Document: WT/DS344/R Page D-1 ANNEX D ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF FIRST AND SECOND MEETINGS Contents Page Annex D-1 Executive Summary of the Op ening Statement of Mexico – First Meeting D-2 Annex D-2 Closing Statement of Mexico – First Meeting D-6
Document codes: WT/DS344/R
Complainant: Mexico
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, Japan, South Korea, Thailand
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. 1, 2.1, 2.4, 2.4.2, 9, 18.4  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. XVI:4  Agreement Establishing the World Trade Organization

ANNEX D

ORAL STATEMENTS OR EXECUTIVE SUMMARIES THEREOF
FIRST AND SECOND MEETINGS

Contents Page
Annex D-1 Executive Summary of the Op ening Statement of Mexico – First
Meeting D-2
Annex D-2 Closing Statement of Mexico – First Meeting D-6
Annex D-3 Executive Summary of the Opening Statement of the
United States – First Meeting D-8
Annex D-4 Closing Statement of the United States – First Meeting D-12
Annex D-5 Third Party Oral Statement of China D-14
Annex D-6 Third Party Oral Statement of the European Communities D-15
Annex D-7 Third Party Oral Statement of Japan D-18
Annex D-8 Third Party Oral Statement of Thailand D-21
Annex D-9 Executive Summary of the Opening Statement of Mexico – Second
Meeting D-22
Annex D-10 Executive Summary of the Opening Statement of the
United States – Second Meeting D-25

ANNEX D-1

EXECUTIVE SUMMARY OF THE OPENING STATEMENT OF
MEXICO – FIRST MEETING

Mr Chairman, members of the Panel:

I. SECURITY AND PREDICTABILITY IN THE WTO CASE LAW
1. Article 3.2 of the DSU states that the disput e settlement system is a "central element" in
providing security and predictability to the multilatera l trading system, which creates an expectation
that panels will adopt the reasoni ng in previous Appellate Body re ports on the same issues. The
question of whether the Anti-Dumping Agreement allows investigating authorities to disregard or
"zero" intermediate price comparisons where the export price exceeds normal value, was ruled on for
the first time in 2001 by the Appellate Body in EC – Bed Linen . The zeroing procedures in that first
case were applied in the context of an original inv estigation and in reference to comparisons between
the weighted average of export prices and normal valu e, as defined in Article 2.4.2. However, the
principles of definition set in the text of the Ag reements, as the Appellate Body observed, clearly
exceed the ambit of original investigations and average-to-average comparison.
2. This became evident in the next "zeroi ng" case analysed by the Appellate Body:
US - Softwood Lumber V. Here, the Appellate Body extended its findings regarding zeroing practices,
which apply in an original investigation where transaction-to-transaction comparison is used. In
reaching its conclusion, the Appellate Body interp reted the text on the definitions of "dumping",
"margins of dumping" and "product", in Article VI of the GATT 1994 and Article 2.1 and 2.4.2 of the
Anti-Dumping Agreement, in the same way as it had in EC – Bed Linen.
3. The Appellate Body again relied on the same provisions of the Agreements and the same
interpretation in US – Zeroing (EC 1) , in which it determined that the United States' zeroing
procedure in original investigations where the average-to-average comparison methodology is used, is
incompatible "as such" with the United States' obligations under the Agreements, and that the zeroing
procedures as applied in sixteen periodic revi ews where the comparison was between individual
export prices and monthly average normal value, w as likewise incompatible with the United States'
obligations for calculating margins of dumping for th e exporter in question, and in respect of the
investigated product as a whole.
4. More recently, in US – Zeroing (Japan) , the Appellate Body resolved the last outstanding
issue when it recognized that zeroing procedures in administrative reviews, sunset reviews and other
proceedings are inconsistent "as such" with Artic le VI of the GATT 1994 and the relevant provisions
of the Anti-Dumping Agreement . Again, an essential part of the Appellate Body's reasoning was
consistency in applying the defin itions of "dumping", "margins of dumping" and "product" discussed
in EC – Bed Linen.
5. In examining the Appellate Body 's consistent treatment of this matter in its reports, this Panel
should acknowledge two relevant points. First, despite the United States' efforts to confuse the issue,
the measure challenged in each of the above-menti oned cases is the same. As the Appellate Body
said in US – Zeroing (Japan) , there is a single zeroing measure that applies in different contexts.
Secondly, in its decisions in all these cases, the A ppellate Body has changed neither its reasoning nor
its interpretation of the text of the Agreements. Although the facts themselves have been different in
each case, the Appellate Body's construction of the Ag reements has been consistent in all the cases.

In its reports, the Appellate Body has always relied on the same fundamental principles of the
Agreements.
6. In view of the foregoing, Mexico submits th at the texts of the Agreements can support only
the conclusion that all sales comparisons should be considered in calculating dumping margins.
II. THE CONCEPTS OF "DUMPING", "MARGINS OF DUMPING", AND
"PRODUCT"
7. The position taken by Mexico and the Appellate Body rests on a number of basic principles of
law. First, "dumping" and "margins of dumping" , as defined in Article VI:1 and VI:2 of the
GATT 1994 and Article 2.1 of the Anti-Dumping Agreement , relate to the "product" in question.
Secondly, the concepts of "dumping" and "margins of dumping" relate only to the behaviour involved
in establishing exporter or producer prices for the exported product.
8. The Appellate Body established in several cases a definition of the terms "dumping" and
"margins of dumping" that is clear, coherent and in keeping with the texts. The United States, on the
other hand, supports interpretations of these terms that are incompatible with the text, context, intent
and object of the Agreement and so are incompatible with the customary rules of interpretation of
public international law.
"Margins of Dumping" – calculated for the product as a whole and not for individual transactions
or models

9. Article VI:1 and VI:2 of the GATT 1994 defin es "dumping" in relation to a "product". This
definition is carried over to the Anti-Dumping Agreement by Article 2.1, and by virtue of the opening
phrase of the latter, "[f]or the purpose of this Agreement", the definition applies throughout the
Agreement. Article 2.1 is thus a rule that gove rns the interpretation and the context of the term
"margin(s) of dumping" throughout the Agreement. Similarly, the term "dumping" has the same
meaning for all provisions of the Agreement an d for all types of anti-dumping proceedings.
Consequently, any "dumping" or "margin of dumping" in conformity with the Agreement must be
calculated in relation to the product under investigation or review.
10. This raises the question of what the Agreements refer to when they use the term "product".
The Appellate Body gave the answer in EC – Bed Linen . It found that the "product" for which the
dumping and margins of dumping are calculated is and must be the investigated product "as a whole".
11. The terms "dumping" and "margins of dumping" necessarily relate to the same definition of
"product" "because it is the product that is introduced into the commerce of another country at less
than its normal value in that country" (Report of the Appellate Body, US – Zeroing (Japan) ,
para. 109). This concept of dumping for a defined pr oduct under investigation or review is also a
factor taken into account in determining whether dumping causes or threatens injury.
12. Mexico concedes that it is permissible – even necessary in some circumstances – to carry out
intermediate price comparisons on a model or transaction basis. However, as the Appellate Body has
found time and again, starting with EC – Bed Linen and up to US – Zeroing (Japan) , such
intermediate comparisons cannot be treated as "margins of dumping" as defined in the Agreements.
13. The United States' interpretation wrongly assumes that it is individual importers that engage
in dumping. This position is at odds with the text and the intent of the Agreements.

"Margins of dumping" – calculated in respect only of individual exporters or foreign producers

