UNITED STATES – ANTI-DUMPING MEASURES ON CERTAIN SHRIMP AND DIAMOND SAWBLADES FROM CHINA
Document: Report of the Panel
Date: 8 June 2012
Document codes: WT/DS422/R
Complainant: China
Respondent: U.S.
Third parties: EU, Honduras, Japan, South Korea, Thailand, Vietnam
Dispute stage: Panel
Agreements cited: Art. 2.4.2  Anti-dumping

UNITED STATES – ANTI-DUMPING MEASURES ON
CERTAIN SHRIMP AND DIAMOND
SAWBLADES FROM CHINA

Report of the Panel

I. INTRODUCTION
1.1 On 28 February and on 22 July 2011, China re quested consultations with the United States
concerning an alleged "zeroing" practice by the Un ited States Department of Commerce (USDOC) in
its anti-dumping measures on two products from China: (i) certain frozen warmwater shrimp
(hereafter "Shrimp"), and (ii) diamond sawbla des and parts thereof (hereafter "Diamond
Sawblades")
1.
1.2 On 13 October 2011, China requested the establis hment of a panel pursuant to Article XXIII
of the GATT 1994, Articles 4 and 6 of the DSU and Article 17.4 of the Anti-Dumping Agreement2.
1.3 At its 25 October 2011 meeting, the Dispute Se ttlement Body (DSB) es tablished this Panel
pursuant to the request of China in document , in accordance with Article 6 of the DSU.
1.4 The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter re ferred to the DSB by China in document
 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.
1.5 Following the agreement of the parties, the Panel was composed on 21 December 2011 as
follows:
 Chairman: Mr Alberto Juan Dumont

 Members: Mr Ernesto Fernández

1.6 The European Union, Honduras, Japan, Korea, Thailand and Viet Nam reserved their rights to
participate in the Panel proceedings as third parties.
1.7 After consulting with the parties and seeking the vi ews of the third parties, and in view of a
joint "Agreement on Procedures" submitted by the parties
3, the Panel decided not to hold any
substantive meetings with the parties and/or third parties.

1 WT/DS422/1 and WT/DS422/1/Add.1.
2 WT/DS422/3.
3 Agreement on Procedures between China and the United States, WT/DS422/4, Exhibit CHN-1. The
Agreement is attached to this Report as Annex D-1. The Agreement provides, inter alia, that the parties would,
in the event China requests the establishment of a pane l, work to reach agreement on working procedures aimed
to expedite the panel proceedings. In this context, the parties would agree to reques t that they file only one
written submission each, and that the Panel forego meetings with the parties, or, at most, have only one such
meeting. The Agreement further provi des that the United States would not contest China's claims that the
measures identified in China's panel request are inconsis tent with Article 2.4.2, first sentence, of the Anti-
Dumping Agreement on the grounds stated in US – Softwood Lumber V . The Agreement further indicates that
the scope of China's panel request does not include any claim regarding the margin of dumping calculated for
Zhanjiang Guolian in the Shrimp investigation or "the margin of dumping determined solely on the basis of
adverse facts available" in either the Shrimp or Diamond Sawblades investigation. Finally, the Agreement
provides that China should not ask that the Panel suggest ways in which the United States could implement the
Panel's recommendations pursuant to the second sentence of Article 19.1 of the DSU, and that the United States
should implement the Panel's recommendations by recalculating relevant margins of dumping and issuing a new
determination in order to render the measures at issu e consistent with the DSB's recommendations and rulings

1.8 The Panel submitted its Interim Report to the parties on 5 April 2012 and submitted its Final
Report to the parties on 3 May 2012.
II. FACTUAL ASPECTS
A. USDOC
 DETERMINATIONS IN THE SHRIMP AND DIAMOND SAWBLADES INVESTIGATIONS
2.1 This dispute concerns the alleged use by the USDOC of zeroing in the calculation of margins
of dumping in its original investigations in the Shrimp and Diamond Sawblades anti-dumping
proceedings.
2.2 The United States initiated the Shrimp investigation on 27 January 2004 4. The USDOC
issued its final determination in this investigation on 8 December 2004 5. The final determination
indicates that the USDOC calculated the fo llowing margins of dumping for the four
exporters/producers selected for individual exam ination: Allied, 84.93 per cent; Yelin,
82.27 per cent; Red Garden, 27.89 per cent; Zhanjiang Guolian, 0.07 per cent (i.e. de minimis). In
addition, the USDOC applied a "separate rate" of 55.23 per cent, corresponding to the weighted-
average of the margins of dumping calculate d for Allied, Yelin, and Red Garden, to
35 exporters/producers who were not selected for individual examination but had established their
independence from the government 6. Finally, the USDOC applied a "PRC-wide rate" of
112.81 per cent to exporters/producers not selected fo r individual examination who did not establish
their independence from the government or who failed to respond to the USDOC's questionnaires. On
1 February 2005, the USDOC issued an amended fina l determination and an anti-dumping duty order.

and the Anti-Dumping Agreement. At the organizational meeting, the parties confirmed their request that the
Panel not hold any meeting with the parties and third parties.
4 Notice of Initiation of Antidumping Duty Investigations: Certain Frozen and Canned Warmwater
Shrimp From Brazil, Ecuador, India, Thailand, the People's Republic of China and the Socialist Republic of
Vietnam, 69 Fed. Reg. 3876 (27 January 2004), Exhibit CHN-2.
5 Notice of Final Determination of Sales at Less Than Fair Value: Certain Frozen and Canned
Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997 (8 December 2004),
Exhibit CHN-3.
6 In proceedings involving imports from "non-market economies", including China, the USDOC
applies a rebuttable presumption that all companies within the country are essentially operating units of a single
government-wide entity and, thus, sh ould receive a single anti-dumping du ty rate, the "country-wide rate"
("PRC-wide rate" in the investigations at issue). Expo rters wishing to rebut this presumption must demonstrate
the absence of government control, both de jure and de facto, over their export activities, pursuant to a set of
criteria established by the USDOC. Respondents who sa tisfy these criteria are elig ible to receive a margin
separate from the country-wide rate. Where, as was the case in the Shrimp and Diamond Sawblades
investigations, the USDOC has limited its examination, the respondents found eligible for a separate rate either
receive an individual margin, if select ed for individual examination, or the "separate rate", if not selected for
individual examination. This "separate rate" normally corresponds to the weighted-average of the margins of
exporters/producers selected for indivi dual examination, excluding zero and de minimis margins and margins
calculated entirely on the basis of facts available. (Chi na's first written submission, para. 7; Declaration of
Valerie Owenby, (hereafter VO Statement), Exhibit CHN- 18, para. 78; United States' first written submission,
footnote 6; Notice of Preliminary Determination of Sales at Less Than Fair Value, Partial Affirmative
Preliminary Determination of Critical Circumstances and Postponement of Final Determination: Certain
Frozen and Canned Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 42654 (16 July
2004), Exhibit CHN-4, pp. 42660-42661; Notice of Final Determination of Sales at Less Than Fair Value:
Certain Frozen and Canned Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997 (8
December 2004), Exhib it CHN-3, p. 71002; Preliminary Determination of Sales at Less Than Fair Value,
Postponement of Final Determination, and Preliminar y Partial Determination of Critical Circumstances:
Diamond Sawblades and Parts Thereof from the People's Republic of China , 70 Fed. Reg. 77121 (29 December
2005), Exhibit CHN-21, pp. 77124-77128; and Final Determination of Sales at Less Than Fair Value and Final
Partial Affirmative Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the
People's Republic of China, 71 Fed. Reg. 29303 (22 May 2006), Exhibit CHN-13, pp. 29307-29308).

