WT/DS350/R 
Page E-1 
 
 
ANNEX E 
 
 
PARTIES' COMMENTS ON THE APPELLATE BODY REPORT  
IN US – STAINLESS STEEL (MEXICO) (DS344) 
 
 
Contents Page 
Annex E-1 Comments of the European Communities on the Appellate Body 
Report in US – Stainless Steel (Mexico)  (DS344) E-2 
Annex E-2 Comments of the United Stat es on the Appellate Body Report in 
US – Stainless Steel (Mexico)  (DS344) E-3 
Annex E-3 Comments of the European  Communities on the United States' 
Comments on the Appellate Body Report in US – Stainless Steel 
(Mexico)  (DS344) E-25 
Annex E-4 Comments of the United States on the Comments of the European 
Communities on the Appellate Body Report in US – Stainless Steel 
(Mexico)  (DS344) E-28 
 
 WT/DS350/R 
Page E-2  
 
ANNEX E-1 
 
 
COMMENTS OF THE EUROPE AN COMMUNITIES ON THE 
APPELLATE BODY  REPORT IN US – STAINLESS STEEL (MEXICO) 
(DS344) 
 
  
The European Communities refers to the Panel's letter inviting the Parties to comment on the 
Appellate Body Report in DS344.  The Europ ean Communities observes that, as was entirely 
foreseeable, the Appellate Body has once again c onfirmed that the correct interpretation of the  Anti-
Dumping Agreement  precludes the zeroing methodology used by  the United States in the measures at 
issue.  
The European Communities agrees with the Appella te Body's analysis and respectfully invites 
the Panel, in making an "objective assessment of the matter before it" under Article 11 of the DSU to 
adopt the same approach.  We draw the Panel's par ticular attention to the statement that "absent 
cogent reasons, an adjudicatory body will resolve the same legal question in the same way in a 
subsequent case" (para. 160);  and that "the relevan ce of clarification contai ned in adopted Appellate 
Body reports is not limited to the application of a particular provision in a specific case" (para. 161).  
The European Communities considers that, if the Panel were not to follow the Appellate 
Body, its findings would inevitably be reversed on a ppeal.  We therefore fail to see what useful 
purpose could possibly be served by prolonging discussion of what has already been decided. 
 
 
 WT/DS350/R 
Page E-3 
 
 
 
ANNEX E-2 
 
COMMENTS OF THE UNITED ST ATES ON THE APPELLATE  
BODY REPORT IN US – STAINLESS STEEL (MEXICO)  (DS344) 
 
 
TABLE OF REPORTS  
 
Short Form Full Citation 
US – Softwood Lumber V 
(AB)  Appellate Body Report, United States – Final Dumping Determination 
on Softwood Lumber from Canada , WT/DS264/AB/R, adopted 
31 August 2004 
US – Zeroing (EC) (AB)   Appellate Body Report, United States – Laws, Regulations and 
Methodology for Calculating Dumping Margins , WT/DS294/AB/R, 
adopted 9 May 2006 
US – Zeroing (Japan)  (Panel)  Panel Report, United States – Measures Relating to Zeroing and 
Sunset Reviews , WT/DS322/R, adopted 23 January 2007, as modified 
by the Appellate Body Report, WT/DS322/AB/R 
US – Zeroing (Japan) (AB)  Appellate Body Report, United States – Measures Relating to Zeroing 
and Sunset Reviews , WT/DS322/AB/R, adopted 23 January 2007 
US – Stainless Steel (Mexico) 
(Panel)  Panel Report, United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/R, adopted 20 May 2008, as 
modified by the Appellate Body Report, WT/DS344/AB/R 
US – Stainless Steel (Mexico) 
(AB)  Appellate Body Report, United States – Final Anti-Dumping 
Measures on Stainless Steel from Mexico , WT/DS344/R, adopted 
20 May 2008  
 WT/DS350/R 
Page E-4  
 
I. INTRODUCTION 
1. The United States thanks the Panel for the oppor tunity to address the Appellate Body report in 
US – Stainless Steel (Mexico) .  In that report, the Appellate Body reversed the panel and found that 
simple zeroing by the United States in periodic reviews is, as such, inconsistent with Article 9.3 of the 
Agreement on Implementation of Article VI of  the General Agreement on Tariffs and Trade 1994 
("AD Agreement") and Article VI:2 of the GATT 1994.
1  The Appellate Body also reversed the panel 
and found that the United States acted inconsisten tly with Article 9.3 of the AD Agreement and 
Article VI:2 of the GATT 1994 by applying simple  zeroing in the five periodic reviews at issue.2  The 
United States has demonstrated in its submissions  to the Panel, and at the Panel's substantive 
meetings, that the text of the AD Agreement and the GATT 1994 do not prohibit zeroing in periodic 
reviews.  As set out more fully below, the Unite d States believes that the Appellate Body's most 
recent report on the issue of zeroing in US – Stainless Steel (Mexico) is deeply flawed and should not 
be treated as persuasive by this Panel.3   
 2. The Appellate Body Division that heard US – Stainless Steel (Mexico) would like this Panel 
to abandon its obligation to unde rtake an objective assessment of the matter before it under Article 11 
of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").  
Instead, the Division has indicated that panels need  to follow prior Appellate  Body reports on zeroing, 
all in the name of "security and predictability" of  the WTO dispute settlement system and a "coherent 
and predictable body of jurisprudence", even if such  past reports add to or diminish the rights and 
obligations of Members under the covered agreemen ts.  There is no support in the DSU for the 
Division's approach, which would undermine the secu rity and predictability of the multilateral trading 
system and expand the legal effect of Appellate Bo dy reports beyond what was agreed by Members.   
 3. The Division's finding that zeroing in periodic revi ews is inconsistent with Article VI:2 of the 
GATT 1994 and Article 9.3 of the AD Agreement lacks a basis in the text of the covered agreements, 
and contradicts what the negotiating history of the AD Agreement confirms.  The Division claims that 
its interpretation is the only permissible one unde r Article 17.6(ii) of the AD Agreement, but in 
reality, it represents a modification of the reasons for the prohibition on zeroing in periodic reviews, thereby contradicting its conclusion that there is  only one permissible interpretation.  The United 
States urges this Panel to find that the AD Ag reement and the GATT 1994 allow the calculation of 
transaction-specific margins of dumping, and that there is no requirement for the provision of offsets 
in the assessment proceedings at issue.   
 
II. THE PANEL IN US – STAINLESS STEEL (MEXICO) PROPERLY FULFILLED ITS 
OBLIGATIONS UNDER THE DSU 
4. Mexico argued on appeal that the panel in US – Stainless Steel (Mexico) acted inconsistently 
with Article 11 of the DSU by "failing to follow well-established Appellate Body jurisprudence" on 
the issue of zeroing.
4  Although the Appellate Body Division ultimately declined to make a finding on 
Mexico's claim, in obiter dicta  it expressed its deep concern over the panel's "departing from" prior 
Appellate Body reports addressing the same legal issues.5  The United States respectfully disagrees 
with the Division's approach, which would transf orm Appellate Body reports into authoritative 
                                                      
1 US – Stainless Steel (Mexico) (AB) , para. 165(a).  The United Stat es notes that the European 
Communities ("EC") does not make an as such claim of inconsistency in the present dispute.   
2 US – Stainless Steel (Mexico) (AB) , para. 165(b).   
3 The United States has attached copies of its statement at the meeting of the Dispute Settlement Body 
on the DSB's consideration for adoption of the panel and Appellate Body reports in US – Stainless Steel 
(Mexico)  as Annex 1 to these comments and its separate written communication to the DSB on those reports as 
Annex 2.   
4 US – Stainless Steel (Mexico) (AB) , para. 154.   
5 US – Stainless Steel (Mexico) (AB) , para. 161-62.   WT/DS350/R 
Page E-5 
 
 
interpretations of the covered agre ements.  Drawing similar conclusi ons to prior panel and Appellate 
Body reports, the panel in US – Stainless Steel (Mexico) recognized the proper role of prior Appellate 
Body reports in the WTO dispute settlement system, correctly understood what was required of it under the DSU, and acted consistently with its obligations.    
5. The panel, before proceeding to a consideration of Mexico's substantive claims, observed that 
it was "not bound by previous Appella te Body or panel decisions that have addressed the same issue, 
i.e. simple zeroing in periodic reviews, which is before us in these proceedings".
6  As the panel 
affirmed, "[t]here 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 parties to the relevant dispute."7  The Division at first also 
recalled the well-established understanding that there is no stare decisis in the WTO dispute 
settlement system8, but then appears to have suggested the contrary.9   
 6. The panel was fully mindful of its obligati on under Article 11 of the DSU to undertake an 
"objective assessment" of the matter before  it.  Recalling the panel report in US – Zeroing (Japan) , the 
panel noted that "the concern over the preservation of a consistent line of jurisprudence should not 
override a panel's task to carry out an objective examination of the matter before it through an interpretation of the relevant treaty provisions in accordance with the customar y rules of interpretation 
of public international law".
10  After a "careful consideration" of the matter before it, the panel 
decided that "we have no option but to respectfully  disagree with the line of reasoning developed by 
the Appellate Body regarding the WTO-consiste ncy of simple zeroing in periodic reviews".11  
Likewise, the panel concluded that "[i]n 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 ... we have felt compelled to 
depart from the Appellate Body's approach".12  It is clear that the panel approached its job seriously, 
that it conducted a very critical and thorough examinat ion of prior Appellate Body reports on the issue 
of zeroing, and that it did not lightly deviate from those reports.   
 7. The Division, in criticizing th e panel for departing from past Appellate Body reports, failed to 
acknowledge that the panel did what was required under Article 11 of the DSU – that is, the panel 
undertook an "objective assessment" of the matter before it.
13  The Division also suggested that:   
 
consistency and stability in the inte rpretation of [Members'] rights and 
obligations under the covere d agreements is essential to promote 'security and 
predictability' in the dispute settlement system. ...  The Panel's failure to follow previously adopted Appellate Body reports addressing the same issues undermines the development of a coherent and predictable body of jurisprudence 
clarifying Members' rights and obligati ons under the covered agreements as 
contemplated under the DSU.
14   
 The Division's discussion cannot be reconciled with the text of Article 3.2 of the DSU.  The "security 
and predictability" referred to in Article 3.2 is the "security and predictability" of the "multilateral 
                                                     
 
6 US – Stainless Steel (Mexico) (Panel) , para. 7.102.   
7 US – Stainless Steel (Mexico) (Panel) , para. 7.102.   
8 US – Stainless Steel (Mexico) (AB) , para. 158 (quoting Japan – Alcoholic Beverages II (AB) , pp. 12-
15).   
9 US – Stainless Steel (Mexico) (AB) , paras. 161-62.   
10 US – Stainless Steel (Mexico) (Panel) , para. 7.105.   
11 US – Stainless Steel (Mexico) (Panel) , para. 7.106.   
12 US – Stainless Steel (Mexico) (Panel) , para. 7.106.   
13 Ironically, the panel did offer "cogent reasons" for departing from prior Appellate Body findings on 
zeroing, which makes the Division's criticism all the more misplaced according to the Division's own criteria.   
14 US – Stainless Steel (Mexico) (AB) , para. 161.   WT/DS350/R 
Page E-6  
 
trading system", and not the "'security and pred ictability' in the dispute settlement system".
15  Under 
Article 3.2, the DSB's recommendations and rulings  "cannot add to or diminish the rights and 
obligations provided in the covered agreements".16  Recommendations and rulings that add to or 
diminish such rights and obligations undermine th e very security and predictability of the multilateral 
trading system that is mentioned in Article 3.2.  Wh at is more, to the extent such rulings are followed 
without hesitation, the security and predictability of  the agreements that Members negotiated will be 
even further undermined.    8. The Division has essentially found that "security  and predictability" in the dispute settlement 
system and the need for "a coherent and predi cable body of jurisprudence" should trump other 
provisions of the DSU, including the requirement under Article 3.2 that the DSB's recommendations 
and rulings not add to or diminish Members' right s and obligations under the covered agreements, and 
a panel's obligation under Article 11 to conduct an objective assessment.  Indeed, carried to its logical 
extreme, the Division's reasoning would mean the Appellate Body could ne ver change its mind or 
should never have a dissenting opinion since either w ould detract from "security and predictability".   
 
