CHINA – DEFINITIVE ANTI-DUMPING DUTIES ON X-RAY SECURITY INSPECTION EQUIPMENT FROM THE EUROPEAN UNION
Document: Report of the Panel
Date: 26 February 2013
Document codes: WT/DS425/R
Complainant: EU
Respondent: China
Third parties: Japan, U.S., Thailand, Norway, India, Chile
Dispute stage: Panel
Agreements cited: Art. 6.2, 6.4, 6.5.1, 6.9, 12.2.2, 3.1, 3.2, 3.4, 3.5  Anti-dumping

CHINA – DEFINITIVE ANTI-DUMPING DUTIES
ON X-RAY SECURITY INSPECTION EQUIPMENT
FROM THE EUROPEAN UNION

Report of the Panel

I. INTRODUCTION
1.1 On 25 July 2011 the European Union requested consultations with the Government of the
People's Republic of China ("Chin a") pursuant to Article XXIII:1 of the General Agreement on
Tariffs and Trade 1994 ("GATT 1994"), Article 17.3 of the Agreement on Implementation of
Article VI of the GATT 1994 ("Anti-Dumping Agreem ent") and Article 4 of the Understanding on
Rules and Procedures Governing the Settlement of Disputes ("DSU") with respect to the imposition of
definitive anti-dumping duties on x-ray security in spection equipment from the EU, pursuant to
Ministry of Commerce of the People's Republic of China ("MOFCOM"), Notice No. 1 (2011),
including its annex
1. The consultations were held on 19 September and 18 October 2011. The
consultations failed to resolve the dispute.
1.2 On 8 December 2011, the European Union requested, pursuant to Article 6 of the DSU and
Article 17.4 of the Anti-Dumping Agreement that th e Dispute Settlement Body (the "DSB") establish
a Panel to examine this matter2.
1.3 At its meeting on 20 January 2012, the DSB establis hed a panel pursuant to the request of the
European Union in document , in accordance with Article 6 of the DSU.
1.4 The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter refe rred to the DSB by the European Union in
document and to make such findings as will assist the DSB in making
the recommendations or in giving the rulings provided for in those agreements.
1.5 On 2 March 2012, the European Union request ed the Director-General to determine the
composition of the panel, pursuant to Article 8.7 of the DSU. This paragraph provides:
If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Council
or Committee, shall determine the com position of the panel by appointing the
panelists whom the Director-General considers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in th e dispute, after consulting with the parties
to the dispute. The Chairman of th e DSB shall inform the Members of the
composition of the panel thus formed no later than 10 days after the date the
Chairman receives such a request.
1.6 On 12 March 2012, the Director-General accordingly composed the Panel as follows:
 Chairman: Mr Eduardo Pérez Motta

 Members: Ms Andrea Marie Brown
 Mr Gilles LeBlanc

1.7 Chile, India, Japan, Norway, Thailand and the United States reserved their rights to
participate in the Panel proceedings as third parties.

1 WT/DS425/1.
2 WT/DS425/2.

1.8 The Panel met with the parties on 29-30 May and 11-12 September 2012. It met with the
third parties on 30 May 2012. The Panel issued its interim report to the parties on 28 November 2012.
The Panel issued its final report to the parties on 18 January 2013.
II. FACTUAL ASPECTS
2.1 On 28 August 2009, the Chinese producer Nuctech Company Limited (Nuctech) filed an
application with MOFCOM requesting the impositi on of anti-dumping measures on imports of x-ray
security inspection equipment originating in the European Union (Application)3.
2.2 MOFCOM issued a Notice of Initiation of an anti-dumping investigation on
23 October 20094. MOFCOM fixed a twelve-month Period of Investigation (POI) for dumping,
running from 1 January 2008 to 31 December 2008. The POI for MOFCOM's injury investigation
covered the period 1 January 2006 to 31 December 2008.
2.3 Two European Union exporters/producers - Smiths Heimann GmbH and Smiths Heimann
SAS - registered to participate as responde nts in MOFCOM's investigation. The
European Commission also registered as a responde nt. Only Smiths Heimann GmbH (Smiths) and
the European Commission participated in MOFCOM's investigation.
2.4 On 16 November 2009, MOFCOM issued a dumping questionnaire. On the same date,
MOFCOM's Bureau of Industrial Injury Inv estigation (BIII) issued a domestic manufacturers
questionnaire, a domestic importers questionnaire, and a foreign manufacturers/exporters (injury)
questionnaire.
2.5 Smiths filed its responses to the dumping 5 and injury 6 questionnaires on 30 December 2009.
Nuctech submitted its response to the domestic manufacturers' questionnaire on 19 December 2009 7.
No other exporter, producer or importer filed any questionnaire responses.
2.6 On 9 June 2010, MOFCOM published a prelim inary determination of dumping and injury,
and imposed provisional anti-dumping duties on the subject products8.
2.7 On 29 June 2010, Smiths submitted its comments on MOFCOM's preliminary
determination9,10. The European Commission submitted its comments on 25 June 2010.
2.8 MOFCOM conducted an on-site verification of Smiths' questionnaire responses from 18 to
25 August 2010.
2.9 On 14 September 2010, MOFCOM disclosed the e ssential facts that it would use to make a
final injury determination (Final Injury Disclosure) 11. On 25 September 2010, Smiths submitted its
comments on MOFCOM's Final Injury Disclosure12.

3 Application, Exhibit EU-3.
4 MOFCOM's Notice of Initiation, Exhibit EU-4.
5 Smiths' Questionnaire Response (Dumping) Exhibit EU-6.
6 Smiths' Questionnaire Response (Injury) Exhibit EU-7.
7 Nuctech's Questionnaire Response, Exhibit EU-8.
8 Preliminary Determination, Exhibit EU-12.
9 Smiths' Response to Preliminary Determination (Dumping), Exhibit EU-13.
10 Smiths' Response to Preliminary Determination (Injury), Exhibit EU-14.
11 MOFCOM's Basis for Final Injury Disclosure Exhibit, EU-15.
12 Smiths' Comments on Injury Disclosure, Exhibit EU-16.

2.10 On 28 December 2010, MOFCOM disclosed the e ssential facts that it would use to make a
final determination of dumping (Final Dumping Disclosure) 13. On 7 January 2011, Smiths filed its
comments on the Final Dumping Disclosure 14. The European Commission filed its comments on
6 January 2011.
2.11 On 23 January 2011, MOFCOM published its fi nal determination of dumping and injury
(Final Determination) 15. The Final Determination provides for the imposition of a 33.5% anti-
dumping duty on imports of x-ray scanners produced by Smiths. The Final Determination also
imposes a residual rate of 71.8% on imports of x-ray scanners from other sources in the
European Union.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. T
HE EUROPEAN UNION
3.1 In its written submissions, the European Union re quests the Panel to find that the measure at
issue in this dispute is inconsistent with the following provisions of the Anti-Dumping Agreement:
(a) Articles 3.1 and 3.2 of the Anti-Dumping Agreement, because MOFCOM failed to
make an objective examination on the basis of positive evidence of the price effects
of dumped imports;
(b) Articles 3.1 and 3.4 of the Anti-Dumping Agreement, since MOFCOM:
 failed to base its evaluation of the relevant factors and indices having a bearing on
the state of the domestic industry on positiv e evidence and thus failed to make an
objective examination of the impact of dumped imports on the Chinese industry;
 failed to examine all relevant factors listed in Article 3.4 of the Anti-Dumping
Agreement, in particular, the magnitude of the margin of dumping; and
 failed to make a proper evaluation of all in jury factors in context and thus failed
to reach a reasoned and adequate conclusion with respect to the state of the
Chinese industry.
(c) Articles 3.1 and 3.5 of the Anti-Dumping Agreement, since MOFCOM:
 failed properly to examine the causal re lationship between dumped imports and
injury; and
 failed to examine the relevance of ot her known factors in its non-attribution
analysis.
(d) Articles 6.5.1, 6.4 and 6.2 of the Anti-Dumping Agreement because MOFCOM:
 failed to ensure with respect to certain confidential information submitted by the
applicant in the Application and its anne xes, and the investigation questionnaire
and its annexes, that non-confidential summaries of confidential information were

13 MOFCOM's Dumping Disclosure to Smiths (BCI), Exhibit EU-17 and MOFCOM's Dumping
Disclosure to the European Commission, Exhibit EU-18.
14 Smiths' Comments on the Dumping Disclosure, Exhibit EU-19.
15 Final Determination, Exhibit EU-2.

sufficiently detailed to enable a reasona ble understanding of the substance of the
information submitted; and
 failed to require a statement of reasons explaining exceptional circumstances why
summarization was not possible with respect to a statement by the Chinese Public
Security Bureau of Civil Aviation Administration (Public Security Bureau).
(e) Articles 6.9, 6.4 and 6.2 of the Anti-Dumping Agreement because MOFCOM:
 failed to provide interested parties w ith information about the essential facts
under consideration for the determination of injury;
 failed to provide interested parties w ith information about the essential facts
under consideration for the determination of normal value and export price;
 failed to provide interested parties w ith information about the essential facts
under consideration for the calculation of the dumping margin for the cooperating
producer; and
 failed to provide interested parties w ith information about the essential facts
under consideration for the calculation of the residual duty.
(f) Article 12.2.2 of the Anti-Dumping Agreement because:
 neither in the public notice of the imposition of definitive measures, nor in a
separate report, MOFCOM set forth sufficiently detailed explanations for the
methodology used in the establishment of the normal value; together with
references to the matters of fact and law and reasons which led to arguments
being accepted or rejected;
 neither in the public notice of the imposition of definitive measures, nor in a
separate report, MOFCOM set forth suffici ently detailed explanations for all the
considerations relevant to the injury dete rminations; together with references to
the matters of fact and law and reasons which led to arguments being accepted or
rejected; and
 neither in the public notice of the imposition of definitive measures, nor in a
separate report, MOFCOM made available the calculations and data used to
calculate the margins for Smiths, as well as the calculations and underlying data
on which it relied to determine the residual duty.
3.2 The European Union requests the Panel to recommend that the DSB request China to bring its
measure into conformity with its obligations under the Anti-Dumping Agreement.
B. CHINA
3.3 China requests the Panel to reject the European Union's claims in their entirety.
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their written submissions, oral statements to the
Panel and their answers to questions. Executive summaries of the parties' written submissions, and

their oral statements or executive summaries ther eof, are attached as addenda to this Report in
Annexes A, C, E and F (see List of Annexes, pages vii and viii).
V. ARGUMENTS OF THE THIRD PARTIES
5.1 The third parties were invited to make written s ubmissions and oral statements to the Panel.
Japan and Norway made both written submissions a nd oral statements. Chile made only an oral
statement, while the United States made only a writte n submission to the Panel. India and Thailand
did not make any written or oral representations to the Panel. The third parties' written submissions
and oral statements, or executive summaries thereof, are attached as addenda to this Report in
Annexes B and D (see List of Annexes, pages vii and viii).
VI. INTERIM REVIEW
A. I
NTRODUCTION
6.1 On 28 November 2012, the Panel submitted its Interim Report to the parties. On
12 December 2012, China submitted written requests for review of precise aspects of the Interim
Report. The European Union did not submit any request for review of its own, but submitted
comments on China's requests on 21 December 2012.
6.2 Before turning to the substantiv e issues raised by China's requ ests, we note that China makes
numerous requests that the Panel's summaries of China' s arguments be more detailed. In general, the
European Union does not provide specific comment s on these requests. The European Union's
position is that the Panel's summaries of arguments are adequate and do not require the extensive
amendments requested by China. The European Union expresses a concern that acceding to China's
requests may upset the balance between the presentati on of the arguments of each party. However,
the European Union ultimately defers to the Pa nel's judgment regarding whether to accommodate
China's requests. As each of China's requested amendments to the summaries is indeed based upon its
submissions during the course of the Panel proceedings, we see no harm in accommodating China's
requests. Although the European Union notes that acceding to China's requests may upset the balance
between the presentation of each party's arguments , we do not think that the amendments are
substantial enough to make this a concern.
6.3 China also makes numerous requests that certain sections of the Panel's evaluation, as
opposed to the summaries of the parties' argument s, be supplemented with China's arguments as
presented during the course of the proceedings. In general, the European Union objects to these
requests, on the basis that the additions are too deta iled and are unnecessary. However, if the Panel is
inclined to accede to China's requ ests, the European Union asks that the additions be made to the
summaries of China's arguments, rath er than to the Panel's evaluation. Given that each of China's
requests is based upon its submissions, the Panel has accommodated the requests. However, the Panel
has made the additions to China's summaries of argume nts, rather than to the Panel's evaluation. This
is because the Panel does not consider the additions necessary to its own reasoning, but is prepared to
add further detail to the summaries of China's arguments. Where the requested additions were already
included in the summaries of China's arguments, the Panel has not accommodated the request.
6.4 China identified certain information in the In terim Report and in an Annex to the Interim
Report which disclosed confidential information. The Panel has removed this information from the
Final Report and from the relevant Annex.
6.5 China also identified several typographical erro rs in the Interim Report, which we have
corrected. We are grateful for China's assistance in this regard.

6.6 We now turn to the substantive issues raised by China's requests. As explained below, the
Panel has modified aspects of its findings in li ght of the parties' comments where it considered
appropriate. Due to these changes, the numbering of certain paragraphs and footnotes in the Final
Report has changed from the Interim Report. Unless ot herwise specified, the text below refers to the
paragraph and footnote numbers in the Interim Report.
B. PRICE EFFECTS OF DUMPED IMPORTS : ARTICLES 3.1 AND 3.2 OF THE ANTI -DUMPING
AGREEMENT
1. Paragraph 7.39
6.7 China requests this paragraph be modified to reflect that Smiths' failure to raise the
differences between "low-energy" and "high-energy" scanners in the context of the price analysis
relates to why the average unit value methodology was reasonable.
6.8 The European Union contends that the addition requested by China is unnecessary. However,
if the Panel agrees to include it, it should be preced ed by "According to China...", to clarify that it
represents part of China's argument, rather than the Panel's reasoning.
6.9 Given that the amendment requested by China, as supplemented by the European Union, does
not alter the substance of the Panel's reasoning and is an accurate reflection of China's position, we
have acceded to China's request. However, given that the Panel summarises the arguments of China
on this point in paragraph 7.38 of the Final Report, we have made the addition to the end of this
paragraph, rather than in the middle of the Panel's reasoning in paragraph 7.40 of the Final Report.
2. Paragraph 7.69
6.10 China requests that paragraph 7.69 be modified to list the energy levels of the subject
products produced by Smiths Heima nn GmbH, rather than simply sta ting that all scanners had an
energy level of 300 KeV or less. China contends that this will "more precisely reflect the facts".
6.11 The European Union does not comment on this request.
6.12 Although the Panel does not consider that the amendment requested by China is necessary to
its reasoning, we do not perceive a problem in a dding the level of precision requested by China.
Consequently, the Panel has added the detail in footnote 82 of the Final Report.
3. Paragraphs 7.80-7.83
6.13 China requests that the Panel exclude the imag es of the scanners included within the Interim
Report. In China's view, the images are unneces sary and suggest that all scanners produced by
Nuctech are similar to those in th e images, when in fact the Panel acknowledged elsewhere that "the
low-energy market sector represent[ed] a significant part of Nuctech's activities throughout the POI".
6.14 The European Union objects to China's request. According to the European Union, the
images are very useful in illustrating the differenc es in physical characteristics and uses among the
various products covered by the investigation. China has not advanced a convincing reason for
removing the images. The Interim Report makes clear that the models are merely examples and it
does not suggest that Nuctech sold only high-energy models.
6.15 The Panel rejects China's request. The images c onstitute an important part of our analysis.
Further, our reasoning clearly indicates that Nuctech produced both "high" and "low-energy" scanners
and the use of the images does not suggest otherwise.

4. Paragraph 7.85
6.16 China notes the Panel's reliance upon the stat ement in the Final Determination that
"[a]lthough X-Ray scanners of a high energy level are usually used to inspect large objects, while X-
Ray scanners of a low energy level are used to insp ect small objects, these are only variations adopted
in accordance with different product designs and mark et elections". According to China, the Panel
has taken the statement out of context. This is because MOFCOM made it as a part of the product
scope determination, rather than as a part of the in jury determination. Further, MOFCOM also stated
that "high-energy scanners can also be used to inspect small objects". Consequently, China argues
that the observations made by MOFCOM do not ac knowledge differences between "high-energy" and
"low-energy" scanners.
6.17 The European Union objects to China's request. The European Union argues that the Interim
Report clearly states the context in which MOFCOM's observations were made.
6.18 We do not consider it necessary to make any changes to our reasoning in paragraph 7.85
(paragraph 7.86 of the Final Report). The para graph already provides that MOFCOM made the
observations "in the context of considering the scope of the product under investigation". Further, the
Panel acknowledges and addresses MOFCOM's observation that "high-energy scanners can be used to
detect small objects" in paragraph 7.88 of the Final Report.
5. Paragraph 7.87
6.19 In stating that the use of "high-energy" scanne rs to inspect small objects appears to be a
theoretical possibility rather than a reflection of "market elections", China argues that the Panel has
not taken into account the evidence presented by it to establish that there are scanners with an energy
level above 300 KeV that are designed to inspect small objects.
6.20 The European Union recalls that it has addressed China's arguments in this regard in its
submissions to the Panel during the proceedings.
6.21 The Panel has amended the wording used in pa ragraph 7.88 of the Final Report, and added
footnote 106, in order to clarify that it has indeed taken into consideration the evidence furnished by
China relating to the uses of certain "high-energy" scanners.
6. Paragraph 7.89
6.22 China argues that the Panel relied upon Smiths' assertion about the price differences between
"high-energy" and "low-energy" scanners without addressing China's submission that the assertion
was not supported by any evidence.
6.23 The European Union recalls that it addressed China's argument in this regard in its
submissions during the course of the Panel proceedings.
6.24 The Panel has decided to add footnote 112 to pa ragraph 7.90 of the Final Report in order to
clarify its findings regarding Smiths' submissions on the price differences between "high-energy" and
"low-energy" scanners.

C. THE STATE OF THE DOMESTIC INDUSTRY: ARTICLES 3.1 AND 3.4 OF THE ANTI-DUMPING
AGREEMENT
1. Paragraph 7.142
6.25 China argues that paragraph 7.142 does not accura tely reflect its arguments. According to
China, it clarified during the second meeting with the Panel that Nuctech, rather than MOFCOM,
adjusted the data originally provided during the ve rification process, in order to exclude exports.
China requests an amendment to the paragraph to reflect this.
6.26 The European Union submits that the current text is clear and accurate. If the Panel
nevertheless agrees with China's suggestion, the European Union requests that the amendment be
prefaced with "China contends ...".
6.27 We note that China changed its position, between its first submission and the second meeting
with the Panel, regarding whether MOFCOM or Nuct ech modified the data to account for exports. In
its findings, the Panel has accepted China's revised position, namely that Nuctech itself revised the
data. The Panel has amended the summary of Chin a's arguments in paragraph 7.144 of the Final
Report to reflect this.
2. Paragraph 7.198
6.28 China argues that the Panel's finding in this paragraph, namely that MOFCOM assessed the
industry's actual profit level by reference to the expect ed level of profit, is wrong as a matter of fact.
According to China, MOFCOM only examined the actual profit level. It found that the domestic
industry was making losses and a contrario did not make a profit. Further, according to China, in the
context of Article 3.4 of the Anti-Dumping Agreemen t, an investigating authority is required only to
examine the "state" of the domestic industry. Ther efore, contrary to the findings of the Panel,
MOFCOM was not required to provide an expl anation regarding why it expected the domestic
industry to be profitable. Finally, China submits that in the Final Determination MOFCOM examined
the profit indicator at length.
6.29 The European Union objects to China's comments. The European Union argues that
paragraph 7.198 does not address the level of profit in a vacuum, but in its proper context, which
should be measured by a proper counterfactual of the expected profit level. Further, the
European Union contends that during the course of the Panel proceedings, China systematically failed
to address the European Union's allegation about the "expected level" of profits. Therefore, China's
attempt to rebut the Panel's finding at the interim review stage of proceedings should be rejected as a
matter of due process.
6.30 In the Panel's view, it is clear from the Final Determination that MOFC OM did consider the
"expected profit" in assessing the state of the domestic industry. The Panel has added footnote 216 to
paragraph 7.200 of the Final Report in order to clar ify the basis for its view that MOFCOM's analysis
of profit was not restricted merely to the absolute levels of profit obtained by the domestic industry,
but was also conducted by reference to expected profit levels. The Panel does not consider it
necessary to further amend its reasoning in the light of the China's comments.
D. C
AUSATION: ARTICLES 3.1 AND 3.5 OF THE ANTI-DUMPING AGREEMENT
1. Paragraphs 7.239-7.244
6.31 China argues that the Panel has not addressed its arguments summarised at paragraphs 7.231
and 7.232 of the Final Report. China requests the Panel to address them.

6.32 The European Union does not comment on this request.
6.33 The Panel notes that the arguments referred to by China relate to the debate between the
parties about whether there was a correlation between subject imports and domestic prices, and the
relevance of this for the causation analysis. Having reached the conclusion that MOFCOM's
causation analysis was not adequate on the basis of ot her arguments made by the parties, the Panel in
the Interim Report did not proceed explicitly to address the arguments regarding correlation. The
Panel is prepared to accommodate China's request, in order to make explicit its views regarding the
correlation arguments. Consequently, the Panel has added paragraphs 7.246-7.247 to the Final
Report.
2. Paragraph 7.269
6.34 In concluding that MOFCOM did not address Smiths' arguments concerning "product quality"
and "technology factors", China submits that the Pane l did not consider findings by MOFCOM in this
regard on page 16 of the Final Determination.
6.35 The European Union objects to China's comment. Accordin g to the European Union,
MOFCOM's conclusions about "physical characteris tics" and "technological features" in the context
of the likeness analysis on page 16 of the Fina l Determination are not connected with the proper
analysis MOFCOM should have c onducted on page 32 of the Final De termination when specifically
examining other known factors as a part of the non-attribution analysis.
6.36 The Panel considers it appropriate to add footno te 281 to paragraph 7.279 of the Final Report
in order explicitly to address China's comment and to clarify its reasoning in this regard.
E. MOFCOM'S TREATMENT OF NON-CONFIDENTIAL SUMMARIES: ARTICLES 6.5.1, 6.2 AND 6.4
1. Paragraph 7.346
6.37 China objects to the Panel's statement that a repl y of "yes" or "no" will not necessarily reveal
confidential information. China asserts that the Pa nel effectively takes issue with MOFCOM's initial
decision to treat the relevant information as confidential. China suggests that this issue was not before
the Panel, since there was no claim by the EU con cerning the designation of the relevant information
as confidential. Furthermore, China contends that Nuctech considered that the reply to question 19
was not confidential, and therefore that the non-conf idential version could reflect the reply ticked in
the confidential version as well.
6.38 The European Union asks the Panel to reje ct China's remarks. According to the
European Union, the Panel does not take issue w ith whether or not the relevant information can
properly be regarded as confidential. According to the European Union, the Panel rightly explains
that there is a violation of Article 6.5.1 because th ere is no summary of the substantive content of the
relevant confidential information, nor any ev idence that MOFCOM applied the Article 6.5.1
exceptional circumstances mechanism. The Panel then addressed China's argument that
summarization should always be considered impossible in the case of "yes" or "no" answers.
6.39 We are not persuaded by China's arguments. Having found that there was no evidence of any
application by MOFCOM of the Article 6.5.1 exceptional circumstances mechanism, we then merely
addressed China's argument that a "yes"/"no" answ er cannot be summarized because such summary
would necessarily reveal confidential information. However, we have ame nded paragraph 7.350 of
the Final Report to clarify that the main reason fo r rejecting China's argument is MOFCOM's failure
to invoke the Article 6.5.1 exceptional circumstances mechanism.

F. DISCLOSURE OF ESSENTIAL FACTS
1. Paragraphs 7.412 and 7.414, and footnote 375
6.40 China contends that the Panel failed to reflect China's argument that the European Union
extended the scope of its claim from an alleged lack of disclosure of the calculations of the dumping
margin, normal value and export price to an alleged lack of disclosure of the (underlying) price and
adjustments data. China proposes a number of chang es to the Panel's description of China's position
at paragraphs 7.412 and 7.414, and footnote 375. The European Union denies that it has extended the
scope of its claim of violation. According to the European Union, China is confusing the claim with
arguments advanced during the course of the Panel proceedings. The European Union contends that
its original claim, as set forth in its request for est ablishment of a Panel, concerned the disclosure of
both the calculations and the underlying data.
6.41 While we have amended paragra ph 7.416 and footnote 379 of the Final Report to avoid any
risk of misrepresenting China's position, we disagr ee with China's assertion th at the European Union
improperly extended the scope of its claim. We ha ve clarified footnote 379 of the Final Report to
avoid any uncertainty.
6.42 We have also amended paragr aph 7.418 of the Final Report, to avoid any risk of
misrepresenting China's reliance on the Argentina – Poultry Anti-Dumping Duties case.
G. PUBLIC NOTICE
1. Paragraph 7.457 and footnote 406
6.43 China asks the Panel to amend its findings to pr event any inconsistency with its finding, in
footnote 406, that the European Union's claim should not be under stood to refer to "information on
the underlying facts". The European Union contends that it is clear that the Panel did not fault China
for failing to provide information on the underlying fact s. The European Union also contends that the
Panel is not bound to follow the terminology or legal reasoning advanced by the parties.
6.44 In our view, all of the elements identified in paragraph 7.457 properly pertain to the
explanation of MOFCOM's price effects methodology, and have therefore been properly addressed by
the Panel. To avoid any risk of inconsistency with footnote 406, though, we have made certain
changes to the text of footnote 410 in the Final Re port, and the text of paragraph 7.461 of the Final
Report.
2. Paragraphs 7.462, 7.464 and 7.466
6.45 China claims that the European Union's claim should not be understood to include reference
to the reasons why MOFCOM resorted to facts ava ilable, and the factual basis for its residual duty
determination. According to China, the European Union's claim should be restricted to MOFCOM's
failure to publish the calculations and underlying data for the residual duty. The European Union asks
the Panel to reject China's argument, stating that all aspects of the European Union's claim were
properly included in its request for establishment of a Panel.
6.46 We uphold China's request insofar as it applies to the reasons justifying MOFCOM's resort to
facts available. We agree that such reasons do not form part of the data underlying MOFCOM's
residual duty determination. Howeve r, we reject China's request in respect of the factual basis for
MOFCOM's residual duty determination, since such factual basis does form part of the underlying
data for MOFCOM's determinati on. We have amended paragra ph 7.468 of the Final Report

accordingly. We do not consider that there is any n eed for additional changes to other paragraphs of
the Final Report.
H. CONCLUSION AND RECOMMENDATIONS
6.47 In light of its comments on paragraphs 7.462, 7.464 and 7.466 (discussed above), China has
also suggested a change to paragraph 8.1. As a result of the Panel's position on the proposed
modification by China to paragraph 7.466, there is no need to change paragraph 8.1 in the manner
requested by China.
VII. FINDINGS
7.1 This case concerns the imposition by China of anti-dumping duties on imports of certain x-
ray security inspection equipment from the European Union. The European Union claims that the
anti-dumping duties imposed by China, and the unde rlying investigation co nducted by the Chinese
authorities, are inconsistent with various procedur al and substantive provisions of the Anti-Dumping
Agreement. China denies the European Union's claims.
7.2 The European Union has advanced a number of procedural claims under Articles 6.5.1, 6.9
and 12.2.2 of the Anti-Dumping Agreement, and cert ain substantive claims under Article 3 of the
Anti-Dumping Agreement. We shall begin by exam ining the European Union' s substantive claims.
Thereafter, we shall turn to th e European Union's procedural claims. Before reviewing the
European Union's claims, though, we recall a number of general principles regarding treaty
interpretation, standard of review and burden of proof in WTO dispute settlement proceedings.
A. GENERAL PRINCIPLES REGARDING TREATY INTERPRETATION, THE APPLICABLE STANDARD
OF REVIEW AND BURDEN OF PROOF
1. Treaty Interpretation
7.3 Article 3.2 of the DSU provides that the dis pute settlement system serves to clarify the
existing provisions of the covered agreements "in accordance with customary rules of interpretation of
public international law". It is generally accepted th at the principles codified in Articles 31 and 32 of
the Vienna Convention on the Law of Treaties are such customary rules16.
2. Standard of Review
7.4 Panels generally are bound by the standard of review set forth in Article 11 of the DSU,
which provides, in relevant part, that:
[A] panel should make an objective assessment of the matter before it, including an
objective assessment of the facts of the cas e and the applicability of and conformity
with the relevant covered agreements. (emphasis added)
7.5 The Appellate Body has stated that the "objective assessment" to be made by a panel
reviewing an investigating authority's determination is to be informed by an examination of whether
the agency provided a reasoned and adequate explan ation as to: (i) how the evidence on the record

16 Done at Vienna, 23 May 1969, 1155 United Nations Treaty Series 331 (1980); 8 International Legal
Materials 679 (1969).

supported its factual findings; and (ii) how those factual findings supported the overall
determination17.
7.6 The Appellate Body has also commented that a panel reviewing an investigating authority's
determination may not conduct a de novo review of the evidence or substitute its judgment for that of
the investigating authority. A panel must limit its examination to the evidence that was before the
agency during the course of the investigation and must take into account all such evidence submitted
by the parties to the dispute 18. At the same time, a panel must not simply defer to the conclusions of
the investigating authority. A panel's examinatio n of those conclusions must be "in-depth" and
"critical and searching"19.
7.7 Further to Article 11 of the DSU, Article 17.6 of the Anti-Dumping Agreement sets forth a
specific standard of review applicable to anti-dumping disputes, namely:
(i) in its assessment of the facts of the ma tter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was
proper and the evaluation was unbiased and objective, even though the panel
might have reached a different conclusion, the evaluation shall not be overturned;

(ii) the panel shall interpret the relevant provisions of the Agreement in accordance
with customary rules of interpretation of public international law. Where the panel
finds that a relevant provision of the Agreement admits of more than one
permissible interpretation, the panel sha ll find the authorities' measure to be in
conformity with the Agreement if it rests upon one of those permissible
interpretations.

3. Burden of Proof
7.8 The general principles applicable to the allo cation of the burden of proof in WTO dispute
settlement require that a party claiming a viola tion of a provision of a WTO Agreement must assert
and prove its claim
20. Therefore, as the complaining party, the European Union b ears the burden of
demonstrating that certain aspects of the anti-dumping measure at issue are inconsistent with the Anti-
Dumping Agreement. The Appellate Body has stated that a complaining party will satisfy its burden
when it establishes a prima facie case, namely a case which, in the absence of effective refutation by
the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party 21.
Finally, it is generally for each party asserting a fact to provide proof thereof22.
B. INTRODUCTION TO INJURY
7.9 The European Union claims that China acted inconsistently with Articles 3.1, 3.2, 3.4 and 3.5
of the Anti-Dumping Agreement in making its findings regarding whether the dumped imports caused
injury to the domestic industry. This section of the Report examines each of the claims in turn.
7.10 First, the Panel will consider the European Union's claim that MOFCOM's price effects
analysis was inconsistent with Articles 3.1 a nd 3.2 of the Anti-Dumping Agreement because it was

17 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 186.
18 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS, para. 187.
19 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 - Canada), para. 93.
20 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
21 Appellate Body Report, EC – Hormones, para. 104.
22 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.

not an objective examination based on positiv e evidence. The Panel will examine the
European Union's argument that MOFCOM conducted its price effects analysis without taking into
account the "considerable differences between th e products covered by the investigation" 23, in
particular between "high-energy" (energy levels a bove 300 KeV) and "low-energy" (energy levels at
or below 300 KeV) scanners.
7.11 Second, the Panel will consider the European Union's claim under Articles 3.1 and 3.4 of the
Anti-Dumping Agreement. The European Union ar gues that MOFCOM's examination of the impact
of the dumped imports on the domestic industr y was not based upon "positive evidence"; that
MOFCOM did not consider "all relevant economic factors and indices" having a bearing on the state
of the industry; and that MOFCOM did not proper ly evaluate the interaction between the "positive"
and "negative" economic factors and indices and consider them in their proper context.
7.12 Third, the Panel will evaluate the European Union's claim under Articles 3.1 and 3.5 of the
Anti-Dumping Agreement. The Panel will consider the European Union's argument that the price
effects methodology employed by China under Article 3.2 has a consequent impact upon the validity
of MOFCOM's causation findings. The Panel will also evaluate the contention that MOFCOM did
not provide a reasoned and adequa te explanation in attributing injury to the dumped imports,
particularly in circumstances where in the final year of the POI, the price of dumped imports was
higher than that of the like domestic product. Fi nally, the Panel will examine the European Union's
argument that MOFCOM did not adequately consider other causes of injury in its non-attribution
analysis.
C. P
RICE EFFECTS OF DUMPED IMPORTS: ARTICLES 3.1 AND 3.2 OF THE ANTI-DUMPING
AGREEMENT
1. Introduction
7.13 The European Union claims th at MOFCOM's price effects findings did not constitute an
objective examination based on positive evidence, contrary to the obligations under Articles 3.1
and 3.2 of the Anti-Dumping Agreement. The b asis for the European Union's claim is that
MOFCOM's price effects methodology was flawed because it involved price comparisons, based on
weighted average unit values, in circumstanc es where MOFCOM did not take into account the
"considerable differences" among the products being compared, particularly between "high-energy"
and "low-energy" scanners24.
2. Relevant provisions
7.14 Article 3.1 of the Anti-Dumping Agreement provides:
A determination of injury for purposes of Article VI of GATT 1994 shall be based on
positive evidence and involve an objective examination of both (a) the volume of the
dumped imports and the effect of the dum ped imports on prices in the domestic
market for like products, and (b) the consequent impact of these imports on domestic
producers of such products.
7.15 Article 3.2 of the Anti-Dumping Agreement provides:
With regard to the volume of the dumped imports, the investigating authorities shall
consider whether there has been a significan t increase in dumped imports, either in

23 European Union's first written submission, para. 167.
24 European Union's first written submission, para. 167.

absolute terms or relative to production or consumption in the importing Member.
With regard to the effect of the dumped imports on prices, the investigating
authorities shall consider whether there h as been a significant price undercutting by
the dumped imports as compared with the price of a like product of the importing
Member, or 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. No one or several of these factors can necessarily give
decisive guidance.
3. Main arguments of the parties
(a) European Union
(i) Comparability of the products included in the price effects analysis
7.16 The European Union asserts that MOFCOM established the existence of "large" 25 and
"serious"26 price undercutting using a flawed price comp arison methodology, even though no price
undercutting had been alleged by Nuctech. Furthermore, the methodology used by MOFCOM to
determine price depression/suppression magnified the degree to which Nuctech's prices were
depressed/suppressed far beyond the levels that Nuctech itself had alleged, on the basis of its own
price data
27. The European Union argues that the price analysis methodology applied by MOFCOM,
namely a comparison of weighted average unit valu es for all products, was flawed because it failed to
take into account manifest differences between the t ypes of scanner at issue, particularly between the
low-energy scanners exported by Smiths and the hi gh-energy scanners that were the main focus of
Nuctech's business. According to the European Union, Smiths explained repeatedly during the
investigation that low-energy scanners and high -energy scanners have very different physical
characteristics, end-uses, technological features, mechanical features, manufacturing processes and
prices and do not compete with each other 28. Accordingly, due to these differences, Smiths argued
that high-energy scanners should be excluded from the product under investigation. The
European Union does not pursue this product scope argument in these proceedings. Instead, the
European Union contends that, in view of the manifest differences between low-energy and high-
energy scanners, it was clearly inadequate for th e Chinese authorities to examine the existence of
price undercutting and price depression/suppression without taking these differences into account.
The European Union acknowledges that Nuctech pr oduced low-energy scanners during the POI, but
contends that MOFCOM also failed to take into account the differences between the low-energy
scanners produced by Smiths and Nuctech respectively.
7.17 In response to China's argument that there is "no hard and clear dividing line" between high-
and low-energy scanners, but rather a "single continuum of scanners", the European Union argues that
this is an unsupported assertion, to which no reference was made in the Final Determination. The
European Union acknowledges that while there may be room for debate about whether the dividing
line should be drawn precisely at 300 KeV or a somewhat higher level, there is wide and easily
recognisable gap between high- and low-energy s canners. The European Union argues that the
energy level of scanners used to scan large objects is always much higher than that used to scan small
objects, and this is always reflected in very large disparities in price.

25 Final Determination, Section V.II.3, Exhibit EU-2, p. 23.
26 Final Determination, Section V.II.3, Exhibit EU-2, p. 23.
27 While the European Union refers to MOFCOM's finding as "price depression", China maintains that
MOFCOM in fact made a finding of "price suppression": The Panel addresses this issue at paras. 7.52-7.54 of
this Report. As explained there, the Panel will use th e label "price suppression" when referring to MOFCOM's
findings in this regard.
28 See Smiths' Injury Brief, Exhibit EU-11, pp. 3-7.

(ii) Obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement
7.18 The European Union submits th at because MOFCOM used a br oad definition of the product
under investigation, the obligation to make an objective examination of positive evidence required
MOFCOM to take into account the relevant differences between the various types of products covered
by the investigation when conducting its price effe cts analysis. The European Union does not argue
that MOFCOM should have used any particular methodology in order to do this. Rather, the
European Union notes that MOFCOM failed to do so at all, as explained in the sections below on
price undercutting and price depression/suppression.
 Price undercutting
7.19 The European Union recalls that MOFCOM exam ined the existence of price undercutting by
comparing the weighted average unit value of a ll imports of all the products covered by the
investigation to the weighted average unit value of all domestic sales of all the like products made by
Nuctech. The European Union accepts that a comparison of weighted average unit values may be an
appropriate methodology for considering the exis tence of price undercutting where the products
covered by the investigation are relatively hom ogeneous and sufficiently comparable. Where the
relevant products are heterogeneous, though, the European Union contends that differences in average
unit values may merely reflect changes or variations in product mix rather than genuine differences in
pricing. In the circumstances of the present case, due to the considerable differences between low-
energy and high-energy scanners, the European Uni on argues that it was manifestly inadequate for
MOFCOM to examine the existence of price undercu tting by comparing weighted average unit values
for all the products under consideration. According to the European Union, the distorting effects of
the methodology followed by MOFCOM were exacerbated by the fact that during the POI there were
no exports of high-energy scanners from the European Union to China.
 Price depression/suppression
7.20 At the outset, there is a dispute between th e European Union and China about whether
MOFCOM made a finding of price depression or suppression. The European Union maintains that
both its professional translation of the relevant phras e in the Final Determination, and the content of
the Final Determination, support its position that MO FCOM made a finding of price depression. The
European Union notes that MOFCOM did not state that Nuctech was prevented from increasing its
prices in order to reflect cost increases. Rath er, MOFCOM found that the dumped imports forced
Nuctech to lower its prices by more than the reduction in its unit cost of production. The
European Union contends that it is implicit in MOFCOM's reasoning that Nuctech's prices would not
have increased in the absence of the dumped imports, given the substantial reduction in Nuctech's unit
production cost. Rather, Nuctech's prices would have decreased less. This supports the conclusion
that MOFCOM made a finding of price depression rather than suppression.
7.21 The European Union submits MOFCOM's finding that prices of the domestic like product fell
by as much as 72.68% during the POI is nullified by the same flawed me thodology that MOFCOM
applied in respect of price undercutting. In other words, changes in the av erage unit values found by
MOFCOM were more likely to reflect changes in the product mix of the domestic industry over the
POI than changes in the domestic industry's pricing policy.

(b) China
(i) Differences between low-energy and high-energy scanners, and amongst low-energy scanners
 Continuum of scanners
7.22 China disputes that there is a clear-cut distincti on between scanners with an energy level at or
below 300 KeV ("low-energy") and scanners with an energy level above 300 KeV ("high-energy").
China argues that a scanner's energy level is not dete rminative of its physical characteristics, uses or
prices. Rather, there exists a continuum of sca nners, with gradual differences between adjoining
models. Therefore, to the extent that certain cl aims raised by the European Union are based on an
alleged distinction between low-energy and high-en ergy scanners, they should be rejected by the
Panel because the distinction is factually incorr ect. To support this argument, China provides
examples of scanners with an energy level at or below 300 KeV that have the characteristics that
Smiths described as belonging to high energy scanners, and vice versa29.
 MOFCOM's analysis
7.23 China submits that Smiths only raised the issu e of alleged differences between "low-energy"
and "high-energy" scanners to claim that such products were not "like", such that high-energy
scanners should be excluded from the scope of MOFCOM 's investigation. China asserts that Smiths
never referred to such differences in the cont ext of MOFCOM's price effects analysis. China
contends that at no point did Smiths claim that MOFCOM should make separate price undercutting
and price suppression analyses for "low-energy" and "high-energy" scanners. China submits that if,
as claimed by the European Union, it was so essential to conduct a separate price analysis for "low-
energy" and "high-energy" scanners, and even for different types of "low-energy" scanners, one
would expect that the argument would at least have been raised by Smiths during the investigation.
China asserts that this did not occur.
7.24 China submits that, in comparing Smiths' impor t prices of the subject product with Nuctech's
domestic prices of the like product, MOFCOM pr operly compared the prices of like products.
Furthermore, China submits that it was reasonable for MOFCOM to assess the effects of the prices of
dumped imports by using the weighted average methodology. China notes that MOFCOM did not in
any way manipulate data or figures since MOFCOM applied the same methodology for both the
domestic and imported products and included all data relating to a ll models. China submits that, in
this way, MOFCOM ensured an even-handed treatme nt of the information and data on the record.
China asserts that MOFCOM was aware that prices may differ from model to model or even from
transaction to transaction. Indeed, this is a co mmon feature of all anti-dumping investigations
worldwide and explains precisely why investigating authorities use averages. According to China,
MOFCOM concluded that these price differences were not of a nature to overturn the conclusion that
the price undercutting was "significant". In addition, China contends that an average comparison may
work to the advantage of the exporter on some occasions, while work against it on others. China
submits that as long as the method is applied even-h andedly and in an objective manner, it cannot be
considered biased.
7.25 China argues that MOFCOM requested complete pricing data relating to the subject product
for the three years of the POI. However, Smiths provided only average figures for certain models for
2008 and no pricing data at all for 2006 and 2007. Therefore, China contends that it was in fact
impossible for MOFCOM to perform a model-to-model comparison and that the use of the weighted
average methodology was reasonable and appropriate in the circumstances. A ccording to China, the
requirement of "objectivity" in Article 3.1 is to be assessed in the light of the specific circumstances

29 China's second written submission, paras. 204-238.

of the case, including the information and data availa ble to the investigating authority. In order to
conclude that an investigating authority has favoured a particular interested pa rty, it is necessary that
the investigating authority had options before it, a nd chose the option that favoured the interests of a
particular party. Further, China argues that there was no need for MOFCOM to make findings
pursuant to Article 6.8 of the Anti-Dumping Agreement because Article 3.2 does not prescribe the use
of any specific methodology and that it was possi ble for MOFCOM to use a reasonable comparison
methodology on the basis of the data submitted by the parties or gathered from public records.
(ii) Obligations under Articles 3.1 and 3.2 of the Anti-Dumping Agreement
7.26 China notes that Articles 3.1 and 3.2 of the Anti-Dumping Agreement do not set out any
specific methodology that investigating authorities mu st follow in order to examine the effects of
dumped imports on prices in a domestic market. Furthe rmore, China submits that panels in previous
cases have rejected the view that the methodologica l obligations included in Article 2 of the Anti-
Dumping Agreement, relating to the dumping margin determination, apply to the price undercutting
analysis of Article 3.2 of the Anti-Dumping Agreement. According to China, there is no obligation in
the Anti-Dumping Agreement requiring an investigati ng authority during the price effects analysis to
make adjustments similar to those applicable wh en making the comparison between normal value and
export price under Article 2.4 of the Anti-Dumping Agreement. China notes that there are important
differences between the determination of the marg in of dumping under Article 2.4 and the price
effects analysis under Article 3.2. First, Article 3.2 requires an investigating authority only "to
consider", rather than to make a determination on, the effects of dumped imports on domestic prices
and does not require any quantification of the degree of undercutting. Second, the price analysis is
only one among various elements or factors examined by the investigating authority in determining
whether injury is suffered by the domestic indus try. As a result of these differences, when
interpreting Articles 3.1 and 3.2, the requirement of "objective examination" should not be interpreted
to impose obligations that do not flow from it. In EC – Pipe Fittings, the Panel held that the
requirement in Article 3.1 to conduct an "objectiv e examination" on the basis of "positive evidence"
implies only that the examination must "conform to the dictates of the basic principles of good faith
and fundamental fairness" and that the "investigatin g authority must therefore ensure an even-handed
treatment of the information and data on the record of the investigation".
 Price undercutting
7.27 China asks the Panel to reject the European Un ion's claim that "MOFCOM's finding of price
undercutting was reached by following a manifestly inadequate methodology involving the use of
weighted average unit values for all the products under investigation" 30. Further, China disputes the
European Union's argument that the inappropriateness of the methodology used by MOFCOM is
evidenced by the fact that neither Nuctech nor Sm iths had made any reference to the existence of
price undercutting
31. China submits that, contrary to the European Union's argument, Nuctech did
claim that there was price undercutting 32. China also argues that ther e is no evidence on the record
excluding the possibility that either Smiths, its Fren ch affiliate or any other European exporter had
exported high-energy scanners. Finally, China emphasises that the example provided by the
European Union is purely hypothetical.
 Price suppression
7.28 At the outset, China argues that MOFCOM in fact made a finding of price suppression, rather
than price depression as stated in th e European Union's translation of the Final Determination. China

30 European Union's first written submission, para. 205.
31 European Union's first written submission, paras. 205 and 211.
32 China refers to Nuctech's Questionnaire Response, question 38 (4), Exhibit EU-8, p. 26.

argues that in the Final Determination, MOFCOM f ound "the rate of the decline of sales price was
higher than the rate of production cost reduction by 19.01 percentage points, indicating that the sales
price of domestic Like Products failed to remain at a reasonable level as a result of being [suppressed]
by the import price of the Subject Product" 33. Therefore, according to China, this supports the
conclusion that MOFCOM found price suppression rath er than price depression, because MOFCOM
found that domestic prices were prevented from incr easing to a profitable level due to the effects of
the low price of the dumped imports. Although in the Final Determination MOFCOM found only
price undercutting and price suppression, China argues that in fact a mixed picture of price depression
and suppression can be found in this case. The price undercutting and rapid increases in import
volume forced the domestic prices down to non-prof itable levels and preven ted the domestic industry
from increasing prices to profitable levels.
7.29 China denies that there is any inherent bias in the methodology followed by MOFCOM to
determine the existence of price suppression. China contends that MOFCOM used the same
methodology throughout the POI, and the average price calculation method was applied even-
handedly to both imports and domest ic products. Further, China argu es that price comparability does
not arise as an issue when considering price s uppression, because it involves a consideration of the
prices and costs relating to the domestic product on ly and does not involve a comparison with the
prices of the imported product. According to China, the fact that the product mix varies or may vary
over time cannot have any impact on the assessmen t of price suppression. This is because price
suppression depends on whether the prices of a certain product mix have been able to follow changes
in costs for the same product mix.
4. Evaluation by the Panel
(a) Introduction
7.30 The European Union claims that MOFCOM's pr ice effects findings were not based on an
objective examination of positive evidence, contrary to the obligations under Articles 3.1 and 3.2 of
the Anti-Dumping Agreement. The basis of the Eu ropean Union's claim is that MOFCOM's price
effects methodology was flawed because it involve d comparing the weighted average unit values for
the entire range of products covered by the investig ation, without taking into account the considerable
differences among the products, particularly between "high-energy" and "low-energy" scanners.
According to the European Union, the distorting effects of the methodology followed by MOFCOM
were exacerbated by the fact that during the POI there were no exports of high-energy scanners from
the European Union to China.
(b) General approach under Article 3.1 of the Anti-Dumping Agreement
7.31 In analysing the European Union's claim, it is well established that the Panel's role is not to
conduct a de novo review of the evidence or simply defer to the conclusions of the investigating
authority. Rather, the Panel must test whether the explanation for the conclusion reached by the
investigating authority is reasoned and adequate in the light of other plausible explanations
34.
7.32 Further, in considering the European Union' s claims under Article 3.1 of the Anti-Dumping
Agreement, and in particular whether the qua lity of evidence relied upon by MOFCOM met the
standard of positive evidence, we recall that in US – Hot Rolled Steel, the Appellate Body held:
The term "positive evidence" relates, in our view, to the quality of the evidence that
authorities may rely upon in making a determin ation. The word "positive" means, to

33 Final Determination, Exhibit EU-2, pp. 23-24.
34 See, for example, Appellate Body Report, US – Tyres (China), para. 280.

us, that the evidence must be of an affirmative, objective and verifiable character, and
that it must be credible.35
The Appellate Body has also agreed that "positive ev idence" refers to "eviden ce that is relevant and
pertinent with respect to the issue being decided, and that has the characteristics of being inherently
reliable and trustworthy"36.

