UNITED STATES – FINAL ANTI-DUMPING MEASURES ON STAINLESS STEEL FROM MEXICO
Document: Report of the Panel
Date: 20 December 2007
Document codes: WT/DS344/R
Complainant: Mexico
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, Japan, South Korea, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 1, 2.1, 2.4, 2.4.2, 9, 18.4  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

UNITED STATES – FINAL ANTI-DUMPING MEASURES
ON STAINLESS STEEL FROM MEXICO

Report of the Panel

I. INTRODUCTION
1.1 On 26 May 2006, the Government of Mexico ( "Mexico") requested consultations with the
Government of the United States of America ("United States" or "US") pursuant to Article 4 of the
Understanding on Rules and Procedures Governing th e Settlement of Disputes ("DSU"), Article XXII
of the General Agreement on Tariffs and Tr ade 1994 ("GATT 1994"), and Article 17 of the
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
("Anti-Dumping Agreement" or "Agreement"), re garding the laws, regulations, administrative
practices and methodologies for calculating dumping margins. 1 Consulations were held on
15 June 2006, but failed to resolve the dispute.
1.2 On 12 October 2006, Mexico requested the Dis pute Settlement Body ("DSB") to establish a
panel pursuant to Articles 4 and 6 of the DSU, Ar ticle XXIII of the GATT 1994 and Article 17 of the
Anti-Dumping Agreement.
1.3 At its meeting on 26 October 2006, the DSB est ablished a panel pursuant to the request of
Mexico 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 provisions of the covered agreements cited
by Mexico in document , the ma tter referred to the DSB by Mexico in
that document, and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements."
1.5 On 15 December 2006, Mexico requested the Dire ctor-General to determine the composition
of the Panel, pursuant to paragraph 7 of Article 8 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 consid ers 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 20 December 2006, the Director-General accordingly composed the Panel as follows:
Chairperson: Mr. Alberto Juan Dumont

 Members: Mr. Bruce Cullen
 Ms Leora Blumberg

1.7 Chile, China, the European Communities, Japan and Thailand have reserved their rights to
participate in the panel proceedings as third parties.
1.8 The Panel met with the parties on 22-23 May 2007 and on 17 July 2007. It met with the third
parties on 23 May 2007.

1 WT/DS344/1.

II. FACTUAL ASPECTS
2.1 At issue in this dispute is what Mexico descr ibes as the "Zeroing Procedures" under US law,
which, according to Mexico, require the United States Department of Commerce ("USDOC") to
calculate margins of dumping in investigations a nd periodic reviews in a manner that does not fully
reflect export prices that are above the normal value. According to Mexico, this takes place through
the non-inclusion in the numerator of the weighted average dumping margin calculations of the results
of comparisons where the export price exceeds the norma l value, when such results are aggregated in
the calculation of the margins of dumping for the product under consideration as a whole. More
specifically, Mexico takes issue with the "Zeroing Procedures" in connection with investigations
where the weighted average normal value is comp ared with the weighted average export price
(referred to by Mexico as "model zeroing in inve stigations"), and the periodic reviews where the
weighted average normal value is compared with individual export transactions (referred to by
Mexico as "simple zeroing in periodic reviews").
2.2 In addition to its two "as such" claims, Mexico also challenges the application by the USDOC
of the "Zeroing Procedures" in the investigation and five periodic reviews on Stainless Steel Sheet and
Strip in Coils from Mexico . The list of the anti-dumping measures subject to Mexico's "as applied"
claims is as follows:
Investigation
Stainless Steel Sheet and Strip in Coils from Mexico , 64 FR 30790 (USDOC) (8 June 1999),
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 64 FR 40560
(USDOC) (27 July 1999)
Periodic Reviews
Stainless Steel Sheet and Strip in Coils from Mexico , 67 FR 6490 (USDOC) (12 February 2002),
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 67 FR 15542
(USDOC) (2 April 2002)
Stainless Steel Sheet and Strip in Coils from Mexico , 68 FR 6889 (USDOC) (11 February 2003),
subsequently amended as Stainless Steel Sheet and Strip in Coils from Mexico , 68 FR 13686
(USDOC) (20 March 2003)
Stainless Steel Sheet and Strip in Coils from Mexico, 69 FR 6259 (USDOC) (10 February 2004)
Stainless Steel Sheet and Strip in Coils from Mexico, 70 FR 3677 (USDOC) (26 January 2005)
Stainless Steel Sheet and Strip in Coils from Mexico, 70 FR 73444 (USDOC) (12 December 2005)
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1 Mexico requests the Panel to find that:
(1) Model zeroing, as applied in the investigation on Stainless Steel Sheet and Strip in
Coils from Mexico, is inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and
Articles 2.1, 2.4, 2.4.2, and 18.4 of the Anti-Dumping Agreement; and Article XVI:4
of the WTO Agreement;

(2) Model zeroing in investigations is, as such, inconsistent with Articles VI:1 and VI:2
of the GATT 1994 and Articles 2.1, 2.4, 2.4.2, and 18.4 of the Anti-Dumping
Agreement; and Article XVI:4 of the WTO Agreement;
(3) Simple zeroing in periodic reviews is, as su ch, inconsistent with Articles VI:1 and
VI:2 of the GATT 1994 and Articles 2.1, 2.4, 9.3, and 18.4 of the Anti-Dumping
Agreement, and Article XVI:4 of the WTO Agreement; and
(4) Simple zeroing, as applied in the five listed periodic reviews of Stainless Steel Sheet
and Strip in Coils from Mexico , is inconsistent with Articles VI:1 and VI:2 of the
GATT 1994 and Articles 2.1, 2.4, 9.3, and 18.4 of the Anti-Dumping Agreement, and
Article XVI:4 of the WTO Agreement.
2
3.2 The United States requests the Panel to dismiss Me xico's two "as such" claims because, in the
view of the United States, there exists under US law no such measure as the "Zeroing Procedures". In
the alternative, the United States requests the Pane l to reject Mexico's "as such" claim regarding
simple zeroing in periodic reviews because Mexico has failed to demonstrate that the Anti-Dumping
Agreement disallows zeroing in periodic reviews. For the same reason, the United States also
requests the Panel to reject Mexico's "as applied" claim regarding simple zeroing in the five periodic
reviews at issue. With regard to Mexico's "as a pplied" claim regarding the use of model zeroing in
the anti-dumping investigation on Stainless Steel Sheet and Strip in Coils from Mexico , the
United States acknowledges that the USDOC did use m odel zeroing in the investigation at issue. The
United States also recalls the r easoning of the Appellate Body in US – Softwood Lumber V that such
use was inconsistent with Article 2.4.2 of the Agreement and acknowledges that this reasoning is
equally applicable to Mexico's "as applied" claim at issue.3
IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of the parties are set out in their written submissions and oral statements to the
Panel and their answers to questions. The parti es' submissions and oral statements or executive
summaries thereof, are attached to this report as annexes (see List of Annexes, pages iii and iv).4
V. ARGUMENTS OF THE THIRD PARTIES
5.1 Chile, China, the European Communities, Jap an and Thailand reserved their rights to
participate in these panel proceedings as third par ties. Neither China nor Thailand provided a written
submission, and Chile did not submit an oral statemen t to the Panel. The arguments of the European
Communities and Japan are set out in their written s ubmissions and oral statements, the arguments of
Chile are set out in its written submission, and th e arguments of China and Thailand are set out in
their oral statements to the Panel. The third pa rties' submissions and oral statements, or executive
summaries thereof, are attached to this report as annexes (see List of Annexes, pages iii and iv).
VI. INTERIM REVIEW
6.1 On 5 October 2007, we submitted the interim report to the par ties. On 26 October 2007, the
United States submitted a written request for the review of precise aspects of the interim report.
Mexico did not make such a request. It did, howev er, direct the Panel's attention to a typographical

2 Response of Mexico to Question 2 from the Panel Following the First Meeting.
3 First Written Submission of the United States, para. 104; Response of the United States to
Question 12 from the Panel Following the First Meeting.
4 The English and Spanish versions of Mexico's executive summaries are reproduced as submitted by
Mexico in their original language.

error in the interim report. On 9 November 2007, Mexico submitted comments on the United States'
comments on the interim report. The United Stat es did not submit further comments since Mexico
had not submitted comments on the interim report.
6.2 We have outlined our treatment of the parties' requests below. In addition to the changes
explained below, where necessary, we also have ma de technical revisions to our report and corrected
typographical errors brought to our attention by the parties.
A. R
EQUEST OF THE UNITED STATES
6.3 First, the United States requests that paragraphs 3.2, 7.15 and 7.43 of our report be amended
in order to better reflect the United States' argum ents regarding Mexico's claim on model zeroing.
Mexico has not made any comment regarding th e United States' request. We have amended
paragraphs 3.2, 7.15 and 7.43 in order to accommodate the United States' concern.
6.4 Second, the United States request s that the last sentence of pa ragraph 7.30 be deleted. The
United States finds this sentence unnecessary to the Panel's analysis in the remainder of the paragraph.
The United States contends that this sentence implie s that only measures of "general and prospective"
application may be successfully challenged "as such " in WTO dispute settlement. The Unites States
notes, however, that this issue is not presented in this dispute. Furthermore, the United States is of the
view that the scope of an "as such" claim may not be so limited. The United States argues that a
measure that does not mandate WTO-inconsistent behaviour can not be successfully challenged "as
such" in WTO dispute settlement. According to th e United States, Article 3.2 of the DSU does not
stand for the proposition that ensuring "predictability and security" to the multilateral trading system
is an objective of the WTO dispute settlement system . Rather, Article 3.2 provides that the dispute
settlement system is a central element in providing " security and predictability" and that this is to be
done by preserving the rights and obligations of Members and by clarifying the provisions of the
WTO agreements.
6.5 Mexico disagrees with the United States' comment and asserts that it amounts to re-arguing
the case, which can not be done at the interim revi ew stage. Mexico argu es that the United States'
argument regarding the types of measures that may be subjected to WTO dispute settlement does not
constitute a comment regarding a precise aspect of th e interim report. Mexico also disagrees with the
second aspect of the United States' comment regardi ng paragraph 7.30 and contends that Article 3.2
of the DSU makes clear that "security and predictab ility" to the multilateral trading system is indeed
an object of the DSU.
6.6 We agree with the United States' contention that this dispute does not require us to decide
what types of measures may be challenged "as such" in WTO dispute settlement. The last sentence of
paragraph 7.30 of our report, therefore, does not reflec t an assessment of this issue. In the same vein,
our statement in the same paragraph regarding the term "security and predictability" referred to in
Article 3.2 of the DSU, is not intended to ascribe a precise meaning to this term. None of these two
statements are part of our legal reasoning with regard to Mexico's claims. We therefore decline to
amend paragraph 7.30.
6.7 Third, the United States submits that the rele vant part of paragraph 7.38 below does not
reflect the United States' position as to the accuracy of the expert opinion, submitted by Mexico to the
Panel, regarding the application of Model Zeroing Procedures under US law. The United States
requests that the Panel delete the sentence starti ng with "In response to questioning..." from this
paragraph. Mexico disagrees with the United States and argues that the sentence at issue contains a
fair description of the United States' comments re garding the expert opini on on the application of
Model Zeroing Procedures under US law.

6.8 We have deleted the sentence in paragraph 7.38 referred to by the United States and made
other changes to the paragraph in order to reflect the United States' position in a more comprehensible
fashion.
6.9 Fourth, the United States requests that we expl ain, in paragraph 7.40 of our report, the
provisions of US law pursuant to which the USDOC announced in the Federal Register that it would
no longer make average-to-average comparisons in investigations without taking into consideration all
comparable export transactions. To this end, the United States proposes adding a footnote to
paragraph 7.40. Mexico opposes the United States' request. According to Mexico, the USDOC's
notice described a practice that was not limited in sc ope or period of application. Regardless of the
domestic law requirements pursuant to which it was announced, therefore, the notice at issue
described a measure of general and prospective application.
6.10 In order to provide further factual clarifica tion regarding the notice published in the Federal
Register, we have added footnote 39 to paragraph 7.40. We have al so made certain technical changes
to the text of this paragraph at the request of the United States.
6.11 Fifth, the United States requests that we amend certain parts of paragraph 7.45 in order to
better describe our finding and to ensure its consis tency with other related findings that we have
made. Mexico objects on the grounds that the change s suggested by the United States would alter the
meaning of the Panel's findings. According to Me xico, the United States' comments imply that the
duty imposed in an investigation may be changed over time and that it may not have continuing
effect. We have amended paragr aph 7.45, taking into consideration the views expressed by both
parties.
6.12 Sixth, the United States notes our statement in paragraph 7.117 below to the effect that the
concept of "product as a whole" has been developed by the Appellate Body. The United States argues
that this concept was used for the firs t time by the European Communities in the EC – Bed Linen case
and wants this to be mentioned in a footnote to pa ragraph 7.117. Mexico objects to the United States'
request on the grounds that it amounts to re-arguing th e United States' case and that it is not related to
interim review. Furthermore, Mexico contends that whether a party to a previous dispute also used
the term "product as a whole" in its argumentation is not relevant to the issue of whether the term
"product" may be interpreted as referring to some thing narrower than the product under consideration
as a whole for purposes of these proceedings.
6.13 Our statement that the notion of "product as a whole" has been developed by the Appellate
Body is obiter dictum and thus has no bearing on our evaluation of Mexico's claims in these
proceedings. We therefore do not find important to mention when and in which context this concept
was first used in WTO dispute settlement. We have, however, made a modification to
paragraph 7.117 so as to note that this concept was developed in WTO dispute settlement generally,
without mentioning by whom.
6.14 Seventh, the United States takes issue with our reference to the object and purpose of specific
treaty provisions in paragraphs 7.119 and 7.148 below. The United States asserts that according to
Article 31(1) of the Vienna Convention on the Law of Treaties ("Vienna Convention"), it is the object
and purpose of the treaty, not specific provisions thereof, that has to be taken into consideration in the
interpretation of the treaty. The United States agre es with our interpretation based on the text of the
treaty and therefore argues that we do not need to refer to object and purpose. If, however, we choose
to make such a reference, the United States argues that we have to clarify that what we refer to is the
object and purpose of the treaty, not specific pr ovisions thereof. Mexico disagrees with the
United States and argues that Article 31(1) of the Vienna Convention does not preclude the interpreter
from taking into account the object and purpose of specific provisions of a treaty.

6.15 Article 31(1) of the Vienna Convention reads:
"ARTICLE 31
General rule of interpretation
1. A treaty shall be interpreted in goo d faith in accordance with the ordinary
meaning to be given to the te rms of the treaty in their
 context and in the light of its
object and purpose."5 (emphasis added)
6.16 We note that the term "object and purpose" in Article 31(1) is preceded by "its" whereas the
term "context" is preceded by "their". Thus, we c onsider that Article 31(1) refers to the object and
purpose of the treaty as a whole, rather then specific provisions thereof. Had drafters intended to refer
to the object and purpose of specific provisions, they would have used "their", not "its", before "object
and purpose", as in the case of the word "context". 6 We have therefore am ended paragraphs 7.119
and 7.148 of our report accordingly.
6.17 Eighth, the United States requests the Panel to am end the third sentence of paragraph 7.122 in
order to clarify that this sentence reflects Mexico 's arguments. Mexico objects to the United States'
request and contends that the mentioned sentence correctly reflects Mexico's views as contained in
paragraph 62 of its second written submission to the Pa nel. We note that it is clear that the sentence
referred to by the United States conveys Mexico's views regarding the object and purpose of the treaty
provisions cited therein. Furthermore, footnote 92 to the preceding sentence indicates where Mexico
presented the argument at issue. We therefore decline to make any changes to paragraph 7.122.
VII. FINDINGS
A. RELEVANT PRINCIPLES REGARDING STANDARD OF REVIEW, TREATY INTERPRETATION AND
BURDEN OF PROOF
1. Standard of Review
7.1 Article 11 of the DSU provides the standard of review for WTO panels in general. Article 11
imposes upon panels a comprehensive obligation to ma ke an "objective assessment of the matter", an
obligation which embraces all aspects of a panel's examination of the "matter", both factual and legal.7
7.2 Article 17.6 of the Anti-Dumping Agreement se ts forth the special standard of review
applicable to disputes under the Anti-Dumping Agreement:

5 (1969) 8 International Legal Materials 679.
6 We consider, however, that this does not preclude the interpreter from taking into account the object
and purpose of specific treaty provisions, where warranted. In this regard, we find support in the Appellate
Body's statement that "[t]o the extent that one can speak of the "object and purpose of a treaty provision", it will
be informed by, and will be in consonance with, the object and purpose of the entire treaty of which it is but a
component". Appellate Body Report, European Communities – Customs Classification of Frozen Boneless
Chicken Cuts ("EC – Chicken Cuts "), WT/DS269/AB/R, WT/DS286/AB/R, and Corr.1, adopted
27 September 2005, para. 238.
7 Article 11 of the DSU provides in part:
"The function of panels is to assist the DSB in discharging its responsibilities under this
Understanding and the covered agreements. Acco rdingly, a panel should make an objective
assessment of the matter before it, including an objective assessment of the facts of the case
and the applicability of and conformity with th e relevant covered agreements, and make such
other findings as will assist the DSB in making the recommendations or in giving the rulings
provided for in the covered agreements."

 "(i) in its assessment of the facts of the matter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of
those facts was unbiased and objective. If the establishment of the facts was proper
and the evaluation was unbiased and objectiv e, 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 Agreemen t admits of more than one permissible
interpretation, the panel shall find the author ities' measure to be in conformity with
the Agreement if it rests upon one of those permissible interpretations."