9. While the Appellate Body h as an undeniably important role in the WTO dispute settlement 
system, the Appellate Body was not set up to i ssue authoritative interpretations on the covered 
agreements;  only the Ministerial Conf erence and General Council may do that.
17  The Division, in 
discussing the Appellate Body's "distinct" role in the alleged "hierarchical structure" of the WTO 
dispute settlement system18, appears to downgrade the very impo rtant role of panels and panels' 
fundamental responsibilities as agreed by Members in the DSU.   
 10. The United States wishes to r ecall that despite the Division's dicta  to the contrary, prior 
Appellate Body reports on zeroing are not bi nding.  This Panel, like the panel in US – Stainless Steel 
(Mexico) , should undertake an objective assessment of the matter before it, as required by Article 11 
of the DSU.
19  We also ask this Panel to remain mindfu l of the proper interpretation of Articles 3.2 
and 19.2 of the DSU and ensure that its findings do not add to or diminish the rights and obligations 
of Members under the covered agreements.20  The Panel should decline any invitation to adopt 
uncritically the reasoning in Appellate Body reports si mply in the name of consistent jurisprudence or 
"security and predictability".    III. THE APPELLATE BODY DIVISION'S REASONING IS FLAWED AND SHOULD 
NOT BE FOLLOWED BY THIS PANEL 
11. The United States is deeply troubled by the Appellate Body Division's evaluation of the issue 
of zeroing.  The question before the Division was wh ether the Members agreed to prohibit 
zeroing as part of their WTO obligations.  Any such agreement could only be manifest in the 
text of the AD Agreement.  However, the text of the AD Agreement is silent on the issue of 
zeroing.  Faced with agreement language that do es not address zeroing at all, let alone include a 
broad prohibition on zeroing, the Division ha s drawn inferences that the text cannot support 
about what it is that Members intended with respect to zeroing.   
 
                                                     
 
15 US – Stainless Steel (Mexico) (AB) , para. 160.   
16 Likewise, Article 19.2 ensures that the findings and recommendations of panels and the Appellate 
Body cannot add to or diminish the rights and obligations of Members under the covered agreements.   
17 WTO Agreement, Art. IX:2.   
18 US – Stainless Steel (Mexico) (AB) , para. 161.   
19 See, e.g. , US First Written Submission, paras. 24, 28-29;  US Opening Statement at First Substantive 
Meeting of the Panel, paras. 4, 6, 9.   
20 See, e.g. , US First Written Submission, paras. 28, 32;  US Opening Statement at First Substantive 
Meeting of the Panel, paras. 7-8.   WT/DS350/R 
Page E-7 
 
 
12. The difficulties and problems of the Appella te Body's approach are illustrated by the 
individual Appellate Body reports on the issue.   Over several reports, the Appellate Body has 
modified its analysis in mutually contradictor y ways.  The Appellate Body's most recent effort 
in US – Stainless Steel (Mexico)  is no less flawed.  In particular, the Appellate Body report 
largely assumes its conclusion, relying not on the text of the AD Agreement but on language 
from its previous reports remove d from its context.  The Appellate Body's shifting rationales 
throughout its successive zeroing reports detracts from its conclusion that under Article 17.6(ii) 
of the AD Agreement, only one permissible in terpretation exists of the AD Agreement and 
Article VI of the GATT 1994.21   
 
The Appellate Body's Shifting Explanation for the Prohibition on Zeroing  
 
13. In US – Softwood Lumber V , the Appellate Body interpreted the term "margins of 
dumping" in the first sentence of Article 2.4.2 in an integrated manner with the phrase "all 
comparable export transactions" to derive a concept of the "product as a whole" as 
distinguished from sub-groups  or models of a product.22  The phrase "all comparable export 
transactions" appears only in connection with av erage-to-average comparisons, but Article 2.4.2 
also provides for the calculation of a margin of dumping on a transaction-to-transaction or 
average-to-transaction basis.  Thus, in US – Softwood Lumber V the Appellate Body had 
concluded that zeroing was not permitted in the context of "multiple averaging", but did not explain how zeroing could be prohibited in the context of "multiple comparisons" generally.  
Indeed, it specifically refrained from making a finding concerning the other two methods of 
comparison.    
14. Then, in contrast to US – Softwood Lumber V , in US – Zeroing (EC)  the Appellate Body 
appeared to embrace a new interpretation, such that a new concept of the "product as a whole" 
led to the conclusion that zeroing is prohibit ed whenever "multiple comparisons" are made.23  
Again, these phrases do not appear in the AD Agreement, but were derived from interpretations 
based on the phrase "all comparable export tran sactions", which appears only in connection 
with average-to-average comparisons in investi gations.  In considering this, the panel in US – 
Zeroing (Japan) found that the Appellate Body had provided:   
 
[N]o explanation of this shift from the use of the "product as a whole" 
concept as context to interpret the term "margins of dumping" in the first 
sentence of Article 2.4.2 of the AD Agreement in connection with multiple 
averaging, on the one hand, to the use of  this concept as an autonomous legal 
basis for a general prohibition of zeroing, on the other.  In this regard, we 
note, in particular, that the Appella te Body does not discuss why the fact 
that in the context of multiple avera ging the terms "dumping"and "margins 
of dumping" cannot apply to a  sub-group  of a product logically leads to the 
broader conclusion that Members may not distinguish between  transactions  
in which export prices are less than normal value and transactions  in which 
export prices exceed normal value.24  
 
15. Then, in US – Zeroing (Japan) , the Appellate Body reinterpreted the "all comparable 
export transactions" language to rela te solely to all transactions within a model, and not across models 
of the product under investigation.25  Previously, the Appellate Body relied on the word "all" in "all 
                                                      
21 US – Stainless Steel (Mexico) (AB) , para. 136.   
22 US – Softwood Lumber V (AB) , paras. 86-103 .   
23 US – Zeroing (EC) (AB),  para. 127.   
24 US – Zeroing (Japan) (Panel) , para. 7.101.   
25 US – Zeroing (Japan) (AB), para. 124.   WT/DS350/R 
Page E-8  
 
comparable export transactions" as the textual basis for requiring the results of all model-average-to-
model-average comparisons to be included in th e margin of dumping in the average-to-average 
context.26  The Appellate Body insisted that the word  "all" was not necessary to its finding that a 
single overall margin of dumping must be calculated a nd must include the results of all transaction-to-
transaction comparisons.  Because the Appellate Body has concluded that there is a single permissible 
interpretation of these provisions of the AD Agreement, the term "all" is either relevant, or it is not.  
The Appellate Body cannot adopt one permissible in terpretation in one instance, and then adopt a 
contradictory interpretation with regard to the same i ssue, and still continue to maintain that there is 
only one permissible interpretation provided for in the text.   
 
16. Finally, and most recently, in US – Stainless Steel (Mexico) , the Appellate Body, shifting its 
emphasis yet again, relied on Article VI of th e GATT 1994, and on Articles 2.1 and 9.3 of the 
AD Agreement, for its conclusion th at because "dumping" and "margins of dumping" carry one rigid, 
identical meaning throughout the AD Agreement re gardless of the context in which the terms are 
placed, transaction-specific calculations are prohibited.   
 
17. In attempting to reach a desired result on the issue of zeroing, the Appellate Body's reasoning 
varies from one dispute to the next.  Such varying conclusions defy common sense.  Considering the 
text of the AD Agreement and the various contra dictory interpretations offered on the issue of 
zeroing, this Panel, when making its own objective asse ssment of the matter before it, should find that 
at the very least, an alternative interpretati on – that the AD Agreement does not prohibit the 
calculation of dumping on a transaction-specific basis in assessment reviews – is permissible.   
 
The Division's Flawed Reasons for the Pr ohibition on Zeroing in Periodic Reviews  
 
18. The Division's finding that zeroing is inconsistent with Articles 9.3 of the AD Agreement and 
Article VI:2 of the GATT 1994 lacks a textual basis and is without support in the negotiating history 
of the Uruguay Round Agreements.  The AD Agreement and the GATT 1994 do not prohibit the 
calculation of transaction-specific antidumping margins, nor do they require offsets to be provided for 
non-dumped transactions.  The United States respectfully refers the Panel to, and incorporates the 
comments set out in, the attached Communication of the United States to the Dispute Settlement 
Body, dated 20 May 2008, in which we explain in more detail the errors in the Division's reasoning.27   
 
IV. CONCLUSION 
19. The United States thanks the Panel once agai n for the opportunity to comment on the recent 
Appellate Body report in US – Stainless Steel (Mexico) .  We respectfully ask the Panel to remain 
mindful of its obligation to undertake an objective a ssessment as required by Article 11 of the DSU.  
To the extent that the Panel takes the Appellate Body report into account, the United States believes 
that for the reasons discussed above, and in the co mments set out in the attached documents, the Panel 
will find that report unpersuasive and incorrect, and will agree that the AD Agreement and the 
GATT 1994 do not prohibit zeroing as applied in the asse ssment proceedings challenged by the EC.   
 
                                                      
26 US – Softwood Lumber V (AB) , paras. 86-103.   
27 See Annex 2.   WT/DS350/R 
Page E-9 
 
 
ANNEX 1 
 
US COMMENTS ON US – STAINLESS STEEL (MEXICO) (AB)  
  
Oral Statement of the United States on th e DSB's Consideration for Adoption of the 
 
Reports of the Panel and Appellate Body in United States – Final Antidumping  
Measures on Stainless Steel from Mexico  (WT/DS344)  
  
 Mr. Chairman, the United States would first lik e to welcome the panel report being adopted 
today.  We commend the Panel for the professional job th at it performed in this dispute, for its careful 
analysis of the relevant provisions of the An tidumping Agreement and the GATT 1994 and for taking 
so seriously its responsibility to Members to conduct an objective examination of the matter placed before it.   
 
 It is clear from the Panel's report that the Pane l did not lightly choose not to follow the earlier 
Appellate Body reports on zeroing.  It would have b een far simpler, not to mention I suspect far more 
popular, for the Panel just to go along with what  the Appellate Body had said on this subject.  
However, the Panel clearly was deeply troubled by  the flaws in the logic and approach of those 
previous reports.   
 