7.33 In examining whether MOFCOM conducted an objective examination of the evidence, we
note that the Appellate Body has held that this requi res an examination that conforms "to the dictates
of the basic principles of good faith and fundamental fairness". Further, the investigation must occur
in an "unbiased" and "even-handed" manner and must not favour a particular interested party over
another37.
(c) What methodology did MOFCOM use in its price effects analysis?
7.34 The European Union's claim under Articles 3.1 and 3.2 of the Anti-Dumping Agreement is
based upon the argument that making price comparisons without ensuring comparability does not
amount to an objective examination of positive evidence. Although not explicit in its Final
Determination, based upon the explanations provi ded during consultations, the European Union
understands that MOFCOM reached its finding of price undercutting by comparing annual weighted
average unit prices of all dumped imports with the annual weighted average unit prices of all domestic
sales by Nuctech38. In concluding that domestic prices were suppressed39, MOFCOM also relied upon
comparisons of annual weighted average unit prices 40. In particular, as will be discussed below,
MOFCOM compared domestic average unit values over the course of the POI in order to make an
intermediate finding that the prices of the domestic industry had declined by the amount quantified by
MOFCOM41. MOFCOM also relied upon its undercutting findings in concluding that the price
suppression was an effect of subject imports42.
7.35 In order to compare the price of subject imports with the price of the domestic like products,
China explained:
MOFCOM calculated the average unit pri ce per year of the subject imports as a
whole and compared them with the annual av erages of the domestic like product. By
putting both prices side by side it was obvious if one was higher or lower than the
other.43
7.36 In response to Panel questioning, China clarified that in order to arrive at the annual average
unit prices for Nuctech's sales, which were u sed in its undercutting and suppression analyses,
MOFCOM did not request that Nuctech provide tr ansaction specific data or data on a model-by-
model basis. Although, on its own initiative, Nu ctech provided domestic pr ice data on a model-by-
model basis for certain models, MOFCOM did not u se this in its price effects analysis. Rather,
MOFCOM divided the total domestic sales value of the domestic like product for each year of the

35 Appellate Body Report, US – Hot Rolled Steel, para. 192.
36 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, paras. 164-165.
37 Appellate Body Report, US – Hot Rolled Steel, paras. 193 and 196.
38 European Union's first written submission, para. 190.
39 The Panel notes that the parties disagree regarding whether MOFCOM found price suppression or
depression. As explained at paras. 7.52-7.54 of this Report, the Panel will use the label "price suppression"
when referring to MOFCOM's findings in this regard.
40 European Union's first written submission, para. 213.
41 See the European Union's response to Panel question 64 and para. 7.56 of this Report.
42 See paras. 7.58-7.60 of this Report.
43 China's response to Panel question 81, para. 50.

POI, as provided by Nuctech in its questionna ire response, by the quantity sold during the
corresponding year44. China confirmed that MOFCOM did not know the uses or energy levels for the
scanners that were included in these price effects calculations. According to China, MOFCOM did
"not consider that differences in energy levels [w ere] relevant for the price effects analysis under
Article 3.2 and it did therefore not take such differences into consideration"45.
7.37 MOFCOM used customs value data to determine the price of subject imports. In order to
calculate their annual average unit prices, China clarified that it did not take data for individual import
shipments during a given year and then aggregate it in order to calculate an average unit value for that
year. Rather, MOFCOM used the total customs valu e for the subject product for each year of the POI
and divided it by the import quantity of the subject product during the corresponding year46.
(d) What is the relevance of Smiths' failure to raise concerns regarding the price effects analysis
during the course of the investigation?
7.38 China notes that during the course of the investig ation, Smiths raised the issue of the alleged
differences between "low-energy" and "high-energy " scanners in the context of MOFCOM's decision
regarding the scope of products under investigation. China contends th at Smiths did not ever refer to
the alleged differences between the products in th e context of the price analysis conducted by
MOFCOM. China argues that if "it was so essentia l to make a price analysis separately for 'low-
energy' and 'high-energy' scanners, one would expect that the argument would at least have been
raised by Smiths during the investigation" 47. According to China, the f act that the argument was not
raised shows that there were no grounds for MOFCOM to consider the use of averages unreasonable.
7.39 China does not explicitly argue that Smiths' fa ilure to raise the argument about the alleged
differences between the products unde r investigation in the context of the price effects analysis
prevents the Panel from making a finding on this issue. If this is what China intends to imply, in our
view, China's suggestion is not well-founded. It is well established that a Member bringing a
complaint before a panel under the DSU is not limite d to those claims that were made during the
domestic investigation. The Appellate Body held in US – Lamb, for instance, that:
In arguing claims in dispute settlement, a WTO Member is not confined merely to
rehearsing arguments that were made to th e competent authorities by the interested
parties during the domestic investigation, even if the WTO Member was itself an
interested party in the investigation.48
7.40 China argues that the fact that Smiths did no t raise the alleged differences in the product
under consideration in the context of the price effect s analysis gives an indication that it was not in
fact essential for MOFCOM to take these differences into account. However, given that the Appellate
Body has held that a Member's claim is not restrict ed to the arguments made during the course of the
relevant investigation, in our view, the merits of the European Union' s claim under Articles 3.1
and 3.2 of the Anti-Dumping Agreement are not affect ed by the fact that the argument was not raised
during domestic proceedings.

44 China's response to Panel question 79, paras. 46 and 48 and China's response to Panel question 80,
para. 49.
45 China's response to Panel question 83, para. 53.
46 China's response to Panel question 82, para. 51. China also notes that the import value and volume
data received from customs was adjusted to exclude pro ducts other than the subject product. Further, the
average prices obtained were subsequently adjusted to bring them to landed level by adding the amount of the
duties payable upon importation.
47 China's first written submission, para. 280.
48 Appellate Body Report, US – Lamb, para. 113. See also, Appellate Body Report, US – Corrosion

(e) Has the issue of price comparability under Articles 3.1 and 3.2 of the Anti-Dumping
Agreement been considered by other panels or the Appellate Body?
7.41 The Appellate Body has observed that although Articles 3.1 and 3.2 of the Anti-Dumping
Agreement do not prescribe any particular methodology for examining the price effects of dumped
imports, investigating authorities do not have unfettered discretion in this regard. Rather, regardless
of the methodology chosen to examine price effect s, the investigating authority must conduct an
objective examination of positive evidence49.
7.42 Most recently, both the panel and the Appellate Body in China – GOES had cause to consider
whether an objective examination of positive evid ence had occurred in circumstances where the
investigating authority had conducted a price undercu tting analysis without considering the need for
adjustments to ensure price comparability. The pa nel concluded that when comparing subject import
and domestic prices to establish the existence of pr ice undercutting, an investigating authority must
"ensure that the prices it is using for its comparison are properly comparable" 50. Further, the panel
held that "[a]s soon as price comparisons are made, price comparability necessarily arises as an
issue"
51. The Appellate Body agreed with the panel's conclusion and stated:
[B]oth [parties] agreed that an investig ating authority must ensure comparability
between prices that are being compared . Indeed, although there is no explicit
requirement in Article 3.2 ... we do not see how a failure to ensure price
comparability could be consistent with th e requirement under Article 3.1 … that a
determination of injury be based on "pos itive evidence" and involve an "objective
examination" of, inter alia, the effect of subject imports on the prices of domestic like
products. Indeed, if subject import and dom estic prices were not comparable, this
would defeat the explanatory force that subject import prices might have for the
depression or suppression of domestic prices. We therefore see no reason to disagree
with the Panel when it stated that "[a]s soon as price comparisons are made, price
comparability necessarily arises as an issue".
52
7.43 Prior to the decision in China – GOES, two panels considered the extent to which Article 3.2
of the Anti-Dumping Agreement requires an investig ating authority to make adjustments to account
for differences in the products being considered in the price effects analysis. In EC – Tube or Pipe
Fittings, the panel reasoned as follows:
[I]n view of the stark contrast in the text , context, legal nature and rationale of the
provisions in Article 2 of the Anti-Dumping Agreement relating to the calculation of
the dumping margin and Article 3 relating to the injury analysis, we decline to
transpose wholesale the more detailed methodological obligations of Article 2
concerning dumping into the provisions of Article 3 concerning injury analysis.
Furthermore, because in the price undercutting analysis, the investigating authority is
examining injury caused by dumped imports, to the extent a product competes with
another product and affects domestic sales of that product, there might well be
different bases for deciding whether or not to make an adjustment in the context of
the dumping and price undercutting analyses. In a dumping determination, one focus
of adjustments may be on differences in costs that a producer/exporter might
reasonably be expected to reflect in his prices; by contrast, the focus in a price

49 Appellate Body Report, EC – Bed Linen (Article 21.5 - India), para. 113.
52 Appellate Body Report, China – GOES, para. 200.

undercutting analysis may be on differences between the imported and domestic like
product that have a perceived importance to consumers.53
7.44 In a similar vein, in EC – Fasteners (China) the panel held:
[T]here is no equivalent requirement under Ar ticle 3.2 to that of Article 2.4 of the
AD Agreement with respect to "due allowance" for differences affecting price
comparability. In our view, while it is clear that the general requirements of objective
examination and positive evidence of Article 3.1 limit an investigating authority's
discretion in the conduct of a price undercutting analysis, this does not mean that the
requirements of Article 2.4 with respect to due allowance for differences affecting
price comparability are applicable. Thus, fo r instance, adjustments in the context of
price undercutting analysis may be a useful means of ensuring that the requirements
of objective examination of positive evidence in Article 3.1 are satisfied, as might the
use of carefully defined product categories for the collection of price information.
54
(f) Did MOFCOM's price effects analysis cons titute an objective examination of positive
evidence?
(i) What were MOFCOM's obligations in relation to its price undercutting analysis?
 The obligation "to consider" price undercutting
7.45 In its submissions before the Panel, China argue d that the obligations in Article 3.2 of the
Anti-Dumping Agreement must be read in the light of the requirement on an investigating authority
only to "consider", rather than to make a determin ation on, whether there has been significant price
undercutting by dumped imports, or whether the effect of such imports is otherwise to depress prices
or prevent price increases 55. In the Panel's view, the requirement to "consider" price effects does not
require a definitive determination regarding the ex istence of price undercutting, price suppression or
price depression. However, although an investig ating authority may be required only to "consider"
price effects, the consideration must still involve an objective examination of positive evidence. In
this regard, we agree with the Appellate Body's statement in China – GOES:
The notion of the word "consider", when cast as an obligation upon a decision maker,
is to oblige it to take something into account in reaching its decision. By the use of
the word "consider", Article 3.2 … [does] not impose an obligation on an
investigating authority to make a definitive determination on the volume of subject
imports and the effect of such imports on domestic prices. Nonetheless, an authority's
consideration of the volume of subject imports and their price effects pursuant to
Article 3.2 … is also subject to the overarc hing principles, under Article 3.1 … that it
be based on positive evidence and involve an objective examination. In other words,
the fact that no definitive determination is required does not diminish the rigour that
is required of the inquiry under Articles 3.2 …
Furthermore, while the consideration of a matter is to be distinguished from the
definitive determination of that matter, this does not diminish the scope of what the
investigating authority is required to consid er. The fact that the authority is only
required to consider, rather than to make a final determination , does not change the
subject matter that requires consider ation under Article 3.2 … which includes

53 Panel Report, EC – Tube or Pipe Fittings, paras. 7.292-7.293.
54 Panel Report, EC – Fasteners (China), para. 7.328.
55 See China's first written submission, paras. 291, 294 and 297.

"whether the effect of" the subject imports is to depress prices or prevent price
increases to a significant degree.56
7.46 Consequently, when assessing MOFCOM's obliga tions in relation to its price undercutting
analysis, the obligation to "consider" rather than to make a determination on the existence of price
undercutting does not alter the substance or the nature of the enquiry required under Article 3.2 of the
Anti-Dumping Agreement.
 When conducting a price undercutting analysis, is it necessary to take into account differences
in the products being compared?
7.47 In relation to price undercutting under Article 3. 2 of the Anti-Dumping Agreement, the Panel
notes that, by its very nature, this involves a compar ison of prices, in particular the prices of dumped
imports with the prices of the like domestic product. As the Appellate Body noted in China – GOES:
[A]n investigating authority must consider "whether there has been a significant price
undercutting by the dumped or subsidized imports as compared with the price of a
like product of the importing Member". Thus, with regard to significant price
undercutting, Article 3.2 … expressly establish[ es] a link between the price of subject
products and that of like domestic produc ts, by requiring a comparison be made
between the two.57
7.48 The Panel must decide whether, when conducting such a comparison of prices as part of an
undercutting analysis, an investigating authority mu st take into account differences in the products
being compared. In this regard, we note the Appellate Body's statement in China – GOES:
[W]e do not see how a failure to ensure price comparability could be consistent with
the requirement under Article 3.1 … that a determination of injury be based on
"positive evidence" and involve an "objective examination" of, inter alia, the effect of
subject imports on the prices of domestic like products…We therefore see no reason
to disagree with the Panel when it stated that "[a]s soon as price comparisons are
made, price comparability necessarily arises as an issue".58
7.49 The Panel agrees with the Appellate Body that when a price comparison is made for the
purposes of an undercutting analysis under Article 3.2 of the Anti-Dumping Agreement, it is
necessary to ensure that the prices being consid ered are actually comparable. We note that
Articles 3.1 through 3.5 of the Anti-Dumping Ag reement detail an investigating authority's
obligations when establishing whether dumped imports have caused injury to the domestic industry.
The Appellate Body noted in China – GOES that the:
[P]rovisions contemplate a logical progression of inquiry leading to an investigating
authority's ultimate injury and causation determination … [P]ursuant to Article 3.5 …
it must be demonstrated that dumped…imports are causing injury "through the effects
of" dumping …"[a]s set forth in paragraphs 2 and 4". Thus, the inquiry set forth in
Article 3.2 … and the examination required in Article 3.4 … are necessary in order to
answer the ultimate question in Article 3.5 … as to whether subject imports are
causing injury to the domestic industry. The outcomes of these inquiries form the
basis for the overall causation analysis contemplated in Article 3.5 …. [T]he

56 Appellate Body Report, China – GOES, paras. 130-131.
57 Appellate Body Report, China – GOES, para. 136.
58 Appellate Body Report, China – GOES, para. 200.

interpretation of Article 3.2 … should be consistent with th e role [it] play[s] in the
overall framework of an injury determination under Article 3.59
7.50 The Panel considers that the Appellate Body's analysis of the relationship between the various
provisions of Article 3 of the Anti-Dumping Agre ement, culminating in the definitive causation
analysis under Article 3.5, is relevant to this case. It is precisely because the price undercutting
analysis under Article 3.2 ultimately must be u sed to assess whether dumped imports "through the
effects of dumping, as set forth in paragraphs 2 and 4" are causing injury to the domestic industry, that
it is necessary to ensure the prices that are the subject of an undercutting analysis are comparable. If
two products being analysed in an undercutting anal ysis are not comparable, for example in the sense
that they do not compete with each other, it is di fficult to conceive how the outcome of such an
analysis could be relevant to the causation questio n. Further, if two products are compared at
different levels of trade, without adjustment, the outcome of this comparison would not lead to an
objective, unbiased analysis under Article 3.5 regarding the injury arising due to the difference in the
prices of the products.
7.51 Consequently, in the Panel's view, when price comparisons are conducted as a part of a price
undercutting analysis under Article 3.2 of the Anti-Dumping Agreement, it is necessary for an
investigating authority to consider whether the pr ices are actually comparable. The Panel notes that
Article 3.2 does not mandate a specific methodology by which to ensure price comparability. When
the issue relates to a lack of comparability due to product differences, including due to differences in
market perceptions of the products for example, an investigating authority has multiple options in
determining how to proceed. For instance, an inve stigating authority could make use of "carefully
defined product categories for the collection of price information" 60. Alternatively, the
European Union argued that when it conducted its own investigation of x-ray scanners, its
investigating authority accounted for relevant di fferences by comparing the actual sales prices
charged by the exporter, with the prices offered by the domestic producers that submitted bids in the
same tendering procedure. Accord ing to the European Union, this ensured that the comparison of
prices occurred between products with the same specifications, as detailed in the call for bids 61. A
further example of a way in which to account for differences in the products being compared would
be to make relevant adjustments. The Panel does not suggest that the detailed provisions regarding
adjustments found in Article 2.4 of the Anti-Dumping Agreement should necessarily be transposed
wholly into Article 3.2. This is because there ar e other ways to ensure price comparability under
Article 3.2, apart from making adjustments, as just outlined. Further, the kind of adjustments required
in comparing prices for the purpose of establishing a dumping margin may be different to those
required in order to ensure an objective examination of price undercutting in the context of the injury
and causation analyses 62. However, in many instances relevant adjustments will effectively ensure
price comparability under Article 3.2.
(ii) What were MOFCOM's obligations in relation to its price suppression analysis?
 Did MOFCOM find price depression or price suppression?
7.52 At the outset, the Panel notes that there is a disagreement between the parties regarding
whether MOFCOM made a finding of price depression or price suppression. We recall that
MOFCOM made the following finding in its Final Determination:

59 Appellate Body Report, China – GOES, para. 128.
60 See Panel Report, EC – Fasteners (China), para. 7.328.
61 European Union's response to Panel question 21, para. 126.
62 See, for example, Panel Report, EC – Tube or Pipe Fittings , para. 7.293 and Panel Report, EC –
Fasteners (China), para. 7.328.

Although the import price of the Subject Product was slightly higher than the price of
domestic Like Products in 2008, it remained at a low level, while the sales price of
domestic Like Products decreased by 46.75% from 2008 to 2007, almost down to the
unit sales cost, leaving unit gross profit rate at a low level. Other evidence showed
that the unit production cost of domestic Like Products decreased by 53.67% from
2006 to 2008 while the sales price of domestic Like Products decreased by 72.68%
over the same period, i.e., the rate of th e decline of sales price was higher than the
rate of production cost reduction by 19.01 pe rcentage points, indicating that the sales
price of domestic Like Products failed to re main at a reasonable level as a result of
being [depressed/suppressed] by the import price of the Subject Product.
63
7.53 In the Panel's view, it is not necessary to decide whether MOFCOM's finding is best
characterised as one of "price suppression" or "price depression". This is because the
European Union's challenge does not centre on whet her the facts as found by MOFCOM, namely that
domestic prices decreased by more than the cost of production, can amount to a finding of price
suppression. Rather, the European Union request s that the Panel examine the way in which
MOFCOM compared prices in reaching its conclusion. The European Union acknowledges that its
claim does not depend on the "label" assigned by China to its findings
64.
7.54 Therefore, if MOFCOM, through China, maintains that it made a finding of price suppression,
the Panel is prepared to proceed on the basis of this label. However, in doing so, the Panel makes no
comment regarding whether the notion of price su ppression can in fact extend to circumstances where
"the rate of the decline of sales price was higher than the rate of production cost reduction … as a
result of being suppressed by the import price" 65. Rather, the Panel needs only to assess whether the
price comparison methodology used by MOFCOM to arri ve at this conclusion was consistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement.
 Did MOFCOM compare prices in making its price suppression finding?
7.55 In response to the European Union's argument that MOFCOM did not take into account the
differences between the scanners under investigati on when conducting its price suppression analysis,
China argues that price comparability cannot arise as an issue when considering price suppression.
According to China, price suppression is "assessed on th e basis of data pertaining to the domestic like
product only and [does] not involve a compar ison with the price of the imported product"
66. Contrary
to China's argument, in the Panel's view, in its price suppression analysis, MOFCOM relied on price
comparisons in two contexts. First, even ac cepting MOFCOM's ultimate finding was one of price
suppression, in reaching this finding MOFCOM made an intermediate finding that domestic prices
had declined over the course of the POI. Second, in concluding that prices were suppressed due to the
dumped imports, MOFCOM relied upon its price undercutting findings, which themselves relied upon
a comparison between the dumped imports and the like domestic product.
- Decline in domestic prices
7.56 The Panel notes that in reaching its price suppression finding, by comparing the changes in
domestic prices with the changes in domestic co sts over the POI, MOFCOM first concluded and
ultimately relied upon the fact that domestic prices decreased by 72.68% over the course of the POI.
This intermediate step involved a comparison of prices of the domestic like product over time. While
the European Union does not contest the way in which MOFCOM compared domestic prices and

63 Final Determination, Exhibit EU-2, pp. 23-24.
64 European Union's response to Panel question 64, para. 23.
65 Final Determination, Exhibit EU-2, pp. 23-24
66 China's response to Panel question 57, para. 9.

domestic costs, it argues that the intermediate fi nding of a decrease in prices was not based upon an
objective examination of positive evidence because MOFCOM did not take any steps to ensure
comparability before proceeding with the comparison of domestic prices over the POI67.
7.57 The Panel agrees with the European Union th at when comparing domestic prices over time,
MOFCOM was obliged to ensure that the domestic prices being compared were actually comparable.
In particular, when comparing the price of a basket of goods over time, it is necessary to ensure price
comparability by considering, and if necessary taking into account, any change s in the proportion of
the product types making up the basket each year. W ithout ensuring comparability in this context, it
is possible that an observed decline in the average unit prices may actually be the result of a change in
the product mix, for example due to an increased proportion of lower priced domestic products being
sold in a particular year, rather than due to a genuine change in domestic prices68.
- Reliance upon undercutting findings
7.58 China's argument that a price suppression anal ysis does not involve a comparison between
domestic prices and the prices of the imported product is based on an interpretation of Article 3.2 of
the Anti-Dumping Agreement that requires only a cons ideration of the existence of price suppression
per se and does not involve a consideration of whether there is a causal relationship between any price
suppression found to exist and the dumped imports69.
7.59 Although China pursues this argument before th e Panel, the Panel notes that in MOFCOM's
findings, it did in fact draw a link between the dumped imports and the price suppression, and indeed
relied upon its findings of price underc utting to conclude that domestic prices were suppressed. This
is in line with the Appellate Body's conclusion in China – GOES that it is not sufficient under
Article 3.2 of the Anti-Dumping Agreement to cons ider only the existence of price depression or
suppression per se . Rather, in conducting a price suppression analysis, it is necessary to consider
whether dumped imports have "explanatory force" for the occurrence of su ppression of domestic
prices70. In the circumstances of this case, MOFCOM stated:
The import price of the Subject Product remained at a low level, lower than the price
of domestic Like Products for most of the time during the POI such that it had an
evident… [suppressing] effect on the price of domestic Like Products.71
7.60 Therefore, it appears to the Panel that in reaching its conclusion that domestic prices were
suppressed, MOFCOM did indeed consider the role of subject imports in this regard. In the Panel's
view, MOFCOM relied upon its undercutting findings, in particular that the import prices remained
lower than domestic prices for most of the POI, in concluding that the imports had a suppressing
effect on domestic prices. Therefore, to the exte nt MOFCOM considered the "explanatory force" of
the dumped imports for the price suppression of do mestic products by relying on its undercutting
findings, then any inconsistencies in MOFCOM's price undercutting analysis, due to a failure to
ensure price comparability, will also render MOFCOM 's price suppression findings inconsistent with
Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

67 European Union's response to Panel question 64, para. 24.
68 See the European Union's example of how this may occur, at European Union's first written
submission, para. 215.
69 China's response to Panel question 58, paras. 15-21.
70 Appellate Body Report, China – GOES, paras. 138, 141.
71 Final Determination, Exhibit EU-2, p. 24 (emphasis added).

(iii) Did MOFCOM ensure price comparability in its price undercutting and price suppression
analyses under Article 3.2?
 Did MOFCOM take any steps to ensure price comparability?
7.61 The Panel recalls that MOFCOM's price effects analysis involved the comparison of prices in
two different contexts. First, MOFCOM compared the prices of the dumped imports and the like
domestic product for the purposes of its price underc utting finding, which it subsequently also relied
upon for its price suppression finding. Second, MOFCOM also compared the prices of the like
domestic product over the course of the POI in orde r to reach the intermediate conclusion, for the
purpose of its price suppression analysis, that prices of the like domestic product had declined.
7.62 The record indicates that MOFCOM did not take any steps to ensure that the prices it was
comparing for the purposes of its price undercutting and suppression analyses were in fact
comparable. In particular, as indicated previous ly, in response to a Panel question regarding the
method by which MOFCOM arrived at the annual av erage unit values used in its comparison, China
clarified that MOFCOM did not ever request transaction specific or model-by-model data from
Nuctech. Rather, MOFCOM divided the total domes tic sales value of the domestic like product for
each year of the POI by the quantity sold during th e POI. Further, MOFCOM did not know the uses
or energy levels of Nuctech's scanners that we re sold during the POI and included in its price
comparisons
72. Therefore, based on the information th at MOFCOM requested from Nuctech, it is
clear that from the beginning of the investigati on MOFCOM took the decision that any form of
evaluation of the specifications or the prices of th e products that it was including in its analysis was
not necessary. In fact, MOFCOM did not examine any pricing data at all, but merely examined the
total sales value of the domestic like product.
7.63 Similarly, in relation to the data on dumpe d imports, MOFCOM did not have transaction
specific or model-by-model data. Rather, MOFCOM used the total customs value for the subject
product for each year of the POI and divided it by the import quantity of the subject product73.
7.64 According to China, "MOFCOM … concluded th at these price differences [between] models
were not of a nature to overturn the conclusi on that the price undercutting was 'significant'" 74.
However, without any data before it regarding th e actual prices of the dumped imports and the like
domestic product, as sold in China during the POI, it would have been impossible for MOFCOM to
have reached this conclusion. I ndeed, the conclusion is not reflec ted anywhere in MOFCOM's Final
Determination.
7.65 China submits that MOFCOM examined the arguments raised by Smiths regarding the
alleged differences between the "low-energy" a nd "high-energy" scanners when considering the
product scope of the investigation 75. In considering the product sco pe, MOFCOM concluded that the
domestic products were "like" the subject imports. Therefore, China argues that in its price effects
analysis MOFCOM compared the prices of "like" products, which was sufficient to ensure price
comparability76. The Panel is not convinced by this ar gument. The consequence of defining the
product under consideration very broa dly, is that the "like" domestic product will also be very broad.
However, a number of panels have clarified that where a broad basket of goods under consideration

72 China's response to Panel question 79, para. 46; China's response to Panel question 80, para. 49;
and China's response to Panel question 83, para. 53.
73 As indicated at paras. 7.93-7.95 of this Report, the Panel does not consider that Smiths' failure to
provide the information requested of it justifies the methodology used by MOFCOM for its price effects
analyses.
74 China's first written submission, para. 312 and China's second written submission, para. 250.
75 See, for example, China's first written submission, para. 325.
76 China's first written submission, paras. 305-309.

and a broad basket of domestic goods have been found by an investigating authority to be "like", this
does not mean that each of the goods included in th e basket of domestic goods is "like" each of the
goods included within the scope of the product under consideration 77. In the circumstances of this
case, the fact that the domestic product was found under Article 2.6 of the Anti-Dumping Agreement
to be "like" the product under consideration, does not necessarily mean that a Smiths product used for
scanning hand baggage at airports is necessarily "like" a Nuctech product used for scanning rail
carriages, trucks or marine cargo containers, for example78.
7.66 Consequently, in the Panel's view, MOFCOM's conclusion in the context of considering the
scope of the investigation, namely that the domestic product was "like" the product under
consideration, does not mean that MOFCOM fulfill ed its obligation to ensure price comparability
when conducting its price effects analysis under Article 3.2 of the Anti-Dumping Agreement.
7.67 It is clear that from the start of the investigation, MOFCOM did not take any steps to consider
or analyse whether the products it was comparing in its price undercutting and suppression analyses
were actually comparable. This is contrary to the notion that "[a]s soon as price comparisons are
made, price comparability necessarily arises as an issue" 79. Without an examination of price
comparability, MOFCOM did not ensure that its price undercutting and suppression analyses
constituted an objective examination based on positive evidence.
 Was there evidence before MOFCOM to put it on notice that price co mparability should be
assessed before conducting the price effects analysis?
7.68 In the Panel's view, price comparability needs to be considered in all price effects analyses to
ensure that the injury determination involves an objective examination based on positive evidence.
However, in addition, in the circumstances of this case, there was a significant volume of evidence on
the record to put MOFCOM on notice that price co mparability was an issue and would need to be
accounted for before undertaking price comparisons under Article 3.2 of the Anti-Dumping
Agreement. This evidence is outlined in the sections below. In summary, based upon its review of the
evidence before MOFCOM, the Panel concludes that it was clear that the dumped imports consisted
only of "low-energy scanners", while there was no such limit on the energy levels of the domestic like
product. Further, even accepting the ex istence of a "continuum" of scanners 80, there was evidence on
the record to indicate that there were significant differences between the dumped imports and some of
Nuctech's scanners, in terms of uses, physical ch aracteristics and prices, for example. Further,
MOFCOM's own findings indicated that "high-energy" and "low-energy" scanners have different uses
and are perceived differently by consumers. In the li ght of this evidence, the Panel is of the view that
MOFCOM clearly failed to conduct an objective examination of positive evidence by proceeding with
its price effects analysis without even consideri ng, let alone taking into account, these differences in
the products being compared. The following pa ragraphs provide a more detailed account of the
evidence that was before MOFCOM.

77 See, for example, the Panel's reasoning in EC – Salmon (Norway), paras. 7.13-7.76.
78 For examples of Smiths' products "ideally suitable for cabin baggage" and for "briefcases, handbags
and other small items", see Application, Exhibit EU-3, pp. 132 and 138 of the pdf document. To see all
products produced by Smiths Heimann GmbH, see Smiths' Questionnaire Response regarding energy levels of
low-energy scanners not exceeding 300 KeV, Exhibit EU-42. For examples of Nuctech scanners used to scan
trucks, see Smiths' Injury Brief, Exhibit EU-11, p. 4 and Nuctech's website description of "high-energy"
scanners, Exhibit EU-21.
79 Appellate Body Report, China – GOES, para. 200.
80 See para. 7.77 for China's argument regarding the existence of a "continuum" scanners.

- The evidence on the record before MOFC OM indicated that all imports were
"low-energy" scanners, whereas domestic products were not so limited
7.69 The evidence on the record supports the European Union's position that during the POI
Smiths exported only "low-energy" scanners to China. For example, in its Injury Brief Smiths stated:
Smiths did not export high-energy scanners to China during the POI … Smiths' high-
energy scanners could not have injured and did not injure the domestic high-energy
scanner industry because Smiths exported only low-energy scanners to China during
the POI.81
7.70 Further, in its questionnaire response, Smiths listed all of the subject products produced by
Smiths Heimann GmbH. All of the products were scanners with an energy level of 300 KeV or less82.
Although China argues that this questionnaire res ponse did not include information on the models
exported to China in 2006 and 2007, the Panel is not c onvinced by this argument. We note that in its
questionnaire response Smiths provided certain pricing information for 2008 only 83. However, in
other sections of the questionnaire, informa tion for all years of the POI was provided 84. In relation to
the subject products produced by Smiths Heimann GmbH, the questionnaire stated "See the table
below for all models of the Subject Product we produce", followed by the relevant table of
information85. There is no indication at all that this in formation referred only to production in 2008.
Further, at no stage in the investigation did either MOFCOM or Nuctech question Smiths' position
that its German branch (Smiths Heimann GmbH) exported only "low-energy" scanners.
7.71 In relation to the possible export of "high-energy" scanners to China by the French affiliate of
Smiths Heimann GmbH, namely Smiths Heimann SAS, Smiths stated in its questionnaire response:
Smiths Heimann is the only company which manufactures and exports the Subject
Product to China…Smiths Heimann has expor ted products to China through Smiths
Detection (Asia Pacific) Pte Ltd. (Singapore). Other than these two companies, no
other companies of Smiths Detection Group Limited have been involved in either
production or sale of the Subject Products to China.86
Although China questions the relevance of this ev idence in demonstrating that Smiths Heimann SAS
did not export the subject product to China, on the basis that Smiths Heimann SAS is not included
within "Smiths Detection Group Limited", the Pane l notes a number of other statements by Smiths
that support the position that Smiths Heimann SAS did not export to China, including:

Only Smiths Heimann GmbH in German[y] a nd Smiths Detection (Asia Pacific) Pte
Ltd. are involved in the production or sale of the Subject Product to China
87; and
Smiths Heimann SAS is an important produc tion entity of Smiths Group in the EU,
but it did not produce or export any Subject Products during the POI to China88.

81 Smiths' Injury Brief, Exhibit EU-11, p. 7.
82 In particular, all of the products were scanners with energy levels of 100 KeV, 140 KeV, 160 KeV or
300 KeV. Smiths' Questionnaire Response (Injury), Exhibit EU-7 (BCI), pp. 13-14 and Smiths' Questionnaire
Response regarding energy levels of low-energy scanners not exceeding 300 KeV, Exhibit EU-42. See also,
European Union's response to Panel question 29, para. 148.
83 Smiths' Questionnaire Response (Injury), Exhibit EU-7 (BCI), p. 21.
84 Smiths' Questionnaire Response (Injury), Exhibit EU-7 (BCI), see, for example, pp. 18, 19 and 22.
85 Smiths' Questionnaire Response (Injury), Exhibit EU-7 (BCI), p. 13.
86 Smiths' Questionnaire Response (Dumping), Exhibit EU-6 (BCI), p. 12.
87 Smiths' Questionnaire Response (Dumping), Exhibit EU-6 (BCI), p. 19.

7.72 Further, the evidence before the Panel indicat es that MOFCOM's investigation proceeded on
the basis that there were no exports from Smiths Heimann SAS to China. In particular, MOFCOM
did not ever request supplementary information fro m Smiths in relation to its statement that only
Smiths Heimann GmbH exported to China. Furthe r, MOFCOM did not ever apply facts available
against Smiths Heimann SAS, on the basis that it was exporting to China but not cooperating.
Finally, in response to a Panel question regardi ng the way in which MOFCOM used customs value
data to determine the price of subject imports, China provided a confidential explanation which, in the
Panel's view, confirms that MOFCOM was using cu stoms value data only in relation to imports from
Germany, and not from France or elsewhere 89. Consequently, in the Panel's view, this confirms that
the Smiths' export pricing data on which MOFCOM was relying related only to "low-energy"
scanners.
7.73 With respect to whether there may have been other European companies, apart from those in
the Smiths group, exporting high-energy scanners to China, even Nuctech stated in the Application
that, to its knowledge "Smiths Heimann is the only one in the EU countries that exports the subject
product to China" 90. Further, in its questionnaire response, Nuctech reiterated this and stated "[a]s
such, the export data from the EU to China is the export data from Smiths Heimann to China"91.
7.74 Therefore, in the Panel's view, the evidence on the record, which MOFCOM did not question,
was that the dumped imports consisted only of scanners with energy levels of 300 KeV or less.
7.75 In relation to the like domestic product, it is clear that it included both "low-energy" and
"high-energy" scanners 92. Regarding actual sales of the like domestic product during the POI, the
Panel notes that before MOFCOM, Nuctech did not contest, in response to Smiths' arguments on
product scope, that it sold both low- and high-energy scanners during the POI 93. Consequently, the
Panel considers that MOFCOM was on notice that Nu ctech's sales were not limited to scanners with
an energy level at or below 300 KeV.
7.76 Therefore, the situation confronting MOFCOM was that the dumped imports consisted only
of "low-energy" scanners, while the domestic "like" product consisted of both "low-energy" and
"high-energy" scanners.
- Regardless of whether or not there is a "continuum" of scanners, the evidence
on the record indicated that there were significant differences between the
scanners under investigation
7.77 The Panel recalls that the parties disagree re garding whether a clear cut-off line between
"high-energy" and "low-energy" scanners exists. During the investigation, Smiths argued that there
were considerable differences between scanners with an energy level at or below 300 KeV and
scanners with an energy level above 300 KeV. Be fore the Panel, the European Union adopts these
arguments but also acknowledges that there may be room for debate regarding whether the dividing

88 Smiths' Questionnaire Response (Injury), Exhibit EU-7 (BCI), p. 10.
89 China's response to Panel question 82, see text within the second BCI brackets in para. 52.
90 Application, Exhibit EU-3, p. 13.
91 Nuctech's Questionnaire Response, Exhibit EU-8, p. 13.
92 See, Nuctech's Questionnaire Response, Exhibit EU-8, pp. 9 and 38, where a non-exhaustive list of
Nuctech products falling within the definition of the like product is provided, and includes model names for
both "low" and "high-energy" scanners.
93 The Panel also notes that China has never disputed this before the Panel. In fact, in noting that two
"so-called low-energy scanners" repres ented more than 80% of Nuctech's sales of scanners during the POI,
China stated that the "low-energy market sector repres ents a significant part of Nuctech's activities throughout
the POI", but it did not argue that "low-energy" scanners accounted for all sales of the like domestic product
during the POI (China's first written submission, para. 438).

line should be drawn precisely at 300 KeV. However, the European Union argues that it is clear that
there is a wide and easily recognisable gap betwee n "high" and "low-energy" scanners. In contrast,
China argues that there is no clear-cut off line be tween scanners, but rather a "continuum" of scanners
exists.
7.78 A review of China's second written submission re veals that there is some merit to China's
argument that the 300 KeV energy level does not al ways create a sharp distinction between the
physical characteristics, uses, technological featur es, mechanical features, manufacturing processes
and prices of scanners and that examples of overlap regarding these characteristics across the
300 KeV energy level can be found
94.
7.79 Therefore, the Panel acknowledges that the 300 KeV energy level does not necessarily
provide a precise means of distinguishing between different types of scanners. However, whether
there is a precise cut-off point between two categor ies of scanners based on energy level, or whether
there is a "continuum" of scanners, as argued by Chin a, is not determinative of the issue before the
Panel. It is clear that the product under considera tion, and consequently the "like" domestic product,
were defined very broadly. For example, the like product was defined broadly enough to include
scanners for objects such as cargo containers, trucks and railway carriages, and scanners for smaller
objects, such as parcels and baggage at airports 95. Further, the evidence pr ovided by China in its
second written submission to demonstrate that using the 300 KeV energy level as the cut-off point for
different types of scanners is not appropriate in fact demonstrates the wi de range of physical
characteristics of the scanners under consideration96.
7.80 While the 300 KeV energy level may not necessarily provide a precise cut-off point between
product types, and even accepting the existence of a "continuum" of scanners, in the Panel's view,
there was evidence on the record before MOFCOM to suggest that there were clear differences in uses
and physical characteristics between the Smiths' sc anners exported to China and some of Nuctech's
scanners. This evidence is outlined below.
- Differences in physical characteristics and uses between the dumped imports
and some of Nuctech's scanners
7.81 Smiths made extensive submissions, in the c ontext of contesting the scope of the product
under consideration, to the effect that there are considerable differences between "low" and "high"
energy scanners. Indeed, a comparison of Nuctech's scanners and the dumped Smiths' scanners on the
Panel's record indicates that some of Nuctech's scanne rs exhibit very different physical characteristics
and uses to the Smiths' scanners that were exported to China. For instance, the following represents a
Nuctech scanner with an energy level of either 6MeV or 9 MeV. It is used to "penetrate and inspect
fully-loaded railroad vehicles"97.

94 See China's second written submission, paras. 204-238.
95 See, for example, China's second written submissi on, paras. 218-220, outlining some of the different
uses for which certain scanners produced by Smiths and Nuctech are designed. See also, technical data in
Exhibits EU-20 and EU-21, describing the uses of different Nuctech scanners.
96 See, for example, China's second written submissi on, para. 206, revealing that Nuctech and Smiths'
scanners range in weight from at least 160 kg to 7,500 kg.
97 Nuctech's website description of "high-energy" scanners, Exhibit EU-21. The image is a Nuctech RF
Series scanner. Nuctech's Questionnaire Response, Exhibit EU-8, pp. 9 and 38 (Attachment 2), indicates that
the RF Series was included in the domestic like product. Pictures and specifications of the RF scanner and other
Nuctech scanners of a similar size can be found in Nuct ech's Questionnaire Response and were therefore on the
record before MOFCOM (Exhibit EU-8, see in particular, pp. 109-118 of the pdf document). Due to the poor
quality of the photocopies of these images, the image from the website, submitted as Exhibit EU-21, is included
in this Report in preference to that in the Questionnaire Response.

7.82 A further example of a Nuctech scanner with an energy level ranging from 1.5MeV to 6MeV
that is used for " inspecting cars, cargo containers, empty c ontainers, container trucks at seaports,
border crossings, airports" is shown below98:

98 Nuctech's website description of "high-energy" scanners, Exhibit EU-21. The image is of the
Nuchtech FS Series scanner. Nuctech's Questionnaire Response, Exhibit EU-8, pp. 9 and 38 (Attachment 2),
indicates that the FS3000 was included in the domestic like product. The same image (and specifications) of the
FS3000 was before MOFCOM in Nuctech's Questionnaire Response, Exhibit EU-8, pp. 115-116 of the
pdf document.

7.83 In its questionnaire response, Smiths GmbH provi ded the specifications of all the scanners it
produced99. None of them look remotely like the Nuct ech scanners shown above. An example of a
Smiths scanner is shown below. As is evident fro m the image, it is used to scan hand luggage and
other small items:

7.84 While China submits that "[i]t is only by juxt aposing the extremes of the spectrum that the
EU is able to create the impression that completely different categories of scanner exist" 100, in the
Panel's view, there was evidence on the record befo re MOFCOM to suggest that some of Nuctech's
scanners were at a very different place on the spectrum to most of Smiths' exports to China.
7.85 With such differences in the physical charact eristics and uses of the scanners exported by
Smiths to China and some of the large scanners produced by Nuctech, it seems clear to us that
MOFCOM was on notice of a need at least to c onsider comparability before conducting its price
comparisons for the purposes of its undercutting analysis, and consequently its price suppression
analysis, under Article 3.2 of the Anti-Dumping Agre ement. Further, given that Nuctech's products
included those ranging from small ha nd-luggage scanners to the large railway and container scanners
shown above101, MOFCOM was on notice of the need to consider the product mix of Nuctech's annual
sales before comparing domestic prices over time for the purposes of its price suppression analysis.
In the Panel's view, for MOFCOM to make an interm ediate conclusion of a price decline in Nuctech's
products, which included both low- and high-energy scanners, without in some way considering and
ensuring comparability of the bask et of Nuctech goods over the POI, does not constitute an objective
examination because observed changes in the average unit values could be the result of changes in the
product mix, rather than genuine changes in pri ces. The Panel notes that the methodology used by
MOFCOM, namely collecting total sales value and dividing it by quantity sold, without examining
uses or prices of the imports or the domestic pr oducts, makes it clear that MOFCOM did not account
for the differences in the products being compared. Rather, MOFCOM simply included all sales in its
average unit value calculations. In the Panel's vi ew, this is not consistent with an objective
examination of positive evidence for the purposes of the price undercutting and price suppression
analyses under Articles 3.1 and 3.2 of the Anti-Dumping Agreement.

99 Smiths' Questionnaire Response regarding energy levels of low-energy scanners not exceeding
300 KeV, Exhibit EU-42.
100 China's second written submission, para. 199.
101 See, for example, Nuctech's Questionnaire Response, Exhibit EU-8, pp. 97-118 of the
pdf document.

- MOFCOM's own findings regarding "low-energy" and "high-energy"
scanners support the position that price comparability needed to be
considered
7.86 In addition to the information on the record regarding the very different physical
characteristics and uses of the imported products an d some of Nuctech's scanners, MOFCOM itself
made certain observations, in the context of consid ering the scope of the product under investigation,
which support the notion that MOFCOM should have considered comparability before proceeding
with its price effects analysis. In particular, in its Final Determination, MOFCOM stated:
Although X-Ray scanners of a high energy level are usually used to inspect large
objects, while X-Ray scanners of a low energy level are used to inspect small objects,
these are only variations adopted in accordance with different product designs and
market elections.
102
7.87 In its Dumping Disclosure to Smiths, MOFCOM made the same statement, referring to the
different uses to which "high-energy" and "low-e nergy" scanners are put as "variations adopted in
accordance with differences in pr oduct design and market choice" 103. Similarly, in the Dumping
Disclosure to the European Commission, MOFCOM stated:
[F]irstly, from the physical characteristics, these two looked different, reflecting the
morphological differences in integration, as the manufacturer chose different forms of
product integration subject to different customer needs and product design … the
difference of the ray source transmitter re flected high and low energy in product
design, and the difference in the operating mechanism of the detection system was
based on the energy level of detection and th e choice of a more appropriate level of
detection … Although the high-energy equi pment was often used to detect large
objects, while low-energy equipment was used to detect small objects, this was just a
change based on product design and a different market.104
7.88 Therefore, even MOFCOM acknowledged that "high-energy" and "low-energy" scanners
generally have different uses, are pe rceived differently by consumers a nd are in "a different market".
Although MOFCOM stated that "high-energy x-ray scanners can also be used to inspect small
objects"105, MOFCOM's preceding statement indicates that this is the exception rather than the rule
and generally does not reflect the "market elections" earlier referred to by MOFCOM 106.
Consequently, in the light of MOFCOM's acknowledge ment, in the context of considering the scope
of the product under investigation, that high-ene rgy and low-energy scanners generally operate in
different markets, in the Panel's view MOFCOM s hould have considered this when deciding upon its
methodology for determining price effects under Articl e 3.2 of the Anti-Dumping Agreement. To be
comparing the prices of Smiths' low energy scanners with the prices of a much broader mix of "like"

102 Final Determination, Exhibit EU-2, p. 13.
103 MOFCOM's Dumping Disclosure to Smiths (BCI), Exhibit EU-17, p. 6.
104 MOFCOM's Dumping Disclosure to the European Commission, Exhibit EU-18, p. 7 of the
pdf document.
105 Final Determination, Exhibit EU-2, p. 13.
106 We note that in its second written submission, China provides evidence to indicate that there are two
scanners with energy levels of 320 KeV and 6 MeV, for which the description of use includes to inspect air
cargo and pallets at airports. According to China, the Eu ropean Union considers that such uses are reserved for
"low-energy" scanners (China's second written submission, paras. 219-220 and Exhibits CHN-10 and CHN-11).
In the Panel's view, these examples do not alter the f act that MOFCOM found in general that "high-energy"
scanners are used to inspect large objects and that "high" and "low-energy" scanners are perceived differently in
the market. The Panel considers that MOFCOM should have taken this finding into account wh en deciding
upon its price effects methodology.

