EUROPEAN UNION – ANTI-DUMPING MEASURES ON CERTAIN FOOTWEAR FROM CHINA
Document: Request for Consultations by China
Date: 8 February 2010
Document codes: WT/DS405/1; G/L/916; G/ADP/D82/1
Complainant: China
Respondent: EU
Third parties: Australia, Brazil, Colombia, Japan, Turkey, U.S., Vietnam
Dispute stage: Panel
Agreements cited: Art. 9  Anti-dumping  Protocol of AccessionArt. 6.10, 9.2, 9.3, 9.4  Anti-dumpingArt. I, XVI:4, X:3(a)  GATT 1994Art. 2.1, 2.4  Anti-dumpingArt. VI:1  GATT 1994Art. 3.1, 17.6, 3.4, 3.5, 6.1.2, 6.5, 6.5.1, 6.5.2, 6.8, 11.3, 12.2.2, 1, 18.1, 2.2.2, 2.6, 9.1, 3.3, 6.2, 6.4, 6.5.1, 6.5.2, 6.1.1, 6.9, 6.10.2  Anti-dumping

EUROPEAN UNION – ANTI-DUMPING MEASURES ON
CERTAIN FOOTWEAR FROM CHINA

Request for Consultations by China

 The following communication, dated 4 February 2010, from the delegation of China to the
delegation of the European Union and to the Chairm an of the Dispute Settlement Body, is circulated
in accordance with Article 4.4 of the DSU.

 My authorities have instructed me to request consultations with the European Union pursuant
to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
("DSU"), Article XXIII:1 of the General Agreement on Ta riffs and Trade 1994 and Article 17 of the
Agreement on Implementation of Article VI of GATT 1994 (" Anti-Dumping Agreement") regarding
the following:

(a) Article 9(5) of Council Regulation (EC) No. 384/96 on protection against dumped
imports from countries not members of the European Community
1 as amended, 2
which has now been codified and replaced by Council Regulation (EC) No.
1225/2009
3 (the "Basic AD Regulation").
(b) Council Regulation (EC) No. 1472/2006 of 5 October 2006 imposing definitive anti-
dumping duties and collecting definitively the provisional anti-dumping duties
imposed on imports of certain footwear with uppers of leather from inter alia China.4
(c) Council Implementing Regulation (EU) No. 1294/2009 of 22 December 2009,
imposing definitive anti-dumping duties on im ports of certain footwear with uppers
of leather originating in inter alia China, as extended to imports of certain footwear
with uppers of leather consigned from the Macao SAR, whether declared as

1 Council Regulation (EC) No. 384/96 of 22 D ecember 1995 on protection against dumped imports
from countries not members of the European Community, OJ L 56, 6.3.1996, p.1.
2 Council Regulation (EC) No. 2331/96 of 2 Decem ber 1996, OJ L 317, 6.12.1996, p.1, Council
Regulation (EC) No. 905/98 of 27 April 1998, OJ L 128, 30.4.1998, p. 18, Council Regulation (EC)
No. 2238/2000 of 9 October 2000, OJ L 257, 11.10.2000, p.2, Council Regulation (EC) No. 1972/2002 of
5 November 2002, OJ L 305, 7.11.2002, p.1, Council Regulation (EC) No. 461/2004 of 8 March 2004, OJ L 77,
13.3.2004, p. 12 and Council Regulation (EC) No. 2117/2005 of 21 December 2005, OJ L 340, 23.12.2005,
p. 17.
3 Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports
from countries not members of the European Community (codified version), OJ L 343, 22.12.2009, p.51 and
corrigendum to Council Regulation (EC) No. 1225/2009, OJ 7, 12.1.2010, p.22.
4 OJ L 275, 6.10.2006, p.1.

originating in the Macao SAR or not, followi ng an expiry review pursuant to Article
11(2) of Council Regulation (EC) No 384/96.
5

