WORLD TRADE  
ORGANIZATION  WT/DS344/11 
12 June 2008 
 
 (08-2749) 
 Original:   English 
  
 
UNITED STATES – FINAL ANTI-DUMPING MEASURES 
ON STAINLESS STEEL FROM MEXICO 
 
Communication from the United States  
  
 The following communication, dated 20 May 200 8, is circulated at the request of the 
delegation of the United States. 
 
_______________ 
 
1. On 20 December 2007, the Panel in United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico  ("US – Stainless Steel ") circulated its final report.  In that report, the 
Panel engaged in a lengthy analysis of the legal re lationship under the WTO dispute settlement system 
between panel reports and A ppellate Body reports.  The Panel recalle d "that this is not the first case in 
the WTO in which simple zeroing in periodic review s has been challenged.  The WTO-consistency of 
simple zeroing in periodic reviews was questioned before the panels in  US - Zeroing (EC) and US - 
Zeroing (Japan) .  In both cases, the panels found this pr actice not to be inconsistent with the 
obligations set out in the relevant provisions cited by the complaining parties.  We also recall that the 
Appellate Body reversed the decisions of both pane ls and found simple zeroing in periodic reviews to 
be WTO-inconsistent."
1 
2. Indeed, the Panel correctly noted "that, although adopted panel reports only bind the parties to 
the dispute that they concern, the Appellate Body e xpects future panels to take them into account to 
the extent that the issues before them are si milar to those addressed by previous panels."2  
Furthermore, the Panel accurately concluded "tha t even though the DSU does not require WTO panels 
to follow adopted panel or Appellate  Body reports, the Appellate Body de facto expects them to do so 
to the extent that the legal issues addressed are similar."3 
3. At the same time, the Panel stated:  
We also note, however, that the panel in US - Zeroing (Japan) , while recognizing the 
need to provide security and predictability to the multilateral trading system through the development of a consistent line of jurisprudence on similar legal issues, drew attention to the provisions of Articles 11 and 3.2 of the DSU and implied that the concern over the preservation of a consistent line of jurisprudence should not override 
a panel's task to carry out an objective examination of the matter before it through an 
interpretation of the relevant treaty provis ions in accordance with the customary rules 
of interpretation of public international law.   We also share the concern raised by the 
                                                     
 
1 Panel Report, para. 7.101. 
2 Panel Report, para. 7.104. 
3 Panel Report, para. 7.105. WT/DS344/11 
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  panel in US - Zeroing (Japan) regarding WTO panels' obligation to carry out an 
objective examination of the matter referred to them by the DSB.
4  
4. Despite all of this, the Panel finally concluded that:  
After a careful consideration of the matters discussed above, we have decided that we 
have no option but to respectfully disagree with the line of reasoning developed by 
the Appellate Body regarding the WTO-c onsistency of simple zeroing in periodic 
reviews.  We are cognizant of the fact that in two previous cases, US – Zeroing (EC)  
and US – Zeroing (Japan) , the decisions of panels that found simple zeroing in 
periodic reviews to be WTO-consistent were reversed by the Appellate Body and that 
our reasoning set out below is very similar to these panel decisions.  In light of our 
obligation under Article 11 of the DSU to carry out an objective examination of the 
matter referred to us by the DSB, however, we have felt compelled to depart from the 
Appellate Body's approach for the reasons explained below.5 
5. These passages demonstrate the Panel's awareness of likelihood that the Appellate Body 
would reverse the Panel's findings while underscori ng the seriousness of the Panel's disagreement 
with the prior Appellate Body reports.  Despite that  risk of reversal, the Panel ultimately concluded 
that:   
We are not convinced that the treaty provisions cited by Mexico, on which the 
Appellate Body based its reasoning, necessarily compel a definition of 'dumping' based on an aggregation of all export transactions.
6   
In particular, the Panel was "troubled by the fact that the principal basis of the Appellate Body's 
reasoning in the zeroing cases seems to be premised on an interpretation that does not have a solid 
textual basis in the relevant treaty provisions."7  Ultimately, the Panel stated that "we find the 
Appellate Body's reasoning not to be convincing."8 
 6. The Panel correctly assessed the likelihood that  the Appellate Body would reverse its 
findings.  On 30 April 2008, the Appellate Body Division hearing the appeal circulated its report
9, 
reversing the Panel's findings. 
7. The United States wishes to offer its views on the Appellate Body Division's report.  In light 
of the fact that the Appellate Body had previously re versed a panel's findings on this issue, despite the 
panel's respectful (and unprecedented) disagreemen t with the Appellate Body and despite the US 
comments offered on an even earlier Appellate Body  report, the United States offers its comments 
only after careful consideration – the Unite d States does not offer these comments lightly.10  
                                                      
4 Panel Report, para. 7.105. 
5 Panel Report, para. 7.106 (footnote omitted). 
6 Panel Report, para. 7.117. 
7 Panel Report, para. 7.119. 
8 Panel Report, para. 7.121. 
9 WT/DS344/AB/R. 
10For the comments of the United Stat es on prior Appellate Body reports regarding the issues of 
zeroing in assessment proceedings, see United States – Laws, Regulations and Methodology for Calculating 
Dumping Margins ("Zeroing"), Communication by the United States, WT/DS294/16 (17 May 2006); United 
States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), Communication 
from the United States, WT/DS294/18 (19 June 2006); and United States – Measures Relating to Zeroing and 
Sunset Reviews , Communication from the United States, WT/DS322/16 (26 February 2007).  WT/DS344/11 
 Page 3 
 
