WT/DS397/R 
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ANNEX C 
  
ORAL STATEMENTS OF THE PARTIES AT THE FIRST  
SUBSTANTIVE MEETING OF THE PANEL OR  
EXECUTIVE SUMMARIES THEREOF 
 
 
Contents Page 
Annex C-1 Executive Summary of the Opening Statement of China at the First 
Meeting of the Panel C-2 
Annex C-2 Executive Summary of the Opening Statement of the 
European Union at the First Meeting of the Panel C-9 
Annex C-3 Closing Statement of China at the First Meeting of the Panel C-18 
Annex C-4 Closing Statement of the European Union at the First Meeting of 
the Panel C-20 
 WT/DS397/R 
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ANNEX C-1 
  
EXECUTIVE SUMMARY OF THE OPENING STATEMENT  
OF CHINA AT THE FIRST MEETING OF THE PANEL 
 
 I. INTRODUCTION 
 
1. In this dispute, China challenges two measure s:  (i) Article 9(5) of Council Regulation (EC) 
No. 384/96 on Protection against Dumped Imports from Countries not Members of the EC, as amended, as codified and replaced by Council Regul ation (EC) No. 1225/2009;  and (ii) Council 
Regulation (EC) No. 91/2009 which imposes a defin itive anti-dumping duty on imports of certain iron 
or steel fasteners originating in the People's Republic of China.   
 2. In its First Written Submission, th e EU has raised a broad range of procedural  arguments.  If 
these procedural deficiencies are so  substantial, China fails to unde rstand why the EU did not request 
such a preliminary ruling.  Unfo rtunately, the absence of a request for preliminary ruling has denied 
China the opportunity to reply in writing to the pro cedural objections before this first substantive 
meeting.  China fears that the EU's unwillingness to  request a preliminary ruling is just one more 
element of the EU's litigation tactics.  China reca lls that procedural arguments are important where 
they are invoked to ensure due process rights a nd that they should not be abused as tactical 
instruments to prevent a panel from addressing the substantive issues underlying the dispute.   
 
3. In its Oral Statement, China will address the main procedural arguments raised by the EU and 
reply to the remaining procedural objections in its second written submission.  Likewise, China will 
not enter into a detailed refutati on of all substantive arguments but  will focus on demonstrating the 
fundamental errors in the EU's arguments relating to China's main claims.    II. CLAIMS CONCERNING ARTICLE 9(5) OF COUNCIL REGULATION (EC) 
No. 384/96 OF 22 DECEMBER 1995 ON PROTECTION AGAINST DUMPED IMPORTS FROM COUNTRIES NOT MEMBERS OF THE EC, AS CODIFIED AND REPLACED BY COUNCIL REGU LATION (EC) No. 1225/2009 
 4. As a preliminary remark
, China rejects the EU's allegation that there is a common 
understanding that China is not yet a market economy country.  Following its WTO accession, China has gradually evolved into a market economy country .  This view is shared by many WTO Members 
that have granted full market economy status to China.  In any case, whether China is a market 
economy or a non-market economy country is not relevant in this dispute.   
 
5. It is therefore regrettable that the EU see ms to confuse the rules governing "Market Economy 
Treatment" or MET and "Individual Treatment" or IT .  In the EU's anti-dumping regime, MET and IT 
are completely different issues.  MET relates to the question whether the domestic prices and costs of 
the exporting producer in the non-market economy country can be used for determining normal 
value (Article 2(7)).  The provisions on IT, on th e contrary, only relate to the question whether an 
individual dumping margin and duty must be calculated for the exporting producer on the basis of his 
own export prices or, on the contrary, such exporting producer must be subjected to the country-wide 
residual duty (Article 9(5)).  China does not address the WTO consistency of the EU's rules contained 
in Article 2(7) of the Basic AD Regulation which d eal with the normal value determination.  China's 
"as such" claim is only directed at Article 9(5) of  the Basic AD Regulation and thus only relates to the 
"individual treatment" issue.   
  WT/DS397/R 
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6. The EU intentionally ignores the difference between both sets of rules.  Instead, it tries to 
transform the limited exceptions which concern the normal value determination into a legal 
justification for all forms of diffe rent treatment applied to non-market  economy countries.  This tactic 
becomes obvious in the section entitled "background"1, where the EU invokes Article 8 of the 
Kennedy Round Anti-Dumping Code to support its position, contrary to the documented negotiating 
history thereof, and in the EU's anal ysis of China's Protocol of Accession.2   
 7. China submits that a correct application of th e rules of treaty interpretation can only lead to 
the conclusion that Article 9(5) of the Basic AD Regulation violates inter alia  Articles 6.10, 9.2, 9.3 
and 9.4 of the AD Agreement.  Contrary to what the EU alleges, there is no rule or "codified 
understanding" in the AD Agreement according to which the provisions of that Agreement would 
only be applicable to market economy countries.    8. The procedural arguments
 raised by the EU against the claims made by China relating to the 
first measure can be grouped into two main categor ies.  The EU first submits that China's Panel 
Request failed to satisfy the requirements of Article  6.2 since the Panel Request failed to present the 
claims relating to Articles 6.10, 9.3 and 9.4 of  the AD Agreement and Article X:3(a) of the 
GATT 1994 sufficiently clearly because there is alle gedly no connection between the measure at 
issue, i.e. Article 9(5) of the Basic AD Regulation, and the WTO provisions that China claims this measure violates.
3   
 
9. The EU submits that Article 9(5) only deals with the issue of the imposition of anti-dumping 
duties while the provisions that China claims this measu re violates deal with other issues.  This issue 
is however a substantive issue that has nothing to do with the procedural requirements of Article 6.2 
of the DSU, which merely requires the complaining pa rty to identify in its Panel Request the specific 
measure at issue and the claims so  as to enable the defending party to know the problem at issue.  On 
the basis of China's Panel Request, the EU was ma nifestly aware of the specific measure challenged 
and the legal basis for the alleged nullification or impairment of China's WTO benefits.   
 10. Furthermore, when submitting that the " explanation  provided by China"
4 with respect to these 
claims fails to plainly connect the specific measure at issue with the specific claim so that the problem 
is presented clearly, the EU obviously confuses the "c laims" with the "arguments" that refer to the 
explanations.  While "claims" must be set out in  the Panel Request in a precise manner, arguments 
will necessarily be expanded upon a nd clarified progressively during the proceeding.  Finally, the EU 
failed to demonstrate that China' s alleged failure to "present the problem clearly" has prejudiced its 
ability to defend itself.    
11. The second set of procedural argum ents relate to "issues" that have been raised by China in its 
First Written Submission and which were allegedly no t covered by the Panel Request.  First, the EU 
claims that Council Regulation (EC) No 1225/2009 is  outside the Panel's terms of reference because 
the measure identified in the Panel Re quest is Council Regulation No 384/96, " as amended " while 
Council Regulation (EC) No 1225/2009 does not amend  but repeal  Council Regulation No 384/96.  
This is a purely formalistic argument which, if adopted, would seriously undermine the effectiveness 
of the dispute settlement system.  Since the word ing and content of the measure at issue has not 
changed, the Panel has to conclude that Article  9(5) of Council Regulation (EC) No 1225/2009 is 
within its terms of reference.    
                                                     
 
1 EU FWS, para. 11 – 14.   
2 EU FWS, para. 123 – 129.   
3 EU FWS, para. 51.   
4 EU FWS, para. 53, 56, 61, 65 and 67.   WT/DS397/R 
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12. Second, the EU submits that China has sought to  "expand the scope of the measure at issue to 
cover other issues".
5  According to the EU, the measure identif ied in the Panel Request is Article 9(5) 
of the Basic AD Regulation which deals only with the imposition of anti-dumping duties6 and China's 
First Written Submission "seeks to incorporate issues  dealing with the calculation and determination 
of individual margins within the scope of the measure at issue".7  The EU's claim appears to take issue 
with the "content" of the measure at issue.  Howeve r, contrary to what the EU alleges, Article 9(5) 
deals not only with the imposition of anti-dumping duties but also determines whether or not an individual dumping margin will be calculated.  Ch ina's views on the scope of the measure are clear 
from its Panel Request.    
13. With respect to the substantive issues
 raised by the EU regarding China's challenge of 
Article 9(5) of the Basic AD Regulation, China' s comments will, for the purposes of this Oral 
Statement, be limited to some observations con cerning the EU's arguments relating principally to 
Articles 6.10 and 9.2 of the AD Agreement and Article  I of the GATT 1994.  The other issues will be 
addressed in China's second written submission.   
 
