EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL FROM ARGENTINA AB-2016-4
Document: Report of the Appellate Body
Date: 6 October 2016
Document codes: WT/DS473/AB/R
Complainant: Argentina
Respondent: EU
Third parties: Australia, China, Malaysia, Norway, Russia, Saudi Arabia, Turkey, U.S., Colombia, Indonesia, Mexico
Dispute stage: Appellate Body
Agreements cited: Art. 2.2  Anti-dumpingArt. VI:1  GATT 1994Art. 2.2.1.1, 9.3, 2, 18.4  Anti-dumpingArt. XVI:4  Agreement Establishing the World Trade OrganizationArt. 2.1, 2.2.2(iii), 2.4  Anti-dumpingArt. VI:2  GATT 1994Art. 3.1, 3.4, 3.5, 1  Anti-dumpingArt. VI  GATT 1994

EUROPEAN UNION – ANTI-DUMPING MEASURES ON BIODIESEL
FROM ARGENTINA
AB-2016-4
Report of the Appellate Body

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on Tariffs
and Trade 1994
Basic Regulation Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection
against dumped imports from countries not members of the European
Community (codified version), Official Journal of the European Union, L Series,
No. 343 (22 December 2009), pp. 51-73, and corrigendum thereto, L Series,
No. 7 (12 January 2010), pp. 22-23 (Panel Exhibit ARG-1)
CARBIO Cámara Argentina de Biocombustibles (Association of Argentine Biodiesel
Producers)
Council Regulation (EC)
No. 384/96
Council Regulation (EC) No. 384/96 of 22 December 1995 on protection against
dumped imports from countries not members of the European Community,
Official Journal of the European Communities, L Series, No. 56 (6 March 1996),
p.1 (Panel Exhibit ARG-4)
Council Regulation (EC)
No. 1972/2002
Council Regulation (EC) No. 1972/2002 of 5 November 2002 amending
Regulation (EC) No. 384/96 on the protection against dumped imports from
countries not members of the European Community, Official Journal of the
European Communities, L Series, No. 305 (7 November 2002), pp. 1-3 (Panel
Exhibit ARG-5)
Definitive Disclosure General Disclosure Document (Annex 1), AD593 – Anti-dumping proceeding
concerning imports of biodiesel originating in Argentina and Indonesia, Proposal
to impose definitive measures, 1 October 2013 (Panel Exhibit ARG-35)
Definitive Regulation Council Implementing Regulation (EU) No. 1194/2013 of 19 November 2013
imposing a definitive anti-dumping duty and collecting definitively the
provisional duty imposed on imports of biodiesel originating in Argentina and
Indonesia, Official Journal of the European Union, L Series, No. 315 (26
November 2013), pp. 2-26 (Panel Exhibit ARG-22)
DET Differential Export Tax
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EBB European Biodiesel Board
EU authorities European Commission and the Council of the European Union
FOB free on board
GAAP generally accepted accounting principles
GATT 1994 General Agreement on Tariffs and Trade 1994
IP investigation period
Provisional Regulation Commission Regulation (EU) No. 490/2013 of 27 May 2013 imposing a
provisional anti-dumping duty on imports of biodiesel originating in Argentina
and Indonesia, Official journal of the European Union, L Series, No. 141 (28 May
2013), pp. 6-25 (Panel Exhibit ARG-30)
SCM Agreement Agreement on Subsidies and Countervailing Measures
surrogate price for
soybeans
The average of the reference prices of soybeans published by the Argentine
Ministry of Agriculture for export FOB Argentina during the investigation period,
minus fobbing costs
USDOC United States Department of Commerce
Vienna Convention Vienna Convention on the Law of Treaties, Done at Vienna, 23 May 1969,
WTO World Trade Organization
WTO Agreement Marrakesh Agreement Establishing the World Trade Organization

PANEL EXHIBITS CITED IN THIS REPORT
Panel Exhibit Description
ARG-1 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against
dumped imports from countries not members of the European Community (codified
version), Official Journal of the European Union, L Series, No. 343 (22 December 2009),
pp. 51-73, and corrigendum thereto, L Series, No. 7 (12 January 2010), pp. 22-23
ARG-3 Council Regulation (EC) No. 3283/94 of 22 December 1994 on protection against
dumped imports from countries not members of the European Community, Official
Journal of the European Communities, L Series, No. 349 (31 December 1994), p. 1
ARG-4 Council Regulation (EC) No. 384/96 of 22 December 1995 on protection against dumped
imports from countries not members of the European Community, Official Journal of the
European Communities, L Series, No. 56 (6 March 1996), p.1
ARG-5 Council Regulation (EC) No. 1972/2002 of 5 November 2002 amending Regulation (EC)
No. 384/96 on the protection against dumped imports from countries not members of
the European Community, Official Journal of the European Communities, L Series,
No. 305 (7 November 2002), pp. 1-3
ARG-6 E. Borovikov and B. Evtimov, "EC's Treatment of Non-Market Economies in Anti-
Dumping Law: Its History: An Evolving Disregard of International Trade Rules; Its State
of Play: Inconsistent with the GATT/WTO?", Revue des Affaires Européennes (2001-
2002) (Kluwer, 2002), pp. 875-896
ARG-7 Olesia Engelbutzeder, "EU Anti-Dumping Measures Against Russian Exporters – In View
of Russian Accession to the WTO and the EU Enlargement 2004" (Peter Lang AG, 2004),
(excerpt) pp. 159-160
ARG-8 Council Regulation (EC) No. 1891/2005 of 14 November 2005 amending Regulation
(EEC) No. 3068/92 imposing a definitive anti-dumping duty on imports of potassium
chloride originating in Belarus, Russia or Ukraine, Official Journal of the European Union,
L Series, No. 302 (19 November 2005), pp. 14-21
ARG-9 Council Regulation (EC) No. 1050/2006 of 11 July 2006 imposing a definitive
anti-dumping duty on imports of potassium chloride originating in Belarus and Russia,
Official Journal of the European Union, L Series, No. 191 (12 July 2006), pp. 1-25
ARG-10 Council Regulation (EC) No. 954/2006 of 27 June 2006 imposing definitive anti-dumping
duty on imports of certain seamless pipes and tubes, or iron or steel originating in
Croatia, Romania, Russia and Ukraine, repealing Council Regulations (EC) No. 2320/97
and (EC) No. 348/2000, terminating the interim and expiry reviews of the anti-dumping
duties on imports of certain seamless pipes and tubes of iron or non-alloy steel
originating, inter alia, in Russia and Romania and terminating the interim reviews of the
anti-dumping duties on imports of certain seamless pipes and tubes of iron or non-alloy
steel originating, inter alia, in Russia and Romania and in Croatia and Ukraine, Official
Journal of the European Union, L Series, No. 175 (29 June 2006), pp. 4-38
ARG-11 Council Regulation (EC) No. 812/2008 of 11 August 2008 amending Regulation (EC)
No. 954/2006 imposing a definitive anti-dumping duty on imports of certain seamless
pipes and tubes of iron or steel originating, inter alia, in Russia, Official Journal of the
European Union, L Series, No. 220 (15 August 2008), pp. 1-5
ARG-12 Council Implementing Regulation (EU) No. 1269/2012 of 21 December 2012 amending
Implementing Regulation (EU) No. 585/2012 imposing a definitive anti-dumping duty on
imports of certain seamless pipes, of iron or steel, originating, inter alia, in Russia,
following a partial interim review pursuant to Article 11(3) of Regulation (EC)
No. 1225/2009, Official Journal of the European Union, L Series, No. 357 (28 December
2012), pp. 1-6
ARG-13 Council Regulation (EC) No. 1911/2006 of 19 December 2006 imposing a definitive
anti-dumping duty on imports of solutions of urea and ammonium nitrate originating in
Algeria, Belarus, Russia and Ukraine following an expiry review pursuant to Article 11(2)
of Regulation (EC) No. 384/96, Official Journal of the European Union, L Series, No. 365
(21 December 2006), pp. 26-49
ARG-14 Council Regulation (EC) No. 238/2008 of 10 March 2008 terminating the partial interim
review pursuant to Article 11(3) of Regulation (EC) No. 384/96 of the anti-dumping duty
on imports of solutions of urea and ammonium nitrate originating in Russia, Official
Journal of the European Union, L Series, No. 75 (18 March 2008), pp. 14-21

Panel Exhibit Description
ARG-15 Council Implementing Regulation (EU) No. 1251/2009 of 18 December 2009 amending
Regulation (EC) No. 1911/2006 imposing a definitive anti-dumping duty on imports of
solutions of urea and ammonium nitrate originating, inter alia, in Russia, Official Journal
of the European Union, L Series, No. 338 (19 December 2009), pp. 5-11
ARG-16 Council Regulation (EC) No. 236/2008 of 10 March 2008 terminating the partial interim
review pursuant to Article 11(3) of Regulation (EC) No. 384/96 of the anti-dumping duty
on imports of ammonium nitrate originating in Russia, Official Journal of the European
Union, L Series, No. 75 (18 March 2008), pp. 1-7
ARG-17 Council Regulation (EC) No. 661/2008 of 8 July 2008 imposing a definitive anti-dumping
duty on imports of ammonium nitrate originating in Russia following an expiry review
pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of
Regulation (EC) No. 384/96, Official Journal of the European Union, L Series, No. 185
(12 July 2008), pp. 1-34
ARG-18 Council Regulation (EC) No. 237/2008 of 10 March 2008 terminating the partial interim
review pursuant to Article 11(3) of Regulation (EC) No. 384/96 of the anti-dumping duty
on imports of ammonium nitrate originating, inter alia, in Ukraine, Official Journal of the
European Union, L Series, No. 75 (18 March 2008), pp. 8-13
ARG-19 Council Regulation (EC) No. 907/2007 of 23 July 2007 repealing the anti-dumping duty
on imports of urea originating in Russia, following an expiry review pursuant to
Article 11(2) of Regulation (EC) No. 384/96, and terminating the partial interim reviews
pursuant to Article 11(3) of such imports originating in Russia, Official Journal of the
European Union, L Series, No. 198 (31 July 2007), pp. 4-19
ARG-20 Council Regulation (EC) No. 240/2008 of 17 March 2008 repealing the anti-dumping
duty on imports of urea originating in Belarus, Croatia, Libya and Ukraine, following an
expiry review pursuant to Article 11(2) of Regulation (EC) No. 384/96, Official Journal of
the European Union, L Series, No. 75 (18 March 2008), pp. 33-48
ARG-21 Council Regulation (EC) No. 1256/2008 of 16 December 2008 imposing a definitive
anti-dumping duty on imports of certain welded tubes and pipes of iron or non-alloy
steel originating in Belarus, the People's Republic of China and Russia following a
proceeding pursuant to Article 5 of Regulation (EC) No. 384/96, originating in Thailand
following an expiry review pursuant to Article 11(2) of the same Regulation, originating
in Ukraine following an expiry review pursuant to Article 11(2) and an interim review
pursuant to Article 11(3) of the same Regulation, and terminating the proceedings in
respect of imports of the same product originating in Bosnia and Herzegovina and
Turkey, Official Journal of the European Union, L Series, No. 343 (19 December 2008),
pp. 1-38
ARG-22 Council Implementing Regulation (EU) No. 1194/2013 of 19 November 2013 imposing a
definitive anti-dumping duty and collecting definitively the provisional duty imposed on
imports of biodiesel originating in Argentina and Indonesia, Official Journal of the
European Union, L Series, No. 315 (26 November 2013), pp. 2-26
ARG-23 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February
2013, Case T-235/08, Acron OAO and Dorogobuzh OAO v Council of the European Union
ARG-30 Commission Regulation (EU) No. 490/2013 of 27 May 2013 imposing a provisional
anti-dumping duty on imports of biodiesel originating in Argentina and Indonesia,
Official Journal of the European Union, L Series, No. 141 (28 May 2013), pp. 6-25
ARG-31 Consolidated version of the new anti-dumping complaint concerning imports of biodiesel
originating in Argentina and Indonesia – Complaint to the Commission of the European
Union under Council Regulation (EC) No. 1225/2009
ARG-32 Notice of initiation of an anti-dumping proceeding concerning imports of biodiesel
originating in Argentina and Indonesia, Official Journal of the European Union, C Series,
No. 260 (29 August 2012), pp. 8-16
ARG-33 Notice of initiation of an anti-subsidy proceeding concerning imports of biodiesel
originating in Argentina and Indonesia, Official Journal of the European Union, C Series,
No. 342 (10 November 2012), pp. 12-20
ARG-35 General Disclosure Document (Annex 1), AD593 – Anti-dumping proceeding concerning
imports of biodiesel originating in Argentina and Indonesia, Proposal to impose definitive
measures, 1 October 2013

Panel Exhibit Description
ARG-36 Commission Regulation (EU) No. 1198/2013 of 25 November 2013 terminating the
anti-subsidy proceeding concerning imports of biodiesel originating in Argentina and
Indonesia and repealing Regulation (EU) No. 330/2013 making such imports subject to
registration, Official Journal of the European Union, L Series, No. 315 (26 November
2013), pp. 67-68
ARG-37 Written Submission by CARBIO of 5 November 2012 in AD593 – Anti-dumping
investigation concerning imports of biodiesel originating in, inter alia, Argentina
ARG-39 Letter dated 17 October 2013 from CARBIO and its members providing comments on
the Definitive Disclosure
ARG-43 CARBIO and its Members, PowerPoint presentation on AD593 – Anti-dumping
investigation concerning imports of biodiesel originating in, inter alia, Argentina,
presented at the hearing held on 14 December 2012
ARG-46 CARBIO, PowerPoint presentation on AD593 – Biodiesel originating in Argentina,
presented at the hearing held on 8 July 2013
ARG-51 Letter dated 1 July 2013 from CARBIO providing comments on the Provisional Disclosure
ARG-52 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February
2013, Case T-118/10, Acron OAO v Council of the European Union
ARG-53 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February
2013, Case T-459/08, EuroChem Mineral and Chemical Company OAO (Eurochem MCC)
v Council of the European Union
ARG-54 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February
2013, Case T-84/07, EuroChem Mineral and Chemical Company OAO (Eurochem MCC) v
Council of the European Union
EU-3 Commission Decision of 13 February 2013 terminating the anti-dumping proceeding
concerning imports of white phosphorus, also called elemental or yellow phosphorus,
originating in the Republic of Kazakhstan, Official Journal of the European Union,
L Series, No. 43 (14 February 2013), pp. 38-58
EU-4 Commission Regulation (EC) No. 988/2004 of 17 May 2004 imposing provisional
anti-dumping duties on imports of okoumé plywood originating in the People's Republic
of China, Official Journal of the European Union, L Series, No. 181 (18 May 2004),
pp. 5-23
EU-8 Tietje et al., "Cost of Production Adjustments in Anti-dumping Proceedings: Challenging
Raw Material Inputs Dual Pricing Systems in EU Anti-dumping Law and Practice" (2011)
45(5) Journal of World Trade, pp. 1071-1102
EU-24 Commission Regulation (EC) No. 1235/2003 of 10 July 2003 imposing a provisional
anti-dumping duty on imports of silicon originating in Russia, Official Journal of the
European Union, L Series, No. 173 (11 July 2003), pp. 14-34

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Import
Measures
Appellate Body Reports, Argentina – Measures Affecting the Importation of Goods,
WT/DS438/AB/R / WT/DS444/AB/R / WT/DS445/AB/R, adopted 26 January 2015
Argentina – Textiles and
Apparel
Appellate Body Report, Argentina – Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted 22 April
1998, DSR 1998:III, p. 1003
China – Auto Parts Appellate Body Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, adopted 12 January 2009,
DSR 2009:I, p. 3
China – GOES Appellate Body Report, China – Countervailing and Anti-Dumping Duties on Grain
Oriented Flat-Rolled Electrical Steel from the United States, WT/DS414/AB/R,
adopted 16 November 2012, DSR 2012:XII, p. 6251
China – HP-SSST (Japan)
/ China – HP-SSST (EU)
Appellate Body Reports, China – Measures Imposing Anti-Dumping Duties on
High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan /
China – Measures Imposing Anti-Dumping Duties on High-Performance Stainless
Steel Seamless Tubes ("HP-SSST") from the European Union, WT/DS454/AB/R
and Add.1 / WT/DS460/AB/R and Add.1, adopted 28 October 2015
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R /
WT/DS433/AB/R, adopted 29 August 2014, DSR 2014:III, p. 805
EC — Bed Linen
(Article 21.5 – India)
Appellate Body Report, European Communities – Anti-Dumping Duties on Imports
of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU by
India, WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, p. 965
EC — Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping
Measures on Certain Iron or Steel Fasteners from China, WT/DS397/AB/R,
adopted 28 July 2011, DSR 2011:VII, p. 3995
EC – Fasteners (China)
(Article 21.5 – China)
Appellate Body Report, European Communities – Definitive Anti-Dumping Measures
on Certain Iron or Steel Fasteners from China – Recourse to Article 21.5 of the
DSU by China, WT/DS397/AB/RW and Add.1, adopted 12 February 2016
EC – IT Products Panel Reports, European Communities and its member States – Tariff Treatment
of Certain Information Technology Products, WT/DS375/R / WT/DS376/R /
WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933
EC – Poultry Appellate Body Report, European Communities – Measures Affecting the
Importation of Certain Poultry Products, WT/DS69/AB/R, adopted 23 July 1998,
DSR 1998:V, p. 2031
EC – Salmon (Norway) Panel Report, European Communities – Anti-Dumping Measure on Farmed Salmon
from Norway, WT/DS337/R, adopted 15 January 2008, and Corr.1, DSR 2008:I,
p. 3
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on
Malleable Cast Iron Tube or Pipe Fittings from Brazil, WT/DS219/AB/R, adopted
18 August 2003, DSR 2003:VI, p. 2613
EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable Cast
Iron Tube or Pipe Fittings from Brazil, WT/DS219/R, adopted 18 August 2003, as
modified by Appellate Body Report WT/DS219/AB/R, DSR 2003:VII, p. 2701
EC and certain member
States – Large Civil
Aircraft
Appellate Body Report, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June
2011, DSR 2011:I, p. 7
Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from
Turkey, WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, p. 2667
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/AB/R, adopted 16 January 1998,
DSR 1998:I, p. 9
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and
Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December
2005, DSR 2005:XXII, p. 10853

Short Title Full Case Title and Citation
Thailand – H-Beams Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes and
Sections of Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/AB/R,
adopted 5 April 2001, DSR 2001:VII, p. 2701
Thailand – H-Beams Panel Report, Thailand – Anti-Dumping Duties on Angles, Shapes and Sections of
Iron or Non-Alloy Steel and H-Beams from Poland, WT/DS122/R, adopted 5 April
2001, as modified by Appellate Body Report WT/DS122/AB/R, DSR 2001:VII,
p. 2741
US — 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916,
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, DSR 2000:X,
p. 4793
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R
and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Carbon Steel (India) Appellate Body Report, United States – Countervailing Measures on Certain
Hot-Rolled Carbon Steel Flat Products from India, WT/DS436/AB/R, adopted
19 December 2014, DSR 2014:V, p. 1727
US – Continued Zeroing Appellate Body Report, United States – Continued Existence and Application of
Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III,
p. 1291
US – Continued Zeroing Panel Report, United States – Continued Existence and Application of Zeroing
Methodology, WT/DS350/R, adopted 19 February 2009, as modified as
Appellate Body Report WT/DS350/AB/R, DSR 2009:III, p. 1481
US – Corrosion Resistant
Steel Sunset Review
Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on
Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R,
adopted 9 January 2004, DSR 2004:I, p. 3
US – Countervailing and
Anti-Dumping Measures
(China)
Appellate Body Report, United States – Countervailing and Anti-Dumping
Measures on Certain Products from China, WT/DS449/AB/R and Corr.1, adopted
22 July 2014, DSR 2014:VIII, p. 3027
US – FSC (Article 21.5 –
EC)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the European
Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p. 55
US – Hot-Rolled Steel Appellate Body Report, United States – Anti-Dumping Measures on Certain
Hot-Rolled Steel Products from Japan, WT/DS184/AB/R, adopted 23 August 2001,
DSR 2001:X, p. 4697
US – Oil Country Tubular
Goods Sunset Reviews
Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures
on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted
17 December 2004, DSR 2004:VII, p. 3257
US – Section 211
Appropriations Act
Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of
1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589
US – Section 301 Trade
Act
Panel Report, United States – Sections 301-310 of the Trade Act of 1974,
WT/DS152/R, adopted 27 January 2000, DSR 2000:II, p. 815
US – Shrimp II
(Viet Nam)
Appellate Body Report, United States – Anti-Dumping Measures on Certain Shrimp
from Viet Nam, WT/DS429/AB/R, and Corr.1, adopted 22 April 2015
US – Softwood Lumber V Panel Report, United States – Final Dumping Determination on Softwood Lumber
from Canada, WT/DS264/R, adopted 31 August 2004, as modified by
Appellate Body Report WT/DS264/AB/R, DSR 2004:V, p. 1937
US – Softwood Lumber V
(Article 21.5 – Canada)
Appellate Body Report, United States – Final Dumping Determination on Softwood
Lumber from Canada – Recourse to Article 21.5 of the DSU by Canada,
WT/DS264/AB/RW, adopted 1 September 2006, DSR 2006:XII, p. 5087
US – Stainless Steel
(Mexico)
Appellate Body Report, United States – Final Anti-Dumping Measures on Stainless
Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR 2008:II, p. 513
US – Washing Machines Appellate Body Report, United States – Anti-Dumping and Countervailing
Measures on Large Residential Washers from Korea, WT/DS464/AB/R and Add.1,
adopted 26 September 2016

Short Title Full Case Title and Citation
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven Wool
Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1,
DSR 1997:I, p. 323
US – Zeroing (EC) Appellate Body Report, United States – Laws, Regulations and Methodology for
Calculating Dumping Margins ("Zeroing"), WT/DS294/AB/R, adopted 9 May 2006,
and Corr.1, DSR 2006:II, p. 417
US – Zeroing (Japan) Appellate Body Report, United States – Measures Relating to Zeroing and Sunset
Reviews, WT/DS322/AB/R, adopted 23 January 2007, DSR 2007:I, p. 3

APPELLATE BODY

European Union – Anti-Dumping Measures
on Biodiesel from Argentina

European Union, Appellant/Appellee
Argentina, Other Appellant/Appellee

Australia, Third Participant
China, Third Participant
Colombia, Third Participant
Indonesia, Third Participant
Mexico, Third Participant
Norway, Third Participant
Russia, Third Participant
Saudi Arabia, Third Participant
Turkey, Third Participant
United States, Third Participant

AB-2016-4

Appellate Body Division:

Bhatia, Presiding Member
Van den Bossche, Member
Zhang, Member

1 INTRODUCTION
1.1. The European Union and Argentina each appeals certain issues of law and legal
interpretations developed in the Panel Report, European Union – Anti-Dumping Measures on
Biodiesel from Argentina1 (Panel Report). The Panel was established on 25 April 2014 to consider a
complaint by Argentina with respect to two measures of the European Union2: (i) the anti-dumping
measure imposed by the European Union on imports of biodiesel originating in Argentina 3; and
(ii) the second subparagraph of Article 2(5) of Council Regulation (EC) No. 1225/2009 of
30 November 2009 on protection against dumped imports from countries not members of the
European Community4 (Basic Regulation).5
1.2. The anti -dumping measure on biodiesel challenged by Argentina was adopted upon
conclusion of an investigation on imports of biodies el originating in Argentina and Indonesia. 6 The
European Commission initiated the investigation on 29 August 2012, following a complaint
submitted by the European Biodiesel Board (EBB). 7 Provisional anti-dumping duties were imposed

1 WT/DS473/R, 29 March 2016.
2 Panel Report, para. 2.1. See also Request for the Establishment of a Panel by Argentina, WT/DS473/5.
3 Panel Report, para. 2.3 (referring to Commission Regulation (EU) No. 490/2013 of 27 May 2013
imposing a provisional anti-dumping duty on imports of biodiesel originating in Argentina and Indonesia,
Official Journal of the European Union, L Series, No. 141 (28 May 2013), pp. 6-25 (Provisional Regulation)
(Panel Exhibit ARG-30); and Council Implementing Regulation (EU) No. 1194/2013 of 19 November 2013
imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of
biodiesel originating in Argentina and Indonesia, Official Journal of the European Union, L Series, No. 315
(26 November 2013), pp. 2-26 (Definitive Regulation) (Panel Exhibit ARG-22)). In this Report, we refer to both
the Provisional Regulation and Definitive Regulation collectively as the "anti-dumping measure on biodiesel".
4 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports
from countries not members of the European Community (codified version), Official Journal of the
European Union, L Series, No. 343 (22 December 2009), pp. 51-73, and corrigendum thereto, L Series, No. 7
(12 January 2010), pp. 22-23 (Panel Exhibit ARG-1).
5 Panel Report, para. 2.2 (referring to Basic Regulation (Panel Exhibit ARG-1)).
6 Panel Report, para. 2.3.
7 Panel Report, para. 2.3 (referring to Notice of initiation of an anti-dumping proceeding concerning
imports of biodiesel originating in Argentina and Indonesia, Official Journal of the European Union, C Series,
No. 260 (29 August 2012), pp. 8-16 (Notice of initiation of the anti-dumping investigation) (Panel Exhibit
ARG-32); and Consolidated version of the new anti-dumping complaint concerning imports of biodiesel
originating in Argentina and Indonesia – Complaint to the Commission of the European Union under Council
Regulation (EC) No. 1225/2009 (Consolidated version of the complaint) (Panel Exhibit ARG-31)). In addition,
and also following a complaint by the EBB, on 10 November 2012, the EU authorities initiated a countervailing
duty investigation with regard to imports of biodiesel from Argentina and Indonesia. The EU authorities

on 29 May 2013 through t he Provisional Regulation , and definitive anti -dumping duties on
27 November 2013 through the Definitive Regulation .8 With regard to the
Argentine producers/exporters, the rates of the provisional anti-dumping duties applied were equal
to the dumping margi ns ranging from 6.8% to 10.6%. 9 In the Definitive Regulation, the
EU authorities10 confirmed the provisional findings of dumping and injury, and calculated dumping
margins ranging from 41.9% to 49.2%. As the se dumping margins exceeded the inju ry margins
calculated by the EU authorities, which ranged from 22% to 25.7%, the EU authorities applied
duties corresponding to the injury margins.11
1.3. Argentina claimed before the Panel that the anti -dumping measure on biodiesel is
inconsistent with several provisions of the Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 ( Anti-Dumping Agreement ) and the
General Agreement on Tariffs and Trade 1994 ( GATT 1994 ) relating to the dumping margin
determination, the injury and causatio n determinations, and the imposition of duties. Specifically,
Argentina alleged that the European Union acted inconsistently with: (i) Article 2.2.1.1 of the
Anti-Dumping Agreement by failing to calculate the cost of production of the product under
investigation on the basis of records kept by the Argentine producers 12, and by including costs not
associated with the production and sale of biodiesel in the calculation of the cost of production;
(ii) Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b )(ii) of the GATT 1994 by failing
to construct the normal value of the exports of biodiesel on the basis of the cost of production in
the country of origin13; (iii) Articles 2.2 and 2.2.2(iii) of the Anti -Dumping Agreement by failing to
base the profit-margin component of the constructed normal value on a reasonable method within
the meaning of Article 2.2.2(iii); (iv) Article 2.4 of the Anti-Dumping Agreement by failing to make
due allowance for differences affecting price comparability and thus precluding a fair comparison
between the normal value and the export price; (v) Article 9.3 of the Anti -Dumping Agreement
and Article VI:2 of the GATT 1994 by imposing anti -dumping duties in excess of the margins of
dumping that should have been established under Art icle 2 of the Anti -Dumping Agreement;
(vi) Articles 3.1 and 3.4 of the Anti -Dumping Agreement with regard to the EU authorities' injury
determination; and (vii) Articles 3.1 and 3.5 of the Anti -Dumping Agreement with regard to the
EU authorities' non -attribution analysis and finding that the injury suffered by the EU domestic
industry did not result from factors other than dumped imports.14
1.4. Furthermore, Argentina claimed before the Panel that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with: (i) Article 2.2.1.1 and, as a
consequence, Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
by providing that the authorities shall reject or adjust the cost data in the records of producers o r
exporters under investigation when those costs reflect prices that are "abnormally or

terminated that investigation on 27 November 2013 following the withdrawal of the complaint by the domestic
industry. (Panel Report, fn 15 to para. 2.3 (referring to Notice of initiation of an anti-subsidy proceeding
concerning imports of biodiesel originating in Argentina and Indonesia, Official Journal of the European Union,
C Series, No. 342 (10 November 2012), pp. 12-20 (Notice of initiation of the countervailing duty investigation)
(Panel Exhibit ARG-33); and Commission Regulation (EU) No. 1198/2013 of 25 November 2013, terminating
the anti-subsidy proceeding concerning imports of biodiesel originating in Argentina and Indonesia and
repealing Regulation (EU) No. 330/2013 making such imports subject to registration, Official Journal of the
European Union, L Series, No. 315 (26 November 2013), pp. 67-68 (Notice of termination of the countervailing
duty investigation) (Panel Exhibit ARG-36))
8 Panel Report, para. 2.3 (referring to Provisional Regulation (Panel Exhibit ARG-30); and Definitive
Regulation (Panel Exhibit ARG-22)).
9 Panel Report, para. 7.179 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 179).
10 The European Commission conducts investigations and adopts preliminary determinations; the
Council of the European Union adopts final determinations on the basis of proposals from the
European Commission. (Panel Report, fn 17 to para. 2.3) We refer to both collectively as the "EU authorities".
11 Panel Report, para. 7.179. The factual aspects of this dispute are set forth in greater detail in
paragraphs 2.1-2.3, 7.72-7.73, 7.179-7.184, 7.279-7.281, 7.311-7.316, 7.374-7.379, 7.441-7.448, 7.473-
7.476, 7.491-7.496, and 7.512-7.517 of the Panel Report, and in section 5 and paragraphs 6.117-6.118 of this
Report.
12 Argentina claimed that, as a consequence of this inconsistency, the European Union also acted
inconsistently with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
(Panel Report, paras. 3.1.b.i, 7.193, and 7.250)
13 Argentina claimed that, as a result of the inconsistencies in (i) to (ii) above, the EU authorities also
acted inconsistently with Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994.
14 Panel Report, para. 3.1.b.

artificially low" as a result of an alleged market distortion 15; (ii) Article 2.2 of the Anti -Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994 by providing tha t the costs shall be adjusted
or established in certain cases "on any other reasonable basis, including information from other
representative markets"16; and, as a consequence, (iii) Article XVI:4 of the Marrakesh Agreement
Establishing the World Trade Organization (WTO Agreement) and Article 18.4 of the Anti -Dumping
Agreement.17
1.5. The European Union requested the Panel to reject Argentina's claims in their entirety. 18 In
addition, the European Union submitted a request for a preliminary ruling, arguing that cer tain
claims in Argentina's panel request fell outside the Panel's terms of reference because: (i) the
panel request failed to identify the specific measures at issue; (ii) the panel request failed to meet
the requirement in Article 6.2 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ( DSU) to "provide a brief summary of the legal basis of the complaint
sufficient to present the problem clearly"; and/or (iii) they were not included in Argentina's request
for consultations. 19 The Panel declined to issue the ruling requested by the European Union;
finding, instead, that Argentina's panel request fulfils the requirements of Article 6.2 of the DSU 20,
and that "the claims in the panel request may reasonably be said to have evolved fr om those in
the request for consultations". 21 The Panel therefore ruled that the claims subject to the
European Union's request for a preliminary ruling fell within the Panel's terms of reference.22
1.6. In the Panel Report, circulated to Members of the World Tra de Organization (WTO) on
29 March 2016, the Panel found that:
a. With respect to Argentina's claims concerning the anti-dumping measure imposed by the
European Union on imports of biodiesel from Argentina:
i. The European Union acted inconsistently with Article 2.2.1.1 of the Anti -Dumping
Agreement by failing to calculate the cost of production of the product under
investigation on the basis of the records kept by the producers23;
ii. The European Union acted inconsistently with Article 2.2 of the Anti -Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994 by using a "cost" for inputs that
was not the cost prevailing "in the country of origin", namely, Argentina24;
iii. Argentina had not established that the European Union acted inconsistently with the
requirement under Article 2.4 of the Anti -Dumping Agreement to make a "fair
comparison"25;

18 Panel Report, para. 3.3.
19 Panel Report, paras. 7.9-7.10. See also paras. 7.17, 7.35, and 7.58; and Executive summary of the
European Union's request for a preliminary ruling, Panel Report, Annex C-5.
20 Panel Report, para. 7.34. See also paras. 7.32-7.33.
21 Panel Report, para. 7.54. See also paras. 7.62-7.64.
22 These claims include: (i) the claim under Article 9.3 of the Anti-Dumping Agreement; and (ii) claims
concerning the consistency of the second subparagraph of Article 2(5) of the Basic Regulation with Article 2.2
of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994. (See Panel Report, paras. 7.34, 7.55, 7.64,
and 8.1.a.i-8.1.a.iii) With respect to the other claims subject to the European Union's preliminary ruling
request, the Panel noted that Argentina had not pursued those claims. The Panel therefore considered the
aspects of the European Union's request regarding those claims to be moot, and made no findings on them.
(Ibid., paras. 7.12-7.14 and 8.1.a.iv)
23 Panel Report, para. 8.1.c.i. See also para. 7.249. The Panel did not reach findings as to whether, as a
consequence, the European Union acted inconsistently with Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994. (Ibid., para. 8.1.c.i; see also para. 7.250)
24 Panel Report, para. 8.1.c.ii. See also para. 7.260. The Panel did not find it necessary, for the effective
resolution of this dispute, to reach findings as to: (i) whether the European Union acted inconsistently with
Article 2.2.1.1 of the Anti-Dumping Agreement because it included costs not associated with the production
and sale of biodiesel in the calculation of the cost of production; or (ii) whether the European Union acted
inconsistently with Article 2.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994 as a result of
inconsistencies with Articles 2.2 and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994. (Ibid., paras. 8.1.c.iii and 8.1.c.iv; see also paras. 7.269 and 7.276)

iv. Argentina had not established that the European Union acted inconsistently with
Articles 2.2.2(iii) and 2.2 of the Anti -Dumping Agreement in its determination of the
amount for profit s applied in the construction of the Argentine producers' normal
value26;
v. The European Union acted inconsistently with Article 9.3 of the Anti -Dumping
Agreement and Article VI:2 of the GATT 1994 by imposing anti -dumping duties in
excess of the margins of du mping that should have been established under Article 2
of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994, respectively27;
vi. The European Union acted inconsistently with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement in its examination of t he impact of the dumped imports on
the domestic industry, insofar as such examination related to production capacity
and capacity utilization28; and
vii. Argentina had not established that the European Union's non-attribution analysis was
inconsistent with Articles 3.1 and 3.5 of the Anti-Dumping Agreement.29
b. With respect to Argentina's claims concerning the EU Basic Regulation:
i. Argentina had not established that the second subparagraph of Article 2(5) is
inconsistent "as such" with Article 2.2.1.1 of the Anti -Dumping Agreement and, as a
consequence, Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of
the GATT 199430;
ii. Argentina had not established that the second subparagraph of Article 2(5) is
inconsistent "as such" with Article 2.2 of the Anti -Dumping Agreement and with
Article VI:1(b)(ii) of the GATT 199431; and, therefore
iii. Argentina had not established that the second subparagraph of Article 2(5) is
inconsistent "as such" with Article XVI:4 of the WTO Agreement and Article 18.4 of
the Anti-Dumping Agreement.32
1.7. On 20 May 2016 , the European Union notified the Dispute Settlement Body ( DSB), pursuant
to Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the
Panel Report and certain legal interpretations develope d by the Panel, and filed a Notice of
Appeal33 and an appellant's submission pursuant to Rule 20 and Rule 21, respectively, of the
Working Procedures for Appellate Review34 (Working Procedures). On 25 May 2016 ,
Argentina notified the DSB, pursuant to Article s 16.4 and 17 of the DSU, of its intention to appeal
certain issues of law covered in the Panel Report and certain legal interpretations developed by the
Panel, and filed a Notice of Other Appeal35 and an other appellant's submission pursuant to Rule 23
of the Working Procedures. On 7 June 2016, the European Union and Argentina each filed an
appellee's submission.36 On 10 June 2016, Australia, China, Colombia, Indonesia, Mexico, Russia,

28 Panel Report, para. 8.1.c.viii. See also para. 7.431. The Panel found that Argentina's claims under
Articles 3.1 and 3.4 of the Anti-Dumping Agreement concerning the EU authorities' evaluation of return on
investments fell outside the Panel's terms of reference. (Ibid., para. 8.1.c.ix; see also para. 7.429)
30 Panel Report, para. 8.1.b.i. See also paras. 7.153-7.154.
31 Panel Report, para. 8.1.b.ii. See also paras. 7.169-7.174.
33 Notification of an Appeal by the European Union, WT/DS473/10.
34 WT/AB/WP/6, 16 August 2010.
35 Notification of an Other Appeal by Argentina, WT/DS473/11.
36 Pursuant to Rules 22 and 23(4) of the Working Procedures.

Saudi Arabia, and the United States each filed a third participant's submission.37 On the same day,
Norway and Turkey each notified its intention to appear at the oral hearing as a third participant.38
1.8. By letter of 1 June 2016, the participants and third participants were informed that, in
accordance with Rule 15 of the Working Procedures, the Appellate Body had notified the Chair of
the DSB of its decision to authorize Appellate Body Member Mrs Yuejiao Zhang to complete the
disposition of this appeal, even though her second term was due to expire before the completion of
the appellate proceedings.
1.9. On 30 June 2016, the Appellate Body Division hearing th is appeal received two letters from
the European Union. In the first letter, the European Union requested a period of 50 minutes to
deliver its oral statement at the hearing. The Eu ropean Union expressed the view that there is "an
unusual volume of third participant submissions in this appeal", and that these submissions "refer
to a number of points that have not been raised by Argentina". The European Union asserted that
it needed to have a full opportunity to address these additional points on its "own motion" and "in
an appropriately structured way". In the second letter, the European Union requested that
additional procedures be adopted for: (i) public observation of the oral hear ing; and (ii) viewing of
a recording of the oral hearing by third participants. On 1 July 2016, the Division invited Argentina
and the third participants to comment on these requests by 12 noon on Tuesday, 5 July 2016. In
response, Argentina, China, Mexico, and the United States submitted comments.
1.10. Having received comments on the request made by the European Union in its first letter 39,
on 6 July 2016, pursuant to Rule 28(1) of the Working Procedures, the Division invited the
European Union to submit an addi tional memorandum by 11 July 2016 to identify the precise
points referred to by the third participants that allegedly had not been raised by Argentina, and to
explain the reasons for its concerns with these points. In the same letter, the Division also invited
Argentina and the third participants to respond in writing, if they so wished, by 14 July 2016. 40 By
the deadlines set out above, the European Union submitted a "non -exhaustive list" of arguments
raised by certain third participants that it claimed had not been developed in Argentina's written
submissions, and Argentina and China each provided a written response. 41 By letter
dated 15 July 2016, the Division informed the participants and third participants that they would
be accorded, respectively, 35 minutes each and 7 minutes each for their oral statements at the
hearing. With respect to the requests made by the European Union in its second letter, the
Division received comments from Argentina, China, Mexico, and the United States. 42 On 11 July

37 Pursuant to Rule 24(1) of the Working Procedures.
38 Pursuant to Rule 24(2) of the Working Procedures. Malaysia, which was a third party before the Panel,
neither filed a third participant's submission nor notified its intention to appear at the oral hearing.
39 Argentina argued that the length of the third participants' submissions in these proceedings did not
appear exceptionally long, and that it was unable to identify any issue in these submissions that had not been
raised by the participants. In Argentina's view, the request to extend the time for the opening statements to
50 minutes was unwarranted, and an extension of five to ten minutes to the time usually allocated to each
participant would suffice. Mexico expressed support for retaining sufficient flexibility to ensure that the
participants and third participants could make their statements.
40 On 8 July 2016, the European Union and China each requested an extension of the time period for
filing, respectively, the additional memorandum, and the response thereto. The Division declined these
requests in a Procedural Ruling issued on 9 July 2016. The Procedural Ruling can be found in Annex D-1 of the
Addendum to this Report, contained in document WT/DS473/AB/R/Add.1.
41 Argentina argued that the points identified in the non-exhaustive list of the European Union either
were addressed by Argentina or were points that responded to the European Union's own arguments.
Therefore, Argentina considered that an additional five-minute period would suffice to allow the
European Union to respond to these points in its oral statement. China stated that third participants frequently
raise points not developed by the participants, and that the European Union had not identified any
extraordinary circumstances in this dispute that would justify an extension of time for its oral statement.
42 Regarding the request to open the oral hearing to public observation, Argentina expressed regret that
the European Union chose to make this request on a unilateral basis, and indicated that it would prefer not to
have the hearing open to public observation in these proceedings. Mexico indicated that it would not object to
the request, while China stated that it wished to keep its statements and answers to questions confidential
should the hearing be opened to public observation. Both China and Mexico emphasized that their positions in
this dispute are without prejudice to their systemic positions on this issue. The United States confirmed its
support for the European Union's request, as well as its wish to make its statements and answers to questions
public. Regarding the European Union's request to adopt additional procedures for viewing a video recording of
the oral hearing by the third participants, Argentina questioned the purposes to be served by such procedures
and expressed concerns as to the administrative burden such procedures would entail. None of the
third participants supported this request. Further details regarding the comments by Argentina and the

2016, the Division issued a Procedural Ruling in which the Division declined the European Union's
request to adopt additional procedures: (i) to allow public observation of the oral hearing, and
(ii) to enable the third participants to view a video recording of the oral hearing. The Procedural
Ruling can be found in Annex D-2 of the Addendum to this Report.
1.11. By letter of 19 July 2016, the Chair of the Appellate Body notified the Chair of the DSB that
the Appellate Body would not be able to circulate its Report within the 60-day period pursuant to
Article 17.5 of the DSU, or within the 90-day period pursuant to the same provision.43 The Chair of
the Appellate Body explained that this was due to a number of factors, including the number and
complexity of the issues raise d in this and concurrent appellate proceedings, the demands on the
WTO Secretariat's translation services, the shortage of staff in the Appellate Body Secretariat, as
well as the scheduling difficulties arising from a substantial workload of the Appellate Body, with
several appeals proceeding in parallel, and overlap in the composition of the Divisions hearing the
different appeals. On 9 August 2016, the Chair of the Appellate Body informed the Chair of the
DSB that the Report in these proceedings would be circulated no later than 6 October 2016.44
1.12. The oral hearing in these appellate proceedings was held on 21 -22 July 2016. 45 The
participants and nine third participants (Australia, China, Colombia, Indonesia, Mexico, Norway,
Russia, Saudi Arabia, and the Unite d States) made oral statements and/or responded to questions
posed by the Members of the Appellate Body Division hearing the appeal.
2 ARGUMENTS OF THE PARTICIPANTS
2.1. The claims and arguments of the participants are reflected in the executive summaries of
their written submissions provided to the Appellate Body.46 The Notices of Appeal and
Other Appeal, and the executive summaries of the participants' claims and arguments, are
contained in Annexes A and B of the Addendum to this Report, WT/DS473/AB/R/Add.1.
3 ARGUMENTS OF THE THIRD PARTICIPANTS
3.1. The arguments of the third participants that filed a written submission are reflected in the
executive summaries of those submissions provided to the Appellate Body47, and are contained in
Annex C of the Addendum to this Report, WT/DS473/AB/R/Add.1.
4 ISSUES RAISED
4.1. The following issues are raised in this appeal with respect to the anti -dumping measure on
biodiesel:
a. in respect of the determination of dumping:
i. whether the Panel erred in its interpretation and application of th e second condition
in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement in finding that
the European Union acted inconsistently with th is provision when constructing the
normal value by failing to calculate the cost of production of the p roduct under
investigation on the basis of the records kept by the investigated producers (raised
by the European Union);

third participants can be found in Annex D-2 of the Addendum to this Report, contained in document

43 WT/DS473/12.
44 WT/DS473/13.
45 The oral hearing in this appeal was originally scheduled to commence in the afternoon of 21 July
2016. By letter of 6 July 2016, the participants and third participants were informed that, in view of the size
and complexity of the submissions by the participants and third participants, the start of the oral hearing would
be advanced by half a day.
46 Pursuant to the Appellate Body communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).
47 Pursuant to the Appellate Body communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in
Appellate Proceedings" (WT/AB/23, 11 March 2015).

ii. whether the Panel erred in its interpretation and application of Article 2.2 of the
Anti-Dumping Agreement in finding that the Europea n Union acted inconsistently
with Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 by not using the cost of production in Argentina (raised by the
European Union); and
iii. whether the Panel erred in its interpretation and appl ication of Article 2.4 of the
Anti-Dumping Agreement in finding that Argentina ha d not established that the
European Union failed to make a "fair comparison" between the normal value and the
export price within the meaning of this provision (raised by Argentina);
b. whether the Panel erred in its interpretation and application of Article 9.3 of the
Anti-Dumping Agreement in finding that the European Union acted inconsistently
with Article 9.3 of the Anti -Dumping Agreement and, consequently, Article VI:2 of the
GATT 1994 by imposing anti -dumping duties in excess of the margins of dumping that
should have been established under Article 2 of the Anti -Dumping Agreement and
Article VI:1 of the GATT 1994, respectively (raised by the European Union); and
c. whether the Panel erred in its interpretation and application of Articles 3.1 and 3.5 of the
Anti-Dumping Agreement in finding that Argentina had not established that the
EU authorities' non -attribution analysis, insofar as it related to the allegation of
"overcapacity" as an "other factor" causing injury to the EU domestic industry, is
inconsistent with these provisions (raised by Argentina).
4.2. The following issues are raised in this appeal with respect to the second subparagraph of
Article 2(5) of the EU Basic Regulation:
a. whether, in finding that Argentina had not established that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the
Anti-Dumping Agreement, the Panel erred in ascertaining the scope and meani ng of the
second subparagraph of Article 2(5) and thereby erred in its application of Article 2.2.1.1
of the Anti -Dumping Agreement, and acted inconsistently with Article 11 of the DSU
(raised by Argentina);
b. whether, in finding that Argentina had not estab lished that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the Panel:
i. erred in its interpretation of Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 in finding that these provisions do not "prohibit
an authority resorting to sources of information other than producers' costs in the
country of origin" (raised by Argentina);
ii. erred in ascertainin g the meaning of the second subparagraph of Article 2(5) and
thereby erred in its application of Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, and acted inconsistently with Article 11 of the
DSU (raised by Argentina); and
iii. applied an erroneous legal standard for assessing whether the second subparagraph
of Article 2(5) is inconsistent "as such" with the relevant provisions of the covered
agreements (raised by Argentina); and
c. whether the Panel erred in finding that Argent ina had not established that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Article XVI:4 of the WTO Agreement and Article 18:4 of the Anti -Dumping Agreement
(raised by Argentina).
5 BACKGROUND AND OVERVIEW OF THE MEASURES AT ISSUE
5.1. Before addressing the issues of law and legal interpretation raised in this dispute, we provide
an overview of the measures challenged by Argentina, as well as certain background information.

