UNITED STATES – ANTI-DUMPING MEASURE ON SHRIMP FROM ECUADOR
Document: Report of the Panel
Date: 30 January 2007
Document codes: WT/DS335/R
Complainant: Ecuador
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, India, Japan, South Korea, Mexico, Thailand
Dispute stage: Panel
Agreements cited: Art. 2.4.2  Anti-dumping

UNITED STATES – ANTI-DUMPING MEASURE ON
SHRIMP FROM ECUADOR

Report of the Panel

I. INTRODUCTION
A. COMPLAINT OF ECUADOR
1.1 On 17 November 2005, the Government of Ec uador ("Ecuador") requested consultations
pursuant to Article 4 of the Understanding on Ru les and Procedures Governing the Settlement of
Disputes ("the DSU"), Article XXII of the Gene ral Agreement on Tariffs and Trade 1994 ("the
GATT"), and Article 17 of the Agreement on Implemen tation of Article VI of the General Agreement
on Tariffs and Trade 1994 ("the Anti-Dumping Ag reement") concerning certain anti-dumping
measures on frozen warmwater shrimp from Ecuador and, in particular , the United States Department
of Commerce ("USDOC")'s practice of "zeroing" when calculating dumping margins, as applied in
these measures. 1 Ecuador and the United States consulted on 31 January 2006 and on several
occasions thereafter, but failed to resolve the dispute.
1.2 On 8 June 2006, Ecuador requested the Dispute Settlement Body ("the DSB") to establish a
panel pursuant to Articles 4 and 6 of the DSU, Article XXIII of the GATT, and Article 17 of the Anti-
Dumping Agreement.2
1.3 At its meeting on 19 July 2006, the DSB establishe d a Panel in accordance with Article 6 of
the DSU to examine the matter referred to the DSB by Ecuador in document 3 The
Panel's terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by Ecuador in document , the ma tter referred to the DSB by Ecuador in
that document, and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements."
1.4 On 26 September 2006, the parties agreed that the Panel would be composed as follows:
Chairman: Mr. Alberto Juan Dumont
Members: Ms. Deborah Milstein
1.5 Brazil, Chile, China, the European Communities, India, Japan, Korea, Mexico and Thailand
reserved their third-party rights.
1.6 The Panel’s meetings with the parties and the third parties were held on 3 November 2006.
II. FACTUAL ASPECTS
2.1 At issue in this dispute is the use by the USDOC of zeroing as applied in respect of three anti-
dumping measures on certain frozen warmwater shrimp from Ecuador. The measures as identified by
Ecuador are the final determination of dumping, th e amended final determination of dumping, and the
anti-dumping order.
2.2 The USDOC, on 27 January 2004, initiated an an ti-dumping investigation on Certain Frozen
and Canned Warmwater Shrimp from Ecuador. On 4 August 2004, the USDOC published a notice of
a preliminary determination of dumping in this investigation. In the notice, the USDOC indicated that

1 WT/DS335/1.
2 WT/DS335/6, appended to this Report as Attachment 1.
3 WT/DS335/7.

it had selected the three largest producers/exporters of the subject merchandise, Exporklore S.A.
("Exporklore"), Exportadora De Alimentos S.A. ("E xpalsa") and Promarisco S.A. ("Promarisco") as
mandatory respondents and had calculated margins of dumping for these three respondents, as well as
an "all others" rate.
4
2.3 On 23 December 2004, the USDOC's final dumping determination was published, 5 reporting
that the following margins of dumping had been calculated: Expalsa, 2.62%, Exporklore, 2.35%,
Promarisco, 4.48%, and "all others", 3.26%. On 1 February 2005, in response to comments received
from interested parties, the USDOC published an amended final margin determination and anti-
dumping duty order. 6 The amended final margins of dumping calculated by the USDOC were as
follows: Exporklore 2.48%, Promarisco, 4.42%, "all ot hers", 3.58%. The amended final margin of
dumping calculated for Expalsa was de minimis. Expalsa was therefore not made subject to the final
anti-dumping duty order.
2.4 Ecuador contends that the USDOC engaged in "zeroing" in determining the respective
margins of dumping for Exporklore, Promarisco and "all others" 7 in the final dumping determination,
the amended final determination, and the anti-dumpi ng order, and that as a consequence the measures
at issue violate Article 2.4.2 of the Anti-Dumping Agreement.
III. PROCEDURAL ASPECTS
3.1 On 12 October 2006, at the organizational meeting of the Panel, Ecuador and the
United States informed the Panel that they had r eached an agreement concerning certain procedural
aspects of this dispute.8 The Agreement provides, inter alia, that the Parties would cooperate to enable
the Panel to circulate its report as quickly as possible and that to that end, the parties would seek to
reach agreement on expedited working procedures that they would jointly ask the Panel to adopt, and
that would allow for the adoption of the Panel Report by the DSB no later than 31 October, 2006. 9 At
the organizational meeting, the parties did jointl y present such proposed working procedures, as well
as a proposed accelerated timetable, for the Panel' s consideration, emphasizing that they understood
that it was up to the Panel to decide on the timetab le and working procedures after consulting with the
parties.
3.2 The Agreement also provides that the United Stat es would not contest Ecuador's claims that
the measures identified in Ecuador's request for th e establishment of a panel are inconsistent with
Article 2.4.2, first sentence, on the grounds stated in US – Softwood Lumber V .10 The Agreement

4 Exhibit Ecu-1 to answers of Ecuador to questions from the Panel (13 November 2006), Notice of
Preliminary Determination of Sales at Less than Fair Value and Postponement of Fi nal Determination: Certain
Frozen and Canned Warmwater Shrimp from Ecuador, 69 Fed. Reg. 47091.
5 Notice of Final Determination of Sales at less Than Fair Value: Certain Frozen and Canned
Warmwater Shrimp from Ecuador, 69 Fed. Reg. 79613, Exhibit Ecu-2 to the written submission of Ecuador.
6 Notice of Amended Final Determination of Sales at Less than Fair Value and Antidumping Duty
Order: Certain Frozen Warmwater Shrimp from Ecuado r, 70 Fed. Reg. 5156, Exhibit Ecu-3 to the written
submission of Ecuador.
7 Ecuador describes the "all others" rate as "[t]he amended final weighted average of [Exporklore and
Promarisco's] margins, which applies to all non-inv estigated Ecuadorian producers that export to the
United States." See answers of Ecuador to questions from the Panel (13 November 2006), Annex A-3
(question 1).
8 The "Agreement on Procedures", WT/DS335/8, also submitted to the Panel as Exhibit Ecu-1 to the
written submission of Ecuador, is appended as Attachment 2.
9 The parties did not, in their jointly proposed timetable, ask the Panel to abide by that date. This
would in any case not have been possible given that the organizational meeting was only held on
12 October 2006.
10 Agreement on Procedures, para. 3.

