WORLD TRADE  
ORGANIZATION  WT/DS344/R 
20 December 2007 
 (07-5614) 
 Original:   English 
  
 
     
 
    
 
UNITED STATES – FINAL ANTI-DUMPING MEASURES 
ON STAINLESS STEEL FROM MEXICO 
 
 
Report of the Panel 
 
  
  WT/DS344/R 
 Page i 
 
 
  TABLE OF CONTENTS 
 
Page  
 
I. INTRODUCTION ................................................................................................................... .1 
II. FACTUAL ASPECTS ..............................................................................................................2  
III. PARTIES' REQUESTS FOR FIND INGS AND RECOMMENDATIONS.........................2  
IV. ARGUMENTS OF THE PARTIES ........................................................................................3  
V. ARGUMENTS OF THE THIRD PARTIES ..........................................................................3  
VI. INTERIM REVIEW................................................................................................................. 3 
A. REQUEST OF THE UNITED STATES ..............................................................................................4  
VII. FINDINGS....................................................................................................................... ..........6  
A. RELEVANT PRINCIPLES REGARDING STANDARD OF REVIEW , TREATY 
INTERPRETATION AND BURDEN OF PROOF .................................................................................6  
1. Standard of Review............................................................................................................. ......6  
2. Rules of Treaty Interpretation................................................................................................. 7 
3. Burden of Proof................................................................................................................ .........8  
B. TERMINOLOGY USED TO DESCRIBE THE MEASURES AT ISSUE ...................................................8  
C. TERMS OF REFERENCE ................................................................................................................9  
D. MODEL ZEROING IN INVESTIGATIONS ......................................................................................10  
1. Arguments of Parties ........................................................................................................... ...10 
(a) Mexico ......................................................................................................................... .............10  
(b) United States .................................................................................................................. ...........10  
2. Arguments of Third Parties ...................................................................................................11  
(a) Chile.......................................................................................................................... ................11  
(b) China.......................................................................................................................... ...............11  
(c) European Communities........................................................................................................... ..11 
(d) Japan .......................................................................................................................... ...............12  
(e) Thailand ....................................................................................................................... .............13  
3. Evaluation by the Panel........................................................................................................ ..13 
(a) Model Zeroing in Inves tigations "As Such" .............................................................................13  
(i) Alleged Existence of the Model Zeroing Procedures................................................................13  
Did the Model Zeroing Procedures  Exist As of the Time of the Establishment of the Panel ?................ 14  
Were the Model Zeroing Procedures  Subsequently Repealed by the United States ? ............................. 17  
(ii) Should the Panel Make Findings and Recommendations on an Expired Measure? ................18  
(iii) Is Model Zeroing in Investiga tions WTO-Inconsistent? ...........................................................20  
(b) Model Zeroing in Investig ations "As Applied" ........................................................................23  
E. SIMPLE ZEROING IN PERIODIC REVIEWS ...................................................................................23  WT/DS344/R   
Page ii  
 
  1.
 Arguments of Parties ........................................................................................................... ...23 
(a) Mexico ......................................................................................................................... .............23  
(b) United States .................................................................................................................. ...........24  
2. Arguments of Third Parties ...................................................................................................25  
(a) Chile.......................................................................................................................... ................25  
(b) China.......................................................................................................................... ...............26  
(c) European Communities........................................................................................................... ..26 
(d) Japan .......................................................................................................................... ...............26  
(e) Thailand ....................................................................................................................... .............26  
3. Evaluation by the Panel........................................................................................................ ..27 
(a) Alleged Existence of the Simple Zeroing Procedures ..............................................................27  
(b) Is Simple Zeroing in Periodic  Reviews WTO-Inconsistent? ....................................................30  
(i) Description of the Calculations in Periodic Reviews under US Law .......................................30  
(ii) Significance of WTO Jurisprudence .........................................................................................30  
(iii) Alleged Violations of Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 
9.3 of the Anti-Dumping Agreement .........................................................................................32  
Interpretation of the Relevant Treaty Provisions ..................................................................................... 32  
Contextual Support for the Panel's Interp retation of the Relevant Treaty Provisions ............................. 39  
Existence of the Prospective Normal Value Systems ....................................................................... 39  
Mathematical Equivalence Between the First and the Third Methodolo gies in the Absence 
of Zeroing ............................................................................................................................... ......... 40  
(iv) Alleged Violations of Article 2. 4 of the Anti-Dumping Agreement...........................................43  
(v) Potential Consequences of a Gen eral Prohibition on Zeroing.................................................44  
(c) Conclusion ..................................................................................................................... ...........45  
VIII.  CONCLUSIONS AND RECOMMENDATIONS................................................................45  
  WT/DS344/R 
 Page iii 
 
 
  LIST OF ANNEXES 
 
ANNEX A 
 
EXECUTIVE SUMMARIES OF FIRST WRITTEN 
SUBMISSIONS OF THE PARTIES 
 
Contents Page 
Annex A-1 Executive Summary of the First Written Submission of Mexico A-2 
Annex A-2 Executive Summary of the First Written Submission of the 
United States A-9 
 
ANNEX B 
 
THIRD PARTIES WRITTEN SUBMISSIONS OR 
EXECUTIVE SUMMARIES THEREOF 
 
Contents Page 
Annex B-1 Third Party Written Submission of Chile B-2 
Annex B-2 Executive Summary of the Third Party Written Submission of the 
European Communities B-4 
Annex B-3 Executive Summary of the Third Party Written Submission of 
Japan B-9 
 
ANNEX C 
 
SECOND WRITTEN SUBMISSIONS OF THE PARTIES 
OR EXECUTIVE SUMMARIES THEREOF 
 
Contents Page 
Annex C-1 Second Written Submission of the United States C-2 
Annex C-2 Executive Summary of the Second Written Submission of Mexico C-5 
 
ANNEX D 
 
ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF 
FIRST AND SECOND MEETINGS 
 
Contents Page 
Annex D-1 Executive Summary of the Op ening Statement of Mexico – First 
Meeting D-2 
Annex D-2 Closing Statement of Mexico – First Meeting D-6 
Annex D-3 Executive Summary of the Opening Statement of the 
United States – First Meeting D-8 
Annex D-4 Closing Statement of the United States – First Meeting D-12 
Annex D-5 Third Party Oral Statement of China D-14 
Annex D-6 Third Party Oral Statement of the European Communities D-15 
Annex D-7 Third Party Oral Statement of Japan D-18 
Annex D-8 Third Party Oral Statement of Thailand D-21 
Annex D-9 Executive Summary of the Opening Statement of Mexico – Second 
Meeting D-22 
Annex D-10 Executive Summary of the Opening Statement of the 
United States – Second Meeting D-25 WT/DS344/R   
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  ANNEX E 
 
REQUEST FOR THE ESTABLISHMENT 
OF A PANEL 
 
Contents Page 
Annex E-1 Request for the Establishment of a Panel – Document WT/DS344/4 E-2 
 
  
  WT/DS344/R 
 Page v 
 
 
  TABLE OF CASES CITED IN THIS REPORT  
 
Short Title Full Case Title and Citation 
Indonesia – Autos  Panel Report, Indonesia – Certain Measures Affecting the Automobile 
Industry ("Indonesia – Autos "), WT/DS54/R, WT/DS55/R, WT/DS59/R, 
WT/DS64/R and Corr.1, 2, 3 and 4, adopted 23 July 1998, 
DSR 1998:VI, 2201 
India – Autos  Panel Report, India – Measures Affecting the Automotive Sector ("India – 
Autos "), WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, 
DSR 2002:V, 1827 
Dominican Republic – Import and Sale of Cigarettes  Panel Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes  ("Dominican Republic – 
Import and Sale of Cigarettes "), WT/DS302/R, adopted 19 May 2005, 
as modified by Appellate Body Report, WT/DS302/AB/R 
EC – Approval and Marketing of Biotech Products  Panel Report, European Communities – Measur es Affecting the Approval 
and Marketing of Biotech Products  ("EC – Approval and Marketing of 
Biotech Products "), WT/DS291/R, WT/DS292/R, WT/DS293/R, Corr.1 
and Add.1, 2, 3, 4, 5, 6, 7,  8 and 9, adopted 21 November 2006 
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on 
Certain Hot-Rolled Steel Products  from Japan ("US – Hot-Rolled 
Steel") , WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, 4697
US – Gasoline  Appellate Body Report, United States – Standards for Reformulated 
and Conventional Gasoline ("US – Gasoline") , WT/DS2/AB/R, 
adopted 20 May 1996, DSR 1996:I, 3 
US – Zeroing (Japan)  Panel Report, United States – Measures Relating to Zeroing and Sunset 
Reviews  (" US – Zeroing (Japan) "), WT/DS322/R, adopted 
23 January 2007, as modified by Appellate Body Report, WT/DS322/AB/R 
US – Shrimp (Article 21.5 
– Malaysia)  Appellate Body Report, United States – Import Prohibition of Certain 
Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by 
Malaysia  ("US – Shrimp (Article 21.5 – Malaysia) "), WT/DS58/AB/RW, 
adopted 21 November 2001 
Japan – Alcoholic Beverages II  Appellate Body Report, Japan – Taxes on Alcoholic Beverages ("Japan – 
Alcoholic Beverages II
 "), WT/DS8/AB/R, WT/DS10/AB/R, 
WT/DS11/AB/R, adopted 1 November 1996 
US – Softwood Lumber V  Appellate Body Report, United States – Final Dumping Determination 
on Softwood Lumber from Canada ("US – Softwood Lumber V "), 
WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, 1875 
US – Shrimp (Ecuador)  Panel Report, United States – Anti-Dumping Measures on Shrimp from 
Ecuador ("US – Shrimp (Ecuador) "), WT/DS335/R, adopted 
20 February 2007 
US – Certain EC Products  Appellate Body Report, United States – Import Measures on Certain 
Products from the European Communities ("US – Certain EC 
Products "), WT/DS165/AB/R, a dopted 10 January 2001, 
DSR 2001:I, 373 
US – Zeroing (Japan)  Appellate Body Report, United States – Measures Relating to Zeroing 
and Sunset Reviews  ("US – Zeroing (Japan) "), WT/DS322/AB/R, 
adopted 23 January 2007 WT/DS344/R   
Page vi  
 
  US – Wool Shirts and 
Blouses  Appellate Body Report, United States – Measure Affecting Imports of 
Woven Wool Shirts and Blouses from India ("US – Wool Shirts and 
Blouses "), WT/DS33/AB/R and Corr.1, adopted 23 May 1997, 
DSR 1997:I, 323 
US – Gambling  Appellate Body Report, United States – Measures Affecting the Cross-
Border Supply of Gambling and Betting Services ("US – Gambling "), 
WT/DS285/AB/R, adopted 20 April 2005 
India – Patents (US)  Appellate Body Report, India – Patent Protection for Pharmaceutical 
and Agricultural Chemical Products ("India – Patents (US) "), 
WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9 
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins ("Zeroing")  ("US – 
Zeroing (EC) "), WT/DS294/AB/R, adopted 9 May 2006 
US – Corrosion-Resistant 
Steel Sunset Review  Appellate Body Report, United States – Sunset Review of Anti-Dumping 
Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan  
("US – Corrosion-Resistant Steel Sunset Review "), WT/DS244/AB/R, 
adopted 9 January 2004, DSR 2004:I, 3 
US – Oil Country Tubular Goods Sunset Reviews  Appellate Body Report, United States – Sunset Reviews of Anti-Dumping 
Measures on Oil Country T ubular Goods from Argentina  ("US – Oil 
Country Tubular Goods Sunset Reviews "), WT/DS268/AB/R, adopted 
17 December 2004, DSR 2004:VII, 3257 
EC – Chicken Cuts Appellate Body Report, European Communities – Customs 
Classification of Frozen Boneless Chicken Cuts ("EC – Chicken Cuts "), 
WT/DS269/AB/R, WT/DS286/AB/R, and Corr.1, adopted 27 September 2005  WT/DS344/R 
 Page 1 
 
 
  I. INTRODUCTION 
1.1 On 26 May 2006, the Government of Mexico ( "Mexico") requested consultations with the 
Government of the United States of America ("United  States" or "US") pursuant to Article 4 of the 
Understanding on Rules and Procedures Governing th e Settlement of Disputes ("DSU"), Article XXII 
of the General Agreement on Tariffs and Tr ade 1994 ("GATT 1994"), and Article 17 of the 
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 
("Anti-Dumping Agreement" or "Agreement"), re garding the laws, regulations, administrative 
practices and methodologies for calculating dumping margins.1  Consulations were held on 
15 June 2006, but failed to resolve the dispute.   
1.2 On 12 October 2006, Mexico requested the Dis pute Settlement Body ("DSB") to establish a 
panel pursuant to Articles 4 and 6 of the DSU, Ar ticle XXIII of the GATT 1994 and Article 17 of the 
Anti-Dumping Agreement.   
1.3 At its meeting on 26 October 2006, the DSB est ablished a panel pursuant to the request of 
Mexico in document WT/DS344/4, in accordance with Article 6 of the DSU.   
1.4 The Panel's terms of reference are the following:   
"To examine, in the light of the relevant provisions of the covered agreements cited 
by Mexico in document WT/DS344/4, the ma tter referred to the DSB by Mexico in 
that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."   
1.5 On 15 December 2006, Mexico requested the Dire ctor-General to determine the composition 
of the Panel, pursuant to paragraph 7 of Article  8 of the DSU.  This paragraph provides:   
"If there is no agreement on the panelists within 20 days after the date of the 
establishment of a panel, at the request of  either party, the Director-General, in 
consultation with the Chairman of the DSB and the Chairman of the relevant Council 
or Committee, shall determine the com position of the panel by appointing the 
panelists whom the Director-General consid ers most appropriate in accordance with 
any relevant special or additional rules or  procedures of the covered agreement or 
covered agreements which are at issue in th e dispute, after consulting with the parties 
to the dispute.  The Chairman of th e DSB shall inform the Members of the 
composition of the panel thus formed no later than 10 days after the date the 
Chairman receives such a request."   
1.6 On 20 December 2006, the Director-General ac cordingly composed the Panel as follows:   
Chairperson: Mr. Alberto Juan Dumont 
  Members: Mr. Bruce Cullen    Ms Leora Blumberg  
1.7 Chile, China, the European Communities, Japan  and Thailand have reserved their rights to 
participate in the panel proceedings as third parties.   
1.8 The Panel met with the parties on 22-23 May 2007 and on 17 July 2007.  It met with the third 
parties on 23 May 2007.   
                                                     
 
1 WT/DS344/1.   WT/DS344/R   
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  II. FACTUAL ASPECTS 
2.1 At issue in this dispute is what Mexico descr ibes as the "Zeroing Procedures" under US law, 
which, according to Mexico, require the United States Department of Commerce ("USDOC") to 
calculate margins of dumping in investigations a nd periodic reviews in a manner that does not fully 
reflect export prices that are above the normal value.   According to Mexico, this takes place through 
the non-inclusion in the numerator of the weighted average dumping margin calculations of the results 
of comparisons where the export price exceeds the norma l value, when such results are aggregated in 
the calculation of the margins of dumping for the product under consideration as a whole.  More specifically, Mexico takes issue with the "Zeroing  Procedures" in connection with investigations 
where the weighted average normal value is comp ared with the weighted average export price 
(referred to by Mexico as "model zeroing in inve stigations"), and the periodic reviews where the 
weighted average normal value is compared with  individual export transactions (referred to by 
Mexico as "simple zeroing in periodic reviews").   
2.2 In addition to its two "as such" claims, Mexico  also challenges the application by the USDOC 
of the "Zeroing Procedures" in the inve stigation and five periodic reviews on Stainless Steel Sheet and 
Strip in Coils from Mexico .  The list of the anti-dumping measures subject to Mexico's "as applied" 
claims is as follows:   
Investigation 
Stainless Steel Sheet and Strip in Coils from Mexico , 64 FR 30790 (USDOC) (8 June 1999), 
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 64 FR 40560 
(USDOC) (27 July 1999) 
Periodic Reviews 
Stainless Steel Sheet and Strip in Coils from Mexico , 67 FR 6490 (USDOC) (12 February 2002), 
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 67 FR 15542 
(USDOC) (2 April 2002) 
Stainless Steel Sheet and Strip in Coils from Mexico , 68 FR 6889 (USDOC) (11 February 2003), 
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 68 FR 13686 
(USDOC) (20 March 2003) 
Stainless Steel Sheet and Strip in Coils from Mexico , 69 FR 6259 (USDOC) (10 February 2004) 
Stainless Steel Sheet and Strip in Coils from Mexico , 70 FR 3677 (USDOC) (26 January 2005) 
Stainless Steel Sheet and Strip in Coils from Mexico , 70 FR 73444 (USDOC) (12 December 2005) 
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS 
3.1 Mexico requests the Panel to find that:   
(1) Model zeroing, as applied in the investigation on Stainless Steel Sheet and Strip in 
Coils from Mexico , is inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and 
Articles 2.1, 2.4, 2.4.2, and 18.4 of the Anti-Dumping Agreement;  and Article XVI:4 of the WTO Agreement;    WT/DS344/R 
 Page 3 
 
 
  (2) Model zeroing in investigations is, as such, inconsistent with Articles VI:1 and VI:2 
of the GATT 1994 and Articles 2.1, 2.4, 2.4.2, and 18.4 of the Anti-Dumping Agreement;  and Article XVI:4 of the WTO Agreement;   
(3) Simple zeroing in periodic reviews is, as su ch, inconsistent with Articles VI:1 and 
VI:2 of the GATT 1994 and Articles 2.1, 2.4, 9.3, and 18.4 of the Anti-Dumping 
Agreement, and Article XVI:4 of the WTO Agreement;  and  
(4) Simple zeroing, as applied in the five listed periodic reviews of Stainless Steel Sheet 
and Strip in Coils from Mexico , is inconsistent with Articles VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1, 2.4, 9.3, and 18.4 of the Anti-Dumping Agreement, and 
Article XVI:4 of the WTO Agreement.
2   
3.2 The United States requests the Panel to dismiss Me xico's two "as such" claims because, in the 
view of the United States, there exists under US la w no such measure as the "Zeroing Procedures".  In 
the alternative, the United States requests the Pane l to reject Mexico's "as such" claim regarding 
simple zeroing in periodic reviews because Mexico has failed to demonstrate that the Anti-Dumping 
Agreement disallows zeroing in periodic reviews.   For the same reason, the United States also 
requests the Panel to reject Mexico's "as applied" claim regarding simple zeroing in the five periodic 
reviews at issue.  With regard to Mexico's "as a pplied" claim regarding the use of model zeroing in 
the anti-dumping investigation on Stainless Steel Sheet and Strip in Coils from Mexico , the 
United States acknowledges that the USDOC did use m odel zeroing in the investigation at issue.  The 
United States also recalls the r easoning of the Appellate Body in US – Softwood Lumber V  that such 
use was inconsistent with Article 2.4.2 of the Agreement and acknowledges that this reasoning is 
equally applicable to Mexico's "as applied" claim at issue.3   
IV. ARGUMENTS OF THE PARTIES 
4.1 The arguments of the parties are set out in their written submissions and oral statements to the 
Panel and their answers to questions.  The parti es' submissions and oral statements or executive 
summaries thereof, are attached to this report as annexes (see List of Annexes, pages iii and iv).4   
V. ARGUMENTS OF THE THIRD PARTIES 
5.1 Chile, China, the European Communities, Jap an and Thailand reserved their rights to 
participate in these panel proceedings as third par ties.  Neither China nor Thailand provided a written 
submission, and Chile did not submit an oral statemen t to the Panel.  The arguments of the European 
Communities and Japan are set out in their written s ubmissions and oral statements, the arguments of 
Chile are set out in its written submission, and th e arguments of China and Thailand are set out in 
their oral statements to the Panel.  The third pa rties' submissions and oral statements, or executive 
summaries thereof, are attached to this report as a nnexes (see List of Annexes, pages iii and iv).   
VI. INTERIM REVIEW 
6.1 On 5 October 2007, we submitted the interim report to the par ties.  On 26 October 2007, the 
United States submitted a written request for the review of precise aspects of the interim report.  
Mexico did not make such a request.  It did, howev er, direct the Panel's attention to a typographical 
                                                      