Thus, taken together Article 11 of the DSU a nd Article 17.6 of the Anti-Dumping Agreement
establish the standard of review we must apply with respect to both the factual and the legal aspects of
the present dispute.

2. Rules of Treaty Interpretation
7.3 Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the
provisions of the covered agreements "in accordance with customary rules of interpretation of public
international law". It is generally accepted that these customary rules are reflected in Articles 31-32
of the Vienna Convention on the Law of Treaties ("Vienna Convention" ). Article 31(1) of the
Vienna Convention provides:

"A treaty shall be interpreted in good faith in accordance with the ordinary meaning
to be given to the terms of the treaty in their context and in the light of its object and
purpose."

7.4 In the context of disputes under the Anti-Dumping Agreement, the Appellate Body has stated
that:
"The first sentence of Article 17.6(ii), echoing closely Article 3.2 of the DSU, states
that panels 'shall' interpret the provisions of the AD Agreement 'in accordance with
customary rules of interpretation of public international law'. Such customary rules
are embodied in Articles 31 and 32 of the Vienna Convention on the Law of Treaties
 ('Vienna Convention' ). Clearly, this aspect of Article 17.6(ii) involves no 'conflict'
with the DSU but, rather, confirms that th e usual rules of treaty interpretation under
the DSU also apply to the AD Agreement. …
The second sentence of Article 17.6(ii) … presupposes that application of the rules
of treaty interpretation in Articles 31 and 32 of the Vienna Convention could give
rise to, at least, two interpretations of some provisions of the AD Agreement, which,
under that Convention, would both be ' permissible interpretations'. In that event, a
measure is deemed to be in conformity with the AD Agreement "if it rests upon one
of those permissible interpretations."8 (emphasis in original)
7.5 Thus, under the Anti-Dumping Agreement, we have to follow the same rules of treaty
interpretation as in any other dispute. Furthermore, Article 17.6(ii) provides explicitly that if we find

8 Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel Products
from Japan ("US – Hot-Rolled Steel"), WT/DS184/AB/R, adopted 23 August 2001, DSR 2001:X, 4697, paras. 57
and 59.

more than one permissible interp retation of a provision of the Anti-Dumping Agreement, we have to
uphold a measure that rests on one of those interpretations.
3. Burden of Proof
7.6 The general principles applicable to burden of proof in WTO dispute settlement require that a
party claiming a violation of a provision of the WT O Agreement by another Member assert and prove
its claim.
9 Mexico as the complaining party must therefore make a prima facie case of violation of
the relevant provisions of the relevant WTO ag reements, which the respondent must refute. A prima
facie case must be based on evidence and legal argument put forward by the complaining party in
relation to each of the elements of the claim. 10 We also note that it is generally for each party
asserting a fact, whether complainant or respondent, to provide proof thereof. 11 In this respect,
therefore, it is also for the United States to provi de evidence for the facts which it asserts. We also
recall that a prima facie case is one which, in the absence of eff ective refutation by the other party,
requires a panel, as a matter of law, to rule in favour of the party presenting the prima facie case.
B. TERMINOLOGY USED TO DESCRIBE THE MEASURES AT ISSUE
7.7 The term "zeroing" refers to the calculation of a weighted average margin of dumping in a
manner that does not fully reflect export prices that are above the normal value. Mexico takes issue
with two different types of "zeroing": "model zeroing in investigations" and "simple zeroing in
periodic reviews". According to Mexico's descr iption, "model zeroing in investigations" occurs
where the investigating authorities compare the we ighted average normal value and the weighted
average export price for each model of the product un der consideration and treat as zero the results of
model-specific comparisons where the weighted average export pri ce exceeds the weighted average
normal value, when such comparisons are aggreg ated for purposes of calculating the margin of
dumping for the product under consideration as a whole in an anti-dumping investigation. 12 "Simple
zeroing in periodic reviews" is used by Mexico to refer to a method whereby the authorities compare
individual export transactions against monthly wei ghted average normal values and do not fully take
into account the results of comparisons where the export price exceeds the monthly weighted average
normal value when such results are aggregated in order to calculate the margin of dumping for the
product under consideration as a whole in a periodic review.13
7.8 The United States submits that these terms used by Mexico to describe the measures at issue
in these proceedings are not found under US law an d asks the Panel not to make any inferences from
them.14
7.9 We note that the terms "zeroing", "model zeroi ng in investigations" or "simple zeroing in
periodic reviews" are not found under US law. Nor are they mentioned anywhere in the Anti-
Dumping Agreement. We also note, however, that a number of WTO panels and the Appellate Body
have, in the past, used the same or similar terms in order to describe the measure before them. We
also find it useful to use the same terminology in our analysis in this report. We would like to
emphasize, however, that our use of these terms is for ease of reference only and shall not be
interpreted as an assessment of their WTO-compatibility.

9 Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses
from India ("US – Wool Shirts and Blouses "), WT/DS33/AB/R and Corr.1, adopted 23 May 1997,
DSR 1997:I, 323 at 337.
10 Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling
and Betting Services ("US – Gambling"), WT/DS285/AB/R, adopted 20 April 2005, para. 140.
11 Appellate Body Report, US – Wool Shirts and Blouses, supra, note 9, para. 337.
12 First Written Submission of Mexico, para. 15.
13 First Written Submission of Mexico, para. 21.
14 First Written Submission of the United States, footnote 38.

C. TERMS OF REFERENCE
7.10 Mexico, in its First Written Submission, iden tified the measure at issue as the "Zeroing
Procedures" applied by the United States in all pro cedural contexts and in relation to all types of
methods of comparison between the normal value and the export price. That is, Mexico challenged
one single measure, the "Zeroing Procedures", manifested in different contexts. 15 The United States
in its First Written Submission argued that Mexico had not identified the "Zeroing Procedures" as a
single measure in its request for consultations and its request for the establishment of a panel.
According to the United States, Mexico had identif ied two measures in connection with its "as such"
claims in its request for establishment: "model zeroing in investigations" and "simple zeroing in
periodic reviews". The United States therefore asked the Panel to disregard Mexico's "as such" claim
regarding the "Zeroing Procedures" in all contexts and with regard to all kinds of comparisons
between the normal value and the export price, and limit these proceedings to the two "as such"
claims specifically raised in Mexico's panel request . In response to questioning on this issue, Mexico
acknowledged that as far as its "as such" claims were concerned, the scope of its panel request was
limited to "model zeroing in investigations" and "simple zeroing in periodic reviews". Mexico
pointed out:
"[A]s clarified in its oral responses to the questions from the Panel, Mexico's claims
are limited to the two manifestations of the "Zeroing Procedures" that are described in
its request— (1) the use of model zeroing in original investigations; and (2) the use
of simple zeroing in periodic reviews."16 (emphasis added)
7.11 Article 7 of the DSU provides that the terms of reference of a panel are determined by the
scope of the complaining party's panel request. Bo th parties agree that as far as Mexico's "as such"
claims are concerned, its panel request is limite d to "model zeroing in investigations" and "simple
zeroing in periodic reviews". A textual analysis of Mexico's panel request, in our view, confirms this
conclusion. The request contains no mention of pr oceedings other than investigations and periodic
reviews and no mention of comparison methodologies other than the weighted average to weighted
average ("WA-WA") methodology in investigations and the weighted average to transaction ("WA-
T") methodology in periodic reviews. The word "rev iew" is preceded by the word "periodic" in each
instance it is used in the request. Hence, it is cl ear that our terms of reference in these proceedings
only contain two "as such" claims by Mexico, i.e. "model zeroing in investigations" and "simple
zeroing in periodic reviews". We shall, therefore, only address these two "as such" claims by Mexico,
because "[a] panel cannot assume jurisdiction that it does not have". 17 We would like to emphasize,
however, that our conclusion here concerns solely th e jurisdictional issue raised by the United States
as to whether the Panel may address Mexico's "a s such" claims other than "model zeroing in
investigations" and "simple zeroing in periodic revi ews". Whether or not the measures pertaining to
these two claims actually exist under US law is a separate issue which we address below as part of our
substantive assessment of Mexico's claims.

15 See, for instance, First Written Submission of Mexico, para. 12.
16 Response of Mexico to Question 1(a) from the Panel Following the First Meeting.
Mexico repeated the same point in its Responses to Questions 1(b), 2 and 3 from the Panel Following
the First Meeting.
17 Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products ("India – Patents (US)"), WT/DS50/AB/R, adopted 16 January 1998, DSR 1998:I, 9, para. 92.

D. M
ODEL ZEROING IN INVESTIGATIONS
1. Arguments of Parties
(a) Mexico
7.12 Mexico has raised an "as such " as well as an "as applied" claim regarding model zeroing in
investigations. Mexico argues that the rul es and procedures relating to model zeroing in
investigations are embodied in what Mexico d escribes as the "Zeroing Procedures" under US law.
According to Mexico, in investigations where the US investigating authorities carry out intermediate
calculations for the product under consideration, on the basis, among others, of models or
transactions, and then aggregate the intermediate cal culations to calculate the margin for the product
under consideration, they do not fully take into acco unt the results of intermediate calculations where
the export price exceeds the normal value. In other words, the US authorities treat negative results as
zero. This, in Mexico's view, gives rise to a num ber of inconsistencies with the United States' WTO
obligations.
7.13 First, Mexico argues that model zeroing is inconsistent with Articles VI:1 and VI:2 of the
GATT 1994 and Article 2.1 of the Anti-Dumping Agreement because it precludes the calculation of a
margin of dumping for the product under considera tion as a whole. The ultimate margin only reflects
part of the calculations for the product under consideration because negative results in the
intermediate calculations are treated as zero. Second, Mexico contends that model zeroing in
investigations is inconsistent with Article 2. 4.2 of the Anti-Dumping Agreement because it precludes
the calculation of a margin of dumping based on a weighted average of prices of all comparable
export transactions for the product under consideration as a whole. Third, Mexico submits that model
zeroing in investigations is inconsistent with the obligation to carry out a fair comparison between the
normal value and the export price as required unde r Article 2.4 of the Anti-Dumping Agreement
because it artificially reduces the prices of certain export transactions. Fourth, Mexico argues that as
an "administrative procedure" within the mean ing of Article XVI:4 of the WTO Agreement and
Article 18.4 of the Anti-Dumping Agreement, model zer oing in investigations is inconsistent with the
obligations set forth in these provisions.
7.14 In addition to its "as such" claim regarding model zeroing in investigations, Mexico also
contends that model zeroing "as applied" in the anti-dumping investigation on Stainless Steel Sheet
and Strip in Coils from Mexico is, for the same reasons mentioned in connection with its "as such"
claim, inconsistent with the United States' WTO obligations.
(b) United States
7.15 The United States contends that there exists no such measure as the "Zeroing Procedures"
under US law and therefore invites the Panel to di smiss Mexico's "as such" claim regarding model
zeroing in investigations. Even if the Panel finds that such a measure existed at the time the Panel
was established, the United States directs the Panel's attention to the fact that through a policy change
that came into effect on 22 February 2007, the USDOC stopped using model zeroing in investigations
as from the mentioned date. Regarding Mexico's "as applied" claim, the United States acknowledges
that the USDOC applied model zeroing in the anti-dumping investigation on Stainless Steel Sheet and
Strip in Coils from Mexico . The United States also recognizes that in US – Softwood Lumber V, the
Appellate Body found the use of model zeroing to be inconsistent with Article 2.4.2 of the Agreement
and that the Appellate Body's reasoning in that respect is equally applicable to this claim.18

18 Supra, note 3.

2. Arguments of Third Parties
7.16 We note that although Mexico acknowledged, subsequent to its First Written Submission, that
the scope of its panel request was limited to "mode l zeroing in investigations" and "simple zeroing in
periodic reviews", some of the third parties also addressed other types of zeroing because they
prepared their submissions before Mexico's written acknowledgement regarding the scope of its panel
request.
(a) Chile
7.17 Chile contends that the WTO-inconsistency of the zeroing methodology in investigations has
been confirmed by previous Appellate Body deci sions and expresses hope that this issue will be
resolved on a multilateral level through amendment of the Anti-Dumping Agreement. Continued
adjudication between WTO Members on this issue, which is costly and time consuming, should
therefore be avoided. Chile submits that zeroing not only inflates the margin of dumping, but also
yields a positive determination of dumping where th ere would have been no dumping absent zeroing.
Chile therefore asks the Panel to find that zeroing is inconsistent with Article s VI:1 and VI:2 of the
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement.
(b) China
7.18 Based on the WTO jurisprudence regarding zeroi ng, China argues that irrespective of the
methodology used for the comparison of the normal value and the export price, the use of zeroing in
investigations is inconsistent with Articles 2.1, 2.4.2, and 2.4 of the Anti-Dumping Agreement. China
is of the view that the Panel should not depart from the Appellate Body's jurisprudence because the
arguments presented by the United States in these proceedings do not differ from the arguments raised
in prior cases. China therefore invites the Pa nel to accept Mexico's claims and expects the
United States to eliminate the use of zeroing in all anti-dumping proceedings.
(c) European Communities
7.19 The European Communities' third party submission mainly focuses on the WTO
jurisprudence on zeroing and discusses in detail the significance of adopted Appellate Body reports
for WTO panels dealing with similar legal issu es. More specifically, the European Communities
summarizes previous panel and Appellate Body findings on zeroing, with a particular emphasis on the
latter, and notes that all the issues raised by Mexi co in this case have alread y been discussed by the
Appellate Body and that a relatively consiste nt line of jurisprudence has emerged. The
European Communities then looks into the principle of stare decisis , i.e. the binding effect of
previous court decisions on subsequent cases. In this regard, the European Communities first
analyses the principle in the context of national legal systems and observes that unlike common law
jurisdictions where lower courts are required to follo w the decisions of higher courts on similar legal
issues, in civil law jurisdictions the main task assign ed to courts is to apply the written legal texts to
the facts presented in a given case. Yet, the Eu ropean Communities observes, courts in civil law
jurisdictions do follow the decisions of higher courts carefully and apply them to similar issues raised
before them. Likewise, the European Communities notes that high courts in civil law jurisdictions,
such as Italy and France, also follow their own jurisprudence as a matter of judicial policy and
practice. Furthermore, the European Communities points out that some judges even follow the
decisions made by other courts at the same level.
7.20 As far as the international tribunals are concerned, the European Communities notes that stare
decisis in principle does not apply in such tribunals a nd there is no legal norm that requires them to
follow previous decisions by higher courts. Th e European Communities points out, however, that in
practice most international tribunals do give certain weight to precedents when dealing with similar

legal issues. In this regard, the European Comm unities mentions the practice of the European Court
of Human Rights, the International Court of Justice, the International Tribunal for the Law of the Sea,
the International Criminal Tribunal for the Former Yugoslavia, the International Criminal Tribunal for
Rwanda, the International Criminal Court and the In ternational Centre for Settlement of Investment
Disputes. The European Communiti es also notes that when a lower court considers it appropriate to
depart from the jurisprudence of its higher court, it generally identifies a cogent reason for such
departure.
7.21 On the more specific issue of "precedent in the WTO dispute settlement system", the
European Communities notes that there is no rule that requires WTO panels to follow adopted
Appellate Body decisions and that such decisions are binding only on the parties to the proceedings
and with regard to the dispute at issue. Noneth eless, the European Communities observes that panels
in practice do follow Appellate Body decisions when dealing with similar legal issues. Through its
decisions, the Appellate Body strives to establish c onsistency in its case la w by citing its previous
decisions where appropriate. According to the EC , this serves the need to provide "security and
predictability to the multilateral trading system", as set forth in Article 3.2 of the DSU. The European
Communities endorses this approach b ecause "the need for security and predictability is also thought
to require consistency in WTO case law, including in particular the Appellate Body decisions relating
to questions of law and legal interp retations of the covered agreements".
19 Furthermore, the
European Communities argues that Appellate Body d ecisions should be accorded particular authority
by panels even though there is no written rule that requires them to do so. The
European Communities recalls the pronouncements of the Appellate Body itself on this issue,
including in US – Oil Country Tubular Goods Sunset Reviews where the Appellate Body opined that
panels were expected to follow adopted Appellate Body decisions where the issues are the same.
With regard to the dispute at i ssue, the European Communities consid ers Mexico's claims to be based
on a consistent line of reasoning and findings developed by the Appellate Body. In the
European Communities' view, the Appellate Body's jurisprudence on zeroing represents the correct
legal analysis. In the interest of ensuring secu rity and predictability for the multilateral trading
system, the European Communities subm its that this jurisprudence has to be followed by the Panel in
this case.
(d) Japan
7.22 Japan generally submits that the "Zeroing Pr ocedures" used by the US investigating
authorities constitute a measure of general and prospective application and therefore may be
challenged "as such" in WTO dispute settlement pr oceedings. Japan recalls the Appellate Body
findings in previous zeroing cases and argues that these findings should be followed by the Panel in
these proceedings. More specifically, Japan conte nds that the "Zeroing Procedures" challenged by
Mexico in this case are the same as those found to be WTO-inconsistent by the Appellate Body in
US – Zeroing (Japan) and contends that such past rulings sh ould be followed in this case to ensure
security and predictability for the international trading system.
7.23 Japan generally agrees with Mexico that the use of zeroing in investiga tions is inconsistent
with Articles 2.1, 2.4.2 and 2.4 of the Anti-Dumpi ng Agreement. Japan specifically supports Mexico
with respect to investigations where the T-T met hodology is used, but also claims that the same
inconsistency arises in the context of the WA-W A and the WA-T methodologies. Japan submits that
the definition of dumping in Article VI:1 of th e GATT 1994 and Article 2.1 of the Anti-Dumping
Agreement requires the investigating authorities to make a determination of dumping for the product
under consideration as a whole, irrespective of the methodology used for the comparison of the
normal value and the export price. If the authorities carry out multiple comparisons, the results of all
such intermediate comparisons have to be taken into considerati on in determining the margin of