14. The Anti-Dumping Agreement does not address the behaviour of individual importers or
individual import transactions. Rather, it provides c onsistently that determinations of dumping are
carried out in respect of every exporter or foreign producer investigated.
15. The focus on the exporter is evident throughout the text of Article VI of the GATT 1994 and
the Anti-Dumping Agreement, and the Appellate Body found that this fact is clearly confirmed by the
text of Article 6.10 of the Anti-Dumping Agreement.
16. Anti-dumping measures are designed to offset the effects of the pricing behaviour of
producers and exporters, since the producer or expo rter is necessarily involved in determining the
price of the exports giving rise to sales at a price lower than normal value. Accordingly, the prices of
all the export transactions of an exporter or foreign produce must be taken into account in determining
whether it has engaged in dumping and, if so, to what extent.
17. There is a clear distinction between the estab lishment or collection of duties and the margin of
dumping, which sets a ceiling on the amount of the duties that may be established or collected.
III. INTERPRETATION OF THE PHRASE "ALL COMPARABLE EXPORT
TRANSACTIONS" IN ARTICLE 2.4.2
18. The United States overlooks this fundamental poi nt when it reiterates in its First Submission
that it is the phrase "all comparable export transactions" in Article 2.4.2 of the Anti-Dumping
Agreement that lays down the requirement to calculate margins of dumping in reference to the
"product" as a whole. It submits that, while th e phrase "all comparable export transactions" refers
solely to average-to-average comparisons, zeroi ng is prohibited only in the context of such
comparisons.
19. In Mexico's view, this position is not supporte d by the reports of the Appellate Body. In the
first case, EC – Bed Linen, in which zeroing was addressed and where the parties referred expressly in
their arguments to Article 2.4.2, it is plain that th e principles that led the Appellate Body to determine
that investigating authorities may not ignore or alte r the results of intermediate price comparisons,
were to be found in the definitions of "dumping" an d "margins of dumping" in Article VI:1 and VI:2
of the GATT 1994 and Article 2.1 of the Anti-Dumping Agreement . The fact that the phrase, "all
comparable export transactions" was discussed in the context of Article 2.4.2 and the related
arguments, was not a decisive element in the report of the Appellate Body.
20. Nor does Mexico agree with the United States ' argument in its First Written Submission that
in its report in US – Softwood Lumber V , the Appellate Body relied on the phrase "all comparable
transactions" in Article 2.4.2. As in its earlier report, in EC – Bed Linen, the Appellate Body based its
findings in US – Softwood Lumber V essentially on the definitions of "dumping" and "margins of
dumping" that apply throughout the Anti-Dumping Agreement . The Appellate Body rejected the
United States' argument, concluding that "dumpi ng" and "margins of dumping" apply only to the
investigated product as a whole and may not be determ ined at the level of a sub-product, model or
category of that product.
21. The United States further argues that the report of the Appellate Body would void the phrase
"all comparable export transactions" of meaning if zeroing were prohibited in all the comparison
methods provided for in Article 2. 4.2. However, as the Appellate Body said, the reason why the
phrase "all comparable export transactions" appears onl y in connection with the average-to-average
comparison methodology is that this is the only me thodology to which it is relevant. Since in the
average-to-average methodology groups of transactions can be aggregated, the phrase "all comparable
export transactions" requires that each group include a ll transactions that are comparable, and that no

export transaction be excluded when margins of dumping are determined on the basis of this
methodology. Furthermore, the average-to-ave rage comparison methodology involves calculating a
weighted average export price, whereas the trans action-to-transaction methodology takes account of
all export transactions individually and compares them with the most appropriate transactions on the
domestic market. Consequently, as the Appellate Body observed, the phrase "all comparable export
transactions" is simply not relevant to the transaction-to-transaction methodology.
IV. MEXICO'S REQUEST FOR FINDINGS
22. The United States has expressed concern that Me xico refers to zeroing procedures as if they
were a single measure. It is beyond all doubt that, as the Appellate Body concluded in US – Zeroing
(Japan), there is one single zeroing measure.
V. CONCLUSION
23. Mexico would again remind the Panel that the measure challenged as such in this dispute is
the same as the measure on which the Appellate Body issued a decision in cases brought by Canada,
the European Communities and Japan. The Appellate Body has consistently he ld that the measure is
in breach of the United States' obligations under the Agreements.
24. In the interests of the secur ity and predictability of the WTO system and in order to ensure
that the Agreements negotiated by Members are impl emented as their texts require, we urge the Panel
to allow all Mexico's claims.

ANNEX D-2

CLOSING STATEMENT OF MEXICO – FIRST MEETING

I. INTRODUCTION

Mr. Chairman, Members of the Panel:

1. On behalf of the Mexican de legation, it is once again our priv ilege to appear before you to
present the views of Mexico concerning the issues in this dispute.

2. Our closing statement will be brief and will focus on some key points.

3. In its opening statement, the United States equated Mexico's position regarding the security
and predictability of WTO dispute settlement to "t he Panel need do nothing more than blindly follow
prior Appellate Body reports". This is incorrect. This dispute is not about the primacy of Appellate
Body reports over panel proceedings nor is it about the doctrine of precedent. Rather, it is about the
correct legal interpretation of the relevant pr ovisions of the GATT 1994 and the Anti-dumping
Agreement. Mexico asks only that this pane l correctly interpret these provisions giving due
consideration to prior Appellate Body findings on identical issues.

4. It is notable that in the oral statements of the parties given yesterday, no new issues were
raised. The first written submissions of the parties express fully the issues before the Panel.

5. The differences in the positions of Mexico a nd the United States can be distilled into two
questions.

6. First, which WTO terms and provisions fo rm the foundation for the prohibition against
zeroing? The United States takes the position that the sole basis for the prohibition is the phrase "all
comparable export transactions" in Article 2.4.2 of the Anti-dumping Agreement. Mexico takes the
position that the foundation of the prohibition is found in the meaning of the terms "dumping",
"margins of dumping" and "product" in Articles VI:1 and 2 of GATT 1994 and Article 2.1 of the
Anti-dumping Agreement.

7. Second, when interpreting the WTO terms and provisions applicable to the assessment of
anti-dumping duties, should the focus be on the importer or the exporter/producer? The United States
takes the position that the focus should be on the im porter. Mexico takes the position that the focus
should be on the exporter/producer.

8. Contrary to the submissions of the United St ates, the responses to these questions do not give
rise to more than one "permissible" interpretation for each response.

9. The response to each question poses a single permis sible interpretation. In both instances, the
interpretations posed by Mexico are the permissi ble ones. Mexico's interpretations attribute a
consistent meaning to the applicable terms and provisions as they are used throughout the Anti-
dumping Agreement. They take into account the entire context of the Anti-dumping Agreement.
They follow the interpretations presented by the Appellate Body in its reports concerning zeroing
practices.

10. In contrast, the interpretations posed by the United States do not attribute consistent meaning
to the applicable terms and provisions as they ar e used throughout the Anti-dumping Agreement.
They do not take into account the entire context of the Anti-dumping Agreement. Finally, they
directly contradict the interpretations presented by the A ppellate Body in its reports concerning
zeroing practices. The interpretations posed by the United States are, simply put, not permissible.

11. Embedded in the United States' submissions are arguments that rely on factual scenarios
related to the technical application of anti-dumping duties. The findings required in this dispute do
not require the Panel to consider the many di fferent factual scenarios regarding the technical
application of anti-dumping duties. Rather, they require the Panel to focus on the text of the
applicable terms and provisions of GATT 1994 an d the Anti-dumping Agreement and interpret those
terms and provisions in a manner th at is consistent with the rules of interpretation set out in
Articles 31 and 32 of the Vienna Convention of the Law of Treaties as incorporated in Article 3.2 of
the DSU.

12. Thank you once again for agreeing to serve on th is Panel and for your efforts, and those of the
Secretariat and translators, in preparing for this meeting.

13. This concludes our closing statement. We would be pleased to respond to any questions you
may have.

ANNEX D-3

EXECUTIVE SUMMARY OF THE OPENING STATEMENT OF THE
UNITED STATES – FIRST MEETING

Mr. Chairman, Members of the Panel:

Procedural Issues

1. This Panel is tasked with making its own objective assessment of the matter before it. This
includes an assessment of the facts as well as the conformity of the challenged measures with the
relevant covered agreements. Mexico and some third parties, how ever, would have this Panel neglect
its responsibilities in the name of "security and predic tability". According to them, it is sufficient that
the Appellate Body previously has found zeroing to be inconsistent with provisions of the WTO
Agreements.

2. The Appellate Body itself has stated that its reports are not binding on panels. Prior panel and
Appellate Body reports should be taken into account only to the extent that the reasoning contained in
them is persuasive. In our first written submission, we have provided cogent reasons why the findings
and reasoning of the Appellate Body in US – Zeroing (Japan) and US – Zeroing (EC) are seriously
flawed with respect to certain aspects relevant to this dispute and therefore should not be followed.

3. "Security and predictability" is not an indepe ndent obligation, nor is it a stated "object and
purpose" of any WTO Agreement. The only referen ce to this phrase in the WTO Agreement is in
DSU Article 3.2, which makes clear that security and predictability are achieved only when the
dispute settlement system works as provided therei n – that is, through the proper application of
customary rules of interpretation of public international law to the agreed-upon provisions of the
covered agreements, in order to preserve the right s and obligations to which the Members agreed.
Security and predictability is provided by a dispute settlement system that does not add to or diminish
the rights and obligations of WTO Members. A pa nel is not permitted to follow a prior panel or
Appellate Body report in the name of "security and predictability" where that prior report has added to
or diminished rights and obligations.

Scope of this Dispute

4. In light of its terms of reference and Articl e 7 of the DSU, this Panel may only address those
matters identified by Mexico in its request for establishment of a panel. In its request for
consultations and its request for the establishment of a panel, Mexico identified two alleged measures
it was challenging "as such" - the use of "zeroing" in average-to-average comparisons in original
investigations and the use of "zeroing" in assessment proceedings. Yet, in its first written submission,
Mexico asserts that it is challenging a "single zeroing measure" in all antidumping proceeding
contexts.

5. Mexico argues that in US – Zeroing (Japan) , the Appellate Body concluded that there was
one single rule which it found to be inconsistent with US obligations. A prerequisite for the Appellate
Body to reach that conclusion was its finding that " zeroing" in all contexts and with respect to all
types of comparisons was within the scope of Japan 's request for establishment of a panel and request
for consultations. That is clearly not the case here.

