CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES REPORT OF THE PANEL
Document: REPORT OF THE PANEL Addendum
Date: 31 July 2015
Document codes: WT/DS414/RW/Add.1; WT/DS414/RW.
Complainant: U.S.
Respondent: China
Third parties: Argentina, EU, Honduras, India, Japan, South Korea, Saudi Arabia, Vietnam, Russia
Dispute stage: Implementation & Compliance
Agreements cited: Art. VI  GATT 1994Art. 1  Anti-dumpingArt. 10, 11.2, 11.3, 12.7, 12.8, 22.3, 12.7, 12.8, 22.3, 22.5, 15.1, 15.2  Subsidies and Countervailing Measures (SCM)Art. 6.9, 12.2.2, 6.8, Annex II, 6.4, 6.5.1, 3.1, 3.2  Anti-dumping

CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON
GRAIN ORIENTED FLAT-ROLLED ELECTRICAL STEEL
FROM THE UNITED STATES
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to D to the Report of the Panel to be found in document

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures on Business Confidential Information A-6
ANNEX B
ARGUMENTS OF THE UNITED STATES
Contents Page
Annex B-1 Executive summary of the first written submission of the United States B-2
Annex B-2 Executive summary of the second written submission of the United States B-9
Annex B-3 Executive summary of the oral statements of the United States at the
Substantive Meeting
B-17
Annex B-4 Executive summary of the oral statem ent of the United States at the
Interim Review Meeting
B-21
ANNEX C
ARGUMENTS OF CHINA
Contents Page
Annex C-1 Executive summary of the first written submission of China C-2
Annex C-2 Executive summary of the second written submission of China C-10
Annex C-3 Executive summary of the oral statements of China at the Substantive Meeting C-18
Annex C-4 Executive summary of the oral statement of China at the Interim Review
Meeting
C-22
ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of the European Union D-2
Annex D-2 Integrated executive summary of the arguments of Japan D-6

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Additional Working Procedures on Business Confidential Information A-6

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ANNEX A-1
CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED
FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES (WT/DS414)
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
WORKING PROCEDURES OF THE PANEL
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on
Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following
Working Procedures shall apply.
General

2. The deliberations of the Panel and the document s submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter
"party") from disclosing statements of its own positions to the public. Members shall treat as
confidential information submitted by another Member to the Panel which the submitting Member
has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
3. The parties shall treat business confidential information in accordance with the procedures
set forth in the Additional Working Procedures of the Panel Concerning Business Confidential
Information.
4. The Panel shall meet in closed session. The parties, and Members having notified their
interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU
(hereafter "third parties"), shall be present at the meetings only when invited by the Panel to
appear before it.
5. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and thir d party shall have responsibility for all members
of its own delegation and shall ensure that each member of such delegation acts in accordance
with the DSU and these Working Procedures, particularly with regard to the confidentiality of the
proceedings.
Submissions

6. Before the substantive meeting of the Panel with the parties, each party shall transmit to the
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts
of the case and its arguments, and counter-arguments, respectively, in accordance with the
timetable adopted by the Panel.
7. A party shall submit any request for a prelimin ary ruling at the earliest possible opportunity
and in any event no later than in its first written submission to the Panel. If the United States
requests such a ruling, China shall submit its response to the request in its first written
submission. If China requests such a ruling, the United States shall submit its response to the
request prior to the substantive meeting of the Panel, at a time to be determined by the Panel in
light of the request. Exceptions to this procedure shall be granted upon a showing of good cause.
8. Each party shall submit all factual evidence to the Panel no later than during the substantive
meeting, except with respect to evidence necessar y for purposes of rebuttal, answers to questions
or comments on answers provided by the other party. Exceptions to this procedure shall be
granted upon a showing of good cause. Where su ch exception has been granted, the Panel shall
accord the other party a period of time for comme nt, as appropriate, on any new factual evidence
submitted after the substantive meeting.

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9. Where the original language of exhibits is not a WTO working language, the submitting party
or third party shall submit a translation into the WTO working language of the submission at the
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised
promptly in writing, preferably no later than the next filing or meeting (whichever occurs earlier)
following the submission which contains the translation in question. Any objection shall be
accompanied by a detailed explanation of the grounds of objection and an alternative translation.
10. To facilitate the maintenance of the record of the dispute, and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the dispute. For example, exhibits su bmitted by the United States could be numbered
US-1, US-2, etc. If the last exhibit in connection with the first submission was numbered US-5, the
first exhibit of the next submission thus would be numbered US-6.
Questions

11. The Panel may at any time pose questions to the parties and third parties, orally in the
course of the substantive meeting or in writing.
Substantive meeting

12. Each party shall provide to the Panel the list of members of its delegation in advance of the
meeting with the Panel and no later than 5.00 p.m. the previous working day.
13. The substantive meeting of the Panel shall be conducted as follows:
a. The Panel shall invite the United States to make an opening statement to present its
case first. Subsequently, the Panel shall invite China to present its point of view. Before
each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies to the interpreters.
Each party shall make available to the Panel and the other party the final version of its
opening statement as well as its closing statem ent, if any, preferably at the end of the
meeting, and in any event no later than 5.00 p.m. on the first working day following the
meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask questions or make comments, through the Panel. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's questions within a deadline to be determined by the Panel.
c. The Panel may subsequently pose question s to the parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the parties to which
it wishes to receive a response in writing. Each party shall be invited to respond in
writing to such questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with the United States presenting its statement first.
Third parties

14. The Panel shall invite each third party to transmit to the Panel a written submission prior to
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by
the Panel.
15. Each third party shall also be invited to present its views orally during a session of the
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. the previous
working day.

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16. The third party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order.
Third parties present at the third-party session and intending to present their views
orally at that session, shall provide the Panel, the parties and other third parties with
provisional written versions of their statements before they take the floor. Third parties
shall make available to the Panel, the parties and other third parties the final versions of
their statements, preferably at the end of th e session, and in any event no later than
5.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

17. The description of the arguments of the partie s and third parties in the descriptive part of
the Panel report shall consist of executive summari es provided by the parties and third parties,
which shall be annexed as addenda to the report . These executive summaries shall not in any way
serve as a substitute for the submissions of the parties and third parties in the Panel's examination
of the case.
18. Each party shall submit executive summaries of the facts and arguments as presented to the
Panel in its written submissions, other than responses to questions, and its oral statements, in
accordance with the timetable adopted by the Panel. Each executive summary of a written
submission shall be limited to no more than 10 pages, and each summary submitted by each party
of both opening and closing statements presented at a substantive meeting shall be limited to no
more than 5 pages. The Panel will not summarize in the descriptive part of its report, or annex to
its report, the parties' responses to questions.
19. Each third party shall submit an executive summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panel. This
summary may also include a summary of response s to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
20. The Panel reserves the right to request the parties and third parties to provide executive
summaries of facts and arguments presented by a party or a third party in any other submissions
to the Panel for which a deadline may not be specified in the timetable.
Interim review
21. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
22. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.

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23. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

24. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all documents to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file 4 paper copies of all documents it submits to the
Panel. However, when exhibits are provided on CD-ROMS/DVDs, 2 CD-ROMS/DVDs and
2 paper copies of those exhibits shall be filed. The DS Registrar shall stamp the
documents with the date and time of the filing. The paper version shall constitute the
official version for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, in Microsoft Word format,
either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is
provided by e-mail, it should be addre ssed to DSRegistry@wto.org, and cc'd to XXXXXX
and XXXXXX. If a CD-ROM or DVD is provided, it shall be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the substantive meeting with the Panel. Each third party shall serve any document
submitted to the Panel directly on the parties and all other third parties. Each party and
third party shall confirm, in writing, that copies have been served as required at the time
it provides each document to the Panel.
e. Each party and third party shall file its do cuments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.

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ANNEX A-2
CHINA – COUNTERVAILING AND ANTI-DUMPING DUTIES ON GRAIN ORIENTED
FLAT-ROLLED ELECTRICAL STEEL FROM THE UNITED STATES (WT/DS414)
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
ADDITIONAL WORKING PROCEDURES ON BUSINESS CONFIDENTIAL INFORMATION
1. These procedures apply to any business confidential information (BCI) that a party wishes to
submit to the Panel that was previously treated by China's Ministry of Commerce ("MOFCOM") as
BCI in the anti-dumping and countervailing duty investigations at issue in this dispute. However,
these procedures do not apply to information that is available in the public domain. In addition,
these procedures do not apply to any BCI if the pe rson who provided the information in the course
of the aforementioned investigations agrees in writing to make the information publicly available.
2. The first time that a party submits to the Panel BCI as defined above from an entity that
submitted that information in one of the investigations at issue, the party shall also provide, with a
copy to the other party, an authorizing letter from the entity. That letter shall authorize both the
United States and China to submit in this disp ute, in accordance with these procedures, any
confidential information submitted by that entity in the course of those investigations.
3. No person may have access to BCI except a member of the Secretariat or the Panel, an
employee of a party or third party, and an outsid e advisor for the purposes of this dispute to a
party or third party. However, an outside advisor is not permitted access to BCI if that advisor is
an officer or employee of an enterprise engage d in the production, export, or import of the
products that were the subject of the investigations at issue in this dispute.
4. A party or third party having access to BCI shall treat it as confidential, i.e., shall not
disclose that information other than to those persons authorized to receive it pursuant to these
procedures. Each party and third party shall have responsibility in this regard for its employees as
well as any outside advisors used for the purpos es of this dispute. BCI obtained under these
procedures may be used only for the purpose of providing information and argumentation in this
dispute and for no other purpose.
5. The party submitting BCI shall mark the cover and/or first page of the document containing
BCI, and each page of the document, to indicate the presence of such information. The specific
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]]. The
first page or cover of the document shall state "Contains business confidential information on
pages xxxxxx", and each page of the document shall contain the notice "Contains Business
Confidential Information" at the top of the page.
6. Where a party submits a document containing BCI to the Panel, the other party or any
third party referring to that BCI in its documents, including written submissions and oral
statements, shall clearly identify all such information in those documents. All such documents shall
be marked as described in paragraph 5. In the case of an oral statement containing BCI, the party
or third party making such a statement shall inform the Panel before making it that the statement
will contain BCI, and the Panel will ensure that only persons authorized to have access to BCI
pursuant to these procedures are in the room to hear that statement.
7. The Panel will not disclose BCI, in its report or in any other way, to persons not authorized
under these procedures to have access to BCI. The Panel may, however, make statements of
conclusion drawn from such information. Before the Panel circulates its final report to the
Members, the Panel will give each party an opportun ity to review the report to ensure that it does
not contain any information that the party has designated as BCI.
8. Submissions containing BCI will be included in the record forwarded to the Appellate Body in
the event of an appeal of the Panel's Report.

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ANNEX B
ARGUMENTS OF THE UNITED STATES
Contents Page
Annex B-1 Executive summary of the first written submission of the United States B-2
Annex B-2 Executive summary of the second written submission of the United States B-9
Annex B-3 Executive summary of the oral statements of the United States at the
Substantive Meeting
B-17
Annex B-4 Executive summary of the oral statem ent of the United States at the
Interim Review Meeting
B-21

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ANNEX B-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF THE UNITED STATES
I. INTRODUCTION
1. On November 16, 2012, the Dispute Settlement Body ("DSB") adopted its recommendations
and rulings in the dispute China – Countervailing and Anti-Dumping Duties on Grain Oriented
Flat-rolled Electrical Steel from the United States ("China – GOES") (DS414), and found that China
imposed antidumping and countervailing duties on U.S. exports of grain oriented flat-rolled
electrical steel ("GOES") in a manner that breached China's obligations under the Agreement on
Implementation of Article VI of the Ge neral Agreement on Tariffs and Trade 1994
("AD Agreement"), and the Agreement on Subsidies and Countervailing Measures
("SCM Agreement"). As a result, the DSB recommended that China bring its measures into
conformity with its obligations under these agreements.
2. Instead of complying with the DSB's recommendations and rulings, China did the opposite:
on July 31, 2013, China's Ministry of Commerce ("MOFCOM") issued a Determination on the
Re-investigation of Antidumping and Countervailing Duties on Grain Oriented Flat-Rolled Electrical
Steel Imports from the United States ("Re-determination") that suffers from many of the same
flaws as the original investigation, and as a result, continues to impose antidumping and
countervailing duties on imports of GOES in a WTO-inconsistent manner.
3. These breaches include MOFCOM's findings that the imports subject to investigation (the
"subject imports") had adverse effects on prices of the domestic like product; that the domestic
industry was materially injured in 2008; and that there was a causal relationship between the
subject imports and any material injury to the domestic industry in any part of the period of
investigation. The breaches also include MOFCOM's failures to disclose certain facts, and to explain
its Re-determination.
4. Thus, from a WTO compliance standpoint, the situation is the same as it was in the original
proceedings: China still imposes antidumping and countervailing duties on imports of GOES from
the United States through measures that are inconsistent with the covered agreements. U.S.
companies, therefore, continue to lose sale s and market share in China because of these
WTO-inconsistent duties.
5. In light of the evidence and arguments pres ented below, the United States respectfully
requests that the Panel find that China's Re-determination fails to comply with the DSB's
recommendations and rulings in China – GOES, and is inconsistent with China's WTO obligations.
II. REVIEW
 UNDER ARTICLE 21.5 OF THE DSU
6. Under Article 21.5 of the DSU, measures that negate or undermine compliance with the
DSB's recommendations and rulings and any measures taken to comply that are inconsistent with
a covered agreement may come within the scope of an Article 21.5 proceeding. An Article 21.5
panel is to engage in an objective assessment to determine the existence or consistency of a
measure taken to comply.
7. If on a specific issue the underlying evidence and the explanations given by the investigating
authority have not changed from the original determination, then an Article 21.5 panel should
reach the same conclusions as the original panel. Moreover, in this dispute, one question is
whether MOFCOM's conclusions are "reasoned and adequate" in "light of the evidence."
Accordingly, investigating authorities in antidumping and countervailing duty investigations may
have to consider conflicting arguments and evidence and will need to exercise discretion. However,
the investigating authority is responsible for ensuring that its explanations reflect that conflicting
evidence was considered.

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III. MOFCOM'S INJURY RE-DETERMINATION FAILS TO COMPLY WITH THE DSB'S
RECOMMENDATIONS AND RULINGS AND IS INCONSISENT WITH CHINA'S WTO
OBLIGATIONS
A. MOFCOM's Revised Price Effects Analysis Is Inconsistent with China's Obligations
Under Articles 3.1 and 3.2 of the AD Ag reement and Articles 15.1 and 15.2 of the
SCM Agreement

8. In its analysis, MOFCOM concluded that the subject imports had adverse effects on the
domestic industry's prices in three ways: (i) the volume of subject imports suppressed domestic
prices in 2008 and the first quarter of 2009, as ev idenced by a cost-price squeeze experienced by
the domestic industry in those periods; (ii) the 5.56 percent increase in subject imports' market
share in 2008 drove the domestic industry to cut prices by 30.25 percent in the first quarter of
2009, resulting in price depression; and (iii) the pric ing policies of subject foreign producers in the
first quarter of 2009, as indicated by certain verification documents, drove domestic producers to
cut their prices in the first quarter of 2009, also resulting in price depression.
9. MOFCOM has failed to meaningfully address and remedy the numerous deficiencies that the
DSB found in the original determination. Its findings regarding the price effects of subject imports
are inconsistent with Articles 3.1 and 3.2 of th e AD Agreement and Articles 15.1 and 15.2 of the
SCM Agreement, as discussed below.
1. An Investigating Authority's Considerat ion of Price Effects Must Be Based on
"Positive Evidence" and Must "Involve an Objective Examination."

10. Article 3.1 of the AD Agreement and Ar ticle 15.1 of the SCM Agreement impose two
important requirements on authorities that make injury determinations. The first is that the
determination be based on "positive evidence." The second requirement is that the injury
determination involves an "objective examination" of the volume of the dumped or subsidized
imports, their price effects, and their impact on the domestic industry.
2. MOFCOM's Finding That the Volume of Subject Imports Suppressed Domestic
Prices in 2008 and the First Quarter of 2009 Does Not Rest on an Objective
Examination Based on Positive Evidence

a. MOFCOM's Volume-Based Price Su ppression Analysis Is Flawed

11. MOFCOM's analysis is seriously flawed. In its Re-determination, MOFCOM seems to take the
position that a price effects analysis can be conducted without taking into account the relationship
between the prices of subject impo rts and the prices of the domestic like product. In considering
the effect of the subject imports on prices under Article 3.2 of the AD Agreement and Article 15.2
of the SCM Agreement, the investigating authority sh all consider evidence as to that effect, such
as evidence of the prices of imported products compared to the prices of domestic products. An
investigating authority cannot determine that subject imports had a particular price effect while
ignoring the evidence as to the actual prices of imports compared to domestic products. Yet
MOFCOM ignored the price comparison evidence altogether in its Re-determination.
12. Leaving aside the fundamental problem of MOFCOM's complete failure to conduct an analysis
of the relationship between prices of subject im ports and the domestic like product, MOFCOM's
analysis also suffers from other serious flaws. MOFCOM's attempt to show that the decline in the
price-cost differential in 2008 was not attributable to Baosteel's startup costs is unpersuasive.
MOFCOM's attempt to show that the domestic industry did not exercise price restraint for its own
benefit is also unpersuasive.
b . M O F C O M F a i l s t o S h o w t h a t A ny Price Suppression Was Linked to
Subject Imports

13. Moreover, MOFCOM's price suppression analysis suffers from a more fundamental flaw
because it fails to show that any price suppressi on was the effect of subject imports. MOFCOM
simply assumed that any price suppression was li nked to subject imports. Notably, MOFCOM has
now disavowed making any price comparisons betw een the subject imports and the domestic like
product. MOFCOM admits that it "neither conducte d a comparison of the price level of the subject

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merchandise and the domestic like product nor did it issue any finding on 'low price' or price
cutting." In other words, MOFCOM actually has no statistical data or evidence showing that the
prices of subject imports were adversely affecting the prices of the domestic like product.
c. MOFCOM's Theory that Subject Im ports Caused Price Suppression Has
No Basis

14. In the absence of any evidence showing that the prices of subject imports were adversely
affecting the prices of the domestic like product, MOFCOM has simply proffered a theory that the
increase in the subject imports' volume and ma rket share in 2008 caused the prices of the
domestic like product to be suppressed. There are several problems with MOFCOM's analysis.
15. The data for the first quarter of 2009 demonstr ates an absence of price competition between
subject imports and the domestic like product. Al though the domestic industry's prices dropped
by 30.25 percent, and the prices of subject import s declined by only 1.25 percent, this sharp
divergence in prices did not translate into significant shifts in market share. The domestic industry
gained 1.04 percentage points of market share, and subject imports gained 1.17 percentage points
– both at the expense of nonsubject imports. If price were an important factor in purchasing
decisions, the drastic decline in the domestic industry's prices should have caused a much more
significant shift in sales and market share in favor of the domestic industry.
16. The Appellate Body recognized that price mo vements in the first quarter of 2009 indicated
that subject imports and the domestic product were not competing on the basis of price. At no
point in its analysis, however, has MOFCOM attemp ted to address this fundamental flaw. Instead,
MOFCOM relies on three arguments in an attempt to show that subject imports were affecting the
prices of the domestic like product. First, it contends that there was parallel pricing between
subject imports and the domestic product. Second, it argues that certain documents obtained
during its verification of domestic producers show that respondents had adopted a pricing strategy
to set price lower than those of the domestic produc t. Finally, it claims that a partial overlap in
customers proves that price was important in purc hasing decisions. Each of these arguments is
unpersuasive, as discussed below.
d. MOFCOM's Reliance on Parallel Pricing is Unsubstantiated

17. With regard to parallel pricing, MOFCOM assert s that the trends in the prices of the subject
imports and the domestic product are "consistent" or "fundamentally consistent." MOFCOM
elaborates on this by stating: "with regard to the change in the average price trend, from 2006 to
2008, the trend of change between the subject me rchandise and the domestic like product was
consistent and the rate of change was similar, indicating that competition existed between the
subject merchandise and the domestic like product."
18. In its report, however, the Appellate Body explained that, although it could "conceive of
ways in which an observation of parallel pric e trends might support a price depression or
suppression analysis ... there is no basis on which to draw any such conclusion in this case."
MOFCOM's reliance on parallel pricing is just as unsupported in the Re-determination as it was in
the original determination. In short, MOFCOM's reliance on parallel pricing to show that subject
imports affected domestic prices is not supported by positive evidence.
e. Any Evidence of a Supposed Pricing Policy is Not Probative

19. With regard to evidence of a pricing polic y by respondents, MOFCOM points to documents
that it obtained during verification (a contract between a Russian trading company and a Chinese
customer, and three sets of price negotiation documents between a Chinese producer and its
customers), and states that these documents show that "prices have significant influence on the
purchase decisions of downstream users." An ex amination of these documents, however, shows
that they prove nothing of the sort.