 In light of the Panel's careful examination a nd obvious struggle in attempting to reconcile the 
agreed text of the WTO agreements with statements made by the Appellate Body  in its prior reports, it 
would have seemed that this Appellate Body Di vision would have felt ca lled upon to address most 
carefully the issues raised and the Panel's concerns.  Thus, it is even more troubling that the Appellate 
Body Division on this appeal not only summarily rejected the Panel's points, but also took the Panel to 
task simply for taking the Panel's duties to heart an d trying to ensure that the Panel's findings were 
consistent with the agreed text of the WTO agreements.     The United States is deeply troubled by the Appellate Body Division's response on two levels, 
each of them posing serious systemic problems for us, the Members.  First, once again a Division has 
devised a new basis to justify findings against zero ing in reviews – this time that the margin of 
dumping is exporter based and that somehow this precludes finding a margin of dumping with respect to an individual transaction.  The reasoning under th is approach continues to be deeply flawed and 
fails to comport with the actual, agreed treaty text.    
 Second, the Division has significantly depart ed from the established understanding of the 
relationship between panel and Appella te Body reports and the role of the Appellate Body and that of 
Members.  This report purports to create a new lega l effect for Appellate Body  reports, one that would 
appear to grant to the Appellate Body the very au thority to issue authoritative interpretations of the 
covered agreements that is reserved by the WTO Agreement exclusively
 to Members.   
 
 With respect to the first systemic level of con cern, let me simply note that there are numerous 
flaws in the Appellate Body's reasoning in this latest report, including in particular its rejection of the 
fact that the Uruguay Round negotiators did not agr ee to prohibit zeroing in assessment reviews.  No 
common understanding was reached on zeroing in the Uruguay Round because, despite extensive efforts by many participants, proposals to prohi bit zeroing were firmly opposed by many others, 
including several users of antidumping measures.   
  However, if the Members of the WTO never agreed to ban zeroing, then the DSU does not 
empower the Appellate Body to create new obligations  that impose such a ban.  The Appellate Body's 
approach ought to be of concern to every singl e WTO Member, any one of which may someday be 
called upon to defend its own laws and regulations, and every one of which will want to rely on the WT/DS350/R 
Page E-10  
 
negotiated outcome of the Uruguay Round, the Doha  Round, or other WTO negotiations – and not be 
held to rules found nowhere in those outcomes.   
 
 We will not dwell on those points further th is afternoon.  Instead, we have prepared a 
written statement that addresses the continuing and evolving flaws with the Appellate Body's 
analysis of zeroing;  a copy will be available in the room after the meeting and will be circulated 
to all delegations.     The second level of systemic concern is of such enormous institutional significance for 
the dispute settlement system that we are comp elled to elaborate on our concerns today.   
  In this dispute, the Panel correctly noted its obligations  under DSU Articles 11, 3.2 and 19.1 
and undertook its work in accordance with those obligations.  And, in carrying out its task, this 
Panel – like another panel before it – carefully considered, and ultimately disagreed with, the 
various versions of the Appellate Body's reaso ning in prior disputes involving zeroing in 
assessment reviews.  On appeal, Mexico raised a claim under DSU Article 11.   
 
 The first few paragraphs of the Appellate Body report's discussion of that appeal are 
unexceptional.  The Division first recalls the task of  the Panel under DSU Article 11:  to assist the 
DSB in discharging its responsibilities, and to make an objective assessment of the  matter, including 
the applicability of and conformity with the covere d agreements.  It further recalls that under DSU 
Article 3.2, "the dispute settlement system of the WTO is a central element in providing security and 
predictability to the multilateral trading system".  And, it recalls that the original members of the 
Appellate Body, in one of the very first appeals it he ard, clarified the status of prior adopted reports:  
they are not binding, except with respect to the par ticular dispute between the parties, but they "should 
be taken into account where they are relevant to a ny dispute".  We have no quarrel with any of this, 
and we believe that all Members share that view.   
  The discussion then turns, however, in a signi ficantly different direction – one that no longer 
relies on WTO Agreement text or even on prior adop ted reports.  The discussion begins to use terms 
such as "'security and predictability' in the dispute settlement system" – which is a misstatement of the 
text, since the DSU only speaks to the dispute settle ment system providing security and predictability 
to the "multilateral trading system".  The discussion also asserts that the Panel's "failure to follow 
previously adopted Appellate Body reports ... undermines the development of a coherent and 
predictable body of jurisprudence clarifying Me mbers' rights and obligations under the covered 
agreements".    
 The Division closes by expressing its concern a bout "the Panel's decision to depart from" the 
Appellate Body's prior rulings on these issues, st ating that the Panel's approach has "serious 
implications for the proper functioning of the WTO dispute settlement system".     Mr. Chairman, with respect, the Appellate Body Division is mistaken.  This second part of the Appellate Body's discussion misperceives the WTO Ag reement and this Member-driven organization.  
It is WTO Members that negotiate and agree to obliga tions, and we do so by consensus.  We have also 
established one and only one means for adopting binding  interpretations of the obligations that we 
agree to:  Article IX:2 of the WTO Agreement provides that the Ministerial Conference and the 
General Council have the exclusive author ity to adopt such interpretations.   
 
 Yet the approach in this Appellate Body re port would appear to mean that Appellate Body 
reports should be treated as authoritative interpretati ons of the covered agreements – they are to be 
followed by panels regardless of whether a panel in a particular dispute agrees with those prior 
reports.  In other words, panels are simply to abdicate their responsibility to conduct an objective 
assessment of the matters before them and should simply follow prior Appellate Body reports.   
 WT/DS350/R 
Page E-11 
 
 
 This does a disservice to panels and the serious responsibility that the DSB assigns to them.   
  What is more, WTO Members have made it clear – in fact, the DSU says it twice – that the findings of panels and the Appellate  Body cannot add to or diminish the rights and obligations in the 
covered agreements.  Perhaps unlike some other institutions, the WTO does not rely on adjudication 
to advance its objectives.  However, this Appellate  Body report's approach, including its references to 
a "coherent and predictable body of jurispruden ce", would appear to transform the WTO dispute 
settlement system into a common law system.  Bu t that was nowhere agreed among Members.   
  And what is more, this Division raised a ll of these systemic concerns unnecessarily, some 
might even say gratuitously.  The report rejected Me xico's Article 11 appeal, so all of this discussion 
was mere dicta  by the Division.   
  We do, of course, share the Appellate Body's interest in having similar cases treated similarly.  We expect that all Members do likewise.  We do not, however, share this report's view that this means 
that panels must follow Appellate Body reports in different disputes.  Rather, to cite again to the 
Japan – Alcoholic Beverages  Appellate Body report, we would e xpect any panel to take account of 
any other relevant adopted report, whether authored by  the Appellate Body or by a different panel.   
  To take account of an adopted report, of course,  does not mean to follow it without hesitation.  
To the contrary, to take account of such a report me ans to examine it, to consider it, and to engage 
with its reasoning.  We recall that an objective  assessment is one that is critical and searching.  Such 
an assessment can lead, in fact, to further or greater clarification.     Mr. Chairman, the WTO dispute settlement syst em functions properly when the rules that 
Members established for that system are respected.  One of those rules is that a panel must make an 
objective assessment of the matter before it, includi ng an objective assessment of the "applicability of 
and conformity with the relevant  covered agreements".  Whatever  one's views of the substantive 
issues in this dispute, there is no question but that the Panel did so here.     We therefore strongly believe that the Appellate  Body's concerns about the Panel's approach 
are misplaced.  Rather than pr esenting "serious implications" for the dispute settlement system, the 
Panel's actions in this dispute affirm the strength of that system.   
  WT/DS350/R 
Page E-12  
 
 ANNEX 2 
 
US COMMENTS ON US – STAINLESS STEEL (MEXICO) (AB)  
  
Communication to the DSB by the United States on United States – Final Antidumping
 
Measures on Stainless Steel from Mexico  (WT/DS344)  
  1. On 20 December 2007, the Panel in United States – Final Anti dumping Measures on Stainless 
Steel from Mexico  ("US – Stainless Steel ") circulated its final report.  In that report, the Panel engaged 
in a lengthy analysis of the legal relationship un der the WTO dispute settlement system between panel 
reports and Appellate Body reports.  The Panel recalled "that this is not the first case in the WTO in 
which simple zeroing in periodic reviews has been  challenged.  The WTO-consistency of simple 
zeroing in periodic reviews was questioned before the panels in  US - Zeroing (EC) and US  - Zeroing 
(Japan) .  In both cases, the panels found this practice not to be inconsistent with the obligations set 
out in the relevant provisions cited by the complaini ng parties.  We also recall that the Appellate Body 
reversed the decisions of both panels and found simple zeroing in periodic reviews to be WTO-
inconsistent."
1   
 2. Indeed, the Panel correctly noted "that, although  adopted panel reports only bind the parties to 
the dispute that they concern, the Appellate Body e xpects future panels to take them into account to 
the extent that the issues before them are si milar to those addressed by previous panels".
2  
Furthermore, the Panel accurately concluded "that even though the DSU does not require WTO panels 
to follow adopted panel or Appellate  Body reports, the Appellate Body de facto expects them to do so 
to the extent that the legal issues addressed are similar".3 
 
3. At the same time, the Panel stated:    
We also note, however, that the panel in US - Zeroing (Japan) , while recognizing 
the need to provide security and predicta bility to the multilateral trading system 
through the development of a consistent  line of jurisprudence on similar legal 
issues, drew attention to the provisions of Articles 11 and 3.2 of the DSU and 
implied that the concern over the preservation of a consistent line of jurisprudence should not override a panel's task to carry out an objective examination of the matter before it through an  interpretation of the relevant treaty 
provisions in accordance with the customar y rules of interpretation of public 
international law.  We also share the concern raised by the panel in US - Zeroing 
(Japan) regarding WTO panels' obligation to carry out an objective examination 
of the matter referred to them by the DSB.
4   
 4. Despite all of this, the Pa nel finally concluded that:   
 
After a careful consideration of the ma tters discussed above, we have decided 
that we have no option but to respectfu lly disagree with the line of reasoning 
developed by the Appellate Body regard ing 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 
                                                     
 
1 Panel Report, para. 7.101.   
2 Panel Report, para. 7.104.   
3 Panel Report, para. 7.105.   
4 Panel Report, para. 7.105.    WT/DS350/R 
 Page E-13 
 
 
 found simple zeroing in periodic reviews to  be WTO-consistent were reversed by 
the Appellate Body and that our reasoning set out below is very similar to these 
panel decisions.  In light of our obligation under Article 11 of the DSU to carry out an objective examination of the matter  referred to us by the DSB, however, 
we have felt compelled to depart from the Appellate Body's approach for the 
reasons explained below.
5   
 5. These passages demonstrate the Panel's awar eness of likelihood that the Appellate Body 
would reverse the Panel's findings while underscori ng the seriousness of the Panel's disagreement 
with the prior Appellate Body reports.  Despite that  risk of reversal, the Panel ultimately concluded 
that:   
 