6. There is nothing in US law that requires a monolith ic use of "zeroing" in all contexts. This is
supported by the fact that Commerce is no longer ma king average-to-average comparisons in original
investigations without providing offsets fo r non-dumped comparisons, a fact which Mexico
acknowledges in its first written submission. Mexi co relies on descriptions of what Commerce has
done in the past to argue the existence of a "single zeroing measure". Aside from the fact that these
past examples do not cover all the contexts suppo sedly covered by the so-called "single zeroing
measure", Mexico's arguments imply that if an administering authority acts in a non-arbitrary and
consistent manner, this should expose it to dis pute settlement for somehow maintaining a separate
measure. This is a very troubling proposition.

The Claimed Obligation to Provide Offsets

7. Mexico argues that the Antidumping Agre ement imposes on Members an obligation to
provide an offset to dumping in all types of antidumping proceedings, including assessment
proceedings. Mexico does this d espite the absence of a textual b asis for such an obligation and a
permissible interpretation of the Antidumping Agreement that does not require such offsets.

8. In the disputes to date that have addressed th e issue of offsets, the only textual basis panels
have identified for an obligation to provide offset s has been the "all comparable export transactions"
language in the text of Article 2.4.2 of the Antid umping Agreement. This is consistent with the
approach articulated by the Appellate Body in US – Softwood Lumber Dumping . The phrase "all
comparable export transactions" in Article 2.4.2 ap plies only to antidumping investigations and only
when authorities use average-to-average comparisons pursuant to Article 2.4.2. The panels have
consistently found that the obligation to provide offsets applies only as a consequence of the text-
based obligation to include all comparable expor t transactions when making weighted-average to
weighted-average comparisons in an investigation. The panels have also consistently found that there
is no textual basis for an obligation to provide o ffsets outside the context of average-to-average
comparisons in investigations. The analysis offered by the prior panels is persuasive and correct.

9. Article 2.4.2 provides for two symmetrical comparison types, average-to-average and
transaction-to-transaction, and a third asymmetrical comparison type, average-to-transaction, which
may be used under certain conditions. With respect to the average-to-average comparisons, the
phrase "all comparable export transactions", as interpreted by the Appellate Body in US – Softwood
Lumber Dumping, addresses whether the relevant comparison may be made at the level of averaging
groups (or "models"). Under this reading, the wo rd "all" in "all comparable export transactions"
refers to all transactions across all models of the product under investigation. This is the textual basis
for the conclusion that margins of dumping based on average-to-average comparisons must relate to
the "product as a whole" rather than individual averaging group comparisons. This phrase, "all
comparable export transactions", however, applies onl y to the use of average-to-average comparisons
in an investigation.

10. A general prohibition of zeroi ng would negate and contradict the interpretation of the phrase
"all comparable export transactions" that was the b asis of the obligation to provide offsets in the
context of average-to-average comparisons. However, in US – Zeroing (Japan) , the Appellate Body
did just that by reinterpreting "all comparable expor t transactions" to relate solely to all transactions
within a model, and not across models for the produc t under investigation. In doing so, the Appellate
Body abandoned the only textual basis in the Antidumping Agreement for prohibiting zeroing. In this
case, Mexico argues that margins of dumping calcula ted in assessment proceedings must relate to the
"product as a whole", and cannot be calculated for individual transactions. However, "product as a
whole" is not a term found in the Antidumping Agre ement nor does it have any defined meaning. To
the extent the concept of "product as a whole" has any relevance to the Antidumping Agreement, it is
only as a shorthand for the operation of the phrase "a ll comparable export transactions" in the context

of average-to-average comparisons in investiga tions. Mexico's argument relies entirely on the
concept of "product as a whole" being applied in a manner detached from that textual basis.

11. Mexico seeks to redefine the concept of dumpi ng contained in Article 2.1 of the Antidumping
Agreement and Article VI of the GATT 1994 such that the terms "dumping" and "margins of
dumping" relate "solely, and exclusively, to the "product" under consideration taken "as a whole"".

12. The text of these provisions defines and describes dumping as occurring in the course of
individual commercial transactions. The commercial reality is that prices are generally set in
individual transactions and products are "introduced into the commerce" of the importing country in
individual transactions. In other words, dumping – as defined under these provisions – may occur in a
single transaction. To the extent that some transac tions introduce merchandise into the market of an
importing country at a price above normal value, this is to the benefit of the seller, not the domestic
industry injured by other transactions made at less than normal value.

13. Mexico asserts that dumping and margins of dumping "are concepts that have no meaning
unless considered with reference to the product under consideration taken as a whole". The Appellate
Body reports relied upon by Mexico are unpersuasive because they cannot alter the simple fact that
the relevant text of these provisions, the relevant context for interpreting the meaning of these terms,
and the well-established prior understanding of these concepts all confirm that dumping and margins
of dumping do have a meaning in relation to i ndividual transactions. Our written submission sets
forth the textual, contextual, and other evidence that the concepts of dumping and margins of dumping
are applicable to individual transactions. That evidence conclusively establishes that the terms
dumping and margins of dumping as used in Ar ticle 2.1 of the Antidumping Agreement and
Article VI of the GATT 1994 do not support the existence of an obligation to provide offsets for
instances of non-dumping in assessment proceedings.

14. Mexico's misinterpretation of the term "mar gin of dumping" is the basis for its claim of
inconsistency with Article 9.3. Article 9.3 requires that the amount of the antidumping duty assessed
shall not exceed the margin of dumping. That obligation, just like the term "margin of dumping"
itself, may be applied at the level of individua l transactions. This understanding is particularly
appropriate in the context of antidumping duty assessments, where duties are assessed on individual
customs entries resulting from individual transacti ons for which importers are liable for payment.
Mexico's argument that excess antidumping duties were assessed in this dispute depends on its
misinterpretation of the term "margin of dumping" re ferred to in Article 9.3 as relating exclusively to
the product "as a whole" considered on an exporter-wi de basis. The panels examining this issue have
consistently observed that interpreting the term "margin of dumping" as relating exclusively to the
"product as a whole" for all importers of product fro m a particular exporter is inconsistent with the
importer- and import-specific obligation to pay an antidumping duty.

15. Mexico's interpretation of Article 9.3 cannot be reconciled with the recognition in Article 9 of
prospective normal value systems of assessment. Under such systems, the amount of liability for
payment of antidumping duties is determined at the time of importation on the basis of a comparison
between the price of the individual export transaction and the prospective normal value. If the margin
of dumping must relate exclusively to the "produ ct as a whole" determined on an exporter-specific
basis, the administration of such an assessment system is simply impossible. An obligation to account
for other imports in assessing antidumping duties on a par ticular entry is contrary to the very concept
of a prospective normal value system and, if accep ted, would effectively render prospective normal
value systems WTO-inconsistent unless they were c onverted to a retrospective system by adopting
retrospective assessment reviews.

16. Antidumping duties are applied at the level of individual entries. In this way, an importer
may be induced to raise resale prices to cover th e amount of the antidumping duty, thereby preventing

the dumping from having further injurious effect. If, instead, the amount of the antidumping duty
must be reduced to account for the amount by whic h some other transaction was sold at above normal
value, possibly involving an entirely different importer, then the antidumping duty will be insufficient
to have the intended effect. The importer of the dumped product would remain in a position to
profitably resell the product at a price that continues to be injuriously dumped. If Mexico's reading of
"margin of dumping" is accepted as the sole permi ssible interpretation of Article 9.3, the remedy
provided under the Antidumping Agreement a nd the GATT 1994 will be prevented from fully
addressing injurious dumping.

17. Mexico claims inconsistency with the "fair comparison" requirement of Article 2.4, arguing
that the United States has assessed antidumping duties "in excess of the actual margin of dumping for
the product" because the duties assessed exceeded the margin of dumping for the product as a whole.
The relevant text of Article 2.4, however, provi des only that a "fair comparison shall be made
between the export price and the normal value". Th e text of Article 2.4 does not address whether any
particular assessment of antidumping duties exceeds the margin of dumping, whether "dumping" and
"margins of dumping" are concepts that apply to individual transactions, or whether a margin of
dumping may be specific to each importer. Indeed , the text of Article 2.4 does not resolve the
question of whether zeroing is "fair" or "unfair". Resolution of Mexico's claim depends not on the
text of Article 2.4, but on whether it is permissibl e to interpret the term "margin of dumping" as used
in Article 9.3 as applying to transactions. As prio r panels have found, it is permissible to understand
the term "margin of dumping" as used in Artic le 9.3 as applying to an individual transaction.
Therefore, the challenged assessments do not exceed th e margin of dumping and there is no basis for
a finding of inconsistency with Article 2.4.

18. Any interpretation that gives rise to a gene ral prohibition of zeroing also renders the second
sentence of Article 2.4.2, the "targeted dumping pr ovision", inutile. This is because the targeted
dumping methodology mathematically must yield the same result as an average-to-average
comparison if, in both cases, non-dumped comparison s are required to offset dumped comparisons.
This defect cannot be ignored or assumed away by supposing that the targeted dumping provision
permits an authority to ignore any obligation in the Antidumping Agreement other than the obligation
to use one of the two symmetrical comparison methods.

