Document: WT/DS405/R Page F-1 ANNEX F ORAL STATEMENTS, OR EXECUTIVE SUMMARIES THEREOF, OF THE PARTIES AT THE SECOND SUBSTANTIVE MEETING WITH THE PANEL
Document codes: WT/DS405/R
Complainant: China
Respondent: EU
Third parties: Australia, Brazil, Colombia, Japan, Turkey, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. 9  Anti-dumping  Protocol of AccessionArt. 6.10, 9.2, 9.3, 9.4  Anti-dumpingArt. I, XVI:4, X:3(a)  GATT 1994Art. 2.1, 2.4  Anti-dumpingArt. VI:1  GATT 1994Art. 3.1, 17.6, 3.4, 3.5, 6.1.2, 6.5, 6.5.1, 6.5.2, 6.8, 11.3, 12.2.2, 1, 18.1, 2.2.2, 2.6, 9.1, 3.3, 6.2, 6.4, 6.5.1, 6.5.2, 6.1.1, 6.9, 6.10.2  Anti-dumping

ANNEX F

ORAL STATEMENTS, OR EXECUTIVE SUMMARIES THEREOF,
OF THE PARTIES AT THE SECOND SUBSTANTIVE
MEETING WITH THE PANEL

Contents Page
Annex F-1 Executive Summary of the Opening Statement of China F-2
Annex F-2 Executive Summary of the Opening Statement of the
European Union F-12
Annex F-3 Executive Summary of the Closing Statement of China F-18
Annex F-4 Closing Statement of the European Union F-30

ANNEX F-1

EXECUTIVE SUMMARY OF THE OPENING
STATEMENT OF CHINA

1. China will focus its attention this morning on addressing certain of the arguments made by the
EU in its Second Written Submission ("SWS"). Chin a will also draw to the attention of the Panel
certain instances in which the EU has ignored ke y arguments outright, as well as certain instances
where it has misconstrued China's arguments in su ch a way that its rebuttals are essentially non-
responsive. The issues that China will mainly ad dress this morning are the Article 9(5) as such
claims; the overly broad PCN-system used by the EU; the analogue country selection process; the
failure to examine the MET forms; Article 3 and Article 11.3 issues including sampling; causation in
the injury analysis and certain procedural issues.

CHINA'S SUBSTANTIVE ARGUMENTS WITH REGARD TO THE "AS SUCH" CLAIMS
ARE VALID

2. First, with regard to China's as such claims against Article 9(5) of the Basic AD Regulation,
China considers that the Panel report in EC - Fasteners (China) broadly supports its claims. As China
has demonstrated in its SWS
1, the Panel in that dispute roundly rejected the EU's arguments with
respect to essentially every point on which it made an affirmative finding. It has done so on the basis
of what are for the most part the same exact argume nts put forth by the EU in this dispute and found
the Article to be WTO-inconsistent for a variety of independent reasons.

ANALOGUE COUNTRY SELECTION FALLS WITHIN THE SCOPE OF ARTICLE 2.1
AND 2.4

3. China will begin with the instances of pro cedural bias seen throughout the analogue selection
process. Throughout this dispute China has shown 1) that the EU had a strong motive predisposing it
toward the selection of Brazil in light of the relatively high normal value such a selection was likely to
yield - a fact corroborated by the actual results of the investigation along with the domestic producers'
actions in ensuring the selection of Brazil; 2) highly disparate and inadequately explained treatment of
potential analogue country producers in terms of th e questionnaire response times, and 3) a very
strong link between questionnaire response time and the likelihood that a given country would end up
being selected as the analogue country.

4. With respect to the question of whether any aspect of the analogue country selection process
can fall within the scope of the fair comparison ob ligation, the EU continues to rest its argument
almost solely on its theory that the obligati on, independent and overarching as it may be, only
activates once the establishment of normal value has occurred. As to that, three AB reports
2 explicitly
state that the independent and overarchi ng fair comparison obligation informs " all of Article 2". In
China's view the relevant AB pronouncements in clude the proposition that if any aspect of the
establishment of normal value precludes a fair comparison, then the fair comparison obligation is
necessarily violated.

1 See China SWS, part 2 generally.
2 AB Report, EC - Bed Linen, para. 59, AB report, US - Zeroing, para. 146, AB report, US - Softwood
Lumber V, para. 133.

5. As to the issue of the scope of Article 2.1 as it applies to the analogue country selection
process, China recalls that the EU has argued in the context of the fair comparison issue that the initial
establishment of normal value should be dealt with by Article 2.1 rather than Article 2.4. In support
of that Argument, the EU has cited AB in US-Hot Rolled Steel finding a violation of Article 2.1 - and
only Article 2.1 - in regard to an aspect of the initial establishment of normal value
3.

6. While China does not endorse th e EU's "two-stage logic" theo ry, China is pleased to see that
the EU recognizes that Article 2.1, and more specifically the obligation to identify a " comparable
price," is central to the issue before the Panel. China recalls that it has indeed cited Article 2.1 in the
context of the analogue country selection, and that the EU has not put forth an argument as to why the
analogue country selection process does not fall within its scope.

THE EU'S ANALOGUE COUNTRY SELECTION PROCESS VIOLATED ARTICLE 2.4
AND 2.1

7. As to the question of what actually constitu tes an appropriate method by which an analogue
country selection process can secure a "comparable pr ice" capable of a "fair comparison," the EU
misconstrues China's argument, and by doing so fa ils to address the central point. China has made
clear that it considers - in light of th e object and purpose of the ADA - that the underlying purpose of
the analogue country selection process, and indeed all processes by which proxy normal values not
based on domestic prices in the domestic market of the country under investigation are derived, is to
at least attempt to approximate the value which would have prevailed in the absence of the need to
find the proxy. In the case of NME methodologies , if the methodology is to have any hope of
approximating the extent to which dumping is actually occurring , then that methodology must be
reasonably aimed at finding a proxy for the "undistorted" value. If not that, then what is the final
dumping margin but essentially a random number?

8. The EU seems to have taken China's argument as to the purpose of the process - to
approximate the value but for the distortion - as an argument dictating the mechanics of the process.
It is apparently on this basis that the EU summar ily dismisses the argument by concluding that it does
not regard the goal of "replicating conditions in a non-market economy country as though it were not
a non-market economic country as one that can meani ngfully be pursued in the course of calculating
dumping margins," and adding that it has not "ever been applied in this context".
4

9. China notes the EU's observation that China's " but for the distortion" argument is not one that
has "ever been applied" in the analogue country selec tion context. China notes that while it need not
express an opinion as to the WTO-consistency of other Members' methodologies in the present case, it
would appear as though it is in fact almost always applied by most Members that consider resort to
the process necessary.

THE EU PRECLUDED FAIR COMPARISON A ND VIOLATED ARTICLE 2.4 BY USING A
BROAD PCN SYSTEM

10. First, it is recalled that hiking shoes and wo men's luxury shoes which were to be classified
under the same PCN are different among others, in terms of production processes, time and
technology and raw materials. All of these factors affect the production costs. It was impossible to
quantify and substantiate the multiple adjustment s for each transaction-based comparison between
these two divergent footwear types falling within the same PCN; let alone calculating these
adjustments for the numerous other footwear cate gories classified under the same PCN and then for
all PCN categories "A" and "E".

3 EU SWS, para. 61.
4 EU SWS, para. 80.

11. Most importantly, the Chinese exporters were not even aware of the footwear models
produced by the Brazilian producers. Consequently, they could not possibly request adjustments for
the different footwear types classified within the same PCN by them and the Brazilian producers.
Additionally, per the EU practice, adjustments are not accepted unless duly verified.

12. The EU asserts that had Chinese exporters requested adjustments such adjustments could
have been taken into account. China notes that in the original investigation the leather quality
adjustment, besides being incorrectly calculated, applied across the board to all PCNs. Such an
adjustment did not address differences between divergent footwear classified in the same PCN.

PARTY REPORT AND ARTICLES 17.6(i) AND 6.10.2 ADA BY FAILING TO EXAMINE
THE MET APPLICATIONS OF THE NON-SAMPLED PRODUCERS

13. As to the EU's failure to examine the MET a pplications in the original investigation, China
recalls that for practical purposes, the likely effect of examining the MET applications would have
been that a significant number of producers woul d have escaped a dumping margin based on the
analogue country normal value even though their own normal values would not have been used . That
is, even though the EU resorted to sampling, in orde r to comply with Paragraph 15(a) of the Protocol,
the EU would have had to calculate the dumping ma rgins for the non-sampled companies on the basis
of those sampled companies which did receive MET.

14. For this reason the EU's reliance on sampling as a means to justify ignoring outright over 140
MET questionnaires is misplaced. Sampling is not applicable to the MET determination.
Article 6.10.2 provides that under certain circumstances authorities may be relieved of their obligation
to determine individual margins of dumping , but it does not relieve them of the obligation to
determine in which of the two relevant groups the companies are to be assigned, where those two
groups are (1) companies whose margins are based on analogue country normal values, and (2)
companies whose margins are based on Chinese mark et economy normal values. In other words,
MET is a pre-determination into which of the two groups companies are put.

15. There are significant differences between the tw o principal questions that relate to the MET
issue. The first is whether, w ithin the meaning of Article 6.10.2, determining the market economy
status of a company is tantamount to assigning it "an individual margin," as the EU argues. The EU
notes that this question arises only as a result of a "unilateral concession vis-à-vis China"
5 in that the
EU makes MET determinations individually as opposed to at the industry level. However, where
those individual determinations are only made with respect to about 8 per cent of the potential
producers operating under market econom y conditions – and in this case much less - then it is not
much of a concession.

16. The other principal question is whether or not an authority may in good faith and in
accordance with the sta ndards of Article 17.6(i) and the Wo rking Party Report solicit questionnaire
responses from non-sampled MET claimants and then never even bother to look at them, using
sampling as a pretext. The EU barely argues that such action would accord with an obligation to
provide interested parties a meaningful opportunity fo r the defence of their inte rests, but instead rests
its case on the notion that none of the articles cited by China provide for that obligation.

17. In that regard the portion of the Working Party Report relevant to this issue does not
necessarily provide for an "additional right" beyond Ar ticle 6.2 (particularly the chapeau), but rather
the same right, though located in another place. China has provided its views on the binding nature of

5 EU SWS, para. 216.

the commitments contained in Paragr aph 151 of the Working Party Report. 6 However, it would point
out here the contradictory nature of the fact that the EU argues that it did not actually commit to
provide interested parties a defence of their inte rests in Paragraph 151 of the Working Party Report
and that China should have invoked Article 6.2 in that regard, while at the same time arguing
elsewhere that there are limitations to the invoca tion as a free-standing obligation of the "broadly
stated" defence of interests provision of the Chapeau of Article 6.2.