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f. A Partial Overlap of Customers Does Not Provide Any Support for
MOFCOM's Conclusion that Subjec t Imports are Competitive with
Domestic Like Product

20. MOFCOM also cites to a partial overlap in customers to support its assertion that price was
an important factor in purchasing decisions. This partial overlap in customers, however, does not
prove what MOFCOM says it does. The fact that some customers – be they distributors of electrical
equipment or electrical utilities – buy both from subject sources and from domestic producers does
not establish that there is direct competition for sales to these purchasers by domestic and subject
suppliers, that the domestic and subject suppliers were selling the same products, or that price is
an important factor in purchasing decisions.
21. MOFCOM should have conducted a thorough inquiry into the relative importance of price and
non-price factors in purchasing decisions, rather than simply attributing the price suppression to
the subject imports. But the Re-determination demonstrates that MOFCOM failed to do this,
thereby underscoring the lack of objectivity of it s examination. Because MOFCOM failed to show
that subject imports "have explanatory force" fo r the suppression of domestic prices, MOFCOM's
analysis is inconsistent with Articles 3.1 and 3.2 of the AD Agreement and Articles 15.1 and 15.2
of the SCM Agreement.
3. MOFCOM's Finding that Price Depressi on in the First Quarter of 2009 Was an
Effect of Subject Imports Does Not Re st on an Objective Examination Based
on Positive Evidence

22. Instead of pointing to any evidence or providing a substantive analysis of the purported link
between the loss of market share in 2008 and th e domestic price drop in interim 2009, MOFCOM
merely asserted that "[t]he evidence that the In vestigation Authority obtained fully support this
determination," and that its finding was based on a "comprehensive rather than isolated analysis
of the situation in 2008 and the first quarter in 2009." MOFCOM never explains what this
"evidence" is, or the nature of the "comprehensive analysis" that it supposedly conducted.
23. As the original panel and the Appellate Body explained, merely showing the existence of a
significant depression in prices does not satisf y the requirements of the covered agreements. An
authority must also show that such price depressi on is an effect of the subject imports. MOFCOM
has not done so here. MOFCOM's finding that the depression of domestic prices in the first quarter
of 2009 was attributable to the domestic industry's loss of market share to subject imports in 2008
is inconsistent with Articles 3.1 and 3.2 of the AD Agreement and Articles 15.1 and 15.2 of the
SCM Agreement.
4. MOFCOM's Finding That the Pricing Policies of Subject Foreign Producers
Caused Price Depression in Interim 2009 Does Not Rest on an Objective
Examination Based on Positive Evidence

24. MOFCOM's reliance on an alleged policy of pr ice undercutting by subject imports to explain
its finding of price depression in the first quarter of 2009 is as misplaced as it was in MOFCOM's
original determination. As the Appellate Body noted in its analysis of this issue, in light of the
pricing dynamic in that period – where the price of subject imports declined by 1.25 percent, while
the price of domestic products plunged by 30. 25 percent, and subject imports oversold the
domestic product – there was no basis to conclude that a policy of price undercutting could explain
depressive or suppressive effects on domestic prices.
25. In addition to the fundamental implausibility of MOFCOM's reasoning, there are also other
defects in its analysis, which cast further do ubt on whether MOFCOM conducted an objective
examination based on positive evidence. The pric e negotiation documents also fail to support
MOFCOM's claims.
5. Conclusion

26. In sum, MOFCOM's findings that the volume of subject imports suppressed domestic prices
in 2008 and the first quarter of 2009 is not based on positive evidence, and does not reflect an
objective examination of the evidence. Furtherm ore, MOFCOM's theories that a 5.56 percent
increase in subject imports' market share in 2008 drove the domestic industry to cut prices

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by 30.25 percent in the first quarter of 2009, or that the domestic industry was driven to do so by
"pricing policies" of subject foreign producers, lack any foundation in the record. As a result,
MOFCOM has not shown, through these findings, that "the effect of such imports is otherwise to
depress prices to a significant degree or prev ent price increases, which otherwise would have
occurred, to a significant degree." Accordingly, MOFCOM's analysis is inconsistent with Articles 3.1
and 3.2 of the AD Agreement and Articles 15.1 and 15.2 of the SCM Agreement.
B. MOFCOM's Analysis of the Impact of Su bject Imports on the Domestic Industry is
Inconsistent with China's Obligations Under Articles 3.1 and 3.4 of the
AD Agreement, and Articles 15.1 and 15.4 of the SCM Agreement

27. MOFCOM's finding that the subject imports ha d an adverse impact on the domestic industry
was not based on an objective examination of "all relevant economic factors and indices having a
bearing on the state of the industry," in breach of Articles 3.1 and 3.4 of the AD Agreement and
Articles 15.1 and 15.4 of the SCM Agreement.
28. The "examination" contemplated by Articles 3.4 and 15.4 must be based on a "thorough
evaluation of the state of the industry" and it must "contain a persuasive explanation as to how
the evaluation of relevant factors led to the determination of injury." MOFCOM failed to conduct
such an examination with respect to its finding that the domestic industry was materially injured
in 2008.
29. Additionally, an authority's factual findings under Article 3.4 of the AD Agreement and
Article 15.4 of the SCM Agreement must comply wi th the "objective examination" and "positive
evidence" requirements articulated in Article 3. 1 of the AD Agreement and Article 15.1 of the
SCM Agreement, respectively. MOFCOM's findings are not based on an objective examination and
are not supported by positive evidence. MOFCOM 's examination of the factors enumerated in
Articles 3.4 and 15.4 for 2008 is highly distorted and selective. It is distorted because factors that
are identified as being indicative of material injury are not viewed in their proper context. It is
selective because it ignores the fact that many of these factors showed that the domestic industry
was performing well in 2008.
30. In sum, MOFCOM's "examination of the im pact of the dumped imports on the domestic
industry concerned" and "evaluation of all relevant economic factors and indices having a bearing
on the state of the industry" was not based on an "objective examination" of "positive evidence."
MOFCOM's findings, therefore, are inconsistent with Articles 3.1 and 3.4 of the AD Agreement
and 15.1 and 15.4 of the SCM Agreement.
C. MOFCOM's Revised Causation Analysis Is Inconsistent with China's Obligations
Under Articles 3.1 and 3.5 of the AD Agre ement, and Articles 15.1 and 15.5 of the
SCM Agreement

31. For the reasons highlighted below, MOFCOM's causation analysis was not based on an
objective examination of positive evidence, as re quired by Article 3.1 of the AD Agreement and
Article 15.1 of the SCM Agreement, or an examinat ion of all relevant evidence, as required by
Article 3.5 of the AD Agreement and Article 15.5 of the SCM Agreement.
1. An Investigating Authority's Causatio n Analysis Must Be Based on "Positive
Evidence" and Must "Involve an Objective Examination."

32. An authority's factual findings under Article 3.5 of the AD Agreement and Article 15.5 of the
SCM Agreement must comply with the "positive evidence" and "objective examination"
requirements articulated in Article 3.1 of the AD Agreement and Article 15.1 of the
SCM Agreement respectively. As we demonstrate below, five aspects of MOFCOM's causation
analysis fail to conform to these requirements.
2. MOFCOM's Causation Analysis Fails Be cause of its Reliance on its Defective
Price Effects Findings

33. Because MOFCOM has not established that the imports under investigation had any
significant price effects on the domestically produced product, a necessary element of its causal

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link analysis fails. Accordingly, due to its failure to demonstrate significant price effects, China has
failed to demonstrate that dumped or subsidized imports are causing injury, as required by
Articles 3.1 and 3.5 of the AD Agreement and Articles 15.1 and 15.5 of the SCM Agreement.
3. MOFCOM's Assertion That the Domest ic Industry Was Prevented by Subject
Imports from Realizing the Benefits of Economies of Scale Does Not Rest on
an Objective Examination Based on Positive Evidence

34. At several points in the Re-determination, MOFCOM states that China's domestic GOES
industry increased its production capacity, but that it was injured by subject imports because they
prevented it from realizing attendant economies of scale. These are nothing more than conclusory
assertions, unsupported by any factual analys is. Among the questions that MOFCOM leaves
unaddressed are: which of the two domestic produc ers was prevented from realizing economies of
scale? Why should the producer have reasonably expected to realize economies of scale? What
should these economies of scale have been, and when should they have been realized?
35. In sum, MOFCOM's findings that the domestic industry was injured because it was prevented
by subject imports from realizing the benefits of economies of scale does not rest on an objective
examination based on positive evidence, and MOFCOM fails to demonstrate a causal relationship
between subject imports and any such injury to the domestic industry. MOFCOM's findings are
inconsistent with Articles 3.1 and 3.5 of the AD Agreement and 15.1 and 15.5 of the
SCM Agreement.
4. MOFCOM's Non-Attribution Analysis With Respect to Injury Caused by the
Domestic Industry's Overexpansion an d Overproduction Continues to be
Seriously Flawed

36. The original panel found that MOFCOM br eached Article 3.5 of the AD Agreement and
Article 15.5 of the SCM Agreement by failing to conduct a non-attribution analysis to ensure that it
was not attributing to subject imports injury caused by the Chinese GOES industry's overexpansion
and overproduction.
 China did not appeal the original panel's findings with regard to causation to
the Appellate Body, nor has it fixed the deficiencies that the original panel found. MOFCOM's
a n a l y s i s o f t h i s f a c t o r i n t h e R e - d e t e r m i n a t i o n i s m a r r e d b y n u m e r o u s e r r o r s a n d u n s u p p o r t e d ,
conclusory statements, and continues to fall short of what is required by Articles 3.1 and 3.5 of the
AD Agreement, and Articles 15.1 and 15.5 of the SCM Agreement.
5. MOFCOM's Non-Attribution Analysis With Respect to Injury Caused by
Nonsubject Imports Is Inadequate

37. MOFCOM's Re-determination Disclosure make new disclosures concerning the volumes of
nonsubject imports and the Re-determination relies on these data in finding that nonsubject
imports did not affect the causal link between subject imports and material injury to the domestic
industry. As before, MOFCOM's non-attribution analysis with respect to nonsubject imports is
unpersuasive and is not based on an objective examination of the newly-disclosed evidence.
38. There are two significant problems with MO FCOM's analysis. First, MOFCOM's statement
about the relative importance of subject and nonsubject imports since 2008 is demonstrably
incorrect. Second, and more fundamentally, MOFCOM 's analysis fails to address the inquiry that
MOFCOM should have conducted, which is to ask ho w the increasing quantity of subject imports in
2008 could have had injurious effects on the domestic industry while the increasing and much
greater quantity of nonsubject imports sold in 2008 at lower AUVs could have had no injurious
effects.
39. Because MOFCOM's Re-determination is devoid of any such analysis of the effect of
nonsubject imports, China failed to comply with Articles 3.1 and 3.5 of the AD Agreement, and
Articles 15.1 and 15.5 of the SCM Agreement.

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D. MOFCOM's Failure to Disclose Essent ial Facts Violates Article 6.9 of the
AD Agreement and Article 12.8 of the SCM Agreement

40. China breached Articles 6.9 of the AD Ag reement and 12.8 of the SCM Agreement by failing
to disclose to interested parties the "essential facts" forming the basis of MOFCOM's injury
Re-determination.
41. These facts are "absolutely indispensable" to MOFCOM's determination of material injury.
Without such information, no affirmative determination could be made and no definitive duties
could be imposed. The covered agreements require that investigating authorities inform interested
parties of essential facts under consideration prior to making a final determination. The aim of the
requirement is "to permit parties to defend their interests."
42. The facts are "essential facts" in that they ar e "facts that are significant in the process of
reaching a decision as to whether or not to apply definitive measures." They formed part of the
basis for MOFCOM's determination of material injury and decision to apply the definitive measures
at issue in this dispute. MOFCOM was required to disclose the essential facts that supported its
price effects examination and causation analysis, so that interested parties could defend their
interests.
E. MOFCOM's Findings are Inconsistent with Articles 12.2 and 12.2.2 of the
AD Agreement, and Articles 22.3 and 22.5 of the SCM Agreement

43. The original panel found that China brea ched Article 12.2.2 of the AD Agreement and
Article 22.5 of the SCM Agreement because MOFCOM did not adequately explain the basis for its
"low price" findings for its decision that nonsubject imports were not a cause of injury. The
Appellate Body agreed with the panel, finding that MOFCOM had failed to disclose all relevant
information on the matters of fact relating to its conclusion that there had been price undercutting.
44. MOFCOM's Re-determination suffers from the same flaws. It does not explain the matters of
fact and law and reasons which led to the imposition of antidumping and countervailing duties.
These issues were "material" within the meaning of Articles 12.2 of the AD Agreement and 22.3 of
the SCM Agreement because they had to be resolv ed before MOFCOM could render an affirmative
material injury determination. This information also constituted "relevant information on the
matters of fact and law and reasons which have led to the imposition of final measures," within the
meaning of Article 12.2.2 of the AD Agreement and Article 22.5 of the SCM Agreement. This
information was an integral part of MOFCOM's pricing analysis, which was central to its finding of a
causal link between subject imports and material injury. As such, MOFCOM's failure to disclose the
information in its final determinations therefore breached Article 12.2.2 of the AD Agreement and
Article 22.5 of the SCM Agreement.
IV. CONCLUSION
45. For the reasons set forth in this submission, the United States respectfully requests the
Panel to find that China's measures fail to comply with the recommendations and rulings of the
DSB; and are inconsistent with China's obligations under the SCM Agreement and
Antidumping Agreement.

- B-9 -

ANNEX B-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF THE UNITED STATES
I. INTRODUCTION
1. In its first written submission, the United States demonstrated that a number of aspects of
the Determination on the Re-investigation of Antidumping and Countervailing Duties on Grain
Oriented Flat-Rolled Electrical Steel Imports from the United States ("Re-determination") that the
Government of the People's Republic of China (" China") has adopted with respect to imports of
grain oriented flat-rolled electrical steel ("GOES") from the United States are inconsistent with
China's obligations under the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994 ("AD Agreement"), and the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement"). Accordingly, China has failed to comply with the
recommendations and rulings of the Dispute Settlement Body ("DSB") to bring its measures into
conformity with China's obligations under the AD and SCM Agreements.
2. China's responses are characterized by unsubstantiated assertions, and a failure to address
the substance of the U.S. arguments. Contrary to China's assertions, the issues in this dispute do
not involve questions of how to interpret conflicting evidence, and the United States is not asking
the Panel to second-guess China's Ministry of Commerce ("MOFCOM"). Instead, on issue after
issue, the United States has proven that MOFCOM's analysis does not rest on an objective
examination based on positive evidence. MOFCOM's analysis is not based on data that provide an
accurate and unbiased picture, and has not been conducted without favoring the interests of any
party.
3. China's responses suffer from a fundamental we akness. Despite the findings of the DSB that
MOFCOM had not provided positive evidence to su pport the findings and conclusions contained in
its original determination, MOFCOM chose to base its revised findings on essentially the same
faulty record. MOFCOM continued to rely on evidence that the DSB specifically identified as having
dubious probative value, without attempting to rect ify the obvious flaws. Instead of rectifying its
evidentiary shortcomings, in its Re-determination, MOFCOM simply deleted references to "low
prices," and switched its rationale to rely solely on the volume of subject imports. The little new
information contained in the revised materials only serves to underscore the fact that the
deficiencies of the original determination have not been remedied in MOFCOM's Re-determination.
4. When the Panel scrutinizes MOFCOM's Re -determination and China's arguments, the
United States is confident that the Panel will agree that China failed to comply with the DSB's
recommendations and rulings as well as China's obligations under the AD and SCM Agreements. In
this submission, the United States focuses on some of the key issues in this dispute, including
those that have arisen as a result of China's first written submission.
II. CHINA CANNOT DEFEND MOFCOM'S REVISED PRICE EFFECTS ANALYSIS
5. As demonstrated in the U.S. first written submission, China breached Articles 3.1 and 3.2 of
the AD Agreement and Articles 15.1 and 15.2 of the SCM Agreement because MOFCOM's price
effects analysis was fundamentally flawed in a number of respects. In response, China offers
arguments that are unconvincing and do not serve to rebut the U.S. showing that China's price
effects analysis in the Re-determination fell far short of meeting China's WTO obligations.
A. China's Disregard of Price Comparisons is Based on a Flawed Interpretation of the
Covered Agreements and Does Not Reflec t an Objective Examination Based on
Positive Evidence
6. According to China, an authority may choose to conduct a price effects analysis that does
not even consider the record evidence concerning the relative prices of imports and domestic
products. The text of the covered agreements is the starting point for showing that China's legal
position is incorrect. First, under Article 3.2, the question to be examined is the "effect of the

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dumped imports on prices in the domestic market for like products." Second, Article 3.1 states
that an injury determination must be based on "positive evidence" and must involve an "objective
examination" of this question of price effects. Third, Article 3.2 contains some details on what
factors are relevant to determining what, if any, effects imports may have had on domestic prices.
Fourth, Article 3.2 closes with the statement that "No one or several of these factors can
necessarily give decisive guidance." The common sense reading of these provisions is that an
objective assessment of all of the relevant factors would require an evaluation of evidence on
relative prices.
7. The United States also notes that China provides no support for its position in any prior
panel or Appellate Body reports. The United States further notes that the fact that MOFCOM
neglected to undertake price comparisons suggests that available evidence of prices would have
weakened the "explanatory force" of subject impo rts for any adverse price effects. Finally, China
misrepresents the U.S. position in this dispute.
B. China Fails to Show that Subject Imports Had "Explanatory Force" for Any Price
Suppression
8. In its first written submission, the United States showed that MOFCOM's price effects
analysis in its Re-determination contains a crucial gap because it fails to show that subject imports
had any "explanatory force" for the asserted pr ice effects. In essence, MOFCOM's analysis
consisted of little more than its observations th at: (i) the volume and market share of subject
imports increased in 2008; (ii) the domestic industry experienced price suppression and
depression; and (iii) consequently subject imports must have caused these price effects. MOFCOM
ignored compelling evidence in the record of an absence of price competition between subject
imports and the domestic like product. Instead of addressing the evidence, China attempts to
explain away this fundamental gap in MOFCOM's analysis.
1. Market Share Shifts in 2008 Do Not Demonstrate a Linkage Between Subject
Imports and Prices of the Domestic Like Product
9. China contends that by merely noting the domestic industry's loss of market share to
subject imports in 2008 "MOFCOM more than met it s burden of showing that subject imports had
some explanatory force." MOFCOM's analysis contains a crucial flaw. MOFCOM simply assumed
that the increasing volume and market share of subject imports in 2008 had explanatory force for
the alleged price suppression experienced by the domestic industry in 2008 and the first quarter of
2009. The problem with MOFCOM's so-called analysis is that coincidence is not tantamount to
evidence of price effects, nor does it automati cally amount to explanatory force. The sharply
divergent price trends, along with the muted market share response, in the first quarter of 2009
demonstrated the absence of price competition between subject imports and the domestic like
product.
10. Moreover, China's efforts to discount the relevance of the Appellate Body's discussion of the
price movements in the first quarter of 2009 are unavailing. The Appellate Body specifically
addressed China's argument regarding "the importance of the increase in subject import volume to
MOFCOM's finding of significant price depression and suppression," and did not find it persuasive.
11. Additionally, China makes much of its charac terization that the subject imports' gain in
market share and the domestic industry's loss of market share in 2008 were of similar magnitude.
But China's characterization is misleading because it ignores a key fact. China has failed to
acknowledge that the overall market was experienci ng substantial growth, and that sales of both
imported products and domestic products were increasing. In short, MOFCOM can point to no
evidence linking the increase in the subject imports' market share in 2008 to any price suppression
in 2008 or the first quarter of 2009.
2. MOFCOM's Findings in Connection With its Like Product and Cumulation
Determinations Do Not Support MOFCOM's Assumption that Competition Was
Based on Price
12. China maintains that MOFCOM's findings in two different contexts – its determination of the
domestic like product, and its determination to cumulate imports from the United States and

- B-11 -

Russia – support a conclusion that subject imports and the domestic like product were competitive
for purposes of MOFCOM's price effects analysis. China's contention is unfounded. MOFCOM's like
product and cumulation analyses do not go beyo nd very general similarities between subject
imports and the domestic like product, and do not include any meaningful consideration of the
nature of price competition – or lack thereof – between these products. China's assertion that
these analyses were sufficient to show that ther e was direct competition between subject imports
and the domestic like product – such that subject imports could be found to have "explanatory
force" for price effects – is without any merit.
3. Any Findings of "Parallel Pricing" Do Not Show a Compet itive Relationship
Based on Price
13. As noted in the U.S. first written submission , the Appellate Body explained that, although it
could "conceive of ways in which an observation of parallel price trends might support a price
depression or suppression analysis … there is no basis on which to draw any such conclusion in this
case." China claims that its findings on parallel pricing have "expanded significantly." This
"expanded analysis," however, is merely rhetoric regarding the same conclusory statements made
in the original determination. MOFCOM's reliance on parallel pricing, thus, is just as unsupported in
the Re-determination as it was in the original determination.
14. Moreover, MOFCOM's theory of parallel pricing has two problems. First, the price trends that
it identifies are at such a level of generality as to have no probative value. The second flaw in
MOFCOM's theory is that it simply mischaracterized the data, or characterized it in such a
broad-brush fashion as to be of little value. MOFCOM stated that "[i]n 2007 and 2008, the rate
change in the price of the subject merchandise wa s close to that of domestic like products;" and
that "from 2006 to 2008, the trend of change be tween the subject merchandise and the domestic
like product was consistent and the rate of change was similar." This is clearly a
mischaracterization of the data.
15. In addition, China urges the Panel not to "s econd-guess" MOFCOM. But, contrary to the way
in which China seeks to portray this issue, this is not an instance where there are divergent but
reasonable ways to evaluate the evidence. In co ncluding that the data discussed above showed
that there was parallel pricing sufficient to establish the existence of a competitive relationship
between subject imports and the domestic like product, MOFCOM failed to engage in an objective
examination.
4. China's Reliance on Alleged Pricing Policies is Misplaced
16. The United States showed in its first submissi on that the four verification documents relied
upon by MOFCOM were not probative of price competition between the subject imports and the
domestic like product. China fails to rebut the U.S. argument. The United States noted at the
outset that these verification documents pertain only to the first quarter of 2009, and thus shed
little, if any, light on competitive conditions in 2008, the part of the period of investigation that
MOFCOM now deems to have "more evidentiary value for determining injury and causal link."
China fails to address this point. Further, China's assertion that the United States "concedes … that
purchasers were using offers for subject merchandise to negotiate for lower domestic prices" is
incorrect. Moreover, the original panel and the Appellate Body both recognized that the probative
value of the "pricing policy" documents was undermined by the pricing dynamic in the first quarter
of 2009, when the price of the domestic like pr oduct fell by 30.25 percent, while that of the
subject imports declined by only 1.25 percent.
5. Evidence of a Partial Customer Ov erlap Does Not Support a Finding of a
Competitive Relationship Based on Price
17. The United States showed in its first submissi on that a partial overlap of customers does not
provide any support for MOFCOM's conclusion that subject imports compete with the domestically
produced product on the basis of price. China's response to this is first to accuse the United States
of engaging in "speculation." This is nothing more than a disingenuous attempt to divert attention
from the gap in MOFCOM's reasoning. China then conflates the customer overlap issue with
MOFCOM's consideration of a different issue – namely the question of whether there were certain
specialty products that the Chinese industry did not produce. Neither the partial overlap of

- B-12 -

customers nor MOFCOM's findings that the Chinese GOES industry produces certain specialty
products supports MOFCOM's conclusion that subject imports are competitive with the domestic
like product.
6. Conclusion
18. MOFCOM's findings that the volume of subj ect imports suppressed domestic prices in 2008
and the first quarter of 2009 is not based on positive evidence, and does not reflect an objective
examination of the evidence. MOFCOM has not shown that "the effect of such imports is otherwise
to depress prices to a significant degree or prevent price increases, which otherwise would have
occurred, to a significant degree." When confront ed with the flaws and insufficiencies in each
component of MOFCOM's analysis discussed above, China often resorts to arguing that the aspect
of the analysis in question is only part of a mu lti-faceted discussion of the record as a whole, or
that MOFCOM "holistically" reviewed all of the evidence. If the constituent parts of MOFCOM's
analysis are unsupported by positive evidence, not based on an objective examination, or
otherwise inconsistent with the WTO agreements, these appeals to the "big picture" cannot save
MOFCOM's analysis. Accordingly, China has acted inconsistently with Articles 3.1 and 3.2 of the
AD Agreement and Articles 15.1 and 15.2 of the SCM Agreement.
C. MOFCOM's Finding that Price Depression in the First Quarter of 2009 Was an Effect
of Subject Imports Is Inconsistent with the Obligation to Base Findings on Positive
Evidence and an Objective Examination
1. China's Effort to Link Price Depressi on in the First Quarter of 2009 to Market
Share Shifts in 2008 Falls Short
19. Although China contends that MOFCOM has "significantly expanded and clarified its
reasoning" of price depression in the Re-determination, this is not so. According to China, the
increasing volume and market share of subject imports in 2008 constitute "evidence," and
MOFCOM's conclusion that the domestic industry slashed its prices by 30.25 percent in response
constitutes the requisite "analysis."
 However, the fact that there is no evidence that the
30.25 percent drop in the domestic industry's prices in the first quarter of 2009 was in any way
related to the gain in the subject imports' market share in 2008 undermines MOFCOM's theory.
MOFCOM has essentially concocted a reason to link two events with no apparent cause-effect
relationship. This does not constitute "analysis." The United States explained in its first submission
that MOFCOM's price depression analysis was further marred by its claim that price depression was
caused by efforts of subject imports to under cut the price of the domestic product in the
first quarter of 2009. China has failed to address this issue.
20. Moreover, the Appellate Body made clear that "Articles 3.2 and 15.2 contemplate an inquiry
into the relationship between subject imports and domestic prices" and that "an investigating
authority is required to examine domestic prices in conjunction with subject imports in order to
understand whether subject imports have explanatory force for the occurrence of significant
depression or suppression of domestic prices." Notwithstanding MOFCOM's claim that it engaged in
a "comprehensive" analysis, MOFCOM's consideration of the price depression issue is as
unsupported as it was in the original injury determination.
2. MOFCOM's Finding That Alleged Pricin g Policies Caused Price Depression in
Interim 2009 Has No Foundation
21. China's assertion that "the pricing policy documents show the ways in which purchasers
were using subject import prices to drive down domestic prices" is incorrect. The Appellate Body
was clear that, in light of the pricing dynamic in the first quarter of 2009 – where the price of
subject imports declined by 1.25 percent, whil e the price of domestic products plunged by
30.25 percent, and subject imports oversold the domestic product – there was no basis to
conclude that a policy of price undercutting could explain depressive or suppressive effects on
domestic prices.
22. China's contends that Panel and Appellate Body criticism of MOFCOM's reliance on pricing
policy documents no longer apply because these criticisms allegedly focused on MOFCOM's old
explanation involving "low price." China misreads the Appellate Body report. The Appellate Body's