19. The United States respectfully disagrees with the Appellate Body's reasoning in US – Zeroing
(Japan) that the Antidumping Agreement includes a general prohibition of zeroing. The United States
agrees with the reasoning applied by the panels th at outside the context of average-to-average
comparisons in investigations the Antidumping Ag reement does not impose an obligation to provide
offsets for non-dumping. At a minimum, we urge th is Panel to find that a permissible interpretation
of the Antidumping Agreement, consistent with th e Appellate Body's original interpretation in US –
 Softwood Lumber Dumping and faithful to the text of the Antidumping Agreement, contains no
obligation to provide for an offset to dumping in assessment proceedings.

ANNEX D-4

CLOSING STATEMENT OF THE
UNITED STATES – FIRST MEETING

Mr. Chairman, Members of the Panel:

1. On behalf of the United States' delegation, I would once again like to thank you and the
members of the Secretariat for your work on this dispute. We appreciated the opportunity to provide
you with preliminary thoughts on your questions and look forward to provid ing you with additional
comments in our written responses and our second submission.

2. We will be very brief in our closing statemen t. Mexico would have this Panel merely follow
the Appellate Body report in US – Zeroing (Japan) without engaging in its own analysis. Having
failed to include a "single zeroing measure" in its re quest for establishment of the panel, Mexico even
argues that the Panel should find the existence of such a measure because the Appellate Body did so
in a separate dispute.

3. Mexico would have the Panel do this in the interest of "secu rity and predictability". Security
and predictability is provided by a dispute settlement system that does not add to or diminish the
rights and obligations to which the Members agr eed. This requires the proper application of
customary rules of interpretation of public intern ational law to the agreed upon provisions of the
covered agreements. Therefore, any prohibition of zeroing must be found in the text of the
Antidumping Agreement. Aside from a prohibition of zeroing in the context of average-to-average
comparisons in original investigations, there is plainly no general prohibition of zeroing.

4. Mexico's proposed obligation to treat non-dum ped imports as a remedy for injurious dumping
by reducing the assessment of antidumping duties on dumped imports depend s upon a definition of
dumping that is not based upon the text of the Anti dumping Agreement, but on an abstract concept of
dumping. Ultimately Mexico's interpretati on cannot be reconciled with the commercial,
administrative realities to which the Antidumping Agreement must relate.

5. The prior panels addressing this issue have r ecognized the deficiencies inherent in Mexico's
proposed interpretation and have found that the re levant text, the relevant context, and the well-
established prior understanding of the terms "dumpi ng" and "margin of dumping" as used in the
Antidumping Agreement demonstrate that these concepts are not devoid of meaning except in relation
to the product as a whole.

6. As detailed in our first written submission, Me xico's interpretation cannot be reconciled with
the ordinary meaning of the terms with which dumping and margins of dumping are defined, and
which describe dumping as occurring in the course of ordinary commercial transactions, and which do
not define products as "introduced into the commerce" of the importing country "as a whole", or
prices of all the products at issue in an assessment proceeding generally being set "as a whole".

7. Mexico's interpretation cannot be reconciled w ith the Appellate Body's interpretation of the
phrase "all comparable export transactions" in US – Softwood Lumber Dumping.

8. Nor can it be reconciled with the targeted dumping provision in the second sentence of
Article 2.4.2; with the importer- and import-specif ic obligation to pay antidumping duties; with the

existence of prospective normal value systems of ass essment as provided in Article 9; and, with the
effective functioning of antidumping duties as a remedy for injurious dumping.

9. Finally, let me reiterate the position of the Un ited States with respect to Mexico's particular
claims in this dispute. First, regarding Mexico's "as such" claims, Mexico has failed to establish the
existence of any measure that may be challenge d "as such", whether the measures are taken as
described in Mexico's panel request – as they mu st be – or as a single measure as described in
Mexico's first written submission. Accordingly, Mexi co's "as such" claims should be rejected in their
entirety.

10. Second, regarding Mexico's "as applied" claim relating to the investigation of stainless steel
from Mexico for which the Department of Commerc e used average-to-average comparisons without
providing offsets for non-dumped comparisons, the Unite d States does not contest that its calculation
in this investigation was inconsistent with th e obligation to account for "all comparable export
transactions" in calculating the "margin of dumping" as these terms were interpreted by the Appellate
Body in US – Softwood Lumber Dumping.

11. Third, a correct interpretation of the An tidumping Agreement does not impose an obligation
to provide offsets for instances of non-dumping in assessment proceedings. Accordingly, Mexico's
"as applied" claims with respect to the five periodic reviews should be rejected.

12. Mr. Chairman, Members of the Panel, we a ppreciate this opportunity to present these closing
comments and look forward to continuing to work with you on these issues.

ANNEX D-5

THIRD PARTY ORAL STATEMENT
OF CHINA

1. Mr. Chairman, distinguished members of the pane l, it is my great honour to appear before you
today to present the views of China as a third party to these proceedings.

2. Notwithstanding China did not submit a written submission to the panel, China would like to
emphasize its systematic interests in this disput e regarding whether the "zeroing procedures" adopted
by the United States in the original anti-dumping i nvestigation and periodic reviews are consistent
with the GATT and the Anti-Dumping Agreement.

3. Both Mexico and United States don't contest the fact that all major issues arising under this
case have been examined by the Appellate Body in previous anti-dumping disputes. Thus, the
reasoning and findings of the Appellate Body in th ese disputes can provide valuable guidance in the
present case. In this regard, China would like to draw the attention of the panel to the Appellate
Body's findings in " EC - Bed Linen ", " US- Softwood Lumber V ", " US – Zeroing (EC1) ", " US –
Softwood Lumber V (Art. 21.5-Canada)" and "US – Zeroing (Japan)".

4. In these disputes, the Appellate Body found th at the zeroing procedure may be challenged "as
such" and is prohibited in all circumstances whenever calculating the "margins of dumping"
regardless of the specific phase or comparison methods. To be more specific, no matter the
comparing method is weighted average-to–weighted average ("W-W"), transaction–to–transaction
("T-T") or weighted average–to–transaction ("W-T"), the use of zeroing in original investigation is
always inconsistent with Articles 2.1, 2.4.2 and 2.4 of AD Agreement. As to the zeroing
methodology in the administrative reviews, it has al so been found incompatible with AD Agreement
Article 9.3 and GATT Article VI:2. On all these matters, China believes that the legal position is
clear, and sees little purpose in a lengthy re-iteration of the consistent jurisprudence developed by the
Appellate Body in these cases. Besides, Chin a can't find any remarkable new argument in
United States' rebuttal comparing with those it has ra ised before. Since these arguments have all been
dismissed by the Appellate Body with well-f ounded reasoning, China sees no reason why the present
panel shall depart from the Appellate Body's prior rulings.

5. In light of the forgoing, China urges the Pane l to approve Mexico's claims that the zeroing
measures adopted by the United States are inconsistent "as such" with Articles 2.1, 2.4, 2.4.2 and 9.3
of the AD Agreement. It is time for the United St ates to eliminate the systematic use of zeroing, a
practice which is not permissible under the WTO Agre ement and harmful to the balance of rights and
obligations established by it.

6. Mr. Chairman, this concludes the oral statemen t of China as a third party to this proceeding.
Thank you for your attention.

ANNEX D-6

THIRD PARTY ORAL STATEMENT OF THE
EUROPEAN COMMUNITIES

Mr. Chairman, Members of the Panel:

1. The European Communities appreciates this oppor tunity to appear before you today. The
European Communities makes this third party oral st atement because of its systemic interest in the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").

2. This case also raises important substantive i ssues in relation to Article VI of the General
Agreement on Tariffs and Trade 1994 and the Agr eement on Implementation of Article VI ("Anti-
Dumping Agreement") thereof. However, none of the issues raised in this proceeding relating to anti-
dumping are new. Mexico's claims appear to be supported by a consistent body of reasoning and
findings, contained in all reports issu ed by the Appellate Body since the EC-Bed Linen case. Further,
the European Communities has been unable to detect anything new in the argumentation used by the
United States to defend its zeroing methodologies and practices.

3. The European Communities' oral statement will th erefore be brief. In its written submission
the European Communities set out at length the syst emic reasons why in its view, this Panel should
follow the findings and conclusions contained in previous Appellate Body reports on zeroing.
1

4. It is not disputed that adopted panel and Appellate Body reports are binding, qua reports, only
on the immediate parties to the dispute. Further, like many other international adjudicatory systems,
the WTO dispute settlement system does not formally recognise the doctrine of stare decisis – the
doctrine of binding judicial precedent. But these pr inciples do not detract from the interest that the
WTO dispute settlement system has in common with all other responsible adjudicatory systems:
maintaining consistency, stability and predictability of the case law. Further, as the
European Communities has set out at length in its written submission, in all adjudicatory systems,
whether national or international, that are two- or multi-tier systems, decisions of the hierarchically
superior body are binding on the hierarchically lower body, in particular on issues of law.