2 Response of Mexico to Question 2 from the Panel Following the First Meeting.   
3 First Written Submission of the United States, para. 104;  Response of the United States to 
Question 12 from the Panel Following the First Meeting.   
4 The English and Spanish versions of Mexico's  executive summaries are reproduced as submitted by 
Mexico in their original language.   WT/DS344/R   
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  error in the interim report.  On 9 November 2007,  Mexico submitted comments on the United States' 
comments on the interim report.  The United Stat es did not submit further comments since Mexico 
had not submitted comments on the interim report. 
6.2 We have outlined our treatment of the parties'  requests below.  In addition to the changes 
explained below, where necessary, we also have ma de technical revisions to our report and corrected 
typographical errors brought to our attention by the parties. 
A. R
EQUEST OF THE UNITED STATES  
6.3 First, the United States requests that paragraphs  3.2, 7.15 and 7.43 of our report be amended 
in order to better reflect the United States' argum ents regarding Mexico's claim on model zeroing.  
Mexico has not made any comment regarding th e United States' request.  We have amended 
paragraphs 3.2, 7.15 and 7. 43 in order to accommodate the United States' concern. 
6.4 Second, the United States request s that the last sentence of pa ragraph 7.30 be deleted.  The 
United States finds this sentence unnecessary to the Pane l's analysis in the remainder of the paragraph.  
The United States contends that this sentence implie s that only measures of "general and prospective" 
application may be successfully challenged "as such " in WTO dispute settlement.  The Unites States 
notes, however, that this issue is not presented in this  dispute.  Furthermore, the United States is of the 
view that the scope of an "as such" claim may not be so limited.  The United States argues that a 
measure that does not mandate WTO-inconsistent behaviour can not be successfully challenged "as 
such" in WTO dispute settlement.  According to th e United States, Article 3.2 of the DSU does not 
stand for the proposition that ensuring "predictability and security" to the multilateral trading system 
is an objective of the WTO dispute settlement system .  Rather, Article 3.2 provides that the dispute 
settlement system is a central element in providing " security and predictability" and that this is to be 
done by preserving the rights and obligations of Members and by clarifying the provisions of the WTO agreements. 
6.5 Mexico disagrees with the United States' comment and asserts that it amounts to re-arguing 
the case, which can not be done at the interim revi ew stage.  Mexico argu es that the United States' 
argument regarding the types of measures that may be subjected to WTO dispute settlement does not 
constitute a comment regarding a precise aspect of th e interim report.  Mexico also disagrees with the 
second aspect of the United States' comment regardi ng paragraph 7.30 and contends that Article 3.2 
of the DSU makes clear that "security and predictab ility" to the multilateral trading system is indeed 
an object of the DSU. 
6.6 We agree with the United States' contention that this dispute does not require us to decide 
what types of measures may be cha llenged "as such" in WTO dispute settlement.  The last sentence of 
paragraph 7.30 of our report, therefore, does not reflec t an assessment of this issue.  In the same vein, 
our statement in the same paragraph regarding the term "security and predictability" referred to in 
Article 3.2 of the DSU, is not intended to ascribe a precise meaning to this term.  None of these two 
statements are part of our legal reasoning with regard to Mexico's claims.  We therefore decline to 
amend paragraph 7.30. 
6.7 Third, the United States submits that the rele vant part of paragraph 7.38 below does not 
reflect the United States' position as to the accuracy of  the expert opinion, submitted by Mexico to the 
Panel, regarding the application of Model Zeroing Procedures  under US law.  The United States 
requests that the Panel delete the sentence starti ng with "In response to questioning..." from this 
paragraph.  Mexico disagrees with the United States  and argues that the sentence at issue contains a 
fair description of the United States' comments re garding the expert opini on on the application of 
Model Zeroing Procedures  under US law.  WT/DS344/R 
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  6.8 We have deleted the sentence in paragraph 7.38 referred to by the United States and made 
other changes to the paragraph in order to reflect the United States' position in a more comprehensible 
fashion. 
6.9 Fourth, the United States requests that we expl ain, in paragraph 7.40 of our report, the 
provisions of US law pursuant to which the USDOC announced in the Federal Register that it would 
no longer make average-to-average comparisons in in vestigations without taking into consideration all 
comparable export transactions.  To this end,  the United States proposes adding a footnote to 
paragraph 7.40.  Mexico opposes the United States'  request.  According to Mexico, the USDOC's 
notice described a practice that was not limited in sc ope or period of application.  Regardless of the 
domestic law requirements pursuant to which it was announced, therefore, the notice at issue 
described a measure of general and prospective application. 
6.10 In order to provide further factual clarifica tion regarding the notice published in the Federal 
Register, we have added footnote 39  to paragraph 7.40.  We have al so made certain technical changes 
to the text of this paragraph at the request of the United States. 
6.11 Fifth, the United States requests that we amend certain parts of paragraph 7.45 in order to 
better describe our finding and to ensure its consis tency with other related findings that we have 
made.  Mexico objects on the grounds that the change s suggested by the United States would alter the 
meaning of the Panel's findings.  According to Me xico, the United States' comments imply that the 
duty imposed in an investigation may be changed over time and that it may not have continuing 
effect.  We have amended paragr aph 7.45, taking into consideration the views expressed by both 
parties. 
6.12 Sixth, the United States notes our statement in paragraph 7.117 below to the effect that the 
concept of "product as a whole" has been develope d by the Appellate Body.  The United States argues 
that this concept was used for the firs t time by the European Communities in the EC – Bed Linen  case 
and wants this to be mentioned in a footnote to pa ragraph 7.117.  Mexico objects to the United States' 
request on the grounds that it amounts to re-arguing th e United States' case and that it is not related to 
interim review.  Furthermore, Mexico contends that  whether a party to a previous dispute also used 
the term "product as a whole" in its argumentation is  not relevant to the issue of whether the term 
"product" may be interpreted as referring to some thing narrower than the product under consideration 
as a whole for purposes of these proceedings. 
6.13 Our statement that the notion of "product as a whole" has been developed by the Appellate 
Body is obiter dictum and thus has no bearing on our evaluation of Mexico's claims in these 
proceedings.  We therefore do not find important to mention when and in which context this concept 
was first used in WTO dispute settlement.  We have, however, made a modification to 
paragraph 7.117 so as to note that this concept was developed in WTO dispute settlement generally, 
without mentioning by whom. 
6.14 Seventh, the United States takes issue with our reference to the object and purpose of specific 
treaty provisions in paragraphs 7.119 and 7.148 below.  The United States asserts that according to 
Article 31(1) of the Vienna Convention on the Law of  Treaties ("Vienna Convention"), it is the object 
and purpose of the treaty, not specific provisions thereof,  that has to be taken into consideration in the 
interpretation of the treaty.  The United States agre es with our interpretation based on the text of the 
treaty and therefore argues that we do not need to refer to object and purpose.  If, however, we choose 
to make such a reference, the United States argues that we have to clarify that what we refer to is the 
object and purpose of the treaty, not specific pr ovisions thereof.  Mexico disagrees with the 
United States and argues that Artic le 31(1) of the Vienna Conventi on does not preclude the interpreter 
from taking into account the object and purpose of specific provisions of a treaty. WT/DS344/R   
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  6.15 Article 31(1) of the Vienna Convention reads: 
"ARTICLE 31 
General rule of interpretation  
1. A treaty shall be interpreted in goo d faith in accordance with the ordinary 
meaning to be given to the te rms of the treaty in their
 context and in the light of its  
object and purpose."5  (emphasis added) 
6.16 We note that the term "object and purpose" in Article 31(1) is preceded by "its" whereas the 
term "context" is preceded by "their".  Thus, we c onsider that Article 31(1) refers to the object and 
purpose of the treaty as a whole, rather then specific provisions thereof.  Had dr afters intended to refer 
to the object and purpose of specific provisions, they w ould have used "their", not  "its", before "object 
and purpose", as in the case of the word "context".6  We have therefore am ended paragraphs 7.119 
and 7.148 of our report accordingly. 
6.17 Eighth, the United States requests the Panel to am end the third sentence of paragraph 7.122 in 
order to clarify that this sentence reflects Mexico 's arguments. Mexico objects to the United States' 
request and contends that the mentioned sentence correctly reflects Mexico's views as contained in 
paragraph 62 of its second written submission to the Pa nel.  We note that it is clear that the sentence 
referred to by the United States conveys Mexico's views regarding the object and purpose of the treaty 
provisions cited therein.  Furthermore, footnote 92 to the preceding sentence indicates where Mexico 
presented the argument at issue.  We therefore d ecline to make any changes to paragraph 7.122. 
VII. FINDINGS 
A. RELEVANT PRINCIPLES REGARDING STANDARD OF REVIEW , TREATY INTERPRETATION AND 
BURDEN OF PROOF  
1. Standard of Review 
7.1 Article 11 of the DSU provides the standard of review for WTO panels in general.  Article 11 
imposes upon panels a comprehensive obligation to ma ke an "objective assessment of the matter", an 
obligation which embraces all aspects of a panel's ex amination of the "matter" , both factual and legal.7   
7.2 Article 17.6 of the Anti-Dumping Agreement se ts forth the special standard of review 
applicable to disputes under the Anti-Dumping Agreement:   
                                                      
5 (1969) 8 International Legal Materials  679. 
6 We consider, however, that this does not preclude the interpreter from taking into account the object 
and purpose of specific treaty provisions, where warranted.  In this regard, we find support in the Appellate 
Body's statement that "[t]o the extent that one can speak of the "object and purpose of a treaty provision", it will be informed by, and will be in consonance with, the object  and purpose of the entire treaty of which it is but a 
component".  Appellate Body Report, European Communities – Customs Classification of Frozen Boneless 
Chicken Cuts ("EC – Chicken Cuts "), WT/DS269/AB/R, WT/DS286/AB/R, and Corr.1, adopted 
27 September 2005, para. 238. 
7 Article 11 of the DSU provides in part:   
"The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements.  Acco rdingly, a panel should make an objective 
assessment of the matter before it, including an  objective assessment of  the facts of the case 
and the applicability of and conformity with th e relevant covered agreements, and make such 
other findings as will assist the DSB in making the recommendations or in giving the rulings 
provided for in the covered agreements."    WT/DS344/R 
 Page 7 
 
 
   "(i) in its assessment of the facts of the matter, the panel shall determine whether the 
authorities' establishment of the facts was proper  and whether their evaluation of 
those facts was unbiased and objective.  If the establishment of the facts was proper 
and the evaluation was unbiased and objectiv e, even though the panel might have 
reached a different conclusion, the evaluation shall not be overturned;   
 
 (ii) the panel shall interpret the relevant provisions of the Agreement in accordance with 
customary rules of interpretation of public international law.  Where the panel finds 
that a relevant provision of the Agreemen t admits of more than one permissible 
interpretation, the panel shall find the author ities' measure to be in conformity with 
the Agreement if it rests upon one of th ose permissible interpretations."   
 Thus, taken together Article 11 of the DSU a nd Article 17.6 of the Anti-Dumping Agreement 
establish the standard of review we must apply with  respect to both the factual and the legal aspects of 
the present dispute.   
 
2. Rules of Treaty Interpretation 
7.3 Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the 
provisions of the covered agreements "in accordance with customary rules of interpretation of public 
international law".  It is generally accepted that these customary rules are reflected in Articles 31-32 
of the Vienna Convention on the Law of Treaties ("Vienna Convention" ).  Article 31(1) of the 
Vienna Convention  provides:  
 
"A treaty shall be interpreted in good faith  in accordance with the ordinary meaning 
to be given to the terms of the treaty in their context and in the light of its object and purpose."  
 
7.4 In the context of disputes under the Anti-Dumping Agreement, the Appellate Body has stated 
that:  
"The  first  sentence of Article 17.6(ii), echoing closely Article 3.2 of the DSU, states 
that  panels  'shall' interpret the provisions of the  AD Agreement  'in accordance with 
customary rules of interpretation of public international law'.  Such customary rules 
are embodied in Articles 31 and 32 of the Vienna  Convention on the Law of Treaties  
 ('Vienna Convention' ).  Clearly, this aspect of Article 17.6(ii) involves no 'conflict' 
with the DSU but, rather, confirms that th e usual rules of treaty interpretation under 
the DSU also apply to the  AD Agreement . … 
The  second   sentence of Article 17.6(ii) … presupposes   that application of the rules 
of treaty interpretation in Articles 31 and 32 of the  Vienna Convention   could give 
rise to, at least, two interpretations of some provisions of the  AD Agreement ,  which, 
under that Convention, would both be ' permissible   interpretations'.  In that event, a 
measure is deemed to be in conformity with the  AD Agreement "if it rests upon one 
of those permissible interpretations."8  (emphasis in original) 
7.5 Thus, under the Anti-Dumping Agreement, we have to follow the same rules of treaty 
interpretation as in any other dispute.  Furthermore,  Article 17.6(ii) provides explicitly that if we find 
                                                      
8 Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products 
from Japan ("US – Hot-Rolled Steel "), WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, 4697, paras. 57 
and 59.   WT/DS344/R   
Page 8  
 
  more than one permissible interp retation of a provision of the Anti-Dumping Agreement, we have to 
uphold a measure that rests on one of those interpretations.   
3. Burden of Proof 
7.6 The general principles applicable to burden of proof in WTO dispute settlement require that a 
party claiming a violation of a provision of the WT O Agreement by another Member assert and prove 
its claim.
9   Mexico as the complaining party must therefore make a prima facie case of violation of 
the relevant provisions of the relevant WTO ag reements, which the respondent must refute.  A  prima 
facie case must be based on evidence and  legal argument put forward by the complaining party in 
relation to each of the elements of the claim.10  We also note that it is generally for each party 
asserting a fact, whether complainant or respondent, to provide proof thereof.11  In this respect, 
therefore, it is also for the United States to provi de evidence for the facts which it asserts.  We also 
recall that a prima facie case is one which, in the absence of eff ective refutation by the other party, 
requires a panel, as a matter of law, to rule in favour of the party presenting the prima facie case.   
B. TERMINOLOGY USED TO DESCRIBE THE MEASURES AT ISSUE  
7.7 The term "zeroing" refers to the calculation of  a weighted average margin of dumping in a 
manner that does not fully reflect export prices that are above the normal value.  Mexico takes issue 
with two different types of "zeroing":  "model zeroing in investigations" and "simple zeroing in 
periodic reviews".  According to Mexico's descr iption, "model zeroing in investigations" occurs 
where the investigating authorities compare the we ighted average normal value and the weighted 
average export price for each model of the product un der consideration and treat as zero the results of 
model-specific comparisons where the weighted average export pri ce exceeds the weighted average 
normal value, when such comparisons are aggreg ated for purposes of calculating the margin of 
dumping for the product under consideration as a whole in an anti-dumping investigation.12  "Simple 
zeroing in periodic reviews" is used by Mexico to  refer to a method whereby the authorities compare 
individual export transactions against monthly wei ghted average normal values and do not fully take 
into account the results of comparisons where the export price exceeds the monthly weighted average 
normal value when such results are aggregated in order to calculate the margin of dumping for the 
product under consideration as a whole in a periodic review.13   
7.8 The United States submits that these terms used by Mexico to describe the measures at issue 
in these proceedings are not found under US law an d asks the Panel not to make any inferences from 
them.14   
7.9 We note that the terms "zeroing", "model zeroi ng in investigations" or "simple zeroing in 
periodic reviews" are not found under US law.  Nor are they mentioned anywhere in the Anti-
Dumping Agreement.  We also note, however, that  a number of WTO panels and the Appellate Body 
have, in the past, used the same or similar terms in order to describe the measure before them.  We 
also find it useful to use the same terminology in our analysis in this report.  We would like to 
emphasize, however, that our use of these terms is for ease of reference only and shall not be 
interpreted as an assessment of their WTO-compatibility.   
                                                      
9 Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses 
from India ("US – Wool Shirts and Blouses "), WT/DS33/AB/R and Corr.1, adopted 23 May 1997, 
DSR 1997:I, 323 at 337.   
10 Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling 
and Betting Services ("US – Gambling "), WT/DS285/AB/R, adopted 20 April 2005, para. 140.   
11 Appellate Body Report,  US – Wool Shirts and Blouses , supra , note 9, para. 337.   
12 First Written Submission of Mexico, para. 15.   
13 First Written Submission of Mexico, para. 21.   
14 First Written Submission of the United States, footnote 38.    WT/DS344/R 
 Page 9 
 
 
  C. TERMS OF REFERENCE  
7.10 Mexico, in its First Written Submission, iden tified the measure at issue as the "Zeroing 
Procedures" applied by the United States in all pro cedural contexts and in relation to all types of 
methods of comparison between the normal value and the export price.  That is, Mexico challenged 
one single measure, the "Zeroing Procedures", manifested in different contexts.15  The United States 
in its First Written Submission argued that Mexico  had not identified the "Zeroing Procedures" as a 
single measure in its request for consultations and its request for the establishment of a panel.  
According to the United States, Mexico had identif ied two measures in connection with its "as such" 
claims in its request for establishment:  "model zeroing in investigations" and "simple zeroing in 
periodic reviews".  The United States therefore asked the Panel to disregard Mexico's "as such" claim 
regarding the "Zeroing Procedures" in all contexts  and with regard to all kinds of comparisons 
between the normal value and the export price, and limit these proceedings to the two "as such" 
claims specifically raised in Mexico's panel request .  In response to questioning on this issue, Mexico 
acknowledged that as far as its "as such" claims were  concerned, the scope of its panel request was 
limited to "model zeroing in investigations" and "simple zeroing in periodic reviews".  Mexico 
pointed out:   
"[A]s clarified in its oral responses to the questions from the Panel, Mexico's claims 
are limited to the two manifestations of th e "Zeroing Procedures" that are described in 
its request— (1) the use of model zeroing in original investigations;  and (2) the use 
of simple zeroing in periodic reviews ."16  (emphasis added) 
7.11 Article 7 of the DSU provides that the terms of  reference of a panel are determined by the 
scope of the complaining party's panel request.  Bo th parties agree that as far as Mexico's "as such" 
claims are concerned, its panel request is limite d to "model zeroing in investigations" and "simple 
zeroing in periodic reviews".  A textual analysis of Mexico's panel request, in our view, confirms this 
conclusion.  The request contains no mention of pr oceedings other than investigations and periodic 
reviews and no mention of comparison methodologies other than the weighted average to weighted 
average ("WA-WA") methodology in investigations and the weighted average to transaction ("WA-
T") methodology in periodic reviews.  The word "rev iew" is preceded by the word "periodic" in each 
instance it is used in the request.  Hence, it is cl ear that our terms of reference in these proceedings 
only contain two "as such" claims by Mexico, i.e. "model zeroing in investigations" and "simple 
zeroing in periodic reviews".  We shall, therefore,  only address these two "as such" claims by Mexico, 
because "[a] panel cannot assume jurisdiction that it does not have".17  We would like to emphasize, 
however, that our conclusion here concerns solely th e jurisdictional issue raised by the United States 
as to whether the Panel may address Mexico's "a s such" claims other than "model zeroing in 
investigations" and "simple zeroing in periodic revi ews".  Whether or not the measures pertaining to 
these two claims actually exist under US law is a separ ate issue which we address below as part of our 
substantive assessment of Mexico's claims.   
                                                      
15 See, for instance, First Written Submission of Mexico, para. 12.   
16 Response of Mexico to Question 1(a) from the Panel Following the First Meeting.   
Mexico repeated the same point in its Responses to Questions 1(b), 2 and 3 from the Panel Following 
the First Meeting.   
17 Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical 
Products ("India – Patents (US) "), WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9, para. 92.   WT/DS344/R   
Page 10  
 
