Document: Oral Statement
Date: 23 October 2006
Document codes: WT/DS335/R
Complainant: Ecuador
Respondent: U.S.
Third parties: Brazil, Chile, China, EU, India, Japan, South Korea, Mexico, Thailand
Dispute stage: Panel
Agreements cited: Art. 2.4.2  Anti-dumping

ANNEX B

SUBMISSIONS OF THE UNITED STATES

Contents Page
Annex B-1 Written Submission of the United States (23 October 2006) B-2
Annex B-2 Oral Statement of the United States (3 November 2006) B-3
Annex B-3 Answers of the United States to Questions from the Panel
 (13 November 2006)
B-4

ANNEX B-1

WRITTEN SUBMISSION OF THE UNITED STATES

1. The United States notes that the parties to this dispute have reached an Agreement on
Procedures to permit expeditious resolution of this dispute.
1 In its request for a panel in this dispute
(WT/DS335), Ecuador claims that the United States has breached its obligations under Article 2.4.2,
first sentence, of the Agreement on Implementation of Article VI of the GATT 1994 . The basis of
Ecuador's claim is the Departme nt of Commerce's use of "zeroing" in calculating the dumping
margins in the investigation Certain Warmwater Shrimp from Ecuador.2

2. Ecuador describes, both in its request for a panel, and in its First Written Submission, that
zeroing means the following: (1) different "models," i.e., types, of products are identified using
"control numbers" that specify the most relevant pr oduct characteristics; (2) weighted average prices
in the US and weighted average normal values in the comparison market are calculated on a
model-specific basis for the entire period of inves tigation; (3) the weighted average normal value of
each model is compared to the weighted average US price for that same model; (4) to calculate the
dumping margin for an exporter, the amount of dump ing for each model is summed and then divided
by the aggregated US price for all models; (5) before summing the total amount of dumping for all
models, all negative margins on individual models are set to zero.
3

3. Ecuador further states that its claim is lim ited to the use of "zeroing" in calculating the
margins for Promarisco S.A., Exporklore S.A., and the "all others" rate.
4

4. Ecuador describes the Department of Commerc e's calculation of the dumping margins in the
investigation, states that the calculation is the same as the calculation described in Softwood Lumber,
and states that Ecuador considers the calculation to be inconsistent with Article 2.4.2 on the grounds
set forth in paragraphs 62-117 of the Softwood Lumber AB report.5

5. The United States acknowledges the accuracy of Ecuador's description of Commerce's use of
"zeroing" in calculating the dumping margins for Promarisco S.A., Exporklore S.A., and the "all
others" rate in this investigation. The United St ates also recognizes that a measure using a similar
calculation was the subject of the Softwood Lumber report, and that the DSB ruled that the measure
was inconsistent with Article 2.4.2, first sentence because of that calculation.
6

1 See Exhibit ECU-1.
2 WT/DS335/6 (9 June 2006), Section C.
3 See Panel Request, Section B; First Written Submission of Ecuador, 19 October 2006, para. 2
(hereinafter "Ecuador First Submission.")
4 Ecuador First Submission, para. 6.
5 Ecuador First Submission, para. 20.
6 See Appellate Body Report, Final Dumping Determination on Softwood Lumber from
Canada,WT/DS264/AB/R, adopted 31 August 2004, paras. 62-117.

ANNEX B-2

ORAL STATEMENT OF THE UNITED STATES

3 November 2006

 On behalf of the United States delegation, I would like to thank you for agreeing to serve on
this Panel. And, like Ecuador, I would like to thank you for acting so quickly in response to the
Parties' joint request regarding working procedures and the timetable.

 We will not offer a lengthy statement today. Because the United States and Ecuador do not
disagree on the outcome, there is no need for such a statement. Instead, we, like Ecuador, stand ready
to respond to the two questions you provided to us in advance of this meeting, as well as to any
additional questions you may have.

 We would like to say a few words, however, about the third party submissions. Third party
submissions can be useful in helping a panel to fu lfill the tasks assigned to it by the DSB. In this
regard, the United States would like to thank Chile for its submission. While we do not agree with
every word in Chile's submission, it nevertheless reflects a careful and thoughtful consideration of the
issues.

 However, third party submissions also can im pede, rather than facilitate, a panel's work.
Unfortunately, this is the case with the submission of the European Communities ("EC"), which raises
matters that are extraneous to this Panel's work and which makes assertions that are false. For
example, the EC refers to certain alleged "as such" measures of the United States
1, even though there
are no "as such" claims within the Panel's terms of re ference. In a similar vein, the EC asserts that the
United States has recognized "that zeroing is inconsistent with the Anti-Dumping Agreement",2 even
though the EC knows full well that a panel recently ag reed with the United States that "zeroing" is not
always WTO-inconsistent.3

1 Third Party Written Submission by the European Communities, 30 October 2006, para. 10.
2 Third Party Written Submission by the European Communities, 30 October 2006, para. 8.
3 See Third Party Written Submission by the European Communities, 30 October 2006, note 6,
referring to United States – Measures Relating to Zeroing and Sunset Reviews , in which the panel found, inter
alia, that zeroing in administrative reviews is permissible. The panel report in that cas e is currently the subject
of an appeal to the Appellate Body.

ANNEX B-3

ANSWERS OF THE UNITED STATES
TO QUESTIONS FROM THE PANEL

13 November 2006

Q4. Does the United States concede that the Appellate Body's findings and reasoning in
Softwood Lumber V extend to the calculation in the United States investigation on Shrimp of
the "all others" rate in the sense of Article 9. 4 Anti-Dumping Agreement (in addition to the
dumping margins for individual exporters)?

1. The recommendations and rulings of the Dispute Settlement Body in Softwood Lumber V
provided that the use of zeroing in connection with the calculation of the weighted-average dumping
margins for the companies in that investigation was inconsistent with Article 2.4.2 of the Anti-
Dumping Agreement. The US Department of Commerce ("Commerce") understood that these
findings concerning the company-specific margins necessarily affected the "all others" rate.
Therefore, when the United States implemented the DSB recommendations and rulings, Commerce
recalculated both the individual company rates and the "all others" rate, without a separate claim
having been made under Article 9.4.

Q5. What do the parties consider is the role of the Panel in a case like this one, where there
is no substantive disagreement between the Parties as to the inconsistency of a measure with one
or more cited provisions of a covered Agreement? Can the Panel limit itself to sanctioning the
[mutual understanding] [agreement] of the parties, or must the Panel, on its own, determine
whether the measure at issue is inconsistent with the cited provisions?

2. The United States considers that the role of a Panel in a case like this one, where there is no
substantive disagreement between the Parties as to th e inconsistency of a measure with one or more
cited provisions of a covered Agre ement, is nevertheless to make an objective assessment of the
matter, as required by Article 11 of the DSU, incl uding an objective assessment of the facts of the
case and the applicability of and confor mity with the relevant covered agreements. The matter before
this Panel is a narrow one – whether Commerce's ca lculation of the weighted average to weighted
average margins of dumping for the two separately investigated Ecuadorian exporters and for "all
other" exporters breaches the first sentence of Articl e 2.4.2. Therefore, the Parties are not asking the
Panel to "sanction" their Agreement, but rather, to consider that the Agreement facilitates the Panel's
assessment of the facts of the case and the appli cability and conformity of the measures with the
covered agreements. Nevertheless, it is correct to say that they are seeking a decision that would
allow the rest of the provisions of the Agreement to be implemented.