5. The European Communities submits that in the WTO dispute settlement system the
expectations upon panels are no different. A param ount function of this system is to create and
maintain a uniform body of rules. This is clearly reflected in Art. 3.2 DSU, according to which the
WTO dispute settlement system aims at providing "security and predictability to the multilateral
trading system". The Appellate Body occupies a superior position in the hierarchy of this system
(Art. 17 DSU). Its very purpose is to provide pr edictability and stability to the multilateral trading
system through its decisions on issues of law cove red in panel reports an d legal interpretations
developed by panels.

6. It is beyond dispute that the practice of zeroing in anti-dumping cases has been contested
many times in WTO dispute settlement proceedi ngs. The Appellate Body in particular has
adjudicated on the issues raised in this case frequently, including in cases involving different
variations of zeroing, both in original anti-dumping investigations and review s, in different factual
circumstances and between different parties.
2

1 See EC's written submission, 11 April 2007, part IV.
2 In its written submission the European Communities has reviewed the salient reasoning and findings
of the Appellate Body in each of these reports. See EC 's written submission, 11 April 2007, part III. Reference

7. The United States does not contest this, but argues that this Panel should not follow these
Appellate Body reports. On the contrary, the Unit ed States explicitly invites this Panel to re-apply
findings and follow the reasoning contained in panel re ports that have been rejected and overturned –
in many cases more than once– by the Appellate Body, in reports which have subsequently been
adopted by the Dispute Settlement Body.

8. The European Communities submits that the s uggestion by the United States that this Panel
should be free to depart from adopted Appellate Body reports on issues of law and legal
interpretations relating to the covered agreements, is misguided.

9. The Appellate Body itself has addressed this very question in several cases. As set out in the
European Communities' written submission, some of these cases are particularly relevant as they deal
with appeals in zeroing cases. In US –Softwood Lumber V (Art. 21.5 – Canada), the United States
requested the Appellate Body not to "import wholesale the findings and reasoning" from another case,
EC – Bed Linen, on the following grounds: the United States was not a party to the latter dispute, the
arguments raised in that case were different, and the United States' practice of zeroing was not at issue
in the EC – Bed Linen case.

10. The Appellate Body started its response to this request by recalling its previous statement in
Japan – Alcoholic Beverages II, according to which adopted pa nel reports create "legitimate
expectations among Members". It also referred to its statement in US – Shrimp (Article 21.5 –
Malaysia), according to which this principle of legitim ate expectations also applies to adopted
Appellate Body reports. The Appellate Body then recalled that it had in US – Shrimp (Article 21.5 –
Malaysia) explicitly approved of a panel report that had used reasoning and findings of an adopted
Appellate Body report; and that it explicitly held that the panel had been correct in using the Appellate
Body's findings as a "tool for its own reasoning" . The Appellate Body proceeded with citing
Article 3.2 of the DSU in full and stated, in respon se to the United States' request, that it had decided
to take account of the reasoning and findings contained in the Appellate Body report in EC – Bed
Linen, "as appropriate".
3

11. Furthermore, there should be no doubt that the Appellate Body expects
 panels to follow its
conclusions: in US – Oil Country Tubular Goods Sunset Reviews , the Appellate Body explicitly held
that "following the Appellate Body's conclusions in earlier disputes is not only appropriate, but is
what would be expected from panels, es pecially where the issues are the same" 4; and in US – Zeroing
(Japan), the Appellate Body took firm exception to the f act that the panel had come to conclusions on
the basis of reasoning relating to the Anti-Dump ing Agreement, which the Appellate Body had
rejected earlier.5

is made in particular to the adopted Appellate Body Reports in the following cases: EC – Bed Linen , adopted
12 March 2001; US – Softwood Lumber V , adopted 31 August 2004; US – Zeroing (EC1) , adopted
9 May 2006; US – Softwood Lumber V (Article 21.5 – Canada), adopted 15 August 2006; US – Zeroing
(Japan), adopted 9 January 2007.
3 See EC's written submission, 11 April 2007, paras. 155-159.
4 Ibid., para. 166.
5 Ibid., para. 85.

12. In conclusion, the European Communities s ubmits that as the Appellate Body is the
hierarchically superior body in the WTO dispute se ttlement system, tasked with deciding on issues of
law and legal interpretations, its rulings must be regarded as commanding particular authority for
panels, as authoritative pronouncements on the law. The United States' submission that this Panel
should not follow Appellate Body findings and r easoning in zeroing cases, and that analogous cases
can be decided in a contrary sense by this Panel, must be rejected.

13. The European Communities stands ready to par ticipate further in the discussion, or to answer
any questions that this Panel may have regarding th e matters set out in its written submission. Thank
you for your attention.

ANNEX D-7

THIRD PARTY ORAL STATEMENT
OF JAPAN

I. INTRODUCTION

1. Mr. Chairman, distinguished Members of the Pa nel, on behalf of the Government of Japan, I
thank you for your attention to this matter. This morning, Japan will focus mainly on the arguments
of the parties concerning the WTO-consistency of the use of zeroing in periodic reviews and
endeavour to reinforce Japan's position on the issue as much as possible.

2. Before talking about the issues related to periodic reviews, let me briefly point out the
fundamental flaw in the United States' argument on the "scope of the as such claims" made by
Mexico. The United States contends that the as such claim made by Mexico on "a single zeroing
measure, the Zeroing Procedures" is baseless b ecause it addressed only limited aspects of the use of
zeroing within the whole antidumping regime of the United States. In doing so, the United States
even quotes the Appellate Body's report in United States – Zeroing (DS322) brought by Japan.
However, in that dispute, the point that the Appe llate Body made clear was to the contrary to the
United States' contention. There, the Appellate B ody upheld the Panel's conclusion that the "zeroing
procedures" under different comparison methodologies, and in different stages of antidumping
proceedings, simply reflect different manifestations of a single rule or norm.
1 The mere fact that
Mexico's request for panel establishment did not co ver as wide range of zeroing as the Japan's case
never undermines the single nature of zeroing pro cedures which can be challenged as such. The
zeroing procedures, as such, have been declared inc onsistent with the US obligations in DS322, and
the subject of the Mexico's claims is simply a part of such WTO incompatible measure.

II. THE UNITED STATES MISUNDERSTANDS THE NOTION OF "DUMPING"

3. Turning to specific arguments, first of all, Japan would like to point out that the normative
notion of "dumping" that is defined by the provisions of Antidumping Agreement and the GATT 1994
is different from the individual transaction at a price lower than normal value of a product.

4. The United States argues that "dumping neve rtheless occurs at the level of individual
transactions" as a starting point of its argument with regard to permissibility of zeroing in periodic
reviews.
2 However, when the exporting price is less than normal value, it is just a "discount" that
occurs at the level of the individual transactions. It is not "dumping" as set forth in the provisions of
Antidumping Agreement and the GATT 1994. We can find no textual support in the Antidumping
Agreement to consider a mere "discount" at the le vel of an individual transaction as "dumping". As
the Appellate Body has repeatedly stated clearly, the existence of dumping has to be decided only in
relation to "a product" as defined by the authority, as the texts of Article 2.1 of Antidumping
Agreement and Article VI of the GATT 1994 suggest
3.

5. Thus, the interpretation of the United States that "dumping" can exist at the level of an
individual transaction is in contradiction with th e interpretation of Antidumping Agreement and the

1 See Appellate Body Report, US – Zeroing (Japan), para. 88.
2 United States' First Written Submission, para.89.
3 Appellate Body Report, US –Zeroing(Japan) , paras. 108-109, 115; Appellate Body Report, US –
Softwood Lumber V, para 93.

GATT 1994 by the Appellate Body in the past zeroi ng disputes, and therefore subsequent arguments
of the United States based on such misinterpretation are also incorrect.

III. ARTICLE 9 READ TOGETHER WITH ARTICLE 2 OF THE ANTIDUMPING
AGREEMENT DOES NOT SUPPORT THE ARGUMENTS OF THE
UNITED STATES

6. Secondly, the United States submits that "there is no textual support in Article 9.3 for the
view that the AD Agreement requires an e xporter-oriented assessment of antidumping duties"
4, and
asserts that "the obligation set forth in Article 9. 3 to assess no more in antidumping duties than the
margin of dumping" is applicable "at the level of individual transactions".5

7. Japan does not deny that the amount of antidumping duty can be assessed on individual
transactions. However, as required by Ar ticle 9.3 of the Antidumping Agreement, the assessment
shall not lead to the imposition of an amount exceeding the "margin of dumping as established under
Article 2". And the "margin of dumping" must be determined for the product as a whole, as the
Appellate Body has repeatedly pronounced.

8. The Appellate Body has also held that Artic les 9.2 and 9.5 of the Antidumping Agreement and
Article VI:2 of the GATT 1994 confirm the vi ew that antidumping duties are imposed "on the
product", not on individual transactions.
6 Moreover, consistent with th e rules under Article 2 of the
Antidumping Agreement, the "margin of dumping" must be established for the "product" as a whole. 7
As a result, in a duty assessment review, the authority must ensure that the aggregate amount of the
duty levied on the product during the review period does not exceed the margin of dumping for the
product for that period.

