UNITED STATES – ANTI-DUMPING MEASURES APPLYING DIFFERENTIAL PRICING METHODOLOGY TO SOFTWOOD LUMBER FROM CANADA REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 9 April 2019
Document codes: WT/DS534/R
Complainant: Canada
Respondent: U.S.
Third parties: Brazil, China, EU, Japan, Kazakhstan, South Korea, Russia, Vietnam
Dispute stage: Panel
Agreements cited: Art. 2.4.2, 2.4, 1, 2.1  Anti-dumpingArt. VI:1, VI:2  GATT 1994

UNITED STATES – ANTI-DUMPING MEASURES APPLYING DIFFERENTIAL
PRICING METHODOLOGY TO SOFTWOOD LUMBER FROM CANADA
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Working Procedures of the Panel 4
Annex A-2 Additional Working Procedures on Business Confidential Information 10
Annex A-3 Additional Working Procedures on Open Meetings 12
Annex A-4 Timetable for the Panel proceedings 13
Annex A-5 Interim Review 15
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 First integrated executive summary of the arguments of Canada 18
Annex B-2 Second integrated executive summary of the arguments of Canada 23
Annex B-3 First integrated executive summary of the arguments of the United States 30
Annex B-4 Second integrated executive summary of the arguments of the United States 41
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil 53
Annex C-2 Integrated executive summary of the arguments of China 55
Annex C-3 Integrated executive summary of the arguments of the European Union 57
Annex C-4 Integrated executive summary of the arguments of Japan 59

CASES CITED IN THIS REPORT
Short title Full case title and citation
Argentina – Import
Measures
Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, / / , adopted
26 January 2015, DSR 2015:II, p. 579
EC – Bed Linen Appellate Body Report, European Communities – Anti-Dumping Duties on
Imports of Cotton-Type Bed Linen from India, , adopted
12 March 2001, DSR 2001:V, p. 2049
EC – Hormones Appellate Body Report, European Communities – Measures Concerning Meat
and Meat Products (Hormones), , , adopted
13 February 1998, DSR 1998:I, p. 135
US –
Anti-Dumping Methodologies
(China)
Appellate Body Report, United States – Certain methodologies and Their
Application to Anti-Dumping Proceedings Involving China, WT/DS471/AB/R
and Add.1, adopted 22 May 2017
US –
Anti-Dumping Methodologies
(China)
Panel Report, United States – Certain methodologies and Their Application to
Anti-Dumping Proceedings Involving China, WT/DS471/R and Add.1, adopted
22 May 2017, as modified by Appellate Body Report WT/DS471/AB/R
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany,
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX,
p. 3779
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application
of Zeroing methodology, WT/DS350/AB/R, adopted 19 February 2009,
DSR 2009:III, p. 1291
US – Countervailing Duty
Investigation on DRAMS
Appellate Body Report, United States – Countervailing Duty Investigation on
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea,
WT/DS296/AB/R, adopted 20 July 2005, DSR 2005:XVI, p. 8131
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I,
p. 3
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted
23 August 2001, DSR 2001:X, p. 4697
US – Lamb Appellate Body Report, United States – Safeguard Measures on Imports of
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia,
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX,
p. 4051
US – Softwood Lumber V Appellate Body Report, United States – Final Dumping Determination on
Softwood Lumber from Canada , WT/DS264/AB/R, adopted 31 August 2004,
DSR 2004:V, p. 1875
US – Softwood Lumber V
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Dumping Determination on
Softwood Lumber from Canada – Recourse to Article 21.5 of the DSU by
Canada, WT/DS264/AB/RW, adopted 1 September 2006, DSR 2006:XII,
p. 5087
US – Softwood Lumber VI
(Article 21.5 – Canada)
Appellate Body Report, United States – Investigation of the International
Trade Commission in Softwood Lumber from Canada – Recourse to
Article 21.5 of the DSU by Canada, WT/DS277/AB/RW, adopted 9 May 2006,
and Corr.1, DSR 2006:XI, p. 4865
US – Stainless Steel
(Mexico)
Appellate Body Report, United States – Final Anti-Dumping Measures on
Stainless Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008,
DSR 2008:II, p. 513
US – Washing Machines Appellate Body Report, United States – Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea, WT/DS464/AB/R and
Add.1, adopted 26 September 2016, DSR 2016:V, p. 2275
US – Washing Machines Panel Report, United States – Anti-Dumping and Countervailing Measures on
Large Residential Washers from Korea, WT/DS464/R and Add.1, adopted 26
September 2016, as modified by Appellate Body Report WT/DS464/AB/R,
DSR 2016:V, p. 2505
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven
Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997,
and Corr.1, DSR 1997:I, p. 323

Short title Full case title and citation
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology
for Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted
9 May 2006, and Corr.1, DSR 2006:II, p. 417
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I,
p. 3

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994
BCI Business Confidential Information
CONNUM product control number
DPM differential pricing methodology
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the
Settlement of Disputes
GATT 1994 General Agreement on Tariffs and Trade 1994
Resolute Resolute FP Canada Inc.
T-T transaction-to-transaction
Tolko Tolko Marketing and Sales Ltd.
USDOC United States Department of Commerce
West Fraser West Fraser Mills Ltd.
W-T weighted-average-to-transaction
WTO World Trade Organization
W-W weighted-average-to-weighted-average

1 INTRODUCTION
1.1 Complaint by Canada
1.1. On 28 November 2017 , Canada requested consultations with the United States pursuant to
Articles 4 and 10.4 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994)
and Article 17 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994 (Anti-Dumping Agreement), with respect to the US anti-dumping measures applying
the differential pricing methodology (DPM) to softwood lumber products from Canada.1
1.2. Consultations were held on 17 January 2018. These consultations failed to settle the dispute.
1.2 Panel establishment and composition
1.3. On 15 March 2018, Canada requested the establishment of a panel. 2 At its meeting
on 9 April 2018, the Dispute Settlement Body (DSB) established a panel pursuant to the request of
Canada in document WT/DS534/2, in accordance with Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited by
the parties to the dispute, the matter referred to the DSB by Canada in document
WT/DS534/2 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 9 May 2018, Canada requested the Director -General to determine the composition of the
Panel, pursuant to Article 8.7 of the DSU . On 22 May 2018 , the Director -General accordingly
composed the Panel as follows:
Chairperson: Mr Thinus Jacobsz

Members: Ms María Valeria Raiteri
Mr Guillermo Valles Galmés

1.6. Brazil, China, the European Union, Japan, Kazakhstan, the Republic of Korea, the
Russian Federation, and Viet Nam reserved their rights to participate in the P anel proceedings as
third parties.5
1.3 Panel proceedings
1.3.1 General
1.7. After consultation with the parties, the Panel adopted on 20 June 2018 its Working Procedures6,
Additional Working Procedures on Business Confidential Information (BCI)7, Additional Working
Procedures on Open Meetings 8, and the timetable. The Panel revi sed its timetable on
7 December 2018 after consulting the parties.
1.8. The Panel held its first substantive meeting with the parties on 12 and 13 September 2018.
The session wi th the third parties took place on 13 September 2018. The Panel held its second
substantive meeting with the parties on 4 December 2018. On 29 January 2019, the Panel issued

1 Request for consultations by Canada, WT/DS534/1-G/L/1206-G/ADP/D120/1 (Canada's consultations
request).
2 Request for the establishment of a panel by Canada, WT/DS534/2 (Canada's panel request).
3 DSB, Minutes of Meeting held on 9 April 2018, WT/DSB/M/411.
4 Constitution note of the Panel, WT/DS534/3.
5 Constitution note of the Panel, WT/DS534/3.
6 See the Panel's Working Procedures in Annex A-1.
7 See the Panel's Additional Working Procedures on Business Confidential Information in Annex A-2.
8 See the Panel's Additional Working Procedures on Open Meetings in Annex A-3.

the descriptive part of its Report to the parties. The Panel issued its Interim Report to the parties on
28 February 2019. The Panel issued its Final Report to the parties on 27 March 2019.
2 FACTUAL ASPECTS
2.1. This dispute concerns anti-dumping measures imposed by the United States Department of
Commerce (USDOC) following an investigation on certain softwood lumber products from Canada
(underlying investigation) . In particular, Canada challenges certain aspects of the dumping
determinations made by the USDOC using the DPM.
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Canada requests the Panel to find as follows:
a. The USDOC acted inconsistently with the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement because by applying the DPM in the underlying investigation it9:
i. failed to find "a pattern of export prices which differ sig nificantly among different
purchasers, regions or time periods"; and
ii. used zeroing under the weighted-average-to-transaction (W-T) methodology provided
in the second sentence of Article 2.4.2 of the Anti-Dumping Agreement.
b. The USDOC acted inconsistently with Article 2.4 of the Anti -Dumping Agreement in the
underlying investigation because as part of the DPM the USDOC used zeroing under the
W-T methodology provided in the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement.10
c. The USDOC acted inconsistently with Articles 1 and 2.1 of the Anti -Dumping Agreement
as well as Articles VI:1 and VI :2 of the GATT 1994 in the underlying investigation as a
consequence of its violations under Articles 2.4.2 and 2.4 in this investigation.11
3.2. The United States requests that the Panel reject Canada's claims in their entirety.
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries that were provided to
the Panel in accordance with paragraph 22 of the Working Procedures (see Annex B).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Brazil, China, the European Union, and Japan are reflected in their executive
summaries that were provided to the Panel in accordance with paragraph 25 of the Working
Procedures (see Annex C).12
6 INTERIM REVIEW
6.1. On 28 February 2019, we issued our Interim Report to the parties. On 7 March 2019, the
United States submitted a written request for the Panel to review precise aspects of the Interim
Report. Canada did not make a written request to review precise aspects of the Interim Report but
submitted on 13 March 2019 its comments on the United States' request for interim review.

9 Canada's first written submission, para. 68; response to Panel question after the first meeting of the
Panel No. 6, para. 17.
10 Canada's first written submission, para. 68; response to Panel question after the first meeting of the
Panel No. 6, para. 17.
11 Canada's first written submission, para. 68.
12 Kazakhstan, the Republic of Korea, the Russian Federation, and Viet Nam did not file a submission,
nor did they make any statement.

6.2. The requests made at the interim review stage as well as the Panel's discussion and disposition
of those requests are set out in Annex A-5.
7 FINDINGS
7.1 General principles regarding treaty interpretation, the standard of review, and burden
of proof
7.1.1 Treaty interpretation
7.1. Article 3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of interpretation
of public international law". Article 17.6(ii) of the Anti-Dumping Agreement similarly requires panels
to interpret that agreement's provisions in accordance with the customary rules of interpretation of
public international law.13 The principles codified in Articles 31 and 32 of the Vienna Convention on
the Law of Treaties are generally accepted as such customary rules.
7.1.2 Standard of review
7.2. Article 11 of the DSU provides, in relevant part, that:
[A] panel should make an objective assessment of the matter befor e it, including an
objective assessment of the facts of the case and the applicability of and conformity
with the relevant covered agreements.
In addition, Article 17.6 of the Anti -Dumping Agreement sets forth the special standard of review
applicable to disputes under the Anti-Dumping Agreement:
(i) in its assessment of the facts of the matter, the panel shall determine whether
the authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objective, even though the panel might have
reached a different conclusion, the evaluation shall not be overturned;
(ii) the panel shall interpret the relevant prov isions of the Agreement in accordance
with customary rules of interpretation of public international law. Where the panel finds
that a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorit ies' measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations.
7.3. Thus, Article 11 of the DSU and Article 17.6 of the Anti-Dumping Agreement together establish
the standard of review we will apply with respect t o both the factual and the legal aspects of the
present dispute. The Appellate Body has explained that when a panel is reviewing an investigating
authority's determination, the "objective assessment" standard in Article 11 of the DSU requires a
panel to re view whether the authority has provided a reasoned and adequate explanation as
to (a) how the evidence on the record supported its factual findings; and (b) how those factual
findings support the overall determination.14 In reviewing an investigating authority's determination,
a panel should not conduct a de novo review of the evidence, nor substitute its judgment for that of
the investigating authority. A panel must limit its examination to the evidence that was before the
investigating authority during the investigation15 and must take into account all such evidence
submitted by the parties to the dispute. 16 At the same time, a panel must not simply defer to the

13 Article 17.6(ii) of the Anti-Dumping Agreement also provides that if a panel finds that a provision of
the Anti-Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure
that rests upon one of those interpretations.
14 Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS, para. 186; US – Lamb,
para. 103.
15 Article 17.5(ii) requires a panel to examine the matter based on the facts made available to the
authorities.
16 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 187.

conclusions of the investigating authority; a panel 's examination of those conclusions must be
"in-depth" and "critical and searching".17
7.4. In the context of Article 17.6(i) of the Anti -Dumping Agreement, the Appellate Body has
clarified that while the text of this provision is couched in terms of an obligation on a panel, in effect
it defines when an inv estigating authority can be considered to have acted inconsistently with the
Anti-Dumping Agreement in the course of its "establishment" and "evaluation" of the relevant
facts.18 Therefore, a panel must assess if the establishment of the facts by the investigating authority
was proper and if the evaluation of those facts by that authority was unbiased and objective. 19
If these broad standards have not been met, a panel must hold the investigating
authority's establishment or evaluation of the facts to be inco nsistent with the
Anti-Dumping Agreement.20
7.1.3 Burden of proof
7.5. The general principles applicable to the allocation of the burden of proof in WTO dispute
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert
and prove its claim. 21 Therefore, as the complaining party in this proceeding, Canada bears the
burden of demonstrating that the challenged aspects of the measures at issue are inconsistent with
the Anti-Dumping Agreement and the GATT 1994. The Appellate Body has stated that a complaining
party will satisfy its burden when it establishes a prima facie case, namely a case which, in the
absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule
in favour of the complaining party.22 Finally, it is generally for each party asserting a fact to provide
proof thereof.23
7.2 The USDOC's dumping determinations in the underlying investigation
7.6. In the underlying investigation, the USDOC used the DPM to examine whether the export prices
of the Canadian producers showed "a pattern of export prices which differ[ed] significantly among
different purchasers, regions or time periods".24 Finding that the export prices of Canadian producers
Resolute FP Canada Inc. (Resolute), Tolko Marketing and Sales Ltd. (Tolko) , and West Fraser Mills
Ltd. (West Fraser) (three Canadian producers) showed such a pattern, the USDOC examined whether
the weighted-average-to-weighted-average (W-W) methodology could take into account those price
differences, and explained that it could not. 25 Thus, the USDOC decided not to apply the
W-W methodology, and instead determined the margins of dumping of the three Canadian producers
by comparing a normal value established on a weighted average basis with the pric es of individual
export transactions (i.e. the W-T methodology), which is the methodology provided in the second
sentence of Article 2.4.2 of the Anti-Dumping Agreement. The USDOC applied the W-T methodology
to all export transactions of the three Canadian producers, and used zeroing when doing so.26
7.7. Canada challenges certain aspects of these determinations under the second sentence of
Article 2.4.2 and Article 2.4 of the Anti -Dumping Agreement, claiming, as noted in
paragraph 3.1 above, that in applying the DPM in the underlying investigation the USDOC:
a. failed to identify a "pattern" consistent with the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement thereby acting inconsistently with this second sentence; and