THE EU VIOLATED ARTICLE 2.2.2(iii) BY FAILING TO APPLY THE CAP FOR PROFITS

18. Concerning the EU's failure to apply the cap fo r profits in the original investigation, it is
common sense that footwear is much closer to te xtile products than to chemical and engineering
products in terms of production inputs, production methods, end-uses, market structure, sales
channels, and just about any other objective or subjective measure.
7

THE EU'S VIOLATION OF ARTICLE 3 LED TO THE VIOLATION OF ARTICLE 11.3 TO
THE EXTENT THE INJURY ANALYSIS WAS RELIED UPON IN THE LIKELIHOOD-OF-
INJURY ANALYSIS

19. In response to the Panel questions, the EU claimed that it is an "open question" whether
Article 3 applies to injury determ inations in sunset reviews. Mu ch has been said by China on this
issue. Notably, that the panel in US - OCTG Sunset Review (from Argentina) found that if an
investigating authority makes an injury de termination in an expiry review and " uses" the injury
determination "as part" of its expiry review determination, the injury determination should conform
to the requirements of Article 3.8

20. In its SWS the EU asserts that China has not provided any evidence that the EU relied upon
the injury analysis for its likelihood-of-injury determ ination. This claim is untenable in light of the
detailed arguments in China's FWS, opening and clos ing statements at the first meeting of the Panel
and the SWS. Additionally, the EU has also misint erpreted China's explanation of the legal relation
between the applicability of Articles 3 and 11.3. 9 China considers that to th e extent an investigating
authority relies upon an injury analysis for its lik elihood-of-injury determination, the former must
conform to the provisions of Article 3.

21. Additionally, the EU provid es an explanation based on only one scenario concerning dumping
and injury post imposition of the measures to allege that Article 3 does not apply in an expiry review
even if a likelihood-of-injury determination relies upon the finding of past injury. 10 China notes that
there may be a situation where post imposition of the measures the exporters increase their export
prices and yet there is injury to the domestic in dustry. China does not agree that the injury
determination is purely a judgmental process. The EU's determination shows that significant reliance
was placed on the volume and price effects of the imports on the domestic industry and the
undercutting margins calculated, which are mathematical issues.11

6 China's response to Questions 30 and 86; China's SWS, paras. 1252-1259.
7 In any event, the EU does not deny that footwear and chemical and engineering cannot be considered
"the same general category" of products. EU FWS, para. 589.
8 See also Panel Report, US - OCTG from Mexico , footnote 121. The Panel in that case referred to the
AB ruling in US – Corrosion-Resistant Steel Sunset Review, supra note 37, paras. 126-130 and held that " if, an
investigating authority were to make an injury determination in a sunset review, such a determination would be
subject to the requirements of Article 3 ." See furthermore Panel Report, US - Corrosion Resistant Steel ,
paras. 7.99-7.101.
9 Para. 91, EU's SWS.
10 See paras. 160-162, EU's SWS.
11 Recitals 288, 291, 292, 323, Review Regulation.

22. The EU also states that the " fundamental issue is whether th e EU's determination of the
likelihood-of-injury satisfies the obligations of Article 11.3" and China "should be asked to prove" this
in a claim against an expiry review.
12 In response, China notes that the AB in US-OCTG Sunset
Review clearly held that Article 11.3 does not expressly prescribe any specific methodology for
investigating authorities to use in maki ng a likelihood-of-injury determination. 13 Thus, the
"obligations" referred to by the EU can at best be understood to stem from the requirement to reach a
"reasoned and adequate conclusion" based on "sufficient factual basis". 14 To this end, if an
investigating authority conducts a complete injury analysis and uses it to determine the likelihood of
continuation of injury, 15 an assessment of the consistency of the injury analysis with Article 3 would
be the logical recourse. Only then can it be de termined as to whether or not the investigating
authority's likelihood-of-injury determination was consistent with Article 11.3. 16

THE EU VIOLATED ARTICLE 3.1 BY NOT APPLYING AN OBJECTIVE SAMPLING
PROCEDURE AND BY NOT SOLICITING POSITIVE EVIDENCE FROM THE
COMPLAINANT PRODUCERS

23. First, the EU alleges in its SWS that China has modified claim II.2 " beyond recognition and
understanding."
17 Before elaborating on the factual incorrectness of the EU's allegations, China
considers that the EU mixes up the concepts of 'cla ims' and 'arguments'. China recalls that parties
have the right to progressively clarify their clai ms in the FWS, SWS, meetings with the Panel 18 and
also in response to the Panel's questions.

24. That said, the EU's interpretation that this claim was only " about a difference in the treatment
between two broad categories " of interested parties, is incorrect . In its FWS, China focused on the
aspects of "objective examination" and "positive evidence" with reference to the sample selection of
the domestic industry.19

THE EU'S DOMESTIC INDUSTRY SAMPLE SELECTED DID NOT COMPLY WITH
ARTICLE 6.10

25. With regard to the applicability of Article 6. 10 to sampling for injury analysis, the EU takes
issue with China's interpretation of the panel findings in EC - Salmon. China has clearly explained its
reasoning in the SWS.
20 China nevertheless reiterates that the EC - Salmon panel did not prohibit the
application of Article 6.10 in the context of samp ling for injury analysis. Contrary to the EU's
projection, China has provided detailed proof that indeed volume of production was the key factor
taken into account by the EU for sample selection.
21 Besides the fact that the EU suddenly introduces

12 Para. 103, EU's SWS.
13 AB Report, US - OCTG-Sunset Reviews, para. 281.
14 Ibid., at para. 284.
15 Panel Report, US - OCTG Sunset Reviews, paras. 7.272-7.274.
16 In its SWS, the EU repeats its allegation of a le gal error by China in the context of the review
investigation claims. The EU's arguments on this point have been extensively rebutted by China in its SWS
(paras. 504-521, of China's SWS). China has demonstrated that the legal basis of its claims are Articles 11.3 and
3 and has justified the applicability of Article 3 in the context of the likelihood-of-injury determination in the
EU's review investigation.
17 Claim II.2, heading "A", EU's SWS.
18 AB report, Korea - Dairy, para. 139. See also AB Report, India - Patents, para. 88. AB Report, EC –
Bananas III, para. 145.
19 See paras. 448-449.China summarized these very points in para. 287 of its response to question 40
from the Panel.
20 See paras. 615-632 of China's SWS. See also China's response to question 53 from the Panel.
21 See paras. 624-627 of China's SWS.

"price segment"22 as a sampling criterion, any other criteria taken into account after the selection of
the eight EU producers are irrelevant23 and amount to ex-post justifications.

26. The EU states that it did not include comp anies in the sample based on their production
volume but fails to substantiate how precisely the ei ght companies were selected such that they could
be considered representative of the domestic industry.

THE EU VIOLATED ARTICLE 3.1 BECAUSE THE SAMPLE WAS NOT
REPRESENTATIVE OF THE EU INDUSTR Y AND THE SAMPLE SELECTION WAS NOT
BASED ON AN OBJECTIVE EXAMINATION OF POSITIVE EVIDENCE

27. China disagrees with the EU's contention that the Panel is not required to inquire into the
representativeness of the sample. China's claim II.3 cl early refers to Article 3.1 as the legal basis and
the lack of representativeness of the sample was argued in the FWS.
24 This aspect was also referred to
by China in its opening statement at the first meeting of the Panel, was explained in response to
question 53 from the Panel and extensively argued in the SWS.

28. The EU's repeated statement that besid es a few large companies, 18,000 EU producers
employ less than 10 persons and have extremel y small production volumes is not substantiated by
facts. Indeed large and medium size compani es do exist in the EU as can be observed from the
comments submitted by interested parties 25 and the websites of the Spanish and Italian footwear
associations.26 China recalls that sampling in the injury cont ext is an exception to the general rule of a
collective injury examination for the domestic i ndustry as a whole and the results of the injury
analysis of the sample are transposed to the w hole domestic industry. Therefore sampling in the
injury context is subject to the strict requirements of Article 3.1 and, based on the facts of a case, of
Article 6.10 ADA. China does not consider that th e EU's excuse of administrative impracticability to
increase the number of companies in the sample is a permissible justification for violating the ADA.

29. Additionally, in response to th e EU's arguments regarding China's mere assertion of data for
sampling not being "sought", 27 China recalls that it has established that the relevant "positive
evidence" for sampling was not sought from the co mplainant producers. Moreover, it was not
available to the EU for the pool of the complainants, based on the complaint, standing forms and CEC
submissions as claimed in the Review Regulation and the EU's FWS. Thus, the EU industry's sample
selection was not based on an objective examination of positive evidence. This is the crux of China's
claim II.3(i) to the exclusion of any other interpretations put forward by the EU.

30. China notes that the EU argued on numerous occasions that it had the relevant positive
evidence " which would have been solicited by a sampling form (had that form been sent)," for
selecting the eight producers from the complainant pr oducers at the time of sample selection. In its
SWS the EU asserts that since the domestic industry comprised of 18,000 SMEs it could not possibly
have the information for each producer. The Panel s hould not be misled into believing that the "pool
of producers" from which the eight companies were selected comprised 18,000 producers; it
comprised only the complainants.
28 The EU cannot be permitted to er ode the Article 3.1 requirements

23 See paras. 647, 655 of China's SWS.
24 See paras. 500, 506-509, 511-513 of China's FWS.
25 See European Footwear Alliance submission dated 12 November 2008, Annex 4. Exhibit CHN-34.
26 http://www.fice.es/en/index.php?option=com_content&task=view&id=18&Itemid=17;
http://www.ancicalzature.com/anci/soci.nsf/elencoassociati?openform.
27 Para. 132, EU's SWS.
28 On a date before 10 October 2008 and these eight companies were sent anti-dumping questionnaires
on 10 October 2008.

also relevant for sampling of the producers,
29 by claiming that what matters is that the information
relied upon by the investigating authority allows it to select a sample that "reliably" reflects the
situation of the domestic industry.
30 Moreover, sample selection is supposed to be an "objective"
procedure and not an alleged objective "declared in mind" by an investigating authority as considered
by the EU.

31. China recalls that contrary to the EU's clai ms, it did not define anywhere that "the domestic
industry" was "the Union production." China has disp roved the EU's attempted interpretations of the
Review Regulation recitals mentioned in response to question 50 from the Panel.

32. Finally, China is accused of not providing any factual support to show that the information
mentioned in the complaint is exaggerated. In r esponse, it is noted that among others, the Chinese
and Vietnamese imports to the EU, the dumping an d undercutting margins, the EU consumption and
production of the like product for the years 2005-2007 provided in the complaint are significantly
higher than those mentioned in the Review Re gulation. In the Note for the File dated
26 November 2008, the EU accepted the existence of numerous estimates in the complaint. In China's
view, the data provided in the complaint emanated from the parties seeking the extension of the
measures and cannot be considered "positive evidence" unless verified at the source, i.e . the company
providing them. Mathematical figures are verifiab le but this does not establish that the companies
providing them did not add estimates or exaggera te them. The CEC letter dated 29 October 2008
which as per the EU provided the volume and sales information for the first half of 2008, clearly
included estimations.