14. As a preliminary remark, China would like to emphasize the fundamental error in the 
approach taken by the EU when interpreting the prov isions concerned.  Rather than starting from the 
ordinary meaning of the terms read in their contex t, the EU follows a teleological approach.  China 
also considers it necessary to respond to the EU statements that Article 9(5) of the Basic 
AD Regulation has a much more limited scope than that claimed by China.  The EU submits that 
Article 9(5) deals only with the very specific issu e which refers to the imposition of definitive anti-
dumping duties and that it does not address the determination of margins of dumping which is allegedly governed by Article 9(4) of the Basic AD  Regulation.  The EU's analysis is incorrect.  
Whether an individual or a country-wide dumping ma rgin is determined for a particular exporting 
producer is not governed by Article 9(4) but by Ar ticle 9(5) of the Basic AD Regulation.  The EU 
actually confirms this in paragr aphs 81 of its First written Submission where it explains how anti-
dumping duties and dumping margins are determined in case of imports from non-market economy countries.  As such, Article 9(5) concerns both the determination of an individual duty and an 
individual dumping margin.    15. China will now briefly elaborate on its clai ms that Article 9(5) violates several WTO 
provisions.  China will start with the Article 9.2 ADA
 claim.  The EU seems to consider that it would 
always be permissible for WTO Members to limit their examination to the exporting country as a whole and to impose one country-wide duty.  Article 9.2 would merely require that the investigating 
authority name the supplier or suppliers of the pro duct concerned.  Yet, the above interpretation is 
wrong, inter  alia because it would make no sense to require  the suppliers to be named on an 
individual basis if the intention was to impose a country-wide duty.  The EU's interpretation of 
Article 9.2 is also dangerous since it would allow investigating authorities to disregard the individual 
dumping margins calculated for specific exporters  as long as the duty imposed on them does not 
exceed the country-wide dumping margin.    16. The EU further submits that the ordinary meaning of the word "impracticable" used in 
Article 9.2 of the AD Agreement is "ineffective".  However, based on the New Shorter Oxford 
Dictionary
8, "impracticable" refers to something which is  not feasible in practice or impossible in 
practice while the word "ineffective" refers to some thing which has no effect or result.  Moreover, the 
EU's reference to Article 8.3 of the AD Agreemen t does not support its position either, but, on the 
contrary, demonstrates the err oneous nature of the EU's interpretation.  Thus, the word 
"impracticable" only refers to situations in whic h the specific action is not feasible for practical 
                                                      
5 EU FWS, para. 77.   
6 EU FWS, para. 78 – 80.   
7 EU FWS, para. 79.   
8 The New Shorter Oxford English Dictionary, 1993, 3rd edition, Volume I, p.1325 and p.2317.    WT/DS397/R 
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reasons.  The typical situation where this arises is wh ere the number of exporters is too large or where 
certain exporters are not known.  This interpreta tion of the term "impracticable" is furthermore 
confirmed by the negotiating history of the Kennedy Round Anti-Dumping Code.   
 17. The EU's arguments relating to Article 6.10
 must similarly be rejected.  China submits that 
Article 9(5) of the Basic AD Regulation violates Article 6.10 of the AD Agreement because it 
provides specific conditions that exporting producers from non-market economy countries must fulfil in order to receive individual treatment, i.e. an indi vidual dumping margin and an individual duty rate.  
The EU argues that the departure from the general rule contained in Article 6.10 first sentence is 
permissible in situations different from the sampling scenario.
9  However, Article 6.10 expressly 
limits the possibility to derogate from this general rule  to this one specific case, as also confirmed by 
consistent case-law.10   
 18. The EU further refers to the Panel's findings in Korea – Certain Paper  and Norway – 
Salmon
11, to argue that the terms "exporter or producer" in Article 6.10, first sentence, cannot be 
interpreted strictu senso  as a "company that exports" or a "company that produces" but rather in a 
manner which also permits to combine separate en tities into a single supplier which is the actual 
source of price discrimination, and in case of non-market economy countries, the State.12  However, 
Article 9(5) deals with a different  issue than the question ex amined by the Panel in Korea – Certain 
Paper , namely whether several legal entities are rela ted and should be regard ed as one exporter.  
Article 9(5) of the Basic AD Regulation is both diffe rent from and additional to the criteria used to 
determine whether different legal entities should be considered as  one "exporter" or "producer" for 
the purposes of the dumping margin determination.  The "individual treatment" test of Article 9(5) applies in addition  to the examination of whether several expor ters are related and should be treated 
as a single exporter or producer.  The criteria of Articl e 9(5) are also stricter than the general criteria 
used by the EU investigating authorities to determin e whether distinct legal entities should be treated 
as a single exporter or producer.   
 19. China can agree with the fi nding reached by the Panel in Korea – Certain Paper  that the 
terms "exporter" or "producer" in Article 6.10 do not necessarily refer to a single legal entity and that 
one individual dumping margin may be determined fo r several legal companies that are found to be 
related.  China maintains, however, that this ma rgin still has to be "individual" for that group of 
companies.  However, under Article 9(5), expor ting producers from non-market economy countries 
who cannot demonstrate that they fulfil the criteri a set out in that provision will be subject to the 
residual country-wide dumping  margin and anti-dumping duty.  This is plainly inconsistent with the 
requirement of Article 6.10 that the dumping margin  be determined on an individual basis, no matter 
whether the "exporter" or "producer" is a single legal entity or a group of companies. Also, the 
country-wide dumping margin is not based on the data  concerning all exporters/producers found to be 
"related".    20. The EU tries to defend the use of the additiona l and stricter criteria of Article 9(5) and the 
imposition of a country-wide duty where such criteria are not met by referring to the State as being the actual producer and the source of the dumping.
13  The EU does not explain, however, why State-
owned or State-controlled companies should be treated differently from other related group 
companies.  Neither does the EU justify why such  companies should be made subject to the higher 
residual duty.   21. Finally, the obligation to impose a country -wide duty unless a company demonstrates that it 
meets the IT criteria of Article 9(5), does not apply to all State-owned or State-controlled companies, 
                                                     
 
9 EU FWS, para. 142, 147 and 152.   
10 See, e.g., Panel Report, Mexico – Beef and Rice , para. 7.137.   
11 EU FWS, para. 144 – 147.   
12 EU FWS, para. 147.   
13 EU FWS, para. 153.   WT/DS397/R 
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but only to such companies in countries classified as non-market economy countries by the EU.  There is no objective justification for this discriminatory treatment.    22. With respect to the Protocol of Accession,  it does not allow any derogation as to the export 
prices which must be used or from the rule that dumping margins and anti-dumping duties must be 
determined on an individual basis.   
 23. However, the EU considers that such specifi c provision would not be required and that it is 
sufficient as a legal justification that the Prot ocol of Accession contains a "common understanding 
that China is not a market economy country" to make "the specific provisions" dealing with non-
market economy countries contained in the AD Agre ement applicable, namely Articles 6.10 and 9.2 
of the AD Agreement.
14  This conclusion is wrong on both counts, since (i) China's Protocol of 
Accession does not contain a "common understanding th at China is not a market economy country"; 
and (ii) neither Article 6.10 nor any provisions of  Article 9 specifically address issues in connection 
with non-market economy countries.   
 
24. In conclusion, the imposition of additional an d stricter criteria for obtaining an individual 
anti-dumping duty on exporting producers from China compared to the criteria applicable to exporting producers from market economy countries has no lega l justification in the AD Agreement or in 
China's Protocol of Accession.    
25. Moreover, this discriminatory treatment  also violates Article I:1 of the GATT 1994 .  The EU 
submits that no violation of Article I.1 can be found, on the basis of the lex specialis  principle and 
Article II:2(b) of the GATT.
15  However, this reasoning is flawed as (i) Article II:2(b) of the 
GATT 1994 only relates to Article II:1 but not to Artic le I of the GATT 1994;  and (ii) there is no 
"conflict" of provisions within the meaning of the General Interpretative Note  to Annex 1A of the 
WTO Agreement since the AD Agreement or the Pr otocol or Accession does not contain a legal 
justification for treating exporters from non- market economy countries differently.   
 