1. China considers that Article 9(5) of the Basic AD Regulation which provides that in case of
imports from non-market economy countries, the duty shall be specified for the supplying country
concerned and not for each supplier and that an in dividual duty will only be specified for exporters
that demonstrate that they fulfil the criteria listed in that provision, is inconsistent, as such, with the
EU's obligations under Article XVI:4 of the Marrakesh Agreement Establishing the World Trade
Organization; Articles VI:1 and X:3(a) of the GATT 1994; Articles 6.10, 9.2, 9.3, 9.4, 12.2.2 and
18.4 of the AD Agreement, since these provisions re quire an individual margin and duty to be
determined and specified for each known exporter or producer. Furthermore, the criteria listed in
Article 9(5) of the Basic AD Regulation to obtain an individual duty are unreasonable and not
objective. Moreover, by imposing these conditions only to imports from, allegedly, non-market
economy countries, the EU's measure is also discrimin atory and thus contrary to Article I:1 of the
GATT 1994.

2. China considers that the Council Regulation (EC) No. 1472/2006 of 5 October 2006 imposing
definitive anti-dumping duties and collecting definitively the provisional anti-dumping duties imposed
on imports of certain footwear with uppers of leather from inter alia China
6 ('Definitive Regulation')
is inconsistent, among others, with the following provisions of the Anti-Dumping Agreement , the
GATT 1994 and Part I, paragraph 15 of China's Protocol of Accession.
1. Part I, paragraph 15 (a) (ii) of China's Protocol of Accession, Paragraph 151(e), (f) of
the Report of the Working Party on the Accession of China, Articles 2.4 and 6.10.2 of
the Anti-Dumping Agreement because the EU did not examine the non-sampled
cooperating Chinese exporters' Market Economy Treatment and Individual Treatment
applications.

2. Article 2.2.2 of the Anti-Dumping Agreement because the amounts for administrative,
selling and general costs and profits established by the EU for the company granted
Market Economy Treatment were not calculated on the basis of a reasonable method
as the EU used the administrative, selling and general costs and profits of Chinese
exporters in other anti-dumping cases invo lving products other than the product
concerned.

3. Article 2.4 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994
because by selecting Brazil as the analogue country; using the PCN methodology
established; and making adjustments for differences in production costs when normal
value is based on prices or constructed valu es in the analogue country, on the basis of
the data of Chinese exporters that were not granted market economy treatment, the
EU precluded a fair comparison between the export price and the normal value.

4. Article 2.6 jo. 4.1 of the Anti-Dumping Agreement because the EU wrongly
established the like product by not excluding STAF below €7.5/pair even though

5 OJ L 352, 30.12.2009, p. 1.
6 OJ L 275, 6.10.2006, p. 1.

conceptually and technically there is no difference between STAF below and above
€7.5/pair.

5. Articles 3.1 and 17.6(i) of the Anti-Dumping Agreement because the EU failed to
objectively examine, based on positive evid ence, both the volume of the dumped
imports and the effect of the dumped imports on prices in the domestic market for
like products, and the consequent impact of these imports on domestic producers of
such products, as the EU used different sampling procedures for Chinese exporters on
the one hand, and EU producers on the other hand; the EU made the injury
assessment partially on the basis of the verified data of the sampled EU producers and
partially on the basis of the unverified data provided by the complainants and national
federations;

6. Articles 3.1, 3.2 and 17.6(i) of the Anti-Dumping Agreement as the EU failed to
objectively examine, based on positive evidence, the effect of the dumped imports on
prices in the domestic market for like produc ts, and the consequent impact of these
imports on domestic producers of such products because the EU's underselling
calculation was based on a very low quantit y of exports of the sampled Chinese
exporting producers; the EU wrongly calcula ted the underselling margin by applying
a volume-based reduction ratio to the origin ally calculated price-based margin and by
allocating the non-injurious import value in relation to import values for a period
outside the investigation period.