We begin by summarizing the aspects of the anti-dumping measure on biodiesel from Argentina
that are relevant to these appellate proceedings, before briefly describing the
second subparagraph of Article 2(5) of the Basic Regulation and other relevant aspects of th is
Regulation.
5.1 The EU anti-dumping measure on biodiesel from Argentina
5.2. The investigation underlying the anti -dumping measure on biodiesel was initiated by the
EU authorities on 29 August 201248, following a complaint lodged on 16 July 2012 by the EBB. 49
The European Union published the Provi sional Regulation on 28 May 2013, imposing provisional
anti-dumping duties on imports of biodiesel originating in Argentina. 50 On 1 October 2013, the
EU authorities issued a Definitive Disclosure and proposal for definitive anti -dumping duties, and
invited comments from the interested parties. 51 On 26 November 2013, the Definitive Regulation
was published in the Official Journal of the European Union.52
5.3. The investigation o n dumping and injury covered the period from 1 July 2011 to 30 June
2012 (investigation period, or IP ), and the examination of trends relevant for the assessment of
injury covered the period from 1 January 2009 to 30 June 2012 (period considered). 53 The
EU authorities defined the product concerned as biodiesel originating in, inter alia, Argentina, and
found that soybeans are "the main raw material purchased and used in the production of biodiesel"
in Argentina. 54 It is undisputed that the cost of raw materials is the largest cost component in
producing biodiesel.55
5.4. In the Provisional Regulation, the EU authorities found that the biodiesel market in Argentina
was heavily regulated by the State, and considered that, under these circumstances, domestic
sales of biodiesel were not made in the ordinary course of trade. 56 As this meant that the prices
paid for biodiesel in domestic sales could not form the basis for the determination of the normal
value, the EU authorities decided to construct the normal value for the investigation period on the
basis of the Argentine producers' own production costs in t heir records57, the selling, general and
administrative expenses incurred, and a profit margin of 15% based on turnover.58
5.5. In constructing the normal value in the Provisional Regulation , the EU authorities noted the
allegation by the EBB in relation to the Differential Export Tax (DET) system. Under this system,
Argentina imposes differential taxes on exports of soybeans, soybean oil, and biodiesel, and the
taxes imposed on exports of raw materials are higher than the taxes imposed on exports of the

48 Panel Report, para. 7.179 (referring to Notice of initiation of the anti-dumping investigation
(Panel Exhibit ARG-32)).
49 Panel Report, para. 7.179 (referring to Consolidated version of the complaint (Panel Exhibit ARG-31)).
50 Panel Report, para. 7.179 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 179).
51 Panel Report, para. 7.179 (referring to General Disclosure Document (An nex 1), AD593 –
Anti-dumping proceeding concerning imports of biodiesel originating in Argentina and Indonesia, Proposal to
impose definitive measures (1 October 2013) (Definitive Disclosure) (Panel Exhibit ARG-35)).
52 Panel Report, para. 7.179 (referring to Definitive Regulation (Panel Exhibit ARG-22)).
53 Panel Report, para. 7.375. See also Provisional Regulation (Panel Exhibit ARG-30), Recital 5; and
Definitive Regulation (Panel Exhibit ARG-22), Recital 3.
54 Panel Report, para. 7.182 (quoting Definitive Disclosure (Panel Exhibit ARG-35), para. 35). See also
Definitive Regulation (Panel Exhibit ARG-22), Recital 39. Before the Panel, Argentina explained that soybeans
are not a direct input in the production of biodiesel, but must be "crush[ed]" to obtain soybean oil before
biodiesel can be obtained from the oil by way of transesterification. (Panel Report, fn 265 to para. 7.185) Like
the Panel, we refer to both soybean and soybean oil when describing the relevant findings in the Provisional
and Definitive Regulations.
55 Evidence on the Panel record suggests that the costs of raw materials account for 75%–85% of the
total cost of production of biodiesel. (Consolidated version of the complaint (Panel Exhibit ARG-31), para. 137)
56 See Panel Report, para. 7.180 (referring to Provisional Regulation (Panel Exhibit ARG-30),
Recitals 44-45). Specifically, blending fossil diesel and biodiesel is mandatory in Argentina (at 7% biodiesel),
and the total amount of biodiesel needed to meet this blending requirement is apportioned among a select
number of Argentine biodiesel producers. Oil companies are obliged to purchase biodiesel from these producers
at prices fixed by the State and published by Argentina's Ministry of Energy. (See Provisional Regulation (Panel
Exhibit ARG-30), Recital 44)
57 Panel Report, para. 7.364. See also Provisional Regulation (Panel Exhibit ARG-30), Recital 45.
58 Panel Report, para. 7.312 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recitals 44
and 46).

finished product.59 The EBB alleged that the DET system depresses the domestic price of soybeans
and soybean oil , and therefore distorts the costs of production of biodiesel producers in
Argentina.60 The EU authorities considered, however, that , due to a lack of inf ormation for
purposes of deciding the most appropriate way to address this allegation, the question as to
whether the Argentine biodiesel producers' records reasonably reflect the costs associated with the
production of biodiesel would be further examined at the definitive stage, as well as in the parallel
countervailing duty investigation.61 Thus, despite the EBB's allegation, the EU authorities used the
actual costs of soybeans reported in the Argentine producers' records in calculating the
constructed normal value in the Provisional Regulation. 62 On the basis of the constructed normal
value and the relevant export price, the EU authorities established dumping margins ranging
from 6.8% to 10.6% for the Argentine producers/exporters. 63 Having concluded that th e dumped
imports had caused material injury to the domestic biodiesel industry of the European Union, and
that the injury margins exceeded the dumping margins 64, the EU authorities imposed provisional
duties at rates equal to the above dumping margins.65
5.6. Subsequently, in both the Definitive Disclosure and Definitive Regulation, the EU authorities
found that the DET system in Argentina depressed the domestic price of soybeans and soybean oil
to an artificially low level that, as a consequence, affected the co sts of the Argentine biodiesel
producers.66 The EU authorities noted that, on the one hand, the amount of the export tax on
soybeans and soybean oil was calculated on the basis of a "reference price" that "reflect [ed] the
level of international prices"67, namely, the daily FOB price for soybeans and soybean oil published
by the Argentine Ministry of Agriculture, Livestock and Fisheries. 68 On the other hand, the
domestic prices of soybeans and soybean oil reflected the prevailing conditions in the
Argentine domestic market, and followed the trends of the international prices. 69 The
EU authorities established that "the difference between the international and the domestic price of
soya beans and soya bean oil is the export tax on the product and other expenses inc urred for
exporting it." 70 In other words, the domestic prices of soybeans and soybean oil, albeit set
according to supply and demand in the Argentine market, were essentially equivalent to the
international prices minus exporting expenses and the amount of the export tax.

59 As the EU authorities found:
[E]xport taxes on raw material (35% on soya beans and 32% on soybean oil) were significantly
higher than the export taxes on the finished product (nominal rate of 20% on biodiesel, with an
effective rate of 14.58% taking into account a tax rebate)
60 Panel Report, para. 7.180 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 45). We
note that, in the context of the non-attribution analysis regarding imports of biodiesel by the EU domestic
industry, the EU authorities found that "during some months of the [investigation period] the import price of
soybean oil from Argentina was higher than the import price of [biodiesel]." (Ibid., para. 7.473 (quoting
Provisional Regulation (Panel Exhibit ARG-30), Recital 135)
61 Panel Report, para. 7.180 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 45). As
noted above, the EU authorities conducted a parallel countervailing duty investigation on imports of biodiesel
from Argentina and Indonesia, which was initiated on 10 November 2012 following a complaint by the EBB. In
the case of Argentina, the alleged subsidies consisted of the provision of inputs (i.e. soybeans or soybean oil)
at below market prices, by means of a government policy of DET that obliges input producers to sell on the
domestic market, creating an excess of supply, depressing prices to a below-market level, and artificially
reducing the costs of the biodiesel producers. The countervailing duty investigation was terminated on
25 November 2013, following the EBB's withdrawal of its complaint on 7 October 2013. (Ibid., fn 252 to
para. 7.180 (referring to Notice of initiation of the countervailing duty investigation (Panel Exhibit ARG-33);
and Notice of termination of the countervailing duty investigation (Panel Exhibit ARG-36)))
62 Panel Report, para. 7.364. See also Provisional Regulation (Panel Exhibit ARG-30), Recital 45.
63 Panel Report, para. 7.179 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 179).
64 Injury margins in the Provisional Regulation ranged from 27.8% to 31.8%. (Provisional Regulation
(Panel Exhibit ARG-30), Recital 179, referred to in Panel Report, para. 7.179)
65 Panel Report, para. 7.179 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recital 179).
66 Panel Report, para. 7.181 (referring to Definitive Disclosure (Panel Exhibit ARG-35), para. 26).
See also Definitive Regulation (Panel Exhibit ARG-22), Recital 30.
67 Definitive Disclosure (Panel Exhibit ARG-35), para. 32; Definitive Regulation (Panel Exhibit ARG-22),
Recital 36. The EU authorities indicated that the Chicago Board of Trade is the main source for such
international prices. (Definitive Regulation (Panel Exhibit ARG-22), fn 2 to Recital 36)
68 Definitive Disclosure (Panel Exhibit ARG-35), para. 32; Definitive Regulation (Panel Exhibit ARG-22),
Recital 36. See also Panel Report, paras. 7.182, 7.184, 7.257, and 7.299, and fn 441 to para. 7.259.
70 Panel Report, para. 7.181 (quoting Definitive Disclosure (Panel Exhibit ARG-35), para. 33). See also
Definitive Regulation (Panel Exhibit ARG-22), Recital 37.

5.7. The EU authorities concluded that "the domestic prices of the main raw material used by
biodiesel producers in Argentina were … lower than the international prices due to the distortion
created by the Argentine export tax system and, cons equently, the costs of the main raw material
were not reasonably reflected in the records kept by the Argentinean producers under
investigation in the meaning of Article 2(5)" of the Basic Regulation. 71 The EU authorities therefore
decided to revise the construction of the normal value in the Provisional Regulation and "disregard
the actual costs of soya beans (the main raw material purchased and used in the production of
biodiesel) as recorded by the companies concerned in their accounts". 72 Instead, such actual costs
were replaced by "the average of the reference prices of soya beans published by the
Argentine Ministry of Agriculture for export FOB Argentina" 73, "minus fobbing costs" 74, during the
investigation period. In this Report, we refer to this replacement used by the EU authorities in the
Definitive Regulation as the "surrogate price for soybeans".75
5.8. As the Panel found, the surrogate price for soybeans used by the EU authorities as part of its
construction of the normal value was based on "the reference price used by the
Argentine government for the calculation of the export tax on soybeans" 76, that is, a "reference
price" that "reflect ed the level of international prices". 77 At the same time, the EU authorities
considered that this surrogate price for soyb eans "would have been the price paid by the
Argentine producers in the absence of the export tax system" .78 On the basis of, inter alia, the
revised constructed normal value, the EU authorities calculated dumping margins ranging from
41.9% to 49.2% for the Argentine exporters/producers.79
5.9. The Definitive Regulation confirmed the provisional findings of injury and causation 80,
although certain aspects of the findings were modified. In particular, the figures relating to two of
the macroeconomic indicators examin ed by the EU authorities – the production capacity and
capacity utilization rate of the EU industry – were modified in light of revised data submitted by
the EBB subsequent to the Provisional Regulation. The EBB claimed that the data previously
submitted regarding the total EU production capacity included "idle capacity" and should therefore
be reduced.81 The EU authorities accepted the revised data on production capacity submitted by
the EBB, which led to a downward adjustment to the production capacity fig ures and an upward
adjustment to the capacity utilization rates in the Definitive Regulation.82
5.10. Finally, the EU authorities found that the injury margins, at rates ranging from 22%
to 25.7%, were lower than the dumping margins. The EU authorities applied the "lesser duty rule",
and imposed definitive anti -dumping duties on imports of biodiesel from Argentina at rates equal
to the injury margins.83
5.2 The second subparagraph of Article 2(5) of the Basic Regulation
5.11. The Basic Regulation is the basic EU legal inst rument on the protection against dumped
imports from countries that are not member States of the European Union. 84 It contains language
identical or similar to that used in the Anti -Dumping Agreement, together with additional

71 Panel Report, para. 7.181 (quoting Definitive Disclosure (Panel Exhibit ARG-35), para. 34). See also
Definitive Regulation (Panel Exhibit ARG-22), Recital 38.
72 Definitive Regulation (Panel Exhibit ARG-22), Recital 39. See also Panel Report, para. 7.182 (referring
to Definitive Disclosure (Panel Exhibit ARG-35), para. 35).
73 Definitive Regulation (Panel Exhibit ARG-22), Recitals 39-40. See also Panel Report, para. 7.182
(referring to Definitive Disclosure (Panel Exhibit ARG-35), para. 35).
74 Panel Report, para. 7.257.
76 Panel Report, fn 441 to para. 7.259. See also paras. 7.182, 7.184, and 7.299.
77 Panel Report, para. 7.257. See also Definitive Disclosure (Panel Exhibit ARG-35), para. 32;
Definitive Regulation (Panel Exhibit ARG-22), Recital 36.
78 Panel Report, para. 7.257 (referring to Definitive Disclosure (Panel Exhibit ARG -35), para. 32).
See also Definitive Regulation (Panel Exhibit ARG-22), Recital 42, quoted in Panel Report, para. 7.184.
79 Panel Report, para. 7.179. See also Definitive Regulation (Panel Exhibit ARG-22), Recital 65.
80 Panel Report, para. 7.179.
81 Panel Report, para. 7.376.
82 Panel Report, para. 7.379 (quoting Definitive Regulation (Panel Exhibit ARG -22), Recitals 131 -133).
See also Definitive Disclosure (Panel Exhibit ARG-35), paras. 105-106; and infra, para. 6.117.
83 Panel Report, para. 7.365 and fn 616 thereto (referring to Definitive Regulation (Panel
Exhibit ARG-22), Recital 215).
84 See European Union's first written submission to the Panel, para. 29.

provisions and details that hav e no direct counterpart in the Anti -Dumping Agreement. 85
Article 2 of the Basic Regulation , entitled "Determination of dumping", contains provisions setting
out rules relating to normal value, export price, comparison between normal value and export
price, and dumping margin. The rules relating to normal value are set out in Articles 2(1)
through 2(7). Of particular relevance to this dispute are Articles 2(3) and 2(5). The
second subparagraph of the latter provision is the only provision of the Basic Regulation that
Argentina has challenged "as such" in this dispute.
5.12. The first subparagraph of Article 2(3) of the Basic Regulation, which contains language
similar to Article 2.2 of the Anti -Dumping Agreement, sets out two methods for determining the
normal value "[w]hen there are no or insufficient sales of the like product in the ordinary course of
trade, or where because of the particular market situation such sales do not permit a proper
comparison".86 In such circumstances, "the normal value of the like produ ct shall be calculated on
the basis of the cost of production in the country of origin plus a reasonable amount for selling,
general and administrative costs and for profits, or on the basis of the export prices, in the
ordinary course of trade, to an appr opriate third country, provided that those prices are
representative."87
5.13. Article 2(5) of the Basic Regulation contains four subparagraphs. It begins with a
subparagraph that largely replicates the language in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement, providing that "[c]osts shall normally be calculated on the basis of
records kept by the party under investigation, provided that such records are in accordance with
the generally accepted accounting principles of the country concerned and that it is shown that the
records reasonably reflect the costs associated with the production and sale of the product under
consideration."88 The text of the second subparagraph of Article 2(5) does not directly correspond
to any specific provision of the Anti-Dumping Agreement. It provides that, "[i]f costs associated
with the production and sale of the product under investigation are not reasonably reflected in the
records of the party concerned, they shall be adjusted or established on the basis of the costs of
other producers or exporters in the same country or, where such information is not available or
cannot be used, on any other reasonable basis, including information from other representative
markets."89
5.14. The following table juxtaposes the above -mentioned provisions of the Anti -Dumping
Agreement and the Basic Regulation, with the provision subject to Argentina's challenge – the
second subparagraph of Article 2(5) of the Basic Regulation – underlined.

85 The preamble of the Basic Regulation explicitly refers to the GATT 1994 as well as the Anti-Dumping
Agreement, and states that, "[i]n order to ensure a proper and transparent application of [the detailed rules
set out in the Anti-Dumping Agreement], the language of the agreement should be brought into Community
legislation as far as possible". (Basic Regulation (Panel Exhibit ARG-1), 3rd preambular recital)
86 Article 2(3) of the Basic Regulation (Panel Exhibit ARG-1). See also Panel Report, para. 7.72.
87 Article 2(3) of the Basic Regulation (Panel Exhibit ARG-1). See also Panel Report, para. 7.72. The
second subparagraph of Article 2(3) goes on to provide the definition of "[a] particular market situation", which
is not contained in the Anti-Dumping Agreement. The determination of a reasonable amount for selling, general
and administrative costs and for profits is set out in Article 2(6) of the Basic Regulation.
88 Article 2(5) of the Basic Regulation (Panel Exhibit ARG-1). See also Panel Report, para. 7.72.
89 Article 2(5) of the Basic Regulation (Panel Exhibit ARG-1). See also Panel Report, para. 7.72. The
other subparagraphs of Article 2(5) are not pertinent for purposes of this dispute.

Table 1 Juxtaposition of certain provisions of the Anti-Dumping Agreement and the
EU Basic Regulation
Article Anti-Dumping Agreement Article EU Basic Regulation
2.2 When there are no sales of the like
product in the ordinary course of
trade in the domestic market of the
exporting country or when, because
of the particular market situation or
the low volume of the sales in the
domestic market of the exporting
country [footnote omitted], such
sales do not permit a proper
comparison, the margin of dumping
shall be determined by comparison
with a comparable price of the like
product when exported to an
appropriate third country, provided
that this price is representative, or
with the cost of production in the
country of origin plus a reasonable
amount for administrative, selling
and general costs and for profits.
2(3)

When there are no or insufficient sales
of the like product in the ordinary
course of trade, or where because of
the particular market situation such
sales do not permit a proper
comparison, the normal value of the
like product shall be calculated on the
basis of the cost of production in the
country of origin plus a reasonable
amount for selling, general and
administrative costs and for profits, or
on the basis of the export prices, in the
ordinary course of trade, to an
appropriate third country, provided that
those prices are representative.
A particular market situation for the
product concerned within the meaning
of the first subparagraph may be
deemed to exist, inter alia, when prices
are artificially low, when there is
significant barter trade, or when there
are non-commercial processing
arrangements.
2.2.1.1 For the purpose of paragraph 2, costs
shall normally be calculated on the
basis of records kept by the exporter
or producer under investigation,
provided that such records are in
accordance with the generally
accepted accounting principles of the
exporting country and reasonably
reflect the costs associated with the
production and sale of the product
under consideration. …

2(5) Costs shall normally be calculated on
the basis of records kept by the party
under investigation, provided that such
records are in accordance with the
generally accepted accounting
principles of the country concerned and
that it is shown that the records
reasonably reflect the costs associated
with the production and sale of the
product under consideration.
If costs associated with the production
and sale of the product under
investigation are not reasonably
reflected in the records of the party
concerned, they shall be adjusted or
established on the basis of the costs of
other producers or exporters in the
same country or, where such
information is not available or cannot
be used, on any other reasonable
basis, including information from other
representative markets.
…
Source: Anti-Dumping Agreement and Basic Regulation (Panel Exhibit ARG-1). (underlining added)

6 ANALYSIS OF THE APPELLATE BODY
6.1 Claims concerning the EU anti -dumping measure on imports of biodiesel from
Argentina
6.1.1 Determination of dumping
6.1. In this section, we address the claims of error raised by both the European Union and
Argentina relating to the determination of dumping under Article 2 of the Anti-Dumping Agreement
and Article VI of the GATT 1994 . These claims of error are closely related and concern the
Panel's findings under Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement regarding the
EU authorities' calculation of the cost of production in constructing the normal value of biodiesel ,
and under Article 2.4 of the Anti -Dumping Agreement regarding the comparison between that
normal value and the export price of biodiesel. The European Union and Argentina disagree on
whether Article 2.2.1.1 allows an investigating authority to disregard the records of a producer
under investigation if the authority determines that the costs in such records are not "reasonable".
The European Union and Argentina also disagree on whether Article 2.2 of the Anti -Dumping
Agreement and Article VI:1(b)(ii) of the GATT 1994 allow an investigating authority to use certain
evidence other than the records kept by the investigated producer, in particular information from
outside the country of origin, when determining the cost of production in the country of origin
under Article 2.2. Finally, the European Union and Argentina disagree on the circumstances in
which Article 2.4 requires due allowance to be made where the investigating authority has
constructed the normal value on the basis of costs that are not those in the records kept by the
investigated producer.
6.2. We begin by examining the European Union's and Argentina's claims of error regarding the
Panel's findings under Article 2.2.1.1 of the Anti -Dumping Agreement. We then turn to the
European Union's claims of error under Article 2.2 of the Anti-Dumping Agreement. In that section,
we also examine Argentina's claim of error regarding the Panel's interpretation of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 .90 Finally, we examine
Argentina's claims of error under Article 2.4 of the Anti-Dumping Agreement.
6.1.1.1 Article 2.2.1.1 of the Anti-Dumping Agreement
6.1.1.1.1 Introduction
6.3. The European Union appeals the Panel's finding that "the European Union acted inconsistently
with Article 2.2.1.1 of the Anti-Dumping Agreement by failing to calculate the cost of production of
the product under investigation on the basis of the records kept by the producers".91 In the view of
the European Union, the Panel erred in its interpretation and application of the second condition in
the first sentence of Article 2.2.1.1, in particular by finding that this condition refers to the actual
costs incurred by the specific exporter or producer under investigation 92, and that this condition
does not include a general standard of "reasonableness". 93 The European Union requests us to
reverse the findings in paragraphs 7.247-7.249 and 8.1.c.i of the Panel Report, and further argues
that we should not complete the analysis. 94 In contrast, Argentina requests us to uphold the
Panel's findings at issue. In the event that we reverse the Panel 's findings under Article 2.2.1.1,

90 Argentina raises this claim of error in connection with the Panel's finding on the second subparagraph
of Article 2(5) of the Basic Regulation. Given that, however, this claim of error also concerns the Panel's
interpretation of Article 2.2 of the Anti-Dumping Agreement, we address this aspect of Argentina's appeal in
this section together with the European Union's claims concerning the Panel's finding under Article 2.2. See
also infra, para. 6.58.
91 Panel Report, para. 7.249. (fn omitted) See also European Union's appellant's submission, para. 55
(referring to Panel Report, paras. 7.247-7.249 and 8.1.c.i).
92 European Union's appellant's submission, paras. 96, 114, 126, 128-130, 135, 165-166, 169,
172-173, 175-176, 179, 187-189, and 209.
93 See European Union's appellant's submission, paras. 84, 87-92, 95, 105-107, 110-111, 126-127,
131, 133, 135, 137-138, 153, 159-160 and 210-211.
94 European Union's appellant's submission, paras. 55, 153, and 211-212.

Argentina r equests us to complete the legal analysis and find that the European Union acted
inconsistently with Article 2.2.1.1.95
6.4. Before examining the European Union's claim of error on appeal, we summarize the relevant
Panel findings with respect to Article 2.2.1.1 of the Anti-Dumping Agreement. We then set out our
understanding of the second condition in the first sentence of Article 2.2.1.1. Thereafter, we turn
to examine the merits of the European Union's claim that the Panel erred in its interpretation and
application of this provision.
6.1.1.1.2 The Panel's findings
6.5. The Panel first recalled that, in certain situations where domestic sales do not permit a proper
comparison, the normal value may be constructed on the basis of the "cost of production in the
country of origin plus a reasonable amount for administrative, selling and general costs and for
profits".96 To the Panel, the opening phrase in Article 2.2.1.1 of the Anti -Dumping Agreement —
 "For the purpose of paragraph 2" – indicates that Article 2.2.1.1 elaborates on ho w the "cost of
production in the country of origin" referred to in Article 2.2 is to be determined in constructing the
normal value. Moreover, the first sentence of Article 2.2.1.1 establishes the records of the
investigated exporter or producer as the preferred source of information for determining the costs
of production. The Panel noted that the term "shall" in the first sentence of Article 2.2.1.1 indicates
that it establishes a mandatory rule in this respect, whereas the term "normally" suggests that this
rule may be derogated from under certain conditions. In th is regard, the Panel considered that, in
the two conditions that it sets out, the first sentence of Article 2.2.1.1 expressly provides for
two circumstances in which an investigating authority need not follow the general rule to calculate
costs on the basis of the records kept by the exporter or producer under investigation.97
6.6. Regarding the second of these conditions – that the records kept by the exporter or producer
under investigation reasonabl y reflect the costs associated with the production and sale of the
product under consideration – the Panel observed that the focus of this condition is on the specific
exporter or producer under investigation, and what is contained in its records. 98 Since it is the
"records" that must reasonably reflect the costs of production and sale of the product, and given
that "reflect" connotes the faithful and accurate depiction of information and that "reasonably
reflect" concerns the degree or manner of reflection of costs in the records, the Panel considered
that "reasonably reflect" in Article 2.2.1.1 means that the records of an exporter or producer must
depict all the costs it has incurred in a manner that is – within acceptable limits – accurate and
reliable.99
6.7. To t he Panel , the context provided by the first condition in the first sentence of
Article 2.2.1.1, namely, that the records be "in accordance with the generally accepted accounting
principles of the exporting country", suggests that the first sentence of Article 2.2.1.1 is concerned
with the reasonable reflection of the costs that producers actually incur in the production of the
product at issue. 100 In addition, the Panel took the view that , under Article 2.2 of the
Anti-Dumping Agreement, the purpose of ca lculating the cost of production and constructing the
normal value on the basis of the cost is to identify an appropriate proxy for the price of the like
product in the ordinary course of trade in the domestic market of the exporting country when such
price cannot be used. It flows from this purpose that the "costs associated with the production and
sale of the product under consideration" are those that a producer actually incurred, "since these
would yield such a proxy more accurately".101 The Panel did not consider that the arguments made

95 Argentina makes this request with respect to both of its claims of inconsistency before the Panel,
namely, that the European Union acted inconsistently with Article 2.2.1.1 because, in the anti-dumping
measure at issue, the EU authorities: (i) failed to calculate the cost of production of biodiesel on the basis of
the records kept by the Argentine producers (Argentina's appellee's submission, paras. 95 and 118-119); and
(ii) included costs not associated with the production and sale of biodiesel in the calculation of the cost of
production. (Argentina's other appellant's submission, paras. 373-374, 378-379, and 390-391)
96 Panel Report, para. 7.225 (quoting Article 2.2 of the Anti-Dumping Agreement).
97 Panel Report, para. 7.227.
98 Panel Report, para. 7.228.
99 Panel Report, paras. 7.230-7.231.
100 Panel Report, para. 7.232.
101 Panel Report, para. 7.233.

by the parties pertaining to the object and purpose of the Anti -Dumping Agreement shed light on
the interpretative question before it, and thus did not examine those arguments in detail.102
6.8. On this basis, the Panel understoo d that the second condition in the first sentence of
Article 2.2.1.1 relates to whether the costs set out in a producer's or exporter's records
"correspond – within acceptable limits – in an accurate and reliable manner[] to all the actual costs
incurred by the particular producer or exporter for the product under consideration". 103 In its view,
this calls for a comparison between, on the one hand, the costs as reported in the records kept by
the producer or exporter and, on the other hand, the costs actually incurred by that producer or
exporter. T o t he Panel , this does not mean that an investigating authorit y must automatically
accept whatever is reflected in the records . Rather, it is free to examine the reliability and
accuracy of the costs reported in the records and, thus, whether those records reasonably reflect
the costs associated with the production and sale of the product under consideration. In the
Panel's view, however, the examination of the records for purposes of determining whether they
"reasonably reflect" costs within the meaning of Article 2.2.1.1 does not involve an examination of
the "reasonableness" of the reported costs themselves, as proposed by the European Union. The
Panel considered that the object of the comparison is to establish wh ether the records reasonably
reflect the costs actually incurred, and not whether they reasonably reflect some hypothetical costs
that might have been incurred under a different set of conditions or circumstances and which the
investigating authority considers more "reasonable" than the costs actually incurred.104
6.9. The Panel found support for its understanding in previous panel reports. After conducting a
detailed examination of the findings of the panels in US – Softwood Lumber V 105, Egypt – Steel
Rebar106, and EC – Salmon (Norway)107, the Panel considered that the reasoning in each of those
reports suggests that Article 2.2.1.1 focuses on the actual costs of production of the exporter or
producer under investigation.
6.10. Turning to the anti -dumping measure at issue, th e Panel noted that the EU authorities
decided not to use the cost of soybeans in the production of biodiesel in Argentina because "the
domestic prices of the main raw material used by biodiesel producers in Argentina were found to
be artificially lower tha n the international prices due to the distortion created by the
Argentine export tax system".108 The Panel considered that this did not constitute a sufficient basis
under Article 2.2.1.1 for concluding that the producers' records do not reasonably reflect t he costs

102 Panel Report, para. 7.238.
104 Panel Report, para. 7.242 and fn 400 thereto.
105 The Panel noted that, in US – Softwood Lumber V, the panel examined whether the records of the
producers of softwood lumber "reasonably reflected" the level of profit derived from selling a by-product
generated in the production of softwood lumber that, in turn, offset the cost of production of softwood lumber.
The Panel considered that, by assessing the extent to which the profits derived from the sales of the by-
product reduced the cost of production of softwood lumber, that panel sought to ascertain the actual cost of
production to the producer in question. (Panel Report, para. 7.243 (referring to Panel Report, US – Softwood
Lumber V, para. 7.312))
106 The Panel explained that the panel in Egypt – Steel Rebar was faced with the question of whether
certain short-term interest income was related to the production and sale of rebar, such that it could be used
to offset the cost of production of rebar. Since none of the investigated companies had provided sufficient
evidence that the interest income was related to their cost of production of rebar, that panel found that
Turkey had not demonstrated that the investigating authority acted inconsistently with Article 2.2.1.1 of the
Anti-Dumping Agreement in deciding not to factor this income as an offset in its calculation of the cost of
production of rebar. The Panel considered that this approach calls for an assessment of each producer's actual
cost of production, and whether the evidence on the record of the investigation demonstrates that those costs
were offset by a certain income. (Panel Report, para. 7.245 (referring to Panel Report, Egypt – Steel Rebar,
paras. 7.422-7.426))
107 In the Panel's view, the panel in EC – Salmon (Norway) faulted the investigating authority for
allocating, and thus associating, the full amount of certain non-recurring costs to the cost of production of
farmed salmon despite the fact that these non-recurring costs did not relate exclusively to the farming-related
activities for a given salmon generation. That panel considered that, to comply with Article 2.2.1.1, the
allocation methodology to determine the cost of production must reflect the relationship that exists between
the costs being allocated and the production activities to which they are "associated". The Panel considered
that panel's approach to be focused on the actual costs of production incurred by producers, because it tested
whether a rational relationship existed between the costs allocated and the production activities in order to
yield an accurate outcome. (Panel Report, para. 7.246 (referring to Panel Report, EC – Salmon (Norway),
paras. 7.506-7.507 and 7.514))
108 Panel Report, para. 7.248 (quoting Definitive Regulation (Panel Exhibit ARG-22), Recital 38).

associated with the production and sale of biodiesel. 109 Thus, the Panel found that the
European Union acted inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement by failing
to calculate the cost of production of the product under invest igation on the basis of the records
kept by the producers.110
6.1.1.1.3 The second condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement
6.11. The European Union's appeal calls for us to examine the second condition in the
first sentence of Articl e 2.2.1.1 of the Anti -Dumping Agreement. The European Union claims that
the Panel erred in considering that this condition calls for an assessment of costs actually incurred
by the producer at issue. 111 The European Union contends that this condition permits an
examination of the "reasonableness" of the reported costs themselves. 112 The European Union's
arguments highlight the interconnected nature of the various provisions of Article 2 of the
Anti-Dumping Agreement as a whole. In its view , these provisions are imbued with a general
standard of "reasonableness", which endows an investigating authority with discretion, under
Article 2.2.1.1, to disregard the records kept by the exporter or producer when the authority
considers that the costs recorded therein are not reasonable.113 Argentina's arguments focus on
the constraints that the text of Article 2.2.1.1 places on an investigating authority's
determinations. Argentina also emphasizes that other interpretative elements do not support the
general standard of "reasonableness" posited by the European Union.114
6.12. We observe that Article 2.2.1.1 of the Anti-Dumping Agreement forms part of the disciplines
concerning the determination of dumping in Article 2 of the Anti -Dumping Agreement. Article 2.1
of the Anti -Dumping Agreement provides that a product is being dumped when it is "introduced
into the commerce of another country" at an export price that is "less than its normal value". 115
The other provisions of Article 2 then set out the rules regarding the determination of normal value
and export price, and the comparison to be made between the two for purposes of determining the
margin of dumping.
6.13. Article 2.2 of the Anti -Dumping Agreement identifies the circumstances in which an
investigating authority need not determine the normal value on the basis of domestic sales. 116
Article 2.2 further provides that, in such circumstances, the margin of dumping shall be
determined by comparison with a comparable price of the like product when exported to an
appropriate third country, "or with the cost of production in the country of origin plus a reasonable
amount for administrative, selling and general costs and for profits".
6.14. Articles 2.2.1, 2.2.1.1, and 2.2.2 of the Anti -Dumping Agreement, in turn, further elaborate
on various aspects of Article 2.2. Article 2.2.1 sets forth rules concerning when sales of the like
product in the domestic market or to a third country may be treated as not being in the ordinary
course of trade and disregarded in determining the normal value. Article 2.2.2 r egulates the
determination of the amounts for administrative, selling and general costs and for profits.

109 The Panel noted that it had neither been alleged that the costs of soybeans in the records kept by
the producers do not represent the actual price paid by those producers, nor that the records themselves are
inconsistent with the GAAP. (Panel Report, para. 7.222)
110 Panel Report, paras. 7.248-7.249.
111 European Union's appellant's submission, paras. 96, 114, 126, 128-130, 135, 165-166, 169, 172-
173, 175-176, 179, 187-189, and 209.
112 European Union's appellant's submission, paras. 153, 158-159 (referring to Panel Report, fn 400 to
para. 7.242), and 211.
113 See European Union's appellant's submission, paras. 84, 87-92, 95, 105-107, 110-111, 126-127,
131, 133, 135, 137-138, 153, 159-160, and 210-211.
114 Argentina's appellee's submission, paras. 10, 14-16, 32-34, 95, and 118.
115 Pursuant to Article 2.1, the normal value of the product refers to "the comparable price, in the
ordinary course of trade, for the like product when destined for consumption in the exporting country".
116 One circumstance identified in Article 2.2 of the Anti-Dumping Agreement is "[w]hen there are no
sales of the like product in the ordinary course of trade in the domestic market of the exporting country". The
other circumstance outlined in Article 2.2 is "when … such sales do not permit a proper comparison", either
because of "the particular market situation" or "the low volume of the sales in the domestic market of the
exporting country".

6.15. Article 2.2.1.1 and footnote 6 of the Anti-Dumping Agreement provide:
For the purpose of paragraph 2, costs shall normally be calculated on the basis o f
records kept by the exporter or producer under investigation, provided that such
records are in accordance with the generally accepted accounting principles of the
exporting country and reasonably reflect the costs associated with the production and
sale of the product under consideration . Authorities shall consider all available
evidence on the proper allocation of costs, including that which is made available by
the exporter or producer in the course of the investigation provided that such
allocations have been historically utilized by the exporter or producer, in particular in
relation to establishing appropriate amortization and depreciation periods and
allowances for capital expenditures and other development costs. Unless already
reflected in the cos t allocations under this sub -paragraph, costs shall be adjusted
appropriately for those non-recurring items of cost which benefit future and/or current
production, or for circumstances in which costs during the period of investigation are
affected by start-up operations.[*]117
[*fn original]6 The adjustment made for start -up operations shall reflect the costs at the end of
the start-up period or, if that period extends beyond the period of investigation, the most recent
costs which can reasonably be taken into account by the authorities during the investigation.
6.16. In examining the second condition in the first sentence of Article 2.2.1.1, we first analyse
the structure of that sentence and the obligation contained therein. Thereafter, we examine the
specific wording of the second condition in the first sentence, which is italicized in the above
quotation and is at issue in this dispute. Subsequently, we turn to the other relevant interpretative
elements.
6.17. Article 2.2.1.1 of the Anti -Dumping Agreement begins with the phrase: "For the purpose of
paragraph 2". "[P]aragraph 2" refers to Article 2.2 of the Anti-Dumping Agreement, which provides
that, where the normal value cannot be determined on the basis of domestic sales, it shall instead
be determined using one of two alternative bases, one of which is the cost of production in the
country of origin plus a reasonable amount for administrative, selling and general costs and for
profits.118 Accordingly, Article 2.2.1.1 includes rules pertaining to the cal culation of the "cost of
production" for purposes of determining the normal value under Article 2.2. The first sentence of
Article 2.2.1.1 further provides that "costs shall normally" be calculated on the basis of records
kept by the exporter or producer u nder investigation , provided that such records meet
two conditions. The reference to the records kept by the exporter or producer under investigation
indicates that this sentence is concerned with establishing the cost for the specific exporter or
producer under investigation. This is confirmed by the fact that the subject of both conditions in
the first sentence of Article 2.2.1.1 is the records kept by the exporter or producer.
6.18. Article 2.2.1.1 thus identifies the records of the investigated exporter or p roducer as the
preferred source for cost of production data 119, and directs the investigating authority to base its
calculations of costs on such records when the two conditions are met. 120 The second condition
that triggers the obligation in the first sentenc e of Article 2.2.1.1 is that the records "reasonably
reflect the costs associated with the production and sale of the product under consideration". On
the basis of the relevant dictionary definitions 121, we understand that the term "records" refers to

117 Emphasis added.
118 We recall that Article 2.2.2 of the Anti-Dumping Agreement concerns the determination of the
amounts for administrative, selling and general costs and for profits.
119 Appellate Body Report, EC – Tube or Pipe Fittings, para. 99.
120 As the Panel noted, the EU authorities relied explicitly on the second condition in the first sentence of
Article 2.2.1.1 of the Anti-Dumping Agreement to discard the records kept by the Argentine producers under
investigation insofar as they pertained to the cost of soybeans. (See Panel Report, paras. 7.221 and 7.227;
and Definitive Regulation (Panel Exhibit ARG-22), Recital 38) Thus, for purposes of resolving this dispute, it is
the meaning of this condition that must be ascertained, and not whether there are other circumstances in
which the obligation in the first sentence of Article 2.2.1.1 "normally" to base the calculation of costs on the
records kept by the exporter or producer under investigation would not apply.
121 The definition of the word "record" includes: "[a]n account of the past; a piece of evidence about the
past; … a written or otherwise permanently recorded account of a fact or event; … a document … on which
such an account is recorded". (Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007),
Vol. 2, p. 2491) The definition of the word "cost" includes: "[w]hat must be given in order to acquire, produce,

a written or documented account of facts or past events, and that the term "costs" refers to the
price paid or to be paid to acquire or produce something.
6.19. The term "costs" in the second condition in the first sentence of Article 2.2.1.1 is followed
by the phrase "associated with the production and sale of the product under consideration". From
the relevant dictionary definitions122, the phrase "associated with" can be understood as connected
to, or united with. In the first sentence of Article 2.2.1.1, the phrase "associated with" thus makes
a connection, and recognizes a relationship, between the "costs", on the one hand, and the
"production and sale of the product under consideration", on the other hand. We see the phrase
"product under consideration" as a referen ce to the product at issue in the anti -dumping
investigation.123 Thus, the phrase "costs associated with the production and sale of the product
under consideration" refers to the costs that have a relationship with the production and sale of
the specific product from the exporting Member with respect to which dumping is being assessed.
In our view, when this text is read together with the reference to "records kept by the exporter or
producer under investigation", it is clear that this condition refers to tho se costs incurred by the
investigated exporter or producer that have a relationship with the production and sale of the
product under consideration.
6.20. The phrase "costs associated with the production and sale of the product under
consideration" in the first sentence of Article 2.2.1.1 is preceded by the phrase "reasonably
reflect". Relevant dictionary definitions 124 suggest that the term "reasonably reflect" means to
mirror, reproduce, or correspond to something suitably and sufficiently. In Article 2.2.1.1, the term
"reasonably" qualifies the reproduction or correspondence of the costs. Given the structure of the
first sentence of Article 2.2.1.1, and in particular the fact that "reasonably reflect" refers to "such
records", it is clear that it is the "records" of the individual exporters or producers under
investigation that are subject to the condition to "reasonably reflect" the "costs".
6.21. Turning to the relevant context for the interpretation of th e second condition in the
first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement, we note that the first condition
specified in that sentence is that the " records [be] in accordance with the generally accepted
accounting principles of the exporting country". The generally accepted accounting principles
(GAAP) refer to principles, standards, and procedures that are commonly used, within a specific
jurisdiction, for financial accounting and reporting purposes. Thus, the first condition in the
first sentence of Article 2.2.1.1 relates to whether the records of a specific exporter or producer
conform to the accounting principles, standards and procedures that are generally accepted and
apply to such records in the relevant jurisdiction – i.e. the exporting country. This is a condition
that concerns the general acco unting and reporting practices of the exporter or producer. In
contrast, the second condition in the first sentence of Article 2.2.1.1 concerns the records'
reasonable reflection of the costs associated with the production and sale of the product under
consideration in a specific anti-dumping proceeding.125 Indeed, conformity with the GAAP does not
necessarily ensure that the records "reasonably reflect the costs associated with the production
and sale of the product under consideration"126 because the manner in which costs are recorded in

or effect something; the price (to be) paid for a thing", and "[c]harges, expenses". (Shorter Oxford English
Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1, p. 531)
122 The term "associated with" may be defined as "join[ed], unite[d]", "combine[d]", and "[c]onnect[ed]
as an idea". (Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1, p. 137)
123 This is consistent with the way in which the same phrase is used in footnote 2 and Article 2.6 of the
Anti-Dumping Agreement. Footnote 2 provides that sales of the like product in the domestic market shall be
considered of a sufficient quantity for the determination of the normal value if such sales constitute a certain
percentage of the sales of the "product under consideration to the importing Member". Article 2.6 defines "like
product" in relation to the "product under consideration". This suggests that the "product under consideration"
is the specific product from the exporting Member with respect to which dumping is being assessed.
124 The word "reasonably" is defined as "sufficiently, suitably", and "at a reasonable rate; to a
reasonable extent". (Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007), Vol. 2,
p. 2481) The word "reflect" is defined as "[r]eproduce or display after the fashion of a mirror; correspond in
appearance or effect to; have as a cause or source". (Shorter Oxford English Dictionary, 6th edn (Oxford
University Press, 2007), Vol. 2, p. 2506)
125 In our view, the panel report in US – Softwood Lumber V also stands for the understanding that the
second condition in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement concerns the
reasonable reflection of the costs associated with the production and sale of the product under consideration in
a specific anti-dumping investigation. See supra, fn 105.
126 Emphasis added.

financial statements in general may not necessarily correspond to how the product under
consideration is defined for purposes of a specific anti-dumping investigation.127
6.22. Our understanding of the second condition in the first se ntence of Article 2.2.1.1 is
confirmed by the second and third sentences of Article 2.2.1.1, and footnote 6 of the
Anti-Dumping Agreement. These provisions set out rules for an investigating authority's allocation
and adjustment of costs. These rules recognize that certain types of expenses have effects beyond
the period in which the costs are incurred. They also imply that it may be inappropriate to attribute
certain company costs entirely to the production and sale of the product under consideration. 128
These provisions reinforce the understanding that the inquiry envisaged under Article 2.2.1.1 is
one relating to the circumstances of each investigated exporter or producer in the exporting
country. The cost allocations and adjustments contemplated in the sec ond and third sentences of
Article 2.2.1.1 and footnote 6 allow an investigating authority to obtain a more precise calculation
of the costs associated with the product under consideration for the specific exporter or producer
by ensuring or verifying that there is a genuine relationship between the costs reflected in the
exporter's or producer's records and the costs associated with the production and sale of the
specific product under consideration. This context supports the understanding that the
second condition in the first sentence of Article 2.2.1.1 relates to whether the records of the
exporter or producer suitably and sufficiently correspond to or reproduce the costs that have a
genuine relationship with the production and sale of the specific product under consideration.
6.23. Furthermore, Article 2.2 of the Anti-Dumping Agreement refers to "the cost of production in
the country of origin". In our view, given the fact that Article 2.2.1.1 starts with the phrase "[f]or
the purpose of paragraph 2", the interpretation of the term "costs" in Article 2.2.1.1, for purposes
of calculating the costs of production, must be consistent with how the term "cost" is understood in
Article 2.2. Thus, insofar as the cost of production is concerned, the costs "calculated on the basis
of records kept by the exporter or producer" under Article 2.2.1.1 must lead to a cost "in the
country of origin". The context provided by Article 2.2 suggests that the second condition in the
first sentence of Article 2.2.1.1 should not be inte rpreted in a way that would allow an
investigating authority to evaluate the costs reported in the records kept by the exporter or
producer pursuant to a benchmark unrelated to the cost of production in the country of origin.
6.24. In addition, in our view, Art icle 2.2 of the Anti -Dumping Agreement concerns the
establishment of the normal value through an appropriate proxy for the price of the like product in
the ordinary course of trade in the domestic market of the exporting country when the normal
value cannot be determined on the basis of domestic sales. 129 The costs calculated pursuant to
Article 2.2.1.1 of the Anti -Dumping Agreement must be capable of generating such a proxy. This
supports the view that the "costs associated with the production and sale of th e product under
consideration" in Article 2.2.1.1 are those costs that have a genuine relationship with the
production and sale of the product under consideration. This is because these are the costs that,
together with other elements, would otherwise form the basis for the price of the like product if it
were sold in the ordinary course of trade in the domestic market.
6.25. Looking beyond the relevant context, we turn to the object and purpose of the
Anti-Dumping Agreement. We first note that the Anti -Dumping Agreement does not contain a
preamble to guide the inquiry into its object and purpose. The object and purpose of this

127 While the product under consideration in a particular anti-dumping investigation may be limited to a
single model, size, type or specification of a product, the exporter or producer under investigation may export
or produce a number of different products. The records of such exporter or producer may include costs that
concern multiple products without allocating them on a product-by-product or model-by-model basis. Thus, the
manner in which an exporter or producer registers its costs may not reasonably reflect the costs associated
with the production and sale of the product under consideration in a specific anti-dumping investigation.
128 The second sentence of Article 2.2.1.1 of the Anti-Dumping Agreement requires an investigating
authority to consider "all available evidence on the proper allocation of costs" including, specifically, evidence
provided by the relevant exporter or producer, provided that the allocation is one that the exporter or producer
has historically utilized. The third sentence of Article 2.2.1.1 requires an investigating authority, to the extent
not already accomplished by applying the second sentence, to make appropriate adjustments to take account
of non-recurring items of cost which benefit future and/or current production, and of costs affected by start-up
operations. Footnote 6 provides that adjustments made by an investigating authority for start-up operations
shall reflect the costs at the end of the start-up period or, if that period extends beyond the period of
investigation, the most recent costs which can reasonably be taken into account by the authority during the
investigation.
129 See Panel Reports, Thailand – H-Beams, para. 7.112; and US – Softwood Lumber V, para. 7.278.