  D. M
ODEL ZEROING IN INVESTIGATIONS  
1. Arguments of Parties 
(a) Mexico 
7.12 Mexico has raised an "as such " as well as an "as applied" claim regarding model zeroing in 
investigations.  Mexico argues that the rul es and procedures relating to model zeroing in 
investigations are embodied in what Mexico d escribes as the "Zeroing Procedures" under US law.  
According to Mexico, in investigations where the US investigating authorities carry out intermediate 
calculations for the product under consideration,  on the basis, among others, of models or 
transactions, and then aggregate the intermediate cal culations to calculate the margin for the product 
under consideration, they do not fully take into acco unt the results of intermediate calculations where 
the export price exceeds the normal value.  In other words, the US authorities treat negative results as 
zero.  This, in Mexico's view, gives rise to a num ber of inconsistencies with the United States' WTO 
obligations.   
7.13 First, Mexico argues that model zeroing is inconsistent with Articles VI:1 and VI:2 of the 
GATT 1994 and Article 2.1 of the Anti-Dumping Agreement because it precludes the calculation of a 
margin of dumping for the product under considera tion as a whole.  The ultimate margin only reflects 
part of the calculations for the product under consideration because negative results in the 
intermediate calculations are treated as zero.  Second, Mexico contends that model zeroing in 
investigations is inconsistent with Article 2. 4.2 of the Anti-Dumping Agreement because it precludes 
the calculation of a margin of dumping based on a weighted average of prices of all comparable 
export transactions for the product under consideration as a whole.  Third, Mexico submits that model 
zeroing in investigations is inconsistent with the obligation to carry out a fair comparison between the 
normal value and the export price as required unde r Article 2.4 of the Anti-Dumping Agreement 
because it artificially reduces the prices of certain export transactions.  Fourth, Mexico argues that as 
an "administrative procedure" within the mean ing of Article XVI:4 of the WTO Agreement and 
Article 18.4 of the Anti-Dumping Agreement, model zer oing in investigations is  inconsistent with the 
obligations set forth in these provisions.   
7.14 In addition to its "as such" claim regarding model zeroing in investigations, Mexico also 
contends that model zeroing "as applied"  in the anti-dumping investigation on Stainless Steel Sheet 
and Strip in Coils from Mexico  is, for the same reasons mentioned in connection with its "as such" 
claim, inconsistent with the United States' WTO obligations.   
(b) United States 
7.15 The United States contends that there exists no such measure as the "Zeroing Procedures" 
under US law and therefore invites the Panel to di smiss Mexico's "as such" claim regarding model 
zeroing in investigations.  Even if the Panel finds that such a measure existed at the time the Panel 
was established, the United States directs the Panel's attention to the fact that through a policy change 
that came into effect on 22 February 2007, the USDOC stopped using model zeroing in investigations 
as from the mentioned date.  Regarding Mexico's "as applied" claim, the United States acknowledges 
that the USDOC applied model zeroing in the anti-dumping investigation on Stainless Steel Sheet and 
Strip in Coils from Mexico .  The United States also recognizes that in US – Softwood Lumber V , the 
Appellate Body found the use of model zeroing to be inconsistent with Article 2.4.2 of the Agreement 
and that the Appellate Body's reasoning in that respect is equally applicable to this claim.18   
                                                      
18 Supra , note 3.    WT/DS344/R 
 Page 11 
 
 
  2. Arguments of Third Parties 
7.16 We note that although Mexico acknowledged, subse quent to its First Wr itten Submission, that 
the scope of its panel request was limited to "mode l zeroing in investigations" and "simple zeroing in 
periodic reviews", some of the third parties also addressed other types of zeroing because they prepared their submissions before Mexico's written  acknowledgement regarding the scope of its panel 
request.   
(a) Chile 
7.17 Chile contends that the WTO-inconsistency of  the zeroing methodology in investigations has 
been confirmed by previous Appellate Body deci sions and expresses hope that this issue will be 
resolved on a multilateral level through amendment of the Anti-Dumping Agreement.  Continued 
adjudication between WTO Members on this issue, which is costly and time consuming, should 
therefore be avoided.  Chile submits that zeroing not only inflates the margin of dumping, but also yields a positive determination of dumping where th ere would have been no dumping absent zeroing.  
Chile therefore asks the Panel to find that zeroing is inconsistent with Article s VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement.   
(b) China 
7.18 Based on the WTO jurisprudence regarding zeroi ng, China argues that irrespective of the 
methodology used for the comparison of the normal value and the export price, the use of zeroing in investigations is inconsistent with Articles 2.1, 2. 4.2, and 2.4 of the Anti-Dumping Agreement.  China 
is of the view that the Panel should not depart from the Appellate Body's jurisprudence because the 
arguments presented by the United States in these pro ceedings do not differ from the arguments raised 
in prior cases.  China therefore invites the Pa nel to accept Mexico's claims and expects the 
United States to eliminate the use of zeroing in all anti-dumping proceedings.   
(c) European Communities 
7.19 The European Communities' third party submission mainly focuses on the WTO 
jurisprudence on zeroing and discusses in detail the significance of adopted Appellate Body reports 
for WTO panels dealing with similar legal issu es.  More specifically, the European Communities 
summarizes previous panel and Appe llate Body findings on zeroing, w ith a particular emphasis on the 
latter, and notes that all the issues raised by Mexi co in this case have alread y been discussed by the 
Appellate Body and that a relatively consiste nt line of jurisprudence has emerged.  The 
European Communities then looks into the principle of stare decisis , i.e. the binding effect of 
previous court decisions on subsequent cases.  In  this regard, the European Communities first 
analyses the principle in the context of national legal systems and observes that unlike common law 
jurisdictions where lower courts are required to follo w the decisions of higher courts on similar legal 
issues, in civil law jurisdictions the main task assign ed to courts is to apply the written legal texts to 
the facts presented in a given case.  Yet, the Eu ropean Communities observes, courts in civil law 
jurisdictions do follow the decisions of higher courts carefully and apply them to similar issues raised 
before them.  Likewise, the European Communities notes that high courts in civil law jurisdictions, 
such as Italy and France, also follow their own jurisprudence as a matter of judicial policy and 
practice.  Furthermore, the European Communities points out that some judges even follow the decisions made by other courts at the same level.   
7.20 As far as the international tr ibunals are concerned, the Eu ropean Communities notes that stare 
decisis  in principle does not apply in such tribunals a nd there is no legal norm that requires them to 
follow previous decisions by higher courts.  Th e European Communities points out, however, that in 
practice most international tribunals do give certain  weight to precedents when dealing with similar WT/DS344/R   
Page 12  
 
  legal issues.  In this regard, the European Comm unities mentions the practice of the European Court 
of Human Rights, the International Court of Justice,  the International Tribunal for the Law of the Sea, 
the International Criminal Tribunal for the Former Yugoslavia, the Internati onal Criminal Tribunal for 
Rwanda, the International Criminal Court and the In ternational Centre for Settlement of Investment 
Disputes.  The European Communiti es also notes that when a lower court considers it appropriate to 
depart from the jurisprudence of its higher court,  it generally identifies a cogent reason for such 
departure.   
7.21 On the more specific issue of "precedent in  the WTO dispute settlement system", the 
European Communities notes that there is no rule  that requires WTO panels to follow adopted 
Appellate Body decisions and that such decisions are binding only on the parties to the proceedings 
and with regard to the dispute at issue.  Noneth eless, the European Commun ities observes that panels 
in practice do follow Appellate Body decisions when dealing with similar legal issues.  Through its decisions, the Appellate Body strives to establish c onsistency in its case la w by citing its previous 
decisions where appropriate.  According to the EC , this serves the need to provide "security and 
predictability to the multilateral trading system", as se t forth in Article 3.2 of the DSU.  The European 
Communities endorses this approach b ecause "the need for security and predictability is also thought 
to require consistency in WTO case law, including in  particular the Appellate Body decisions relating 
to questions of law and legal interp retations of the covered agreements".
19  Furthermore, the 
European Communities argues that Appellate Body d ecisions should be accorded particular authority 
by panels even though there is no written rule that requires them to do so.  The 
European Communities recalls the pronouncements of the Appellate Body itself on this issue, 
including in US – Oil Country Tubular Goods Sunset Reviews  where the Appellate Body opined that 
panels were expected to follow adopted Appellate Body decisions where the issues are the same.  
With regard to the dispute at i ssue, the European Communities consid ers Mexico's claims to be based 
on a consistent line of reasoning and findings developed by the Appellate Body.  In the 
European Communities' view, the Appellate Body's  jurisprudence on zeroing represents the correct 
legal analysis.  In the interest of ensuring secu rity and predictability for the multilateral trading 
system, the European Communities subm its that this jurisprudence has to  be followed by the Panel in 
this case.   
(d) Japan 
7.22 Japan generally submits that the "Zeroing Pr ocedures" used by the US investigating 
authorities constitute a measure of general and prospective application and therefore may be 
challenged "as such" in WTO dispute settlement pr oceedings.  Japan recalls the Appellate Body 
findings in previous zeroing cases and argues that these findings should be followed by the Panel in these proceedings.  More specifically, Japan conte nds that the "Zeroing Procedures" challenged by 
Mexico in this case are the same as those found to be WTO-inconsistent by the Appellate Body in 
US – Zeroing (Japan)  and contends that such past rulings sh ould be followed in this case to ensure 
security and predictability for the international trading system.   
7.23 Japan generally agrees with Mexico that the use of zeroing in investiga tions is inconsistent 
with Articles 2.1, 2.4.2 and 2.4 of the Anti-Dumpi ng Agreement.  Japan specifically supports Mexico 
with respect to investigations where the T-T met hodology is used, but also claims that the same 
inconsistency arises in the context of the WA-W A and the WA-T methodologies.  Japan submits that 
the definition of dumping in Article VI:1 of th e GATT 1994 and Article 2.1 of the Anti-Dumping 
Agreement requires the investigating authorities to make a determination of dumping for the product 
under consideration as a whole, irrespective of the methodology used for the comparison of the normal value and the export price.  If the authorities carry out multiple comparisons, the results of all such intermediate comparisons have  to be taken into considerati on in determining the margin of 
                                                     
 
19 Written Submission of the European Communities, para. 160.    WT/DS344/R 
 Page 13 
 
 
  dumping for the product under consideration as a w hole.  Finally, Japan asserts that zeroing in 
investigations is inconsistent w ith the obligation to carry out a fair comparison between the normal 
value and the export price as required under Article 2.4 of the Agreement.   
(e) Thailand 
7.24 Thailand considers the use of zeroing to be in consistent with the letter and the spirit of 
Article VI of the GATT 1994 and the Anti-Dumping Agreement.  According to Thailand, as the 
Appellate Body has consistently held in the past  zeroing cases, whenever investigating authorities use 
intermediate price comparisons while calculating the margin of dumping, they should take into 
account the results of all such comparisons wher e the export price exceeds the normal value.  
Thailand therefore invites the Panel to follow this  line of reasoning in this case and accept Mexico's 
claims with regard to model zeroing in investig ations, irrespective of the comparison methodology 
used.   
3. Evaluation by the Panel 
7.25 Mexico has raised an "as such " as well as an "as applied" claim regarding model zeroing in 
investigations.  Below, we analyse each in turn.   
(a) Model Zeroing in Investigations "As Such" 
7.26 Mexico's "as such" claim on model zeroing in i nvestigations raises the issue of the alleged 
existence of the measure at issue.  Mexico submits that there exists, under US law, such a measure as 
the "Zeroing Procedures" as manifested in anti-dum ping investigations where the normal value and 
the export price are compared on a WA-WA basis.  In  other words, Mexico asserts the existence of a 
measure called the "Zeroing Procedures" relativ e to model zeroing in investigations.  The 
United States disagrees with Mexico's assertion th at such a measure as the "Zeroing Procedures" 
exists under US law and therefore invites the Pane l to dismiss Mexico's " as such" claim regarding 
model zeroing in investigations.   
7.27 Mexico, in certain instances in its subm issions, refers to this measure as the Model Zeroing 
Procedures.20  We find this expression useful because it ser ves to distinguish the measure at issue in 
connection with Mexico's "as such" claim on mode l zeroing in investigations from the measure at 
issue in connection with Mexico's "as such" claim on  simple zeroing in periodic reviews.  For ease of 
reference, therefore, we shall use this expression to refer to the specific measure  at issue in connection 
with the claim at issue.   
(i) Alleged Existence of the Model Zeroing Procedures 
7.28 The first issue that we have to address regarding Mexico's "as such" claim on model zeroing 
in investigations is whether the measure exists.  We note that this inquiry concerns the alleged 
existence of the Model Zeroing Procedures  at the time of the establishment of this Panel.  Assuming 
that this measure existed when this Panel was established, th e parties disagree whether it was 
subsequently withdrawn by the United States.  Th e United States asserts that it was, but Mexico 
disagrees.  If we find that the measure existed at th e time of the establishment of this Panel, we will 
also have to address the issue of whether it was subsequently withdrawn.  Furthermore, if we find that 
the measure was indeed withdrawn subsequent to the establishment of this Panel, we will also have to 
decide whether to make findings and rulings on an expired measure.   
 
                                                      
20 See, for instance, First Written Subm ission of Mexico, paras. 57 and 61. WT/DS344/R   
Page 14  
 
  Did the Model Zeroing Procedures  Exist As of the Time of the Establishment of the Panel
? 
7.29 We are cognizant that we can only address the substance of Mexico's "as such" claim on 
model zeroing in investigations if there ex ists, under US law, such a measure as the Model Zeroing 
Procedures .  We recall that the principles on the burde n of proof applicable in these proceedings 
(supra , para. 7.6) require Mexico to present evidence sufficient to demonstrate the existence of such 
measure.   
7.30 The types of measures that can be subject to  the WTO dispute settlement proceedings have 
not been specified in the DSU.  Article 3.3 of the DSU mentions that the WTO dispute settlement 
mechanism deals with the "measures taken by a Member".  This indicates that there has to be a nexus 
between the measure that is contested and the Member against which the complaint is brought.21  It 
does not, however, speak directly to the question of  what types of measures may be challenged.  We 
note, however, that this issue is not novel in the WTO dispute settlement system.  A reading of the Appellate Body's decisions on this issue reveals that the concept of a "measure" that can be 
challenged in WTO dispute settlement is to  be interpreted broadly.  Recently, in US – Corrosion-
Resistant Steel Sunset Review , the Appellate Body reasoned that "[i]n principle, any act or omission 
attributable to a WTO Member can be a measure of  that Member for purposes of dispute settlement 
proceedings".
22  The Appellate Body further indicated that a measure, for purposes of the WTO 
dispute settlement proceedings, consists "not onl y of particular acts applied only to a specific 
situation, but also of acts setting forth rules or norms  that are intended to have  general and prospective 
application".23  We agree with the Appellate Body's a pproach regarding the concept of a "measure" 
for purposes of the WTO dispute settlement proceedings .  In our view, not allowing "as such" actions 
against measures of general and prospective app lication would undermine the objective of ensuring 
the "security and predictability to the multilateral tr ading system" referred to in Article 3.2 of the 
DSU.   
7.31 The United States does not disagree with the no tion that the WTO dispute settlement system 
applies to, among others, acts that set forth norms that  have a general and prospective application.  It 
argues, however, that Mexico has not presented ev idence sufficient to prove that such a measure 
exists in this case.  We note that the issue of proving the existence of a measure subject to an "as 
such" claim has been discu ssed by the Appellate Body on several occasions.  In US – Oil Country 
Tubular Goods Sunset Reviews , the United States, the Member complained against in that case, argued 
that because the Sunset Policy Bulletin was not a legal instrument that was binding for the US authorities, it did not constitute a meas ure subject to WTO dispute settlement.
24  The Appellate Body 
disagreed.  According to the Appellate Body, the status of the Sunset Policy Bulletin was not relevant to 
the question of whether it could be challenged in th e WTO.  What mattered was whether it constituted a 
measure subject to WTO di spute settlement.  The Appellate Body reasoned that the Sunset Policy 
Bulletin had normative value, that it had general and prospective applicati on and concluded that it 
constituted a measure subject to the WTO dispute settlement.25   
7.32 The measure at issue in these proceedings is different from the Sunset Policy Bulletin in that 
unlike the Sunset Policy Bulletin, the Model Zeroing Procedures  are not manifested in a written form.  
                                                      
21 Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating 
Dumping Margins ("Zeroing")  ("US – Zeroing (EC) "), WT/DS294/AB/R, adopted 9 May 2006, para. 187.   
22 (footnote omitted) Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on 
Corrosion-Resistant Carbon Steel Flat Products from Japan  ("US – Corrosion-Resistant Steel Sunset Review "), 
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3, para. 81.   
23 (footnote omitted) Ibid., para. 82.   
24 Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country 
Tubular Goods from Argentina  ("US – Oil Country Tubular Goods Sunset Reviews "), WT/DS268/AB/R, adopted 
17 December 2004, DSR 2004:VII, 3257, para. 184.   
25 Ibid., para.  187.    WT/DS344/R 
 Page 15 
 
 
  In our view, however, it would be inconsistent with the above-describ ed approach regarding the concept 
of a "measure" to hold that only written instruments may constitute a measure.  We do not, therefore, 
attribute a decisive role to the form in which the measure is manifested in considering whether the Model Zeroing Procedures  may be challenged in the WTO.  We note that this very issue arose in the 
recent US – Zeroing (EC)  case which also involved zeroing and that the Appellate Body made a ruling 
along these same lines.
26  Nonetheless, the Appellate Body ca utioned that a panel must not lightly 
assume the existence of a rule or norm constituting a measure of general and prospective application, 
especially when it is not in the form of a written document.27  The Appellate Body identified certain 
criteria that a measure should possess in order to be susceptible to a challenge in the WTO dispute 
settlement proceedings:   
"In our view, when bringing a challenge against such a "rule or norm" that constitutes 
a measure of general and prospective appli cation, a complaining party must clearly 
establish, through arguments and supporting evid ence, at least that the alleged "rule 
or norm" is attributable to the responding Member ;  its precise content ;  and indeed, 
that it does have general and prospective application .  It is only if the complaining 
party meets this high threshold, and puts forward sufficient evidence with respect to 
each of these elements, that a panel would be in a position to find that the "rule or 
norm" may be challenged, as such.  This evidence may include proof of the 
systematic application of the challenged "rul e or norm".  Particular rigour is required 
on the part of a panel to support a conclusion as to the existence of a "rule or norm"  
that is not expressed in the form of a written document.   A panel must carefully 
examine the concrete instrumentalities that  evidence the existence of the purported 
"rule or norm" in order to conclude that such "rule or norm" can be challenged, as 
such."28  (footnote omitted, emphasis added) 
7.33 In so far as the claim at issue here, we recall that the alleged measure is the Model Zeroing 
Procedures .  Turning to the criteria pronounced by the Appellate Body, we note that the measure 
challenged by Mexico is attributable to the United States .  The fact that model zeroing occurs in 
connection with the margin calculations in anti- dumping investigations carried out by the USDOC 
clearly indicates this.   
7.34 Regarding the precise content  of the Model Zeroing Procedures , Mexico points to various 
instruments.  Mexico contends that the following constitute evidence that d escribes the content of the 
Model Zeroing Procedures :  (a) the Standard Computer Program me used by the USDOC, (b) the Anti-
Dumping Manual, (c) the application of the Model Zeroing Procedures  in the investigation on 
Stainless Steel Sheet and Strip in Coils from Mexico , (d) further evidence on the consistent application 
of the Model Zeroing Procedures  in all investigations previous ly conducted by the USDOC, and (e) 
evidence showing continued application of the Model Zeroing Procedures  in current investigations.   
7.35 First, regarding the Standard Computer Progra mme used for dumping margin calculations by 
the USDOC, Mexico argues that the Standard Ze roing Line incorporated in this programme 
implements the Model Zeroing Procedures  in investigations.  That is, the Standard Computer 
Programme used by the USDOC treats as zero the results of intermediate comparisons yielding 
negative margins when the comparisons are aggregat ed for the calculation of the overall margin of 
dumping for the product as a whole.  An expert opi nion presented by Mexico confirms this assertion 
and further explains how model zeroing is carried out in investigations.29  The expert opinion also 
                                                      
