Document: WT/DS282/R Page D-1 ANNEX D ORAL STATEMENTS, FIRST AND SECOND MEETINGS OR EXECUTIVE SUMMARIES THEREOF Contents Page Annex D-1 Oral Statement of Mexico - First Meeting D-2
Document codes: WT/DS282/R
Complainant: Mexico
Respondent: U.S.
Third parties: Argentina, Canada, China, Taiwan, EU, Japan, Venezuela, Thailand
Dispute stage: Appellate Body
Agreements cited: Art. 1, 2, 3, 6, 11, 18  Anti-dumpingArt. VI, X  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

ANNEX D

ORAL STATEMENTS, FIRST AND SECOND MEETINGS OR
EXECUTIVE SUMMARIES THEREOF

Contents Page
Annex D-1 Oral Statement of Mexico - First Meeting D-2
Annex D-2 Oral Statement of the United States - First Meeting D-6
Annex D-3 Third Party Oral Statement of Argentina D-9
Annex D-4 Third Party Oral Statement of China D-14
Annex D-5 Third Party Oral Statement of the European Communities D-16
Annex D-6 Third Party Oral Statement of Japan D-21
Annex D-7 Opening Oral Statement of Mexico – Second Meeting D-26
Annex D-8 Closing Oral Statement of Mexico – Second Meeting D-30
Annex D-9 Opening Oral Statement of the United States – Second Meeting D-34
Annex D-10 Closing Oral Statement of the United States – Second Meeting D-40

ANNEX D-1

ORAL STATEMENT OF MEXICO –
FIRST MEETING

(25 May 2004)

I. INTRODUCTION

1. Mexico respectfully ask that the members of the Panel keep the following key elements in
mind throughout this meeting:

 • First, the Appellate Body has made clear that the principal obligation of Article 11.3
is termination of the measure; continua tion of the measure beyond 5 years is the
exception. The United States must prove that it has satisfied the requirements of
Article 11.3 to justify the continuation of the anti-dumping duty beyond the five year
period.

 • Second, underlying the US position is the view that Articles 11.2 and 11.3 contain no
substantive obligations, and that the standa rds relating to "dumping" and "injury" in
Articles 2 and 3 simply do not apply.

 • Third, the U.S review decisions at issue in this case are based on presumptions, or
inferences, drawn from one observation: that Mexican import volumes are lower than
the volume reached before the imposition of the anti-dumping measure in 1995.

II. US VIOLATIONS OF ARTICLE 11.2 AND 11.3

A. T
HE ANTI-DUMPING STATUTE, THE SAA, AND THE SPB ARE INCONSISTENT AS SUCH WITH
ARTICLE 11.3 OF THE ANTI-DUMPING AGREEMENT BECAUSE THEY ESTABLISH A WTO-
INCONSISTENT PRESUMPTION
2. Paragraph 123 of the US First Submission reveals the presumptions that underpin US law and
direct the Department's pr actice. The obligations in Article 11.3 cannot be satisfied by presumptions
or "simply an exercise in logic." Determinations under Article 11.3 must always rest on "positive
evidence" of likelihood.

3. The empirical evidence provided in MEX-62 demonstrates the operation of a WTO-
inconsistent presumption.

B. U
S VIOLATIONS ARISING FROM THE DEPARTMENT'S ARTICLE 11.3 REVIEW
1. Import Volumes as the Only Basis for the Decision

4. The US position could not be clearer: the "depressed state of import volumes" was the only
basis for Commerce's determination that dumping was lik ely to recur, and the US firmly believes that
there is nothing wrong with this approach. There is no reason to require a Member to maintain its

export volumes to one market as a pre-condition to benefit from its rights under Article 11.3, and
Article 11.3 contains no such pre-condition.

2. Lack of Positive Evidence

5. It is important for the Panel to focus on th e following questions when examining the specific
facts of this case:

 1 . does Article 11.3 allow an authority to rely, in the circumstance of this case, solely on
an inference arising from lower than pre-order import volumes, and to ignore
evidence provided by the parties?; and

 2 . is there positive evidence that dumping is "likely" on the facts of this case?

Mexico submits that the answer to both questions is "no".

6. With respect to the first question, an authority must base its likelihood decision on positive
evidence. In this case, the Department passively relied on the presumption that lower volumes mean
likely dumping (following the direction of the statute, SAA, and SPB).

7. With respect to the second question, the only positive evidence developed in the case
demonstrated that dumping would not occur, and that it was certainly not "likely." Mexico
demonstrates in the chart appearing as MEX-64 that the Department ignored evidence of past, present,
and future behaviour by the Mexican exporters.

8. In addition, the United States argues in its Fi rst Submission that the likely margin to prevail
was irrelevant to its substantive decision that dumping was likely to recur in this case. The
United States attempts to avoid the consequences the Japan Steel appeal decision, by arguing that the
dumping "margin likely to prevail," while repor ted, was not relied upon in determining whether
dumping was likely to continue or recur. This ex-post rationalization by the United States is not
credible. The statute, regulations, and SPB direct
 the Department to consider the dumping margin in
rendering its "likelihood" determin ation, and the evidence shows that the Department unjustifiably –
but clearly – relied on the historic dumping margin in this case.

C. US
 VIOLATIONS ARISING FROM THE COMMISSION'S ARTICLE 11.3 REVIEW
1. The "likely" standard used by the Commi ssion violates Articles 11.3 "as such" and "as
applied" in this case

9. The Commission has admitted that its interp retation of "likely" is something less than
"probable," while the Appellate Body has confir med that "likely" means "probable," and not
something less.1

10. The United States explains in rebuttal that the only reason the Commission argued before the
CIT and the NAFTA Panel examining this very same case that "likely" did not mean "probable" was
because the Commission did not understand what "probable" meant and that its previous
understanding was that a probable standard required "a high level of certainty" or "near certainty."
Again, the argument lacks credibility given the Co mmission's sophisticated, technical arguments in
the litigation.

1 See Appellate Body Report, Japan Sunset, paras. 110-111.

2. The Commission's Likelihood of Injury Determination Violated US Obligations Under
Article 11.3 Because it was not based on an Objective Examination of the Record, Was
Not Based on Positive Evidence, and Was Ta inted by the Flawed "Margin of Dumping
to Prevail" Reported by the Department

11. The Commission's decision was based on mere speculation: events pulled from the past, or
potential outcomes best described as "possibilities, " were cobbled together by the Commission to
form the basis for its inference that injury would be likely. With respect to the price, volume, and
impact of the "likely" imports, the Commission combined reliance on anecdotal evidence of what
possibly could occur, with findings from the origin al investigation several years earlier. Mexico
submits that the investigating authority cannot re ly to this extent on evidence from the original
investigation as the basis for its Article 11.3 determination.

3. Article 3 Applies To Reviews Conducted Under Article 11.3

12. Mexico and all of the Third Parties participati ng in this case, are firm in their belief that the
text of the Anti-dumping Agreement necessarily imp lies that the Article 11.3 injury determination
must satisfy the substantive requirements of Article 3. This view is based on the text of the
Agreement, particularly footnote 9.

13. The only way to sustain that Article 11.3 inju ry determinations are somehow different is to
demonstrate that some other provision of the Ag reement "specifies" that "injury" as used in
Article 11.3 need not be interpreted in accordance with Article 3. No such provision exists.

4. The Commission's decision to conduct a cumulative injury analysis violates Article 11.3
because cumulation is not permitted by Article 11.3

14. Article 11.3 affords every WTO Member the ri ght to termination of anti-dumping duties after
five years. Cumulation nullifies that right becau se termination depends on the export practices of
private companies of other WTO Members.

15. The United States offers no textual arguments to support its repudiation of the right created by
Article 11.3. Mexico asserts that Article 11.3 – bot h pursuant to its terms and as interpreted in its
context – expressly prohibits cumulation. Alternativ ely, if cumulation is permitted, it simply cannot
remain unregulated. In this case, the Commissi on conducted a cumulative analysis even though it
never defined a time frame for its likelihood determina tion. If an investigating authority has not even
decided when the "likely" imports will be in the ma rket and when the injury is "likely" to recur, it
cannot justify a decision to cumulate the "likely" imports

D. U
S VIOLATIONS ARISING FROM THE DEPARTMENT'S ARTICLE 11.2 REVIEW
16. According to the United States, Article 11. 2 does not create an obligation on WTO Members
to allow termination of the measure with respect to individual companies, but rather obligates the
Members to implement a system for "order-wide" termination. The argument is not credible for
several reasons: (1) it ignores the two references in the text to Article 11.2 to "interested parties,"
which demonstrate an intent to require termination when individual exporters demonstrate that the
measure is no longer necessary; (2) in developi ng this argument, the United States never once
mentions the DRAMs from Korea case, which demonstrates that the Department's company-specific
revocation proceedings are governed by Article 11.2; and (3) in this case, the only two known
exporters requested termination because the meas ure was no longer necessary, which is expressly the
circumstance covered by Article 11.2.

17. Treatment of Hylsa's request, and the specific issue of zeroing
. The question for this Panel is
whether the Department's practice of zeroing complies with the obligations and Articles 11.2 and 2. In

this case, zeroing creates a dumping margin, wher e no dumping margin exists. Consequently, the
zeroing in this case violates the United States' obligation under Articles 11.2 and 2.4 to base its
calculation on a "fair comparison."

18. The use of zeroing in this case also violates Ar ticle 2.4.2. As the Appellate Body explained in
Steel from Japan , reviews under Article 11 contain both an adjudicatory and investigatory element.
That is, "investigation phase" is properly understood in the context of Article 2.4.2 to mean the
portion of the proceeding (original investigation or review) in which the authority "investigates"
whether dumping has occurred.

19. Department's determination not to revoke the measure as to TAMSA
. It is clear that the
decision was based solely on the basis of the volume factor. For the same reasons explained above in
the context of the Article 11.3 review, the excessive reliance on the volume factor violates the
obligations of Article 11.2.

III. BASED ON THE PERVASIVE AND FUNDAMENTAL US VIOLATIONS, THE
PANEL SHOULD SUGGEST THAT THE MEASURE BE TERMINATED

20. Mexico refers the Panel to the specific request s it made of the Panel in paragraphs 375 to 381
of Mexico's First Submission.

ANNEX D-2

ORAL STATEMENT OF THE UNITED STATES –
FIRST MEETING

(7 June 2004)

Mr. Chairman, members of the Panel:

1. At the outset, we thought it would be helpful to outline the US review system. US law
provides that an anti-dumping duty order may be revoked by Commerce after a completion of any of
three types of reviews - sunset, changed circumst ances, and administrative. The sunset review
implements the US obligations of Article 11.3 of the AD Agreement and is conducted on an order-
wide basis. The changed circumstance review most directly implements US obligations under
Article 11.2 and can be conducted on an order-wide or a company-specific basis. The administrative
review primarily provides the mechanism for the ca lculation of duties owed, as required by Article 9
of the AD Agreement. However, it can also pr ovide a mechanism for an order-wide or company-
specific termination; here, TAMSA and Hylsa sought company-specific terminations of the order in
this dispute.

ISSUES CONCERNING THE LIKELIHOOD OF CONTINUATION OR RECURRENCE OF
DUMPING

2. With regard to Commerce's sunset determin ation, Mexico claims that the United States
breached its obligations under Article 11.3 of the AD Agreement because US law and practice require
that a "presumption of likely dumping" be applie d in favour of maintaining the anti-dumping duty
order. Article 11.3 does not prescribe how to de termine likelihood in a sunset review, or what
particular methodology a Member should use to determine likelihood. In a situation where, as is the
case here, an administering authority employs a methodology that is consistent with its WTO
obligations, properly establishes the facts, and ev aluates those facts in an unbiased and objective
manner, the authority's decision may not be overturned.

3. Mexico's entire sunset review claim is prem ised on the existence of an alleged "irrefutable
presumption" that Commerce makes an affirmative likelihood determination in every sunset review in
which a domestic interested party participates. Me xico claims that the Statement of Administrative
Action, the Sunset Policy Bulletin , and an alleged "consistent practi ce" all give rise to the alleged
presumption. Mexico fails to show the existence of the allegedly "WTO-inconsistent presumption" in
US law because no such presumption exists.