III. CLAIMS CONCERNING COUNCIL REGULATION (EC) No 91/2009 OF 
26 JANUARY 2009 IMPOSING A DEFINI TIVE ANTI-DUMPING DUTY ON 
IMPORTS OF CERTAIN IRON AND STEEL FASTENERS FROM CHINA 
 
26. China will address various aspects of its cl aims concerning the determination of the 
"domestic industry ".  China submits that the domestic industry determination made by the EU 
violates Article 4.1 of the AD Agreement in several respects.    
27 First, China considers that the EU has violat ed Article 4.1 of the AD Agreement by excluding 
from the definition of the "domestic industry" all producers that did not make themselves known 
within 15 days as of the date of publication of the notice of initiation as well as those producers that did not support the investigation.
16  According to the EU, Article 4.1 gives the investigating 
authorities the discretion to choose the producers to be included in the "domestic industry" as long as the producers thus selected represent a "major proportion" of the total domestic production.
17   
 
28. This theory was expressly rejected by the Panel in EC – Salmon .  The Panel stated that it is 
not permissible to exclude from the outset from the "domestic industry" certain categories of 
producers of the like product other than those set out in  Article 4.1.  Contrary to what the EU alleges, 
the Panel's findings in EC – Salmon  were not limited to categories of producers "which produce a 
                                                      
14 EU FWS, para. 127.   
15 EU FWS, para. 173.   
16 China FWS, para. 233-245.   
17 EU FWS, para. 292-297.    WT/DS397/R 
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particular type of the like product" but concern any category of producers of the like product other 
than those set out in Article 4.1.    29. The EU did exactly what the Panel so clearly condemned.  It excluded from the definition of the "domestic industry" all producers that did not make themselves known within 15 days following 
the notice of initiation as well as those producers that did not support the complaint.  These exclusions 
alone already introduced a bias in the "domestic industry"  definition in favour of a finding of injury.   
 30. Second, the producers thus selected did not represent "a major proportion" of the total domestic production of fasteners.  The EU did not  even check whether the producers thus selected 
constituted "a major proportion" of the total domestic  output.  The EU automatically assumes that the 
major proportion criterion is fulfilled as long as the selected producers meet the major proportion definition in Article 5(4) of the Basic AD Regula tion which deals with the standing requirements for 
the complainants.  The EU thus interprets Article 4.1 of the AD Agreement as allowing it to define the 
domestic industry as consisting only of producers expressly supporting the complaint as long as the 
latter represent more than 25 percen t of the Community production.   
 31. The EU tries to defend the automatic equation between the producers supporting the complaint and the "domestic industry" by stating that meeting the 25 per cent test creates a legitimate 
presumption  that the producers represent a major proportion of total production.
18  Since the 
producers constituting the domestic industry represente d 27 per cent of the total domestic production, 
they did, according to the EU, satisfy the major proportion test of Article 4.1.   
 32. The EU's interpretation finds no basis in the relevant provisions when examined in the light of the principles of treaty interpretation.  In order to represent a "proportion" and thus a fortiori  "a major 
proportion", the domestic producers concerned must constitu te a "part", a "share" of the whole, that is 
of the domestic production as a whole.  In other word s, they must be representative of the whole.  
This has also been underlined by the Appellate Body in US – Lamb .
19  By failing to include in the 
definition of the domestic industry domestic produ cers that opposed the complaint or remained 
neutral, the EU investigating authorities defined a do mestic industry that is not "representative" of the 
whole and does not constitute a "proportion" of the total domestic production and a fortiori  a "major 
proportion" of the total domestic production.   
 
33. The Panel in Argentina – Poultry  merely takes note of the fact that the "major proportion" 
requirement does not imply a precise quantitative threshol d, such as 50 per cent.  It states that whether 
a collective output constitutes a "major proportion" is to be assessed on the basis of the 
circumstances of the case .20  It is certainly incorrect to dedu ce from this that meeting the 25 per cent 
threshold would automatically constitute a presumption that the "major proportion" test has been met.  
The EU, however, did precisely this.  It did not ex amine whether this conclusion was justified on the 
basis of the circumstances of the case.    34. China submits that the circumstances in this  case demonstrate that the collective output of the 
45 producers allegedly representing 27 per cent does not  constitute a "major proportion" of the total 
domestic production.  The first relevant circumst ance is the "practicability " for the investigating 
authorities to include more producers in its definition of the domestic industry.  In the case at hand, 
the investigating authorities had identified at th e beginning of their investigation, at least, 
114 producers representing 45 per cent of the total do mestic production.  These producers account for 
almost double the output represented by the producers finally included in the domestic industry 
definition. In view of this circumstance, it is ha rdly possible to argue that 27 per cent constitutes a 
"major proportion".   
                                                     
 
18 EU FWS, para. 348.   
19 Appellate Body Report, US – Lamb , para. 91.   
20 Panel Report, Argentina – Poultry , para. 7.342.   WT/DS397/R 
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 35. Another circumstance that needs to be ta ken into account is the number of producers 
constituting the domestic industry in relation to the total number of domestic producers.  As noted by 
the EU itself, there are more than 300 producers of the like product in the EU.
21  Thus, 45 producers 
amount to only one sixth of this estimated total.   
 
36. In a last-ditch effort to justify its practice, th e EU seems to argue that it is irrelevant how the 
domestic industry is defined when sampling is used.22  This is obviously not correct.   
 37. Moreover, the determinati on of "domestic industry" also violates Article 3.1 of the 
AD Agreement.  If the investigating authorities de fine the domestic industry by excluding from the 
domestic industry producers because they oppose the complaint, they act with bias.  According to 
the EU, a violation of Article 4.1 would have no bearing on the obligations imposed on investigating 
authorities under Article 3.1.  China strongly disagr ees with this view.  It is only possible to conduct 
an "objective examination" of injury if the result of  this examination is not predetermined by the way 
the domestic industry has been defined.  By excluding inter alia  producers that opposed the 
complaint, the EU conducted their investigation in such a way that it becomes more likely that, as a 
result of the fact-finding or evaluation process, th ey will determine that the domestic industry is 
injured.    38. Finally, China would like to make a few co mments regarding the claims it has made with 
respect to numerous violations of due process obligations  by the EU.  When reviewing the EU's 
arguments with respect to these claims, one is stru ck by how the EU tries to avoid going into the 
substance of China's claims.  The EU consiste ntly claims that China has failed to make a prima facie 
case because the claims are not understandable, ar e presented in a confusing way, the evidence 
submitted is irrelevant or inexistent or for other ob scure reasons.  China believes that the real reason is 
other, namely that the EU simply lacks any s ubstantive arguments and evidence to rebut China's 
claims.  These procedural arguments should not be allo wed to obscure the real issue before the Panel, 
namely that the Chinese exporting producers were ne ver given an effective opportunity to exercise 
their due process rights.   
                                                     