 
  8. At the outset, the United States would note that some Members have argued that zeroing is 
"unfair".  But many people do not know what zeroing is.  A brief explanation may be helpful.  If an 
import is dumped, the Member collects a duty.  If  the import is not dumped, the Member collects 
nothing.  That is zeroing: treating a non-dumped import as – not dumped.  
9. Thus, simple common sense confirms that zeroing does not "inflate" the margin of dumping 
but rather simply treats non-dumped imports neutrally.  That logic is reflected in Article VI of the 
GATT 1994 and the Anti-Dumping Agreement, which recognize that Members may calculate a margin of dumping on a transaction-by-transaction b asis, and, thus, collect duties on dumped imports, 
while collecting no duties on non-dumped imports. 
10. Four times the DSB has been presented with the question of whether margins of dumping can 
be calculated on a transaction-specific basis and zeroing is thus permissible in contexts such as 
assessment proceedings.  Four times panels – that have included in their membership antidumping administrators and negotiators – ha ve concluded that zeroing is permitte d in such circumstances.  Four 
times the Appellate Body has disagreed.  And each ti me that the Appellate Body has done so, it has 
presented a new rationale for its position that does not withstand close scrutiny.  Thus, it is not 
surprising that two panels have taken the unprecedented step of  examining, and then rejecting, the 
Appellate Body's reasoning.   
11. Panels have not been alone in critiquing th e Appellate Body's reasoning.  Academics – 
including those who are not necessarily supporters of the antidumping remedy – have acknowledged 
that the Appellate Body's findings have no sound basis in the text of the agreements, and they 
recognize the danger to the WTO system of such extra-legal behavior.
11  They rightly perceive that 
whatever one's personal views on antidumping in gene ral, or zeroing in particular, if the Appellate 
Body is perceived to be arrogating to itself the authority to make policy, it would pose a far greater danger to trade than antidumping authorities declin ing to make adjustments for so-called negative 
dumping margins.  This is because the Anti-Dumping Agreement, like all of the covered agreements, 
reflects a balance of interests negotiated by the Members.  When the Appellate Body alters the 
negotiated balance, it acts beyond its  authority and jeopardizes Members' confidence that the bargains 
that are negotiated are the bargains that will be respected.  
                                                     
 
11 See e.g. Professor Chad P. Bown an d Professor Alan O. Sykes, The Zeroing Issue: A Critical 
Analysis of Softwood V , revised version forthcoming in World Trade Review, ("[T]he legal foundation for the 
Appellate Body's ruling is somewhat dubious, doubly so in the face of the standard of review applicable under 
the ADA ... .  The danger of such decisions is that they will undermine confidence in the Appellate Review 
process and make it more difficult for WTO Members in the future to reach agreem ent on contentious issues." 
(p. 30  )) <http://people.brandeis.edu/~cbown/papers/Bown-Sykes-ALI.pdf> ; Terence P. Stewart, Amy S. Dwyer 
& Elizabeth Hein, "Trends in the Last Decade of WTO Trade Remedy Decisions: Problems and Opportunities 
for the WTO Dispute Settlement System ," 24 A RIZONA J. COMP.  L. 251 (2007); Professor Roger P. Alford, 
"Reflections on U.S.– Zeroing:  A Study in Judicial Overreaching by the WTO Appellate Body ," 45 C OLUM . J. 
TRANSNAT 'L L. 196 (2006-2007) ("The Appellate Body's report in US – Zeroing crystallizes some of the 
concerns that have been expressed in the past regarding judicial excess in the WTO dispute settlement regime." (p. 220 )); Professor Phoenix X.F. Cai, " Between Intensive Care and Crematorium: Using Standard of Review to 
Restore Balance to the WTO ," 15 T
ULANE J. INT'L & COMP. L. 465 (2006-2007); Professor Richard H. 
Steinberg,  "Judicial Lawmaking at the WTO: Discursive, Constitutional, and Political Constraints ," 98 A M. J. 
INT'L  L. 247 (2004); Professor Daniel K. Tarullo, "Paved with good intentions: the dynamic effects of WTO 
review of anti-dumping action ," 2 W ORLD TRADE REVIEW  373 (2003); John Greenwald, " WTO Dispute 
Settlement: An Exercise in Trade Law Legislation ," 6 J.  INT'L ECON. L. 113  (2003); John Ragosta, Navin Joneja, 
and Mikhail Zeldovich, " WTO Dispute Settlement System Is Flawed and Must Be Fixed ," 37 I NT'L LAWYER   
697(2003); Professor Daniel K. Tarullo, " The Hidden Costs of International Dispute Settlement: WTO Review of 
Domestic Anti-dumping Decisions ," 34 L.  & POLICY INT'L BUS. 109 (2002- 2003); Geert A. Zonnekeyn, " The 
Bed Linen Case and its Aftermath ," 36 J.  WORLD TRADE  993 (2002); Claude Barfield,  Free Trade, Sovereignty, 
Democracy: The Future of the World Trade Organization , 2 U.  CHI. J. OF INT'L L. 403 (2001). WT/DS344/11 
Page 4  
 