further recognizes that the scope of Ecuador's request for the establishment of a panel does not include
any claim regarding the margin of dumping calculate d for Expalsa, and that the parties would so
inform the Panel. The Agreement provides in this respect that if the Panel were to make findings
consistent with the parties' understanding as to th e exclusion of Expalsa, implementation would not
involve a recalculation of the margin for Expalsa.11
3.3 The Agreement also provides that Ecuador woul d not request that the panel suggest, pursuant
to the second sentence of Article 19.1 of the DSU, ways in which the United States could implement
the Panel's recommendations.12
3.4 On 17 October 2006 the Panel adopted its tim etable and working procedures, after
considering the parties' joint proposal. Given the special circumstances of this case, the Panel decided
to adopt an expedited timetable, based on the parties' joint proposal.
IV. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. ECUADOR
4.1 Ecuador requests the Panel to find that th e United States acted inconsistently with
Article 2.4.2, first sentence, of the Anti-Dumping Agreement by using "zeroing" when calculating the
dumping margins for Exporklore, Promarisco and "a ll others" in the anti-dumping investigation of
certain shrimp from Ecuador. 13 Ecuador relies, inter alia , on the reasoning in the Appellate Body
Report in US – Softwood Lumber V , in this respect, arguing that in that case, the DSB ruled that a
similar measure was inconsistent with Article 2.4.2 of the Anti-Dumping Agreement.
B. UNITED STATES
4.2 The United States does not contest Ecuador's cl aims. To the contrary, the United States
"acknowledges" the accuracy of Ecuador’s description of the USDOC’s use of "zeroing" in the
measures at issue and "recognizes" that a measure using a similar calculation, which was the subject
of the US – Softwood Lumber V Report, was ruled by the DSB to be inconsistent with Article 2.4.2,
first sentence.14
V. ARGUMENTS OF THE PARTIES AND OF THE THIRD PARTIES
5.1 The arguments of the parties and third parties are set out in their written submissions, oral
statements to the Panel and answers to Panel questions that are set forth in the Annexes to this Report.
(See list of annexes, at page ii, supra).
VI. INTERIM REVIEW
6.1 The Panel's Interim Report was issued to the parties on 4 December 2006. On
11 December 2006, the United States submitted a wr itten request to review precise aspects of the
Interim Report. Ecuador submitted no request for revi ew and, in addition, indicated that it had no
comments on the United States' request for review.
6.2 The United States, in its request, suggested th at the Panel insert additional language into
paragraph 7.38 of the Interim Report to more accurately reflect the reasoning of the Appellate Body in
US – Softwood Lumber V . The United States also suggested that paragraph 7.41 be amended in line

11 Ibid., para. 7
12 Ibid., para. 4.
13 Written submission of Ecuador, Annex A-1, para. 22.
14 Written submission of the United States, Annex B-1, para. 5.

with its proposed amendments to paragraph 7.38 . After carefully reviewing these suggestions, the
Panel has modified aspects of paragraphs 7.38 and 7. 41 of the Interim Report, incorporating some of
the language proposed by the United States and maki ng additional modifications where it considered
that doing so would provide additional clarity to the Panel's discussion of the Appellate Body's
reasoning in US – Softwood Lumber V.
6.3 Finally, the Panel amended the last sentence of paragraph 3.2 to remove ambiguity in its
wording and to more clearly reflect the contents of the parties' Agreement on Procedures. The Panel
also made some technical corrections to other paragraphs.
VII. FINDINGS
A. G
ENERAL ISSUES
1. Role of the Panel under Article 11 in di sputes where the responding party does not
object to the complaining party's claims
7.1 The dispute before us is unusual in that, as mentioned above, the responding party, the
United States, does not contest any of the complaini ng party’s claims. The parties have not, however,
characterized their shared view of the substan tive aspects of the dispute as a "mutually agreed
solution", and thus Article 12.7 does not apply. 15 We therefore start by considering whether the lack
of substantive disagreement between the parties affects our responsibilities as a Panel.
7.2 In this regard, we consider that we must be guided in this dispute, as we would be in any other
dispute subject to the DSU, by the provisions in Article 11 of the DSU, "Function of Panels", which
provides:
The function of panels is to assist the DSB in discharging its responsibilities under
this Understanding and the covered agreements. Accordingly, a panel should make an
objective assessment of the matter before it, including an objective assessment of the
facts of the case and the applicability of and conformity with the relevant covered
agreements, and make such other findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in the covered agreements.
Panels should consult regularly with the parties to the dispute and give them adequate
opportunity to develop a mutually satisfactory solution. 16 (emphasis added)

15 We note that Article 12.7 of the DSU provides that, where the parties to the dispute have developed a
"mutually satisfactory solution", the report of the panel "shall be confined to a brief description of the case and
to reporting that a solution has been reached". In contrast, where no such solution has been reached, "the panel
shall submit its findings in the form of a written report to the DSB", which report "shall set out the findings of
fact, the applicability of relevant provisions and the basic rationale behind any findings and recommendations
that it makes."
16 Article 11 DSU. We note that Article 17.6 Anti-Dumping Agreement – setting forth the special
standard of review applicable to disputes under the Anti-Dumping Agreement – also applies to this dispute.
Article 17.6 provides that:
"17.6 In examining the matter referred to in paragraph 5:
(i) in its assessment of the facts of the matter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of those facts
was unbiased and objective. If the establishment of the facts was proper and the evaluation
was unbiased and objective, even though the pa nel might have reached a different conclusion,
the evaluation shall not be overturned;
 (ii) the panel shall interpret the relevant provisions of the Agr eement in accordance with
customary rules of interpretation of public international law. Where the panel finds that a
relevant provision of the Agreement admits of more than one permissible interpretation, the

7.3 Given that, notwithstanding their common view as to how the dispute should be resolved, the
parties have not reached a mutually agreed solution (which would require us only to "report[] that a
solution has been reached" 17), we understand that our responsibility is as set forth in Article 11 DSU,
i.e., to make an "objective assessm ent of the facts of the case and th e applicability of and conformity
with the relevant covered agreemen ts, and make such other findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in the covered agreements".
7.4 We note that the the parties and third parties sh are this view. For instance, Ecuador and the
United States, in their (identical) response to a question from the Panel addressing this issue, 18
indicate that they:
[consider] that the role of a Panel in a ca se like this one, where there is no substantive
disagreement between the Parties as to the inconsistency of a measure with one or
more cited provisions of a covered Agreement, is nevertheless to make an objective
assessment of the matter, as required by Article 11 of the DSU, including an objective
assessment of the facts of the case and the applicability of and c onformity with the
relevant covered agreements. The matter be fore this Panel is a narrow one – whether
Commerce’s calculation of the weighted av erage to weighted average margins of
dumping for the two separately investigated Ecuadoran exporters and for “all other”
exporters breaches the first sentence of Artic le 2.4.2. Therefore, the Parties are not
asking the Panel to “sanction” their Agreem ent, but rather, to consider that the
Agreement facilitates the Pa nel’s assessment of the facts of the case and the
applicability and conf ormity of the measures with the covered agreements.
Nevertheless, it is correct to say that they are seeking a decision that would allow the
rest of the provisions of the Agreement to be implemented.
19
7.5 A number of third parties formulate similar view s on the issue. For instance, the European
Communities submit that:
Article 11 of the DSU does not expressly refe r to a panel "sanctioning the mutual
understanding of the parties". Rather it refers to a panel making an "objective
assessment" and making "findings". Such an "objective assessment" and such
"findings" are always made by a panel "on its own", in the sense that the panel takes
sole responsibility for them, and is not compelled to follow the opinion of one or both
Parties.
20
7.6 India indicates that, in its view,

panel shall find the authorities' measure to be in conformity with the Agreement if it rests
upon one of those permissible interpretations."
Given that the United States does not contest Ecuador's claims, it is not necessary for us to consider in detail the
implications of the standard of review in this dispute.
17 Article 12.7 DSU.
18 The Panel asked the parties and third parties to provide their views on the following question:
"What does your delegation consider is the role of a Panel in a case like this one, where there
is no substantive disagreement between the Partie s as to the inconsistency of a measure with
one or more cited provisions of a covered Agreement? Can the Panel limit itself to
sanctioning the mutual understanding of the par ties, or must the Panel, on its own, determine
whether the measure at issue is inconsistent with the cited provisions?"
19 Answers of the United States to questions from the Panel (13 November 2006) (answer to question
5), Annex B-3; answers of Ecuador to questions from the Panel (13 November 2006) (answer to question 5),
Annex A-4.
20 Answer of the European Communities to question posed by the Panel, Annex C-8, para. 4.