7. Article 3.3 of the Anti-Dumping Agreement because the cumulative assessment of
imports from China and Vietnam by the EU was inappropriate in light of the
conditions of competition between the im ported products and the like domestic
products.

8. Articles 3.1 and 3.4 of the Anti-Dumping Agreement as the EU failed to objectively
examine, based on positive evidence, the effect of the dumped imports on prices in
the domestic market for like products, and th e consequent impact of these imports on
domestic producers of such products because several key injury indicators were
analysed on the basis of the data of the whole EU production and not on the data of
the sampled EU producers or EU industry; and the EU inappropriately established the
profit margin for the EU industry.

9. Article 3.4 of the Anti-Dumping Agreement because the EU failed to examine the
impact of the dumped imports on the domes tic industry concerned by evaluating all
of the relevant economic factors and indices having a bearing on the state of the EU
industry, notably production capacity and capacity utilization.

10. Articles 3.1 and 3.5 of the Anti-Dumping Agreement as the EU failed to objectively
examine, based on positive evidence, the effect of the dumped imports on prices in
the domestic market for like products, and th e consequent impact of these imports on
domestic producers of such products because the EU failed to ensure that injury
caused to the EU industry by other factor s, which included among others, the export
performance of EU producers, the effects of counterfeiting, the lifting of the quota on
Chinese footwear, changes in pattern of c onsumption, the decline in EU demand and
the effects of exchange rate fluctuations, was not attributed to dumped imports from
China.

11. Article 6.1.2 of the Anti-Dumping Agreement because the EU failed to ensure the
prompt availability of evidence presented in writing by one interested party to other
interested parties.

12. Articles 6.2, 6.4 and 6.5 of the Anti-Dumping Agreement because the EU failed to
provide timely opportunities for all inter ested parties to see all non-confidential
information relevant to the defence of thei r interests including, but not limited to, the
identity and sampling of the EU producers, non-confidential summaries of the
questionnaire responses of EU producers, information on the adjustments for
differences affecting price comparability.

13. Article 6.5.1 of the Anti-Dumping Agreement because the EU failed to ensure the
disclosure of the names of the complainants; the provision of non-confidential
summaries of confidential information rela ting to the EU industry, and sampled EU
producers in the complaint and questionna ire responses respectively, and data
provided by national federations or, where pr ovided, failed to ensure the provision by
the EU industry and/or the sampled EU pr oducers, of sufficiently detailed summaries
to enable a reasonable understanding of the substance of that information.

14. Article 6.5.2 of the Anti-Dumping Agreement because the EU failed to determine that
the request for confidentiality of the names of the complainants is not warranted; and
the EU failed to reject the confidential information provided by the sampled EU
producers, the non-confidential summary of which was not provided.

15. Article 6.1.1 of the Anti-Dumping Agreement and Part I, paragraph 15 of China's
Accession Protocol because Chinese exporting producers were granted only 15 days
by the EU to submit their written reply to the Market Economy Treatment and
Individual Treatment questionnaires.

16. Article 6.9 of the Anti-Dumping Agreement because the additional definitive
disclosure regarding a change in the form of the measures was not made by the EU in
sufficient time for the interested parties to defend their interests.

17. Article 6.10 of the Anti-Dumping Agreement because the sample of the Chinese
exporting producers selected by the EU was not based on the largest percentage of
export volumes of the product concerned from China as the sample was established
before the exclusion of STAF from the product scope of the investigation; and the
domestic sales volumes of the sampled companies were also taken into account for
sample selection.

18. Article 6.10.1 of the Anti-Dumping Agreement because the sample of the Chinese
exporting producers was not selected by the EU in consultation with, and with the
consent of the parties concerned.

19. Articles 3.1 and 9.2 of the Anti-Dumping Agreement because the anti-dumping duty
on Chinese exports was not imposed and collected by the EU on a non-discriminatory
basis as the duty rate established for Ch ina was higher than that for Vietnam,
although both the dumping and injury margin s found for Vietnamese exporters were
higher than those for Chinese exporters.

