AUSTRALIA – ANTI-DUMPING AND COUNTERVAILING DUTY MEASURES ON CERTAIN PRODUCTS FROM CHINA REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 26 March 2024
Document codes: WT/DS603/R
Complainant: China
Respondent: Australia
Third parties: Argentina, Brazil, Canada, EU, India, Japan, South Korea, Malaysia, Mexico, Norway, Russia, Singapore, Switzerland, Taiwan, United Kingdom, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. 2.1, 2.2, 2.2.1, 2.2.1.1, 2.2.2, 9.3  Anti-dumpingArt. VI:1, VI:2  GATT 1994Art. 1.1(a)(1), 1.1(b), 1.2, 2.1(c), 11.1, 11.2, 11.3, 14(d)  Subsidies and Countervailing Measures (SCM)

AUSTRALIA – ANTI-DUMPING AND COUNTERVAILING DUTY MEASURES
ON CERTAIN PRODUCTS FROM CHINA
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
PANEL DOCUMENTS
Contents Page
Annex A-1 Working Procedures of the Panel 4
Annex A-2 Additional Working Procedures concerning Business Confidential Information 11
Annex A-3 Interim Review 13
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of China 25
Annex B-2 Integrated executive summary of the arguments of Australia 41
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil 60
Annex C-2 Integrated executive summary of the arguments of Canada 62
Annex C-3 Integrated executive summary of the arguments of the European Union 63
Annex C-4 Integrated executive summary of the arguments of Japan 67
Annex C-5 Integrated executive summary of the arguments of Mexico 70
Annex C-6 Integrated executive summary of the arguments of Norway 72
Annex C-7 Integrated executive summary of the arguments of the Russian Federation 75
Annex C-8 Integrated executive summary of the arguments of the United Kingdom 80
Annex C-9 Integrated executive summary of the arguments of the United States 83

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Australia – Anti-Dumping
Measures on Paper
Panel Report, Australia – Anti-Dumping Measures on A4 Copy Paper,
 and Add.1, adopted 28 January 2020
China – Broiler Products Panel Report, China – Anti-Dumping and Countervailing Duty Measures on
Broiler Products from the United States, and Add.1, adopted
25 September 2013, DSR 2013:IV, p. 1041
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, DSR 2015:IX, p. 4573
EC – Bananas III
(Article 21.5 – Ecuador II) /
EC – Bananas III
(Article 21.5 – US)
Appellate Body Reports, European Communities – Regime for the
Importation, Sale and Distribution of Bananas – Second Recourse to
Article 21.5 of the DSU by Ecuador, WT/DS27/AB/RW2/ECU, adopted
11 December 2008, and Corr.1 / European Communities – Regime for the
Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of
the DSU by the United States, WT/DS27/AB/RW/USA and Corr.1, adopted
22 December 2008, DSR 2008:XVIII, p. 7165
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
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
EU – Biodiesel (Argentina) Appellate Body Report, European Union – Anti-Dumping Measures on
Biodiesel from Argentina, WT/DS473/AB/R and Add.1, adopted
26 October 2016, DSR 2016:VI, p. 2871
EU – Biodiesel (Argentina) Panel Report, European Union – Anti-Dumping Measures on Biodiesel from
Argentina, WT/DS473/R and Add.1, adopted 26 October 2016, as modified by
Appellate Body Report WT/DS473/AB/R, DSR 2016:VI, p. 3077
EU – Fatty Alcohols
(Indonesia)
Appellate Body Report, European Union – Anti-Dumping Measures on Imports
of Certain Fatty Alcohols from Indonesia, WT/DS442/AB/R and Add.1,
adopted 29 September 2017, DSR 2017:VI, p. 2613
EU – PET (Pakistan) Appellate Body Report, European Union – Countervailing Measures on Certain
Polyethylene Terephthalate from Pakistan, WT/DS486/AB/R and Add.1,
adopted 28 May 2018, DSR 2018:IV, p. 1615
Indonesia – Chicken
(Article 21.5 – Brazil)
Panel Report, Indonesia – Measures Concerning the Importation of Chicken
Meat and Chicken Products – Recourse to Article 21.5 of the DSU by Brazil,
WT/DS484/RW and Add.1, circulated to WTO Members 10 November 2020,
appealed 17 December 2020
Korea – Dairy Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of
Certain Dairy Products, WT/DS98/AB/R, adopted 12 January 2000, DSR
2000:I, p. 3
Thailand – Cigarettes
(Philippines) (Article 21.5 –
Philippines II)
Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the
Philippines – Second Recourse to Article 21.5 of the DSU by the Philippines,
WT/DS371/RW2 and Add.1, circulated to WTO Members 12 July 2019,
appealed 9 September 2019
Ukraine – Ammonium
Nitrate
Appellate Body Report, Ukraine – Anti-Dumping Measures on Ammonium
Nitrate, WT/DS493/AB/R and Add.1, adopted 30 September 2019,
DSR 2019:X, p. 5227
Ukraine – Ammonium
Nitrate
Panel Report, Ukraine – Anti-Dumping Measures on Ammonium Nitrate,
WT/DS493/R, Add.1 and Corr.1, adopted 30 September 2019, as upheld by
Appellate Body Report WT/DS493/AB/R, DSR 2019:X, p. 5339
US – Anti-Dumping
Methodologies (China)
Panel Report, United States – Certain Methodologies and Their Application to
Anti-Dumping Proceedings Involving China, WT/DS471/R and Add.1, adopted
22 May 2017, as modified by Appellate Body Report WT/DS471/AB/R, DSR
2017:IV, p. 1589
US – Carbon Steel (India)
(Article 21.5 – India)
Panel Report, United States – Countervailing Measures on Certain Hot-Rolled
Carbon Steel Flat Products from India – Recourse to Article 21.5 of the DSU
by India, WT/DS436/RW and Add.1, 15 November 2019, mutually agreed
solution reported
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and
Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012,
DSR 2012:XI, p. 5751
US – Countervailing
Measures (China)
Panel Report, United States – Countervailing Duty Measures on Certain
Products from China, WT/DS437/R and Add.1, adopted 16 January 2015, as
modified by Appellate Body Report WT/DS437/AB/R, DSR 2015:I, p. 183

Short Title Full Case Title and Citation
US – Pipes and Tubes
(Turkey)
Panel Report, United States – Countervailing Measures on Certain Pipe and
Tube Products from Turkey, WT/DS523/R and Add.1, circulated to
WTO Members 18 December 2018, appealed 25 January 2019
US – Tariff Measures
(China)
Panel Report, United States – Tariff Measures on Certain Goods from China,
WT/DS543/R and Add.1, circulated to WTO Members 15 September 2020,
appealed 26 October 2020
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)
(Article 21.5 – Japan)
Appellate Body Report, United States – Measures Relating to Zeroing and
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan,
WT/DS322/AB/RW, adopted 31 August 2009, DSR 2009:VIII, p. 3441

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short Title (if any) Description/Long title
AUS-11 Continuation 517 initiation
notice
Notice of initiation of the expiry review of the anti-dumping
and countervailing duty measures on stainless steel sinks
exported from China (Anti-Dumping Notice No. 2019/86)
(3 July 2019)
AUS-13 Investigation 238 Komodo
Hong Kong
Limited's questionnaire
response
Komodo Hong Kong Limited's response to questionnaire in
the investigation into the alleged dumping and
subsidization of stainless steel sinks exported from China
(dated 5 May 2014, published 21 May 2014)
AUS-14 Investigation 238
Zhuhai Grand's
questionnaire response
Zhuhai Grand's response to questionnaire in the
investigation into the alleged dumping and subsidization of
stainless steel sinks exported from China (16 May 2014)
AUS-15 Investigation 238
Primy's questionnaire
response
Primy's response to questionnaire in the investigation into
the alleged dumping and subsidization of stainless steel
sinks exported from China (published 20 May 2014)
AUS-49 Investigation 238 statement
of essential facts
Statement of essential facts of the investigation into the
alleged dumping and subsidization of stainless steel sinks
exported from China (23 December 2014)
AUS-70 Investigation 193
(aluminium zinc coated
steel) final report
Final report of the investigation into the alleged
subsidization of zinc coated steel and aluminium zinc
coated steel exported from China
(Anti-Dumping Commission Report No. 193) (dated
28 June 2013, published 5 August 2013)
AUS-75 (BCI) Investigation 221 final
report, appendix 2 "Steel
Price Uplift"
Final report of the investigation into the alleged dumping of
wind towers exported from China and Korea, appendix 2
"Steel Price Uplift" (Anti-Dumping Commission Report
No. 221) (dated 21 March 2014, published 16 April 2014)
AUS-81 (BCI) Continuation 517
Zhuhai Grand verification
visit report, p. 25 and
attachment
Report of verification visit to Zhuhai Grand in the expiry
review of the anti-dumping and countervailing duty
measures on stainless steel sinks exported from China,
p. 25 and attachment
CHN-2 Investigation 238 final report Final report of the investigation into the alleged dumping
and subsidization of stainless steel sinks exported from
China (Anti-Dumping Commission Report No. 238) (dated
19 February 2015, published 26 March 2015)
CHN-3 Investigation 466 final report Final report of the investigation into the alleged dumping of
railway wheels exported from China and France
(Anti-Dumping Commission Report No. 466) (dated
1 March 2019, published 16 July 2019)
CHN-4 Investigation 221 final report Final report of the investigation into the alleged dumping of
wind towers exported from China and Korea
(Anti-Dumping Commission Report No. 221) (dated
21 March 2014, published 16 April 2014)
CHN-5 Investigation 221 initiation
notice
Notice of initiation of the investigation into the alleged
dumping of wind towers exported from China and Korea
(Anti-Dumping Notice No. 2013/68) (28 August 2013)
CHN-6 Investigation 221 findings
notice
Notice of findings in relation to the investigation into the
alleged dumping of wind towers exported from China and
Korea (Anti-Dumping Notice No. 2014/33) (16 April 2014)
CHN-7 Continuation 487 initiation
notice
Notice of initiation of the expiry review of the anti-dumping
measures on wind towers exported from China and Korea
(Anti-Dumping Notice No. 2018/115) (16 July 2018)
CHN-8 Continuation 487 findings
notice
Notice of findings of the expiry review of the anti-dumping
measures on wind towers exported from China and Korea
(Anti-Dumping Notice No. 2019/33) (27 March 2019)
CHN-9 ADRP Review 2019/100
review proposal notice
Notice of ADRP proposal to conduct administrative review
of the minister's decision in the expiry review of the
anti-dumping measures on wind towers exported from
China and Korea, in relation to TSP (8 May 2019)
CHN-10 ADRP Review 2019/100
minister's decision notice
Notice of minister's decision following the
ADPR's administrative review of the continuation of the
anti-dumping measures on wind towers exported from
China and Korea, in relation to TSP (dated 8 July 2020,
published 9 July 2020)

Exhibit Short Title (if any) Description/Long title
CHN-12 Investigation 238 initiation
notice
Notice of initiation of the investigation into the alleged
dumping and subsidization of stainless steel sinks exported
from China (Anti-Dumping Notice No. 2014/20)
(18 March 2014)
CHN-13 Investigation 238
termination notice
Notice of termination of part of the investigation into the
alleged subsidization of stainless steel sinks exported from
China (Anti-Dumping Notice No. 2015/16)
(19 February 2015)
CHN-14 Investigation 238 findings
notice
Notice of findings in relation to the investigation into the
alleged dumping and subsidization of stainless steel sinks
exported from China (Anti Dumping Notice No. 2015/41)
(26 March 2015)
CHN-15 Review 352 initiation notice Notice of initiation of the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by SCEA (Anti-Dumping Notice No. 2016/53)
(16 May 2016)
CHN-16 Review 352 findings notice Notice of findings in relation to the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by SCEA (Anti-Dumping Notice No. 2016/107)
(dated 17 November 2016, published 21 November 2016)
CHN-17 Review 352 final report Final report of the interim review of the anti-dumping
measures on stainless steel sinks exported from China by
SCEA (Anti-Dumping Commission Report No. 352) (dated
October 2016, published 21 November 2016)
CHN-18 Review 459 initiation notice Notice of initiation of the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by SCEA (Anti-Dumping Notice No. 2017/187)
(21 December 2017)
CHN-19 Review 459 findings notice Notice of findings in relation to the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by SCEA (Anti-Dumping Notice No. 2018/75)
(dated 14 June 2018, published 15 June 2018)
CHN-20 Review 461 initiation notice Notice of initiation of the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by Yingao (Anti-Dumping Notice No. 2018/24)
(12 February 2018)
CHN-21 Review 461 findings notice Notice of findings in relation to the interim review of the
anti-dumping measures on stainless steel sinks exported
from China by Yingao (Anti-Dumping Notice No. 2018/143)
(dated 9 October 2018, published 12 October 2018)
CHN-22 Review 459 final report Final report of the interim review of the anti-dumping
measures on stainless steel sinks exported from China by
SCEA (Anti-Dumping Commission Report No. 459) (dated
April 2018, published 15 June 2018)
CHN-23 ADRP Review 2020/124
review proposal notice
Notice of ADRP proposal to conduct administrative review
of the minister's decision in the expiry review of the
anti-dumping and countervailing duty measures on
stainless steel sinks exported from China, in relation to
Primy and Zhuhai Grand (6 April 2020)
CHN-24 ADRP Review 2020/124
minister's decision notice
Notice of minister's decision following the
ADPR's administrative review of the continuation of the
anti-dumping measures on stainless steel sinks from China,
in relation to Primy and Zhuhai Grand (dated 3 July 2020,
published 8 July 2020)
CHN-26 Investigation 466 initiation
notice
Notice of initiation of the investigation into the alleged
dumping and subsidization of railway wheels exported from
China and the alleged dumping of railway wheels exported
from France (Anti-Dumping Notice No. 2018/59)
(18 April 2018)
CHN-27 Investigation 466
termination notice
Notice of termination of the investigation into the alleged
subsidization of railway wheels exported from China
(Anti-Dumping Notice No. 2019/12) (24 January 2019)
CHN-28 Investigation 466 findings
notice
Notice of findings in relation to the investigation into the
alleged dumping of railway wheels exported from China
and France (Anti-Dumping Notice No. 2019/30) (dated
12 July 2019, published 16 July 2019)
CHN-29 Customs Act 1901, Part XVB Customs Act 1901 (Commonwealth), Part XVB

Exhibit Short Title (if any) Description/Long title
CHN-30 ADRP Review 2019/100
conference summary
Summary of ADRP conference with ADC members in
relation to the administrative review of the
minister's decision in the expiry review of the anti-dumping
measures on wind towers exported from China and Korea,
in relation to TSP (dated 19 June 2019, published
1 July 2019)
CHN-31 Continuation 487 final report Final report of the expiry review of the anti-dumping
measures on wind towers exported from China and Korea
(Anti-Dumping Commission Report No. 487) (dated
12 March 2019, published 27 March 2019)
CHN-32 ADRP Review 2019/100
report
ADRP's report of the administrative review of the
minister's decision in the expiry review of the anti-dumping
measures on wind towers exported from China and Korea,
in relation to TSP (ADRP Report No. 100) (dated
April 2020, published 9 July 2020)
CHN-33 Investigation 198 (hot rolled
plate steel) final report
Final report of the investigation into the alleged dumping of
hot rolled plate steel exported from China, Indonesia,
Japan, Korea, and Chinese Taipei and the alleged
subsidization of hot rolled plate steel exported from China
(Anti-Dumping Commission Report No. 198) (dated
16 September 2013, published 5 February 2014)
CHN-35 Investigation 238
Zhuhai Grand verification
visit report
Report of verification visit to Zhuhai Grand in the
investigation into the alleged dumping and subsidization of
stainless steel sinks exported from China (dated
September 2014, published 2 October 2014)
CHN-36 Continuation 517 final report Final report of the expiry review of the anti-dumping and
countervailing duty measures on stainless steel sinks
exported from China (Anti-Dumping Commission Report
No. 517) (dated February 2020, published
28 February 2020)
CHN-38 Customs Amendment
Regulations 2005 (No. 8)
and Explanatory Statement
Customs Amendment Regulations 2005 (No. 8)
(Commonwealth), Select Legislative Instrument 2005
No. 265 (23 November 2005), and Explanatory Statement
to the Customs Amendment Regulations 2005 (No. 8)
(28 November 2005)
CHN-42 ADC, Dumping and Subsidy
Manual (2013), p. 43
ADC, Dumping and Subsidy Manual (December 2013),
p. 43
CHN-43 Investigation 238 Primy
verification visit report
Report of verification visit to Primy in the investigation into
the alleged dumping and subsidization of stainless steel
sinks exported from China (dated September 2014,
published 2 October 2014)
CHN-46 (BCI) Continuation 517
Primy's response to
statement of essential facts
Primy's response to the statement of essential facts in the
expiry review of the anti-dumping and countervailing duty
measures on stainless steel sinks exported from China
(19 December 2019)
CHN-47 ADRP Review 2020/124
report
ADRP's report of the administrative review the
minister's decision in the expiry review of the anti-dumping
and countervailing duty measures on stainless steel sinks
exported from China, in relation to Primy and Zhuhai Grand
(ADRP Report No. 124) (dated June 2020, published
8 July 2020)
CHN-48 (BCI) Investigation 466 Masteel
verification visit report,
appendix 3 "Domestic
Sales", tab "(b) Profit"
Report of verification visit to Masteel in the investigation
into the alleged dumping and subsidization of railway
wheels exported from China and the alleged dumping of
railway wheels exported from France, appendix 3
"Domestic Sales", tab "(b) Profit"
CHN-51 Review 461 final report Final report of the interim review of the anti-dumping
measures on stainless steel sinks exported from China by
Yingao (Anti-Dumping Commission Report No. 461) (dated
September 2018, published 12 October 2018)
CHN-52 Continuation 517 findings
notice
Notice of findings in relation to the expiry review of the
anti-dumping and countervailing duty measures on
stainless steel sinks exported from China
(Anti-Dumping Notice No. 2020/003) (dated
27 February 2020, published 28 February 2020)

Exhibit Short Title (if any) Description/Long title
CHN-53 (BCI) Investigation 466 Masteel
verification visit report,
appendix 2 "CTMS", tab "(a)
CTMS"
Report of verification visit to Masteel in the investigation
into the alleged dumping and subsidization of railway
wheels exported from China and the alleged dumping of
railway wheels exported from France, appendix 2 "CTMS",
tab "(a) CTMS"
CHN-54 (BCI) Investigation 466 Masteel
verification visit report,
appendix 2 "CTMS (Final
with uplift)", tab "(a) CTMS"
Report of verification visit to Masteel in the investigation
into the alleged dumping and subsidization of railway
wheels exported from China and the alleged dumping of
railway wheels exported from France, appendix 2 "CTMS
(Final with uplift)", tab "(a) CTMS"
CHN-59 Investigation 238
consideration report
Report of consideration of the application for the
anti-dumping and countervailing duty measures on
stainless steel sinks exported from China
(Consideration Report No. 238) (dated 11 March 2014,
published 18 March 2014)
CHN-60 CBSA statement of reasons,
attached to Investigation
238 application
CBSA's statement of reasons concerning the making of final
determinations with respect to the dumping and
subsidization of certain stainless steel sinks originating in
or exported from China (9 May 2012), submitted to ADC as
"Attachment C-1-1.1.1" to the application for anti-dumping
and countervailing duty measures on stainless steel sinks
exported from China (18 March 2014)
CHN-90 (BCI) Continuation 517 Primy's
response to statement of
essential facts, table 6
"accessories adjustment"
Primy's response to the statement of essential facts in the
expiry review of the anti-dumping and countervailing duty
measures on stainless steel sinks exported from China,
table 6 "accessories adjustment"

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
304 SS CRC 304 stainless steel cold-rolled coil
AD claims China's claims under the Anti-Dumping Agreement
ADC Anti-Dumping Commission
ADRP Anti-Dumping Review Panel
ADRP Review 2019/100 administrative review of the minister's decision in the expiry review of the
anti-dumping measures on wind towers exported from China and Korea, in
relation to TSP
ADRP Review 2020/124 administrative review of the minister's decision in the expiry review of the
anti-dumping and countervailing duty measures on stainless steel sinks
exported from China, in relation to Primy and Zhuhai Grand
Anti-Dumping Agreement Agreement on Implementation of Article VI of the General Agreement on
Tariffs and Trade 1994
BCI business confidential information
CBSA Canadian Border Services Agency
Continuation 487 expiry review of the anti-dumping measures on wind towers exported from
China and Korea
Continuation 517 expiry review of the anti-dumping and countervailing duty measures on
stainless steel sinks exported from China
CTMS cost to make and sell goods
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
f.o.b. free on board
GAAP generally accepted accounting principles
GATT 1994 General Agreement on Tariffs and Trade 1994
Investigation 198 original investigation into the alleged dumping of hot rolled plate steel
exported from China, Indonesia, Japan, Korea, and Chinese Taipei and the
alleged subsidization of hot rolled plate steel exported from China
Investigation 221 original investigation into the alleged dumping of wind towers exported from
China and Korea
Investigation 238 original investigation into the alleged dumping and subsidization of stainless
steel sinks exported from China
Investigation 466 original investigation into the alleged dumping and subsidization of railway
wheels exported from China and the alleged dumping of railway wheels
exported from France
Jiabaolu Zhongshan Jiabaolu Kitchen & Bathroom Products Co. Ltd.
Jigang Shandong Iron and Steel Company Limited, Jinan Company
Masteel Maanshan Iron & Steel Co Ltd
MCC model control code
MEPS MEPS (International) Ltd.
Primy Primy Corporation Limited; or
Zhuhai Primy Kitchen & Bathroom Co., Ltd.
Program 1 Stainless steel received at less than adequate remuneration ; or Raw Materials
Provided by the Government at Less than Fair Market Value
Review 352 first interim review of the anti-dumping measures on stainless steel sinks
exported from China by SCEA
Review 459 second interim review of the anti-dumping measures on stainless steel sinks
exported from China by SCEA
Review 461 interim review of the anti-dumping measures on stainless steel sinks exported
from China by Yingao
Rhine Rhine Sinkwares Manufacturing Ltd. Hui Zhou
SCM Agreement Agreement on Subsidies and Countervailing Measures
SCEA Shengzhou Chunyi Electrical Appliances Co. Ltd.
SG&A administrative, selling and general costs
SIE state invested enterprise
stainless steel sinks deep drawn stainless steel sinks
TSP Shanghai Taisheng Wind Power Equipment Co. Ltd.
Valdunes MG-Valdunes SAS
VAT value-added tax
WTO World Trade Organization
Yingao Guangdong Yingao Kitchen Utensils Co. Ltd.
Zhuhai Grand Zhuhai Grand Kitchenware Co. Ltd.

1 INTRODUCTION
1.1 Complaint by China
1.1. On 24 June 2021, China requested consultations with Australia pursuant to Article 4 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU ) and
Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994), Article 17 of
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994
(Anti-Dumping Agreement) and Article 30 of the Agreement on Subsidies and Countervailing
Measures (SCM Agreement) with respect to the measures and claims set out below.1
1.2. Consultations were held on 11 August 2021.
1.2 Panel establishment and composition
1.3. On 13 January 2022, China requested the establishment of a panel pursuant to Articles 4.7
and 6 of the DSU , Article XXIII:2 of the GATT 1994, Article 17.4 of the Anti-Dumping Agreement
and Article 30 of the SCM Agreement with standard terms of reference. 2 At its meeting on
28 February 2022, the Dispute Settlement Body (DSB) established a panel pursuant to the request
of China in document WT/DS603/2, in accordance with Article 6 of the DSU.3
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant provisions of the covered agreements cited b y
the parties to the dispute, the matter referred to the DSB by China in document
WT/DS603/2 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.4
1.5. On 5 September 2022, the parties agreed that the panel would be composed as follows:
Chairperson: Ms Elaine FELDMAN

Members: Mr Luis M. CATIBAYAN
 Ms Silvia Lorena HOOKER ORTEGA

1.6. Argentina, Brazil, Canada, the European Union, India, Japan, the Republic of Korea, Malaysia,
Mexico, Norway, the Russian Federation, Singapore, Switzerland, Chinese Taipei,
the United Kingdom, the United States and Viet Nam notified their interest in participating in the
Panel proceedings as third parties.
1.3 Panel proceedings
1.3.1 General
1.7. After consultation with the parties, the Panel adopted its Working Procedures5 and timetable on
21 October 2022. The Panel periodically updated its timetable throughout the dispute.
1.8. The Panel held an organizational meeting with the parties on 12 October 2022. The Panel held
a first substantive meeting with the parties on 7 and 8 March 2023. A session with the third parties
took place on 8 March 2023. At the parties' request, the meeting was held in a hybrid format,
allowing delegates of the parties and third parties to participate either in person or remotely. 6 The
Panel held a second substa ntive meeting with the parties on 1 and 2 August 2023. At the
parties' request, the second substantive meeting was also held in a hybrid format.7

1 Request for consultations by China, WT/DS603/1 (China's consultation request).
2 Request for the establishment of a panel by China, WT/DS603/2 (China's panel request).
3 DSB, Minutes of the meeting held on 28 February 2022, WT/DSB/M/461, para. 2.4.
4 Constitution note of the Panel, WT/DS603/3.
5 Working Procedures of the Panel (Annex A-1).
6 Panel communications to the parties and third parties (17 February 2023).
7 Panel communication to the parties (3 July 2023).

1.9. On 23 October 2023, the Panel issued the descriptive part of its Report to the parties. The
parties submitted comments on the descriptive part on 6 November 2023. The Panel issued its
Interim Report to the parties on 8 December 2023. The parties submitted comments on the
Interim Report on 21 December 2023 and commented on each other 's responses on
19 January 2024. The Panel issued its Final Report to the parties on 16 February 2024.
1.3.2 Working procedures concerning Business Confidential Information
1.10. After consultation with the parties, the Panel adopted Additional Working Procedures
concerning Business Confidential Information (BCI) on 21 October 2022.8
1.3.3 Preliminary ruling request
1.11. On 16 December 2022, after China had already submitted its first written submission,
Australia requested a preliminary ruling, arguing that certain challenged measures were outside the
Panel's terms of reference due to their expiry before the date of the Panel’s establishment . China
submitted its response on 4 January 2023. Australia submitted its comments on China's response
on 12 January 2023. On 13 January 2023, Australia submitted its first written submission. In its first
written submission, Australia made further comments on China 's response and requested that the
Panel find that certain of China's other claims are also outside the Panel's terms of reference due to
their expiry before the date of the Panel’s establishment . Australia also argued that certain of
China's claims were outside the Panel's terms of reference due to the failure of China's panel request
to satisfy the requirements of Article 6.2 of the DSU.
1.12. On 12 January 2023, the Panel invited the third parties to comment on Australia's preliminary
ruling request in their written submissions. Subsequently, certain third parties commented on the
issues raised in Australia 's request for a preliminary ruling in their third party submissions of
27 January 2023. By letter dated 10 February 2023, China informed the Panel that it wished to
respond to matters raised in Australia 's further comments on China 's response to the preliminary
ruling request , other arguments made in Australia 's first written submission , as well as the
comments of the third parties on the terms of reference issues, including making a first response to
those comments in China's oral statement at the first meeting of the parties. On 13 February 2023,
the Panel informed the parties that it would not rule on any terms -of-reference issues raised by
Australia until after the first meeting with the parties, to allow Chin a to have an opportunity to
address such issues in its oral statement at the first meeting.
1.13. The Panel posed questions regarding these issues to the parties at and after the
first substantive meeting. Following the first meeting, the Panel initially declined to set a date for
the parties ' filing of their second written submissions because the Panel wished, if reasonably
possible, to resolve Australia 's terms-of-reference challenges before the parties made such
submissions and thus limit the issues the parti es needed to address . Despite efforts to do so, the
Panel considered that it could not reasonably rule on such issues without further input from the
parties. Thus, the Panel thereafter set a deadline for the filing of the parties' second written
submissions. The Panel posed additional questions regarding these issues to the parties at and after
the second substantive meeting. In light of the complexity of the issues raised by
Australia's terms-of-reference arguments , the Panel ultimately deferred ruling on
Australia's arguments pertaining to the expiry of measures and Article 6.2 of the DSU until the
issuance of its Report.
1.3.4 Agreed Procedures for Arbitration under Article 25 of the DSU
1.14. On 28 April 2022, Australia and China notified to the DSB their mutual agreement, "pursuant
to Article 25.2 of the [DSU,] to enter into arbitration under Article 25 of the DSU to decide any
appeal from any final panel report as issued to the parties" 9 in this dispute. In its Working
Procedures, the Panel took " note of the Agreed Procedures for Arbitration under Article 25 of the
DSU in this dispute notified by the parties on 28 April 2022 (WT/DS603/4) and of the joint requests
of the parties to the Panel formulated therein".10

8 Additional Working Procedures of the Panel concerning Business Confidential Information (Annex A-2).
9 Agreed Procedures for Arbitration under Article 25 of the DSU, WT/DS603/4. (fn omitted)
10 Working Procedures of the Panel, para. 34.

2 FACTUAL ASPECTS
2.1 The measures at issue
2.1. China's panel request identifies the challenged measures as:
1 With respect to wind towers
By way of notices dated 14 April 2014, the Parliamentary Secretary to the Minister for
Industry of Australia imposed final anti-dumping duties in respect of wind towers
imported into Australia from China. The imposition of the duties was based on the
findings and recommendations reported to the Parliamentary Secretary in Anti-dumping
Commission Report No. 221 – Dumping of Wind Towers Exported from the
People's Republic of China and the Republic of Korea (21 March 2014).
The specific legal instruments that imposed those duties, and other l egal instruments
that were subsequently published with respect to those instruments, are set out in the
Appendix. The measures at issue include those specific legal instruments and all
annexes, amendments, modifications, replacements, implementing acts or related
measures in connection with those legal instruments.
2 With respect to [deep drawn stainless steel sinks (stainless steel sinks)]
By way of notices dated 19 March 2015, the Parliamentary Secretary to the Minister for
Industry and Science of Australia imposed final anti-dumping and countervailing duties
in respect of stainless steel sinks imported into Australia from China. The imposition of
the duties was based on t he findings and recommendations reported to the
Parliamentary Secretary in Anti-dumping Commission Report No. 238 – Alleged
Dumping of Deep Drawn Stainless Steel Sinks Exported from the People 's Republic of
China and Alleged Subsidisation of Deep Drawn Sta inless Steel Sinks
(19 February 2015).
The specific legal instruments that imposed those duties, and other legal instruments
that were subsequently published with respect to those instruments, are set out in the
Appendix. The measures at issue include tho se specific legal instruments and all
annexes, amendments, modifications, replacements, implementing acts or related
measures in connection with those legal instruments.
3 With respect to railway wheels
By way of notices dated 12 July 2019, the Minister for Industry, Science and Technology
of Australia imposed final anti-dumping duties in respect of railway wheels imported
into Australia from China. The imposition of the duties was based on the findings and
recommendations reported to the Minister in Anti-dumping Commission Report No. 466
– Alleged Dumping of Certain Railway Wheels Exported from the People 's Republic of
China and France (1 March 2019).
The specific legal instruments that imposed those duties are set out in the Appendix.
The measures at issue include those legal instruments and all annexes, amendments,
modifications, replacements, implementing acts or related measures in connection with
those legal instruments.11
2.2 The underlying proceedings
2.2. As indicated in the section immediately above, Chin a challenges Australia 's measures
concerning a series of anti-dumping/countervailing duties proceedings with respect to three different
products, i.e. wind towers, deep drawn s tainless steel sinks (stainless steel sinks) , and railway
wheels. China challenges anti-dumping measures in each of the three. Stainless steel sinks is the

11 China's panel request, pp. 1-2. (emphasis original)

only one of the three with respect to which China also challenges countervailing measures. We briefly
set out the basic facts relating to such proceedings below.
2.2.1 Wind towers
2.2.1.1 Original investigation (Investigation 221)
2.3. On 28 August 2013, the Australian Anti-dumping Commission (ADC) initiated an investigation
into the alleged dumping of wind towers from China and Korea (Investigation 221). 12 It examined
alleged dumping in an investigation period from 1 January 2012 to 30 June 2013, with injury
assessed for the period starting 1 January 2008.13 Shanghai Tai sheng Wind Power Equipment Co.
Ltd. (TSP), a Chinese firm, participated in the investigation. TSP was the only exporter of the product
under investigation from China.14 The ADC issued its findings in this investigation in a report dated
21 March 2014.15 On 16 April 2014, the relevant parliamentary secretary accepted the findings and
conclusions in the report and imposed anti-dumping measures on TSP at the rate of 15% and on all
other exporters from China at the rate of 15.6%.16
2.2.1.2 Five-year expiry review (Continuation 487)
2.4. On 16 July 2018, the ADC initiated a five -year expiry review concerning the anti-dumping
measures imposed on wind towers from China and Korea ( Continuation 487).17 The ADC issued its
findings in a report dated 12 March 2019.18 On 25 March 2019, the relevant minister accepted the
findings in the report.19 As a result, the anti-dumping measures were continued in relation to exports
from TSP at the rate of 6.4%. The information and calculation methodology pertaining to TSP were
used to calculate a new dumping duty rate of 10.9% for all other Chinese exporters.20
2.2.1.3 Administrative review in relation to TSP
2.5. On 8 May 2019, an administrative review proceeding concerning the decision to continue the
measures against TSP was initiated.21 The Anti-Dumping Review Panel (ARP) issued its findings in a
document dated April 2020.22 As a result of this review, in a notice dated 8 July 2020, the decision
was taken to revoke the anti-dumping measures as against TSP, effective 17 April 2019.23 The
measures in relation to all other Chinese exporters remained in place at the margin assessed in the
expiry review.
2.2.2 Stainless steel sinks
2.2.2.1 Original investigation (Investigation 238)
2.6. On 18 March 2014, the ADC initiated an investigation into the alleged dumping and
subsidization of stainless steel sinks from China ( Investigation 238). The investigation examined
alleged dumping and subsidi zation in an investigation period from 1 January 2013 to
31 December 2013, with injury assessed for the period starting 1 January 2009.24 Multiple Chinese
companies participated in the investigation by submitting their financial data and other relevant

12 Investigation 221 initiation notice (Exhibit CHN-5).
13 Investigation 221 final report (Exhibit CHN-4), p. 6.
14 Investigation 221 final report (Exhibit CHN-4), pp. 9 and 32.
15 Investigation 221 final report (Exhibit CHN-4).
16 Investigation 221 findings notice (Exhibit CHN-6).
17 Continuation 487 initiation notice (Exhibit CHN-7).
18 Continuation 487 final report (Exhibit CHN-31).
19 Continuation 487 findings notice (Exhibit CHN-8).
20 Continuation 487 findings notice (Exhibit CHN-8); Continuation 487 final report (Exhibit CHN-31),
p. 39 ("[t]he Commission established an export price for uncooperative and all other exporters under
subsection 269TAB(3), based on verified information from TSP Shanghai. The Commission established a normal
value under subsection 269TAC(6), having regard to information verified with TSP Shanghai, but exclusive of
any favourable adjustments. In addition, uplift to plate steel has been based on all plate steel purchased from
Chinese suppliers by TSP Shanghai for both domestic and exported wind towers during the inquiry period").
21 ADRP Review 2019/100 review proposal notice (Exhibit CHN-9).
22 ADRP Review 2019/100 report (Exhibit CHN-32).
23 ADRP Review 2019/100 minister's decision notice (Exhibit CHN-10).
24 Investigation 238 initiation notice (Exhibit CHN-12).

information as interested parties in the investigation. 25 Due to the number of exporters who
responded, the ADC chose to limit the number of exporters individually examined to three. The
three exporters were Zhuhai Grand Kitchenware Co. Ltd. (Zhuhai Grand), Primy Corporation Limited.
(Primy), and Zhongshan Jiabaolu Kitchen & Bathroom Products Co. Ltd . (Jiabaolu). On
19 February 2015, the ADC issued its final report in this investigation. 26 The countervailing duty
investigation was terminated with respect to the exporters Primy and Jiabaolu on the basis that the
amounts of subsidy with respect to each of them were de minimis.27
2.7. In a notice dated 26 March 2015, the relevant parliamentary secretary accepted the findings
in the final report .28 As a result, anti-dumping measures were imposed with respect to expor ters
from China. The ADC assigned individual dumping margins of 12.5% to Zhuhai Grand, 5% to Primy,
and 15.4% to Jiabaolu. The dumping margin of eight residual exporters not included in the
examination was determined to be 10.4%. Uncooperative and all other exporters from China were
assigned a dumping margin of 49.5%. 29 In the same decision, margins of subsidization were
calculated as 3.3% for Zhuhai Grand, 3.4% for the residual exporters, and 6.4% for uncooperative
and all other exporters from China. Anti-dumping duties were imposed on Primy and Jiabaolu at a
rate of the respective dumping margins, and combined anti-dumping and countervailing duties were
imposed on Zhuhai Grand at an individual rate of 12.5%, on residual exporters at a rate of 10.7%,
and on uncooperative and all other exporters from China at a rate of 52.6%.30
2.2.2.2 First interim review in relation to SCEA
2.8. On 16 May 2016, the ADC initiated an interim review 31 concerning the measures imposed on
stainless steel sinks from China, as it related to the exporter Shengzhou Chunyi Electrical Appliances
Co. Ltd. (SCEA) (Review 352 ) 32 As a result of a notice dated 17 November 2016,
SCEA's anti-dumping and countervailing measures were revised. The revised dumping margin for
SCEA was 34.13% and its revised subsidization margin was 20.03% (a combined anti-dumping duty
and countervailing duty rate of 34.33%).33
2.2.2.3 Second interim review in relation to SCEA
2.9. On 21 December 2017, the ADC initiated a second interim review concerning the measures
imposed on stainless steel sinks from China, as it related to the same exporter as before, SCEA
(Review 459).34 As a result of a notice dated 14 June 2018, the anti-dumping and countervailing
measures were again revised for SCEA. The revised dumping margin for SCEA was 8% and its revised
subsidization margin was 1% (a combined anti-dumping duty and countervailing duty rate of 8%).35
2.2.2.4 Interim review in relation to Yingao
2.10. On 12 February 2018, the ADC initiated an interim review concerning the measures imposed
on stainless steel sinks from China, as it related to the exporter Guangdong Yingao Kitchen Utensils
Co. Ltd. (Yingao) (Review 461).36 In a notic e dated 9 October 2018, the anti-dumping measures

25 Investigation 238 final report (Exhibit CHN-2), pp. 30-33.
26 Investigation 238 final report (Exhibit CHN-2).
27 Investigation 238 termination notice (Exhibit CHN-13).
28 Investigation 238 findings notice (Exhibit CHN-14).
29 Investigation 238 findings notice (Exhibit CHN-14).
30 Investigation 238 findings notice (Exhibit CHN-14).
31 Australia explains that "in certain circumstances an affected party may seek a review by the ADC of a
dumping duty notice, a countervailing duty notice, or an undertaking (interim review). An interim review may
concern the 'variable factors' – the normal value, export price, non-injurious price, or the amount of the
countervailing subsidy, and may be in relation to a particular exporter or exporters generally". (Australia's first
written submission, para. 142).
32 Review 352 initiation notice (Exhibit CHN-15).
33 Review 352 findings notice (Exhibit CHN-16).
34 Review 459 initiation notice (Exhibit CHN-18).
35 Review 459 findings notice (Exhibit CHN-19).
36 Review 461 initiation notice (Exhibit CHN-20). This document contains a date of 12 February 2017,
but later documents appear to clarify that it was instead 12 February 2018. (See e.g. Review 461 findings
notice (Exhibit CHN-21)).

were revised for Yingao. The ADC assigned a zero dumping margin and a countervailable subsidy
margin of 0.4%.37
2.2.2.5 Five-year expiry review (Continuation 517)
2.11. On 3 July 2019, the ADC initiated a five-year expiry review concerning the anti-dumping and
countervailing measures imposed on stainless steel sinks from China (Continuation 517).38 In a
notice dated 27 February 202039 , as a result of Continuation 517, varying anti-dumping and
countervailing duties were continued against exporters from China.40
2.2.2.6 Administrative review in relation to Primy and Zhuhai Grand
2.12. On 6 April 2020, an administrative review proceeding was initiated concerning the rates at
which the relevant minister had decided to continu e the anti-dumping measures as against Primy
and Zhuhai Grand, at the request of those companies.41 In a notice dated 3 July 2020, the relevant
minister affirmed the ADRP's recommendations to continue the anti-dumping measures as against
Primy and Zhuhai Grand at the rates imposed in Continuation 517. 42 The anti-dumping measures
that were continued with respect to all other exporters from China were also unaffected by this
review.
2.2.3 Railway wheels original investigation (Investigation 466)
2.13. On 18 April 2018, the ADC initiated an investigation into the alleged dumping of railway
wheels from China and France, and the alleged subsidization of railway wheels from China
(Investigation 466). The investigation examined the alleged dumping and subsidizatio n in an
investigation period from 1 January 2017 to 31 December 2017, with injury assessed for the period
starting 1 January 2014.43 Maanshan Iron & Steel Co Ltd. (Masteel), being the only exporter of the
product under investigation during the investigatio n period from China, participated in the
investigation by submitting its financial data as a cooperative exporter. 44 On 24 January 2019, the
countervailing duty investigation was terminated on the basis that the amounts of subsidy with
respect to Masteel a nd "all other" exporters from China were de minimis.45 The ADC issued its
findings and conclusions in a final report dated 1 March 2019.46
2.14. In a notice dated 12 July 2019, the relevant parliamentary secretary accepted the findings
and conclusions in the final report. As a result, anti-dumping measures were imposed with respect
to Masteel and all other exporters from China at the rate of 17.4%.47
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. China requests that the Panel find that the challenged measure s are inconsistent with
Australia's obligations under the GATT 1994, the Anti-Dumping Agreement, and/or the
SCM Agreement, as applicable. China further requests, pursuant to Article 19.1 of the DSU, that the
Panel recommend that Australia bring its measures into conformity with its WTO obligations.
3.2. Australia requests that the Panel rule that many of China's claims are outside the Panel's terms
of reference. Further, to the extent that the Panel does not find that China's claims are outside its

37 Review 461 findings notice (Exhibit CHN-21).
38 Continuation 517 initiation notice (Exhibit AUS-11).
39 Continuation 517 findings notice (Exhibit CHN-52).
40 Continuation 517 findings notice (Exhibit CHN-52); Continuation 517 final report (Exhibit CHN-36).
41 ADRP Review 2020/124 review proposal notice (Exhibit CHN-23).
42 ADRP Review 2020/124 minister's decision notice (Exhibit CHN-24). See also ADRP Review 2020/124
report (Exhibit CHN-47).
43 Investigation 466 initiation notice (Exhibit CHN-26).
44 Investigation 466 final report (Exhibit CHN-3), p. 22.
45 Investigation 466 termination notice (Exhibit CHN-27).
46 Investigation 466 final report (Exhibit CHN-3).
47 Investigation 466 findings notice (Exhibit CHN-28), p. 2; Investigation 466 final report
(Exhibit CHN-3), pp. 25-26.