Agreement can, nonetheless, be discerned from its content and structure.
The Anti-Dumping Agreement defines the concept of "dumping" 130 and the remedies available to
Members whose domestic industries are injured by such "dumping". 131 At the same time, the
Anti-Dumping Agreement conditions the right to apply such remedies to counteract dumping on
the demonstrated existence of three substantive c onditions — dumping, injury, and a causal link
between the two132 — as well as on compliance with certain procedural and additional substantive
rules. Taken as a whole, the object and purpose of the Anti -Dumping Agreement is to recognize
the right of Members to take anti-dumping measures to counteract injurious dumping while, at the
same time, imposing substantive conditions and detailed procedural rules on anti -dumping
investigations and on the imposition of anti -dumping measures. 133 The understanding we have
derived from the text and context of the second condition in the first sentence of Article 2.2.1.1 of
the Anti-Dumping Agreement is, in our view, consistent with such object and purpose.
6.26. Thus, interpreting the condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement that the "records … reasonably reflect the costs associated with the
production and sale of the product under consideration" , in accordance with the ordinary meaning
of the terms in their context and in light of the objec t and purpose of the
Anti-Dumping Agreement, we understand this condition as referring to whether the records kept
by the exporter or producer suitably and sufficiently correspond to or reproduce those costs
incurred by the investigated exporter or produce r that have a genuine relationship with the
production and sale of the specific product under consideration. With this understanding in mind,
we turn to examine the European Union's claim that the Panel erred in its interpretation and
application of Article 2.2.1.1 of the Anti-Dumping Agreement.
6.1.1.1.4 Whether the Panel erred in its interpretation and application of Article 2.2.1.1
of the Anti-Dumping Agreement
6.27. The European Union contends that, in finding the biodiesel anti -dumping measure at issue
to be inconsist ent with Article 2.2.1.1 of the Anti -Dumping Agreement, the Panel erred in its
interpretation and application of the second condition in the first sentence of th is provision.134 The
European Union submits that the Panel failed to conduct a holistic and prope r interpretation of
Article 2.2.1.1 consistent with Article 31 of the Vienna Convention on the Law of Treaties 135
(Vienna Convention ). The European Union alleges multiple discrete errors by the Panel and
contends that e ach of them amounts to error requiring reversal of the Panel's ultimate finding of
inconsistency.136 We first examine the two main arguments of the European Union, namely, that
the Panel erred in finding that the second condition in the first sentence of Article 2.2.1.1 refers to
the "actual" costs incurred by the specific exporter or producer under investigation, and that this
condition does not include a general standard of "reasonableness". 137 Thereafter, we turn to the
European Union's remaining arguments.
6.28. The first main argument made by the Eur opean Union is that the Panel erred in finding that
the second condition in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement refers
to the actual costs incurred by the specific exporter or producer under investigation. 138 The
European Union submits that the phrase "associated with the production and sale" in this condition
is drafted in relatively general and abstract terms, and cannot be interpreted to mean "actual"
costs of production and sale. 139 The European Union adds that the Panel erred by failing properly

130 Pursuant to Article 2.1 of the Anti-Dumping Agreement, a product is to be considered "dumped"
when it is "introduced into the commerce of another country" at an export price that is "less than its normal
value". The Appellate Body has explained that dumping is the result of the pricing behaviour of individual
exporters or foreign producers. (See Appellate Body Reports, US – Zeroing (Japan), paras. 111 and 156; US –
131 See Articles 2, 3, 4, 7, 8, and 9 of the Anti-Dumping Agreement.
132 See Articles 2 and 3 of the Anti-Dumping Agreement.
133 See Appellate Body Report, US – Washing Machines, para. 5.52.
134 European Union's appellant's submission, paras. 55, 113, and 154.
135 Done at Vienna, 23 May 1969, UN Treaty Series, Vol. 1155, p. 331.
136 European Union's appellant's submission, paras. 113, 156, and 190.
137 See European Union's appellant's submission, paras. 84, 87-92, 95, 105-107, 110-111, 126-127,
131, 133, 135, 137-138, 153, 159-160, and 210-211.
138 See European Union's appellant's submission, paras. 96, 114, 126, 128-130, 135, 165-166, 169,
172-173, 175-176, 179, 187-189, and 209.
139 European Union's appellant's submission, para. 96. In the European Union's view, the term
"associated" has a broader meaning than the phrase "actually incurred". (Ibid., para. 165)

to interpret the term "associated". 140 In the European Union's view, a proper interpretation of the
term "associated" leads to the conclusion that "the European Union was fully entitled to consider
which costs would pertain [or relate] to the production and sale of biodiesel in normal
circumstances, i.e. in the absence of the distortion caused by Argentina's differential export tax
system."141 In their third participant's submissions, Australia and the United States express views
similar t o that of the European Union, and consider that the condition at issue should not be
interpreted as referring to the actual costs incurred by the producer or exporter under
investigation.142
6.29. Argentina submits that the term "costs" in the second condition in the first sentence of
Article 2.2.1.1 of the Anti -Dumping Agreement refers to charges or expenses that have actually
been incurred by a given producer for the production and sale of the product under consideration.
To Argentina, the Panel correctly conclud ed that this condition is concerned with the reasonable
reflection of the costs that producers actually incur in the production of the product at issue. 143 In
their third participant's submissions, China, Indonesia, and Saudi Arabia also argue that the
condition at issue refers to an investigated producer's actual costs of producing the product under
consideration.144
6.30. As explained above, we understand the phrase "costs associated with the production and
sale of the product under consideration" in the first sent ence of Article 2.2.1.1 of the
Anti-Dumping Agreement to refer to costs incurred by the investigated exporter or producer that
are genuinely related to the production and sale of the product under consideration. We do not
consider that the Panel's interpre tation conflicts with our understanding of this phrase. Although
Article 2.2.1.1 does not explicitly refer to "actual" costs, the Panel stated that the condition at
issue relates to whether the costs set out in a producer's or exporter's records "correspon d –
within acceptable limits – in an accurate and reliable manner[] to all the actual costs incurred by
the particular producer or exporter for the product under consideration".145 To the Panel, this "calls
for a comparison between, on the one hand, the cost s as they are reported in the
producer['s]/exporter's records and, on the other, the costs actually incurred by that producer." 146
When comparing the two conditions in the first sentence of Article 2.2.1.1, the Panel considered
that, "while the costs in the records might be consistent with GAAP, they may still not accord with
how they would need to be considered in the context of an anti -dumping investigation, such as in
respect of the proper allocation of costs for depreciation or amortization or the relevan t time
periods."147 In addition, when examining the panel findings in EC – Salmon (Norway) , the
Panel noted that the panel in that case focused on the actual costs of production incurred by the
producers, "because the panel tested whether there existed, in a ctuality, a rational relationship
between the costs allocated and the production activities". 148 Reading the Panel's use of the
word actual in light of the broader reasoning of the Panel findings, we understand the Panel to
have considered that the second condition in the first sentence of Article 2.2.1.1 concerns the
costs incurred by the producer under investigation that are genuinely related to the production and
sale of the product under consideration in a particular anti -dumping investigation. Thus, we do not
consider that the Panel's use of the word "actual" is in error. Nor do we consider, as the
European Union argues, that the condition at issue allow s the EU authorities to consider which
costs would pertain to the production and sale of biodiesel in n ormal circumstances, i.e. in the
absence of the alleged distortion caused by Argentina's export tax system. Rather, we agree with
Argentina that such interpretation would add words to the condition at issue that are not present
in Article 2.2.1.1, namely, the costs that "would pertain" and "in normal circumstances".149
6.31. The European Union also submits that, because the first condition in the first sentence of
Article 2.2.1.1 of the Anti -Dumping Agreement already instructs companies to record costs that

140 European Union's appellant's submission, paras. 164-166.
141 European Union's appellant's submission, para. 170. (emphasis omitted)
142 Australia's third participant's submission, paras. 9 and 11; United States' third participant's
submission, paras. 11 and 19-20.
143 Argentina's appellee's submission, paras. 28-30 (referring to Panel Report, paras. 7.232-7.233).
144 China's third participant's submission, paras. 36, 40, and 70; Indonesia's third participant's
submission, paras. 23 and 27-28; Saudi Arabia's third participant's submission, para. 16.
146 Panel Report, para. 7.242.
147 Panel Report, para. 7.232.
148 Panel Report, para. 7.246 (referring to Panel Report, EC – Salmon (Norway), para. 7.514).
149 Argentina's appellee's submission, para. 26. (emphasis original; underlining omitted)

they have actually incurred, the second condition in that sentence must be interpreted to mean
something more than that.150
6.32. Argentina submits that the GAAP are merely a set of rules for accounting and financial
reporting, and that, even when records conform to such rules, those records may not reasonably
reflect the costs incurred by the producer or exporter in relation to the product under consideration
in a particular anti-dumping investigation.151
6.33. We do not consider that the first condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement renders the second condition in that sentence 152 superfluous or
meaningless because, as noted above, while the first condition concerns the activity of the
exporter or producer generally, the second condition is specific to the costs associated with the
production and sale of the product under consideration. In this regard, we agree with the Panel
that records that are GAAP -consistent153 may nonetheless be found not to reasonably reflect the
costs associated with t he production and sale of the product under consideration. This may occur,
for example, if certain costs relate to the production both of the product under consideration and
of other products, or where the exporter or producer under investigation is part o f a group of
companies in which the costs of certain inputs associated with the production and sale of the
product under consideration are spread across different companies' records, or where transactions
involving such inputs are not at arm's length. 154 Thus, we do not consider that the Panel erred in
this respect.
6.34. The European Union also takes issue with the Panel's statement that "the context provided
by Article 2.2.2 [of the Anti -Dumping Agreement] suggests to [it] that, as a general principle, the
actual data of producers/exporters is to be preferred in constructing the normal value" 155, and
disputes that this supports the Panel's interpretation of Article 2.2.1.1. The European Union
suggests that the Panel erroneously imported the word "actual" from Articl e 2.2.2 without
considering that this provision refers to "actual data" pertaining to production and sale "in the
ordinary course of trade" of the like product. To the European Union, it would be arbitrary to
import the word "actual" while at the same time excluding the phrase "in the ordinary course of
trade".156 To us, however, it is clear from the Panel Report that, in making this statement, the
Panel was addressing, and rejecting, the European Union's reliance on Article 2.2.2 as context to
argue that "th e express reference to the 'actual data' of the producer/exporter in that provision
relates only to production and sales in the ordinary course of trade , and a contrario, their actual
data need not be used where the like product is not sold in the ordinary course of trade."157 In the
Panel's view, contrary to the European Union's argument, "the structure of Article 2.2.2 indicates a
preference for the actual data of the exporter and like product in question, with an incremental
progression away from these pri nciples before reaching 'any other reasonable method' in
Article 2.2.2(iii)".158 In our view, the Panel's reading of Article 2.2.2 is consistent with the overall
structure and logic of this provision.
6.35. The second main argument raised by the European Union is that the Panel erred in finding
that the second condition in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement

150 European Union's appellant's submission, para. 176. See also para. 128. The United States submits
similar views in paragraph 16 of its third participant's submission.
151 Argentina's appellee's submission, paras. 36-37 and 102-104. China and Indonesia submit similar
views in their third participant's submission. (See China's third participant's submission, paras. 44-49, and 70;
and Indonesia's third participant's submission, para. 27)
152 As set out above, the first sentence of Article 2.2.1.1 provides:
For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept
by the exporter or producer under investigatio n, provided that such records are in accordance
with the generally accepted accounting principles of the exporting country and reasonably reflect
the costs associated with the production and sale of the product under consideration.
153 As the Panel pointed out, it is undisputed between the parties that GAAP generally instruct
companies truly to record all the costs that have actually been incurred in the production of the items.
(Panel Report, para. 7.232)
154 Panel Report, para. 7.232.
155 Panel Report, para. 7.236.
156 European Union's appellant's submission, para. 135.
157 Panel Report, para. 7.236 (referring to European Union's first written submission to the Panel,
paras. 247-248). (emphasis original)
158 Panel Report, para. 7.236.

does not include a general standard of "reasonableness". 159 The European Union submits that the
Panel failed to recognize that Ar ticle 2.2.1.1 is informed by a standard of "reasonableness" that
permits an investigating authority to disregard the records kept by the exporter or producer if the
authority determines that the costs in such records are not reasonable. 160 The European Union
argues that the costs referred to in the second condition in the first sentence of Article 2.2.1.1
"must themselves be 'reasonable' if the records are to reasonably reflect them". 161 The
European Union considers that a standard of "reasonableness" informs not only the term "reflect",
but also the determination of the costs associated with the production and sale of the product
under consideration.162 In its third participant's submission, Australia submits that an investigating
authority should be permitted to consider whether the costs in the records are reasonable and,
where they are not, to adjust or replace those costs in an appropriate manner.163
6.36. Argentina submits that there is no textual basis for the European Union's argument that a
standard of "reasonableness" informs the determination of the costs associated with the
production and sale of the product under consideration under Article 2.2.1.1. Argentina also notes
that the word "reasonably" is an adverb that qualifies the verb "reflect" and not the
word "costs".164 Similarly, in their third participant's submissions, China, Indonesia, and
Saudi Arabia contend that Article 2.2.1.1 does not allow an investigating authority to assess
whether the recorded costs meet some general standard of "reasonableness" through a
comparison with hypothetical costs that might prevail in a hypothetical market, free from
government regulation.165
6.37. We fail to see any textual support in Article 2.2.1.1 of the Anti -Dumping Agreement for the
argument made by the European Union. Indeed, we observe that the European Union itself accepts
that the adverb "reasonably" modifies the verb "reflect" in a phrase where the subject of the
sentence is the producer's or exporter's "records". 166 In our view, the plain meaning of the terms
used in the co ndition at issue, as well as the structure of the first sentence of Article 2.2.1.1, do
not support the European Union's reading of the term "costs" in the second condition of this
provision. To the extent that costs are genuinely related to the production and sale of the product
under consideration in a particular anti -dumping investigation, we do not consider that there is an
additional or abstract standard of "reasonableness" that governs the meaning of "costs" in the
second condition in the first sentence of Article 2.2.1.1.
6.38. The European Union further contends that the relationship among Articles 2.2, 2.2.1,
and 2.2.1.1 of the Anti -Dumping Agreement supports its interpretation of the second condition in
the first sentence of Article 2.2.1.1 as containing a standard of "reasonableness" that informs the
determination of "costs". Specifically, the European Union contends that the calculation of costs
pursuant to Article 2.2.1.1 is relevant not only for constructing the normal value under Article 2.2,
but also in determining whether domestic sales or sales to a third country are not in the ordinary
course of trade by reason of price under Article 2.2.1. The European Union submits that, in order
to determine whether, under Article 2.2.1, sales of the like produ ct are "below per unit … costs of
production plus administrative, selling and general costs", an authority must first establish the
"costs" pursuant to Article 2.2.1.1. 167 Thus, in the European Union's view, the word "costs" in the
first sentence of Article 2.2.1.1 refers to "all costs" 168, which includes not only the cost of
production but also administrative, selling and general costs. Given that the amount of

159 European Union's appellant's submission, paras. 84, 87-92, 95, 105-107, 110-111, 126-127, 131,
133, 135, 137-138, 153, 159-160, and 210-211.
160 European Union's appellant's submission, paras. 105, 111, 126, 153, 159, and 210-211.
161 European Union's appellant's submission, para. 159.
162 European Union's appellant's submission, paras. 153, 159, and 210. Australia and the United States
express a similar view. (Australia's third participant's submission, para. 9; United States' third participant's
submission, para. 21)
163 Australia's third participant's submission, para. 22.
164 Argentina's appellee's submission, paras. 17-19, 22-23, and 32. China, Indonesia, and Saudi Arabia
express a similar view. (China's third participant's submission, para. 34; Indonesia's third participant's
165 China's third participant's submission, paras. 24 and 35-36. See also Indonesia's third participant's
submission, paras. 19, 26, 32-34, and 36; Saudi Arabia's third participant's submission, paras. 16, 21, 26, 30,
33, and 48.
166 European Union's appellant's submission, para. 159.
167 European Union's appellant's submission, paras. 69, 72, and 74-75.
168 European Union's appellant's submission, para. 76. (emphasis omitted)

"administrative, selling and general costs" 169 must, pursuant to Article 2.2, be "reasonable", the
European Union contends that it would be internally inconsistent to interpret the second condition
in the first sentence of Article 2.2.1.1 as meaning that a standard of "reasonableness" informs the
determination of the costs associated with sales, but not th ose associated with production. 170 In
this respect, the European Union notes the "repeated use" of the term "reasonable" in Articles 2.2,
2.2.1, 2.2.1.1, 2.2.2, 2.3, and 2.4, and footnote 6 of the Anti -Dumping Agreement, which, in the
European Union's view, supports its interpretation of the second condition in the first sentence of
Article 2.2.1.1.171
6.39. We understand the European Union to contend that Article 2.2.1.1 contains a standard of
"reasonableness" pertaining to "administrative, selling and general costs " that is present more
generally in the Anti-Dumping Agreement, and in particular in Articles 2.2, 2.2.1, and 2.2.2. Again,
we do not find support in these provisions for the European Union's argument that Article 2.2.1.1
contains a general standard of "reasonableness" that informs not only the reflection of the costs in
a producer's records, but also the "costs" themselves. The adverb "reasonably" in the
second condition of the first sentence of Article 2.2.1.1 modifies the verb "reflect", rather than the
word "costs". Moreover, none of the references to "reasonable" in the provisions cited by the
European Union suggests that the investigating authority enjoys unfettered discretion to define
subjectively, and to apply, a benchmark of "reasonableness" for purposes of assessing whether the
costs in a producer's or exporter's records are "unreasonable".172
6.40. The European Union also characterizes the Panel as having found that " no matter how
unreasonable the production (or sale) costs in the records kept by the inve stigated firm would be
when compared to a proxy or benchmark consistent with a normal market situation, there is
nothing an investigating authority can do."173
6.41. We do not subscribe to the European Union's reading of the Panel Report. We note that, to
the Pane l, the second condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement requires a comparison between the costs in the producer's or exporter's
records and the costs incurred by such producer or exporter. The Panel emphasized that "t he
object of the comparison is to establish whether the records reasonably reflect the costs actually
incurred, and not whether they reasonably reflect some hypothetical costs that might have been
incurred under a different set of conditions or circumstanc es and which the investigating authority
considers more 'reasonable' than the costs actually incurred." 174 In this connection, the
Panel explained that its understanding of this condition does not imply that "whatever is recorded
in the records of the produc er or exporter must be automatically accepted ."175 To the Panel, an
investigating authorit y is "certainly free to examine the reliability and accuracy of the costs
recorded in the records of the producers/exporters" to determine, in particular, whether all
costs incurred are captured; whether the costs incurred have been over - or understated; and
whether non -arms-length transactions or other practices affect the reliability of the reported
costs.176 The Panel further stated that "Article 2.2.1.1 does not involv e an examination of the
'reasonableness' of the reported costs themselves, when the actual costs recorded in the records
of the producer or exporter are otherwise found, within acceptable limits, to be accurate and
faithful."177 In light of these statements, we consider the Panel's interpretation of Article 2.2.1.1 to
be more nuanced than the European Union's argument suggests.

169 Emphasis added.
170 European Union's appellant's submission, paras. 73-76 and 78.
171 European Union's appellant's submission, paras. 77-78 and 90.
172 For instance, what may constitute the "reasonable" amount for administrative, selling and general
costs and for profit, referred to in Article 2.2, is further elaborated pursuant to the concrete rules set out in
Article 2.2.2. In this regard, we agree with Argentina that this is not tantamount to a general and abstract
"reasonableness" test. (Argentina's appellee's submission, paras. 50 and 105) Similarly, where the term
"reasonable" is used in Article 2.2.1, it refers to something concrete, i.e. a "period of time". In footnote 6 of
the Anti-Dumping Agreement, where the term "reasonably" is less directly connected to a specific
determination, it refers to the phrase "be taken into account by the authorities during the investigation", and
not to "costs", much less to "costs" in the second condition in the first sentence of Article 2.2.1.1.
173 European Union's appellant's submission, para. 84.
177 Panel Report, fn 400 to para. 7.242. At the end of its interpretative analysis, the Panel concluded
that the second condition in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement "calls for an

6.42. We now turn to address the multiple discrete errors that the European Union alleges that
the Panel made in interpreting the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.
The European Union claims that the Panel erred in stating that the opening phrase — "For the
purpose of paragraph 2" — in Article 2.2.1.1 makes clear that this provision elaborates on how the
cost of production in the country of origin in Article 2.2 is to be determined in constructing the
normal value.178 The European Union submits that the purpose of Article 2.2 is to "elaborate rules
for determining a value that is normal, or a normal value". 179 The European Union argues that the
Panel's statement erroneously narrows the purpose of Article 2.2, arbitrarily excluding the other
aspects of this provision.180
6.43. Argentina underlines that the claim it raised before the Panel concerned the determination
of the "co st of production" for the purpose of constructing the normal value for the
Argentine producers in the anti -dumping measure on biodiesel. Argentina considers that the
Panel's statement is correct in view of the claim that Argentina raised in this dispute.181
6.44. We do not consider that the Panel statement challenged by the European Union erroneously
narrows the purpose of Article 2.2 of the Anti -Dumping Agreement. In our view, this statement
does not address what other costs, in addition to costs of production, ma y also be governed by
Article 2.2.1.1. Rather, the Panel's statement comports with our understanding, explained above,
that the calculation of "cost of production", for purposes of determining the normal value under
Article 2.2, is subject to Article 2.2.1.1 of the Anti -Dumping Agreement. Thus, we do not consider
that the Panel erred in making this statement.
6.45. The European Union also takes issue with the Panel's observation that "[t]he first sentence
of Article 2.2.1.1 … establishes the records of the invest igated producer as the preferred source of
information for the establishment of the costs of production." 182 The European Union points out
that this language is not used in the first sentence of Article 2.2.1.1.183 Argentina submits that the
Panel did not err in its description of the first sentence of Article 2.2.1.1, and that the
Panel's observation reflects the fact that the records of the producer shall normally be used,
provided that the conditions in the first sentence are fulfilled.184
6.46. We agree with this o bservation by the Panel. By requiring that costs normally be calculated
on the basis of the records kept by the exporter or producer under investigation, "Article 2.2.1.1
identifies the 'records kept by the exporter or producer under investigation' to be t he preferred
source for cost of production data", as the Appellate Body explained in EC – Tube or Pipe
Fittings.185
6.47. The European Union points to the contextual significance of Article 2.4 of the
Anti-Dumping Agreement for interpreting Article 2.2.1.1 of the Anti-Dumping Agreement.
According to the European Union, there is an overlap between Articles 2.2 and 2.4 in the sense
that adjustments will be justified pursuant to the latter provision only to the extent that they have
not already been made pursuant to the former provision. Thus, the European Union argues that, if
a tax adjustment would be justified under Article 2.4, such adjustment could, alternatively, be
made under Article 2.2.186

assessment of whether the costs set out in a producer's records correspond – within acceptable limits – in an
accurate and reliable manner, to all the actual costs incurred by the particular producer or exporter for the
178 European Union's appellant's submission, para. 115 (referring to Panel Report, para. 7.227). The
European Union contends that the Panel also made the same error later in paragraph 7.233 of its Report.
(See European Union's appellant's submission, para. 133)
179 European Union's appellant's submission, para. 115.
180 European Union's appellant's submission, para. 115.
181 Argentina's appellee's submission, para. 98.
182 Panel Report, para. 7.227.
183 European Union's appellant's submission, para. 116.
184 Argentina's appellee's submission, para. 99.
185 See Appellate Body Report, EC – Tube or Pipe Fittings, para. 99.
186 European Union's appellant's submission, para. 101.

6.48. To us, the European Union's argument risks conflating the obligations in Article 2.2.1.1 and
Article 2.4 of the Anti-Dumping Agreement.187 The manner in which the normal value is calculated
pursuant to Article 2.2 of the Anti -Dumping Agreement may inform the types of adjustments
required under Article 2.4. This, however, does no t mean that any adjustment envisaged under
Article 2.4 – in particular adjustments for taxation – may instead be taken into account in
determining the normal value pursuant to Article 2.2. Rather, Article 2.2.1.1 and Article 2.4 serve
different functions in the context of determinations of dumping: the former assists an investigating
authority in the calculation of costs for purposes of constructing the normal value ; whereas the
latter concerns the fair comparison between the normal value and the export pri ce. Thus, we do
not consider that Article 2.4 supports the European Union's interpretation of the first sentence of
Article 2.2.1.1.
6.49. Referring to Article XI of the GATT 1994, the European Union also argues that, because
export taxes are not covered by th is provision, other disciplines must be interpreted so as to
permit a reasonable and appropriately calibrated response to the existence of such discriminatory
and highly trade -distorting measures. 188 We do not see the European Union's argument that
export taxes are not prohibited by Article XI of the GATT 1994 to be contextually relevant to the
interpretation of Article 2.2.1.1 of the Anti-Dumping Agreement.
6.50. Finally, the European Union submits that the Panel made certain erroneous statements as to
the object an d purpose of the Anti -Dumping Agreement.189 After briefly summarizing the
arguments made by Argentina and the European Union pertaining to the object and purpose of the
Anti-Dumping Agreement, the Panel stated:
The Anti-Dumping Agreement does not contain a p reamble or an explicit indication of
its object and purpose. Moreover, we do not consider that an interpretation of the text
of Article 2.2.1.1 in context leaves its meaning equivocal or ambiguous. We therefore
do not consider that arguments pertaining to the object and purpose of the
Anti-Dumping Agreement shed light on the meaning of the particular question of
interpretation before us, and we therefore do not examine those arguments in
detail.190
6.51. The European Union reads these sentences as a statement by th e Panel that, because the
Anti-Dumping Agreement contains no preamble, considerations of the object and purpose of the
Anti-Dumping Agreement are not relevant. 191 We note, however, that the Panel stated only that
"[t]he Anti-Dumping Agreement does not contai n a preamble or an explicit indication of its object
and purpose", referring to an Appellate Body report where the same statement is found.192
6.52. The European Union also reads the above sentences as embodying the view that, because
the interpretation of Article 2.2.1.1 does not leave the meaning of the condition at issue equivocal
or ambiguous, the object and purpose of the Agreement at issue is irrelevant. The European Union
submits that, in adopting such a view, the Panel erroneously relegated the object and purpose to a
supplementary means of interpretation.193
6.53. It is true that it would be incorrect to treat the object and purpose of an agreement as a
supplementary means of interpretation. Rather, examining the terms of a treaty in light of the
object and purpo se of that treaty is part of the interpretative exercise under Article 31(1) of the
Vienna Convention. This is because Article 31(1) provides that "[a] treaty shall be interpreted in
good faith in accordance with the ordinary meaning to be given to the ter ms of the treaty in their
context and in the light of its object and purpose ."194 We, however, do not share the
European Union's reading of the sentences of the Panel Report quoted above. The Panel simply

187 Article 2.4 provides that a fair comparison shall be made between the export price and the normal
value. Article 2.4 also provides that due allowance shall be made for differences which affect price
comparability, and includes an illustrative list of the factors for which such allowance shall be made.
188 European Union's appellant's submission, para. 108.
189 European Union's appellant's submission, para. 136. See also paras. 190-208.
191 European Union's appellant's submission, para. 136.
192 Panel Report, para. 7.238 (referring to Appellate Body Report, US – Softwood Lumber V (Article 21.5
– Canada), para. 118).
193 European Union's appellant's submission, para. 136.
194 Emphasis added.

made the observation that it "[did] not consider that an interpretation of the text of Article 2.2.1.1
in context leaves its meaning equivocal or ambiguous". 195 The Panel further stated that the
"arguments pertaining to the object and purpose of the Anti -Dumping Agreement" did not shed
light on the particular interpretative question before it. 196 The Panel then concluded that, for this
reason, it was not necessary to engage in an in-depth analysis of those arguments.197
6.54. We now turn to the European Union's claim that the Panel erred in its application of the
second condition in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement to the
anti-dumping measure on biodiesel. 198 The Panel noted that the EU authorities determined not to
use the cost of soybeans in the production of biodiesel because "the dome stic prices of the main
raw material used by biodiesel producers in Argentina were found to be artificially lower than the
international prices due to the dist ortion created by the Argentine export tax system". 199 To the
Panel, this was not a sufficient basi s under Article 2.2.1.1 for concluding that the producers'
records do not reasonably reflect the costs associated with the production and sale of biodiesel.
For this reason, the Panel found that the European Union acted inconsistently with Article 2.2.1.1
by failing to calculate the cost of production of the product under investigation on the basis of the
records kept by the producers.200
6.55. Concerning its claim that the Panel erred in applying Article 2.2.1.1, the European Union
does not advance any argument th at is separate and different from its arguments concerning the
alleged errors in the Panel's interpretation of Article 2.2.1.1 of the Anti -Dumping Agreement. In
light of our understanding of Article 2.2.1.1, explained above, we agree with the Panel's statement
that the EU authorities' determination that domestic prices of soybeans in Argentina were lower
than international prices due to the Argentine export tax system was not, in itself, a sufficient
basis under Article 2.2.1.1 for concluding that the produ cers' records do not reasonably reflect the
costs of soybeans associated with the production and sale of biodiesel, or for disregarding those
costs when constructing the normal value of biodiesel. For this reason, we agree with the
Panel's finding that the European Union acted inconsistently with Article 2.2.1.1 by failing to
calculate the cost of production of the product under investigation on the basis of the records kept
by the producers.201
6.1.1.1.5 Conclusions
6.56. In sum, we consider that the second condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement – that the records kept by the exporter or producer under investigation
reasonably reflect the costs associated with the production and sale of the product under
consideration – relates to wh ether the records kept by the exporter or producer under
investigation suitably and sufficiently correspond to or reproduce those costs incurred by the
investigated exporter or producer that have a genuine relationship with the production and sale of
the specific product under consideration. The Panel's interpretation, which is more nuanced than
the European Union's arguments on appeal suggest, does not conflict with our understanding of
this provision. In our view, the Panel did not err in rejecting the Eu ropean Union's argument that
the second condition in the first sentence of Article 2.2.1.1 includes a general standard of
"reasonableness". With respect to the application of Article 2.2.1.1 to the anti -dumping measure
on biodiesel, we agree with the Panel that the EU authorities' determination that domestic prices of
soybeans in Argentina were lower than international prices due to the Argentine export tax system
was not, in itself, a sufficient basis for concluding that the producers' records did not reas onably
reflect the costs of soybeans associated with the production and sale of biodiesel, or for
disregarding the relevant costs in those records when constructing the normal value of biodiesel.
6.57. We therefore find that the Panel did not err in its interpre tation and application of the
second condition in the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement.
Consequently, we uphold the Panel's finding, in paragraphs 7.249 and 8.1.c.i of its Report, that the
European Union acted inconsistently with Article 2.2.1.1 of the Anti -Dumping Agreement by failing

197 Panel Report, para. 7.238.
198 European Union's appellant's submission, paras. 55, 113, and 154.
199 Panel Report, para. 7.248 (quoting Definitive Regulation (Panel Exhibit ARG-22), Recital 38).
200 Panel Report, paras. 7.248-7.249.
201 Panel Report, paras. 7.248-7.249.

to calculate the cost of production of the product under investigation on the basis of the records
kept by the producers. Having upheld this Panel finding, the condition for Argentina's request for
completion of the legal analysis is not fulfilled. Thus, we do not examine this request.
6.1.1.2 Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994
6.1.1.2.1 Introduction
6.58. We now turn to the Panel's interpretation and application of Articl e 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. The European Union and
Argentina202 each appeals different aspects of the Panel's interpretation of these provisions. The
European Union also appeals the Panel's application of the se provisions to the anti -dumping
measure on biodiesel. Argentina, for its part, appeals the Panel's application of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 to the second subparagraph of
Article 2(5) of the Basic R egulation.203 We deal with this latter part of Argentina's appeal in
section 6.2 below.
6.59. The European Union claims that the Panel erred in its interpretation of Article 2.2 of the
Anti-Dumping Agreement and, in particular, in its understanding of the phrase " cost of production
in the country of origin" in th is provision.204 The European Union further claims that the
Panel erred in finding that the European Union acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GA TT 1994 by not using the cost of
production in Argentina when constructing the normal value in the anti -dumping measure on
biodiesel.205 The European Union contends that the soybean prices used by the EU authorities
reflected the soybean costs that the produ cers of biodiesel would pay in Argentina absent the
distortion caused by the Argentine DET system. For this reason, the European Union argues that
these prices were costs "in the country of origin" within the meaning of Article 2.2.206 The
European Union requests us to reverse the Panel finding at issue 207, but maintains that we should
not complete the analysis. 208 In contrast, Argentina requests us to uphold the Panel's application
of Article 2.2 to the anti-dumping measure on biodiesel, contending that the Pane l correctly found
that the EU authorities did not rely on the cost of production in Argentina when constructing the
normal value.209 Should we reverse the Panel 's finding under Article 2.2, Argentina requests us to
complete the legal analysis and find that t he European Union acted inconsistently with Article 2.2
of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 with respect to the
anti-dumping measure on biodiesel.210
6.60. Argentina claims that the Panel erred in its interpretation of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 when stating that these
provisions neither " limit the sources of information that may be used in establishing the costs of
production", nor " prohibit an authority [from] resorting to sources of information other than
producers' costs in the country of origin", but do "require that the costs of production established
by the authority reflect conditions prevailing in the country of origin". 211 Argentina requests us to
reverse the Panel's interpretation.212 In Argentina's view, these provisions do not permit the use of

202 See supra fn 90.
203 In this context, Argentina claims that the Panel erred: (i) in ascertaining the scope and meaning of
the second subparagraph of Article 2(5) of the Basic Regulation; and (ii) in rejecting Argentina's alternative
claim and finding that Argentina had not demonstrated that the second subparagraph of Article 2(5) cannot be
applied in a WTO-consistent manner. (Argentina's other appellant's submission, paras. 194 and 196-197)
204 European Union's appellant's submission, paras. 218 and 227. The European Union has not advanced
specific arguments regarding the Panel's finding under Article VI:1(b)(ii) of the GATT 1994.
205 European Union's appellant's submission, paras. 213, 227, and 240.
206 European Union's appellant's submission, paras. 229-230. For the factual aspects of the
anti-dumping measure on biodiesel from Argentina, see section 5.1 of this Report.
207 European Union's appellant's submission, paras. 213, 240, and 263 (referring to Panel Report,
paras. 7.260 and 8.1.c.ii).
208 European Union's appellant's submission, para. 241.
209 Argentina's appellee's submission, paras. 121, 152, and 179.
210 Argentina's appellee's submission, para. 153.
211 Argentina's other appellant's submission, para. 195 (referring to Panel Report, para. 7.171).
212 Argentina's other appellant's submission, paras. 234 and 391.

any information other than the producers' costs in the country of origin. 213 The European Union
submits that we should reject Argentina's claim because Argentina has not demonstra ted that the
Panel erred in its interpretation of Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 in making the above statements.214
6.61. Before examining the claims of error on appeal, we first summarize the
Panel's interpretation and application of Article 2.2 of the Ant i-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994. We then examine the participants' claims that the Panel erred
in its interpretation of these provisions. Subsequently, we turn to consider the European Union's
claim that the Panel erred in its application of Article 2.2 of the Ant i-Dumping Agreement to the
anti-dumping measure on biodiesel. Thereafter, we consider Argentina's request for us to complete
the legal analysis.
6.1.1.2.2 The Panel's findings
6.62. In asses sing Argentina's claim that the second subparagraph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, the Panel made certain statements expressing its
understanding of these provisions. The Panel noted that it was not in dispute between the parties
that Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 require
the construction of the normal value on the basis of the "cost of production" "in the country of
origin". The parties disagreed, however, as to whether these provisions permit the use of
information from outside the country of origin in constructing the cost of production. The Panel
explained:
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 do
not limit the sources of information that may be used in establishing the costs of
production; what they do require, however, is that the authority construct the normal
value on the basis of th e "cost of production" "in the country of origin". While this
would, in our view, require that the costs of production established by the authority
reflect conditions prevailing in the country of origin, we do not consider that the
two provisions prohibit an authority resorting to sources of information other than
producers' costs in the country of origin.215
6.63. Later in its Report, the Panel addressed Argentina's claim that the European Union acted
inconsistently with Article 2.2 of the Anti -Dumping Agreement a nd Article VI:1(b)(ii) of the
GATT 1994 in the anti -dumping measure on bio diesel by failing to construct the normal value on
the basis of the cost of production in Argentina. The Panel recalled that the EU authorities had
found domestic prices of soybeans in Argentina to be "artificially lower" than international prices
due to the distortion created by the Argentine DET system. For this reason, the EU authorities did
not use the "average actual purchase price of soybeans during the [investigation period]" 216,
i.e. the cost of soybeans as reflected in the producers' records. Instead, the EU authorities
replaced this cost with the average reference price of soybeans for export published by the
Argentine Ministry of Agriculture, minus fobbing costs 217 (which we hav e defined above as the
surrogate price for soybeans). 218 The Panel also noted that the EU authorities considered that the
surrogate price for soybeans reflected the level of international prices and that the
Argentine producers would have paid prices at that level in the absence of the DET system. 219 In
the view of the Panel, however, the surrogate price for soybeans used by the EU authorities did
not represent the cost of soybeans in Argentina for domestic purchasers of soybeans, including the
Argentine produc ers and exporters of biodiesel under investigation .220 For these reasons, the

213 Argentina's other appellant's submission, paras. 195, 205, and 234 (referring to Panel Report,
para. 7.171).
214 European Union's appellee's submission, paras. 6, 67, 70-71, and 171.
215 Panel Report, para. 7.171.
216 Panel Report, para. 7.257.
217 Panel Report, para. 7.257.
218 See supra, para. 5.7.
219 Panel Report, paras. 7.257 (referring to Definitive Disclosure (Panel Exhibit ARG-35), para. 32) and
7.259 (referring to European Union's response to Panel question No. 45, para. 60).
220 Panel Report, paras. 7.258-7.259. The Panel considered that the EU authorities selected the
surrogate price for soybeans precisely because it was not the cost of soybeans in Argentina. (Ibid.,
para. 7.258)

Panel found that the European Union acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by using, in the construction of
the normal value , a "cost" that was not the cost prevailing "in the country of origin", namely,
Argentina.221
6.1.1.2.3 Whether the Panel erred in its interpretation of Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
6.64. Like the Panel fin ding at issue, the European Union's arguments before the Panel and on
appeal distinguish between "cost", on the one hand, and "information" or "evidence", on the other
hand.222 To the European Union, the cost of production to be determined under Article 2.2 of the
Anti-Dumping Agreement is that of the country of origin, but this provision does not forbid the use
of information from countries other than the country of origin in the calculation of such cost of
production.223
6.65. Argentina submits, however, that the distinction made by the European Union and the Panel
is artificial, given that "cost of production" refers to expenses incurred in the production of the
product concerned in the country of origin, which necessarily implies that the information and
evidence used are those from the country of origin. Argentina thus argues that Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 do not permit the use of
information other than the producers' costs in the country of origin.224
6.66. The int erpretative question on appeal concerns the phrases "cost of production in the
country of origin" in Article 2.2 of the Anti -Dumping Agreement and "cost of production of the
product in the country of origin" in Article VI:1(b)(ii) of the GATT 1994. Specifi cally, the
participants disagree as to whether these phrases encompass information or evidence from outside
the country of origin.
6.67. Article 2.2 of the Anti-Dumping Agreement provides:
When there are no sales of the like product in the ordinary course of tra de in the
domestic market of the exporting country or when, because of the particular market
situation or the low volume of the sales in the domestic market of the exporting
country, such sales do not permit a proper comparison, the margin of dumping shall
be determined by comparison with a comparable price of the like product when
exported to an appropriate third country, provided that this price is representative, or
with the cost of production in the country of origin plus a reasonable amount for
administrative, selling and general costs and for profits. 225
6.68. Article VI:1(b)(ii) of the GATT 1994 provides:
1. The Members recognize that dumping, by which products of one country are
introduced into the commerce of another country at less than the normal value o f the
products, is to be condemned if it causes or threatens material injury to an
established industry in the territory of a Member or materially retards the
establishment of a domestic industry. For the purposes of this Article, a product is to
be considered as being introduced into the commerce of an importing country at less
than its normal value, if the price of the product exported from one country to another
 …
(b) in the absence of such domestic price, is less than either

221 Panel Report, para. 7.260.
222 Panel Report, paras. 7.95-7.96 and 7.171; European Union's appellee's submission, paras. 67-70;
appellant's submission, para. 222.
223 European Union's appellant's submission, paras. 222-223 and 238-239; appellee's submission,
paras. 67 and 70.
224 Argentina's other appellant's submission, paras. 205, 212, and 234; appellee's submission,
paras. 129-130 and 148-149. See also Panel Report, para. 7.83.
225 Fn omitted.