 
21 EU FWS, para. 322.   
22 EU FWS, para. 284 and 302.    WT/DS397/R 
 Page C-9 
 
 
 ANNEX C-2 
 
 
EXECUTIVE SUMMARY OF THE OPENING STATEMENT  
OF THE EUROPEAN UN ION AT THE FIRST  
MEETING OF THE PANEL 
 
 
I. CHINA'S "AS SUCH" CLAIM AGAINST ARTICLE 9(5) OF COUNCIL 
REGULATION NO 384/96, AS AMENDED 
 
1. The European Union considers that the Panel' s mandate with respect to  China's as such claim 
is to examine the conformity of the concrete aspect s of the specific measure described by China in its 
Panel Request with the relevant provisions of the covered agreements invoked by China.  The specific 
measure in this case, as defined by China's Panel Requ est, is a very concrete legislative provision, i.e., 
Article 9(5) of Council Regulation No 384/96, as amended.  The concrete aspects this provision 
requires or provides for are that, in case of imports from non-market economy countries:  (i) an individual anti-dumping duty shall be specified for s uppliers that can demonstrate, on the basis of 
properly substantiated claims, that they fulfil the five  criteria listed in that provision;  and, otherwise, 
(ii) the anti-dumping duty shall be specified for the supplying country concerned and not for each 
supplier.  The Panel is thus not
 called to examine other provision s of Council Regulation No 384/96, 
as amended;  any of the provisions of Council Re gulation No 1225/2009;  the "individual treatment" 
or "individual treatment regime or practice" of th e European Union;  any matters pertaining to the 
calculation or individual determination of dumping ma rgins;  or any other matters different from the 
one specifically identified by China in its Panel Re quest.  Moreover, the European Union has already 
shown that the Panel should reject most of China' s claims since, contrary  to the requirements under 
Article 6.2 of the DSU , China's Panel Request failed to present the problem clearly and, on substance, 
the specific measure described by China in its Pa nel Request does not fall within the scope of the 
obligations contained in Articles 9.2, 6.10, 9.3 and 9.4 of the Anti-Dumping Agreement  and 
Article X:3(a) of the GATT 1994 .  In any event, like the third parties expressing a view on this issue, 
the European Union considers that China's clai ms against Article 9(5) of Council Regulation 
No 384/96, as amended, are based on a wrong unde rstanding of the relevant provisions in the Anti-
Dumping Agreement , the GATT 1994  as well as China's Protocol of Accession.  In particular, China 
fails to show why Article 9.2 of the Anti-Dumping Agreement  contains a principle to impose 
individual anti-dumping duties per known exporter or pr oducer.  It is rather the contrary.  This 
provision seems to allow for the imposition of anti-dumping duties on a country-wide basis.    
2. Even assuming that Article 9.2 of the Anti-Dumping Agreement  can be read as containing 
such a principle, quod non , imposition of country-wide anti-dump ing duties is permitted in cases 
where such imposition on individual basis would result in the measure being ineffective .  This is 
precisely the case of China as non-market economy.  I ndeed, the objective of offsetting or preventing 
dumping would be undermined if individual duties we re to be imposed on suppliers which do not act 
sufficiently independent in their export activities fro m the State, i.e., the actual producer of the 
product concerned.  China's Protocol of Accessi on also provides useful context to confirm the 
conclusion that, in the case of imports originating in China, anti-dumping duties can be specified on a 
country-wide basis when suppliers cannot show that  market economy conditions prevail with regard 
to the manufacture, production and sale of the product concerned.    
3. Moreover, as several panels ha ve clarified, Article 6.10 of the Anti-Dumping Agreement  
permits that a single dumping margin can be determ ined for the actual producer and the source of the 
price discrimination, even if there are several exporte rs involved.  This is fundamentally the situation WT/DS397/R 
Page C-10  
 
 in non-market economy countries, where State control over the means of production and State 
intervention in the economy including international trade imply that all imports are considered to 
emanate from a single producer.  It follows that the imposition of anti-dumping duties on a single supplier, i.e., China, despite th e existence of several exporters which do not act independently from 
the State, i.e., non-IT suppliers, is permitted by Article 9.2 of the Anti-Dumping Agreement .  In this 
respect, the calculation of dumping margins and the imposition of anti-dumping duties on a country-
wide basis do not differ much from a situation wher e the investigating authority is confronted with 
several exporters all dependent from one single producer, which is the actual source of price 
discrimination.    
4. The European Union observes that China's clai ms under Articles 6.10, 9.3, 9.4 and 18.4 of the 
Anti-Dumping Agreement , Articles I:1 and X:3(a) of the GATT 1994  and Article XVI:4 of the 
WTO Agreement  are entirely dependent on a finding that  Article 9(5) of Council Regulation 
No 384/96, as amended, "as such" infringes Article 9.2 of the Anti-Dumping Agreement  and, to some 
extent Article 6.10 of the Anti-Dumping Agreement .  Since this is not the case, the Panel does not 
need to examine those claims.   
 
II. ARTICLE 9(5) OF COUNCIL REGULA TION NO 384/96 "AS APPLIED" IN 
COUNCIL REGULATION NO 91/2009 
 
5. The European Union observes that China's first claim is based on the assumption that the 
application of Article 9(5) of Council Regulati on No 384/96, as amended, is inconsistent with 
Articles 6.10, 9.2 and 9.4 of the Anti-Dumping Agreement  in all cases.  Since this is not the case, the 
Panel should also reject China's claim in connection to Council Regulation No 91/2009.   
 
III. STANDING OF THE EU DOMESTIC INDUSTRY 
 
6. The European Union would like to indicate that China has not consulted with the European Union on this new claim in its Pa nel Request, as required by Article 4 of the DSU .  
Moreover, China's Panel Request is not specific a nd does not set out the problem clearly, as required 
by Article 6.2 of the DSU .  The European Union also notes that Notice of Initiation 2007/C 267/11 is 
not a measure at issue.  In view of all these, China's claim is outside the Panel's terms of reference.  In 
any event, on the substance of th e matter, the European Union submits that, manifestly, it did examine 
the standing issue prior to initiation, thereby comp lying with Article 5.4, third sentence, of the Anti-
Dumping Agreement .   
 
IV. DEFINITION OF THE DOMESTIC INDUSTRY 
 
7. As a preliminary matter, it is important to r ecall the very general nature of the two provisions 
that are being invoked by China.  Article 4.1 sets fo rth a fairly general definition of the term domestic 
industry as consisting of all producers of the domestic like product as a whole or those producers 
whose collective output constitutes a major propor tion of total domestic production.  The only 
"obligation" to be derived from this provision is to define  the domestic industry in a manner that is 
consistent with this definition.  Similarly general in  nature is Article 3.1 which requires that the state 
of the domestic industry, as defined in accordance with Article 4.1, is examined in an objective 
manner and based on positive evidence, i.e., based on reliable data.  China errs when it asserts that 
these two very general obligations impose very speci fic obligations.  The five claims of China are 
clear evidence of this erroneous approach.  The European Union respectfully  requests the Panel to 
reject all five.   
 
8. First, China claims that the European Union was not allowed to define the domestic industry 
as consisting of only those cooperating producers th at made themselves known within 15 days of 
initiation of the investigation.  As explained in our  submission, this brief summary of the legal basis  WT/DS397/R 
 Page C-11 
 