terms of reference , Australia requests that the Panel reject China's claims in this dispute in their
entirety.
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflected in their executive summaries, provided to the Panel
in accordance with paragraph 24 of the Working Procedures adopted by the Panel (see Annexes B-1
and B-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of Brazil, Canada, the European Union, Japan, Mexico, Norway, the
Russian Federation, the United Kingdom, and the United States are reflected in their executive
summaries, provided in accordance with paragraph 27 of the Working Procedures adopted by the
Panel (see Annexes C-1, C -2, C-3, C -4, C -5, C-6, C-7, C -8, and C -9). Argentina, India, the
Republic of Korea, Malaysia, Singapore, Switzerland, Chinese Taipei, and Viet Nam did not provide
the Panel with a third-party written submission or a written version of any oral statement.
6 INTERIM REVIEW
6.1. The requests made at the interim review stage as well as the Panel's discussion and disposition
of those requests are set out in Annex A-3.
7 FINDINGS
7.1 Treaty interpretation and standard of review
7.1. This dispute concerns claims raised by China under the Anti-Dumping Agreement, the
SCM Agreement, and the GATT 1994. We briefly recall below the applicable provisions on treaty
interpretation and standard of review.
7.1.1 Treaty interpretation
7.2. Article 3.2 of the DSU provides that the dispute settlement system serves to clarify the existing
provisions of the covered agreements "in accordance with customary rules of interpretation of public
international law". It is generally accepted that such customary rules include those codified in
Articles 31 and 32 of the Vienna Convention on the Law of Treaties.
7.3. Article 17.6(ii) of the Anti-Dumping Agreement directs us to the same customary rules of treaty
interpretation, and further provides:
[T]he panel shall interpret the relevant provisions of the Agreement in accordance with
customary rules of interpretation of public international law. Where the panel finds that
a relevant provision of the Agreement admits of more than one permissible
interpretation, the panel shall find the authorities' measure to be in conformity with the
Agreement if it rests upon one of those permissible interpretations.
7.1.2 Standard of review
7.4. Article 11 of the DSU sets out a general standard of review for panels, providing, 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[.]
7.5. In addition to Article 11 of the DSU, Article 17.6(i) of the Anti-Dumping Agreement provides
that in disputes under the Anti-Dumping Agreement:

[I]n its assessment of the facts of the matter, the panel shall determine whether the
authorities' establishment of the facts was proper and whether their evaluation of those
facts was unbiased and objective. If the establishment of the facts was proper an d the
evaluation was unbiased and objective, even though the panel might have reached a
different conclusion, the evaluation shall not be overturned[.]
7.6. Thus, Article 17.6(i) is explicit that in carrying out its objective assessment, the Panel is barred
from conducting a de novo review of the facts. Instead, we are directed to "determine whether the
authorities' establishment of the facts was proper", and "whether their evaluation of those facts was
unbiased and objective".
7.7. As to the universe of relevant fac ts whose "establishment" and "evaluation" by the authority
we must assess, Article 17.5(ii) of the Anti-Dumping Agreement provides that we are to "examine
the matter based upon … the facts made available in conformity with appropriate domestic
procedures to the authorities of the importing Member".
7.8. Although the SCM Agreement does not contain a similar provision, Members have declared that
disputes arising from anti-dumping and countervailing duty measures should be resolved in a
consistent manner.48
7.2 Expiry of measures and Australia's challenges under Article 6.2 of the DSU
7.9. In this section, we examine Australia's claims that certain measures are expired and provide a
general analytical framework that we will apply to assess expiry. We also address
Australia's challenges under Article 6.2 of the DSU in this section. We further note two points
surrounding terminology at the outset. First, for ease of reference, we refer to the stages of the
imposition and administration of anti-dumping and countervailing duty orders (e.g. investigations,
interim reviews, expiry reviews, and administrative reviews) as "segments". The segments comprise
"proceedings" more generally. Second, the parties use the term "expiry review" as referring to
segments referenced in Article 11.3 of the Anti -Dumping Agreement and Article 21.3 of the
SCM Agreement, which are sometimes referred to as "sunset" reviews. We adopt the term "expiry
review" in this Report. The parties use the term "interim review" as referring to reviews referenced
in Article 11.2 of the Anti-Dumping Agreement and Article 21.2 of the SCM Agreement. We adopt
that term in this Report as well.
7.10. The parties' arguments on these subjects, and particularly those surrounding expiry, are
extensive. Issues surrounding expiry first arose in Australia's preliminary ruling request. This request
concerned the alleged expiry of countervailing measures in the stainless steel sinks proceedings
related to one subsidy program me called "Stainless steel received at less than adequate
remuneration" or " Raw Materials Provided by the Government at Less than Fair Ma rket Value "
(Program 1). In its first written submission, Australia offered additional arguments concerning the
alleged expiry of certain other anti-dumping measures in the stainless steel sinks and wind towers
proceedings, along with challenges made under Article 6.2 of the DSU. As China responded to such
challenges in its own submissions, and further clarified to what segments its challenges pertained,
Australia subsequently raised additional arguments surrounding the alleged expiry of measures and
additional challenges under A rticle 6.2 of the DSU . The summary of party arguments below
separates arguments concerning expiry and challenges under Article 6.2 of the DSU.
7.2.1 Main party arguments
7.2.1.1 Expiry of measures
7.11. Australia requests, in its preliminary ruling request, "that the Panel issue a preliminary ruling
that all of China's claims contained in Section B.2 of its request for the establishment of a panel
[(China's panel request)], concerning 'countervailing measures,' fall outside the Panel's terms of

48 Declaration on Dispute Settlement Pursuant to the Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 or Part V of the Agreement on Subsidies and Countervailing
Measures.

reference" because they relate to measures that have expired.49 Australia notes that the claims "are
focused exclusively on 'the countervailing measures … only with regard to alleged Program 1 – Raw
Materials Provided by the Government at Less than Fair Market Value' in the Stainless Steel Sinks
investigation". 50 Australia asserts that the "measures challenged by China associated with
'Program 1' were terminated on 27 March 2020 – two years prior to the establishment of this Panel
on 28 February 2022".51 Australia argues that this is so because: (a) China only challenges the
countervailing measures with respect to Program 1; (b) at that time the five -year expiry review
superseded the original investigation as the legal basis for the countervailing measures; and (c) in
the expiry review all countervailing duties with respect to Program 1 were terminated. Australia
further notes that China's claims vis-à-vis Program 1 are only brought on an as-applied basis.52
Australia argues that the termination of such measures, and particularly the fact that such measures
were terminated before the Panel's establishment, means that the measures are outside the
Panel's terms of reference.53 Australia also claims that no benefits to China are being impaired by
the expired countervailing measures.54
7.12. China responds that, in its view, the preliminary ruling request does not raise an issue going
to the Panel's jurisdiction or terms of reference. In this context, China notes that Australia does not
challenge the panel request's delineation of the relevant measures or claims in any relevant way,
and instead argues that the countervailing measure on stainless steel sinks with regard to Program 1
does not exist.55
7.13. China further argues that, contrary to Australia's assertions, the relevant countervailing
measure challenged in this proceeding is still in effect. China asserts that the relevant measure here
is the original "countervailing duty notice" 56 dating from 2015 imposing countervailing duties on
stainless steel sinks from China – an order that included countervailing duties imposed specifically
with respect to Program 1 – and continues to be the relevant measure even after the most recent
expiry review that Australia mistakenly argues replaced the original measure. 57 This is so, in
China's view, because the expiry review merely changed the amount of the countervailing duties
imposed with respect to Program 1, and did not affect in any way the character of the legal measure,
i.e. the countervailing duty order, itself in place against China with respect to Program 1.58 China
further contends that, in general, under Australian law an expiry review does not terminate the basis
on which anti -dumping or countervailing duty measures are in place, but, rather, such reviews
continue it and are thus linked to the original investigation. China argues that Australian domestic
courts have expressly explained this linkage. China argue s that the measure was not just the
countervailing duty amount, but also the manner of calculating the duties and the methodology used
to do so, which, according to China, were applied consistently throughout the relevant segments,
including the expiry review, and continue to be applied. China also submit s that in cases where a
respondent could impose duties on the goods from the complaining Member in a manner that may
give rise to materially similar WTO inconsistencies that are alleged in the dispute, this may provide
a basis for making findings with respect to the challenged measure.59

49 Australia's preliminary ruling request, para. 1. Australia clarifies that it "is requesting that the Panel
exclude from its terms of reference, China's claims under sections B.2.1 – B.2.5 of the [China's panel
request])". (ibid. fn 1).
50 Australia's preliminary ruling request, para. 2. (emphasis original)
51 Australia's preliminary ruling request, para. 2. (emphasis original)
52 Australia's preliminary ruling request, paras. 21-22.
53 Australia's preliminary ruling request, paras. 8-9. See also Australia's opening statement at the first
meeting of the Panel, paras. 25-26.
54 Australia's preliminary ruling request, para. 3.
55 China's response to Australia's request for a preliminary ruling, paras. 6-14.
56 The word "notice" used by China in its response to the preliminary ruling request is a term under
Australian law that refers to an instrument imposing anti-dumping or countervailing duties. (China's response
to Australia's request for a preliminary ruling, paras. 18-24 (referring to Customs Act 1901, Part XVB
(Exhibit CHN-29)).
57 China's response to Australia's request for a preliminary ruling, paras. 23-24.
58 China's response to Australia's request for a preliminary ruling, para. 21.
59 China's response to Australia's request for a preliminary ruling, paras. 22-23, 33 and 56; opening
statement at the first meeting of the Panel, paras. 15-18; second written submission, paras. 37-39, 40-41, and
44; response to Panel question No. 7, para. 22, and No. 70, paras. 69 and 70. China also argues that the
ADC's practices in other proceedings that are not the subject of this dispute support the conclusion that even if
a certain subsidy programme were assigned a zero countervailing duty rate in a particular segment, that

7.14. China notes that the expiry review found that subsidization was likely to recur with respect to
Program 1, and specifically continued the effect of the original countervailing duty order with respect
to that program me.60 China contends that Program 1 would be within the scope of future expiry
reviews and would simply consist of a re-determination of the amount of subsidization.61 China also
notes that, without the amount of subsidization attributable to Program 1 in the original
investigation, the amount of subsidization for the sampled companies would have been de minimis,
and thus the countervailing duty order would never have existed without the original findings with
respect to Program 1.62
7.15. Australia counters that the mere possibility that Program 1 might become countervailable in
the future is an insufficient reason to make findings with respect to the now -expired countervailing
measures, and would render any such findings an inappropriate advisory opinion.63 Australia further
argues that: (a) China's contention is incorrect that no countervailing duties would have been
imposed had it not been for countervailing duties attributable to Program 1 in the original
investigation because uncooperative exporters would still have been assigned countervailing duty
rates even in the absence of Program 164; (b) China attempts to broaden its claims with respect to
the countervailing measure in order to save them from Australia's challenge, thus improperly
converting its claims from as applied claims to as such claims (because China is essentially basing
the violation on the possibility that Australia might assign subsidy margins to Program 1 in the
future)65; (c) China mischaracterizes Article 21.1 of the SCM Agreement; and (d) China assigns too
much significance to the legal effect of the "notice" under Australian law.66
7.16. Australia also argues that all of China's claims under the Anti-Dumping Agreement (AD claims)
relating to the wind towers and stainless steel sinks original investigation are outside the
Panel's terms of reference. Australia asserts that original investigations and expiry reviews are
distinct processes with different objectives both under WTO law and Australian law. Australia thus
argues that the imposition of duties following the original investigation, and the continuation of
duties following the expiry reviews – in which the ADC performed new calculations of normal values
and export prices – were distinct and separate measures, with the latter superseding the former. 67
Australia also contends that even if the Panel finds that the original measures are not expired and
makes findings with respect to them, the Panel should decline to make recommendations under
Article 19.1 of the DSU with respect to them.68

subsidy programme still remains within the scope of, and will be examined in, subsequent segments
(China's closing statement at the first meeting of the Panel, para. 8(a). See also China's response to Australia's
request for a preliminary ruling, paras. 57-72).
60 China asserts that the expiry review found that Program 1 was a countervailable subsidy.
(China's response to Australia's request for a preliminary ruling, para. 36 (quoting Continuation 517 final report
(Exhibit CHN-36), p. 107)). Australia asserts that any mention in the final report of the expiry review stating
that Program 1 was a countervailable subsidy was a typographical error. (Australia's comments on
China's response to a preliminary ruling request, para. 25). China further asserts in this context that the expiry
review "continue[d]" the original order, and that "Australia's use of the word 'continuation' is coterminous with
the 'continued imposition of the duty'". (China's response to Australia's request for a preliminary ruling,
para. 17 (quoting Article 21.1 of the SCM Agreement) (emphasis added by China)).
61 China's response to Panel question No. 9. China also claims that examples taken from other ADC
proceedings reveal administrative practices that support China's position in this context. (China's response to
Australia's request for a preliminary ruling, paras. 57-72).
62 China's response to Australia's request for a preliminary ruling, paras. 49-56. China later indicated
that if Program 1 had not erroneously been found to be a subsidy, then there would have been no
countervailing duties placed on the 15 companies that participated in the original investigation, and no expiry
review would have been possible with respect to Program 1. (China's second written submission, para. 59).
63 Australia's comments on China's response to a preliminary ruling request, para. 5.
64 Australia's comments on China's response to a preliminary ruling request, paras. 29-30; response to
Panel question No. 49.
65 Australia's comments on China's response to a preliminary ruling request, paras. 34-35.
66 Australia's comments on China's response to a preliminary ruling request, paras. 37-38.
67 Australia's first written submission, paras. 58-63. We note that the European Union, as a third party,
generally agrees with Australia that an expiry review replaces the original order. (European Union's response to
third-party question No. 3.a). Japan and the United States consider the question as nuanced and must be
evaluated on a case-by-case basis. (Japan's response to third-party question No. 3.a; United States' response
to third-party question No. 3.a). Australia refers to the panel report in US – Pipes and Tubes (Turkey) as being
an example of a panel refusing to rule on an expired measure in a factually similar case. (Australia's first
written submission, paras. 67-69).
68 Australia's first written submission, paras. 74-77, 131-134 and 138.

7.17. According to China, the expiry of a measure alone is not dispositive of whether a panel can
address the claims with respect to that measure. China asserts that there is contextual support for
this proposition in the DSU, and that the Appellate Body has recognized that repeal of a measure
does not necessarily constitute a satisfactory settlement of the relevant matter. China further
contends that even if the measures are "expired", they still have "effects", and thus in that scenario
the Panel should recommend that the effects be removed. These effects, according to China, are the
continued application of WTO -inconsistent methodologies and practices, including, with respect to
stainless steel sinks specifically, the inclusion of Program 1 in the scope of the countervailing duty
order.69 China argues that because expiry reviews do not address all the issues that an original
investigation addresses, operate according to different strictures, and can rely on previous findings
of dumping and subsidization to continue an anti-dumping or countervailing duty order, "[i]t follows
that any such determination of past dumping and subsidisation must have been WTO consistent in
order for the continuation of a duty to be WTO consistent".70
7.18. China also rejects Australia's assertion that China's panel request "unambiguously states that
it is only challenging the countervailing measures associated with Program 1".71 China contends that
the measures are set out in section A of its panel request, which "include[s] a connected set of
measures, evidenced in instruments including those identified at Nos. 8 to 23 of the Appendix of the
panel request".72 Nor, according to China, does section B limit the measures at issue, as this section
rather "presents the grounds on which the measures are in violation of WTO provisions and are
nullifying or impairing the benefits that would otherwise accrue to China under the covered
agreements".73 Those legal grounds are, according to China, that the ADC's m ethodology of
assessing Program 1, which led to imposition of countervailing duties, was inconsistent with the
SCM Agreement, and that the methodology "has continued legal, and practical or operational
effect".74 At the first meeting China also emphasized that it was challenging "one indivisible,
continuous measure", although China subsequently contended that this statement was in error and
that China was challenging "one indivisible, continuous set of measures in each respect".75
7.19. Although China does not ac cept that the measures expired, China also argues that the
measures, even if they had expired in a legal sense, have continued operational and practical effect.
With respect to the countervailing duties on stainless steel sinks, China contends that if it had not
been for the subsidy margin attributed to Program 1 in the original investigation, then no
countervailing duties would have been imposed with respect to the 15 exporters that participated in
the original investigation, and no co ntinuation of the duties would have been possible under an
expiry review. Thus, according to China, there exists "a clear factual chain established between the
original erroneous findings relating to Program 1, and the current duties".76
7.20. In its responses to questions following the first meeting, China clarifies that, with respect to
the wind towers and stainless steel sinks proceedings, it seeks findings and recommendations for all
claims made for the original investigations and expiry reviews, and with respect to the stainless steel
sinks proceedings the interim review s as well. China sought no findings with respect to the wind
towers administrative review that resulted in TSP being excluded from the wind towers AD order.
For the railway wheels proceedings, China seeks findings and recommendations only with respect to
the original investigation.77 China specifies that the ADC's WTO-inconsistent conduct in the original
investigations remains unchanged and unaltered in subsequent segments, and thus the latter
segments have not changed the essence of the original WTO -inconsistent determinations by the
ADC.78 China further argues that its legal claims extend to the entirety of the anti -dumping and

69 China's response to Panel question No. 40.
70 China's opening statement at the first meeting of the Panel, para. 29. See also, generally,
ibid. paras. 23-28.
71 Australia's preliminary ruling request, para. 20.
72 China's opening statement at the first meeting of the Panel, para. 12.
73 China's opening statement at the first meeting of the Panel, para. 12.
74 China's opening statement at the first meeting of the Panel, para. 12 (fns omitted). See also
China's comments on Australia's preliminary ruling request, especially, paras. 18–48.
75 China's opening statement at the first meeting of the Panel, para. 14; second written submission,
para. 45 and fn 54.
76 China's opening statement at the first meeting of the Panel, para. 22. China also expresses concern
that if Australia's position on these issues is accepted, it becomes unclear how a WTO Member could challenge
a reviewed or extended measure. (China's opening statement at the first meeting of the Panel, paras. 19-22).
77 China's response to Panel question No. 37.
78 China's responses to Panel question No. 37, para. 114; question No. 38, para. 118(a); and
question No. 57, para. 147.

countervailing proceedings included in China's panel r equest, and that the violations alleged in the
original investigations are inherent in the measures.79
7.21. In its second written submission, Australia argues that China has advanced new claims under
Article 11.2 of the Anti-Dumping Agreement and Article 21.2 of the SCM Agreement related to
interim reviews. 80 Australia also argues that, following the first substantive meeting, China has
attempted to redefine the measures at issue as a connected series of measures constituting one
overarching measure, although China has not advanced sufficient evidence to estab lish such a
measure. 81 With respect to China's CVD claims, Australia also stresses that the ADC would
investigate Program 1 in a future countervailing duty proceeding if it were presented with evidence
that it was a subsidy.82 Also, according to Australia, China failed to mention the wind towers expiry
review in its first written submission with respect to any claim except AD claim 6.a, and also failed
to make reference to the stainless steel sinks interim reviews or expiry review in advancing multiple
claims. 83 Australia submits that raising additional claims at a late stage is contrary to the
paragraph 3(1) of the Panel's Working Procedures and is fundamentally unfair to Australia.84
7.22. In its response to Panel questions and in its second written submission, China clarifies that
its submission is that the measure is an "indivisible, continuous set of measures in each respect".85
China also argues that the measures it challenges are methodologies applied by the ADC in the
original investigations and then carrie d through the subsequent segments such as interim reviews
and expiry reviews.86 In this regard, China argues in its second written submission87 and responses
to Panel questions88 that the measures all continue to have the same essence . China also stresses
that this dispute remains amenable to findings and recommendations even if the measures are found
to have expired.89
7.23. China also asserts that the Panel must make findings with re spect to the investigations in
each case they are challenged because the investigations and other segments such as expiry reviews
form parts of a continuous measure, i.e. an anti-dumping or countervailing duty order, and reaffirms
that the original investigations' errors are "foundational" in nature.90 In particular, China argues that
if the alleged errors in the original investigation had not occurred then the injury assessment in the
stainless steel sinks countervailing duty investigation, for example, wo uld have involved a smaller
group of exporters since, in China's view, individually investigated firms would have been excluded
from the countervailing duty order altogether owing to the de minimis subsidization margins they
should have received.91 China further rejects Australia's argument that China's claims as against any
segments of the proceedings are in violation of the Panel's Working Procedures.92
7.24. Australia counters that China's references to the "essence" of the challenged measures is
legally irrelevant. Australia also argues that the re were relevant factual differences in the
ADC's findings and methodologies between the investigations and expiry reviews .93 Australia also
asserts that, in a hypothetical dispute, if all the measures are within the panel's terms of reference
and not expired, and there were no changes in methodology between the investigations and expiry
reviews, then the panel could make findings with respect to the expiry reviews.94

79 China's response to Panel question No. 3, para. 8.
80 Australia's second written submission, para. 7.
81 Australia's second written submission, paras. 34-35 and 77-86.
82 Australia's second written submission, para. 46.
83 Australia's second written submission, paras. 131-132.
84 Australia's second written submission, paras. 133-134; see also comments on China's response to
Panel question No. 95.
85 China's response to Panel question No. 98, para. 165; second written submission, para. 45.
86 China's second written submission, paras. 24-25, 27-41, and 44-48.
87 China's second written submission, para. 55.
88 China's response to Panel question No. 69.
89 China's second written submission, paras. 64-97.
90 See e.g. China's response to Panel question No. 70, para. 65.
91 China's response to Panel question No. 73.
92 China's response to Panel question No. 95.
93 Australia's response to Panel question No. 69.
94 Australia's response to Panel question No. 70.

7.2.1.2 Article 6.2 of the DSU
7.25. Australia argues that China's AD claims relating to the wind towers and stainless steel sinks
expiry review s are outside the Panel's terms of reference by virtue of Article 6.2 of the DSU.
Specifically with respect to wind towers, A ustralia notes that although the introductory parts of
China's first written submission set out two claims explicitly related to segments subsequent to the
stainless steel sinks investigation, China appears to direct additional claims against the wind towers
expiry review in a later section of its first written submission.95
7.26. Australia further recalls the Appellate Body's guidance that " [i]dentification of the treaty
provisions claimed to have been violated is 'always necessary' and 'a minimum prerequisite' if the
legal basis of the complaint is to be presented at all".96 Australia thus contends that, with respect to
both wind towers and stainless steel sinks, critically, the panel request fails to cite Article 11.3 of
the Anti-Dumping Agreement.97 Australia contends that the panel in EU – Footwear (China) correctly
determined that no claims under Article 2 of the Anti-Dumping Agreement can be made unless a
panel's jurisdiction over an expiry review is first established via a claim under Article 11.3, which
serves as a "gateway" provision to challenging expiry reviews. 98 Australia recalls that original
investigations and expiry reviews are distinct proceedings governed by different legal standards. 99
Australia further contrasts this situation with at least one previous panel proceeding in which China
challenged determinations made in the course of an expiry review but premised such claims on a
violation of Article 11.3.100 Australia cites other panel proceedings in which challenges under
Article 2 were accompanied by citations in the panel requests to Article 11.3 where an investigating
authority's conduct in five-year expiry reviews was at issue.101
7.27. Australia also raises s imilar challenges with respect to: (a) China's claims vis-à-vis the
stainless steel sinks interim reviews, citing the absence of a reference to Article 11.2 of the
Anti-Dumping Agreement and Article 21.2 of the SCM Agreement in the panel request; and
(b) China's CVD claims with respect to the stainless steel sinks expiry review, citing the absence of
a reference to Article 21.3 of the SCM Agreement in the panel request.102
7.28. Australia also contends that, even if China had cited Article 11.3, the anti-dumping duties on
TSP and the ADRP's report on the administrative review in relation to TSP in the wind towers
proceedings are outside the Panel's terms of reference because the duties on TSP have been revoked
pursuant to the administrative review. 103 Thus, even if TSP's anti-dumping duties and the
ADRP's report are within its terms of reference and the Panel makes findings with respect to them,
in Australia's view, the Panel should at minimum decline to issue recommendations with respect to
them.104
7.29. Australia further asserts that China's claim under Article 2.4 of the SCM Agreement falls
outside the Panel's terms of reference because China failed to cite Article 2.4 of the SCM Agreement
in its panel request.105
7.30. China argues that " continued imposition of duties is based on the original investigations,
reports and notices, all of which are particularised in our panel request".106 Further, China asserts
that claims based on Article 2 of the Anti-Dumping Agreement are not confined to original
investigations, but relate to "the entirety of the measure at issue", including the expiry reviews in

95 Australia's first written submission, para. 528 (referring to China's first written submission,
paras. 35 and 272-279).
96 Australia's first written submission, para. 80 (quoting Appellate Body Report, Korea – Dairy,
para. 124).
97 Australia's first written submission, paras. 80-87 and 95.
98 Australia's first written submission, paras. 96-98.
99 Australia's first written submission, paras. 88-90.
100 Australia's first written submission, paras. 91-94.
101 Australia's first written submission, para. 99 and 135-136. We note that the European Union and
Japan, as third parties, generally agree with Australia's position in this context. (European Union's response to
third-party question No. 1; Japan's response to third-party question No. 1).
102 Australia's second written submission, paras. 4.c, 7, and 124-129.
103 Australia's first written submission, paras. 102-106.
104 Australia's first written submission, paras. 106 and 528-529.
105 Australia's first written submission, paras. 657-658 and 662-663.
106 China's opening statement at the first meeting of the Panel, para. 30.

which a dumping margin is calculated , and the requirements of Article 2 are applicable to those
reviews. Thus, in China's vi ew, it is unnecessary to cite Article 11.3 in order to bring an Article 2
claim.107 China observes that Article 11.3 allows for expiry reviews, but it is still not the basis for
China's claims; that basis is, rather, Article 2. China also argues that the pa nel report in EC –
Footwear (China) made an Article 2 finding and then made consequential findings under Article 11.3,
which indicates that the panel considered Article 2 to apply directly to the expiry review in
question.108 China also contends that by Australia's logic, in order to challenge conduct in an original
investigation it would be necessary to cite Articles 5 and 6 of the Anti-Dumping Agreement.109 China
also applies these same general arguments to reject Australia's claims that it was necessary fo r
China's panel request to cite Article 11.2 of the Anti-Dumping Agreement and Article 21.2 of the
SCM Agreement in order to challenge interim reviews, and also Article 21.3 of the SCM Agreement
in order to challenge expiry reviews. 110 China also confirms t hat it makes no claims under
Articles 11.2 and 11.3 of the Anti-Dumping Agreement, or under Articles 21.2 and 21.3 of the
SCM Agreement.111
7.31. China agrees with Australia that the anti-dumping measures with respect to TSP are expired
following the administrative review.112
7.32. China further asserts that its panel request adequately cites Article 2.4 of the SCM Agreement
by including language that is similar thereto.113
7.2.2 Approach to expiry
7.33. As the above section illustrates, the parties' arguments surroundin g expiry of measures and
Article 6.2 of the DSU are extensive and have evolved over time.
7.34. The Panel is of the view that issues surrounding the expiry of challenged measures arise
primarily due to two circumstances. First, multiple procedural segments have already occurred in
the wind towers and stainless steel sinks proceedings.114 With respect to wind towers, there has
been an original investigation , an expiry review, and an administrative review . In stainless steel
sinks, there has been an original investigation, three interim reviews, and an expiry review. In its
submissions, China challenges certain aspects of Australian anti-dumping and countervailing duty
orders (e.g. dumping margin calculations, determination of subsidy benefit, etc) with respect to all
the segments enumerated in the preceding two sentences, with the exception of the wind towers
administrative review .115 Second, with respect to the majority of claims, China alleges that the
challenged conduct by the ADC first appeared in the original investigations and was then repeated
in later segments.
7.35. Against this background, Australia argues that the only non-expired measures are the wind
towers and stainless steel sinks expiry reviews, and the railway wheels inve stigation; the other
measures arising from pre -expiry-review segments are expired. This expiry occurred, in
Australia's view, in one of two general ways. The first pertains to both AD claims and CVD claims.
That is , Australia considers that the expiry reviews superseded and supplanted all preceding
segments, including the original investigations. In this context, Australia notes that the ADC
re-calculated all Chinese exporters' dumping and subsidy margins in the expiry reviews. Australia
thus argues that China's claims (whether regarding anti-dumping or countervailing measures) as
they pertain to the superseded segments (i.e. original investigations and interim reviews) are outside
the Panel's terms of reference. The second pertains to China's CVD claims which operate as against
Program 1. Australia argues that the measures have expired because the ADC found that Program 1

107 See e.g. China's response to Panel question No. 65.
108 China's opening statement at the first meeting of the Panel, paras. 30-34.
109 China's response to Panel question No. 5.
110 See e.g. China's response to Panel question No. 65.
111 China's response to Panel question No. 65, para. 13. China refers to these articles as "procedural"
provisions. (China's response to Panel question No. 65, para. 12).
112 China's response to Panel question No. 41, para. 129. China notes that multiple previous WTO panels
have considered both original investigations and related expiry reviews, including when the expiry review
occurred before panel establishment. (China's response to Panel question No. 55, paras. 142-144).
113 China's opening statement at the first meeting of the Panel, paras. 35-40.
114 With respect to the railway wheels proceedings, there has only been an original investigation that is
relevant in this dispute, and thus no expiry issues arise.
115 China's response to Panel question No. 37, para. 116.

conferred no benefit to Chinese exporters in the expiry review . In Australia's view, this led to a
finding by the ADC that Program 1 was no longer a countervailable subsidy, and thus to a termination
of countervailing measures with respect to Program 1. Australia considers that China's CVD claims
therefore relate to expired measures and are thus outside the Panel's terms of reference . Such
arguments, if the Panel were to accept them , would mean that China would be able to challenge
only aspects of the expiry reviews in the wind towers and stainless steel sinks proceedings. Australia
further argues, in addition, that China cannot challenge the interim or expiry reviews because the
panel request did not cite Articles 11.2 or 11.3 of the Anti-Dumping Agreement or Articles 21.2 or
21.3 of the SCM Agreement, and thus the panel request did not satisfy the requi rements of
Article 6.2 of the DSU. Such cumulative arguments, if accepted, would remove most of China 's
claims from our consideration, leaving only claims vis-à-vis the railway wheels proceedings. Given
the major impact Australia's arguments could have on the scope of this dispute, and the systemic
nature of certain arguments, in this section we articulate our overall approach to the issue of expiry,
and to Australia's challenges under Article 6.2 of the DSU.
7.36. We first recall China's argument that the alleged errors in the original investigations are
"foundational" in nature. Thus, from China's perspective, such errors in the original investigation
"infect" the anti-dumping or countervailing duty order as it was originally imposed.116 This infection,
according to China, cannot be remedied by later -in-time segments because such segments merely
continue the originally flawed order.117 As a result, in China's view, we should always make findings
in respect of the original investigations, and refrain from finding that they may have expired. In
support of this conceptual approach, China argues, in particular, that in the absence of the alleged
flaws in the original investigations, certain exporters ' subsidization margins in the stainless steel
sinks proceedings would have been de minimis (and thus the exporters would have been excluded
from the scope of the countervailing duty order altogether), the injury and causation analyses in the
CVD investigation would have been different, and there may not even be a countervailing duty order
in place today. China also asserts that previous panels and the Appellate Body have observed that
different segments of anti-dumping or countervailing proceedings are interrelated.118
7.37. We therefore note that China appears to advocate using a broad counterfactual approach to
assessing expiry. That is, with respect to any given aspect of the orders, China asks us to envision
a world in which the alleged WTO inconsistencies never occurred, as sume that this would have
required the ADC to change its approach to a given issue (e.g. assessment of subsidy benefit) ,
compare that changed counterfactual situation to the situation in the actual world, and then, if
anything about the anti-dumping or countervailing duty orders would have been different between
the two, we could not find that the aspect is expired. We decline to adopt this approach . Because
we generally must assess expiry before we determine whether to issue findings, China appears to
ask us to assume that violations of WTO law occurred ex ante, assume how Australia would comply
with any hypothetical findings, and then fashion a counterfactual world based upon those
assumptions. We, however, consider it inappropriate to either assume violations of WTO law before
they are found to exist or assume how Australia would comply with any findings that we might issue.
Moreover, even if China more simply argues that the ongoing legal effect of an aspect of an
anti-dumping or countervailing duty order should be judged by the fact that other, related aspects
have continued legal effect, we still consider this approach flawed. This is so because we consider it
illogical to assume that simply because certain aspects of anti-dumping or countervailing duty orders
are related119, in that one may change when another changes, that means that all such aspects
become part and parcel of each other for expiry purposes when only one such aspect is challenged.120

116 China's response to Panel question No. 102, para. 209.
117 We note, however, that the parties agree that TSP was excluded from the wind towers anti-dumping
order following an administrative review. China does not challenge this administrative review or its result, even
though the wind towers anti-dumping order at large remains in place. We consider this inconsistent with the
notion that the original order as a whole is irreparably "infected" and cannot be remedied by post-investigation
segments.
118 Overall, we note that although China argues at times that the segments are interconnected, China
also raises distinct challenges to certain segments (see AD claims 6.b.ii and 6.b.iii with respect to stainless
steel sinks, further below, which only pertain to expiry reviews). Thus, we see some tension between the
conception of a single overall anti-dumping or countervailing duty order being the challenged measure and
China's ability to discern problems with only specific segments.
119 We note that China is correct that dumping determinations might affect subsequent injury and
causation analyses in an original investigation.
120 We agree with China that previous panels have correctly noted that segments of anti-dumping or
countervailing proceedings are related, as they form related stages of administering a particular anti-dumping

We therefore recall that, in this dispute, China challenges certain aspects of Australian anti-dumping
and countervailing duty orders (e.g. dumping margin calculations, determination of subsidy benefit,
etc), and such claims are only lodged on an as-applied basis. This observation, in our minds, also
critically undermines China's view that alleged errors committed by an investigating authority in an
original investigation can never become expired through the application of a new approach taken by
that investigating authority in a post-investigation segment.121
7.38. In light of these considerations, it seems to us that the question of whether a challenged
aspect of the order is expired is narrower than China envisions. That is, the question of expiry is to
be assessed with respect to the situation we observe at presen t, asking whether Australia legally
applies a particular challenged aspect of the order at present or not. This appears consistent with
the fact that China only challenges certain, specific aspects of the orders on an as-applied basis. We
therefore consider it appropriate to assess expiry on a claim -by-claim basis, focusing on whether
the specific, relevant aspects of the orders have expired (i.e. ceased to have legal effect ) in the
context of the relevant proceedings. We therefore disagree with China's arguments that we cannot
find any challenged aspect of the orders to be expired and must make findings with respect to the
original investigations whenever they are challenged.
7.39. In order to facilitate the expiry examination in a manner consistent with the above reasoning,
the Panel will assess the extent to which the challenged aspect changed as between; (a) the original
investigations, (i.e. the segment on which China focusses its challenges); and (b) the expiry reviews,
i.e. the latest-in-time segments which determined the anti -dumping and countervailing duty rates
to which Chinese exporters are currently subject .122 We note that we do not consider the stainless
steel sinks interim reviews in this context, because they all preceded the stainless steel sinks expiry
review.123 For convenience going forward, the Panel will refer to this inquiry as to whether the
essence of the relevant aspect changed.
7.40. If the essence of a challenged aspect remained unchanged as between the investigations and
the expiry reviews, t wo relevant consequences follow. The first is that, if China challenge s the
investigations and expiry reviews for a given claim, then an argument against one such segment
functions as an argument against both. We thus note that, for all claims with respect to wind towers
and stainless steel sinks except AD claims 6.b.ii and 6.b.iii, and CVD claim 5, China challenges not
only the original investigations, but also the expiry reviews and the stainless steel sinks interim
reviews.124 If there is no essence chang e as between the investigations and expiry reviews,

or countervailing duty order. See, e.g. Panel Report, US – Zeroing (Japan) (Article 21.5 – Japan), para. 7.79
(characterizing different segments in the administration of a particular anti-dumping order as being part of a
single "chain of assessment"). We see no reason to conclude, however, that this relationship means that a
particular aspect of an original investigation can never become expired through subsequent conduct by an
investigating authority, and we read no previous report cited by China as standing for that categorical
proposition. (See e.g. China's response to Panel question No. 98, para. 171 and fn 94).
121 We recognize China's argument that an expiry review cannot lead to the expiry of alleged errors
made by an investigating authority in an original investigation because the expiry review is performed with an
eye to discerning, on a prospective basis, whether the expiry of the relevant anti-dumping or countervailing
duty order would be likely to lead to the continuation or recurrence of dumping, subsidization, and/or injury.
This, analysis, according to China, is essentially based on the analyses of such issues performed by the
investigating authority in an original investigation. We note, however, that China makes no claims under
Article 21.3 of the SCM Agreement or Article 11.3 of the Anti-Dumping Agreement that the ADC improperly
continued the overall anti-dumping or countervailing duty orders. We further note that: (a) the ADC's injury
findings are not challenged in this dispute; (b) as far as Program 1, specifically, is concerned, the ADC
assigned no countervailing duties to Program 1 as a result of the expiry review; and (c) the ADC recalculated
and replaced all dumping margins in the expiry reviews. Thus, we ultimately fail to see how the continuation of
the orders as a result of the expiry reviews supports the Chinese argument that the legal effect of more
specific relevant aspects of the orders continues.
122 We recall that in the expiry reviews the ADC re-calculated anti-dumping and countervailing duty
rates for all Chinese exporters.
123 We further note that each interim review addressed only one exporter, and thus the interim reviews
are more limited in scope than the investigation and expiry reviews, which addressed all relevant exporters.
Thus, the interim reviews could not have meaningfully superseded the preceding investigation with respect to
exporters not subject to the interim reviews.
124 See, especially, China's responses to Panel question Nos. 37 and 69.

therefore, then arguments against the investigations would function as against the expiry reviews
and would be deemed lodged in a timely manner.125
7.41. The second consequence of observing no essence change is that we consider it within our
discretion regarding the segment with respect to which we make findings.126 In these circumstances,
and when faced with this choice, we consider it sufficient and most appropriate to make fin dings
with respect to the expiry reviews, these being the latest-in-time segment and the iteration of the
anti-dumping or countervailing duty order to which Chinese goods are currently subject. This choice
also means that we need not specifically address Australia's arguments that the expiry reviews led
to the expiry of the original investigations and interim reviews, because we do not make findings
with respect to these segments.
7.42. If the essence of a relevant aspect of the order did change as between the investigation and
the expiry review, this, in our minds, indicates that the challenged aspect of the order present in the
original investigation expired (having been effectively replaced by the expiry review).127 Moreover,
this will also mean that China, in order to effectively challenge the expiry reviews, must have raised
arguments specific to that changed aspect in a timely manner. We note, however, that the essence-
change assessment significantly facilitates, but may not in all cases resolve, the expiry inquiry. This
is so because, for example, certain challenged aspects of orders may not technically change over
time, but may still become expired through other means. Moreover, any such expiry analysis will
ultimately be fact specific.
7.2.3 Australia's claims under Article 6.2 of the DSU
7.43. In the section immediately above, we articulated our approach to expiry issues in this dispute.
In light of that approach, we, at this point, address Australia's challenges raised under Article 6.2 of
the DSU. Australia bases these challenges on the Appellate Body's guidance that "[i]dentification of
the treaty provisions claimed to have been violated is 'always necessary' and 'a minimum
prerequisite' if the legal basis of the complaint is to be presented at all".128
7.44. First, we note Australia's argument that China cannot challenge the stainless steel sinks
interim reviews because the panel request did not cite Article 11.2 of the Anti-Dumping Agreement
or Article 21.2 of the SCM Agreement. We recall, however, that in the section above, we indicate
that we will not be examining the interim reviews. Rather, insofar as we examine aspects of the
orders that are not expired, we will focus our attention and make findings with respect to the expiry
reviews only.129 As we do not examine th e interim reviews, we consider it unnecessary to address
these Australian challenges under Article 6.2 of the DSU.
7.45. Second, we note Australia's argument that China cannot bring challenges under the
SCM Agreement with respect to the stainless steel sinks expiry review because China's panel request
failed to cite Article 21.3 of the SCM Agreement. Given our findings in sections 7.4.9, 7.4.10, and
7.4.11 below, that China's CVD claims address expired aspects of the stainless steel sinks CVD order,
we consider it unnecessary to address these Australian challenges under Article 6.2 of the DSU. We
further consider it unnecessary to address Australia's argument that China cannot bring a claim

125 Previous panels have included segments of trade remedy proceedings in their terms of reference,
even when the segments in question, unlike here, were not mentioned expressly in the panel request. (See,
e.g. Panel Report, US – Anti-dumping Methodologies (China), sections 7.3.2 and 7.3.4). If, however, we
consider that Australia did not have an appropriate opportunity to respond to more specific Chinese arguments
or evidence with respect to any claim, we address that issue in the appropriate section of this Report.
126 One panel explained that it would make this decision with reference to the parties' requests, the
objectives of dispute settlement and especially securing a positive solution to the dispute, recognizing that the
panel's mandate covered both versions of the measure. (Panel Report, Indonesia – Chicken (Article 21.5 –
Brazil), appealed 17 December 2020, para. 7.5). See also Panel Report, US – Tariff Measures (China),
appealed 26 October 2020, para. 7.48 (discussing factors that panels consider in determining whether there
was a change in essence in certain context).
127 This is particularly so with respect to China's AD claims because, as noted by Australia, in the expiry
reviews the ADC re-calculated all Chinese exporters' anti-dumping duty rates. We further recall that all of
China's AD claims are brought under, or depend on, Article 2, i.e. dealing with the manner in which the ADC
calculated dumping margins.
128 Australia's first written submission, para. 80 (quoting Appellate Body Report, Korea – Dairy,
para. 124).
129 See para. 7.41 above.

under Article 2.4 of the SCM Agreement because China's panel request fails to cite Article 2.4 of the
SCM Agreement for the same reason.
7.46. Finally, we note Australia's argument th at China cannot bring challenges under the
Anti-Dumping Agreement with respect to the stainless steel sinks and wind towers expiry reviews
because China's panel request failed to cite Article 11.3 of the Anti-Dumping Agreement. Australia
argues in this context that the need to cite Article 11.3 of the Anti-Dumping Agreement arises due
to its function as a "gateway" provision that allows Article 2 claims to be brought in the context of
an expiry review. We therefore recall that China also brings a challenge under Article 9.3 of the
Anti-Dumping Agreement, "because the amount of the anti-dumping duties imposed by Australia
exceeds any margins of dumping that may have been properly established under Article 2 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994 ". 130 Article 9.3 of the
Anti-Dumping Agreement provides, in relevant part:
The amount of the anti-dumping duty shall not exceed the margin of dumping as
established under Article 2.
7.47. Similarly, Article VI:2 of the GATT 1994 provides, in relevant part:
In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in amount than the margin of dumping in
respect of such product.
7.48. Thus, Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994 set the
maximum level at which anti-dumping duties may be levied. We agree with previous WTO dis pute
settlement reports that the term "margin of dumping" in Article 9.3 "relates to a margin [of dumping]
that is established in a manner subject to the disciplines of Article 2 and which is therefore consistent
with those disciplines ".131 We also agree that an error or inconsistency under Article 2 of the
Anti-Dumping Agreement "does not necessarily or automatically mean that the anti-dumping duty
actually applied will exceed the correct margin of dumping".132
7.49. In light of this discussion of Article 9.3, we therefore recall that all of China's other claims
raised under the Anti -Dumping Agreement are brought under Article 2 of the
Anti-Dumping Agreement, i.e. they address the manner in which ADC established dumping margins.
Logically, therefore, we would need to assess China's Article 2 claims (addressing how dumping
margins were determined) in order to assess China's Article 9.3 claim (addressing whether the
dumping margins were determined in a manner inconsistent with Article 2 and consequently were
too high ). We therefore consider that, even assuming that Australia is correct that a formal
"gateway" provision is required in order for China to raise challenges vis-a-vis the expiry reviews,
China's claim under Article 9.3 functions as such a "gateway" for China's claims under Article 2. That
being the case, it is unnecessary to require China to have also cited Article 11.3 as an additional
"gateway", and thus unnecessary for us to address Australia's claim that Article 11.3 had to be
included in the panel request. We further note that because section B.1 of the panel request directs
all anti-dumping claims (including Article 2 claims) against all segments listed in the appendix to the
panel request "unless otherwise stated", and the expiry reviews appear in the appendix, we do not
consider that a reference to Article 11.3 was otherwise necessary to satisfy the requirements of
Article 6.2 of the DSU.
7.50. We further note that, in its first written submission, Australia presents its substantive
arguments as against the wind towers and stainless steel sinks proceedings in the alternative, to be
addressed only if the Panel disagrees with Australia's expiry arguments and challenges under
Article 6.2 of the DSU. Consistent with the approach the Panel has adopted in this section and the
immediately preceding section, and with the Panel's reasoning in section 7.6 below, insofar as we
find a challenged aspect of a relevant order to have expired, we will not examine the

130 China's panel request, section B(1), para. 8. The request directs this claim against all measures in
the appendix to the panel request, which includes the expiry reviews.
131 E.g. Panel Report, EU – Biodiesel (Argentina), para. 7.359. (emphasis added)
132 E.g. Panel Report, EU – Biodiesel (Argentina), para. 7.363.

parties' substantive arguments pertaining thereto. If we determine that a challenged aspect is not
expired, we will go on to examine the parties' substantive arguments.133
7.3 Wind towers
7.51. In this section, we address China's AD claims as against the wind towers proceedings. We
recall that multiple segments have occurred in the wind towers proceeding, i .e. an original
investigation, expiry review, and an administrative review. Thus, we will assess expiry for each claim
in accordance with the discussion and approach articulated in section 7.2.2 above.
7.52. We recall at this point, however, that the parties agree that the wind towers administrative
review involving TSP resulted in TSP's exclusion from the wind towers AD order. We discern no
reason to disagree. 134 We further note that China pursue s no challenges with respect to the TSP
administrative review before this Panel. We therefore consider the wind towers AD order as expired
with respect to TSP. Our evaluation of China's claims below, therefore, will ultimately focus on the
ADC's alleged errors as they impacted the group of uncooperative and all-others exporters (TSP was
the only identified exporter of wind towers to Australia in the investigation and expiry review).
7.53. We further note that China numbers its claims (i.e. AD claim 1, AD claim 2 , etc.) in its
first written submission, to track the claims as they are enumerated in its panel request . Certain
claims operate with respect to multiple proceedings (e.g. AD claim 1 under Article 2.2 of the
Anti-Dumping Agreement is made as against all three proceedings). Both parties have referred to
China's claims according to this numbering scheme throughout this dispute. We adopt that same
numbering throughout this Report for convenience. However, our examination of China's claims does
not follow the numerical order under Ch ina's numbering scheme in one respect. Specifically, we
address AD claim 3 (pertaining mainly to Article 2.2.1.1 of the Anti -Dumping Agreement) before
AD claim 1 (pertaining mainly to Article 2.2 of the Anti-Dumping Agreement). This is so because, in
our view, a discussion of the ADC's rejection of exporters' costs naturally precedes a discussion of
the surrogate costs selected by the ADC following that rejection.
7.3.1 AD claim 3 under Article 2.2.1.1 of the Anti-Dumping Agreement: rejection of
exporters' costs
7.3.1.1 Legal framework
7.54. We note that this claim pertains to Article 2.2.1.1 of the Anti -Dumping Agreement, which
provides, in relevant part:
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.
7.55. Article 2.2.1.1 indicates that it operates "for the purpose of paragraph 2". Thus, this provision
provides rules for determining costs when an investigating authority constructs normal value under
Article 2.2 or performs the ordinary-course-of-trade test under Article 2.2.1. For clarity and
convenience, this Report will refer to the two conditions in the first sentence of Article 2.2.1.1, i.e.
the records kept by the exporter or producer (a) "are in accordance with the generally accepted
accounting principles of the exporting country" and (b) "reasonably reflect the costs associated with
the production and sale of the product under consideration" as the "first condition" and the
"second condition".