 …
(ii) the cost of produc tion of the product in the country of origin plus a
reasonable addition for selling cost and profit.
6.69. As noted above, the definition of the term "cost" refers to the expenses paid or to be paid
for something. This definition does not include a reference to information or evidence. The term
"cost" in both Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
is followed by "of production" and then by "in the country of origin". On the basis of the text of
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, the phrase
"cost of production […] in the country of origin" may be understood as a reference to the pri ce
paid or to be paid to produce something within the country of origin.
6.70. We observe that Art icle 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 do not contain additional words or qualifying language specifying the type of evidence
that must be used, or limiting the sources of information or evidence to only those sourc es inside
the country of origin. An investigating authority will naturally look for information on the cost of
production "in the country of origin" from sources inside the country. At the same time, these
provisions do not preclude the possibility that th e authority may also need to look for such
information from sources outside the country. The reference to "in the country of origin", however,
indicates that, whatever information or evidence is used to determine the "cost of production", it
must be apt to or capable of yielding a cost of production in the country of origin. This, in turn,
suggests that information or evidence from outside the country of origin may need to be adapted
in order to ensure that it is suitable to determine a "cost of production" "in the country of
origin".226
6.71. Turning to the relevant context, we recall that Article 2.2.1.1 of the Anti -Dumping
Agreement identifies the "records kept by the exporter or producer under investigation" as the
preferred source for cost of production data to be used in such calculation. 227 We do not see,
however, that the first sentence of Article 2.2.1.1 precludes information or evidence from other
sources from being used in certain circumstances. Indeed, it is clear to us that , in some
circumstances, the information in the records kept by the exporter or producer under investigation
may need to be analysed or verified using documents, information, or evidence from other
sources, including from sources outside the "country of origin". 228 While such documents,
information, or evidence are from outside the country of origin, they would, nonetheless, be
relevant to the calculation of the cost of production in the country of origin . These considerations
support the understanding that the determination of the "cost of production in the country of
origin" may take account of evidence from outside the country of origin.
6.72. The second sentence of Article 2.2.1.1 of the Anti -Dumping Agreement provides that the
authorities "shall consider all available evidence on the proper al location of costs".
Argentina considers that this sentence does not assist in understanding the meaning of "cost" in
Article 2.2, because the evidence referred to in this sentence relates only to the "proper allocation
of costs" and not to the costs themse lves.229 We, however, read the sentence above as suggesting
that the "evidence" used to establish a "cost" can be different from that cost itself. This is because
this sentence refers separately to "evidence" and to "cost".
6.73. We further observe that, while bot h obligations apply harmoniously when an investigating
authority constructs the normal value, the scope of the obligation to calculate the costs on the
basis of the records in the first sentence in Article 2.2.1.1 is narrower than the scope of the
obligation to determine the cost of production in the country of origin in Article 2.2. In
circumstances where the obligation in the first sentence of Article 2.2.1.1 to calculate the costs on
the basis of the records kept by the exporter or producer under investi gation does not apply, or

226 China expresses a similar view in paragraph 89 of its third participant's submission.
227 Appellate Body Report, EC – Tube or Pipe Fittings, para. 99.
228 This may be so e.g. where the producer under investigation purchases inputs from outside the
country of origin to produce the product under consideration. We note, in this regard, that Article 6.6 of the
Anti-Dumping Agreement provides that authorities shall satisfy themselves as to the accuracy of the
information supplied by interested parties upon which their findings are based.
229 Argentina's appellee's submission, paras. 130-131. See also Indonesia's third participant's
submission, para. 43.

where relevant information from the exporter or producer under investigation is not available 230,
an investigating authority may have recourse to alternative bases to calculate some or all such
costs. Yet, Article 2.2 does not speci fy precisely to what evidence an authority may resort. This
suggests that, in such circumstances, the authority is not prohibited from relying on information
other than that contained in the records kept by the exporter or producer, including in-country and
out-of-country evidence. This, however, does not mean that an investigating authority may simply
substitute the costs from outside the country of origin for the "cost of production in the country of
origin". Indeed, Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 make clear that the determination is of the "cost of production […] in the country of
origin". Thus, whatever the information that it uses, an investigating authority has to ensure that
such information is used to arrive at the "cost of production in the country of origin". Compliance
with this obligation may require the investigating authority to adapt the information that it
collects.231 It is in this sense that we understand the Panel to have stated that Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 "require that the costs of
production established by the authority reflect conditions prevailing in the country of origin".232
6.74. In light of our examination above of the phrases "cost of production in the country of origin"
in Article 2.2 of the Anti-Dumping Agreement and "cost of production … in the country of origin" in
Article VI:1(b)(ii) of the GATT 1994, we consider that these provisions do not limit the sources of
information or evidence that may be used in establishing the costs of production in the country of
origin to sources inside the country of origin. 233 For this reason, we do not consider that Argentina
has demonstrated that the Panel erred in stating that these provisions "d o not limit the sources of
information that may be used in establishing the costs of production", and do not "prohibit an
authority [from] resorting to sources of information other than producers' costs in the country of
origin" but do "require that the co sts of production established by the authority reflect conditions
prevailing in the country of origin".234
6.75. In its appeal, although it "partially agrees" with the Panel's interpretation of Article 2.2 of
the Anti-Dumping Agreement235, the European Union neverth eless claims that the Panel erred in
its interpretation of this provision. This is because, according to the European Union, the
Panel failed to recognize that "Article 2.2.1.1 does not preclude an investigating authority from
having regard to evidence rel ating to matters outside the country of origin, if to do so would be
helpful in determining the costs associated with the production and sale of the product under
consideration; and in then determining what data to use to reject/replace/adjust the records kept
by the investigated firm". 236 The European Union does not identify any particular passage in the
Panel Report that reveals the Panel's alleged error in interpreting Article 2.2. Nor do we see that
the European Union's argument accurately describes the P anel's analysis and understanding of
Article 2.2.1.1. In any event, we understand the European Union's argument to mean that its
claim of error under Article 2.2 is dependent upon its claim that the Panel erred in its
interpretation of Article 2.2.1.1. As we have found that the Panel did not err in its interpretation of
Article 2.2.1.1, we reject the European Union's claim challenging the Panel's interpretation of
Article 2.2 of the Anti-Dumping Agreement.

230 This may occur e.g. where the producer under investigation refuses access to and does not provide
information concerning costs, and the investigating authority relies on "best information available" under
Article 6.8 and Annex II to the Anti-Dumping Agreement.
231 Pursuant to Articles 12.2.1(iii) and 12.2.2 of the Anti-Dumping Agreement, a public notice of the
imposition of provisional or final measures shall contain, inter alia, a full explanation of the reasons for the
methodology used in the establishment and comparison of the export price and the normal value under
Article 2 of the Anti-Dumping Agreement. Thus, we understand that, with respect to any information or
evidence used to determine the cost of production in the country of origin, an investigating authority is
required to explain how the information or evidence informed the calculation of the cost of production.
232 Panel Report, para. 7.171. Accordingly, we disagree with Argentina's assertion that, in making this
statement, the Panel was reading words into the provisions at issue. (See Argentina's other appellant's
233 This interpretation of Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 is without prejudice to our interpretation of Article 2.2.1.1 of the Anti-Dumping Agreement.
234 Argentina's other appellant's submission, para. 195 (quoting Panel Report, para. 7.171).
235 European Union's appellant's submission, para. 231 (referring to Panel Report, para. 7.171).
236 European Union's appellant's submission, para. 227.

6.1.1.2.4 Whether the Panel erred in its application of Artic le 2.2 of the
Anti-Dumping Agreement to the anti-dumping measure at issue
6.76. We now turn to the European Union's claim that the Panel erred in its application of
Article 2.2 of the Anti -Dumping Agreement to the anti -dumping measure at issue in finding that
the European Union acted inconsistently with this provision by not using the cost of production in
Argentina when constructing the normal value of biodiesel.237
6.77. The Panel observed that the EU authorities replaced the "average actual purchase price of
soybeans during the [investigation period], as reflected in the producers' records" with the
surrogate price for soybeans. 238 The Panel also noted that the EU authorities considered that the
surrogate price for soybeans reflected the level of international prices and that this would have
been the price paid by the Argentine producers in the absence of the DET system. 239 The Panel,
however, was not persuaded that the surrogate price for soybeans used by the EU authorities
represented the cost of soybeans in Argentina for producers or exporters of biodiesel, and
highlighted that "the EU authorities selected this cost precisely because it was not the cost of
soybeans in Argentina. "240 For these reasons, the Panel found that the European Union acted
inconsistently with Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 by using a "cost" that was not the cost prevailing in Argentina when constructing the
normal value of biodiesel.241
6.78. In challenging these Panel findings on appeal, the European Union first argues that they
"are based upon and vitiated by [the Panel's] legally erroneous findings with respect to
Article 2.2.1.1, and for this reason alone, with the reversal of the latter, the former should also be
reversed".242 Given, however, that we have already found that the European Union has not
established that the Panel erred in its interpretation or application of the second condition in the
first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement, we reject this argument by the
European Union.
6.79. The European Union further argues that the Panel failed to recognize that: (i) a price
derived from a price at the border can, by definition, be characterized as both an international
price and a price in Argentina; and (ii) the subtraction of the fobbi ng costs from the published
reference price renders the surrogate price for soybeans used by the EU authorities a reasonable
proxy for the undistorted price of soybeans in Argentina. 243 The European Union contends that the
surrogate price for soybeans used b y the EU authorities reflected the soybean costs that would
have existed in Argentina in the absence of the distortion caused by the Argentine DET system,
and thus constituted the "cost of production in the country of origin" within the meaning of
Article 2.2 of the Anti-Dumping Agreement.244
6.80. Argentina emphasizes that the European Union itself considered that the reference price for
soybeans, which was the basis for the surrogate price for soybeans used by the EU authorities,
reflected the level of internatio nal prices. It follows, for Argentina, that the Panel correctly
concluded that the surrogate price for soybeans was not "the cost of production in the country of
origin" because it was not the cost of soybeans in Argentina. 245 Argentina contends that the
European Union cannot argue that the surrogate price for soybeans used by the EU authorities
constituted the "cost of production" in Argentina merely by claiming that this would be the price
that Argentine producers of biodiesel "would pay domestically" in th e absence of the
Argentine DET system.246
6.81. As noted earlier, when relying on any out -of-country information to determine the "cost of
production in the country of origin" under Article 2.2 of the Anti -Dumping Agreement, an

237 European Union's appellant's submission, paras. 213 and 240 (referring to Panel Report,
paras. 7.260 and 8.1.c.ii).
238 Panel Report, para. 7.257.
239 Panel Report, para. 7.257 (referring to Definitive Disclosure (Panel Exhibit ARG-35), para. 32).
241 Panel Report, para. 7.260.
242 European Union's appellant's submission, para. 225.
243 European Union's appellant's submission, para. 226.
244 European Union's appellant's submission, para. 230.
245 Argentina's appellee's submission, para. 146.
246 Argentina's appellee's submission, para. 150. (emphasis omitted)

investigating authority has to ensur e that such information is used to arrive at the "cost of
production in the country of origin", and this may require the investigating authority to adapt that
information.247 In our view, domestic prices may reflect world prices and, in such circumstances, a
price at the border could, as the European Union argues, be simultaneously characterized as both
an international and a domestic price. We do not consider, however, that the Panel failed to take
such considerations into account. Rather, the Panel's analys is focused on the EU authorities'
understanding of the surrogate price for soybeans. In line with the Panel's understanding, we
consider that the mere fact that a reference price is published by the Argentine Ministry of
Agriculture does not necessarily ma ke this price a domestic price in Argentina. 248 In addition, we
note, as the Panel did, that the EU authorities considered that the reference price published by the
Argentine Ministry of Agriculture reflected the level of international prices of soybeans. 249 Other
than pointing to the deduction of fobbing costs, the European Union has not asserted, either
before the Panel or before us, that the EU authorities adapted, or even considered adapting, the
information used in their calculation in order to ensure that it represented the cost of production
in Argentina. On the contrary, the EU authorities specifically selected the surrogate price for
soybeans to remove the perceived distortion in the cost of soybeans in Argentina. As the Panel
stated, the EU authorities selected and used this particular information precisely because it did not
represent the cost of soybeans in Argentina. 250 Thus, we agree with the Panel that the surrogate
price for soybeans used by the EU authorities did not represent the cost of soybeans in Argentina
for producers or exporters of biodiesel.251 Accordingly, we do not consider that the European Union
has established that the Panel erred in its application of Article 2.2 of the Anti-Dumping Agreement
in finding that the European Union acted inc onsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by not using the cost of
production in Argentina when constructing the normal value of biodiesel.
6.1.1.2.5 Conclusions
6.82. In sum, we consider that the phrases "cost of production in the country of origin" in
Article 2.2 of the Anti -Dumping Agreement and "cost of production … in the country of origin" in
Article VI:1(b)(ii) of the GATT 1994 do not limit the sources of information or evidence that may
be used in establishing the cost of production in the country of origin to sources inside the country
of origin. When relying on any out -of-country information to determine the "cost of production in
the country of origin" under Article 2.2, an investigating authority has to e nsure that such
information is used to arrive at the "cost of production in the country of origin", and this may
require the investigating authority to adapt that information. In this case, like the Panel, we
consider that the surrogate price for soybeans used by the EU authorities to calculate the cost of
production of biodiesel in Argentina did not represent the cost of soybeans in Argentina for
producers or exporters of biodiesel.
6.83. We therefore find that the Panel did not err in its interpretation of Arti cle 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, and that the European Union
has not established that the Panel erred in its application of these provisions to the biodiesel
measure at issue. Consequently, we uphold the Panel's finding, in paragraphs 7.260 and 8.1.c.ii of
its Report, that the European Union acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by not using the cost of
production in Argentina when construct ing the normal value of biodiesel. Having upheld th is
finding, the condition for Argentina's request for completion of the legal analysis is not fulfilled.
Thus, we do not examine this request.
6.1.1.3 Article 2.4 of the Anti-Dumping Agreement
6.84. Argentina appeals th e Panel's finding that Argentina did not establish that the
European Union acted inconsistently with the requirement to make a "fair comparison" under
Article 2.4 of the Anti -Dumping Agreement by failing to make "[d]ue allowance" for "differences

247 See supra, para. 6.73.
248 Panel Report, para. 7.259.
249 Panel Report, para. 7.257 (referring to Definitive Disclosure (Panel Exhibit ARG-35), para. 32).
250 Panel Report, para. 7.258.
251 Panel Report, para. 7.259.

which affect price comparability" within the meaning of this provision.252 Argentina alleges that the
Panel erred in its interpretation and application of Article 2.4.253 According to Argentina, the
Panel's "general proposition" – that "differences arising from the met hodology applied for
establishing the normal value cannot, in principle, be challenged under Article 2.4 as 'differences
affecting price comparability'" – is not s upported by the text of Article 2.4 or relevant
Appellate Body findings in past disputes. 254 Argentina further contends that the Panel erred in
finding that the "difference" identified by Argent ina, which resulted from the EU authorities' use of
the surrogate price for soybeans in constructing the normal value, was not a difference affecting
price comparability within the meaning of Article 2.4.255 On this basis, Argentina requests us to
reverse the Panel's finding under Article 2.4 of the Anti -Dumping Agreement, and to find, instead,
that the difference at issue is a "difference[] affecting price comp arability" under Article 2.4, and
that the European Union acted inconsistently with this provision. 256 The European Union considers
that the Panel did not err in its analysis, and requests us to uphold the relevant Panel findings.257
6.85. We recall that, in constructing the normal value, the EU authorities replaced the actual costs
of soybeans in the Argentine producers' records with the surrogate price of soybeans. 258 As a
result, "the level of distortion mitigated by the [EU] authorities more or less amounted to th e level
of the export tax" on soybeans, given that the difference between the surrogate price of soybeans
and actual costs of soybeans "roughly equalled the export tax" .259 In its comments on the
Definitive Disclosure, the Association of Argentine Biodiesel Producers (CARBIO) argued that the
EU authorities effectively compared a normal value that reflected the inclusion of the export tax on
soybeans with an export price that did not take into account such tax, and hence did not make a
fair comparison between the normal value and the export price.260 The EU authorities rejected this
argument by CARBIO, finding, instead, that "[t]he fact that from a pure numerical point of view
the result is similar does not mean that the methodology applied by the Commission cons isted in
simply adding the export taxes to the costs of the raw material." 261 Before the Panel,
Argentina alleged that, by constructing the normal value on the basis of the surrogate price for
soybeans, the EU authorities introduced a difference between the normal value and export price
that affected price comparability within the meaning of Article 2.4 of the Anti-Dumping Agreement,
for which "due allowance" should have been made.262
6.86. In analysing Argentina's claim, the Panel began by noting that the third sen tence of
Article 2.4 of the Anti -Dumping Agreement elaborates on the means of ensuring that the
"comparison" between the normal value and the export price is "fair" by requiring "[d]ue
allowance" to be made "for differences which affect price comparability ".263 In the Panel's view,
such "differences" are those in the characteristics of the compared transactions that have an
impact, or are likely to have an impact, on the prices involved in the transactions. 264 Turning to
the anti -dumping measure on biodiesel, t he Panel considered that the "difference" alleged by
Argentina under Article 2.4 arose from the decision of the EU authorities to construct the normal
value by, inter alia, using what it considered to be the undistorted price for the main raw material
input.265 In the Panel's view, this difference is not a difference which affects price comparability
within the mea ning of Article 2.4 because it does not "represent[] a tax – or some other

252 Argentina's other appellant's submission, para. 294 (referring to Panel Report, paras. 7.292-7.306
and 8.1.c.v).
253 Argentina's other appellant's submission, paras. 294, 298, 300, and 308.
254 Argentina's other appellant's submission, paras. 298 and 300 (referring to Panel Report,
para. 7.304).
255 Argentina's other appellant's submission, para. 300.
256 Argentina's other appellant's submission, paras. 318 and 324-325.
257 European Union's appellee's submission, paras. 6 and 171.
258 Panel Report, para. 7.299 (referring to Definitive Disclosure (Panel Ex hibit ARG -35), paras. 32
and 35-36; and Definitive Regulation (Panel Exhibit ARG-22), Recitals 36 and 39-40).
259 Panel Report, para. 7.299 (referring to European Union's first written submission to the Panel,
para. 284; and Argentina's first written submission to the Panel, paras. 302-304).
260 Panel Report, para. 7.280 (referring to Letter dated 17 October 2013 from CARBIO and its members
providing comments on the Definitive Disclosure (Panel Exhibit ARG-39), p. 12). See also Definitive Regulation
(Panel Exhibit ARG-22), Recital 41.
261 Panel Report, para. 7.281 (quoting Definitive Regulation (Panel Exhibit ARG-22), Recital 42).
262 Panel Report, paras. 7.282-7.283.
263 Panel Report, para. 7.294.
264 Panel Report, para. 7.295 (referring to Appellate Body Report, US – Zeroing (EC), para. 157 and
Panel Report, US – Stainless Steel (Korea), para. 6.77).
265 Panel Report, para. 7.300.

identifiable characteristic – that was incorporated into the constructed normal value ; by the
EU authorities".266 Rather, "the alleged 'difference' is one that arose exclusively from the
methodology used to construct the normal value … a matter that is primarily governed by
Article 2.2 of the Anti -Dumping Agreement."267 The Panel then stated that its conclusion , in this
respect, is consistent with the view of the Appellate Body in EC – Fasteners (China) (Article 21.5 –
China).268 Specifically, the Panel read the Appellate Body's findings in that dispute "as consistent
with the general proposition that differences arising from the methodology applied for establishing
the normal value cannot, in principle, be challenged under Article 2.4 as 'differences affecting price
comparability'".269
6.87. We observe that, in referring to the "general proposition" after having reached its conclusion
under Article 2.4, the Panel was supplementing its earlier analysis as to why the difference at issue
does not fall within the scope of the "differences" under Article 2.4 of the Anti -Dumping
Agreement. The Pane l's statement, in which it referred to the "general proposition", merely
expresses its understanding of the Appellate Body's findings in EC – Fasteners (China)
(Article 21.5 — China). We do not share this understanding. The Appellate Body report in EC –
Fasteners (China) (Article 21.5 – China) does not contain any such "general proposition". The
reasoning in that report is tailored to the circumstances of that dispute, in which the analogue
country methodology was used. The Appellate Body explained that Art icle 2.4 of the Anti-Dumping
Agreement had to be read in the context of the second Ad Note to Article VI:1 of the GATT 1994
and Section 15(a) of China's Accession Protocol. 270 Neither of those provisions is relevant for
purposes of this dispute. Moreover, we would have serious reserv ations regarding what the
Panel referred to as the "general proposition". The text of Article 2.4 itself makes clear that "[d]ue
allowance shall be made in each case, on its merits".271 This indicates that the need to make due
allowance must be assessed in light of the specific circumstances of each case.
6.88. In any event, we recall the Panel's findings that, in constructing the normal value, the
EU authorities acted inconsistently with Articles 2.2.1.1 and 2.2 of the Anti -Dumping
Agreement.272 At the oral hearing, the European Union expressed the view that, should we uphold
the Panel's findings under Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement, there would be
no need to further examine the Panel's finding under Article 2.4 of t he Anti -Dumping
Agreement.273 In contrast, Argentina contended that the errors it alleged under Article 2.4 of the
Anti-Dumping Agreement would remain relevant even if we were to uphold the Panel's findings
under Articles 2.2.1.1 and 2.2.
6.89. We have upheld the Panel's findings that the EU authorities acted inconsistently with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement in constructing the normal value for the
reasons set out above.274 Given these findings, and notwithstanding our reservations about cer tain
aspects of the Panel's analysis under Article 2.4 of the Anti -Dumping Agreement, we do not
consider it fruitful, in the particular circumstances of this dispute, to examine further whether the
EU authorities also failed to conduct a "fair comparison" in comparing the constructed normal value
to the export price. We therefore find it unnecessary to rule on Argentina's claim on appeal
regarding the Panel's finding under Article 2.4 of the Anti-Dumping Agreement.

267 Panel Report, para. 7.301.
268 Panel Report, paras. 7.303-7.304 (referring to Appellate Body Report, EC – Fasteners (China)
(Article 21.5 – China), paras. 5.207, 5.214, and 5.231).
270 Appellate Body Report, EC – Fasteners (China) (Article 21.5 – China), para. 5.2 and fn 46 thereto
and para. 5.207. In that context, the Appellate Body noted that "an investigating authority has to 'take steps
to achieve clarity as to the adjustment claimed' and determine whether, on its merits, the adjustment is
warranted because it reflects a difference affecting price comparability or whether it would lead to adjusting
back to costs or prices that were found to be distorted in the exporting country." (Ibid., para. 5.207
(quoting Appellate Body Report, EC – Fasteners (China), paras. 488 and 519, in turn quoting Panel Report,
EC – Tube or Pipe Fittings, para. 7.158) (emphasis added))
271 Emphasis added.
272 Panel Report, paras. 7.249 and 7.260.
273 As a third participant, China expressed a similar view, stating that we could declare moot the
Panel's findings under Article 2.4 of the Anti-Dumping Agreement. (China's third participant's submission,
274 See supra, paras. 6.56-6.57 and 6.82-6.83.

6.1.2 Imposition of anti-dumping duties: Article 9.3 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994
6.90. The European Union requests us to reverse the Panel's finding that " [t]he European Union
acted inconsistently with Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of the
GATT 1994 by imposing anti-dumping duties in excess of the margins of dumping that should have
been established under Article 2 of the Anti -Dumping Agreement and Article VI:1 of the
GATT 1994, respectively". 275 The European Union contends that the Panel erred in i ts
interpretation and application of Article 9.3 of the Anti -Dumping Agreement by: (i) considering
that Article 9.3 of the Anti -Dumping Agreement calls for a comparison between the amount of
duties and the dumping margins that should have been calculated c onsistently with Article 2 of
that Agreement 276, and that a violation of Article 2 automatically results in a violation of
Article 9.3277; and (ii) relying on the margins of dumping calculated in the Provisional Regulation in
applying Article 9.3 to the facts of this dispute. 278 Argentina maintains that the European Union's
appeal of the Panel's findings under Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of
the GATT 1994 is without merit and should be dismissed.279
6.91. We begin with a brief overview of t he relevant Panel findings before considering the
interpretation of Article 9.3 of the Anti -Dumping Agreement and whether the Panel erred in
reaching its findings.
6.1.2.1 The Panel's findings
6.92. Argentina alleged before the Panel that, as a result of its erroneous c onstruction of the
normal value and the consequent unduly high margin of dumping, the European Union imposed
and levied anti -dumping duties in excess of the margin of dumping that should have been
established in accordance with Article 2 of the Anti -Dumping Agreement, and thereby acted
inconsistently with Article 9.3 of the Anti -Dumping Agreement and Article VI:2 of the
GATT 1994.280
6.93. In addressing Argentina's claim, the Panel considered that the question before it was
whether the phrase "margin of dumping as established under Article 2" in Article 9.3 of the
Anti-Dumping Agreement "refers to the margin of dumping that an investigating authority would
have established in the absence of any errors or inconsistencies with [Article 2]". 281 Analysing the
text of Article 9.3, the Panel considered that the term "margin of dumping" in Article 9.3 "relates
to a margin that is established in a manner subject to the disciplines of Article 2 and which is
therefore consistent with those disciplines". 282 The Panel added that an error or inconsistency
under Article 2 "does not necessarily or automatically mean that the anti -dumping duty actually
applied will exceed the correct margin of dumping" , and hence be inconsistent with Article 9.3. 283
This is because, even in situations in which the dumping margin is not determined consistently
with Article 2, the actual anti -dumping duty rate could still be lower than the correct margin of
dumping, for example, due to the application of the lesser duty rule.284
6.94. The Panel recalled its finding that the European Union acted inconsistently with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement and with Article VI:1(b)(ii) of the
GATT 1994 in establishing the dumping margins in the Definitive Regulation due to the "use of

275 Panel Report, para. 8.1.c.vii. See also para. 7.367; and European Union's appellant's submission,
para. 262.
276 European Union's appellant's submission, paras. 253 and 255-256.
277 European Union's appellant's submission, para. 248.
278 European Union's appellant's submission, para. 260. The European Union has not advanced specific
arguments in support of its claim under Article VI:2 of the GATT 1994.
279 Argentina's appellee's submission, para. 157.
280 Panel Report, paras. 7.355 and 7.357. The Panel noted the European Union's argument that
Argentina's claims under Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 are
"entirely consequential on the [Article 2] claims", and recalled that it had sustained some of Argentina's claims
under Article 2 of the Anti-Dumping Agreement. (Ibid., fn 606 to para. 7.357 (quoting European Union's
first written submission to the Panel, para. 288))
281 Panel Report, para. 7.358.
282 Panel Report, para. 7.359.
284 Panel Report, para. 7.363.

surrogate input price s in the construction of each investigated Argentine producer's normal
value".285 The Panel contrasted this with the EU authorities' use of actual input prices when
constructing the normal value and calculating dumping margins at the provisional stage. The Panel
also noted that Argentina highlighted that the duties imposed in the Definitive Regulation are
"two to three times higher " than the dumping margins calculated in the Provisional Regulation. 286
While acknowledging that it could not "infer the exact dumpi ng margins that would have been
established had the determinations been done in accordance with Article 2", the Panel
nevertheless expressed the view that "the dumping margins established in the Provisional
Regulation provide a reasonable approximation of what margins calculated in accordance with
Article 2 of the Anti -Dumping Agreement might have been ."287 To the Panel, the fact that the
anti-dumping duties imposed in the Definitive Regulation were substantially higher than the
dumping margins calculated in the Provisional Regulation suggested that the definitive
anti-dumping duties "exceeded what the dumping margins could have been had they been
established in accordance with Article 2".288
6.95. The Panel therefore concluded that Argentina had made a prima facie case that the
European Union had acted inconsistently with Article 9.3 of the Anti-Dumping Agreement. Applying
its reasoning under Article 9.3 of the Anti -Dumping Agreement, mutatis mutandis , to
Argentina's claim under Article VI:2 of the GATT 1994, the Pan el found that the European Union
also acted inconsistently with the latter provision. On the basis of the foregoing, the Panel found
that the European Union acted inconsistently with Article 9.3 of the Anti -Dumping Agreement and
Article VI:2 of the GATT 1994 by imposing anti-dumping duties in excess of the margin of dumping
that should have been established under Article 2 of the Anti-Dumping Agreement.289
6.1.2.2 Whether the Panel erred in its interpretation of Article 9.3 of the Anti -Dumping
Agreement
6.96. Article 9 of the Anti -Dumping Agreement contains several provisions relating to the
imposition and collection of anti -dumping duties. Article 9.3, in particular, provides that "[t]he
amount of the anti -dumping duty shall not exceed the margin of dumping as established under
Article 2." The words "shall not exceed" indicate that Article 9.3 sets a ceiling for the maximum
amount of the anti -dumping duty that may be imposed and collected. This maximum level is "the
margin of dumping as established under Article 2".290 The ph rase "as established under" is
immediately followed by the reference to " Article 2". Article 2, in turn, sets out detailed rules that
govern various aspects of a dumping determination, including the determination of the normal
value and the export price an d their comparison, for purposes of calculating the margin of
dumping. Read in light of the detailed rules on dumping determinations set out in Article 2, the
phrase "as established under Article 2" indicates that the "margin of dumping" in Article 9.3 is a
margin that is established in a manner consistent with th ese rules. We therefore share the Panel's
understanding that the "'margin of dumping' referred to in Article 9.3 relates to a margin that is
established in a manner subject to the disciplines of Ar ticle 2 and which is therefore consistent
with those disciplines".291
6.97. Furthermore, we note that Article 9.3 is the chapeau to three provisions concerning the
assessment and collection of anti -dumping duties. 292 All three provisions are "subject to the
overarching requirement in Article 9.3 that the amount of anti -dumping duty 'shall not exceed the
margin of dumping as established under Article 2'" of the Anti -Dumping Agreement. 293 The
"margin of dumping" referred to in Article 9.3 thus provides the benchmark aga inst which the
consistency of the amount of the anti -dumping duty with Article 9.3 must be examined under any

285 Panel Report, para. 7.364.
286 Panel Report, para. 7.365 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recitals 59
and 179; and Definitive Regulation (Panel Exhibit ARG-22), Recital 215).
287 Panel Report, para. 7.365.
288 Panel Report, para. 7.365.
289 Panel Report, paras. 7.365-7.367.
290 Emphasis added.
291 Panel Report, para. 7.359.
292 Articles 9.3.1 and 9.3.2 provide, respectively, rules specific to duties assessed on a retrospective and
a prospective basis, and Article 9.3.3 sets out rules for determining "whether and to what extent a
reimbursement should be made when the export price is constructed in accordance with" Article 2.3 of the
Anti-Dumping Agreement.
293 Appellate Body Report, US – Stainless Steel (Mexico), para. 102.

of the duty assessment systems envisaged in Articles 9.3.1 to 9.3.3. In our view, it would frustrate
the benchmark function of Article 9.3 if the margin of dumping were itself inconsistent with the
Anti-Dumping Agreement. We also note that, pursuant to Article 9.2 of the Anti -Dumping
Agreement, "[w] hen an anti -dumping duty is imposed in respect of any product, such
anti-dumping duty shall be collect ed in the appropriate amounts in each case".294 Read in light of
Article 9.2, the benchmark provided by Article 9.3 is one specific demarcation of when the
amounts of anti-dumping duties will be appropriate.
6.98. Our understanding of the phrase "margin of dumping as established under Article 2" is
supported by the context provided by Article VI:2 of the GATT 1994. This Article provides that a
WTO Member "may levy on any dumped product an anti-dumping duty not greater in amount than
the margin of dumping in respect of such product". It further states that, "[f]or the purposes of
this Article, the margin of dumping is the price difference determined in accordance with
[Article VI:1]."295 As the Panel correctly pointed out, the term "in accordance with" in the
second sentence of this provision "makes it clear … that Article VI:2 prohibits the levying of
anti-dumping duties in excess of the dumping margin determined consistently with Article VI:1 of
the GATT 1994 in the same way as the phrase 'as established under Article 2' does in
Article 9.3."296
6.99. The Appellate Body's findings in past disputes under Article 9.3 of the Anti -Dumping
Agreement further support the interpretation above. In US — Zeroing (EC) , the Appellate Body
took note of the reference in Article 9.3 to Article 2. The Appellate Body considered that it followed
from this reference that, under Article 9.3, the amount of the assessed anti -dumping duties may
not exceed the relevant margin of dumping, namely, a margin that has been established
consistently with Article 2.297
6.100. Similarly, in US – Zeroing (Japan), having found that margins of dumping calculated using
zeroing in original investigations are margins of dumping inconsis tent with Article 2 of the
Anti-Dumping Agreement 298, the Appellate Body disagreed with that panel's view that the term
"margins of dumping" can have different meanings under different provisions of the Anti -Dumping
Agreement.299 That panel had relied, in support of its view, on the differences between the
retrospective and prospective duty assessme nt systems referred to under Article 9.3. The
Appellate Body, however, noted that "the introductory clause of Article 9.3 applies equally to
prospective and retroactive duty assessment systems ."300 The Appellate Body emphasized that,
under either system, "th e authority is required to ensure that the total amount of anti -dumping
duties collected … does not exceed the total amount of dumping … calculated according to the
margin of dumping established for that exporter or foreign producer without zeroing" 301 and
that, "[u]nder any system of duty collection, the margin of dumping established in accordance with
Article 2 operates as a ceiling for the amount of anti -dumping duties that could be collected in
respect of the sales made by an exporter."302
6.101. In our view, ther efore, the Panel properly considered that the Appellate Body's findings in
US – Zeroing (EC) and US – Zeroing (Japan) confirm that Article 9.3 prohibits the amount of the

294 Emphasis added.
295 Emphasis added.
297 Appellate Body Report, US – Zeroing (EC), para. 127. Specifically, the Appellate Body found that,
because Article 2.1 defines dumping in relation to the product as a whole, and because "Article 9.3 refers to
Article 2", it "follows" that the "margin of dumping" referred to in Article 9.3 of the Anti-Dumping Agreement
must also be established "for the product as a whole". (Ibid.) This chain of reasoning is built on the premise
that the "margin of dumping" referred to in Article 9.3 must be one that is established consistently with the
requirements of Article 2.
298 Specifically, the Appellate Body found the use of zeroing, when calculating margins of dumping on
the basis of transaction-to-transaction comparisons in original investigations, to be inconsistent with
Article 2.4.2 and Article 2.4 of the Anti-Dumping Agreement. (Appellate Body Report, US – Zeroing (Japan),
paras. 138 and 147, respectively)
299 Appellate Body Report, US – Zeroing (Japan), para. 151.
300 Appellate Body Report, US – Zeroing (Japan), para. 156.
301 Appellate Body Report, US – Zeroing (Japan), para. 156.
302 Appellate Body Report, US – Zeroing (Japan), para. 162. (emphasis added) See also Appellate Body
Report, US – Stainless Steel (Mexico), para. 102.

anti-dumping duties from exceeding a dumping margin that is determined consistently w ith
Article 2 of the Anti-Dumping Agreement.303
6.102. The European Union acknowledges that "[i]t is undisputed that the ordinary meaning of
the phrase 'the margin of dumping as established under Article 2' is that of a margin of dumping
established in accordance with the provisions of Article 2 ."304 The European Union nonetheless
asserts that, contrary to the Panel's interpretation, "what the text of Article 9.3 requires is merely
a comparison between the anti-dumping duties actually imposed and the dumping margin actually
calculated by the investigating authority , irrespective of the investigating authority's possible
errors when calculating the dumping margin." 305 We have difficulty reconciling these
two statements of the European Union. We fail to see how a dumping margin "actually calculated"
by the investigating authority, which nonetheless contains "errors" in light of the requirements of
Article 2, could at the same time be a margin "established in accordance with the provisions of
Article 2".
6.103. The European Union contends that the WTO-consistency of the calculation of the margin of
dumping under Article 2, on the one hand, and the comparison called for in Article 9.3, on the
other hand, are "two different stages in the analysis", and the finding of a WTO -inconsistency in
one stage should not automatically lead to a finding of WTO -inconsistency in the other stage.306 At
the oral hearing, the European Union further clarified that it takes issue with the
Panel's understanding that an inconsistency with Article 2 automatically leads to an inconsistency
with Article 9.3. 307 The Panel, however, did not interpret Article 9.3 in this way. To the contrary,
the Panel explicitly made clear that "[a]n error or inconsistency under Article 2 does not
necessarily or automatically mean that the anti -dumping duty actually applied will exceed the
correct margin of dumping." 308 According to the Panel, "it is possible that an anti -dumping duty
could be applied at a rate that is lower than the WTO -inconsistent dumping margin."309 The Panel
referred, by way of example, to the lesser duty rule under Article 9.1 of the Anti -Dumping
Agreement.310 According to the Panel, where the lesser duty rule is applied, it is conceivable that
the final duties imposed will " not only be lower than the WTO -inconsistent dumping margin, but
also lower than the dumping margin that would have been established in accordance with
Article 2"311, and hence not inconsistent with Article 9.3 of the Anti-Dumping Agreement.
6.104. We agree with the above analysis of the Panel. Indeed, un derstanding the "margin of
dumping" referred to in Article 9.3 as one established consistently with Article 2 of the
Anti-Dumping Agreement does not mean that any error in the calculation of the dumping margin
will necessarily lead to a violation of Articl e 9.3. The application of the lesser duty rule provides
one example of when this may not be the case. Moreover, because Article 9.3 is concerned with
the maximum amount of anti-dumping duties that may be collected, the errors under Article 2 that
matter fo r purposes of Article 9.3 are those that result in a higher dumping margin than the
one that would have been calculated had the authority acted consistently with Article 2. Not all
breaches of Article 2 will invariably or predictably entail such a result. In this respect, we also
share the European Union's understanding that a complainant "must show something more than a
simple erroneous calculation of normal value" in order to succeed with a claim under Article 9.3. 312
In our view, the complainant must show that anti-dumping duties are imposed at a rate that is
higher than the dumping margin that would have been established had the authority acted
consistently with Article 2.
6.105. In some cases, such a showing may be straightforward. For example, in the disputes
concerning "zeroing" discussed above, it was clear that the use of zeroing, which is inconsistent
with Article 2 of the Anti-Dumping Agreement, led to higher margins of dumping. Furthermore, the
lesser duty rule was not applied in the anti -dumping proceedings at issue in those disputes. Under

303 Panel Report, para. 7.361.
304 European Union's appellant's submission, para. 250. (emphasis original)
305 European Union's appellant's submission, para. 255. (emphasis added)
306 European Union's appellant's submission, para. 256.
307 European Union's response to questioning at the oral hearing.
308 Panel Report, para. 7.363. (fn omitted; emphasis added)
309 Panel Report, para. 7.363.
310 Article 9.1 of the Anti-Dumping Agreement provides that "[i]t is desirable … that the duty be less
than the margin if such lesser duty would be adequate to remove the injury to the domestic industry".
311 Panel Report, para. 7.363.
312 European Union's appellant's submission, para. 256.

such circumstances, the fact that the duties were imposed at rates equal to the margins of
dumping established with the use of zeroing necessarily meant that those duties were in excess of
the margins that would have be en established had the margins been calculated consistently with
Article 2 (i.e. without "zeroing"), and hence inconsistent with Article 9.3 of the Anti -Dumping
Agreement. We emphasize, however, that what is required for a complainant to meet its burden of
proof under Article 9.3 will depend on the specific circumstances of each dispute.
6.1.2.3 Whether the Panel erred in its application of Article 9.3 of the Anti -Dumping
Agreement
6.106. The European Union advances two sets of arguments alleging that the Panel erred in i ts
application of Article 9.3 of the Anti -Dumping Agreement. First, the European Union contends that
the Panel "erred when it inferred from its previous findings" under Articles 2.2.1.1 and 2.2 of the
Anti-Dumping Agreement that the European Union also bre ached Article 9.3 of that Agreement.313
In the European Union's view, because the Panel's interpretations of Articles 2.2.1.1 and 2.2 are
flawed and should be reversed, we should also reverse the Panel's finding under Article 9.3. As we
have upheld the Panel's findings under Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement314,
we reject the European Union's contention that the Panel erred under Article 9.3 as a consequence
of the alleged errors in its findings under Articles 2.2.1.1 and 2.2.
6.107. Second, the European Union maintains that the Panel erred by seeking to rely on the
dumping margins calculated in the Provisional Regulation, "effectively implying that this is what
the [dumping margin] determination should have been". 315 In doing so, the European Union
argues, the Panel exceeded "the authority vested in it pursuant to the DSU and the special or
additional rules" under Article 17.6(i) of the Anti -Dumping Agreement, pursuant to which "the
Panel should have limited itself to determining if the investigatin g authority's evaluation of the
facts was unbiased and objective".316
6.108. As noted above 317, in applying Article 9.3 to the facts of the case, the Panel began by
recalling its findings that "the EU authorities acted inconsistently with Articles 2.2.1.1 and 2.2 of
the Anti -Dumping Agreement … in their establishment of the dumping margins in the
Definitive Regulation due to their use of surrogate input prices in the construction of each
investigated Argentine producer's normal value."318 The Panel further recalled that, "[b]y contrast,
at the provisional stage, the EU authorities had used each Argentine producer's actual input prices
when constructing the normal value used in calculating that producer's dumping margin." 319 The
Panel then noted that "Argentina contrast[ed] the margins calculated in the Provisional Regulation,
ranging from 6.8% to 10.6% , with the duties imposed by the EU authorities in the
Definitive Regulation, which ranged from 22.0% to 25.7%, i.e. two to three times higher."320
6.109. Contrary to the European Union's argument, the Panel did not "effectively imply[]" that the
dumping margins calculated in the Provisional Regulation constituted "what the determination
should have been".321 Rather, the Panel was careful not to draw such a conclusion, observing that
"[w]e cannot infer the exact dumping margins that would have been established had the
determinations been done in accordance with Article 2." 322 Rather, the Panel considered that the
dumping margins in the Provisional Regulation served as a "reasonable approxim ation" for what
the margins "might have been". 323 The Panel further stated that "[t ]he substantial difference
between the margins calculated at the provisional stage and the duties imposed in the

313 European Union's appellant's submission, para. 259.
314 See supra, paras. 6.56-6.57 and 6.82-6.83.
315 European Union's appellant's submission, para. 260 (referring to Panel Report, paras. 7.364-7.365).
316 European Union's appellant's submission, para. 260.
317 See supra, para. 6.94.
318 Panel Report, para. 7.364.
319 Panel Report, para. 7.364.
320 Panel Report, para. 7.365 (referring to Provisional Regulation (Panel Exhibit ARG-30), Recitals 59
and 179; and Definitive Regulation (Panel Exhibit ARG-22), Recital 215). The Panel further noted that, "[i]n
application of the 'lesser duty rule', these duty rates corresponded to the injury margins calculated by the
EU authorities; the dumping margins calculated by the EU authorities in the Definitive Regulation were
significantly higher, ranging from 41.9% to 49.2%." (Ibid., fn 616 thereto)
321 European Union's appellant's submission, para. 260.
322 Panel Report, para. 7.365.
323 Panel Report, para. 7.365.