In the amended final determination, the USDOC recalculated the margin of dumping for Allied
at 80.19 per cent to correct a ministerial error. As a consequence of this change, the USDOC also
recalculated the separate rate, to 53.68 per cent, corresponding to the weighted-average of the
dumping margin for Allied, as revised, and of the dumping margins for Yelin and of Red Garden, as
calculated in the final determination 7. On 17 August 2006, the USDOC issued a second amended
final determination, in which it applied the separate rate to an additional 11 Chinese
exporters/producers who had previously been subject to the PRC-wide rate8.
2.3 The USDOC subsequently issued a remand de termination on 2 September 2010, which
revised the scope of the investigation to incl ude dusted shrimp pursuant to a decision of the
United States Court of International Trade (CIT) 9. This was followed by an amendment of the anti-
dumping duty order on 26 April 2011 10. On 29 April 2011, following positive sunset review
determinations by the USDOC and the United St ates International Trade Commission (USITC), the
USDOC published a notice of continuation of the anti-dumping order 11. Finally, the USDOC
further issued a second remand determina tion on 24 May 2011 in which, following
another decision of the CIT, it recalculated the margins of dumping for Allied (to 5.07 per cent) and
Yelin (to 8.45 per cent)12.
2.4 The USDOC initiated an anti-dumping inv estigation on Diamond Sawblades from, inter alia,
China on 21 June 200513. The USDOC's final determination was issued on 22 May 2006. In this final
determination, the USDOC calculated the following margins of dumping: (i) individual margins of
2.50 per cent for AT&M, 34.19 per cent for Bosun and 48.50 per cent for Hebei Jikai; (ii) a separate
rate of 20.72 per cent; (iii) a PRC-wide rate of 164.09 per cent 14. On 22 June 2006, the USDOC
issued an amended final determination to correct mi nisterial errors in the final determination, and
revising AT&M's dumping margins to 2.82 per cent, Bosun's dumping margin to 35.51 per cent, and

7 Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty
Order: Certain Frozen Warmwater Shrimp From the People's Republic of China , 70 Fed. Reg. 5149
(1 February 2005), Exhibit CHN-5. The amended final determination and order also excluded canned shrimp
from the scope of the investigation.
8 Certain Frozen Warmwater Shrimp from the People's Republic of China: Notice of Second Amended
Final Determination of Sales at Less Than Fair Value, 71 Fed. Reg. 47484 (17 August 2006), Exhibit CHN-6.
9 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand,
and the Socialist Republic of Vietnam: Notice of Amended Final Determinations of Sales at Less Than Fair
Value Pursuant to Court Decision, 75 Fed. Reg. 53947 (2 September 2010), Exhibit CHN-7.
10 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand,
and the Socialist Republic of Vietnam: Amended Antidumping Duty Orders in Accordance with Final Court
Decision, 76 Fed. Reg. 23277 (26 April 2011), Exhibit CHN-8.
11 Certain Frozen Warmwater Shrimp From Brazil, India, the People's Republic of China, Thailand,
and the Socialist Republic of Vietnam: Continuation of Antidumping Duty Orders, 76 Fed. Reg. 23972
(29 April 2011), Exhibit CHN-11.
12 Certain Frozen Warmwater Shrimp From the People's Republic of China: Notice of Amended Final
Determination of Sales at Less Than Fair Value Pursuant to Court Decision , 76 Fed. Reg. 30100
(24 May 2011), Exhibit CHN-9. We note that the USDOC did not recalculate the separate rate as a result of the
second remand determination. (China's first writte n submission, para. 11; China's response to Panel
question No. 2; United States' response to Panel question No. 2).
13 Initiation of Antidumping Duty Investigations: Diamond Sawblades and Parts Thereof from the
People's Republic of China and the Republic of Korea, 70 Fed. Reg. 35625 (21 June 2005), Exhibit CHN-12.
14 Final Determination of Sales at Less Than Fair Value and Final Partial Affirmative Determination
of Critical Circumstances: Diamond Sawblades and Parts Thereof from the People's Republic of China ,
71 Fed. Reg. 29303 (22 May 2006), Exhibit CHN-13.

the separate rate to 21.43 per cent
15. The USDOC issued the anti-dumping order on
4 November 200916.
B. MEASURES AT ISSUE
2.5 With respect to the Shrimp investigation, China challenges the anti-dumping order, as
amended and extended, and the USDOC's final dete rminations, as amended, leading to this order 17.
The specific aspects of these measures challenged by China are: (i) the use by the USDOC of the
zeroing methodology in determining Allied, Yelin and Red Garden's dumping margins; and (ii) the
USDOC's reliance on individual dumping margins calc ulated with zeroing in calculating the separate
rate, as amended18.
2.6 With respect to the Diamond Sawblades i nvestigation, China challenges the final
determination, amended final determination and anti-dumping order 19. The specific aspect of these
measures challenged by China is the use by the USDOC of the zeroing methodology in determining
AT&M's dumping margin, as amended
20.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1 China requests that the Panel find that21:
(a) in the calculation of the dumping margins for Allied, Yelin and Red Garden in the
Shrimp investigation, by the use of the zeroing methodology, the United States acted
inconsistently with Article 2.4.2, first sentence, of the Anti-Dumping Agreement;
(b) in the calculation of the separate rate in the Shrimp investigation, by relying on
company-specific dumping margins that we re calculated with the use of the zeroing
methodology, the United States acted inconsiste ntly with Article 2.4.2, first sentence,
of the Anti-Dumping Agreement; and,
(c) in the calculation of the dumping margin for AT&M in the Diamond Sawblades
investigation, by the use of the zeroing methodology, the United States acted
inconsistently with Article 2.4.2, first sentence, of the Anti-Dumping Agreement.
3.2 The United States does not oppose China's requests for the above findings
22.