133 Australia's first written submission, sections V and VI. We also note, however, that Article 11.3 of the
Anti-Dumping Agreement and Article 21.3 of the SCM Agreement provide the substantive bases for
complainants to challenge the continuation of anti-dumping and countervailing duty orders occurring as a
result of an expiry review. Thus, having failed to cite these provisions in its panel request, China may not and
does not argue that the anti-dumping and countervailing duty orders at large should not have been continued
as a result of the expiry reviews. Indeed, such claims would be outside our terms of reference.
134 See section 7.2.1.2 above; ADRP Review 2019/100 minister's decision notice (Exhibit CHN-10).

7.56. As to the word "normally", the Appellate Body has explained tha t "[g]iven the reference to
'normally' in the first sentence of Article 2.2.1.1, we do not exclude that there might be
circumstances other than those in the two conditions set out in that sentence, in which the obligation
to base the calculation of costs on the records kept by the exporter or producer under investigation
does not apply ".135 These appear reasonable observations, and we thus agree that the word
"normally" may provide a basis for rejecting exporters' record costs when constructing normal value
or performing the ordinary-course-of-trade test.
7.57. We note the panel's report in Australia – Anti-dumping Measures on Paper. In that dispute,
the panel assessed an almost identical claim by Indonesia that the ADC had violated Article 2.2.1.1
by rejecting the use of exporters' costs because the costs did not "reasonably reflect competitive
market costs". In the underlying investigation in that dispute, the ADC considered the same statutory
language as in the underlying proceedings here. The panel found that the ADC had made no finding
as to whether the second condition had been fulfilled when rejecting exporters' costs. This raised
the question as to whether the word "normally" in the first sentence of Article 2.2.1.1 provided a
basis for the ADC to reject the exporters' costs in the a bsence of a second condition finding. The
panel found that it did not because any flexibility that may be provided by the word "normally" would
only be activated after the investigating authority determines that both of the conditions in the
first sentence of Article 2.2.1.1 are fulfilled.136 We agree with the panel's conclusion in this respect.
In particular, and without setting out the panel 's reasoning in full, we agree with the panel 's point
that if the word "normally" could be used to depart from export ers' costs without the investigating
authority examining whether the two conditions in the first sentence of Article 2.2.1.1 were satisfied,
this would effectively read out those two conditions from the text of Article 2.2.1.1.
7.58. As to this point, we note Australia's argument that:
[I]f a finding is made that circumstances are not "normal", then going on to make
findings under the other two circumstances would be redundant. In either case, the
subsequent findings would be redundant because there was al ready a finding to the
effect that the obligation to use the exporter's records in the first sentence of
Article 2.2.1.1 did not apply. Subsequent findings on the other circumstances, whether
affirmative or negative, could not change that outcome.137
7.59. While this argument does have some weight, we disagree that the Australia – Anti-dumping
Measures on Paper interpretation of the first sentence of Article 2.2.1.1 lacks any practical value, as
Australia appears to argue. This is so because the two conditions in the first sentence of
Article 2.2.1.1 were important enough in the drafters' minds to specifically include as conditions to
examine, in light of which an investigating authority would "normally" use the exporters' record
costs. Thus, it could reasonably be expected that rejecting exporters' costs, even when both
conditions are satisfied, would be accompanied by an explanation as to why such rejection is justified
despite those conditions being satisfied.
7.60. Thus, we consider that, in order for an investigatin g authority to rely on any flexibility to
depart from using exporters' costs that may be provided by the word "normally" in the first sentence
of Article 2.2.1.1, the investigating authority must first make affirmative findings as to both the
first condition and the second condition in the first sentence.
7.3.1.2 Main party arguments
7.61. China makes this claim with respect to the wind towers investigation and expiry review. China
asserts that the ADC rejected using the exporters' costs of production when constructing normal
values and instead used non-Chinese surrogate costs for steel plate and flanges. China claims that,

135 Appellate Body Report, Ukraine – Ammonium Nitrate, para. 6.87 (quoting Shorter Oxford English
Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), Vol. 2, p. 1945;
Appellate Body Report, US – Clove Cigarettes, para. 273).
136 Panel Report, Australia – Anti-dumping Measures on Paper, paras. 7.109-7.125.
137 Australia's second written submission, para. 164(a). Australia also made other arguments in support
of its interpretation of Article 2.2.1.1, an interpretation that is different than the panel's interpretation of that
provision in Australia – Anti-dumping Measures on Paper. See, e.g. Australia's first written submission,
paras. 182-191; second written submission, paras. 149-186. As already stated in this section, however, we
agree with the panel's interpretation of Article 2.2.1.1 in Australia – Anti-dumping Measures on Paper.

in doing so, Australia violated Article 2.2.1.1 – and, as a result, Articles 2.1 and 2.2 – of the
Anti-Dumping Agreement because the ADC failed to calculate relevant costs "on the basis of records
kept by the exporter or producer under investigation" within the meaning of Article 2.2.1.1. More
specifically, China argues that the ADC either did not determine, or wrongly determined, that the
records kept by the exporters or producers under investigation did not "reasonably reflect the costs
associated with the production and sale of the product under consideration" within the meaning of
the "second condition" of the first sentence of Article 2.2.1.1. This is so because, according to China,
the ADC instead rejected the exporters' costs because they "did not reasonably reflect competitive
market costs", within the meaning of applicable Australian law.138 China further asserts that the ADC
failed to make a finding under the "first condition" of the first sentence of Article 2.2.1.1 (i.e. that
"records are in accordance with the generally accepted accounting principles of the exporting
country") in the expiry review.139 China also indicates that even if TSP had been excluded from the
scope of the order owing to the most recent administrative review – and thus the relevant
anti-dumping measures are expired with respect to TSP – this is immaterial because the methods
used to calculate TSP's normal values were transferred over onto the uncooperative producers in
the expiry review, and such exporters are still subject to the order.140
7.62. Australia argues that the ADC made a negative finding as to the second condition in both the
investigation and expiry review , albeit not in the express language of Article 2.2.1.1.141 Australia
also argues that "China has mischaracterised and misunderstood the application of
Regulation 180(2) of the Customs Regulation 1926 and then section 43(2) of the Customs
(International Obligations ) Regulation 2015"142 because the requirement that exporters' costs, in
order to be used in relevant calculations, must reflect competitive market costs is different from the
issue to be determined in the second condition in the first sentence of Article 2.2.1.1. Australia
further asserts that, as discussed in the context of Australia's arguments vis-à-vis AD claim 1, China
misunderstood the relevant methodology regarding how the ADC constructed normal values in the
investigation, and specifically how the ADC determined the uplift ratio used to alter certain of
TSP's costs.143 Australia underlines in this context that the "competitive market costs " test in the
Australian law only indicates that the records of the exporters must be used if they satisfy that and
other requirements, but says nothing about what should happen if the exporters' costs do not satisfy
such criteria. Thus, Australia argues that a finding that costs do not reflect competitive market costs
will not represent an automatic finding to not use such records.144 Australia also asserts that because
TSP was excluded from the scope of the order as a result of the administrative review following the
expiry review, the relevant measures are expired with respect to TSP.145
7.63. Australia also argues that there was a change of essence as between the investigation and
expiry review because the ADC uplifted costs of both steel plate and flanges in the investigation, but
only uplifted the cost of steel plate in the expiry review.146
7.64. China maintains that in the original investigation and expiry review the ADC made no finding
as to the second condition.147 China also argues that the fact that the ADC uplifted the costs of steel
plate and flanges in the investigation but only flanges in the expiry review does not mean that there
was a change of essence between the two segments.148 China also argues that evidence provided
by Australia in support of its characterizations of how the ADC calculated the uplift ratio is flawed.149
7.3.1.3 Expiry
7.65. China's claim concerns the wind towers original investigation and expiry review. As discussed
in section 7.2.2 above, the nature of China's claim raises the issue of whether or not the aspect

138 China's first written submission, section F.1.
139 China's response to Panel question No. 80, para. 104.
140 China's response to Panel question No. 41.
141 Australia's second written submission, para. 317; response to Panel question No. 78,
paras. 110-119.
142 Australia's first written submission, para. 493.
143 Australia's first written submission, para. 494.
144 Australia's responses to Panel question No. 77, and No. 78, paras. 75 and 79.
145 Australia's first written submission, paras. 102-106.
146 Australia's response to Panel question No. 69, para. 34.
147 China's second written submission, paras. 174-183.
148 China's responses to Panel question No. 69, para. 43, and No. 105.
149 China's comments on Australia's response to Panel question No. 74.

challenged by China has expired. To address this issue, we will consider whether there was a change
of essence in the approach taken by the ADC to reject exporters' costs in the investigation and expiry
review.
7.66. In the investigation, the ADC constructed TSP's (the only Chinese exporter) normal value.150
In so doing, the ADC indicated that:
In determining the cost of production and the administrative, selling and general costs
associated with the sale of those goods, the Parliamentary Secretary must have regard
to factors provided for in Regulation 180.[151] The regulation requires that if an exporter
keeps records relating to like goods that are in accordance with generally accepted
accounting principles (GAAP) in the country of export, and reasonably reflect
competitive market costs associated with the production or manufacture of like goods,
the Parliamentary Secretary must work out the cost of production using information set
out in the exporter's records.152
7.67. The ADC noted that TSP's records were maintained in a manner that complied with the
generally accepted accounting principles (GAAP) of China.153 The ADC then found that "the cost of
plate steel and flanges reflected in the records of TSP do not reasonably reflect a competitive market
cost. … Therefore, for the purposes of constructing a normal value, the Commission considers it
appropriate to determine the cost of production for wind towers sold domestically by replacing the
cost of plate steel and flanges with a competitive market cost" .154 In the expiry review, the ADC
again constructed TSP's normal values155 and replaced TSP's costs of steel plate (but not flanges)
with surrogate cos ts, again finding that TSP 's costs for steel plate did not reflect a competitive
market cost.156
7.68. We consider that there was no change of essence in the ADC 's cost-replacement/uplift
methodology as between the investigation and expiry review. We note that: (a) in the investigation
the uplift was applied to the costs of both steel plate and flanges whereas in the expiry review the
uplift was applied only to steel plate; and (b) in the expiry review the uplifted costs were further
altered with reference to the Steel Bulletin Board (Platts) benchmark.157 These differences, however,
in our view, are immaterial as they do not alter the key aspect of the order challenged by China, i.e.
the rejection of TSP's record costs for at least steel plate based on the notion that they did not reflect
competitive market costs.158
7.69. We further recall that TSP was excluded from the wind towers AD order following an
administrative review, and thus we will focus on the ADC's alleged errors as they impacted the group
of uncooperative and all-others exporters.159 We therefore note that, in determining a normal value
for uncooperative and all other exporters in the expiry review, the ADC made the following
statement:
The Commission established a normal value under subsection 269TAC(6), having regard
to information verified with TSP Shanghai, but exclusive of any favourable adjustments.
In addition, uplift to plate steel has been based on all plate steel purchased from Chinese

150 Investigation 221 final report (Exhibit CHN-4), pp. 33-34.
151 The specific relevant provision is Regulation 180(2) of the Customs Regulation 1926.
Regulation 180(2) was subsequently replaced by section 43(2) of the Customs (International
Obligations) Regulation 2015. (China's first written submission, paras. 162-164). The parties agree that the
relevant wording of each is materially the same, although each was in effect during different stages of the
relevant segments.
152 Investigation 221 final report (Exhibit CHN-4), pp. 29-30. (fn added)
153 Investigation 221 final report (Exhibit CHN-4), p. 30.
154 Investigation 221 final report (Exhibit CHN-4), p. 30.
155 Continuation 487 final report (Exhibit CHN-31), p. 32.
156 Continuation 487 final report (Exhibit CHN-31), p. 33.
157 See section 7.3.2.3 below (describing this further adjustment in the expiry review).
158 We also note that neither China nor Australia consider that the ADC's method of rejecting
TSP's relevant costs was materially different as between the investigation and expiry review. Australia indicates
that in both the investigation and expiry review the ADC issued no second condition finding in the express
language of Article 2.2.1.1, but, in both cases, the negative finding was nonetheless evident from the reports.
(Australia's response to Panel question No. 78, paras. 110-119).
159 See para. 7.52 above.

suppliers by TSP Shanghai for both domestic and exported wind towers during the
inquiry period.160
7.70. We consider that this statement sufficiently indicates that the cost-replacement methodology
(both with respect to the rejection of TSP's record costs for steel pl ate and the selection of an
"uplifting" strategy to establish a surrogate cost) for TSP was transferred over onto the
uncooperative and all other exporters. This is so because the ADC indicated that, in determining the
uncooperative exporters' normal values, it had reference to TSP's data, and then summarily indicated
that it used uplifted steel plate costs, as it had done for TSP. Thus, even if the cost -replacement
method could be deemed expired vis-à-vis TSP, specifically, owing to its later exclusion fro m the
scope of the anti -dumping order, that methodology still remains the basis for the uncooperative
exporters' still-active anti-dumping duty rate.161
7.71. We therefore consider that the challenged aspect of the anti-dumping order has not expired.
We therefore will make findings with respect to this challenged aspect of the order and, as explained
above, focus our attention on the expiry review.
7.3.1.4 Evaluation
7.72. In the expiry review, after deciding to construct normal values for TSP, the ADC noted:
To determine the cost of production or manufacture, subsection 43(2) of the Regulation
requires that if:
• an exporter or producer keeps records relating to like goods that are in
accordance with generally accepted accounting principles in the country
of export; and
• those records reasonably reflect competitive market costs associated with
the production or manufacture of like goods;
the Minister must work out the cost of production or manufacture using information set
out in the exporter or producer's records.
In [the final report of Investigation 221] , the Commission found that the cost of plate
steel and the cost of the flanges reflected in the records of TSP Shanghai did not
reasonably reflect competitive market costs. The Commission has again examined these
matters for the purposes of this inquiry.162
7.73. The ADC then performed an "Assessment of competitive market costs" and concluded:
Having determined that the records of TSP Shanghai do not reasonably reflect
competitive market costs in accordance with subsection 43(2)(b)(ii) of the Regulation,
the Commissioner is not required to work out an amount for the cost of production using
the information as set out in TSP Shanghai's records.
Significant distortions in the plate steel market in China resu lted in an uplift being
applied to plate steel costs in [the final report of Investigation 221 ] to establish a
competitive market cost. Given the available evidence indicates that these distortions

160 Continuation 487 final report (Exhibit CHN-31), p. 39. (emphasis added)
161 Australia asserts that the facts available mechanism under Article 6.8 of the
Anti-Dumping Agreement was used to determine uncooperative exporters' normal values. While perhaps true,
we still see nothing in the ADC's report indicating that it applied the uplifting methodology used for TSP in
anything other than a mechanical fashion following from the use of this method vis-à-vis TSP itself. We
therefore consider the use of facts available immaterial in this context. Australia confirmed that no facts
available were used to determine the dumping margins of TSP in the expiry review. (Australia's response to
Panel question No. 75).
162 Continuation 487 final report (Exhibit CHN-31), p. 32.

continue to exist, for this inquiry, the Commission uplift ed the prices of raw material
steel plate used in the constructed normal value for TSP Shanghai.163
7.74. We consider that this clearly indicates that the ADC rejected the costs of steel plate because
the costs for steel plate were not "competitive market costs". Indeed, immediately after noting that
the relevant underlying statutory language means that "the Commissioner is not required to work
out an amount for the cost of production using the information as set out in TSP Shanghai's records",
the ADC indicate s that the record costs were rejected for the sole reason that "[s]ignificant
distortions" in the Chinese steel markets meant that the costs for steel plate were not "competitive
market costs".
7.75. We consider that the ADC's conclusion was a non-application of the second condition, i.e. the
ADC did not reach a finding at all under the second condition . This is so because the consideration
of whether costs "reasonably reflect competitive market costs" is different from the issue of whether
the costs reflected in the exporters ' records "reasonably reflect the costs associated with the
production and sale of the product under consideration ". The latter pertains to the question of
whether the costs in the exporters ' records reflect those incurred by the exporter. The former
pertains to the question of whether the costs in the exporters ' records reflect something else,
i.e. competitive market costs.164
7.76. We also recall that the panel in Australia – Anti-dumping Measures on Paper addressed the
same issue with respect to findings made by the ADC – where the ADC rejected exporters ' costs
because they did not reasonably reflect competitive market costs – and found that, in doing so, the
ADC did not rely on the second conditio n. The panel so found because it considered that, after
examining the ADC 's findings and certain other considerations, "the ultimate measure of whether
the pulp component of the exporters' records was acceptable to the ADC was the comparison of the
exporters' pulp costs with the competitive market benchmark. Therefore, the standard the ADC was
applying to the records was something other than whether the records reasonably reflected the costs
incurred".165
7.77. We note that China refers to a practice manual of the ADC that was "operative at the time
[that] each of th[e relevant] decisions were made", and which provides that:
Concerning the term "reasonably reflect competitive market costs" for the cost to make
used in Regulation 180(2), the Commission gives the term "reasonably reflect " the
following meanings:
• that the cost to make items are supported by the books of account; and
• that the costs themselves are "reasonable" i.e. the cost allo cations methods
used by the exporter in working out those costs are reasonable.
More generally, the Commission may examine whether the cost to make are those costs
that would be incurred in a "competitive" market. The term "competitive" in
Regulation 180(2) is given its usual meaning and this can only be known according to
the case circumstances.
For example, it may be relevant when examining whether the cost to make reasonably
reflects competitive market costs to examine the production of other like goods in the
country of export. A significant variation between the costs shown in the records of the
exporter or producer concerned when compared with other producers of like goods may
be an indication that the records do not reasonably reflect costs incurred. Or, contracts

163 Continuation 487 final report (Exhibit CHN-31), p. 33. The ADC later concluded that it "has not
applied any uplift to the flanges cost component in its normal value calculation". (ibid. p. 35).
164 Australia appears to draw a distinction at times between: (a) the ADC's conclusion that
exporters' costs did not reflect competitive market costs, which Australia argues is no finding under the
second condition; and (b) the ADC's noting of distortions in the Chinese steel markets, which may underlie the
conclusion described in (a), but on their own can form the basis for a negative findings as to the
second condition. This does not appear to be a meaningful distinction, as neither focusses on the costs actually
incurred by the exporter.
165 Panel Report, Australia – Anti-dumping Measures on Paper, para. 7.106. (emphasis original)

entered into for long term supply can be relevant when deciding that the price under
those contracts is a normal competitive market price.166
7.78. China argues that this excerpt demonstrates that when the ADC rejects exporters' costs
because they d o not reflect competitive market costs, it amounts to a misapplication of the
second condition of Article 2.2.1.1. We note that t he practice manual does indicate that the term
"reasonably reflect competitive market costs " can include an examination of "whether the cost to
make items are supported by the books of account ". This examination appears similar to the
second condition of Article 2.2.1.1. However, the excerpt above further indicates that the ADC may
also examine "whether the cost to make are those costs that would be incurred in a 'competitive'
market". This is the determination made by the ADC, and, as explained further above in this section,
this determination is materially different from the language of the second condition.167
7.79. We therefore conclude that the ADC did not make a negative finding under the
second condition of Article 2.2.1.1 in the expiry review.168 We also find that the ADC did not make
an affirmative finding under the second condition in the expiry review. This is despite the presence
of certain language in the ADC's report suggesting that such a finding may have been possible.
Specifically, the ADC stated that "[t]he Commission is satisfied that the information provided by TSP
Shanghai is accurate and reliable for the purpose of ascertaining the variable factors applicable to
its exports of the goods" .169 Both parties indicated that this was not a second condition finding.
Australia, in particular, in dicated that this statement was for purposes of Article 6.6 of the
Anti-Dumping Agreement, i.e. it was the ADC satisfying itself "as to the accuracy of the information"
obtained from the exporter, but not specifically finding that the costs " reasonably reflect the costs
associated with the production and sale of the product under consideration " for purposes of
Article 2.2.1.1. Although we agree with Australia that there is likely "overlap" between these
two inquiries, we ultimately do not see a compelling r eason to disturb the parties' shared
understanding that this statement pertain s to the accuracy of TSP's information, generally, rather
than the accuracy of the costs for purposes of normal value construction, specifically.170

166 China's first written submission, para. 203 (quoting ADC, Dumping and Subsidy Manual (2013), p. 43
(Exhibit CHN-42)) (emphasis omitted). We recall that the relevant wording of Regulation 180(2) of the
Customs Regulation 1926 (mentioned in this exhibit) and section 43(2) of the Customs (International
Obligations) Regulation 2015 (mentioned in the expiry review report) is materially the same. See fn 151
above.
167 China also cites an explanatory statement accompanying the amendment to Regulation 180(2) that
introduced the relevant "competitive market costs" language. This notes the introduction of the language and
concludes:
The amending Regulations substitute paragraph 180(2)(b)(ii) to prescribe that the Minister only
has to use the records relating to the like goods if they reasonably reflect competitive market costs
associated with the production or manufacture of like goods. This ensures that the relevant records
are only taken into account if they reasonably reflect competitive market costs and not just actual
costs.
(China's first written submission, para. 163 (quoting Customs Amendment Regulations 2005 (No. 8) and
Explanatory Statement (Exhibit CHN -38), pp. 8 -9)) (emphasis added by China). See also
Australia's response to Panel question No. 77, paras. 70-73 (discussing the explanatory statement).
We do not consider this demonstrates that the "competitive market costs" test is the same as the
inquiry under the second condition of Article 2.2.1.1. Indeed, the italicized language in the excerpt above itself
seems to suggest they are different, cumulative inquiries.
168 We also note that the ADC's findings in the expiry review for stainless steel sinks and in the
investigation for railway wheels (discussed in the sections addressing AD claim 3 for these two proceedings,
further below) are consistent with our conclusions in this section regarding the relationship between the
"competitive market costs" standard and the second condition of Article 2.2.1.1.
169 Continuation 487 final report (Exhibit CHN-31), p. 29.
170 China's response to Panel question No. 80, para. 112; Australia's response to Panel question No. 80,
para. 143. The parties' positions, and our conclusion, is the same with respect to the ADC's statement in the
investigation that "[v]erification of TSP's information submitted in its questionnaire response showed that
domestic sales and domestic CTMS calculations were reasonably complete, relevant and accurate".
(Investigation 221 final report (Exhibit CHN-4), p. 33).

7.80. In light of the foregoing, we find that there was no basis for departure from using TSP's record
costs for steel plate in constructing normal value in the wind towers expiry review.171 We therefore
find that the ADC acted inconsistently with Article 2.2.1.1 in that segment.172
7.3.2 AD claim 1 under Article 2.2 of the Anti-Dumping Agreement: costs of production in
the country of origin
7.3.2.1 Legal framework
7.81. This claim pertains to Article 2.2 of the Anti-Dumping Agreement, which provides:
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,
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.173
7.82. The expression "cost of production in the country of origin" in Article 2.2 has been understood
as "a reference to the price paid or to be paid to produce something within the country of origin".174
The Appellate Body has further explained that Article 2.2
do[es] not preclude the possibility that the 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".175
7.83. We agree with this Appellate Body analysis. We note at this time that Australia argues that it
would be unnecessary for the Panel to rule on China 's claim under Article 2.2 if the Panel finds a
violation of Article 2.2.1.1.176 China argues that the Panel can and should address this claim even if
the Panel finds a violation under Article 2.2.1.1.177 We recall that China makes similar Article 2.2.1.1
claims and Article 2.2 claims vis-à-vis the wind towers, stainless steel sinks, and railway wheels
proceedings. We consider it most appropriate, under the circumstanc es of this dispute, to make
findings as to this claim regardless of whether or not a violation of Article 2.2.1.1 is found in the
context of any of the three proceedings. This is so mainly because we consider the disciplines of

171 The parties also agree that there was no first condition finding in the expiry review.
(Australia's response to Panel question No. 78, para. 116; China's responses to Panel question Nos. 69 and
80). We agree. Thus, even if there had been an affirmative second condition finding, the ADC would still not
have been entitled to depart from using TSP's costs.
172 China also claims violations of Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1
of the GATT 1994 in this context. (China's first written submission, section F.1). We discern no independent
basis on which to find violations of these provisions. The Panel declines to make findings as to these claims as
it would not be helpful in resolving the dispute.
173 Fn omitted; emphasis added.
174 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.69.
175 Appellate Body Report, EU – Biodiesel (Argentina), para. 6.70 (fns omitted). We recall that Australia
generally argues that the limited information on the record of the relevant proceedings prevented the ADC
from making further adjustments to the surrogate costs, and that, at times, it was the non-responsiveness of
the exporters or the Chinese Government to requests for information that produced a record with limited
information. We agree with the Appellate Body, however, that "it is for the investigating authority to determine
normal value consistently with Article 2.2 when domestic sales cannot be used". (Appellate Body Report,
Ukraine – Ammonium Nitrate, fn 419.) We also note that Australia has explained that in none of the relevant
investigations or expiry reviews did the ADC use the facts available mechanism under Article 6.8 of the
Anti-Dumping Agreement to determine normal value of examined exporters. (Australia's responses to
Panel question Nos. 12 and 75). We therefore find this argument by Australia immaterial as to all
three proceedings.
176 Australia's response to Panel question No. 12.
177 China's response to Panel question No. 12.

Articles 2.2.1.1 and 2.2 to be distinct, and we consider that issuing findings with respect to both this
claim and China's other claims under Article 2.2.1.1 would be helpful in terms of resolution of this
dispute.178
7.3.2.2 Main party arguments
7.84. China makes this claim with respect to the wind towers investigation and expiry review. 179
China argues that in these two segments the ADC rejected TSP's costs of production when
determining normal values, and instead used surrogate costs. 180 These surrogate costs were
"uplifted" costs for steel plate and flanges. China claims that, in doing so, Australia violated
Article 2.2 – and, as a result, Articles 2.1 and 2.2.1.1 – of the Anti-Dumping Agreement because the
ADC used costs that were not "the cost of production in the country of origin" within the meaning of
Article 2.2. More specifically, China claims that the costs used were specifically chosen by the ADC
because they were meant to not represent the costs of production in China, and that the ADC made
no material effort to adap t such costs so that they could reasonably be considered "the cost of
production in [China]".181 China cites the Appellate Body reports in EU – Biodiesel (Argentina) and
Ukraine – Ammonium Nitrate in support of its arguments in this context.182
7.85. Australia contends that China misunderstands how the ADC calculated the ratio used to uplift
TSP's relevant costs of production . Australia asserts that "China alleges that the ADC compared
Chinese plate steel prices with Korean and Chinese Taipei plate steel prices to work out a percentage
difference. This is simply factually incorrect. The ADC compared plate steel prices in China with an
unadjusted normal value for plate steel in China from a previous investigation to work out the
relevant percentage difference" which was then used to uplift TSP's relevant costs.183 In this context,
Australia underlines that the Panel may not rely on publications of the Australian Government that
postdate the original investigation to interpret the ADC's findings in the original investigation, as
China does.184 Australia also contends that it was the Chinese Government's failure to respond to
questionnaire inquiries that led the ADC to rely on price inform ation on steel plate from another
investigation.185
7.86. Australia contends there was a change of essence in respect of this aspect as between the
original investigation and the expiry review because in the expiry review the ADC used a benchmark
to further adjust the investigation's uplifted prices.186 Australia further asserts that China appeared
to make only certain claims with respect to the wind towers expiry review in one part of its
first written submission , but contradicts itself by directing this claim against the expiry review
elsewhere in its first written submission.187
7.87. Australia also argues that if the Panel were to find a violation of Article 2.2.1.1 under
AD claim 3, then it would not be necessary or desirable to also issue findings with respect to this
Chinese claim . This is not, in Australia's view, because this claim is consequential to
China's AD claim 3 under Article 2.2.1.1. Rather, in Australia's view, it is because the Panel would
already have made a finding of error with respect to an aspect of the ADC's decision that forms a
predicate for its assessments of the facts and issues presented with respect to this claim.188

178 We recognize that panels may differ in their approach to this issue under the unique circumstances
they face. Compare Panel Report, EU – Biodiesel (Argentina), paras. 7.255-7.260 (making findings on a similar
Article 2.2 claim after it had found a violation of Article 2.2.1.1) with Panel Report, Australia – Anti-dumping
Measures on Paper, para. 7.133 (finding a consequential violation of Article 2.2 based on an underlying
Article 2.2.1.1 violation).
179 China's response to Panel question No. 37, table 1.
180 China's first written submission, paras. 76-95.
181 China's response to Panel question No. 69, paras. 49-53.
182 China's first written submission, paras. 96-119.
183 Australia's first written submission, para. 503. (emphasis original) See also Australia's first written
submission, paras. 504-506 and 510-512 (containing relevant statements of the ADC); response to
Panel question No. 74.
184 Australia's first written submission, paras. 505 and 513-515 (referring to ADRP Review 2019/100
conference summary (Exhibit CHN-30)).
185 Australia's first written submission, paras. 507-509.
186 Australia's response to Panel question No. 69, para. 35.
187 Australia's first written submission, paras. 517-518.
188 Australia's response to Panel question No. 12.

7.88. China responds that, contrary to Australia's position, the ADC did use steel plate price data
from Korea and Chinese Taipei, and compared that data to Chinese steel plate prices , to calculate
the uplift ratio. China stresses that explanations provided in subsequent Australian administrative
procedures support China's position, and that Australia's explanations are inconsistent with certain
statements made by the ADC. Also, China asserts that the main piece of evidence Australia relies
on to support its position ( a confidential appendix to the investigation report189) does not actually
support Australia's position. Moreover, according to China, even if Australia were correct in its factual
assertions surrounding this issue, it would not matter because the normal values of the Chinese
company in the prior investigation Australia alleges were used to calculate the uplift ratio had been
constructed using non-Chinese costs. Moreover, in China's view, even if one were to accept that the
ADC only used data from China to calculate the uplift ratio as Australia claims, the uplift ratio would
still have resulted in a fictional cost of production for TSP and thus could still not be considered to
be a cost of production in the country of origin for purposes of Article 2.2.190 China also asserts that
in the wind towers expiry review the ADC used an additional non -Chinese benchmark to further
adjust relevant costs, thus further demonstrating the ADC's non-compliance with Article 2.2 in that
segment.191
7.89. China also asserts that a violation of Article 2.2.1.1 would also result in a violation of
Article 2.2, but considers that the Panel should still make findings with respect to this claim even if
a violation of Article 2.2.1.1 is found. China indicates that such an approach has been followed in
other disputes.192
7.3.2.3 Expiry
7.90. China's claim concerns the wind towers original investigation and expiry review. As discussed
in section 7.2.2 above, we will address first the issue of whe ther or not the aspect challenged by
China has expired. In this regard, we shall consider whether there was a change of essence in the
approach taken by the ADC to select surrogate costs as between the original investigation and expiry
review.
7.91. In the investigation t he ADC constructed TSP's normal value. 193 In doing so, the ADC
"consider[ed] it appropriate to determine the cost of production for wind towers sold domestically
by replacing the cost of plate steel and flanges with a competitive market cost" .194 A competitive
market cost for steel plate and flanges was obtained using information from a different Australian
investigation, i.e. an investigation into hot rolled plate steel from China , Indonesia, Japan, Korea,
and Chinese Taipei (Investigation 198). As explained by the ADC, "[t]he competitive market cost
was established using verified domestic selling prices in China for plate steel from
[Investigation 198]. These prices were then compared to the unadjusted normal values established
in [Investigation 198]. The differences in these prices were then applied to the cost of steel plate
and flanges for TSP".195
7.92. In the expiry review, the ADC again constructed TSP's normal value 196 and replaced
TSP's costs of steel plate (but not flanges) with surrogate costs.197
[To replace the costs the ADC ] indexed the uplifted costs from [the final report of
Investigation 221] by reference to movements in the Steel Bulletin Board (Platts)
benchmark from the original investigation period in [the final report of Investigation
221] to the current inquiry period. The Commission selected Flat Products / Plate CFR
East Asia / East Asia import CFR $ / ton (which is reported on Cost and Freight (CFR)
terms in USD per tonne) as its benchmark because it is comprised of non-China import

189 Investigation 221 final report, appendix 2 "Steel Price Uplift" (Exhibit AUS-75).
190 China's response to Panel question No. 11; second written submission, paras. 145-149.
191 China's second written submission, paras. 151-152.
192 China's response to Panel question No. 12 (referring to Appellate Body Reports, EU – Biodiesel
193 Investigation 221 final report (Exhibit CHN-4), pp. 33-34.
194 Investigation 221 final report (Exhibit CHN-4), p. 30.
195 Investigation 221 final report (Exhibit CHN-4), pp. 33-34.
196 Continuation 487 final report (Exhibit CHN-31), p. 32.
197 Continuation 487 final report (Exhibit CHN-31), pp. 33-35.

prices, and is therefore likely to be the most representative of competitive plate steel
prices in the region.198
7.93. We further recall that TSP was excluded from the wind towers AD order following an
administrative review, and thus we will focus on the ADC's alleged errors as they impacted the group
of uncooperative and all -others exporters. 199 We therefore further recall that , as explained in
paragraph 7.70 above, we found that the cost-replacement methodology (both with respect to the
rejection of TSP's record costs for steel plate and the selection of an "uplifting" methodology to
establish a surrogate cost) for TSP was transferred over o nto the uncooperative and all other
exporters. Thus, even if the uplifting methodology could be deemed expired vis-à-vis TSP,
specifically, owing to its later exclusion from the scope of the anti-dumping order, that methodology
remains the basis for the uncooperative exporters' still-active anti-dumping duty rate.200
7.94. We consider that there was no change of essence in the ADC 's uplifting methodology in the
investigation and expiry review. We acknowledge that: (a) in the investigation the uplift was applied
to both steel plate and flanges whereas in the expiry review the uplift was applied only to flanges;
and (b) in the expiry review the uplifted costs were further altered with reference to the
Steel Bulletin Board (Platts) benchmark . These minor differences in the approaches between the
original investigation and the expiry review are not , in our view, material enough to alter the key
aspects of the order challenged by China, i.e. the uplifting of TSP's costs with reference to data that
(a) was not TSP's and (b) was not further adjusted.
7.95. We therefore consider that the challenged aspect of the anti-dumping order has not expired.
We thus will make findings with r espect to this challenged aspect of the order and , as explained
above, focus our attention on the expiry review.
7.3.2.4 Evaluation
7.96. As noted in the section immediately above, in the expiry review, the ADC rejected TSP's record
costs for steel plate, instead using surrogate costs for these production inputs by uplifting
TSP's costs. We first note, therefore, that the parties disagree as to how the ADC calculated the ratio
used to uplift TSP's costs . The parties agree that data for this purpose were taken from
Investigation 198, a temporally overlapping Australian investigation of hot rolled plate steel from
China, Indonesia, Japan, Korea, and Chinese Taipei. 201 The ADC stated in the wind towers
investigation that "[a] competitive market cost for plate steel was established using verified domestic
selling prices in China for plate steel from [Investigation 198]. These prices were then compared to
the unadjusted normal values [for plate steel] established in [Investigation 198]. The difference in
these prices was then applied to the purchase cost of plate steel as refl ected in TSP's records".202
China argues that the normal values were those taken from Korea and Chinese Taipei. Australia
argues that the normal values were taken from the Chinese producer Shandong Iron and Steel
Company Limited, Jinan Company (Jigang). In short, the parties disagree on the source of some of
the data used to uplift TSP's costs (i.e. a Chinese entity Jigang or non-Chinese entities from Korea
and Chinese Taipei).
7.97. This disagreement is potentially relevant because, if the ADC used Jigang's normal value
(rather than Korean and Chinese Taipei entities' normal values) to calculate the uplift ratio, along
with "verified domestic selling prices for plate steel", this might suggest that the result of the uplift
could be deemed to be a "cost of production in the country of origin" (because only data taken from
Chinese sources were used to uplift TSP's costs). Upon closer examination, though, we consider this
disagreement moot. This is because we agree with China that even if Australia's factual
characterizations surrounding this issue were correct, the ADC did not reasonably demonstrate that
the surrogate costs would represent a cost of production in China for TSP. We reach this conclusion
because the ADC fails to provide any explanation as to how the price at which a company that is not

198 Continuation 487 final report (Exhibit CHN-31), pp. 33-34. (italics original; underlining added)
199 See para. 7.52 above.
200 China's first written submission, paras. 83 and 112.
201 Investigation 198 (hot rolled plate steel) final report (Exhibit CHN-33).
202 Investigation 221 final report (Exhibit CHN-4), p. 30. (emphasis added)

TSP (whatever WTO Member in which it may be located) sells steel plate, when compared to other
selling prices for steel plate, yields a referent for TSP's steel plate costs.203
7.98. This error, in our view, was exacerbated in the expiry review, in which the ADC further
adjusted the previously established uplifted costs with reference to the Steel Bulletin Board (Platts)
benchmark. We recall that the benchmark was specifically chosen "because it is comprised of
non-China import prices, and is therefore likely to be the most representative of competitive plate
steel prices in the region".204 We consider it plain that the use of "non-Chinese import prices" would
move the already "uplifted" costs further away from what TSP's cost s of production in China were.
Australia has not pointed to any adjustments the ADC performed to such prices to adapt them to
TSP's circumstances in China in either the investig ation or expiry review, and we discern none. 205
While we note that the ADC explored other potential methodologies to replace TSP's costs in the
expiry review, the ADC's explanations as to why it rejected alternative methods provide no insight
into why no fu rther adjustments to the uplifted costs would have been needed for purposes of
Article 2.2.206
7.99. On this basis, we find that the ADC acted inconsistently with the practice of an unbiased and
objective investigating authority with respect to Article 2.2 of the Anti-Dumping Agreement by using
uplifted TSP's steel plate costs for the purpose of constructing normal value, and then transferring
that methodology over onto the ADC's calculation of normal valu es for the uncooperative and all
other exporters 207, without a reasoned and adequate explanation as to why the uplifted costs,
without any adjustments to adapt such uplifted costs to TSP's circumstances, represented a cost of
production in China for TSP.208
7.3.3 AD claim 5.c under Article 2.2.1.1 of the Anti-Dumping Agreement: "manner" and
"circumstances" of rejection of exporters' costs
7.3.3.1 Main party arguments
7.100. China claims that Australia violated Articles 2.1, 2.2, 2.2.1.1 of the Anti-Dumping Agreement
and Article VI:1 of the GATT 1994 due to the "manner" and "circumstances" in which the ADC
rejected the use of TSP's costs when constructing normal value in the wind towers investigation and
expiry review.209 China asserts that this claim is different from its other cl aims under Articles 2.2
and 2.2.1.1 because this claim "focusses on what the investigating authority did after it rejected the
exporter's record costs of plate steel and flanges" and specifically "challenges the rationality of the
'cost difference' used by the investigating authority to 'uplift' the exporter's record costs for plate
steel and flanges for the purposes of the calculation of the exporter's costs of production". 210 In
China's view, the process by which the ADC "uplifted" the exporter's costs of production was neither

203 The ADC chose to use information from Investigation 198 because the investigation concerned steel
plate, its period of investigation overlapped with that of the wind towers investigation, and information on its
record had been verified. (Investigation 221 final report (Exhibit CHN-4), pp. 29-30 and 33-34).
204 Continuation 487 final report (Exhibit CHN-31), p. 34. (emphasis added)
205 We note Australia's argument that "it would be nonsensical – through the choice of reference data
under Article 2.2 – to reintroduce the very same distortions that the ADC legitimately excluded under
Article 2.2.1.1". (Australia's second written submission, para. 197). We reject this argument because, even if
Australia's argument is true in principle, in neither the investigation nor expiry review does the ADC offer a
reasoned and adequate explanation, as to why making no adjustments to the uplifted costs was necessary to
avoid reverting to the distortions it sought to avoid. We consider it unnecessary to address China's additional
argument that Jigang's normal values could not be used to create costs of production in China at all because its
normal values were constructed using Chinese export prices for coking coal. (China's second written
submission, para. 145(d)).
206 Continuation 487 final report (Exhibit CHN-31), pp. 34-35. The ADC also made certain adjustments
to the normal value at large. See Investigation 221 final report (Exhibit CHN-4), p. 34 (noting changes to
SG&A, financing costs, and other costs deemed necessary for a "fair comparison"); Continuation 487 final
report (Exhibit CHN-31), p. 37 (noting changes deemed necessary for a "fair comparison"). We discern no way
in which these adjustments, however, were made for the purpose of adapting the uplifted costs, specifically, to
TSP's circumstances in China.
207 See para. para. 7.52 above.
208 China also claims violations of Articles 2.1 and 2.2.1.1 of the Anti-Dumping Agreement, and
Article VI of the GATT 1994 in this context. (China's first written submission, section E.1). We discern no
independent basis on which to find violations of these provisions. The Panel declines to make findings as to
these claims as it would not be helpful in resolving the dispute.
209 China's first written submission, para. 14.
210 China's first written submission, para. 261. (emphasis original)

unbiased nor objective. Further, according to China, the determination was not based on positive
evidence and the ADC provided no reasoned or adequate explanation to justify this cost adjustment.
China notes that the period of invest igation in Investigation 198 – i.e. the other investigation from
which the ADC took the surrogate costs used to replace TSP's costs – had a different, albeit
overlapping, period of investigation than the wind towers investigation. Moreover, with respect to
the expiry review, China asserts that the Steel Bulletin Board (Platts) benchmark used to adjust the
already-uplifted surrogate costs from the original investigation was similar to TSP's steel costs during
the expiry review's period of investigation , and thus there should have logically been no need to
adopt modified and uplifted surrogate costs at all for purposes of the expiry review.211
7.101. Australia asserts that this claim, insofar as it relates to the obligation for using costs of
production in the country of origin, is subsumed under China's AD claim 1 under Article 2.2, and,
insofar as it relates to the second condition of Article 2.2.1.1, it lacks a legal basis.212 Australia also
argues that China misunderstands the ADC's findings in this context .213 Australia asserts that since
this claim is duplicative of China's other claims, the expiry issues arising with respect to those claims
apply equally to this claim.214
7.3.3.2 Expiry
7.102. In the section im mediately below, we find this claim effectively subsumed under
China's AD claims 1 and 3 under Articles 2.2 and 2.2.1.1 , and we therefore make no additional
findings here. The expiry issue is thus moot.
7.3.3.3 Evaluation
7.103. In this claim, China asks the Panel to find that in the wind towers investigation the ADC
improperly used surrogate costs of production taken from a different investigation and time period,
and in the expiry review further adjusted those costs with a benchmark that furth er modified the
already-inaccurate costs. We recall, however, that we have already found that Australia violated
Articles 2.2.1.1 and 2.2 by improperly rejecting TSP's relevant costs and then failing to adapt the
chosen surrogate costs such that they could be considered costs of production in China. 215 We
consider that those conclusions already address the key underlying concerns in China's claim here,
i.e. the propriety of using "uplifted" costs as surrogate costs of production for TSP in constructing
normal value. Here, China asks us to state the same conclusion in a different manner. We therefore
consider that we need not separately consider this claim and decline to make any additional findings
with respect to it.
7.3.4 AD claim 6.a under Article 2.4 of the Anti-Dumping Agreement: fair comparison
7.3.4.1 Legal framework
7.104. Article 2.4 of the Anti-Dumping Agreement provides:

211 China's first written submission, paras. 261-279 and 297-306.
212 Australia's first written submission, paras. 522-525; response to Panel question No. 16;
second written submission, paras. 204-214.
213 Australia's first written submission, para. 520.
214 Australia's response to Panel question No. 69, para. 36.
215 See discussions surrounding AD claims 1 and 3 above.