19 Written Submission of the European Communities, para. 160.

dumping for the product under consideration as a w hole. Finally, Japan asserts that zeroing in
investigations is inconsistent w ith the obligation to carry out a fair comparison between the normal
value and the export price as required under Article 2.4 of the Agreement.
(e) Thailand
7.24 Thailand considers the use of zeroing to be in consistent with the letter and the spirit of
Article VI of the GATT 1994 and the Anti-Dumping Agreement. According to Thailand, as the
Appellate Body has consistently held in the past zeroing cases, whenever investigating authorities use
intermediate price comparisons while calculating the margin of dumping, they should take into
account the results of all such comparisons wher e the export price exceeds the normal value.
Thailand therefore invites the Panel to follow this line of reasoning in this case and accept Mexico's
claims with regard to model zeroing in investig ations, irrespective of the comparison methodology
used.
3. Evaluation by the Panel
7.25 Mexico has raised an "as such " as well as an "as applied" claim regarding model zeroing in
investigations. Below, we analyse each in turn.
(a) Model Zeroing in Investigations "As Such"
7.26 Mexico's "as such" claim on model zeroing in i nvestigations raises the issue of the alleged
existence of the measure at issue. Mexico submits that there exists, under US law, such a measure as
the "Zeroing Procedures" as manifested in anti-dum ping investigations where the normal value and
the export price are compared on a WA-WA basis. In other words, Mexico asserts the existence of a
measure called the "Zeroing Procedures" relativ e to model zeroing in investigations. The
United States disagrees with Mexico's assertion th at such a measure as the "Zeroing Procedures"
exists under US law and therefore invites the Pane l to dismiss Mexico's " as such" claim regarding
model zeroing in investigations.
7.27 Mexico, in certain instances in its subm issions, refers to this measure as the Model Zeroing
Procedures.20 We find this expression useful because it ser ves to distinguish the measure at issue in
connection with Mexico's "as such" claim on mode l zeroing in investigations from the measure at
issue in connection with Mexico's "as such" claim on simple zeroing in periodic reviews. For ease of
reference, therefore, we shall use this expression to refer to the specific measure at issue in connection
with the claim at issue.
(i) Alleged Existence of the Model Zeroing Procedures
7.28 The first issue that we have to address regarding Mexico's "as such" claim on model zeroing
in investigations is whether the measure exists. We note that this inquiry concerns the alleged
existence of the Model Zeroing Procedures at the time of the establishment of this Panel. Assuming
that this measure existed when this Panel was established, th e parties disagree whether it was
subsequently withdrawn by the United States. Th e United States asserts that it was, but Mexico
disagrees. If we find that the measure existed at th e time of the establishment of this Panel, we will
also have to address the issue of whether it was subsequently withdrawn. Furthermore, if we find that
the measure was indeed withdrawn subsequent to the establishment of this Panel, we will also have to
decide whether to make findings and rulings on an expired measure.

20 See, for instance, First Written Submission of Mexico, paras. 57 and 61.

Did the Model Zeroing Procedures Exist As of the Time of the Establishment of the Panel

7.29 We are cognizant that we can only address the substance of Mexico's "as such" claim on
model zeroing in investigations if there ex ists, under US law, such a measure as the Model Zeroing
Procedures. We recall that the principles on the burde n of proof applicable in these proceedings
(supra, para. 7.6) require Mexico to present evidence sufficient to demonstrate the existence of such
measure.
7.30 The types of measures that can be subject to the WTO dispute settlement proceedings have
not been specified in the DSU. Article 3.3 of the DSU mentions that the WTO dispute settlement
mechanism deals with the "measures taken by a Member". This indicates that there has to be a nexus
between the measure that is contested and the Member against which the complaint is brought. 21 It
does not, however, speak directly to the question of what types of measures may be challenged. We
note, however, that this issue is not novel in the WTO dispute settlement system. A reading of the
Appellate Body's decisions on this issue reveals that the concept of a "measure" that can be
challenged in WTO dispute settlement is to be interpreted broadly. Recently, in US – Corrosion-
Resistant Steel Sunset Review , the Appellate Body reasoned that "[i]n principle, any act or omission
attributable to a WTO Member can be a measure of that Member for purposes of dispute settlement
proceedings".
22 The Appellate Body further indicated that a measure, for purposes of the WTO
dispute settlement proceedings, consists "not onl y of particular acts applied only to a specific
situation, but also of acts setting forth rules or norms that are intended to have general and prospective
application".23 We agree with the Appellate Body's a pproach regarding the concept of a "measure"
for purposes of the WTO dispute settlement proceedings . In our view, not allowing "as such" actions
against measures of general and prospective app lication would undermine the objective of ensuring
the "security and predictability to the multilateral tr ading system" referred to in Article 3.2 of the
DSU.
7.31 The United States does not disagree with the no tion that the WTO dispute settlement system
applies to, among others, acts that set forth norms that have a general and prospective application. It
argues, however, that Mexico has not presented ev idence sufficient to prove that such a measure
exists in this case. We note that the issue of proving the existence of a measure subject to an "as
such" claim has been discu ssed by the Appellate Body on several occasions. In US – Oil Country
Tubular Goods Sunset Reviews, the United States, the Member complained against in that case, argued
that because the Sunset Policy Bulletin was not a legal instrument that was binding for the US
authorities, it did not constitute a meas ure subject to WTO dispute settlement.
24 The Appellate Body
disagreed. According to the Appellate Body, the status of the Sunset Policy Bulletin was not relevant to
the question of whether it could be challenged in the WTO. What mattered was whether it constituted a
measure subject to WTO di spute settlement. The Appellate Body reasoned that the Sunset Policy
Bulletin had normative value, that it had general and prospective applicati on and concluded that it
constituted a measure subject to the WTO dispute settlement.25
7.32 The measure at issue in these proceedings is different from the Sunset Policy Bulletin in that
unlike the Sunset Policy Bulletin, the Model Zeroing Procedures are not manifested in a written form.

21 Appellate Body Report, United States – Laws, Regulations and Methodology for Calculating
Dumping Margins ("Zeroing") ("US – Zeroing (EC)"), WT/DS294/AB/R, adopted 9 May 2006, para. 187.
22 (footnote omitted) Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion-Resistant Carbon Steel Flat Products from Japan ("US – Corrosion-Resistant Steel Sunset Review"),
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3, para. 81.
23 (footnote omitted) Ibid., para. 82.
24 Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country
Tubular Goods from Argentina ("US – Oil Country Tubular Goods Sunset Reviews"), WT/DS268/AB/R, adopted
17 December 2004, DSR 2004:VII, 3257, para. 184.
25 Ibid., para. 187.

In our view, however, it would be inconsistent with the above-described approach regarding the concept
of a "measure" to hold that only written instruments may constitute a measure. We do not, therefore,
attribute a decisive role to the form in which the measure is manifested in considering whether the
Model Zeroing Procedures may be challenged in the WTO. We note that this very issue arose in the
recent US – Zeroing (EC) case which also involved zeroing and that the Appellate Body made a ruling
along these same lines.
26 Nonetheless, the Appellate Body ca utioned that a panel must not lightly
assume the existence of a rule or norm constituting a measure of general and prospective application,
especially when it is not in the form of a written document. 27 The Appellate Body identified certain
criteria that a measure should possess in order to be susceptible to a challenge in the WTO dispute
settlement proceedings:
"In our view, when bringing a challenge against such a "rule or norm" that constitutes
a measure of general and prospective appli cation, a complaining party must clearly
establish, through arguments and supporting evid ence, at least that the alleged "rule
or norm" is attributable to the responding Member ; its precise content ; and indeed,
that it does have general and prospective application . It is only if the complaining
party meets this high threshold, and puts forward sufficient evidence with respect to
each of these elements, that a panel would be in a position to find that the "rule or
norm" may be challenged, as such. This evidence may include proof of the
systematic application of the challenged "rul e or norm". Particular rigour is required
on the part of a panel to support a conclusion as to the existence of a "rule or norm"
that is not expressed in the form of a written document. A panel must carefully
examine the concrete instrumentalities that evidence the existence of the purported
"rule or norm" in order to conclude that such "rule or norm" can be challenged, as
such."28 (footnote omitted, emphasis added)
7.33 In so far as the claim at issue here, we recall that the alleged measure is the Model Zeroing
Procedures. Turning to the criteria pronounced by the Appellate Body, we note that the measure
challenged by Mexico is attributable to the United States . The fact that model zeroing occurs in
connection with the margin calculations in anti- dumping investigations carried out by the USDOC
clearly indicates this.
7.34 Regarding the precise content of the Model Zeroing Procedures , Mexico points to various
instruments. Mexico contends that the following constitute evidence that describes the content of the
Model Zeroing Procedures: (a) the Standard Computer Programme used by the USDOC, (b) the Anti-
Dumping Manual, (c) the application of the Model Zeroing Procedures in the investigation on
Stainless Steel Sheet and Strip in Coils from Mexico, (d) further evidence on the consistent application
of the Model Zeroing Procedures in all investigations previous ly conducted by the USDOC, and (e)
evidence showing continued application of the Model Zeroing Procedures in current investigations.
7.35 First, regarding the Standard Computer Progra mme used for dumping margin calculations by
the USDOC, Mexico argues that the Standard Ze roing Line incorporated in this programme
implements the Model Zeroing Procedures in investigations. That is, the Standard Computer
Programme used by the USDOC treats as zero the results of intermediate comparisons yielding
negative margins when the comparisons are aggregat ed for the calculation of the overall margin of
dumping for the product as a whole. An expert opi nion presented by Mexico confirms this assertion
and further explains how model zeroing is carried out in investigations. 29 The expert opinion also

26 Appellate Body Report, US – Zeroing (EC), supra, note 21, paras. 190-193.
27 Ibid., para. 196.
28 Ibid., para. 198.
29 Exhibit MEX-1, paras. 29-35.

indicates that the USDOC has never changed th e zeroing line of this Standard Computer
Programme.
30
7.36 Second, Mexico cites the Anti-Dumping Manua l used by the USDOC as further evidence
indicating that the USDOC regularly uses the Standard Computer Programme in its margin
calculations in investigations. The Manual provides, in relevant parts:
"III. PROGRAMMING PROCEDURES
The basic elements of the new PC progr amming procedures for investigations and
reviews are validated databases, proper calculation methodologies, the best computer
platform, and standard programs. The pur pose of the procedures is to improve the
accuracy and consistency of computer calculations. Calculation accuracy occurs
when a program has been thoroughly checked. Accuracy is a function of both using
validated databases in standard programs and checking calculations for computational
and substantive correctness. Calculation consistency occurs when every program
uses the same standard calculation methodology."
31
We note that the Manual shows that the USDOC is expected to use the Standard Computer
Programme consistently in its margin calculations in investigations.
7.37 Third, Mexico points to the application of the Model Zeroing Procedures in the investigation
on Stainless Steel Sheet and Strip in Coils from Mexico , as proof of the existence of such Procedures.
We note that the United States acknowledges that the USDOC did use model zeroing in the
investigation on Stainless Steel Sheet and Strip in Coils from Mexico.
32
7.38 Fourth, Mexico asserts that the US DOC has consistently applied the Model Zeroing
Procedures in past investigations. Mexico substan tiates this assertion through an expert opinion,
statements made by the United States before the pr evious WTO panels and th e factual findings made
by those panels. The expert opinion states that the Model Zeroing Procedures have been a consistent
element of the USDOC's dumping margin calculation in all proceedings. 33 In response to questioning
in this regard, the United States has argued that the expert's description of the application of Model
Zeroing Procedures under US law was inaccurate in so far as it suggested that the USDOC was bound
by the Standard Computer Programme. According to the United States, the expert opinion only
describes the basic templates in the computer programme, which the USDOC has discretion to
change. The United States also cites instances where the expert herself acknowledges that the
USDOC made changes to the computer programmes, albeit in the context of periodic reviews. The
United States acknowledges, however, that these cha nges did not include the zeroing aspects of the
programmes.
34 Although the United States asserts th at the Assistant Secretary for Import
Administration has discretion to change the com puter programmes used by the USDOC, including
their zeroing aspects, the United States stated that such discretion had never been used until the policy
change, dated 22 February 2007, with regard to i nvestigations where the normal value and the export
price were compared on a WA-WA basis.35

30 Exhibit MEX-1, paras. 16-17.
31 Exhibit MEX-4D, p.8.
32 Supra, note 3.
33 Exhibit MEX-1, paras. 15-17.
34 Response of the United States to Question 5 from the Panel Following the First Meeting.
35 Response of the United States to Question 2 from the Panel following the Second Meeting.

7.39 Finally, Mexico refers to the fact that the Model Zeroing Procedures were followed in every
investigation conducted after January 2006. 36 While not providing a full list of these investigations,
Mexico mentions certain examples where the USDOC defended the use of zeroing in some of these
investigations.37
7.40 It seems clear to us, on the basis of the fo regoing, that Mexico has presented evidence
sufficient to demonstrate the precise content of the Model Zeroing Procedures "as such" under
US law. In our view, the eviden ce about the precise content of the Model Zeroing Procedures ,
particularly the parts of the Anti-Dumping Manual that we cited above which indicate that the
USDOC had to follow the Standard Computer Progr amme consistently in investigations, also
demonstrates that these Procedures had general and prospective application
. This shows that the
Model Zeroing Procedures went beyond mere repetition of a certain methodology to specific cases
and had become a "deliberate policy". 38 We observe below (paras. 7. 44-7.45), that the USDOC made
its policy change entailing the termination of mode l zeroing in investigations through an official
notice in the Federal Register. 39 In our view, this confirms that the Model Zeroing Procedures had,
until such change, a general and prospective application.
7.41 The United States argues that Mexico has not demonstrated the existence of the Model
Zeroing Procedures as a measure that could be challenged be fore a WTO panel. The United States
criticizes Mexico's reliance on past panel and Appellate Body findings regarding the existence of the
zeroing procedures and argues that "a separate pane l's findings are not evidence, but conclusions
based on evidence". 40 We note that other WTO panels as well as the Appellate Body have made
similar findings in cases that concerned the zeroing methodology applied by the United States in anti-
dumping proceedings. Our findings are, however, based on the evidence presented by Mexico in
these proceedings, not on the WTO jurisprudence. We therefore disagree with the United States'
assertion.
7.42 On the basis of the foregoing considerations, we conclude that Mexico has presented evidence
sufficient to demonstrate the existence of the Model Zeroing Procedures under US law as of the date
of establishment of this Panel.
Were the Model Zeroing Procedures Subsequently Repealed by the United States?
7.43 The United States submits that as of 22 February 2007, the USDOC stopped using model
zeroing in investigations. Mexico acknowledges that the United States did make such a change in its
practice regarding model zeroing in investigations and that it applied its new practice in at least one
investigation initiated sub sequent to this date. 41 Mexico, however, considers that the United States
has not eliminated the practice of model zeroing in investigations because this change in policy only

36 Mexico has not explained the significance of January 2006. Our understanding is that the
importance of this date in terms of the submission of evidence regarding the continued application of Model
Zeroing Procedures is because it supersedes the date of the USDOC's determination in the last periodic review
on Stainless Steel Sheet and Strip in Coils from Mexico , i.e. 12 December 2005. See, First Written Submission
of Mexico, para. 136.
37 First Written Submission of Mexico, paras. 76-78.
38 See, Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews
("US – Zeroing (Japan)"), WT/DS322/AB/R, adopted 23 January 2007, para. 85.
39The United States submits that the Federal Regi ster notice announcing th at the USDOC would no
longer make average-to-average comparisons in investigations without taking into consideration all comparable
export transactions was issued in co nnection with the implementation of DSB rulings and recommendations in
the US – Zeroing (EC) dispute, as required under US law [Section 123(g) of the Uruguay Round Agreements
Act (19 U.S.C. § 3533(g))]. Comments of the United States on the interim report of the Panel, para. 6.
40 First Written Submission of the United States, para. 40.
41 Response of Mexico to Question 13 from the Panel Following the First Meeting.

affects the investigations ongoing as of, or initiated af ter, 22 February 2007. Mexico also argues that
as long as the impact of model zeroing on existing anti-dumping measures is not removed, the
measure cannot be considered to have been eliminated.
7.44 The official notice repealing model zeroing in investigations, published in the US Federal
Register, reads in relevant parts:
"Final Modification Concerning the Ca lculation of the Weighted-Average
Dumping Margin During an Antidumping Investigation
After considering all of the comments subm itted, the Department is adopting this
final modification concerning the calcula tion of the weighted-average dumping
margin. The Department will no longer make average-to-average comparisons in
investigations without providing offsets for non-dumped comparisons."
42
"Timetable
The effective date of this notice is 16 Janua ry 2007 ... The Department will apply this
final modification in all current and futu re antidumping investigations as of the
effective date."43
The effective date of this modification was subsequently changed to 22 February 2007.44
7.45 We note that, as Mexico also concedes, the no tice makes clear that the practice of model
zeroing in investigations was to be eliminated as of 22 February 2007. The United States also
submitted evidence that the new method applied in at least one investigation. 45 We also note that the
notice unambiguously states that the new policy will ha ve prospective effect only. It will apply to
investigations ongoing as of, or initiated after, the e ffective date of the notice. The issue therefore
becomes whether in these circumstances Mexico's as sertion that the measure relating to Mexico's "as
such" claim regarding model zeroing in investigations has not been eliminated, can be sustained. In
our view, it cannot. We recall that we are now considering an "as such" challenge to a rule or norm of
general and prospective application. Whether the change in the United States' practice has
retrospective effect does not have a bearing on th e more general question of whether the measure has
been repealed. The fact that the impact of th e repealed measure will continue as long as the anti-
dumping duty rates previously calcu lated through the use of model zeroing remain in place does not
change the fact that the measure itself is no longer in force, and that it will not be followed in the
future investigations. We therefore conclude that the measure at issue, i.e. the Model Zeroing
Procedures under US law, expired on 22 February 2007. The question therefore becomes whether we
should make findings and recommendations on this expired measure.
(ii) Should the Panel Make Findings and Recommendations on an Expired Measure?
7.46 Above, we found that the measure at issue with respect to Mexico's "as such" claim on model
zeroing in investigations, i.e. the Model Zeroing Procedures under US law, expired on
22 February 2007. Thus, the measure which was in fo rce as of the time of the establishment of the
Panel, was, during the Panel proceedings, repealed. This raises the question of whether this Panel
should make findings and recommendations on this expired measure.