  12. In this regard, the Appellate Body Division responsible for US - Stainless Steel  has for the 
first time suggested that if a panel should decline to follow Appellate Body reasoning – regardless of 
how flawed that reasoning may be – the panel ac ts at odds with the "promotion of security and 
predictability" and the "prompt settlement of disputes".
12  This Division's view of its role is deeply 
disturbing.  Members have agreed that the "dispute settlement system of the WTO is a central element 
in providing security and predictabilit y of the multilateral trading system."13  The Appellate Body 
Division misstates this provision by arguing that it refe rs to "'security and predictability' in the dispute 
settlement system."14  Instead, the dispute settlement system only provides "security and 
predictability" to the multilateral trading system wh en the Dispute Settlement Body ("DSB"), and the 
panels and the Appellate Body that serve it, respect  the parameters set out in Article 3.2 – that the 
recommendations and rulings of the DSB cannot add to, or diminish, the rights and obligations in the 
covered agreements.  Suggesting, as this Division did, that panels are required blindly to follow 
erroneous Appellate Body conclu sions in the name of security and predictability is simply 
inconsistent with Article 3.2.  The Panel recognized  this, and should be commended for its devotion to 
Articles 3.2 and 11 of the DSU. 
13. With that backdrop, it is important to examine the particular reasoning used this time by the 
Appellate Body Division and its approach to zeroing in assessment reviews. 
A. THE APPELLATE BODY'S REJECTION OF NEGOTIATING HISTORY  
14. On appeal, the United States explained that, even assuming arguendo  there was any 
ambiguity in the text regarding a prohibition on zeroing, an examination of the negotiating history 
would confirm that Members did not agree to prohibit it.  In light of the absence of a textual 
prohibition on zeroing – neither "zeroing" nor "negative dumping margins" appears anywhere in the 
Anti-Dumping Agreement – one would have expected  the Division to have wanted to consult the 
negotiating history if the Division were consideri ng viewing the text as implicitly dealing with 
zeroing.  Surprisingly, however, the Division's view  was that recourse to the negotiating history was 
not "strictly necessary."15  Moreover, although the Division did in the end examine the US 
explanations of the negotiating history, the Divi sion's conclusions regarding the negotiating history 
simply cannot be reconciled with that history. 
1. The Tokyo Round Antidumping Code permitted zeroing 
15. For example, in 1979, certain contracting parties concluded the Agreement on 
Implementation of Article VI of the GATT.  Becau se the title is identical to the title of the WTO 
agreement, and the agreement resulting from the Kennedy Round, we w ill refer to the 1979 
Agreement by its colloquial name, the Tokyo Roun d Anti-Dumping Code ("Code").  As its name 
indicates, drawing on Article VI of the GATT, the Code set out further disciplines on the imposition of antidumping measures, including disciplines on th e assessment of antidumping duties.  Signatories 
twice brought disputes, arguing that zeroing was inconsistent with the Code.  Those claims failed.   
16. During the Uruguay Round, further disciplines we re negotiated, resulting in yet another 
Agreement on Implementation of Ar ticle VI of the GATT, which we will refer to as the Anti-
Dumping Agreement.  While some aspects of th e Code were radically altered, the provisions 
                                                     
 
12 Appellate Body Report, para. 161. 
13 DSU Article 3.2. 
14 Appellate Body Report, paras. 160-161. 
15 Appellate Body Report, para. 128.  WT/DS344/11 
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  governing assessment proceedings – found not to have prohibited zeroing – were not.16  In fact, the 
two key provisions were identical. 
17. Article 8:3 of the Tokyo Round Anti-Dumping Code provides that: 
The amount of the anti-dumping duty must not exceed the margin of dumping as 
established under Article 2. 
18. Article 9.3 of the Anti-Dumping Agreement provides that: 
The amount of the anti-dumping duty shall not exceed the margin of dumping as 
established under Article 2. 
19. Yet the Division examined the negotiating history and drew the extraordinary conclusion that 
"we are not persuaded that the [Tokyo Round Code] provide[s] guidance as to whether simple zeroing 
is permissible under Article 9.3. of the Anti-Dumping Agreement ."17  At least one panel had declined 
to find a prohibition in Article 8.3 itself.  That provision is directly incorporated into the Anti-Dumping Agreement as Article 9.3.  Even in light of these facts, the Division concluded that 
Article 9.3 of the Anti-Dumping Agreement prohibits zeroing in assessment proceedings.
18 
20. The Appellate Body Division's report finds that "the relevance of" the panel reports under the 
Code "is diminished by the fact that the" C ode was separate from the GATT 1947 and has been 
"terminated".  Both of these statement are quite puz zling when referring to negotiating history.  It is 
completely unclear what legal significance attaches to the termination of a previous agreement that 
served as part of the negotiating history of the An ti-Dumping Agreement.  By definition, negotiating 
history is just that – it is "history" and so in the past.  There is no requirement that negotiating history 
only consist of agreements or documents still in for ce at the time an agreement is being interpreted.  
And while the Code was separate from the GATT 1947, the negotiators of the Anti-Dumping 
Agreement relied on and drew from its provisions, so the interpretation of those provisions would be 
directly relevant to understanding the Anti-Dumpi ng Agreement.  The Marrakesh Agreement reflects 
this understanding, noting in Article XVI:1 that the "WTO shall be guided by the decisions, 
procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and 
                                                      