We are not convinced that the treaty provisions cited by Mexico, on which the 
Appellate Body based its reasoning, necessarily compel a definition of 'dumping' based on an aggregation of all export transactions.
6   
 
In particular, the Panel was "troubled by the fact that the principal basis of the Appellate Body's 
reasoning in the zeroing cases seems to be premised on an interpretation that does not have a solid 
textual basis in the relevant treaty provisions".7  Ultimately, the Panel stated that "we find the 
Appellate Body's reasoning not to be convincing".8 
 
6. The Panel correctly assessed the likelihood th at the Appellate Body would reverse its 
findings.  On 30 April 2008, the Appellate Body Division hearing the appeal circulated its report9, 
reversing the Panel's findings.    7. The United States wishes to offer its views on the Appellate Body Division's report.  In light 
of the fact that the Appellate Body had previously re versed a panel's findings on this issue, despite the 
panel's respectful (and unprecedented) disagreement with the Appellate Body and despite the US 
comments offered on an even earlier Appellate Body  report, the United States offers its comments 
only after careful consideration – the Unite d States does not offer these comments lightly.
10   
 8. At the outset, the United States would note that some Members have argued that zeroing is 
"unfair".  But many people do not know what zeroing is.  A brief explanation may be helpful.  If an 
import is dumped, the Member collects a duty.  If the import is not dumped, the Member collects nothing.  That is zeroing:  treating a non-dumped import as – not dumped.    9. Thus, simple common sense confirms that zeroing does not "inflate" the margin of dumping 
but rather simply treats non-dumped imports neutrally.  That logic is reflected in Article VI of the 
GATT 1994 and the Antidumping Agreement, which r ecognize that Members ma y calculate a margin 
of dumping on a transaction-by-transaction basis, a nd, thus, collect duties on dumped imports, while 
collecting no duties on non-dumped imports.    
                                                     
 
5 Panel Report, para. 7.106 (footnote omitted).   
6 Panel Report, para. 7.117.   
7 Panel Report, para. 7.119.   
8 Panel Report, para. 7.121.   
9 WT/DS344/AB/R.   
10 For the comments of the United States on prior Appellate Body reports regarding the issues of 
zeroing in assessment proceedings, see United States – Laws, Regulations and Methodology for Calculating 
Dumping Margins ("Zeroing"), Communication by the United States, WT/DS294/16 (17 May 2006);  United 
States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), Communication 
from the United States, WT/DS294/18 (19 June 2006);  and United States – Measures Relating to Zeroing and 
Sunset Reviews , Communication from the United States, WT/DS322/16 (26 February 2007).   WT/DS350/R 
Page E-14  
 
 10. Four times the DSB has been presented with the question of whether margins of dumping can 
be calculated on a transaction-specific basis and zeroing is thus permissible in contexts such as assessment proceedings.  Four times panels – that have included in their membership antidumping administrators and negotiators – ha ve concluded that zeroing is permitte d in such circumstances.  Four 
times the Appellate Body has disagreed.  And each time  that the Appellate Body has done so, it has 
presented a new rationale for its position that does not withstand close scrutiny.  Thus, it is not 
surprising that two panels have taken the unprecedented step of  examining, and then rejecting, the 
Appellate Body's reasoning.    11. Panels have not been alone in critiquing the Appellate Body's reasoning.  Academics – 
including those who are not necessarily supporters of the antidumping remedy – have acknowledged 
that the Appellate Body's findings have no sound basis in the text of the agreements, and they 
recognize the danger to the WTO system of such extra-legal behaviour.
11  They rightly perceive that 
whatever one's personal views on antidumping in gene ral, or zeroing in particular, if the Appellate 
Body is perceived to be arrogating to itself the authority to make policy, it would pose a far greater 
danger to trade than antidumping authorities declin ing to make adjustments for so-called negative 
dumping margins.  This is because the Antidumping Agreement, like all of the covered agreements, 
reflects a balance of interests negotiated by the Members.  When the Appellate Body alters the 
negotiated balance, it acts beyond its authority and jeopardizes Members' confidence that the bargains 
that are negotiated are the bargains that will be respected.    
12. In this regard, the Appellate Body Division responsible for Stainless Steel  has for the first 
time suggested that if a panel should decline to fo llow Appellate Body reasoning – regardless of how 
flawed that reasoning may be – the panel acts at odds with the "promotion of security and 
predictability" and the "prompt settlement of disputes".
12  This Division's view of its role is deeply 
disturbing.  Members have agreed that the "dispute settlement system of the WTO is a central element 
in providing security and predictabilit y of the multilateral trading system".13  The Appellate Body 
Division misstates this provision by arguing that it refe rs to "'security and predictability' in the dispute 
                                                      
11 See e.g.  Professor Chad P. Bown an d Professor Alan O. Sykes, The Zeroing Issue:  A Critical 
Analysis of Softwood V , revised version forthcoming in World Trade Review, ("[T]he legal foundation for the 
Appellate Body's ruling is somewhat dubious, doubly so in the face of the standard of review applicable under 
the ADA ... .  The danger of such decisions is that they will undermine confidence in the Appellate Review 
process and make it more difficult for WTO Members in the future to reach agreem ent on contentious issues." 
(p. 30)) <http://people.brandeis.edu/~cbown/papers/Bown- Sykes-ALI.pdf>;  Terence P. Stewart, Amy S. Dwyer 
& Elizabeth Hein, "Trends in the Last Decade of WTO Trade Re medy Decisions:  Problems and Opportunities 
for the WTO Dispute Settlement System ", 24 A RIZONA J. COMP.  L. 251 (2007);  Professor Roger P. Alford, 
"Reflections on U.S.– Zeroing:  A Study in Judicial Overreaching by the WTO Appellate Body ", 45 C OLUM . J. 
TRANSNAT 'L L. 196 (2006-2007), ("The Appellate Body's report in US – Zeroing crystallizes some of the 
concerns that have been expressed in the past regarding judicial excess in the WTO dispute settlement regime."  
(p. 220 ));  Professor Phoenix X.F. Cai, " Between Intensive Care and Crematorium:  Using Standard of Review 
to Restore Balance to the WTO ", 15 T ULANE J. INT'L & COMP. L. 465 (2006-2007);  Professor Richard H. 
Steinberg,  "Judicial Lawmaking at the WTO:  Discursive, Constitutional, and Political Constraints ", 98 A M. J. 
INT'L L. 247 (2004);  Professor Daniel K. Tarullo, "Paved with good intentions:  the dynamic effects of WTO 
review of anti-dumping action ", 2 W ORLD TRADE REVIEW  373 (2003);  John Greenwald, " WTO Dispute 
Settlement:  An Exercise in Trade Law Legislation ", 6 J.  INT'L ECON. L. 113  (2003);  John Ragosta, Navin 
Joneja, and Mikhail Zeldovich, " WTO Dispute Settlement System Is Flawed and Must Be Fixed ", 37 I NT'L 
LAWYER  697(2003);  Professor Daniel K. Tarullo, " The Hidden Costs of International Dispute Settlement:  
WTO Review of Domestic Anti-dumping Decisions ," 34 L.  & P OLICY INT'L BUS. 109 (2002-2003);  Geert A. 
Zonnekeyn, " The Bed Linen Case and its Aftermath ," 36 J.  WORLD TRADE  993 (2002);  Claude Barfield,  Free 
Trade, Sovereignty, Democracy:  The Fu ture of the World Trade Organization , 2 U.  CHI. J. OF INT'L L. 403 
(2001).   
12 Appellate Body Report, para. 161.   
13 DSU Article 3.2.  WT/DS350/R 
 Page E-15 
 
 
 settlement system".14  Instead, the dispute settlement system only provides "security and 
predictability" to the multilateral trading system when the Dispute Settlement Body ("DSB"), and the 
panels and the Appellate Body that serve it, respect  the parameters set out in Article 3.2 – that the 
recommendations and rulings of the DSB cannot add to, or diminish, the rights and obligations in the 
covered agreements.  Suggesting, as this Division did, that panels are required blindly to follow 
erroneous Appellate Body conclu sions in the name of security and predictability is simply 
inconsistent with Article 3.2.  The Panel recognized  this, and should be commended for its devotion to 
Articles 3.2 and 11 of the DSU.    13. With that backdrop, it is important to examin e the particular reasoning used this time by the 
Appellate Body Division and its approach to zeroing in assessment reviews. 
 A. T
HE APPELLATE BODY'S REJECTION OF NEGOTIATING HISTORY  
14. On appeal, the United States explained that, even assuming arguendo  there was any 
ambiguity in the text regarding a prohibition on zeroing, an examination of the negotiating history 
would confirm that Members did not agree to prohibit it.  In light of the absence of a textual 
prohibition on zeroing – neither "zeroing" nor "negative dumping margins" appears anywhere in the Antidumping Agreement – one would have expected the Division to have wanted to consult the 
negotiating history if the Division were consideri ng viewing the text as implicitly dealing with 
zeroing.  Surprisingly, however, the Division's view  was that recourse to the negotiating history was 
not "strictly necessary".
15  Moreover, although the Division did in the end examine the US 
explanations of the negotiating history, the Divi sion's conclusions regardi ng the negotiating history 
simply cannot be reconciled with that history.    
The Tokyo Round Antidumping Code permitted zeroing
 
 15. For example, in 1979, certain contr acting parties concluded the Agreement on 
Implementation of Article VI of the GATT.  Becau se the title is identical to the title of the WTO 
agreement, and the agreement resulting from the Kennedy Round, we will refer to the 1979 
Agreement by its colloquial name, the Tokyo Roun d Anti-Dumping Code ("Code").  As its name 
indicates, drawing on Article VI of the GATT, th e Code set out further disciplines on the imposition 
of antidumping measures, including disciplines on the assessment of antidumping duties.  Signatories 
twice brought disputes, arguing that zeroing was inconsistent with the Code.  Those claims failed.   
 16. During the Uruguay Round, further disciplines were negotiated, resulting in yet another 
Agreement on Implementation of Article VI of th e GATT, which we will refer to as the Antidumping 
Agreement.  While some aspects of the Code we re radically altered, the provisions governing 
assessment proceedings – found not to have prohibited zeroing – were not.
16  In fact, the two key 
provisions were identical.    17. Article 8:3 of the Tokyo Round Anti-Dumping Code provides that:    
The amount of the anti-dumping duty must not exceed the margin of dumping as 
established under Article 2.   
 18. Article 9.3 of the Antidumping Agreement provides that:   
                                                     
 
14 Appellate Body Report, paras. 160-161.   
15 Appellate Body Report, para. 128.   
16 For example, the United States has accepted that there is a colorable argu ment that Article 2.4.2 
prohibits zeroing in average-to-average comparisons in  investigations, through its use of the phrase "all 
comparable export transactions".  There was no corresponding provision in the Code.   WT/DS350/R 
Page E-16  
 
 The amount of the anti-dumping duty shall not exceed the margin of dumping as 
established under Article 2.   
 19. Yet the Division examined the negotiating history and drew the extraordinary conclusion that "we are not persuaded that the [Tokyo Round Code] provide[s] guidance as to whether simple zeroing 
is permissible under Article 9.3. of the Anti-Dumping Agreement ".
17  At least one panel had declined 
to find a prohibition in Article 8.3 itself.  That provision is directly incorporated into the Antidumping Agreement as Article 9.3.  Even in light of these facts, the Division concluded that Article 9.3 of the Antidumping Agreement prohibits zeroing in assessment proceedings.
18   
 
20. The Appellate Body Division's report finds that  "the relevance of" th e panel reports under the 
Code "is diminished by the fact that the" C ode was separate from the GATT 1947 and has been 
"terminated".  Both of these statement are quite puzz ling when referring to negotiating history.  It is 
completely unclear what legal significance attaches to the termination of a previous agreement that 
served as part of the negotiating history of the An tidumping Agreement.  By definition, negotiating 
history is just that – it is "history" and so in the past.  There is no requirement that negotiating history 
only consist of agreements or documents still in forc e at the time an agreement is being interpreted.  
And while the Code was separ ate from the GATT 1947, the negotiators of the Antidumping 
Agreement relied on and drew from its provisions, so the interpretation of those provisions would be 
directly relevant to understanding the Antidumping Agreement.  The Marrakesh Agreement reflects 
this understanding, noting in Article XVI:1 that  the "WTO shall be guided by the decisions, 
procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and 
the bodies established in the framework of GATT 1947".  And ironically, later in its report the Appellate Body Division extols the pers uasive value of panel reports.   
 