20. Articles 6.10, 6.10.2, 9.2 and 9.3 of the Anti-Dumping Agreement because although
sampling was resorted to in the curr ent case by the EU for Chinese exporting
producers, a country-wise duty was imposed on the sampled Chinese exporting
producers.

21. Articles 6.10, 6.10.2, and 9.2 of the Anti-Dumping Agreement because the EU applied
additional conditions by way of the Indivi dual Treatment criteria to deny individual
dumping margins to cooperating Chinese exporting producers.

22. Article 12.2.2 of the Anti-Dumping Agreement because the EU failed to provide
sufficiently detailed explanations in the Definitive Regulation regarding matters of
fact and law which led to the acceptance or rejection of the arguments of the
interested parties, and on matters of f act and law and reasons which led to the
imposition of final measures.

23. Article 17.6(i) of the Anti-Dumping Agreement because the analogue country
selection process by the EU and the calculation of a dumping margin for the non-
sampled cooperating Chinese exporting producer s without the examination of their
Market Economy Treatment and Individual Treatment applications, did not amount to
a proper establishment of facts and an unbiased and objective evaluation of those
facts.

24. In consequence, Articles 1 and 18.1 of the Anti-Dumping Agreement because an anti-
dumping measure shall be applied only under the circumstances provided for in
Article VI of the GATT 1994 and in accordance with the provisions of the Anti-
Dumping Agreement.

 The EU's measure, therefore, nullifies and impairs benefits accruing to China under the Anti-
Dumping Agreement and the GATT 1994.

3. The EU initiated an expiry review of the anti-dumping measure on imports of certain
footwear with uppers of leather from inter alia China by publishing a notice of initiation on 3 October
2008.
7 By Council Implementing Regulation (EU) No. 1294/2009 of 22 December 2009 ('Review
Regulation'), the Council decided to extend the anti-dumping measure.
 China considers that the Review Regulation extending the duties is inconsistent, among
others, with the following provisions of the Anti-Dumping Agreement and the GATT 1994:

1. Article 5.3 of the Anti-Dumping Agreemen t because the EU failed to examine the
accuracy and adequacy of the evidence provide d in the expiry review request in order
to determine whether there was sufficient evidence to justify the initiation of the
expiry review.

2. Articles 3.1 and 17.6(i) of the Anti-Dumping Agreement because the EU failed to
objectively examine, based on positive evid ence, both the volume of the dumped
imports and the effect of the dumped imports on prices in the domestic market for
like products, and the consequent impact of these imports on domestic producers of

7 OJ C 251, 3.10.2008, p. 21.

such products, as the EU used different sampling procedures for Chinese exporters
and EU importers, on the one hand, and EU producers on the other hand.

3. Articles 3.1 and 17.6(i) of the Anti-Dumping Agreement and Article VI:1 of the
GATT 1994 because the EU failed to ob jectively examine, based on positive
evidence, both the volume of the dumped imports and the effect of the dumped
imports on prices in the domestic market for like products, and the consequent impact
of these imports on domestic producers of such products; and Article 6.10 of the Anti-
Dumping Agreement , because the EU producers' sample selected was neither
statistically valid nor representative of the largest volume that could reasonably be
investigated; the EU producers' sample was not representative of the product types
covered under the scope of the measure and produced in the EU, and of the
geographic spread of EU production; th e data of the sampled EU producers,
pertaining to product types produced differed significantly at different points of the
investigation; the EU producers' sample in cluded a producer that outsourced its entire
production of the product concerned to a thir d country in the review investigation
period; an incorrect product classification methodology was used by the EU mid-way
through the investigation; in constituting th e EU importers' sample, the EU failed to
cover the largest volume that could reasonably be investigated.