42 Exhibit MEX-10, p. 77722.
43 Exhibit MEX-10, p. 77725.
44 Exhibit MEX-11, p. 3783.
45 Exhibit US-3, p. 9508.

7.47 We asked for parties' views on this issue. While continuing to assert that the measure at issue
has not been abandoned by the United States, Mexico ar gues that, if the Panel is of the view that the
measure has been repealed, it should make finding s on the measure's WTO consistency, and further
asserts that if the Panel finds the measure to be inconsistent, it should also make recommendations. In
this context, Mexico also points out that the Pane l can, as some panels have done in the past, make
qualified recommendations. 46 The United States maintains that the alleged measure does not exist,
but acknowledges as a general matter that "if a measure exists at the time a panel is established but
expires or is withdrawn during the course of the pa nel proceedings, it is still within the panel's terms
of reference, and the panel may make findings regarding the WTO consistency of the measure".47 We
understand the United States' position to be that if the Panel finds that such a measure as the Model
Zeroing Procedures existed under US law at the time of the establishment of the Panel and that it was
withdrawn in the course of the panel proceedings , the Panel is not precluded from making findings
regarding the alleged WTO-inconsistency of such a measure.
7.48 Model Zeroing Procedures in investigations "as such" was raised in Mexico's panel request
and therefore is within this Panel's terms of refe rence. Hence, we are not precluded from addressing
Mexico's claims with regard to this measure . As we have noted, however, the measure was
withdrawn after the commencement of the panel pr oceedings. There is no specific provision in the
DSU that addresses whether a WTO panel may or may not make findings and recommendations on a
measure which, while within the panel's terms of reference at the outset of the panel proceedings,
subsequently expires. We note, however, that th is is not a novel issue in WTO dispute settlement
proceedings. This specific issue has arisen in a num ber of cases, and panels, taking into consideration
the particularities of the disputes before them, have used their discretion in deciding whether making
findings on an expired measure would be appropriate in each case.48
7.49 According to Article 3.7 of the DSU, "[t]he aim of the dispute settlement mechanism is to
secure a positive solution to a dispute". We will in any case have to address the WTO-consistency of
model zeroing in investigations because Mexico has al so raised an "as applied" claim in this regard.
In these circumstances, we find it appropriate to make findings regarding Mexico's claim on model
zeroing in investigations "as such" in order to secure a positive solution to the dispute before us.
7.50 As to whether we should also make a recomme ndation, we fail to see what purpose would be
served by a recommendation relating to a measure that no longer exists. We recall in this respect the
views expressed by the Appellate Body in US – Certain EC Products:
"We note, though, that there is an obvious inconsistency between the finding of the
Panel that "the 3 March Measure is no l onger in existence" and the subsequent
recommendation of the Panel that the DSB request that the United States bring its
3 March Measure into conformity with its WTO obligations. The Panel erred in

46 Response of Mexico to Question 1(b) from the Panel Following the Second Meeting.
47 Response of the United States to Question 1(b) from the Panel Following the Second Meeting.
48 See for instance, Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry
("Indonesia – Autos "), WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1, 2, 3 and 4, adopted
23 July 1998, DSR 1998:VI, 2201, para. 14.9; Panel Report, India – Measures Affecting the Automotive Sector
("India – Autos"), WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 1827, paras. 7.26-
7.29; Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes
("Dominican Republic – Import and Sale of Cigarettes "), WT/DS302/R, adopted 19 May 2005, as modified by
Appellate Body Report, WT/DS302/AB/R, paras. 7.340-7.344; Panel Report, European Communities –
Measures Affecting the Approval and Marketing of Biotech Products ("EC – Approval and Marketing of Biotech
Products"), WT/DS291/R, WT/DS292/R, WT/DS293/R, Corr.1 and Add.1, 2, 3, 4, 5, 6, 7, 8 and 9, adopted
21 November 2006, paras. 7.1303-7.1312.

recommending that the DSB request the United States to bring into conformity with
its WTO obligations a measure which the Panel has found no longer exists."
49
We shall refrain from making recommendations even if we find this measure to be inconsistent with
the United States' WTO obligations since we have found that the United States abandoned the practice
of model zeroing in investigations as from 22 Febr uary 2007. We now proceed to our substantive
analysis of Mexico's "as such" claim on model zeroing in investigations.
(iii) Is Model Zeroing in Investigations WTO-Inconsistent?
7.51 The United States concedes that prior to the policy change on 22 February 2007, the USDOC
applied model zeroing in anti-dumping investigations. That is, the USDOC considered as zero results
of intermediate model-specific comparisons when su ch results were aggregated in the calculation of
the margin of dumping for the product under consid eration as a whole. As we noted above, the
United States acknowledges that in US – Softwood Lumber V , the Appellate Body found the use of
zeroing in this context to be inconsistent with Article 2.4.2 of the Agreement and that this reasoning is
equally applicable to this claim. Finally, the United States has presented no arguments in response to
Mexico's contention that the use of model zeroing in investigations is WTO-in consistent. In short,
and excepting its arguments about the existence of the alleged measure as discussed above, the
United States does not appear to contest Mexico's claim on this issue.
7.52 We recall that the rules on the burden of proof applicable in these proceedings ( supra,
para. 7.6) provide that the party claiming a violation of a provision of the WTO Agreement, in this
case Mexico, by another Member, must assert and prove its claim. Mexico, therefore, has to present
evidence and arguments sufficient to make a prima facie case of violation of the relevant provisions
of the relevant WTO agreements. Thus, the fact that the United States does not contest Mexico's
contention that the use of model zeroing in invest igations is WTO-inconsistent does not discharge
Mexico of its obligation to make a prima facie case. It follows that we shall find for Mexico in
connection with its claim on model zeroing in investigations only if Mexico presents a prima facie
case regarding the incompatibility of model zeroing in investigations with the relevant provisions of
the relevant WTO agreements. In our view, our ob ligation to carry out an "objective assessment of
the facts of the case and the applicability of and c onformity with the relevant covered agreements" as
set forth in Article 11 of the DSU, lends support to ou r approach. With this in mind, we turn to the
evaluation of the arguments that Mexico has presented in support of this claim.
50
7.53 Mexico raises four arguments in support of its claim regarding the WTO-inconsistency of
model zeroing in investigations. First, it asserts that model zeroing in investigations is inconsistent
with Articles VI:1 and VI:2 of the GATT 1994 a nd Article 2.1 of the Anti-Dumping Agreement
because it precludes the calculation of a margin of dumping for the product under consideration as a
whole. The ultimate margin only reflects part of the calculations for the product under consideration
because negative results in the intermediate calculations are treated as zero. Second, Mexico contends
that model zeroing in investigations is inconsistent with Article 2.4.2 of the Anti-Dumping Agreement
because it precludes the calculation of a margin of dumping based on a weighted average of prices of
all comparable export transactions for the product under consideration as a whole. Third, Mexico
submits that model zeroing in investigations is inc onsistent with the obligation to carry out a fair

49 Appellate Body Report, United States – Import Measures on Certain Products from the European
Communities ("US – Certain EC Products "), WT/DS165/AB/R, adopted 10 January 2001, DSR 2001:I, 373,
para. 81.
50 We recall that this very issue arose in US – Shrimp (Ecuador) and the panel pointed out that it could
only find for the complaining Member if that Member made a prima facie case on the inconsistency with the
relevant provisions of the relevant WTO agreements of model zeroing in investigations. See, Panel Report,
United States – Anti-Dumping Measures on Shrimp from Ecuador ("US – Shrimp (Ecuador) "), WT/DS335/R,
adopted 20 February 2007, para. 7.9. We therefore also find support in this panel decision.

comparison between the normal value and the export price as required under Article 2.4 of the Anti-
Dumping Agreement because it artificially reduces th e prices of certain export transactions. Fourth,
Mexico argues that as an "administrative procedure" within the meaning of Article XVI:4 of the WTO
Agreement and Article 18.4 of the Anti-Dumping Agreement, model zeroing in investigations is
inconsistent with the obligations set forth in those provisions.
7.54 We find it appropriate to commence our assessment of Mexico's claim with the alleged
violation of Article 2.4.2 of the Agreement and then move on to the next alleged violation, if, and to
the extent necessary, to resolve the claim.
7.55 We recall that model zeroing in investigations has been found to be inconsistent with the
obligation under Article 2.4.2 of the Agreement to compare the weighted-average of the normal value
with the weighted-average of the prices of all comp arable export transactions in all dispute settlement
proceedings in which it was challenged, i.e. in the panel decisions in EC – Bed Linen , EC – Tube or
Pipe Fittings, US – Softwood Lumber V , US – Zeroing (Japan), US – Shrimp (Ecuador) and the
Appellate Body decisions in EC – Bed Linen and US – Softwood Lumber V. We note that Mexico has
developed its arguments on model zeroing mainly along the lines of this jurisprudence.51
7.56 Article 2.4.2 of the Agreement provides:
"Article 2
Determination of Dumping

2.4.2 Subject to the provisions governing fair comparison in paragraph 4, the
existence of margins of dumping during the investigation phase shall normally be
established on the basis of a comparison of a weighted average normal value with a
weighted average of prices of all comparable export transactions or by a comparison
of normal value and export prices on a transaction-to-transaction basis. A normal
value established on a weighted average basis may be compared to prices of
individual export transactions if the author ities find a pattern of export prices which
differ significantly among different purchasers, regions or time periods, and if an
explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weight ed average-to-weighted average or
transaction-to-transaction comparison." (emphasis added)
7.57 We note that the text of Article 2.4.2 provides that in investigations where the normal value
and the export price are compared on a WA-WA basis, the weighted average normal value is to be
compared with "a weighted average of prices of all comparable export transactions". Mexico asserts
that through model zeroing in investigations, the US DOC ignores, in the calculation of the margin of
dumping for the product under consideration as a whole, the results of intermediate comparisons made
for different models in which the WA export price exceeds the WA normal value. This, in Mexico's
view, is inconsistent with the obligation to take all comparable export transactions into consideration
in the calculation of the margin of dumping for th e product under consideration as a whole. In its
argumentation, Mexico heavily relies on the findings of the Appellate Body in prior zeroing disputes,
particularly in US – Softwood Lumber V.

51 First Written Submission of Mexico, paras. 198-208.

7.58 The Appellate Body in US – Softwood Lumber V started by pointing out that Article 2.4.2
permits multiple averaging.
52 That is, the investigating authorities may first break the subject product
into models, perform a comparison on the basis of a WA normal value and a WA export price for
each such model, and then aggregate these intermedia te results in calculating the margin of dumping
for the product under consideration as a whole. Th e Appellate Body agreed with the panel that
Article 2.4.2 requires the authorities to take in to consideration the average of prices of all comparable
export transactions. 53 The Appellate Body observed that th e parties disagreed as to whether this
obligation was limited to model-specific comparisons or whether it also applied to the aggregation of
such comparisons. The Appellate Body was of the view that the resolution of this issue centred on the
interpretation of the terms "dumping" and "margi ns of dumping" in the Anti-Dumping Agreement. 54
The Appellate Body interpreted the definition of the term "dumping" under Article 2.1 to refer to the
product under consideration as a whole as defined by th e investigating authorities. It then noted that
by virtue of the phrase "[f]or the purpose of this Agre ement" in Article 2.1, this definition applies to
the entire Agreement, including Article 2.4.2. The Appellate Body then concluded that dumping can
be found to exist only "for the product under investigation as a whole, and cannot be found to exist for
a product type, model, or category of that product".55
7.59 In the view of the Appellate Body, the obligation set forth in Article 2.4.2 to take into account
the weighted average of prices of all comparable export transactions applies not only to the model-
specific comparisons, but also to their aggregation for purposes of establishing the margin of dumping
for the product under consideration as a whole.
56 Consequently, the results of model-specific
comparisons are not margins of dumping within the meaning of Article 2.4.2, but rather constitute
intermediate calculations established by the authori ties in the context of calculating the margin of
dumping for the product under consideration as a whole. 57 It follows that when authorities use
multiple averaging in their dumping determinations, Article 2.4.2 requires them to take into account
the results of all model-specific comparisons in the calculation of the margin of dumping for the
product under consideration as a whole.
7.60 At the outset, we note, and incorporate by reference, our reasoning below (paras. 7.102-7.105)
regarding the importance of adopted Appellate Body reports on future panels dealing with similar
legal issues. The issue we are addressing, model zeroing in investigations, is the same as the one
addressed by the Appellate Body in US – Softwood Lumber V . Nonetheless, for the reasons set forth
below, we only partially agree with the Appella te Body's reasoning regarding model zeroing in
investigations, even though we also come to the same conclusion.
7.61 We note that the Appellate Body's reasoning is mainly based on the phrase "all comparable
export transactions" under Article 2.4.2, interprete d in light of the definition of "dumping" under
Article 2.1 of the Agreement. The Appellate B ody reasoned that the phrase "all comparable export
transactions" requires the authorities to take into cons ideration the weighted average of prices of all
comparable export transactions, both in the cont ext of model-specific comparisons and in the
aggregation of such model-specific results. We ag ree with the Appellate Body that the phrase "all
comparable export transactions" requires the author ities to take into consideration the weighted
average of prices of all comparable export transactions in their dumping determinations in
investigations. We consider that the text of Artic le 2.4.2 stipulates this requirement with sufficient
clarity. We share the view of the Appellate Body regarding the interpretation of the phrase "all

52 Appellate Body Report, United States – Final Dumping Determination on Softwood Lumber from
Canada ("US – Softwood Lumber V "), WT/DS264/AB/R, adopted 31 August 2004, DSR 2004:V, 1875, para. 81.
53 Ibid., para. 86.
54 Ibid., para. 90.
55 Ibid., para. 96.
56 Ibid., para. 98.
57 Ibid., para. 97.

comparable export transactions" under Article 2.4.2. Model zeroing runs counter to this requirement
because it entails the omission of the results of model-specific comparisons where the WA export
price exceeds the WA normal value, from the aggreg ation of model-specific results in the calculation
of the margin of dumping. Model zeroing is, theref ore, inconsistent with Article 2.4.2. We note,
however, that, as discussed below in paras. 7.11 6-7.123, we do not share the Appellate Body's
reasoning on the issue of "product as a whole" and ha ve not relied on that reasoning in our assessment
of Mexico's claim.
7.62 On the basis of the foregoing considerations, we conclude that Mexico has met its burden of
proof regarding the inconsistency of model zeroing in investigations 58 with Article 2.4.2 of the
Agreement. Having found model zeroi ng in investigations to be incons istent with Article 2.4.2 of the
Agreement, we need not, and do not, address Mexico's claims under Articles VI:1 and VI:2 of the
GATT 1994 and Articles 2.1, 2.4 and 18.4 of the An ti-Dumping Agreement and Article XVI:4 of the
WTO Agreement in support of the same claim.
(b) Model Zeroing in Investigations "As Applied"
7.63 It is uncontested that the USDOC applie d model zeroing in the investigation on Stainless
Steel Sheet and Strip in Coils from Mexico .59 Having found model zeroing in investigations to be
inconsistent "as such" with the obligation set out un der Article 2.4.2 of the Agreement, we also find
that the USDOC acted inconsistently with Article 2.4.2 in the investigation on Stainless Steel Sheet
and Strip in Coils from Mexico by using model zeroing in the refere nced investigation. As we have
done with regard to Mexico's claim on model zeroing in investigations "as such", here too we decline
to address Mexico's claims raised under Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1,
2.4 and 18.4 of the Anti-Dumping Agreement and Article XVI:4 of the WTO Agreement in support of
the same claim.
E. SIMPLE ZEROING IN PERIODIC REVIEWS
1. Arguments of Parties
(a) Mexico
7.64 Mexico has raised an "as such " as well as an "as applied" claim regarding simple zeroing in
periodic reviews. Mexico argues that the rules a nd procedures relating to simple zeroing in periodic
reviews are embodied in what Mexico describes as the "Zeroing Procedures" under US law.
7.65 Mexico generally asserts that dumping is an exporter-specific concept and that it can only
exist with respect to individual exporters or fore ign producers, not importers or individual import
transactions. According to Mexico, simple zeroing in periodic reviews is inconsistent with the WTO
rules in several regards. First, Mexico submits th at simple zeroing in periodic reviews is inconsistent
with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the Anti-Dumping
Agreement because it leads to a margin of dumpi ng greater than the margin for the product under
consideration as a whole. This is because the US law requires the USDOC to treat as zero the results
of intermediate price comparisons where the ex port price exceeds the normal value when such
intermediate determinations are aggregated in order to calculate the margin of dumping for the
product under consideration as a whole. Such a de termination, in Mexico's view, only partially
reflects the export transactions pertaining to the pr oduct under consideration as a whole. It therefore