Nuctech products, including products with different uses and which were not perceived by customers
to be substitutable, does not constitute an objec tive examination of positive evidence for the purposes
of the price undercutting (and consequently the pri ce suppression) analysis under Articles 3.1 and 3.2
of the Anti-Dumping Agreement107. Further, to analyse the trends in the prices of Nuctech's products,
which included both low- and high-energy scanne rs, without considering and taking into account
changes in the product mix each year, does not constitute an objective ex amination of positive
evidence for the purposes of the price suppression analysis.
- There was some evidence on the r ecord before MOFCOM regarding
significant differences in the prices of different models
7.89 In addition to MOFCOM's own conclusions, Nuctech's submissions in its Application also
should perhaps have suggested to MOFCOM that pri ce comparability needed to be considered in the
context of its Article 3.2 analysis. In partic ular, in submitting its domestic prices over the POI,
Nuctech stated that "[b]eca use the prices of different types of Subject Products vary significantly, the
change in the average price cannot show a trend of price change" 108. Consequently, Nuctech
separated the trends in the prices for two of its models, which together accounted for more than 80%
of its sales 109. The two models which Nuctech chose for this purpose were both "low-energy"
scanners, indicating that in Nuctech's view even an aggregation of prices of "low-energy" models can
lead to distorted conclusions when considering pricing trends over time.
7.90 Smiths also made submissions regarding the price differences between "high" and "low-
energy" scanners. In particular, Smiths stated in its Injury Brief that the price difference between its
highest-priced low-energy scanner (a 300 KeV scanner) and lowest-priced high-energy scanner
(a 2.5 MeV scanner) was approximately ten-fold 110. Although before the Panel China submitted an
example of two contracts relating to sales of Nu ctech scanners in 2011, which demonstrated that a
high-energy scanner had been sold at a lower price than a "low-energy" scanner 111, the Panel remains
of the view that the submissions on the record be fore MOFCOM regarding the differences in prices
across models, including between "low-energy" a nd "high-energy" models, should at least have
prompted MOFCOM to examine, and if necessary take into account, such differences prior to
conducting its price effects analysis under Article 3.2 112. The Panel notes that the contracts submitted
to it by China were not on the record before MOFCOM and, in any event, relate to sales outside the
POI. These transactions could therefore not have provided any justification for a conclusion by
MOFCOM that there was no need to ensure compar ability before making the price comparisons it did
in its price undercutting and suppression analyses.
- Other evidence
7.91 Finally, in addition to the aforementioned evidence before MOFCOM, there were also
extensive submissions by Smiths to MOFCOM regard ing the different uses, physical characteristics

107 Where the "like" domestic product has the broad interpretation outlined by the Panel in EC –
Salmon (Norway), paras. 7.13-7.76 (see para. 7.65 of this Report).
108 Application, Exhibit EU-3, pp. 29-30.
109 Application, Exhibit EU-3, p. 29.
110 Smiths' Injury Brief, Exhibit EU-11, pp. 6-7.
111 Sales Contracts provided in Exhibits CHN-17 (BCI) and CHN-18 (BCI).
112 China argues that Smiths' submission regarding the price differences between "high-energy" and
"low-energy" scanners was merely an unsubstantiated asser tion. However, the Panel is of the view that in the
light of Nuctech's own submissions regarding the problems in using aggregated prices, and the fact that Smiths'
submission was not contested before MOFCOM, Smiths' submission provides support for the conclusion that
MOFCOM should at least have considered the pricing of different scanners when choosing its price effects
methodology.

and technical features of "high-energy" and "low-energy" scanners 113. The Panel does not consider
that MOFCOM's examination of this evidence for the purpose of concluding that both "high-energy"
and "low-energy" scanners could be included within the scope of the investigation was sufficient for
the purposes of ensuring price comparability under Article 3.2 of the Anti-Dumping Agreement.
MOFCOM's conclusions for the purposes of product sc ope were at a very high-level of generality.
For instance, with respect to the functions and uses of the scanners, MOFCOM stated that there were
no differences between the various scanners becau se "all X-Ray scanners were used to detect
objects"114. In the Panel's view, the fact that all scanners were used to detect objects is clearly not
determinative of whether the prices at issue were comparable for the purposes of the Article 3.2 price
effects analysis.
 Conclusion
7.92 The Panel concludes that MOFCOM did not ta ke any steps to ensu re price comparability
before undertaking its price comparisons as part of its price effects analysis. This was even though
there was evidence on the record before MOFCOM to indicate that there were significant differences
in the uses, physical characteristics and prices of the products being compared and in circumstances
where MOFCOM had itself concluded that "high-en ergy" and "low-energy" scanners are perceived
differently by consumers.
(g) What is the relevance of China's argument that Smiths did not provide the data that would
have allowed MOFCOM to conduct a model-to-model price comparison?
7.93 China argues that MOFCOM requested complete pricing data relating to the subject product
for the three years of the POI. However, Smith s provided only average figures for certain models
for 2008 and no pricing data at all for 2006 and 2007. Therefore, China contends that it was in fact
impossible for MOFCOM to perform a model-to-model price effects analysis and that the use of the
weighted average methodology was reasonable and appropriate in these circumstances.
7.94 The Panel recalls that MOFCOM did not requ est pricing data from Nuctech, whether on a
transaction specific basis or on a model by model basis, but rather requested the total domestic sales
value for use in calculating average unit values. Therefore, even if Smiths had provided all of the data
requested of it, given that MOFCOM did not requ est equivalent data from Nuctech, it appears that
MOFCOM was not intending to employ a model-to-mode l price analysis. Consequently, the Panel is
not convinced that the reason MOFCOM chose the methodology it did was due to Smiths' failure to
provide certain data. Rather, as indicated previously, the data requested of Nuctech indicates to the
Panel that MOFCOM decided at the outset to use its average unit value methodology.
7.95 In any event, the Panel notes that under Article 6.8 and Annex II of the Anti-Dumping
Agreement, there are explicit procedures for an inves tigating authority to follow when an interested
party does not provide necessary information. Unde r specific circumstances, these procedures allow
an investigating authority to fill factual gaps in th e record with the best information available. The
Panel notes that there is no evidence on the record that MOFCOM found Smiths had failed to provide
necessary information within the meaning of Article 6.8 of the Anti-Dumping Agreement and had
resorted to the facts available procedures under A nnex II. In response to a Panel question, China
confirms that MOFCOM did not make such a finding under Article 6.8 and did not apply facts
available under Annex II
115. Whether or not a resort to facts available under Article 6.8 and Annex II
could ever justify the type of methodology employed by MOFCOM in this case, it is clear that in the
absence of resorting to facts av ailable, the flaws in MOFCOM's analysis cannot be cured by the

113 See, for example, Smiths' Injury Brief, Exhibit EU-11, pp. 2-7.
114 Final Determination, Exhibit EU-2, p. 13.
115 China's response to Panel question 42, para. 33.

argument that Smiths did not provide the necessary information. In the Panel's view, MOFCOM's
approach was not "reas onable and appropriate" 116, but was inconsistent with Articles 3.1 and 3.2 of
the Anti-Dumping Agreement, and the lack of fa ctual information before MOFCOM cannot justify
this.
7.96 In the light of this conclusion, it is not necessar y for the Panel to resolve the issue raised by
the European Union regarding whether MOFCOM in fact had sufficient information before it to
conduct a price effects analysis that took into acco unt the alleged differenc es between the products
under consideration.
(h) Conclusion
7.97 The Panel concludes that China acted inconsis tently with Articles 3.1 and 3.2 of the Anti-
Dumping Agreement by failing to ensure that the prices it was comparing as a part of its price effects
analysis were actually comparable. In particular, the Panel concludes that MOFCOM's price
undercutting and price suppression analyses were incons istent with Articles 3.1 and 3.2 because they
were not based on an objective examination of positive evidence.
D. T
HE STATE OF THE DOMESTIC INDUSTRY: ARTICLES 3.1 AND 3.4 OF THE ANTI-DUMPING
AGREEMENT
1. Introduction
7.98 The European Union submits that MOFCOM did not base its injury finding on positive
evidence. Further, the injury evaluation did not involve an assessment of all relevant economic
factors. Finally, the injury analysis ignored the positive state of the domestic industry, instead finding
material injury based on a limited number of nega tive factors, ignoring the overall development and
interaction among the positive and negative factor s. China asks the Panel to reject the
European Union's claim.
2. Relevant provisions
7.99 Article 3.1 of the Anti-Dumping Agreement is set forth above. Article 3.4 of the Anti-
Dumping Agreement provides:
The examination of the impact of th e dumped imports on th e domestic industry
concerned shall include an evaluation of all relevant economic factors and indices
having a bearing on the state of the industry, including actual and potential decline in
sales, profits, output, market share, productivity, return on investments, or utilization
of capacity; factors affecting domestic prices; the magnitude of the margin of
dumping; actual and potential negativ e effects on cash flow, inventories,
employment, wages, growth, ability to raise capital or investments. This list is not
exhaustive, nor can one or several of these factors necessarily give decisive guidance.

116 China's response to Panel question 42, para. 34.

3. Main arguments of the parties
(a) European Union
(i) MOFCOM's failure to rely on positive evidence
7.100 The European Union submits that MOFCOM relied on flawed data, contrary to the Article 3.1
obligation to use positive evidence. This argument is based on discrepancies between the data relied
on by MOFCOM, and the data submitted by Nuctech . Since the domestic industry was made up only
of Nuctech, the European Union contends that th e trends found by MOFCOM on the basis of its
record evidence should coincide to a great extent with the trends resulting from the data submitted by
Nuctech.
7.101 Although China argues that the data provided by Nuctech was adjusted pursuant to the
verifications conducted by MOFCOM, the European Union argues that there is no evidence to support
this. At no stage did MOFCOM alert interested pa rties to the fact that it had found discrepancies in
Nuctech's data during verification and had subsequently modified the data.
7.102 In response to China's explanation regardi ng the adjustments to the data on cash flow,
investments and return on investme nt, namely that the figures were adjusted to remove information
relating to exports and other products, the European Union submits that this is difficult to reconcile
with the specific questions addressed to Nuctech. The questions referred to domestic like product and
not to other products. The European Union also qu estions the basis (e.g. quantities, turnover, etc.)
upon which MOFCOM made the adjustments.
7.103 In addition to such alleged discrepancies be tween the information provided by Nuctech and
the data reflected in MOFCOM's Final Determinat ion, the European Union submits that there are
other indicia making such data unreliable. In particul ar, the European Union refers to publicly
available data regarding Nuctech's pre-tax profits and employment, which cannot be reconciled with
MOFCOM's findings.
7.104 The European Union notes that MOFCOM addressed the alleged discrepancies between its
Final Determination and the publicly available data by stating that the public figures "included the
information and data on other produc ts in addition to the Like Produc ts, while the determinations of
the instant case only would be based only on the information and da ta on Like Products" 117. The
European Union submits that MOFCOM's rationale is questionable, since scanners accounted for
approximately 90% of Nuctech's products.
(ii) MOFCOM's failure to examine all Article 3.4 factors
7.105 The European Union submits that MOFCOM faile d to examine the magnitude of the margin
of dumping, notwithstanding the inclusion of this factor in Article 3.4 of the Anti-Dumping
Agreement. According to the European Union, th ere is nothing in the Final Determination or on the
record showing that MOFCOM evaluated or considered the relevance of this factor. Further, China
has confirmed that MOFCOM does not have separate internal reports in which the factor may have
been evaluated.

117 Final Determination, Exhibit EU-2, p. 28.

(iii) MOFCOM's failure to take into account d ifferences between low-energy and high-energy
scanners
7.106 The European Union recalls its previous argu ments regarding the di fferences between low-
energy and high-energy scanners. The European Union considers that because the investigation
covered products that belong to different market s and do not compete with each other, MOFCOM's
use of weighted average values, in particular in the evaluation of the factors affecting prices and costs,
was manifestly inadequate for considering the existe nce of material injury and did not constitute an
objective examination.
7.107 In response to China's argument that it would be contrary to Article 3.4 of the Anti-Dumping
Agreement to focus on specific segments of the dome stic industry, rather than examining the industry
as whole, the European Union clarifies it is not arguing that MOFCOM was required to conduct a
separate examination per segment of all factors having a bearing on the state of the domestic industry.
Rather, the European Union focuses its argument on in jury factors relating to prices and costs. The
European Union argues that in circumstances wher e the domestic industry makes two very different
products, the combination of price and cost data for both products leads to data which is not
representative of, and does not indicate much about, the state of the domestic industry as a whole.
(iv) MOFCOM's failure to make a proper evaluati on of the overall development and interaction
among injury factors taken together
 MOFCOM failed to provide a compelling expl anation of whether and how the overwhelming
majority of positive movements were outweighed by other factors that may have been moving
in a negative direction
7.108 The European Union submits that MOFCOM failed to provide a compelling explanation of
how the overwhelming majority of positive injury factors were outweighed by negative injury factors.
7.109 The European Union asserts that most injury factors examined by MOFCOM were positive or
showed a positive trend. The European Union notes in particular that consumption, output,
production capacity, capacity utilisation, sales vol ume, sales revenue, domestic market share,
productivity, and wages experienced a significant increase between 2006 and 2008.
7.110 Indeed, the European Union no tes China agrees that, of the 16 factors considered by
MOFCOM, only seven were negative. The Europe an Union argues that MOFCOM disregarded the
"trends" observed within factors over the POI. Acco rding to the European Union, a factor cannot be
considered "negative" fo r the purpose of the inju ry analysis simply because there was a negative
figure throughout the period or at the end of the period considered.
7.111 The European Union acknowledges that profits remained negative during the POI. However,
the European Union contends that there was neve rtheless a positive trend in the domestic industry's
profits, indicating that the state of the industry moved positively between 2006 and 2008.
7.112 The European Union contends that certain ot her factors which MOFCOM considered to be
"negative", namely the rate of return on invest ment, employment and cash flow, fluctuated up and
down during the POI, generally showing a positive trend towards the end of the POI (with the
exception of employment). In the European Union's view, these factors cannot correctly be
characterised as "negative".
7.113 With respect to employment, the European Un ion argues that at a time when wages were
increasing and Nuctech's productivity was booming, the fluctuating employment rate cannot be
considered negative as such. Further, given that Nuctech was making huge investments in the low-

energy scanner market and expanding its production facilities, cash outflow is to be expected.
However, the constant increase in the rate of return indicated that Nuctech's investment and cash flow
were moving in a positive direction.
7.114 The European Union submits that only two factors were negative and showed a negative trend
for the domestic industry over the whole POI: domestic sales prices and inventories.
7.115 According to the European Union, therefore, an overwhelming majority of the injury factors
examined by MOFCOM were positive and showed a pos itive trend. Some were negative but showed
a positive trend (profits), and others fluctuated s howing a positive trend towards the end of the POI
(rate of return and cash flow). One factor simp ly fluctuated up and down (employment), and others
remained unclear although MOFCOM appears to have considered that they declined (investments and
financing capacity). The only factors that were clearly negative and showed a negative trend for the
domestic industry were the domestic sales price (s howing constant decline throughout the POI) and
inventories (showing an irregular increase throughout the POI).
7.116 According to the European Union, such positive movements in such a large number of factors
required MOFCOM to provide a "compelling explanati on" of whether and how, in the light of such
apparent positive trends, the domes tic industry was, or remained, injured. The European Union
submits that MOFCOM did not provide the required "compelling explanation".
 MOFCOM's contradictory observations and failu re to examine all factors in their proper
context
7.117 The European Union submits th at MOFCOM's analysis of certain negative factors was
inadequate for the purposes of Articles 3.1 and 3.4 of the Anti-Dumping Agreement, because
MOFCOM made contradictory observations in a non-even-handed manner.
7.118 The European Union submits that in its Fina l Determination MOFCOM made contradictory
observations with regard to sales reve nue, pre-tax profits, rate of return of the domestic x-ray security
inspection equipment industry, net cash outflow, th e domestic industry's financing and investment
capacity and the reduction in employment.
7.119 Aside from the alleged contradictory observa tions, the European Union submits that
MOFCOM failed to examine the injury factors in their proper economic context. According to the
European Union, an "evaluation" of a factor is not limited to a mere characterisation of its relevance
or irrelevance. Rather, an "evalu ation" also implies the analysis of data through placing it in context
in terms of the particular evolution of the data pertaining to each factor individually, as well as in
relation to other factors. In this regard, the European Union suggests that MOFCOM overlooked the
issue of how and why domestic sales prices were decreasing, even in 2008 (by 46.7%), when the price
of subject imports consistently increased throughout the period (including 2008, by 14%), and were
actually higher than those of the domestic products in 2008118.
7.120 The European Union submits that MOFCOM also failed to indicate what amount of profits or
the domestic industry was "expected", or should normally have been able, to achieve in the expanding
market. The European Union contends that, in a competitive market, such as the scanners market,
growth and profits will depend on numerous fact ors, including the growth of other domestic and
foreign competitors. MOFCOM did not provide any evidence showing that Nuctech should have
been able to realise higher profits and growth than it actually did. The European Union also argues
that MOFCOM failed to compare Nuctech's profits and growth to the profits and growth of other
domestic and foreign producers, even though such evidence was on the record . The European Union

118 Final Determination, Exhibit EU-2, pp. 23 and 24.

submits that MOFCOM failed to examine Nuctech's e xpected growth and profits in the light of the
growth of other domestic producers, which may al so have usurped part of Nuctech's "expected"
growth.
 MOFCOM failed to take account of all facts a nd arguments on the record relating to the state
of the industry: start-up status and aggressive pricing
7.121 The European Union contends that MOFCOM fail ed to consider all facts and arguments on
the record relating to the state of the domestic industry. The European Union argues that, in
particular, MOFCOM failed to consider two relevant economic factors identified by Smiths that had a
bearing on the state of the domestic industry: the start-up status of Nuctech in the low-energy
scanners market, and Nuctech's aggr essive pricing strategy. The Eu ropean Union also submits that
MOFCOM failed to take into account record evid ence indicating that Nuctech was expanding both
locally and overseas.
(b) China
(i) MOFCOM's failure to rely on positive evidence
7.122 China recalls that the burden of proof is on the Eu ropean Union, which is required, in order to
make a prima facie case, to show how and why the eviden ce relied upon by MOFCOM is not of an
affirmative, objective and verifiable character. China claims that the European Union fails to
discharge this burden. According to China, the alleged existence of discrepancies between, on the one
hand, MOFCOM's findings as reflected in its Final De termination and, on the other hand, the figures
reported by Nuctech in its Application and in th e Injury Questionnaire Response, cannot by itself
demonstrate that the "evidence" on which MOFCOM based itself is not "positive", namely is not of an
affirmative, objective and verifiable character.
7.123 China contends that the findings made by MOFCOM regarding the various injury factors are
based on the figures and data provided by Nuctech as adjusted where necessary after careful
examination and scrutiny, in particular during the verification, in accordance with Article 6.6 of the
Anti-Dumping Agreement. China notes that after verification, Nuctech provided revised data to
MOFCOM, which excluded exports of the like produc t, and (domestic and export) sales of non-like
products. China emphasises that the only relevant cr iterion to determine whether the data used is
"positive" is whether such evidence is "of an affirmative, objective a nd verifiable character". China
notes that the findings of the Appellate Body in Thailand – H-Beams clearly invalidate the European
Union's position that data only becomes "positive evidence" if investigating authorities inform
interested parties that the data has been modified pursuant to verifications. In fact, China contends
that the European Union is confusing two different issues, namely whether investigating authorities
inform interested parties of which data is us ed, on the one hand, and whether the investigating
authorities base themselves on positive evidence, on the other. China also notes that MOFCOM
expressly indicated in its Preliminary and Final Determinations that supplementary evidence and
material was provided by Nuctech after verification.
7.124 China also submits that the additional argument made by the European Union that "there are
other indicia making such data unreliable" 119 must equally be rejected. China asserts that MOFCOM
specifically addressed the issue of differences between the figures provided by Nuctech and those
reflected in other publicly available documents (suc h as the data disclosed by the parent company of
the applicant in its annual reports as well as the info rmation and data filed with the Administration for
Industry and Commerce)
120. In particular, MOFCOM noted that the figures "included the information

119 European Union's first written submission, para. 255.
120 European Union's first written submission, para. 255.

and data on other products in add ition to the Like Products, while the determinations of the instant
case [] would be based only on the in formation and data on Like Products" 121. In response to the
European Union's attempt to dispute MOFCOM's conc lusion on this issue, on the basis that scanners
account for approximately 90% of Nuctech's products over the POI, China argues that there is no
evidence on the record to support the European Un ion's position. Although China considered that it
was not for it to furnish any evidence on this point, in fact China provided the relevant figures
regarding the proportion of Nuctech's products accounted for by scanners, as originally provided by
Nuctech and verified by MOFCOM during the course of the investigation. According to China, these
figures invalidate the European Union's allegation.
(ii) MOFCOM's failure to examine all Article 3.4 factors
7.125 China accepts that MOFCOM was required to examine all of the factors set forth in
Article 3.4 of the Anti-Dumping Agreement. Howeve r, China contends that the Appellate Body in
EC – Tube or Pipe Fittings clarified that there does not need to be an "explicit" evaluation of the
factors, provided "a panel conducting an assessment of an anti-dumping measure is able to find in the
record sufficient and credible evidence to satisfy itself that a factor has been evaluated"122.
7.126 China submits that MOFCOM examined the "m agnitude of the margin of dumping" and
found margins that exceeded the " de minimis " threshold of Article 5.8 of the Anti-Dumping
Agreement. China asserts that th is evaluation is set out clearly in the Final Determination, even
though it is not in the part concerning the injury determination. China also submits that MOFCOM
expressly examined the dumping margins of the e xporting producers and arrived at the following
results:
1. Smiths Heimann GmbH 33.5%
2. All Others 71.8% 123

7.127 Accordingly, China contends that it flows from the foregoing that the magnitude of the
margin of dumping had been examined and eval uated. China admits that MOFCOM did not
expressly characterize such margins as being "signifi cant" or "substantial", but claims that this is
unnecessary where it follows from the decision to impose measures that the margins were greater than
"de minimis".
(iii) MOFCOM's failure to take account of d ifferences between low-energy and high-energy
scanners
7.128 China asks the Panel to reject the European Union's arguments regarding the impact of
alleged differences between low-energy and high-en ergy scanners on MOFCOM's injury analysis.
China asserts that MOFCOM investigated the like product issue raised by Smiths, and found that both
"types" of scanners were "almost the same"124.
7.129 China argues that the European Un ion's claim lacks any factual basis. This is because China
maintains that there is no clear-cut distincti on between scanners based upon whether their energy
level is above or below 300 KeV.
7.130 As a matter of law, China submits that the fo cus of the objective examination for the purpose
of determining injury is the domestic industry as de fined in accordance with Article 4.1 of the Anti-

121 Final Determination, Exhibit EU-2, p. 28.
122 Appellate Body Report, EC – Tube or Pipe Fittings, para. 161.
123 Final Determination, Exhibit EU-2, p. 33.
124 Final Determination, Exhibit EU-2, p. 12.

Dumping Agreement. China submits that MOFCOM was, therefore, required to determine the state
of the domestic industry as a whole. Since MOFCOM concluded that the x-ray scanners domestically
produced in China and the Subject Product were "lik e products", the injury determination had to be
carried out with respect to the identified "like pro duct" as defined above, i.e., in respect of domestic
production of both low-energy and high-energy sca nners. According to China, MOFCOM would
have failed to act objectively if MOFCOM had focu sed its injury examination exclusively on "low-
energy" scanners. Further, there is no requirement th at an investigating authority carry out a separate
analysis for allegedly different categories of the "like product". Therefore, by examining the domestic
industry as a whole, MOFCOM carried out an objectiv e examination as required by Article 3.1 of the
Anti-Dumping Agreement.
(iv) Evaluation of the overall development and interaction among injury factors
 MOFCOM's evaluation of the interaction be tween positive and negative injury factors
7.131 China submits that there is no factual basis for the European Union's argument that most
injury factors examined by MOFCOM were positiv e and that the only factors that were clearly
negative and showed a negative trend for the domes tic industry were the domestic sales prices and
inventories. According to China, MOFCOM's anal ysis reveals a negative assessment of a significant
number of factors. In this regard, as a prelimin ary matter China notes the statement by the panel in
EC – Fasteners (China) that "a 'negative factor' in the asse ssment of the condition of the domestic
industry is not limited to a factor for which the information demonstrates an actual decline in
performance125". According to China, a factor which remains at a low level may be seen as a negative
factor and support a finding of injury.
7.132 Although China acknowledges that MOFCOM found positive developments with respect to
certain factors (namely capacity, output, capacity utilisation, sales volume, market share, sales
revenue, productivity and wages), China contends that factors that show positive developments do not
preclude investigating authorities from making an affi rmative determination of injury. According to
China, MOFCOM provided a detailed and satisfactor y explanation of both how the negative factors
supported an affirmative injury de termination and why the presence of several factors that showed
positive trends could not overturn th is conclusion. China argues that the examination carried out by
MOFCOM shows an objective examination of pos itive evidence. MOFCOM's conclusions could
reasonably have been reached by an objective decision-maker.
 MOFCOM's allegedly contradictory observations and failure to examine all factors in their
proper economic context
7.133 In relation to the European Union's assertion that MOFCOM made contradictory observations
"in its evaluation of all factors and the state of the domestic industry" 126, China rejects this argument
and contends that it is based on a distortion of MOFCOM's findings.
7.134 Further, China notes the European Union's argument that an "evaluation" of an injury factor
also implies the analysis of data through placing it in context in terms of the particular evolution of
the data pertaining to each fact or individually, as well as in relation to other factors examined 127.
China understands the European Union to argue that MOFCOM should have provided a logical
explanation of how the different factors relate to each other and the economic context.

125 Panel Report, EC – Fasteners (China), para. 7.402.
126 European Union's first written submission, para. 288.
127 Panel Report, EC – Tube or Pipe Fittings, para. 7.314; Panel Report, EC – Bed Linen (Article 21.5 -
India), para. 6.162.

7.135 China submits that in conducting its injury an alysis, MOFCOM properly considered how the
factors related to each other and to the wider econom ic context. In particular, MOFCOM concluded
that Nuctech was forced to lower its prices to a le vel that could not be compensated for by the cost
savings resulting from increased economies of scale: "[t]he increase of capacity, output, sales volume
and market share of the domestic industry did not br ing the expected profits to the domestic industry.
Domestic industry suffered consistent losses throughout the POI" 128. In the absence of dumped
products, Nuctech would not have been forced to re duce its prices to such a low level and could have
compensated price decreases by cost savings. This w ould in turn have permitted Nuctech to return to
profitability.
7.136 In response to the European Union's argument that the subject imports, which were increasing
in price, could not have forced the domestic sales price to go down, China argues that in 2006
and 2007, the subject imports significantly undercut the domestic prices. Even in 2008, although
subject import prices were slightly higher than domestic prices, they remained at a low level and
continued to prevent Nuctech from becoming profitabl e. Further, the sales volume of subject imports
increased by 88% and captured additional market shar e in a rapidly expanding market. China refutes
the European Union's argument th at Nuctech sacrificed profits in order to increase sales and its
market share. According to China, this is ba sed on the erroneous view that an industry would
voluntarily expose itself to a situation of self-inflic ted losses. Similarly, China notes that while in
theory economies of scale and higher productivity rates may allow an industry to lower its prices, it is
with a view to increasing profits and not to operating at a loss.
7.137 In relation to MOFCOM's analysis of profits, China underlines that MOFCOM found that the
domestic like product sustained serious losses and although losses were less in 2008 than 2007, the
domestic industry was not able to turn losses into pr ofits and this constituted a negative factor. China
also emphasises that the term "serious" is adequate to describe the reported pre-tax profit figures,
which were -34.88%, -31% and -1.84% over the POI. Finally, in response to a Panel question, China
notes MOFCOM found that Nuctech did not realize the profit that should have been obtained.
According to China, there was no need for MOFC OM to calculate the "expected profit". The
important point was that Nuctech expected to be profitable, but was not
129.
 Whether MOFCOM took account of all facts and arguments on the record relating to the state
of the industry: start-up status and aggressive pricing
7.138 China asks the Panel to reject the European Un ion's claim that "MOFCOM failed to consider
all facts and arguments on the record relevant to or having to do with the state of the domestic
industry" and thereby, "failed to make an objectiv e assessment of the impact of the dumped imports
on the Chinese industry as required by Articles 3.1 and 3.4 Anti-Dumping Agreement"130.
7.139 China notes that the European Union's cl aim concerns MOFCOM's treatment of
two economic factors, namely the start-up situatio n of Nuctech in the low-energy scanners market,
and Nuctech's aggressive pricing 131. China submits that these are not elements that may potentially
describe the state of the industry, but rather elemen ts that may potentially cause the injury, i.e., they
explain, rather than describe, the injured state of the industry. According to China, therefore, these
factors are clearly not "factors or indices having a bearing on the state of the domestic industry"
within the meaning of Article 3.4 of the Anti-Dumping Agreement.

128 Final Determination, Exhibit EU-2, p. 28.
129 China's response to Panel question 56, para. 71.
130 European Union's first written submission, para. 302.
131 European Union's first written submission, para. 297.

7.140 Furthermore, even if those indices were considered as "factors" that may have a bearing on
the state of the domestic industry, China contends that the European Union has failed to demonstrate
that those factors were relevant in assessing the im pact of the dumped imports on the state of the
domestic industry. According to China, the argu ments made by Smiths concerning the alleged start-
up situation and pricing policy of Nuctech were pure allegations, unsubst antiated by relevant
evidence. China contends that not every factor raised by an interested party needs to be examined by
an investigating authority. In the absence of eviden ce that the considerations raised by Smiths were
"relevant economic factors having a bearing on the state of the industry", MOFCOM was not required
to examine them in its injury analysis.
4. Evaluation by the Panel
(a) Whether MOFCOM relied on positive evidence
7.141 The European Union argues that discrepancies between the data cited by MOFCOM in its
Preliminary and Final Determinati ons and (i) data supplied by Nuctech in the Application and in
response to the injury questionnaire; and (ii) data in publicly available documents, such in Nuctech's
parent company annual reports and data filed with the Administration for Industry and Commerce,
demonstrate that MOFCOM's determination was not based upon positive evidence.
(i) Do the alleged differences between the dat a relied upon by MOFCOM and the data supplied
by Nuctech in the Application and in the injury questionnaire suggest that MOFCOM did not
rely upon positive evidence?
7.142 The first element of the European Union's ar gument that MOFCOM did not base its injury
determination on positive evidence arises from allege d discrepancies between the data relied upon by
MOFCOM and the data supplied by Nuctech in its Application and in the injury questionnaire
132.
7.143 An examination of the record supports the Eu ropean Union's assertion, which is uncontested
by China, that there are indeed discrepancies between certain findings made by MOFCOM and the
information supplied by Nuctech. For example, with respect to cash flow, MOFCOM found cash
outflow throughout the POI, although with reduced outflow in 2008 133. In contrast, in its Application,
Nuctech indicated that the domestic like product expe rienced cash inflow in 2006 and 2007, and cash
outflow in 2008 134. Further, in its questionnaire respon se, Nuctech reported cash inflow for the
domestic like product in 2006 and 2007 and a balanced net cash flow of 0 in 2008135.
 Did MOFCOM act inconsistently with Articles 3.1 and 3.4 by modifying data at verification
without alerting interested parties to this?
7.144 In response to the European Union's submissi on, China explains that, in accordance with
Article 6.6 of the Anti-Dumping Agreement, MOFC OM conducted an on-site verification to satisfy
itself of the accuracy of the information provided by Nuctech. China's initial position was that, as a

132 The European Union argues that there are di screpancies in MOFCOM's findings on cash flow,
investments, return on investment, sales revenue and profits, when compared to the information supplied to
MOFCOM by Nuctech. The Eu ropean Union notes that there may be more examples, but due to the limited
disclosure in the public record, it is not in a position to highlight specific contradictions with respect to any other
injury factors. Nevertheless, the European Union argues that the exampl es it has provided are sufficient to
undermine the credibility of the data relied upon by MOFCOM and therefore, sufficient for the Panel to find
that MOFCOM acted inconsistently with Artic les 3.1 and 3.4 of the Anti-Dumping Agreement
(European Union's first written submission, paras. 182, 252-253 and footnote 221).
133 Final Determination, Exhibit EU-2, p. 26.
134 Application, Exhibit EU-3, p. 39.
135 Nuctech's Questionnaire Response, Exhibit EU-8, Attachment 21.

result of this verification, MOFCOM adju sted the information supplied by Nuctech 136. However,
during the second meeting with the Panel, China clarified that Nuctech, rather than MOFCOM,
performed the necessary adjustment s. In particular, during the verification, MOFCOM found that
some of the figures provided by Nuctech in its initial questionnaire response incorrectly included
exports of the domestic like product. Revised data and information was therefore provided by
Nuctech after verification. MOFCOM relied upon th is revised data. At various stages of its
submissions, China also argues that MOFCOM excluded data relating to sales of products other than
the like product 137. However, in response to a Panel question, which highlighted that the data
provided by Nuctech on cash-flow, investments, retu rn on investments, sales revenue and profits
included only the domestic like product138, China refers only to the exclusion of data relating to export
sales upon verification and does not press the point that data relating to non-li ke products was also
excluded139.
7.145 According to the European Uni on, China's explanation is unt enable. The European Union
complains that at no stage did MOFCOM alert interested parties, in a letter or in its determinations, to
the fact that it had modified the data provided by Nuctech pursuant to an on-site verification.
According to the European Union, if MOFCOM 's conduct were found acceptable by the Panel,
"investigating authorities could completely disregard the figures on the record available to all parties
and on the basis of which the parties have based their defence"140.
7.146 We note that in its Preliminary and Final Determinations, MOFCOM disclosed the injury data
upon which it based its findings. We understand that the European Union's complaint is not that
MOFCOM failed to disclose the data upon which it was relying, but rather that MOFCOM did not
explain that it had modified the data supplied by Nu ctech as a result of an on-site verification. In our
view, this aspect of the European Union's argu mentation appears to blur the lines between the
requirement that an injury determination be based upon positive evidence and the requirements
regarding disclosure of evidence and reasoning fo und elsewhere in the Anti-Dumping Agreement,
such as in Articles 6 and 12. We would suggest th at whether evidence is " positive", in the sense of
being affirmative, objective and verifiable, is unrel ated to whether an inv estigating authority has
explained or disclosed the way in which it derived the data. In other words, in the reference to
"positive evidence", Article 3.1 of the Anti-Dumpi ng Agreement disciplines the substantive adequacy
of the evidence relied upon by an investigating author ity, rather than imposing procedural obligations
in relation to the disclosure of the reasoning or method by which the investigating authority
derived the evidence. We find some support for th is approach in the Appellate Body's report in
Thailand – H-Beams . The specific question before the Appella te Body in that case was whether the
investigating authority was required to base its injury determination only upon non-confidential
information, on the basis that this was the only evidence disclosed to, or discernible by, parties to the
investigation. The Appellate Body made a number of general statements to indicate that the positive

136 China's first written submission, paras. 345-346.
137 China's first written submission, paras. 345-3 46 and China's comments on the European Union's
138 In its question, the Panel noted that with respect to cash flow, Nuctech submitted in the Application
that "cash flow of domestic like product was subject to a net inflow in 2006 and 2007, but which turned into a
negative figure (outflow) in 2008" (emphasis added). Further in its questionnaire response, the table detailing
cash flows in Attachment 21 is entitled "Domestic Like Product net cash flows". (emphasis added) (Application,
Exhibit EU-3, p. 39 and Nuctech's Questionnaire Respon se, Exhibit EU-8, Attachment 21.) In relation to
investments and return on investments, the table detailing these figures in Nuctech's questionnaire response is
entitled "Return on Investment on Domestic Like Product" (emphasis added). (Nuctech's Questionnaire
Response, Exhibit EU-8, Attachment 20.) In relation to the trends for sales revenue and profits, the relevant
table in Nuctech's questionnaire response includes columns for the "domestic like product" and for "all
products". (Nuctech's Questionnaire Response, Exhibit EU-8, Attachment 7.)
139 China's response to Panel question 93, paras. 78-83.
140 European Union's second written submission, para. 184.

evidence requirement in Article 3.1 is concerned with the nature of the evidence, rather than with
procedural obligations:
The focus of Article 3 is thus on substantive obligations that a Member must fulfil in
making an injury determination…
[T]he ordinary meaning of [positive evidence and objective examination] does not
suggest that an investigating authority is required to base an injury determination only
upon evidence disclosed to, or discernible by, the parties to the investigation…
Article 12, like Article 6, sets forth important procedural and due process obligations.
However, as in the case of Article 6, th ere is no justification for reading these
obligations into the substantive provisions of Article 3.1.141
7.147 Therefore, in our view, the European Union' s complaint that MOFCOM failed to inform
interested parties that it had modified certain da ta supplied by Nuctech as a result of the on-site
verification is an argument about the procedural ob ligations disciplining investigating authorities. It
does not bear upon whether the evidence is "positive".
7.148 The European Union also argues that when collecting informatio n regarding the state of the
domestic industry, questionnaires shoul d be drafted in a clear manner so that interested parties know
whether information relating only to domestic performance, or both domestic and export performance,
is being collected. According to the European Uni on, the questionnaire sent to Nuctech was vague in
this respect 142. The Panel agrees that when issuing questionnaires, it is certainly desirable that
investigating authorities ensure that they are as clear and unambiguous as possible. However, the
Panel can find no basis to conclude that any lack of clarity, resulting in modifications to the data upon
verification, bears upon the determination of whet her the modified data ultimately relied upon is
"positive" or not.
 Was the modified data relied upon by MOFCOM positive evidence?
7.149 Even though the Panel does not consider that MO FCOM's lack of disclosure in relation to the
verification process, and its alleged lack of clarity in its questionnaire, creates an inconsistency with
respect to Articles 3.1 and 3.4 of the Anti-Dump ing Agreement, the question remains whether the
evidence relied upon by MOFCOM can be considered "positive". The Panel must determine whether
the European Union has established a prima facie case that the evidence upon which MOFCOM relied
in making its injury determination was not of an affirmative, objective and verifiable character and
was not credible.
7.150 The European Union's case regarding the ev idence relied upon by MOFCOM appears to be
based on two main arguments. The first effectively amounts to a suggestion that MOFCOM cannot in
fact have modified the data by excluding inform ation relating to exports, while the second is an
argument that if MOFCOM did modify the data in this way, the export information upon which it
relied was not credible, such that the resulting modified data was not positive evidence.
- Did MOFCOM have the necessary information before it to modify the data in
the manner alleged by China?
7.151 In relation to the first argument, the European Union contends that it is not clear from the
public record that MOFCOM asked Nuctech for specific evidence regarding its profitability in the

141 Appellate Body Report, Thailand – H-Beams, paras. 106, 107 and 110.
142 European Union's comments on China's response to Panel question 93, para. 56.

export market, thereby allowing MOFCOM to modify th e data to exclude that relating to exports. In
making this argument, we surmise that the European Union is suggesting that MOFCOM did not have
evidence before it relating to Nuctech's export perfo rmance, or at least that the "precise evidence
provided directly by Nuctech to MOFCOM was lacking" from the public record143.
7.152 An examination of the questionnaire lends some support to the European Union's position that
MOFCOM did not ask Nuctech a direct question rega rding the profitability of its exports. We note
that the questionnaire did ask Nuctech to provide in formation on the volume, sales revenue and prices
of its exports144. Apart from the question relating to sales revenue, it does not seem that the requested
information would have been adequate to allow MOFCOM itself to adjust the aggregated data on cash
flow, investments, return on investments and profits to take account of exports 145. However, China's
position is not that MOFCOM requested informati on on exports and then adjusted the aggregate
figures itself using this information. Rather, China argues:
[D]uring the verifications, MOFCOM found out that the figures provided in the initial
reply to Question 20 of the Questionnaire Response of Nuctech incorrectly included
exports of the domestic Like Product. Revi sed data and information were therefore
provided by Nuctech after verification. MO FCOM used the revised data which were
part of the record.
146
7.153 Therefore, according to China, upon verifi cation MOFCOM realised that certain data
originally provided by Nuctech included informat ion relating to the export of the like domestic
product. China's explanation indicates that as a part of the verification process, Nuctech was alerted
to this problem and it subsequently provided revised responses. This is corroborated by the existence
on the Panel's record of Nuctech's revi sed questionnaire response to question 20
147. It includes data
on sales revenue and profits for the like domestic product, excluding that relating to exports.
7.154 In relation to MOFCOM's conclusion in the Fina l Determination that "t he export of domestic
X-ray security inspection equipment increased profits for the domestic industry", China argues that by
comparing the original tables of data provided by Nuctech in response to the questionnaire, with the
modified tables following verification, MOFCOM ob tained the necessary information on profitability
of Nuctech's exports of the like product 148. The Panel considers this to be a plausible explanation of
how MOFCOM was able to draw a conclusion regarding export profitability.
7.155 Consequently, in the Panel's view, the Europ ean Union has not successfully established that
MOFCOM, together with Nuctech, did not or could not have adjusted aggregated data to exclude
information relating to the export of the like domestic products. Further, the Panel is satisfied that
MOFCOM had information before it to draw a co nclusion about export profitability in the Final
Determination.

143 European Union's response to Panel question 71, paras. 57-58 and European Union's second written
submission, para. 326.
144 Nuctech's questionnaire response, Exhibit EU-8, questions 24, 36, 37 and 50(6), pp. 18, 24-25
and 34.
145 Where these are the variables the European Union highlights in arguing that there are discrepancies
in the data relied upon by MOFCOM, when compared to that supplied to MOFCOM by Nuctech.
146 China's opening statement at the second meeting with the Panel, para. 67.
147 Nuctech's Revised Questionnaire Response, Exhibit CHN-21 (BCI).
148 China's comments on the European Union's response to Panel question 71, para. 85.

- Was the information relied upon by MOFCOM in modifying the original
information submitted by Nuctech credible?
7.156 The second prong to the European Union's argument relates to the credibility of the export
data underlying the adjustments to the original da ta provided by Nuctech. In other words, even
accepting that during the verification process Nuctech' s data was adjusted to exclude the information
relating to exports, the European Union argues that the export data relied upon in this process was not
credible.
7.157 Essentially, the European Union argues that ther e was evidence on the record suggesting that
exports of the like domestic product were having a negative effect on the state of the industry,
whereas MOFCOM's findings suggest the opposite. Indeed, in the Final Determination, MOFCOM
found:
During the POI, domestic X-Ray security inspection equipment also had export trade
in which some products were exported through contract manufacturing. Evidence
showed that during the POI, the export of domestic X-Ray security inspection
equipment increased profits for domestic indus try, while serious losses in sales in the
domestic market were the main reason for the difficulties suffered by the domestic
industry. Thus, during the POI, the material injury to domestic X-Ray security
inspection equipment industry was not caused by the export of domestic Like
Products.
149
7.158 Further, in the Application, Nuctech stated:
The export volume of domestic like products continued to increase, and export profit
conditions have been relatively good. Thus , the export performance of the domestic
industry cannot have had a great effect on the overall injury suffered by the domestic
industry. Therefore, the export performance of the domestic industry is not the
reason for the injury to the domestic industry.
150
7.159 The changes in certain variables following veri fication also demonstrate that Nuctech and
MOFCOM were relying on data indicating that ex ports of the like domestic product were having a
positive effect on the state of the domestic industry. For instance, in its Application, Nuctech stated
that the domestic like product experienced cash inflow in 2006 and 2007, and cash outflow in 2008151.
Further, in its questionnaire response, Nuctech reported cash inflow for the domestic like product
in 2006 and 2007 and a balanced net cash flow of 0 in 2008 152. By contrast, once having adjusted for
exports, MOFCOM found cash outfl ow throughout the POI, although with reduced outflow
in 2008153.
7.160 The European Union's position is that there w as evidence on the record to demonstrate that
one of the reasons for Nuctech's losses was precisely its losses in the export markets. On this basis,
the European Union argues that MOFCOM's figures to the contrary are not positive evidence. In
particular, the European Union notes that in its rebuttal to the applicant's comments, Smiths argued:
Numerous public documents filed by the Pe titioner's listed parent company, Tsinghua
Tongfang, have stated consistently that e xports were the cause, not the cure, of its

149 Final Determination, Exhibit EU-2, p. 32.
150 Application, Exhibit EU-3, p. 43.
151 Application, Exhibit EU-3, p. 39.
152 Nuctech's Questionnaire Response, Exhibit EU-8, Attachment 21.
153 Final Determination, Exhibit EU-2, p. 26.

financial difficulties. For example, on page 41 of the annual report, Tsinghua
Tongfang states that it experienced a 17% increase in outstanding cash receivable
'because of the expansion of its subsidia ries Nuctech and Taihao Technology, and
because of the long implementation cycles of overseas projects' . Tsinghua
Tongfang's 2009 filings again stated that 'the pressure faced by [its] security
inspection business increased tremendously as an impact of the worldwide financial
crisis'. It further stated that Petitioner 'rolled out leasing arrangements in response to
the declining purchasing power of overseas customers'.154
7.161 The European Union also refers to an exhibit att ached to Smiths' Injury Brief, in the form of a
report in a Chinese magazine, Caijing, which stated that Tongfang's declined financial performance
was due to the negative impact of the 2008 globa l economic crisis on Nuctech's "export-oriented
security inspection business"155.
7.162 For the reasons following, the Panel is not convinced that the ev idence cited by the
European Union is sufficient to establish a prima facie case that MOFCOM did not rely upon positive
evidence:
 Increase in outstanding cash receivable due to "long implementation cycles of overseas
projects"

7.163 In relation to this extract from a Tongfang annual report, China argues that the reference to
"long implementation cycles of overseas projects" ca nnot be taken to mean that Nuctech's export
performance was bad. It merely indicates that overseas projects take time to complete" 156. The Panel
agrees that the term "overseas projects" is somewhat ambiguous and may not necessarily be a
reference to export performance. In any event, as argued by China, the report does not indicate
whether the overseas projects are those of Nuctech or some other company within the Tongfang
group157.
 The pressure faced by [its] security inspection business increased tremendously as an impact
of the worldwide financial crisis

7.164 The Panel notes that this statement is drawn from a filing made by Tongfang in 2009 and
therefore, it is not clear whether the pressure increase occurred during the POI, or only after it. In any
event, as China notes, the worldwide financial crisis began in mid-2008. China argues that as most
export contracts are concluded months in advance, it is logical that the impact of the financial crisis
would not be felt in 2008158. In the Panel's view, even if the impact of the financial crisis were felt by
Nuctech in the second half of 2008, it is possible that the overall export performance over the course

154 European Union's opening statement at the first meeting with parties, para. 63 and Smiths' Rebuttal
to Applicant's Comments, Exhibit EU-34, p. 6.
155 European Union's response to Panel question 71, para. 59 and Smiths' Injury Brief, Exhibit EU-11,
p. 62 of the pdf document.
156 China's comments on the European Union's response to Panel question 71, para. 79.
157 China's comments on the European Union's response to Panel question 71, para. 79. Given these
concerns with the evidence relied upon by Smiths and the European Union, the Pa nel does not consider it
necessary to resolve the translation i ssue raised by China in its comments on the European Union's response to
Panel question 71, para. 78.
158 China's opening statement at the second meeting with the Panel, para. 102.

of 2008 (and indeed over the POI) was positive and ther efore consistent with the evidence relied upon
by MOFCOM159.
 The Applicant rolled out leasing arrangements in response to the declining purchasing power
of overseas customers

7.165 The Panel agrees with China's argument that this statement does not represent direct evidence
of "losses"160 in the export market161. In fact, the extract indicates that Nuctech implemented a plan to
prevent or react to negative developments in ove rseas markets. This strategy may well have been
successful in maintaining a positive export performan ce and therefore, the Panel does not consider it
to be very strong evidence that Nuctech was perform ing poorly in the export market. The Panel also
notes that the statement is in an extract from a 2009 filing, and therefore it is not clear whether the
developments it discusses occurred within the POI or not162.
 Tongfang's declined financial performance was due to the negative impact of the 2008 global
economic crisis on Nuctech's "export-oriented security inspection business"

7.166 Although the Panel considers this to be eviden ce that Nuctech's exports of the like domestic
product suffered due to the 2008 global financial crisis, the Panel again notes that it is not clear that
this downturn in exports would have been experienced during the POI
163.
 Conclusion
7.167 In the Panel's view, the European Union has not presented adequate evidence to demonstrate
that MOFCOM did not rely upon positive evidence in making its determination. In particular, the
Panel is not convinced by the European Union's suggestion that the data originally provided by
Nuctech in its questionnaire could not have been modi fied to exclude information relating to exports.
Further, accepting that the data provided by Nuctech was modified at verification, the
European Union has not established that the export data relied upon to do this was lacking in
credibility.
(ii) Are the alleged differences between the data relied upon by MOFCOM and the data in
publicly available documents indicia that MOFCOM's data is not "positive evidence"?
7.168 The European Union argues that discrepanci es between the data relied upon by MOFCOM
and the data found in Nuctech's parent compan y annual report as well as data filed with the
Administration for Industry and Commerce are indicia that the data reflected in MOFCOM's Final
Determination is unreliable
164.
7.169 China does not contest that there are discrepancies between the data cited by MOFCOM in its
determinations and data in certa in publicly available documents. Indeed, an examination of the
evidence reveals that in a report prepared by Nuctech's parent co mpany, Tongfang, the gross profit

159 Given these concerns with the evidence relied u pon by Smiths and the European Union, the Panel
does not consider it necessary to reso lve whether the European Union selectively quoted from the filing, as
alleged by China in its comments on the European Union's response to Panel question 71, para. 82.
160 European Union's opening statement at the first meeting with the Panel, para. 63.
161 China's comments on the European Union's response to Panel question 71, para. 83.
162 Given these concerns with the evidence relied u pon by Smiths and the European Union, the Panel
does not consider it necessary to reso lve whether the European Union selectively quoted from the filing, as
alleged by China in its comments on the European Union's response to Panel question 71, para. 83.
164 European Union's first written submission, para. 255.

margins for Nuctech were cited as 25.52% in 2006, 27.42% in 2007 and 25.86% in 2008 165. The
European Union contends that it is difficult to r econcile these figures with the negative pre-tax profits
reported in MOFCOM's Final Determination. Further, in its reports to the Administration for Industry
and Commerce, Nuctech reported increasing employment over the POI, whereas in its Final
Determination, MOFCOM found fluctuating employment levels166.
7.170 In the Final Determination, in response to comments from Smiths regarding the discrepancies
between the data in the Preliminary Determinati on and the publicly available data disclosed by
Nuctech's parent company, MOFCOM explained:
Upon investigation, we found that the Pe titioner also produced other products in
addition to the Like Products in the inst ant case. Both the information and data
disclosed by the parent company of the Pe titioner in its annual reports as well as the
information and data filed with the Administration for Industry and Commerce
included the information and data on other products in addition to the Like Products,
while the determinations of the inst ant case only would be based only on the
information and data on Like Products.167
7.171 The European Union disputes the explanation provided by MOFCOM in the Final
Determination. The European Union's position is that the like domestic product accounted for a major
proportion of Nuctech's production, such that the differences between the data relied on by MOFCOM
and that in publicly available documents should not ha ve been so marked. In particular, in its written
submissions, the European Union contends that scanners accounted for approximately 90% of
Nuctech's production. The European Union explains th at this figure represents Smiths' best estimate,
based upon its market knowledge at the time 168. The European Union also relies upon a number of
statements on the record indicating that the dom estic like product made up a "significantly high"
proportion of Nuctech's production 169. For example, the European Union quotes from a report of
Nuctech's parent company, which provides "[t] he predecessor of Nuctech was Tsinghua Tongfang
nuclear technology company which was founded in 1997, specialized in … the large-container
inspection system "170. Further, in its Injury Brief, Smiths extracted a table from Tongfang's 2007
prospectus, which stated that Nuctech's "main products or core businesses" were "container inspection
systems"171.
7.172 The Panel notes that in its first written submi ssion, the European Union also states that
"until 2008 Nuctech produced only scanners" 172. This seems to suggest that Nuctech's production
consisted only of the like domes tic product until 2008, because in the same paragraph of its
first written submission, the European Union refers to scanners as "the subject products"173. However,
in response to a Panel question on this point, the Eur opean Union clarifies that "it is not contested that

165 See Smiths' Injury Brief (Exhibit VI), Exhibit EU-11, p. 87 of the pdf document. Further, in
Exhibit IV of Smiths' Injury Brief, the gross profit marg in for Nuctech is reported to be 27% and the documents
states that "[b]ased on the understanding of Nuctech' s competitiveness and development strategy, we believe …
its profit margins can remain at current levels (i.e., the gross margin of 26%) in the next three to five years";
Exhibit EU-11, pp. 75, 78 and 80.
166 See Smiths' Injury Brief, Exhibit EU-11, extr acting information from Nuctech's report to the
Administration for Industry and Commerce at p. 11 (Table 2).
167 Final Determination, Exhibit EU-2, p. 28.
168 European Union's second written submission, para. 195.
169 European Union's response to Panel question 18, para. 110.
170 Smiths' Injury Brief, Exhibit EU-11, p. 75 of the pdf document, quoting from a report produced by
Tongfang (emphasis added).
171 Smiths' Injury Brief, Exhibit EU-11, pp. 16-17.
172 European Union's first written submission, para. 255.
173 European Union's first written submission, para. 255.