9. Accordingly, the argument of the United States is not supported by the texts as well as the
interpretation by the Appellate Body of th e provisions under the Antidumping Agreement and
GATT 1994.

IV. THE EXISTENCE OF A PNV SYSTEM CANNOT JUSTIFY ZEROING

10. Thirdly, the United States continues to argue that, under the prospective normal value (PNV)
system, "margins of dumping" may be calculated for individual import transactions.
8

11. However, the Appellate Body has previous ly considered, and rejected, this argument.
9 The
Appellate Body concluded that a "margin of dumping" is not determined at the time of importation on
a transaction specific basis 10: margins are first calculated in original investigations; antidumping
duties are imposed upon each entry for importation of the product; the amount of duties initially
imposed may be reviewed, and in the case of the prospective system, a "refund" must be paid in
accordance with Article 9.3.2 of the Antidumping Ag reement "when the duties paid exceed the actual
margin of dumping".
11 In any review under Article 9.3 – under any system of duty collection – the

4 United States' First Written Submission, para.85.
5 Ibid., para.83.
6 Appellate Body Report, US – Softwood Lumber V, para.94 and 99.
7 Appellate Body Report, US – Zeroing(Japan), para. 110.
8 United States' First Written Submission, para.93.
9 Appellate Body Report, US – Zeroing (Japan), paras. 161 and 162.
10Appellate Body Report, US – Zeroing (Japan) , para.151. See also , Appellate Body Report, US –
Zeroing (EC), para. 128. Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada) , para. 87
("the results of transaction-specific comparisons are not, in themselves, "margins of dumping" ").
11 Appellate Body Report, US – Softwood Lumber V (Article 21.5 – Canada), para. 112.

authority must determine a margin of dumping for the product as a whole by aggregating all multiple
comparison results.
12

V. MEMBERS MUST REFUND TO ENSURE THAT THE AMOUNT OF
ANTIDUMPING DUTIES DOES NOT EXCEED THE MARGIN OF DUMPING
DETERMINED FOR AN EXPORTER

12. Finally, it is not limited to the case of the pr ospective system that the authority needs to
refund all or part of the deposits to meet the ob ligation under Article 9.3. Japan emphasizes that
under Article 9.3, to the extent that the total amount of duties were collected at the time of importation
in the form of a deposit in excess of the margin of dumping determined upon review for individual
exporters, the authority should refund such exceed ing amount. As stated by the Appellate Body,
"[u]nder any system of duty collection, the ma rgin of dumping established in accordance with
Article 2 operates as a ceiling for the amount of anti-du mping duties that could be collected in respect
of the sales made by an exporter" 13 and the Antidumping Agreement "provides for a refund if the
ceiling is exceeded".14

13. Accordingly, regardless of what sort of dut y assessment system is used, the authority must
refund to the importers (1) all deposits paid at th e time of entries when no margin of dumping is
established in reviews for those entries, or (2) such amount of deposits as exceed the margin of
dumping as established in such reviews.

VI. CONCLUSION

14. Japan respectfully requests the Panel to examin e carefully the facts presented by the parties to
this dispute taking into consideration the points th at Japan has raised, so as to ensure fair and
objective application of the Antidumping Agreement. Thank you for your attention, Mr. Chairman,
distinguished Members of the Panel.

12 Appellate Body Report, US – Zeroing (EC), para. 132.
13 Appellate Body Report, US – Zeroing (Japan), para. 162.
14 Appellate Body Report, US – Zeroing (Japan), para.163.

ANNEX D-8

THIRD PARTY ORAL STATEMENT
OF THAILAND

1. Mr. Chairman and Members of the Panel: Th ailand appreciates the opportunity to participate
in this proceeding and to present its views today.

2. Thailand reserved its right to participate as a third party in this proceeding under Article 10.2
of the Dispute Settlement Understanding due to our concern about the continued use of "zeroing" by
the United States in original investigations as well as periodic reviews. In Thailand's view, the use of
zeroing in any circumstance is inconsistent with both the spirit and the substance of Article VI of the
GATT 1994 and the Anti-Dumping Agreement. In effect, the use of zeroing either artificially creates
margins of dumping where none would otherwise ha ve been found or, at a minimum, artificially
inflates margins of dumping and the consequent imposition of anti-dumping measures, whether in an
original proceeding or a periodic review. As ev idenced by the numerous zeroing-related disputes
either concluded or initiated against the United St ates just over the course of the previous year,
Thailand is not alone in this view.

3. Thailand generally supports the arguments made by Mexico, the European Communities, and
Japan regarding the United States' use of zeroing in this dispute. Because these delegations have
already submitted detailed analyses, we do not think it necessary to repeat those arguments today. We
instead simply remind the Panel that the Appellate Bo dy's rulings to date on the issue of zeroing have
coherently and consistently addr essed the numerous different arguments put before it in each dispute,
ranging from EC – Bed Linen to the latest US – Zeroing (Japan). To summarize, the Appellate Body
has held that whenever an investigating authorit y uses intermediate comparisons between subgroups
of export prices and normal values – whether on a mo del-by-model, transaction-by-transaction or any
other basis – as a step to arrive at the overall du mping margin for that product, the investigating
authority may not, in aggregating those intermediate comparisons, "zero" the results of some of those
comparisons.

4. Regardless of whether each successive Appellate Body report states this principle in identical
terms, addresses all of the different methodologies in which zeroing can be used, or repeats all of the
reasoning of previous reports, Thailand considers th is principle to have been fully and correctly
reasoned by the Appellate Body and to apply equally and fully to the issues that are before the Panel
in this case. We agree also with the arguments made by the European Communities on the need for
security and predictability within the multilateral trading system.
1 Thailand therefore urges this Panel
to follow the reasoning and findings of the Appellate Body, and rule that as submitted by Mexico the
use of zeroing by the United States in original inv estigations and periodic reviews - regardless of the
comparison methodology used - is inconsistent w ith its obligations under Article VI of the
GATT 1994 and the Anti-Dumping Agreement.

5. Thank you.

1 Third Party Submission by the European Communities, para. 167.

ANNEX D-9

EXECUTIVE SUMMARY OF THE OPENING STATEMENT
OF MEXICO – SECOND MEETING

I. INTRODUCTION

Mr. Chairman, Members of the Panel:

1. In this opening statement, we do not intend to provide an exhaustive presentation of Mexico's
case. Instead, we limit our discussion to certain key points concerning Mexico's claims against the
United States' Zeroing Measures respecting model zer oing in original investigations and simple
zeroing in periodic reviews.

II. MODEL ZEROING IN ORIGINAL INVESTIGATIONS

2. Mexico maintains its request for a finding on th is claim. As outlined in Mexico's response to
Question 13 of the Panel, the scope of the United States' abandonment of model zeroing in original
investigations is incomplete. Accordingly, for im plementation reasons, a Panel finding on this claim
is necessary. Mexico also maintains its "as such" claim regarding model zeroing in original
investigations to the extent that such zeroing in original investig ations has not been fully abandoned
by the United States, as described in Mexico's re sponse to Question 13 of the Panel. Although the
United States has not acknowledged the merits of this claim, Mexico has presented a prima facie case
with respect to each requisite element of this cl aim and the United States has not rebutted Mexico's
prima facie case.

III. SIMPLE ZEROING IN PERIODIC REVIEWS

3. Mexico and the United States have filed de tailed submissions on Mexico's claim regarding
simple zeroing in periodic reviews. It is clear from a review of these submissions that Mexico has
presented a prima facie case with respect to each requisite element of this claim and that the
United States has not rebutted Mexico's prima facie case.

IV. OTHER KEY ISSUES

4. We would like to elaborate upon certain key issues that have been raised by the United States.

A. E
VIDENCING A MEASURE THAT CAN BE CHALLENGED AS SUCH

5. The Appellate Body has found that an "as su ch" claim of the kind asserted by Mexico can be
sustained where the complaining party establishes clearly through arguments and supporting
evidence: (1) that the alleged rule or norm is a ttributable to the responding Member; (2) its precise
content; and (3) that it has general and prospective application.

6. The United States does not appear to seriously ch allenge the first or second prongs of this test.
There is no doubt that the zeroing measure is attribut able to the United States, specifically that it is
attributable to the USDOC as the investigating au thority in US anti-dumping proceedings. Likewise,
Mexico has amply documented the specific conten t of the Zeroing measures as applied by the
USDOC in original investigations and periodic review s and the fact that this measure is invariably

applied in all periodic reviews and in all original investigations (at least until February 2007) as rule
of general and prospective application.

B. T
HE MANDATORY/DISCRETIONARY DISTINCTION

7. As it has done in the past, the United States seeks to sidestep these conclusions by asserting
that zeroing is not mandated under the US anti-dumping laws. In its response to Question 19 of the
Panel, the United States argues that "[i]n order to find that a measure, as such, breaches an obligation,
the measure must mandate that breach". In making this argument, the United States mischaracterizes
the applicability of the mandatory/discretionary distinction to the facts of this dispute.

8. In both US – Zeroing (EC) and US – Zeroing (Japan) , there was no issue as to whether
zeroing was "mandated" under US law. There is similarly no such issue in this dispute.