4. With respect to the SAA, Mexico quotes a p assage to demonstrate the alleged "presumption."
However, the quoted passage does not demonstrate an y such presumption. Likewise, Mexico cites
certain passages from the Sunset Policy Bulletin as a potential source for the alleged "WTO-
inconsistent presumption." Here we recall that the Sunset Policy Bulletin has no status under US law.
Therefore, it is, as a factual matter, impossible to conclude that the Sunset Policy Bulletin creates any
kind of presumption.

5. Because Mexico cannot establish that US law creates a "presumption," Mexico instead asserts
that a "presumption" exists simply because Comme rce has found likelihood in a particular number of
sunset determinations. Previous panels have found that the mere frequency of a particular outcome
does not transform that outcome into a "measure" that may be challenged independently for its alleged
WTO inconsistency. Second, the statistic does not re veal the particular factual circumstances in each
case or the analysis resulting from the evaluation of those factual circumstances.

6. We also wish to note that the Appellate Body in Japan Sunset did not affirmatively find that
the Sunset Policy Bulletin is a measure.

7. Turning to Mexico's "as applied" sunset revi ew claims, Mexico has based these claims either
on an inaccurate understanding of the facts on the r ecord or Mexico's disagreement with Commerce's
weighing of the evidence in the sunset review of OCTG from Mexico.

ISSUES CONCERNING THE FOURTH ADMINISTRATIVE REVIEW

8. Mexico's second principal claim is that Commerc e's determinations in the fourth review were
inconsistent with Article 11.2 and Article 2 of the AD Agreement and GATT 1994. Mexico is
attempting to read obligations into Article 11.2 that do not exist.

Company-specific terminations under US Law

9. Although a company-specific examination of the necessity for the continuation of a duty is
not required by Article 11.2 or any other provision of the AD Agreement, the United States,
nevertheless, provides such a procedure under its domestic law in a manner that is entirely WTO
consistent. The United States points out that it has procedures, separate and apart from those
challenged here, that provide for the possibility of termination of the order on a company-specific
basis.

10. Mexico has argued that the commercial qua ntities requirement is inconsistent with
Article 11.2. Nothing in Article 11.2, however, prohibits a commercial quantities requirement.

Commerce did not conduct a termination analysis

11. Mexico claims that Commerce applied a standa rd that was inconsistent with Article 11.2 of
the AD Agreement in determining whether the c ontinued imposition of the anti-dumping duty order
on OCTG from Mexico was necessary to offset dumpin g in the fourth review. In fact, Commerce did
not undertake a substantive analysis of whether th e OCTG order was necessary in the fourth review,
because Commerce determined that a termination review was not necessary.

The margin calculation methodology in the fourth review

12. Mexico also claimed that the United States calculated Hylsa's overall dumping margin in
violation of Article 2.4 of the AD Agreement. Me xico concludes that this violation also led to a
violation of Article 11.2 because, if the overall dumping margin had been calculated as Mexico
suggests is required, the order would have been revoked as to Hylsa. This claim fails because Mexico
adopts an interpretation that would expand the oblig ations in Article 2.4.2 and Article 11.2 beyond
their express terms.

ISSUES CONCERNING THE LIKELIHOOD OF CONTINUATION OR RECURRENCE OF
INJURY

13. Mexico has raised a number of issues rega rding the ITC's determination of likelihood of
continuation or recurrence of injury in the OCTG sunset review. We will focus on three of those
issues.

The Likely Standard

14. Mexico argues that the ITC misinterpreted th e term "likely" in Article 11.3. Essentially,
Mexico maintains that "likely" can only mean "probable," and that the ITC disregarded this meaning
and interpreted "likely" to mean "possible." The IT C did not interpret "likely" to mean "possible," as
demonstrated by the determination itself.

Article 3

15. Mexico claims that Article 3 of the AD Agreem ent applies in its entirety to sunset reviews.
But there are numerous textual indications that this is not the case. For example, there are no cross-
references in Article 3 to Article 11, or in Article 11 to Article 3.

16. Moreover, a determination of injury, or threat of injury, under Article 3 and a determination
of likely continuation or recurrence of injury under Article 11.3 are entirely different concepts.

The Time Frame

17. Mexico claims that the provisions of US law regarding the time frame within which injury
would be likely to continue or recur are inconsiste nt with Articles 3 and 11.3 of the AD Agreement.
Mexico misconstrues Article 11.3, which does not specify the time frame relevant to a sunset inquiry.

CONCLUSION

18. Mr. Chairman, that concludes the opening st atement of the United States. We would be
pleased to answer any questions the Panel may have.

ANNEX D-3

THIRD PARTY ORAL STATEMENT OF ARGENTINA

(26 May 2004)

I. INTRODUCTION

1. Argentina welcomes this opportunity to present its views to the panel in United States – Anti-
Dumping Measures on OCTG from Mexico (DS 282). Argentina's comments today will focus on the
US violations of Article 11.3 arising from US law and practice, the Departme nt's determination of
likely dumping, and the Commission's determination of likely injury. Argentina will also offer its
views as why Article 11.2 contains company-specific obligations, and why the United States violated
Article 11.2.

II. US ARTICLE 11.3 REVIEWS

A. T
HE UNITED STATES EMPLOYS A WTO-INCONSISTENT PRESUMPTION THAT DUMPING IS
LIKELY
2. The US statute, the Statement of Administ rative Action, and the Sunset Policy Bulletin, as
such, as well as the Department's consistent pr actice in sunset review cases, establish a WTO-
inconsistent presumption that termination of th e anti-dumping duty would be likely to lead to
continuation or recurrence of dumping. Under US law, declines in import volume and/or the
existence of historic dumping margins are given decisive weight. The empirical evidence developed
by Mexico in Exhibit MEX-62 in this case demonstr ates that every time the Department finds that at
least one of the three criteria contained in secti on II.A.3 of the SPB is satisfied (continuation of
dumping, cessation of imports, and no-dumping with a significant decline of imports), the Department
makes an affirmative finding of likely dumping, wit hout considering additional factors. There are no
exceptions.

3. The Appellate Body emphasized in Japan Sunset that the likelihood determination under
Article 11.3 could not be based "solely on the mech anistic application of presumptions" but instead
must be grounded on a "firm evidentiary foundation." 1 The Department's likelihood determinations
operate exclusively on the "mechanistic application of presumption." In all (227 out of 227) of the
full and expedited sunset reviews, the Department determined that dumping was likely to continue or
recur.

B. THE DEPARTMENT'S DETERMINATION OF LIKELIHOOD OF DUMPING WAS
FLAWED

4. The Department's likelihood of dumping dete rmination in the sunset review of OCTG from
Mexico was inconsistent with Article 11.3. The Department rejected positive evidence that
demonstrated that dumping would not be likely an d instead it relied on post-order import volume in

1 Appellate Body Report, Japan Sunset, para. 178.

determining that dumping was likely to recur. The prospective analysis required by Article 11.3, as
confirmed by the Appellate Body, was completely absent.

5. The evidence in this case demonstrated th at the market and economic circumstances
prevailing at the time of the original investig ation (Mexican peso devaluation and high dollar
indebtedness of Mexican exporters) no longer existe d and were not likely to exist in the future.
2 In
addition, neither of the Mexican exporters had ever been found to be dumping based on a review of
their own data. The Mexican expor ters provided evidence of these fa cts, and the Department ignored
the evidence. The Department's actions are completely unjustified in this case, and violate
Article 11.3. As the European Communities has highlighted, the Mexican case is a particularly
glaring and egregious example indicative that the United States anti-dumping system is skewed
toward findings of likelihood in sunset review investigations.
3

C. T
HE DETERMINATION OF LIKELIHOOD OF INJURY WAS FLAWED
1. Determining Likely Injury Under Article 11.3

6. In order to impose anti-dumping measures, a do mestic industry must be injured, and the cause
of that injury must be dumping. This bedrock pr inciple has applied to the international regulation of
dumping and dumping measures since its inclusion in Article VI of GATT 47. The requirements of
dumping, and injury caused by dumping, continue through the life of the measure; without these
elements, the measure must be terminated. This is made clear by Article 11.1 of the Anti-Dumping
Agreement, which states that: "An anti-dumping dut y shall remain in force only as long as and to the
extent necessary to counteract dumping which is causing injury."

7. "Dumping," "Injury," and "Causation." What do all these terms mean? There is no mystery
here because the WTO Members defined the terms. Article 2 defines dumping "for the purposes of
this Agreement." Article 3, footnote 9 defines in jury "under this agreement," and requires that the
term "injury" "shall be interpreted in accordance w ith the provisions of this Article." Article 3.5
explains that there must be a causal link between the dumping and the injury, and describes the nature
and type of evidence necessary to establish the necessary causal link. There is no ambiguity in these
terms.

8. But the United States' First Submission claims that the requirements are not clear, and that
Article 3 does not apply to the injury determinati on required by Article 11.3. Argentina respectfully
asks that the Panel to focus on this issue. For Ar gentina, and for the other Third Parties, the US
argument conflicts directly with the text of the Agreement, and therefore changes the balance of rights
and obligations agreed by the WTO Members.

9. While confident that the Panel will agree with Mexico and all the Third Parties in this dispute
regarding the application of Article 3 to Article 11.3 determinations, Argentina notes that Mexico's
claims are not dependent upon the application of Artic le 3. Mexico claims that the United States
violated Article 11.3
 because: (1) the Commission did not apply a "likely" standard in this case (as it
admitted to a NAFTA Panel reviewing the very same injury determination) 4; (2) the Commission did
not properly establish and objectively evaluate evid ence that could support a finding that injury was
likely to continue or recur; and (3) the imprope r finding of likely dumping necessarily taints the
Commission's analysis of likely injury, and necessar ily negates the possibility of proving a causal link
between the dumping and injury. Each of these clai ms relate to the substance of the Article 11.3
obligation.

2 See Mexico's First Submission, paras. 129-144.
3 See European Communities, Third Party Submission, page 16 para. 68.
4 See Mexico's First Submission, para. 171 and (MEX-47).

10. Argentina notes that the injury portion of th e Article 11.3 review of Mexican OCTG imports
is identical to the injury portion of the Article 11.3 review of Argentine OCTG, which is the subject of
a separate WTO dispute settlement proceeding (DS 268). Argentina endorses all of Mexico's "as
applied" arguments related to the injury portion of the review. The Commission's decision is based on
speculation, and, at best, events that can be considered to be "possible."

2. Cumulative Injury Analysis Prohibited in Article 11.3 Reviews

11. Argentina considers that the application of a cu mulative injury analysis is not consistent with
the rights granted to individual WTO Members by Article 11.3. 5 The purpose of Article 11.3 is to
provide each WTO Member with the right to have an anti-dumping measure affecting its exports
terminated after five years, unless its exports are likely to be dumped within the meaning of Article 2
and the dumping is likely to cause injury within the meaning of Article 3. A cumulative injury
analysis violates the object and purpose of Article 11.3, because it conditions each Member's right to
termination of an anti-dumping measure covering its imports on the commercial practices of exporters
from other countries.

12. Argentina shares Mexico's view that th e text of the Anti-Dumping Agreement is not
 silent on
the issue of cumulation.6 Article 11.3 refers to anti-dumping "duty" in the singular, not plural. Thus,
on its face, Article 11.3 requires the authorit y to determine whether the revocation of a single anti-
dumping measure – rather than the revocation of multiple anti-dumping measures – would be likely to
lead to the continuation or recurrence of injury. Article 11.3 thus does not permit cumulation.

13. Argentina notes that WTO Members in the Uruguay Round achieved, for the first time,
disciplines on the practice of cumulation. The us e of a cumulative analysis was authorized for
"investigations," and even then only where certain conditions are met. The fact that Article 3.3
provides for the conditioned use of cumulation in "investigations" but not in "reviews" indicates that a
cumulative injury analysis is not permitted in the likelihood of injury dete rmination made in an
Article 11.3 review. The failure of Article 3.3 and Article 11.3 to cross-reference each other
corroborates this reading. Article 11.3 contains e xplicit cross-references to other articles of the Anti-
Dumping Agreement (such as Articles 6 and 8), and other articles in the agreement explicitly cross-
reference Article 11 (such as the cross reference in Article 12.3). Thus, it is evident that "when the
negotiators . . . intended that the disciplines set fort h in one provision be applied in another context,
they did so expressly."
7 Accordingly, the lack of cross-references between Articles 11.3 and 3.3
indicates that the drafters of the Anti-Dumping Agreement did not intend for the limited use of a
cumulative injury analysis permitted in an investigation to be extended to the likelihood of injury
determination in a review under Article 11.3.