the panel's obligation under Article 11 of the DSU to examine and resolve the claim
put forward by Ecuador is not affected by the fact that the United States has indicated
that it will not contest Ecuador's claim. Even though the United States is not
contesting the claim, the panel must still examine whether Ecuador has made a prima
facie case that the use of zeroing in the measu re at issue was inconsistent with
Article 2.4.2 and make a finding on that issue.
21
2. Burden of proof
7.7 Because of its singularity, this dispute raises in a particularly acute fashion the issue of the
burden of proof.
7.8 The burden of proof lies, in WTO dispute settle ment proceedings, with the party that asserts
the affirmative of a particular claim or defence. 22 Ecuador, as the complaining party, must therefore
make a prima facie case of violation of the relevant provisions of the relevant WTO agreements. The
burden would then shift to the responding party (h ere the United States), to adduce evidence to rebut
the presumption that Ecuador's assertions are true. In this context, we recall that "a prima facie case is
one which, in the absence of effective refutation by the defending party, requires a panel, as a matter
of law, to rule in favour of the complaining party presenting the prima facie case."23

21 Answer of India to question posed by the Panel, Annex C-10 (footnote omitted). The responses of
other third parties are also consistent with our approach. Korea provides detailed reasoning under the provisions
of the DSU as to why the Panel could not limit itself to sanctioning the parties' Agreement. It notes that such
"understandings" do not have the legal effect of constraining the function of a panel until they have been
converted into a mutually agreed solution and notified to the DSB accordingly. See answer of Korea to question
posed by the Panel, Annex C-12. Brazil submits that, unless the Panel were to consider that it constitutes a
mutually agreed solution, the partie's Agreement has not, and could not have, revoked Article 11 of the DSU
and that the Panel is therefore bound by its duty to make an objective assessment of the matter before it. See
answer of Brazil to question posed by the Panel, Annex C- 2. Chile, on the basis of the obligation on panels in
DSU Article 11 to perform an objective evaluation of the ma tter before them, argues that the role of this Panel,
considering the agreement reached between the parties, is to perform an objective evaluation of the facts, of the
applicability of the cited provisions, and of the conformity of the measures in question with those provisions, all
on the bases presented by Ecuador and not contested by the United States. See answer of Chile to question
posed by the Panel, Annex C-5. Mexico draws a di stinction between WTO dispute settlement and commercial
arbitration, arguing that in the latter context an agreement between the parties may be submitted to an arbitrator
for approval. In the WTO context, by contrast, Mexico argues that if a panel were simply to sanction an
agreement between two parties as to the interpretation of a provision, this could not, via the negative consensus
rule, substitute for an authoritative interpretation by Me mbers pursuant to Article IX of the WTO Agreement.
See answer of Mexico to question posed by the Panel, Annex C-15.
22 Appellate Body Report, US – Wool Shirts and Blouses , p. 14; Appellate Body Report, EC –
Hormones, para. 98. In US – Wool Shirts and Blouses, the Appellate Body noted that a number of GATT Panels
had adopted this approach; it also indicated that most jurisdictions adopt a similar rule:
"In addressing [the issue of the burden of proof], we find it difficult, indeed, to see how any
system of judicial settlement could work if it incorporated the proposition that the mere
assertion of a claim might amount to proof. It is, thus, hardly surprising that various
international tribunals, including the Interna tional Court of Justice, have generally and
consistently accepted and applie d the rule that the party wh o asserts a fact, whether the
claimant or the respondent, is responsible for providing proof thereof. Also, it is a generally-
accepted canon of evidence in civil law, common la w and, in fact, most jurisdictions, that the
burden of proof rests upon the party, whether complaining or defending, who asserts the
affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a
presumption that what is claimed is true, the burden then shifts to the other party, who will fail
unless it adduces sufficient evidence to rebut the presumption."
US – Wool Shirts and Blouses, p. 14 (footnotes omitted).
23 EC – Hormones, para. 104, citing US – Wool Shirts and Blouses, p. 14.

7.9 In our view, the issue of the burden of proof is of particular importance in this case. This is
because Ecuador has made factual and legal claims before the Panel which the United States does not
contest. Yet, the fact that the United States does not contest Ecuador's claims is not a sufficient basis
for us to summarily conclude that Ecuador's clai ms are well-founded. Rather, we can only rule in
favour of Ecuador if we are satisfied that Ecuador has made a prima facie case. We take note in this
regard that the Appellate Body has cautioned panels against ruling on a claim before the party bearing
the burden of proof has made a prima facie case. In EC – Hormones, the Appellate Body ruled that
the Panel erred in law when it absolved the comp laining parties from the necessity of establishing a
prima facie case and shifted the burden of proof to the responding party:
In accordance with our ruling in United States - Shirts and Blouses , the Panel should
have begun the analysis of each lega l provision by examining whether the
United States and Canada had presented ev idence and legal arguments sufficient to
demonstrate that the EC measures were inconsistent with the obligations assumed by
the European Communities under each Article of the SPS Agreement addressed by
the Panel ... Only after such a prima facie determination had been made by the Panel
may the onus be shifted to the European Communities to bring forward evidence and
arguments to disprove the complaining party's claim.
24
7.10 More recently, in US – Gambling, the Appellate Body indicated that "[a] panel errs when it
rules on a claim for which the complaining party has failed to make a prima facie case",25 and noted
that:
A prima facie case must be based on "evidence and legal argument" put forward by
the complaining party in relation to each of the elements of the claim. A complaining
party may not simply submit evidence and expect the panel to divine from it a claim
of WTO-inconsistency. Nor may a compla ining party simply allege facts without
relating them to its legal arguments.
In the context of the sufficiency of panel requests under Article 6.2 of the DSU, the
Appellate Body has found that a panel request:
... must plainly connect the challenged measure(s) with the
provision(s) of the covered agreements claimed to have been
infringed, so that the respondent party is aware of the basis for the
alleged nullification or impairme nt of the complaining party's
benefits.
Given that such a requirement applies to panel requests at the outset of a panel
proceeding, we are of the view that a prima facie case—made in the course of
submissions to the panel—de mands no less of the complaining party. The evidence
and arguments underlying a prima facie case, therefore, must be sufficient to
identify the challenged measure and its b asic import, identify the relevant WTO
provision and obligation contained therein, and explain the basis for the claimed
inconsistency of the measure with that provision.
26

24 EC – Hormones, para. 109 (footnotes omitted); see also, inter alia, the Appellate Body Report in
Japan – Agricultural Products II , paras. 122, 130
25 US – Gambling, para. 139.
26 Ibid., paras. 140-141 (footnotes omitted, emphasis original). See also the Appellate Body Report in
US – Zeroing (EC), para. 217.

7.11 Thus, notwithstanding the fact that the United States is not seeking to refute Ecuador's claims,
we must satisfy ourselves that Ecuador has established a prima facie case of violation, and notably
that it has presented "evidence and argument... suffici ent to identify the challenged measure and its
basic import, identify the relevant WTO provision a nd obligation contained therein, and explain the
basis for the claimed inconsistency of the measure with that provision."
7.12 We now proceed to examine whether Ecuador has met its burden to make a prima facie case.
B. S
UBSTANTIVE ISSUE - USE OF "ZEROING" BY THE USDOC IN THE MEASURES AT ISSUE
1. Ecuador's arguments
(a) Introduction
7.13 Ecuador contends that the USDOC's fina l determination of 23 December 2004 27 and its
amended final margin determination a nd anti-dumping order of 1 February 2005 28 are inconsistent
with the United States' obligations under th e first sentence of Article 2.4.2 of the Anti-Dumping
Agreement as that provision applies to the weighted average-to-weighted average methodology.
Ecuador's claims are limited to the calculation of the dumping margins for two Ecuadorian exporters
(Promarisco and Exporklore) and the "all others" rate . Ecuador's challenge is limited to the USDOC's
use of zeroing in an original investigation and does not address such use in the context of annual
administrative review proceedings or any other types of proceedings.29
7.14 Ecuador describes the "zeroing" methodology at issue in this dispute as follows:
(1) different "models," i.e. types, of pr oducts are identified using "control numbers"
that specify the most relevant product char acteristics, (2) weighted average prices in
the U.S. and weighted average normal values in the comparison market are calculated
on a model-specific basis for the entire pe riod of investigation; (3) the weighted
average normal value of each model is comp ared to the weighted average U.S. price
for that same model; (4) in order to calcula te the dumping margin for an exporter, the
amount of dumping for each model is summed and then divided by the aggregated
U.S. price for all models; and (5) before summing the total amount of dumping for all
models, all negative margins on individual models are set to zero
.30
7.15 Ecuador claims that the USDOC's use of zeroing in the investigation at issue was "similar" or
"identical" to the use of zeroing that was found to be inconsistent with Article 2.4.2. of the the Anti-
Dumping Agreement in the Panel and Appe llate Body Reports in US – Softwood Lumber V and US –
Zeroing (EC).31
(b) Similarities with the measures at issue in US – Softwood Lumber V
7.16 Concerning the similarities between its claims in the present dispute and the ruling of the
Appellate Body in US – Softwood Lumber V , Ecuador indicates that the material facts applicable to
the use of zeroing in the present dispute are the sa me or very similar to those examined by the
Appellate Body in US – Softwood Lumber V and that it has raised a challenge identical to that which
the Appellate Body considered in US – Softwood Lumber V , namely, that "the use of zeroing in