Definitive Regulation suggests that the [definitive anti -dumping duties ] exceeded what the
dumping margins could have been had they been established in accordance with Article 2."324
6.110. In our view, the Panel's reliance on the margins calculated in the Provisional Regulation
was appropriate in light of the specific circum stances of this case. As noted, the change in the
basis for constructing the normal value that the EU authorities made between the Provisional and
Definitive Regulations is exactly the one found to be inconsistent with Articles 2.2.1.1 and 2.2 of
the Anti -Dumping Agreement. More specifically, in the Definitive Regulation, the EU authorities
replaced the actual purchase price of soybeans as reflected in the producers' records, which was
used in calculating the cost of production at the provisional stage, wit h the surrogate price for
soybeans.325 This change significantly increased the cost of production determined by the
EU authorities, hence the normal value and the corresponding margin of dumping, for each of the
Argentine producers in comparison to the provi sional stage. 326 As Argentina showed before the
Panel, definitive duties were imposed at rates "two to three times higher " than the dumping
margins in the Provisional Regulation. 327 Furthermore, even though the lesser duty rule was
applied in the Definitive Regulation, the duty rates applied were still substantially higher than the
margins of dumping calculated in the Provisional Regulation on the basis of a constructed normal
value whose consistency with Article 2 has not been questioned.328
6.111. In this respect, we recall the European Union's contention that a complainant "must show
something more than a simple erroneous calculation of normal value in order to put forward a
successful claim under Article 9.3 of the Anti -Dumping Agreement".329 As Argentina rightly poin ts
out, "[t]his is precisely what Argentina did" in this dispute. 330 Specifically, in addition to
demonstrating error in the construction of the normal value, Argentina also showed that the
amount of the definitive anti -dumping duties "exceeded what the dump ing margins could have
been had they been established in accordance with Article 2." 331 Accordingly, and in light of the
specific circumstances of this dispute, we find that the Panel did not err in finding that
"Argentina has made a prima facie case that th e European Union acted inconsistently with
Article 9.3 of the Anti-Dumping Agreement, which the European Union has failed to rebut."332
6.1.2.4 Conclusions
6.112. In sum, we consider that the Panel correctly interpreted Article 9.3 of the Anti -Dumping
Agreement in statin g that the "'margin of dumping' referred to in Article 9.3 relates to a margin
that is established in a manner subject to the disciplines of Article 2 and which is therefore
consistent with those disciplines."333 Furthermore, in our view, the Panel did not err in considering
that, in light of the specific circumstances of this dispute, "Argentina has made a prima facie case
that the European Union acted inconsistently with Article 9.3 of the Anti -Dumping Agreement,
which the European Union has failed to rebut ."334 We also agree with the Panel that the same
considerations that guided its assessment of Argentina's Article 9.3 claim apply mutatis mutandis
to its assessment of Argentina's claim under Article VI:2 of the GATT 1994.335
6.113. For these reasons, we uphold the Panel's finding, in paragraph s 7.367 and 8.1.c.vii of its
Report, that the European Union acted inconsistently with Article 9.3 of the Anti -Dumping
Agreement and Article VI:2 of the GATT 1994 by imposing anti -dumping duties in excess of the
margin of dumpi ng that should have been established under Article 2 of the Anti -Dumping
Agreement and Article VI:1 of the GATT 1994, respectively.

325 Panel Report, paras. 7.182 and 7.257. See also Definitive Regulation (Panel Exhibit ARG -22),
Recitals 39-40.
326 Panel Report, paras. 7.182 and 7.257.
327 Panel Report, para. 7.365.
328 Panel Report, para. 7.365.
329 European Union's appellant's submission, para. 256.
330 Argentina's appellee's submission, para. 165.
331 Panel Report, para. 7.365.
332 Panel Report, para. 7.365.
333 Panel Report, para. 7.359.
334 Panel Report, para. 7.365.
335 Panel Report, para. 7.366.

6.1.3 Non-attribution analysis in causation determination: Articles 3.1 and 3.5 of the
Anti-Dumping Agreement
6.114. Argentina appeals th e Panel 's finding that Argentina failed to establish that the
EU authorities' treatment of "overcapacity" as an "other factor" causing injury to the EU domestic
industry was inconsistent with Articles 3.1 and 3.5 of the Anti -Dumping Agreement.336 Specifically,
Argentina alleges that the Panel erred in its interpretation of these provisions in considering that it
was relevant to examine whether the revised data on productio n capacity submitted by
the EBB had "a significant role" in the EU authorities' non -attribution analysis on overcapacity. 337
Argentina further claims that the Panel erred in its application of Articles 3.1 and 3.5 by:
(i) concluding that the EU authorities' non -attribution analysis regarding overcapacity was not
based on or affected by the revi sed data338; (ii) failing to distinguish overcapacity from capacity
utilization339; and (iii) failing to note the inconsistency of the EU authorities' conclusion in light of
the evidence before them. 340 Argentina requests us to reverse the Panel's finding under
Articles 3.1 and 3.5 of the Anti -Dumping Agreement, and to find that the European Union acted
inconsistently with these provisions in its non-attribution analysis relating to overcapacity.341
6.115. The European Union responds that Argentina's claims regarding the Panel's alleged errors
should be dismissed. 342 The European Union emphasizes the Panel's "clear findings" that the
revised data did not have a role in the EU authorities' conclusion on overcapacity 343, and endorses
the Panel's observation that overcapacity and capacity utilization are two logically related
concepts.344 The European Union requests that we uphold the Panel findings challenged by
Argentina.345
6.116. In addressing Argentina's appeal, we begin by briefly recalling the relevant factual
background regarding the EU authorities' determinations of injury and causation, as well as the
Panel findings relevant to Argentina's appeal. We then address the provisions at issue in this
dispute. Finally, we examine each of Argentina's claims regarding the Panel's alleged errors.
6.1.3.1 Relevant background and the Panel's findings
6.117. In assessing injury to the domestic industry, the EU authorities evaluated certain
macroeconomic indicators in the Provisional and Definitive Regulations, including production
capacity and capacity utiliza tion.346 Following the issuance of the Provisional Regulation,
the EBB claimed that the total EU production capacity data that it had pre viously submitted to
the EU authorities were too high because they included "idle capacity". Accordingly, the
EBB submitted revised production capacity data excluding "idle capacity", which the EU authorities
accepted "after close scrutiny". 347 This led to a downward adjustment to the production capacity
figures, and an upward adjustment to the capacity utilization rates. In t urn, the revised findings in
the Definitive Regulation stated that production capacity had decreased and capacity utilization
had increased during the period considered 348, which marked a contrast from the findings in the
Provisional Regulation that producti on capacity had increased and capacity utilization had
decreased during the same period. 349 Portions of the tables in the Provisional and

336 Argentina's other appellant's submission, para. 326 (referring to Panel Report, paras. 7.462-7.472
337 Argentina's other appellant's submission, para. 334 (quoting Panel Report, para. 7.466).
338 Argentina's other appellant's submission, para. 346 (quoting Panel Report, para. 7.465).
339 Argentina's other appellant's submission, paras. 327 and 350.
340 Argentina's other appellant's submission, paras. 327 and 350.
341 Argentina's other appellant's submission, para. 372.
342 European Union's appellee's submission, paras. 150, 159, and 171.
343 European Union's appellee's submission, para. 150 (referring to Panel Report, paras. 7.463
and 7.465).
344 European Union's appellee's submission, para. 157.
345 European Union's appellee's submission, para. 171.
348 The period considered refers to the period for examining trends relevant for the assessment of
injury, which was from 1 January 2009 to the end of the investigation period (or the IP), i.e. 30 June 2012.
(See supra, para. 5.3)
349 Definitive Regulation (Panel Exhibit ARG-22), Recitals 131-132. See also Panel Report, para. 7.379.

Definitive Regulations regarding the production capacity, production volume, and capacity
utilization figures are reproduced below.350
Table 2 Macroeconomic indicators from the Provisional Regulation
 2009 2010 2011 IP
Production capacity
(tonnes) 20 359 000 21 304 000 21 517 000 22 227 500
Production volume
(tonnes) 8 754 693 9 367 183 8 536 884 9 052 871
Capacity utilisation 43% 44% 40% 41%

Table 3 Macroeconomic indicators from the Definitive Regulation351

 2009 2010 2011 IP
Production capacity
(tonnes) 18 856 000 18 583 000 16 017 000 16 329 500
Production volume
(tonnes) 8 729 493 9 367 183 8 536 884 9 052 871
Capacity utilisation 46% 50% 53% 55%

6.118. In addressing causation, the EU authorities undertook a non -attribution analysis regarding
several "other factors" that were allegedly causing injury to the domestic industry at the same
time as the dumped imports. Of particular relevance to this appeal, under the heading "Capacity of
the Union industry", the EU authorities identified, in the Provisional Regulation, an argument that
had been raised by CARBIO that the injury to the EU industry was "due to overcapacity caus ed by
over-expansion … without a commensurate increase in demand". 352 In responding to this
argument, the EU authorities observed that, while the domestic industry became less profitable
during the period considered, capacity utilization remained low and sta ble throughout the period.
The EU authorities therefore found that there appeared to be no causal link between low capacity
utilization and injury to the domestic industry. 353 This conclusion was confirmed in the
Definitive Regulation.354
6.119. Before the Panel, Arg entina challenged the EU authorities' analysis of several indicators of
injury as being inconsistent with Articles 3.1 and 3.4 of the Anti -Dumping Agreement.355 Argentina
also challenged the EU authorities' analysis of causation , contending that the EU authorities failed
to separate and distinguish appropriately the injurious effects of overcapacity from those of the
dumped imports, as required by Articles 3.1 and 3.5.356 In particular, Argentina contended that the
EU authorities acted inconsistently with these provisions in their non-attribution analysis by relying
on the revised figures on production capacity and capacity utilization in the
Definitive Regulation.357 In addition, Argentina maintained that, in such analysis, the
EU authorities confused overcapacity as an "other factor" causing injury with capacity utilization as

350 Panel Report, para. 7.375 (quoting Provisional Regulati on (Panel Exhibit ARG -30), Table 4 in
Section 7.1) and para. 7.379 (quoting Definitive Regulation (Panel Exhibit ARG-22), Table to Recital 131). See
also Definitive Disclosure (Panel Exhibit ARG-35), paras. 105-106.
351 The EBB also corrected the production volume figure for 2009, which is reproduced in this table.
352 Provisional Regulation (Panel Exhibit ARG-30), Recital 137.
353 Provisional Regulation (Panel Exhibit ARG-30), Recitals 139-140.
354 Definitive Regulation (Panel Exhibit ARG-22), Recitals 162-171.
355 Panel Report, para. 7.368.
356 Panel Report, para. 7.441.
357 Panel Report, para. 7.449.

an injury indicator, and erred in focusing on the capacity utilization rates rather than overcapacity
in absolute terms.358
6.120. The Panel began by recalling its finding that the EU authorities' t reatment of the revised
production capacity data submitted by the EBB was inconsistent with Articles 3.1 and 3.4 of the
Anti-Dumping Agreement. 359 The Panel then considered whether this finding of inconsistency
should render the EU authorities' non -attribution analysis with regard to overcapacity inconsistent
with Articles 3.1 and 3.5 for the same reasons. 360 Having reviewed certain recitals in the
Provisional and Definitive Regulations, the Panel considered that the revised data "did not taint the
EU authorit[ies'] determination on overcapacity as an 'other factor' causing injury to the domestic
industry, as this determination was not based on or affected by the revised data". 361 In the
Panel's view, the revised data "did not have a significant role in the EU authorities' conclusion in
the Definitive Regulation on overcapacity as an 'other factor' causing injury". 362 Consequently, the
Panel concluded that the fact that the EU authorities' evaluation of capacity and capacity utilization
was inconsistent with Articles 3.1 and 3.4 of the Anti-Dumping Agreement did not, in and of itself,
render the EU authorities' non -attribution analysis of overcapacity inconsistent with Articles 3.1
and 3.5 thereof.363
6.121. The Panel then examined, and rejected, Argentina's argument that the EU authorities
improperly focused on capacity utilization as opposed to the increase in overcapacity in absolute
terms. The Panel considered that capacity utilization is logically related to overcapacity, in the
sense that the rate of capacity utilization reflects the amount of excess capacity of the
domestic industry in relative terms. The Panel disagreed with Argentina that focusing on the
increase in overcapacity in absolute terms, rather than on trends in capacity utilization rates,
would have altered t he conclusion reached by the EU authorities in this reg ard. Moreover, the
Panel saw no basis in Article 3 of the Anti -Dumping Agreement to support the proposition that an
investigating authority must give priority to the evolution of the domestic industry' s overcapacity
in absolute terms as opposed to its evolution in relative terms.364
6.122. After rejecting several other arguments advanced by Argentina 365, the Panel considered
that the EU authorities' conclusion with respect to overcapacity is one that an unbiased and
objective investigating authority could have reached in light of the facts before it. 366 Consequently,
the Panel rejected Argentina's allegations that the European Union acted inconsistently with
Articles 3.1 and 3.5 of the Anti-Dumping Agreement in rejecting overcapacity as an "other factor"
of injury to the EU domestic industry.367

358 Panel Report, para. 7.450. The Panel's findings with respect to other arguments raised by
Argentina that challenged the causation analysis made by the EU authorities are not subject to appeal. (Ibid.,
paras. 7.469-7.471)
359 Panel Report, para. 7.462. More specifically, the Panel found that the EU authorities had not
exercised sufficient care in assessing the accuracy and reliability of the revised data submitted by the EBB in
the circumstances of the anti-dumping investigation at issue. The Panel considered that, due to their treatment
of the revised data, the EU authorities had failed to base their evaluation of production capacity and capacity
utilization on positive evidence and had failed to conduct an objective examination of the impact of dumped
imports on the domestic industry relating to these two factors, thereby acting inconsistently with Articles 3.1
and 3.4 of the Anti-Dumping Agreement. (Ibid., paras. 7.411, 7.413, and 7.415) The Panel's findings under
Articles 3.1 and 3.4 are not subject to appeal.
360 Panel Report, para. 7.462.
361 Panel Report, para. 7.463.
362 Panel Report, para. 7.466.
363 Panel Report, para. 7.466.
364 Panel Report, para. 7.468.
365 See supra, fn 358.
366 Panel Report, para. 7.472.
367 Panel Report, para. 7.472.

6.1.3.2 Relevant provisions
6.123. Before turning to Argentina's claims, we discuss briefly the relevant provisions of the
Anti-Dumping Agreement. Articles 3.1 and 3.5 of the Anti-Dumping Agreement provide:
Article 3
Determination of Injury368
3.1 A determination of injury for purposes of Article VI of GATT 1994 shall be based
on positive evidence and involve an objective examination of both (a) the volume of
the dumped imports and the effect of the dumped imports on prices in the domestic
market for like products, and (b) the consequent impact of these imports on domestic
producers of such products.
…
3.5 It must be demonstrated that the dumped imports are, through the effects of
dumping, as set forth in paragraphs 2 and 4, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the dumped imports
and the injury to the domestic industry shall be based on an examination of all
relevant evidence before the authorities. The authorities shall also examine any known
factors other than the dumped imports which at the same time are injuring the
domestic industry, and the injuries caused by these other factors must not be
attributed to the dumped imports. Factors which may be relevant in this respect
include, inter alia , the volume and prices of imports not sold at dumping prices,
contraction in demand or changes in the patterns of consumption, trade restrictive
practices of and competition between the foreig n and domestic producers,
developments in technology and the export performance and productivity of the
domestic industry.369
6.124. Article 3.1 of the Anti -Dumping Agreement "is an overarching provision that sets forth a
Member's fundamental, substantive obligatio n" concerning the injury determination and "informs
the more detailed obligations in the succeeding paragraphs" of Article 3.370 The Appellate Body has
interpreted the term "positive evidence" as focusing on the facts underpinning and justifying the
injury d etermination.371 The term relates to the quality of the evidence that an investigating
authority may rely on in making a determination, and requires that such evidence be "affirmative,
objective, verifiable, and credible". 372 Furthermore, the Appellate Body ha s found that an
"objective examination" requires an authority to conduct an investigation "in an unbiased manner,
without favouring the interests of any interested party, or group of interested parties, in the
investigation".373
6.125. Article 3.5 requires that the determination of a causal relationship between the dumped
imports and the injury to the domestic industry be based on "an examination of all relevant
evidence before the authorities ". Article 3.5 also requires an investigating authority to "examine
any kn own factors other than the dumped imports which at the same time are injuring the
domestic industry" and to ensure that "the injuries caused by these other factors [are not]

368 Fn omitted.
369 Emphasis added.
370 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.137 (quoting
Appellate Body Report, China – GOES, para. 126). See also Appellate Body Reports, Thailand – H-Beams,
371 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.138 (quoting
Appellate Body Report, US – Hot-Rolled Steel, para. 193).
372 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.138 (quoting
Appellate Body Report, China – GOES, para. 126). See also Appellate Body Report US – Hot Rolled Steel,
para. 192.
373 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.138 (quoting
Appellate Body Report, China – GOES, para. 126). See also Appellate Body Report, US – Hot-Rolled Steel,
para. 193.

attributed to the dumped imports". 374 The non -attribution language in Article 3.5 ca lls for an
assessment that involves "separating and distinguishing the injurious effects of the other factors
from the injurious effects of the dumped imports"375 and requires "a satisfactory explanation of the
nature and extent of the injurious effects of t he other factors, as distinguished from the injurious
effects of the dumped imports".376
6.126. With the above -mentioned considerations in mind, we turn to consider Argentina's claims
that the Panel erred in its interpretation and application of these provisions.
6.1.3.3 Whether the Panel erred in its interpretation of Articles 3.1 and 3.5 of the
Anti-Dumping Agreement
6.127. We begin with the interpretative error that, according to Argentina, is found in th e
first sentence of paragraph 7.466 of the Panel Report, which states:
We therefore conclude that the revised data did not have a significant role in the
EU authorities' conclusion in the Definitive Regulation on overcapacity as an "other
factor" causing injury.
6.128. In Argentina's view, the Panel erred in considering that it was relevant to examine whether
the revised data concerning production capacity "[did or] did not have a significant role in the
EU authorities' conclusion in the Definitive Regulation on overcapacity as an 'other factor' causing
injury".377 For Argentina, the obli gation to make an injury determination, including of the other
known factors causing injury, on the basis of "positive evidence" and involving an "objective
examination" is an "absolute" one. 378 Argentina refers to the following statements by the
Appellate Body in EC – Bed Linen (Article 21.5 – India) in support of its argument:
These obligations are absolute. They provide for no exceptions, and they include no
qualifications. They must be met by every investigating authority in every injury
determination.379
6.129. In Argentina's view, to the extent that the EU authorities relied, even partly, on evidence
that was not "positive" and did not involve an "objective examination", the EU authorities'
non-attribution analysis of overcapacity is inconsistent with Articles 3. 1 and 3.5 of the
Anti-Dumping Agreement.380 The European Union considers that Argentina's argument should be
dismissed on the basis of the Panel's "clear findings" in the paragraphs immediately preceding the
statement challenged by Argentina, which indicate that the EU authorities did not rely on the
revised data in their non-attribution analysis.381
6.130. As a preliminary matter, we are not persuaded that the Appellate Body's statements in
EC – Bed Linen (Article 21.5 – India) support Argentina's position. In our vi ew, the
Appellate Body's statement that "[t]hese obligations are absolute" concerns the fundamental
nature of the obligations imposed by Articles 3.1 and 3.2, in the sense that "[t]hey must be met
by every investigating authority in every injury determinat ion."382 These statements of the
Appellate Body do not speak to the issue of whether the extent to which certain evidence plays a
role in an injury determination is relevant in assessing the WTO-consistency of that determination.

374 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.283 (quoting
Appellate Body Report, China – GOES, para. 151).
375 Appellate Body Reports, China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.283 (quoting
Appellate Body Report, China – GOES, para. 151). See also Appellate Body Reports, US – Hot Rolled Steel,
376 Appellate Body Report, US – Hot-Rolled Steel, para. 226.
377 Argentina's other appellant's submission, para. 334 (quoting Panel Report, para. 7.466). (emphasis
added by Argentina) See also para. 337; and response to questioning at the oral hearing.
378 Argentina's other appellant's submission, para. 345.
379 Argentina's other appellant's submission, para. 336 (quoting Appellate Body Report, EC – Bed Linen
(Article 21.5 – India), para. 109).
380 Argentina's other appellant's submission, para. 345.
381 European Union's appellee's submission, para. 150.
382 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 109.

6.131. In any event, reading the Pa nel's statement in paragraph 7.466 in its context, we do not
consider that the Panel intended to articulate or apply an interpretation of Articles 3.1 and 3.5. 383
Rather, in making the impugned statement in paragraph 7.466, the Panel merely affirmed the
view that it had expressed in the preceding paragraphs of its Report regarding the irrelevance of
the revised data to the specific non -attribution analysis undertaken by the EU authorities in the
investigation on biodiesel from Argentina.
6.132. More specifically, the Panel considered that it was "clear" from the EU authorities' findings
that their conclusions regarding overcapacity in the Provisional and Definitive Regulations "were
not dependent on, or even affected by, the use of the revised vs. the initial data a nd/or the trends
associated with these data, as in either case, the data showed a low rate of capacity utilization ".384
The Panel therefore found that the revised data did not "taint" the EU authorities' determination on
overcapacity as an "other factor" cau sing injury to the domestic industry, as this determination
"was not based on or affected by the revised data". 385 Finally, in examining Argentina's argument
concerning a specific statement in Recital 165 of the Definitive Regulation, the Panel considered
that "this statement does not convince us that the EU authorities' conclusion with respect to the
issue of overcapacity was based on, or affected by, the revised data." 386 After conducting the
analysis above, the Panel made the statement challenged by Argentin a, namely, that "the revised
data did not have a significant role in the EU authorities' conclusion in the Definitive Regulation on
overcapacity as an 'other factor' causing injury."387
6.133. Thus, even though the Panel did not use exactly the same words in the fi rst sentence of
paragraph 7.466 as it did in the preceding paragraphs of its Report , the totality of the Panel's
analysis makes it clear that the Panel found that the EU authorities' non -attribution analysis was
not based on or affected by the revised data. Therefore, contrary to Argentina's argument, we do
not consider the Panel to have articulated a standard whereby it is relevant to examine whether
the revised data played a significant role in the EU authorities' non -attribution analysis.388 We thus
do not find an error of interpretation in the Panel's analysis under A rticles 3.1 and 3.5 of the
Anti-Dumping Agreement. Rather, we consider that Argentina's appeal regarding the Panel's
analysis of the relevance of the revised data concerns the Panel's alleged errors in its application of
Articles 3.1 and 3.5, to which we now turn.
6.1.3.4 Whether the Panel erred in concluding that the EU authorities did not rely on the
revised data
6.134. Argentina claims that , "even if the Appellate Body were to conclude that the Panel was
right in examining the role played by the revised data in the determination of the EU authorities, …
the Panel did not correctly apply Article 3.1 when concluding that 'the issue of overcapacity was
[not] based on, or affected by, the revised data .'"389 Argentina refers to two instances,
Recitals 165 and 170 of the Definitive Regulation, in which the EU authorities referred to the
revised data in connection with their analysis of whether the injury to the EU industry was caused
by the alleged overcapacity of t he EU industry, as opposed to dumped imports of biodiesel. In
Argentina's view, these references demonstrate that the EU authorities relied on the revised
data.390 The European Union considers it unnecessary, in light of the Panel's "clear finding" that
the non-attribution analysis was not "based on, or affected by, the revised data" 391, to engage in a
comparative analysis of the evolution of production capacity, capacity utilization, and overcapacity
in the Provisional and Definitive Regulations.392
6.135. We observe that Recital 165 of the Definitive Regulation states:

383 See Argentina's other appellant's submission, paras. 334, 337, and 345.
384 Panel Report, para. 7.463. (emphasis added) The Panel emphasized that the EU authorities had
found that low capacity utilization was not a major cause of injury on the basis of the original data in the
Provisional Regulation, and that the Definitive Regulation "merely confirmed these findings, after addressing
comments of interested parties". (Ibid. (fn omitted))
385 Panel Report, para. 7.463.
386 Panel Report, para. 7.465.
388 Panel Report, para. 7.466.
389 Argentina's other appellant's submission, para. 346 (quoting Panel Report, para. 7.465).
390 Argentina's other appellant's submission, paras. 347-349.
391 Panel Report, para. 7.465.
392 European Union's appellee's submission, paras. 151-152.

In addition, following the inclusion of the revised data on capacity and utilisation, the
Union industry decreased capacity during the period considered, and increased
capacity utilisation, from 46% to 55%. This shows that the capacity utilisation of the
Union industry would be significantly higher in the absence of dumped imports than
the 53% mentioned above.
6.136. Argentina contests the Panel's characterization of the first sentence of Recital 165 as "a
subsidiary point made by the EU authorities in response to a specific argument [described in
Recital 163] that even in the absence of any imports from Argentina and Indonesia, capacity
utilization would have been low at 53% during the [investigation period]."393 Rather, for Argentina,
the first sentence constitutes a response t o an interested party's argument, which pointed out
that, based on the original data in the Provisional Regulation, "the increase in production capacity
from 2009 to the end of the [investigation period] … has led to a reduction in capacity utilisation
during the period under consideration".394
6.137. We note that, in addressing Argentina's argument concerning Recital 165, the Panel
reviewed not only Recitals 163 and 165, but also Recital 164. In thi s recital, the EU authorities
rejected the interested party's comment in Recital 163 because "no evidence was provided to
support the view that the low capacity utilization rate was causing injury to such an extent as to
break the causal link between dumpe d imports and the injury". 395 The EU authorities then added
that fixed costs represented only a small proportion of the total production costs, explaining that
low capacity utilization was only one factor causing injury, but not a decisive one. 396 In making
these observations, the EU authorities did not make reference to the revised data. Rather, the
authorities referred generally to the phenomenon of "low capacity utilization" that, in their view,
existed at both the provisional and definitive stages. The Pane l emphasized that "[i]t is only after
making these points that the EU authorities posited [in Recital 165] that, in view of the revised
capacity utilization rates, in the absence of any dumped imports, capacity utilization would have
been significantly higher than the 53% figure cited by the interested parties."397
6.138. Reading Recitals 163, 164, and 165 together, we concu r with the Panel that the
first sentence of Recital 165, which refers to the revised data, constitutes "a subsidiary point" in
response to the interested party's argument that capacity utilization would have been low even in
the absence of imports. In our view, therefore, the Panel did not err in stating that the reference
to the revised data in Recital 165 does not demonstrate that the EU author ities' conclusion
regarding overcapacity was based on the revised data.398
6.139. Argentina further highlights that, in Recital 170 of the Definitive Regulation, the
EU authorities noted that "[t]he revised macroeconomic indicators also show that companies were
during the period taking capacity out of possible use, and closer to the end of the
[investigation period] were starting a process of closing plants that are no longer viable." 399 We
note that, during the Panel proceedings, neither Argentina nor the Panel specifically addressed this
recital in considering whether the EU authorities relied on the revised data in their non -attribution
analysis.400 Furthermore, apart from quoting the sentence above, Argentina has not provided us
with additional arguments as to why a mere reference to the revised data in Recital 170 supports
the view that the non -attribution analysis was based on the revised data. Such passing reference
does not change the fact that the conclusion regarding overcapacity in the Provisional Regulation
remained unchanged in the Definitive Regulation, despite the revised capacity utilization rates.

393 Argentina's other appellant's submission, para. 347 (quoting Panel Report, para. 7.465).
394 Argentina's other appellant's submission, para. 347 (quoting Definitive Regulation (Panel
Exhibit ARG-22), Recital 163).
395 Panel Report, para. 7.465 (referring to Definitive Regulation (Panel Exhibit ARG-22), Recital 164).
396 Panel Report, para. 7.465 (referring to Definitive Regulation (Panel Exhibit ARG-22), Recital 164).
397 Panel Report, para. 7.465 (referring to Definitive Regulation (Panel Exhibit ARG-22), Recital 164).
398 Panel Report, para. 7.465.
399 Argentina's other appellant's submission, para. 348 (quoting Definitive Regulation (Panel
Exhibit ARG-22), Recital 170).
400 The Panel referred to Recital 170 of the Definitive Regulation in its summary of the factual
background to Argentina's claim, in paragraph 7.446 of its Report. Argentina referred to Recital 170 in
footnote 224 to paragraph 228 of its second written submission to the Panel, but not as support for its
argument that the EU authorities relied on the revised data in the Definitive Regulation.

6.140. In light of the above, we do not consider that Argentina has established that the
Panel erred in its application of Articles 3.1 and 3.5 of the Anti -Dumping Agreement in considering
that the EU authorities' non -attribution analysis concerning overcapacity in the
Definitive Regulation was not "based on" or "affected by" the revised data.401
6.1.3.5 Whether the Panel erred in failing to distinguish overcapacity from capacity
utilization and in failing to note the inconsistency of the EU authorities' conclusion in
light of the evidence before them
6.141. As noted above, Argentina makes two additional claims of error regarding the
Panel's application of Articles 3.1 and 3.5 of the Ant i-Dumping Agreement, namely, that the
Panel erred in failing to distinguish overcapacity from capacity utilization and in failing to note the
inconsistency of the EU authorities' conclusion in light of the evidence before them.402
6.142. First, Argentina claims that the Panel erred in considering that the EU authorities did not
improperly focus on capacity utilization as opposed to the increase in overcapacity in absolute
terms during the period considered. In Argentina's view, the Panel failed to acknowledge that
"overcapacity" and "capacity utilization" are two distinct concepts when it stated that the concepts
are "logically related".403 Argentina submits that, while "overcapacity" refers to a situation where a
producer has capacity larger than what is required by the demand in a particular market, "capacity
utilization" refers to the actual production as a percentage of the total capacity. 404 For its part, the
European Union considers that the Panel was correct in stating that capacity utilization is "logically
related" to overcapacity and that an objective and unbiased investigating authority may examine
overcapacity on the basis of capacity utilization.405
6.143. We recall that, in rejecting Argentina's argument that the EU authorities improperly
focused on capacity utilizat ion, as opposed to the increase in overcapacity in absolute terms, the
Panel considered that the concepts of "overcapacity" and "capacity util ization" are "logically
related … in the sense that the rate of capacity utilization reflects the amount of excess capacity of
the domestic industry in relative terms ."406 This statement by the Panel is consistent with the way
in which the concepts of "overcapacity" and "capacity utilization" were used in the investigation at
issue. Specifically, both terms were used in a complementary manner to refer to the same
phenomenon, namely, a situation in which production capacity exceeds production volume,
resulting in excess or unused capacity. While "overcapacity" describes, in absolute terms, the
production capacity that the EU domestic industry had not used, "capacity utilization" describes, in
relative terms, the production capacity that the EU domestic industry had used. Moreover, both
the "overcapacity" figures referred to by Argentina and the "capacity utilization" rates shown in the
Provisional Regulation were derived from the same data, namely, the original data concerning
production volume and production capacity. Thus, contrary to Argentina's contention, we do not
consider that the Panel failed to distinguish between overcapacity and capacity utilization. Rather,
as the Panel found, "an objective and unbiased investigating authority may well have proceeded to
examine the issue of overcapacity on the basis of capacity utilization rather than in terms of the
evolution of the domestic industry's overcapacity."407
6.144. In relation to Argentina's first claim of error, Argentina also contends that the Panel erred
in considering that there is no basis in Article 3 to support the proposition that an investigating
authority would have to consider or give priority to the evolution of the domestic industry 's
overcapacity in absolute terms as opposed to its evolution in relative terms. Argentina submits
that the obligation under Article 3.5 to examine other "known factors" must involve an "objective
examination" as req uired by Article 3.1. Argentina further submits that, to act objectively, the

401 Panel Report, para. 7.465.
402 Argentina's other appellant's submission, paras. 327 and 350.
403 Argentina's other appellant's submission, para. 356.
404 Argentina's other appellant's submission, para. 357. To calculate "overcapacity" for a given year,
Argentina subtracts the production volume in tonnes from the production capacity in tonnes for the same year.
(Ibid., Table 1 to para. 365; second written submission to the Panel, Table 1 to para. 230) By comparison, the
"capacity utilization" figures as presented in the Provisional and Definitive Regulations are derived by dividing
the production volume by the production capacity for the same period. (See e.g. Provisional Regulation
(Panel Exhibit ARG-30), Table 4)
405 European Union's appellee's submission, para. 158.
406 Panel Report, para. 7.468.
407 Panel Report, para. 7.468.

EU authorities should have examined the overcapacity figures raised by CARBIO during the
investigation and explained why, despite the substantial i ncrease in overcapacity, they could still
conclude that the injury suffered by the domestic industry was caused by the alleged dumped
imports.408
6.145. As explained above, "overcapacity" and "capacity utilization" are "logically related"
concepts that describe th e same phenomenon – excess or unused capacity – in complementary
terms. Given this relationship, we do not consider that the obligation to conduct an "objective
examination" based on "positive evidence" necessarily required the EU authorities to examine th e
evidence regarding these concepts in exactly the same format as it was submitted by the
interested parties. We also note that the interested parties themselves (including CARBIO) referred
not only to overcapacity in absolute terms 409, but also to capacity utilization in relative terms in
their submissions and presentations to the EU authorities. 410 In our view, therefore, the Panel did
not err in finding that the EU authorities were not required to give priority to the evolution of the
domestic industry's overcapacity in absolute terms as opposed to its evolution in relative terms. 411
Based on our understanding of "overcapacity" and "capacity utilization" as two related and
complementary concepts, we also disagree with Argentina's argument that the Panel erred i n
finding that "focusing on the increase in overcapacity in absolute terms, rather than on trends in
capacity utilization rates, would [not] have altered the conclusion reached by the
EU authorities".412
6.146. Finally, Argentina claims that the Panel erred "by fai ling to note the inconsistency of the
EU authorities' conclusion that this factor could not be 'a major cause of injury' on the basis of the
evidence before [them]". 413 For Argentina, the EU authorities' conclusion that capacity utilization
"remained low thr oughout the … period [considered]" 414 is contradicted by the data in the
Provisional Regulation, which showed a decrease in "utilization capacity" from 43% to 41% and,
hence, demonstrated a link between the deterioration of capacity utilization and the situa tion of
the EU producers concerned. 415 In our view, the above -mentioned figures appear consistent with
the EU authorities' assessment that capacity utilization "remained low throughout the … period
[considered]".416 Thus, we consider that the Panel did not err in finding no inconsistency with
Articles 3.1 and 3.5 in this regard.
6.1.3.6 Conclusions
6.147. We consider that the Panel was not expressing, and therefore did not err in, its
interpretation of Articles 3.1 and 3.5 of the Anti -Dumping Agreement when it stated that th e
revised data did not have a significant role in the EU authoritie s' conclusion in the
Definitive Regulation on overcapacity as an "other factor" causing injury. Furthermore, the Panel
committed no error in its application of these provisions. Specificall y, the Panel did not err in:
(i) stating that the EU authorities' conclusion in their non -attribution analysis was not based on or
affected by the revised data; (ii) rejecting Argentina's argument that the EU authorities improperly

408 Argentina's other appellant's submission, para. 361.
409 It appears that CARBIO did not submit to the EU authorities the specific "overcapacity" figures that
Argentina submitted to the Panel and to us. (Argentina's response to questioning at the oral hearing)
Nonetheless, the European Union agreed that the specific "overcapacity" figures submitted by Argentina are
the result of a simple subtraction of the production volume figures from the total production capacity figures.
(European Union's response to questioning at the oral hearing)
410 See Definitive Regulation (Panel Exhibit ARG-22), Recitals 163 and 166; Written Submission by
CARBIO of 5 November 2012 in AD593 – Anti-dumping investigation concerning imports of biodiesel originating
in, inter alia, Argentina (Panel Exhibit ARG-37), paras. 66-74; CARBIO and its Members, PowerPoint
presentation on AD593 – Anti-dumping investigation concerning imports of biodiesel originating in, inter alia,
Argentina, presented at the hearing held on 14 December 2012 (Panel Exhibit ARG-43), slides 17-18; CARBIO,
PowerPoint presentation on AD593 – Biodiesel originating in Argentina, presented at the hearing held on 8 July
2013 (Panel Exhibit ARG-46), slides 18-21; and Letter dated 1 July 2013 from CARBIO providing comments on
the Provisional Disclosure (Panel Exhibit ARG-51), pp. 14-18.
411 Panel Report, para. 7.468.
412 Argentina's other appellant's submission, paras. 359 and 363 (quoting Panel Report, para. 7.468).
413 Argentina's other appellant's submission, para. 368 (quoting Provisional Regulation (Panel
Exhibit ARG-30), Recital 139). See also Definitive Regulation (Panel Exhibit ARG-22), Recital 181.
414 Argentina's other appellant's submission, para. 368.
415 Argentina's other appellant's submission, para. 369. See also Definitive Regulation (Panel
Exhibit ARG-22), Recital 161.
416 Provisional Regulation (Panel Exhibit ARG-30), Recital 139.

focused on capacity utilization as opposed to the increase in overcapacity in absolute terms during
the period considered; or (iii) finding no fault in the EU authorities' conclusion that, on the basis of
the evidence before them, overcapacity could not be "a major cause of injur y". More generally, we
agree with the Panel that the EU authorities' conclusion with respect to overcapacity is one that an
unbiased and objective investigating authority could have reached in light of the facts before it.417
6.148. For these reasons, we find that Argentina has not established that the Panel erred in
finding that the EU authorities' treatment of overcapacity in its non -attribution analysis as an
"other factor" causing injury to the EU domestic industry was not inconsistent with Articles 3.1
and 3.5 of the Anti -Dumping Agreement. Consequently, we uphold the Panel's finding, in
paragraphs 7.472 and 8.1.c.x of its Report, that Argentina had not established that the
European Union's non -attribution analysis was inconsistent with Articles 3.1 and 3.5 of t he
Anti-Dumping Agreement.
6.2 Claims concerning the second subparagraph of Article 2(5) of the Basic Regulation
6.2.1 Introduction
6.149. Argentina appeals the Panel's findings that Argentina had not established that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.418 Furthermore, Argentina appeals the Panel's consequential finding that Argentina
had not established that the second subparagraph of Article 2(5) of the Basic Regulation is
inconsistent "as such" with Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement.419 Argentina requests us to reverse these findings of the Panel.
Argentina further requests us to complete the legal analysis and find that the second subparagraph
of Article 2(5) of the Basic Regulation is inconsistent "as such" with Articles 2.2.1.1 and 2.2 of the
Anti-Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, Article XVI:4 of the
WTO Agreement, and Article 18.4 of the Anti-Dumping Agreement.420
6.150. Specifically, with respect to its claim under Article 2.2.1.1 of the Anti-Dumping Agreement,
Argentina contends that the Panel erred in ascertaining the meaning of the second subparagraph
of Article 2(5) of the Basic Regulation.421 Argentina further claims that, in ascertaining the
meaning of that provision of the Basic Regulation, the Panel acted inconsistently with Article 11 of
the DSU by failing to make an objective, thorough, and holistic e xamination of all the different
elements put forward by Argentina.422
6.151. In respect of its claim under Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, Argentina alleges , first, that the Panel erred in ascertaining
the meaning of the second subparagraph of Article 2(5) of the Basic Regulation. 423 Argentina
further submits that, in ascertaining the meaning of that provision, the Panel acted inconsistently
with Article 11 of the DSU by failing to make an objective, thorough, and holistic examination of all
the different elements put forward by Argentina.424 Argentina also contends that the Panel erred in
finding that, the second subparagraph of Article 2(5) of the Basic Regulation is not
WTO-inconsistent because Argentina had not demo nstrated that the second subparagraph of
Article 2(5) cannot be applied in a WTO-consistent manner.425
6.152. The European Union contends that the Panel correctly found that Argentina had not
established that the second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as

417 Panel Report, para. 7.472.
418 Argentina's other appellant's submission, paras. 28 and 194 (referring to Panel Report,
paras. 8.1.b.i-ii, 7.153-7.154, and 7.169-7.174).
419 Argentina's other appellant's submission, para. 291 (referring to Panel Report, paras. 7.175 and
8.1.b.iii).
420 Argentina's other appellant's submission, paras. 3-5, 33, 176, and 193.
421 Panel Report, paras. 7.153-7.154.
422 Argentina's other appellant's submission, paras. 32 and 135.
423 Argentina's other appellant's submission, para. 196 (referring to Panel Report, paras. 7.169
and 7.172).
424 Argentina's other appellant's submission, para. 269.
425 Argentina's other appellant's submission (referring to Panel Report, para. 7.174).

such" with the relevant provision s of the covered agreements . Therefore, the European Union
requests that we uphold these findings.426
6.2.2 The assessment of the meaning of municipal law
6.153. Before the Panel, Argentina claimed that the se cond subparagraph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Articles 2.2.1.1 and 2.2 of the
Anti-Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, Article XVI:4 of the
WTO Agreement, and Article 18.4 of the Anti-Dumping Agreement. The Panel found that Argentina
had not established that the second subparagraph of Article 2(5) of the Basic Regulation is
inconsistent "as such" with th ese provisions of the covered agreements. Argentina challenges
these findings. Before addres sing Argentina's claims of error, we set out, as the Panel did 427,
certain considerations that are relevant to ascertaining the meaning of a municipal law.
6.154. These considerations are particularly relevant in the context of a claim that the municipal
law at issue is inconsistent "as such" with WTO obligations. We recall that a claim that a measure
is inconsistent "as such" challenges a measure of a Member that has general and prospective
application428, whereas a claim that a measure is inconsistent "as applied" challenges one or more
specific instances of the application of such a measure.429
6.155. Where a Member's municipal law is challenged "as such", a panel must ascertain the
meaning of that law for the purpose of determining whether that Member has complied with its
obligations under the covered agreements. Accordingly, "[a]lthough it is not the role of panels or
the Appellate Body to interpret a Member's domestic legislation as such, it is permissible, indeed
essential, to conduct a detailed examination of that legi slation in assessing its consistency with
WTO law."430 In this regard, a panel must conduct an independent assessment of the meaning of
the municipal law at issue, and should not simply defer to the meaning attributed to that law by a
party to the dispute. 431 A panel's assessment of municipal law for the purpose of determining its
consistency with WTO obligations is subject to appellate review under Article 17.6 of the DSU. 432
Just as it is necessary for the panel to seek a detailed understanding of the municipal law at issue,
so too is it necessary for the Appellate Body to review the panel's examination of that municipal
law.433
6.156. A party asserting that another party's municipal law is inconsistent "as such" with relevant
WTO obligations bears the burden of introduc ing evidence as to the meaning of such law to
substantiate that assertion.434 When a municipal law is challenged "as such", the starting point for
the analysis will be the text of that municipal law, on its face. 435 A complainant may seek to
support its unders tanding of the meaning of the municipal law on the basis of the text of that
municipal law only. A complainant may also seek to support its understanding of the meaning of
the municipal law at issue with additional elements such as "evidence of the consist ent application
of such laws, the pronouncements of domestic courts on the meaning of such laws, the opinions of
legal experts and the writings of recognized scholars". 436 Likewise, in addition to setting out its

