Document: Executive Summary
Document codes: WT/DS383/R
Complainant: Thailand
Respondent: U.S.
Third parties: Argentina, EU, Japan, South Korea, Taiwan
Dispute stage: Panel
Agreements cited: Art. 2.4.2  Anti-dumping

ANNEX B

THIRD PARTIES WRITTEN SUBMISSIONS OR EXECUTIVE
SUMMARIES THEREOF

Contents Page
Annex B-1 Third Party Written Submissi on of the European Communities B-2
Annex B-2 Third Party Written Submission of Japan B-5
Annex B-3 Executive Summary of the Third Party Written Submission of
Argentina B-6

ANNEX B-1

THIRD PARTY WRITTEN SUBMISSION OF
THE EUROPEAN COMMUNITIES

1. The European Communities makes this third party written submission because of its systemic
interest in the correct and consiste nt interpretation and application of, inter alia , the Agreement on
Implementation of Article VI of the Ge neral Agreement on Tariffs and Trade 1994 (the "Anti-
Dumping Agreement") and the Dispute Settlement Understanding ("DSU").

2. At the outset, the European Communities observes that there are many similarities between
the present dispute and the issue confronted by the panels in US – Shrimp (Ecuador) and US –
Shrimp (Thailand). In those disputes, the complaining party challenged the conformity of an anti-
dumping order adopted by the United States on the basis that the methodology used to calculate the
dumping margins of the exporters concerned (" model zeroing") infringed Article 2.4.2 of the Anti-
Dumping Agreement for the reasons contained in the report of the Appellate Body in US – Softwood
Lumber V. In those disputes, the United States refrained from contesting that legal claim and even
agreed with the complaining party on the means and timing of the implementation of the adopted
DSB report.

3. In the present dispute, the Agreement on Procedures between Thailand and the United States
1
contains paragraphs by which the Parties agree on th e procedures that are to govern certain aspects of
the Panel proceedings. It also contains paragraphs by which the Parties agree that the United States
will not contest the claim; Thailand will not request the Panel to suggest, pursuant to Article 19.1 of
the DSU, ways in which the United States could impl ement the Panel's reco mmendations; and by
which the manner and timing of implementation are agreed. 2 Thus, in the EC view, the Agreement on
Procedures not only resolves certain procedural issues, it also represents, at least in part, a resolution
or solution of the dispute between the Parties. However, neither Party refers in its First Written
Submission to Articles 3.6 or 12.7 of the DSU.

4. In the particular factual circumstances of the present case, th e European Communities
welcomes the prompt resolution of the dispute and does not object to the manner of proceeding
chosen by the Parties. However, the European Co mmunities considers that the ability of parties to a
dispute to agree on certain matters and to then ha ve such agreement translated into findings and
recommendations of a panel which are eventually ad opted by the DSB is not unlimited. The manner
of proceeding chosen by the Parties cannot affect the rights of WTO Members which are not parties to

1 Exhibit THA-8.
2 The Parties have agreed that an y change in the cash deposit rate or revocation of the anti-dumping
order as a result of the recalculation of dumping margins pursuant to a Section 129 determination will take
effect with respect to "entries made no sonner than the date [of implementation of the new determination]"
(Agreement on Procedures , para. 6). In this respect, the European Communities observes that the US
obligations resulting from the Agreement on Procedures would appear to be far more limited than the US
obligations resulting from identical violations found in other disputes. Indeed, the Appellate Body has twice
rejected the relevance of the "date of entry" for the purpose of assessing compliance with adopted DSB reports
(Appellate Body Report, US – Zeroing (Article 21.5 – EC) para. 309, and Appellate Body Report, US – Zeroing
(Article 21.5 – Japan) , para. 169). Thus, in the EC view, as all mutually agreed solutions shall be consistent
with the covered agreements and shall not nullify or impair benefits accruing to any Member under those
agreements (Article 3.5 of the DSU), any agreement between the Parties on implementation cannot alter the
consequences of a recommendation pursuant to Article 19.1 of the DSU, i.e., to bring the measure into full
conformity with the covered agreements.

the Agreement on Procedures 3; nor can the approach chosen by the Parties seek to obtain findings
having equal weight in practice vis-à-vis other WTO Members as a "conventional" panel report.