17 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 93.
18 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
19 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
20 Appellate Body Report, US – Hot-Rolled Steel, para. 56.
21 Appellate Body Report, US – Wool Shirts and Blouses, p. DSR 1997:1, p. 337.
22 Appellate Body Report, EC – Hormones, paras. 98 and 104.
23 Appellate Body Report, US – Wool Shirts and Blouses, p. DSR 1997:1, p. 337.
24 Canada's first written submission, para. 22; United States' first written submission, para. 15.
25 Canada's first written submission, paras. 23-24; United States' first written submission, para. 15. The
USDOC did not explain why the T-T comparison could not take into account those price differences.
26 Canada's first written submission, paras. 26-27; United States' first written submission, paras. 15 and 17.

b. used zeroing while applying the W -T methodology provided in the second sentence of
Article 2.4.2, thereby acting inconsistently with this second sentence as well as Article 2.4
of the Anti-Dumping Agreement.
7.8. In addition, Canada claims that as a consequence of violations under the second sentence of
Article 2.4.2 and Article 2.4 in the underlying investigation , the USDOC also acted inconsistently
with Articles 1 and 2.1 of the Anti -Dumping Agreement as well as Articles VI:1 and VI :2 of the
GATT 1994.27
7.9. We recall that the panel and the Appellate Body in US – Washing Machines examined similar
sets of claims under the second sentence of Articles 2.4.2 and 2.4 brought by Korea against the
United States. The panel and the Appellate Body upheld Korea's claims in that dispute and found
that:
a. the DPM is, as such, inconsistent with Article 2.4.2 of the Anti -Dumping Agreement
because it fails to find "a pattern" consistent with the pattern clause28; and
b. Articles 2.4.2 and 2.4 of the Anti -Dumping Agreement do not permit zeroing under the
W-T methodology.29
7.10. Canada relies on the findings of the Appellate Body in presenting its arguments, and asks us
to reach the same conclusions that the Appellate Body did with respect to these two sets of claims.30
The United States argues that the Appellate Body's findings in US – Washing Machines were
incorrect, and asks us to not follow them.31 We will first examine Canada's claims under the second
sentence of Article 2.4.2 of the Anti-Dumping Agreement, followed by its claim under Article 2.4 of
the Anti -Dumping Agreement and the consequential claims under Articles 1 and 2.1 of the
Anti-Dumping Agreement as well as Articles VI:1 and VI:2 of the GATT 1994.
7.2.1 Second sentence of Article 2.4.2 of the Anti-Dumping Agreement
7.2.1.1 Provision at issue
7.11. Article 2 of the Anti -Dumping Agreement is titled "Determination of Dumping". Article 2.4.2
of the Anti-Dumping Agreement sets out the methodologies to determine the "margins of dumping"
while Article 2.1 of the Anti -Dumping Agreement as well as Article VI:1 of the GATT 1994 define
dumping.
7.12. Article 2.4.2 of the Anti-Dumping Agreement states:
Subject to the provisions governing fair comparison in paragraph 4, the existence of
margins of dumping during the investigation phase shall normally be established on the
basis of a comparison of a weighted average normal value with a weighted average of
prices of all comparable export transactions or by a comparison of normal value and
export prices on a transaction -to-transaction basis. A normal value established on a
weighted average basis may be compared to prices of individual export transactions if
the authorities find a pattern of export prices which differ significantly among different
purchasers, regions or time periods, and if an explanation is provided as to why

27 See para. 3.1(c) above.
28 Panel Report, US – Washing Machines, para. 8.1(a)(ix); Appellate Body Report, US – Washing
Machines, para. 6.3. One distinction between Canada's and Korea's claims is that in this dispute Canada makes
"as applied", and not "as such", claims challenging the use of the DPM in the underlying investigation.
(Canada's response to Panel question after the first meeting of the Panel No. 6, para. 17).
29 Panel Report, US – Washing Machines, paras. 8.1(a)(xii), 8.1(a) (xiii), 8.1(a)(xiv), and 8.1(a)(xv);
Appellate Body Report, US – Washing Machines, paras. 6.9-6.10. The panel in US –
Anti-Dumping Methodologies (China) also found that the second sentence of Article 2.4.2 does not permit the
use of zeroing under the W-T methodology. (Panel Report, US – Anti-Dumping Methodologies (China),
para. 7.220).
30 Canada's first written submission, para. 3.
31 See, e.g. United States' first written submission, paras. 10, 36-37, 69-73, 82-83, and 86-87.

such differences cannot be taken int o account appropriately by the use of a weighted
average-to-weighted average or transaction-to-transaction comparison.
7.13. Article 2.4.2 sets out three different methodologies to determine the margin s of dumping
(dumping margin32) of a foreign producer or exporter. The first sentence of Article 2.4.2 sets out the
two methodologies that are normally used to determine such a margin. The first methodology, which
we refer to as the W -W methodology, requires "a comparison of a weighted average normal value
with a weighted average of prices of all comparable export transactions". The second methodology
requires "a comparison of normal value and export prices on a transaction-to-transaction basis". We
refer to it as the T-T methodology.
7.14. The second sentence of Article 2.4.2 sets out the third methodology to determine the dumping
margin. It states that "[a] normal value established on a weighted average basis may be compared
to prices of individual export transactions" if the following two conditions are met by the investigating
authority:
a. it finds "a pattern of export prices which differ significantly among different purchasers,
regions or time periods" (we refer to this part of the second sentence of Article 2.4.2 as
the pattern clause); and
b. it explains why "such differences cannot be taken into account appropriately by the use of
a [W-W or T-T] comparison" (we refer to this part of the second sentence of Article 2.4.2
as the explanation clause).
7.15. The W-T methodology is considered an exception because its use is permitted only when these
two conditions are met. 33 The function of the second sentence is to identify and unmask dumping
targeted to certain purchasers, to certain regions, or in certain time periods.34
7.16. Irrespective of whether the dumpi ng margin is determined under the first sentence or
pursuant to the second sentence of Article 2.4.2, it must be determined consistent with the definition
of "dumping" set out in Article 2.1 of the Anti-Dumping Agreement35, which states36:
For the purpose of this Agreement, a product is to be considered as being dumped, i.e.
introduced into the commer ce of another country at less than its normal value, if the
export price of the product exported from one country to another is less than the
comparable price, in the ordinary course of trade, for the like product when destined for
consumption in the exporting country.
7.17. Article VI:1 of the GATT 1994 defines dumping in a similar manner, recognizing that dumping
occurs when a product is introduced into the commerce of another country at less than the normal
value. The Appellate Body has consistently held, relying in part on Article 2.1 of the Anti-Dumping
Agreement and Article VI:1 of the GATT 1994 as context, that dumping and margins of dumping
must be determined for the product as a whole.37
7.18. What this means is that if in applying the W-W methodology, an investigating authority divides
the product into multiple models, and calculates a model -specific weighted average normal value
and a model-specific weighted average export price for each model, the "margins of dumping" are
not the results of those multiple model -specific comparisons in which the model -specific normal

32 An investigating authority is required to find a single overall dumping margin for a foreign producer or
exporter. (Appellate Body Report, US – Continued Zeroing, para. 283).
33 See e.g. Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 97.
34 Appellate Body Reports, EC – Bed Linen, para. 62; US – Washing Machines, para. 5.17.
35 Appellate Body Reports, US – Softwood Lumber V (Article 21.5 – Canada), para. 92; US – Softwood
36 By virtue of the opening phrase of Article 2.1 ("[f]or the purpose of this Agreement"), the definition of
dumping applies throughout the Anti-Dumping Agreement.
37 See e.g. Appellate Body Reports, US – Softwood Lumber V, paras. 93-96; EC – Bed Linen, para. 53;
and US – Zeroing (EC), para. 126. The Appellate Body in US – Washing Machines recognized that a dumping
margin determined pursuant to the second sentence of Article 2.4.2 must be a margin for the product as a
whole. But it took the view that a dumping margin for the product as a whole is determined differently under
this second sentence. (Appellate Body Report, US – Washing Machines, para. 5.104).

value exceed the model -specific export price.38 Dumping and "margins of dumping" only exist for
the product as a whole, and not for types, models, or categories of the product. 39 Therefore, an
investigating authority can establish the dumping margin for the product as a whole only by
aggregating all intermediate values generated on the basis of such model -specific comparison
results.40 The Appellate Body has stated in this regard that there is no textual basis under
Article 2.4.2 to justify taking into account only some multiple comparison results (i.e. those results
that are positive because the model -specific weighted average export price is lower than the
model-specific weighted average normal value) to determine the dumping margin for the product as
a whole. 41 If an investigating authority disregards, by treating as zero, those model -specific
comparison results that are negative because the model -specific weighted average export price is
higher than the model-specific weighted average normal value, it would fail to take into account the
prices of "all" comparable export transactions, as is required under the W-W methodology described
in the first sentence of Article 2.4.2.42 It would also fail to determine the dumping margin for the
product as a whole.
7.19. If an investigating authority applies the T -T methodology, the transaction -specific
comparisons where the transaction -specific contemporaneous normal value exceed the
transaction-specific export price are not the "margins of dumping" referred in Article 2.4.2.43
Instead, an investigating authority can establish the dumping margin for the product as a whole only
by aggregating all comparison results irrespective of whether the transaction-specific export price is
higher or lower than the transaction -specific contemporaneous normal value.44 In particular, when
aggregating such results, an investigating authority is not permitted to disregard, by treating as
zero, those comparison res ults that are negative because the transaction -specific export price is
higher than the transaction -specific contemporaneous normal value. 45 In reaching this conclusion,
the Appellate Body found the reference to "export prices" in the plural in the first se ntence of
Article 2.4.2, without further qualification, to suggest that all of the results of the transaction-specific
comparisons generated under the T -T methodology need to be aggregated to determine the
dumping margin. 46 It took the view that zeroing alt ers the real values of certain export
transactions.47 Further, it relied on contextual considerations, noting that the two
"normal" methodologies provided in the first sentence, i.e. the W-W and T-T methodologies fulfil the
same function. 48 Thus, according t o the Appellate Body it would be illogical to interpret the
T-T methodology in a manner that would lead to results that are systemically different from those
obtained under the W -W methodology, which would be the case if zeroing is permitted under the
T-T methodology (while it is precluded under the W -W methodology).49 Thus, as reflected in the

38 See e.g. Appellate Body Report, US – Softwood Lumber V, para. 97.
39 Appellate Body Report, US – Softwood Lumber V, paras. 93 and 96.
40 Appellate Body Report, US – Softwood Lumber V, para. 97.
41 Appellate Body Report, US – Softwood Lumber V, para. 98.
42 Appellate Body Report, EC – Bed Linen, para. 55.
43 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 94.
44 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), paras. 87 and 94. The
Appellate Body found the reference to "export prices" in the plural in the first sentence to suggest that the
comparison under the T-T methodology will generally involve multiple export transactions, and the reference to
"a comparison" in the singular to suggest that this methodology requires an overall calculation exercise
involving aggregation of those multiple transactions.
45 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 88.
46 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 88.
47 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 88.
48 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 93.
49 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 93. The
Appellate Body noted that while the W-W methodology, as described in the first sentence of Article 2.4.2,
requires a comparison based on a weighted average of prices of "all" comparable export transactions, the first
sentence does not use similar terms while describing the T-T methodology. However, the Appellate Body took
the view that the phrase "all comparable export transactions" is used while describing the W-W methodology
because under this methodology if an investigating authority makes comparisons based on groups or models, it
must include in each group only those export transactions that are comparable, but must include all
comparable export transactions corresponding to the group. Such a scenario does not arise under the
T-T methodology, and thus the phrase "all comparable export transactions" is not pertinent in the context of
the T-T methodology. Thus, it concluded that no inference could be drawn from the absence of this phrase in
the description of the T-T methodology in the first sentence of Article 2.4.2. (Appellate Body Report, US –
Softwood Lumber V (Article 21.5 – Canada), para. 91).

findings in numerous panel and Appellate Body reports , zeroing is prohibited under the W -W and
T-T methodologies.
7.20. Like under the T-T methodology, the application of the W-T methodology may yield multiple
comparison results. How exactly these comparison results must be aggregated under the
W-T methodology is a subject of dispute in this case, and thus separately discussed as part of our
legal analysis below.
7.2.1.2 Factual overview
7.2.1.2.1 The USDOC's evaluation of the conditions for the use of the W -T methodology
in the underlying investigation
7.21. Following the requirements under US law in the underlying investigation, the USDOC
determined the dumping margin of the Canadi an producers using the W -T methodology when it
found "a pattern of export prices that differ [ed] significantly" and explained why the
W-W methodology could not account for such differences.50 The USDOC used the DPM to meet these
requirements.
7.2.1.2.1.1 DPM
7.22. In the first stage of the DPM, the USDOC examined whether the export sales of an investigated
producer or export er showed a pattern of export prices that differed significantly among different
purchasers, regions and time periods. 51 In the second stage of the DPM, th e USDOC examined
whether it could appropriately account for such differences using only the W-W methodology.52 When
it explained that it could not account for such differences using only the W -W methodology, it
considered it appropriate to use the W-T methodology.53
7.23. To meet the pattern requirements in the first stage of the DPM, the USDOC used what it
referred as the Cohen's d test and the ratio test. It used the Cohen's d test to examine whether the
investigated producer's or exporter's prices of merchandise to a distinct purchaser, region or time
period differed significantly from the prices of its comparable merchandise to all other purchasers,
regions or time periods respectively.54 The purpose of the Cohen's d test was not to evaluate whether
a pattern existed. 55 Instead, the USDOC discerned the pattern under the ratio test based on the
extent of the prices that differed significantly.56

50 USDOC, Issues and decision memorandum dated 1 November 2017 for the final affirmative
determination of sales at less than fair value and affirmative final determination of critical circumstances of
certain softwood lumber products from Canada (Final issues and decision memorandum), (Exhibit CAN-1),
p. 55.
51 USDOC, Decision memorandum dated 23 June 2017 for the preliminary determination in the
antidumping duty investigation of certain softwood lumber products from Canada (Preliminary issues and
decision memorandum), (Exhibit CAN-3), p. 14; United States' response to Panel question after the first
meeting of the Panel No. 8(b), para. 30.
52 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 14.
53 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 15. To examine whether the
W-W methodology could appropriately take into account such differences, the USDOC examined the difference
between a dumping margin calculated under the W-W methodology (without zeroing) and a dumping margin
calculated under the appropriate alternative methodology (described in paragraph 7.28 below), based on the
results of the Cohen's d test and the ratio test. (Ibid. p. 14). The USDOC used zeroing under the
W-T methodology when calculating the margin under the appropriate alternative methodology. When it found a
meaningful difference between these two dumping margins it explained that the differences in prices could not
be taken into account appropriately under the W-W methodology. Such a meaningful difference arose
when (a) there was a 25% relative change in the dumping margin obtained under the W-W methodology and
the dumping margin obtained under the appropriate alternative methodology, provided the dumping margins
obtained under both methodologies were above de minimis; or (b) when the dumping margin under the
W-W methodology was de minimis but under the appropriate alternative methodology was above de minimis.
(Ibid. p. 15).
54 Final issues and decision memorandum, (Exhibit CAN-1), p. 58.
55 Final issues and decision memorandum, (Exhibit CAN-1), p. 58; United States' response to Panel
question after the second meeting of the Panel No. 8(b), para. 30.
56 Final issues and decision memorandum, (Exhibit CAN-1), p. 58.