A fair comparison shall be made between the export price and the normal value. This
comparison shall be made at the same level of trade, normally at the ex-factory level,
and in respect of sales made at as nearly as possible the same time. Due allowance
shall be made in each case, on its merits, for differences which affect price
comparability, including differences in conditions and terms of sale, taxation, levels of
trade, quantities, physical characteristics, and any other differences which are also
demonstrated to affect price comparability. 7 In the cases referred to in paragraph 3,
allowances for costs, including duties and taxes, incur red between importation and
resale, and for profits accruing, should also be made. If in these cases price
comparability has been affected, the authorities shall establish the normal value at a
level of trade equivalent to the level of trade of the constru cted export price, or shall
make due allowance as warranted under this paragraph. The authorities shall indicate
to the parties in question what information is necessary to ensure a fair comparison and
shall not impose an unreasonable burden of proof on those parties.
7 It is understood that some of the above factors may overlap, and authorities shall ensure that they
do not duplicate adjustments that have been already made under this provision.
7.3.4.2 Main party arguments
7.105. China recalls that, when constructing nor mal values in all three challenged proceedings,
including the wind towers proceedings, the ADC used costs that were different from the costs actually
incurred by the exporters in manufacturing the product under consideration. China argues that the
ADC's cost substitution methodology to determine constructed normal values generated relevant
disparities between the normal value and the export price because:
a. On the one hand, actual export prices were formulated by the Chinese exporters on the
basis of their knowledge and understanding of the production of those goods in China, the
actual costs of production in China, and the exporters' desired profit for producing and
selling those products from China to customers in other countries; and
b. On the other hand, constructed normal values were calculated by the ADC on the basis of
unrealistic and inflated costs of production, which did not reflect the recorded cost of the
exporters nor the cost of production in China as the country of origin.216
7.106. China argues that such disparities represent differences affecting price comparability under
Article 2.4, because by using costs higher than an exporter's record costs in constructing normal
value, the ADC imputed a price -setting variable of which the exporter was not cog nisant and thus
necessarily did not take into account when making export sales. 217 China submits that absent any
due allowances to account for these disparities 218, the comparison between the normal value as
constructed and the export price in each of the th ree investigations was not a "fair comparison"
under Article 2.4.219
7.107. China, however, asserts that if the Panel were to find violations of Article 2.2, 2.2.1,
and 2.2.1.1, then there would be no need for the Panel to address this claim.220
7.108. Australia argues t hat China's claim under Article 2.4 is "entirely, and impermissibly,
premised on China's disagreement with Australia's construction of normal value, and not on any
failure to make due allowances under Article 2.4".221 Australia argues that there is no textual basis
to challenge the ADC's normal value calculation under Article 2.4. Australia thus rejects
China's position that Australia's cost substitution resulted in a difference between normal value and
export price that required an adjustment under Article 2.4. In Australia's view, Article 2.4 is only
concerned with making appropriate adjustments which are unrelated to the construction of normal
value pursuant to Article 2.2, because Article 2.4 presupposes that the normal value and export

216 China's first written submission, paras. 326 and 336; opening statement at the first meeting of the
Panel, paras. 89 and 90.
217 China's first written submission, paras. 332-333 and 335.
218 China's first written submission, paras. 327-331.
219 China's first written submission, paras. 15(a), 322, 324 and 327.
220 China's second written submission, paras. 279-280.
221 Australia's first written submission, paras. 314, 318, and 413. See also ibid. paras. 532-535.

price have already been established. 222 Australia agrees that the Panel need not proceed to an
analysis under Article 2.4 if China succeeds on AD claims 1 and 3.223
7.3.4.3 Expiry
7.109. In the section immediately below, we find it unnecessary to examine the substance of this
claim. We therefore consider an expiry analysis moot.
7.3.4.4 Evaluation
7.110. The issue before us under AD claim 6.a is to determine whether the ADC's conduct is
consistent with the practice of an unbiased and objective investigating authority by not making an
adjustment under Article 2.4 to account for the difference between the export price and the normal
value generated by the alleged use of non-Chinese surrogate costs to construct normal value. China
claims that the ADC bears an obligation under Article 2.4 to make due allowance for differences
affecting price comparability, including those stemming from the ADC's allegedly inappropriate use
of non-Chinese surrogate costs for normal value calculation purpose .224 The parties agree that the
practical implication of China' s AD claim 6.a, if successful, is to reverse the methodology used to
construct normal value. 225 The parties disagree, however, as to whether such a reversing is
prescribed or permitted under the Anti-Dumping Agreement.226
7.111. We begin by considering the relationship between China's AD claim 6.a under Article 2.4,
and its claims under Articles 2.2 and 2.2.1.1. Although Article 2.4 contains obligations separate and
distinct from those contained in Articles 2.2 and 2.2.1.1, the adjustments China requests in the
present case are essentially the same as those requested under the Articles 2.2 and 2.2.1.1 claims,
i.e. to construct normal value using the exporters' costs of production in China . Thus,
China's AD claim 6.a under Article 2.4 is, in essence, an additional or secondary course of action to
address the same underlying issue stemming from the ADC's use of alternative data for normal value
calculation. In their responses to a question from the Panel, both parties agreed that there is no
need for the Panel to review this claim separately if the Panel were to find a breach under Articles 2.2
and 2.2.1.1 (AD claims 1 and 3).227 With respect to the expiry review, we have found with respect
to AD claim 1, above, that the ADC acted inconsistently with Article 2.2 by using TSP's uplifted costs
from the original investigation, which were adjusted according to a benchmark that excluded Chinese
data, but not adjusted to TSP 's circumstances in China . We have also found with respect to
AD claim 3, above, that the ADC acted inconsistently with Article 2.2.1.1 because there was no basis
for the ADC to reject the exporter's record costs for steel plate in constructing normal value under
the circumstances of the expiry review.
7.112. In light of these findings, we consider it unnecessary to examine further whether the ADC
also failed to conduct a fair comparison under Article 2.4 by making adjustment to account for the
differences generated through the use of surrogate costs in the expiry review.
7.3.5 AD claim 7 under Articles 2.2 and 2.2.2 of the Anti-Dumping Agreement
7.3.5.1 Legal framework
7.113. Article 2.2 of the Anti-Dumping Agreement provides that:
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,

222 Australia's first written submission, para. 328; second written submission, paras. 216, 218, and 221.
223 Australia's response to Panel question No. 20, para. 40.
224 China's response to Panel question No. 20, paras. 74–75.
225 Australia's response to Panel question No. 21, para. 44; Australia's second written submission,
paras. 216 and 220; and China's opening statement at the first meeting of the Panel, para. 93.
226 China's opening statement at the first meeting of the Panel, para. 93; Australia's second written
submission, paras. 220 and 221.
227 Australia's response to Panel question No. 20, para. 40; China's response to Panel question No. 20,
para. 77; opening statement at the first meeting of the Panel, para. 97; and second written submission,
para. 279.

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 representa tive, or with the
cost of production in the country of origin plus a reasonable amount for administrative,
selling and general costs and for profits.228
7.114. Article 2.2.2 of the Anti-Dumping Agreement provides that:
For the purpose of paragraph 2, the amounts f or administrative, selling and general
costs and for profits shall be based on actual data pertaining to production and sales in
the ordinary course of trade of the like product by the exporter or producer under
investigation. When such amounts cannot be d etermined on this basis, the amounts
may be determined on the basis of:
(i) the actual amounts incurred and realized by the exporter or producer in question in
respect of production and sales in the domestic market of the country of origin of the
same general category of products;
(ii) the weighted average of the actual amounts incurred and realized by other exporters
or producers subject to investigation in respect of production and sales of the like
product in the domestic market of the country of origin;
(iii) any other reasonable method, provided that the amount for profit so established
shall not exceed the profit normally realized by other exporters or producers on sales
of products of the same general category in the domestic market of the country of
origin.
7.115. The chapeau of Article 2.2.2 imposes a general obligation on an investigating authority to
use "actual data pertaining to production and sales in the ordinary course of trade" when determining
amounts for SG&A and profits for the purpose of calculating constructed normal value. Only "[w]hen
such amounts cannot be determined on this basis" may an investigating authority proceed to employ
one of the other three methods provided in subparagraphs (i)-(iii). Thus an investigating authority,
when determin ing SG&A and profits under Article 2.2.2, must first attempt to make such a
determination using the "actual data pertaining to production and sales in the ordinary course of
trade".
7.116. Similarly, subparagraphs (i) and (ii) also express a preference for actua l data, whereas
subparagraph (iii) permits an investigating authority to use "any other reasonable method", subject
to the condition that the amount for profit so established shall not exceed the profit normally realized
by other exporters or producers on sales of products of the same general category in the domestic
market of the country of origin.
7.3.5.2 AD claim 7.a: Profits not based on "actual data"
7.3.5.2.1 Main party arguments
7.117. China argues that the ADC arrived at incorrect amounts for profit in the wind towers original
investigation and expiry review by determining a profit rate with reference to actual cost and sales
data in the ordinary course of trade, but then applying that profit rate to the cost of production and
administrative, selling and general costs (SG&A) incorporating non -record and non -Chinese
surrogate costs which had been "uplifted".229
7.118. China argues that the chapeau of Article 2.2.2 imposes a general obligation on an
investigating authority to use "actual data pertaining to production and sales in the ordinary course
of trade" when determining amounts for SG&A and profits.230 China contends that the "uplifted cost
base" used to calculate the amount of profit included costs of production that were not the

228 Fn omitted.
229 China's first written submission, paras. 16(a), 395 and 397.
230 China's first written submission, paras. 402-404 (referring to, inter alia, Appellate Body Reports,
EC – Tube or Pipe Fittings, para. 97; China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.25).

exporter's actual data. 231 In China's view, the ADC's methodology is incapable of rendering an
amount for profit "based on actual data pertaining to production and sales in the ordinary course of
trade … by the exporter or producer under investigation" as required by Article 2.2.2.232
7.119. Australia notes that China does not challenge the profit rates used by the ADC.233 Australia
argues that the constructed cost base reflected the "correct" costs of the exporter, and thus using
them for profit determination would be consistent with using "actual data pertaining to production
and sales" within the meaning of Article 2.2.2.234 Further, Australia argues that this claim is
derivative of China's AD claims 1 and 3 and should be rejected for the reasons set forth in
Australia's responses to those claims.235
7.120. China disagrees with Australia that its claims under the chapeau of Article 2.2.2 are
derivative of its AD claims 1 and 3. In China's view, Article 2.2.2 is prescriptive of the method that
must be followed in order to calculate the amounts for profit "[f]or the purpose of paragraph 2".236
7.3.5.2.2 Expiry
7.121. China's claim concerns the wind towers investigation and expiry review .237 As discussed in
section 7.2.2 above, the nature of China's claim raises the issue of whether or not the aspect
challenged by China has expired. To address this issue, we will consider whether there was a change
of essence in the approach taken by the ADC to calculate profit under Article 2.2.2 as between the
investigation and expiry review.
7.122. In both segments, TSP was the only investigated Chinese exporter and the ADC uplifted
TSP's costs. Against that background, China makes the same claim here vis-à-vis both segments,
i.e. the ADC applied a profit rate to TSP's uplifted cost data, thus violating the chapeau of
Article 2.2.2 because such costs were not " actual data pertaining to production and sales in the
ordinary course of trade of the like product by t he exporter or producer under investigation ".
Australia does not contest that the ADC applied a profit rate to the TSP's uplifted costs in both
segments and we see no reason to doubt this shared understanding by the parties. We therefore
consider that there was no change of essence as between the two segments, and thus no expiry of
this aspect of the order. We will thus proceed to examine this claim and focus on the expiry review.
7.3.5.2.3 Evaluation
7.123. As indicated in the section above, China claims that the ADC applied a profit rate to uplifted
cost data in the wind towers proceedings238; Australia does not contest these facts. All that the
parties contest is whether the uplifted data could be considered "actual data pertaining to production
and sales in the ordinary course of trade of the like product by the exporter or producer under
investigation" within the meaning of the chapeau of Article 2.2.2.
7.124. We recall that TSP was excluded from the wind towers AD order following an administrative
review, and thus we will focus on the ADC's alleged errors as they impacted the group of
uncooperative and all-others exporters.239 Thus, so far as TSP is concerned, China's claim addresses
an expired aspect of the anti-dumping order. Furthermore, we have found in section 7.3.1.3 above
that the uplift methodology was effectively transferred over to the uncooperative exporters. In this
regard, the ADC stated in section 6.6.1 of its expiry review report that:
The Commission established a normal value [for uncooperative and all other exporters]
under subsection 269TAC(6), having regard to information verified with TSP Shanghai,

231 China's first written submission, para. 416.
232 China's first written submission, paras. 397, 401, 413-414, and 416-418. China also claims violations
of Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994.
(China's second written submission, para. 304).
233 Australia's first written submission, paras. 542-543.
235 Australia's first written submission, paras. 538, and 543-544.
236 China's second written submission, para. 306.
237 China's responses to Panel question Nos. 37 and 69.
238 China's first written submission, paras. 16(a), 395, and 397.
239 See para. 7.52 above.

but exclusive of any favourable adjustments. In addition, uplift to plate steel has been
based on all plate steel purchased from Chinese suppliers by TSP Shanghai for both
domestic and exported wind towers during the inquiry period.240
7.125. However, it is not clear to us from the above extract whether the ADC applied the profit rate
to these uplifted data, specifically, in order to help determine the uncooperative exporters ' normal
value. China argues that the profit determination made with respect to TSP was "automatically
applied to the determination of the amount for pr ofit for all other exporters", "both in the original
investigation and in the subsequent expiry review".241 We note, however, that China has not pointed
to any specific statement in the paragraph above or elsewhere in the expiry review report to the
effect that the uplifted cost data were used as part of any relevant profit determination for the
uncooperative and all other exporters . Rather, all the above excerpt indicates is that the ADC had
"regard to information verified with TSP" more generically. Accordingly, we find that China has failed
to make a prima facie case that the ADC applied a profit rate to the uplifted cost data in the expiry
review.242
7.3.5.3 AD claim 7.c: Inconsistency in "like products" determination
7.3.5.3.1 Main party arguments
7.126. China argues that the A DC's normal value calculation in the wind towers investigation and
expiry review contained an internal inconsistency with respect to Articles 2.1 and 2.2, on the one
hand, and Article 2.2.2, on the other hand. 243 China claims that the ADC applied the profit
methodology under the chapeau of Article 2.2.2, which requires sales of the lik e product in the
ordinary course of trade to calculate profit, after having previously concluded that it had to construct
a normal value because of the lack of "relevant" sales in the domestic market.244 China argues that
the ADC failed to provide any adequate or reasoned explanation to justify the contradictory findings
that there was both an "absence of relevant sales of like goods on the domestic market" 245 for the
purpose of Article 2.2, and an existence of such domestic sales of like product for calculating the
amount of profit under Article 2.2.2 chapeau.246 China argues that Article 2.6 provides a uniform
definition of "like product" for all provisions under the Anti-Dumping Agreement. Accordingly, in
China's view, an investigating authority may not find a particular product to be a like product for the
purposes of Article 2.2.2, but not a like product for the purpose of Article 2.2.247 According to China,
if an investigating authority determined that there were no sales of the like product on the domestic
market in the ordinary course of trade for purposes of Article 2.2, then the investigating authority
would be barred from determining the amounts for profit using the Chinese exporter's domestic
sales of those same products under the chapeau of Article 2.2.2.248 China contends that the
ADC's decision to construct a normal value under Article 2.2 and its decision to use the chapeau of
Article 2.2.2 to calculate profit as part of that construction exercise a re therefore evidently
incompatible. China also contends that, in the expiry review, after TSP raised this issue with the
ADC, the ADC responded that it had found domestic sales in the ordinary course of trade of the like
product such that it could apply the method provided in the chapeau of Article 2.2.2, although the
ADC still used a constructed normal value, citing lack of "relevant" sales on the domestic market.249

240 Continuation 487 final report (Exhibit CHN-31), p. 39. See also ibid. p. 34, where it is stated that
"TSP Shanghai's steel plate costs have been uplifted accordingly in its cost to make data".
241 China's first written submission, para. 415 (referring to Investigation 221 final report
(Exhibit CHN-4), p. 34; Continuation 487 final report (Exhibit CHN-31), p. 39).
242 In so concluding, we note that it may appear somewhat odd to find that that ADC violated
Article 2.2.1.1 in uplifting TSP's costs and then failing to adapt them properly under Article 2.2, but still find
that they reflect "actual data pertaining to production and sales in the ordinary course of trade of the like
product by the exporter or producer under investigation" within the meaning of the chapeau of Article 2.2.2.
Regarding China's claims under Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994, we discern no independent basis on which to find violations of these provisions. We thus decline to
make findings as to these claims as it would not be helpful in resolving the dispute.
244 China's first written submission, paras. 441-442.
245 Investigation 221 final report (Exhibit CHN-4), p. 33.
246 China's first written submission, para. 454.
247 China's first written submission, para. 447.
248 China's first written submission, para. 453.
249 China's first written submission, para. 453.

7.127. Australia argues that China has failed to make a prima facie case of inconsistency. 250
Australia argues that in the expiry review the ADC did not reframe its position in the original
investigation. According to Australia, the ADC found in the original investigation that there was an
absence of relevant sales of like goods on the domestic market in China for determining normal
values. Australia asserts that the ADC similarly determined in the expiry review that the domestic
sales were not "relevant sales" for the purposes of determining normal value. 251 In response to a
question from the Panel, Australia clarified that although the ADC found in both segments that there
were sales on the domestic market in the ordinary course of trade, those sales were not considered
to be relevant sales for the purpose of Article 2.2.252
7.3.5.3.2 Expiry
7.128. China's claim concerns the wind towers investigation and expiry review. 253 As discussed in
section 7.2.2 above, the nature of China's claim raises the issue of whether or not the aspect
challenged by China has expired. To address this issue, we will consider whether there was a change
of essence in the approach taken by the ADC to determine whether sales of the like product occurred
for purposes of Articles 2.2 and 2.2.2 as between the investigation and expiry review.
7.129. We consider that there was no change of essence as between the investigation a nd expiry
review. In both segments, the ADC constructed TSP's normal value because, in its view, there were
no "relevant" domestic sales to use to establish a normal value. 254 The ADC also considered that
there were sales of the like product for purposes of determining a level of profit in both segments.255
We thus recall that TSP was excluded from the wind towers AD order following an administrative
review, and thus we will focus on the ADC's alleged errors as they impacted the group of
uncooperative and all-others exporters.256 As noted in section 7.3.1.3 above, TSP's data were used
as a basis for determining the normal value for the non-cooperating and all-other exporters in the
expiry review .257 We consider that the ADC's explanation for how this was accomplished, and
specifically referencing the uplifting of TSP's steel prices, indicates that the construction approach
used for TSP was effectively transferred over onto the uncooperative exporters (because the point
of uplifting costs was to construct normal value). We therefore consider that the relevant aspect of
the order has not expired. We thus make findings with respect to th is claim and, in doing so, we
focus on the expiry review.
7.3.5.3.3 Evaluation
7.130. China's AD claim 7.c is premised on an alleged internal inconsistency in the ADC's normal
value determination in both the original investigation and the expiry review. As discussed in the
section immediately above, we will focus our analysis on the expiry review. We will refer to the
ADC's determination in the original investigation where necessary, and where the ADC refers to its
own original findings during the course of the expiry review.
7.131. According to China, on the one hand, the ADC found that there was an absence of relevant
sales of like products on the domestic market in China for determining normal values. On the other
hand, the ADC determined the profit component of the constructed nor mal value on the premise
that TSP's domestic sales of wind towers were domestic sales of the like product in the ordinary
course of trade.258
7.132. In response to a Panel question, China indicated that its claim of "internal inconsistency" can
be understood as containing two claims in the alternative , i.e. a breach of Article 2.2 for resorting
to constructed normal value where the conditions for doing so were not met because there were

250 Australia's first written submission, paras. 545 and 549; responses to Panel question No. 29,
para. 85, and No. 30, para. 87.
251 Australia's first written submission, para. 547.
252 Australia's response to Panel question No. 29, para. 83.
253 China's responses to Panel question Nos. 37 and 69.
254 See Investigation 221 final report (Exhibit CHN-4), pp. 33-34; Continuation 487 final report
(Exhibit CHN-31), p. 36.
255 See Investigation 221 final report (Exhibit CHN-4), p. 34; Continuation 487 final report
(Exhibit CHN-31), p. 36.
256 See para. 7.52 above.
257 See also Continuation 487 final report (Exhibit CHN-31), p. 39.
258 China's second written submission, para. 319.

sales of the like product in the ordinary course of trade in the domestic marke t; and in the
alternative, a breach of the chapeau of Article 2.2.2 for calculating profit using data pertaining to
domestic sales where it was determined that there were no sales of the like product in the ordinary
course of trade on the domestic market .259 Thus, China's claim essentially turns on a factual
question: did the ADC determine (a) that there were sales of the like product in the ordinary course
of trade on the domestic market, or (b) that there were no sales of the like product in the ordinary
course of trade on the domestic market?
7.133. In the expiry review, the ADC stated that:
The Commission notes that wind tower sales are project driven and differ in their
technical properties between projects. As such, the Commission considers that each
wind tower is a unique product and that, because of the many variables and differences
in technical specifications which would affect proper comparison, it is not possible to
accurately adjust domestic prices to make them comparable with export prices.
Therefore, the Commission is of the view that there is an absence of sales of like goods
in the market of the country of export that would be relevant for the purposes of
determining a price under subsection 269TAC(1).260
7.134. The ADC further stated that:
[W]hilst wind towers may vary from project to project and have different technical
properties, they nevertheless are like goods. However, these differences mean that
there are no relevant sales of like goods on the domestic market to enable matching to
the goods exported to Australia.261
7.135. The statements of the ADC that "there are no relevant sales of like goods" and "there is an
absence of sales of like goods in the market of the country of export" suggest that the ADC found
that there were no sales of the like product in the ordinary course of trade in the domestic market.
In response to a Panel question, however, Australia clarified that while there were sales of the like
product in the domestic market, these sales were not considered "relevant" sales. 262
Australia's position finds support in the ADC's statement in the investigation that "domestic sales of
like goods in China and Korea are not relevant and suitable to compare to export sales". 263 In the
expiry review, the ADC also stated that "[t]he Commission observes that, having established that
like goods are sold in the domestic market, there is no basis for derogating from subsection 45(2)
of the Regulation".264 For this reason, we accept Australia's position that the ADC determined that
there were sales of the like product in the domestic market. Accordingly, the factual premise of
China's claim under the chapeau of Article 2.2.2 fails. We focus instead on China's claim under
Article 2.2.
7.136. Australia's defence to China's claim under Article 2.2 boils down to a distinction that the ADC
seems to have made between (a) the existence of sales of the like product and (b) the existence of
relevant sales of the like product. Article 2.2, however, makes no such distinction; it only refers to
"sales" of the "like product".265
7.137. Article 2.2 permits an investigating authority to resort to two alternative methods for
determining normal value in two mutually exclusive situations: first, where there are no sales of the
like product in the domestic market; second, where such sales do not permit a proper comparison,
either because of the particular market situation, or because the volume of the sales was low. In the
present case, we accept Australia's position that the ADC determined that there were sales of the
like product on the domestic market. Accordingly, the ADC could not have properly relied on the first

259 China's response to Panel question No. 28, para. 98; second written submission, para. 318.
260 Continuation 487 final report (Exhibit CHN-31), p. 32.
261 Investigation 221 final report (Exhibit CHN-4), p. 29.
262 Australia's response to Panel question No. 29, para. 83.
263 Investigation 221 final report (Exhibit CHN-4), p. 29.
264 Continuation 487 final report (Exhibit CHN-31), p. 36.
265 We posed additional questions to Australia with respect to this issue. In response, Australia referred
the Panel to paragraphs 545-549 of its first written submission, which do not address these questions.
(Australia's response to Panel question No. 29(b), para. 85).

criterion to justify resort to the alternative method of determining normal value. That leaves the
second criterion, namely, where such sales do not permit a proper comparison, either because of
the particular market situation, or because the volume of the sales was low. It is clear from the
record that the ADC concluded that the domestic sales did not permit a proper comparison with
export sales. However, the ADC did not determine that the domestic sales failed to permit a proper
comparison because the vol ume of the sales was low, or because of a particular market situation.
In particular, with respect to the latter, the ADC stated in the expiry review report that: "[n]either
of those circumstances (being the composition of the Australian industry or the me thod of
ascertaining normal value in circumstances of a particular market situation in the country of export)
are relevant to the present inquiry".266
7.138. Thus, the ADC determined that the domestic sales did not permit a proper comparison with
export sales on the basis of a "relevance" test that has no basis in Article 2.2. In doing so, the ADC
resorted to a constructed normal value in a manner inconsistent with that provision.267
7.3.6 AD claim 8 under Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the
GATT 1994: collection of duties in excess of the margin of dumping
7.139. The applicable legal framework for this claim has already been set forth in section 7.2.3
above.
7.3.6.1 Main party arguments
7.140. China asserts that Australia has collected anti-dumping duties on the basis of margins of
dumping that were inflated as a result of the alleged WTO-inconsistencies challenged in China's other
AD claims. 268 China claims that, as a result, Australia has collected anti-dumping duties in excess
of the margins of dumping that would have been "properly established" under Article 2, contrary to
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.269
7.141. Australia argues that China's claim under Article 9.3 is purely consequential, and that it must
fail given that the ADC's calculation of relevant dumping margins was consistent with Article 2 of the
Anti-Dumping Agreement.270
7.3.6.2 Evaluation
7.142. To the extent that we have found above that the ADC acted inconsistently with the provisions
of Article 2, we consider that China has established, as a matter of fact, that the dumping margins
were improperly inflated through the use of uplifted, surrogate costs in the expiry review. As the
ADC made clear in its report , the surrogate costs it used were "significantly higher" than the costs
in the exporter's records during the relevant period. The use of inflated costs thus lead to an increase
in the dumping margin in this case .271 We note that Australia does not argue otherwise. Rather,

266 Continuation 487 final report (Exhibit CHN-31), p. 50. The ADC made a similar finding in the original
investigation, where it stated that "[g]iven the finding that normal values cannot be determined under
s.269TAC(1), the Commission considers that the assessment of whether a market situation exists in the
Chinese domestic market to be redundant. … As outlined in the previous chapter of this report, the Commission
did not consider it necessary to undertake an assessment of the market situation claims". (Investigation 221
final report (Exhibit CHN-4), pp. 29 and 33.)
267 China also claims violations of Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1
of the GATT 1994 in this context. (See China's first written submission, section H.1). We discern no
independent basis on which to find violations of these provisions. The Panel declines to make findings as to
these claims as it would not be helpful in resolving the dispute.
268 See for example, China's first written submission, para. 338; opening statement at the first meeting
and No 110, paras. 240 and 246.
269 China's first written submission, paras. 458 and 459-480. See also China's second written
submission, para. 325.
270 Australia's first written submission, paras. 165, 344-345, and 474; second written submission,
para. 230.
271 In this regard, we note that the ADC also concluded in the expiry review report that:
The benchmark indicates that competitive market steel prices were significantly higher during the
manufacturing period than the costs set out in the exporter 's records. Therefore

Australia appears to treat the success of China's claim under Article 9.3 as dependent on the other
underlying claims under the Anti-Dumping Agreement. In the absence of any rebuttal from Australia,
this in our view establishes prima facie that the anti-dumping duties imposed by the ADC exceeded
the margins of dumping that would have been e stablished had the authorities acted consistently
with Article 2.
7.143. Accordingly, we uphold China's claim that Australia acted inconsistently with Article 9.3 of
the Anti-Dumping Agreement and Article VI:2 of the GATT 1994. We also recall that, in so finding,
the underlying violations of Article 2 that we have found apply to the uncooperative and all-others
rate that was determined with reference to the TSP's normal values, given TSP's exclusion from the
wind towers AD order following the administrative review.272
7.4 Stainless steel sinks
7.144. In this section, we address China's AD and CVD claims as against the stainless steel sinks
proceedings. We recall that multiple segments have occurred in the stainless steel sinks proceedings,
i.e. an original investigation, three interim reviews, and an expiry review. Thus, we will assess expiry
for each claim in accordance with the discussion and approach articulated in section 7.2.2 above.
The only exceptions to this are AD claims 6.b.ii and 6.b.iii, which are directed only as against the
expiry review.
7.145. We also note that the numbering of China's claims, and the order in which we address them,
has already been described in paragraph 7.53 above.
7.4.1 AD claim 3 under Article 2.2.1.1 of the Anti-Dumping Agreement: rejection of
exporters' costs
7.146. Under AD claim 3, China argues that the ADC improperly rejected exporters' records as the
basis on which to determine exporters' costs of production under Article 2.2.1.1 in order to determine
normal value. We recall that China's AD claim 4 is predicated on the notion that in using surrogate
costs for 304 stainless steel cold -rolled coil (304 SS CRC) improperly chosen under Article 2.2.1.1
to perform the ordinary-course-of-trade test (which is used to help determine normal value) ,
Australia violated Article 2.2.1. We thus consider that China 's AD claim 3 is most effectively and
efficiently addressed in conjunction with AD claim 4. We turn to that claim immediately below.
7.4.2 AD claim 4 under Articles 2.2.1.1 and 2.2.1 of the Anti-Dumping Agreement: use of
correct "costs" in the ordinary-course-of-trade test
7.4.2.1 Legal framework
7.147. This claim pertains to Article 2.2.1 of the Anti-Dumping Agreement, which provides:
Sales of the like product in the domestic market of the exporting country or sales to a
third country at prices below per uni t (fixed and variable) costs of production plus
administrative, selling and general costs may be treated as not being in the ordinary
course of trade by reason of price and may be disregarded in determining normal value
only if the authorities determine that such sales are made within an extended period of
time in substantial quantities and are at prices which do not provide for the recovery of
all costs within a reasonable period of time. If prices which are below per unit costs at
the time of sale are abo ve weighted average per unit costs for the period of
investigation, such prices shall be considered to provide for recovery of costs within a
reasonable period of time.273

TSP Shanghai's steel plate costs have been uplifted accordingly in its cost to make data. The
Commission's index methodology and workings can be found at Confidential Attachment 4.
(Continuation 487 final report (Exhibit CHN-31), p. 34)
272 See para. 7.52 above.
273 Fns omitted.

7.148. The parties agree that the word "costs" in the context of Articles 2.2 and 2.2.1.1 should be
interpreted consistently with the word "costs" in Article 2.2.1.274 Thus, if the ADC selects costs in a
manner that is inconsistent with Article 2.2 or 2.2.1.1, and if the ADC used the same costs in the
ordinary-course-of-trade test in the context of Article 2.2.1, it necessarily leads to a violation of that
article as well. We agree. The panel in Ukraine – Ammonium Nitrate interpreted this article in a
similar way. In that dispute, the panel noted that "Ukraine used the surrogate price of gas, rather
than the reported gas cost, first, to identify the below-cost sales, and second, to assess whether the
below-cost sales exhibited the characteristics set out in the first sentence of Article 2.2.1".275 The
panel then reasoned:
[W]e note that Article 2.2.1.1 applies to "[p]aragraph 2". The reference to
"[p]aragraph 2" covers not just Article 2.2 but also Article 2.2.1. The panel in
EC – Salmon (Norway) recognized that the rules for calculating the costs used in a
determination under Article 2.2.1 are found in Article 2.2.1.1. It would follow, in our
view, that costs used in the ordinary -course-of-trade test under Article 2.2.1 must be
consistent with Article 2.2.1.1. Further, if we were to accept Ukraine's arguments, we
would essentially be concluding that the investigating authority was free to disregard
the specific rules under Article 2.2.1.1 when calculating the cost of production used for
the purposes of the ordinary-course-of-trade test under Article 2.2.1. However, there is
nothing in the text of Article 2.2.1 or Article 2.2.1.1 to support such a view. Such an
interpretation is also likely to create systemic problems as in conducting their
ordinary-course-of-trade test under Article 2.2.1 investigating authorities would be free
to use a cost of production calculated inconsistently with Article 2.2.1.1, thereby
frustrating the very purpose of this test.276
7.149. We agree with this reasoning. Moreover, we consider that the general thrust of this reasoning
also applies with respect to an underlying violation of Article 2.2. Indeed, if the costs used in the
ordinary-course-of-trade test under Article 2.2.1 were not costs in the country of origin, then it is
not clear how such costs could be properly used to determine below-cost sales by the exporter which
is, of course, in the country of origin.
7.150. The legal framework for Article 2.2.1.1 appears in section 7.3.1.1 above.
7.4.2.2 Main party arguments
7.151. China makes this claim with respect to the stainless steel sinks original investigation, interim
reviews and expiry review. China considers that this claim is dependent on AD claim 3 raised under
Article 2.2.1.1, discussed further above .277 China notes that in these segments the ADC used
non-Chinese surrogate costs, rather than the Chinese exporters' costs of production, in constructing
normal values and/or determining whether sales made by the relevant exporters were made in the
ordinary course of trade for purposes of assessing whether such sales were below -cost.278 China
argues that having wrongfully rejected the exporters' costs of production, contrary to Article 2.2.1.1,
the ADC also violated Article 2.2.1 by subsequently using non -Chinese surrogate costs in the
ordinary-course-of-trade test.279 China contends that the violation of Article 2.2.1 also resulted in
an inconsistency with Articles 2.1 and 2.2.280
7.152. China claims that Australia violated Article 2.2.1.1 of the Anti-Dumping Agreement because
the ADC failed to calculate relevant costs "on the basis of records kept by the exporter or producer
under investigation" within the meaning of Article 2.2.1.1. This is so because, according to China,
the ADC instead rejected the exporters' costs because they "did not reasonably reflect competitive

274 Australia's first written submission, para. 408; China's first written submission, paras. 145 and 247.
275 Panel Report, Ukraine – Ammonium Nitrate, para. 7.114.
276 Panel Report, Ukraine – Ammonium Nitrate, para. 7.116. (fn omitted)
277 China's response to Panel question No. 2.
278 China's response to Panel question No. 37, and No. 69, para. 61; annex A to China's responses to
Panel questions after the second meeting of the Panel.
279 China's first written submission, para. 247.
280 China's first written submission, paras. 246-250. China also claims a violation of Article VI:1 of the
GATT 1994.

market costs" within the meaning of applicable Australian law , which, in China's view, is a
misapplication of the second condition in the first sentence of Article 2.2.1.1.281
7.153. Australia agrees with China that the ADC used surrogate costs for 304 SS CRC in performing
the ordinary-course-of-trade test in the original investigation and expiry review, and in constructing
normal value in the original investigation.282 Australia further agrees that this claim is dependent on
whether Australia violated Article 2.2.1.1.283
7.154. With respect to the investigation, Australia argues that the ADC acted consistently with
Article 2.2.1.1 because the ADC made a negative finding as to the second condition in the
investigation.284 According to Australia, "[t]he ADC determined that the exporters' records did not
adequately capture the cost of 304 SS CRC, and as a result, the ADC deci ded to adjust the
exporters' recorded costs for 304 SS CRC in order to construct normal value" .285 Australia stresses
that the ADC's findings for purposes of the second condition of Article 2.2.1.1 were not made on the
basis that the exporters' records did not reflect "competitive market costs".286 Rather, according to
Australia, the ADC acknowledged that it needed to make findings specifically with respect to the
strictures of the second condition of Article 2.2.1.1287 , and then did so by finding that the
exporter's records reflected 304 SS CRC costs that were distorted by the Chinese
Government's interventions in the steel market.288 Australia explains that:
[T]he ADC determined not to employ the 304 SS CRC costs in the exporters' records
not because the costs themselves were unreasonable, but because the ADC had
determined that the recorded costs did not reasonably reflect the actual 304 SS CRC
costs associated with the production and sale of the product under consideration. In
other words, the ADC determined under the second condition of Article 2.2.1.1 that the
exporters' records did not reasonably reflect the exporters' costs because the records
were not an accurate and reliable reflection of the costs actually incurred in the
production and sale of stainless steel sinks.289
7.155. Australia also indicates that the Chinese Government refused to provide certain information
to the ADC regarding the operation of the steel market in China, which led the ADC to rely on
information reasonably available to it in its analyses in this context.290
7.156. With respect to the expiry review, Australia argues that China has not made a prima facie
case with respect to this segment. This is so, in Australia's view, because in the investigation there
was a negative finding for the second condition in Article 2.2.1.1 whereas in the expiry review there
was a positive finding under both the first and the second conditions . Therefore, according to
Australia, in the expiry review, the ADC relied on the flexibility provided by the word "normally" in
the first sentence of Article 2.2.1.1 in rejecting the exporters ' 304 SS CRC costs. 291 Australia
considers that because China never recognized this change of essence it did not make a prima facie
case with respect to the expiry review. 292 Australia also asserts that there were other relevant
differences as between the investigation and expir y review. Specifically, Australia contends that,
although the ADC used North American and European 304 SS CRC costs as surrogate costs in both
segments, the ADC used surrogate costs for constructing normal value and performing the
ordinary-course-of-trade test in the original investigation, but only used surrogate costs for the
ordinary-course-of-trade test in the expiry review.293 Australia also indicates that the ADC obtained

281 China's first written submission, section F.1.
282 Australia's response to Panel question No. 69, para. 22.
283 Australia's first written submission, para. 409; response to Panel question No. 2.
284 Australia's second written submission, para. 241.
285 Australia's first written submission, para. 363; second written submission, para. 241; and response
to Panel question No. 78, paras. 85-91.
286 Australia's first written submission, para. 364.
287 Australia's first written submission, para. 365.
288 Australia's first written submission, para. 366.
289 Australia's first written submission, para. 367 (emphasis original). See also ibid. paras. 374-380.
290 Australia's first written submission, paras. 353-361 and 374.
291 Australia's responses to Panel question No. 69, para. 24, and No. 78, paras. 106-108.
292 Australia's responses to Panel question No. 69, para. 24, Nos. 100 and 107.
293 Australia's response to Panel question No. 69, para. 22.

its surrogate 304 SS CRC prices from different data sources in the original inves tigation and expiry
review.294
7.157. China responds that the ADC made no proper finding as to the second condition in either the
investigation or the expiry review.295 China also argues that this claim operates with respect to the
wrongful determination of costs whether or not normal values were constructed in the expiry review,
and that the ADC made no reference to the term "normally", as used in Article 2.2.1.1 of the
Anti-Dumping Agreement, in its expiry review report.296 China also argues that in the expiry review
the ADC used surrogate costs for both constructing normal value and for performing the
ordinary-course-of-trade test.297 China agrees with Australia that the ADC used a 304 SS CRC price
obtained from two different sources in the investigation and the expiry review but disagrees that
this means that there was a change of essence between the two segments.298
7.158. We note that both parties indicate that China's other claim under Article 2.2.1.1, discussed
in the section immediately above, underlies this claim. We agree. Thus, we incorporate the
parties' arguments with respect to that claim by reference here.
7.4.2.3 Expiry
7.159. China's claim concerns the stainless steel sinks original investigation, interim reviews and
expiry review. As discussed in section 7.2.2 above, we shall first consider whether or not the aspect
challenged by China has expired. To do so, we shall consider whether there was a change of essence
in the approach taken by the ADC to reject exporters' costs as between the investigation and expiry
review, and do not examine the interim reviews.
7.160. In the original investigation, the ADC constructed certain normal values for investigated
exporters, and thus had to determine such exporters ' costs of production. 299 The ADC noted that
"Regulation 180(2) requires that if an exporter keeps records in accordance wit h the appropriate
GAAP, and those records reasonably reflect competitive market costs associated with the production
of like goods, then the cost of production must be worked out using the exporter's records" and that
"the records of Chinese exporters of t he goods have been kept in accordance with the relevant
GAAP". 300 This is an affirmative finding under the first condition of the first sentence of
Article 2.2.1.1. The ADC then found "that 304 SS CRC (also supplied in sheet form) prices in China
are affected by GOC influences in the iron and steel industry, and hence do not reasonably reflect
competitive market costs, and should be replaced by a competitive market substitute" .301 We
consider this a clear statement to the effect that the ADC rejected the use of exporters' 304 SS CRC
record costs because they did not reasonably reflect a competitive market cost. 302 We further note

294 Australia's responses to Panel question No. 78, para. 25 (table).
295 China's second written submission, paras. 174-183; comments on Australia's responses to
Panel question No. 69, para. 19, Nos. 80 and 100; and responses to Panel question Nos. 69, 80, 100 and 107.
296 China's comments on Australia's response to Panel question No. 69, paras. 17-19.
297 China's response to Panel question No. 69, para. 61.
298 China's response to Panel question No. 69, para. 43.
299 Investigation 238 final report (Exhibit CHN-2), pp. 39-43.
300 Investigation 238 final report (Exhibit CHN-2), p. 42.
301 Investigation 238 final report (Exhibit CHN-2), p. 42. 304 SS CRC is a key input in the production of
stainless steel sinks. (ibid. p. 40).
302 As discussed in section 7.3.1.4 above, this was not a finding under the second condition of the first
sentence of Article 2.2.1.1. We discern nowhere else where the ADC issued any finding under the second
condition, whether affirmative or negative. We note that Australia argues that, while not made expressly in the
language of Article 2.2.1.1, a negative finding under the second condition is evident in the report. Australia
submitted that the ADC understood that it had to make a finding under the second condition of Article 2.2.1.1,
as evidenced by the ADC's statement that:
However, the Commissioner does not consider this ability to amend costs is limited to situations
where costs are not reasonably reflective of 'competitive market costs', but also where costs do
not reasonably reflect the costs associated with the production and sale of the goods or like goods
in general. In such cases, these costs do not 'reasonably reflect the costs associated with the
production and sale of the product under consideration' as provided for by Article 2.2.1.1.
(Investigation 238 final report (Exhibit CHN-2), p. 146)
We ultimately find such statements immaterial because they do not amount to findings under the
second condition. (Australia's second written submission, paras. 238-244; responses to Panel question No. 61,
para. 194, and No. 78, paras. 85-91).

that the ADC used the surrogate costs not only to construct certain normal values, but also to
perform the ordinary-course-of-trade test.303
7.161. In the expiry review, the ADC again rejected exporters' costs of 304 SS CRC for purposes of
performing the ordinary-course-of-trade test, but not in constructing normal values because no
normal values were constructed.304 In doing so, the ADC found – under the first condition of the first
sentence of Article 2.2.1.1 – that the relevant exporters' records were kept in accordance with the
GAAP of China.305 The ADC also stated that "[t]hrough the verification of each exporter's production
data, the Commission found that the stainless steel production costs in each exporter 's production
records were a reasonable reflection of the price paid to their stainless steel suppliers. To this extent,
the Commission is satisfied that the cost of production records reasonably reflect s the costs
associated with the production of like goods ".306 We consider this to be , on its face, a clear
affirmative second condition finding under the first sentence of Article 2.2.1.1 with respect to
stainless steel costs . China argues that it is not an affirmative second condition finding because
"[t]he second condition does not ask whether any one or other of an exporter's actual invoiced and
paid-for costs is a 'reasonable reflection of the price paid '".307 In our view, however, the accurate
reflection in exporters' records of the costs actually paid for certain production inputs is precisely
upon what the second condition of Article 2.2.1.1 focuses. In sum, in the expiry review the ADC
made affirmative findi ngs under both the first and second conditions of the first sentence of
Article 2.2.1.1. The ADC then went on to again reject exporters' 304 SS CRC record costs because,
in its view, they did not reasonably reflect competitive market costs.308
7.162. We consider that there was a change of essence in the approach taken by the ADC as
between the investigation and expiry review. We first note that in the investigation, the ADC used
surrogate costs for constructing normal values and performing the ordinary-course-of-trade test. In
the expiry review, the ADC used surrogate costs only in performing the ordinary-course-of-trade
test (the ADC did not construct normal values in the expiry review). In the context of this claim,
however, this difference is immaterial because a violation of Article 2.2.1.1 may occur in rejecting
the exporters record costs whether this is done for purposes of selecting costs to use in normal value
construction or for performing the ordinary-course-of-trade test.309
7.163. We also note that i n the investigation, there was an affirmative findin g under the first
condition, but no finding under the second condition. In the expiry review, there were affirmative
findings under both the first and second conditions. This change is material because, as discussed
in section 7.3.1.1, this means that in the investigation, the ADC was unable to rely on any flexibility
afforded by the word "normally" in the first sentence of Article 2.2.1.1 to reject
exporters' 304 SS CRC costs; but in the expiry review, the ADC could potentially rely on such
flexibility. We therefore find that the ADC's approach to rejecting exporters' 304 SS CRC record costs
in the original investigation has expired, having been replaced by the appro ach taken in the expiry
review.310 In the next section, we will therefore focus on the approach taken by the ADC in the expiry
review and, in particular, examine whether China has raised specific arguments, in a timely manner,
vis-à-vis that approach.