58 We recall that in paras. 7.7-7.9 above, we noted the description of the term "model zeroing in
investigations" offered by Mexico, and decided to use it in our analysis in this case for ease of reference.
59 Supra, note 3.

artificially inflates the margin of dumping and cau ses the imposition of an anti-dumping duty above
the exporter's true margin.
7.66 Second, Mexico contends that simple zeroing in periodic reviews is inconsistent with the
obligation to carry out a fair comparison between the normal value and the export price as required
under Article 2.4 of the Agreement because, as articulated by the Appellate Body in US – Zeroing
(Japan), a practice that gives rise to a margin of dum ping above an exporter's real margin cannot be
viewed as involving a fair comparison within the meaning of Article 2.4.
7.67 Third, Mexico asserts that as an "adminis trative procedure" within the meaning of
Article XVI:4 of the WTO Agreement and Article 18.4 of the Anti-Dumping Agreement, simple
zeroing in periodic reviews is also inconsistent with the obligations set out in these provisions.
7.68 In addition to its "as such" claims, Mexico also contends that by applying simple zeroing in
five periodic reviews of the measure on Stainless Steel Sheet and Strip in Coils from Mexico , the
USDOC acted inconsistently with the United States' WTO obligations.
(b) United States
7.69 The United States requests the Panel to dismiss Mexico's "as such" claim regarding simple
zeroing in periodic reviews because, in the view of the United States, no such measure as the "Zeroing
Procedures" exists under US law. In the alterna tive, the United States requ ests the Panel to reject
Mexico's "as such" claim regarding simple zeroing in periodic reviews because Mexico has failed to
demonstrate that the Anti-Dumping Agreement disallo ws zeroing in periodic reviews. For the same
reason, the United States also requests the Panel to reject Mexico's "as applied" claim regarding
simple zeroing in the five periodic reviews at issue.
7.70 More specifically, the United States argues that the Anti-Dumping Agreement cannot be
interpreted to include a general prohibition on zeroing in all contexts. The exclusive textual basis for
finding zeroing to be WTO-inconsistent is Article 2.4.2 of the Agreement, which only prohibits
zeroing in the narrow context of investigations where the WA-WA methodology is used. The
United States is of the view that it is at least a permissible interpretation of the Agreement that zeroing
is allowed outside this particular context. The United States therefore asks the Panel to follow the
correct and persuasive reasoning of past panels in this regard and refrain from following the Appellate
Body's reasoning which, in the United States' view, fa ils to give credit to a permissible interpretation
of the Agreement, inconsistently with Article 17.6( ii) of the Agreement. The United States submits
that an interpretation that extends the prohibiti on on zeroing beyond the context of investigations
where the WA-WA methodology is used would re nder the remainder of Article 2.4.2 of the
Agreement meaningless. More specifically, the United States contends that if zeroing is prohibited in
all contexts, the exceptional WA-T methodology provi ded for in that article would mathematically
yield the same result as the WA-WA methodology. Such an approach would be inconsistent with the
principle of effective treaty interpretation. The United States also notes that the European Court of
First Instance approved zeroing in the context of the WA-T methodology based on this "mathematical
equivalence" issue.
60
7.71 The United States submits that Article VI:1 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement contain definitional provisions that normally do not impose independent legal
obligations on Members while acknowledging that they may play an important role in interpreting
other provisions of the Agreement. Furthermore, the United States is of the view that these provisions
could be interpreted to allow a definition of dum ping on a transaction-specific basis, as opposed to
requiring the examination of export transactions at an aggregate level. The United States finds

60 Case T-274/02, Ritek Corp. v. Council of the European Union, 24 October 2006 (Exhibit US-5).

support for this reading of the definition of dumping in GATT practice as well as the negotiating
history of the Uruguay Round Anti-Dumping Agreement. The United States asserts that the phrases
"product as a whole" and "multiple comparisons" used by Mexico have been derived by the Appellate
Body from the term "all comparable export transacti ons" in Article 2.4.2 and are not found in the text
of the Agreement.
7.72 The United States also disagrees with Mexico's interpretation of Article 9.3 of the Agreement.
In the view of the United States, reading this provision as disallowing importer-specific duty
assessment would undermine the very purpose of imposing anti-dumping duties which is to remove
the injurious effect of dumping. If, as Mexico proposes, Article 9.3 is interpreted to require an
exporter-specific margin of dumping, this would a llow importers with a high margin to benefit from
the importers with lower margins and thus to continue to cause injury to the domestic industry.
7.73 The United States also submits that Mexico's interpretation of Article 9.3 renders the
prospective normal value systems inoperative and runs counter to Article 9.4(ii) which clearly allows
for such systems. Under the prospective normal va lue system, an importer's liability is the difference
between the export price in a given transaction and the prospective normal value. According to the
United States, there is no textual support in the Agreement for the proposition that prices in other
export transactions are relevant to the calculation of the liability of an importer under the prospective
normal value system.
7.74 The United States asserts that Article 2.4 of the Agreement does not resolve the issue of
whether zeroing as such is fair or unfair. Accord ing to the United States, Mexico's reasoning under
Article 2.4 is built on its reading of the obligation set forth in Article 9.3. If the Panel agrees that it is
permissible to read Article 9.3 as allowing an importer-specific determination in duty assessment
proceedings, such a determination would not yiel d a duty that exceeds the margin of dumping and
there would be no argument about the unfairness of this assessment within the meaning of Article 2.4.
7.75 The United States contends that Mexico's claims under Articles XVI:4 of the WTO
Agreement and 18.4 of the Anti-Dumping Agreemen t are dependent on its substantive claims and
invites the Panel to exercise judicial economy with regard to these claims.
2. Arguments of Third Parties
7.76 We note that although Mexico acknowledged, subsequent to its First Written Submission, that
the scope of its panel request was limited to "mode l zeroing in investigations" and "simple zeroing in
periodic reviews", some of the third parties also addressed other types of zeroing because they
prepared their submissions before Mexico's written acknowledgement regarding the scope of its panel
request.
(a) Chile
7.77 Chile contends that the WTO-inconsistency of the zeroing methodology in periodic reviews
has been confirmed by previous Appellate Body decisions and expresses hope that this issue will be
resolved on a multilateral level through amendment of the Anti-Dumping Agreement. Continued
adjudication between WTO Members on this issue, which is costly and time consuming, should
therefore be avoided. Chile submits that zeroing not only inflates the margin of dumping, but also
yields a positive determination of dumping where th ere would have been no dumping absent zeroing.
Chile therefore asks the Panel to find that zeroing is inconsistent with Article s VI:1 and VI:2 of the
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement.

(b) China
7.78 Based on the WTO jurisprudence regarding zeroing , China argues that the use of zeroing in
periodic reviews is inconsistent w ith Article 9.3 of the Anti-Dumpi ng Agreement and Article VI:2 of
the GATT 1994. China is of the view that the Pa nel should not depart from the Appellate Body's
jurisprudence because the arguments presented by the United States in these proceedings do not differ
from the arguments raised in the context of the p ast cases. China therefore invites the Panel to accept
Mexico's claims and expects the United States to eliminate the use of zeroing in all anti-dumping
proceedings.
(c) European Communities
7.79 The arguments of the European Communities addressing the importance of WTO
jurisprudence on zeroing, summarized in paras. 7.19-7.21 above, also apply to this claim.
(d) Japan
7.80 Japan generally submits that the "Zeroing Pr ocedures" used by the US investigating
authorities constitute a measure of general and prospective application and therefore may be
challenged "as such" in WTO dispute settlement pr oceedings. Japan recalls the Appellate Body
findings in previous zeroing cases and argues that these findings should be followed by the Panel in
these proceedings. More specifically, Japan cont ends that the zeroing measures challenged by
Mexico in this case are the same as those found to be WTO-inconsistent by the Appellate Body in
US – Zeroing (Japan) and contends that such past rulings should be followed in this case to ensure the
security and predictability of the international trading system.
7.81 Regarding the use of zeroing in periodic review s, Japan first observes that the chapeau of
Article 9.3 contains a cross-reference to Article 2. It follows that the obligation to calculate an
aggregate margin of dumping for the product under consideration as a whole also applies in the
context of periodic reviews under US law. Japan disagrees with the United States' view that dumping
can be defined on a transaction-specific basis. A ccording to Japan, there is a difference between the
normative meaning of dumping and the price differe nce that might occur on a transaction-specific
basis. Drawing guidance from Article 6.10 of the Agreement, Japan also argues that in periodic
reviews the authorities have to calculate a margin of dumping for exporters, not importers. Japan
agrees that anti-dumping duties may be assessed on a transaction-specific basis under Article 9.3 of
the Agreement, but adds that such assessment cannot exceed the margin of dumping calculated for the
product under consideration as a whole in accordance with Article 2.
7.82 In sum, Japan agrees with Mexico that the use of zeroing in periodic reviews is inconsistent
with Article VI:2 of the GATT 1994 and Article 9.3 of the Anti-Dumping Agreement.
(e) Thailand
7.83 Thailand considers the use of zeroing to be in consistent with the letter and the spirit of
Article VI of the GATT 1994 and the Anti-Dumping Agreement. According to Thailand, as the
Appellate Body has consistently held in the past zeroing cases, whenever investigating authorities use
intermediate price comparisons while calculating the margin of dumping, they should take into
account the results of all such comparisons wher e the export price exceeds the normal value.
Thailand therefore invites the Panel to follow this line of reasoning in this case and accept Mexico's
claims with regard to simple zeroing in periodic reviews, irrespective of the comparison methodology
used.

3. Evaluation by the Panel
(a) Alleged Existence of the Simple Zeroing Procedures
7.84 As we noted above, Mexico argues that the rules and procedures pertaining to simple zeroing
in periodic reviews are embodied in what Mexi co describes as the "Zeroing Procedures" under
US law. The United States, however, denies the exis tence of such a measure under its law. Mexico's
claim, therefore, requires the Panel first to assess th e issue of the alleged existence of the "Zeroing
Procedures" under US law. Mexico, in certain instan ces in its submissions, refers to this measure as
the Simple Zeroing Procedures 61. This expression, in our view, serves to distinguish the measure at
issue here from the first measure subject to Mexi co's "as such" claim regarding model zeroing in
investigations, discussed above. For ease of refere nce, therefore, we shall use the expression Simple
Zeroing Procedures to refer to the specific measure at issue with regard to this claim.
7.85 We note that the evidence put forward by Me xico regarding the alleged existence of the
Simple Zeroing Procedures under US law, and the United States ' counterarguments, are similar to
those presented in connection with Mexico's claim regarding model zeroing in investigations. Our
analysis below is therefore also along the same lines as set out in paras. 7.29-7.42 above.
7.86 We are cognizant that we can only address th e substance of Mexico's "as such" claim
regarding simple zeroing in periodic reviews if th ere exists, under US law, such a measure as the
Simple Zeroing Procedures . We recall that the principles on the burden of proof applicable in these
proceedings ( supra, para. 7.6) require Mexico to present evidence sufficient to demonstrate the
existence of such a measure.
7.87 We recall our reasoning above ( supra, paras. 7.30-7.32) regarding the types of measures that
may be challenged in the WTO dispute settlement pro ceedings and the criteria that an alleged rule or
norm has to possess in order for such a rule or norm to be susceptible to a challenge in the WTO.
Based on the same reasoning, we now proceed to our assessment of whether the Simple Zeroing
Procedures, which according to Mexico exist under US law, meet these criteria.
7.88 Turning to the criteria pronounced by the Appellate Body US – Zeroing (EC) 62, we note that
the measure challenged by Mexico is attributable to the United States . The fact that simple zeroing
occurs in connection with the margin calculations in periodic reviews carried out by the USDOC
clearly indicates this.
7.89 Regarding the precise content of the Simple Zeroing Procedures, Mexico points to various
instruments. Mexico contends that the following constitutes evidence that describes the content of the
Simple Zeroing Procedures : (a) the Standard Computer Programme used by the USDOC, (b) the
Anti-Dumping Manual, (c) the application of the Simple Zeroing Procedures in all the five periodic
reviews on Stainless Steel Sheet and Strip in Coils from Mexico, (d) further evidence on the consistent
application of the Simple Zeroing Procedures in all the periodic reviews previously conducted by the
USDOC, and (e) evidence showing continued application of the Simple Zeroing Procedures in the
current periodic reviews.
7.90 First, regarding the Standard Computer Progra mme used for dumping margin calculations by
USDOC, Mexico argues that the Standard Zeroing Li ne incorporated in this programme implements
the Simple Zeroing Procedures in periodic reviews. That is, the computer programme used by the
USDOC treats as zero the results of intermedia te comparisons yielding negative margins when the
comparisons are aggregated for the calculation of the overall margin of dumping for the product under

61 See, for instance, First Written Submission of Mexico, para. 103.
62 Supra, note 28.

consideration as a whole. An expert opinion presen ted by Mexico confirms this assertion and further
explains how simple zeroing is ca rried out in periodic reviews.
63 The expert opinion also indicates
that the USDOC has never changed the zeroing line of this Standard Computer Programme.64
7.91 Second, Mexico cites the Anti-Dumping Manua l used by the USDOC as further evidence
indicating that the USDOC regularly uses the Standard Computer Programme in its margin
calculations in periodic reviews. The Manual provides, in relevant parts:
"III. PROGRAMMING PROCEDURES
The basic elements of the new PC progr amming procedures for investigations and
reviews are validated databases, proper calculation methodologies, the best computer
platform, and standard programs. The pur pose of the procedures is to improve the
accuracy and consistency of computer calculations. Calculation accuracy occurs
when a program has been thoroughly checked. Accuracy is a function of both using
validated databases in standard programs and checking calculations for computational
and substantive correctness. Calculation consistency occurs when every program
uses the same standard calculation methodology."
65
We note that the Manual shows that the USDOC is expected to use the Standard Computer
Programme consistently in its margin calculations in periodic reviews.
7.92 Third, Mexico argues that the USDOC applied the Simple Zeroing Procedures at issue in all
the five periodic reviews on Stainless Steel Sheet and Strip in Coils from Mexico . The United States
does not contest this fact.66
7.93 Fourth, Mexico asserts that the USDOC has consistently applied the Simple Zeroing
Procedures in all the past periodic reviews. Mexico substantiates this assertion through an expert
opinion, statements made by the United States be fore the previous WTO panels and the factual
findings made by those panels. The expert opinion states that the Simple Zeroing Procedures have
been a consistent element of the periodi c reviews carried out by the United States. 67 In response to
questioning in this regard, the United States has not c ontested the accuracy of this expert's description
of the application of the Simple Zeroing Procedures. The United States has, however, argued that this
description was inaccurate in so far as it suggested that the USDOC was bound by the Standard
Computer Programme. According to the United Stat es, the expert opinion only describes the basic
templates in the computer programme, which the USDOC has discretion to change. The
United States also cites instan ces where the expert herself acknowledges that the USDOC made
changes to the computer programmes used in the fi ve periodic reviews at issue in this case. The
United States acknowledges, however, that these cha nges did not include the zeroing aspects of the
programmes.
68 Although the United States asserts th at the Assistant Secretary for Import
Administration has discretion to change the com puter programmes used by the USDOC, including
their zeroing aspects, the United States acknowledges that such discretion has never been used in
periodic reviews where the WA-T method was used.69

63 Exhibit MEX-1, paras. 29-35.
64 Exhibit MEX-1, paras. 16-17.
65 Exhibit MEX-4D, p.8.
66 Response of the United States to Question 5 from the Panel Following the First Meeting.
67 Exhibit MEX-1, paras. 15-17.
68 Response of the United States to Question 5 from the Panel Following the First Meeting.
69 Response of the United States to Question 2 from the Panel Following the Second Meeting.

7.94 Finally, Mexico submits that in ever y periodic review between January 2006 70 and the
initiation of the dispute settlement proceedings at issue where the WA-T method was used, the
USDOC followed the Standard Comp uter Programme and zeroed. While not providing a full list of
these periodic reviews, Mexico mentions certain examples where the USDOC defended the use of
zeroing in proceedings initiated by interested par ties. The United States has not contested this
assertion. In one of the periodic reviews cited by Mexico, the USDOC rejects the respondents'
assertion that the practice of zeroing has to be discontinued:
"Comment 9: Non-Offsetting for Export Sales that Exceed Normal Value
Ispat argues that the Department's refusal to offset non-dumped sales is contrary to
WTO findings and should not be employed for the final results.

Department's Position
We have not changed our calculation of th e weighted-average dumping margin for
the final results.

The Federal Circuit has affirmed the Department's methodology as a reasonable
interpretation of the statute."
71
7.95 It seems clear to us, on the basis of the fo regoing, that Mexico has presented evidence
sufficient to demonstrate the content of the Simple Zeroing Procedures under US law. In our view,
the evidence about the content of the Simple Zeroing Procedures , particularly the parts of the Anti-
Dumping Manual that we cited above which indicat e that the USDOC has to follow the Standard
Computer Programme consistently in periodic revi ews, also demonstrates that these Procedures have
general and prospective application . This shows that the Simple Zeroing Procedures have gone
beyond mere repetition of a certain methodology to specific cases and have become a "deliberate
policy."
72
7.96 The United States argues that Mexico has not demonstrated the existence of the Simple
Zeroing Procedures as a measure that could be challenged be fore a WTO panel. The United States
criticizes Mexico's reliance on past panel and Appellate Body findings regarding the existence of the
zeroing procedures and argues that "a separate pane l's findings are not evidence, but conclusions
based on evidence". 73 We note that other WTO panels as well as the Appellate Body have made
similar findings in cases that concerned the zeroing methodology applied by the United States in anti-
dumping proceedings. We note, however, that ou r findings are based on the evidence presented by
Mexico in these proceedings, not on the WTO jurisprudence.
7.97 On the basis of the foregoing considerations, we conclude that Mexico has presented evidence
sufficient to demonstrate the existence of the Simple Zeroing Procedures under US law.