26 Appellate Body Report, US – Zeroing (EC) , supra , note 21, paras. 190-193.   
27 Ibid., para.  196.   
28 Ibid., para. 198.   
29 Exhibit MEX-1, paras. 29-35.   WT/DS344/R   
Page 16  
 
  indicates that the USDOC has never changed th e zeroing line of this Standard Computer 
Programme.
30   
7.36 Second, Mexico cites the Anti-Dumping Manua l used by the USDOC as further evidence 
indicating that the USDOC regularly uses the Standard Computer Programme in its margin calculations in investigations.  The Manu al provides, in relevant parts:   
"III. PROGRAMMING PROCEDURES 
The basic elements of the new PC progr amming procedures for investigations and 
reviews are validated databases, proper calculation methodologies, the best computer platform, and standard programs.  The pur pose of the procedures is to improve the 
accuracy and consistency of computer calculations.  Calculation accuracy occurs 
when a program has been thoroughly checked.  Accuracy is a function of both using 
validated databases in standard programs and checking calculations for computational and substantive correctness.  Calculation consistency occurs when every program 
uses the same standard calculation methodology."
31   
We note that the Manual shows that the USDOC is expected to use the Standard Computer 
Programme consistently in its margin calculations in investigations.   
7.37 Third, Mexico points to the application of the Model Zeroing Procedures  in the investigation 
on Stainless Steel Sheet and Strip in Coils from Mexico , as proof of the existence of such Procedures.  
We note that the United States acknowledges that the USDOC did use model zeroing in the investigation on Stainless Steel Sheet and Strip in Coils from Mexico .
32   
7.38 Fourth, Mexico asserts that the US DOC has consistently applied the Model Zeroing 
Procedures  in past investigations.  Mexico substan tiates this assertion through an expert opinion, 
statements made by the United States before the pr evious WTO panels and th e factual findings made 
by those panels.  The expert opinion states that the Model Zeroing Procedures  have been a consistent 
element of the USDOC's dumping margin calculation in all proceedings.33  In response to questioning 
in this regard, the United States has argued that the expert's description of the application of Model 
Zeroing Procedures  under US law was inaccurate in so far as it suggested that the USDOC was bound 
by the Standard Computer Programme.  According to the United States, the expert opinion only describes the basic templates in the computer programme, which the USDOC has discretion to 
change.  The United States also cites instances where the expert herself acknowledges that the 
USDOC made changes to the computer programmes, albeit in the context of periodic reviews.  The 
United States acknowledges, however, that these cha nges did not include the zeroing aspects of the 
programmes.
34  Although the United States asserts th at the Assistant Secretary for Import 
Administration has discretion to change the com puter programmes used by the USDOC, including 
their zeroing aspects, the United States stated that su ch discretion had never been used until the policy 
change, dated 22 February 2007, with regard to i nvestigations where the normal value and the export 
price were compared on a WA-WA basis.35 
                                                      
30 Exhibit MEX-1, paras. 16-17.   
31 Exhibit MEX-4D, p.8.   
32 Supra , note 3.   
33 Exhibit MEX-1, paras. 15-17.   
34 Response of the United States to Question 5 from the Panel Following the First Meeting.   
35 Response of the United States to Question 2 from  the Panel following the Second Meeting.    WT/DS344/R 
 Page 17 
 
 
  7.39 Finally, Mexico refers to the fact that the Model Zeroing Procedures  were followed in every 
investigation conducted after January 2006.36  While not providing a full list of these investigations, 
Mexico mentions certain examples where the USDOC defended the use of zeroing in some of these 
investigations.37   
7.40 It seems clear to us, on the basis of the fo regoing, that Mexico has presented evidence 
sufficient to demonstrate the precise content of the Model Zeroing Procedures  "as such" under 
US law.  In our view, the eviden ce about the precise content of the Model Zeroing Procedures , 
particularly the parts of the Anti-Dumping Manual that we cited above which indicate that the USDOC had to follow the Standard Computer Progr amme consistently in investigations, also 
demonstrates that these Procedures had general and prospective application
.  This shows that the 
Model Zeroing Procedures  went beyond mere repetition of a certain methodology to specific cases 
and had become a "deliberate policy".38  We observe below (paras. 7. 44-7.45), that the USDOC made 
its policy change entailing the termination of mode l zeroing in investigations through an official 
notice in the Federal Register.39  In our view, this confirms that the Model Zeroing Procedures had, 
until such change, a general and prospective application.   
7.41 The United States argues that Mexico has not demonstrated the existence of the Model 
Zeroing Procedures  as a measure that could be challenged be fore a WTO panel.  The United States 
criticizes Mexico's reliance on past  panel and Appellate Body findings  regarding the existence of the 
zeroing procedures and argues that "a separate pane l's findings are not evidence, but conclusions 
based on evidence".40  We note that other WTO panels as well as the Appellate Body have made 
similar findings in cases that concerned the zeroing methodology applied by the United States in anti-
dumping proceedings.  Our findings are, however, based on the evidence presented by Mexico in 
these proceedings, not on the WTO jurisprudence.  We therefore disagree with the United States' 
assertion.   
7.42 On the basis of the foregoing considerations, we  conclude that Mexico has presented evidence 
sufficient to demonstrate the existence of the Model Zeroing Procedures  under US law as of the date 
of establishment of this Panel.   
Were the Model Zeroing Procedures  Subsequently Repealed by the United States ? 
7.43 The United States submits that as of 22 February 2007, the USDOC stopped using model 
zeroing in investigations.  Mexico acknowledges that the United States did make such a change in its 
practice regarding model zeroing in investigations and that it applied its new practice in at least one 
investigation initiated sub sequent to this date.41  Mexico, however, considers that the United States 
has not eliminated the practice of model zeroing in investigations because this  change in policy only 
                                                      
36 Mexico has not explained the significance of January 2006.  Our understanding is that the 
importance of this date in terms of the submission of evidence regarding the continued application of Model 
Zeroing Procedures  is because it supersedes the date of the USDOC's determination in the last periodic review 
on Stainless Steel Sh eet and Strip in Coils from Mexico , i.e. 12 December 2005.  See, First Written Submission 
of Mexico, para. 136.   
37 First Written Submission of Mexico, paras. 76-78.   
38 See, Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews  
("US – Zeroing (Japan) "), WT/DS322/AB/R, adopted 23 January 2007, para. 85.   
39The United States submits that the Federal Regi ster notice announcing th at the USDOC would no 
longer make average-to-average compar isons in investigations without taking into consideration all comparable 
export transactions was issued in co nnection with the implementation of DSB rulings and recommendations in 
the US – Zeroing (EC) dispute, as required under US law [Section 123(g) of the Uruguay Round Agreements 
Act (19 U.S.C. § 3533(g))].  Comments of the United St ates on the interim report of the Panel, para. 6. 
40 First Written Submission of the United States, para. 40.   
41 Response of Mexico to Question 13 from the Panel Following the First Meeting.   WT/DS344/R   
Page 18  
 
  affects the investigations ongoing as of, or initiated af ter, 22 February 2007.  Mexico also argues that 
as long as the impact of model zeroing on existing anti-dumping measures is not removed, the measure cannot be considered to have been eliminated. 
7.44 The official notice repealing model zeroing in investigations, published in the US Federal 
Register, reads in relevant parts:   
"Final Modification Concerning the Ca lculation of the Weighted-Average 
Dumping Margin During an Antidumping Investigation 
After considering all of the comments subm itted, the Department is adopting this 
final modification concerning the calcula tion of the weighted-average dumping 
margin.  The Department will no longer make average-to-average comparisons in 
investigations without providing offsets for non-dumped comparisons."
42   
"Timetable 
The effective date of this notice is 16 Janua ry 2007 ... The Department will apply this 
final modification in all current and futu re antidumping investigations as of the 
effective date."43   
The effective date of this modification w as subsequently changed to 22 February 2007.44   
7.45 We note that, as Mexico also concedes, the no tice makes clear that the practice of model 
zeroing in investigations was to be eliminated as of 22 February 2007.  The United States also 
submitted evidence that the new method applied in at least one investigation.45  We also note that the 
notice unambiguously states that the new policy will ha ve prospective effect only.  It will apply to 
investigations ongoing as of, or initiated after, the e ffective date of the notice.  The issue therefore 
becomes whether in these circumstances Mexico's as sertion that the measure relating to Mexico's "as 
such" claim regarding model zeroing in investigations has not been eliminated, can be sustained.  In 
our view, it cannot.  We recall that we are now consid ering an "as such" challenge to a rule or norm of 
general and prospective application.  Whether the change in the United States' practice has 
retrospective effect does not have a bearing on th e more general question of whether the measure has 
been repealed.  The fact that the impact of th e repealed measure will continue as long as the anti-
dumping duty rates previously calcu lated through the use of model zeroing remain in place does not 
change the fact that the measure itself is no longer in force, and that it will not be followed in the 
future investigations.  We therefore conclude that the measure at issue, i.e. the Model Zeroing 
Procedures  under US law, expired on 22 February 2007.  The question therefore becomes whether we 
should make findings and recommendati ons on this expired measure.   
(ii) Should the Panel Make Findings and Recommendations on an Expired Measure? 
7.46 Above, we found that the measure at issue with respect to Mexico's "as such" claim on model 
zeroing in investigations, i.e. the Model Zeroing Procedures  under US law, expired on 
22 February 2007.  Thus, the measure which was in fo rce as of the time of the establishment of the 
Panel, was, during the Panel proceedings, repealed.  This raises the question of whether this Panel 
should make findings and recommendati ons on this expired measure.   
                                                      
42 Exhibit MEX-10, p. 77722.  
43 Exhibit MEX-10, p. 77725.   
44 Exhibit MEX-11, p. 3783.   
45 Exhibit US-3, p. 9508.    WT/DS344/R 
 Page 19 
 
 
  7.47 We asked for parties' views on this issue.  While  continuing to assert that the measure at issue 
has not been abandoned by the United States, Mexico ar gues that, if the Panel is of the view that the 
measure has been repealed, it should make finding s on the measure's WTO consistency, and further 
asserts that if the Panel finds the measure to be in consistent, it should also make recommendations.  In 
this context, Mexico also points out that the Pane l can, as some panels have done in the past, make 
qualified recommendations.46  The United States maintains that the alleged measure does not exist, 
but acknowledges as a general matter that "if a measure exists at the time a panel is established but 
expires or is withdrawn during the course of the pa nel proceedings, it is still within the panel's terms 
of reference, and the panel may make findings regarding the WTO consistency of the measure".47  We 
understand the United States' position to be that if  the Panel finds that such a measure as the Model 
Zeroing Procedures  existed under US law at the time of the establishment of the Panel and that it was 
withdrawn in the course of the panel proceedings , the Panel is not precluded from making findings 
regarding the alleged WTO-incons istency of such a measure.   
7.48 Model Zeroing Procedures  in investigations "as such" was raised in Mexico's panel request 
and therefore is within this Panel's terms of refe rence.  Hence, we are not precluded from addressing 
Mexico's claims with regard to this measure .  As we have noted, however, the measure was 
withdrawn after the commencement of the panel pr oceedings.  There is no specific provision in the 
DSU that addresses whether a WTO panel may or may not make findings and recommendations on a 
measure which, while within the panel's terms of reference at the outset of the panel proceedings, 
subsequently expires.  We note, however, that th is is not a novel issue in WTO dispute settlement 
proceedings.  This specific issue has arisen in a num ber of cases, and panels, taking into consideration 
the particularities of the disputes before them, have  used their discretion in deciding whether making 
findings on an expired measure would be appropriate in each case.48   
7.49 According to Article 3.7 of the DSU, "[t]he aim of the dispute settlement mechanism is to 
secure a positive solution to a dispute".  We will in any case have to address the WTO-consistency of 
model zeroing in investigations because Mexico has al so raised an "as applied" claim in this regard.  
In these circumstances, we find it appropriate to make findings regarding Mexico's claim on model 
zeroing in investigations "as such" in order to secu re a positive solution to the dispute before us.   
7.50 As to whether we should also make a recomme ndation, we fail to see what purpose would be 
served by a recommendation relating to a measure that no longer exists.  We recall in this respect the 
views expressed by the Appellate Body in US – Certain EC Products :   
"We note, though, that there is an obvious  inconsistency between the finding of the 
Panel that "the 3 March Measure is no l onger in existence" and the subsequent 
recommendation of the Panel that the DSB request that the United States bring its 3 March Measure into conformity with its  WTO obligations.  The Panel erred in 
                                                     
 
46 Response of Mexico to Question 1(b) from the Panel Following the Second Meeting.   
47 Response of the United States to Question 1(b) from the Panel Following the Second Meeting.   
48 See for instance, Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry 
("Indonesia – Autos "), WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1, 2, 3 and 4, adopted 
23 July 1998, DSR 1998:VI, 2201, para. 14.9;  Panel Report, India – Measures Affecting the Automotive Sector 
("India – Autos "), WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 1827, paras. 7.26-
7.29;  Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes  
("Dominican Republic – Import and Sale of Cigarettes "), WT/DS302/R, adopted 19 May 2005, as modified by 
Appellate Body Report, WT/DS302/AB/R, paras. 7.340-7.344;  Panel Report, European Communities – 
Measures Affecting the Approval  and Marketing of Biotech Products  ("EC – Approval and Marketing of Biotech 
Products "), WT/DS291/R, WT/DS292/R, WT/DS293/R, Corr.1 and Add.1, 2, 3, 4, 5, 6, 7, 8 and 9, adopted 
21 November 2006, paras. 7.1303-7.1312.   WT/DS344/R   
Page 20  
 
  recommending that the DSB request the United States to bring into conformity with 
its WTO obligations a measure which the Panel has found no longer exists."
49   
We shall refrain from making recommendations even if we find this measure to be inconsistent with 
the United States' WTO obligations since we have found that the United States abandoned the practice 
of model zeroing in investigations as from 22 Febr uary 2007.  We now proceed to our substantive 
analysis of Mexico's "as such" claim on model zeroing in investigations.   
(iii) Is Model Zeroing in Investi gations WTO-Inconsistent? 
7.51 The United States concedes that prior to the policy change on 22 February 2007, the USDOC 
applied model zeroing in anti-dumping investigations.  That is, the USDOC considered as zero results 
of intermediate model-specific comparisons when su ch results were aggregated in the calculation of 
the margin of dumping for the product under consid eration as a whole.  As we noted above, the 
United States acknowledges that in US – Softwood Lumber V , the Appellate Body found the use of 
zeroing in this context to be inconsistent with Arti cle 2.4.2 of the Agreement a nd that this reasoning is 
equally applicable to this claim.  Finally, the Un ited States has presented no arguments in response to 
Mexico's contention that the use of model zeroing in investigations is WTO-in consistent.  In short, 
and excepting its arguments about the existence of the alleged measure as discussed above, the 
United States does not appear to contest Mexico's claim on this issue.   
7.52 We recall that the rules on the burden of proof applicable in these proceedings ( supra , 
para. 7.6) provide that the party claiming a violation of a provision of the WTO Agreement, in this case Mexico, by another Member, must assert and prove its claim.  Mexico, therefore, has to present 
evidence and arguments sufficient to make a prima facie case of violation of the relevant provisions 
of the relevant WTO agreements.  Thus, the fact  that the United States does not contest Mexico's 
contention that the use of model zeroing in invest igations is WTO-inconsistent does not discharge 
Mexico of its obligation to make a prima facie case.  It follows that we shall find for Mexico in 
connection with its claim on model zeroing in investigations only if Mexico presents a prima facie 
case regarding the incompatibility of model zeroing in investigations with the relevant provisions of 
the relevant WTO agreements.  In our view, our ob ligation to carry out an "objective assessment of 
the facts of the case and the applicability of and c onformity with the relevant covered agreements" as 
set forth in Article 11 of the DSU, lends support to ou r approach.  With this in mind, we turn to the 
evaluation of the arguments that Mexico has presented in support of this claim.
50   
7.53 Mexico raises four arguments in support of its claim regarding the WTO-inconsistency of 
model zeroing in investigations.  First, it asserts that model zeroing in  investigations is inconsistent 
with Articles VI:1 and VI:2 of the GATT 1994 a nd Article 2.1 of the Anti-Dumping Agreement 
because it precludes the calculation of a margin of  dumping for the product under consideration as a 
whole.  The ultimate margin only reflects part of the calculations for the product under consideration 
because negative results in the interm ediate calculations are treated as  zero.  Second, Mexico contends 
that model zeroing in investigati ons is inconsistent with Article 2.4.2 of the Anti-Dumping Agreement 
because it precludes the calculation of a margin of dumping based on a weighted average of prices of 
all comparable export transactions for the product under consideration as a whole.  Third, Mexico 
submits that model zeroing in investigations is inc onsistent with the obligation to carry out a fair 
                                                      
49 Appellate Body Report, United States – Import Measures on Certain Products from the European 
Communities ("US – Certain EC Products "), WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373, 
para. 81. 
50 We recall that this very issue arose in US – Shrimp (Ecuador) and the panel pointed out that it could 
only find for the complaining Member if that Member made a prima facie case on the inconsistency with the 
relevant provisions of the relevant WTO agreements of model zeroing in investigations.  See, Panel Report, United States – Anti-Dumping Measures on Shrimp from Ecuador ("US – Shrimp (Ecuador) "), WT/DS335/R, 
adopted 20 February 2007, para. 7.9.  We therefore also find support in this panel decision.    WT/DS344/R 
 Page 21 
 
 
  comparison between the normal value and the export  price as required under Article 2.4 of the Anti-
Dumping Agreement because it artificially reduces th e prices of certain export transactions.  Fourth, 
Mexico argues that as an "administrative procedure"  within the meaning of Article XVI:4 of the WTO 
Agreement and Article 18.4 of the Anti-Dumping Agreement, model zeroing in investigations is 
inconsistent with the obligations set forth in those provisions.   
7.54 We find it appropriate to commence our assessment of Mexico's claim with the alleged 
violation of Article 2.4.2 of the Agreement and then move on to the next alleged violation, if, and to 
the extent necessary, to resolve the claim.   
7.55 We recall that model zeroing in investigations has been found to be inconsistent with the 
obligation under Article 2.4.2 of the Agreement to compare the weighted-average of the normal value 
with the weighted-average of the prices of all comp arable export transactions in all dispute settlement 
proceedings in which it was challenged, i.e. in the panel decisions in EC – Bed Linen , EC – Tube or 
Pipe Fittings,  US – Softwood Lumber V , US – Zeroing (Japan), US – Shrimp (Ecuador)  and the 
Appellate Body decisions in EC – Bed Linen  and US – Softwood Lumber V .  We note that Mexico has 
developed its arguments on mode l zeroing mainly along the lines of this jurisprudence.51   
7.56 Article 2.4.2 of the Agreement provides:   
"Article 2 
Determination of Dumping 
... 
2.4.2 Subject to the provisions governing fair comparison in paragraph 4, the 
existence of margins of dumping during the investigation phase shall normally be 
established on the basis of a comparison of  a weighted average normal value with a 
weighted average of prices of all comparable export transactions  or by a comparison 
of normal value and export prices on a transaction-to-transaction basis.  A normal value established on a weighted average basis may be compared to prices of 
individual export transactions if the author ities find a pattern of export prices which 
differ significantly among different purchasers, regions or time periods, and if an 
explanation is provided as to why such differences cannot be taken into account 
appropriately by the use of a weight ed average-to-weighted average or 
transaction-to-transaction comparison."  (emphasis added) 
7.57 We note that the text of Article 2.4.2 provides that in investigations where the normal value 
and the export price are compared on a WA-WA basis,  the weighted average normal value is to be 
compared with "a weighted average of prices of all comparable export transactions".  Mexico asserts 
that through model zeroing in investigations, the US DOC ignores, in the calculation of the margin of 
dumping for the product under consideration as a whole,  the results of intermediate comparisons made 
for different models in which the WA export price exceeds the WA normal value.  This, in Mexico's 
view, is inconsistent with the obligation to take all comparable export transactions into consideration 
in the calculation of the margin of dumping for th e product under consideration as a whole.  In its 
argumentation, Mexico heavily relies on the findings of the Appellate Body in prior zeroing disputes, 
particularly in US – Softwood Lumber V .   
                                                     