426 European Union's appellee's submission paras. 17-19, 38, 62, 74, 112, 122, and 171.
427 Panel Report, paras. 7.119-7.126.
428 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 172. A measure may
be challenged "as such" even where that measure has never been applied. (See Appellate Body Report,
US - 1916 Act, paras. 92-93)
429 Appellate Body Report, US – 1916 Act, para. 60. The terms "as applied" and "as such" do not
exhaustively define the types of measures that are susceptible to challenge in WTO dispute settlement.
(Appellate Body Reports, US – Continued Zeroing, paras. 179-181; US – 1916 Act, paras. 60-61;
US - Corrosion-Resistant Steel Sunset Review, para. 81; Argentina – Import Measures, paras. 5.102 and
5.109; see also Panel Report, US – Continued Zeroing, para. 7.46)
430 Appellate Body Report, US – Hot-Rolled Steel, para. 200 (referring to Appellate Body Report,
India - Patents (US), paras. 66-67).
431 Panel Report, para. 7.121 (referring to Appellate Body Report, US – Carbon Steel (India),
para. 4.445, (in turn referring to Appellate Body Report, India – Patents (US), para. 66).
432 Appellate Body Report, US – Section 211 Appropriations Act, para. 105.
433 Appellate Body Report, India – Patents (US), para. 68.
434 The nature and extent of the evidence required to satisfy the burden of proof will vary from case to
case. (Appellate Body Report, US – Carbon Steel, para. 157)
435 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review, para. 168.
436 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.100
(quoting Appellate Body Report, US – Carbon Steel, para. 157).

understanding of the text of the municipal la w at issue, the respondent may submit evidence
relating to such additional elements to rebut the complainant's arguments. In conducting its
independent assessment of the meaning of the municipal law at issue, a panel must undertake a
holistic assessment of all the relevant elements before it.437
6.157. In the present dispute, before the Panel, Argentina took the position that confining the
analysis to the text of the second subparagraph of Article 2(5) of the Basic Regulation would not
suffice to arrive at a proper understanding of this provision. 438 In this regard, Argentina requests
us to review not only the Panel's examination of the text of the second subparagraph of
Article 2(5), but also the Panel's reading of the legislative history that led to the introduction of the
second subparagraph of Article 2(5) into the Basic Regulation, the alleged consistent practice of
the EU authorities, and certain judgments of the General Court of the European Union.439
6.158. Below we examine Argentina's contention that the Panel erred in addressing
Argentina's claims concerning the second subparagraph of Article 2(5) of the Basic Regulation. We
begin with Argentina's claims under Article 2.2.1.1 of the Anti-Dumping Agreement. Thereafter, we
turn to Argentina's claims under Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii)
of the GATT 1994. Finally, we examine Argentina's claim s under Article XVI:4 of the
WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.
6.2.3 Article 2.2.1.1 of the Anti-Dumping Agreement
6.159. Argentina argu es that the Panel erred in finding that the second subparagraph of
Article 2(5) deals only with "what has to be done after the EU authorities have determined that a
producer's records do not reasonably reflect the costs of production pursuant to the
first subparagraph".440 Argentina contends that the Panel committed legal error in concluding that
the second subparagraph of Article 2(5) does not require the European Union to determine that a
producer's records do not reasonably reflect the costs associated wit h the production and sale of
the product under consideration when those records reflect prices that are considered to be
artificially or abnormally low as a result of a distortion. 441 For Argentina, the Panel's conclusions
are based on an erroneous assessmen t of the text of the measure and of its context, as well as of
the practice of the EU authorities, and certain judgments of the General Court of the
European Union.442 Argentina further argues that the Panel acted inconsistently with Article 11 of
the DSU by failing to make an objective and thorough examination of all the different elements put
forward by Argentina beyond the text of the measure, thereby failing to make a proper holistic
assessment of all these elements taken together in order to ascertain the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation.443
6.160. The European Union highlights that it is the first subparagraph of Article 2(5) of the
Basic Regulation that is concerned with the application of the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement. The European Union points out that the first subparagraph of
Article 2(5) of the Basic Regulation replicates, in large part, the language of Article 2.2.1.1 of the
Anti-Dumping Agreement. By contrast, the second subpar agraph of Article 2(5) of the
Basic Regulation sets out what is to be done, as a matter of EU law, when costs need not be
established on the basis of the records of the exporter or producer under investigation, because
one of the two conditions set out in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement is not met. 444 For these reasons, the European Union submits that
Argentina's attempts to argue that the second subparagraph of Article 2(5) of the Basic Regulation

437 Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.101.
438 Panel Report, para. 7.125.
439 Argentina's other appellant's submission, paras. 133 and 254.
440 Panel Report, para. 7.153. The Panel found that Argentina had not established that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the
Anti-Dumping Agreement and, as a consequence, Article 2.2 of the same Agreement and Article VI:1(b)(ii) of
the GATT 1994. (Panel Report, para. 7.154) On appeal, Argentina limits its claims to the Panel's finding under
Article 2.2.1.1 of the Anti-Dumping Agreement, and does not expressly challenge the Panel's consequential
findings under Article 2.2 of the same Agreement and Article VI:1(b)(ii) of the GATT 1994. (Argentina's other
appellant's submission, para. 28)
441 Panel Report, para. 7.153.
442 Argentina's other appellant's submission, paras. 28-30 and 123-124.
443 Argentina's other appellant's submission, para. 32.
444 European Union's appellee's submission, paras. 39-41.

is inconsistent with the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement must fail,
because, conceptually, "there is simply no match between the two provisions."445
6.161. We begin with a summary of the relevant findings of the Panel before addressing each of
Argentina's claims of error.
6.2.3.1 The Panel's findings
6.162. The Panel understood the essence of Argentina's claim under Article 2.2.1.1 of the
Anti-Dumping Agreement to be founded on the following meaning of the second subparagraph of
Article 2(5) of the Basic Regulation, advanced by Argentina. When the EU authorities take the view
that the costs reported in an investigated producer's records reflect prices that are "abnormally
low" or "artificially low" because of what they consider to be a "distortion" 446, the
second subparagraph of Article 2(5) of the Basic Regulation requires the EU authorities to
determine that the costs of production and sale of the product under investigation are not
"reasonably reflected" in the producer's records and, consequently, to reject or adjust those costs
in establishing the investigated producer's costs of production and sale. 447 The Panel noted that,
according to Argentina, this understanding of the provision necessarily means that the
second subparagraph of Article 2(5) of the Basic Regulation is inc onsistent "as such" with the
first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.448
6.163. The Panel examined the text of the second subparagraph of Article 2(5) of the
Basic Regulation, together with the other elements relied on by Argentina, in order to determine
whether they support Argentina's understanding of th is provision. The other elements consisted of
the legislative history that led to the introduction of the second subparagraph of Article 2(5) into
the Basic Regulation in 2002, the alleged consistent practice of the EU authorities, and judgments
of the General Court of the European Union.
6.164. With respect to the text, the Panel found that the second subparagraph of Article 2(5) only
lays down what the authorities can do – and allows them to select any one of the listed options for
determining the costs of production – after they have made a determination under the
first subparagraph that the records do not reasonably reflect the costs. 449 With respect to the
legislative history, the Panel considered that neither Recital 4 of Council Regulation
(EC) No. 1972/2002450 nor the second subparagraph of Article 2(3) of the Basic Regulation
supports the notion that the determination that records do not reasonably reflect the costs of
production if prices are ar tificially low due to a market distortion is made pursuant to the
second subparagraph of Article 2(5) in certain situations. 451 Further, the Panel found that the
decisions of the EU authorities, submitted by Argentina as evidence of the alleged consistent
practice, did not undermine the Panel's preliminary conclusion, reached on the basis of the text of
the impugned provision and of its legislative history, that the relevant determination is made
pursuant to the first subparagraph of Article 2(5). 452 Finally, the Panel found that nothing in the
judgments of the General Court of the European Union cited by Argentina support s
Argentina's reading of the relationship between the first two subparagraphs of Article 2(5), that is,
that the determination of whether the producer's records reasonably reflect the costs of production

445 European Union's appellee's submission, para. 42.
446 Panel Report, para. 7.113. The Panel noted Argentina's explanation that it had used the terms
"abnormally" and "artificially" to indicate that the prices are "lower" as a result of an alleged "distortion" in the
form of price regulation, an export tax, or other government intervention. Argentina pointed out that these
terms, and the terms "distorted or affected by a distortion" and "do not reflect market values or prices", which
it used in describing the measure at issue, are not included in the text of the second subparagraph of
Article 2(5) of the Basic Regulation. However, these terms were used in the other evidence Argentina had
submitted to the Panel in support of its understanding of the scope and meaning of the second subparagraph of
Article 2(5) of the Basic Regulation. (Ibid., and fn 188 thereto)
447 Panel Report, para. 7.112.a.
448 Panel Report, para. 7.112.a.
449 Panel Report, para. 7.134.
450 Council Regulation (EC) No. 1972/2002 of 5 November 2002 amending Regulation (EC) No. 384/96
on the protection against dumped imports from countries not members of the European Community, Official
Journal of the European Communities, L Series, No. 305 (7 November 2002), pp. 1-3 (Panel Exhibit ARG-5).
451 Panel Report, para. 7.143.
452 Panel Report, para. 7.148.

is made pursuant to the first subparagraph in certain situat ions and pursuant to the
second subparagraph in other situations.453
6.165. The Panel concluded that the second subparagraph of Article 2(5) of the Basic Regulation
does not require the EU authorities to determine that a producer's records do not reasonably
reflect the costs associated with the production and sale of the product under consideration when
these records reflect prices that are consi dered to be artificially or abnormally low as a result of a
distortion. The Panel understood that the second subparagraph of Article 2(5) applies to an
entirely different issue, that is, the issue of what has to be done after the EU authorities have
determined, under the first subparagraph of Article 2(5), that a producer's records do not
reasonably reflect the costs of production. Hence, the Panel concluded that Argentina had not
established that the second subparagraph of Article 2(5) of the Basic Regulation is inconsistent
"as such" with Article 2.2.1.1 of the Anti -Dumping Agreement, because Argentina had not
established its case regarding the meaning of the challenged measure on which its claim was
based.454
6.2.3.2 Whether the Panel erred in ascertaining the mean ing of the
second subparagraph of Article 2(5) of the Basic Regulation
6.166. We understand the question raised by Argentina on appeal to be whether the Panel erred
in finding that the second subparagraph of Article 2(5) of the Basic Regulation comes into play
only after a determination has been made under the first subparagraph of Article 2(5) that the
records do not reasonably reflect the costs associated with the production and sale of the product
under consideration. 455 Argentina contests the Panel's understandi ng, emphasizing that the
second subparagraph of Article 2(5) requires the European Union to determine that a producer's
records do not reasonably reflect the costs associated with the production and sale of the product
under consideration in circumstances where such records reflect prices considered to be artificially
or abnormally low as a result of a distortion.
6.167. We recall our interpretation of Article 2.2.1.1 of the Anti -Dumping Agreement at
paragraphs 6.18-6.26. As discussed, the first sentence of Article 2.2.1.1 identifies the records of
the investigated exporter or producer as the preferred source for cost of production data, and
directs the investigating authority to base cost calculation on such records when the two conditions
set out in this provision are met. The second of those conditions is that the "records … reasonably
reflect the costs associated with the production and sale of the product under considerati on". To
us, the second condition in the first sentence of Article 2.2.1.1 relates to whether the records of
the exporter or producer suitably and sufficiently correspond to or reproduce the costs that have a
genuine relationship with the production and sale of the specific product under consideration.
6.168. According to Argentina, its reading of the second subparagraph of Article 2(5) of the
Basic Regulation necessarily means that the measure at issue is inconsistent with the
first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement, because Article 2.2.1.1 does not
allow an investigating authority to reject or adjust costs simply because such costs are considered
to be abnormally or artificially low due to a distortion. For Argentina, when prices of some i nputs
or raw materials are "abnormally or artificially low" in comparison to prices in other markets due to
an alleged market distortion, they still qualify as the costs actually incurred by the particular
exporter or producer. Th us, the records of the exp orter or producer containing such costs would,
for the purpose of Article 2.2.1.1 of the Anti-Dumping Agreement, still be considered as reasonably
reflecting the costs associated with the production and sale of the product under consideration .
Argentina ar gues, therefore, that by providing that the EU authorities shall reject or adjust the
cost data of the exporter as included in its records when those costs reflect prices which are
"abnormally or artificially low " due to an alleged market distortion , the s econd subparagraph of
Article 2(5) of the Basic Regulation is inconsistent with Article 2.2.1.1 of the
Anti-Dumping Agreement.456

453 Panel Report, para. 7.152.
454 Panel Report, paras. 7.153-7.154.
455 Panel Report, paras. 7.132 and 7.153.
456 Argentina's other appellant's submission, paras. 123-124 and 189-191; first written submission to
the Panel, para. 132.

6.169. Like the Panel, we begin our review with the text of the legal instrument containing the
measure at issue, being mindful of the overall structure and logic of the Basic Regulation457, before
we review the other elements submitted by Argentina in support of its understanding of the
meaning of the measure at issue.
6.170. The measure at issue, namely , the second subparagraph of Article 2(5), is one of the
provisions of Article 2 of the Basic Regulation.458 Article 2, section A, of the Basic Regulation
governs the determination of the normal value in anti -dumping investigations. Article 2 of the
Basic Regulation provides, in relevant part:
Article 2
Determination of dumping
A. NORMAL VALUE
…
3. When there are no or insufficient sales of the like product in the ordinary course of
trade, or where because of the particular market situation such sales do not permit a
proper comparison, the normal valu e of the like product shall be calculated on the
basis of the cost of production in the country of origin plus a reasonable amount for
selling, general and administrative costs and for profits, or on the basis of the export
prices, in the ordinary course o f trade, to an appropriate third country, provided that
those prices are representative.
A particular market situation for the product concerned within the meaning of the
first subparagraph may be deemed to exist, inter alia, when prices are artificially l ow,
when there is significant barter trade, or when there are non -commercial processing
arrangements.
…
5. Costs shall normally be calculated on the basis of records kept by the party under
investigation, provided that such records are in accordance with t he generally
accepted accounting principles of the country concerned and that it is shown that the
records reasonably reflect the costs associated with the production and sale of the
product under consideration.
If costs associated with the production and sale of the product under investigation are
not reasonably reflected in the records of the party concerned, they shall be adjusted
or established on the basis of the costs of other producers or exporters in the same
country or, where such information is no t available or cannot be used, on any other
reasonable basis, including information from other representative markets.459
…
6. The amounts for selling, for general and administrative costs and for profits shall be
based on actual data pertaining to productio n and sales, in the ordinary course of
trade, of the like product, by the exporter or producer under investigation. …
6.171. The first subparagraph of Article 2(3) identifies two alternative methods for determining
the normal value. Articles 2(5) and 2(6) focus on the application of the first alternative method
identified in the first subparagraph of Article 2(3), that is, the construction of the normal value on
the basis of the cost of production in the country of origin plus a reasonable amount for selling,
general and administrative costs and for profits.

457 Appellate Body Reports, China – Auto Parts, para. 238.
458 Basic Regulation (Panel Exhibit ARG-1). A general description of Article 2 of the Basic Regulation is
contained in section 5.2 of this Report.
459 Underlining added.

6.172. As the Panel observed, the first subparagraph of Article 2(5) reproduces, in large part, the
text of the first sentence of Article 2.2.1.1 of the Anti -Dumping Agreement.460 The
first subparagraph of Article 2(5) identifies the records of the "party under investigation" as the
source of the data that is to be preferred in the calculation of costs. The text of the
first subparagraph of Article 2(5) indicates that this provision sets the conditions that, when
satisfied, require the EU authorities to rely on the records of the "party under investigation" in the
construction of the costs associated with the production and sale of the product under
consideration. These two conditions are: that the records are consistent with the GAAP of the
exporting Member; and that they reasonably reflect the costs associated with the production and
sale of the product under consideration.461
6.173. The second subparagraph of Article 2(5) does not directly correspond to any specific
provision of the Anti -Dumping Agreement. It begins by noting : "If costs associated with the
production and sale of the product under investigation are not reasonably reflected in the records
of the party concerned". 462 It seems to us that the first clause of the second subparagraph of
Article 2(5), which begins with the word "if", and repeats the reference to costs being reasonably
reflected in the records, refers to the circumstances in which the second condition set out in the
first subparagraph is not met. In such cir cumstances, the second subparagraph of Article 2(5)
directs the EU authorities to adjust or establish the costs "on the basis of the costs of other
producers or exporters in the same country or, where such information is not available or cannot
be used, on any other reasonable basis, including information from other representative markets" .
Thus, we share the Panel's view that the wording and structure of the first two subparagraphs of
Article 2(5) suggest that the second subparagraph of Article 2(5) comes into play only following a
determination made in applying the first subparagraph that a producer's records do not reasonably
reflect the costs associated with the production and sale of the product under investigation.463
6.174. We note that, before the Panel, Arge ntina argued that the clause "shall be adjusted or
established on the basis of the costs of other producers or exporters in the same country or, where
such information is not available or cannot be used, on any other reasonable basis, including
information from other representative markets" in the second subparagraph of Article 2(5)
constitutes or informs the reasons why information from the domestic market cannot be used to
determine the costs of production. 464 In rejecting this argument by Argentina, the Pa nel stated
that "the text of the first and the second subparagraphs do not provide any criteria for the
determination of whether the costs are reasonably reflected in a producer's records."465 On appeal,
Argentina contends that the Panel contradicted itself in finding both that the first subparagraph of
Article 2(5) does not provide "any criteria for the determination of whether the costs are
reasonably reflected in a producer's records" and that the issue as to when the EU authorities are
to determine that t he producer's records do not reasonably reflect the costs is "an issue that is
governed by the first subparagraph of Article 2(5) of the Basic Regulation."466
6.175. In our view, in stating that "the text of the first and the second subparagraphs do not
provide any criteria for the determination of whether the costs are reasonably reflected in a
producer's records" 467, the Panel was rejecting Argentina's argument that the
second subparagraph of Article 2(5) constitutes or informs the reasons why information from the
domestic market cannot be used to determine the costs of production. The second subparagraph
refers to "where such information is not available or cannot be used", but it does not specify the
reasons for which, or circumstances in which, the EU authorities may find themselves in such a
situation. Moreover, as discussed at paragraph 6.172 above, we understand that the obligation in
the first subparagraph of Article 2(5) to calculate the costs on the basis of the re cords kept by the
party under investigation is triggered only if , inter alia, the records reasonably reflect the costs
associated with the production and sale of the product under consideration. Thus, contrary to
Argentina's argument, it is in applying the first subparagraph of Article 2(5), rather than the

460 Panel Report, para. 7.131.
461 Panel Report, para. 7.131.
462 Emphasis added.
463 Panel Report, para. 7.132.
464 Panel Report, para. 7.133 (referring to Argentina's second written submission to the Panel,
paras. 19-22 and 63).
465 Panel Report, para. 7.133.
466 Argentina's other appellant's submission, para. 43 (referring to Panel Report, paras. 7.131-7.133).
467 Panel Report, para. 7.133.

second, that the EU authorities determine whether the records reasonably reflect the costs
associated with the production and sale of the product under consideration.
6.176. We therefore understand the options identified in the second subparagraph to be those
that would apply after the EU authorities make the deter mination, pursuant to the
first subparagraph of Article 2(5), that the records of the party under investigation do not
reasonably reflect the costs as sociated with the production and sale of the product under
consideration. Nor do we consider that the Panel erred in finding that the text of the first and
second subparagraphs of Article 2(5) does not provide any criteria for the determination of
whether the costs are reasonably reflected in a producer's records.468
6.177. Argentina also asserts that Article 2(3) of the Basic Regulation, and , in particular, the
second subparagraph thereof, supports Argentina's view that it is the second subparagraph of
Article 2(5) that governs the determination by the EU authorities that the records of the "party
under investigation" do not reasonably reflect the costs associated with the production and sale of
the product under consideration. Argentina considers it especially rele vant that the
second subparagraphs of Article s 2(3) and 2(5) , respectively, were introduced into the
Basic Regulation at the same time, through the same amendment.469
6.178. The Panel considered it to be "a matter of considerable significance to the meaning and
content of both of the subparagraphs of Article 2(5) that neither subparagraph contains any of the
terms or concepts used by Argentina to describe the measure at issue, i.e. 'artificially low',
'abnormally low', 'distortion', 'reflects market values'; 'regula ted market', 'artificially distorted',
etc.".470 Argentina contests this statement by the Panel, arguing that all these terms and concepts
used by Argentina to describe the measure at issue can be found in the other elements referred to
by Argentina including, for example, Article 2(3) of the Basic Regulation.471
6.179. We recall that, pursuant to Article 2(3), the EU authorities may decide that domestic sales
do not permit a proper comparison for the purposes of a determination of dumping. In such a
case, the normal value would have to be arrived at through different means, one of which —
calculation on the basis of the cost of production — is addressed by Article 2(5) that governs the
calculation of costs. Thus, we understand Articles 2(3) and 2(5) to concern differe nt
determinations by the EU authorities. It is true, as Arge ntina contends, that the
second subparagraph of Article 2(3) contains the words "artificially low", which Argentina seeks to
rely on in explaining its understanding of the second subparagraph of A rticle 2(5).472 Yet, on its
face, the second subparagraph of Article 2(3) provides no guidance as to which subparagraph of
Article 2(5) governs the determination by EU authorities that the records of the "party under
investigation" do not reasonably reflect the costs associated with the production and sale of the
product under consideration.473
6.180. Based on an examination of the text of the second subparagraph of Article 2(5), taking
into account the overall structure and logic of Article 2 of the Basic Regulation, we do not consider
that the Panel erred in expressing the preliminary view that the second subparagraph of
Article 2(5) comes into play only after a determinatio n has been made under the

468 Panel Report, para. 7.134.
469 Argentina submits that the second subparagraph of Article 2(3) of the Basic Regulation, and the
reasons for its introduction into the Basic Regulation, are part of the legislative history that should have
informed the Panel's understanding of the meaning of the second subparagraph of Article 2(5). (Argentina's
other appellant's submission, paras. 62-63 and 72-73) We note that the Panel addressed Article 2(3) as part of
the legislative history that led to the introduction of the second subparagraph of Article 2(5). (Panel Report,
paras. 142-143) In our view, while the reasons for the introduction of the second subparagraph of Article 2(3)
may be pertinent as evidence of the legislative history relevant to this dispute, Article 2(3) itself is part of the
context, structure, and overall logic of Article 2 of the Basic Regulation. Therefore, we review it as such.
470 Panel Report, para. 7.134.
471 Argentina's other appellant's submission, para. 50.
472 In Argentina's view, these words support the understanding that the scope of the
second subparagraph of Article 2(5) is not to set out alternative sources for records that are found not to
reasonably reflect costs in general. For Argentina, the second subparagraph of Article 2(5) addresses the
situations in which costs are "distorted". (Argentina's other appellant's submission, para. 49)
473 We take note that Argentina also relies on Article 2(3) of the Basic Regulation, read together with
Recital 4 of Council Regulation (EC) No. 1972/2002, to support its understanding of the legislative history. We
address this further at infra, paras. 6.182-6.185.

first subparagraph that the records do not reasonably reflect the c osts associated with the
production and sale of the product under consideration.474
6.181. In support of its claim of error, Argentina relies on three additional elements that, in its
view, make clear that the second subparagraph of Article 2(5) does not have the m eaning
attributed to it by the Panel. These elements are the legislative history that led to the introduction
of the measure at issue into the Basic Regulation, the alleged consistent practice of the
EU authorities, and judgments of the General Court of the European Union.
6.182. Regarding the legislative history, as Argentina points out, the provisions that appear in the
Basic Regulation as the first subparagraphs of Article 2(3) and 2(5), respectively, existed in
Council Regulation (EC) No. 3283/94475 and Council Regulation (EC) No. 384/96476, both of which
preceded the Basic Regulation. However, the provisions that appear in the Basic Regulation as the
second subparagraphs of Article s 2(3) and 2(5) , respectively, were introduced only in 2002,
through Council Regulation (EC) No. 1972/2002.
6.183. Argentina argues that the Panel erred in finding that "neither Recital 4 [of Council
Regulation (EC) No. 1972/2002] nor the second subparagraph of Article 2(3) support the notion
that the determination that records do not reasonably reflect the costs of production if prices are
artificially low due to a market distortion is made pursuant to the second subparagraph of
Article 2(5) in certain situations, while in other situations, the determination is made pursuant to
the first subparagraph of Article 2(5)".477 For Argentina, Recital 4 clarifies that, if data have to be
obtained from sources that are unaffected by distortions, this necessarily implies that , when the
costs in the records are affected by a distortion, the authorities automa tically have to determine
that such records do not reasonably reflect the costs associated with the production and sale of the
product under consideration.478
6.184. Recital 4 of Council Regulation (EC) No. 1972/2002 states:
It is considered appropriate to give som e guidance as to what has to be done if,
pursuant to Article 2(5) of Regulation (EC) No 384/96, the records do not reasonably
reflect the costs associated with the production and sale of the product under
consideration, in particular in situations where because of a particular market situation
sales of the like product do not permit a proper comparison. In such circumstances,
the relevant data should be obtained from sources which are unaffected by such
distortions. Such sources can be the costs of other producers or exporters in the same
country or, where such information is not available or cannot be used, any other
reasonable basis, including information from other representative markets. The
relevant data can be used either for adjusting certain items of the records of the party
under consideration or, where this is not possible, for establishing the costs of the
party under consideration.
6.185. Recital 4 provides guidance as to "what has to be done if, pursuant to Article 2(5) of
Regulation (EC) No 384/96, the records do not reasonably reflect the costs associated with the
production and sale of the product under consideration". 479 In Council Regulation (EC) No. 384/96
(a preceding version of the Basic Regulation), what now appears as the first subparagraph of
Article 2(5) was the only provision of Article 2(5). Thus, we do not see the text of Recital 4, in
particular its first sentence, as supporting Argentina's argument. Rather, like the Panel, we read
Recital 4 of Council Regulation (EC) No. 1972/2002 as suggesting that the determination that the
records do not reasonably reflect the costs associated with the production and sale of the product

474 Panel Report, para. 7.132.
475 Council Regulation (EC) No. 3283/94 of 22 December 1994 on protection against dumped imports
from countries not members of the European Community, Official Journal of the European Communities,
L Series, No. 349 (31 December 1994), p. 1 (Panel Exhibit ARG-3).
476 Council Regulation (EC) No. 384/96 of 22 December 1995 on protection against dumped imports
from countries not members of the European Community, Official Journal of the European Communities,
L Series, No. 56 (6 March 1996), p. 1 (Panel Exhibit ARG-4).
477 Panel Report, para. 7.143.
478 Argentina's other appellant’s submission, paras. 67-73.
479 Emphasis added.

under consideration has always been one made pursuant to the provision that now appears in the
Basic Regulation as the first subparagraph of Article 2(5).480
6.186. Argentina also challenges the Panel's assessment of three academic articles relating to the
legislative history of the second subparagraph of Article 2(5).481 According to Argentina, the
Panel made contradictory statements in reviewing these articles. Specifically, the Panel recognized
that these articles suggest that the "2002 amendments" "enable" the EU authorities to conclude
that the records do not "reasonably reflect" costs where prices are artificially low. At the sam e
time, the Panel considered that these articles do not suggest that it is the second subparagraph of
Article 2(5) that governs the determination of whether costs are reasonably reflected in a
producer's records.482
6.187. The articles referred to by Argentina appear to focus on the correlation between the timing
of the introduction of the second subparagraphs of Articles 2(3) and 2(5), on the one hand, and
the granting of full and unconditional market economy status to Russia, on the other hand.
However, as the Pan el rightly observed, none of these articles "suggest that it is the
second subparagraph of Article 2(5) that governs the determination [of] whether costs are
reasonably reflected in a producer's records."483
6.188. Argentina further challenges the Panel's evaluation of the alleged consistent practice of the
EU authorities, arguing that the Panel erred in finding that:
the decisions cited by Argentina do not establish, o r even suggest, that the
second subparagraph of Article 2(5) is the provision pursuant to which th ese
determinations of whether the costs were reasonably reflected in the records were
made. The decisions in general refer to Article 2(5) without distinguishing between its
two subparagraphs; contrary to Argentina's assertions, the wording used by the
EU authorities in the regulations does not suggest that their determinations that its
records did not 'reasonably reflect' a producer's costs were made pursuant to
Article 2(5), second subparagraph.484
6.189. Specifically, Argentina contends that, in ascertaining the meaning of the
second subparagraph of Article 2(5), the Panel erred in the conclusions it drew from its review of
the following decisions of the EU authorities in a series of anti -dumping proceedings following the
introduction of the second subparagraph of Article 2(5) of the Basic Regulation485: Potassium
Chloride from Belarus, Russia or Ukraine 486; Seamless Pipes and Tubes of Iron or Steel from
Croatia, Romania, Russia and Ukraine487; Solutions of Urea and Ammonium Nitrate from, inter alia,

480 Panel Report, para. 7.141. We also take note of Argentina's argument that the Panel ignored other
phrases in Recital 4, read in conjunction with Article 2(3) of the Basic Regulation. These other phrases include:
"in particular in situations where because of a particular market situation sales of the like product do not
permit a proper comparison"; and "the relevant data should be obtained from sources which are unaffected by
such distortions." (Argentina's other appellant’s submission, paras. 67 and 69) However, we consider
Argentina's reliance on the other phrases of Recital 4 to be unavailing, because they relate to what should be
done after it has been found that the records do not reasonably reflect the relevant costs.
481 Argentina's other appellant's submission, para. 75 (referring to Tietje et al., "Cost of Production
Adjustments in Anti-Dumping Proceedings" (2011) 45(5) Journal of World Trade , pp. 1071-1102 (Panel
Exhibit EU-8); E. Borovikov and B. Evtimov, "EC's Treatment of Non-Market Economies in Anti-Dumping Law:
Its History: An Evolving Disregard of International Trade Rules; Its State of Play: Inconsistent with the
GATT/WTO?", Revue des Affaires Européennes (2001-2002) (Kluwer, 2002), pp. 875-896 (Panel
Exhibit ARG-6); and Olesia. Engelbutzeder, EU Anti-Dumping Measures Against Russian Exporters – In View of
Russian Accession to the WTO and the EU Enlargement 2004 (Peter Lang AG, 2004), (excerpt) pp. 159-160
(Panel Exhibit ARG-7)).
482 Argentina's other appellant’s submission, para. 76 (referring to Panel Report, para. 7.144).
483 Panel Report, para. 7.144.
484 Panel Report, para. 7.148. (fn omitted) In these proceedings, Argentina does not challenge the
alleged consistent practice of the EU authorities as a measure at issue. Rather, Argentina relies on this alleged
consistent practice as an element supporting its understanding of the second subparagraph of Article 2(5) of
the Basic Regulation.
485 Panel Report, paras. 7.146-7.147.
486 Council Regulation (EC) No. 1891/2005 (Panel Exhibit ARG-8); Council Regulation (EC)
No. 1050/2006 (Panel Exhibit ARG-9).
487 Council Regulation (EC) No. 954/2006 (Panel Exhibit ARG-10); Council Regulation (EC) No. 812/2008
(Panel Exhibit ARG-11); Council Implementing Regulation (EU) No. 1269/2012 (Panel Exhibit ARG-12).

Russia and Algeria 488; Ammonium Nitrate from Russia 489; Ammonium Nitrate from Ukraine 490;
Urea from Russia491; Urea from, inter alia, Croatia and Ukraine 492; and Certain Welded Tubes and
Pipes of Iron or Non-Alloy Steel from, inter alia, Russia.493
6.190. All of these decisions concern, inter alia, determinations that were made by the
EU authorities pursuant to Article 2(5) of the Basic Regulation. We observe that , in these
decisions, each time a reference was made to Article 2(5), such reference was made in connection
with a determination by the EU authorities to adjust the "costs". Accordingly, we understand these
references to concern, in particular, the second subparagraph of Article 2(5), which directs the
EU authorities to adjust the "costs", or establish the "costs": (i) on the basis of th e costs of other
producers or exporters in the same country , or, where such information is not available or cannot
be used ; (ii) on any other reasonable basis, including information from other representative
markets.494
6.191. However, none of the references to Art icle 2(5) in these decisions expressly identifies the
second subparagraph of Article 2(5) as the provision that governs the determination that the
records of the party under investigation do not reasonably reflect the costs of the production and
sale of th e product under consideration, when those records reflect prices that are considered to
be artificially or abnormally low as a result of a market distortion.
6.192. Before the Panel, Argentina also referred to the Definitive Regulation issued following the
anti-dumping investigation concerning imports of biodiesel from Argentina, the subject of
Argentina's "as applied" claims in the present dispute. 495 In the Definitive Regulation, the
EU authorities referred to certain jurisprudence of the General Court of the Euro pean Union,
noting:
The General Court also concluded that it is apparent from the first subparagraph of
Article 2(5) of the basic Regulation that the records of the party concerned do not
serve as a basis for calculating normal value if the costs associate d with the
production of the product under investigation are not reasonably reflected in those
records. In that case, the [second subparagraph] provides that the costs are to be
adjusted or established on the basis of sources of information other than thos e
records. That information may be taken from the costs incurred by other producers or
exporters [in the same country] or, when that information is not available or cannot

488 Council Regulation (EC) No. 1911/2006 (Panel Exhibit ARG-13); Council Regulation (EC)
No. 238/2008 (Panel Exhibit ARG-14); Council Implementing Regulation (EU) No. 1251/2009 (Panel Exhibit
ARG-15).
489 Council Regulation (EC) No. 236/2008 (Panel Exhibit ARG-16); Council Regulation (EC) No. 661/2008
(Panel Exhibit ARG-17).
490 Council Regulation (EC) No. 237/2008 (Panel Exhibit ARG-18).
491 Council Regulation (EC) No. 907/2007 (Panel Exhibit ARG-19).
492 Council Regulation (EC) No. 240/2008 (Panel Exhibit ARG-20).
493 Council Regulation (EC) No. 1256/2008 (Panel Exhibit ARG-21).
494 For example, in Solutions of Urea and Ammonium Nitrate from, inter alia, Russia and Algeria, the
EU authorities considered that the gas prices paid in Algeria during the review investigation period could not
reasonably reflect the costs associated with the production and distribution of gas. The EU authorities
determined that, "as provided for in Article 2(5) of the basic Regulation, the gas costs borne by one
cooperating exporting producer, Fertial, were adjusted on the basis of information from other representative
markets." (Council Regulation (EC), No. 1911/2006 (Panel Exhibit ARG-13), Recital 28) During a subsequent
review, the EU authorities established that the prices paid by the Russian exporting producers were abnormally
low. Since gas costs were not reasonably reflected in their records, the EU authorities had to adjust them
accordingly. The decision states: "[i]n the absence of any undistorted gas prices relating to the Russian
domestic market, and in accordance with Article 2(5) of the basic Regulation, gas prices had to be established
on 'any other reasonable basis, including information from other representative markets'." (Council Regulation
(EC), No. 238/2008, (Panel Exhibit ARG-14), Recital 21) In Urea from Russia, the EU authorities established
that the prices paid by the Russian producers were abnormally low. Since gas costs were not reasonably
reflected in the four companies' records, the EU authorities decided that "they had to be adjusted pursuant to
Article 2(5) of the basic Regulation." (Council Regulation (EC) No. 907/2007 (Panel Exhibit ARG-19),
Recital 33) Similar findings were made in Council Regulation (EC) No. 237/2008 (Panel Exhibit ARG-18),
Recital 19; Council Regulation (EC) No. 240/2008 (Panel Exhibit ARG-20), Recital 26; and Council Regulation
(EC) No. 1256/2008 (Panel Exhibit ARG-21), Recital 111.
495 Definitive Regulation (Panel Exhibit ARG-22).

be used, any other reasonable source of information, including information from othe r
representative markets.496
6.193. These statements in the Definitive Regulation indicate that the EU authorities considered
that Article 2(5) involves a two -step structure, and that the EU authorities understood the
General Court to have expressed the same view. 497 First, pursuant to the first subparagraph of
Article 2(5), the EU authorities determine whether the records of the party under investigation
reasonably reflect the costs of the production and sale of the product under consideration. If they
do not, then, pursuant to the second subparagraph of Article 2(5), the costs are to be adjusted or
established on the basis of sources of information other than those records.
6.194. For these reasons, we agree with the Panel that the decisions cited by Argentina do not
suggest, much less suffice to demonstrate, that it is the second subparagraph that governs the
determination by the EU authorities that the records of the party under investigation do not
reasonably reflect the costs of the production and sale of the product under consideration.498
6.195. In addition, we take note of Argentina's assertion that the Panel erred in concluding that
nothing in the four judgments of the General Court of the European Union, cited by Argentina,
supports Argentina's view that the determination of whether the producer's records reasonably
reflect the costs of production is made pursuant to the first subparagraph in certain situations and
pursuant to the second subparagraph in other situations. 499 Argentina referred the Panel to
four judgments of the General Court of the European Union relating to Case T-235/08 (Acron I)500,
Case T-118/10 (Acron II)501, Case T-459/08502, and Case T-84/07.503
6.196. We see some significance in the statement of the General Court, which appears in all
four judgments, that it is "apparent from the first subparagraph of Article 2(5) of the
basic regulation that the records of the party concerned do not serve as a basis for calculating
normal value if the costs associated with the production of the product under investigation are not
reasonably reflected in those records." 504 This statement suggests that it is in applying the
first subparagraph of Article 2(5), rather than the second, that the EU authorities determine
whether the records of the party under investigation reasonably reflect the c osts associated with
the production and sale of the product under consideration. Our view is reinforced by the fact that ,
in all four judgments, the sentence that immediately follows the quoted statement identifies the
role of the second subparagraph of Ar ticle 2(5) as governing the adjustment or establishment of

496 Definitive Regulation (Panel Exhibit ARG-22), Recital 32. In this regard, we recall the Panel's
clarification, in fn 110 to paragraph 7.73 of its Report, that "the General Court of the European Union has
referred to the [second subparagraph] as the 'second sentence of the first subparagraph' of Article 2(5) of the
Basic Regulation."
497 See also European Union's appellee's submission, paras. 12 and 54.
498 Panel Report, para. 7.148. Like the Panel, we do not consider it necessary to decide on whether the
decisions cited by Argentina can properly be characterized as reflecting, or constitutive of, a consistent practice
by the EU authorities.
499 Argentina's other appellant's submission, paras. 93-114 (referring to Panel Report,
paras. 7.150-7.152).
500 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February 2013,
Case T-235/08, Acron OAO and Dorogobuzh OAO v Council of the European Union (General Court of the
European Union, Case T-235/08 (Acron I)) (Panel Exhibit ARG-23).
501 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February 2013,
Case T-118/10, Acron OAO v Council of the European Union (General Court of the European Union,
Case T-118/10 (Acron II)) (Panel Exhibit ARG-52).
502 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February 2013,
Case T-459/08, EuroChem Mineral and Chemical Company OAO (EuroChem MCC) v Council of the
European Union (General Court of the European Union, Case T-459/08) (Panel Exhibit ARG-53).
503 Judgment of the General Court of the European Union (Eighth Chamber) of 7 February 2013,
Case T-84/07, EuroChem Mineral and Chemical Company OAO (EuroChem MCC) v Council of the
European Union (General Court of the European Union, Case T-84/07) (Panel Exhibit ARG-54).
504 Judgments of the General Court of the European Union, Case T-235/08 (Acron I) (Panel
Exhibit ARG-23), para. 39; Case T-118/10 (Acron II) (Panel Exhibit ARG-52), para. 46; Case T-459/08 (Panel

the costs established on the basis of sources of information other than those records that have
been found, pursuant to the first subparagraph, to be unfit for use.505
6.197. For these reasons, we see no error in the Panel's statements that:
nothing in the judgments cited by Argentina supports Argentina's reading of the
relationship between the first two subparagraphs of Article 2(5), i.e. that the
determination of whether the producer's records reasonably reflect the costs of
production is made pursuant to the first subparagraph in certain situations and
pursuant to the second subparagraph in other situations. Rather, the four judgments
of the General Court cited by Argentina point in the direction of this determination
being made pursuant to the first subparagraph of Article 2(5).506
6.198. In sum, having reviewed the Panel's evaluation of all the elements submitted by Argentina,
we find that Argentina has not established that the Panel erred in its assessment of th e
second subparagraph of Article 2(5) of the Basic Regulation. Like the Panel, we do not see support
in the text of the Basic Regulation, or in the other elements relied on by Argentina, for the view
that it is in applying the second subparagraph of Articl e 2(5) that the EU authorities are to
determine that the records of the party under investigation do not reasonably reflect the costs
associated with the production and sale of the product under consideration when those records
reflect prices that are considered to be artificially or abnormally low as a result of a distortion.
6.2.3.3 Whether the Panel acted inconsistently with Article 11 of the DSU
6.199. Argentina argues that the Panel failed to make an objective assessment of the matter
before it, thereby acting incons istently with Article 11 of the DSU. According to Argentina,
although the Panel recognized the need to follow a holistic approach in examining the various
elements submitted by Argentina and the European Union for purposes of discerning the meaning
and content of Article 2(5) of the Basic Regulation, it failed to do so. Specifically, Argentina asserts
that the Panel failed to make a thorough examination of all the different elements put forward by
Argentina beyond the text of the measure and failed to make a proper holistic assessment of all
these elements taken together in order to ascertain the meaning of the second subparagraph of
Article 2(5).507
6.200. Article 11 of the DSU states in relevant part that "a panel should make an objective
assessment of the matter before it, including an objective assessment of the facts of the case and
the applicability of and conformity with the relevant covered agreements" . For a claim under
Article 11 of the DSU to prevail, an appellant must identify specific errors regarding the objectivity
of the panel's assessment508, and "it is incumbent on a participant raising a claim under Article 11
on appeal to explain why the alleged error meets the standard of review under that provision". 509
An appellant should not simply recast arguments that it made before the panel in the guise of a
claim under Article 11.510 Moreover, a claim that a panel has failed to make an objective
assessment of the matter before it, as required by Article 11 of the DSU, is "a very serious
allegation".511 With respect to a panel's assessment of the facts, the Appellate Body has stressed
that "not every error allegedly committed by a panel amounts to a violation of Article 11 of the

505 Judgments of the General Court of the European Union, Case T-235/08 (Acron I) (Panel Exhibit
ARG-23), para. 39; Case T-118/10 (Acron II) (Panel Exhibit ARG-52), para. 46; Case T-459/08 (Panel
506 Panel Report, para. 7.152.
507 Argentina's other appellant's submission, paras. 32 and 142-175.
508 Appellate Body Report, EC – Fasteners (China), para. 442.
509 Appellate Body Reports, China – Rare Earths, para. 5.178 (quoting Appellate Body Report,
EC - Fasteners (China), para. 442 (emphasis original)).
510 Appellate Body Report, EC – Fasteners (China), para. 442.
511 Appellate Body Reports, China – Rare Earths, para. 5.227 (quoting Appellate Body Report,
EC - Poultry, para. 133).