70 Supra, note 36.
71 Exhibit MEX-6J, p. 23-24.
72 See, Appellate Body Report, US – Zeroing (Japan), supra, note 38, para. 85.
73 First Written Submission of the United States, para. 40.

(b) Is Simple Zeroing in Periodic Reviews WTO-Inconsistent?
(i) Description of the Calculations in Periodic Reviews under US Law
7.98 The United States has a retrospective duty assessment system. Under the US system, the anti-
dumping duty order imposed following an investig ation does not necessarily constitute the final
liability for the importers importing the subject prod uct into the United States. The importer deposits
a security in the form of a cash deposit at the time of importation. Subsequently, the importer
74 may,
on an annual basis, ask the USDOC to calculate the importer's final liability for the imports made in
the previous year. This is called a "periodic review " or an "administrative review" under US law. If
the duty calculated in a periodic review exceeds the original cash deposit, the importer has to pay the
difference. When the opposite is the case, the diffe rence is reimbursed with interest. In cases where
no final assessment is requested, the initial cash deposit paid at the time of importation is
automatically assessed as the final duty. Besides a ssessing the final liability of importers for imports
made during the period of review, the USDOC, in a periodic review, also calculates the cash deposit
rate that would apply to imports made following the completion of the periodic review.
7.99 For purposes of calculating margins of dumping in a periodic review, the product under
consideration is broken into models and a monthl y WA normal value is determined for each model.
Each export transaction is compared against th e relevant monthly WA normal value. These
comparisons are then aggregated. In such aggreg ation, the results of comparisons where the export
price exceeds the WA normal value are treated as zero. A weighted average margin of dumping is
calculated for each exporter, which then becom es the cash deposit for the following period. The
calculation of the importer-specific assessment rate is also similar. The USDOC segregates, from the
figures pertaining to the exporter, the results of the comparisons for each importer and divides it by
the total value of imports made by the same importer.
75 In other words, the numerator for the
exporter's weighted average dumping margin for the period of review, i.e. the future cash deposit rate,
is the total of the comparisons where the normal value exceeds the export price and the denominator is
the value of all exports from that exporter during the period of review. The numerator for the
importer-specific assessment rate reflects the resu lts of comparisons where the normal value exceeds
the export price within the universe of the imports made by that particular importer, and the
denominator is the total value of all imports by the importer.
7.100 Parties generally agree with the above descrip tion of the way the USDOC calculates margins
of dumping in periodic reviews.76
(ii) Significance of WTO Jurisprudence
7.101 We recall that this is not the first case in the WTO in which simple zeroing in periodic
reviews has been challenged. The WTO-consiste ncy of simple zeroing in periodic reviews was
questioned before the panels in US – Zeroing (EC) and US – Zeroing (Japan) . In both cases, the
panels found this practice not to be inconsistent with the obligations set out in the relevant provisions
cited by the complaining parties. We also recall that the Appellate Body reversed the decisions of
both panels and found simple zeroing in periodic reviews to be WTO-inconsistent.

74 The US law also allows the domestic interested pa rties, foreign producers or exporters to seek the
initiation of a periodic review. See, Response of the Un ited States to Question 3(a) From the Panel Following
the Second Meeting.
75 First Written Submission of Mexico, paras. 79-83.
76 Responses of Mexico and the United States to Question 3(a) from the Panel Following the Second
Meeting.

7.102 We recall that we are not, strictly speaking, bound by previous Appellate Body or panel
decisions that have addressed the same issue, i.e. simple zeroing in periodic reviews, which is before
us in these proceedings. There is no provision in the DSU that requires WTO panels to follow the
findings of previous panels or the Appellate Body on the same issues brought before them. In principle,
a panel or Appellate Body decision only binds the parties to the relevant dispute. Certain provisions of
the DSU, in our view, support this proposition. According to Article 19.2 of the DSU, for example,
"[i]n accordance with paragraph 2 of Article 3, in their findings and recommendations, the panel and
Appellate Body cannot add to or diminish the rights and obligations provided in the covered
agreements". In the same vein, Article 3.2 of the DSU provides that "[r]ecommendations and rulings of
the DSB cannot add to or diminish the rights and obligations provided in the covered agreements".
7.103 We also note, however, the Ap pellate Body's pronouncement, in Japan – Alcoholic
Beverages II
 , regarding the impact of adopted panel reports for future panels dealing with similar issues.
The Appellate Body opined:
"Adopted panel reports are an important part of the GATT acquis. They are often
considered by subsequent panels. They create legitimate expectations among WTO
Members, and, therefore, should be taken into account where they are relevant to any
dispute. However, they are not binding, except with respect to resolving the
particular dispute between the parties to that dispute. In short, their character and
their legal status have not been cha nged by the coming into force of the WTO
Agreement."
77 (footnote omitted, emphasis in original)
7.104 The above excerpt indicates that, although adopt ed panel reports only bind the parties to the
dispute that they concern, the Appe llate Body expects future panels to take them into account to the
extent that the issues before them are simila r to those addressed by previous panels. In US – Shrimp
(Article 21.5 – Malaysia), the Appellate Body reiterated its findings in Japan – Alcoholic Beverages II
and held that the same analysis applies to adopted Appellate Body reports. 78 The Appellate Body
clearly stated that the panel in the implementation proceedings under Article 21.5 of the DSU in US –
Shrimp (Article 21.5 – Malaysia) did not err in following the interp retative guidance provided by the
Appellate Body in the original proceedings. To the contrary, the Appellate Body expected the panel to
do so.79 More recently in US – Oil Country Tubular Goods Sunset Reviews, the Appellate Body opined
that "following the Appellate Body's conclusions in earlier disputes is not only appropriate, but is
what would be expected from panels, especially where the issues are the same".80
7.105 This indicates that even though the DSU does not require WTO panels to follow adopted panel
or Appellate Body reports, the Appellate Body de facto expects them to do so to the extent that the legal
issues addressed are similar. We al so note, however, that the panel in US – Zeroing (Japan) , while
recognizing the need to provide security and predictability to the multilateral trading system through the
development of a consistent line of jurisprudence on similar legal issues, drew attention to the provisions
of Articles 11 and 3.2 of the DSU and implied that the concern over the preservation of a consistent line
of jurisprudence should not override a panel's task to carry out an obj ective examination of the matter
before it through an interpretation of the relevant treaty provisions in accordance with the customary

77 Appellate Body Report, Japan – Taxes on Alcoholic Beverages ("Japan – Alcoholic Beverages II "),
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, p. 14.
78 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products –
Recourse to Article 21.5 of the DSU by Malaysia ("US – Shrimp (Article 21.5 – Malaysia)"), WT/DS58/AB/RW,
adopted 21 November 2001, para. 109.
79 Ibid., para. 107.
80 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, supra, note 24, para. 188.

rules of interpretation of public international law.
81 We also share the concern raised by the panel in
US – Zeroing (Japan) regarding WTO panels' oblig ation to carry out an objective examination of the
matter referred to them by the DSB.
7.106 After a careful consideration of the matters discussed above 82, we have decided that we have
no option but to respectfully disagree with the line of reasoning developed by the Appellate Body
regarding the WTO-consistency of simple zeroing in periodic reviews. We are cognizant of the fact
that in two previous cases, US – Zeroing (EC) and US – Zeroing (Japan), the decisions of panels that
found simple zeroing in periodic reviews to be WTO- consistent were reversed by the Appellate Body
and that our reasoning set out below is very similar to these panel decisions. In light of our obligation
under Article 11 of the DSU to carry out an objective examination of the matter referred to us by the
DSB, however, we have felt compelled to depart fr om the Appellate Body's approach for the reasons
explained below.
(iii) Alleged Violations of Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the
Anti-Dumping Agreement
Interpretation of the Relevant Treaty Provisions
7.107 Mexico bases its claim on the relevant treaty provisions as interpreted in prior Appellate Body
decisions on zeroing. Mexico asserts that dumping is an exporter-specific concept and that it can only
exist with respect to individual exporters or fore ign producers, not importers or individual import
transactions. According to Mexico, the definiti on of dumping under Articles VI:1 and VI:2 of the
GATT 1994 and Article 2.1 of the Anti-Dumpi ng Agreement applies to the product under
consideration as a whole. Article VI:2 of the GATT 1994 stipulates that an anti-dumping duty may
not be greater than the margin of dumping found with respect to the product under consideration.
Article 9.3 of the Anti-Dumping Agreement provides that the amount of the anti-dumping duty cannot
exceed the margin of dumping established under Article 2 of the Agreement. It follows that an anti-
dumping duty calculated for a given producer or expor ter may not be greater than the margin of
dumping calculated for the product under considerati on as a whole. That is, the margin of dumping
established for a producer or exporter constitutes a ceiling for the duty that may be imposed on the
product exported by that producer or exporter. According to Mexico, simple zeroing in periodic
reviews is inconsistent with these principles becaus e it does not fully reflect export prices that are
above the normal value, in the calculation of the margin of dumping for the product under
consideration as a whole. The results obtained through simple zeroing only partially reflect the export
transactions of the product under consideration. Simple zeroing inflates the margin of dumping and
as such is inconsistent with Article VI:2 of the GATT 1994 and Article 9.3 of the Anti-Dumping
Agreement. Mexico also argues that simple zeroing is inconsistent with the obligation to carry out a
fair comparison between the normal value and the export price as required under Article 2.4 of the
Agreement.
7.108 The United States contends that the Agreement does not generally prohibit zeroing.
According to the United States, the exclusive textual basis for finding zeroing to be WTO-inconsistent
is Article 2.4.2 of the Agreement, which only prohibits zeroing in the narrow context of investigations
where the WA-WA methodology is used. The United States urges the Panel to take into account the
findings of previous panels in this regard whic h, according to the United States, held that the

81 Panel Report, United States – Measures Relating to Zeroing and Sunset Reviews (" US – Zeroing
(Japan)"), WT/DS322/R, adopted 23 January 2007, as modified by Appellate Body Report, WT/DS322/AB/R,
footnote 733.
82 In our assessment of the importance of WTO jurisprudence, we also took into account the views
expressed by third parties, particularly those of the European Communities which concentrated mainly on this
issue.

mentioned obligation under Article 2.4.2 does not apply outside the scope of WA-WA comparisons in
investigations. The United States invites the Panel to find at least that this reasoning reflects a
permissible interpretation of the Agreement. Mo re specifically, the United States asserts that
Article VI:1 of the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement cannot impose
independent obligations because they contain defini tional provisions. Furthermore, the United States
is of the view that these two provisions may be in terpreted to permit a transaction-based definition of
dumping. The United States also argues that there is historical support for this proposition. Likewise,
the United States contends that the definition of th e word "product" does not necessarily refer to the
"product as a whole". It follows that the term "margin of dumping" does not necessarily refer to the
margin for the product under consideration as a w hole. Determining the margin of dumping in
periodic reviews without providing offsets for inte rmediate comparisons where the export price
exceeds the normal value is therefore not inconsiste nt with the United States' WTO obligations. In
the view of the United States, Mexico's interpreta tion of the relevant lega l provisions would be
inconsistent with Article 9.4(ii) of the Agreemen t which allows prospective normal value systems.
The United States argues that Article 2.4 of the Agreement does not resolve the issue of whether
zeroing is unfair. According to the United States, Mexico's claim under Article 2.4 is dependent on its
claim under Article VI:2 of the GATT 1994 and Artic le 2.4.2 of the Anti-Dumping Agreement. It
follows that if the Panel finds that the term "margin of dumping" for purposes of a periodic review
may be interpreted on a transaction-specific basis, the Panel should also reject Mexico's claim under
Article 2.4 because this would invalidate Mexico's ar gument that simple zeroing in periodic reviews
yields a duty in excess of the exporter's real margin of dumping.
7.109 We note that Mexico's arguments, in support of its claim that the use of simple zeroing in
periodic reviews is inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1
and 9.3 of the Anti-Dumping Agreement, are premised on the interpretation of these provisions by the
Appellate Body, particularly in US – Zeroing (EC) and US – Zeroing (Japan) . The Appellate Body's
line of reasoning is based on two principles. First, under the definition of "dumping" in Article 2.1 of
the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, "dumping" has to be established
for the product under consideration as a whole.
83 According to the Appellate Body, this interpretation
also applies to duty assessment proceedings under Article 9.3 since Article 9.3 refers to Article 2. In
US – Zeroing (EC), the Appellate Body opined:
"We note that Article 9.3 refers to Article 2. It follows that, under Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994, the amount of the
assessed anti-dumping duties shall not exceed the margin of dumping as established
"for the product as a whole". Therefore, if the investigating authority establishes the
margin of dumping on the basis of multiple comparisons made at an intermediate
stage, it is required to aggregate the r esults of all of the multiple comparisons,
including those where the export price exceeds the normal value. If the investigating
authority chooses to undertake multiple comparisons at an intermediate stage, it is not
allowed to take into account the results of only some multiple comparisons, while
disregarding others."84 (footnote omitted)
7.110 Second, in the view of the Appellate Body, a determination of dumping in all anti-dumping
proceedings, including duty assessment proceedings under Article 9.3 of the Agreement, has to be
made in respect of each exporter or foreign producer subject to the proceeding. The Appellate Body
found contextual support in Article 6.10 for its inte rpretation of the term "m argin of dumping" under
Article 9.3:

83 Appellate Body Report, US – Zeroing (EC), supra, note 21, para. 126.
84 Ibid., para. 127.

"Article 6.10 of the Anti-Dumping Agreement provides relevant context for the
interpretation of the term "margin of dumping" in Article 9.3 of the Anti-Dumping
Agreement and Article VI:2 of the GATT 1994. Article 6.10, which is part of the
context of Article 9.3, provides that "[t]he authorities shall, as a rule, determine an
individual margin of dumping for each known exporter or producer concerned of the
product under investigation". Therefore, under the first sentence of Article 6.10,
margins of dumping for a product must be established for exporters or foreign
producers. The text of Article 6.10 does not limit the application of this rule to
original investigations, and we see no reason why this rule would not be relevant to
duty assessment proceedings governed by Article 9.3 of the Anti-Dumping Agreement
and Article VI:2 of the GATT 1994."
85
7.111 Furthermore, the Appellate Body indicated that this interpretation is consistent with the
definition of the notion of dumping:
"Establishing margins of dumping for exporte rs or foreign producers is consistent
with the notion of dumping, which is designed to counteract the foreign producer's or
exporter's pricing behaviour. Indeed, it is the exporter, not the importer, that engages
in practices that result in situations of dumping. For all of these reasons, under
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994,
margins of dumping are established for foreign producers or exporters."86
7.112 These two principle points of view regarding the calculation of the margins of dumping in
periodic reviews leads to the conclusion that:
"[I]n a review proceeding under Article 9.3.1, the authority is required to ensure that
the total amount of anti-dumping duties collected from all the importers of that
product does not exceed the total amount of dumping found in all sales made by the
exporter or foreign producer, calculate d according to the margin of dumping
established for that exporter or foreign produ cer without zeroing. The same "ceiling"
applies in review proceedings under Article 9.3.2, because the introductory clause of
Article 9.3 applies equally to prospective and retroactive duty assessment systems."
87
7.113 In the view of the Appellate Body, theref ore, in any anti-dumping proceeding, including
periodic reviews under Article 9.3, dumping has to be calculated for the product under consideration
as a whole and in respect of the individual exporters or foreign producers subject to such proceeding.
Once the authorities define the product under consid eration, the scope of that definition also
determines the scope of the authorities' dumping determination. Dumping cannot exist in relation to a
type, model, or category of the product subject to the proceedings. Nor can dumping be found in
relation to individual import transactions. It has to be calculated for each known exporter or foreign
producer, as stipulated under Article 6.10 of the Agre ement. It follows that when the calculation of
dumping entails more than one level of comparisons between the normal value and the export price,
the results of the intermediate comparisons are not margins of dumping. They are merely inputs to be
taken into account in the determination of the ma rgin of dumping for the product under consideration
as a whole for each known exporter or foreign producer.
7.114 When applied to duty assessment proceedings un der Article 9.3 of the Agreement, the above-
described reasoning leads to the conclusion that the margin of dumping calculated for the product
under consideration as a whole - exported by the e xporter or foreign producer subject to such

