not have been required to take into account if it had applied a prospective normal value system.").   
162 US – Zeroing (Japan) (Panel) , para. 7.205.   
163 Report on the Special Import Measures Act, House of Commons Canada, December 1996, 
http://www.parl.gc.ca/35/Archives/committees352/si ma/reports/01_1996-12/chap4e.html (Exhibit US-4) 
(hereinafter "SIMA Report").  See also  Special Import Measures Act Self-Assessment Guide ("Normal Value - 
Export Price = Antidumping Duty (or Margin of Dumping"), http://www.cbsa-asfc.gc.ca/sima/self-e.html#12  
(Exhibit US-5).   
164 Id.   
165 US – Zeroing (Japan) (Panel), para. 7.155;  see also US – Zeroing (EC) (Panel) , para. 7.260 
("[C]aution ... is especially warranted where as in the case of the first sent ence of Article 2.4, a legal rule is 
expressed in terms of a standard that by its very nature  is more abstract and less determinate than most other 
rules in the AD Agreement.  The meaning of 'fair' in a legal rule must necessarily be determined having regard 
to the particular context within which the rule operates.");  see also US – Softwood Lumber Dumping 
(Article 21.5) (Panel) , para.5.74 ("[W]e believe that a claim based on a highly general and subjective test such 
as "fair comparison" should be approa ched with caution by treaty interpreters.  For this reason, any concept of 
"fairness" should be solidly rooted in the context provided by the AD Agreement,  and perhaps the 
WTO Agreement  more generally.  As such there must be a discernible standard within the AD Agreement,  and 
perhaps the WTO Agreement , by which to assess whether or not a compar ison has been "fair" or "unfair".  Thus, 
the fact that comparison methodology A produces a higher margin of dumping than comparison methodology B 
would only make comparison methodology A unfair if comparison methodology B were the applicable standard.   WT/DS350/R 
 Page A-109 
 
 
  concluded that "the "fair comparison" requirement  cannot have been intended to allow a panel to 
review a measure in light of a necessarily somewh at subjective judgment of what fairness means in 
the abstract and in complete isolation from the substantive context".166   
 142. Assessment of antidumping duties in the amount by which the normal value exceeded the 
export price on a transaction-specific basis, without providing an offset for non-dumped transactions 
does reflect a "fair comparison" made for each ex port transaction.  The EC's assertion that the 
United States has assessed antidumping duties "in excess of the actual margin of dumping for the 
product" is predicated on the assumption that zeroi ng is prohibited – otherwise, the challenged 
assessments would reflect the correct magnitude of the margins of dumping.   
 
143. The EC's claim of inconsistency with Ar ticle 2.4 adopts the reasoning set forth in the 
Appellate Body report in US – Zeroing (Japan) , finding that a methodology cannot be viewed as 
involving a "fair comparison" under Article 2.4 if  the resulting assessments exceed the "margin of 
dumping established in accordance with Article 2".
167  The reasoning upon which the EC relies, 
however, is entirely consequential of the Appellate Body report's previous analysis of the term 
"margin of dumping".  Indeed, the passage quoted by  the EC makes plain that the rationale followed 
in the Appellate Body report was based on the results  of the comparison methodology in relation to 
the previously interpreted "margin of dumping", rath er than on any inherently unfair aspect of the 
comparison methodology itself.  Therefore, this claim of "unfairness" depends not on the text of Article 2.4, but on whether it is permissible to in terpret the term "margin of dumping" as used in 
Article 9.3 as applying to transactions.   
 144. As the panels in US – Zeroing (EC) and US – Zeroing (Japan)  have concluded, it is 
permissible to interpret "margin of dumping" as us ed in Article 9.3 as applying to an individual 
transaction.
168  As a consequence, there is no obligati on to aggregate transactions in calculating 
margins of dumping in an assessment proceeding, and there can be no obligation to offset the 
antidumping duty liability for a transaction to reflect the extent to which other transactions were not 
dumped.  Therefore, if the Panel finds, as the pr ior panels have found, that it is permissible to 
understand the term "margi n of dumping" as used in Article 9.3 as applying to an individual 
transaction, then the challenged assessment will not  exceed the margin of dumping and there will be 
no basis, according to the rationale adopted by the EC, for a finding of inconsiste ncy with Article 2.4.   
 
145. In addition, as mentioned above, an interpreta tion of Article 2.4 that gives rise to a general 
prohibition of zeroing also renders the second sente nce of Article 2.4.2, the "targeted dumping 
provision", inutile.169  The targeted dumping provision is an  exception to the symmetrical comparison 
methodologies generally required by Article 2.4.2.  It is not an exception to the fair comparison 
requirement of Article 2.4.  Thus, an interpretation of Article 2.4 that  generally prohibits zeroing in all 
contexts would render the distinctions between the average-to-average and the average-to-transaction 
methodologies in Article 2.4.2 without meaning.170  A panel should not interpret provisions of the 
AD Agreement in such a way that its express pr ovisions are rendered meaningless or superfluous.171  
As the Appellate Body has consistently found, "inter pretation must give meaning and effect to all the 
terms of a treaty.  An interpreter is not free to adopt a reading that would result in reducing whole 
                                                                                                                                                                     
If however, the AD Agreement  were to permit either comparison methodology A or B, this would not be the 
case.").   
166 US – Zeroing (Japan) (Panel) , para. 7.158 ( quoting US – Zeroing (EC) (Panel) , para. 7.261).   
167 EC First Submission, para. 206 ( quoting US – Zeroing (Japan) (AB) , para. 168).   
168 US – Zeroing (EC) (Panel) , para. 7.201- 7.206;  US – Zeroing (Japan) (Panel) , para. 7.194 - 7.199.   
169 US – Zeroing (EC) (Panel) , para. 7.266;  US – Zeroing (Japan) (Panel) , para. 7.159.   
170 Id.   
171 See US – Gasoline (AB) , p. 23;  Japan – Alcohol Taxes (AB) , p. 12;  Egypt – Rebar , para. 7.277.   WT/DS350/R 
Page A-110  
 
  clauses or paragraphs of a treat y to redundancy or inutility".
172  An interpretation of Article 2.4 of the 
AD Agreement to require that dumping margins be offset by non-dumped transactions is therefore 
impermissible and must be rejected.    146. The EC also argues that the US assessment me thodology is inconsistent with US obligations 
under Article 2.4 because it is "inherently biased" as opposed to the EC's preferred methodology.
173  
But the EC can point to nothing in the text of the Agreement to support its contention that a methodology can be designated as "fair" or "unfair" within the meaning of Article 2.4 solely on the basis of whether it makes dumping margins go up or down.    
147. Moreover, the EC's claim that the US a ssessment methodology necessarily results in higher 
antidumping duties than would a so-called "symmetrical" comparison is incorrect.  A simple example illustrates this point.  Assume that the export price fo r a particular transaction is 9, and that there are 
two corresponding home market transactions, one at 8 and one at 10.  Assume also that both home 
market transactions are comparable to the export tr ansaction, but that the transaction at 10 is the most 
comparable.  Under a transaction-to-transaction me thod, the transaction at 10 would be used for 
normal value, resulting in a dumping amount of 1 (10-9 = 1).  However, under the so-called "asymmetrical" average-to-transaction method, the two home market transactions would be averaged, 
resulting in a normal value of 9 and, in turn, a dumping amount of zero (9-9 = 0).    148. Under the average-to-transaction comparis on method used by the United States, no 
antidumping duties would be assessed in this situati on, because the export price – 9 – is not less than 
the weighted average normal value – 9.  Howeve r, under a transaction-to-transaction comparison 
method – a "symmetrical" comparison method explic itly permitted in investigations pursuant to 
Article 2.4.2 – the United States would be perm itted to assess $1 in antidumping duties for this 
transaction.  Consequently, there is no inherent bias associated with the US assessment method.   
 