15 Notice of Amended Final Determination of Sales at Less Than Fair Value: Diamond Sawblades and
Parts Thereof from the People's Republic of China, 71 Fed. Reg. 35864 (22 June 2006), Exhibit CHN-14.
16 Diamond Sawblades and Parts Thereof From the People's Republic of China and the Republic of
Korea: Antidumping Duty Orders , 74 Fed. Reg. 57145 (4 November 2009), Exhibit CHN-15. The USITC had
originally issued a negative injury determination, which was successfully challenged by the US petitioners
before the CIT. As a result of the CI T decision, the USITC changed its determination to one of threat of injury.
This explains why the order was issued more than two years after the amended final determination.
17 China indicates that this includes the determinations, orders, and continuation of the order discussed
above. (China's first written submission, para. 19 and footnote 29).
18 China's first written submission, para. 20. Thus, China does not challenge the de minimis rate
calculated for Zhanjiang Guolian or the PRC-wide rate. (China's first written submission, para. 7).
19 China's first written submission, para. 21. Thus, China does not challenge the dumping margins
calculated for other individually-examined exporters/prod ucers, the separate rate, or the PRC-wide rate.
(China's first written submission, footnote 36).
20 China's first written submission, para. 22.
21 China's first written submission, para. 68.
22 United States' first written submission, para. 8.

IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their written submissions to the Panel and their
answers to the Panel's questions. The parties' submissions (or executive summaries thereof) are
attached to this Report as Annexes A-1 and A-2 (see List of Annexes, page ii).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The arguments of the European Union, Japan and Thailand ar e set out in their respective
third-party submissions to the Panel and are attached to this Report as Annexes B-1 to B-3 (see List of
Annexes, page ii). While Honduras, Korea and Viet Nam also reserved their right to participate in the
Panel proceedings as third parties, they did not submit a third-party submission.
VI. INTERIM REVIEW
A. INTRODUCTION
6.1 On 5 April 2012, the Panel submitted its Interim Report to the parties. On 16 April 2012, the
parties submitted written requests for review of precise aspects of the Interim Report. On
20 April 2012, the parties submitted written comments on each other's requests for interim review.
6.2 As explained below, the Panel has made a numbe r of minor adjustments to the Report in light
of the parties' comments. The numbering of para graphs and footnotes in the Final Report remains
unchanged from the Interim Report.
B. C
HINA'S REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT
6.3 China requests that we make a number of ch anges to correct inaccuracies in the Panel's
citations to certain USDOC determ inations submitted by China as exhibits in footnotes 16 and 24.
The United States agrees with the ch anges proposed by China. China further requests that we correct
a typographical error in paragraph 7.2, and that we modify the paragraphs of China's first written
submission which are referenced in footnote 43 . The United States did not comment on these
requests. We have made the changes requested by China.
6.4 China requests that we amend paragraph 7.4 and footnote 27 to clarify that only the
third sentence of Article 12.7 of the DSU, and not the entirety of this provision, applies where a
mutually agreed solution is reached. We have amended paragraph 7.4 and footnote 27 as suggested
by China.
C. UNITED STATES' REQUESTS FOR REVIEW OF PRECISE ASPECTS OF THE INTERIM REPORT
6.5 The United States requests that we make certain changes to footnote 6 to make it clear that the
separate rate assigned to an individual respondent who qualifies for such a rate is not based on an
individual investigation of that r espondent. We have made certain ch anges to footnote 6 in order to
address the United States' concerns. We have , however, not implemented the United States'
suggestion to use the term "separate rate average". Rather, consistent with the terminology used in the
remainder of the Report and the terminology used by the parties in their submissions to the Panel, we
consider it appropriate to refer to the rate at issue as the "separate rate", but explain that it corresponds
to the weighted-average of the individual rates determined for individually-examined respondents.
6.6 The United States requests that we replace the te rm "extended" with "revised" in the first
sentence of paragraph 2.3. The United States consid ers that the latter more accurately reflects the
nature of the change to the scope of the Shrimp investigation to include dusted shrimp in the

2 September 2010 remand determination. We have made the change s uggested by the United States.
For the same reason, the United States requests that we delete the term "extende d" in paragraph 2.5.
China objects to this second request, and we decl ine to make the modification suggested by the
United States. The term "extended" in paragraph 2.5 refers to the continuation of the anti-dumping
order following the USDOC and USITC's sunset revi ew determinations, and not to the modification
of the product scope of the Shrimp investigation. Moreover, paragraph 2.5 describes the measures
challenged by China, and our use of the term "exten ded" in this paragraph mirrors China's use of the
same term in its first written submission.
6.7 The United States considers that the quotations to two Appellate Body Reports contained in
paragraph 7.29 do not adequately re flect the role that each panel plays in the dispute settlement
process. The United States submits that the right s and obligations of WTO Members flow, not from
panel or Appellate Body reports, but from the text of the covered agreements. The United States adds
that while prior reports have an important place in the dispute settlement process, Article 11 of the
DSU defines a panel's responsibility to carry out its own objective examination of the matter before it,
including the "applicability of and conformity with th e covered agreements". Further, Article 3.2 of
the DSU directs a panel to make that examination through an interpretation of the relevant treaty
provisions in accordance with the customary rules of interpretation of public international law. The
United States considers that a concern over consistency with a prior report adopted by the DSB should
not and cannot override these provisions, which do not direct a panel to apply or defer to previously
adopted reports. The United States adds that pa ragraph 7.29 is, in any event, not essential to the
Panel's analysis. The United States therefore requ ests that we delete paragraph 7.29. China does not
comment on this request for review. The United Stat es has not convinced us that the reference to the
two Appellate Body statements at issue in paragra ph 7.29 is inappropriate or that the Appellate Body
has erred in making these statements. In consequen ce, we decline the United States' request and have
not deleted paragraph 7.29.
VII. FINDINGS
A. I
NTRODUCTION AND ROLE OF A PANEL EXAMINING CLAIMS THAT ARE UNOPPOSED BY THE
RESPONDING PARTY
7.1 China claims that the United States acted inconsis tently with Article 2.4.2, first sentence, of
the Anti-Dumping Agreement by using zeroing to calculate margins of dumping in its final
determinations and orders, as ame nded and extended, in the Shrimp and Diamond Sawblades original
investigations, and in relying on margins of dumping calculated with zeroing in establishing the
separate rate applied in the Shrimp investigation. China contends that the USDOC's use of zeroing
affected the determination of the dumping margin s and has led the USDOC to find dumping where
none would have otherwise been found, or has led the USDOC to calculate inflated dumping
margins
23.
7.2 China submits that in the two investigations at issue, the USDOC used a five-step approach
(which China terms the "Five Components") in calculating the dumping margins for the
exporters/producers which the USDOC selected for individual examination 24. According to China,
the USDOC:

23 China's first written submission, para. 59.
24 China notes that, on 27 December 2006 the USDOC modified its dumping margin procedure in
original investigations to eliminate zeroing where the average-to-average comparison methodology was used,
but that this modification was only applied in pending and future investigations as of the effective date of the
USDOC's notice of modification (22 February 2007). Since the Shrimp and Diamond Sawblades investigations
were finished in 2005 and 2006 respectively, this modification was not applied in any of the determinations at

i. identified different "models" (i.e., typ es) of products using "control numbers"
(CONNUM) that specify the most relevant product characteristics;
ii. calculated weighted-average US prices and weighted-average normal values on a
model-specific basis for the entire period of investigation;
iii. compared the weighted-average normal valu e of each model to the weighted-average
US price for that same model;
iv. in order to calculate the dumping margin for an exporter, summed the amount of
"dumping" for each model and then divided it by the aggregate US price for all
models; and
v. before summing the total amount of dumpi ng for all models, effectively set all
negative margins on individual models to zero
25.
7.3 China submits that the zeroing methodology applie d by the USDOC in the investigations at
issue is the same as the one which the Appellate Body found to be in consistent with Article 2.4.2 of
the Anti-Dumping Agreement in US – Softwood Lumber V26.
7.4 The United States does not contest China's cl aims. The parties have not, however,
characterized their shared view of the substan tive aspects of the dispute as a "mutually agreed
solution", and thus the third sentence of Article 12.7 of the DSU does not apply 27. We therefore start
by considering whether the lack of substantiv e disagreement between the parties affects our
responsibilities as a panel.
7.5 We note that the panels in US – Shrimp (Ecuador) and, subsequently, US – Shrimp
(Thailand), US – Anti-Dumping Measures on PET Bags , and US – Zeroing (Korea) were presented
with a similar situation. Indeed each of th ese panels examined claims, unopposed by the
United States, that were virtually identical to China's legal claims in the dispute before us.
7.6 Each of these panels considered that notwithst anding the fact that the claims before them
were unopposed, they were still bound by Article 11 of the DSU 28 to make an "objective assessment

issue in this dispute. (China's first wr itten submission, footnote 31, referring to Antidumping Proceedings:
Calculation of the Weighted-Average Dumping Margin During an Antidumping Investigation; Final
Modification, 71 Fed. Reg. 77722 (27 December, 2006), Exhibit CHN-16; and Antidumping Proceedings:
Calculation of the Weighted-Average Dumping Margins in Antidumping Investigations; Change in Effective
Date of Final Modification, 72 Fed. Reg. 3783 (26 January 2007), Exhibit CHN-17).
25 China's first written submission, paras. 23-24.
26 China's first written submission, paras. 63-64.
27 When a mutually agreed solution is reached, the third sentence of Article 12.7 of the DSU provides
that a panel's Report shall be "confined to a brief description of the case and to reporting that a solution has been
reached".
28 Article 11 reads, in relevant part:
The function of panels is to assist the DSB in discharging its responsibilities under this
Understanding and the covered agreements. Accordingly, a panel should make an objective
assessment of the matter before it, including an objective assessment of the facts of the case
and the applicability of and conformity with th e relevant covered agreements, and make such
other findings as will assist the DSB in making the recommendations or in giving the rulings
provided for in the covered agreements.
Further, we note that Article 17.6 of the Anti-Dump ing Agreement is also relevant to a panel's factual
and legal assessment of an anti-dumping determination by an investigating authority. However, the
United States does not contest China's claims, and we need not consider the application of this provision in
detail.

of the facts of the case and the applicability of and conformity with the rele vant covered agreements,
and make such other findings as will assist the DSB in making the recommendations or in giving the
rulings provided for in the covered agreements"
29. We agree with this approach and apply it in our
consideration of China's claims.
B. BURDEN OF PROOF AND ORDER OF THE PANEL'S ANALYSIS
7.7 The general principles regarding the allocati on of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO agreement by another
Member assert and prove its claim. Generally, ther efore, China, as the complaining party, has to
make a prima facie case of violation of the relevant provisi ons of the WTO agreements it invokes,
before the burden shifts to the responding party, the United States, to rebut China's arguments.
7.8 The US – Shrimp (Ecuador) panel recalled that the Appellate Body has held that a "panel errs
when it rules on a claim for which the complaining party has failed to make a prima facie case"
30. On
this basis, the panel considered that the fact that a claim is uncontested is not a sufficient basis to
conclude in favour of the complainant. Rather, the panel concluded, the complaining party must
make a prima facie case of violation of a WTO agreement before any burden shifts to the respondent:
[N]otwithstanding the fact that the United States is not seeking to refute Ecuador's
claims, we must satisfy ourselves that Ecuador has established a prima facie case of
violation, and notably that it has presented "evidence and argument ... sufficient to
identify the challenged measure and its b asic import, identify the relevant WTO
provision and obligation contained therein, and explain the basis for the claimed
inconsistency of the measure with that provision"
31.
7.9 This approach was later followed by the panels in US – Shrimp (Thailand) , US – Anti-
Dumping Measures on PET Bags , and US – Zeroing (Korea)32. We agree with the reasoning of these
panels and adopt a similar approach to the issue of the burden of proof in our assessment of China's
claims. Accordingly, notwithstanding the fact that the United States does not contest China's claims,
we can only find in favour of China if we are satisfied that China has at least established a prima facie
case of violation under the provision it invokes.
7.10 Our evaluation of China's claims follows the orde r of analysis adopted by these prior panels.
We examine, in turn, whether China has establis hed that: (i) the USDOC applied zeroing in the
determinations at issue; (ii) the methodology used by USDOC in the measures at issue is similar to
the one reviewed by the Appellate Body in US – Softwood Lumber V; and (iii) the United States acted
inconsistently with Article 2.4.2 of the Anti-Dump ing Agreement, on the basis of the reasoning of the
Appellate Body in US – Softwood Lumber V.
7.11 We examine China's claim with respect to the separate rate applied by the USDOC in the
Shrimp investigation in a distinct section at the end of our findings.