3. Defining the Timeframe for the Likelihood of Injury Determination

14. A fundamental flaw with the Commission's inju ry analysis in this case was its failure to
specify any timeframe for the likelihood of injury. As Argentina has argued in DS 268, the statutory
provisions (19 U.S.C. §§ 1675a(a)(1) and (5)), are inconsistent as such with Articles 11.3 and 3. 8
Article 11.3 requires the authority to determine whether termination of an anti-dumping measure
would be likely to lead to the continuation or recurrence of injury. The authority's likelihood of injury
determination must not be based on speculation abou t possible market conditions several years into
the future, but rather must be based upon the likelihood of injury upon "expiry" of the measure.

5 See Mexico's First Submission, sec. VIII.E.
6 See Mexico's First Submission, para. 254.
7 Appellate Body Report, Steel from Germany, para. 69.
8 See First Submission of Argentina in DS 268, Sec. VIII.C.1.

15. Argentina does not see how the obligations of Article 11.3 can be implemented without
defining the period in which injury is likely to cont inue or recur. Simply put, to determine whether
something would be likely or probable, the admini stering authority must have some timeframe in
mind because time affects the probability of occu rrence. US law violates Article 11.3 because it
strongly suggests that injury need not be imminent upon the expiry of the measure. Also, the
Commission's decision in this case violates Article 11.3 because the Commission did not even bother
to define a time period when injury was likely to r ecur. It simply cannot be – as in this case – that a
Member can conduct the Article 11.3 injury analysis without any parameters at all for the timeframe
within which injury would be likely to continue or recur.

III. US ARTICLE 11.2 REVIEWS

16. Argentina is puzzled by US arguments regard ing the nature of the Article 11.2 obligation.
For Argentina, it is clear that Article 11.2 creat es an obligation to terminate the measure upon the
presentation of positive evidence by individual expo rters that the measure is no longer necessary to
offset dumping.

17. First, the US position is inconsistent with th e text of Article 11.2, which refers to "any
interested party" and "interested parties." With these references, the text is explicit that the
Article 11.2 obligations to conduct a review and/ or to terminate an anti-dumping duty are company-
specific. The Appellate Body confirmed this read ing in the context of its analysis of whether
Article 11.3 creates company-specific obligations.
9

18. Further, the US position is in consistent with the position recently taken by the United States
in DS268. There, the United States asserted that sunset reviews are conduc ted on an "order-wide"
basis. Based on this approach, the United States co nsidered the relevance of the individual exporter
participation to be limited.
10 The result of such an approach is that continuation of an anti-dumping
order can be based on circumstances wholly unrelated to any one individual company. At the same
time, the United States repeated ly emphasized throughout that proceeding that US procedures were
consistent with the Anti-Dumping Agreement beca use they enabled a company to have an order
revoked as it pertains to that company by obtaining zero margins in three consecutive administrative
reviews.
11

19. Once the Panel arrives to the substance of th e 11.2 claims, it is clear to Argentina that the
United States did not have a proper basis to deny the requests for termination and to continue the
measure to TAMSA, Hylsa, and "all others." W ith respect to TAMSA, the Department once again
placed decisive weight on the volume factor, even to the extent of explicitly calling it a "threshold"
factor that was imposed after TAMSA had begun the process of reviews required by US law. With
respect to Hylsa, the evidence provided by Mexico is crystal clear: the so-called evidence of dumping
was a margin calculated on the basis of zeroing, which violates the "fair comparison" requirement of
Article 2.4. The US decision to ignore the ev idence that the measure was no longer necessary to
offset dumping violates the requirements of Article 11.2.

9 Appellate Body Report, Japan Sunset, para. 149.
10 See, e.g., US Answers to Argentina's First Set of Questions (8 Jan. 2004), para. 12; US Answers to
Panel's First Set of Questions (8 Jan. 2004), paras. 3 and 19; US Answers to Panel's Second Set of Questions (13
Feb. 2004), para. 3.
11 US Oral Response to Panel Question During First Su bstantive Meeting of the Panel with the Parties;
see also US Second Written Submission, United States – Sunset Reviews of Anti-Dumping Measures on Oil
Country Tubular Goods from Argentina, WT/DS268 (8 Jan. 2004), paras. 13-15.

IV. CONCLUSION

20. Argentina believes that Mexico has presente d a compelling case of violations. If the panel
agrees and recommends that the United States bring itself into compliance with its obligations,
Argentina agrees that termination of the anti-dumping measure on OCTG from Mexico would be the
appropriate suggestion from the panel. Argentina a nd Mexico are both of the view that a suggestion
is appropriate in the case of violations of Artic les 11.2 and 11.3, both of which create affirmative
obligations to terminate an anti-dumping measure, unless certain findings are made by the Member
seeking to continue the measure. If the findings are improper, the Panel should suggest termination in
order to restore the rights of the exporting Member.

21. Argentina thanks the Panel for providing the opportunity to comment on the important issues
presented in this dispute.

ANNEX D-4

THIRD PARTY ORAL STATEMENT OF CHINA

(26 May 2004)

1. Thank you, Mr. Chairman, and members of th e Panel. China appreciates this opportunity to
present its views on the issues raised in this Panel proceeding. In this statement, I will summarize
China's major view of points in our written submission.

2. The first issue is whether the US Department of Commerce ("DOC") acted
inconsistently with Article 2 and Article 11.3 of the Anti-Dumping Agreement regarding DOC's
likelihood of continuation or recurrence of dumping decision.

3. China agrees with Mexico that a determina tion solely based on the decrease of import volume
to decide that the expiry of the duty would be likel y to lead to continuation or recurrence of dumping
is not consistent with Article 11.3 of the Anti-Dumping Agreement.

4. The three criteria DOC adopted to determ ine dumping continuation or recurrence, i.e.,
continued dumping margins, the cessation of impor ts and/or declining import volumes accompanied
by the elimination of dumping margin do not adhere to the "dumping" definition in Article 2 of the
Anti-Dumping Agreement.

5. Article 11.3 of the Anti-Dumping Agreemen t requires the investigation authorities to
determine that the expiry of the duty would be likely, i.e., probable to lead to continuation or
recurrence of dumping before they decide not to terminate the anti-dumping measure. "To determine"
means the investigation authorities to conduct a rigorous examination in a sunset review to continue
the anti-dumping measures based on evidences that show "probability" rather than simple
"possibility".

6. The second issue is whether the US In ternational Trade Commission ("ITC") acted
inconsistently with Article 3 and Article 11.3 of the Anti-Dumping Agreement regarding ITC's
likelihood of continuation or recurrence of injury decision.

7. As we mentioned above, same as dumping d ecision, the investigation authorities are required
to determine that the expiry of the duty would be likely, i.e., probable, to lead to continuation or
recurrence of injury before they decide not to terminate the anti-dumping measure.

8. China agrees with Mexico that provisions of Article 3 of the Anti-Dumping Agreement apply
to Article 11.3.

9. Article 3.1 of the Anti-Dumping Agreement pr ovides that the investigation authorities must
base their injury determination on positive eviden ce and objective examination of the consequent
impact of these imports on domestic producers of such products.

Article 3.4 of the Anti-Dumping Agreement requires the investigation authorities to evaluate all 15
economic factors and indices. China agrees with Mexi co that in sunset review, the authorities must
follow Article 3.4 as well.

10. Article 3.5 provides that injury within the meaning of this Agreement must be caused by
dumped imports through effect of dumping set fo rth in paragraphs 2 a nd 4. This means the
investigation authority must prove causal link between dumping and injury. If the Panel finds that the
ITC failed to make causation analysis, the ITC acted inconsistently with Artic le 3.5 and 11.3 of the
Anti-Dumping Agreement.

11. China shares the view of Mexico that 19 U.S.C. § 1675a(a)(1) and 19 U.S.C. § 1675a(a)(5)
are inconsistent with Article 11.3 and Article 3 of the Anti-Dumping Agreement. The US legislation
empowers the ITC to determine whether injury w ould be likely to continue or recur "within a
reasonable foreseeable time" and to consider the e ffects of revocation or termination over a longer
period of time". It thus gives the ITC discretion to in vestigate into the long indefinite future, which is
inconsistent with the Article 11.3 of the Anti-Dump ing Agreement that requires the determination to
be based on injury upon expiry of the order.

12. The last issue China would like to address is "zeroing" methodology.

13. China agrees with Mexico that the dumping margin calculated using the "zeroing"
methodology in the DOC 4
th administrative review is inconsistent with Article 2.1 and 2.4 of the Anti-
Dumping Agreement.

14. The practice of "zeroing" selectively calculates margins only for those sales of a product with
positive margins, setting negative margins produced from sales of product to zero. This methodology
creates an artificially inflated dumping margin.

15. If the Panel, based on the evidence submitte d by Mexico, finds that DOC applied zeroing
methodology to find positive dumping margin for Hylsa in the 4
th administrative review, the DOC
determination was inconsistent with Article 2.1 and Article 2.4 of the Anti-Dumping Agreement.

16. We thank you again for this opportunity to express our views.

Chairman, Members of the Panel.

I. INTRODUCTION

1. The European Communities makes this third party oral statement because of its systemic
interest in the correct interpretation of the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement").

2. In this oral statement, in addition to the observations set out in its written observations, and
reacting to certain statements made by the othe r parties, the European Communities will comment on
the following points :

 • the precise nature of the findings made by USDOC in the sunset review;

 • the categorisation of United States periodic reviews of the amount of duty under the
Anti-Dumping Agreement; and

 • the inherent unfairness of the simple zero ing methodology used by the United States
in periodic reviews of the amount of duty.

II. SUNSET REVIEW "AS APPLIED"

3. The European Communities would draw the Panel' s attention to the fact that all of the third
parties - Argentina, China, the European Communities, Japan and th e Separate Customs Territory of
Taiwan, Penghu, Kinmen and Matsu – agree that th e conduct of sunset reviews in the United States,
generally, or in this specific case, is not consistent with the provisions of the Anti-Dumping
Agreement.

A. L
IKELY RECURRENCE OF DUMPING
4. The European Communities interest in this case is systemic. However, the distinction
between the general and the specific is not always an easy one. In order to understand what is wrong
with the United States system of sunset reviews in general terms it is helpful, even necessary, to
understand what is wrong with this, and other, speci fic determinations. That requires clarity on the
facts of the specific case. Th e European Communities would therefore like to draw the Panel's
attention to certain facts which are not entirely c onsistent with the United States presentation of the
facts in its first written submission.

5. The United States asserts that it found likely continuation or recurrence
1, referring in general
terms to all of the Issues and Decisions Me morandum relating to the preliminary sunset
determination.2 In fact, the specific determination was likely recurrence.3 Even if, in other parts of
the Issues and Decisions Memorandum, reference is made in general term s to "continuation or
recurrence", these are just general references to the relevant legal test. The Panel must look to the
specific determination made by USDOC, that being recurrence.

6. It is important to be precise about what USDOC actually determined on this point. Being
precise, by using the word "recurrence" rather than "continuation", makes it clear that USDOC made a
determination in relation to a phenomenon that had ceased, that phenomenon being the dumping

1 United States first written submission, para 46.
2 United States first written submission, footnote 73 (referring to Exhibit US-14).
3 Issues and Decisions Memorandum relating to the preliminary sunset determination, Exhibit US-14,
page 9, para 2.

determination made in respect of the original period of investigation. Using the word "continuation"
is factually inaccurate and would serve only to obfuscate the analysis – that is, to cover-up serious
weakness in the position of the United States in this case on this point.

7. The United States cannot, before this Panel, re troactively add to the measure determinations
that the measure does not contain. Nor can the Un ited States retroactively change the determination
in the measure.

8. The United States further suggests or asser ts that it relied for its determination on dumping
throughout the history of the order
4, referring to pages 5 to 8 of the Issues and Decisions
Memorandum relating to the prel iminary sunset determination. 5 In fact, the United States relied on
the original dumping margin and imports6 to find that "recurrence of dumping of OCTG from Mexico
is likely if the order were to be revoked". The preliminary results of the fourth periodic review
(1.47 per cent for Hylsa) are described in th e factual section of the Issues and Decisions
Memorandum, entitled "History of the Order". They are not, however, relied on by USDOC for the
purposes of its preliminary sunset determination.