149. Moreover, the EC has not offered any argument as to how an offset to antidumping duties assessable on one entry as a result of a distinct entry having been sold at above normal value would be 
considered an adjustment or other comparison criteri on that falls under the rubric of Article 2.4.  The 
focus of Article 2.4 is on the selection of compar able transactions and the making of appropriate 
adjustments to those transactions so as to render th em comparable.  Even as described by the EC, an 
offset requirement would be applied to the results  of comparisons, and would not pertain to the 
comparisons themselves.
174  Consequently, it falls clearly outside the scope of Article 2.4.   
 150. Finally, the EC's attempt to use the "fair co mparison" reference in Article 2.4 to nullify the 
express limitation in Article 2.4.2 is inconsistent w ith principles of treaty interpretation and, for that 
reason, should be rejected by the Panel.   
 
6.  Article 11.2 Is Not Applicable to Article 9.3 Assessment Proceedings 
151. The determination of such a rate in an  assessment proceeding conducted pursuant to 
Article 9.3 of the AD Agreement does not constitute a review of the continued necessity of the 
antidumping duty and, thus, is not subject to the oblig ations of Article 11.2.  The EC's argument that 
reviews pursuant to Article 11.2 of the AD Agreemen t and the reassessment of deposit rates for future 
entries in future reviews are "the same"
175 is not supported by the plain language of Article 11.2 of the 
AD Agreement.    
                                                     
 
172 US – Gasoline (AB), p. 23;  see also Japan – Alcohol Taxes (AB). p. 12; US – Underwear (AB) , 
p. 16.   
173 EC First Submission, para. 200.   
174 EC First Submission, para. 207.   
175 EC First Submission, para. 235.    WT/DS350/R 
 Page A-111 
 
 
  152. Article 11.2 allows interested parties to requ est a review to determine "whether the injury 
would be likely to continue or recur if the duty were  removed or varied".  Therefore, an Article 11.2 
review is focused on the continuation or recurrence of  injury if the duty were varied, rather than on a 
determination of a varying duty rate.  The EC c ites footnote 21 in support of its position; however, 
footnote 21 simply states that a determination of liability for payment of antidumping duties made 
pursuant to Article 9.3 does not, by itself, constitu te a review under Article 11.2.  This statement 
supports the position that assessment proceedings c onducted under Article 9.3 of the AD Agreement 
are not subject to the obligations of Article 11.2.  Furthermore, footnote 22 to the AD Agreement, provides that in a retrospective system, a finding in a proceeding conducted pursuant to Article 9.3 
that no duty is to be levied does not by itself re quire termination of the duty.  Neither of these 
provisions supports the EC's view that a determ ination of the amount of antidumping duty to be 
assessed on specific import transactions determined in  assessment proceedings relates to the inquiry 
called for by Article 11.2 as to whether injury would likely continue or recur if the duty were removed 
or varied.   
 
C. T
HE EC'S CLAIMS WITH RESPECT TO SUNSET REVIEWS  
153. The EC argues that the United States' determ inations in the challenged sunset reviews are 
inconsistent with Articles 11.1 and 11.3 of  the AD Agreement because when making its 
determinations that removal of the antidumping duty would likely lead to a continuation or recurrence 
of dumping, the United States relied on margins that were calculated in "proceedings using model zeroing", and therefore "did not comply with its obligations pursuant to Articles 2.1, 2.4 and 2.4.2 
because these margins were not b ased on a fair comparison and not calculated for the product as a 
whole".
176   
 154. The EC's argument, however, should be rej ected.  The EC has not demonstrated that a 
calculation done in accordance with the EC's approach would result in zero or de minimis  dumping 
margins in the cited cases, leading to a revocation of the order.   
 D. T
HE EC'S CLAIMS WITH RESPECT TO INVESTIGATIONS  
155. With respect to the four investigations pr operly before the Panel, upon which the EC did 
request consultations, and continues to challenge177, the United States acknowledges that Commerce 
did not provide offsets for non-dumped transactions  when calculating the margins of dumping using 
the average-to-average comparison methodology duri ng the investigation phase.  The United States 
recognizes that in US – Softwood Lumber Dumping  the Appellate Body found that the use of 
"zeroing" with respect to the average-to-avera ge comparison methodology in investigations was 
inconsistent with Article 2.4.2, by interpreting the terms "margins of dumping" and "all comparable 
export transactions" as used in Article 2.4.2 in an integrated manner.  ( See US – Softwood Lumber 
Dumping (AB) , paras. 62-117).  The United States ac knowledges that this reasoning is equally 
applicable with respect to the clai ms for these four investigations.   
 156. The United States, however, continues to c ontest the EC's challenges that extend beyond 
Article 2.4.2 with respect to these four investig ations.  Specifically, the United States contests any 
claims of WTO inconsistency as to Articles 2. 1 and 2.4 of the AD Agreement, and hereby 
incorporates arguments contained in Section B.
178  Because Articles 2.1 and 2.4 of the AD Agreement 
do not impose independent obligations, to the ex tent the EC is claiming that the challenged 
investigations are inconsistent with Articles 2.1 or 2.4, the EC has failed to establish the existence of 
                                                      
176 EC First Submission, para. 259.   
177 Cases XV, XVI, XVII and XVIII of the EC's Panel Request.   
178 Paragraph 177 of the EC's First Submission allege that the four, named investigations in its Annex 
only violate Articles 2.4 and Articles 2.4.2, however, the EC  also cites Article 2.1 in support of its argument.  
See EC First Submission, paras 149, 155, 160.   WT/DS350/R 
Page A-112  
 
  any obligations pursuant to these definitional provis ions, and thus, the EC's challenge must depend on 
Article 2.4.2.  Therefore, a finding by the Panel on  the narrow issue of Article 2.4.2 is sufficient to 
resolve this matter.    E. WTO
 AGREEMENT ARTICLE XVI:4 
157. The EC's first claim with respect to Ar ticle XVI:4 of the WTO Agreement depends on a 
finding of inconsistency with provisi ons of the AD Agreement and GATT 1994.179  As one panel 
recognized, there is no "independent" basis for a claim under Article XVI:4.180  For the reasons set out 
above demonstrating that the United States has not ac ted inconsistently with the provisions of either 
the AD Agreement or the GATT 1994, the EC's clai m with respect to Article XVI:4 should be 
rejected.   
 158. The EC also attempts to demonstrate a br each of Article XVI:4 by relying on a novel, 
expansive and erroneous interp retation of that provision.
181  It argues that "the findings of the 
Appellate Body as adopted by the DSB in specifi c disputes create an independent international 
obligation for the losing party in that dispute to comply".182  Because the DSB has adopted Appellate 
Body reports holding zeroing incons istent with provisions of the c overed agreements, the EC asserts 
that the United States is under a continuing obligation to comply, and has not done so for certain determinations that were issued after the adoption of at least the first report  finding zeroing to be 
inconsistent with the Antidumping Agreement .
183  In fact, the EC overlooks the fact that the 
determinations listed in the Annex to its panel request were issued before  the expiration of the 
"reasonable period of time to comply" in both US – Zeroing (EC) and US – Zeroing (Japan) .  It is 
unanswered why the EC would like the Panel to im pose a greater obligation on the United States than 
the DSU itself imposed.   
 