29 Panel Reports in US – Shrimp (Ecuador), para. 7.3; US – Shrimp (Thailand), para. 7.19, US – Anti-
Dumping Measures on PET Bags, para. 7.5; and US – Zeroing (Korea), paras. 7.16-17.
30 See Panel Report, US – Shrimp (Ecuador) , para. 7.10 (citing Appellate Body Report, US –
Gambling, para. 139). A prima facie case "is one which, in the absence of effective refutation by the defending
party, requires a panel, as a matter of law, to ru le in favour of the complaining party presenting the prima facie
case". (Appellate Body Report, EC – Hormones, para. 104, citing Appellate Body Report, US – Wool Shirts and
Blouses, p. 14).
31 Panel Report, US – Shrimp (Ecuador), para. 7.11.
32 Panel Reports in US – Shrimp (Thailand) , para. 7.21; US – Anti-Dumping Measures on PET Bags ,

C. WHETHER CHINA HAS ESTABLISHED THAT THE USDOC APPLIED ZEROING IN THE
DETERMINATIONS AT ISSUE
7.12 In support of its factual assertion that the USDOC applied zeroing in its dumping margin
calculations in the Shrimp and the Diamond Sawblad es investigations, China submits as evidence the
Issues and Decision Memoranda accompanying the USDOC's final determination in each
investigation, as well as an expert statement from Ms Valerie Owenby (hereafter "VO Statement").
The VO Statement reviews the methodology employ ed by the USDOC in the calculation of the
dumping margins and attaches a number of exhibi ts, including computer programming logs and
outputs as well as analysis memoranda generated by the USDOC during the investigations and
provided to Ms Owenby by the exporter/producer concerned33.
7.13 We note the following in respect of this evidence submitted by China.
7.14 First, the computer programming logs emana ting from the USDOC submitted by China and
attached to the VO Statement each contain a line with the following instruction "WHERE
EMARGIN GT 0". This programming line, which we hereafter refer to as the "zeroing line", instructs
the programme to include only those comparison results that are positive (i.e. greater than zero) in the
calculation of the total amount of dumping and ther efore causes the programme to ignore negative
results34. China submits such computer programmi ng logs, containing the zeroing line, for each
exporter/producer (Allied, Yelin and Red Garden in the Shrimp investigation and AT&M in the
Diamond Sawblades investigation) and in each case, for at least the most recent dumping margin
calculation for each exporter/producer35.
7.15 Second, the Issues and Decision Memorandum acco mpanying the final determination in the
Shrimp investigation contains a statement in which the USDOC acknowledg es that it used model
zeroing in calculating margins of dumping in that determination. The USDOC states that it:
… made model-specific comparisons of weighted-average export prices with
weighted-average normal values of comparable merchandise [and] then combined the
dumping margins found based upon these comparisons, without permitting non-

33 The VO Statement explains that where a USDO C computer programme is executed, a log is
generated which repeats the programming statements in the computer programme, and provides notes on the
execution and operation of the computer programme. Further, the programming software used by the USDOC
provides the ability to print out data while the prog ramming code is processing; these printouts are the
"outputs". The VO Statement adds that the USDOC typically releases a hard copy of the log and output of the
computer programme used to generated the dumping margin calculation to the respondent. VO Statement,
Exhibit CHN-18, para. 46. The VO Statement also explains that, with the exception of Allied in respect of the
Shrimp amended final determination, each of the investigated companie s provided Ms Owenby with electronic
versions of the USDOC's final computer programmes rel eased to them, and copies of the databases that the
USDOC used to generate its margin calculations. (VO Statement, Exhibit CHN-18, para. 47 and footnote 27).
34 China's first written submission, para. 57 and VO Statement, Exhibit CHN-18, para. 38.
35 China does not provide the USDOC's computer programming log for Allied in the final
determination and amended final determination and for AT&M in the final determination but provides them for
each of the other relevant determinations and exporters/producers. Concerning the Shrimp investigation, Yelin's
dumping margin was most recently calculated in the second remand determination; the zeroing line is found at
p. 23 of Attachment II to Exhibit CHN-18-VO-8, which contains the printout of the USDOC's programming log.
Allied's dumping margin was most recen tly calculated in the second remand determination; the zeroing line is
found at p. 26 of Attachment II to Exhibit CHN-18-VO-17. Red Garden's dumping margin was only calculated
in the final determination; the zeroing line is found at p. 81 of Exhibit CHN-18-VO-20. AT&M's dumping
margin was most recently calculated in the Diamond Sawb lades amended final determination; the zeroing line
is found at p. 61 of Attachment II to Exhibit VO-26. The USDOC acknowledges that each of these logs, as well
as each of the other logs submitted by China, orig inates from the USDOC. (United States' first written
submission, para. 4 and footnote 5 and United States' response to Panel question No. 5).

dumped comparisons to reduce the dumping margins found on distinct models of
subject merchandise , in order to calculate the weighted-average dumping margin
36.
(emphasis added)
7.16 Likewise, the Issues and Decision Memorandum accompanying the final determination in
Diamond Sawblades states that:
The Department interprets [the statutory definition of dumping] to mean that a
dumping margin exists only when normal valu e is greater than export or constructed
export price. As no dumping margins exist with respect to sales where normal value
is equal to or less than export or c onstructed export price, the Department will not
permit these non-dumped sales to offset the amount of dumping found with respect to
other sales"37. (emphasis added)
7.17 This language effectively acknowledges the USDO C's use of zeroing to calculate margins of
dumping in its final determination in each of the two investigations.
7.18 Third, the VO Statement generally establishes th at the USDOC applied zeroing in calculating
the dumping margin in each of the successive determin ations in each investigation, with respect to
each individually-examined exporter/producer. The VO Statement applies a four-step analysis in
examining each calculation38, by which it: (i) duplicates the USDOC's dumping margin calculations;
(ii) identifies where each of the "Five Components" occurs in each calculati on, and cross-references
the duplicate results with other record evidence to confirm the USDOC's application of zeroing;
(iii) modifies the duplicate calculations to elim inate zeroing by turning off the zeroing line (to
demonstrate the impact of zeroing); and (iv) compares the results of each set of calculations to
quantify the impact of zeroing39.
7.19 Fourth, the United States acknowledges the accura cy of China's description of the USDOC's
use of zeroing in its calculation of the dumping margins challenged by China40.
7.20 On the basis of this evidence, we are satisfi ed that China has established that the USDOC
applied zeroing when calculating the dumping margin s for Yelin, Allied and Red Garden in its final
determinations and orders, as ame nded and extended, in the Shrimp investigation, and in calculating
the dumping margin for AT&M in its final and am ended final determinatio ns and order in the
Diamond Sawblades investigation.