9. These facts are confirmed by the Issues and Decisions Memorandum relating to the final
sunset determination, which is drafted in the same terms.
7

10. It is equally important to be precise a bout what USDOC actually relied on to make its
recurrence determination, for the same reasons. Al so in relation to this matter, the United States
cannot retroactively seek to re-write history, by de nying what is written in the measure before this
Panel. Its attempts to do so nicely flag the weakness of its case on this point.

11. The European Communities refers to its writte n submission, in which it has explained why it
considers USDOC's determination in this case to be inconsistent with va rious provisions of the Anti-
Dumping Agreement.

III. FOURTH PERIODIC REVIEW OF AMOUNT OF DUTY

A. C
ATEGORISATION OF UNITED STATES PERIODIC REVIEWS OF THE AMOUNT OF DUTY UNDER
THE ANTI-DUMPING AGREEMENT
12. In its written observations the European Comm unities drew the Panel's attention to the fact
that United States periodic reviews of the amount of duty correspond very closely, entirely or almost
entirely, to the provisions of Article 9.3.1 of the Anti-Dumping Agreement, rather than Article 11.2 of
the Anti-Dumping Agreement . The European Communities explai ned, in this respect, that the
United States changed circumstances review co rresponded more closely to the provisions of
Article 11.2 of the Anti-Dumping Agreement . The consequence of this is that the investigation or
assessment made during a United States periodic re view must be conducted in a manner that is
consistent with Articles 9 and 2 of the Anti-Dumping Agreement.

13. This is a point that the European Communiti es would like to re-iterate and emphasize. If a
systematic comparison is made between the texts of the various provisions, paying close attention to
the purpose, temporal character, outcome, time limits, evidentiary and other procedural rules, it is an
observation of fact that is incontrovertible.

4 United States first written submission, para 46.
5 United States first written submission, footnote 74 (referring to Exhibit US-14).
6 Issues and Decisions Memorandum relating to the preliminary sunset determination, Exhibit US-14,
page 9, para 2.
7 Exhibit Mex-19, page 4, para 4.

14. The European Communities finds further confirma tion of this analysis in the fact that, during
the relevant period, the United States also conducted a changed circumstances review.8 This confirms
the fact that periodic reviews of the amount of duty and changed circumstances reviews are quite
different, one relating essentially to Article 9.3.1 of the Anti-Dumping Agreement , and the other to
Article 11.2.

B. Z
EROING
15. The European Communities would like to em phasise that what it presents in its written
observations is an interpretation of the relevant provisions of the Anti-Dumping Agreement that
reflects the general principle and overarching oblig ation to make a fair comparison between export
price and normal value. The relevant provisions of Article 2 of the Agreement, which define
dumping, must be interpreted in a systematic and logical manner, in order to give the Agreement its
true meaning.

16. In particular, the European Communities w ould like to emphasise that the United States
practice of simple zeroing in periodic reviews of the amount of duty is inconsistent with the basic rule
in Article 2.4 that a fair comparison must be made, notably insofar as it cuts across the logic
established by USDOC itself when USDOC itself fi xes the parameters of its investigation or
assessment. A dumping determination that is inte rnally logically self-contradictory cannot be based
on a permissible interpretation of the Anti-Dumping Agreement . It cannot reflect an objective
assessment based on positive evidence. Just as the Appellate Body has ruled that this is so in respect
of the definition of the subject product and model zeroi ng, so it is equally true for any other parameter
that is used by the investigating authority more th an once in its determination. That parameter must
be consistently established and used throughout the assessment. It cannot be arbitrarily changed,
according to the outcome sought by the investigating authority.

17. In the context of zeroing, these observations have particular force with regard to the
parameters mentioned in the second sentence of Article 2.4.2 of the Anti-Dumping Agreement ,
namely: purchasers; regions and time. Absent targeted dumping by reference to one of these
parameters, an investigating authority must use a symmetrical method of comparing normal value and
export price without zeroing. The investigating auth ority is bound by its own definition of the scope
of its analysis and must therefore duly reflect all the export transactions falling within that scope. The
simple zeroing method used by the United States is, at least potentially, offensive to any one of these
parameters, because it is performed at the most disaggr egated level, that is, at the level of individual
transactions. In other words, instead of treating all the relevant export transactions as a whole, the
United States methodology results in treating each export transaction individually in the same manner
as model zeroing results in treating each model separately.

18. The recent dissenting opinion in the US-Softwood Lumber case is just that – a dissenting and
minority opinion. It is wrong. And that may be de monstrated with ease. It fails to mention at any
point, let alone grasp, the kernel of the reasoning of the Appellate Body in the EC-Bed Linen case :
the requirement that determinations be objective and based on positive evidence means that they must
be internally logically consistent. Once an inves tigating authority has adopted a certain logic, of its
own choice, it is bound to apply the same logic in a consistent manner throug hout its determination.
That is particularly true when it comes to identif ying the category of transactions, in terms of subject
product, geography and time, that will be the subject of an anti-dumping proceeding. Whether or not
there is such a thing as a perfect market definition, once the parameters for the analysis have been
fixed, they must be applied consistently by the inv estigating authority in order to ensure that a fair
comparison is made. Thus, the essential point is not whether or not the choice between the two
"schools of thought" to which the dissenter refers ca n be made on the basis of the text, context and

8 Exhibit US-12.

purpose of the Anti-Dumping Agreement. The point is rather that once the investigating authority has
itself made that choice, it is bound by its own logic.

19. In the face of the text and the overwhelm ing logic of the meaning of the provisions in
Article 2 of the Anti-Dumping Agreement which define dumping, the United States advances
essentially one brief and purely textual argument – the phrase "during the investigation phase". The
United States entire defence on this point is theref ore premised on the assertion that this means "not
during the review phase"; that the Anti-Dumping Agreement defines the terms investigation and
review; and that these terms are mutually exclusiv e. Even if, for the sake of argument, the
United States were correct, that would not rende r "zeroing" permissible in reviews - quite the
contrary, it would in fact mean that the asymmetrical method of comparison that Article 2.4.2
introduces as an exception to the norm is not availa ble in reviews. In any event, these textual
assertions made by the United States are simply wr ong. In textual terms, the European Communities
has explained in its written observations that the matter before this Panel is essentially an
investigation or assessment within the meaning of Article 9.3.1 of the Anti-Dumping Agreement
(whatever term is used by the United States). Th e European Communities has also explained that the
Agreement contains no definition of the terms "review" and "investigation"; and that in fact these
terms are used in different senses in the Agreement – the meaning or meanings in any case being
derived from the context and purpose of the provisions in question. In particular, the European
Communities has explained that the text "investigation" in Article 2.4.2 of the Agreement must have
the same general and unqualified meaning as the word "investigation" in Article 6 of the Agreement.
The European Communities has thus demonstrated, in equally textual terms, the basic fallacy in the
United States textual argument. The United States is actually asking the Panel to read into
Article 2.4.2 words such as "initial" or "original" or "Article 5" – words that are simply not there in
the text. Add to this the overwhelming argumen ts of context and purpose put forward by the
European Communities – arguments that the United States has neither responded to nor matched with
any context or purpose based arguments of any kind, and the only permissible and true interpretation
of the Agreement becomes clear.

20. The European Communities holds the firm c onviction that the reason why the United States
has offered no contextual or purpose based argument in support of its (errone ous) textual assertion is
that there are no such arguments to be made. Why should the overarching principle of "fair
comparison" for which Article 2.4 stands actually count for nothing when it comes to finally assessing
and paying anti-dumping duty? Why should a method of comparison that gives more weight to
dumped transactions than to non-dumped transactions be considered "fair"? Why should the
methodology for calculating dumping margins change fro m one moment to another? Why should the
results of an original investigation be totally eclipsed and set at naught by the results of a first
assessment exercise? Why should two exporters, exporting the identical product from the same
country during the same period, in an identical series of transactions (in terms of amount, price and
timing) be subjected to two completely diffe rent methodologies and anti-dumping duties? If model
zeroing is unfair, how can simple zeroing, which produces an even worse result, be fair? Why should
exporters who eliminate the margin by which they have been found to be dumping, nevertheless be
subject to a dumping duty? Why should dumping be found to exist or not, and its magnitude
determined, according to the arbitrary distributio n of transactions over time? Why should Members
using a prospective collection system be penalis ed compared to Members using a retrospective
system? The United States offers no answers to th ese questions because it has none. The silence is
deafening.

 Thank you for your attention.

I. INTRODUCTION

1. Mr. Chairman and distinguished Members of the panel, on behalf of the Government of
Japan, I thank you for your attention to this important matter. This morning, we will not repeat our
arguments in our written submission. Rather, we would like to focus on certain arguments presented
by parties that we did not address in detail in our written submission.

II. ARGUMENTS

A. T
HE THREE SCENARIOS IN THE SUNSET POLICY BULLETIN ARE INCONSISTENT WITH
ARTICLE 11.3 OF THE AD AGREEMENT AS SUCH
2. The United States insists that the Appellate Body in US – Corrosion-Resistant-Carbon Steel
Frat Products from Japan Sunset Review case1 found in favour of the DOC's affirmative likelihood
finding, which was based solely on dumping margins and depressed import volumes.2 We disagree.

3. The United States appears to have misunderst ood the Appellate Body's statements. As the
United States should be fully aware, Japan narro wed its as-applied claims regarding the DOC's
likelihood determination in the CRS sunset review case, focusing on other issues, such as the zeroing
and the as-such claim of Sunset Policy Bulletin , in its appeal. With respect to the as-applied claims,
Japan asked the Appellate Body to review whether DOC's reliance on the automatic review
mechanism provided for in Sunset Policy Bulletin was justified. Japan also asked the Appellate Body
to review whether DOC's reliance on the dumpi ng margins, which DOC calculated in previous
administrative reviews using the zeroing method, w as justified. The Appellate Body, however, was
unable to rule on either of these issues because "the Panel did not examine the nature and meaning of
Section II.A.3 of the Sunset Policy Bulletin,"3 and because of "the lack of factual finding by the Panel
regarding the methodology used by USDOC in the administrative reviews." 4 Japan did not ask the
Appellate Body to review the DOC's reliance on the import volume 5, nor did Japan ask the Appellate
Body to review whether DOC's reliance on dumping margins and import volumes alone would
constitute sufficient evidence in the CRS sunset review case.
6 Absent of these factual findings by the
panel, the Appellate Body had no choice to dist urb the DOC's conclusion that dumping margins and
import volume "pointed in the same direction, that is, toward likely future dumping." 7 Therefore, the
Appellate Body has never stated that dumping margins and import volumes alone constitute a
sufficient basis to determine the likelihood of dumping in sunset review.

4. The United States also argues that the Sunset Policy Bulletin is not a "measure," which is
actionable under the WTO dispute settlement procee dings, because it is not "an instrument with a
functional life of its own" and not "mandatory."
8 This argument has been rejected by the Appellate
Body in US – CRS Sunset Review case.

5. The Appellate Body in US – CRS Sunset Review case expressly stated, "allowing measures to
be the subject of dispute settlement proceedings, whet her or not they are of a mandatory character, is

1 Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-
Resistant Carbon Steel Flat Products from Japan , (“US – CRS Sunset Review ”), WT/DS244/AB/R (adopted
9 January 2004).
2 First Submission of the United States, para. 104.
3 See Appellate Body Report, US – CRS Sunset Review, para. 184.
4 See id., para 138. See also id., paras. 203, and 253.
5 See id., para. 203.
6 See id., paras. 192-198.
7 Id., para. 205.
8 First Submission of the United States, paras. 110-114.

consistent with the comprehensive nature of the right of Members to resort to dispute settlement." 9 In
fact, the Appellate Body in US – CRS Sunset Review case and other cases has not required a measure
to be "an instrument with a functional life of its own. " The issue of mandatory "is relevant, if at all,
only as part of the panel's assessment of whether the measure is, as such, inconsistent with particular
obligations."10

6. The only question that this Panel has to consider, therefore, is whether the Sunset Policy
Bulletin is inconsistent with Article 11.3 of the AD Agreement as such. The Appellate Body in US –
CRS Sunset Review case pointed out that the following f actors would be relevant in examining
whether the Sunset Policy Bulletin is inconsistent with Article 11.3 as such: the nature and meaning
and consistent application of Section II.A.3 of the Sunset Policy Bulletin and the nature and meaning
of the "good cause" standard in Section II.C. 11 Japan believes that Mexico has established that the
Sunset Policy Bulletin is inconsistent with Article 11.3.