159. The EC's expansive interpretation of Artic le XVI:4 should be rejected.  The idea of a 
continuing "independent internati onal obligation" arising from adopt ed reports cannot be reconciled 
with the long-standing rule that Appellate Body and panel reports "are not binding, except with 
respect to resolving the particular disput e between the parties to that dispute".184  (Again, there is a 
certain irony in the EC's position – asserting that find ings in prior disputes are binding on this Panel 
while at the same time ignoring findings from prio r disputes when they conflict with the EC's position 
in this dispute.)  The EC's interpretation finds no support in the text of the covered agreements.  For 
each individual dispute, the DSU provides the m echanism to determine compliance by the Member 
concerned with the DSB's adopted recommendations and rulings, and, in cases of non-compliance, to 
authorize the suspension of concessions in the absence of an agreement on compensation.185   
                                                      
179 As the EC acknowledges, the determination of a breach of a provision of any covered agreement 
gives rise to a breach of Article XVI:4 of the WTO Agreement.  See EC First Written Submission, paras. 123-25 
(citing US – 1916 Act (Japan) (Panel) and US – 1916 Act (EC) (Panel) ).   
180 See US – OCTG from Mexico (Panel) , para. 7.189.  The panel in that dispute also found that there 
can be no independent breach of Article 18.4 of the AD  Agreement, which requires that "[e]ach Member shall 
take all necessary steps, of a general or particular charact er, to ensure, not later than the date of entry into force 
of the WTO Agreement for it, the conformity of its la ws, regulations and administrative procedures with the 
provisions of this Agreement as they ma y apply for the Member in question".   
181 See EC First Written Submission, para. 128.   
182 EC First Written Submission, para. 128.  The EC references an international law journal article in 
support of its interpretation of Article XVI:4.  See EC First Written Submission, paras. 128.  The rights and 
obligations of Members, however, ar e found in the text of the covered ag reements, and not in articles written by 
a private individual.   
183 See EC First Written Submission, paras. 131-132.  It  is ambiguous which report the EC considers 
first in time, but it cites just US – Zeroing (EC) and US – Zeroing (Japan)  in paragraph 131, making US – 
Zeroing (EC)  the first report to be adopted of the two.   
184 US – Softwood Lumber Dumping (AB) , para. 111 ( quoting Japan – Alcohol Taxes (AB) ).   
185 See DSU, Arts. 21, 22.    WT/DS350/R 
 Page A-113 
 
 
  160. The EC is advocating that the Panel adopt  an approach which would distort the WTO's 
dispute settlement system to the detriment of th e "security and predictability" of the multilateral 
trading system referred to in Article 3.2.186  Under the EC's reading of Article XVI:4, a complaining 
party could identify a Member's measures that are a llegedly similar to those that already have been 
found inconsistent in adopted A ppellate Body reports, and claim non- compliance with the findings in 
the adopted reports.  Allowing such a claim w ould completely flout the DSU's provisions on 
compliance and on not adding to or diminishing righ ts of Members, and would make adopted reports 
binding on all Members, despite their non-binding status outside of the original dispute.    161. The rationales offered by the EC do not justif y its reading of Article XVI:4.  The EC asserts 
that allowing claims based on the enforcement of adopted panel reports woul d serve to eliminate a 
"multiplicity of endless litigation".
187  Policy arguments based on speculative concerns about the 
number of future cases, however, cannot trump the language of the DSU, which establishes the rules 
for adjudicating individual disputes and dealing with issues of non-compliance in each separate dispute.  The EC is free to raise its arguments in the context of the ongoing efforts of Members to 
amend the DSU, but this Panel must apply the DSU as it currently is written.   
 162. Furthermore, the EC's argument would tran sform panel and Appellate Body findings into 
authoritative interpretations of the covered agreements  with effect beyond the particular parties to a 
particular dispute.  But Article IX of the Marrak esh Agreement is explicit - neither a panel nor the 
Appellate Body has the authority to render interp retations of the covere d agreements.  Members 
conferred that authority exclusively upon the Mi nisterial Conference and the General Council.  
Accordingly, the EC's proposed interpretation of  Article XVI:4 fails on this basis alone.   
 163. The EC also appears to argue for an expansive reading of Article  XVI:4 as a means to deter or 
sanction breaches of "the duty of good faith ".
188  However, panels are not tasked with determining, 
nor are they authorized to determine, whether Me mbers have complied with a public international law 
principle of "good faith";  rather they must determ ine whether a Member's meas ure is consistent with 
the covered agreements.  The cove red agreements do not provide for an obligation of "good faith" to 
be considered in connection with  the substantive obligations set forth therein, nor would it be 
constructive for panels to engage  in examining whether a Member's breach resulted from a good faith 
reading or otherwise.189  Indeed, the Appellate Body has noted that "[n]othing . . . in the covered 
agreements supports the conclusion that simply b ecause a WTO Member is found to have violated a 
substantive treaty provision, it therefore has not acted in good faith".190  It is worth noting that the 
Appellate Body made this statement in the context of reversing  the panel finding cited by the EC for 
the proposition that panels may in fact find that a Member has acted in bad faith.    
164. Panels are subject to clear and unequivocal  limits on their mandate:  they may clarify 
"existing provisions" of covered WTO agreements and may examine the measures at issue in light of 
                                                     
 
186 "Security and predictability" resu lts from the application of the correct interpretive approach set 
forth in the second sentence of Article 3.2 of the DSU – the "customary rules of interpretation of public 
international law" – to the provisions of the WTO Ag reement.  The proper interpretation ensures that the 
findings and recommendations of a panel or the Appellate Body, and the recommendations and rulings of the 
DSB, do not "add to or diminish the rights and obligations provided in the covered agreements".  The EC's 
reading of Article XVI:4 would be antithetical to the "secu rity and predictability" that a proper interpretation of 
the covered agreements brings to the world trading system.   
187 EC First Written Submission, para. 129.   
188 EC First Written Submission, para. 130.   
189 The EC later in its submission asserts that Artic le 3 of the DSU contains an "obligation for WTO 
Members to engage in procedures in good faith in an  effort to resolve dispute [sic]."  EC First Written 
Submission, para. 265.  However, the EC is not alleging a breach of this provision of the DSU, nor would there 
be any basis for it to do so.   
190 US – Offset Act (Byrd Amendment) (AB) , para. 298.   WT/DS350/R 
Page A-114  
 
  the relevant provisions of the covered WTO agreements.
191  The Appellate Body is confined to review 
"issues of law covered in the panel report and le gal interpretations developed by the panel".192  
Nowhere in Appendix 1 to the DSU, which defines the covered agreements for purposes of the DSU, 
is there listed an international law principle of  good faith.  Nor does the WTO Agreement distinguish 
between a breach of an agreement in good faith and a breach in bad faith – in either case it would be a 
breach of the Agreement and would have the cons equences provided in the Agreement.  The EC's 
invocation of the "duty of good faith" cannot jus tify its expansive reading of Article XVI:4.   
 
VI.  CONCLUSION 
165. As set forth above, the United States respec tfully requests that the Panel grant the US 
preliminary objections and reject the EC's "as applied" claims regarding assessment proceedings, 
sunset reviews, and investigations.    
                                                     
 
191 See DSU, Arts. 3.2, 7.1.   
192 DSU, Art. 17.6.    WT/DS350/R 
 Page A-115 
 
 
  LIST OF EXHIBITS 
 
US-1  Final Determination of Sales at Less Than Fair Value:  Certain Activated Carbon 
from the People's Republic of China, 72  Fed. Reg. 9508 (2 March 2007).   
 
US-2  Communication by the United States of 20 February 2007 (WT/DS322/16).   
 US-3  Case T-274/02, Ritek Corp. v. Council of the European Union, 24 October 2006.   
 US-4  Report on the Special Import Meas ures Act, House of Commons Canada, 
December 1996, 
http://www.parl.gc.ca/35/Archives/committe es352/sima/reports/01_1996-12/chap4e.h
tml.   
 
US-5  Special Import Measures Act Se lf-Assessment Guide ("Normal Value - 
Export Price = Antidumping Duty (or Margin of Dumping"), 
http://www.cbsa-asfc.gc.ca/ sima/self-e.html#12. 
 WT/DS350/R 
Page A-116  
 