36 Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain Frozen and
Canned Warmwater Shrimp from the People's Republic of China (29 November 2004), Exhibit CHN-19, p. 23.
37 Issues and Decision Memoran dum for the Final Determination in the Antidumping Duty
Investigation of Diamond Sawblades and Parts Thereof from the People's Republic of China (15 May 2006),
Exhibit CHN-22, p. 25.
38 With the exception that the VO Statement only reviews the calculation of AT&M's dumping margin
in the Diamond Sawblades amended final determination, a nd not in the final determination. Further, because
Ms Owenby was not provided with the USDOC's log for Allied in the amended final determination, she had to
recreate the USDOC's calculations for Allied's margins in this determination.
39 VO Statement, Exhibit CHN-18, para. 43 ff. Exhibit CHN-18-VO-2 provides a table identifying the
specific line and page number where each "component" occurs in each margin calculation.
40 United States' first written submission, para. 2.

D. WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY USED BY THE USDOC IS THE
SAME AS THE METHODOLOGY REVIEWED BY THE APPELLATE BODY IN US – SOFTWOOD
LUMBER V
7.21 The Appellate Body described zeroing as applied by the USDOC in the Softwood Lumber
investigation as follows:
First, USDOC divided the product under i nvestigation (that is, softwood lumber from
Canada) into sub-groups of identical, or broadly similar, product types. Within each
sub-group, USDOC made certain adjustment s to ensure price comparability of the
transactions and, thereafter, calculated a weighted average normal value and a
weighted average export price per unit of the product type. When the weighted
average normal value per unit exceeded the weighted average export price per unit for
a sub-group, the difference was regarded as the "dumping margin" for that
comparison. When the weighted average normal value per unit was equal to or less
than the weighted average export price per unit for a sub-group, USDOC took the
view that there was no "dumping margin" for that comparison. USDOC aggregated
the results of those sub-group comparisons in which the weighted average normal
value exceeded the weighted average export price – those where the USDOC
considered there was a "dumping margin" – after multiplying the difference per unit
by the volume of export transactions in that sub-group. The results for the sub-groups
in which the weighted average normal value was equal to or less than the weighted
average export price were treated as zero for purposes of this aggregation, because
there was, according to USDOC, no "dumping margin" for those sub-groups. Finally,
USDOC divided the result of this aggregati on by the value of all export transactions
of the product under investigation ( including the value of export transactions in the
sub-groups that were not included in the aggregation). In this way, USDOC obtained
an "overall margin of dumping", for each exporter or producer, for the product under
investigation (that is, softwood lumber from Canada). … Thus, as we understand it,
by zeroing, the investigating authority treats as zero the difference between the
weighted average normal value and the wei ghted average export price in the case of
those sub-groups where the weighted averag e normal value is less than the weighted
average export price. Zeroing occurs only at the stage of aggregation of the results of
the sub-groups in order to establish an overall margin of dumping for the product
under investigation as a whole
41. (emphasis original, footnote omitted).
7.22 China contends that the "Five Components" methodology applied by the USDOC in the
Shrimp and Diamond Sawblades investigations matches this description of the methodology
employed by the USDOC in the investigation at issue in US – Softwood Lumber V . China explains
that they are "substantially identical in all legally relevant respects"42.
7.23 The evidence provided by China, which we have reviewed in the previous section of our
findings, including the extensive discussion and identification of each of the "Five Components" in
the VO Statement, satisfies us that in the determin ations at issue the USDOC did, in fact, follow the
methodology described by China 43. Thus, China has established that in the original investigations at

41 Appellate Body Report, US – Softwood Lumber V, paras. 64-65.
42 China's first written submission, para. 64.
43 In addition, in relation to the first component, Ch ina cites to certain passages from the text of the
preliminary determinations in the Shrimp and Diamond Sawblades investigations that demonstrate that the
USDOC sought comments from interested parties on the re levant product characteristics criteria, i.e. to define
the CONNUM. (China's first written subm ission, paras. 28 and 52, referring to Notice of Preliminary
Determination of Sales at Less Than Fair Value, Par tial Affirmative Preliminary Determination of Critical

issue, the USDOC: (i) identified different models or types of products; (ii) calculated weighted-
average US prices and weighted-average normal values on a model-specific basis for the entire period
of investigation; (iii) compared the weighted-a verage normal value of each model to the weighted-
average US price for that same model
44; (iv) calculated the dumping margin for an exporter by
summing up the results of those model-specific co mparisons, and then dividing the resulting amount
by the aggregate US price for all models; and; (v), as we have already found, when summing the
total amount of dumping for all models, ignored the results of model-specific comparisons for which
the weighted-average US price exceeded the weight ed-average normal value. We agree with China
that this methodology is identical to the one described by the Appellate Body in US – Softwood
Lumber V.
7.24 Moreover, not only does the United States acknowledge that China's description of the
methodology used by the USDOC in the determinations at issue is accurate 45, the United States also
acknowledges that the reasoning of the Appellate Body in US – Softwood Lumber V is applicable with
respect to China's claims in the present dispute46.
7.25 In light of these considerations, we are satis fied that China has demonstrated that the
methodology applied by the USDOC to calculate dumpi ng margins in the investigations at issue is
identical to the one th at the USDOC used in US – Softwood Lumber V , which the Appellate Body
found to be inconsistent with Article 2.4.2 of the Anti-Dumping Agreement in that dispute.
E. WHETHER CHINA HAS ESTABLISHED THAT THE METHODOLOGY APPLIED BY THE USDOC IS
INCONSISTENT WITH ARTICLE 2.4.2 OF THE ANTI-DUMPING AGREEMENT
7.26 We now turn to the legal analysis of China' s claims, i.e., whether the measures challenged by
China are inconsistent with Article 2.4.2, first sentence, of the Anti-Dumping Agreement . This
sentence reads as follows:
Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investiga tion phase shall normally be established on
the basis of a comparison of a weighted average normal value with a weighted
average of prices of all comparable export transactions or by a comparison of normal
value and export prices on a transaction-to-transaction basis.
7.27 We recall that China relies on the Appellate Body Report in US – Softwood Lumber V to
argue that the United States acted inconsistently with this provision 47. The panel in US – Shrimp
(Ecuador) explained its understanding of the Appellate Body's reasoning in US – Softwood Lumber V
as follows:

Circumstances and Postponement of Final Determination: Certain Frozen and Canned Warmwater Shrimp
From the People's Republic of China , 69 Fed. Reg. (16 July 2004), Exhibit CHN-4, pp. 42654 and 42663; and
Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and
Preliminary Partial Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the
People's Republic of China, 70 Fed. Reg (29 December 2005), Exhibit CHN-21, pp. 77122 and 722130).
44 The European Union correctly notes that China uses the terms "dumping" and "margins" when
discussing the results of export price-normal value comparisons at the model level (European Union's third-
party submission, para. 7). As the European Union observes, the Appellate Body has indicated that "dumping"
can only exist for the product under investigation as a whole, and that consequently, intermediate comparisons
between the normal value and the export price at the product level should not be referred to as "dumping
margins".
45 United States' first written submission, para. 2.
46 United States' first written submission, para. 8.
47 China's first written submission, para . 61 (citing Appellate Body Report, US – Softwood Lumber V ,
paras. 86-103 and 98).