7.24. Under the Cohen 's d test, the USDOC comp ared the weighted average price to a specific
purchaser (or specific region, or specific time period) with the weighted average price to all other
purchasers (or all other regions, or all other time periods). This test was done on a model-by-model
basis.57 To illustrate, let us assume that Foreign Producer Z exports the product under investigation
to four US purchasers, which are Purchasers A, B, C, and D. The USDOC would apply the
Cohen's d test with respect to each of these four purchasers on a model basis . Thus, the USDOC
would calculate the weighted average price (mean price) of all export transactions with respect to a
particular model (CONNUM 58) to Purchaser A. 59 This was the test grou p. The USDOC would also
calculate a weighted average price of all export transactions other than those made to Purchaser A
with respect to that particular model.60 This was the comparison group.
7.25. The USDOC used the Cohen's d coefficient to consider whether the difference in the weighted
average prices to the test group and the comparison group was significant.61 In particular, to assess
the magnitude of this difference, the USDOC calculated a Cohen 's d coefficient using the following
formula62:
d=
(weighted average export price) test
group
- (weighted average export price)comparison
group
√
(variance) test
group
- (variance)comparison
group
2

7.26. When the Cohen's d coefficient based on this formula was 0.8 or above, the USDOC found a
significant difference in the weighted average export price to the test group and that to the
comparison gro up.63 The USDOC found such a significant difference irrespective of whether the
weighted average price to the test group was significantly higher or significantly lower than that to
the comparison group.64 Thus, in our illustration above, irrespective of whether the weighted average
price to Purchaser A in the test group met the 0.8 threshold because it was significantly higher or
significantly lower tha n the weighted average price in the comparison group, the export prices to
Purchaser A in the test group wo uld pass the Cohen's d test. This exercise would be repeated for
Purchasers B, C, and D. This exercise would also be repeated for different regions, and for different
time periods.65
7.27. The export transactions of purchasers, regions and time periods that passe d the
Cohen's d test were set aside for separate consideration under the ratio test.66 Under the ratio test,
the USDOC aggregated the export transactions to purchasers, regions and time periods that passed
the Cohen's d test to identify a single pattern.67
7.28. When the aggregate value of the export transactions to purchasers, regions and time periods
that passed the Cohen 's d test accounted for 66% or more of the value of all export transactions,
the USDOC considered applying the W -T methodology to all export tra nsactions.68 When the
aggregate value of the export transactions to purchasers, regions and time periods that passed the

57 Canada's first written submission, para. 14; United States' first written submission, paras. 56-57.
58 The USDOC uses the nomenclature CONNUM or control numbers to refer to different models of the
product under investigation.
59 United States' first written submission, paras. 57-58; Canada's first written submission, para. 16.
60 Canada's first written submission, para. 16; United States' first written submission, para. 57.
61 Final issues and decision memorandum, (Exhibit CAN-1), p. 55.
62 United States' first written submission, para. 58.
63 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 14.
64 Canada's first written submission, paras. 17-18; United States' first written submission, para. 68.
65 See, e.g. United States' first written submission, paras. 56-57. The USDOC would define time periods
by quarter, i.e. three-month periods.
66 In applying the Cohen's d test, the USDOC compared the export sales on a CONNUM basis for each
purchaser, region and time period. If, for instance a particular CONNUM-specific export transaction did not pass
the Cohen's d test for a given purchaser, that CONNUM-specific transaction was not included in the ratio test.
(United States' response to Panel question after the second meeting of the Panel No. 1, paras. 1-2).
67 In aggregating the results of the Cohen's d test, the USDOC did not double count export sales that
passed the Cohen's d test for more than one category, i.e. by purchaser, region or time period. For example, if
an export sale passed the Cohen's d test by purchaser and region, then the USDOC only counted the export
sale once while aggregating the results of the Cohen's d test. (United States' response to Panel question after
the first meeting of the Panel No. 1(b), para. 3).
68 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 14.

Cohen's d test accounted for more than 33% but less than 66% of the value of all export
transactions, the USDOC considered applying the W-T methodology to those export transactions
that passed the Cohen's d test and the W-W methodology to those export transactions that did not
pass the Cohen 's d test.69 When the aggregate value of the export transactions to purchasers,
regions and time periods that passed the Cohen 's d test accounted for 33% or less of the value of
all export transactions, the USDOC applied the W-W methodology to all export transactions.70
7.29. Having met the pattern requirement through the Cohen's d test and the ratio test, the USDOC
considered whether the W -W methodology could take into account appropriately the differences
identified under the Cohen 's d test. When it explained that it could not, the USDOC applied the
W-T methodology to determine the dumping margin of the concerned foreign producer or exporter.
7.2.1.2.1.2 DPM's application in the underlying investigation
7.30. In the underlying investigation, the USDOC found that 73.56%, 72.69%, and 80.83% of
Resolute's, Tolko's, and West Fraser's export transactions respectively passed the Cohen's d test.71
These export transactions included sales to purchasers, regions and time periods that passed the
Cohen's d test because they were found to be significantly higher than export prices to other
purchasers, regions or time periods , as well as prices that passed the Cohen 's d test because they
were found to be significantly lower than export prices to other purchasers, regions or time periods.72
These export transactions of Resolute, Tolko, and West Fraser also included transactions to multiple
purchasers, regions and time periods.73
7.31. Thus, as the United States confirms, in the underlying investigation the USDOC found "a single
pattern" of export prices "which differ[ed] significantly among different purchasers, regions and time
periods".74 The pattern included export prices to purchasers, regions and time periods that differed
significantly because they were significantly lower than other prices, as well as those that differed
significantly because they were significantly higher than other prices.75
7.2.1.2.2 The USDOC 's application of the W -T methodology in the underlying
investigation
7.32. The export transactions of Resolute, Tolko, and West Fraser that passed the Cohen 's d test
represented 66% or more of the respective value of all export transactions made by these three
Canadian producers. Thus, after explaining why the W-W methodology could not take into account
appropriately the identified differences in prices, following the DPM requirements the USDOC applied
the W-T methodology to all export transactions of each of these producers.
7.33. In comparing the weighted average normal value with the pr ice of an individual export
transaction under the W -T methodology, the USDOC disregarded, by treating as zero, those
comparison results that were negative because the price of the individual export transaction in
question was higher than the relevant weigh ted average normal value. 76 The USDOC determined
the dumping margin by aggregating the positive comparison results, i.e. those comparison results
that were positive because the price of the individual export transaction was lower than the relevant

69 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 14.
70 Preliminary issues and decision memorandum, (Exhibit CAN-3), p. 14.
71 United States' first written submission, para. 64; Canada's first written submission, para. 23.
72 United States' response to Panel question after the first meeting of the Panel No. 1(a), para. 1.
73 United States' response to Panel question after the first meeting of the Panel No. 1(b), para. 2.
74 United States' response to Panel question after the first meeting of the Panel No. 8(b), para. 30
(emphasis added). See also Canada's response to Panel question after the first meeting of the Panel No. 1(b),
para. 3.
75 United States' response to Panel question after the first meeting of the Panel No. 1(a), para. 1;
Canada's response to Panel question after the first meeting of the Panel No. 1(a), paras. 1-2; and
Canada's first written submission, para. 17.
76 United States' response to Panel question after the first meeting of the Panel No. 3(b), paras. 18-20.
The USDOC used multiple averaging in the underlying investigation, meaning that the USDOC divided the
product under consideration into different models or CONNUMs, and calculated a weighted average normal
value for each CONNUM. It compared the weighted average normal value in the comparison market with
US prices, and then aggregated the comparison results. (United States' response to Panel question after the
first meeting of the Panel No. 3(a), para. 17).

weighted average normal value.77 The dumping margin was expressed as a percentage of the total
value of all US prices for each exporter.78 Thus, the USDOC used zeroing under the W-T methodology
in the underlying investigation.
7.2.1.3 Evaluation
7.34. We will first review Canada 's claims under the second sentence of Article 2.4.2 concerning
the USDOC's alleged failure to identify a pattern consistent with the pattern clause, and then turn
to its claim on the use of zeroing under the W -T methodology. In making our findings with respect
to these claims, we recall that Article 11 of the DSU obliges us to "make an objective assessment of
the matter before [us], including an objective assessment of the facts of the case and the
applicability of and conformity with the relevant covered agreements". Consistent with this
obligation, as well as with Article 3.2 of the DSU and Article 17.6(ii) of the Anti-Dumping Agreement,
we have set out in the sections below our interpretation of the second sentence of Article 2.4.2 of
the Anti-Dumping Agreement. We have then examined whether Canada has established that the
USDOC acted inconsistently with the second sentence of Article 2.4.2, as we have interpreted it. In
interpreting this provision, we have taken into account the legal interpretations developed in the
reports of WTO panels and the Appellate Body, including those set out in the panel and
Appellate Body reports in US – Washing Machines.
7.35. We have found our understanding of the text of the second sentence of Article 2.4.2 in this
regard to be consistent with certain aspects of the panel's and Appellate Body's interpretation of this
sentence in US – Washing Machines. However, as noted below, we have found our understanding of
this text to differ from certain aspects of the panel's and the Appellate Body's interpretation in US –
Washing Machines. For the reasons set out in our report, we respectfully disagree with those aspects
of the Appellate Body's and the panel's interpretation in US – Washing Machines.79
7.2.1.3.1 Identification of pattern under the second sentence of Article 2.4.2 of the
Anti-Dumping Agreement
7.36. The parties agree, as stated in paragraph 7.31 above, that in the underlying investigation:
a. the USDOC found "a single pattern" of export prices "which d iffered significantly among
different purchasers, regions and time periods"; and
b. this pattern included export prices to purchasers, regions or time periods that differed
significantly because they were significantly higher than export prices to other purchasers,
regions or time periods.
7.37. The parties disagree, however, on whether, as a matter of law, the pattern clause permits an
investigating authority to find such a "pattern". Canada asks us to follow the Appellate Body's finding
in US – Washing Machines that the pattern clause does not permit an investigating authority to find
a "pattern" of the type set out in paragraph 7.36 above. The United States considers the
Appellate Body's findings to be incompatible with the text of the second sentence of Article 2.4.2,
and thus asks us to not follow these findings . We commence our analysis by examining the text of
the pattern clause.
7.38. To comply with the pattern clause, an investigating authority must find:
a. a pattern;
b. of export prices which differ significantly among different purchasers, regions or time
periods.

77 United States' response to Panel question after the first meeting of the Panel No. 3(b), paras. 18-20.
78 United States' response to Panel question after the first meeting of the Panel No. 3(a), para. 17.
79 See para. 7.107 below. We also disagree for the same reason with the panel and the Appellate Body
in US – Anti-Dumping Methodologies (China) to the extent the findings of the panel and the Appellate Body
differ from the legal interpretation set out in this Report.

7.39. "Pattern" is defined as "a regular and intelligible form or sequence discernible in certain
actions or situations". 80 Thus, if the export prices do not form "a regular and intelligible form or
sequence discernible in certain actions or situations", they do not form "a pattern" consistent with
the pattern clause. The pattern clause also specifies what type of pattern an investigating authority
must find because it refers to a pattern " of export prices which differ significantly among different
purchasers, regions or time periods". Thus, export prices which do not differ, or do not differ
significantly, among different purchasers, regions or time periods , also do not form "a pattern"
consistent with the pattern clause.
7.40. Further, the use of the singular form in the pattern clause ("a pattern") does not necessarily
suggest that an investigating authority cannot find more than one pattern. If the text had used the
plural form "patterns", an investigating authority may have been required to find more than one
type of pattern to meet the pattern clause requirements.81 But that is not the case. Thus, while the
use of "a pattern" suggests that an investigating authority may comply with the pattern clause by
identifying only one type of pattern, it on its face does not preclude an investigating authority from
finding more than one type of pattern.
7.41. With these considerations in mind, we turn to examine whether the pattern clause permits an
investigating authority to find a pattern of the type set out in paragraph 7.36 above.
7.2.1.3.1.1 Whether export price variations across purchasers, regions and time periods
may be aggregated to find a single pattern of export prices which differ significantly
among different purchasers, regions and time periods
7.42. The issue before us is w hether the pattern clause permits an investigating authority to
aggregate export price variations across purchasers, regions and time periods to find a single pattern
of export prices which differ significantly among different purchasers, regions and time periods. The
Appellate Body and the panel in US – Washing Machines concluded that it does not. Canada relies
on these findings of the Appellate Body to contend that in the underlying investigation the USDOC
failed to find a pattern among different purchasers, regions or time periods because it aggregated
differences in prices across three unrelated categories, i.e. purchasers, regions and time periods.82
The United States disagrees with Canada's arguments.
7.43. We note that an investigating authority must identify a pattern of "export prices which differ
significantly among different purchasers, regions or time periods". The preposition "among" may be
defined, inter alia , as "in relation to the rest of the group [it belongs to]" 83 or " esp. of things
distinguished in kind from the rest of the group" .84 These definitions suggest, as the United States
acknowledges, a relationship between one thing, i.e. purchasers, regions or time periods and other
things of the same type, i.e. other purchasers, regions or time periods.85 Thus, as the United States
also acknowledges, the use of "among" in the pattern clause shows that an investigating authority
may not compare prices between purchasers and regions because these two categories are not of
the same type. 86 Instead, the comparisons must be made between e xport prices to different
purchasers, or different regions, or different time periods, i.e. with respect to categories of the same
type.87

80 The parties agree on this definition. (Canada's first written submission, para. 38; United States' first
written submission, para. 44).
81 See e.g. Panel Report, US – Washing Machines, para. 7.143. The panel considered that the use of the
singular form may simply indicate that a finding of a pattern with respect to any of the three categories set out
in the pattern clause could potentially be a sufficient basis to apply the W-T methodology.
82 Canada's first written submission, paras. 34 and 41-42.
83 Panel Report, US – Washing Machines, para. 7.142 (quoting McMillan Dictionary online, definition of
"among"); Appellate Body Report, US – Washing Machines, para. 5.31. (emphasis omitted)
84 Oxford Dictionaries online, definition of "among"
http://www.oed.com/view/Entry/6524?redirectedFrom=among#eid (accessed 20 March 2019). See also
United States' first written submission, para. 46.
85 The United States appears to agree with this understanding based on the word "among".
(United States' first written submission, para. 46).
86 United States' response to Panel question after the first meeting of the Panel No. 7, para. 24.
87 See, e.g. United States' response to Panel question after the first meeting of the Panel No. 7,
para. 24.