  ANNEX A-3 
 
 
RESPONSE TO THE UNITED STATES' REQUEST FOR  
PRELIMINARY RULINGS BY THE EUROPEAN COMMUNITIES 
 
TABLE OF CONTENTS 
 
   Page
 
I. INTRODUCTION ................................................................................................................118  
II. ALL MEASURES DESCRIBED IN THE PANEL REQUEST WERE 
ALREADY IDENTIFIED IN THE CONSULTATION REQUEST................................118  
A. CONTINUED EXISTENCE AND APPLICATION OF ZEROING AS THE MATTER CONCERNED .........118  
B. SPECIFIC MEASURES NOT INCLUDED IN THE REQUEST FOR CONSULTATIONS ARE ALSO 
COVERED ............................................................................................................................... ..120  
C. CONCLUSIONS .........................................................................................................................124  
III. THE PANEL REQUEST IDENTIFIES A CONCRETE NUMBER OF 
MEASURES ....................................................................................................................... ...124  
A. THE PANEL REQUEST IDENTIFIES 18 ANTI -DUMPING PROCEEDINGS AS MEASURES ................125  
B. THE PANEL REQUEST ADEQUATELY INFORMS THE UNITED STATES OF THE 
CHALLENGED MEASURES ........................................................................................................125  
C.  SUBSEQUENT MEASURES ADOPTED BY THE UNITED STATES WITH RESPECT TO THE 
18 MEASURES INCLUDED IN THE PANEL REQUEST ALSO FALL WITHIN THE PANEL 'S 
TERMS OF REFERENCE .............................................................................................................126  
D. CONCLUSIONS .........................................................................................................................127  
IV. THE PRELIMINARY DETERMINATION S INCLUDED IN THE PANEL 
REQUEST FALL WITHIN THE TERMS OF REFERENCE ........................................127  
A. PRELIMINARY DETERMINATIONS ARE SUBSE QUENT MEASURES INCLUDED IN THE 
PANEL REQUEST ......................................................................................................................128  
B. THE PRELIMINARY DETERMINATIONS ARE RELATED TO THE ANTI -DUMPING 
PROCEEDINGS FALLING WITHIN THE TERMS OF REFERENCE ...................................................128  
C. CONCLUSIONS .........................................................................................................................129  
V. FINAL REMARKS...............................................................................................................129  
 
  WT/DS350/R 
 Page A-117 
 
 
  TABLE OF CASES 
 
 
Short Title Full Case Title and Citation 
Argentina – Footwear Panel Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/R, adopted 12 January 2000, as modified by 
the Appellate Body Report, WT/DS121/AB/R 
Brazil – Aircraft Panel Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/R, adopted 20 August 1999, as modified by the Appellate 
Body Report, WT/DS46/AB/R 
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for 
Aircraft , WT/DS46/AB/R, adopted 20 August 1999 
Brazil – Desiccated Coconut Appellate Body Report, Brazil – Measures Affecting Desiccated 
Coconut , WT/DS22/AB/R, adopted 20 March 1997 
Canada - Aircraft Panel Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/R, adopted 20 Augu st 1999, as modified by the 
Appellate Body Report, WT/DS70/AB/R 
Canada – Wheat Panel Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/R, adopted 
27 September 2004, as modified by  the Appellate Body Report, 
WT/DS276/AB/R 
Chile – Agricultural Products 
(Price Band) Panel Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products, WT/DS207/R, adopted 
23 October 2002, as modified by  the Appellate Body Report, 
WT/DS207/AB/R 
EC – Bananas III Panel Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/R, adopted 
25 September 1997, as modified by  the Appellate Body Report, 
WT/DS27/AB/R 
EC – Bananas III Appellate Body Report, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, 
adopted 25 September 1997 
EC – Computer Equipment Appellate Body Report, European Communities – Customs 
Classification Of Certain Computer Equipment , 
WT/DS62,67,68/AB/R/, adopted 22 June 1998 
Korea – Vessels Panel Report, Korea – Measures Affecting Trade in Commercial 
Vessels , WT/DS273/R, adopted 11 April 2005 
Japan – Film Panel Report, Japan – Measures Affecti ng Consumer Photographic 
Film and Paper , WT/DS44/R, adopted 22 April 1998 
Mexico – Definitive Anti-
Dumping Measures on Beef and Rice Appellate Body Report, Mexico – Definitive Anti-Dumping Measures 
on Beef and Rice , WT/DS295/AB/R, adopted 20 December 2005 
Measures – HFCS Panel Report, Mexico – Anti-Dumping Investigation of High 
Fructose Corn Syrup (HFCS) from the United States , WT/DS132/R, 
adopted 24 February 2000 
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to 
Zeroing and Sunset Reviews , WT/DS322/AB/R, adopted 
23 January 2007 
 
 WT/DS350/R 
Page A-118  
 
  I. INTRODUCTION 
1. Following your fax dated 17 September 2007, the European Communities provides below its 
reply to the request for preliminary rulings made by  the United States.  As will be explained below, 
the European Communities considers that (1) it does not seek to expand the matter in this dispute 
beyond the measures upon which consulta tions were held;  (2) the matter subject to review by this 
Panel has been determined precisely in the requ est for establishment of the Panel;  and (3) all 
measures contained in the Panel request fall w ithin the Panel's terms of reference.   
 2. In particular, the European Communities subm its that the consultations and the request for 
establishment of the Panel gave the United States ad equate notice of the scope of the matters and 
claims asserted by the European Co mmunities in conformity with Articles 4.4, 4.7, 6.2 and 7.1 of the 
Dispute Settlement Understanding and Articles 17.3, 17.4 and 17.5 of the Anti-Dumping Agreement .  
Moreover, the measures subject to this dispute we re precisely identified in the Panel request in 
accordance with the requirements of  Article 6.2 of the Dispute Settlement Understanding.  Finally, all 
the challenged measures fall within the Panel' s terms of reference.  Therefore, the 
European Communities requests the Panel to reject the United States' request for preliminary ruling 
entirely.    
II. ALL MEASURES DESCRIBED IN THE PANEL REQUEST WERE ALREADY 
IDENTIFIED IN THE CO NSULTATION REQUEST 
3. The United States argues that the measures cont ained in the request for consultations relate 
to 38 specific measures and 2 on-going original proceedings, whereas the Panel request refers 
to 52 specific measures, i.e., the original 38 measures plus 14 additional allegedl y new measures, 
including 7 final and 3 on-going additional sun set review proceedings, and 3 final and 1 on-going 
additional administrative review proceedings.
1  The United States reached this conclusion by referring 
to the anti-dumping proceedings mentioned in the An nexes of the request for consultations and Panel 
request respectively.  In light of this, the United St ates considers that, since consultations did not take 
place on these additional 14 specific measures, they s hould be excluded from the terms of reference of 
this Panel.    4. As explained below, the European Communiti es considers that all measures described in the 
Panel request were already identified in the request for consultations.   
 
A. C
ONTINUED EXISTENCE AND APPLICATION OF ZEROING AS THE MATTER CONCERNED  
5. The European Communities submits that the matte r subject to this dispute was clearly stated 
since the very beginning in the request for consultati ons.  Indeed, the title of this case showed to the 
United States that the European Co mmunities wanted to consult on the " continued existence and 
application of the zeroing methodology " as the matter concerned.   
 6. Moreover, the first paragraph of the request for consultations also clearly refers to the 
application of zeroing as the matter concerned, a nd then identifies specific anti-dumping proceedings 
where the United States used this methodolog y when calculating dumping margins on products 
imported from the European Communities.  In particul ar, the request for consultations states that:   
 
"The European Communities request consu ltations with the United States (…) with 
regard to the practice and methodologies for calculating dumping margins involving the use of zeroing, and the application of  zeroing in certain specified anti-dumping 
measures."   
                                                     
 
1 First Written Submission by the United States, para. 49.    WT/DS350/R 
 Page A-119 
 
 
  7. Then, the request for consultations describes how the United States applies zeroing in original 
investigation, administrative review and sunset re view proceedings and includes references to anti-
dumping proceedings where this methodology was used, resulting in higher duties being in place.    8. Following this logic, section 2 of the request for consultations refers to several matters as 
subject to discussion:   
 
"(a) The United States regulations, zeroing methodology, practice, administrative procedures and measures for determining the dumping margin (…)";  (b) The specific anti-dumping administrative reviews listed in Annex I to the present 
request, and any assessment instructions i ssued pursuant to them in which the 
United States applied the regulations, zeroi ng methodology, practice, administrative 
procedures and measures described under point 1(a) above (…);  (c) The specific dumping determination in the original i nvestigations listed in Annex III to the 
present request, and any automatic assessment  instructions issued pursuant to them, 
in which the United States applied the zeroing methodology described under 
point 1(b) above (…);  (d) The specific Sunset review determination in the case 
listed in Annex II to the present request.  The United States relied in its determination on dumping margins that were calculated in the original investigation 
and in administrative reviews using the methodology described under point 1(a) 
above."   
 