 
51 First Written Submission of Mexico, paras. 198-208.   WT/DS344/R   
Page 22  
 
  7.58 The Appellate Body in US – Softwood Lumber V  started by pointing out that Article 2.4.2 
permits multiple averaging.
52  That is, the investigating authorities may first break the subject product 
into models, perform a comparison on the basis of  a WA normal value and a WA export price for 
each such model, and then aggregate these intermedia te results in calculating the margin of dumping 
for the product under consideration as a whole.  Th e Appellate Body agreed with the panel that 
Article 2.4.2 requires the authorities to take in to consideration the average of prices of all  comparable 
export transactions.53  The Appellate Body observed that th e parties disagreed as to whether this 
obligation was limited to model-specific comparisons or whether it also applied to the aggregation of 
such comparisons.  The Appellate Body was of the vi ew that the resolution of this issue centred on the 
interpretation of the terms "dumping" and "margi ns of dumping" in the Anti-Dumping Agreement.54  
The Appellate Body interpreted the definition of the term "dumping" under Article 2.1 to refer to the 
product under consideration as a whole as defined by th e investigating authorities.  It then noted that 
by virtue of the phrase "[f]or the purpose of this Agre ement" in Article 2.1, this definition applies to 
the entire Agreement, including Article 2.4.2.  The Appellate Body then concluded that dumping can 
be found to exist only "for the product under inves tigation as a whole, and cannot be found to exist for 
a product type, model, or category of that product".55   
7.59 In the view of the Appellate Body, the obligation set forth in Article 2.4. 2 to take into account 
the weighted average of prices of all comparable export transactions applies not only to the model-specific comparisons, but also to their aggregation for purposes of establishing the margin of dumping for the product under consideration as a whole.
56  Consequently, the results of model-specific 
comparisons are not margins of dumping within the meaning of Article 2.4.2, but rather constitute 
intermediate calculations established by the authori ties in the context of calculating the margin of 
dumping for the product under consideration as a whole.57  It follows that when authorities use 
multiple averaging in their dumping determinations, Article 2.4.2 requires them to take into account 
the results of all model-specific comparisons in the calculation of the margin of dumping for the product under consideration as a whole.   
7.60 At the outset, we note, and incorporate by reference, our reasoning below (paras. 7.102-7.105) 
regarding the importance of adopted  Appellate Body reports on future  panels dealing with similar 
legal issues.  The issue we are addressing, model zeroing in investigations, is the same as the one 
addressed by the Appellate Body in US – Softwood Lumber V .  Nonetheless, for the reasons set forth 
below, we only partially agree with the Appella te Body's reasoning regarding model zeroing in 
investigations, even though we also come to the same conclusion.   
7.61 We note that the Appellate Body's reasoning is mainly based on the phrase "all comparable 
export transactions" under Article 2.4.2, interprete d in light of the definition of "dumping" under 
Article 2.1 of the Agreement.  The Appellate B ody reasoned that the phrase "all comparable export 
transactions" requires the authorities to take into cons ideration the weighted average of prices of all 
comparable export transactions, both in the cont ext of model-specific comparisons and in the 
aggregation of such model-specific results.  We ag ree with the Appellate Body that the phrase "all 
comparable export transactions" requires the author ities to take into consideration the weighted 
average of prices of all comparable export transactions in their dumping determinations in investigations.  We consider that the text of Artic le 2.4.2 stipulates this requirement with sufficient 
clarity.  We share the view of the Appellate Body  regarding the interpretation of the phrase "all 
                                                     
 
52 Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from 
Canada ("US – Softwood Lumber V "), WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, 1875, para. 81.   
53 Ibid., para. 86.   
54 Ibid., para. 90.   
55 Ibid., para. 96.   
56 Ibid. , para. 98.  
57 Ibid., para. 97.    WT/DS344/R 
 Page 23 
 
 
  comparable export transactions" under Article 2.4.2.  Model zeroing runs counter to this requirement 
because it entails the omission of the results of model-specific comparisons where the WA export 
price exceeds the WA normal value, from the aggreg ation of model-specific results in the calculation 
of the margin of dumping.  Model zeroing is, theref ore, inconsistent with Article 2.4.2.  We note, 
however, that, as discussed below in paras. 7.11 6-7.123, we do not share the Appellate Body's 
reasoning on the issue of "product as a whole" and ha ve not relied on that reasoning in our assessment 
of Mexico's claim.   
7.62 On the basis of the foregoing considerations, we  conclude that Mexico has met its burden of 
proof regarding the inconsistency of model zeroing in investigations58 with Article 2.4.2 of the 
Agreement.  Having found model zeroi ng in investigations to be incons istent with Article 2.4.2 of the 
Agreement, we need not, and do not, address Mexico's  claims under Articles VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1, 2.4 and 18.4 of the An ti-Dumping Agreement and Article XVI:4 of the 
WTO Agreement in support of the same claim.   
(b) Model Zeroing in Inves tigations "As Applied" 
7.63 It is uncontested that the USDOC applie d model zeroing in the investigation on Stainless 
Steel Sheet and Strip in Coils from Mexico .59  Having found model zeroing in investigations to be 
inconsistent "as such" with the obligation set out un der Article 2.4.2 of the Agreement, we also find 
that the USDOC acted inconsistently with  Article 2.4.2 in the investigation on Stainless Steel Sheet 
and Strip in Coils from Mexico  by using model zeroing in the refere nced investigation.  As we have 
done with regard to Mexico's claim on model zeroing in investigations "as such", here too we decline 
to address Mexico's claims raised under Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 
2.4 and 18.4 of the Anti-Dumping Agreement and Ar ticle XVI:4 of the WTO Agreement in support of 
the same claim.   
E. SIMPLE ZEROING IN PERIODIC REVIEWS  
1. Arguments of Parties 
(a) Mexico 
7.64 Mexico has raised an "as such " as well as an "as applied" claim regarding simple zeroing in 
periodic reviews.  Mexico argues that the rules a nd procedures relating to simple zeroing in periodic 
reviews are embodied in what Mexico describes as the "Zeroing Procedures" under US law.   
7.65 Mexico generally asserts that dumping is an exporter-specific concept and that it can only 
exist with respect to individual exporters or fore ign producers, not importers or individual import 
transactions.  According to Mexico, simple zeroing in periodic reviews is inconsistent with the WTO 
rules in several regards.  First, Mexico submits th at simple zeroing in periodic reviews is inconsistent 
with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the Anti-Dumping Agreement because it leads to a margin of dumpi ng greater than the margin for the product under 
consideration as a whole.  This is because the US law requires the USDOC to treat as zero the results 
of intermediate price comparisons where the ex port price exceeds the normal value when such 
intermediate determinations are aggregated in order to calculate the margin of dumping for the 
product under consideration as a whole.  Such a de termination, in Mexico's view, only partially 
reflects the export transactions pertaining to the pr oduct under consideration as a whole.  It therefore 
                                                     
 
58 We recall that in paras. 7.7-7.9 above, we noted the description of the term "model zeroing in 
investigations" offered by Mexico, and decided to use it in  our analysis in this case for ease of reference.   
59 Supra , note 3.   WT/DS344/R   
Page 24  
 
  artificially inflates the margin of dumping and cau ses the imposition of an anti-dumping duty above 
the exporter's true margin.   
7.66 Second, Mexico contends that simple zeroing in  periodic reviews is inconsistent with the 
obligation to carry out a fair comparison between  the normal value and the export price as required 
under Article 2.4 of the Agreement because, as articulated by the Appellate Body in US – Zeroing 
(Japan) , a practice that gives rise to a margin of dum ping above an exporter's real margin cannot be 
viewed as involving a fair comparison within the meaning of Article 2.4.   
7.67 Third, Mexico asserts that as an "adminis trative procedure" within the meaning of 
Article XVI:4 of the WTO Agreement and Article  18.4 of the Anti-Dumping Agreement, simple 
zeroing in periodic reviews is also inconsistent w ith the obligations set out in these provisions.   
7.68 In addition to its "as such" claims, Mexico also  contends that by applying simple zeroing in 
five periodic reviews of the measure on Stainless Steel Sheet and Strip in Coils from Mexico , the 
USDOC acted inconsistently with the United States' WTO obligations.   
(b) United States 
7.69 The United States requests the Panel to dismiss Mexico's "as such" claim regarding simple 
zeroing in periodic reviews because, in the view of the United States, no such measure as the "Zeroing 
Procedures" exists under US law.  In the alterna tive, the United States requ ests the Panel to reject 
Mexico's "as such" claim regarding simple zeroing in periodic reviews because Mexico has failed to 
demonstrate that the Anti-Dumping Agreement disallo ws zeroing in periodic reviews.  For the same 
reason, the United States also requests the Panel to  reject Mexico's "as applied" claim regarding 
simple zeroing in the five periodic reviews at issue.   
7.70 More specifically, the United States argues that the Anti-Dumping Agreement cannot be 
interpreted to include a general prohibition on zeroing in all contexts.  The exclusive textual basis for 
finding zeroing to be WTO-inconsistent is Article  2.4.2 of the Agreement, which only prohibits 
zeroing in the narrow context of investigations where the WA-WA methodology is used.  The United States is of the view that it is at least a pe rmissible interpretation of the Agreement that zeroing 
is allowed outside this particular context.  The United States therefore asks the Panel to follow the 
correct and persuasive reasoning of past panels in this regard and refrain from following the Appellate 
Body's reasoning which, in the United States' view, fa ils to give credit to a permissible interpretation 
of the Agreement, inconsistently with Article 17.6( ii) of the Agreement.  The United States submits 
that an interpretation that extends the prohibiti on on zeroing beyond the context of investigations 
where the WA-WA methodology is used would re nder the remainder of Article 2.4.2 of the 
Agreement meaningless.  More specifically, the United States contends that if zeroing is prohibited in 
all contexts, the exceptional WA-T methodology provi ded for in that article would mathematically 
yield the same result as the WA-WA methodology.  Such  an approach would be inconsistent with the 
principle of effective treaty interpretation.  The United States also notes that the European Court of 
First Instance approved zeroing in the context of the WA-T methodology based on this "mathematical 
equivalence" issue.
60   
7.71 The United States submits that Article VI:1 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement contain definitional provisions that normally do not impose independent legal 
obligations on Members while acknowledging that they  may play an important role in interpreting 
other provisions of the Agreement.  Furthermore, th e United States is of the view that these provisions 
could be interpreted to allow a definition of dum ping on a transaction-specific basis, as opposed to 
requiring the examination of export transactions at  an aggregate level.  The United States finds 
                                                      
60 Case T-274/02, Ritek Corp. v. Council of the European Union, 24 October 2006 (Exhibit US-5).    WT/DS344/R 
 Page 25 
 
 
  support for this reading of the definition of dumping in GATT practice as well as the negotiating 
history of the Uruguay Round Anti-Dumping Agreement.  The United States asserts that the phrases "product as a whole" and "multiple comparisons" used by Mexico have been derived by the Appellate 
Body from the term "all comparable export transacti ons" in Article 2.4.2 and are not found in the text 
of the Agreement.   
7.72 The United States also disagrees with Mexico's inte rpretation of Article 9.3 of the Agreement.  
In the view of the United States, reading this provision as disallowing importer-specific duty 
assessment would undermine the very purpose of imposing anti-dumping duties which is to remove the injurious effect of dumping.  If, as Mexico proposes, Article 9.3 is interpreted to require an exporter-specific margin of dumping, this would a llow importers with a high margin to benefit from 
the importers with lower margins and thus to contin ue to cause injury to the domestic industry.   
7.73 The United States also submits that Mexico's  interpretation of Article 9.3 renders the 
prospective normal value systems inoperative and runs counter to Article 9.4(ii) which clearly allows 
for such systems.  Under the prospective normal va lue system, an importer's liability is the difference 
between the export price in a given transaction and the prospective normal value.  According to the 
United States, there is no textual support in the Agreement for the proposition that prices in other 
export transactions are relevant to  the calculation of the liability of  an importer under the prospective 
normal value system.   
7.74 The United States asserts that Article 2.4 of the Agreement does not resolve the issue of 
whether zeroing as such is fair or unfair.  Accord ing to the United States, Mexico's reasoning under 
Article 2.4 is built on its reading of the obligation set forth in Article 9.3.  If the Panel agrees that it is 
permissible to read Article 9.3 as allowing an importer-specific determination in duty assessment 
proceedings, such a determination would not yiel d a duty that exceeds the margin of dumping and 
there would be no argument about the unfairness of this  assessment within the meaning of Article 2.4.   
7.75 The United States contends that Mexico's  claims under Articles XVI:4 of the WTO 
Agreement and 18.4 of the Anti-Dumping Agreemen t are dependent on its substantive claims and 
invites the Panel to exercise judicial economy with regard to these claims.   
2. Arguments of Third Parties 
7.76 We note that although Mexico acknowledged, subse quent to its First Wr itten Submission, that 
the scope of its panel request was limited to "mode l zeroing in investigations" and "simple zeroing in 
periodic reviews", some of the third parties also addressed other types of zeroing because they prepared their submissions before Mexico's written  acknowledgement regarding the scope of its panel 
request.   
(a) Chile 
7.77 Chile contends that the WTO-inconsistency of  the zeroing methodology in periodic reviews 
has been confirmed by previous Appellate Body decisions and expresses hope that this issue will be 
resolved on a multilateral level through amendment of the Anti-Dumping Agreement.  Continued 
adjudication between WTO Members on this issue, which is costly and time consuming, should 
therefore be avoided.  Chile submits that zeroing not only inflates the margin of dumping, but also yields a positive determination of dumping where th ere would have been no dumping absent zeroing.  
Chile therefore asks the Panel to find that zeroing is inconsistent with Article s VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement.   WT/DS344/R   
Page 26  
 
  (b) China 
7.78 Based on the WTO jurisprudence regarding zeroing , China argues that the use of zeroing in 
periodic reviews is inconsistent w ith Article 9.3 of the Anti-Dumpi ng Agreement and Article VI:2 of 
the GATT 1994.  China is of the view that the Pa nel should not depart from the Appellate Body's 
jurisprudence because the arguments presented by the United States in these proceedings do not differ 
from the arguments raised in the context of the p ast cases.  China therefore invites the Panel to accept 
Mexico's claims and expects the United States to eliminate the use of zeroing in all anti-dumping 
proceedings.   
(c) European Communities 
7.79 The arguments of the European Communities addressing the importance of WTO 
jurisprudence on zeroing, summarized in paras. 7. 19-7.21 above, also apply to this claim.   
(d) Japan 
7.80 Japan generally submits that the "Zeroing Pr ocedures" used by the US investigating 
authorities constitute a measure of general and prospective application and therefore may be 
challenged "as such" in WTO dispute settlement pr oceedings.  Japan recalls the Appellate Body 
findings in previous zeroing cases and argues that these findings should be followed by the Panel in 
these proceedings.  More specifically, Japan cont ends that the zeroing measures challenged by 
Mexico in this case are the same as those found to be WTO-inconsistent by the Appellate Body in 
US – Zeroing (Japan)  and contends that such past rulings s hould be followed in this case to ensure the 
security and predictability of the international trading system.   
7.81 Regarding the use of zeroing in periodic review s, Japan first observes that the chapeau of 
Article 9.3 contains a cross-reference to Article 2.   It follows that the obligation to calculate an 
aggregate margin of dumping for the product under consideration as a whole also applies in the 
context of periodic reviews under US law.  Japan disagrees with the United States' view that dumping can be defined on a transaction-specific basis.  A ccording to Japan, there is a difference between the 
normative meaning of dumping and the price differe nce that might occur on a transaction-specific 
basis.  Drawing guidance from Article 6.10 of the Agreement, Japan also argues that in periodic 
reviews the authorities have to calculate a margin  of dumping for exporters, not importers.  Japan 
agrees that anti-dumping duties may be assessed on a transaction-specific basis under Article 9.3 of 
the Agreement, but adds that such assessment cannot  exceed the margin of dumping calculated for the 
product under consideration as a whole in accordance with Article 2.   
7.82 In sum, Japan agrees with Mexico that the use of  zeroing in periodic reviews is inconsistent 
with Article VI:2 of the GATT 1994 and Article  9.3 of the Anti-Dumping Agreement.   
(e) Thailand 
7.83 Thailand considers the use of zeroing to be in consistent with the letter and the spirit of 
Article VI of the GATT 1994 and the Anti-Dumping Agreement.  According to Thailand, as the Appellate Body has consistently held in the past  zeroing cases, whenever investigating authorities use 
intermediate price comparisons while calculating the margin of dumping, they should take into 
account the results of all such comparisons wher e the export price exceeds the normal value.  
Thailand therefore invites the Panel to follow this  line of reasoning in this case and accept Mexico's 
claims with regard to simple zeroing in periodic reviews, irrespective of the comparison methodology 
used.    WT/DS344/R 
 Page 27 
 
 
  3. Evaluation by the Panel 
(a) Alleged Existence of the Simple Zeroing Procedures  
7.84 As we noted above, Mexico argues that the rules and procedures pertaining to simple zeroing 
in periodic reviews are embodied in what Mexi co describes as the "Zeroing Procedures" under 
US law.  The United States, however, denies the exis tence of such a measure under its law.  Mexico's 
claim, therefore, requires the Panel first to assess th e issue of the alleged existence of the "Zeroing 
Procedures" under US law.  Mexico, in certain instan ces in its submissions, refers to this measure as 
the Simple Zeroing Procedures61.  This expression, in our view, serves to distinguish the measure at 
issue here from the first measure subject to Mexi co's "as such" claim regarding model zeroing in 
investigations, discussed above.  For ease of refere nce, therefore, we shall use the expression Simple 
Zeroing Procedures  to refer to the specific measure at i ssue with regard to this claim.   
7.85 We note that the evidence put forward by Me xico regarding the alleged existence of the 
Simple Zeroing Procedures  under US law, and the United States ' counterarguments, are similar to 
those presented in connection with Mexico's claim regarding model zeroing in investigations.  Our 
analysis below is therefore also along the same lines as set out in paras. 7.29-7.42 above.   
7.86 We are cognizant that we can only address th e substance of Mexico's "as such" claim 
regarding simple zeroing in periodic reviews if th ere exists, under US law, such a measure as the 
Simple Zeroing Procedures .  We recall that the principles on the burden of proof applicable in these 
proceedings ( supra , para. 7.6) require Mexico to present evidence sufficient to demonstrate the 
existence of such a measure.   
7.87 We recall our reasoning above ( supra , paras. 7.30-7.32) regarding the types of measures that 
may be challenged in the WTO dispute settlement pro ceedings and the criteria that an alleged rule or 
norm has to possess in order for such a rule or norm to be susceptible to a challenge in the WTO.  
Based on the same reasoning, we now proceed to our assessment of whether the Simple Zeroing 
Procedures , which according to Mexico exist under US law, meet these criteria.   
7.88 Turning to the criteria pronounced by the Appellate Body US – Zeroing (EC)62, we note that 
the measure challenged by Mexico is  attributable to the United States .  The fact that simple zeroing 
occurs in connection with the margin calculations  in periodic reviews carried out by the USDOC 
clearly indicates this.   
7.89 Regarding the precise content  of the Simple Zeroing Procedures , Mexico points to various 
instruments.  Mexico contends that the following constitutes evidence that de scribes the content of the 
Simple Zeroing Procedures :  (a) the Standard Computer Programme used by the USDOC, (b) the 
Anti-Dumping Manual, (c) the application of the Simple Zeroing Procedures  in all the five periodic 
reviews on Stainless Steel Sheet and Strip in Coils from Mexico , (d) further evidence on the consistent 
application of the Simple Zeroing Procedures  in all the periodic reviews previously conducted by the 
USDOC, and (e) evidence showing continued application of the Simple Zeroing Procedures  in the 
current periodic reviews.   
7.90 First, regarding the Standard Computer Progra mme used for dumping margin calculations by 
USDOC, Mexico argues that the Standard Zeroing Li ne incorporated in this programme implements 
the Simple Zeroing Procedures  in periodic reviews.  That is, the computer programme used by the 
USDOC treats as zero the results of intermedia te comparisons yielding negative margins when the 
comparisons are aggregated for the calculation of the overall margin of dumping for the product under 
                                                      