- B-13 -

analysis was not based on MOFCOM's "low price" findings in the original determination. In short,
the Appellate Body's analysis is as relevant to the Re-determination as it was to MOFCOM's original
injury determination.
III. CHINA CANNOT DEFEND MOFCOM 'S REVISED IMPACT ANALYSIS
A. The United States Properly Challeng es Revised Aspects of MOFCOM's Impact
Analysis
23. China asserts that the United States improperly brings a new claim before this Panel.
Specifically, China attempts to challenge on procedural grounds the U.S. demonstration that
MOFCOM's Re-determination breaches Articles 3.1 and 3.4 of the AD Agreement, and Articles 15.1
and 15.4 of the SCM Agreement. China, for instance , asserts that "the introduction of a new claim
at this stage of proceedings is contrary to basi c principles of fairness and due process." China is
incorrect. This claim, like other U.S. claims, is appropriate because the claim challenges aspects of
China's compliance measures that are inconsistent with the covered agreements. Thus, China's
arguments relating to claims that may be alleged under Article 21.5 of the DSU are misguided.
24. The United States raises a claim to address an aspect of China's compliance measure that is
inconsistent with the covered agreements. MOFC OM's revised injury determination contains
several changes. In light of these changes, th e utility of the compliance proceedings would be
"seriously undermined" if the Panel were unable to evaluate whether China's Re-determination on
this aspect is consistent with the covered agreements.
B. China's Arguments Regarding the Impact of the Subject Imports on the Domestic
Industry Fail
25. The United States showed in its first writte n submission that MOFCOM's examination of the
factors enumerated in Articles 3.4 of the AD Agreement and 15.4 of the SCM Agreement for 2008
is highly distorted and selective.
26. Contrary to China's argument, the United States is not arguing that it is not reasonable, or
that it is distortive, for an authority to focus on the latter portion of its period of investigation
when assessing injury. The United States is arguing that – when focusing on a recent period, or
any period, for that matter – data must be viewed in their proper context. MOFCOM "focused on
the trends in growth rates," or on the velocity of growth, without considering the trends in their
proper context.
27. The "examination" contemplated by Articl es 3.4 of the AD Agreement and 15.4 of the
SCM Agreement must be based on a "thorough evaluation of the state of the industry" and it must
"contain a persuasive explanation as to how the evaluation of relevant factors led to the
determination of injury." Additionally, an authority's factual findings under Articles 3.4 and 15.4
must comply with the "objective examination" and "positive evidence" requirements set out in
Articles 3.1 of the AD Agreement and 15.1 of th e SCM Agreement. MOFCOM's conclusion that the
domestic industry experienced material injury in 2008 is not based on a thorough evaluation of the
state of the industry in that year, is not based on a persuasive explanation, and is neither
objective nor based on positive evidence.
IV. CHINA CANNOT DEFEND MOFCOM'S REVISED CAUSATION ANALYSIS
A. MOFCOM's Causation Analysis Fails Becaus e of its Reliance on its Defective Price
Effects Findings
28. MOFCOM's price effects analysis represente d an important element of its overall injury
determination, notwithstanding China's suggestion that it was merely "collateral." Because
MOFCOM failed to establish that subject impo rts had any significant price effects on the
domestically produced product, a necessary element of MOFCOM's causal link analysis is
compromised. Accordingly, due to its failure to demonstrate significant price effects, China has
failed to demonstrate that dumped or subsidized imports are causing injury, as required by the
covered agreements.

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B. MOFCOM's Assertion That the Domest ic Industry Was Prevented by Subject
Imports from Realizing the Benefits of Ec onomies of Scale Does Not Rest on an
Objective Examination Based on Positive Evidence
29. In the Re-determination, MOFCOM made a number of conclusory assertions to the effect
that the increased output and capacity of the do mestic industry did not produce the corresponding
economies of scale. MOFCOM's assertions were no t supported by any factual analysis. MOFCOM's
findings about economies of scale are nothing more than conclusory assertions, unsupported by
any factual analysis. MOFCOM's findings that th e domestic industry was injured because it was
prevented by subject imports from realizing the bene fits of economies of scale does not rest on an
objective examination based on positive evidence.
C. MOFCOM's Non-Attribution Analysis Wi th Respect to Injury Caused by the
Domestic Industry's Overexpansion and Ov erproduction Continues to be Seriously
Flawed
30. The United States showed in its first written submission that MOFCOM's non-attribution
analysis with respect to the injury caused by the domestic industry's overexpansion and
overproduction was marred by errors and unsu pported, conclusory statements. Rather than
addressing the flaws in MOFCOM's analysis, China, for the most part, asserts that, because the
covered agreements do not specify any particular methodology, MOFCOM was free to address this
issue in any manner. China's argument misses the point. The covered agreements provide that an
authority's analysis must be based on positive evidence and an objective analysis. MOFCOM's
analysis did not meet these fundamental stan dards. Thus, MOFCOM's redetermination is
inconsistent with Articles 3.1 and 3.5 of the AD Agreement, and Articles 15.1 and 15.5 of the
SCM Agreement by having failed to conduct an objective non-attribution analysis to ensure that it
was not attributing to subject imports injury caused by the Chinese GOES industry's
over-expansion and over-production.
D. MOFCOM's Non-Attribution Analysis With Respect to Injury Caused by Nonsubject
Imports Is Inadequate
31. MOFCOM's non-attribution analysis makes no commercial sense. MOFCOM failed to address
the question of how the increasing quantity of subject imports in 2008 could have had injurious
effects on the domestic industry while the increasing and much greater quantity of nonsubject
imports in 2008, sold at lower AUVs than subjec t imports, could have had no injurious effects.
MOFCOM also failed to explain how the smaller quan tity of subject imports in the first quarter of
2009 could have had injurious effects on the domestic industry, while the much greater quantity of
nonsubject imports in that period allegedly had no injurious effects. Additionally, China's argument
for using market share data conflates shifts in market share with absolute market share data. Had
MOFCOM examined the relative market shares of subject and nonsubject imports, it would have
been apparent that nonsubject imports were a much more significant factor in the market than
subject imports in 2008 and the first quarter of 2009. Because of these flaws in MOFCOM's
non-attribution analysis with respect to nonsubject imports, MOFCOM failed to comply with
Articles 3.1 and 3.5 of the AD Agreement, and Articles 15.1 and 15.5 of the SCM Agreement.
V. CHINA BREACHED ARTICLE 6.9 OF THE AD AGREEMENT AND ARTICLE 12.8 OF THE
SCM AGREEMENT THROUGH MOFCOM'S FAILURE TO DISCLOSE THE ESSENTIAL
FACTS
32. As demonstrated in the U.S. first written submission, MOFCOM acted inconsistently with
Article 6.9 of the AD Agreement and Article 12.8 of the SCM Agreement by failing to disclose the
"essential facts" forming the basis of MOFCOM's decision to apply definitive measures. The
provisions dictate the timing of the disclosure, as such disclosure must take place "before a final
determination is made." In addition, what constitutes "essential facts" are those facts that relate to
the elements an authority is required to examine in the context of an injury analysis, which are set
out in Articles 3.1, 3.2, 3.4, and 3.5 of the AD Agreement and Articles 15.1, 15.2, 15.4, and 15.5
of the SCM Agreement.

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A. China Cannot Defend MOFCOM's Failure to Disclose the Essential Facts Underlying
its Injury Re-determination
33. The United States identified categories of essential facts that must have been taken into
account by MOFCOM in its price effects and causation determinations. As the United States has
explained, for each category of essential facts, China's disclosure was non-existent. As a result,
China breached Article 6.9 of the AD Agreement and Article 12.8 of the SCM Agreement.
MOFCOM's assertion that the trends of the pric es of the subject imports and the domestic like
product were the same.
34. In its response, China cannot point to anywhere in the record where MOFCOM discloses the
data underlying MOFCOM's assertion that the price trends of the subject imports and the domestic
like product were the same. In short, though there may be some complications presented where
essential facts are based in part on confidential information, the authority is not excused from its
obligation to disclose to interested parties the essential facts which formed the basis of the
decision to apply definitive measures.
MOFCOM's assertion that the domestic industry was prevented by subject imports from realizing
economies of scale.
35. Again, China cannot point to anywhere in the record where MOFCOM discloses the data
underlying MOFCOM's assertion that the domestic industry was prevented by subject imports from
realizing economies of scale.
"Sales obstacles" that allegedly prevented the domestic industry from making more sales in 2008
and the first quarter of 2009.
36. China cites a series of general statements in the preliminary disclosure that do nothing to
reveal the essential facts supporting the existence of these alleged sales obstacles.
MOFCOM's conclusion that the domestic industry 's loss of market share in 2008 led it to slash
prices by over 30 percent in the first quarter of 2009.
37. MOFCOM fails to support its assertion that th e domestic industry's loss of market share in
2008 led it to slash prices by over 30 percent in the first quarter of 2009.
MOFCOM's assertion that the price-cost differential for Wuhan decreased in 2008.
38. China points to a decline in gross profit, but it does not cite any essential facts to support its
conclusion that Wuhan's price-cost differential decreased in 2008.
MOFCOM's finding that the capacity and output of the domestic GOES industry did not exceed
market demand.
39. Unsupported with a citation to the record, China asserts that "it was clear that the growth in
domestic capacity in 2008 was actually less than th e growth in overall in overall demand." It is
unclear as to what data China is referring, particularly since the available data actually show
capacity and output outstripping demand.
MOFCOM's division of responsibility for the inventory overhang.
40. China claims that "MOFCOM's preliminary disclosure document included extensive discussion
on the cause of the domestic industry's inventory overhand." China, however, omits the fact that
nowhere in the preliminary disclosure document does MOFCOM provide the data supporting its
division of responsibility for the inventory overhang.

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VI. CHINA BREACHED ARTICLES 12.2 AND 12.2.2 OF THE AD AGREEMENT AND
ARTICLES 22.3 AND 22.5 OF THE SCM AGREEMENT
41. As demonstrated in the U.S. first written submission, MOFCOM acted inconsistently with
Articles 12.2 and 12.2.2 of the AD Agreement, and Articles 22.3 and 22.5 of the SCM Agreement
by failing to explain in sufficient detail the matters of fact that MOFCOM took into consideration in
its injury Re-determination. These issues were "material" within the meaning of Articles 12.2 of
the AD Agreement and 22.3 of the SCM Agreemen t because they had to be resolved before
MOFCOM could render an affirmative material in jury Re-determination. This information also
constituted "relevant information on the matters of fact and law and reasons which have led to the
imposition of final measures," within the mean ing of Article 12.2.2 of the AD Agreement and
Article 22.5 of the SCM Agreement. In its response , China makes a series of statements that are
unsupported by the record. The Re-determination does not support China's explanations. MOFCOM
did not explain its findings in sufficient detail and, consequently, China has not satisfied the
requirements of the covered agreements.
VII. CONCLUSION
42. For the reasons set forth in this submission and its first written submission, the
United States respectfully requests the Panel to find that China's measures fail to comply with the
recommendations and rulings of the DSB; and are inconsistent with China's obligations under the
AD Agreement and SCM Agreement.

- B-17 -

ANNEX B-3
EXECUTIVE SUMMARY OF THE ORAL STATEMENTS OF THE UNITED STATES
AT THE SUBSTANTIVE MEETING
1. The United States begins by noting that we have seen this scenario before. The
United States has commenced three dispute settlement proceedings against China concerning
antidumping and countervailing duty measures on U.S. exports. Each of the disputes we have
brought addresses similar problems under the same procedural and substantive provisions of the
covered agreements.
2. In this dispute, the DSB found that China imposed antidumping and countervailing duties on
U.S. exports of grain oriented flat-rolled electrical steel ("GOES") in a manner that breached
China's obligations under the AD Agreement and the SCM Agreement. As a result, the
DSB recommended that China bring its measures into conformity with its obligations under these
agreements. However, instead of complying with the DSB's recommendations and rulings, China
took a different track. China issued a re-determina tion of duties that suffers from the same basic
flaws as the original investigation, and as a result, China continues to impose antidumping and
countervailing duties on imports of GOES in a WTO-inconsistent manner.
3. As the Appellate Body has indicated, "[a] panel can assess whether an authority's
explanation for its determination is reasoned and adequate only if the panel critically examines
that explanation in the light of the facts and the alternative explanations that were before that
authority." Here, a critical examination reveals that China's continued reliance on evidence that
the DSB specifically identified as having dubious probative value, without attempting to rectify the
obvious flaws, falls far short of compliance.
I. CHINA MISINTERPRETS ARTICLES 3.1 AND 3.2 OF THE AD AGREEMENT, AND 15.1
AND 15.5 OF THE SCM AGREEMENT
4. The United States has established that when examining the "positive evidence" relating to
the effect of subject imports on prices in the market, an objective authority would compare the
pricing levels of imports and domestically pr oduced products. When properly interpreted,
Articles 3.1 and 3.2 of the AD Agreement, and 15.1 and 15.2 of the SCM Agreement, require an
authority to consider evidence of relative prices of subject imports and the domestic products as
part of an objective examination of "whether the effect of such imports is otherwise to depress
prices to a significant degree or prevent price increases, which otherwise would have occurred, to
a significant degree."
5. China, by contrast, is promoting an untenable interpretation of the covered agreements
when it argues that an authority may choose to conduct a price effects analysis that ignores the
question of the relative prices of imports and domestic products. Articles 3.2 and 15.2 do not
provide that an authority may limit its analysis merely to a finding that price depression or price
suppression is occurring. The text states that "no one or several of these factors can necessarily
give decisive guidance." Accordingly, regardless of the final basis for a finding of adverse price
effects, an authority needs to look at all relevant factors.
6. Article 3.1 of the AD Agreement and Articl e 15.1 of the SCM Agreement further reinforce
that an analysis of price effects requires an anal ysis of relative prices. From any perspective, an
obligation to conduct an "objective examination" based on "positive evidence" – when reviewing
the price effects of one group of products on a second group of products – would include an
examination of the relative prices of the two groups. Failing to do so would miss an important
aspect of determining whether the two groups are price competitive, and whether subject imports
have "explanatory force" for the occurrence of adverse price effects. This is especially true when,
as in this dispute, the petitioner specifically alleged adverse price effects due to the low price of
subject imports.

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7. China misconstrues the Appellate Body's findings. China notes that the Appellate Body
observed that one could find significant price effects either from a pricing element, a volume
element, or a combination of the two. However, it does not follow from this observation that an
authority is free to disregard all information regarding relative prices, even if it bases its price
effects analysis on volume. If subject imports and the domestic products do not compete on price,
as the evidence indicates in this dispute, then an unbiased authority would call into question the
"explanatory force" of subject imports for any adverse price effects.
II. CHINA FAILS TO SHOW THAT SUBJECT IMPORTS HAD "EXPLANATORY FORCE"
FOR ANY PRICE SUPPRESSION
8. Compelling evidence in the record of MOFCOM's investigation indicates an absence of price
competition between subject imports and the domestic like product. The domestic industry's prices
dropped by a staggering 30.25 percent, while the prices of subject imports declined by only
1.25 percent. Yet, this sharp divergence in prices did not translate into significant shifts in market
share. If price were an important factor in purchasing decisions, the drastic decline in the domestic
industry's prices should have caused a much more significant shift in sales and market share in
favor of the domestic industry.
9. China's efforts to downplay the significance of what happened in the first quarter of 2009 –
and to distance itself from the Appellate Body's observations – are unconvincing. China accuses
the United States of "mechanically" applying the Appellate Body's findings, and argues that "the
context is different" because MOFCOM's analysis of price effects in the redetermination "has been
substantially revised and clarified." This is inaccurate. The only significant change in MOFCOM's
price effects analysis is that MOFCOM has changed its rationale from the original determination by
cutting out nearly all references to relative prices, and to rely now solely on the volume of subject
imports.
10. Whatever changes there have been in MOFCOM 's price effects analysis since the original
injury determination, the fundamental facts ar e unchanged. MOFCOM made its re-determination
on the same record as the original injury determination. The pricing and market share data in the
first quarter of 2009 continue to point to an ab sence of price competition between subject imports
and the domestic product.
A. Market Share Shifts Do Not Show Pr ice Competition Between Subject Imports
and Domestic Like Product
11. China seeks to avoid the obvious implications of the pricing and market share data for the
first quarter of 2009 by suggesting the domestic indu stry's gain in market share in that quarter
was in fact more substantial than 1.04 percent if one compares the first quarter of 2009 to full
year 2008 instead of to the first quarter of 2008. China, however, provides no evidentiary basis for
this assertion. Again, the record evidence strongly suggests an absence of price competition
between subject imports and the domestic like product.
B. MOFCOM's Findings in Connection With its Like Product and Cumulation
Determinations Prove Nothing
12. The comparisons that MOFCOM made for purposes of the domestic like product and
cumulation analyses were at a level of extreme generality. For most of the comparisons between
the subject imports and the domestic like product, MOFCOM found merely that the products were
"fundamentally the same." These are nothing more than broad-brush generalizations. They are not
enough to show that subject imports are sufficiently competitive with the domestic like product to
be causing adverse price effects. MOFCOM's approach is not consistent with the obligation to
conduct an "objective examination" based on "positive evidence."
C. The DSB Has Already Found That An y Parallel Pricing Does Not Show a
Competitive Relationship Based on Price
13. China's assertion that MOFCOM's findings of "parallel pricing" were sufficient to show a
competitive relationship between subject imports and the domestic like product is just as
unpersuasive. MOFCOM's parallel pricing findings are essentially the same as they were in the

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original injury determination, and suffer from the same defects identified by the original panel and
the Appellate Body.
D. The DSB Has Already Found That Pric ing Policy Documents Have No Probative
Value
14. Nor are the so-called pricing policy docume nts relied on by MOFCOM probative of price
competition between the subject imports and the domestic like product. These four documents
pertain only to the first quarter of 2009. Both the original panel and the Appellate Body recognized
that the probative value of these "pricing policy" documents was undermined by the pricing
dynamic in the first quarter of 2009, when the prices of the domestic like product fell by
30.25 percent, while that of the subject imports declined by only 1.25 percent.
E. A Partial Customer Overlap Does No t Support a Finding of a Competitive
Relationship Based on Price
15. Finally, evidence of a partial overlap in customers does not support a finding of a
competitive relationship based on price.
F. Conclusion
16. In sum, none of the additional factors th at China claims support MOFCOM's price effects
analysis stands up to scrutiny. When confronted with specific flaws and insufficiencies in
MOFCOM's analysis, China repeatedly resorts to arguing that the aspect of the analysis in question
is only part of a multi-faceted discussion of the record as a whole, and that the United States
somehow fails to see the big picture. If the constituent parts of MOFCOM's analysis do not hold up,
these vague appeals to the big picture, or, as Chin a puts it, to a "holistic" analysis, cannot save
MOFCOM's analysis.
III. CHINA FAILS TO SHOW THAT SUBJEC T IMPORTS HAD "EXPLANATORY FORCE"
FOR PRICE DEPRESSION IN THE FIRST QUARTER OF 2009
17. Turning now to alleged price depression in the first quarter of 2009, there is no evidence
that the sharp drop in the domestic industry's prices in that quarter was in any way related to the
gain in the subject imports' market share in 2008. As with its analysis of price suppression,
MOFCOM has essentially concocted a reason to link two events with no causal relationship.
IV. CHINA'S IMPACT ANALYSIS IS INCO NSISTENT WITH ARTICLES 3.4 OF THE
AD AGREEMENT AND 15.4 OF THE SCM AGREEMENT
18. MOFCOM's impact causation analysis is inconsistent with Articles 3.1 and 3.4 of the
AD Agreement and Articles 15.1 and 15.4 of the SCM Agreement. As explained in the
U.S. submissions, MOFCOM's examination of the factors enumerated in Articles 3.4 and 15.4 for
2008 is highly distorted and selective. The Unit ed States has shown that in 2008 the positive
trends vastly outnumbered and outweighed the negative ones. As a result, the investigating
authority was obligated to provide "a compelling explanation of why and how, in light of such
apparent positive trends, the domestic industry {i s}, or remain{s}, injured." China failed to do so
in this dispute.
V. CHINA'S CAUSATION ANALYSIS IS INCONSISTENT WITH ARTICLES 3.1 AND 3.5
OF THE AD AGEREMENT AND ARTICLES 15.1 AND 15.5 OF THE SCM AGREEMENT
19. MOFCOM's causation analysis is inconsistent with Articles 3.1 and 3.5 of the AD Agreement
and Articles 15.1 and 15.5 of the SCM Agreement. The domestic industry's expansion of capacity
and production outstripped the growth in dema nd for GOES in the Chinese market by wide
margins. Numerous errors and unsupported, conclusory statements tarnish MOFCOM's analysis of
injury caused by the domestic industry's overexpansion and overproduction.
20. In addition, MOFCOM's new disclosures show that nonsubject imports were a much more
significant factor in the Chinese market than subject imports, in all parts of the period of
investigation. They entered China in significantly greater quantities than cumulated subject

- B-20 -

imports throughout the period; they continued to grow by significant amounts; and they had lower
average unit values than subject imports in 2008.
21. Instead of conducting an objective non-attribution analysis, MOFCOM summarily dismissed
the role of nonsubject imports. In doing so, it mischaracterized the relative importance of
nonsubject imports. MOFCOM failed to ask how the increasing quantity of subject imports in 2008
could have had injurious effects on the domestic industry, while the increasing and much greater
quantity of nonsubject imports sold in 2008 at lower AUVs could have had no injurious effects.
VI. CHINA'S DISCLOSURES ARE INADEQUATE
A. China Failed to Disclose the Essential Facts, Contrary to Articles 6.9 of the
AD Agreement and 12.8 of the SCM Agreement
22. The United States will now turn to MOFCOM's failure to disclose the essential facts that
formed the basis of its re-determination. In previo us submissions, the United States showed that
China failed to meet the requirements of Articl e 6.9 of the AD Agreement and Article 12.8 of the
SCM Agreement. Accordingly, the compliance panel in this dispute should find that China acted
inconsistently with Article 6.9 of the AD Agreem ent and Article 12.8 of the SCM Agreement by not
disclosing the essential facts forming the basis for its re-determination.
B. China Failed To Explain its Re-deter mination, Contrary to Articles 12.2
and 12.2.2 of the AD Agreement, and 22.3 and 22.5 of the SCM Agreement
23. China also has failed to rebut the U.S. demonstration that China breached its WTO
obligations by failing to explain its re-determina tion of material injury. The re-determination
simply does not support China's explanations. Ther efore, MOFCOM did not explain its findings in
sufficient detail. Consequently, China has not satisfied the requirements of the covered
agreements.
VII. CONCLUSION
24. For the reasons set forth above and in our submissions, the United States respectfully
requests the compliance panel to find that China has failed to implement the recommendations
and rulings of the DSB and its measures taken to comply are inconsistent with China's obligations
under the AD Agreement and SCM Agreement.