THE EU VIOLATED ARTICLES 3.1 AND 3.4 IN ITS INJURY ANALYSIS

33. First, the EU states that China has not s ubstantiated that the Pr odcom data included the
production of EU producers related to or importing from Chinese/Vietnamese producers and that
Article 4.1 does not impose an obligation to exclude related producers. China notes that the British
and German footwear associations clearly stated that their members included companies that imported
footwear from China/Vietnam. Interested par ties also provided comments noting that Italian
producers like Tod's and Sixmar have significant imports from China.
31 In fact the EU itself claims to
have investigated with respect to the complainan t producers whether or not they were related to
Chinese/Vietnamese producers and/or had imports from these countries beyond 25 per cent. Having
followed this approach, the EU cannot claim now that exclusion was optional and that this is an issue
related to standing only. The latter point is not s upported by Articles 4.1 and 3.4, the panel ruling in
EC - Bed-Linen32 and recital 339 of the Review Regulation.

34. Next, China does not consider that merely by cross-checking trends established through
different sources for different data sets pertaining to different time periods a nd product levels can an
investigating authority discharge the obligation of conducting an injury assessment consistent with
Articles 3.1 and 3.4. Just because the EU permitte d the national associations to provide estimates,
such estimates do not constitute "positive evidence". 33 China does not accept that "estimates" can be
used for each and every assessment in the context of injury by an investigating authority as was done
by the EU.

29 Panel Report, EC - Salmon, para. 7.130. AB Report, US - Hot-Rolled Steel, paras. 192-193.
30 Para. 136, EU's SWS.
31 See paras. 733-740 of China's FWS for detailed comments.
32 Panel Reports, EC - Bed-Linen, para. 6.181.

BY USING NON-VERIFIED DATA THE EU DID NOT CONDUCT AN OBJECTIVE
EXAMINATION OF INJURY BASED ON POSITIVE EVIDENCE

35. In the context of China's claim concerning th e violations of Articles 3.1 and 17.6(i) in the
original investigation, and the use of non-verified data provided by the complainants at the complaint
stage,
34 China would ask the Panel not to accept the EU 's arguments as to the WTO consistency of
cross-checking information with data provided by national federations according to a black box
methodology.

36. Essentially, the overall picture that emerges is one where an investigating authority that
applies sampling both on the dumping and on the in jury side, accepts at face value data from 800+
non-sampled unverified companies when it comes from the complainant industry, but rejects outright
all information submitted by ar ound 140 non-sampled exporting producers requesting MET on the
very ground that it cannot be checked.

THE EU DID NOT PERFORM THE NON- ATTRIBUTION ANALYSIS CORRECTLY
BECAUSE ITS ANALYSIS COULD NOT HAVE DETERMINED THE EXTENT TO WHICH
THE DUMPED IMPORTS WERE THE CAUSE OF THE INJURY

37. China has shown that as a general matter the EU's arguments demonstrate that the conclusion
on causation can be properly made without regard to the non-attribution analysis, and how this helps
explain its approach in general. In that regard, the EU's SWS contains another telling paragraph:

"By applying the criterion successively to two 'other factors', each of which caused 50
per cent of the damage, China claims that the European Union would be compelled to
disregard their relevance. In the first place , the European Union does not
understand how in such circumstances the authority could have arrived an initial
finding of causation by the dumped imports."35
38. The EU has barely attempted to hide the fact that it views the non-attribution requirement as a
pointless formality because, in its apparent view, it is not possible to 'unring the bell'. The question
that the EU is asking here is "how could a non-a ttribution analysis break th e causal link if the causal
link is already found by the time we do the non-attribution analysis?"

39. China notes that the EU's exposition of its attitude toward the practical utility of the non-
attribution requirement now takes on particular importance because it is now - as a last-ditch
"alternative argument" - essentially asking the Panel to believe that it really did perform a proper
collective analysis on the basis of more precise ideas as to what the actual extent of injury caused by
each individual factor really was. The EU cites its boilerplate assertion that it performed a collective
analysis in support of its plea, and reasons that if it did not "have an appreciation of the relative
contribution of dumped imports…on th e one hand, and the various known 'other factors' on the other,
it would not be able to reach the conclusion to which it refers in terms of breaking the causal link."
 36

40. While China considers that logic sound enou gh, it would ask the Panel here, as it has
elsewhere, to decline the EU's request that it be take n at its word that the contents of its black box are
indeed WTO-consistent. First, China considers that the AB in US-Hot Rolled Steel , in requiring "a
satisfactory explanation of the nature and extent of the injurious effects of the other factors," 37
intended this "explanation" to come at the investig ation stage. In addition, the AB has endorsed the

34 EU SWS, para. 224.
35 EU SWS, para. 227.
36 EU SWS, para. 253.
37 AB report, US - Hot Rolled Steel, para. 226

rule that the party which asserts a fact, whether the complainant or respondent, is responsible for
providing proof thereof.
38

41. Second, the EU's claim is hard to believe in li ght of the context of its other arguments. It has
argued that, as a matter of logic, a non-attribution analysis cannot possibly break the causal link that is
"initially found" even before the non-attribution an alysis. At the same time it asks the Panel to
believe, in spite of its not having provided any evidence to this effect, that (1) it did in fact expend the
necessary resources required to perform rigorous analyses and make more precise determinations as to
the actual extent of each of the injurious effect of the va rious factors it considered, and (2) that it
performed a collective analysis on the basis of thos e more precise results. Why didn't the EU divulge
these results and the methodologies used to derive them in the regulations , and why would it only
disclose their very existence at this late stage of the proceedings, even though these issues were the
subject of much debate at the first meeting with the Panel?

42. Finally, with respect to the EU's rebuttal on the currency appreciation issue, China notes once
again that in considering the appreciation of the Euro to be solely an issue of "import price levels," the
EU conveniently avoids the fact that the steep appreciation of the Euro throughout the period of
investigation was likely to have, in itself, an injurious effect.
39

43. One effect of the appreciation of the Euro vis-à-vis the dollar was, to be sure, to make
Chinese imports relatively more attractive in that import prices were lower when measured in Euros,
and whether or not that issue—when framed in terms of "import prices"—can be considered an "other
factor" is one side of the argument.

44. But the other side of the issue is that, in a competitive world market with many players, the
appreciation of the currency of the home country vi s-à-vis that in which footwear is traded on the
world market may very well have caused major injury to the European industry even if Chinese
imports did not exist, or even if China's home currency were also the euro.40

THE EU VIOLATED ARTICLE 6.2 BY FAIL ING TO CONFIRM THAT FIVE SAMPLED
PRODUCERS DID NOT COMPLETE THE COMMUNITY INTEREST QUESTIONNAIRE

45. First, China does not contend, as the EU puts it, that an EU importers' association was left in
ignorance of the fact that some EU producers did not complete the Community interest questionnaire.
China's claim is based on the evidence on the record. In its FWS the EU strongly argued on this issue.

46. Next, China notes that the EU while referring to the Note for the File of 23 January 2009
claims that the absence of five responses in the non-confidential file should have been interpreted by
the interested parties to imply that the missing re plies had not been received. China notes that the
Community interest questionnaire responses were made available progressively.
41 In recital 401 of
the Review Regulation, the EU referring to the Co mmunity interest questionnaire stated that "all"
cooperating producers sampled in the original investig ation kept a significant part of their production
in the EU. This was a clear indication that the re plies of all the ten sampled producers were available
to the EU but only six responses were made available in the open file. Thus the non-availability of
the questionnaires in the non-confidential file was not an indicator that the sampled producers did not
respond.

38 AB Report, US - Wool Shirts and Blouses, p. 14.
39 See for example paras 591, 610 of China's responses to question 94.
40 I.e., there are other competitors that price in dollars which would depress EU prices.
41 China notes that the questionnaire responses of companies "H" and "I" were added sometime
between end of February and beginning of March 2009.

47. In response to the EU's proce dural allegation in this context42, China notes that Article 6.2 is a
part of the Panel's terms of reference in claim II.7. Based on the disclosure of new facts on this issue,
per the panel ruling in India-Patents, China has the right to make additional arguments.43

THE EU VIOLATED ARTICLE 6.5 BY GRANTING CONFIDENTIALITY IN THE
ABSENCE OF GOOD CAUSE

48. The EU disputes China's assertion that the sampled EU producers were represented by
lawyers. China has provided additional evidence in its SWS 44 and also refers to the various CEC
submissions made on behalf of the sampled companies. In fact the EU itself stated in the Note for the
File dated 9 December 2008 that CEC was compet ent to provide complementary information on
behalf of the complainants including the sampled companies.45

THE EU VIOLATED ARTICLES 6.2 AND 6.4 BY NOT PROVIDING INTERESTED
PARTIES TIMELY OPPORTUNITIES TO SEE THE RELEVANT INFORMATION

49. China disagrees with the EU's assertion th at analogue country selection issues were not
covered within the scope of "information" for the purpose of Article 6.4 as the request of the
interested parties pertained to the "intention" of the investigating authorities. The e-mail of EFA was
drafted in a prospective manner based on the termin ology used in the notice of initiation of the EU.
This does not dilute the substance of the claim regarding the denial of timely opportunities to see the
"information" pertaining to the analogue country selection, i.e. if any analogue country producers
responded to the questionnaires, etc. These issues clearly fall within the scope of "information".
Additionally, China notes that the presen t case has to be distinguished from Korea - Paper
(Article 21.5) referred to by the EU. The EU's projection of the alleged "revocability" of the selection
of Brazil is at odds with the facts.

50. Last, in response to the EU's accusation of China's expansion of claim II.7 by invoking an
independent violation of Article 6.2,
46 it is clarified that China has developed its arguments based on
the same Articles as stated in the Panel request and based on the facts as described in its FWS.

43 Panel Report, India - Patents, paras. 7.11-7.15.
44 See para. 868(iii) of China's SWS.
45 Exhibit CHN-26. Additionally, besides sending the anti-dumping questionnaire to the eight sampled
companies, an undated letter was also sent by the EU to CEC mentioning that the eight sampled companies were
required to complete the questionnaires by 19 November 2008.
46 Paras. 200-203, EU's FWS.

ANNEX F-2

EXECUTIVE SUMMARY OF THE OPENING
STATEMENT OF THE EUROPEAN UNION

1. China chose to file an unusually long Se cond Written Submission (SWS), saving some of the
discussion, arguments and evidence till the last mome nt. This necessitates a lengthy oral statement
from the EU in which the EU addresses the tens, if not hundreds, of factual allegations by China.
Although the EU addresses them at length 1, the relevance of many of those allegations for China's
claims is dubious. We hope that the Panel will see through this.

2. China's "as such" claim against Article 9(5) of the Basic AD Regulation. With respect to
Panel's terms of reference, the EU again observes that China is not responding to our arguments based
on Article 6.2 of the DSU. Nor has China fully addressed our arguments raised in our Request for
Preliminary Rulings.