4. Article 2.1 of the Anti-Dumping Agreement because the affirmative findings of the
EU regarding dumping were based on an unrepresentative volume of the total
Chinese imports into the EU during the review investigation period.

5. Article 2.4 of the Anti-Dumping Agreement and Article VI:1 of the GATT 1994
because the analogue country selection process of the EU; and the PCN methodology,
as initially used by the EU and suddenly cha nged in the middle of the investigation,
of necessity precluded a fair comparison between the export price and the normal
value.

6. Articles 3.1, 3.4 and 17.6(i) of the Anti-Dumping Agreement because the EU failed to
make an objective examination, on the b asis of positive evidence, of the factors
having a bearing on the state of the domestic industry because several key injury
indicators were analysed on the basis of the data of the whole EU production and not
the data of the sampled EU producers or the EU industry.

7. Articles 3.1, 3.5 and 17.6(i) of the Anti-Dumping Agreement because the EU failed to
make an objective examination, on the basis of positive evidence, that dumped
imports are, through the effects of dum ping, causing injury; and because the EU
failed to ensure that injury caused to th e EU industry by other factors was not
attributed to dumped imports.

8. Article 6.1.2 of the Anti-Dumping Agreement because the EU failed to provide other
interested parties prompt access to th e information in the non-confidential
questionnaire responses filed by sampled EU producers.

9. Articles 6.2 and 6.4 of the Anti-Dumping Agreement because the EU failed to provide
timely opportunities for all interested par ties to see all non-confidential information
relevant to the defence of their inter ests concerning sampling of EU producers,
selection of the analogue country and other procedural issues.

10. Article 6.5.1 of the Anti-Dumping Agreement because the EU failed to ensure the
disclosure of the names of the complainants; and the provision of summaries of
confidential information relating to the EU industry, and sampled EU producers in the
expiry review request and questionnaire responses respectively, or, where provided,
failed to ensure the provision by the EU industry and/or the sampled EU producers, of
sufficiently detailed summaries to enable a reasonable understanding of the substance
of that information.

11. Article 6.5.2 of the Anti-Dumping Agreement because the EU failed to determine that
the request for the confidentiality of the na mes of the complainants is not warranted;
and failed to reject the confidential in formation provided by the sampled EU
producers, the non-confidential summaries of which were not provided.

12. Article 6.8 of the Anti-Dumping Agreement because the EU did not apply facts
available when faced with incorrect and deficient information, including product
classification information, provided by sampled EU producers in the injury
questionnaire responses.

13. Article 6.9 of the Anti-Dumping Agreement because the EU failed to inform all
interested parties of the essential facts unde r consideration with regard to the Market
Economy Treatment and Individual Treatment applications of Chinese exporters.

14. Article 11.3 of the Anti-Dumping Agreement because the EU's determination that
expiry of the measure is likely to lead to a continuation of dumping and injury is
based on determination of continued dumping and injury in violation of Articles 2.1,
2.4, 3.1, 3.4, 3.5, 6.8, 6.10 and 17.6(i) of the Anti-Dumping Agreement.

15. Article 12.2.2 of the Anti-Dumping Agreement because the EU failed to provide
sufficiently detailed explanations in the Re view Regulation regarding matters of fact
and law and reasons which led to the extension of the measures; and of reasons which
led to the acceptance or rejection of the arguments of the interested parties.

16. Article 17.6(i) of the Anti-Dumping Agreement because the analogue country
selection process by the EU did not amount to a proper establishment of the facts and
an unbiased and objective evaluation of those facts.

17. In consequence, Articles 1 and 18.1 of the Anti-Dumping Agreement because an anti-
dumping measure shall be applied only under the circumstances provided for in
Article VI of the GATT 1994 and in accordance with the provisions of the Anti-
Dumping Agreement.

 The Government of China reserves its right to raise further factual claims and legal issues
during the course of the consultations.

 We look forward to receiving your reply to the present request and to fixing a mutually
convenient date for consultations.