16 For example, the United States has accepted that there is a colorable argu ment that Article 2.4.2 
prohibits zeroing in average-to-average comparisons in  investigations, through its use of the phrase "all 
comparable export transactions."  There wa s no corresponding provision in the Code. 
17 Appellate Body report, para. 130. 
18 The Division dismissed the relevance of panel reports interpreting the Tokyo Round Code because 
those disputes involved Article 2.6 of that Code – the fair comparison provision – which changed in the 
Antidumping Agreement.  However, the Division failed to take into account that in EEC – Anti-Dumping Duties 
on Audio Tapes in Cassettes  Originating in Japan, ADP/136 (April 28, 1995)(unadopted).  Japan did challenge 
zeroing under Article 8.3 of the Code and did not prevail.  EC – Audiocassettes, para. 11.  This renders puzzling 
Japan's comment that the negotiators did not include a prohibition on zeroing in Article 9.3 because they already 
considered it to be prohibited.  Appellate Body Report, para. 130.  Even more surprising then is the Division's reliance on that comment, which is plainly inconsistent with the historical record. 
  Likewise, it is surprising to the United States that the Division credits the EC's submission for the 
proposition that "there is a 'strong indication of consensu s that the interests of both parties in the asymmetry and 
zeroing debate could be accommodated in  the targeted dumping provisions th at eventually became the second 
sentence of Article 2.4.2."  Appellate Body Report, pa ra. 130 (quoting EC Third Participant's Submission, 
para. 226.)  The United States struggles to comprehend  how, if the EC considered that the Anti-Dumping 
Agreement prohibits zeroing in all but the targeted dumping situation, the EC nevertheless continued to zero 
until the EC– Bed Linen dispute, in which the DSB recommendations and rulings were adopted in 2001.  EC – 
Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R (adopted 12 March 2001).  
If the EC were sincere, then it would appear that the EC  is acknowledging that it in tentionally breached its WTO 
obligations from 1995 to 2001. WT/DS344/11 
Page 6  
 
  the bodies established in the framework of GATT 1947."  And ironically, later in its report the 
Appellate Body Division extols the pe rsuasive value of panel reports.  
2. Article VI of the GATT did not bar zeroing 
21. Japan was one of the contracting parties that  challenged zeroing – unsuccessfully –  under the 
Tokyo Round Code.  While Japan challenged zeroing as being inconsistent with Article 2 of the Code, 
and, consequentially, with Article 8:3, Japan did not challenge zeroing as being inconsistent with 
Article VI:1.  The same is true for Brazil in its dispute against the EEC involving Cotton Yarn.
19  The 
latter is an adopted panel report and thus forms part of the GATT acquis.20 
22. This history confirms that the Uruguay Roun d negotiators operated from a premise that 
zeroing was not prohibited under Article VI of the GATT or  Article 8:3 of the Tokyo Round Code.  
Japan's view that the negotiators understood zer oing to be prohibited already is impossible to 
reconcile with its own unsuccessful pursuit of pre- WTO dispute settlement on that very topic.  The 
EC did not agree that the text prohibited zeroing, as its defense in EC – Audiocassettes  confirms. 
Article 8:3 was directly incorporated into Article  9.3 of the Anti-Dumping Agreement.  In this 
context, there is simply no basis for the Appellate Body's conclusion that Article VI:1 of the GATT or 
Article 9.3 of the Anti-Dumping Agreement prohibits zeroing in assessment proceedings.   
23. In light of the foregoing discussion, it is clear th at the Division has not based its "prohibition" 
of zeroing on language that is differently phrased or new.  It has based its prohibition on Article VI of 
the GATT and Article 9.3, both of which existed (the latter as Article 8.3) at the time of the Tokyo 
Round Code.  
24. At best, there was no consensus that zeroing was already prohibited by the text of the 
agreements in question.  Given that fact, and the fact that Article 8:3 of the Tokyo Round Code is 
replicated in Article 9.3 of the Anti-Dumping Agr eement, and the presence of Article 17.6(ii) of the 
Anti-Dumping Agreement, it is difficult to understand the Division's refusal to acknowledge the relevance of the negotiating history. 
25. The implications of the Division's creation of  new obligations in the absence of textual 
changes is particularly troubling as the Membership strives to conc lude the Doha Round. What this 
Division is saying to the Membership is that it is insuffi cient to remain silent in the text in the face of 
a disagreement in the negotiations.  Such silence may be construed at some future date by the 
Appellate Body as agreement to change the meaning of the text. Thus, if the disagreement cannot be 
bridged with affirmative text, the continuing disagr eement should be reflected in text confirming the 
lack of consensus — a task that is likely to prove  difficult, if not impossible, for the negotiators. 
26. If the Division did not rely on the negotiating history, then the natural question is:  what did it 
rely on?  The Division primarily relied upon a three-part analysis: 
(a) the margin of dumping is exporter related; 
(b) dumping and margin of dumping can only be found to exist at the level of multiple 
transactions; and 
                                                     