303 Investigation 238 final report (Exhibit CHN-2), pp. 39-43 and 207-219.
304 Continuation 517 final report (Exhibit CHN-36), pp. 61, 65, 67, 70-71, 73, and 107.
305 See Continuation 517 final report (Exhibit CHN-36), p. 50 (noting "[f]or the purpose of this inquiry,
the Commission is satisfied that the production records of all of the selected exporter complied with
section 43(2)(b)(i) of the Regulation in so far that they were kept in accordance with generally accepted
accounting principles in the country of export").
306 Continuation 517 final report (Exhibit CHN-36), pp. 50-51.
307 China's comments on Australia's response to Panel question No. 80, para. 69. (emphasis original)
308 Continuation 517 final report (Exhibit CHN-36), pp. 51-53. The ADC stated "[i]n light of the above
finding that the production costs of stainless steel incurred by Chinese exporters of the goods do not
reasonably reflect competitive market costs for that input, the Commission has considered how best to
determine what a competitive market substitute price for this input in China should be, having regard to all
available information".
309 See China's panel request, para. B.1.3 (referring to the "determination of normal value" with respect
to AD claim 3).
310 We decline to make findings with respect to the approach taken in the original investigation. See
section 7.6 below.

7.4.2.4 Evaluation
7.164. We recall Australia's argument that China did not make a prima facie case with respect to
the expiry review because China bases its arguments on an incorrect factual predicate, i.e. that the
ADC failed to make any finding under the second condition of the first sentence of Article 2.2.1.1 in
the expiry review.
7.165. In light of Australia 's argument, we recall the manner in which China has challenged the
expiry review in this proceeding. At no point before the second substantive meeting did China discuss
the second condition affirmative finding in the expiry review. China had predicated this claim, rather,
on the notion that there was no proper second condition finding. Indeed, even after the second
meeting, China adhered to its position that there was no affirmative second condition finding.311 As
discussed in the above section, this is incorrect. We therefore consider that China has not established
a factual basis for its claim.
7.166. We also find that, even if China had acknowledged the affirmative second condition finding
when China first specifically addressed this finding at the second meeting 312, this, in our minds,
would have been too late for China to make a viable argument against the expiry review. Panels, of
course, consider arguments submitted throughout the proceedings. 313 However, introducing a new
line of argumentation so late in this proceeding would raise due process concerns in our minds. 314
The Working Procedures of the Panel reflect the basic structure of the proceeding as envisioned by
the DSU, i.e. a first phase in which the parties present the facts of their cases and their arguments
(first written submissions and first meeting), and a second phase in which parties present rebuttals
(second written submissions and second meeting). 315 If China could introduce an entir ely new
argument in the second phase as to why the ADC violated Article 2.2.1.1, Australia would not be
provided a meaningful opportunity to respond to, and reasonably develop, its position against such
an argument. As explained in section 7.3.1.1 above, any argumentation based on the ADC making
both affirmative first and second condition findings would present a new argument because in that
case the issue arises as to whether the word "normally" presented a basis to reject
exporters' relevant costs for purposes of conducting the ordinary-course-of-trade test. Under
China's argument of non -compliance, any flexibility offered by the word "normally" is never
triggered.
7.167. In light of the for egoing, we find that China has failed to make a prima facie case that the
ADC acted inconsistently with Articles 2.2.1.1 or 2.2.1 in the context of AD claims 3 or 4. 316 We
therefore also note that we need not address or resolve the parties' arguments concerning whether
the word "normally" could have provided a basis for departing from using exporters' record costs.
7.4.3 AD claim 1 under Article 2.2 of the Anti-Dumping Agreement: costs of production in
the country of origin
7.168. Under AD claim 1, China argues that the ADC selected surrogate costs that did not represent
the costs of production in the country of origin under Article 2.2 of the Anti -Dumping Agreement in
order to determine the margin of dumping. We recall that China's AD claim 2 is predicated on the
notion that Australia violated Article 2.2.1 in using surrogate costs for 304 SS CRC to perform the
ordinary-course-of-trade test (which is used to help determine normal value and thus the margin of
dumping), costs that were improperly chosen under Article 2.2. We thus consider that

311 See China's first written submission, section F.1; second written submission, section F.1.a; responses
to Panel question Nos. 62, 79, 80, 100, 106, 107; and comments on Australia's responses to Panel
question No. 69, para. 19, No. 78, para. 56(c), and No. 100, paras. 116-117. See also footnote 5 to
question No. 80(a) in the Panel's questions sent to the parties before the second substantive meeting.
312 See footnote 5 to question No. 80(a) in the Panel's questions sent to the parties before the second
substantive meeting.
313 Appellate Body Report, Korea – Dairy, para. 139; Panel Report, China – Broiler Products, para. 6.74.
314 Australia also argues that it would be too late to advance such arguments. (Australia's second
written submission, para. 130).
315 Working Procedures of the Panel, para. 3.
316 We also make no findings with respect to the other provisions that China alleged had been violated in
the context of AD claims 3 and 4, i.e. Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1 of
the GATT 1994. (See China's first written submission, sections F.1 and F.2). We discern no independent basis
on which to find violation of these provisions.

China's AD claim 1 is most effectively and efficiently addressed in conjunction with AD claim 2. We
turn to that claim immediately below.
7.4.4 AD claim 2 under Articles 2.2 and 2.2.1 of the Anti-Dumping Agreement: use of
correct "costs" in the ordinary-course-of-trade test
7.169. The applicable legal framework for this claim has already been set forth in
sections 7.3.2.1and 7.4.2.1 above.
7.4.4.1 Main party arguments
7.170. China makes this claim with respect to the stainless steel sinks original investigation, interim
reviews, and expiry review. 317 China notes that Article 2.2.1 of th e Anti-Dumping Agreement
provides that "sales of the like product in the domestic market of the exporting country" may be
treated as outside the ordinary course of trade if such sales are below-cost. China asserts that the
word "costs" as used in Article 2.2.1 refers to the "costs of production in the country of origin" as
that term is used in Article 2.2. China therefore further recalls that the ADC, in the stainless steel
sinks investigation, used surrogate costs for 304 SS CRC , rather than the exporters' costs, in
determining whether sales made by the relevant exporter were made in the ordinary course of trade
for purposes of assessing whether such sales were below-cost. China argues, therefore, that because
the ADC used surrogate costs which were not costs of producti on in China, and used those same
surrogate costs in the ordinary-course-of-trade test performed under Article 2.2.1, Australia violated
Article 2.2.1.318 China stresses, however, that in its view this claim is not dependent on any other
claims China makes.319
7.171. China argues that the ADC acted inconsistently with Article 2.2 of the
Anti-Dumping Agreement because in the relevant segments the ADC rejected using the
exporters' costs for 304 SS CRC when determining normal values, and instead used non -Chinese
surrogate costs from Europe and North America.320 China claims that, in doing so, Australia violated
Article 2.2 of the Anti-Dumping Agreement because the ADC used costs that were not "the cost of
production in the country of origin" within the meaning of Article 2.2. More specifically, China claims
that the costs used were specifically chosen by the ADC because they were meant to not represent
the costs of production in China, and that the ADC made no material effort to adapt such costs so
that they could reasonab ly be considered "the cost of production in [China]". China cites the
Appellate Body reports in EU – Biodiesel (Argentina) and Ukraine – Ammonium Nitrate in support of
its arguments in this context.321
7.172. Australia agrees with China that "the cost of production to be used for the OCOT assessment
under Article 2.2.1 must meet the same disciplines as those applicable to the cost of production in
the country of origin under Article 2.2 and the rules regarding the use of exporters' records in
Article 2.2.1.1".322 In light of such observations, Australia concludes that this claim is dependent on
China's other Article 2.2 claim, discussed in the section immediately above , insofar as this claim
concerns the stainless steel sinks investigation . With respect to the int erim and expiry reviews,
Australia submits that for AD claim 2 China cannot have made a prima facie case because it has not
addressed the differences in the ADC's ordinary-course-of-trade assessment between the
investigation and the interim and expiry reviews, or advanced any separate arguments.323
7.173. Australia, however, asserts that the ADC acted consistently with Article 2.2. Australia argues
that the ADC had to use non-Chinese surrogate data due to the distortions in the Chinese steel

317 See e.g. China's responses to Panel question Nos. 37 and 69; annex A to China's responses to
Panel questions after the second meeting of the Panel.
318 China's first written submission, paras. 132-146. China argues, as a consequence, Australia violated
Articles 2.1, 2.2, and 2.2.1.1. (ibid. para. 8).
319 China comments on Australia's response to Panel question No. 69, para. 20.
320 China's first written submission, paras. 76-95; response to Panel question No. 69; and annex A to
China's responses to Panel questions after the second meeting of the Panel.
321 China's first written submission, paras. 96-119. China also claims violations of Articles 2.1
and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994.
322 Australia's first written submission, para. 408.
323 Australia's first written submission, para. 410; responses to Panel question No. 5, paras. 1-2, and
No. 69, paras. 27-28.

market caused by government involvement.324 Australia further contends that the ADC selected the
costs after considering multiple different potential surrogate costs and decided on the selected
sources, after unsuccessful attempts to secure relevant information from the Chinese
Government.325 Australia specifically indicates that the ADC rejected using other benchmarks
because, inter alia, some of them included Chinese steel data and others – particularly those from
other Asian countries – were likely distorted by the prevalence of Chinese steel in the region. 326
Australia argues that the ADC actively sought to adjust these data but could not do so in ce rtain
ways because the Chinese Government and the exporters failed to provide information to the ADC.327
Australia underlines that the ADC used the chosen information in an attempt to avoid reintroducing
the same market distortions it had identified in the Chinese steel markets.328 Australia claims that
the ADC adjusted the costs by adding, as appropriate, delivery costs and slitting costs for
304 SS CRC depending on the exporters' circumstances.329
7.174. In response to a question from the Panel, Australia also argued that there were differences
between the investigation and expiry review , with which China did not engage, because in the
investigation the ADC used the price of North American and European prices for 304 SS CRC
published by MEPS (International) Ltd. (MEPS), a steel market data company, whereas in the expiry
review the ADC used prices for North American and European 304 SS CRC published by Steel
Business Briefing Ltd. 330 Australia further notes that in the original investigation the ADC used
surrogate costs for constructing normal values and for performing the ordinary-course-of-trade test,
but in the expiry review the ADC only used surrogate costs for conducting the
ordinary-course-of-trade test because no normal values were constructed in the expiry review.331
7.175. China responds that the ADC's adjustments for delivery and slitting costs were insufficient
to render a cost of production in China. 332 China also indicates that in the expiry review the ADC
used surrogate costs both for constructing normal value and for performing the
ordinary-course-of-trade test.333 Moreover, China indicates that even if the ADC used different data
sources to obtain the surrogate costs in the investigation and expiry review, this is immaterial
because the essence of the challenged m ethodology is the use of out -of-country data and the lack
of appropriate adjustments to reflect the cost in the country of origin.334
7.4.4.2 Expiry
7.176. China's claim concerns the stainless steel sinks original investigation, interim reviews, and
expiry review.335 As discussed in section 7.2.2 above, we will address first the issue of whether or
not the aspect challenged by China has expired. In this regard, we shall consider whether there was
a change of essence in the approach taken by the ADC to select surrogate costs as between the
original investigation and expiry review, and do not examine the interim reviews.
7.177. We first recall that, per our discussion surrounding expiry with respect to AD claim 4, above,
the ADC used surrogate costs in constructing normal value and performing the
ordinary-course-of-trade test in the investigation, but only in performing the
ordinary-course-of-trade test in the expiry review. We do not ultimately consider this change to be
material in this specific context, however. This is so because both parties agree, as do we, that costs
that represent the costs of production in the country of origin, within the meaning of Article 2.2,
must be used in performing the ordinary-course-of-trade test under Article 2.2.1. Thus, use of

324 Australia's first written submission, paras. 387-391.
325 Australia's first written submission, paras. 392-397.
326 Investigation 238 final report (Exhibit CHN-2), pp. 212-215.
327 Australia's first written submission, paras. 399-402.
328 Australia's second written submission, para. 254.
329 Australia's first written submission, paras. 404-405; response to Panel question No. 69, para. 25.
Australia also argues that if the Panel were to find a violation under AD claim 3, then it would not be necessary
or desirable to also issue findings with respect to AD claim 1. (Australia's response to Panel question No. 12).
This argument is moot, however, as we have found no violation under AD claim 3 for the stainless steel sinks
proceedings.
330 Australia's response to Panel question No. 69, para. 25 (referring to Investigation 238 final report
(Exhibit CHN-2), pp. 42 and 217; Continuation 517 final report (Exhibit CHN-36), p. 54).
331 Australia's response to Panel question No. 69, para. 22.
332 China's response to Panel question No. 69, para. 54.
333 China's response to Panel question No. 69, para. 61.
334 China's response to Panel question No. 69, para. 43(b).
335 China's responses to Panel question Nos. 37 and 69.

surrogate costs in performing the ordinary-course-of-trade test is sufficient, in our view, to examine
whether such costs comported with the standards in Article 2.2 for purposes of examining whether
there is a violation of Article 2.2.1.336
7.178. We also recall that, in the investigation, to select a surrogate cost for 304 SS CRC, the ADC
"determined that the most reasonable option available is a MEPS -based average pri ce for
304 SS CRC using the monthly reported MEPS North American and European prices alone (excluding
the Asian price). This was calculated using the monthly reported data for the investigation period
available from MEPS".337 The ADC then explained that it "compared: the benchmark MEPS European
and North American average 304 SS CRC prices; to verified purchase prices actually incurred by
Chinese exporters of deep drawn stainless steel sinks when purchasing this input to arrive at an
individual percentage difference between the benchmark and purchases prices, which was then be
applied to the stainless steel costs recorded in the exporters' records".338
7.179. The ADC made two adjustments to the surrogate costs depending on the circumstances of
the exporters : (a) the ADC added to the MEPS benchmark price "the verified annual weighted
average delivery cost of 3 04 SS CRC from one selected exporter … to arrive at a per tonne
304 SS CRC delivery cost in China"339; and (b) the ADC added a cost for slitting 304 SS CRC "based
on the annual average verified price difference between slit and unslit product purchased at the
same time by the same exporter from the same supplier of slit and unslit stainless steel ".340 This
latter adjustment was considered necessary because the MEPS benchmark price was for unslit
304 SS CRC.341
7.180. In the expiry review , the ADC again selected North American and European 304 SS CRC
prices as surrogate costs for 304 SS CRC. However, the ADC obtained the prices from a different
source, i.e. from Steel Business Briefing Ltd. 342 The ADC again adjusted for delivery and slitting
costs.343
7.181. We consider that there was no change of essence in the ADC 's approach to surrogate cost
selection as between the investigation and expiry review. Indeed, the same surrogate costs were
chosen in each, i.e. European and North American 304 SS CRC prices. The only noteworthy difference
we discern is that the surrogate costs were obtained from different sources in the two segments,
i.e. MEPS in the investigation and Steel Business Briefing Ltd . in the expiry review. This minor
difference in the approaches between the two segments is not, in our view, material enough to alter
the key aspect of the order challenged by China, i.e. the selection of European and North American
304 SS CRC costs to replace exporters' 304 SS CRC costs with adjustments only made for delivery
costs and slitting costs.
7.182. We therefore consider that the challenged aspect of the anti-dumping order has not expired.
We therefore will make findings with respect to this challenged aspect of the order and, as explained
above, focus our attention on the expiry review.
7.4.4.3 Evaluation
7.183. As indicated in section 7.4.2.3 above, in the expiry review, the ADC rejected
exporters' record costs of 304 SS CRC for purposes of conducting the ordinary-course-of-trade test,
and instead selected surrogate costs for doing so. Those costs were "the average price of grade
304 [SS] CRC for North America and Europe published by [Steel Business Briefing Ltd.]".344 The ADC

336 See China's panel request, para. B.1.1 (referring generically to the "determination of the margin of
dumping" with respect to AD claim 1).
337 Investigation 238 final report (Exhibit CHN-2), pp. 42-43. This surrogate cost was "the same
'benchmark' price considered to be representative of 'adequate remuneration' for the purposes of determining
a benefit under Subsidy Program 1 – Raw Materials Provided by the Government at Less than Fair Market
Value" for purposes of the countervailing investigation in the stainless steel sinks proceedings. (Ibid. p. 137).
338 Investigation 238 final report (Exhibit CHN-2), p. 43.
339 Investigation 238 final report (Exhibit CHN-2), p. 219.
340 Investigation 238 final report (Exhibit CHN-2), p. 219.
341 Investigation 238 final report (Exhibit CHN-2), p. 219.
342 Continuation 517 final report (Exhibit CHN-36), pp. 53-54.
343 Continuation 517 final report (Exhibit CHN-36), p. 54. The slitting cost adjustment was considered
necessary because the benchmark price was for unslit 304 SS CRC.
344 Continuation 517 final report (Exhibit CHN-36), p. 53.

chose this benchmark because it was the same surrogate cost selected in the original investigation.
In particular, the ADC considered that the key factors in selecting the surrogate cost remained
applicable, i.e. it "includes only data related to prices of 304 CRC stainless steel " and "does not
include any Asian pricing data that may be unreasonable due to the influence of exported Chinese
304 CRC stainless steel in the region".345 The ADC further made adjustments for slitting and delivery
costs, as it had done in the original investigation.346
7.184. In the expiry review, we note that one party before the ADC argued that: (a) any advantage
in 304 SS CRC costs that Chinese companies enjoyed were not due to any identified government
distortions but instead due to other advantages like cheaper electricity and nickel; and (b) European
and North American market conditions were different than those in China. The ADC dismissed these
arguments simply by noting that significant government influence was present in the Chinese steel
industry, and that in the original investigation the surrogate price was deemed the only reasonable
one primarily due to the absence of any influence from the Chinese steel markets.347
7.185. In our view, the ADC did not, in the expiry review, reasonably demonstrate that the selected
surrogate costs, even with adjustments to delivery and slitting costs, reflected a "cost of production
in the country of export" within the meaning of Article 2.2 of the Anti-Dumping Agreement. Simply
stated, the ADC never explained why 304 SS CRC costs on t wo different continents
(i.e. North America and Europe) represent a cost of production in China rather than a cost of
304 SS CRC in Europe and North America. Again, t he ADC selected the surrogate costs largely
because they were free from influence of Chinese steel market conditions. Thus, the surrogate costs
were selected because they are not "distorted" Chinese costs. But we discern no logical basis on
which to conclude that this ipso facto makes them (presumably undistorted) Chinese costs, and the
ADC never offered a reasoned explanation as to why this would be the case.
7.186. On this basis, we find that the ADC acted inconsistently with the practice of an unbiased and
objective investigating authority with respect to Article 2.2 of the Anti-Dumping Agreement by failing
to provide a reasoned and adequate explanation as to why the surrogate costs, with only
adjustments for delivery and slitting costs, represented a cost of production in China for the relevant
exporters. As a result, and because it used surrogate costs that were not demonstrated to be costs
of production in the country of origin in conducting the ordinary-course-of-trade test, the ADC
violated Article 2.2.1.348
7.4.5 AD claim 6.a under Article 2.4 of the Anti -Dumping Agreement: due allowa nce to
ensure a fair comparison
7.187. The applicable legal framework for this claim has already been set forth in section 7.3.4.1
above.

345 Continuation 517 final report (Exhibit CHN-36), p. 53.
346 Continuation 517 final report (Exhibit CHN-36), p. 54. One party before the ADC also argued that
adjustments should be made to "reflect the same export terms as those received by the manufacturers in
China". In response, the ADC indicated that "this has been addressed in its replacement methodology".
(Continuation 517 final report (Exhibit CHN-36), p. 55). In the original investigation, the ADC also noted that a
slightly different thickness of steel was used in North America, although the ADC considered that this did not
inflate the surrogate price because thicker steel was usually cheaper in this context. (Investigation 238 final
report (Exhibit CHN-2), p. 216). The ADC also dismissed one argument from Jiabaolu that "the percentage
difference between the 304 SS CRC benchmark and the price of that input incurred by exporters should be
applied to the revenue generated by exporters in selling scrap stainless steel". (Investigation 238 final report
(Exhibit CHN-2), p. 137).
347 Continuation 517 final report (Exhibit CHN-36), p. 54.
348 China also claims violations of Articles 2.1 and 2.2.1.1 of the Anti-Dumping Agreement and
Article VI:1 of the GATT 1994. (China's first written submission, sections E.1 and E.2). We discern no
independent basis on which to find violations of these provisions. The Panel declines to make findings as to
these claims as it would not be helpful in resolving the dispute.

7.4.5.1 Main party arguments
7.188. China argues that the ADC's cost replacement methodology to determine normal values 349
generated relevant disparities between the normal value and the export price.350 China argues that
such disparities represent differences affecting price comparability under Article 2.4. 351 China
submits that absent any due allowances by the ADC to account for these disparities 352 , the
comparison between the normal value and the export price in each of the investigation was not a
"fair comparison" under Article 2.4.353 China, however, asserts that if the Panel were to find
violations of Articles 2.2, 2.2.1, and 2.2.1.1 under AD claims 1-4, then there would be no need for
the Panel to address this claim.354
7.189. China argues that the ADC's failure to adjust for the actual differences in the costs of
production for domestic sales and export sales resulting from the use of non-Chinese surrogate costs
stands in stark contrast to its decision to make adjustments to ac count for the difference in
recoverability of value-added tax (VAT) in the same proceedings. For China, the approach taken by
the ADC with respect to these two types of adjustments were neither unbiased nor even-handed.355
7.190. Australia argues that China's claim under Article 2.4 is "entirely, and impermissibly,
premised on China's disagreement with Australia's construction of normal value, and not on any
failure to make due allowances under Article 2.4".356 Australia argues that there is no textual basis
to cha llenge the ADC's normal value calculation under Article 2.4. Australia thus rejects
China's position that Australia's cost substitution resulted in a difference between normal value and
export price that required an adjustment under Article 2.4. In Austral ia's view, Article 2.4 is only
concerned with making appropriate adjustments which are unrelated to the construction of normal
value pursuant to Article 2.2, because Article 2.4 presupposes that the normal value and export
price have already been established.357 Australia agrees with China that the Panel need not proceed
to an analysis under Article 2.4 if China succeeds on AD claims 1 and 3.358 Australia also argues that
China has lodged no "separate arguments … on the relationship between the application of the OCOT
assessment and any failure to make due allowance to ensure a fair comparison".359
7.4.5.2 Expiry
7.191. China's claim concerns the stainless steel sinks original investigation, interim reviews and
expiry review.360 As discussed in section 7.2.2 above, we shall first consider whether or not the
aspect challenged by China has expired. To do so, we shall consider whether there was a change of
essence in the approach taken by the ADC with respect to the need for adjustments to account for
any difference resulting from the ADC's use of the cost replacement methodology as between the
investigation and expiry review, and do not examine the interim reviews.
7.192. In the investigation, the ADC constructed normal values by using cost s of production
incorporating surrogate costs.361 However, in the expiry review, the ADC decided not to construct
the normal values for selected exporters and used instead the data pertaining to the

349 China notes that the ADC calculated normal values on the basis of a domestic price or constructed
normal value under Article 2.2 using "a substituted and inflated cost or cost used for the production of subject
products". (China's first written submission, para. 324).
350 China's first written submission, paras. 326 and 336; opening statement at the first meeting of the
Panel, paras. 89 and 90.
351 China's first written submission, paras. 332-333 and 335.
352 China's first written submission, paras. 327-331.
353 China's first written submission, paras. 15(a), 322, 324, and 327.
354 China's second written submission, paras. 279-280.
355 China's first written submission, paras. 338-342. See section 7.4.6.1.1 below for China's arguments
regarding VAT adjustments. China clarifies that this lack of evenhandedness is a factor for the
Panel's consideration "as part of its standard of review of the investigating authority's decision in the context of
Article 2.4". (China's response to Panel question No. 18, para. 63).
356 Australia's first written submission, paras. 314, 318, and 413. See also ibid. paras. 532-535.
357 Australia's first written submission, para. 328; second written submission, paras. 216, 218, and 221.
358 Australia's response of Panel question No. 20, para. 40.
359 Australia's response of Panel question No. 69, para. 29.
360 China's responses to Panel question Nos. 37 and 69.
361 China's first written submission, paras. 401 and 417-418; Investigation 238 final report
(Exhibit CHN-2), pp. 43-44.

exporters' recorded sales.362 Thus, the alleged need for an adjustment to account for differences
generated by the use of surrogate costs in constructing normal value did not arise in the expiry
review. We therefore consider that there was a change of essence as between the original
investigation and the expiry review in this respect. Thus, the specific aspect of the order challenged
by China, i.e. comparing export price and normal value constructed using surrogate costs without
proper adjustment, has expired. We decline to issue findings with respect to this aspect of the order
therefore, per the Panel's reasoning in section 7.6 below.
7.193. However, insofar as China's Article 2.4 claim is predicated on the normal value being flawed
due to the use of surrogate costs in applying the ordinary-course-of-trade test, we consider that
there is no change of essence in the ADC's methodology in this respect bec ause the ADC used
surrogate costs in performing the ordinary-course-of-trade test in both the original investigation and
expiry review. We therefore will address China’s claim insofar as it is based on the ADC’s alleged
failure to make adjustments under Ar ticle 2.4 stemming from the use of surrogate costs in
performing the ordinary-course-of-trade test, and, as explained above, focus our attention on the
expiry review.
7.4.5.3 Evaluation
7.194. Insofar as normal values calculated in the expiry review being allegedly flawed due to the
use of surrogate costs in applying the ordinary-course-of-trade test, we have found in section 7.4.4
above that the ADC acted inconsis tently with Articles 2.2 and 2.2.1 by using surrogate costs that
did not represent the cost of production in China in determining whether sales made by the relevant
exporter were made in the ordinary course of trade for purposes of assessing whether such s ales
were below-cost. We also recall that the parties agreed that there is no need for the Panel to review
this claim separately if the Panel were to find a breach under Articles 2.2 and 2.2.1.1.363 For these
reasons, we consider it unnecessary to make findings on whether the ADC also acted inconsistently
with Article 2.4 by failing to make adjustments to account for the differences generated through the
alleged use of those improperly selected surrogate costs in applying the ordinary-course-of-trade
test.
7.4.6 AD claim 6.b under Article 2.4 of the Anti-Dumping Agreement
7.195. China claims that, in the stainless steel sinks proceedings, the ADC breached Article 2.4 in
three additional respects.364 We will address these in turn.
7.196. The applicable legal framework for this claim has already been set forth in section 7.3.4.1
above.
7.4.6.1 AD claim 6.b.i: VAT adjustment
7.4.6.1.1 Main party arguments
7.197. China's claim regarding the VAT adjustment is two -fold. First, China argues that the ADC
failed to provide a reasoned and adequate explanation that differences in VAT recoverability affected
price comparability.365 Second, China argues that the upward VAT adjustment both misrepresented
and overstated the actual "extra costs" associated with the difference in VAT recoverability.366

362 Continuation 517 final report (Exhibit CHN-36), pp. 61, 65, 68, 71 and 73. See also
Australia's response to Panel question No. 69, para. 31; China's response to Panel question No. 69, p. 107.
363 Australia's response of Panel question No. 20, para. 40; China's response to Panel question No. 20,
para. 77; opening statement at the first meeting of the Panel, para. 97; and second written submission,
para. 279.
364 China raises five points to support its AD claim 6.b in its panel request and in paragraph 15(b) of its
first written submission. However, in light of the fact that the first and second points concern the same subject
matter, i.e. upward adjustment to account for VAT recoverability; and the third and fourth points concern the
accessories adjustments, we address this claim in three sections. We note that in its first written submission
Australia also organized its rebuttal in three categories.
365 China's first written submission, paras. 350(a) and 353. See also China's opening statement at the
first meeting of the Panel, para. 100; response to Panel question No. 27, para. 97(b); and second written
submission, para. 281.
366 China's first written submission, para. 356.

7.198. Regarding the ADC's conclusion that differences in VAT recoverability affected price
comparability, China argues that there was no reference in the investigation report to any record
evidence showing that the VAT difference had an effect on price comparability.367 China argues that
the ADC's statement that the difference " should have an associated effect on export price " shows
that its finding was based on "guesswork" 368, and "an unsupported and incorrect presumption" .369
In China's view, in order to make an adjustment under Article 2.4, the ADC should, as a first step,
identify and quantify the "actual VAT costs that the exporter would have incurred due to the lower
VAT refund "370; then, the ADC should have sought information from the exporter as to how or
whether the actual unrecovered VAT amount impacted the exporter's export pricing decision, and
how that differed from the exporter's domestic pricing decision.371
7.199. Regarding the method used by the ADC to calculate the amount of the adjustment, China
argues that the ADC both misrepresented and overstated the actual "extra costs" associated with
the actual VAT recoverability difference. 372 First, China argues that the ADC's methodology of
applying the difference to normal values was incapable of representing the " non-refundable
value-added tax (VAT) expense" associated with the exp ort sales or its impact on price
comparability.373 In China's view, to make due allowance "on its merits" under Article 2.4, the due
allowance should have been made in a way to appropriately capture the differences in the "actual
liability incurred by the company"374 , i.e. based on "the extent of the additional tax liability
expense".375 Second, China contends that, by applying an 8% VAT adjustment to an inflated normal
value constructed using surrogate costs which were higher than the exporters' actual costs, or to a
sales-based normal value which went through an ordinary-course-of-trade test containing surrogate
costs, the ADC's method inflated the actual difference in VAT costs/liability associated with the
Chinese exporter's export and domestic sales business.376
7.200. Australia argues that the ADC adopted an upward adjustment to normal values because the
evidence provided by the exporters such as Zhuhai Grand showed that there was an eight percentage
point difference between the VAT recoverability for export and domestic sales, which would have
affected pricing. 377 Australia contends that the ADC set out its reasoning on this issue in the
investigation report, which makes specific relevant reference to Zhuhai Grand's submissions and the
ADC's verification findings.378 Furthermore, Australia argues that the ADC correctly applied the 8%
upward adjustment to the constructed normal value even though the constructed normal value used
surrogate costs, because to do otherwise would have reintroduced the distortions that the ADC had
previously excluded in constructing normal value.379
7.4.6.1.2 Expiry
7.201. China's claim concerns the stainless steel sinks original investigation, interim reviews and
expiry review.380 As discussed in section 7.2.2 above, we shall first consider whether or not the
aspect challenged by China has expired. To do so, we shall consider whether there was a change of

367 China's first written submission, paras. 350(a) and 353. See also China's opening statement at the
first meeting of the Panel, para. 100; response to Panel question No. 27, para. 97(b); and second written
submission, para. 281.
368 China's first written submission, para. 353.
369 China's second written submission, para. 281. See also China's response to Panel question No. 81,
paras. 121-122.
370 China's response to Panel question No. 81, para. 118.
371 China's response to Panel question No. 81, para. 119.
372 China's first written submission, para. 356.
373 China's first written submission, para. 355. (emphasis original) See also China's response to
Panel question No. 83, para. 128.
374 China's first written submission, para. 354 (referring to Investigation 238 final report
(Exhibit CHN-2), p. 149). See also China's first written submission, para. 340; second written submission,
Panel's question, China argues that the logically correct calculation would be to calculate such amount on the
export price, being the activity that generated the difference in the recoverable vs non-recoverable VAT and
the subject of the difference being adjusted. (China's response to Panel question No. 27, para. 97).
375 China's first written submission, para. 354.
376 China's first written submission, paras. 338, 340, 341, 350, and 355-356.
377 Australia's first written submission, para. 428.
378 Australia's first written submission, para. 430.
379 Australia's first written submission, para. 434; second written submission, paras. 276-278.
380 China's responses to Panel question Nos. 37 and 69.

essence in the approach taken by the ADC with respect to the need for adjustments to account for
any VAT recoverability difference and the ADC's calculation methodology to account for such
difference as between the investigation and expiry review, and do not examine the interim reviews.
7.202. In the stainless steel sinks investigation, the comparison between normal value and export
price was carried out on "VAT-free basis". That is to say, the normal value and the export price are
both net of any VAT when they are compared. Nevertheless, the ADC considered there to be an
"expense" or "extra cost" of unrecovered VAT expenses associated with export sales, but not with
domestic sales.381 The ADC accounted for this perceived difference in taxation as between domestic
and export sales382 by applying an upward adjustment of 8% to the unadjusted normal values .383
In the investigation report, the ADC states that:
Zhuhai Grand submitted that there should be no adjustment to normal values to account
for differences in VAT between export prices and normal values in any case, as both the
export price and the cost -based normal value (i.e. those calculated under
s. 269TAC(2)(c)) are VAT-free.
The Commissioner does not agree with Zhuhai Grand's submission that an adjustment
for differences in VAT liability between the export and domestic market is not warranted
in general, simply because the constructed normal value and export prices being used
for dumping margin comparison are VAT free.
The purpose of the adjustment is that, when making the export sale, the company is
aware of the fact that it is unable to recover the full amount of VAT paid on its inputs,
and that this should have an associated effect on export price whereby the export price
would be raised to accommodate this extra cost. Consequently, it is logical to upwards
adjust the normal value for this 8% difference in taxation , as provided for by
s. 269TAC(9) of the Act.384
7.203. In the expiry review, the ADC also made adjustments for "non-refundable VAT expenses" by
"[a]dd[ing] an amount for non -refundable VAT expenses incurred on e xports of the goods to
Australia".385 Although this reference is somewhat summary in nature, we consider that it indicates
that the ADC implicitly carried forward its reasoning in the original investigation in to the expiry
review in order to make what appears to be (and neither party disputes) the same adjustment to
normal value for VAT in the expiry review.386

381 Australia's first written submission, paras. 427-428; China's first written submission, para. 347; and
Investigation 238 Primy verification visit report (Exhibit CHN-43), section 8.4. See also Investigation 238
Zhuhai Grand verification visit report (Exhibit CHN-35), p. 19; Investigation 238 Zhuhai Grand's questionnaire
response (Exhibit AUS-14), p. 35 (where Zhuhai Grand states "[t]he export of the subject goods during the
[period of investigation] was subject to refund of VAT of 9%. The export VAT refund is calculated based on the
[f.o.b.] export price"); Investigation 238 Primy's questionnaire response (Exhibit AUS-15), p. 38 (where Primy
said "on the exportation of the subject goods during the [period of investigation] Primy was entitled to [a]
refund of VAT of 9%"); Investigation 238 Komodo Hong Kong Limited's questionnaire response
(Exhibit AUS-13), p. 15 (where Komodo Hong Kong Limited said "[d]uring the investigation period, the VAT
refund rate for sink, drainer, tray and clips is 9%; for waste kit is 15%; for cutting board is 13%. Therefore,
Komodo GZ incurs non-refundable VAT cost (2%-8%) for those Australia sales, as compared with the domestic
sales VAT exclusive price").
382 Investigation 238 Primy verification visit report (Exhibit CHN-43), section 8.4; Investigation 238 final
report (Exhibit CHN-2), pp. 149-150.
383 During the original investigation, the ADC used constructed normal values for some models and
normal values based on domestic sales that passed the ordinary-course-of-trade test, for other models. During
the expiry review, the ADC did not construct normal values and used sales-based normal values instead. China
uses the term "unadjusted" in its first written submission, as we understand it, to refer to the normal values
calculated before the relevant adjustment under consideration have been made, i.e. in this case the VAT
adjustment.
384 Investigation 238 final report (Exhibit CHN-2), p. 150.
385 Continuation 517 final report (Exhibit CHN-36), pp. 62, 66, 69, 71, and 74.
386 According to Australia, the ADC identified and applied different rates of VAT liability for the expiry
review period from 1 July 2018 to 30 June 2019. (Australia's response to Panel question No. 69, para. 30). See
also China's comments on Australia's response to Panel question No. 69, para. 23 (arguing that this difference
does not affect the expiry analysis). We discern no other differences in the approach by the ADC to this issue in
the expiry review, and the parties direct us to none. The fact that the VAT refund rate may have varied as
between the original investigation and the expiry review does not change our conclusion.