61 See, for instance, First Written Submission of Mexico, para. 103.   
62 Supra , note 28.   WT/DS344/R   
Page 28  
 
  consideration as a whole.  An expert opinion presen ted by Mexico confirms this assertion and further 
explains how simple zeroing is ca rried out in periodic reviews.
63  The expert opinion also indicates 
that the USDOC has never changed the zeroing line of this Standard Computer Programme.64   
7.91 Second, Mexico cites the Anti-Dumping Manua l used by the USDOC as further evidence 
indicating that the USDOC regularly uses the Standard Computer Programme in its margin 
calculations in periodic reviews.  The Ma nual provides, in relevant parts:   
"III. PROGRAMMING PROCEDURES 
The basic elements of the new PC progr amming procedures for investigations and 
reviews are validated databases, proper calculation methodologies, the best computer platform, and standard programs.  The pur pose of the procedures is to improve the 
accuracy and consistency of computer calculations.  Calculation accuracy occurs 
when a program has been thoroughly checked.  Accuracy is a function of both using validated databases in standard programs and checking calculations for computational and substantive correctness.  Calculation consistency occurs when every program 
uses the same standard calculation methodology."
65   
We note that the Manual shows that the USDOC is expected to use the Standard Computer 
Programme consistently in its margin calculations in periodic reviews.   
7.92 Third, Mexico argues that the USDOC applied the Simple Zeroing Procedures  at issue in all 
the five periodic reviews on Stainless Steel Sheet and Strip in Coils from Mexico .  The United States 
does not contest this fact.66   
7.93 Fourth, Mexico asserts that the USDOC has consistently applied the Simple Zeroing 
Procedures  in all the past periodic reviews.  Mexico substantiates this assertion through an expert 
opinion, statements made by the United States be fore the previous WTO panels and the factual 
findings made by those panels.  The expert opinion states that the Simple Zeroing Procedures  have 
been a consistent element of the periodi c reviews carried out by the United States.67  In response to 
questioning in this regard, the United States has not c ontested the accuracy of this expert's description 
of the application of the Simple Zeroing Procedures .  The United States has, however, argued that this 
description was inaccurate in so  far as it suggested that the USDOC was bound by the Standard 
Computer Programme.  According to the United Stat es, the expert opinion only describes the basic 
templates in the computer programme, which the USDOC has discretion to change.  The United States also cites instan ces where the expert herself acknowledges that the USDOC made 
changes to the computer programmes used in the fi ve periodic reviews at issue in this case.  The 
United States acknowledges, however, that these cha nges did not include the zeroing aspects of the 
programmes.
68  Although the United States asserts th at the Assistant Secretary for Import 
Administration has discretion to change the com puter programmes used by the USDOC, including 
their zeroing aspects, the United States acknowledges that such discretion has never been used in 
periodic reviews where the WA-T method was used.69   
                                                      
63 Exhibit MEX-1, paras. 29-35.   
64 Exhibit MEX-1, paras. 16-17.   
65 Exhibit MEX-4D, p.8.   
66 Response of the United States to Question 5 from the Panel Following the First Meeting.   
67 Exhibit MEX-1, paras. 15-17.   
68 Response of the United States to Question 5 from the Panel Following the First Meeting.   
69 Response of the United States to Question 2 from  the Panel Following the Second Meeting.    WT/DS344/R 
 Page 29 
 
 
  7.94 Finally, Mexico submits that in ever y periodic review between January 200670 and the 
initiation of the dispute settlement proceedings at issue where the WA-T method was used, the USDOC followed the Standard Comp uter Programme and zeroed.  While not providing a full list of 
these periodic reviews, Mexico mentions certain  examples where the USDOC defended the use of 
zeroing in proceedings initiated by interested par ties.  The United States has not contested this 
assertion.  In one of the periodic reviews cited by Mexico, the USDOC rejects the respondents' 
assertion that the practice of zeroing has to be discontinued:   
"Comment 9:  Non-Offsetting for Expo rt Sales that Exceed Normal Value 
Ispat argues that the Department's refusal to offset non-dumped sales is contrary to 
WTO findings and should not be employed for the final results.   
... 
Department's Position 
We have not changed our calculation of th e weighted-average dumping margin for 
the final results.   
... 
The Federal Circuit has affirmed the Department's methodology as a reasonable 
interpretation of the statute."
71   
7.95 It seems clear to us, on the basis of the fo regoing, that Mexico has presented evidence 
sufficient to demonstrate the content of the Simple Zeroing Procedures  under US law.  In our view, 
the evidence about the content of the Simple Zeroing Procedures , particularly the parts of the Anti-
Dumping Manual that we cited above which indicat e that the USDOC has to follow the Standard 
Computer Programme consistently in periodic revi ews, also demonstrates that these Procedures have 
general and prospective application .  This shows that the Simple Zeroing Procedures  have gone 
beyond mere repetition of a certain methodology to specific cases and have become a "deliberate policy."
72   
7.96 The United States argues that Mexico has not demonstrated the existence of the Simple 
Zeroing Procedures  as a measure that could be challenged be fore a WTO panel.  The United States 
criticizes Mexico's reliance on past  panel and Appellate Body findings  regarding the existence of the 
zeroing procedures and argues that "a separate pane l's findings are not evidence, but conclusions 
based on evidence".73  We note that other WTO panels as well as the Appellate Body have made 
similar findings in cases that concerned the zeroing methodology applied by the United States in anti-
dumping proceedings.  We note, however, that ou r findings are based on the evidence presented by 
Mexico in these proceedings, not on the WTO jurisprudence.   
7.97 On the basis of the foregoing considerations, we  conclude that Mexico has presented evidence 
sufficient to demonstrate the existence of the Simple Zeroing Procedures  under US law.   
 
                                                      
70 Supra , note 36.   
71 Exhibit MEX-6J, p. 23-24.   
72 See, Appellate Body Report, US – Zeroing (Japan) , supra , note 38, para. 85.   
73 First Written Submission of the United States, para. 40.   WT/DS344/R   
Page 30  
 
  (b) Is Simple Zeroing in Period ic Reviews WTO-Inconsistent? 
(i) Description of the Calculations in  Periodic Reviews under US Law 
7.98 The United States has a retrospective duty assessme nt system.  Under the US system, the anti-
dumping duty order imposed following an investig ation does not necessarily constitute the final 
liability for the importers importing the subject prod uct into the United States.  The importer deposits 
a security in the form of a cash deposit at the time of importation.  Subsequently, the importer
74 may, 
on an annual basis, ask the USDOC to calculate the importer's final liability for the imports made in 
the previous year.  This is called a "periodic review " or an "administrative review" under US law.  If 
the duty calculated in a periodic review exceeds the original cash deposit, the importer has to pay the 
difference.  When the opposite is the case, the diffe rence is reimbursed with interest.  In cases where 
no final assessment is requested, the initial cash deposit paid at the time of importation is 
automatically assessed as the final duty.  Besides a ssessing the final liability of importers for imports 
made during the period of review, the USDOC, in a periodic review, also calculates the cash deposit rate that would apply to imports made follo wing the completion of the periodic review.   
7.99 For purposes of calculating margins of dumping in a periodic review, the product under 
consideration is broken into models and a monthl y WA normal value is determined for each model.  
Each export transaction is compared against th e relevant monthly WA normal value.  These 
comparisons are then aggregated.  In such aggreg ation, the results of comparisons where the export 
price exceeds the WA normal value are treated as zero.  A weighted average margin of dumping is 
calculated for each exporter, which then becom es the cash deposit for the following period.  The 
calculation of the importer-specific assessment rate is  also similar.  The USDOC segregates, from the 
figures pertaining to the exporter, the results of the comparisons for each importer and divides it by 
the total value of imports made by the same importer.
75  In other words, the numerator for the 
exporter's weighted average dumping margin for the period of review, i.e. the future cash deposit rate, 
is the total of the comparisons where the normal va lue exceeds the export price and the denominator is 
the value of all exports from that exporter during the period of review.  The numerator for the 
importer-specific assessment rate reflects the resu lts of comparisons where the normal value exceeds 
the export price within the universe of the imports  made by that particular importer, and the 
denominator is the total value of all imports by the importer.   
7.100  Parties generally agree with the above descrip tion of the way the USDOC calculates margins 
of dumping in periodic reviews.76   
(ii) Significance of WTO Jurisprudence 
7.101  We recall that this is not the first case in the WTO in which simple zeroing in periodic 
reviews has been challenged.  The WTO-consiste ncy 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 practice 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 panels and found simple zeroing in peri odic reviews to be WTO-inconsistent.   
                                                      
74 The US law also allows the domestic interested pa rties, foreign producers or exporters to seek the 
initiation of a periodic review.  See, Response of the Un ited States to Question 3(a) From the Panel Following 
the Second Meeting.   
75 First Written Submission of Mexico, paras. 79-83.   
76 Responses of Mexico and the United States to Question 3(a) from the Panel Following the Second 
Meeting.    WT/DS344/R 
 Page 31 
 
 
  7.102  We recall that we are not, strictly speaking, bound by previous Appellate Body or panel 
decisions that have addressed the same issue, i.e. simple zeroing in periodic reviews, which is before 
us in these proceedings.  There is no provision in the DSU that requires WTO panels to follow the findings of previous panels or the Appellate Body on the same issues brought before them.  In principle, 
a panel or Appellate Body decision only binds the partie s to the relevant dispute.   Certain provisions of 
the DSU, in our view, support this proposition.  According to Article 19.2 of the DSU, for example, 
"[i]n accordance with paragraph 2 of Article 3, in  their findings and recommendations, the panel and 
Appellate Body cannot add to or diminish the rights and obligations provided in the covered 
agreements".  In the same vein, Article 3.2 of the DSU provides that "[r]ecommendations and rulings of 
the DSB cannot add to or diminish the rights and ob ligations provided in the covered agreements". 
7.103  We also note, however, the Ap pellate Body's pronouncement, in Japan – Alcoholic 
Beverages II
 , regarding the impact of adopted panel reports fo r future panels dealing with similar issues.  
The Appellate Body opined:   
"Adopted panel reports are an important part of the GATT acquis .  They are often 
considered by subsequent panels.  They  create legitimate expectations among WTO 
Members, and, therefore, should be taken into account where they are relevant to any 
dispute.  However, they are not binding, except with respect to resolving the particular dispute between the parties to that  dispute.  In short, their character and 
their legal status have not been cha nged by the coming into force of the WTO 
Agreement ."
77  (footnote omitted, emphasis in original) 
7.104  The above excerpt indicates that, although adopt ed panel reports only bind the parties to the 
dispute that they concern, the Appe llate Body expects future panels to take them into account to the 
extent that the issues before them are simila r to those addressed by previous panels.  In US – Shrimp 
(Article 21.5 – Malaysia) , the Appellate Body reiterated its findings in Japan – Alcoholic Beverages II 
and held that the same analysis applies to adopted Appellate Body reports.78  The Appellate Body 
clearly stated that the panel in the implementation proceedings under Article 21.5 of the DSU in US –
Shrimp (Article 21.5 – Malaysia) did not err in following the interp retative guidance provided by the 
Appellate Body in the original proc eedings.  To the contrary, the Appe llate Body expected the panel to 
do so.79  More recently in US – Oil Country Tubular Goods Sunset Reviews , the Appellate Body opined 
that "following the Appellate Body's conclusions in earlier disputes is not only appropriate, but is 
what would be expected from panels, es pecially where the issues are the same".80   
7.105  This indicates that even though the DSU does not  require WTO panels to follow adopted panel 
or Appellate Body repor ts, the Appellate Body de facto expects them to do so to the extent that the legal 
issues addressed are similar.  We al so note, however, that the panel in US – Zeroing (Japan) , while 
recognizing the need to provide security and predicta bility to the multil ateral trading system through the 
development of a consistent line of jurisprudence on si milar legal issues, drew attention to the provisions 
of Articles 11 and 3.2 of the DSU and implied that th e concern over the preservation of a consistent line 
of jurisprudence should not override a panel's task to carry out an obj ective examination of the matter 
before it through an interpretation of the relevant treaty provisions in accordance with  the customary 
                                                      
77 Appellate Body Report, Japan – Taxes on Alcoholic Beverages ("Japan – Alcoholic Beverages II "), 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 14.   
78 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products – 
Recourse to Article 21.5 of the DSU by Malaysia  ("US – Shrimp (Article 21.5 – Malaysia) "), WT/DS58/AB/RW, 
adopted 21 November 2001, para. 109.   
79 Ibid., para. 107.   
80 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews , supra , note 24, para. 188.   WT/DS344/R   
Page 32  
 
  rules of interpretation of public international law.
81  We also share the concern raised by the panel in 
US – Zeroing (Japan)  regarding WTO panels' oblig ation to carry out an objective examination of the 
matter referred to them by the DSB.   
7.106  After a careful consideration of the matters discussed above82, 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-consistency 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 fr om the Appellate Body's approach for the reasons 
explained below.   
(iii) Alleged Violations of Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the 
Anti-Dumping Agreement 
Interpretation of the Relevant Treaty Provisions  
7.107  Mexico bases its claim on the relevant treaty pr ovisions as interpreted in prior Appellate Body 
decisions on zeroing.  Mexico asserts that dumping is an exporter-specific concept and that it can only exist with respect to individual exporters or fore ign producers, not importers or individual import 
transactions.  According to Mexico, the definiti on of dumping under Articles VI:1 and VI:2 of the 
GATT 1994 and Article 2.1 of the Anti-Dumpi ng Agreement applies to the product under 
consideration as a whole.  Article VI:2 of the GATT 1994 stipulates that an anti-dumping duty may 
not be greater than the margin of dumping found with respect to the product under consideration.  
Article 9.3 of the Anti-Dumping Agreement provide s that the amount of the anti-dumping duty cannot 
exceed the margin of dumping established under Article 2 of the Agreement.  It follows that an anti-
dumping duty calculated for a given producer or expor ter may not be greater than the margin of 
dumping calculated for the product under considerati on as a whole.  That is, the margin of dumping 
established for a producer or exporter constitutes a ceiling for the duty that may be imposed on the 
product exported by that producer or exporter.  According to Mexico, simple zeroing in periodic 
reviews is inconsistent with these principles becaus e it does not fully reflect export prices that are 
above the normal value, in the calculation of the margin of dumping for the product under 
consideration as a whole.  The results obtained thro ugh simple zeroing only partially reflect the export 
transactions of the product under consideration.  Simple zeroing inflates the margin of dumping and 
as such is inconsistent with Article VI:2 of  the GATT 1994 and Article 9.3 of the Anti-Dumping 
Agreement.  Mexico also argues that simple zeroing is inconsistent with the obligation to carry out a 
fair comparison between the normal value and the export price as required under Article 2.4 of the 
Agreement.   
7.108  The United States contends that the Agreement does not generally prohibit zeroing.  
According to the United States, the exclusive textua l basis for finding zeroing to be WTO-inconsistent 
is Article 2.4.2 of the Agreement, which only prohib its zeroing in the narrow context of investigations 
where the WA-WA methodology is used.  The United States urges the Panel to take into account the 
findings of previous panels in this regard whic h, according to the United States, held that the 
                                                     
 
81 Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews  ("US – Zeroing 
(Japan) "), WT/DS322/R, adopted 23 January 2007, as modified by Appellate Body Report, WT/DS322/AB/R, 
footnote 733.   
82 In our assessment of the importance of WTO jurisprudence, we also took into account the views 
expressed by third parties, particularly those of the European Communities which concentrated mainly on this 
issue.    WT/DS344/R 
 Page 33 
 
 
  mentioned obligation under Article 2.4.2 does not ap ply outside the scope of WA-WA comparisons in 
investigations.  The United States invites the Panel to find at least that this reasoning reflects a permissible interpretation of the Agreement.  Mo re specifically, the United States asserts that 
Article VI:1 of the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement cannot impose 
independent obligations because they contain defini tional provisions.  Furthermore, the United States 
is of the view that these two provisions may be in terpreted to permit a transaction-based definition of 
dumping.  The United States also argues that there is  historical support for this proposition.  Likewise, 
the United States contends that the definition of th e word "product" does not necessarily refer to the 
"product as a whole".  It follows that the term "margin of dumping" does not necessarily refer to the margin for the product under consideration as a w hole.  Determining the margin of dumping in 
periodic reviews without providing offsets for inte rmediate comparisons where the export price 
exceeds the normal value is therefore not inconsiste nt with the United States' WTO obligations.  In 
the view of the United States, Mexico's interpreta tion of the relevant lega l provisions would be 
inconsistent with Article 9.4(ii) of the Agreemen t which allows prospective normal value systems.  
The United States argues that Article 2.4 of the Agreement does not resolve the issue of whether 
zeroing is unfair.  According to the United States, Mexico's claim under Article  2.4 is dependent on its 
claim under Article VI:2 of the GATT 1994 and Artic le 2.4.2 of the Anti-Dumping Agreement.  It 
follows that if the Panel finds that the term "margin of dumping" for purposes of a periodic review may be interpreted on a transaction-specific basis, the Panel should also reject Mexico's claim under 
Article 2.4 because this would invalidate Mexico's ar gument that simple zeroing in periodic reviews 
yields a duty in excess of the exporter's real margin of dumping.   
7.109  We note that Mexico's arguments, in support of its claim that the use of simple zeroing in 
periodic reviews is inconsistent  with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 
and 9.3 of the Anti-Dumping Agreement, are premised on the interpretation of these provisions by the Appellate Body, particularly in US – Zeroing (EC)  and US – Zeroing (Japan) .  The Appellate Body's 
line of reasoning is based on two principles.  First,  under the definition of "dumping" in Article 2.1 of 
the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, "dumping" has to be established 
for the product under consideration as a whole.
83  According to the Appellate  Body, this interpretation 
also applies to duty assessment proceedings under Article 9.3 since Article 9.3 refers to Article 2.  In 
US – Zeroing (EC) , the Appellate Body opined:   
"We note that Article 9.3 refers to Article 2.   It follows that, under Article 9.3 of the 
Anti-Dumping Agreement  and Article VI:2 of the GATT 1994, the amount of the 
assessed anti-dumping duties shall not exceed the margin of dumping as established 
"for the product as a whole".  Therefore, if  the investigating authority establishes the 
margin of dumping on the basis of multiple comparisons made at an intermediate 
stage, it is required to aggregate the r esults of all of the multiple comparisons, 
including those where the export price exceeds the normal value.  If the investigating 
authority chooses to undertake multiple comparis ons at an intermediate stage, it is not 
allowed to take into account the results of only some multiple comparisons, while 
disregarding others."84  (footnote omitted) 
7.110  Second, in the view of the Appellate Body, a determination of dumping in all anti-dumping 
proceedings, including duty assessment proceedings under Article 9.3 of the Agreement, has to be 
made in respect of each exporter or foreign producer  subject to the proceeding.  The Appellate Body 
found contextual support in Article 6.10 for its inte rpretation of the term "m argin of dumping" under 
Article 9.3:   
                                                      
83 Appellate Body Report, US – Zeroing (EC) , supra , note 21, para. 126.   
84 Ibid., para. 127.   WT/DS344/R   
Page 34  
 