Nuctech made products other than th e products concerned in 2007 or 2008" 174. Further, the statement
"should not be interpreted as a factual assertion indi cating that Nuctech did not make products other
than scanners until 2008" 175. Indeed, the Panel notes that in Attachment 7 to its questionnaire
response, Nuctech indicates that its total productio n and production of the "domestic like product"
differed at least as early as 2007 176. Consequently, in making its de termination regarding whether the
differences between the data relied upon by MOFCOM a nd that in certain public reports indicate that
MOFCOM did not rely upon positive evidence, th e Panel does not give any weight to the
European Union's statement that "until 2008 Nuctech produced only scanners". If the
European Union had originally intended to rely upon this statement to suggest that the data used by
MOFCOM and that found in the public reports s hould have been the same at least up until 2008
(subject to the adjustment made by MOFCOM to account for exports), the Panel cannot rely upon it
for this purpose, given the European Union's concession that Nuctech was producing goods other than
the like product prior to 2008
177.
7.173 Despite China's argument that the European Union had merely asserted a fact without
providing proof thereof, and consequently that it was not required to furnish evidence of the
proportion of Nuctech's production accounted for by the like domestic product, China ultimately
provided to the Panel the relevant confidential figures178.
7.174 The Panel notes that MOFCOM assessed the in jury to the domestic industry caused by
subject imports by excluding data relating to exports. Once export revenue is excluded, the
proportion of the domestic sales revenue accounted fo r by the like domestic product is nowhere near
the 90% estimate advanced by the European Union179.

174 European Union's response to Panel question 70, para. 55.
175 European Union's response to Panel question 70, para. 54.
176 Nuctech's questionnaire response, Exhibit EU-8, Attachment 7, p. 43.
177 In its response to Panel question 70 at para. 55, the European Union notes that the statement at issue
should be interpreted in the sense that "Nuctech only started making and selling scanners and other products
based on technologies other than X-ray in 2008". However, the European Union does not explain the relevance
of this to its argument that the differences in the data used by MOFCOM and found in the public reports indicate
that MOFCOM did not rely on positive evidence.
The Panel notes that in refuting the argument that Nuctech produced only scanners until 2008, China
refers to Nuctech's production of "x-ray liquid secur ity inspection system[s]" (China's response to Panel
question 91). According to the European Union, this submission further undermines the reliability of the data
used by China, because it indicates that China incorrectly excluded such liquid inspection systems, which use x-
ray technology, from the like domestic product (European Union's comments on China's response to Panel
question 91, paras. 49 and 51). In making this argument, the European Union is effectively requesting the Panel
to make a ruling on whether the x-ray liquid security inspection system at issue falls within the scope of the like
domestic product. However, the scope the domestic like pr oduct was not otherwise raised before the Panel or
included in the Panel request. Indeed, the Panel does not have arguments or evidence before it regarding
whether this product falls within the scope of the inves tigation. For instance, the Panel notes that the subject
product excludes "second generation X-Ray security inspection equipment using IDE technology" (Final
Determination, Exhibit EU-2, p. 11). The Panel has no information before it regarding whether or not the liquid
inspection system uses IDE technology, for example, and therefore could be a like domestic product. Therefore,
the Panel is not in a position to make the finding that the European Union seeks in order to support its argument
that MOFCOM did not rely upon positive evidence.
178 China's opening statemen t at the second meeting with the Pane l, para. 61 and Nuctech's modified
questionnaire response, question 20, Exhibit CHN-21 (BCI), p. 4 of the pdf document.
179 Nuctech's modified questionnai re response, question 20, Exhibit CHN-21 (BCI), p. 4 of the
pdf document (see the fifth column of the table for the relevant figures).
We note that the European Union queries the reliability of the figures in the confidential table provided
by China. The European Union questions how the sales figures, which are "constant between 2006 and 2007
and going up in 2008" can be reconciled with (i) MOFCOM's findings that sales revenue increased by 55% each
year; and (ii) Nuctech's allegation in its questionnaire response that its sales revenue for the domestic like

7.175 Consequently, in the Panel's view, the Europ ean Union has not made out its case that the
discrepancies between the data used by MOFCOM a nd the data in certain public sources indicate that
MOFCOM did not rely on positive evidence. The Eu ropean Union's submissions relied heavily on an
assertion that 90% of Nuctech's production over the POI was accounted for by the like domestic
product. Although it is not clear to the Panel th at such an assertion was sufficient to establish a prima
facie case regarding the lack of positiv e evidence, in any event the Pa nel is of the view that in
presenting the figures in Nuctech's questionnaire response, as verified by MOFCOM, China has
clearly rebutted any such prima facie case. Although there was some evidence on the record that
Nuctech's "main products or core businesses" were "container inspection systems" 180, once export
sales revenue was accounted for, the proportion of Nuctech's sales revenue arising from sales of the
like domestic product was very significantly less th an suggested by the Eur opean Union. In the
Panel's view, the European Union has not successf ully challenged the explanation provided by
MOFCOM in the Final Determination for the diffe rences between the data it relied upon and that
found in certain public reports.
7.176 Therefore, the Panel concludes that the Eu ropean Union has not established that the
discrepancies in the data used by MOFCOM and that found in certain public reports indicate that
MOFCOM did not rely on positive evidence.
(iii) Conclusion
7.177 In conclusion, the European Union has not established that MOFCOM failed to rely upon
positive evidence in making its findings on the stat e of the domestic industry. Therefore, the
European Union has not made out its case that in this regard China acted inconsistently with
Articles 3.1 and 3.4 of the Anti-Dumping Agreement.
(b) Whether MOFCOM examined all factors listed in Article 3.4 of the Anti-Dumping
Agreement
7.178 The European Union argues that MOFCOM acted inconsistently with Articles 3.1 and 3.4 of
the Anti-Dumping Agreement because it did not examine all factors listed in Article 3.4, in particular
it failed to examine the "magnitude of the margin of dumping".
7.179 We note that the Appellate Body and a number of panels have found that it is mandatory for
an investigating authority to evaluate each of the 15 factors lis ted in Article 3.4 of the Anti-Dumping
Agreement181. For instance, in Thailand – H-Beams the Appellate Body stated:
The Panel concluded its comprehensive analysis by stating that "each of the
fifteen individual factors listed in the mandatory list of factors in Article 3.4 must be
evaluated by the investigating authorities …". We agree with the Panel's analysis in

product was lower in 2008 than 2006 (European Union's comments on China's response to Panel question 92,
para. 53). In the Panel's view, the European Union's st atement that the figures in the table indicate that sales
revenue was "constant between 2006 and 2007 and going up in 2008" is misplaced. The sales revenue figures in
the table represent the proportion of Nuctech's total sales revenue accounted for by domestic sales of the like
product. Therefore, it is possible that the domestic sales revenue for the like product increased by 55% each
year, while still maintaining a constant or slightly increasing proportion of Nuctech's total sales revenue.
Similarly, the figures in the table do not indicate whether or not, in absolute terms, the domestic sales revenue
for the like product was increasing or decreasing over the POI.
180 Smiths' Injury Brief, Exhibit EU-11, pp. 16-17.
181 Appellate Body Report, Thailand – H-Beams , para. 125; Panel Reports, EC – Bed Linen

its entirety, and with the Panel's interpretation of the mandatory nature of the factors
mentioned in Article 3.4 of the Anti-Dumping Agreement.182
7.180 Further, certain panels have reasoned that an "e valuation" of the factors in Article 3.4 of the
Anti-Dumping Agreement requires a process of anal ysis and assessment. Where an investigating
authority concludes that a particular factor listed in Article 3.4 is not relevant, this conclusion must be
explained. According to the panel in EC – Bed Linen (Article 21.5 - India):
[A]n "evaluation" is a process of analys is and assessment requiring the exercise of
judgment on the part of the investigating author ity. It is not simply a matter of form,
and the list of relevant factors to be evaluate d is not a mere checklist. As the relative
weight or significance of a given factor may naturally vary from investigation to
investigation, the investigating authority must therefore assess the role, relevance and
relative weight of each factor in the partic ular investigation. Where the authority
determines that certain factors are not relevant or do not weigh significantly in the
determination, the authority may not simply disregard such factors, but must explain
their conclusion as to the lack of relevan ce or significance of such factors. The
assessment of the relevance or materiality of certain factors, including those factors
that are judged to be not central to the decision, must therefore be at least implicitly
apparent from the determination. Silence on the relevance or irrelevance of a given
factor will not suffice.
183
7.181 In the Panel's view, the text of Article 3.4 of the Anti-Dumping Agreement, namely that the
examination "shall" include an evaluation of all re levant economic factors, including the 15 listed in
the provision, clearly requires that each of the factor s be evaluated. Therefore, the Panel agrees with
the reasoning of previous panels and the Appellate Body in this regard.
7.182 In the circumstances of this case, MOFCOM did not refer to the "magnitude of the margin of
dumping" in its Final Determination when conducting its injury analysis and in particular when
conducting its "assessment of industry-re lated economic factors and indicators" 184. However, in
two sections of the Final Determination, name ly in the sections entitled "Dumping and Dumping
Margin" and "Final Conclusion upon Investigati on", MOFCOM listed the margins of dumping for
Smiths and "all others"185. China argues that this constituted an express examination by MOFCOM of
the margin of dumping. Further, although MOFCOM did not explicitly characterise the margins as
"substantial" or "significant", "it follows from the decision itself to impose measures that the margins
were not considered to be de minimis"186.
7.183 In the view of the Panel, the simple listing of the margins in the "Final Conclusion" and
"Dumping" sections of the determination is not suffi cient evidence that the magnitude of the margin
of dumping was evaluated in the context of ex amining the state of the domestic industry 187. In our
view, an investigating authority is required to evaluate the magnitude of the margin of dumping and to
assess its relevance and the weight to be attributed to it in the injury assessment. In our view,
MOFCOM did not do this, but rather was silent on the relevance or irrelevance of the magnitude of
the margin of dumping in relation to the impact of the dumped imports on the domestic industry.

182 Appellate Body Report, Thailand – H-Beams, para. 125 (footnote omitted).
183 Panel Report, EC – Bed Linen (Article 21.5 - India), para. 6.162.
184 Final Determination, Exhibit EU-2, pp. 24-29.
185 Final Determination, Exhibit EU-2, pp. 22 and 33.
186 China's first written submission, para. 358.
187 Final Determination, Exhibit EU-2, pp. 22 and 33.

7.184 We note China's reliance on the Appellate Body's conclusion in EC – Tube or Pipe Fittings,
namely that a separate record of the evaluation of each injury factor listed in Article 3.4 is not
necessary where there is sufficien t evidence on the record that th e factor has nevertheless been
evaluated188. However, in our view, the reasoning in EC – Tube or Pipe Fittings does not advance
China's position. It seems difficult to conclude th at merely listing the margins of dumping constitutes
an evaluation, in the sense of an analysis and an assessment, of the magnitude of the margin of
dumping in terms of its relevance to the impact of the dumped imports on the domestic industry.
Further, there is nothing implicit in the statement of the margins of dumping, or elsewhere in the Final
Determination, to indicate that an evaluation of the factor occurred, although was not explicitly
explained. China argues that the fact that it imposed anti-dumping duties indicates that it concluded
that the dumping margins were not de minimis under Article 5.8 of the Anti-Dumping Agreement .
However, in our view this is not a particularly conv incing argument under Article 3.4. If the Panel
were to accept China's reasoning, the implication w ould be that every time an investigating authority
imposed anti-dumping duties, this would indicate that the authority had evaluated the "magnitude of
the margin of dumping" by virtue of concluding that it was not de minimis, and would seem to render
superfluous its inclusion in the Article 3.4 list.
7.185 Therefore, the Panel concludes that China has acted inconsistently with Articles 3.1 and 3.4 of
the Anti-Dumping Agreement in failing to have evaluated the "magnitude of the margin of dumping".
(c) Whether MOFCOM should have taken into account the differences between low-energy and
high-energy scanners in its injury analysis
7.186 In its first written submission, the European Un ion argues that the "use of weighted average
values in the injury factors is manifestly inadequate for considering the existence of material injury
where the investigation covers different types of products with widely different prices that do not
compete with each other and thus belong to distinct markets" 189. The European Union then proceeds
to give examples of aggregated injury factors, namely domestic sales revenue, prices, unit costs of
production and the comparison betwee n domestic industry prices and unit costs, that it claims were
inadequate for assessing material injury due to the use of weighted average unit values 190. In its
second written submission, the European Union clarifies that it does not argue that MOFCOM was
required to carry out a separate examination of all factors having a bearing on the state of the
domestic industry per segment or sector and it does not argue that MOFCOM should have focused its
injury examination exclusively on low-energy scanners
191. Rather, the European Union "focuses its
argument primarily on injury factors relating to prices and costs" 192. According to the
European Union, MOFCOM was not entitled to aggregate certain data, "in particular relating to prices
and costs", as this was not consistent with an objective examination of the state of the industry193.
7.187 We note that the Appellate Body and a number of panels have interpre ted the meaning of the
obligation to examine the impact of the dumped imports on the "domestic industry" under Article 3.4
of the Anti-Dumping Agreement. In US – Hot Rolled Steel, the Appellate Body noted that the term
"domestic industry" is defined in Article 4.1 of the Anti-Dumping Ag reement and refers to "domestic
producers as a whole of the like products or to those of them whose collective output of the products
constitutes a major proportion of the total domestic production of those products". Therefore, the
Appellate Body reasoned that the reference to the " domestic industry" in Article 3.4 indicates that the
injury examination must focus on the totality of th e "domestic industry" and not simply on one party,

188 Appellate Body Report, EC – Tube or Pipe Fittings, para. 161.
189 European Union's first written submission, para. 260.
190 European Union's first written submission, paras. 261-264.
191 European Union's second written submission, para. 205 and footnote 283.
192 European Union's second written submission, para. 205.
193 European Union's second written submission, para. 209.

sector or segment of it 194. Having said this, the Appellate Body noted that in some circumstances it
may be "highly pertinent", from an economic perspec tive, for an investigating authority to undertake
an evaluation of particular parts, sectors or segme nts within a domestic industry in assessing the state
of the industry as a whole 195. However, any segmented analysis must be conducted in an "objective
manner". According to the Appellate Body, this means that where one sector within the domestic
industry is examined under Article 3.4, an inves tigating authority should also examine all other
sectors making up the industry, as well as the industry as a whole 196. A number of panels have
employed the same reasoning as that f ound within the Appellate Body report 197. We note that while
the Appellate Body has commented that supplemen ting an assessment of th e state of the entire
domestic industry with a segmented analysis may be highly pertinent in some circumstances, the
Appellate Body has never been required to consider whether a failure to conduct an analysis by sector
may in some circumstances amount to acting incons istently with Articles 3.1 and 3.4 of the Anti-
Dumping Agreement.
7.188 In the circumstances of this case, the Panel does not consider it necessary to resolve whether
MOFCOM acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement by making
its injury findings on the basis of the industry as a whole and not conducting a segmented analysis
based on any distinction between products produced by the domestic industry. In its second written
submission, the European Union clarifies that the focus of its concerns unde r Article 3.4 relates to
prices and costs. In particular, the European Union quotes from two sections of the Final
Determination, which state that "[the price of domestic Like Products] dropped by 72.68% from 2006
to 2008 and was below or almost as low as unit sales cost" and "the sales price of domestic Like
Products decreased by 46.75% from 2008 to 2 007, almost down to the unit sales cost" 198. An
examination of the Final Determination reveals that both of these quotes are taken from sentences or
sections of the Final Determination discussing the pr ice comparison between the subject imports and
the domestic product or the comparison of domestic prices over the POI . The first sentence is drawn
from the following discussion in the Final Determination:
[T]he import price of the Subject Product rema ined at low levels and was lower than
the price of domestic like products for most of the time during the POI. This had
obvious undercutting and [suppressing] effects on the price of domestic Like
Products, which dropped by 72.68% from 2006 to 2008 and was below or almost as
low as unit sales cost.199 (emphasis added)
Similarly, the second discussion of the sales pric e of the domestic like product quoted by the
European Union is drawn from a subsection of the injury determination entitled "the impact of the
import price of the Subject Product on the price of domestic Like Products". The quote comes from
the following sentence:

Although the import price of the Subject Product was slightly higher than the price of
domestic Like Products in 2008, it remained at a low level, while the sales price of
domestic Like Products decreased by 46.75% from 2008 to 2007, almost down to the
unit sales cost.200 (emphasis added)

194 Appellate Body Report, US – Hot Rolled Steel, para. 190.
195 Appellate Body Report, US – Hot Rolled Steel, para. 195.
196 Appellate Body Report, US – Hot Rolled Steel, para. 204.
197 Panel Reports, US – Hot Rolled Steel , paras. 7.189-7.191; Mexico – Corn Syrup , paras. 7.147
and 7.154 and EC – Fasteners (China), para. 7.407-7.410.
198 Final Determination, Exhibit EU-2, pp. 23 and 27.
199 Final Determination, Exhibit EU-2, p. 27.
200 Final Determination, Exhibit EU-2, p. 23.

7.189 Therefore, in the Panel's view, there is cons iderable overlap between the European Union's
claim under Articles 3.1 and 3.2 of the Anti-Dump ing Agreement and its claim under Articles 3.1
and 3.4. Essentially, the European Union complains th at the analysis of domestic prices and costs, in
the context of the price effects analysis, should have been disaggregated under Article 3.4. However,
the Panel's finding under Article 3.2, namely that MOFCOM erred in failing to take into account the
differences between products in its analysis of price undercutting and price suppression, addresses the
concerns regarding the aggregation of prices raised by the European Union under Article 3.4. The
Panel does not consider it necessary to make a fu rther finding of inconsistency, this time under
Article 3.4, in relation to the same aspect of MOFCOM 's reasoning. In the light of this, and the fact
that the Panel has elsewhere found China to have ac ted inconsistently with Article 3.4, the Panel
exercises judicial economy in relation to this section of the European Union's Article 3.4 claim.
(d) Evaluation of the overall development and interaction among injury factors
7.190 The European Union argues that MOFCOM failed to make a proper evaluation of the overall
development and interaction among injury factors a nd thereby acted inconsistently with Articles 3.1
and 3.4 of the Anti-Dumping Agreement. In making this argument, the European Union proceeds on
the assumption that MOFCOM based its analysis on positive evidence and contends that the manner
in which MOFCOM evaluated the evidence was not objective201.
7.191 The European Union contests three different aspects of MOFCOM's examination of the injury
factors, and claims that each gives rise to a violation of Articles 3.1 and 3.4 202. First, the
European Union argues that MOFCOM did not cond uct an objective examination when considering
the interaction between positive and negative injury factors; second, MOFCOM failed to examine all
factors in their proper context and made contradi ctory observations; and third, MOFCOM failed to
take into account all facts and arguments on the record relating to the state of the industry.
7.192 In relation to the third aspect of the European Union's argument, the Panel examines this as a
part of its Article 3.5 analysis, for the reasons therein explained203.
7.193 In the Panel's view, there are considerable overlaps between the first and second aspects of
the European Union's argument. Therefore, the Panel considers it appropriate to examine the two
aspects of the argument together, in an integrated approach, reaching one overall conclusion regarding
whether China acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement. The
second prong to the European Union's argument, name ly that MOFCOM failed to examine all factors
in their proper context and made contradictory obser vations, is itself based on three allegations. The
allegations are that MOFCOM made contradictor y observations when describing certain injury
factors, that MOFCOM did not indicate the basis on which it concluded that pr ofits were below those
"expected" and finally, that MOFCOM's finding rega rding domestic prices does not support its injury
finding. We evaluate the first two allegations as part of the integrated approach to this aspect of the
European Union's case. However, with respect to the third allegation, we exercise judicial economy.
This is because the third allegation is that MOFCOM "failed to evaluate th e relevant data through
placing it in context in terms of the particular e volution of the data pertaining to each factor
individually, as well as in relation to the other factors examined" 204. To support this argument, the
European Union focuses on MOFCOM's analysis of domestic prices. In particular, the
European Union complains that MOFCOM "failed to address a very important point: how and why
domestic sales prices were decreasing, even in 2008 … when the import prices of the Subject
Products consistently increased throughout the period … and were higher than those of the domestic

201 European Union's first written submission, para. 266, footnote 238.
202 European Union's second written submission, paras. 238, 260 and 283.
203 See paras. 7.253-7.263 of this Report.
204 European Union's second written submission, para. 250.

products in 2008" 205. However, the European Union makes th e same argument in the context of its
claim under Articles 3.1 and 3.5. The Panel does not consider it necessary to make multiple findings
of inconsistency with respect to the same allege d weakness in MOFCOM's analysis. Therefore, we
examine this argument once, under Articles 3.1 and 3.5206.
(i) Did MOFCOM evaluate the interaction between positive and negative injury factors and
consider their proper economic context?
7.194 The European Union's argument regarding MOFCOM's explanation for its injury
determination consists of two ma in elements. First, the Europ ean Union queries the way in which
MOFCOM treated individual injury factors. In particular, the European Union contends that
MOFCOM incorrectly characterised certain factors as "negative" by ignoring positive trends exhibited
by each of the factors at issue, making contradict ory observations and failing to explain the basis for
its assertions regarding certain injury indicia. Second, the European Union argues that MOFCOM
failed to provide a compelling explanation re garding why the negative factors supported an
affirmative injury determination in the light of several factors exhibiting positive trends.
7.195 At the outset, the Panel notes that a number of other panels have previously considered
similar arguments. In particular, in Thailand H – Beams, the panel stated:
While we do not consider that such positive trends in a number of factors during the
[POI] would necessarily preclude the investigating authorities from making an
affirmative determination of injury, we are of the view that such positive movements
in a number of factors would require a compelling explanation of why and how, in
light of such apparent positive trends, the domestic industry was, or remained, injured
within the meaning of the Agreement. In pa rticular, we consider that such a situation
would require a thorough and persuasive explanation as to whether and how such
positive movements were outweighed by an y other factors and indices which might
be moving in a negative direction during the [POI].
207
7.196 In EC – Countervailing Measures on DRAM Chips, a case considering the analogous
provision under the Agreement on Subsidies and Countervailing Measures (SCM Agreement), the
panel held that the investigating authority had examin ed all factors both individually and in an overall
context and had provided a reasoned and adequate explanation to support its determination. Although
a number of factors had grown in absolute terms during the POI, the panel placed considerable
emphasis on the fact that the investigating authority had explained that the levels of growth were well
below those necessary to remain comp etitive in the industry at issue. Therefore, while only 3 factors
developed negatively over the POI, the investiga ting authority had taken into account the negative
effects on other factors, which had in fact grown in absolute terms208.
7.197 Finally, in EC – Fasteners (China), the panel considered whether the investigating authority's
characterisation of certain injury factors as "negative" was consistent with an objective examination of
the evidence. The panel upheld a finding that a prof it rate of 4.4% was "low", on the basis that the
investigating authority had found that a profit margin of 5% could be expected in the industry in the
absence of injurious dumping209. The panel also noted that factors exhibiting a positive trend may be
considered "negative" when th e increases are significantly less than the expansion in demand 210.

205 European Union's first written submission, para. 292.
206 See paras. 7.241-7.248 of this Report.
207 Panel Report, Thailand – H-Beams, para. 7.249.
208 Panel Report, EC – Countervailing Measures on DRAM Chips, para. 7.372.
209 Panel Report, EC – Fasteners (China), para. 7.399.
210 Panel Report, EC – Fasteners (China), para. 7.403.

Finally, the panel noted that a decline with respect to only one injury factor would not necessarily
prevent a finding of injury. However, in such a cas e, "the nature of the product, industry and market,
as well as the reasoning of the investigating authority, would be critical considerations for a reviewing
panel"211.
 MOFCOM's treatment of individual injury factors
7.198 We commence our analysis by considering the European Union's argument that MOFCOM
did not conduct an objective examination of individual injury factors, before turning to the argument
that MOFCOM did not properly evaluate the interaction between positive and negative injury factors.
 Profits
7.199 The European Union argues that industry profits should not have been treated as a "negative"
factor because profits were increasing and Nuctech was growing well in excess of domestic
demand
212. For the same reason, the European Uni on contends that MOFCOM's description of
industry losses as "serious" was not even-handed, pa rticularly because Nuctech had almost broken-
even by the end of the POI213.
7.200 With respect to pre-tax profits, MOFCOM found that the industry experienced losses
(-34.88%, -31% and -1.84% ) throughout the POI. The Panel no tes that in many circumstances, a
reasonable and objective investigating authority may view three consecutive years of losses as
"negative" and "serious". However, the Panel r ecalls that in reaching its conclusion, MOFCOM did
not indicate on what basis it concluded that Nuctech did not realize "expected profits" or "the profits
that should have been obtained"
214, which was an important element of its reasoning. In response to a
Panel question on this point, China stated that "the relevant issue was that the domestic industry did
not obtain a profit while the company expected to be profitable. There is no need to calculate or
quantify the amount of such 'expected profits'" 215. The Panel does not agree with China's position in
this regard. In the Panel's view, an objective and even-handed examination of the expected level of
profit, by which the industry's actual profit level was assessed, needs to be based on more than an
assertion that the "company expected to be profitable". Some form of estimation, calculation or
explanation regarding why profitability in the absence of subject imports was a reasonable expectation
should have been provided as part of an objective examination216.
7.201 Further, in the Panel's view, an even-h anded examination of profits required an
acknowledgement of the positive trend in which this factor was moving and an accompanying
explanation regarding why, in the light of th is and other positive factors, the industry should
nevertheless be considered injured. In the Pa nel's view, focusing only on absolute levels, and
ignoring trends, has the potential to give a partial picture of the state of an industry.

211 Panel Report, EC – Fasteners (China), para. 7.401, footnote 814.
212 European Union's first written submission pa ras. 269 and 273 and second written submission,
paras. 224-225.
213 European Union's first written submission, para. 289.
214 In the European Union's translation of the Final Determination, Exhibit EU-2, p. 28, the phrase is
"expected profits". However, according to China, the phrase at issue is better translated as "the profits that
should have been obtained" (China's response to Panel question 56, para. 71).
215 China's response to Panel question 56, para. 71.
216 In assessing the state of the domestic industry, MOFCOM found that "the increase of capacity,
output, sales volume and market share of the domestic industry did not bring the expected profits to the
domestic industry". Consequently, the Panel is of the view that MOFCOM's analysis of profit was not restricted
merely to the absolute levels of profit obtained by the domestic industry, but was also conducted by reference to
expected profit levels.

7.202 However, the Panel is not convinced by the European Union's argument that including a
discussion of both pre-tax profits and unit gross profit in its injury determina tion "created confusion"
about the state of the domestic industry. Both parties agree that the two measurements of profit
constitute different concepts 217. Although the European Union argues that referring to two or more
different concepts of profit shows "a lack of coherence and internally inconsistent reasoning" 218, the
Panel is not convinced by this argument. Readi ng the Final Determination in the knowledge that the
two concepts are different, does not lead to any contradictions in the findings of MOFCOM219.
7.203 Finally, the European Union argues that two stat ements in the Final Determination regarding
profits are inconsistent. In particular, the Europ ean Union asserts that the statement that pre-tax
profits "[d]uring the POI … first declined and then increased" and the finding that pre-tax profit rates
increased over the POI from -34.88%, -31% to -1.84% are inconsistent 220. However, the Panel is not
convinced that these findings are necessarily inconsis tent. As China highlights, the first statement
refers to absolute levels of pre-tax profits, while the second refers to pre-tax profit rates221.
 Net cash flow, rate of return and employment
7.204 With respect to each of these factors, the European Union argues that MOFCOM classified
them as "negative", without cons idering their trends over the POI
222. Given that there was cash
outflow and a negative rate of return throughout the course of the POI, the Panel notes that this could
reasonably support a conclusion that these factors contributed to a "negative" state of the industry.
However, the Panel is of the view that an objectiv e and impartial examination would have required an
acknowledgement and analysis of th e fluctuations in the factors over the POI, including the upward
trend they both experienced in the final year. Simi larly, with respect to employment levels, while an
end-to-end comparison indicated a decline in employment over the POI, MOFCOM did not attempt to
analyse its fluctuations. The Panel is of the view that this is not consistent with an unbiased
examination.

217 In particular, China explains that "'gross profit' is the result of deducting from the net sales price the
cost of manufacturing (consisting of raw material costs, labour costs and manufacturing overheads) and is
equivalent to the 'gross margin' before the deduction of SGA and financial expenses. In contrast, pre-tax profits
are net of such SGA and financial expenses" (China's fi rst written submission, para. 411). In its second written
submission (para. 242 and footnote 316) the European Union agrees with China that the two concepts are
different.
218 European Union's second written submission, para. 242.
219 Indeed, the European Union's response to Panel question 28 reveals that the European Union
understood that the differences in MOFCOM's findings regarding profit in 2008 were explained by the different
concepts of profit used in the Final Determination.
220 Final Determination, Exhibit EU-2, pp. 26 and 27 and European Union's first written submission,
para. 289.
221 China's response to Panel question 94, para. 84. The Panel notes that the pre-tax profit rates referred
to by China included absolute profit levels as the numerator and sales revenue as the denominator. MOFCOM
found that sales revenue increased by approximately 55% each year over the POI. In these circumstances, it is
possible that absolute profit levels may have decreased between 2006 and 2007, but profit rates increased. A
simple numerical example illustrates this point: if the abso lute level of profit in 2006 is -34.88 and the absolute
level of sales revenue is 100, then the pre-tax profit rate will be -34%. If in 2007, the absolute level of profit
decreases to -40 (for example) and the abso lute level of sales revenue increases to 155, then the pre-tax profit
rate will increase to -26%. Therefore, the Panel does not consid er that the statements referred to by the
European Union are necessarily inconsistent.
222 European Union's first written submission, paras. 270, 273 and 289; and second written submission,
paras. 221-223, 226-227, 243-244 and 246.

 Sales Revenue Growth
7.205 The European Union queries how MOFCOM could have found "severe" depression in sales
revenue growth, in circumstances where sales revenue increased by more than 50% during each year
of the POI and where sales volume and domestic output were growing well in excess of domestic
demand. China explains that there is no contradi ction in MOFCOM's findings in this regard, because
in comparison to the growth in sales volume, sales revenue growth was much lower.
7.206 The Panel is not convinced by the European Union's argument that MOFCOM's findings
were not even-handed in this regard. Although in its Final Determination MOFCOM found that sales
revenue increased by approximately 55% each year of the POI, MOFOM's statement that there was
"severe depression" in sales revenue growth was made in the context of discussing the fast growth in
sales volume over the POI:
The sales volume of domestic Like Products gr ew fast during the POI. However, the
import price of the Subject Product remained at low levels and was lower than the
price of domestic like products for most of the time during the POI. This had obvious
undercutting and depressing effects on the pr ice of domestic Like Products, which
dropped by 72.68% from 2006 to 2008 and was below or almost as low as unit sales
cost, resulting in severe depression of sales revenue growth.
223
Although it would perhaps have been clearer for MOFCOM explicitly to state that the "severe
depression" in sales revenue growth was in compar ison to sales volume, in the Panel's view, the
context in which the statement is found is suffici ent for a reader to understand this. This is
particularly so in the light of the following page of the Final Determination which provides "the
growth rate of sales revenue of the domestic industr y [was] significantly lower than the growth rate of
their sales volume"224. In the Panel's view, when viewed in th e context of the growth in sales volume,
MOFCOM's finding that sales revenue was sever ely depressed did not lack even-handedness or
objectivity.
 Investment and financing capacity
7.207 The European Union argues MOFCOM's finding that the domestic industry "saw continued
expansion" cannot be reconciled w ith the finding that the "investment and financial capacity of the
Petitioner declined"225.
7.208 The Panel notes that the terminology used to describe the industry's investment and financial
capacity is not as clear as it could be. Further, the explanations provided by China during the course
of the Panel proceedings have adde d to the confusion. In particular, in its first written submission
China argues that the "continued expansion" refers to increases in output and sales volume by the
domestic industry, suggesting that it is not a reference to investment levels 226. However, in response
to a Panel question, China states that "MOF COM found continuous investment over the POI" 227. If
this is the case, the decline in "investment and fi nancial capacity" perhaps refers to a decline in
"investment … capacity", rather than a decline in in vestment. However, this is not entirely clear from
the text of the Final Determination.

223 Final Determination, Exhibit EU-2, p. 27.
224 Final Determination, Exhibit EU-2, p. 28.
225 Final Determination, Exhibit EU-2, pp. 26-27.
226 China's first written submission, paras. 415-416.
227 China's response to Panel question 95.

7.209 The Panel does not consider that less than clear drafting in a determination is an indication of
a lack of an objective examination. However, in the light of the contrasting explanations provided by
China during the course of the panel proceedings , and the lack of clarity surrounding MOFCOM's
findings on investment, the Panel is of the view that MOFCOM's finding in this regard was not
reasoned and adequate. Consequently, the Panel will weigh this in the balance when making its
overall assessment regarding whether MOFCOM acted in consistently with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement in considering individual injury factors and in its evaluation of the
interaction between positive and negative injury factors.
 MOFCOM's examination of the interaction between positive and negative injury factors
7.210 The European Union argues that MOFCOM fa iled to provide a compelling explanation
regarding why the negative injury factors supported an affirmative injury determination in the light of
several factors exhibiting positive trends.
7.211 After listing 16 injury factors and stating the trend observed for each over the POI,
MOFCOM provided the following explanations for why a number of the injury factors were positive:
The above evidence shows that during th e POI, the domestic X-Ray security
inspection equipment industry was in a fast growth stage of development with
increasing market demand. The apparent consumption of domestic X-Ray security
inspection equipment increased by 10.72% from 2006 to 2007 and by 14.17% from
2007 to 2008. Driven by market demand, both industry capacity and output of
domestic Like Products grew fast during the POI.
…
During the POI, thanks to the importance in creasingly attached to public security in
China, the apparent consumption of domestic X-Ray security equipment registered
fast growth, and some economic factors and indicators, such as capacity, output, sales
volume and market share, improved correspondingly.
228
7.212 Therefore, MOFCOM explained that the x-ray security inspection industry was in a stage of
fast growth, driven by increased consumer demand. Consequently, a number of the indicia of the
state of the industry evolved positively.
7.213 Directly after each of these explanations, MOFCOM explained why the domestic industry
was nevertheless injured:
However, the import price of the Subject Product remained at low levels and was
lower than the price of domestic like products for most of the time during the POI.
This had obvious undercutting and depressing ef fects on the price of domestic Like
Products, which dropped by 72.68% from 2006 to 2008 and was below or almost as
low as unit sales cost, resulting in severe depression of sales revenue growth for the
domestic X-Ray security inspection equipment industry. Unit gross profit for
domestic Like Products was negative in 2006 and 2007 and low in 2008. Domestic
Like Products suffered serious losses in pre- tax profits in 2006, which worsened in
2007 by an additional 38.03%; although th e losses were reduced in 2008, domestic
manufacturers were still unable to turn losses into profits. Pre-tax profit rates
remained negative at -34.88%, -31% and -1.84% in 2006, 2007 and 2008,
respectively. During the POI, the rate of return for the domestic X-Ray security

228 Final Determination, Exhibit EU-2, pp. 27-28.

inspection equipment industry also remained negative, with greatly increased year-
end inventory, consistent net cash outflo w, diminished investment and financing
capacity, deteriorating production and oper ations, and a 25.08% reduction (despite an
initial increase) of workforce from the beginni ng to the end of the POI, and industry
growth was clearly depressed. Accordingly, MOFCOM found material injury to the
domestic X-Ray security inspection equipment industry.
…
However, the price of domestic Like Products declined year by year as a result of the
undercutting and depressing effect of the price of the Subject Product, causing the
growth rate of the sales revenue of the domestic industry to be significantly lower
than growth rate of their sales volume du ring the POI. Meanwhile, the sales volume
of domestic Like Products was far lower than the output during the POI, resulting in
significant inventory increase of domestic Li ke Products. The increase of capacity,
output, sales volume and market share of the domestic industry did not bring the
expected profits to the domestic industr y. Domestic industry suffered consistent
losses throughout the POI.
 229
7.214 The parties agree that MOFCOM found 9 of the 16 indicia of the state of the industry to be
"positive". The European Union's complaint is that rather than explaining why the negative
developments in the industry were such as to out weigh the positive developments, MOFCOM merely
juxtaposed the positive and negative factors.
7.215 The Panel recalls that MOFCOM's treatment of certain individual injury factors did not
reflect an objective examination of the evidence. In the Panel's view, this consequently affects
MOFCOM's overall assessment of the state of the indus try. In particular, aside from the question of
whether MOFCOM examined and explained the inte raction between the positive and negative injury
factors, the fact that MOFCOM ignored the trends in certain injury factors and did not explain the
basis for some of its conclusions, for instance the basis for "expected profits ", undermines the overall
assessment of the state of the industry. Further, the Panel notes that aside from listing all 16 injury
factors and the trends observed in them over the c ourse of the POI, MOFCOM did not otherwise refer
to or explain the developments in capacity utili zation, productivity and wages in the descriptive
section of its analysis of the industry. In the Panel's view, a more balanced approach would have been
explicitly to analyse each of the 16 factors in the de scription of the state of the industry and to weigh
them in the assessment. In the light of these probl ems with MOFCOM's analysis of the state of the
industry, the Panel does not consider it necessar y to make a determination regarding whether
MOFCOM was obliged to provide a more "compelling explanation" regarding the interaction between
the positive and negative injury factors than the one that it did.
(ii) Conclusion
7.216 Our overall assessment of MOFCOM's evaluati on of the relevant economic factors and
indices leads to the conclusion that MOFCOM did not conduct an objective examination of the
evidence. In particular, the Panel is concerned about MOFCOM's failure to acknowledge and analyse
the trends observed in each injury factor and its failu re to indicate the basis of its assertion that profits
were below "expected" levels. The Panel also notes that there are some aspects of MOFCOM's
finding that are not reasoned and adequate. Fina lly, an objective examination would have included
and weighed each of the 16 injury indicia as a part of the analysis of the state of the industry.
Therefore, the Panel concludes that MOFCOM acted inconsistently with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement.

229 Final Determination, Exhibit EU-2, pp. 27-28.

(e) Conclusion on the European Union's claim unde r Articles 3.1 and 3.4 of the Anti-Dumping
Agreement
7.217 The European Union presented a number of diffe rent arguments to support its claim that
China acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement. The
European Union has not established that MOFCOM failed to rely upon positive evidence. However,
the Panel concludes that China acted inconsiste ntly with Articles 3.1 and 3.4 because MOFCOM
failed to consider all relevant economic factors, in particular, the "magnitude of the margin of
dumping". Further, MOFCOM's examination of the state of the industry, including the trends in
individual injury factors, lacked objectivity and was not always reasoned and adequate. Finally, in the
light of its findings under Articles 3.1 and 3.2 of the Anti-Dumping Agreement, the Panel exercises
judicial economy regarding whether MOFCOM acted inconsistently with Article 3.4 by failing to take
into account the differences between high-energy and low-energy scanners.
E. CAUSATION: ARTICLES 3.1 AND 3.5 OF THE ANTI-DUMPING AGREEMENT
1. Introduction
7.218 The European Union submits th at China violated Articles 3.1 and 3.5 of the Anti-Dumping
Agreement because MOFCOM failed to make an objec tive determination, on the basis of all relevant
evidence before it, that the dumped imports were, through the effects of dumping, causing injury.
2. Relevant provisions
7.219 Article 3.1 of the Anti-Dumping Agreement is set forth above. Article 3.5 provides:
It must be demonstrated that the dumped im ports are, through the effects of dumping,
as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports
and the injury to the domestic industry shall be based on an examination of all
relevant evidence before the authorities. The authorities shall also examine any
known factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by these other factors must not be
attributed to the dumped imports. Factors which may be relevant in this respect
include, inter alia , the volume and prices of imports not sold at dumping prices,
contraction in demand or changes in the pa tterns of consumption, trade restrictive
practices of and competition between the foreign and domestic producers,
developments in technology and the e xport performance and productivity of the
domestic industry.
3. Main arguments of the parties
(a) European Union
(i) The volume of subject imports
7.220 The European Union notes MOFCOM's conclusi on that the large volume of subject imports,
and their lower (dumped) price, caused material injury to the domestic x-ray security inspection
equipment industry. The European Union reca lls that MOFCOM found the volume of dumped
imports rose continuously in comparison to total im ports in China and rapidly in absolute terms, and
that the growth rate of the volume of dumped im ports exceeded the growth rate of apparent
consumption. However, according to the European Union, the volume of subject imports was not
"large" or "great" when viewed in the context of domestic consumption and domestic sales volume.

The European Union argues that a relatively small increase in subject imports in comparison to the
much higher increase of domestic production cannot ser ve as a basis for attributing injury to the
subject imports.
(ii) The absence of any imports of high-energy scanners
7.221 The European Union recalls its earlier ar gument that MOFCOM improperly relied on a
comparison of weighted average unit values that fail ed to take into account differences between low-
energy and high-energy scanners. The European Union submits that, absent a proper distinction
between high-energy and low-energy scanners, MO FCOM improperly attributed to the imports of
low-energy scanners the injury suffered by a dom estic producer of both high-energy and low-energy
scanners. The European Union argues that where two categories of a product do not compete with
each other, the attribution of the effects found with respect to both categories where only one category
was imported is inconsistent with Article 3.5 of the Anti-Dumping Agreement.
(iii) The price effects of subject imports
7.222 The European Union argues that dumping by s ubject imports did not prevent Nuctech from
raising its prices, since subject imports – albeit dumped – were still priced higher than domestic
products. In addition, the European Union cont ends that the absence of any correlation between
subject import prices (going up by almost 10% ove r POI) and domestic prices (going down by 73%
over the POI) meant that MOFCOM was required to provide a very compelling analysis of why
causation was still present
230.
7.223 In response to China's contention that Nuctech was forced to main tain its prices at low levels
in order to be able to compete with Smiths, th e European Union argues that this is not what
MOFCOM found. Rather, MOFCOM found that Nu ctech increased its mark et share every year,
beyond any increase in the market share of subject imports in relative terms. It also found that
Nuctech increased its sales volume and sale reve nue every year by more than 50%. The
European Union argues that in circumstances where s ubject import prices were constantly increasing,
MOFCOM's finding that such prices forced the domestic sales prices to maintain their downward
trend does not meet the compelling, reasoned and ad equate explanation require d under Article 3.5 of
the Anti-Dumping Agreement.
(iv) MOFCOM's consideration of other known factors: non-attribution
7.224 The European Union submits that MOFCOM's evaluation of known factors other than the
allegedly dumped imports as possible causes of injury was inconsistent with Articles 3.1 and 3.5 Anti-
Dumping Agreement.
7.225 The European Union contends that MOFCOM limited itself to collecting evidence with
respect to a pro-forma list of other factors set forth in MOFCOM's Injury Questionnaire. In relation
to certain causal factors that it did explicitly examine, namely Nuctech's export performance and
"product quality and technology factors", the Eu ropean Union argues th at MOFCOM failed to
consider several arguments made by Smiths.

230 The European Union refers to Appellate Body Report, Argentina – Footwear (EC), paras. 144-145,
referring to Panel Report, Argentina – Footwear (EC) , para. 8.238 ("While (...) a coincidence [between the
increase in imports with a decline in the relevant injury factors] by itself cannot prove causation (...), its absence
would create serious doubts as to the existence of a causal link, and would require a very compelling analysis of
why causation is still present") (emphasis in original).

7.226 Further, the European Union submits that MOFCOM ignored other "known factors" that were
raised by interested parties and that were relevant in the present case. The European Union refers in
this regard to arguments raised by Smiths concerning the impact of the global financial crisis in 2008,
Nuctech's start-up situation, Nuctech's aggressive pricing policy, Nuctech's aggressive business
expansion, and the "fair" competition between Nu ctech and other producers. According to the
European Union, these other known factors adequately explained the reduction in sales price, the
losses of pre-tax profit, the negative rate of return , the increased inventory, the workforce reduction,
and the failure to recover huge investment. Th e European Union asserts that MOFCOM failed to
examine these factors. According to the European Union, therefore, MOFCOM failed to separate and
distinguish the injurious effects of other causal f actors from those of the dumped imports, contrary to
the non-attribution requirement of Article 3.5.
(v) Violations of Articles 3.1, 3.2 and 3.4 of the Anti-Dumping Agreement
7.227 Finally, the European Union submits that the abovementioned alle ged violations of
Articles 3.1, 3.2 and 3.4 of the Anti-Dumping Ag reement further render MOFCOM's non-attribution
determination inconsistent with Article 3.5 Anti-Dumping Agreement.
(b) China
(i) The volume of subject imports
7.228 China submits that the European Union's argu ment that MOFCOM's consideration of the
volume of dumped imports as "large" or "great" w as improper "when seen in the context of domestic
consumption and domestic sales volume" 231, must be rejected. This is because it relates to the
existence rather than the cause of injury. According to China, the examination and assessment of the
"import volume" factor takes place in the context of the injury determination made pursuant to
Articles 3.1 and 3.2 of the Anti-Dumping Agreemen t, rather than the assessment of causation under
Article 3.5.
7.229 On substance, China contends that an unbiased and objective investigating authority could
properly have described the volume of dumped imports as "large" or "great" on the basis of the record
evidence. China notes that MOFCOM examined the trends in the volume of dumped imports over the
POI first in absolute terms, then in relation to th e total import volume in China, and finally in relation
to domestic consumption. It is clear that the evidence before MOFCOM was such that an unbiased
and objective authority could reach the conclusion that the volume of dumped imports was "large"
and "great". China submits that there is no oblig ation under Articles 3.2 or 3.5 of the Anti-Dumping
Agreement to consider the volume of dumped imports in absolute terms and relative to production and
consumption. China argues that the use of the wo rd "or" in Article 3.2 clearly shows that the
examination of one or the other is sufficient. There is no requirement to compare the rate of increase
of the dumped imports with the rate of increase of the sales of domestic like products.
(ii) The absence of any imports of high-energy scanners
7.230 China asks the Panel to reject the European Union's claim that MOFCOM wrongly attributed
the observed effects on the domestic industry to the dumped imports since MOFCOM combined
information relating to high-energy and low-energy scanners
232. China submits that injury and
causation must be assessed in relation to the "dom estic industry" as a whole, as defined pursuant to
Article 4.1 of the Anti-Dumping Agreement. Acco rding to China, there is no requirement to
distinguish between different product "segments" or " sectors" of the domestic industry. In any event,

231 European Union's first written submission, para. 344.
232 European Union's first written submission, para. 346.

China argues that the factual premise on which th e European Union bases its argument is incorrect,
namely that there are "considerable differences" 233 between categories of scanners. China maintains
that there is no clear-cut distinction between sca nners with an energy level below 300 KeV and those
with an energy level above 300 KeV.
(iii) The price effects of subject imports
7.231 Regarding the European Union's argument that MOFCOM did not provide a reasoned
explanation of the impact of the prices of subject imports on the prices of the like domestic product,
China notes that the European Union wrongfully claims that there was no price undercutting, although
it is clear that MOFCOM found price undercutting in 2006 and 2007. Further, while there was no
finding of price undercutting in 2008, MOFCOM di d find price suppression throughout the POI.
According to China, the European Union appears to ignore that the negative effect of import prices on
domestic prices may take a form di fferent from price undercutting, na mely it may take the form of
price depression or price suppression.
7.232 China also challenges the factual premise of th e European Union's claim that "there was no
correlation between import prices (going up) and domestic prices (going down)" 234. China suggests
that the European Union appears to consider that import prices and domestic prices should follow the
same trends in order to have a correlation. Howeve r, according to China, the relevant point is not the
trend followed by the import prices and the domestic prices as such, but the interaction between the
subject import prices and the domestic prices. What investigating authorities need to consider is
whether import prices "undercut" domestic prices or "depressed/suppressed" domestic prices. China
submits that MOFCOM provided a reasoned explanation of the impact of the price of subject imports
on the price of the domestic like product. MOFC OM clearly indicated the temporal correlation
between, on the one hand, the rapidly increasing s ubject imports at very low (albeit slightly
increasing) prices over the POI and, on the other hand, the domestic prices that sharply declined over
the POI. China argues that the fact that there was no undercutting in 2008 does not mean that dumped
imports did not have negative effects on domestic prices in the form of price suppression/depression.
Further, China argues that what matters is the ex istence of a general coin cidence between the overall
trends in imports and the overall trends in the injury factors. Accord ing to China, MOFCOM
established the existence of such a coincidence.
(iv) MOFCOM's consideration of other known factors: non-attribution
7.233 China rejects the European Union's assertion that "MOFCOM limited itself to collecting
evidence with respect to a pro-forma list of othe r factors contained in its Injury Questionnaire"
235.
China notes the European Union's contention that MOFCOM failed to consider Smiths' arguments
when assessing the e ffect of Nuctech's export performanc e and "product quality and technology
factors". However, China submits that Smiths' ar guments were properly and fully examined in the
Final Determination.
7.234 China also notes the European Union's argument that MOFCOM failed to consider "factors
such as the impact of the global crisis in 2008, Nuctech's aggressive business expansion, the fair
competition between Nuctech and other producers" 236, and "the start-up situation of Nuctech and its
aggressive pricing policy" 237. China contends that before an au thority is required to "examine" other
factors, Article 3.5 requires that the factor at issu e be "known" to the investigating authority, be a

233 European Union's first written submission, para. 346.
234 European Union's first written submission, para. 348.
235 European Union's first written submission, para. 354.
236 European Union's first written submission, para. 354.
237 European Union's first written submission, para. 355.

factor other than the dumped imports, and be inju ring the domestic industry at the same time as the
dumped imports. Although in response to a Panel qu estion China clarifies that it does not argue that
the factors were not "known" to MOFCOM, it does subm it that to the extent the factors referred to by
the European Union were presented by Smiths without appropriate evidence, they cannot be regarded
as constituting other known factors within the meaning of Article 3.5.
7.235 China submits that, in any event, it did not violate Article 3.5 of the Anti-Dumping
Agreement with respect to the factors listed in th e European Union's first written submission, since
either they were examined by MOFCOM during the investigation, or there was no need to examine
them because they rested on a factual assumption that had already been rejected by MOFCOM.
(v) Violations of Articles 3.1, 3.2 and 3.4 of the AD Agreement
7.236 China submits that there are no inconsistencie s with Articles 3.1, 3.2 and 3.4 of the Anti-
Dumping Agreement, such that this purely conseq uential element of the European Union's claim
under Article 3.5 should be dismissed.
4. Evaluation by the Panel
7.237 The European Union argues that MOFCOM attrib uted the injurious state of the domestic
industry to subject imports on the basis of a flawed volume effects analysis and a flawed price effects
analysis. Further, MOFCOM's non-attribution analys is was inconsistent with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement because MOFCOM disregarded the actual causes for any negative
condition of the domestic industry.
7.238 The following sections of this report examine th e European Union's claims in relation to
MOFCOM's price effects, volume and non-attribution analyses respectively.
(a) MOFCOM's analysis of the prices of the subject imports
(i) Is MOFCOM's causation analysi s inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping
Agreement on the basis that MOFCOM did not consider the differences between the products
under consideration in its price effects analysis?
7.239 The Panel has concluded that MOFCOM's pri ce effects analysis suffers from serious
shortcomings under Articles 3.1 and 3.2 of the Anti-Dumping Agreement 238. In particular, although
there was evidence on the record to suggest that it should, MOFCOM failed to consider price
comparability before undertaking its price effects analysis. Given that MOFCOM relied upon the
price effects of subject imports in its causation anal ysis, the flaws in the price effects analysis also
undermine MOFCOM's conclusion on the causal link between the subject imports and the injury
suffered by the industry239.
7.240 Consequently, the Panel concludes that MOFCOM 's causation analysis was inconsistent with
Articles 3.1 and 3.5 of the Anti-Dumping Agreement.