27 69 Fed. Reg. 76913, attached to the written submission of Ecuador as Exhibit Ecu-2.
28 70 Fed. Reg. 5156, attached to the written submission of Ecuador as Exhibit Ecu-3.
29 See answers of Ecuador to questions from the Panel (6 November 2006), Annex A-3 (answer to
question 1).
31 Ibid. para. 11.

calculating margins in an original investigation using the weighted average to weighted average
method of model specific comparisons is inconsistent with the first sentence of Article 2.4.2 of the
Antidumping Agreement". 32 Ecuador notes, in this respect, that its own challenge in the present
dispute is, like Canada's challenge in US – Softwood Lumber V, limited to an "as applied" challenge to
the consistency of zeroing when used in calculating margins of dumping on the basis of a comparison
of a weighted average normal value with a weight ed average of prices of "all comparable export
transactions".33 Ecuador also notes that its challenge is limited to the consistency of the USDOC's
methodology under the first sentence of Article 2. 4.2, the same issue which the Appellate Body
considered in US – Softwood Lumber V , and that the description of zeroing (as applied by the
USDOC) provided by the Appellate Bo dy is substantially similar to that provided by Ecuador in its
first submission.34 Ecuador finally notes that the United St ates has not contested its assertion that the
USDOC's use of zeroing in the measures at issue "app ears to be similar or identical to the use of
zeroing" in US – Softwood Lumber V . 35
7.17 Ecuador has submitted a number of exhibits to the Panel in support of its claim that the
methodology used by the USDOC in the calculation of the dumping margins at issue in this dispute is
similar to the one the USDOC used in US – Softwood Lumber V . According to Ecuador, these
exhibits demonstrate that the USDOC expressly acknowledged that, in the calculation of the dumping
margins for Exporklore and Promarisco, it (1) u sed the weighted average-to-weighted average
comparison methodology under Article 2.4.2; (2) made multiple comparisons on a model specific
basis; and (3) ignored negative margins when calculating the weighted average margin for the product
under investigation as a whole.
36 Ecuador has, inter alia , referred us to the USDOC's final
determination "Issues and Decision Memorandum" 37 in which the USDOC comments on the
methodology it used in calculating the margins of dumping for the Ecuadorian respondents. The
USDOC indicates that it followed its "standard methodology of not using non-dumped sales
comparisons to offset or reduce the dumping found on other sales comparisons".
38 Moreover, the
USDOC notes that, in calculating the dumping margins, it had:
made model-specific comparisons of weight ed-average EPs with weighted average
NVs of comparable merchandise ... [It] then combined the dumping margins found
based upon these comparisons, without permitting non-dumped comparisons to
reduce the dumping margins found on distinct models of subject merchandise, in
order to calculate the weighted-average dumping margin.
39
7.18 In addition, Ecuador has provided the Pane l with exhibits documenting how the USDOC
calculated the margins of dumping for Exporklore, Promarisco, and "all others", including a copy of
the "margin calculation program" used by the USDOC. According to Ecuador, this "margin

32 See answers of Ecuador to questions from the Panel (6 November 2006) Annex A-3 (answer to
question 2).
33 Ibid.
34 Ibid.
35 Ibid.
36 Ibid. (answer to question 1).
37 "Issues and Decision Memorandum for the Final Determination of the Antidumping Duty
Investigation of Certain Frozen and Canned Warmwate r Shrimp from Ecuador", 23 December 2004, Exhibit
Ecu-4 to the written submission of Ecuador.
38 Ibid., p. 8, quoted in the answers of Ecuador to questions from the Panel (6 November 2006)
Annex A-3 (answer to question 1).
39 Ibid. The Panel notes that the USDOC makes these comments in the section of its Memorandum
addressing a request from respondents in the investigation that it change its methodology in light of the
Appellate Body Report in Softwood Lumber V (which the USDOC refuses to do). See the Memorandum, ibid.,
"Comment 1 - Offsets for Non-Dumped Sales", p. 8 ff.

calculation program" includes the computer program ming instructions that the USDOC used to
employ its zeroing methodology.
40
7.19 Finally, Ecuador has provided the Panel with what it identifies as the USDOC's worksheets
for the calculation of the "all others " rate for the final determination 41 and for the amended final
determination.42 These worksheets indicate that the USDOC calculated the "all others" rate on the
basis of a weighted average of the respective du mping margins of Exporklore, Promarisco, and (for
the original final determination) Expalsa in the corresponding determinations.43
(c) Legal arguments
7.20 With respect to the alleged inconsistency of the "zeroing" methodology used by the USDOC
to calculate Exporklore, Promarisco, and the "a ll others" margins of dumping, Ecuador initially
indicated (in its first written submission) that, given the fact that the United States agrees not to
contest Ecuador's claims, Ecuador considered it "unn ecessary" to recite [in its submission] in detail
the factual aspects of the DOC's application of zeroing in the challenged measures or the arguments as
to why zeroing, as used in those measures, was in consistent with Article 2.4.2, first sentence." 44
Ecuador did, however, indicate that the calculation performed by the USDOC was the same as the one
described in US – Softwood Lumber V and that it considered this calculation to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement on th e grounds set forth in paragraphs 62-117 of the
Appellate Body Report in US – Softwood Lumber V.45
7.21 At the meeting with the parties, the Panel ask ed Ecuador to further elaborate on the legal
reasoning underlying its claim of inconsistency. Ec uador indicated that the basic rationale of the
Appellate Body's conclusions in US – Softwood Lumber V was that margins of dumping calculated

40 See answers of Ecuador to questions from the Panel (13 November 2006), Annex A-4
(answer to question 2):
"the DOC memoranda in Exhibits Ecu-2, Ecu-3, Ecu-7, Ecu-8, Ecu-11, and Ecu-12 contain
the margin calculation programs for Exporklore and Promarisco. In these exhibits, Ecuador
has included only Part 10-E of each DOC ma rgin calculation program, which includes the
following computer programming instructions that DOC used to employ its zeroing
methodology:
 PROC MEANS NOPRINT DATA=MARGIN;
 WHERE EMARGIN GT 0;
 VAR EMARGIN MUSQTY USVALUE;
 OUTPUT OUT = ALLPUDD (DROP = _FREQ_ _TYPE_)
 SUM = TOTPUDD MARGQTY MARGVAL;

Through these instructions, the DOC included only those weighted average to weighted
average comparisons of EP to NV that had positive
 dumping margins, i.e., where the margin
of dumping (or “EMARGIN”) was greater than zero. In doing so, the DOC’s computer
language effectively set those margins that were less than zero to zero when calculating the
weighted average dumping margins for the product." (emphasis original)
41 Answers of Ecuador to questions from the Panel (13 November 2006), Annex A-4 (answer to
question 3) and Exhibit Ecu-18 thereto, USDOC Memo to the File, "Antidumping Duty Investigation of Certain
Frozen and Canned Warmwater Shrimp from Ecuador" All Others' Rate Calculation for Ecuador",
17 December 2004, Attachment 1.
42 Ibid.
43 The Panel notes that, as mentioned above, in the amended final determination, the USDOC
calculated a de minimis margin of dumping for Expalsa.
45 Ibid., para. 20.