  "Article 6.10 of the Anti-Dumping Agreement  provides relevant context for the 
interpretation of the term "margin of dumping" in Article 9.3 of the Anti-Dumping 
Agreement  and Article VI:2 of the GATT 1994.  Article 6.10, which is part of the 
context of Article 9.3, provides that "[t]he  authorities shall, as a rule, determine an 
individual margin of dumping for each known exporter or producer concerned of the 
product under investigation".  Therefore, under the first sentence of Article 6.10, 
margins of dumping for a product must be  established for exporters or foreign 
producers.  The text of Article 6.10 does not limit the application of this rule to original investigations, and we see no reason why this rule would not be relevant to 
duty assessment proceedings governed by Article 9.3 of the Anti-Dumping Agreement  
and Article VI:2 of the GATT 1994."
85 
7.111  Furthermore, the Appellate Body indicated that  this interpretation is  consistent with the 
definition of the notion of dumping:   
"Establishing margins of dumping for exporte rs or foreign producers is consistent 
with the notion of dumping, which is designed to counteract the foreign producer's or 
exporter's pricing behaviour.  Indeed, it is the exporter, not the importer, that engages 
in practices that result in situations of  dumping.  For all of these reasons, under 
Article 9.3 of the Anti-Dumping Agreement  and Article VI:2 of the GATT 1994, 
margins of dumping are established for foreign producers or exporters."86   
7.112  These two principle points of view regarding the calculation of the margins of dumping in 
periodic reviews leads to the conclusion that:   
"[I]n a review proceeding under Article 9.3.1, the authority is required to ensure that 
the total amount of anti-dumping duties collected from all the importers of that product does not exceed the total amount of dumping found in all sales made by the 
exporter or foreign producer, calculate d according to the margin of dumping 
established for that exporter or foreign produ cer without zeroing.  The same "ceiling" 
applies in review proceedings under Article 9.3.2, because the introductory clause of 
Article 9.3 applies equally to prospectiv e and retroactive duty assessment systems."
87   
7.113  In the view of the Appellate Body, theref ore, in any anti-dumping proceeding, including 
periodic reviews under Article 9.3, dumping has to be calculated for the product under consideration 
as a whole and in respect of the individual exporters or foreign producers subject to such proceeding.  Once the authorities define the product under consid eration, the scope of that definition also 
determines the scope of the authorities' dumping dete rmination.  Dumping cannot exist in relation to a 
type, model, or category of the product subject to the proceedings.  Nor can dumping be found in 
relation to individual import transactions.  It has to  be calculated for each known exporter or foreign 
producer, as stipulated under Article 6.10 of the Agre ement.  It follows that when the calculation of 
dumping entails more than one level of comparisons  between the normal value and the export price, 
the results of the intermediate comparisons are not margins of dumping.  They are merely inputs to be 
taken into account in the determination of the ma rgin of dumping for the product under consideration 
as a whole for each known exporter or foreign producer.   
7.114  When applied to duty assessment proceedings un der Article 9.3 of the Agreement, the above-
described reasoning leads to the conclusion that the margin of dumping calculated for the product 
under consideration as a whole - exported by the e xporter or foreign producer subject to such 
                                                     
 
85 Ibid., para. 128.   
86 Ibid., para. 129.   
87 Appellate Body Report, US – Zeroing (Japan) , supra , note 38, para. 156.    WT/DS344/R 
 Page 35 
 
 
  proceedings - operates as the ceiling for the anti-du mping duties that may be collected from importers 
of that product.  The chapeau of Article 9.3 provi des that "[t]he amount of the anti-dumping duty shall 
not exceed the margin of dumping as established under Article 2".  This means that:   
""[T]he total amount of anti-dumping duties collected on the entries of a product from 
a given exporter shall not exceed the margin of dumping established for that 
exporter", in accordance with Article 2."88     
Consequently, a scheme that does not take into cons ideration the results of intermediate comparisons 
that yield negative dumping in the calculatio n of the overall margin for the product under 
consideration as a whole, would be inconsiste nt with Article 9.3 of the Agreement.   
7.115  We respectfully disagree with the Appellate Body's reasoning.  We recognize that our 
analysis inevitably resembles that of the panels in th e last two cases that dealt with simple zeroing in 
periodic reviews, US – Zeroing (EC)  and US – Zeroing (Japan) , and that the Appellate Body reversed 
those panels' findings that simple zeroing is not in consistent with Article 9.3 of the Anti-Dumping 
Agreement.  We would like to underline, however , that our analysis is not simply an unthinking 
repetition of these past panel decisions.  Rather, it reflects our own appreciation of the facts and the 
legal arguments presented by the parties in these proceedings, as is require d by our obligation under 
Article 11 of the DSU to carry out an objective examination of the matter before us.   
7.116  We recall that the main premise of the Appellate  Body's reasoning pertains to the definition of 
the concepts of "dumping" and "margins of dumpi ng" used in Article 2.1 of the Agreement and 
Articles VI:1 and VI:2 of the GATT 1994.  According to the Appellate Body, the margin of dumping has to be determined for the product under consider ation as a whole.  Accordingly, the results of the 
comparisons made at an intermediate stage before aggregating them in order to calculate the margin 
of dumping for the product as a whole are not margins of dumping.  Likewise, the margin of dumping has to be calculated in respect of the exporter or the foreign producer subject to the anti-dumping 
proceeding, not the importer importing the product.  It follows that dumping cannot be calculated on a 
transaction-specific basis; it has to be based on all ex ports of the subject product made in the period of 
review from the exporter or the foreign producer subject to the proceeding.   
7.117  We disagree with these propositions.  Mexico ar gues that the word "product" used in the 
provisions it cites refers to the "product as a whole" .  If follows that any determination of dumping 
has to be based on an aggregation of all export tr ansactions.  We note, however, that the expression 
"product as a whole" does not appear in the text of  Article 2.1 of the Agreement or Articles VI:1 
and VI:2 of the GATT 1994.  It has been developed in WTO dispute settlement.  We are not 
convinced that the treaty provisions cited by Mexico, on which the Appellate Body based its 
reasoning, necessarily compel a definition of "dum ping" based on an aggregation of all export 
transactions.  We note that the panel in US – Zeroing (Japan) also asked itself the question of how a 
requirement to base dumping margin calculations on the aggregation of export transactions may be 
inferred from the ordinary meaning of the words "p roduct" or "products" under Article 2.1 of the 
Anti-Dumping Agreement and Article s VI:1 and VI:2 of the GATT 1994.
89  We agree with the 
following reasoning developed by that panel on this issue:   
"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 sal es at an aggregate level.  Similarly, the 
notion of a margin of dumping as the price difference  that exists when one price is 
less than another price (or constructed valu e) can easily be applied to individual 
                                                      
88 (footnotes omitted) Ibid., para. 155.   
89 Panel Report, US – Zeroing (Japan) , supra , note 81, para. 7.105.   WT/DS344/R   
Page 36  
 
  transactions and does not require an exam ination of export transactions at an 
aggregate level.  The terms "export price of a product exported from one country to 
another" in Article 2.1 of the AD Agreement  and "the price of the product exported 
from one country to another" in Article  VI:1 of the GATT 1994 can reasonably be 
interpreted to mean the price of the pr oduct in a particular export transaction."
90   
7.118  The Appellate Body disagreed with this view .  In paragraphs 108-116 of its decision in US –
Zeroing (Japan) , the Appellate Body repeated the conclusions  that it had formulated in its previous 
decisions in US – Softwood Lumber V  and US – Zeroing (EC) .  It did not, however, provide a 
convincing response to the question we have highlig hted above.  That is, the Appellate Body did not 
explain how the texts of Articles VI:1 and VI :2 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement necessarily require the interpre tation that the words "product" or "products" 
used in the definition of "dumping" may only be interpreted as referring to the product under 
consideration as a whole, not to individual export transactions.   
7.119  We are troubled by the fact that the principal basis of the Appellate Body's reasoning in the 
zeroing cases seems to be premised on an interpretati on that does not have a solid textual basis in the 
relevant treaty provisions.  We re call the rules on treaty interpretation ( supra , paras. 7.3-7.5) which 
we have to follow in these proceedings.  We are of  the view that a good faith interpretation of the 
ordinary meaning of the texts of Articles VI:1 a nd VI:2 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement, read in their context and in light of the object and purpose of the mentioned agreements, does not exclude an interpretation th at allows the concept of dumping to exist on a 
transaction-specific basis.  We recall that according to  the standard of review that we have to follow 
in these proceedings ( supra , paras. 7.1-7.2), we are precluded from excluding an interpretation which 
we find permissible, even if there may be other permissible interpretations.   
7.120  We also note that the use of the words "product"  or "products" in other instances in Article VI 
and other provisions of the GATT 1994 or the An ti-Dumping Agreement does not necessitate the 
view that these terms cannot be in terpreted as referring to individual export transactions.  As the panel 
in US – Zeroing (Japan)  noted in paragraph 7.108 of its report, for instance:   
"[T]he phrase "importation of any product" u sed in Article VI:6 and other provisions 
of the GATT 1994 does not mean that these pr ovisions inherently cannot apply to an 
individual import transaction.  Similarly, wh en Article VII:3 of the GATT 1994 refers 
to "the value for customs purposes of any imported product", the mere use of the word "product" cannot reasonably be interp reted to preclude the possibility to apply 
this term to the value of a product in a pa rticular import transaction.  If the word 
"product" in Article VII:3 does not necessarily  require an examination of transactions 
at an aggregate level, we cannot see wh y such an examination is nevertheless 
required by the use of that word in Articles VI:1 and VI:2."
91   
7.121  We note that the Appellate Body did not explain whether the use of the words "product" or 
"products" in these other contexts, which may very well be interpreted on a transaction-specific basis, 
had any bearing on its interpretati on.  This is another reason wh y we find the Appellate Body's 
reasoning not to be convincing.  The fact that these words may be interpreted in a significantly 
                                                      
90 Ibid., para. 7.106.   
91 Footnotes omitted.   
We also agree with that panel's vi ew that this reasoning does not n ecessarily mean that "a Member may 
on the basis of a finding that some export sales under consideration are dumped (and are causing injury) impose 
a duty on all subsequent imports of that product without in any way taking into account the relative significance 
of those dumped sales compared to other, non-dumped sales under consideration".  Panel Report, US – Zeroing 
(Japan) , supra , note 81, footnote 745.    WT/DS344/R 
 Page 37 
 
 
  different way when used elsewhere in Article VI and other provisions of the GATT 1994 or the Anti-
Dumping Agreement weakens the proposition that they must necessarily be interpreted to refer to the 
totality of exports of the product under consid eration as a whole, as opposed to individual 
transactions, when they are used in th e context of dumping determinations.   
7.122  Mexico contends that because Article VII of th e GATT 1994 deals with customs valuation, its 
purpose and objectives are completely different from those of Article VI.  It is therefore normal that 
these two provisions ascribe different meanings to the word "product".92  We note, however, that 
Mexico's argument is based solely on its unde rstanding of the object and purpose of these two 
provisions and does not have any textual basis.  We therefore disagree with Mexico in this regard.   
7.123  On the basis of the foregoing, we feel compelle d to share the interpretation by the panel in 
US – Zeroing (Japan)  of the words "product" and "products" in Article VI of the GATT 1994 and 
Article 2.1 of the Anti-Dumping Agreement:   
"[T]he terms "dumping" and "margin of dumping" in Article 2.1 of the AD Agreement  
and Articles VI:1 and VI:2 of the GATT 1994 are defined in relation to "product" and "products" does not warrant the conclusion that these terms, by definition, cannot 
apply to individual transactions and inhe rently require an examination of export 
transactions at an aggregate level in whic h the same weight is accorded to export 
prices that are above normal value as to export prices that are below normal value."
93   
7.124  We also disagree with the second element of th e Appellate Body's reasoning that generally 
prohibits zeroing, i.e. that dumping has to be calculated with r espect to individual exporters or foreign 
producers.  We note that the obligation to pay anti-dumping duties is not incurred on the basis of a 
comparison of an exporter's total sales, but on the ba sis of an individual sale between the exporter and 
its importer.  It is therefore a transaction-specifi c liability.  This importer-specific or transaction-
specific character of the payment of anti-dumping duti es has, therefore, to be taken into consideration 
in interpreting Article 9.3.  Article  9.3 reads in relevant parts:   
"Article 9  
 
Imposition and Collection of Anti-Dumping Duties 
... 
9.3 The amount of the anti-dumping duty shall not exceed the margin of dumping 
as established under Article 2. 
9.3.1 When the amount of the anti-dumping duty is assessed on a retrospective 
basis, the determination of the final liability for payment of anti-dumping duties shall 
take place as soon as possible, normally within 12 months, and in no case more than 18 months, after the date on which a request for a final assessment of the amount of 
the anti-dumping duty has been made.  Any refund shall be made promptly and normally in not more  than 90 days followi ng the determination of final liability made 
pursuant to this sub-paragraph.  In any case, where a refund is not made within 
90 days, the authorities shall provide an explanation if so requested.   
9.3.2 When the amount of the anti-dumping duty is assessed on a prospective basis, 
provision shall be made for a prompt refund, upon request, of any duty paid in excess 
                                                     
 
92 Second Written Submission of Mexico, para. 62.   
93 Panel Report, US – Zeroing (Japan) , supra , note 81, para. 7.112.   WT/DS344/R   
Page 38  
 
  of the margin of dumping.  A refund of any such duty paid in excess of the actual 
margin of dumping shall normally take place within 12 months, and in no case more 
than 18 months, after the date on which a request for a refund, duly supported by evidence, has been made by an importer of  the product subject to the anti-dumping 
duty.  The refund authorized should normally  be made within 90 days of the above-
noted decision."  (footnote omitted) 
7.125  Article 9.3 deals with the imposition and collec tion of anti-dumping duties.  It requires that 
the amount of the duty not exceed the margin of dumping as established under Article 2.  The two 
sub-paragraphs of Article 9.3 contain more speci fic obligations regarding the assessment of anti-
dumping duties under the retrospective and prospective systems of duty collection.  In a retrospective 
system, which is employed in the United States, pa yments collected at the time of importation (such 
as the cash deposit rate in the US system) are not de finitive duties.  An importer has the right to ask 
the authorities to calculate its final liability in respect  of the importations made in a past period.  The 
authorities then have to calculate the importer's fi nal liability and if there is any excessive payment, 
refund the corresponding amount to the importer with interest.  In a prospective system, however, the 
payment of the anti-dumping duty at the time of import ation is generally considered to be definitive.  
If the importer believes that the amount of the an ti-dumping duty it paid exceeded its margin of 
dumping, it can ask the authorities for a refund.  When  such a request is made, the authorities have to 
calculate the actual margin of dumping and refund  anti-dumping duties that exceeded the margin of 
dumping.   
7.126  It is significant to note in this regard that the text of Article 9.3 itself does not contain any 
obligation to aggregate export transactions in duty assessment proceedings.  We note that an importer 
does not incur liability for the payment of anti-dumpi ng duties on the basis of the totality of exports 
made by an exporter.  In our view, Articles 9.3.1 a nd 9.3.2 have to be interpreted in light of this 
specific purpose because the former  concerns the calculation of the final liability of individual 
importers
 (in the case of a retrospective system), and th e latter the refund of duties paid in excess of 
the margin of dumping of individual importers  (in the case of a prospective system).  The fact that 
final duties or refunds in duty assessment proceedings are calculated for individual importers, in our 
view, leads to the conclusion that Article 9.3 does not exclude an importer and import-specific calculation, and does not necessarily require a calculation on the basis of all sales made by an exporter.   
7.127  We disagree with the Appellate Body's view that a determination of dumping in all anti-
dumping proceedings, including duty assessment proceed ings under Article 9.3 of the Agreement, has 
to be made in respect of each exporter or foreign producer subject to the proceeding.  We also disagree with the view that Article 6.10 lends support to  this view.  In this regard, we agree with the 
panel in US – Zeroing (Japan)  that: 
"Article 6 of the AD Agreement  contains provisions designed to ensure transparency 
and due process in the conduct of anti-dumpi ng investigations.  In that context, 
Article 6.10 provides that, as a rule, authorities must determine an individual margin of dumping for each known exporter or produ cer of the product under investigation 
but also lays down certain rules that must be observed when it is not possible to determine such an individual margin of dumping.  Neither the phrase "product under investigation" nor the reference to an indi vidual margin of dumping for an exporter or 
producer in our view provides any guidance with respect to the precise methodology 
to be used for the purpose of calculating that margin of dumping.  As in Article 2.1 of the AD Agreement  and Articles VI:1 and VI:2 of the GATT 1994, the use of the word 
"product" in Article 6.10 does not exclude the possibility of applying the concept of dumping to individual transactions.  Even assuming arguendo  that the notion of an 
"individual margin of dumping for each known exporter or producer" implies an  WT/DS344/R 
 Page 39 
 
 
  obligation to determine a single margin  of dumping for each known exporter or 
producer based on an analysis of the totality of the export transactions under consideration, it does not necessarily follow th at in deriving such a single margin an 
authority must accord the same weight to  transactions in which the export price is 
above the normal value as to transactions in which the export price is below the 
normal value.  Nothing in the text of Article 6.10 indicates that such a margin may 
not be calculated as an overall weighted average margin of dumping in which the 
numerator consists of the sum of the amounts by which export prices are less than normal value and the denominator reflects the total value of all export transactions."
94  
(footnotes omitted) 
7.128  We recall the rules on treaty interpretation ( supra , paras. 7.3-7.5) which we have to follow in 
these proceedings.  We are of the view that it is at least a permissible interpretation of Article 9.3 of 
the Agreement that the concept of dumping may be interpreted on an importer-specific basis.  We 
recall that according to the standard of review  that we have to follow in these proceedings ( supra , 
paras. 7.1-7.2), we are precluded from excluding an interpretation which we find permissible, even if 
there may be other permissible interpretations.  We therefore disagree with Mexico's assertion that the 
text of Article 9.3 of the Agreement necessarily requires dumping determinations in duty assessment 
proceedings to be specific to individua l exporters or foreign producers.   
Contextual Support for the Panel's Interpre tation of the Relevant Treaty Provisions  
7.129  A review of the relevant context provid es further support for the proposition that the 
provisions cited by Mexico, Articles VI:1 and VI:2  of the GATT 1994 and Articles 2.1 and 9.3 of the 
Anti-Dumping Agreement, do not prohibit simp le zeroing in periodic reviews.   
Existence of the Prospective Normal Value Systems 
7.130  The first contextual support is found in Article  9.4(ii) of the Agreement, which provides in 
relevant parts:   
"9.4 When the authorities have limited th eir examination in accordance with the 
second sentence of paragraph 10 of Article  6, any anti-dumping duty applied to 
imports from exporters or producers not include d in the examination shall not exceed:   
... 
 