238 See analysis at paras. 7.30-7.97 of this Report.
239 Final Determination, Exhibit EU-2, pp. 30-31. See the final four paragraphs of VI(I) of
MOFCOM's analysis, where MOFCOM lin ks its finding of price undercutting and price suppression to the
injury suffered by the domestic industry. MOFCOM concludes: "Accordingly, MOFCOM decided that the
import of the Subject Product in large volume and at lower price materially injured domestic X-Ray security
inspection equipment industry".

(ii) Did MOFCOM provide a reasoned and adequate ex planation of the causal link between the
prices of the dumped imports and the injury to the domestic industry?
7.241 The European Union argues that, even assumi ng MOFCOM's use of weighted average unit
values to calculate price effects was correct, MO FCOM failed to provide a reasoned and adequate
explanation regarding how the increasing prices of dumped imports forced domestic prices to
decrease, consequently injuring the domestic industry.
7.242 We recall that MOFCOM found price undercutting in 2006 and 2007. Although the prices of
the dumped imports were above the prices of the domestic like product in 2008, MOFCOM found
price suppression in that year. MOFCOM explaine d that the import of the subject product in large
volumes and at low prices had unde rcutting and suppressing effects on the prices of the like domestic
product, consequently causing injury to the domestic industry240.
7.243 The European Union complains that MOFCOM did not provide a reasoned and adequate
explanation of how the dumped imports caused pr ice depression/suppression in circumstances where,
at least in 2008, the import prices were higher than the domestic prices. According to the
European Union, MOFCOM should have explained why domestic prices could not have increased, at
least up to the level of the prices of the dumped impo rts. In fact, the European Union argues that a
very compelling explanation was required to explain this and to explain the absence of a temporal
correlation between the trends in prices of the domestic product and imports.
7.244 In the Panel's view, MOFCOM's explanation of the causal mechanism by which the dumped
imports caused injury to the domestic industry was not reasoned and adequate 241. MOFCOM
concluded that dumped imports were the only cause of injury over the POI. However, in relation to
the situation in 2008 in particular, MOFCOM di d not explain how dumped imports could be the only
cause of injury to the domestic industry, in ci rcumstances where the prices of the dumped imports
were greater than the prices of the domestic like pr oducts. MOFCOM did not explain why, if nothing
else was causing price suppression and consequent injury, Nuctech could not increase its prices, at
least to the level of Smiths' prices.
7.245 In response to a Panel question, China explains that in 2008, the import volume of the subject
products was increasing rapidly and Smiths was increa sing its market share. As a result, "Nuctech
was forced to maintain its prices at a low level in order to be able to compete with Smiths. If not, it
would have lost even more sales to Smiths"242. However, we note that MOFCOM did not provide this
explanation in its Final Determina tion. In addition, it is not clear what China means when it states
that Nuctech "would have lost even more sales to Smiths", because Nuctech was in fact increasing its
market share over the POI, rather than losing sales. In a similar vein, in its second written
submission, China argues that "if imports are reachi ng the domestic market in substantial quantities at
very low dumped prices (even if slightly increasi ng), the domestic industry will have no other choice
than selling its own products at very low prices in order to defend market share"243. However, in this
case, it appears that the extent to which Nu ctech lowered its prices was in fact to increase its market
share, rather than to maintain or defend it. In circumstances where MOFCOM found that the dumped
imports were the only cause of price suppression and consequent injury to the domestic industry,
MOFCOM's determination lacked a reasoned and adequate explana tion regarding why Nuctech was

240 Final Determination, Exhibit EU-2, pp. 30-31.
241 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 - Canada) , para. 93, regarding the
standard of review a panel must employ when examining the reasons of an investigating authority.
242 China's response to Panel question 49, para. 61.
243 China's second written submission, para. 344 (emphasis added).

forced to lower its prices below those of the dumped im ports in 2008, to such an extent that its market
share increased244.
7.246 The Panel recalls that the parties disagree about whether there was a correlation between
subject imports and domestic prices, and about the re levance of this for the causation analysis. China
relies on the panel's decision in US – Wheat Gluten, which notes the relevance of a general
coincidence between trends in injury factors a nd trends in imports to support a finding by an
investigating authority of a causal connection between increased imports and serious injury.
According to China, MOFCOM noted the correlatio n between the import of the subject product in
large volumes and at low prices and the material injury to the domestic industry.
7.247 The Panel acknowledges that an overall correlation between dumped imports and injury to the
domestic industry may support a finding of causation. However, such a coinci dence analysis is not
dispositive of the causation question; causation and correlation are two distinct concepts. In the
circumstances of this case, even accepting China's position that the domestic industry experienced
injury as the dumped imports entered the market at large volumes and low (albeit increasing) prices,
in the Panel's view, the causation question is not re solved by such a general finding of coincidence.
Rather, we consider that MOFCOM was required to conduct a more detailed analysis. In our view,
MOFCOM's analysis was not adequate, due to its failure to explain why the prices of the domestic
scanners could not rise at least to the level of th e dumped imports in 2008, in circumstances where
MOFCOM found no other causes of injury apart from the dumped imports.
7.248 Consequently, the Panel concludes that MOFC OM did not provide a reasoned and adequate
explanation regarding how the dumped imports ca used price suppression in the domestic industry,
particularly in 2008 when the prices of the dumped imports were above those of the domestic
industry. For this reason, the Panel is of the view that the MOFCOM did not conduct an objective
examination of the evidence and concludes that China acted inconsistently with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement.
(b) MOFCOM's analysis of the volume of the subject imports
7.249 The European Union argues that MOFCOM's characterisation of the import volume of subject
imports as "large" or "great" in the context of its analysis under Article 3.5 of the Anti-Dumping
Agreement was improper, partial and not even-handed. According to the European Union, this is
because, although MOFCOM considered the volume of imports in absolute terms and in comparison
to total imports and to total domestic consumption, it did not consider it in relation to total domestic
production, which was exhibiting a "skyrocket trend"245.
7.250 The Panel does not consider it necessary to de termine whether MOFCOM's volume effects
analysis was inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement. This is because
even if the Panel were to conclude in China's fa vour in this regard, given our findings regarding the
flaws in MOFCOM analysis of the effect of import prices on the like domestic product under
Articles 3.1 and 3.2 and consequently under Article 3. 5, the Panel in any event would not be able to
uphold MOFCOM's causation findings.

244 Given the relative prices of the dumped imports and the like domestic products in 2006 and 2007,
the Panel is not convinced by the European Union's complaint that the lack of correlation between the
movement in prices required a "very compelling expl anation" (European Union's second written submission,
para. 303). In the Panel's view, the fact that subject import prices were increasing in 2006 and 2007, while the
domestic prices were decreasing, does not necessa rily undermine a finding of price undercutting, in
circumstances where the prices of the subject imports remained below the prices of the domestic like product.
245 European Union's second written submission, para. 295.

7.251 Article 3.5 of the Anti-Dumping Agreement 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", where paragraph 2 sets out the requirements for analysing the volume and
price effects of the dumped imports. In its cau sation determination, MOFCOM relies upon both the
"great volumes" of subject imports, as well as their "low" prices to conclude that "these factors had
evident undercutting and [suppressing] effects on the prices of domestic Like Products" 246.
MOFCOM also states that "the EU exported X-ray security inspection equipment to China in large
volumes and at lower prices, causing serious eff ects on the production and operations of domestic
security inspection equipment"247. Therefore, both the volume and the prices of subject imports were
integral to MOFCOM's findings on price suppres sion and undercutting and also to its causation
analysis. There is nothing in the Final Determina tion to indicate how these two factors interacted or
operated independently to cause price effects in relation to the domestic like product or to cause injury
to the domestic industry. Consequently, there is nothing in the Final Determination that would allow
the Panel to conclude that either the price or the volume of dumped imports alone could sustain
MOFCOM's findings on price effects under Article 3.2 or its consequent finding on causation under
Article 3.5. In these circumstances, the Panel considers that MOFCOM's findings regarding the
prices of subject imports were so central to its price effects and causation analyses that even if we
were to find MOFCOM's volume effects analysis were consistent with Article 3.5, the flaws in
MOFCOM's findings regarding the impact of the prices of subject imports on the prices of domestic
products would in any event invalidate MOFCOM's overall causation finding
248. Indeed, China does
not argue that MOFCOM's causation analysis could be sustained on the basis of volume effects alone.
7.252 Consequently, the Panel does not consider it ne cessary to make a finding regarding whether
MOFCOM's characterisation of the import volume as "large" or "great" was inconsistent with
Articles 3.1 and 3.5 of the Anti-Dumping Agreem ent on the basis that it was not an objective
examination of positive evidence.
(c) MOFCOM's examination of the relevance of other "known factors" causing injury to the
domestic industry
(i) Should MOFCOM's consideration of Nuctech's alle ged start-up situation, aggressive pricing
policy and business expansion be considered under Article 3.4 or Article 3.5 of the Anti-
Dumping Agreement?
7.253 The European Union argues that MOFCOM acted inconsistently with Articles 3.1 and 3.4 of
the Anti-Dumping Agreement by failing to consider a ll facts and arguments on the record relevant to
or having to do with the state of the domestic indus try. In particular, the European Union contends
that MOFCOM did not consider Nuctech's alleged start-up situation, aggr essive pricing policy or
business expansion. In the event the Pane l considers that these factors have an effect on the state of
the industry, rather than factors indicative of the state of the industry, the European Union argues in
the alternative that MOFCOM did not consider th ese factors as a part of its causation analysis under
Articles 3.1 and 3.5 of the Anti-Dumping Agreement
249.
7.254 In relation to whether the claim is best character ised as falling under Article 3.4 or 3.5 of the
Anti-Dumping Agreement, the Panel notes that Article 3.4 requires an examination of "the impact of

246 Final Determination, Exhibit EU-2, p. 30.
247 Final Determination, Exhibit EU-2, p. 30.
248 In this regard, we recall the Appellate Body's finding in Japan – DRAMs (Korea) that "there may be
cases in which certain intermediate findings may be so central to the ultimate conclusion of an
investigating authority that an error at an intermediate state of reasoning may invalidate the final conclusion"
(paras. 131-135). See also, Panel Report, China – GOES , paras. 7.450-7.542 and Appellate Body Report,
China – GOES, paras. 219-220.
249 European Union's second written submission, footnote 334.

the dumped imports on the domestic industry" and an evaluation of all relevant factors and indices
"having a bearing on the state of the industry". In China – GOES, the Appellate Body held that
Article 3.4 requires "an examination of the explanatory force of subject imports for the state of the
domestic industry". However, it does not require a demonstration that subject imports are causing
injury to the domestic industry. Rather, the latte r analysis occurs under Article 3.5, which also
requires a non-attribution analysis relating to all factors causing injury to the domestic industry250.
7.255 In the Panel's view, Nuctech's alleged start- up situation, business e xpansion and aggressive
pricing strategy are best considered as potential cau ses of an industry's condition, rather than factors
indicative of the state of the industry akin to those listed in Article 3.4 of the Anti-Dumping
Agreement. This is evident ev en from the way in which the Euro pean Union describes these factors
in its submissions. For example, in relation to Nuctech's alleged start-up situation, the
European Union argues:
Nuctech only recently started to catch up in the high-end market sector of low-energy
scanners. To this purpose, Nuctech made huge investment which did pay off in terms
of increased sales, production and domestic market share while at the same time
losses, return of investment and cash flow gradually improved towards break-even.
251
7.256 Therefore, by the European Union's own descr iption, the alleged start-up situation had
consequent effects on many of the indicators of the state of the industry listed in Article 3.4 of the
Anti-Dumping Agreement.
7.257 Similarly, the European Union discusses the a lleged business expansion of Nuctech in terms
of its effect upon inventories:
Nuctech's increased inventories did not reflect the state of an industry that could not
sell, but an industry that was expanding and growing and that, as a result, needed to
increase its stocks.252
7.258 Again, this seems to support our view that Nu ctech's alleged business expansion was a factor
having an effect upon certain indicia of the state of the industry found in Article 3.4 of the Anti-
Dumping Agreement, rather than a factor which it self gave an indication of whether the industry was
injured.
7.259 In relation to the alleged aggressive pricing policy pursued by Nuctech, the European Union
argues that MOFCOM failed to consider this as an "other" factual indicator under Article 3.4 of the
Anti-Dumping Agreement, rather than alleging that it fell within one of the listed factors in the
provision. In particular, the European Union does no t appear to contend that the pricing policy falls
within "factors affecting domestic prices" listed in Ar ticle 3.4. In this regard, we agree with the
panel's statement in EC – Tube or Pipe Fittings that:
[T]his requirement [of an evaluation of "factors affecting domestic prices"] is
inextricably linked to the requirements of Articles 3.1 and 3.2 to conduct an objective
examination of the effects of dumped imports on prices in the domestic market for
like products …We see no basis in the text of the Agreement for [the] argument that
would require an analysis of factors affecting domestic prices beyond an Article 3.2
price analysis, and observe that certain of the factors potentially affecting price may

250 Appellate Body Report, China – GOES, para. 150.
251 European Union's first written submission, para. 297.
252 European Union's first written submission, para. 301 (emphasis added).

be more in the way of causal factors to be analysed under Article 3.5 rather than
under Article 3.4.253
7.260 Consequently, in the Panel's view, any alleged pricing strategy pursued by Nuctech is better
characterised as a possible cause of inju ry, rather than a factor indicative of the state of the industry.
A pricing strategy may affect the level of pri ce undercutting, suppression or depression or certain
other factors listed in Article 3.4, such as sales, profits and market share. Indeed, the
European Union's own submissions regarding the a lleged pricing policy support this characterisation
of the issue:
[T]he only possibility for Nuctech to compete with Smiths was to adopt an aggressive
pricing practice. And its strategy of maintaining low domestic prices was proven
successful since Nuctech's market share increased.254
Further, in Smiths' submissions to MOFCOM, it stated:

[C]ertain data in the Disclosure Letter strongly support the Company's previously-
stated argument that Petitioner in recent years has increasingly been selling at low
prices in the domestic market to gain market share.
255
Thanks to its aggressive price strategy , Petitioner's market share increased…These
facts suggest that Petitioner cut prices to gain market share during the POI256.
7.261 These statements support the Panel's view that the pricing strategy allegedly pursued by
Nuctech may cause changes in certain factors listed in Article 3.4, but that it is not in itself indicative
of whether the domestic industry is injured.
7.262 Therefore, the Panel concludes that the factors at issue are best characterised as having the
potential to affect the state of the industry, rather than factors indicative of the state of the industry.
7.263 The Panel recalls that in China – GOES the Appellate Body found that Article 3.4 of the Anti-
Dumping Agreement requires an examination of th e impact of subject imports on the domestic
industry, but that the obligation to conduct a non-attr ibution analysis of all factors causing injury to
the domestic industry falls under Article 3.5 of the Anti-Dumping Agreement. Although in many
circumstances it may not be possible to undertake a meaningful examination of the impact of subject
imports on the domestic industry without conducting some form of non-attribution analysis, it is clear
that the explicit obligation to conduct such an analys is falls under Article 3.5. Therefore, because the
Panel considers that Nuctech's alleged start-up situation, aggressive pricing policy and business
expansion are factors that may cause injury to the domestic industry, rather than being themselves
indicia of injury, the Panel considers it most a ppropriate to examine MOFCOM's treatment of them
under Article 3.5 rather than 3.4257.

253 Panel Report, EC – Tube or Pipe Fittings, para. 7.335.
254 European Union's first written submission, para. 297 (emphasis added).
255 Comments on the 'Disclosure Letter on the Basis of Which the Final Determination for the Anti-
Dumping Investigation Against X-Ray Security Inspectio n Equipment Will be Made", Exhibit EU-16, p. 10
(emphasis added).
256 Smiths' Rebuttals to Applicant's Comments, Exhibit EU-34, p. 9 (emphasis added).
257See para. 7.192 of this Report.

(ii) Did MOFCOM fail to examine the relevance of certain known factors raised by Smiths and
was MOFCOM's examination of certain factors pro forma?
7.264 The European Union argues that in its causa tion determination, MO FCOM's non-attribution
analysis was limited to collection of data for a list of pro-forma factors, which MOFCOM succinctly
dismissed as not causes of injury. According to th e European Union, MOFCOM failed to consider
arguments made by Smiths, in particular in relati on to the "effect of exports" and "product quality and
technology factors". The European Union also argues that MOFCOM ignored five other "known
factors" raised by interested parties, namely (i) th e impact of the global financial crisis; (ii) fair
competition between Nuctech and other producers; (iii) Nuctech's aggressive business expansion;
(iv) Nuctech's aggressive pricing policy; and (v) Nuctech's start-up situation 258. For the reasons
explained below, the Panel will analyse the European Union's arguments about MOFCOM's
consideration of the "effect of exports" together with the "impact of the global financial crisis" and its
consideration of the "product quality and technology factors" together with "fair competition"259.
7.265 In relation to the European Union's argument that MOFCOM ignored certain "known
factors", we recall that in EC – Tube or Pipe Fittings, the Appellate Body stated:
Critical to the effective operation of the non-attribution obligation, and indeed, the
entire causality analysis, is the requireme nt of Article 3.5 to "examine any known
factors other than the dumped imports wh ich at the same time are injuring the
domestic industry", for it is the "injuries" of those "known factors" that must not be
attributed to dumped imports. In order for this obligation to be triggered, Article 3.5
requires that the factor at issue:
(a) be "known" to the investigating authority;
(b) be a factor "other than dumped imports"; and
(c) be injuring the domestic industry at the same time as the
dumped imports.260
7.266 In response to a Panel question, China clarifies th at it does not contend that the five factors at
issue were not "known" to MOFCOM 261. In our view, it is also clear that the five factors were "other
than dumped imports". However, China argues that before an investigating authority is required to
conduct a non-attribution analysis in relation to a pa rticular factor, there must be relevant evidence
before it to demonstrate that the factor is causing injury to the domestic industry. In relation to a
number of the five factors which are the subject of the European Union's cl aim, China argues that
Smiths did not present such evidence to MOFCOM and therefore, MOFCOM was not obliged to
conduct a non-attribution analysis for such factors.
7.267 As a general proposition, we agree with China that if there is no relevant evidence before an
investigating authority to indicate that a factor is injuring the domestic industry, there is no
requirement for the investigating authority to make a finding regarding whether the factor is indeed
causing injury, and subsequently to proceed to cond uct a non-attribution analysis. In our view, where
an interested party has raised an "o ther factor", it would be preferable for an investigating authority to
expressly state that the party has not presented evid ence that the factor is injuring the domestic

258 In evaluating the parties' arguments in relation to the final three factors, we also consider the
relevant arguments made by the parties in the contex t of its claim under Article 3.4 of the Anti-Dumping
Agreement, which are better considered in the context of the Article 3.5 causation claim.
259 See paras. 7.268-7.269 and 7.272-7.275 of this Report.
260 Appellate Body Report, EC – Tube or Pipe Fittings, para. 175.
261 China's response to Panel question 55, para. 70.

industry, rather than not mentioning the factor at a ll in its determination. However, where there is
indeed no such evidence before the investigati ng authority, we agree that there can be no
inconsistency with Article 3.1 and 3.5 in failing to conduct a non-attribution analysis.
 The "impact of the global financial cris is in 2008" and the "effect of exports"
7.268 The European Union contends that MOFCOM did not examine Smiths' argument that
"Nuctech's declined financial performance in 2008 was due to the negative impact of the global
economic crisis", in particular because Nuctech is "an exporter focused on selling container scanners
in the overseas market"262.
7.269 The Panel agrees with China's contention that th e argument raised by Smiths relates directly
to the impact of Nuctech's export performance on the state of the domestic industry. The
European Union submits that Smiths' argument is more properly characterised as the impact of the
financial crisis on Nuctech in view of its business strategy, namely " strongly focused on export
markets and high-energy scanners as opposed to selling low-energy scanners domestically" 263. In our
view, the European Union's submission highlights that Smiths' argument is essentially that the
financial crisis had a ne gative impact on Nuctech's export perform ance, due to its export orientation,
and consequently caused injury to the domestic industr y. In fact, in the context of its argument that
MOFCOM's investigation was not based upon pos itive evidence, the European Union relies upon a
statement about the negative impact of the glob al economic crisis as evidence that Nuctech was
making losses in the export market 264. Therefore, the European Un ion's argument reduces to its
argument that MOFCOM did not adequately address the effect of exports in its causation analysis.
7.270 In this regard, the European Union's conten tion is that MOFCOM reached its conclusion
about the effect of exports without addressing Sm ith's arguments to the contrary and without
supporting its statement with positive evidence. We recall that MOFCOM found:
During the POI, domestic X-Ray security inspection equipment also had export trade
in which some products were exported through contract manufacturing. Evidence
showed that during the POI, the export of domestic X-Ray security inspection
equipment increased profits for domestic indus try, while serious losses in sales in the
domestic market were the main reason for the difficulties suffered by the domestic
industry. Thus, during the POI, the material injury to domestic X-Ray security
inspection equipment industry was not caused by the export of domestic Like
Products.265
7.271 As concluded previously, the European Union failed to demonstrate that MOFCOM's finding
was not based on positive evidence 266. Therefore, the remaining question is whether MOFCOM was
required to address Smiths' arguments regarding Nuct ech's export performance in any further detail
that it did. We recall that Smiths' arguments regarding Nuctech's export performance were based
upon statements drawn from the annual reports of Nuctech's parent company, Tsinghua Tongfang 267.
In its Final Determination, MOFC OM explained that it would not be taking the annual reports into
account because they included information on pr oducts other than the like domestic product 268.
Further, the Panel has previously concluded that the specific extracts from the annual reports relied
upon by Smiths did not provide direct evidence of Nuctech's export performance, such as to

262 Smiths' Injury Brief, Exhibit EU-11, pp. 16-17.
263 European Union's second written submission, para. 325.
264 European Union's response to Panel question 71, para. 59.
265 Final Determination, Exhibit EU-2, p. 32.
266 See conclusion reached at para. 7.167 of this Report.
268 Final Determination, Exhibit EU-2, p. 28.

undermine MOFCOM's conclusion on this point269. In the light of this, the Panel is not convinced that
MOFCOM needed to provide any further reasoning than it did regarding the export performance of
Nuctech.
 "Product quality and technology factors" and "fair competition"
7.272 The European Union argues that in addressing "product quality and technology factors",
MOFCOM succinctly dismissed this as a cause of injury, without considering Smiths' arguments
about the inferior quality of Nuctech's products in terms of product range, quality, track-record, user
friendliness and service. Further, according to th e European Union, Smiths presented evidence that
the injury suffered by Nuctech arose as a result of "fair competition" from United States and European
products. However, the European Union argues that MOFCOM did not address this factor at all. The
Panel considers that the submis sions and evidence relied upon by the European Union to support its
arguments relating to these two factors overlap to a large extent. Therefore, the Panel will consider
them together.
7.273 In relation to "product quality and technology factors", MOFCOM found:
During the POI, the quality of domestic X-Ray security inspection equipment
remained stable, and had world-leader technological level and manufacturing
processing. Domestic industry owned comp letely independent intellectual property
right for the core components of domestic Like Products. Thus, during the POI, the
material injury to domestic X-Ray security inspection equipment industry was not
caused by product quality or technology disadvantages.270
7.274 China argues that this finding "fully addressed " the issue and, in any event, MOFCOM was
under no duty explicitly to address each and every argument raised by Smiths, no matter how
tenuously evidenced271.
7.275 In relation to both "product quality and technology factors" and "fair competition", the
European Union notes that Smiths made extensive ar guments to the effect that its products were
superior to those offered by Chinese producers, in term s of quality, track record and user friendliness.
Smiths also argued that in relation to many of th e sales made by Smiths in the Chinese market, there
were no domestic substitutes272. Specifically, in relation to "fair competition", Smiths argued:
Chinese government procurement authorities re sponsible for aviation security prefer
U.S. and EU products because there was si mply no effective Chinese competitor in
the high-end aviation market during the POI. In the high-end market, i.e., the
aviation Low-energy Scanner market, competition does not take place on price but on
quality, track record, user-friendliness, and service. The Company's products are
superior to the domestic Chinese products in all of the above aspects. Thus, in the
high-end aviation market, the Company could not have injured any domestic
producer because China's government procurement authorities in that market sector
prefer EU and U.S. products to domestic products for technical performance, and no
domestic producer was even a full competitor to begin with.
273

269 See paras. 7.162-7.167 of this Report.
270 Final Determination, Exhibit EU-2, p. 32.
271 China's first written submission, paras. 532-533.
272 Smiths' Injury Brief, Exhibit EU-11, pp. 12-16.
273 European Union's first written submission, para. 314, quoting from Smiths' Response to the
Preliminary Determination, Exhibit EU-13, pp. 11 and 12-13.

7.276 Although not all of Smiths' arguments in this regard were supported by evidence, we note that
some of its arguments, particularly those in rela tion to the non-existence of Chinese substitutes, did
refer to supporting figures or documents. For example, Smiths cited to Chinese government
procurement regulations, under whic h the procurement authority is required to give preference to
domestic products unless "the products, projects or services to be procured cannot be obtained
domestically, or cannot be obtained on reasonable commercial terms within the PRC" 274. Further,
Smiths provided figures regarding its own sales of secu rity inspection equipment to aviation users in
China, namely 400 units from 2004-2008, all pu rchased under the government procurement
regulations275.
7.277 In the light of these submissions, the Panel c onsiders that MOFCOM's conclusion relating to
Nuctech's intellectual property rights and its statem ent that the "quality of domestic X-Ray security
inspection equipment remained stable, and had wo rld-leader technological level and manufacturing
processing" was not reasoned and adequate. Ra ther, MOFCOM should have addressed Smiths'
argument that its extensive sales into the Chin ese market under government procurement regulations
indicated that there were no equivalent products th at could be obtained dom estically, or could be
obtained on reasonable commercial terms.
7.278 The Panel notes that Smiths also referred to studies outlining the comparative advantage of
Smiths' scanners purchased at certain Chinese air ports and explaining the link between Smiths' high
prices and the quality of its products 276. Further, Smiths noted that during the POI, airports in China
purchased ten different Smiths models, with energy levels at or below 300 KeV, whereas Nuctech had
only four such models on offer 277. According to Smiths, this demo nstrated that Nuctech simply did
not have the range of products necessary to win th e bids. Although the Engl ish translations of the
exhibits relied upon by Smiths to support these statem ents are not on the record before the Panel, we
note that very brief one-sentence summaries of the content of the reports are provided in the list of
exhibits at the end of the Injury Brief 278. In our view, this provides some support for our previous
conclusion that MOFCOM did not adequately address the submissions and arguments on the record
before it, relating to the extent to which Nuctech products could match those of Smiths and producers
from the United States279.
7.279 We note that China relies on the panel report in Thailand – H-Beams to argue that it does not
need to address every argument raised by Smiths, no matter how tenuously evidenced. However, in
our view, the evidence presented by Smiths was su ch as to require a more reasoned and detailed
response from MOFCOM. Further, in stating that Article 3.5 of the Anti-Dumping Agreement does
not require "an express indication that the investig ating authorities have exam ined all underlying or
contributory causal elements which may comprise or influence a given causal factor", the panel in
Thailand – H-Beams was explaining that an investigating aut hority's reasoning does not need to refer
to the precise terminology used by parties to an inve stigation to describe a causal factor. Further, it
does not need expressly to refer to all elements relevant to a particular causal factor, where it is
evident that the elements at issu e have been implicitly considered 280. In the circumstances before us,
we do not consider that this case advances China' s position because we cannot find anything in the

274 Smiths' Injury Brief, Exhibit EU-11, p. 12, citing to Government Procurement Law, Article 10(1),
effective 1 Jan. 2003. 《自主创新产品政府首购和订购 管理办法》, Art. 1, effective 27 Dec. 2007.
275 Smiths' Injury Brief, Exhibit EU-11, pp. 12-13.
276 Smiths' Injury Brief, Exhibit EU-11, p. 13, footnote 13.
277 Smiths' Injury Brief, Exhibit EU-11, p. 15, footnote 20.
278 Smiths' Injury Brief, Exhibit EU-11, List of Injury Brief Exhibits, pp. 60-62 of the pdf document.
279 The Panel notes that according to the Applicati on, there was also a very significant increase in
imports from the United States over the POI (Application, Exhibit EU-3, p. 43).
280 Panel Report, Thailand – H-Beams, para. 7.282.

Final Determination to suggest that MOFCOM im plicitly considered the evidence presented by
Smiths281.
7.280 Consequently, the Panel concludes that whet her labelled as "product quality and technology
factors" or "fair competition", MOFCOM did not ad equately engage with the evidence and arguments
submitted by Smiths to the effect that Nuctech c ould not offer the same products as Smiths, or could
not offer products of the same quality. Th erefore, MOFCOM did not conduct an objective
examination of the evidence, as required by Articl es 3.1 and 3.5 of the Anti-Dumping Agreement. In
the light of this conclusion, the Panel does not consider it necessary to address whether MOFCOM
should have assessed other arguments made by Smiths in relation to "fair competition", namely that
Nuctech lacked effective cost control measures.
 Alleged aggressive business expansion
7.281 In its Injury Brief and in its rebuttal to the applicant's comments on the Preliminary
Determination, Smiths provided evidence, drawn from Nuctech's annual reports, to support its
argument that the increase in Nuctech's inventori es was not caused by the dumped imports, but by
Nuctech's aggressive business expansion. For example, Smiths noted:
Moreover, Tsinghua Tongfang's 2008 Annual Re port states on p. 40 that "companies
with more inventory, including Nuctech … are increasingly expanding scale of
business and increased amount of inve ntory." Tsinghua Tongfang's 2007 Annual
Report states on page 111 that the cau se of the 30.13% increase of Tsinghua
Tongfang's group-wise 2007 year end inve ntory from its 2006 year end level
inventory "was caused by the expansion of business scopes of our subsidiaries
NUCTECH, Tongfang Environmental Co. Ltd, and Shenyang Tongfang Multimedia.
Technology Co. Ltd." The same Annual Report states on page 41 that "the increased
inventory is mainly due to the expanding business scope of NUCTECH, Tongfang
Environmental, and Shenyang Multimedia.
282
7.282 In its comments on the Preliminary Determina tion, the European Commission argued that the
increase in inventory remained unexplained in the Determination. The European Commission
submitted that the increase was more likely to be due to "other business reasons" rather than the

281 China submits that MOFCOM considered and rejected, in the context of its like product analysis, an
assertion by Smiths that the subject imports were superior to the domestic products in terms of quality and
service, and were not substitutable for each other (China's opening statement at the second meeting with the
Panel, paras. 110 and 115). However, the Panel is no t convinced that MOFCOM's analysis in this regard
involved a consideration of all the arguments and ev idence submitted by Smiths in the context of non-
attribution. The Panel notes that the conclusion reached by MOFCOM at page 16 of the Final Determination
essentially replicates the conclusi on reached by MOFCOM on the like pr oduct determination at the end of
page 15. Therefore, the Panel is not convinced that MOFCOM's consideration of Smiths' assertion went beyond
its consideration of the like product analysis, which was conducted at a high-level of generality and did not
involve an examination of Smiths' non-attribution ar guments and evidence (see pages 14-15 of the Final
Determination). For example, the Panel cannot find any explicit or implicit consider ation of the evidence and
arguments relating to the Chinese government procurement regulations, requiring preference to be given to
domestic products where available, and purchases of Smiths' products under such regulations, and the relevance
of this to Smiths' submission relating to the range of domestic products available in comparison to imports.
Therefore, the Panel remains of the view that in asse ssing "product quality and technology factors" and "fair
competition" under Article 3.5, MOFCOM did not adequately engage with, and provide a reasoned and
adequate explanation in relation to, the evidence and arguments submitted by Smiths.
282 Smiths' Injury Brief, Exhibit EU-11, pp. 17-18. See also, Smiths' Rebuttals to Applicant's
Comments on the Preliminary Determination, Exhibit EU-34, pp. 8-9.

dumped imports, such as outdated technology of the product in stock, withdrawn orders and the time
lag between production and sale283.
7.283 China argues that MOFCOM did not need to c onduct a non-attribution analysis in relation to
the alleged aggressive business expansion, because there was no relevant evidence before MOFCOM
to indicate that this factor was causing injury to the domestic industry. China again argues that
Smiths' reliance upon the annual reports of Nuctech is inapposite because the information in the
annual reports encompasses a wider range of products than included in the like product definition.
7.284 The evidence submitted to MOFCOM by Smith s regarding other possible causes of the
increase in Nuctech's inventories, apart from th e dumped imports, are statements drawn from the
annual reports of Nuctech's parent company. Th e Panel recalls that in the context of assessing
whether MOFCOM's injury analysis under Article 3.4 of the Anti-Dumping Agreement was based on
positive evidence, the Panel concluded that the di fferences in the data relied upon by MOFCOM and
that found in the annual reports of Nuctech's pa rent company were adequately explained due to
inclusion in the annual report of statistics regarding a broader range of products than the like domestic
product284.
7.285 The Panel is less convinced that it was reasonable for MOFCOM to disregard as completely
irrelevant the statements in the annual report th at Nuctech's business expansion caused increases in
inventories. The extracts from the annual reports cited by Smiths state that in 2008 Nuctech was
"increasingly expanding scale of business and increased amount of inventory" and that the expansion
in the inventories between 2006 and 2007 "was caused by the expansion of business scopes of our
subsidiaries Nuctech" 285. While we have concluded that the differences in the data relied upon by
MOFCOM and that found in the annual reports could reasonably be explained by the broader range of
products covered by the annual report statistics, it is quite a different proposition for MOFCOM to
have completely ignored explicit statements regarding other causes of injury to the domestic industry,
leading to increased inventories. This is partic ularly the case in the light of MOFCOM's finding that
Nuctech was expanding its capacity by approximately 50% each year, which was more than the
annual increase in domestic demand. Given this fi nding, the Panel considers that an objective and
unbiased investigating authority would have assessed whether the statements in the annual reports
about Nuctech's business expansion and resulting in creased inventories related to that portion of
Nuctech's production made up by the like domestic product.
7.286 Consequently, by failing to take into consider ation and to investigate the relevance of the
statements by Nuctech's parent company regarding the cause of Nuctech's increase in inventories, the
Panel finds that MOFCOM failed to make an obj ective examination of the evidence before it, as
required by Articles 3.1 and 3.5 of the Anti-Dumping Agreement.
 Alleged aggressive pricing strategy
7.287 The European Union argues that there was evidence on the record indicating that the injury to
the domestic industry was caused by a voluntary aggressive pricing policy pursued by Nuctech, but
that MOFCOM did not address this causal factor in its Final Determination.
7.288 In particular, the European Union notes that Smiths referred to a study describing Nuctech's
pricing policy with respect to high-energy scanners on the export market. Although it appears that
Smiths did not include the study as an attachment to its Injury Brief, Smiths summarised the study as
follows:

283 European Commission's Comments on the Preliminary Determination, Exhibit EU-35, p. 4.
284 See conclusion reached at para. 7.175 of this Report.
285 Smiths' Injury Brief, Exhibit EU-11, pp. 17-18.

[D]escribing how NUCTECH set its pricing ta rgets to maximize sales growth in the
hope of rapidly expanding market penetra tion by lowering prices to gain scale in
production and sales. According to this study, in its efforts to penetrate the
international high-energy scanners markets, NUCTECH adopted a "high quality
lower price" strategy, lowering its product prices by about 30% below those of like
products of the competitors.
286
7.289 Smiths also argued that the data in MOFCOM's Injury Disclosure supported the theory that
Nuctech was lowering its prices in order to increase it s market share. In particular, Smiths quoted the
relevant pricing and market share data and highlight ed that "the magnitude of [Nuctech's] increases in
volume and market share are much higher than tho se enjoyed by Smiths … At the same time that
prices of domestic products dropped, prices of Smiths' products increased" 287. The European Union
asks, "[w]hat more evidence was n eeded than the constant decrease in price reflected in MOFCOM's
Final Determination? Why did domestic sale prices decrease every year when EU import prices
constantly increased during the POI and were even above domestic sales prices in 2008" 288? Finally,
the European Union contends that given the high -quality of Smiths' products, the only possibility for
Nuctech to be able to compete was to adopt an aggressive pricing policy.
7.290 China argues that there was no relevant eviden ce on the record to support Smiths' contention
that Nuctech adopted an aggressive pricing policy. Therefore, MOFOM was not under an obligation
to address this evidence.
7.291 The Panel notes that the evidence on the record relied upon by the European Union to support
its argument is not direct evidence of the existe nce of an aggressive pricing policy on the domestic
market. However, given the highly confidential nature of a company's pricing strategies, any
evidence from a competitor regarding the existence of a particular pricing policy will necessarily be
circumstantial. In the Panel's view, Smiths presen ted such circumstantial evidence to MOFCOM. In
particular, Smiths referred to a study detailing the pricing strategy pursued by Nuctech in the high-
energy export market. It also outlined how MOFCOM 's injury findings, in particular the trends in
Nuctech's pricing and its level re lative to dumped import prices in 2008, were consistent with an
aggressive pricing policy. In the Panel's view, in the light of this evidence, when assessing the causes
of injury to the domestic industry, an objective and unbiased decision maker would have investigated
the possibility of the existence of such a pricing policy. The fact that MOFCOM did not do so was
inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.
 Nuctech's alleged "start-up" situation
7.292 In its Injury Brief, Smiths made extensive alle gations to the effect that Nuctech was in a
"start-up" situation in relation to low-energy scanne rs and that this explained some of the injury
suffered by Nuctech, including lack of profitability. China argues that Smiths did not furnish any
evidence to support these allegations, and conseque ntly, MOFCOM was not required to address the
alleged "start-up" situation of Nuctech in its causation analysis.
7.293 In the Panel's view, many of the allegations regarding Nuctech's start-up situation were not
supported by evidence, but rather were bare assertions . Further, in some instances the evidence cited
by Smiths does not seem clearly to support the poin t for which it was relied on. For instance, Smiths
relied upon Exhibit IV to the Injury Brief to suppo rt its claim that Nuctech was in the process of
diversifying its business by developing products such as baggage inspection equipment and that it was
making a strategic shift to strengthen its low-energy scanner sector. However, on this topic, the most

286 Smiths' Injury Brief, Exhibit EU-11, p. 18, footnote 30.
287 Smiths' Comments on Injury Disclosure, Exhibit EU-16, p. 10.
288 European Union's second written submission, para. 279.

that can be gleaned from Exhibit IV is that Nuct ech diversified from container inspection to other
forms of inspection, such as baggage, fluids, radi oactive materials and explosives. There is no
indication in the evidence of the period of time over which this occurred289.
7.294 The Panel's review of the evidence relied upo n by the European Un ion and China indicates
the following:
(a) Nuctech has historically focused on s upplying large-scale container inspection
systems290;
(b) Nuctech has diversified from container in spection to baggage inspection, fluids
security inspection, radioactive mate rials inspection and drugs/explosives
inspection291. There is no precise indication in the relevant evidence regarding the
period of time over which this occurred;
(c) Nuctech was selling low-energy scanners from as early as 2004 and was offering at
least two low-energy models for sale in product brochures in mid-2003292;
(d) The European Union and Chin a agree that Nuctech offered between four to six
models of low-energy scanners during the POI 293. In contrast, Smiths states that it
had 20 such models on offer294;
(e) As at the end of 2007, Nuctech had sold 216 "small security inspection equipments"
in foreign markets295;
(f) Nuctech sold "close to 1,400 units of small-scale [security inspection] equipment" to
Olympics-related users in 2008296; and
(g) MOFCOM found that over the POI Nuct ech experienced increased productivity
levels, reduced losses and increased rates of return. The European Union argues that
these results are characteristic of a company in a start-up situation297.

289 Smiths' Injury Brief, Exhibit EU-11 (Exhibit IV to the Injury Brief).
290 Smiths' Injury Brief, Exhibit EU-11, p. 8 (and Exhib it IV to the Injury Brief, p. 1, which states that
Nuctech's predecessor specialized in "large container inspection system").
291 Smiths' Injury Brief, Exhibit EU-11 (and Exhibit IV to the Injury Brief, p. 8). In its Injury Brief,
Smiths alleges that "Nuctech is making a strategic shift to strengthen its low-energy scanner sector to achieve its
goal of developing into a full-range scanner producer pa rticipating in both the high-energy scanner and low-
energy scanner markets globally". To support this allegation, Smiths relies upon Exhibit IV, p. 5, attached to its
Injury Brief. However, it is difficult to find such a st atement in Exhibit IV. The closest appears to be the
statement about the "functional diversification" undertaken by Nuctech.
292 See sales contract for model THSCAN CX100100T, dated 8 November 2004 (140 KeV),
Exhibit CHN-8. See also, product brochures for THSCAN CX6550B and THSCAN CX100100T (both
140 KeV), dated 10 June 2003, Exhibit CHN-7, (China argues that the numbers 030610 at the bottom of the
right hand corner of the brochures represents the date. The European Union has not contested this).
293 China's second written submission, para. 307( d) and the European Union's second written
submission, para. 272. See also, Smiths' Injury Brief, Exhibit EU-11, p. 15. According to Smiths, in addition to
the four models of low-energy scanners offered by Nuctech during the POI, an additional two were newly
developed but unavailable during the majority of the POI. In its submission, China states that 5 models of low-
energy scanner were offered by Nuctech during the POI.
294 Smiths' Injury Brief, Exhibit EU-11, p. 15.
295 Smiths' Injury Brief, Exhibit EU-11 (Exhibit IV, pp. 5-6), pp. 77-78 of the pdf document.
296 Smiths' Injury Brief, Exhibit EU-11, p. 10.
297 European Union's second written submission, para. 276.