5. Under these circumstances, Article 11 of the DSU gains special relevance. Notwithstanding
the absence of disagreement between the parties, a panel has a basic obligation under Article 11 of the
DSU to make an objective assessment of the matter before it, including an objective assessment of the
facts of the case.
4 Such assessment should include the facts, evidence and legal argument. A panel
should therefore exercise particular care in this resp ect, particularly where, as in this case, the dispute
touches on matters that the complaining party do es not pursue. The Panel should particularly
distinguish between finding that the Parties agree with respect to a particular fact, evidentiary matter
or legal issue; and the Panel itself making such finding.

6. Taking into account the above consideration, the European Communities would like to make
two remarks on the submissions of the Parties.

7. First, the European Communities obser ves that the description made by Thailand
5 of the
methodology applied by the United States in the pres ent case contains terminology which is incorrect
in view of the interpretation followed by the Appe llate Body. In particular, Thailand states that the
dumping margin for an exporter was calculated "by summing up the amount of dumping for each
model" and that the USDOC "set to zero all negative margins on individual models" ( emphasis
added). However, the Appellate Body has already cl arified that dumping can be found to exist only
"for the product under investigation as a whole, and cannot be found to exist for a product type,
model, or category of that product" and that "the results of model-specific comparisons are not
margins of dumping within the meaning of Article 2.4.2, but rather constitute intermediate
calculations that need to be taken into considera tion in the calculation of the margin of dumping for
the product under consideration as a whole" ( emphasis added ).6 Consequently, the
European Communities suggests that the Panel us e the proper terminology as indicated by the
Appellate Body.7

8. Second, the European Communities observes that panels and the Appella te Body have found
the use of zeroing in original investigations to be inconsistent with Article 2.4.2 of the Anti-Dumping
Agreement in many disputes so far.
8 The European Communities not es that the Appellate Body
Report in US – Stainless Steel (Mexico) addresses in general terms the relevance of previous panel
and Appellate Body reports. 9 In this respect, the final sentence of paragraph 160 refers to "an
adjudicatory body" (in the singular), which seems to indicate that the phrase refers to the situation in

3 DSU, Article 3.2.
4 Panel Report, Colombia – Indicative Prices, para. 181; and Appellate Body Report, US – Gambling,
para. 281 ("[W]hen a panel rules on a claim in the absence of evidence and supporting arguments, it acts
inconsistently with its obligations under Article 11 of the DSU").
5 Thailand's First Written Submission, para. 10 (c onfirmed by the US First Written Submission,
para. 2).
6 Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from
Canada ("US – Softwood Lumber V"), paras 81 – 90; see also Appellate Body Report, US – Continued Zeroing,
7 See, e.g., Appellate Body Report, US – Zeroing (Japan), footnote 13.
8 See Appellate Body Report, EC – Bed Linen , para. 66; Appellate Body Report, US – Softwood
Lumber V, para. 117; Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 124;
Appellate Body Report, US – Zeroing (Japan) , para. 138; and Appellate Body Report, US – Zeroing (EC) ,
para. 222. In addition, model zeroing in original investigations has been found to be inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement by all panels that have examin ed that practice, including the
panels in EC – Bed Linen , EC – Tube or Pipe Fittings , US – Softwood Lumber V , US – Zeroing (EC) , US –
Zeroing (Japan), and US – Shrimp (Ecuador), US – Shrimp (Thailand) and US – Continued Zeroing.
9 Appellate Body Report, US – Stainless Steel (Mexico), paras 157 – 162.

which it is the same body in both the previous case and the case to be decided. That is, it refers to the
situation in which a panel might be called upon to r esolve the same legal issu e that it has previously
resolved; or the situation in which the Appellate Body might be called upon to resolve the same legal
issue that it has already resolved. We note that the phrase refers to "cogent reasons" as the basis for a
change in view. By contrast, the European Co mmunities notes that paragraph 161 of the Appellate
Body Report in US – Stainless Steel (Mexico) addresses the hierarchical relationship between panels
and the Appellate Body. It concludes that the re levance of clarification provided by the Appellate
Body on issues of legal interpretation is not limited to the application of a particular provision in a
specific case. There is no express reference to "coge nt reasons". Finally, in paragraph 162 of the
Appellate Body Report in US – Stainless Steel (Mexico) the Appellate Body states that it was deeply
concerned about the panel's decision to depart from well-established Appella te Body jurisprudence
clarifying the interpretation of the same legal issues.