Article VI of the GATT did not bar zeroing
 
 
21. Japan was one of the contracting parties th at challenged zeroing – unsuccessfully – under the 
Tokyo Round Code.  While Japan challenged zeroing as being inconsistent with Article 2 of the Code, 
and, consequentially, with Article 8:3, Japan did not challenge zeroing as be ing inconsistent with 
                                                      
17 Appellate Body report, para. 130.   
18 The Division dismissed the relevance of panel reports interpreting the Tokyo Round Code because 
those disputes involved Article 2.6 of that Code – the fair comparison provision – which changed in the 
Antidumping Agreement.  However, the Division failed to take into account that in EEC – Antidumping Duties 
on Audiocassettes  Originating in Japan, ADP/136 (28 April 1995) (unadopted).  Japan did challenge zeroing 
under Article 8.3 of the Code and did not prevail.  EC – Audiocassettes, para. 11.  This renders puzzling Japan's 
comment that the negotiators did not include a prohibition on zeroing in Article 9.3 because they already 
considered it to be prohibited.  Appellate Body Report, para. 130.  Even more surprising then is the Division's 
reliance on that comment, which is plainly inconsistent with the historical record.   
Likewise, it is surprising to the United States that the Division credits the EC's submission for the 
proposition that "there is a 'strong indication of consensu s that the interests of both parties in the asymmetry and 
zeroing debate could be accommodated in  the targeted dumping provisions that eventually became the second 
sentence of Article 2.4.2".  Appellate Body Report, pa ra. 130 (quoting EC Third Participant's Submission, 
para. 226).  The United States struggles to comprehend how, if the EC considered that the Antidumping 
Agreement prohibits zeroing in all but the targeted dumping situation, the EC nevertheless continued to zero until the EC – Bed Linen dispute, in which the DSB recommendations and rulings were adopted in 2001.  EC – 
Antidumping Duties on Cotton-Type Bed Linen from India, DS141 (adopted 12 March 2001).  If the EC were 
sincere, then it would appear that the EC is acknowledging that it inte ntionally breached its WTO obligations 
from 1995 to 2001.    WT/DS350/R 
 Page E-17 
 
 
 Article VI:1.  The same is true for Brazil in its dispute against the EEC involving Cotton Yarn.19  The 
latter is an adopted panel report and thus forms part of the GATT acquis.20   
 22. This history confirms that the Uruguay Round negotiators operated from a premise that 
zeroing was not prohibited under Article VI of the GATT or  Article 8:3 of the Tokyo Round Code.  
Japan's view that the negotiators understood zer oing to be prohibited already is impossible to 
reconcile with its own unsuccessful pursuit of pre- WTO dispute settlement on that very topic.  The 
EC did not agree that the text pr ohibited zeroing, as its defense in EC – Audiocassettes  confirms.  
Article 8:3 was directly incorporated into Article 9. 3 of the Antidumping Agreement.  In this context, 
there is simply no basis for the Appellate Body's conclusion that Article VI:1 of the GATT or Article 
9.3 of the Antidumping Agreement prohibits zeroing in assessment proceedings.   
 23. In light of the foregoing discussion, it is clear that the Division has not based its "prohibition" 
of zeroing on language that is differently phrased or new.  It has based its prohibition on Article VI of 
the GATT and Article 9.3, both of which existed (the latter as Article 8.3) at the time of the Tokyo 
Round Code.   
 24. At best, there was no consensus that zeroing was already prohibited by the text of the 
agreements in question.  Given that fact, and the fact that Article 8:3 of the Tokyo Round Code is 
replicated in Article 9.3 of the Antidumping Agre ement, and the presence of Article 17.6(ii) of the 
Antidumping Agreement, it is difficult to unders tand the Division's refusal to acknowledge the 
relevance of the negotiating history.   
 25. The implications of the Division's creation of new obligations in the absence of textual 
changes is particularly troubling as the Membership strives to conclude the Doha Round.  What this 
Division is saying to the Membership is that it is insuff icient to remain silent in the text in the face of 
a disagreement in the negotiations.  Such silence may be construed at some future date by the 
Appellate Body as agreement to change the meaning of  the text.  Thus, if the disagreement cannot be 
bridged with affirmative text, the continuing disagr eement should be reflected in text confirming the 
lack of consensus - a task that is likely to prove difficult, if not impossible, for the negotiators.   
 26. If the Division did not rely on the negotiating hist ory, then the natural question is:  what did it 
rely on?  The Division primarily relied upon a three-part analysis:   
 
a) the margin of dumping is exporter related;   b) dumping and margin of dumping can only be  found to exist at the level of multiple 
transactions;  and 
c) it is obligatory to include all transactions, dumped and non-dumped, in those multiple 
transactions.   
 B. T
HE APPELLATE BODY'S MISGUIDED EMPHASIS ON EXPORTER MARGINS OF DUMPING  
27. The Division spends a significant portion of its report on the question of whether a margin of 
dumping is exporter or importe r related.  However, it is not clear why this matters or why it must be 
exclusively one or the other.  The Division itself acknowledges that any dumped price results from a 
negotiation involving the exporter and the importer.   
                                                      
19 EEC – Imposition of Anti-Dumping Duties on Cotton Yarn from Brazil,  ADP/137, 42S/17, adopted 
by the ADP Committee 30 October 1995.   
20 Further, even after implementation of the Antidumping Agreement, India's challenge to zeroing in 
EC – Bed Linen  did not involve a claim of inconsistency with Ar ticle VI, nor did Canada's challenge to zeroing 
in US – Final Lumber AD Determination, WT/DS264, adopted 31 August 2004  ("Softwood Lumber") , or US – 
Final Lumber AD Determination (21.5) , WT/DS264, adopted 1 September 2006 (" Softwood Lumber (21.5)") .   WT/DS350/R 
Page E-18  
 
 28. In any event, the question of whether a margin  of dumping is exporter related does not resolve 
the question of whether it can be determined on the b asis of individual transactions or must always be 
determined on the basis of multiple transactions.  A margin determined on the basis of an exporter's 
action with respect to an individual transaction is no less exporter-related than one determined on the 
basis of multiple transactions by that exporter.
21   
 
29. The emphasis on "exporter-related" misses the point.  The purpose of collecting antidumping 
duties is to counteract dumping.  Importers pay the duties.  Thus, duties counteract dumping by dissuading the importer from having any interest in a dumped price.  The importer will try to avoid 
dumped prices by recognizing that there is an e xport price below which the importer will derive no 
benefit if negotiations with the exporter result in an  even lower price.  The antidumping duty, paid by 
the importer, would erase any gain netted by such negotiation because the importer could not 
profitably resell the merchandise at a price less than its normal value.    30. More importantly, the Division's conclusion a bout an exporter-wide margin of dumping is at 
odds with Article 9.3.2.  According to the Appellate Body, the exporter's  margin of dumping, 
calculated on the basis of all of that exporter's transactions, establishes the ceiling for assessment of 
duties.  Under Article 9.3.2, the importer may request a refund if that request is "duly supported by 
evidence ...".  If the amount of the liability is cappe d by the margin of dumping, and the margin of 
dumping is calculated on the basis of the exporter's  transactions, how can the importer  duly support 
its request with evidence?  The impor ter only knows what that importer's own transactions are.  Nor 
does the importer necessarily have info rmation about transactions handled by other importers .   
 31. In fact, the Division's affirmation that margins of dumping must be calculated on an exporter-wide basis unwittingly authorizes Members w ith prospective ad valorem systems to decline to provide 
full refunds .  The importer best positioned to request a refund is an importer who has engaged in non-
dumped transactions.  It can support its refund with  evidence from its own transactions.  But if 
another importer has engaged in dumped transacti ons with the same exporter, those transactions will 
offset the first importer's refund.   Take an example:  the margin of dumping for an exporter in the 
investigation is 5 per cent.  Normal value is 5 per cent higher than the export price.  An importer 
knows that all of his export prices have risen, some  well beyond the 5 per cent differential.  That 
importer requests a refund.  A second importer's e xport prices have all declined, some well beyond the 
5 per cent differential.  The result is that the fi rst importer does not get a refund.  Moreover, the 
second importer cannot provide evidence on which to b ase a request for a refund.  He is only owed a 
                                                     
 
21 In this regard, it is interesting that the Division be gins its analysis with the concept of the exporter-
wide margin of dumping and only then proceeds to the transaction-specific margin of dumping.  In its 
discussion of whether a margin of dumping is exporter- or importer-specific, the report appears to collapse the 
question of whether a dumping margin is exporter- or importer-specific with the question of whether such a margin comprises multiple transactions.  Thus, the report states that there is "nothing in Articles 5.8, 6.10, and 
9.5 of the Anti-Dumping Agreement  to suggest that it is permissible to interpret the term 'margin of dumping' 
under those provisions as referring to multiple 'dumping margins' occurring at the level of individual importers".  However, the question the Division sought to address in that section of the report was not the issue of multiple  
margins of dumping, but rather whether the margin is cal culated for the exporter, rather than the importer.   
There are also questions about the Division's interpre tation of the French and Spanish texts.  At note 
200 of the report, the Division states that the French version of Article 6.10 of the Agreement, "une marge de 
dumping individual" translates into "'one' single margin of dumping".  In fact, the French text translates into "an 
individual margin of dumping".  It does not refer to "one" margin or to one "single" margin of dumping.  The report's translation of the Spanish version is no better.  The Spanish text – not reproduced in the footnote – 
refers to "el margen de dumping que corresponda a cada exportador".  This translates as "a margin of dumping 
corresponding to each exporter".  In any event, there is no reason Article 6.10 would refer to multiple margins.  
Article 6.10 imposes an obligation to calculate an individual margin of dumping for each exporter, as opposed to 
one margin for all exporters .  It has nothing to do with the question of whether one may calculate multiple 
margins of dumping for each such exporter.    WT/DS350/R 
 Page E-19 
 
 
 refund on the basis of the first importer's transac tions, evidence the second importer does not have and 
cannot supply to the investigating authority to "dul y substantiate" his request.  Thus, in requiring a 
margin of dumping to be calculated on the b asis of all of the exporter's transactions, the Division has 
authorized prospective systems to deny importers full refunds.    
 C. T
RANSACTION -SPECIFIC MARGIN OF DUMPING  
32. The Division then devotes all of two paragraphs  to the central question of whether the margin 
can be at the transaction-specific level.22   
 33. As the United States has noted before, and as four panels have found, the calculation of a 
transaction-specific margin of dumping for purposes of the assessment of antidumping duties is a 
permissible interpretation of the Antidumping Agre ement.  That a margin of dumping may be 
calculated on a transaction-specific basis leads to the conclusion that authorities are not required to 
offset a dumping margin calculated for one tran saction with a negative dumping margin calculated in 
a separate transaction.   
 