DSU"512, but only those that are so material that, "taken together or singly" 513, they underm ine
the objectivity of the panel's assessment of the matter before it.514
6.201. With particular regard to a panel's duties in ascertaining the meaning of municipal law, the
Appellate Body has found that, "[a]s part of their duties under Article 11 of the DSU, pane ls have
the obligation to examine the meaning and scope of the municipal law at issue in order to make an
objective assessment of the matter before it" .515 In doing so, "a panel should undertake a
holistic assessment of all relevant elements, starting with the text of the law and including, but not
limited to, relevant practices of administering agencies" .516 When parties refer to elements in
addition to the text of the municipal law, a panel must take account of all such elements, in order
to engage in an objective assessment of the matter. As the Appellate Body clarified in US – Carbon
Steel (India):
[I]t is incumbent on a panel to engage in a thorough analysis of the measure on its
face and to address evidence submitted by a party that the alleged inconsisten cy with
the covered agreements arises from a particular manner in which a measure is
applied. While a review of such evidence may ultimately reveal that it is not
particularly relevant, that it lacks probative value, or that it is not of a nature or
significance to establish a prima facie case, this can only be determined after its
probative value has been reviewed and assessed.517
6.202. Thus, in ascertaining the meaning of a municipal law, a panel is required to undertake a
"holistic assessment" of all the relevan t elements. At the same time, we emphasize that a review
of whether a panel undertook a holistic assessment, and by so doing met its obligation under
Article 11 of the DSU, should be guided by the specific circumstances of each case, the nature of
the meas ure and the obligation at issue, and the evidence submitted by the parties. In other
words, there is no single methodology that every panel must employ before it can be found to
have undertaken a proper "holistic assessment".
6.203. Turning to the present dispute , we understand the crux of Argentina's claim under
Article 11 of the DSU to be that the Panel failed to make an objective assessment of the matter
because the Panel failed to undertake a "holistic assessment" of all the relevant elements in order
to ascer tain the meaning of the second subparagraph of Article 2(5).518 Additionally,
Argentina contends that the Panel's examination of the legislative history of the provision at issue,
the academic articles, the alleged consistent practice of the EU authorities, and judgments of the
General Court, was cursory and failed to address properly the details of each of these elements.519
6.204. We disagree with Argentina's assertion that the Panel's examination of the relevant
elements was cursory. The Panel examined each of the elements referred to by the parties. 520 The
mere fact that the Panel disagreed with Argentina's understanding of the various elements and
agreed, in some respects, with the European Union's view does not equate to a breach of the
Panel's duties under Article 11 of the DSU. It seems to us that Argentina has, in large part, recast
the arguments that it made before the Panel in the guise of a claim under Article 11, which does
not suffice as a basis for us to find that the Panel acted inconsistently with Article 11 of the
DSU.521
6.205. As regards Argentina's assertion that the Panel failed to undertake a proper
holistic assessment of all the relevant elements taken together in order to ascertain the meaning
of the second subparagraph of Article 2(5), we recall that the A ppellate Body addressed a similar

512 Appellate Body Report, EC – Fasteners (China), para. 442.
513 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1318. See also
Appellate Body Report, EC – Fasteners (China), para. 499.
514 Appellate Body Reports, China – Rare Earths, para. 5.179.
515 Appellate Body Reports, US – Countervailing and Anti-Dumping Measures (China), para. 4.98;
516 Appellate Body Reports, US – Countervailing and Anti-Dumping Measures (China), para. 4.101;
US - Shrimp II (Viet Nam), para. 4.32.
517 Appellate Body Report, US – Carbon Steel (India), para. 4.454.
518 Argentina's other appellant's submission, paras. 32, 148-155, and 161-175.
519 Argentina's other appellant's submission, paras. 144-146.
520 Panel Report, paras. 7.136-7.152.
521 Appellate Body Report, EC – Fasteners (China), para. 442.

claim by Viet Nam in US – Shrimp II (Viet Nam). In that case, the panel began its examination
with the text of the measure at issue. The panel set out its preliminary finding on the basis of the
text of the measure, before proceeding to its examination of the other elements submitted by the
parties. In rejecting Viet Nam's arguments that the panel failed to undertake a
"holistic assessment", and therefore was in breach of its duty under Article 11 of the DSU, the
Appellate Body noted, with respect to the panel's preliminary conclusion on the basis of the text of
the measure at issue, that:
[t]hese statements, read in isolation, might unfortunately give the impression that the
Panel was drawing a conclusion regarding the meaning and effect of Section 129(c)(1)
on the basis of the text of that provision, taken alone. Yet, as noted above, these
statements form part of a paragraph that clearly indicates at the outset that, at this
step of its analysis, the Panel was examining the text of Section 129(c)(1). In
subsequent paragraphs, the Panel proceeded to examine the relevance and import of
argumentation and elements – beyond the text of Section 129(c)(1) – submitted by
the parties regarding the meaning and effect of Section 129(c)(1).522
6.206. In that dispute, having reviewed the panel's reasoning in its entirety, the Appellate Body
concluded that the panel properly relied on the various elements that it examined to inform its
understanding of the meaning and effect of the measure at issue . Therefore, the Appellate Body
found that the panel had complied with its duty under Article 11 of the DSU.523
6.207. Similarly, in the present dispute, the Panel made clear that the initial conclusion that it
reached on the basis of its examination of the text of the second subparagraph of Article 2(5) of
the Basic Regulation was only the first step in a multi -pronged analysis. At the outset of this
section of its Report, the Panel preceded its assessment of the second subparagraph of Article 2(5)
by explaining that it would proceed as follows:
[M]indful of the need to conduct a "holistic assessment" of the evidence put forward
by the parties, we proceed to determine the scope, meaning and content of the
measure at issue, as they pertain to each of Argentina's two claims.
We first consider the text of Article 2(5), second subparagraph, and the other
evidence submitted by Argentina in order to determine whether they support
Argentina's allegations concerning the scope, meaning, and content of this
provision.524
6.208. Having examined the text of the second subparagraph of Article 2(5), the Panel explicitly
characterized the results of that examination as a preliminary conclusion on the basis of the text,
indicating that it would proceed to consider "the other evidence submitte d by Argentina". 525
Thereafter, the Panel examined, and made intermediate findings 526, with respect to the legislative
history that led to the introduction of the second subparagraph of Article 2(5), the
alleged consistent practice of the EU authorities, and t he four judgments of the General Court of
the European Union, before coming to a conclusion based on its "holistic assessment" of all the
evidence submitted by Argentina.527
6.209. Based on our review of the Panel's findings, we consider that the Panel conducted a proper
examination and undertook a holistic assessment of the various elements before it. We therefore
reject Argentina's claim that the Panel acted inconsistently with Article 11 of the DSU, in
ascertaining the meaning of the second subparagraph of Article 2(5) of the Basic Regulation.
6.210. Given our finding in paragraph 6.198 above, and our rejection of Argentina's claim under
Article 11 of the DSU, we find that the Panel did not err in concluding that Argentina did not
establish its case regarding the meaning of the challenged measure, or in finding , for this reason,

522 Appellate Body Report, US – Shrimp II (Viet Nam), para. 4.36.
523 Appellate Body Report, US – Shrimp II (Viet Nam), paras. 4.50-451.
524 Panel Report, paras. 7.126-7.127.
525 Panel Report, para. 7.135.
526 Panel Report, paras. 7.135, 7.143-7.144, 7.148, and 7.152.
527 Panel Report, paras. 7.153-7.154.

that Argentina had not establish ed that the second subparagraph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the Anti-Dumping Agreement.528
6.2.3.4 Conclusions
6.211. Regarding Argentina's claim of error with respect to the Panel's findings under
Article 2.2.1.1 of the Anti -Dumping Agreement, having reviewed the Panel's evaluation of all the
elements submitted by Argentina, we do not consider that Argentina has established that the
Panel erred in its assessment of the second subparagraph of Article 2(5) of the Basic Regulation.
Like the Panel, we do not see support in the text of the Basic Regulation, or in the other elements
relied on by Argentina, for the view that it is in applying the second subparagraph of Article 2(5)
that the EU authorities are to determine that the records of the party under investigation do not
reasonably reflect the costs associated with the production and sale of the product under
consideration when those records reflect prices that are considered to be artificially or abnormally
low as a result of a distortion. In this regard, w e further consider that the Panel conducted a
proper examination and under took a holistic assessment of the various elements before it. We
therefore reject Argentina's claim that the Panel acted inconsistently with Article 11 of the DSU in
ascertaining the meaning of the second subparagraph of Article 2(5) of the Basic Regulation.
6.212. Accordingly, we find that the Panel did not err, and did not fail to comply with its duties
under Article 11 of the DSU, in concluding that Argentina had not established its case regarding
the meaning of the challenged measure, or in finding , for this r eason, that Argentina had not
established that the second subparagraph of Article 2(5) of the Basic Regulation is inconsistent
"as such" with Article 2.2.1.1 of the Anti-Dumping Agreement.529
6.213. For these reasons, we uphold the Panel's finding, in paragraphs 7.154 and 8.1.b.i of its
Report, that Argentina ha d not established that the second subparagraph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the Anti-Dumping Agreement.
6.2.4 Article 2.2 of the Anti -Dumping Agreement a nd Article VI:1(b)(ii) of the
GATT 1994
6.214. Argentina requests us to reverse the Panel's finding that Argentina had not established
that the second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.530
Argentina advances three grounds in support of its appeal.531
6.215. First, Argentina argues that the Panel erred in ascerta ining the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation , by finding that, even when
"information from other representative markets" is used, the second subparagraph of Article 2(5)
does not require the EU authorities to establish the costs of production so as to reflect costs
prevailing in other countries. 532 Second, Argentina contends that, in ascerta ining the meaning of
the second subparagraph of Article 2(5) of the Basic Regulation , the Panel acted inconsistently
with Article 11 of the DSU by failing to conduct an objective, thorough, and holistic examination of
all of the different elements put forward by Argentina. 533 Third, Argentina alleges that the Panel
erred in finding that Argentina had to demonstrate that the second subparagraph of Article 2(5)
cannot be applied in a WTO -consistent manner.534 In Argentina's view, the approach by the Panel
wrongly suggests that, in order to prevail with a claim that a measure is inconsistent "as such",
the complaining party must establish that the measure at issue leads to WTO -inconsistent results
in all instances in which t he measure is applied. For Argentina, this finding also erroneously

528 Panel Report, para. 7.154.
529 Panel Report, para. 7.154.
530 Panel Report, paras. 7.169-7.174 and 8.1.b.ii.
531 Argentina also appeals the Panel's interpretation of Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, which is contained in paragraph 7.171 of the Panel Report. This aspect of
Argentina's appeal is addressed in section 6.1.1.2 of this Report.
532 Panel Report, para. 7.172 (referring to Argentina's opening statement at the second Panel meeting,
para. 24).
533 Argentina's other appellant's submission, paras. 267-275.
534 Panel Report, paras. 7.174 and 8.b.ii.

suggests that, in order to prevail with a claim that a measure is inconsistent "as such", it is
necessary that the measure being challenged is mandatory.535
6.216. The European Union requests us to reject Argentina's claims of error and uphold the
Panel's finding that the second subparagraph of Article 2(5) of the Basic Regulation is not
inconsistent "as such" with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994. As regards Argentina's first ground of appeal, the European Union highlights that the
second subparagraph of Article 2(5) grants broad discretion to the EU authorities to resort to
various options in constructing costs when they have determined, in applying the
first subparagraph of Article 2(5), that the records kept by the party under investigation do not
reasonably reflect the costs associated with production and sale. 536 Second, the European Union
avers that the Panel did not fail to make an objective asse ssment of the matter as required by
Article 11 of the DSU. 537 In response to Argentina's third ground of appeal, the European Union
contends that, in order for a claim that a measure is inconsistent "as such" to prevail, it must be
shown that the measure wil l necessarily be applied in a manner that is inconsistent with that
Member's WTO obligations. For the European Union, this means that the measure at issue can only
be found to be inconsistent "as such" if it "unavoidably" or "compulsorily" requires the
EU authorities to act contrary to the European Union's WTO obligations.538
6.217. We begin with a summary of the relevant findings of the Panel before addressing each of
Argentina's claims of error in turn.
6.2.4.1 The Panel's findings
6.218. Before the Panel, Argentina raised two a lternative lines of argument in support of its claim
under Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
First, Argentina contended that the second subparagraph of Article 2(5) of the Basic Regulation
mandates WTO-inconsistent conduct. This line of ar gument was based on
Argentina's understanding of the second subparagraph of Article 2(5) as requiring the
EU authorities to adjust or establish a producer's costs on the basis of information from countries
other than the co untry of origin, if the EU authorities have determined that the records reflect
prices that are artificially or abnormally low as a result of a distortion and if information from other
producers/exporters from the same country is not available or cannot be used.539
Argentina submitted that the references to "any other reasonable basis" and to "information from
other representative markets" in the second subparagraph of Article 2(5) mandate the use of costs
from outside the country of origin. 540 The European Union disagreed with Argentina, arguing that
the second subparagraph of Article 2(5) grants wide discretion to the EU authorities to resort to
various options where they have determined under the first subparagraph of Article 2(5) that the
costs are not reaso nably reflected in the records. 541 For the Panel, the disagreement between the
parties centred on the "discretion" afforded to the EU authorities to resort to information from
"other representative markets" in establishing or adjusting the costs when they ha ve concluded
that a producer's records do not reasonably reflect the costs of production of the product under
consideration.542
6.219. The Panel considered the text of the second subparagraph of Article 2(5) of the
Basic Regulation, together with the other elements submitted by Argentina, in ascertaining the
meaning of th is provision. These elements consist of other relevant provisions of the
Basic Regulation, the legislative history that led to the introduction of the second subparagraph of
Article 2(5) into the Basic Regulation in 2002, the alleged consistent practice of the EU authorities,
and certain judgments of the General Court of the European Union.

535 Argentina's other appellant's submission, para. 277.
536 European Union's appellee's submission, paras. 74-75.
537 European Union's appellee's submission, para. 112.
538 European Union's appellee's submission, para. 120 (quoting Appellate Body Report, US – Oil Country
539 Panel Report, para. 7.155. We recall that, in paragraphs 6.211-6.213 of this Report, we upheld the
Panel's finding that Argentina had not established that the second subparagraph of Article 2(5) of the
Basic Regulation requires the EU authorities to determine that the records of the party under investigation do
not reasonably reflect the costs associated with the production and sale of the product under consideration.
540 Panel Report, para. 7.155.
541 Panel Report, paras. 7.117 and 7.155.
542 Panel Report, paras. 7.117 and 7.155.

6.220. The Panel found that the text of the second subparagraph of Article 2(5) does not support
Argentina's argument that this measure requires the EU authorities, when they take the view that
the costs of other domestic producers or exporters are not available or cannot be used, to
construct the normal value on the basis of costs that do not reflect the costs of product ion in the
country of origin.543 Instead, the Panel found that the second subparagraph of Article 2(5) lays out
a series of options for the EU authorities to establish the costs of production once it has been
determined that the producer's records do not rea sonably reflect the costs associated with the
production and sale of the product being investigated. According to the Panel, on its face, the
phrase "on any other reasonable basis, including information from other representative markets"
in the second subparagraph of Article 2(5) is formulated in permissive terms, and does not require
that the costs reported in the producer's records be replaced by costs in another country.544
6.221. With respect to the legislative history, the Panel considered that neither Recital 4 of
Council Regulation (EC) No. 1972/2002 nor the second subparagraph of Article 2(3) of the
Basic Regulation suggests that the options available under the second subparagraph of Article 2(5)
are constrained in such a way that the EU authorities must syst ematically resort to information or
prices not in the country of origin. 545 Further, the Panel stated that, while the decisions of the
EU authorities submitted by Argentina as evidence of a consistent practice reveal that the
EU authorities may resort to pri ces in countries other than the country of origin, any consistent
practice emanating from these examples does not demonstrate that the second subparagraph of
Article 2(5) requires them to do so. 546 Finally, the Panel found that the judgments of the
General Court of the European Union cited by Argentina show that, in a situation in which the
EU authorities determine that a producer's records do not reasonably reflect the costs of
production because they are affected by a distortion, the EU authorities are entitled to establish
the producer's costs on the basis of sources that are unaffected by that distortion, and may have
recourse to sources of information outside the country of origin. The Panel considered this
understanding to be consistent with its reading of the text of the second subparagraph of
Article 2(5).547
6.222. Based on its consideration of the arguments of the parties, and of all the relevant elements
submitted by Argentina, the Panel concluded that, even where the EU authorities do resort to
information from other countries to construct the normal value, it does not necessarily follow that
they act contrary to Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.548 In the Panel's view, the language of the second subparagraph of Article 2(5)
pertains to the sources of information (as opposed to the costs themselves) that may be used to
establish an investigated producer's/exporter's costs in constructing the normal value. As a result,
the Panel found that, even when information f rom "other representative markets" is used, the
second subparagraph of Article 2(5) does not " require the EU authorities to establish the costs of
production so as to reflect costs prevailing in other countries."549
6.223. In its second line of argument, Argentina maintained that, even if the Panel were to find
that the second subparagraph of Article 2(5) is discretionary, in the sense that it does not require
the EU authorities to use costs not prevailing in the country of origin, the second subparagraph of
Article 2(5) would still be inconsistent "as such" with Article 2.2 of the Anti -Dumping Agreement
and Article VI:1(b)(ii) of the GATT 1994. In Argentina's view, even if the second subparagraph of
Article 2(5) were discretionary, in the sense that it provides for the possibility to use a basis other
than the cost of production in the country of origin, this renders that measure inconsistent with
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. 550 In

543 Panel Report, para. 7.160.
544 Panel Report, para. 7.169.
545 Panel Report, para. 7.163.
546 Panel Report, para. 7.166.
547 Panel Report, para. 7.168.
548 Panel Report, para. 7.171. Argentina's appeal of this paragraph of the Panel Report is addressed in
section 6.1.1.2 of this Report.
549 Panel Report, para. 7.172. (emphasis original; fn omitted)
550 Panel Report, para. 7.118 (referring to Argentina's opening statement at the first Panel meeting,
para. 74; response to Panel question No. 24, para. 69; and second written submission to the Panel,
paras. 147-149 and 162).

response, the European Union sub mitted that Argentina needed to establish that the measure
mandates WTO-inconsistent action for its claim to succeed.551
6.224. The Panel found that Argentina had established that the second subparagraph of
Article 2(5) permits the EU authorities to resort to costs outside the country of origin in some
circumstances. Thus, the Panel found that Argentina had shown that this measure is capable of
being applied in a manner that is inconsistent with the European Union's obligations under
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. However, the
Panel stated that Argentina had n ot demonstrated that the second subparagraph of Article 2(5)
cannot be applied in a WTO-consistent manner. The Panel found, as a consequence, that Argentina
had not established that the second subparagraph of Article 2(5) of the Basic Regulation is
inconsistent "as such" with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.552
6.2.4.2 The assessment of a complaint that a measure is inco nsistent "as such" with
WTO obligations
6.225. In respect of its claim under Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994, Argentina asserts that the Panel erred in ascertaining the
meaning of the second subparagraph of Artic le 2(5) of the Basic Regulation. Argentina also
contends that the Panel acted inconsistently with Article 11 of the DSU in ascertaining the meaning
of the second subparagraph of Article 2(5). In addition, Argentina argues that the Panel employed
an erroneous legal standard that a complainant must meet in order to prevail in a claim that a
measure is inconsistent "as such".
6.226. Argentina's appeal raises questions concerning the legal standard for establishing whether
a measure is inconsistent "as such" with WTO obligations.553 As we stated in paragraph 6.154
above, a claim that a measure is inconsistent "as such" challenges a measure that has general and
prospective application554, whereas a claim that a measure is inconsi stent "as applied" challenges
one or more specific instances of the application of such a measure. 555 Indeed, a measure need
not have been applied to be the subject of an "as such" challenge. 556 Given that complainants
bringing "as such" challenges seek to pre vent Members ex ante from engaging in certain conduct,
the "implications of such challenges are … more far-reaching than 'as applied' claims."557
6.227. Under the GATT 1947, panels distinguished between mandatory and discretionary
legislation, finding that only leg islation that mandated a violation of GATT obligations could be
found to be inconsistent "as such" with those obligations. 558 The distinction between mandatory
and discretionary legislation turned on whether there was relevant discretion vested in the
executive branch of government. 559 The Appellate Body has since clarified that, as with any
analytical tool, the importance of the "mandatory/discretionary" distinction may vary from case to
case, and has, for this reason, cautioned against applying the distinctio n "in a
mechanistic fashion".560
6.228. Moreover, there is no basis, either in the practice of the GATT and the WTO generally, or in
the provisions of the Anti-Dumping Agreement, for finding that only certain types of measure s can

551 Panel Report, para. 7.118 (referring to European Union's first written submission to the Panel,
paras. 184-187; and second written submission to the Panel, paras. 38 and 82).
552 Panel Report, para. 7.174 (referring to Appellate Body Report, US – Carbon Steel (India),
para. 4.483).
553 Argentina's appeal also raises questions concerning the considerations that are relevant to
ascertaining the meaning of a municipal law. In respect of this, we recall our discussion in paragraphs 6.153-
6.156 above.
554 Appellate Body Reports, US – Oil Country Tubular Goods Sunset Reviews, para. 172; US – 1916 Act,
paras. 92-94.
555 Appellate Body Reports, US – 1916 Act, paras. 60-61; US – Continued Zeroing, paras. 179-181;
US - Corrosion-Resistant Steel Sunset Review, para. 81; Argentina – Import Measures, para. 5.103. See also
Panel Report, US – Continued Zeroing, para. 7.46.
556 Appellate Body Reports, US – Corrosion-Resistant Steel Sunset Review, para. 82; US – 1916 Act,
paras. 92-94. See also Panel Report, US – Section 301 Trade Act, paras. 7.80-7.81.
557 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 172.
558 Appellate Body Report, US – 1916 Act, para. 88 (referring to various GATT Panel Reports).
559 Appellate Body Report, US – 1916 Act, para. 100.
560 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 93.

be challenged "as such". As the Appellate Body explained in US – Corrosion-Resistant Steel Sunset
Review, allowing measures to be the subject of dispute settlement proceedings, whether or not
they are of a mandatory character, is consistent with the comprehensive nature of the right of
Members, enshrined in Article 3.2 of the DSU, to resort to dispute settlement to preserve their
rights and obligations under the covered agreements. 561 The Appellate Body, therefore, saw
"no reason for concluding that, in principle, non -mandatory measures canno t be challenged
'as such'".562
6.229. Thus, the discretionary nature of the measure is no barrier to a challenge "as such".
Furthermore, measures involving discretionary aspects may be found to violate certain
WTO obligations "as such". 563 Appellate Body findings in past disputes recognize this possibility.
For example, in US – Corrosion-Resistant Steel Sunset Review , the Appellate Body reversed the
panel's finding that the measure at issue was "not a mandatory legal instrument obligating a
certain course of conduct a nd thus can not, in an d of itself, give rise to a WTO violation."564
Similarly, in US – Carbon Steel, the Appellate Body found that the complainant did not satisfy its
burden of proving either that the measure at issue mandated the investigating authority to act
inconsistently with the relevant provision of WTO law, or that such law "restrict[ed] in a material
way" the authority's discretion to make a determination consistent with WTO law.565
6.230. As the Panel noted, consistent with the generally applicable principl es regarding the
burden of proof in WTO disputes, it is for the complainant to establish the WTO -inconsistency of
the challenged municipal law. 566 The complainant bears the burden of introducing evidence as to
the meaning of that municipal law to substantiate its claim of WTO-inconsistency.567 Such evidence
will typically be produced in the form of the text of the relevant legislation or legal instrument, and
may be supported by evidence of other elements such as the consistent application of such law,
the pronouncements of domestic courts on the meaning of such law, the opinions of legal experts ,
and the writings of recognized scholars. Precisely what is required to establish that a measure is
inconsistent "as such" will vary, depending on the particular circum stances of each case, including
the nature of the measure and the WTO obligations at issue.568
6.231. With these considerations in mind, we turn to Argentina's claims on appeal. We recall that,
before the Panel, Argentina's challenge under Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 consisted of two alternative lines of argument: (i) that the
second subparagraph of Article 2(5) requires WTO-inconsistent action; and (ii) that, even if the
second subparagraph of Article 2(5) does not require WTO-inconsistent action, it is nevertheless
WTO-inconsistent because it provides for the possibility that such action may be taken.
Argentina's appeal concerns the Panel's findings with respect to both lines of argument.
6.232. We begin with Argenti na's contention that the Panel erred in ascertaining the meaning of
the second subparagraph of Article 2(5) of the Basic Regulation by finding that the provision does
not require the EU authorities to establish the costs of production so as to reflect cost s prevailing
in other countries. Next, we address Argentina's related claim that the Panel acted inconsistently
with Article 11 of the DSU in ascertaining the meaning of the second subparagraph of Article 2(5)
of the Basic Regulation. Thereafter, we examin e Argentina's assertion that the Panel employed an
erroneous legal standard for an "as such" challenge in stating that Argentina had not
demonstrated that the second subparagraph of Article 2(5) cannot be applied in a WTO -consistent
manner.

561 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 89.
562 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 88.
563 Appellate Body Report, US – 1916 Act, fn 59 to para. 99 (referring to Panel Report, US – Section 301
Trade Act, paras. 7.53-7.54).
564 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review, para. 100. (fn omitted)
565 Appellate Body Report, US – Carbon Steel, para. 162.
566 Panel Report, para. 7.120.
567 Appellate Body Report, US – Carbon Steel, para. 157 (referring to Appellate Body Report, US – Wool
Shirts and Blouses, p. 14, DSR 1991:I, p. 335).
568 Appellate Body Report, US – Carbon Steel, para. 157; Panel Reports, EC – IT Products, para. 7.112.

6.2.4.3 Whether the Pan el erred in ascerta ining the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation
6.233. Argentina appeals the Panel's finding that , even when "information from other
representative markets" is used, the second subparagraph of Article 2(5) d oes not " require the
EU authorities to establish the costs of production so as to reflect costs prevailing in other
countries".569 We understand the question raised by Argentina on appeal to be whether the
Panel erred in finding that the phrase "on any other reasonable basis, including information from
other representative markets" in the second subparagraph of Article 2(5) is formulated in
permissive terms, and does not require that the costs reported in the producer's records be
replaced by costs in another country.570 Argentina contends that the second subparagraph of
Article 2(5) is formulated in mandatory terms because, in circumstances where the records of an
investigated producer do not reasonably reflect costs associated with the production and sale of
the product, and the costs of other domestic producers or exporters cannot be used, the
EU authorities must use information from other representative markets that do es not reflect the
costs of production in the country of origin.
6.234. We recall our interpretatio n of Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 in paragraph s 6.69-6.73 above. In particular, we recall that
the phrase "cost of production […] in the country of origin" in these provisions make s clear that
the determination to be made is of a cost of production in the country of origin . These provisions
do not limit the sources of information or evidence that may be used in esta blishing the costs of
production in the country of origin. However, whatever the information that it uses, an
investigating authority has to ensure that such information is used to arrive at the "cost of
production" "in the country of origin". Compliance w ith this obligation may require the
investigating authority to adapt the information that it collects.571
6.235. In support of its claim before the Panel, Argentina relied on the text of the
Basic Regulation, the legislative history that led to the introduction of the second subparagraph of
Article 2(5), the alleged consistent practice by the EU authorities, and judgments of the
General Court of the European Union. We begin our review with the Panel's examination of the text
of the legal instrument containing the me asure at issue, being mindful of the overall structure and
logic of the Basic Regulation. Thereafter, we review the Panel's examination of the other elements
submitted by Argentina. Finally, we draw our conclusion regarding the meaning of the
second subparagraph of Article 2(5) from the assessment of all the relevant elements taken
together.
6.236. As we have seen, the second subparagraph of Article 2(5) of the Basic Regulation states:
If costs associated with the production and sale of the product under investiga tion are
not reasonably reflected in the records of the party concerned, they shall be adjusted
or established on the basis of the costs of other producers or exporters in the same
country or, where such information is not available or cannot be used, on a ny other
reasonable basis, including information from other representative markets.
6.237. For the reasons discussed in section 6.2.3.2 above, we agree with the Panel's finding that
the second subparagraph of Article 2(5) comes into play only after a determination has been made
under the first subparagraph that the records do not reasonably reflect the costs associated with
the production and sale of the product under consideration. 572 The second subparagraph of
Article 2(5) indicates that, in such circumstances, the costs associated with the production and
sale of the product under investigation "shall" be adjusted or established on the basis of the
alternative means provided for in the second clause of that subparagraph. To us, the text of the
second subparagraph of Article 2(5), and in particular the word "shall", indicates that, once a
determination is made, in applying the first subparagraph, that the costs associated with the
production and sale of the product under i nvestigation are not reasonably reflected in the records
of the party concerned, then the EU authorities must "adjust" or "establish" the costs on the basis

570 Panel Report, para. 7.169.
571 See supra, paras. 6.69-6.73.
572 Panel Report, para. 7.132.

of the alternative means provided for under the second subparagraph.573 The second subparagraph
provides several options574 for the EU authorities to use as a basis for adjusting or establishing the
costs.575
6.238. Moreover, our reading of the text of the second subparagraph of Article 2(5) suggests that
there is a progression, or an order of preference, for the alternative bases contained therein. When
this provision applies, the EU authorities are directed to adjust or establish these costs on the
basis of the costs of other producers or exporters in the same country. Only in situations where
such information is n ot available or cannot be used can the EU authorities proceed to adjust or
establish the costs "on any other reasonable basis, including information from other representative
markets".
6.239. As regards the specific alternative bases that the second subparagraph of Article 2(5)
provides for adjusting or establishing the relevant "costs", Argentina argues that the Panel erred
when it found that the language of the second subparagraph of Article 2(5) refers to the sources of
information as opposed to the costs themselves.576 The European Union agrees with the Panel's
finding.577
6.240. We observe that, unlike Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii)
of the GATT 1994, which refer only to "costs", the second subparagraph of Article 2(5) of the
Basic Regulation uses both the words "costs" and "information". As discussed in paragraph 6.69
above, the word "cost s" refers to the price paid or to be paid to produce something. 578 The
definition of the word "information" is broader579, and could encompass knowledge communicated
concerning costs.
6.241. Our reading of the text of the second subparagraph of Article 2(5) suggests that the
meaning of the word "information", which appears twice in the Basic Regulation, is dependent on
the context in which it is used. For instance, the second subparagraph of Article 2(5) directs the
EU authorities to adjust or establish the "costs associated with the production and sale of the
product under investigation" on the basis of the "costs of other producers or exporters in the same
country", except "where such information is not available or cannot be used". 580 Given the
immediate context of the word "information" in that phrase, it could be read as referring to the
"costs of other producers of exp orters in the same country". However, when the information
concerning the costs of other producers or exporters in the same country is not available or cannot
be used, the second subparagraph of Article 2(5) directs the EU authorities to adjust or establis h
the relevant costs "on any other reasonable basis, including information from other representative
markets".581 Argentina and the European Union disagree as to whether the phrase "information
from other representative markets" must be read as a reference t o information regarding costs
from outside the country of origin.582 To us, the text of the second subparagraph of Article 2(5), on

573 We observe that both participants also appear to accept this view. Argentina contends that the use of
the word "shall" in this provision implies that the second subparagraph of Article 2(5) "is formulated in
mandatory terms". (Argentina's other appellant's submission, para. 239) Likewise, in response to questioning
at the oral hearing, the European Union acknowledged that the second subparagraph of Article 2(5) imposes an
obligation on the investigating authority as to what it must do following a determination, pursuant to the
first subparagraph, that the records do not reasonably reflect the costs associated with the production and sale
of the product under consideration.
574 The second subparagraph of Article 2(5) identifies these alternative bases as: the costs of other
producers or exporters in the same country; or, where such information is not available or cannot be used, on
any other reasonable basis, including information from other representative markets.
575 The Panel made a similar observation, stating that "the text of Article 2(5), second subparagraph,
provides a number of alternative bases on which the EU authorities may establish or adjust the costs where
they have determined pursuant to the first subparagraph of Article 2(5) that the costs reported in a producer's
records do not 'reasonably reflect' the costs of production of the investigated product." (Panel Report,
576 Argentina's other appellant's submission, paras. 255-261.
577 European Union's appellee's submission, para. 89.
578 Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1, p. 528.
579 The definition of "information" includes: "[k]nowledge communicated concerning some particular
fact, subject, or event". (Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1,
p. 1379)
580 Emphasis added.
581 Emphasis added.
582 At the oral hearing, Argentina argued that, because the EU authorities can adjust or establish costs
"on any other reasonable basis, including information from other representative markets" only if the costs of

its face, makes clear that "any other reasonable basis , including information from other
representative markets", refers to information relating to something other than the "costs of other
producers or exporters in the same country". However, it is not apparent to us that the words
"information from other representative markets" are necessarily to be understood in a narrow
sense, as Argentina suggests, as only referring to the costs of production of the product under
consideration from outside the country of origin.583
6.242. Moreover, we recall that the second subparagraph of Article 2(5) directs the EU authorities
to "adjust" or "establi sh" the relevant costs: (i) on the basis of the costs of other producers or
exporters in the same country; or, where such information is not available or cannot be used;
(ii) on any other reasonable basis, including information from other representative ma rkets. The
words "adjust" and "establish" have very broad definitions.584 This suggests that they cover a wide
range of possible actions by the EU authorities, and do not exclude that the authorities could adapt
out-of-country information to ensure that it r eflects the cost of production in the country of origin.
For example, the EU authorities may consider that the costs associated with the production and
sale of the product under consideration are reasonably reflected in the records of the producer or
exporter under investigation, save for a minor discrepancy relating to one of the manufacturing
inputs. In such a case, the alternative bases proposed in the second subparagraph of Article 2(5),
including "information from other representative markets", could b e used as a reference point for
correcting the discrepancy. However, this information would not replace the costs reflected in the
records of the producer or exporter under investigation. Likewise, the EU authorities may
encounter a situation in which the information concerning the costs of the other producers or
exporters in the same country is not available or cannot be used, in which case the EU authorities
would have to construct the cost of production relying on "any other reasonable basis", including
information from other representative markets. In such a scenario, nothing in the language of the
second subparagraph of Article 2(5) precludes the possibility that the EU authorities may use the
"information from other representative markets" in order to arrive at the cost of production
without adapting it to reflect the costs of production in the country of origin. At the same time,
nothing in the language of the second subparagraph of Article 2(5) precludes the possibility that
the EU authorities may adapt information from outside the country of origin to reflect the costs of
production in the country of origin.585
6.243. For these reasons, we are of the view that the second subparagraph of Article 2(5) may be
read to encompass the possibility that the EU authorities may use "information from other
representative markets", as the basis for arriving at the costs of production, without adapting it to
reflect the costs of production in the country of origin. Nevertheless, the existence of that
possibility does not mea n, as Argentina contends, that the second subparagraph of Article 2(5)
requires the EU authorities to construct the normal value on the basis of the costs prevailing in
countries other than the country of origin.
6.244. Based on the foregoing, we agree with the Panel's preliminary view, following the first step
in its analysis that, on its face, the text of the second subparagraph of Article 2(5) "does not
require that the costs reported in the producer's records be replaced by costs in another
country."586 At the s ame time, nothing in the text of the second subparagraph of Article 2(5)

other producers or exporters in the same country are not available or cannot be used, then the "information
from other representative markets" must necessarily refer to information regarding costs from outside the
country of origin. For its part, the European Union maintained that the reference to "information from other
representative markets" cannot be automatically equated with information from outside the country of origin.
According to the European Union, "other representative markets" may include other relevant product markets
in the country of origin, a geographical market, or even a temporal market. (European Union's appellee's
submission, para. 86)
583 Panel Report, para. 7.159.
584 The definition of the word "adjust" includes: "[a]rrange suitably in relation to something else or to
some standard or purpose" and "[a]rrange, compose, harmonize differences, discrepancies, accounts".
(Shorter Oxford English Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1, p. 28) The definition of the
word "establish" includes: "place beyond dispute, ascertain, demonstrate, prove". (Shorter Oxford English
Dictionary, 6th edn (Oxford University Press, 2007), Vol. 1, p. 865)
585 We note that, in response to questioning at the oral hearing, both Argentina and the European Union
acknowledged that the second subparagraph of Article 2(5) could be understood broadly enough to capture any
one of the scenarios described above. However, as the European Union commented, the treatment of any such
"information from other representative markets" would necessarily be dependent on the circumstances of each
anti-dumping investigation.
586 Panel Report, para. 7.169. (italics original; underlining added)

precludes the possibility that the EU authorities may use "information from other representative
markets" as the basis for arriving at the costs of production without adapting it to r eflect the costs
of production in the country of origin.587
6.245. As part of our "holistic assessment", we now turn to consider the various other elements
relied on by Argentina to support its understanding of the meaning of the second subparagraph of
Article 2(5) of the Basic Regulation .588 On appeal, Argentina challenges the Panel's assessment of
these elements.
6.246. With respect to the legislative history that led to the introduction of the
second subparagraph of Article 2(5) into the Basic Regulation, before the Panel, Argentina referred
to Recitals 3 and 4 of Council Regulation (EC) No. 1972/2002, read in conjunction with the
second subparagraph of Article 2(3) of the Basic Regulation. In this regard, the Panel found:
[O]ur reading of the second subparagraph of Articl e 2(3) in conjunction with Recital 4
of Council Regulation 1972/2002 suggests that when the authorities determine that a
particular market situation exists on the basis of the existence, inter alia, of
"artificially low" prices due to a distortion, they sh ould establish or adjust the costs of
a producer on a basis that is not affected by that distortion. However, neither the
second subparagraph of Article 2(3) nor Recital 4 of Council Regulation 1972/2002
suggests that the options available to the EU authorities are constrained in such a way
that they must systematically resort to information or prices not in the country of
origin.589
6.247. Argentina contests this reasoning by the Panel and instead contends that Recitals 3 and 4
of Council Regulation (EC) No. 1972/2002 support Argentina's view that the "information from
other representative markets" referred to in the second subparagraph of Article 2(5) of the
Basic Regulation constitutes the information that will have to be used to adjust or replace the costs
included in the records of the producer or exporter concerned precisely because those costs are
affected by a country-wide distortion.590
6.248. As described at paragraph 6.182 above, Council Regulation (EC) No. 1972/2002 is the
legal instrument that introduced the two provisions that now appear in the Basic Regulation as the
second subparagraphs of Articles 2(3) and 2(5) respectively. 591 Recitals 3 and 4 of
Council Regulation (EC) No. 1972/2002 state, in relevant part:
(3) … I t is prudent to provide for a clarification as to what circumstances could be
considered as constituting a particular market situation in which sales of the like
product do not permit a proper comparison. Such circumstances can, for example,
occur because of the existence of barter -trade and other non -commercial processing
arrangements or other market impediments. As a result market signals may not
properly reflect supply and demand which in turn may have an impact on the relevant
costs and prices and may a lso result in domestic prices being out of line with
world-market prices or prices in other representative markets. …
(4) It is considered appropriate to give some guidance as to what has to be done if,
pursuant to Article 2(5) of Regulation (EC) No 384/96, the records do not reasonably
reflect the costs associated with the production and sale of the product under
consideration, in particular in situations where because of a particular market situation

587 Argentina's contention that the existence of this possibility is sufficient to demonstrate that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 is addressed in section 6.2.4.5 of this
Report.
588 These elements consist of the legislative history that led to the introduction of Article 2(5) into the
Basic Regulation, the alleged consistent practice of the EU authorities, and certain judgments of the
General Court of the European Union.
590 Argentina's other appellant's submission, paras. 244 and 262; see also response to Panel question
No. 99.
591 In response to questioning at the oral hearing, the European Union clarified that Recitals 3 and 4 of
Council Regulation (EC) No. 1972/2002 do not contain obligations in themselves, but explain the reasons for
the legislation.

sales of the like product do not permit a proper compar ison. In such circumstances,
the relevant data should be obtained from sources which are unaffected by such
distortions. Such sources can be the costs of other producers or exporters in the same
country or, where such information is not available or cannot be used, any other
reasonable basis, including information from other representative markets. The
relevant data can be used either for adjusting certain items of the records of the party
under consideration or, where this is not possible, for establishing the costs of the
party under consideration.592
6.249. At the oral hearing, Argentina highlighted that Recital 3, like the second subparagraph of
Article 2(5) of the Basic Regulation, uses the words "other representative markets". In particular,
Argentina points to the phrase "domestic prices being out of line with world-market prices or prices
in other representative markets ".593 Argentina argues that, given the juxtaposition of "domestic
prices", on the one hand, with "world market prices" and "other representative markets", on the
other hand, when the Basic Regulation refers to "other representative markets", this necessarily
means markets other than the domestic market of the exporting country. Moreover,
Argentina contends that Recital 4 clarifies that there is no discretion left to the authorities . For
Argentina, whenever the records do not reasonably reflect the costs because they are affected by
a distortion, the EU authorities must obtain data from sources that are not affected by such
distortions. Argentina add s that , in circumstances where the distortion affects the costs of all
domestic exporters/producers, the EU authorities must use information from other representative
markets, and this data "will necessarily not reflect the costs prevailing in the country of origin".594
6.250. Recital 3 of Council Regulation (EC) No. 1972/2002 explains the rationale for the
introduction of the second subparagraph of Article 2(3)595 of the Basic Regulation. This
Recital clarifies the circumstances that could be considered as constituti ng a particular market
situation in which sales of the like product do not permit a proper comparison. Recital 4 of
Council Regulation (EC) No. 1972/2002 contains the rationale for the introduction of the
second subparagraph of Article 2(5) of the Basic Regulation, the measure at issue in this dispute.
As discussed above, Article 2(5) elaborates on the application of the first alternative method
identified in the first subparagraph of Article 2(3)596, namely, construction of the normal value on
the basis of t he costs of production in the country of origin. While Recitals 3 and 4 concern
different determinations by the EU authorities, it is significant that both use the words "other
representative markets". In our view, this confirms our initial understanding, expressed in
paragraph 6.241 above, that the phrase "information from other representative markets" in the
second subparagraph of Article 2(5) refers to something other than the "costs of other producers
or exporters in the same country".
6.251. However, contrary to Argentina's assertion, we do not read Recitals 3 and 4 of
Council Regulation (EC) No. 1972/2002 to suggest that, pursuant to the second subparagraph of
Article 2(5) of the Basic Regulation , "[w]here the dist ortion affects the costs of all domestic
exporters/producers, the EU authorities must use information" that will necessarily not reflect the
costs of production in the country of origin. 597 Recital 4 clarifies that, where the EU authorities find
that a particular market results in "distortions", the EU authorities should obtain data from sources
that are unaffected by such distortions. Recital 4 indicates that such sources can be "the costs of
other producers or exporters in the same country or, where such in formation is not available or
cannot be used, any other reasonable basis, including information from other representative
markets." In the event that the scenario posited by Argentina occurs, that is, a distortion affects
the costs of all the producers or exporters in the same country, then the EU authorities are to use
"any other reasonable basis, including information from other representative markets" . Thus, even

592 Panel Exhibit ARG-5.
593 Emphasis added.
595 The second subparagraph of Article 2(3) states that: "[a] particular market situation for the product
concerned within the meaning of the first subparagraph may be deemed to exist, inter alia, when prices are
artificially low, when there is significant barter trade, or when there are non-commercial processing
arrangements."
596 The two alternative methods identified in the first subparagraph of Article 2(3) are: (i) "on the basis
of the cost of production in the country of origin plus a reasonable amount for selling, general and
administrative costs and for profits"; and (ii) "on the basis of the export prices, in the ordinary course of trade,
to an appropriate third country, provided that those prices are representative".
597 Argentina's other appellant's submission, para. 244.

if, according to Argentina, the term "other representative markets" necessarily refers to ma rkets
outside the country of origin, the word "including" makes clear that the information from other
representative markets is but one illustration of what may constitute "any other reasonable basis".
6.252. Recital 4 adds that the "relevant data can be used eit her for adjusting certain items of the
records of the party under consideration or, where this is not possible, for establishing the costs of
the party under consideration." As discussed at paragraph 6.242 above, the words "adjust" and
"establish" in the second subparagraph of Article 2(5) have very broad definitions. They could
cover a wide range of possible actions by the EU authorities, and do not exclude adaptation of
out-of-country information to reflect the costs of production in the country of origin.
6.253. For these reasons, we agree with the Panel that the legislative history relied on by
Argentina does not suggest that the options available to the EU authorities are constrained in such
a way that the EU authorities are required to resort to information or prices not in the country of
origin.598
6.254. Argentina also challenges the Panel's evaluation of the alleged consistent practice of the
EU authorities.599 As the Panel noted, in the majority of the examples cited by Ar gentina, the
EU authorities adjusted the actual costs incurred by the producer on the basis of prices prevailing
in other countries or on the basis of the price for export of the input concerned. In the
investigation on biodiesel from Argentina, the EU authorities replaced the actual input costs with a
surrogate price for soybeans that, in their view, reflected what the domestic prices for the inputs
would have been in the absence of the distortions created by the export tax system maintained by
Argentina.600 The Panel took the view that , while the examples of application cited by Argentina
reveal that the EU authorities may resort to prices prevailing in countries other than the country of
origin, these examples do not demonstrate that the second subparagraph of Article 2(5) requires
them to do so.601
6.255. We note that, in the investigations in : Seamless Pipes and Tubes of Iron or Steel from
Croatia, Romania, Russia and Ukraine ; Ammonium Nitrate from Russia; and Urea from Russia ,
having found that the gas costs were not reasonably reflected in the exporting producers' records
as provided for in Article 2(5) of the Basic Regulation, the EU authorities considered it appropriate
to base the adjustment, in all three decisions, on information from "other representative
markets".602 In the investigation on biodiesel that is the subject of Argentina's "as applied" claims
in the present dispute, the EU authorities noted the confirmation of the General Court of the
European Union that:
… the records of the party concerned do not serve as a basis for calculating normal
value if the costs associated with the production of the product under investigation are
not reasonably reflected in those records. In that case, the [second subparagraph ]
provides that the costs are to be adjusted or established on the basis of sources of
information other than those records.603
6.256. Accordingly, we concur with the Panel that "[t]he decisions of the EU authorities cited by
Argentina contain explicit statements by the EU authorities to the effect that Artic le 2(5) allows
recourse to data from other representative markets including third countries." 604 However, as the
Panel observed, while the examples cited by Argentina reveal that the EU authorities may resort to