7.204. Accordingly, we consider that there wa s no essence change as between the two segments
that is relevant to this claim, and that this aspect of the order is not expired. We will thus proceed
to make findings with respect to it and, we focus our attention on the expiry review.
7.4.6.1.3 Evaluation
7.205. We will address China's claim regarding the VAT adjustment by examining its two principal
aspects in turn. As discussed in the section immediately above, we will focus our analysis on the
expiry review.
7.4.6.1.3.1 Whether the ADC failed to provide a reasoned and adequate explanation that
the differences in VAT recoverability affected price comparability
7.206. The first aspect of China's claim focuses on its assertion that there was no reference in the
investigation report to any record evidence indicating that the VAT difference had any effect on price
comparability. China argues that Australia was not able to identify any such evidence when asked
by the Panel.387 China further argues that the ADC's statement that the difference "should have an
associated effect on export price " shows that its finding was based on "guesswork" 388 and
"an unsupported and incorrect presumption".389
7.207. We start with the question of whether the ADC identified and substantiated a difference in
VAT recoverability as between the export price and the normal value. We note that, while we focus
our analysis on the expiry review, as noted in paragraph 7.203 above, we will refer to the
ADC's reasoning in the investigation report, because we consider that the ADC implicitly carried
forward its reasoning with respect to the VAT adjustments in the original investigation into the expiry
review. We note at first that during the expiry review the ADC identified a di fference related to
"non-refundable VAT expenses".390 In the original investigation, the ADC identified a difference in
the unrecovered "amount of VAT paid on its inputs", which "should have an associated effect on
export price whereby the export price would be raised to accommodate this extra cost".391 Australia
referred to the difference as "costs applicable to exports (non -refundable VAT liability), that [sic]
were not applicable to domestic sales".392
7.208. It is clear and undisputed that that unrecovered input VAT occurs only when an export sale
is made. There is, therefore, a clear connection between unrecovered VAT and export sales.
Accordingly, we consider that the ADC properly identified a difference in VAT recoverability as
between the domestic sales and the export sales, i.e. the input VAT for the domestic sales which is
fully recovered and the input VAT for the export sales which is only partially recovered. 393 In
quantitative terms, the difference is between the VAT on the input for the production of an export
sale and the VAT refund, i.e. 9% of the free on board (f.o.b.) export price. We note that evidence
on the record indicates that, with respect to some exporters at least, the VAT refund resulted in
unrecovered input VAT.394 China has also presented no evidence showing that the input VAT incurred
in the production of an export sale equals or is less than the VAT refund realized. We thus consider
that the ADC did not act inconsistently with the practice of an unbiased and objective investigating
authority in concluding that the VAT refund of 9% for export sales is likely to result in a difference
in VAT recoverability for domestic and export sales.
7.209. We next consider the question of whether the ADC acted reasonably in determining that the
identified difference affected price comparability . Differences in taxation feature among the
examples of factors that may affect the price comparability in Article 2.4. In the investigation, the
ADC explained that, when making an export sale, exporting producer s were aware of the fact that

387 China's second written submission, para. 282 (referring to Australia's response to
Panel question No. 27, para. 78).
388 China's first written submission, para. 353.
389 China's second written submission, para. 281.
390 Continuation 517 final report (Exhibit CHN-36), pp. 62, 66, 69, 71, and 74.
391 Investigation 238 final report (Exhibit CHN-2), p. 150.
392 Australia's response to Panel question No. 83, para. 149.
393 We note that the ADC did not construct normal values during the expiry review. Thus, the difference
identified by the ADC pertains to the actual difference in the domestic and export markets.
394 Komodo Hong Kong Limited and Primy provided responses to the questionnaire that referred to
partial VAT refunds for exported goods. (Investigation 238 Primy's questionnaire response (Exhibit AUS-15),
p. 38; Investigation 238 Komodo Hong Kong Limited's questionnaire response (Exhibit AUS-13), p. 15).

they are unable to recover the full amount of VAT paid on inputs, and would raise the export price
accordingly to accommodate this extra cost. Thus, the ADC provided an explanation concerning the
way in which the identified differences are likely to affect the comparability of normal value and
export price.
7.210. We acknowledge China's argument that the ADC did not demonstrate that the difference in
VAT recoverability actually affected price comparability. In our view, though, it was sufficient for the
ADC to establish that exporting producers knew about the differences in VAT recoverability for their
export sales and domestic sales, bearing in mind record evidence to this effect.395 We do not consider
that the mere use of the words by the ADC that "should have an associated effect on export price"
shows that this conclusion was based on guesswork or un supported presumption. Rather, it shows
that the ADC considered that the evidence available on the record, although not an irrefutable proof,
supported a finding that there is a likely possibility that the VAT difference has an associated effect
on export price (i.e. resulting in the exporters raising export price) which is not present on domestic
sales price. 396 We further note that China has pointed to nothing on the record indicating that the
exporters would have addressed the cost of unrecovered VAT on export sales in some other manner.
7.211. For this reason, we do not consider the ADC's consideration of the matter to be inconsistent
with Article 2.4.
7.4.6.1.3.2 The methodology applied by the ADC to calculate the VAT adjustment
7.212. The second aspect of China's claim under Article 2.4 on VAT recoverability concerns the
methodology applied by the ADC to calculate the adjustment . We begin by setting out our
understanding of the factual background concerning the VAT adjustment in the proceedings at issue.
We recall that, while we focus our analysis on the expiry review, as noted in paragraph 7.203 above,
we will refer to the ADC's reasoning in the investigation report, because we consider that the ADC
implicitly carried forward its reas oning with respect to the VAT adjustments in the original
investigation into the expiry review.
7.213. The Chinese VAT rate for the product concerned during the period of investigation was 17%.
When the goods were produced and sold in China, any VAT on input costs was fully recovered, being
offset against the output VAT charged on sales on the domestic market. When the goods were
exported, however, the exporters were not able to recover the VAT charged on relevant inputs by
offsetting against the output VAT (because the export sales were subject to zero per cent VAT).397
Instead, and for stainless steel sinks, specifically, exporters were entitled to a VAT refund from the
Chinese tax authorities at a rate of 9% of the f.o.b. export price during the original investigation.398
Australia has indicated that the VAT refund rate during the expiry review was different.399
7.214. The ADC treated the unrecovered amount of VAT in case of exportation as a "8% difference
in taxation" , and considered that "it is logical to upwards adjust the normal value for this 8%
difference in taxation, as provided for by s. 269TAC(9) of the Act" .400 Australia has referred to the
difference during these proceedings as "the non-refundable VAT liability for export sales" which was
"a percentage of the export selling price".401 In the investigation, the ADC used the following formula

395 See fns 381-382 above.
396 We recall that the Appellate Body has stated that differences affecting price comparability include
any "differences in characteristics of the compared transactions that have an impact, or are likely to have an
impact, on the prices of the transactions". (Appellate Body Report, EU – Fatty Alcohols (Indonesia), para. 5.22
(referring to Appellate Body Report, US – Zeroing (EC), para. 157)) (emphasis added). Both parties referred to
this statement of the Appellate Body. (China's first written submission, para. 332; Australia's second written
submission, para. 273). We recall that our task is to determine whether the ADC's approach was unbiased and
objective.
397 China's response to Panel question No. 81, para. 118, where China states that "the liability arises
from inability to offset input VAT, not from the exporting activity itself, which is VAT free".
398 Australia's response to Panel question No. 69, para. 30.
399 Australia's response to Panel question No. 69, para. 30. China has not contested
Australia's assertion.
400 Investigation 238 final report (Exhibit CHN-2), p. 150.
401 Australia's second written submission, para. 277. China disagrees with Australia's description of what
the ADC did. (China's response to Panel question No. 83, para. 126).

to work out the adjustment: "[f.o.b.] normal value X 8% (the amount of VAT that is
non-refundable)".402
7.215. The ADC also made the following observations:
In its submission in response to the Verification Visit Report, Zhuhai Grand submitted
that the Commission's methodology applied in the company's Verification Visit Report
to calculate the upwards adjustment to normal values to account for differences in VAT
between the domestic and export markets was mathematically erroneous. Specifically,
Zhuhai Grand submitted that:
• the VAT adjustment should be calculated on the 'actual [f.o.b.] value', meaning
the actual [f.o.b.] export prices achieved by Zhuhai Gr and in the investigation
period, rather than the constructed [f.o.b.] normal value with profit included
(as this would have been the actual liability incurred by the company); and
• the formula applied by the Commission is incorrect.
In [the statement of essential facts], the Commission made no changes to the approach
taken in the company's Verification Visit Report in relation to the above.
In its response to [the statement of essential facts], Zhuhai Grand again submitted the
above points.
…
[T]he Commissio ner does not agree with Zhuhai Grand's submission that the VAT
adjustment should be calculated on actual (achieved) [f.o.b.] export prices. In
constructing Zhuhai Grand's normal value, it is the Commission's intention to derive a
normal value for the goods if they had been sold domestically, and to undertake
appropriate adjustments to that normal value to account for differences between export
and domestic sales of those goods if sold at that normal value . It is therefore logical
that any adjustment applied to normal value for differences in VAT across markets be
applied to the full constructed normal value, determining the rate of the adjustment had
the goods been exported at that normal value.403
7.216. China's arguments regarding the ADC's VAT adjustment formula have evolved during the
Panel proceedings. We understand China's principal argument to be that "the due allowance should
have been made based on the extent of the additional tax liability expense ".404 More specifically,
China argues that the VAT adjustment was calculated using the uplifted normal value base, which
is: (a) different to, and higher than, the actual cost incurred; and (b) different to, and higher than,
a normal value reflecting actual costs in the financial record kept by the Chinese exporter.405 Thus,
in China's view, the ADC's calculation method inflated the alleged price effect of the cost difference
between export and domestic sales. China additionally argues that, instead of applyi ng the 8% to
the normal value, the ADC should have applied the 8% to the export price, exportation "being the
activity that generated the difference in the recoverable vs non-recoverable VAT and the subject of
the difference being adjusted"406. Towards the latter part of the proceedings, China argued that, to
compute the adjustment, the ADC needed to "identify the actual VAT costs that the exporter would
have incurred due to the lower VAT refund ".407 Regarding China's claim that the VAT adjustment
inflated the difference in VAT recoverability, we note that this claim is premised on the ADC's use of
surrogate costs in the calculation of the constructed normal value and the use of the surrogate costs
in applying the ordinary-course-of-trade test.408 China is concerned that a percentage was applied

402 Investigation 238 final report (Exhibit CHN-2), p. 150.
403 Investigation 238 final report (Exhibit CHN-2), pp. 149-150. (fns omitted)
404 China's first written submission, para. 354. See also China's first written submission, para. 350(b).
405 China's response to Panel question No. 17, para. 62.
406 China's response to Panel question No. 27, para. 97.
407 China's response to Panel question No. 81, para. 118.
408 See China's response to Panel question No. 83, para. 127. See also Continuation 517 final report
(Exhibit CHN-36), pp. 61, 65, 67, 70 and 73, where the ADC stated that, for each selected exporting

to an inflated normal value base. As discussed in section 7.4.2.3 above, the ADC did not construct
normal value in the expiry review. Insofar as China's claim is predicated on the normal value being
flawed due to the use of surrogate costs in applying the ordinary-course-of-trade test, we have
found that the ADC acted inconsistently with Article 2.2.1 by using surrogate costs that did not
represent the cost of production in China. In particular, we consider that the use of these higher
surrogate costs in applying the ordinary-course-of-trade test would logically lead to the exclusion of
lower-priced sales from the normal value calculation and consequently a higher normal value. We
note that Australia does not argue otherwise.
7.217. Consequently, we uphold China's claim that the ADC acted inconsistently with Article 2.4 by
applying a percentage to the flawed normal value base through the use of surrogate costs in applying
the ordinary-course-of-trade test.
7.218. Given this finding, we consider it unnecessary to further consider China's other arguments,
i.e. whether the ADC should have applied a percentage to the export price, instead of the normal
value, or whether the ADC should have calculated the actual VAT costs that the exporter would have
incurred due to the lower VAT refund.
7.4.6.2 AD claim 6.b.ii: differences relating to accessories
7.219. We note that this claim pertains to the ADC's findings in the expiry review only, and thus no
expiry issues arise with respect to this claim.409
7.220. The applicable legal framework for this claim has already been set forth in section 7.3.4.1
above.
7.4.6.2.1 Main party arguments
7.221. China claims that the ADC improperly calculated the amount of due allowance for accessories
differently depending on whether the accessory concerned had been produ ced by the exporter or
was purchased from a third -party supplier410, even though the exporting producer Primy "did not
differentiate product costing" on that basis.411 China asserts that, in cases where accessories were
produced by the exporters themselves, a profit margin was added in the adjustment, the profit
margin being the profit realized by the exporter "on domestic sales of the like goods in OCOT". 412
However, in cases where the exporters purchased accessories from a third party, no such
ordinary-course-of-trade profit margin was added in the adjustment. 413 China argues that the ADC
did not provide any explanation as to why it has treated accessor y costs differently depending on
whether the accessory concerned had been produced by Primy, or was purchased by Primy from a
third-party supplier. 414 China notes Australia's argument that the accessories sourced from
third-party suppliers already incorporate a profit, and thus no profit should be added. China rejects
this argument because it essentially means that the ADC assumed Primy (a) sold sinks incorporating
purchased accessories with no profit on th ose accessories; and (b) sold sinks incorporating
self-produced accessories with the same level of profit on th ose accessories as on the overall sink.
China considers this a nonsensical opinion as to Primy's business practice not supported by evidence
or explained by the ADC .415 China also argues that the ADC's methodology increased the dumping
margin.416
7.222. Furthermore, China argues that although the ADC had on record the actual costs of
accessories for each product code 417, it failed to calculate a due allowance based on the actual

producers, the ADC has re-examined the volume of sales in ordinary course of trade using a revised CTMS
after replacing each exporter's reported stainless steel production costs with a suitable competitive market
substitute.
409 China's responses to Panel question Nos. 37 and 69.
412 Continuation 517 final report (Exhibit CHN-36), p. 59.
413 China's first written submission, paras. 15(b) and 362.
414 China's first written submission, para. 372.
415 China's response to Panel question No. 23, para. 94; second written submission, para. 290.
416 China's opening statement at the first meeting of the Panel, para. 109.

accessory cost differences.418 China asserts that the ADC instead averaged certain accessory costs
across a number of different product codes under a model control code (MCC) to calculate the due
allowance. 419 According to China, this led to a distorted outcome, because the actual "unit
accessories costs for each product code within one MCC are vastly different".420 China contends that
the averaging approach misrepresented the accessory cost difference in all cases, by decreasing the
accessory cost difference in the case of the model with the most expensive accessory costs, and by
increasing the accessory cost differences the case of all other models with less expensive accessory
costs.421 China argues that the ADC failed to provide any defence of the distortive effects of this
averaging in its expiry review report.422 China thus contends that the ADC's averaging methodology
lacks objectivity and is inconsistent with Article 2.4.423
7.223. Regarding the inclusion of a profit margin in the costs of accessories, Australia agrees with
China's explanations regarding how the ADC added a profit margin to certain costs of accessories
produced by exporters, whereas such a profit margin was not added to the c osts of the
exporter's purchased accessories. Australia contends, however, that a reasoned and adequate
explanation for such differential treatment was provided in the ADC's expiry review report and the
ADRP's administrative review report.424 Australia asserts that the differential treatment was due to
the fact that the purchase price for accessories purchased from third-party suppliers was considered
to reflect its full market value inclusive of a profit, to which no profit was added; whereas a profit
was added to the internally produced accessories.425
7.224. Regarding the averaging of the costs of accessories across different models, Australia
explains that the ADC made deductions at the MCC level because the range of design variations
relating to the stainless steel sinks was very broad. Australia explains that the MCC structure was
based on three product specifications , and that the ADC determined that the range of accessories
sold domestically was considerably larger than the range of accessories sold with sinks exported to
Australia. 426 Australia asserts tha t, when making adjustments to account for differences in
accessories included in different models, the ADC used accessory costs for models within each MCC,
i.e. the ADC calculated an average cost for accessories across the range of models within each
MCC.427 Thus, to ensure a fair comparison, Australia explains that the ADC first deducted average
accessory costs from normal value at the MCC level, and then adjusted normal value upwards by
the costs of accessories relating to the exported product to Australia , at the accessories level, as
opposed to the MCC level.428 Australia argues that, even though the methodologies applied for the
downwards and upwards adjustments for accessories were not identical, the ADC adopted an

418 China's first written submission, para. 363.
419 China's second written submission, paras. 294 and 298.
421 China's first written submission, para. 366. See also China's opening statement at the first meeting
of the Panel, paras. 110-111; second written submission, para. 294.
422 China's second written submission, para. 295.
423 China's first written submission, para. 374.
424 Australia's first written submission, paras. 441-442.
425 Australia's first written submission, para. 440 (referring to Continuation 517 final report
(Exhibit CHN-36), p. 59); second written submission, para. 284.
426 Australia's first written submission, para. 445. The MCC structure contains three broad categories by
reference to (a) the number of bowls; (b) the number of drainer boards; and (c) the total capacity of the sink.
Under each of the broad categories, there are three or four specific subcategories, namely, 1 bowl, 1 bowl
(round), 2 bowls, and 2 bowls (round) for the first category, no drainer boards, 1 drainer board, and 2 drainer
boards for the second category, and capacity of 7 to 30 L, 30 to 50 L, and 50 to 70 L for the third category.
During the expiry review, interested parties claimed, and the ADC acknowledged that:
[O]utside of the three MCC categories, the r ange of design variations relating to the sinks the
subject of this inquiry is very broad and the MCC structure relied on in [the statement of essential
facts] may not capture the production cost and price variations brought about by market specific
product differences between the goods exported to Australia and like goods sold in China.
(Continuation 517 final report (Exhibit CHN-36), p. 19)
However, the ADC decided not to expand the MCC categories but would capture the differences by
making adjustment to the normal value. (See Australia's first written submission, paras. 445-449 (referring to
Continuation 517 final report (Exhibit CHN-36), p. 19)).
427 Australia's first written submission, para. 450.
428 Australia's first written submission, paras. 450-452. In response to a question from the Panel,
Australia clarified that when making the upward adjustments, the ADC used the costs of export accessories at
accessories level as opposed to the MCC level. (Australia's response to Panel question No. 25, paras. 61-68).

"evidence based approach".429 Australia argues that Article 2.4 does not prescribe how adjustments
are to be calculated, and that the ADC made adjustments that were appropriate in light of the
evidence before it. 430 Australia further asserts that its adjustments reduced the normal value
ascertained and therefore Primy's dumping margin.431
7.4.6.2.2 Evaluation
7.225. Before proceeding to discuss this claim in substance, we recall the basic factual background.
In the expiry review, the ADC considered that it had to make a fair comparison between stainless
steel sinks sold domestically and those exported to Australia. The ADC noted that accessories sold
with sinks were not only diverse, generally, but also varied widely as between domestically sold
sinks and exports to Australia. 432 To control for these differences, the ADC removed accessories
costs from domestically sold sinks and then added back costs of accessories sold for export to
Australia. In that fashion, the ADC essentially ended up with domestic sales and exports with the
same accessory costs (i.e. export acce ssory costs).433 In order to do that exercise, however, the
ADC needed to determine the costs of domestic and export accessories. The two aspects of this
claim relate to the ADC's determinations regarding how to calculate such costs.
7.226. That general background being established, we note that this claim contains two aspects:
(a) the ADC 's differential treatment of levels of profit vis-a-vis accessories purchased from
third-party suppliers versus those made internally when making adjustments under Article 2.4; and
(b) the ADC's use of average accessories' cost in making adjustments under Article 2.4. We address
each in turn.
7.4.6.2.2.1 Treating accessories purchased from third-party suppliers differently from
accessories produced internally by the exporting producer
7.227. We begin with China's claim that the ADC calculated the amount of the due allowance
differently depending on whether the accessory concerned had been produced by the exporter or
was purchased from a third-party supplier without a reasoned and adequate explanation.434 Australia
argues that a reasoned and adequate explanation for such differential treatment was provided in the
ADC's expiry review report and the ADRP's administrative review report.435
7.228. In the expiry review report, the ADC stated:
To account f or differences in prices that are driven by the market specific product
differences between equivalent domestic and Australian MCCs and to achieve a proper
comparison between the price of like goods and exported goods, the Commission
considers that an adjustment under section 269TAC(8) is warranted. The value of the
adjustment has been worked out by calculating the difference in the weighted average
unit cost of production (excluding accessory costs) between the two markets for each
relevant MCC and then ad ding to this result each exporter's profit margin (as a
percentage of cost) realised on domestic sales of like goods in OCOT.
The Commission notes that the treatment outlined above relates to differences arising
from each exporters own production activities. Where a specification adjustment occurs
due to features that relate to items which are sold with sinks, but are however sourced
from third party suppliers, such as accessories, the adjustments do not recognise OCOT
profit margin.436
7.229. We note first that to calculate the adjustment the ADC added a profit margin to the costs of
accessories produced by the exporter itself, but not to the costs of accessories when they were

429 Australia's response to Panel question No. 25, para. 69.
430 Australia's first written submission, para. 454.
431 Australia's second written submission, para. 289. See also Australia's response to
Panel question No. 25, para. 71.
432 Continuation 517 final report (Exhibit CHN-36), p. 20.
433 Australia's response to Panel question No. 25, para. 52.
434 China's first written submission, para. 372.
435 Australia's first written submission, paras. 440-443.
436 Continuation 517 final report (Exhibit CHN-36), p. 59.

purchased from third-party suppliers . Given that Primy sold the sinks and accessories to the
customers in a single package437, we consider that the ADC's differential treatment of self-producer
accessories and purchased accessories is untenable (in the sense that it is inconsistent with the
practice of an unbiased and objective investigating authority) absent some justification. While the
above statement sets out the ADC's decision not to add a profit margin to accessories costs when
they were sourced from third -party suppliers, it does not explain why the ADC has treated
accessories sourced from third -party suppliers differently. Australia points us to no other contents
of the expiry review findings by the ADC that contain any additional explanations as to the reasoning
behind the ADC 's differential treatment, and we discern none . Australia's argument that the ADC
applied differential treatment because the price for accessories purchased from third-party suppliers
was considered to reflect its full market value inclusive of a profit, to which no profit needed to be
added, therefore amounts to an ex post facto explanation. We therefore do not consider it here.
7.230. Moreover, we do not consider that a relevant explanation was provided for the
ADC's differential treatment in the ADRP's administrative review report . This is a report published
on 8 July 2020438, produced in the context of the subsequent administrative review. This report thus
postdates the expiry review. Accordingly, any explanations by the ADC referred to in this report also
amount to an ex post facto explanation, and we similarly decline to consider them in this context.
7.231. Consequently, we conclude that the ADC failed to provide a reason ed and adequate
explanation concerning the differential treatment of accessories produced by the exporter itself and
accessories sourced from third-party suppliers in its calculation of due allowance.439
7.232. In light of the above, we find that the ADC acted inconsistently with the practice of an
unbiased and objective investigating authority with respect to Article 2.4 of the
Anti-Dumping Agreement by treating accessories purchased by Primy from third -party su ppliers
differently from accessories produced by Primy without an adequate and reasonable explanation.
7.4.6.2.2.2 Failure to use actual accessory costs to calculate adjustment
7.233. We now turn to China's claim that the ADC failed to make a due allowance based on actual
accessory cost differences by averaging domestic accessory costs. 440 We recall that, when making
adjustments to account for differences in domestic and export accessories included in different
models of sinks, the ADC adopted a two-step methodology. As the first step, the ADC calculated an
average domestic accessories cost from each domestic sales transaction across all the different
product codes under a particular MCC on a quarterly basis. For convenience, we will call this
"MCC-level average domestic accessories costs". The ADC deducted this MCC-level average domestic
accessories costs from the normal value to arrive at a normal value net of domestic accessories
costs. Australia calls this step the "downwards adjustment", and we adopt that term here as well.441
7.234. As the second step, the ADC calculated an average export accessories cost, not at an MCC
level, but at an "accessories level". By accessories level, we understand Australia to mean that the
ADC used the average costs of the same type of accessories (such as basket waste, sealing tape,
clips or bypass kit) provided by the exporter Primy as the costs for a particular type of accessories,
rather than to calculate this average at product code level or at MCC level. The ADC then used the
average accessories costs to arrive at the costs for the different accessories packs (i.e. a combination

437 Continuation 517 Primy's response to statement of essential facts (Exhibit CHN-46 (BCI)), p. 16.
438 ADRP Review 2020/124 report (Exhibit CHN-47).
439 In any event, we are not persuaded by Australia's argument during these proceedings that the price
paid by Primy for accessories purchased from third-party suppliers reflects its full market value inclusive of a
profit, to which no profit needs to be added. The "profit" referred to by Australia in this context is the profit
generated by the third-party supplier, rather than the profit generated by Primy when the accessories were
resold to Primy's customers as part of the sinks. (Australia's response to Panel question No. 85, para. 154).
Australia's proposition seems to be that a sinks producer like Primy did, and will always, pass on sinks
accessories purchased from third-party suppliers to their customers at cost, i.e. with no markup. This
proposition appears to be inconsistent with evidence on the record, which shows that Primy treated sinks and
accessories "as one single product in the cost accounting, and the cost of production is calculated together as
one single product". (Continuation 517 Primy's response to statement of essential facts (Exhibit CHN-46
(BCI)), p. 16).
440 China's first written submission, para. 363.
441 Australia's response to Panel question No. 25, para. 52.

of accessories) that were ultimately sold together with the sinks. 442 The ADC then added the
accessories-pack-level export accessories costs to the downwards-adjusted value for each domestic
sales transaction of various product codes within an MCC. 443 Australia calls this step the "upwards
adjustment"444, and we adopt that term here as well. Through these two steps, the ADC effectively
replaced the domestic accessories costs in the normal value with the export accessories costs, and
then compared this adjusted normal value with the export price.
7.235. China's claim pertains to both the first and second steps described above.445 We note that
in both of these two steps, the ADC used an averaging methodology to calculate the adjustments
for differences in accessories. The way in which the ADC averaged the accessory costs in these
two steps was different. Nevertheless, the thrust of China's claim with respect to both steps concerns
the ADC's use of averaged accessory costs, rather than the actual accessory costs allegedly available
to the ADC. We will therefore address the use of averaging in both steps together rather than making
separate findings with respect to each step separately.
7.236. According to China, the accessory costs for different product codes under a given MCC were
very different, and thus by averaging out these individual actual differences for each model under
an MCC, the ADC not only failed to make a due allowance to account for the actual accessory cost
differences that it has identified under Article 2.4, but also introduced a distortion in the resulting
prices. Thus, China argues that "the ADC did not make a fair compar ison, nor did it apply an
appropriate due allowance to ensure a fair comparison".446 Australia argues that Article 2.4 does not
prescribe how adjustments are to be calculated. In Australia's view, the ADC did not act in an
arbitrary manner in making adjustments that were appropriate in light of the evidence before it. 447
The issue before us therefore is whether it is consistent with the practice of an unbiased and objective
investigating authority to use an average accessories cost across different models or for different
accessories types for the purpose of calculating due allowance in the circumstances of the present
case.
7.237. Article 2.4 prescribe s no particular methodology by which investigating authorities must
satisfy their obligation to ensure a fair comparison. The focus of Article 2.4 is on the means by which
to ensure the fairness of the comparison between normal value and export price. 448 Whatever
methodology an investigating authority employs to calculate a due allowance, that due allowance
must be calculated on the merits of each individual case and must serve the purpose of accounting
for the differences determined to affect price comparabilit y. If the methodology does not serve to
account for the differences determined to affect price comparability, it does not comport with the
requirements of Article 2.4.
7.238. We thus first note China's argument that the ADC's averaging methodology failed to account
for the actual differences determined to affect price comparability . In the present case, the ADC
found that:
[T]he kinds of accessories offered with sinks was also found to be a price determinant,
particularly since the range of accessories sold with sinks on the domestic market in
China were considerably larger than the range of accessories sold with sinks exported
to Australia. As a result, the Commission has applied adjustments to normal value to
account for differences in accessories.449
7.239. The differences thus identified by the ADC are actual differences between the ranges, and
hence the costs of accessories for the domestic sales, on the one hand, and the costs of accessories
for its comparable export sales in general , on the other hand. The ADC soug ht to address th ese
differences by, first, deducting accessories costs from the normal value sales transactions in order
to reach normal values without accessories costs (after which the ADC added back in export

442 Australia's response to Panel question No. 25, paras. 61-63.
443 Australia's first written submission, paras. 450-452. See also Australia's response to
Panel question No. 25, paras. 62-63.
444 Australia's response to Panel question No. 25, para. 52.
445 China's response to Panel question No. 24, para. 95.
446 China's response to Panel question No. 109, para. 238.
447 Australia's first written submission, para. 450. See also Australia's response to
Panel question No. 25, paras. 69-71.
448 Panel Report, Egypt – Steel Rebar, para. 7.333.
449 Continuation 517 final report (Exhibit CHN-36), p. 20.

accessories costs to the normal values). Thu s, in a general sense, the ADC accounted for the
differences between the domestic and export sales, i.e. different accessories costs. Of course, by
averaging costs, the ADC's methodology did not account for the individual and specific differences
as determined to affect price comparability with respect to each product code or each individual
sales transaction. This result, however, is inherent to the process of averaging. The question thus
becomes whether the averaging process prevented the resulting comparison between normal value
and export price from being fair. The only aspect of China's arguments that addresses this issue is
China's argument that the averaging methodology resulted in distortions in calculating due
allowances.450
7.240. China not es that Primy identified this issue, specifically with respect to the downward s
adjustment, in its submission to the ADC during the expiry review:
The Commission deducted MCC average unit accessory cost from each sales transaction
for various product codes within each MCC. Because the unit accessories costs for each
product code within one MCC are vastly different, such deduction of MCC average unit
accessories costs would distort the resulting calculated sinks price without accessories.
Primy, again for th e MCC with the largest IP sales to Australia, 1BWL0DBB, prepared
Table 5 showing the production quantities within narrower ranges of accessories costs
for product codes within MCC 1BWL0DBB. It can be seen that [a large percentage] of
the production quantity of various product codes of Primy are with unit accessories costs
at least [an appreciable percentage] away from the MCC average developed by the
Commission, either lower than the MCC average or higher.
For The [sic.] resulting effect is simply and clea r. For the product codes with actual
accessories costs at the lower end of the range in Table 5, the Commission has
significantly over-deducted accessories costs from the selling prices, and on the other
hand, for those product codes with actual accessorie s costs at the higher end of the
range in Table 5, the Commission has significantly under-deducted accessories costs
from the selling prices. As result, for any given sales transactions for any product code,
the selling prices after the deduction would be a significantly distortive one, almost
without exception. Since after the ordinary course of trade test… will only leave part of
the domestic sales transactions within this MCC in the calculation of normal value, the
normal value would be based on a bunch of domestic sales prices distorted after this
deduction.451
7.241. We recognize, as did Primy, that, since the costs of domestic accessories varied across
different product codes in an MCC , the ADC's methodology of deducting MCC -weighted-average
accessory costs from the normal value logically has the distortive effect of over-deducting accessory
costs from some product codes and under-deducting them from other product codes within the MCC.
China's principal argument as to why such distortions led to an unfair comparison is that the
averaging methodology did not correctly reflect the actual difference in accesso ry costs and thus
increased the dumping margin.452 In response to a question from the Panel as to how the averaging
methodology increased the dumping margin in the present case, China refers to and elaborates on
the example of table 5 in Primy's submission as mentioned above.453 In particular, China argues that
the use of averaging has the impact of (a) "excluding domestic products with lower accessory costs";
(b) "retaining domestic products with higher accessory costs"; and (c) "comparing domestic products
with higher accessory costs with the export price, where adjustment to the domestic product normal
value for accessories was only based on the average accessory costs for the entire domestic product
sales within the MCC, instead of using the actual, and higher, accessory costs associated with those
domestic products sold that formed the basis of the normal value comparison, resulting in an
insufficient 'deduction' or 'downward adjustment ' to the normal value". 454 We note that table 5
contained not only instances for which the costs are higher than the average, but also instances
where accessories costs are lower than the average. In our view, this result is merely a characteristic
of averaging. We do not consider that an objective and impartial in vestigating authority would
necessarily refrain from averaging transactions in this manner simply because different results were

451 Continuation 517 Primy's response to statement of essential facts (Exhibit CHN-46 (BCI)), pp. 12-13.
452 China's opening statement at the first meeting of the Panel, para. 111.
453 China's response to Panel question No. 110, paras. 239-243.
454 China's response to Panel question No. 110, para. 242.

reached for individual transactions (or even the overall adjustment) than those that would have
been reached without averaging. We further note that there is no claim that the averaging
methodology itself was used in a biased manner against certain data sets but not others.
7.242. With respect to the upward s adjustment, China presented Exhibit CHN -90 (BCI) which
contained a "table 6" showing that the "accessory costs used by the Commission " to make the
upwards adjustment to the normal value were consistently higher than the actual accessory costs
for the product exported by Primy to Australia.455 However, China does not explain that it is the use
of averaging that leads to this outcome. Furthermore, as mentioned above, we understand
China's claim to specifically relate to the use of averaging in both the downward and upward
adjustments.456 Commenting on table 6, China also states clearly that " Primy's submission to the
investigating authority also demonstrated the specific effect of using average accessory costs as an
upward adjustment with respect to the export models".457 We therefore consider that China has not
reasonably explained how this table supports it s claim in this context. 458 We further discern no
additional arguments raised by China against the upward adjustment beyond the general claim that
the use of averaging leads to distortions across averaged data. We would reject this argument here
for the same reasons as we rejected it with respect to the downward adjustment in the paragraph
immediately above.
7.243. Accordingly, we find that China has failed to demonstrate that the ADC acted inconsistently
with Article 2.4 by using an averaging methodology in calculating the adjustments in this context.
7.4.6.3 AD claim 6.b.iii: comparison of export models to other export models
7.244. We note that this claim pertains to the ADC's findings in the expiry review only, and thus no
expiry issues arise with respect to this claim.459
7.245. The applicable legal framework for this claim has already been set forth in section 7.3.4.1
above.
7.4.6.3.1 Main party arguments
7.246. China does not dispute that there are differences in physical characteristics between the
export models and the domestic models for which a due allowance should be made to ensure price
comparability.460 China argues that for four MCCs exported to Australia (export models) where there
were insufficient domestic sales of like goods sold in ordinary course of trade (domestic models),
the ADC calculated the normal value using data pertaining to domestic surrogate models with the
closest physical characteristics under the MCC hierarchy structure, with an appropriate specification
adjustment. In making the specification adjustment, China argues, the ADC compared these export
models with export models of the MCC containing the domestic surrogate models. China contends
that the ADC should have compared the export models with the domestic surrogate models that
formed the basis of the normal value.461 China argues that the ADC therefore improperly calculated
the due allowance by comparing two export model costs462, rather than comparing the cost of an
export model and its comparable domestic model. 463 Using an example to illustrate the

455 China's response to Panel question No. 110, paras. 244-246 (quoting Continuation 517
Primy's response to statement of essential facts (Exhibit CHN-46 (BCI)), p. 15; referring to Continuation 517
Primy's response to statement of essential facts, table 6 "accessories adjustment" (Exhibit CHN-90 (BCI))).
456 China’s first written submission, paras. 362, 366, and 373; opening statement at the first meeting of
the Panel, para. 110; second written submission, paras. 294 and 298; and opening statement at the second
meeting of the Panel, paras. 82-84.
457 China's response to Panel question No. 110, para. 244.
458 We note that China offers this table for the first time in China's response to the Panel's questions
following the second meeting. (China's response to Panel question No. 110). We therefore note that insofar as
China offers this table in an attempt to broaden its arguments against the downward and upward adjustments
beyond its arguments that the use of averaging itself led to the unfair comparison, we would consider such
broadened arguments untimely and reject them accordingly. See para. 7.166 above.
459 China's responses to Panel question Nos. 37 and 69.
460 China's first written submission, para. 386.
461 China's first written submission, paras. 379-382.
462 China's first written submission, para. 387.
463 China's first written submission, paras. 381-382.

ADC's methodology464, China argues that this methodology had no relevance to the differences
between the export price of the model concerned and a normal value that is necessarily based on
domestic sales.465 Accordingly, China submits that the ADC's adjustment was incapable of ensuring
a fair comparison.466
7.247. Regarding the ADC's adjustment method of comparing export models with export models,
Australia accepts China's description and characterization of the events.467 Australia argues that the
ADC acted consistently with Article 2.4 by carefully considering and properly assessing the
alternative adjustment methodology requested by Zhuhai Grand.468
7.248. We again note that th e parties' arguments with respect to this claim pertain to the
ADC's findings in the expiry review only, and thus no expiry issues arise , and no such arguments
are raised, with respect to this claim.469
7.4.6.3.2 Evaluation
7.249. We recall that during the stainless steel sinks expiry review, the ADC calculated a dumping
margin for Zhuhai Grand by comparing export price and the normal value based on the
exporter's domestic sales of like products within the same MCC. For four MCCs exported to Australia
(export models) where there were either n o or insufficient domestic sales of like goods sold in the
ordinary course of trade (domestic models), the ADC calculated the normal value using data
pertaining to surrogate domestic models with the closest physical characteristics under the MCC
hierarchy structure, with an appropriate adjustment for the purposes of Article 2.4. The ADC stated
that:
For four other MCCs exported to Australia the Commission is not satisfied that there
were sufficient domestic sales of like goods sold in OCOT on the basis ther e was an
absence, or low volume, of sales in the country of export of the identical MCC. For these
MCCs the Commission is satisfied that there were sufficient domestic sales volumes of
surrogate models based on the MCCs with the closest physical characteristics under the
MCC hierarchy structure. Accordingly, the normal value for these MCCs could be
determined under section 269TAC(1) with an appropriate specification adjustment
applied in the manner described at section 7.5.470
7.250. In section 7.10.5 of the expiry review report, the ADC further stated that:
In addition to the adjustments outlined in [the statement of essential facts] in relation
to Zhuhai Grand, the Commission also considers that further adjustments under
section 269TAC(8) [of the Customs Act 1901] are warranted to account for the effect
on prices brought about by the difference in the amount of stainless steel and other
market specific product differences between domestic and export MCCs.471
7.251. Thus, for four MCCs the ADC determined normal values by us ing surrogate domestic sales
taken from other MCCs. In light of the differences between the domestic and export MCCs, the ADC
identified a need to make certain adjustments. For this purpose , the ADC compared the export
models of these four MCCs with export models of the MCC s containing the surrogate domestic
models.472 It is undisputed that the ADC actually had the cost data for the domestically sold

464 China's first written submission, paras. 388-389.
465 China's first written submission, para. 390.
466 China's first written submission, para. 391.
467 Australia's first written submission, paras. 460-461.
468 Australia's first written submission, para. 463.
469 See, e.g. China's responses to Panel question Nos. 37 and 69.
470 Continuation 517 final report (Exhibit CHN-36), p. 73.
471 Continuation 517 final report (Exhibit CHN-36), p. 73.
472 By way of example, call one of these exported MCCs "MCC Exp 1". Note that there are only sufficient
export sales in MCC Exp 1. In order to determine the normal value for MCC Exp 1 to be compared with the
export price in MCC Exp 1, the ADC selected another MCC that most resembled the physical characteristics of
the exported MCC, e.g. MCC 2, which did have sufficient domestic sales to determine normal value, in addition
to being exported to Australia. That is to say, there are both domestic sales and export sales in MCC 2. The
ADC calculated the adjustment to the normal value based on MCC 2 domestic models by comparing the export

surrogate MCC on the record, but chose to use the cost data for the exported version instead.473 The
issue before us is whether it is consistent with the practice of an unbiased and objective investigating
authority to use cost data pertaining to export sales of a MCC to compare with the export sales of a
surrogate MCC in order to compute an adjustment to account for the differences in physical
characteristics between an export sale and a domestic sale.
7.252. We answer this question in the negative. We recall that in order for due allowance
adjustments to be made under Article 2.4, differences affecting pric e comparability must exist
between two markets. That is, a difference between the price at which the like product is sold in the
exporting country and that at which the allegedly dumped product is sold in the importing country.
If there is no difference affecting the prices of products sold in the markets concerned, no adjustment
can be made. When making an adjustment in this regard, the due allowance has to be calculated on
the merits of each individual case and must serve the purpose of accounting for the differences
determined to affect price comparability. In other words, the due allowance adjustment must serve
the purpose of accounting for the differences affecting price comparability in the two markets. In
the present case, by comparing export models w ith export models, the ADC's methodology
necessarily does not serve the purpose of accounting for differences affecting price comparability in
the two markets. We do not consider that this is consistent with the practice of an objective and
impartial investigating authority.
7.253. Accordingly, we find that the ADC acted inconsistently with Article 2.4 by comparing export
models to export models for purposes of performing a fair comparison as between the normal value
and export price for Zhuhai Grand in the stainless steel sinks expiry review.
7.4.7 AD claim 7.a under Article 2.2.2 of the Anti-Dumping Agreement: profits not based
on "actual data"
7.254. The applicable legal framework for this claim has already been set forth in section 7.3.5.1
above.
7.4.7.1 Main party arguments
7.255. China claims that the ADC calculated both the profit rate as well as the amounts of the profit
in the stainless steel sinks proceedings by using the cost of production incorporating surrogate
costs.474 China argues that the chapeau of Article 2.2.2 imposes a general obligation on an
investigating authority to use "actual data pertaining to production and sales in the ordinary course
of trade" when determining amounts for SG&A and profits.475 China contends that the "uplifted cost
base" used to calculate the profit rate and/or the amount of profit included costs of production that
were not the exporter's actual data. 476 Accordingly, in China's view, the ADC's methodology is
incapable of rendering an amount for profit "based on actual data pertaining to production and sales
in the ordinary course of trade … by the exporter or producer under investigation" as required by
Article 2.2.2. 477 Consequently, China argues, the ADC also acted inconsistently with the
requirements of Articles 2.1 and 2.2 of the Anti -Dumping Agreement and Article VI:1 of the
GATT 1994.478
7.256. Australia argues that the ADC applied a profit rate which was calculated consistently wi th
Articles 2.2 and 2.2.2 of the Anti-Dumping Agreement. 479 Australia notes that during the

models of MCC Exp 1 with the export models of MCC 2 "to account for the effect on prices brought about by
the difference in the amount of stainless steel and other market specific product differences between domestic
and export MCCs". Thus, and critically, to account for differences between MCC Dom 1 (now replaced with
MCC Dom 2) with MCC Exp 1, the ADC calculated the adjustment by comparing the price of MCC Exp 1 with the
price of the exported models of MCC 2 (MCC Exp 2) rather than using the price of the domestically sold models
of MCC 2 (MCC Dom 2). (See Continuation 517 final report (Exhibit CHN-36), p. 73).
473 Australia's first written submission, para. 461. See also China's first written submission, para. 387
(referring to ADRP Review 2020/124 report (Exhibit CHN-47), p. 26).
474 China's first written submission, paras. 401 and 417-418; responses to Panel question Nos. 37 and 69.
475 China's first written submission, paras. 402-404 (referring to, inter alia, Appellate Body Reports,
EC – Tube or Pipe Fittings, para. 97; China – HP-SSST (Japan) / China – HP-SSST (EU), para. 5.25).
476 China's first written submission, para. 416.
477 China's first written submission, paras. 397, 401, 413-414, and 416-418.
478 China's second written submission, para. 304.
479 Australia's first written submission, paras. 465-471.

investigation, the ADC accepted a submission from Zhuhai Grand to use the full cost to make and
sell the goods (CTMS) at issue, for each selected Chinese exporter to calculate the target profit
rate. 480 Australia argues that the relevant exporters raised no relevant objections to the
ADC's methodology during the investigation.481 Further, Australia argues that this claim is derivative
of China's AD claims under Articles 2.2.1.1 and 2.2 and should be rejected for the reasons set forth
in Australia's responses to those claims.482
7.257. China disagrees with Australia that its claims under the chapeau of Article 2.2.2 are
derivative of its AD claims 1 and 3. 483 In China's view, Article 2.2.2 is prescriptive of the method
that must be followed in order to calculate the amounts for profit "[f]or the purpose of
paragraph 2".484
7.258. In response to a question from the Panel, both parties agreed that the ADC did not calculate
normal value during the interim review for Yingao and the expiry review.485
7.4.7.2 Expiry
7.259. China's claim concerns the stainless steel sinks original investigation, interim reviews and
expiry review.486 As discussed in section 7.2.2 above, we shall first consider whether or not the
aspect challenged by China has expired. To do so, we shall consider whether there was a change of
essence in the approach taken by the ADC in calculating profit as between the investigation and
expiry review, and do not examine the interim reviews.
7.260. In the investigation, the ADC calculated both the profit rate a nd the amounts of profit by
using the cost of production incorporating surrogate costs. 487 However, in the expiry review, the
ADC decided not to construct the normal values for selected exporters and used instead the data
pertaining to the exporters' recorded sales. 488 As such, the ADC had no reason to calculate profit
under Article 2.2.2 for any exporters, China points to no instance in which the ADC did so, and we
discern none. We therefore consider that there was a change of essence as between the original
investigation and the expiry review. Thus, the specific aspect of the order challenged by China, i.e.
construction of normal value using surrogate costs in the profit determination, has expired . We
decline to issue findings with respect to this aspect of the order therefore, per the Panel's reasoning
in section 7.6 below.
7.4.8 AD claim 8 under Article 9.3 of the Anti-Dumping Agreement: collection of duties in
excess of the margin of dumping
7.261. The applicable legal framework for this claim has already been set forth in
section 7.2.3 above.
7.4.8.1 Main party arguments
7.262. China asserts that Australia has collected anti -dumping duties on the basis of margins of
dumping that were inflated as a result of the alleged WTO-inconsistencies challenged in China's other
AD claims.489 China claims that, as a result, Australia has collected anti-dumping duties in excess of

480 Australia's first written submission, paras. 467-469. See also Investigation 238 final report
(Exhibit CHN-2), p. 43; Investigation 238 statement of essential facts (Exhibit AUS-49), p. 37.
481 Australia's first written submission, paras. 470-471.
482 Australia's first written submission, para. 473; second written submission, paras. 298-302.
483 China's second written submission, para. 306.
484 China's second written submission, para. 306.
485 Australia's response to Panel question No. 69, para. 31; China's response to Panel question No. 69,
p. 107.
486 China's responses to Panel question Nos. 37 and 69.
487 China's first written submission, paras. 401 and 417-418; Investigation 238 final report
(Exhibit CHN-2), pp. 43-44.
488 Continuation 517 final report (Exhibit CHN-36), pp. 61, 65, 68, 71 and 73. See also
Australia's response to Panel question No. 69, para. 31; China's response to Panel question No. 69, p. 107.
489 See for example, China's first written submission, para. 338; opening statement at the first meeting
No 110, paras. 240 and 246.