 
 of China's claim – which is part of the "matter" before you – is nowhere to be found in China's 
Consultations Request.  Since no cons ultations were held on this matte r, China's claim is not properly 
before the Panel.  Moreover, and on the merits, Ch ina ignores the fact that Article 4.1 defines the 
domestic industry as consisting of all producers of the like product or of those producers that 
represent a major proportion of total domestic production.  The text of Article 4.1 does not establish a 
hierarchy of preference between these two possibilities.   WTO case-law has confirmed this.  The EU's 
determination that the domestic industry consisted of all those producers willing to cooperate and 
which made themselves known within 15 days followi ng the initiation of the investigation is thus 
entirely legitimate as long as these producer represented "a major proportion" of total domestic production.  Such was the case, as these producers represented 27 per cent of domestic production.  
Nothing in Article 4.1 disallows the use of a 15-da y deadline for practical reasons.  The EU did not 
"deliberately exclude" any type of domestic produ cers, and the subparagraphs (i) and (ii) of 
Article 4.1 are therefore not relevant to the situa tion at hand.  The European Union wishes to clarify 
one important factual point which appears to have ca used some confusion among the third parties.  It 
is not so that the European Union ex cluded all producers that did not support the investigation.  The 
views of the domestic producers were requested by  the EU authorities and were relevant for the 
standing determination before  the initiation of the investigation.   However, once the investigation 
began, the domestic producers' views on the initiation b ecame irrelevant.  In the Notice of Initiation of 
the investigation, the European Union simply requ ested domestic producers that wished to cooperate 
in the investigation to make themselves known with in 15 days, without further enquiry as to whether 
they supported or opposed the investigation.  Then , the EU authorities decided to define the domestic 
industry as consisting of those producers expressi ng a willingness to cooperate.  In other words, 
contrary to the understanding of some third par ties, no producer which made itself known within 
15 days was excluded for reason of the fact that it woul d not support the initiation of the investigation.  
Any exclusion took place merely because of the express statement by domestic producer of its will not to cooperate in the investigation.  Needless to  say, if a domestic producer decides not to cooperate, 
it will be impossible to obtain the relevant data duri ng the investigation.  In addition, and insofar as 
Article 3.1 would impose any requirements in respect  of the definition of the domestic industry, quod 
non, there is no basis for the argument that the mere fact that a 15-days cut off date was used for 
practical reasons would require the Panel to find that the investigation was not conducted in an 
unbiased or objective manner.  The 15-days deadline that was used as the basis for determining the 
group of producers that would constitute the domestic  industry is an objective criterion that does not 
favour either side.  China has failed to demons trate that this limitation prevented an objective 
examination of the state of the domestic industry.    9. Second, China argues that the domestic indus try as defined by the European Union does not 
consist of producers producing "a major prop ortion" of domestic output since these producers 
represent "only" 27 per cent of total domestic produc tion.  China's interpretation of the term "a major 
proportion" in Article 4.1 is in error.  China argue s that "a major proportion" has to be as close as 
possible to 100 per cent.  The WTO case-law to wh ich China itself refers with approval clearly 
disavows this erroneous interpretati on considering that "a major propor tion" is rather an "important, 
serious or significant" proportion.  It is clear that 27 per cent is a significant proportion of production.  China presents no arguments or evidence to contradict this conclusion in the context of the particular 
circumstances of this case as it was required to do.  The European Union wishes to clarify that the 
legal question before the Panel is not, as some thir d parties seem to suggest, whether 25 per cent is 
sufficient in all circumstances to constitute a major proportion.  Indeed, the European Union considers 
that a percentage that is higher than 25 per cent should legitimately be considered as constituting a 
major proportion, unless there is evidence that shows that, in the particular circumstances of the case, 
such a percentage is not a major proportion.  In su m, the European Union requests the Panel to reject 
China's claim that the EU's de finition of the domestic industry violated Article 4.1 of the Anti-
Dumping Agreement .   
 WT/DS397/R 
Page C-12  
 
 10. Third, China argues that the domestic i ndustry was "not defined in relation to the 
investigation period" and therefore violates Article 3.1 of the Anti-Dumping Agreement .  China errs 
both in respect of the facts on the record and in respect  of the applicable law.  To begin, the facts.  
China refers to the October 2006 – 2007 period as the period for determination of injury while this is 
actually primarily the period of investigation for dum ping as the injury trends were examined using a 
longer period of time starting in 2003.  The in jury data examined thus covered the period 
January 2003 – October 2 007.  The determination of a "major proportion" was based on data relating 
to the last full year prior to initiation for which sta tistics were available, the year 2006, thus including 
part of the period of investigation for dumping purpos es.  Absent any evidence to  the contrary, this is 
an objective and entirely reasonable approach to take.  And to continue, the law.  Article 3.1 simply 
does not impose an obligation to expressly determin e the existence of a major proportion, let alone 
that it would require such a determination to be ma de in relation to the exact same period as the period 
of investigation for dumping purposes.  Article 3.1 is  entirely silent on this issue and relates only to 
the manner in which the data of the domestic i ndustry are to be examined (objectively) and the 
reliability of the evidence that is to be examined (positive evidence).  In any case, and applying for the 
sake of argument the generally applicable reasonabl eness standard to the determination of "a major 
proportion", it is clear that a recent and relevant pe riod was used consisting of the last full year prior 
to initiation for which statistical data were availabl e, including part of the period of investigation for 
dumping purposes.  There is therefore no factual nor legal basis for China's claim of violation in respect of the EU's determination of  the domestic industry in the context of the investigation period.   
 
11. Fourth, China argues that the determination of  injury on the basis of a sample of domestic 
producers representing 17 per cent of total domestic  production violates Article 4.1 and 3.1 of the 
Anti-Dumping Agreement  since the sampled producers do not re present a major proportion of total 
domestic production.  First, China fails to demonstrate that Article 4.1 imposes any obligation in respect of sampling.  Furthermore, it would not make  sense to require a sample to comply with the 
same "major proportion" obligation that the domestic industry itself is to comply with.  As rightly 
noted by Japan in its Third Party Written Submis sion, "accepting China's argument … would vitiate 
the purpose of sampling".  The requirement of Article  3.1 is arguably that the sampled data should be 
sufficiently representative of the domestic industry as defined in  accordance with Article 4.1 .  That is 
different from requiring that the sample be representative of the totality  of the domestic producers  as a 
whole, as China erroneously alleges to be required.  As explained in our First Written Submission, the 
sample chosen was representative of the domestic in dustry both in terms of volume, types of products 
and size of the producers.  China's argument in re spect of the volume of total production represented 
by the sampled producers is thus without merit.    12. Fifth, China argues that the European Un ion should have excluded a number of domestic 
producers from the definition of the domestic industry for the simple reason that these producers were 
related to producers / exporters in China and that  the European Union failed to objectively examine 
this relationship.  However, it is clear that the Anti-Dumping Agreement  permits , under certain 
conditions, the authority to exclude related producers, but certainly does not require  an authority to do 
so.  Even China accepts this.  That leads to two c onclusions:  first, without an "obligation" to do 
something there can be no "violation";  second, it is only when the authority would want to exclude 
such related producers that there exists a prior obl igation to determine in an objective manner whether 
such a relationship exists and whether this relatio nship was such to cause the related producer to 
behave differently.  The EU authorities did not  exclude any related producers and therefore no 
obligation to make an objective dete rmination could have been violated.  In any case, China fails to 
demonstrate that the facts do not support the reasonable finding of the EU authorities that the centre of 
interest of these domestic producers re mained in the European Union an d that it was therefore neither 
necessary nor appropriate to exclude these producer s from the scope of the domestic industry.    WT/DS397/R 
 Page C-13 
 
 
 V. SELECTION OF THE PRODUCT CONCERNED 
 
13. The European Union further submits that th e Panel should reject China's claim that the 
European Union acted inconsistently  with Articles 2.1 and 2.6 of the Anti-Dumping Agreement  
because it included in the scope of the product concerne d both standard and special fasteners as "like" 
products despite their readily apparent differences and uses.  Fundamentally, China ignores that like 
product and product concerned are two distinct issues in the Anti-Dumping Agreement , and that there 
is nothing requiring investigating authorities to carry out a likeness analysis within the product 
concerned.  Moreover, China ignores the fact that the measure at issue does not contain any 
determination to the effect that standard fasteners ar e like special fasteners, so  China is referring to a 
non-existent determination.  Thus, China's cl aim is based upon challenging a non-existent 
determination by reference to a non-existent obliga tion, something which the Panel must reject.   
 
VI. FAIR COMPARISON UNDER ARTICLE 2.4 OF THE ANTI-DUMPING 
AGREEMENT  
 
14. We now turn to China's claim under Article 2.4 of the Anti-Dumping Agreement  – the need to 
conduct fair comparison between norma l value and export price.  Once again, China refers to a very 
"general and abstract" obligation in order to impose very specific obligations that are nowhere to be 
found in the Anti-Dumping Agreement .  China alleges that the Europ ean Union failed to make a fair 
comparison between normal value and export price because the EU authorities did not base this 
comparison on the full Product Control Number ("PCN").  It is clear however that Article 2.4 of the 
Anti-Dumping Agreement  does not specify the methodology to be followed in order to conduct a fair 
comparison.  The mere fact that the comparison was not made on the basis of the full PCN can therefore not ipso facto  constitute a violation of Article 2. 4 as erroneously argued by China.  
Importantly, China misunderstands th e role and relevance of the PCNs which are merely a tool for 
gathering information in a particular manner that  may allow the authority to compare identical 
products without the need to make any adjustments.  The PCN is determined at the beginning of the 
investigation when it is not even clear which elements  are actually affecting price comparability.  It is 
thus not correct that the PCN necessarily identifies product characteristics affecting price comparability or that, simply because the informati on was requested to be provided on the basis of a 
particular PCN, the authority would be pr ecluded from adopting a different methodology for 
comparing normal value and export price.  What is  necessarily unfair, biased, or not "even-handed" 
about the fact that the comparison was not made on the basis of the full PCN?  China does not seem to 
have answered this question yet.    15. In respect of China's claim of lack of making adjustments for differences affecting price 
comparability, it is recalled that the EU authorities complied with the obligation under Article 2.4 to 
make adjustments for those differences affecting th e price comparability in this case.  In particular, 
the European Union ensured a fair comparison by  distinguishing between products on the basis of 
strength class and between standard and special fast eners.  These were the two main characteristics 
referred to by the Association of Chinese Exporters and Importers of Fasteners.  It is thus incorrect of 
China to argue that the PCN necessarily  identifies the factors affecting price comparability for which 
adjustments should have been made.  In sum, China clearly failed to demonstrate that the 
EU authorities violated their obligations under Article 2.4 of the Anti-Dumping Agreement .   
 