3. Moving on to substantive issues, the EU observes that in its Second Written Submission
China mischaracterises the EU's arguments by saying that our defence rests, essentially, on China's
Protocol of Accession. The EU is merely inte rpreting the provisions of the ADA and applying them
to the specific circumstan ces of imports from China, as a non-market economy country. Contrary to
what China asserts, Section 15(d) of China's Protoc ol of Accession explicitly permits the EU to treat
China as a non-market economy country until 2016. And certain natural consequences in the context
of anti-dumping proceedings arise from that status without that amounting to a discrimination under
Article I:1 of the GATT 1994.

4. We have demonstrated that China's claim under Article 6.10 does not fall under the Panel's
terms of reference and relies on an incorrect interp retation of that provision. The use of "shall"
followed by the terms "as a rule" indicates that the obligation therei n is only a general principle and
not a strict obligation that is to be complied with in any and all circumstances. We have also shown in
our SWS that China is incapable of dealing with the existence of other hypothetical examples where
investigating authorities have to calculate dumping margins and impose anti-dumping duties on a
country-wide basis. Those examples provide st rong contextual support to the conclusion that
sampling is not the only exception to the individual dumping margin determination, as China posits.
Moreover, the application of the Article 9(5) criteria does not make the application of the
"relationship" test under other rules irrelevant. Bo th are complementary, although they serve similar
purposes, i.e. identify the relevant supplier, either a group of compan ies or separate legal entities, on
the one hand, or the State and companies which do not act independently from the State in their export
activities (as a "group") or companies operating independently from the State, on the other hand. In
sum, both tests serve to identify a close relati onship between separate legal entities in order to
conclude that they can be considered as one single exporter or producer for the purpose of
Article 6.10. Furthermore, in the specific contex t of anti-dumping investigations relating to Chinese
imports, the EU has shown that, in non-market economy countries, the State can be considered as a
producer and that the presumption is State control of international trade. Thus, the degree of
interference of the State in the export activities of private entities has to be examined on a case-by-

1 For the purposes of this executive summary, the EU focuses on some but necessarily not all the points
raised in its oral statement.

case, company-by-company basis. China has not cont ested this presumption by reference to relevant
evidence, but only by assertions rega rding its economic status. Needless to say, such assertions are
not enough to meet its own burden of proof in these proceedings. Once again, the fact that China has
not provided evidence to rebut the presumption that the State in non-market economy countries is a
supplier and controls international trade, i.e. the mere basis of why Article 9(5) exits, is quite telling.

5. Moving on to China's claim under Article 9.2, this provision permits the imposition of anti-
dumping duties on a country-wide basis also in the particular case of imports from non-market
economy countries, where the State is considered as one supplier. In any even t, the third sentence of
Article 9.2 of the ADA also permits the imposition of duties on a country-wide basis when there are
several suppliers and it is "impracticable" to specify individual anti-dumping duties per supplier. The
notion of "impracticable" implies "something which is not feasible in practice", "something which
cannot be done for practical reasons ", or something that is not "able to be effected, accomplished or
done". In other words, suppliers cannot be spec ified by name and duties cannot be imposed on an
individual basis because of "practical" reasons (i .e. it would render those duties ineffective, not
feasible or not suited for being used for a particul ar purpose, i.e. offsetting or preventing dumping).
Indeed, if a supplier is not acting independently of the State, in view of the role of the State in non-
market economy countries and in particular its control on international trade, there is a risk that non-
IT suppliers will channel all its exports through the company with the lowest duty-rate, thereby
undermining the main objective of the anti-dumping measure, i.e. to offset or prevent dumping.

6. With respect to China's claim under Article I:1 of the GATT 1994, the EU has elaborated in
theory but also by providing uncon tested evidence specifically relating to China that the status of the
economy of the exporter is relevant in the context of anti-dumping proceedings. China also follows a
narrow approach to when a conflict between two c overed agreements may take place. This includes
situations like the present case, where an agreemen t prohibits what another permits. Indeed, if
Article 9.2 of the ADA already requires the imposition and collection of anti-dumping duties "on a
non-discriminatory basis" and Article 9(5) is cons istent with such a provision, by definition,
Article 9(5) could not violate the non-discriminat ion provision contained in Article I:1 of the
GATT 1994.

7. Finally, Article 9(5) does not provide for any discretion as to how the EU authorities
administer this provision and, thus, China's claim is outside the scope of Article X:3(a). In reality
through this claim China takes issue with the ma nner in which the EU authorities calculate dumping
margins in the case of imports from China. This issue is blatantly outside the Panel's terms of
reference since China made no reference to Artic le 6.8 of the ADA in its Panel Request. In
conclusion, the EU respectfully requests the Panel to reject China's claims against Article 9(5) of the
Basic AD Regulation.

8. Claims against Review and Definitive Regulations – Burden of Proof. Where there is a
clash of evidence the maxim 'he w ho asserts a fact must prove it' will come into play. Although the
rule is the same for both parties, the consequen ces of failing it are not. If the complainant fails to
prove the facts that form the basis of its claim th at claim will fail. If a responding Member fails to
prove a fact that it has put forward in order to refute the complainant's factual assertions the panel will
still have to determine whether those assertions ha ve been proved. In other words, that the
respondent's assertions are not established to be true does not necessarily imply the truth of those of
the complainant.

9. Claim II.1, Claim II.13. A. Analogue country selection. The basic source of law on the
selection of the analogue country is China's Protocol of Accession. The Commission considered all
relevant factors in making the selection; there is no obligation to consider the level of economic
development. Article 2.1 of the ADA does not provide a sufficient basis for regulating the selection,
nor do Articles 2.4 and 17.6(i), or paragraph 151 of the Working Party Report. The distortions of a
non-market economy prevent identification of what would exist but for the distortions. Even if

Indonesia had been used as an analogue country th e margins of dumping would have been large, and
the evidence produced in the review showed that pr ices were not likely to rise and extinguish that
margin. The possibility of using proxies under Ar ticle 14 of the SCM Agreement has no significance
for the ADA, where the context is much wider. The EU looks at various factors in making its
selection, but in the footwear review competitiveness and representativeness were the most
significant. As regards representativeness, sales in Brazil satisfied the 5 per cent rule, whereas those
in Indonesia fell far below it. China has failed to prove that the 'holiday season' resulted in bias in
favour of Brazil as the analogue country. The contacts with producers did not reflect such a bias.
Extensive time was allowed to producers in a ll countries, and none was refused for lateness.
Allegations of collusion between Italian and Brazilia n producers to distort the investigation were not
substantiated. Indian and Indonesian producers would have had most to gain from continuation of the
measure. China provides no evidence for its suggest ions regarding collusion, which remain no more
than hypotheses. China tries, in effectually, to justify its previo us invocation of the Czechoslovak
proposal as regards the interpretation of the second Ad Note to Article VI:1 of GATT 1994. The great
number of producers in Brazil was a significant indicat or of competitiveness. The increased value of
the Brazilian real served to off-set the increase in tariff. The problem of 'like product' and children's
shoes was overcome by making allowances during comp arison. China has failed to establish that the
EU made a determination of lik elihood of dumping that was based on a defective finding of past
dumping.

10. B. PCN. The alternative classification proposals made during the review were considered by
the Commission, but were not shown to be a significant improvement. China has not shown that
problems caused by the range of products within particular PCNs could not be dealt with by
appropriate adjustments during comparison. It has not established that the EU's PCN system actually
prevented fair comparison being made by means of such adjustments.

11. Errors in China's claims on injury in the review regulation. The approach taken by the
panel in the US – Corrosion Resistant Steel Sunset Review confirms the EU view. Panels have a duty
to consider whether claims based on Article 11.3 of the ADA are in circumstances like those of the
present case properly before them. In this case they are not. China's argument that the Commission
failed to give proper consideration to the issue of likelihood is ill-founded. In particular, it ignores the
thorough examination of expected export prices and volumes in the light of such factors as spare
capacity. China fails to distinguish between the Commission finding of injury, and its findings on the
various injury factors. These were used independe ntly in the course of making the determination of
the likelihood of injury should the measure be allowed to lapse.

12. Claim II.3. Contrary to what China argues, the Notes for the file of 29/10/2008, 09/12/2008
and 09/03/2009 confirm the EU view, stated also in the Review Regulation (Recital 21). China also
overlooks that the company at issue still maintained its production capacities in the EU, even after it
discontinued its production there. Hence, this co mpany could have at any moment re-started its
production in the EU.

13. Claim II.4 The Note for the File of 2 October 2008 (Exhibit EU-19) discusses the
information used by the EU IA to verify the standing of the complainants. That note explains that the
production of the complaining industry was about 150 million pairs and the total production in the EU
had been assessed at 390 million pairs. This confirms the EU was consistent in defining the domestic
industry throughout the investigation.

14. Claim II.5 . China's claim that 'structural inefficien cy' was a cause of injury was an 'other
factor' that the Commission did not consider, but th is is in effect a claim that Chinese producers can
undercut those in the EU, which, given that ther e is dumping, supports the conclusion that the
'dumped imports' are the cause of injury. In any event the fact that Chin a's producers operate in non-
market economy means that differences in effici ency cannot be adequately measured. The
Commission had found that the EU industry had undergone and was undergoing major changes to

improve efficiency and meet the demands of the market. The use of outsourcing was one of these
changes, but in so far as it resulted from compe tition from dumped imports it was a symptom rather
than a cause of injury. Regarding non-dumped impor ts from third countries as a cause of injury, this
was not denied by the Commission, but the volume and level of undercutting of dumped imports was
such that their causal link with th e injury was not broken. As re gards reduction in demand this was
matched with a reduction in production, but this al so did not break the causal link. That link was
established by examining data for market share, prof its, investments and wages. Since movements in
exchange rates affected prices any associated in jury was a consequence of undercutting by the
dumped imports.

15. Claim II.6. As complainant, it is China's responsib ility to provide evidence for its assertions
that the Commission did not make available non-c onfidential versions of questionnaire responses
under Article 6.1.2 of the ADA. The rules on confidentiality have the consequence that the
Commission was obliged to clarify parties' intentions in that respect, given that there were serious
grounds for believing that they had not properly unde rstood the procedures. In the circumstances, the
time taken for clarification respected the standard of promptness. Furthermore, those circumstances
also support the conclusion that revised versions of the responses, concealing the companies'
identities, were received in response to requests from the Commission, and that the differences in the
dates on which responses were made available to in terested parties were due to differences in the
dates on which those responses were received. The pa rties' requesting confidentiality made clear that
it concerned any information that would reveal their identities. The circumstances of the
consideration of these matters were complicated. A proper consideration of the facts shows that the
Commission's account of what occurred regarding Company B was correct. China has no evidence
for its assertion that the response was not made available until 'around 12 December'.