- B-21 -

ANNEX B-4
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF THE UNITED STATES
AT THE INTERIM REVIEW MEETING
1. The United States recognizes that China has the right pursuant to Article 15.2 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") to request
a meeting to discuss the requests for review of pr ecise aspects of the interim report. Nonetheless,
such meetings have become very rare in WTO dispute settlement, and the United States considers
that it would have been more efficient to submit comments on each other's requests in writing.
2. As an initial matter, it may be useful to recall that the purpose of an interim review meeting
under DSU Article 15.2 is to allow parties an opportunity to comment on issues identified in the
requests for review of precise aspects of the inte rim report. This is the only appropriate topic of
discussion for the interim review meeting. A part y that goes beyond the issues raised in the
written comments would be going beyond the review envisioned in Article 15.2. Regrettably, as we
will explain, China's recent effort to introduce new evidence in this proceeding goes beyond the
scope of interim review under DSU Article 15.
3. In this statement, we proceed as follows. First, the United States explains why China's
attempt to submit new evidence to the Panel is incompatible with the DSU and the Panel's Working
Procedures. We note that China's requests should also be rejected because they were not based
on evidence before the Panel when made. We also explain why China's new evidence is in any
event irrelevant under the Panel's terms of reference for purposes of the Panel's examination of
China's compliance measures. Second, we note that we agree with one request by China, to delete
the additional recommendation in relation to China's measure taken to comply, but for the
different reason that no recommendation under DS U Article 19.1 is necessary or appropriate in a
compliance proceeding. Third, we will comment on China's other requests for review of aspects of
the Panel's interim report. In brief, the United States considers that the Panel report is strong and
its conclusions are well-founded, and China has provided no reasons for the Panel to amend any of
its findings.
I. PARAGRAPH 8 OF CHINA'S COMMENTS: CHINA'S NEW EVIDENCE IS UNTIMELY,
CONTRARY TO THE DSU, AND, IN ANY EVENT, IRRELEVANT FOR PURPOSES OF
THIS PROCEEDING
4. In paragraph 8 of its comments, China assert s that "China expects the expiration of these
measures on April 10, 2015." China further asserted that "MOFCOM will publish a public notice of
termination regarding the measures at issue on April 10, 2015, and China will submit the public
notice to the Panel immediately." In light of this, China suggests that "China would like to
respectfully request the Panel to take into consid eration the fact of termination of the disputed
measures" and requests that the Panel "issue no recommendations in its final report." On April 21,
China submitted a notice to the Panel allegedly relating to the termination of the antidumping and
countervailing duties on GOES from the United States. China's assertions and attempt to submit
new evidence are flawed in multiple respects.
A. China's Submission of New Evidence I s U n t i m e l y a n d M u s t B e R e j e c t e d a s
Inconsistent with Article 15 of the DSU and with the Panel's Working
Procedures
5. First, China's attempt to introduce new eviden ce during the interim review stage of a panel
proceeding is contrary to the DSU and should be rejected. On that basis alone, as China's request
is premised on the Panel's acceptance of China's exhibit as new evidence, the Panel should reject
China's request to make any finding on the alleged "fact of termination".
6. The interim review stage is not the time for a panel to examine new evidence. Article 15.1 of
the DSU allows parties to submit comments on the descriptive part of the panel's draft report.
Following expiry of "the set time period" for receipt of comments on the draft descriptive part, "the

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panel shall issue an interim report" with its findings and conclusions. Article 15.2 of the DSU
permits parties to submit a written request for "the panel to review precise aspects of the interim
report prior to circulation" of the report. The panel process is almost completed when the interim
review stage has commenced. The parties have already provided their facts and arguments, and
the panel issues the draft descriptive part under Article 15.1 " [f]ollowing the consideration [by the
panel] of [the parties'] rebuttal submissions and oral arguments." The panel issues an interim
report containing "the panel's findings and conclusions," and at this point the parties make
requests to "the panel to review precise aspects of the interim report." That is, the interim report
contains the panel's findings and conclusions "following the consideration" of the parties' evidence
and arguments, and Article 15.2 nowhere cont emplates that the parties' can submit additional
facts for the panel to consider.
7. China's attempt to introduce new evidence thus falls outside the scope of the review
contemplated by Article 15.2 of the DSU, and the panel should reject this attempt to introduce
new evidence during the interim review stage. We note that this is not a new issue. We are aware
of six reports in which previous panels or the Appellate Body have considered an effort by a party
to introduce new evidence at the interim review stage. In every such report, the panel or the
Appellate Body rejected the effort to introduce new evidence.
1 The United States respectfully
requests that this panel reject China's attempt for the same reasons as previous panels and the
Appellate Body. As the Appellate Body stated in EC – Sardines , and again in EC – Selected
Customs Matters , "the interim review stage is not the appropriate time to introduce new
evidence."2 As explained by the Appellate Body, at th e time of the interim review, "the panel
process is all but completed; it is only – in the words of Article 15 – 'precise aspects' of the report
that must be verified during the interim review . . . this, in our view, cannot properly include an
assessment of new and unanswered evidence."3 The same situation applies here.
8. China's untimely submission of new evidence is also inconsistent with paragraph 8 of the
Working Procedures of the Panel. The Panel in its procedures set out that the parties should submit
all factual evidence to the Panel "no later than during the substantive meeting, except with respect
to evidence necessary for purposes of rebuttal, answers to questions or comments on answers
provided by the other party." China's evidence fits none of these categories.
9. The United States further notes that, were the submission of evidence permitted at this
stage, it would need to be examined and responde d to by the other party, and then evaluated by
the panel. Any findings by the panel would then need to be issued to the parties for review under
DSU Article 15. This would lead to a reopening of the panel process, perhaps multiple times, and
delay in the issuance of the panel's report, contrary to the goals of "prompt settlement" and
efficient procedures reflected in DSU Articles 3.3, 12.8, and 20.1.
10. Under DSU Article 15, and as reflected in the Panel's Working Procedures, interim review is
not the time for submission of new evidence by a party. For these reasons, the United States
respectfully requests that the Panel reject China' s attempt to introduce new evidence at this stage
of the proceeding and therefore reject the request for review contingent on this untimely evidence.
B. China's Request May Also Be Reject ed Because It Was not Substantiated
When Made
11. The preceding basis is sufficient reason to reject China's request to consider the factual
assertion made by China. The United States also notes that China's request for review may be
rejected on the additional basis that it was not based on the evidence before the Panel in this
proceeding. China requested "the Panel to take into consideration the fact of termination of the
disputed measures". However, China had provided no such "fact" in this proceeding to justify its
request for review. To the contrary, China's request for review was explicit in noting China's
speculation about future events. China stated that "China expects the expiration of these
measures on April 10, 2015." China further asserted that "MOFCOM will publish a public notice of

1 See e.g., EC – IT Products, para. 6.48 and 7.167; EC – Sardines (Panel), para. 6.16; EC – Sardines
(AB), para. 301; EC – Selected Customs Matters (Panel), paras. 6.3-6.6; EC – Selected Customs Matters (AB),
2 See EC – Sardines (AB), para. 301; EC – Selected Customs Matters (AB), para. 259. See also EC – IT
Products, para. 6.48 and 7.167.
3 EC – Sardines (AB), para. 301.

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termination regarding the measures at issue on April 10, 2015." But possible future events do not
form an adequate basis for the Panel to review and modify aspects of its interim report. Because
China's request was made not based on any evidence that had been developed by the parties and
considered by the Panel prior to issuance of the report, there was no need or basis for the Panel to
review its findings further. China's request may be rejected for this reason as well.
C. In Addition to Being Untimely, Chin a's New Evidence Is Irrelevant for the
Panel's Legal Assessment
12. China's new evidence, in addition to being untimely, is also not relevant to the matter being
examined by the Panel. In several reports, the A ppellate Body has stated that, as a general rule,
the measures subject to a panel's review "must be measures that are in existence at the time of
the establishment of a panel,"
4 and therefore the task of the panel is to determine whether the
measures at issue are consistent with the obligations at issue " at the time the Panel was
established."5 The Appellate Body has also stated that a panel's review of the matter should focus
on the measures identified in a panel request "as they existed and were administered at the time
of establishment of the Panel." 6 This ensures that a complaining party need not "adjust its
pleadings throughout dispute settlement proceedings in order to deal with a disputed measure as a
'moving target'."
7
13. Here, China's new exhibit alleges the termination of the antidumping and countervailing
duties on GOES from the United States as occurring on April 10, 2015, long after the panel was
established. Previous panels and the Appellate Body have noted that evidence "that predate[s] or
post-date[s] the establishment of a panel may be relevant to determining whether or not a
violation of [an obligation] exists at the time of [panel] establishment."
8 However, China's exhibit
has no relevancy to the legal situation that existed on the date of the Panel's establishment when
the DSB referred the matter to the Panel. Thus, the new evidence, even on the terms China
alleges, is not relevant to the Panel's legal assessment and its findings and conclusions in this
proceeding.
II. PARAGRAPH 8 OF CHINA'S COMMENTS: THE UNITED STATES AGREES, BUT FOR A
DIFFERENT REASON, THAT THE PANEL'S RECOMMENDATION IN PARAGRAPH 8.6
SHOULD BE DELETED
14. The United States and China have both requested the deletion of the recommendation
contained in the Panel's interim report. Therefore, as a practical matter, we may have simplified
the Panel's task with respect to this recommend ation. Nonetheless, the parties have requested
deletion for different reasons. As explained above, the basis China puts forward is flawed and must
be rejected. Nonetheless, the recommendation may be deleted for the reason explained by the
United States.
15. If this were not a compliance proceeding, the Panel would have been required under DSU
Article 19.1 to make recommendations on the measure examined. However, because we are in a
compliance proceeding, there is no need for the Panel to make an additional recommendation on
China's measure taken to comply. As noted previously by the United States, a panel in a
compliance proceeding is tasked under DSU Article 21.5 with determining whether a measure
taken to comply that is within the panel's terms of reference exists, or is inconsistent with a
covered agreement.
16. As noted by the second compliance panel in US – Foreign Sales Corporations , "an
Article 21.5 compliance procedure occurs after the DSB has already made recommendations and
rulings based on Article 19.1 of the DSU."
9 The compliance panel is examining whether the
Member has brought its measure into full compliance with WTO rules through the specific inquiry

5 EC – Selected Customs Matters (AB), para. 259. See also China – Raw Materials (AB), para. 264;
EC – Approval and Marketing of Biotech Products (Panel), para. 7.456.
6 EC – Selected Customs Matters (AB), para. 187.
7 Chile – Price Band System (AB), para. 144.
8 EC – Selected Customs Matters (AB), para. 186, 188-89 (agreeing with and quoting EC – Customs
(Panel), para. 7.37).
9 US – FSC (Article 21.5 – EC II) (Panel), para. 7.43.

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set out in Article 21.5. 10 Until a Member has brought its measures found to be inconsistent by the
DSB into compliance with its WTO obligations, the DSB's original recommendation will remain
operative.11
17. The Panel has found that China's measures taken to comply are inconsistent with the
covered agreements. The United States has requested that the Panel make clear that China has
failed to bring its measures found by the DSB to be inconsistent with the covered agreements into
compliance with the recommendations and rulings of the DSB. That is all the Panel needs to do in
this proceeding. Therefore, the United States ag rees that the Panel may delete the additional
recommendation on China's measure taken to comply, for the reasons set out previously.
III. U.S. COMMENTS ON OTHER REQUESTS BY CHINA
18. China's Comments on Paragraphs 7.21: China has provided no basis for the Panel to
alter its language regarding China's use of the term "unfair imports".
19. China's Comments on Paragraphs 7.55 to 7.57, and Paragraph 7.66: China asserts
the Panel should delete any discussion of facts that could not be used to justify China's measure
under the applicable standard of review. The United States disagrees with China's assertion and
recalls that the standard of review stated by the Appellate Body is whether the authority's
determinations are "reasoned and adequate" in "light of the evidence." The Appellate Body has
explained that in order to make such a finding "a panel's examination of those conclusions must be
critical and searching, and be based on the information contained in the record and the
explanations given by the authority in its published report." Thus, an authority's determination is
to be reviewed on the basis of information and reasoning set out in the determination.
20. The Panel found that MOFCOM's re-determinati on did not to set out the market share data
referenced in Paragraph 7.55. The Panel properly found that MOFCOM's re-determination failed to
satisfy the requirements of the covered agreements , in light of the standard of review. At the
same time, the facts at issue were evidence that China submitted to the Panel and therefore it was
appropriate for the Panel to examine and discuss the evidence, including its role in light of the
standard of review and in light of the fact that it provided further support for the Panel's
findings. Accordingly, no changes are necessary in response to China's comments.
21. China's Comments on Paragraphs 7.58, and 7.63 to 7.65: China offers no basis for the
Panel to modify the reasoning or findings in these paragraphs.
22. China's Comments on Paragraphs 7.72 to 7.81: China appears to simply present its
dissatisfaction with the Panel's findings. The United States has responded thoroughly to China's
arguments on this issue, and the Panel has expl ained its findings and disagreement with China's
position. Accordingly, no changes are necessary in response to China's comments.

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ANNEX C
ARGUMENTS OF CHINA
Contents Page
Annex C-1 Executive summary of the first written submission of China C-2
Annex C-2 Executive summary of the second written submission of China C-10
Annex C-3 Executive summary of the oral statements of China at the Substantive Meeting C-18
Annex C-4 Executive summary of the oral statement of China at the Interim Review
Meeting
C-22

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ANNEX C-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF CHINA
I. INTRODUCTION
1. When China's Ministry of Commerce ("MOFCOM") issued its redetermination in this dispute,
that redetermination addressed and fully complied with all of the concerns raised by the original
Panel and the Appellate Body in their reports. MOFCOM's redetermination addressed all of the
findings in those reports – those on the antidumping duty margins, those on the countervailing
duty margins, the procedural issues, and the injury findings. The United States has not raised any
claims concerning the redetermination findings about the antidumping duty or countervailing duty
margins. The United States has challenged only the injury findings, and certain disclosure issues
relating to those injury findings. Most of these issues were raised in the original proceeding:
(1) that the adverse price effects were not the resu lt of subject imports; (2) that the finding of
causation was flawed; (3) that certain essential facts were not disclosed; and (4) that certain
findings were not sufficiently explained. The United States also raises a completely new claim
under Articles 3.1 and 3.4 of the AD Agreement and Articles 15.1 and 15.4 of the SCM Agreement,
which is an improper expansion of this dispute to include a wholly new claim.
2. On each of these issues, MOFCOM's redetermination fully addresses the concerns raised
about MOFCOM's original determination. With the benefit of the clarification of certain legal
standards by the Appellate Body, the MOFCOM redetermination addresses all the issues, provides
an expanded and clarified rationale for all of the findings previously questioned, and thus has
demonstrated the redetermination fully complies with the relevant WTO obligations. That the
United States is not satisfied, and has brought this dispute back to the WTO, reflects
two fundamental errors in the U.S. approach.
3. The first error is that the United States appears to believe MOFCOM had to change its mind,
and find no material injury in this particular case. But this belief reflects a fundamental misreading
of the Panel and Appellate Body decisions in this dispute. The Panel and Appellate Body identified
gaps and shortcomings in the analysis and explan ation provided in the original determination.
MOFCOM was then asked to reconsider in light of these issues, and either to change its analysis on
an issue or better explain and justify the conclusi on previously reached. That is precisely what
MOFCOM did.
4. The second fundamental error in the U.S. approach is that the United States appears to
believe that this Panel should substitute its judgment for that of the administering authority. That
the United States can think of other possible interpretations does not make the MOFCOM
interpretation unreasonable or WTO inconsistent. As long as MOFCOM considered the other
possibilities and explained its reasoning, the MOFCOM findings are WTO consistent. MOFCOM did
so in its redetermination in this case.
II. MOFCOM'S PRICE EFFECTS FINDINGS WERE CONSISTENT WITH ARTICLES 3.1
AND 3.2 OF THE AD AGREEMENT AND ARTICLES 15.1 AND 15.2 OF THE
SCM AGREEMENT
5. The U.S. claims that MOFCOM's findings with respect to the price effects of subject imports
were not based on positive evidence and an obje ctive examination of the facts within the meaning
of Articles 3.1 of the AD Agreement and 15.1 of the SCM Agreement. According to the Appellate
Body, the standard for price effects is whether subject imports have "explanatory force" for price
suppression or depression, and this may be achieved by identifying "the relevant aspects of such
imports, including the price and/or the volume of such imports." Nowhere does the text of
Article 3.2 or Article 15.2, or the Appellate Body's clarification of those provisions, mandate a price
comparison. The texts require only an examination of the relationship between subject imports
and domestic prices and discussion of why the subject imports have "explanatory force."
MOFCOM's redetermination more than meets this standard.

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A. MOFCOM's Focus On The Volume And Ot her Aspects Of Subject Imports Does Not
Reflect A "Flawed Analysis" Of Price Suppression
(1) The U.S. insistence on price compar isons reflects a misunderstanding of
Articles 3.2 of the AD Agreement and 15.2 of the SCM Agreement
6. MOFCOM properly concluded that the volume of subject imports in the context of this case
contributed significantly to the price suppression experienced by the domestic industry in 2008 and
early 2009. In response, the United States contends that MOFCOM must perform a price
comparison. Contrary to the U.S. argument, there is no requirement to undertake price
comparisons. The text of Articles 3.2 and 15.2 imposes no requirement to conduct price
comparisons. The Appellate Body has confirmed that such examination of domestic prices in
conjunction with any aspect of subject imports may reflect the price and/or the volume of such
imports, confirming that price comparisons themselves are not required to establish price effects.
The U.S. interpretation to the contrary is simply inconsistent with both a plain reading of
Articles 3.2 and 15.2, as well as the Appellate Body's further clarification of that legal standard.
(2) MOFCOM reasonably identified subject imports as a source of significant price
effects
7. MOFCOM's redetermination correctly reflects that as a matter of law and as a matter of fact,
the subject imports in this case had a significant effect on domestic prices. Whether the subject
imports are higher priced or lower priced, if they are increasing in the market and particularly if
they are increasing so much as to be gaining ma rket share, that expansion in subject imports can
affect domestic prices. In such a situation, the domestic firms need to decide whether and how to
respond. A logical response is to restrain price increases that might otherwise be needed, or to
lower prices. As MOFCOM found in its redetermination, that is precisely what happened in this
case.
8. Contrary to the U.S. arguments, MOFCOM did not "simply assume" a linkage between
subject import volumes and price effects. Rather , MOFCOM showed not only that the volume and
market share of subject imports increased, but that this gain came directly at the expense of the
domestic industry. As MOFCOM noted, the subj ect imports gained 5.56 percentage points of
market share and the domestic industry lost 5.65 percentage points of market share. In other
words, subject imports explained 98 percent of the loss of domestic market share in 2008.
MOFCOM stressed this key point several times in its discussion, noting both that the lost domestic
market share was "taken by the subject merchand ise," that the amounts of the subject import
gain and domestic loss were almost identical, and that the surging subject imports were
"overtaking the market share of the domestic industry."
9. MOFCOM also made specific findings that subject imports and domestic products were
directly competitive with each other. MOFCOM made this finding in the context of determining the
like product, and the context of deciding to cumulatively assess subject imports. The United States
challenged neither of these key factual findings. It is the United States that makes the unrealistic
and unsupported assumption that a domestic industry can watch increasing volumes of
competitive subject imports gain significant market share and do nothing in response.
B. Alternative explanations offered by th e United States to suggest a different
rationale for the price suppression occurring in 2008 are not persuasive
10. The United States offers a handful of alternative explanations for the price suppression seen
in 2008, citing in particular the effects of Baost eel's startup costs and purported self restraint in
domestic pricing. Even if there were some other price effects from other factors as the
United States speculates, that does not eliminate or in any way disprove the significant
contribution of subject imports to the price suppression. MOFCOM had no obligation to disprove
any possible role by other factors, as the United States implies with its arguments. To the
contrary, MOFCOM only needed to establish th e "explanatory force" of the subject imports
themselves as a significant contribution to adverse price effects. MOFCOM did so in its
redetermination.

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C. Attempts by the United States to discredit MOFCOM's examination of volume and
market share all fail to confront the core of MOFCOM's analysis of price effects and
the relevant standard
11. After its initial argument about MOFCOM's finding of adverse price effects, the United States
then presents a series of arguments claiming th at MOFCOM's finding that subject imports caused
price suppression has no basis. But each of thes e U.S. arguments fails to address the core of
MOFCOM's analysis that increasing subject imports took significant market share, had a restraining
effect on domestic prices, and thus suppressed the domestic prices.
12. First, the United States claims a temporal e rror in MOFCOM's analysis, arguing that the loss
of 5.65 percentage points of market share by th e domestic industry in 2008 "did not fully occur
until the end of 2008." The U.S. logic implies that no company reacts to market changes during
the course of the year, only when those changes ar e quantified and totaled at the end of the year.
There is simply no factual foundation for this logic, which defies even common sense. Second, the
United States contends that because the domest ic industry gained more market share in 2007
than it lost in 2008, this fact establishes that the increase in subject imports in 2008 would not
have had the effect on prices claimed by MOFCOM. This claim is also advanced without any
evidentiary foundation. Any past gain in market share is logically irrelevant to the effect of the
subject imports in 2008 and how the domestic indust ry would react to those subject import gains
in 2008. Third, the United States speculates about the impact of various non-price factors in an
attempt to discredit MOFCOM's analysis. This speculation is at odds with MOFCOM's specific factual
findings – unchallenged by the United States – that the subject imports and domestic products
were "directly competitive" in this case, being sold in the same sales channels to the same
customers.
D. Diverging price trends in the first quarter of 2009 do not disprove any connection
between subject imports and price suppression in 2008 and the first quarter
of 2009
13. The United States also contends that data for the first quarter of 2009 demonstrates an
absence of price competition between subject imports and the domestic like product. According to
the United States, if price were an important factor, the sharp decline in domestic industry prices
witnessed in the first quarter of 2009 should have produced a larger shift in domestic sales and
market share. We note that the U.S. argument rests on a single fact disconnected from the overall
evidence before MOFCOM in this case and the various findings that MOFCOM made. Before turning
to the details of the U.S. arguments about this single fact, we note a few more general points.
14. The United States cites the Appellate Body discussion of this fact, but ignores two key
points about that discussion. The Appellate Body comment addressed the reasoning in the original
MOFCOM determination about the effects of the "the prices of subject imports," and not about the
effects of subject imports more generally. In other words, the criticism reflected an aspect of the
original determination that has been significantly changed in the redetermination. The
redetermination has substantially clarified the focus on how the subject imports was having
adverse price effects, clarifications that were not before the Appellate Body.
15. Moreover, the Appellate Body questioned whet her the prices of subject imports "adequately
explained" the price suppression and depression. The criticism thus focused on the adequacy of
the explanation. The Appellate Body was not agreeing that this single fact meant that there were
no price competition. It would not have been the Appellate Body's function to make such a factual
finding, which is why the focus was on the adequacy of the specific determination before the
Appellate Body and the explanation provided in that determination.
16. That old determination is not the subject of this proceeding. There is a new redetermination
that specifically addresses these points. The U.S. criticism that MOFCOM did not provide any
explanation or reasoning is largely a repeat of the U.S. arguments from the prior Appellate Body
proceedings. But MOFCOM has fully considered the issues raised by the Panel and Appellate Body,
and has now fully explained its reasoning with two full pages addressing this specific point. The
United States attacks this reasoning, but these attacks also have no merit.