under the first methodology set out in the first senten ce of Article 2.4.2, must be calculated for the
"product as a whole".46
7.22 In its written response to the same Panel question, 47 Ecuador indicates that the legal reasoning
that underlies its claim that the thr ee measures at issue are inconsistent with Article 2.4.2 is identical
to the reasoning of the Appellate Body in US – Softwood Lumber V , and is essentially as follows: The
term “margins of dumping” in Article 2.4.2, when interpreted in an integrated manner with the term
"all comparable export transactions," does not refer to margins of dumping that are determined for
individual product types; rather, the calculation fo r an individual product type reflects only an
intermediate calculation made by an investigating authority in the context of establishing margins of
dumping for the product under investigation; as a result, dumping cannot be found to exist only for a
type, model or category of that product. It is only on the basis of aggregating all of the intermediate
values for all product types that an investigating au thority can establish the margin of dumping for the
product under investigation. 48

46 In response to a question from the Panel at th e meeting with the parties, the representative of
Ecuador provided the following explanation of the Appellate Body's rationale in Softwood Lumber V:
"...The essence [of the Appellate Body's rationale in Softwood Lumber V ] was the AB's
analysis of Art. 2.4.2 from a textual standpoint as well as in context. The most essential
element of the finding was that anti-dumping margins must be determined for the product as a
whole, meaning the product under investigati on. Here, the product under investigation was
certain frozen warmwater shrimp exported from Ecuador, defined more specifically by the
Commerce Department in its measures. The inconsistency that arises in the methodology used
in the Shrimp case was that margins were not determined, under the Appellate Body's
analysis, for the product as a whole, rather margins were determined on a model-specific
basis. And those margins which were negative margins were set to zero. And our position, as
the Appellate Body found, is simply that it is inconsistent, that margins must be determined
for the product as a whole."
47 Question 1 from the Panel:
"Bearing in mind that adopted Appellate Body reports, including the Appellate Body Report
in Softwood Lumber V are not, stricto sensu , binding (expect with respect to resolving the
particular dispute between the parties to that dispute), could Ecuador please explain why, in its
view, the US measures at issue are inconsistent with the US’ obligations under Article 2.4.2 of
the Anti-Dumping Agreement (i.e. what is the legal reasoning underlying Ecuador’s claim of
inconsistency)?"
48 Answers of Ecuador to questions from the Panel (13 November 2006), Annex A-4 (answer to
question 1). The relevant parts of Ecuador's answer read as follows:
"(1) The DOC used 'multiple averaging' in Softwood Lumber , just as it did in Frozen
Warmwater Shrimp;
(2) The DOC set to zero any margin that it fo und to be less than zero after making each
of its weighted average to weighted average comparisons of export price to normal value;
(3) The DOC calculated the antidumping ma rgin for an exporter or producer by
summing the results of each of the comparisons in which normal value exceeded the export
price, and then divided by the aggregated US price for all models;
(4) The term 'margins of dumping' in Article 2.4.2, when interpreted in an integrated
manner with the term 'all comparable export transactions,' does not refer to margins of
dumping that are determined for individual product types;
(5) Rather, the calculation for an individual product type reflects only an intermediate
calculation made by an investigating authority in the context of establishing margins of
dumping for the product under investigation;
(6) As a result, dumping cannot be found to exist only for a type, model or category of
that product. It is only on the basis of aggregating all of the intermediate values for all
product types (including those intermediate values where normal value exceeded export price)
that an investigating authority can establish the margin of dumping for the product under
investigation;

7.23 Thus, Ecuador concludes, "dumping could not be determined by only considering the positive
intermediate values for certain types or models of frozen warmwater shrimp, which is how the DOC
calculated the weighted-average dumping margin fo r Promarisco S.A. and Exporklore S.A. in the
contested measures. All intermediate values had to be included."
49
7.24 Ecuador submits that, although the Appellate Body’s decision is not binding on the Panel,
the Appellate Body's analysis in US – Softwood Lumber V is persuasive, especially in light of the fact
that the zeroing used by the USDOC in the measures at issue is identical to that which it used in its
original investigation in US – Softwood Lumber V . Ecuador further notes that the United States has
expressly agreed not to contest Ecuador’s claim that the three measures are inconsistent with
Article 2.4.2 on the grounds stated by the Appellate Body in US – Softwood Lumber V .
2. The United States' arguments
7.25 As mentioned above, the United States has, befo re us, not sought to re fute Ecuador's claims.
The United States has indicated that it "acknowle dges the accuracy of Ecuador’s description of
Commerce’s use of 'zeroing' in calculating the du mping margins for Promarisco S.A., Exporklore
S.A., and the 'all others' rate in this investigati on" and, moreover, that it "recognizes that a measure
using a similar calculation was the subject of the US – Softwood Lumber V report, and that the DSB
ruled that the measure was inconsistent with Article 2.4.2, first sentence because of that calculation."50
3. Arguments of the third parties
7.26 Most of the third parties, either in their third party submissions or oral statements, have
expressed support for Ecuador's claims and provide d general comments on the impermissibility of
"zeroing", whether generally or in the context of the so-called weighted average-to-weighted average
methodology, and have referred to various Panel or Appellate Body reports that have addressed the
issue.51
7.27 Some of the third parties also have indicated expressly their view that Ecuador has met its
burden to make a prima facie case before the Panel, 52 or have stated that the model zeroing
methodology at issue in this dispute was id entical to the measure that was found, in US – Softwood
Lumber V , to be inconsistent with the United States' obligations under the Anti-Dumping Agreement.53

(7) Here, the product was frozen warmwater shrimp from Ecuador;
(8) Thus, dumping could not be determined by only considering the positive intermediate
values for certain types or models of fro zen warmwater shrimp, which is how the DOC
calculated the weighted-average dumping margin for Promarisco S.A. and Exporklore S.A. in
the contested measures. All intermediate values had to be included."
49 Ibid.
50 Written submission of the United States, Annex B-1, para. 5. The United States cites, in this context,
Appellate Body Report, Final Dumping Determination on Softwood Lumber from Canada, WT/DS264/AB/R,
adopted 31 August 2004, paras. 62-117.
51 See the oral statement of Brazil, Annex C-1; third party submission of Chile, Annex C-3; third party
submission of the European Communities, Annex C-7; oral statement of India, Annex C-9; oral statement of
Japan, Annex C-11; third party submission of Mexico (containing a detailed discussion of the panel and
Appellate Body jurisprudence on the issue), Annex C-13 and Mexico's oral statement, Annex C-14; oral
statement of Thailand, Annex C-16.
52 See the oral statement of Brazil, Annex C-1, para. 9.
53 See the third party submission of Mexico, Annex C-13, para. 4.