34. Canada agrees:    
An investigating authority assesses anti dumping duties when the export price is 
lower than the weighted-average normal value, but applies no anti-dumping 
duties to non-dumped transactions when the opposite is true .  It is not the same 
as the practice of zeroing ... .
23   
 35. Put differently, a permissible interpretation of the Antidumping Agreement is that a Member 
may calculate a margin of dumping on the basis of i ndividual transactions, is not obligated to provide 
offsets for one transaction as compared to anothe r, and thus zeroing is not prohibited in such 
circumstances.  Under Article 17.6 of the Antidumping Agreement, if an interpretation is permissible, 
a measure based on it must be allowed to stand.    36. If a margin of dumping can be calculated on the basis of an individual transaction, then the exporter's margin of dumping is the same  as the importer's antidumping liability, and the various 
provisions of the Antidumping Agreement fit together neatly.
24  Article 6 and its focus on margins of 
dumping for exporters  – in which the Appellate Body has attempted to find a prohibition on zeroing 
for purposes of antidumping duty assessment – melds seamlessly with Article 9 and its emphasis on duty assessment for importers .  It is useful to bear this concept in mind when evaluating the 
conclusions of the Division that the Antidumping Ag reement prohibits the calculation of a margin of 
dumping on a transaction-specific basis.   
 
37. The Division states that:     
[T]he notion that a "product is introduced into  the commerce of another country 
at less than its normal value" ... suggests to us that the determination of dumping 
with respect to an exporter is properly ma de not at the level of individual export 
transactions, but on the basis of the totality  of an exporter's transactions of the 
subject merchandise over the period of investigation .
25 
 
                                                      
22 Appellate Body Report, paras. 98-99.   
23 Quoted in US – Softwood Lumber (21.5) (Panel), para. 5.55 (emphasis added).   
24 The Appellate Body report acknowledges this fact, but in a footnote.  See Appellate Body Report, 
n.219.   
25 Appellate Body Report, para. 98 (emphasis).   WT/DS350/R 
Page E-20  
 
 38. There are two important aspects of this conc lusion, in particular, that require comment.   
 
1. Lack of Textual Basis for Prohibition 
39. What jumps out at the reader is that the Divi sion does not cite to any actual text that directs 
the calculation of a margin of dumping at a pa rticular level (transaction-specific or multiple 
transactions).  Instead, the Division relies on a "notion" that "suggests" a particular result.  However, a 
"notion" that "suggests" a particular interpretation is not sufficient to conclude that the text of a 
covered agreement prohibits particular action.  This  is especially true in the case of the Antidumping 
Agreement, Article 17.6(ii) of which provides:    
Where the panel finds that a relevant pr ovision of the Agreement admits of more 
than one permissible interpretation, the panel shall find the authorities' measure 
to be in conformity with the Agreement if it rests upon one of those permissible 
interpretations.   
 
40. Moreover, a closer examination of the la nguage upon which the Division's report relies does 
not support its interpretation of Article VI:1 as pr ecluding the calculation of margins of dumping on a 
transaction-specific basis.  Article VI:1 provides:    
a product is to be considered as bei ng introduced into the commerce of an 
importing country at less than its normal value, if the price of the product 
exported from one country to another ... is less than the comparable price ... for 
the like product ... .   
 41. The Division fails to offer a meaningful explanation as to why this sentence precludes  the 
calculation of a margin of dumping on a transaction-sp ecific basis.  Indeed, the ordinary meaning of 
the text, read in context, does not support the conclusion that the only interpretation of Article VI:1 is 
one involving multiple transactions .
26   
 42. The Division's reliance on the word "product" is  misplaced.  "Product" in Article VI is not 
confined to meaning all transactions  of that product.  Such a readi ng cannot be reconciled with the use 
of "product" in Article II:2(b) of the GATT 1994:  "Nothing in this Article shall prevent any 
contracting party from imposing at any ti me on the importation of any product:   
 
... (b) any anti-dumping or countervailing duty applied consistently with the 
provisions of Article VI... .   
 
43. For a duty to be applied "on the importation of any product" it will be applied on a particular 
transaction.  A duty is not applied only after there have been multiple transactions.  Nor would the 
Division's reading of "product" work for the other elements of Article II:2.    44. The Panel considered carefully Mexico's ar guments, which relied on one of the lines of 
reasoning advanced in prior Appellate Body reports ;  namely, the notion that margins of dumping 
                                                     
 
26 If the Appellate Body were correct that the term "p roduct" refers not to individual importations of the 
product, but the "product as a whole", then it stands to reason that the term "product" would always  appears in 
the singular in the Antidumping Agreemen t.  However, the term "product" does appear in the plural.  Thus, 
Article 2.3 refers to "the price at which the imported product s are first resold ... ".  Si milarly, Article 2.5 refers 
to "where products are not imported directly ...".  Thus, the Appellate Body's view that "product" can only refer 
to multiple importations of the product, as opposed to an individual importation, is simply not supported by the 
text.    WT/DS350/R 
 Page E-21 
 
 
 must be calculated on the basis of the "product as a whole".  The Panel noted – as had other panels 
before it – that the term "product as a whole" does not appear in the GATT 1994 or the Antidumping Agreement.
27  The Panel also agreed with the following analysis of the US – Zeroing (Japan) panel:   
 
We fail to see why the notion that a "product is introduced into the commerce of 
another country" cannot apply to a particular export sale and would necessarily 
require an examination of different export sales at an aggregate level.28   
 45. Thus, the Panel engaged in a careful analysis of the actual words in the relevant provision.  
However, in lieu of explaining why the Panel's careful analysis was flawed, the Division simply 
dismissed it  – "Contrary to what the Panel indicates ..."
29 – without addressing any of the arguments 
the Panel made.  Indeed, the Appellate Body report offered no textual analysis of the provision.    
 46. Taken to its logical extreme, the Division's reading of Article VI:1 suggests that there is in fact only one product, one normal value, and one export price, for all goods exported from the country 
in question.  Article VI:1 does not even use the term " exporter. "  There is no textual basis for the 
Divisions' conclusion that Article VI:1 "suggests ... that the determination of dumping ... is properly 
made ... on the basis of the totality of an exporter's  transactions ...".
30   
 47. Indeed, it would require that no margin coul d be determined until a ll imports had stopped.  
The Division appears to overlook this problem with  its reference to the "totality of an exporter's 
transactions of the subject merchandise  over the period of investigation".
31  But that fails to address 
the question of the relevant time period.  Nothing in the text specifies the time period as being the 
period of investigation, nor does the text specify the pe riod to be used after the period of investigation.  
The Division was imputing into the te xt words that are not there.   
 
48. In summary, the Division was unsuccessful in its  struggle to identify something in the text of 
the GATT 1994 or the Antidumping Agreement that would support that the margin of dumping cannot be transaction-specific.    
2. Erroneous Reliance on Calculations in Other Proceedings 
49. The Division also relied on "contextual" referenc es.  For instance, it referred to the fact that 
"whether  an exporter is dumping can only be made on the basis of an examination of the exporter's 
pricing behavior as reflected in all of its transactions over a period of time".
32  The Division also 
refers to the "purpose" of an antidumping duty, whic h is to "counteract the injury caused or threatened 
to be caused by 'dumped imports' to the domestic industry".33   
 
50. However, to the extent that these arguments ar e relevant at all, they pertain to antidumping 
investigations .  The "determination of dumping" occurs in an investigation.  The "determination of 
injury" occurs in an investigation.  The US – Stainless Steel  appeal did not involve an investigation:  it 
involved an assessment proceeding .   
                                                      
27 For a more detailed discussion of the flaws in the "product as a whole" rationale, see United States – 
Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing"), Communication by the 
United States, 12 June 2006.   
28 US – Measures Relating to Zeroing and Sunset Reviews (Panel), WT/DS322, adopted 
23 January 2007, para. 7.105, quoted in Panel Report, para. 7.117 ( US – Zeroing (Japan )).   
29 Appellate Body Report, para. 98.   
30 Appellate Body Report, para. 98 (emphasis added).   
31 Appellate Body Report, para. 98.   
32 Appellate Body Report, para. 98.  As noted above, the idea that the text provides guidance as to this 
period of time is mistaken.   
33 Appellate Body Report, para. 98.   WT/DS350/R 
Page E-22  
 
 51. Panels, and the Appellate B ody itself, have repeatedly noted that different antidumping 
proceedings serve "different purposes".
34  It is not clear why, even if the analysis of multiple 
transactions is required in an i nvestigation, such analysis is also required in assessment proceedings, 
which serve an entirely different purpose.  As th e Appellate Body has stated, "[t]he disciplines 
applicable to original investigations cannot, th erefore, be automatically imported into review 
processes".35   
 52. Further, in a footnote, the Division addressed a report issued in 1960 by the Group of Experts, which, as the name indicates, comprised a group of antidumping experts.  According to the Group of Experts, "the ideal method [for making a dumping determination] was to make a determination in 
respect of each single importation of the product concerned".
36  Thus, as far back as 1960, 
antidumping experts recognized that margins of dumping would ideally be calculated on the basis of individual transactions.  As a result, it is clear that  a permissible interpretation of Article VI of the 
GATT 1994 is to determine a margin of dumping on a transaction-specific basis.    
53. The Division's basis for rejecting the interpre tation inherent in the Group of Experts statement 
was the following:  the Group of Experts rec ognized that such a method was impracticable, 
particularly with respect to an injury determination
37, and perhaps most remarkably, that the WTO 
Agreement entered into force "long after" the Group of  Experts Report.  In other words, the Division 
considered that a report by experts far closer in ti me to the conclusion of the agreement at issue was 
"of little relevance" because it was old.38  This approach would appear to reverse the customary rules 
of interpretation of public international law.   
 54. The Division appears to have misunderstood the relevance of the Group of Experts' statement.  
That statement is relevant for pur poses of understanding the permissible interpretation of Article VI.   
 