- C-5 -

(1) Parallel Pricing
17. The United States contends that MOFCOM's findings on parallel pricing between the domestic
like product and subject merchandise from 2006 to 2008 to establish a competitive relationship
remain unsupported. But MOFCOM's explanation ha s been expanded significantly from the more
limited findings at issue before the Panel and the Appellate Body previously. MOFCOM has now
more fully explained its reasoning, addressing trends both over the 2006 to 2008 period, as well
as the divergence in the first quarter of 2009. Consistent trends over the 2006 to 2008 period
combined with the growth in market share confirm the competitive overlap.
18. Furthermore, MOFCOM explained in much more detail how the break in parallel pricing in the
first quarter of 2009 was in fact very much part of the injurious competitive dynamic: the domestic
industry lowered its prices in the first quarter of 2009 precisely in reaction to the adverse effects in
2008, to which the domestic industry was reacting. The United States may have a different
interpretation of the evidence, but this is not a reason to second-guess how the authority
considered this evidence and explained its reasoning.
(2) Pricing Policy
19. The United States is also dismissive of evidence of pricing competition in the form of pricing
policy documents obtained during verification. Yet, the United States ultimately concedes, as it
must, that purchasers were using offers for subject merchandise to negotiate for lower domestic
prices. Combined with the Russian offer to matc h whatever price changes the Chinese industry
might offer, these pricing policy documents are evidence consistent with price competition. It was
reasonable for MOFCOM to find that the reviewed contract meant the trading company would offer
a lower price, but this finding is not necessary to show the competitive relationship with respect to
price. Furthermore, MOFCOM directly addressed issues of substitutability and quality in its
redetermination, finding subject imports and domestic products to be directly competitive.
(3) Overlap of Customers
20. The United States ignores MOFCOM's more comprehensive discussion not the customer
overlap and its significance for this case. MOFCOM's findings on the overlap in competition and the
inferences drawn from these findings were not made in isolation, but were part of overall findings
on the existence of the directly competitive relationship between subject imports and domestic
products. Thus, while the United States specul ates that customers could have been buying
different products from domestic and subject suppliers, MOFCOM in fact discussed at some length
its analysis of questionnaire responses, its specific verification of the domestic industry capabilities
to produce those products the exporters had al leged could not be produced by the Chinese
companies, its review of evaluation reports of downstream users, and the overlap of customers. It
was the evidence about customer overlap in conjun ction with all the other evidence that together
led MOFCOM to find competitive overlap.
E. MOFCOM properly concluded that the su bject imports contributed significantly to
sharp price depression in early 2009
21. Beyond price suppression in 2008 and first quarter of 2009, MOFCOM also found price
depression in the first quarter of 2009 as domestic prices fell sharply. To this end, the
United States does not dispute the existence of price depression in the first quarter of 2009. It
fully acknowledges that domestic prices declined by 30.25 percent. Instead, the United States
challenges only that subject imports had anything to do with that price depression.
22. In its redetermination MOFCOM explained in more detail and more completely the dynamics
of the domestic industry reacting to the subject import volume and market share gains throughout
2008 by cutting prices in the first quarter of 2009. The U.S. argument largely ignores this
expanded discussion, and makes translation mistak es to downplay the extent to which subject
imports captured virtually all of the lost domestic market share.
23. The United States argues there is "no evidence" or "substantive analysis" that the price
decline was related to the surge in market shar e in 2008, but then largely ignores the MOFCOM
repeated discussion of this very point. MOFCOM noted this domestic industry reaction to the loss of

- C-6 -

market share in 2008 by cutting prices in Q1 2009 to fight for the lost market share in its initial
discussion of the impact of subject imports on do mestic prices. MOFCOM then also explained in
direct response to arguments raised by the U.S. Government and AK Steel concerning price trends
in the first quarter of 2009 that the evidence refl ected that the domestic industry was specifically
responding to the surge in subject imports in 2008 through a reduction in prices in Q1 2009.
24. Simply stated, the United States is just wrong to argue that there was no analysis
establishing a link between subject imports and price depression. The data on the increasing
volume and market share of subject imports are ev idence. The MOFCOM discussion of that data is
analysis. More importantly, MOFCOM has explained fully its reasoning in this regard. MOFCOM has
fully explained a completely reasonable interpretation of the available evidence. MOFCOM did not
ignore and in fact fully discussed the issue of ex panding domestic capacity and the price trends in
Q1 2009, and how those facts would have affected the domestic price effects MOFCOM analyzed.
That the MOFCOM interpretation is not the only possible interpretation does not make it any less
reasonable.
F. MOFCOM properly concluded that the pricing policy of subject imports further
contributed significantly to the sharp price depression in early 2009
25. The United States challenges MOFCOM's reliance on the pricing policy documents, again
relying on the Panel and Appellate Body criticism, not the substance of the redetermination. But as
the Appellate Body noted, "{e}ven in the absenc e of price undercutting, however, a policy that
aims to undercut a competitor's prices may still be relevant to an examination of its price
depressive or suppressive effects." MOFCOM's redetermination explains more fully why these
pricing policy documents were relevant. The MOFC OM redetermination explained that the volume
and market share of subject imports had the effect of suppressing and depressing domestic prices.
26. The pricing policy documents show the ways in which purchasers were using subject import
prices to drive down domestic prices, consistent with the Appellate Body's observation that such a
situation could be relevant. MOFCOM properly considered the evidence of the pricing policy in
Q1 2009 along with all of the other evidence to draw its conclusion about price depression.
III. MOFCOM PROPERLY ANALYZED THE IMPA CT OF SUBJECT IMPORTS CONSISTENTLY
WITH CHINA'S OBLIGATIONS UNDER ARTICLES 3.1 AND 3.4 OF THE
AD AGREEMENT AND ARTICLES 15.1 AND 15.4 OF THE SCM AGREEMENT
27. For the first time in this dispute, the United States is now raising a claim under Articles 3.4
and 15.4 that MOFCOM improperly found the Chinese industry to be materially injured. This new
claim fails for both procedural and substantive reasons. Procedurally, the United States cannot
expand the scope of the dispute in an Article 21.5 compliance proceeding to include wholly new
claims not previously addressed by the Panel. Th e Panel made no prior rulings on Articles 3.4
or 15.4 and MOFCOM has had no opportunity to co nsider any such rulings and bring any problems
into compliance. It would be extremely unfair – and contrary to WTO precedents – to allow such a
claim.
28. But even if the Panel were to consider this claim, it would fail on the merits. The
United States has not raised any points that MOFCOM did not consider in its determination. The
basic outline of MOFCOM's finding of material injury is clear. The domestic industry was materially
injured in 2008 and early 2009 when the large volume of subject imports captured significant
market share for the first time, suppressed and depressed prices for the domestic industry, and
thus led to adverse trends in financial perfor mance. MOFCOM considered the full period of
investigation, and used the domestic industry's performance early in the period as the basis for
evaluating its much weaker and materially injured performance later in the period. The U.S.
arguments about specific factors all ignore the downturn – either relative or absolute – at the end
of the period that demonstrates material injury.
29. MOFCOM properly focused on key negative trends at the end of the period to find the
domestic industry materially injured. That the industry was doing better earlier in the period, and
that some trends were less adverse than others, does not mean the domestic industry was not
materially injured. The U.S. claim would have this Panel reweigh the evidence and substitute its
judgment for that of the administering authority – neither of which falls within the Panel's scope of

- C-7 -

review. MOFCOM addressed all of the key factors set forth in Articles 3.4 and 15.4, weighed the
conflicting evidence, and made a reasonable judgment that was fully explained. MOFCOM's
findings should be affirmed.
IV. MOFCOM PROPERLY ANALYZED CAUSATION CONSISTENTLY WITH CHINA'S
OBLIGATIONS UNDER ARTICLES 3.1 AND 3.5 OF THE AD AGREEMENT AND
ARTICLES 15.1 AND 15.5 OF THE SCM AGREEMENT
30. MOFCOM's redetermination sets forth a straig htforward and reasonable analysis of causation
that fully respects its WTO requirements. Early in the period, the overall market was growing and
the domestic industry was doing well. But then directly competitive subject imports surged in
2008, increasing significantly both their absolute volume and more importantly their market share,
capturing 5.56 percentage points of market share in 2008. As a result of this gain in volume and
market share, subject imports suppressed and depressed domestic price levels. The subject
imports thus took away market share, prevented pr ice increases needed to cover rising costs, and
forced the domestic industry to lower prices to prevent further losses of market share and to win
back a portion of the market share already lost.
31. China notes that the United States does not challenge the heart of this analysis - that the
increasing volume and market share of the direct ly competitive subject imports caused material
injury. Rather, the United States challenges only the linkage between those adverse volume
effects and the collateral adverse price effects found by MOFCOM, price suppression in 2008 and
Q1 2009 and price depression in Q1 2009, and the denial of any economies of scale. And the
United States makes two non-attribution arguments. None of these U.S. arguments undermine the
basic causation – the link between the subject imports and the adverse effects on the domestic
industry – that MOFCOM found in this case.
32. MOFCOM properly analyzed the adverse price effects, fully addressing any concerns raised
by the Panel and Appellate Body in the earlier proceedings. In particular, MOFCOM specifically
linked the increasing volume and market share of subject imports to the price suppression and
price depression that affected the domestic industry, relying on both those volume effects as well
as the other evidence of the competition between subject imports and the domestic products.
33. MOFCOM also properly relied on the denial of economies of scale as part of its analysis. In a
growing market, a domestic industry can reasonably invest in new capacity in anticipation of
economies of scale from larger production that necessarily lowers per unit costs, as the preexisting
fixed costs are now allocated over larger production volume. When unfairly traded imports capture
a significant part of that volume through increased market share, that adverse effect reasonably
supports a finding of causation.
34. MOFCOM properly separated and distinguished the effect of increased domestic capacity and
production. The United States makes this argument the centerpiece of its attack, but incorrectly
assumes that if domestic capacity and production were having some effect then subject imports
themselves could not be having any adverse effects. Articles 3.5 and 15.5 do not require
disproving any role of any other factor – only that these other facts be taken into account and
separated and distinguished from the role of subj ect imports. In fact, MOFCOM's redetermination
shows that even after controlling for the effect s of domestic capacity and production, subject
imports themselves were still making a significant contribution to the material injury suffered by
the domestic industry over the 2008 and early 2009 period. The U.S. arguments are little more
than comments about alternative approaches that in no way undermine the reasonableness of the
approaches used by MOFCOM.
35. MOFCOM also properly separated and distinguished the effect of non-subject imports. Unlike
subject imports, which gained significant market share, non-subject imports did not. Unlike the
dumped and subsidizes subject imports, non-subject imports were fairly traded and thus did not
impermissibly expand their market share. The U.S. argument that the absolute volume of
non-subject imports was higher ignores the more probative evidence about market shares. And
the U.S. argument about the prices of non-subject imports relies entirely on average unit value
data that the United States itself strenuously argued was not reliable.

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36. The Panel should therefore affirm MOFCOM's expanded and more complete redetermination
as consistent with the obligations under Articles 3.1 and 3.5 of the AD Agreement and Articles 15.1
and 15.5 of the SCM Agreement.
V. MOFCOM PROPERLY DISCLOSED ALL ESSENTIAL FACTS PRIOR TO THE
DETERMINATION CONSISTENTLY WI TH CHINA'S OBLIGATIONS UNDER
ARTICLES 6.9 OF THE AD AGREEMENT AND 12.8 OF THE SCM AGREEMENT
37. The United States asserts that MOFCOM's injury redetermination was inconsistent with
Articles 6.9 of the AD Agreement and 12.8 of SCM Agreement for its failure to disclose all
"essential" facts forming the basis of the redetermination before issuance of the final
redetermination. The United States identifies seven facts that it claims MOFCOM failed to disclose
in such a manner that interested parties would have an opportunity to defend their interests. The
U.S. argument is procedurally and substantively defective: procedurally because the United States
has not established a prima facie case that the listed facts are "essential;" and substantively
because MOFCOM's injury redetermination discloses all of the listed facts in accordance with a
proper balance of the necessary disclosure while still protecting the confidential information.
A. The United States Has Not Established a Prima Facie Case that MOFCOM Failed to
Disclose All Essential Facts That Form the Basis of the Redetermination
38. A party claiming that a Member has acted inconsistently with WTO rules bears the burden
of proving that inconsistency."
1 The United States thus has the burden of establishing a prima facie
case that MOFCOM failed to disclose all essential facts. The United States has failed to establish a
prima facie case. Leaving aside the legal definition of what constitutes an "essential" fact, the
United States has not satisfied the evidentiary burden of proving that each of the seven facts listed
are "essential" to the redetermination. Rather than relating each of the alleged facts to the legal
standard, the United States uses general language and broad assertions that the facts are
"absolutely indispensable" without any explanation. The United States has "simply allege[d] facts
without relating them to its legal arguments,"
2 and has therefore failed to establish a prima facie
case. As such, the Panel has no basis to rule on these claims.
B. Evaluated on the Merits, the U.S. Claims Must Fail Because MOFCOM's Preliminary
Disclosure Document Disclosed the Facts in Dispute
39. Because the United States has not satisfied th e evidentiary burden of establishing that the
listed facts meet the definition of "essential" under the covered agreements, China does not
address that issue in this submission. Rather, China focuses here on the fundamental factual error
in the United States' argument: contrary to the U.S. claims, MOFCOM did sufficiently disclose each
of the listed facts in the preliminary disclosure document. The U.S. argument is premised on an
assumption – that MOFCOM did not previously disclose these facts – which is not true.
Remarkably, this U.S. error is confirmed in some instances by the fact that the United States
actually made arguments based on these facts fo r purposes of the final redetermination. Such
arguments would be impossible to make if MOFCOM had not already disclosed these facts.
MOFCOM properly disclosed each of the facts id entified by the United States in MOFCOM's
preliminary disclosure document. MOFCOM did so in a manner that provided the United States and
other interested parties with the ability to defe nd their interests and make arguments about those
facts. That the United States has concerns with the actual conclusions reached, as made clear by
the United States' decision to comment on many of these facts following the preliminary
disclosure, is irrelevant for these claims.
VI. MOFCOM PROPERLY PROVIDED THE MATTERS OF FACT AND LAW THAT LED TO THE
IMPOSITION OF THE ANTIDUMPIN G AND COUNTERVAILING DUTIES
CONSISTENTLY WITH CHINA'S OBLIGATI ONS UNDER ARTICLES 12.2 AND 12.2.2
OF THE AD AGREEMENT AND 22.3 AND 22.5 OF THE SCM AGREEMENT
40. The United States claims that MOFCOM's redetermination failed to explain the matters of
fact and law that led to the ultimate imposition of the antidumping and countervailing duties. The
United States identifies five issues that it clai ms MOFCOM did not explain in the Redetermination.

1 EC – Hormones (Canada) (Article 22.6 – EC), para. 9.
2 Appellate Body Report, US – Gambling, para. 140.

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As with the U.S. claims concerning "essential facts," the claims under Articles 12.2 and 12.2.2 of
the AD Agreement and 22.3 and 22.5 of the SCM Agreement fail for several reasons.
41. Here again, the United States has not established a prima facie case for its claim. This
failure is determinative, as the Panel cannot rule on a claim for which the prima facie case has not
been established.
42. Furthermore, as a factual matter, the United States errs in its allegation that MOFCOM did
not explain the facts listed in the U.S. first written submission. The United States may disagree
with the substance of MOFCOM's findings, but such a disagreement is not relevant to these claims.
The United States might have preferred even more discussion or preferred that MOFCOM disclosed
business confidential information, but those U.S. preferences are not WTO obligations. The
question is whether or not the facts and reasoning that led to a given conclusion are sufficiently
clear from the determination. MOFCOM fully complied with this obligation.
VII. CONCLUSION
43. For all of these reasons, China respectfully requests the Panel to find that: (1) the U.S.
claims concerning material injury under Articles 3.1 and 3.4 of the AD Agreement and Articles 15.1
and 15.4 of the SCM Agreement should be dism issed as outside the proper scope of this
Article 21.5 proceeding, (2) the U.S. claims about disclosure of essential facts under Article 6.9 of
the AD Agreement and Article 12.8 of the SCM Agre ement should be dismissed for failing to state
a prima facie case; (3) the U.S. claims about adequacy of explanation under Articles 12.2
and 12.2.2 of the AD Agreement and Article 22. 3 and 22.5 of the SCM Agreement should be
dismissed for failing to state a prima facie case; and (4) regardless of the rulings on the
three foregoing arguments, the MOFCOM redetermination is otherwise fully consistent with China's
obligations under the AD Agreement and SCM Agreement.

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ANNEX C-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF CHINA
I. MOFCOM PROPERLY ANALYZED PRICE EFFECTS
1. MOFCOM properly analyzed the price effects of subject imports, focusing on volume-related
price suppression and depression over the period concerned, but in the context of other key
evidence about the competitive relationship between subject imports and domestic shipments.
MOFCOM did not merely rely on volume alone to establish price effects. The volume evidence in
combination with the established competitive relationship served to demonstrate the "explanatory
force" of subject imports and the significant price effects MOFCOM found in the case.
2. Nothing in the WTO texts support the U.S. position that MOFCOM needed to perform a
comparison of relative prices as a necessary part of its price effects analysis. First, the U.S.
reading is not derived from the plain meaning of the text, but its own "common sense"
presumptions. Second, nothing in the text indicates that an authority must a priori include such
price comparisons. Third, the Appellate Body focused upon this interpretive point in China – GOES
and has already rejected the U.S. position, find ing that: (1) there are two distinct types of
inquiries, including price undercutting and price depression/suppression; (2) that they each may
depend on different factual elements; and (3) that they are not mutually inclusive exercises. The
only U.S. response to this clear Appellate Body finding is a qualification of this language in a
footnote found in the Appellate Body's report, but the U.S. selectively quotes from and ultimately
misreads that footnote.
3. MOFCOM's redetermination demonstrated that subject imports had "explanatory force" for
significant price suppression. In particular, MO FCOM demonstrated a linkage between subject
imports and prices of the domestic like product in 2008. MOFCOM's treatment of subject import
volume and market share was made in conjunction with numerous other factual findings all
supporting a finding of a positive competitive relationship between subject imports and the
domestic like product, as discussed below.
4. MOFCOM's like product and cumulation findin gs show that the subject import and domestic
products were competing on price. In particular, the specific findings of substitutability strongly
supports the notion of price competition. The United States has not contested these findings,
which are more than just "general similarities " between subject imports and the domestic like
product. Indeed, the United States now concedes "some degree of competitive overlap." So the
U.S. argument is that even through products ar e "competitive" and "substitutable," they are not
highly substitutable enough to be competing on price. Yet the United States has provided
absolutely no factual, logical, or legal basis for such an assertion, and this assertion is completely
at odds with the ability of subject imports to increase enou gh in 2008 to gain 5.56 percentage
points of market share. It is hard to imagine that products that are competitive, substitutable, and
gaining market share are not competing based on pr ice. Moreover, even if the standard were in
fact "highly substitutable," the U.S. argument still fails because it ignores the specific facts of this
case. As MOFCOM specifically noted in its redetermination, Allegheny Ludlum in its questionnaire
response stated "that the subject merchandise it produces or exports are highly substitutable and
competitive with the Chinese domestic like product and the like product from other countries."
MOFCOM was well within its discretion to accept as credible the Allegheny Ludlum statement that
its products were "highly substitutable."
5. MOFCOM's analysis of parallel price trends noted that such trends were "fundamentally
consistent" and therefore also indicated a competitive relationship. The limited number of data
points does not invalidate the trends, since these data points based on annual AUVs provided a
broad assessment that smoothed out potentially anomalous data. These data points over the 2006
to 2008 period constitute more probative evidence than the more limited evidence on which the
United States relies. If this data over a three year period has – in the U.S. words -- "no probative
value," then what is the Panel to make of the U.S. argument that relies so heavily and so
repeatedly on a single data point for a single quarter? Is there something less than "no probative
value?" These trends were in the same direction, and within a handful of percentage points of each

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other. Given the nature of AUVs, which only broadl y reflect the underlying pricing data, such small
differences in the percentage point changes are not material. Finally, even assuming the U.S.
argument is correct and the AUV data showing br oad pricing trends is of "no probative value,"
there are still numerous other factual bases supp orting the MOFCOM finding of adverse price
effects. Yet if one subtracts the AUV data for Q1 2009 from the U.S. argument, there really is
nothing else left to the U.S. argument. In sum, when looking at the record as a whole, the trends
identified by MOFCOM were probative and offered reasonable support for MOFCOM's findings.
6. MOFCOM also analyzed the pricing policy documents found at verification as providing
further evidence of price competition between the subject imports and the domestic like product.
That these documents relate to Q1 2009 does not mean these documents have no relevance at all
for other time periods, regardless of all the other facts on the record. The United States admits
that these documents in fact show purchaser behavior, and that is precisely why these documents
are probative for understanding how purchasers viewed the relationship between subject imports
and domestic products.
7. MOFCOM's discussion of customer overlap furt her confirms the explanatory force of subject
imports with respect to price effects. MOFCOM's notes the simple but important fact that there
were common customers specifically for GOES, not just any product, and so the same customers
were buying from both import and domestic sources. Allegheny Ludlum reinforced this point, when
it explained in its questionnaire response "that th e subject merchandise it produces or exports are
highly substitutable and competitive with the Chin ese domestic like product and the like product
from other countries." MOFCOM went on to analyze whether there were any specialty products
being supplied by subject producers that could not be supplied by the domestic industry, finding
that this was not the case. Thus, MOFCOM reasonably established: (1) common customers;
(2) same products sold; and (3) no attenuated competition due to specialty products. These
findings are not speculation.
8. The United States attacks each of these multiple MOFCOM factual finding in isolation against
its lone argument that the market share response to diverging prices in the first quarter of 2009
does not support a finding that subject imports and the domestic like product had a competitive
relationship. This single (but often repeated) U. S. argument ultimately fails on two fundamental
grounds.
9. First, the United States misrepresents the ma rket share response by comparing end points –
first quarter 2008 to first quarter 2009 – rather than looking, as MOFCOM did, to the full loss in
market share over the entirety of 2008. This U. S. argument ignores the decline in domestic
industry market share that occurred over the course of 2008 – the totality of which is what the
industry responded to, not trends in market share between isolated periods, the first quarter of
2008 and the first quarter of 2009. MOFCOM never indicated that this recapture of market share
was only 1.04 percentage points, only that the increase in first quarter 2009 was 1.04 percentage
points when compared to first quarter 2008. The increase compared to 2008 as a whole was
necessarily more substantial. Only a significant decline in domestic pricing could lead to this swing
in market share in just one quarter, consistent with MOFCOM's conclusion that the domestic like
product and subject imports competed on price. MOFCOM's analysis was "based on a
comprehensive rather than isolated analysis of the situation in 2008 and the first quarter in 2009."
Stripped to its core, the U.S. argument rests entirely on trends in a single quarter at the end of
MOFCOM's period of investigation to rebut all of MOFCOM's findings over the entire period of
investigation. In contrast MOFCOM considered all the evidence in reaching its determination.
10. Second, the United States fails to acknowledge the reasonable inferences to be drawn from
MOFCOM's findings as a whole. The United States continues to isolate MOFCOM's volume and
market share findings and never considers MOFCOM's price effects findings as a whole. The
Appellate Body has recognized the importance of considering evidence as a whole: "a piece of
evidence that may initially appear to be of little or no probative value, when viewed in isolation,
could, when placed beside another piece of eviden ce of the same nature, form part of an overall
picture that gives rise to a reasonable inference . . . ." The United ignores this key principle when
repeatedly considering each point in isolation. But each MOFCOM finding reinforces the other and
contributes to the overall demonstration of th e explanatory force of subject imports. The
United States cannot rebut the probative value of volume and market share trends by
mechanistically considering those trends alone, ignoring the other evidence and findings.