the margins of dumping that would have been "properly established" under Article 2, contrary to
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.490
7.263. Australia argues that China's claim under Article 9.3 is purely consequential, and that it must
fail given that the ADC's calculation of relevant dumping margins was consistent with Article 2 of the
Anti-Dumping Agreement.491
7.4.8.2 Evaluation
7.264. To the extent that we have found above that the ADC acted inconsistently with the provisions
of Article 2, we consider that China has established, as a matter of fact, that the dumping margins
were improperly inflated through the use of surrogate costs in the stainless steel sinks proceedings.
In this regard, we note that the ADC concluded in the stainless steel sinks expiry review that "[i]n
each case, application of the [Steel Business Briefing] benchmark price resulted in an increase to
each exporters' production costs, i.e. the actual stainless steel costs incurred by exporters were
lower than the benchmark amount".492 As discussed in section 7.4.2.3 above, the ADC did not use
the surrogate costs to construct normal values but it did use these higher surrogate costs in applying
the ordinary-course-of-trade test, which would logically lead to the exclusion of more lower -priced
sales from the normal value calculation and consequently a higher dumping margin. We note that
Australia does not argue otherwise. Rather, Australia appears to treat the success of China's claim
under Article 9.3 as dependent on the other underlying claims under the Anti-Dumping Agreement.
In the absence of any rebuttal from Australia, this in our view establishes prima facie that the
anti-dumping duties imposed by the ADC exceeded the margins of dumping that would have been
established had the authorities acted consistently with Article 2.
7.265. Accordingly, we uphold China's claim that Australia acted inconsistently with Article 9.3 of
the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.
7.4.9 CVD claims 2 and 3 under Articles 1.1(b) and 14(d) of the SCM Agreement: use of
out of country benchmark493
7.266. China brings claims under the SCM Agreement regarding the ADC's findings in the stainless
steel sinks proceedings with respect to one subsidy programme named "Program 1 – Raw Materials
Provided by the Government at Less than Fair Market Value" (Program 1). This programme concerns
the provision of a particular raw material, i.e. 304 SS CRC, used in the production of stainless steel
sinks, for less than adequate remuneration by a government or public body.494
7.4.9.1 Main party arguments
7.267. China claims that, in determining the existence and amount of benefit conferred by
Program 1, the ADC acted inconsistently with Articles 1.1(b) and 14(d) of the SCM Agreement, by
using a benchmark that did not relate to the prevailing market conditions in the country of provision
(i.e. China) and rejecting in -country benchmarks without a reasoned and adequate explanation.
China contends that to justify the rejection of in-country prices, the ADC should have explained how
identified government interventions, used as the basis for rejecting in-country prices, distorted the
price of 304 SS CRC.495 China argues, in particular:

490 China's first written submission, paras. 458, 459-480. See also China's second written submission,
para. 325.
491 Australia's first written submission, paras. 165, 344-345, and 474; second written submission,
para. 310.
492 Continuation 517 final report (Exhibit CHN-36), p. 54.
493 We note that China did not pursue a claim with respect to "CVD claim 1" in its submissions. Thus, we
begin by addressing China's CVD claims 2 and 3.
494 See e.g. Investigation 238 final report (Exhibit CHN-2), pp. 11, 53, and 137.
495 China's first written submission, para. 513.

a. The ADC's examination was not based on the evidence on the record of the particular
investigation but on conclusions it reached in "previous investigations" concerning different
products.496 There was no analysis of the market for 304 SS CRC.497
b. The ADC determined, without justification, that government policy has distorted the
Chinese domestic market for 304 SS CRC. The ADC referred to concerns expre ssed in
other investigations about macroeconomic policies and plans relating to the Chinese iron
and steel industry more generally, rather than specifically about the market for
304 SS CRC.498
c. The ADC only made limited adjustments to the benchmark, with no consideration of
prevailing market conditions in the country of provision, such as price, quantity,
availability, marketability and other conditions of purchase or sale within China.499
7.268. Australia argues that this claim pertains to an expired measure. Australia contends that
although the ADC used an out-of-country benchmark in the original investigation, the ADC used an
in-country benchmark in the expiry review. Moreover, Australia asserts that, unlike in the original
investigation, in the expiry review the ADC found that Program 1 conferred no benefit on exporters
and was thus found not to be a subsidy.500
7.269. Australia also argues that during the original investigation, the Chinese Government did not
provide a complete response to the government questionnaire.501 According to Australia, the ADC
therefore had to resort to the evidence available to it, which included substantial evidence that there
was significant government intervention in the Chinese iron and steel industry that distorted prices
for various steel outputs.502 Noting the significant similarities in the raw materials and manufacturing
processes for these steel outputs and that for 304 SS CRC, the ADC determined there was sufficient
evidence to show that prices of 304 SS CRC were also distorted. Australia contends that these ADC
findings were sufficient to allow the ADC to resort to out -of-country benchmarks in its benefit
analysis.503 Australia asserts that the ADC adopted an out-of-country benchmark that was the best
available representation of the market -determined price of 304 SS CRC in China. Australia further
argues that the ADC adjusted this benchmark for prevailing market conditions in China.504 Australia
further contends that Article 14 does not require investigating authorities to adopt a particular style
of analysis or methodology in every investigation.505
7.270. China responds that, in its view, the ADC's approach of using out-of-country benchmarks to
evaluate whether exporters obtained goods at less than adequate remuneration under Program 1
has not expired. China contends that this is so, in particular, because in the expiry review the ADC
indicated in its statement of essential facts and in its anti-dumping findings that using an
out-of-country benchmark was an ongoing practice in this context .506 China also asserts that
Australia provides no evidence that the benchmark used in the expiry review did not continue to be
an out-of-country benchmark507, but also indicates that the use of a different methodology for one
exporter in the expiry review did suggest that an out -of-country benchmark methodology had not

496 China's first written submission, paras. 514-516.
497 China's first written submission, paras. 515-516 and 518.
498 China's first written submission, para. 520.
499 China's first written submission, para. 530.
500 Australia's responses to Panel question No. 69, paras. 19-21, and No. 90; comments on
China's response to Panel question No. 97. Australia also argues that the challenged countervailing duty
measure as against Program 1 is no longer in effect, and accordingly no benefits accruing to China under the
WTO Agreements are being impaired. (Australia's first written submission, paras. 603 and 606). Additional
Australian arguments pertaining to expiry in this context have also been explained in more detail in
section 7.2.1.1 above.
501 Australia's first written submission, paras. 594-596 and 610.
502 In response to the Panel's question, Australia clarified that the ADC did not resort to the facts
available mechanism set forth in Article 12.7 of the SCM Agreement, except for uncooperative and all other
exporters. (Australia's response to Panel question No. 34, para. 96, fn 59).
503 Australia's first written submission, para. 608.
504 Australia's second written submission, para. 337.
505 Australia's second written submission, para. 341.
506 China's response to Panel question No. 97.
507 China's comments on Australia's response to Panel question No. 69, para. 15.

been used. China stresses that there is no basis on which to conclude, however, that the use of out-
of-country benchmarks in this context had been abandoned by the ADC as a general matter.508
7.4.9.2 Expiry
7.271. China's claim concerns the stainless steel sinks original investigation, interim reviews, and
expiry review.509 As discussed in section 7.2.2 above, we will address first the issue of whether or
not the aspect challenged by China has expired. In this regard, we shall consider whether there was
a change of essence in the approach taken by the ADC to evaluate the benefit received by exporters
under Program 1 as between the original investigation and expiry review , and do not examine the
interim reviews.
7.272. In the original investigation, in determining whether a benefit had been conferre d on the
exporters under Program 1, the ADC co nsidered the difference between costs incurred by Chinese
exporters when purchasing 304 SS CRC from state invested enterprises (SIE or SIEs) and an external
benchmark. That benchmark was the same benchmark used in determining costs for constructed
normal values and conducting the ordinary-course-of-trade test in the dumping determination, i.e.
a MEPS-based average price for 304 SS CRC using the monthly reported MEPS North American and
European prices (excluding the Asian price) (see section 7.4.4.2 above).510
7.273. In the expiry review findings, out of the selected investigated exporters, the ADC examined
Program 1 with respect to two exporters only, i.e. Rhine Sinkwares Manufacturing Ltd . Hui Zhou
(Rhine) and Zhuhai Grand. 511 The ADC noted that Rhine had provided an updated stainless steel
purchase ledger which listed the names of stainless steel suppliers, and the business licences for
these companies. After examination, the ADC found that Rhine had not benefit ed from Program 1
because none of its suppliers of stainless steel were public bodies. 512 Since the ADC excluded the
existence of any subsidy benefit on the basis of the absence of public body involvement, the issue
of benchmarking for the less-than-adequate-remuneration assessment never arose. With respect to
exporter Zhuhai Grand, the ADC stated that:
To determine whether Zhuhai Grand had received a benefit from its SIE traders through
less than fair market value, the Commission compared the selling prices from its SIE
traders to non-SIE traders and noted that the prices paid by Zhuhai Grand to its SIE
traders were consistently higher than purchases from non-SIE traders.
The Commission is of the view that purchases of stainless steel via SIE traders did not
result in a benefit in the form of lower prices being received by Zhuhai Grand. As such,
the Commission does not consider that a benefit under this program has been
conferred.513

508 China's comments on Australia's response to Panel question No. 90.
509 China's comments on Australia's response to Panel question No. 90.
510 Investigation 238 final report (Exhibit CHN-2), p. 219. As discussed in section 7.4.4.3 above, the
ADC made limited adjustments to this benchmark. In resorting to this external benchmark, the ADC considered
and rejected two internal benchmark options, i.e. private prices from non-SIE 304 SS CRC suppliers, and
import prices of 304 SS CRC to China. (Ibid. pp. 207 and 208).
511 Continuation 517 final report (Exhibit CHN-36), pp. 82-83. The countervailing duty investigation had
previously been terminated so far as two of these five selected exporters were concerned (Primy and Jiabaolu).
(See Investigation 238 final report (Exhibit CHN-2), p. 12). With respect to the other exporter, Guangdong
Cresheen Smart Home Co Ltd, the expiry review report does not contain any discussion regarding Program 1.
512 Continuation 517 final report (Exhibit CHN-36), pp. 82-83.
513 Continuation 517 final report (Exhibit CHN-36), p. 83. (emphasis added) In the expiry review the
ADC also stated that: "[f]or the purpose of this inquiry the benchmark price used for Program 1 and the
stainless steel cost substitute in relation to section 43(2) of the Regulation relies on the average price of grade
304 [SS] CRC for North America and Europe published by [Steel Business Briefing Ltd.]" (ibid. p. 53
(emphasis added)). China refers to this statement in support of its assertion that in the expiry review report
the ADC again relied on an external benchmark in conducting its benefit analysis vis-à-vis Program 1.
(China's first written submission, para. 508). We note, however, that the ADC made this statement in the
context of selecting a surrogate steel price for purposes of the dumping investigation. This statement was not
made in the context of the subsidization findings in the expiry review and indeed, appears contradicted by the
ADC's express findings on benefit, discussed above in this section. We therefore consider this statement
immaterial.

7.274. Thus, while the ADC did assess potential Program 1 benefit for Zhuhai Grand by reference
to a benchmark for the less -than-adequate-remuneration assessment , that b enchmark was
comprised of selling prices from its non-SIE traders. China does not contend that such non-SIE prices
comprised an out -of-country benchmark .514 Indeed, Australia has submitted a BCI exhibit (with
content taken from Zhuhai Grand's verification) which is consistent with the conclusion that the ADC
used an in-country, rather than external, benchmark.515
7.275. We consider that there was a change of essence in the approach taken by the ADC in
determining whether Program 1 conferred a benefit as between the original investigation and the
expiry review. Specifically, while the ADC did employ an external benchmark for this purpose in the
original investigation, there is no evidence that the ADC did so in the expiry review . We therefore
consider that the approach taken by the ADC in the original investigation regarding the determination
of benefit for Program 1 has expired. Because China 's claim only pertains to the use of an
out-of-country benchmark, this claim only pertains to an expired aspect of the order.516 We therefore
decline to make findings with respect to this claim per our reasoning in section 7.6 below.
7.4.10 CVD claim 4 under Articles 1.2 and 2.1(c) of the SCM Agreement: specificity
determination of Program 1
7.4.10.1 Main party arguments
7.276. China asserts that the ADC determined that Program 1 was de facto specific under
Article 2.1(c) of the SCM Agreement. China claims that the ADC acted inconsistently with
Articles 1.2 and 2.1(c) in the original investigation and the expiry review by failing to:
a. identify a subsidy programme with respect to Program 1;
b. consider whether the purported programme was used by a limited number of certain
enterprises; and
c. consider, either explicitly or implicitly, the extent of diversification of economic activities
within the jurisdiction of the granting authority, as well as the length of time during which
the subsidy programme has been in operation.517
7.277. China argues that the ADC's mere reference to Program 1 as a "subsidy program" in its
findings is insufficient to establish the existence of a subsidy programme for the purposes of
Article 2.1(c)518, and that any identification of a subsidy program me must be done explicitly rather
than implicitly.519 China contends that there was no evidence that subsidies had been provided to
recipients pursuant to a plan or scheme, or that a systematic series of act ions pursuant to which
financial contributions that confer a benefit had been provided to certain enterprises. 520 China also
argues that the ADC's recognition that 304 SS CRC was a " key input in the manufacture of

514 We recall that China argues that the ADC used an external benchmark to assess benefit for an
exporter in the statement of essential facts. Because that document does not constitute the findings of the
ADC, we do not consider it relevant.
515 Continuation 517 Zhuhai Grand verification visit report, p. 25 and attachment (Exhibit AUS-81
(BCI)). China has not contested that this exhibit demonstrates the in-country nature of the benchmark used in
the expiry review for Zhuhai Grand.
516 As we consider the operable question to be whether the ADC currently applies an out-of-country
benchmark in the stainless steel sinks countervailing duty order, we reject China's arguments that we should
consider what group of Chinese exporters would be subject to the order had the ADC not used an
out-of-country benchmark in the original investigation. This reasoning applies in equal force to CVD claims 4
and 5, in that we consider the expiry issues there focus on whether the ADC currently applies an affirmative
specificity determination for Program 1 in a meaningful legal sense, or currently must apply the original
initiation decision to investigate Program 1 under the countervailing duty order. (See CVD claims 4 and 5 with
respect to stainless steel sinks, further below).
517 China's first written submission, para. 552.
518 China's first written submission, paras. 553 (referring to Panel Report, US – Pipes and Tubes
519 China's comments on Australia's response to Panel question No. 113.
520 China's first written submission, paras. 554-557; second written submission, paras. 357-358;
comments on Australia's responses to Panel question Nos. 91 and 92.

downstream products (including deep drawn s tainless steel sinks)" is not evidence of the actual
"use" of any programme by a limited number of enterprises.521
7.278. China further argues that the ADC's investigation report does not contain any express or
implicit reference to an examination of the mandator y factors under Article 2.1(c)，i.e. the extent
of diversification of economic activities within the jurisdiction of the granting authority, as well as of
the length of time during which the subsidy programme has been in operation.522
7.279. Finally, China contends that the ADC's determination that Program 1 was specific was not
substantiated by positive evidence as is required by Article 2.4, because the investigation report
contains no evidence supporting the conclusion that Program 1 was a subsidy programme, or that
the use of Program 1 was limited to certain enterprises.523
7.280. Australia argues that this claim pertains to an expired measure. Australia contends that all
references to Program 1 being a countervailable subsidy in the expiry review report, including any
references to the specificity of Program 1, are typographical error s.524 This is so because, in
Australia's view, the ADC found in the expiry review that there was no benefit conferred by
Program 1 to any exporters , and thus it was unnecessary to assess specificity of the subsidy
programme.525 Australia relatedly asserts that because there was no subsidy found to exist with
respect to Program 1 in the expiry review, there could not logically have been a specificity finding
with respect to it.526
7.281. Australia also argues that the ADC identified a subsidy programme through a systematic
series of actions that involved the granting of a financial contribution conferring a benefit, i.e. the
provision of 304 SS CRC for less than adequate remuneration by Guangdong Metals and Minerals
Import & Export Co., Ltd. to a limited group of particular enterprises engaged in the manufacture of
downstream products including stainless steel sinks. 527 Australia contends that the series of
transactions were not just the mere provision of financial contributions to certain enterprises, but a
systematic series of actions that "occurred in the wider context of systemic subsidisation and
associated policies of the Government of China within the Chinese steel market". 528 Australia
underlines that, in its view, the systematic series of actions as evidenced by the ADC's analysis of
the conferral of a benefit under Program 1 to selected exporters in the investigation was sufficient
to identify a subsidy programme, and that no further analysis was needed with respect to any other
entities that may have received financial contributions or associated benefits under Program 1.529
Australia also asserts that the identification of a subsidy programme by an investigating authority
can be done implicitly.530
7.282. Regarding the consideration of mandatory factors in Article 2.1(c), Australia argues that
investigating authorities have significant flexibility as to how they take account of these two
factors.531 Relying on the panel report in US – Carbon Steel (India) (Article 21.5 – India), Australia
argues that "it can be sufficient for other aspects of a determination to demonstrate that 'account
was taken' of the matter". 532 Australia also argues that the taking account of the two factors need

521 China's first written submission, paras. 559-560.
522 China's first written submission, paras. 562-564; second written submission, paras. 362-364.
523 China's first written submission, para. 566.
524 Australia's request for a preliminary ruling, fn 39; comments on China's response to the preliminary
ruling request, para. 25.
525 Australia's first written submission, para. 634.
526 Australia's responses to Panel question No. 69, paras. 19-21, and No. 90. Additional Australian
arguments pertaining to expiry in this context have also been explained in more detail in section 7.2.1.1
above.
527 Australia's first written submission, paras. 638 and 653; second written submission, paras. 367-368.
528 Australia's second written submission, paras. 369-370.
529 Australia's responses to Panel question Nos. 91-92; comments on China's response to
Panel question No. 92.
530 Australia's response to Panel question No. 113; comments on China's response to
Panel question No. 113.
531 Australia's second written submission, para. 374.
532 Australia's second written submission, para. 374 (referring to Panel Report, US – Carbon Steel
(India) (Article 21.5 – India), para. 7.210).

not be done explicitly .533 Australia considers that the findings of the ADC indicate that the ADC
adequately took account of both mandatory factors.534
7.283. China responds that the ADC, in the expiry review, did in fact make a finding that the
Program 1 was specific, and any such finding is not, as Australia argues, a typographical error. China
notes that the ADC stated in the expiry review that Program 1 was a countervailable subsidy, and
that under Australian domestic law, a subsidy must be specific in order to be countervailable.
Moreover, in China's view, in the expiry review the ADC signalled that it had not changed its approach
to determining the specificity of Program 1 from the original investigation.535
7.4.10.2 Expiry
7.284. China's claim concerns the stainless steel sinks original investigation, interim reviews, and
expiry review.536 As discussed in section 7.2.2 above, we will address first the issue of whether or
not the aspect challenged by China has expired. As also explained in that section, we would normally
start by assessing whether there was a change of essence as between the original investigation and
expiry review, and do not examine the interim reviews. Here, however, we take a slightly different
approach in recognition of the fact that, in the expiry review, the ADC found that Program 1 did not
qualify as a subsidy.
7.285. As described in section 7.4.9.2 above, the ADC found that Program 1 conferred no benefit
on exporters in the expiry review. In order for a subsidy to exist both in the SCM Agreement and
under Austr alian law , there must be both a financial contribution and it must confer a benefit.
Without a conferral of a benefit, Program 1 does not meet the definition of a subsidy for purposes
of the expiry review. The existence of a "subsidy" is a prerequisite to finding that the subsidy is
specific under both the SCM Agreement and Australian law. 537 Thus, even if there is a finding of
specificity in the expiry review, it is without legal effect because the finding has no "subsidy" to
which to attach.538 China points to no other way in which the specificity finding in the expiry review
has any material relevance under Australian law.539
7.286. We therefore consider this aspect of the order expired. Because China's claim pertains to an
expired aspect of the order, we decline to make findings with respect to this claim per our reasoning
in section 7.6 below.
7.4.11 CVD claim 5 under Articles 11.2 and 11.3 of the SCM Agreement : initiation of
investigation for Program 1
7.4.11.1 Main party arguments
7.287. China claims that the ADC acted inconsistently with Articles 11.1, 11.2, and 11.3 of the
SCM Agreement by failing to properly evaluate the sufficiency of the application fo r the purpose of
justifying the initiation of the investigation into Program 1.540 China argues that the application
included insufficient evidence of the existence and nature of Program 1. In China's view, an objective
and unbiased investigating authority could not have concluded that there was sufficient basis to
initiate the investigation, because

533 Australia's second written submission, paras. 374 and 376 (referring to Panel Report, US – Carbon
534 Australia's first written submission, paras. 640-641; second written submission, paras. 378-379
(referring to Investigation 238 final report (Exhibit CHN-2), p. 207).
535 China's response to Australia's request for a preliminary ruling, para. 36; response to
Panel question No. 69, paras. 33-42.
536 China's comments on Australia's responses to Panel question Nos. 37 and 69.
537 See SCM Agreement, Article 1; Continuation 517 final report (Exhibit CHN-36), p. 77.
538 China argues that the ADC made a specificity finding in the expiry review, evidenced by the following
statement by the ADC: "[I]n accordance with sections 269TAAC(4) and (5) and having had regard to
sections 269TAAC(2) and (3), that Programs 1, 3, 8, 20, and new Programs 31, 34, 35, 37 are specific".
(Continuation 517 final report (Exhibit CHN-36), p. 107 (emphasis added)).
539 China never argues that this specificity finding would compel the ADC to find that Program 1 is
specific in a later segment.

a. the application contain ed insufficient evidence that stainless steel sinks were being
subsidized at the time the application was lodged, given that the statement of findings
by the Canadian Border Services Agency (CBSA)541, a Canadian investigating authority,
relied on by the applicant relates to a period that was "between 36 and 16 months prior
to the period of investigation" and "over 30 months" before the initiation of the
investigation by the ADC542; and
b. the application neither asserted that Program 1 is specific, nor contained evidence upon
which specificity could be considered.543
7.288. More specifical ly, China argues that the applicant relied on the findings of another
Member's investigating authority, i.e. the CBSA, with respect to a similar programme as "relevant
information" for determining that there are reasonable grounds to investigate Program 1. However,
as noted above, China asserts that the CBSA 's statement relates to a period that was between
36 and 16 months prior to the period of investigation considered by the ADC, and over 30 months
before the initiation of the investigation. 544 China argues that the ADC did not explain why or how
such historic information was considered sufficient to justify the initiation of the investigation. 545
China also argues that the ADC merely acknowledged in the "consideration report" 546 of the
investigation that a s ubsidy needed to be specific in order to be countervailable, without actually
examining specificity.547 China also asserts that the CBSA's statement also does not include a finding
upon which it could be concluded that the similar programme investigated by the CBSA , i.e.
"Program 83: Raw Materials Provided by the Government at Less than Fair Market Value" , was
specific.548 In sum, China submits that an objective and unbiased investigating authority could not
have concluded that there was sufficient basis to initiate the investigation regarding Program 1.549
7.289. China rejects Australia's argument that Article 11 does not prevent an investigating authority
from considering evidence outside the four corners of the application when evaluating whether to
initiate an investigation based upon an application. China argues that Australia's position is based
on a misunderstanding of the panel report in China – GOES, is not justified on any interpretation of
Articles 11.1, 11.2, and 11.3, and ignores Article 11.6.550 China contends that Article 11.3 requires
the investigating authority to review the evidence provided in the application and to decide whether
that evidence "is sufficient to justify the initiation of an investigation".551 In China's view, while it is
permissible for an investigating authority to consider information outside the application to assess
the adequacy and accuracy of the evidence provided in the application, Article 11.3 does not allow
an investigating authority to seek its own information when an application fails to meet the
requirements of Article 11.2.552
7.290. China further argues that it is unclear fro m the record that the ADC actually had regard to
any information external to the application when considering whether initiating an investigation into
Program 1 was justified. China notes that the ADC's consideration report does not reference
specificity b eyond noting that it is a requirement of establishing that a countervailing subsidy
exists.553
7.291. Australia argues that this claim pertains to an expired measure. Australia notes that, in the
expiry review, the ADC investigated both new subsidies and previously investigated subsidies under
the same legal authority, i.e. Part XV, Division 6A of the Customs Act 1901. Australia also contends
that there is no requirement that the ADC investigate Program 1 again in a subsequent expiry or

541 CBSA statement of reasons, attached to Investigation 238 application (Exhibit CHN-60).
542 China's first written submission, paras. 585 and 589.
543 China's first written submission, para. 587.
544 China's first written submission, para. 585.
545 China's first written submission, para. 586.
546 Investigation 238 consideration report (Exhibit CHN-59). This report was published before the
initiation of the investigation, and the purpose of the report appears to be to consider whether the application
was sufficient to justify the initiation of the investigation.
547 China's first written submission, paras. 581-582.
548 China's first written submission, paras. 580 and 587.
549 China's first written submission, para. 579.
550 China's second written submission, para. 386.
551 China's second written submission, para. 106.
552 China's second written submission, para. 386.
553 China's second written submission, paras. 387 to 388.

interim review simply due t o the fact that it had been previously investigated in prior segments.
Australia further stresses that any subsidy, whether previously investigated or not, can be
investigated in an expiry review whether or not it had been investigated in a previous segmen t, if
there is evidence that it should be included in the scope of the examination. 554 Australia also
underlines that it is not the case that, absent new evidence regarding Program 1, the ADC would
investigate it in a subsequent expiry review or interim rev iew, and also that any examination of
Program 1 would operate as if it were a new subsidy that had never been previously examined. 555
Australia further rejects China's assertions that the ADC's investigation of new subsidies in the expiry
review may be contrary to WTO law.556
7.292. Australia also argues that in deciding whether to initiate an investigation, an investigating
authority is not limited to the evidence in the application itself. Australia contends that the ADC also
relied on its previous investigations into similar subsidy programmes such as aluminium zinc coated
steel and galvanized steel, and hot rolled plate steel in which the ADC determined that these
subsidies (which the ADC considered to be variations of Program 1) were specific.557 Australia argues
that the domestic industry did not have access to such information and therefore could not have
included it in its application. 558 Australia further contends that the application itself conta ined
information on the nature of the subsidy which went to specificity.559
7.293. Australia further argues that the absence of explicit references to a specificity determination
in the consideration report is not in itself inconsistent with Articles 11.2 and 11.3 of the
SCM Agreement.560 Australia contends that "it is implicit in the Stainless Steel Sinks Investigation
238 Consideration Report, that the ADC did consider whether there was adequate evidence indicating
specificity".561 In this regard, Australia points to a statement of the ADC in the consideration report
that Australia's domestic legislation "provides that, in order for a subsidy to be countervailable, it
must also be specific".562 Thus, Australia argues that the ADC acknowledged that specificity must be
considered.563
7.294. China acknowledges that the question of whether new subsidies can be investigated in an
expiry review is not a question raised by China's claim. However, China argues that any such practice
may be contrary to WTO law. China indicates that the ADC did in fact examine new subsidies in the
expiry review, and appeared to examine all subsidies (new or old) under the same legal authority.
China also asserts that nothing about how the ADC examined Program 1 in the expiry review
indicates that it has somehow been removed from the scope of future countervailing proceedings.564
China also argues that any new subsidies would be investigated under the countervailing duty order
that only exists due to the foundational errors committed in the original investigation.565 China states
that Division 6A of the Customs Act 1901 simply allows the ADC to investigate subsidies under an
existing anti-dumping or countervailing duty order, and thus it links the investigations of new
subsidies to the foundational errors made in the original investigation.566

554 Australia's responses to Panel question Nos. 71, 73, 103, and 104.
555 Australia's response to Panel question No. 104.
556 Australia's comments on China's response to Panel question No. 71. Additional Australian arguments
pertaining to expiry in this context have also been explained in more detail in section 7.2.1.1 above.
557 Australia's first written submission, paras. 691-692 (referring to Investigation 198 (hot rolled plate
steel) final report (Exhibit CHN-33), p. 10; Investigation 193 (aluminium zinc coated steel) final report
(Exhibit AUS-70), p. 48).
558 Australia's response to Panel question No. 94.
559 Australia's response to Panel question No. 94.
560 Australia's first written submission, paras. 695-696 (referring to Panel Report, US – Countervailing
Measures (China), para. 7.25).
561 Australia's first written submission, para. 696.
562 Investigation 238 consideration report (Exhibit CHN-59), p. 34.
563 Australia's first written submission, para. 696.
564 China's response to Panel question No. 71.
565 China's response to Panel question No. 103.
566 China's comments on Australia's response to Panel question No. 71. China states that the ADC
investigated the new subsidies in the expiry review under the same legal authority used to investigate
Program 1 in the original investigation. (China's response to Panel question No. 71, para. 83). See also
China's response to Panel question No. 104, para. 218(a) ("[i]t would be consistent with Australian
investigating authority practice for it to do whatever it likes, in terms of examination of subsidies, in a subsidy
'variable factor' review".); and response to Panel question No. 73, para. 96(d) (indicating that the ADC

7.295. China further asserts that according to its understanding of the ADC's practice, the ADC
could examine Program 1 in a future interim or expiry review, but the ADC would not need to
examine Program 1 as a new subsidy because the ADC could rely on previous findings vis-à-vis
Program 1 that it made in previous segments. China also contends that there does not appear to be
any evidentiary requirements to be met for the ADC to examine Program 1 in a future review. 567
Moreover, in China 's view, the subsidization provided for under Program 1 is embedded in the
countervailing duty order because, in an expiry review, the ADC o nly will continue the order if
revocation of the order would lead to the continuation or recurrence of "the … subsidization " and
material injury that the order is intended to prevent. According to China, "the subsidization" includes
the subsidization by Program 1 found to exist in the original investigation. China also adds that, in
its view, including new subsidies in an expiry review is likely contrary to Australian law.568 Finally,
China asserts that the ADC initiation notice in the expiry review indicates that the ADC would review
the subsidy programmes included in the original investigation.569
7.4.11.2 Expiry
7.296. Unlike the majority of China 's claims, this claim is directed solely against the original
investigation.570 This is so because that is the only segment in which there was a decision by the
ADC as to whether to initiate an investigation, and the decision to initiate an investigation with
respect to Program 1 was part of that overall exercise. Thus, it is not possible, as a practical matter,
to examine whether there has been a change of essence as between the initiation decision in the
original investigation and a similar decision in a later segment. As noted in section 7.2.2 above,
however, this is not the end to the expiry inquiry. We therefore continue to examine whether the
ADC's initiation decision with respect to Program 1 in the original investigation has ceased to have
legal effect, i.e. whether it has expired.
7.297. We consider that the legal result of the initiation decision with respect to Program 1 was to
allow the ADC to examine Program 1 in the original investigation. 571 The question of whether the
initiation decision has ceased to have legal effect, therefore, in our minds, centres on whether
Australia currently must apply the original initiation decision for Program 1 to investigate Program 1
in a post-investigation segment under the countervailing duty order.572 We consider that the record
before us indicates that the answer to this question is in the negative. This is so because the record
supports the conclusion that under Australian law and practice the ADC could investigate Program 1
under the countervailing duty order in a post-investigation segment even in the absence of an
initiation decision in the original investigation.
7.298. We first note that the Panel has asked the parties specific questions regarding the
circumstances under which the ADC can investigate "new" subsidies in post-investigation segments
(i.e. subsidies that had not been investigated in a n original investigation ) and whether such new
subsidies are treated differently than subsidies that had been investigated in an original investigation
(which we will refer to as "original" subsides). 573 China has directed us to nothing in the
ADC's reports in any segment or in Australian law that constrains the ability of the ADC to examine
new subsidies in a post-investigation segment, or that compels new and original subsidies be treated

investigates not only original subsidies in an expiry review but also "any other subsidies to which it might turn
its mind in the expiry review").
567 China's response to Panel question No. 104.
568 China's comments on Australia's response to Panel question No. 103.
569 China's comments on Australia's response to Panel question No. 104.
570 China's responses to Panel question Nos. 37 and 69.
571 See Investigation 238 consideration report (Exhibit CHN-59), p. 38 ("[i]n light of the above
[assessment of Program 1], the Commission considers that there are reasonable grounds to conclude that
exporters of deep drawn stainless steel sinks may have received benefits under this subsidy and that its
investigation is warranted.").
572 We recall that we earlier found that we need not consider what group of Chinese exporters might
have been subject to the stainless steel sinks countervailing duty order, and whether a change in that
composition calls into question whether a countervailing duty order would exist today or not, had the alleged
inconsistencies with the SCM Agreement not occurred. These considerations are counterfactual in nature and,
in our minds, extend beyond the key question of whether Australia currently must apply the original initiation
decision for Program 1 to investigate Program 1 under the countervailing duty order.
573 See e.g. Panel's question Nos. 71, 103, and 104.

in a different manner in post-investigation segments.574 China does, however, mention the following
statement in the ADC's initiation notification for the stainless steel sinks expiry review:
My examination of countervailable subsidies will be limited to programs currently
covered by the countervailing duty notice, however should further evidence of additional
countervailable subsidy programs be provided I may examine the additional programs
if to do so will not prevent the timely completion of the inquiry.575
7.299. We consider that this statement does not reveal whether new and or iginal subsidies are
treated differently under Australian law in the context of post-investigation segments.576
7.300. The record does contain evidence, however, that the ADC can and does investigate new and
original subsidies in similar manners in post -investigation segments. In a response to a Panel
question, Australia referred to Australian law Part XV, Division 6A of the Customs Act 1901, which
addresses expiry reviews. We agree with Australia that this section of Australian law appears to draw
no distinctions between original and new subsidies.577 We also note that in the three stainless steel
sinks interim reviews and the expiry review, the ADC requested information on both original and
new subsidies and examined exporters' records with an eye to determining w hether new subsidies
had been received. We take special note that in one interim review and the expiry review the ADC
examined new subsidies. In no segment do we discern any indication that the ADC considered its
ability to investigate new subsidies was di fferent than how it examined old subsidies as a legal
matter.578 Thus, we consider that the ADC could assess Program 1 in post-investigation segments
in essentially the same legal manner whether it was or was not included in the original investigation.
We also do not consider China's argument that investigating new subsidies in post -investigation
segments may be contrary to WTO law relevant, as this is not an issue before us in this dispute.
7.301. We therefore consider that the record reflects that the ADC does not need to rely on the fact
that Program 1 was investigated in the original investigation in determining whether or h ow it may
be examined in the post-investigation segments. This, in our minds, compels the conclusion that the
original initiation decision with respect to Program 1 is an expired aspect of the order. We therefore
decline to make findings with respect to th is aspect of the order per ou r reasoning in section 7.6
below.
7.5 Railway wheels
7.302. In examining China's claims below with respect to railway wheels, we recall that there has
only been one relevant segment that has occurred thus far, i.e. the original investigation. Thus, no
expiry issues arise with respect to China's railway wheels claims. We also note that the numbering
of China's claims, and the order i n which we address them, has already been described in
paragraph 7.53 above.
7.5.1 AD claim 3 under Article 2.2.1.1 of the Anti-Dumping Agreement: rejection of
exporters' costs
7.303. The applicable legal framework for this claim has already been set forth in section 7.3.1.1
above.

574 China does argue that the ADC considers information about subsidies from prior segments in making
findings. This may be correct, but it does not demonstrate a legal compulsion to treat new and original
subsidies differently.
575 Continuation 517 initiation notice (Exhibit AUS-11), p. 5.
576 We acknowledge that this example may illustrate a more general practice of the ADC, in a given
segment, to investigate previously investigated subsidies in a somewhat automatic fashion. Even if correct,
however, this would not, in our minds, change the ultimate conclusion in this section because the ADC would
still be able to investigate Program 1 in post-investigation segments in the absence of an original initiation
decision.
577 Australia's response to Panel question No. 103.
578 See Review 352 final report (Exhibit CHN-17), p. 18; Review 459 final report (Exhibit CHN-22),
p. 18; Review 461 final report (Exhibit CHN-51), p. 27; and Continuation 517 final report (Exhibit CHN-36),
pp. 79-81 and 83-84.

7.5.1.1 Main party arguments
7.304. China argues that the ADC rejected Masteel's579 costs of production when constructing
normal values and instead used non -Chinese surrogate costs. China claims that, in doing so,
Australia violated Article 2.2.1.1 of the Anti-Dumping Agreement because the ADC failed to calculate
relevant costs "on the basis of records kept by the exporter or producer under investigation" within
the meaning of Article 2.2.1.1. More specifically, China argues that the ADC either did not determine,
or wrongly determined, that the records kept by Masteel did not "reasonably reflect the costs
associated with the production and sale of the product under consideration" within the meaning of
Article 2.2.1.1. This is so because, according to China, the ADC instead rejected the Masteel's costs
because they "did not reasonably reflect competitive market costs", within the meaning of applicable
Australian law.580
7.305. Australia argues that China misunderstands the ADC's findings and calculations of
Masteel's steel billet costs. 581 Specifically, Australia argues that "[t]he ADC's constructed value
methodology for Masteel did not rely on the second condition in the first sentence of Article 2.2.1.1,
as China erroneously assumes. Australia contends that the ADC relied on the term 'normally,' as set
forth in the first sentence of Article 2.2.1.1, when relying on information other than Masteel's records
for the purpose of calculating the cost of production for steel billet".582 Indeed, Australia asserts that
the ADC only made a first condition finding, but no second condition finding, for purposes of
Article 2.2.1.1.583 According to Australia, the ADC concluded that the relevant circumstances were
"not normal or ordinary" due to the Chinese Government's intervention in the underlying steel
market, which caused significant and systemic imbalances in t hat market.584 Australia argues that
the word "normally" in the first sentence of Article 2.2.1.1 must be taken into account to give a
proper interpretation of the provision. 585 Australia contends that a proper interpretation of
Article 2.2.1.1 leads to the conclusion that "irrespective of whether the records are (a) GAAP
compliant, and (b) 'reasonably reflect' costs, an investigating authority may rely on data other than
the records of the exporter or producer if there are not normal or ordinary circumstance s affecting
the exporter or producer's costs".586 In this regard, Australia argues that the structure of the first
sentence of Article 2.2.1.1 does not impose an order of analysis as between the two conditions and
consideration of the word "normally", and thus the word "normally" affords discretion to depart from
using exporters' costs even if the investigating authority does not make fin dings as to one or both
conditions. 587 Australia further asserts that such a sequencing would serve no meaningful
purpose.588 Australia argues that an investigating authority's reliance on the word "normally" is not
unconstrained, and there must be a proper basis for doing so on the record. 589 Australia also
contends that the ADC sought information from Masteel and the Chinese Government in this context
but the responses to such requests were incomplete.590
7.306. China responds that any flexibility afforded by the wo rd "normally" in the first sentence of
Article 2.2.1.1 would only arise if the ADC made affirmative findings as to the two conditions in that
sentence, consistent with the panel 's analysis in Australia – Anti-dumping Measures on Paper .591
China maintains th at any discretion afforded by the word "normally" to depart from using
exporters' records when the two conditions are satisfied must be limited. More specifically, China
argues that the text and context of the Anti-Dumping Agreement indicates that such flexibility would
arise in the situation where an exporter's records do not give the investigating authority confidence
in the accuracy, completeness, faithfulness and reliability of the exporter's cost record. 592 China

579 Masteel was the only investigated Chinese exporter in the investigation.
580 China's first written submission, section F.1.
581 Australia's first written submission, para. 177.
582 Australia's first written submission, para. 178.
583 Australia's responses to Panel question No. 61, para. 193, and No. 78, paras. 82-83.
584 Australia's first written submission, paras. 179 and 192-243; second written submission, paras. 143
and 146.
585 Australia's first written submission, paras. 182-191.
586 Australia's first written submission, para. 244.
587 Australia's second written submission, paras. 150-158.
588 Australia's second written submission, para. 157.
589 Australia's second written submission, para. 166.
590 Australia's first written submission, paras. 234-243.
591 China's second written submission, paras. 199 and 203-205.
592 China's second written submission, para. 239.

further asserts that the ADC failed to make a finding under the first condition of Article 2.2.1.1 in
the investigation.593
7.5.1.2 Evaluation
7.307. China claims that the ADC improperly rejected Masteel's costs of producing steel billet when
constructing its normal value because the ADC did so without making a proper finding under the
second condition of Article 2.2.1.1.
7.308. In the original investigation, the ADC calculated a constructed normal value for Masteel (the
only investigated Chinese exporter ). 594 In assessing what costs of producti on to use in its
construction of normal value, the ADC recalled that , per the relevant underlying statute, the ADC
must use the Masteel's records concerning its costs of production if they are kept in accordance with
GAAP and reasonably reflect competitive market costs. The ADC then recalled that the influence of
the Chinese Government had, in its view, resulted in distortions in China's domestic steel and steel
input markets.595 The ADC stated that "[i]n these circumstances, the Commission is not required to
work out an amount for the cost of production using the information set out in Masteel's records".596
The ADC then summarily indicated that it had selected a suitable replacement steel billet benchmark
cost.597 This analytic progression by the ADC , in our view, establishes that the ADC rejected
Masteel's costs of producing steel billet because, in its view, they did not reasonably reflect
competitive market costs. In an appendix to its report, the ADC elaborated on why it considered that
Masteel's costs of producing steel billet did not reasonably reflect competitive market costs. 598 The
ADC also indicated in this appendix that "[t]hese circumstances are not normal and ordinary because
the records of Masteel reflect the government influence by the GOC which distorts the costs in the
steel and steel input markets in China".599
7.309. We recall that in section 7.3.1.4 above, addressing a similar claim with respect to the wind
towers proceedings, we considered that when the ADC applies the competitive market costs test, it
is failing to apply, rather than misapplying, the second condition in Article 2.2.1.1 of the
Anti-Dumping Agreement. We see no reason to alter that conclusion here. We discern no other point
at which the ADC makes either an affirmative or negative finding under the second condition. Again,
the assessment of whether costs "reasonably reflect competitive market conditions", in our opinion,
is different than whether costs "reasonably reflect the costs associated with the production and sale
of the product under consideration ". As indicated in the paragraph immediately above, the ADC
rejected Masteel's relevant costs based on the former inquiry, rather than the latter. On this basis,
we find that, in rejecting Masteel's costs because they did not reflect competitive market costs, the
ADC did not make a finding under the second condition of Article 2.2.1.1. The ADC therefore could
not rely on any flexibility provided by the word "normally" in the first sentence of Article 2.2.1.1,
and thus had no basis upon which to depart from using Masteel's costs of production reflected in its
records. We therefore find that the ADC acted inconsistently with Article 2.2.1.1 of the Anti-Dumping
Agreement. We also note that we conclude that there was no first condition finding made in the
ADC's report in the investigation. Thus, even if there had been an affirmative second condition
finding, the ADC would still not have been entitled to depart from using Masteel's costs.600

593 China's responses to Panel question Nos. 69 and 80.
594 Investigation 466 final report (Exhibit CHN-3), pp. 23-24.
595 Investigation 466 final report (Exhibit CHN-3), pp. 24 and 80-95.
596 Investigation 466 final report (Exhibit CHN-3), p. 24.
597 Investigation 466 final report (Exhibit CHN-3), pp. 24-25.
598 Investigation 466 final report (Exhibit CHN-3), appendix 2.
599 Investigation 466 final report (Exhibit CHN-3), p. 80.
600 We note that Australia argues that the ADC made a first condition finding in the statement of
essential facts in this investigation, and that this finding was not contested and therefore the finding was clear
from the course of the investigation. (Australia's responses to Panel question No. 61, para. 193, and No. 78,
para. 82.) The ADC's report, not the statement of essential facts, in our mind reflects the ADC's findings,
however, and we discern no first condition finding in that report. We therefore consider that no first condition
finding was made in the investigation. China also claims violations of Articles 2.1 and 2.2 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994 in this context. (China's first written submission,
section F.1.) We discern no independent basis on which to find violations of these provisions. The Panel
declines to make findings as to these claims as it would not be helpful in resolving the dispute.