VII. PRICE UNDERCUTTING 
 
16. China argues that the European Unio n violated Articles 3.1 and 3.2 of the Anti-Dumping 
Agreement  since the EU authorities allegedly failed to make a price undercutting comparison between 
export prices and prices of dome stic producers on the basis of th e full PCN.  As an important 
preliminary matter, we would note that this claim wa s not part of China's Consultations Request and, 
thus, this claim is outside the Panel's terms of reference.  In  any case, Article 3.2 of the Anti-Dumping WT/DS397/R 
Page C-14  
 
 Agreement  does not require any particul ar methodology for conducting a price undercutting analysis and 
China's claim that the European Union violated its obligations simply because it used a "simplified" PCN is thus clearly without merit.  Nor is it cl ear why the alleged failure to use the full PCN would 
necessarily reveal a bias against Chinese exporters.  The most important aspect of the price comparison 
between EU fasteners and Chinese fasteners was the difference between special versus standard 
fasteners.  This difference was taken into account  by the EU authorities.  Given the "considerable 
discretion" that is to be given to authorities in re spect of the price undercutti ng analysis and taking into 
consideration the fact that the more detailed me thodological obligations of Article 2 on dumping cannot 
simply be transposed into the provisions of Article 3, there simply is no basis for China's claim that the 
price undercutting analysis was not even-handed or was biased simply because the full PCN was not 
used to make this comparison.  In any case, the relevant PCN characteristics were taken into 
consideration as well as the important distinction between special and standard fasteners, and the EU 
authorities thus clearly complied with any obligatio n of reasonableness that could be imposed in this 
respect.  In sum, China's claims under Articles 3.1 and 3.2 of the Anti-Dumping Agreement  in respect of 
the price undercutting analysis are to be rejected.   
 
VIII. VOLUME OF DUMPED IMPORTS 
 
17. China argues that the European Union violat ed its obligations under Articles 3.1, 3.2, 3.4 
and 3.5 because the EU authorities fail ed to exclude the volume of tw o marginal exporters that were 
found not to be dumping from its volume analysis under Article 3.2 and because the EU authorities 
assumed for the purposes of that same volume anal ysis that all non-examined exporters were 
dumping.  The European Union requests the Panel to reject China's claim in this respect.   
 18. First, the European Union recalls that the tw o exporters that China claims should have been 
excluded represented a totally negligible  amount of exports.  This marginal amount of non-dumped 
imports is incapable of undermining the objectivity  of the determination which remains based on 
almost 100 per cent of imports.  This is even more  so since the actual examination is to determine 
whether there exists a "significant" increase in dumped  imports.  The failure to exclude this marginal 
amount which is simply incapable of impacting on the "significance" of the increase found to exist 
cannot be the basis for a finding of violation of Artic le 3.1 and 3.2.  We thus urge the Panel not to 
adopt a formalistic approach but to look at what the European Union did and whether, as a whole, it 
objectively determined that there existed a signifi cant increase in dumped imports when it found that 
imports increased by 103 per cent.  The answer to that question is and remains, yes.  It is clear that if 
the volume of non-dumped imports had been excluded, the outcome would have been exactly the same, dumped imports would have been found to have significantly increased.  The European Union 
requests the Panel not make the same mi stake that was made by the panel in Japan – DRAMs (Korea)  
when that panel considered that to conduct this t ype of examination of whether the determination by 
the authorities still stood, irrespective of the al leged error that was made, would constitute a de novo  
review.  The Appellate Body fau lted the panel for not having conduc ted such an examination, and 
rightly so.    19. Second, China errs when it asserts that th e EU authorities were not entitled to include the 
imports of all non-examined producers in the tota l volume of dumped imports.  Since all of the 
sampled producers were found to be dumping, th e EU authorities were entitled to conclude, by 
extrapolation, that all imports from non-examined producers were equally dumped.  This is precisely 
one method for determining the volume of dum ped imports that the Appellate Body in EC – Bed 
Linen  considered to be appropriate in a sampling cont ext.  All of China's claims in respect of the 
volume analysis are thus to be rejected including its  consequential claims under Articles 3.4 and 3.5.    WT/DS397/R 
 Page C-15 
 
 
 IX. INJURY FACTORS UNDER ARTICLE 3.4 OF THE ANTI-DUMPING AGREEMENT  
 
20. First, China asserts that the EU's injury de termination is flawed because the EU authorities 
allegedly did not consistently use the same datase t for examining injury.  But the EU authorities  did 
consistently use data relating only to the same domestic industry .  The fact that the EU authorities 
examined certain factors on the basis of data re lating to a representative sample of the domestic 
industry while other factors were examined based on data relating to all producers that are part of the 
domestic industry does not vitiate the objectivity of the analysis in any way.  It is not because 
sampling is used that it would not be permissible for an authority to base certain of its conclusions on 
the more complete dataset, where availa ble.  In the words of the panel in EC – Bed Linen in respect of 
an identical argument by India, to require an authority to ignore such information would be 
"anomalous" and "inconsistent with the fundame ntal underlying principle that anti-dumping 
investigations should be fair and that investig ating authorities should base their conclusions on an 
objective evaluation of the evidence".  Article 3.4 says nothing about the particular methodology to follow in case of injury sampling.  And China has ce rtainly not demonstrated that there is anything 
inherently biased about this approach either.  The example of market share to which China refers is 
based on an inaccurate presentation of the facts as the conclusions of the EU authorities are essentially 
similar, whether based on the sampled data or on the data for the industry as a whole.  The situation in 
this case is thus entirely different from that di scussed in the WTO case-law referred to by China 
which concerned situations in which the authoriti es did not examine the domestic industry as defined 
in accordance with Article 4.1 in a consistent ma nner, but used a broader or narrower approach 
depending on the kind of factors examined. Such was not the case in the fasteners investigation.   
 21. Second, China argues that the European Un ion failed to objectively examine the factor 
"profitability" and points to allegedly conflicting st atements in respect of this factor in the EU 
authorities' findings.  In fact, however, China is quoting selectively  from the findings of the 
authorities.  A proper reading of Council Regulati on No 91/2009 clearly shows that the authorities 
reached the reasonable and reasoned conclusion, suppor ted by the facts on the record that profitability 
remained low.  China effectively blames the EU au thorities for their detailed discussion of this factor 
and their nuanced approach to "profitability".  Ch ina is simply asking the Panel to substitute its 
judgment for that of the EU authorities, something the Panel is clearly not allowed to do under Article 17.6 of the Anti-Dumping Agreement  and Article 11 of the DSU .   
 