7.295 The question before us is whether Smiths submitted sufficient relevant evidence to
MOFCOM regarding the existence of a start-up situ ation, such that MOFCOM should have examined
this factor as a part of its causation analysis. The answer to this question partly depends on the
definition of "start-up". The Panel observes that Article 2.2.1.1 of the Anti-Dumping Agreement
refers to "start-up operations", but does not provide a definition. We also note that for the purposes of
paragraph 4 of Annex IV to the SCM Agreement, which addresses calculation of total ad valorem
subsidization, "a start-up period will not extend be yond the first year of production". This is a
narrower concept of "start-up" period than suggested by the European Union298.
7.296 In the Panel's view, MOFCOM was justified in reaching the conclusion that there was not
relevant evidence before it to support Smiths' assertions that Nuctech was in a "start-up" situation.
The evidence that was submitted demonstrated that Nuctech's production of low-energy scanners
commenced at least three years prior to the beginni ng of the POI. Further, during the POI it appears
that Nuctech was selling significant quantities of lo w-energy scanners. Although there may be room
for debate regarding for how many years after production commences a company can be considered to
be in a "start-up" phase, MOFCOM cannot be c onsidered to have lacked objectivity or even-
handedness for taking the view that there was no releva nt evidence before it that Nuctech was in such
a phase. Although the Panel considers it would have been preferable for MOFCOM to explicitly state
this conclusion, the Panel does not consider that MOFCOM acted inconsistently with Articles 3.1
or 3.5 of the Anti-Dumping Agreement by failing to address Smiths' assertions in this regard.
(iii) Conclusion
7.297 The Panel finds that MOFCOM acted inconsistently with Articles 3.1 and 3.5 of the Anti-
Dumping Agreement by failing to conduct an objectiv e examination of the evidence on the record. In
particular, MOFCOM failed to separate and distingui sh the injurious effects of other causal factors
from those of the dumped imports, contrary to the non- attribution requirement of Article 3.5. In this
regard, MOFCOM failed to consider the eviden ce on the record regarding Nuctech's alleged
aggressive business expansion, alleged aggressive pricing strategy and the "product quality and
technology factors/fair competition".
(d) Consequential violations
7.298 The European Union argues that due to inconsis tencies with Articles 3.1, 3.2 and 3.4 of the
Anti-Dumping Agreement, MOFCOM's causation analys is, including the non-attribution analysis, is
necessarily inconsistent with Article 3.5 of the Anti-Dumping Agreement 299. Given our findings that
MOFCOM's price effects analysis and injury findings were flawed, consequently MOFCOM's
causation analysis, which rests upon these findings, is inconsistent with Article 3.5 of the Anti-
Dumping Agreement.
(e) Conclusion on the European Union's claims under Articles 3.1 and 3.5 of the Anti-Dumping
Agreement
7.299 The European Union presented a number of arguments to support its claim that China acted
inconsistently with Articles 3.1 and 3.5 of th e Anti-Dumping Agreement in conducting its causation
analysis. The Panel concludes that MOFCOM acted inconsistently with Artic les 3.1 and 3.5 due to
the failure to take into consider ation the differences in the products under consideration in the price
effects analysis and due to the failure to provide a reasoned and adequate explanation regarding how
the prices of the dumped imports caused price suppression in the domestic industry, particularly

298 In response to Panel question 72, para. 62, the European Union argues that "a start-up is a situation
that may last in time between one and five years".
299 European Union's first written submission, paras. 350 and 364.

in 2008. The Panel exercises judicial economy with respect to MOFCOM's analysis of the effect of
the volume of subject imports. Finally, the Panel concludes that MOFCOM failed to consider certain
"known factors", and failed to consider evidence relating to other factors that it did explicitly
consider, in its non-attribution analysis.
7.300 Therefore, the Panel concludes that China has acted inconsistently with Articles 3.1 and 3.5 of
the Anti-Dumping Agreement.
F. CONCLUSION ON THE EUROPEAN UNION'S INJURY CLAIMS
7.301 The Panel finds that MOFCOM acted inconsiste ntly with its obligations under Articles 3.1,
3.2, 3.4 and 3.5 of the Anti-Dumping Agreement. In particular, the Panel concludes that MOFCOM's
price effects methodology was inconsistent with Articles 3.1 and 3.2 because MOFCOM did not
ensure that the prices it was comparing for this pu rpose were actually comparable. Further, in its
injury analysis, MOFCOM did not consider all injury factors listed Article 3.4 and did not conduct an
objective examination of the state of the industry. Finally, MOFCOM acted inconsistently with
Articles 3.1 and 3.5 because it relied on its flawed pr ice effects findings; failed to provide a reasoned
and adequate explanation of how dumped imports caused price suppression to the domestic industry;
and, finally, did not fulfil its obligations in conducting its non-attribution analysis.
G. MOFCOM'S TREATMENT OF NON-CONFIDENTIAL SUMMARIES: ARTICLES 6.5.1, 6.2 AND 6.4
1. Introduction
7.302 The European Union claims that certain aspects of MOFCOM's treatment of non-confidential
summaries prepared by Nuctech violated Article 6.5.1 of the Anti-Dumping Agreement. The
European Union also makes additional claims under Articles 6.2 and 6.4 of the Anti-Dumping
Agreement. China asks the Panel to reject the European Union's claims.
2. Provisions at issue
7.303 Articles 6.2 and 6.4 of the Anti-Dumping Agreement provide:
6.2 Throughout the anti-dumping investigati on all interested parties shall have a
full opportunity for the defence of their interests. To this end, the authorities shall, on
request, provide opportunities for all interest ed parties to meet those parties with
adverse interests, so that opposing views may be presented and rebuttal arguments
offered. Provision of such opportunities must take account of the need to preserve
confidentiality and of the convenience to the parties. There shall be no obligation on
any party to attend a meeting, and failure to do so shall not be prejudicial to that
party's case. Interested parties shall also have the right, on justification, to present
other information orally.
6.4 The authorities shall whenever practic able provide timely opportunities for
all interested parties to see all information that is relevant to the presentation of their
cases, that is not confidential as defined in paragraph 5, and that is used by the
authorities in an anti-dumping investigation, and to prepare presentations on the basis
of this information.
7.304 Articles 6.5 and 6.5.1 provide:
6.5 Any information which is by nature confidential (for example, because its
disclosure would be of significant competitiv e advantage to a competitor or because

its disclosure would have a significantly adverse effect upon a person supplying the
information or upon a person from whom that person acquired the information), or
which is provided on a confidential basis by parties to an investigation shall, upon
good cause shown, be treated as such by the authorities. Such information shall not
be disclosed without specific permission of the party submitting it. [Footnote omitted]
6.5.1 The authorities shall require interested parties providing
confidential information to furnish non-confidential summaries
thereof. These summaries shall be in sufficient detail to permit a
reasonable understanding of the substance of the information
submitted in confidence. In excep tional circumstances, such parties
may indicate that such information is not susceptible of summary. In
such exceptional circumstances, a statement of the reasons why
summarization is not possible must be provided.
3. Main arguments of the parties
(a) European Union
7.305 The European Union challenges two aspects of MOFCOM's treatment of non-confidential
summaries. First, the European Union identifies a number of instances in which MOFCOM allegedly
accepted non-confidential summaries provided by Nu ctech that were not adequate to permit a
reasonable understanding of the substance of the inform ation submitted in confidence, contrary to the
first two sentences of Article 6.5.1 of the Anti-Du mping Agreement. Second, the European Union
claims that MOFCOM allowed the Public Secu rity Bureau not to submit any non-confidential
summaries of confidential information, even though the conditions for application of the "exceptional
circumstances" mechanism provided for in the third and fourth sentences of Article 6.5.1 had not been
fulfilled. The European Union also pursues depende nt claims under Articles 6.2 and 6.4 of the Anti-
Dumping Agreement.
(i) Adequacy of non-confidential summaries provided by Nuctech
7.306 The European Union claims that MOFCOM faile d to require Nuctech to provide adequate
non-confidential summaries of certain confidential in formation submitted in Nuctech's Application,
and in Nuctech's replies to MOFCOM's ques tionnaire. Regarding Nuctech's Application
300, the
European Union's claims concern the non-confidential summaries of certain model designations, and
certain Exhibits. Regarding Nuctech's questionnair e response, the European Union's claims concern
the non-confidential summaries of certain Attachme nts to Nuctech's questionnaire response, and of
certain replies provided by Nuctech.
 Nuctech's Application
 Model designation

7.307 The European Union asserts that MOFCOM failed to require Nuctech to provide an adequate
non-confidential summary of the characteristics of the two imported product models in respect of
which Nuctech alleged dumping in its Application. In its Application, Nuctech referred to the
relevant models as "Model 1" a nd "Model 2", and as the "main models of the Subject products" 301.
The European Union submits that the description of these models as "Model 1" and "Model 2" was

300 The European Union's claims concern the public version of Nuctech's Application, set forth in
Exhibit EU-3.
301 Application, Exhibit EU-3, p. 24.

inadequate for the purpose of Article 6.5.1, given the breadth of the product under investigation, and
the existence of different categories and typ es of subject products with largely diverging
characteristics.
 Exhibits 8, 9, 10, 11 and 14 of the Application
7.308 The European Union claims that MOFCOM faile d to require Nuctech to provide adequate
non-confidential summaries of Exhibits 8, 9, 10, 11 and 14 of the Application. These Exhibits
concern evidence on normal value, evidence on e xport prices, evidence on price adjustments,
explanations by the domestic industry regardi ng the volume and value of subject imports, and
Nuctech's 2006-8 financial audit reports. The European Union claims that the "[s]ummaries of those
Exhibits are essentially limited to saying that the Exhi bit contains 'pieces of evidence' on the subject
followed by a request for confidential treatment" 302 on the basis that disclosure of the underlying
confidential information would cause "severe adverse e ffects" to the party disclosing the information.
The European Union alleges that, to the extent that any summary of the underlying confidential
information was provided, it was inadequate. Accord ing to the European Union, the summary should
at least have mentioned the type of document used as evidence (e.g. study, invoice, price offer, sales
ledger) and the number of such pieces of evidence.
 Attachments to Nuctech's questionnaire response
7.309 The European Union challenges the non-confiden tial summaries of certain Attachments to
Nuctech's questionnaire response. The European Union claims that the non-confidential summaries
of Attachments 14 (sales volume/value), 16 (p roduction volume), 17 (inventory), 18 (production
costs) and 19 (pre-tax profit) do not provide for a reasonable understanding of the trends over the
injury POI because they are made on a monthly, rather than annual, basis. According to the
European Union, an index on an annual basis is necessary to understand the annual trend in the
relevant injury factors.
 Nuctech's replies to certain questions in MOFCOM's questionnaire
7.310 The European Union challenges the non-confid ential summary of Nuctech's response to
question 17, concerning the establishment of ne w plants, changes of location, expansions,
acquisitions, mergers or terminations. Noting that the non-confidential version of Nuctech's response
to question 17 simply says "[Confidential]", th e European Union asserts that no non-confidential
summary has been provided for Nuctech's response to this question.
7.311 The European Union makes a similar challenge regarding the non-confidential version of
Nuctech's replies to questions 19, 19(1) and 19( 2), regarding other potential uses for Nuctech's
production equipment. The European Union contends that while it is clear th at the Applicant replied
affirmatively to question 19, the information requi red in support of its response, which was included
in Attachment 6, has been redacted in full. The European Union also notes that the text of Nuctech's
replies to questions 19(1) and (2) has been redact ed in its entirety. Regarding China's assertion 303 that
summarization was impossible, the European Union c ontends that there is no evidence on the record
of a statement to that effect having been made by Nuctech, as required by Article 6.5.1 of the Anti-
Dumping Agreement.
7.312 The European Union also asserts that Nuctech's replies to questions 32 and 38(5) (on the
major factors influencing sales prices) were redact ed, with part of the text replaced by the term
"[Confidential]". The European Union contends that no non-confidential summary has been provided

302 European Union's first written submission, para. 72.
303 China's first written submission, para. 93.

for the information designated as confidential. Regarding China's argument 304 that summarization
was impossible, the European Union contends that there is no evidence on the record of a statement to
that effect having been made by Nuctech, as requi red by Article 6.5.1 ADA. The European Union
makes the same assertion in respect of Nuctech's response to question 33.
7.313 The European Union also submits that no non-confidential summary was provided for
Attachment 4 to Nuctech's questionnaire response. Th e European Union asserts that the text has been
redacted in its entirety, and it has not been established by the Applicant that summarization was
impossible. The European Union notes that China refers 305 to Nuctech's response to question 13 as
the summary of Attachment 4, but contends that no such cross-reference can be found in
Attachment 4. The European Union further notes th at while Attachment 4 concerns imports of raw
materials, the alleged summary deals with the cons umption of raw materials from all sources (both
domestic and imported).
(ii) Non-summarization in exceptional circumstances
7.314 The European Union notes that the third and f ourth sentences of Article 6.5.1 of the Anti-
Dumping Agreement allow authorities to waive the obligation on parties to provide a non-confidential
summary of their confidential information in "exceptional circumstances" where summarisation of the
confidential information is not possible. Accordi ng to the European Union, in such exceptional
circumstances the party seeking confidential treatment of the information submitted must be required
to provide a statement of reasons why summarisation is not possible.
7.315 According to the European Union, MOFCOM faile d to require the Public Security Bureau to
provide a statement of reasons explaining the exceptional circumstances why certain confidential
information provided by it could not be summarized . The European Union contends that MOFCOM
merely accepted the Public Security Bureau's statemen t that "due to the nature of such information,
we cannot provide a non-confidential summary of such information"306. The European Union submits
that it is impossible to deduce from this statement what the exceptional circumstances were that meant
that the confidential information was not susceptible of summary.
(iii) Additional claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement
7.316 The European Union states that, pursuant to Article 6.4 of the Anti-Dumping Agreement,
interested parties must have access to all info rmation used by the authorities in an anti-dumping
investigation. The European Union asserts that the sole restriction re lates to "confidential"
information, the access to which is subject to the specific regime of Article 6.5 of the Anti-Dumping
Agreement. The European Union contends that, even if interested parties do not have access to
confidential information, they must still be grante d access to the non-confiden tial summary thereof in
accordance with Article 6.5.1. According to the Eur opean Union, failure to provide interested parties
access to such non-confidential summa ries constitutes a violation of Article 6.4. The European Union
further submits that depriving interested parti es of the right to access non-confidential summaries
restricts the opportunity of interested parties to defe nd their interests, contrary to Article 6.2 of the
Anti-Dumping Agreement.

304 China's first written submission, para. 94.
305 China's first written submission, paras. 95-97.
306 Disclosure of hearings, Exhibit EU-27.

(b) China
(i) Adequacy of non-confidential summaries
7.317 China denies that the summaries provided by Nuctech were not sufficient to provide a
reasonable understanding of the substance of the unde rlying confidential information. According to
China, the sufficiency of the summary depends on the nature of the confidential information at issue,
and on whether or not the summary allows inter ested parties an opportunity to respond and defend
their interests307.
 Nuctech's Application
 Model designation
7.318 China submits that disclosure of the precise ch aracteristics of Models 1 and 2 would have
disclosed the information for which confidential tr eatment had been requested. Furthermore, China
submits that the summary provided was in any event "adequate" for the purpose of Article 6.5.1 of the
Anti-Dumping Agreement. China notes in this regard that the panel in EU – Footwear (China) noted
that the adequacy of a non-confidential summary h as to take into account the context in which the
information has been submitted. China contends that the relevant product models were used by
Nuctech in its Application to provide informati on on normal value and export prices, in accordance
with Article 5.2 (iii) of the Anti-Dumping Agreement. China submits that what an Application must
contain pursuant to Articles 5.2(ii) and 5.2(iii) of the Anti-Dumping Agreement is a description of the
subject product and "information" on the normal value and the export price with respect to the
"product in question". China considers that, by identifying the two models as the "main models of the
Subject products", the Applicant provided a non-conf idential summary that w as sufficient to permit a
reasonable understanding that the information provi ded with respect to the normal value and export
price were those of "the product in question", c onsistent with the above-m entioned requirements of
Article 5.2.
 Exhibits 8, 9, 10, 11 and 14 of the Application
7.319 China rejects the European Union's assertion th at summaries of the relevant Exhibits are
essentially limited to saying that the Exhibits contai n "pieces of evidence". China submits that the
Exhibits also clearly indicate on which issues eviden ce was provided: Exhibit 8 contains information
on normal value; Exhibit 9 contains information on export price; Exhibit 10 contains information on
price adjustments; Exhibit 11 contains information on the volume and value of the imported products;
and Exhibit 14 indicates that it contains "the appl icant's 2006, 2007, 2008 financial audit reports".
Furthermore, China contends that adequate non-confidential summarization of the confidential
information contained in those exhibits was provide d in the body of the Application, as made clear
from the Exhibits themselves which refer the reader to the "application text".
 Attachments to Nuctech's questionnaire response
7.320 Regarding the quarterly indexes contained in the non-confidential summaries provided as
Attachments 14 (sales volume/value), 16 (production volume), 17 (inventory), 18 (production costs)
and 19 (pre-tax profit), China notes that Article 6.5.1 requires that the non-confidential summary be in
sufficient detail to permit a reasonable understanding of the substance of the information submitted in
confidence. China asserts that because the unde rlying confidential information was provided on a
quarterly basis, the provision of non-confidentia l summaries on the same quarterly basis correctly
reflects the substance of the information that was provided in confidence. In addition, China contends

307 China refers in this regard to Appellate Body Report, EC – Fasteners (China), para. 542.

that even if the Panel were to consider that only annual trends would constitute an adequate summary
of the data submitted in confidence, such a nnual trends were provided by Nuctech in other
attachments to its questionnaire response.
 Nuctech's replies to MOFCOM's questions
7.321 China submits that the European Union has failed to substantiate its claim regarding
Nuctech's replies to specific questions in MO FCOM's questionnaire. China submits that the
European Union merely identifies the information for which there is allegedly no adequate non-
confidential summary, without explaining how and wh y China violated Article 6.5.1 of the Anti-
Dumping Agreement with respect to such inform ation. China asserts that, as a result of the
European Union's failure to establish a prima facie case in respect of this claim, the claim should be
rejected.
7.322 China also makes the following remarks in resp ect of the European Union's claim. China
asserts that when the information concerned is provided in response to a "yes/no" question (e.g.
questions 17, 19(1) and 19(2)), no summary is possible since this would otherwise disclose the
confidential information, namely the yes/no res ponse. China refers in this regard to the
Appellate Body's finding in EC – Fasteners (China) that "[s]ummarization of information will not be
possible where no alternative method of presenting th at information can be developed that would
not […] necessarily disclose the sensitive information"
308. China makes the same observation in
respect of Nuctech's replies to questions 32, 33 and 38(5) 309. According to China, it is clear from the
response to question 32 ("Major factors influenc ing the sales price are [confidential]") and
question 38(5) ("The main factors influencing the sales price of the Domestic Like Product produced
by our company are [Confidential]") that a summary was not possible since such summary would
have disclosed the sensitive information at issue.
7.323 China asserts that Attachment 4 is part of Nuctech's response to question 13, which
adequately summarises the confidential informa tion as follows: "We use a large quantity of
components and parts to produce the Domestic Like Product. The quantity of components and parts is
decided completely based on production needs" 310. China submits that Nuctech specifically provides
that the confidential version contains "inf ormation on [its] procurement policy and method" 311, and
then explicitly indicates that Attachment 4 contains the information on the importation by the
Company which is confidential. China submits th at the above-reported summary is sufficient to
enable an interested party to understand the substa nce of the confidential in formation. China asserts
that the same is true for question 38, to which Nuctech responded that "there was price undercutting
with respect to the Domestic Like Product", and that the information on such "price undercutting" was
included in Attachment 15. China submits that this is an adequate summary.
(ii) Non-summarization in exceptional circumstances
7.324 China asks the Panel to reject the European Union's claim that MOFCOM failed to require a
statement of reasons explaining the exceptional circumstances why information provided by the
Public Security Bureau could not be summarized. China submits that the Public Security Bureau
explained the reasons why summarization of the confidential information was not possible on two

308 Appellate Body Report, EC – Fasteners (China), para. 543.
309 China also states that, in fact , with regard to question 33, the English non-confidential version
erroneously ticked the box "yes". In other words, China submits that there was a translation error, and that the
original Chinese non-confidential version left the reply blank in order to protect confidentiality (English
translation of Nuctech's questionnaire response, p. 22, (p. 19 of original Chinese version), Exhibit EU-8).
310 Nuctech's Questionnaire Response, Exhibit EU-8, p. 11.
311 Nuctech's Questionnaire Response, Exhibit EU-8, p. 11.

separate occasions. China contends that the Public Security Bureau provided an oral explanation, and
the following written explanation:
As the information here below involves confidential commercial information, the
disclosure of which will cause material a dverse effects on relevant interested
party(ies), we hereby apply for confiden tial treatment of such information. In
addition, due to the nature of such info rmation, we cannot pr ovide a non-confidential
summary of such information.312
7.325 According to China, while the party submitting information in confidence must identify the
exceptional circumstances and provide a statement explaining the reasons why summarization is not
possible, nothing requires that such statement must be made public. China asserts that a description
of the exceptional circumstances justifying non-summar ization need not be made public if, as in the
present case, they themselves were confidential. China contends in this regard that information on the
number and types of security systems used in Chinese ai rports, and in the aviation sector in general, is
confidential for reasons of public security.
7.326 China submits that MOFCOM was obliged to scrutinise the Public Security Bureau's
statement before that statement could be placed in the Public Reading Room, as foreseen in
Articles 11 and 12 of the Decree on "Rules on Information Access and Information Disclosure in
Industry Injury Investigations" No. 19 2006
313. China asserts that the fact that MOFCOM placed the
document transmitted by the Public Security Bureau in the Public Reading Room demonstrates that
MOFCOM scrutinized and accepted the explanati on. China contends that, had MOFCOM not
considered the explanation adequate, it would have notified the Public Security Bureau about its
inappropriateness pursuant to Article 12 of the a bove-mentioned Decree, and would not have placed
the document in the Public Reading Room.
(iii) Additional claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement
7.327 China notes that the European Union's claims under Articles 6.4 and 6.2 of the Anti-Dumping
Agreement are purely consequential to its claim under Article 6.5.1. China submits that, since there is
no violation of Article 6.5.1, the Panel should re ject the European Union's dependent claims under
Articles 6.2 and 6.4. China also submits that, even if there were a violation of Article 6.5.1, the
European Union has failed to make a prima facie case that China violated Articles 6.2 and 6.4 of the
Anti-Dumping Agreement. With respect to Article 6. 4, China notes that since the scope of Articles
6.5.1 and 6.4 are different, a violation of Article 6. 5.1 does not necessarily entail a violation of Article
6.4. China submits that the European Union di d not establish the conditions of Article 6.4.
Furthermore, China submits that the European Union failed to even identify the "information"
concerned. Regarding Article 6.2, China also argues that the European Union has failed to
demonstrate why the fact that no adequate non-confidential summary was provided for each item
identified by the European Union deprived Smiths of a full opportunity to defend its interests.
4. Evaluation by the Panel
7.328 The European Union pursues claims under Artic le 6.5.1 concerning both the adequacy of
certain non-confidential summaries provided by Nuctech, and MOFCOM's reliance on the exceptional
circumstances mechan ism. The European Union also rais es dependent claims under Articles 6.2
and 6.4. We begin by examining the European Un ion's claims concerning the adequacy of certain
non-confidential summaries provided by Nuctech.

312 Disclosure of hearings, Exhibit EU-27.
313 China's response to Panel question 32, paras. 9-14.

(i) Adequacy of non-confidential summaries
7.329 The European Union challenges the non-conf idential summaries of parts of Nuctech's
Application, certain attachments to Nuctech's questionnaire response, and some of Nuctech's
questionnaire responses. We begin by considering the European Union's claims regarding the non-
confidential summaries of parts of Nuctech's Application.
 Nuctech's Application
7.330 The European Union contends that MOFCOM failed to require Nuctech to properly
summarize the confidential information concerning the two models in respect of which Nuctech
alleged dumping in its Application. The Eur opean Union also challenges the non-confidential
summaries of certain Exhibits of the Application.
 Model designation
7.331 In its Application, Nuctech alleged dumping in respect of two models. The model names
were treated as confidential, and therefore not rev ealed. Instead, Nuctech referred to "Model 1" and
"Model 2". Nuctech indicated that "[Model 1] and [Model 2] are the main models of the Subject
Products". The European Union claims that the designation of the relevant models as "Model 1" and
"Model 2" failed to provide a reasonable understand ing of the substance of the model information
submitted in confidence, contrary to Article 6.5.1
314.
7.332 We accept the European Union's claim that simply designating the relevant models as
"Model 1" and "Model 2" fails to provide any summa ry of the underlying confidential information.
While such designation may provide a convenient label by which to refer to the models, it provides no
insight into the substance of the confidential inform ation regarding such matters as the characteristics
of the models at issue. Regarding China's asser tion that Smiths would have known which were the
"main" models at issue, as only four models were exported by Smiths in significant quantities 315, we
consider that an investigating authority's comp liance with Article 6.5.1 should not depend on an
interested party's ability to work out for itself, on th e basis of different factors, what the substance of
the underlying confidential information might be. We agree in this regard with the finding by the
panel in China – GOES that Article 6.5.1 of the Anti-Dumping Agreement:
[E]xplicitly require[s] the interested party fu rnishing the confidential information to
provide a summary thereof, rather than re quiring other interested parties to infer,
derive and piece together a possible summary of the confidential information.316
7.333 Thus, we do not consider that interested par ties should have had to infer from Nuctech's use
of the term "main" that the rele vant models were, in fact, those most exported by Smiths. In any
event, since four models were appare ntly exported in significant quantities 317, Smiths would still have
been left in doubt regarding precisely which two models were at issue.
7.334 We note China's argument that Nuctech was not able to provide further details without
compromising the confidentiality of the underlying information. However, we agree with the
statement by the panel in Mexico – Olive Oil that "confidential information should usually be capable
of being summarized" 318. Furthermore, if the confidential information were not susceptible of

314 The European Union does not challenge the treatment of the model names as confidential.
315 See China's response to Panel question 30, para. 3.
317 China's response to Panel question 30, para. 3.
318 Panel report, Mexico – Olive Oil, para. 7.90.

summary, then the Article 6.5.1 exceptional circumstances mechan ism should have been invoked.
There is no evidence before us, or argumentation by China, to suggest that this was the case.
7.335 We also note China's argument, based on the findings of the panel in EU – Footwear (China),
that our assessment of the adequacy of a non-confid ential summary should take into account the fact
that such summary relates to information submitted in an application. The relevant findings provide:
Turning to China's claim under Article 6.5.1, we recall that Article 6.5.1 requires that
interested parties submitting confidential information also s upply non-confidential
summaries of that information and that these summaries shall "permit a reasonable
understanding of the substance of the information submitted in confidence"
(emphasis added). The non-confidential version of the complaint provides average
data on domestic prices in Brazil and export prices from China and Viet Nam. We
recall that the information in question was presented in the context of the complaint
seeking the initiation of an anti-dumping inves tigation, presumably in satisfaction of
Article 5.2(iii), which requires a complain ant to provide "information" on normal
value and export price. In this context, we are of the view that the average prices
provided suffice as a non-confidential summary of the specific prices reported in the
annexes, sufficient to pe rmit a reasonable understanding of the "substance" of the
confidential information in question. We therefore reject China's claim that an
adequate non-confidential summary of the domestic prices in Brazil and export prices
from China and Viet Nam was not provided.319
7.336 We do not consider that this finding by the EU – Footwear (China) panel provides guidance
for our evaluation of the issues arising in the present case. First, it is entirely unclear the extent, if any,
to which the EU – Footwear (China) panel took into account the fact that the relevant information
was provided in the context of an application in its interpretation of the requirements of Article 6.5.1.
Although it may be that the panel considered that th e summary need not be as detailed or informative
in the context of an application, there is no express statement to this effect. Second, even if such
context were taken into account by the panel, we note that, in that case, a non-confidential summary
of specific price data had been provided. The pa nel found that such summary was adequate for the
purpose of Article 6.5.1. In the present case, by contrast, there is no summary of any of the
confidential model data. There is simply a desi gnation of the models as "Model 1" and "Model 2".
Thus, the factual circumstances of the present case are distinct from those of EU – Footwear (China).
In any event, the obligation set forth in the first sentence of Article 6.5.1 provides that the summary
should provide a reasonable understanding of th e substance of the underlying confidential
information. This obligation is not qualified. The text of Article 6.5.1 does not suggest that, in the
context of applications, the non-confidential summa ry need only provide a reasonable understanding
of the application, or merely dem onstrate that (consistent with Arti cle 5.2(iii)) "information on prices
at which the product in question is sold when destin ed for consumption in the domestic markets of the
country or countries of origin or export" was provided by the applicant. Even in the context of an
application, Article 6.5.1 requires that the non- confidential summary should provide a reasonable
understanding of the substance of the confidentia l information. Nuctech's non-confidential model
designation fails to do this.
 Conclusion
7.337 For the above reasons, we uphold the Europ ean Union's claim regarding Nuctech's non-
confidential summary of the confidential informa tion pertaining to the models covered by its
Application.

319 Panel Report, EU – Footwear (China), para. 7.730.

 Exhibits 8, 9, 10, 11 and 14 of the Application
7.338 The European Union claims that Nuctech's non-confidential summaries of Exhibits 8, 9, 10,
11 and 14 of the Application did not meet the requi rements of Article 6.5.1. The European Union
claims that the summaries of these Exhibits, which contained evidence, did not indicate the type of
evidence at issue (e.g. study, invoice, price offer, or sales ledger), or the number of such pieces of
evidence. China contends that the Article 6.5.1 obligation to provide a summary of the "substance" of
the information submitted in confidence relates only to the content of the information, rather than the
type of evidence at issue. China contends that th e content of the relevant information (as opposed to
the type of evidence in which that information was contained) was summarized adequately in the
main body of the Application. We begin by exam ining the European Union's claim in respect of
Exhibits 8, 9, 10 and 11.
7.339 Exhibit 8 is entitled "Pieces of evidence for normal value". Exhibit 8 provides:
These pieces of evidence have been provided by a third-party who requires a
confidential treatment. Disclosing these documents would cause severe adverse
effects to this third-party, please strictly ensure confidentiality. As regards the
section related to normal value, please refer to the application text.
7.340 Exhibit 9 is identical to Exhibit 8, except refe rence is made to export price instead of normal
value. Exhibit 10 is also identical to Exhibit 8, except reference is made to price and price transport
fee adjustments instead of normal value. Exhibit 11 is entitled "Explanations by industry associations
concerning the application for investigating the volume and value of imported products". The
remainder of Exhibit 11 is essentially the same as Exhibit 8, except the last sentence reads "As regards
the section related to imported products' volume and value, please refer to the application text".
7.341 We note China's argument that the confidential normal value, export price, price adjustment
and import volume and value data contained in these Exhibits was summarized at various places in
the Application. In our view, though, that data was not the only information contained in those
Exhibits that was designated as confidential in the sense of Article 6.5.1. The identity of the source of
the abovementioned data was also treated as confiden tial. In order to prot ect the identity of that
source, so too was the evidence (containing the relevant data) provided by that source
320. The
Article 6.5.1 obligation to summarize the substa nce of confidential information applies to all
information designated as confidential. In cases where multiple types of information are designated
as confidential, the substance of each type of conf idential information must be summarized. In the
present case, MOFCOM only ensured that a summary of the substance of the confidential data
contained in the relevant Exhibits was provided321. MOFCOM did not require Nuctech to provide any
summary of the other two types of confidential inform ation at issue. In particular, MOFCOM did not
require Nuctech to provide any summary of the information pertaining to either the source from which
the evidence was obtained 322, or the evidence323 provided by that source, contrary to Article 6.5.1. In
this regard, we note China's reliance on the New Shor ter Oxford English Dictionary's definition of the
term "substance" as "the theme or subject of an artwork, an argument, etc., esp. as opposed to form or

320 We recall that Exhibits 8, 9, 10 and 11 each stat e that "[t]hese pieces of evidence have been
provided by a third-party who requires a confidential treatment", and that "[d]isclosing these documents would
cause severe adverse effects to this third-party".
321 We base this statement on the fact that the European Union has not challenged Nuctech's non-
confidential summaries of that data.
322 Nuctech might have indicated, fo r example, whether the source was an end-user, a distributor, or a
market analyst. We note that the European Union has not pursued any claim regarding the adequacy of the
summarization of the confidential information regarding the source.
323 Nuctech might have indicated, for example, whethe r the evidence took the form of sales invoices,
ledger extracts, quotes or advertisements.

expression; the gist or essential meaning of an account, matter" 324. We note, though, that the same
dictionary further defines "substance" as "[t]he essentia l nature or part of a thing etc.", and "[t]hat of
which a physical thing consists". In our view, th e latter definition provides useful insight into the
nature of the additional summaries that MOFCOM should have required Nuctech to provide regarding
the evidence at issue.
7.342 Turning next to Exhibit 14, we note that this E xhibit is entitled "Financial audit reports of the
applicant". The non-confidential version of Exhi bit 14 provides that "The documents include the
applicant's 2006, 2007, 2008 fina ncial audit reports. Disclosing these documents would cause severe
adverse effects to the applicant, please strictly en sure confidentiality". China contends that this
constitutes an adequate non-confidential summary of the substance of the confidential information
included in Exhibit 14, since interested parties are informed that Exhibit 14 contains "the
applicant's 2006, 2007, 2008 financial audit reports". We are not persuaded by China's argument.
Where the content of financial audit reports is designated as confidential, the non-confidential
summary of such audit reports must provide a re asonable understanding of the substantive content of
those reports. Simply indicating that the confiden tial information is comprised of financial audit
reports fails to do this
325.
 Conclusion
7.343 For the above reasons, we uphold the European Union's Article 6.5.1 claim against the non-
confidential summaries of the confidential information contained in Exhibits 8, 9, 10, 11 and 14 of the
Application.
 Attachments to Nuctech's questionnaire response
7.344 The European Union challenges the non-confiden tial summaries of confidential information
set forth in Attachments 14, 16, 17, 18 and 19 to Nuctech's questionnaire r esponse on the basis that
these attachments contain quarterly, rather than a nnual, trends. China defends these non-confidential
summaries on the basis that the underlying confidenti al information was itself prepared on a quarterly
basis.
7.345 The European Union has not challenged China's factual assertion that the underlying
confidential information was prepared on a quarterly basis. As a matter of law, we consider that if the
underlying confidential information was itself prepared on a quarterly basis, the preparation of non-
confidential summaries on the same quarterly basi s is not inconsistent with the Article 6.5.1
requirement to provide a reasona ble understanding of the substan ce of the underlying confidential
information.
7.346 We note the European Union's argument that MOFCOM's determination was based on an
analysis of annual trends, so that interested par ties could have received a non-confidential version of
such annual analysis. The European Union's argum ent concerns the disclosure of information relied
on by the investigating authority. This issue fa lls outside the scope of Article 6.5.1, which is
concerned with the existence and adequacy of non -confidential summaries prepared by interested
parties. The European Union's argument is theref ore not relevant to the claims presently under
examination.

324 New Shorter Oxford English Dictionary , L. Brown (ed.) (Clarendon Press, 1993) Vol. II, p. 3123,
cited by China at para. 6 of its oral statement at the second substantive meeting.
325 We acknowledge that, in practice, it may prove difficult to provide such substantive insight into
financial audit reports. We note, though, that MOFCOM did not invoke the Article 6.5.1 exceptional
circumstances mechanism in respect of Exhibit 14.

 Conclusion
7.347 For the above reasons, we reject the European Union's Article 6.5.1 claim in respect of
Attachments 14, 16, 17, 18 and 19 to Nuctech's questionnaire response.
 Nuctech's replies to certain questions in MOFCOM's questionnaire
7.348 The European Union claims that MOFCOM faile d to require Nuctech to provide adequate
non-confidential summaries of Nuctech's replies to questions 17, 19, 19(1), 19(2), 32, 33 and 38(5) of
MOFCOM's questionnaire, and Attachments 4 and 15 to those replies. China asserts that the
European Union has failed to substantiate its claim, since it merely identifies the relevant summaries,
without further explaining their deficiencies.
7.349 We disagree that the European Union has failed to substantiate its claim. As explained below,
it is evident, when examining the non-confidential su mmaries identified by the European Union, that
these replies do not contain any summary of any conf idential information. In such circumstances,
there was no need for the European Union to further explain the nature of the deficiency. In this
regard, we begin with the European Union's cl aim concerning Nuctech's response to question 17,
which seeks information regarding the establishment of new plants, changes of location, expansions,
acquisitions, mergers or terminations. Question 17 reads:
Were there any adjustments related to th e production of the Domestic Like Product
during the POI, e.g. the establishment of new plants, changes of location, expansions,
acquisitions, mergers or terminations?

( ) No

( ) Yes. Please provide information on the time, reason, the specific adjustments
and effects of such adjustments on the production capacity.
326
7.350 The non-confidential version of Nuctech's response to question 17 simply says
"[Confidential]". Everything else in Nuctech's re sponse to question 17 has been redacted. This
response fails to meet the requirements of Article 6.5.1, since it contains no summary of the
substantive content of the relevant confidential in formation. Although China contends that a simple
"yes" / "no" reply cannot be summarized, since such summarization would necessarily reveal
confidential information, there is no evidence th at MOFCOM applied the Article 6.5.1 exceptional
circumstances mechanism in respect of this matt er. For these reasons, China's argument fails.
Furthermore, we do not agree that a reply of "y es" or "no" will necessarily reveal confidential
information. This will depend on the specific question at issue. In our view, answering "yes" or "no"
to a highly general question regarding possible me rgers, expansions etc. would not reveal any
confidential information. Furthermore, China's pos ition is undermined by the fact that the "yes" box
is ticked in Nuctech's replies to questions 19 and 33. Although China contends that the "yes" box was
ticked in error in the English translation of the reply to question 33 327, China does not make this
argument in respect of question 19. Furthermore, we note that the "yes" box is also ticked in the
Chinese version of the reply to question 19 328, excluding the possibility of any translation error in
respect of that question. This suggests that Nuctech did not consider that ticking the "yes" box would
divulge confidential information.

326 Nuctech's Questionnaire Response, Exhibit EU-8.
327 China's first written submission, para. 93.
328 Nuctech's Questionnaire Response, Exhibit EU-8, p. 13 of the Chinese version.

7.351 We make the same finding in respect of the non-confidential summaries in Nuctech's replies
to questions 19, 19(1) and 19(2), regarding other po tential uses for Nuctech's production equipment.
The text of MOFCOM's questions is set forth be low, with Nuctech's non-confidential response in
bold:
19. Was the production equipment that your company used to produce the Domestic
Like Product also used to produce other products during the POI?
( ) No
(√) Yes. Please complete the table be low with respect to the allocation of
production capacity among various produc ts (including the Domestic Like
Product).
Unit
 Product Name

Year

 Volume Percentage
(%)
Volume Percentage
(%)
Volume Percentage
(%)
2006
2007
2008

Note: If there is no data on the allocation of production capacity among various products
(including the Domestic Like Product, please enter the actual production volume and the
percentage that the production volume is of the actual total production volume generated by
the same production equipment or facilities. Allocate the quantity of production amount
accordingly.)
Please refer to Attachment 6 [Confidential] for information on the allocation of
production capacity amount various products.
(1) Has the increase or utilization of your production capacity of Domestic Like
Product been constrained during the POI?

( ) No

( ) Yes. Please specify the constraining elements.
[Confidential]
(2) Are there any plans to expand your production capacity of the Domestic Like
Product either within or outside China?
( ) No
( ) Yes. Please explain in detail.
[Confidential]
329

329 Nuctech's Questionnaire Response, Exhibit EU-8.

7.352 Even with the above-mentioned ticking of the "yes" box in reply to question 19, Nuctech's
responses to questions 19, 19(1) and 19(2) contai n no summary of any information whatsoever, and
therefore fail to meet the requirements of Article 6.5. 1. Nor is there any reference to the Article 6.5.1
exceptional circumstances mechan ism. Furthermore, although Nu ctech's response refers to
Attachment 6, that document states:
[As business secrets of the Petitioner are involved here, the disclosure of which will
impose serious adverse impacts on the Petitioner, confidentiality is therefore
requested].
7.353 Accordingly, Attachment 6 does not provide any summary of the confidential information
contained in Nuctech's replies to questions 19, 19(1) and 19(2).
7.354 A similar picture emerges in respect of Nuct ech's response to questions 32, 33 and 38(5).
Question 32 concerns possible influences on the prices of domestic products and subject imports. The
text of MOFCOM's question 32, with Nuctech's response in bold, is set forth below:
32. What are your views on the changes of the prices of the imported Subject Product
and the prices of the Domestic Like Product during the POI? Please explain with
specific data. What are the major factors influencing the prices?
The prices of the imported Subject Product declined during the
POI. Please refer to the Petition for the specific figures. The sales
prices on the domestic market have been seriously constrained by
the dumped Subject Product. As a result, it is impossible for the
domestic industry to realize a reasonable profit. Please refer to
Attachment 13 for information on the changes of sales prices of
the Domestic Like Product. Major factors influencing the sales
prices are [Confidential].
7.355 Nuctech's response does not contain, or summarize, any confidential information. Although
there is a reference to domestic price data contai ned in Attachment 13, the non-confidential version of
Attachment 13 is the same as the abovementione d Attachment 6 ("[As business secrets of the
Applicant are involved here, the disclosure of which will impose serious adverse impacts on the
Applicant, confidentiality is therefore requested .]"), and therefore contains no summary of the
relevant confidential information. While China c ontends that a summary of Nuctech's reply would
have revealed confidential information, there is no evidence that MOFCOM invoked the Article 6.5.1
exceptional circumstances mechanism.
7.356 Question 33 concerns investment and finance. The text of question 33, and Nuctech's
response in bold, provide:
33. During the POI, was there any influen ce on the investment or financing of the
production of the Domestic Like Product caused by the imported Subject Product?
( ) No
( ) Yes. Please complete the following table and provide supporting evidence.

Projects If yes, please enter √ ,
if no,
please enter x
Explanation
Expansion plan was suspended,
delayed or cancelled

Investment plan was suspended,
delayed or cancelled

Loan application was rejected
Credit rating fell
Experienced difficulties in
issuance of shares or debt

Other

Note: please specify the time of the specific changes and provide supporting evidence.

 [Confidential]
7.357 The simple insertion of the word "[Confiden tial"] provides no summary of the relevant
confidential information. Nor does Nuctech's re sponse refer to the exceptional circumstances
mechanism. Nor, as explained above, do we accept Ch ina's argument that ticking either "yes" or "no"
in response to this highly general question would have revealed confidential information.
7.358 Question 38(5) concerns influences on domestic pricing. The text of question 38(5), and
Nuctech's response in bold, provide:
38(5) What are the main factors influencing the sales price of the Domestic Like
Product?
The main factors influencing the sa les price of the Domestic Like
Product produced by our company are [Confidential].
7.359 Again, Nuctech's response contains no summary of any information. Nor is the Article 6.5.1
exceptional circumstances mechanism invoked.
7.360 Finally, regarding Attachments 4 and 15 to Nuctech's questionnaire response (concerning
information on imports of inputs, and informati on regarding price undercutting respectively), we note
that these documents contain the same text as the abovementioned Attachment 6 ("[As business
secrets of the Petitioner are involved here, the disclosure of which will impose serious adverse
impacts on the Petitioner, confidentiality is theref ore requested]"). Accordingly, these Attachments
fail to provide any summary of the confidential in formation contained therein. Nor does MOFCOM
apply the Article 6.5.1 exceptional circumstances mechanism in respect of these Attachments.
7.361 China contends that the non-confidential su mmary for Attachment 4 is contained in the
following statement made in reply to question 13: "[w]e use a large quantity of components and parts
to produce the Domestic Like Product. The quantit y of components and parts is decided completely
based on production needs". We do not consider that this statement provides an adequate non-
confidential summary of the confidential information in Attachment 4. According to Nuctech's reply
to question 13, Attachment 4 contains "information on import[s] by our Company". However, the
above-mentioned statement (set forth in Nuctech's reply to question 13) contains no reference to
imports by Nuctech.
7.362 Concerning Attachment 15, China contends th at the confidential information in that
Attachment is adequately summarized in Nuctec h's reply to question 38: "there was price
undercutting with respect to the Domestic Like Pr oduct". We disagree, since that assertion provides

no insight into the substance of the information unde rlying the allegation of price undercutting that is
set forth in Attachment 15.
7.363 Finally, we note China's argument that ne ither Smiths nor the European Commission
complained about the alleged inadequacy of the non-confidential summaries of Nuctech's replies to
questions 17, 19, 32, 33 and 38(5), or Attachments 4 and 15. China also argues that the adequacy of
the summaries is demonstrated by the fact that the respondents prepared extensive comments on the
basis of the summaries provided by Nuctech. We are not persuaded by these arguments. The
consistency of a non-confidential summary with Artic le 6.5.1 should be assessed by reference to the
content of that summary, rather than any propens ity for respondents to prepare comments on the basis
of their best estimate of the substance of the underl ying confidential information. The fact that an
interested party refrains from complaining, and inst ead manages to prepare some sort of comments on
the basis of inadequate non-confidential summari es, should not render the investigating authority
immune from subsequent action on the basis of Article 6.5.1 of the Anti-Dumping Agreement.
 Conclusion
7.364 For the above reasons, we uphold the European Union's Article 6.5.1 claim that MOFCOM
failed to require Nuctech to provide adequate non-confidential summaries of the confidential
information contained in Nuctech's replies to que stions 17, 19, 19(1), 19(2), 32, 33 and 38(5) of
MOFCOM's questionnaire, and Attachments 4 and 15 to those replies.
(ii) Non-summarization in exceptional circumstances
7.365 The European Union raises a claim regarding the non-summarization of certain confidential
information submitted to MOFCOM by the Public Security Bureau. This claim concerns the third and
fourth sentences of Article 6.5.1, which allow i nvestigating authorities to waive the obligation on
parties to provide a non-confidential summary of their confidential information in "exceptional
circumstances" where summarisation of the conf idential information is not possible. The
fourth sentence of Article 6.5.1 provides that, in su ch exceptional circumstances, "a statement of the
reasons why summarization is not possible must be provided". We must determine whether or not
MOFCOM properly required the Public Security Bur eau to explain why the confidential information
it submitted to MOFCOM could not be summarized.
7.366 According to China 330, the Public Security Bureau explai ned to MOFCOM that the relevant
confidential information could not be summarized on tw o occasions: first, the Public Security Bureau
indicated in a written statement that a non-confidential summary could not be provided because of the
"nature" of the confidential information; second, th e Public Security Bureau explained orally to
MOFCOM that a summary could not be provided wit hout risking to disclose highly sensitive security
information. There is no evidence on the Panel's reco rd that the Public Security Bureau ever provided
any oral explanation to MOFCOM. Nor has Chin a identified any reference to any such oral
explanation in MOFCOM's preliminary or final determinations, or referred to any relevant evidence in
MOFCOM's own investigation record. In these circum stances, we shall resolve the European Union's
claim exclusively on the basis of the above-men tioned written statement provided by the Public
Security Bureau. In particular, we shall determ ine whether or not that written statement properly
explains the reasons why summarization of confidenti al information provided by the Public Security
Bureau is not possible. That written statement provides as follows:
[As the information herebelow involves c onfidential commercial information, the
disclosure of which will cause material a dverse effects on relevant interested
party(ies), we hereby apply for confidential treatment of such information. In

330 China's response to Panel question 32.

addition, due to the nature of such info rmation, we cannot pr ovide a non-confidential
summary of such information.]331
7.367 According to China, the reference in the second sentence of the written statement to the
"nature of such information" contains the statem ent of reason why summarization was not possible.
China contends that the phrase "nature of such info rmation" refers to the highly sensitive character of
the information, "since it relates to the safety in ai r transport, as this flows from the name of the entity
itself, namely the Chinese Public Security Bureau of Civil Aviation Administration"332.
7.368 We note that Article 6.5.1 only allows non-su mmarization of confidential information in
"exceptional" circumstances. In our view, a si mple reference to the "nature" of confidential
information does not adequately explain why, exceptionally, that information cannot be summarized.
The "nature" of information could refer to a multitude of factors, not all of which would necessarily
prevent summarization. China argues that because the relevant information was provided by an entity
entitled the Public Security Bureau, the "nature" of that information should be understood as
pertaining to air transport safety. We are not persuaded by this argument, since the first sentence of
the above written statement provides that the releva nt information is "commercial" in character.
There is no reason why commercially sensitive informa tion submitted by the Public Security Bureau
should necessarily be understood to relate to air transport safety (as opposed, for example, to the
terms on which the Public Security Bureau may have procured x-ray scanners). In any event, the
mere fact that the information pertains to ai r transport safety would not necessarily preclude all
possibility of summarization.
7.369 We note China's additional argument that MO FCOM was under no obligation to disclose the
reasons why the relevant information could no t be summarized because those reasons were
themselves confidential. In our view, the requireme nts of Article 6.5.1 seek to ensure a degree of
transparency in anti-dumping investigations. Our view is consistent with the finding by the panel in
EC – Fasteners (China) that "the goal of maintaining transparency during the course of the
investigation" "is one of the purposes of Article 6.5"
333. That panel went on to state that "the
investigating authorities must ensure that where an interested party asserts that a particular piece of
confidential information is not susceptible of summary, the reasons for that assertion are appropriately
explained"334. Although that panel was referring primar ily to the need to explain the reasons
justifying non-summarization to the investigating authority , the panel's reference to "maintaining
transparency" makes no sense unless that panel also envisaged that such explanation would also be
made available to interested parties. This is b ecause there would be no transparency if the reasons
were to remain with the investigating authority. Furthermore, since the object and purpose of
Article 6.5.1 is to ensure transparency, we would ex pect that any restriction on transparency would be
expressly provided for. While the third and four th sentences of Article 6.5.1 expressly provide for
non-summarization of confidential information in excep tional circumstances, they do not provide that
the reasons making summarization impossible do not need to be disclosed. For these reasons, we
reject China's argument that MOFCOM was under no obligation to disclose the reasons why the
relevant information could not be summarized.
7.370 We also reject China's argument that the fact that the Administration's statement was placed
in the public reading room indicates that MOFCOM properly scrutinized the reasons why the relevant
confidential information could not be summarized. Th e mere fact that an authority is required to

331 Disclosure of hearings, Exhibit EU-27.
332 China's oral statement at the second substantive meeting, para. 9 (emphasis original).
333 Panel Report, EC – Fasteners (China), para 7.515. The Appellate Body referred approvingly to this
finding by the panel at para. 544 of its Report.
334 Panel Report, EC – Fasteners (China), para. 7.515.

perform a particular function unde r its domestic law does not demonstrate, for the purpose of WTO
dispute settlement proceedings, that the authority did actually perform that function.
 Conclusion
7.371 For the above reasons, we uphold the European Union's Article 6.5.1 claim that MOFCOM
improperly invoked the exceptional circumstances mechanism by failing to require the Public
Security Bureau to provide a statement of the reasons why summarization of the underlying
confidential information was not possible.
(iii) Additional claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement
7.372 The European Union claims that a violation of either the second or third sentences of
Article 6.5.1 necessarily results in a violation of Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
The European Union claims that a violation of Article 6.5.1 results in a violation of Article 6.4, and
that a violation of Article 6.4 in turn results in a violation of Article 6.2335.
7.373 As presented by the European Union, its cl aims under Articles 6.2 and 6.4 are entirely
dependent on its claims under Article 6.5.1. We have upheld the majority of the European Union's
Article 6.5.1 claims. When China brings its measure into conformity with Article 6.5.1, the logic
underlying the European Union's presentation of dependent claims under Articles 6.2 and 6.4 suggests
that China would at the same time bring its measur e into conformity with those additional provisions,
if the European Union's additional claims were upheld. The logic underlying the European Union's
presentation of dependent claims w ould not require China to take an y additional action to bring its
measure into conformity with Articles 6.2 or 6. 4 if the European Union's additional claims under
those provisions were upheld. The Appellate Body found in Canada – Wheat Exports and Grain
Imports that the practice of judicial economy "allows a panel to refrain from making multiple findings
that the same measure is inconsistent with various provisions when a single, or a certain number of
findings of inconsistency, would suffice to resolve the dispute" 336. E v e n i f w e w e r e t o a c c e p t t h e
European Union's claims that, in violating Article 6.5.1, MOFCOM also acted contrary to Articles 6.2
and 6.4, we consider that our findings under Artic le 6.5.1 are such as to allow the DSB to make
sufficiently precise recommendations and rulings in order to ensure the effective resolution of this
dispute337. Accordingly, there is no need for us to address those additional claims presented by the
European Union.
 Conclusion
7.374 We exercise judicial economy in relation to the European Union's additional claims under
Articles 6.2 and 6.4 of the Anti-Dumping Agreement.

335 European Union's response to Panel question 7, pa ra. 39: "To conclude, when information that was
submitted to the authorities and that should have been made available is unduly withheld in violation of
Article 6.5.1, this at the same ti me constitutes a violation of the ri ght to access information pursuant to
Article 6.4. Depriving interested parties of the right to access such information restricts their opportunity to
defend their interests, contrary to the obligation under Article 6.2".
336 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 133.
337 See also Appellate Body Reports, Brazil – Retreaded Tyres, para. 257 and Australia – Salmon ,
para. 223.