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11. The U.S. arguments concerning MOFCOM's trea tment of price depression in the first quarter
of 2009 mirror its arguments concerning MOFCOM's findings on price effects in general. First, the
United States mischaracterizes MOFCOM's analysis as focusing solely on the increasing volume and
market share of subject imports. Although those pa rticular facts did constitute probative evidence
o f p r i c e e f f e c t s , t h e y w e r e p a r t o f a b r o a d e r analysis of subject imports that showed their
competitive relationship with the domestic like product.
12. Second, the single piece of evidence abou t divergent trends in Q1 2009 sheds very little
light on the true effect of the domestic indust ry reducing prices. The end point to end point
analysis presented by the United States does not account for the market share lost by the
domestic industry over the entirety of the 2008, and consequently the level of market share
regained by the domestic industry from its low point to the end of the first quarter of 2009. Far
from being "irrational," the price decline did allow the domestic industry to recover a substantial
portion of market share loss in very short order – circumstances that might only occur in the
presence of a significant drop in price. The price drop in the first quarter of 2009 was thus far from
"irrational." Rather, the price drop was a ration ale response by the domestic industry and it
succeeded in recovering much of the lost market share.
13. Whether or not MOFCOM had written evidence of actual offers for imported merchandise or
actual sales transactions does not detract from the probative value of the policies themselves.
These documents are further evidence of the competitive relationship between subject imports and
the domestic like product on terms directly bearing on price. Again, regardless of whether there
was actual underselling or not, the pricing policy documents show the ways in which purchasers
were using the growing presence of subject im port prices to drive down domestic prices,
consistent with the Appellate Body's specific observation that such a situation could be relevant.
II. MOFCOM PROPERLY ANALYZED ADVERSE IMPACT
14. The United States has not successfully rebutted China's argument that this claim is
not properly before this Article 21.5 panel. Pr ior WTO precedent and fundamental fairness prevent
a complaining country from not raising a claim initially, luring the defending country into
reasonably believing there was nothing that needed to be changed, and only then raising that new
claim in an Article 21.5 proceeding when the defend ing country no longer has any chance to bring
that aspect of its measure into compliance. Yet that is precisely what the United States is trying to
do in this case.
15. The U.S. efforts to show the MOFCOM findin g on adverse impact was somehow new all fail.
A comparison of the injury discussion in the original MOFCOM determination and the revised
redetermination now before this Article 21.5 panel shows no additional discussion of the market
conditions in 2008. Contrary to the U.S. allegation, there is no new focus on 2008 in the MOFCOM
discussion of injury; the injury discussion is essentially unchanged, reciting the key facts that
highlight the declines at the end of the period.
16. Thus the U.S. argument that the redeterm ination somehow changed reduces to a single
point: that because MOFCOM deleted a few references to "low price," these minor changes
somehow created a "new" determination on this issue so different that it is now properly subject to
a challenge in this Article 21.5 proceeding. This U.S. argument, however, fails for three key
reasons. (1) The references to "low price" in the original determination of injury were simply
references to unfairly traded imports. (2) Even if one were to assume that "low price" were not
just a reference to unfairly traded imports more ge nerally, the references to "low price" refer to
the price of subject imports, an issue that has no particular relevance when analyzing the injury
suffered by a domestic industry. (3) This different focus of injury determinations under Article 3.4
and 15.4 largely explains why the U.S. argument on injury in fact says nothing at all about "low
priced" subject imports.
17. This situation is essentially the same as that before the panel in US – Countervailing
Measures Concerning Certain Products from the EC , which correctly stressed that "the utility of an
Article 21.5 proceeding should not override the basic due process rights of the parties to the
dispute." Nor are these conclusions in any way at odds with the Appellate Body jurisprudence. In
discussing its prior jurisprudence in Canada – Aircraft (Article 21.5 – Brazil) and US – FSC
(Article 21.5 – EC), the Appellate Body in the more recent decision in EC – Bed Linen (Article 21.5

- C-13 -

– India) stressed the requirement to raise a new claim challenging a new component of the
measure taken to comply which was not part of the original measure. That is why the Appellate
Body repeatedly stressed that the scope of Article 21.5 proceedings covered "a new claim
challenging a new component of the measure taken to comply which was not part of the original
measure," and "a new claim challenging a changed component of the measure taken to comply."
18. The U.S. claim on adverse impact also fails on its merits. MOFCOM reviewed the evidence
objectively, and reached reasonable conclusions that the domestic industry that had done well
early in the period suffered a number of declining indicators at the end of the period when subject
imports surged. The United States now concedes there is nothing inherently unreasonable or
distortive in focusing on the end of the period, as MOFCOM did in this case. Moreover, MOFCOM
did not ignore the earlier part of the period. MO FCOM properly used the trends over the 2006 to
2007 period as reasonable context for evaluating the trends over the 2007 to 2008 period. There
is nothing WTO inconsistent about finding injury at the end of the period, and positive trends
earlier in the period do not somehow immunize the domestic industry from suffering material
injury later in the period. MOFCOM reasonably co nsidered all of the evidence, put the end of the
period in proper context, and made a reasoned and objective judgment based on all the evidence.
19. The United States alleges without any support that the earlier trend may have been
unsustainable, but this possibility was (1) inconsistent with the evidence of strong rates of growth
in total consumption in China, increasing 22.8 percent in 2007 and another 18.1 percent in 2008,
and (2) no party during the original proceedings before MOFCOM submitted any evidence
contradicting this basic point. Based on the evid ence before MOFCOM, the growth rates over the
2006 to 2007 were consistent with the rapidly growing Chinese market and thus provided a
reasonable benchmark. The United States attempts to downplay this relatively high growth rate in
overall consumption, but in doing so makes illogical comparisons of percentage changes, and does
not demonstrate that MOFCOM's approach was in any way not reasonable or objective.
20. The United States also points to large increases in 2007, but in doing ignores the basic
context of a growing market. Given the generally comparable rates of growth in the overall market
over the 2006 to 2007 period and 2007 to 2008 period, it was reasonable for MOFCOM to compare
the trends over these two periods and find that the negative trends over the 2007 to 2008 period
were indicative of injury. Rather than cancelling out the injury in 2008, the more positive trends in
2007 just underscore and provide reasonable context for finding the negative trends in 2008 to be
injurious. Thus, although the United States accuses MOFCOM of not putting trends into context, in
fact it is the U.S. argument that seeks repeatedly to misunderstand or ignore the context.
21. Beyond this context of evaluating trends in light of the growing market, MOFCOM also
properly evaluated the trends for the injury as a whole. This focus on the industry as a whole does
not represent side stepping the issue. MOFCOM fully considered the relevance of Baosteel's entry
into the domestic industry in its redetermination when appropriate. But for purposes of Articles 3.4
and 15.4, the focus must be on the industry as a whole. Subject imports can be injurious in all
markets, whether there is a new entrant or not.
22. The United States continues to say nothing about Q1 2009 in its argument about adverse
impact. Even after China pointed out this serious failing in the U.S. FWS, noting the MOFCOM focus
on "trends that turned adverse in 2008 and then became worse in Q1 2009," the U.S. SWS says
not one word about the negative trends in Q1 2009. The U.S. failure to say anything about
Q1 2009 is far more "selective" than anything in MOFCOM's analysis.
23. Moreover, any positive trends did not "outweigh" the negative trends. MOFCOM reasonably
and persuasively explained why, after considering al l the factors as a whole, it found the domestic
industry to be injured. That is why MOFCOM repeatedly stressed what would be reasonably
expected in a growing market, and then noted the injurious trend. Thus, MOFCOM acknowledged
that capacity and production were up, but then noted that these increases "did not produce the
corresponding economies of scale and profits" the domestic industry expected from its
investments. MOFCOM noted that "the increase in sales did not bring about the corresponding
increase in profit." MOFCOM also noted for several factors the increase early in the period followed
by the decrease later in the period – a decrease in the growth in 2008 and often a decrease in the
actual amount in Q1 2009.

- C-14 -

III. MOFCOM PROPERLY ANALYZED CAUSATION
24. The United States makes only two arguments ab out the basic causal link and they both fail.
The U.S. argument about defective price effects addresses individual pieces of evidence in isolation
rather than look at the totality of the record and all of MOFCOM's findings as they relate to price
effects. MOFCOM did not make conclusory statements about the effects of rising subject import
volumes and market share in isolation. Rather, MOFCOM made a series of well reasoned findings
establishing the general competitive relationship of subject imports and the domestic like product
in conjunction with rising imports volumes and market share. These findings as a whole
demonstrated the "explanatory force" of subject im ports and their significant effect on price. The
U.S. position really reduces to making a single argument across all MOFCOM's findings, contending
that the price divergence between subject impo rts and the domestic like product in the first
quarter of 2009, relative to shifts in market share, somehow trumps all other evidence and
repudiates any finding of adverse price effects. But as discussed in detail in Section II, this U.S.
analysis is flawed.
25. The U.S. argument about MOFCOM's analysis of economies of scale also fails to address
what MOFCOM actually found – how subject imports affected the domestic industry as a whole,
and deprived the domestic industry of its ability to fully realize the potential on its investments in
new capacity. The United States now acknowledges that MOFCOM's basic point is true, but
dismissed the more basic point MOFCOM was making in its redetermination. China finds the U.S.
criticism of an "abstract truism" rather strange, given that the U.S. initial argument on this point
was itself just a list of abstract questions. Nor does this basic point change by considering each
firm individually, rather than considering the indust ry as a whole as required by Articles 3 and 15.
It was in no way a "failure" for MOFCOM not to quantify these effects, and the United States has
not cited to any WTO obligation to quantify such effects. MOFCOM thus reasonably and objectively
noted this qualitative connection between the growing volume of subject imports, the lack of
economies of scale from new investments, and the adverse effects suffered by the domestic
industry.
26. On both of these issues, the United States essentially argues that simply by articulating
another way to view the evidence, it has somehow shown that MOFCOM's analysis is necessarily
and unavoidably flawed. But this approach is ju st wrong. MOFCOM reasonably addressed all the
evidence, considered these other perspectives, and reasonably concluded that subject imports
were contributing to adverse effects being suffered by the domestic industry.
27. Similarly, the United States makes only tw o arguments about non-attribution, but these two
arguments also both fail. MOFCOM properly cons idered and distinguished the effects of subject
imports from the effect of domestic industry expa nsion of capacity. The entire U.S. argument on
this point is really little more than a dispute over the MOFCOM methodology for showing that
subject imports contributed significantly to the inventory overhang, even after taking into account
the expansion of domestic capacity.
28. China had made the point in its FWS that its discussion of non-attribution regarding the
expansion in the domestic industry had considered inventory expansion as only one of many
factors. The United States never responds at all to any of the other points that MOFCOM had noted
about this issue. In particular, the United Stat es never responds to MOFCOM's discussion that:
(1) one cannot reasonably compare percentages that are calculated by base amount of very
different magnitudes, as does the U.S. argument on this point; (2) the clear link between subject
import market share gains in 2008 and lost market share by the domestic industry; and (3) the
fact that the domestic firms had to cut their prices in early 2009 specifically in an attempt to
regain the market share that had been lost in 2008. China is not attempting to "draw attention
away" from MOFCOM's analysis of inventory. China is putting the inventory discussion into context,
as part of the overall analysis.
29. The U.S. argument thus reduces to disagreements with MOFCOM's methodology – the use of
the 2007 as the base year; and the combined consideration of 2008 and Q1 2009. Since the
United States did not even attempt to address China's other arguments, the U.S. claim comes
down to these technical disputes about a particular methodology.

- C-15 -

30. MOFCOM's choice of 2007 as the baseline rests on positive evidence and reflects objective
examination of that evidence. MOFCOM fully explained its choice. First, MOFCOM noted that in a
normal growing market "a reasonable basis for the market competitor's forecast" for its market
share in the next year would be to start with its market share in the current year, absent some
other factors. Second, when seeking to analyze the situation in 2008, the year 2007 would be "the
most comparable and representative." Third, and more specific to this particular case, the year
2007 was a year in which subject imports had been stable (not surging like 2008), and the
domestic industry "did not show any signs of an adverse situation yet" (not weakening indicators
like 2008).
31. Although using 2006 would also have been reasonable, that base-line would have had the
following problems. First, any market competitor at the end of 2007, trying to forecast its 2008
market share, would not normally go back to 2006. Doing so would have ignored the more recent
changes in the business during 2007. Second, 2006 would also have been before the subject
i m p o r t s u r g e , b u t i t w o u l d h a v e b e e n m o r e r e m o t e i n t i m e a n d t h u s m o r e s u b j e c t t o o t h e r
intervening factors. MOFCOM sought to understand what changed in 2008 – why the positive
trends in 2007 reversed in 2008. Thus, MOFCOM chose 2007 because going back to 2006 would
have introduced more uncertainty in this analysis, since the further back in time the authority
goes, the greater the risk of "some other factors" playing a role.
32. The United States also makes much of MOFCOM's choice to consider 2008 and Q1 2009 as a
whole, arguing that the contribution of subject imports to the inventory overhang in Q1 2009 alone
would have been smaller. As with the choice of 2007 as a base year, MOFCOM fully explained its
choice to consider inventory build-up over a 15 month period, and that explanation is reasonable
and objective. In particular, MOFCOM address this choice of methodology at some length in its
redetermination.
33. Thus, MOFCOM's choices rested on completely reasonable principles: (1) that different
economic factors have different characteristics and thus may need to be treated differently in
trying to understand the causal relationships; and (2) that inventory in particular has a distinctive
feature in that it accumulates over time, and thus requires a different approach to understating
the relative contribution of different factors to inventory build-up.
34. Instead of addressing these arguments, the Un ited States points to a isolated comment by
MOFCOM, and then twists that comment out of contex t. Even if the contribution of subject imports
may have been less in Q1 2009, the focus on that narrow period was not the most appropriate
way to consider inventory with its unique characteristic of being accumulated over time, not sold
over a discrete period. Given that 2008 accounted for the vast majority of the overall 2008 and
early 2009 period being considered, MOFCOM reasonably explained why it put particular weight on
the contribution of subject imports to the inventory build up in 2008.
35. MOFCOM thus met its obligations under Articles 3.5 and 15.5. As China has noted, MOFCOM
had no obligation to show that subject imports were the only factor. The United States does not
dispute this point. MOFCOM showed – using a reasonable methodology – that subject imports
accounted for about half of the inventory build up, and thus were making a significant contribution
to the adverse effects being experienced by the do mestic industry, even when distinguished from
the effects attributable to the expansion in domestic capacity.
36. MOFCOM also properly considered and distin guished the effects of subject imports from the
effects of non-subject imports. MOFCOM reasonably found that if large volumes of non-subject
imports were having no effects in 2006 and 2007, and did not gain any market share in 2008, then
non-subject imports were not the problem. The United States relies entirely on the argument that
since non-subject imports had large volume, and allegedly had lower prices, then non-subject
imports must have mattered more. This argument fails for many reasons. First, the U.S. argument
still does not address and cannot explain how the larger volume and allegedly lower priced non-
subject imports did not have any adverse effect in 2006 and 2007. Second, the United States
incorrectly asserts that "MOFCOM did not examine market share data." MOFCOM could not have
noted the shifts in the market share without ex amining the market share data. Third, MOFCOM
focused its analysis on shifts in market share because those changes over time were more
probative on understanding why the performance of the Chinese industry changed over time. The
shifts in market share both took into account the growing market and allowed MOFCOM to see
what supply sources were gaining and losing market share over time. Fourth, MOFCOM correctly

- C-16 -

noted that the shift in market shares in 2008 was the key fact to consider. The year 2008 was
when the domestic industry lost 5.65 percentage po int of market share – this is the adverse effect
to be explained. And in 2008, subject imports gain ed 5.56 percentage points of market share,
while non-subject imports gained only 0.09 percentage point of market share.
IV. MOFCOM PROPERLY DISCLOSED ALL ESSENTAL FACTS
37. In its SWS the United States still has not set forth a prima facie claim. Even this expanded
discussion continues to make an overarching fundamental error -- there is not a single sentence in
the U.S. SWS explaining why each of the seven facts at issue should be considered "essential."
Many of the U.S. arguments are basically that public summaries of facts are somehow not
sufficient, and that the underlying data needed to be disclosed. When arguing for disclosure of
facts that the authority has deemed (without any challenge) to be confidential, the complaining
party has a particular burden to articulate clearly and explicitly why that particular fact – as
opposed to its public summary – is in fact essential. Yet the United States has made no effort to do
so. For these reasons, China continues to believe the Panel should reject the U.S. claim as failing
to state a prima facie case.
38. Even if the United States has finally established a prima facie case, the United States still
has not sufficiently demonstrated that the facts at issue were "essential" or that the facts were not
sufficiently disclosed. The consistent theme in th e U.S. argument is to dismiss without serious
discussion what MOFCOM actually disclosed and ju st insist that the undisclosed confidential
underlying data was somehow "essential."
39. Trends in Import Prices. The disclosure clearl y describes the different sources of data for the
price trends. The U.S. argument ignores the cl ear use of percentage changes to provide a
sufficient public summary of the underlying confidential data. Nor does the United States anywhere
demonstrate how the "data underlying" these perc entage changes were somehow "essential," or
why the percentage changes themselves were not sufficient disclosure of these facts.
40. Economies of Scale. The disclosure found that the "rise of demand gives an impetus" to
capacity in China, a statement fully supported by the facts disclosed showing the percentage
changes in demand and domestic industry capacity. The United States has not presented any
argument why the confidential underlying data are "essential facts."
41. Sales Obstacles. The disclosure makes this reference to "sales obstacles" clear in context,
and that is why this particular paragraph ends with the concluding statement that "[h]ence, the
domestic industry has been seriously impacted in both production and sales due to a great deal of
imports." Nowhere does the United States explain what additional facts about subject imports in
this context were undisclosed "essential facts."
42. Price Reduction in Q1 2009. MOFCOM's disclos ure cited to the loss of domestic industry
market share in 2008 and the regaining of that sh are in Q1 2009, essential facts that were fully
disclosed, and then drew the reasonable conclusi on about the business motivation for the Chinese
industry to lower its prices.
43. Price-cost differential for Wuhan. The disclosur e clearly documents the decline in gross profit
rate, which is the difference between average prices earned and average costs incurred -- the
"price-cost differential." The U.S. argument ignores the clear use of percentage changes to provide
a sufficient public summary of the underlying confidential data. The underlying data are not
"essential facts," and were confidential data that did not need to be disclosed beyond these
percentage changes.
44. Capacity Did Not Exceed Market Demand. The disclosure describes the trends in both
capacity and consumption, using percentage ch anges to protect the confidentiality of the
underlying data. MOFCOM disclosed sufficient facts to show that even after its growth over the
2006 to 2008 period, domestic capacity was still below the total market in China.
45. Allocation of Inventory Overhang. The disclosure clearly explains the data sources and
methodology used to confirm that subject imports made a significant contribution. The U.S.

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argument ignores the use of percentage changes to provide a sufficient public summary of the
underlying confidential data used in the calculations.
V. MOFCOM PROPERLY DISCLOSED THE FACTUAL AND LEGAL BASIS OF ITS
DETERMINATION
46. The U.S. FWS made no effort to state a prima facie case for this claim, offering only brief
and insufficient one sentence statements that certain points were important to the final decision by
MOFCOM, without any discussion of why. The United States has not responded to this argument,
and instead uses its SWS in an unsuccessful attempt to state its claim for the first time. But the
U.S. SWS only attempts to rehabilitate three of the five claims made initially, indicating that it has
abandoned the two other sub-claims.
47. The U.S. efforts to rehabilitate the first three of these sub-claims still fail to state a
prima facie case. The U.S. SWS does not cure this fundamental defect, and instead repeats the
defect of assertion without explanation or argument. Even if the Panel itself believes these points
are material, it is not the job of this Panel to make the U.S. arguments for the United States, and
certainly not at this late stage of the proceeding. If the Panel cannot find any explanation of why
the United States believes certain points to be material in the FWS or SWS, it is not too late for the
United States to attempt to make such a showing now. But if the Panel decides to consider the
merits, these claims still fail.
48. Trends in Import Prices. The entire U.S. argument is to disagree with the MOFCOM
characterization of the trend in overall prices as measured by average unit values. But this U.S.
argument makes too much out of too little. Th e U.S. argument ignores the paragraph-long
explanation of why the domestic average prices fell by a larger amount in early 2009. Thus,
MOFCOM disclosed and discussed the key facts. The United States might disagree with MOFCOM's
assessment, but there is no basis to say this point was not discussed.
49. Economies of Scale. The entire U.S. argu ment is that China made a statement without
citation of the redetermination, but takes this statement out of context. This statement from
China's FWS was made after three preceding sentences that did cite the redetermination. The
fourth sentence was simply expanding on the implications of the prior three sentences.
50. Sales Obstacles. The entire U.S. argument on this point is a one sentence disagreement with
China's argument, but this one sentence largely ignores the redetermination itself. MOFCOM's
redetermination drew permissible inferences based on the loss and then partial regaining of
market share, MOFCOM was also aware of the expl icit statement by the Chinese producers in their
petition that during Q1 2009, "the petitioners had to reduce product price to maintain their market
share under the impact of the unfair trade pr actice of the two subject countries." The
United States never discusses any of these facts, and only asserts that there must have been
something else that was not disclosed and something else that needed to be discussed. But an
assertion is not an argument, and so this U.S. claim must fail.