9. In view of this, the European Communiti es requests the Panel to carry out an objective
assessment of the matter before it, taking into account the well-established Appellate Body
jurisprudence clarifying the interpretation of the same legal issues.

ANNEX B-2

THIRD PARTY WRITTEN SUBMISSION
OF JAPAN

1. This dispute is one of the numerous di sputes brought to the WTO dispute settlement
procedure concerning "zeroing" used in the US anti-dumping procedures. Japan, as shown by its own
recourse to the WTO dispute settlement procedure, has an interest in the issue of the WTO-
consistency and implementation by the United States regarding "zeroing".

2. The basis of Thailand's claim is that the US Department of Commerce's use of "zeroing"
when calculating the dumping margins for certain i nvestigated exporters in the investigation of
polyethylene retail carrier bags from Thailand is inconsistent with the United States' obligations under
Article 2.4.2, first sentence, of the Agreement of Implementation of Article VI of the GATT 1994 (Anti-
Dumping Agreement).
1 Japan totally supports Thailand's clai m. Japan shares the same recognition
with both parties that in United States – Final Dumping Determination on Softwood Lumber From
Canada ( US – Softwood Lumber Dumping ) the Appellate Body found that the use of "zeroing" 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 "weighted-average-to-
weighted-average methodology") in investigations was inconsistent with Article 2.4.2 of the Anti-
Dumping Agreement .
2 In this regard, Japan notes that th e United States does not contest that the
measures identified in the panel request are incons istent with Article 2.4.2, first sentence, of Anti-
Dumping Agreement on the grounds stated in US – Softwood Lumber Dumping.3

3. In light of the foregoing, Japan, noting that the parties to this dispute have reached an
Agreement on Procedures to permit expe ditious resolution of this dispute
4, agrees with both parties
that a prompt resolution be brought to this dispute. Japan expects that the United States would take
appropriate actions with respect to measures at is sue so that "prompt settlement of situations", as
stated in Article 3.3 of Understanding on Rules and Procedures Governing the Settlement of Disputes,
will be achieved.

1 WT/DS383/2 (10 March 2009), pp.2-3.
2 Appellate Body Report, US – Softwood Lumber Dumping , paras. 62-117, Written submission of
Thailand (Thailand FWS) para. 15, and First Written Submission of the United States (US FWS) para. 5.

ANNEX B-3

EXECUTIVE SUMMARY OF THE THIRD PARTY
WRITTEN SUBMISSION
OF ARGENTINA

I. INTRODUCTION
1. Argentina does not intend to discuss zeroing as applied in the specific case brought by
Thailand. Instead, it will focus on a more systemic aspect, that is, the inconsistency of zeroing as
such.

2. The practice and methodology applied by the United States Department of
Commerce (USDOC), commonly known as "zeroing", is inconsistent with the
Anti-Dumping Agreement (hereinafter ADA). Article 1 of the ADA stipulates that "[a]n
anti-dumping measure shall be app lied only under circumstances pr ovided for in Article VI of
GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions
of this Agreement".

3. The zeroing methodology for calculating the margin of dumping during the investigation
phase, by eliminating certain relevant transactions fr om the calculation, can lead to two situations:
(a) artificial inflation of a margin of dumping; or , in the worst-case scenario, (b) creation of a margin
of dumping where there is none, contrary to Article VI of the GATT 1994 and the ADA.

II. INCONSISTENCY WITH ARTICLE 2.4 OF THE ANTI-DUMPING AGREEMENT
4. Article 2.4 of the ADA establishes that cal culation of the margin of dumping requires a
"fair comparison" to be made between export price and normal value. It also specifies how such a
comparison is to be done and that due allowance is to be made, in each individual case, for differences
which affect "price comparability", providing alte rnatives for adjustment for the purposes of such
comparison.

5. As shown above, this provision lays down as a standard that any investigating authority, when
calculating margins of dumping in investigations, is required to do so on the basis of a fair
comparison, regardless of the method it may decide to use under Article 2.4.2.

6. The ordinary meaning of the word " equitativo" (fair) in Spanish indicates that the comparison
must be " justa", " imparcial" or " ecuánime" ( Diccionario de la Lengua Española , Espasa Calpe,
Madrid, 2005), i.e. just, impartial or unprejudiced. In other words, the comparison must not be
distorted in such a way as to artificially increase the margin of dumping or to create positive margins
where the result of the equation is negative. The principle of "fair comparison" hence ensures that,
regardless of the method used, the result of the calcu lation of the margin of dumping is a genuine one,
and this implies taking into account all variables that may affect the final result.