H. DISCLOSURE OF ESSENTIAL FACTS: ARTICLES 6.9, 6.2 AND 6.4
1. Introduction
7.375 The European Union claims that MOFCOM fa iled to disclose certain essential facts to
interested parties, contrary to Article 6.9 of th e Anti-Dumping Agreement. The European Union also
pursues additional claims under Articles 6.2 and 6.4. China asks us to reject the European Union's
claims.
2. Relevant provisions
7.376 Article 6.9 of the Anti-Dumping Agreement provides:
The authorities shall, before a final determ ination is made, inform all interested
parties of the essential facts under consideration which form the basis for the decision
whether to apply definitive measures. Such disclosure should take place in sufficient
time for the parties to defend their interests.
7.377 Articles 6.2 and 6.4 of the Anti-Dumping Agreement are set forth above
338.
3. Main arguments of the parties
(a) European Union
7.378 According to the European Union, Article 6.9 requires investigating authorities to disclose to
interested parties the body of facts that are impor tant in the analysis and decision making of the
investigating authority for deciding whether to ap ply definitive measures and at what level. The
European Union contends that MOFCOM failed, contra ry to Article 6.9, to disclose: the underlying
data and methodology used by MOFCOM in its price analysis, adjustments made by MOFCOM to the
export price in respect of sales to an affiliated distributor, the data and adjustments applied by
MOFCOM in determining Smiths' margin of dumping, and the facts availabl e used by MOFCOM to
establish the residual anti-dumping duty 339. The European Union contends that although these issues
were addressed in MOFCOM's Injury Disclosure 340 and/or Dumping Disclosure 341, such disclosures
did not meet the requirements of Article 6.9.
(i) Underlying data and methodology for price effects analysis
7.379 The European Union submits that MOFCOM failed to disclose the underlying data and
methodologies it followed in determining the exis tence of (i) price undercutting and (ii) price
depression/suppression. The European Union conte nds that, because the underlying data and the
methodologies for price undercutting and price de pression/suppression constitute "essential facts" that
form the basis for the decision whether to apply de finitive measures within the meaning of Article 6.9
of the Anti-Dumping Agreement, China acted incons istently with Article 6.9 ADA by not disclosing
them prior to the final determination. The Eur opean Union submits that, because the investigation
involved heterogeneous products, knowing these methodologies was of utmost importance for Smiths'

338 See para. 7.303.
339 At para. 93 of its first written submission, the European Union also refers to MOFCOM's alleged
failure to disclose essential facts regarding MOFCOM's determination of the causal link between injury and the
dumped imports. However, the European Union did not make any arguments regarding this issue during any of
its subsequent written or oral submissions to the Panel. Accordingly, we consider that the European Union has
effectively abandoned this claim.
340 Injury Disclosure, Exhibit EU-15.
341 Dumping Disclosure, Exhibits EU-17 and EU-18.

defence. According to the European Union, it was therefore especially important to know, in this case,
how subject import and domestic prices were being compared, and whether MOFCOM made
adjustments to ensure price comparability.
7.380 The European Union acknowledges that actual price data may sometimes warrant confidential
treatment in accordance with Article 6.5 of the Anti-Dumping Agreement. The European Union
contends, though, that MOFCOM did not invoke confidentiality as a basis for not disclosing the
relevant underlying data 342. The European Union further conten ds that confidentiality can in any
event not justify MOFCOM's failure to disclose th e methodology used to determine the existence of
the alleged price undercutting and price depression, since that methodology is not confidential.
7.381 Having regard to prior WTO case law, the Eur opean Union contends that Article 6.9 should
be applied on the basis of a distinction between facts and (legal) reasoning. According to the
European Union, anything that does not constitute (legal) reasoning constitutes fact. Furthermore, the
European Union contends that the object and pur pose of Article 6.9 – namely, to provide the
interested parties with a possibility to effectively exercise their right of defence by commenting on the
body of facts that are essential for the process of analysis and decision-making by the investigating
authority – confirms that the "essential facts" incl ude not only the end result (i.e. the existence of
adverse price effects), but also the underlying data and the methodology employed by the
investigating authority to get to that end result. The European Union contends that concluding
otherwise would deprive interested parties of a means to challenge whether the underlying data and
methodology in fact provide a basis for the conclusion drawn.
(ii) Affiliated distributor adjustment to export price
7.382 The European Union claims that China viol ated Article 6.9 because MOFCOM failed to
disclose the underlying facts and criteria on the basis of which an adjustment was made to the export
price for sales to an affiliated distributor. The European Union asserts that the Dumping Disclosure
343
merely contains what looks like a description of different steps in MOFCOM's decision making
process, rather than identifying "essential facts" within the meaning of Article 6.9 Anti-Dumping
Agreement. The European Union submits that MOFCOM did not disclose the underlying facts and
criteria on the basis of which the adjustments to the export price were made, "like the specific
amounts of adjustment items, including specific data on the adjusted proportions of expenses incurred
by the affiliated distributor"344.
(iii) Determination of the dumping margin for Smiths
7.383 The European Union claims that MOFCOM violat ed Article 6.9 by failing to disclose data on
transactions and adjustments used in the calcu lation of Smiths' margin of dumping. The
European Union alleges that the calculations relied upon by an inves tigating authority to determine
the normal value and export prices, as well as th e data underlying those calculations, constitute
"essential facts" forming the basis of the investiga ting authority's imposition of final measures within
the meaning of Article 6.9. The European Union contends that the calcul ations and underlying data
are facts that are "essential" to the determina tion of the existence and level of dumping because,
without this information, no affi rmative determination could be ma de and no definitive duties could
be imposed.

342 European Union's oral statement at the first substantive meeting, para. 27.
343 The European Union refers in this regard to th e Final Dumping Disclosure to Smiths, Exhibit EU-
17.
344 European Union's first written submission, para. 111.

7.384 The European Union acknowledges that MOFCOM disclosed 345 information about the
methodology used to calculate the dumping margin, an d includes a reference to the data used (namely
an "evidentiary document submitted by the responde nt Company"). However, the European Union
submits that MOFCOM should also have explaine d how the figures were calculated on the basis of
the information provided by Smiths, and the reas ons for the discrepancy between MOFCOM's figures
and those provided by Smiths.
(iv) Determination of the residual anti-dumping duty
7.385 The European Union contends that MOFCOM failed to disclose th e essential facts under
consideration regarding the calculation of the "all others" dumping rate (i.e. the rate applied to imports
of x-ray scanners produced by European Union prod ucers other than Smiths). The European Union
submits that MOFCOM failed to explain how MOFCOM used the information available to arrive at a
residual dumping margin that is more than twice the margin determined for Smiths.
(v) Additional claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement
7.386 The European Union submits that, by acting cont rary to its obligations under Article 6.9,
China also (i) failed to provide a timely opportunity for all interested parties to see all information that
was relevant to defend their interests, as require d by Article 6.4 Anti-Dumping Agreement, and (ii)
deprived the interested parties of a full opportunity to defend their interests, contrary to Article 6.2
Anti-Dumping Agreement.
(b) China
7.387 China denies that MOFCOM failed to comply with its Article 6.9 obligation to disclose
essential facts.
(i) Underlying data and methodology for price effects analysis
7.388 China denies the European Union's claim rega rding MOFCOM's alleged failure to disclose
the underlying data and the methodology used in its price analysis.
7.389 China submits that the methodology followed by MOFCOM to consider the price effects of
the dumped imports does not constitute an "essentia l fact which forms the basis for the decision
whether to apply definitive measures" within the meaning of Article 6.9. First, China submits that the
methodology is not a fact. Second, China submits that even if the methodology used by MOFCOM to
analyse price effects were a fact, it is not an "essential" fact. China submits that while the
methodology followed by an investigating authority to calculate a dumping margin might rightly be
regarded as being central and essential, since it alone is determinative not only for the determination
that dumping exists but also for its precise quantif ication and, ultimately, the level of the anti-
dumping duty imposed, this is not so for the methodology followed in the price analysis unless the
country of import applies the so-called "lesser duty" rule. Furthermore, China submits that Article 3.2
only requires the investigating authorities to "consider" whether there have been adverse price effects.
China refers to the finding by the panel in Thailand – H-Beams that the textual term "consider" in
Article 3.2 does not "require an explicit 'finding' or 'determination' by the investigating authorities as
to whether the increase in dumped imports is 'significant'"
346. China submits that, to the extent that
Article 3.2 itself does not require that a "determinati on" or a "finding" of price effects be made, it

345 The European Union refers in this regard to th e Final Dumping Disclosure to Smiths, Exhibit EU-
17.
346 Panel Report, Thailand – H-Beams, para. 7.161.

seems rather absurd to require that the inv estigating authority should disclose the methodology
followed in its assessment of such price effects.
7.390 Third, China submits that even if the Panel we re to conclude that the methodology used by
MOFCOM is an "essential fact," it is not an essentia l fact "which forms the basis for the decision
whether to apply definitive measures" . China refers in this regard to the Appellate Body's finding in
in EC – Fasteners (China) that "[t]he "essential facts" under Arti cle 6.9, which form the basis for a
final determination, are those that are material for the authority's decision" 347. According to China,
the methodology used in the price analysis is not an essential fact that forms the basis for the decision
whether to apply definitive measures. What wa s material or essential for MOFCOM's decision to
impose anti-dumping measures was that the dumped imports had effects on the domestic prices, in
particular (i) that "the import price of the Subject Product was largely below the price of domestic
Like Products in 2006 and 2007, which seriously un dercut the price of domestic Like Products," and
(ii) that "[a]lthough the import price of the Subject Product was slightly higher than the price of
domestic Like Products in 2008, it remained at a lo w level while the sales price of domestic Like
Products decreased by 46.75% from 2008 to 2007, almost down to the unit sales cost, leaving unit
gross profit rate at a low level"
348.
7.391 Regarding the European Union's claim that MO FCOM failed to disclose the data underlying
its price effects analysis, China contends that Artic le 6.9 does not apply to the "evidence" on the basis
of which MOFCOM has reached its factual conclusions in its price analysis (i.e. the specific data from
identified sources which were used by MOFCOM for its price analysis).
7.392 Furthermore, China asserts that MOFCOM fully complied with Article 6.9 by disclosing the
trends in the domestic and subject import prices, ra ther than the actual price data. China asserts that
disclosing the absolute figures of domestic prices w ould have been inconsistent with the duty of the
investigating authorities not to disclose confidential information.
(ii) Affiliated distributor adjustment to export price
7.393 China denies the European Union's claim that China violated Article 6.9 by not disclosing the
underlying facts and criteria on the basis of which th e export price for sales to an affiliated distributor
was adjusted. China asserts that MOFCOM addressed this issue in its Preliminary Determination, and
that Smiths made comments on MOFCOM's analys is. China submits that MOFCOM then fully
addressed Smiths' observations in its Dumping Disclosure 349. According to China, the
European Union's assertion that MOFCOM did not disclose the underlying facts and criteria on the
basis of which the adjustments to the export price were made is therefore directly contradicted by the
documents in the file.
(iii) Determination of the dumping margin for Smiths
7.394 China denies the European Uni on's claim that MOFCOM failed to disclose "essential facts"
regarding the determination of Smiths' margin of du mping. As to the scope of the European Union's
claim, China emphasises that the European Union has extended the scope of its claim before the
Panel. China contends that the initial claim as put forward by the European Union in its First Written
Submission related to an alleged lack of di sclosure of the dumping margin calculation and
calculations concerning the normal value and e xport price. However, in its Second Written
Submission, the European Union started to claim a lack of disclosure of data on transactions and
adjustments used in the calculation of normal valu e and export price. China submits that, since the

347 Appellate Body Report, EC – Fasteners (China), para. 483.
348 Final Determination, Exhibit EU-2, p. 23.
349 China refers in this regard to the Final Dumping Disclosure to Smiths, Exhibit EU-17, p. 12.

European Union expressly stated that it will not make arguments as to the alleged lack of disclosure
concerning the determination of normal value, this aspect of the claim should be rejected from the
outset. On the substance, as to the dumping margin calculation, China points out that MOFCOM fully
explained to Smiths how the comparison between the normal value and the export price was made.
Indeed, MOFCOM provided a table containing, fo r each model of the Subject Product, data
concerning the normal value, export price, quantity, CIF price and dumping margin. China also
asserts that a more detailed explanation of MOFCOM's dumping methodology was set forth in
MOFCOM's Preliminary Dumping Disclosure
350. Regarding the actual calculations made by
MOFCOM for the normal value and the export price, China contends that they do not constitute
"essential facts". According to China, there was t hus no obligation on MOFCOM to disclose an Excel
sheet listing all the transaction data including the adjustment figures used in the calculation of the
normal value and the export price. In any case, China contends that MOFCOM precisely identified the
elements of the calculations, namely the data that were used for the determination of the normal value
and the export price, which adjust ments were made and the level of such adjustments. China notes
that Article 6.9 does not prescribe the form that the disclosure should take such that, by identifying the
data used for the determination of the normal va lue and the export price, which adjustments were
made and the level of such adjustments, China fully complied with the requirement of Article 6.9 to
disclose the "essential facts under consideration whic h form the basis for the decision whether to
apply definitive measures".
(iv) Determination of the residual anti-dumping duty
7.395 China denies the European Union's claim th at MOFCOM failed to disclose the "essential
facts" under consideration regarding the calculation of the "all others" dumping rate. China contends
that MOFCOM properly explained that it used "f acts available" in respect of European Union
companies that did not respond to the Application or the questionnaire 351. China also contends that
MOFCOM also explained that the residual duty wa s calculated on the basis of "the sales data of
products of relevant models reported by the respondent Company"352.
7.396 China further submits that the reason why the 71.8% duty calculated on the basis of the facts
available is an appropriate residual duty is not a "f act" within the meaning of Article 6.9 of the Anti-
Dumping Agreement. China notes in this regard that the panel in Argentina – Poultry Anti-Dumping
Duties declined to consider as a "fact" the reasons wh y the investigating authority failed to use certain
domestic and export sales price data reported by exporters353.
(v) Additional claims under Articles 6.2 and 6.4 of the Anti-Dumping Agreement
7.397 China notes that the European Union has made dependent claims under Articles 6.2 and 6.4 of
the Anti-Dumping Agreement. China submits that, since there is no violation of Article 6.9, the
European Union's consequential claims of violatio n of Articles 6.4 and 6.2 must also fail. China
further submits that, even if the Panel were to conc lude that China had somehow violated Article 6.9,
the European Union claims under Article 6.4 and 6.2 have to be rejected since the European Union
has failed to demonstrate separate violations of those provisions.

350 MOFCOM's Preliminary Dumping Disclosure to Smiths, Exhibit CHN-2.
351 China refers in this regard to the Final Dumping Disclosure to the European Commission,
Exhibit EU-18.
352 Preliminary Dumping Disclosure to the European Commission, Exhibit CHN-3.
353 China refers to Panel Report, Argentina – Poultry Anti-Dumping Duties, para. 7.225.

4. Evaluation by the Panel
7.398 The European Union claims that MOFCOM fail ed to disclose certain alleged "essential facts
under consideration" that "form the basis for th e decision whether to apply definitive measures",
contrary to Article 6.9 of the Anti-Dumping Agreem ent. The alleged "essential facts" concern the
underlying data and methodology for MOFCOM's analysis of the price effects of the dumped imports,
adjustments made by MOFCOM to the export price, the data and adjustments applied by MOFCOM
in determining Smiths' margin of dumping, and the facts available used by MOFCOM to establish the
residual anti-dumping duty. China asks us to reject the European Union's claims.
7.399 The first sentence of Article 6.9 requires inv estigating authorities to disclose the "essential
facts which form the basis for the decision whether to apply definitive measures". In interpreting this
provision, we are guided by the recent findings of the Appellate Body in China – GOES:
Articles 6.9 and 12.8 do not require the disclosure of all the facts that are before an
authority but, instead, those that are "essen tial"; a word that carries a connotation of
significant, important, or salient. In considering which facts are "essential", the
following question arises: essential for what purpose? The context provided by the
latter part of Articles 6.9 and 12.8 clarifies that such facts are, first, those that "form
the basis for the decision whether to appl y definitive measures" and, second, those
that ensure the ability of interested par ties to defend their interests. Thus, we
understand the "essential facts" to refer to those facts that are significant in the
process of reaching a decision as to whether or not to apply definitive measures.
Such facts are those that are salient for a decision to apply definitive measures, as
well as those that are salient for a contrary outcome. An 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 defin itive measures. In our view, disclosing the
essential facts under consideration pursuant to Articles 6.9 and 12.8 is paramount for
ensuring the ability of the parties concerned to defend their interests.
354
7.400 We agree with the Appellate Body's analysis of Article 6.9. We particularly note the
Appellate Body's reference to the need for interested parties to be able to defend their interests. We
observe in this regard that, although the European Union's claim is based on the first sentence of
Article 6.9, there is also a second sentence in that provision. The second sentence of Article 6.9
provides that the disclosure of essential facts "should take place in sufficient time for the parties to
defend their interests". Bearing in mind Article 31.1 of the Vienna Convention on the Law of
Treaties, we consider that the second sentence of Article 6.9 provides context for interpreting the
scope of the provision set forth in the first sentenc e of that provision. Accordingly, we consider it
important to interpret the first sentence of Article 6.9 in a manner that allows interested parties to
defend their interests.
(a) Underlying data and methodology for price effects analysis
7.401 The European Union claims that MOFCOM fa iled to disclose to interested parties the
methodology and underlying data used for MOFCOM's analysis of the price effects of subject
imports, contrary to Article 6.9. The European Union claims that the methodology and underlying
data constitute "essential facts under consideration … which form the basis for the decision whether
to apply definitive measures" within the meaning of Article 6.9. China denies that MOFCOM's price
effects methodology is either a "fact" or "essentia l". China also denies that MOFCOM was required
to disclose the evidence on which its price effects analysis was based. China contends that MOFCOM

354 Appellate Body Report, China – GOES, para. 240 (footnote omitted).

complied with Article 6.9 by disclosing the trends in subject import prices and domestic prices, and in
domestic costs.
7.402 We recall that, in assessing the effect of dum ped imports on price, MOFCOM found both
price undercutting and price suppression. MOFCOM 's finding of price undercutting was based on a
comparison of the annual AUVs of the subject im ports with the annual AUVs of the domestic like
product. In respect of price suppression, MOFCOM f ound that the rate of decline in domestic prices
was greater than the rate of declin e in the unit cost of production. For the reasons set forth below, we
consider that the AUVs determined by MOFCOM, and the price data 355 underlying those AUVs 356,
should have been disclosed by MOFCOM as "essential facts under consideration which form the basis
for the decision whether to apply definitive measure s", pursuant to Article 6.9 of the Anti-Dumping
Agreement.
7.403 The AUVs and underlying price data are factual in nature 357. Furthermore, they were "under
consideration" by MOFCOM. As to whether the AUVs and underlying price data are "essential", and
"form the basis for the decision whether to apply de finitive measures", we note that the parties appear
to disagree on whether it is necessary to first de termine that these facts are "essential", and then
determine whether they "form the basis for the d ecision whether to apply definitive measures", or
whether this analysis should be conducted more holisti cally (by considering that a fact is "essential" if
it "form[s] the basis for" the final determination). In relying on the findings of the panel in EC –
Salmon, we understand that the European Union advan ces a holistic approach. This is because that
panel found that the "'essential facts under considera tion which form the basis of the decision whether
to apply definitive measures' are the body of facts essential to the determinations that must be made
by the investigating authority before it c an decide whether to apply definitive measures "358. By
contrast, China appears to consider that one should first consider whether or not facts are "essential",
and then consider whether or not the "essential fact s" "form the basis of the decision whether to apply
definitive measures"359. Given the structure of the first sentence of Article 6.9, and consistent with the
approach taken by the EC – Salmon (Norway) panel, we consider that whether or not a fact is
"essential" depends on the role of that fact in the decision-making process of the investigating
authority: facts that "form the basis for the decision whether to apply definitive measures" are
"essential". This approach is consistent with th e abovementioned finding by the Appellate Body in
China – GOES that "the 'essential facts' … refer to tho se facts that are significant in the process of
reaching a decision as to whether or not to apply definitive measures"360.

355 The European Union's arguments refer only to price data (see, for example, para. 107 of the
European Union's first written submission, and para. 78 of its second written submission), and make no mention
of cost data. Accordingly, we restrict our findings to the price data underlying MOFCOM's price effects
analysis. In doing so, we do not exclude the possibility that certain underlying cost data might also need to be
disclosed under Article 6.9 of the Anti-Dumping Agreement.
356 The underlying price data includes the Nuctech price data used by MOFCOM to determine the
domestic annual AUVs, and the customs value data used by MOFCOM to determine the annual AUVs for the
subject imports (see China's response s to Panel questions 78-82). We note that China considers that the
European Union's claim relates to "t he source or evidence on which the essential facts are based" (China's
first written submission, para. 153). Our understanding of the European Un ion's claim is somewhat different.
We understand the European Union's claim to concern the price data on which MOFCOM's findings of price
effects were actually based, rather than the evidence or sources from which that data was taken.
357 In making this finding, we do not accept the fact/reasoning distinction drawn by the
European Union. In particular, we do not accept that anything that does not constitute reasoning necessarily
constitutes a fact.
358 Panel Report, EC – Salmon (Norway), para. 7.807 (emphasis added).
359 China's first written submission, para. 148.
360 Appellate Body Report, China – GOES, para. 240.

7.404 We consider that the AUVs and underlying price data were essential to at least one of the
determinations made by MOFCOM before it could decide whether to apply definitive measures, i.e.
the determination that dumped imports had the e ffect of price undercutting and price suppression.
The AUVs and underlying price data constitu ted the body of facts on which MOFCOM's
determination of price effects was based. Since this body of facts was therefore required to
understand the basis for MOFCOM's price effects an alysis, we consider that it should have been
disclosed by MOFCOM pursuant to Article 6.9.
7.405 China contends that the facts under consideration for the Article 3.2 price effects analysis are
not "essential" within the meaning of Article 6.9 because Article 3.2 merely requires authorities to
"consider", rather than make any findings or dete rminations on, the price effects of dumped imports.
China's argument is based on the finding of the panel in Thailand – H-Beams that the textual term
"consider" does not "require an explicit 'finding' or 'determination' by the investigating authority as to
whether the increase in dumped imports is 'significant'" 361. We note that China made the same
argument before the Appellate Body in China – GOES , without success. In the context of a claim
under Article 3.2 of the Anti-Dumping Agreement, th e Appellate Body accepted that "the use of the
word 'consider' [means that] Article[] 3.2 […] do[e s] not impose an obligation on an investigating
authority to make a definitive determination on the volume of subject imports and the effect of such
imports on domestic prices" 362. However, the Appellate Body made it clear that the Article 3.2
assessment is an integral part of the establishm ent of a causal link between the dumped imports and
the injury to the domestic industry 363. The Appellate Body also made it clear that the price effects
analysis must in any event meet the requiremen ts of Article 3.1 of the Anti-Dumping Agreement 364.
Thereafter, in the context of a claim under Article 6.9 of the Anti- Dumping Agreement, the Appellate
Body found:
[I]n the context of the second sentence of Article[] 3.2 …, we consider that the
essential facts that investigating authoriti es need to disclose are those that are
required to understand the basis for their pr ice effects examination, leading to the
decision whether or not to apply definitive measures, so that in terested parties can
defend their interests.365
7.406 Thus, even though an investigating authority is only required to "consider" the price effects of
subject imports, the facts underlying that "consid eration" nevertheless constitute "essential facts"
within the meaning of Article 6.9 of the Anti-Dumping Agreement.
7.407 Before completing our analysis of the Europ ean Union's claim regarding the data underlying
MOFCOM's price effects analysis, we must addr ess China's argument that MOFCOM complied with
Article 6.9 by disclosing the trends in both the domestic and subject import prices 366. China refers in
this regard to MOFCOM's finding that:
[T]he import price of the Subject Produc t maintained growth, though in small
amounts, while the price of domestic like pr oducts declined by the large margin with
a 72.68% decrease in 2008 compared to 2006. The import price of the Subject
Product was largely below that of domest ic like products in 2006 and 2007, which
seriously undercut the price of domestic like products, resulting in sales prices lower

361 Panel Report, Thailand – H-Beams , para. 7.161, cited by China at para. 146 of its first written
submission, and at para. 89 of its second written submission.
362 Appellate Body Report, China – GOES, para. 130 (emphasis original).
363 Appellate Body Report, China – GOES, para. 128.
364 Appellate Body Report, China – GOES, para. 130.
365 Appellate Body Report, China – GOES, para. 242.
366 China's first written submission, paras. 155-162.

than per unit production costs of domestic like products and serious losses of pre-tax
profits during that time period. Although the import price of the Subject Product was
slightly higher than that of domestic like prod ucts in 2008, it remained at a low level,
while the sales price of domestic like produc ts dropped by 46.75% in 2008 against
2007, approaching the per unit cost thereof, leaving unit gross profit rate at a low
level.367
7.408 China's argument that MOFCOM's disclosure of trend data satisfies the requirements of
Article 6.9 is based on the following finding by the panel in Korea – Certain Paper:
Regarding the conformity with Article 6. 9 of the explanations provided in the
mentioned report, we consider that the trends in prices may be seen as one essential
fact that established the basis of the KT C's decision to apply the definitive anti-
dumping duty at issue. We note that the report explains trends in the prices of
dumped imports and those of the Korean industry in the POI. We do not agree with
Indonesia's view that failure to include ab solute figures for the Korean industry's
prices rendered this disclosure inconsistent with the requirements of Article 6.9. We
see no support in the text of Article 6.9, or elsewhere in the Agreement, for
Indonesia's proposition. We therefore reject this aspect of Indonesia's claim too.368
7.409 For the following reasons, we are not persuaded by China's reliance on the findings of the
Korea – Certain Paper panel to aver that MOFCOM's disclos ure of price trends sufficed for the
purpose of Article 6.9. First, the fact that trend data "may be seen as one essential fact" does not
exclude the possibility that AUVs should be seen as another essential fact. Second, the complainant
in Korea – Certain Paper had claimed that the investigating authority should have disclosed "absolute
[price] figures". We do not understand the Europ ean Union to claim that MOFCOM should have
disclosed absolute price data
369. Rather, the European Union accepts that actual price data may be
treated as confidential370, but considers that ranges of price data could have been disclosed instead 371.
Third, we recall that the scope of the disclosure oblig ation set forth in the first sentence of Article 6.9
is determined in light of the objective, set forth in the second sentence, of ensuring that interested
parties are able to properly defend their interests. In our view, by simply informing interested parties
of the trends in subject import and domestic pric es, MOFCOM provided little basis for interested
parties to defend their interests. To properly a nd fully defend their interests, interested parties
required disclosure of the entire body of facts essential to MOFCOM's analysis of the price effects of
the dumped imports
372. Finally, we note that a similar argument was rejected by the Appellate Body

367 MOFCOM's Preliminary Determination, Exhibit EU-12, pp. 15-16.
368 Panel Report, Korea – Certain Paper, para. 7.328.
369 European Union's response to Panel question 61, para. 15: "we do not submit that China was
required under Article 6.9 [of the Anti-Dumping Agreement] to disclose absolute prices" (footnote omitted).
370 European Union's first written submission, para. 107. In our view, the above finding of the Korea –
Certain Paper panel was motivated by the fact that the absolute price data at issue had been designated as
confidential. This would explain why the panel expressly noted that Indonesia had not challenged the
investigating authority's decision to treat the relevant price data as confidential under Article 6.5 (Panel Report,
Korea – Certain Paper, para. 7.327).
371 Regarding the treatment of confidential information in the context of Article 6.9, we agree with the
finding of the panel in China – GOES (para. 7.410) that "when information is both confidential but also part of
the 'essential facts under consideration', the obligation to disclose the information is nevertheless binding". In
doing so, we note that the panel's finding was upheld by the Appellate Body (Appellate Body Report, China –
GOES, para. 247). Furthermore, although the price data underlying MOFCOM's price effects analysis might
properly be treated as confidential, we doubt that the same is true of annual AUVs.
372 To the extent that confidential information is at issue, we recall our agreement with the finding by
the China – GOES panel (para. 7.410) that Article 6.9 requires the disclosure of non-confidential summaries of

in China – GOES . In that case, China argued that MOFC OM disclosed the essential facts regarding
price depression by disclosing that average domestic prices had fallen by 30.25% over a given period.
China also argued, with respect to price suppressi on, that MOFCOM disclosed that the price-cost
differential dropped by 7% over one pe riod, and by 75% over another period 373. The Appellate Body
found that such disclosure did not meet the requireme nts of Article 6.9. According to the Appellate
Body, "the essential facts that MOFCOM should ha ve disclosed … include the price comparisons
between subject imports and the like domestic products"374.
7.410 Turning next to the European Union's clai m that MOFCOM should have disclosed the
methodology applied by MOFCOM in its price e ffects analysis, we recall that the methodology
applied by MOFCOM involved a comparison of th e annual AUVs for the domestic product with the
annual AUVs for the dumped imports. We have al ready found that MOFCOM should have disclosed
those AUVs under Article 6.9. Had MOFCOM done so, it would have inevitably also disclosed that it
would assess price effects on the basis of AUVs. In the particular circumstances of the price effects
analysis undertaken by MOFCOM, therefore, the methodology employed by MOFCOM cannot
meaningfully be distinguished from the AUVs on which the application of that methodology was
based. In these circumstances, the issue of whethe r MOFCOM should also have disclosed its price
effects methodology is moot, and need not be considered further by us.
 Conclusion
7.411 For the above reasons, we uphold the European Union's claims that MOFCOM should have
disclosed the AUVs and underlying price data that MOFCOM would use to analyse the price effects
of the dumped imports. We do not rule on the Eu ropean Union's claim that MOFCOM should also
have disclosed its price effects methodology.
(b) Affiliated distributor adjustment to export price
7.412 The European Union claims that MOFCOM fa iled to disclose "the underlying facts and
criteria on the basis of which the adjust ments to the export price were made" 375, 376 . China asks the

the essential, but confidential, facts. In doing so, we note that the panel's finding was upheld by the
Appellate Body (Appellate Body Report, China – GOES, para. 247).
373 Appellate Body Report, China – GOES, para. 246.
374 Appellate Body Report, China – GOES, para. 247.
375 European Union's first written submission, para. 111. The European Union indicated that this claim
"focuses on the criteria followed by MOFCOM in deciding adjustments to export price" (European Union's oral
statement at the second substantive meeting, para. 23). In its first written submission, the European Union also
asserts that MOFCOM failed to disclose "the specific amounts of adjustment items, including specific data on
the adjusted proportions of expenses incurred by the affiliated distributor". To the extent that the
European Union's claim might also be understood to include MOFCOM's alleged failure to disclose the specific
absolute amounts of adjustment made for given export transactions, that issue is addressed in the next sub-
section of our report, concerning MOFCOM's disclosure in respect of the margin of dumping established for
Smiths.
376 In its first written submission, the European Uni on referred generally to MOFCOM's alleged failure
to disclose "[t]he price adjustments that were made and the normal value and export price calculations"
(European Union First Written Submission, para. 109). In its response to question 11, though, the
European Union confirmed that its claim did not include adjustments made to normal value (European Union
response to Panel question 11, para. 85). Furthermor e, in its written submissions, the European Union only
made detailed arguments regarding an adjustment that MOFCOM made to the export price to reflect expenses
incurred by an affiliated distributor. In its oral statement at the second substantive meeting, the European Union
confirmed that it was not asking the Panel to make findings regarding adjustments made by MOFCOM to
normal value. Accordingly, we only make findings in respect of MOFCOM's alleged failure to disclose
essential facts regarding the adjustment made by MOFCOM to the export price in respect of sales made to an
affiliated distributor.

Panel to reject the European Union's claim. China contends that MOFCOM explained which
adjustments were made, the amount thereof, and the reason for making them.
7.413 In its Dumping Disclosure to Smiths, MOFCOM indicated that as a result of information
provided by Smiths, MOFCOM would make a downward adjustment to the export price in case of
sales to affiliated distributors. While MOFCOM initially adjusted for direct and indirect sales
expenses, and a rate of profit, MOFCOM explained th at it ultimately determined to only adjust for the
direct and indirect selling expenses reported by Smiths 377. MOFCOM's Dumping Disclosure also
contained a table that included "CIF Price" and "Export Price". The "Export Price" was [[ n]]% lower
than the "CIF Price", indicating the amount of adjustment made378.
7.414 In our view, MOFCOM's Dumping Disclosure was sufficient to disclose to Smiths (i) that an
adjustment was being made in respect of sales through its affiliated distributor, (ii) that the adjustment
was made to reflect the direct and indirect selli ng expenses reported by Smiths, and (iii) that the
amount of the adjustment was [[ n]]%. In these circumstances, we see no factual basis for the
European Union's claim that MOFCOM failed to disclose the underlying facts and criteria on the
basis of which the adjustments to the export price were made.
 Conclusion
7.415 For the above reasons, we reject the European Union's claim that MOFCOM failed to disclose
the underlying facts and criteria on the basis of whic h the affiliated distributor adjustment to export
price was made.
(c) Determination of the dumping margin for Smiths
7.416 The European Union submits that MOFCOM vi olated Article 6.9 because MOFCOM failed
to disclose the calculations it relied on to determ ine Smiths' margin of dumping, as well as the data
and adjustments underlying those calculations. China contends that MOFCOM properly explained
how the margin of dumping was calculated. As to the actual calculations made by MOFCOM for the
normal value and the export price, China submits that such calculations do not constitute "essential
facts" within the meaning of Article 6.9. Regard ing the data on transactions and adjustments, China
submits that even assuming that they are "essentia l facts", there is no specific form in which to
disclose them. China explains that MOFCOM preci sely identified the elements of the calculations,
namely the data that were used for the determina tion of the normal value and the export price, which
adjustments were made and the level of such adjust ments, in such a way that , even in the absence of
calculation sheets, it was easy for Smiths to make th e calculation itself. According to China, it has
fully complied with the Article 6.9 requirement379.

377 Final Dumping Disclosure to Smiths, Exhibit EU-17, p. 12.
378 Final Dumping Disclosure to Smiths, Exhibit EU-17, p. 13. Although the table did not specifically
state that the difference between the Export Price an d CIF Price corresponded to the affiliated distributor
adjustment, no other export price adjustment was discussed in the sub-section entitled "Adjustment Items".
379 China also argues (second written submission, para. 113 and opening statement at the second
meeting, para. 17 ) that the European Union has extended the scope of its claim. According to China, the
European Union's claim related only to (i) an alleged lack of disclosure of the dumping margin calculation and
(ii) an alleged lack of disclosure of the actual calculations performed by MOFCOM to calculate normal value
and export price. China's understanding was based on the European Union's response to Panel question 11, in
which the European Union indicated that it would not make arguments with respect to an alleged lack of
disclosure concerning "the determination of normal value". In China's view, this clarified that the
European Union's claim did not concern an insufficient disclosure of the data used to calculate the normal value
and the adjustments made thereto. The Panel notes, thoug h, that at para. 117 of its first written submission, the
European Union referred expressly to "the data underlying the authority's calculations" in the context of its

7.417 Without defining the entire scope of essential facts that should be disclosed in a given
investigation, we consider that the transaction-speci fic price and adjustment data that are developed
and used by the investigating authority for the purpose of establishing a margin of dumping constitute
"essential facts" within the meaning of Article 6.9. Such data are salient to the establishment of the
margin of dumping. Furthermore, the margin estab lished cannot be understood without such data. In
the present case, MOFCOM provided Smiths with a table setting out the quantity of sales, normal
value, export price, CIF price and margin of dumping established for 10 models of scanner
380. The
table also provides the weighted average margin of dumping determined on the basis of such
model/model data. In our view, the model/model overview contained in this table provides little, if
any, basis for Smiths to defend its interests. To properly defend its interests, Smiths would have
needed to fully understand the factual basis from which MOFCOM's model/model findings were
derived. To do so, Smiths would have needed access to the transaction-specific price and adjustment
data on which MOFCOM's model-specific findings of normal value and export price were based.
7.418 We note China's reliance on the report of the panel in Argentina – Poultry Anti-Dumping
Duties to argue that only "the specific amounts de termined as normal va lue and export price"
constitute "essential facts" 381. In our view, the Argentina – Poultry Anti-Dumping Duties panel was
not addressing the specific issue of whether or not the data underlying the determinations of normal
value and export price constituted "essential facts". That panel was rather considering whether or not
a failure by the investigating authority to inform interested parties that certain normal value and
export data reported by exporters was not going to be used in the fi nal determinati on constituted a
violation of Article 6.9. Accordingly, the Argentina – Poultry Anti-Dumping Duties panel report
provides no guidance for resolving the specific issue presently before the Panel. We have considered
whether the Argentina – Poultry Anti-Dumping Duties panel's finding that "the normal value and
export price data" are essential facts relates only to the specific amounts determined as normal value
and export price, to the exclusion of the underlying data. We have concluded that it does not. We note
in this regard the panel's finding:
While we accept that the normal value and e xport price data ultimately used in the
final determination are essential facts whic h form the basis for the decision whether
to apply definitive measures, the fact that certain normal value and export price data
is not going to be used is not.382
7.419 In this excerpt, a distinction is drawn between "normal value and export price data" used in
the final determination, and "normal value and export price data" that is not going to be used in the
final determination. If the phrase "normal value a nd export price data" related to the specific amounts
determined as normal valu e and export price, there would be no sense in drawing that distinction.

claim concerning MOFCOM's disclosure of essential facts regarding Smiths' margin of dumping. In addition,
question 11 was posed in respect of an argument made by China at para. 164 of its first written submission,
which concerned a distinct part of the European Union's Article 6.9 claim (concerning MOFCOM's disclosure of
the determination of normal value and export pri ce). In any event, we do not understand that the
European Union's reply to question 11 in any way reduced the scope of its claim in respect of the disclosure of
essential facts regarding Smiths' margin of dumping, particularly since the European Union specifically stated
that its reply to question 11 is "without prejudice" to its claim regarding "the calculation of the individual
margin of dumping for the cooperating producer". Give n the abovementioned para. 117 of its first written
submission, we do not consider that the term "calculation" should be understood to refer only to MOFCOM's
calculations, to the exclusion of the underlying data. Accordingly, we do not consider that the European Union's
reply to question 11 should be understood to mean that the European Union has abandoned its Article 6.9 claim
in respect of MOFCOM's failure to disclose the data underlying MOFCOM's determination of Smiths' margin of
dumping.
380 Final Dumping Disclosure to Smiths, Exhibit EU-17, p. 13.
381 Panel Report, Argentina – Poultry Anti-Dumping Duties, para. 7.224.
382 Panel Report, Argentina – Poultry Anti-Dumping Duties, para. 7.224 (emphasis original).

This is because the specific amounts determined as normal value and export price are necessarily used
in the final determination: absent such specific am ounts, no margin of dumping can be established.
Accordingly, the phrase "normal value and export pr ice data" must mean something other than the
specific amounts determined as normal value and export price. In our view, the phrase can only be
referring to a broader range of data that could be of potential use in the determination of those specific
amounts. According to the Argentina – Poultry Anti-Dumping Duties panel, such data constitute
"essential facts" when they are actually used to de termine normal value and export price. This is
consistent with our view that the data underlying the determinations of normal value and export price
constitute "essential facts".
7.420 While we accept the European Union's asserti on that MOFCOM should have disclosed the
transaction-specific price and adjustment data on wh ich its determination of the margin of dumping
was based, we are not persuaded that MOFCOM w as required by Article 6.9 to also disclose the
actual calculation of Smiths' margin of dumping. Although disclosure of an excel sheet incorporating
all of the relevant essential facts and calculations woul d undoubtedly be of value to interested parties,
we do not consider that the actual mathematical de termination by which an investigating authority
calculates a respondent's margin of dumping c onstitutes a "fact … under consideration". The
"facts … under consideration" are rather the factual el ements that form the basis for that mathematical
determination. The mathematical determination is part of the "consideration" of those facts.383
 Conclusion
7.421 For the above reasons, we uphold the European Union's claim that MOFCOM violated
Article 6.9 by failing to disclose the price and adju stment data underlying its determination of Smiths'
margin of dumping. However, we reject the European Union's claim that MOFCOM violated
Article 6.9 by failing to disclose its calculations of Smiths' margin of dumping.
(d) Determination of the residual anti-dumping duty
7.422 The European Union claims that MOFCOM acted inconsistently with Article 6.9 because
MOFCOM did not provide interested parties with information about the essential facts under
consideration for the calculation of the residual duty. In particular, the European Union contends that
MOFCOM failed to disclose "the facts forming the b asis for its decision to apply the facts available",
and "the facts that led it to conclude th at 71.8% is an appropriate residual rate" 384. China asks us to
reject the European Union's claim.
7.423 Concerning the first part of the European Union' s claim, we note that MOFCOM stated in its
Final Dumping Disclosure to the European Commission that:
For other EU companies who failed to ma ke any response or submit any answer
sheet, subject to Article 21 of the "Anti-Dumping Regulations", the investigating
authority decided to adopt the facts and th e best available information to make the
determination of dumping and dumping margin.
385
7.424 In our view, this statement properly discl oses that MOFCOM's decision to apply facts
available was based on the failure of other Eur opean Union companies to respond to MOFCOM's
questionnaire. We therefore reject the European Union's claim that MOFCOM failed to disclose the
facts forming the basis for its decision to apply the facts available.

383 Furthermore, there is no certainty that the calculations would have been performed by the time
essential facts are disclosed pursuant to Article 6.9.
384 European Union's first written submission, para. 124.
385 MOFCOM's Final Dumping Disclosure to the European Commission, Exhibit EU-18.

7.425 Regarding MOFCOM's disclosure of the essentia l facts that formed the basis for the
imposition of a residual rate of 71.8%, we note that MOFCOM disclosed that the residual rate would
be based on facts available originating from "the sales data of products of relevant models reported by
the respondent Company" 386. We do not consider that this statement reveals the totality of the
"essential facts" that should have been disclosed und er Article 6.9. Such limited disclosure does not
reveal all salient facts, since it is not sufficiently detailed to allow interested parties to understand the
factual basis for the imposition of a residual duty rate of 71.8% 387. We have already identified some
of the "essential facts" that should have been discl osed in respect of MOFCOM's determination of
Smiths' margin of dumping. In our view, similar "essential facts" should also have been disclosed
(albeit in a non-confidential form) in respect of MOFCOM's determination of the all others rate388.
 Conclusion
7.426 To conclude, we reject the European Union's claim that MOFCOM failed to disclose the facts
forming the basis for its decision to apply the facts available. However, we uphold the
European Union's claim that MOFCOM failed to discl ose the essential facts that formed the basis for
MOFCOM's determination that the residual duty should be 71.8%.
(e) Additional claims under Articles 6.2 and 6.4
7.427 The European Union claims that the abovemen tioned violations by MOFCOM of Article 6.9
also caused MOFCOM to violate Articles 6.2 and 6.4 of the Anti-Dumping Agreement389.
7.428 As presented by the European Union, its cl aims under Articles 6.2 and 6.4 are entirely
dependent on its claims under Article 6.9. We have upheld many of the European Union's Article 6.9
claims. When China brings its measure into conf ormity with Article 6.9, the logic underlying the
European Union's presentation of dependent claims under Articles 6.2 and 6.4 suggests that China
would at the same time bring its measure into c onformity with those additional provisions, if the
European Union's additional claims were upheld . The logic underlying the European Union's
presentation of dependent claims w ould not require China to take an y additional action to bring its
measure into conformity with Articles 6.2 or 6.4, if the European Union's additional claims under
those provisions were upheld. The Appellate Body found in Canada – Wheat Exports and Grain
Imports that the practice of judicial economy "allows a panel to refrain from making multiple findings
that the same measure is inconsistent with various provisions when a single, or a certain number of
findings of inconsistency, would suffice to resolve the dispute" 390. E v e n i f w e w e r e t o a c c e p t t h e
European Union's claims that, in violating Article 6.9, MOFCOM also acted contrary to Articles 6.2
and 6.4, we consider that our findings under Article 6.9 are such as to allow the DSB to make
sufficiently precise recommendations and rulings in order to ensure the effective resolution of this

386 Preliminary Dumping Disclosure to the European Commission, Exhibit CHN-3.
387 China asserts that the European Union is seeking disclosure of th e "reason" why the 71.8% residual
rate was appropriate. China contends that this "reason" is not an essential fact falling within the scope of
Article 6.9. We do not agree. We understand the European Union's claim to concern the factual basis for
the 71.8% residual rate. Although that factual basis may reveal whether or not the 71 .8% rate was appropriate,
that alone does not convert the factual basis into a "reason".
388 To the extent that confidential information is at issue, we recall our agreement with the finding by
the China – GOES panel (para. 7.410) that Article 6.9 requires the disclosure of non-confidential summaries of
the essential, but confidential, facts. In doing so, we note that the panel's finding was upheld by the
Appellate Body in China – GOES at para. 247.
389 The European Union's claim in respect of Article 6.2 is based on both the abovementioned
violations of Article 6.9, and th e alleged consequential violation of 6.4 (European Union first written
submission, para. 101: "the obligation set out in Article 6.2 is so broad that a finding of violation of Articles 6.9
and 6.4 necessarily entails a violation of Article 6.2").
390 Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 133.

dispute391. Accordingly, there is no need for us to address those additional claims presented by the
European Union.
 Conclusion
7.429 We exercise judicial economy in respect of the European Union's additional claims under
Articles 6.2 and 6.4 of the Anti-Dumping Agreement.
I. PUBLIC NOTICE: ARTICLE 12.2.2
1. Introduction
7.430 The European Union submits that China vi olated Article 12.2.2 of the Anti-Dumping
Agreement because of alleged shortcomings in the content of MOFCOM's public notice of affirmative
determination providing for the impos ition of definitive anti-dumping duties 392. China asks the Panel
to reject the European Union's claim.
2. Relevant provisions
7.431 In relevant part, Article 12.2.2 of the Anti-Dumping Agreement provides:
A public notice of conclusion … of an inves tigation in the case of an affirmative
determination providing for the imposition of a definitive duty … shall contain, or
otherwise make available through a separat e report, all relevant information on the
matters of fact and law and reasons wh ich have led to the imposition of final
measures …, due regard being paid to the requirement for the protection of
confidential information. In particular , the notice or report shall contain the
information described in subparagraph 2.1, as well as the reasons for the acceptance
or rejection of relevant arguments or claims made by the exporters and importers, and
the basis for any decision made under subparagraph 10.2 of Article 6.
7.432 Article 12.2.1, which is referred to in the above extract from Article 12.2.2, provides:
A public notice of the imposition of provisional measures shall set forth, or otherwise
make available through a separate report, sufficiently detailed explanations for the
preliminary determinations on dumping and injury and shall refer to the matters of
fact and law which have led to arguments being accepted or rejected. Such a notice or
report shall, due regard being paid to the requirement for the protection of
confidential information, contain in particular:
(i) the names of the suppliers, or when this is impracticable, the
supplying countries involved;
(ii) a description of the product which is sufficient for customs
purposes;
(iii) the margins of dumping established and a full explanation of
the reasons for the methodology used in the establishment

391 See also Appellate Body Reports, Brazil – Retreaded Tyres, para. 257 and Australia – Salmon,
para. 223.
392 MOFCOM's public notice is set forth in the published version of its Final Determination,
Exhibit EU-2.

and comparison of the export price and the normal value
under Article 2;
(iv) considerations relevant to th e injury determination as set out
in Article 3;
(v) the main reasons leading to the determination.
7.433 Furthermore, the chapeau of Article 12.2 provid es that each public notice "of any preliminary
or final determination … shall set forth … in suffi cient detail the findings and conclusions reached on
all issues of fact and law considered material by the investigating authorities".
3. Main arguments of the parties
(a) European Union
7.434 There are two elements to the European Uni on's claims under Article 12.2.2. First, the
European Union claims that MOFCOM failed to include in its public notice (or any separate report393)
certain relevant information on the matters of f act and law which led to the imposition of final
measures, contrary to the first sentence of Article 12.2.2. Second, the Euro pean Union claims that
MOFCOM failed to include in its public notice the reasons for rejecting rele vant arguments or claims
made by Smiths during the course of the inv estigation, contrary to the second sentence of
Article 12.2.2.
(i) Relevant information on matters of fact and la w which have led to the imposition of final
measures: Article 12.2.2, first sentence
7.435 In support of its claims regarding MOFCOM's a lleged failure to include in its public notice
relevant information on matters of fact and law wh ich have led to the imposition of final measures,
the European Union relies on the finding by the panel in EU – Footwear (China) that Article 12.2.2
requires the investigating authority to "provid[ e] sufficient background and reasons for that
determination, such that its reasons for conc luding as it did can be discerned and are understood" 394.
The European Union submits that MOFCOM failed to include "relevant information" in its public
notice (or any separate report) regarding the price effects of dumped imports, and the calculation of
Smiths' dumping margin and the residual rate.
 MOFCOM's price effects analysis
7.436 The European Union submits that MOFC OM's conclusion that the imports under
investigation caused significant price undercutting and price depression/suppression is an essential
component of its affirmative injury determination, which in turn is a prerequisite for China's
imposition of definitive measures. The European Union asserts that MOFCOM failed to explain the
methodology used to calculate those price effects.

393 MOFCOM did not provide any separate report to interested parties. Accordingly, we need only
consider the contents of MOFCOM's Final Disclosure. We therefore exclude any further reference to "separate
report" when considering th e parties' arguments concerning Article 12.2.2, and the requirements of that
provision.
394 China refers in this regard to Panel Report, EU – Footwear (China), para 7.844.

The calculations and underlying data for Smiths' margin of dumping, and for the residual anti-
dumping duty
7.437 The European Union claims th at China acted inconsistently with Article 12.2.2 ADA by
failing to include in the public notice the calculations and underlying data it used to determine (i) the
margin of dumping for Smiths, and (ii) the resi dual duty. The European Union submits that the
calculations employed by an investigating author ity to determine dumping margins, and the data
underlying the authority's calculations, constitute "relevant information on matters of fact and law and
reasons which have led to the imposition of final measures" within the meaning of Article 12.2.2. The
European Union contends that the calculations th emselves are "relevant" to the decision to apply
definitive measures because they constitute the ma thematical basis for arriving at the dumping
margins imposed by an investigating authority, and because they led to the imposition of definitive
measures, in the sense that defin itive measures can only be applied wh en the calculations result in an
affirmative margin of dumping.
(ii) Reasons for the rejection of relevant argume nts made by Smiths: Article 12.2.2,
second sentence
7.438 The European Union submits that Smiths made "relevant" arguments regarding the treatment
of domestic sales to affiliated distributors, the credibil ity of certain injury data and other injury issues,
and the existence of any causal link between dumped imports and injury to the domestic industry.
The European Union submits that these arguments ar e "relevant" because they concern the mandatory
elements of a final public notice referred to in Artic le 12.2.1(iii)-(v) of the Anti-Dumping Agreement.
The European Union claims that MOFCOM reject ed these arguments without providing any reasons
in the public notice for doing so.
 The treatment of domestic sales to affiliated distributors
7.439 The European Union claims that MOFCOM faile d to include in its public notice the reasons
for rejecting "relevant" arguments made by Smith s regarding the issue of whether or not certain
domestic sales to affiliated companies were made in the ordinary course of trade (within the meaning
of Article 2.1 of the Anti-Dumping Agreement). The European Union contends that Smiths addressed
this issue in a series of comments on MOFCOM's Dumping Disclosure 395. The European Union
submits that MOFCOM's Final Determination simp ly acknowledges Smiths' arguments and evidence,
and then rejects them without providing reasons for doing so396.
 The credibility of certain injury data, and other injury issues
7.440 The European Union submits that MOFCOM failed to include in its public notice the reasons
for rejecting arguments made by Smiths regardi ng the credibility of certain data relied on by
MOFCOM for its injury analysis 397. The European Union contends that MOFCOM failed to explain
in its public notice why it rejected these arguments.