16. Claim II .7. China's attempt to use Article 6.2 to expand the rights conferred by
Articles 6.1.2, 6.4 and 6.9 of the ADA conflicts with the interpretative principles of 'effectiveness' and
of
lex specialis derogat legi generali. China's interpretation of Article 6.2 would amount to
establishing a right of 'advance consultation' on all steps taken by an investigating authority in the
course of an investigation or review, but the ADA confers no such right. The prospect of legal
proceedings encourages the Commission to take account of criticisms made during investigations
and if appropriate to change provisional decisions. The particular categories of information
identified by China were dealt with correctly by the Commission. It confuses 'information' with
methodology. A party's response is what it defines as its response, which may be a revised
document. China has failed to provide evidence regarding the reason for the delays in placing
responses of potential analogue companies in the non-confidential file.

17. Claim II.8. The Commission applied the same policy regarding good cause for according
confidentiality to all interested parties. Certain categories of information were recognised as by
nature confidential, and the Commission did not require companies to make statements of the
obvious. The fact that complainants requested confidentiality for their identities is not in doubt.
China fails to indicate the source of the obligation to reveal the names of EU producers. Its
claims regarding the provision of information are contradictory. The Commission had good
evidence for accepting the complainants' fears of retaliation should they be identified;
participation of some in other proceedings did not concern comparable situations. Once the claim
of confidentiality was accepted it had to be app lied to any information that could be used to
identify the companies concerned. The particular documents listed by China in this context do
not reveal any failures by the Commission regarding the rules on confidentiality.

18. Claim II.9. China's claim appears to be based on the mistaken belief that an investigating
authority is obliged to weigh the importance of a valid claim to confidentiality against the
problems that such confidentiality would create for other parties.

19. Claim II.10 . The EU confirms that the Co mmission's verification visits to EU producers
allowed sufficient time for corrected data to be obtained. China is far from establishing the truth
of its allegations of bias in the treatment of in terested parties. It introduces a claim under
Article 6.8 of the ADA which is not within the terms of reference. The procedure under that
Article is a means to an end, not an end in itself.

20. Claim II.11. China's only reference to Article 11.3 of the ADA is in this claim. It has treated
this claim as a purely consequential matter, and ca nnot change that approach at this stage of the
proceedings.

21. Claim II .12. Article 12.2.2 of the ADA does not extend to requiring publication of
explanations of the application of doctrines of domestic law.

22. Claim III.2. The methodology specified in Article 2.2.2(ii) of the ADA could not be used
in this investigation because the companies concerned were not operating on a market-economy
basis. For the same reason the data of such companies could not be used in applying the cap in
Article 2.2.2(iii). The companies proposed by China were makers of polyester fibres, and as such
could not be regarded as in the same general category as footwear producers.

23. Claim III .3. China's evidence of supposed bias by the Commission is completely
unpersuasive. An investigating authority is not obliged overtly to address every argument raised
by parties.

24. Claim III.4. The product scope of the investigation was a matter for definition by the EU and
was not governed by the notion of 'like product'.

25. Claim III.5. As apparent from its first sentence, recital 215 of Definitive Regulation
discusses the analysis of micro-economic elements and the statement about companies having to close
down is the result of that analysis and is made in th at context, rather than as a result of any statements
in recitals 172 or 200 of the Provisional Regulation. The fact that the info rmation from complainants
was further cross-checked with information from the relevant associations does not mean that the data
used by the EU was thereby made less reliable.

26. Claims III.6, III.16 . The ADA leaves Members free to set anti-dumping duties below the
level of the dumping margin, but they may not discriminate in breach of Article 9.2. In applying the
'lesser duty' principle a Member is not obliged to use concepts drawn from Article 3.

27. Claim III.8. The Commission provided adequate evidence for its finding on employment and
production capacity. It properly evaluated the factor s affecting domestic prices. The calculation of
the lesser duty was quite distinct from the determin ation of injury. The Commission's evaluation of
profit levels was proper, as was the lifting of the quota on imports from China.

28. Claims III .10, III.11, III.12 . The 36 supporters of the complaint also endorsed the
confidentiality request that it contained. Giving the names of companies not supporting the complaint
would have risked enabling the identification of complainants and supporters. Doubts about the
sufficiency of evidence supporting the complaint should be pursued under Article 5 of the ADA.
Commercial data may still be of use to competitors even if the names of the supplying firms are
unknown.

29. Claim III .13. The MET questionnaires are not part of the 'original questionnaire sent to
interested parties at the outset of an investigati on'. They are not part of a comprehensive set of
questionnaires. They seek information that is a necessary preliminary to the dumping calculation.

China's Accession Protocol makes explicit provisi on regarding which parts of the Working Party
Report are binding.

30. Claim III.14. The facts of the present dispute are similar to those in EC – Norway (Salmon).
The changed method of calculating the lesser duty involved no new facts. The Commission was
going beyond its obligations under Article 6.9 of th e ADA in providing further disclosure and giving
an opportunity for comment. In any event, that opportunity would itself have satisfied Article 6.9.

31. Claim III .15. The Commission confirmed that the removal of STAF from the products
covered by the investigation did not affect the re presentativeness of the sample. The government of
China agreed to the sample that was selected, and did not question th e content of the sample when it
was informed of the removal of STAF. It is therefore estopped from going back on that agreement.

32. Claim III .19. The notion of publishing an 'evidentiary path' is relevant only to those
situations where the authority had to reconcile divergent information and data. Article 12.2.2 does not
forbid Members referring to matters in other publ icly available documents. It does not require
publication of matters that are neither required to be considered nor were actually considered.

ANNEX F-3

EXECUTIVE SUMMARY OF THE CLOSING
STATEMENT OF CHINA

I. INTRODUCTION

1. China has taken note of the exceptionally lo ng opening Oral Statement ("OS") of the EU,
which is for all intents and purposes its Third Written Submission. While this Closing Statement will
not be nearly as long as the EU's Opening Statement, it too will be unusually long in light of the
quantity of misconstrued arguments and outright fals ehoods which China simply cannot allow to pass
without comment.

2. With regard to the EU's arguments on the burde n of proof found at paras. 48 et seq. in its OS,
the EU cites the AB Report US - Gambling as to the definition of a prima facie case
1 while referring
to "the well-established rule that 'he who asserts a fact must prove it 2'". With regard to the US -
Gambling case, China notes the distinction between "evidence" in the context of as such claims where
measures are generally WTO-consistent or not as a matter of law - such as those which were the
subject of the US - Gambling case - and "evidence" in the context of claims that an investigating
authority did or did not act in a WTO-consistent manner where only that investigating authority holds
the evidence necessary to defi nitively prove the truth or falsity of the allegation one way or the other.
Where that is the case, and the complaining party makes substantiated allega tions with regard to
which only the defendant holds the evidence which w ill ultimately prove or disprove the allegation,
the burden must shift to the defending party to refu te a substantiated claim against it, while at the
same time the Panel may seek information which may help it make a determination:
3 a right China
has asked the Panel to exercise with respect to the sample of EU producers from the beginning of this
proceeding. What is for certain is that the defe nding party cannot in good fa ith withhold all evidence
which would tend to corroborate a complainant's cl aims while at the same time freely offering that
which at least appears to absolve it of any wrongdoing.

3. As to the EU's repeated accusations that China has brought "new claims" in its Second
Written Submission and because of that much of China's SWS are out of the Panel's terms of
reference; China recalls once again the distinction between claims and arguments as those terms have
been defined for the purposes of Article 6.2 of th e DSU - a distinction which has been noted countless
times throughout these proceedings.
4

1 The evidence and arguments underlying a prima facie case, therefore, must be sufficient to identify
the challenged measure and its basi c import, identify the relevant WTO provision and obligation contained
therein, and explain the basis for th e claimed inconsistency of the measure with that provision. AB report , US -
Gambling, para 148.
2 Para. 65 EU's oral statement at the second meeting with the Panel.
3 DSU Article 13(2).
4 By "claim" we mean a claim that the respondent party has violated, or nullified or impaired the
benefits arising from, an identified provision of a particular agreement. Such a claim of violation must, as we
have already noted, be distinguished from the arguments adduced by a complaining party to demonstrate that the
responding party's measure does indeed infringe upon the identified treaty provision. Arguments supporting a
claim are set out and progressively clarified in the first written submissions, the rebuttal submissions and

4. The EU has not provided any support for its a pparent contention that parties' may not make
additional arguments and provide evidence relating to their claims after the time of the First Written
Submissions, and China considers the fact that the EU has addressed many of China's additional
arguments in its 130 page OS as evidence that it too recognizes the clear distinction. To the extent
that the EU considers China to have "saved some of the discussi on, arguments and evidence till the
last moment," thus implying that China has taken strategic decisions in bad faith, China notes that
while its SWS was indeed lengthy, the vast majority of whatever could be considered "new" has come
as a direct reaction to the EU's FWS and the events of the first meeting of the Panel, some of which
include the sudden disclosure of key facts withheld by the EU up until the time of that meeting.

II. CLAIMS II.1 AND II.13

ANALOGUE COUNTRY SELECTION

5. With regard to the question as to whethe r "China [can] overcome the argument that
[Article 2.1] is purely definitional that cannot be used as a basis of a claim
5," the EU argues that the
only reason why the AB in US - Hot Rolled Steel ruled on a claim based on an impermissible
interpretation of "ordinary course of trade" is because "the complainant had no way of challenging
this particular conduct of the US other than by i nvoking Article 2.1 since the phrase is not elaborated
elsewhere in the ADA".

6. Actually, the phrase is located in three different parts of Article 2, and this very fact was
specifically noted 6 as central to China's point that while Article 2.1 does not create independent
obligations, it may nevertheless form the basis of a claim so long as it can be shown that the
obligation is also located (or "created") elsewhere in the ADA as well. In the case of "comparable
price," China has noted five
7 other instances in which that phrase occurs, including in the
Paragraph 15 of the Protocol itself, and thus is not purporting that the part of Article 2.1 cited creates
an independent obligation.

7. Thus, the EU's argument that China must have cited Paragraph 15 of the Protocol in order to
benefit from the "comparable price" language contai ned therein must fail just as an argument that
Article 2.2 must be cited in order to find a violation of the "ordinary course of trade" obligation
contained in Article 2.1. The EU has not m eaningfully distinguished this case from the US - Hot
Rolled Steel case. China notes that this "no independent obl igation" point is the extent of the EU's
argument as to whether the Article 2.1 claim is valid as it specifically acknowledges that the analogue
country selection process is fundamentally about securing a "comparable price".

8. On the broad issue of the disciplines impo sed by the Articles cited, China notes that its
argument that the process must include some factor acknowledging the economic realities of the
target of the investigation is completely distinct from its arguments attacking the EU's use of the
criteria that it did apply. The EU has addressed both as if it would be the case that if the Panel finds
that the selection criteria were applied in a reasona ble manner, then it need not rule on whether those
criteria were permissible to begin with. The opposite is true. China's arguments that the
"competitiveness," "representativeness" and "like pr oduct" issues were handled incorrectly in this
particular case are only necessary in the event that they, without anything more, are permissible in any
case. In that regard it is noteworthy that even if th e Panel is to believe that China would have been no
better off with Indonesia as it's analogue count ry, as the EU now suddenly argues, it is the selection

the first and second panel meetings with the parties. AB Report, Korea - Dairy , para. 139. (Emphasis
added).
5 Para. 65 EU's oral statement at the second meeting with the Panel.
6 Para 300, China's SWS.
7 Para 308, China's SWS.

process which is of primary importance rather than any "harmless error" argument now put forth by
the EU. Up to this point, the parties have gone back and forth arguing over whether analogue country
domestic sales volume and the number of producers are sufficient as the only considered criteria.
That issue logically precedes that of whether the EU analysed them correctly.