The Appellate Body began its analysis with the text of Article 2.4.2 and noted that the
question before it was the proper interpreta tion of the terms "all comparable export
transactions" and "margins of dumping" in Ar ticle 2.4.2. In examining the arguments
of the parties with respect to these phrases, the Appellate Body concluded that the
parties' disagreement centered on whether a Member could take into account "all"
comparable export transactions only at the sub-group level, or whether such
transactions also had to be taken into account when the results of the sub-group
comparisons are aggregated. To examine th at issue, the Appellate Body noted the
definition of dumping in Article 2.1 of the Anti-Dumping Agreement. The Appellate
Body found that "it [was] clear from the texts of [Article VI:1 of the GATT 1994 and
Article 2.1 of the Anti-Dumping Agreement] that dumping is defined in relation to a
product as a whole as defined by the inv estigating authority". The Appellate Body
further considered that the definition of " dumping" contained in Article 2.1 applies to
the entire Agreement, including Article 2.4.2, and that "'[d]umping', within the
meaning of the Anti-Dumping Agreement, can therefore be found to exist only for the
product under investigation as a whole, and cannot be found to exist only for a type,
model, or category of that product." Next, the Appellate Body relied on its Report in
EC – Bed Linen , in which it stated that "[w]hatever the method used to calculate the
margins of dumping ... these margins must be, and can only be, established for the
product under investigation as a whole." Thus, the Appellate Body noted that "[a]s
with dumping, 'margins of dumping' can be found only for the product under
investigation as a whole, and cannot be found to exist for a product type, model, or
category of that product." The Appellate Body therefore rejected the United States'
arguments in that case that Article 2.4.2 does not apply to the aggregation of the
results of multiple comparisons at the sub- group level; for the Appellate Body, while
an investigating authority may undertake mu ltiple averaging to establish margins of
dumping for a product under investigation, the results of the multiple comparisons at
the sub-group levels are not margins of dum ping within the meaning of Article 2.4.2;
they merely reflect intermediate calculations made by an investigating authority in the
context of establishing margins of dumping fo r the product under investigation. It is
only on the basis of aggregating all such in termediate values that an investigating
authority can establish margins of dumping for the product under investigation as a
whole. On this basis, the Appellate Body held that zeroing, as applied by the USDOC
in US – Softwood Lumber V:
mean[t], in effect, that at least in the case of some export transactions,
the export prices are treated as if they were less than what they
actually are. Zeroing, therefore, does not take into account the
entirety of the prices of some export transactions, namely, the prices
of export transactions in those sub-groups in which the weighted
average normal value is less than the weighted average export price.
Zeroing thus inflates the margin of dumping for the product as a
whole.
The Appellate Body on this basis conclude d that the treatment of comparisons for
which the weighted average normal value is less than the weighted average export
price as "non-dumped" comparisons was not in accordance with the requirements of
Article 2.4.2 of the Anti-Dumping Agreement. As a result, the Appellate Body upheld
the Panel's finding that the United States had acted inconsistently with Article 2.4.2 of

the Anti-Dumping Agreement in determining the existence of margins of dumping on
the basis of a methodology incorporating the practice of zeroing
48. (footnotes omitted)
7.28 We find this reasoning of the Appellate Body to be persuasive.
7.29 Moreover, while prior panel or Appellate Body reports are not, strictly speaking, binding
upon panels, the Appellate Body has indicated that "[f]ollowing the Appellate Body's conclusions in
earlier disputes is not only appropriate, it is what would be expected from panels, especially where the
issues are the same" and that "[t]his is also in li ne with a key objective of the dispute settlement
system to provide security and predictability to the multilateral trading system" 49. In addition, the
Appellate Body has in the past cautioned that the failure by a panel to follow previously adopted
Appellate Body reports addressing the same issues undermined the development of a coherent and
predictable body of jurisprudence clarifying Me mbers' rights and obligations under the covered
agreements as contemplated under the DSU50.
7.30 In the words of the US – Shrimp (Ecuador) panel, "there is now a c onsistent line of Appellate
Body Reports … that holds that 'zeroing' in the c ontext of the weighted average-to-weighted average
methodology in original investigations … is inconsistent with Article 2.4.2" 51. We recall that the
United States has advanced no argument to contra dict the reasoning of the Appellate Body in US –
Softwood Lumber V and in subsequent decisions that have found the use of zeroing in the context of
the weighted average-to-weighted average methodology in original investigations inconsistent with
Article 2.4.2. Moreover, the issues raised by Chin a's claims are identical in all material respects to
those addressed by the Appellate Body in US – Softwood Lumber V and the United States
acknowledges that the reasoning of the Appellate Body in that dispute is equally applicable with
respect to the dumping margins challenged by China in the present dispute52.
7.31 We conclude, on this basis, that China has discharged its burden of establishing a prima facie
case that the United States has acted inconsistently with Article 2.4.2, first sentence, by virtue of the
USDOC's use of zeroing in the determinations at issue because the USDOC did not calculate the
dumping margins challenged by China on the basis of the product as a whole and taking into account
all comparable export transactions.
7.32 Given that the United States presents no argum ent to rebut the arguments and evidence
submitted by China, we find that the United Stat es acted inconsistently with Article 2.4.2,
first sentence, of the Anti-Dumping Agreement due to the USDOC's use of zeroing in the calculation
of the dumping margins for Allied, Yelin and Red Ga rden in the Shrimp investigation, and of the
dumping margin for AT&M in the Diamond Sawblades investigation.
F. APPLICATION OF A SEPARATE RATE ESTABLISHED ON THE BASIS OF MARGINS OF DUMPING
CALCULATED WITH THE USE OF ZEROING
7.33 China challenges not only the consistency with Article 2.4.2 of the Anti-Dumping Agreement
of the USDOC's use of zeroing to calculate individual dumping margins, but also the consistency with
the same provision of the USDOC's reliance on du mping margins calculated with zeroing for the
purposes of establishing the separate rate applied in the Shrimp investigation.

48 Panel Report, US – Shrimp (Ecuador), paras. 7.38-7.39.
49 Appellate Body Report, US – Continued Zeroing, para. 362.
50 Appellate Body Report, US – Stainless Steel (Mexico), para. 161.
51 Panel Report, US – Shrimp (Ecuador), para. 7.40.
52 United States' first written submission, para. 8.