(ii) where the liability for payment of anti-dumping duties is calculated on the basis of a prospective normal value, the difference between the weighted average 
normal value of the selected exporters or producers and the export prices of exporters 
or producers not individually examined[.]" 
7.131  Article 9.4(ii) clearly provides for a prospec tive normal value system.  In a prospective 
normal value system, the importer's liability is dete rmined through the comparison of the price paid 
by the importer in a given transaction and the prosp ective normal value.  Under this system, prices 
paid in other export transactions ha ve no bearing on this importer's liability.  In other words, the fact 
that other importers do not dump, or dump at a lower margin, does not affect the liability of an importer who imports at dumped prices.  If the dete rmination of liability for anti-dumping duties can 
be determined on a transaction-specific basis in a prospective normal value system, there is no reason 
why the same cannot be the case in the context of  the retrospective duty assessment system under 
Article 9.3.2.   
                                                     
 
94 Ibid., para. 7.111.   WT/DS344/R   
Page 40  
 
  7.132  The Appellate Body in US – Zeroing (Japan)  disagreed with this reasoning.  According to the 
Appellate Body, the duty paid in a prospective normal value system does not represent the calculation 
of a margin of dumping.  Nor does it mean that the total amount of the duties paid in such a system 
can exceed the margin of dumping established for th e exporter or foreign producer at issue.  The 
Appellate Body then went on and opined:   
"Under a prospective normal value system, e xporters may choose to raise their export 
prices to the level of the prospective nor mal value in order to avoid liability for 
payment of anti-dumping duties on each export transaction.  However, under Article 9.3.2, the amount of duties collected is subject to review so as to ensure that, pursuant to Article 9.3 of the Anti-Dumping Agreement , the amount of the anti-
dumping duty collected does not exceed the margin of dumping as established under 
Article 2.  It is open to an importer to request a refund if the duties collected exceed the exporter's margin of dumping.  Whether a refund is due or not will depend on the 
margin of dumping established for that exporter."
95  (footnote omitted) 
7.133  Here too, we feel compelled to disagree with the Appellate Body.  The Appellate Body 
suggests that duties collected under a prospective normal value system are subject to a duty 
assessment proceeding under Article 9.3.2.  The A ppellate Body's view seems to be that duties 
collected under a prospective normal value system would be subject to such duty assessment proceeding in the same way as any other anti-dumpi ng duty assessed on a prospective basis.  We note 
that in an anti-dumping investigation, authorities base their dumping determinations on past data and 
impose the duty on the basis of that data.  After the duty is imposed, however, there is always a 
possibility of an importer paying a duty above its ma rgin of dumping.  There is therefore a need for 
having a mechanism for the refund of duties paid in  excess of the margin of dumping of individual 
importers.  Under the current system embodied in the Anti-Dumping Agreement, this objective is 
achieved through the duty assessment proceedings provi ded for under Article 9.3.  Obviously, we do 
not consider duties collected under a prospective normal value system to be exempt from duty 
assessment proceedings.  That is because in such a sy stem, just as in other systems of duty collection, 
there may be changes subsequent to the impos ition of the duty, which may necessitate a duty 
assessment proceeding.  We note that Article 9.3 does not shed light on how duty assessment proceedings are to be carried out.  We would th ink, however, that a duty assessment proceeding with 
regard to duties collected on the basis of a prospective normal value system would have to be consistent with the nature of the referenced system.  It would have been quite illogical, in our view, if 
the drafters allowed prospective normal value syst ems and yet envisaged that duties collected under 
such a system would be subject to a duty assessm ent proceeding under Article 9.3 in a manner that 
would require the authorities to calculate a margin of dumping not on the basis of the data pertaining to the importer seeking the initiation of the proceedi ng, but based on the aggregated data pertaining to 
the exporter(s) from whom the importer imports.  The prospective normal va lue system is based on 
the notion of transaction-based duty collection.  Th e Appellate Body's reasoning that duties collected 
under such a system are nevertheless subject to duty assessment proceedings just like other duties 
assessed on a prospective basis is, ther efore, far from being convincing.   
Mathematical Equivalence Between the First and th e Third Methodologies in the Absence of Zeroing 
7.134  The second contextual support stems from the fact that a general prohibition on zeroing 
cannot be reconciled with the existence of the third comparison methodology (WA-T) under 
Article 2.4.2.  We recall the rele vant parts of Article 2.4.2:   
"A normal value established on a weighted average basis may be compared to prices 
of individual export transactions if the authorities find a pattern of export prices 
                                                     
 
95 Appellate Body Report, US – Zeroing (Japan) , supra , note 38, para. 160.    WT/DS344/R 
 Page 41 
 
 
  which differ significantly among different pur chasers, regions or time periods, and if 
an explanation is provided as to why such   differences cannot be taken into account 
appropriately by the use of a weight ed average-to-weighted average or 
transaction-to-transaction comparison." 
7.135  We note that Article 2.4.2 allows a comparis on of WA normal value with individual export 
transactions only if certain conditions are met:  first, the pattern of export prices must differ 
significantly among different purchasers, regions or  time periods.  Second, the authorities must 
explain why such differences cannot be taken into ac count appropriately through the use of one of the 
two principal methodologies.   
7.136  An interpretation of the relevant treaty provisions that prohibits zeroing in all contexts would, 
in our view, render the third methodology inutile because this methodology would then 
mathematically yield the same re sult as the WA-WA methodology.  That is, absent zeroing, the third 
methodology would lead to the same mathematic al result as the WA-WA methodology.  We recall 
that the principle of effectiveness requires that "interpretation must give meaning and effect to all the terms of a treaty.  An interpreter is not free to adopt a reading that would result in reducing whole 
clauses or paragraphs of a treaty to redundancy or inutility".
96   
7.137  We note that the Appellate Body, in US – Zeroing (Japan) , disagreed with this proposition 
and opined:   
"The emphasis in the second sentence of Artic le 2.4.2 is on a "pattern", namely a 
"pattern of export prices which differs significantly among different purchasers, regions or time periods".  The prices of transactions that fall within this pattern  must 
be found to differ significantly from othe r export prices.  We therefore read the 
phrase "individual export transactions" in that sentence as referring to the transactions 
that fall within the relevant pricing patte rn.  This universe of export transactions 
would necessarily be more limited
 than the universe of export transactions to which 
the symmetrical comparison methodologies in the first sentence of Article 2.4.2 
would apply.  In order to unmask targeted  dumping, an investigating authority may 
limit the application of the W-T comparison methodology to the prices of export 
transactions falling within the relevant pattern. "97  (emphasis added) 
7.138  The Appellate Body states that the second sentence of Article 2.4.2 implies that the universe 
of export transactions in the third methodology will necessarily be more limited than those in the first 
two methodologies.  This is because, in order to unmask targeted dumping, the authorities will base 
their dumping determinations on the subset of the expor t transactions that fall within the relevant price 
pattern.   
7.139  This approach leaves certain questions unanswered .  First, the Appellate Body has not pointed 
to any textual basis for the proposition that the expor t transactions to be used in the third methodology 
would necessarily be more limited than those in the first two methodologies.  In light of the text of 
Article 2.4.2, it is not evident to us that dumpi ng determinations in the third methodology could be 
limited to the subset of the export transactions that  fall within the relevant price pattern.  The second 
sentence of Article 2.4.2 simply mentions that the authorities may, under certain circumstances, 
compare prices of individual export transactions with  the WA normal value.  It does not mention in 
any way whether such comparison may, or has to, be limited to the subset of export transactions that 
fall within the relevant price pattern.  Second, assuming that this proposition does in fact have a 
                                                      
96 (footnote omitted) Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline  ("US – Gasoline "), WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3, p. 23.   
97 Appellate Body Report, US – Zeroing (Japan) , supra , note 38, para. 135.   WT/DS344/R   
Page 42  
 
  textual basis in the Agreement, the Appellate Body  did not explain how the authorities would treat the 
remaining export transactions.  If, for instance, wh at the Appellate Body meant is that the export 
transactions that do not fall within the relevant  price pattern are to be excluded from dumping 
determinations, this would mean disregarding them.  Given the Appellate Body's strongly expressed 
view that dumping has to be determined for the product under consideration as a whole and hence all 
export transactions pertaining to th e product under consideration have to be taken into consideration 
by the authorities, we do not consider that this can be what the Appellate Body meant.  Alternatively, 
if the Appellate Body meant that the authorities would use the WA-WA methodology with respect to 
the export transactions that do not fall within the re levant price pattern, and combine these results with 
the results obtained through the WA-T methodology for the prices that fall within the pattern, we note 
that such an approach would also lead to th e same mathematical result as the WA-WA methodology.
98  
We therefore do not consider that the Appellate  Body's approach invalidates the mathematical 
equivalence problem.   
7.140  Mexico argues "that mathematical equivalency do es not exist if intermediate monthly average 
normal values are used in the average to transac tion method and period-long average normal values 
are used in the average to average method".99  Mexico submitted calculation tables in order to 
illustrate this point.100  Through these tables, Mexico demonstrated that if one uses monthly 
WA normal value in the third methodology and annu al WA normal value in the first, the resulting 
margins of dumping will be different.  We note, and the United States does not dispute, that if 
WA normal value figures are based on different time  periods in connection with the WA-WA and the 
WA-T methodologies, such calculations will yield different mathematical results.  For instance, if 
annual WA normal value is used in the WA-WA methodology and monthly WA normal value in the 
WA-T methodology, as Mexico did in its tables, these two calculations will result in different margins 
of dumping.  Mexico argues that this disproves th e mathematical equivalence argument presented by 
the United States.  We disagree.  Mexico has shown no support in the text of Article 2.4.2 for the proposition that the normal value figures used unde r the WA-WA and the WA-T methodologies may, 
or have to, be based on different time periods.  If they are based on the same time periods, then the 
mathematical equivalence holds.  In this  regard, we agree with the panel in US – Zeroing (Japan)  that 
"[t]here exists no substantive di fference between "a weighted average normal value" in the first 
sentence of Article 2.4.2 and "a normal value established on a weighted average basis" in the second sentence of that provision".
101  We also note that the justificati on for the use of the asymmetrical third 
methodology under Article 2.4.2 is the significant difference between the pattern of export prices , not 
the normal value.  Hence, Article 2.4.2 does not, in our view, lend support to Mexico's proposition 
that the time frame for the determination of th e WA normal values under the first and the third 
methodologies may be different.102   
7.141  Mexico argues that because the terminology u sed in the first and the second sentences of 
Article 2.4.2 to describe the WA normal values to be used under the first and the third methodologies 
is not identical, the use of WA monthly normal valu es under the third methodology is not prohibited.  
According to Mexico, "[h]ad the drafters intende d these phrases to have precisely the same meaning, 
they would have been expected to  use the identical language or provided cross-references between the 
sentences". 103  While Mexico is right that the phrases used in Article 2.4.2 to refer to the WA normal 
                                                      
98 Through Table 2 in Exhibit US-2, the United States has shown that using the WA-T and the WA-
WA methodologies in combination under the second sentence of Article 2.4.2 would yield the same mathematical result as using the WA-WA methodology for the totality of the calculations.  Mexico has not 
objected to the calculations submitted in this table.   
99 Oral Statement of Mexico at th e Second Meeting, para. 27.   
100 Exhibit MEX-12.   
101 Panel Report, US – Zeroing (Japan) , supra , note 81, para. 7.129.   
102 Ibid.   
103 Mexico's Comments on the United States' Response to Question 3 from the Panel Following the 
Second Meeting.    WT/DS344/R 
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  values in the context of the first and the third methodologies are not identical, this does not, in our 
view, suffice to assert that they refer to different normal values that may be based on different time 
frames.  Mexico has not explained how exactly the text of Article 2.4.2 supports such an 
interpretation.  It is, in our view, at least one of the permissible interpretations of Article 2.4.2 that, 
contrary to Mexico's point of view, this provisi on does not justify the establishment of the WA normal 
values in the context of the first and the third met hodologies on the basis of different time periods.  
We therefore disagree with Mexico's argument, ta king into consideration the principles on the treaty 
interpretation that we follow in this case ( supra , paras. 7.3-7.5).   
7.142  Mexico notes that the methodology used in th e calculation tables submitted by Mexico based 
on a comparison of WA monthly normal values w ith individual export transactions is the same 
methodology prescribed in US Regulations for inv estigations where targeted dumping is identified 
and the third comparison methodology is used.104  The United States does not dispute this fact.105  We 
understand Mexico to argue that because the US Re gulations allow for the use of monthly WA normal 
values in the use of the third methodology, th e United States cannot logically argue in these 
proceedings that Article 2.4.2 of the Agreement disa llows such an approach.  We recall that we are 
not called upon to assess the consistency of the mentioned US regulatory provisions with the 
WTO rules.  The claim that we are addressing concerns the use of simple zeroing in periodic reviews.  
We therefore need not, and do not, express any vi ews about the WTO-consistency of the regulatory 
provisions under US law regarding the use of WA monthly normal values in investigations where 
targeted dumping is identified.  What the US law prescribes regarding the use of WA monthly normal 
values in connection with the third methodolo gy under the second sentence of Article 2.4.2 is 
irrelevant to our assessment of whether Article 2.4.2 allows such an approach.   
7.143  Based on the foregoing considerations, we rej ect Mexico's claim that simple zeroing in 
periodic reviews is inconsistent  with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 
and 9.3 of the Anti-Dumping Agreement.  As we mentioned in paras. 7.119 and 7.128 above, our 
conclusion in this regard rests upon a permissible interpretation of the relevant treaty provisions 
invoked by Mexico, which, according to our standard of review ( supra , paras. 7.1-7.2), we cannot 
disregard even if there may be other permissible interpretations of such provisions.   
(iv) Alleged Violations of Article 2.4 of the Anti-Dumping Agreement 
7.144  Mexico's arguments in support of its claim that  the use of simple zeroing in periodic reviews 
is inconsistent with Article 2.4 of the Anti-Dump ing Agreement are premised on the interpretation of 
this provision developed by th e Appellate Body, mainly in US – Zeroing (Japan) .  Mexico asserts that 
Article 2.4 requires the authorities to carry out a fair comparison between the normal value and export 
price while comparing them for purposes of calculating a margin of dumping.  Mexico recalls that any 
determination of dumping has to be made for the product under consideration as a whole.  The Simple 
Zeroing Procedures  under US law, however, "result in calculation of dumping and margins of 
dumping that do not reflect all of the transactions  involving the product under consideration as a 
whole".106  A comparison that fails to take into account  certain export transactions cannot result in a 
determination of dumping for the product under consideration as a whol e and cannot be considered as 
a "fair comparison" within the meaning of Article 2. 4.  In Mexico's view, zeroing is inherently biased 
                                                      
104 Oral Statement of Mexico at th e Second Meeting, para. 35.   
105 The United States submits, and Mexico does not contest, that although the US Regulations provide 
for the use of monthly WA normal values in investigatio ns where targeted dumping is found, these provisions 
have never been used by the USDOC.  Response of the United States to Question 5 from the Panel Following 
the Second Meeting.  We do not, however, find this fact to be relevant to our assessment of Mexico's argument regarding the issue of mathematical equivalence.   
106 First Written Submission of Mexico, para. 245.   WT/DS344/R   
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  and hence in violation of the fair comparison require ment of Article 2.4 because it artificially inflates 
the margin of dumping by ignoring certain export transactions.   
7.145  We note that Mexico's claim under Article 2.4 is premised on the assumption that 
Articles VI:1 and VI:2 of the GATT 1994 and Artic les 2.1 and 9.3 of the Anti-Dumping Agreement 
prohibit simple zeroing in periodic reviews.  Mexico argues that these provisions require the 
authorities in a periodic review to calculate an individual margin of dumping for each exporter or 
foreign producer concerned and to base such calculations on an aggregation of all export transactions 
by each individual exporter or foreign producer .  It follows that failing to base dumping 
determinations in a periodic review on an aggr egation of all export transactions from individual 
exporters or foreign producers artificially inflates such  margins and therefore is inherently unfair.  We 
disagreed with this assumption above ( supra , para. 7.123), while addressing Mexico's claim regarding 
the alleged inconsistency of simple  zeroing in periodic reviews with  Articles VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1 and 9.3 of the Anti-Dumping Agreement.  That is, we disagreed with Mexico's assertion that these provisions require inve stigating authorities in a periodic review to base 
their dumping determinations on an aggregation of all export transactions from each exporter.  We 
therefore also reject Mexico's claim that simple zeroing in periodic reviews is inherently inconsistent 
with the obligation to carry out a fair comparis on between the normal value and the export price as 
stipulated under Article 2.4 of the Anti-Dumping Agreement.   
(v) Potential Consequences of a General Prohibition on Zeroing 
7.146  Finally, we note that accepting Mexico's interp retation of Articles VI:1 and VI:2 of the 
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement as prohibiting simple 
zeroing in periodic reviews would lead to undesira ble results.  If, while calculating in a periodic 
review the amount of the duty to be paid by a give n importer, the authorities have to take into account 
the export prices paid by other importers importing from the same exporter or foreign producer, this 
would have unfair consequences in the market.  In this situation, importers with high margins of 
dumping would be favoured at the expense of im porters who do not dump or who dump at a lower 
margin.  In such situations, importers importing at dumped prices would pay less than their true 
margin of dumping because of other importers refra ining from importing at dumped prices.  We agree 
with the United States that "[t]his kind of competitiv e disincentive to engage in fair trade could not 
have been intended by the drafters of the An tidumping Agreement and sh ould not be accepted ... as 
consistent with a correct interpretation of Article 9.3".
107  In addition, we note that such an approach 
would unnecessarily expand the scope of periodic re views because the exporters would have to 
submit information pertaining to all of their export  transactions rather than those pertaining to the 
importer requesting the review.  This would, in our view, also cause administrative inconvenience because the investigating authorities would have to  analyze all that information and be unable to 
complete the review in a timely manner.  Such a heavy burden could also encourage non-cooperation 
on the part of the exporters.   
7.147  Furthermore, imposing on the investigating author ities an obligation to take into consideration 
the prices of non-dumped imports while calculating the amount of the liability in a periodic review 
would, in our view, also preclude the achievement of the function of anti-dumping duties, i.e. 
removing the injurious effect of dumping.  The fact  that some imports are made at non-dumped prices 
would not, in our view, change the fact that the domestic industry in the im porting country is injured 
by dumped imports.  In other words, the injury suffered by the domestic industry because of dumped 
imports would not be removed by im ports at non-dumped prices.  Finally, as we noted in more detail 
in para. 7.133 above, we recall that a general pr ohibition on zeroing would render the administration 
of prospective normal value systems impractical.   
                                                     
 
107 Oral Statement of the United States at the Second Meeting, para. 18.    WT/DS344/R 
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  7.148  We do not consider such anomalies to be the intention of the drafters.  These potential 
concerns over a general prohibition on zeroing, in ou r view, lend support to our interpretation of the 
relevant treaty provisions provided above.   
(c) Conclusion 
7.149  We have found simple zeroing in periodic reviews108 "as such" not to be inconsistent with 
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping 
Agreement.  We therefore also reject Mexico's "a s applied" claim regarding the five periodic reviews 
on Stainless Steel Sheet and Strip in Coils from Mexico  carried out by the USDOC.   
7.150  Having rejected Mexico's main claims rega rding simple zeroing in periodic reviews under 
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping 
Agreement, we decline to make findings on Mexico 's dependent claims under Article XVI:4 of the 
WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.   
VIII.  CONCLUSIONS AND RECOMMENDATIONS 
8.1 On the basis of the above findings, we conclude that:   
(a) Model zeroing in investigations "as such" is inconsistent  with 
Article 2.4.2 of the Anti-Dumping Agreement, 
(b) The USDOC acted inconsistently  with Article 2.4.2 of the Anti-
Dumping Agreement in the investigation on Stainless Steel Sheet and 
Strip in Coils from Mexico  by using model zeroing, 
(c) Simple zeroing in periodic review s is "as such" not inconsistent  with 
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3 
and 2.4 of the Anti-Dumping Agreement, 
(d) The USDOC did not  act inconsistently  with Articles VI:1 and VI:2 of 
the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping Agreement by using simple zeroing in the five periodic reviews on Stainless Steel Sheet and Strip in Coils from Mexico .   
8.2 We have applied judicial economy with regard to:   
(a) Mexico's claims under Articles VI:1 and VI:2 of the GATT 1994 and 
Articles 2.1, 2.4 and 18.4 of the Anti-Dumping Agreement and Article XVI:4 of the WTO Agreem ent regarding model zeroing in 
investigations, 
(b) Mexico's claims under Article XVI :4 of the WTO Agreement and 
Article 18.4 of the Anti-Dumping Agreement regarding simple 
zeroing in periodic reviews.   
8.3 We recommend that the DSB request the United States to bring its measure mentioned in 
paragraph 8.1(b) above into conformity with its obligations under the WTO Agreement.  We have 
made no recommendation regarding model zeroing in i nvestigations "as such" because, as mentioned 
                                                     
 
108 We recall that in paras. 7.7-7.9 above, we noted the description of the term "simple zeroing in 
periodic reviews" offered by Mexico, and decided to use it in our analysis in this case for ease of reference.   WT/DS344/R   
Page 46  
 
  in para. 7.50 above, we have found that the USDOC stopped using it during these dispute settlement 
proceedings.   
8.4 Mexico asks the Panel to suggest that the United States implement the DSB recommendations 
and rulings in this dispute in respect of its "as such" claims by eliminating Model Zeroing Procedures  
and Simple Zeroing Procedures .  In addition, Mexico asks the Panel to suggest that the United States 
eliminate zeroing from the five periodic review r esults subject to these proceedings.  Mexico does not 
seek a suggestion with regard to the investigation on Stainless Steel Sheet and Strip in Coils from 
Mexico
 by requesting the revocation of the anti-dumping duty.109  The United States notes that a 
suggestion is not essential to the resolution of a dispute in the WTO dispute settlement system.  
According to the United States, a Member is free to choose the means to implement the DSB 
recommendations and rulings.  In a case like this where the same measure is subject to other 
implementation processes, making a suggestion may cause complications over such processes.  The United States therefore asks the Panel to rej ect Mexico's request for a suggestion.   
8.5 We note that by virtue of Article 19.1 of the DSU, a panel has discretion to ("may") suggest 
ways in which a Member could implement the re commendation that the Member concerned bring the 
measure into conformity with the covered agreem ent in question.  Having made no recommendations 
to the DSB on Mexico's claims w ith respect to which Mexico seeks a suggestion, however, we cannot, 
and do not, make any suggesti on under Article 19.1 of the DSU in these proceedings.   
 
_______________ 
  
                                                     
 
109 Response of Mexico to Question 16 from the Panel Following the First Meeting.