7. The practice of setting the negative margins to zero consists of disregarding export prices that
are higher than the domestic market prices of the enterprise in question. Now, how can a fair
comparison of normal value and export prices be made if some variables are omitted from the
calculation of the margin of dumping, without justification of any kind?

8. By omitting from the calculation results in case s where the margin of dumping is negative,
the zeroing methodology produces a result that does not reflect reality, with margins of dumping
created artificially on the basis of a selection of variables showing positive results.

9. Although the ADA does indeed allow adjust ments for the purpose of facilitating price
comparability (where actual comparison is impossible) and makes no reference to zeroing, such
adjustments cannot be made in the light of the zeroing methodology, for what is done in applying this
method is to select some variables and dismiss othe r "comparable" ones, thus turning zeroing into a
practice inconsistent with Article 2.4 of the ADA.

III. INCONSISTENCY WITH ARTICLE 2.4.2 OF THE ANTI-DUMPING AGREEMENT
10. Both panels and the Appellate Body have in several instances found the practice of zeroing to
be inconsistent with Article 2.4.2 of the ADA.

11. Article 2.4.2 refers to the various methods av ailable to investigating authorities for calculating
the margin of dumping. It specifies that "[ s]ubject 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 nor mal value and export prices
on a transaction to transaction basis [thus providing the possibility of applying a weighted
average/transaction under exceptional circumstances method]".

12. The aforementioned provision explains how domestic authorities must proceed in establishing
"the existence of margins of dumping", that is, it explains how they must proceed in establishing that
there is dumping.

13. As can be inferred from this provision, co mparison for the purposes of calculating the
"margin of dumping" in an investigation, rega rdless of the method used, must be based on "all"
comparable transactions and not on the selection of certain models or transactions.

14. Argentina hence concurs with the arguments in paragraph 13 of Thailand's written submission
that the terms "margins of dumping" and "all compar able export transactions" must be interpreted in
an "integrated manner"
1, which leads to the conclusion that, where "an investigating authority has
chosen to undertake multiple comparisons, the inv estigating authority necessarily has to take into
account the results of all those comparisons in or der to establish margins of dumping for the product
as a whole under Article 2.4.2".2

15. Argentina therefore agrees with Thailand that the zeroing methodology is inconsistent with
Article 2.4.2, because it fails to take into account "all" comparable transactions as prescribed by the
provision in question. According to this methodol ogy, the "margin of dumping" is calculated by
selecting some transactions and disregarding (by setting them to zero) those in which case the result is
negative.

1 Appellate Body Report, WT/DS264/AB/R, adopted on 31 August 2004 ("Appellate Body Report,
US – Softwood Lumber V"), paras. 86-103. (Original footnote.)
2 Ibid., para. 122. (Original footnote.)

IV. INCONSISTENCY WITH ARTICLE 9.3 OF THE ANTI-DUMPING AGREEMENT
AND ARTICLE VI:2 OF THE GATT 1994
16. Article 9.3 of the ADA, read in conjuncti on with Article VI:2 of the GATT 1994, provides
that anti-dumping duties levied in order to offset the effects of dumping may not exceed the margin of
dumping in respect of such product.

17. Article 9.3 stipulates that " [t]he amount of the anti-dumping duty shall be established in
accordance with the provisions of Article 2".

18. The zeroing methodology, by not producing a resu lt that takes into account all the variables to
be taken into consideration in a margin-of-dumping determination, ultimately implies the levying of
anti-dumping duties in excess of the margin of dumpi ng, and is consequently inconsistent with
Articles 9.3 of the ADA and VI:2 of the GATT 1994.

19. Nonetheless, Argentina wishes to make clear that the imposition and collection of duties
cannot be confused with the calculation of the ma rgin of dumping, which the implementing authority
is required to make prior to the imposition phase.

V. CONCLUSION
20. In view of the foregoing, Argentina considers that the zeroing methodology for calculating
margins of dumping during the investigation phase is inconsistent with Article 2.4.2 of the ADA.

21. Accordingly, Argentina respectfully requests the Panel that the United States be asked to
bring its measures into conformity with WTO law.