85 Ibid., para. 128.
86 Ibid., para. 129.
87 Appellate Body Report, US – Zeroing (Japan), supra, note 38, para. 156.

proceedings - operates as the ceiling for the anti-du mping duties that may be collected from importers
of that product. The chapeau of Article 9.3 provides that "[t]he amount of the anti-dumping duty shall
not exceed the margin of dumping as established under Article 2". This means that:
""[T]he total amount of anti-dumping duties collected on the entries of a product from
a given exporter shall not exceed the margin of dumping established for that
exporter", in accordance with Article 2."88
Consequently, a scheme that does not take into cons ideration the results of intermediate comparisons
that yield negative dumping in the calculatio n of the overall margin for the product under
consideration as a whole, would be inconsistent with Article 9.3 of the Agreement.
7.115 We respectfully disagree with the Appellate Body's reasoning. We recognize that our
analysis inevitably resembles that of the panels in th e last two cases that dealt with simple zeroing in
periodic reviews, US – Zeroing (EC) and US – Zeroing (Japan), and that the Appellate Body reversed
those panels' findings that simple zeroing is not in consistent with Article 9.3 of the Anti-Dumping
Agreement. We would like to underline, however , that our analysis is not simply an unthinking
repetition of these past panel decisions. Rather, it reflects our own appreciation of the facts and the
legal arguments presented by the parties in these proceedings, as is require d by our obligation under
Article 11 of the DSU to carry out an objective examination of the matter before us.
7.116 We recall that the main premise of the Appellate Body's reasoning pertains to the definition of
the concepts of "dumping" and "margins of dumpi ng" used in Article 2.1 of the Agreement and
Articles VI:1 and VI:2 of the GATT 1994. According to the Appellate Body, the margin of dumping
has to be determined for the product under consider ation as a whole. Accordingly, the results of the
comparisons made at an intermediate stage before aggregating them in order to calculate the margin
of dumping for the product as a whole are not margins of dumping. Likewise, the margin of dumping
has to be calculated in respect of the exporter or the foreign producer subject to the anti-dumping
proceeding, not the importer importing the product. It follows that dumping cannot be calculated on a
transaction-specific basis; it has to be based on all exports of the subject product made in the period of
review from the exporter or the foreign producer subject to the proceeding.
7.117 We disagree with these propositions. Mexico ar gues that the word "product" used in the
provisions it cites refers to the "product as a whole" . If follows that any determination of dumping
has to be based on an aggregation of all export tr ansactions. We note, however, that the expression
"product as a whole" does not appear in the text of Article 2.1 of the Agreement or Articles VI:1
and VI:2 of the GATT 1994. It has been developed in WTO dispute settlement. We are not
convinced that the treaty provisions cited by Mexico, on which the Appellate Body based its
reasoning, necessarily compel a definition of "dum ping" based on an aggregation of all export
transactions. We note that the panel in US – Zeroing (Japan) also asked itself the question of how a
requirement to base dumping margin calculations on the aggregation of export transactions may be
inferred from the ordinary meaning of the words "p roduct" or "products" under Article 2.1 of the
Anti-Dumping Agreement and Article s VI:1 and VI:2 of the GATT 1994.
89 We agree with the
following reasoning developed by that panel on this issue:
"We fail to see why the notion that "a pr oduct is introduced into the commerce of
another country" cannot apply to a pa rticular export sale and would necessarily
require an examination of different export sal es at an aggregate level. Similarly, the
notion of a margin of dumping as the price difference that exists when one price is
less than another price (or constructed valu e) can easily be applied to individual

88 (footnotes omitted) Ibid., para. 155.
89 Panel Report, US – Zeroing (Japan), supra, note 81, para. 7.105.

transactions and does not require an exam ination of export transactions at an
aggregate level. The terms "export price of a product exported from one country to
another" in Article 2.1 of the AD Agreement and "the price of the product exported
from one country to another" in Article VI:1 of the GATT 1994 can reasonably be
interpreted to mean the price of the product in a particular export transaction."
90
7.118 The Appellate Body disagreed with this view . In paragraphs 108-116 of its decision in US –
Zeroing (Japan), the Appellate Body repeated the conclusions that it had formulated in its previous
decisions in US – Softwood Lumber V and US – Zeroing (EC) . It did not, however, provide a
convincing response to the question we have highlig hted above. That is, the Appellate Body did not
explain how the texts of Articles VI:1 and VI :2 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement necessarily require the interpre tation that the words "product" or "products"
used in the definition of "dumping" may only be interpreted as referring to the product under
consideration as a whole, not to individual export transactions.
7.119 We are troubled by the fact that the principal basis of the Appellate Body's reasoning in the
zeroing cases seems to be premised on an interpretati on that does not have a solid textual basis in the
relevant treaty provisions. We re call the rules on treaty interpretation ( supra, paras. 7.3-7.5) which
we have to follow in these proceedings. We are of the view that a good faith interpretation of the
ordinary meaning of the texts of Articles VI:1 and VI:2 of the GATT 1994 and Article 2.1 of the Anti-
Dumping Agreement, read in their context and in light of the object and purpose of the mentioned
agreements, does not exclude an interpretation th at allows the concept of dumping to exist on a
transaction-specific basis. We recall that according to the standard of review that we have to follow
in these proceedings ( supra, paras. 7.1-7.2), we are precluded from excluding an interpretation which
we find permissible, even if there may be other permissible interpretations.
7.120 We also note that the use of the words "product" or "products" in other instances in Article VI
and other provisions of the GATT 1994 or the An ti-Dumping Agreement does not necessitate the
view that these terms cannot be interpreted as referring to individual export transactions. As the panel
in US – Zeroing (Japan) noted in paragraph 7.108 of its report, for instance:
"[T]he phrase "importation of any product" u sed in Article VI:6 and other provisions
of the GATT 1994 does not mean that these pr ovisions inherently cannot apply to an
individual import transaction. Similarly, when Article VII:3 of the GATT 1994 refers
to "the value for customs purposes of any imported product", the mere use of the
word "product" cannot reasonably be interp reted to preclude the possibility to apply
this term to the value of a product in a pa rticular import transaction. If the word
"product" in Article VII:3 does not necessarily require an examination of transactions
at an aggregate level, we cannot see wh y such an examination is nevertheless
required by the use of that word in Articles VI:1 and VI:2."
91
7.121 We note that the Appellate Body did not explain whether the use of the words "product" or
"products" in these other contexts, which may very well be interpreted on a transaction-specific basis,
had any bearing on its interpretati on. This is another reason wh y we find the Appellate Body's
reasoning not to be convincing. The fact that these words may be interpreted in a significantly

90 Ibid., para. 7.106.
91 Footnotes omitted.
We also agree with that panel's view that this reasoning does not necessarily mean that "a Member may
on the basis of a finding that some export sales under consideration are dumped (and are causing injury) impose
a duty on all subsequent imports of that product without in any way taking into account the relative significance
of those dumped sales compared to other, non-dumped sales under consideration". Panel Report, US – Zeroing
(Japan), supra, note 81, footnote 745.

different way when used elsewhere in Article VI and other provisions of the GATT 1994 or the Anti-
Dumping Agreement weakens the proposition that they must necessarily be interpreted to refer to the
totality of exports of the product under consid eration as a whole, as opposed to individual
transactions, when they are used in the context of dumping determinations.
7.122 Mexico contends that because Article VII of the GATT 1994 deals with customs valuation, its
purpose and objectives are completely different from those of Article VI. It is therefore normal that
these two provisions ascribe different meanings to the word "product". 92 We note, however, that
Mexico's argument is based solely on its unde rstanding of the object and purpose of these two
provisions and does not have any textual basis. We therefore disagree with Mexico in this regard.
7.123 On the basis of the foregoing, we feel compelle d to share the interpretation by the panel in
US – Zeroing (Japan) of the words "product" and "products" in Article VI of the GATT 1994 and
Article 2.1 of the Anti-Dumping Agreement:
"[T]he terms "dumping" and "margin of dumping" in Article 2.1 of the AD Agreement
and Articles VI:1 and VI:2 of the GATT 1994 are defined in relation to "product" and
"products" does not warrant the conclusion that these terms, by definition, cannot
apply to individual transactions and inhe rently require an examination of export
transactions at an aggregate level in whic h the same weight is accorded to export
prices that are above normal value as to export prices that are below normal value."
93
7.124 We also disagree with the second element of th e Appellate Body's reasoning that generally
prohibits zeroing, i.e. that dumping has to be calculated with r espect to individual exporters or foreign
producers. We note that the obligation to pay anti-dumping duties is not incurred on the basis of a
comparison of an exporter's total sales, but on the ba sis of an individual sale between the exporter and
its importer. It is therefore a transaction-specifi c liability. This importer-specific or transaction-
specific character of the payment of anti-dumping duti es has, therefore, to be taken into consideration
in interpreting Article 9.3. Article 9.3 reads in relevant parts:
"Article 9

Imposition and Collection of Anti-Dumping Duties

9.3 The amount of the anti-dumping duty shall not exceed the margin of dumping
as established under Article 2.
9.3.1 When the amount of the anti-dumping duty is assessed on a retrospective
basis, the determination of the final liability for payment of anti-dumping duties shall
take place as soon as possible, normally within 12 months, and in no case more than
18 months, after the date on which a request for a final assessment of the amount of
the anti-dumping duty has been made. Any refund shall be made promptly and
normally in not more than 90 days following the determination of final liability made
pursuant to this sub-paragraph. In any case, where a refund is not made within
90 days, the authorities shall provide an explanation if so requested.
9.3.2 When the amount of the anti-dumping duty is assessed on a prospective basis,
provision shall be made for a prompt refund, upon request, of any duty paid in excess

92 Second Written Submission of Mexico, para. 62.
93 Panel Report, US – Zeroing (Japan), supra, note 81, para. 7.112.

of the margin of dumping. A refund of any such duty paid in excess of the actual
margin of dumping shall normally take place within 12 months, and in no case more
than 18 months, after the date on which a request for a refund, duly supported by
evidence, has been made by an importer of the product subject to the anti-dumping
duty. The refund authorized should normally be made within 90 days of the above-
noted decision." (footnote omitted)
7.125 Article 9.3 deals with the imposition and collec tion of anti-dumping duties. It requires that
the amount of the duty not exceed the margin of dumping as established under Article 2. The two
sub-paragraphs of Article 9.3 contain more speci fic obligations regarding the assessment of anti-
dumping duties under the retrospective and prospective systems of duty collection. In a retrospective
system, which is employed in the United States, pa yments collected at the time of importation (such
as the cash deposit rate in the US system) are not de finitive duties. An importer has the right to ask
the authorities to calculate its final liability in respect of the importations made in a past period. The
authorities then have to calculate the importer's fi nal liability and if there is any excessive payment,
refund the corresponding amount to the importer with interest. In a prospective system, however, the
payment of the anti-dumping duty at the time of import ation is generally considered to be definitive.
If the importer believes that the amount of the an ti-dumping duty it paid exceeded its margin of
dumping, it can ask the authorities for a refund. When such a request is made, the authorities have to
calculate the actual margin of dumping and refund anti-dumping duties that exceeded the margin of
dumping.
7.126 It is significant to note in this regard that the text of Article 9.3 itself does not contain any
obligation to aggregate export transactions in duty assessment proceedings. We note that an importer
does not incur liability for the payment of anti-dumpi ng duties on the basis of the totality of exports
made by an exporter. In our view, Articles 9.3.1 a nd 9.3.2 have to be interpreted in light of this
specific purpose because the former concerns the calculation of the final liability of individual
importers
 (in the case of a retrospective system), and th e latter the refund of duties paid in excess of
the margin of dumping of individual importers (in the case of a prospective system). The fact that
final duties or refunds in duty assessment proceedings are calculated for individual importers, in our
view, leads to the conclusion that Article 9.3 does not exclude an importer and import-specific
calculation, and does not necessarily require a calculation on the basis of all sales made by an
exporter.
7.127 We disagree with the Appellate Body's view that a determination of dumping in all anti-
dumping proceedings, including duty assessment proceedings under Article 9.3 of the Agreement, has
to be made in respect of each exporter or foreign producer subject to the proceeding. We also
disagree with the view that Article 6.10 lends support to this view. In this regard, we agree with the
panel in US – Zeroing (Japan) that:
"Article 6 of the AD Agreement contains provisions designed to ensure transparency
and due process in the conduct of anti-dumpi ng investigations. In that context,
Article 6.10 provides that, as a rule, authorities must determine an individual margin
of dumping for each known exporter or produ cer of the product under investigation
but also lays down certain rules that must be observed when it is not possible to
determine such an individual margin of dumping. Neither the phrase "product under
investigation" nor the reference to an individual margin of dumping for an exporter or
producer in our view provides any guidance with respect to the precise methodology
to be used for the purpose of calculating that margin of dumping. As in Article 2.1 of
the AD Agreement and Articles VI:1 and VI:2 of the GATT 1994, the use of the word
"product" in Article 6.10 does not exclude the possibility of applying the concept of
dumping to individual transactions. Even assuming arguendo that the notion of an
"individual margin of dumping for each known exporter or producer" implies an

obligation to determine a single margin of dumping for each known exporter or
producer based on an analysis of the totality of the export transactions under
consideration, it does not necessarily follow th at in deriving such a single margin an
authority must accord the same weight to transactions in which the export price is
above the normal value as to transactions in which the export price is below the
normal value. Nothing in the text of Article 6.10 indicates that such a margin may
not be calculated as an overall weighted average margin of dumping in which the
numerator consists of the sum of the amounts by which export prices are less than
normal value and the denominator reflects the total value of all export transactions."
94
(footnotes omitted)
7.128 We recall the rules on treaty interpretation ( supra, paras. 7.3-7.5) which we have to follow in
these proceedings. We are of the view that it is at least a permissible interpretation of Article 9.3 of
the Agreement that the concept of dumping may be interpreted on an importer-specific basis. We
recall that according to the standard of review that we have to follow in these proceedings ( supra,
paras. 7.1-7.2), we are precluded from excluding an interpretation which we find permissible, even if
there may be other permissible interpretations. We therefore disagree with Mexico's assertion that the
text of Article 9.3 of the Agreement necessarily requires dumping determinations in duty assessment
proceedings to be specific to individual exporters or foreign producers.
Contextual Support for the Panel's Interpretation of the Relevant Treaty Provisions
7.129 A review of the relevant context provid es further support for the proposition that the
provisions cited by Mexico, Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1 and 9.3 of the
Anti-Dumping Agreement, do not prohibit simple zeroing in periodic reviews.
Existence of the Prospective Normal Value Systems
7.130 The first contextual support is found in Article 9.4(ii) of the Agreement, which provides in
relevant parts:
"9.4 When the authorities have limited th eir examination in accordance with the
second sentence of paragraph 10 of Article 6, any anti-dumping duty applied to
imports from exporters or producers not included in the examination shall not exceed:

(ii) where the liability for payment of anti-dumping duties is calculated on the
basis of a prospective normal value, the difference between the weighted average
normal value of the selected exporters or producers and the export prices of exporters
or producers not individually examined[.]"
7.131 Article 9.4(ii) clearly provides for a prospec tive normal value system. In a prospective
normal value system, the importer's liability is dete rmined through the comparison of the price paid
by the importer in a given transaction and the prosp ective normal value. Under this system, prices
paid in other export transactions ha ve no bearing on this importer's liability. In other words, the fact
that other importers do not dump, or dump at a lower margin, does not affect the liability of an
importer who imports at dumped prices. If the dete rmination of liability for anti-dumping duties can
be determined on a transaction-specific basis in a prospective normal value system, there is no reason
why the same cannot be the case in the context of the retrospective duty assessment system under
Article 9.3.2.

94 Ibid., para. 7.111.

7.132 The Appellate Body in US – Zeroing (Japan) disagreed with this reasoning. According to the
Appellate Body, the duty paid in a prospective normal value system does not represent the calculation
of a margin of dumping. Nor does it mean that the total amount of the duties paid in such a system
can exceed the margin of dumping established for th e exporter or foreign producer at issue. The
Appellate Body then went on and opined:
"Under a prospective normal value system, e xporters may choose to raise their export
prices to the level of the prospective nor mal value in order to avoid liability for
payment of anti-dumping duties on each export transaction. However, under
Article 9.3.2, the amount of duties collected is subject to review so as to ensure that,
pursuant to Article 9.3 of the Anti-Dumping Agreement , the amount of the anti-
dumping duty collected does not exceed the margin of dumping as established under
Article 2. It is open to an importer to request a refund if the duties collected exceed
the exporter's margin of dumping. Whether a refund is due or not will depend on the
margin of dumping established for that exporter."
95 (footnote omitted)
7.133 Here too, we feel compelled to disagree with the Appellate Body. The Appellate Body
suggests that duties collected under a prospective normal value system are subject to a duty
assessment proceeding under Article 9.3.2. The A ppellate Body's view seems to be that duties
collected under a prospective normal value system would be subject to such duty assessment
proceeding in the same way as any other anti-dumpi ng duty assessed on a prospective basis. We note
that in an anti-dumping investigation, authorities base their dumping determinations on past data and
impose the duty on the basis of that data. After the duty is imposed, however, there is always a
possibility of an importer paying a duty above its ma rgin of dumping. There is therefore a need for
having a mechanism for the refund of duties paid in excess of the margin of dumping of individual
importers. Under the current system embodied in the Anti-Dumping Agreement, this objective is
achieved through the duty assessment proceedings provi ded for under Article 9.3. Obviously, we do
not consider duties collected under a prospective normal value system to be exempt from duty
assessment proceedings. That is because in such a sy stem, just as in other systems of duty collection,
there may be changes subsequent to the impos ition of the duty, which may necessitate a duty
assessment proceeding. We note that Article 9.3 does not shed light on how duty assessment
proceedings are to be carried out. We would th ink, however, that a duty assessment proceeding with
regard to duties collected on the basis of a prospective normal value system would have to be
consistent with the nature of the referenced system. It would have been quite illogical, in our view, if
the drafters allowed prospective normal value syst ems and yet envisaged that duties collected under
such a system would be subject to a duty assessm ent proceeding under Article 9.3 in a manner that
would require the authorities to calculate a margin of dumping not on the basis of the data pertaining
to the importer seeking the initiation of the proceedi ng, but based on the aggregated data pertaining to
the exporter(s) from whom the importer imports. The prospective normal va lue system is based on
the notion of transaction-based duty collection. Th e Appellate Body's reasoning that duties collected
under such a system are nevertheless subject to duty assessment proceedings just like other duties
assessed on a prospective basis is, therefore, far from being convincing.
Mathematical Equivalence Between the First and the Third Methodologies in the Absence of Zeroing
7.134 The second contextual support stems from the fact that a general prohibition on zeroing
cannot be reconciled with the existence of the third comparison methodology (WA-T) under
Article 2.4.2. We recall the relevant parts of Article 2.4.2:
"A normal value established on a weighted average basis may be compared to prices
of individual export transactions if the authorities find a pattern of export prices