 
19 EEC – Imposition of Anti-Dumping Duties on Cotton Yarn from Brazil,  ADP/137, BISD 42S/17, 
adopted by the ADP Committee October 30, 1995.   
20 Further, even after implementation of the Antidumping Agreement, India's challenge to zeroing in 
EC – Bed Linen  did not involve a claim of inconsistency with Article VI, nor did Canada's challenge to zeroing  
in US – Final Lumber AD Determination, WT/DS264/R, adopted August 31, 2004  ("US – Softwood Lumber"), 
or US – Final Lumber AD Determination (21.5) , WT/DS264/RW adopted September 1, 2006 ("US – Softwood 
Lumber (21.5) (Panel)") .  WT/DS344/11 
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  (c) it is obligatory to include all transactions , dumped and non-dumped, in those multiple 
transactions. 
B. THE APPELLATE BODY'S MISGUIDED EMPHASIS ON EXPORTER MARGINS OF DUMPING  
27. The Division spends a significant portion of its report on the question of whether a margin of 
dumping is exporter or importe r related.  However, it is not clear why this matters or why it must be 
exclusively one or the other.  The Division itself acknowledges that any dumped price results from a 
negotiation involving the exporter and the importer.   
28. In any event, the question of whether a margin of dumping is exporter related does not resolve 
the question of whether it can be determined on the b asis of individual transactions or must always be 
determined on the basis of multiple transactions.  A margin determined on the basis of an exporter's 
action with respect to an individual transaction is no less exporter-related than  one determined on the 
basis of multiple transactions by that exporter.21 
29. The emphasis on "exporter-related" misses the point.  The purpose of collecting antidumping 
duties is to counteract dumping.  Importers pay the duties.  Thus, duties counteract dumping by dissuading the importer from having any interest in a dumped price.  The importer will try to avoid 
dumped prices by recognizing that there is an e xport price below which the importer will derive no 
benefit if negotiations with the exporter result in an  even lower price.  The antidumping duty, paid by 
the importer, would erase any gain netted by such negotiation because the importer could not 
profitably resell the merchandise at a price less than its normal value.   
30. More importantly, the Division's conclusion abou t an exporter-wide margin of dumping is at 
odds with Article 9.3.2.  According to the Appellate Body, the exporter's  margin of dumping, 
calculated on the basis of all of that exporter's transactions, establishes the ceiling for assessment of 
duties.  Under Article 9.3.2, the importer may request a refund if that request is "duly supported by 
evidence ... ."  If the amount of the liability is ca pped by the margin of dumping, and the margin of 
dumping is calculated on the basis of the exporter's  transactions, how can the importer  duly support 
its request with evidence?  The impor ter only knows what that importer's own transactions are.  Nor 
does the importer necessarily have info rmation about transactions handled by other importers . 
                                                     
 
21 In this regard, it is interesting that the Division be gins its analysis with the concept of the exporter-
wide margin of dumping and only then proceeds to the transaction-specific margin of dumping.  In its 
discussion of whether a margin of dumping is exporter- or importer-specific, the report appears to collapse the 
question of whether a dumping margin is exporter- or importer-specific with the question of whether such a 
margin comprises multiple transactions.  Thus, the report st ates that there is "nothing in Articles 5.8, 6.10, and 
9.5 of the Anti-Dumping Agreement  to suggest that it is permissible to interpret the term 'margin of dumping' 
under those provisions as referring to multiple 'dumping margins' occurring at the level of individual importers."  
However, the question the Division sought to address in that section of the report was not the issue of multiple  
margins of dumping, but rather whether the margin is calculated for the exporter, rather than the importer. 
There are also questions about the Division's interp retation of the French and Spanish texts.  At note 
200 of the report, the Division states that the French version of Article 6.10 of the Agreement, "une marge de dumping individual"  translates into "'one' single margin of dumping."  In fact, the French text translates into "an 
individual margin of dumping."  It does not refer to "one" margin or to one "single" margin of dumping.  The 
report's translation of the Spanish version is no better.  The Spanish text – not reproduced in the footnote – refers to "el margen de dumping que corresponda a cada exportador."  This translates as "a margin of dumping 
corresponding to each exporter."  In any event, there is no reason Article 6. 10 would refer to multiple margins.  
Article 6.10 imposes an obligation to calculate an individual margin of dumping for each exporter, as opposed to one margin for all exporters .  It has nothing to do with the question of whether one may calculate multiple 
margins of dumping for each such exporter. WT/DS344/11 
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  31. In fact, the Division's affirmation that margin s of dumping must be calculated on an exporter-
wide basis unwittingly authorizes Members w ith prospective ad valorem systems to decline to provide 
full refunds .  The importer best positioned to request a re fund is an importer who has engaged in non-
dumped transactions.  It can support its refund with  evidence from its own transactions.  But if 
another importer has engaged in dumped transacti ons with the same exporter, those transactions will 
offset the first importer's refund.   Take an example:  the margin of dumping for an exporter in the 
investigation is 5%.  Normal value is 5% higher th an the export price.  An importer knows that all of 
his export prices have risen, some well beyond the 5%  differential.  That importer requests a refund.  
A second importer's export prices have all declined, so me well beyond the 5% differential.  The result 
is that the first importer does not get a ref und.  Moreover, the second importer cannot provide 
evidence on which to base a request for a refund.  He  is only owed a refund on the basis of the first 
importer's transactions, evidence the second import er does not have and cannot supply to the 
investigating authority to "duly su bstantiate" his request.  Thus, in requiring a margin of dumping to 
be calculated on the basis of all of the exporter's transactions, the Division has authorized prospective 
systems to deny importers full refunds.   
C. T
RANSACTION -SPECIFIC MARGIN OF DUMPING  
32. The Division then devotes all of two paragraphs to the central question of whether the margin 
can be at the transaction-specific level.22 
33. As the United States has noted before, and as f our panels have found, the calculation of a 
transaction-specific margin of dumping for purposes of the assessment of antidumping duties is a permissible interpretation of the Anti-Dumping Ag reement.  That a margin of dumping may be 
calculated on a transaction-specific basis leads to the conclusion that authorities are not required to 
offset a dumping margin calculated for one tran saction with a negative dumping margin calculated in 
a separate transaction.   
34. Canada agrees:  
An investigating authority assesses antidumpi ng duties when the export price is lower 
than the weighted-average normal value, but applies no anti-dumping duties to 
non-dumped transactions when the opposite is true.  It is not the same as the practice 
of zeroing ... .
23 
35. Put differently, a permissible interpretation of the Anti-Dumping Agreement is that a Member 
may calculate a margin of dumping on the basis of i ndividual transactions, is not obligated to provide 
offsets for one transaction as compared to anothe r, and thus zeroing is not prohibited in such 
circumstances.  Under Article 17.6 of the Anti -Dumping Agreement, if an interpretation is 
permissible, a measure based on it must be allowed to stand. 
36. If a margin of dumping can be calculated on the basis of an individual transaction, then the 
exporter's margin of dumping is the same  as the importer's antidumping liability, and the various 
provisions of the Anti-Dumping Agreement fit together neatly.24  Article 6 and its focus on margins of 
dumping for exporters  – in which the Appellate Body has attempted to find a prohibition on zeroing 
for purposes of antidumping duty assessment – melds seamlessly with Article 9 and its emphasis on duty assessment for importers .   It is useful to bear this concept in mind when evaluating the 
                                                     