22. Third, China argues that the European Uni on failed to conduct an objective examination of 
the evidence on the record, as th e EU authorities allegedly based their injury finding on negative 
developments in respect of only one of the injury factors of Article 3.4 of the Anti-Dumping 
Agreement , market share.  In our First Written Submission, we have explained that China's 
presentation of the facts and of the relevant findings of  the EU authorities is simply not accurate.  It is 
clear from the record that the inju ry determination was not based on only one factor.  A reasonable 
and reasoned determination was made in respect of all injury factors, leading the EU authorities to the 
conclusion that a number of factors were negativ e when examined in the light of the significant 
increase in demand:  significant decr ease in market share, decrease in  sales volumes, low profitability, 
low cash flow and return on investment and low cap acity utilisation as well as high dumping margins 
were all
 examined in their proper context and were all considered to support the conclusion that the 
domestic industry was suffering "injury".  Once ag ain, China is simply requesting the Panel to 
examine the facts on the record and to determine whether it would have reached the same conclusion 
of injury as the EU authorities did.  This, however , is not the role of the Panel as is clear from 
Article 17.6 of the Anti-Dumping Agreement  as well as Article 11 of the DSU .   
 
23. Fourth, China asserts that the European Uni on improperly concluded that the injury consisted 
of the displacement from one market segment to anot her, while injury should be determined for the 
product as a whole.  However, the EU authorities did not make such a finding of market displacement, 
but related its injury finding to fasteners as a whol e.  The EU authorities referred to the move of the WT/DS397/R 
Page C-16  
 
 domestic industry in the direction of a greater focus on special fasteners as an indicator of how the 
industry tried to deal with the competition from the dumped imports (which were concentrated in the 
standard fastener market) by moving into the special  fastener market.  The EU authorities' conclusion 
is that in so doing the industry was able to mitig ate the negative effects of the dumped imports, but 
that, in respect of the product as a whole, producers still were suffering injury.  Again, it seems that 
China objects to the nuanced and ba lanced discussion of this development by the EU authorities.   
 
X. CAUSATION AND NON-ATTRIBUTION 
 
24. China's claim in respect of the causation anal ysis of the EU authorities is actually limited to 
the speculative assertion that if the domestic indu stry had not decided to move into the special 
fastener segment it would not have lost market share.  Not only does China's assertion unduly limit 
the injury found to exist to a mere loss of market share, China also fails to point to any flaws in 
the EU authorities' reasonable and reasoned findings in respect of the existence of a causal link 
between dumped imports and consequent injury to the domestic industry.   
 
25. In terms of the non-attribution requirement, Ch ina's allegation that the EU authorities did not 
adequately distinguish the effects of other factor s such as the increase in raw material prices and the 
export performance of the EU industr y is equally unsubstantiated.  It  is clear from the record that 
the EU authorities examined the role of the increase in raw material prices but found that there did not 
exist a similar direct link between the increase in ra w material prices and the loss of market share as 
was found to exist in respect of the dumped imports.  The time pattern did not match, the increase in 
raw material prices was not specific to the EU indus try and should have affected all producers, and in 
any case, under normal circumstances such price incr eases would have been passed on to consumers.  
China simply disagrees with the EU authorities' asse ssment of the impact of the raw material prices 
factor.  However, China fails to demonstrate that  the EU authorities did not provide a reasonable and 
reasoned explanation of how the fact s support the determination made.   
 26. China's claim in respect of the EU authorities' treatment of  the export performance of the 
domestic industry is equally without merit.  Th e reasonable and reasoned conclusion of the EU 
authorities was that export performance, although re latively unimportant, was very good, and that 
export sales were made at prices significantly higher than domestic sales prices.  Therefore, export 
performance was not a source of material injury.  China's unsubstantiated speculation about what 
could have happened had more of the export sales b een made on the domestic market is not relevant 
and is in any case contradicted by the facts on the record.    
XI. CHINA'S PROCEDURAL CLAIMS 
 
27. Of the 13 procedural claims China advances in its First Written Submission only one relating 
to Article 6.1.1 of the Anti-Dumping Agreement  does not suffer of some fundamental problem, be it 
jurisdictional, presentational or both.    28. China claims that the European Un ion has breached Article 6.1.1 of the Anti-Dumping 
Agreement  because the EU authorities granted to Chinese suppliers only 15 days to submit their claim 
forms for MET and IT.  China asserts that the clai m from is actually a "questionnaire" within the 
meaning of Article 6.1.1 and therefore be subject to the minimum 30-days rule therein.  As Japan 
correctly observes in its Third Party Written Submi ssion, "an MET/IT claim form is an additional 
element that is present only in the context of  anti-dumping investigations concerning non-market 
economy countries like China, while the overall d eadlines for investigations regarding market 
economy and non-market economy countries are identical".  It simply cannot be the initial questionnaire.  If all requests for information in an  anti-dumping investigation were subject to the 30-
day rule in Article 6.1.1, investigating authorities would never be able to complete the investigation 
within the prescribed time limits.  Indeed, as the United States correctly observes in its Third Party  WT/DS397/R 
 Page C-17 
 
 
 Written Submission, China itself does not practice wh at it preaches.  The European Union considers 
that the Panel should apply the same l ogic as that applied by the panel in Egypt – Rebar  and reject 
China's claim under Article 6.1.1 of the Anti-Dumping Agreement .   
 29. Finally, we would also like  to address some other systemic observations on the relationship 
between some of the relevant provisions under Article 6 of the Anti-Dumping Agreement .  First, 
contrary to what Norway appears to imply, the European Union is not in any way trying to limit the obligation in the first sentence of Article 6.2 of the Anti-Dumping Agreement  when it has expressed 
caution on the relationship between Article 6.4 and 6.2.   The European Union simply observes that the 
text of the provisions does not provide for the suggested necessary consequential violation of 
Article 6.2 if a violation of Article 6.4 would be  established in a given case.  The European Union 
invites the Panel to be very cautious on the interp retation of the relevant provisions when confronted 
with China's very general and err oneous assertions.  Indeed, an exam ple of China's broad brushed way 
of presenting its claims is its position that the A ppellate Body would have  already found that a 
violation of Article 6.4 always leads to a violation of Article 6.2.  With regard to the relationship 
between Articles 6.4, 6.5 and 6.9 of the Anti-Dumping Agreement , the European Union considers that 
China has fundamentally misunderstood the respectiv e scope and content of these provisions.  In the 
view of the European Union the most blatant misunderstanding concerns the relationship between 
Articles 6.4 and 6.9.  China systematically accuses  the European Union of a breach of Article 6.4 
because the disclosure documents or the final regulation is drafted in a certain way.  The European Union fails to understand how the draf ting of the disclosure documents or the final 
regulation could possibly provide evidence of a viol ation of a provision regulating the right to have 
access to information unless these documents would actually  state that access to the file was denied.   
   WT/DS397/R 
Page C-18  
 
 ANNEX C-3 
 
 
CLOSING STATEMENT OF CHINA AT THE  
FIRST MEETING OF THE PANEL 
 
 
Mr. Chairman, the Distinguished Members of the Panel, 
  During the last two days, the EU has argued that the EU's "individual treatment" regime is somehow justified by a common understanding containe d in China's Protocol of Accession that China 
is a "non-market economy".  When questioned, the EU was, however, unable to point to any specific 
wording in the Protocol which would confirm the existence of such an understanding which would be 
common to the WTO membership.  If anything, the third party interventions of this morning have 
clarified that no such "common unders tanding" exists.  This is not surp rising.  Paragraph 15 of China's 
Protocol of Accession only deals with one very lim ited issue, namely the possibility for some WTO 
members to determine normal value on the basis of data other than the domestic prices and costs in 
China.  Nothing more, nothing less.  In the present dispute, China does not challenge this possibility 
which is expressly provided for in the Protocol of Accession.  It is unacceptable, however, that the EU 
tries to read into this provision and, in particular , into the word "sale", a justification to ignore the 
clear obligations contained in Article 6. 10 and 9.2 of the AD Agreement.    
  Whatever the situation may have been in the past, China can no longer be considered as a so-
called non-market economy country.  In any event,  this question is irrelevant since neither 
Article 6.10 nor Article 9.2 distinguish between an y such different categories of WTO Members.   
  The EU has also tried to convince you that its  injury determination was based on an objective 
and unbiased analysis of the impact of the dumpe d imports on a domestic industry which had been 
determined in full compliance with Article 4.1.   
 