7. In sum, the Panel should reject the argument made by the United States.

B. T
HE ITC'S DETERMINATION OF LIKELIHOOD OF CONTINUATION OR RECURRENCE OF INJURY
WOULD BE INCONSISTENT WITH ARTICLES 3.1, 3.4, 3.5 AND 11.3 OF THE AD AGREEMENT
8. The US arguments on the applicability of Artic le 3 of the AD Agreement to sunset reviews
are not based on the interpretation of the ordinary meaning of footnote 9 of the AD Agreement, and
thus must be rejected. As discussed in our submission, the first phrase of footnote 9 "[u]nder this
Agreement" clarifies that the term "injury" thr oughout the whole AD Agreement, including the term
in Article 11.3 shall be understood in accordance with footnote 9.

9. The phrase in the footnote – "sha ll be interpreted in accordance with the provisions of this
Article"12 – further clarifies the application of the substa ntive rules of Article 3 to Article 11.3. The
phrase "likely to lead to continuation or recurrence" in Article 11.3 does not change the core concept
of "injury." To find a "recurrence" of injury, fo r example, the authorities must find that injury, which
does not exist through the effects of dumping at the time of the review, will recur at a point in the
future. These analyses do not affect the substantiv e requirement that the authorities must find injury
based on positive evidence and on objective examinati on of the effect of dumped imports on prices
and of the volume of dumped imports. In the same vein, the requirement for evaluating economic
factors listed in Article 3.4 as well as the causation and non-attribution requirements under Article 3.5
must be satisfied under the sunset review proceedings.

10. The United States argues that likelihood of injury as defined in Article 11.3 requires
"decidedly different analysis"
13 from that for the injury analysis in the original investigation. Contrary
to the US argument, Article 3 contemplates prospec tive analysis even in original investigations.
Footnote 9 and the provisions of Article 3 clarify that all the provisions of Article 3 apply to the
determination of the threat of material injury. Ar ticle 3.7 then requires that the authorities examine a
situation at a point in the future, at which the e ffects of dumping will cause material injury to the
domestic industry. In a threat case, therefore, the examination of economic factors and causations
under Articles 3.4 and 3.5 also must be made at the point in the future. The analysis of "injury" in
sunset reviews is analogous to the analysis required in Article 3 for the threat of material injury. As
such, Article 3 contemplates the prospective injury analysis, as Article 11.3 requires.
The US argument thus has no merits.

9 Appellate Body Report, US – CRS Sunset Review, para. 89.
10 Id.
11 Id., paras. 169, 184 and 189.
12 Footnote 9 of the AD Agreement. (emphasis added).

11. In this case, the ITC appears to have faile d to evaluate individual factors as listed in
Article 3.4. The ITC also appears to have failed to separate and distinguish the effects of factors other
than the dumped imports, which the ITC knew at the time of the sunset review, from effects of
dumping. The ITC's injury determination in the sun set review, therefore, appears to be inconsistent
with Articles 3.4 and 3.5.

C. T
HE DOC'S DETERMINATION BASED ON THE DUMPING MARGINS CALCULATED WITH
ZEROING METHODOLOGY
12. The United States argues that the Appellate Body reports in EC-Bed Linen14 and in US – CRS
Sunset Review case are not relevant to this case. The United States alleges that the finding in EC –
Bed Linen case was limited to the investigation phase and that it examined a calculation methodology
distinct from that in this case. 15 The United States also asserts that the Appellate Body found that it
was unable to confirm the inconsistency of the zeroing method with the AD Agreement. 16 W e
disagree.

13. The Appellate Body in Japan-Taxes on Alcoholic Beverages
17 stated that panel reports
constitute legitimate expectations among WTO Members, and, therefore, should be taken into account
where they are relevant to any dispute.18

14. As discussed in our submission, the Appellate Body in EC-Bed Linen case clarified that
zeroing is inconsistent with Article 2.4 and 2.4.2 because "the Anti-Dumping Agreement concerns the
dumping of a product,"
19 and because "[w]hatever the method u sed to calculate the margins of
dumping, in our view, these margins must be, and can only be, established for the product under
investigation as a whole". 20 It further clarified "[t]he comp arison between export price and normal
value that does not take fully into account the prices of all comparable export transactions – such as the
practice of ‘zeroing' at issue in this dispute – is not a ‘fair comparison' between export price and normal
value, as required by Arti cle 2.4 and by Article 2.4.2". 21 In these aspects, there is no difference
between the calculation methods used in EC-Bed Linen and the calculation methods in this case as
discussed in our submission.

15. The Appellate Body in US – CRS Sunset Review case has clarified that the differences of the
types of AD proceedings are irrelevant to the zeroi ng issue. In particular, the Appellate Body has
explicitly stated with respect to the sunset revi ew, "should investigating authorities choose to rely
upon dumping margins in making their likelihood determination, the calculation of these margins
must conform to the disciplines of Article 2.4"
22, and "[i]f these margins were legally flawed because
they were calculated in a manner inconsistent with Ar ticle 2.4, this could give rise to an inconsistency
not only with Article 2.4, but also with Article 11.3 of the Anti-Dumping Agreement ."23 T h e
Appellate Body has further stated, "the inherent bias in a zeroing methodology of this kind may
distort not only the magnitude of a dumping margin, but also a finding of the very existence of
dumping."
24

14 Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type
Bed Linen from India ("EC – Bed Linen"), WT/DS141/AB/R (adopted 12 March 2001).
15 First Submission of the United States, para. 212.
16 Id., para. 213.
17 Appellate Body Report, Japan-Taxes on Alcoholic Beverages , WT/DS8, 10, 11/AB/R (adopted
1 November 1996) .
18 Id., page 14.
19 Appellate Body Report, EC – Bed Linen, para. 51.
20 Id., para. 53.
21 Id.
22 Appellate Body Report, US – CRS Sunset Review, para. 127.
23 Id.
24 Id., para. 135.

16. Therefore, contrary to the argument by the United States, the rulings and findings in both EC-
Bed Linen case and US – CRS Sunset Review case are fully relevant to this case. Thus, they constitute
"legitimate expectation" among WTO Members. This Panel, therefore, should follow the findings in
EC-Bed Linen case and US – CRS Sunset Review case.

17. The United States also argues that the Appellate Body in US – CRS Sunset Review case made
no finding and undertook no serious legal analysis on the issue of zeroing.
25 This is incorrect. The
Appellate Body in US – CRS Sunset Review case could not conclude that the calculation method
adopted by the United States is inconsistent with Article 2.4 only because of the lack of factual
finding by the Panel. 26 As discussed, the Appellate Body clearly found that the determination in
sunset reviews based upon dumping margins calculated with zeroing methodology is inconsistent with
Article 2.4.27

III. CONCLUSION

18. For the foregoing reasons, Japan respectfully re quests the Panel to find that the United States
acted inconsistently with Articles 2.4, 3.1, 3.4, 3.5, 11.2 and 11.3 of the AD Agreement.

25 First Submission of the United States, para. 212.
26 See Appellate Body Report, US – CRS Sunset Review, para. 138.
27 See id., para. 127.

ANNEX D-7

OPENING ORAL STATEMENT OF MEXICO –
SECOND MEETING

(17 August 2004)

I. INTRODUCTION

1. Article 11 contains specific ob ligations related to the termination of anti-dumping duties. If a
Member wants to continue a measure beyond the five -year period prescribed in Article 11.3, or to
continue a measure after a review requested by an interested party pursuant to Article 11.2, the
Member must satisfy the obligations of Article 11.
1 The determinations of the Department of
Commerce ("the Department") and the Internati onal Trade Commission ("Commission") in this case
fail to satisfy these obligations, as the decisions were based on presumptions and the use of legal
standards that violate Article 11. Because the US authorities did not satisfy the requirements for
continuing the measure, the measure must be immediately terminated.

2. Mexico notes its disagreement with the US stat ements regarding the burden of proof. Mexico
has presented a prima facie case and the United States has invoked what the Appellate Body has
reaffirmed to be the limited exception of Article 11.3 to extend the measure beyond the temporal
limitation contained therein.

II. THE DEPARTMENT'S SUNSET DETERMINATION

A. W
TO-INCONSISTENT PRESUMPTION OF LIKELY DUMPING
3. The US statute (19 U.S.C. § 1675a(c)(1)), the US Statement of Administrative Action
("SAA") (pages 889-890), and the Sunset Policy Bulletin ("SPB") (Section II.A.3), operating
independently and together, establish a presumption that dumping would be likely to continue or
recur.
2 This presumption is inconsistent with Article 11.3.

4. The US has failed to rebut the following facts: First
, the Department has neve r issued a
determination in any full or expedited sun set review that dumping would not be likely ; out of 232 full
and expedited sunset reviews, the DOC rendere d 232 likely dumping determinations. Second , MEX-
62 and MEX-65 confirm that the Statute, the S AA, and the SPB establish a WTO-Inconsistent
presumption of likely dumping in every case by requiring the Department to give decisive weight to
historical dumping margins or declines in import volume. Third , the "good cause" provision
impermissibly reverses the burden and has never resulted in a not likely determination.

5. Mexico has highlighted and documented the Department's consistent practice for three
different reasons. First, the Depa rtment's consistent practice provides evidence of the meaning of the
statute, the SAA, and the SPB. Second, the Departme nt's consistent practice itself is a measure that
violates Article 11.3. And third, the Department 's consistent practice demonstrates that the

1 See Appellate Body Report, Sunset Review of Steel from Japan, para. 113.
2 See Mexico's First Submission, paras. 87-109; Mexico's Second Submission, paras. 8-47.

United States has not administered its law in a reasonable and impartial manner, as required by GATT
Article X:3(a).

B. T
HE DEPARTMENT'S LIKELIHOOD DETERMINATION
6. In its Second Submission, the US did not even attempt to rebut Mexico's "as applied" claims
regarding the Department's dete rmination of likely dumping in this case. The positive evidence
submitted by the Mexican respondents showed th at the margin of dumping from the original
investigation was not in any way indicative of the likelihood of dumping. Also before the Department
were the no dumping determinations (zero margins) of the recently conducted administrative review –
probative that dumping would not be likely. 3

7. The Department cited reduced import volume , ignored the positive evidence submitted by the
Mexican respondents, and then relied on the only re maining information before the Department (the
original dumping margin and the decline in volume) as the basis for the likely dumping determination.
The Department did not conduct a case-specific analysis to determine the basis for the decline, as the
Appellate Body indicated was necessary. The Depart ment then exaggerated its error by inferring that
the volume decrease must mean that the Mexican exporters could not compete in the US market
without dumping, and then extending the inference fu rther to mean that the Mexican exporters would
be likely to dump upon revocation. The Department also violated Article 11.3 by relying on the
original margin in determining whether revocation of the duty would be likely to lead to continuation
or recurrence of dumping.

III. THE COMMISSION'S SUNSET DETERMINATION

A. F AILURE TO APPLY A "LIKELY" STANDARD AND MISINTERPRETATION OF "INJURY"
8. The US arguments regarding the injury dete rmination are firmly anchored to the flawed
misinterpretations of "likely" and "injury" in Article 11.3. The failure to apply a "likely" standard and
to interpret "injury" correctly affected everythi ng that the Commission did in its review. Having
misinterpreted what it needed to find, it failed to properly establish and objectively evaluate facts that
constituted positive evidence of likely injury.

9. It is beyond doubt that "likely" means "proba ble;" the Appellate Body has said so. Mexico
demonstrated that the Commission argued vigorous ly in the NAFTA dispute involving this same
sunset review that the SAA precludes the Co mmission from applying a "probable" standard . The
Commission's admission that it did not apply a probable standard is conclusive of the issue. If the
authority is applying the wrong standard, then, by definition, it cannot properly establish the facts
necessary to support the correct standard, and it ca nnot objectively examine the facts to reach the
correct standard. Exhibit MEX-68 provides examples of the Commission failures to comply with the
standards for Article 11.3 reviews. In numerous instances, the Commission relied on assumptions and
unsupported inferences. In other relevant parts of the determination, the Commission based its
conclusions on findings made during the original inv estigation as decisive, or even the "tie-breaker."
Findings from pre-WTO investigations are not consistent with any post-WTO Anti-Dumping
Agreement provision because by definition they cannot be the result of the Anti-Dumping Agreement,
as required by Article 18.3.