 
22 Appellate Body Report, paras. 98-99. 
23 Quoted in US – Softwood Lumber (21.5)(Panel), para. 5.55 (emphasis added). 
24 The Appellate Body report acknowledges this fact, but in a footnote.  See  Appellate Body Report, 
n.219.    WT/DS344/11 
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  conclusions of the Division that the Anti-Dumping Agreement prohibits the calculation of a margin of 
dumping on a transaction-specific basis. 
37. The Division states that:  
[T]he notion that a "product is introduced into the commerce of another country at 
less than its normal value" ... suggests to us  that the determination of dumping with 
respect to an exporter is properly made  not at the level of individual export 
transactions, but on the basis of the totality of  an exporter's transactions of the subject 
merchandise over the period of investigation .25 
38. There are two important aspects of this conclusion, in particular, that require comment.   
(a) Lack of Textual Basis for Prohibition  
39. What jumps out at the reader is that the Divisi on does not cite to any actual text that directs 
the calculation of a margin of dumping at a pa rticular level (transaction-specific or multiple 
transactions).  Instead, the Division relies on a "notion" that "suggests" a particular result.  However, a 
"notion" that "suggests" a particular interpretation is not sufficient to conclude that the text of a 
covered agreement prohibits particular  action.  This is especially true  in the case of the Anti-Dumping 
Agreement, Article 17.6(ii) of which provides: 
Where the panel finds that a relevant provis ion of the Agreement admits of more than 
one permissible interpretation, the panel sh all find the authorities' measure to be in 
conformity with the Agreement if it rests upon one of those permissible interpretations.   
40. Moreover, a closer examination of the langua ge upon which the Division's report relies does 
not support its interpretation of Article VI:1 as precluding the calculation of margins of dumping on a 
transaction-specific basis.  Article VI:1 provides: 
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 country to another ... is less than the comp arable price ... for the like product ... . 
41. The Division fails to offer a meaningf ul explanation as to why this sentence precludes  the 
calculation of a margin of dumping on a transaction-sp ecific basis.  Indeed, the ordinary meaning of 
the text, read in context, does not support the conclusion that the only interpretation of Article VI:1 is 
one involving multiple transactions .
26  
42. The Division's reliance on the word "product" is misplaced.  "Product" in Article VI is not 
confined to meaning all transactions  of that product.  Such a readi ng cannot be reconciled with the use 
of "product" in Article II:2(b) of the GATT 1994: "Nothing in this Article shall prevent any 
contracting party from imposing at any time on the importation of any product: 
                                                      
25  Appellate Body Report, para. 98 (emphasis). 
26 If the Appellate Body were correct that the term "p roduct" refers not to individual importations of the 
product, but the "product as a whole," then it stands to reason that the term "product" would always  appears in 
the singular in the Anti-Dumping Agreement.  However, the term "product" does appear in the plural.  Thus, 
Article 2.3 refers to "the price at which the imported product s are first resold ... ."  Si milarly, Article 2.5 refers 
to "where products are not imported directly ... ."  Thus, the Appellate Body's view that "product" can only refer 
to multiple importations of the product, as opposed to an individual importation, is simply not supported by the 
text. WT/DS344/11 
Page 10  
 
  ... 
(b) any anti-dumping or countervailing duty applied consistently with the 
provisions of Article VI... ." 
43. For a duty to be applied "on the importation of an y product" it will be applied on a particular 
transaction.  A duty is not applied only after there have been multiple transactions.  Nor would the 
Division's reading of "product" work for the other elements of Article II:2. 
44. The Panel considered carefully Mexico's arguments, which relied on one of the lines of 
reasoning advanced in prior Appellate Body reports ; namely, the notion that margins of dumping must 
be calculated on the basis of the "product as a whole" .  The Panel noted – as ha d other panels before it 
– that the term "product as a whole" does not appear in the GATT 1994 or the Anti-Dumping 
Agreement.
27  The Panel also agreed with the following analysis of the US – Zeroing (Japan) panel: 
We fail to see why the notion that a "pr oduct is introduced into the commerce of 
another country" cannot apply to a pa rticular export sale and would necessarily 
require an examination of different export sales at an aggregate level.28 
45. Thus, the Panel engaged in a careful analysis of the actual words in the relevant provision.  
However, in lieu of explaining why the Panel's careful analysis was flawed, the Division simply 
dismissed it  – "Contrary to what the Panel indicates ... ."29 – without addressing any of the arguments 
the Panel made.  Indeed, the Appellate Body report offered no textual analysis of the provision.  
46. Taken to its logical extreme, the Division's reading of Article VI:1 suggests that there is in 
fact only one product, one normal value, and one export price, for all goods exported from the country 
in question.  Article VI:1 does not even use the term " exporter. "  There is no textual basis for the 
Divisions' conclusion that Article VI:1 "suggests ... that the determination of dumping ... is properly 
made ... on the basis of the totality of an exporter's  transactions ... ."30 
47. Indeed, it would require that no margin could be determined until all imports had stopped.  
The Division appears to overlook this problem with  its reference to the "totality of an exporter's 
transactions of the subject merchandise  over the period of investigation."31  But that fails to address 
the question of the relevant time period.  Nothing in the text specifies the time period as being the 
period of investigation, nor does the text specify the pe riod to be used after the period of investigation.  
The Division was imputing into the text words that are not there. 
48. In summary, the Division was unsuccessful in its struggle to identify something in the text of 
the GATT 1994 or the Anti-Dumping Agreement that would support that the margin of dumping cannot be transaction-specific.  
(b) Erroneous Reliance on Calcula tions in Other Proceedings 
49. The Division also relied on "contextual" references .  For instance, it referred to the fact that 
"whether  an exporter is dumping can only be made on the basis of an examination of the exporter's 
                                                     