- C-18 -

ANNEX C-3
EXECUTIVE SUMMARY OF THE ORAL STATEMENTS OF CHINA AT THE SUBSTANTIVE MEETING
I. MOFCOM PROPERLY ANALYZED PRICE EFFECTS
1. Nothing in the relevant WTO texts supports the U.S. position that MOFCOM must compare
relative prices as a necessary part of price effects analysis. The U.S. reading has no basis in the
plain meaning of the text, which gives administering authorities discretion to choose the analytic
approach. Moreover, the Appellate Body addres sed precisely this interpretive point in China –
GOES, and has already rejected the U.S. position. The United States also complains about what
the absence of findings about price undercutting implies for MOFCOM's conclusions. But this
argument fails. First, it incorrectly assumes there was some detailed pricing information that
MOFCOM ignored. Second, this argument also incorrectly assumes more detailed information
would have somehow been adverse. The U.S. argument is thus really about requiring authorities
to engage in a certain type of analysis and requ iring authorities to gather data to conduct that
analysis. Particularly in the context of a redetermination looking back at a period of time several
years old, it is completely reasonable for an authority to make a new determination based on
information already on the record before the authority.
2. Turning to the factual issues, MOFCOM's redetermination properly demonstrated that subject
imports had "explanatory force" for the adverse price effects found, including the findings of price
suppression. Contrary to the repeated U.S. argume nts, MOFCOM did not rely on volume alone to
establish price effects. The volume evidence in combination with the established competitive
relationship explained the nearly one-to-one relationship between subject import gains and
domestic industry losses. The United States tr ies to dismiss the evidence of the strongly
competitive relationship, but these arguments cannot be reconciled with the undisputed findings
by MOFCOM.
3. Collectively, the evidence of (1) a single like product that rested on the factual finding of
substitutability among different supply sources; (2) cumulation that rested on the factual findings
of substitutability and a competitive relationsh ip among subject imports sources and with the
domestic products; (3) U.S. producer testimony of a "highly competitive" relationship among
supply sources; (4) parallel pricing trends over the 2006 to 2008 period; (5) documents revealing
how purchasers leveraged subject import prices to affect domestic prices; (6) overlapping
customers that bought from both domestic and su bject imports, highly their substitutability; and
(7) nearly one-to-one market replacement, supp orts the explanatory force of subject imports.
MOFCOM's demonstration of "explanatory force" thus rested on multiple, consistent, and mutually
reinforcing factual findings. The U.S. argues unsuccessfully that the difference between percentage
changes in AUVs over one comparison period in Q1 2009 somehow trumps the seven other factual
findings made by MOFCOM. But this one fact in isolation does not undermine the collective weight
of the other evidence that strongly support the existence of the competitive relationship.
4. The United States attacks each of these multiple MOFCOM factual findings in isolation with
its argument that the market share responses to di verging prices in the first quarter of 2009 does
not support a finding that subject imports and the domestic like product had a competitive
relationship. But this repeated U.S. argument ul timately fails for several reasons. First, the
United States misapplies certain comments by the Appellate Body that addressed the reasoning in
the original MOFCOM determination about the effects of "the prices of subject imports," and not
about the effects of subject imports more generally. The redetermination has substantially
changed and clarified the focus on how the subject imports were having adverse price effects --
clarifications that were not before the Appellate Body. In particular, the redetermination both
explained in more detail the evidence supporting the finding of competitive relationship, and
addressed specifically and at some length the reasons for giving less weight to the divergent AUV
trends in the first quarter of 2009. Moreover, the Appellate Body questioned whether the prices of
subject imports "adequately explained" the price suppression and depression, and thus focused on
the adequacy of the available data and explanatio n. The Appellate Body could not have evaluated
a different set of findings from a different determination, which is why the focus was on the
adequacy of the specific determination before the Appellate Body.

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5. Second, the U.S. argument misrepresents the domestic industry market share response by
comparing end points – first quarter 2008 to first quarter 2009 – rather than looking, as MOFCOM
did, to the full loss in market share over the en tirety of 2008. Third, MOFCOM never indicated that
this recapture of market share was only 1.04 percentage points; the increase compared to 2008 as
a whole was necessarily a more substantial 5.15 out 5.65 percentage points regained from subject
imports.
6. The United States simply fails to acknowledge the reasonable inferences to be drawn from
MOFCOM's findings as a whole. The Appellate Body has recognized the importance of considering
the evidence as a whole, explaining that "a piece of evidence that may initially appear to be of
little or no probative value, when viewed in isolation, could, when placed beside another piece of
evidence of the same nature, form part of an overall picture that gives rise to a reasonable
inference . . . ." The United States ignores this key principle when repeatedly considering each
point in isolation, but never stepping back to consider them as a whole. But each MOFCOM finding
reinforces the other and contributes to the overal l demonstration of the "explanatory force" of
subject imports. The United States cannot rebut the probative value of volume and market share
trends by mechanically considering those trends alone, ignoring the extensive other evidence and
findings that supported MOFCOM's overall determination about adverse price effects.
7. Thus, the MOFCOM findings of price suppression in 2008 and early 2009 and price
depression in early 2009 both rest on a proper foundation of evidence that establishes the
"explanatory force" of the subject imports. MOFCOM discussed the evidence supporting its findings
and reasonably addressed the potentially contrary evidence, in the end making a reasonable and
balanced judgment about all of the evidence.
II. MOFCOM PROPERLY ANALYZED ADVERSE IMPACT
8. The United States has not successfully rebutted China's argument that this new claim is not
properly before this Article 21.5 panel. Prior WTO precedent and fundamental fairness do not allow
a complaining country to avoid a claim initially, luring the defending country into reasonably
believing there was nothing that needed to be ch anged regarding that aspect of a measure, and
only then raising that new claim in an Article 21.5 proceeding when the defending country no
longer has any chance to bring that aspect of its measure into compliance. Yet that is precisely
what the United States is trying to do in this dispute with its new claim on adverse impact.
9. The U.S. efforts to show the MOFCOM finding on adverse impact was somehow "new" and
thus permissible all fail. Contrary to the U.S. allegation, there is no new focus on 2008 in the
MOFCOM discussion of injury; the injury discussion is essentially unchanged, reciting the same key
facts that highlight the declines at the end of the period. Thus the U.S. argument that the
redetermination somehow changed reduces to a sing le point: that because MOFCOM deleted a few
references to "low priced imports," these minor changes somehow created a "new" determination
on this issue. This U.S. argument, however, is wrong. First, the MOFCOM discussion of material
injury was always focused on the subject import s, not on the prices of the subject imports.
Second, even if one were to assume that "low priced imports" were not just a reference to unfairly
traded imports more generally, which it was, the references to "low price" refer to the price of
subject imports, an issue that has no particular relevanc e when analyzing the in jury suffered by a
domestic industry under Article 3.4 and 15.4.
10. But regardless of the Panel ruling on this important procedural issue, the U.S. claim on
adverse impact also fails on its merits. First, the United States alleges without any support that the
earlier trend may have been unsustainable, but this theory several problems. First, this theory is
inconsistent with the evidence of strong rates of growth in total consumption in China, increasing
22.8 percent in 2007 and another 18.1 percent in 2008. Moreover, no party during the original
proceedings before MOFCOM submitted any eviden ce contradicting this basic point about the
growing market or in anyway suggesting the growth would not continue. Second, the
United States also points to large increases in 2007, but in doing ignores the basic context of a
growing market. Third, beyond this context of ev aluating trends in light of the growing market,
MOFCOM also properly evaluated the trends for the injury as a whole. Contrary to the U.S.
argument, this focus on the industry as a whole does not represent side stepping the issue. Finally,
any positive trends did not "outweigh" the negative trends. MOFCOM reasonably and persuasively
explained why, after considering all the factors as a whole, it found the domestic industry to be
injured.

- C-20 -

III. MOFCOM PROPERLY ANALYZED CAUSATION
11. The United States makes only two arguments ab out the basic causal link and they both fail.
As we have just discussed in some detail, the flawed U.S. argument about MOFCOM's price effects
findings addresses individual pieces of evidence in isolation rather than look at the totality of the
record and all of MOFCOM's findings as they relate to price effects.
12. So in fact, other than repeating its price effects arguments, the U.S. argument about causal
link actually reduces to a single argument. The United States challenges MOFCOM's analysis of
economies of scale, but this argument also fails to address what MOFCOM actually found. In
particular, this U.S. argument does not address MOFCOM's finding that subject imports captured
tonnage and market share that affected the domestic industry as a whole, and deprived the
domestic industry of its ability to fully realize the potential on its investments in new capacity.
MOFCOM reasonably and objectively noted this qualitative connection between the growing volume
and market share of subject imports, the corresp onding lack of economies of scale from new
investments, and the adverse effects suffered by th e domestic industry. On both of these issues,
the United States essentially argues that simply by articulating another way to view the evidence,
it has somehow shown that MOFCOM's analysis is necessarily and unavoidably flawed. But this
approach is wrong. MOFCOM reasonably addres sed all the evidence, considered these other
perspectives, and reasonably concluded that subject imports were significantly contributing to
adverse effects being suffered by the domestic industry.
13. MOFCOM properly considered and distinguished the effects of subject imports from the effect
of domestic industry expansion of capacity. The entire U.S. argument on this point is really little
more than a technical dispute over the MOFCOM methodology for showing that subject imports
contributed significantly to the inventory overhang, even after taking into account the expansion of
domestic capacity.
14. Before moving to the specifics of the U. S. arguments about MOFCOM's methodology and
why these arguments are wrong, it is helpful to step back and put this argument into an overall
context. The dispute is not about whether MOFCOM "separated and distinguished;" the
United States admits as much, acknowledging that MOFCOM addressed this issue with its
"non-attribution analysis" about alleged overexpansion and overproduction. Rather the dispute is
entirely over how MOFCOM did so. But in doing so, the United States has made this issue entirely
about the methodology chosen, and ignores the repe ated guidance from the Appellate Body that
the AD Agreement does not specify the methodol ogy, and will not second guess any reasonable
and objective method. Thus, China need not show that its method was the only way, or even the
best way. China need only show that MOFCOM properly established the facts in question, and then
evaluated them in an unbiased and objective manner. As we will now demonstrate, MOFCOM more
than met this standard.
15. This U.S. non-attribution argument reduces to disagreements about two specific aspects of
the MOFCOM methodology: first, the use of 2007 as the base year; and second, the combined
consideration of 2008 and Q1 2009. Since the United States did not even attempt to address
China's other arguments, the U.S. claim comes down to these technical disputes about a particular
methodology. But MOFCOM's choice of 2007 as the baseline rests on positive evidence and reflects
objective examination of that evidence. MOFCOM fully explained its choice. Although using 2006
would also have been reasonable, that base-line would have had several serious problems. Thus,
MOFCOM chose 2007 because going back to 2006 would have introduced more uncertainty in this
analysis, since the further back in time the auth ority goes, the greater the risk of "some other
factors" playing a role. The United States also makes much of MOFCOM's choice to consider 2008
and Q1 2009 as a whole, arguing that the cont ribution of subject imports to the inventory
overhang in Q1 2009 alone would have been smaller. As with the choice of 2007 as a base year,
MOFCOM fully explained its choice to consider inventory build-up over a 15-month period, and that
explanation is reasonable and objective.
16. MOFCOM also properly considered and distin guished the effects of subject imports from the
effects of non-subject imports. MOFCOM reasonably found that if large volumes of non-subject
imports were having no effects in 2006 and 2007, and did not gain any market share in 2008, then
non-subject imports were not the problem. The United States relies entirely on the argument that
since non-subject imports had large volume, and allegedly had lower prices, then non-subject
imports must have mattered more. This argument fails for many reasons. First, the U.S. argument

- C-21 -

still does not address and cannot explain how the larger volume and allegedly lower priced
non-subject imports did not have any adverse effect in 2006 and 2007. Second, the United States
incorrectly asserts that "MOFCOM did not examine market share data." MOFCOM could not have
noted the shifts in the market share without ex amining the market share data. Third, MOFCOM
focused its analysis on shifts in market share because those changes over time were more
probative on understanding why the performance of the Chinese industry changed over time. The
shifts in market share both took into account the growing market and allowed MOFCOM to see
what supply sources were gaining and losing market share over time. Fourth, MOFCOM correctly
noted that the shift in market shares in 2008 was the key fact to consider. The year 2008 was
when the domestic industry lost 5.65 percentage po int of market share – this is the adverse effect
to be explained. And in 2008, subject imports gain ed 5.56 percentage points of market share,
while non-subject imports gained only 0.09 percentage point of market share.
IV. MOFCOM PROPERLY DISCLOSED ALL ESSENTAL FACTS
17. Even after two submissions, the United States still has not set forth a prima facie claim
about the failure to disclose "essential facts." Ev en the expanded discussion in the U.S. Second
Written Submission continues to make an overarching fundamental error -- there is not a single
sentence explaining why each of the seven facts at issue should be considered "essential." Many of
the U.S. arguments are basically that public su mmaries of facts are somehow not sufficient, and
that the underlying data needed to be disclosed. When arguing for disclosure of facts that the
authority has deemed -- without any challenge -- to be confidential, the complaining party has a
particular burden to articulate clearly and explicitly why that particular fact – as opposed to its
public summary – is in fact essential. Yet the United States has made no effort to do so. For these
reasons, China continues to believe the Panel should reject the U.S. claim as failing to state a
prima facie case. But even if the Panel believes th e United States has finally established a
prima facie case, the United States still has not sufficiently demonstrated that the facts at issue
were actually "essential" or that the facts were not sufficiently disclosed. We discussed each of the
seven specific facts at issue in our written submissions. We will not repeat that level of detail now.
The consistent theme in the U.S. argument is to dismiss without serious discussion what MOFCOM
actually disclosed and just insist that the undisclosed confidential underlying data was somehow
"essential." Our written submission documents fact by fact what MOFCOM said and why it was
sufficient.
V. MOFCOM PROPERLY DISCLOSED THE FACTUAL AND LEGAL BASIS OF ITS
DETERMINATION
18. The United States has also still not stated a prima facie case for its claim about the
disclosure of the basis for the determination, of fering only brief and insufficient one sentence
statements that certain points were important to the final decision by MOFCOM, without any
discussion of why. The United States has not actually responded to this argument, and instead
uses its Second Written Submission in a still unsuccessful attempt to state its claim for the
first time. But the U.S. effort fails. At the outset, we note that the United States only attempts to
rehabilitate three of the five specific claims made initially, indicating that it has now abandoned the
two other specific claims. The U.S. efforts to rehabilitate the first three of these specific claims still
fail to state a prima facie case. The U.S. Second Written Submission does not cure this
fundamental defect of not explaining why certain points were material, and instead repeats the
defect of assertion without explanation or argument. Even if the Panel itself believes these points
are material, it is not this Panel's job to make the U.S. arguments for the United States, and
certainly not at this late stage of the proceeding. If the Panel cannot find any explanation of why
the United States believes certain points to be material in the written submissions already made, it
is now too late for the United States to attempt to make such a showing now. But if the Panel
decides to consider the merits, these claims still fail. We discussed each of the three remaining
claims at issue in some detail in our written submissions. We will not repeat that discussion here.
We urge the Panel to consider that explanation of why MOFCOM's discussion was sufficient.

- C-22 -

ANNEX C-4
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF CHINA AT THE INTERIM REVIEW MEETING
1. China would like to thank the Panel for arranging this meeting on the interim report. We
realize such meetings are not common. But given the circumstances of this dispute, with the
termination of the challenged measures occurring during the pendency of this Article 21.5
proceeding, China believes it is useful and appr opriate for the parties and the Panel to meet one
more time to discuss how most appropriately to take into account this important recent
development.
2. As we all know, the interim report was released on 17 March 2015. It concerns measures
first taken by China on 10 April 2010, specifically anti-dumping measures on imports of grain
oriented flat-rolled electrical steel originating in both Russia and the United States, as well as an
anti-subsidy measure on the same product originating in the United States. This Article 21.5
proceeding has concerned China's actions in seeking to bring those measures into conformity as
first recommended by the Panel and Appellate Body back in 2012.
3. We now have the interim report concerning China's implementation efforts. Although China
is disappointed in the Panel's findings, China nevertheless appreciates the role of WTO dispute
settlement – and the efforts by Panels – in providing an orderly way to address and resolve
disputes between Members. We have made some specific comments on precise aspects of the
interim report that we hope the Panel will consider.
4. Beyond these specific comments, however, there is a separate issue concerning the Panel's
recommendation in its interim report. We believe important events have occurred and require the
Panel to reconsider of this issue. In the last paragraph of the interim report, paragraph 8.6, the
Panel recommends that China "bring its measures into conformity with its obligations under the
Anti-Dumping and SCM Agreements." China suggest s that this paragraph be struck from the
report, a change that is necessary in light of recent events and consistent with past practice.
5. As noted, the anti-dumping and anti-subsidy measures at issue are now more than
five-years old. Consistent with the obligations under Article 11.3 of the Anti-Dumping Agreement
and Article 21.3 of the SCM Agreement, China terminates anti-dumping and anti-subsidy measures
after five years unless it is demonstrated that they remain necessary to address dumping,
subsidization, and injury. China takes these obligations seriously and has implemented them into
its national law as Article 48 of its AD Regulation and Article 47 of its CVD Regulation.
6. The process for determining whether an expiry review was necessary to consider the matter
was initiated on 10 October 2014, as announced in Public Notice No. 67 issued by MOFCOM. Under
that process, parties had 60 days prior to the five-year expiration date of the measures at issue to
file a written application for an expiry review to MOFCOM. No such application was submitted by
any party. As a consequence, on 10 April 2015, MOFCOM issued Public Notice No. 11 of 2015
informing the public that no application had been filed for expiry review by the domestic industry
or by any natural person, legal person or organiza tion on behalf of the domestic industry within
the time limit as specified. Under these circumst ances, MOFCOM decided not to launch an expiry
review, but instead terminated the measures at issue effective as of 11 April 2015. China
submitted this termination notice and an English translation to the Panel and the United States on
21 April 2015.
7. There are several reasons for the Panel to cons ider this important piece of evidence. First,
the evidence simply did not exist until several days ago, and could not have been submitted, but is
nevertheless highly relevant. Second, this evidence goes to the essence of this Article 21.5
proceeding – the ongoing imposition of the chal lenged anti-dumping and anti-subsidy measures.
Those measures are no longer being imposed. Thir d, this Article 21.5 proceeding is still ongoing
and therefore all parties have a chance to be heard and there is no unfairness to anyone.

- C-23 -

8. The specific measures that led to this dispute have thus been terminated. Such measures
once terminated cannot simply be revived. Rath er new anti-dumping and anti-subsidy measures
can only be imposed upon completion of a new investigation, and new affirmative findings of
dumping/subsidy, injury, and causality are made . MOFCOM has never imposed anti-dumping and
anti-subsidy measures absent such complete procedures.
9. Given the termination of the measures, China th erefore requests that the Panel take steps to
modify its interim report to reflect this reality, and that the Panel remove any recommendation
that China bring its measures into conformity. China has already done so. There are no longer any
"measures" in effect to which such a recommendation would apply.
10. Such action would be consistent with the limits of the Panel's mandate and past practice.
China notes that panels have repeatedly found it appropriate to abstain from issuing any
recommendations regarding terminated measures. And the Appellate Body has in fact
distinguished the question of whether a panel can make a finding concerning an expired measure
from the question of whether a panel can make a recommendation relating to an expired measure.
For example, in US – Certain EC Products , the Appellate Body reversed the panel's decision to
make a recommendation pursuant to Article 19.1 of the DSU on the grounds that the panel had
already found that the measure at issue in that dispute had expired. The same principle has
extended to Article 21.5 proceedings under the Dispute Settlement Understanding.
11. China believes the same facts exist here, and that the Panel should revise the interim report
to reflect the recent developments. In China's view, the final report should reflect the current
reality. First, the specific measures the United States challenged have been terminated. Second,
given the termination of the measures, the Panel has no need to make any recommendations
regarding China bringing its measures into compliance with its obligations under the WTO
agreements. Third, given the termination of the measures. China in fact is now already in
compliance with its obligations. Any prior recommendations relate to measures that no longer exist
and therefore cease to be operative.
12. China would also like to respond to some of the U.S. comments on the interim report
concerning recommendations. At paragraphs 8-12 of its comments, the United States agrees with
China that there is no need for this Panel to make any recommendation and that paragraph 8.6 of
the interim report should be deleted. These comments by the United States, however, imply that
the original recommendations should remain operative. That is not correct.
13. China would like to make clear there is no longer any disputed measure in effect to which
the original recommendations could still apply. In accordance with the normal operation of Chinese
law, these measures were in effect for the five years permitted by Chinese law. No party submitted
an application to renew these measures and so they have been terminated.
14. Given these facts, the measures that were th e subject of this proceeding no longer exist,
and will not exist upon release of the Panel's final report. That is why China requests that the
Panel take steps to modify its interim report to reflect this reality, and namely that it remove any
recommendation that China bring its measures into conformity. There are no longer any
"measures" in effect to which such a recommendation would apply. The United States argues in
paragraph 12 of its comments that the original recommendations remain in effect, but
acknowledges that is true only until "a Member has brought its measures found to be inconsistent
by the DSB into full compliance with its WTO obligations." Termination of the measures at issue in
this dispute brings China into full compliance.
15. For the same reasons, there is no need for the new language that the United States has
suggested. In paragraph 10 of its comments the United States has proposed new language that is
not appropriate. Given that the measures no longer exist, there is no factual or legal basis for a
statement that "China has failed to bring its measure" into compliance, as the United States has
suggested.
16. We appreciate the Panel's time in considering these new facts and in reconsidering the
language currently found in paragraph 8.6 of the Panel's interim report.

- D-1 -

ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Integrated executive summary of the arguments of the European Union D-2
Annex D-2 Integrated executive summary of the arguments of Japan D-6

- D-2 -

ANNEX D-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION
1. A N INVESTIGATING AUTHORITY'S PRICE EFFECTS ANALYSIS MUST MEET SUBSTANTIVE AND
PROCEDURAL REQUIREMENTS LAID DOWN IN THE ADA AND SCM AGREEMENTS
1. Articles 3.2 ADA and 15.2 SCM require the investigating authority to undertake a price
effects analysis as part of an injury determination. A price effects analysis under Article 3.2 ADA
and Article 15.2 SCM must meet several substa ntive and procedural requirements: (i) the
investigating authority must assess whether domestic prices are depressed or suppressed by
subject imports; (ii) this assessment must be "rigorous" and entail an objective examination based
on positive evidence; and (iii) the investigating authority's consideration must be disclosed to the
parties so that they can know whether the auth ority has met these substantive, procedural and
evidentiary requirements.
2. The Appellate Body explained in China – GOES that the analytical and evidentiary obligations
under the ADA and SCM Agreements discipline an investigating authority's requirement to
"consider" (i.e. to " take something into account in reaching its decision")
1 price effects under
Articles 3.2 and 15.2. Articles 3.1 and 15.1 ensu re that, although investigating authorities need
not make a definitive determination in respect of price effects, this "does not diminish the rigour
that is required of the inquiry under Articles 3.2 and 15.2", 2 and it "does not diminish the scope of
what the investigating authority is required to consider".3
3. The text and context of Article 3.2 and Article 15.2, as clarified through jurisprudence,
require an authority to examine whether any obse rved price depression or price suppression is
attributable to subject imports. In China – GOES, the Appellate Body explained that "consideration
of significant price depression or suppression under Articles 3.2 and 15.2 encompasses by
definition an analysis of whether the domestic prices are depressed or suppressed by subject
imports".4 The Appellate Body clarified that "it is not sufficient for an investigating authority to
confine its consideration to what is happening to domestic prices for purposes of considering
significant price depression or suppression".5
2. I S THE INVESTIGATING AUTHORITY REQUIRED TO CONDUCT A PRICE COMPARISON IN ORDER TO
DETERMINE WHETHER PRICE DEPRESSION OR PRICE SUPPRESSION IS THE EFFECT OF THE SUBJECT
IMPORTS

4. In the view of the European Union, an objective authority cannot conclude that price
suppression or price depression is "the effect" of the subject imports without making a proper
comparison of the prices of subject imports with the prices of the domestic like product.
5. In the original dispute the Appellate Body noted that panels must allow for the possibility
that either the price or the volume of subject imports is sufficient by itself to sustain a finding that
price suppression or depression is "the effect" of subject imports.
6 The Appellate Body also clarified
that a finding that price suppression or price depr ession is the effect of the subject imports does
not require a finding of actual price undercutting. 7 In the EU's view, however, neither of these
findings has the implication that an objective investigating authority can dispense with comparing
the prices of the subject imports and the domestic like products.