10. The United States contends that "injury" in Article 11.3 is "conceptually different" than
"injury" in Article 3.
4 The argument is remarkable from a text ual point of view, and is inconsistent
with the approach taken by the Appellate Body. 5 The Appellate Body did not find that the phrase

3 See, e.g., MEX-64 (Evidence Chart from Mexico's First Oral Statement).
4 US Answers to Questions from the Panel, para. 26; US First Submission, paras. 259-263.
5 Appellate Body Report, Sunset Review of Steel from Japan, paras. 108-109 (emphasis removed).

"continuation or recurrence of" changes the meaning of "dumping." This Panel cannot find that this
same phrase changes the meaning of "i njury." "Injury" in Article 11.3 is "injury" that is defined in,
and subject to, footnote 9 of the Anti-Dumping Agreement.

B. U
S STATUTORY REQUIREMENTS GOVERNING THE TIME FRAME FOR LIKELY INJURY
11. The United States argues that Article 11.3 does not specify the time frame relevant to a sunset
inquiry, and thus, the relevant time peri od is within each Member's discretion. 6 An undefined time
frame is not consistent with the "likely" standard of Article 11.3. Without a time frame, how can one
determine if the time frame used in a review was "reasonable"? Without a time frame, how can one
know when the injury will be likely to occur? W ithout a time frame how can one know if cumulated
imports are likely to be simultaneously present in the market?

C. T
HE COMMISSION'S CUMULATIVE INJURY ANALYSIS
12. The United States misconstrues Mexico's primary cumulation argument. Mexico does not
argue that Article 11.3 is silent with respect to cumulation. Mexico asserts that Article 11.3 – both
pursuant to its terms ("duty" in the singular) and as interpreted in its context – expressly prohibits
cumulation. Article 3.3 also demonstrates that cumulation is limited to investigations.

13. Assuming arguendo that Articles 11.3 and 3.3 do not preclude cumulation in Article 11.3
reviews, then following the Appellate Body's logic, the Panel should find that the United States failed
to respect the substantive standards for cumulation in this case. When an auth ority decides to rely on
findings related to cumulation from the original inv estigation, the authority must ensure that the
findings are consistent with Article 3.
7 Irrespective of whether or not Article 3 directly or indirectly
applies to sunset reviews, a basic condition to cumu late imports in assessing injury is that the imports
from the cumulated countries must be simultaneou sly present in the US market. The Commission's
determination shows that the Commission analysis failed in this respect.

IV. THE DEPARTMENT'S DETERMINATION NOT TO REVOKE

A. T HE ARTICLE 11.2 OBLIGATION IS NOT LIMITED TO TERMINATION OF AN ANTI-DUMPING
DUTY ON AN ORDER-WIDE BASIS
14. MEX-66 demonstrates that the United States has never revoked an anti-dumping duty under
Section 351.222(g) based on a substantive analysis of whether the continued imposition of the duty
was necessary to offset dumping. Section 351.222(g) is chiefly a mechanism for revocation where the
US industry is no longer interested in the continuation of the anti-dumping order.

15. The United States' implementation of the adverse ruling of the Panel in DRAMS from Korea
should eliminate any lingering doubt as to whether Article 11.2 creates company-specific obligations.
The United States explained to its trading partners that the United States had "implemented the
recommendations and rulings of the DSB" to bring its measures into conformity with its Article 11.2
obligations.

6 US First Submission, paras. 330-331.
7 Cf. Appellate Body Report, Sunset Review of Steel from Japan, para. 127.

B. T HE DEPARTMENT'S DETERMINATION NOT TO REVOKE IN THIS CASE
16. The Department violated Article 11.2 becau se the Department did not terminate the anti-
dumping duty on OCTG from Mexico immediately upon the demonstration that the continued
imposition of the duty was not necessary to offset du mping. In the case of Hylsa, the Department
claimed that revocation was not appropriate because Hylsa was found to have a dumping margin of
0.79 per cent in the fourth review. But that marg in was calculated using the practice of "zeroing."
The decisions by the Appellate Body in EC Bed Linen , Japan Sunset and, most recently, Softwood
Lumber establish beyond dispute that the practice of zeroi ng is not consistent wi th the requirement of
Article 2.4 or with the requirement of Article 2.4. 2. With respect to TAMSA, the Department's
determination not to revoke violated Article 11.2 because the Department: (i) applied a standard
which required a demonstration that dumping was "not likely" in the future; (ii) arbitrarily imposed a
"commercial quantities" requirement; and (iii) ignored positive evidence that demonstrated that the
volume was reasonable in the context of the historically-low market conditions for oil and OCTG, and
the positive evidence that the measure was no longer necessary to offset dumping. The Department
also violated GATTT Article X:2.

V. CONCLUSION

17. Because strict compliance with the requireme nts of Article 11.3 is required in order for a
Member to extend the anti-dumping duties beyond five years, a finding that the United States did not
comply with these rules requires a finding that the US impermissibly extended the anti-dumping
measure in this case beyond 5 years, and therefore must immediately terminate the measure.

ANNEX D - 8

CLOSING ORAL STATEMENT OF MEXICO – SECOND MEETING

(18 August 2004)

1. Mexico would like to begin by addressing the issue discussed at the end of yesterday's
session. Mexico believes that a possible appeal of OCTG from Argentina (DS 268) should not affect
this proceeding. Mexico did not present written ar guments in that case, was not a complaining or
disputing party, and the Panel's ruling in that case cannot diminish Mexico's rights. Mexico has
presented a prima facie case on all its claims, and the United States has responded to those claims.
The Panel should make findings on all of the claims presented.

2. Also, while there is some overlap of issues and measures, there are also important differences.
For example, OCTG from Argentina did not involve any claims relate d to the obligations of Article
11.2. With respect to the injury determination, the Panel in OCTG from Argentina interpreted
Argentina not to be challenging the likely standa rd, whereas Mexico has made specific arguments
related to the application of the likely standard, and how this standard affected the Commission's
determination. Also, the Panel in OCTG from Argentina used "judicial economy" to avoid addressing
many of the claims made by Argentina, whereas Me xico has specifically asked this Panel to make
findings on all claims presented. For these reas ons, Mexico respectfully requests that in case of a
possible appeal in OCTG from Argentina, this cas e should not be delayed, and that Mexico's case be
analyzed on its own merits and in accordance with the procedures contained in the DSU.

3. Turning now to the substance of the issues, the United States returned to a familiar theme
yesterday. According to the US, Mexico is "grafting onto" Article 11.3 detailed substantive
requirements that are not there, and in the process is creating obligation for the United States that do
no exist. (paragraphs 15, 30, 31, 34, 41, 44). But, Mexico is doing no such thing. Instead, Mexico's
claims are based firmly on the words that the WTO Members incorporated into the text of Article 11.3
and in the Anti-Dumping Agreement. The difference in our positions is that Mexico believes that the
words are meaningful and create substantive obligat ions, while the US looks at these words and sees
no substantive obligations.

4. That US position makes sense only if you accep t that the United States never meant to be
bound by the text of Articles 11.1, 11.2 and 11.3. The United States wants the Panel to rule that it is
permissible to keep anti-dumping duties in place forever, as the US did before the WTO Anti-
Dumping Agreement, as long as the US goes throu gh the motions of reviewing the measures every
five years, and revoking orders whenever the US in dustry supports their removal. That notion cannot
be reconciled with the affirmative obligations in Articles 11.1, 11.2 and 11.3 to terminate anti-
dumping duties immediately once they are no longer warranted.

5. The words in Article 11 do impose substantiv e obligations. Let me briefly mention these in
light of some of the statements made by the United States yesterday:

6. "Likely
": The word "likely" is central to Mexico 's claims arising from the sunset reviews by
both the Department and Commission. On the Department side, the US showed in paragraph 11 of its
comments yesterday that it is very comfortable telling the Panel that it relied only on an inference that

lower volumes meant that dumping was "likely." To the US, that is enough, and the word "likely"
requires nothing more. Mexico is confident that this is not consistent with the substantive obligation
to terminate the measure unless the authority de velops and objectively examines positive evidence
that dumping is "likely." Likely means probable, and relying solely on presumptions and an inference
drawn from lower volumes does not establish what is pr obable. This is especially true in a case such
as this where the exporters have provided positive evidence demonstrating that dumping is not
probable. The Mexican exporters provided positive ev idence that the only dumping margin calculated
in the case – 21.7 per cent - could not be repeated short of some miracle, yet the Department
considered that dumping would be "likely" to recu r, and that 21.7 per cent would be the "likely"
margin to prevail.

7. On the Commission
 side, the US tries to downplay the importance of the Commission's
admission that it did not apply a "probable" standard in this same sunset determination, and that the
SAA precluded it from applying such a standard. We heard yesterday that this admission is not
relevant because it occurred at the "beginning of the dialogue" with the US courts related to the
Commission's likely standard. It is important fo r the Panel to recognize that the entire "dialogue"
alluded to by the United States related to a single question: did the Commission correctly interpret the
word "likely." In the rest of the "dialogue," the c ourt told the Commission that "likely" does, in fact,
mean "probable," and it required the Commission to re-do its decisions in the cases under review.
The US cannot refute this. At the WTO, the onl y question for the Panel is whether the Commission
applied a likely standard, and the Commission's admission answers the question. If the Panel
concludes that the Commission did not give "likely" its ordinary meaning of "probable," then the
United States violated its Article 11.3 obligations because it improperly continued the measure
beyond 5 years.

8. "Injury
": First, Mexico would like to emphasize that it has presented claims related
exclusively to Article 11.3 that are not dependent upon the application of other articles of the Anti-
Dumping Agreement. In addition, the US did not mention yesterday its earlier position that
"continuation or recurrence of injury" is different than "injury" defined in footnote 9, or that
Article 11.3 is a specific exception to the definition of injury in footnote 9. In paragraph 42, the
US takes the position that the "case does not turn on whet her the term 'injury' referred to in Article 11
has the same meaning as the term referenced in foot note 9." For Mexico, if "injury" in Article 11.3 is
"injury" in footnote 9, then it "shall be interpreted in accordance with" Article 3. So, the proper
interpretation of the word "injury" in Article 11. 3 is important to this case precisely because the WTO
Members agreed that "injury" had to be interprete d in a very specific manner; that is, "in accordance
with" Article 3. While Mexico has given several examples of how the Commission's decision is not
made in accordance with Article 3, perhaps the most striking example is the US assertion in paragraph
36 of its oral statement that there is no requirement of a causal link between the likely dumping and
likely injury. This is unprecedented in the history of anti-dumping regulation, and is contrary to the
basic requirements of Article VI of GATT1994 and the WTO Anti-Dumping Agreement. Also, the
US has never rebutted Mexico's arguments with si multaneity, which is essential to any decision to
cumulate imports.

9. Mexico has explained in its various submissi ons that the proper interpretation of the words
"likely" and "injury" necessarily affect the Commission's determination. Without a proper
interpretation of these words, the Commission does not know what it is looking for, and it can hardly
be expected to establish the facts properly, evalua te the facts objectively, and base the determination
on positive evidence of "likely" "injury." Mexico summarized some of this evidence in MEX-68,
which accompanied yesterday's oral statement.

10. Mexico is surprised by the US objection to Exhibit MEX-68. As Mexico has explained, there
is no new evidence in MEX-68. Rather the exhibit is simply a compilation of evidence and arguments
already before the Panel. MEX-68 is comprised of three columns. The first quotes findings in the
Commission's Sunset Determination (MEX-20) that are already in the r ecord, the second column

summarizes the flaws with the Commission's analysis as have already been argued by Mexico, and the
third column identifies where in its first a nd second written submissions Mexico made these
arguments. No element of the Exhibit is new, and it is hard to understand how the US could seriously
take the position that the Exhibit as a whole cannot be offered by Mexico to complement its oral
statement.