C. M
ATHEMATICAL EQUIVALENCY

9. Mexico notes that the mathematical equivalenc y argument was considered and rejected by the
Appellate Body in both US – Softwood Lumber V (21.5) and US – Zeroing (Japan) . The argument
has no merit based on these two adopted Appellate Body reports.

10. Although there is no need for Mexico to further rebut the mathematical equivalency
argument, in light of the fact that the United States has introduced Exhibit US-10 to support its
response to Question 15 of the Panel, Mexico is pr esenting an example of its own that demonstrates
the absence of mathematical equivalency.

11. In order for the US allegation of "inutility" to be sustained in this case, its argument of
mathematical equivalency must hold in all possible circumstances. Mexico will employ the figures in
the United States' example to show that mathematical equivalency will not hold in all possible
circumstances. The United States bases its ex ample on the assumption that identical period-long
average normal values in both average-to-average and average-to-transaction comparisons must
always be used. This assumption was adopted, erroneously in Mexico's view, by panels in US –
Softwood Lumber V (21.5) and US – Zeroing (Japan).
1 The Appellate Body has neither specifically
endorsed nor rejected this assumption in its decisions to date.

12. The statutory provisions governing targeted dumping are set out in 19 U.S.C. § 1677f-
1(d)(1)(B) and the regulatory provisions in 19 CFR § 351.414(e) and (f) ( Exhibit MEX-3).
Paragraph (e), inter alia, sets out a requirement for contemporan eous monthly average normal values.
Thus, the USDOC Regulations explicitly link the "average-to-transaction" method in targeted
dumping investigations to the use of contemporan eous monthly average normal values. Moreover,
the Regulations specifically link the "average-to-aver age" method with the use of period-long average
normal values.

13. Mexico presents in its example that mathema tical equivalency does not exist if intermediate
monthly average normal values are used in the aver age to transaction method and period-long average
normal values are used in the aver age to average method. Mexico offers this example because it is
entirely consistent with US domestic law on this subject.

14. The examples provided above demonstrate, by means of the same comparison methodologies
specified under the USDOC Regulations for A-T comp arisons made in periodic reviews and for A-T
comparisons used to evaluate targeted dumping in original investigations, that the US claim of

1 Panel Report, US – Softwood Lumber V (21.5), paras. 5.49-5.51; Panel Report, US – Zeroing (Japan),
paras. 7.128-7.129.

mathematical equivalency, absent zeroing, fails. Indeed, there is plainly no mathematical equivalency
between these methods, because the use of monthly no rmal values in the US system of conducting A-
T comparisons removes the prospect of uniform equivalency.

V. CONCLUSION

15. Mexico again reminds the Panel that the meas ure at issue challenged as such by Mexico is
identical to the measure decided by the Appella te Body in cases brought by Canada, the EC and
Japan. The Appellate Body has consistently dete rmined that this measure is contrary to the
United States' obligations under the Agreements. In reaching its determinations, the Appellate Body
has considered and rejected virtually all of the arguments presented by the United States in this
dispute and has interpreted the text of the Agre ements in accordance with recognized principles of
international law applicable to dispute settlement proceedings and has applied its reasoning in a
coherent and consistent manner.

16. Mr. Chairman, and members of the Panel, these prior decisions must be taken into account.
Their reasoning has withstood the arguments posed ag ainst them by the United States. Third Party
submissions in this case overwhelmingly support our case. For the sake of the security and
predictability of the WTO system, and to ensure th at the Agreements negotiated by the Members are
enforced in accordance with their text, we urge you to sustain Mexico's claims in their entirety.

ANNEX D-10

EXECUTIVE SUMMARY OF THE OPENING STATEMENT OF THE
UNITED STATES - SECOND MEETING

1. We note Mexico's acknowledgment in response to the Panel's questions that its claims are
limited by the language of its panel request to the use of model zeroing in average-to-average
comparisons in original investigations and simple zeroing in periodic reviews. Mexico continues to
cling to its argument that there is a single measu re taken by the United States that requires the
Department of Commerce to "zero". Mexico presen ts no new evidence of the existence of a measure
that prescribes and requires specific action. It mere ly continues to present th e same evidence of past
actions by Commerce. Mexico has not demonstrat ed that there is any "as such" measure requiring
zeroing, because there is no such measure.

2. Mexico insists on making accusations regardi ng alleged non-compliance by the United States
with respect to the DSB recommendations and rulings in US – Zeroing (EC) . Mexico states that it
"does not agree that the United Stat es fully abandoned the use of 'mode l zeroing' in investigations as
of February 22, 2007". Mexico argues that full co mpliance would require the United States to revise
all existing measures.

3. Aside from the fact that it is not for Mexico to unilaterally determine the non-compliance of
another Member, as DSU Article 23 makes clear, we note that the EC does not appear to share
Mexico's view. In its recent request for consulta tions under Article 21.5, the complaint of the EC is
limited to its "as applied" claims. Indeed at th e 24 April 2007 meeting of the DSB, the EC welcomed
the decision to abandon zeroing in original investigations when calculating the dumping margin on a
weighted average-to-weighted average basis.

4. Moreover, in arguing that a Member can impl ement a ruling against a measure "as such" only
by revising all applications of that measure, Me xico improperly blurs the distinction between "as
such" and "as applied" claims.

5. Mexico also continues to argue that a sugg estion from the Panel regarding implementation is
necessary. However, it is well-established that a Member has the right to determine the means of
implementation. Further, Mexico appears to be seeking though a suggestion a result that goes well
beyond any right it might have under the Agreemen t. In this connection, we note Mexico's
recognition that the provision of offsets in the original investigation on stainless steel would still result
in a margin of dumping well above the de minimis threshold. Therefore, the antidumping order would
remain in place.

6. Regarding the alleged legal basis for requiring o ffsets, Mexico explains that its claim that the
Antidumping Agreement contains an obligation to reduce antidumping duties to account for instances
of non-dumping rests on two essential textual found ations. These two supposed foundations fail to
support Mexico's claims with respect to periodic reviews.

7. Mexico's first alleged textual foundation is that the terms "dumping" and "margin of
dumping" as they are defined in Article VI:1 and VI:2 of the GATT 1994 and in Article 2.1 of the
Antidumping Agreement have no meaning except in rela tion to the product taken in its entirety. The
text of these definitions, however, does not contain the words "taken in its entirety" or "taken as a
whole" or any words to that effect. Instead, th e text of these definitions contains only the word
"product". Mexico admits that the term "product" can refer to individual transactions in the context of

numerous provisions of the GATT 1994, including within Article VI. Nevertheless, Mexico argues
that those uses of the term "product" are distinguis hable because they arise in contexts other than the
determination of margins of dumping. By so arguing, Mexico effectively concedes that the ordinary
meaning of the term "product" – standing alon e – cannot serve as the textual basis for an
interpretation that requires the phrase "margin of dumping" to relate solely to the "product as a
whole". Moreover, Mexico has identified no other te xtual basis for interpreting the term "product" –
as used in the definitions of "dumping" and "margin of dumping" – to mean the "product as a whole".
Nor has Mexico identified any textual basis for excl uding the possibility that the term "product" – as
used in these definitions – may include the concept of individual transactions.

8. In fact, the text of these definitions suppor ts the individual transaction meaning of the term
"product", since the price of a product is establis hed for each transaction and since each transaction is
introduced into the commerce of the importing country . The fact that prices are set in individual
transactions and the fact that products are intr oduced into the commerce of an importing country
pursuant to individual transactions are not "subjectiv e views" of the United States, as Mexico argues.
Rather, this is the actual commercial conduct that is described by the text of the provisions of the
Antidumping Agreement. As the panel in US – Zeroing (Japan) concluded, the definition of dumping
itself "undermines the argument that it is not permis sible to interpret the concept of dumping as being
applicable to individual sales transactions".

9. Mexico argues that a second essential foundation of its claims in this case is the notion that
the remedies contained in the Antidumping Agreement are not directed toward importers. It is not
disputed that dumping results from the pricing beha viour of exporters and producers. It is also
indisputable, however, that antidumping duties are dir ected at importers. The fact that importers are
the parties that actually pay the antidumping duties must not be ignored if antidumping duties are to
be an effective remedy to "offset or prevent" dumping as provided in Article VI:2 of the GATT 1994.

10. Mexico misunderstands the remedies provide d for in the Antidumping Agreement as punitive
measures directed at the conduct of producers and e xporters. On the contrary, antidumping duties are
remedial measures taken to "offset or prevent" dumping and its injurious effects by removing any
incentive the importer has to import merchandise at less than normal value and to induce the importer
to increase the resale price to cover the expe nse of the antidumping duties and prevent further
injurious effect. Mexico interprets the Anti dumping Agreement to require that the amount of
antidumping duties be reduced in the amount by whic h some transactions are sold at prices in excess
of normal value. Mexico is essentially arguing th at non-dumped transactions constitute a remedy for
dumped transactions that supplants the remedy provided for in the Antidumping Agreement. There is
no basis for this interpretation in the provisions of the GATT 1994 or the Antidumping Agreement.