 
27 For a more detailed discussion of the flaws in the "product as a whole" rationale, see United States – 
Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), Communication by the 
United States, 12 June 2006. 
28 US – Measures Relating to Zeroing and Sunset Reviews (Panel), WT/DS322/R, adopted 
23 January 2007, para. 7.105, quoted in Panel Report, para. 7.117 ( US – Zeroing (Japan )). 
29 Appellate Body Report, para. 98. 
30 Appellate Body Report, para. 98 (emphasis added). 
31 Appellate Body Report, para. 98.  WT/DS344/11 
 Page 11 
 
 
  pricing behaviour as reflected in all of its transactions over a period of time."32   The Division also 
refers to the "purpose" of an antidumping duty, whic h is to "counteract the injury caused or threatened 
to be caused by 'dumped imports' to the domestic industry."33 
50. However, to the extent that these arguments are relevant at all, they pertain to antidumping 
investigations .  The "determination of dumping" occurs in an investigation.  The "determination of 
injury" occurs in an investigation.  The US – Stainless Steel  appeal did not involve an investigation:  it 
involved an assessment proceeding .   
51. Panels, and the Appellate Body itself, have repeatedly noted that different antidumping 
proceedings serve "different purposes".34  It is not clear why, even if the analysis of multiple 
transactions is required in an i nvestigation, such analysis is also required in assessment proceedings, 
which serve an entirely different purpose.  As th e Appellate Body has stated, "[t]he disciplines 
applicable to original investigations cannot, th erefore, be automatically imported into review 
processes."35  
52. Further, in a footnote, the Division addressed a report issued in 1960 by the Group of Experts, 
which, as the name indicates, comprised a group of antidumping experts.  According to the Group of 
Experts, "the ideal method [for making a dumping determination] was to make a determination in 
respect of each single importation of the product concerned"36 Thus, as far back as 1960, antidumping 
experts recognized that margins of dumping would ideally be calculated on the basis of individual transactions.  As a result, it is clear that a permis sible interpretation of Article VI of the GATT 1994 is 
to determine a margin of dumping on a transaction-specific basis. 
53. The Division's basis for rejecting the interpreta tion inherent in the Group of Experts statement 
was the following:  the Group of Experts recognized that such a method was impracticable, 
particularly with respect to an injury determination,
37 and perhaps most remarkably, that the WTO 
Agreement entered into force "long after" the Group of Experts Report.  In other words, the Division considered that a report by experts far closer in tim e to the conclusion of the agreement at issue was 
"of little relevance" because it was old.
38  This approach would appear to reverse the customary rules 
of interpretation of public international law.  
54. The Division appears to have misunderstood the re levance of the Group of Experts' statement.  
That statement is relevant for purposes of understand ing the permissible interpretation of Article VI. 
                                                      
32 Appellate Body Report, para. 98.  As noted above, the idea that the text provides guidance as to this 
period of time is mistaken. 
33 Appellate Body Report, para. 98. 
34 See, e.g., United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat 
Products from Germany (AB), WT/DS213/AB/R, adopted 19  December 2002, para. 87; United States – 
Anti-Dumping Measures on Oil Country Tubular Goods (OCTG) from Mexico, WT/DS282/AB/R, adopted 
28 November 2005 , para. 170; United States – Sunset Reviews of An ti-Dumping Measures on Oil Country 
Tubular Goods from Argentina, WT/DS268/AB/R , adopted 17 December 2004, para. 359 (" US – OCTG from 
Argentina") ; 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, para. 106; Mexico – Definitive Anti-Dumping 
Measures on Beef and Rice; Comp laint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as 
modified by the Appellate Body Report, WT/DS295/AB/R, para. 7.144, citing 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, para. 6.90. 
35 US – OCTG from Argentina, para. 359. 
36 Appellate Body Report, n. 213, quoting  Group of Experts Report. 
37 Appellate Body Report, n. 213. 
38 Appellate Body Report, para. 132. WT/DS344/11 
Page 12  
 