4. Analysis by the Panel
7.28 We must first determine whether Ecuador has est ablished that the USDOC did, in fact, "zero"
in the three measures identified by Ecuador in its panel request. Assuming that Ecuador has
established this fact, we will then proceed to our legal analysis of the measures challenged by
Ecuador. Because Ecuador relies on the Appellate Body Report in US – Softwood Lumber V as the
basis for its legal reasoning that the measures at issue are inconsistent with Article 2.4.2, the first step
of this legal analysis will be to determine whet her Ecuador has demonstrated that the measures it
challenges (and in particular the zeroing methodology used by the USDOC to calculate the dumping
margins challenged by Ecuador in the measures at issu e) are the same in all relevant respects to those
which the Appellate Body, in US – Softwood Lumber V , ruled were inconsistent with the first sentence
of Article 2.4.2. Should we find this to be the case, we will need to consid er whether to apply the
same reasoning as appears in the Appellate Body Report, i.e. whether to follow the precedent in that
case.
(a) Whether Ecuador has established that the USDOC "zeroed" in the three measures at issue
7.29 Concerning the facts of the case, we have re viewed the evidence and explanations provided
by Ecuador. We are satisfied that Ecuador has provided evidence that est ablishes that the USDOC
"zeroed" in calculating the margins of dumping fo r Exporklore and for Promarisco, and that the
dumping margin for "all others" was calculated as the weighted average of these two companies'
individual margins. In particular, Ecuador has, in our view, demonstrated that, for Exporklore and
Promarisco, the USDOC performed a weighted average-to-weighted average comparison (first
methodology under the first sentence of Article 2.4.2) for each of the different product models or sub-
products, and that the USDOC "zeroed" negative margins of dumping when the results of the
comparisons at these levels were aggregated to calculate each company's margin of dumping for the
product as a whole; and that these results were then weight-averaged to arrive at the margin for "all
others". Indeed, the United States does not deny th e accuracy of Ecuador's description of the three
measures at issue, including the fact that the USDOC zeroed in the manner described above.
(b) Whether Ecuador has established that the methodol ogy used by the USDOC is similar to the
methodology the USDOC used in Lumber V
7.30 Our next task is to determine whether the "zeroing" methodology used by the USDOC to
calculate the dumping margins at issue here was, as alleged by Ecuador, similar or identical to the one
the Appellate Body, in US – Softwood Lumber V , found to be inconsistent with Article 2.4.2 of the
Anti-Dumping Agreement.
7.31 We note in this respect that, in US – Softwood Lumber V , Canada's challenge was limited to
an "as applied" challenge of the consistency of "zeroing" when used in calculating margins of
dumping on the basis of a comparison of a weighted average normal value with a weighted average of
prices of all comparable export transactions (the so-called "weighted average-to-weighted average
methodology") in the context of an original investigation under Article 2.4.2 of the Anti-Dumping
Agreement.54
7.32 The Appellate Body in US – Softwood Lumber V , described "zeroing" as applied by the
USDOC in that investigation as follows:
First, USDOC divided the product under i nvestigation (that is, softwood lumber from
Canada) into sub-groups of identical, or br oadly similar, product types. Within each
sub-group, USDOC made certain adjustment s to ensure price comparability of the

54 Appellate Body Report, US – Softwood Lumber V, para. 63.

transactions and, thereafter, calculated a weighted average normal value and a
weighted average export price per unit of the product type. When the weighted
average normal value per unit exceeded the weighted average export price per unit for
a sub-group, the difference was regarded as the "dumping margin" for that
comparison. When the weighted average normal value per unit was equal to or less
than the weighted average export price per unit for a sub-group, USDOC took the
view that there was no "dumping margin" for that comparison. USDOC aggregated
the results of those sub-group comparisons in which the weighted average normal
value exceeded the weighted average export price—those where the USDOC
considered there was a "dumping margin"—after multiplying the difference per unit
by the volume of export transactions in that sub-group. The results for the sub-groups
in which the weighted average normal value was equal to or less than the weighted
average export price were treated as zero for purposes of this aggregation, because
there was, according to USDOC, no "dumping margin" for those sub-groups. Finally,
USDOC divided the result of this aggregati on by the value of all export transactions
of the product under investigation ( including the value of export transactions in the
sub-groups that were not included in the aggregation). In this way, USDOC obtained
an "overall margin of dumping", for each exporter or producer, for the product under
investigation (that is, softwood lumber from Canada).
55
7.33 The Appellate Body also added that:
Thus, as we understand it, by zeroing, the i nvestigating authority treats as zero the
difference between the weighted average normal value and the weighted average
export price in the case of those sub-groups where the weighted average normal value
is less than the weighted average export pr ice. Zeroing occurs only at the stage of
aggregation of the results of the sub-groups in order to establish an overall margin of
dumping for the product under investigation as a whole.56
7.34 Having examined the description of the methodol ogy employed by the USDOC in the three
measures challenged by Ecuador, as described in its submission to the Panel, 57 and having considered
the additional evidence submitted by Ecuador, we are satisfied that Ecuador has demonstrated – at
least prima facie – that the methodology applied by the USDOC in calculating the margins of
dumping for Exporklore and Promarisco, which the "a ll others" rate necessarily incorporated, was the
same methodology which was found by the Appellate Body in US – Softwood Lumber V to be
inconsistent with Article 2.4.2 of the Anti-Dumping Agreement. Furthermore, we once again note that
the United States has not sought to refute Ecuador's claims. 58 In our view, the United States'
"acknowledgement" and "recognition" lend further support to our conclu sion that Ecuador has met its
burden to make a prima facie case.
(c) Ecuador's claim of inconsistency under Article 2.4.2 of the Anti-Dumping Agreement
7.35 We now turn to the legal analysis of Ecuador's claims, i.e. whether the measures it challenges
are inconsistent with Article 2.4.2 of the Anti-Dumping Agreement. Article 2.4.2 provides as follows:

55 Ibid., para. 64 (emphasis original; footnote omitted).
56 Ibid., para. 65.
57 See para. 7.14, supra.
58 See para. 7.25, supra.

Article 2
Determination of Dumping

2.4.2 Subject to the provisions governing fair comparison in paragraph 4, the
existence of margins of dumping during the investigation phase shall normally be
established on the basis of a comparison of a weighted average normal value with a
weighted average of prices of all comparable export transactions or by a comparison
of normal value and export prices on a transaction-to-transaction basis. A normal
value established on a weighted average basis may be compared to prices of
individual export transactions if the author ities find a pattern of export prices which
differ significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weight ed average-to-weighted average or
transaction-to-transaction comparison.
7.36 Ecuador has relied on the Appellate Body Report in US – Softwood Lumber V
 in support of its
claim of inconsistency with Article 2.4.2 and, in particular, on the Appellate Body's finding that
margins of dumping may only be calculated for a product as a whole under the weighted average-to-
weighted average methodology provided for in the first sentence of Article 2.4.2.
7.37 While we are not, strictly speaking, bound by the Appellate Body's reasoning in US –
Softwood Lumber V , we are reminded that adopted Appellate Body Reports create legitimate
expectations among WTO Members, 59 and that "following the Appellate Body's conclusions in
earlier disputes is not only appropriate, but is what would be expected from panels, especially where
the issues are the same".60
7.38 Our understanding of the Appe llate Body's reasoning in US – Softwood Lumber V is as
follows. The Appellate Body began its analysis w ith the text of Article 2.4.2 and noted that the
question before it was the proper interpretation of the terms "all comparable export transactions" and
"margins of dumping" in Article 2.4.2. In examin ing the arguments of the parties with respect to
these phrases, the Appellate Body concluded that th e parties' disagreement centered on whether a
Member could take into account "all" comparable e xport transactions only at the sub-group level, or
whether such transactions also had to be take n into account when the results of the sub-group
comparisons are aggregated. To examine that i ssue, the Appellate Body noted the definition of
dumping in Article 2.1 of the Anti-Dumping Agreement . The Appellate Body found that "it [was]
clear from the texts of [Article VI:1 of the GATT 1994 and Article 2.1 of the Anti-Dumping
Agreement] that dumping is defined in relation to a pr oduct as a whole as defined by the investigating
authority".61 The Appellate Body further considered that the definition of "dumping" contained in
Article 2.1 applies to the entire Agreement, including Article 2.4.2, and that "'[d]umping', within the
meaning of the Anti-Dumping Agreement, can therefore be found to exist only for the product under
investigation as a whole, and cannot be found to ex ist only for a type, model, or category of that
product."62 Next, the Appellate Body relied on its Report in EC - Bed Linen , in which it stated that
"[w]hatever the method used to calculate the margins of dumping ... these margins must be, and can