11. The lack of a textual basis for Mexico's cl aims with respect to periodic reviews is also
demonstrated by Mexico's attempt to apply the "product as a whole" concept in a manner that is
detached from the concept's underlying textual basis in the first sentence of Article 2.4.2 of the
Antidumping Agreement. The concept of "product as whole", however, was originally derived from
the phrase "all comparable export transactions" in the fi rst sentence of Article 2.4.2. Not surprisingly,
Mexico is forced to acknowledge that the phrase "all comparable export transactions" cannot lend any
support to its claims with respect to periodic review s, because that phrase pertains only to average-to-
average comparisons in original investigations.

12. Nevertheless, Mexico attemp ts to find support for its interpretation in the Appellate Body
report in US – Softwood Lumber Dumping by asserting that the phrase "all comparable export
transactions" was not integral to the Appellate Body's reasoning in that report. Mexico's assertion is
erroneous, because the Appellate Body expressly stated that it was interpreting the term "margins of
dumping" and the phrase "all comparable export transac tions" in an "integrated manner". Thus, the
Appellate Body did not ignore, but instead based its findings on, the phrase "all comparable export

transactions". In addition, the fact that the Appe llate Body was not deriving its interpretation of
"margins of dumping" solely from the definitions in Article 2.1 of the Antidumping Agreement and
Article VI of the GATT 1994 is further demonstrated by the fact that the Appellate Body declined to
address the contextual argument that a general prohi bition of zeroing would be inconsistent with the
provision for transaction-to-transaction comparisons in Article 2.4.2. If the Appellate Body was
articulating a general prohibition of zeroing based on the definitional provisions, as Mexico argues,
there would have been no sound basis for declining to address the transaction-to-transaction context.

13. For these reasons, Mexico's proposed interpreta tion is at odds with the provisions of the
Antidumping Agreement upon which it relies. With respect to Article VI:2 and Ad Article VI:2 of the
GATT 1994, and Articles 2.2, 2.4.2 second sentence, and Article 9 of the Antidumping Agreement,
the implications of the interpretation proposed by Mexico provide further contextual support for the
conclusion that Mexico's interpretation is not corr ect. Mexico's proposed interpretation carries with it
implications that simply cannot be reconciled with these provisions.

14. Article 2.4.2 provides for average-to-transac tion comparisons under certain circumstances as
an alternative to average-to-average or transac tions-to-transaction comparisons. The interpretation
offered by Mexico is incorrect because it renders inutile the average-to-transaction comparisons
provided for in the second sentence of Article 2.4.2. Contrary to Mexico's arguments, the
United States is not asserting an "affirmative defe nse" based on the second sentence. Rather, the
United States is arguing that application of the customary rules of interpretation of public
international law leads to the conclusion that Mexico 's proposed interpretation fails to give effect to
the provisions of Article 2.4.2, second sentence.

15. The redundancy of the average-to-transaction comparison type with the average-to-average
comparison type, if offsets are granted, is a function of the mathematics of calculating weighted
averages, and can be readily demonstrated, as the United States did in its response to the Panel's
questions. As detailed in our submissions, under Mexico's interpretation that the Antidumping
Agreement incorporates a general prohibition of dum ping, this comparison type is rendered a nullity
because it cannot mathematically produce a result that differs from the average-to-average
comparison type.

16. With respect to Article 9.3, Mexico ar gues that excess antidumping duties have been
assessed. This argument rests on its misinterpretation of the term "margin of dumping" in Article 9.3
as relating exclusively to the product "as a whole", and as considered exclusively from the perspective
of the exporter and on an aggregate basis over some frame of reference that is nowhere mentioned in
the text. This interpretation of the term "margin of dumping" in Article 9.3 is not supported by the
text of the Article. Indeed, this interpretation is at odds with the text of Article 9.3, which provides
for determination of final liability for antidumping du ties that are paid by importers on the basis of
individual import transactions.

17. The mismatch between the nature of the as sessment proceedings provided for in Article 9.3
and the interpretation of the term "margin of du mping" proposed by Mexico result in perverse
incentives and absurd results. In particular, as pr eviously noted, the reduction of antidumping duties
to account for non-dumped transactions will result in a remedy that is insufficient to "prevent or
offset" dumping and its injurious effects as intended by Article VI:2 of the GATT 1994. Moreover,
the offsets contemplated by Mexico would c onfer an additional competitive disadvantage upon
importers who refrain from importing dumped mercha ndise from the same exporter or producer as an
importer that does import dumped merchandise. Under Mexico's proposed interpretation, the
antidumping duty liability for the importer of the dump ed transactions would be reduced by the offset
attributable to the non-dumped import transactions. This kind of competitive disincentive to engage
in fair trade could not have been intended by th e drafters of the Antidumping Agreement and should
not be accepted by the Panel as consistent with a correct interpretation of Article 9.3.

18. In addition, an obligation to account for other imports in assessing antidumping duties on a
particular entry is contrary to the very concept of a prospective normal value system provided for in
Article 9. Under such a system, the amount of liability for payment of antidumping duties is
determined at the time of importation on the basis of a comparison between the price of the individual
export transaction and the prospective normal valu e. If the margin of dumping must relate
exclusively to an aggregation of all transactions constituting the "product as a whole", as Mexico
argues, the administration of such an assessment system cannot function as intended.

19. Under Mexico's interpretation, a prospec tive normal value assessment system necessarily
requires retrospective reviews on the basis of the aggregation of transactions because, according to
Mexico, the margin of dumping for the "product as a whole" can never be known at the time of
importation. Nothing in the text of Article 9, how ever, suggests that the refund proceeding described
therein necessarily must relate to an aggregated examination of all transactions. Nor does Mexico
attempt to explain why, if refund proceedings under Article 9.3 require aggregation of transactions for
the "product as a whole", Article 9.3 fails to pr ovide for any time frame over which the transactions
would be aggregated. Thus, it is impossible to di scern from the text the universe of transactions that
comprise the "product as a whole".

20. Mexico tries to avoid the natural conclusion of its own argumentation by explaining that the
possibility of retrospective refund proceedings woul d arise in a prospective normal value system only
if the sum total of antidumping duties applied upon importation were to exceed the margin of
dumping determined on the basis of aggregating all transactions and providing offsets for non-
dumped transactions. But, under Mexico's own interp retation, this would arise in virtually every
circumstance. Upon entry of any non-dumped tran saction, under a prospective normal value system,
zero antidumping duty liability is incurred. Under Me xico's interpretation, however, each of those
non-dumped transactions will result in an offset that must reduce the antidumping duty liability for the
other dumped transactions. Thus, the only way to av oid the necessity of a retrospective review under
Mexico's interpretation of a prospective norma l value system is if there are no non-dumped
transactions. This interpretation contradicts the prospective nature of the assessment system described
in the text of Article 9.

21. Nevertheless, Mexico argues that the US position renders the refund proceeding a nullity
because it means that, without an aggregated retros pective determination of the margin of dumping,
the margin of dumping and the antidumping duty app lied at the time of importation would always be
identical. This is not correct; a more limited re fund proceeding is consistent with the prospective
nature of this type of assessment system. Fo r example, a refund proceeding would be necessary to
deal with instances in which the price or other re levant elements of the transaction change after
importation of the product occurs. In such inst ances the actual margin of dumping may differ from
the antidumping duty applied upon importation.

22. Mexico also argues that zeroing is inconsis tent with the "fair comparison" requirement of
Article 2.4 because it is "biased" and "inflates" the margin of dumping. The relevant text of
Article 2.4, however, provides only that a "fair co mparison shall be made between the export price
and the normal value". It is not disputed, however, that the United States makes a "fair comparison"
between export price and normal value for each export transaction in an assessment proceeding.
Mexico's claims relate not to the comparison of export price and normal value, but to a supposed
obligation to aggregate the results of those compar isons. Mexico has repeatedly argued that zeroing
does not occur when export price and normal value are compared, but when the results of those
comparisons are aggregated without providing offset s for the non-dumped transactions. Accordingly,
Mexico's complaints with respect to zeroing can have no bearing on whether the United States makes
a fair comparison of export price and normal value consistent with Article 2.4.

23. Even if the "fair comparison" requirement of Article 2.4 were pertinent to Mexico's claims,
there is no textual basis in Article 2.4 for conc luding that the denial of offsets for non-dumped
transactions is unfair. If the Panel finds, as prio r panels have found, that it is permissible to
understand the term "margi n of dumping" as used in Article 9.3 as applying to an individual
transaction, then there will be no basis for a fi nding that the margins of dumping calculated by the
United States in periodic reviews are "inflated" or the result of "bias".

24. In summary, Mexico has failed to reconcile its proposed general prohibition of zeroing with a
correct interpretation based on the text and contex t of the relevant provisions of the Antidumping
Agreement. The practical consequences of adop ting Mexico's interpretation counsel strongly in
favour of the interpretation adopted by prior panels , which is that, except fo r the context of average-
to-average comparisons in investigations, the Antidumping Agreement does not impose an obligation
to provide offsets for non-dumping.