 China would like to point out that the EU's allegations are not supported by the evidence in 
the file.     Contrary to what the EU stated, its own doc uments confirm that it excluded those producers 
which did not support the complaint from the definiti on of the domestic industry and that it did not 
check whether the remaining pro ducers still constituted a major propor tion, other than verifying the 
25 per cent threshold was met.  We understand that , as the EU stated, these documents may not have 
been phrased as precisely as they should have b een.  The EU has, however, not submitted any 
evidence to the contrary.    
 Similarly, the facts on the file show that dur ing the investigation period used for the injury 
determination imports from China increased by mo re than 100 per cent and Chinese prices undercut 
the prices of the EU producers by more than 40 per cent.  Yet, during the same period, the domestic 
industry not only doubled its profit, the EU produ cers also increased their sales volume and sales 
revenue while other injury indicators remained stable.  It is true that the EU producers did not increase 
their sales as rapidly as the market grew.  Is it, however, reasonable to base a finding of material 
injury solely on a loss of potential sales?     The foregoing facts also raise a more fundamental question.  Is it really credible that the EU 
producers were able to increase their selling pri es and sales volumes if the Chinese producers offered 
comparable product types at a price which was more th an 40 per cent lower?  This flies in the face of 
economic logic.  Yet, the EU wants you to believe  that the comparison for both dumping and injury  WT/DS397/R 
 Page C-19 
 
 
 was made by comparing identical products.  Ind eed, the EU has acknowledged that no adjustments 
were made for differences in physical characteristi cs.  In other words, no differences were found 
which had an effect on price comparability.     The EU does not provide a reasonable explana tion for the fundamental inconsistency between 
its findings and economic logic.  Its defence consis ts in stating that it is free to choose its own 
methodology for making price comparisons.  Moreove r, the EU states that China has provided no 
evidence that the EU's methodology was not objectiv e or unfair.  The EU itself stated in the 
questionnaires sent to the Chinese exporting producer s that the information on a PCN basis was 
necessary to "ensure a fair comparison" and that it would be used "to compare prices of imports from 
the country concerned and prices charged by the Comm unity industry and to compare sales data to the 
cost of production".  This cons titutes evidence that the PCN factor s were necessary to make a fair 
comparison.  Furthermore, it was only after repeat ed requests by the Chinese exporting producers and 
at a very late stage in the investigation, that is , a few days before the deadline for the submission of 
comments on the definitive disclosure, that some in formation on the methodology used was provided.  
In fact, the criteria used to distinguish standard fro m special fasteners were ne ver clearly identified.  
Neither were the Chinese exporters told which PCNs of the EU producers had been grouped together 
into the newly created "product types" with which their products would be compared.  The latter is 
essential.  As demonstrated by China in paragraph 394 of its First Written Submission, prices of PCNs 
which were grouped into single "product types" by  the EU may differ by 80 per cent.  Such 
differences are larger than the price undercutting found.  These price differences are based on the only 
data the Chinese producers had access to, i.e. their own data.  China, however, submits that these data 
are sufficient to make a prima facie case.  China submits that until now,  the EU has failed to provide a 
satisfactory rebuttal.     The EU has invoked on several occasions the fact that China has been unable to submit 
specific evidence demonstrating that the determinations  made by the EU were incorrect.  With all due 
respect, the EU itself has simply made it impossible for Chinese exporters to have access to most data 
used by the EU in reaching its st anding, injury and dumping determination.  In doing so, the EU has 
violated the due process rights of the Chinese exporters and breached Articles 6.1.1, 6.2, 6.4, 6.5, 6.9 
and 12.2.2 of the AD Agreement.    
 China submits that its First Written Submi ssion includes the necessary evidence to make a 
prima facie case.  The EU, however, simply chooses to  ignore such evidence.  The clearest example of 
this tactic is the approach taken by the EU w ith respect to the Information Document and the 
disclosure documents which the EU summarily dismis ses as being irrelevant for China's claims.   
 
 Finally, China considers that the debate during the last two days has clarified that the many 
procedural objections raised by the EU are purel y formalistic or factually unfounded.  Moreover, 
nowhere has the EU been able to shown that any of  the alleged procedural violations has prejudiced 
its ability to defend itself.     This concludes our closing statement.  Chin a thanks the Panel and the secretariat for their 
attention and detailed questioning during this meeting.  China is ready to provide any further 
information and evidence you may require to bring this dispute to a satisfactory solution.   
 WT/DS397/R 
Page C-20  
 
 ANNEX C-4 
 
 
CLOSING STATEMENT OF THE EUROPEAN UNION  
AT THE FIRST MEETI NG OF THE PANEL 
 
 
1. The European Union would like to thank you ag ain for all your efforts.  We look forward to 
the next steps in the procedure in order to f acilitate your tasks in the present dispute.   
 2. We would like to be brief in our closing stat ement and insist on some points which we believe 
should be relevant for the proper assess ment of the matter before you.   
 
3. First, the European Union has engaged in  these proceedings in good faith, as required by 
Article 3.10 of the DSU.  Contrary to China's asser tion which attempts to put into doubt the good faith 
of the EU in its procedural handling, we have not  made "procedural allegations" to mask our measure, 
avoiding any discussion on the substance of the issue.   The reality is rather the contrary.  Even if 
China has failed to make its prima facie case in its  First Written Submission, the European Union has 
been more than forthcoming and has extensively pr ovided both clarification of the facts of the case 
and interpretations of the legal provisions invoked by  China.  The so-called "procedural allegations" - 
as China qualifies them - are fundamental rules unde r the DSU granting rights to the parties and 
governing dispute settlement proceedings which must be respected for a proper functioning of the 
multilateral trading system.    
4. Second, the European Union considers that , under the Panel's Working Procedures and the 
provisions of the DSU, China should have presented all the evidence and should have made its case, 
at the latest, during this first hearing.  However, China has mentioned that a more precise rebuttal of 
the EU's arguments will be reserved only for its Second Written Submission.  In this respect, the 
European Union cautions the Panel to avoid maki ng the case for the complainant.  Once more, we 
would like to note that China not only has to rebut  the arguments the European Union has provided 
for in its First Written Submission – again, argume nts that we have made in good faith although we 
still do not know what China's arguments are – but al so has to make its case with respect to many of 
the claims included in China's Panel Request.    
5. Third, on China's as such claim against Ar ticle 9(5) of Council Regulation No 384/96, as 
amended, we would like to briefly elaborate on your question about any other situations where the 
exception mentioned in Article 6.10 of the ADA may a pply.  In this respect, in addition to the case at 
hand, where it is permissible to impose a country-w ide duty in view of the existence of a single 
producer, there may be cases where the authority w ould not be required unde r Article 6.10 of the 
ADA to calculate individual dumping margins to known exporters or producers.  For instance, a 
known exporter may decide to drop its cooperation in the middle of the investigation.  In that case, 
that exporter would be subject to the residual c ountry-wide duty for the non-cooperating exporters and 
thus, in other words, an individual dumping margin  would not be calculated for such exporter.  
Another example can be mentioned for the sake of completeness.  Indeed, it may occur that in a 
particular case an exporter has not produced the pr oduct concerned during the Period of Investigation 
but merely has exported the products of another supplie r.  Such an "exporter" would be considered as 
a mere trader of the product concerned and thus would be subject to the anti-dumping duty found for 
the actual supplier.    6. Fourth, and since this is a matter that has received particular attention in China's oral 
statement, on the question of the definition of the dom estic industry, we would like to reiterate that no 
producers were "arbitrarily excluded" – as China clai ms –, but rather all producers were invited to  WT/DS397/R 
 Page C-21 
 
 
 participate and make their willingness to particip ate known within a reasonable and objective time 
period of 15 days and no producers were excluded for reason of the fact that they at one point in time had opposed the investigation.  These producers c onstituted a major, important, significant proportion 
of total domestic production and China is unable to po int to any particular circumstances of this case 
that would demonstrate that 27 per cent of pro duction represented by these producers was anything 
other than "major".  Even China in the course of this  hearing has accepted that 25 per cent or even less 
of production can be a major proportion for the pur poses of Article 4.1.  Mr. Chairman, what more 
can we add to this admission which is a far cr y from China's original position as expressed in its 
First Written Submission that 27 per cent cannot be a major proportion.    
 Mr. Chairman, Members of the Panel, this conc ludes our closing statement.  Thank you again 
for your efforts.      
 
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