  55. The Division has failed to explain why the fact that a particular system is administratively 
impracticable leads to the conclusion that Members necess arily agreed to another system with a 
completely different concept of a margin of dumping, i.e, one that is numerically different .  Members 
did no such thing.  Instead, they devised an administratively  practicable  system that allows them to 
assess a duty with the same  margin of dumping.  Thus, investig ations may be conducted on the basis 
of multiple transactions, and so may assessment proceedings and reviews.
39  Whether the system 
described by the Group of Experts is possible or not , it provides critical insight into how the concept 
of a margin of dumping has been viewed under the GATT 1947 and the WTO regime. 
56. As required by Article 17.6 of the Agreement, the question is whether a transaction-specific 
margin of dumping is a permissible  interpretation.  The Panel report that respected the requirements 
of Article 17.6. 
57. Finally, the Division further bases its rejection of the concept of a transaction-specific margin 
of dumping on the fact that it does not believe that  such a margin "can be done" for purposes of 
Articles 5.8, 6.10, 6.10.2, 9.4, 9.5, 11.2, and 11.3.  The United States has not taken the position that a margin of dumping must always  be calculated on a transaction-specific basis, but rather that the 
Agreement  allows  it to be calculated on a transaction-specific basis, and also allows  it to be calculated 
on the basis of multiple transactions.  Thus, in an investigation using an average-to-average 
comparison, there will of course be multiple tr ansactions, and the overall margin of dumping will 
ultimately be calculated on the basis of those transact ions.  But the Division has failed to explain how 
the text requires
 in every instance that the calculation be made on the basis of multiple transactions, 
particularly in light of the negotiating history and practice under the GATT 1947, Tokyo Round Code, 
and the WTO.   
58. It is clear, therefore, that the text does not s upport the Division's view that Article VI prohibits 
calculating a margin of dumping on a transaction-specif ic basis, and that its analysis is too summary, 
conclusive, and dismissive of the contrary evid ence.  In this light, it was unnecessary and largely 
irrelevant for the Division to engage in the analysis  under its third part of its analysis:  whether it is 
permissible when using multiple transactions to disregard the amount by which the export price 
exceeds the normal value is unnecessary.  Given that  the text does not prohibit the calculation of 
margins of dumping on a transaction-specific basis, there is no need to examine whether the text 
expressly authorizes "disregarding" certain transactions.  
D. PROSPECTIVE NORMAL VALUE SYSTEMS  
59. Panels have repeatedly relied on the existence of prospective normal value systems to confirm 
that a margin of dumping may be calculated on a tran saction-specific basis.  The first panel to do so 
was in the Softwood Lumber (21.5) , where Canada – a Member with a prospective normal value 
system – was the complaining party.  In that dis pute, Canada itself recognized  that prospective normal 
value systems operate on the basis of a transaction-specific margin of dumping, as noted in the 
quotation from Canada in Section C above.  
60. Each panel, including this Panel, that has found zeroing to be permissible on the basis of a 
transaction-specific margin of dumping has explaine d that prospective normal value systems confirm 
the calculation of margins of dumping on such a basis.  
                                                      
39The United States recalls that the basis for th e prohibition on zeroing in average-to-average 
comparisons in investigations came not from the definition of dumping but from the language "all comparable export transactions" in Article  2.4.2.  Thus, the existence of multiple transactions does not of itself require 
offsets.  WT/DS344/11 
 Page 13 
 
 
  61. The Division errs in stating that "i f the prospective normal value has been improperly 
determined, a review can be requested ... ."40  The Division presumes that in PNV systems, a "proper" 
PNV can be determined such that a retrospect ive review of all export transactions will be 
unnecessary.  This is despite the fact that the Divi sion is imposing an obligation for imports priced 
above  the PNV to offset imports priced below  the PNV.  Under the Division's own view of zeroing, 
whether the "proper" PNV has been determined or not, any transactions above even the "proper" PNV 
would have to be offset against those below the "p roper" PNV in a review under Article 9.3.2.  Thus, 
the Division's arguments about zeroing are inconsistent with its arguments about PNV systems.  Moreover, this would simply transform a PNV system into a retrospective system. 
62. In addition, the key element of a prospec tive normal value system is that it uses a prospective  
normal value, not a contemporaneous  normal value.  It informs the importer of the prospective normal 
value so that the importer has a basis for knowing whether the export price will suffice to eliminate 
dumping.  However, the Division's views on PNV systems undo that certainty by suggesting that the prospective normal value is subject to retrospective recalculation.  
63. There is a flaw even with this aspect of the Division's analysis.  Article 9.3.2 conditions a 
request for a refund on a request by the importer , duly substantiated with evidence.  Assuming such a 
thing as a "proper" normal value exists, the importer does not know what it is.  The normal value is established in the country of export.  It would have  been illogical for the Agreement to authorize an 
importer to request a refund without any basis for know ing whether he is in fact entitled to any such 
refund to begin with and to require him to do so on the basis of evidence that is not in his possession.  
E. C
ONCLUSION  
64. Like the panels before it, the Panel in this di spute provided a very careful, text-based analysis 
of whether zeroing is permitted in assessment procee dings.  The Division should at a minimum have 
conceded that there is more than one permissibl e interpretation of the Anti-Dumping Agreement.  
However, the Division instead: 
• asserts that the text of Article VI prohibits zeroing, but without providing any textual 
analysis of that provision;  
• fails to recognize that, before the Division decided that zeroing was prohibited on the 
basis of Article VI, five zeroing disputes had been brought and decided, under both 
the Tokyo Round Code and the Anti-Dumping Agreement, without a single Article VI 
claim;  
• fails to recognize that zeroing had not been found inconsistent in assessment 
proceedings under the Tokyo Round Code, despite Japan's claim to the contrary;  
• fails to recognize that the key Tokyo Round Code provision at issue in that dispute 
was incorporated wholesale into the Anti-Dumping Agreement; and 
• despite all these facts, concludes the negotiatin g history is of "little relevance" to the 
questions in this dispute. 
65. The Division's casual dismissal of the negotiating history and imputing into the agreed text 
obligations that do not appear there should give ev ery Member pause, particularly at a time when 
Members are negotiating a new set of rights and obligations and are, naturally, basing those 
negotiations on the rights and obligations they know to be in existence today and relying on the fact 
that they are only taking on those obligations that appear in the text they negotiate. 
__________ 
                                                      
40 Appellate Body report, para. 121 (emphasis added).