55. The Division has failed to explain why the fact that a particular system is administratively 
impracticable leads to the conclusion that Members necess arily agreed to another system with a 
completely different concept of a margin of dumping, i.e , one that is numerically different.  Members 
did no such thing.  Instead, they devised an administratively  practicable  system that allows them to 
assess a duty with the same  margin of dumping.  Thus, investig ations may be conducted on the basis 
of multiple transactions, and so may assessment proceedings and reviews.
39  Whether the system 
described by the Group of Experts is possible or not , it provides critical insight into how the concept 
of a margin of dumping has been viewed under the GATT 1947 and the WTO regime.   
                                                      
34 See, e.g., United States – Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat 
Products from Germany (AB), WT/DS213/AB/R, a dopted 19 December 2002, para. 87;  United States – Anti-
Dumping Measures on Oil Country Tubular Goods (OCTG) from Mexico, WT/DS282/AB/R, adopted 
28 November 2005 , para. 170;  United States – Sunset Reviews of Anti-Dumping Measures on Oil Country 
Tubular Goods from Argentina, WT/DS268/AB/R , adopted 17 December 2004, para. 359 (" US – OCTG from 
Argentina") ;  United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat 
Products from Japan, WT/DS244/AB/R, adopted 9 January 2004, para. 106;  Mexico – Definitive Anti-Dumping 
Measures on Beef and Rice;  Co mplaint with Respect to Rice, WT/DS295/R, adopted 20 December 2005, as 
modified by the Appellate Body Report, WT/DS295/AB/R, para. 7.144, citing United States – Anti-dumping 
Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabit or Above From Korea, WT/DS99/R, adopted 19 March 1999, para. 6.90.   
35 US – OCTG from Argentina, para. 359.   
36 Appellate Body Report, n. 213.   
37 Appellate Body Report, n. 213.   
38 Appellate Body Report, para. 132.   
39 The United States recalls that the basis for th e prohibition on zeroing in average-to-average 
comparisons in investigations came not from the defin ition of dumping but from the language "all comparable 
export transactions" in Article 2.4.2.  Thus, the existence of multiple tran sactions does not of itself require 
offsets.    WT/DS350/R 
 Page E-23 
 
 
  
56. As required by Article 17.6 of the Agreement,  the question is whether a transaction-specific 
margin of dumping is a permissible  interpretation.  The Panel report that respected the requirements 
of Article 17.6.    
57. Finally, the Division further bases its rejecti on of the concept of a transaction-specific margin 
of dumping on the fact that it does not believe that  such a margin "can be done" for purposes of 
Articles 5.8, 6.10, 6.10.2, 9.4, 9.5, 11.2, and 11.3.  The United States has not taken the position that a margin of dumping must always  be calculated on a transaction-specific basis, but rather that the 
Agreement  allows  it to be calculated on a transaction-specific basis, and also allows  it to be calculated 
on the basis of multiple transactions.  Thus, in an investigation using an average-to-average 
comparison, there will of course be multiple tran sactions, and the overall margin of dumping will 
ultimately be calculated on the basis of those transact ions.  But the Division has failed to explain how 
the text requires
 in every instance that the calculation be made on the basis of multiple transactions, 
particularly in light of the negotiating history and practice under the GATT 1947, Tokyo Round Code, 
and the WTO.   
 58. It is clear, therefore, that the text does not support the Division's view that Article VI prohibits 
calculating a margin of dumping on a transaction-specific basis, and that its analysis is too summary, conclusive, and dismissive of the contrary evid ence.  In this light, it was unnecessary and largely 
irrelevant for the Division to engage in the analysis  under its third part of its analysis:  whether it is 
permissible when using multiple transactions to disregard the amount by which the export price 
exceeds the normal value is unnecessary.  Given that  the text does not prohibit the calculation of 
margins of dumping on a transaction-specific basis, there is no need to examine whether the text 
expressly authorizes "disregarding" certain transactions.    
D. P
ROSPECTIVE NORMAL VALUE SYSTEMS  
59. Panels have repeatedly relie d on the existence of prospective normal value systems to confirm 
that a margin of dumping may be calculated on a tran saction-specific basis.  The first panel to do so 
was in the Softwood Lumber (21.5) , where Canada – a Member with a prospective normal value 
system – was the complaining party.  In that dis pute, Canada itself recognized  that prospective normal 
value systems operate on the basis of a transaction-specific margin of dumping, as noted in the 
quotation from Canada in Section C above.   
 60. Each panel, including this Panel, that has found zeroing to be permissible on the basis of a transaction-specific margin of dumping has explaine d that prospective normal value systems confirm 
the calculation of margins of dumping on such a basis.  
 
61. The Division errs in stating that "if the prospective normal value has been improperly 
determined, a review can be requested ...".
40  The Division presumes that in PNV systems, a "proper" 
PNV can be determined such that a retrospect ive review of all export transactions will be 
unnecessary.  This is despite the fact that the Division is imposing an obligation for imports priced above  the PNV to offset imports priced below  the PNV.  Under the Division's own view of zeroing, 
whether the "proper" PNV has been determined or not, any transactions above even the "proper" PNV 
would have to be offset against those below the "p roper" PNV in a review under Article 9.3.2.  Thus, 
the Division's arguments about zeroing are inconsistent with its arguments about PNV systems.  Moreover, this would simply transform a P NV system into a retrospective system.   
 
62. In addition, the key elem ent of a prospective normal value system is that it uses a prospective  
normal value, not a contemporaneous  normal value.  It informs the importer of the prospective normal 
                                                     
 
40 Appellate Body report, para. 121 (emphasis added).   WT/DS350/R 
Page E-24  
 
 value so that the importer has a basis for knowing whether the export price will suffice to eliminate 
dumping.  However, the Division's views on PNV systems undo that certainty by suggesting that the prospective normal value is subject to retrospective recalculation.   
 63. There is a flaw even with this aspect of th e Division's analysis.  Article 9.3.2 conditions a 
request for a refund on a request by the importer , duly substantiated with evidence.  Assuming such a 
thing as a "proper" normal value exists, the importe r does not know what it is.  The normal value is 
established in the country of export.  It would have  been illogical for the Agreement to authorize an 
importer to request a refund without any basis for know ing whether he is in fact entitled to any such 
refund to begin with and to require him to do so on the basis of evidence that is not in his possession.   
 
E. C
ONCLUSION  
64. Like the panels before it, th e Panel in this dispute provided a very careful, text-based analysis 
of whether zeroing is permitted in assessment procee dings.  The Division should at a minimum have 
conceded that there is more than one permissi ble interpretation of the Antidumping Agreement.  
However, the Division instead:   
 
• asserts that the text of Article VI prohibits zer oing, but without providing any textual analysis 
of that provision;   
 
• fails to recognize that, before the Division decided that zeroing was prohibited on the basis of 
Article VI, five zeroing disputes had been brought and decided, under both the Tokyo Round 
Code and the Antidumping Agreement, wit hout a single Article VI claim;   
 
• fails to recognize that zeroing had not been found inconsistent in assessment proceedings 
under the Tokyo Round Code, despite Japan's claim to the contrary;   
 
• fails to recognize that the key Tokyo Round Code provision at issue in that dispute was 
incorporated wholesale into the Antidumping Agreement;  and 
 
• despite all these facts, concludes the negotiatin g history is of "little relevance" to the 
questions in this dispute.  
 65. The Division's casual dismissal of the negotiating history and imputing into the agreed text obligations that do not appear there should give ev ery Member pause, particularly at a time when 
Members are negotiating a new set of rights and obligations and are, naturally, basing those 
negotiations on the rights and obligations they know to  be in existence today and relying on the fact 
that they are only taking on those obligations that appear in the text they negotiate.      WT/DS350/R 
 Page E-25 
 
 
 ANNEX E-3 
 
 
COMMENTS OF THE EUROPEAN  COMMUNITIES ON THE  
UNITED STATES' COMMENTS ON THE APPELLATE BODY  
REPORT IN US – STAINLESS STEEL (MEXICO) (DS344) 
 
 1. The European Communities hesitates to ma ke any comment at all on the United States' 
comments on the Appellate Body Report in DS344.  The legal arguments have  been re-iterated so 
many times;  and the matter is so clearly decided, that one wonders about the usefulness of continuing 
the exchange.  Not least because the United States ' submissions are increasingly bereft of legal 
argument, preferring in instead the endless repetition of: misrepresentations of the arguments;  other 
statements that are little more than slogans; and irre levant non-legal assertions.  It appears to the EC 
that the United States is just playing for time, under pressure from protectionist internal 
constituencies, which is a matter of regret, and hardly consistent with the United States' DSU 
obligations.  However, in order to try to assist th e Panel to the greatest extent possible, here, once 
again, are the pertinent points, as they emerge from the latest US submission.    2. First, the United States often repeats – as if it were a slogan – that reports cannot add to or 
diminish the rights and obligations  of Members.  Two can play at that game.  The 
European Communities has explained that, in the view of the EC, the US position diminishes the 
obligations of the US and the rights of the othe r WTO Members on the question of zeroing.  Bandying 
this slogan backwards and forwards does little to address, in legal terms, the legal claims  that have 
been made against the measures at issue, which legal claims and arguments the US continues to 
simply ignore.  Rhetoric such as this is no s ubstitute for proper legal ar gument – although one might, 
from a litigator's perspective, have some sympathy with  the US, since it is clear that, in legal terms, 
the US has nothing left to say, which is why it resorts to this style of submission.   
 3. More specifically, the US simply ignores the other half of the equation:  reports clarify the 
existing provisions of the covered agreements in acco rdance with customary rules of interpretation of 
public international law .  And Appellate Body reports deal specifically with "issues of law" and 
"legal interpretations".
1  It is, of course, a basic feature of any law expressed in abstract terms, and 
subjected to binding judicial review, that its mean ing will have to be clarified or interpreted in 
subsequent litigation.  That is the whole point of  having a system of litigation, and specifically one 
whose results are binding  and should be unconditionally  accepted.  Together , these two statements 
encapsulate a basic truth and feature about the law:  we must have interpretation;  we do not want 
judicial legislation.  To repeatedly cite one half of this equation is, of course, to say precisely nothing 
in legal terms – and would not pass muster in a fi rst year law school paper – never mind a court of 
international law.    4. In this respect, fundamentally, the US goes against one of the backbone principles of the 
dispute settlement system, which is to provide "secu rity and predictability".  What can bring more 
security and predictability to the system than four Appellate Body reports co nsistently ruling against 
zeroing?  The US assertion that taking the Appellate Body's logic to the extreme would mean that the 
Appellate Body would never change its mind because this would detract from "security and 
predictability" is simply rhetoric.  Indeed, the Appellate Body has articulated the possibility for 
adjudicatory bodies to change previous legal interpretations in light of cogent reasons .  Needless to 
say, repeated attempts by the US to bring the same legal arguments do not amount to cogent reasons.   
 