9. The Annexes to the request for consulta tions identify precisely the measures where the 
United States applied the contested methodology by providing information on the specific anti-dumping proceedings concerned.  In particular, the Annexes mention, inter alia , the product and 
country subject to anti-dumping duties in the United States.   
 
10. The request for establishment of the Panel fo llows a similar structur e as the one described 
above and, thus, does not expand the scope of the matter subject to c onsultations.  The title still refers 
to the "continued existence and application of zeroing methodology".  Likewise, the scope of the 
Panel request states that:    
"The European Communities hereby requ ests that a panel be established by 
DSB (…) with regard to an "as such" measu re or measures providing for the practice 
or methodologies for calculating dumping margins involving the use of zeroing, and the application of zeroing in certain spec ified anti-dumping measures maintained by 
the United States."   
 
11. Since the WTO inconsistency of the zeroing methodology had already been established in previous cases, the Panel request notes that " the European Communities does not ask the Panel to rule 
on the WTO inconsistency of this practice ".  However, the European  Communities described the 
matter as follows:    
"The United States uses this practice or methodology in calculating dumping 
amounts or dumping margins, and in setti ng and collecting anti-dumping duties.  
The level of such anti-dumping duties is set in original proceedings, revised in administrative review proceedings or changed circumstances proceedings, and the need for the continued application of anti-dumping duties is decided in sunset 
review proceedings.  In the latter DOC may determine that dumping is likely to 
continue or recur if the anti-dumping order were revoked, notably because dumping has continued at levels above de minimis  after the issuance of the order.  To find that 
dumping has continued after the issuance of the order, DOC relies on dumping margins calculated in the original pr oceeding and in administrative review 
proceedings using zeroing.  The EC has id entified in the annex to this request a WT/DS350/R 
Page A-120  
 
  number of anti-dumping orders where duties are set and/or maintained on the basis 
of the above-mentioned zeroing practice or methodology with the result that duties are paid by importers either in excess of the dumping margin which would have been calculated using a WTO consistent me thodology or are paid when no such duty 
would have resulted from the use of a WTO-consistent methodology."   
 
12. In other words, as it was the case in the re quest for consultations, the European Communities 
still refers to the use of zeroing by the Unite d States in several anti-dumping proceedings as the 
subject matter of this dispute.  Then, when describ ing the measures at issue, the Panel request refers 
to:   
 
"The continued application of, or the a pplication of the specific anti-dumping duties 
resulting from the anti-dumping orders enumer ated from I to XVIII in the Annex to 
the present request as calculated or maintain ed in place pursuant to the most recent 
administrative review or, as the case may be, original proceeding or changed 
circumstances or sunset review proceedi ng at a level in excess of the anti-dumping 
margin which would result from the corr ect application of the Anti-Dumping 
Agreement (whether duties or cash deposit rates or other form of measure).   
 
In addition to these measures, the admini strative reviews, or, as the case may be, 
original proceedings or changed circumst ances or sunset review proceedings listed 
in the Annex (numbered 1 to 52) with th e specific anti-dumping orders and are also 
considered by the EC to be measures subj ect to the current request for establishment 
of the panel in addition to the anti-dumping orders.   
 
This includes the determinations in re lation to all companies and includes any 
assessment instructions, whether automatic or  otherwise, issued at any time pursuant 
to any of the measures listed in the Annex."   
 13. Again, the Panel request mentions the conti nued application of anti-dumping duties at a level 
in excess of the anti-dumping margin which woul d result from the correct application of the Anti-
Dumping Agreement , i.e., without zeroing.  Then, the Panel request includes in its Annex 
18 measures, derived from 18 original anti-dumpi ng orders, including 52 anti-dumping proceedings, 
i.e., 4 original proceedings, 37 administrative review proceedings and 11 sunset review proceedings.  
As was the case in the request for consultations, those 18 measures are described by reference to the 
product concerned originating from a particular country.    
14. As can be seen, both the request for consu ltations and the Panel request describe the matter 
concerned in a similar manner.  Therefore, due process has been respected since the United States 
obtained adequate notice of the scope of  the matter and claims asserted by the 
European Communities.
2   
 B. S
PECIFIC MEASURES NOT INCLUDED IN THE REQUEST FOR CONSULTATIONS ARE ALSO 
COVERED  
15. The United States points out in its First Writte n Submission that the Panel request contains 
14 additional measures which were not raised during consultations, including 10 sunset review 
proceedings and 4 administrative review proceedings.3   
16. Even if some of the specific anti-dumping pro ceedings which were listed in the request for the 
establishment of a Panel were not included expressly in the Annexes to the request for consultations, 
                                                      
2 Panel Report, Canada – Aircraft , (WT/DS70/R), paras 9.12-9.31;  Panel Report, Korea – Vessels  
(WT/DS273/R), at para. 9;  and Appellate Body Report, US – Zeroing (Japan)  (WT/DS322/AB/R), paras 89-95.   
3 First Written Submission by the United States, para. 61.    WT/DS350/R 
 Page A-121 
 
 
  the European Communities submits th at those measures were also covered and that the United States 
had enough notice of the matter subject to dispute.    17. The European Communities argues that, acco rding to the relevant case-law on Articles 4 
and 6 of the Dispute Settlement Understanding, there is no need that the  specific measures that are 
the subject of the request for consultations and th ose which are the subject of the Panel request be 
identical, as long as they invol ve essentially the same matter, i.e., the application of zeroing 
methodologies when calculating the dumping margin s in the specific anti-dumping proceedings with 
respect to a particular product originating from one specific country.    
18. In Brazil – Aircraft , on appeal, Brazil argued that the Panel erred in finding that certain 
regulatory instruments relating to PROEX referred to  in the Panel request were properly before the 
Panel.  Specifically, Brazil claimed that because thos e instruments came into effect in 1997 and 1998, 
after consultations were held between Canada and Brazil, they had not been the subject of 
consultations and, therefore, coul d not properly be before the Panel.   The Panel had ruled as follows 
on this issue:
4   
 
"(…) [W]e recall that Brazil and Cana da consulted 'regarding certain export 
subsidies granted under the Brazilian Programa de Financiamento ás  Exportações 
(PROEX) to foreign purchasers of Brazil's EMBRAER aircraft', and that the request for establishment of a Panel relates to 'export subsidies under PROEX'.  We consider 
that the consultations and request for establishment relate to what is 
fundamentally the same 'dispute', beca use they involve essentially the same 
practice , i.e., the payment of export subsidies under PROEX.  Under these 
circumstances, and notwithstanding the fact that both the authorizing legal instrument and certain other legal instrume nts relating to the administration of the 
PROEX interest equalization regime changed or were only introduced subsequent to 
the last consultations, we cannot say that Canada has failed to comply with the requirements of Article 4.7 of the DSU" ( emphasis added ).   
 19. The Appellate Body upheld the Panel's finding .  In doing so, the Appellate Body said that:
5   
 
"We note that Brazil and Canada consulted about 'certain export subsidies granted 
under the Brazilian Programa de Financiamento às Exportações (PROEX) to 
foreign purchasers of Brazil's Embraer aircraft', and that the request for the establishment of a Panel also relates to 'the payment of export subsidies through 
interest rate equalization and export financing programmes under PROEX'.  We 
have been advised by Brazil that the regulat ory instruments that came into effect in 
1997 and 1998, after the consultations ha d taken place, and that relate to the 
administration of PROEX, did not change the essence of that regime.   
 
In our view, Articles 4 and 6 of the DSU, as well as paragraphs 1 to 4 of Article 4 of 
the SCM Agreement , set forth a process by which a complaining party must request 
consultations, and consultations  must be held, before a matter may be referred to the 
DSB for the establishment of a Panel. Under Article 4.3 of the SCM Agreement , 
moreover, the purpose of consultations is 'to clarify the facts of the situation and to 
arrive at a mutually agreed solution'.   
 