7.44. However, the United States contends that such comparisons do not in and of themselves
identify "a pattern". 88 Instead, in the United States' view, to identify a pattern among different
purchasers, regions or time periods for the foreign producer or exporter, and the product as a whole,
an investigating authority needs to examine the producer's or exporter's sales holistically, and in the
aggregate.89 The United States submits that the USDOC aggregated the differences in export prices
identified under the Cohen 's d test to determine the extent of those differences and consider the
producer's overall pricing behaviour in the US market for the product as a whole.90 The United States
asserts that nothing in the text of the pattern clause suggests that significant differences among
each category, i.e. purchasers, regions or time periods , cannot be considered together when
assessing whether there exists "a pattern of export prices which differ significantly 'among different
purchasers, regions or time periods'".91 According to the United States, the text of the pattern clause
on its face contemplates a pattern of export prices that tr anscends multiple purchasers, regions or
time periods, noting that if the pattern clause prohibited the identification of such a single pattern,
instead of using the preposition "among" only once, it would have used this preposition three times
(as in among purchasers, or among regions, or among time periods).92 We, however, disagree with
the United States' arguments.
7.45. Nothing in the pattern clause suggests that having identified significant differences in export
prices among different purchasers, or differen t regions, or different time periods, an investigating
authority is permitted to aggregate those differences to find one single pattern. Instead, we agree
with the Appellate Body in US – Washing Machines that a single "pattern" which comprises prices
found to be significantly different from other prices across different categories would effectively be
composed of prices that do not form a regular and intelligible sequence.93 The use of the conjunction
"or" in the specific context of the pattern clause, that is along with the use of the words "among"
and "pattern " confirms that the identified pattern must be one of export prices which differ
significantly among categories of the same type, i.e. different pur chasers, different regions, or
different time periods. We also disagree with the United States' argument that if the pattern clause
prohibited the identification of a single pattern that aggregates differences in export prices across
categories, it would have used the preposition "among" thrice. Instead, we, like the Appellate Body
in US – Washing Machines, consider that the use of "among" thrice in the pattern clause would have
been superfluous because it would have conveyed the same meaning as the existing text.94
7.46. Further, nothing in the pattern clause precludes an investigating authority from considering
the extent of the price differences identified under the pattern clause . One would also expect an
investigating authority to look at the overall pricing behaviour of a foreign producer or exporter to
identify a pattern. But we do not consider that it is necessary for an investigating authority to, as
the United States contends, aggregate the identified price differences across different categories to
address those considerations.
7.47. In particular, as noted above, the pattern clause does not preclude an investigating authority
from finding more than one pattern. Thus, having examined the totality of an exporter 's or
producer's export sales by purchaser, by region, and by time period, an investigating authority could
find, consistent with the pattern clause, a pattern of export prices which differ significantly among
different purchasers, a pattern of export prices which differ significantly among different regio ns,
and a pattern of export prices which differ significantly among different time periods. The
investigating authority is free to examine the extent of the price differences represented across the
identified patterns.
7.48. Our interpretation is consistent with that of the Appellate Body in US – Washing Machines.
The Appellate Body noted that its interpretation of the pattern clause did not exclude the possibility
that a foreign producer or exporter could be practising more than one type of targeted dumping
(that is dumping targeted to purchasers, regions and time periods), or that an investigating authority
could find more than one type of pattern.95 However, like us, the Appellate Body found that the text

88 United States' response to Panel question after the first meeting of the Panel No. 8(b), para. 28.
89 United States' response to Panel question after the first meeting of the Panel No. 8(b), para. 28.
90 United States' response to Panel question after the first meeting of the Panel No. 7, para. 26.
91 United States' first written submission, para. 79. (emphasis omitted)
92 United States' first written submission, paras. 79 and 87.
93 Appellate Body Report, US – Washing Machines, para. 5.32.
94 Appellate Body Report, US – Washing Machines, para. 5.34.
95 Appellate Body Report, US – Washing Machines, para. 5.35.

of the pattern clause did not support the United States' view that an investigating authority could
find a single pattern of export prices, which includes variations in export prices across purch asers,
regions and time periods. Therefore, we conclude that the pattern clause does not permit an
investigating authority to find a single pattern that aggregates differences in export prices across
purchasers, regions and time periods.
Conclusion
7.49. Based on the foregoing, we find that the USDOC acted inconsistently with the second sentence
of Article 2.4.2 in the underlying investigation because in applying the DPM , and specifically under
the ratio test, it aggregated differences in export prices across unrelated categories, i.e. purchasers,
regions and time periods to identify a single pattern of export prices which differed significantly
among different purchasers, regions and time periods.
7.2.1.3.1.2 Whether a pattern can include export prices to purchasers, regions or time
periods that differ significantly because they are significantly higher relative to export
prices to other purchasers, regions or time periods
7.50. We recall that a foreign producer or exporter 's prices to a US purchaser pass the
Cohen's d test when the weighted average price to that purchaser is found to differ significantly from
the weighted average export price to all other purchasers (same with regions and time periods).
Otherwise, those prices fail the Cohen's d test. But the weighted average export price to a specific
purchaser (or a specific region, or a specific time period) that passes the Cohen's d test, may differ
significantly because this price is significantly lower, or significantly higher , than the weighted
average price to all other purchasers (or all other regions, or all other time periods).
7.51. Noting that in applying the Cohen's d test in the underlying investigation the USDOC identified
both higher-priced and lower-priced export sales to purchasers, regions or time periods as part of
the purported pattern 96, Canada asserts that export prices which differ significantly because they
are significantly higher, as opposed to significantly lower, cannot form part of the pattern. Canada
finds support for its view in the Appellate Body report in US – Washing Machines , where the
Appellate Body concluded that the pattern must be limited to the export transactions to those
purchasers, regions or time periods whose prices are found to differ significantly because they are
significantly lower than export prices to other purchasers, regions or time periods.97 Canada submits
that this interpretation of the Appellate Body gives meaning to the word "pattern". 98 Further,
considering the Anti-Dumping Agreement is focused on sales below normal value, and the second
sentence of Article 2.4.2 is meant to address targeted dumping, an investigating authority must find
a pattern of lower-priced, not higher-priced export sales.99
7.52. The United States disagrees with Canada's arguments as well as the Appellate Body's findings
in US – Washing Machines on which these arguments are based. Noting that as part of the pattern
requirements, the DPM, and specifically the Cohen 's d test, looks for export prices to a purchaser,
region or time period that are either significantly higher or significantly lower than export prices to
other purchasers, regions or time periods , the United States asserts that the pattern clause does
not require or foreclose a focus either on lower -priced or higher-priced sales.100 Instead, a pattern
of export prices which "differ significantly" would necessarily include in the United States' view both
lower-priced and higher-priced export sales that differ significantly from each other.101
7.53. However, while observing that the Cohen 's d test looks for export prices that are either
significantly higher or significantly lower, the United States asserts that the relevant pattern is not
limited to export transactions to those purchasers, regions or time periods that pass the
Cohen's d test. Instead, the pattern could comprise the export transactions to purchasers, regions
or time periods that pass the Cohen's d test as well as those that fail the Cohen's d test, which, we

96 Canada's first written submission, para. 40.
97 Canada's first written submission, para. 35 (referring to Appellate Body Report, US – Washing
Machines, paras. 5.39-5.43); Appellate Body Report, US – Washing Machines, para. 5.29.
98 Canada's response to Panel question after the first meeting of the Panel No. 10, para. 20.
99 Canada's opening statement at the first meeting of the Panel, para. 20.
100 United States' first written submission, para. 68.
101 United States' first written submission, para. 70.

note, effectively means that the pattern could comprise all export transactions of the investigated
producer or exporter. 102 The United States justifies this view by observing that under the
Cohen's d test, the USDOC makes intermediate comparisons by comparing the export prices to each
purchaser with that to all other purchasers (same with regions and time periods) . For example, if
the foreign producer or exporter has three US purchasers, A, B, and C, the USDOC would compare
the weighted average export price to Purchaser A with the weig hted average export price to
Purchasers B and C; the weighted average export price to Purchaser B with the weighted average
export price to Purchasers C and A; and the weighted average export price to Purchaser C with the
weighted average export price to Purchasers A and B. The United States contends that if the
weighted average export price to Purchaser A is significantly lower than the weighted average export
price to the other purchasers, "logically" the weighted average export price to the other purchasers,
here, Purchasers B and C, would be significantly higher.103 Thus, per the United States, the pattern
of export prices which differ significantly would comprise export transactions to Purchasers A and C
as well as B.104
7.54. Canada challenges the USDOC's decision to identify as part of the pattern those export prices
to a specific purchaser, region or time period that passed the Cohen 's d test because they were
significantly higher (as opposed to just significantly lower) relative to export prices to othe r
purchasers, regions or time periods. Thus, the issue that we must resolve is whether "a pattern of
export prices which differ significantly" could include export prices to purchasers, regions or time
periods which differ significantly because they are si gnificantly higher relative to export prices to
other purchasers, regions or time periods. Our interpretation of the pattern clause suggests that it
could.
7.55. Interpreting the pattern clause taking into account the function of the second sentence of
Article 2.4.2 suggests that the focus of the pattern is on export prices which "differ significantly" and
thus not on all export prices. 105 However, the pattern clause does not further qualify the export
prices which "differ significantly" by requiring that they dif fer only because they are significantly
lower, not significantly higher, relative to export prices to other purchasers, regions or time periods.
Thus, the pattern clause is silent on this matter.
7.56. We recognize that th is silence of the text is not dispositive. 106 Indeed, even assuming the
phrase "export prices which differ significantly" could, in principle, cover export prices to purchasers,
regions or time periods that are significantly lower as well as significantly higher, these export prices
must collectively form a regular and intelligible sequence that is discernible in certain actions and is
capable of being understood (i.e. they form "a pattern"). We recall that the panel in US – Washing
Machines concluded, relying on the definition of pattern as a regular and intelligible form or
sequence, that prices that are too high and prices that are too low do not belong in the same
pattern.107 The Appellate Body upheld this finding of the panel, while additionally noting that a
pattern cannot comprise export prices that differ significantly because they are significantly
higher.108 However, our interpretation of the text leads us to a different conclusion than that reached
by the panel and the Appellate Body in US – Washing Machines.
7.57. To us, the silence of the text on whether the export prices that differ significantly must do so
because they are significantly lower or significantly higher is explained by the function of the second
sentence of Article 2.4.2, which is to unmask dumpi ng targeted to certain purchasers, regions or

102 See e.g. United States' response to Panel question after the first meeting of the Panel No. 8(b),
para. 30. Export transactions that pass the Cohen's d test, and those that fail the Cohen's d test, would make
up the entire universe of export transactions of a foreign producer or exporter.
103 United States' response to Panel question after the first meeting of the Panel No. 8(a), para. 27.
104 If there are multiple export transactions to a purchaser that makes up the test group, the USDOC
would calculate a single weighted average price to that purchaser. If there are multiple export transactions to
the purchasers that make up the comparison group, the USDOC would calculate a single weighted average
price to all these purchasers. Under the Cohen's d test, the USDOC would make its comparisons based on
these weighted average prices. However, as explained above, when the weighted average price to the
purchaser passes the Cohen's d test, the USDOC would consider the total value of all export transactions to
this purchaser under the ratio test.
105 Appellate Body Report, US – Washing Machines, para. 5.26.
106 We are aware that the silence of a text is not necessarily dispositive, as it is possible that the
requirement with respect to which the text is silent was intended to be included by implication. (Appellate Body
107 Panel Report, US – Washing Machines, para. 7.144.
108 Appellate Body Report, US – Washing Machines, paras. 5.36-5.37.

time periods. The text of the pattern clause supports the view that targeted dumping is masked
when significantly lower prices to certain purchasers, or certain regions, or in certain time periods
are masked by significantly higher export prices to certain other purchasers, or to certain other
regions, or in certain other time periods. In particular, the text permits an investigating authority to
find a pattern, which comprises export prices to purchasers, regio ns or time periods that
are (a) significantly lower and thus may be masked; and (b) significantly higher and thus may be
masking those lower-priced export sales. Having identified such a pattern, an investigating authority
is permitted, as noted in paragraph 7.99 below, to unmask targeted dumping reflected in the pattern
by applying the W-T methodology to those export transactions that fall within the pattern (while still
being required to apply a normal W-W or T-T methodology to the non-pattern transactions).
7.58. To successfully unmask targeted dumping reflected in the pattern transactions, an
investigating authority should be permitted to adopt a methodology that deals with such significantly
higher-priced export sales, which may be masking the significantly lower-priced export sales, as well
as those lower-priced sales, which may be masked. The second sentence permits an investigating
authority to do so by applying the W-T methodology to a pattern that includes both these types of
export sales. Thus, the silence of the text on whether export prices must "differ significantly" because
they are significantly higher or significantly lower is explained by the function of the second sentence
of Article 2.4.2.
7.59. We recall that the Appellate Body in US – Washing Machines relied primarily on contextual
considerations in concluding that the pattern could only comprise export prices which differ
significantly because they are significantly lower . The Appellate Body, after all, did recognize that
the text of the second sentence does not expressly specify whether the export prices which differ
significantly must do so because they are significantly higher or significantly lower.109 We, however,
disagree with these contextual considerations.
7.60. For instance, the Appellate Body found support for its view in the definition of dumping in
Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, noting that dumpe d
prices refer to export prices that are lower than the normal value.110 But we do not find this definition
to offer specific guidance on the issue before us because low -priced export transactions may be
higher or lower than the normal value, just as high -priced export transactions may be higher or
lower than the normal value, especially considering that the pattern is not determined by reference
to normal value. Further, the Appellate Body's finding was informed by its view that if an
investigating authority determines the dumping margin under the second sentence of Article 2.4.2,
it must apply the W -T methodology only to pattern transactions and exclude the non-pattern
transactions.111 However, as discussed in paragraphs 7.88-7.99 below, such a methodological
approach is not consistent with Article 2.4.2 because this provision does not permit an investigating
authority to exclude non -pattern transactions. Thus, we respectfully disagree with the contextual
considerations relied on by the Appellate Body to the extent they are based on a methodological
approach that in our view is not provided under the second sentence of Article 2.4.2.
7.61. We also disagree with the panel in US – Washing Machines insofar as it concluded that prices
that are too high and prices that are too low do not belong in the same pattern.112 The definition of
pattern does not suggest that prices falling within a pattern need to differ in the same way, i.e. it
need not comprise only lower-priced export sales, or only higher-priced export sales, to purchasers
(or regions, or time periods). What is important is that the sequence of export prices should form a
regular and intelligible sequence that is discernible in certain actions and capable of being
understood. Export prices which "differ significantly" because they are significantly higher or
significantly lower could form such a sequence. Such a sequence of significantly higher and
significantly lower export prices to purchasers, regions or time periods would stand out relative to
export prices to other purchasers, regions or time periods because they " differ significantly", and
thus would be capable of being understood. Moreover, the word "pattern" should not be viewed in
isolation from the other parts of the text that specify what type of pattern an investigating authority
must find. In so specifying, the pattern clause only requires that the pattern be of export prices
which differ significantly, and does not prescribe whether they should differ because they are