9. With regard to the "but for the distortion" argument, as a threshold issue, China notes in
respect of the EU's OS that the fact that the Pa nel in DS 379 ruled only on the basis of Article 14 of
the SCM Agreement as opposed to Article 15 of the Pr otocol is of absolutely no consequence. At
least as long as the Panel considers convincing the argument that there is no difference in the
underlying purpose of proxy-value determination in NME anti-dumping and subsidies cases.

10. The EU says that the Panel in that case - in no ting that at a bare minimum an authority must
seek to find the value that "would prevail in the absence of the distortion" - "did not purport to address
how Section 15(b) [of the Protocol] would have been applied had it been invoked
8". The EU also
continues to argue that finding or attempting to find undistorted values is impossible in non-market
economies.

11. On the second point, China recalls that DS 379 was a case in which China was the target of
the anti-subsidy investigation, so it seems pretty clear that the Panel thought that it was possible to try
to find undistorted values in "NME" scenarios. As to the first point, China understands the EU to
argue, without giving any reason as to why, that the underlying purpose of proxy establishment in the
case of China would or could be different depending on whether the investigating authority relies on
Article 14 of the SCM Agreement or Paragraph 15 of the Protocol as its legal basis for finding a
benchmark. China fails to see how this could be possible.

12. Finally, as to the issue of the over-relian ce on domestic sales volume as that criteria was
applied in the present case , China would first note that the "5 per cent rule" borrowed from the
footnote of Article 2.2 is not actually a rule, but rather a guideline from which derogation is
acceptable in instances where "the evidence demonstrat es that domestic sales at such lower ratio are
nonetheless of sufficient magnitude to provide for a proper comparison
9".

13. China has never said that there was no statistical advantage between the Brazilian sales
volume and the Indonesian sales volume. Rather, China's argument was that by considering the
200,000 Indonesian pairs capable of providing a statistically significant sample (i.e. of significant
magnitude to permit a proper comparison), it was un reasonable for the EU to have considered the
marginal advantage gained from the difference in two already statistically significant domestic sales
volumes as more valuable than both the co mparable level of economic development and broader
range of footwear types sold found in the case of Indonesia.

14. With regard to the procedural bias issues in connection with the analogue country selection,
China notes that it has not in fact "abandoned" it s Article 17.6(i) claim, as the EU argues in
Paragraph 64, and China has explicitly said as much . Rather, China has noted the alternate bases on
which the Panel should find that the EU has violated China's due process rights and demonstrated how
those additional bases fall within the Panel's term of reference and how China had made its case in
regard to those bases in its First Written Submission.

8 Para. 85 EU's oral statement at the second meeting with the Panel.
9 ADA Article 2.2[fn].

PROCEDURAL BIAS

15. The EU claims in its OS that sending the analogue country questionnaires in the holiday
season did not affect cooperation of Indian and I ndonesian producers as holidays are there all around
the year and refers to the festival Eid-al-Adha. It is noted that for this festival, in Indonesia 10 and
India there is one public holiday. Therefore, this would not have interrupted or dissuaded Indonesian
producers from cooperating and this one day holiday cannot be compared to the long holiday break
starting before Christmas and ending after the new year, generally covering two weeks.

16. Besides the fact that the EU changed its ju stification in the FWS compared to the Review
Regulation concerning the reason for the sending of questionnaires to Indian and Indonesian
producers only on 23 and 22 December 2008 respectively, it has provided no proof why this was so.

17. In paras. 107-108 of its OS the EU claims that responses were received from analogue
country producers even after the dates mentioned in the Note for the File dated 6 February 2009 and
makes several arguments about the dates of the r eceipt of the non-confidential questionnaire response
of Indonesian producers. These arguments besides be ing irrelevant to the issue show the complete
lack of transparency in the proceeding. Add itionally, the EU's own Note for the File dated
6 February 2009 gave the dates of receipt of th e confidential versions of the analogue country
questionnaire responses. China's claims II.1 and II. 13 relate to the confidential versions of the
responses. The fact that the responses had certain de ficiencies is an issue ap art from the substance of
China's claims.

18. China has already explained that the Brazilian producers got maximum flexibility to reply to
the questionnaire and the encouragement to coopera te. This approach is undoubtedly biased. For the
record it is noted that non-confidential versions of the extension letters sent to Indian and Indonesian
producers are not available in the open files. The EU is well aware of the Indian footwear association
(Indian Shoe Federation) and the Indonesian footw ear association (Aprisindo) but no contacts were
established with these associations. Only the Braz ilian footwear association was contacted by the EU
to solicit cooperation.

19. With regard to the issue of collusion, the point is that the EU did not investigate this issue
despite its apparent close links with the Brazilian foot wear association. The EU also notes that Indian
as well as Indonesian producers had interest in the extension of the measures. China notes that the
factor differentiating the situation of the Brazilia n producers was that only Brazil initiated an anti-
dumping investigation against Chinese footwear si multaneous to the EU's investigation and that
producers in the two countries were clearly assisting each other.

COMPETITIVENESS

20. China has neither claimed nor premised its ar guments on the grounds that domestic prices in
Brazil would increase by 35 per cent on account of the tariff increase. China notes that the EU has
accepted that the tariff increase would affect the domest ic prices but considers that the large number
of producers in the Brazilian market would offset this increase.
11 While this theory of the EU does not
appear to be economically sound, it is clear that the EU at a minimum did not have any evidence to
this effect. Third, there is no evidence in th e non-confidential file that the Brazilian footwear
association provided the price data for domestic footwear sales for the period concerned.

10 http://www.indonesialogue.com/about-indonesia/public-holidays-for-2008-indonesia.html.
11 Para. 118 EU's oral statement at the second meeting with the Panel.

PCN METHODOLOGY

21. China notes that the EU incorrectly claims that the PCN methodology proposed by the
interested parties would not have overcome the problems on account of the broad PCN system. China
recalls that because cooperating importers in the or iginal investigation reported data based on the
more specific PCN system with more specific PCN categories the Commission determined that STAF
should be excluded from the product scope. Additiona lly, it is common sense that, if, for example,
there had been specific categories for formal/dre ss footwear and informal/leisure footwear, the
problem of classification of different footwear in the different PCNs would not be there as far as these
categories of footwear is concerned. The main issue was with PCNs classified under categories "A"
and "E" and these PCNs comprised 70 per cent of the PCNs exported by Chinese producers.
12

22. The Commission repeats that adjustments c ould have been made but China has explained
13
that in the absence of the knowledge of the foot wear classified by the Brazilian producers in the
various PCNs, Chinese exporters could not possibly de monstrate any adjustments. The issue does not
pertain to adjustments between PCNs but to footwear within the same PCN.

23. Last, as regards the reclassification of footw ear, the EU claims in para. 142 of its OS that
China has not indicated where the EU requested Chinese exporters or EU producers to classify sports,
sports-like and trekking footwear (hiking, climbi ng and outdoor footwear) in category 'E'. In
response, it is noted that the EU requested such classification specifically in AD questionnaires sent to
the exporters and EU producers. China refers to para. 406 of its FWS which provides extracts from
the AD questionnaire for Chinese exporters and the EU producers.

24. China notes that the EU has accepted that the PCN list of the Commission was wrong.
Interestingly, it took the EU this WTO case to figure out where the problem lay as regards PCN
ABE31. Nevertheless, it shows that the EU could not apply its own PCN system and that even in the
verification the EU did not gather the correct data.
14

FORMULATION OF CHINA'S CLAIMS CONCERNING ARTICLE 11.3

25. Regarding claims II.1 and II.3, China notes that the EU repeats its allegation of a legal error
in the formulation of China's claims. However, Chin a's claim and its arguments are clear – that to the
extent the EU for its likelihood-of-dumping dete rmination relied on the dumping margin calculated
inconsistently with Articles 2.1, 2.4 ADA and Article VI:1 GATT 1994, it violated Article 11.3.

26. With reference to the additional analysis clai med to be carried out by the EU, it specifically
refers to the alleged substantia l analysis of the volume and prices of the imports made in the
likelihood-of-dumping context. To the extremely limited extent these findings were referred to by the
EU in the likelihood-of-injury analysis, China h as presented its comments in the SWS showing that
the volume and prices of the imports were evaluated in the context of the in jury analysis and the
comparative price analysis of the Chinese exports was never undertaken. Additionally, the EU states
that if a point is covered under the arguments of interested parties it is still part of the likelihood
analysis. The EU seems to be pointing to its likely causation analysis through this statement. In that
context China notes that the EU's responses to the interested parties pertained to selected causal
factors raised; were not entirely fact-based; and largely relied upon the injury analysis conducted.
15

12 See Exhibit CHN-112.
13 See paras. 19-22 of China's oral statement at the second meeting with the Panel.
14 The PCN list of the Commission was made after the verification of the EU producers as mentioned
by the EU. See Exhibit CHN-74.
15 See e.g. recitals 308, 310, 311, 312, Review Regulation.

CLAIM II.3

27. Surprisingly in its OS the EU now claims th at there were five sampling criteria; the fifth
being sales value. This is contrary to recital 21 of the Review Regulation which explicitly refers to
sales volume. Such confusion in the EU's argument s thoroughly discredits its analysis and reinforces
China's point that the sample selection of the EU was not based on "objective examination" of
"positive evidence". The EU also claims at this late stage of the proceeding that there is no difference
between product segment, price segment and sector se gment and this can be obtained by dividing the
total sales value by the total sales volume. Firs t, China notes that the unit sales price is not
determinant of the price segment/sector segment in which a company operates. Second, as noted by
China in its FWS and SWS, the non-confidential vers ion of the complaint does not show that sales
data was provided by the complainants. Third, the EU stated in response to question 45 from the
Panel that only sales volume data was provided in the complaint and in the standing forms. 16 Fourth,
the EU mentioned in response to question 45 from th e Panel that the complaint provided the data for
the price segment, i.e. the average price/unit price, and not the sales value. Therefore, there is
extreme confusion in the EU's arguments as to the ex-post criteria created.

28. Indeed, China has stated that the situation of producers in one Member State is different from
those in another Member State but the EU's samp le did not take into account the situation of
producers in 80 per cent of the EU Member States where footwear production is undertaken as per the
Prodcom data. Therefore, the EU's assertions concerning the geographical representativity of the
sample are incorrect.