395 The European Union refers in this regard to Smiths' Comments on the Dumping Disclosure, Exhibit
EU-19, pp. 2-4, and the corresponding text in the public version of the Comments, Exhibit EU-19, pp. 2-3.
396 The European Union refers in this regard to MOFCOM's Final Determination, Exhibit EU-2, p. 17.
397 The European Union refers in this regard to Smiths' Comments on the Injury Disclosure,
Exhibit EU-16, pp. 9-10.

 The determination of causal link
7.441 The European Union submits that Smiths include d a number of arguments in its Injury Brief
to the effect that dumped imports had not caused injury to the domestic industry. The
European Union contends that Smiths asserted in its Injury Brief that:
[A]ny injury to the domestic industry could not be attributed to the alleged dumped
imports but to the lower range of models provided by the domestic industry in the
high-end market of low-energy scanners (i.e. aviation) and the fact that the biggest
costumer of that market (the Ch inese government) preferred to purchase
European Union and US scanners to protect public safety.
398
7.442 The European Union also contends that Smiths addressed four relevant factors which were the
cause of any alleged material injury: the glob al economic crisis, Nuctech's aggressive business
expansion, Nuctech's aggressive pricing policy, and pressure from fair competition. The
European Union further submits that Smiths repeated these arguments in its comments on
MOFCOM's Injury Disclosure 399. The European Union contends that MOFCOM failed to explain in
its public notice why MOFCOM rejected these arguments made by Smiths.
(b) China
7.443 China asks the Panel to reject the various Article 12.2.2 claims raised by the European Union.
(i) Relevant information on matters of fact and la w which have led to the imposition of final
measures: Article 12.2.2, first sentence
 MOFCOM's price effects analysis
7.444 China notes that Article 12.2.2 of the Anti-Du mping Agreement requires the inclusion in a
public notice or separate report of "all relevant info rmation on the matters of fact and law and reasons
which have led to the imposition of final measures" . China submits that the methodology used by
MOFCOM to analyse the price effects of subject imports is not a "matter of fact".
7.445 China further submits that, even if the methodol ogy were a "matter of fact", the methodology
is not "relevant" within the meaning of Article 12.2.2 of the Anti-Dumping Agreement, since the
explanation of such methodology is not necessa ry to discern and understand the reasons for
concluding that anti-dumping measures must be imposed400.
7.446 China also submits that the requirement to gi ve public notice of "all relevant information on
matters of fact and law" must be read in the light of the more particular obligations laid down in
Article 12.2.1, which are incorporated by refe rence into Article 12.2.2. China notes that
Article 12.2.1 (iv) requires, with respect to the determination of injury, that the public notice or
separate report shall contain "the considerations rele vant to the injury determinations as set out in
Article 3". According to China, the obligation to provide an explanation under Article 12.2.1(iv)
therefore relates only to the requirements specified in Article 3. China acknowledges that the analysis
of the effects of the import prices on domestic prices pursuant to Article 3.2 is an element which must
be taken into account in the injury determination, but notes that there is, however, no obligation to use
a calculation methodology to consider what have be en the effects of the import prices on domestic

398 Smiths' Injury Brief, Exhibit EU-11, p. 15.
399 The European Union refers in this regard to Smiths' Comments on the Injury Disclosure,
Exhibit EU-16, p. 6.
400 China refers in this regard to Panel Report, EU – Footwear (China), para. 7.844.

prices. According to China, therefore, there is no basis for an obligation to disclose or explain any
such calculation methodology.
7.447 Furthermore, China submits that MOFCOM in any event disclosed all relevant information on
matters of fact and law concerning the calculation of price undercutting or price suppression.
The calculations and underlying data for Smiths' margin of dumping, and for the residual anti-
dumping duty
7.448 China asks the Panel to reject the European Union's claim that China acted inconsistently with
Article 12.2.2 of the Anti-Dumping Agreement by failing to include in the public notice the
calculations and underlying data for Smiths' margin of dumping and the all others rate.
7.449 China contends that the panel in EU – Footwear (China) confirmed that confidential
information cannot be included in the public notice under Article 12.2.2 of the Anti-Dumping
Agreement
401. China contends that the calculations and underlying data of the dumping margin
determinations necessarily contain confidential information, and ther efore fall outside the scope of
Article 12.2.2 of the Anti-Dumping Agreement.
7.450 Furthermore, China denies that calculations employed by an investigating authority to
determine dumping margins, the data underlying these calculations, or the methodology for the
calculation of the residual duty, constitute "relev ant information on matters of fact and law and
reasons which have led to the imposition of final m easures" within the meaning of Article 12.2.2 of
the Anti-Dumping Agreement. China asserts that the panel in EU – Footwear (China) rejected a very
similar claim made with respect to the dumping margin calculation402.
(ii) Reasons for the rejection of relevant arguments made by Smiths: Article 12.2.2, second
sentence
7.451 China submits that there is nothing in the text of Article 12.2.2 to support the European
Union's assertion that arguments concerning the ma ndatory factors set forth in Article 12.2.1 are
necessarily "relevant" for the purpose of Article 12.2.2. According to China, the text of Article 12.2,
which generally requires the publication of findings and conclusions on all issues of facts and law
considered material by the investigating authoriti es, and which constitutes relevant context for the
interpretation of Article 12.2.2 403, rather supports the view that the term "relevant" as used in
Article 12.2.2, last sentence, means material for the investigating authorities, and thus necessarily
involves a degree of subjectivity and discretion on the part of the investigating authorities.
 The treatment of domestic sales to affiliated distributors
7.452 China asks the Panel to reject the Europ ean Union's claim that MOFCOM failed to
provide reasons for the rejection of Smiths' argument that domestic sales to affiliated distributors were
made in the ordinary course of trade. According to China, the Final Determination 404 explains clearly
that MOFCOM rejected Smiths' claim about its re lationship with its affilia ted distributor for two
reasons: (i) first because MOFCOM's verification established that "the pricing and sale processes,
[and] the sales prices of Smith Heimann through affi liated distributors in the European Union During
the POI were clearly affected by the affiliation relationship"; and (ii) second because "Smiths
Heimann did not have sufficient evidence to prove that the price differences were merely sales

401 China refers in this regard to Panel Report, EU – Footwear (China), para. 7.870.
402 China refers in this regard to Panel Report, EU – Footwear (China), para. 7.894.
403 China refers in this regard to Panel Report, EU – Footwear (China), para. 7.844.
404 China refers in this regard to Final Determination, Exhibit EU-2, p. 17.

expenses which it saved". China asserts that, for these reasons, MOFCOM concluded that "the
affiliated sales price cannot represent fair market pr ice and such transactions were not in the normal
course of trade"405.
 The credibility of certain injury data, and other injury issues
7.453 China submits that Smiths' arguments regarding the credibility of the data
submitted by Nuctech cannot be regarded as "relevan t" within the meaning of Article 12.2.2, since
they did not need to be resolved in order for MOFCOM to reach its fina l determination. China
asserts that these arguments were in any even t fully addressed by MOFCOM in its Final
Determination406.
 The causal link
7.454 China asks the Panel to reject the European Union's claim that MOFCOM failed to provide
reasons for rejecting relevant arguments con cerning the causal link. China asserts that the
European Union fails to substantiate its claim pr operly, since the European Union does not precisely
identify the arguments regarding the existence of th e causal link that were allegedly raised by Smiths
during the investigation. A fortiori, China contends that the European Union failed to demonstrate
why the arguments allegedly raised by Smiths would be "relevant".
4. Evaluation by the Panel
7.455 The European Union makes two types of claim unde r Article 12.2.2. First, in respect of the
first sentence of Article 12.2.2, the European Unio n claims that MOFCOM failed to include in its
public notice certain relevant information on the matters of fact and law which led to the imposition of
final measures. Second, in respect of the second sentence of Article 12.2.2, the European Union
claims that MOFCOM failed to include in its p ublic notice the reasons for rejecting relevant
arguments made by Smiths during the course of the inv estigation. China asks the Panel to reject the
European Union's claims. We begin by evaluating the European Union's claims relating to the first
sentence of Article 12.2.2.
(a) MOFCOM's alleged failure to include in its pub lic notice relevant information on the matters
of fact and law which led to the imposition of final measures: Article 12.2.2, first sentence
7.456 The European Union's claims in respect of the first sentence of Article 12.2.2 concern
MOFCOM's alleged failure to include in its public notice relevant information regarding the price
effects analysis, the margin of dumping established for Smiths, and the residual anti-dumping duty for
all other European Union exporters/producers.
(i) MOFCOM's price effects analysis
7.457 In its first written submission, the European Union refers, in very general terms, to
MOFCOM's alleged failure to publis h "the relevant information on facts and law and reasons" which
have led it to the conclusion that the imports under investigation caused significant price effects 407.
China asks the Panel to reject the European Union's claim, arguing that the European Union has failed

405 China refers in this regard to Final Determination, Exhibit EU-2, p. 17.
406 China refers in this regard to Final Determination, Exhibit EU-2, p. 28.
407 European Union's first written submission, para. 149. In describing the European Union's claim in
this way, we assume that the reference to "this conclusion" in the second sentence of that paragraph concerns the
"conclusion that the imports under investigation caused significant price effects" alluded to in the first sentence
thereof.

to point out precisely which "relevant information" had been omitted from the public notice 408. In
response to China's argument, the European Union states that the "relevant information" should be
understood in light of the reference, in the previous paragraph of its first written submission (which
refers to an alleged violation of Article 6.9 of the Anti-Dumping Agreement), to MOFCOM's alleged
failure to include its price effects methodology in the public notice. The European Union states
explicitly that "this information - the methodology - is relevant information on matters of fact and law
and reasons which have led to the imposition of final measures" 409. From this response, we
understand that the "relevant information" targeted by the European Union's claim concerns the
explanation of MOFCOM's price effects methodology 410. Accordingly, we shall consider whether or
not the obligation on MOFCOM to include in its public notice all "relevant information" on matters of
fact or law and reasons that led to the imposition of final measures required MOFCOM to include an
explanation of its price effects methodology in its public notice.
7.458 In interpreting the scope of the obligation set fo rth in the first sentence of Article 12.2.2, we
note that the text of Article 12.2.2 refers to Article 12.2.1. Accordingly, th e information described in
Article 12.2.1 must be included in public notices issued pursuant to Article 12.2.2. We consider that
it is also appropriate to have regard to the contex tual guidance afforded by Article 12.2, which applies
to public notices of both preliminary and final determ inations. Article 12.2 provides that such public
notices shall set forth "in sufficient detail the finding s and conclusions reached on all issues of fact
and law considered material by the investigating au thorities". In considering the contextual guidance
afforded by Article 12.2, we have regard to the followings findings made by the panels in EU –
Footwear (China) and EC – Tube or Pipe Fittings:
The chapeau of Article 12.2.2, Article 12.2, requires the publication of "findings and
conclusions on all issues of fact and law considered material by the investigating
authorities" (emphasis added). In our view, this is relevant context for a proper
understanding of Article 12.2.2, and thus in forms our understanding of what must be
included in a public notice under that provision. China suggests that whether
information and reasons for the acceptan ce or rejection of arguments must be
provided in such a notice should be judged from the perspective of the interested
parties. We do not agree. We consider that while an investigating authority must
make innumerable decisions during the course of an anti-dumping investigation, with
respect to procedural matters, investigating methods, factual considerations, and legal
analysis, which may be of importance to indi vidual interested parties, not all of these
are "material" within the meaning of Article 12.2.2. In our view, what is "material"
in this respect refers to an issue whic h must be resolved in the course of the
investigation in order for the investiga ting authority to reach its determination
whether to impose a definitive anti-dumping dut y. We note in this regard the views
of the panel in EC – Tube or Pipe Fittings:

408 China's first written submission, para. 231.
409 European Union's response to Panel question 17, para. 108.
410 In its second written submission, the European Uni on referred not only to the fact that MOFCOM's
public notice allegedly did not "include the investigating authority's explanation of the methodology used in
order to calculate the alleged price undercutting or price depression", but also to the alleged omission of "any
information on the underlying facts" (European Union's second written submission, para. 109). While we are
prepared to accept the Europ ean Union's initial assertion that its clai m concerns the price effects methodology
applied by MOFCOM, considerations of due process prevent us from accep ting the inclusion of an additional
element (relating to "information on the underlying facts") into the scope of the European Union's claim
relatively late in the proceedings. Thus, to the extent that the phrase "information on the underlying facts"
extends the scope of the European Union's claim beyond the explanation and description of MOFCOM's price
effects methodology, we decline to make findings in respect thereof.

Article 12.2 provides that the findings and conclusions on issues of
fact and law which are to be included in the public notices, or
separate report, are those considered "material" by the investigating
authority. The ordinary meaning of the term of "material" is
"important, essential, relevant".
We understand a "material" issue to be an issue that has arisen in the
course of the investigation that must necessarily be resolved in order
for the investigating authorities to be able to reach their
determination. We observe that the list of topics in Article 12.2.1 is
limited to matters associated with the determinations of dumping and
injury, while Article 12.2.2 is more generally phrased ("all relevant
information on matters of fact and law and reasons which have led to
the imposition of final measures, or the acceptance of a price
undertaking"). Nevertheless, the phrase "have led to", implies those
matters on which a factual or legal determination must necessarily be
made in connection with the decision to impose a definitive anti-
dumping duty. … contextual cons iderations also support this
interpretation since, the only matte rs referred to "in particular" in
subparagraph 12.2.2 are, in addition to the information described in
subparagraph 2.1, the reasons for accep tance or rejection of relevant
arguments or claims, and the basis for certain decisions.
We cannot conclude that every single decision of an investigating authority in the
course of an investigation can be consider ed as having "led to" the imposition of the
final measures, such that it must be described, together with the "information"
relevant to the decision, in the published no tice of the final determination. Not every
question or issue which arises during an inv estigation, and which is resolved by the
investigating authority, is necessarily c onsidered material by the investigating
authorities, and may be said to have "led to" the imposition of the anti-dumping duty,
even though it may be of interest or significan t to one or more interested parties. In
our view, the notions of "material" and "r elevant" in Article 12.2.2 must be judged
primarily from the perspective of the actua l final determination of which notice is
being given, and not the entirety of the inv estigative process. Other provisions of the
Dumping Agreement, notably Articles 6.1.2, 6.2, 6.4, and 6.9 address the obligations
of the investigating authority to make in formation available to parties, disclose
information, and provide opportunities for parties to defend their interests. In our
view, Article 12.2.2 does not replicate th ese provisions, but rather, requires the
investigating authority to explain its fi nal determination, providing sufficient
background and reasons for that determination, such that its reasons for concluding as
it did can be discerned and are understood.
411
7.459 We are in broad agreement with these findings. Consistent therewith , we consider that the
first sentence of Article 12.2.2 requires an inves tigating authority to include in its public notice a
description of its findings and conclusions on the issu es of fact and law that it considered material 412
to its decision to impose final measures. That descr iption must include "sufficient detail". While the
sufficiency of the detail of the description may depe nd on the precise nature of the findings made by
the investigating authority, it should in any even t be sufficient to ensure that the investigating

411 Panel Report, EU – Footwear (China), para. 7.844, footnotes omitted.
412 We note the finding by the Appellate Body in China – GOES (para. 265) that "the facts that an
investigating authority may consider material to its de terminations are circumscribed by the framework of the
substantive provisions of the Anti-Dumping Agreement".

authority's reasons for concluding as it did can be discerned and understood by the public 413. The
ability of the public to understand the findings and conclusions of the investigating authority is
important, for the concept of "public" is broad: it includes "interested parties" within the meaning of
Article 6.11 of the Anti-Dumping Agreement and, for example, consumer organizations that might be
expected to have an interest in the imposition of anti-dumping measures. Article 13 of the Anti-
Dumping Agreement provides for judicial review of the final determinations referred to in
Article 12.2.2. In our view, the level of detail of the description of the authority's findings and
conclusions must be sufficient to allow the abov ementioned entities to assess the conformity of those
findings and conclusions with domes tic law, and avail themselves of the Article 13 judicial review
mechanism where they consider it necessary. In a si milar vein, we also consider that the level of
detail should be sufficient to allow the relevant e xporting Member to ascertain the conformity of the
findings and conclusions with the provisions of the WTO Agreement, and to avail itself of the WTO
dispute settlement procedures where it considers it necessary
414. Our approach is consistent with the
following findings recently made by the Appellate Body in China – GOES:
Article[] 12.2.2 […] capture[s] the principl e that those parties whose interests are
affected by the imposition of final anti-dumping and countervailing duties are entitled
to know, as a matter of fairness and due process, the facts, law and reasons that have
led to the imposition of such duties. The obligation of disclosure under
Article[] 12.2.2 … is framed by the require ment of "relevance", which entails the
disclosure of the matrix of facts, law and r easons that logically fit together to render
the decision to impose final measures. By requiring the disclosure of "all relevant
information" regarding these categories of information, Article[] 12.2.2 … seek[s] to
guarantee that interested parties are able to pursue judicial review of a final
determination as provided in Article 13 of the Anti-Dumping Agreement …
415
7.460 Turning to the arguments of the European Uni on, we agree with the European Union that
MOFCOM's findings that the dumped imports ha d the effect of price undercutting and price
suppression are material to its decision to impo se final measures. Accordingly, MOFCOM was
required to include a description of the "relevant information" regarding those findings in its public
notice, to ensure that the reasons for its findings could be discerned and understood 416. MOFCOM's
public notice contained the following description of its price effects findings:
Evidence showed that during the POI the import price of the Subject Product
sustained growth, although in small amount s, while the price of domestic Like
Products declined by a large margin with a 72.68% decrease in 2008 compared
to 2006. The import price of the Subject Product was largely below the price of
domestic Like Products in 2006 and 2007, wh ich seriously undercut the price of
domestic Like Products, resulting in sales pr ices lower than per unit production costs
of domestic Like Products and serious lo sses of pre-tax profits during that time
period. Although the import price of the Subject Product was slightly higher than the
price of domestic Like Products in 2008, it remained at a low level, while the sales

413 Our interpretation is consistent with the finding by the Appellate Body in China – GOES (para. 256)
that "[t]he inclusion of ["all rele vant information"] should therefore give a reasoned account of the factual
support for an authority's decision to impose final measures".
414 Like the panel in EU – Footwear (China), though, we consider that Article 12.2.2 does not replicate
the transparency obligations set forth in Articles 6.1.2, 6.2, 6.4 and 6.9. Thus, there is not necessarily any need
to include all of the Article 6.9 "essential facts" in the public notice.
415 Appellate Body Report, China – GOES, para. 258.
416 We recall that the Article 12.2.2 public notice must contain the information described in
Article 12.2.1. We note in particular that Article 12.2.1(iv) refers to "considerations relevant to the injury
determination as set out in Article 3". Such considera tions must therefore be included in the Article 12.2.2
public notice.

price of domestic Like Products decreased by 46.75% from 2008 to 2007, almost
down to the unit sales cost, leaving unit gross profit rate at a low level. Other
evidence showed that the unit production cost of domestic Like Products decreased
by 53.67% from 2006 to 2008 while the sales price of domestic Like Products
decreased by 72.68% over the same period, i.e. the rate of the decline of sales price
was higher than the rate of production co st reduction by 19.01 percentage points,
indicating that the sales price of domestic Like Products failed to remain at a
reasonable level as a result of being depressed by the import price of the Subject
Product. Accordingly, the import price of the Subject Product clearly had an
undercutting and depressing effect on the prices of domestic Like Products.
417
7.461 In our view, MOFCOM's description of its price effects findings does not meet the
requirements of Article 12.2.2, since it provides no in sight into how those findings were reached. In
particular, there is no explanation of how MOFC OM assessed the relationship between domestic and
subject import prices, and between domestic price and cost 418. In our view, MOFCOM's public notice
should have described MOFCOM's use of AUVs, a nd explained the factual basis for those AUVs and
why the use of AUVs was appropriate. We cons ider that these elements are relevant for
understanding how MOFCOM arrived at its price effects findings, and for assessing the conformity of
those findings with the relevant provisions of domestic law and the WTO Agreement.
(ii) The calculations and underlying data for Smiths' margin of dumping, and for the residual
anti-dumping duty
7.462 The European Union claims th at China acted inconsistently with Article 12.2.2 ADA by
failing to make available the calculations and underlyi ng data it used to determine (i) the margin of
dumping for Smiths, and (ii) the residual duty for all other European exporters/producers 419.
According to the European Union, such data and calculations constitute "relevant information" on the
matters of fact and law and reasons which led to the imposition of definitive measures420.

417 Final Determination, Exhibit EU-2, pp. 23-24.
418 We note that in China – GOES, the Appellate Body found that MOFCOM should have included in
its public notice "those facts underlying the existence of price undercutting that would have allowed for an
understanding of this element of MOFCOM's finding of significant price depression and suppression"
(Appellate Body report, China – GOES, para. 262). We further note the Appellate Body's finding that "[w]hen
confidential information is part of the relevant inform ation on the matters of fact within the meaning of
Article[] 12.2.2. […], the disclosure obligation under [this] provision[] should be met by disclosing non-
confidential summaries of that information" (para. 259).
419 European Union's first written submission, para. 162.
420 The Panel considered carefully whether or not this claim falls within its terms of reference, as set
forth in the European Union's request for establishment of a panel (WT/DS425/2). Concerning Article 12.2.2,
the European Union's request for the establishment of a panel claims that China acted inconsistently with its
WTO obligations:
[B]ecause neither in its public notice of th e imposition of definitive measures, nor in a
separate report, China set forth sufficiently detailed explanations for the definitive
determinations on dumping and injury, together with references to the matters of fact and law
which led to arguments being accepted or rejected . Specifically, China failed to provide: a) a
full explanation of the reasons for the methodology used in the establishment and comparison
of the export price and normal value (Article 12.2.1(iii) of the Anti-Dumping Agreement); b)
all the considerations relevant to the injury determination as set out in Article 3 of the
Antidumping Agreement (Article 12.2.1(iv) of the Anti-Dumping Agreement); and c) the main
reasons leading to the determination (Article 12.2.1(v) of the Anti-Dumping Agreement).
In light of comments made by both parties (see European Union's response to Panel question 63, and China's
comments thereon), we consider that although the term "specifically" in the second sentence above suggests that
the European Union's claims are concerned with the issues enumerated as a), b) and c) in that second sentence,

7.463 We agree with the European Union that the margin of dumping established for Smiths
constitutes a matter of fact and/or reason that led to the imposition of definitive measures.
Accordingly, MOFCOM was required to describe all "relevant information" pertaining to its
establishment of that margin. Concerning the issue of whether or not MOFCOM should have
included the calculations for Smiths' margin of dum ping as "relevant information", we agree with the
panel in China – GOES that the interpretation of Article 12.2. 2 in the context of determinations of
margins of dumping should be guided by Article 12 .2.1(iii), which provides that public notices must
include:
[T]he margins of dumping established and a full explanation of the reasons for the
methodology used in the establishment and comparison of the export price and the
normal value under Article 2.
7.464 In particular, we agree with the following finding by the China – GOES panel that
calculations need not be included in the Article 12.2.2 public notice:
Although the requirement to give public notice of "all relevant information on matters
of fact and law" may appear wide enough to encompass the data and calculations
used to determine the dumping margins, this requirement must be read in the light of
the more particular obligation spelt out in Article 12.2.1(iii), which is incorporated by
reference into Article 12.2.2. In the Panel' s view, it is significant that the text in
Article 12.2.1(iii) sets out in detail the in formation regarding dumping margins that
must be included in a public notice or separate report, but omits any reference to the
calculations or data. While Article 12.2.2 provides that its disclosure obligations
apply "in particular" to the factors in Article 12.2.1(iii) and to the reasons for
acceptance or rejection of relevant arguments or claims, we acknowledge that this is
not an exhaustive description of the "relevant information" that may be included in a
public notice or separate report under Article 12.2.2. Nevertheless, some relevance
must be attributed to the fact that the drafters of Article 12.2 specified with some
particularity a list of the information required in the public notice or separate report
and chose not to list the data and calculati ons used to arrive at a dumping margin,
even though, on the United States' argument, this is "relevant information" that
should be included in every public notice or separate report issued at the conclusion
of an anti-dumping investigation. Therefore, on the text of Article 12.2.2, which by
cross-reference includes the text of Article 12.2.1, it is difficult to conclude that there
is an obligation to disclose the calculations and data underlying a dumping margin.
421
7.465 Regarding the issue of whether or not MOFCOM should have included the data underlying its
determination of Smiths' margin of dumping in the public notice, we recall that we have upheld the
European Union's Article 6.9 claim regarding non- disclosure of that data. In our view, though,
Article 12.2.2 does not require that all "essential fa cts" underlying the margin of dumping should be
included in the public notice 422, 423 . The scope of Article 12.2.2 is more nuanced, and would not

the earlier reference to MOFCOM's failure to include "sufficiently detailed explanations for the definitive
determinations on dumping" in its public notice is sufficient to include its claim regarding the calculations and
underlying data for Smiths' margin of dumping within our terms of reference.
421 Panel Report, China – GOES, paras 7.333.
422 Although Article 12.2.2 serves in part to allow inte rested parties to pursue judicial review of final
determinations, there must be limits to the amount of information that need be included in a public notice. In
our view, the contextual guidance afforded by Article 12.2.1 provides insight as to where such limits lie.
423 The scope of the European Union's Article 12.2.2 claim appears to be the same as the scope of its
Article 6.9 claim. At para. 157 of its first written submission, the European Union avers that, with respect to the
lack of disclosure of MOFCOM's calculations, it is bringing claims under both provisions. Furthermore, at

require the inclusion of all underlying data. Without a more precise description by the
European Union of the specific underlying data that, in its view, should have been reflected in the
public notice, there is no basis for us to uphold the European Union's claim.
7.466 Regarding the European Union's claim that MO FCOM failed to include in its public notice
the calculations and underlying data for the residual anti-dumping duty applied to all other
European Union exporters/producers, we have alr eady found that dumping margin calculations need
not be included in Article 12.2.2 notices. Con cerning the underlying data, the European Union argues
more specifically that "MOFCOM was required to expl ain in the public notice why it resorted to facts
available to determine the residual duty rate and wh ich facts support this conclusion. It was further
required to publish the relevant factual basis (at least in the form of a non-confidential summary) for
its determination and the method it relied upon"424.
7.467 We agree that MOFCOM was required to in clude all "relevant information" regarding
residual rate in its notice. We note that MO FCOM's public notice contained only the following
information regarding the residual rate:
For other EU companies not responding to the petition or the Questionnaire, in
accordance with Article 21 of the Antidumping Regulations , MOFCOM decided to
use obtained facts and the best information obtainable to determine the normal value
and the export price thereof.425
7.468 In our view, this information is not sufficient to meet the requirements of Article 12.2.2, since
MOFCOM provides no information regarding the fact ual basis for its determ ination of the residual
rate.
7.469 For all of the above reasons, we reject the European Union's claim that MOFCOM violated
Article 12.2.2 by failing to include the calculatio ns and underlying data for Smiths' margin of
dumping. We also reject the European Union's claim regarding MOFCOM's failure to include its
calculation of the residual rate in its public notice. However, we uphold the European Union's claim
that MOFCOM violated Article 12.2.2 by failing to include "relevant information" regarding the
factual basis for its determination of the residual rate.
(iii) Conclusion
7.470 In conclusion, we uphold the European Un ion's claim that MOFCOM violated the
first sentence of Article 12.2.2 by failing to provide relevant information re garding its price effects
analysis, and its determination of the residual rate. However, we reject the European Union's claim in
respect of the calculations and underlying data for Smiths' margin of dumping, and the calculations
for the residual rate.
(b) MOFCOM's alleged failure to pr ovide reasons for the rejection of certain arguments made by
Smiths: Article 12.2.2, second sentence
7.471 The European Union claims that MOFCOM vi olated the second sentence of Article 12.2.2
because it failed to explain in its public notice why MOFCOM rejected arguments made by Smiths
concerning the treatment of domestic sales to affilia ted distributors, the credibility of certain injury

para. 161 of its first written submission, the European Union claims that, where the data underlying MOFCOM's
calculations is not disclosed under Article 6.9, it should be included in the Article 12.2.2 public notice.
424 European Union's second written submission, para. 128.
425 Final Determination, Exhibit EU-2, p. 21.

data and other injury issues, and the existence of any causal link between dumped imports and injury
to the domestic industry. China asks the Panel to reject the European Union's claim.
7.472 The second sentence of Article 12.2.2 requires th e inclusion in the public notice of "the
reasons for the acceptance or rejection of relevant arguments or claims made by the exporters and
importers". In light of our interpretation of the first sentence of Article 12.2.2, we consider that
"relevant" arguments or claims are those that relate to the issues of fact and law considered material
by the investigating authority. Since this provi sion concerns the arguments and claims made by
exporters and importers, whose inter ests will be adversely affected by an affirmative determination, it
is particularly important that the "reasons" for re jecting or accepting such arguments should be set
forth in sufficient detail to allow those exporters and importers to understand why their arguments or
claims were treated as they were, and to assess whet her or not the investigating authority's treatment
of the relevant issue was consistent with domestic law and/or the WTO Agreement.
(i) The treatment of domestic sales to affiliated distributors
7.473 In its comments on MOFCOM's Dumping Disclosure, Smiths queried MOFCOM's
determination that domestic sales to affiliated dist ributors were not made in the ordinary course of
trade. In particular, Smiths queried MOFCOM's de termination that such sales were affected by the
affiliation relationship, and that Smiths had not provided sufficient in formation showing that the price
differences relative to sales to non-affiliated distri butors merely reflected sales expenses saved by
Smiths:
To support its claim that sales to bot h affiliated distributors and unaffiliated
distributors in the EU should be taken into account in calculating normal value,
Smiths submitted, in its Questionnaire Response, Comments on the Preliminary
Determination, Supplementary Docume nts provided after the Preliminary
Determination, data and explanations showing that affiliated distributors serve certain
functions otherwise performed by Smiths' sales department and bear related expenses,
causing Smiths' cost of sales to affiliated distributors to be lower than the cost of sales
to unaffiliated distributors while still reflec ting arm's length practice. In addition,
during the onsite verification, Smiths presented original sales documents to and
answered inquiries of the investigating offici als. At the conclusion of the verification
process Smiths provided documents requested by the officials.
…
We would also like to emphasize to your esteemed Bureau that Smiths' pricing
practices with respect to affiliated distribut ors have been continuously confirmed by
reputable public auditing firms to be cons istent with fair market principles and
reflective of the normal value of its produc ts. Please refer to the audited reports of
Smiths in the case record. Sm iths thus maintains that the conclusory exclusion of
affiliated transactions is unfair to Smiths and results in a distorted calculation of
normal value.
426
7.474 Regarding documentary evidence, Smiths contends:
In the Supplementary Documents for the Anti-dumping Investigation against X-ray
Security Inspection Equipment provided by Smiths on August 11, 2010, Smiths
explained that deductions in sales prices to affiliated companies occurred only with

426 Smiths' comments on MOFCOM's Final Dumping Disclosure, Exhibit EU-19, pp. 2-4. See also
corresponding text in the public version of the Comments, Exhibit EU-19, pp. 2-3.

respect to relevant sales expenses and profit rates of Smiths because sales to affiliated
companies bear less risk, thus enabling Smith to save costs and expenses borne on
sales to unaffiliated companies. Moreover, Smiths provided the Table of Calculation
of Prices to Affiliated Companies in the EU (Appendix 2 of the Supplementary
Documents), in which it further explained that the price differences in prices to
affiliated companies are due to lower sales expenses resulting from lower risk. Smiths
then presented extensive sales documents to the investigating officials during the
onsite verification, answering their various questions as they examined the
documents. Smiths provided copies of certain documents when the officials requested
copies with respect to the above statemen ts and documents. The Disclosure Letter,
however effectively ruled all of these submissions to be "data not being used for
calculating normal value." Therefore, under Article 12 MOFCOM must disclose the
reasons why they are not used, or, in the word ing of the Disclosure Letter, why they
are considered "not sufficient" by MOFCOM. (footnote omitted, emphasis original)
427
7.475 The European Union claims that MOFCOM faile d to provide the reasons for rejecting these
arguments in its public notice, contrary to the second sentence of Article 12.2.2.
7.476 China does not deny that MOFCOM was required to address this issue in its public notice, but
claims that MOFCOM properly addressed Smith s' arguments in its Final Determination 428. China
relies on the finding by the panel in EU – Footwear (China) that Article 12.2.2 does not require that
the authority is "required to respond in detail to the argument" of the interested parties. China
contends that MOFCOM's explanations of the issues raised by Smiths were "amply sufficient". Since
China does not deny that MOFCOM was required to address Smiths' arguments in its public notice,
there is no need for us to determine whether or not Smiths' arguments are "relevant". Instead, we
need only consider the adequacy of the explan ation provided by MOFCOM for rejecting those
arguments.
7.477 In its public notice of the Final Determination, MOFCOM provided the following information
regarding its handling of Smiths' arguments:
The Company stated in its Comments follo wing the Preliminary Determination that
although the sales prices to affiliated co mpanies were lower than those to non-
affiliated companies in the EU, the price di fference consisted only of relevant sales
expenses saved by the Company and that the sales prices to affiliated companies were
not affected by the affiliation relationship a nd represented fair market price, and that
such transactions were in the normal cour se of trade. Upon on-site verification and
further verification, MOFCOM discovered that the pricing and sales processes, the
sales prices of Smiths Heimann through aff iliated distributors in the EU during the
POI were clearly affected by the affiliation relationship, and that Smiths Heimann did
not have sufficient evidence to prove that the price differences were merely sales
expenses which it saved. Therefore, the affiliated sales price cannot represent fair
market price and such transactions were not in the normal course of trade. MOFCOM
decided to maintain its decision in the Preliminary Determination to exclude the
transactions made by the Company through affiliated distributors in the EU during
the POI from the normal value determination in its Final Determination.429

427 Smiths' comments on MOFCOM's Final Dumping Disclosure, Exhibit EU-19, pp. 2-4. See also
corresponding text in the public version of the Comments, Exhibit EU-19, pp. 2-3.
428 China's first written submission, para. 220.
429 Final Determination, Exhibit EU-2, p. 17.

7.478 While this excerpt from the Final Determin ation shows that MOFCOM acknowledged the
various arguments made by Smiths, we find that it does not amount to a sufficiently detailed
explanation of the reasons for rejecting those argum ents. The issue raised by Smiths was whether,
notwithstanding the relationship of affiliation , the sales still reflected arm's length practice.
MOFCOM did not address that issue in its Final Determination. In simply stating that the price of
sales to affiliated distributors "were clearly affected by the affiliation relationship", MOFCOM fails to
explain the reason why it rejects Smiths' argument that, despite the affiliation between Smiths and
certain distributors, such sales "still reflect[] arm's length practice". Furthermore, in simply stating
that Smiths "did not have sufficient evidence to pr ove that the price differences were merely sales
expenses which it saved", MOFCOM fails to explain the reasons why the documentary evidence
provided by Smiths was not sufficient to show that the lower sales prices to affiliated distributors
reflected lower sales expenses resulting from lower risk430. Without such detailed explanation, Smiths
had no means of understanding why its arguments were rejected, or of ascertaining whether or not
MOFCOM's handling of this issue was consistent with the provisions of Chinese law and/or the
WTO Agreement. Accordingly, we find that MOFC OM's failure to fully explain the reasons why it
rejected this argument is inconsistent with Article 12.2.2 of the Anti-Dumping Agreement.
(ii) The credibility of certain injury data, and other issues
7.479 The European Union claims that MOFCOM's pub lic notice omitted the reasons for rejecting
certain arguments made by Smiths regarding th e credibility of MOFCOM's injury data. The
European Union also claims that MOFCOM faile d to provide the reasons for rejecting certain
additional arguments made by Smiths concerning MOFCOM's injury findings.
 Credibility of MOFCOM's injury data
7.480 The European Union claims that MOFCOM faile d to explain in its public notice the reasons
for rejecting Smiths' arguments regarding the cr edibility of certain injury data relied on by
MOFCOM. In particular, the European Union refers to Smiths' arguments that the profitability and
employment data relied on by MOFCOM were inconsistent with data contained in public filings made
by Nuctech to the State Administration for Industry & Commerce ("SAIC"), and public filings made
by Nuctech's parent company.
7.481 China contends that Smiths' arguments are not "relevant", in the sense of being material to
MOFCOM's decision to impose final duties. China also contends that in any event MOFCOM fully
addressed Smiths' arguments in its Final Determination.
7.482 MOFCOM's Final Determination addressed this issue in the following terms:
Smiths Heimann stated in its No-Injury Defense Opinions and Comments on the
Preliminary Determination that some info rmation and data on domestic industry in
the Preliminary Determination, includi ng production and operation situation and
employee headcount, contradicted the information and data disclosed by the listed
parent company of the Petitioner in its annual reports as well as the information and
data filed with the Administration for I ndustry and Commerce. Smiths Heimann also
stated in its Rebuttal of the Comments of the Petitioner on the Preliminary
Determination that the listed parent compan y of the Petitioner cited in several public

430 At para. 149 of its second written submission, China contends that Smiths acknowledged that the
prices to affiliated distributors are lower not only b ecause of savings on direct selling expenses, but mainly
because of lower overhead expenses and profits. Howe ver, there is no explanation of this reasoning in
MOFCOM's Final Determination. Nor is it clear th at MOFCOM's reference to "sales expenses" should
necessarily be understood to refer only to direct selling expenses.

documents that exports were the cause of its financial difficulty rather than the reason
for the overall soundness of its operations.
Nuctech stated in its Comments on the Defense Opinions on the Preliminary
Determination by the EC and Smiths He imann GmbH that the subject of its
Application, and hence the subject of this I nvestigation, was the injury situations of
the Subject Product. The Petitioner had a s ound performance in its overall operations
because of its other products and exports. However, it had suffered material injury
with respect to said products due to th e effect of the dumping of the imported
products.
Upon investigation, we found that the Pe titioner also produced other products in
addition to the Like Products in the inst ant case. Both the information and data
disclosed by the parent company of the Pe titioner in its annual reports as well as the
information and data filed with the Administration for Industry and Commerce
included the information and data on other products in addition to the Like Products,
while the determinations of the inst ant case only would be based only on the
information and data on Like Products.431
7.483 Leaving aside the issue of whether or not Smiths' arguments regarding this matter are
"relevant", we consider that in any event MOFCOM 's Final Determination adequately explains why
Smiths' arguments were rejected. The Final Dete rmination explains that the data discrepancies
identified by Smiths were a reflection of product cove rage, in the sense that the data referred to by
Smiths related to products that were not the subj ect of MOFCOM's investigation. In our view,
MOFCOM's explanation was sufficient to allow Smiths to understand why its arguments were
rejected, and to ascertain whether or not MOFCOM's handling of this issue was consistent with the
provisions of Chinese law and/or the WTO Agreement.
 Additional arguments made by Smiths
7.484 The European Union also claims that MOFCOM failed to address a number of additional
arguments made by Smiths. In particular, at para graph 151 of its first written submission, and in a
footnote thereto, the European Union claims:
In addition, Smiths also made a numbe r of pertinent arguments concerning
MOFCOM's injury analysis in view of China's obligations under Articles 3.4 ADA.117
Section 5 of the European Union's first written submission.
7.485 The European Union did not provide any more deta ils of this aspect of its claim in its first
written submission. Nor did the European Union id entify the "pertinent arguments" with which this
claim is concerned. This lack of detailed argumen tation led China to assert that the European Union's
claim should be rejected, for l ack of proper identification of the Smiths arguments at issue 432. In
response to a question from the Panel asking the Eu ropean Union to comment on China's reaction to
its claim433, the European Union notes that paragraph 151 of its first written submission refers to the
Article 3.4 claims set forth in Section 5 of its subm ission. The European Union also contends that the

431 Final Determination, Exhibit EU-2, p. 28.
432 China's oral statement at the first substantive meeting, para. 17.
433 European Union's response to Panel question 14, para. 94.

relevant comments by Smiths "are then identified in paragraphs 255, 280-281, 293, 297-302" of its
first written submission.
7.486 In our view, the European Union has failed to establish a prima facie case of violation of
Article 12.2.2 in respect of any additional argum ents allegedly made by Smiths. The blanket
reference in the European Union's first written submission to substantive injury arguments made in
Section 5 of that submission is not sufficien t to establish that MOFCOM failed in its procedural
obligation to explain why certain arguments allegedl y made by Smiths were rejected. To require the
Panel to (i) sift through Section 5 of the Europ ean Union's first written submission to identify the
relevant arguments made by Smiths, (ii) consider wh ether or not such arguments relate to matters that
were material to MOFCOM's decision to impose fi nal duties, and then (iii) leaf through the Final
Determination to identify where MOFCOM may have addressed such arguments, would require the
Panel to make the case on behalf of the European Union. Although, in response to a question from
the Panel, the European Union identifies certain sp ecific paragraphs of its first written submission,
these references are not sufficient to identify the relevant argumen ts allegedly made by Smiths,
explain how those arguments relate to matters that are material 434, or indicate the extent to which
MOFCOM may or may not have provided reasons for rejecting those arguments in its Final
Determination. Thus, even considering the additional references provided by the European Union, we
remain of the view that the European Union has failed to establish the requisite prima facie case.
(iii) The causal link
7.487 The European Union claims that MOFCOM failed to explain why it rejected certain
arguments made by Smiths regarding the causal link between dumped imports and injury to the
domestic industry. At paragraph 154 of its first written submission, according to the European Union:
Smiths listed several factors which the i nvestigating authority should take into
account in assessing the existence of the causal link.121
European Union's interpretation, since this would suggest that any arguments or comments concerning the
establishment of the margin of dumping or the determination of injury should be addressed in the public notice.
As explained above, we consider that the scope of the Article 12.2.2 obligations is narrrower. In any event,
since the European Union has not identifed the releva nt arguments at issue, there is no clear basis for
establishing whether or not they relate to the mandatory elements set forth in Article 12.2.1.

7.489 China contends that the European Union fa iled to demonstrate that Smiths' arguments
regarding these factors are "relevant" within th e meaning of Article 12.2.2, such that MOFCOM
should have explained in its public notice its reasons for rejecting them.
7.490 It is possible, by reading paragraph 154 of the European Union's first written submission in
conjunction with paragraph 312 thereof, to identify which of Smiths' arguments are at issue in this
claim. However, the European Union does not explain the extent to which such arguments are
"relevant" to matters that were material to MOFC OM's decision to impose final duties. Nor does the
European Union explain the extent to which such arguments may or may not have been addressed by
MOFCOM in its Final Determination. Again, th erefore, the European Union's presentation of its
claim expects too much of the Panel, in the sense that we are effectively expected to make the
European Union's case by first examining whether Sm iths' arguments are relevant to material matters
of fact or law, and then reviewing MOFCOM's Fina l Determination in order to determine the extent,
if any, to which these arguments were addressed by MOFCOM. Although our evaluation of certain
aspects of the European Union's Article 3.5 claim caused us to address issues that may well have a
bearing on an assessment of claims made under Article 12.2.2, the onus remains on the
European Union, as complainant, to establish its case. It is not for the Panel to review the
European Union's Article 3.5 claim and determine for itself what aspects of that claim might support a
finding of violation of Article 12.2.2. Accordingly, given the failure of the European Union to spell
out the basis for its Article 12.2.2 claim in respect of arguments allegedly made by Smiths regarding
causal link, we find that the European Union has failed to establish a prima facie for such claim.
(iv) Conclusion
7.491 For the above reasons, we uphold the European Union's claim that MOFCOM violated the
second sentence of Article 12.2.2 by failing to expl ain in its public notice why it rejected Smiths'
arguments regarding the treatment of domestic sales to affiliated distributors. We reject the
European Union's claim regarding Smiths' arguments on the credibility of certain injury data, and its
claim regarding additional arguments allegedly not adequately addressed in MOFCOM's public
notice.
VIII. CONCLUSIONS AND RECOMMENDATION
A. CONCLUSIONS
8.1 In the light of the findings set forth in this Report, the Panel concludes that China acted
inconsistently with:
(a) Articles 3.1 and 3.2 of the Anti-Dumping Agreement, on the basis that China did not
conduct an objective examination based on positive evidence of the effect of the
dumped imports on prices in the domestic market for like products;
(b) Articles 3.1 and 3.4 of the Anti-Dumping Agreement on the basis that China did not
conduct an objective examination of the impact of the dumped imports on the
domestic industry:
(i) by failing to evaluate the magnitude of the margin of dumping; and
(ii) in relation to its examination of certain individual injury factors.
(c) Articles 3.1 and 3.5 of the Anti-Dumping Agreement on the basis that China did not
conduct an objective examination on the basis of positive evidence:

(i) of the causal relationship between dumped imports and the injury to the
domestic industry in respect of MOFCOM's assessment of the prices of the
dumped imports; and
(ii) in its non-attribution analysis, in particular in relation to MOFCOM's
treatment of Smiths' arguments on pr oduct quality and technology factors,
fair competition, Nuctech's alleged aggressive business expansion and alleged
aggressive pricing policy.
(d) Article 3.5 of the Anti-Dumping Agreement as a consequence of the inconsistencies
with Articles 3.1, 3.2 and 3.4.
(e) Article 6.5.1 of the Anti-Dumping Agreement on the basis that China did not require
interested parties providing confidential information to furnish non-confidential
summaries in sufficient detail to permit a reasonable understanding of the substance
of the following information submitted in confidence:
(i) information pertaining to the models covered in the Application; and
(ii) the information contained in Nuctech's replies to questions 17, 19, 19(1),
19(2), 32, 33 and 38(5) of MOFCOM's questionnaire and Attachments 4
and 15 to those replies;
(f) Article 6.5.1. of the Anti-Dumping Agreement on the basis that China did not require
an interested party to explain why certain information submitted in confidence could
not be summarized;
(g) Article 6.9 of the Anti-Dumping Agreement on the basis that China did not inform
interested parties of the following essential facts under consideration forming the
basis for the decision to apply definitive measures:
(i) the AUVs and underlying price data u sed to analyse the price effects of
dumped imports;
(ii) the price and adjustment data underlying Smiths' margin of dumping; and
(iii) the facts that formed the basis for the determination that the residual duty rate
should be 71.8%;
(h) Article 12.2.2 of the Anti-Dumping Agreem ent, first sentence, on the basis that
MOFCOM's public notice was deficient in failing to provide relevant information
regarding:
(i) its price effects analysis; and
(ii) the factual basis for the determination of the residual rate;
(i) Article 12.2.2 of the Anti-Dumping Agreem ent, second sentence, on the basis that
MOFCOM's public notice was deficient in failing to explain why MOFCOM rejected
Smiths' arguments regarding the treatment of domestic sales to affiliated distributors.
8.2 In the light of the findings set forth in this Report, the Panel concludes that the
European Union has not established that China acted inconsistently with:

(a) Articles 3.1 and 3.4 of the Anti-Dumping Agreement by failing to base its
examination of the factors having a bearing on the state of the industry on positive
evidence;
(b) Articles 3.1 and 3.5 of the Anti-Dumping Agreement in connection with MOFCOM's
treatment in its non-attribution analysis of the effect of exports, the impact of the
global financial crisis and Nuctech's alleged start-up situation;
(c) Article 6.5.1 of the Anti-Dumping Agreement in connection with the non-confidential
summaries of the confidential information set forth in Attachments 14, 16, 17, 18 and
19 to Nuctech's questionnaire response;
(d) Article 6.9 of the Anti-Dumping Agreement in connection with informing interested
parties of:
(i) the underlying facts and criteria on the basis of which the affiliated
distributor adjustment to export price was made;
(ii) the calculations of Smiths' margin of dumping; and
(iii) the facts forming the basis of the decisi on to apply facts available in relation
to the residual duty rate;
(e) Article 12.2.2 of the Anti-Dumping Agreement, first sentence, by failing to include in
the public notice:
(i) the calculations and underlying data for Smiths' margin of dumping; and
(ii) the calculation of the residual duty rate;
(f) Article 12.2.2 of the Anti-Dumping Agreement, second sentence, in connection with:
(i) Smiths' arguments on the credibility of certain injury data; and
(ii) additional arguments allegedly made by Smiths concerning MOFCOM's
injury and causation analysis;
8.3 In the light of the findings set forth in paragraphs 8.1and 8.2 of this Report, the Panel does not
consider it necessary to make findings with respect to the European Union's claims under:
(a) Articles 3.1 and 3.4 of the Anti-Dumpi ng Agreement in relation to whether
MOFCOM should have taken into account the differences between "high-energy" and
"low-energy" scanners;
(b) Articles 3.1 and 3.5 of the Anti-Dumpi ng Agreement in relation to MOFCOM's
analysis of the volume of dumped imports;
(c) Article 6.2 of the Anti-Dumping Agreement; and
(d) Article 6.4 of the Anti-Dumping Agreement.

B. RECOMMENDATION
8.4 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to constitute a case of nullification or
impairment of benefits under th at agreement. Accordingly, to the extent China has acted
inconsistently with certain provisions of the An ti-Dumping Agreement, we conclude that it has
nullified or impaired benefits accruing to the European Union under that Agreement.
8.5 Pursuant to Article 19.1 of the DSU, having fo und China acted inconsistently with certain
provisions of the Anti-Dumping Agreement, we r ecommend China bring its measure into conformity
with its obligations under that Agreement.