109 Appellate Body Report, US – Washing Machines, para. 5.29.
110 See, e.g. Appellate Body Report, US – Washing Machines, para. 5.29.
111 See para. 7.71 below.
112 Panel Report, US – Washing Machines, para. 7.144.

significantly higher or significantly lower relative to export prices to other purchasers, regions or
time periods. Therefore, the pattern clause does not preclude an investigating authority from finding
that the pattern includes export prices to purchasers, regions or time periods that "differ
significantly" because they are significantly highe r relative to export prices to other purchasers,
regions or time periods.
7.62. As we noted above, Canada's claim under the second sentence of Article 2.4.2 is based on its
view that the pattern identified under the pattern clause cannot include export prices to purchasers,
regions or time periods which differ significantly because they are significantly higher relative to
export prices to other purchasers, regions or time periods. We disagree with this view based on the
legal analysis set out above. Thus, we also disagree with Canada that the USDOC acted inconsistently
with the pattern clause because export prices to certain purchasers, regions or time periods passed
the Cohen 's d test because they were significantly higher relative to export prices to other
purchasers, regions or time periods.
7.63. Our findings with respect to the claim brought by Canada should not, however, be
misunderstood to mean that a pattern would comprise all export transactions of a foreign producer
or exporter.113 The United States asserts, as noted above, that once an investigating authority finds
that the weighted average export price to a particular purchaser ( Purchaser A in the hypothetical
discussed in paragraph 7.53) is significantly lower than the weighted average export price to all
other purchasers ( Purchasers B and C in the hypothetical), the weighted average export price to
those other purchasers (i.e. Purchasers B and C ) is significantly higher than the weighted average
export price to Purchaser A. Thus, the pattern of export prices which "differ significantly" from each
other per the United States includes all export transactions to Purchaser A ( because the weighted
average price to this purchaser is significantly lower) as well as all export transactions to Purchasers
B and C (because the weighted average export price to these two purchasers is significantly higher).
7.64. We disagree with this argument of the United States because it works when one assumes that
to meet the pattern clause requirements, an investigating authority must necessarily consider
whether the weighted average export price to one purchaser differs significantly from the weighted
average of the export prices to all other purchasers combined.114 But this assumption is not grounded
in the text of the pattern clause. The pattern clause does not prescribe how an investigating authority
must find a pattern. But it does require an investigating authority to find a pattern of export prices
which differ significantly among different purchasers. It does not state that an investigating authority
must find whether the weighted average export price to one purchaser differs significantly from the
weighted average of expor t prices to all other purchasers (with the same rationale applying to
regions and time periods as well). Irrespective of the methodology used to identify a pattern, the
pattern ultimately discerned, based on an evaluation of all export sales of the concern ed foreign
producer or exporter, cannot include export prices which do not differ significantly among different
purchasers, regions or time periods.
7.65. Indeed, as noted in paragraph 7.55 above, we agree with the Appellate Body in US – Washing
Machines that the focus of the pattern is on export prices which "differ significantly" and thus not on
all export prices.115 The text of the pattern clause does not suggest that the pattern comprises any

113 The United States submits that the USDOC did not find in the underlying investigation that the
pattern consisted of all export sales. (United States' response to Panel question after the second meeting of the
Panel No. 4, para. 43). However, as noted earlier, it also contends that a pattern could comprise export
transactions that pass the Cohen's d test as well as those that fail the Cohen's d test, which would effectively
mean that the pattern would comprise all export transactions of a foreign producer or exporter, even though
only export prices to certain purchasers, regions or time periods pass the Cohen's d test because they are
found to "differ significantly". (United States' response to Panel question after the first meeting of the Panel
No. 8(b), para. 30).
114 The United States contends that the Appellate Body in US – Washing Machines rewrote the pattern
clause by substituting "among" for "from" because the Appellate Body found that the distinguishing factor that
would allow the authority to discern which prices form part of the pattern would be that the prices in the
pattern differ significantly from prices not in the pattern. (United States' first written submission, para. 71). It
appears to us, however, that it is the United States' interpretation of the pattern clause that replaces the word
"among" with "from".
115 Appellate Body Report, US – Washing Machines, para. 5.26. We also consider that a "pattern" that
includes export prices to purchasers, regions or time periods which do not "differ significantly" would not form
"a regular and intelligible form or sequence discernible in certain actions or situations". There would be no
criteria based on which such a sequence could be discerned or be capable of being understood, and such a

lower- or higher-priced export transaction, or any export transaction priced above or below the
normal value. The existence of such type of lower-priced and higher-priced export transactions would
not be a sufficient basis to find a pattern because the pattern clause requires an investigating
authority to find a pattern of export prices which differ significantly among different purchasers,
regions or time periods, and not significant differen ces or variations across the prices of all export
transactions. It follows that if an investigating authority were to find that certain export prices do
"differ significantly among different purchasers, regions or time periods" and form the relevant
pattern, that would not present the investigating authority with a carte blanche to include other
export prices that do not "differ significantly among different purchasers, regions or time periods"
in the pattern. Thus, we consider that a pattern of export pric es which "differ significantly" among
different purchasers, regions or time periods necessarily excludes export prices which do not differ
significantly among different purchasers, regions or time periods.
Conclusion
7.66. Based on the foregoing, we find that Canada has not established that in applying the DPM in
the underlying investigation the USDOC acted inconsistently with the second sentence of
Article 2.4.2 by including, in the pattern, export transactions to those purchasers, regions or time
periods whose prices differed significantly because they were significantly higher relative to export
prices to other purchasers, regions or time periods.
7.2.1.3.2 Zeroing under the W-T methodology
7.67. We observed in paragraph 7.20 above that t he process of comparing a normal value
established on a weighted average basis with the prices of individual export transactions may yield
multiple intermediate comparison results . An intermediate comparison result is positive when the
price of an individual export transaction is lower than the weighted average normal value. An
intermediate comparison result is negative when the price of an individual export transaction is
higher than the weighted average normal value. An investigating authority uses zeroing under the
W-T methodology when, in aggregating the intermediate comparison results , it disregards by
treating as zero the negative comparison results and considers only the positive comparison results.
Considering that in dumping margin calculations the total dumped amount is presented in the
numerator, the numerator reflects only the positive comparison results when zeroing is used (and
the positive as well as the negative comparison results when zeroing is not used). The denominator
comprises the value of all export transactions, including the value of export transactions that are
disregarded while determining the total dumped amount. The formula for calculating a dumping
margin under the W-T methodology (in percentage) is116:
Total Dumped Amount (Numerator)
Total Value of all export transactions (Denominator)
× 100
7.68. The issue in this dispute is whether the second sentence of Article 2.4.2 permits such type of
zeroing under the W -T methodology. The panels in US – Washing Machines and US –
Anti-Dumping Methodologies (China) and the Appellate Body in US – Washing Machines concluded
that the second sentence of Article 2.4.2 does not permit the use of zeroing under the
W-T methodology.117 One Appellate Body Member in US – Washing Machines, however, dissented
from the majority view and found zeroing to be permissible under the W-T methodology. While these
panels and the Appellate Body found zeroing to be impermissible under the second sentence, they

sequence would not be regular or intelligible. Instead, they would be essentially random variations in prices.
Thus, export prices to purchasers, regions or time periods which do not differ significantly relative to export
prices to other purchasers, regions or time periods cannot form part of the pattern.
116 Irrespective of whether the dumping margin is determined under the W-T methodology, the
W-W methodology, or the T-T methodology, the numerator would reflect the total dumped amount. However,
how exactly the total dumped amount is determined would vary based on the methodology used.
117 The Appellate Body's findings were not based on the unanimous view of all three Appellate Body
Members forming the Division. While the majority, i.e. two Members concluded that the second sentence of
Article 2.4.2 prohibits zeroing under the W-T methodology, one Member disagreed with that conclusion and
wrote a dissenting opinion. We refer to the findings of the majority as the Appellate Body findings in US –
Washing Machines.

acknowledged that the W -T methodology is an exceptional methodology which is designed to
unmask targeted dumping. 118 However, they concluded that th e second sentence of Article 2.4.2
permits an investigating authority to unmask targeted dumping without using zeroing. This
conclusion is based on their view on how an investigating authority is supposed to determine the
dumping margin pursuant to the second sentence of Article 2.4.2.
7.69. These panels and the Appellate Body noted that when an investigating authority determines
the dumping margin under the second sentence of Article 2.4.2 after meeting the conditions set out
in this sentence, it is permitted to apply the W-T methodology only to those export transactions that
fall within the relevant pattern.119 Thus, they took the view that the second sentence does not permit
an investigating authority to apply the W-T methodology to the non-pattern transactions. However,
the panels and the Appellate Body reached different conclusions on how an investigating authority
is supposed to treat such non-pattern transactions.
7.70. The panels in US – Washing Machines and US – Anti-Dumping Methodologies (China) did not
preclude the application of any of the two normal methodologies, i.e. the W -W or the
T-T methodology to the non-pattern transactions.120 Thus, these panels did not preclude that an
investigating authority could apply a mixed methodology wherein the W-T methodology is applied
to pattern transactions (but without zeroing) and the W -W or T -T methodology is applied to
non-pattern transactions (without zeroing). 121 When such a mixed methodology is used , the
intermediate results calculated by applying the W -T methodology to pattern transactions and the
W-W (or T-T) methodology to non-pattern transactions must be aggregated to calculate one overall
dumping margin for the foreign producer or exporter. The panels observed that in aggregating these
intermediate results, an investigating authority may systematically disregard the intermediate result
calculated by applying the W -W or the T-T methodology to non -pattern transactions, when this
intermediate result is negative. 122 When th is intermediate result is positive , the investigating
authority would add this result to the intermediate result obtained by applying the W-T methodology
to pattern transactions.123 This way, according to these panels, the W-T methodology could unmask
targeted dumping by not letting negative dumping outside the pattern offset or "re -mask" the
dumping within the pattern.124
7.71. However, unlike these two panels, the Appellate Body concluded that the second sentence of
Article 2.4.2 does not permit the use of a mixed methodology, thereby disagreeing with the two

118 See, e.g. Appellate Body Report, US – Washing Machines, paras. 5.17-5.18; Panel Reports, US –
Washing Machines, para. 7.155; US – Anti-Dumping Methodologies (China), fn 385.
119 Appellate Body Report, US – Washing Machines, para. 5.55; Panel Reports, US – Washing Machines,
120 The panel in US – Washing Machines observed that one might take the view that the combined
application of the W-T and W-W (or T-T) methodologies is not provided under the second sentence of
Article 2.4.2. But considering the complainant did not make a claim to that effect, it assumed that the
combined application of the two methodologies (i.e. W-T methodology to the pattern transactions and W-W or
T-T methodology to the non-pattern transactions) is not precluded. (Panel Report, US – Washing Machines,
para. 7.161). The panel in US – Anti-Dumping Methodologies (China) noted that to resolve the claim before it,
it did not need to express a view on how an investigating authority should treat non-pattern transactions while
determining the dumping margin for the product as a whole. But, it observed that an investigating authority
may use another methodology with respect to the non-pattern transactions, provided it complies with
Article 2.4.2 and other relevant provisions of the Anti-Dumping Agreement. It did not suggest that the
non-pattern transactions must be excluded. (Panel Report, US – Anti-Dumping Methodologies (China),
para. 7.182).
121 In US – Washing Machines, the panel dealt with the use of a mixed methodology by the USDOC
wherein the W-T methodology was applied to export transactions that passed the Cohen's d test and the
W-W methodology was applied to export transactions that did not pass the Cohen's d test.
122 Panel Reports, US – Washing Machines, paras. 7.162-7.164; US – Anti-Dumping Methodologies
(China), fn 385.
123 So, to take an example, if the intermediate result calculated by applying the W-T methodology to
pattern transactions is 500, and that calculated by applying the T-T methodology to non-pattern transactions
is -500, an investigating authority would disregard the intermediate result based on non-pattern transactions
resulting in a dumped amount of 500 (500 + 0). If the intermediate result calculated by applying the
W-T methodology to pattern transactions is 500, and that calculated by applying the T-T methodology to
non-pattern transactions is 150, the two results would be added to get a total dumped amount of 650
(500+150).
124 Panel Reports, US – Washing Machines, para. 7.162; US – Anti-Dumping Methodologies (China),
fn 385.

panels on this point.125 Instead, in determining the dumped amount pursuant to the second sentence
an investigating authority would apply the W -T methodology only to the pattern transactions and
exclude the non-pattern transactions.126 Thus, the dumped amount represented in the numerator
would be based only on results obtained by applying the W-T methodology to pattern transactions.127
The denominator would reflect the value of all export transactions, i.e. the pattern and the
non-pattern transactions.128 This way, per the Appellate Body, an investigating authority can address
targeted dumping that is represented in the pattern by comparing all export transactions identified
in the pattern with the weighted average normal value.129 Because the non-pattern transactions are
excluded from the dumping margin calculations, the negative intermediate result based on such
non-pattern transactions is not allowed to re-mask the targeted dumping identified in the pattern.130
According to the Appellate Body, o nce the non-pattern transactions are excluded, there is nothing
more that needs to be unmasked. Thus, per the Appellate Body zeroing is not permitted to unmask
targeted dumping.
7.72. Relying primarily on these findings of the Appellate Body in US – Washing Machines, Canada
contends that the second sentenc e of Article 2.4.2 does not permit the use of zeroing under the
W-T methodology. The United States disputes Canada's submission and asks us not to follow the
Appellate Body's findings in US – Washing Machines. Noting that the second sentence of Article 2.4.2
sets out an exceptional W -T methodology, which is designed to unmask targeted dumping, the
United States asserts that if zeroing is prohibited under the W -T methodology, this methodology
would no longer be exceptional, or provide the mean s to unmask tar geted dumping. 131 The
United States' assertion is based on its view that because the W -T methodology is an
exceptional methodology, its use should result in a dumping margin that is systematically different
from the dumping margin determined under the "normal" W-W or T-T methodology.132 However, if
zeroing is prohibited under the W-T methodology, this methodology per the United States will "as a
mathematical certainty, in every case " yield a dumping margin that is identical to the dumping
margin determined under the W-W methodology.133 In particular, the United States submits that if
zeroing is prohibited under the W-T methodology, there will be mathematical equivalence between
the dumping margin determined under the W -W methodology, the W -T methodology, and a
mixed methodology wherein the W-T methodology is applied to a subset of export transactions and
the W-W methodology is applied to the remaining export transactions.134 Such type of mathematical
equivalence according to the United States will render the second sentence of Article 2.4.2 inutile.135
Canada, however, disputes the United States' mathematical equivalence arguments on the grounds
set out in paragraph 7.76 below.
7.73. In addition to disagreeing on whether zeroing is permissible under the second sentence of
Article 2.4.2, the parties also disagree on whether the dumping margin determined under the
W-W methodology provided in the first sentence of Article 2.4.2, and that determined pursuant to
the second sentence of Article 2.4.2, will be mathematically equivalent in every case if zeroing is
prohibited under the W-T methodology. We must ascertain whether the dumping margin determined
under the W-W methodology provided in the first sentence of Article 2.4.2 will be mathematically
equivalent "in every case" to the dumping margin determined pursuant to the second sentence of
Article 2.4.2.136 If we find that such type of mathematical equivalence arises in every case, and not
just in a specific set of circumstances, we will consider the United States' mathematical equivalence