29. China recalls that the EU argued strongly in its FWS and SWS that there is no evidence that
the data in the complaint is based on estimates and that it had all the relevant information for sampling
from the complaint among others. In complete contradiction, in paras. 339, 342 and 344 of its OS the
EU has pointed out clearly that the complainants had made false claims of providing information
which was actually not provided in the complaint. This shows that the complaint was not a reliable
source for any form of information.

CLAIM II.4

30. China notes that it has extensively demonstrated in its SWS that the EU nowhere defined or
clarified that the domestic industry comprised co mplainants and non-complainants and the EU's
references to the various recitals of the Review Regulation do not support its assertion. The Note for
the File dated 2 October 2009 referred to by the EU does not support its assertion. The EU claims that
the Note for the File dated 9 December 2008 was a minor mistake and " the standing Note, the other
notes" prove its point. The so-called standing note of the EU as mentioned above again refers to
Community production and not EU industry production. China requests the Panel to ask the EU to
provide the "other notes" which it considers clarified the situation.

CLAIM II.5

31. In the context of the causation analysis, all of the EU's arguments erroneously first blame the
imports from China as being the cause of the othe r known factors affecting the EU producers.
Second, the EU overlooks the fact that the injuri ous effect of the other known factors has to be
assessed for the EU producers. No comparison is required to be made to the labour costs or efficiency
in China for that purpose.

32. Regarding the structural inefficiency of th e EU producers, China's contention is not that
Chinese exporting producers are more efficient than EU producers or can produce footwear at cheaper

16 China notes that until now the EU has provided no proof to establish that indeed sales data was
provided in the complaint.

costs. The claim is that EU producers are structura lly inefficient, period. This is a major cause of
injury to them as recognized by the EU as well in the Review. Additionally, the EU's argument that
thousands of 10-employee EU producers could supposed ly together achieve the production levels and
efficiency so as to be an attractive source of suppl y for multinational brands is an interesting ivory
tower concept but of course does not work in practi ce. In fact in reality no multinational brand is
sourcing from these clusters.

33. Besides the fact that the EU did not assess the injurious effect of the high labour costs in the
EU, it claims that China provided in its FWS labour co sts for all industries. It however fails to note
that the labour costs provided were given by a sampled EU footwear producer from the original
investigation in its Community interest questionna ire response and that ample evidence on the issue
was presented by EFA members during the hear ing conducted in the course of the review
investigation.

34. China notes the EU's statement that it ha d facts and evidence to support its arguments
concerning the structural inefficiency issue and that it disclosed it to the parties in the Note for the
File dated 16 October 2009. Th is document was submitted by China as Exhibit CHN-126. But it
does not contain an analysis as claimed by the EU.

35. On the issue of the injurious effects of the imports from third countries, China notes that in
para. 203 of the OS the EU claims completely the opposite of what it claimed in its SWS.
17
Additionally, while deviating from the issue that th e price of the Indian and Indonesian imports did
not take into account the product mix, the EU c onfuses it with the point of volumes and market
shares.

36. The EU also claims that the fact that pr oducers could not reach the 6 per cent profitability
target establishes the causal link with the allege dly dumped imports and shows that there was no
injury on account of the decline in EU demand. This does not amount to examining the nature and
extent of the injurious effect of the contrac tion in the EU demand and changes in patterns of
consumption within the meaning of Article 3.5. In fact such an argument cannot even be considered
to be providing a satisfactory qualita tive explanation in support of the conclusion that this factor does
not break the causal link between the dumped imports and the injury to the domestic industry.

37. Furthermore, the EU claims that the injury attributed to the dumped imports was that of
preventing the domestic industry from restoring itself to a viable level of operations notably in terms
of share, profits, investment and wages. China not es that the Review Regulation states that in the
RIIP:
18 sales prices increased by 30 per cent; profits increased by 131 per cent; investments increased
by 133 per cent; return on investments increased by 117 per cent; and wages increased by 12 per cent.

CLAIM II.6

38. The EU presents an incorrect interpretation of the Guatemala - Cement II case in para. 230 of
its OS. The Panel neither assumed nor implied as the EU claims that " the authorities would have
been entitled to delay making the document in question available if their suspicions had had a
sufficiently serious basis."

39. China notes that contrary to what the EU st ates in para. 233 of its OS, in this case there was
no Commission practice of checking the non-confidentia l documents of other interested parties than
the EU producers. For instance, China will pr ovide an example in the context of claim II.8
concerning the non-confidential AD questionnaire r esponse of Adidas which provided information
that was considered by the EU as confidential by na ture as regards the EU producers. But the EU did

18 See recitals 250-256, Review Regulation.

not check this nor contact the importer concer ned with "confidentiality concerns" and the non-
confidential questionnaire response of this importer was made available promptly to all interested
parties.

40. The EU also creates an interpretation based on Article 6.4 as to how an authority should act if
there is a conflict between the promptness requireme nt of Article 6.1.2 and confidentiality issues.
China submits that this interpretation has no legal basis in the ADA and is not supported by any Panel
or AB findings.

41. The EU while referring to a few sentences fro m the CEC's request for confidentiality of the
names claims that the Commi ssion interpreted that " confidentiality was sought for any information
that would lead to the disclosure of the names of the relevant companies ." China considers that when
the CEC letter itself refers to the names and Memb er States only, how can an objective investigating
authority grant confidentiality to anything it consider s to be even closely related to the identity of a
company. There is no legal basis in the ADA for th is interpretation. Per the EU, besides the names
themselves, the identity of the producers could ha ve been discovered if among others, any of the
following were disclosed - Member States' nam es; PCNs produced; production; and sales volume.
19
Therefore, the EU projects that practically ever ything related to the eight sampled producers was
confidential as it could lead to the discovery of thei r identity irrespective of the fact that there are
18,000 producers in the EU and most of them would likely be producing multiple kinds of footwear.

42. China requests the Panel not to take into account the EU's excuse of administrative burden
upon its officials on account of maintaining a file , sending deficiency letters and handling the
questionnaire responses concerning which there were c onfidentiality issues. Above all the latter issue
was self-created and does not permit a violation of the ADA.

43. In para. 257 of its OS the EU notes that dat es are recorded only when a document is received
and not when it is made available to interested parties. This in itself shows that the EU has significant
leverage to add a document as and when it likes. This also proves that it was easy for the EU to claim
that Company B's response was added right the day after EFA's legal representative checked the file.

CLAIM II.7

44. The EU admits in para. 272 of its OS that sampling and application of facts available, among
others, are matters of interest for interested parties. Agreeably these issues are related to the
interested parties' rights of defence. However each of the decisions taken by an investigating
authority at the specific stage of the investigation are not of a provisional character as stated by the
EU and are not merely confirmed by the adoption of the measure. In fact China recalls that this new
explanation is in contrast to the statement of the EU in para. 393 of its FWS.

45. Therefore, China's interpretation of timeliness is correct and interested parties will have full
opportunity for the defence of their interests only if they have timely opportunities to see the relevant
information pertaining to the issues as requested to th e investigating authority. China's claims are not
such that every step of the inves tigating authority would be subject to the Article 6.4 requirement as
the EU projects. However, the aim is indeed to have access, at least in part, to the information in the
EU's black box.

46. The EU has made abundant arguments but fa iled to explain how the sampled producers'
production increased from 10.7 million pairs as stated in the Note for the File dated
18 November 2008, to 11.3 million pairs, despite the fact that pr oduction of the sample became 18-

19 See paras. 286-289, EU's oral statement at the second meeting with the Panel.

20 per cent lower due to the discovery of outsourcing by one sampled producer.
20 Contrary to what
the EU claims, this was not explained in the disclosure issued on 12 October 2009.

47. The EU claims that the non-c onfidential responses of two Brazilian producers were not made
available because their data was not used. This however does not justify a violation of Article 6.4.

CLAIM II.8

48. The EU claims in para. 310 that certain categories of information such as sales data are by
nature confidential and if a company provides such data it does not have to establish good cause.
First, this proposition is inconsis tent with three Panel reports – Guatemala-Cement II
21, Korea-
Paper22, and Mexico-Tubes and Pipes .23 Second, China notes that it is not for the investigating
authority to decide whether or not the informati on provided is confidential by nature. Third, by
giving an example regarding the EU importer Adid as' questionnaire response, the EU cannot justify
the breach of Article 6.5. It was incumbent upon the EU to ask Adidas to demonstrate good cause for
confidential treatment. China considers it important to present a copy of that response as Exhibit
CHN-132. That questionnaire response gives extensive information on all points and on the very
same issues which the EU apparently considers confidential by nature in the case of the EU producers,
including sales turnover of the company. The EU is sharp in criticizing Adidas for not requesting
confidentiality for minimal data but fails to note that sampled Companies G & H did not make any
request for confidentiality as regards their questionnaire responses.

49. As regards the request for confidential treatme nt, China considers it important to note that on
the one hand the EU claims that the sampled produc ers authorized CEC to request confidentiality on
their behalf. On the other hand it has claimed in the FWS, SWS and its OS that CEC did not represent
the sampled companies as far as the questionna ire responses were concerned and CEC had no
knowledge of the data of these companies. These two assertions are contradictory and the EU must
decide its argument.

50. Despite the detailed explanations of China a nd evidence provided, the EU continues to claim
that China gave no evidence to show that the risks of retaliation claimed in the original investigation
are untrue. China reiterates that in the original investigation after the imposition of the provisional
measures, seventeen Italian footwear producers that were granted confidential treatment filed an
application for annulment of the Provisiona l Regulation thereby disclosing their names during the
course of the investigation . The argument developed by the EU in its OS that risk of retaliation is
less likely once duties are imposed therefore rests on a factually incorrect basis. Furthermore, it is
illogical that at the time of initiation of the original investigation, the risk of retaliation existed and a
few months later after the imposition of provisi onal measures, it suddenly disappeared only to
miraculously re-appear at the time of the review investigation. Third, the fact that these same
producers later intervened in other court cases d espite their names and identities having been known
for a long time by then, proves that retaliation never occurred.

51. In para. 352 the EU claims that if r easons why non-confidential summaries cannot be
provided are obvious, the EU does not require parties to provide reasons. This approach is totally in
violation of Article 6.5.1 as confirmed by the Panel in US - OCTG Sunset Reviews (Article 21.5).
24

20 For detailed arguments see China's SWS paras. 965-966.
21 Panel Report, Guatemala - Cement II, para. 8.219.
22 Ibid., at para. 7.335.
23 Panel Report, Mexico - Pipes and Tubes, para. 7.378.
24 See Panel Report, US - OCTG Sunset Reviews (Article 21.5), paras.7.135-7.136.

CLAIMS III.1; CLAIM III.20

52. The plain reading of Article 6.10.2 ADA, which provides only for the possibility not to
determine an individual margin of dumping for not sampled producers, does not allow the EU's
departure from its obligations under Paragraph 15(a) of China's Protocol of Accession.