7.5.2 AD claim 1 under Article 2.2 of the Anti-Dumping Agreement: costs of production in
the country of origin
7.310. The applicable legal framework for this claim has already been set forth in section 7.3.2.1
above.
7.5.2.1 Main party arguments
7.311. China recalls that in the railway wheels investigation the ADC rejected using the
exporters' costs of production when determining normal value, and instead used surrogate costs.
Specifically, China indicates that the ADC replaced Ma steel's steel-billet production costs with a
French producer MG-Valdunes SAS (Valdunes)'s steel-billet purchasing costs.601 China claims that,
in doing so, Australia violated Article 2.2 of the Anti-Dumping Agreement because the ADC used
costs that were not "the cost of production in the country of origin" within the meaning of Article 2.2.
More specifically, China claims that the ADC used the selected surrogate costs because they were
meant to not represent the costs of production in China, and that the ADC made no material effort
to adapt such costs so that they could reasonably be considered "the cost of production in [China]".
China notes that although the ADC made certain adjustments to the surrogate costs in the
investigation, such adjustments were insufficient to make the surrogate costs "costs of production
in the country of origin". China also asserts that the ADC noted the need for further such
adjustments, but failed to perform them, citing the lack of information on the record, which, in
China's view, is an irrelevant legal co nsideration in this context. 602 China cites the Appellate Body
reports in EU – Biodiesel (Argentina) and Ukraine – Ammonium Nitrate in support of its arguments
in this context.603
7.312. Australia asserts that "China's claim is limited to challenging the ADC's approach to
determining the cost of a single (but important) input in Masteel's production process: steel
billet".604 In this context, Australia contends that the ADC recognized that Article 2.2 does not
preclude the use of out -of-country data, that the circum stances of the investigation meant that it
was proper for the ADC to resort to out-of-country data, and that the ADC made proper adjustments
to Valdunes's data to reflect Masteel's circumstances in China.605 Australia recalls that the ADC found
that it could not use Masteel's recorded costs, and thus turned to other data to determine such costs.
Australia asserts that the ADC selected the surrogate costs in this context because
Valdunes's purchases were of a particular relevant grade of steel, such data were taken from the
same relevant period of investigation and were verified by the ADC, and because Valdunes's costs
did not reflect Chinese market distortions. 606 Australia asserts that the ADC adjusted
Valdunes's SG&A because Masteel, unlike Valdunes, was a vertically integrated producer that made
its own steel billet.607 Australia indicates that the ADC considered, but rejected, the use of alternative
data sources.608 Australia further argues that the ADC could not further adjust Valdunes's data to
ensure that such data represented the cost of production in China because the Chinese Government
and Masteel failed to provide relevant information to the ADC that could have been used to make
such adjustments.609
7.313. Australia also argues that if the Panel were to find a violation of Article 2.2.1.1 under
AD claim 3, then it would not be necessary or desirable to also issue findings with respect to this
claim under Article 2.2. This is not, in Australia 's view, because this claim is consequential to
China's claim under Article 2.2.1.1. Rather, in Australia 's view, it is because if a violation of
Article 2.2.1.1 is found, this claim is premised on a particular outcome of the Article 2.2.1.1 analysis,

601 China's first written submission, paras. 76-95.
602 China's second written submission, paras. 158-161.
603 China's first written submission, paras. 96-119.
604 Australia's first written submission, para. 277.
605 Australia's first written submission, paras. 278 and 289-292. Specifically, Australia discusses in this
context the adjustments made to Valdunes's costs to reflect the fact that Masteel was a vertically integrated
producer which did not purchase, but made, steel billet. (Australia's first written submission, paras. 289-290).
606 Australia's first written submission, para. 286.
607 Australia's second written submission, paras. 199-202. Australia notes that the ADC used the costs
of another steel company, ArcelorMittal, in making this adjustment, because Masteel provided such data for
this express purpose, ArcelorMittal's core business was production and sale of steel products, and its relevant
costs were readily identifiable in its records. (ibid. para. 201).
608 Australia's first written submission, paras. 298-311.
609 Australia's first written submission, paras. 293-297.

and if the ADC improperly rejected exporters' costs under Article 2.2.1.1, then the Panel's analysis
of whether the ADC properly adjusted the costs to represent the cost of production in China used
would be irrelevant as a practical matter.610
7.314. China responds that a violation of Article 2.2.1.1 would also result in a violation of Article 2.2,
but argues that the Panel should still make findings with respect to this Article 2.2 claim even if a
violation of Article 2.2.1.1 is found. China indicates that such an approach has been followed in other
disputes.611 China also asserts that the ADC's adjustment of the surrogate costs for SG&A to which
Australia refers was incapable of rendering a cost of production in China.612
7.5.2.2 Evaluation
7.315. China claims that the surrogate co sts for steel billet selected by the ADC for purposes of
constructing Masteel's normal value in the railway wheels investigation did not represent the "cost
of production in country of origin" within the meaning of Article 2.2 of the Anti-Dumping Agreement.
7.316. In the investigation, and after rejecting Masteel's costs of producing steel billet in
constructing normal value, the ADC considered multiple benchmarks to use for Masteel's steel billet
costs, i.e. private prices, import prices, and external benchmarks .613 The ADC ultimately used the
steel billet costs of the company Valdunes. Valdunes was a French producer and the only other
verified exporter of railway wheels subject to the investigation.614 The ADC selected Valdunes's cost
data because "they are the cost of the particular grade of micro alloyed steel used in the production
of the good s under consideration " and the ADC had verified the costs for the same period of
investigation.615 The ADC thus concluded that "the suitable [replacement] benchmark is to uplift
Masteel's steel billet input costs to reflect the difference between these costs and the costs incurred
by Valdunes".616
7.317. Two adjustments were made to Valdunes's steel-billet costs. The first was deemed
appropriate because Valdunes purchased its steel billet whereas Masteel made its own steel billet.617
The ADC thus adjusted Valdunes's SG&A to reflect that Masteel would not have incurred certain
costs as a vertically integrated company in this respect.618 The ADC made the second adjustment to
address Valdunes's lack of steel billet purchase cost data for one quarter of the period of
investigation as follows:
Due to this [lack of data], the Commission a djusted the French billet costs from the
third quarter o f the investigation period, relative to movements of an East Asia steel
benchmark, to determine a French billet price in that quarter. The Commission then
annualised the difference between the French billet costs and the Masteel costs to
produce billet use d in railway wheels, and uplifted the Masteel billet costs by this
annualised percentage.619
7.318. The ADC discussed, but declined to make, other adjustments to Valdunes's costs. Certain
parties before the ADC raised concerns that the steel billet surrogate cost s did not reflect

610 Australia's response to Panel question No. 12.
611 China's response to Panel question No. 12.
612 China's response to Panel question No. 69, paras. 57-59.
613 Investigation 466 final report (Exhibit CHN-3), pp. 100-102.
614 Investigation 466 final report (Exhibit CHN-3), p. 22.
615 Investigation 466 final report (Exhibit CHN-3), pp. 101-102.
616 Investigation 466 final report (Exhibit CHN-3), p. 25. See also Ibid. p. 96 (explaining that in the
statement of essential facts "the Commission calculated the cost of production with reference to the actual
costs incurred by Masteel in production of steel billet of the particular grades used to produce railway wheels
and uplifted these costs with reference to the difference between these costs, and the billet purchase price for
railway wheel grade steel incurred by the French producer examined in this investigation, Valdunes")
617 Investigation 466 final report (Exhibit CHN-3), pp. 81, 93-94, and 96.
618 Investigation 466 final report (Exhibit CHN-3), pp. 25, 81, and 98-102.
619 Investigation 466 final report (Exhibit CHN-3), p. 96. Interested parties also argued that steel billet
purchasing costs were irrelevant because Masteel was a vertically integrated producer of steel billet. The ADC
disagreed, indicating that "[g]iven the GOC's significant influence on the Chinese steel market and steel input
markets, the Commission considers that it is appropriate to uplift Masteel's costs at the steel billet level. This is
the most appropriate point to uplift the costs to capture the total impact of the Government influences on the
cost to produce steel billet in China". (ibid. pp. 96-97). The subject of whether the cost of purchasing steel
billet was relevant at all pertains most directly to China's AD claim 5.d, discussed further below.

comparative advantages that Masteel enjoyed, such as lower labour costs and the fact that Masteel
was a "large-scale" producer capable of achieving relatively cheap production of steel billet. 620 The
ADC declined to make additional adjustments to Valdunes's costs, however, because:
The Commission considers that in order to calculate any comparative advantages or
disadvantages between Chinese and French billet costs, would [sic] require the
Commission to isolate and subtract the effect of the GOC 's significant involvement in
the Chinese steel market. The Commission considers that it would not be possible to
isolate and quantify the effect of GOC involvement, with any degree of accuracy, in the
relevant markets and to quantify such comparative advantages or disadvantages.621
Moreover, the ADC indicated that it had not received information from interested parties that would
have allowed it to make such adjustments.622
7.319. We consider tha t the ADC did not reasonably demonstrate that the surrogate costs
represented costs of production in China. The costs were taken from a producer in a different
country, and the only adjustment made was related to Masteel being a vertically integrated producer
of steel billet. There is no explanation in the ADC's findings as to why a French company's cost of
purchasing steel billet would meaningfully represent a Chinese company's cost of producing steel
billet in China. 623
7.320. On this basis, we find that the ADC acted inconsistently with the practice of an unbiased and
objective investigating authority with respect to Article 2.2 of the Anti-Dumping Agreement by failing
to provide a reasoned and adequate explanation as to why the uplifted costs, without any
adjustments to adapt such uplifted costs to Masteel's circumstances in China (other than SG&A),
represented a cost of production in China for Masteel.624
7.5.3 AD claim 5.d under Artic les 2.2 and 2.2.1.1 of the Anti-Dumping Agreement: the
"manner and circumstances" of rejection of exporters' costs
7.5.3.1 Main party arguments
7.321. China claims that Australia violated Article s 2.1, 2.2, and 2 .2.1.1 of the
Anti-Dumping Agreement and Article VI:1 of t he GATT 1994 due to the "manner" and
"circumstances" in which the ADC rejected certain of Masteel's costs in the railway wheels
investigation when constructing normal value .625 China asserts that its claim addresses "what a
'cost' is".626 China explains that:
The investigating authority failed to provide any reasoned and adequate explanation as
to why prices paid in the French market for steel billet used in the production of railway
wheels in France were relevant evidence for calculating the costs of iron ore, coal and
scrap steel and the processing of those materials into railway wheels in China. China

620 Investigation 466 final report (Exhibit CHN-3), pp. 97-98 and 100.
621 Investigation 466 final report (Exhibit CHN-3), p. 98. See also Ibid. p. 100 (making same conclusion
with respect to similar issue).
622 Investigation 466 final report (Exhibit CHN-3), p. 98.
623 We note Australia's argument that "it would be nonsensical – through the choice of reference data
under Article 2.2 – to reintroduce the very same distortions that the ADC legitimately excluded under
Article 2.2.1.1". (Australia's second written submission, para. 197). We reject this argument because the ADC
undertook no meaningful analysis as to why conditions in France, specifically, were meaningfully representative
of costs of production of steel billet in China, whether distorted or undistorted. It seems to us, rather, that the
surrogate prices were certain costs for purchasing steel billet, perhaps free from the alleged Chinese
distortions, in France.
624 China also claims violations of Articles 2.1 and 2.2.1.1 of the Anti-Dumping Agreement and
Article VI:1 of the GATT 1994 in this context. We discern no independent basis on which to find violations of
these provisions. The Panel declines to make findings as to these claims as it would not be helpful in resolving
the dispute.
625 China's first written submission, para. 14. China also claims a violation of Article VI:1 of the
GATT 1994.
626 China's first written submission, para. 308.

submits that it is not possible to provide such an explanation within the legal
requirements of Articles 2.2 and 2.2.1.1.627
This is so, according to China, because Masteel did not purchase steel billet, and thus using a
surrogate cost for steel billet in place of Masteel's raw input costs for the production of steel billet
cannot be said to have "'a genuine relationship with th e production and sale of the product under
consideration'".628 China clarifies and stresses "that a cost determination carried out and the ultimate
calculation of cost must be in relation to a cost of a type incurred by the exporter concerned".629
7.322. Australia responds that "the ADC assessed Masteel's records and implemented its cost
adjustment at the steel billet level rather than at the raw material level because an adjustment at
that level of production was appropriate on the facts of this investigation" .630 Australia emphasizes
that, in this context, the ADC took into account information in Masteel's questionnaire response, that
the ADC did not have access to verifiable and isolated raw materials costs, and that the ADC adjusted
the reference data (i.e. the purchase price of steel billet) to reflect the fact that Masteel was a
vertically integrated producer. 631 Australia also contends that China's claim lacks a clear legal
basis.632 Overall, therefore, Australia asserts that this claim, insofar as it relates to the obligation to
use costs of production in the country of origin, is subsumed under China's AD claim 1 under
Article 2.2, and, insofar as it relates to the second condition of Article 2.2.1.1, it lacks a legal basis.633
7.5.3.2 Evaluation
7.323. In this claim, China asks the Panel to find that in the railway wheels investigation the ADC
improperly used a cost of purchasing steel billet as a substitute for the Chinese exporter 's cost of
producing steel billet in constructing normal value. We recall, however, that we have already found
that Australia violated Articles 2.2.1.1 and 2.2 by improperly rejecting Masteel's steel-billet
production costs and then failing to adapt the chosen surrogate costs such that they could be
considered costs of production in China.634 We consider that those conclusions already address the
key underlying concerns in China's claim here, i.e. that the chosen surrogate costs were an improper
substitute for Masteel's relevant steel billet costs. Here, China asks us to state the same conclusion
in a somewhat different manner. We therefore consider that we need not separately consider this
claim and decline to make any additional findings with respect to it.
7.5.4 AD claim 6.a under Article 2.4 of the Anti-Dumping Agreement
7.324. The applicable legal framework for this claim has already been set forth in section 7.3.4.1
above.
7.5.4.1 Main party arguments
7.325. As already explained in examining AD claims 1 and 3 for this proceeding , above, China
argues that the ADC's cost substitution methodology to determine constructed normal values
generated disparities between the norm al value and the export price .635 China argues that such
disparities represent differences aff ecting price comparability under Article 2.4 of the
Anti-Dumping Agreement, because by using costs higher than an exporter's record costs in
constructing normal value, the ADC imputed a price -setting variable of which the exporter was not

627 China's first written submission, para. 313. (emphasis original)
628 China's first written submission, para. 312 (quoting Appellate Body Report, Ukraine – Ammonium
Nitrate, para. 6.24). See also China's first written submission, paras. 280-289 and 307-314.
629 China's response to Panel question No. 15, para. 52.
630 Australia's first written submission, para. 253.
631 Australia's first written submission, paras. 253 and 260-272.
632 Australia's first written submission, paras. 255-259. This is so because, according to Australia,
insofar as this claim concerns the use of costs in the country of origin, that claim is already addressed in
AD claim 1, and insofar as this claim relies on the second condition of Article 2.2.1.1 (i.e. related to
AD claim 3), that condition was not the basis for the ADC's decision to not use the relevant exporters' costs,
but, rather, the ADC relied on the term "normally" in Article 2.2.1.1 in this context.
633 Australia's response to Panel question No. 18; second written submission, paras. 204-214.
634 See discussions of AD claims 1 and 3 for railway wheels, above.
635 China's first written submission, paras. 326 and 336; opening statement at the first meeting of the
Panel, paras. 89 and 90.

cognisant and thus necessarily did not take into account when making export sales.636 China submits
that absent any due allowances to account for these disparities 637, the comparison between the
normal value as constructed and the export price in each of the three investigations was not a "fair
comparison" under Article 2.4.638 China, however, asserts that if the Panel were to find violations of
Articles 2.2, and 2.2.1.1, then there would be no need for the Panel to address this claim. China
notes that this approach was followed by the Appellate Body in EU – Biodiesel (Argentina).639
7.326. Australia argues that this claim is "entirely, and impermissibly, premised on
China's disagreement with Australia's construction of normal value, and not on any failure to make
due allowances under Article 2.4".640 Australia argues that there is no textual basis to challenge the
ADC's normal value calculation under Article 2.4. Australia thus rejects China's position that
Australia's cost substitution resulted in a difference as between normal value and export price that
required an adjustment under Article 2.4. In Australia's view, Article 2.4 is only concerned with
making appropriate adjustments that are unrelated to the construction of normal value pursuant to
Article 2.2, because A rticle 2.4 presupposes that the normal value and export price have already
been established.641 Australia agrees with China that the Panel need not proceed to an analysis
under Article 2.4 if China succeeds on AD claims under Articles 2.2 and 2.2.1.1.642
7.5.4.2 Evaluation
7.327. We have already set out our understanding of the relationship between China's claim under
Article 2.4, and its claims under Articles 2.2 and 2.2.1.1, in discussing AD claim 6.a in the context
of the wind towers proceedings, further above. We continue to consider that the adjustments China
requests pursuant to Article 2.4 would essentially require the authority to construct normal value
using the exporters' costs of production in China . This is the issue addressed in the context of
China's claims under Articles 2.2 and 2.2.1.1. We have already found that the ADC acted
inconsistently with Articles 2.2 and 2.2.1.1 in resorting to surrogate costs in the railway wheels
investigation in examining AD claims 1 and 3 with respect to this proceeding. Accordingly, we
consider it unnecessary to examine further whether the ADC also failed to conduct a fair comparison
under Article 2.4 by failing to make any adjustments linked to such use of surrogate costs.
7.5.5 AD claim 7.b under Article 2.2.2 of the Anti-Dumping Agreement: profits not actually
realized in the domestic market
7.328. The applicable legal framework for this claim has already been set forth in section 7.3.5.1
above.
7.5.5.1 Main party arguments
7.329. China recalls that, in the railway wheels investigation, the ADC found that the only
investigated Chinese exporter, Masteel, did not sell like products domesticall y. Accordingly, when
constructing normal values, the ADC could not calculate profit based on actual data pertaining to
domestic sales of the like product, as envisaged in the chapeau of Article 2.2.2. China asserts that
the ADC instead used the method provided for in Article 2.2.2(i), which refers to the actual amount
of profit realized on domestic sales for the same general category of products.643 China claims that,
in doing so, the ADC acted inconsistently with Article 2.2.2(i):
a. by including exported products in its calculation of the profit rate of the exporter in respect
of production and sales in the domestic market of the same general category of products
under Article 2.2.2(i). More specifically, China contends that the profit rate was calculated
with reference to Masteel's entire Wheels Division, which made both export and domestic

636 China's first written submission, paras. 332-333 and 335.
637 China's first written submission, paras. 327-331.
638 China's first written submission, paras. 15(a), 322, and 327.
639 China's second written submission, para. 279.
640 Australia's first written submission, paras. 314, 318, and 413. See also ibid. paras. 532-535.
641 Australia's first written submission, para. 328; second written submission, paras. 216, 218, and 221.
642 Australia's response of Panel question No. 20, para. 40.
643 China's first written submission, paras. 425-426.

sales.644 The profit was therefore, according to China, not based on "sales in the domestic
market" as required by Article 2.2.2(i); and
b. by applying that profit rate to a constructed cost of production using non -Chinese
surrogate costs , instead of the Chinese expo rter's recorded cost of production in the
country of origin , the profit was therefore, according to China, not "the actual amounts
incurred and realized" by the exporter, as required by Article 2.2.2(i).645
7.330. China further argues that the ADC knew that the da ta it used included both domestic sales
and export sales. 646 China rejects Australia's argument that it was not possible for the ADC to
distinguish and separate export sales from domestic sales.647 In China's view, Australia cannot shift
the investigating au thority's obligation to determine profits on the basis of actual data in the
domestic market to the exporting producers. 648 According to China, Masteel was misled to believe
that the profit was calculated from the data pertaining to its domestic sales, instead of from the data
pertaining to global sales that included both domestic and export sales.649
7.331. Australia agrees with China that the ADC relied on Article 2.2.2(i) in making the profit
determination in this context, and that in doing so the ADC was required to use actual profit amounts
realized by Masteel in the Chinese domestic market.650 Australia argues, however, that China failed
to make a prima facie case that the sales figures used by the ADC included Masteel's sales in both
the domestic and export markets.651 Australia acknowledges that the ADC used Masteel's sales data
of all railway wheels from Masteel's "Wheels Division" as its basis, which included both domestic and
export sales.652 However, Australia contends that the sales data were the best available verified
information the ADC could obtain from Masteel on the actual a mounts it had incurred and reali zed
from the sale of railway wheels in the Chinese domestic market.653 Australia argues that Masteel
had suggested that the ADC use this data for this purpose. 654 Australia further argues that neither
Masteel nor the Chinese Government raised any concerns or objections to the method used by ADC
to calculate the profits during the investigation.655
7.332. In response to China's argument that the ADC arrived at incorrect amounts for profit by
applying its calculated profit rate to a constructed cost of production instead of the Chinese
exporter's recorded cost of production in the country of origin, Australia offers two arguments. First,
Australia argues that China failed to make a prima facie case of inconsistency because the ADC
determined amounts for profits using the best available verified information it could obtain from
Masteel on the actual profits it had re alized from the sale of railway wheels in China's domestic
market. Second, Australia argues that, given China's allegation that the ADC improperly applied the
profit rate to the cost of production is entirely contingent on China's claim under Article 2.2 (AD
claim 1), China failed to make a prima facie case of inconsistency under this claim because it failed
to make a prima facie case under Article 2.2.656
7.5.5.2 Evaluation
7.333. We recall that Article 2.2.2(i) allows an investigating authority to determine the profit on the
basis of "the actual amounts incurred and realized by the exporter or producer in question in respect

644 Investigation 466 Masteel verification visit report, appendix 3 "Domestic Sales", tab "(b) Profit"
(Exhibit CHN-48 (BCI)).
645 China's first written submission, paras. 431-432.
646 China's second written submission, para. 314.
647 China's second written submission, para. 314.
648 China's second written submission, para. 316.
649 China's second written submission, paras. 315 and 316.
650 Australia's first written submission, para. 334.
651 Australia's first written submission, paras. 335-336.
653 Australia's first written submission, paras. 335-336; second written submission, para. 228. In
response to a question from the Panel, Australia clarified that it "has not suggested that the finding was made
on basis of facts available in the sense of an Article 6.8 AD determination. The reference to 'best available' in
this context merely meant that the ADC used the only verified information that was available".
(Australia's response to Panel question No. 31, para. 91).
654 Australia's second written submission, para. 228.
655 Australia's first written submission, para. 339; second written submission, para. 228; and response
656 Australia's first written submission, para. 342.

of production and sales in the domestic market of the country of origin of the same general category
of products".
7.334. This claim contains two aspects: first, that the ADC failed to calculate profit on the basis of
"sales in the domestic market" within the meaning of Article 2.2.2(i) ; and second, that the ADC
calculated Masteel's profit by applying a profit rate to an uplifted cost of production. We begin with
the first. In this regard , the parties agree that: (a) the ADC determined profit on the basis of
Article 2.2.2(i)657; and (b) the ADC used sales data pertaining to "all railwa y wheels" produced by
the Wheels Division of Masteel, which included both domestic sales and export sales. Specifically, in
response to a question posed by the Panel, Australia confirmed that the data it used for the purpose
of calculating profit included data related to both export sales and domestic sales:
The cost and sales data relied on was split into 2 categories labelled "Goods Sub Type A
… Wheel Under Investigation Scope" and "Goods Sub Type B … Wheel Not Under
Investigation Scope".
Of these catego ries, "Goods Sub Type A … Wheel Under Investigation Scope" were
disaggregated by market but was not usable for the profit calculation since Masteel had
no sales of the like product in China during the investigation period. The second
category, "Goods Sub T ype B … Wheel Not Under Investigation Scope", was not
disaggregated and included both domestic and export sales. The ADC was not able, on
the basis of the verified cost data before it, distinguish between export sales and
domestic sales in this latter category. 658
7.335. Accordingly, we find that the ADC did not calculate profit on the basis of the actual amounts
incurred and realized by Masteel in respect of sales only "in the domestic market of the country of
origin", as required by Article 2.2.2(i).
7.336. Australia raises three principal arguments to justify the ADC's use of data which included
export sales. First, Australia argues that the data was the best available verified information
concerning "the actual amounts incurred and realized by the exporter or produce r in question in
respect of production and sales in the domestic market of the country of origin of the same general
category of products". Second, Australia argues that Masteel had proposed that the ADC use the
data set that contain ed both domestic and ex port sales. 659 Third, Australia argues that neither
Masteel nor the Chinese Government raised any concerns or objections to the method used by ADC
to calculate the profits during the investigation (which included data pertaining to both domestic and
export sales). We reject all three of these arguments, because Article 2.2.2(i) contains no exception
or qualification from the rule to use actual data which pertains to "sales in the domestic market".660
Australia's arguments are premised on an exception that does not exist.
7.337. Accordingly, with respect to the first aspect of China's claim, we conclude that the ADC acted
inconsistently with Article 2.2.2(i) by failing to calculate profit on the basis of the actual amounts
incurred and realized by Masteel in respect of "sales in the domestic market of the country of origin".
7.338. Turning to the second aspect of China's claim involving the calculation of amounts of profit
in the railway wheels investigation, we note that the ADC applied a profit rate to a constructed cost
of production using surrogate costs , rather than using the Chinese exporter's recorded costs of
production.661 The profit was therefore, according to China, not "the actual amounts incurred and

657 Australia's first written submission, para. 334. See also Investigation 466 final report
(Exhibit CHN-3), p. 25, where the ADC stated that "[a]s Masteel does not sell like goods in China, the
Commission was unable to calculate profit under subsection 45(2) of the Regulation. The Commission has
instead calculated an amount for profit under subsection 45(3)(a) of the Regulation by identifying the actual
amounts realised by Masteel from the sale of the same general category of goods (other types of railway
wheels sold by Masteel) on the domestic market in China". (emphasis added)
658 Australia's response to Panel question No. 31, paras. 92-93. (emphasis added)
659 Australia's second written submission, para. 228.
660 In response to a question from the Panel, Australia clarified that the present case does not concern a
situation where there was no data concerning "sales in the domestic market" or a lack of cooperation from the
exporting producer which justified the use of facts available under Article 6.8 of the Anti-Dumping Agreement.
(Australia's response to Panel question No. 31, para. 91).
661 See also Investigation 466 final report (Exhibit CHN-3), p. 25.

realized" by the exporter, as required by Article 2.2.2(i).662 We thus recall that we have found above
with respect to AD claims 1 and 3 that the ADC acted inconsistently with Articles 2.2.1.1 and 2.2 of
the Anti-Dumping Agreement by improperly rejecting certain of Masteel's costs of production when
constructing normal value, and replacing them with surrogate costs that did not represent
Masteel's cost of production in the country of origin. Under these circumstances, we discern no way
in which such amounts could be said to represent the "actual amounts incurred and realized" by
Masteel in the domestic market , as required by Article 2.2.2(i). Accordingly, with respect to the
second aspect of China's AD claim 7.b, we find that the ADC acted inconsistently with Article 2.2.2(i)
by using non-Chinese surrogate costs of production in its profit determination in the railway wheels
investigation.663
7.5.6 AD claim 8 under Article 9.3 of the Anti-Dumping Agreement: collection of duties in
excess of the margin of dumping
7.339. The applicable legal framework for this claim has already been set forth in section 7.2.3
above.
7.5.6.1 Main party arguments
7.340. China asserts that Australia has collected anti -dumping duties on the basis of margins of
dumping that were inflated as a result of the alleged WTO-inconsistencies challenged in China's other
AD claims. 664 China claims that, as a result, Australia has collected anti-dumping duties in excess
of the margins of dumping that would have been "properly established" under Article 2, contrary to
Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.665
7.341. Australia argues that China's claim under Article 9.3 is purely consequential, and that it must
fail given that the ADC's calculation of relevant dumping margins was consistent with Article 2 of the
Anti-Dumping Agreement.666
7.5.6.2 Evaluation
7.342. To the extent that we have found above that the ADC acted inconsistently with the provisions
of Article 2, we consider that China has established, as a matter of fact, that the dumping margins
were improperly inflated through the use of "uplifted" surrogate costs in the railway wheels
investigation. In this regard, we note that the ADC stated in the final report of Investigation 466
that "[t]he Commission considers that the suitable benchmark is to uplift Masteel's steel billet input
costs to reflect the difference between these costs and the costs incurred by Valdunes, as adjusted
for SG&A expenses that Masteel would not have incurred in the production of railway wheels in
China" and that Masteel's cost of production of steel billet was "typically lower than the Valdunes
purchase price".667 We note that Australia does not argue otherwise. Rather, Australia appears to
treat the success of China's claim under Article 9.3 as dependent on the other underlying claims
under the Anti-Dumping Agreement. In the absence of any rebuttal from Australia, this in our view
establishes prima facie that the anti-dumping duties imposed by the ADC exceeded the margins of
dumping that would have been established had the authorities acted consistently with Article 2.

662 China's first written submission, paras. 431-432.
663 China also claims violations of Articles 2.1 and 2.2 of the Anti-Dumping Agreement and Article VI:1
of the GATT 1994 in this context. (See China's first written submission, section G.6). However, China does not
elaborate on these claims. We discern no independent basis on which to find violations of these provisions. The
Panel declines to make findings as to these claims as it would not be helpful in resolving the dispute.
664 See for example, China's first written submission, para. 338; opening statement at the first meeting
and No 110, paras. 240 and 246.
665 China's first written submission, paras. 458, 459-480. See also China's second written submission,
para. 325.
666 Australia's first written submission, paras. 165, 344-345, and 474; second written submission,
para. 230.
667 Investigation 466 final report (Exhibit CHN-3), pp. 25 and 93 (emphasis added); Investigation 466
Maasteel verification visit report, appendix 2 "CTMS", tab "(a) CTMS" (Exhibit CHN-53 (BCI)) and
Investigation 466 Maasteel verification visit report, appendix 2 "CTMS (Final with uplift)", tab "(a) CTMS"
(Exhibit CHN-54) (showing an increase in "material costs" attributable to adjustments made by the ADC).

7.343. Accordingly, we uphold China's claim that Australia acted inconsistently with Article 9.3 of
the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.
7.6 Whether to issue findings and recommendations for expired aspects of the
anti-dumping and countervailing duty orders
7.344. With respect to certain claims above, we have found that challenged aspects of the
anti-dumping and countervailing duty orders are expired. As explained in those sections, we decline
to make findings or recommendations with respect to the claims that pertain to those aspects. This
section sets forth our reasoning for so declining.
7.345. At the outset, we agree with China and previous statements by the Appellate Body that we
have jurisdiction to rule on expired measures. 668 We also agree with previous panel and
Appellate Body reports indicating that panels have discretion as to whether to issue findings with
respect to expired measures. 669 We note that the relatively recent panel report in Thailand –
Cigarettes (Philippines) (Article 21.5 – Philippines II) engaged in a detailed discussion regarding the
manner in which panels have exercised this discretion.670 We agree with that panel that:
Panels have attached importance to several different considerations, including most
notably (1) whether the measure at issue was withdrawn prior to, or only after, the
establishment of the panel by the DSB; (2) whether the re was a risk of reintroduction
of the same or materially similar measure; and (3) whether findings on the withdrawn
measure would have any practical value for implementation in the light of other findings
on materially similar measures. None of these three considerations is decisive in and of
itself, and they do not necessarily exhaust the circumstances that panels may take into
account when deciding how to exercise their discretion[.]671
We also agree with that panel that "[i]n respect of measures withdrawn before panel establishment,
panel practice appears to heavily lean against making any findings; in respect of measures
withdrawn after panel establishment, panel practice appears to heavily lean towards panels making
findings on such measures, bu t not making any recommendation pursuant to Article 19.1 of the
DSU".672
7.346. China generally asserts that the same arguments which mitigate, in its view, in favour of
finding that the measures are not expired also mitigate in favour of making findings and
recommendations with respect to them even if they are expired. 673 We described such arguments
extensively in section 7.2.1 above, and in the sections addressing expiry of specific aspects. We thus
will not repeat them here. We are also cognizant that we may consider a range of factors in deciding
whether to issue findings on expired measures. In our view, we discern no factor or combination of
factors that may point in favour of making findings that outweigh the fact that certain aspects of the
anti-dumping and countervailing duty orders expired before panel establishment. We therefore recall
that certain aspects of the anti-dumping and countervailing duty orders have expired by virtue of:
(a) the ADC's findings in the wind towers and stainless steel sinks expiry reviews, which were
concluded in 2019 and 2020, respectively; and/or (b) the administrative review, pursuant to which
TSP was excluded from the anti -dumping order, concluded in 2020. 674 All were concluded before

668 See e.g. China's second written submission, paras. 87-95; Appellate Body Reports, EC – Bananas III
(Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), para. 270 (explaining that the DSU "nowhere
provides that the jurisdiction of a panel terminates or is limited by the expiry of the measure at issue").
669 See e.g. Appellate Body Report, EU – PET (Pakistan), para. 5.19 (explaining that "a panel has a
margin of discretion in the exercise of its inherent adjudicative powers under Article 11 of the DSU", and that
"[w]ithin this margin of discretion, it is for a panel to decide how it takes into account subsequent modifications
to, or expiry or repeal of, the measure at issue").
670 Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 – Philippines II), appealed
9 September 2019, section 7.4.3.1. This panel report was circulated on 12 July 2019, and appealed on
9 September 2019. It has not yet been adopted by the DSB. We nonetheless find its examination persuasive
insofar as we cite it, as is the case with other reports cited with approval in this Report.
671 Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 – Philippines II), appealed
9 September 2019, para. 7.468.
672 Panel Report, Thailand – Cigarettes (Philippines) (Article 21.5 – Philippines II), appealed
9 September 2019, para. 7.469. (fns omitted)
673 China's second written submission, para. 92.
674 See section 2 above.

Panel establishment in 2022. We consider this factor decisive , and we decline to issue findings or
recommendations as to the expired aspects of the orders on that basis.675
8 CONCLUSIONS AND RECOMMENDATIONS
8.1. For the reasons set forth in this Report, the Panel concludes as follows:
a. Wind towers:
i. with respect to AD claim 3 , in the expiry review, the ADC acted inconsistently
with Article 2.2.1.1 of the Anti -Dumping Agreement because there was no basis
for departing from using TSP's record costs for steel plate in constructing normal
value;
ii. with respect to AD claim 1 , in the expiry review, the ADC acted inconsistently
with the practice of an unbiased and objective investigating authority with respect
to Article 2.2 of the Anti-Dumping Agreement by uplifting TSP's steel plate costs
for the purpose of constructing normal value, and then transferring that
methodology over onto the ADC's calculation of normal values for the
uncooperative and all other exporters, without a reasoned and adequate
explanation as to why the uplifted costs, without any adjustments to adapt such
uplifted costs to TSP's circumstances, represented a cost of production in China
for TSP;
iii. it is unnecessary to examine AD claim 5.c under Articles 2.1, 2.2, 2.2.1.1 of the
Anti-Dumping Agreement and Article VI:1 of the GATT 1994, because the claim
is already effectively addressed under AD claims 1 and 3;
iv. with respect to AD claim 6.a , having already found violations of Articles 2.2
and 2.2.1.1, it is unnecessary to examine whether the ADC failed to conduct a
fair comparison under Article 2.4 of the Anti -Dumping Agree ment by making
adjustments to account for the differences generated by the use of surrogate
costs in constructing normal value;
v. with respect to AD claim 7.a , China has not demonstrated that the ADC acted
inconsistently with Article 2.2.2 of the Anti-Dumping Agreement because it failed
to make a prima facie case that the ADC applied a profit rate to "uplifted" cost
data in the expiry review;
vi. with respect to AD claim 7.c, in the expiry review, the ADC acted inconsistently
with Article 2.2 of the Anti-Dumping Agreement by determining that the domestic
sales did not permit a proper comparison with export sales on the basis of a
"relevance" test that has no basis in Article 2.2; and
vii. with respect to AD claim 8, to the extent that the ADC acted inconsistently with
the provisions of Article 2 of the Anti -Dumping Agreement in the expiry review,
the ADC also acted inconsistently with Article 9.3 of the Anti-Dumping Agreement
and Article VI:2 of the GATT 1994.
b. Stainless steel sinks:
i. with respect to AD claims 3 and 4 , China has not demonstrated that the ADC
acted inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement, and thus
acted inconsistently with Article 2.2.1 of the Anti -Dumping Agreement, by

675 The situation with respect to the ADC's initiation decision with respect to Program 1 is somewhat
unique, since our basis for that finding was that the ADC need not rely on the original initiation decision in
order to investigate Program 1. See section 7.4.11.2 above. This is not technically due to the ADC's findings in
the expiry review, per se, but due to a more general legal situation existing under Australian law. Nonetheless,
we consider that the aspect expired before Panel establishment because that general legal situation existed
even at the time of the expiry review.

rejecting exporters’ record costs for purposes of performing t he
ordinary-course-of-trade test in the expiry review;
ii. with respect to AD claims 1 and 2 , in the expiry review, the ADC acted
inconsistently with the practice of an unbiased and objective investigating
authority with respect to Article 2.2 of the Anti-Dumping Agreement by failing to
provide a reasoned and adequate explanation as to why the surrogate costs, with
only adjustments for delivery and slitting costs, represented a cost of production
in China. Thus, the ADC also acted inconsistently with Article 2 .2.1 of the
Anti-Dumping Agreement because it used surrogate costs that were not
demonstrated to be costs of production in the country of origin in performing the
ordinary-course-of-trade test;
iii. with respect to AD claim 6.a , having already found a violation of Articles 2.2
and 2.2.1, it is unnecessary to issue findings on whether the ADC acted
inconsistently with Article 2.4 the Anti -Dumping Agreement by failing to make
adjustment to account for the differences generated through the use of surrogate
costs in applying the ordinary -course-of-trade test. Also, ins ofar as the claim is
based on the comparison of export price and a normal value that is constructed
using surrogate costs, we decline to issue findings with respect to this aspect of
the order because it is expired;
iv. with respect to AD claim 6.b.i, China has not demonstrated that the ADC acted
inconsistently with Article 2.4 of the Anti -Dumping Agreement in the expiry
review in determining that the VAT recoverability difference between domestic
and export sales affected price comparability between the normal value and
export price. However, in the expiry review, the ADC acted inconsistently with
Article 2.4 of the Anti -Dumping Agreement by applying a percentage to the
normal value base that was flawed via the use of surrogate costs in applying the
ordinary-course-of-trade test;
v. with respect to AD claim 6.b.ii, in the expiry review, the ADC acted inconsistently
with the practice of an unbiased and objective investigating authority with respect
to Article 2.4 of the Anti-Dumping Agreement by treating accessories purchased
by Primy from third -party suppliers differently from accessories produced by
Primy without an adequate and reasonable explanation. However, China has not
demonstrated that the ADC acted inconsistently with Article 2.4 of the
Anti-Dumping Agreement in the expiry review by using an averaging methodology
in calculating the adjustments to account for differences in accessories for the
exporting producer Primy;
vi. with respect to AD claim 6.b.iii, in the expiry review, the ADC acted inconsistently
with Article 2.4 of the Anti -Dumping Agreement by comparing export models to
export models for purposes of performing a fair comparison as between the
normal value and export price for Zhuhai Grand;
vii. with respect to AD claim 7.a, the Panel declines to issue findings with respect to
China's claim that the ADC acted inconsistently with Article 2.2.2 of the
Anti-Dumping Agreement by using the cost of production incorporating surrogate
costs in its determination of profit, because this aspect of the order is expired;
viii. with respect to AD claim 8, to the extent that the ADC acted inconsistently with
the provisions of Article 2 of the Anti -Dumping Agreement in the expiry review,
the ADC also acted inconsistently with Article 9.3 of the Anti-Dumping Agreement
and Article VI:2 of the GATT 1994;
ix. with respect to CVD claims 2 and 3 , the Panel declines to issue findings with
respect to China's claim that the ADC acted inconsistently with Articles 1.1(b) and
14(d) of the SCM Agreement by improperly rejecting in-country benchmarks and
instead using a benchmark that did not relate to the prevailing market conditions

in the country of provision (i.e. China) because this aspect of the order challenged
by China is expired;
x. with respect to CVD claim 4, the Panel declines to issue findings with respect to
China's claim that the ADC acted inconsistently with Article 2.1(c) of the
SCM Agreement by improperly determining that Program 1 was specific because
this aspect of the order challenged by China is expired; and
xi. With respect to CVD claim 5, the Panel declines to issue findings with respect to
China's claim that the ADC acted inconsistently with Articles 11.1, 11.2, and 11.3
of the SCM Agreement by failing to properly evaluate the sufficiency of the
application for the purpose of justifying the initiation of the investigation into
Program 1, because this aspect of the order challenged by China is expired.
c. Railway wheels:
i. with respect to AD claim 3 , in the original investigation, the ADC acted
inconsistently with Article 2.2.1.1 of the Anti-Dumping Agreement because it had
no basis for departing from using Masteel's record costs of production when
constructing normal value;
ii. with respect to AD claim 1, in the original investigation, the ADC acted
inconsistently with the practice of an unbiased and objective investigating
authority with respect to Article 2.2 of the Anti-Dumping Agreement by failing to
provide a reasoned and adequate explanation as to why the uplifted costs,
without any adjustments to adapt such uplifted costs to Masteel's circumstances
in China (other than SG&A), represented a cost of production in China for Masteel;
iii. with respect to AD claim 5.d , it is unnecessary to consider this clai m under
Articles 2.1, 2.2, and 2.2.1.1 of the Anti-Dumping Agreement and Article VI:1 of
the GATT 1994 because the claim is already effectively addressed under
AD claims 1 and 3;
iv. with respect to AD claim 6.a, having already found violations of Articles 2.2 and
2.2.1.1, it is unnecessary to examine further whether the ADC also failed to
conduct a fair comparison under Article 2.4 by failing to make any adjustments
linked to such use of surrogate costs in constructing normal value;
v. with respect to AD claim 7.b , in the original investigation, the ADC acted
inconsistently with Article 2.2.2(i) of the Anti -Dumping Agreement by failing to
calculate profit on the basis of the actual amounts incurred and realized by
Masteel in respect of "sales in the domestic market of the country of origin". The
ADC also acted inconsistently with Article 2.2.2(i) of the Anti-Dumping Agreement
by using surrogate costs of production in its profit determination; and
vi. with respect to AD claim 8, to the extent that the ADC acted inconsistently with
the provisions of Article 2 of the Anti -Dumping Agreement in the original
investigation, the ADC also acted inconsistently with Article 9.3 of the
Anti-Dumping Agreement and Article VI:2 of the GATT 1994.
8.2. Under Articl e 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment. We conclude that, to the extent that the measures at i ssue are
inconsistent with the GATT 1994 and Anti -Dumping Agreement, they have nullified or impaired
benefits accruing to China under those agreements.
8.3. Pursuant to Article 19.1 of the DSU, we recommend that Australia bring its measures into
conformity with its obligations under the GATT 1994 and the Anti-Dumping Agreement.