125 Appellate Body Reports, US – Washing Machines, paras. 5.129-5.130; US –
126 Appellate Body Report, US – Washing Machines, paras. 5.106 and 5.117.
127 Appellate Body Report, US – Washing Machines, para. 5.114.
128 Appellate Body Report, US – Washing Machines, para. 5.114.
129 Appellate Body Report, US – Washing Machines, para. 5.155.
130 Appellate Body Report, US – Washing Machines, para. 5.109.
131 United States' first written submission, paras. 11 and 115.
132 United States' first written submission, paras. 114-115.
133 United States' first written submission, para. 121. (emphasis added)
134 United States' first written submission, fn 177; response to Panel question after the second meeting
of the Panel No. 2(a), paras. 13-31.
135 United States' first written submission, paras. 5 and 159.
136 The United States requests us to make factual findings confirming that dumping margins calculated
under the W-W and W-T methodologies will be mathematically equivalent if zeroing is considered impermissible
under the W-T methodology. (United States' first written submission, para. 160; second written submission,
para. 74).

arguments as part of our assessment o f whether zeroing is permissible under the
W-T methodology.137
7.2.1.3.2.1 The assumptions underlying the United States' mathematical equivalence
argument
7.74. The United States, as noted above, asserts that the dumping margin determined under the
W-W methodology will be mathematically equivalent in every case to a dumping margin that is
determined under138:
a. the W-T methodology, wherein this methodology is applied to all export transactions of a
foreign producer or exporter; or
b. a mixed methodology, wherein the W -T methodology is applied to a subset of export
transactions of that foreign producer or exporter and the W-W methodology is applied to
the remaining export transactions.
7.75. Canada does not make a formal claim challenging the application of the W-T methodology to
all export transactions, instead of only pattern transactions. However, in rebutting the
United States' mathematical equivalence arguments, Canada asserts, relying on the Appellate Body
report in US – Washing Machines, as follows:
a. The second sentence o f Article 2.4.2 does not permit an investigating authority to apply
the W-T methodology to all export transactions. Instead, this methodology must be limited
to pattern transactions.139
b. The Anti-Dumping Agreement does not permit the use of a mixed methodology wherein
the W-T methodology is applied to pattern transactions and the W-W (or T-T) methodology
is applied to non -pattern transactions.140 Instead, as the Appellate Body stated in US –
Washing Machines , if an investigating authority applies the W -T methodology after
meeting the conditions set out in the second sentence, it must apply this methodology
only to pattern transactions. 141 Non-pattern transactions must be excluded wh en
calculating the dumped amount. Therefore, neither the W -W nor the T -T methodology
must be applied to these non-pattern transactions.
7.76. Canada submits that if the W -T methodology is applied correctly , consistent with the
Appellate Body's interpretation of the second sentence of Article 2.4.2, i.e. if it is applied to pattern
transactions alone, the resultant dumping margin will not be mathematically equivalent to the
dumping margin determined under the W -W methodology (which must be applied to all export
transactions).142 In addition, while maintaining that the second sentence do es not permit an
investigating authority to use a mixed methodology, Canada nonetheless presents calculations
showing that the dumping margin based on a W -W methodology will not be mathematically
equivalent in all cases to a dumping margin based on a mixed methodology wherein the
W-T methodology is applied to pattern transactions and the W -W methodology is applied to

137 In US – Softwood Lumber V (Article 21.5 – Canada) the Appellate Body stated that "[o]ne part of a
provision setting forth a methodology is not rendered inutile simply because, in a specific set of circumstances,
its application would produce results that are equivalent to those obtained from the application of a
comparison methodology set out in another part of that provision". (Appellate Body Report, US – Softwood
Lumber V (Article 21.5 – Canada), para. 99 (emphasis added)). We agree with the Appellate Body that the
second sentence of Article 2.4.2 is not rendered inutile if the dumping margin determined under the
W-W methodology and that determined pursuant to the second sentence of Article 2.4.2 are mathematically
equivalent only "in a specific set of circumstances".
138 United States' first written submission, fn 177; response to Panel question after the second meeting
of the Panel No. 2(a), para. 5.
139 Canada's responses to Panel question after the first meeting of the Panel Nos. 5(a) and (b),
paras. 12, 14, and 16.
140 Canada's response to Panel question after the second meeting of the Panel No. 2(c), para. 1.
141 Canada's response to Panel question after the first meeting of the Panel No. 5(a), para. 14.
142 Canada's responses to Panel question after the first meeting of the Panel Nos. 5(a) and (b),
paras. 12, 14, and 16.

non-pattern transactions.143 In the calculations, Canada calculates the normal value under the W-W
and W-T methodologies on different temporal bases.144
7.77. We note that both parties' arguments on mathematical equivalence are directly linked to the
scope of application of the W-T methodology and to the treatment of non-pattern transactions. Thus,
in making our findings on mathematical equivalence we find it necessary to set out our
understanding on how an investigating authority is supposed to make dumping margin calculations
when the conditions for the use of the W -T me thodology provided in the second sentence of
Article 2.4.2 are met.
Dumping determinations pursuant to the second sentence of Article 2.4.2
7.78. We consider, as past panels and the Appellate Body have, that the second sentence of
Article 2.4.2 does not permit an investigating authority to apply the W-T methodology to all export
transactions. Instead, this methodology may be applied only to pattern transactions. However, we
disagree that non-pattern transactions may (or must) be excluded when an investigating authority
makes dumping determinations pursuant to the second sentence. Instead, an investigating authority
must apply the W -W or the T-T methodology to those non-pattern transactions. The intermediate
result calculated by applying the W-T methodology to pattern transactions must be aggregated with
the intermediate result calculated by applying the W -W or the T-T methodology to the non-pattern
transactions. The intermediate result based on non -pattern transactions may not be excluded,
irrespective of whether that result is positive or negative. We have reached these conclusions based
on the legal analysis set out below.
Scope of application of the W-T methodology
7.79. The United States argues that if an investigating authority properly establishes the conditions
for applying the W-T methodology, nothing in the Anti-Dumping Agreement would preclude it from
determining the dumping margin by applying the W -T methodology to all export transactions. 145
Canada contends that the W -T methodology may only be applied to pattern transactions. Our
interpretation of the text of the second sentence of Article 2.4.2 shows that this sentence does not
permit the application of the W-T methodology to non-pattern transactions.
7.80. The second sentence of Article 2.4.2 does not state that in applying the W-T methodology an
investigating authority must compare the normal value established on a weighted average basis with
the prices of all export transactions. Reading the text of this sentence as a whole, taking into account
in particular, the explanation clause, shows that this sentence does not envisage the application of
the W-T methodology to all export transactions. Instead, this methodology must be limited to those
export transactions that fall within the pattern that the investigat ing authority identifies under the
pattern clause.
7.81. The explanation clause permits an investigating authority to apply the W-T methodology only
when it explains why "such differences" cannot be taken into account appropriately by using a W-W
or T -T comparison. "Such differences" refer to the "export prices which differ significantly" and
therefore form the relevant pattern. 146 To comply with t he explanation clause, an investigating
authority must explain why the "export prices which differ significantly" and form the relevant
pattern cannot be taken into account appropriately by the use of a W -W or T -T comparison. The
explanation clause does no t require an explanation as to why export prices outside the pattern
cannot be taken into account appropriately using a W-W or T-T comparison, or simply an explanation
of the reasons for using the W -T comparison (with respect to all export transactions) . Indeed, the
text of the explanation clause, which closely reflects the text of the Dunkel Draft from the Uruguay

143 Canada's response to Panel question after the second meeting of the Panel No. 2(d), para. 4;
Canada's dumping margin calculations under W-W and mixed W-T/W-W methodologies, (Exhibit CAN-33).
144 Canada uses a mixed methodology wherein it calculates the normal value for the W-T methodology
based on a quarterly period, and the normal value for the W-W methodology based on an annual period.
(Canada's dumping margin calculations under W-W and mixed W-T/W-W methodologies, (Exhibit CAN-33)).
145 United States' response to Panel question after the first meeting of the Panel No. 21, para. 74.
146 Appellate Body Report, US – Washing Machines, para. 5.50. We consider that when the pattern
clause and explanation clause are read together it becomes clear that "such differences" refer to the "pattern
of export prices which differ significantly" among different purchasers, regions or time periods.

Round of negotiations, differs in this respect from earlier draft texts from the Uruguay Round, such
as the New Zealand I text, the New Zealand II text, the New Zealand III text, and the Ramsauer
text that permitted recourse to the W-T methodology provided, inter alia, "the authorities [gave] an
explanation of the reasons for using such a comparison", i.e. the W -T comparison.147 We consider
that the agreed text of the second sentence of Article 2.4.2, and specifically the explanation clause
is worded the way it is, and does not require an explanation with respect to export transactions
falling outside the pattern because the second sentence does not contemplate the application of the
W-T methodology outside the pattern.
7.82. If the W-T methodology was meant to be applied to non -pattern transactions, the need to
explain why the W-W or T-T comparison could not take into account appropriately such transactions
would perhaps be even more compelling. We stated above that the pattern identified under the
pattern clause includes significantly high-priced export sales to purchasers, regions or time periods
that may be masking significantly lower-priced export sales to other purchasers, regions or time
periods and those lower-priced export sales, which may be masked. Thus, these export sales form
part of the pattern transactions, and not the non-pattern transactions. In that sense, there is nothing
abnormal about the non -pattern transactions. Just because such non -pattern transactions coexist
with pattern transactions does not mean that the non -pattern transactions become abnormal.
Instead, these are the sort of export transactions to which an investigating authority would apply a
normal methodology in ordinary circumstances. Therefore, if the second sentence permitted an
investigating authority to apply the W -T methodology to non -pattern transactions the text would
have required an explanation (perhaps an even more compelling one) why the W -W or the
T-T methodology could not appropriately take into account such non -pattern transactions. The
reason it does not require such an explanation is because the second sentence does not contemplate
the application of the W-T methodology to non-pattern transactions.148
7.83. We recognize, of course, that non -pattern transactions may be above the weighted average
normal value and that disregarding comparison results based on them would lead to a higher overall
dumping margin for the foreign producer or exporter. But we do not consider that the pattern clause
or any other part of the second sentence of Article 2.4.2 permit s an investigating authority to
"unmask" non -pattern transactions above the weighted average normal value by applying the
W-T methodology. Indeed, a foreign producer or exporter may make multiple export transactions
within the period of investigation. Many of these export transactions may be higher than a weighted
average normal value, while others may be lower than the weighted average normal value. The
existence of such a higher-priced transaction is not a problem per se because if one were to apply
the W-W methodology such higher-priced and lower-priced export transactions would be averaged
out without the possibility to disregard any individual high-priced export transaction.149 Similarly, if
an investigating authority we re to apply the T -T methodology, it would have to consider the real
values of such high-priced and low-priced transactions, and not disregard comparison results based
on either of them. Only when such higher-priced export transactions form part of a pattern of export
prices which not only differ, but "differ significantly" "among different purchasers, regions or time
periods", is an investigating authority permitted to unmask such higher-priced export sales to certain
purchasers, regions or time periods tha t may be masking lower -priced export sales to other
purchasers, regions or time periods. Permitting an investigating authority to "unmask" non-pattern
transactions would undermine the prohibition on zeroing under the W-W or T-T methodology.
7.84. Thus, while we disagree with past panels and the Appellate Body on the nature of the export
transactions that fall within the relevant pattern, we agree with them that the second sentence of
Article 2.4.2 does not permit an investigating authority to apply the W-T methodology to export
transactions falling outside the pattern. Based on the above, we conclude that the second sentence

147 Draft working paper on anti-dumping discussed during the Uruguay Round (6 November 1990)
(New Zealand I); Draft working paper on anti-dumping prepared during the Uruguay Round
(15 November 1990) (New Zealand II); Draft working paper on anti-dumping prepared during the
Uruguay Round (23 November 1990) (New Zealand III); and Draft working paper on anti-dumping prepared
during the Uruguay Round (26 November 1991) (Ramsauer text).
148 Panel Report, US – Washing Machines, paras. 7.23-7.24. The panel in US – Washing Machines
expressed similar views, noting that an explanation is required with respect to pattern transactions because
only pattern transactions should be subject to the W-T methodology.
149 This averaging effect of the W-W methodology would not have been lost on the Uruguay Round
negotiators, who would have known that higher-priced and lower-priced domestic and export transactions
would be averaged out under the W-W methodology, and yet chose it as one of the methodologies that an
investigating authority shall normally use.

of Article 2.4.2 does not permit an investigating authority to apply the W-T methodology to all export
transactions. Instead, the W-T methodology may be applied only to pattern transactions.
Treatment of non -pattern transactions under the second sentence of
Article 2.4.2
7.85. The W-T methodology may be applied only to pattern transactions. Does this mean that the
non-pattern transactions must be simply excluded while calculating the total dumped amount
pursuant to the second sentence of Article 2.4.2 (per the Appellate Body's methodological approach
in US – Washing Machines)? Or does this mean that an investigating authority must apply either the
W-W or the T-T methodology to the non -pattern transactions? If an investigating authority must
apply either the W-W or the T-T methodology to the non -pattern transactions, the application of
these normal methodologies would generate an intermediate result based on such non -pattern
transactions that may be negative or positive. Is an investigating authority permitted to exclude this
intermediate result when it is negative but add it (to the intermediate result based on pattern
transactions) when it is positive? We must resolve these questions because the overall dumping
margin determined under the W -W methodology and that determined pursuant to the second
sentence of Article 2.4.2 will not be mathematically equivalent in every case if (a) non -pattern
transactions are excluded under the W -T methodology150, or (b) non -pattern transactions are
excluded when the intermediate result based on them is negative.151
7.86. Canada contends that the explicit authorization under the second sentence of Article 2.4.2 to
focus on pattern transactions also provides the basis for disregarding non-pattern transactions.152
Thus, Canada asserts, relying on the Appellate Body Report in US – Washing Machines , that
non-pattern transactions must be excluded when the dumping margin is determined under the
second sentence of Article 2.4.2. But Canada submits that assuming Article 2.4.2 permits the use of
a mixed methodology, an investigating authority cannot exclude the intermediate result based on
non-pattern transactions when it is negative.153
7.87. The United States argues that a dumping margin determined pursuant to the second sentence
of Article 2.4.2 by excluding non-pattern transactions "cannot credibly be called a margin of dumping
for the 'product as a whole'". 154 The United States submits that "one of the major flaws" of this