53. As to the issue of the EU's administrative capacity to analyse four additional non-sampled
producers, China considers that the EU's interp retation that individual examinations beyond the
companies selected in the sample are never necessar y, renders Article 6.10.2, which clearly uses the
term "nevertheless" a nullity.

54. Finally, the EU's insistence on receiving fro m China data on the EU's own administrative
capacity goes beyond what China is required to establish, i.e. a prima facie case, as China has
established in its FWS.
25

CLAIM III.2

55. The EU claims that Article 2.2.2(ii) cannot be applied per se when " the other exports or
producers subject to investigation " have not been granted MET, while in the same footwear
investigation the EU did use data from the companies that have not been granted MET. 26 Furthermore
3 of the 12 sampled companies were found to comply with MET criteria which permit the use of their
profits and SG&A.

56. China's interpretation as to how to determine reasonability under Article 2.2.2(iii) is totally in
line with previous Panel reports.
27 The EU has criticized China's s uggestion as to the use of profits
from an investigation on finished polyester filament fabrics from China and on polyester staple fibres,
but did not even attempt to show a similarity between "chemical" and "engineering", which could
mean anything from castings to trichloroisocyanuric acid28, and footwear.

CLAIM III.3

57. The EU has - by using its own incomplete records as an excuse
29 - attempted to demonstrate
that China has adduced no evidence of discriminat ory treatment in favour of Brazilian producers in
the analogue country selection process. Ironically , the supporting evidence against which the EU
directs its criticisms, is no other than it's own non-co nfidential files. The EU also requires China to
prove future predictions, a claim that cannot be taken seriously.30

25 China's FWS, para. 1048.
26 Definitive Regulation, Recital 127.
27 Panel Report, EC – Bed Linen , para. 6.60, footnote 32. Cited in para. 901 of China's FWS. Panel
Report, Thailand - H-Beams , para. 7.125. Cited in para. 900 of China's FWS. See also China's response to
Question 84.
28 Or hand pallet trucks, tartaric acid, barium carbonat e or magnesia bricks. These are all products that
were covered by measures published between 10/07/2005 and 10/07/2006 (i.e. within 12 months before the
disclosure) in which certain Chinese companies obtained MET.
29 EU's oral statement at the second meeting with the Panel, para. 392: "The EU does not now possess
records sufficient to explain the circ umstances in 2005 that led to this co nduct." See also EU FWS para. 609,
referring to an entry from Calcados Myrabel: "At this stage the European Union cannot confirm whether the
earlier submission was the confidential version."
30 EU's oral statement at the second meeting with the Panel, para. 394: "…China has no evidence to
prove that a supposedly lengthy period that was allowed to one company would not have been allowed to
another company should that have been required."
In any event, the available eviden ce suggests that no extensions of the deadlines to respond to
questionnaire from Thai, Indian or Indonesian producers would have been granted. China FWS, para. 930, bullet
point (ii) and Exhibit CHN-84.

CLAIM III.4

58. The EU does not contest that the crite ria for the establishment of the "product
concerned"/"product under consideration" and like product are simila r and has undertaken no attempt
to rebut the arguments in paras. 1340-1348 of Chin a's SWS showing that the EU effectively applied
the like product test in this case, when it decide d to exclude STAF from the scope of the "product
concerned"/"product under consideration".

CLAIM III.5

59. The EU's conclusion that " in the case of SMEs, [losses] cannot be sustained for more than a
few months without their being forced to close down "
31 was explicitly based on information provided
by the national federations, i.e. information provided by companies outside the domestic industry.
The EU's argument that the same conclusion, wh en put in another paragraph of the Regulation
imposing measures, would be the result of the analysis made in its own context, should be rejected.32

60. As the use of data from producers outside of the domestic industry, i.e. companies that are
neither part of the sample, nor of the complainants, cannot be used ,
 33 cross-checking the information
– in the black box part of the investigation - agai nst information provided by national associations, is
equally prohibited.

CLAIM III.10; CLAIM III.11; CLAIM III.12

61. Contrary to the complainants which authorized CEC to act on their behalf 34, the 36 supporters
of the complaint merely declared their support fo r the complaint but did not provide powers of
attorney empowering CEC to act on their behalf, as the complainants did.

62. China made no statement that the complain t contained no summary of the names of the
complaining companies but referred to the missing summary of the domestic prices in Brazil and
export prices from China and Viet Nam.

CLAIM III.13; CLAIM III.14

63. An MET questionnaire is not comparable to a sampling form. The EU acknowledges that
MET and dumping questionnaires were sent simultaneous ly to interested parties and therefore the
outcome of the MET determination does not dete rmine which party will receive the "dumping"
questionnaire.

64. The Additional Disclosure did involve consid eration of new facts as import value amounts for
the calendar year 2005 had not been disclosed pr eviously. The reference to the Definitive
Disclosure
35 refers to volumes, not values, and in any event concerns only the volumes of 2005 from
China, not Viet Nam.

65. Finally, China takes note of Para 380 of the EU's OS, in which it claims that the Panel would
not be justified in making any recommendations to the DSB if the 2009 regulation lapses at some
point between now and the when it would make its final recommendations. China considers that even
if measures were to expire it is essential that th e Panel makes findings regarding China's claims and

31 Provisional Regulation, Recital 199.
32 EU's oral statement at the second meeting with the Panel, para. 400.
33 Panel Report, EC - Bed Linen, paras. 6.182, 6.183.
34 Exhibit CHN-108.
35 Exhibit CHN-81, Recital 291.

rules on the suggestions as mentioned by China in para. 1225 of its FWS because even if the measures
are terminated for now, a new set of inconsistent me asures could recur and in fact the EU industry has
already threatened in press releases to do so. Th e issues raised by China in this case are to a large
extent systemic. China notes that there have been previous cases in which the Panel made a finding in
favour of the complainant exactly for these reasons.36

36 They are the GATT panel reports US-Prohibitio n of Imports of Tuna and Tuna Products from
Canada, EEC-Import Restrictions on Imports of Apples from Chile and EEC-Import Restrictions on Imports of
Desert Apples from Chile. The Panel in US - Wool Shirts and Blouses cited those three reports, among others, in
considering it appropriate that it issue its report in a case where the measures as issue were to be terminated, but
where there was no agreement between the parties to te rminate the proceedings a nd where the issue of the
withdrawal of the measure did not ar ise until long after the establishment of the panel. See Panel report, US -

ANNEX F-4

CLOSING STATEMENT OF THE EUROPEAN UNION

1. We divide our closing statement into two pa rts. First, we focus on housekeeping issues,
second, we would like to make a few observations regarding the proceedings and the way China has
been arguing its case.

A. "HOUSEKEEPING" ISSUES

2. We noticed that a couple errors occurred in our oral statement yesterday. In para. 355, we
referred to the data from year 1995, we meant to refer to year 2005. In para. 260, references made to
September should be read as references to Novemb er and references to October as references to
December.

3. Next, we note that China confirmed at this meeting that estimates can, as such, constitute
positive evidence within the meaning of Article 3.1 of the ADA. However, China is of the view that
in the circumstances of this case the estimates made by national associations cannot constitute
positive evidence. We are returning to this to make sure that this position of China is firmly on the
record.

4. Further, we return to the one comment we ow e you on China's second oral statement. China,
in para. 66 of this statement says that the Comm ission failed to take full account of the changed
exchange rate as an ‘other factor ' in injury causation. However, the aspect to which it refers – the
increased price of EU products in dollar terms – was considered by the Commission because the
consequences of that increase would have been fe lt in the areas of exports of EU products, and of
imports from third countries. Both of these topi cs were examined in the Commission's causation
analysis.

B. HORIZONTAL POINTS ARISING OUT OF THE PROCEEDINGS

5. Now, as this the last opportunity for us to speak before you, we would like to draw your
attention to a few horizontal points which we see emanate from the proceedings.

6. First, yesterday, in our oral statement, we took you through many of the petty factual
allegations which China made in its SWS. As you remember, we talked, inter alia, about such things
as a page missing in a previous version of the ope n file due to a photocopying error or what holiday
seasons were celebrated at a certain moment in th e investigation around the world. There were many
more of these tiny factual matters, all of which Chin a turned into an issue or allegation before this
Panel. We addressed them, but we return to what we stated at the beginning of this meeting: even if
these allegations were true, we sincerely wonder what relevance, if any, would they have for China's
claims. The Panel should review China's claims also in this light.

7. Second, we note that China has made and is making new factual assertions at the last stages
of this proceeding. For instance, with respect to in jury, China now raises the issue with the fact that
the EU industry comprised about 18.000 companies. The EU pointed to this fact from the very
beginning, because it was legally relevant for the c onsideration of the claims. Now, when China
realizes this is an important fact, China suddenly, in its oral statement, raises an issue with this

number, saying it represents only an EU "assertion". Of course it is no assertion and the number is
based on evidence on file. But more fundamentally, if China had problems with this number, it
should have raised them at the latest the first time the EU mentioned it, and not know (when China
eventually realized that this number is relevant for the legal consideration of its claims). If we
continue like this, we will end up with yet another 600-page submission, full of new allegations which
the EU will have to rebut at the last moment. Ch ina's strategy raises some issue of abuse of the
procedure in which indeed it should be the respondent who has the last word or at least a chance to
comment on the factual allegations made. We have sincere concerns that this backloading of
discussion may happen again at the stage of comments to the disadvantage of the respondent.

8. Finally, we have an important observation about China's arguments for which we have a
shorthand "destruction without solution". China very often criticizes the methods used by the EU IA
as inconsistent with WTO rules. But China does not offer solutions. China does not offer alternative
ways of how the EU IA could have acted or th e methodologies it could have followed (e.g. in the
injury analyses) in compliance with WTO rules in the factual circumstances of the case. One thing is
clear – it is always possible to obtain additional in formation, especially if one would have the whole
time of the world. But this is not the task of an IA. The task of an IA is not to write a thesis about the
state of domestic industry, for instance. An IA has to gather information which complies with the
requirements of the ADA (e.g. Article 3 ADA in case of injury claims about domestic industry),
within the strict deadlines imposed. The IA looks for reasonable methods to deliver on this task while
making the conduct of the investigation possible. Metaphysical certainty and level of details which
China seeks is something else which does not take acc ount of the realities of an investigation. We
would urge the panel to have this viewpoint in mind when reviewing China's claims.

9. Finally, let me say again that we are con cerned about a possible disadvantage for the EU. If
China will indeed continue to provide its submissions as it did up to this point, we may be faced with
very substantial China's comments to which we ca nnot respond. We would thus urge the Panel to
bear this in mind when reviewing, in particular, any new assertions made by China in their comments
and, if necessary, provide the EU with a chance to respond.

10. This concludes our statement. We would lik e to thank the Panel again for the good discussion
we had and for the patience you showed in listeni ng to our statement yesterday (and your physical
stamina; it became very clear that panel proceedi ngs are not only about an intellectual challenge but
also may present a physical one). We also thank you for the work ahead of you when reviewing our
responses to the questions and comments and drafting the report. Thank you.