                                                     
 
1 DSU, Article 17(6).   WT/DS350/R 
Page E-26  
 
 5. Second, the EC has noted the documents circul ated by the US to the DSB in relation to the 
Appellate Body Report, as in past zeroing cases.  The EC is not at all impressed by these documents.  The EC notes that Article 17(14) of the DSU, final sentence, states that the adoption procedure is without prejudice to the rights of Members to 'expr ess their views' on an Appellate Body Report.  
Naturally, one would not wish to preclude Member s from doing that in general terms.  However, 
the EC is of the view that it is hardly appropriate, pursuant to this provision, for a Member to circulate 
a lengthy document that contains what is in rea lity a legal submission containing a re-hash of the 
submissions previously made to the panel and the A ppellate Body.  The EC takes the view that such 
documents serve no useful purpose, and are hardly  consistent with a Member's obligation to 
unconditionally accept the report.  It appears to the EC that the US appears to believe that by 
"shouting" in procedural terms it might get its way.  However, in the view of the EC, this kind of 
activity – which amounts to little more than propagand a – has precisely the opposite effect:  it simply 
confirms that the US has no further legal arguments on which to rely.    6. Third, we note that the US repeatedly refers to  the Appellate Body "division".  It is not clear 
what the US intent is here, but we have three comme nts.  First, we note that the Appellate Body has 
decided several cases on zeroing, in which the thr ee persons serving on the case, within the meaning 
of Article 17(1) of the DSU, have been differe nt.  Thus, these several reports do not represent the 
views of one "division" – they represent the views of  many individuals – and of the Appellate Body as 
a whole.  Second, and following on from the precedi ng point, Appellate Body reports are attributable 
to the Appellate Body itself, and not a particular "d ivision" of the Appellate Body.  In fact, according 
to Rule 4 of the Appellate Body Working Pro cedures on collegiality, all Appellate Body Members 
convene on a regular basis to discuss matters of po licy, practice and procedure and exchange views 
before a division finalises a report.  Third, the repo rts are in any event adopted by the DSB – that is, 
the whole WTO Membership.  Thus, the US' repeated  references to the "division" simply serve no 
useful purpose, and may and should be disregarded.   
 
7. Fourth, on the question of "permissible interp retation" – another US slogan.  The Appellate 
Body has rightly clarified that this is a tie-breaker that operates after  the application of the agreed 
rules of interpretation of public international law.  Nor could it be otherwise.  As any lawyer would 
confirm, it is possible  to argue  anything,  however absurd or counter-factual it might be (as the US 
submissions in the zeroing cases bear witness).  Just b ecause something is "possible or permissible" in 
this sense does not make it consistent with the agreed rules of interpretation in the Vienna 
Convention.  The US view of this provision amounts to saying that the disciplines in the Anti-
Dumping Agreement  might as well not be there at all – since, according to the US, it can interpret 
them as it wishes.  The WTO Members would not have gone to the trouble of negotiating bound tariff rates and a set of complex agreements, if an importing Member could, in effect unilaterally, impose 
additional anti-dumping duties at will, based on the US proposition that the Anti-Dumping Agreement  
is a "hotch-potch of obscurity", and thus  means all things to all persons.  The Anti-Dumping 
Agreement  is not a religious tract.  It is an international agreement that exhaustively regulates in 
considerable detail the limited circumstances in whic h an anti-dumping duty ca n be applied, over and 
above the bound tariff rate.  Furthermore, the concep t of "permissible interpretation" has nothing to do 
with the US Chevron  doctrine, which regulates the relationshi p between the legislature, executive and 
judiciary within the US – a problem that has nothing to do with centralised and binding dispute 
settlement in a multilateral organisation of 152 Members.    8. Fifth, the US repeatedly refers to the term "text" – another US slogan – as if to suggest that 
the EC is not relying on the text of the Anti-Dumping Agreement .  In fact, the US appears to use this 
term to refer either to the text containing the sp ecific obligation in question, or to the ordinary 
meaning of that text – in both instances the usage is erroneous.  The term "text" appears once in 
Article 31 of the Vienna Convention, and clearly refers at least to the entire 
Anti-Dumping Agreement , 
thus necessarily encompassing also the context and th e object and purpose.  It is thus the EC that  WT/DS350/R 
 Page E-27 
 
 
 bases its case on the text – all the text – of Article VI of the GATT 1994 and the Anti-Dumping 
Agreement ; and the US that seeks to ignore the text of those agreements.   
 9. Sixth, as the EC has explained at length, this case has nothing to do with "offsets" (it is no defence to alter the claim, and then argue that th ere is no "text" prohibiting offsets).  Nor does the 
term "zeroing" fully capture the essence of the pr oblem, which is the selection of the relatively low-
priced export transactions as the only or preponderant  basis of the calculation, without any relevant 
targeting dumping pattern being identified.  The US thus continues to simply refuse to respond to the 
actual legal claims made against it.    
10. Seventh, the US complains that the Appellate Body does not respect the will of the legislator.  
But it is of course the US that flatly ignores the significance of the targeted dumping provisions, within the context of Article VI of the GATT 1994 and the Anti-Dumping Agreement  as a whole.  
Even when the truth of the matter is apparent from the implied admission in the US' own municipal law (the SAA).  And even when the US is incapa ble of rebutting the EC submissions regarding the 
correct interpretation of the phrase "the existenc e of margins of dumping during the investigation 
phase".  Thus, it is the US, not the Appellate Body, which demonstrates an absence of any respect for 
the will of the legislator.    11. Eighth, how it is that the US continues to make the bare assertion th at its position is supported 
by the negotiating history can only continue to astonish.  The EC has explained precisely why the 
opposite is the case; and the US has simply not responded.   
 12. Ninth, the US assertion that the Appellate Body  has changed its analysis in different cases is 
wholly without merit.  What the Appellate Body  has done is to limit itself in any given case to 
interpreting the legal provisions that need to be in terpreted in order to resolve the specific dispute 
before it.  One does not have to decide everything be fore one can decide anything.  In the context of 
zeroing, there are different ways of expressing the same basic point, according the specific measure at 
issue and the specific claims and arguments that have been made.  Thus, what the Appellate has 
demonstrated is a highly intelligent exercise of great judicial restraint .  For the United States to 
present this as "inconsistency" and, in the same breath, accuse the Appellate Body of judicially 
legislating is ironic in the extreme.   
 
13. In short, the US comments are, once again, the world turned on its head – this really is Alice 
Through the Looking Glass stuff.  So much so th at the US position hardly represents one articulated 
within the context of a rules-based approach;  it is  just a veneer beneath which a thinly veiled power-
oriented expression of will is readily  apparent.  The EC expects it to be dealt with accordingly.   
 WT/DS350/R 
Page E-28  
 
 ANNEX E-4 
 
 
COMMENTS OF THE UNITED STATES  ON THE COMMENTS OF THE 
EUROPEAN COMMUNITIES ON THE APPELLATE BODY REPORT  
IN US – STAINLESS STEEL (MEXICO)  (DS344) 
 
  
TABLE OF REPORTS 
 
Short Form Full Citation 
US – Softwood Lumber 
Dumping (AB)  Appellate Body Report, United States – Final Dumping Determination 
on Softwood Lumber from Canada , WT/DS264/AB/R, adopted 
31 August 2004 
US – Stainless Steel (Mexico) (Panel)  Panel Report, United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/R, adopted 20 May 2008, as 
modified by the Appellate Body Report, WT/DS344/AB/R 
US – Stainless Steel (Mexico) 
(AB)  Appellate Body Report, United States – Final Anti-Dumping 
Measures on Stainless Steel from Mexico , WT/DS344/R, adopted 
20 May 2008 
   WT/DS350/R 
 Page E-29 
 
 
 1. The United States thanks the Panel for this  opportunity to provide these comments on the 
comments of the European Communities ("EC ") on the Appellate Body report in US – Stainless 
Steel (Mexico) .   
 2. The EC asks the Panel, when making its  "objective assessment" under Article 11 of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), to "adopt the 
same approach" as the Appellate Body report in US – Stainless Steel (Mexico) .  The EC drew "the 
Panel's particular attention to the statement that 'absent cogent reasons, an adjudicatory body will 
resolve the same legal question in the same way in a subsequent case' (para. 160)".   
 
3. In this regard, the United States recalls the finding of the panel in US – Stainless 
Steel (Mexico) :  "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 un der Article 11 of the DSU to carry out an objective 
examination of the matter referred to us by the DS B, however, we have felt compelled to depart from 
the Appellate Body's approach fo r the reasons explained below."
1  The United States appreciates that 
the EC's approach would have the Panel here resolv e the legal question of zeroing in the same way as 
the equivalent adjudicatory body – the panel in US – Stainless Steel (Mexico)  – and depart from the 
Appellate Body's approach.    
4. As the Appellate Body itself has noted, and as the panel in US – Stainless Steel (Mexico) 
recognized, prior Appellate Body reports "are not  binding, except with respect to resolving the 
particular dispute between the parties to that dispute".
2  To the extent that the reasoning in prior 
Appellate Body reports is persuasive, those repor ts may be taken into account, but they have no stare 
decisis effect under the DSU.  Indeed, to find otherwi se would conflict with Article IX:2 of the WTO 
Agreement, under which only the Ministerial Conf erence and General Council may issue authoritative 
interpretations under the covered agreements.  The A ppellate Body cannot create such an authority in 
itself.    5. The EC warns the Panel that if it were not to  follow the Appellate Body, "its findings would 
inevitably be reversed on appeal".  However, the panel in US – Stainless Steel (Mexico)  was also 
"cognizant of the fact that in two previous cases, US – Zeroing (EC)  and US – Zeroing (Japan) , the 
decisions of panels that found simp le 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", 
yet decided that its responsibility under DSU Article  11 to conduct an objective assessment meant that 
it needed to depart from the Appellate Body's prio r reasoning.  This Panel should also, in the EC's 
words, "in making an 'objective assessment of th e matter before it' under Article 11 of the DSU … 
adopt the same approach".
3   
 6. The EC also believes that "the Appellate Body has once again confirmed that the correct 
interpretation of the Anti-Dumping Agreement  precludes the zeroing methodology used by the 
United States in the measures at issue".  As the Un ited States has demonstrated in its comments to the 
Panel, the Appellate Body report in US – Stainless Steel (Mexico)  is deeply flawed.
4  Its findings lack 
                                                      
1 US – Stainless Steel (Mexico)(Panel) , para. 7.106.   
2 US – Softwood Lumber Dumping (AB) , para. 111 (quoting Japan – Alcohol Taxes (AB) );  see also 
US – Stainless Steel (Mexico) (Panel) , para. 7.102.   
3 It also is presumptuous of the EC to assert with such certainty that the Panel would be reversed.  
The EC is not the Appellate Body, and does not know what a different division of the Appellate Body would do 
on appeal.   
4 Comments of the United States on the Appellate Body Report in US – Stainless Steel (Mexico)  
(WT/DS344), paras. 11-18 & Annex 2.   WT/DS350/R 
Page E-30  
 
 a basis in the text of the Antidumping Agreement and the GATT 1994 and contradict the negotiating 
history of the Antidumping Agreement.  To the ex tent the Panel takes into account the Appellate 
Body report in US – Stainless Steel (Mexico) , we believe that for the reasons specified in our 
comments, this Panel will find that report unpers uasive, as previous panels have found the prior 
Appellate Body reports unpersuasive.   
 
7. For all the reasons provided by the United St ates in its comments on the Appellate Body 
report and these comments on the EC's comments, the United States respectfully requests the Panel to 
find that the Appellate Body report is unpersuasive  and, in conducting an objective assessment of the 
matter before it, the Panel should depart from the Appellate Body's approach.   
 
  
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