59 See Appellate Body Report , Japan Alcoholic Beverages II , p. 14; Appellate Body Report, US –
Shrimp (Article 21.5 – Malaysia), paras. 108-109; Appellate Body Report, US – Softwood Lumber V, paras. 109-112.
60 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, paragraph 188.
61 Appellate Body Report, US – Softwood Lumber V, para. 93.
62 Ibid.

only be, established for the product under investigation as a whole."
63 Thus, the Appellate Body
noted that "[a]s with dumping, 'margins of dumping' can be found only for the product under
investigation as a whole, and cannot be found to exis t for a product type, model, or category of that
product." The Appellate Body therefore rejected the United States' argument s in that case that
Article 2.4.2 does not apply to the aggregation of th e results of multiple comparisons at the sub-group
level; for the Appellate Body, while an investiga ting authority may undertake multiple averaging to
establish margins of dumping for a product unde r investigation, the results of the multiple
comparisons at the sub-group levels are not margins of dumping within the meaning of Article 2.4.2;
they merely reflect intermediate calculations made by an investigating authority in the context of
establishing margins of dumping for the product under investigation. It is only on the basis of
aggregating all such intermediate values that an inves tigating authority can establish margins of
dumping for the product under investigation as a whole. 64 On this basis, the Appellate Body held that
zeroing, as applied by the USDOC in US – Softwood Lumber V :
mean[t], in effect , that at least in the case of some export transactions, the export
prices are treated as if they were less than wh at they actually are. Zeroing, therefore,
does not take into account the entirety of the prices of some export transactions,
namely, the prices of export transactions in those sub-groups in which the weighted
average normal value is less than the weight ed average export price. Zeroing thus
inflates the margin of dumping for the product as a whole.
65
7.39 The Appellate Body on this basi s concluded that the treatment of comparisons for which the
weighted average normal value is less than the weighted average export price as "non-dumped"
comparisons was not in accordance with th e requirements of Article 2.4.2 of the Anti-Dumping
Agreement.66 As a result, the Appellate Body upheld the Panel's finding that the United States had
acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement in determining the existence of
margins of dumping on the basis of a methodology incorporating the practice of zeroing.67
7.40 We further note that the Appellate Body Report in US – Zeroing (EC) also referred to its
reasoning and findings in US – Softwood Lumber V. 68 Thus, in our view, there is now a consistent
line of Appellate Body Reports, from EC – Bed Linen to US – Zeroing (EC) that holds that "zeroing"
in the context of the weighted average-to-weighted average methodology in original investigations
(first methodology in the first sentence of Article 2.4.2) is inconsistent with Article 2.4.2.
7.41 We have, as is our duty, carefully cons idered the Appellate Body's reasoning in US –
Softwood Lumber V and taken into consideration the consis tent line of Appellate Body Reports as
mentioned in the previous paragraph. We find the Appellate Body's reasoning persuasive and adopt it
as our own. Given that the issues raised by Ecuador 's claims are identical in all material respects to
those addressed by the Appellate Body in the Lumber V case, we are satisfied that Ecuador has made a
prima facie case that the use of zeroing by the USDOC in the calculation of the margins of dumping
for Exporklore and Promarisco, from which were cal culated the "all others" margins in the three

63Appellate Body Report, EC – Bed Linen , para. 53 (emphasis original), quoted in Appellate Body
Report, US – Softwood Lumber V, para. 96.
64 Appellate Body Report, US – Softwood Lumber V, paras. 97-98.
65 Ibid., para. 101 (footnote omitted).
66 Ibid, para. 102.
67 Ibid., para. 117.
68 Appellate Body Report, US – Zeroing (EC) , para. 126. The Appellate Body in that case was not,
however, considering the permissibility under Article 2.4.2 Anti-Dumping Agreement of zeroing under the
weighted average to weighted average methodology in original investigations, the only issue that is before us in
this dispute. Nevertheless, in our view, the Appellate Body's findings in US – Zeroing (EC) provide support to
the conclusion that zeroing, as applied by the USDOC in US – Softwood Lumber V and in the calculation of the
margins of dumping that are challenged by Ecuador, is inconsistent with Article 2.4.2.

measures identified in its request for the establis hment of a panel, is inconsistent with the
United States' obligations under Article 2.4.2 of the Anti-Dumping Agreement because the USDOC
did not calculate these dumping margins on the basis of the "product as a whole" as it failed to take
into account all comparable export transactions in calculating the margins of dumping.
7.42 As a final point, we note that neither the Panel nor the Appellate Body Report in US –
Softwood Lumber V addressed explicitly the issue of the in consistency of the "all others" rate as
calculated by the USDOC. In this regard, we cons ider that our finding that Ecuador has established
that the calculation of the margins of dumping for Exporklore and Promarisco was inconsistent with
Article 2.4.2 means that the calculation of the "a ll others" rate as the weighted average of the
individual rates necessarily incorporates this inconsistent methodology.
69 The parties agree.70
7.43 Given that we have conclude d that Ecuador has made a prima facie case of violation in
respect of the final determination, the amended final determination and th e anti-dumping order, we
are required, as a matter of law, and in the ab sence of arguments from the responding party to the
contrary, to rule in favour of Ecuador. We therefore determine that the USDOC, by using "zeroing" as
described above in calculating the margins of dumpi ng in the three measures challenged by Ecuador,
has acted inconsistently with the United St ates' obligations under Article 2.4.2 of the Anti-Dumping
Agreement.
VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 In light of the above findings, we conclude that the USDOC acted inconsistently with
Article 2.4.2 in its final and amended final affirma tive determinations of sales at less than fair value
(dumping) with respect to certain frozen warmwate r shrimp from Ecuador, and in its final anti-
dumping duty order.
8.2 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment of benefits under that ag reement. Accordingly, we conclude that, to the
extent the United States has acted incons istently with the provisions of the Anti-Dumping Agreement,
it has nullified or impaired benefits accruing to Ecuador under that Agreement. We therefore
recommend that the Dispute Settlement Body request the United States to bring its measures into
conformity with its obligations under the Anti-Dumping Agreement.

ATTACHMENT 1 – REQUEST FOR ESTABLISHMENT OF A PANEL (DS335/6)

9 June 2006

 (06-2790)
 Original: English

Request for the Establishment of a Panel by Ecuador

 The following communication, dated 8 June 2006, from the delegation of Ecuador to the
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 Upon the instruction of my authorities, I here by convey the request of the Government of
Ecuador for the establishment of a panel under Article XXIII of the General Agreement on Tariffs and
Trade 1994 ("GATT 1994"), Articles 4 and 6 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU"), a nd Article 17 of the Agreement on Implementation
of Article VI of the General Agreement on Ta riffs and Trade 1994 ("Anti-Dumping Agreement")
regarding certain measures imposed by the United States, as further described below.

A. Consultations

 On 17 November 2005, the Government of Ecuador requested cons ultations with the
Government of the United States under Article 4 of the DSU, Article XXII of the GATT 1994, and
Article 17 of the Anti-Dumping Agreement concerning anti-dumping measures involving Certain
Frozen Warmwater Shrimp from Ecuador, Inv. no. A- 331-802. See Notice of Final Determination of
Sales at Less Than Fair Value: Certain Fr ozen and Canned Warmwater Shrimp from Ecuador,
69 Fed. Reg. 76913, 23 December 2004, and Notice of Amended Final Determination of Sales at Less
Than Fair Value and Antidumping Duty Order: Certain Frozen Warmwater Shrimp from Ecuador,
70 Fed. Reg. 5156, 1 February 2005.

 Consultations were held on 31 January 2006 and on several occasions thereafter. These
consultations provided helpful clarifications, but have not completely resolved the dispute.

B. Summary of the Facts

 The United States initiated its anti-dumping inv estigation against certain frozen warmwater
shrimp from Ecuador on 27 January 2004. See 69 Fed. Reg. 3876. The DOC conducted its
investigation of the extent of dumping under the st atutory authority provided by the Tariff Act of
1930, as amended, 19 U.S.C. § 1673, et seq., and under the regulatory authority provided in 19 C.F.R.