1 Appellate Body Report, China – GOES, para. 130 (emphasis original).
2 Ibid. para. 130.
3 Ibid. paras 131-132 (emphasis original).
4 Ibid. para. 142.
5 Ibid. para. 138 (emphasis original).
6 Ibid. para. 216.
7 Ibid. para. 206.

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6. While the Appellate Body referred to the possibility that a finding that price depression or
price suppression was the effect of subject imports could be sustained by evidence relating to the
volume of those imports, it recognised that
[…] Given the inter-relationship of product volumes and prices, it is not
clear that an investigating authority may in practice easily separate and
assess the relative contribution of the volumes versus the prices of
subject imports on domestic practices.
8
7. Because of the inter-relationship of product volumes and prices observed by the Appellate
Body, the effects of the volume of subject imports cannot be properly assessed without talking into
account also the effects of the prices of such imports. In turn, the effects of the subject imports'
prices on the prices of the domestic like product cannot be properly assessed in the absence of any
price comparison.
8. In particular, subject imports cannot have the effect of supressing or depressing the prices
of the domestic like products unless they compete on price with them. Yet, unless the investigating
authority has conducted a proper price comparison, it will not be possible to ascertain the nature
and the extent of competition between subject imports and the domestic like products. The
original dispute illustrates this. The Appellate Body observed that:
[…] The fact that there was a substantial divergence in pricing levels over
the period could suggest that the two products were not in competition
with each other, or that there were other factors work. […]
9
9. The Appellate Body went on to quote with approval the observation made by Japan to the
effect that:
[…] the fact that the price of subject imports was higher than the price of
domestic like products in the first quarter of 2009 "may rather indicate
that both products are not in competition with each other, and therefore,
price depression or price suppression of the domestic products could not
be the effect of the imports."
10
10. MOFCOM's Re-determination does not appear to address the issues that were raised by the
Appellate Body in view of the substantial price differentials shown by the evidence relied upon by
MOFCOM in its original determination. Instead, MOFCOM appears to have disregarded such
evidence in its Re-determination.
11. While the European Union does not put into question that an investigating authority has a
certain margin of discretion in choosing a methodology for analysing the effects of subject imports
on domestic industry prices;
11 the ADA and SCM do not prescribe any precise methodology for
establishing the existence of price depression an d suppression. This does not mean, contrary to
what appears to be China's position, that a comp arison of the prices of domestic and imported
products is never required , so that the investigative authorities enjoy complete discretion to
decide whether or not to make such a comparison.
12. Second, contrary to China's position in this case, the European Union does not understand
the Appellate Body in China – GOES, to have stated or even implied that an investigating authority
has in all cases a full discretion under Article 3.2 ADA and 15.2 SCM to dispense with comparing
the prices of the subject imports and the do mestic like products. In the view of the
European Union, rather the contrary would be true in most cases, based on the guidance provided
by the Appellate Body.

8 Appellate Body Report, China – GOES, footnote 346.
9 Ibid. para. 226.
10 Ibid. footnote 375.
11 Panel report, China – Autos (US), para. 7.255.

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13. The Appellate Body noted that it "[could] conceive of ways in which an observation of
parallel price trends might support a price depression or price suppression analysis" 12, despite the
absence of price undercutting. For example, according to the Appellate Body,
The fact that prices of subject imports and domestic products move in
tandem might indicate the nature of competition between the products,
and may explain the extent to which factors relating to the pricing
behaviour of importers have an effect on domestic prices.
13
14. MOFCOM's redetermination purports to rely in part on a finding of parallel pricing. A proper
finding of parallel pricing, however, would have to be based on a price comparison at different time
points during the investigation period. Yet MOFCOM did not conduct any such comparison. Merely
comparing the increase or decrease rates expres sed in percentage terms, without disclosing the
initial price levels to which those rates refer, which is what MOFCOM appears to have done in this
case, is of limited value in order to assess the nature and the extent of competition between the
subject imports and the domestic like products. Where, as it appears to be the case in this dispute,
there is a substantial price differential between su bject imports and the domestic like product, the
mere fact that prices move in the same direction at similar rates could be due to other factors and
does not provide conclusive evidence of price competition. In other words, it does not have, of
itself, sufficient "explanatory force".
15. Similarly, the relevance of anecdotal evid ence on a supposed policy of price undercutting,
such as that relied upon by MOFCOM in this case, cannot be properly assessed without taking into
account also the actual differences in prices between the subject imports and the domestic like
products. Again, this is confirmed by the findings of the Appellate Body in the original dispute,
where the Appellate Body noted that:
[…] Even though we consider that a policy of price undercutting can
explain depressive or suppressive effe cts on domestic prices even in the
absence of actual price undercutting, we do not see that, in the light of
the price dynamic in the first quarter of 2009, there was a basis to
conclude so in this case […]
14.
16. The analysis of the "price dynamic" ment ioned by the Appellate Body involves a price
comparison, which MOFCOM, however, refused to do in its Re-determination.
17. In U.S. – GOES the Appellate Body noted that, for the purpose of Articles 3.2 of the
AD Agreement and 15.2 of the SCM Agreement, "the investigating authority is not required to
conduct a fully fledged and exhaustive analysis of all known factors that may cause injury to the
domestic industry"
15. Nonetheless, the Appellate Body went on to stress that the Appellate Body
"may not disregard evidence that calls into ques tion the explanatory force of subject imports for
significant depression or suppression of domestic prices".16
18. A fortiori the investigating authority should not be allowed to disregard evidence relating to
the prices of subject imports that may call into qu estion the "explanatory force" of the volume of
subject imports. For the reasons explained above, a comparison of the prices of subject imports
with the prices of the domestic like product is manifestly relevant, and indeed indispensable, in
order to assess the effects of subject imports on the prices of domestic like products. Where an
investigating authority deliberately omits to include in its determination any such price
comparison, despite the fact that the necessary evid ence is, or should have been, available in the
record, it can be surmised that such price comparison would have called into question the
authority's findings based on the volume of subject imports.

12 Appellate Body Report, China – GOES, para. 210.
13 Ibid. para. 210.
14 Appellate Body Report, China – GOES, para. 226.
15 Ibid. para. 151.
16 Ibid. para. 152.

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19. Selective use of data raises questions of bias and accuracy, and thus inconsistency with the
requirement to conduct an "objective examination" based on "positive evidence". 17 As such, an
investigating authority is obliged to consider arguments made by interested parties regarding the
accuracy and relevancy of data, and the determination "must be based on an examination of all
relevant evidence before the investigating authority".
18 An investigating authority must also
adequately explain its conclusions on the issues raised. 19 A panel is therefore tasked with
"examin[ing] whether the investigating authority's reasoning takes sufficient account of conflicting
evidence and responds to competing plausible explanations of that evidence".20

17 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 183.
18 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.397. (emphasis added) See also
Appellate Body Report, Thailand – H-Beams, para. 107.
19 Panel Report, EC – Salmon (Norway), paras 7.644-7.645.
20 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada), para. 97.

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ANNEX D-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN
I. INTRODUCTION
1. Due to its systemic interest, as well as its direct interest stemming from the DS454 dispute,
Japan addresses the proper legal interpretation of the Agreement on Implementation of Article VI
of the General Agreement on Tariffs an d Trade 1994 ("Anti-Dumping Agreement"), 1 and
respectfully requests that the Panel take Japan's views into consideration.
II. ARGUMENTS
A. The Consistency of MOFCOM's Price Effect s Analysis with Articles 3.1 and 3.2
of the Anti-Dumping Agreement
2. On the topic of the price effects analysis co nducted by the Ministry of Commerce of the
People's Republic of China ("MOFCOM"), the requirement under Article 3.1 of the
Anti-Dumping Agreement is for an investigating authority to determine "the effect of the dumped
imports on prices in the domestic market for like products", and do so "based on positive evidence
and … an objective examination". Article 3.1 serves as "an overarching provision that sets forth a
Member's fundamental, substantive obligation" with respect to the injury determination, and
"informs the more detailed obligations in succeeding paragraphs".
2
3. As an initial matter, "positive evidence" must be both pertinent and of reliable quality; 3 and
an "objective examination" requires that an investigating authority's analysis "conform to the
dictates of the basic principles of good faith and fundamental fairness", and be conducted "in an
unbiased manner, without favouring the interests of any interested party, or group of interested
parties, in the investigation".
4 M O F C O M ' s a p p a r e n t l a c k o f e v i dence and disregard for contrary
evidence in its price suppression and price depression determinations appear to violate the
"overarching" and "fundamental" principles of Article 3.1 to base determinations on "positive
evidence" and an "objective examination".
4. Turning to the substantive inquiry regarding "the effect of the dumped imports on prices in
the domestic market for like products", Article 3.2 sets forth three price effect factors that the
investigating authority must consider to determine whether such an "effect" exists: price
undercutting, price depression, and price suppression. Article 3.2 also makes clear that "[n]o one
or several of these factors can necessarily give decisive guidance". In the current case, MOFCOM
claims to have reached its price effects determination on the basis of finding price suppression and
price depression, so Japan focuses on those two factors.
5. The Appellate Body has made clear that, in order to find price suppression or price
depression, "an investigating authority is required to examine domestic prices in conjunction with
subject imports in order to understand whether subject imports have explanatory force for the
occurrence of significant depression or suppression of domestic prices ",
5 and " is required to
consider the relationship between subject imports and prices of like domestic products, so as to

1 Japan notes that while it presents its arguments in terms of the applicable provisions of the
Anti-Dumping Agreement, the same arguments should apply to the corresponding provisions of the Agreement
on Subsidies and Countervailing Measures ("SCM Agreement").
2 Appellate Body Report, China – GOES, para. 126 (quoting Appellate Body Report, Thailand – H-Beams,
para. 106).
3 See Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 165; Panel Report,
China – X-Ray Equipment, para. 7.32; Panel Report, Mexico – Steel Pipes and Tubes, para. 7.213; Panel
Report, Mexico – Anti-Dumping Measures on Rice, para. 7.55.
4 Appellate Body Report, China – GOES, para. 126 (quoting Appellate Body Report, US – Hot-Rolled
Steel, para. 193). See also Appellate Body Report, EC – Fasteners (China), para. 414.
5 Appellate Body Report, China – GOES, para. 138 (emphasis added).

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understand whether subject imports provide explan atory force for the occurrence of significant
depression or suppression of domestic prices".6
6. Further, Japan submits that under Article 3.2, an investigating authority must find the actual
depression or suppression of domestic prices by dumped imports, as opposed to merely the
potential for such depression or suppression. In this regard, the text of Article 3.2 reads: "… the
investigating authorities shall consider … whether the effect of such imports is … to depress prices
to a significant degree or prevent price increases, which otherwise would have occurred , to a
significant degree".7 Use of the present tense phrases "is … to depress" and "is … to … prevent"
indicates that price depression and suppression must be actually occurring. Moreover, the phrase
"which otherwise would have occurred" relating to price suppression makes it clear that the prices
of domestic like products must actually be lower than the prices that would have existed had there
been no imports at dumped prices.
7. The Appellate Body has also explained that "a n 'effect' is 'a result' of something else",
8 and
that the provisions of Article 3 of the Anti-Dum ping Agreement "contemplate a logical progression
of inquiry leading to an investigating authority's ultimate injury and causation determination". 9 In
the context of Article 3, Japan emphasizes that th e actual depression or suppression of domestic
prices found to exist by an investigating authority must be attributable to dumping. Article 3.2
provides that "[w]ith regard to the effect of the dumped imports on prices, the investigating
authorities shall consider … whether the effect of such imports is otherwise to" depress or suppress
domestic prices. 10 The reference to "such imports" is plainly a reference to "dumped imports".
Article 3.1 also provides that the overall inqu iry is with respect to "the effect of the dumped
imports on prices in the domestic market for like products". 11 Thus, the required effects on
domestic prices must be attributed to dumping; otherwise, a large volume of imports at
non-dumped prices could justify the imposition of anti-dumping measures. As such, it should be
evident that investigating authorities must consider the degree of dumping, and accordingly the
prices of dumped imports, in order to conclude that dumped imports have "explanatory force" for
the suppression or depression of domestic prices.
8. Japan is also of the view that, to properly fi nd price suppression or depression by subject
imports, an investigating authority must examine the competitive relationship between the subject
imports and the domestic like products . It must find that subject imports actually compete with
the domestic like products, and have evidence that subject imports actually substitute for the
domestic like products. In this regard, an investigating authority must consider the degree and
nature of competition along with the price differential between the subject imports and the
domestic like products. It must also assess evidence that is indicative of a lack of competition,
such as opposing price trends or parallel pric e trends of vastly different magnitudes between
subject imports and domestic like products.
9. As is evident from the above explanation, to establish the required competitive relationship
and price suppression or depression, an investigating authority cannot just rely on facts such as an
increase in subject import volume, parallel pricing between subject imports and domestic like
products, consumer overlap, or domestic pricing policies that take into account import prices.
10. To begin, with regard to China's assertion that a consideration of import volume alone may
be a sufficient basis for finding price suppression or depression, China erroneously conflates the
volume and price effects inquiries under Articles 3.1 and 3.2. If the volume of subject imports
were a sufficient basis to find price effects, th e price effects inquiry would become redundant and
the second sentence of Article 3.2 would be rendered inutile. This is clearly an untenable result.
Also, logically, an increase in volume or market share of subject imports does not necessarily
suggest that there is price suppression or depr ession, because the volume and market share of
subject imports may increase where the domestic industry fails to lower prices or restrain price
increases in response to imports.

6 Appellate Body Report, China – GOES, para. 154 (emphasis added).
7 Emphases added.
8 Appellate Body Report, China – GOES, para. 135. See also The Oxford English Dictionary, OED Online,
Oxford University Press, accessed 18 June 2014, http://www.oed.com/view/Entry/59664 (defining "effect" as
"[t]hat which results from the action or properties of something or someone").
9 Appellate Body Report, China – GOES, para. 128.
10 Emphases added.
11 Emphasis added.

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11. Next, on parallel pricing, prices moving in a "parallel" manner are merely evidence of a
correlation between the prices of subject imports an d the domestic like product, not that prices of
the former are having effects on prices of the latter. The panel in China – Autos (US) concurred.12
Similarly, as the same consumer may purchase different kinds of "like" products, consumer
overlap does not mean that price competition exists. Nor are pricing policies alone a sufficient
basis for finding price competition, because a domestic industry may naturally consider a variety of
other prices – including import prices, prices of related but non-like products, and the overall price
index in general – in setting its own prices.
12. Japan also disagrees with China's contention that the competitive relationship required for
ascertaining price effects under Article 3.2 ca n simply be presumed from like product or
cumulation findings. As several panels have agreed , a like product finding does not mean that the
prices of subject imports and domestic like products may be appropriately compared for
ascertaining price effects.
13 For example, in China – X-Ray Equipment , the panel explained that
x-ray equipment used for scanning hand baggage at airports may be "like" x-ray equipment used
for scanning rail carriages, trucks, or marine cargo containers, but the former is not in competition
with or substitutable for the latter, such that prices of the latter may be considered to have effects
on prices of the former. As such, a "likeness" finding or an investigating authority's consideration
of competition and/or substitutability for purposes of a "likeness" finding does not automatically
ensure that price competition exists.
13. In sum, only upon conducting a complete examination as outlined above can an
investigating authority properly determine whether price suppression or price depression, and
consequently price effects, by subject imports exis ts within the meaning of Articles 3.1 and 3.2 of
the Anti-Dumping Agreement. Here, Japan agrees with the United States that MOFCOM appears to
have failed to satisfy its obligations in this regard.
B. The Consistency of MOFCOM's Impact Analysis with Articles 3.1 and 3.4 of
the Anti-Dumping Agreement
1. Whether the United States' Clai m Is Properly Before the Panel
14. With regard to China's argument that this Panel may not consider the United States'
Articles 3.1 and 3.4 claims concerning MOFCOM's impact analysis, Japan disagrees because
MOFCOM's redetermination is a "new and different"
14 measure, as it was issued in response to the
recommendations by the dispute settlement body ("DSB") and plainly separate from MOFCOM's
original determination. Moreover, MOFCOM made several changes to the impact analysis in its
redetermination, including elimination of references to the "low price" of subject imports. Further,
MOFCOM's impact analysis in its redetermination may also be considered "new and different" in
the sense that it is affected by MOFCOM's revised dumping margins
15 and MOFCOM's revised price
effects analysis.
2. The Merits of the United States' Claim
15. Turning to the merits of the United States' cl aim, an objective examination of impact must
"include[] and weigh[] each of the 16 injury indicia [listed in Article 3.4]", 16 and where there are
"positive movements in a number of factors", the investigating authority must provide "a
compelling explanation of why and how, in light of such apparent positive trends, the domestic
industry [is], or remain[s], injured".
17 Thus, here, the Panel should examine whether MOFCOM
adequately considered and weighed each of the 16 injury indicia, including the positive trends

12 See Panel Report, China – Autos (US), para. 7.265.
13 See Panel Report, China – X-Ray Equipment, paras. 7.51, 7.65-7.67; Panel Report, China –
14 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), paras. 41-42.
15 See the first sentence of Article 3.4 of the Anti-Dumping Agreement.
16 Panel Report, China – X-Ray Equipment, para. 7.216 (emphasis added). See also Appellate Body
Report, US – Hot-Rolled Steel, para. 197.
17 Panel Report, China – X-Ray Equipment, para. 7.195 (quoting Panel Report, Thailand – H-Beams,
para. 7.249) (emphasis added). See also id., para. 7.180; Panel Report, EC – Bed Linen (Article 21.5 – India),

- D-9 -

alleged by the United States, 18 and whether MOFCOM provided the required " compelling
explanation".
C. The Consistency of MOFCOM's Causation Analysis with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement
1. Causal Link
16. With respect to the causal link between subjec t imports and material injury suffered by the
domestic industry, first, Japan concurs with the United States that a price effects determination
inconsistent with Articles 3.1 and 3.2 of the Anti-Dumping Agreement necessarily results in a
causation determination inconsistent with Articles 3.1 and 3.5.19
17. Second, with respect to the United States' argument that MOFCOM improperly relied on a
conclusory assertion that subject imports preven ted the domestic industry from realizing the
benefits of economies of scale, even if this finding had evidentiary support, it is not sufficient to
establish a causal link under Articles 3.1 and 3.5 because Article 3.5 requires an investigating
authority to demonstrate that "the dumped imports are, through the effects of dumping, as set
forth in paragraphs 2 and 4, causing injury"
20 to the domestic industry. That is, an investigating
authority must base its causation determination on its examination of the volume of dumped
imports and their price effects, including their du mping margins. Otherwise, even a large volume
of imports at non-dumped prices could justify the imposition of anti-dumping duties, which is
clearly an untenable result.
18. Also, China's view that "whenever subject imports gain market share, the domestic industry
necessarily suffers from … economies of scale effect s" due to the "inherent" effect of the domestic
industry's "total fixed costs of production … being allocated over smaller output"
21 conflates the
volume analysis with the causation analysis. Under China's view, an increase in market share by
subject imports would always result in lack of economies of scale for the domestic industry, and
consequently always result in an affirmative causation finding, making the causation inquiry
redundant. Moreover, under China's theory, an investigating authority could affirmatively find
causation and impose anti-dumping duties any time import volumes increased because of the
"inherent" economies of scale effects, even if such imports took place at non-dumped prices.
Again, these are not tenable results.
19. Here, the Panel must consider whether MOFCOM properly found that dumped imports, by
virtue of their volume or price effects, caused material injury to the domestic industry. MOFCOM
seems to have failed to do so.
2. Non-Attribution
20. On non-attribution, an investigating authority must "separate and distinguish" the injurious
effects of subject imports from those of other kn own factors. This entails identifying the "nature
and extent" of the injurious effects of the non- attribution factor at issue and the "nature and
extent" of the injurious effects of the su bject imports, and distinguishing the two.
22 Accordingly,
the Panel here should carefully examine whethe r MOFCOM assessed the precise degree of the
injurious effects that may have been caused by the domestic industry's
overexpansion/overproduction and non-subject im ports, and separated and distinguished those
injurious effects from the injurious effects of th e subject imports. MOFCOM appears not to have
done so.

18 See United States' first written submission, paras. 91-105.
19 See Panel Report, China – GOES, para. 7.620; Panel Report, China – X-Ray Equipment,
paras. 7.239-7.240; Panel Report, China – Autos (US), paras. 7.327-7.328.
20 Emphasis added.
21 China's first written submission, para. 101.
22 See Appellate Body Report, US – Hot-Rolled Steel, paras. 226, 228. See also Panel Report, China –
Autos (US), para. 7.323 (citing Appellate Body Report, US – Hot-Rolled Steel, paras. 233-236).

- D-10 -

D. The Consistency of MOFCOM's Disclosu re of Essential Facts and Notice of
Final Determination with Articles 6.9, 12.2, and 12.2.2 of the
Anti-Dumping Agreement
21. With respect to the United States' argument that MOFCOM violated Article 6.9 of the
Anti-Dumping Agreement by failing to disclose a number of essential facts under consideration that
formed the basis for its redetermination, what is required under Article 6.9 is the disclosure of
"essential facts", meaning "those facts on the record that may be taken into account by an
authority in reaching a decision as to whether or not to apply definitive … duties", or "those facts
that are significant in the process of reaching a decision as to whether or not to apply definitive
measures".
23 Moreover, "[a]n authority must disclose such facts, in a coherent way, so as to
permit an interested party to understand the basis for the decision whether or not to apply
definitive measures", and "disclosing the essential facts under consideration pursuant to
Article[] 6.9 … is paramount for ensuring the ability of the parties concerned to defend their
interests".
24 Further, "[w]hat constitutes an 'essential fact' must … be understood in the light of
the content of the findings needed to satisfy the substantive obligations with respect to the
application of definitive measures … , as well as the factual circumstances of each case".25
22. As for the United States' argument that MOFCOM violated Articles 12.2 and 12.2.2 by failing
to explain the matters of fact and law and reasons that led to the imposition of duties in several
respects, with respect to a final determination, Article 12.2 states that an investigating authority
must provide a notice or separate report setting out "in sufficient detail the findings and
conclusions reached on all issues of fact and law considered material by the investigating
authorities",
26 and Article 12.2.2 further specifies that the authority's final report must detail " all
relevant information on the matters of fact and law and reasons which have led to the imposition
of final measures". 27 With regard to "matters of fact", Ar ticle 12.2.2 requires disclosure of "those
facts that allow an understanding of the factual basis that led to the imposition of final
measures",28 and "[w]hat constitutes 'relevant information on the matters of fact' is … to be
understood in the light of the content of the findings needed to satisfy the substantive
requirements with respect to the imposition of final measures …, as well as the factual
circumstances of each case". 29 Moreover, with regard to the obligation to disclose reasoning in
Article 12.2.2, "it is particularly important that the 'reasons' for rejecting or accepting … arguments
should be set forth in sufficient detail to allo w … exporters and importers to understand why their
arguments or claims were treated as they were, and to assess whether or not the investigating
authority's treatment of the relevant issue was consistent with domestic law and/or the
WTO Agreement".
30
23. In Japan's view, the facts identified by the United States were facts taken into consideration
by MOFCOM in its injury and causation determination and therefore should have been disclosed,
and the reasoning behind the assertions and findings identified by the United States should have
been explained in sufficient detail.
31 The Panel should carefully examine whether MOFCOM satisfied
its obligations in this regard.
III. CONCLUSION
24. Japan appreciates the Panel's consideration of Japan's views with regard to the
interpretation of the provisions of the Anti-Dumping Agreement addressed above.