150 In rejecting the United States' mathematical equivalence arguments in US – Washing Machines, the
Appellate Body noted that "[c]omparing normal value with 'pattern transactions' only will not normally yield
results that are mathematically or substantially equivalent to the results obtained from the application of the
W-W [ ] methodology to all export transactions". (Appellate Body Report, US – Washing Machines, para. 5.163
(emphasis original)). In addition, the Appellate Body considered that the mere fact that the application of the
W-T methodology to pattern transactions may lead to a result that is equivalent to the result obtained by
applying the W-W methodology to pattern transactions is neither relevant nor reads the W-T methodology out
of the second sentence of Article 2.4.2. (Appellate Body Report, US – Washing Machines, para. 5.165).
151 The panel in US – Washing Machines noted that when the non-pattern transactions are dumped
(i.e. the intermediate result based on such transactions is positive), aggregating the result of the
W-W methodology (without zeroing) for non-pattern transactions with the result of the W-T methodology
(without zeroing) for pattern transactions would lead to the same margin of dumping as the application of the
W-W methodology (without zeroing) to all export transactions. The margin of dumping changes, however,
when the non-pattern transactions are not dumped (i.e. the intermediate result based on such transactions is
negative), and when that amount of negative dumping outside the pattern is systematically disregarded while
aggregating it with results of the W-T methodology. (Panel Report, US – Washing Machines, fn 299). The
United States agrees that mathematical equivalence will not arise in this case. (United States' response to
Panel question after the second meeting of the Panel No. 2(b), para. 33). However, the United States submits
that this does not solve the problem of mathematical equivalence because the application of the W-W or the
W-T methodology to the same set of export transactions without zeroing will yield mathematically equivalent
results. (United States' response to Panel question after the second meeting of the Panel No. 2(b), para. 33).
In our view, the relevant question is whether the overall dumping margin determined under the
W-W methodology and that determined pursuant to the second sentence of Article 2.4.2 are mathematically
equivalent. If we were to find that Article 2.4.2 permits an investigating authority to (a) apply the
W-T methodology only to pattern transactions, or (b) exclude the intermediate result based on non-pattern
transactions when it is negative, we would conclude that the overall dumping margin determined under the
W-W methodology and that determined pursuant to the second sentence of Article 2.4.2 would not be
mathematically equivalent in every case.
152 Canada's response to Panel question after the first meeting of the Panel No. 15(a), para. 35.
153 Canada's response to Panel question after the second meeting of the Panel No. 2(c), paras. 2-3.
154 United States' first written submission, para. 95.

methodological approach is that it requires an investigating authority to disregard evidence of
dumping from non-pattern transactions.155 With respect to the use of a mixed methodology pursuant
to the second sen tence, the United States submits that the Anti -Dumping Agreement does not
preclude such a methodology.156 The United States also observes that the panel in US – Washing
Machines stated that when the intermediate result based on non-pattern transactions is negative, it
may be excluded so that negative dumping in respect of non-pattern transactions does not re-mask
dumping in the pattern.157
7.88. We commence our analysis by noting that both sentences of Article 2.4.2 must be interpreted
bearing in mind the context provided by Article 2.1 of the Anti-Dumping Agreement and Article VI:1
of the GATT 1994, which define dumping. Article VI:2 of the GATT defines the margin of dumping
as the difference between the normal value and the export price, and establishes the link between
dumping and margin of dumping.158 The margin of dumping reflects the magnitude of dumping. 159
The Appellate Body has, as noted above, relied on these provisions as context in concluding that
dumping and margins of dumping must be determined for the pro duct as a whole. The
Appellate Body has stated that the notion that a product is introduced into the commerce of another
country at less than its normal value, as provided in Article VI:1 of the GATT 1994, suggests that
the exporter's dumping determination must be based on "the totality of an exporter's transactions"
of the subject merchandise over the period of investigation. 160 Considering Article 2.1 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994 inform our interpretation of not just the
first sentence of Article 2.4.2, but also its second sentence, we consider that dumping determinations
must be based on the totality of an exporter's transactions even when the conditions for the use of
the W-T methodology under this second sentence are met.
7.89. Article 2.4.2, on its face, does not create any exceptional rule allowing an investigating
authority to exclude the totality of an exporter 's transactions or the pricing behaviour outside the
identified pattern when the conditions set out in the second sentence of Article 2.4.2 are met. Is
such a rule included by implication? Reading Article 2.4.2 in context and in light of the object and
purpose of the Anti -Dumping Agreement suggests no. Instead, the absence of such a rule makes
sense.
7.90. Let us consider t he following questions . For the purpose of Article 2.1 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994, a product is considered dumped when
it is introduced into the commerce of another country at less than its normal value. Could
non-pattern transactions be priced below normal value? Yes, they could because export transactions
outside the pattern may be priced below the normal value, just as they may be priced above it. Is
an investigating authority permitted to exclude the pricing behaviour outside the pattern when it
calculates the overall dumping margin of a foreign producer or exporte r? Nothing in the
Anti-Dumping Agreement would suggest so. Indeed, to properly assess the pricing behaviour of a
foreign producer or exporter, and to determine whether it is in fact dumping the product under
consideration, and if so, by what margin, it is obviously necessary to take into account the prices of
all the export transactions of that foreign producer or exporter .161 Otherwise, the magnitude of
dumping, which is reflected in the margin of dumping, may be understated or overstated.
7.91. We are cognizant t hat in finding that an investigating authority must exclude non -pattern
transactions while determining the dumped amount pursuant to the second sentence of Article 2.4.2,
the Appellate Body stated that this sentence "says nothing about including transactions that are not
part of the pattern in the comparison process that is required to establish margins of dumping". 162
However, what is relevant is not that the text says nothing about including transactions that are not
part of the pattern, but that the text says nothing about excluding transactions that are not part of
the pattern, when an investigating authority determines the dumping margin for the product as a
whole. The silence of the text on this matter may be contrasted with other provisions of the

155 United States' response to Panel question after the first meeting of the Panel No. 14(a), para. 50.
156 United States' response to Panel question after the second meeting of the Panel No. 2(c), para. 35.
157 United States' response to Panel question after the second meeting of the Panel No. 2(c), para. 35
(referring to Panel Report, US – Washing Machines, para. 7.162).
158 See, e.g. Appellate Body Report, US – Zeroing (Japan), para. 110.
159 Appellate Body Report, US – Zeroing (Japan), para. 110.
160 Appellate Body Report, US – Stainless Steel (Mexico), para. 98.
161 Appellate Body Report, US – Zeroing (Japan), para. 111.
162 Appellate Body Report, US – Washing Machines, para. 5.109.

Anti-Dumping Agreement, including Articles 2.2.1, 2.2.2, and 2.3 of the Anti -Dumping Agreement,
which set out specific rules on when an investigating authority may reject certain transactions or
data.163 The existence of such specific rules in other parts of the Anti-Dumping Agreement suggests
that if the drafters of the Anti-Dumping Agreement had intended to allow an investigating authority
to disregard non-pattern transactions, which could well be the majority of the export transactions of
a foreign producer or exporter, they would have provided rules to this effect. Therefore, the silence
of the text in this regard appears deliberate.
7.92. Further, while the Appellate Body took the view that the exclusion of non-pattern transactions
ensures that targeted dumping identified in the pattern is not re -masked by comparison results
based on non-pattern transactions, the purpose of the second sentence of Article 2.4.2 is to unmask
targeted dumping through the application of the W-T methodology, and not by simply disregarding
non-pattern transactions .164 Otherwise, the text could have simply stated that an investigating
authority is permitted to apply the W -W or T-T methodology to a limited set of export transactions
that make up the pattern and disregard the non-pattern transactions.165 Instead, we are concerned
that in requiring an investigating authority to make its dumping determination based on pattern
transactions alone, the Appellate Body's approach artificially lim its or increases the total dumped
amount, reflected in the numerator, while the denominator reflects the real value of all export
transactions. Such a determination is not based on a proper evaluation of the evidence on record,
and thus cannot be a method provided for in the second sentence of Article 2.4.2.
7.93. Our understanding of the text is also consistent with what the Appellate Body considered the
object and purpose of the Anti-Dumping Agreement, which is to allow Members to deal with injurious
dumping by allowing them to take anti -dumping measures to counteract injurious dumping and
imposing disciplines on the use of such anti -dumping measures. 166 The
Appellate Body's methodological approach of excluding non -pattern transactions frustrates this
object and purpose of the Anti -Dumping Agreement because it does not allow an investigating
authority to calibrate the anti-dumping measures to respond to the actual level of injurious dumping,
as reflected in the totality of the pricing behaviour of a foreign producer or exporter.
7.94. We also disagree that the first sentence of Article 2.4.2 precludes the application of the W-W
(or T-T) methodology to non-pattern transactions alone because this methodology must be applied
to all export transactions, and not just a su bset of those transactions, i.e. the non -pattern
transactions.167 Instead, reading the two sentences of Article 2.4.2 together, and in proper context,
shows that neither the first sentence nor the second sentence permits an investigating authority to
simply exclude non-pattern transactions.

163 Article 2.3 of the Anti-Dumping Agreement for instance permits an investigating authority to reject
the price of an export transaction and construct it instead where "it appears to the authorities concerned that
the export price is unreliable because of association or a compensatory arrangement between the exporter and
the importer or a third party". Article 2.2.1 of the Anti-Dumping Agreement permits an investigating authority
to disregard in determining normal value, when certain conditions are met, the sales of the like product in the
domestic market of the exporting country or the sales to third countries, which are below per unit costs of
production plus administrative, selling, and general costs. Articles 2.2.2(i)-(iii) of the Anti-Dumping Agreement
provide alternative methods that an investigating authority must use when the amounts for administrative,
selling, and general costs and for profits cannot be based on actual data pertaining to production and sales in
the ordinary course of trade of the like product by the foreign producer or exporter under investigation.
164 The Appellate Body's view was based on its finding that the pattern comprises export prices to
purchasers, regions or time periods which "differ significantly" because they are significantly lower (and not
significantly higher) than export prices to other purchasers, regions or time periods. We, for the reasons set
out above, disagree with this finding. Therefore, we also disagree with the Appellate Body's view, which is
informed by this finding.
165 The dumping margin obtained by applying the W-T methodology (without zeroing) to pattern
transactions will be mathematically equivalent to a dumping margin obtained by applying the
W-W methodology to the same pattern transactions. Thus, we do not see why there would be the need to
provide for the W-T methodology if the same result could be obtained simply by limiting the W-W methodology
to pattern transactions.
166 Appellate Body Report, US – Washing Machines, para. 5.52.
167 Canada's response to Panel question after the second meeting of the Panel No. 2(c), para. 1;
response to Panel question after the first meeting of the Panel No. 17, para. 38; and Appellate Body Report,
US – Washing Machines, paras. 5.121-5.122.

7.95. Take the "normal" W-W methodology for instance. In setting out this methodology, the first
sentence of Article 2.4.2 states that the margins of dumping under this methodology shall be based
on a comparison of a weighted a verage normal value with a weighted average of "prices of all
comparable export transactions". 168 The second sentence requires an investigating authority to
explain why "such differences", i.e. the differences in the pattern identified by that authority, cannot
be taken into account appropriately by the use of a W -W or T-T comparison. Once an investigating
authority provides such an explanation, consistent with the explanation clause, it has proper basis
to conclude that the universe of "all comparable export transactions" under the W-W methodology
excludes those export transactions that fall within the pattern.
7.96. In such a situation, the universe of comparable export transactions under the
W-W methodology is limited to the non -pattern transactions, but it includes all such comparable
(non-pattern) transactions. Thus, an investigating authority would apply the W -W methodology to
all non-pattern transactions. The intermediate result obtained by applying the W -W methodology
must be aggregated with the intermediate result obtained by applying the W -T methodology to
pattern transactions, to determine the overall dumping margin for the product as a whole. The same
considerations apply when an investigating authority applies the T-T methodology to the non-pattern
transactions.
7.97. However, an investigating authority is not permitted to disregard the intermediate result
obtained by applying the W-W (or T-T) methodology to non-pattern transactions when the result is
negative. The requirement to consider "all" comparable export transactions precludes an
investigating authority from selectively excluding any comparable export transaction. It also
precludes an investigating authority from collectively excluding all such comparable export
transactions, which would be the case if an investigating authority disregards the comparison result
based on non-pattern transactions because it is negative.
7.98. While the dumping margin may well be higher if an investigating authority excludes the
negative intermediate result based on non-pattern transactions, the second sentence is designed to
unmask targeted dumping, not ensure a higher dumping margin. Nothing in Article 2.4.2 suggests
that whenever a pattern is found to exist , the overall dumping margin for the foreign producer or
exporter shall be systemically higher than the dumped margin determined under the first sentence
of Article 2.4.2.169
7.99. In sum, we conclude that if the conditions set out in the second sentence of Article 2.4.2 are
met, an investigating authority is permitted to apply the W -T methodology to the pattern
transactions, but must apply the W-W or T-T methodology to the non-pattern transactions. The first
sentence of Article 2.4.2 does not cease to apply just because an investigating authority is permitted
by the second sentence to apply the W -T methodology to the pattern transactions that cannot be
taken into account appropriately under the W -W or T -T methodology. Instead, the W -W or the
T-T methodology must be applied to the non-pattern transactions, which may be taken into account
appropriately under these normal methodologies.
7.100. The dumping margin determined pursuant to the second sentence where the
W-T methodology is applied to pattern transactions (without zeroing) and the W -W methodology is
applied to non-pattern transactions (without zeroing) will in every case be mathematically equivalent
to the dumping margin based on the application of the W-W methodology to all export transactions,
provided the weighted average normal values used under the W-W and W-T methodologies are the
same. We will consider below whether such type of mathematical equivalence affects the effet utile
of the second sentence of Article 2.4.2.
7.2.1.3.2.2 Textual and contextual basis for a prohibition on zeroing under the second
sentence
7.101. We have concluded that the W -T methodology may be applied only to the pattern
transactions while a "normal" methodology must be applied to the non-pattern transactions. We
have also concluded that the pattern transactions include export transactions to purchasers, regions