We do not believe, however, that Articles 4 and 6 of the DSU, or paragraphs 1 to 4 of Article 4 of the SCM Agreement, requ ire a precise and exact identity between 
the specific measures that were the subj ect of consultations and the specific 
                                                     
 
4 Panel Report, Brazil – Aircraft  (WT/DS46/R), para. 7.11.   
5 Appellate Body Report, Brazil – Aircraft  (WT/DS46/AB/R), paras 130-132.   WT/DS350/R 
Page A-122  
 
  measures identified in the request for the establishment of a Panel .  As stated by 
the Panel, '[o]ne purpose of consultations , as set forth in Article 4.3 of the SCM 
Agreement, is to 'clarify the facts of th e situation', and it can be expected that 
information obtained during the course of consultations may enable the complainant 
to focus the scope of the matter with r espect to which it seeks establishment of a 
Panel'.  We are confident that the speci fic measures at issue in this case are the 
Brazilian export subsidies for regional airc raft under PROEX.  Consultations were 
held by the parties on these subsidies, and it is these same subsidies that were referred to the DSB for the establishmen t of a Panel. We emphasize that the 
regulatory instruments that came into effect in 1997 and 1998 did not change the 
essence of the export subsidies for regional aircraft under PROEX" ( emphasis 
added ).   
 20. Similarly, in Mexico – Definitive Anti-Dump ing Measures on Beef and Rice , the Appellate 
Body emphasised the purpose of consultations in find ing that, with respect to the measures at issue, 
Articles 4 and 6 of the Dispute Settlement Understandi ng do not "require a precise and exact identity" 
between the request for consultations and the Pa nel request, provided that the "essence" of the 
challenged measures has not changed.
6  Previously, the Panel in the same case had confirmed that:7   
 
"In our view, [Articles 4.5 and 4.7 of the DSU and Article 17.4 of the Anti-
Dumping Agreement] do not in any way req uire a complete identity between the 
scope of the request for consultations an d the request for establishment, nor do 
they, in our view, limit the scope of the request for establishment to the exact scope 
of the request for consultations .  While we read these provisions to require that 
Members should attempt to find a mutually agreed solution on the 'matter' in dispute through consultations, this, in our view, onl y requires that request for consultations 
relate to the same subject matter as the request  for establishment of a panel.  In sum, 
and provided the request for establishment concerns a dispute on which consultations have been requested, there is no need for the matter ( i.e. the specific 
measures at issue and the legal basis of the complaint) as identified in the request for 
establishment to be identical to the matter on which consultations were requested."   
 
21. Therefore, in light of the above case-law, it can be concluded that there is no need for identity 
between the specific measures that were the subject of the request for consu ltations and those subject 
of the Panel request provided that they involve essentially the same matter.    22. In the present case, the 14 allegedly new measur es included in the Panel request refer to the 
same matter raised during consultations, i.e., the use of zeroing when calculating the dumping 
margins in the specific anti-dumping proceedings with  respect to the same products originating from 
the specific countries listed therein.  Consequently, the specific measures not mentioned by the United States would also fall within the matter of this dispute.    23. In any event, it should be added that the inclusion of new measures which amount to an 
extension or a modification of measures previously mentioned in the request for consultations do not 
affect the consistency of the panel request with the consultations carried out between the parties.  In 
Chile – Price Band System and Safeguard Measu res Relating to Certain Agricultural Products 
(DS 207) , in the context of the extension of a safegua rd measure not foreseen in the request for 
consultations, the Panel dealt with this issue as follows:
8   
                                                      
6 Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice 
(WT/DS295/AB/R), para. 138;  and Panel Report, Canada – Aircraft  (WT/DS70/R), para 9.12.   
7 Panel Report, Mexico – Definitive Anti-Dumpi ng Measures on Beef and Rice (WT/DS295/AB/R), 
para. 7.41.   
8 Panel Report, Chile – Agricultural Products (Price Band) (WT/DS207/R), para. 7.119.    WT/DS350/R 
 Page A-123 
 
 
   
"[T]he 'extensions' are not distinct measures, but merely continuations in time of the definitive safeguard measures.  As a result, we consider that the definitive safeguard 
measures were not terminated before the re quest for establishment, but, rather, that 
their duration was simply extended at that time.  Thus, we need not further consider 
Chile's argument that we lack the author ity to make findings in respect of the 
definitive measures on the grounds that they have expired.  For the same reason, we 
also consider the fact that the extensio n was not mentioned in the request for 
consultations irrelevant for the determina tion of our jurisdiction:  pursuant to 
Article 4.4 of the DSU, Argentina had to, and did, identify the definitive safeguard 
measures in its request for consultations .  The fact that the duration of the 
identified measures was extended by Chile af ter the request for consultations cannot 
affect Argentina's compliance with Article 4.4 of the DSU."   
 24. In line with this case-la w, the European Communities argues that the requirement of 
consistency between the request fo r consultations and the Panel request, as established by Articles 4.4 
and 6.2 of the Dispute Settlement Understanding, is still met in case where there is no identity 
between the specific measures that were the subject of the request for consultations and those which 
are the subject of the Panel request as long as they involve essentially the same matter.  In this sense, the extension or modification of the measures menti oned in the Panel request are also covered by the 
request for consultations.   
 
25. The 14 additional measures mentioned by the Un ited States have a direct relationship with the 
measures listed in the request for consultations.  As  mentioned before, the Annexes to the request for 
consultations identified the measures, inter alia , by reference to the product and exporting country 
subject to anti-dumping duties as a result of the most recent proceeding ( i.e., original proceeding, 
administrative or sunset reviews).  The additional measures contained in the Panel request refer to 
modifications or implemen tations of the original anti-dumping orders with respect to the same 
products and countries already discussed in  the context of consultations.   
 26. The request for establishment of the Panel c ontains some measures which were adopted or 
initiated after consulta tions were requested
9, but they refer to the identical products and countries 
already mentioned in the Annex to the request for consultations.   
 27. The request for establishment of the Panel also  refers to sunset review measures not included 
in the request for consultation
10 which were very close to the date  of request for consultations (they 
are dated 15 September 2006, where the request was filed on 2 October 2006), or relate to the 
continuation of measures which were  covered by an administrative review mentioned in the request 
for consultations.    28. Finally, two proceedings
11 listed in the Annex to the request for the establishment of a panel 
which the United States pretend to be new measures we re in fact already listed in the Annex to the 
request for consultations even if the request for co nsultations only referred to the preliminary results 
of these proceedings.   
 29. Therefore, in light of the above, the Europ ean Communities submits that the 14 allegedly new 
measures mentioned by the United States were covere d by the request for consultations since they 
relate to the same matter, i.e., the use of zeroi ng when calculating the dumping margins in the specific 
anti-dumping proceedings with respect to a partic ular product from a specific country, and have a 
                                                     
 
9 Three sunset review proceedings (proceedings No 4, 38 and 47) and four administrative review 
proceedings (proceedings No 1, 22, 35 and 43).   
10 Proceedings No 9, 14, 19, 26, 29, 32 and 42.   
11 Proceedings No 1 and 22.   WT/DS350/R 
Page A-124  
 
  direct relationship with the measures mentioned in the Annexes to the request for consultations, since 
they imply extensions (in the case of sunset revi ews), modifications (in administrative reviews) or 
implementations ( i.e., definitive collection in the case of ad ministrative reviews) of the anti-dumping 
duties consulted upon.    
C. C
ONCLUSIONS  
30. From the foregoing, the European Comm unities submits that both the request for 
consultations and the Panel request describe the matter concerned in a similar manner.  To the extent 
that the measures covered in the Panel request we re based on the same zeroing methodology already 
targeted in the consultations request and the sa me anti-dumping proceedings (described by reference 
to products and countries concerned), this is suffici ent to comply with the requirements of Articles 4 
and 6 of the Dispute Settlement Understanding and their mirroring provision in Article 17 of the Anti-
Dumping Agreement .  Moreover, since the 14 allegedly new measures had a direct relationship with 
the measures identified in the Annexes to the requ est for consultations (by reference to the same 
products and countries subject to anti-dumping duties) , the European Communities consider that all 
the measures fall within the matter of this dispute.   
 
III. THE PANEL REQUEST IDENTIFIES A CONCRETE NUMBER OF MEASURES 
31. The United States argues that the Panel request refers to an indeterminate number of measures 
that were not specifically identified and, thus, wo uld not fall within the Panel's terms of reference 
pursuant to Article 6.2 of the Dispute Settlement Understanding.   
 