95 Appellate Body Report, US – Zeroing (Japan), supra, note 38, para. 160.

which differ significantly among different pur chasers, regions or time periods, and if
an explanation is provided as to why such differences cannot be taken into account
appropriately by the use of a weight ed average-to-weighted average or
transaction-to-transaction comparison."
7.135 We note that Article 2.4.2 allows a comparis on of WA normal value with individual export
transactions only if certain conditions are met: first, the pattern of export prices must differ
significantly among different purchasers, regions or time periods. Second, the authorities must
explain why such differences cannot be taken into ac count appropriately through the use of one of the
two principal methodologies.
7.136 An interpretation of the relevant treaty provisions that prohibits zeroing in all contexts would,
in our view, render the third methodology inutile because this methodology would then
mathematically yield the same re sult as the WA-WA methodology. That is, absent zeroing, the third
methodology would lead to the same mathematic al result as the WA-WA methodology. We recall
that the principle of effectiveness requires that "interpretation must give meaning and effect to all the
terms of a treaty. An interpreter is not free to adopt a reading that would result in reducing whole
clauses or paragraphs of a treaty to redundancy or inutility".
96
7.137 We note that the Appellate Body, in US – Zeroing (Japan) , disagreed with this proposition
and opined:
"The emphasis in the second sentence of Artic le 2.4.2 is on a "pattern", namely a
"pattern of export prices which differs significantly among different purchasers,
regions or time periods". The prices of transactions that fall within this pattern must
be found to differ significantly from othe r export prices. We therefore read the
phrase "individual export transactions" in that sentence as referring to the transactions
that fall within the relevant pricing patte rn. This universe of export transactions
would necessarily be more limited
 than the universe of export transactions to which
the symmetrical comparison methodologies in the first sentence of Article 2.4.2
would apply. In order to unmask targeted dumping, an investigating authority may
limit the application of the W-T comparison methodology to the prices of export
transactions falling within the relevant pattern."97 (emphasis added)
7.138 The Appellate Body states that the second sentence of Article 2.4.2 implies that the universe
of export transactions in the third methodology will necessarily be more limited than those in the first
two methodologies. This is because, in order to unmask targeted dumping, the authorities will base
their dumping determinations on the subset of the export transactions that fall within the relevant price
pattern.
7.139 This approach leaves certain questions unanswered. First, the Appellate Body has not pointed
to any textual basis for the proposition that the export transactions to be used in the third methodology
would necessarily be more limited than those in the first two methodologies. In light of the text of
Article 2.4.2, it is not evident to us that dumpi ng determinations in the third methodology could be
limited to the subset of the export transactions that fall within the relevant price pattern. The second
sentence of Article 2.4.2 simply mentions that the authorities may, under certain circumstances,
compare prices of individual export transactions with the WA normal value. It does not mention in
any way whether such comparison may, or has to, be limited to the subset of export transactions that
fall within the relevant price pattern. Second, assuming that this proposition does in fact have a

96 (footnote omitted) Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline ("US – Gasoline"), WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3, p. 23.
97 Appellate Body Report, US – Zeroing (Japan), supra, note 38, para. 135.

textual basis in the Agreement, the Appellate Body did not explain how the authorities would treat the
remaining export transactions. If, for instance, wh at the Appellate Body meant is that the export
transactions that do not fall within the relevant price pattern are to be excluded from dumping
determinations, this would mean disregarding them. Given the Appellate Body's strongly expressed
view that dumping has to be determined for the product under consideration as a whole and hence all
export transactions pertaining to th e product under consideration have to be taken into consideration
by the authorities, we do not consider that this can be what the Appellate Body meant. Alternatively,
if the Appellate Body meant that the authorities would use the WA-WA methodology with respect to
the export transactions that do not fall within the relevant price pattern, and combine these results with
the results obtained through the WA-T methodology for the prices that fall within the pattern, we note
that such an approach would also lead to the same mathematical result as the WA-WA methodology.
98
We therefore do not consider that the Appellate Body's approach invalidates the mathematical
equivalence problem.
7.140 Mexico argues "that mathematical equivalency does not exist if intermediate monthly average
normal values are used in the average to transac tion method and period-long average normal values
are used in the average to average method". 99 Mexico submitted calculation tables in order to
illustrate this point. 100 Through these tables, Mexico demonstrated that if one uses monthly
WA normal value in the third methodology and annu al WA normal value in the first, the resulting
margins of dumping will be different. We note, and the United States does not dispute, that if
WA normal value figures are based on different time periods in connection with the WA-WA and the
WA-T methodologies, such calculations will yield different mathematical results. For instance, if
annual WA normal value is used in the WA-WA methodology and monthly WA normal value in the
WA-T methodology, as Mexico did in its tables, these two calculations will result in different margins
of dumping. Mexico argues that this disproves th e mathematical equivalence argument presented by
the United States. We disagree. Mexico has shown no support in the text of Article 2.4.2 for the
proposition that the normal value figures used unde r the WA-WA and the WA-T methodologies may,
or have to, be based on different time periods. If they are based on the same time periods, then the
mathematical equivalence holds. In this regard, we agree with the panel in US – Zeroing (Japan) that
"[t]here exists no substantive di fference between "a weighted average normal value" in the first
sentence of Article 2.4.2 and "a normal value established on a weighted average basis" in the second
sentence of that provision".
101 We also note that the justificati on for the use of the asymmetrical third
methodology under Article 2.4.2 is the significant difference between the pattern of export prices , not
the normal value. Hence, Article 2.4.2 does not, in our view, lend support to Mexico's proposition
that the time frame for the determination of th e WA normal values under the first and the third
methodologies may be different.102
7.141 Mexico argues that because the terminology u sed in the first and the second sentences of
Article 2.4.2 to describe the WA normal values to be used under the first and the third methodologies
is not identical, the use of WA monthly normal valu es under the third methodology is not prohibited.
According to Mexico, "[h]ad the drafters intende d these phrases to have precisely the same meaning,
they would have been expected to use the identical language or provided cross-references between the
sentences". 103 While Mexico is right that the phrases used in Article 2.4.2 to refer to the WA normal

98 Through Table 2 in Exhibit US-2, the United States has shown that using the WA-T and the WA-
WA methodologies in combination under the second sentence of Article 2.4.2 would yield the same
mathematical result as using the WA-WA methodology for the totality of the calculations. Mexico has not
objected to the calculations submitted in this table.
99 Oral Statement of Mexico at the Second Meeting, para. 27.
100 Exhibit MEX-12.
101 Panel Report, US – Zeroing (Japan), supra, note 81, para. 7.129.
102 Ibid.
103 Mexico's Comments on the United States' Response to Question 3 from the Panel Following the
Second Meeting.

values in the context of the first and the third methodologies are not identical, this does not, in our
view, suffice to assert that they refer to different normal values that may be based on different time
frames. Mexico has not explained how exactly the text of Article 2.4.2 supports such an
interpretation. It is, in our view, at least one of the permissible interpretations of Article 2.4.2 that,
contrary to Mexico's point of view, this provision does not justify the establishment of the WA normal
values in the context of the first and the third met hodologies on the basis of different time periods.
We therefore disagree with Mexico's argument, ta king into consideration the principles on the treaty
interpretation that we follow in this case (supra, paras. 7.3-7.5).
7.142 Mexico notes that the methodology used in th e calculation tables submitted by Mexico based
on a comparison of WA monthly normal values w ith individual export transactions is the same
methodology prescribed in US Regulations for inv estigations where targeted dumping is identified
and the third comparison methodology is used. 104 The United States does not dispute this fact. 105 We
understand Mexico to argue that because the US Regulations allow for the use of monthly WA normal
values in the use of the third methodology, th e United States cannot logically argue in these
proceedings that Article 2.4.2 of the Agreement disa llows such an approach. We recall that we are
not called upon to assess the consistency of the mentioned US regulatory provisions with the
WTO rules. The claim that we are addressing concerns the use of simple zeroing in periodic reviews.
We therefore need not, and do not, express any vi ews about the WTO-consistency of the regulatory
provisions under US law regarding the use of WA monthly normal values in investigations where
targeted dumping is identified. What the US law prescribes regarding the use of WA monthly normal
values in connection with the third methodolo gy under the second sentence of Article 2.4.2 is
irrelevant to our assessment of whether Article 2.4.2 allows such an approach.
7.143 Based on the foregoing considerations, we rej ect Mexico's claim that simple zeroing in
periodic reviews is inconsistent with Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1
and 9.3 of the Anti-Dumping Agreement. As we mentioned in paras. 7.119 and 7.128 above, our
conclusion in this regard rests upon a permissible interpretation of the relevant treaty provisions
invoked by Mexico, which, according to our standard of review ( supra, paras. 7.1-7.2), we cannot
disregard even if there may be other permissible interpretations of such provisions.
(iv) Alleged Violations of Article 2.4 of the Anti-Dumping Agreement
7.144 Mexico's arguments in support of its claim that the use of simple zeroing in periodic reviews
is inconsistent with Article 2.4 of the Anti-Dump ing Agreement are premised on the interpretation of
this provision developed by the Appellate Body, mainly in US – Zeroing (Japan). Mexico asserts that
Article 2.4 requires the authorities to carry out a fair comparison between the normal value and export
price while comparing them for purposes of calculating a margin of dumping. Mexico recalls that any
determination of dumping has to be made for the product under consideration as a whole. The Simple
Zeroing Procedures under US law, however, "result in calculation of dumping and margins of
dumping that do not reflect all of the transactions involving the product under consideration as a
whole".106 A comparison that fails to take into account certain export transactions cannot result in a
determination of dumping for the product under consideration as a whole and cannot be considered as
a "fair comparison" within the meaning of Article 2. 4. In Mexico's view, zeroing is inherently biased

104 Oral Statement of Mexico at the Second Meeting, para. 35.
105 The United States submits, and Mexico does not contest, that although the US Regulations provide
for the use of monthly WA normal values in investigatio ns where targeted dumping is found, these provisions
have never been used by the USDOC. Response of the United States to Question 5 from the Panel Following
the Second Meeting. We do not, however, find this fact to be relevant to our assessment of Mexico's argument
regarding the issue of mathematical equivalence.
106 First Written Submission of Mexico, para. 245.

and hence in violation of the fair comparison require ment of Article 2.4 because it artificially inflates
the margin of dumping by ignoring certain export transactions.
7.145 We note that Mexico's claim under Article 2.4 is premised on the assumption that
Articles VI:1 and VI:2 of the GATT 1994 and Artic les 2.1 and 9.3 of the Anti-Dumping Agreement
prohibit simple zeroing in periodic reviews. Mexico argues that these provisions require the
authorities in a periodic review to calculate an individual margin of dumping for each exporter or
foreign producer concerned and to base such calculations on an aggregation of all export transactions
by each individual exporter or foreign producer . It follows that failing to base dumping
determinations in a periodic review on an aggr egation of all export transactions from individual
exporters or foreign producers artificially inflates such margins and therefore is inherently unfair. We
disagreed with this assumption above (supra, para. 7.123), while addressing Mexico's claim regarding
the alleged inconsistency of simple zeroing in periodic reviews with Articles VI:1 and VI:2 of the
GATT 1994 and Articles 2.1 and 9.3 of the Anti-Dumping Agreement. That is, we disagreed with
Mexico's assertion that these provisions require inve stigating authorities in a periodic review to base
their dumping determinations on an aggregation of all export transactions from each exporter. We
therefore also reject Mexico's claim that simple zeroing in periodic reviews is inherently inconsistent
with the obligation to carry out a fair comparis on between the normal value and the export price as
stipulated under Article 2.4 of the Anti-Dumping Agreement.
(v) Potential Consequences of a General Prohibition on Zeroing
7.146 Finally, we note that accepting Mexico's interp retation of Articles VI:1 and VI:2 of the
GATT 1994 and Articles 2.1, 2.4 and 9.3 of the Anti-Dumping Agreement as prohibiting simple
zeroing in periodic reviews would lead to undesira ble results. If, while calculating in a periodic
review the amount of the duty to be paid by a give n importer, the authorities have to take into account
the export prices paid by other importers importing from the same exporter or foreign producer, this
would have unfair consequences in the market. In this situation, importers with high margins of
dumping would be favoured at the expense of im porters who do not dump or who dump at a lower
margin. In such situations, importers importing at dumped prices would pay less than their true
margin of dumping because of other importers refraining from importing at dumped prices. We agree
with the United States that "[t]his kind of competitiv e disincentive to engage in fair trade could not
have been intended by the drafters of the An tidumping Agreement and sh ould not be accepted ... as
consistent with a correct interpretation of Article 9.3".
107 In addition, we note that such an approach
would unnecessarily expand the scope of periodic re views because the exporters would have to
submit information pertaining to all of their export transactions rather than those pertaining to the
importer requesting the review. This would, in our view, also cause administrative inconvenience
because the investigating authorities would have to analyze all that information and be unable to
complete the review in a timely manner. Such a heavy burden could also encourage non-cooperation
on the part of the exporters.
7.147 Furthermore, imposing on the investigating authorities an obligation to take into consideration
the prices of non-dumped imports while calculating the amount of the liability in a periodic review
would, in our view, also preclude the achievement of the function of anti-dumping duties, i.e.
removing the injurious effect of dumping. The fact that some imports are made at non-dumped prices
would not, in our view, change the fact that the domestic industry in the im porting country is injured
by dumped imports. In other words, the injury suffered by the domestic industry because of dumped
imports would not be removed by im ports at non-dumped prices. Finally, as we noted in more detail
in para. 7.133 above, we recall that a general pr ohibition on zeroing would render the administration
of prospective normal value systems impractical.

107 Oral Statement of the United States at the Second Meeting, para. 18.

7.148 We do not consider such anomalies to be the intention of the drafters. These potential
concerns over a general prohibition on zeroing, in ou r view, lend support to our interpretation of the
relevant treaty provisions provided above.
(c) Conclusion
7.149 We have found simple zeroing in periodic reviews 108 "as such" not to be inconsistent with
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping
Agreement. We therefore also reject Mexico's "a s applied" claim regarding the five periodic reviews
on Stainless Steel Sheet and Strip in Coils from Mexico carried out by the USDOC.
7.150 Having rejected Mexico's main claims rega rding simple zeroing in periodic reviews under
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping
Agreement, we decline to make findings on Mexico 's dependent claims under Article XVI:4 of the
WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.
VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 On the basis of the above findings, we conclude that:
(a) Model zeroing in investigations "as such" is inconsistent with
Article 2.4.2 of the Anti-Dumping Agreement,
(b) The USDOC acted inconsistently with Article 2.4.2 of the Anti-
Dumping Agreement in the investigation on Stainless Steel Sheet and
Strip in Coils from Mexico by using model zeroing,
(c) Simple zeroing in periodic review s is "as such" not inconsistent with
Articles VI:1 and VI:2 of the GATT 1994 and Articles 2.1, 9.3
and 2.4 of the Anti-Dumping Agreement,
(d) The USDOC did not act inconsistently with Articles VI:1 and VI:2 of
the GATT 1994 and Articles 2.1, 9.3 and 2.4 of the Anti-Dumping
Agreement by using simple zeroing in the five periodic reviews on
Stainless Steel Sheet and Strip in Coils from Mexico.
8.2 We have applied judicial economy with regard to:
(a) Mexico's claims under Articles VI:1 and VI:2 of the GATT 1994 and
Articles 2.1, 2.4 and 18.4 of the Anti-Dumping Agreement and
Article XVI:4 of the WTO Agreem ent regarding model zeroing in
investigations,
(b) Mexico's claims under Article XVI :4 of the WTO Agreement and
Article 18.4 of the Anti-Dumping Agreement regarding simple
zeroing in periodic reviews.
8.3 We recommend that the DSB request the United States to bring its measure mentioned in
paragraph 8.1(b) above into conformity with its obligations under the WTO Agreement. We have
made no recommendation regarding model zeroing in i nvestigations "as such" because, as mentioned

108 We recall that in paras. 7.7-7.9 above, we noted the description of the term "simple zeroing in
periodic reviews" offered by Mexico, and decided to use it in our analysis in this case for ease of reference.

in para. 7.50 above, we have found that the USDOC stopped using it during these dispute settlement
proceedings.
8.4 Mexico asks the Panel to suggest that the United States implement the DSB recommendations
and rulings in this dispute in respect of its "as such" claims by eliminating Model Zeroing Procedures
and Simple Zeroing Procedures. In addition, Mexico asks the Panel to suggest that the United States
eliminate zeroing from the five periodic review r esults subject to these proceedings. Mexico does not
seek a suggestion with regard to the investigation on Stainless Steel Sheet and Strip in Coils from
Mexico
 by requesting the revocation of the anti-dumping duty. 109 The United States notes that a
suggestion is not essential to the resolution of a dispute in the WTO dispute settlement system.
According to the United States, a Member is free to choose the means to implement the DSB
recommendations and rulings. In a case like this where the same measure is subject to other
implementation processes, making a suggestion may cause complications over such processes. The
United States therefore asks the Panel to reject Mexico's request for a suggestion.
8.5 We note that by virtue of Article 19.1 of the DSU, a panel has discretion to ("may") suggest
ways in which a Member could implement the re commendation that the Member concerned bring the
measure into conformity with the covered agreem ent in question. Having made no recommendations
to the DSB on Mexico's claims with respect to which Mexico seeks a suggestion, however, we cannot,
and do not, make any suggestion under Article 19.1 of the DSU in these proceedings.