598 Panel Report, para. 7.163.
599 The Panel's assessment concerned the same decisions of the EU authorities that we discussed in
paragraphs 6.189-6.194 above.
600 Panel Report, para. 7.165.
601 Panel Report, paras. 7.164-7.166.
602 For all three investigations, the adjusted price was based on the average price of Russian gas when
sold for export at the German/Czech border (Waidhaus), adjusted for local distribution costs.
(Council Implementing Regulation (EU) No. 1269/2012 (Panel Exhibit ARG-12), Recital 21; Council Regulation
(EC) No. 238/2008 (Panel Exhibit ARG-14), Recital 22; Council Regulation (EC) No. 907/2007 (Panel
Exhibit ARG-19), Recitals 33 and 34)
603 Definitive Regulation (Panel Exhibit ARG-22), Recital 32.

prices prevailing in countries other than the country of origin, they do not demonstrate that the
second subparagraph of Article 2(5) of the Basic Regulation requires them to do so.605
6.257. Still in this regard, we note that the European Union refers to evidence submitted to the
Panel concerning other decisi ons of the EU authorities.606 Notably, in response to questioning at
the oral hearing, the European Union pointed to the EU authorities' decision on Silicon from Russia.
According to the European Union, this decision provides a clear example of a situation w hen the
phrase "information from other representative markets" in the second subparagraph of Article 2(5)
was understood to refer to information from a different geographical market, but one within the
country of origin. However, we observe that, in that decision, the EU authorities explained that the
investigation was initiated before the date of entry into force of the amendment to the
Basic Regulation by Council Regulation (EC) No. 1972/2002.607 Therefore, the new regime
following from that amendment, whic h includes the second subparagraph of Article 2(5) of the
Basic Regulation, did not apply to that investigation. We share Argentina's view that the examples
cited by the European Union shed no light on the meaning of the words "on any other reasonable
basis including information from other representative markets" in the second subparagraph of
Article 2(5) of the Basic Regulation.
6.258. Argentina also considers that the Panel erred in its understanding of the four judgments of
the General Court of the European Union. In particular, Argentina contends that the Panel wrongly
considered these judgments to show that , when the EU authorities determine that a producer's
records do not reasonably reflect the costs of production because they are affected by a distortion,
"the EU authorities are entitled to establish the producer's costs on the basis of sources that are
unaffected by that distortion, and may have recourse to sources of information outside the country
of origin."608 In Argentina's view, these judgments , instead, clearly indicate the mandatory nature
of the second subparagraph of Article 2(5). Argentina asserts that the judgments demonstrate
that, when the EU authorities conclude that the exporter's records do not reasonably reflect the
costs due to a distortion, the authorities have to adjust the distorted item by having recourse to
information from other representative markets, and have no discretion to do otherwise.609
6.259. In each of the judgments relied on by Argentina, the General Court concluded that the
EU authorities were "fully entitled to conclude that one of the items in the applicants' records could
not be regarded as reasonable and that, consequently, that item had to be adjusted by having
recourse to other sources from markets which the institutions regarde d as more representative
and, consequently, the price of gas had to be adjusted."610 We read these statements by the Court
as suggesting that, once the EU authorities determine that the records of the producer or exporter
under investigation do not reasonably reflect the costs of production and sale of the product under
consideration, the authorities must resort to the alternative bases identified in the
second subparagraph of Article 2(5) of the Basic Regulation.
6.260. We also take note that, in each of the cases , the General Court found that "the
[second subparagraph] provides that the costs are to be adjusted or established on the basis of

605 Panel Report, para. 7.166.
606 European Union's appellee's submission, paras. 104-106 (referring to Commission Decision of
13 February 2013 terminating the anti-dumping proceeding concerning imports of white phosphorus, also
called elemental or yellow phosphorus, originating in the Republic of Kazakhstan, Official Journal of the
European Union, L Series, No. 43 (14 February 2013), pp. 38-58 (Panel Exhibit EU-3); Commission Regulation
(EC) No. 988/2004 of 17 May 2004 imposing provisional anti-dumping duties on imports of okoumé plywood
originating in the People's Republic of China, Official Journal of the European Union, L Series, No. 181 (18 May
2004), pp. 5-23 (Panel Exhibit EU-4); and Council Regulation (EC) No. 240/2008 (Panel Exhibit ARG-20)). For
example, in one decision, the EU authorities relied on the accounts of the parent company in the country of
origin (which included the data of the activities of the exporting producer under investigation) to correct an
aspect of the records of the exporting producer. ((Panel Exhibit EU-3), Recitals 36-37)
607 Commission Regulation (EC) No. 1235/2003 of 10 July 2003 imposing a provisional anti-dumping
duty on imports of silicon originating in Russia, Official Journal of the European Union, L Series, No. 173
(11 July 2003), pp. 14-34 (Panel Exhibit EU-24), Recital 15.
608 Argentina's other appellant's submission, para. 250 (quoting Panel Report, para. 7.168 (emphasis
original)).
609 Argentina's other appellant's submission, paras. 250-253.
610 Judgments of the General Court of the European Union, Case T-235/08 (Acron I) (Panel
Exhibit ARG-23), para. 46; Case T-118/10 (Acron II) (Panel Exhibit ARG-52), para. 53; Case T-459/08 (Panel
Exhibit ARG-53), para. 67; and Case T-84/07 (Panel Exhibit ARG-54), para. 60. (emphasis added)

sources of information other than those records." 611 In each of the se cases, the EU authorities
relied on information concerni ng costs from outside the country of origin. However, in each of
these cases, the General Court stressed the order of preference set out in the
second subparagraph of Article 2(5), noting that, where adjustments are to be made, the
"information may be take n from the costs incurred by other producers or exporters [in the same
country] or, when that information is not available or cannot be used, any other reasonable source
of information, including information from other representative markets" .612 Accordingly, we are
not persuaded by Argentina's contention that "[t]he fact that the General Court did not discuss or
even refer to allegedly other possible options" means that , "[w]henever there is a distortion
affecting the domestic market, the authorities have to adjust the item affected by the distortion by
having recourse to information from other representative markets" .613 Rather, these judgments
are consistent with the view that the EU authorities can turn to any other reasonable basis,
including information from other representative market s, only in the event that the costs of other
producers or exporters in the same country were not available or could not be used.
6.261. In our view, while the judgments reveal that the EU authorities may resort to information
from sources outside the country of origin, they do not demonstrate that the second subparagraph
of Article 2(5) of the Basic Regulation requires the EU authorities to use that information without
adapting it to reflect the costs of production in the country of origin. Hence, we do not consider the
Panel to have erred in finding that these judgments show that , when the EU authorities determine
that a producer's records do not reasonably reflect the costs of production because they are
affected by a distortion, "the EU authorities are entitled to establish the producer's costs on the
basis of sources that are unaffected by that distortion, and may have recourse to sources of
information outside the country of origin."614
6.262. In sum, having reviewed the Panel's evaluation of all the relevant elements, we find that
Argentina has not established that the second subparagraph of Article 2(5) of the Basic Regulation
means that, where the costs of other domestic producers or exporters in the same country cannot
be used, the EU authorities are required to use information from other representative markets that
does not reflect the costs of production in the country of origin.
6.2.4.4 Whether the Panel acted inconsistently with Article 11 of the DSU
6.263. Argentina claims that, in ascertaining the meaning of the second subparagraph of
Article 2(5) of the Basic Regulation, the Panel failed to make an objective assessment of the
matter before it, thereby acting inconsistently with Article 11 of t he DSU. Specifically,
Argentina argues that the Panel f ailed to conduct an objective examination of the elements
submitted by Argentina. Argentina contends that the Panel's analysis of the elements beyond the
text of the Basic Regulation was limited to some cursory observations and failed to provide any
reasoning for the Panel's conclusions. Argentina also argues that the Panel failed to make a true
"holistic assessment" of these different elements because, having reached a preliminary conclusion
on the basis of the text of the challenged provision, the Panel e xamined the remaining elements
separately and in isolation from each other , and failed to base its final conclusion on a
holistic assessment of all relevant elements taken together. 615 The European Union submits that
the Panel's analysis of the various elements cannot be construed as a failure to fulfil its obligations
under Article 11 of the DSU. The European Union considers that the Panel carefully analysed all the
arguments advanced by Argentina and justified its conclusions with respect to each of them.616
6.264. We reiterate our discussion, at paragraphs 6.200-6.202 above, regarding a panel's duties,
under Article 11 of the DSU, in the context of ascertaining the meaning of m unicipal law. We
consider that, like the arguments it advanced in support of its othe r claim under Article 11 of

611 Judgments of the General Court of the European Union, Case T-235/08 (Acron I) (Panel Exhibit
ARG-23), para. 39; Case T-118/10 (Acron II) (Panel Exhibit ARG-52), para. 46; Case T-459/08 (Panel
612 Judgments of the General Court of the European Union, Case T-235/08 (Acron I) (Panel
Exhibit ARG-23), para. 39; Case T-118/10 (Acron II) (Panel Exhibit ARG-52), para. 46; Case T-459/08 (Panel
Exhibit ARG-53), para. 60; Case T-84/07 (Panel Exhibit ARG-54), para. 53. See also European Union's
appellee's submission, paras. 108-111.
613 Argentina's other appellant's submission, para. 253. (emphasis added)
615 Argentina's other appellant's submission, paras. 267-275.
616 European Union's appellee's submission, paras. 112-117.

the DSU617, Argentina's arguments that the Panel acted inconsistently with Article 11 of the DSU in
reaching its findings regarding the consisten cy of the second subparagraph of Article 2(5) of the
Basic Regulation with Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994 amount to no more than a recasting of the arguments that Argentina made before the
Panel. This doe s not suffice as a basi s for us to find that the Panel acted inconsistently with
Article 11 of the DSU.618
6.265. Argentina also asserts that the Panel failed to undertake a proper holistic assessment of all
the relevant elements taken together in order to asce rtain the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation . Relying on the Appellate Body's
reasoning in US – Shrimp II (Viet Nam)619, it is our view, for the same reasons as those discussed
in paragraphs 6.199-6.209 above, that the Panel conducted a proper examination and undertook a
holistic assessment of the various elements before it. We therefore reject Argentina's claim that
the Panel acted in consistently with Article 11 of the DSU in ascertaining the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation.
6.266. Based on our finding in paragraph 6.262 above and our rejection of Argentin a's claim
under Article 11 of the DSU, we consider that the Panel did not err in finding that , "even when
information from 'other representative markets' is used, Article 2(5), second subparagraph, does
not … require the EU authorities to establish the cos ts of production so as to reflect costs
prevailing in other countries."620
6.267. As described in paragraphs 6.231-6.232 above, before the Panel, Argentina's challenge
under A rticle 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
consisted of two alternative lines of argument: (i) that the second subparagraph of Article 2(5)
requires WTO-inconsistent action; and (ii) that, even if the second subparagr aph of Article 2(5)
does not require WTO -inconsistent action, it is nevertheless WTO -inconsistent because it provides
for the possibility that such action may be taken. Having addressed Argentina's appeal concerning
its first line of argument above, we now turn to Argentina's appeal concerning the Panel's finding
on Argentina's second line of argument. Specifically, we examine Argentina's assertion that the
Panel employed an erroneous legal standard for an "as such" challenge in stating that Argentina
had not demonstrated that the second subparagraph of Article 2(5) of the Basic Regulation cannot
be applied in a WTO-consistent manner.
6.2.4.5 Whether the Panel erred by employing an erroneous legal standard to find that
Argentina had not established that the second s ubparagraph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994
6.268. Before the Panel, Argentina put forward an alternative to its argument that the
second subparagraph of Article 2(5) of the Basic Regulation is mandatory. For Argentina, even if it
does not mandate recourse to out -of-country costs, the fact that the second subparagraph of
Article 2(5) permits the authorities to construct the cost of production u sing a basis other than the
costs of production in the country of origin renders that measure inconsistent "as such" with
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.621 The Panel,
however, rejected this alternative argument, finding instead that, "while Argentina has established
that Article 2(5), second subparagraph, is capable of being applied in a manner that is inconsistent
with the European Union's obligations under Article 2.2 of the Anti -Dumping Agreement and …
Article VI:1(b)(ii) of the GATT 1994, … Argentina has not demonstrated that this provision cannot
be applied in a WTO-consistent manner."622

617 At para. 6.209 above, we rejected Argentina's claim that the Panel acted inconsistently with
Article 11 of the DSU in reaching its findings regarding the consistency of the second subparagraph of
Article 2(5) of the Basic Regulation with Article 2.2.1.1 of the Anti-Dumping Agreement.
618 Appellate Body Report, EC – Fasteners (China), para. 442.
619 Appellate Body Report, US – Shrimp II (Viet Nam), paras. 4.36 and 4.50.
621 Panel Report, para. 7.118 (referring to Argentina's opening statement at the first Panel meeting,
para. 74; response to Panel question No. 24, para. 69; and second written submission to the Panel,
paras. 147-149 and 162).
622 Panel Report, para. 7.174 (referring to Appellate Body Report, US – Carbon Steel (India),
para. 4.483).

6.269. On appeal, Argentina submits that this Panel finding is erroneous because it suggests that ,
in order to prevail with a claim that a measure is inconsistent "as such", a complaining party must
establish that the measure at issue leads to WTO -inconsistent results in all instances in which the
measure is applied.
6.270. We understand Argentina and the European Union to have advanced several possible tests
as to what must be established in order for a measure to be found to be inconsistent "as such"
with WTO obligations. Argentina contends that a complainant challenging a measure "as such" has
to demonstrate that a certain aspect of that measure would lead to an outcome that is necessarily
inconsistent with WTO rules. 623 In addition, Argentina suggests that, to the extent that a
WTO provision at issue prohibits certain conduct, the fact that the challenged measure permits
such conduct renders it inconsistent "as such" with that WTO provision.624 The European Union, for
its part, asserts that for a measure to be found inconsistent "as such", the measure must
"unavoidably" or "compulsorily" require the domestic authorities to act contrary to WTO obligations
in all cases. 625 We also take note of the views of two of the third participants in this regard.
China submits that, in order to show that a legislative measure is in consistent "as such" with a
WTO obligation, a complainant need not show th at the measure leads to a WTO -inconsistent
outcome in every instance. Instead, in China's view, the claim will prevail as long as a measure
necessarily operates, at least in certain circumstances, to preclude conduct required under the
covered agreements.626 For its part, the United States opines that, where a Member may apply a
measure in a WTO-consistent manner, there is no basis to find that the Member has, through that
measure, breached its WTO obligations because of the potential for a future WTO -inconsistent
application.627
6.271. As we have discussed in paragraphs 6.228-6.229 above, the discretionary nature of a
measure is no barrier to an "as such" challenge, and measures involving some discretionary
aspects "may violate certain WTO obligations". 628 Consistent with the generally applicable
principles regarding the burden of proof in WTO disputes, it is for the complainant to establish the
WTO-inconsistency of the challenged m easure.629 Precisely what is required to establish that a
measure is inconsistent "as such" will vary, depending on the particular circumstances of each
case, including the nature of the measure and the WTO obligations at issue.630
6.272. In the present dispute, the Panel began its analysis of Argentina's claims concerning the
Basic Regulation by recalling "the relevant principles established under WTO jurisprudence" on,
inter alia, the examination of a complaint that a Member's municipal law is inconsistent
"as such".631 The Panel noted the Appellate Body's clarificatio n that challenges to a
Member's legislation "as such" are "'serious challenges', particularly as Members are presumed to
have enacted their laws in good faith." 632 The Panel added that, consistent with the generally
applicable principles regarding the burden of proof in WTO disputes, it is for the complainant to
establish the WTO -inconsistency of provisions of domestic law. 633 In that section of its analysis,
the Panel made no additional statements in connecti on with the examination of a complaint that a
measure is inconsistent "as such".

623 Argentina's other appellant's submission, paras. 279-280 (quoting Appellate Body Report, US – Oil
Country Tubular Goods Sunset Reviews, para. 172). Argentina maintains that it has demonstrated that, in
cases in which the records of the producer or exporter under investigation do not reasonably reflect the costs
associated with the production and sale of the product under consideration because of a "distortion" affecting
the domestic market, the EU authorities necessarily use "information from other representative markets",
which are not the costs of production in the country of origin. (Ibid., para. 281)
624 Argentina's other appellant's submission, paras. 284-285 (referring to Panel Report, para. 7.171).
625 European Union's appellee's submission, paras. 120 and 122.
626 China's third participant's submission, paras. 97-98 (quoting Appellate Body Reports, US – Shrimp II
(Viet Nam), para. 4.24; Argentina – Textiles and Apparel, para. 62; and US – FSC (Article 21.5 – EC),
para. 221).
627 United States' third participant's submission, para. 47.
628 Appellate Body Report, US – 1916 Act, fn 59 to para. 99 (referring to Panel Report, US – Section 301
Trade Act, paras. 7.53-7.54).
629 Panel Report, para. 7.120.
630 Appellate Body Report, US – Carbon Steel, para. 157; Panel Reports, EC – IT Products, para. 7.112.
631 Panel Report, paras. 7.119-7.126.
632 Panel Report, para. 7.120 and fn 192 thereto (quoting and referring to Appellate Body Report,
US - Oil Country Tubular Goods Sunset Reviews, paras. 172-173).
633 Panel Report, para. 7.120.

6.273. Our review of the Panel's analysis of Argentina's claim under Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 suggests to us that the
Panel proceeded as follows. The Panel first ascertained the meaning of the second subparagraph of
Article 2(5) of the Basic Regulation 634 before examining the nature of the WTO obligations in
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.635 The Panel
then compared the two to assess whether the second subparagraph of Article 2(5) is inconsistent
"as such" with those WTO obligations. 636 In our view, the Panel did not err in adopting this
approach.
6.274. In addressing Argentina's alternativ e line of argument, the Panel stated that, "while
Argentina has established that Article 2(5), second subparagraph, is capable of being applied in a
manner that is inconsistent with the European Union's obligations under Article 2.2 of the
Anti-Dumping Agreement and … Article VI:1(b)(ii) of the GATT 1994, … Argentina has not
demonstrated that this provision cannot be applied in a WTO -consistent manner."637 In a footnote
to this statement, the Panel indicated that it found guidance in certain statements in the
Appellate Body report in US – Carbon Steel (India) containing language that is quite similar to that
used by the Panel in its Report.638
6.275. In US – Carbon Steel (India) , the Appellate Body reversed the panel's findings under
Article 12.7 of the Agreement on Su bsidies and Countervailing Measures ( SCM Agreement)
because it found that the panel had failed to comply with its duty under Article 11 of the DSU. 639
India requested the Appellate Body to complete the legal analysis and address its claim that
the US measures at issue in that case were inconsistent "as such" with Article 12.7 of the
SCM Agreement.640
6.276. With respect to the nature of the obligation at issue in that dispute, the Appellate Body
found that, pursuant to Article 12.7 of the SCM Agreement, an investigati ng authority must use
"facts available" that reasonably replace the information that an interested party failed to provide,
with a view to arriving at an accurate determination. 641 The Appellate Body rejected India's
argument that Article 12.7 prohibits the use of an inference that is "adverse to the interests" of a
non-cooperating party. Instead, the Appellate Body clarified that using an inference that is
"adverse to the interests" of a non-cooperating party is not, in itself, inconsistent with Article 12.7.
Rather, whether the "facts available" used are reasonable replacements of the missing
information, and whether an adverse inference is drawn in accordance with Article 12.7, is to be
determined in light of the particular circumstances of a given case.642
6.277. As regards the measure at issue in that dispute, India argued that the measure was
inconsistent "as such" with Article 12.7 of the SCM Agreement because, despite the "innocuous"
language of the text of the measure 643, other evidence644, including the United States Department
of Commerce ( USDOC) practice, allegedly demonstrated "a consistent and systematic application
of the measure, which contribute[d] to proving the existence, as part of the measure, of a system
created to punish non -cooperation by drawing adve rse inferences in every case of

634 Panel Report, paras. 7.157-7.170.
635 Panel Report, para. 7.171.
636 Panel Report, para. 7.172.
637 Panel Report, para. 7.174.
639 Appellate Body Report, US – Carbon Steel (India), para. 4.456.
640 Article 12.7 of the SCM Agreement provides that: "[i]n cases in which any interested Member or
interested party refuses access to, or otherwise does not provide, necessary information within a reasonable
period or significantly impedes the investigation", preliminary and final determinations may be made on the
basis of the facts available.
641 Appellate Body Report, US – Carbon Steel (India), para. 4.416 (quoting Appellate Body Report,
Mexico – Anti-Dumping Measures on Rice, paras. 293-294).
642 Appellate Body Report, US – Carbon Steel (India), paras. 4.467-4.469.
643 Appellate Body Report, US – Carbon Steel (India), para. 4.471.
644 In addition to the text of the measure at issue, India submitted evidence of judicial decisions, the
Statement of Administrative Action, and USDOC practice. (Appellate Body Report, US – Carbon Steel (India),
para. 4.452)

non-cooperation."645 The Appellate Body made intermediate findings with respect to each of the
elements before it646, and concluded that those elements:
[did] not establish conclusively that the measure requires an investigating authority to
consistently apply inferences in a manner that would not comport with Article 12.7 in
all cases of non -cooperation. Where inferences are drawn, this evidence of the use of
"adverse inferences" does not establish conclusively that the measure at issue cannot
be applied in a manner that comports with Article 12.7.647
6.278. In light of the obligation under Article 12.7 of the SCM Agreement, the Appellate Body
examined all the relevant elements and found that India had failed to establish that the measure
bore the meaning that India attributed to it. 648 As noted above, Article 12.7 directs an
investigating authority to use "facts available" that reasonably replace the information that an
interested party failed to provide, with a view to arriving at an accur ate determination. For this
reason, evidence that an adverse inference was drawn in a particular instance, or in several
instances, could not, in itself, have sufficed to establish that the information selected did not
reasonably replace the information in a manner consistent with Article 12.7. Thus, the finding of
the Appellate Body related to the nature of the WTO obligation at issue, and the burden of proof
with regard to India's assertion as to the meaning of the municipal law at issue.
6.279. For these reason s, we consider that the Panel in the present dispute took the
Appellate Body's statements in US – Carbon Steel (India) out of context. To the extent that the
Panel was expressing a legal standard for an "as such" challenge when it stated that
"Argentina has not demonstrated that this provision cannot be applied in a WTO -consistent
manner"649, the Panel misread the Appellate Body's statements in US – Carbon Steel (India).
6.280. We recall that the WTO obligation at issue in the present dispute is found in Article 2.2 of
the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. As stated at
paragraph 6.234 above, Article 2.2 and Article VI:1(b)(ii) do not limit the sources of information or
evidence that may be us ed in establishing the costs of production in the country of origin.
However, whatever the information that it uses, an investigating authority has to ensure that such
information is used to arrive at the "cost of production" "in the country of origin". Co mpliance with
this obligation may require the investigating authority to adapt the information that it collects.
6.281. We further recall our finding, at paragraph 6.266 above, that the Panel did not err in
finding tha t, "even when information from 'other representative markets' is used, Article 2(5),
second subparagraph, does not … require the EU authorities to establish the costs of production so
as to reflect costs prevailing in other countries." 650 We also recall our view that nothing in the
second subparagraph of Article 2(5) precludes the possibility that , when the EU authorities rely on

645 Appellate Body Report, US – Carbon Steel (India), para. 4.479.
646 The Appellate Body's intermediate findings, with respect to each of the elements before it, were as
follows. With respect to the text of the measure at issue, the Appellate Body did not consider that the measure,
on its face, required the investigating authority to act inconsistently with Article 12.7. The Appellate Body also
found that the judicial decisions did not support India's proposition that the measure at issue was mandatory in
requiring the use of the worst possible information in all cases of non-cooperation. Likewise, the Appellate Body
was of the view that the Statement of Administrative Action and the legislative history of the measure did not
support India's proposition that the measure was mandatorily applied in all cases of non-cooperation without
examining all evidence or engaging in a comparative assessment of such evidence so as to use the most
appropriate or fitting information. Finally, on the basis of its review of the "practice" in the application of the
measure, the Appellate Body was not convinced by India's assertion that the measure required the USDOC to
draw the worst possible inference in all cases of non-cooperation, or to assume that those "facts available" with
adverse consequences were the only facts that it could use. (Appellate Body Report, US – Carbon Steel (India),
paras. 4.470, 4.477-4.478, and 4.481)
647 Appellate Body Report, US – Carbon Steel (India), para. 4.483.
648 For example, India submitted documents to the Panel arguing that they illustrated that the measure
had been applied in many instances routinely and mechanically to always draw the worst possible inference. In
rebuttal, the United States placed a number of cases on the Panel record where the "worst possible inference"
was not applied in instances of non-cooperation. For the Appellate Body, the evidence concerning the
application of the measure suggested that, even if the "practice" in respect of its application were relevant to
ascertaining its meaning in that case, it did not conclusively support the proposition advanced by India.
(Appellate Body Report, US – Carbon Steel (India), paras. 4.479-4.481)
649 Panel Report, para. 7.174.

"information from other representative markets", they could adapt that information to reflect the
costs of production in the countr y of origin, in a manner consistent with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. We therefore find that
Argentina has not satisfied its burden of proving that the second subparagraph of Article 2(5) of
the Basic Regulation restricts, in a material way, the discretion of the EU authorities to construct
the costs of production in a manner consistent with Article 2.2 of the Anti-Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994.651
6.282. Like the Panel, we consider that "Argentina has established that Article 2(5),
second subparagraph, is capable of being applied in a manner that is inconsistent with the
European Union's obligations under Article 2.2 of the Anti -Dumping Agreement and …
Article VI:1(b)(ii) of the GATT 1994."652 However, the mere fact tha t the application of the
second subparagraph of Article 2(5) could, in some circumstances, lead to WTO -inconsistency is
not sufficient to discharge Argentina's burden to make a prima facie case that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994. Accordingly,
we find that the Panel did not err in finding that Argentina had not established that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.653
6.2.4.6 Conclusions
6.283. Regarding Argentina's claims of error with respect to the Panel' s findings under Article 2.2
of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, having reviewed the
Panel's evaluation of all the relevant elements, we find as follows. As regards Argentina's first line
of argument, we find that Argent ina has not established that the Panel erred in rejecting the
assertion that the second subparagraph of Article 2(5) of the Basic Regulation means that, where
the costs of other domestic producers or exporters in the same country cannot be used, the
EU authorities are required to use information from other representative markets that does not
reflect the costs of production in the country of origin. In this regard, we further consider that the
Panel conducted a proper examination and undertook a holistic as sessment of the various
elements before it. We therefore reject Argentina's claim that the Panel acted inconsistently with
Article 11 of the DSU in ascertaining the meaning of the second subparagraph of Article 2(5) of the
Basic Regulation.
6.284. For these reaso ns, we find that the Panel did not err, and did not fail to comply with its
duties under Article 11 of the DSU, in stating that , "even when information from 'other
representative markets' is used, Article 2(5), second subparagraph, does not … require the
EU authorities to establish the costs of production so as to reflect costs prevailing in other
countries."654
6.285. With respect to Argentina's second line of argument, precisely what is required to establish
that a measure is inconsistent "as such" will vary, dep ending on the particular circumstances of
each case, including the nature of the measure and the WTO obligations at issue. As regards the
nature of the WTO obligations at issue, Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 do not limit the sources of information or evidence that may
be used in establishing the costs of production in the country of origin. However, whatever the
information that it uses, an investigating authority has to ensure that such information is us ed to
arrive at the "cost of production" "in the country of origin". Compliance with this obligation may
require the investigating authority to adapt the information that it collects. As regards the measure
at issue, we understand that nothing in the secon d subparagraph of Article 2(5) of the
Basic Regulation precludes the possibility that , when the EU authorities rely on "information from
other representative markets", they could adapt that information to reflect the costs of production
in the country of o rigin, in a manner consistent with Article 2.2 of the Anti -Dumping Agreement
and Article VI:1(b)(ii) of the GATT 1994. We therefore find that Argentina has not satisfied its
burden of proving that the second subparagraph of Article 2(5) of the Basic Regulation restricts, in
a material way, the discretion of the EU authorities to construct the costs of production in a

651 See Appellate Body Report, US – Carbon Steel, para. 162.
652 Panel Report, para. 7.174.
653 Panel Report, para. 7.174.

manner consistent with Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.
6.286. Like the Panel, we consider that "A rgentina has established that Article 2(5),
second subparagraph, is capable of being applied in a manner that is inconsistent with the
European Union's obligations under Article 2.2 of the Anti -Dumping Agreement and …
Article VI:1(b)(ii) of the GATT 1994."655 To the extent that the Panel may have been expressing a
legal standard for an "as such" challenge when it stated that "Argentina has not demonstrated that
this provision cannot be applied in a WTO -consistent manner"656, we consider that this would be a
misreading of a statement by the Appellate Body in US – Carbon Steel (India). In any event, the
mere fact that the application of the second subparagraph of Article 2(5) could, in some
circumstances, lead to WTO-inconsistency is not sufficient to discharge Argentina's burden to make
a prima facie case that the second subparagraph of Article 2(5) of the Basic Regulation is
inconsistent "as such" with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.
6.287. Consequently, we uphold the Panel's finding, in paragraphs 7.174 and 8.1.b.ii of its
Report, that Argentina had not establish ed that the second subparagra ph of Article 2(5) of the
Basic Regulation is inconsistent "as such" with Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994.
6.2.5 Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement
6.288. Argentina submits that, because it has demonstrated that the Panel erred in finding that
the second subparagraph of Article 2(5) of the Basic Regu lation is not inconsistent "as such" with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994,
it necessarily follows that the European Union has not ensured the conformity of its laws,
regulations, and administr ative procedures with the provisions of the Anti -Dumping Agreement
and the GATT 1994 and, as a consequence, has violated Article XVI:4 of the WTO Agreement and
Article 18.4 of the Anti-Dumping Agreement.657
6.289. As discussed above, we have upheld the Panel's fin dings that Argentina ha d not
established that the second subparagraph of Article 2(5) of the Basic Regulation is inconsistent
"as such" with Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of
the GATT 1994. The Panel's findin g under Article XVI:4 of the WTO Agreement and Article 18.4 of
the Anti-Dumping Agreement was consequential. On appeal, Argentina advances no arguments in
support of its claims under Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement that are separate from its arguments in support of its claims under
Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
6.290. Consequently, we uphold the Panel's finding, in paragraphs 7.175 and 8.1.b.iii of its
Report, that Argentina ha d not established that the second subparagraph of Article 2(5) of the
Basic Regulation is inconsistent with Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement.
7 FINDINGS AND CONCLUSIONS
7.1 Claims conc erning the EU anti -dumping measure on imports of biodiesel from
Argentina
7.1. For the reasons set out in this Report, the Appellate Body makes the following findings and
conclusions.

655 Panel Report, para. 7.174.
656 Panel Report, para. 7.174.
657 Argentina's other appellant's submission, paras. 291-293.

7.1.1 Determination of dumping
7.1.1.1 Article 2.2.1.1 of the Anti-Dumping Agreement
7.2. We con sider that the second condition in the first sentence of Article 2.2.1.1 of the
Anti-Dumping Agreement – that the records kept by the exporter or producer under investigation
reasonably reflect the costs associated with the production and sale of the produ ct under
consideration – relates to whether the records kept by the exporter or producer under
investigation suitably and sufficiently correspond to or reproduce those costs incurred by the
investigated exporter or producer that have a genuine relationship with the production and sale of
the specific product under consideration. The Panel's interpretation, which is more nuanced than
the European Union's arguments on appeal suggest, does not conflict with our understanding of
this provision. In our view, the Panel did not err in rejecting the European Union's argument that
the second condition in the first sentence of Article 2.2.1.1 includes a general standard of
"reasonableness". With respect to the application of Article 2.2.1.1 to the anti -dumping measure
on biodiesel, we agree with the Panel that the EU authorities' determination that domestic prices of
soybeans in Argentina were lower than international prices due to the Argentine export tax system
was not, in itself, a sufficient basis for concluding th at the producers' records did not reasonably
reflect the costs of soybeans associated with the production and sale of biodiesel, or for
disregarding the relevant costs in those records when constructing the normal value of biodiesel.
We therefore find that the Panel did not err in its interpretatio n and application of the
second condition in the first sentence of Article 2.2.1.1 of the Anti-Dumping Agreement.
a. Consequently, we uphold the Panel's finding, in paragraphs 7.249 and 8.1.c.i of the
Panel Report, that the European Union acted inconsistently w ith Article 2.2.1.1 of the
Anti-Dumping Agreement by failing to calculate the cost of production of the product
under investigation on the basis of the records kept by the producers. Having upheld this
Panel's finding, the condition for Argentina's request for completion of the legal analysis
is not fulfilled. Thus, we do not examine this request.
7.1.1.2 Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994
7.3. We consider that the phrases "cost of production in the country of origin" in Article 2.2 of the
Anti-Dumping Agreement and "cost of production … in the country of origin" in Article VI:1(b)(ii) of
the GATT 1994 do not limit the sources of information or evidence that may be used in
establishing the cost of production in the country of origin to sources inside the country of origin.
When relying on any out -of-country information to determine the "cost of production in the
country of origin" under Article 2.2, an investigating authority has to ensure that such information
is used to arrive at the "cost of production in the country of origin", and this may require the
investigating authority to adapt that information. In this case, like the Panel, we consider that the
surrogate price for soyb eans used by the EU authorities to calculate the cost of production of
biodiesel in Argentina did not represent the cost of soybeans in Argentina for producers or
exporters of biodiesel. We therefore find that the Panel did not err in its interpretation of
Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994, and that the
European Union has not established that the Panel erred in its application of these provisions to
the biodiesel measure at issue.
a. Consequently, we uphold the Panel's finding, in paragraphs 7.260 and 8.1.c.ii of the
Panel Report, that the European Union acted inconsistently with Article 2.2 of t he
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 by not using the cost
of production in Argentina wh en constructing the normal value of biodiesel. Having
upheld this finding , the condition for Argentina's request for completion of the legal
analysis is not fulfilled. Thus, we do not examine this request.
7.1.1.3 Article 2.4 of the Anti-Dumping Agreement
7.4. We have upheld the Panel's findings that the EU authorities acted inconsistently with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement in constructing the normal value for the

reasons set out above.658 Given these findings, and notwithstanding our reservations about certain
aspects of the Panel's analysis under Article 2.4 of the Anti -Dumping Agreement, we do not
consider it fruitful, in the particular circumstances of this dispute, to examine further whether the
EU authorities also failed to conduct a "fair comparison" in comparing the constructed normal value
to the export price.
a. We therefore find it unnecessary to rule on Argentina's claim on appeal regarding the
Panel's finding under Article 2.4 of the Anti-Dumping Agreement.
7.1.2 Imposition of anti-dumping duties: Article 9.3 of the Anti-Dumping Agreement and
Article VI:2 of the GATT 1994
7.5. We consider that the Panel correctly interpreted Article 9.3 of the Anti-Dumping Agreement in
stating that the "'margin of dumping' referred to in Article 9.3 relates to a marg in that is
established in a manner subject to the disciplines of Article 2 and which is therefore consistent
with those disciplines". 659 Furthermore, in our view , the Panel did not err in considering that, in
light of the specific circumstances of this dispu te, "Argentina has made a prima facie case that the
European Union acted inconsistently with Article 9.3 of the Anti -Dumping Agreement, which the
European Union has failed to rebut." 660 We also agree with the Panel that the same considerations
that guided it s assessment of Argentina's Article 9.3 claim apply mutatis mutandis to its
assessment of Argentina's claim under Article VI:2 of the GATT 1994.661
a. For these reasons, we uphold the Panel's finding, in paragraphs 7.367 and 8.1.c.vii of
the Panel Report, that the European Union acted inconsistently with Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994 by imposing anti -dumping
duties in excess of the margin of dumping that should have been established under
Article 2 of the Anti -Dumping Agreement and Article VI:1 of the GATT 1994,
respectively.
7.1.3 Non-attribution analysis in causation determination: Articles 3.1 and 3.5 of the
Anti-Dumping Agreement
7.6. We consider that the Panel was not expressing, and therefore did not err in, its interpret ation
of Articles 3.1 and 3.5 of the Anti-Dumping Agreement when it stated that the revised data did not
have a significant role in the EU authorities' conclusion in the Definitive Regulation on overcapacity
as an "other factor" causing injury. Furthermore , the Panel committed no error in its application of
these provisions. Specifically, the Panel did not err in: (i) stating that the EU authorities'
conclusion in their non -attribution analysis was not based on or aff ected by the revised data;
(ii) rejecting Argentina's argument that the EU authorities improperly focused on capacity
utilization as opposed to the increase in overcapacity in absolute terms during the period
considered; or (iii) finding no fault in the EU authorities' conclusion that , on the ba sis of the
evidence before them , overcapacity could not be "a major cause of injury". More generally, we
agree with the Panel that the EU authorities' conclusion with respect to overcapacity is one that an
unbiased and objective investigating authority cou ld have reached in light of the facts before it. 662
For these reasons, we find that Argentina has not established that the Panel erred in finding that
the EU authorities' treatment of overcapacity in its non -attribution analysis as an "other factor"
causing injury to the EU domestic industry was not inconsistent with Articles 3.1 and 3.5 of the
Anti-Dumping Agreement.
a. Consequently, we uphold the Panel's finding, in paragraphs 7.472 and 8.1.c.x of the
Panel Report, that Argentina had not established that the E uropean Union's
non-attribution analysis was inconsistent with Articles 3.1 and 3.5 of the Anti -Dumping
Agreement.

658 See supra, paras. 6.56-6.57 and 6.82-6.83.
659 Panel Report, para. 7.359.
660 Panel Report, para. 7.365.
661 Panel Report, para. 7.366.
662 Panel Report, para. 7.472.

7.2 Claims concerning the second subparagraph of Article 2(5) of the Basic Regulation
7.2.1 Article 2.2.1.1 of the Anti-Dumping Agreement
7.7. Having reviewed the Panel's evaluation of all the elements submitted by Argentina, we do not
consider that Argentina has established that the Panel erred in its assessment of the
second subparagraph of Article 2(5) of the Basic Regulation. Like the Panel, we do not se e support
in the text of the Basic Regulation, or in the other elements relied on by Argentina, for the view
that it is in applying the second subparagraph of Article 2(5) that the EU authorities are to
determine that the records of the party under investi gation do not reasonably reflect the costs
associated with the production and sale of the product under consideration when those records
reflect prices that are considered to be artificially or abnormally low as a result of a distortion. In
this regard, we further consider that the Panel conducted a proper examination and undertook a
holistic assessment of the various elements before it. We therefore reject Argentina's claim that
the Panel acted inconsistently with Article 11 of the DSU in ascertaining the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation . Accordingly, we find that the Panel
did not err, and did not fail to comply with its duties under Article 11 of the DSU, in concluding
that Argentina had not established its case regarding the meaning of the challenged measure, or in
finding, for this reason, that Argentina had not establish ed that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the
Anti-Dumping Agreement.663
a. For these reasons, we uphold the Panel's finding, in paragraphs 7.154 and 8.1.b.i of the
Panel Report, that Argentina ha d not established that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2.1.1 of the
Anti-Dumping Agreement.
7.2.2 Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994
7.8. Having reviewed the Panel's evaluation of all the relevant elements, we find as follows. As
regards Argentina's first line of argument, w e find that Argentina has not established that the
Panel erred in rejecting the assertion that the second subparagraph of Article 2(5) of the
Basic Regulation means that, where the costs of other domestic producers or exporters in the
same country cannot b e used, the EU authorities are required to use information from other
representative markets that does not reflect the costs of production in the country of origin. In this
regard, we further consider that the Panel conducted a proper examination and under took a
holistic assessment of the various elements before it. We therefore reject Argentina's claim that
the Panel acted inconsistently with Article 11 of the DSU in ascertaining the meaning of the
second subparagraph of Article 2(5) of the Basic Regulation.
7.9. For these reasons, we find that the Panel did not err, and did not fail to comply with its duties
under Article 11 of the DSU, in stating that , "even when information from 'other representative
markets' is used, Article 2(5), second subparagraph, does n ot … require the EU authorities to
establish the costs of production so as to reflect costs prevailing in other countries."664
7.10. With respect to Argentina's second line of argument, precisely what is required to establish
that a measure is inconsistent "as suc h" will vary, depending on the particular circumstances of
each case, including the nature of the measure and the WTO obligations at issue. As regards the
nature of the WTO obligations at issue, Article 2.2 of the Anti -Dumping Agreement and
Article VI:1(b)(ii) of the GATT 1994 do not limit the sources of information or evidence that may
be used in establishing the costs of production in the country of origin. However, whatever the
information that it uses, an investigating authority has to ensure that such information is used to
arrive at the "cost of production" "in the country of origin". Compliance with this obligation may
require the investigating authority to adapt the information that it collects. As regards the measure
at issue, we understand that not hing in the second subparagraph of Article 2(5) of the
Basic Regulation precludes the possibility that , when the EU authorities rely on "information from
other representative markets", they could adapt that information to reflect the costs of production
in the country of origin, in a manner consistent with Article 2.2 of the Anti -Dumping Agreement

663 Panel Report, para. 7.154.

and Article VI:1(b)(ii) of the GATT 1994. We therefore find that Argentina has not satisfied its
burden of proving that the second subparagraph of Article 2(5) of the Basic Regulation restricts, in
a material way, the discretion of the EU authorities to construct the costs of production in a
manner consistent with Article 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.
7.11. Like the Panel, we consider that "Argentina has established that Article 2(5),
second subparagraph, is capable of being applied in a manner that is inconsistent with the
European Union's obligations under Article 2.2 of the Anti -Dumping Agreement and …
Article VI:1(b)(ii) of the GATT 1994."665 To the extent that the Panel may have been expressing a
legal standard for an "as such" challenge when it stated that "Argentina has not demonstrated that
this provision cannot be applied in a WTO -consistent manner"666, we consider that th is would be a
misreading of a statement by the Appellate Body in US – Carbon Steel (India). In any event, the
mere fact that the application of the second subparagraph of Article 2(5) could, in some
circumstances, lead to WTO-inconsistency is not sufficient to discharge Argentina's burden to make
a prima facie case that the second subparagraph of Article 2(5) of the Basic Regulation is
inconsistent "as such" with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the
GATT 1994.
a. Consequently, we uphold the Panel's finding, in paragraphs 7.174 and 8.1.b.ii of the
Panel Report, that Argentina had not establish ed that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent "as such" with Article 2.2 of the
Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
7.2.3 Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement
7.12. We have upheld the Panel's findings that Argentina ha d not established that the
second subparagraph of Article 2(5) of the Basic Regulation is inconsistent "as such" with
Articles 2.2.1.1 and 2.2 of the Anti -Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
The Panel's finding under Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement was consequential. On appeal, Argentina advances no arguments in
support of its claims under Article XVI:4 of the WTO Agreement and Article 18.4 of the
Anti-Dumping Agreement that are separate from its arguments in support of its claims under
Articles 2.2.1.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.
a. Consequently, we uphold the Panel's finding, in paragraphs 7.175 and 8.1.b.iii of the
Panel Report, that Argentina ha d not established that the second subparagraph of
Article 2(5) of the Basic Regulation is inconsistent with Article XVI:4 of the
WTO Agreement and Article 18.4 of the Anti-Dumping Agreement.
7.3 Recommendation
7.13. The Appellate Body recommends that the DSB request the European Union to bring its
measure found in this Rep ort, and in the Panel Report as modified by this Report, to be
inconsistent with the Anti -Dumping Agreement and the GATT 1994 into conformity with those
Agreements.

665 Panel Report, para. 7.174.
666 Panel Report, para. 7.174.
WT /DS47 3/ AB/R

Signed in the original in Geneva this 6th day of September 2016 by:
Ujal Singh BHATIA
Presiding Member
Yuejiao ZHANG'
Member