32. In particular, the United States points out that  the Panel request identified as "measures" the 
following:    
"[T]he continued application of, or the application of the specific anti-dumping 
duties resulting from the anti-dumping orders enumerated from I to XVIII in the 
Annex to the present request as calculated or maintained in place pursuant to the 
most recent administrative review or, as the case may be, original proceeding or 
changed circumstances or sunset review proceeding."   
 33. The United States then assumes that this requ est refers to the most recent of the measures 
specifically listed for each of the 18 anti-dumping cases in  the Annex.  However, to the extent that the 
request does not refer to the most recent identifie d measure, but to any most recent measure, the 
United States argues that it refers to an i ndeterminate number of alleged measures.   
 34. Finally, the United States notes that, because it did not have opportunity to consult with the 
European Communities with respect to this indete rminate number of alleged measures, it was unable 
to seek further clarity regarding the scope and effect of the challenged measures.    35. The European Communities submits that th is claim is unfounded.  As stated in Canada – 
Aircraft
12, the consistency of a party's request for th e establishment of a panel in accordance with 
Article 6.2 of the Dispute Settle ment Understanding should be judge d exclusively in light of the 
specificity of the request for establishment, and not in light of the specificity of the party's earlier 
request for consultations.  The European Commu nities submits that the Panel request precisely 
identifies the measures subject to this dispute.    
                                                     
 
12 Panel Report, Canada – Aircraft,  (WT/DS70/R), para. 9.32.    WT/DS350/R 
 Page A-125 
 
 
  A. T HE PANEL REQUEST IDENTIFIES 18 ANTI-DUMPING PROCEEDINGS AS MEASURES  
36. The European Communities considers that th e Panel request contains a clear list of the 
measures which fall within the Panel's terms of refe rence.  In particular, its Annex identifies 18 anti-
dumping proceedings, by product and country concerned, mentioning the relevant places where the 
measures were published in the United States, and th e duty rates imposed.  The identification of the 
original anti-dumping order imposing duties on the product from the country concerned is thus 
followed by all instances wh ere the measures at hand , i.e., the duties imposed on the basis of zeroing 
methodologies, have been modified.  In this respect,  when the Panel request refers to the continued 
application of duties determined using zeroing methodologies as a result of the original anti-dumping orders in the 18 cases contained in the Annex, the m easures subject to the Panel's terms of reference 
are properly defined.   
 37. The fact that the Panel request does not enum erate the last modification of the duties with 
respect to the 18 anti-dumping proceedings as publis hed in the United States is irrelevant insofar as 
the measures have been determined by reference to the products, count ries concerned, and duty levels.  
In this sense, the Panel in Argentina – Footwear  found that it is the identification of the measures 
(rather than merely the numbers of the resolutions and the places of their promulgation in the Official 
Journal) which is primarily relevant for the pu rposes of Article 6.2 of the Dispute Settlement 
Understanding:
13   
 
"[W]e consider that the EC's request primarily and unambiguously identifies the 
provisional and definitive measures (rathe r than only the cited resolutions and 
promulgations as such).  In our view, it is the identification of these measures (rather than merely the numbers of the resolutions and the places of their promulgation in the Official Journal) which is primarily relevant for purposes of Article 6.2 of the 
DSU.  Therefore, we consider that it is the provisional and definitive measures in 
their substance rather than the legal acts in  their original or modified legal forms 
that are most relevant fo r our terms of reference .  In our view, this is consistent 
with the Appellate Body's findings in the Guatemala - Cement  case" ( emphasis 
added ).   
 38. Likewise, in Canada – Wheat
14 the Panel noted that, by its terms, Article 6.2 of the Dispute 
Settlement Understanding does not require that pane l requests explicitly specify measures of general 
application ( i.e., laws and regulations) by name, date of a doption, etc.  The Panel found that the fact 
that the United States had not specified the relevant  laws or regulations by name, date of adoption, 
etc, did not necessarily render the panel request incons istent with Article 6.2 of the Dispute Settlement 
Understanding.   
 
39. Thus, the European Communities submits that the measures falling within the Panel's terms of 
reference were sufficiently identified in  the Annex to the Panel request.   
 B. T
HE PANEL REQUEST ADEQUATELY INFORMS THE UNITED STATES OF THE CHALLENGED 
MEASURES  
40. Moreover, it cannot be argued that the word ing used in the Panel request leaves the 
United States unaware of the measures which are subject to this dispute.  Indeed, the purpose of the specificity requirement in Article 6.2 of the Di spute Settlement Understanding is to guarantee the 
                                                     
 
13 Panel Report, Argentina – Footwear , (WT/DS121/R), para. 8.40.   
14 Panel Report, Canada – Wheat , (WT/DS276/R), para. 19.   WT/DS350/R 
Page A-126  
 
  rights of the parties to a due process.  In this sense, the Appellate Body in EC – Computer 
Equipment
15 noted that:   
 
"We do not see how the alleged lack of precision of the terms, LAN equipment and PCs with multimedia capability, in the request for the establishment of a panel 
affected the rights of defence of the Eu ropean Communities in the course of the 
panel proceedings.  As the ability of the European Communities to defend itself 
was not prejudiced by a lack of knowing the measures at issue, we do not believe 
that the fundamental rule of due process was violated by the Panel " (emphasis 
added ).   
 
41. Similarly, the Panel in Canada – Wheat
16 found that:   
 
"whether sufficient information is provided on the face of the panel request will 
depend, as noted above, on whether the information provided serves the purposes of 
Article 6.2, and in particular its due process objective, as well as the specific 
circumstances of each case, including the type of measure that is at issue."   
 42. In this respect, the European Communities ar gues that the United States has failed to show 
that the Panel request is so flawed that the de fending party's rights of defence are prejudiced, and 
maintains that the United States cannot demonstrate th at any imperfections in the Panel's request for 
establishment rise to this level.   
 C.
  S UBSEQUENT MEASURES ADOPTED BY THE UNITED STATES WITH RESPECT TO THE 
18 MEASURES INCLUDED IN THE PANEL REQUEST ALSO FALL WITHIN THE PANEL 'S TERMS OF 
REFERENCE  
43. Finally, the European Communities notes that  subsequent measures, subsidiary or closely 
related to the specified measures, have been acc epted as proper identification of the measures falling 
within the Panel's terms of reference in accord ance with Article 6.2 of the Dispute Settlement 
Understanding.    44. The Panel in EC – Bananas III  found that the object and purpose of the specificity 
requirement of Article 6.2 of the Dispute Settlement Understanding is to ensure the clarity of panels' 
terms of reference, which pursuant to Article 7 of  the Dispute Settlement Understanding are typically 
determined by the panel request, and to inform th e respondent and potential third parties of the scope 
of the complaining party's claims ( i.e., the "measures" challenged a nd the WTO provisions invoked by 
the complaining party).
17  As long as Article 6.2 is  interpreted to require an y measure challenged to be 
specified in the panel request or to be subsidiary  or closely related to the specified measures, the 
object and purpose of Article 6.2 are satisfied.18   
 45. In EC – Bananas III , the "basic EC regulation at issue"  was identified in the request for 
establishment of the Panel.  In addition, the re quest referred in general terms to "subsequent 
EC legislation, regulations and administrative me asures (...) which implement, supplement and amend 
[the EC banana] regime".  The Panel found that  for purposes of Article 6.2 this reference was 
sufficient to cover all European Communities legi slation dealing with the importation, sale and 
                                                     
 
15 Appellate Body Report, EC – Computer Equipment  (WT/DS62/AB/R, WT/DS67/AB/R, 
WT/DS68/AB/R), para. 70.   
16 Panel Report, Canada – Wheat,  (WT/DS276/R), para. 20.   
17 Panel Report, EC –Bananas III , (WT/DS27/R), para. 7.35; Appellate Body Report, EC – Bananas 
III, (WT/DS27/AB/R), para. 142;  Appellate Body Report, Brazil – Desiccated Coconut  (WT/DS22/AB/R), 
para. 22.   
18 Panel Report, Japan – Film  (WT/DS44/R), para. 10.9.    WT/DS350/R 
 Page A-127 
 
 
  distribution of bananas because the measures that th e complainants were cont esting were "adequately 
identified", even though they were not explicitly listed.19  The Appellate Body agreed that the panel 
request contained sufficient identification of the measures at issue to fulfil the requirements of 
Article 6.2 of the Dispute Settlement Understanding.20   
 