Part 351. As noted above, the DOC published its fi nal margin determination on 23 December 2004.
Following a final affirmative determination of ma terial injury by the US International Trade
Commission (70 Fed. Reg. 3943, 27 January 20 05), the DOC published its amended final margin
determination and anti-dumping duty order on 1 February 2005. The DOC's final margin
determination and amended final margin determination, as well as its anti-dumping duty order,
reflected and contained anti-dumping margins that were calculated by using "zeroing."

 The DOC's "zeroing" of negative anti-dumping ma rgins in anti-dumping investigations more
specifically means the following: (1) different "model s," i.e., types, of products are identified using
"control numbers" that specify the most relevant pr oduct characteristics; (2) weighted average prices
in the US and weighted average normal values in the comparison market are calculated on a model-
specific basis for the entire period of investigati on; (3) the weighted average normal value of each
model is compared to the weighted average US pr ice for that same model; (4) to calculate the
dumping margin for an exporter, the amount of dump ing for each model is summed and then divided
by the aggregated US price for all models; (5) before summing the total amount of dumping for all
models, all negative margins on individual models ar e set to zero. Through this method, the DOC
calculates margins of dumping and collects anti-du mping duties in amounts that exceed the actual
extent of dumping by the investigated companies.

 The DOC used zeroing in determining the fi nal anti-dumping margins for the two Ecuadorian
exporters for which anti-dumping margins above the 2 per cent de minimis level were calculated in
both the final and the amended final affirmative determination of sales at less than fair value in the
investigation of Certain Frozen Warmwater Shri mp from Ecuador cited above, as well as for "all
other" Ecuadorian exporters that were not separately investigated. The DOC's unpublished Issues and
Decision Memorandum, dated 23 December 2004, as well as other documents contained in the
administrative record of the investigation, includi ng computer programs, describe in more detail the
DOC's use of zeroing in the Ecuadorian shrimp investigation.

 The DOC's use of zeroing in the Ecuadorian sh rimp investigation appears to be similar
or identical to the investigation method that w as held to be inconsistent with the Anti-Dumping
Agreement in United States – Final Dumping Determination on Softwood Lumber from Canada
(Panel Report, WT/DS264/R, and Appellate B ody Report, WT/DS264/AB/R, adopted 31 August
2004), and in United States – Laws, Regulations and Methodology for Calculating Dumping Margins
("Zeroing") (Panel Report, WT/DS294/R, and Appella te Body Report, WT/DS294/AB/R, adopted
9 May 2006).

C. Measures and Claims

 The DOC's Final Determination, the DOC's Amended Final Determin ation, and the DOC's
anti-dumping duty order applied zeroing in its inv estigation of Certain Frozen Warmwater Shrimp
from Ecuador (referred to collectively below as the "m easures"). The use of zeroing in each of these
measures to calculate the margins of dumpi ng for the two exporters with margins above de minimis
and "all other" exporters is in consistent with the obligations of the United States under the
Anti-Dumping Agreement. Specifically, Ecuador considers that the measures are inconsistent with
the first sentence of Article 2.4.2 of the Anti-Dumping Agreement.

 The foregoing paragraph is provided without pr ejudice to any arguments that the Government
of Ecuador may develop and present to the panel regarding the WTO-inconsistency of the measures at
issue.

D. Request

 Ecuador requests, pursuant to Article 6 of the DSU and Article 17.4 of the Anti-Dumping
Agreement, that the Dispute Settle ment Body establish a panel to examine this matter, with the
standard terms of reference set out in Article 7.1 of the DSU. Ecuador asks that its request be placed
on the agenda for the next meeting of the Dispute Settlement Body to be held on 19 June 2006.

ATTACHMENT 2 – PROCEDURAL AGREEMENT BETWEEN ECUADOR AND
THE UNITED STATES (DS335/8)

25 October 2006

 (06-5137)
 Original: English

Agreement on Procedures between Ecuador and the United States

 The following communication, dated 20 Oct ober 2006, from the delegation of Ecuador and
the delegation of the United States to the Chairman of the Dispute Settlement Body, is circulated at
the request of those delegations.

 On 27 November 2005, the Government of Ecuador requested cons ultations with the
United States (hereinafter "the Parties") under Article 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU"), Article XXII of the General Agreement
on Tariffs and Trade 1994 ("GATT 1994"), and Article 17 of the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement"), with
respect to anti-dumping measures on shrimp fro m Ecuador. WT/DS335/1 (21 November 2005).
Consultations were held on 31 Ja nuary 2006 and on several occasions thereafter. These consultations
have enabled the Parties to agree on the following procedures for purposes of this dispute:

1. Ecuador requested the establishment of a panel in this dispute by filing its request for the
establishment of a panel on 8 June 2006 (WT/DS335/ 6). A copy of Ecuador's panel request is
attached to this agreement.
71 The DSB established a panel on 19 July 2006.

2. The Parties will cooperate to enable the pane l to circulate its report as quickly as possible in
light of the requirements of the DSU. To that end, the Parties will work expeditiously to reach
agreement on expedited working procedures that they will jointly ask the panel to adopt, and that will
allow for the adoption of the panel report by the DSB no later than 31 October 2006. That agreement
will include a request that the Parties file only one written submission each, and that the panel forego
meetings with the Parties or, at most, have only one such meeting. The Par ties also agree to share
with each other drafts of their respective written submissions prior to submitting them to the panel and
to take all reasonably available steps to expedite the proceeding.

71 Not reproduced here.

3. The United States will not contest Ecuador's cl aim that the measures identified in the attached
request for the establishment of a panel are inconsis tent with Article 2.4.2, first sentence, on the
grounds stated in United States – Final Dumping Determination on Softwood Lumber from Canada ,
WT/DS264/AB/R, Report of the Appellate Body adopted 31 August 2004.

4. Ecuador will not request that the panel sugg est, pursuant to Article 19.1, second sentence, of
the DSU, ways in which the United States could implement the panel's recommendations.

5. Provided that the panel's finding is limited to a finding that one or more of the challenged
measures is inconsistent with Article 2.4.2, fi rst sentence, of the Anti-Dumping Agreement, the
Parties agree that, pursuant to Article 21.3(b) of th e DSU, the reasonable period of time for bringing
each such measure into conformity with the Anti-Dumping Agreemen t will be six months, beginning
on the date on which the DSB adopts the panel report.

6. Subject to the consultation requirements of section 129(b) of the Uruguay Round Agreements
Act (“URAA”), 19 U.S.C. § 3538(b), the United States will use section 129(b) to recalculate margins
of dumping (subject to the exclusion of Exportadora de Alimentos S.A. in paragraph 8, below) and to
issue a new determination in order to render th e anti-dumping measures on shrimp from Ecuador not
inconsistent with the findings of the panel. If any such recalculation that is performed under
section 129(b) results in a change in a cash deposit rate for the anti-dumping measures on shrimp from
Ecuador, the new cash deposit rate will have prospective effect only, taking effect no sooner than the
date on which the United States Trade Representa tive directs the United States Secretary of
Commerce to implement its recalculation of the margins and new determination, as set forth in section
129(c)(1) of the URAA, 19 U.S.C. § 3538(c)(1).

7. The Parties also mutually understand that th e scope of Ecuador's request for the establishment
of a panel does not include any claim regarding th e margin of dumping calculated for Exportadora de
Alimentos S.A. The Parties agree that they w ill inform the panel in their written submissions,
whether made jointly or separately, that they are seeking findings consistent with this understanding.
Accordingly, implementation would not involve a recalculation of the margin of dumping for
Exportadora de Alimentos S.A., to the extent that the findings of the panel are consistent with the
Parties' understanding.

 For Ecuador For the United States

 (signed) (signed)
 Eva Garcia Fabre Peter F. Allgeier
 Ambassador Ambassador