11. "Dumping
": The United States offers two argument s in paragraph 31 regarding its notion of
dumping: (1) that the Anti-Dumping Agreement does not contain any obligations as to how to
determine an overall rate of dumping, and (2) that th ere is no requirement to calculate an overall rate
of dumping in a review. Whatever the broader impl ications of these questions, there can be no doubt
that the Department calculated a margin in its f ourth review of Hylsa, the dumping finding was based
on prohibited "zeroing," and the resulting dumping finding was used by the Department as the
justification to continue the anti-dumping measure despite its Article 11.2 obligations. On the issue of
"zeroing" — which the United States now refers to as "Offset" —the Appellate Body's recent decision
in Softwood Lumber is dispositive. The Anti-Dumping Agreement requires the calculation of a single
overall dumping margin for the product under inves tigation, even if the dumping comparisons are
made at the level of sub-categories. In Japanese Steel Sunset, the Appellate Body held that authorities
are not required to calculate dumping margins in Ar ticle 11.3 reviews, but if they choose to do so,
their calculations must comply with the requirements of Article 2. The logic of these decisions is
compelling, and applies with equal force to the Ar ticle 11.2 review under consideration in this case.
The failure of the United States even to acknowledge these decisions is disappointing, to say the least.

12. "Necessary
": The panel in DRAMS from Korea held that the "need for the continued
imposition of the duty must be demonstrable on the basis of [positive] evidence ... " (para. 6.42).
In its oral statement yesterday, the US continued its strategy of avoiding references to the case, which
says a lot about the US position. As we have expl ained previously, the United States admitted at that
time that it was modifying its regulations for company-specific revocation in order to bring its
procedures into compliance with the obligations of Article 11.2. The United States has not attempted
to square its statements in Korean DRAMs with its current position for the obvious reason that they
are not reconcilable.

13. The statements that the US did make yesterday about its Article 11.2 obligation are not
credible in light of the Department's practice. D espite its explanation that it primarily implements its
Article 11.2 obligation through the "changed ci rcumstances" provision of its regulations
(Section 351.222(g)), the simple fact is that the United States has never used the 351.222(g) procedure
in that manner. The provision does not even me ntion the substantive standard. Yesterday, the
US told the Panel that it should not be concer ned with whether phrase containing the substantive
standard of Article 11.2 "was exp licity invoked." (paragraph 18). Mexico disagrees. The absence of
the substantive standard casts substantial doubt on the US explanation that this provision is the
implementation of the Article 11.2 obligation. Co mbined with the US statements to the WTO in
Korean DRAMs, and the practice highlighted in MEX-66, the US position is untenable.

14. In summary, Mexico asks that the Panel consid er the arguments made by the parties, without
losing sight of the systemic implications of th e case.. TAMSA and Hylsa, the exporters, provided
positive evidence demonstrating that the anti-dumping order should have been terminated after the
fourth administrative review and again after the sun set review. For the last three and a half years,
they have been subjected to anti-dumping du ties that are not permitted by the Anti-Dumping
Agreement.

16. Mexico has requested that this proceeding result in the immediate termination of the anti-
dumping measure applicable to OCTG. This request is based on the impossibility of retroactively
complying with the prescribed time limit in Article 11.3. As the Appellate Body has established,
Article 11.3 imposes temporal limitations which, if not met, require the removal of the anti-dumping
measure. Mexico has made this request based on the time-bound nature of the obligation since its

first submission, and the United States has not offe red any rebuttal yet. Mexico asks, as a matter of
law, that the Panel affirm that the only manner in which the US can bring its measure into conformity
with the Agreement is through the immediate termin ation of the anti-dumping order. Mexico looks
forward to the opportunity to respond to any questions that the Panel may have regarding this request.

ANNEX D-9

OPENING ORAL STATEMENT OF THE UNITED STATES –
SECOND MEETING

(27 August 2004)

Mr. Chairman, members of the Panel:

1. I would like to thank you for this opportunity to further clarify certain issues raised by
Mexico's second submission. We will focus on issues raised by Mexico's second submission.

ISSUES REGARDING SUNSET REVIEW

2. Mexico's claims focus on the obligations in Article 11.3 of the AD Agreement. Mexico's
second submission presents nothing new, and Mexico fails to establish a prima facie case.

3. Citing the Appellate Body report in Japan Sunset, Mexico argues that the Sunset Policy
Bulletin is a "measure." The Appellate Body in Japan Sunset did not find that the Sunset Policy
Bulletin is a "measure." Instead, the Appellate Body simply reversed the panel's finding that the
Sunset Policy Bulletin was not
 a measure because the panel's analysis was flawed.

4. Mexico incorrectly claims that the Appella te Body "evaluated" whether "‘the type of
instrument itself, be it a law, regulation, procedure, practice, or something else'" could be subject to
dispute settlement. Mexico misquotes the Appellate Body, which made no such statement but instead
asked whether
 the type of instrument should determine wh ether it is subject to dispute settlement.
Moreover, Mexico claims that the United States has failed to address Mexico's comments in this
regard. However, the United States has addressed Me xico's claim in both our first written submission
at paragraph 114 and in our second submission in footnote 21. Mexico has provided neither evidence
nor argument to establish its claim regarding the legal significance of the Sunset Policy Bulletin in the
context of the US legal regime.

5. While the Appellate Body did state that "leg al instruments" could be challenged as measures,
Mexico has not demonstrated that the Sunset Policy Bulletin is a "legal instrument." The Sunset
Policy Bulletin is not a law or a regulation, and it does not have the status of a law or regulation under
the US legal regime. Mexico's response has been to state that the Panel is not required to take as
"‘fact' any Member's explanation" regarding the me aning of its own law. However, Mexico has not
established that the US explanation of the meaning of the Sunset Policy Bulletin in the context of its
municipal law is incorrect.

6. Mexico also claims that, notwithstanding the failure of respondent interested parties to
respond to the notice of initiation in 173 sunset revi ews, Commerce has failed in its "duty to seek out
information." In failing to respond, respondents al so fail to rebut the positive evidence placed on the
record by the domestic interested parties.

7. Mexico argues that the "good cause" provisi on in US law restricts the evidence Commerce
may consider in a sunset review. The "good cau se" provision, however, is nothing more than a

requirement for the submitting party to provide a le gally sufficient reason for the information to be
considered in the sunset review. In practice, very few interested parties have submitted or attempted
to submit "other factors" information in sunset reviews.

8. In support of this claim, Mexico has mischaracterized both Canada-Sugar and Brass Sheet &
Strip-Netherlands. Mexico's grievance is not with the a pplication of the "good cause" and "other
factors" provisions in those reviews, but with Commerce's analysis of the information in those
reviews.

9. With regard to the sunset review of OCTG from Mexico, Mexico claims both that Commerce
impermissibly relied upon the margin of dumping cal culated in the original investigation in making
the affirmative dumping determination, and that Commerce impermissibly relied on depressed import
volumes because import volume data alone cannot support an affirmative dumping determination.

10. In addition, Mexico alleges that Commerce referred to Hylsa's 0.79 per cent margin of
dumping in the fourth administrative review to s upport the affirmative likelihood determination in the
sunset review. This is incorrect.

ISSUES CONCERNING THE FOURTH ADMINISTRATIVE REVIEW

Article 11.2 Does Not Impose Company-Specific Termination Obligations

11. The text of Article 11.2 does not impose comp any-specific termination obligations, but refers
to the termination of "the duty" as a whole.

12. Mexico argues that because Article 11.2 permits "any interested party" to request
 termination
of "the duty," it also compels investigating authorities to conduct termination reviews at the company-
specific level. This goes beyond the obligations agreed to in the text of the Agreement. Mexico also
relies upon section 351.222(e) for its assertion that an individual company can only request revocation
for itself. However, section 351.222(e) simply means that when an individual exporter requests
revocation for itself (either as part of a request for revocation as a whole or in part), that exporter must
submit the information in that section.

13. Mexico further claims that, because Article 11. 2 permits a request by any interested party and
Article 11.3 provides for a request only by a domestic industry, this means that the scope
 of the
termination review must be different under Article 11.2. There is, however, no need for a provision in
Article 11.3 for an individual respondent to request a termination review because that Article provides
that, absent such a review, the duty shall be terminated.

14. Second
, Article 11.2 refers not just to respondents, but to "any interested party." The
United States wishes to make clear, however, that respondent interested parties, as well as domestic
interested parties, have requested and received order-wide revocation reviews.

15. Mexico claims that section 351.222(g) revi ews do not fulfil Article 11.2 obligations because
that provision does not contain the language "deter mine whether the continued imposition of the duty
is necessary to offset dumping." The issue, however, is not whether that phrase was explicitly
invoked, but whether the relevant obligation has been met. Based on section 351.222(g) reviews,
Commerce has terminated numerous measures wh ich no longer remained necessary to offset
dumping.

16. Mexico asserts that section 35 1.222(g) is not a vehicle for assessing whether the continued
imposition of the duty is necessary to offset dumpi ng because it is chiefly a mechanism for revocation
where the US industry is no longer interested in the continuing the order is incorrect. This is a false
dichotomy. So-called "no interest" revocations are an important means of revocation when the duty is

no longer necessary; most foreign exporters and producers prefer to seek company-specific
 revocation
to maintain an advantage over home-country competitors.

17. The number of cases relevant to the issue before this Panel is, moreover, much smaller than
that suggested by Mexico's new exhibit. Sectio n 351.222(g) deals with various types of "changed
circumstances," including requests for narrowing the scope of the products c overed by the order.
Termination of "the duty" when it was no longer n ecessary accounted for 18 of the cases, and led to
revocation of the order in all but one of those cases.

Neither TAMSA nor Hylsa presented Positive Information Sufficient to Warrant an 11.2
Review

18. Mexico has not demonstrated why TAMSA's ability to make a single token sale
 to or through
its US affiliate in each of the three review peri ods without dumping constitutes evidence sufficient to
substantiate the need for a review of the necessity of the order. The same is true of Hylsa's token
sales, which Commerce did not further evaluate because Hylsa was found to have dumped in the
fourth review period.

19. The United States has previously shown wh y the commercial quantities requirement accords
with the requirement in Article 11.2 for the interest ed party to substantiate that such a review is
needed
. Mexico has seized upon the theory that Comme rce did not apply a threshold requirement at
all, asserting, instead, that Commerce conducted a subs tantive review of the merits of the future
necessity of the order. However, these claims are baseless.

Mexico's Remaining Commercial Quantities Complaints Lack Merit

20. Mexico continues to repeat unavailing argum ents regarding commercial quantities – without
explaining how they constitute breaches of US obligati ons. Mexico has also argued that if there were
sufficient quantities to conduct an administrative re view for purposes of calculating the final margin,
then there were sufficient quantities to conduct a revocation review. However, the purpose of the
administrative review under US law is to calculate the final margin for imports, regardless of the
quantity involved. On the other hand, a revoca tion review requires an evaluation as to whether
dumping is likely to continue or recur. Un less zero margins are based on sales in commercial
quantities, those margins cannot "warrant" an Article 11.2 review.

21. Mexico also argues that footnote 22 of the AD Agreement implies that any zero margin is
sufficient "positive evidence" to tr igger obligations under Article 11.2. However, if the drafters
intended an Article 11.2 review to be compelled by the existence of a zero margin, they would have
so stated. Such decisions are thus at the discretion of each Member.

Mexico Has Not Met its Burden of Proof with Respect to the Revocation Issue

22. The review obligation contained in Article 11.2 is only triggered when there is a request
 for a
review of the duty by an interested party which submits positive information substantiating the need
for the review. Neither TAMSA nor Hylsa ever requested a review of "the duty" and neither
submitted information sufficient to "substantiate" the need for such a review. Mexico's claim that
Commerce has not demonstrated that the order did remain necessary is irrelevant and seeks to turn the
burden of proof in this proceeding on its head. Mexico's claims regarding the US commercial
quantities requirement also rely upon unsupportable claims of inflexible "presumptions" regarding
declines in import volumes after the imposition of an order.

Mexico's Arguments Regarding "Offset" Are Also Inapposite

23. Mexico alleges that Hylsa's margin calcula tion is WTO-inconsistent based on Articles 2 and
11.2 of the AD Agreement. However, the calculation of dumping margins in an administrative review
under the United States' system is performed pursu ant to Article 9.3.1 of the AD Agreement and
Mexico has failed to raise any claims pursuant to this provision.

24. Regarding its Article 2 claims, Mexico argues that a "fair analysis" of Hylsa's sales would
have found "negative dumping margins." The anal ysis of each export transaction in the fourth
administrative review was based on a comparison with a normal value for identical or similar home
market transactions, with due allowance made for any differences affecting price comparability.
Thus, a fair comparison was made. Second, Mexi co has failed to establish that the AD Agreement
contains any obligations as to how to determine an overall rate of dumping or even whether such an
overall rate of dumping must be determined in a review

25. Finally, Mexico not only pursues contradictor y legal arguments of the interpretation of the
term "investigation," but now asserts that the United States' non-application of an offset is inconsistent
with two separate Article 2 provisions of the AD Agre ement. Mexico's claims for an offset for non-
dumped transactions should be rejected by the Panel.