46. Implementing measures which are not expressl y mentioned in the Panel request also fall 
within the Panel's terms of reference.  In Argentina – Footwear , the Panel noted that:21   
 
"We further recall that the Japan – Film Panel considered certain measures which 
had not been listed in the Panel request to be within its terms of reference because 
they were 'implementing measures' based  on a basic framework law, specifically 
identified in the Panel request, which specified the form and circumscribed the possible content and scope of such implementing measures.  From this we infer that 
a legal act not explicitly listed in a Panel request but which has a direct 
relationship to a measure that is specifica lly described therein, can be said to be 
sufficiently identified to satisfy the requirements of Article 6.2 .  In this respect, we 
agree with the Japan – Film  Panel's statement that the requirements of Article 6.2 
could be met in the case of a legal act that is  subsidiary to or so closely related to a 
measure specifically identified, that the responding party can reasonably be found to 
have received adequate notice of the scope of the claims asserted by the complaining party" ( emphasis added ).   
 
47. Therefore, any subsequent measure, in othe r words, any anti-dumping proceeding, modifying 
the duty levels established in the Panel request w ith respect to the original anti-dumping orders 
mentioned in the Annex would be closely related to the measures id entified therein and, thus, would 
fall under the Panel's terms of reference in accord ance with Article 6.2 of the Dispute Settlement 
Understanding.  In this respect, the European Comm unities considers that the Panel request identifies 
precisely the measures which are covered in this dispute.    D. C
ONCLUSIONS  
48. From the foregoing, the European Communiti es submits that the United States' claim is 
unfounded since the Panel request identifies the specif ic measures subject to this dispute, including 
any subsequent modification of the measures ( i.e., the duty levels) described therein with respect to 
the products and countries concerned.  
IV. THE PRELIMINARY DETERMINATIONS INCLUDED IN THE PANEL REQUEST 
FALL WITHIN THE TERMS OF REFERENCE 
49. The United States argues that four of the 14 allegedly new measures were preliminary results 
from on-going proceedings in which no final determin ation had been made at the time of the Panel 
request.  For this additional reason, the United St ates considers that these four on-going proceedings 
are not within the Panel's terms of reference, since Article 17.4 of the Anti-Dumping Agreement  does 
not permit for the establishment of a Panel to review proceedings that are not final.
22   
 
                                                      
19 Panel Report, EC – Bananas III , (WT/DS27/R), para. 7.27.   
20 Appellate Body Report, EC – Bananas III , para. 140.   
21 Panel Report, Argentina – Footwear , para. 8.35.   
22 First Written Submission by the United States, para. 72.   WT/DS350/R 
Page A-128  
 
  A. P
RELIMINARY DETERMINATIONS ARE SUBSE QUENT MEASURES INCLUDED IN THE PANEL 
REQUEST  
50. The European Communities submits that this argument should be rejected.  As explained 
before, the Panel request describes as the matter con cerned the continued application of specific anti-
dumping duties resulting from the anti-dumping orders enumerated from I to XVIII in its Annex "as 
calculated or maintained in place pursuant to the most recent [anti-dumping proceedings]".  In other 
words, it comprises any subsequent measure adopte d by the United States, including preliminary 
determinations setting out the dut y levels (wrongly calculated by applying zeroing) and insofar as 
those duties are still in place.    
51. As mentioned before, subsequent measures a dopted by the United States with respect to the 
anti-dumping proceedings contained in the Annex to th e Panel request fall within the Panel's terms of 
reference.  In order to avoid re petition, the European Communities re fer this Panel to the arguments 
mentioned in Section II.C above.    
52. Therefore, the European Communities consid ers that any act or decision taken by the 
United States with respect to the du ties in place, even if it is not final, is covered by the Panel's terms 
of reference.    B. T
HE PRELIMINARY DETERMINATIONS ARE RELATED TO THE ANTI -DUMPING PROCEEDINGS 
FALLING WITHIN THE TERMS OF REFERENCE  
53. In addition, the European Communities note th at challenges to administrative decisions in 
anti-dumping proceedings (even if they are not final in the sense that duties ha ve not been imposed), 
which are related to the imposition of duties have b een admitted in previous cases.  For instance, in 
Mexico – HCFS ,23 the Panel noted the following:   
 
"A claim regarding the period for which a provisional measure was applied does not, 
at first glance, constitute a challenge to  the definitive anti-dumping duty in this 
dispute.  However, we consider that th e United States' claim under Article 7.4 of 
the AD Agreement is nevertheless related to  Mexico's definitive anti-dumping duty.  
In this regard, we recall that, under Artic le 10 of the AD Agreement, a provisional 
measure represents a basis under which a Member may, if the requisite conditions 
are met, levy anti-dumping duties retroactively.  At the same time, a Member may 
not, except in the circumstances provided for in Article 10.6 of the AD Agreement, retroactively levy a definitive anti-dumping duty for a period during which provisional measures were not applied.  Consequently, because the period of time for which a provisional measure is applied is  generally determinative of the period 
for which a definitive anti-dumping duty may be levied retroactively, we consider 
that a claim regarding the duration of a provisional measure relates to the definitive anti-dumping duty.   
 
(…) In our view, it would be incorrect to interpret Article 17.4 of the AD Agreement 
in a manner which would leave Members without any possibility to pursue dispute 
settlement in respect of a claim alleging a violation of a requirement of the 
AD Agreement" ( emphasis added ).   
 54. The four on-going proceedings contained in the Panel request refer to one administrative 
review
24 and three sunset reviews.25  In all cases, as shown in the European Communities' First 
                                                      
23 Panel Report, Mexico – HCFS,  (WT/DS132/R), paras 7.53-7.54.   
24 Proceeding No. 35.   
25 Proceedings No. 4, 38 and 47.    WT/DS350/R 
 Page A-129 
 
 
  Written Submission, a final determination by the USDOC has been issued where dumping margins 
have been calculated by applying zeroing.  In th is respect, the European Communities is challenging 
the duties already in place with respect to three cases26 and any administrative step leading to the 
modification or collection of the duty level with respect to the measures identified in the Panel 
request.  The preliminary determinations carried out  by the USDOC have an impact in the final duty 
level which may result from the latest proceeding and, th us, fall within the Panel's terms of reference.   
 C. C
ONCLUSIONS  
55. From the foregoing, the European Communiti es submits that the United States' claim is 
unfounded since the preliminary determinations identif ied in the Panel request are related to the anti-
dumping proceedings enumerated in  its Annex and, therefore, fa ll within the Panel's terms of 
reference.    
V. FINAL REMARKS 
56. In light of the above, the European Communiti es submits that the United States' request for a 
preliminary ruling should be rejected entirely.   
 57. Firstly, the European Communities considers that  the request for consultations and the request 
for establishment of the Panel gave the United Stat es adequate notice of the scope of the matters 
asserted by the European Communities in conformity w ith Articles 4.4, 4.7, 6.2 and 7.1 of the Dispute 
Settlement Understanding and Articl es 17.3, 17.4 and 17.5 of the Anti-Dumping Agreement .  In any 
event, the United States has not proven how the d escription of the measures contained therein has 
affected its rights to a due process.    58. Secondly, the measures subject to this dispute were precisely identified in the Panel request in 
accordance with the requirements of Article 6.2 of the Dispute Settlement Understanding.  Contrary to 
what the United States argues, th e Panel request clearly identifies 18 anti-dumping proceedings, by 
reference to products and countries concerned, wher e duties are in place at a level higher than it 
should be, since the United States applied zeroing when calculating the dumping margins.    59. Finally, all the challenged measures, includi ng the preliminary determinations by the USDOC 
fall within the Panel's terms of reference.   
 
  
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26 Proceedings No. 35 and 38 relate to anti-dumping proceedings with respect to the same product and 
country concerned.