7.34 China argues that since the calculation of the sep arate rate in the Shrimp investigation was
based on a weighted-average of the dumping margins of mandatory respondents, the calculation of the
separate rate in the Shrimp investigation "neces sarily incorporates" the inconsistent zeroing
methodology, and thus violates Article 2.4.2, first sentence, of the Anti-Dumping Agreement53.
7.35 The evidence submitted by China indicates that the USDOC did, indeed, rely on margins of
dumping calculated with zeroing to derive the separ ate rate, as amended, applied in the Shrimp
investigation. In both the final determinati on and the amended final determination, the USDOC
applied as separate rate the weighted-average of the margins calculated fo r the three individual
respondents that had margins above zero or de minimis54. As we have found above, these margins
had, in turn, been calculated with the use of zeroing55.
7.36 We note that Article 2.4.2 of the Anti-Dumping Agreement imposes disciplines on the
determination of dumping margins, and more specifi cally, on the manner in which the export price
should be compared to the normal value in establishing these margins. On its face, Article 2.4.2 does
not appear to address the question of the applica tion of anti-dumping duties, including the duties
which may be applied on imports from exporters/pr oducers not selected for individual examination.
China has not, in our view, satisfactorily explained how Article 2.4.2 could provide the legal basis for
a finding of inconsistency with respect to the separate rate
56. The fact that margins of dumping are

53 China's first written submission, para. 67 and Chin a's response to Panel question No. 1 (both quoting
Panel Report, US – Shrimp (Ecuador), para. 7.42).
54 As indicated above in footnote 12, the USDOC did not revise the separate rate in subsequent
determinations.
55 Notice of Final Determination of Sales at Less Than Fair Value: Certain Frozen and Canned
Warmwater Shrimp From the People's Republic of China , 69 Fed. Reg. 70997 (8 December 2004),
Exhibit CHN-3, Exhibit CHN-3, p. 71003; Notice of Amended Final Determination of Sales at Less Than Fair
Value and Antidumping Duty Order: Certain Frozen Warmwater Shrimp From the People's Republic of China ,
70 Fed. Reg. 5149 (1 February 2005), Exhibit CHN-5, p. 5150; and Antidumping Duty Investigation of Certain
Frozen and Canned Warmwater Shrimp from the People’s Republic of China – Calculation of the Weighted
Average Section A rate (26 January 2005), Exhibit CHN-20, discussed in China's first written submission,
paras. 47-49. In addition, China has established that at least two of these three ma rgins were impacted by the
use of zeroing. However, the evidence submitted by China indicates that the margin of dumping for Yelin in the
final determination, which is the one that was used in the calculation of the separate rate in both the final and the
amended final determinations, does not change when zeroing is eliminated. (China's response to Panel
question No. 4 and VO Statement, Exhibit CHN-18, paras. 59-61).
56 We asked the following question to China:
… Please explain how and why, in your view, Article 2.4.2 provides a legal basis for a finding
of violation with respect to the separate rate applied in the Shrimp investigation (as opposed to
the margins calculated for exporters/producers selected for individual examination). In so
doing, please refer to the text and context of Article 2.4.2 and to any prior panel or Appellate
Body decision which you consider to support an interpretation of Article 2.4.2 as imposing
disciplines with respect to a "separate rate" or, more generally, to a rate applied to
exporters/producers not selected for individual investigation.
China answered as follows:
…Where, as here, the "margins of dumping" for individually investigated exporters are
calculated inconsistently with Article 2.4.2, th e Separate Rate calculated on that basis must
necessarily violate Article 2.4.2. In other word s, the source of the WT O-inconsistency of the
Separate Rate is the application of "zeroing" in the calculation of "margins of dumping" for
individually investigated exporters in violation of Article 2.4.2 and the reliance thereof.

Support may be found in US – Shrimp (Ecuador) . The panel in that dispute correctly found
that, in an identical situation, the calculation of the separate rate based on individual margins
calculated with the use of zeroing "necessarily in corporates this inconsistent methodology [of
zeroing] ". Also noted by the US – Shrimp (Ecuador) panel, the United States agreed to this
view …. (China's response to Panel question No. 1) (footnotes omitted)

inconsistent with Article 2.4.2 does not necessarily mean that a separate rate calculated on the basis of
such margins is also, itself, inconsistent with that same provision
57.
7.37 Furthermore, like the panel in US – Shrimp (Ecuador) , we note that neither the Panel nor the
Appellate Body Report in US – Softwood Lumber V addressed explicitly the issue of the inconsistency
of the "all others" rate as calculated by the USDOC in the Softwood Lumber investigation58.
7.38 That said, we recall that in addressing Ecuador's cl aim with respect to the "all others" rate in
that dispute, the US – Shrimp (Ecuador) panel observed as follows:
[W]e consider that our finding that Ecuador has established that the calculation of the
margins of dumping for [some of the individually-investigated exporters] was
inconsistent with Article 2.4.2 means that the calculation of the "all others" rate as
the weighted average of the individual rates necessarily incorporates this inconsistent
methodology
59. (emphasis added, footnote omitted)
7.39 We agree with this observation of the US – Shrimp (Ecuador) panel. We have found that the
United States acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by using
zeroing in the calculation of the margins of dumpi ng for individually-examined exporters/producers.
Following the reasoning of the US – Shrimp (Ecuador) panel, this means that the calculation of the
separate rate on the basis of these margins necess arily incorporates the WTO-inconsistent zeroing
methodology60.
VIII. CONCLUSIONS AND RECOMMENDATION
8.1 In light of the above findings, we conclude that the USDOC acted inconsistently with
Article 2.4.2 of the Anti-Dumping Agreement by us ing zeroing in the calculation of dumping margins
for Allied, Yelin and Red Garden in its final determination in the Sh rimp investigation, as amended,
and in the calculation of AT&M's dumping margin in its final determination in the Diamond
Sawblades investigation, as ame nded, as well as in the corres ponding anti-dumping duty orders, as
amended and extended.
8.2 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under that agreement. Accordingly, we conclude that the United States has
nullified or impaired benefits accruing to China under the Anti-Dumping Agreement. Pursuant to
Article 19.1 of the DSU, having found that th e United States has acted inconsistently with
Article 2.4.2 of the Anti-Dumping Agreement as set out above, we recommend that the United States
bring its measures into conformity with its obligations under this Agreement.

Dumping Agreement. (Panel Report, US – Shrimp (Viet Nam), paras. 7.212-227, 7.229).
58 Panel Report, US – Shrimp (Ecuador), para. 7.42.
59 Panel Report, US – Shrimp (Ecuador), para. 7.42.
60 We note that the parties agree that the rationale of para. 7.42 of the Panel Report in US – Shrimp
(Ecuador) should apply with regard to the separate rate in the Shrimp investigation. (United States' response to
Panel question No. 2; China's first written submission, para. 67; China's response to Panel question No. 1).