ISSUES CONCERNING THE LIKELIHOOD OF CONTINUATION OR RECURRENCE OF
INJURY

Standard of Review

26. The United States agrees that the Panel shoul d review the ITC's determination to ascertain
whether that determination was based on a proper es tablishment of the facts based on Article 17.6(i)
of the Agreement, rather than Article 3.

Inapplicability of Article 3 Requirements to an Article 11.3 Sunset Review

27. Mexico has not shown that the Commission's evaluation was anything other than objective
and unbiased and based on a proper establishment of the facts.

28. While Mexico and the third parti es may believe that Article 11 should
 specify particular
criteria that must be addressed in making an Article 11.3 evaluation, it remains that the Agreement as
written does not so specify.

29. Mexico's discussion of the requirements of Article 3.5 provides a good example of how
Mexico is attempting to expand improperly the obliga tions of Members in sunset reviews. According
to Mexico, Article 3.5 requires authorities to dem onstrate that expiry of the duty would lead to
dumped imports, and that the dumped imports are likely to cause injury. Nothing in Article 3.5
imposes these requirements, which instead are captured in Article 11.3.

30. Mexico has failed to explain how the volume and price effects analyses mandated by
Articles 3.1 and 3.2 would be applied in a sunset re view. Instead, Mexico states that the absence of
imports would require the investigating authoriti es to determine why the imports are absent and
whether they are likely to return to the market. These are relevant inquiries in a sunset review, but
they are not required by Article 3.2.

31. Mexico's own arguments concerning the appli cation of Articles 3.4 and 3.7 further illustrate
why those Articles are not applicable to sunset reviews. As the panel in ITC Lumber explained, even
in the context of an original threat determina tion, Article 3.4 serves to establish the background

against which the impact of future dumped im ports must be assessed. It does not require an
evaluation of what the industry would look like based on future dumped imports.

32. Mexico's emphasis on the Article 3.4 mention of the magnitude of the margin of dumping
serves to illustrate that the Article does not apply to sunset reviews. Article 3.4 does not mention the
magnitude of the dumping margin that is likely to prevail if an order is revoked.

33. Mexico points to the US statute as proof that it is practical to apply those requirements to
sunset reviews. Just because the US statute requir es consideration of some of the same elements in
both original investigations and sunset reviews does not indicate that the analytical framework for the
two types of determinations is the same.

34. Moreover, this case does not turn on whether the term "injury" referred to in Article 11 has
the same meaning as the term referenced in footnote 9. The determination
 required under an
Article 11.3 review differs from the determination required under an Article 3 investigation.

The "Reasonably Foreseeable Future"

35. Mexico incorrectly insists that the US statut e allows an "undefined time frame" within which
injury may continue or recur after expiry of the duty. The US statute restricts the period for the injury
review to what is likely to occur within "the reasonably foreseeable future."

36. Nothing in the Agreement spells out any set period of time that should be examined.
Mexico's reliance on Article 11.1 and on the last sentence of Article 11.3 to show otherwise is
misplaced. Neither refers to the length of the future period that should be examined to ascertain
whether revocation of the order is likely to lead to continuation or recurrence of injury.

The Likely Standard

37. Mexico raises two ques tions raised concerning the likely injury standard. First, is the standard
set out in the US statute consistent with Artic le 11.3? Second, in the OCTG review, did the
Commission apply the likely standard in a manner consistent with Article 11.3?

38. The answer to both of these questions is an emphatic yes. With respect to the first issue, the
statute on its face plainly uses the exact same term – likely – as the term used in the Agreement. Thus,
Mexico's as such claim fails. Rega rding the ITC's application of the likely standard in the OCTG
review, we have rebutted in our written submissions Mexico's claim that the ITC did not apply the
standard in a WTO-consistent manner.

39. Mexico's arguments regarding the likely standard and the ITC's interpretation of it are
semantic. It is more useful to examine the details of the ITC's analysis. Notably, the ITC, using the
likely standard, has made negative determinations as to the likelihood of continuation or recurrence of
injury, leading to the revocation of anti-dumping measu res, in over one-third of the transition sunset
reviews it conducted.

40. Turning to Mexico's challenges to the fact ual aspects of the ITC's determination, Mexico
consistently fails to address the collective weight of the evidence relied on by the ITC, instead arguing
that a particular fact is not itself sufficient to s upport a finding. The application of the standard of
review to the facts in this case should lead this Panel to the same conclusion that the Argentina OCTG
panel reached in finding that the identical ITC determination was based on a proper establishment of
the facts.

41. For example, Mexico argues as though the ITC identified only one fact that supported its
finding that foreign producers would have the incen tive to increase their exports of casing and tubing

to the United States if the orders were revoked. Mexico simply fails to acknowledge the other
findings showing the incentive to increase imports of casing and tubing.

42. Mexico has not demonstrated any flaw in the ITC's likely price effects or likely impact
findings. With respect to likely impact, Mexico in its second submission merely repeats arguments
that we have already rebutted. As to likely pr ice effects, Mexico takes a new approach to its
repetitious argument that underselling was the key to the ITC's price effects findings, arguing now
that US law requires
 the ITC to consider likely underselling. US law requires the ITC to consider
likely underselling, but not to rely on it.

ANNEX D-10

CLOSING ORAL STATEMENT OF THE UNITED STATES –
SECOND MEETING

(27 August 2004)

Mr. Chairman, members of the Panel:

1. We will confine ourselves now to commenting on the few issues that remain outstanding,
including new issues raised by Mexico in its second opening statement yesterday.

Volume Requirements

2. We want to address the issue of whether the commercial quantities threshold for revocation
reviews should be defined. It is important to recall the context in which the commercial quantities
requirement is applicable: Companies have est ablished zero dumping margins and thus request a
review seeking revocation of the order. Ab sent a commercial quantities requirement, companies
could simply obtain review by making one token sale to the United States each year in order to
establish zero margins, after which they could th en resume dumping. The requirement is thus
necessary in order to establish whether the zero marg ins that were achieved can provide a realistic
picture of the likely future behavior of the exporters.

3. No number is set up to be a bright-line threshold for determining whether companies meet the
requirement, nor does Article 11.2 require the United States to establish this threshold in its order-
wide reviews. Furthermore, such a threshold would not benefit respondents. Respondents are
currently able to argue that they have satisfied the requirement even when they have shipped a low
percentage of pre-order exports. A fixed thres hold would deprive respondents of that opportunity.
Moreover, Mexico has not demonstrated that th e United States uses the requirement to deny
revocation reviews where warranted. Instead, the Un ited States has demonstrated that relatively low
post-order import volumes can satisfy the requirement.

4. Creating a bright-line threshold for commercia l quantities would have no basis in the text of
Article 11.2. Moreover, in the present dispute, TAMSA's volumes dropped to 0.2 per cent of pre-
order levels. Assuming arguendo that Article 11.2 applies to the review in question, this is not a close
call.

5. The same logic applies to the sunset revi ew analysis, which requires a Member to draw
informed conclusions about what might happen in the future. If import volumes have dropped
significantly, then it is reasonable to question wh ether it is the existence of the order – and not
reformed behavior of the respondents – that le d to the decrease in imports. The Anti-Dumping
Agreement affords Members great discretion with respect to the details of conducting Article 11.2 and
Article 11.3 reviews, both of which require counte rfactual determinations about which petitioners and
respondents will always be able to disagree.

The Statistics in Argentina OCTG and this Dispute

6. Mexico proffers a new and erroneous argumen t regarding the statistics it submitted in support
of its claim that the Sunset Policy Bulletin is a measure. Mexico states that the United States has
departed from its position in the Argentina OCTG di spute and that the United States did not challenge
the statistics in that dispute but does so now by providing "alternative statistics." Mexico is wrong on
all counts. First, the United States challenged the relevance of the statistics in Argentina OCTG, as it
has here. Second, the United States has not offered "alternative statistics" but has analyzed Mexico's
statistics and revealed their lack of probative va lue. The United States has not "departed" from its
position in Argentina OCTG.

The Argentina OCTG Panel's Evaluation of the Likely Standard

7. Mexico incorrectly states that the Argentin a OCTG panel failed to evaluate whether the
Commission applied the right standard. The Argentina panel in fact did evaluate whether the ITC met
the likelihood standard of Article 11.3 and concluded that it did.

Other Issues Relating to Injury

8. Mexico states that a likely injury determin ation without a dumping ma rgin is inconsistent
with Article 11.3. Yet the Appellate Body has al ready concluded that Artic le 11.3 does not require a
Member to calculate a margin. Mexico quotes from German Steel to imply that in a countervailing
duty case, the level of subsidization is determina tive for purposes of determining injury. Mexico
ignores the Appellate Body's primary conclusion: Injury is not defined in the SCM Agreement in
relation to any specific level of subsidization. Likewise, injury in the Anti-Dumping Agreement is not
defined in relation to any specific magnitude of dumping.

9. Mexico's arguments relating to the cumulation analysis are not persuasive. Mexico implies
that the ITC did not properly evaluate whether subject imports are likely to compete with each other
and with the domestic like product. However, Mexico fails to note that the US statute at issue
provides for such an evaluation in sunset reviews and that, in this review, the ITC did thoroughly
evaluate the competition issue. Mexico also argues that if imports are not in the market together,
there is no justification for cumulation, ignoring th e fact that there were imports in the market
together, albeit at lower levels than those prior to the entry of the order.

10. In addition, in paragraph 34 of its opening st atement yesterday, Mexico attempts to discredit
the ITC's likely injury determination, which took into consideration findings in the original
investigation, by arguing that Article 18.3 provides that pre-WTO findings are not consistent with the
Anti-Dumping Agreement. However, Article 18. 3 simply says that the Anti-Dumping Agreement
applies to investigations and review of existing measures initiated after the entry into force of the
Agreement.

Procedural Concerns

Mexico's Claim Regarding Consistent Practice is Beyond the Panel's Terms of Reference

11. Mexico continues to argue that its claim re garding the US "consistent practice" in sunset
reviews is within the Panel's terms of reference. It is not. Mexico relies on the fact that the
United States addressed Mexico's arguments regarding the consistent practice. Yet it is not whether
arguments were made and rebutted that establishes wh ether a claim is properly within a panel's terms
of reference. Rather, it is the panel request that establishes the terms of reference. Mexico's panel
request does not include a claim regarding "consistent practice" and a violation of Article 11.3.

Remedy

12. Mexico's request that the Panel make sugges tions regarding the appropriate remedy, should
the Panel find in Mexico's favour, is also troublin g. Members retain flexibility on how to implement
DSB recommendations and rulings.

13. Second, the United States strongly objects to Mexico's statements that imply that the
United States will somehow act in bad faith should the Panel find the existence of WTO
inconsistencies. There is no basis for such an a llegation, as the United States hopes that there was no
basis for such an allegation in, for example, the Mexico HFCS dispute where the DSB found that
Mexico had failed to comply with the DSB recommendations and rulings.

14. It follows then that it is inappropriate for Mexico to request that the Panel dictate precisely
how the United States should implement any recommendation or ruling, in anticipation of such bad
faith.

15. Also troubling is Mexico's argument in para graph 72 of its oral statement that the Panel
should suggest termination because to do otherw ise will permit the United States to correct
"retroactively" a violation of Article 11.3. Article 19.1 is clear as to the recommendation required of
panels and the Appellate Body.

16. Mexico's request asks the Panel to prejudge the question of continuation or recurrence of
dumping and injury. That is not something that panels are authorized to do under the DSU.

Consideration of a Possible Appeal in Argentina OCTG

17. Finally, with regard to the rele vance of an Appellate Body report in Argentina OCTG to this
dispute, should the former dispute be appealed , the United States has noted that prior panel and
Appellate Body reports are not binding on future WTO disputes. That said, the United States would
not object to delaying the current proceedings to take into account any such Appellate Body report.
However, the United States would respectfully requ est that the Panel provide each party with the
opportunity to comment on any such Appellate Body re port as it may pertain to this dispute, and then
to comment on the comments of the other party, prio r to the Panel issuing its interim report in this
dispute.