168 Emphasis added.
169 Other provisions of the Anti-Dumping Agreement, such as Annex II(7), provide that the results may
be less favourable in the situations set out therein.

or time periods for which the export prices are found to "differ significantly" because (a) they are
significantly higher (and thus may be masking the lower -priced export sales) or (b) they are
significantly lower (and thus may be masked by higher-priced export sales). But higher-priced export
transactions mask lower-priced export transactions only when they are above the normal value. 170
Thus, it is only by comparing "[a] normal value established on a weighted average basis" with the
"prices of individual export transactions" that an investigating authority can ascertain whether the
high-priced export transactions are indeed masking lower -priced export t ransactions. Once the
investigating authority applies the W -T methodology it would be able to identify those export
transactions that are being masked, and those export transactions that are masking them.
7.102. Having identified the higher-priced export transactions within the pattern that are masking
lower-priced export transactions in that pattern, is an investigating authority permitted to unmask
such higher -priced export transactions by treating their value as zero ? The text of the second
sentence doe s not explicitly state that an investigating authority is permitted to disregard, by
treating as zero, those export transactions that are priced above the weighted average normal
value.171 However, again, the silence of the text on this matter is not disposi tive. Instead, to
determine whether an investigating authority is permitted to zero such higher -priced export
transactions, we must interpret the text of the second sentence in context and in light of the function
of the second sentence of Article 2.4.2.
7.103. The second sentence permits an investigating authority to compare a weighted average
normal value with the prices of "individual" export transactions. Qualification of the term "export
transactions" by "individual" rather than "all" suggests that the dumpin g margin under the
W-T methodology need not be based on the comparison results of all export transactions.172 Instead,
interpreting the second sentence in light of its function, and taking into account the word "individual",
which can be defined as "[e]xisti ng as a separate indivisible entity; numerically one; single, as
distinct from others of the same kind; particular" or "single; separate" 173, suggests that an
investigating authority may distinguish those individual export transactions that mask other export
transactions from those individual export transactions that are being masked. It follows that the
authority may treat these individual transactions differently when making its dumping
determinations under the W-T methodology. In particular, having identified through the application
of the W-T methodology the individual export transactions that mask other export transactions, and
those individual export transactions that are being masked, an investigating authority is not required
to re-mask the individual export transactions above the weighted average normal value but may
instead treat them as zero.
7.104. Our view is supported by contextual elements. The W -T methodology is distinct from the
"normal" methodologies provided in the first sentence of Article 2.4.2. It is an exception, and unlike
the two normal methodologies, its function is to unmask targeted dumping. Thus, unlike the W -W
and T-T methodologies, which as noted in paragraph 7.19 above, fulfil the same function and are
meant to give systemically similar results, the W -T methodology fulfils a different function, and is

170 Canada states that in the broadest sense of the term "mask", higher-priced sales to a particular
purchaser, region or time period may mask lower-priced sales to others within the same category regardless of
their relationship with normal value. (Canada's response to Panel question after the second meeting of the
Panel No. 6, para. 12). Canada provides no explanation in support of this statement. In any case, we disagree
with this statement for we do not see how higher-priced export sales would mask lower-priced sales when, for
instance, both are above normal value. Thus, whether or not higher-priced sales are actually masking
lower-priced sales can only be ascertained through the application of a methodology that takes into account
the difference between the export price and normal value.
171 In US – Washing Machines, the Appellate Body relied on the reference to "prices of individual export
transactions" in the plural, which it noted was not qualified by any reference to normal value, to support its
view that zeroing was impermissible under the second sentence of Article 2.4.2. (Appellate Body Report, US –
Washing Machines, para. 5.154). However, we do not find the use of the plural form in the second sentence of
Article 2.4.2 to suggest that zeroing is impermissible under this sentence. Instead, the phrase "a normal value
established on a weighted average basis may be compared to prices of individual export transactions" is a
description of the W-T methodology, which permits an investigating authority to compare a weighted average
normal value with the prices of multiple export transactions.
172 This view accords with that of the dissenting Member in US – Washing Machines who noted that the
second sentence of Article 2.4.2 puts emphasis on the selection of individual export transactions.
(Appellate Body Report, US – Washing Machines, para. 5.201).
173 Appellate Body Report, US – Washing Machines, para. 5.49 (quoting the definitions of "individual" in
Oxford Dictionaries online).

not meant to give results that are systemically simi lar to that obtained under either the W -W
methodology or the T-T methodology.
7.105. However, if one of the two normal methodologies, i.e. the W-W methodology, systemically
and in every case gives a result that is mathematically equivalent to the dumping margin determined
pursuant to the second sentence of Article 2.4.2, this would suggest that the W -T methodology is
unable to fulfil its function. We consider such type of mathematical equivalence to be a symptom of
an underlying problem, which is the inability of the W-T methodology to unmask targeted dumping.
Certain adjustments to the examined data may well break mathematical equivalence in some cases.
For example, as Canada notes, if in using a mixed W -W and W -T methodology an investigating
authority changes the temporal bases of the normal value used under the W -W and
W-T methodologies respectively, the resultant overall dumping margin may be different from that
calculated by applying the W-W methodology to all export transactions.174 But Canada (or any third
party) does not assert, and we do not consider, that the Anti -Dumping Agreement requires an
investigating authority to change the normal value in this manner. 175 More to the point, we do not
see, and Canada does not show, how such a change in the temporal basis for normal value
calculations would allow an investigating authority to unmask targeted dumping. Thus, while
adjustments of these types may well break mathematical equivalence, such type of adjustments
would only make the symptom, rather than the underlying problem, disappear.
7.106. Considering the raison d'être of the W-T methodology is to unmask targeted dumping, the
inability of this methodology to do so will render this methodology inutile. We recall that an
interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs
of a treaty to redundancy or inutility.176 Therefore, contextual considerations also support our view
that the second sentence of Article 2.4.2 does not prohibit zeroing u nder the W-T methodology.
Based on the above, we find that an investigating authority is permitted to use zeroing while applying
the W-T methodology to the pattern transactions.177
7.107. We are aware that our conclusion s in this Report differ from th ose of the panel and the
Appellate Body in US – Washing Machines as well as the panel in US – Anti-Dumping Methodologies
(China).178 This is the result of our objective assessment of the facts of this case, and the applicability
of, and conformity with, the relevant covered agreements. We have carefully considered these
reports of the panels and the Appellate Body, and found convincing or cogent reasons to arrive at
conclusions different from those of the Appellate Body in US – Washing Machines as well as the
panels in US – Washing Machines and US – Anti-Dumping Methodologies (China).179
7.2.1.3.2.3 Conclusion
7.108. Based on the foregoing, we find that Canada has failed to establish that the USDOC acted
inconsistently with the second sentence of Article 2.4.2 by using zeroing under the W-T methodology
in the underlying investigation.

174 See, e.g. Canada's response to Panel question after the second meeting of the Panel No. 2(d),
para. 4.
175 Panel Report, US – Washing Machines, para. 7.165. The panel stated that there was no textual basis
to conclude that the "normal value established on a weighted average basis", as referred in the second
sentence of Article 2.4.2, is different from the "weighted average normal value", as referred in the first
sentence of Article 2.4.2.
176 Appellate Body Report, US – Gasoline, DSR 1996:I, p. 21.
177 Considering we have concluded that the second sentence of Article 2.4.2 does not require an
investigating authority to re-mask the individual export transactions in the pattern that are above the weighted
average normal value, we do not consider that by using zeroing under the second sentence of Article 2.4.2 an
investigating authority fails to make its dumping determinations based on the totality of an exporter's or
foreign producer's export transactions. Instead, having considered the prices of all the export transactions of
that foreign producer or exporter, an investigating authority is permitted to exclude, by treating as zero, those
individual export transactions in the pattern that are above the weighted average normal value and thus
masking the prices of other export transactions.
178 See also paras. 7.62 and 7.88-7.99 above.
179 See, e.g. Appellate Body Report, US – Stainless Steel (Mexico), para. 160.

7.2.2 Zeroing claims under Article 2.4 of the Anti-Dumping Agreement
7.109. Article 2.4 of the Anti -Dumping Agreement requires "[a] fair comparison … between the
export price and the normal value". Canada contends that the use of zeroing under the second
sentence of Article 2.4.2 is inconsistent with the "fair compariso n" obligation because (a) zeroing
inflates the dumping margin generated under the W -T methodology; and (b) zeroing ignores the
actual export price of a transaction made above normal value and instead deems that the export
price is equal to the normal value .180 The United States notes that the text of Article 2.4 of the
Anti-Dumping Agreement says nothing about whether zeroing is fair or unfair.181 The United States
also asserts that the Appellate Body has found zeroing to be unfair and inconsistent with Article 2.4
in previous disputes only when it has found zeroing to be inconsistent with other provisions of the
Anti-Dumping Agreement.182
7.110. We recall that in US – Washing Machines the Appellate Body found zeroing under the
W-T methodology to be inconsistent with Article 2.4 of the Anti -Dumping Agreement. The
Appellate Body found that setting the value of intermediate negative comparison results to zero
under the W-T methodology has the effect of inflating the magnitude of dumping, thus resulting in
higher margins of dumping, while also making a positive determination of dumping more likely when
the export prices above normal value exceed those that are below normal value. 183 However, the
Appellate Body's finding under Article 2.4 was based on its finding that zeroing is prohibited under
the second sentence of Article 2.4.2. For instance, in making its findings under Article 2.4 it noted
that by setting to zero "individual export transactions" that yield a negative comparison re sult, an
investigating authority fails to compare "all" comparable export transactions that form the applicable
"'universe of export transactions' [i.e. pattern transactions] as required under the second sentence
of Article 2.4.2, thus failing to make a 'fair comparison' within the meaning of Article 2.4".184 It also
recalled while making its findings under Article 2.4 its earlier finding that zeroing under the second
sentence of Article 2.4.2 is not required to identify and address targeted dumping.185 Therefore, we
consider the Appellate Body's findings under Article 2.4 to be dependent on its findings that zeroing
is impermissible under the second sentence of Article 2.4.2.
7.111. We have already found that the second sentence of Article 2.4.2 permits zeroing under the
W-T methodology to the extent this methodology is limited to pattern transactions. Thus, the
Appellate Body's findings in US – Washing Machines offer us limited guidance on whether we should
find zeroing under the W -T methodology to be inconsistent wi th Article 2.4. Instead, we must
consider whether zeroing under the second sentence of Article 2.4.2 could be impermissible under
Article 2.4 even if it is permissible under the second sentence of Article 2.4.2. Canada has not
provided any independent basis for us to find that zeroing under the W-T methodology is inconsistent
with the "fair comparison" obligation of Article 2.4 even if zeroing under this methodology is
consistent with the second sentence of Article 2.4.2.186
7.112. Based on the foregoing, we find that Canada has not established that the USDOC acted
inconsistently with Article 2.4 of the Anti -Dumping Agreement in the underlying investigation
because it used zeroing under the W-T methodology provided in the second sentence of Article 2.4.2
of the Anti-Dumping Agreement.
7.2.3 Consequential claims under Articles 1 and 2.1 of the Anti -Dumping Agreement as
well as Articles VI:1 and VI:2 of the GATT 1994
7.113. Canada claims that as a consequence of the violations under the second sentence of
Article 2.4.2 and Article 2.4 of the Anti-Dumping Agreement, the USDOC acted inconsistently with

180 Canada's first written submission, paras. 60-61.
181 United States' first written submission, para. 193.
182 United States' first written submission, para. 206.
183 Appellate Body Report, US – Washing Machines, para. 5.180.
184 Appellate Body Report, US – Washing Machines, para. 5.180.
185 Appellate Body Report, US – Washing Machines, para. 5.181.
186 See, e.g. Canada's first written submission, paras. 58-63. Canada relies on past reports of the
Appellate Body that found zeroing to be impermissible under Article 2.4 only after finding that zeroing was
inconsistent with other provisions of the Anti-Dumping Agreement. Thus, these reports are not directly relevant
in assessing whether Article 2.4 prohibits the use of zeroing under the W-T methodology, even if zeroing is
permissible under the second sentence of Article 2.4.2.

Articles 1 and 2.1 of the Anti-Dumping Agreement as well as Articles VI:1 and VI:2 of the GATT 1994
in the underlying investigation. We have concluded that the USDOC acted in consistently with the
second sentence of Article 2.4.2 in the underlying investigation because it identified a single pattern
that aggregates differences in export prices across purchasers, regions and time periods, which the
second sentence does not permi t. We have rejected other aspects of Canada 's claims under the
second sentence of Article 2.4.2 as well as its claim under Article 2.4.
7.114. We consider our findings under the second sentence of Article 2.4.2 and under Article 2.4 to
be sufficient to resolve this dispute. Therefore, we do not find it necessary to address
Canada's claims under Articles 1 and 2.1 of the Anti -Dumping Agreement as well as Articles VI:1
and VI:2 of the GATT 1994.187
7.115. Based on the foregoing , we exercise judicial economy on Canada's claims under Articles 1
and 2.1 of the Anti-Dumping Agreement as well as Articles VI:1 and VI:2 of the GATT 1994.
8 CONCLUSIONS AND RECOMMENDATION
8.1. For the reasons set forth in this Report, we find that in applying the DPM in the underlying
investigation the United States acted inconsistently with:
a. Article 2.4.2 of the Anti -Dumping Agreement by aggregating differences in export prices
across unrelated categories, i.e. purchasers, regions and time periods to identify a single
pattern of export prices which differed significantly among different purchasers, regions
and time periods.
8.2. For the reasons set forth in this Report, we find that Canada has failed to demonstrate that in
applying the DPM in the underlying investigation the United States acted inconsistently with:
a. Article 2.4.2 of the Anti -Dumping Agreement by including, in the pattern, export
transactions to those purchasers, regions or time periods whose prices differed
significantly because they were significantly higher relat ive to export prices to other
purchasers, regions or time periods.
b. Article 2.4.2 of the Anti-Dumping Agreement by using zeroing under the W-T methodology
provided in the second sentence of Article 2.4.2.
c. Article 2.4 of the Anti-Dumping Agreement by using zeroing under the W-T methodology
provided in the second sentence of Article 2.4.2.
8.3. For the reasons set forth in this Report, we do not need to address, and exercise judicial
economy on, Canada 's consequential claims under Articles 1 and 2.1 of the
Anti-Dumping Agreement as well as Articles VI:1 and VI:2 of the GATT 1994.
8.4. Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent the measure at issue is inconsistent with
the Anti-Dumping Agreement, it has nullified or impaired benefits accruing to Canada under this
agreement.
8.5. Pursuant to Article 19.1 of the DSU, we re commend that the United States bring its measure
into conformity with its obligations under the Anti-Dumping Agreement.